Document:

Exhibit 10.13

Exhibit 10.13

NATIONAL MENTOR HOLDINGS, LLC EXECUTIVE DEFERRAL PLAN

Second Amendment and Restatement Adopted June 17, 2009

And

Effective as of January 1, 2009.

ARTICLE 1: Establishment and Purpose

1.1 Establishment. National Mentor Holdings, LLC (the “Company”) hereby amends and restates
the National Mentor Holdings, LLC Executive Deferral Plan f/k/a National Mentor, Inc. Executive
Deferral Plan (the “Plan”), effective as of January 1, 2009. The Plan was originally established
effective as of November 1, 2003, and amended on each of October 1, 2003, August 1, 2006 and
December 29, 2006, and amended and restated on on December 30, 2008 effective as of January 1,
2009.

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 Network
401(k) Retirement Plan (the “Qualified 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”).

1.3 Compliance with Code § 409A. The Company intends the Plan to comply with the requirements
of Code § 409A, and, in particular, the provisions of Treas. Reg. §§ 1.409A-2(a)(9)(iii) and (iv)
(respecting the treatment of non-qualified plans linked to qualified plans involving deferral
elections and matching contributions).

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.

3.3 Special 2005 Stock Option Account. Amounts attributable to those certain options to
purchase common stock of the Company granted to certain Participants and deferred into the Special
2005 Stock Option Account shall be preserved in the Participant’s Accounts. See the Second
Amendment to the Plan signed July 28, 2006 and adopted as of August 1, 2006.

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.

 

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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 must be executed no later than
the following times:

(i) In the case of a Participant whose participation commenced in a prior Plan
Year, no later than the last day of the immediately preceding Plan Year; and

(ii) In the case of Participant’s “first year of eligibility” within the meaning
of Treas. Reg. § 1.409A-2(a)(7) and provided that the Participant participates in no
other “account balance plan” within the meaning of Treas. Reg. § 1.409A-1(c)(2(A),
within 30 days after the date on which he or she becomes eligible to participate in
the Plan, such election to take effect on, and apply only with respect to
compensation paid for services performed subsequent to, the next Entry 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.

(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.

 

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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.

4.6 Special Election Rights

(a) A Participant may irrevocably designate in writing, not later than the last day of the
immediately preceding Plan Year (or, with respect to a Participant’s “first year of eligibility”
within the meaning of Treas. Reg. § 1.409A-2(a)(7), within thirty days of the date the Participant
becomes eligible to participate in the Plan, provided that the Participant participates in no other
“account balance plans” within the meaning of Treas. Reg. § 1.409A-1(c)(2)(A)), a “Specified
Distribution Date” (as defined in Section 4.6(b)) to apply that portion of the year’s Salary
Reduction Accruals and Matching Contribution Accruals, and earnings thereon, exclusive of amounts
transferred to the Qualified Plan pursuant to Article 6. Amounts with respect to which a
Participant elects to exercise special election rights under this Section 4.6(a) will be
distributed under Section 7.1(c) and not Sections 7.1(a) and (b).

(b) The term “Specified Distribution Date” means a fixed date that is five or more years from
the date of the Participant’s election under Section 4.6(a).

4.7 Election Transitional Rule

Despite any contrary provisions of this Plan, at any time prior to December 31, 2008, a
Participant may irrevocably elect, in writing on forms furnished by and delivered to the Committee,
to change his or her choice of distribution options under Section 7.1(b).

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, 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.

 

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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.

6.3 Code § 409A Restrictions. For Plan Years commencing after December 31, 2008, and except
as permitted by Treas. Reg. § 1.409A-2(9)(iii) or (iv), no action or inaction by a Participant
under the Qualified Plan or any other “qualified employer plan” as defined in Treas. Reg.
§ 1.409A-1(a)(2) with respect to any Plan Year may result in an increase in—

(i) The amount deferred under this and any other nonqualified deferred compensation
plan within the meaning of Treas. Reg. § 1.409A-1(a) in which the Participant participates,
other than the amounts described in Section 6.3(ii) hereof, in excess of the limits
established under Code § 402(g)(1)(A), (B) and (C), or

(ii) The amount of matching contributions under this and any other nonqualified
deferred compensation plan within the meaning of Treas. Reg. § 1.409A-1(a) in which the
Participant participates in excess of 100% of the matching contribution that would have been
made to the Participant under the Qualified Plan but for the Code’s limitations on qualified
plan contributions

ARTICLE 7: Distributions

7.1 Distributions.

(a) The vested portion of a Participant’s Account (exclusive of amounts with respect to which
a Participant has designated a Specified Distribution Date under Section 4.6) will be distributed
to him or her as a result of his or her (i) Termination of Employment for any purpose (including
with respect to his or her Normal Retirement Date or Early Retirement Date), (ii) death or (iii)
Disability, whichever first occurs. The dollar amount of the distribution will be determined as of
the Valuation Date coincident with or first preceding the date of distribution.

