Document:

Exhibit 10.17

 

NATIONAL MENTOR, INC. EXECUTIVE DEFERRAL PLAN

 

Effective as of November 1, 2003

 

 

ARTICLE 1: Establishment and Purpose

 

1.1           Establishment.  National Mentor, Inc. (the “Company”)
hereby establishes the National Mentor, Inc. Executive Deferral Plan (the “Plan”),
effective as of October 1, 2003.

 

1.2           Purpose.  The purpose of the Plan is to permit
designated executives of the Company to accumulate additional retirement income
through a nonqualified deferred compensation plan that enables them to make
Elective Deferrals in excess of those permitted under the Mentor Networks
401(k) Retirement Plan and to receive matching contributions that are otherwise
precluded by the provisions of that plan or by applicable law.  This Plan is intended to be unfunded and
maintained by the Company primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
within the meaning of §§201(2), 301(a)(3) and 401(a)(1) of the
Employee Retirement Income Security Act of 1974 (“ERISA”).

 

ARTICLE 2: Participation

 

2.1           Commencement of
Participation.  An Eligible
Employee will become a Participant on the earliest Entry Date on which he or
she (i) is eligible to participate in the Qualified Plan, (ii) is
designated as a Participant by written action of the Committee, and (iii) executes
and delivers a valid Salary Reduction Agreement to the Committee.

 

2.2           Cessation of Participation.  If a Participant ceases to satisfy any of the
conditions of Section 2.1, his or her participation in this Plan
immediately terminates, except that the Participant’s Account will continue to
be held for his or her benefit and will be distributed to him or her in
accordance with Article 7.  A former
Participant may resume participation as of any Entry Date on which he or she
again satisfies the conditions of Section 2.1.

 

ARTICLE 3: Accounts

 

3.1           Establishment of Accounts.  The Company hereby establishes, for each
Participant (i) a Salary Reduction Accrual Account (for the purpose of
recording the current value of his or her Salary Reduction Accruals) and (ii) a
Matching Contribution Accrual Account (for the purpose of recording the value
of his or her Matching Contribution Accruals). 
All Accounts are established and maintained for the purpose of
reflecting the liability of the Company to Participants.  The Company is under no obligation to
segregate any assets to provide for the liabilities reflected by these
Accounts.  If the Company elects to
segregate assets pursuant to Section 4.4, the Funding Vehicle must
establish and maintain separate Salary Reduction Accrual Accounts and Matching
Contribution Accrual Accounts.

 

 

3.2           Valuation of Accounts.  All Accounts must be valued as of each
Allocation Date and as of any other Valuation Date designated by the Committee.

 

ARTICLE 4: Accrual of Benefits

 

4.1           Types of Contribution.  For any Plan Year, Participants will accrue
benefits in the manner described in this Section 4.1.

 

(a)            For each Plan Year,
the Company will credit each Participant’s Salary Reduction Accrual Account
with the amount specified in his or her Salary Reduction Agreement for such
year.

 

(b)           For each Plan Year,
the Company will credit Matching Contribution Accruals to the Matching
Contribution Accrual Account of each Participant in an amount equal to the “matching
contribution rate” (as defined below) multiplied by the portion of such
Participant’s Salary Reduction Accrual not in excess of the then current
limitation under Code Section 402(g). 
For purposes of this Section 4.1(b), the phrase, “matching
contribution rate” means the contribution rate and compensation percentage
limits for matching contributions under the Qualified Plan for the Plan Year.

 

(c)            In addition to the
mandatory Matching Contribution Accruals described in Section 4.1(b), the
Company may credit additional Matching Contribution Accruals to the Matching
Contribution Accrual Accounts of all Participants in any Plan Year at such
rate, and at such times, as the Board determines in the sole exercise of its
discretion.

 

4.2           Timing of Accruals.  Salary Reduction Accruals under Section 4.1(a) are
deemed to accrue on the date on which the Participant would otherwise have
received the Compensation that he or she elected to defer.  Matching Contribution Accruals described in Section 4.1(b) are
deemed to accrue on the date of the Salary Reduction Accruals to which they
relate.  Matching Contribution Accruals
described in Section 4.1(c) are deemed to accrue on the date
designated (or, if no accrual date is specified, then on the date voted) by the
Board.

