Document:

Exhibit 10.5

Exhibit 10.5

The MENTOR Network

Incentive Compensation Plan

Effective March 4, 2011

 

 

 

Table of Contents

	 	 	 	 	 

	Purpose of Plan
	 	 	1	 
	Incentive Compensation Philosophy
	 	 	1	 
	Incentive Plan Guiding Principles
	 	 	1	 
	Eligibility
	 	 	2	 
	Incentive Compensation Payout Opportunity
	 	 	2	 
	Performance Measurements
	 	 	3	 
	Calculation of Incentive Payouts
	 	 	4	 
	Making the Initial Calculation
	 	 	4	 
	Using Free Cash Flow or DSO Performance to Confirm or Modify the Initial Calculation
	 	 	5	 
	Using Quality of Services or Work to Confirm or Modify the Initial Calculation (as adjusted for Free Cash Flow or DSO performance)
	 	 	5	 
	Redistribution of Unallocated Incentive Compensation
	 	 	5	 
	In the Event that Calculated Payouts Exceed Funds Available to Pay Incentive Compensation
	 	 	6	 
	Discretionary Incentive Pool
	 	 	6	 
	Administration
	 	 	6	 
	Plan Changes
	 	 	6	 
	Management of Financial and Other Goals
	 	 	6	 
	Incentive Compensation Payouts
	 	 	7	 
	Approval of New Plan Entrants
	 	 	7	 
	Ongoing Eligibility Management
	 	 	7	 
	Participant Termination Provisions
	 	 	7	 
	Voluntary Terminations
	 	 	7	 
	Involuntary Terminations for Cause
	 	 	7	 
	Retirement and Death
	 	 	8	 
	Special Provisions Relating to Position and Status Changes
	 	 	8	 
	Promotions and Job Transfers
	 	 	8	 
	Interruptions in Work
	 	 	8	 
	Plan Year and Effective Date
	 	 	9	 
	Plan Amendments
	 	 	9	 
	Exhibit A: Eligibility, Weighting, and Target IC Opportunity for Management Positions
	 	 	10	 
	Exhibit B: Eligibility, Weighting, and Target IC Opportunity for Executive Positions
	 	 	11	 
	Annex 1: Examples of Incentive Compensation Payout Calculations
	 	 	12	 

 

ii

 

Purpose of Plan

The purpose of The MENTOR Network Incentive Compensation Plan (the “Incentive Plan” or the
“Plan”) is to provide executives, management, and other designated key employees with the
opportunity to receive an annual cash incentive award for meeting performance goals that align with
the business goals of The MENTOR Network (“The Network”).

Incentive Compensation Philosophy

The Network’s mission is to provide high-quality home and community-based human services to
adults and children with intellectual and/or developmental disabilities, acquired brain injury and
other catastrophic injuries and illnesses; and to youth with emotional, behavioral, or medically
complex challenges. The Network’s vision is to provide these high-quality services to consumers in
need across the United States. To achieve this vision, The Network’s primary business goal is to
continuously improve the quality of services, thereby growing the business and increasing the
equity value of The Network.

This Incentive Plan is intended to complement the other elements of total compensation such as base
salary, merit increases, and benefits. The Plan is designed to align variable compensation with
The Network’s primary business goals and to support achievement of these business goals by
providing:

	•	 	Incentives that closely align pay with the attainment of high-quality services and work and
the attainment of financial goals affecting equity value, including: (1) adjusted EBITDA for
The Network as reported to The Network’s private equity investor (“Adjusted EBITDA”); (2)
contribution to overhead (“CTO”) for organizational units within The Network; (3) revenue; (4)
adjusted free cash flow for The Network, as defined by the Compensation Committee at the
beginning of each fiscal year (“Free Cash Flow”); and (5) days sales outstanding (“DSO”); and

	•	 	Meaningful and competitive incentive compensation opportunities that attract and retain
high performers at the executive and management levels.

Incentive Plan Guiding Principles

This Incentive Plan is based on a set of principles for providing an effective incentive
compensation plan, which are:

	•	 	Variable pay. Variable pay is an important component of total compensation for executives,
management, and other key employees. This Incentive Plan provides the opportunity for
participants to receive annual incentive compensation payouts based on performance. The
opportunity available is related to a participant’s level of responsibility for and impact on
The Network’s and/or organizational unit’s performance, expressed as a percentage of
annualized
base salary. (Throughout this document, “organizational unit” means operating subgroup or
state, whichever applies to the individual participant. For example, for a Vice President of
Operations, the organizational unit is the group of states for which the Vice President is
responsible, which is a subgroup of the larger Operating Group.)

