Exhibit 10.3

 

MAGELLAN HEALTH SERVICES, INC.

 

2008 MANAGEMENT INCENTIVE PLAN

 

RESTRICTED STOCK UNIT AGREEMENT

 

REFERENCE NUMBER:  2008- MARCH 5, 2008 (Name)

 

As of  MARCH 5, 2008

 

SECTION 1.         GRANT OF RESTRICTED STOCK UNITS.

 

(A)           RESTRICTED STOCK UNITS.  ON THE TERMS AND CONDITIONS SET FORTH IN
THIS AGREEMENT AND EACH NOTICE OF RESTRICTED STOCK UNIT AWARD REFERENCING THIS
AGREEMENT, MAGELLAN HEALTH SERVICES, INC. (THE “COMPANY,” AS FURTHER DEFINED
BELOW) GRANTS TO THE GRANTEE REFERRED TO ON THE SIGNATURE PAGE HEREOF THE RIGHT
TO RECEIVE ON THE SETTLEMENT DATE (AS HEREINAFTER DEFINED) THE NUMBER OF SHARES
OF ORDINARY COMMON STOCK, $0.01 PAR VALUE PER SHARE, OF THE COMPANY (“SHARES,”
AS FURTHER DEFINED BELOW) EQUAL TO THE NUMBER OF “STOCK UNITS” AWARDED TO THE
GRANTEE AS SET FORTH IN THE NOTICE OF RESTRICTED STOCK UNIT AWARD, SUBJECT TO
ADJUSTMENT THERETO ON ACCOUNT OF ANY CHANGE THAT MAY BE MADE IN THE SHARES AS
PROVIDED BY SECTION 4 BELOW (THE “UNIT SHARES”).  EACH SUCH NOTICE OF RESTRICTED
STOCK UNIT AWARD, TOGETHER WITH THIS REFERENCED AGREEMENT, SHALL BE A SEPARATE
“RESTRICTED STOCK UNIT” GOVERNED BY THE TERMS OF THIS AGREEMENT AND ANY SUCH
SEPARATE RESTRICTED STOCK UNIT MAY BE REFERRED TO HEREIN AS THE “RESTRICTED
STOCK UNIT,” AND, AS PERTINENT, ANY OF MULTIPLE NOTICES OF RESTRICTED STOCK UNIT
AWARD REFERENCING THIS AGREEMENT MAY BE REFERRED TO HEREIN AS THE “RESTRICTED
STOCK UNIT AWARD NOTICE.”

 

(B)           2008 MANAGEMENT INCENTIVE PLAN AND DEFINED TERMS.  THE RESTRICTED
STOCK UNIT AWARD IS GRANTED UNDER AND SUBJECT TO THE TERMS OF THE 2008
MANAGEMENT INCENTIVE PLAN, AS AMENDED AND SUPPLEMENTED FROM TIME TO TIME (THE
“PLAN”), WHICH IS INCORPORATED HEREIN BY THIS REFERENCE.  UNLESS OTHERWISE
DEFINED HEREIN, CAPITALIZED TERMS USED HEREIN SHALL HAVE THE MEANINGS ASCRIBED
TO THEM IN THE PLAN.

 

(C)           SCOPE OF THIS AGREEMENT.  THIS AGREEMENT SHALL APPLY BOTH TO THE
RESTRICTED STOCK UNIT AND TO ANY UNIT SHARES ACQUIRED UPON THE SETTLEMENT OF THE
RESTRICTED STOCK UNITS.

 

SECTION 2.         VESTING AND SETTLEMENT OF RESTRICTED STOCK UNITS.

 

(A)           VESTING.  THE RESTRICTED STOCK UNIT SHALL VEST IN WHOLE OR IN PART
ON THE DATE OR DATES PROVIDED BY THE NOTICE OF RESTRICTED STOCK UNIT AWARD,
PROVIDED THAT GRANTEE REMAINS IN THE SERVICE OF THE COMPANY, A SUBSIDIARY OR A
PARENT COMPANY AT SUCH DATE; IT BEING UNDERSTOOD THAT THE NOTICE OF RESTRICTED
STOCK UNIT AWARD MAY PROVIDE THAT THE RESTRICTED STOCK UNIT SHALL VEST UPON
TERMINATION OF GRANTEE’S SERVICE IN SUCH CIRCUMSTANCES AS ARE PROVIDED IN THE
NOTICE OF RESTRICTED STOCK UNIT AWARD.