 

4.3           Salary Reduction
Agreements

 

(a)            By executing a
Salary Reduction Agreement with respect to a Plan Year, a Participant may elect
to have Salary Reduction Accruals credited under the Plan on his or her
behalf.  The current salary and bonus of
a Participant who executes a Salary Reduction Agreement will be reduced by the
amount specified in the election, and an equal amount will be credited to and
accrue under the Plan in accordance with Section 4.1.  Salary Reduction Agreements must separately
designate the amount of reduction of Compensation to be taken from base salary
and bonuses for the Plan Year. 
Reductions may be expressed as a percentage or dollar amount of salary
or bonuses.  Salary Reduction
Contributions may not be made with respect to Compensation other than salary
and bonuses.  A Salary Reduction
Agreement becomes irrevocable as of the date specified in Section 4.3(b).

 

(b)           A Salary Reduction
Agreement with respect to any Plan Year after the Plan’s initial year must be
executed no later than the last day of the preceding Plan Year.  A Salary Reduction Agreement for the initial
Plan Year must be executed before the Effective

 

2

 

Date. 
No Salary Reduction Agreement may be amended or revoked after the last
day on which it could have been executed, except that an agreement is
automatically revoked if the Participant who executed it ceases to be eligible
to participate in the Plan.  An employee
who first becomes an Eligible Employee within a Plan Year may execute a Salary
Reduction Agreement to become effective upon the next Entry Date.

 

(c)            With respect to any
Plan Year, the amount deferred by a Participant in accordance with Section 4.3
may not exceed 100% of his or her Compensation for the year, less his or her
salary reduction contributions under the Qualified Plan and any other of the
Company’s fringe or other benefit plans.

 

4.4           Contributions to Funding
Vehicle.  The Company may, but
is not required to, establish and make contribution of any or all amounts
accrued under Section 4.1 to a Funding Vehicle.  Contributions will be credited with income,
expense, gains and losses in accordance with the investment experience of the
Funding Vehicle.  The Committee may
permit Participants to direct the allocation of their Account balances among
these funds established with a Funding Vehicle in accordance with rules prescribed
by the Committee.  The Committee may
alter the available funds or the procedures for allocating Account balances
among them at any time.

 

4.5           Status of the Funding
Vehicle.  Despite any other
provision of this Plan, all assets held in a Funding Vehicle (including any
insurance policy established or acquired for funding purposes) will at all
times be and remain the property of the Company and subject to the claims of
the Company’s creditors.  No Participant
will have any priority claim on, or security interest or other right in, any
such assets or insurance policy that is superior to the rights of the Company’s
general creditors.

 

4.7           Non-alienability.  A Participant’s rights under this Plan may
not be voluntarily or involuntarily assigned or alienated.  If a Participant attempts to assign his or
her rights or enters into bankruptcy proceedings, his or her right to receive
payments under the Plan will terminate, and the Committee may apply them in
whatever manner will, in its judgment, serve the best interests of the
Participant.

 

ARTICLE 5: Vesting

 

Vesting
Standards.  A
Participant’s interest in his or her Salary Reduction Accrual Account and
Matching Contribution Accrual Account is fully vested at all times.

 

ARTICLE 6: Transfers and Adjustments

 

6.1           Transfers to Qualified
Plan.  As soon as practicable
after the end of each Plan Year, the Committee will determine (on a percentage
basis) each Participant’s “transfer amount,” which equals the excess of (i) the
Elective Deferrals that the Participant could have made under the Qualified
Plan without causing elective deferrals and matching contributions under the Qualified
Plan to exceed the limitations of Code §§401(k)(3), 402(g), or §401(m)(2) of
the Code, over (ii) any elective deferrals he or she actually contributed
directly to the Qualified Plan for such year. 
No later than two and one-half (21⁄2) months after the end of each Plan
Year, each Participant’s Salary Reduction Accrual Account will be debited by
his or her transfer amount,

 

3

 

and the Company will transfer a like amount
to the Participant’s elective deferral account under the Qualified Plan.  The Company shall have no discretion to
retain the transfer amount in this Plan or to modify the calculation of the
transfer amount for any Participant.

 

6.2           Debit to Matching
Contribution Accrual Account. 
Each Participant’s Matching Contribution Accrual Account will be reduced
by an amount equal to the matching contributions made on his behalf under the
Qualified Plan on account of the transfer amount.

 

ARTICLE 7: Distributions

 

7.1           Distributions.

 

(a)            The vested portion
of a Participant’s Account will be distributed to him or her as a result of (i) his
or her Termination of Employment for any purpose (including his or her Normal
Retirement Date or Early Retirement Date), (ii) his or her death or
Disability, or (iii) the termination of the Plan, whichever first
occurs.  Vesting will be determined in
the manner prescribed by Article 5, and the dollar amount of the
distribution will be determined as of the Valuation Date coincident with or
first preceding the date of distribution.