 

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(b) Distributions under Section 7.1(a) to a Participant or, in the case of a Participant’s
death, his or her Beneficiary (exclusive of amounts with respect to which a Participant has
designated a Specified Distribution Date), will be made or commence to be made at the Participant’s
written election (made at the time of the commencement of his or her participation and no later
than the close of the period specified in Treas. Reg. § 1.409A-2(a)) either (i) in cash, in a
single lump sum, or (ii) in substantially equal monthly installments for 5 years (60 installments);
provided, however, that—

(i) If the Participant fails to make a timely election respecting the manner of
his or her distribution under this Section 7.1(b), he or she will be deemed to have
elected to receive a lump sum payment; and

(ii) Despite any other contract provision of this Plan, the Committee may, in
the case of a Participant who has elected substantially equal monthly installments of
5 years under Section 7.1(b) and whose Account at the time of distribution is less
than the dollar limit set forth in Code § 402(g)(1)(B) (for 2009, $16,500), instead
distribute his or her Account in cash, in a single lump sum in a manner consistent
with Treas. Reg. § 1.409A-3(j)(4)(v).

(c) Amounts with respect to which a Participant has designated a Specified Distribution Date
will be distributed, in cash, in a single lump sum, to him or her, or, in the case of his or her
death, to his or her Beneficiary, as soon as practicable following the earliest to occur of his or
her (i) Specified Distribution Date, (ii) Disability, or (iii) death, as the case may be, but in no
event later than the time specified in Section 7.1(d).

(d) All distributions from the Plan to Participants and Beneficiaries under Sections 7.1(a),
(b) and (c) will be made as soon as practicable following the occurrence of the applicable
distribution event, but not later than the latest of (i) the last day of the calendar year in which
such event occurs or (ii) the 15th day of the third month following such event.

(e) Any Termination of Employment triggering payment of benefits under this Article 7 must
constitute a “separation from service” within the meaning of Treas. Reg. § 1.409A-1(h) before
distribution of such benefits can commence. For purposes of clarification, this paragraph shall
not cause any forfeiture of benefits on the part of the Participant, but shall only act as a delay
until such time as a separation from service occurs.

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 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.

 

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7.4 Unforeseeable Emergencies.

(a) 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 (as defined in Code § 152, without regard to Section 152(b)(1), (b)(2) and
(d)(1)(B)), 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 to the extent that the resulting financial
hardship is or may be relieved (i) through reimbursement or compensation by insurance or otherwise,
(ii) by liquidation of the Participant’s assets, to the extent that liquidation of such assets
would not itself cause severe financial hardship or (iii) by cessation of deferrals under the Plan.
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. A distribution because of an Unforeseeable Emergency shall
not exceed the amount required to satisfy the Unforeseeable Emergency, plus amounts necessary to
pay taxes reasonably anticipated as a result of such distribution, after taking into account the
extent to which the Unforeseeable Emergency may be relieved through one or more of the measures
described in (i), (ii) or (iii) above. The Committee may from time to time adopt additional
policies or rules consistent with the requirements of Code § 409A to govern the manner in which
distributions in the case of an Unforeseeable Emergency may be made so that the Plan may be
conveniently administered.

ARTICLE 8: Amendment or Termination of the Plan

8.1 Company’s Right to Amend Plan. The Company, in its discretion, has the right to amend the
Plan from time to time, except that no such amendment shall, without the consent of the Participant
to whom deferred compensation has been credited to any Account under this Plan, adversely affect
the right of the Participant (or his beneficiary) to receive payments of such deferred compensation
under the terms of this Plan, nor may such amendment violate any applicable requirement of law.

8.2 Plan Termination The Company may, in its discretion, terminate the Plan at any time,
however, no termination of this Plan shall alter the right of a Participant (or his beneficiary) to
payments of deferred compensation previously credited to such Participant’s Account under the Plan,
nor will it alter or accelerate the timing of distributions in a manner that is inconsistent with
the requirements of Code § 409A(a).

