Exhibit 10.1

 

MAGELLAN HEALTH, INC.

2016 MANAGEMENT INCENTIVE PLAN

STOCK OPTION AGREEMENT

Reference No. 2016 March 3, 2017 [Employee Name]

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, 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)          2016 MANAGEMENT INCENTIVE PLAN AND DEFINED TERMS.  The option is
granted under and subject to the terms of the Company’s 2016 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.

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(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, SECURITIES LAW AND OFFICER RESTRICTIONS.  As an
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. Pursuant to the
Company’s Equity Ownership Policy currently in effect and as may be amended from
time to time (the “Equity Ownership Policy”) certain officers of the Company are
currently, or may in the future be, subject to restrictions on sales or
transfers of Option Shares and other equity rights issued by the Company.  If
Grantee is at any time subject to such Equity Ownership Policy, sale or transfer
of Grantees’ Option Shares shall be restricted as provided in such Equity
Ownership Policy.

 

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

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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 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 from suspending the issuance of Option
Shares as permitted hereby) and, at such time as such period of suspension ends,
shall give prompt written notice thereof to Optionee.

SECTION 5.        PAYMENT FOR OPTION SHARES.

(a)          CASH OR CHECK.  All or part of the Purchase Price may be paid in
cash or by good check.

(b)          ALTERNATIVE METHODS OF PAYMENT.  Subject to any provision
pertaining thereto in the Option Award Agreement, at the sole discretion of the
Committee, all or any part of the Purchase Price and any applicable withholding
requirements may be paid by one or more of the following alternative methods:

(i)          Surrender of Stock.  Payment may be made by surrendering ownership
of Shares that are already owned by the Optionee free and clear of any
restriction or limitation, unless the Company specifically agrees to accept such
Shares subject to a

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restriction or limitation.  In such cases, such Shares shall be surrendered to
the Company in good form for transfer and shall be valued at their Fair Market
Value on the date of exercise of the option.  Without the specific approval of
the Committee, the Optionee shall not be permitted to surrender ownership of
Shares in payment of the Purchase Price (or withholding) if such action would
cause the Company to recognize compensation expense (or additional compensation
expense) with respect to the option for financial reporting purposes that
otherwise would not have occurred.

(ii)         Net Exercise.  Payment may be made in the case of Nonqualified
Stock Options by reducing the number of Option Shares otherwise deliverable upon
the exercise of the option by the number of Shares having a Fair Market Value
equal to the amount of the Purchase Price and the withholding required to be
made by the Company in connection with such exercise of the option.

(iii)        Exercise/Sale.  Payment may be made by the delivery (on a form
prescribed by the Company) of an irrevocable direction (A) to a securities
broker approved by the Company to sell Option Shares (or other Shares owned by
Optionee) and to deliver all or part of the sales proceeds to the Company or (B)
to pledge Option Shares (and/or other Shares owned by Optionee) to a securities
broker or lender approved by the Company as security for a loan, and to deliver
all or part of the loan proceeds to the Company.

Should the Committee exercise its discretion to permit the Optionee to exercise
the option in whole or in part in accordance with subsection 5(b) above, it
shall have no obligation to permit such alternative exercise with respect to the
remainder of the option or with respect to any other option to purchase Shares
held by the Optionee.

SECTION 6.        TERM AND EXPIRATION.

(a)          BASIC TERM.  Subject to earlier termination in accordance with
subsection 6(b) below, the exercise period of this option shall expire ten (10)
years after the date it is granted.

(b)          TERMINATION OF SERVICE.  If the Optionee’s Service terminates, then
the exercise period for this option shall expire (except as otherwise set forth
in the Option Award Notice) on the earliest of the following occasions (or such
later date as the Committee in a specific instance may determine), but in no
event after the expiration of the ten year period referred to in subsection 6(a)
above:

(i)          the date six (6) months after the termination of the Optionee’s
Service for any reason other than death, normal retirement or Disability;

(ii)         the date thirty-six (36) months after the termination of the
Optionee’s Service by reason of retirement at or after the normal date for
retirement as determined pursuant to the current formal retirement policy of the
Company; or

(iii)        the date twelve (12) months after the Optionee’s death or
Disability.