 

(b)           Distributions to a
Participant or, in the case of a Participant’s death, his or her Beneficiary,
will be made or commence to be made at the Participant’s election either (i) in
cash, in a single lump sum, or (ii) in substantially equal monthly
installments for either 5 years (60 installments) or 10 years (120
installments).  The Participant must make
his or her election regarding the form of distribution under this Section 7.1
when the Participant first commences or resumes Participation in the Plan.  A Participant may change his or her election
as to the form of distribution under the first sentence of this Section 7.1(b) by
filing and amended election form with the Committee, but not such change may be
made at any time during the 12-month period ending on the date that
distributions commence.

 

(c)            All distributions
from the Plan to Participants and Beneficiaries must be made within a
reasonable time following the occurrence of the event that triggers the
distribution and will be made in cash, unless the Committee determines that
other property should be distributed.

 

7.2           Manner of Distribution to
Minors or Incompetents.  If at
any time any distributee is, in the judgment of the Committee, legally,
physically or mentally incapable of receiving any distribution due to him or
her, the distribution will be made to the guardian or legal representative of
the distributee, or, if none exists, to any other person or institution that,
in the Committee’s judgment, will apply the distribution in the best interests
of the intended distributee.

 

7.3           Election of Beneficiary

 

(a)           When an Eligible
Employee qualifies for participation in the Plan, the Committee will provide
him or her with a Beneficiary designation form for the purpose of designating
one or more Beneficiaries and successor Beneficiaries.  A Participant may change his Beneficiary
designation at any time by filing the prescribed form with the Committee.  The consent of the Participant’s current
Beneficiary is not required for a change of Beneficiary and no

 

4

 

Beneficiary has any rights under this Plan
except as provided by its terms.  The
rights of a Beneficiary who predeceases the Participant will terminate as of
the Beneficiary’s death.

 

(b)           Unless a different
Beneficiary has been designated in accordance with Section 7.3(a), the
Beneficiary of any Participant who is lawfully married on the date of his death
is his surviving spouse.  The Beneficiary
of any other Participant who dies without having designated a Beneficiary is
his estate.

 

7.4           Unforeseeable Emergencies.  A Participant may request a withdrawal of all
or a portion of his or her Account derived from Salary Reduction Accruals (but
not from Matching Accruals) as necessary to satisfy an immediate and heavy
financial need in the case of an Unforeseeable Emergency.  For purposes of this Section 7.4, “Unforeseeable
Emergency” means a severe financial hardship to the Participant resulting from
a sudden and unexpected illness or accident of the Participant or of a
dependent of the Participant, loss of the Participant’s property due to
casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant.  The circumstances that will constitute an
Unforeseeable Emergency will depend upon the facts of each case, but, in any
case, payment may not be made in the event that the resulting financial
hardship is or may be relieved (i) through reimbursement or compensation
by insurance or otherwise, or (ii) by liquidation of the Participant’s
assets, to the extent that liquidation of such assets would not itself cause
severe financial hardship.  The need to
send a Participant’s child to college or the desire to purchase a home will not
be an Unforeseeable Emergency.  The
Committee will determine the existence of an Unforeseeable Emergency and the
manner of withdrawal in accordance with applicable law.  Withdrawals made pursuant to this Section 7.4
will begin within 30 days after the date on which the Committee approves the
Participant’s request for withdrawal.

 

ARTICLE 8: Amendment or Termination of
the Plan

 

8.1           Company’s Right to Amend
Plan.  Subject to Section 8.2,
the Board of Directors may, at any time and from time to time, amend, in whole
or in part, any of the provisions of this Plan or may terminate it as a whole
or with respect to any Participant or group of Participants.  Any such amendment is binding upon all
Participants, Beneficiaries, the Committee and all other parties in interest.  A resolution amending or terminating the Plan
becomes effective as of the date specified therein.

 

8.2           Restriction on Retroactive
Amendments.  No amendment may
retroactively deprive a Participant of any benefit accrued under the Plan
before the date of the amendment.

 

ARTICLE 9: Plan Administration

 

9.1           The Committee.  A Committee consisting of one or more persons
appointed by the Board of Directors will administer the Plan.  The Board may remove any member of the
Committee at any time, with or without cause, and may fill any vacancy.  If a vacancy occurs, the remaining member or
members of the Committee have full authority to act.  Any member of the Committee may resign by delivering
his or her written resignation to the Board and the Committee.  Any such resignation will become effective
upon its receipt by the Board or on such other date as is agreed to by the
Board and the resigning Committee member. 
The Committee

 

5

 

acts by a majority of its members at the time
in office and may take action either by vote at a meeting or by consent in
writing without a meeting.  The Committee
may adopt such rules as it deems desirable for the conduct of its affairs
and the administration of the Plan.