 

1

 

	•	 	Alignment. Incentive payouts are directly linked to The Network’s business goals. The
initial calculation of incentive payouts is based on actual Adjusted EBITDA and/or CTO and
actual revenue compared against budgeted goals for The Network and/or organizational unit. In
addition, the calculation factors in Free Cash Flow or the applicable level of DSO and the
participants’ performance with regard to quality of services or work.

	•	 	Clear line of sight. As much as possible, incentives are linked to goals that participants
can see, understand, and impact.

	•	 	Simplicity. The method for calculating incentive payouts and the goals on which incentive
payouts are based are easily understood.

Eligibility

Eligibility for participation in the Incentive Plan is limited to employees who are in
positions that have been approved for participation and who are not eligible for participation
under another cash incentive plan of The Network. Exceptions must be approved by the President and
Chief Operating Officer (“President/COO”,) the Chief Financial Officer (“CFO”) and the Chief Human
Resources Officer (“CHRO”). For a list of management and other key positions that have been
approved for participation, refer to Exhibit A. For a list of executive positions that have been
approved for participation, refer to Exhibit B.

Incentive Compensation Payout Opportunity

A participant’s target incentive compensation opportunity is based on the participant’s level
of responsibility for and impact on The Network’s business goals. Refer to Exhibit A for the
target levels of incentive compensation payout opportunities available to management and other key
positions, and to Exhibit B for executive payout opportunities.

 

2

 

Performance Measurements

Incentive compensation payouts are based on four performance measurements: (1) Adjusted EBITDA
and/or CTO; (2) revenue; (3) Free Cash Flow or DSO; and (4) quality of services or work.

	•	 	Adjusted EBITDA and/or CTO and revenue. An initial calculation of a participant’s
incentive compensation (the “Initial Calculation”) is based on The Network’s and/or
organizational unit’s Adjusted EBITDA and/or CTO and revenue measured against budget goals.
Allocation between Network (Adjusted EBITDA) and organizational unit (CTO) performance is
determined according to a participant’s position, as set out on Exhibits A and B. Adjusted
EBITDA/CTO performance is weighted 75 percent and revenue performance is weighted 25 percent.

	•	 	Free Cash Flow or DSO. The Free Cash Flow target applicable to the executive positions
listed on Exhibit B is established and approved at the beginning of the fiscal year by the
Compensation Committee. When the target is met, the Initial Calculation is unaffected. When
the target is not met, the Initial Calculation is modified. For all other employees, DSO
targets are established and approved for The Network and organizational units at the beginning
of the fiscal year by the CFO and President/COO. When the target is met, the Initial
Calculation is unaffected. When the target is not met, the Initial Calculation is modified.

	•	 	Quality of Services or Work. When goals relating to quality of services or work are met or
exceeded, the Initial Calculation (after any Free Cash Flow or DSO adjustment) is unaffected.
When these goals are not met, the Initial Calculation is modified. Operations and Field
Finance management positions (as set forth on Exhibit A) are rated based on quality of
services of the participant’s applicable organizational unit, including factors such as
licensure issues and restrictions. Other positions (as set forth on Exhibits A and B) are
rated based on an individual participant’s quality of work, including factors such as quality
of management, achievement of assigned goals, completion of assigned projects, and
contributions to the achievement of departmental or company goals. Supervisors will be asked
to certify their ratings with respect to individual performance pertaining to quality of work.
The applicable Operating Group President must certify a participant’s organizational unit’s
rating for quality of service. Notwithstanding the foregoing, Operating Group Presidents will
have discretion to reduce any individual’s Initial Calculation, as modified for quality of
services, if the individual’s quality of work was unsatisfactory and therefore merits such a
reduction. Any unallocated incentive compensation as a result of such reduction may be
awarded by the applicable Operating Group President to one or more other participants in the
Plan whose performance with respect to quality of work was exceptional in the judgment of the
Operating Group President.