The Optionee (or in the case of the Optionee’s death or disability, the
Optionee’s personal representative) may exercise all or part of the option at
any time before its expiration under the preceding provisions of this Section 6,
but only to the extent that the option had become exercisable for Option Shares
on or before the date the Optionee’s Service terminates.  When the Optionee’s
Service terminates, this option shall expire immediately with respect to the
number of Option Shares for which this option has not yet become exercisable,
except by reason of retirement as determined pursuant to the formal retirement
policy of the Company.

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(c)          NOTICE CONCERNING INCENTIVE STOCK OPTION TREATMENT.  If this option
is designated as an Incentive Stock Option in the Option Award Notice, it ceases
to qualify for favorable tax treatment as an Incentive Stock Option to the
extent it is exercised (i) more than three (3) months after the date the
Optionee ceases to be an Employee for any reason other than death or permanent
and total disability (as defined in Section 22(e)(3) of the Code), (ii) more
than twelve (12) months after the date the Optionee ceases to be an Employee by
reason of such permanent and total disability or (iii) after the Optionee has
been on a leave of absence for more than ninety (90) days, unless the Optionee’s
reemployment rights are guaranteed by statute or by contract.

SECTION 7.        ADJUSTMENT OF SHARES.

(a)          ADJUSTMENT GENERALLY.  If while the option remains in effect there
shall be any change in the outstanding Shares of the class which may be
purchased upon exercise of the option, through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, reverse stock
split, combination of shares, exchange of shares for other 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 option so that the
option shall thereafter be exercisable, otherwise on the same terms and
conditions as provided by the Option 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 exercise of the option
had the option been exercised in full immediately prior to such change or
distribution (whether or not the option was then exercisable in full) or, if and
to the extent the Committee determines that so adjusting the consideration to be
received upon exercise of the option, in whole or in part, is not practicable,
the Committee shall equitably modify the consideration to be received in respect
of the exercise of the option or the Exercise Price or other pertinent terms and
conditions of the option as provided by subsection 7(b) below.  Such an
adjustment shall be made successively each time any such change in the
outstanding Shares of the class which may be purchased upon exercise of the
option or extraordinary distribution in respect of such outstanding Shares or
extraordinary change in the capital structure of the Company shall occur.

(b)          MODIFICATION OF OPTION.  In the event any change in the outstanding
Shares of the class which may be purchased upon exercise of the option or
extraordinary distribution in respect of such outstanding Shares or
extraordinary change in the capital structure of the Company described in
subsection 7(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,
Optionee as a participant in the Plan or which otherwise warrants equitable
adjustment to the terms and conditions of the option 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 Shares
and/or other securities and/or cash or other property that may be issued or
delivered upon the exercise of the option and/or adjust the Exercise Price
and/or other terms and conditions of the option as the Committee in its
discretion determines to be equitable in order to prevent dilution or
enlargement of the Optionee’s rights in respect of the option as such existed
before such event.  Appropriate adjustments may likewise be made by the
Committee in other terms and conditions of the option 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
option or any restrictions on Option Shares.  Notwithstanding the foregoing, (i)
each such adjustment with respect to an Incentive Stock Option shall comply with
the rules of Section 424(a) of the Code, (ii) in no event shall any adjustment
be made which would render any Incentive Stock Option granted hereunder other
than an “incentive stock option” for purposes of Section 422 of the Code without
the consent of the Optionee and (iii) 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 shall be interpreted in accordance with Section 409A
of Code and Department

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of Treasury regulations and other interpretive guidance issued there under,
including without limitation any such regulations or guidance that may be issued
after the Date of Grant.  Without limiting the authority of the Committee under
subsection 7(b) above to make modifications to the option 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, Optionee as a
participant in the Plan or which otherwise warrants equitable adjustment to the
terms and conditions of the option because such event interferes with the
operation of the Plan, and notwithstanding any provision of the 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 Optionee to a penalty tax) in connection with the grant
or vesting of the option or any other provision of the Option Award Notice or
this Agreement or the Plan, the Company may (a) adopt such amendments to the
option, 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 option
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 of Grant, to the extent permitted under Section 409A and
regulations and guidance thereunder. Adjustments to the Option under this
Section 7 shall be authorized and made only to the extent such adjustment does
not cause the Option to fail to qualify for the exemption under Treasury
Regulation § 1.409A-1(b)(5) for stock rights not providing for the deferral of
compensation.

