Document:

Exhibit 10.11

 

SEPARATION
AGREEMENT AND RELEASE

 

THIS SEPARATION AGREEMENT AND RELEASE (this “Agreement”)
is made as of March 31, 2005 by and among National Mentor Holdings, Inc.,
a Delaware corporation (the “Company”), National Mentor, Inc., a
Delaware corporation (“Employer”), and Donald Monack (“Executive”).

 

WHEREAS, as of the date hereof, Employer is a direct or indirect
subsidiary of the Company.

 

WHEREAS, Executive and Employer are party to an Employment Agreement
dated September 29, 1999, as amended by the First Amendment to Employment
Agreement, dated March 9, 2001 (as amended, the “Employment Agreement”).

 

WHEREAS, Executive was a participant in the National Mentor, Inc.
Equity Deferred Compensation Plan, adopted on March 9, 2001 (as amended,
the “2001 Equity Plan”) and in the National Mentor Services, LLC 2003
Deferred Compensation Plan, adopted on April 30, 2003 (as amended, the “2003
Equity Plan”), which plans have distributed all amounts owing or to become
owing thereunder to Executive.

 

WHEREAS, Executive is a participant in the National Mentor, Inc.
Executive Deferred Compensation Plan, adopted on March 9, 2001 (as
amended, the “Executive Plan”), the National Mentor, Inc. Executive
Deferral Plan (as amended, the “Deferral Plan”) and in a 401(k) plan of
Employer or one of its Subsidiaries (the “401(k) Plan”).

 

WHEREAS, in connection with Executive’s resignation referenced below,
pursuant to the terms and conditions of the Executive Plan, all amounts owing
or to become owing under the Executive Plan are to be paid in a lump-sum to
Executive.

 

WHEREAS, in connection with Executive’s resignation referenced below,
pursuant to the terms and conditions of the Deferral Plan, all amounts owing or
to become owing under the Deferral Plan are to be paid to Executive.

 

WHEREAS, pursuant to a Management Stock Purchase Agreement dated March 9,
2001 (as amended, the “First Purchase Agreement”), between the Company
and Executive, Executive acquired 116,577.52 shares of the Company’s Common
Stock, par value $.01 per share (“Common Stock”) at a price per share of
$1.00.

 

WHEREAS, pursuant to a Management Stock Purchase Agreement dated May 31,
2003 (as amended, the “Second Purchase Agreement” and together with the
First Purchase Agreement, the “Purchase Agreements”), between the
Company and Executive, Executive acquired 17,424.098 shares of Common Stock at
a price per share of $7.00.

 

1

 

WHEREAS, pursuant to a Stock Option Agreement dated December 8,
2003 (as amended, the “Stock Option Agreement”), by and between the
Company and Executive, Executive was granted an option to acquire up to 10,000
shares of Common Stock at a price per share of $7.00.

 

WHEREAS, the Company, Executive and certain other stockholders of the
Company are parties to an Amended and Restated Stockholders Agreement dated as
of May 1, 2003 (as amended, the “Stockholders Agreement”).

 

WHEREAS, the Company, Executive and certain other stockholders of the
Company are parties to a Registration Agreement dated as of March 9, 2001
(as amended, the “Registration Agreement”).

 

WHEREAS, Executive wishes to resign his positions with the Company and
Employer and each of their respective subsidiaries and the Company and Employer
and each of their respective subsidiaries wish to accept such resignations, in
each case, effective as of March 31, 2005.

 

WHEREAS, on the date hereof and in connection herewith, Executive and
the Company are entering into a Stock Repurchase Agreement in the form attached
hereto as Exhibit A (as amended, the “Repurchase Agreement”).

 

WHEREAS, the Company and Executive have conditioned their execution of
this Agreement upon the concurrent execution of the Repurchase Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

 

1.                                       Resignations.  Effective as of March 31, 2005 (the “Termination
Date”), Executive hereby irrevocably resigns (i) as an employee of the
Company, Employer and any of their respective subsidiaries, (ii) to the
extent he serves on the board of directors of the Company or any of its
subsidiaries, as a member of such boards of directors and (iii) to the
extent that he serves as an officer, trustee, manager or in a similar position
or office to the Company or any of its subsidiaries, as an officer, trustee,
manager or similar position or office to the Company or any of its
subsidiaries.  As used in this Agreement,
the term “subsidiary” and “subsidiaries” includes, without limitation, any
not-for-profit entities affiliated with the Company or any of its subsidiaries.

