EXHIBIT 4.13
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MAGELLAN HEALTH SERVICES, INC.
STOCK OPTION AGREEMENT
Optionee ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Dated: July 17, 2006
SECTION 1. GRANT OF OPTION.
(a) OPTION. On the terms and conditions set forth in this Agreement and the
Notice of Stock Option Award dated as of July 17, 2006 delivered to Optionee
simultaneously herewith and each other Notice of Stock Option Award referencing
this Agreement (an "OPTION AWARD NOTICE"), Magellan Health Services Inc. (the
"COMPANY" as further defined below) grants to the Optionee, as referred to on
the signature page hereof, as of the Date of Grant (as defined below) an option
to purchase at the Exercise Price (as defined below) a number of shares of
Ordinary Common Stock, $ 0.01 par value, of the Company set forth in the Option
Award Notice, subject to Section 7 below (the "OPTION SHARES"). Each such Option
Award Notice, together with this referenced Agreement, shall be a separate
option governed by the terms of this Agreement and any such separate option may
be referred to herein as "the option" and any of multiple Option Award Notices
may be referred to herein as "the Option Award Notice." This option is intended
to be an Incentive Stock Option or a Nonqualified Stock Option, as provided in
the Option Award Notice.
(b) 2006 MANAGEMENT INCENTIVE PLAN AND DEFINED TERMS. Each option referred to in
an Option Award Notice is granted on the same terms and conditions as provided
for the grant of options pursuant to the Company's 2006 Management Incentive
Plan, as amended and supplemented from time to time (the "PLAN"), a copy of
which is incorporated herein by this reference, and shall be subject to such
terms and conditions; it being understood, however, that the option granted
pursuant to the Option Award Notice dated as of July 17, 2006 referred to above
has been separately authorized by the Company and is not among the options
authorized by and granted under the Plan and that the Option Shares that may be
issued pursuant to such Option Award Notice are not among the shares of Ordinary
Common Stock of the Company, and shall not be counted against, the maximum
number of such shares, that may be issued pursuant to the Plan. Certain
capitalized terms used herein are defined in Section 9 below but terms used
herein, if not defined herein, shall have the same meaning for purposes hereof
as provided by the Plan.
(c) SCOPE OF THIS AGREEMENT. This Agreement shall apply both to the option and
to the Option Shares acquired upon the exercise of the option.
SECTION 2. RIGHT TO EXERCISE.
(a) EXERCISABILITY. Subject to the conditions set forth in this Agreement, all
or part of an option may be exercised to purchase Option Shares prior to its
expiration at the time or times set forth in the vesting and exercise provisions
of the Option Award Notice.
(b) $100,000 LIMITATION. If the option is designated as an Incentive Stock
Option in the Option Award Notice, then the Optionee's right to exercise the
option shall be deferred to the extent (and only to the extent) that the option
would not be treated as an Incentive Stock Option solely by reason of the
$100,000 annual limitation under Section 422(d) of the Code, except that the
Optionee need not defer his or her right to exercise the option if (i) the
Company is subject to an Extraordinary Business Combination Event before the
Optionee's Service terminates, (ii) the Company, or any surviving corporation of
any business combination involving the Company or its parent (a "SURVIVING
COMPANY") does not continue the option, and (iii) any Surviving Company does not
assume the option or does not substitute an option with substantially the same
terms for the option. The failure to defer exercise of the option in order to
comply with this $100,000 limitation as permitted by the foregoing provisions
may, however, result in the option no longer being considered an Incentive Stock
Option. Additional limitations with regard to Incentive Stock Options are set
forth in the Plan.
(c) INJURIOUS CONDUCT. Except as otherwise specifically provided by an Option
Award Notice or by an agreement executed by the Company with the approval of the
Committee, in the event the Optionee has engaged in Injurious Conduct as defined
in, and as determined to have occurred in accordance with, Section 12 of the
Plan (i) the option may not be exercised (even if fully vested), nor shall any
other Benefits accrue to the Optionee under the Agreement or the Plan (including
the lapse of any restrictions on transfer or other restrictions applicable to
Option Shares once issued), prior to settlement in full of all obligations of
the Optionee and the Company related to the option (including completion of the
issuance and delivery to the Optionee of Option Shares upon exercise of the
option and compliance by the Optionee with any restrictions that are applicable
to Optionee under the Plan or this Agreement or the Option Award Notice before
the lapse of any restrictions on transfer or other restrictions applicable to
Option Shares once issued), and (ii) any such unsettled option shall be
forfeited and shall terminate and any such Option Shares subject to any such
restrictions shall be forfeited.
