Exhibit 10.14


 


NATIONAL MENTOR HOLDINGS, INC.


STOCK OPTION PLAN


 


ARTICLE I


 


Purpose of Plan


 


The
Stock Option Plan (the “Plan”) of National Mentor Holdings, Inc.
(the “Company”), adopted by the Board of Directors of the Company on November 7,
2001, for directors, officers and key employees of, and certain other key
individuals who perform services for, the Company is intended to advance the
best interests of the Company by providing those persons who have
responsibility for its management and growth with additional incentives by
allowing them to acquire an ownership interest in the Company and thereby
encouraging them to contribute to the success of the Company and to continue to
provide their services to the Company. 
The availability and offering of stock options under the Plan also
increases the Company’s ability to attract and retain individuals of
exceptional managerial talent upon whom, in large measure, the sustained
progress, growth and profitability of the Company depends.  The Plan is a compensatory benefit plan
within the meaning of Rule 701 of the Securities Act of 1933, as amended,
and, unless and until the Common Stock is publicly traded, the issuance of
options to purchase Common Stock pursuant to the Plan and the issuance of
Common Stock pursuant to such options is intended to qualify for the exemption
from registration under the Securities Act provided by Rule 701.


 


ARTICLE II


 


Definitions


 


For
purposes of the Plan, except where the context clearly indicates otherwise, the
following terms shall have the meanings set forth below:


 


“Board”
shall mean the Board of Directors of the Company.


 


“Cause”
shall mean any of the following: (i) theft or embezzlement, or attempted
theft or embezzlement, of money or property of the Company or any subsidiary, perpetration
or attempted perpetration of fraud, or participation in a fraud or attempted
fraud, on the Company or any subsidiary or unauthorized appropriation of, or
attempt to misappropriate, any tangible or intangible assets or property of the
Company or any subsidiary, (ii) any act or acts of disloyalty, misconduct
or moral turpitude injurious to the interest, property, operations, business or
reputation of the Company or any subsidiary or conviction of a crime the
commission of which results in injury to the Company or any subsidiary or (iii) failure
or inability (other than by reason of Disability) to carry out effectively a
Participant’s duties and obligations to the Company and its subsidiaries or to
participate effectively and actively in the management of the Company and its
subsidiaries, as determined in the reasonable judgment of the Board.


 


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“Code”
shall mean the Internal Revenue Code of 1986, as amended, and any successor
statute.


 


“Committee”
shall mean the committee of the Board which may be designated by the Board to
administer the Plan.  The Committee shall
be composed of two or more directors as appointed from time to time to serve by
the Board.


 


“Common
Stock” shall mean the Company’s Common Stock, par value $.01 per share, or
if the outstanding Common Stock is hereafter changed into or exchanged for
different stock or securities of the Company, such other stock or securities.


 


“Company”
shall mean National Mentor Holdings, Inc., a Delaware corporation, and
(except to the extent the context requires otherwise) any subsidiary
corporation of National Mentor Holdings, Inc., a Delaware corporation, as
such term is defined in Section 425(f) of the Code.


 


“Disability”
shall mean the inability, due to illness, accident, injury, physical or mental
incapacity or other disability, of any Participant to carry out effectively his
duties and obligations to the Company or to participate effectively and
actively in the management of the Company for a period of at least 90
consecutive days or for shorter periods aggregating at least 90 days (whether
or not consecutive) during any 180-day period, as determined in the reasonable
judgment of the Board.


 


“Fair
Market Value” of the Common Stock shall be determined by the Committee or,
in the absence of the Committee, by the Board.


 


“Participant”
shall mean any director, officer or key employee of, or any other key
individual who performs services for, the Company who has been selected to
participate in the Plan by the Committee or the Board.


 


“Person”
shall mean 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.


 


“Sale
of the Company” shall mean the sale to a third party or affiliated group of
third parties, as determined by the Committee in its discretion, of (i) capital
stock of the Company possessing the voting power to elect a majority of the
Company’s board of directors (whether by merger, consolidation or sale or
transfer of the Company’s capital stock) or (ii) more than 50% of the
Company’s assets determined on a consolidated basis; provided that in any
event, the term “Sale of the Company” shall not include an offering of
securities to the public.