 

9.2           Powers of the Committee.  In carrying out its duties with respect to
the general administration of the Plan, the Committee has, in addition to any
other powers conferred by the Plan or by law, the following; powers:

 

(i) To determine all questions relating
to eligibility to participate in the Plan;

 

(ii) To compute and certify the amount
and kind of distributions payable to Participants and their Beneficiaries;

 

(iii) To maintain all records necessary
for the administration of the Plan;

 

(iv) To interpret the provisions of the
Plan and to make and publish such rules for the administration of the Plan
as are not inconsistent with the terms thereof;

 

(v) To establish and modify the method
of accounting for the Plan;

 

(vi) To employ counsel, accountants and
other consultants to aid in exercising its powers and carrying out its duties
hereunder; and

 

(vii) To perform any other acts
necessary and proper for the administration of the Plan.

 

9.3           Indemnification.  The Company agrees to indemnify and hold
harmless each member of the Committee against any and all expenses and
liabilities arising out of his action or failure to act in such capacity,
excepting only expenses and liabilities arising out of his own willful
misconduct.  This right of
indemnification is in addition to any other rights to which any member of the
Committee may be entitled.  Liabilities
and expenses against which a member of the Committee is indemnified hereunder
include, without limitation, the amount of any settlement or judgment, costs,
counsel fees and related charges reasonably incurred in connection with a claim
asserted or a proceeding brought against him or the settlement thereof.  The Company may, at its own expense, settle
any claim asserted or proceeding brought against any member of the Committee
when such settlement appears to be in the best interests of the Company.

 

9.4           Claims Procedure.  If a dispute arises between the Committee and
a Participant or Beneficiary over the amount of benefits payable under the
Plan, the Participant or Beneficiary may file a claim for benefits by notifying
the Committee in writing of his claim. 
The Committee will review and adjudicate the claim.  If the claimant and the Committee are unable
to reach a mutually satisfactory resolution of the dispute, it will be submitted
to arbitration under the rules of the American Arbitration
Association.  Each Participant agrees, by
the execution of a Salary Reduction Agreement, that arbitration will be the
sole means of resolving disputes arising under the Plan and waives, on behalf
of himself and his Beneficiary, any fight to litigate any such dispute in a
court of law.

 

6

 

9.5           Expenses of the Committee.  The members of the Committee serve without
compensation for services as such.  The
Company pays the expenses of the Committee.

 

9.6           Expenses of the Plan.  The Company pays the expenses of
administering the Plan.

 

ARTICLE 10: Definitions

 

10.1         Definitions.  As used in this Plan, the following
capitalized words and phrases have the meanings indicated, unless the context
requires a different meaning:

 

(a)            “Account” means amounts credited to
a Participant under the Plan, as described in Article 3.

 

(b)           “Allocation Date” means the last day
of each Calendar Quarter.

 

(c)            “Beneficiary” means the person or
persons designated by a Participant, or otherwise entitled, to receive any
amount credited to his Account that remains undistributed at his death.

 

(d)           “Board of Directors” or “Board” means
the board of directors of the Company.

 

(e)            “Code” means the Internal Revenue
Code of 1986 as amended.

 

(f)            “Committee” means the committee
appointed in accordance with Section 9.1 to administer the Plan.

 

(g)           “Company” means National Mentor, Inc.
and any subsidiaries, affiliates or successors.

 

(h)           “Compensation” means the aggregate
compensation paid to a Participant by the Company for a Plan Year, including
salary, overtime pay, commissions, bonuses and all other items that constitute
wages within the meaning of Code §3401(a) or are required to be reported
under Code §§6041(d), 6051(a)(3) or 6052. Compensation also includes
Salary Reduction Accruals under this Plan and any Elective Deferrals under
cash-or-deferred arrangements or cafeteria plans that are not includible in
gross income by reason of Code §125 or Code §402(a)(8) but does not
include any other amounts contributed pursuant to, or received under, this Plan
or any other plan of deferred compensation. 
Compensation excludes all stock option transactions, relocation
reimbursements, and automobile allowances.

 

(i)             “Disability” means a mental or
physical condition that, in the opinion of a licensed physician approved by the
Committee, renders a Participant permanently incapable of satisfactorily
performing his usual duties for the Company or the duties of such other
position as the Company may make available to him for which he is qualified by
reason of training, education or experience.

 

7

 

(j)             “Early Retirement Date” means the
later of (i) the date on which a Participant attains age 591⁄2 or (ii) his
or her completion of ten (10) Years of Service.

 

(k)            “Effective Date” means October 1,
2003, the date on which this Plan went into effect.

 

(l)             “Eligible Employee” means an
employee of the Company who is a key member of the Company’s management or a
highly compensated employee within the meaning of ERISA §§201(2), 301(a)(3) and
401(a)(1).

