Exhibit 10.1

Execution Version

 

AGREEMENT

 

This Agreement (this “Agreement”) is made and entered into as of March 28, 2019
by and among Magellan Health, Inc., a Delaware corporation (the “Company”), and
the entities and natural persons set forth in the signature pages hereto
(collectively, “Starboard”) (each of the Company and Starboard, a “Party” to
this Agreement, and collectively, the “Parties”).

 

RECITALS

 

WHEREAS, the Company and Starboard have engaged in various discussions and
communications concerning the Company’s business, financial performance and
strategic plans;

 

WHEREAS, as of the date hereof, Starboard has a beneficial ownership (as
determined under Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) interest in the common stock, $0.01 par
value per share, of the Company (the “Common Stock”) totaling, in the aggregate,
2,369,100 shares of the Common Stock, or approximately 9.8% of the shares of
Common Stock issued and outstanding on the date of this Agreement (“Starboard’s
Ownership”);

 

WHEREAS, Starboard submitted a letter to the Company on February 22, 2019 (the
“Nomination Letter”), nominating a slate of director candidates to be elected to
the Company’s board of directors (the “Board”) at the Company’s 2019 annual
meeting of shareholders (the “2019 Annual Meeting”); and

 

WHEREAS, as of the date hereof, the Company and Starboard have determined to
come to an agreement with respect to the composition of the Board and certain
other matters, as provided in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereto, intending to be legally bound hereby, agree as follows:

 

1.Board Appointments and Related Agreements.

(a)Board Appointments.

(i)     The Company agrees that immediately following the execution of this
Agreement, the Board shall take all necessary actions to increase the size of
the Board from nine (9) to thirteen (13) directors and appoint Peter A. Feld
(“Mr. Feld”, or the “Starboard Appointee”),  Leslie V. Norwalk,  Guy P. Sansone
and Steven J. Shulman (each an “Independent Appointee” and, together with the
Starboard Appointee, the “Appointed Directors”) as directors of the Company. 
Prior to the date of this Agreement, each of the Appointed Directors has
submitted to the Company a fully completed copy of the Company’s D&O
Questionnaire and other onboarding materials.

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(ii)    The Company agrees that the Board shall nominate each Appointed Director
(including any Replacement Director (as defined below)) for election to the
Board at the Company’s 2019 Annual Meeting for terms expiring at the Company’s
2020 annual meeting of shareholders (the “2020 Annual Meeting”), subject only to
their consent to serve.  Subject to the foregoing and to the remainder of this
Section 1(a)(ii), the slate of nominees for election at the 2019 Annual Meeting
shall be as determined by the Board, based upon the recommendation of the
Nominating/Corporate Governance Committee (the “Nominating Committee”).  The
Company shall recommend, support and solicit proxies for the Appointed Directors
at the 2019 Annual Meeting in the same manner as it recommends, supports, and
solicits proxies for the election of its incumbent directors (the “Continuing
Directors”).  The Board shall take all necessary actions to decrease the size of
the Board from thirteen (13) to ten (10) directors, effective immediately
following the election of directors at the 2019 Annual Meeting, and the slate of
nominees for election at the 2019 Annual Meeting, together with the incumbent
directors whose terms expire at the 2020 Annual Meeting who will continue to
serve following the 2019 Annual Meeting, shall equal ten (10).

(iii)   If any Appointed Director (or any Replacement Director) is unable or
unwilling to serve as a director for any reason or ceases to be a director,
resigns as a director or is removed as a director prior to the expiration of the
Standstill Period (as defined below), and at such time Starboard beneficially
owns (as determined under Rule 13d-3 promulgated under the Exchange Act) in the
aggregate at least the lesser of 3.0% of the Company’s then outstanding shares
of Common Stock and 717,760 shares of Common Stock (subject to adjustment for
stock splits, reclassifications, combinations and similar adjustments) (such
lesser amount, the “Minimum Ownership Threshold”), Starboard shall have the
ability to recommend a substitute person for appointment to the Board in
accordance with this Section 1(a)(iii) (any such replacement nominee shall be
referred to as a “Replacement Director,” and upon becoming a Replacement
Director, such person shall be deemed an  Appointed Director for purposes of
this Agreement).  Any Replacement Director must (A) be reasonably acceptable to
the Board (such acceptance not to be unreasonably withheld), (B) qualify as
“independent” pursuant to Nasdaq Stock Market (“Nasdaq”) listing standards, (C)
have the relevant financial and business experience to be a director of the
Company and (D) in the case of a Replacement Director who is replacing an
Independent Appointee (or any replacement thereof), be independent of Starboard
(for the avoidance of doubt, the nomination by Starboard of such person to serve
on the board of any other company shall not (in and of itself) cause such person
to not be deemed independent of Starboard, but any employee, director or
affiliate of Starboard (whether past or present) would not be deemed independent
of Starboard).  Any Replacement Director who is replacing Mr. Feld as the
Starboard Appointee (or any replacement thereof) and who is a partner or senior
employee of Starboard that has relevant business and financial experience will
be approved and appointed to the Board no later than ten (10) business days
following the submission of the Company’s D&O Questionnaire and other