 

2.                                       Severance.  In exchange for the general release of all
claims pursuant to Section 4 and the Release (as defined below),
the provisions of Section 3 hereof, and the other promises,
covenants and agreements by Executive set forth herein, subject to Executive’s
execution and delivery of the Release as provided in Section 4
below (a) during the 24 month period commencing on the Termination Date
(the “Severance Period”), Employer shall pay Executive severance at a
rate equal to $280,000 per annum (subject to mandatory withholdings for taxes)
(“Base Severance”), payable in equal installments on the Company’s regular
salary payment dates (provided that the Board of Directors of the Company, in
its discretion, shall have the option to accelerate the date on which any
payment of any Base Severance payable to Executive would otherwise be paid at
any time, provided further than any such acceleration shall not be deemed to
have shortened the Severance Period), (b)

 

2

 

on or about the date of the
Closing (as defined in the Repurchase Agreement), Employer shall pay to Executive
in cash a special bonus in the amount of $111,200 (subject to mandatory
withholdings for taxes), and (c) during the Severance Period, Executive
shall continue to participate in Employer’s group health, dental and vision
benefit plan(s) (excluding, for the avoidance of doubt, any bonus and incentive
compensation plans), on substantially the same terms and conditions as apply
from time to time to Employer’s then employed senior executives (except that
Employer shall pay the portion of the insurance premiums for such benefits
normally paid by Executive) (clauses  (a) through (c),
collectively, the “Severance Payments and Benefits”).  Following the Severance Period, as permitted
by the continuation coverage provisions of Section 4980B of the U.S.
Internal Revenue Code of 1986, as amended (the “Code”), Executive shall
be offered the opportunity to elect continuation coverage under Employer’s
group medical, dental and vision benefit plan(s) (“COBRA coverage”).  Employer shall provide Executive with the
appropriate COBRA coverage notice and election form for this purpose.  If Executive elects COBRA coverage, Executive
shall pay 100% of Executive’s (and his dependents’) health, dental and vision
insurance premiums under COBRA, for up to 18 months following the end of the
Severance Period; provided that Executive shall notify Employer immediately of
any change in his circumstances that would warrant discontinuation of his COBRA
coverage and benefits (including but not limited to Executive’s receipt of
group medical, dental or vision benefits from any other employer).  The existence and duration of Executive’s
rights and/or the COBRA rights of any of Executive’s eligible dependents shall
be determined in accordance with Section 4980B of the Code.  Except as set forth in this Section 2,
Executive agrees that he is not entitled to any other salary, bonus, severance,
reimbursement, benefit or expectation of remuneration or other monies from the
Company or Employer or any of their respective subsidiaries or Affiliates (as
defined in the Release) except as required by law and except for the
distribution of amounts to Executive pursuant to the terms of (i) the
Executive Plan in the aggregate amount of $109,368.89, (ii) the
Deferral Plan and (iii) amounts payable pursuant to the Repurchase
Agreement; provided that, for the avoidance of doubt, Executive may continue as
a participant in the 401(k) Plan to the extent permitted under the terms
thereof.  For purposes of the Stock
Option Agreement, the payments set forth in this Section 2 shall
constitute severance payments and the Noncompetition Period (as defined
therein) shall continue until the end of the Severance Period.  Following the Termination Date, pursuant to
the terms and conditions of the Executive Plan, Executive shall be distributed
his full balance under the Executive Plan in a lump-sum payment (subject to
mandatory withholdings for taxes) in the aggregate amount of $109,368.89.  Following the Termination Date, pursuant to
the terms and conditions of the Deferral Plan, Executive shall be distributed
his full balance under the Deferral Plan (subject to mandatory withholdings for
taxes).  In the event of a material
breach by Executive of this Agreement, the Release, the Repurchase Agreement or
the provisions of the other agreements that survive pursuant to Section 3
below, the Company shall, in addition to any other rights or remedies available
at law or in equity or under the Release, be entitled to cease making payments
pursuant to this Section 2.

