Exhibit 10.1
MAGELLAN HEALTH SERVICES,
INC.
2008 MANAGEMENT INCENTIVE PLAN
STOCK OPTION AGREEMENT
Reference No. 2008-March 5,
2008
SECTION 1.
GRANT OF OPTION.
(a)
OPTION. On the terms and conditions set forth in this
Agreement and each Notice of Stock Option Grant referencing this
Agreement, Magellan Health Services Inc. (the “COMPANY”
as further defined below) grants to the Optionee 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) the number of shares of Ordinary Common Stock, $ 0.01 par
value per share, of the Company set forth in such Notice of Stock
Option Grant, subject to adjustment thereto on account of any
change in respect of the shares of Ordinary Common Stock that may
be made as provided by Section 7 below (the “OPTION
SHARES”). Each such Notice of Stock Option Grant,
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,
as pertinent, any of multiple Notices of Stock Option Grant
referencing this Agreement may be referred to herein as “THE
OPTION AWARD NOTICE.” The option is intended to be an
Incentive Stock Option (as defined below) or a Nonqualified Stock
Option (as defined below), as provided in the Option Award
Notice.
(b)
2008 MANAGEMENT INCENTIVE PLAN AND DEFINED TERMS. The option
is granted under and subject to the terms of the Company’s
2008 Management Incentive Plan, as amended and supplemented from
time to time (the “PLAN”), which is incorporated herein
by this reference. 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 and the Plan, all or part of the option may be exercised
to purchase Option Shares prior to expiration of the option at the
time or times, and subject to satisfaction of the conditions, 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 the Option Award Notice or other Award document 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 during
Optionee’s Service or during the year following termination
of Optionee’s Service, then (i) no option issued to
Optionee under the Plan may be exercised after such determination
(even if fully vested) nor shall any other benefit of any Award
thereafter accrue to the Optionee under the Agreement or the Plan
(including by reason of the lapse of any restriction on transfer or
other restriction applicable to Option Shares that have been
issued), and the Company shall not complete the settlement of any
such option (including completion of the issuance and delivery to
the Optionee of Option Shares upon a previous exercise of the
option) or the settlement of any other Award (including the removal
of any restriction on transfer or other restriction applicable to
any Option Shares that have been issued, even upon lapse of or
compliance by the Optionee with any other restrictions thereon that
are otherwise applicable to Optionee), 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 ( provided , however , that the foregoing
shall not excuse the Company from settling, completing delivery of
or removing any legend restricting the transfer of (A) any
Restricted Stock Award or (B) Stock Units and any related
Dividend Equivalent Rights the settlement of which have been
deferred at the election of the Optionee, if such Restricted Stock
Award or Stock Units were fully vested before the date such
Injurious Conduct occurred (as so determined)). In addition,
except as otherwise specifically provided by an Option Award Notice
or other Award document 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
during Optionee’s Service or during the year following
termination of Optionee’s Service, any benefits realized by
Optionee as a result of any Award under the Plan at any time after
such Injurious Conduct occurred (as so determined), whether upon
vesting or exercise of an Option, lapse of restrictions on Option
Shares, vesting of Restricted Stock Awards or Stock Units or
related Dividend Equivalent Rights, or the lapse of any
restrictions on Shares issued as a result thereof, or as a result
of any other settlement of an Award, shall be forfeited by Optionee
and Optionee shall pay over to the Company in cash the amount of
any benefits so received by Optionee or deliver to the Company any
Shares so received by Optionee and still owned by Optionee (
provided , however , that the foregoing shall not
excuse the Company from settling, completing delivery of or
removing any legend restricting the transfer of (i) any
Restricted Stock Award or (ii) Stock Units and any related
Dividend Equivalent Rights the settlement of which have been
deferred at the election of the Optionee, if such Restricted Stock
Award or Stock Units were fully vested before the date such
Injurious Conduct occurred (as so determined)). A forfeiture
of benefits as provided hereby upon the Committee determining that
Optionee has engaged in Injurious Conduct during Optionee’s
Service or during the year following termination of
Optionee’s Service, shall not relieve Optionee of any other
liability he or she may have to the Company, any Subsidiary or any
Parent as a result of engaging in the Injurious Conduct.
(d)
TRANSFER RESTRICTIONS ON OPTION SHARES. Subject to subsection
2(c) above and subsection 3(c) below, unless otherwise provided by
the Option Award Notice, upon the acquisition of Option Shares
pursuant to the exercise of an option after expiration of the
vesting period and satisfaction of any vesting and exercise
conditions provided by the Option Award Notice, Optionee shall be
free to dispose of Option Shares so acquired in any manner and at
any time.
SECTION 3.
TRANSFER OF OPTION.
