Document:

xene-ex108a_857.htm

Exhibit 10.8A

 

 

SHARE OPTION AGREEMENT

 

THIS AGREEMENT made on [________]

 

AMONG:

 

Xenon Pharmaceuticals Inc., a company incorporated under the laws of Canada

 

(the “Company”)

 

AND:

 

«First_Name» «Last_Name» of «Address», «City», «StateProv» «Country» «ZipPostal»

 

(the “Optionee”)

 

WHEREAS:

 

	
A.
	
The Optionee is a director, officer, employee or Consultant of the Company or of a subsidiary of the Company or of an Affiliate of the Company or a person otherwise approved by the Board of Directors as “Eligible Persons”; and

 

	
B.
	
The Company considers that the grant to the Optionee of an option to purchase Common Shares in the capital of the Company will promote the interests of the Company by furnishing the Optionee with greater incentive to further develop and promote the business and financial success of the Company and by furthering the identity of interest of the Optionee with the shareholders of the Company generally through share ownership in the Company;

 

NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the mutual premises and respective covenants and agreements herein contained, the parties hereto covenant and agree as follows:

 

ARTICLE I

INTERPRETATION

 

	
1.1
	
Definitions

 

In this Agreement unless there is something in the subject matter or context inconsistent therewith, words and terms used herein will have the meanings set forth.  To the extent a capitalized term is used herein and not otherwise defined, it shall have the meaning prescribed under the Plan:

 

 

 

	
(1)
	
“Affiliate” has the meaning ascribed thereto under the Canada Business Corporations Act in effect on the date hereof;

 

	
(2)
	
“Board of Directors” means the board of directors of the Company for the time being;

 

	
(3)
	
“Business Day” means a day other than Saturday, Sunday and any other day which is a legal holiday in British Columbia;

 

	
(4)
	
“Common Shares” means common shares without par value in the capital of the Company;

 

	
(5)
	
“Expiry Date” means the close of business on ● or such later date as may be extended pursuant to the terms of the Plan;

 

	
(6)
	
“Option” means the option to purchase Common Shares granted by this Agreement;

 

	
(7)
	
“Option Exercise Form” has the meaning under Section 2.4 of this Agreement; 

 

	
(8)
	
“Plan” means the 2014 Equity Incentive Plan of the Company adopted by the Board of Directors on April 25, 2014, as the same may from time to time be supplemented or amended and in effect;

 

	
(9)
	
“Retirement” means retirement as an employee and/or officer of the Company, and if there is any question on whether a cessation of employment is by way of a retirement or not, the determination by the Chief Executive Officer (or in his absence or in the case of a situation involving the cessation of employment of an executive officer of the Company, the Compensation Committee of the Board of Directors or the independent members of the Board of Directors) shall be conclusive and binding on the Optionee;

 

	
(10)
	
“Separate Agreement” has the meaning under Section 2.2 of this Agreement; 

 

	
(11)
	
“subsidiary” has the meaning ascribed thereto under the Securities Act (British Columbia) as the same may from time to time be amended or re‐enacted.

 

	
1.2
	
Interpretation

 

For the purposes of this Agreement, except as otherwise provided:

 

	
(1)
	
“this Agreement” means this Share Option Agreement as it may from time to time be supplemented or amended and in effect, and which is deemed to be an Award Agreement in accordance with the Plan;

 

	
(2)
	
all references in this Agreement to “Articles”, “Sections” and other subdivisions are to the designated Articles, Sections and other subdivisions of this Agreement;

 

 

 

	
(3)
	
the words “herein”, “hereof”, “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision;

 

	
(4)
	
the headings are for convenience only and do not form a part of this Agreement and are not intended to interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof;

 

	
(5)
	
the singular of any term includes the plural, and vice versa, the use of any term is equally applicable to any gender and, where applicable, a body corporate, the word “or” is not exclusive and the word “including” is not limiting whether or not non‐limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto;

 

	
(6)
	
where the time for doing an act falls or expires on a day other than a Business Day, the time for doing such act is extended to the next day which is a Business Day;

 

	
(7)
	
any reference to a statute is a reference to the applicable statute and to any regulations made pursuant thereto and includes all amendments made thereto and in force from time to time and any statute or regulation that has the effect of supplementing or superseding such statute or regulation; and

 

	
(8)
	
any other capitalized terms not defined herein but defined in the Plan shall have the meaning as set out in the Plan.