 

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Calculation of Incentive Payouts

Plan participants are eligible to receive an incentive payout based on a percentage of their
annualized base salary as of the last day of the fiscal year for which the incentive is being paid.
The following steps apply in determining a participant’s incentive compensation payout:

	1.	 	Make the Initial Calculation; i.e., calculate the incentive compensation payout attributable
to Adjusted EBITDA/CTO and revenue performance based on management reporting conventions.
This calculation excludes new start investments under immunity and acquisitions other than
tuck-ins (i.e., purchase price of $3 million or less and easy to integrate, as determined by
the Chief Executive Officer (“CEO”)).

	2.	 	Factor in Free Cash Flow or Network/organizational unit DSO performance, as applicable,
confirming or modifying the Initial Calculation, depending on outcome.

	3.	 	Factor in the participant’s performance pertaining to quality of services or work, confirming
or modifying the Initial Calculation, depending on outcome, and as adjusted for Free Cash Flow
or DSO performance.

	4.	 	Redistribute unallocated incentive dollars resulting from modifying payouts for Free Cash
Flow, DSO, and quality performance.

	5.	 	Redistribute unallocated incentive dollars resulting from Operating Group Presidents’
discretion to reduce individual awards for less than satisfactory quality of work.

For examples of incentive compensation payout calculations, refer to Annex 1.

Making the Initial Calculation

To make the Initial Calculation for a participant, the following formula applies.

Formula:

	•	 	First, determine the participant’s target incentive compensation by multiplying the
participant’s annualized base salary as of the last day of the fiscal year by the percentage
applicable to his or her position (the Target IC Payout Opportunity set out on Exhibits A and
B).

	•	 	Second, determine the portion of the participant’s target incentive compensation
attributable to actual Adjusted EBITDA/CTO performance by multiplying the participant’s target
incentive compensation by 75 percent (i.e., Adjusted EBITDA/CTO weighting) and then by the
adjusted percentage (the IC Payout Levels set out on Annex 1) associated with the Network’s
and/or organizational unit’s actual Adjusted EBITDA/CTO results.

	•	 	Third, determine the portion attributable to actual revenue performance by multiplying the
participant’s target incentive compensation by 25 percent (i.e., revenue weighting) and then
by the adjusted percentage (the IC Payout Levels set out on Annex 1) associated with the
Network’s and/or organizational unit’s actual revenue results.

	•	 	Last, sum the portions calculated for actual Adjusted EBITDA/CTO and revenue performance.

 

4

 

The IC Payout Level used in the Initial Calculation is the percentage payout that applies based on
the level of actual Adjusted EBITDA/CTO and revenue performance achieved. At the beginning of each
fiscal year, an Adjusted EBITDA/CTO and revenue performance table is established for The Network
and each organizational unit. The table (an example of which can be found in Annex 1) sets out the
target Adjusted EBITDA/CTO and revenue goals and a performance range of 92.5 to 107.5 percent of
the targets. At each level of performance there is an associated IC Payout Level. Thus, the
minimum actual performance required for an incentive compensation payout is 92.5 percent of the
Adjusted EBITDA/CTO and revenue target goals, and the maximum actual performance factored into the
calculation is 107.5 percent of the target goals.
The IC Payout Level ranges from 50 to 150 percent, with budgeted or target incentive compensation
at 100 percent. In cases where actual Adjusted EBITDA/CTO and/or revenue performance falls between
two performance points in the table, the IC Payout Level used for the Initial Calculation will fall
proportionately between the two IC Payout Level percentages in the table.

Using Free Cash Flow or DSO Performance to Confirm or Modify the Initial Calculation

A participant’s Initial Calculation may be modified for DSO performance or, in the case of
executive positions listed on Exhibit B, for Free Cash Flow performance. If the Network or
organizational unit meets its Free Cash Flow or DSO target, as applicable for the participant, the
Initial Calculation is unaffected. If the Network or organizational unit fails to meet its Free
Cash Flow or DSO target, the Initial Calculation is multiplied by 90 percent.

In confirming or modifying the Initial Calculation, the Free Cash Flow target applies to executive
positions listed on Exhibit B, the organizational unit DSO target applies to Operating Group
positions, and the Network DSO target applies to all other positions.