 

(B)           SETTLEMENT IN SHARES.  SUBJECT TO FOLLOWING PROVISIONS OF THIS
SECTION 2, THE COMPANY SHALL SETTLE THE RESTRICTED STOCK UNIT, TO THE EXTENT IT
HAS VESTED, ON THE DATE ON WHICH THE

 

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RESTRICTED STOCK UNIT HAS VESTED (OR, IF SUCH DATE IS NOT A BUSINESS DAY, THE
NEXT BUSINESS DAY) BY THE DELIVERY TO GRANTEE OF THE NUMBER OF UNIT SHARES EQUAL
TO THE NUMBER OF RESTRICTED STOCK UNITS SO VESTED.  THE DATE ON WHICH A
RESTRICTED STOCK UNIT IS TO BE SETTLED IS HEREIN REFERRED TO AS THE “SETTLEMENT
DATE.”  SUBJECT TO SUBSECTION 2(B) BELOW, IN SETTLEMENT OF THE RESTRICTED STOCK
UNIT, THE COMPANY SHALL CAUSE TO BE ISSUED ON THE SETTLEMENT DATE OR AS SOON AS
PRACTICABLE THEREAFTER (BUT NOT MORE THAN FIVE BUSINESS DAYS) AN APPROPRIATE
CERTIFICATE OR CERTIFICATES FOR THE UNIT SHARES, REGISTERED IN THE NAME OF THE
GRANTEE (OR, AT THE DIRECTION OF THE GRANTEE, 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); PROVIDED, HOWEVER, THAT SUCH UNIT
SHARES SHALL BE SUBJECT TO SUCH RESTRICTIONS ON TRANSFER OR OTHER RESTRICTIONS
AS ARE PROVIDED BY THE RESTRICTED STOCK UNIT AWARD NOTICE AND THE CERTIFICATES
SO ISSUED MAY BEAR A LEGEND REFLECTING SUCH RESTRICTIONS AND ANY RESTRICTIONS
APPLICABLE IN ACCORDANCE WITH SUBSECTIONS 2(G) AND 3(C) BELOW.

 

(C)           ALTERNATIVE SETTLEMENT IN CASH.  IN LIEU OF SETTLEMENT OF THE
RESTRICTED STOCK UNIT IN UNIT SHARES, THE COMMITTEE MAY IN ITS SOLE DISCRETION
ELECT TO SETTLE ALL OR A PORTION OF THE RESTRICTED STOCK UNIT BY A CASH PAYMENT
EQUAL TO THE FAIR MARKET VALUE AS OF THE SETTLEMENT DATE OF THE UNIT SHARES THAT
WOULD OTHERWISE HAVE BEEN ISSUED UNDER THIS AGREEMENT.  SUCH PAYMENT MAY BE MADE
BY GOOD CHECK OF THE COMPANY ISSUED IN ACCORDANCE WITH ITS NORMAL PAYROLL
PRACTICES OR SUCH OTHER MEANS AS ARE ACCEPTABLE TO THE COMPANY

 

(D)           WITHHOLDING REQUIREMENTS.  THE COMPANY MAY WITHHOLD ANY TAX (OR
OTHER GOVERNMENTAL OBLIGATION) THE COMPANY IS REQUIRED TO WITHHOLD AS A RESULT
OF THE GRANT OF THE RESTRICTED STOCK UNIT AND/OR THE ISSUANCE OF UNIT SHARES (OR
CASH IN LIEU OF UNIT SHARES) IN SETTLEMENT OF A RESTRICTED STOCK UNIT AND, AS A
CONDITION TO THE GRANT OF THE RESTRICTED STOCK UNIT OR ISSUANCE OF THE UNIT
SHARES IN SETTLEMENT THEREOF, THE GRANTEE SHALL MAKE ARRANGEMENTS SATISFACTORY
TO THE COMPANY TO ENABLE IT TO SATISFY ALL SUCH WITHHOLDING REQUIREMENTS.

 

(E)           INJURIOUS CONDUCT.  EXCEPT AS OTHERWISE EXPLICITLY PROVIDED BY THE
RESTRICTED STOCK UNIT AWARD NOTICE OR OTHER AWARD DOCUMENT OR BY AN AGREEMENT
EXECUTED BY THE COMPANY WITH THE APPROVAL OF THE COMMITTEE, IN THE EVENT THE
GRANTEE HAS ENGAGED IN INJURIOUS CONDUCT AS DEFINED IN, AND AS DETERMINED TO
HAVE OCCURRED IN ACCORDANCE WITH, SECTION 12 OF THE PLAN DURING GRANTEE’S
SERVICE OR DURING THE YEAR FOLLOWING TERMINATION OF GRANTEE’S SERVICE, THEN
(I) NO UNIT SHARES SHALL BE ISSUED TO GRANTEE IN CONNECTION WITH THE SETTLEMENT
OF A RESTRICTED STOCK UNIT AWARD UNDER THE PLAN AFTER SUCH DETERMINATION (EVEN
IF SUCH AWARD IS FULLY VESTED) NOR SHALL ANY OTHER BENEFIT OF ANY AWARD
THEREAFTER ACCRUE TO THE GRANTEE UNDER THIS AGREEMENT OR THE PLAN (INCLUDING BY
REASON OF THE LAPSE OF ANY RESTRICTION ON TRANSFER OR OTHER RESTRICTION THEN
APPLICABLE TO UNIT SHARES THAT HAVE BEEN ISSUED), AND THE COMPANY SHALL NOT
COMPLETE THE SETTLEMENT OF ANY OTHER AWARD, AND (II) ANY SUCH UNSETTLED
RESTRICTED STOCK UNIT AWARD SHALL BE FORFEITED AND SHALL TERMINATE AND ANY UNIT
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) RESTRICTED STOCK UNIT AWARDS AND ANY RELATED
DIVIDEND EQUIVALENT RIGHTS THE SETTLEMENT OF WHICH HAVE BEEN DEFERRED AT THE
ELECTION OF THE GRANTEE, IF SUCH RESTRICTED STOCK AWARD OR RESTRICTED STOCK UNIT
AWARDS WERE FULLY VESTED BEFORE THE DATE SUCH INJURIOUS CONDUCT OCCURRED (AS SO
DETERMINED)).  IN ADDITION, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY A
RESTRICTED STOCK UNIT AWARD NOTICE OR OTHER AWARD DOCUMENT OR BY AN AGREEMENT
EXECUTED BY THE COMPANY WITH THE APPROVAL OF THE COMMITTEE, IN THE EVENT THE
GRANTEE HAS ENGAGED IN INJURIOUS CONDUCT AS