(a)
TRANSFERS GENERALLY PROHIBITED. Except as otherwise provided
by the Option Award Notice or otherwise permitted by the Plan or in
the case of a transfer permitted by subsection 3(b) below, the
option shall be exercisable only during the Optionee’s
lifetime and only by the Optionee. Except as otherwise
provided in subsection 3(b) below, the option and the rights
and privileges conferred by the option 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 Optionee’s death, by will
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or the laws of descent
and distribution or by a written beneficiary designation accepted
by the Company, (ii) by operation of law in connection with a
merger, consolidation, recapitalization, reclassification or
exchange of Shares, reorganization or similar transaction involving
the Company and affecting the Shares generally or (iii) with
the approval of the Committee, to a member of Optionee’s
family, or a trust primarily for the benefit of Optionee and/or one
or more members of Optionee’s family, or to a corporation,
partnership or other entity primarily for the benefit of Optionee
and/or one or more such family members and/or trusts or
(iv) with the approval of the Committee, in another estate or
personal financial planning transaction; provided, however ,
that in any such case the option so Transferred shall remain
subject in the hands of the Transferee to the restrictions on
Transfer provided hereby and all other terms hereof, including the
terms of subsection 2(c) above.
(c)
FIDUCIARY AND SECURITIES LAW RESTRICTIONS. As a employee,
officer and/or director of the Company, 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 securities of the Company from time to
time adopted by the Company and applicable to Optionee in
connection therewith. Nothing contained herein shall relieve
Optionee of any restriction on sale or other Transfer of Option
Shares provided thereby and any other restrictions of sale or other
Transfer of Option Shares provided herein (including in an Option
Award Agreement or in the Plan) shall be in addition to and not in
lieu of any other restrictions provided thereby.
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 Option 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 and subsection 4(d) below, 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
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) 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.
(d)
SECURITIES LAW RESTRICTIONS ON EXERCISE. Unless a
registration statement under the Securities Act permitting the sale
and delivery of Option Shares upon exercise of the option is in
effect at the date of exercise, the Company shall not be required
to issue Option Shares upon such exercise, except as otherwise
provided in this subsection. The Company shall use its
commercially reasonable efforts to register under the Securities
Act sufficient Option Shares to permit the sale and delivery to
Optionee of all Option Shares that may be acquired by Optionee upon
the exercise of the option; provided , however , that
the Company shall only be so required to register the Option Shares
on Form S-8
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under the
Securities Act (or any successor form). Notwithstanding the
foregoing, the Company shall, if Optionee has given the Company at
least 90 days’ notice requesting the Company to register the
Option Shares that may then be acquired by Optionee upon exercise
of the option in accordance with the foregoing provisions of this
subsection and the Company has failed to do so, issue Option Shares
to Optionee upon exercise of the option without registration
thereof under the Securities Act if (i) Optionee represents,
effective on the date of such issuance, in writing in a form
acceptable to the Company (A) that such Option Shares are
being acquired for investment and not with a present view to
distribution, (B) Optionee understands that the Option Shares
have not been registered under the Securities Act and cannot be
sold or otherwise Transferred unless a registration statement under
the Securities Act is in effect with respect thereto or the Company
has received an opinion of counsel, satisfactory to it, to the
effect that such registration is not required, (C) that
Optionee has, alone or together with any qualified advisor, such
knowledge and experience in financial and business matters as is
necessary to evaluate the risks of an investment in the Option
Shares, is purchasing the Option Shares based on an independent
evaluation of the long-term prospects of an investment in the
Option Shares and has been furnished with such financial and other
information regarding the Company as the Optionee has requested for
purposes of making such evaluation , and (D) Optionee is able
to bear the economic risk of an investment in the Option Shares
subject to such restrictions on Transfer and (ii) if the
Company determines that under the circumstances issuing the Option
Shares pursuant to such exercise of the option is lawful;
provided , however , that the Company may require, as
a condition of such issuance of Option Shares, that Optionee
execute and deliver to it such other certificates, agreements and
other instruments as in the judgment of the Company, upon advice of
counsel, are necessary or appropriate to assure that the Option
Shares are issued to Optionee in accordance with the Securities Act
and any other applicable securities law and may require that any
certificates representing Option Shares so issued bear any
restrictive legend appropriate for such purpose. In addition,
even if a registration statement under the Securities Act
permitting the sale and delivery of Option Shares upon exercise of
the option is in effect at the date of exercise, the Company may
suspend the issuance of Option Shares pursuant to the exercise of
all options issued under the Plan for such period of time as in the
judgment of the Company, upon advice of counsel, is necessary in
order for the Company to come into compliance with all the
reporting requirements applicable to the Company pursuant to
Section 13(a) of the Exchange Act or to otherwise avoid
in connection with the issuance of the Option Shares under such
registration statement a violation of Sections 10, 11 or 12 of the
Securities Act. If the Company suspends the issuance of
Option Shares pursuant to the exercise of options issued under the
Plan, the Company shall give prompt written notice thereof to the
Optionee (but the failure of the Company to give such notice shall
not prevent the Company
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