Exhibit 10.4

 

MAGELLAN HEALTH SERVICES, INC.

 

2011 MANAGEMENT INCENTIVE PLAN

 

NOTICE OF RESTRICTED STOCK UNIT AWARD

 

(REFERENCE NO. 2011-MARCH, 2013)

 

Name of Grantee:

 

[Employee Name]

 

 

 

Date of Grant:

 

March 5, 2013

 

 

 

Type of Award:

 

Restricted Stock Units, each Restricted Stock Unit representing the right to
receive on the terms and conditions of the Restricted Stock Unit Agreement
between Grantee and the Company referenced below and the terms and conditions of
this notice a share of Ordinary Common Stock, par value $0.01 per share
(“Share”), of Magellan Health Services, Inc. (the “Company”), subject to
adjustment thereto as provided in such Restricted Stock Unit Agreement (a “Unit
Share”), or at the election of the Company a cash payment in lieu thereof.

 

 

 

Total Number of Restricted Stock Units Awarded:

 

         Restricted Stock Units.

 

 

 

Vesting :

 

This Award shall vest in accordance with the vesting schedule set forth below,
provided that the Grantee’s Service with the Company, a Subsidiary or a Parent
company has not terminated prior to the vesting date and provided that (i) 50%
of the portion of the restricted stock unit awards which vest on March 5, 2014
shall not vest unless the Company has earnings per share for the year ended
December 31, 2013 of at least $3.03 (“2013 EPS Target”), if the Company does not
achieve the 2013 EPS Target in 2013, this tranche will vest if the Company
achieves earnings per share of at least $3.03 in any subsequent year up to and
including 2018, and 50% of the portion of the restricted stock units which vest
on March 5, 2014 shall not vest unless the Company’s return on equity for the
year ended December 31, 2013 equals at least 7% (“2013 ROE Target”), if the ROE
Target is not met in 2013, this tranche will vest if the Company achieves return
on equity of at least 7% in any subsequent year up to and including 2018;
(ii) 50% of the portion of the restricted stock unit awards which vest on
March 5, 2015 shall not vest unless the Company has earnings per share for the
year ended December 31, 2014 of at least $3.18 per share (the “2014 EPS
Target”), if the Company does not achieve the 2014 EPS Target in 2014, this
tranche will vest if the Company achieves earnings per share of at least $3.18
in any subsequent year up to and including 2019, and 50% of the portion of the
restricted stock units which vest on March 5, 2015 shall not vest unless the
Company’s return on equity for the year ended December 31, 2014 equals at least
7% (“2014 ROE Target”), if the 2014 ROE Target is not met in 2014, this tranche
will vest if the Company achieves return on equity of at least 7% in any
subsequent year up to and including 2019; and (iii) 50% of the portion of the
restricted stock unit awards which vest on March 5, 2016 shall not vest unless
the Company has earnings per share for the year ended December 31, 2015 of at
least $3.34 per share (the “2015 EPS Target”), if the Company does not achieve
the 2015 EPS Target in 2015, this tranche will vest if the Company achieves at
least $3.34 in earnings per share in any subsequent year up to and including
2020, and 50% of the portion of the restricted stock units which vest on
March 5, 2016 shall not vest unless

 

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the Company’s return on equity for the year ended December 31, 2015 equals at
least 7% (“2015 ROE Target”), if the 2015 ROE Target is not met in 2015, this
tranche will vest if the Company achieves return on equity of at least 7% in any
subsequent year up to and including 2020.