 

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DEFINED IN, AND AS DETERMINED TO HAVE OCCURRED IN ACCORDANCE WITH, SECTION 12 OF
THE PLAN DURING GRANTEE’S SERVICE OR DURING THE YEAR FOLLOWING TERMINATION OF
GRANTEE’S SERVICE, ANY BENEFITS REALIZED BY GRANTEE 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 GRANTEE AND GRANTEE SHALL PAY OVER TO THE COMPANY
IN CASH THE AMOUNT OF ANY BENEFITS SO RECEIVED BY GRANTEE OR DELIVER TO THE
COMPANY ANY SHARES SO RECEIVED BY GRANTEE AND STILL OWNED BY GRANTEE (PROVIDED,
HOWEVER, THAT THE FOREGOING SHALL NOT REQUIRE THE FORFEITURE OF OR 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 GRANTEE, 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 GRANTEE HAS ENGAGED IN INJURIOUS CONDUCT DURING GRANTEE’S
SERVICE OR DURING THE YEAR FOLLOWING TERMINATION OF GRANTEE’S SERVICE SHALL NOT
RELIEVE GRANTEE 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.

 

(F)            TRANSFER RESTRICTIONS ON UNIT SHARES.  SUBJECT TO SUBSECTION
2(D) ABOVE AND SUBSECTIONS 2(G) AND 3(C) BELOW, UNLESS OTHERWISE PROVIDED BY THE
RESTRICTED STOCK UNIT AWARD NOTICE OR ANOTHER AGREEMENT BETWEEN GRANTEE AND THE
COMPANY, UPON THE ACQUISITION OF UNIT SHARES PURSUANT TO THE SETTLEMENT OF A
RESTRICTED STOCK UNIT AWARD, GRANTEE SHALL BE FREE TO DISPOSE OF THE UNIT SHARES
SO ACQUIRED IN ANY MANNER AND AT ANY TIME.

 

(G)           SECURITIES LAW RESTRICTIONS ON ISSUANCE OF UNIT SHARES.  UNLESS A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT PERMITTING THE SALE AND DELIVERY
OF UNIT SHARES UPON SETTLEMENT OF THE RESTRICTED STOCK UNIT AWARD IS IN EFFECT
ON THE SETTLEMENT DATE, THE COMPANY SHALL NOT BE REQUIRED TO ISSUE UNIT SHARES
UPON SUCH SETTLEMENT, EXCEPT AS OTHERWISE PROVIDED IN THIS SUBSECTION.  THE
COMPANY SHALL USE ITS COMMERCIALLY REASONABLE EFFORTS TO REGISTER UNDER THE
SECURITIES ACT SUFFICIENT UNIT SHARES TO PERMIT DELIVERY TO GRANTEE OF ALL UNIT
SHARES THAT MAY BE ACQUIRED BY GRANTEE UPON THE SETTLEMENT OF THE RESTRICTED
STOCK UNIT AWARD; PROVIDED, HOWEVER, THAT THE COMPANY SHALL ONLY BE SO REQUIRED
TO REGISTER THE UNIT SHARES ON FORM S-8 UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR FORM).  NOTWITHSTANDING THE FOREGOING, THE COMPANY SHALL, IF GRANTEE
HAS GIVEN THE COMPANY AT LEAST 90 DAYS’ NOTICE REQUESTING THE COMPANY TO
REGISTER IN ACCORDANCE WITH THE FOREGOING PROVISIONS OF THIS SUBSECTION THE UNIT
SHARES THAT MAY THEN BE ACQUIRED BY GRANTEE UPON SETTLEMENT OF THE RESTRICTED
STOCK UNIT AWARD AND THE COMPANY HAS FAILED TO DO SO, ISSUE UNIT SHARES TO
GRANTEE UPON SETTLEMENT OF THE RESTRICTED STOCK UNIT AWARD WITHOUT REGISTRATION
THEREOF UNDER THE SECURITIES ACT IF (I) GRANTEE REPRESENTS, EFFECTIVE ON THE
DATE OF SUCH ISSUANCE, IN WRITING IN A FORM ACCEPTABLE TO THE COMPANY (A) THAT
SUCH UNIT SHARES ARE BEING ACQUIRED FOR INVESTMENT AND NOT WITH A PRESENT VIEW
TO DISTRIBUTION, (B) GRANTEE UNDERSTANDS THAT THE UNIT 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 GRANTEE
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 UNIT SHARES, IS ACQUIRING THE UNIT SHARES