SECTION 3. TRANSFER OF OPTION.
(a) TRANSFERS GENERALLY PROHIBITED. Except as otherwise provided by the Option
Award Notice, this option shall be exercisable only during the Optionee's
lifetime and only by the Optionee. Except as otherwise provided in subsection
3(b) below, this option and the rights and privileges conferred hereby shall not
be sold or otherwise Transferred.
(b) CERTAIN TRANSFERS PERMITTED. Notwithstanding the foregoing provisions of
this Section 3, this option may be Transferred (i) in the event of the Grantee's
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death, by the laws of descent or distribution, (ii) by operation of law in
connection with a merger, consolidation, recapitalization, reclassification or
exchange of shares, reorganization or similar transaction involving the Company
affecting the Shares generally or (iii) with the approval of the Committee, to a
member of Grantee's family, or a trust primarily for the benefit thereof, or to
a corporation, partnership or other entity primarily for the benefit of such a
family member or trust or in another estate planning transaction; provided,
however, that the option so Transferred shall remain subject in the hands of the
Transferee to the restrictions on Transfer provided hereby.
(c) FIDUCIARY AND SECURITIES LAW RESTRICTIONS. As a employee, officer and/or
director of the Company or a subsidiary thereof, Optionee may be subject to
restrictions on his or her ability to sell or otherwise Transfer Option Shares
by reason of being a fiduciary for the Company or by reason of federal or state
securities laws and/or the policies regarding transactions in the securities of
the Company from time to time adopted by the Company in connection therewith.
Nothing contained herein shall relieve Optionee of any restriction on sale or
other Transfer of Option Shares provided thereby and the restrictions provided
herein shall be in addition to and not in lieu of any such other restrictions.
(d) LAPSE OF TRANSFER RESTRICTIONS. Subject to subsection 3(c) above and unless
otherwise provided by the Option Award Notice, upon the acquisition of Option
Shares pursuant to the option Optionee shall be free to dispose of Option Shares
so acquired in any manner and at any time after expiration of the vesting period
provided by the Option Award Notice.
SECTION 4. EXERCISE PROCEDURES.
(a) NOTICE OF EXERCISE. The Optionee (or the Optionee's personal representative
or permitted Transferee) may exercise the option by giving written notice to the
Company specifying the election to exercise the option, the number of Shares for
which it is being exercised and the form of payment. Exhibit A is an example of
a "Notice of Exercise". The Notice of Exercise shall be signed by the person
exercising the option. In the event that the option is being exercised by the
Optionee's personal representative or permitted Transferee, the notice shall be
accompanied by proof (satisfactory to the Company) of the representative's right
to exercise the option. The Optionee or the Optionee's representative or
permitted Transferee shall deliver to the Company, at the time of giving the
notice, payment in a form permissible under Section 5 below for the full amount
of the Purchase Price.
(b) ISSUANCE OF COMMON STOCK. Subject to subsection 2(c) above, after receiving
a proper notice of exercise and payment for the Option Shares for which the
option was exercised, the Company shall cause to be issued a certificate or
certificates for the Option Shares as to which this option has been exercised,
registered in the name of the person exercising the option (or, at the direction
of the Optionee, in the names of such person and his or her spouse as community
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property or as joint tenants with right of survivorship or as tenants in the
entirety).
(c) WITHHOLDING REQUIREMENTS. The Company may withhold any tax (or other
governmental obligation) arising as a result of the exercise of the option, as a
condition to the exercise of the option, and the Optionee shall make
arrangements satisfactory to the Company to enable it to satisfy all such
withholding requirements. The Optionee shall also make arrangements satisfactory
to the Company to enable it to satisfy any withholding requirements that may
arise in connection with the vesting or disposition of Option Shares purchased
by exercising of the option.
SECTION 5. PAYMENT FOR SHARES.
(a) CASH OR CHECK. All or part of the Purchase Price may be paid in cash or by
good check.