Using Quality of Services or Work to Confirm or Modify the Initial Calculation (as adjusted for
Free Cash Flow or DSO performance)

The Initial Calculation may be further modified for quality performance. If a participant receives
a rating of 4 (“meets or exceeds expectations”) for quality of services or work, the Initial
Calculation, as modified for Free Cash Flow or DSO performance, is unaffected. If a participant
receives a rating of 3 (“meets most expectations”) or less, the Initial Calculation, as modified
for Free Cash Flow or DSO performance, is multiplied by 75 percent, 50 percent, or 0 percent, as
set out on Annex 1. A participant’s supervisor must certify a participant’s rating for quality of
work. The applicable Operating Group President must certify a participant’s organizational unit’s
rating for quality of services and the exercise of any discretion to reduce an individual’s Initial
Calculation, as modified, for less than satisfactory quality of work. Quality of service
expectations, standards, and metrics are expected to be developed, approved, and disseminated from
time to time by the President/COO and Operating Group Presidents. A participant’s supervisor
sets quality of work expectations.

Redistribution of Unallocated Incentive Compensation

For incentive compensation that is not allocated as a result of modifying the Initial Calculation
for DSO performance and/or quality of services or work, the unallocated dollar amounts may be
redistributed to participants: (i) within the same operating group, or (ii) within the positions
listed on Exhibit B or listed as “Other” on Exhibit A. The applicable Operating Group President
must approve redistribution of dollars within an operating group. The CEO must approve
redistribution of dollars among all other positions. Incentive compensation that is not allocated
as a result of modifying the Initial Calculation for Free Cash Flow performance may be
redistributed at the discretion of the Compensation Committee.

 

5

 

In the Event that Calculated Payouts Exceed Funds Available to Pay Incentive Compensation

In the event that the total calculated incentive payouts, after taking into account modifications
for Free Cash Flow, DSO, quality performance, and any discretionary redistributions of unallocated
incentive compensation, exceed the funds that are available to pay incentive compensation as
approved by the Compensation Committee, all payouts will be reduced proportionately based on the
funds available.

Discretionary Incentive Pool

Each fiscal year, a discretionary pool will be budgeted equal to three percent of total
budgeted incentive compensation. Based on actual Network Adjusted EBITDA and revenue performance,
the discretionary pool will be adjusted so that it is three percent of the total potential pool.
The discretionary pool may be used to increase incentive compensation payouts for participants
whose calculated payouts may not adequately reflect their performance; for example, to a high
performer within a state or other organizational unit that does not perform well. The CEO must
approve all additions to incentive compensation payouts from the discretionary pool, except for
additions to payouts for executive officers, as defined under the Securities Exchange Act of 1934,
as amended (the “Executive Officers”), whose additions must be recommended by the CEO and approved
by the Compensation Committee.

Administration

Plan Changes

The Compensation Committee must approve the Incentive Plan and any changes to the Plan.

Management of Financial and Other Goals

For each fiscal year, the Compensation Committee must approve:

	•	 	The Network’s Adjusted EBITDA, revenue and DSO performance goals that will be used for
measuring Network performance

	•	 	The Network’s Free Cash Flow performance goal that will be used in calculating incentive
compensation payouts for executive positions listed on Exhibit B

	•	 	The Network’s actual performance results that will be used as the basis for calculating
incentive compensation payouts

The CEO, President/COO and CFO must approve goals and actual performance results for organizational
units.

 

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Incentive Compensation Payouts

Each fiscal year, the Compensation Committee must approve all incentive compensation payouts for
Executive Officers. The CEO must approve all other incentive compensation payouts.

Approval of New Plan Entrants

The Compensation Committee must approve any new Executive Officer entering the plan and the
applicable performance weightings and incentive compensation payout opportunities.

Approval of new entrants other than Executive Officers is based on whether an employee’s position
has been approved for plan participation (as set forth on Exhibit A). New positions (other than
Executive Officers) must be approved for entry into the plan by the President/COO, CFO and Chief
Human Resources Officer.

Ongoing Eligibility Management

At the beginning of each fiscal year, a listing of all current eligible plan positions will be
provided to the President/COO, CFO and CHRO for review and confirmation. The list will include
performance weightings and level of incentive compensation payout opportunity. Once approved, the
list will be submitted to the CEO for approval. In addition, a list of Executive Officer
participants and their performance weightings and level of incentive compensation payout
opportunity will be submitted to the Compensation Committee for review and approval.