 

(m)           “Entry Date” means the Effective Date
and each January 1st, April 1st, July 1st or October 1st
thereafter.

 

(n)           “Funding Vehicle” means a trust or
insurance polices which are established or acquired by the Company to hold
amounts accrued by the Company in accordance with Section 4.4.

 

(o)           “Matching Contribution Accrual” means
an amount credited to a Participant’s Account in accordance with Section 4.1(b).

 

(p)           “Matching Contribution Accrual
Account” means the account established to record Matching Contribution Accruals
on a Participant’s behalf.

 

(q)           “Normal Retirement Date” means a
Participant’s sixty-fifth (65th) birthday.

 

(r)            “Participant” means any Eligible
Employee who satisfies the conditions for participation in the Plan set forth
in Section 2.1.

 

(s)            “Plan” means the National Mentor, Inc.
Executive Deferral Plan, as set forth in this document and as amended from time-to-time.

 

(t)            “Plan Year” means the accounting
year of the Plan, which ends on December 31st.

 

(u)           “Qualified Plan” means the Mentor
Networks 401(k) Plan, as from time-to-time amended.

 

(v)           “Salary Reduction Accrual” means an
amount credited to the Salary Reduction Accrual Account pursuant to a Salary
Reduction Agreement.

 

(w)           “Salary Reduction Accrual Account”
means the account established to record Salary Reduction Accruals authorized by
Participants under the terms of this Plan.

 

(x)            “Salary Reduction Agreement” means
an agreement between a Participant and the Company, under which the Participant
agrees to a reduction in his Compensation and the Company agrees to credit him
with Salary Reduction Accruals under this Plan.

 

8

 

(y)           “Termination of Employment” means a
Participant’s or former Participant’s separation from the service of the
Company (including all affiliates of the Company) by reason of his or her
resignation, retirement, discharge or death.

 

(z)            “Valuation Date” means any
Allocation Date and any other date as of which the value of Participants’
Accounts is determined.

 

ARTICLE 11: Miscellaneous

 

11.1         Plan Not a Contract of
Employment.  The adoption and
maintenance of the Plan does not constitute a contract between the Company and
any Participant and is not a consideration for the employment of any
person.  Nothing herein contained gives
any Participant the right to be retained in the employ of the Company or
derogates from the right of the Company to discharge any Participant at any
time without regard to the effect of such discharge upon his rights as a
Participant in the Plan.

 

11.2         Undefined Terms.  Unless the context clearly requires another
meaning, any term not specifically defined in this Plan is used in the sense
given to it by the Qualified Plan.

 

11.3         Headings.  The headings of Articles, Sections and
Subsections are for reference only and are not to be utilized in construing the
Plan.

 

11.4         Singular and Plural.  Unless clearly inappropriate, singular terms
refer also to the plural number and vice versa.

 

11.5         Severability.  If any provision of this Plan is held illegal
or invalid for any reason, the remaining provisions are to remain in full force
and effect and to be construed and enforced in accordance with the purposes of
the Plan as if the illegal or invalid provision did not exist.

 

11.6         No Additional Rights Under
Plan.  Nothing in this Plan,
express or implied, is intended, or shall be construed, to confer upon or give
to any person, firm, association, or corporation, other than the parties hereto
and their successors in interest, any right, remedy, or claim under or by
reason of this Plan or any covenant, condition, or stipulation hereof, and all
covenants, conditions and stipulations in this Plan, by or on behalf of any
party, are for the sole and exclusive benefit of the parties.

 

11.7         Governing Law.  The laws of the Commonwealth of Massachusetts
govern the construction and operation of this Plan.

 

EXECUTED this 3rd
day of September 2003.

 

	
   

  	
  National Mentor, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas J. McAuliffe

  	
   

  

 

9Exhibit 10.18

 

The
MENTOR  Executive Leadership Incentive
Plan

 

“Mentor/the
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 id defined in Section 425 of the Code.

 

Incentive
Compensation Philosophy

 

MENTOR’s primary objectives are
to provide quality care and services to people with special needs, continue as
an attractive employer of choice and achieve strong organizational and
financial growth.

 

Competitive base salary levels
and merit increases are intended to reward executives for performing the
ongoing aspects of their jobs in a high quality manner.

 

MENTOR has developed this
Leadership Incentive Plan (the “Plan”) to align variable compensation with
organization goals and participant performance.

 

The Plan has been designed to compliment the other elements of total
pay and to support achievement of Company growth and quality goals by
providing:

 

•                  incentives
that closely align pay with quality care and leader, divisional, and
organizational-wide performance goals related to the financial growth of
MENTOR; and

 

•                  meaningful
and competitive variable compensation opportunities that effectively attract
and retain talented executives.