(b) ALTERNATIVE METHODS OF PAYMENT. Subject to any provision of the Option Award
Agreement otherwise providing, at the sole discretion of the Committee, all or
any part of the Purchase Price and any applicable withholding requirements may
be paid by one or more of the following alternative methods:
(i) Surrender of Stock. By surrendering ownership of Shares
that are already owned by the Optionee free and clear of any
restriction or limitation, unless the Company specifically
agrees to accept such Shares subject to a restriction or
limitation. In such cases, the Shares shall be surrendered to
the Company in good form for transfer and shall be valued at
their Fair Market Value on the date of the applicable
exercise of the option. Without the specific approval of the
Committee, the Optionee shall not be permitted to surrender
ownership of Shares in payment of the Purchase Price (or
withholding) if such action would cause the Company to
recognize compensation expense (or additional compensation
expense) with repect to the option for financial reporting
purposes that otherwise would not have occurred.
(ii) Net Exercise. By reducing the number of Shares otherwise
deliverable upon the exercise of the option by the number of
Shares of having a Fair Market Value equal to the amount of
the Purchase Price and withholding required to be made by the
Company in connection with such exercise of the option.
(iii) Exercise/Sale. By the delivery (on a form prescribed by
the Company) of an irrevocable direction (A) to a securities
broker approved by the Company to sell Shares and to deliver
all or a part of the sales proceeds to the Company or (B) to
pledge Shares to a securities broker or lender approved by
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the Company as security for a loan, and to deliver all or
part of the loan proceeds to the Company.
Should the Committee exercise its discretion to permit the Optionee to exercise
the option in whole or in part in accordance with subsection 5(b) above, it
shall have no obligation to permit such alternative exercise with respect to the
remainder of the option or with respect to any other option to purchase Shares
held by the Optionee.
SECTION 6. TERM AND EXPIRATION.
(a) BASIC TERM. Subject to earlier termination in accordance with subsection
6(b) below, the exercise period of this option shall expire ten (10) years after
its Date of Grant.
(b) TERMINATION OF SERVICE. If the Optionee's Service terminates, then the
exercise period for this option shall expire (except as otherwise set forth in
the Option Award Notice) on the earliest of the following occasions (or such
later date as the Committee in a specific instance may determine), but in no
event after the expiration of the ten year period referred to in subsection 6(a)
above:
(i) the date six (6) months after the termination of the
Optionee's Service for any reason other than death, normal
retirement or Disability;
(ii) the date twelve (12) months after the termination of the
Optionee's Service by reason of Disability or retirement
pursuant to any then current formal retirement policy of the
Company; or
(iii) the date twelve (12) months after the Optionee's death.
The Optionee (or in the case of the Optionee's death or disability, the
Optionee's personal representative) may exercise all or part of the option at
any time before its expiration under the preceding provisions of this Section 6,
but only to the extent that the option had become exercisable for Shares on or
before the date the Optionee's Service terminates. When the Optionee's Service
terminates, this option shall expire immediately with respect to the number of
Shares for which this option has not yet become exercisable.
(c) NOTICE CONCERNING INCENTIVE STOCK OPTION TREATMENT. If this option is
designated as an Incentive Stock Option in the Option Award Notice, it ceases to
qualify for favorable tax treatment as an Incentive Stock Option to the extent
it is exercised (i) more than three (3) months after the date the Optionee
ceases to be an Employee for any reason other than death or permanent and total
disability (as defined in Section 22(e)(3) of the Code), (ii) more than twelve
(12) months after the date the Optionee ceases to be an Employee by reason of
such permanent and total disability or (iii) after the Optionee has been on a
leave of absence for more than ninety (90) days, unless the Optionee's
reemployment rights are guaranteed by statute or by contract.
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SECTION 7. ADJUSTMENT OF SHARES.
(a) ADJUSTMENT GENERALLY. If while the option remains in effect there shall be
any change in the Ordinary Common Stock of the Company, through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
reverse stock split, split up, spin-off, combination of shares, exchange of
shares for other securities, dividend in kind or other like change in capital
structure or distribution (other than normal cash dividends) to stockholders of
the Company, an adjustment shall be made to the option as determined by the
Committee so that the option shall thereafter be exercisable for such
securities, cash and/or other property as would have been received in respect of
the Common Stock subject to the option had such option been exercised in full
immediately prior to such change or distribution or, if to the extent the
Committee determines that such adjustment in the consideration to be received
upon exercise of the option is not practicable, the Committee shall equitably
modify the option as provided by subsection 7(b) below, and such an adjustment
shall be made successively each time any such change shall occur.