Participant Termination Provisions

Voluntary Terminations

Plan participants who terminate employment voluntarily before the actual payment date of incentive
compensation, other than by retirement, will not be eligible for any incentive payout under the
Plan, with the exception of unusual situations that are approved by the CEO or, in the case of
payouts for Executive Officers, approved by the Compensation Committee.

Involuntary Terminations for Cause

Plan participants whose employment is involuntarily terminated for cause will not be eligible for
any incentive payments under the Incentive Plan. “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 any third party, 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, or business reputation of the Company or any
subsidiary; (iii) material violation of any agreement with the Company or any serious violation of
the Company’s policies, including its Code of Conduct; or (iv) 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 CEO or, with respect
to the CEO, the Compensation Committee.

 

7

 

Retirement and Death

Plan participants whose employment terminates because of retirement or death are eligible to
receive an incentive compensation payout. The payout will be calculated based upon actual Network
and organizational unit performance for the full fiscal year and quality of work, if applicable,
for the portion of the year the individual was employed, and the resulting amount prorated for the
portion of the year that was worked. Any incentive compensation payout that is earned will be paid
at the normal payout date for all plan participants.

Special Provisions Relating to Position and Status Changes

Promotions and Job Transfers

Incentive plan goals and payout opportunities may be reestablished upon transfer or promotion to a
new position. Unless otherwise determined by the CEO, incentive payouts will be calculated based
upon the participant’s position and base salary as of the last day of the fiscal year.

Interruptions in Work

A long-term illness or disability will not affect the eligibility of an employee to participate in
the Incentive Plan. Performance objectives will not be adjusted based on the work interruption,
although actual performance achieved will be evaluated and the corresponding incentive payout will
be prorated based upon the amount of time worked during the performance period.

“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 or her 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 CEO, or in the case of an Executive Officer, the Compensation Committee.

Special assignments generally will not affect either the target goals or incentive payout, except
as may be reflected in a participant’s performance review rating. However, if the special
assignment is of a significant nature or duration, incentive plan goals may be reestablished and
incentive earnings prorated based on the time spent in each position during the performance period.

 

8

 

Plan Year and Effective Date

The Plan year is the fiscal year, which starts on October 1st and ends on September
30th. The effective date of this plan is March 4, 2011. This Plan supersedes all other
cash incentive compensation plans previously sponsored by The MENTOR Network.

Plan Amendments

The MENTOR Network reserves the right to amend this plan at any time, including termination of
the Plan, without prior notice to plan participants.

 

9

 

Exhibit A: Eligibility, Weighting, and Target IC Opportunity for Management Positions

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Network and Organizational Unit	 
	 	 	 	 	 	 	Performance Weighting	 
	 	 	 	 	 	 	 	 	Organizational	 
	Position	 	Target IC Payout Opportunity	 	 	Network	 	 	Unit	 
	Operations & Field Finance Management
Positions (Measured by Quality of Services)
	 
	Vice President, Operations
	 	25%	 	 	 	25	%	 	 	75	%
	Senior Executive Director
	 	20%	 	 	 	25	%	 	 	75	%
	Executive Director and State Director
	 	15%	 	 	 	0	%	 	 	100	%
	Regional Director and Operations Director
	 	10%	 	 	 	0	%	 	 	100	%
	Area Director
	 	10% for FY11 if a plan participant in FY10; otherwise 5%	 	 	 	0	%	 	 	100	%
	Program Director and Program Manager II
	 	10% for FY11 if a plan participant in FY10; otherwise Staff Bonus Program	 	 	 	0	%	 	 	100	%
	Senior Business Director
	 	20%	 	 	 	25	%	 	 	75	%
	Business Director
	 	15%	 	 	 	25	%	 	 	75	%
	Business Manager
	 	10%	 	 	 	25	%	 	 	75	%
	State Accounting Manager
	 	10%	 	 	 	0	%	 	 	100	%
	Other Management Positions
(Measured by Quality of Work)
	 
	Vice President (includes Operating Group CFOs)
	 	25%	 	 	 	100	%	 	 	0	%
	Senior Director (Corporate)
	 	20%	 	 	 	100	%	 	 	0	%
	Director (Corporate)
	 	15%	 	 	 	100	%	 	 	0	%
	Director (Field HR & QA)
	 	10%	 	 	 	100	%	 	 	0	%
	Manager (Corporate)
	 	10%	 	 	 	100	%	 	 	0	%
	Manager (Field)
	 	10% for FY11 if a plan participant in FY 10; otherwise Staff Bonus Program	 	 	 	100	%	 	 	0	%