SECTION 8.        MISCELLANEOUS PROVISIONS.

(a)          RIGHTS AS A SHAREHOLDER.  Neither the Optionee nor the Optionee’s
personal representative or permitted Transferee shall have any rights as a
shareholder with respect to any Option Shares until the Optionee or his or her
personal representative or permitted Transferee becomes entitled to receive such
Option Shares by (i) filing a notice of exercise and (ii) paying the Purchase
Price as provided by this Agreement, and any such right shall also be subject to
subsections 2(c) and 4(d) above.

(b)          TENURE.  Nothing in the Option Award Notice, this Agreement or the
Plan shall confer upon the Optionee 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 Optionee) or of the Optionee, 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 Optionee at the address that he or she most
recently provided to the Company.

(d)          ENTIRE AGREEMENT.  This Agreement, any related Option 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; it being understood,
however, that, if this Agreement is being entered into by the Company in the
performance of obligations under an employment agreement between the Company and
Optionee, the Company and Optionee shall also have those separate obligations,
if any, relating to the granting of options provided thereby.

(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. 

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(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 Optionee, the Optionee’s personal representatives, heirs,
legatees and other permitted Transferees, 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 9.        DEFINITIONS.

(a)          “AGREEMENT” shall mean this Stock Option Agreement.

(b)          “BOARD OF DIRECTORS” shall mean the Board of Directors of the
Company, as constituted from time to time.

(c)          “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
there under.

(d)          “COMMITTEE” shall mean the committee of the Board of Directors
described in Section 2 of the Plan and (without limitation of the Committee’s
authority to otherwise delegate any of its powers or responsibilities as
permitted by law) shall include any officer of the Company to whom such
committee has specifically delegated by resolution adopted by the Committee
authority to approve payment for Option Shares by an alternative method of
payment referred to in subsection 5(b) above.

(e)          “COMPANY” shall mean Magellan Health, Inc, a Delaware corporation
and any successor thereto.

(f)          “DATE OF GRANT” in respect of an option shall mean, unless
otherwise approved by the Board of Directors or the Committee, (i) the date on
which the Board of Directors or the Committee resolved to grant the option to
Optionee or (ii) either (A) the date on which the Board of Directors or the
Committee resolved to authorize the grant of the option to Optionee, as part of
grants of options to be made to Employees to be selected by an authorized
officer of the Company pursuant to authority delegated by the Board or
Committee, if such date was set as the date of grant by the Board of Directors
or Committee in providing such authorization or (B) the date on which an
authorized officer of the Company determined, as evidenced by a writing, to
grant the option to Optionee pursuant to authority delegated to such officer as
permitted by applicable law by a resolution adopted by the Board of Directors or
the Committee, where such authorizing resolution did not itself provide that the
date of authorization should be the date of grant (which date determined by such
officer shall in no event be earlier than the date of such authorizing
resolution of the Board of Directors or the Committee) and (iii) such later
date, after the resolution of the Board of Directors or Committee referred to in
clauses (i) or (ii)(A) of this sentence or the determination of the officer
referred to in clause (ii)(B) of this sentence), on which Optionee’s Service
commenced.

(g)          “DISABILITY” shall mean that the Optionee is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment as determined by the Committee in its sole
discretion. 

(h)          “EMPLOYEE” shall mean any individual who is a common-law employee
of the Company, a Parent or a Subsidiary.

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(i)          “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 there under.

(j)          “EXERCISE PRICE” shall mean the amount for which one Option Share
may be purchased upon exercise of the option, as specified in the Option Award
Notice.

(k)          “EXTRAORDINARY BUSINESS COMBINATION EVENT” shall be deemed to have
occurred upon any of the following events:

(i)          any person (as such term is used in Section 13(d) of the Exchange
Act) becomes the “beneficial owner” (as determined pursuant to Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing more than fifty percent (50%) of the combined voting power in the
election of directors of the Company’s then outstanding securities, except that,
in the case of a person who beneficially owned 50% of such combined voting power
on the date of the Option Award Notice, such person become the beneficial owner
(as so defined) of securities of the Company representing sixty percent (60%) of
more of such combined voting power; or

(ii)         during any period of two (2) consecutive years (not including any
period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the members of the Board of Directors and
any new director, whose election to the Board of Directors or nomination for
election to the Board of Directors by the Company’s stockholders was approved by
a vote of at least a majority of the directors then still in office who either
were directors at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason to constitute a
majority of the Board of Directors; or

(iii)        the Company shall merge with or consolidate into any other
corporation, other than a merger or consolidation which would result in the
holders of the voting securities of the Company outstanding immediately prior
thereto holding immediately thereafter securities representing more than fifty
percent (50%) of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation; or

(iv)        the stockholders of the Company approve and effect a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company’s assets.