 


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ARTICLE III


 


Administration


 


The
Plan shall be administered by the Committee; provided that if for any reason
the Committee shall not have been appointed by the Board, all authority and
duties of the Committee under the Plan shall be vested in and exercised by the
Board.  Subject to the limitations of the
Plan, the Committee shall have the sole and complete authority to: (i) select
Participants, (ii) grant Options (as defined in Article IV below) to
Participants in such forms and amounts as it shall determine (including,
without limitation, with respect to designating Options as Incentive Stock
Options (as defined in Article V below) or nonqualified stock options), (iii) impose
such limitations, restrictions and conditions upon such Options as it shall
deem appropriate, (iv) interpret the Plan and adopt, amend and rescind
administrative guidelines and other rules and regulations relating to the
Plan, (v) correct any defect or omission or reconcile any inconsistency in
the Plan or in any Option granted hereunder and (vi) make all other
determinations and take all other actions necessary or advisable for the
implementation and administration of the Plan, subject to such limitations as
may be imposed by the Code on the grant of Incentive Stock Options or other
applicable law.  The Committee’s
determinations on matters within its authority shall be conclusive and binding
upon the Participants, the Company and all other Persons.  All expenses associated with the
administration of the Plan shall be borne by the Company.  The Committee may, as approved by the Board
and to the extent permissible by law, delegate any of its authority hereunder
to such persons as it deems appropriate.


 


ARTICLE IV


 


Limitation on Aggregate Shares


 


The
number of shares of Common Stock with respect to which options may be granted
under the Plan (the “Options”) and which may be issued upon the exercise
thereof shall not exceed, in the aggregate, 284,063 shares; provided that the
type and the aggregate number of shares which may be subject to Options shall
be subject to adjustment in accordance with the provisions of Section 6.8
below, and further provided that to the extent any Options expire unexercised
or are canceled, terminated or forfeited in any manner without the issuance of
Common Stock thereunder, or if any Options are exercised and the shares of
Common Stock issued thereunder are repurchased by the Company, such shares
shall again be available under the Plan. 
The 284,063 shares of Common Stock available under the Plan may be
either authorized and unissued shares, treasury shares or a combination
thereof, as the Committee shall determine.


 


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ARTICLE V


 


Awards


 


5.1                                 Options.  The Committee may grant Options to
Participants in accordance with this Article V.   In no event shall the aggregate Fair Market
Value per share of all Common Stock (determined at the time the Option is
awarded) with respect to which Incentive Stock Options are exercisable for the
first time by an individual during any calendar year (under all plans of the
Company and its subsidiaries) exceed $100,000.


 


5.2                                 Form of
Option.  Options granted under this
Plan may be “Incentive Stock Options” within the meaning of Section 422
of the Code or nonqualified stock options. 
Unless otherwise indicated, references herein to “Options” shall
include Incentive Stock Options and nonqualified stock options.


 


5.3                                 Exercise
Price.  The option exercise price per
share of Common Stock shall be fixed by the Committee at the date of
grant.    If the Option is intended to be
an Incentive Stock Option, the option exercise price per share of Common Stock
shall be fixed by the Committee at not less than 100% of the Fair Market Value
of a share of Common Stock on the date of grant (or 110% of such Fair Market
Value if the holder of such Incentive Stock Option owns Common Stock possessing
more than ten percent (10%) of the combined voting power of all classes of
stock of the Company or any subsidiary determined with regard to the
attribution rules of Section 424(d) of the Code).


 


5.4                                 Exercisability.  Options shall be exercisable at such time or
times as the Committee shall determine at or subsequent to grant.


 


5.5                                 Payment
of Exercise Price.  Options shall be
exercised in whole or in part by written notice to the Company (to the
attention of the Company’s Secretary) accompanied by payment in full of the
option exercise price.  Payment of the
option exercise price shall be made in cash (including check, bank draft or
money order) or, in the discretion of the Committee, by delivery of a
promissory note or by payroll deductions (if in accordance with policies
approved by the Board).


 


5.6                                 Terms
of Options.  The Committee shall
determine the term of each Option, which term shall in no event exceed ten
years from the date of grant.    If the
holder of an Incentive Stock Option owns Common Stock possessing more than ten
percent (10%) of the combined voting power of all classes of stock of the
Company or any subsidiary, determined with regard to the attribution rules of
Section 424(d) of the Code, the term of such Incentive Stock Option
shall not exceed five years from the date of grant.


 


5.7                                 Stockholder
Approval. The Plan shall be submitted to the Company’s stockholders for
approval.  The Committee may grant
Options under the Plan prior to the time of stockholder approval, which Options
will be effective when granted, but if for any reason the stockholders of the
Company do not approve the Plan prior to one year from the date of adoption of
the Plan by the Board, all Options granted under the Plan will be terminated
and of no effect, and no Option may be exercised in whole or in part prior to
such stockholder approval.


 


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ARTICLE VI


 


General Provisions


 


6.1                                 Conditions
and Limitations on Exercise.  Options
may be made exercisable in one or more installments, upon the happening of
certain events, upon the passage of a specified period of time, upon the
fulfillment of certain conditions or upon the achievement by the Company of
certain performance goals, as the Committee shall decide in each case when the
Options are granted.