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onboarding materials, so long as such Replacement Director qualifies as
“independent” pursuant to the Nasdaq listing standards.  The Nominating
Committee shall use its reasonable best efforts to make its determination and
recommendation (which it shall undertake reasonably and in good faith) regarding
whether any other such nominee to be a Replacement Director (other than any
Replacement Director who is a partner or senior employee of Starboard, who is
covered by the prior sentence) meets the foregoing criteria within ten (10)
business days after (x) such nominee has submitted to the Company the Company’s
D&O Questionnaire and other onboarding materials and (y) representatives of the
Board have conducted customary interview(s) of such nominee, if such interviews
are requested by the Board or the Nominating Committee.  The Company shall use
its reasonable best efforts to conduct any interview(s) contemplated by this
Section 1(a)(iii) as promptly as practicable, but in any case, assuming
reasonable availability of the nominee, within ten (10) business days after
Starboard’s submission of such nominee.  In the event the Nominating Committee
does not accept a person recommended by Starboard as the Replacement Director,
Starboard shall have the right to recommend additional substitute person(s)
whose appointment shall be subject to the Nominating Committee recommending such
person in accordance with the procedures described in this Section 1(a)(iii).
Upon the recommendation of a Replacement Director nominee by the Nominating
Committee, the Board shall use reasonable best efforts to vote on the
appointment of such Replacement Director to the Board no later than five (5)
business days after the Nominating Committee’s recommendation of such
Replacement Director; provided,  however, that if the Board does not elect such
Replacement Director to the Board pursuant to this Section 1(a)(iii), the
Parties shall continue to follow the procedures of this Section 1(a)(iii) until
a Replacement Director is elected to the Board. Subject to Nasdaq rules and
applicable law, upon a Replacement Director’s appointment to the Board pursuant
to this Section 1(a)(iii), the Board and all applicable committees of the Board
shall take all necessary actions to appoint such Replacement Director to any
applicable committee of the Board of which the replaced director was a member
immediately prior to such director’s resignation or removal.  Subject to Nasdaq
rules and applicable law, until such time as any Replacement Director is
appointed to any applicable committee, one of the other Appointed Directors (as
designated by Starboard with respect to any Replacement Director) will serve as
an interim member of such applicable committee. Any Replacement Director
designated pursuant to this Section 1(a)(iii) to replace any Appointed Director
or a Replacement Director prior to the mailing of the Company’s definitive proxy
statement for the 2019 Annual Meeting, shall stand for election at the 2019
Annual Meeting together with the Company’s other nominees, in accordance with
Section 1(a)(ii) of this Agreement. Starboard shall promptly (and in any event
within five (5) business days): (i) inform the Company in writing if Starboard
fails to satisfy the Minimum Ownership Threshold at any time; and (ii) upon a
request by or on behalf of the Company, confirm the number of shares of Common
Stock beneficially owned (as determined under Rule 13d-3 promulgated under the
Exchange Act) by Starboard.

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(iv)   During the period commencing upon the conclusion of the 2019 Annual
Meeting and continuing through the expiration of the Standstill

Period, the Board shall take all necessary actions to set the size of the Board
at no more than ten (10) directors, unless Starboard consents in writing to any
proposal to increase the size of the Board.

(b)Board Committees.