(l)          “FAIR MARKET VALUE” of a Share as of any day shall mean the closing
price of the Shares on such day (or on the last preceding trading date if the
Shares were not traded on such day) if the Shares are readily tradable on a
national securities exchange or the NASDAQ Stock Market (or other established
market system involving current interdealer quotations), and, if the Shares are
not readily tradable,  “Fair Market Value” shall mean the amount determined in
good faith by the Committee (or in accordance with procedures approved by the
Committee) as the fair market value of the Shares, which determination shall be
final and binding on all persons.

(m)          “INCENTIVE STOCK OPTION” shall mean an employee incentive stock
option described in Section 422(b) of the Code.

(n)          “NONQUALIFIED STOCK OPTION” shall mean a stock option not described
in Sections 422(b) or 423(b) of the Code.

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(o)          “OPTION AWARD NOTICE” shall have the meaning provided by Section 1
of this Agreement.

(p)          “OPTIONEE” shall mean the person signing this Agreement as such.

(q)          “PARENT” shall mean a “parent corporation” as defined in Section
424(e) of the Code.

(r)          “PLAN” shall mean the Magellan Health, Inc. 2016 Management
Incentive Plan.

(s)          “PURCHASE PRICE” shall mean the Exercise Price multiplied by the
number of Option Shares with respect to which this option is being exercised.

(t)          “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 there under.

(u)          “SERVICE” shall mean service as an Employee.  For any purpose under
this Agreement, Service shall be deemed to continue while the Optionee is on a
bona fide leave of absence, if such leave was approved by the Company in writing
or if continued crediting of Service for such purpose is expressly permitted by
the terms of such leave or required by applicable law (as determined by the
Company).

(v)          “SHARE” shall mean a share of Ordinary Common Stock 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 subsection 7(a) above (and in the
event of any such exchange or change, any security resulting from any such
successive exchange or change).

(w)          “TRANSFER” shall mean, with respect to the option or Option 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 Share, or of any beneficial
interest therein, now or hereafter owned by the Optionee, including by
execution, attachment, levy or similar process.

(x)          “SUBSIDIARY” shall mean a “subsidiary corporation” as defined in
Section 424(f) of the Code.

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

 

MAGELLAN HEALTH, INC.

 

 

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

 

OPTIONEE:

 

 

 

 

 

 

Name:

 

 

 

 

 

Date:

 

 

 

Address for Notice:

 

 

 

 

 

 

 

 

 

 

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EXHIBIT A

SAMPLE NOTICE OF EXERCISE

Magellan Health, Inc.
[ADDRESS]
Attn:  Corporate Secretary

Re: Exercise of Option, Option Award Notice Reference No. ____.

I hereby exercise my stock option identified above granted under the Magellan
Health, Inc. 2016 Management Incentive Plan (the “Plan”) and notify you of my
desire to purchase the Option Shares of that have been offered pursuant to the
Plan and related Option Agreement as described below.

Except as otherwise agreed with the Company as provided by the Option Agreement,
I shall pay for the Option Shares by delivery of a check payable to Magellan
Health, Inc. (the “Company”) in the amount described below in full payment for
such Option Shares plus all amounts required to be withheld by the Company under
state, federal or local law as a result of such exercise or shall provide such
documentation as is satisfactory to the Company demonstrating that I am exempt
from any withholding requirement.

This notice of exercise is delivered this ___ day of ______________, 20__.

No. of Option Shares to be Acquired

Type of Option

Exercise Price

Total

 

Nonqualified Stock Option

 

 

 

Incentive Stock Option

 

 

Estimated Withholding

Nonqualified only

 

 

 

 

Amount Paid

 

 

 

 

 

 

Very truly yours,

 

 

 

 

 

Signature of Optionee

 

 

 

Optionee’s Name and Mailing Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

Optionee’s Social Security Number:

 

 

 

 

 

 

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