 

ARTICLE II

THE OPTION

 

	
2.1
	
Grant

 

Subject to the provisions of this Agreement and all the terms of the Plan, the Company hereby grants to the Optionee an option to purchase «Options» Common Shares at an exercise price of $ ● per share. [NTD:  Add the following language if designated as such by the board in its resolutions: This Option is intended to be an Incentive Share Option for U.S. tax purposes.]

 

	
2.2
	
Expiry of Option

 

Subject to the terms of the Plan (including but not limited to section 7.1(e)(v) of the Plan), the provisions of this Agreement below, and/or any employment or service agreement, offer letter, change in control severance agreement, or any other agreement that, prior to the date of this Agreement, has been entered into between the Optionee and the Company or any subsidiary of the Company or any Affiliate of the Company (such agreement, a “Separate Agreement”), the Option will expire upon the earliest to occur of the following:

 

	
(1)
	
the Expiry Date;

 

 

	
(2)
	
the date which is 90 days after the Optionee ceases to be an “Eligible Person” due to termination of employment by the Company or any of its subsidiaries or any of its Affiliates without Cause or due to voluntary termination of employment by the Optionee (other than Retirement);

	
(3)
	
the date which is 180 days from the date Optionee ceases to be an “Eligible Person” due to Retirement; and

	
(4)
	
the date on which the Optionee ceases to be an “Eligible Person” due to termination of employment by the Company or any of its subsidiaries or any of its Affiliates for Cause or material breach of the Eligible Person’s duty to the Company or any of its subsidiaries or any of its Affiliates;

	
(5)
	
the date which is 365 days from the date Optionee ceases to be an “Eligible Person” due to disability; and

	
(6)
	
the date which is 365 days from the date Optionee ceases to be an “Eligible Person” due to death; 

however, in the event of the death of the Optionee occurring during the time period specified in subsections 2.2(2) and 2.2(4) above, subject to earlier expiry on the Expiry Date, the Option will expire on the date which is 365 days after the date the Optionee ceased to be an “Eligible Person”.

 

For greater certainty for the purpose of this Agreement and the Plan, the date on which the employment of an Optionee is terminated without Cause or pursuant to voluntary resignation shall be deemed to be the last day the Optionee actively works in the business of the Company, any of its subsidiaries or any of its Affiliates (or in the case of an alleged constructive dismissal, the date on which the alleged constructive dismissal is alleged to have occurred), and not during or as of the end of any period following such date during which the Optionee is in receipt of, or entitled to receive, statutory, contractual or common law notice of termination or any compensation in lieu of such notice.  

 

Further, and notwithstanding the above, and for greater certainty for the purposes of this Agreement and the Plan, if the Optionee’s employment is terminated by the Company, any of its subsidiaries or any of its Affiliates and prior thereto, concurrently therewith or immediately thereafter the Optionee commences employment with the Company, any of its subsidiaries or any of its Affiliates, as the case may be, the Optionee will not cease to be an “Eligible Person” and the determination of the expiry date of the Option pursuant to subsection 2.2(2) will not apply to such event.  

 

 

 

	
2.3
	
Nontransferability of Option

 

The Option is not transferable or assignable and is exercisable only by the Optionee or, in the event of the death of the Optionee or the appointment of a committee or duly appointed attorney of the Optionee or of the estate of the Optionee on the grounds that the Optionee is incapable, by reason of physical or mental infirmity, of managing his affairs, the Optionee's legal representative or such committee or attorney, as the case may be (the “Legal Representative”).

