UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 16, 2014

 

 

CIVITAS SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-36623   65-1309110

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

313 Congress Street, 6 th Floor

Boston, Massachusetts 02210

(Address of Principal executive offices, including Zip Code)

(617) 790-4800

(Registrant’s telephone number, including area code)

 

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 1.01. Entry into a Material Definitive Agreement.

Registration Rights Agreement

On September 22, 2014, in connection with the closing of the initial public offering (the “IPO”) of Civitas Solutions, Inc. (the “Company”), the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with NMH Investment, LLC (“NMH Investment”), the Company’s sole stockholder. Pursuant to the registration rights agreement, NMH Investment will be entitled to request the Company to register the shares of its common stock held by NMH Investment on a long-form or short-form registration statement on one or more occasions in the future, which registrations may be “shelf registrations.” NMH Investment will also be entitled to participate in certain registered offerings by the Company, subject to the terms and conditions in the registration rights agreement. The Company will pay NMH Investment’s expenses in connection with NMH Investment’s exercise of these rights. The registration rights described in this paragraph apply to (i) shares of the Company’s common stock held by NMH Investment as of the closing of the IPO and (ii) any of the capital stock (or that of its subsidiaries) issued or issuable with respect to the common stock described in clause (i) with respect to any dividend, distribution, recapitalization, reorganization, or certain other corporate transactions (“Registrable Securities”). These registration rights are also for the benefit of any subsequent holder of Registrable Securities. However, any particular securities will cease to be Registrable Securities when they have been sold in a registered public offering, sold in compliance with Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”) or repurchased by the Company or its subsidiaries. In addition, with the Company’s consent and the consent of the holders of a majority of Registrable Securities, any Registrable Securities held by a person other than Vestar and its affiliates will cease to be Registrable Securities if they can be sold without limitation under Rule 144 of the Securities Act.

The foregoing is only a summary of the material terms of the Registration Rights Agreement, and is qualified in its entirety by reference to the Registration Rights Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.1 and incorporated by reference herein.

Director Nominating Agreement

On September 22, 2014, in connection with the closing of the IPO, the Company entered into a director nominating agreement (the “Director Nominating Agreement”) with NMH Investment. The Director Nominating Agreement provides that NMH Investment or affiliates of Vestar Capital Partners V, L.P. (“Vestar”) will have the right to nominate: (i) eight of nine directors so long as NMH Investment and affiliates of Vestar collectively own at least 40% of the total voting power of the Company; (ii) seven of nine directors so long as NMH Investment and affiliates of Vestar collectively own at least 35% of the total voting power of the Company; (iii) six of nine directors so long as NMH Investment and affiliates of Vestar collectively own at least 30% of the total voting power of the Company; (iv) five of nine directors so long as NMH Investment and affiliates of Vestar collectively own at least 25% of the total voting power of the Company; (v) four of nine directors so long as NMH Investment and affiliates of Vestar collectively own at least 20% of the total voting power of the Company; (vi) three of nine directors so long as NMH Investment and affiliates of Vestar collectively own at least 15% of the total voting power of the Company; (vii) two of nine directors so long as NMH Investment and affiliates of Vestar collectively own at least 10% of the total voting power of the Company; (viii) one of nine directors so long as NMH Investment and affiliates of Vestar collectively own at least 5% of the total voting power of the Company. In each case, the Company will agree to take certain actions to support those nominees for election and include the nominees in the proxy statements for the stockholders meetings at which directors are to be elected.

The foregoing is only a summary of the material terms of the Director Nominating Agreement, and is qualified in its entirety by reference to the Director Nominating Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.2 and is incorporated herein by reference.

Item 2.04. Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

On September 17, 2014, National Mentor Holdings, Inc. (“NMHI”), a wholly-owned subsidiary of the Company, issued a conditional notice of partial redemption to holders of NMHI’s 12.50% Senior Notes due 2018

 

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(the “Notes”) declaring that NMHI will redeem $162 million in aggregate principal amount of the Notes on October 17, 2014 (the “Partial Redemption Date”). The redemption price of the Notes is 106.250% of the principal amount redeemed, plus accrued and unpaid interest to, but not including, the Partial Redemption Date (the “Partial Redemption Price”), in accordance with the provisions of the indenture governing the Notes. The notice of partial redemption was conditioned upon (A) the completion of the IPO and (B) the receipt of net proceeds from the IPO in an amount at least equal to the aggregate Partial Redemption Price of the Notes (collectively, the “Financing Condition”). The IPO closed on September 22, 2014. The closing of the IPO satisfied the Financing Condition, and, as a result, $162 million of the Notes became irrevocably due and payable on October 17, 2014.

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

 

(e)

Grants of Restricted Stock Units and Options

On September 16, 2014, in connection with the pricing of the IPO, the Company granted time-vesting restricted stock units and stock options under the Civitas Solutions, Inc. 2014 Omnibus Incentive Plan (the “2014 Incentive Plan”) to each of its named executive officers in the following amounts:

 

Name

   Restricted Stock Units      Stock Options  

Edward M. Murphy

     22,059         48,911   

Bruce F. Nardella

     63,419         140,619   

Denis M. Holler

     12,408         27,512   

David M. Petersen

     10,588         23,477   

Linda De Renzo

     9,430         20,909   

Kathleen P. Federico

     9,265         20,543   

The restricted stock units vest in three equal annual installments, with the first vesting date on September 16, 2015. The stock options have an exercise price of $17.00 per share and vest in three equal annual installments, with the first vesting date on September 16, 2015. If the named executive officer’s employment terminates due to death or disability, the individual shall be entitled to pro rata vesting of his or her unvested restricted restricted stock units and unvested stock options for the portion of the year for which the individual served. If a change in control of the Company occurs, and the named executive officer is terminated other than for cause and other than due to death or disability within six months before or 24 months following after such change in control, all of the individual’s unvested restricted stock unit and stock option awards will become fully vested.

The foregoing is only a summary of the material terms of the restricted stock unit and stock option agreements, and is qualified in its entirety by reference to the forms of restricted stock unit and stock option agreements, which are incorporated by reference as Exhibits 10.3 and 10.4 to this Current Report on Form 8-K and are incorporated herein by reference.

Employment Agreements

On September 22, 2014, in connection with the IPO, the Company entered into amended employment agreements with Messrs. Murphy and Nardella, effective September 17, 2014. The amended employment agreements retain the terms of their existing employment agreements, except that the amended employment agreements provide that (i) if Mr. Murphy or Mr. Nardella is terminated due to death or disability, he will be entitled to accelerated vesting of a pro rata portion of his unvested time-based equity awards under the 2014 Incentive Plan and accelerated vesting of all of his unvested Class F Common Units and Class H Common Units, (ii) if Mr. Murphy

 

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or Mr. Nardella is terminated (other than for cause and other than due to death or disability) within six months prior to or 24 months following a change in control, he will be entitled to accelerated vesting of all of his unvested time-based equity awards under the 2014 Incentive Plan and accelerated vesting of all of his unvested Class F Common Units and Class H Common Units. The payment of severance benefits will be conditioned upon the execution and non-revocation of a release. The amended employment agreements revise the definition of the scope of the business for purposes of the noncompetition and nonsolicitation provisions set forth therein. In addition, Mr. Nardella’s base salary was increased from $500,000 per year to $575,000 per year.

On or about September 22, 2014, in connection with the IPO, the Company entered into new employment agreements with each of its executive officers who currently has a severance agreement (including Messrs. Holler and Petersen and Ms. De Renzo and Ms. Federico, who are named executive officers), effective September 17, 2014, which will supersede their existing severance agreements with us. The employment agreements address the terms not covered by the existing severance agreements, including (i) making explicit that the agreement has a term of one year with automatic renewals unless terminated in accordance with the agreement, (ii) specifying the individual’s position, duties, annual base salary and target bonus and (iii) providing for customary business expense reimbursement. The employment agreements for these executive officers provide that if the executive officer is terminated without “cause” or resigns for “good reason,” he or she will be, subject to execution and non-revocation of a release, entitled to (i) continued payment of his or her base salary for one year, (ii) payment of an amount equal to his or her target bonus, (iii) payment of a pro rata bonus for the year in which such termination occurs if termination occurs within the second half of the year and (iv) a monthly payment of $2,000 for 24 months. If the executive officer is terminated due to death or disability, he or she will be entitled to (i) payment of a pro rata bonus for the year in which such termination occurs and (ii) accelerated vesting of a pro rata portion of his or her unvested time-based equity awards and accelerated vesting of his or her unvested Class F Common Units and Class H Common Units. If the executive officer is terminated (other than for cause and other than due to death or disability) within six months prior to or 24 months following a change in control, he or she will be entitled to (i) the same severance payments as provided for in the event of a termination without “cause” or for “good reason,” except that the payment of his or her base salary will continue for 18 months instead of 12 months following such termination and (ii) accelerated vesting of all of his or her unvested time-based equity awards under the 2014 Incentive Plan and accelerated vesting of all of his or her unvested Class F Common Units and Class H Common Units. The new employment agreements update the description of the scope of the business for purposes of the noncompetition and nonsolicitation provisions set forth therein. In addition, Mr. Holler’s base salary was increased from $335,000 per year to $375,000 per year.

The foregoing is only a summary of the material terms of the employment agreements, and is qualified in its entirety by reference to the amended and restated employment agreement with Mr. Nardella and the third amended and restated employment agreement with Mr. Murphy, which are attached to this Current Report on Form 8-K as Exhibits 10.5 and 10.6 and are incorporated herein by reference, and to the form of employment agreement with each of the other executive officers, which is incorporated by reference as Exhibit 10.7 to this Current Report on Form 8-K and is incorporated herein by reference.

Amendment to Class H Common Units Management Unit Subscription Agreement

On September 22, 2014, in connection with the closing of the IPO, NMH Investment entered into amendments to the Management Unit Subscription Agreements governing the Class H Common Units (the “MUSA Amendment”) with each of the holders of Class H Common Units, including the Company’s named executive officers. Pursuant to the MUSA Amendment, the Class H Common Units will vest upon the earlier to occur of a sale of the Company and the achievement of a multiple of investment return threshold by Vestar and its affiliates. Once vested, the holders of Class H Common Units are entitled to receive between 0.0% and 5.0% of the common equity value distributed by NMH Investments to its unitholders depending upon the multiple of investment achieved by Vestar and its affiliates.

The foregoing is only a summary of the material terms of the MUSA Amendment, and is qualified in its entirety by reference to the form of MUSA Amendment, which is incorporated by reference as Exhibit 10.8 to this Current Report on Form 8-K and is incorporated herein by reference.

 

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Indemnification Agreements

On or about September 17, 2014, the Company entered into amended indemnification agreements with its directors and executive officers in connection with the closing of the IPO. Under the indemnification agreement, directors and executive officers are indemnified against certain expenses, judgments and other losses resulting from involvement in legal proceedings arising from service as a director or executive officer. The Company will advance expenses incurred by directors or executive officers in defending against such proceedings, and indemnification is generally not available for proceedings brought by an indemnified person (other than to enforce his or her rights under the indemnification agreement). If an indemnified person elects or is required to pay all or any portion of any judgment or settlement for which the Company is jointly liable, the Company will contribute to the expenses, judgments, fines and amounts paid in settlement incurred by the indemnified person in proportion to the relative benefits received by the Company (and its officers, directors and employees other than the indemnified person) and the indemnified person, as may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of NMHI (and its officers, directors and employees other than the indemnified person) and the indemnified person in connection with the events that resulted in such losses, as well as any other equitable considerations which the law may require to be considered. NMHI is a guarantor of Civitas’ obligations under this agreement.

The foregoing is only a summary of the material terms of the amended indemnification agreements, and is qualified in its entirety by reference to the form of indemnification agreement, which is incorporated by reference as Exhibit 10.9 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit
No.

  

Description of Exhibit

10.1    Registration Rights Agreement, dated as of September 22, 2014, by and between Civitas Solutions, Inc. and NMH Investment, LLC.
10.2    Director Nominating Agreement, dated as of September 22, 2014, by and between Civitas Solutions, Inc. and NMH Investment, LLC.
10.3    Form of Restricted Stock Unit Agreement under the Civitas Solutions, Inc. 2014 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.33 to Civitas Solutions, Inc.’s Amendment No. 4 to the Registration Statement filed with the SEC on September 3, 2014).
10.4    Form of Nonqualified Stock Option Agreement under the Civitas Solutions, Inc. 2014 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.34 to Civitas Solutions, Inc.’s Amendment No. 4 to the Registration Statement filed with the SEC on September 3, 2014).
10.5    Amended and Restated Employment Agreement by and between Bruce F. Nardella and Civitas Solutions, Inc.
10.6    Third Amended and Restated Employment Agreement by and between Edward M. Murphy and Civitas Solutions, Inc.
10.7    Form of Employment Agreement (other executive officers)
10.8    Amendment to Management Unit Subscription Agreement (Class H Common Units) (incorporated by reference to Exhibit 10.29 to Civitas Solutions, Inc.’s Amendment No. 4 to the Registration Statement filed with the SEC on September 3, 2014).
10.9    Form of Amended and Restated Indemnification Agreement (for directors and executive officers) (incorporated by reference to Exhibit 10.19 of Civitas Solutions, Inc.’s Amendment No. 3 to the Registration Statement filed with the SEC on August 27, 2014)

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  CIVITAS SOLUTIONS, INC.
 

/s/ Denis M. Holler

Date: September 22, 2014   Name:   Denis M. Holler
  Title:   Chief Financial Officer and Treasurer


EXHIBIT INDEX

 

Exhibit
No.

  

Description of Exhibit

10.1    Registration Rights Agreement, dated as of September 22, 2014, by and between Civitas Solutions, Inc. and NMH Investment, LLC.
10.2    Director Nominating Agreement, dated as of September 22, 2014, by and between Civitas Solutions, Inc. and NMH Investment, LLC.
10.3    Form of Restricted Stock Unit Agreement under the Civitas Solutions, Inc. 2014 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.33 to Civitas Solutions, Inc.’s Amendment No. 4 to the Registration Statement filed with the SEC on September 3, 2014).
10.4    Form of Nonqualified Stock Option Agreement under the Civitas Solutions, Inc. 2014 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.34 to Civitas Solutions, Inc.’s Amendment No. 4 to the Registration Statement filed with the SEC on September 3, 2014).
10.5    Amended and Restated Employment Agreement by and between Bruce F. Nardella and Civitas Solutions, Inc.
10.6    Third Amended and Restated Employment Agreement by and between Edward M. Murphy and Civitas Solutions, Inc.
10.7    Form of Employment Agreement (other executive officers).
10.8    Amendment to Management Unit Subscription Agreement (Class H Common Units) (incorporated by reference to Exhibit 10.29 to Civitas Solutions, Inc.’s Amendment No. 4 to the Registration Statement filed with the SEC on September 3, 2014).
10.9    Form of Amended and Restated Indemnification Agreement (for directors and executive officers) (incorporated by reference to Exhibit 10.19 of Civitas Solutions, Inc.’s Amendment No. 3 to the Registration Statement filed with the SEC on August 27, 2014).

Exhibit 10.1

CIVITAS SOLUTIONS, INC.

REGISTRATION RIGHTS AGREEMENT

SEPTEMBER 22, 2014


TABLE OF CONTENTS

 

         Page  

Section 1.

 

Definitions

     1   

Section 2.

 

Demand Registrations

     5   

Section 3.

 

Piggyback Registrations

     9   

Section 4.

 

Holdback Agreements

     11   

Section 5.

 

Registration Procedures

     12   

Section 6.

 

Registration Expenses

     16   

Section 7.

 

Indemnification and Contribution

     17   

Section 8.

 

Underwritten Offerings

     19   

Section 9.

 

Additional Parties; Joinder

     20   

Section 10.

 

Current Public Information

     20   

Section 11.

 

Subsidiary Public Offering

     20   

Section 12.

 

Transfer of Registrable Securities

     20   

Section 13.

 

General Provisions

     21   

 

i


CIVITAS SOLUTIONS, INC.

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “ Agreemen t”) is made as of September 22, 2014, between Civitas Solutions, Inc., a Delaware corporation (the “ Company ”), and NMH Investment, LLC, a Delaware limited liability company (“ Holdings ”). Except as otherwise specified herein, all capitalized terms used in this Agreement are defined in Section 1 . This Agreement shall become effective (the “ Effective Date ”) upon the closing of the Company’s initial public offering of shares of its common stock, par value $0.01 per share (the “ Common Stock ”).

WHEREAS, as of the date hereof, Holdings owns all of the outstanding shares of the Common Stock of the Company;

WHEREAS, Holdings is contemplating causing the Company to make an initial public offering of shares of the Common Stock of the Company (the “ Initial Public Offering ”);

WHEREAS, in consideration of Holdings agreeing to undertake an initial public offering of the Company’s Common Stock, the Company has agreed to grant to Holdings rights with respect to the registration of the Registrable Securities held by Holdings following the Effective Date on the terms and conditions set forth herein;

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 to this Agreement hereby agree as follows:

Section 1. Definitions . The following terms shall have the meanings set forth below.

Acquired Common ” has the meaning set forth in Section 9 .

Affiliate ” of any Person means any other Person controlled by, controlling or under common control with such Person; provided that the Company and its Subsidiaries shall not be deemed to be Affiliates of any holder of Registrable Securities. As used in this definition, “control” (including, with its correlative meanings, “controlling,” “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities, by contract or otherwise).

Agreement ” has the meaning set forth in the recitals.

Automatic Shelf Registration Statement ” has the meaning set forth in Section 2(a) .

Capital Stock ” means (i) with respect to any Person that is a corporation, any and all shares, interests or equivalents in capital stock of such corporation (whether voting or nonvoting and whether common or preferred) and (ii) with respect to any Person that is not a


corporation, individual or governmental entity, any and all partnership, membership, limited liability company or other equity interests of such Person that confer on the holder thereof the right to receive a share of the profits and losses of, or the distribution of assets of, the issuing Person, including in each case any and all warrants, rights (including conversion and exchange rights) and options to purchase any of the foregoing.

Common Stock ” means the Company’s common stock, par value $0.01 per share.

Company ” has the meaning set forth in the preamble.

Demand Registrations ” has the meaning set forth in Section 2(a) .

End of Suspension Notice ” has the meaning set forth in Section 2(f)(ii).

Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time, or any successor federal law then in force, together with all rules and regulations promulgated thereunder.

FINRA ” means the Financial Industry Regulatory Authority.