(b) MODIFICATION OF OPTION. In the event of any change or distribution described
in subsection 7(a) above, in order to prevent dilution or enlargement of
theOptionee's rights hereunder, the Committee may, in an equitable manner,
otherwise adjust the number and kind of Shares that may be issued under this
Agreement and/or adjust the Exercise Price applicable to the option and/or the
Fair Market Value of the Shares and other value determinations applicable to the
option. Appropriate adjustments may also be made by the Committee in other terms
of the option to reflect such changes or distributions and/or to modify any
other terms of the option, on an equitable basis, including modifications of
performance targets and changes in the length of performance periods relating to
the vesting of the option or any restrictions on Option Shares. Notwithstanding
the foregoing, (i) each such adjustment with respect to an Incentive Stock
Option shall comply with the rules of Section 424(a) of the Code, and (ii) in no
event shall any adjustment be made which would render any Incentive Stock Option
granted hereunder other than an "incentive stock option" for purposes of Section
422 of the Code.
SECTION 8. MISCELLANEOUS PROVISIONS.
(a) RIGHTS AS A SHAREHOLDER. Neither the Optionee nor the Optionee's personal
representative or permitted Transferee shall have any rights as a shareholder
with respect to any Shares subject to the option until the Optionee or his or
her personal representative or permitted Transferee becomes entitled to receive
such Shares by (i) filing a notice of exercise and (ii) paying the Purchase
Price as provided by this Agreement, and any such right shall be subject to
subsection 2(c) above of this Agreement.
(b) TENURE. Nothing in the Option Award Notice, this Agreement or the Plan shall
confer upon the Optionee any right to continue in the Company's Service for any
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period of specific duration or interfere with or otherwise restrict in any way
the rights of the Company (or any Parent or Subsidiary employing or retaining
the Optionee) or of the Optionee, which rights are hereby expressly reserved by
each, to terminate his or her Service at any time and for any reason, with or
without cause.
(c) NOTIFICATION. Any notification required by the terms of this Agreement shall
be given in writing and shall be deemed effective upon personal delivery to the
President, Treasurer, General Counsel, Secretary or any Assistant Secretary of
the Company or five Business Days upon deposit with the United States Postal
Service, by registered or certified mail, with postage and fees prepaid
addressed to the Company. A notice shall be addressed to the Company at its
principal executive office, marked to the attention of the Corporate Secretary,
and to the Optionee at the address that he or she most recently provided to the
Company.
(d) ENTIRE AGREEMENT. This Agreement, any related Option Award Notice and the
Plan constitute the entire contract between the parties hereto with regard to
the subject matter hereof and supersede any other agreements, representations or
understandings (whether oral or written and whether express or implied) which
relate to the subject matter hereof; it being understood, however, that, if this
Agreement is being entered into by the Company in the performance of obligations
under an employment agreement between the Company and Optionee, the Company and
Optionee shall also have those separate obligations, if any, relating to the
granting of options provided thereby.
(e) WAIVER. No waiver of any breach or condition of this Agreement shall be
deemed to be a waiver of any other or subsequent breach or condition whether of
like or different nature.
(f) SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Company and its successors and assigns and
upon the Optionee, the Optionee's personal representatives, heirs, legatees and
other permitted Transferees, whether or not any such person shall have become a
party to this Agreement and have agreed in writing to be join herein and be
bound by the terms hereof.
(g) CHOICE OF LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, as such laws are applied to
contracts entered into and performed in such State.
SECTION 9. DEFINITIONS.
(a) "AGREEMENT" shall mean this Stock Option Agreement.
(b) "BOARD OF DIRECTORS" shall mean the Board of Directors of the Company, as
constituted from time to time.
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(c) "CODE" shall mean the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated thereunder.
(d) "COMMITTEE" shall mean the committee of the Board of Directors described in
Section 2 of the Plan.
(e) "COMPANY" shall mean Magellan Health Services, Inc, a Delaware corporation,
and any successor thereto.
(f) "DATE OF GRANT" in respect of an option shall mean the date specified in the
Option Award Notice, which date shall be no later than the date the employment
agreement between the Optionee and the Company, dated as of July 17, 2006 is
effective.
(g) "DISABILITY" shall mean that the Optionee is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment as determined by the Committee in its sole discretion.
(h) "EMPLOYEE" shall mean any individual who is a common-law employee of the
Company, a Parent or a Subsidiary.
(i) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
(j) "EXERCISE PRICE" shall mean the amount for which one Option Share may be
purchased upon exercise of the option, as specified in the Option Award Notice.