 

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Exhibit B: Eligibility, Weighting, and Target IC Opportunity for Executive Officer Positions

	 	 	 	 	 
	 	 	Target IC Payout	 
	Position	 	Opportunity	 
	Chief Executive Officer
	 	 	100	%
	President and Chief Operating Officer
	 	 	75	%
	All Other Executive Officers
	 	 	50	%

	 	 	 
	Notes:
	 
	(1)	 	“Executive Officer” is as defined under the Securities Exchange Act of 1934, as amended.
	 
	(2)	 	For purposes of calculating incentive compensation payouts for executive officers,
performance is based on Network performance with regard to Adjusted EBITDA, revenue, and
Free Cash Flow. Quality of work is based on individual performance.

 

11

 

Annex 1: Examples of Incentive Compensation Payout Calculations

Incentive Compensation Payout Calculation

Example #1

	 	 	 	 	 

	Name

	 	Johan Doe

	Title

	 	Program Manager

	Salary

	 	$	50,000	 
	Target IC Opportunity
	 	10%

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Performance Scale	 	 	 	 	 	 
	CTO/Rev	 	 	IC Payout	 	 	 	 	IC Payout as	 
	Perf. Level	 	 	Level	 	 	 	 	% of Salary	 
	 
	 	 	 	 	 	 	 	 
	 	107.5	%	 	 	150.0	%	 	 
	 	 	15.0	%
	 	106.0	%	 	 	140.0	%	 	 
	 	 	14.0	%
	 	104.5	%	 	 	130.0	%	 	 
	 	 	13.0	%
	 	103.0	%	 	 	120.0	%	 	 
	 	 	12.0	%
	 	101.5	%	 	 	110.0	%	 	 
	 	 	11.0	%
	 	100.0	%	 	 	100.0	%	 	TARGET
	 	 	10.0	%
	 	98.5	%	 	 	90.0	%	 	 
	 	 	9.0	%
	 	97.0	%	 	 	80.0	%	 	 
	 	 	8.0	%
	 	95.5	%	 	 	70.0	%	 	 
	 	 	7.0	%
	 	94.0	%	 	 	60.0	%	 	 
	 	 	6.0	%
	 	92.5	%	 	 	50.0	%	 	 
	 	 	5.0	%

DSO — Performance Modifier

	 	 	 	 	 	 	 	 	 

	YES	 	Meets/Exceeds DSO Target
	 	 	100	%
	NO	 	Does not meet DSO Target
	 	 	90	%

Quality/Performance Modifier

	 	 	 	 	 	 	 	 	 

	 	4	 	 	Meets/Exceeds Expectations
	 	 	100	%
	 	3	 	 	Meets Most Expectations
	 	 	75	%
	 	2	 	 	Needs Improvement
	 	 	50	%
	 	1	 	 	Failed To Meet Expectation
	 	 	0	%

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Weighting	 	 	Target Goals	 	 	Actual Performance	 	 	Achieved	 	 	Adjustors	 
	Performance	 	State	 	 	Network	 	 	Total	 	 	State	 	 	Network	 	 	State	 	 	Network	 	 	State	 	 	Network	 	 	State	 	 	Network	 
	Measures	 	100%	 	 	0%	 	 	100%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	CTO
	 	 	75	%	 	 	0.0	%	 	 	75	%	 	 	5,570	 	 	 	 	 	 	 	5,836	 	 	 	 	 	 	 	104.8	%	 	 	0.0	%	 	 	131.8	%	 	 	0.0	%
	Revenue
	 	 	25	%	 	 	0.0	%	 	 	25	%	 	 	37,707	 	 	 	 	 	 	 	37,753	 	 	 	 	 	 	 	100.1	%	 	 	0.0	%	 	 	100.8	%	 	 	0.0	%
	DSO
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	45	 	 	 	 	 	 	 	47	 	 	 	 	 	 	NO	 	 	 	 	 	 	90.0	%	 	 	 	 
	Quality
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4	 	 	 	 	 	 	 	3	 	 	 	 	 	 	NO	 	 	 	 	 	 	75.0	%	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	Salary
	 	$	50,000	 	 	Initial Calculation	 	 	 	 	 	 	 	 	 	 	 	 	 
	Target IC %
	 	 	10	%	 	CTO	 	 	Revenue	 	 	Total	 	 	DSO	 	 	Adjusted	 	 	Quality	 	 	Adjusted	 
	 