Follow-On Holdback Period ” has the meaning set forth in Section 4(a) .

Free Writing Prospectus ” means a free-writing prospectus, as defined in Rule 405.

Holdback Extension ” has the meaning set forth in Section 4(a) .

Holdback Period ” has the meaning set forth in Section 4(a) .

Holder ” means a holder of Registrable Securities.

Indemnified Parties ” has the meaning set forth in Section 7(a) .

Joinder ” has the meaning set forth in Section 9 .

Long-Form Registrations ” has the meaning set forth in Section 2(a) .

Person ” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

Piggyback Registrations ” has the meaning set forth in Section 3(a) .

Public Offering ” means any sale or distribution by the Company and/or holders of Registrable Securities to the public of Common Stock of the Company pursuant to an offering registered under the Securities Act.

 

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Registrable Securities ” means (i) any Common Stock held by Holdings as of the Effective Date; and (ii) any common Capital Stock of the Company or any Subsidiary issued or issuable with respect to the securities referred to in clause (i)  above by way of dividend, distribution, split or combination of securities, or any recapitalization, merger, consolidation or other reorganization. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when they have been (a) sold or distributed pursuant to a Public Offering, (b) sold in compliance with Rule 144 following the consummation of the Company’s initial Public Offering, or (c) repurchased by the Company or a Subsidiary of the Company. For purposes of this Agreement, a Person shall be deemed to be a holder of Registrable Securities, and the Registrable Securities shall be deemed to be in existence, whenever such Person has the right to acquire, directly or indirectly, such Registrable Securities (upon conversion or exercise in connection with a transfer of securities or otherwise, but disregarding any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected, and such Person shall be entitled to exercise the rights of a holder of Registrable Securities hereunder; provided a holder of Registrable Securities may only request that Registrable Securities in the form of Capital Stock of the Company registered or to be registered as a class under Section 12 of the Exchange Act be registered pursuant to this Agreement. Notwithstanding the foregoing, at the Company’s election and with the consent of the holders of a majority of the Registrable Securities, any Registrable Securities held by any Person (other than Vestar or its Affiliates) that may be sold under Rule 144(b)(1)(i) without limitation under any other of the requirements of Rule 144 shall not be deemed to be Registrable Securities upon notice from the Company to such Person and the Company shall, at such Person’s request, instruct the Company’s transfer agent to remove the legend provided for in Section 12 .

Registration Expenses ” has the meaning set forth in Section 6(a) .

Rule 144 ”, “ Rule 158 ”, “ Rule 405 ”, “ Rule 415 ” and “ Rule 462 ” mean, in each case, such rule promulgated under the Securities Act (or any successor provision) by the Securities and Exchange Commission, as the same shall be amended from time to time, or any successor rule then in force.

Sale of the Company ” means any transaction or series of transactions pursuant to which any Person(s) or a group of related Persons (other than any Investor and its Affiliates) in the aggregate acquires (i) Capital Stock of the Company or the surviving entity entitled to vote (other than voting rights accruing only in the event of a default, breach, event of noncompliance or other contingency) to elect directors with a majority of the voting power of the Company’s or the surviving entity’s board of directors (whether by merger, consolidation, reorganization, combination, sale or transfer of the Company’s Capital Stock) or (ii) all or substantially all of the Company’s assets determined on a consolidated basis; provided that a Public Offering shall not constitute a Sale of the Company.

Sale Transaction ” has the meaning set forth in Section 4(a) .

Securities ” has the meaning set forth in Section 4(a) .

 

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Securities Act ” means the Securities Act of 1933, as amended from time to time, or any successor federal law then in force, together with all rules and regulations promulgated thereunder.

Shelf Offering ” has the meaning set forth in Section 2(d)(ii) .

Shelf Offering Notice ” has the meaning set forth in Section 2(d)(ii) .

Shelf Offering Request ” has the meaning set forth in Section 2(d)(ii) .

Shelf Registration ” has the meaning set forth in Section 2(a) .

Shelf Registrable Securities ” has the meaning set forth in Section 2(d)(ii) .

Shelf Registration Statement ” has the meaning set forth in Section 2(d)(i) .

Short-Form Registrations ” has the meaning set forth in Section 2(a) .

Subsidiary ” means, with respect to the Company, any corporation, limited liability company, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by the Company or one or more of the other Subsidiaries of the Company or a combination thereof, or (ii) if a limited liability company, partnership, association or other business entity, a majority of the limited liability company, partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by the Company or one or more Subsidiaries of the Company or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association or other business entity if such Person or Persons shall be allocated a majority of limited liability company, partnership, association or other business entity gains or losses or shall be or control the managing director or general partner of such limited liability company, partnership, association or other business entity.

Suspension Event ” has the meaning set forth in Section 2(f)(ii) .

Suspension Notice ” has the meaning set forth in Section 2(f)(ii).

Suspension Period ” has the meaning set forth in Section 2(f)(i) .

Vestar ” means Vestar Capital Partners V, L.P., Vestar/NMH Investors, LLC and any other investment fund managed by Vestar Capital Partners, Inc.

Violation ” has the meaning set forth in Section 7(a) .

WKSI ” means a “well-known seasoned issuer” as defined under Rule 405.

 

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Section 2. Demand Registrations .

(a) Requests for Registration . Subject to the terms and conditions of this Agreement, the holders of at least a majority of the Registrable Securities may request registration under the Securities Act of all or any portion of their Registrable Securities on Form S-1 or any similar long-form registration statement (“ Long-Form Registrations ”), and the holders of at least a majority of the Registrable Securities may request registration under the Securities Act of all or any portion of their Registrable Securities on Form S-3 or any similar short-form registration statement (“ Short-Form Registrations ”), if available. All registrations requested pursuant to this Section 2(a) are referred to herein as “ Demand Registrations ”. The holders of a majority of the Registrable Securities making a Demand Registration that is a Short-Form Registration may request that the registration be made pursuant to Rule 415 (a “ Shelf Registration ”) and, if the Company is a WKSI at the time any request for a Demand Registration is submitted to the Company, that such Shelf Registration be an automatic shelf registration statement (as defined in Rule 405) (an “ Automatic Shelf Registration Statement ”). Each request for a Demand Registration shall specify the approximate number of Registrable Securities requested to be registered and the intended method of distribution. Within ten days after receipt of any such request, the Company shall give written notice of the Demand Registration to all other holders of Registrable Securities and, subject to the terms of Section 2(e) , shall include in such Demand Registration (and in all related registrations and qualifications under state blue sky laws and in any related underwriting agreement) all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the receipt of the Company’s notice; provided that, with the consent of the holders of at least a majority of the Registrable Securities requesting such registration, the Company may provide notice of the Demand Registration to all other holders of Registrable Securities within three business days following the non-confidential filing of the registration statement with respect to the Demand Registration so long as such registration statement is not an Automatic Shelf Registration Statement. Each Holder agrees that such Holder shall treat as confidential the receipt of the notice of Demand Registration and shall not disclose or use the information contained in such notice of Demand Registration without the prior written consent of the Company until such time as the information contained therein is or becomes available to the public generally, other than as a result of disclosure by the Holder in breach of the terms of this Agreement.

(b) Long-Form Registrations . The holders of a majority of the Registrable Securities shall be entitled to an unlimited number of Long-Form Registrations in which the Company shall pay all Registration Expenses (as defined in Section 6(a) ), whether or not any such registration is consummated; provided that the aggregate offering value of the Registrable Securities requested to be registered in any Long-Form Registration must equal at least $10 million. All Long-Form Registrations shall be underwritten registrations.

(c) Short-Form Registrations . In addition to the Long-Form Registrations provided pursuant to Section 2(b) , the holders of a majority of the Registrable Securities shall be entitled to an unlimited number of Short-Form Registrations in which the Company shall pay all Registration Expenses; provided that the aggregate offering value of the Registrable Securities requested to be registered in any Short-Form Registration must equal at least $10 million. Demand Registrations shall be Short-Form Registrations whenever the Company is permitted to use any applicable short form and if the managing underwriters (if any) agree to the use of a Short-Form Registration. After the Company has become subject to the reporting requirements of the Exchange Act, the Company shall use its reasonable best efforts to make Short-Form Registrations available for the sale of Registrable Securities.

 

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(d) Shelf Registrations.

(i) Subject to the availability of required financial information and the Company’s ability to use Form S-3 or any similar short-form registration statement, as promptly as practicable after the Company receives written notice of a request for a Shelf Registration, the Company shall file with the Securities and Exchange Commission a registration statement under the Securities Act for the Shelf Registration (a “ Shelf Registration Statement ”). The Company shall use its reasonable best efforts to cause any Shelf Registration Statement to be declared effective under the Securities Act as soon as practicable after filing, and once effective, the Company shall cause such Shelf Registration Statement to remain continuously effective for such time period as is specified in such request, but for no time period longer than the period ending on the earliest of (A) the third anniversary of the date of filing of such Shelf Registration, (B) the date on which all Registrable Securities covered by such Shelf Registration have been sold pursuant to the Shelf Registration, and (C) the date as of which there are no longer any Registrable Securities covered by such Shelf Registration in existence.

(ii) In the event that a Shelf Registration Statement is effective, the holders of a majority of the Registrable Securities covered by such Shelf Registration Statement shall have the right at any time or from time to time to elect to sell pursuant to an offering (including an underwritten offering) Registrable Securities available for sale pursuant to such registration statement (“ Shelf Registrable Securities ”), so long as the Shelf Registration Statement remains in effect, and the Company shall pay all Registration Expenses in connection therewith; provided , that the estimated market value of the Registrable Securities to be sold in any Underwritten Takedown is at least $10 million in the aggregate. The holders of a majority of the Registrable Securities covered by such Shelf Registration Statement shall make such election by delivering to the Company a written request (a “ Shelf Offering Request ”) for such offering specifying the number of Shelf Registrable Securities that the holders desire to sell pursuant to such offering (the “ Shelf Offering ”). As promptly as practicable, but no later than two business days after receipt of a Shelf Offering Request, the Company shall give written notice (the “ Shelf Offering Notice ”) of such Shelf Offering Request to all other holders of Shelf Registrable Securities. The Company, subject to Sections 1(e) and 8 hereof, shall include in such Shelf Offering the Shelf Registrable Securities of any other holder of Shelf Registrable Securities that shall have made a written request to the Company for inclusion in such Shelf Offering (which request shall specify the maximum number of Shelf Registrable Securities intended to be disposed of by such Holder) within seven days after the receipt of the Shelf Offering Notice. The Company shall, as expeditiously as possible (and in any event within 20 days after the receipt of a Shelf Offering Request, unless a longer period is agreed to by the holders of a majority of the Registrable Securities that made the Shelf Offering Request), use its reasonable best efforts to facilitate such Shelf Offering. Each Holder agrees that such Holder shall treat as confidential the receipt of the Shelf Offering Notice and shall not disclose or use the information contained in such Shelf Offering Notice without the prior written consent of

 

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the Company until such time as the information contained therein is or becomes available to the public generally, other than as a result of disclosure by the Holder in breach of the terms of this Agreement.

(iii) Notwithstanding the foregoing, if the Holders of a majority of the Registrable Securities wish to engage in an underwritten block trade off of a Shelf Registration Statement (either through filing an Automatic Shelf Registration Statement or through a take-down from an already existing Shelf Registration Statement), then notwithstanding the foregoing time periods, such Holders only need to notify the Company of the block trade Shelf Offering five business days prior to the day such offering is to commence (unless a longer period is agreed to by the Holders of a majority of the Registrable Securities wishing to engage in the underwritten block trade) and the Company shall promptly notify other Holders of Registrable Securities and such other Holders of Registrable Securities must elect whether or not to participate by the next business day ( i.e. one business day prior to the day such offering is to commence) (unless a longer period is agreed to by the Holders of a majority of the Registrable Securities wishing to engage in the underwritten block trade) and the Company shall as expeditiously as possible use its reasonable best efforts to facilitate such offering (which may close as early as three business days after the date it commences); provided that the Holders of a majority of the Registrable Securities shall use reasonable best efforts to work with the Company and the underwriters prior to making such request in order to facilitate preparation of the registration statement, prospectus and other offering documentation related to the underwritten block trade.

(iv) The Company shall, at the request of the Holders of a majority of the Registrable Securities covered by a Shelf Registration Statement, file any prospectus supplement or, if the applicable Shelf Registration Statement is an Automatic Shelf Registration Statement, any post-effective amendments and otherwise take any action necessary to include therein all disclosure and language deemed necessary or advisable by the Holders of a majority of the Registrable Securities to effect such Shelf Offering.

(e) Priority on Demand Registrations and Shelf Offerings . The Company shall not include in any Demand Registration or Shelf Offering any securities that are not Registrable Securities without the prior written consent of the holders of at least a majority of the Registrable Securities included in such registration. If a Demand Registration or a Shelf Offering is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the number of Registrable Securities and, if permitted hereunder, other securities requested to be included in such offering exceeds the number of Registrable Securities and other securities, if any, which can be sold therein without adversely affecting the marketability, proposed offering price, timing or method of distribution of the offering, the Company shall include in such offering prior to the inclusion of any securities which are not Registrable Securities the number of Registrable Securities requested to be included which, in the opinion of such underwriters, can be sold, without any such adverse effect, pro rata among the respective Holders thereof on the basis of the amount of Registrable Securities owned by each such Holder.

(f) Restrictions on Demand Registration and Shelf Offerings (i) The Company shall not be obligated to effect any Demand Registration within 90 days after the effective date

 

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of a previous Demand Registration or a previous registration in which Registrable Securities were included pursuant to Section 3 or Shelf Offering and in which there was no reduction in the number of Registrable Securities requested to be included. The Company may postpone, for up to 90 days from the date of the request, the filing or the effectiveness of a registration statement for a Demand Registration or suspend the use of a prospectus that is part of a Shelf Registration Statement for up to 90 days from the date of the Suspension Notice (as defined herein) and therefore suspend sales of the Shelf Registrable Securities (such period, the “ Suspension Period ”) by providing written notice to the holders of Registrable Securities if (A) the Company’s board of directors determines in its reasonable good faith judgment that the offer or sale of Registrable Securities would reasonably be expected to have a material adverse effect on any proposal or plan by the Company or any Subsidiary to engage in any material acquisition of assets or stock (other than in the ordinary course of business) or any material merger, consolidation, tender offer, recapitalization, reorganization or other transaction involving the Company, (B) upon advice of counsel, the sale of Registrable Securities pursuant to the registration statement would require disclosure of non-public material information not otherwise required to be disclosed under applicable law, and (C) (x) the Company has a bona fide business purpose for preserving the confidentiality of such transaction or (y) disclosure would have a material adverse effect on the Company or the Company’s ability to consummate such transaction; provided that in such event, the holders of Registrable Securities shall be entitled to withdraw such request for a Demand Registration or underwritten Shelf Offering and the Company shall pay all Registration Expenses in connection with such Demand Registration or Shelf Offering. The Company may delay or suspend the effectiveness of a Demand Registration or Shelf Offering hereunder only once in any twelve-month period; provided that, for the avoidance of doubt, the Company may in any event delay or suspend the effectiveness of a Demand Registration or Shelf Offering in the case of an event described under Section 5(a)(vi) to enable it to comply with its obligations set forth in Section 5(a)(vi). The Company may extend the Suspension Period for an additional consecutive 60 days with the consent of the holders of a majority of the Registrable Securities, which consent shall not be unreasonably withheld.

(ii) In the case of an event that causes the Company to suspend the use of a Shelf Registration Statement as set forth in paragraph (f)(i) above or pursuant to Section 5(a)(vi) hereof (a “ Suspension Event ”), the Company shall give a notice to the holders of Registrable Securities registered pursuant to such Shelf Registration Statement (a “ Suspension Notice ”) to suspend sales of the Registrable Securities and such notice shall state generally the basis for the notice and that such suspension shall continue only for so long as the Suspension Event or its effect is continuing. A Holder shall not effect any sales of the Registrable Securities pursuant to such Shelf Registration Statement (or such filings) at any time after it has received a Suspension Notice from the Company and prior to receipt of an End of Suspension Notice (as defined herein). Each Holder agrees that such Holder shall treat as confidential the receipt of the Suspension Notice and shall not disclose or use the information contained in such Suspension Notice without the prior written consent of the Company until such time as the information contained therein is or becomes available to the public generally, other than as a result of disclosure by the Holder in breach of the terms of this Agreement. The Holders may recommence

 

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effecting sales of the Registrable Securities pursuant to the Shelf Registration Statement (or such filings) following further written notice to such effect (an “ End of Suspension Notice ”) from the Company, which End of Suspension Notice shall be given by the Company to the Holders and to the Holders’ Counsel, if any, promptly following the conclusion of any Suspension Event and its effect.

(iii) Notwithstanding any provision herein to the contrary, if the Company shall give a Suspension Notice with respect to any Shelf Registration Statement pursuant to this Section 2(f) , the Company agrees that it shall extend the period of time during which such Shelf Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from the date of receipt by the Holders of the Suspension Notice to and including the date of receipt by the Holders of the End of Suspension Notice and provide copies of the supplemented or amended prospectus necessary to resume sales, with respect to each Suspension Event; provided that such period of time shall not be extended beyond the date that there are no longer Registrable Securities covered by such Shelf Registration Statement.

(g) Selection of Underwriters . The holders of a majority of the Registrable Securities included in any Demand Registration shall have the right to select the investment banker(s) and manager(s) to administer the offering, subject to the Company’s approval which shall not be unreasonably withheld, conditioned or delayed. If any Shelf Offering is an Underwritten Offering, the holders of a majority of the Registrable Securities participating in such Underwritten Offering shall have the right to select the investment banker(s) and manager(s) to administer the offering relating to such Shelf Offering, subject to the Company’s approval, which shall not be unreasonably withheld, conditioned or delayed.

(h) Other Registration Rights . Except as provided in this Agreement, the Company shall not grant to any Persons the right to request the Company or any Subsidiary to register any Capital Stock of the Company or any Subsidiary, or any securities convertible or exchangeable into or exercisable for such securities, without the prior written consent of the holders of a majority of the Registrable Securities.

Section 3. Piggyback Registrations .

(a) Right to Piggyback . Whenever the Company proposes to register any of its securities under the Securities Act (other than (i) pursuant to a Demand Registration, (ii) in connection with registrations on Form S-4 or S-8 promulgated by the Securities and Exchange Commission or any successor or similar forms or (iii) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities), and the registration form to be used may be used for the registration of Registrable Securities (a “ Piggyback Registration ”), the Company shall give prompt written notice (in any event within three business days after its receipt of notice of any exercise of demand registration rights other than under this Agreement) to the Holders of Registrable Securities, and, subject to the terms of Section 3(c) and Section 3(d) , shall include in such Piggyback Registration (and in all related registrations or qualifications under blue sky laws and in any related underwriting) all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 20 days after delivery of the Company’s notice.