(k) "EXTRAORDINARY BUSINESS COMBINATION EVENT" shall be deemed to have occurred
upon any of the following events:
(i) any person (as such term is used in Section 13(d) of the
Exchange Act) becomes the "beneficial owner" (as determined
pursuant to Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing more
than fifty percent (50%) of the combined voting power in the
election of directors of the Company's then outstanding
securities, except that, in the case of a person who
beneficially owned 50% of such combined voting power on the
date of the Option Award Notice, such person become the
beneficial owner (as so defined) of securities of the Company
representing sixty percent (60%) of more of such combined
voting power; or
(ii) during any period of two (2) consecutive years (not
including any period prior to the execution of this
Agreement), individuals who at the beginning of such period
constitute the members of the Board of Directors and any new
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director, whose election to the Board of Directors or
nomination for election to the Board of Directors by the
Company's stockholders was approved by a vote of at least a
majority of the directors then still in office who either
were directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute a majority of
the Board of Directors; or
(iii) the Company shall merge with or consolidate into any
other corporation, other than a merger or consolidation which
would result in the holders of the voting securities of the
Company outstanding immediately prior thereto holding
immediately thereafter securities representing more than
fifty percent (50%) of the combined voting power of the
voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation;
or
(iv) the stockholders of the Company approve and effect a
plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(l) "FAIR MARKET VALUE" Fair Market Value on any given date means the fair
market value of the shares of Common Stock determined by such methods or
procedures as shall be established from time to time by the Board of Directors.
Unless otherwise determined by the Board of Directors, (i) if the Common Stock
is listed on a national securities exchange or is quoted in the National Market
System of the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") on a last sale basis, the average of the opening price and the
closing price reported as having occurred on such date, or, if there is no sale
on such date, then on the last preceding date on which such a sale was reported,
or (ii) if the Common Stock is not listed on a national securities exchange nor
quoted in NASDAQ on a last sale basis, the amount determined by the Committee
(or in accordance with procedures approved by the Committee) to be the fair
market value based upon a good faith attempt to value the Common Stock
accurately.
(m) "INCENTIVE STOCK OPTION" shall mean an employee incentive stock option
described in Section 422(b) of the Code.
(n) "NONQUALIFIED STOCK OPTION" shall mean a stock option not described in
Sections 422(b) or 423(b) of the Code.
(o) "OPTION AWARD NOTICE" shall have the meaning provided by Section 1 of this
Agreement.
(p) "OPTIONEE" shall mean the person signing this Agreement as such.
(q) "PARENT" shall mean a "parent corporation" as defined in Section 424(e) of
the Code.
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(r) "PLAN" shall mean the Magellan Health Services, Inc. 2006 Management
Incentive Plan.
(s) "PURCHASE PRICE" shall mean the Exercise Price multiplied by the number of
Option Shares with respect to which this option is being exercised.
(t) "SERVICE" shall mean service as an Employee. For any purpose under this
Agreement, Service shall be deemed to continue while the Optionee is on a bona
fide leave of absence, if such leave was approved by the Company in writing or
if continued crediting of Service for such purpose is expressly permitted by the
terms of such leave or required by applicable law (as determined by the
Company).
(u) "SHARE" shall mean a share of Ordinary Common Stock of the Company, as the
same may generally be exchanged for or changed into any other share of capital
stock or other security of the Company or any other company in connection with a
transaction referred to in subsection 7(a) above (and in the event of any such
exchange or change, any security resulting from any such successive exchange or
change) and in respect of the option or the related Option Shares with such
adjustment thereto as provided in respect of adjustments in Benefits granted
under the Plan in accordance with subsection 7(b) above and Section 13 of the
Plan (if applicable).
(v) "TRANSFER" shall mean, with respect to the option or Option Share, any sale,
assignment, transfer, alienation, conveyance, gift, bequest by will or under
intestacy laws, pledge, lien encumbrance or other disposition, with or without
consideration, of all or part of such Share, or of any beneficial interest
therein, now or hereafter owned by the Optionee, including by execution,
attachment, levy or similar process.
(w) "SUBSIDIARY" shall mean a "subsidiary corporation" as defined in Section
424(f) of the Code.
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In consideration of the foregoing and intending to be legally bound
hereby, the Company and the Optionee named below have executed this Agreement as
of the date first above written.
MAGELLAN HEALTH SERVICES, INC.