 

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BASED ON AN INDEPENDENT EVALUATION OF THE LONG-TERM PROSPECTS OF AN INVESTMENT
IN THE UNIT SHARES AND HAS BEEN FURNISHED WITH SUCH FINANCIAL AND OTHER
INFORMATION REGARDING THE COMPANY AS THE GRANTEE HAS REQUESTED FOR PURPOSES OF
MAKING SUCH EVALUATION, AND (D) GRANTEE IS ABLE TO BEAR THE ECONOMIC RISK OF AN
INVESTMENT IN THE UNIT SHARES SUBJECT TO SUCH RESTRICTIONS ON TRANSFER AND
(II) IF THE COMPANY DETERMINES THAT UNDER THE CIRCUMSTANCES ISSUING THE UNIT
SHARES PURSUANT TO SUCH SETTLEMENT OF THE RESTRICTED STOCK UNIT AWARD IS LAWFUL;
PROVIDED, HOWEVER, THAT THE COMPANY MAY REQUIRE, AS A CONDITION OF SUCH ISSUANCE
OF UNIT SHARES, THAT GRANTEE 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  UNIT SHARES ARE
ISSUED TO GRANTEE IN ACCORDANCE WITH THE SECURITIES ACT AND ANY OTHER APPLICABLE
SECURITIES LAW AND MAY REQUIRE THAT ANY CERTIFICATES REPRESENTING UNIT SHARES SO
ISSUED BEAR ANY RESTRICTIVE LEGEND APPROPRIATE FOR SUCH PURPOSE.  IN ADDITION,
EVEN IF A REGISTRATION STATEMENT UNDER THE SECURITIES ACT PERMITTING THE
DELIVERY OF UNIT SHARES UPON SETTLEMENT OF THE RESTRICTED STOCK UNIT AWARD IS IN
EFFECT AT THE SETTLEMENT DATE, THE COMPANY MAY SUSPEND THE ISSUANCE OF UNIT
SHARES PURSUANT TO THE SETTLEMENT OF ALL RESTRICTED STOCK UNIT AWARDS 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  UNIT SHARES UNDER SUCH REGISTRATION STATEMENT A VIOLATION OF
SECTIONS 10, 11 OR 12 OF THE SECURITIES ACT.  IF THE COMPANY SUSPENDS THE
ISSUANCE OF UNIT SHARES PURSUANT TO THE SETTLEMENT OF RESTRICTED STOCK UNIT
AWARDS ISSUED UNDER THE PLAN, THE COMPANY SHALL GIVE PROMPT WRITTEN NOTICE
THEREOF TO THE GRANTEE (BUT THE FAILURE OF THE COMPANY TO GIVE SUCH NOTICE SHALL
NOT PREVENT THE COMPANY FROM SUSPENDING THE ISSUANCE OF UNIT SHARES AS PERMITTED
HEREBY) AND, AT SUCH TIME AS SUCH PERIOD OF SUSPENSION ENDS, SHALL GIVE PROMPT
WRITTEN NOTICE THEREOF TO GRANTEE.  NOTWITHSTANDING THAT THE COMPANY IN
ACCORDANCE WITH THIS SUBSECTION MAY NOT BE ABLE TO ISSUE UNIT SHARES IN
SETTLEMENT OF A RESTRICTED STOCK UNIT, THE COMPANY SHALL NOT BE REQUIRED TO
SETTLE A RESTRICTED STOCK UNIT IN CASH, BUT MAY DO SO IF IT ELECTS IN ITS
DISCRETION TO DO SO, AS PROVIDED BY SUBSECTION 2(C) ABOVE.