 

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(b) Piggyback Expenses . The Registration Expenses of the holders of Registrable Securities shall be paid by the Company in all Piggyback Registrations, whether or not any such registration became effective.

(c) Priority on Primary Registrations . If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability, proposed offering price, timing or method of distribution of the offering, the Company shall include in such registration (i) first, the securities the Company proposes to sell, (ii) second, the Registrable Securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect, pro rata among the holders of such Registrable Securities on the basis of the number of Registrable Securities owned by each such holder, and (iii) third, other securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect. Registrable Securities beneficially owned by any officer or employee of the Company shall not be eligible to be included in any primary offering of Common Stock without the Company’s consent.

(d) Priority on Secondary Registrations . If a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company’s securities, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability, proposed offering price, timing or method of distribution of the offering, the Company shall include in such registration (i) first, the securities requested to be included therein by the holders initially requesting such registration and the Registrable Securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect, pro rata among the holders of such securities on the basis of the number of Registrable Securities owned by such Holder, and (ii) second, other securities requested to be included in such registration which, in the opinion of the underwriters, can be sold without any such adverse effect.

(e) Right to Terminate Registration . The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 3 whether or not any holder of Registrable Securities has elected to include securities in such registration. The Registration Expenses of such withdrawn registration shall be borne by the Company in accordance with Section 6 .

 

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Section 4. Holdback Agreements .

(a) Holders of Registrable Securities . If required by the holders of a majority of the Registrable Securities, each holder of Registrable Securities shall enter into lock-up agreements with the managing underwriter(s) of an underwritten Public Offering in such form as agreed to by the holders of a majority of the Registrable Securities participating in such Public Offering. In the absence of any such lock-up agreement, each holder of Registrable Securities agrees as follows:

(i) in connection with the Company’s initial Public Offering, such Holder shall not (A) offer, sell, contract to sell, pledge or otherwise dispose of (including sales pursuant to Rule 144), directly or indirectly, any Capital Stock of the Company (including Capital Stock of the Company that may be deemed to be owned beneficially by such holder in accordance with the rules and regulations of the Securities and Exchange Commission) (collectively, “ Securities ”), (B) enter into a transaction which would have the same effect as described in clause (A) above, (C) enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences or ownership of any Securities, whether such transaction is to be settled by delivery of such Securities, in cash or otherwise (each of (A), (B) and (C) above, a “ Sale Transaction ”), or (D) publicly disclose the intention to enter into any Sale Transaction, commencing on the earlier of the date on which the Company gives notice to the holders of Registrable Securities that a preliminary prospectus has been circulated for such initial Public Offering or the “pricing” of such offering and continuing to the date that is 180 days following the date of the final prospectus for such initial Public Offering (the “ Holdback Period ”), unless the underwriters managing the Public Offering otherwise agree in writing;

(ii) in connection with all underwritten Public Offerings other than the Company’s initial Public Offering, such Holder shall not effect any Sale Transaction commencing on the earlier of the date on which the Company gives notice to the holders of Registrable Securities of the circulation of a preliminary or final prospectus for such Public Offering or the “pricing” of such offering and continuing to the date that is 90 days following the date of the final prospectus for such Public Offering (a “ Follow-On Holdback Period ”), unless the underwriters managing the Public Offering otherwise agree in writing; and

(iii) in the event that (A) the Company issues an earnings release or discloses other material information or a material event relating to the Company and its Subsidiaries occurs during the last 17 days of the Holdback Period or any Follow-On Holdback Period (as applicable) or (B) prior to the expiration of the Holdback Period or any Follow-On Holdback Period (as applicable), the Company announces that it will release earnings results during the 16-day period beginning upon the expiration of such period, then to the extent necessary for a managing or co-managing underwriter of a registered offering hereunder to comply with FINRA Rule 2711(f)(4), the Holdback Period or the Follow-On Holdback Period (as applicable) shall be extended until 18 days after the earnings release or disclosure of other material information or the occurrence of the material event, as the case may be (a “ Holdback Extension ”).

The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the restrictions set forth in this Section 4(a) until the end of such period, including any Holdback Extension.

 

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(b) The Company . The Company (i) shall not file any registration statement for a Public Offering or cause any such registration statement to become effective, or effect any public sale or distribution of its equity securities, or any securities, options or rights convertible into or exchangeable or exercisable for such securities during any Holdback Period or Follow-On Holdback Period (as extended during any Holdback Extension), and (ii) shall use its reasonable best efforts to cause (A) each holder of at least one percent (1%) (on a fully-diluted basis) of its Common Stock, or any securities convertible into or exchangeable or exercisable for Common Stock, purchased from the Company at any time after the date of this Agreement (other than in a Public Offering) and (B) each of its directors and executive officers to agree not to effect any Sale Transaction during any Holdback Period or Follow-On Holdback Period (as extended during any Holdback Extension), except as part of such underwritten registration, if otherwise permitted, unless the underwriters managing the Public Offering otherwise agree in writing.

Section 5. Registration Procedures .

(a) Whenever the holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to this Agreement or have initiated a Shelf Offering, the Company shall use its reasonable best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof held by a holder of Registrable Securities requesting registration, and pursuant thereto the Company shall as expeditiously as possible:

(i) in accordance with the Securities Act and all applicable rules and regulations promulgated thereunder, prepare and file with the Securities and Exchange Commission a registration statement, and all amendments and supplements thereto and related prospectuses, with respect to such Registrable Securities and use its reasonable best efforts to cause such registration statement to become effective (provided that before filing a registration statement or prospectus or any amendments or supplements thereto, the Company shall furnish to the counsel selected by the holders of a majority of the Registrable Securities covered by such registration statement copies of all such documents proposed to be filed, which documents shall be subject to the review and comment of such counsel);

(ii) notify each holder of Registrable Securities of (A) the issuance by the Securities and Exchange Commission of any stop order suspending the effectiveness of any registration statement or the initiation of any proceedings for that purpose, (B) the receipt by the Company or its counsel of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, and (C) the effectiveness of each registration statement filed hereunder;

(iii) prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period ending when all of the securities covered by such registration statement have been disposed of in accordance with the intended methods of distribution by the sellers thereof set forth in such registration statement (but not in any event before the expiration

 

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of any longer period required under the Securities Act or, if such registration statement relates to an underwritten Public Offering, such longer period as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sale of Registrable Securities by an underwriter or dealer) and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement;

(iv) furnish to each seller of Registrable Securities thereunder such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus), each Free Writing Prospectus and such other documents as such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller;

(v) use its reasonable best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller ( provided that the Company shall not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph or (B) consent to general service of process in any such jurisdiction or (C) subject itself to taxation in any such jurisdiction);

(vi) notify each seller of such Registrable Securities (A) promptly after it receives notice thereof, of the date and time when such registration statement and each post-effective amendment thereto has become effective or a prospectus or supplement to any prospectus relating to a registration statement has been filed and when any registration or qualification has become effective under a state securities or blue sky law or any exemption thereunder has been obtained, (B) promptly after receipt thereof, of any request by the Securities and Exchange Commission for the amendment or supplementing of such registration statement or prospectus or for additional information, and (C) at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, subject to Section 2(f), at the request of any such seller, the Company shall use its reasonable best efforts to prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading;

(vii) use reasonable best efforts to cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed and, if not so listed, to be listed on a securities exchange and, without limiting the generality of the foregoing, to arrange for at least two market markers to register as such with respect to such Registrable Securities with FINRA;

 

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(viii) use reasonable best efforts to provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement;

(ix) enter into and perform such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including, without limitation, effecting a stock split, combination of shares, recapitalization or reorganization);

(x) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate and business documents and properties of the Company as shall be necessary to enable them to exercise their due diligence responsibility, and cause the Company’s officers, directors, employees, agents, representatives and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement;

(xi) take all reasonable actions to ensure that any Free-Writing Prospectus utilized in connection with any Demand Registration or Piggyback Registration hereunder complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken together with the related prospectus, shall not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

(xii) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the Securities and Exchange Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Company’s first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158.

(xiii) permit any Holder of Registrable Securities which Holder, in its sole and exclusive judgment, might be deemed to be an underwriter or a controlling person of the Company, to participate in the preparation of such registration or comparable statement and to allow such Holder to provide language for insertion therein, in form and substance satisfactory to the Company, which in the reasonable judgment of such Holder and its counsel should be included;

 

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(xiv) in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or the issuance of any order suspending or preventing the use of any related prospectus or suspending the qualification of any Common Stock included in such registration statement for sale in any jurisdiction use reasonable best efforts promptly to obtain the withdrawal of such order;

(xv) in the case of any underwritten offering, use its reasonable best efforts to cause such Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the sellers thereof to consummate the disposition of such Registrable Securities;

(xvi) cooperate with the holders of Registrable Securities covered by the registration statement and the managing underwriter or agent, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing securities to be sold under the registration statement and enable such securities to be in such denominations and registered in such names as the managing underwriter, or agent, if any, or such holders may request;

(xvii) cooperate with each holder of Registrable Securities covered by the registration statement and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA;

(xviii) use its reasonable best efforts to make available the executive officers of the Company to participate with the holders of Registrable Securities and any underwriters in any “road shows” or other selling efforts that may be reasonably requested by the Holders in connection with the methods of distribution for the Registrable Securities;

(xix) in the case of any underwritten offering, use its reasonable best efforts to obtain one or more cold comfort letters from the Company’s independent public accountants in customary form and covering such matters of the type customarily covered by cold comfort letters as the holders of a majority of the Registrable Securities being sold reasonably request;

(xx) in the case of any underwritten offering, use its reasonable best efforts to provide a legal opinion of the Company’s outside counsel, dated the date of the closing under the underwriting agreement, and such other documents relating thereto in customary form and covering such matters of the type customarily covered by legal opinions of such nature, which opinion shall be addressed to the underwriters and the holders of such Registrable Securities;

(xxi) if the Company files an Automatic Shelf Registration Statement covering any Registrable Securities, use its reasonable best efforts to remain a WKSI (and not become an ineligible issuer (as defined in Rule 405)) during the period during which such Automatic Shelf Registration Statement is required to remain effective;

 

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(xxii) if the Company does not pay the filing fee covering the Registrable Securities at the time an Automatic Shelf Registration Statement is filed, pay such fee at such time or times as the Registrable Securities are to be sold; and

(xxiii) if the Automatic Shelf Registration Statement has been outstanding for at least three (3) years, at the end of the third year, refile a new Automatic Shelf Registration Statement covering the Registrable Securities, and, if at any time when the Company is required to re-evaluate its WKSI status the Company determines that it is not a WKSI, use its reasonable best efforts to refile the Shelf Registration Statement on Form S-3 and, if such form is not available, Form S-1 and keep such registration statement effective during the period throughout which such registration statement is required to be kept effective.

(b) Any officer of the Company who is a holder of Registrable Securities agrees that if and for so long as he or she is employed by the Company or any Subsidiary thereof, he or she shall participate fully in the sale process in a manner customary for persons in like positions and consistent with his or her other duties with the Company, including the preparation of the registration statement and the preparation and presentation of any road shows.

(c) The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish the Company such information regarding such seller and the distribution of such securities as the Company may from time to time reasonably request in writing.

(d) If Holdings or Vestar or any of their respective Affiliates seek to effectuate a distribution in kind of all or part of their respective Registrable Securities to their respective direct or indirect equityholders, the Company shall, subject to any applicable lock-up agreements, work with the foregoing persons to facilitate such distribution in kind in the manner reasonably requested.

Section 6. Registration Expenses .

(a) The Company’s Obligation . All expenses incident to the Company’s performance of or compliance with this Agreement (including, without limitation, all registration, qualification and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, fees and disbursements of custodians, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding underwriting discounts and commissions) and other Persons retained by the Company) (all such expenses being herein called “ Registration Expenses ”), shall be borne as provided in this Agreement, except that the Company shall, in any event, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed. Each Person that sells securities pursuant to a Demand Registration or Piggyback Registration hereunder shall bear and pay all underwriting discounts and commissions applicable to the securities sold for such Person’s account.

 

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(b) Counsel Fees and Disbursements . In connection with each Demand Registration, each Piggyback Registration and each Shelf Offering that is an underwritten Public Offering, the Company shall reimburse the holders of Registrable Securities included in such registration for the reasonable fees and disbursements of one counsel chosen by the holders of a majority of the Registrable Securities included in such registration or participating in such Shelf Offering and disbursements of each additional counsel retained by any holder of Registrable Securities for the purpose of rendering a legal opinion on behalf of such Holder in connection with any underwritten Demand Registration, Piggyback Registration or Shelf Offering.

Section 7. Indemnification and Contribution .

(a) By the Company . The Company shall indemnify and hold harmless, to the extent permitted by law, each holder of Registrable Securities, such Holder’s officers, directors employees, agents and representatives, and each Person who controls such Holder (within the meaning of the Securities Act) (the “ Indemnified Parties ”) against all losses, claims, actions, damages, liabilities and expenses (including with respect to actions or proceedings, whether commenced or threatened, and including reasonable attorney fees and expenses) caused by, resulting from, arising out of, based upon or related to any of the following statements, omissions or violations (each a “ Violation ”) by the Company: (i) any untrue or alleged untrue statement of material fact contained in (A) any registration statement, prospectus, preliminary prospectus or Free-Writing Prospectus, or any amendment thereof or supplement thereto or (B) any application or other document or communication (in this Section 7 , collectively called an “ application ”) executed by or on behalf of the Company or based upon written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify any securities covered by such registration under the securities laws thereof, (ii) any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any violation or alleged violation by the Company of the Securities Act or any other similar federal or state securities laws or any rule or regulation promulgated thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification or compliance. In addition, the Company will reimburse such Indemnified Party for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such losses. Notwithstanding the foregoing, the Company shall not be liable in any such case to the extent that any such losses result from, arise out of, are based upon, or relate to an untrue statement or alleged untrue statement, or omission or alleged omission, made in such registration statement, any such prospectus, preliminary prospectus or Free-Writing Prospectus or any amendment or supplement thereto, or in any application, in reliance upon, and in conformity with, written information prepared and furnished in writing to the Company by such Indemnified Party expressly for use therein or by such Indemnified Party’s failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished such Indemnified Party with a sufficient number of copies of the same. In connection with an underwritten offering, the Company shall indemnify such underwriters, their officers and directors, and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the Indemnified Parties.

(b) By Each Security Holder . In connection with any registration statement in which a holder of Registrable Securities is participating, each such Holder shall furnish to the

 

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Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such registration statement or prospectus and, to the extent permitted by law, shall indemnify the Company, its officers, directors, employees, agents and representatives, and each Person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses resulting from any untrue or alleged untrue statement of material fact contained in the registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such Holder; provided that the obligation to indemnify shall be individual, not joint and several, for each holder and shall be limited to the net amount of proceeds received by such Holder from the sale of Registrable Securities pursuant to such registration statement.

(c) Claim Procedure . Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall impair any Person’s right to indemnification hereunder only to the extent such failure has prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld, conditioned or delayed). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. In such instance, the conflicted indemnified parties shall have a right to retain one separate counsel, chosen by the holders of a majority of the Registrable Securities included in the registration if such Holders are indemnified parties, at the expense of the indemnifying party.

(d) Contribution . If the indemnification provided for in this Section 7 is held by a court of competent jurisdiction to be unavailable to, or is insufficient to hold harmless, an indemnified party or is otherwise unenforceable with respect to any loss, claim, damage, liability or action referred to herein, then the indemnifying party shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other hand in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations; provided that the maximum amount of liability in respect of such contribution shall be limited, in the case of each seller of Registrable Securities, to an amount equal to the net proceeds actually received by such seller from the sale of Registrable Securities effected pursuant to such registration. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact

 

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relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the holders of Registrable Securities and their successors and assigns agree that it would not be just or equitable if the contribution pursuant to this Section 7(d) were to be determined by pro rata allocation or by any other method of allocation that does not take into account such equitable considerations. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or expenses referred to herein shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending against any action or claim which is the subject hereof. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.

(e) Release . No indemnifying party shall, except with the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement that does not include as an unconditional term thereof giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

(f) Non-exclusive Remedy; Survival . The indemnification and contribution provided for under this Agreement shall be in addition to any other rights to indemnification or contribution that any indemnified party may have pursuant to law or contract and shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive the transfer of Registrable Securities and the termination or expiration of this Agreement.

Section 8. Underwritten Offerings .

(a) Participation . No Person may participate in any offering hereunder which is underwritten unless such Person (i) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Person or Persons entitled hereunder to approve such arrangements (including, without limitation, pursuant to any over-allotment or “green shoe” option requested by the underwriters; provided that no holder of Registrable Securities shall be required to sell more than the number of Registrable Securities such Holder has requested to include) and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements. Each holder of Registrable Securities shall execute and deliver such other agreements as may be reasonably requested by the Company and the lead managing underwriter(s) that are consistent with such Holder’s obligations under Section 4 , Section 5 and this Section 8(a) or that are necessary to give further effect thereto. To the extent that any such agreement is entered into pursuant to, and consistent with, Section 4 and this Section 8(a) , the respective rights and obligations created under such agreement shall supersede the respective rights and obligations of the Holders, the Company and the underwriters created pursuant to this Section 8(a) .

(b) Price and Underwriting Discounts. In the case of an underwritten Demand Registration or Underwritten Takedown requested by Holders pursuant to this Agreement, the price, underwriting discount and other financial terms of the related underwriting agreement for the Registrable Securities shall be determined by the Holders of a majority of the Registrable Securities included in such underwritten offering.

 

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(c) Suspended Distributions . Each Person that is participating in any registration under this Agreement, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 5(a)(vi) , shall immediately discontinue the disposition of its Registrable Securities pursuant to the registration statement until such Person’s receipt of the copies of a supplemented or amended prospectus as contemplated by Section 5(a)(vi) . In the event the Company has given any such notice, the applicable time period set forth in Section  2(d)(i) during which a Registration Statement is to remain effective shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to this Section 8(c) to and including the date when each seller of Registrable Securities covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 5(a)(vi) .