 

3.                                       Termination
and Survival of Agreements.  (i) As of
the Closing, the First Purchase Agreement and the Second Purchase Agreement
shall terminate and be of no further force or effect, (ii) as of the
Closing, Section 1 through 14 of the Stock Option Agreement shall
terminate and be of no further force or effect and all other sections of the
Stock Option Agreement shall survive and remain in full force and effect and (iii) on
the Termination Date, Sections 1 through 7 and Section 13 of
the Employment Agreement shall terminate and be of no further force or effect
and all other

 

3

 

sections of the Employment
Agreement shall survive and remain in full force and effect.  Executive hereby reaffirms his obligations
pursuant to (i) Sections 8 through 12 and Sections 14 through 19
of the Employment Agreement, which sections shall remain in full force and
effect after the Closing and (ii) Sections 15 through 28 of the
Stock Option Agreement, which sections shall remain in full force and effect
after the Closing.  As of the Closing,
Executive will no longer be deemed a party to or maintain any interest in the
Stockholders Agreement or the Registration Agreement.  On the date hereof, Executive and the Company
shall enter into the Repurchase Agreement. 
The Repurchase Agreement shall survive the execution of this Agreement
and remain in full force and effect after the Closing.

 

4.                                       Cooperation.  Executive agrees to reasonably cooperate with
the Company and its subsidiaries in any internal investigation, any
administrative, regulatory, or judicial proceeding or any dispute with a third
party.  Executive understands and agrees
that this cooperation may include, but not be limited to, making himself
available to the Company and its subsidiaries upon reasonable notice for
interviews and factual investigations; appearing at the Company’s or its
subsidiary’s request to give testimony without requiring service of a subpoena
or other legal process; volunteering to the Company and its subsidiaries
pertinent information; and turning over to the Company and its subsidiaries all
relevant documents which are or may come into his possession all at times and
on schedules that are reasonably consistent with his other permitted activities
and commitments.  Executive understands
that in the event the Company or its subsidiaries ask for his cooperation in
accordance with this provision, the Company or such subsidiary will reimburse
him solely for reasonable travel expenses, (including lodging and meals), upon
his submission of receipts.

 

5.                                       Non-Disparagement,
etc.  Executive agrees not to disparage
the Company, its past and present investors, officers, directors or employees
or its Affiliates (as defined in the Release) and to keep all confidential and
proprietary information about the past or present business affairs of the
Company and its Affiliates confidential unless a prior written release from the
Company is obtained.  Executive further
agrees that as of the Termination Date, Executive will return to the Company or
its subsidiaries any and all property, tangible or intangible, relating to its
business, which he presently possesses (including, but not limited to,
company-provided credit cards, building or office access cards, keys, computer
equipment, manuals, files, documents, records, software, customer data base and
other data) and that Executive shall not retain any copies, compilations,
extracts, excerpts, summaries or other notes of any such manuals, files,
documents, records, software, customer data base or other data or except as
mutually agreed between Executive and the Company.

 

6.                                       General
Release.  For the
consideration received (including but not limited to the promises, agreements
and payments), all as provided for in this Agreement and the Repurchase Agreement,
Executive agrees to execute and deliver to the Company on March 31, 2005,
the General Release, in the form attached hereto as Exhibit B,
which release shall constitute a part of this Agreement as if it were set forth
herein (the “Release”). The execution of the Release shall supplement
and shall not supersede the terms of this Agreement or the Repurchase
Agreement.

 

7.                                       Effective
Date and Revocation.  Executive agrees
that he has been given 21 days in which to consider whether to sign this
Agreement (including the Release) and the Repurchase Agreement and has either
used that full 21-day period or voluntarily decided to sign this Agreement
before the end of such period.  The
parties agree that Executive may revoke the Release at any time 

 

4

 

within seven days after executing
it, at which time the Release and this Agreement and the Repurchase Agreement
will all revoked and will become null and void. 
The Release, this Agreement and the Repurchase Agreement will not be
effective or enforceable until the end of such seven-day period, but they shall
be fully effective and enforceable if the Release is not revoked within such
seven-day period.

 

8.                                       Notices.  All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when delivered
personally to the recipient, sent to the recipient by reputable express courier
service (charges prepaid) or mailed to the recipient by certified or registered
mail, return receipt requested and postage prepaid.  Such notices, demands and other
communications shall be sent to Executive, to the Company and to Employer at
the address indicated below:

 

If to Company
or Employer:

 

National
Mentor Holdings, Inc.

313 Congress
Street 6th Floor

Boston, MA
02210

Attention:
President

 

with a copy
to:

 

Madison
Dearborn Capital Partners, LLC

Three First
National Plaza, Suite 3800

Chicago,
Illinois 60602

Attention:
Timothy Sullivan

 

If to
Executive:

 

Donald Monack

177 Canton
Avenue

Milton, MA
02186

 

or to such other address or to the attention of such other person as
the recipient party has specified by prior written notice to the sending party.