 

(h)           Special Distribution Rules to Comply with Code Section 409A.  In
the event that any Restricted Stock Units constitute a “deferral of
compensation” under Section 409A of the Internal Revenue Code (the
“Code”),(1) the timing of settlement of such Restricted Stock Units will be
subject to applicable limitations under Code Section 409A and Section 19(a) of
the Plan, including the following restrictions on settlement:

 

(i)            Settlement of the Restricted Stock Units upon Grantee’s
termination by the Company not for Cause or termination by Grantee for Good
Reason during the specified period following a Change in Control will be subject
to the requirement that the termination constitute a “separation from service”
under Treasury Regulation § 1.409A-1(h), and subject to the six-month delay
rule under Plan Section 19(a)(iii)(B).

 

(ii)           Other applicable provisions of Plan Section 19(a) will apply to
such Restricted Stock Units.

 

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SECTION 3.                            TRANSFER OF RESTRICTED STOCK UNIT AWARD OR
UNIT SHARES

 

(A)           TRANSFERS GENERALLY PROHIBITED.  EXCEPT AS OTHERWISE PROVIDED BY
THE RESTRICTED STOCK UNIT AWARD NOTICE OR OTHERWISE PERMITTED BY THE PLAN OR IN
THE CASE OF A TRANSFER PERMITTED BY SUBSECTION 3(B) BELOW, THE RESTRICTED STOCK
UNIT AWARD MAY BE SETTLED ONLY DURING THE GRANTEE’S LIFETIME AND ONLY BY THE
ISSUANCE OF UNIT SHARES (OR A CASH PAYMENT IN LIEU THEREOF WHERE PERMITTED BY
THE RESTRICTED STOCK UNIT AWARD NOTICE) TO GRANTEE.  EXCEPT AS OTHERWISE
PROVIDED IN SUBSECTION 3(B) BELOW, THE RESTRICTED STOCK UNIT AWARD AND THE
RIGHTS AND PRIVILEGES CONFERRED BY THE RESTRICTED STOCK UNIT AWARD SHALL NOT BE
SOLD OR OTHERWISE TRANSFERRED.

 

(B)           CERTAIN TRANSFERS PERMITTED.  NOTWITHSTANDING THE FOREGOING
PROVISIONS OF THIS SECTION 3, THE RESTRICTED STOCK UNIT AWARD MAY BE TRANSFERRED
(I) IN THE EVENT OF THE GRANTEE’S DEATH, BY WILL 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 GRANTEE’S FAMILY, OR A
TRUST PRIMARILY FOR THE BENEFIT OF GRANTEE AND/OR ONE OR MORE MEMBERS OF
GRANTEE’S FAMILY, OR TO A CORPORATION, PARTNERSHIP OR OTHER ENTITY PRIMARILY FOR
THE BENEFIT OF GRANTEE 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 RESTRICTED
STOCK UNIT AWARD SO TRANSFERRED AND, UPON ISSUANCE OF UNIT SHARES IN SETTLEMENT
THEREOF, THE UNIT SHARES ISSUED TO THE TRANSFEREE 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.  THE FOREGOING
NOTWITHSTANDING, IF RSUS CONSTITUTE DEFERRALS OF COMPENSATION FOR PURPOSES OF
CODE SECTION 409A, RSUS AND ANY RELATED RIGHT OF GRANTEE SHALL NOT BE SUBJECT TO
ANTICIPATION, ALIENATION, SALE, TRANSFER, ASSIGNMENT, PLEDGE, ENCUMBRANCE,
ATTACHMENT, OR GARNISHMENT BY CREDITORS OF THE GRANTEE OR HIS OR HER
BENEFICIARY, EXCEPT AS PERMITTED UNDER CODE SECTION 409A AND REGULATIONS AND
GUIDANCE THEREUNDER.

 

(C)           FIDUCIARY AND SECURITIES LAW RESTRICTIONS.  AS A EMPLOYEE, OFFICER
AND/OR DIRECTOR OF THE COMPANY, GRANTEE MAY BE SUBJECT TO RESTRICTIONS ON HIS OR
HER ABILITY TO SELL OR OTHERWISE TRANSFER UNIT 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 GRANTEE IN CONNECTION
THEREWITH.  NOTHING CONTAINED HEREIN SHALL RELIEVE GRANTEE OF ANY RESTRICTION ON
SALE OR OTHER TRANSFER OF UNIT SHARES PROVIDED THEREBY AND ANY OTHER
RESTRICTIONS OF SALE OR OTHER TRANSFER OF UNIT SHARES PROVIDED HEREIN (INCLUDING
IN A RESTRICTED STOCK UNIT AWARD NOTICE OR IN THE PLAN) SHALL BE IN ADDITION TO
AND NOT IN LIEU OF ANY OTHER RESTRICTIONS PROVIDED THEREBY.

 

SECTION 4.         ADJUSTMENT OF SHARES.