(i)     Immediately following the execution of this Agreement, the Board shall
take all necessary actions to (i) form a Strategic Committee of the Board (the
“Strategic Committee”) to explore strategic alternatives for the Company,  with
the goal of creating value for the Company’s shareholders and (ii) appoint Mr.
Feld and Mr. Shulman to the Strategic Committee,  plus two (2) Continuing
Directors as determined by the Board, with Mr. Feld serving as its Chairman.
During the Standstill Period, unless otherwise agreed by Starboard, the
Strategic Committee shall be composed of four  (4) directors, including two (2)
Appointed Directors (or Replacement Directors).  Subject to Nasdaq rules and
applicable law, in the event either of the Appointed Directors shall for any
reason cease to serve on the Strategic Committee, until such time as a
Replacement Director is appointed to the Strategic Committee, at least one other
Appointed Director will serve as an interim member of the Strategic Committee.

(ii)    Immediately following the execution of this Agreement, the Board and all
applicable committees of the Board shall take all necessary actions to appoint
Mr.  Sansone to the Audit Committee.

(iii)   Immediately following the execution of this Agreement, the Board and all
applicable committees of the Board shall take all necessary actions to appoint
Ms. Norwalk to the Management Compensation Committee.

(iv)   Immediately following the execution of this Agreement, the Board and all
applicable committees of the Board shall take all necessary actions to appoint
Mr. Feld to the Management Compensation Committee.

(v)    Immediately following the execution of this Agreement, the Board and all
applicable committees of the Board shall take all necessary actions to appoint
Mr. Shulman to the Nominating Committee.

(vi)   During the Standstill Period, each committee and subcommittee of the
Board, including any new committee(s) and subcommittee(s) that may be
established, shall include at least one (1) Appointed Director, provided that at
least one (1) Appointed Director satisfies any Nasdaq listing standards and
legal requirements for service on any such committee with respect to financial
expertise and independence.

 

 

(vii)  Subject to Nasdaq rules and applicable laws, during the Standstill
Period, the Board and all applicable committees of the Board shall give each of

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the Appointed Directors the same due consideration for membership to each other
committee of the Board as any other independent director.

(c)Additional Agreements.

(i)     Starboard shall cause each of its respective controlled Affiliates and
Associates to comply with the terms of this Agreement and Starboard shall be
responsible for any breach of this Agreement by any such respective controlled
Affiliate or Associate.  As used in this Agreement, the terms “Affiliate” and
“Associate” shall have the respective meanings set forth in Rule 12b-2
promulgated by the Securities and Exchange Commission under the Exchange Act,
and shall include all persons or entities that at any time during the term of
this Agreement become Affiliates or Associates of any person or entity referred
to in this Agreement.

(ii)    Starboard on behalf of itself and its controlled Affiliates and
Associates hereby (A) irrevocably withdraws its Nomination Letter and (B)
irrevocably withdraws any related materials or notices submitted to the Company
in connection therewith.

(iii)   Until the end of the Standstill Period (as defined below), except as
otherwise provided herein, Starboard shall not, and shall cause each of its
controlled Affiliates and Associates not to, directly or indirectly, (A)
nominate or recommend for nomination any person for election at any annual or
special meeting of the Company’s shareholders or in connection with any
solicitation of shareholder action by written consent  (each, a  “Shareholder
Meeting”), (B) submit any proposal for consideration at, or bring any other
business before, a Shareholder Meeting, or (C) initiate, encourage or
participate in any “vote no,” “withhold” or similar campaign with respect to a
 Shareholder Meeting.  Starboard shall not publicly or privately encourage or
support any other shareholder, person or entity to take any of the actions
described in this Section 1(c)(iii).

(iv)   Starboard agrees that it will appear in person or by proxy at the 2019
Annual Meeting and vote all Common Stock beneficially owned by Starboard at the
2019 Annual Meeting (A) in favor of all directors nominated by the Board for
election, (B) in favor of the ratification of the appointment of Ernst & Young
LLP as the Company’s independent registered public accounting firm for the 2019
fiscal year, (C) in accordance with the Board’s recommendation with respect to
the Company’s “say-on-pay” proposal and (D) in accordance with the Board’s
recommendation with respect to any other Company proposal or shareholder
proposal presented at the 2019 Annual Meeting; provided, however, that in the
event Institutional Shareholder Services Inc. (ISS) or Glass Lewis & Co., LLC
(Glass Lewis) recommends otherwise with respect to the Company’s “say-on-pay”
proposal or any other Company proposal or shareholder proposal presented at the
2019 Annual Meeting (other than proposals relating to the election of
directors), Starboard shall be permitted to vote in accordance with the ISS or
Glass Lewis recommendation.

