Exhibit 10.1
MAGELLAN HEALTH SERVICES,
INC.
2008 MANAGEMENT INCENTIVE
PLAN
STOCK OPTION AGREEMENT
Reference No. 2008-March4,
2009
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