 

(A)           ADJUSTMENT GENERALLY.  IF WHILE THE RESTRICTED STOCK UNIT REMAINS
IN EFFECT THERE SHALL BE ANY CHANGE IN THE OUTSTANDING SHARES OF THE CLASS WHICH
ARE TO BE ISSUED UPON SETTLEMENT OF THE RESTRICTED STOCK UNIT, THROUGH MERGER,
CONSOLIDATION, REORGANIZATION, RECAPITALIZATION, STOCK DIVIDEND, STOCK SPLIT,
REVERSE STOCK SPLIT, COMBINATION OF SHARES, EXCHANGE OF SHARES FOR OTHER

 

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SECURITIES OR OTHER LIKE CHANGE IN THE OUTSTANDING SHARES, OR ANY SPIN-OFF,
SPLIT-OFF, DIVIDEND IN KIND OR OTHER EXTRAORDINARY DIVIDEND OR OTHER
DISTRIBUTION IN RESPECT OF SUCH OUTSTANDING SHARES OR OTHER EXTRAORDINARY CHANGE
IN THE CAPITAL STRUCTURE OF THE COMPANY, AN ADJUSTMENT SHALL BE MADE TO THE
TERMS OF THE RESTRICTED STOCK UNIT SO THAT THE RESTRICTED STOCK UNIT SHALL
THEREAFTER BE ULTIMATELY SETTLED, OTHERWISE ON THE SAME TERMS AND CONDITIONS AS
PROVIDED BY THE RESTRICTED STOCK UNIT AWARD NOTICE, THIS AGREEMENT AND THE PLAN,
FOR SUCH SECURITIES, CASH AND/OR OTHER PROPERTY AS WOULD HAVE BEEN RECEIVED IN
RESPECT OF THE SHARES THAT WOULD HAVE BEEN ISSUED UPON SETTLEMENT OF THE
RESTRICTED STOCK UNIT HAD THE RESTRICTED STOCK UNIT BEEN SETTLED IN FULL
IMMEDIATELY PRIOR TO SUCH CHANGE OR DISTRIBUTION (WHETHER OR NOT THE RESTRICTED
STOCK UNIT WAS THEN FULLY VESTED) OR, IF AND TO THE EXTENT THE COMMITTEE
DETERMINES THAT SO ADJUSTING THE CONSIDERATION TO BE RECEIVED UPON SETTLEMENT OF
THE RESTRICTED STOCK UNIT, IN WHOLE OR IN PART, IS NOT PRACTICABLE, THE
COMMITTEE SHALL EQUITABLY MODIFY THE CONSIDERATION TO BE RECEIVED IN RESPECT OF
THE SETTLEMENT OF THE RESTRICTED STOCK UNIT OR OTHER PERTINENT TERMS AND
CONDITIONS OF THE RESTRICTED STOCK UNIT AS PROVIDED BY SUBSECTION 4(B) BELOW. 
SUCH AN ADJUSTMENT SHALL BE MADE SUCCESSIVELY EACH TIME ANY SUCH CHANGE IN THE
OUTSTANDING SHARES OF THE CLASS WHICH MAY BE RECEIVED UPON SETTLEMENT OF THE
RESTRICTED STOCK UNIT OR EXTRAORDINARY DISTRIBUTION IN RESPECT OF SUCH
OUTSTANDING SHARES OR EXTRAORDINARY CHANGE IN THE CAPITAL STRUCTURE OF THE
COMPANY SHALL OCCUR.

 

(B)           MODIFICATION OF RESTRICTED STOCK UNIT.  IN THE EVENT ANY CHANGE IN
THE OUTSTANDING SHARES OF THE CLASS WHICH MAY BE RECEIVED UPON SETTLEMENT OF THE
RESTRICTED STOCK UNIT OR EXTRAORDINARY DISTRIBUTION IN RESPECT OF SUCH
OUTSTANDING SHARES OR EXTRAORDINARY CHANGE IN THE CAPITAL STRUCTURE OF THE
COMPANY DESCRIBED IN SUBSECTION 4(A) ABOVE OCCURS, OR IN THE EVENT OF ANY CHANGE
IN APPLICABLE LAWS OR ANY CHANGE IN CIRCUMSTANCES WHICH RESULTS IN OR WOULD
RESULT IN ANY SUBSTANTIAL DILUTION OR ENLARGEMENT OF THE RIGHTS GRANTED TO, OR
AVAILABLE FOR, GRANTEE IN RESPECT OF A RESTRICTED STOCK UNIT OR OTHERWISE AS A
PARTICIPANT IN THE PLAN OR WHICH OTHERWISE WARRANTS EQUITABLE ADJUSTMENT TO THE
TERMS AND CONDITIONS OF THE RESTRICTED STOCK UNIT BECAUSE SUCH EVENT OR
CIRCUMSTANCES INTERFERES WITH THE INTENDED OPERATION OF THE PLAN (INCLUDING THE
INTENDED TAX CONSEQUENCES OF AWARDS) OCCURS, THEN THE COMMITTEE MAY, AND SHALL
WHERE REQUIRED BY SUBSECTION 7(A) ABOVE, ADJUST THE NUMBER AND KIND OF UNIT
SHARES AND/OR OTHER SECURITIES AND/OR CASH OR OTHER PROPERTY THAT MAY BE ISSUED
OR DELIVERED UPON THE SETTLEMENT OF THE RESTRICTED STOCK UNIT AND/OR ADJUST THE
OTHER TERMS AND CONDITIONS OF THE RESTRICTED STOCK UNIT AS THE COMMITTEE IN ITS
DISCRETION DETERMINES TO BE EQUITABLE IN ORDER TO PREVENT DILUTION OR
ENLARGEMENT OF THE GRANTEE’S RIGHTS IN RESPECT OF THE RESTRICTED STOCK UNIT AS
SUCH EXISTED BEFORE SUCH EVENT.  APPROPRIATE ADJUSTMENTS MAY LIKEWISE BE MADE BY
THE COMMITTEE IN OTHER TERMS AND CONDITIONS OF THE RESTRICTED STOCK UNIT TO
REFLECT EQUITABLY SUCH CHANGES IN CIRCUMSTANCES, INCLUDING MODIFICATIONS OF
PERFORMANCE TARGETS AND CHANGES IN THE LENGTH OF PERFORMANCE PERIODS RELATING TO
THE VESTING OF THE RESTRICTED STOCK UNIT OR ANY RESTRICTIONS ON UNIT SHARES. 
NOTWITHSTANDING THE FOREGOING, NO ADJUSTMENT SHALL BE MADE WHICH IS PROHIBITED
BY SECTION 13 OF THE PLAN.