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(v)    Starboard agrees that it will appear in person or by proxy at any other
Shareholder Meeting held during the Standstill Period and, to the extent such

Shareholder Meeting includes the election of directors, vote all Common Stock
beneficially owned by Starboard at such Shareholder Meeting, in favor of the
election of the Company’s nominees for election as director and not in favor of
any other director nominees.

(vi)   Starboard acknowledges that, promptly following the date of this
Agreement, each of the Appointed Directors shall comply with any request by the
Company to submit certain information and documentation as may be required by
applicable law and regulations of the insurance industry (“Insurance Law”). Any
Replacement Director shall promptly submit to the Company a fully completed copy
of the Company’s D&O Questionnaire, any information or documentation required by
Insurance Law, and other reasonable and customary director onboarding materials
(including an authorization form to conduct a background check, a representation
agreement and certain other agreements) required by the Company in connection
with the appointment or election of new Board members. Starboard also agrees
that, during the Standstill Period, it will notify the Company in writing and
obtain all required approvals under Insurance Law prior to purchasing or causing
to be purchased or otherwise acquiring or agreeing to acquire beneficial
ownership (as determined under Rule 13d-3 promulgated under the Exchange Act) of
any voting securities if in any such case, immediately after the taking of such
action, Starboard would, in the aggregate, beneficially own an amount of voting
securities that would equal or exceed 10% of the then outstanding shares of
Common Stock.

(vii)  Starboard acknowledges that all directors are (A) governed by all
policies, procedures, codes, rules, standards and guidelines applicable to all
members of the Board and (B) required to keep confidential all Company
confidential information and not disclose to any third parties (including
Starboard) any discussions, matters or materials considered in meetings of the
Board or Board committees; provided,  however, that the Starboard Appointee may
disclose certain Company confidential information to Starboard in accordance
with the terms of an appropriate confidentiality agreement.

(viii) The Company agrees that the Board and all applicable committees of the
Board shall, to the extent that the Board and such committees have such
authority or are entitled to so determine, take all necessary actions, effective
no later than immediately following the execution of this Agreement, to
determine, in connection with their initial appointment as a director and
nomination by the Company at the 2019 Annual Meeting, that each of the Appointed
Directors is deemed to be (A) a member of the “Incumbent Board” or “Continuing
Director” (as such term may be defined in the definition of “Change in Control,”
“Change of Control” (or any similar term) under the Company’s incentive plans,
options plans, deferred compensation plans, employment agreements, severance
plans, retention plans, loan agreements, indentures or any other related plans
or agreements that refer to any such plan or agreement’s definition of “Change
in

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Control” or any similar term) and (B) a member of the Board as of the beginning
of any applicable measurement period for the purposes of the definition of
“Change in Control” or any similar term under such incentive plans, options
plans, employment agreements, loan agreements or indentures of the Company,
including, without limitation, any retention plan, severance plan, or
change-in-control severance plan.

2.Standstill Provisions.

(a)Starboard agrees that, from the date of this Agreement until the earlier of
(x) the date that is fifteen (15) business days prior to the deadline for the
submission of shareholder nominations for the 2020 Annual Meeting pursuant to
the Company’s Bylaws or (y) the date that is ninety (90) days prior to the first
anniversary of the 2019 Annual Meeting (the “Standstill Period”), neither it nor
any of its controlled Affiliates or Associates will, and it will cause each of
its controlled Affiliates and Associates not to, directly or indirectly, in any
manner:

(i)     engage in any solicitation of proxies or consents or become a
“participant” in a “solicitation” (as such terms are defined in Regulation 14A
under the Exchange Act) of proxies or consents (including, without limitation,
any solicitation of consents that seeks to call a special meeting of
shareholders), in each case, with respect to securities of the Company;

