As filed with the Securities and Exchange Commission on September 27, 1996.
Registration Statement No. 33-__________
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MAGELLAN HEALTH SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 58-1076937
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
3414 Peachtree Road, N.E., Suite 1400
Atlanta, GA 30326
(Address of principal executive offices)
(Zip Code)
MAGELLAN HEALTH SERVICES, INC. 1996 STOCK OPTION PLAN
MAGELLAN HEALTH SERVICES, INC. 1997 EMPLOYEE STOCK PURCHASE PLAN
MAGELLAN HEALTH SERVICES, INC. 1996 DIRECTORS' STOCK OPTION PLAN
(Full title of the plans)
STEVE J. DAVIS
Executive Vice President -
Administrative Services and General Counsel
Magellan Health Services, Inc.
3414 Peachtree Road, N.E., Suite 1400
Atlanta, GA 30326
(Name and address of agent for service)
(404) 841-9200
(Telephone number, including area code, of agent for service)
Copies to:
HOWARD A. MCLURE
Vice President and Controller
Magellan Health Services, Inc.
3414 Peachtree Road, N.E., Suite 1400
Atlanta, GA 30326
-----------------------------------------------------
CALCULATION OF REGISTRATION FEE
(See next page)
-----------------------------------------------------
<PAGE>
(Continued from previous page)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------
Proposed Proposed
Title of maximum maximum
securities Amount offering aggregate Amount of
to be to be price offering registration
registered (2) registered per share (1) price (1) fee
- -------------- ---------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Common Stock, 2,600,000 $24.00 $49,866,125.00 $17,195.22
par value
$0.25 per share
- ------------------------------------------------------------------------------
</TABLE>
(1) Shares of Common Stock being registered with respect to the 1996 Stock
Option Plan consist of 1,285,000 shares having a weighted average
exercise price of $18.675 per share and 465,000 shares for which the
offering price is not known. Shares of Common Stock being registered
with respect to the 1997 Employee Stock Purchase Plan consist of
600,000 for which the offering price is not known. Shares of Common
Stock being registered with respect to the 1996 Directors' Stock Option
Plan consist of 125,000 shares having an exercise price of $18.25 per
share, 25,000 shares having an exercise price of $22.375, 25,000 shares
having an exercise price of $23.375, and 75,000 shares for which the
offering price is not known. Pursuant to Rule 457(h)(1), the aggregate
offering price of the 1,140,000 shares for which the offering price is
not known has been calculated pursuant to Rule 457(c) on the basis of
the average of the high and low sales prices of the Common Stock on the
American Stock Exchange on September 25, 1996.
(2) This Registration Statement, pursuant to Rule 416(c), shall be deemed
to register an indeterminate amount of interests under the Magellan
Health Services, Inc. 1997 Employee Stock Purchase Plan.
<PAGE>
Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents previously filed by Magellan Health Services,
Inc. (the "Registrant") with the Securities and Exchange Commission hereby are
incorporated by reference into this Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended September 30, 1995, as amended, on Form 10-K/A
filed on December 28, 1995;
(b) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1995; the Registrant's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1996, as amended on
Form 10-Q/A filed on May 15, 1996; and the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1996;
(c) All reports filed by the Registrant pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") since September 30, 1995; and
(d) The description of the Registrant's Common Stock, par value
$0.25 per share, contained in the Registrant's registration
statement on Form 8-A, effective on July 21, 1992 under the
Exchange Act, including any amendment or report filed for the
purpose of updating such description.
All documents filed by the Registrant subsequent to the date of this
Registration Statement pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Exchange Act and prior to the filing of a post-effective amendment which
indicates that all securities offered hereunder have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing of such documents.
Item 4. Description of Securities.
Inapplicable.
Item 5. Interests of Named Experts and Counsel.
Inapplicable.
Item 6. Indemnification of Directors and Officers.