	 	 	 	 	 	State	 	 	Network	 	 	State	 	 	Network	 	 	Combined	 	 	Modifier	 	 	Payout	 	 	Modifier	 	 	Payout	 
	Target IC $
	 	$	5,000	 	 	$	3,750	 	 	$	—	 	 	$	1,250	 	 	$	—	 	 	$	5,000	 	 	 	—	 	 	$	5,000	 	 	 	—	 	 	$	5,000	 
	 
	 	 	 	 	 	 	 	 
	Adjustors
	 	 	 	 	 	 	131.8	%	 	 	 	 	 	 	100.8	%	 	 	 	 	 	 	 	 	 	 	90	%	 	 	 	 	 	 	75	%	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	IC Payout $
	 	 	 	 	 	$	4,944	 	 	$	—	 	 	$	1,260	 	 	$	—	 	 	$	6,204	 	 	$	(620	)	 	$	5,584	 	 	$	(1,396	)	 	$	4,188	 
	IC Payout Level
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	124.1	%	 	 	 	 	 	 	111.7	%	 	 	 	 	 	 	83.8	%
	IC Payout as % of Salary
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	12.4	%	 	 	 	 	 	 	11.2	%	 	 	 	 	 	 	8.4	%

 

12

 

Incentive Compensation Payout Calculation

Example #2

	 	 	 	 	 

	Name

	 	Jayne Doe

	Title

	 	Business Director

	Salary

	 	$	75,000	 
	Target IC Opportunity

	 	15%

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Performance Scale	 	 	 	 	 	 
	CTO/Rev	 	 	IC Payout	 	 	 	 	IC Payout as	 
	Perf. Level	 	 	Level	 	 	 	 	% of Salary	 
	 
	 	 	 	 	 	 	 	 
	 	107.5	%	 	 	150.0	%	 	 
	 	 	22.5	%
	 	106.0	%	 	 	140.0	%	 	 
	 	 	21.0	%
	 	104.5	%	 	 	130.0	%	 	 
	 	 	19.5	%
	 	103.0	%	 	 	120.0	%	 	 
	 	 	18.0	%
	 	101.5	%	 	 	110.0	%	 	 
	 	 	16.5	%
	 	100.0	%	 	 	100.0	%	 	TARGET
	 	 	15.0	%
	 	98.5	%	 	 	90.0	%	 	 
	 	 	13.5	%
	 	97.0	%	 	 	80.0	%	 	 
	 	 	12.0	%
	 	95.5	%	 	 	70.0	%	 	 
	 	 	10.5	%
	 	94.0	%	 	 	60.0	%	 	 
	 	 	9.0	%
	 	92.5	%	 	 	50.0	%	 	 
	 	 	7.5	%

DSO — Performance Modifier

	 	 	 	 	 	 	 	 	 

	YES	 	Meets/Exceeds DSO Target
	 	 	100	%
	NO	 	Does not meet DSO Target
	 	 	90	%

Quality/Performance Modifier

	 	 	 	 	 	 	 	 	 

	 	4	 	 	Meets/Exceeds Expectations
	 	 	100	%
	 	3	 	 	Meets Most Expectations
	 	 	75	%
	 	2	 	 	Needs Improvement
	 	 	50	%
	 	1	 	 	Failed To Meet Expectations
	 	 	0	%