(ii)    form, join or in any way participate in any “group” (within the meaning
of Section 13(d)(3) of the Exchange Act) with respect to the Common Stock; with
respect to the shares of Common Stock (other than a “group” that includes only
all or some of the entities or persons identified on the signature pages hereto
as of the date hereof; provided,  however, that nothing herein shall limit the
ability of an Affiliate of Starboard to join the “group” following the execution
of this Agreement, so long as any such Affiliate agrees to be bound by the terms
and conditions of this Agreement;

(iii)   deposit any shares of Common Stock in any voting trust or subject any
shares of Common Stock to any arrangement or agreement with respect to the
voting of any shares of Common Stock, other than any such voting trust,
arrangement or agreement solely among the members of Starboard and otherwise in
accordance with this Agreement;

(iv)   seek or submit, or encourage any person or entity to seek or submit,
nominations in furtherance of a “contested solicitation” for the appointment,
election or removal of directors with respect to the Company or seek, encourage
or take any other action with respect to the appointment, election or removal of
any directors; provided,  however, that nothing in this Agreement shall prevent
Starboard or any of its Affiliates or Associates from taking actions in
furtherance of identifying director candidates in connection with the 2020
Annual Meeting so long as such actions do not create a public disclosure
obligation for Starboard or the Company and are not publicly disclosed by

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Starboard or its representatives or Affiliates and are undertaken on a basis
reasonably designed to be confidential and in accordance in all material
respects with Starboard’s normal practices in the circumstances;

(v)    (A) make any proposal for consideration by shareholders at any annual or
special meeting of shareholders of the Company or through any written consent of
shareholders, (B) make any offer or proposal (with or without conditions) with
respect to any merger, tender (or exchange) offer, acquisition,
recapitalization, restructuring, disposition or other business combination
involving Starboard (or its Affiliates or Associates) and the Company, (C)
affirmatively solicit a third party to make an offer or proposal (with or
without conditions) with respect to any merger, tender (or exchange) offer,
acquisition, recapitalization, restructuring, disposition or other business
combination involving the Company, or publicly encourage, initiate or support
any third party in making such an offer or proposal, (D) publicly comment on any
third party proposal regarding any merger, tender (or exchange) offer,
acquisition, recapitalization, restructuring, disposition, or other business
combination with respect to the Company by such third party prior to such
proposal becoming public or (E) call or seek to call a special meeting of
shareholders or act by written consent;

(vi)   seek, alone or in concert with others, representation on the Board,
except as specifically permitted in Section 1;

(vii)  seek to advise, encourage, support or influence any person or entity with
respect to the voting or disposition of any securities of the Company at any
annual or special meeting of shareholders or consent solicitation, except in
accordance with Section 1; or

(viii) make any request or submit any proposal to amend the terms of this
Agreement other than through non-public communications with the Company that
would not be reasonably determined to trigger public disclosure obligations for
any Party.

(b)Except as expressly provided in Section 1 or Section 2(a), Starboard shall be
entitled to (i) vote the shares of Common Stock that it beneficially owns as it
determines in its sole discretion and (ii) disclose, publicly or otherwise, how
it intends to vote or act with respect to any securities of the Company on any
shareholder proposal or other matter to be voted on by the shareholders of the
Company and the reasons therefor.

(c)Nothing in Section 2(a) or elsewhere in this Agreement shall be deemed to
limit the exercise in good faith by an Appointed Director of such person’s
fiduciary duties solely in such person’s capacity as a director of the Company.

3.Representations and Warranties of the Company.  The Company represents and
warrants to Starboard that (a) the Company has the corporate power and authority
to execute this Agreement and to bind it thereto, (b) this Agreement has been
duly and validly authorized,

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executed and delivered by the Company, constitutes a valid and binding
obligation and agreement of the Company, and is enforceable against the Company
in accordance with its terms, except as enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws generally affecting the rights of creditors and
subject to general equity principles and (c) the execution, delivery and
performance of this Agreement by the Company does not and will not (i) violate
or conflict with any law, rule, regulation, order, judgment or decree applicable
to the Company, or (ii) result in any breach or violation of or constitute a
default (or an event which with notice or lapse of time or both would constitute
such a breach, violation or default) under or pursuant to, or result in the loss
of a material benefit under, or give any right of termination, amendment,
acceleration or cancellation of, any organizational document or agreement to
which the Company is a party or by which it is bound.