 

(C)           MODIFICATIONS TO COMPLY WITH SECTION 409A.  TO THE EXTENT
APPLICABLE, THIS AGREEMENT (INCLUDING ANY RELATED NOTICE OF RESTRICTED STOCK
AWARD) SHALL BE INTERPRETED IN ACCORDANCE WITH CODE SECTION 409A AND DEPARTMENT
OF TREASURY REGULATIONS AND OTHER INTERPRETIVE GUIDANCE ISSUED THEREUNDER,
INCLUDING WITHOUT LIMITATION ANY SUCH REGULATIONS OR GUIDANCE THAT MAY BE ISSUED
AFTER THE DATE ON WHICH A RESTRICTED STOCK UNIT WAS AWARDED.  WITHOUT LIMITING
THE AUTHORITY OF THE COMMITTEE UNDER SUBSECTION 4(B) ABOVE TO MAKE

 

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MODIFICATIONS TO THE RESTRICTED STOCK UNIT BY REASON OF CHANGES IN LAW OR
CIRCUMSTANCES THAT WOULD RESULT IN ANY SUBSTANTIAL DILUTION OR ENLARGEMENT OF
THE RIGHTS GRANTED TO, OR AVAILABLE FOR, GRANTEE IN RESPECT OF A RESTRICTED
STOCK UNIT OR OTHERWISE AS A PARTICIPANT IN THE PLAN OR WHICH OTHERWISE WARRANTS
EQUITABLE ADJUSTMENT TO THE TERMS AND CONDITIONS OF THE RESTRICTED STOCK UNIT
BECAUSE SUCH EVENT INTERFERES WITH THE OPERATION OF THE PLAN, AND
NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT TO THE CONTRARY, IN THE EVENT
THAT THE COMMITTEE OR AN AUTHORIZED OFFICER OF THE COMPANY DETERMINES THAT ANY
AMOUNTS WILL BE IMMEDIATELY TAXABLE TO THE PARTICIPANT UNDER SECTION 409A OF THE
CODE AND RELATED DEPARTMENT OF TREASURY GUIDANCE (OR SUBJECT THE GRANTEE TO A
PENALTY TAX) IN CONNECTION WITH THE GRANT OR VESTING OF THE RESTRICTED STOCK
UNIT OR ANY OTHER PROVISION OF THE RESTRICTED STOCK UNIT AWARD NOTICE OR THIS
AGREEMENT OR THE PLAN, THE COMPANY MAY (A) ADOPT SUCH AMENDMENTS TO THE
RESTRICTED STOCK UNIT, INCLUDING AMENDMENTS TO THIS AGREEMENT (HAVING
PROSPECTIVE OR RETROACTIVE EFFECT), THAT THE COMMITTEE OR AUTHORIZED OFFICER
DETERMINES TO BE NECESSARY OR APPROPRIATE TO PRESERVE THE INTENDED TAX TREATMENT
OF THE RESTRICTED STOCK UNIT AND/OR (B) TAKE SUCH OTHER ACTIONS AS THE COMMITTEE
OR AUTHORIZED OFFICER DETERMINES TO BE NECESSARY OR APPROPRIATE TO COMPLY WITH
THE REQUIREMENTS OF SECTION 409A OF THE CODE AND RELATED DEPARTMENT OF TREASURY
GUIDANCE, INCLUDING SUCH DEPARTMENT OF TREASURY GUIDANCE AND OTHER INTERPRETIVE
MATERIALS AS MAY BE ISSUED AFTER THE DATE ON WHICH SUCH RESTRICTED STOCK UNIT
WAS AWARDED, BUT ONLY TO THE EXTENT PERMITTED UNDER CODE SECTION 409A AND
REGULATIONS AND GUIDANCE THEREUNDER.                           .

