Exhibit 10.4


 


MAGELLAN HEALTH SERVICES, INC.


 


2008 MANAGEMENT INCENTIVE PLAN


 


NOTICE OF RESTRICTED STOCK UNIT AWARD


 


(REFERENCE NO.
2008-MARCH 5, 2008)


 


	
  Name of Grantee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date of Grant:

  	
   

  	
  March 5, 2008

  
	
   

  	
   

  	
   

  
	
  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 (i) the portion of this Award which vests on
  the 1st anniversary of the Date of Grant shall not vest unless the
  Company has earnings per share for the year ended December 31, 2008 of
  at least $1.90 (“2008 EPS Target”), (ii) the portion of this Award which
  vests on the 2nd anniversay of the Date of Grant shall not vest
  unless the Company has earnings per share for the year ended
  December 31, 2009 of at least $2.00 per share (the “2009 EPS Target”)
  and the portion of this Award which vests on the 3rd anniversary
  of the Date of Grant shall not vest unless the Company has earnings per share
  for the year ended December 31, 2010 of at least $2.10 per share (the
  2010 “EPS Target”); provided further that: (a) if the Company meets the
  2009 EPS target, the Awards hereunder remaining unvested from the 1st
  anniversary of the Date of Grant shall then become vested on the 2nd
  anniversary of the Date of Grant.; (b) if the Company meets the 2010 EPS
  Target, any Awards hereunder remaining unvested hereunder from the 1st
  and 2nd anniversay of the Date of Grant shall then become vested
  on the 3rd anniversary of the Date of Grant; and (c) if the
  Company has earnings per share of at least $2.10 in any year after 2010, any
  Awards hereunder remaining unvested hereunder from the 1st, 2nd
  and 3rd anniversay of the Date of Grant shall then become vested
  on the first anniversary of the Date of Grant occuring after the year in
  which such EPS was achieved. 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Vesting Date

  	
   

  	
  Vesting Percentage

  
	
   

  	
   

  	
  1st anniversary of the Date of Grant

  	
   

  	
  33.4%

  
	
   

  	
   

  	
  2nd anniversary of the Date of Grant

  	
   

  	
  66.7%

  (i.e., an additional 33.3%)

  
	
   

  	
   

  	
  3rd anniversary of the Date of Grant

  	
   

  	
  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 30% 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, 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 

  



 


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  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 bonus for
  the year in which or any year after the year in which the Change of Control
  occurs from Grantee’s maximum 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 maximum bonus opportunity has yet been
  established for Grantee under a bonus plan applicable to Grantee for the year
  in which the Change of Control has occurred, the maximum 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 $15,000, 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 

  



 


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  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 two years 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.

  
	
   

  	
   

  	
   

  
	
  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.
2008 Management Incentive Plan (“Plan”) and the Restricted Stock Unit Agreement,
reference number 2008-March 5, 2008 (“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.


 


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  MAGELLAN HEALTH SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Rene Lerer

  
	
   

  	
   

  	
  Title: President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
  GRANTEE:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  



 


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