4.Representations and Warranties of Starboard.  Starboard represents and
warrants to the Company that (a) the authorized signatories of Starboard set
forth on the signature pages hereto have the power and authority to execute this
Agreement and any other documents or agreements to be entered into in connection
with this Agreement and to bind Starboard thereto, (b) this Agreement has been
duly authorized, executed and delivered by Starboard, and is a valid and binding
obligation of Starboard, enforceable against Starboard in accordance with its
terms, except as enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar laws
generally affecting the rights of creditors and subject to general equity
principles, (c) the execution of this Agreement, the consummation of any of the
transactions contemplated hereby, and the fulfillment of the terms hereof, in
each case in accordance with the terms hereof, will not conflict with, or result
in a breach or violation of the organizational documents of Starboard as
currently in effect, (d) the execution, delivery and performance of this
Agreement by Starboard does not and will not (i) violate or conflict with any
law, rule, regulation, order, judgment or decree applicable to Starboard, or
(ii) result in any breach or violation of or constitute a default (or an event
which with notice or lapse of time or both would constitute such a breach,
violation or default) under or pursuant to, or result in the loss of a material
benefit under, or give any right of termination, amendment, acceleration or
cancellation of, any organizational document, agreement, contract, commitment,
understanding or arrangement to which such member is a party or by which it is
bound, (e) as of the date of this Agreement, Starboard’s Ownership is 2,369,100
shares of Common Stock and (f) as of the date hereof, and except as set forth in
clause (e) above, Starboard does not currently have, and does not currently have
any right to acquire, any interest in any securities of the Company (or any
rights, options or other securities convertible into or exercisable or
exchangeable (whether or not convertible, exercisable or exchangeable
immediately or only after the passage of time or the occurrence of a specified
event) for such securities or any obligations measured by the price or value of
any securities of the Company or any of its controlled Affiliates, including any
swaps or other derivative arrangements designed to produce economic benefits and
risks that correspond to the ownership of Common Stock, whether or not any of
the foregoing would give rise to beneficial ownership (as determined under Rule
13d-3 promulgated under the Exchange Act), and whether or not to be settled by
delivery of Common Stock, payment of cash or by other consideration, and without
regard to any short position under any such contract or arrangement).

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5.Press Release.  Promptly following the execution of this Agreement, the
Company and Starboard shall jointly issue a mutually agreeable press release
(the “Press Release”) announcing certain terms of this Agreement in the form
attached hereto as Exhibit A.  Prior to the issuance of the Press Release and
subject to the terms of this Agreement, neither the Company (including the Board
and any committee thereof) nor Starboard shall issue any press release or make
any public announcement regarding this Agreement or the matters contemplated
hereby without the prior written consent of the other Party.  During the
Standstill Period, neither the Company nor Starboard shall make any public
announcement or statement that is inconsistent with or contrary to the terms of
this Agreement.

6.Specific Performance.  Each of Starboard, on the one hand, and the Company, on
the other hand, acknowledges and agrees that irreparable injury to the other
Party hereto would occur in the event any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached and that such injury would not be adequately compensable by the
remedies available at law (including the payment of money damages).  It is
accordingly agreed that Starboard, on the one hand, and the Company, on the
other hand (the “Moving Party”), shall each be entitled to specific enforcement
of, and injunctive relief to prevent any violation of the terms hereof, and the
other Party hereto will not take action, directly or indirectly, in opposition
to the Moving Party seeking such relief on the grounds that any other remedy or
relief is available at law or in equity.  This Section 6 is not the exclusive
remedy for any violation of this Agreement.

7.Expenses.  The Company shall reimburse Starboard for its reasonable,
documented out-of-pocket fees and expenses (including legal fees) incurred in
connection with Starboard’s involvement at the Company through the date of this
Agreement, including, but not limited to its Schedule 13D filings, its
preparation and delivery of the Nomination Letter, and the negotiation and
execution of this Agreement, provided that such reimbursement shall not exceed
$275,000 in the aggregate.

8.Severability.  If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.  It is hereby stipulated and
declared to be the intention of the Parties that the Parties would have executed
the remaining terms, provisions, covenants and restrictions without including
any of such which may be hereafter declared invalid, void or unenforceable.  In
addition, the Parties agree to use their best efforts to agree upon and
substitute a valid and enforceable term, provision, covenant or restriction for
any of such that is held invalid, void or enforceable by a court of competent
jurisdiction.