Section 9. Additional Parties; Joinder . Subject to the prior written consent of the holders of a majority of the Registrable Securities, the Company may permit any Person who acquires Common Stock or rights to acquire Common Stock from the Company after the date hereof (the “ Acquired Common ”) to become a party to this Agreement and to succeed to all of the rights and obligations of a “holder of Registrable Securities” under this Agreement by obtaining an executed joinder to this Agreement from such Person in the form of Exhibit A attached hereto (a “ Joinder ”). Upon the execution and delivery of a Joinder by such Person, the Common Stock acquired by such Person shall constitute Registrable Securities and such Person shall be a Holder of Registrable Securities under this Agreement with respect to the Acquired Common, and the Company shall add such Person’s name and address to the Schedule of Investors hereto and circulate such information to the parties to this Agreement.

Section 10. Current Public Information . At all times after the Company has filed a registration statement with the Securities and Exchange Commission pursuant to the requirements of either the Securities Act or the Exchange Act, the Company shall file all reports required to be filed by it under the Securities Act and the Exchange Act and shall take such further action as any holder or holders of Registrable Securities may reasonably request, all to the extent required to enable such Holders to sell Registrable Securities pursuant to Rule 144. Upon request, the Company shall deliver to any holder of Restricted Securities a written statement as to whether it has complied with such requirements.

Section 11. Subsidiary Public Offering . If, after an initial Public Offering of the Capital Stock of one of its Subsidiaries, the Company distributes securities of such Subsidiary to its equity holders, then the rights and obligations of the Company pursuant to this Agreement shall apply, mutatis mutandis , to such Subsidiary, and the Company shall cause such Subsidiary to comply with such Subsidiary’s obligations under this Agreement.

Section 12. Transfer of Registrable Securities .

(a) Restrictions on Transfers . Notwithstanding anything to the contrary contained herein, except in the case of (i) a transfer to the Company, (ii) a transfer by Vestar or any Affiliate of Vestar to their respective limited partners or members, (iii) a Public Offering, (iv) a

 

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sale pursuant to Rule 144 after the completion of the Company’s initial Public Offering or (v) a transfer in connection with a Sale of the Company, prior to transferring any Registrable Securities to any Person (including, without limitation, by operation of law), the transferring Holder shall cause the prospective transferee to execute and deliver to the Company a Joinder agreeing to be bound by the terms of this Agreement. Any transfer or attempted transfer of any Registrable Securities in violation of any provision of this Agreement shall be void, and the Company shall not record such transfer on its books or treat any purported transferee of such Registrable Securities as the owner thereof for any purpose.

(b) Legend . Each certificate evidencing any Registrable Securities and each certificate issued in exchange for or upon the transfer of any Registrable Securities (unless such Registrable Securities would no longer be Registrable Securities after such transfer) shall be stamped or otherwise imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND OTHER PROVISIONS SET FORTH IN A REGISTRATION RIGHTS AGREEMENT DATED AS OF SEPTEMBER [    ], 2014 AMONG THE ISSUER OF SUCH SECURITIES (THE “ COMPANY ”) AND CERTAIN OF THE COMPANY’S STOCKHOLDERS, AS AMENDED. A COPY OF SUCH REGISTRATION RIGHTS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

The Company shall imprint such legend on certificates evidencing Registrable Securities outstanding prior to the date of the Agreement. The legend set forth above shall be removed from the certificates evidencing any securities that have ceased to be Registrable Securities.

Section 13. General Provisions .

(a) Amendments and Waivers . Except as otherwise provided herein, the provisions of this Agreement may be amended, modified or waived only with the prior written consent of the Company and holders of a majority of the Registrable Securities; provided that no such amendment, modification or waiver that would materially and adversely affect a Holder or group of holders of Registrable Securities in a manner materially different than any other Holder or group of holders of Registrable Securities (other than amendments and modifications required to implement the provisions of Section 9 ), shall be effective against such Holder or group of holders of Registrable Securities without the consent of the holders of a majority of the Registrable Securities that are held by the group of Holders that is materially and adversely affected thereby. The failure or delay of any Person to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such Person thereafter to enforce each and every provision of this Agreement in accordance with its terms. A waiver or consent to or of any breach or default by any Person in the performance by that Person of his, her or its obligations under this Agreement shall not be deemed to be a consent or waiver to or of any other breach or default in the performance by that Person of the same or any other obligations of that Person under this Agreement.

 

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(b) Remedies . The parties to this Agreement and their successors and assigns shall be entitled to enforce their rights under this Agreement specifically (without posting a bond or other security), to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto and their successors and assigns agree and acknowledge that a breach of this Agreement would cause irreparable harm and money damages would not be an adequate remedy for any such breach and that, in addition to any other rights and remedies existing hereunder, any party shall be entitled to specific performance and/or other injunctive relief from any court of law or equity of competent jurisdiction (without posting any bond or other security) in order to enforce or prevent violation of the provisions of this Agreement.

(c) Severability . Whenever possible, each provision of this Agreement shall 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 prohibited, invalid, illegal or unenforceable in any respect under any applicable law or regulation in any jurisdiction, such prohibition, invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision of this Agreement in such jurisdiction or in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such prohibited, invalid, illegal or unenforceable provision had never been contained herein.

(d) Entire Agreement . Except as otherwise provided herein, this Agreement contains the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties hereto, written or oral, which may have related to the subject matter hereof in any way.

(e) Successors and Assigns . This Agreement shall bind and inure to the benefit and be enforceable by the Company and its successors and assigns and the holders of Registrable Securities and their respective successors and assigns (whether so expressed or not). In addition, whether or not any express assignment has been made, the provisions of this Agreement which are for the benefit of purchasers or holders of Registrable Securities are also for the benefit of, and enforceable by, any subsequent holder of Registrable Securities.

(f) Notices . Any notice, demand or other communication to be given under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (i) when delivered personally to the recipient, (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient; but if not, then on the next Business Day, (iii) one Business Day after it is sent to the recipient by reputable overnight courier service (charges prepaid) or (iv) three Business Days after it is mailed to the recipient by first class mail, return receipt requested. Such notices, demands and other communications shall be sent to the Company at the address specified below and to any holder of Registrable Securities or to any other party subject to this Agreement at such address as indicated on Schedule of Investors hereto, or at such address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party. Any party may change such party’s address for receipt of notice by giving prior written notice of the change to the sending party as provided herein. The Company’s address is:

Civitas Solutions, Inc.

313 Congress Street, 6th Floor

Boston, MA 02210

Attn: Chief Legal Officer

Facsimile:                     

 

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With a copy to:

Kirkland & Ellis LLP

300 North LaSalle

Chicago, Illinois 60654

Attn: Sanford E. Perl, P.C.

 Mark A. Fennell, P.C.

Facsimile: (312) 862-2200

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.

(g) Business Days . If any time period for giving notice or taking action hereunder expires on a day that is not a Business Day, the time period shall automatically be extended to the Business Day immediately following such Saturday, Sunday or legal holiday.

(h) Governing Law . The corporate law of the State of Delaware shall govern all issues and questions concerning the relative rights of the Company and its stockholders. All other issues and questions concerning the construction, validity, interpretation and enforcement of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

(i) MUTUAL WAIVER OF JURY TRIAL . AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

(j) CONSENT TO JURISDICTION AND SERVICE OF PROCESS . EACH OF THE PARTIES, AND EACH OF THEIR SUCCESSORS AND ASSIGNS, IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE OR ANY DELAWARE STATE COURT, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. EACH OF THE PARTIES, AND EACH OF THEIR SUCCESSORS AND ASSIGNS, HERETO FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO SUCH PARTY’S RESPECTIVE ADDRESS SET FORTH ABOVE

 

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SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR PROCEEDING WITH RESPECT TO ANY MATTERS TO WHICH IT HAS SUBMITTED TO JURISDICTION IN THIS PARAGRAPH. EACH OF THE PARTIES, AND EACH OF THEIR SUCCESSORS AND ASSIGNS, HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, AND HEREBY AND THEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(k) No Recourse . Notwithstanding anything to the contrary in this Agreement, the Company and each holder of Registrable Securities agrees and acknowledges that no recourse under this Agreement or any documents or instruments delivered in connection with this Agreement, shall be had against any current or future director, officer, employee, general or limited partner or member of any holder of Registrable Securities or of any Affiliate or assignee thereof, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any current or future officer, agent or employee of any holder of Registrable Securities or any current or future member of any holder of Registrable Securities or any current or future director, officer, employee, partner or member of any holder of Registrable Securities or of any Affiliate or assignee thereof, as such for any obligation of any holder of Registrable Securities under this Agreement or any documents or instruments delivered in connection with this Agreement for any claim based on, in respect of or by reason of such obligations or their creation.

(l) Descriptive Headings; Interpretation . The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. The use of the word “including” in this Agreement shall be by way of example rather than by limitation.

(m) No Strict Construction . The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

(n) Counterparts . This Agreement may be executed in multiple counterparts, any one of which need not contain the signature of more than one party, but all such counterparts taken together shall constitute one and the same agreement.

(o) Electronic Delivery . This Agreement, the agreements referred to herein, and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent executed and delivered by means of a photographic, photostatic, facsimile or similar reproduction of such signed writing using a facsimile machine or electronic mail shall be treated in all manner and

 

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respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or electronic mail to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or electronic mail as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.

(p) Further Assurances . In connection with this Agreement and the transactions contemplated hereby, upon the written request of the Company, each Holder of Registrable Securities shall execute and deliver any additional documents and instruments and perform any additional acts that may be necessary or appropriate to effectuate and perform the provisions of this Agreement and the transactions contemplated hereby.

(q) No Inconsistent Agreements . The Company shall not hereafter enter into any agreement with respect to its securities which is inconsistent with or violates the rights granted to the holders of Registrable Securities in this Agreement.

(r) Effective Date . This Agreement shall become effective only upon the consummation of the Initial Public Offering.

*    *    *    *    *

 

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

 

CIVITAS SOLUTIONS, INC.
By:  

/s/ Bruce F. Nardella

Name:

Its:

 

Bruce F. Nardella

President and CEO

NMH INVESTMENT, LLC
By:  

/s/ James L. Elrod, Jr.

Name:

Its:

 

James L. Elrod, Jr.

President


SCHEDULE OF INVESTORS

NMH Investment, LLC

c/o Vestar Capital Partners V, L.P.

245 Park Avenue

41st Floor

New York, NY 10167

Attention: Chris A. Durbin, Erin Russell and General Counsel

Facsimile: (212) 808-4922


EXHIBIT A

REGISTRATION RIGHTS AGREEMENT

JOINDER

The undersigned is executing and delivering this Joinder pursuant to the Registration Rights Agreement dated as of [ ], 2014 (as the same may hereafter be amended, the “ Registration Rights Agreement ”), among Civitas Solutions, Inc., a Delaware corporation (the “ Company ”), and the other person named as parties therein.

By executing and delivering this Joinder to the Company, the undersigned hereby agrees to become a party to, to be bound by, and to comply with the provisions of the Registration Rights Agreement as a holder of Registrable Securities in the same manner as if the undersigned were an original signatory to the Registration Rights Agreement, and the undersigned’s                  shares of Common Stock shall be included as Registrable Securities under the Registration Rights Agreement.

Accordingly, the undersigned has executed and delivered this Joinder as of the      day of             ,         .

 

 

Signature of Stockholder

 

Print Name of Stockholder
Address:  

 

 

 

 

 

 

Agreed and Accepted as of

 

  .
CIVITAS SOLUTIONS, INC.
By:  

 

Its:  

 

 

A-1

Exhibit 10.2

DIRECTOR NOMINATING AGREEMENT

THIS DIRECTOR NOMINATING AGREEMENT (this “ Agreement ”) is made and entered into as of September 22, 2014, by and among Civitas Solutions, Inc., a Delaware corporation (the “ Company ”), and NMH Investment, LLC, a Delaware limited liability company (“ NMH Investment ”).

WHEREAS, the Company wishes to grant certain director nomination rights with respect to the shares of Common Stock of the Company currently held by NMH Investment, as provided further herein.

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

1. Board Nomination Rights.

(a) From and after the date of the consummation of the initial public offering of the common stock of the Company (the “ Initial Public Offering ”) and until the provisions of this Section 1 cease to be effective and subject to the terms and conditions of this Agreement, the NMH Investment Majority Holders shall have the right to nominate persons for election to the Board (each a “ Nominee ”) as follows:

(i) eight (8) of nine (9) of the directors shall be nominated by the NMH Investment Majority Holders so long as NMH Investment, Vestar and Vestar’s Affiliates continue to hold Voting Securities representing at least 40% of the total voting power of all the then outstanding Voting Securities, voting as a single class;

(ii) seven (7) of nine (9) of the directors shall be nominated by the NMH Investment Majority Holders so long as NMH Investment, Vestar and Vestar’s Affiliates continue to hold Voting Securities representing at least 35% of the total voting power of all the then outstanding Voting Securities, voting as a single class;

(iii) six (6) of nine (9) of the directors shall be nominated by the NMH Investment Majority Holders so long as NMH Investment, Vestar and Vestar’s Affiliates continue to hold Voting Securities representing at least 30% of the total voting power of all the then outstanding Voting Securities, voting as a single class;

(iv) five (5) of nine (9) of the directors shall be nominated by the NMH Investment Majority Holders so long as NMH Investment, Vestar and Vestar’s Affiliates continue to hold Voting Securities representing at least 25% of the total voting power of all the then outstanding Voting Securities, voting as a single class;

(v) four (4) of nine (9) of the directors shall be nominated by the NMH Investment Majority Holders so long as NMH Investment, Vestar and Vestar’s Affiliates continue to hold Voting Securities representing at least 20% of the total voting power of all the then outstanding Voting Securities, voting as a single class;


(vi) three (3) of nine (9) of the directors shall be nominated by the NMH Investment Majority Holders so long as NMH Investment, Vestar and Vestar’s Affiliates continue to hold Voting Securities representing at least 15% of the total voting power of all the then outstanding Voting Securities, voting as a single class;

(vii) two (2) of nine (9) of the directors shall be nominated by the NMH Investment Majority Holders so long as NMH Investment, Vestar and Vestar’s Affiliates continue to hold Voting Securities representing at least 10% of the total voting power of all the then outstanding Voting Securities, voting as a single class; and

(viii) one (1) director shall be nominated by the NMH Investment Majority Holders so long as NMH Investment, Vestar and Vestar’s Affiliates continue to hold Voting Securities representing at least 5% of the total voting power of all the then outstanding Voting Securities, voting as a single class.

(b) The authorized number of directors on the Board shall initially be nine (9). For as long as the NMH Investment Majority Holders shall have any nomination rights under this Section 1 , the Company shall not take any action to increase or reduce the size of the Board from nine (9) without the written consent of the NMH Investment Majority Holders. If the size of the Board is increased or reduced, then the number of directors the NMH Investment Majority Holders have the right to nominate at each level of ownership set forth in Section 1(a) shall increase or decrease ratably, so that it is equal to the product of (i) a ratio, which is calculated by dividing the number of directors to be nominated by the NMH Investment Majority Holders specified in the applicable sub-paragraph of Section 1(a) by the total number of directors then serving on the Board, multiplied by (ii) the total number of directors then serving on the Board, rounded up to the next whole number in all cases.

(c) After the NMH Investment Majority Holders cease to have any nominations rights under this Section 1 , the Board shall determine the size (i.e., number of Board seats) of the Board in accordance with the Company’s organizational documents.

(d) The representatives designated hereunder by the NMH Investment Majority Holders shall be nominated to serve as a Class I, Class II or Class III director (as defined in the Company’s Certificate of Incorporation), as the case may be. The initial term of each Class I, Class II and Class III director shall expire as set forth in the Company’s Certificate of Incorporation. Any director nominated by the NMH Investment Majority Holders hereunder to fill a vacancy on the Board shall be designated as the same class of director as the director whose termination of services as a director created such vacancy.

(e) The Company shall pay the reasonable out-of-pocket expenses incurred by each director in connection with attending the meetings of the Board and any committee thereof.

(f) At every meeting of the Board, or a committee thereof, for which directors are nominated to stand for election by stockholders of the Company, the NMH Investment Majority Holders will have the right to select those persons to be nominated for election to the Board for each Retiring Director that was a prior Nominee of the NMH Investment Majority Holders in accordance with this Section 1 .

 

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(g) If a vacancy occurs because of the death, disability, disqualification, resignation or removal of a Nominee, the NMH Investment Majority Holders shall be entitled to nominate such person’s successors in accordance with this Agreement and the Board, subject to a determination of the Board in good faith, after consultation with outside legal counsel that such action would not constitute a breach of its fiduciary duties or applicable law, shall fill the vacancy with such successor Nominee.

(h) If a Nominee is not nominated or elected to the Board because of the Nominee’s death, disability, disqualification, withdrawal as a nominee or for other reason is unavailable or unable to serve on the Board, the NMH Investment Majority Holders shall be entitled to nominate promptly another Nominee and the director position for which such Nominee was nominated shall not be filled pending such nomination.

(i) Notwithstanding anything to the contrary contained herein, at such time as NMH Investment, Vestar and Vestar’s Affiliates hold Voting Securities representing less than 5% of the total voting power of all the then outstanding Voting Securities, voting as a single class, the rights of NMH Investment under this Section 1 shall terminate automatically and cease to have any further force and effect.

2. Company Obligations.

(a) The Company agrees to use its commercially reasonable efforts to assure that (i) each Nominee is included in the Board’s slate of nominees for each election of directors and (ii) each Nominee is included in the proxy statement prepared by management of the Company in connection with soliciting proxies for every meeting of the stockholders of the Company called with respect to the election of members of the Board, and at every adjournment or postponement thereof, and on every action or approval by written consent of the stockholders of the Company or the Board with respect to the election of members of the Board.