 

9.                                       General
Provisions.

 

(a)                                  Severability.  Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability will not
affect any other provision or any other jurisdiction, but this Agreement will
be reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

 

5

 

(b)                                 Complete Agreement.  This Agreement (including the Release once
executed), the Repurchase Agreement, and the provisions of the Stock Option
Agreement and the Employment Agreement which remain in full force and effect as
described in Section 3 above, embody the complete agreement and
understanding among the parties and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof or thereof in any
way.  For the avoidance of doubt, nothing
in this Agreement is intended to amend or modify the terms and conditions of
the Executive Plan or the Deferral Plan.

 

(c)                                  Counterparts.  This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

 

(d)                                 Successors and Assigns.  Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive and the Company and Employer and each of their respective
subsidiaries and each of their respective successors and assigns; provided that
the rights and obligations of Executive under this Agreement will not be
assignable without the prior written consent of the Company.

 

(e)                                  Choice of Law.  All questions concerning the construction,
validity and interpretation of this Agreement will be governed by and construed
in accordance with the domestic laws of the Commonwealth of Massachusetts,
without giving effect to any choice of law or conflict of law provision or rule (whether
of the Commonwealth of Massachusetts or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the
Commonwealth of Massachusetts.

 

(f)                                    Amendment and Waiver.  The provisions of this Agreement may be
amended and waived only with the prior written consent of each of the parties
hereto.

 

(g)                                 Business Days.  If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or holiday
in the state in which the Company’s chief executive office is located, the time
period shall be automatically extended to the business day immediately
following such Saturday, Sunday or holiday.

 

*     *    
*     *     *

 

6

 

IN WITNESS WHEREOF, the parties
hereto have executed this Separation Agreement and Release on the date first
written above.

 

 

	
   

  	
  /s/ Donald
  Monack

  	
   

  
	
   

  	
  DONALD
  MONACK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NATIONAL
  MENTOR HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Edward
  Murphy

  	
   

  
	
   

  	
   

  
	
   

  	
  Its: 

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NATIONAL
  MENTOR, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Denis
  Holler

  	
   

  
	
   

  	
   

  
	
   

  	
  Its: 

  	
  Assistant
  Secretary

  	
   

  
								

 

7

 

EXHIBIT A

 

STOCK
REPURCHASE AGREEMENT

 

THIS STOCK REPURCHASE AGREEMENT (this
“Agreement”) is made and entered into this 31st day of March, 2005, by
and between National Mentor Holdings, Inc., a Delaware corporation (the “Company”),
and Donald Monack (“Executive”).

 

WHEREAS, Executive and National Mentor, Inc., a Delaware
corporation (“Employer”), are party to an Employment Agreement dated September 29,
1999, as amended by the First Amendment to Employment Agreement, dated March 9,
2001 (as amended, the “Employment Agreement”).

 

WHEREAS, pursuant to a Management Stock Purchase Agreement dated March 9,
2001 (as amended, the “First Purchase Agreement”), between the Company
and Executive, Executive acquired 116,577.52 shares of the Company’s Common
Stock, par value $.01 per share (“Common Stock”) at a price per share of
$1.00.

 

WHEREAS, pursuant to a Management Stock Purchase Agreement dated May 31,
2003 (as amended, the “Second Purchase Agreement” and together with the
First Purchase Agreement, the “Purchase Agreements”), between the
Company and Executive, Executive acquired 17,424.098 shares of Common Stock at
a price per share of $7.00.

 

WHEREAS, the Company, Executive and certain other stockholders of the
Company are parties to an Amended and Restated Stockholders Agreement dated as
of May 1, 2003 (as amended, the “Stockholders Agreement”).

 

WHEREAS, the Company, Executive and certain other stockholders of the
Company are parties to a Registration Agreement dated as of March 9, 2001
(as amended, the “Registration Agreement”).

 

WHEREAS, Executive wishes to voluntarily resign his employment with the
Company and each of its subsidiaries effective as of March 31, 2005 (the “Termination
Date”).

 

WHEREAS, on the date hereof and in connection herewith, Executive and
the Company and Employer are entering into a Separation Agreement and Release
(as amended, the “Separation Agreement”), which provides for the parties
to enter into this Agreement.

 

WHEREAS, the Company and Executive wish to enter into this Agreement to
provide, in connection with execution of the Separation Agreement, for the full
vesting of Executive’s Common Stock, the repurchase of Executive’s shares of
Common Stock, and certain related matters.

