Exhibit 10.57
AMENDMENT TO EMPLOYMENT
AGREEMENT
(For Compliance with Requirements
of Code Section 409A)
This Amendment to Employment Agreement
between Magellan Health Services, Inc.
(“Employer”) and Tina Blasi (“Employee”)
entered into as of this 1st day of December, 2008.
WHEREAS , Employer and Employee desire to amend the
terms of the Employment Agreement, as amended, currently in effect
between Employer and Employee (the “Employment
Agreement”).
NOW THEREFORE , Employer or Employee agree that the Employment
Agreement is hereby amended as follows:
1.
Reorganization of Sections of
Employment Agreement . Section 10 of the Employment
Agreement (“Governing Law”) is moved to become the
fifth to last Section of the Employment Agreement, and
renumbered accordingly, with the four final Sections renumbered
appropriately.
2.
New Section of Employment
Agreement . The
following new text is inserted as Section 10 of the Employment
Agreement:
10
Special Rules for
Compliance with Code Section 409A
. This Section 10 serves to ensure
compliance with applicable requirements of Section 409A of the
Internal Revenue Code (the “Code”). Certain
provisions of this Section 10 modify other provisions of this
Employment Agreement. If the terms of this Section 10
conflict with other terms of the Employment Agreement, the terms of
this Section 10 control.
(a)
Timing of Certain
Payments .
Payments and benefits
specified under this Employment Agreement shall be paid at the
times specified as follows:
(i)
Accrued Payments at
Termination .
Sections 6(a) — (d) of this Employment Agreement
and Section I.1(ii) of the Amendment to the Employment
Agreement relating to Change in Control ( the “CiC
Amendment”) require payment of amounts earned but unpaid, or
accrued, at the date of Employee’s termination. Unless
the amount is payable under an applicable plan, program or
arrangement on explicit terms providing for a delay in payment
compliant with Code Section 409A, these amounts shall be
payable at the date the amounts otherwise would have been payable
under the applicable plans, programs and arrangements in the
absence of termination but in no event more than thirty (30) days
after Employee’s termination of employment, subject to
10(d).
(ii)
Gross-Up . Gross-up payments payable under the CiC
Amendment will be paid as promptly as practicable after the excise
tax is payable by Employee,
and in any event must be paid no
later than the end of Employee’s taxable year next following
the taxable year in which Employee remits the excise tax or related
taxes to the taxing authorities; provided, however, that any
gross-up payment will be subject to Section 10(d) if
applicable under Section 409A.
(iii)
Expense Reimbursements
. Any payment under
Section 5 or otherwise as an expense reimbursement hereunder
must be paid no later than the end of Employee’s taxable year
next following the taxable year in which Employee incurred the
reimbursable expense.
(iv)
Other Payments
. Any other payment or benefit
required under this Employment Agreement to be paid in a lump sum
or otherwise to be paid promptly at or following a date or event
shall be paid within five (5) days after the due date, subject
to Section 10(b), (c) and (d) below.
(v)
No Influence on Year of
Payment . In the
case of any payment under the Employment Agreement payable during a
specified period of time following a termination or other event
(including any payment for which the permitted payment period
begins in one calendar year and ends in a subsequent calendar
year), Employee shall have no right to elect in which year the
payment will be made, and the Company’s determination of when
to make the payment shall not be influenced in any way by
Employee.
(b)
Special Rules for Severance
Payments . In the
case of payments in the nature of continuation of payments under
Section 4(a) required under
Section 6(c) (“Pre-CiC Severance Payments”)
and severance payable under Section I.1(iii) of the CiC
Amendment (the “CiC Severance Payments” and, with the
Pre-CiC Severance Payment, the “Severance Payments”),
the following rules will apply:
(i)
Separate Payments.
Each monthly installment of
the Pre-CiC Severance Payments shall be deemed to be a separate
payment for all purposes, including for purposes of
Section 409A. The portion of the CiC Severance Payments
that exceeds the Pre-CiC Severance Payments (or the present value
thereof, if such present valuing is required to comply with
Section 409A), and the portion attributable to inclusion of
Target Bonus in the calculation of CiC Severance Payments (or, if
so required, the present value thereof) as compared to Pre-CiC
Severance Payments, shall be deemed to be a separate payment for
all purposes, including for purposes of Section 409A (the
“Separate Lump Sum”).