(b) Notwithstanding anything herein to the contrary, the Company shall not be obligated to cause to be nominated for election to the Board or recommend to the stockholders the election of any Nominee (i) who fails to submit to the Company on a timely basis such questionnaires as the Company may reasonably require of its directors generally and such other information as the Company may reasonably request in connection with the preparation of its filings under the Securities Laws or (ii) if the Board or the Nominating Committee determines in good faith, after consultation with outside legal counsel, that such action would constitute a breach of its fiduciary duties, applicable law or the New York Stock Exchange listing requirements or violate the Company’s Certificate of Incorporation; provided , however , that upon the occurrence of either (i) or (ii) above, the Company shall promptly notify the NMH Investment Majority Holders of the occurrence of such event and permit the NMH Investment Majority Holders to provide an alternate Nominee sufficiently in advance of any Board action, meeting of the stockholders called or written action of stockholders with respect to such election of Nominees and the Company shall use commercially reasonable efforts to perform its obligations under Section 2(a) with respect to such alternate Nominee ( provided that if the Company provides at least 45 days advance notice of the occurrence of any such event such alternative Nominee must be designated by the NMH Investment Majority Holders not less than 30 days in advance of any Board action, notice of meeting of the stockholders or written action

 

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of stockholders with respect to such election of Nominees). The Company shall use commercially reasonable efforts to perform its obligations under Section 2(a) with respect to such alternate Nominee, provided that in no event shall the Company be obligated to postpone, reschedule or delay any scheduled meeting of the stockholders with respect to such election of Nominees.

(c) At any time a vacancy occurs because of the death, disability, resignation or removal of a Nominee, then the Board, or any committee thereof, shall not fill such vacancy until the earliest to occur of (i) the NMH Investment Majority Holders have nominated a successor Nominee and the Board has filled the vacancy and appointed such successor Nominee, (ii) the NMH Investment Majority Holders fail to nominate a successor Nominee within 60 Business Days after receiving notification of the vacancy from the Company, and (iii) the NMH Investment Majority Holders have specifically waived their rights under this Section 2(c) .

3. Definitions .

Affiliate ” means, with respect to any Person, any other Person which directly or indirectly controls, is controlled by or is under common control with such Person. For purposes of this definition, “ control ” (including, with correlative meanings, the terms “ controlled by ” and “ under common control with ”), as applied to any Person, means the possession, directly or indirectly, of the power to vote a majority of the securities having voting power for the election of directors (or other Persons acting in similar capacities) of such Person or otherwise to direct or cause the direction of the management and policies of such Person through the ownership of voting securities, by contract or otherwise (other than the Company or any of its subsidiaries).

Board ” means the board of directors of the Company.

Business Day ” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close.

Certificate of Incorporation ” means the Company’s Certificate of Incorporation as the same may be amended from time to time.

Common Stock ” shall mean the common stock, par value $0.01 per share, of the Company.

NMH Investment ” has the meaning given such term in the preamble.

NMH Investors ” means each of NMH Investment, Vestar and any Affiliate of Vestar that acquires Voting Securities after the date hereof.

NMH Investment Majority Holders ” means the NMH Investors holding a majority in voting power of all of the Voting Securities held by NMH Investors collectively.

Nominating Committee ” means the Nominating and Corporate Governance Committee of the Board.

 

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Person ” means an individual, corporation, partnership, association, trust, limited liability company, joint venture, unincorporated organization or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

Retiring Director ” means any director whose term expires at the next annual meeting of the stockholders of the Company pursuant to the terms of the Company’s Certificate of Incorporation.

Vestar ” means, collectively, Vestar Capital Partners V, L.P. and Vestar/NMH Investors, LLC and any investment fund affiliated with Vestar Capital Partners V, L.P. that at any time acquires Common Stock and executes a counterpart of this Agreement or otherwise agrees to be bound by this Agreement.

Voting Securities ” means capital stock of the Company entitled to vote generally in the election of directors.

4. Amendment and Waiver . Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

5. Assignment . This Agreement is not assignable to any third party, except that NMH Investment may assign all or any portion of its rights hereunder to one or more Affiliates of NMH Investment and/or Vestar and any such Affiliate will be entitled to the rights granted hereunder, provided that (i) the Company is given written notice of said transfer or assignment identifying the name of such Affiliate, (ii) such Affiliate assumes in writing the obligations of NMH Investment under this Agreement, and (iii) such Affiliate holds Voting Securities.

6. Benefit of Parties . This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. The parties hereto expressly agree that Vestar is intended to be a third party beneficiary of Sections 1 and 2. Except as otherwise expressly provided herein, nothing herein contained shall confer or is intended to confer on any third party or entity that is not a party to this Agreement any rights under this Agreement.

7. Headings . Headings are for ease of reference only and shall not form a part of this Agreement.

8. Governing Law . This Agreement shall be construed in accordance with and governed by the law of the State of Delaware without giving effect to the principles of conflicts of laws thereof.

 

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9. Jurisdiction . Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement may be brought against any of the parties in any federal court located in the State of Delaware or any Delaware state court, and each of the parties hereby consents to the exclusive jurisdiction of such court (and of the appropriate appellate courts) in any such suit, action or proceeding and waives any objection to venue laid therein. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, the parties agree that service of process upon such party at the address referred to in Section 16, together with written notice of such service to such party, shall be deemed effective service of process upon such party.

10. WAIVER OF JURY TRIAL . EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

11. Entire Agreement . This Agreement and any other writing signed by authorized representatives of each of the parties after the date hereof that specifically references this Agreement, constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations, both written and oral between the parties with respect to the subject matter hereof.

12. Counterparts; Effectiveness . This Agreement may be signed in any number of counterparts, each of which shall be deemed an original. This Agreement shall become effective on the date of the consummation of the Initial Public Offering. An executed copy or counterpart hereof delivered by facsimile shall be deemed an original instrument.

13. Severability . If any provision of this Agreement or the application thereof to any Person or circumstance shall be invalid or unenforceable to any extent, the remainder of this Agreement and the application of such provisions to other Persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law.

14. Further Assurances . The parties hereto shall execute and deliver such further instruments and do such further acts and things as may be required to carry out the intent and purpose of this Agreement.

15. Specific Performance. The parties hereto agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any federal or state court located in the State of Delaware, in addition to any other remedy to which they are entitled at law or in equity.

 

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16. Notices . All notices, requests and other communications to any party or to the Company shall be in writing (including telecopy or similar writing) and shall be given,

If to the Company :

Civitas Solutions, Inc.

313 Congress Street, 6th Floor

Boston, MA 02210

Attention: Chief Legal Officer

Facsimile:                     

With a copy to (which shall not constitute notice) :

Kirkland & Ellis LLP

300 N. LaSalle

Chicago, IL 60654

Attention: Sanford E. Perl, P.C. and Mark A. Fennell, P.C.

Facsimile: (312) 862-2200

If to NMH Investment :

c/o Vestar Capital Partners V, L.P.

245 Park Avenue

41st Floor

New York, NY 10167

Attention: Chris A. Durbin, Erin Russell and General Counsel

Facsimile: (212) 808-4922

With a copy to (which shall not constitute notice) :

Kirkland & Ellis LLP

300 N. LaSalle

Chicago, IL 60654

Attention: Sanford E. Perl, P.C. and Mark A. Fennell, P.C.

Facsimile: (312) 862-2200

or to such other address or telecopier number as such party or the Company may hereafter specify for the purpose by notice to the other parties and the Company. Each such notice, request or other communication shall be effective when delivered at the address specified in this Section 16 during regular business hours.

17. Enforcement . The parties hereto covenant and agree that the disinterested members of the Board or the disinterested members of any Board committee so designated by the Board have the right to enforce, waive or take any other action with respect to this Agreement on behalf of the Company.

*        *        *         *        *

 

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

 

CIVITAS SOLUTIONS, INC.
By:  

/s/ Bruce F. Nardella

Name:   Bruce F. Nardella
Title:   President and CEO
NMH INVESTMENT, LLC
By:  

/s/ James L. Elrod, Jr.

Name:   James L. Elrod, Jr.
Title:   President

Signature Page to Director Nominating Agreement

Exhibit 10.5

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“ Agreement ”), dated as of September 22, 2014, is effective as of September 17, 2014 (the “ Effective Date ”), and is made between Bruce F. Nardella (“ Officer ”), and Civitas Solutions, Inc., a Delaware corporation (“ Employer ”).

WHEREAS, Officer has been employed by the Employer in the role of President and Chief Executive Officer;

WHEREAS, Officer and Employer are parties to that certain Employment Agreement dated as of December 16, 2013 (the “ Prior Agreement ”); and

WHEREAS, the parties hereto have agreed to enter into this Agreement, which shall amend and restate the Prior Agreement in its entirety, and shall supersede the Noncompetition Agreement as set forth in Section 19 hereof, and which shall govern the rights and obligations of the parties, in each case as of the Effective Date.

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

1. Employment. Employer agrees to continue to employ Officer, and Officer agrees to continue such employment, in accordance with the terms of this Agreement, for an initial term of three years commencing on the Effective Date and, unless terminated earlier in accordance with the terms of this Agreement, ending on January 1, 2017. 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 continue to serve as President and Chief Executive Officer of Employer reporting to Employer’s Board of Directors (the “ Board ”). Officer agrees to serve in such position, or in such other positions of a similar status or level as the Board determines from time to time, and to perform the commensurate duties that the Board 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 or such other location deemed appropriate.


(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 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.

4. Compensation.

(a) Base Salary. Employer will pay Officer a base salary in the amount of $575,000 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. 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, subject to the terms of the Plan, but with a bonus target of 100% of Officer’s Base Salary. The Bonus shall be paid to the Officer in a single lump sum no later than March 15th of the calendar year following the calendar year in which the applicable fiscal year ended.

(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. For all purposes of this Agreement, (including without limitation under this Section 5 ), any expense reimbursements made (or any in-kind benefits provided) to Officer in any one calendar year shall not affect the amount that may be reimbursed in any other calendar year and a reimbursement or in-kind benefit (or right thereto) may not be exchanged or liquidated for another benefit or payment. Any reimbursement subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”) and the rules and regulations thereunder, shall be made no later than the end of the calendar year following the calendar year in which Officer incurs such expense.

6. Termination.

(a) Termination Due to Resignation Without Good Reason, Termination with Cause, or Non-Renewal of Agreement by Officer. 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 (as defined in Section 6(c) below); or

 

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(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 Employer (or any of its securityholders or subsidiaries) that is other than de minimis, (D) the violation by Officer of a written Employer 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 (X) Officer has been provided written notice of Employer’s intention to terminate his employment for Cause and the specific facts relied on, (Y) Officer has been provided 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 (Z) Officer does not cure any such conduct or omission within such ten-day period; or

(iii) the expiration of the term of the Agreement, if Officer notifies Employer of his non-renewal of the term of the Agreement (or an extension thereof) pursuant to the procedures set forth in Section 1 hereof.

Officer may resign his employment without Good Reason at any time by giving thirty (30) days written notice of resignation to Employer.

If Officer is terminated pursuant to this Section 6(a) , in addition to any earned but unpaid amounts to which Officer is entitled under any of Employer’s benefit plans, the payment of which shall be governed by the applicable plan documents, 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 ”). Any Accrued Obligations

 

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attributable to earned but unpaid bonus shall be paid to the Officer in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which the bonus was earned ended, and any other Accrued Obligations under this Section 6(a) shall be paid to the Officer no later than 74 days following his Separation from Service (as defined below) from the Employer (or at such earlier time as applicable law requires).

(b) Termination Without Cause or Non-Renewal of Agreement by Employer. 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. In addition, Employer may notify Officer of Employer’s non-renewal of the term of the Agreement (or an extension thereof) pursuant to the procedures set forth in Section 1 hereof, in which case the Agreement and Officer’s employment hereunder will cease as of the expiration of the term of the Agreement. If Employer terminates this Agreement without Cause, or notifies Officer of non-renewal pursuant to Section 1 hereof, subject to Officer signing a separation agreement containing, among other provisions, a general release of claims in favor of the Employer and related persons and entities in a form and manner reasonably satisfactory to the Employer (the “ Separation Agreement and Release ”) and the Separation Agreement and Release becoming irrevocable, all within 60 days after the date of Officer’s Separation from Service, Employer shall:

(i) With respect to the Accrued Obligations, pay any earned but unpaid bonus to the Officer in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which the bonus was earned ended, and pay all other Accrued Obligations to the Officer no later than 74 days following his Separation from Service from the Employer (or at such earlier time as applicable law requires);

(ii) Continue to pay Officer the Base Salary in effect at the time of his Separation from Service, in accordance with the Employer’s customary payroll practices, for a period of two years;

(iii) Pay Officer an additional monthly amount equal to $2,000 in accordance with the Employer’s customary payroll practices, for a period of two years;

(iv) On or before the last day of each of the two full calendar years following the date of the Officer’s Separation from Service, pay Officer an amount equal to Officer’s target annual bonus for the year in which such termination occurs; and

(v) Pay Officer a pro rata bonus for the year in which such termination occurs based on Employer’s actual performance as of the date of termination, such bonus to be paid in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which the Officer’s Separation from Service occurred ended, provided , however that no such pro rata bonus will be paid if the Officer’s termination occurs in the first six months of such fiscal year.

 

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The amounts payable under Subsections (ii), (iii), (iv) and (v) above shall be paid out in accordance with the Company’s payroll practice commencing within 60 days after the Officer’s Separation from Service; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, such payments shall begin to be paid in the second calendar year by the last day of such 60-day period; provided, further, that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Officer’s Separation from Service. Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treas. Reg. § 1.409A-2(b)(2).

In the event such termination without Cause occurs prior to the consummation of a Sale of the Company (as such term is defined in the Amended and Restated Securityholders Agreement of NMH Investment, LLC, dated as of September 16, 2014), and, within six months following such termination, a Sale of the Company occurs, then, subject to the Separation Agreement and Release becoming effective within 60 days of Officer’s Separation from Service, notwithstanding anything to the contrary in Section 2.5 of the Officer’s Management Unit Subscription Agreement (the “ MUSA ”) pursuant to which Officer’s Class H Units (the “ H Units ”) were granted under that certain Seventh Amended and Restated Limited Liability Company Agreement of NMH Investment, LLC, dated as of September 16, 2014, Officer’s H Units that remain outstanding and unvested immediately prior to the date of such termination shall not expire immediately upon such termination and shall instead remain outstanding until the six-month anniversary of such termination, such that, in the event that a Sale of the Company occurs prior to such six-month anniversary, all such outstanding H Units shall be deemed fully vested for purposes of Section 2.5 of the MUSA pursuant to which the Officer’s H Units were granted. In the event that a Sale of the Company does not occur prior to the end of such six-month anniversary, the Officer’s unvested H Units shall immediately expire.

In the event such termination without Cause occurs prior to the consummation of a Sale of the Company (as such term is defined in the Amended and Restated Securityholders Agreement of NMH Investment, LLC, dated as of September 16, 2014), and, within six months following such termination, a Sale of the Company occurs, then, subject to the Separation Agreement and Release becoming effective within 60 days of Officer’s Separation from Service, notwithstanding anything to the contrary in Section 2.5 of the Officer’s MUSA pursuant to which Officer’s Class F Units (the “ F Units ”) were granted under that certain Seventh Amended and Restated Limited Liability Company Agreement of NMH Investment, LLC, dated as of September 16, 2014, Officer’s F Units that remain outstanding and unvested immediately prior to the date of such termination shall not expire immediately upon such termination and shall instead remain outstanding until the six-month anniversary of such termination, such that, in the event that a Sale of the Company occurs prior to such six-month anniversary, all such outstanding F Units shall be deemed fully vested for purposes of Section 2.5 of the MUSA pursuant to which the Officer’s F Units were granted. In the event that a Sale of the Company does not occur prior to the end of such six-month anniversary, the Officer’s unvested F Units shall immediately expire.

In the event such termination without Cause occurs within six months prior to or 24 months after the consummation of a Change in Control (as such term is defined in Employer’s 2014 Omnibus Incentive Plan, dated as of August 25, 2014 (the “ 2014 plan ”)), then, subject to the

 

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Separation Agreement and Release becoming effective within 60 days of Officer’s Separation from Service, Officer’s then-outstanding Awards (as defined in the 2014 Plan) that would have vested in accordance with their terms solely based upon continued employment, shall not expire upon such termination and shall instead vest in full upon such termination or, if applicable, shall vest in full upon a Change in Control that occurs within six months following such termination. Upon the occurrence of a Change in Control in which such Awards are not assumed by the applicable successor entity, Officer shall be entitled to accelerated vesting of all such then-outstanding Awards whereby such Awards shall, as applicable, be fully exercisable, any vesting conditions or restrictions shall lapse, and such Awards shall be fully vested and nonforfeitable.

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 material reduction in Officer’s annual base salary or annual bonus opportunity, provided that any reduction of up to ten percent (10%) of Officer’s salary or bonus opportunity that is part of a plan to reduce compensation of comparably situated employees of Employer generally shall not be considered a “material reduction in Officer’s annual base salary or annual bonus opportunity” hereunder, (iii) a material breach by Employer of this Agreement, or (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. Notwithstanding anything to the contrary in the foregoing, Officer shall only have Good Reason to terminate employment if Officer gives notice, in writing, to the Employer of the act or omission which is alleged to constitute Good Reason within 90 days of the initial occurrence thereof, and Employer fails to remedy such act or omission within thirty (30) days following Employer’s receipt of written notice from Officer specifying such act or omission.

If Officer terminates this Agreement for Good Reason, subject to Officer signing the Separation Agreement and Release, and the Separation Agreement and Release becoming irrevocable, all within 60 days after the date of Officer’s Separation from Service, Employer shall:

(i) With respect to the Accrued Obligations, pay any earned but unpaid bonus to the Officer in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which the bonus was earned ended, and pay all other Accrued Obligations to the Officer no later than 74 days following his Separation from Service from the Employer (or at such earlier time as applicable law requires);

(ii) Continue to pay Officer the Base Salary in effect at the time of his Separation from Service, in accordance with the Employer’s customary payroll practices, for a period of two years;

(iii) Pay Officer an additional monthly amount equal to $2,000 in accordance with the Employer’s customary payroll practices, for a period of two years;

 

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(iv) On or before the last day of each of the two full calendar years following the date of the Officer’s Separation from Service, pay Officer an amount equal to Officer’s target annual bonus for the year in which such termination occurs; and

(v) Pay Officer a pro rata bonus for the year in which such termination occurs based on Employer’s actual performance as of the date of termination, such bonus to be paid in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which the Officer’s Separation from Service occurred ended, provided , however that no such pro rata bonus will be paid if the Officer’s termination occurs in the first six months of such fiscal year.

The amounts payable under Subsections (ii), (iii), (iv) and (v) above shall be paid out in accordance with the Company’s payroll practice commencing within 60 days after the Officer’s Separation from Service; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, such payments shall begin to be paid in the second calendar year by the last day of such 60-day period; provided, further, that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Officer’s Separation from Service. Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treas. Reg. § 1.409A-2(b)(2).