 

NOW, THEREFORE, the parties hereto, in consideration of their mutual
covenants and agreements hereinafter set forth and intending to be legally
bound hereby, covenant and agree as follows:

 

8

 

1.               Vesting of
Shares.  Notwithstanding
anything in the Purchase Agreements to the contrary, all shares of Common Stock
purchased by Executive pursuant to the Purchase Agreements shall become vested
in full on the date of the Closing (as defined below).

 

2.               Sale and
Purchase of Stock.  At the Closing
(as defined below) and upon the terms and conditions set forth in this
Agreement, Executive agrees to sell, transfer and assign to the Company, and
the Company agrees to purchase, all of Executive’s right, title and interest in
all of Executive’s 134,001.618 shares of Common Stock (collectively, the “Shares”)
for an aggregate purchase price of $2,144,025.89 (the “Shares Purchase Price”).

 

3.               Purchase
Prices; Deliveries.  At the Closing,
Executive will deliver to the Company the certificates representing the Shares,
together with duly executed stock assignments to the Company, upon payment by
the Company of the Shares Purchase Price pursuant to Section 2
(less withholdings pursuant to Section 7 hereof) by check or wire
transfer of immediately available funds to an account designated in writing by
Executive.

 

4.               Closing.  Subject to the conditions contained in this
Agreement, the deliveries contemplated by Section 3 (the “Closing”)
will take place at the offices of Kirkland & Ellis LLP, 200 East Randolph
Drive, Chicago, Illinois 60601 at 10:00 a.m. on April 8, 2005, or
such other place or on such other date as is mutually agreeable to the Company
and Executive, but in any event not less than eight days after the Termination
Date and not greater than 14 days after the Termination Date.

 

5.               Representations
and Warranties of Executive.  Executive hereby
represents and warrants to the Company as follows:

 

(a)          Ownership.  All of the Shares are owned of record and
beneficially by Executive, and Executive has good and marketable title to the
Shares, free and clear of any security interest, claims, liens, pledges,
options, encumbrances, charges, agreements, voting trusts, proxies or other
arrangements or restrictions whatsoever (collectively, “Encumbrances”),
except for such legend and related transfer restrictions as are required under
the Securities Act of 1933 and the restrictions set forth in the Stockholders
Agreement or the Registration Agreement. 
Executive does not own and has no interest in any shares of the Company’s
capital stock or options or rights to acquire the Company’s capital stock other
than the Shares and the option (the “Option”) to acquire shares of
Common Stock pursuant to the Stock Option Agreement (as defined in the
Separation Agreement), which Option will terminate pursuant to the Separation
Agreement at the Closing.  All of the
Shares are validly issued, fully paid and nonassessable.  Executive has not exercised and will not
exercise prior to the Closing the Option, in whole or in part.  At the Closing, Executive will deliver to the
Company good and marketable title to the Shares, free and clear of any
Encumbrances.

 

(b)         Legal Capacity.  Executive has full legal capacity to enter
into and perform his obligations set forth in this Agreement.  This Agreement when executed and delivered
will constitute the valid and legally binding obligation of Executive,
enforceable in accordance with its terms.

 

(c)          Conflicts.  The execution, delivery and performance of
this Agreement by Executive does not conflict with or result in a breach of any
agreement, instrument, order, judgment, decree, law or governmental regulation
to which Executive or the Shares are subject.

 

9

 

6.               Survival of
Representations and Warranties. 
All representations and warranties contained herein or made in writing
by any party in connection herewith will survive the execution and delivery of
this Agreement and the Closing hereunder, regardless of any investigation made
by the Company or on its behalf.

 

7.               Withholdings.  The Company and its subsidiaries shall be
entitled, to make mandatory withholdings for taxes from any amounts due and
payable by any of them hereunder to Executive.

 

8.               Indemnification.  Executive hereby agrees to indemnify the
Company and hold the Company harmless against and in respect of any and all
losses, liabilities, damages, obligations, claims, encumbrances, costs and
expenses (including costs of suit and attorneys’ fees and expenses) incurred by
the Company resulting from any breach of any representation, warranty, covenant
or agreement made by Executive herein or in any instrument, agreement or
document delivered to the Company pursuant hereto or in connection herewith.

 

9.               Termination
and Survival of Agreements.  The parties
hereto agree to the termination and survival provisions set forth in Section 3
of the Separation Agreement.  The
Separation Agreement shall survive the execution of this Agreement and remain
in full force and effect after the Closing.

 

10.         Revocation
of the Separation Agreement.  Notwithstanding
anything herein to the contrary, in the event that the Separation Agreement is
terminated pursuant to Section 4 thereof within seven days of the
date of the Separation Agreement, this Agreement shall immediately terminate
and be null and void.  This Agreement
will not be effective or enforceable until the end of such seven-day period,
but it shall be fully effective and enforceable if it is not revoked within such
seven-day period.