 


6.2                                 Sale
of the Company.  In the event of a
Sale of the Company, the Committee may provide, in its discretion, that the
Options then outstanding shall become immediately exercisable and that such
Options shall terminate if not exercised as of the date of the Sale of the
Company or other prescribed period of time.


 


6.3                                 Written
Agreement.  Each Option granted
hereunder to a Participant shall be embodied in a written agreement (an “Option
Agreement”) which shall be signed by the Participant and by the President
of the Company or his designee for and in the name and on behalf of the Company
and shall be subject to the terms and conditions of the Plan prescribed in the
Option Agreement (including, but not limited to, (i) the right of the
Company and such other Persons as the Committee shall designate (“Designees”)
to repurchase from each Participant, and such Participant’s transferees, all
shares of Common Stock issued or issuable to such Participant on the exercise
of an Option in the event of such Participant’s termination of employment (or,
in the case of a Participant who is not an employee of the Company, upon such
other event(s) as the Committee shall determine), (ii) rights of first
refusal granted to the Company and Designees, (iii) holdback and other
registration right restrictions in the event of a public registration of any
equity securities of the Company and (iv) any other terms and conditions
which the Committee shall deem necessary and desirable).


 


6.4                                 Listing,
Registration and Compliance with Laws and Regulations.  Options shall be subject to the requirement
that if at any time the Committee shall determine, in its discretion, that the
listing, registration or qualification of the shares subject to the Options
upon any securities exchange or under any state or federal securities or other
law or regulation, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition to or in connection with the
granting of the Options or the issuance or purchase of shares thereunder, no
Options may be granted or exercised, in whole or in part, unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.  The holders of such Options shall supply the
Company with such certificates, representations and information as the Company
shall request and shall otherwise cooperate with the Company in obtaining such
listing, registration, qualification, consent or approval.  In the case of officers and other Persons
subject to Section 16(b) of the Securities Exchange Act of 1934, as
amended, the Committee may at any time impose any limitations upon the exercise
of an Option that, in the Committee’s discretion, are necessary or desirable in
order to comply with such Section 16(b) and the rules and
regulations thereunder.  If the Company,
as part of an offering of securities or otherwise, finds it desirable 


 


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because of federal or
state regulatory requirements to reduce the period during which any Options may
be exercised, the Committee, may, in its discretion and without the Participant’s
consent, so reduce such period on not less than 15 days written notice to the
holders thereof.


 


6.5                                 Nontransferability.  Options may not be transferred other than by
will or the laws of descent and distribution and, during the lifetime of the
Participant, may be exercised only by such Participant (or his legal guardian
or legal representative).  In the event
of the death of a Participant, exercise of Options granted hereunder shall be
made only:


 


(i)                           by
the executor or administrator of the estate of the deceased Participant or the
Person or Persons to whom the deceased Participant’s rights under the Option
shall pass by will or the laws of descent and distribution; and


 


(ii)                        to
the extent that the deceased Participant was entitled thereto at the date of
his death, unless otherwise provided by the Committee in such Participant’s
Option Agreement.


 


6.6                                 Expiration
of Options.


 


(a)                                  Normal
Expiration.  In no event shall any
part of any Option be exercisable after the date of expiration thereof (the “Expiration
Date”), as determined by the Committee pursuant to Section 5.6 above.


 


(b)                                 Early
Expiration Upon Termination of Employment; etc..  Except as otherwise provided by the Committee
or the Option Agreement, any portion of a Participant’s Option that was not
vested and exercisable on the date of the termination of such Participant’s
employment (or, in the case of a Participant who is not an employee of the
Company, upon such other event(s) as the Committee shall determine) shall
expire and be forfeited as of such date, and any portion of a Participant’s
Option that was vested and exercisable on the date of the termination of such Participant’s
employment (or, in the case of a Participant who is not an employee of the
Company, upon such other event(s) as the Committee shall determine) shall
expire and be forfeited as of such date, except that: (i) if any
Participant dies or becomes subject to any Disability, such Participant’s
Option shall expire 180 days after the date of his death or Disability, but in
no event after the Expiration Date, and (ii) if any Participant is
discharged other than for Cause, such Participant’s Option shall expire 30 days
after the date of his discharge, but in no event after the Expiration Date.


 


6.7                                 Withholding
of Taxes.  The Company shall be
entitled, if necessary or desirable, to withhold from any Participant from any
amounts due and payable by the Company to such Participant (or secure payment
from such Participant in lieu of withholding) the amount of any withholding or
other tax due from the Company with respect to any shares issuable under the
Options, and the Company may defer such issuance unless indemnified to its
satisfaction.  Upon the disposition
(within the meaning of Section 424(c) of the Code) of shares of
Common Stock acquired pursuant to the exercise of an Incentive Stock Option
prior to the expiration of the holding period requirements of Section 422(a)(1) of
the Code, the Participant shall be required to give notice to the Company of
such disposition and the Company shall have the right 


 


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to require the payment of
the amount of any taxes that are required by law to be withheld with respect to
such disposition.