The Registrant is a Delaware corporation. Section 145 of the Delaware
General Corporation Law (the "DGCL") provides that a Delaware corporation has
the power to indemnify its officers and directors in certain circumstances.
Subsection (a) of Section 145 of the DGCL empowers a corporation to
indemnify any director or officer, or former director or officer, who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of his service as director, officer, employee or agent of the
corporation, or his service, at the corporation's request, as a director,
officer, employee or agent of another corporation or enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such action, suit
or proceeding provided that such director or officer acted in good faith and
1
<PAGE>
in a manner reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding,
provided that such director or officer had no reasonable cause to believe his
conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
director or officer, or former director or officer, who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that such person acted in any of the capacities set forth
above, against expenses (including attorneys' fees) actually and reasonably
incurred in connection with the defense or settlement of such action or suit
provided that such director or officer acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification may be made in respect of any claim,
issue or matter as to which such director or officer shall have been adjudged to
be liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such director or officer is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
Section 145 further provides that, to the extent a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to in subsections (a) or (b) or in the defense of any claim,
issue or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith; provided that indemnification provided for by Section 145 or granted
pursuant thereto shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled; and empowers the corporation to purchase and
maintain insurance on behalf of a director or officer of the corporation against
any liability asserted against him or incurred by him in any such capacity or
arising out of his status as such whether or not the corporation would have the
power to indemnify him against such liabilities under Section 145.
Article VII of the Bylaws of the Registrant provides in substance that
the Registrant shall indemnify directors and officers against all liability and
related expenses incurred in connection with the affairs of the Registrant if:
(a), in the case of actions not by or in the right of the Registrant, the
director or officer acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Registrant, and (with
respect to a criminal proceeding) had no reasonable cause to believe his conduct
was unlawful; and (b), in the case of actions by or in the right of the
Registrant, the director or officer acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Registrant, provided that no indemnification shall be made for a claim as to
which the director or officer is adjudged liable for negligence or misconduct
unless (and only to the extent that) an appropriate court determines that, in
view of all the circumstances, such person is fairly and reasonably entitled to
indemnity.
In addition, Section 102(b)(7) of the DGCL permits Delaware
corporations to include a provision in their certificates of incorporation
eliminating or limiting the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, provided that such provisions shall not eliminate or limit the
liability of a director (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law,
(iii) for unlawful payment of dividends or other unlawful distributions, or (iv)
for any transactions from which the director derived an improper personal
benefit. Article Twelfth of the Registrant's Restated Certificate of
Incorporation contains such a provision.
The Registrant maintains Directors' and Officers' liability insurance
with various insurance providers in the aggregate amount of $60,000,000.
Item 7. Exemption from Registration Claimed.
Inapplicable.
2
<PAGE>
Item 8. Exhibits.
Exhibit Description
------- -----------
4.1 Restated Certificate of Incorporation of the Registrant, as
filed in Delaware on October 16, 1992, which was filed as
Exhibit 3(a) to the Registrant's Annual Report on Form 10-K for
the year ended September 30, 1992, and is incorporated herein
by reference.
4.2 Certificate of Ownership and Merger merging Magellan
Health Services, Inc. (a Delaware corporation) into
Charter Medical Corporation (a Delaware corporation),
as filed in Delaware on December 21, 1995, which was
filed as Exhibit 3(c) to the Registrant's Annual
Report on Form 10-K for the year ended September 30,
1995, and is incorporated herein by reference.
4.3 Form of Share Purchase Rights Plan among the
Registrant and First Union National Bank of North
Carolina, N.A., which was filed as Exhibit 2.5 to the
Registrant's Registration Statement on Form 8-A dated
July 6, 1992, and is incorporated herein by
reference.