 

 

 

 

 

Vesting Date

 

Vesting Percentage

 

 

 

1st anniversary of the Date of Grant (March 5, 2014)

 

33.4%

 

 

 

2nd anniversary of the Date of Grant (March 5, 2015)

 

66.7%
(i.e., an additional 33.3%)

 

 

 

3rd anniversary of the Date of Grant (March 5, 2016)

 

100%
(i.e., an additional 33.3%)

 

 

 

 

 

 

Notwithstanding the preceding paragraph, this Restricted Stock Unit shall
earlier vest immediately with respect to 100% of the Unit Shares subject hereto
in the event, after the date hereof, a Change in Control of the Company (as
defined below) shall have occurred and within the period of eighteen months (or
such other period as is provided by Grantee’s employment agreement, if any, in
effect at the time of the Change of Control) following occurrence of the Change
in Control, Grantee’s Service with the Company shall be terminated by the
Company without Cause (as defined below) or by the Grantee with Good Reason (as
defined below), provided that the Grantee’s Service with the Company has not
previously terminated after the date hereof for any other reason.  For purposes
of this Restricted Stock Unit, the terms “Change in Control,” “Cause” and “Good
Reason” shall have the same meanings as provided in any employment agreement
between the Company and Grantee in effect at the time of the Change in Control
(including any terms of substantially comparable significance in any such
employment agreement even if not of identical wording) or, if no such employment
agreement is in effect at such time or no such meanings are provided in such
employment agreement, shall have the meanings ascribed thereto below:

 

 

 

 

 

(1)                                 A “Change in Control” of the Company shall
mean the first to occur after the date hereof of any of the following events:

 

 

 

 

 

a.                                      any “person,” as such term is used in
Sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), becomes a “beneficial owner,” as such term is used in
Rule 13d-3 promulgated under the Exchange Act, of 50% or more of the Voting
Stock (as defined below) of the Company;

 

 

 

 

 

b.                                      the majority of the Board of Directors
of the Company consists of individuals other than “Continuing Directors,” which
shall mean the members of the Board on the date hereof;

 

 

 

 

 

c.                                       the Board of Directors of the Company
adopts and, if required by law or the certificate of incorporation of the
Corporation, the shareholders approve the dissolution of the Company or a plan
of liquidation or comparable plan providing for the disposition of all or
substantially all of the Company’s assets;

 

 

 

 

 

d.                                      all or substantially all of the assets
of the Company are disposed of pursuant to a merger, consolidation, share
exchange,

 

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reorganization or other transaction unless the shareholders of the Company
immediately prior to such merger, consolidation, share exchange, reorganization
or other transaction beneficially own, directly or indirectly, in substantially
the same proportion as they previously owned the Voting Stock or other ownership
interests of the Company, a majority of the Voting Stock or other ownership
interests of the entity or entities, if any, that succeed to the business of the
Company; or

 

 

 

 

 

e.                                       the Company merges or combines with
another company and, immediately after the merger or combination, the
shareholders of the Company immediately prior to the merger or combination own,
directly or indirectly, 50% or less of the Voting Stock of the successor
company, provided that in making such determination there shall being excluded
from the number of shares of Voting Stock held by such shareholders, but not
from the Voting Stock of the successor company, any shares owned by Affiliates
of such other company who were not also Affiliates of the Company prior to such
merger or combination.

 

 

 

 

 

(2)                               “Cause” shall mean:

 

 

 

 

 

a.                                      Grantee is convicted of (or pleads
guilty or nolo contendere to) a felony or a crime involving moral turpitude;

 

 

 

 

 

b.                                      Grantee’s commission of an act of fraud
or dishonesty involving his or her duties on behalf of the Company;

 

 

 

 

 

c.                                       Grantee’s willful failure or refusal to
faithfully and diligently perform duties lawfully assigned to Grantee as an
officer or employee of the Company or other willful breach of any material term
of any employment agreement at the time in effect between the Company and
Grantee; or

 

 

 

 

 

d.                                      Grantee’s willful failure or refusal to
abide by the Company’s policies, rules, procedures or directives, including any
material violation of the Company’s Code of Ethics.