9.Notices.  Any notices, consents, determinations, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (a) upon
receipt, when delivered personally; (b) upon confirmation of receipt, when sent
by email (provided such confirmation is not automatically generated and such
notice is also sent by a nationally recognized overnight delivery service); or
(c) one business day after deposit with a nationally recognized overnight
delivery service, in

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each case properly addressed to the Party to receive the same.  The addresses
and email addresses for such communications shall be:

If to the Company:

 

 

Magellan Health, Inc.

4800 Scottsdale Road, Suite 4400

Scottsdale, AZ 85251

Attention:

       Daniel Gregoire

Email:      

       dngregoire@magellanhealth.com

 

with a copy (which shall not constitute notice) to:

 

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attention:

      Michael J. Aiello

 

      Raymond O. Gietz

Email:

      michael.aiello@weil.com

 

      raymond.gietz@weil.com

 

If to Starboard:

 

Starboard Value LP

777 Third Avenue, 18th Floor

New York, NY 10017

Attention:

       Peter A. Feld

Email:

       pfeld@starboardvalue.com

 

 

with a copy (which shall not constitute notice) to:

 

Olshan Frome Wolosky LLP

1325 Avenue of the Americas

New York, New York 10019

Attention:

      Steve Wolosky

 

      Andrew Freedman

Email:

      swolosky@olshanlaw.com

   

      afreedman@olshanlaw.com

 

10.Applicable Law.  This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware without reference
to the conflict of laws principles thereof that would result in the application
of the law of another jurisdiction.  Each of the Parties hereto irrevocably
agrees that any legal action or proceeding with respect to this Agreement and
the rights and obligations arising hereunder, or for recognition and enforcement
of any judgment in respect of this Agreement and the rights and obligations
arising hereunder brought by the other Party hereto or its successors or
assigns, shall be brought and determined exclusively in the Delaware Court of
Chancery and any state appellate court

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therefrom within the State of Delaware (or, if the Delaware Court of Chancery
declines to accept jurisdiction over a particular matter, any federal court
within the State of Delaware).  Each of the Parties hereto hereby irrevocably
submits with regard to any such action or proceeding for itself and in respect
of its property, generally and unconditionally, to the personal jurisdiction of
the aforesaid courts and agrees that it will not bring any action relating to
this Agreement in any court other than the aforesaid courts.  Each of the
Parties hereto hereby irrevocably waives, and agrees not to assert in any action
or proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason,
(b) any claim that it or its property is exempt or immune from jurisdiction of
any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise) and (c) to the
fullest extent permitted by applicable legal requirements, any claim that (i)
the suit, action or proceeding in such court is brought in an inconvenient
forum, (ii) the venue of such suit, action or proceeding is improper or (iii)
this Agreement, or the subject matter hereof, may not be enforced in or by such
courts.

11.Counterparts.  This Agreement may be executed in two or more counterparts,
each of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the Parties and
delivered to the other Party (including by means of electronic delivery or
facsimile).

12.Mutual Non-Disparagement.  Subject to applicable law, each of the Parties
covenants and agrees that, during the Standstill Period, or if earlier, until
such time as the other Party or any of its agents, subsidiaries, affiliates,
successors, assigns, officers, key employees or directors shall have breached
this Section 12, neither it nor any of its respective agents, subsidiaries,
affiliates, successors, assigns, officers, key employees or directors, shall in
any way publicly criticize, disparage, call into disrepute or otherwise defame
or slander the other Party or such other Party’s subsidiaries, affiliates,
successors, assigns, officers (including any current officer of a Party or a
Party’s subsidiaries who no longer serves in such capacity at any time following
the execution of this Agreement), directors (including any current director of a
Party or a Party’s subsidiaries who no longer serves in such capacity at any
time following the execution of this Agreement), employees, shareholders,
agents, attorneys or representatives, or any of their businesses, products or
services, in any manner that would reasonably be expected to damage the business
or reputation of such other Party, their businesses, products or services or
their subsidiaries, affiliates, successors, assigns, officers (or former
officers), directors (or former directors), employees, shareholders, agents,
attorneys or representatives;  provided,  however, if the Starboard Appointee is
a Starboard partner or employee, any statements regarding the Company’s
operational or stock price performance or any strategy, plans, or proposals of
the Company not supported by the Starboard Appointee that do not disparage, call
into disrepute or otherwise defame or slander any of the Company’s officers,
directors, employees, stockholders, agents, attorneys or representatives
(“Opposition Statements”), shall not be deemed to be a breach of this Section 12
(subject to, for the avoidance of doubt, any obligations of confidentiality as a
director that may otherwise apply) except that any Opposition Statement will
only speak to a matter that has been made public by the Company; provided,
 further, that if any Opposition Statement is made by Starboard, the Company
shall be permitted to publicly respond with a statement similar in scope to any
such Opposition Statement.