 

Incentive Plan
Guiding Principles

 

The Plan is based on a set of principles necessary for an effective
incentive system.  They are as follows:

 

1.               Variable
Compensation.  MENTOR recognizes that we
attract, motivate and retain our high performing leaders and executives by
providing total compensation that is fair, competitive and reflective of their
performance and contribution to our success. 
Because of their greater responsibilities for and impact upon our
business results, a greater portion of leaders’ and executives’ annual total
cash compensation opportunities (base salary plus incentive) will be comprised
of incentive compensation award opportunities than for other employees.

 

 

2.               Corporate Growth &
Quality.  Incentives are linked with
MENTOR’s core values, critical success factors and strategic intent.  MENTOR intends to provide incentives to
leaders and executives commensurate with their levels of responsibility and
results achieved. While financial performance is the key component for funding
incentive payouts, service quality will not be overlooked. Individual and unit
performance reviews will specifically examine quality, service and operational
excellence as key criteria for determining incentive plan payouts.   The Plan is designed to closely link
incentives to growth in EBITDA and potentially to other growth metrics over
time.

 

Administration

 

The Plan is to be approved by the Board of Directors,  and will be 
interpreted  and administered by a
designated Compensation Committee.  The
administrative duties shall include:

 

•                  Determining
eligibility criteria and approving which leaders & executives shall
participate in the Plan.

 

•                  Approving
any changes to the threshold, target or maximum payout opportunities as a
percentage of base salary.

 

•                  Approving
each Plan Year, the performance measures and goals to be used for measuring
performance at the threshold, target and maximum levels.

 

•                  Determining/approving
actual performance achieved vs. goals at the end of each Plan Year.

 

•                  Determining
the size of the discretionary pool for awarding high performing individuals or
units in years where consolidated, division or unit growth was insufficient to
create an equitable incentive pool.

 

•                  Approving,
at the end of each Plan Year, the percentage of base salary (or dollar) amount
to be paid to each Plan participant.

 

•                  Reviewing
and approving the policies and procedures to be used in administration of the
Plan.

 

•                  Rendering
any decisions necessary with regard to the interpretation of the Plan’s
policies and procedures.

 

2

 

Eligibility &
Award Opportunity

 

Initial eligibility for
participation in the Plan shall be limited to those individuals in the following
positions, and the corresponding initial threshold, target and maximum payout
opportunities as a percentage of base salary are:

 

	
  Participants

  	
   

  	
  Payout Opportunity:

  Thresh/Target/Max

  
	
  •     Chief
  Executive Officer

  	
   

  	
  20%/40%/80%

  
	
  •     Executive
  Group/EVP’s

  	
   

  	
  20%/40%/80%

  
	
  •     Senior
  Vice Presidents and Division Presidents

  	
   

  	
  15%/30%/45%

  

 

The payout opportunities
indicated in the preceding table are subject to plan funding, as explained in
the next section of the plan document, and actual payouts may be prorated
or even zero if individual performance is below expectations or if sufficient
funding is not achieved to pay the awards.

 

Plan
Structure & Funding

 

To provide funding for the
approved participants’ payout percentages of salary (threshold-maximum) as
covered in the previous section, consolidated growth between pre-approved
threshold, target and maximum goals must be achieved. In the initial year, the
total pool of funds allocated for incentive awards will be based upon
consolidated growth in EBITDA. Acquisitions, divestitures and other
extraordinary items will be excluded, or appropriate adjustments will be made
by the Committee. In subsequent years, a combination of revenue and EBITDA
growth or other key metrics may be used, as approved by the Committee. Based upon
the level of growth on a consolidated basis, an example
of funding for a single-factor plan is illustrated in the chart below:

 

Single Factor
Funding Chart

 

	
  EBITDA
  Growth

  	
   

  	
  5%

  	
   

  	
  10%

  	
   

  	
  15%

  
	
  Pool
  Funding

  	
   

  	
  50%

  	
   

  	
  100%

  	
   

  	
  200%

  

 

3

 

Upon creation of the overall
funding pool, each reporting level will then receive incentive compensation
funding based upon the performance of the consolidated organization and/or
their division as follows:

 

Pool
Allocation

 

	
  Job Level

  	
   

  	
  Corporate

  	
   

  	
  Division

  	
   

  
	
  Corporate

  	
   

  	
  100

  	
  %

  	
  0

  	
  %

  
	
  Division
  Pres.

  	
   

  	
  25

  	
  %

  	
  75

  	
  %

  

 

For example, the funding for a Division President would be based upon
both the performance of the consolidated organization as well as the President’s
division.