4.4 Stockholders' Agreement, dated December 13, 1995,
among Green Spring Health Services, Inc., Blue Cross
and Blue Shield of New Jersey, Inc., Health Care
Service Corporation, Independence Blue Cross, Pierce
County Medical Bureau, Inc. and the Registrant, which
was filed as Exhibit 4(d) to the Registrant's
Quarterly Report on Form 10-Q for the quarterly
period ended December 31, 1995, and is incorporated
herein by reference.
4.5 Exchange Agreement, dated December 13, 1995, among Blue Cross
and Blue Shield of New Jersey, Inc., Health Care Service
Corporation, Independence Blue Cross, Pierce County Medical
Bureau, Inc. and the Registrant, which was filed as Exhibit
4(e) to the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended December 31, 1995, and is incorporated
herein by reference.
4.6 Stock and Warrant Purchase Agreement, dated December 22, 1995,
between the Registrant and Richard E. Rainwater, which was
filed as Exhibit 4(f) to the Registrant's quarterly report
on Form 10-Q for the quarterly period ended December 31, 1995,
and is incorporated herein by reference.
4.7 Amendment No. 1 to Stock and Warrant Purchase
Agreement, dated January 25, 1996, between the
Registrant and Rainwater-Magellan Holdings, L.P.,
which was filed as Exhibit 4.7 to the Registrant's
Registration Statement on Form S-3 dated February 26,
1996, and incorporated herein by reference.
4.8 Amendment No. 10, dated as of July 31, 1996, to
Second Amended and Restated Credit Agreement, dated
as of May 2, 1994, among the Registrant, Bankers
Trust Company, as agent, First Union National Bank as
co-agent, which was filed as Exhibit 4(b) to the
Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1996, and is
incorporated herein by reference.
4.9 Amendment No. 11, dated as of September 3, 1996, to Second
Amended and Restated Credit Agreement, dated as of May 2, 1994,
among the Registrant, Bankers Trust Company, as agent, First
Union National Bank as co-agent, which was filed as Exhibit (b)
12 to
3
<PAGE>
Registrant's Amendment No. 2 to Schedule 13E-4 dated September
5, 1996 and is incorporated herein by reference.
5.1 Opinion of Steve J. Davis as to the legality of shares of
Common Stock being registered.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Steve J. Davis (contained in opinion filed as
Exhibit 5).
99.1 1996 Stock Option Plan of the Registrant, which was filed as
Exhibit 10(a) to the Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 1996, and is
incorporated herein by reference.
99.2 1997 Employee Stock Purchase Plan of the Registrant.
99.3 1996 Directors' Stock Option Plan of the Registrant, which was
filed as Exhibit 10(b) to the Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1996,
and is incorporated herein by reference.
Experts
The audited consolidated financial statements and schedule of Magellan
Health Services, Inc. and subsidiaries included in the Magellan Annual Report on
Form 10-K for the year ended September 30, 1995 incorporated by reference in
this Registration Statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in giving said reports.
Future consolidated financial statements and schedules of Magellan
Health Services, Inc. and subsidiaries and the reports thereon of Arthur
Andersen LLP also will be incorporated by reference in this Registration
Statement in reliance upon the authority of that firm as experts in giving those
reports to the extent said firm has audited those financial statements and
consented to the use of their reports thereon.
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement;
and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the registration statement
4
<PAGE>
is on Form S-3 or Form S-8, and the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d)
of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Magellan
Health Services, Inc. certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Atlanta, State of Georgia, on the 25th day of
September, 1996.
MAGELLAN HEALTH SERVICES, INC.
By:/s/ Howard A. McLure
-------------------------------
Howard A. McLure
Vice President and Controller
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on September 25,
1996 in the capacities and on the date indicated.