 

	
2.4
	
Manner of Exercise

 

Subject to the terms of the Plan, the Option may be exercised by (i) delivering to the Company, prior to the expiry of the Option, an option exercise form duly executed by the Optionee or its Legal Representative (the “Option Exercise Form”) substantially in the form of Schedule “A”  completed and executed in a manner acceptable to the Company, acting reasonably, or (ii) in a manner and pursuant to such procedures as the Board of Directors may determine, which will state the election to exercise the Option (with appropriate proof of completion of such exercise procedure) (the “Alternative Exercise Procedure”). The Option Exercise Form or the completion of the Alternative Exercise Procedure (as applicable) must be accompanied by payment in full for the number of Common Shares in respect of which the Option is being exercised in lawful currency of the United States of America, in cash, bank draft, certified cheque or other form of payment acceptable to the Company, made payable to the Company at its principal place of business at the time of the exercise of the Option.

 

Payment of the aggregate exercise price will be by any of the following, or a combination thereof, at the election of the Optionee: (a) cash; (b) cheque; (c) consideration received by the Company under a formal cashless exercise program adopted by the Company in connection with the Plan; or (d) surrender of other Common Shares which have a Fair Market Value Price on the date of surrender equal to the aggregate exercise price of the exercised Common Shares, provided that accepting such Common Shares, in the sole discretion of the Board of Directors, will not result in any adverse accounting consequences to the Company.

 

At the time the Optionee exercises the Option, in whole or in part, and at any time thereafter as requested by the Company, the Optionee hereby authorizes withholding from payroll and any other amounts payable to the Optionee by the Company, any of its subsidiaries or any of its Affiliates and otherwise agree to make adequate provision for any sums required to satisfy the U.S. and Canadian federal, provincial, state, local and foreign tax withholding obligations of the Company, its subsidiaries or its Affiliates, if any, which arise in connection with the exercise of the Option.

 

The Optionee may not exercise the Option unless the tax withholding obligations of the Company, any of its subsidiaries and/or any of its Affiliate are satisfied. Accordingly, the Optionee may not be able to exercise the Option when desired even though the Option is vested, and the Company will have no obligation to issue a certificate for such Common Shares, unless such obligations are satisfied.

 

 

 

	
2.5
	
Issuance of Shares

 

The Company will have no obligation to issue Common Shares upon the exercise of the Option unless the Board of Directors is satisfied that the issuance of such Common Shares to the Optionee will be exempt from all registration or qualification requirements of applicable securities laws and will be permitted under the applicable rules and regulations of all regulatory authorities to which the Company is subject, including any stock exchange or other organized market on which the Common Shares may from time to time be listed or posted for trading.  In particular, if required by any regulatory authority to which the Company is subject, including any stock exchange or other organized market on which the Common Shares may from time to time be listed or traded, shareholder approval to the grant of this Option must be obtained prior to the exercise of the Option or to the amendment of this Agreement.

 

	
2.6
	
Compliance with Laws

 

The Board of Directors may from time to time take such steps and require such documentation from the Optionee which in its opinion is necessary or desirable to ensure compliance with all applicable laws.  The Board of Directors may also from time to time take such steps which in its opinion are necessary or desirable to restrict the transferability of any Common Shares acquired on the exercise of any Option in order to ensure such compliance, including the endorsement of a legend on any certificate representing Common Shares acquired on the exercise of the Option to the effect that such Common Shares may not be offered, sold or delivered except in compliance with the applicable securities laws and regulations of Canada or the United States.

 

	
2.7
	
Delivery of Share Certificates

 

Subject to Sections 2.5 and 2.6, the Company will as soon as practicable after receipt of the Option Exercise Form or the confirmation of the completion of the Alternative Exercise Procedure and the payment referred to in Section 2.4 issue and deliver a certificate or certificates representing the Common Shares so purchased.

 

	
2.8
	
Vesting

 

Unless otherwise specified by the Board in the terms of grant and subject to the terms of the Plan and any Separate Agreement (if applicable), the Common Shares subject to the Options granted under this Agreement will vest and be available to the Optionee to purchase (prior to expiry of the Options as provided for in Section 2.2 above) as follows:

 

	
(1)
	
1/4 (one quarter) on first anniversary of the grant of the Option; and

 

	
(2)
	
1/48 (one forty-eighth) on a monthly basis over the three (3) years following the first anniversary of the grant of the Option, in equal amounts, on the last day of each month;

 

provided that: 

 

 

 