 

The “Consolidated Funding” portion
would be obtained from the funding chart above. 
The “Division Funding” portion would be based upon the proportion of
consolidated growth which was achieved by each division, and subsequently
allocated to division participants, states and subunits.

 

An example of how funding, pool
allocations, performance reviews and actual payouts are calculated/determined
is included in the appendix.

 

Discretionary
Payout Pool

 

In the event that there is not
sufficient funding of the overall pool based upon consolidated performance
results or a division, state or unit pool based upon division growth to
adequately fund the division/state/unit pools, the Plan administrators will
have a contingency pool from which to approve discretionary awards to high
performing participants in those organizations.

 

Performance
Focus Areas and Weights

 

Participants will have their performance evaluated by their supervisors
and leadership based upon the growth of their division and/or of the overall
organization, as well as their personal achievements in the quality, service
and operational excellence areas. Participants may be assigned a limited number
of other key, annual business goals, depending upon job roles and levels.  Growth is defined as increases in revenue,
EBITDA and/or service volumes. EBITDA growth will be used for the first year to
facilitate implementation and clear communications.

 

Significant client service or quality lapses can result in reduction or
even total forfeiture of incentive payouts, based upon individual performance
reviews.

 

Goals and performance weights
will be finalized based upon business plan cycles, and should be communicated
to participants and in place prior to the start of each Plan year.

 

4

 

(Note:  To meet the IRC section 162m $ million
dollar cap performance plan safe harbor for top 5 named executive officers in
public companies, the goals must be measurable, approved by the Board and
disclosed to shareholders for their approval.)

 

Target, minimum Threshold and
Maximum performance levels will be established for each Performance Focus Area
measure (EBITDA, revenue growth, and other key business goals or volume growth
where applicable) and linked to payout percentage opportunities, which are
typically:

 

•                  50%
of target payout for the threshold compared to target performance level;

•                  100%
of target payout for 100% of target performance; and

•                  150%
to 200% (depending upon organizational level) of target payout for maximum
performance.

 

Payouts for performance levels between
threshold and maximum will be calculated based upon pro-ration/interpolation.

 

Performance Period, Award Calculation/Payment
Methodology and Timing

 

Performance goals (and possibly weights) will be set and measured on a
fiscal year basis with incentive payments to be made based upon audited results
following the end of each year.

 

Prior to the beginning of each
Plan Year, the CEO and leadership team will:

 

•                  Determine and
recommend to the Plan Administrators for approval:

•                  Potential
payout ranges;

•                  Measures,
weights, percentages and goals for each eligible employee; and

•                  Administration
procedures changes, if any.

•                  Communicate
to each participant the applicable performance measures and levels, as well as
potential payout range.

 

During the year, situations may arise which warrant legitimate changes
to the measures and goals of a participant. 
Such changes would only be allowed if they are consistent with the goals
and objectives of MENTOR and occur within the first half of the annual incentive
period.   In such cases, the Plan
Administrators and/or an official designee shall review and approve any changes
to a participant’s measures and goals.

 

(Note: to meet IRC section 162m
million dollar cap performance plan safe harbor requirements for top 5 named
executive officers, as determined for SEC disclosure purposes, goals cannot be
changed after approved by Board and shareholders.)

 

5

 

Within two-and-one-half months
after the end of the fiscal year, the Plan Administrators and/or an official
designee shall:

 

•                  Review,
evaluate and determine each participant’s performance against the general
quality, service & operational excellence expectations & any
predetermined performance goals.

•                  Determine
the amount of incentive compensation payable to each participant.

•                  Communicate
the performance and payouts linkage/amounts, and ensure checks are delivered
within the necessary timeframe.

 

Award payments will be calculated using the following methodology:

 

1.               Funding pools will
be calculated based upon consolidated growth vs. the pre-establishes targets,
with further allocation to divisions and units based upon their
relative/proportional growth contributions compared to other divisions/units.
Growth results will be determined by the Committee, and will reflect any
necessary adjustments for acquisitions, divestitures and other extraordinary
items.

 

2.               Discretionary pool
funding, if any, for awards to high performing individuals in divisions/units
without (sufficient) funding will be determined by the committee.

 

3.               Based upon pool
funding, schedules will be prepared and shared with “supervisors” indicating
the “mechanically-allocated” payout opportunity allocated for each individual
along with their threshold, target and maximum 
percentages of base salary.

 

4.               Did the participant’s
results vs. assigned performance goals meet minimum threshold, target or
maximum expectations and demonstrate growth in each of the assigned  EBITDA, revenue and/or service volume categories?