/s/ E. Mac Crawford Date: September 25, 1996
- ------------------------------------- ------------------------------
E. Mac Crawford
President and Chairman of the Board
(Principal Executive Officer)
/s/ Craig L. McKnight Date: September 25, 1996
- ------------------------------------- ------------------------------
Craig L. McKnight
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
6
<PAGE>
/s/ Howard A. McLure Date: September 25, 1996
- ------------------------------------- ------------------------------
Howard A. McLure
Vice President and Controller
(Principal Accounting Officer)
/s/ Edwin M. Banks Date: September 25, 1996
- ------------------------------------- ------------------------------
Edwin M. Banks
Director
/s/ G. Fred DiBona, Jr. Date: September 25, 1996
- ------------------------------------- ------------------------------
G. Fred DiBona, Jr.
Director
/s/ Andre C. Dimitriadis Date: September 25, 1996
- ------------------------------------- ------------------------------
Andre C. Dimitriadis
Director
Date:
- ------------------------------------- ------------------------------
A. D. Frazier, Jr.
Director
/s/ Raymond H. Kiefer Date: September 25, 1996
- ------------------------------------- ------------------------------
Raymond H. Kiefer
Director
Date:
- ------------------------------------- ------------------------------
Gerald L. McManis
Director
Date:
- ------------------------------------- ------------------------------
Darla D. Moore
Director
7
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, the Plan
Administrator of the Registrant's 1997 Employee Stock Purchase Plan has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, hereunto duly authorized, in the City of Atlanta, State of Georgia,
on the 25th day of September, 1996.
MAGELLAN HEALTH SERVICES, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
By: /s/ Steve J. Davis
--------------------------------
Executive Vice President -
Administrative Services and
General Counsel
8
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description of Exhibit
- ------- ----------------------
4.1 Restated Certificate of Incorporation of the Registrant, as
filed in Delaware on October 15, 1992, which was filed as
Exhibit 3(a) to the Registrant's Annual Report on Form 10-K
for the year ended September 30, 1992, and is incorporated
herein by reference.
4.2 Certificate of Ownership and Merger merging Magellan Health
Services, Inc. (a Delaware corporation) into Charter Medical
Corporation (a Delaware corporation), as filed in Delaware on
December 21, 1995, which was filed as Exhibit 3(c) to the
Registrant's Annual Report on Form 10-K for the year ended
September 30, 1995, and is incorporated herein by reference.
4.3 Form of Share Purchase Rights Plan among the Registrant and
First Union National Bank of North Carolina, N.A., which was
filed as Exhibit 2.5 to the Registrant's Registration
Statement on Form 8-A dated July 6, 1992, and is incorporated
herein by reference.
4.4 Stockholders' Agreement, dated December 13, 1995, among Green
Spring Health Services, Inc., Blue Cross and Blue Shield of
New Jersey, Inc., Health Care Service Corporation,
Independence Blue Cross, Pierce County Medical Bureau, Inc.
and the Registrant, which was filed as Exhibit 4(d) to the
Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended December 31, 1995, and is incorporated herein by
reference.
4.5 Exchange Agreement, dated December 13, 1995, among Blue Cross
and Blue Shield of New Jersey, Inc., Health Care Service
Corporation, Independence Blue Cross, Pierce County Medical
Bureau, Inc. and the Registrant, which was filed as Exhibit
4(e) to the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended December 31, 1995, and is incorporated
herein by reference.
4.6 Stock and Warrant Purchase Agreement, dated December 22, 1995,
between the Registrant and Richard E. Rainwater, which was
filed as Exhibit 4(f) to the Registrant's quarterly report on
Form 10-Q for the quarterly period ended December 31, 1995,
and is incorporated herein by reference.
4.7 Amendment No. 1 to Stock and Warrant Purchase Agreement, dated
January 25, 1996, between the Registrant and
Rainwater-Magellan Holdings, L.P., which was filed as Exhibit
4.7 to the Registrant's Registration Statement on Form S-3
dated February 26, 1996, and incorporated herein by reference.
9
<PAGE>
4.8 Amendment No. 10, dated as of July 31, 1996, to Second Amended
and Restated Credit Agreement, dated as of May 2, 1994, among
the Registrant, Bankers Trust Company, as agent, First Union
National Bank as co-agent, which was filed as Exhibit 4(b) to
the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1996, and is incorporated
herein by reference.