 

SECTION 5.         MISCELLANEOUS PROVISIONS.

 

(A)           RIGHTS AS A SHAREHOLDER.  NEITHER THE GRANTEE NOR THE GRANTEE’S
PERSONAL REPRESENTATIVE OR PERMITTED TRANSFEREE SHALL HAVE ANY RIGHTS AS A
SHAREHOLDER WITH RESPECT TO ANY UNIT SHARES UNTIL THE GRANTEE OR HIS OR HER
PERSONAL REPRESENTATIVE OR PERMITTED TRANSFEREE BECOMES ENTITLED TO RECEIVE SUCH
UNIT SHARES PURSUANT TO THIS AGREEMENT, THE PLAN AND THE APPLICABLE RESTRICTED
STOCK UNIT AWARD NOTICE, AND ANY SUCH RIGHT SHALL ALSO BE SUBJECT TO SUBSECTIONS
2(G) AND 3(C) ABOVE.

 

(B)           TENURE.  NOTHING IN THE RESTRICTED STOCK UNIT AWARD NOTICE, THIS
AGREEMENT OR IN THE PLAN SHALL CONFER UPON THE GRANTEE ANY RIGHT TO CONTINUE IN
THE COMPANY’S SERVICE FOR ANY 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 GRANTEE) OR OF THE GRANTEE, 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 GRANTEE AT THE ADDRESS THAT HE OR SHE MOST
RECENTLY PROVIDED TO THE COMPANY.

 

(D)           ENTIRE AGREEMENT.  THIS AGREEMENT, ANY RELATED RESTRICTED STOCK
UNIT 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.

 

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(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 GRANTEE, THE GRANTEE’S PERSONAL REPRESENTATIVES, HEIRS,
LEGATEES AND OTHER PERMITTED TRANSFEREES, ASSIGNS AND THE LEGAL REPRESENTATIVES,
HEIRS AND LEGATEES OF THE GRANTEE’S ESTATE, WHETHER OR NOT ANY SUCH PERSON SHALL
HAVE BECOME A PARTY TO THIS AGREEMENT AND HAVE AGREED IN WRITING TO BE JOINED
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 6.         DEFINITIONS.

 

(A)           “CODE” SHALL MEAN THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
AND AS THE SAME MAY BE AMENDED FROM TIME TO TIME, AND THE REGULATIONS
PROMULGATED THEREUNDER.

 

(B)           “COMPANY” SHALL MEAN MAGELLAN HEALTH SERVICES, INC., A DELAWARE
CORPORATION, AND ANY SUCCESSOR THERETO.

 

(C)           “EXCHANGE ACT” SHALL MEAN THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED AND AS THE SAME MAY BE AMENDED FROM TIME TO TIME, AND ANY SUCCESSOR
STATUTE, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.

 

(D)           “SECURITIES ACT” SHALL MEAN THE SECURITIES ACT OF 1933, AS AMENDED
AND AS THE SAME MAY BE AMENDED FROM TIME TO TIME, AND ANY SUCCESSOR STATUTE, AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER.

 

(E)           “SHARE” SHALL MEAN A SHARE OF ORDINARY COMMON STOCK, $0.01 PAR
VALUE PER SHARE, 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 SECTION 4
ABOVE (AND IN THE EVENT OF ANY SUCH SUCCESSIVE EXCHANGE OR CHANGE, ANY SECURITY
RESULTING FROM ANY SUCH SUCCESSIVE EXCHANGE OR CHANGE).

 

(F)            “TRANSFER” SHALL MEAN, WITH RESPECT TO ANY RESTRICTED STOCK UNIT
OR ANY UNIT 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 RESTRICTED
STOCK UNIT OR ANY UNIT SHARE, OR OF ANY BENEFICIAL INTEREST THEREIN, NOW OR
HEREAFTER OWNED BY THE GRANTEE, INCLUDING BY EXECUTION, ATTACHMENTS, LEVY OR
SIMILAR PROCESS

 

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In consideration of the foregoing and intending to be legally bound hereby, the
Company and the Grantee named below have executed this Agreement as of the date
first above written.

 

 

 

MAGELLAN HEALTH SERVICES, INC.

 

 

 

 

 

 

 

 

Name: Rene Lerer

 

 

Title: President and Chief Executive Officer

 

 

 

GRANTEE:

 

 

 

 

 

 

 

 

Name:

 

 

 

 

 

Address for Notice:

 

 

 

 

 

 

 

 

 

 

 

Social Security Number:

 

 

 

 

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