 

11.         Miscellaneous.

 

(a)          Notices.  All notices, demands or other communications
to be given or delivered under or by reason of the provisions of this Agreement
will be in writing and will be deemed to have been given (i) three days
after the date of mailing by registered or certified mail, return receipt
requested, or (ii) when personally delivered (including by Federal Express
or other express courier service). 
Notices, demands and communications to the Company and Executive will,
unless another address is specified in writing, be sent to the address
indicated below:

 

If to Company:

 

National Mentor Holdings, Inc.

313 Congress Street 6th Floor

Boston, MA 02210

Attention: President

 

10

 

with a copy to:

 

Madison Dearborn Capital Partners, LLC

Three First National Plaza, Suite 3800

Chicago, IL 60602

Attention: Timothy Sullivan

 

If to Executive:

 

Donald Monack

177 Canton Avenue

Milton, MA 02186

 

(b)         Expenses.  Each party hereto agrees to pay all of its
expenses arising in connection with the negotiation, execution and consummation
of the transactions contemplated by this Agreement (including attorneys’ fees
and expenses).

 

(c)          Complete Agreement.  This Agreement and the Separation Agreement,
together with the other agreements referred to herein, constitute the entire
agreement between the parties hereto regarding the subject matter of this
Agreement and supersedes and preempts any prior understandings, agreements or
representations, written or oral, which may have related to the subject matter
hereof.

 

(d)         Severability.  Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability will not
affect any other provision or any other jurisdiction, but this Agreement will
be reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

 

(e)          Counterparts.  This Agreement may be executed in
counterparts, each of which will be deemed to be an original and which taken
together will constitute one and the same agreement.

 

(f)            Further Assurances.  From and after the Closing, and when
requested by the Company, Executive will, without further consideration,
execute and deliver all such instruments of conveyance and transfer and will
take such further actions as the Company may reasonably deem necessary or
desirable in order to transfer the Shares to the Company and to carry out fully
the provisions and purposes of this Agreement.

 

(g)         Successors and Assigns.  This Agreement is intended to bind and inure
to the benefit of and be enforceable by the Company and Executive and their
respective successors and assigns; provided that the rights and obligations of
Executive under this Agreement will not be assignable without the prior written
consent of the Company.

 

11

 

(h)         Governing Law.  All questions concerning the construction,
validity and interpretation of this Agreement will be governed by and construed
in accordance with the domestic laws of the Commonwealth of Massachusetts,
without giving effect to any choice of law or conflict of law provision or rule (whether
of the Commonwealth of Massachusetts or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the
Commonwealth of Massachusetts.

 

*  *  * 
*  *

 

12

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.

 

	
   

  	
  NATIONAL
  MENTOR HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Edward Murphy

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
  President

  	
   

  
	
   

  
	
   

  
	
   

  	
  /s/
  Donald Monack

  	
   

  
	
   

  	
  DONALD
  MONACK

  
						

 

13

 

EXHIBIT B

 

GENERAL RELEASE

 

I, Donald Monack, in consideration of and subject to the performance by
National Mentor Holdings, Inc., a Delaware corporation (the “Holdings”),
and National Mentor, Inc. (“Employer” and collectively with
Holdings and their respective subsidiaries, the “Company”), of their
obligations under the Separation Agreement and Release, dated as of the March 31,
2005 (as amended, the “Agreement”), and the Repurchase Agreement (as
defined in the Agreement), do hereby release and forever discharge as of the
date hereof the Company and its Affiliates (as defined below) and all present
and former directors, officers, agents, representatives, employees, successors
and assigns of the Company and its Affiliates and the Company’s direct or
indirect owners (collectively, the “Released Parties”) to the extent
provided below.  This release constitutes
a part of the Agreement.

 

1.               I
understand that any payments or benefits paid or granted to me under Section 2
of the Agreement represent, in part, consideration for signing this General
Release and are not salary, wages or benefits to which I was already entitled.
I understand and agree that I will not receive the payments and benefits
specified in Section 2 of the Agreement unless I execute this
General Release and do not revoke this General Release within the time period
permitted hereafter or breach this General Release.  I also acknowledge and represent that I have
received all payments and benefits that I am entitled to receive by virtue of
any employment by the Company.