 


6.8                                 Adjustments.  In the event of a reorganization,
recapitalization, stock dividend or stock split, or combination or other change
in the shares of Common Stock, the Board or the Committee may, in order to
prevent the dilution or enlargement of rights under outstanding Options, make
such adjustments in the number and type of shares authorized by the Plan, the
number and type of shares covered by outstanding Options and the exercise prices
specified therein as may be determined to be appropriate and equitable.  The issuance by the Company of shares of
stock of any class, or options or securities exercisable or convertible into
shares of stock of any class, for cash or property, or for labor or services
either upon direct sale, or upon the exercise of rights or warrants to
subscribe therefor, or upon exercise or conversion of other securities, shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock then subject to any Options.  No adjustments to any Incentive Stock Option
shall be made pursuant to this Section 6.8 which consist of a modification
of such Incentive Stock Option under Section 422(h)(3)(C) of the
Code.


 


6.9                                 Rights
of Participants.  Nothing in this
Plan or in any Option Agreement shall interfere with or limit in any way the
right of the Company to terminate any Participant’s employment or other
engagement at any time (with or without Cause), nor confer upon any Participant
any right to continue in the employ or engagement of the Company for any period
of time or to continue his present (or any other) rate of compensation, and
except as otherwise provided under this Plan or by the Committee in the Option
Agreement, in the event of any Participant’s termination of employment or
engagement (including, but not limited to, the termination by the Company
without Cause) any portion of such Participant’s Option that was not previously
vested and exercisable shall expire and be forfeited as of the date of such
termination.  No employee or other person
shall have a right to be selected as a Participant or, having been so selected,
to be selected again as a Participant.


 


6.10                           Amendment,
Suspension and Termination of Plan. 
The Board or the Committee may suspend or terminate the Plan or any
portion thereof at any time and may amend it from time to time in such respects
as the Board or the Committee may deem advisable; provided that no such
amendment shall be made without stockholder approval to the extent such
approval is required by law, agreement or the rules of any exchange upon
which the Common Stock is listed, and no such amendment, suspension or
termination shall materially and adversely impair the rights of Participants
under outstanding Options without the consent of the Participants affected
thereby. No Options shall be granted hereunder after the tenth anniversary of
the adoption of the Plan.


 


6.11                           Amendment,
Modification and Cancellation of Outstanding Options.  The Committee may amend or modify any Option
in any manner to the extent that the Committee would have had the authority
under the Plan initially to grant such Option; provided that no such amendment
or modification shall materially and adversely impair the rights of any
Participant under any Option without the consent of such Participant.  With the Participant’s consent, the Committee
may cancel any Option and issue a new Option to such Participant.


 


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6.12                           Indemnification.  In addition to such other rights of
indemnification as they may have as members of the Board or the Committee, the
members of the Committee shall be indemnified by the Company against all costs
and expenses reasonably incurred by them in connection with any action, suit or
proceeding to which they or any of them may be party by reason of any action
taken or failure to act under or in connection with the Plan or any Option
granted thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding; provided that any such Committee member shall be entitled
to the indemnification rights set forth in this Section 6.12 only if such
member has acted in good faith and in a manner that such member reasonably
believed to be in or not opposed to the best interests of the Company and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe that such conduct was unlawful, and further provided that upon the
institution of any such action, suit or proceeding a Committee member shall
give the Company written notice thereof and an opportunity, at its own expense,
to handle and defend the same before such Committee member undertakes to handle
and defend it on his own behalf.


 


*      *      *     
*


 


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AMENDMENT
TO NATIONAL MENTOR HOLDINGS, INC. STOCK OPTION PLAN


 


On November 11, 2003
Article IV of the Stock Option Plan was amended to increase the number of
shares of Common Stock for which Options (as defined in the Stock Option Plan)
may be granted thereunder to an aggregate of 1,197,952 shares of Common Stock
(from an aggregate of 284,063 shares of Common Stock prior to such amendment).


 


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SECOND
AMENDMENT TO NATIONAL MENTOR HOLDINGS, INC. STOCK
OPTION PLAN


 


On September 7, 2004
Article IV of the Stock Option Plan was amended to increase the number of
shares of Common Stock for which Options (as defined in the Stock Option Plan)
may be granted thereunder to an aggregate of 1,292,952 shares of Common Stock
(from an aggregate of 1,197,952 shares of Common Stock prior to such
amendment).


 


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