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13.Securities Laws.  Starboard acknowledges that it is aware, and will advise
each of its representatives who are informed as to the matters that are the
subject of this Agreement, that the United States securities laws may prohibit
any person who directly or indirectly has received from an issuer material,
non-public information from purchasing or selling securities of such issuer or
from communicating such information to any other person under circumstances in
which it is reasonably foreseeable that such person is likely to purchase or
sell such securities.

14.Entire Agreement; Amendment and Waiver; Successors and Assigns; Third-Party
Beneficiaries; Term.  This Agreement contains the entire understanding of the
Parties with respect to its subject matter.  There are no restrictions,
agreements, promises, representations, warranties, covenants or undertakings
between the Parties other than those expressly set forth herein.  No
modifications of this Agreement can be made except in writing signed by an
authorized representative of each of the Company and Starboard.  No failure on
the part of any Party to exercise, and no delay in exercising, any right, power
or remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or remedy by such Party preclude any other
or further exercise thereof or the exercise of any other right, power or
remedy.  All remedies hereunder are cumulative and are not exclusive of any
other remedies provided by law.  The terms and conditions of this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by the
Parties hereto and their respective successors, heirs, executors, legal
representatives, and permitted assigns.  No Party shall assign this Agreement or
any rights or obligations hereunder without, with respect to Starboard, the
prior written consent of the Company, and with respect to the Company, the prior
written consent of Starboard.  This Agreement is solely for the benefit of the
Parties and is not enforceable by any other persons or entities.  This Agreement
shall terminate at the end of the Standstill Period, except the provisions of
Section 6 through Section 10 and Section 14, which shall survive such
termination.

 

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized signatories of the Parties as of the date hereof.

 

MAGELLAN HEALTH, INC.

 

 

 

 

By:

/s/ Barry Smith

 

Name:  Barry Smith

 

Title:     Chief Executive Officer and

           Chairman of the Board of Directors

 

 

 

[Signature Page to Settlement Agreement]

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STARBOARD VALUE AND OPPORTUNITY MASTER FUND LTD

By: Starboard Value LP, its investment manager

 

STARBOARD VALUE AND OPPORTUNITY S LLC

By: Starboard Value LP, its manager

 

STARBOARD VALUE AND OPPORTUNITY C LP

By: Starboard Value R LP, its general partner

 

STARBOARD VALUE R LP

By: Starboard Value R GP LLC, its general partner

 

STARBOARD VALUE AND OPPORTUNITY MASTER FUND L LP

By: Starboard Value L LP, its general partner

 

STARBOARD VALUE L LP

By: Starboard Value R GP LLC, its general partner

 

STARBOARD VALUE LP

By: Starboard Value GP LLC, its general partner

 

STARBOARD VALUE GP LLC

By: Starboard Principal Co LP, its member

 

STARBOARD PRINCIPAL CO LP

By: Starboard Principal Co GP LLC, its general partner

 

STARBOARD PRINCIPAL CO GP LLC

 

STARBOARD VALUE R GP LLC

 

 

 

 

By:

/s/ Jeffrey C. Smith

 

Name:

Jeffrey C. Smith

 

Title:

Authorized Signatory

 

 

JEFFREY C. SMITH

 

PETER A. FELD

/s/

 

 

By:

/s/ Jeffrey C. Smith

 

Name:

Jeffrey C. Smith

 

Title:

Individually and as Attorney-in-Fact for Peter A.

Feld

 

 

 

[Signature Page to Settlement Agreement]

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EXHIBIT A

 

Press Release

 

 

A-1

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