 

 

 

 

 

(3)                               “Good Reason” shall mean:

 

 

 

 

 

a.                                      a material reduction in Grantee’s salary
in effect at the time of a Change in Control, unless such reduction is
comparable in degree to the reduction that takes place for all other employees
of the Company of comparable rank (for which purpose any person who is an
executive officer of the Company (as determined for purposes of the Exchange Act
shall be considered of comparable rank) or a material reduction in Grantee’s
target bonus opportunity for the year in which or any year after the year in
which the Change of Control occurs from Grantee’s target bonus opportunity for
the year in which the Change in Control occurs (if any) as established under any
employment agreement Grantee has with the Company or any bonus plan of the
Company applicable to Grantee (or, if no such target bonus opportunity has yet
been

 

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established for Grantee under a bonus plan applicable to Grantee for the year in
which the Change of Control has occurred, the target bonus opportunity so
established for Grantee for the immediately preceding year (if any)). For
purposes of this provision, an action or actions of the Company will be deemed
“material” if, individually or in the aggregate, the action or actions
result(s) or potentially result(s) in a reduction in compensation in the current
year or a future year having a present value to Grantee of at least one and one
half percent (1.5%) of Grantee’s then current base salary, provided that Grantee
will have a legal right to claim damages for a breach of contract for any action
by the Company or event having an effect described under those paragraphs that
does not meet this objective materiality test, and actions may be material in a
given case at levels less than the specified level.

 

 

 

 

 

b.                                      a material diminution in Grantee’s
position, duties or responsibilities as in effect at the time of a Change in
Control or the assignment to Grantee of duties which are materially inconsistent
with such position, duties and authority, unless in either case such change is
made with the consent of the Grantee; or

 

 

 

 

 

c.                                       the relocation by more than 50 miles of
the offices of the Company which constitute at the time of the Change in Control
Grantee’s principal location for the performance of his or her services to the
Company;

 

 

 

 

 

provided that, in each such case, Grantee provides notice to the Company within
90 days that such event or condition constituting Good Reason has arisen, and
such event or condition continues uncured for a period of more than 30 days
after Grantee gives notice thereof to the Company, and Grantee terminates
Service within eighteen months after such event or condition has arisen.

 

 

 

 

 

For purposes of the foregoing definitions, (A) “the Company” shall include any
entity that succeeds to all or substantially all of the business of the Company,
(B) “Affiliate” of a person or other entity shall mean a person or other entity
that directly or indirectly controls, is controlled by, or is under common
control with the person or other entity specified, and (C) “Voting Stock” shall
mean any capital stock of any class or classes having general voting power under
ordinary circumstances, in the absence of contingencies, to elect the directors
of a corporation and reference to a percentage of Voting Stock shall refer to
such percentage of the votes that all such Voting Stock is entitled to cast.

 

 

 

Settlement of Award:

 

Unit Shares in settlement of this Award (or, at the Company’s election, cash in
lieu thereof) shall be delivered to Grantee on the Vesting Date (such date, the
“Settlement Date”) as further provided in Grantee’s Restricted Stock Unit
Agreement with the Company.

 

 

 

Dividend Equivalent Rights

 

NONE.

 

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Transfer Restrictions

 

Unit Shares issued in settlement of this Award shall not be subject to any
additional transfer restrictions, other than those provided by Grantee’s
Restricted Stock Unit Agreement.

 

 

 

Other Terms

 

 

 

By signing your name below, you acknowledge and agree that this Award is
governed by the terms and conditions of the Magellan Health Services, Inc. 2011
Management Incentive Plan (“Plan”) and the Restricted Stock Unit Agreement,
reference number 2011-March 5, 2013 (“Agreement”), both of which are hereby made
a part of this document.  Capitalized terms used but not defined in this Notice
of Restricted Stock Unit Award shall have the meanings assigned to them in the
Plan and Agreement.

 

 

 

MAGELLAN HEALTH SERVICES, INC.

 

 

 

 

 

 

 

 

Name: Barry M. Smith

 

 

Title: Chief Executive Officer

 

 

 

 

 

 

GRANTEE:

 

 

 

 

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

 

Date:

 

 

 

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