Exhibit 10.4


 


MAGELLAN HEALTH SERVICES, INC.


 


2008 MANAGEMENT INCENTIVE PLAN


 


NOTICE OF RESTRICTED STOCK UNIT AWARD


 


(REFERENCE NO. 2008-MARCH 4, 2009)


 


	
  Name of Grantee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date of Grant:

  	
   

  	
  March 4, 2009

  
	
   

  	
   

  	
   

  
	
  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 (“EPS”) for the year ended
  December 31, 2009 of at least $1.90 (“2009 EPS Target”); if the Company
  does not achieve the 2009 EPS Target in 2009, this tranche will vest if the
  Company achieves $1.90 of EPS in any subsequent calendar year up to and
  including calendar year 2018, (ii) the portion of this Award which vests
  on the 2nd 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 $2.00 per share (the “2010 EPS Target”);
  if the Company does not achieve the 2010 EPS Target in 2010, this tranche
  will vest if the Company achieves $2.00 of EPS in any subsequent calendar
  year up to and including calendar year 2018 and (iii) 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, 2011 of at least $2.10 per share (the 2011
  “EPS Target”); if the Company does not achieve the 2011 EPS Target in 2011,
  this tranche will vest if the Company achieves $2.10 of EPS in any subsequent
  calendar year up to and including calendar year 2018.

  



 


	
  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 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, 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

  



 


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  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 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

  



 


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  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.

  
	
   

  	
   

  	
   

  
	
  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 4, 2009 (“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: René Lerer

  
	
   

  	
  Title: President and Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  GRANTEE:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  
			



 


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