In the event such termination for Good Reason occurs prior to the consummation of a Sale of the Company (as such term is defined in the Amended and Restated Securityholders Agreement of NMH Investment, LLC, dated as of September 16, 2014), and, within six months following such termination, a Sale of the Company occurs, then, subject to the Separation Agreement and Release becoming effective within 60 days of Officer’s Separation from Service, notwithstanding anything to the contrary in Section 2.5 of the Officer’s MUSA pursuant to which Officer’s H Units were granted under that certain Seventh Amended and Restated Limited Liability Company Agreement of NMH Investment, LLC, dated as of September 16, 2014, Officer’s H Units that remain outstanding and unvested immediately prior to the date of such termination shall not expire immediately upon such termination and shall instead remain outstanding until the six-month anniversary of such termination, such that, in the event that a Sale of the Company occurs prior to such six-month anniversary, all such outstanding H Units shall be deemed fully vested for purposes of Section 2.5 of the MUSA pursuant to which the Officer’s H Units were granted. In the event that a Sale of the Company does not occur prior to the end of such six-month anniversary, the Officer’s unvested H Units shall immediately expire.

In the event such termination for Good Reason occurs prior to the consummation of a Sale of the Company (as such term is defined in the Amended and Restated Securityholders Agreement of NMH Investment, LLC, dated as of September 16, 2014), and, within six months following such termination, a Sale of the Company occurs, then, subject to the Separation Agreement and Release becoming effective within 60 days of Officer’s Separation from Service, notwithstanding anything to the contrary in Section 2.5 of the Officer’s MUSA pursuant to which Officer’s F Units were granted under that certain Seventh Amended and Restated Limited Liability Company Agreement of NMH Investment, LLC, dated as of September 16, 2014,

 

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Officer’s F Units that remain outstanding and unvested immediately prior to the date of such termination shall not expire immediately upon such termination and shall instead remain outstanding until the six-month anniversary of such termination, such that, in the event that a Sale of the Company occurs prior to such six-month anniversary, all such outstanding F Units shall be deemed fully vested for purposes of Section 2.5 of the MUSA pursuant to which the Officer’s F Units were granted. In the event that a Sale of the Company does not occur prior to the end of such six-month anniversary, the Officer’s unvested F Units shall immediately expire.

In the event such termination for Good Reason occurs within six months prior to or 24 months after the consummation of a Change in Control (as such term is defined in Employer’s 2014 Omnibus Incentive Plan, dated as of August 25, 2014 (the “ 2014 plan ”)), then, subject to the Separation Agreement and Release becoming effective within 60 days of Officer’s Separation from Service, Officer’s then-outstanding Awards (as defined in the 2014 Plan) that would have vested in accordance with their terms solely based upon continued employment, shall not expire upon such termination and shall instead vest in full upon such termination or, if applicable, shall vest in full upon a Change in Control that occurs within six months following such termination. Upon the occurrence of a Change in Control in which such Awards are not assumed by the applicable successor entity, Officer shall be entitled to accelerated vesting of all such then-outstanding Awards whereby such Awards shall, as applicable, be fully exercisable, any vesting conditions or restrictions shall lapse, and such Awards shall be fully vested and nonforfeitable.

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 (i) the Officer is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, (ii) the Officer is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Employer, or (iii) the Officer is determined to be totally disabled by the Social Security Administration. Subject to continuing coverage under applicable benefit plans, and except as otherwise provided in this Agreement or as may be required by law, if Officer is terminated pursuant to this Section 6(d) , Employer shall pay Officer (or his beneficiary, as the case may be) (x) the Accrued Obligations and (y) a pro rata bonus for the year in which such termination occurs based on Employer’s actual performance, such bonus to be paid in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which his Separation from Service from the Employer by reason of Disability or death occurred ended. With respect to the Accrued Obligations, Employer shall pay any earned but unpaid bonus to the Officer (or his beneficiary, as the case may be) in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which the bonus was earned ended, and pay all other Accrued Obligations to the Officer no later than 74 days following his Separation from Service from the Employer by reason of death or Disability (or at such earlier date as applicable law requires).

 

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In addition to the payments described above, in the event Officer is terminated pursuant to this Section 6(d), Officer shall also be entitled to pro-rata acceleration of all Awards subject solely to time-based vesting, with such time-based Awards becoming vested and nonforfeitable as of such termination date in proportion to the period of time that has elapsed between the grant date of such award and the date of Officer’s termination over the time-based vesting period contemplated by such Award.

In the event Officer is terminated pursuant to this Section 6(d) prior to the consummation of a Sale of the Company (as such term is defined in the Amended and Restated Securityholders Agreement of NMH Investment, LLC, dated as of September 16, 2014), then notwithstanding anything to the contrary in Section 2.5 of the Officer’s MUSA, the Officer’s H Units granted under that certain Seventh Amended and Restated Limited Liability Company Agreement of NMH Investment, LLC, dated as of September 16, 2014 that remain outstanding and unvested immediately prior to the date of such termination shall not expire immediately upon such termination and, instead, all such outstanding H Units shall be deemed fully vested for purposes of Section 2.5 of the Officer’s MUSA pursuant to which the Officer’s H Units were granted.

In the event Officer is terminated pursuant to this Section 6(d) prior to the consummation of a Sale of the Company (as such term is defined in the Amended and Restated Securityholders Agreement of NMH Investment, LLC, dated as of September 16, 2014), then notwithstanding anything to the contrary in Section 2.5 of the Officer’s MUSA, the Officer’s F Units granted under that certain Seventh Amended and Restated Limited Liability Company Agreement of NMH Investment, LLC, dated as of September 16, 2014 that remain outstanding and unvested immediately prior to the date of such termination shall not expire immediately upon such termination and, instead, all such outstanding F Units shall be deemed fully vested for purposes of Section 2.5 of the Officer’s MUSA pursuant to which the Officer’s F Units were granted.

(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 (i) 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); (ii) the rights and obligations under Sections 7, 8 and 9; and (iii) all procedural and remedial provisions of this Agreement. A termination of this Agreement will constitute a termination of Officer’s employment with Employer.

(f) Separation from Service. Any termination of employment triggering payment of benefits under this Section 6 must constitute a Separation from Service within the meaning of Treas. Reg. § 1.409A-1(h) (a “ Separation from Service ”) before distribution of such benefits can commence. For purposes of clarification, this paragraph shall not cause any forfeiture of benefits on the part of the Officer, but shall only act as a delay until such time as a Separation from Service occurs.

 

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(g) Certain Delayed Payments. If any amount to be paid to Officer pursuant to this Section 6 as a result of Officer’s termination of employment is “deferred compensation” subject to Section 409A of the Code and the rules and regulations thereunder and if the Officer is a “Specified Employee” (as defined under Section 409A) as of the date of Officer’s termination of employment hereunder, then, to the extent necessary to avoid the imposition of excise taxes or other penalties under Section 409A of the Code, the payment of benefits, if any, scheduled to be paid by the Employer to Officer hereunder during the first six (6) month period following the date of a termination of employment hereunder shall not be paid until the date which is the first business day following the six-month anniversary of Officer’s termination of employment for any reason other than death. Any deferred compensation payments delayed in accordance with the terms of this paragraph shall be paid in a lump sum when paid.

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

(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; 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

 

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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  7 (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.

(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 Employer 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 home and community based health and human services, including residential, day and vocational programs, and periodic services to individuals with intellectual and/or developmental disabilities, youth with emotional and/or medically complex challenges or at risk youth, and individuals with acquired brain injuries, and catastrophic injuries and illnesses, or any other business that the Employer is actively conducting or is actively considering conducting, including adult day services and youths with autism, at the time of Officer’s termination of employment (so long as Officer knows or reasonably should have known about such plans(s)), in each case anywhere in the United States (a “ Competitive Business ”);

 

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(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  7 (e)(A) , (B)  or (C)  above, nothing contained in Section  7 (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.

(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 any client of the Company, 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  7, 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

 

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(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 the chair of the Compensation Committee of Employer, 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 the chair of the Compensation Committee of Employer, 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  7 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 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.

8. 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

 

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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  8. 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, 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.

 

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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. Litigation and Regulatory Cooperation. Officer shall cooperate fully with Employer in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of Employer which relate to events or occurrences that transpired while the Officer was employed by Employer. Employer shall reimburse Officer for any reasonable out-of-pocket expenses incurred in connection with Officer’s obligations pursuant to this section. In addition, if such cooperation is required after the Officer’s termination, the Officer shall receive compensation at an hourly rate of not less than the Officer’s Base Salary at the time of termination divided by 1,840.

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  7, 8 or 9 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

 

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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. D&O Policy/Indemnification. Employer agrees to maintain a Directors and Officers Liability Policy covering Officer 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. That certain Indemnification Agreement, dated as of September     , 2014, by and between Officer and Employer remains in full force and effect.

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:

If to Employer:

Civitas Solutions, Inc.

Vestar Capital Partners

245 Park Avenue, 41st Floor

New York, NY 10167

Attn: General Counsel

Telecopy: (212) 808-4922

Email: sdellarocca@VestarCapital.com

with a copy to:

Civitas Solutions, Inc.

313 Congress Street

Boston, MA 02210

Attn: Chief Legal Officer

Telecopy: (617) 790-4271

Email: linda.derenzo@thementornetwork.com

If to the Officer:

To the most recent address on file with Employer 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 or electronic mail, 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.

 

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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.

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. Entire Agreement. Except as set forth in the immediately following sentence, 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 (a) that certain Amended and Restated Severance and Noncompetition Agreement, dated December 31, 2008 and effective January 1, 2009 (the “ Noncompetition Agreement ”), and (b) the Prior Agreement. Notwithstanding the foregoing, nothing in this Agreement shall release Officer from any liability for any breach of Sections 3 or 4 of the Noncompetition Agreement or any confidentiality, restrictive covenant or intellectual property provisions of the Prior Agreement occurring prior to the Effective Date. 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.

20. Interpretation. The Employer will interpret, construe, and administer the Agreement in a manner that satisfies the requirements of the Code and other applicable authority issued by the Internal Revenue Service and the U.S. Department of the Treasury. In addition, the parties shall cooperate fully with one another to ensure compliance with Section 409A of the Code, including, without limitation, adopting amendments to arrangements subject to Section 409A.

21. No Guarantee of Tax Consequences. No person connected with this Agreement, including but not limited to the Employer, or its officers, directors, agents or employees, makes

 

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any representation, commitment or guarantee with respect to the Federal, state or local income, estate and/or gift tax treatment of any benefit paid hereunder including, without limitation, under Section 409A of the Code.

22. Counterparts. This Agreement may be executed (including by facsimile transmission) in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

23. Consent of Vestar Capital Partners V, L.P . By execution of this Agreement, Vestar Capital Partners V, L.P. hereby consents to and ratifies this Agreement, as amended and restated.

24. Effective Date of Agreement . This Agreement shall become effective upon the Effective Date, but only if as of such date Officer is, and since January 1, 2014 continuously has been, employed by Employer. Notwithstanding any implication herein to the contrary, this Agreement shall automatically be null and void and shall automatically be of no force and effect, and no party hereto shall have any liability hereunder to any other party hereto, upon the termination of Officer’s employment prior to the Effective Date.

[Signatures on next page]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on this 22 nd day of September, 2014.

 

BRUCE F. NARDELLA     CIVITAS SOLUTIONS, INC.

/s/ Bruce F. Nardella

    By:  

/s/ Denis M. Holler

      Name:  

Denis M. Holler

      Title:  

Chief Executive Officer and Treasurer

 

Agreed and Acknowledged solely with respect to Section 23 :
VESTAR CAPITAL PARTNERS V, L.P.
By:   Vestar Associates V, L.P.
Its:   General Partner
By:   Vestar Managers V Ltd.
Its:   General Partner
By:  

/s/ Steve Della Rocca

Name:   Steve Della Rocca
Title:   Managing Director

And, solely for purposes of compliance with the vesting provisions regarding the Class H Units and the Class F Units described hereunder

 

NMH INVESTMENT, LLC
By:  

/s/ Steve Della Rocca

Name:   Steve Della Rocca
Title:   Secretary

 

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Exhibit 10.6

THIRD AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

(Edward M. Murphy)

THIS THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“ Agreement ”), originally made as of June 29, 2006 (the “ 2006 Agreement ”) and first amended and restated as of January 1, 2009 (the “ 2009 Agreement ”), and further amended and restated as of December 16, 2013 (the “2013 Agreement”) is hereby further amended and restated dated September 22, 2014 and effective September 17, 2014 (the “ Effective Date ”) by and between Edward M. Murphy (“ Officer ”), and Civitas Solutions, Inc., a Delaware corporation (“ Employer ”).

WHEREAS, Officer has been employed by Employer in the role of Chief Executive Officer; and

WHEREAS, the parties hereto have agreed to enter into this Agreement, which shall amend and restate the Prior Agreement in its entirety, and shall supersede the 2013 Agreement as set forth in Section 19 hereof, and which shall govern the rights and obligations of the parties, in each case as of the Effective Date.

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 continue to employ Officer (which employment shall be in the position of Executive Chair of the Board), and Officer accepts such employment in accordance with the terms of this Agreement, for an initial term of one year ending on January 1, 2015 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 (60) days prior to the next anniversary date.

2. Position and Duties of Officer . Officer will serve as Executive Chair of Employer’s Board of Directors (the “Board”). Officer agrees to serve in such position, or in such other positions of a similar status or level as the Board determines from time to time, and to perform the commensurate duties that the Board 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 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.

4. Compensation .

(a) Base Salary . Employer will pay Officer a base salary in the amount of $400,000 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 . 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 be paid to the Officer in a single lump sum no later than March 15th of the calendar year following the calendar year in which the applicable fiscal year ended.

(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. For all purposes of this Agreement, (including without limitation under this Section  5), any expense reimbursements made (or any in-kind benefits provided) to Officer in any one calendar year shall not affect the amount that may be reimbursed in any other calendar year and a reimbursement or in-kind benefit (or right thereto) may not be exchanged or liquidated for another benefit or payment. Any reimbursement subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “ Code ”) and the rules and regulations thereunder, shall be made no later than the end of the calendar year following the calendar year in which Officer incurs such expense.

 

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6. Termination .

(a) Termination Due to Resignation Without Good Reason, Termination with Cause, or Non-Renewal of Agreement by Officer . 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” (as defined in Section 6(c) below); (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 Employer (or any of its securityholders or subsidiaries) that is other than de minimis, (D) the violation by Officer of a written Employer 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 (X) Officer has been provided written notice of Employer’s intention to terminate his employment for Cause and the specific facts relied on, (Y) Officer has been provided 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 (Z) Officer does not cure any such conduct or omission within such ten-day period; or (iii) the expiration of the term of the Agreement, if Officer notifies Employer of his non-renewal of the term of the Agreement (or an extension thereof) pursuant to the procedures set forth in Section  1 hereof.

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

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 ”). Any Accrued Obligations attributable to earned but unpaid bonus shall be paid to the Officer in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which the bonus was earned ended, and any other Accrued Obligations under this

 

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Section 6(a) shall be paid to the Officer no later than 74 days following his Separation from Service (as defined below) from the Employer (or at such earlier time as applicable law requires).

(b) Termination Without Cause or Non-Renewal of Agreement by Employer . 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. In addition, Employer may notify Officer of Employer’s non-renewal of the term of the Agreement (or an extension thereof) pursuant to the procedures set forth in Section 1 hereof, in which case the Agreement and Officer’s employment hereunder will cease as of the expiration of the term of the Agreement. If Employer terminates this Agreement without “cause”, or notifies Officer of non-renewal pursuant to Section 1 hereof, subject to Officer signing a separation agreement containing, among other provisions, a general release of claims in favor of the Employer and related persons and entities in a form and manner reasonably satisfactory to the Employer (the “ Separation Agreement and Release ”) and the Separation Agreement and Release becoming irrevocable, all within 60 days after the date of Officer’s Separation from Service, Employer shall:

(i) With respect to the Accrued Obligations, pay any earned but unpaid bonus to the Officer in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which the bonus was earned ended, and pay all other Accrued Obligations to the Officer no later than 74 days following his Separation from Service from the Employer (or at such earlier time as applicable law requires);

(ii) Continue to pay Officer the Base Salary in effect at the time of his Separation from Service, in accordance with the Employer’s customary payroll practices, for a period of two years;

(iii) Pay Officer an additional monthly amount equal to $2,000 in accordance with the Employer’s customary payroll practices, for a period of two years;

(iv) On or before the last day of each of the two full calendar years following the date of the Officer’s Separation from Service, pay Officer an amount equal to Officer’s target annual bonus for the year in which such termination occurs; and

(v) Pay Officer a pro rata bonus for the year in which such termination occurs based on Employer’s actual performance as of the date of termination, such bonus to be paid in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which the Officer’s Separation from Service occurred ended, provided , however that no such pro rata bonus will be paid if the Officer’s termination occurs in the first six months of such fiscal year.

 

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The amounts payable under Subsections (ii), (iii), (iv) and (v) above shall be paid out in accordance with the Company’s payroll practice commencing within 60 days after the Officer’s Separation from Service; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, such payments shall begin to be paid in the second calendar year by the last day of such 60-day period; provided, further, that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Officer’s Separation from Service. Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treas. Reg. § 1.409A-2(b)(2).

In the event such termination without Cause occurs prior to the consummation of a Sale of the Company (as such term is defined in the Amended and Restated Securityholders Agreement of NMH Investment, LLC, dated as of September 16, 2014), and, within six months following such termination, a Sale of the Company occurs, then, subject to the Separation Agreement and Release becoming effective within 60 days of Officer’s Separation from Service, notwithstanding anything to the contrary in Section 2.5 of the Officer’s Management Unit Subscription Agreement (the “ MUSA ”) pursuant to which Officer’s Class H Units (the “ H Units ”) were granted under that certain Seventh Amended and Restated Limited Liability Company Agreement of NMH Investment, LLC, dated as of September 16, 2014, Officer’s H Units that remain outstanding and unvested immediately prior to the date of such termination shall not expire immediately upon such termination and shall instead remain outstanding until the six-month anniversary of such termination, such that, in the event that a Sale of the Company occurs prior to such six-month anniversary, all such outstanding H Units shall be deemed fully vested for purposes of Section 2.5 of the MUSA pursuant to which the Officer’s H Units were granted. In the event that a Sale of the Company does not occur prior to the end of such six-month anniversary, the Officer’s unvested H Units shall immediately expire.