By:
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Name:
Title:
OPTIONEE:
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Address for Notice:
Social Security Number:
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EXHIBIT A
SAMPLE NOTICE OF EXERCISE
Magellan Health Services, Inc.
[ADDRESS]
Attn: Corporate Secretary
Re: Exercise of Option, Option Award Notice Reference No. ____.
I hereby exercise my stock option identified above and notify you of my
desire to purchase the Option Shares that may be purchased pursuant to such
option as and to the extent described below.
Except as otherwise agreed with the Company as provided by the Option
Agreement, I shall pay for the Shares by delivery of a check payable to Magellan
Health Services, Inc. (the "Company") in the amount described below in full
payment for such Shares plus all amounts required to be withheld by the Company
under state, federal or local law as a result of such exercise or shall provide
such documentation as is satisfactory to the Company demonstrating that I am
exempt from any withholding requirement.
This notice of exercise is delivered this ___ day of ___________, 20__.
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NUMBER OF SHARES TO BE ACQUIRED UPON
THIS EXERCISE OF THE OPTION: ______________
EXERCISE PRICE PER SHARE: $____; TOTAL EXERCISE PRICE: $____________
TYPE OF OPTION: ___ Nonqualified Stock Option OR ___ Incentive Stock Option
ESTIMATED WITHHOLDING TAX: $__________________
AMOUNT TENDERED HEREWITH: $__________________
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Very truly yours,
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[Signature of Optionee]
Optionee's Name, Mailing Address and Social Security Number:
MAGELLAN HEALTH SERVICES, INC.
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NOTICE OF STOCK OPTION GRANT
(▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
NAME OF OPTIONEE: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
SHARES SUBJECT TO
OPTION: 37,500 shares of Ordinary Common Stock of Magellan Health
Services, Inc. ("Shares")
TYPE OF OPTION: __X__ Nonqualified ______ Incentive
EXERCISE PRICE
PER SHARE: o $
DATE OF GRANT: o July 17, 2006
DATE EXERCISABLE: o This option shall be exercisable only to the extent
it is vested and, except as otherwise provided in
this notice of grant, to the extent vested, only
when otherwise exercisable in accordance with the
terms of the 2006 Management Incentive Plan and the
Option Agreement to which this notice of grant
relates.
o The options granted hereby, to the extent vested on
the date of termination of the Optionee's Service
with the Company, shall be exercisable for a period
of six months after the termination of the
Optionee's Service with the Company (notwithstanding
anything that may be to the contrary in the Option
Agreement to which this notice of grant relates).
VESTING: o This option shall vest with respect to 12,500 of the
Shares subject thereto on each of the first three
anniversaries of the Date of Grant, provided that in
each case the Optionee's Service with the Company
has not terminated prior to such date.
o Notwithstanding the preceding paragraph, this Option
shall earlier vest immediately with respect to 100%
of the Shares subject hereto in the event, after the
date hereof, a Change in Control of the Company (as
defined below) shall have occurred and within the
eighteen months (or such other period as is provided
by Optionee's employment agreement, if any, in
effect at the time of the Change of Control)
following occurrence of the Change in Control,
Optionee's Service with the Company shall be
terminated by the Company without Cause (as defined
below) or by the Optionee with Good Reason (as
defined below), provided that the Optionee's Service
with the Company has not previously terminated after
the date hereof for any other reason, and upon such
accelerated vesting this Option shall continue to be
exercisable for a period of six months after such
termination of Optionee's Service, consistent with
the provisions regarding exercise set forth above.
For purposes of this Option, the terms "Change in
Control," "Cause" and "Good Reason" shall have the
same meanings ascribed thereto below, unless any
employment agreement between the Company and
Optionee in effect at the time of the Change in
Control provides different meanings (in which event,
such meanings, including whether or not the
Optionee's employment has been so terminated, shall
apply but only if such meanings are more favorable
to Optionee).