 

2.               Except
(i) as provided in paragraph 4 below, (ii) for my rights under the
Repurchase Agreement (as defined in the Agreement), (iii) for the
provisions of the Employment Agreement (as defined in the Agreement) and the
Stock Option Agreement (as defined in the Agreement) which expressly survive
the termination of my employment with the Company in accordance with the
Agreement, (iv) for my rights under the Agreement to receive the Severance
Payments and Benefits (as defined in the Agreement), (v) for my rights to
be paid a lump-sum payment in the aggregate amount of $109,368.89 pursuant to
the Executive Plan (as defined in the Agreement) and for my rights to be paid
amounts pursuant to the Deferral Plan (as defined in the Agreement), and (vi) for
my rights under the 401(k) Plan, I knowingly and voluntarily (for myself, my
heirs, executors, administrators and assigns) release and forever discharge the
Company and the other Released Parties from any and all claims, suits,
controversies, actions, causes of action, cross-claims, counter-claims,
demands, debts, compensatory damages, liquidated damages, punitive or exemplary
damages, other damages, claims for costs and attorneys’ fees, or liabilities of
any nature whatsoever in law and in equity, both past and present (through the
date this General Release becomes effective and enforceable) and whether known
or unknown, suspected, or claimed against the Company or any of the Released
Parties which I, my spouse, or any of my heirs, executors, administrators or
assigns, may have, which arise out of or are connected with my employment with,
or my separation or termination from, the Company (including, but not limited
to, any allegation, claim or violation, arising under: the Purchase Agreements
(as defined in the Agreement); the Stockholders Agreement (as defined in the
Agreement); the Registration Agreement (as defined in the Agreement); the
sections of the Employment Agreement and the Stock Option Agreement that are
being terminated pursuant to Section 3 of the Agreement; the 2001
Equity Plan (as defined in the Agreement); the 2003 Equity Plan (as defined in
the Agreement); the Executive Plan (as defined in the Agreement); the Deferral
Plan (as defined in the Agreement); Title VII of the Civil Rights Act of 1964,
as amended; the Civil Rights Act of

 

1

 

1991; the Age
Discrimination in Employment Act of 1967, as amended (including the Older
Workers Benefit Protection Act); the Equal Pay Act of 1963, as amended; the
Americans with Disabilities Act of 1990; the Family and Medical Leave Act of
1993; the Worker Adjustment Retraining and Notification Act; the Employee
Retirement Income Security Act of 1974; any applicable Executive Order
Programs; the Fair Labor Standards Act; or their state or local counterparts;
or under any other federal, state or local civil or human rights law, or under
any other local, state, or federal law, regulation or ordinance; or under any
public policy, contract or tort, or under common law; or arising under any
policies, practices or procedures of the Company; or any claim for wrongful
discharge, breach of contract, infliction of emotional distress, defamation; or
any claim for costs, fees, or other expenses, including attorneys’ fees
incurred in these matters) (all of the foregoing collectively referred to
herein as the “Claims”).

 

3.               I
represent that I have made no assignment or transfer of any right, claim,
demand, cause of action, or other matter covered by paragraph 2 above.

 

4.               I
agree that this General Release does not waive or release any rights or claims
that I may have under the Age Discrimination in Employment Act of 1967 which
arise after the date I execute this General Release. I acknowledge and agree
that my separation from employment with the Company in compliance with the
terms of the Agreement shall not serve as the basis for any claim or action
(including, without limitation, any claim under the Age Discrimination in
Employment Act of 1967).

 

5.               In
signing this General Release, I acknowledge and intend that it shall be
effective as a bar to each and every one of the Claims hereinabove mentioned or
implied. I expressly consent that this General Release shall be given full
force and effect according to each and all of its express terms and provisions,
including those relating to unknown and unsuspected Claims (notwithstanding any
state statute that expressly limits the effectiveness of a general release of
unknown, unsuspected and unanticipated Claims), if any, as well as those
relating to any other Claims hereinabove mentioned or implied. I acknowledge
and agree that this waiver is an essential and material term of this General
Release and that without such waiver the Company would not have agreed to the
terms of the Agreement.  I further agree
that in the event I should bring a Claim seeking damages against the Company,
or in the event I should seek to recover against the Company in any Claim
brought by a governmental agency on my behalf, this General Release shall serve
as a complete defense to such Claims. I further agree that I am not aware of
any pending charge or complaint of the type described in paragraph 2 as of the
execution of this General Release.

 

6.               I
agree that neither this General Release, nor the furnishing of the
consideration for this General Release, shall be deemed or construed at any
time to be an admission by the Company, any Released Party or myself of any
improper or unlawful conduct.