In the event such termination without Cause occurs within six months prior to or 24 months after the consummation of a Change in Control (as such term is defined in Employer’s 2014 Omnibus Incentive Plan, dated as of August 25, 2014 (the “ 2014 plan ”)), then, subject to the Separation Agreement and Release becoming effective within 60 days of Officer’s Separation from Service, Officer’s then-outstanding Awards (as defined in the 2014 Plan) that would have vested in accordance with their terms solely based upon continued employment, shall not expire upon such termination and shall instead vest in full upon such termination or, if applicable, shall vest in full upon a Change in Control that occurs within six months following such termination. Upon the occurrence of a Change in Control in which such Awards are not assumed by the applicable successor entity, Officer shall be entitled to accelerated vesting of all such then-outstanding Awards whereby such Awards shall, as applicable, be fully exercisable, any vesting conditions or restrictions shall lapse, and such Awards shall be fully vested and nonforfeitable.

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

 

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materially inconsistent with Officer’s position in Employer, (ii) a material reduction in Officer’s annual base salary or annual bonus opportunity, provided that any reduction of up to ten percent (10%) of Officer’s salary or bonus opportunity that is part of a plan to reduce compensation of comparably situated employees of Employer generally shall not be considered a “material reduction in Officer’s annual base salary or annual bonus opportunity” hereunder, (iii) a material breach by Employer of this Agreement, or (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. Notwithstanding anything to the contrary in the foregoing, (A) Officer shall only have “Good Reason” to terminate employment if Officer gives notice, in writing, to the Employer of the act or omission which is alleged to constitute “Good Reason” within 90 days of the initial occurrence thereof, and Employer fails to remedy such act or omission within thirty (30) days following Employer’s receipt of written notice from Officer specifying such act or omission and (B) for the avoidance of doubt, Officer’s resignation of his position as Chief Executive Officer of Employer and assumption of the position of Executive Chair of the Board as of the Effective Date shall not constitute “good reason” for purposes of this Agreement or any other agreement between Officer, on the one hand, and Employer or any of its affiliates, on the other hand.

If Officer terminates this Agreement for “good reason”, subject to Officer signing the Separation Agreement and Release, and the Separation Agreement and Release becoming irrevocable, all within 60 days after the date of Officer’s Separation from Service, Employer shall

(i) With respect to the Accrued Obligations, pay any earned but unpaid bonus to the Officer in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which the bonus was earned ended, and pay all other Accrued Obligations to the Officer no later than 74 days following his Separation from Service from the Employer (or at such earlier time as applicable law requires);

(ii) Continue to pay Officer the Base Salary in effect at the time of his Separation from Service, in accordance with the Employer’s customary payroll practices, for a period of two years;

(iii) Pay Officer an additional monthly amount equal to $2,000 in accordance with the Employer’s customary payroll practices, for a period of two years;

(iv) On or before the last day of each of the two full calendar years following the date of the Officer’s Separation from Service, pay Officer an amount equal to Officer’s target annual bonus for the year in which such termination occurs; and

(v) Pay Officer a pro rata bonus for the year in which such termination occurs based on Employer’s actual performance as of the date of termination, such bonus to be paid in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which the Officer’s Separation from Service occurred ended, provided , however that no such pro rata bonus will be paid if the Officer’s termination occurs in the first six months of such fiscal year.

 

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The amounts payable under Subsections (ii), (iii), (iv) and (v) above shall be paid out in accordance with the Company’s payroll practice commencing within 60 days after the Officer’s Separation from Service; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, such payments shall begin to be paid in the second calendar year by the last day of such 60-day period; provided, further, that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Officer’s Separation from Service. Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treas. Reg. § 1.409A-2(b)(2).

In the event such termination for Good Reason occurs prior to the consummation of a Sale of the Company (as such term is defined in the Amended and Restated Securityholders Agreement of NMH Investment, LLC, dated as of September 16, 2014), and, within six months following such termination, a Sale of the Company occurs, then, subject to the Separation Agreement and Release becoming effective within 60 days of Officer’s Separation from Service, notwithstanding anything to the contrary in Section 2.5 of the Officer’s MUSA pursuant to which Officer’s H Units were granted under that certain Seventh Amended and Restated Limited Liability Company Agreement of NMH Investment, LLC, dated as of September 16, 2014, Officer’s H Units that remain outstanding and unvested immediately prior to the date of such termination shall not expire immediately upon such termination and shall instead remain outstanding until the six-month anniversary of such termination, such that, in the event that a Sale of the Company occurs prior to such six-month anniversary, all such outstanding H Units shall be deemed fully vested for purposes of Section 2.5 of the MUSA pursuant to which the Officer’s H Units were granted. In the event that a Sale of the Company does not occur prior to the end of such six-month anniversary, the Officer’s unvested H Units shall immediately expire.

In the event such termination for Good Reason occurs within six months prior to or 24 months after the consummation of a Change in Control (as such term is defined in Employer’s 2014 Omnibus Incentive Plan, dated as of August 25, 2014 (the “ 2014 plan ”)), then, subject to the Separation Agreement and Release becoming effective within 60 days of Officer’s Separation from Service, Officer’s then-outstanding Awards (as defined in the 2014 Plan) that would have vested in accordance with their terms solely based upon continued employment, shall not expire upon such termination and shall instead vest in full upon such termination or, if applicable, shall vest in full upon a Change in Control that occurs within six months following such termination. Upon the occurrence of a Change in Control in which such Awards are not assumed by the applicable successor entity, Officer shall be entitled to accelerated vesting of all such then-outstanding Awards whereby such Awards shall, as applicable, be fully exercisable, any vesting conditions or restrictions shall lapse, and such Awards shall be fully vested and nonforfeitable.

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.

 

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(d) Automatic Termination . This Agreement will terminate automatically upon the death or permanent disability of Officer. Officer will be deemed to be “ Disabled ” or to suffer from a “ Disability ” within the meaning of this Agreement if (i) the Officer is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, (ii) the Officer is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Employer, or (iii) the Officer is determined to be totally disabled by the Social Security Administration. Subject to continuing coverage under applicable benefit plans, and except as otherwise provided in this Agreement or as may be required by law, if Officer is terminated pursuant to this Section 6(d) , Employer shall pay Officer (or his beneficiary, as the case may be) (x) the Accrued Obligations and (y) a pro rata bonus for the year in which such termination occurs based on Employer’s actual performance, such bonus to be paid in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which his Separation from Service from the Employer by reason of Disability or death occurred ended. With respect to the Accrued Obligations, Employer shall pay any earned but unpaid bonus to the Officer (or his beneficiary, as the case may be) in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which the bonus was earned ended, and pay all other Accrued Obligations to the Officer no later than 74 days following his Separation from Service from the Employer by reason of death or Disability (or at such earlier date as applicable law requires).

In addition to the payments described above, in the event Officer is terminated pursuant to this Section 6(d), Officer shall also be entitled to pro-rata acceleration of all Awards subject solely to time-based vesting, with such time-based Awards becoming vested and nonforfeitable as of such termination date in proportion to the period of time that has elapsed between the grant date of such award and the date of Officer’s termination over the time-based vesting period contemplated by such Award.

In the event Officer is terminated pursuant to this Section 6(d) prior to the consummation of a Sale of the Company (as such term is defined in the Amended and Restated Securityholders Agreement of NMH Investment, LLC, dated as of September 16, 2014), then notwithstanding anything to the contrary in Section 2.5 of the Officer’s MUSA, the Officer’s H Units granted under that certain Seventh Amended and Restated Limited Liability Company Agreement of NMH Investment, LLC, dated as of September 16, 2014 that remain outstanding and unvested immediately prior to the date of such termination shall not expire immediately upon such termination and, instead, all such outstanding H Units shall be deemed fully vested for purposes of Section 2.5 of the Officer’s MUSA pursuant to which the Officer’s H Units were granted.

(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 (i) 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

 

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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); (ii) the rights and obligations under Sections 7 , 8 and 9 ; and (iii) all procedural and remedial provisions of this Agreement. A termination of this Agreement will constitute a termination of Officer’s employment with Employer.

(f) Separation from Service . Any termination of employment triggering payment of benefits under this Section  6 must constitute a Separation from Service within the meaning of Treas. Reg.§ 1.409A-1(h) (a “ Separation from Service ”) before distribution of such benefits can commence. For purposes of clarification, this paragraph shall not cause any forfeiture of benefits on the part of the Officer, but shall only act as a delay until such time as a Separation from Service occurs.

(g) Certain Delayed Payments . If any amount to be paid to Officer pursuant to this Section  6 as a result of Officer’s termination of employment is “deferred compensation” subject to Section 409A of the Code and the rules and regulations thereunder and if the Officer is a “Specified Employee” (as defined under Section 409A) as of the date of Officer’s termination of employment hereunder, then, to the extent necessary to avoid the imposition of excise taxes or other penalties under Section 409A of the Code, the payment of benefits, if any, scheduled to be paid by the Employer to Officer hereunder during the first six (6) month period following the date of a termination of employment hereunder shall not be paid until the date which is the first business day following the six-month anniversary of Officer’s termination of employment for any reason other than death. Any deferred compensation payments delayed in accordance with the terms of this paragraph shall be paid in a lump sum when paid.

7. 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

 

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authorization of the Board; 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 7(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.

(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 Employer 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.

 

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(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 home and community based health and human services, including residential, day and vocational programs, and periodic services to individuals with intellectual and/or developmental disabilities, youth with emotional and/or medically complex challenges or at risk youth, and individuals with acquired brain injuries, and catastrophic injuries and illnesses, or any other business that Employer is actively conducting or is actively considering conducting, including adult day services and youths with autism, 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 7(e)(A) , (B)  or (C)  above, nothing contained in Section 7(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.

(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 any client of the Company, 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;

 

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(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  7, 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 the chair of the Compensation Committee of Employer, 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 the chair of the Compensation Committee of Employer, 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  7 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

 

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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 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.

8. 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  8. 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.

 

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(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, 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.

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. Litigation and Regulatory Cooperation . Officer shall cooperate fully with Employer in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of Employer which relate to events or occurrences that transpired while the Officer was employed by Employer. Employer shall reimburse Officer for any reasonable out-of-pocket expenses incurred in connection with Officer’s obligations pursuant to this section. In addition, if such cooperation is required after the Officer’s termination, the Officer shall receive compensation at an hourly rate of not less than the Officer’s Base Salary at the time of termination divided by 1,840.

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 7 , 8 or 9 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

 

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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. D&O Policy/Indemnification . Employer agrees to maintain a Directors and Officers Liability Policy covering Officer 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. That certain Indemnification Agreement, dated as of September 17, 2014, by and between Officer and Employer remains in full force and effect.

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:

If to Employer:

Civitas Solutions, Inc.

Vestar Capital Partners

245 Park Avenue, 41st Floor

New York, NY 10167

Attn: General Counsel

Telecopy: (212) 808-4922

Email: sdellarocca@VestarCapital.com

with a copy to:

Civitas Solutions, Inc.

313 Congress Street

Boston, MA 02210

 

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Attn: Chief Legal Officer

Telecopy: (617) 790-4271

Email: linda.derenzo@thementornetwork.com

If to the Officer:

To the most recent address on file with Employer 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 or electronic mail, 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.

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. Entire Agreement . Except as set forth in the immediately following sentence, 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 (a) that certain employment agreement entered into between Officer and National Mentor, Inc. dated September 7, 2004, (b) the 2006 Agreement, (c) the 2009 Agreement and (d) the 2013 Agreement. Notwithstanding the foregoing, nothing in this Agreement shall release Officer from any liability for any breach of any confidentiality, restrictive covenant or intellectual property provisions of the foregoing agreements occurring prior to the Effective Date. No amendment or modification of this Agreement will be valid unless made in writing and signed by each of the parties and

 

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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.

20. Interpretation . The Employer will interpret, construe, and administer the Agreement in a manner that satisfies the requirements of (a) Code § 409A(a)(2), (3) and (4), (b) Treas. Reg. § 1.409A-1 et seq., and (c) other applicable authority issued by the Internal Revenue Service and the U.S. Department of the Treasury. In addition, the parties shall cooperate fully with one another to ensure compliance with Section 409A of the Code, including, without limitation, adopting amendments to arrangements subject to Section 409A.

21. No Guarantee of Tax Consequences . No person connected with this Agreement, including but not limited to the Employer, or its officers, directors, agents or employees, makes any representation, commitment or guarantee with respect to the Federal, state or local income, estate and/or gift tax treatment of any benefit paid hereunder including, without limitation, under Section 409A of the Code.

22. Counterparts . This Agreement may be executed (including by facsimile transmission) in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

23. Consent of Vestar Capital Partners V, L.P. By execution of this Agreement, Vestar Capital Partners V, L.P. hereby consents to and ratifies the 2009 Agreement, the 2013 Agreement, and this Agreement.

24. Effective Date of Agreement . This Agreement shall become effective upon the Effective Date, but only if as of such date Officer is, and since January 1, 2014 continuously has been, employed by Employer. Notwithstanding any implication herein to the contrary, this Agreement shall automatically be null and void and shall automatically be of no force and effect, and no party hereto shall have any liability hereunder to any other party hereto, upon the termination of Officer’s employment prior to the Effective Date.

[Signatures on next page]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on this 22 nd day of September, 2014.

 

EDWARD M. MURPHY     CIVITAS SOLUTIONS, INC.

/s/ Edward M. Murphy

   

/s/ Bruce F. Nardella

    Name:   Bruce F. Nardella
    Title:   President and Chief Executive Officer

 

Agreed and Acknowledged solely with respect to Section 23 :
VESTAR CAPITAL PARTNERS V, L.P.
By:   Vestar Associates V, L.P.
Its:   General Partner
By:   Vestar Managers V Ltd.
Its:   General Partner
By:  

/s/ Steve Della Rocca

Name:   Steve Della Rocca
Title:   Managing Director

And, solely for purposes of compliance with the vesting provisions regarding the Class H Units described hereunder

 

NMH INVESTMENT, LLC
By:  

/s/ Steve Della Rocca

Name:   Steve Della Rocca
Title:   Secretary

Exhibit 10.7

FORM AGREEMENT

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“ Agreement ”), dated as of ______ __, 2014, is effective as of ________ __, 2014 (the “ Effective Date ”), and is made between _______________ (“ Officer ”), and Civitas Solutions, Inc., a Delaware corporation (“ Employer ”).

WHEREAS, Employer desires to employ Officer in the role of ________; and

WHEREAS, the parties hereto have agreed to enter into this Agreement, [which shall supersede the Noncompetition Agreement as set forth in Section 19 hereof, and] which shall govern the rights and obligations of the parties, in each case as of the Effective Date.

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

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 one year commencing on the Effective Date and, unless terminated earlier in accordance with the terms of this Agreement, ending on the first anniversary of the Effective Date. 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 __________________ of Employer [reporting to the Chief Executive Officer of Employer (the “ CEO ”)]. Officer agrees to serve in such position, or in such other positions of a similar status or level as the [CEO] determines from time to time, and to perform the commensurate duties that the [CEO] 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 the 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.

4. Compensation.

(a) Base Salary. Employer will pay Officer a base salary in the amount of $__________ 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. 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, subject to the terms of the Plan, but with a bonus target of [50]% of Officer’s Base Salary. The Bonus shall be paid to the Officer in a single lump sum no later than March 15th of the calendar year following the calendar year in which the applicable fiscal year ended.

(c) Benefits. Officer will be eligible to participate in all benefit plans to the same extent as they are made available to other comparable executives 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. For all purposes of this Agreement, (including without limitation under this Section 5), any expense reimbursements made (or any in-kind benefits provided) to Officer in any one calendar year shall not affect the amount that may be reimbursed in any other calendar year and a reimbursement or in-kind benefit (or right thereto) may not be exchanged or liquidated for another benefit or payment. Any reimbursement subject to Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the rules and regulations thereunder, shall be made no later than the end of the calendar year following the calendar year in which Officer incurs such expense.

6. Termination.

(a) Termination Due to Resignation Without Good Reason, Termination with Cause, or Non-Renewal of Agreement by Officer. 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:

 

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(i) the effective date of Officer’s resignation without Good Reason (as defined in Section 6(c) below); 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 Employer (or any of its securityholders or subsidiaries) that is other than de minimis, (D) the violation by Officer of a written Employer 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 or the CEO 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 (X) Officer has been provided written notice of Employer’s intention to terminate his employment for Cause and the specific facts relied on, (Y) Officer has been provided 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 (Z) Officer does not cure any such conduct or omission within such ten-day period; or

(iii) the expiration of the term of the Agreement, if Officer notifies Employer of his non-renewal of the term of the Agreement (or an extension thereof) pursuant to the procedures set forth in Section 1 hereof.

Officer may resign his employment without Good Reason at any time by giving thirty (30) days written notice of resignation to Employer.

If Officer is terminated pursuant to this Section 6(a) , in addition to any earned but unpaid amounts to which Officer is entitled under any of Employer’s benefit plans, the payment of which shall be governed by the applicable plan documents, 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 ”). Any Accrued Obligations attributable to earned but unpaid bonus shall be paid to the Officer in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which the bonus was earned ended, and any other Accrued Obligations under this Section 6(a) shall be paid to the Officer no later than 74 days following his Separation from

 

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Service (as defined below) from the Employer (or at such earlier time as applicable law requires).

(b) Termination Without Cause or Non-Renewal of Agreement by Employer. 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. In addition, Employer may notify Officer of Employer’s non-renewal of the term of the Agreement (or an extension thereof) pursuant to the procedures set forth in Section 1 hereof, in which case the Agreement and Officer’s employment hereunder will cease as of the expiration of the term of the Agreement. If Employer terminates this Agreement without Cause, or notifies Officer of non-renewal pursuant to Section 1 hereof, subject to Officer signing a separation agreement containing, among other provisions, a general release of claims in favor of the Employer and related persons and entities in a form and manner reasonably satisfactory to the Employer (the “ Separation Agreement and Release ”) and the Separation Agreement and Release becoming irrevocable, all within 60 days after the date of Officer’s Separation from Service, Employer shall:

(i) With respect to the Accrued Obligations, pay any earned but unpaid bonus to the Officer in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which the bonus was earned ended, and pay all other Accrued Obligations to the Officer no later than 74 days following his Separation from Service from the Employer (or at such earlier time as applicable law requires);

(ii) Continue to pay Officer the Base Salary in effect at the time of his Separation from Service, in accordance with the Employer’s customary payroll practices, for a period of 12 months; provided, however, that if such termination occurs within six months prior to or 24 months after the consummation of a Change in Control (as such term is defined in Employer’s 2014 Omnibus Incentive Plan, dated as of August 25, 2014 (the “ 2014 Plan ”), such Base Salary payments shall continue for a period of 18 months instead of 12 months;

(iii) Pay Officer an additional monthly amount equal to $2,000 in accordance with the Employer’s customary payroll practices, for a period of 24 months;

(iv) On or before the last day of the calendar year following the date of the Officer’s Separation from Service, pay Officer an amount equal to Officer’s target annual bonus for the year in which such termination occurs; and

(v) Pay Officer a pro rata bonus for the year in which such termination occurs based on Employer’s actual performance as of the date of termination, such bonus to be paid in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which the Officer’s Separation from Service occurred ended, provided , however that no such pro rata bonus will be paid if the Officer’s termination occurs in the first six months of such fiscal year.