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Weighting	 	 	Target Goals	 	 	Actual Performance	 	 	Achieved	 	 	Adjustors	 
	Performance	 	State	 	 	Network	 	 	Total	 	 	State	 	 	Network	 	 	State	 	 	Network	 	 	State	 	 	Network	 	 	State	 	 	Network	 
	Measure
	 	75%	 	 	25%	 	 	100%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	CTO
	 	 	56	%	 	 	19	%	 	 	75	%	 	 	7,820	 	 	 	104,461	 	 	 	8,104	 	 	 	101,260	 	 	 	103.6	%	 	 	96.9	%	 	 	124.2	%	 	 	79.6	%
	Revenue
	 	 	19	%	 	 	6	%	 	 	25	%	 	 	57,143	 	 	 	919,547	 	 	 	58,243	 	 	 	911,748	 	 	 	101.9	%	 	 	99.2	%	 	 	112.8	%	 	 	94.3	%
	DSO
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	48	 	 	 	 	 	 	 	52	 	 	 	 	 	 	NO	 	 	 	 	 	 	90.0	%	 	 	 	 
	Quality
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4	 	 	 	 	 	 	 	4	 	 	 	 	 	 	YES	 	 	 	 	 	 	100.0	%	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	Salary
	 	$	75,000	 	 	Initial Calculation	 	 	 	 	 	 	 	 	 	 	 	 	 
	Target IC %
	 	 	15	%	 	CTO	 	 	Revenue	 	 	Total	 	 	DSO	 	 	Adjusted	 	 	Quality	 	 	Adjusted	 
	 
	 	 	 	 	 	State	 	 	Network	 	 	State	 	 	Network	 	 	Combined	 	 	Modifier	 	 	Payout	 	 	Modifier	 	 	Payout	 
	Target IC $
	 	 	11,250	 	 	$	6,328	 	 	$	2,109	 	 	$	2,109	 	 	$	703	 	 	$	11,250	 	 	 	—	 	 	$	11,250	 	 	 	—	 	 	$	11,250	 
	 
	 	 	 	 	 	 	 	 
	Adjustors
	 	 	 	 	 	 	124.2	%	 	 	79.6	%	 	 	112.8	%	 	 	94.3	%	 	 	 	 	 	 	90	%	 	 	 	 	 	 	100	%	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	IC Payout $
	 	 	 	 	 	$	7,860	 	 	$	1,678	 	 	$	2,380	 	 	$	663	 	 	$	12,582	 	 	$	(1,258	)	 	$	11,324	 	 	 	—	 	 	$	11,324	 
	IC Payout Level
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	111.8	%	 	 	 	 	 	 	100.7	%	 	 	 	 	 	 	100.7	%
	IC Payout as % of Salary
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	16.8	%	 	 	 	 	 	 	15.1	%	 	 	 	 	 	 	15.1	%

 

13Exhibit 10.6

Exhibit 10.6

SECOND AMENDMENT TO

AMENDED AND RESTATED 2006 UNIT PLAN

OF

NMH INVESTMENT, LLC

THIS AMENDMENT TO the NMH INVESTMENT, LLC AMENDED AND RESTATED 2006 UNIT PLAN (the
“Plan”), dated May 10, 2011, is hereby adopted and agreed to by the Management Committee of
NMH Investment, LLC, a Delaware limited liability company (the “Company”) by unanimous
written consent pursuant to Section 7(a) of the Plan.

1. Amendments to the Plan.

(a) Section 2 of the Plan is hereby amended by:

(i) adding the following definition of “Class F Unit”:

“Class F Unit” shall mean a Class F Unit as defined in the LLC
Agreement.

(ii) deleting the existing definition of “Unit” in its entirety and replacing it with
the following:

“Unit” shall mean a Preferred Unit, Class A Unit, Class B
Unit, Class C Unit, Class D Unit, Class E Unit or Class F Unit.

(b) Section 3 of the Plan is hereby deleted in its entirety and replaced with the
following:

SECTION 3. Units Subject to the Plan.

 “The total number of Preferred Units which may be issued
under the Plan is 65,000, the total number of Class A Units which may be
issued under the Plan is 650,000, the total number of Class B Units
which may be issued under the Plan is 192,500, the total number of Class
C Units which may be issued under the Plan is 202,000, the total number
of Class D Units which may be issued under the Plan is 388,881, the
total number of Class E Units which may be issued under the Plan is
6,375 and the total number of Class F Units which may be issued is
5,396,388. Units that are subject to Awards which terminate or lapse
without any payment in respect thereof may be granted again under the
Plan.”

 

 

2. Ratification. All other paragraphs, provisions, and clauses in the Plan remain in
full force and effect as originally written.

3. Defined Terms. Certain capitalized terms not defined herein shall have the
meanings given to such terms in the Plan.

5. Governing Law; Binding Agreement. The validity, construction, and effect of this
amendment to the Plan shall be determined in accordance with the laws of the State of New York
applicable to contracts made and to be performed therein.

*     *     *     *     *

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00189-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00189-of-00352.parquet"}]]