 

5.               Were there any  quality or service problems within the
participant’s control that should potentially reduce or nullify the payouts?

 

6.               Supervisors will
then document performance results along with actual payout  recommendations. Within the pool,  upwards or downwards adjustment to the
individual incentive allocation will be made.

 

7.               The performance
reviews and recommended payouts will be reviewed by the CEO and recommended to
the Compensation Committee for approval. The Committee will assess the CEO’s
performance to determine the actual incentive payout.

 

8.               A detailed example
is included in the appendix.

 

Sale of
Company/Change in Control Provisions

 

In the event of a Sale of the Company/Change in Control, as defined
below, the Plan Year will terminate and all eligible employees will receive a
pro-rated portion of their earned incentive.

 

Sale of the Company shall mean the sale to a third party or affiliated
group of third parties, as determined by the Board Compensation Committee in
its discretion, of (i) capital stock of the Company possessing the voting
power to elect a majority of the Company’s nBoard 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 tom the public.

 

6

 

Termination
Provisions

 

a.               Voluntary termination – employees who terminated employment
voluntarily prior to the actual payment date, other than by retirement, will
not be paid any incentive under the plan for the performance year.

 

b.              Involuntary
termination for cause – employees whose employment is involuntarily
terminated for cause will not be eligible for any incentive payments under the
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 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 reputation of 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 Compensation Committee of the Board.

 

c.               Reduction in Force – based upon actual performance and
service achieved, any partial, pro-rated incentives earned will be paid at the
normal payout date to employees who have been terminated by reason of a
reduction in force.

 

d.              Retirement
– based upon actual performance and service achieved, any partial, pro-rated
incentives earned will be paid at the normal payout date to employees who
terminate employment through retirement.

 

e.               Death – based upon actual performance and service achieved,
any partial, pro-rated incentives earned will be paid to participants’ estates
at the normal payout date for any who cease employment during the year due to
the death.

 

Exclusions

 

Not withstanding the above,
participants are eligible for an incentive payout only if their reviewer
certifies that their performance is acceptable, based on the following:

 

•                  Fulfilling
general responsibilities and expectations, including a demonstrated commitment
to the quality of programming, service to customers, and the effectiveness of
the work environment for employees;

 

•                  Successfully
meeting financial objectives;

 

7

 

•                  Meeting
their organizational/business objectives; and

 

•                  Conducting
themselves in alignment with the values of the company.

 

Mentor generally believes that
executive supervision involves regular clarification of expectations, straight
forward feedback on performance, support for success, and regular guidance on
areas where performance requires improvement. 
In light of this, supervisors will be asked to provide feedback on a
quarterly basis as to whether or not an incentive eligible leader is meeting
these basic performance expectations. 
These conversations should be documented for any quarter where a
participant is judged as not meeting requirements and fully for the annual
review.  On an annual basis, supervisors
of incentive eligible leaders will be expected to fill out a form to document
performance appraisal and  to activate
any incentive eligibility of the leaders reporting to them.

 

Special Provisions

 

a.               Promotions, job transfers – incentive plan goals and payout
opportunities will be reestablished upon transfer or promotion to a new
position.  At the end of the performance
period, earned incentive pay will be prorated for performance achieved prior to
transfer and in the new position based on the date of transfer.

 

b.              Interruptions
in work

 

i)                             Long-term
illness or disability:  generally, a
long-term illness or disability will not affect the eligibility of an employee
in the incentive plan.  Performance
objectives will not be adjusted based on the work interruption, although actual
performance achieved will be evaluated and corresponding incentive pay out will
be prorated based on 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 their 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
Compensation committee of the Board.

 

ii)                          Special
assignments:  will generally not impact
either the target goals or incentive pay out. 
If the special assignment is of a significant nature or duration,
incentive plan goals may be renegotiated and incentive earnings will be
prorated based on the time spent in each position during the performance period
as in promotions or job transfers.

 

8

 

Section 162(m)
Provisions

 

In the event the company partakes in an Initial Public Offering or
otherwise becomes a publicly held company without an Initial Public Offering
and becomes subject to Section 162(m) of the Internal Revenue Code, and
applicable regulations, the plan terms shall be disclosed in the prospectus
accompanying the initial public offering. 
Furthermore, prior to the beginning of the next plan year following the
Company becoming publicly held without an Initial Public Offering or prior to
the beginning of the third plan year following an Initial Public Offering, the
Plan, as currently stated or amended, shall be presented for shareholder
approval as required by Section 162(m) and applicable regulations.

 

9

 

 

APPENDEX-replace with new example

 

 

MENTOR INCENT PLAN FUNDING &
ALLOCATION EXAMPLE

 

 

10

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