 

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The amounts payable under Subsections (ii), (iii), (iv) and (v) above shall be paid out in accordance with the Company’s payroll practice commencing within 60 days after the Officer’s Separation from Service; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, such payments shall begin to be paid in the second calendar year by the last day of such 60-day period; provided, further, that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Officer’s Separation from Service. Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treas. Reg. § 1.409A-2(b)(2).

In the event such termination without Cause occurs prior to the consummation of a Sale of the Company (as such term is defined in the Amended and Restated Securityholders Agreement of NMH Investment, LLC, dated as of September 16, 2014), and, within six months following such termination, a Sale of the Company occurs, then, subject to the Separation Agreement and Release becoming effective within 60 days of Officer’s Separation from Service, notwithstanding anything to the contrary in Section 2.5 of the Officer’s Management Unit Subscription Agreement (the “ MUSA ”) pursuant to which Officer’s Class H Units (the “ H Units ”) were granted under that certain Seventh Amended and Restated Limited Liability Company Agreement of NMH Investment, LLC, dated as of September 16, 2014, Officer’s H Units that remain outstanding and unvested immediately prior to the date of such termination shall not expire immediately upon such termination and shall instead remain outstanding until the six-month anniversary of such termination, such that, in the event that a Sale of the Company occurs prior to such six-month anniversary, all such outstanding H Units shall be deemed fully vested for purposes of Section 2.5 of the MUSA pursuant to which the Officer’s H Units were granted. In the event that a Sale of the Company does not occur prior to the end of such six-month anniversary, the Officer’s unvested H Units shall immediately expire.

[In the event such termination without Cause occurs prior to the consummation of a Sale of the Company (as such term is defined in the Amended and Restated Securityholders Agreement of NMH Investment, LLC, dated as of September 16, 2014), and, within six months following such termination, a Sale of the Company occurs, then, subject to the Separation Agreement and Release becoming effective within 60 days of Officer’s Separation from Service, notwithstanding anything to the contrary in Section 2.5 of the Officer’s MUSA pursuant to which Officer’s Class F Units (the “ F Units ”) were granted under that certain Seventh Amended and Restated Limited Liability Company Agreement of NMH Investment, LLC, dated as of September 16, 2014, Officer’s F Units that remain outstanding and unvested immediately prior to the date of such termination shall not expire immediately upon such termination and shall instead remain outstanding until the six-month anniversary of such termination, such that, in the event that a Sale of the Company occurs prior to such six-month anniversary, all such outstanding F Units shall be deemed fully vested for purposes of Section 2.5 of the MUSA pursuant to which the Officer’s F Units were granted. In the event that a Sale of the Company does not occur prior to the end of such six-month anniversary, the Officer’s unvested F Units shall immediately expire.] 1

In the event such termination without Cause occurs within six months prior to or 24 months after the consummation of a Change in Control (as such term is defined in the 2014 Plan), then,

 

1  

NTD: To be included only for Executives who hold Class F Units.

 

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subject to the Separation Agreement and Release becoming effective within 60 days of Officer’s Separation from Service, Officer’s then-outstanding Awards (as defined in the 2014 Plan) that would have vested in accordance with their terms solely based upon continued employment, shall not expire upon such termination and shall instead vest in full upon such termination or, if applicable, shall vest in full upon a Change in Control that occurs within six months following such termination. Upon the occurrence of a Change in Control in which such Awards are not assumed by the applicable successor entity, Officer shall be entitled to accelerated vesting of all such then-outstanding Awards whereby such Awards shall, as applicable, be fully exercisable, any vesting conditions or restrictions shall lapse, and such Awards shall be fully vested and nonforfeitable.

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 material reduction in Officer’s annual base salary or annual bonus opportunity, provided that any reduction of up to ten percent (10%) of Officer’s salary or bonus opportunity that is part of a plan to reduce compensation of comparably situated employees of Employer generally shall not be considered a “material reduction in Officer’s annual base salary or annual bonus opportunity” hereunder, (iii) a material breach by Employer of this Agreement, or (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. Notwithstanding anything to the contrary in the foregoing, Officer shall only have Good Reason to terminate employment if Officer gives notice, in writing, to the Employer of the act or omission which is alleged to constitute Good Reason within 90 days of the initial occurrence thereof, and Employer fails to remedy such act or omission within thirty (30) days following Employer’s receipt of written notice from Officer specifying such act or omission.

If Officer terminates this Agreement for Good Reason, subject to Officer signing the Separation Agreement and Release, and the Separation Agreement and Release becoming irrevocable, all within 60 days after the date of Officer’s Separation from Service, Employer shall:

(i) With respect to the Accrued Obligations, pay any earned but unpaid bonus to the Officer in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which the bonus was earned ended, and pay all other Accrued Obligations to the Officer no later than 74 days following his Separation from Service from the Employer (or at such earlier time as applicable law requires);

(ii) Continue to pay Officer the Base Salary in effect at the time of his Separation from Service, in accordance with the Employer’s customary payroll practices, for a period of 12 months; provided, however, that if such termination occurs within six months prior to or 24 months after the consummation of a Change in Control (as such term is defined in the 2014 Plan), such Base Salary payments shall continue for

 

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a period of 18 months instead of 12 months;

(iii) Pay Officer an additional monthly amount equal to $2,000 in accordance with the Employer’s customary payroll practices, for a period of 24 months;

(iv) On or before the last day of the calendar year following the date of the Officer’s Separation from Service, pay Officer an amount equal to Officer’s target annual bonus for the year in which such termination occurs; and

(v) Pay Officer a pro rata bonus for the year in which such termination occurs based on Employer’s actual performance as of the date of termination, such bonus to be paid in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which the Officer’s Separation from Service occurred ended, provided , however that no such pro rata bonus will be paid if the Officer’s termination occurs in the first six months of such fiscal year.

The amounts payable under Subsections (ii), (iii), (iv) and (v) above shall be paid out in accordance with the Company’s payroll practice commencing within 60 days after the Officer’s Separation from Service; provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, such payments shall begin to be paid in the second calendar year by the last day of such 60-day period; provided, further, that the initial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Officer’s Separation from Service. Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes of Treas. Reg. § 1.409A-2(b)(2).

In the event such termination for Good Reason occurs prior to the consummation of a Sale of the Company (as such term is defined in the Amended and Restated Securityholders Agreement of NMH Investment, LLC, dated as of September 16, 2014), and, within six months following such termination, a Sale of the Company occurs, then, subject to the Separation Agreement and Release becoming effective within 60 days of Officer’s Separation from Service, notwithstanding anything to the contrary in Section 2.5 of the Officer’s MUSA pursuant to which Officer’s H Units were granted under that certain Seventh Amended and Restated Limited Liability Company Agreement of NMH Investment, LLC, dated as of September 16, 2014, Officer’s H Units that remain outstanding and unvested immediately prior to the date of such termination shall not expire immediately upon such termination and shall instead remain outstanding until the six-month anniversary of such termination, such that, in the event that a Sale of the Company occurs prior to such six-month anniversary, all such outstanding H Units shall be deemed fully vested for purposes of Section 2.5 of the MUSA pursuant to which the Officer’s H Units were granted. In the event that a Sale of the Company does not occur prior to the end of such six-month anniversary, the Officer’s unvested H Units shall immediately expire.

[In the event such termination for Good Reason occurs prior to the consummation of a Sale of the Company (as such term is defined in the Amended and Restated Securityholders Agreement of NMH Investment, LLC, dated as of September 16, 2014), and, within six months following such termination, a Sale of the Company occurs, then, subject to the Separation Agreement and Release becoming effective within 60 days of Officer’s Separation from Service,

 

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notwithstanding anything to the contrary in Section 2.5 of the Officer’s MUSA pursuant to which Officer’s F Units were granted under that certain Seventh Amended and Restated Limited Liability Company Agreement of NMH Investment, LLC, dated as of September 16, 2014, Officer’s F Units that remain outstanding and unvested immediately prior to the date of such termination shall not expire immediately upon such termination and shall instead remain outstanding until the six-month anniversary of such termination, such that, in the event that a Sale of the Company occurs prior to such six-month anniversary, all such outstanding F Units shall be deemed fully vested for purposes of Section 2.5 of the MUSA pursuant to which the Officer’s F Units were granted. In the event that a Sale of the Company does not occur prior to the end of such six-month anniversary, the Officer’s unvested F Units shall immediately expire.] 2

In the event such termination for Good Reason occurs within six months prior to or 24 months after the consummation of a Change in Control (as such term is defined in the 2014 Plan), then, subject to the Separation Agreement and Release becoming effective within 60 days of Officer’s Separation from Service, Officer’s then-outstanding Awards (as defined in the 2014 Plan) that would have vested in accordance with their terms solely based upon continued employment, shall not expire upon such termination and shall instead vest in full upon such termination or, if applicable, shall vest in full upon a Change in Control that occurs within six months following such termination. Upon the occurrence of a Change in Control in which such Awards are not assumed by the applicable successor entity, Officer shall be entitled to accelerated vesting of all such then-outstanding Awards whereby such Awards shall, as applicable, be fully exercisable, any vesting conditions or restrictions shall lapse, and such Awards shall be fully vested and nonforfeitable.

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 (i) the Officer is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, (ii) the Officer is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Employer, or (iii) the Officer is determined to be totally disabled by the Social Security Administration. Subject to continuing coverage under applicable benefit plans, and except as otherwise provided in this Agreement or as may be required by law, if Officer is terminated pursuant to this Section 6(d) , Employer shall pay Officer (or his beneficiary, as the case may be) (x) the Accrued Obligations and (y) a pro rata bonus for the year in which such termination occurs based on Employer’s actual performance, such bonus to be paid in a single lump sum no later than March 15th of the calendar year following the calendar year in which the

 

2  

NTD: To be included only for Executives who hold Class F Units.

 

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fiscal year in which his Separation from Service from the Employer by reason of Disability or death occurred ended. With respect to the Accrued Obligations, Employer shall pay any earned but unpaid bonus to the Officer (or his beneficiary, as the case may be) in a single lump sum no later than March 15th of the calendar year following the calendar year in which the fiscal year in which the bonus was earned ended, and pay all other Accrued Obligations to the Officer no later than 74 days following his Separation from Service from the Employer by reason of death or Disability (or at such earlier date as applicable law requires).

In addition to the payments described above, in the event Officer is terminated pursuant to this Section 6(d), Officer shall also be entitled to pro-rata acceleration of all Awards subject solely to time-based vesting, with such time-based Awards becoming vested and nonforfeitable as of such termination date in proportion to the period of time that has elapsed between the grant date of such award and the date of Officer’s termination over the time-based vesting period contemplated by such Award.

In the event Officer is terminated pursuant to this Section 6(d) prior to the consummation of a Sale of the Company (as such term is defined in the Amended and Restated Securityholders Agreement of NMH Investment, LLC, dated as of September 16, 2014), then notwithstanding anything to the contrary in Section 2.5 of the Officer’s MUSA, the Officer’s H Units granted under that certain Seventh Amended and Restated Limited Liability Company Agreement of NMH Investment, LLC, dated as of September 16, 2014 that remain outstanding and unvested immediately prior to the date of such termination shall not expire immediately upon such termination and, instead, all such outstanding H Units shall be deemed fully vested for purposes of Section 2.5 of the Officer’s MUSA pursuant to which the Officer’s H Units were granted.

[In the event Officer is terminated pursuant to this Section 6(d) prior to the consummation of a Sale of the Company (as such term is defined in the Amended and Restated Securityholders Agreement of NMH Investment, LLC, dated as of September 16, 2014), then notwithstanding anything to the contrary in Section 2.5 of the Officer’s MUSA, the Officer’s F Units granted under that certain Seventh Amended and Restated Limited Liability Company Agreement of NMH Investment, LLC, dated as of September 16, 2014 that remain outstanding and unvested immediately prior to the date of such termination shall not expire immediately upon such termination and, instead, all such outstanding F Units shall be deemed fully vested for purposes of Section 2.5 of the Officer’s MUSA pursuant to which the Officer’s F Units were granted.] 3

(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 (i) 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); (ii) the rights and obligations under Sections 7, 8 and 9; and (iii) all procedural and remedial provisions of this Agreement. A termination of this Agreement will constitute a termination of Officer’s employment with Employer.

 

3   NTD: To be included only for Executives who hold Class F Units.

 

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(f) Separation from Service. Any termination of employment triggering payment of benefits under this Section 6 must constitute a Separation from Service within the meaning of Treas. Reg. § 1.409A-1(h) (a “ Separation from Service ”) before distribution of such benefits can commence. For purposes of clarification, this paragraph shall not cause any forfeiture of benefits on the part of the Officer, but shall only act as a delay until such time as a Separation from Service occurs.

(g) Certain Delayed Payments. If any amount to be paid to Officer pursuant to this Section 6 as a result of Officer’s termination of employment is “deferred compensation” subject to Section 409A of the Code and the rules and regulations thereunder and if the Officer is a “Specified Employee” (as defined under Section 409A) as of the date of Officer’s termination of employment hereunder, then, to the extent necessary to avoid the imposition of excise taxes or other penalties under Section 409A of the Code, the payment of benefits, if any, scheduled to be paid by the Employer to Officer hereunder during the first six (6) month period following the date of a termination of employment hereunder shall not be paid until the date which is the first business day following the six-month anniversary of Officer’s termination of employment for any reason other than death. Any deferred compensation payments delayed in accordance with the terms of this paragraph shall be paid in a lump sum when paid.

 

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

(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; 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

 

10


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  7 (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.

(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 Employer 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 12 months 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 home and community based health

 

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and human services, including residential, day and vocational programs, and periodic services to individuals with intellectual and/or developmental disabilities, youth with emotional and/or medically complex challenges or at risk youth, and individuals with acquired brain injuries, and catastrophic injuries and illnesses, or any other business that the Employer is actively conducting or is actively considering conducting, including adult day services and youths with autism, at the time of Officer’s termination of employment (so long as Officer knows or reasonably should have known about such plans(s)), in each case in any geographical area within a 100 mile radius of Officer’s principal place of work with the company or its affiliate, if applicable (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  7 (e)(A) , (B)  or (C)  above, nothing contained in Section  7 (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.

(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 any client of the Company, 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.

 

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For purposes of this Section  7, 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 the chair of the Compensation Committee of Employer, 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 the chair of the Compensation Committee of Employer, 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  7 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 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.

8. Intellectual Property.

 

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(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  8. 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, Officers, agents and

 

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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.

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. Litigation and Regulatory Cooperation. Officer shall cooperate fully with Employer in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of Employer which relate to events or occurrences that transpired while the Officer was employed by Employer. Employer shall reimburse Officer for any reasonable out-of-pocket expenses incurred in connection with Officer’s obligations pursuant to this section. In addition, if such cooperation is required after the Officer’s termination, the Officer shall receive compensation at an hourly rate of not less than the Officer’s Base Salary at the time of termination divided by 1,840.

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  7, 8 or 9 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

 

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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. D&O Policy/Indemnification. Employer agrees to maintain a Directors and Officers Liability Policy covering Officer 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. That certain Indemnification Agreement, dated as of September __, 2014, by and between Officer and Employer remains in full force and effect.

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:

If to Employer:

Civitas Solutions, Inc.

Vestar Capital Partners

245 Park Avenue, 41st Floor

New York, NY 10167 Attn: General Counsel Telecopy: (212) 808-4922

Email: sdellarocca@VestarCapital.com

with a copy to:

Civitas Solutions, Inc.

313 Congress Street

Boston, MA 02210

Attn: Chief Legal Officer

Telecopy: (617) 790-4271

Email: linda.derenzo@thementornetwork.com

If to the Officer:

To the most recent address on file with Employer 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 or

 

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electronic mail, 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.

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. Entire Agreement. Except as set forth in the immediately following sentence, 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 Amended and Restated Severance and Noncompetition Agreement, dated _______________ and effective ________ (the “ Noncompetition Agreement ”). Notwithstanding the foregoing, nothing in this Agreement shall release Officer from any liability for any breach of Sections 3 or 4 of the Noncompetition Agreement occurring prior to the Effective Date]. No amendment or modification of this Agreement will be valid unless made in writing and signed by each of the parties. 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.

20. Interpretation. The Employer will interpret, construe, and administer the Agreement in a manner that satisfies the requirements of the Code and other applicable authority issued by the Internal Revenue Service and the U.S. Department of the Treasury. In addition, the parties shall cooperate fully with one another to ensure compliance with Section 409A of the Code, including, without limitation, adopting amendments to arrangements subject to Section 409A.

 

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21. No Guarantee of Tax Consequences. No person connected with this Agreement, including but not limited to the Employer, or its Officers, directors, agents or employees, makes any representation, commitment or guarantee with respect to the Federal, state or local income, estate and/or gift tax treatment of any benefit paid hereunder including, without limitation, under Section 409A of the Code.

22. Counterparts. This Agreement may be executed (including by facsimile transmission) in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

23. Effective Date of Agreement . This Agreement shall become effective upon the Effective Date, but only if as of such date Officer is, and since ________ __, 2014 continuously has been, employed by Employer. Notwithstanding any implication herein to the contrary, this Agreement shall automatically be null and void and shall automatically be of no force and effect, and no party hereto shall have any liability hereunder to any other party hereto, upon the termination of Officer’s employment prior to the Effective Date.

 

 

[Signatures on next page]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on this __ day of _________, 2014.

 

 

[OFFICER]     CIVITAS SOLUTIONS, INC.

 

    By:    
   

Name:

Title:

 

Bruce F. Nardella

Chief Executive Officer

 

 

 

 

And, solely for purposes of compliance with the vesting provisions regarding the Class H Units [and the Class F Units] described hereunder

 

NMH INVESTMENT, LLC
By:    

Name:

Title:

 

 

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