(ii)
Severance Payment Timing
Rules . Each
installment of Pre-CiC Severance Payments shall be treated as
follows for purposes of Section 409A:
(A) Installments payable during
the year of termination and by March 15 of the year following
termination shall, to the maximum extent possible, be deemed to
constitute a short-term deferral under Treasury Regulation
§
2
1.409A-1(b)(4);
(B) Installments payable
during the period within six (6) months after termination, to
the extent not covered by Section 10(b)(ii)(A), shall, to the
maximum extent possible, be deemed to constitute amounts payable
under the “two-year/two-times” exclusion from being a
deferral of compensation under Treasury Regulation §
1.409A-1(b)(9)(iii);
(C) To the extent that
the “two-year/two-times” exclusion from being a
deferral of compensation under Treasury Regulation §
1.409A-1(b)(9)(iii) has not been fully applied by virtue of
Section 10(b)(ii)(B), installments payable as Pre-CiC
Severance Payments shall be excluded, to the maximum extent
possible, by such “two-years/two-times” exclusion
(applied in the reverse order of payment of the installments
— that is, to the latest installments first); and
(D) All installments of
the Pre-CiC Severance Payment not covered by
Section 10(b)(ii)(A), (B) and (C) shall be paid at
the applicable installment payment date in compliance with
Section 409A, except that any such payment shall be subject to
the six-month delay rule of Section 10(d).
The portions of the CiC Severance
Payments that correspond to the Pre-CiC Severance Payments (that
is, deemed to be the same payment for purposes of
Section 409A) shall be governed by
Section 10(b)(ii)(A) — (D) above, provided
that amounts of the CiC Severance Payments corresponding to Pre-CiC
Severance Payments covered by Section 10(b)(ii)(A), (B), and
(C) above shall be payable as a lump sum within five
(5) days after termination of employment. The Separate
Lump Sum shall be treated as follows for purposes of
Section 409A:
(E) The Separate Lump Sum
shall, to the maximum extent possible, be deemed to constitute a
short-term deferral under Treasury Regulation §
1.409A-1(b)(4);
(F) To the extent that
the “two-year/two-times” exclusion from being a
deferral of compensation under Treasury Regulation §
1.409A-1(b)(9)(iii) has not been fully applied by virtue of
Section 10(b)(ii)(B) and (C), the Separate Lump Sum, to
the extent not covered by Section 10(b)(ii)(E), shall, to the
maximum extent possible, be deemed to constitute amounts payable
under the “two-year/two-times” exclusion;
and
(G) Any portion of the
Separate Lump Sum not covered by Section 10(b)(ii)(E) and
(F) shall be paid within five (5) days after the
qualifying termination of employment in compliance with
Section 409A, except that any such payment shall be subject to
the six-month delay rule and other provisions of
Section 10(d) and except to the extent that the Separate
Lump Sum is not deemed to be a valid separate payment from amounts
governed by Section 10(b)(ii)(D).
Any portions of the CiC Severance
Payments corresponding to Pre-CiC Severance Payments governed by
Section 10(b)(ii)(D) shall be payable,
3
subject to Section 10(d), in a
lump sum within five (5) days after the qualifying termination
of employment if such termination has occurred within two years
following a a change in the ownership of the Company, a change in
effective control of the Company, or a change in the ownership of a
substantial portion of the assets of the Company as defined in
Treasury Regulation § 1.409A-3(i)(10) (a “409A
Change in Control”), and in any other case shall be payable
at the applicable time under Section 10(b)(ii)(D).
(c)
Special Rules for Other
Payments . With
respect to amounts payable under Section I.1(ii) of the
CiC Amendment (relating to incentive awards), the following
rules will apply:
(i)
Separate Payments
. The amounts payable
thereunder shall each be deemed to be a separate payment for all
purposes, including for purposes of Section 409A (subject to
any further designation of separate payments explicitly made in any
separately identifiable plan or arrangement for purposes of
Section 409A).
(ii)
Payment Timing Rules
. A payment referenced in
Section 10(c)(i) shall be