 

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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 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.

Notwithstanding the generality of the foregoing, the Committee will interpret, construe, and
administer the Plan in a manner that satisfies the requirements of (a) Code § 409A(a)(2), (3) and
(4), (b) Treas. Reg. § 1.409A-1 et seq., and (c) other applicable authority issued by the Internal
Revenue Service and the U.S. Department of the Treasury.

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.

 

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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.

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
Articles 3 and 4.

(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 National Mentor
Holdings, LLC.

(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 Holdings, LLC 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 and any other equity
transactions; reimbursement of expenses; payments made as a result of transfer or
relocation; automobile allowances, company-paid parking and any other perquisites;
expatriate allowances, cell phone and other similar allowances; disability and/or life
insurance benefits received from a third party; and severance payments.

 

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(i) “Disability” means that a Participant is (i) unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment which
can be expected to result in death or can be expected to last for a continuous period of not
less than 12 months, or (ii) by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income replacement benefits for a
period of not less than 3 months under an accident and health plan covering the Company’s
employees.

(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 November 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 January 1st, April 1st, July 1st or October 1st of each Plan
Year.

(n) “Funding Vehicle” means a trust or insurance polices, if any, 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 Holdings, LLC Executive Deferral Plan, as set
forth in this document and as amended from time-to-time.

 

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

(u) “Qualified Plan” means The Mentor Network 401(k) Retirement 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.

(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, or other discharge.

(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.

 

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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.

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

EXECUTED this 17th day of June, 2009.

	 	 	 	 	 
	 	National Mentor Holdings, LLC

 	 
	 	By:  	/s/
Denis Holler	 

 

12Exhibit 10.16

Exhibit 10.16

The MENTOR Network

Incentive Compensation Plan

Effective October 1, 2007

 

 

 

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
	 	 	3	 
	Making the Initial Calculation
	 	 	4	 
	Using 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 DSO performance)
	 	 	5	 
	Redistribution of Unallocated Incentive Compensation
	 	 	5	 
	In the Event that Calculated Payouts Exceed Funds Available to Pay Incentive Compensation
	 	 	5	 
	Discretionary Incentive Pool
	 	 	6	 
	Administration
	 	 	6	 
	Plan Changes
	 	 	6	 
	Management of Financial and Other Goals
	 	 	6	 
	Incentive Compensation Payouts
	 	 	6	 
	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

As a national network of local human service providers, The Network’s mission is to provide
high-quality home and community-based human services to individuals with mental retardation and
developmental disabilities, at-risk children and youth with emotional, behavioral, or medically
complex needs and their families, persons with acquired brain injury, individuals with physical
disabilities, and the elderly. 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, state,
or, in the case of Minnesota, region, whichever applies to the individual participant. For
example, for an Executive Director, the organizational unit is the group of states for which the
Executive Director 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 in positions that have
been approved for participation who are not eligible for participation under another cash incentive
plan of The Network. In general, to be eligible, an employee must earn at least $50,000 in base
salary (as adjusted for the local labor market based on Economic Research Institute or comparable
data as determined by the Senior Director of Compensation and Benefits) and, for Program Manager
and Program Director positions, must be responsible for programs with at least $250,000 expected
CTO. Exceptions must be approved by the Chief Operating Officer (“COO”) and the Chief Financial
Officer (“CFO”). 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 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. Operating Group positions
(as set out 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.
Network positions (as set out 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.

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”)).

 

3

 

	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.

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.

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.

 

4

 

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 Network DSO target applies to all other Network positions, and
the organizational unit DSO target applies to Operating Group 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. Quality of service expectations, standards, and metrics are
expected to be developed, approved, and disseminated from time to time by the 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 within the same operating group or within the positions listed as
Network positions on Exhibits A and B. The applicable Operating Group President must approve
redistribution of dollars within an operating group. The CEO must approve redistribution of
dollars among Network 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.

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 and Board of Directors, all payouts will be reduced
proportionately based on the funds available.

 

5

 

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 and the Board of Directors 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, CFO, and COO must approve goals and actual performance results for organizational units.

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.