	
(3)
	
if the Optionee ceases to be an “Eligible Person” due to termination of employment by the Company or any of its subsidiaries or any of its Affiliates without Cause or alleged constructive dismissal or due to voluntary termination by the Optionee (other than Retirement), all Common Shares subject to Options granted under this Agreement which are not yet available for purchase as provided for above (the “Unvested Options”) will immediately be cancelled on the effective date of such termination, which shall be deemed to be the last day the Optionee actively works in the business of the Company, any of its subsidiaries or any of its Affiliates (or in the case of an alleged constructive dismissal, the date on which the alleged constructive dismissal is alleged to have occurred), and no statutory, contractual or common law notice entitlement or any entitlement to compensation in lieu of such notice shall operate to extend the vesting of Options past said deemed termination date;

 

	
(4)
	
if the Optionee ceases to be an “Eligible Person” due to voluntary termination of employment by the Optionee (other than Retirement), all Unvested Options will immediately be cancelled on the effective date of such termination;

 

	
(5)
	
if the Optionee ceases to be an “Eligible Person” due to termination by the Company, any of its subsidiaries or any of its Affiliates of the Optionee’s employment for Cause, all Unvested Options will immediately be cancelled on the date when the Company, its subsidiary or its Affiliate, as the case may be, notifies the Optionee of such termination;

 

	
(6)
	
if the Optionee ceases to be an “Eligible Person” due to Retirement, all Unvested Options will immediately be cancelled on the date of Retirement unless the Board of Directors has expressly granted continued vesting after Retirement in accordance with the schedule provided for in Subsections 2.8(1), (2) and (3) or such other schedule at the Board of Directors’ discretion;

 

	
(7)
	
if the Optionee ceases to be an “Eligible Person” due to disability or before the expiry of the period for exercise as provided for in Subsections 2.2(2) and 2.2(4) above, all Unvested Options will be immediately be cancelled on the date the Optionee ceases to be an Eligible Person; and

 

	
(8)
	
if the Optionee dies before ceasing to be an “Eligible Person” or before the expiry of the period for exercise as provided for in Subsections 2.2(2) and 2.2(4) above, all Unvested Options will be immediately cancelled on the date of death.

 

Notwithstanding the above, the vesting of the Common Shares subject to the Options shall be subject to any vesting acceleration provisions applicable to this Option contained in the Plan and/or any Separate Agreement.

 

 

 

Further, and notwithstanding the above, and for greater certainty for the purposes of this Agreement and the Plan, if the Optionee’s employment is terminated by the Company, any of its subsidiaries or any of its Affiliates and prior thereto, concurrently therewith or immediately thereafter the Optionee commences employment with the Company, any of its subsidiaries or any of its Affiliates, as the case may be, the Optionee will not cease to be an “Eligible Person” and the vesting of the Option will not change as a result of such event.

 

Further, and notwithstanding the above, the Board of Directors may at its discretion accelerate the period of time in which any Unvested Options may become exercisable, provided that the Board of Directors determines that such acceleration is appropriate and in the best interest of the Company in the circumstances and it is agreed and acknowledged that there is no obligation on the Board of Directors to exercise such discretion nor shall the Board of Directors be required to provide reasons for exercise or non-exercise of such discretion.

 

ARTICLE III

ADJUSTMENTS

 

	
3.1
	
Adjustments

 

This Agreement will be amended by the Company unilaterally (without the need of consent or notice to the Optionee) upon the occurrence of the events referred to in Section 10.3(a) of the Plan so that the rights of the Optionee hereunder, including the number of Common Shares that may be purchased on the exercise of the Option and the Exercise Price at which such Common Shares may be purchased, will be adjusted in accordance with the provisions set forth in the Plan.  Successive adjustments will be made in the case of the occurrence of more than one such event as provided for therein, but, in the case of each such event, only from and after the occurrence of such event.  Until the occurrence of such event, the rights of the Optionee hereunder, including the number of Common Shares that may be purchased on the exercise of the Option and the Exercise Price at which such Common Shares may be purchased, will remain unamended as set out herein.

 

 

 

ARTICLE IV

COVENANTS AND REPRESENTATIONS

 

	
4.1
	
Representations and Covenants of the Company

 

	
(1)
	
The Company hereby covenants that it will reserve or cause to be reserved for allotment sufficient Common Shares for issue to the Optionee of all Common Shares which are issuable from time to time under the Option.

 

	
(2)
	
The Company represents that the Optionee is a bona fide employee of the Company or of a subsidiary of the Company or of an Affiliate of the Company or an individual employed by a person which is providing management services to the Company (other than investor relations) or of a subsidiary of the Company or of an Affiliate of the Company or a person who is approved as an “Eligible Person” by the Board of Directors.

 

	
4.2
	
Representations and Covenants of the Optionee

 

The Optionee hereby represents and covenants that:

 

	
(1)
	
the Optionee is a director, officer, employee or Consultant of the Company or of a subsidiary of the Company or of an Affiliate of the Company or a person who is approved as an “Eligible Person” by the Board of Directors on the date of grant;

 

	
(2)
	
the Optionee’s participation in the Plan is voluntary and the Optionee has not been induced to enter into this Agreement by the expectation of employment or continued employment with the Company or any subsidiary of the Company or any Affiliate of the Company or any person providing management services to the Company or any subsidiary of the Company or any Affiliate of the Company;

 

	
(3)
	
the Optionee is aware that the grant of the Option and the issuance by the Company of Common Shares thereunder are exempt from the obligation under applicable securities laws to file a prospectus or other registration document (other than a registration statement on Form S-8 with the United States Securities and Exchange Commission) qualifying the distribution of the Options or the Common Shares to be distributed thereunder under any applicable securities laws and if such exemption for any reason becomes unavailable, the obligation of the Company to grant any Options or issue any Common Shares upon the exercise of an Option will cease; 

 

 

 

	
(4)
	
if the Optionee ceases to be an “Eligible Person” due to termination of employment by the Company, any of its subsidiaries or any of its Affiliates without cause or alleged constructive dismissal or due to voluntary termination by the Optionee (other than Retirement), the Optionee will not make any claims for continued vesting of Unvested Options past the effective date of such termination, which shall be deemed to be the last day the Optionee actively works in the business of the Company, any of its subsidiaries or any of its Affiliates (or in the case of an alleged constructive dismissal, the date on which the alleged constructive dismissal is alleged to have occurred), and will not make any claims for compensation in lieu of statutory, contractual or common law notice or damages relating thereto;

 

	
(5)
	
if the Optionee or the Legal Representative of the Optionee exercises the Option, the Optionee or the Legal Representative, as the case may be, will prior to and upon any sale or disposition of any Common Shares purchased upon the exercise of the Option, comply with all applicable securities laws and all applicable rules and regulations of all regulatory authorities to which the Company is subject, including any stock exchange or other organized market on which the Common Shares may be listed or posted for trading, and will not offer, sell or deliver any of such Common Shares, directly or indirectly, in the United States or to any citizen or resident of, or any company, partnership or other entity created or organized in or under the laws of, the United States, or any estate or trust the income of which is subject to United States federal income taxation regardless of its source, except in compliance with the securities laws of the United States; and

 

	
(6)
	
the Optionee agrees that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimizes the Optionee’s tax liabilities and the Optionee will not make any claim against the Company, any of its subsidiaries, any of its Affiliates or any of their respective officers, directors or employees related to tax liabilities arising from the Options or any of the Optionee’s other compensation.

 

 

 

 

ARTICLE V

MISCELLANEOUS

 

	
5.1
	
Special Provisions for Incentive Share Options

 

	
(1)
	
For U.S. taxpayers, if the Option is designated in this Agreement as an Incentive Share Option, this Option is intended to qualify as an Incentive Share Option under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).  However, if this Option is intended to be an Incentive Share Option, to the extent that it exceeds the $100,000 rule of Code Section 422(d) it will be treated as a Nonqualified Share Option. Further, if for any reason this Option (or portion thereof) will not qualify as an Incentive Share Option, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a Nonqualified Share Option granted under the Plan.  In no event will the Board of Directors, the Company, any of its subsidiaries, any of its Affiliates, any parent or any of their respective employees or directors have any liability to the Optionee (or any other person) due to the failure of the Option to qualify for any reason as an Incentive Share Option.

 

	
(2)
	
Further, if the Option granted to the Optionee herein is an Incentive Share Option, and if the Optionee sells or otherwise disposes of any of the Common Shares acquired pursuant to the Incentive Share Option on or before the later of (i) the date two (2) years after the grant date, or (ii) the date one (1) year after the date of exercise, the Optionee will immediately notify the Company in writing of such disposition. The Optionee agrees that the Optionee may be subject to U.S. and Canadian federal, provincial, state, local and foreign income tax withholding by the Company on the compensation income recognized by the Optionee.

 

	
5.2
	
Section 409A

 

Under Code Section 409A, an option that vests after December 31, 2004 (or that vested on or prior to such date but which was materially modified after October 3, 2004) that was granted with a per share exercise price that is determined by the U.S. Internal Revenue Service (the “IRS”) to be less than the fair market value of a share on the date of grant (a “Discount Option”) may be considered “deferred compensation.”  A Discount Option may result in (i) income recognition by the Optionee prior to the exercise of the option, (ii) an additional twenty percent (20%) federal income tax, and (iii) potential penalty and interest charges.  The Discount Option may also result in additional state income, penalty and interest charges to the Optionee. The Optionee acknowledges that the Company cannot and has not guaranteed that the IRS will agree that the Exercise Price of this Option equals or exceeds the Fair Market Value of a Share on the grant date in a later examination.  The Optionee agrees that if the IRS determines that the Option was granted with a per Share Exercise Price that was less than the Fair Market Value of a Share on the grant date, the Optionee will be solely responsible for the Optionee’s costs related to such a determination.

 

 

 

	
5.3
	
Notices

 

Any notice or other communication required or permitted to be delivered under this Agreement will be considered delivered only if in writing and when it is actually delivered (which delivery may be by telex, telecopy or other telecommunications device) to the attention of the party to whom it is intended at the principal business address of the Company, if addressed to the Company, or to the address specified above, if to the Optionee, or to such other address as such party may designate to the other party by notice in writing delivered in accordance with this Section.

 

	
5.4
	
Interpretation

 

Any question arising as to the interpretation of this Agreement will be determined by the Board of Directors and, absent manifest error, such determination will be conclusive and binding on the Company and the Optionee.

 

	
5.5
	
Further Assurances

 

Each of the parties hereto will, on demand by the other party hereto, execute and deliver all such further documents and instruments and do all such further acts and things as the party may either before or after the execution and delivery of this Agreement reasonably request to evidence, carry out and give full effect to the terms, conditions, intent and meaning of this Agreement.

 

	
5.6
	
Severability

 

If any provision of this Agreement is determined to be void, illegal or unenforceable, such provision will be construed to be separate and severable from this Agreement and will not impair the validity, legality or enforceability of any other provision of this Agreement and the remainder of this Agreement will continue to be binding on the parties hereto as if such provision had been deleted.

 

	
5.7
	
No Assignment

 

Neither this Agreement nor the Option may be assigned, transferred or charged in whole or in part by the Optionee, and any purported assignment, transfer or charge shall cause this Agreement and the Option to lapse forthwith and be null and void after that time.

 

	
5.8
	
Amendment

 

No amendment shall be made to this Agreement unless all applicable rules and regulations of all regulatory authorities to which the Company is subject have been complied with.

 

 

 

	
5.9
	
Burden and Benefit

 

This Agreement will be binding upon and will enure to the benefit of the Company and its successors and assigns and the Optionee and, if applicable, his Legal Representative.

 

	
5.10
	
Time

 

Time will be of the essence in this Agreement.

 

	
5.11
	
Governing Law and Jurisdiction

 

This Agreement and all matters arising hereunder will be governed by and construed in accordance with the laws of the Province of British Columbia.  Subject to any written agreement between the parties, the parties will submit all their disputes arising out of or in connection with this Agreement to the exclusive jurisdiction of the courts of British Columbia.

 

	
5.12
	
Electronic Delivery and Acceptance

 

The Company may, in its sole discretion, decide to deliver any documents related to Options awarded under the Plan or future options that may be awarded under the Plan by electronic means or request the Optionee’s consent to participate in the Plan by electronic means, including, without limitation, by posting them on a website maintained by the Company or a third party under contract with the Company or through such methods indicated in this Agreement.  The Optionee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through any on-line or electronic system established and maintained by the Company or a third party designated by the Company.

 

If the Company posts such documents on a website, it shall notify Participant by e-mail or such other reasonable manner as then determined by the Company.

 

	
5.13
	
Incorporation of the terms of the Plan

 

This Agreement shall be deemed to have incorporated all the terms of the Plan and the Options granted hereunder shall be subject to the terms of the Plan.  In the event of any conflict between the provisions of this Agreement and the terms of the Plan, the terms of the Plan shall govern.

 

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

 

XENON PHARMACEUTICALS INC.

 

 

By:  ____________________________

Title: Corporate Secretary

 

		
	
Signed by «First_Name» «Last_Name»

in the presence of:

 

_______________________________________

Name

 

_______________________________________

Address

 

_______________________________________

 

 
	
)

)

)

)

)

)  _______________________________

)  «First_Name» «Last_Name»

)

)

)

 

 

SCHEDULE “A”

 

OPTION EXERCISE FORM

 

		
	
TO:
	
Xenon Pharmaceuticals Inc.

200-3650 Gilmore Way

Burnaby, BC, V5G 4W8

 

The undersigned hereby irrevocably gives notice, pursuant to the 2014 Equity Incentive Plan (the “Plan”) of Xenon Pharmaceuticals Inc. (the “Company”) and the share option agreement between the Company and the undersigned made on the ______ day of ___________________, 20______ (the “Share Option Agreement”), of the exercise of the option (the “Option”) granted to the undersigned pursuant to the Plan and the Share Option Agreement and hereby irrevocably agrees to purchase (select applicable item):

all of the common shares; or

____________ of the total number of common shares which may be purchased under the Option.

Calculation of total Exercise Price (as defined in the Plan):

			
	
number of common shares to be acquired on exercise: 
	
____________ 
	
common shares

	
times the exercise price per common share: 
	
$ ____________
	
 

	
TOTAL EXERCISE PRICE, enclosed herewith: 
	
$ ____________
	
 

 

The undersigned tenders to Xenon Pharmaceuticals Inc. herewith an amount equal to the total exercise price for the common shares being purchased, as calculated above, plus any amounts necessary to satisfy the tax withholding  obligations in connection with such purchase.  The exercise price may be satisfied pursuant to any of the authorized means set forth under Section 2.4 of the Share Option Agreement.  

The undersigned directs the Company to issue the share certificate evidencing the common shares in the name of the undersigned to be mailed to the undersigned at the following address:

	
	
 

	
 

	
 

	
 

 

 

 

Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the common shares, no right to vote or receive dividends or any other rights as a shareholder will exist with respect to the common shares subject to the Option, notwithstanding the exercise of the Option.  The common shares so acquired will be issued in the name so designated above as soon as practicable after exercise of the Option.  No adjustment will be made for a dividend or other right for which the record date is prior to the date of issuance, except as provided in Section 10.3(a) of the Plan.

The undersigned understands that the undersigned may suffer adverse tax consequences as a result of the purchase or disposition of the common shares.  The undersigned represents that the undersigned has consulted with any tax consultants the undersigned deems advisable in connection with the purchase or disposition of the common shares and that the undersigned is not relying on the Company, any of its subsidiaries or any of its Affiliates for any tax advice.

This notice and all matters arising hereunder will be governed by and construed in accordance with the laws of the Province of British Columbia.  Subject to any written agreement between the parties, the parties will submit all their disputes arising out of or in connection with this notice to the exclusive jurisdiction of the courts of British Columbia.

DATED the ______ day of ____________, ______

			
	
 
	
 
	
 

	
Signature of Witness
	
 
	
Signature of Participant

	
 

 
	
 
	
 

	
Name of Witness (please print)
	
 
	
Name of Participant (please print)mgln_Ex10_1

		
			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.
		

		
			
		

		
			

		 

 

		

		
			(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:

				
	
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				

		
			 
		

		
			 
		

		 

		

			12

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