 

7.               I
agree that I will forfeit all amounts payable by the Company pursuant to the
Agreement if I challenge the validity of this General Release. I also agree
that if I violate this General Release by suing the Company or the other
Released Parties, I will pay all costs and expenses of defending against the
suit incurred by the Released Parties, including reasonable attorneys’ fees,
and return all payments received by me pursuant to the Agreement.

 

2

 

8.               I
agree that this General Release is confidential and agree not to disclose any
information regarding the terms of this General Release, except to my immediate
family and any tax, legal or other counsel I have consulted regarding the
meaning or effect hereof or as required by law, and I will instruct each of the
foregoing not to disclose the same to anyone. 
Any non-disclosure provision in this General Release does not prohibit
or restrict me (or my attorney) from responding to any inquiry about this
General Release or its underlying facts and circumstances by the Securities and
Exchange Commission (SEC), the National Association of Securities Dealers, Inc.
(NASD), any other self-regulatory organization or governmental entity or as
required by applicable law.

 

9.               Notwithstanding
anything in this General Release to the contrary, this General Release shall
not release, relinquish, diminish, or in any way affect any rights or claims
arising out of any breach by the Company or by any Released Party of the
Agreement or the Repurchase Agreement after the date hereof.

 

10.         Whenever
possible, each provision of this General Release shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this General Release is held to be invalid, illegal or unenforceable in any
respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
or any other jurisdiction, but this General Release shall be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.

 

11.         As
used in the Agreement and herein, the term “Affiliate” of any particular
person means (a) any other person directly or indirectly controlling,
controlled by or under common control with such particular person, where “control”
means the possession, directly or indirectly, of the power to direct the
management and policies of a person whether through the ownership of voting
securities, contract or otherwise and (b) any stockholder, partner or
officer of such person or any person who has a management contract with such
person.

 

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

 

1.               I
HAVE READ IT CAREFULLY;

 

2.               I
UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS,
INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT
ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED;
THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH DISABILITIES ACT OF 1990; AND THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;

 

3.               I
VOLUNTARILY CONSENT TO EVERYTHING IN IT;

 

4.               I
HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I HAVE
DONE SO OR, AFTER CAREFUL READING AND CONSIDERATION I HAVE CHOSEN NOT TO DO SO
OF MY OWN VOLITION;

 

3

 

5.               I
HAVE HAD AT LEAST 21 DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE
SUBSTANTIALLY IN ITS FINAL FORM TO CONSIDER IT AND THE CHANGES MADE SINCE
THE FIRST VERSION OF THIS RELEASE ARE NOT MATERIAL AND WILL NOT RESTART THE
REQUIRED 21-DAY PERIOD;

 

6.               I
UNDERSTAND THAT I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS RELEASE TO REVOKE
IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE
REVOCATION PERIOD HAS EXPIRED;

 

7.               I
HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE
OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

 

8.               I
AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED,
WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN
AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.

 

 

	
  DATE: MARCH 31, 2005

  	
  /s/ Donald Monack

  	
   

  
	
   

  	
  DONALD MONACK

  

 

4

 

To: The Board of Directors of National Mentor
Holdings, Inc. (the “Company”) and each of its subsidiaries:

 

Effective as of the Effective Date (defined
below), I hereby resign (i) as an employee of the Company and each of its
subsidiaries, (ii) to the extent I serve on the board of directors of the Company
or any of its subsidiaries, as a member of such boards of directors and (iii) to
the extent that I serve as an officer, trustee, manager or in a similar
position or office to the Company or any of its subsidiaries, as an officer,
trustee, manager or similar position or office to the Company or any of its
subsidiaries. For purposes of this resignation, the term “subsidiary” and “subsidiaries”
includes, without limitation, any not-for-profit entities affiliated with the Company
or any of its subsidiaries. The “Effective Date” for this resignation shall be March 31,
2005; provided that if the General Release being entered into on or about the
date hereof pursuant to the Separation Agreement and Release, by and among me,
the Company and National Mentor, Inc. is revoked by me in accordance with
its terms prior to April 8, 2005, this resignation letter shall also be
automatically revoked and will become null and void.

 

 

	
  Date: March 31, 2005

  	
  /s/ Donald Monack

  	
   

  
	
   

  	
  DONALD MONACK

  

 

5Exhibit 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.

 

1

 

(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 

 

2

 

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.

 

3

 

(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”). 

 

4

 

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 

 

5

 

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 

 

6

 

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:

 

7

 

	
  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 

 

8

 

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.

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