 

6

 

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: (i) an employee’s
position has been approved for plan participation (as set out in Exhibit A), (ii) the employee
earns at least $50,000 in base salary (as adjusted for the local labor market) and, (iii) for
Program Manager and Program Director positions, the employee is responsible for programs with at
least $250,000 expected CTO, as confirmed by the Operating Group CFO. In the case of an employee
meeting the above criteria, entry in the Plan must be approved by both the Operating Group CFO (or,
for Network positions, the CFO) and the Senior Director of Compensation & Benefits.

In the case of employees who do not meet the above criteria but are recommended for participation
by the Operating Group CFO (or, for Network positions, the CFO), the Senior Director of
Compensation & Benefits must review the position and make a recommendation to the COO and CFO as to
whether the employee should be approved for participation and, if so, also recommend weightings and
the level of incentive compensation payout opportunity. The COO and CFO have the final authority
for approving new positions for participation.

Ongoing Eligibility Management

At the beginning of each fiscal year, a listing of all current eligible plan participants will be
provided to Operating Group Presidents and CFOs and to Network department heads for review and
confirmation. The list will include performance weightings and level of incentive compensation
payout opportunity. Once reviewed, the list will be submitted to the CEO, CFO, and COO 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.

 

8

 

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.

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 October 1, 2007. 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	 
	 	 	Target IC	 	 	Unit Performance Weighting	 
	 	 	Payout	 	 	 	 	 	 	Organizational	 
	Position	 	Opportunity	 	 	Network	 	 	Unit	 
	Operating Group Positions (Measured by Quality
of Services)

	Vice Presidents, Operations
	 	 	25	%	 	 	25	%	 	 	75	%
	Executive Directors
	 	 	20	%	 	 	25	%	 	 	75	%
	State Directors
	 	 	15	%	 	 	0	%	 	 	100	%
	Deputy State Directors
	 	 	10	%	 	 	0	%	 	 	100	%
	Program Directors/Managers (Must meet minimum of
$250k CTO floor or have CFO and COO approval) 
	 	 	10	%	 	 	0	%	 	 	100	%
	Sr. Business Directors
	 	 	20	%	 	 	25	%	 	 	75	%
	Business Directors
	 	 	15	%	 	 	25	%	 	 	75	%
	Business Managers
	 	 	10	%	 	 	25	%	 	 	75	%
	State Accounting Managers
	 	 	10	%	 	 	0	%	 	 	100	%
	Operating Group level IT, QA, and HR Directors
	 	 	15	%	 	 	100	%	 	 	0	%
	Network Positions (Measured by Quality of Work)

	Vice Presidents
	 	 	25	%	 	 	100	%	 	 	0	%
	Sr. Directors
	 	 	20	%	 	 	100	%	 	 	0	%
	Directors
	 	 	15	%	 	 	100	%	 	 	0	%
	Managers
	 	 	10	%	 	 	100	%	 	 	0	%
	Designated Executive Group Business Analyst positions
	 	 	10	%	 	 	100	%	 	 	0	%

Note: Organizational Unit means operating sub group, state, or in the case of MN, regions within
the state of MN, whichever is applicable to the individual participant. For example, for Executive
Directors, unit means the operating sub group (i.e., group of states for which the Executive
Director is responsible).

 

10

 

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

	 	 	 	 	 
	 	 	Target IC Payout	 
	Position	 	Opportunity	 
	CEO
	 	 	50	%
	Executive Vice Presidents
	 	 	50	%
	Operating Group Presidents
	 	 	50	%
	Senior Vice Presidents
	 	 	50	%
	Managing Directors
	 	 	50	%

Note: For purposes of calculating incentive compensation payouts for executives, performance is
based on Network performance with regard to Adjusted EBITDA, revenue, and Free Cash Flow. Quality
of work is based on individual executive 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 Expectations	 	 	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	%	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Initial Calculation	 	 	 	 	 	 	 	 	 	 	 	 	 
	Salary	 	$	50,000	 	 	CTO	 	 	Revenue	 	 	Total	 	 	DSO	 	 	Adjusted	 	 	Quality	 	 	Adjusted	 
	Target IC %	 	 	10	%	 	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	%	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Initial Calculation	 	 	 	 	 	 	 	 	 	 	 	 	 
	Salary	 	$	75,000	 	 	CTO	 	 	Revenue	 	 	Total	 	 	DSO	 	 	Adjusted	 	 	Quality	 	 	Adjusted	 
	Target IC %	 	 	15	%	 	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	%

 

13

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