(1) A "Change in Control" of the Company shall
mean the first to occur after the date hereof
of any of the following events:
o
a. any "person," as such term is used in
Sections 3(a)(9) and 13(d) of the Securities
Exchange Act of 1934, as amended (the
"Exchange Act"), becomes a "beneficial
owner," as such term is used in Rule 13d-3
promulgated under the Exchange Act, of 30% or
more of the Voting Stock (as defined below)
of the Company;
b. the majority of the Board of Directors of the
Company consists of individuals other than
"Continuing Directors," which shall mean the
members of the Board on the date hereof,
provided that any person becoming a director
subsequent to the date hereof whose election
or nomination for election was supported by
two-thirds of the directors who then
comprised the Continuing Directors shall be
considered to be a Continuing Director;
c. the Board of Directors of the Company adopts
and, if required by law or the certificate of
incorporation of the Corporation, the
shareholders approve the dissolution of the
Company or a plan of liquidation or
comparable plan providing for the disposition
of all or substantially all of the Company's
assets;
d. all or substantially all of the assets of the
Company are disposed of pursuant to a merger,
consolidation, share exchange, reorganization
or other transaction unless the shareholders
of the Company immediately prior to such
merger, consolidation, share exchange,
reorganization or other transaction
beneficially own, directly or indirectly, in
substantially the same proportion as they
previously owned the Voting Stock or other
ownership interests of the Company, a
majority of the Voting Stock or other
ownership interests of the entity or
entities, if any, that succeed to the
business of the Company; or
e. the Company merges or combines with another
company and, immediately after the merger or
combination, the shareholders of the Company
immediately prior to the merger or
combination own, directly or indirectly, 50%
or less of the Voting Stock of the successor
company, provided that in making such
determination there shall being excluded from
the number of shares of Voting Stock held by
such shareholders, but not from the Voting
Stock of the successor company, any shares
owned by Affiliates of such other company who
were not also Affiliates of the Company prior
to such merger or combination.
(2) "Cause" shall mean:
a. Optionee is convicted of (or pleads guilty or
nolo contendere to) a felony or a crime
involving moral turpitude;
b. Optionee's commission of an act of fraud or
dishonesty involving his or her duties on
behalf of the Company;
c. Optionee's willful failure or refusal to
faithfully and diligently perform duties
lawfully assigned to Optionee as an officer
or employee of the Company or other willful
breach of any material term of any employment
agreement at the time in effect between the
Company and Optionee; or
d. Optionee's willful failure or refusal to
abide by the Company's policies, rules,
procedures or directives, including any
material violation of the Company's Code of
Ethics.
(3) "Good Reason" shall mean:
a. a reduction in Optionee's salary in effect at
the time of a Change in Control, unless such
reduction is comparable in degree to the
reduction that takes place for all other
employees of the Company of comparable rank
(for which purpose any person who is an
executive officer of the Company (as
determined for purposes of the Exchange Act
shall be considered of comparable rank) or a
reduction in Optionee's bonus for the year in
which or any year after the year in which the
Change in Control occurs from Optionee's
maximum bonus opportunity for the year in
which the Change in Control occurs (if any)
as established under any employment agreement
Optionee has with the Company or any bonus
plan of the Company applicable to Optionee
(or, if no such maximum bonus opportunity has
yet been established for Optionee under a
bonus plan applicable to Opitonee for the
year in which the Change in Control has
occurred, the maximum bonus opportunity so
established for Optionee for the immediately
preceding year (if any);
b. a material diminution in Optionee's position,
duties or authority as in effect at the time
of a Change in Control or the assignment to
Optionee of duties which are materially
inconsistent with such position, duties and
authority, unless in either case such change
is made with the consent of the Optionee; or
c. the relocation by more than 30 miles of the
offices of the Company which constitute at
the time of the Change in Control Optionee's
principal location for the performance of his
or her services to the Company;
provided that, in each such case, such event or
condition continues uncured for a period of more
than 15 days after Optionee gives notice thereof to
the Company.
For purposes of the foregoing definitions, (A) "the
Company" shall include any entity that succeeds to all or
substantially all of the business of the Company, (B)
"Affiliate" of a person or other entity shall mean a person
or other entity that directly or indirectly controls, is
controlled by, or is under common control with the person
or other entity specified, and (C) "Voting Stock" shall
mean any capital stock of any class or classes having
general voting power under ordinary circumstances, in the
absence of contingencies, to elect the directors of a
corporation and reference to a percentage of Voting Stock
shall refer to such percentage of the votes that all such
Voting Stock is entitled to cast.
o
o
EXPIRATION DATE: o July 17, 2016
By signing your name below, you accept this award and acknowledge and agree that
this award is granted under and governed by the terms and conditions of the
Stock Option Agreement, dated as of July 17, 2006 between Magellan Health
Services, Inc. and the undersigned Optionee which is hereby made a part of this
document.
OPTIONEE: MAGELLAN HEALTH SERVICES, INC.
By:
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Name:
Title: