Exhibit 10.5
MAGELLAN HEALTH SERVICES, INC.
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2003 MANAGEMENT INCENTIVE PLAN
NOTICE OF STOCK OPTION GRANT
REFERENCE No. 200_-___-_ (____________)
As of January 5, 2004
NAME OF OPTIONEE:
SHARES SUBJECT TO OPTION: _______ shares of the Ordinary Common Stock of
Magellan Health Services, Inc. ("Shares")
TYPE OF OPTION: ___X___ Nonqualified ________ Incentive
EXERCISE PRICE PER SHARE: $ ________
DATE OF GRANT: As of January 5, 2004
DATE EXERCISABLE: This option shall be exercisable (prior to its
expiration) in whole or in part only to the
extent it is vested and, prior to the seventh
anniversary of the Date of Grant, only to the
extent the Trading Price on the date of
exercise (on or after the vesting date) exceeds
the Target Price, all as determined as provided
below. In addition, after termination of
Optionee's Service, this option shall be
exercisable (prior to its expiration) during
the time period and on the conditions specified
below (and only during such time period and on
such conditions, notwithstanding the provisions
of the Option Agreement governing the exercise
of an option after termination of service).
The Target Price shall be the amount equal to
the Exercise Price plus a cumulative return
thereon of 16% per annum, with daily
compounding, from the Date of Grant until the
date for determining the Trading Price
applicable to the exercise of the option. The
Trading Price applicable to the date of
exercise of the option shall be determined as
of the day on which the Shares traded
immediately preceding the exercise date based
on the Fair Market Value of the Shares for each
of the 20 consecutive trading days ending on
(and including) such trading date.
Exercise after termination of Service:
>> In the event Optionee's Service
terminates by reason of his
resignation, this option (to the
extent then vested and subject to
the foregoing condition for exercise
before the seventh anniversary of
the Date of Grant regarding the
Trading Price of the Shares) shall
be exercisable only until the later
of (i) 90 days following the date
Optionee's Service terminates by
reason of such resignation and (ii)
the 45th day following the first day
on or after the date Optionee's
Service so terminates when the
Optionee is not subject to a
prohibition imposed by the Company
on trading securities of the Company
and may sell the Shares acquired
upon exercise of the Option without
violation of Rule 10b-5 under the
Securities Exchange Act of 1934.
>> In the event Optionee's Service
terminates by reason of discharge by
the Company for cause, this option
shall cease to be exercisable (even
if vested and notwithstanding the
Trading Price at the time)
automatically upon the effective
date Optionee's Service so
terminates.
>> In the event Optionee's Service
terminates by reason of his death or
disability, this option shall vest
as provided below and remain
exercisable for two years following
such termination of Service (subject
to the foregoing condition for
exercise before the seventh
anniversary of the Date of Grant
regarding the Trading Price of the
Shares).
>> In the event Optionee terminates his
Service for good reason, unless such
termination of Service is in
connection with a change in control
of the Company, this option shall
vest as provided below and remain
exercisable for two years following
such termination of Service (subject
to the foregoing condition for
exercise before the seventh
anniversary of the Date of Grant
regarding the Trading Price of the
Shares).
>> In the event Optionee's Service
terminates by reason of discharge by
the Company without cause or
Optionee terminates his Service for
good reason (whether or not in
connection with a change in control
of the Company), this option shall
vest as provided below and remain
exercisable for three years
following such termination of
Service (subject to the foregoing
condition for exercise before the
seventh anniversary of the Date of
Grant regarding the Trading Price of
the Shares); provided, however,
that, upon the occurrence of a
change in control of the Company
before a termination of Optionee's
Service, this option shall vest as
provided below and remain
exercisable until its normal
expiration date and provided further
that the foregoing condition for
exercise before the seventh
anniversary of the Date of Grant
regarding the Trading Price of the
Shares shall no longer apply (and
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shall be deemed satisfied) upon any
subsequent termination of Optionee's
Service.
For purposes of determining when the foregoing
provisions concerning exercise after
termination of Service apply (including what
events constitute a change in control of the
Company and when a termination of Service is in
connection with a change in control of the
Company), the provisions of Optionee's
Employment Agreement dated as of January 5,
2004 shall apply (even in the event such
agreement has previously expired in accordance
with its terms).
VESTING: This option shall vest with respect to one-third (1/3) of
the Shares subject hereto on each of the first, second and
third anniversaries of the Date of Grant, provided that
Optionee's Service continues until the date of vesting,
except that, if Optionee's Service with the Company
terminates (i) by reason of his death or disability, (ii)
by reason of discharge by the Company without cause
(whether or not in connection with a change in control of
the Company) or (iii) by the Optionee for good reason
(whether or not in connection with a change in control of
the Company), this option shall immediately vest in full
upon such earlier termination in Service. In addition, in
the event of a change in control of the Company, this
option shall immediately vest in full.
For purposes of determining when the foregoing provisions
concerning acceleration of vesting apply (including what
events constitute a change in control of the Company and
when a termination of Service is in connection with a
change in control of the Company), the provisions of
Optionee's Employment Agreement dated as of January 5,
2004 shall apply (even in the event such agreement has
previously expired in accordance with its terms).
EXPIRATION DATE: January 5, 2014
OTHER TERMS: The provisions of Section 12 of the Plan and subsection
2(c) of the Stock Option Agreement shall not apply to this
option; the provisions of Optionee's Employment Agreement
with the Company dated as of January 5, 2004 shall instead
apply to any circumstance in which such provisions would
otherwise apply.
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By signing your name below, you accept this award and acknowledge and agree that
this award is granted under and governed by the terms and conditions of Magellan
Health Services, Inc. 2003 Management Incentive Plan and the related Stock
Option Agreement, reference number 2004-___, both of which are hereby made a
part of this document.
Optionee:
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Name:
MAGELLAN HEALTH SERVICES, INC.
By:
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Name: ___________________________
Title:
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