4.9 Amendment No. 11, dated as of September 3, 1996, to Second
Amended and Restated Credit Agreement, dated as of May 2,
1994, among the Registrant, Bankers Trust Company, as agent,
First Union National Bank as co-agent, which was filed as
Exhibit (b) 12 to Registrant's Amendment No. 2 to Schedule
13E-4 dated September 5, 1996 and is incorporated herein by
reference.
5.1 Opinion of Steve J. Davis as to the legality of shares of
Common Stock being registered.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Steve J. Davis (contained in opinion filed as Exhibit 5.1).
99.1 1996 Stock Option Plan of the Registrant, which was filed as Exhibit
10(a) to the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1996, and is incorporated herein by
reference.
99.2 1997 Employee Stock Purchase Plan of the Registrant.
99.3 1996 Directors' Stock Option Plan of the Registrant, which was
filed as Exhibit 10(b) to the Registrant's Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1996, and
is incorporated herein by reference.
10
<PAGE>
September 24, 1996
Magellan Health Services, Inc.
3414 Peachtree Road, N.E.
Suite 1400
Atlanta, Georgia 30326
Re: Form S-8 Registration Statement
Ladies and Gentlemen:
I have acted as counsel for Magellan Health Services, Inc., a Delaware
corporation (the "Company"), in connection with the preparation of the
Registration Statement on Form S-8 (the "Registration Statement") filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
relating to: (i) 2,600,000 shares of Company Common Stock, $.25 per value per
share, (the "Shares") to be offered from time to time pursuant to the Magellan
Health Services, Inc. 1996 Stock Option Plan, the Magellan Health Services, Inc.
1996 Directors' Stock Option Plan and the Magellan Health Services, Inc. 1997
Employee Stock Purchase Plan (collectively, the "Plans"); and (ii) an
indeterminate amount of interests (the "Interests") in the Magellan Health
Services, Inc. 1997 Employee Stock Purchase Plan (the "Employee Stock Purchase
Plan") to be offered from time to time thereunder.
As counsel, I have examined and relied upon such records, documents,
certificates and other instruments as in my judgment are necessary or
appropriate to form the basis for the opinions hereinafter set forth. In all
such examinations, I have assumed the genuineness of signatures on original
documents and the conformity to such original documents of all copies submitted
to me as certified, conformed or photographic copies. As to certificates of
public officials, I have assumed the same to have been properly given and to be
accurate.
<PAGE>
Magellan Health Services, Inc.
September 24, 1996
Page 2
Based upon the foregoing, I am of the opinion that (i) the Shares, when
and to the extent issued and paid for pursuant to the provisions of the Plans,
will be validly issued, fully paid and non-assessable and (ii) that the Employee
Stock Purchase Plan confers legal Interests upon employees participating in that
Plan to the extent and upon the terms and conditions described therein.
Very truly yours,
/s/ Steve J Davis
----------------------------------------
Steve J. Davis
Executive Vice President - Administrative
Services and General Counsel
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement of our reports dated
November 9, 1995 (except with respect to the matters discussed in Note 13, as to
which the date is December 20, 1995) included in Magellan Health Services,
Inc.'s Annual Report on Form 10-K for the fiscal year ended September 30, 1995
and to all references to our firm included in this Registration Statement.
/s/ Arthur Andersen LLP
-----------------------
Atlanta, Georgia
September 24, 1996
<PAGE>
MAGELLAN HEALTH SERVICES, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The purpose of the Magellan Health Services, Inc. 1997
Employee Stock Purchase Plan (the "Plan"), is to provide employees of Magellan
Health Services, Inc. (the "Company") and its subsidiary companies with an
opportunity to be compensated through the benefits of stock ownership and to
acquire an interest in the Company through the purchase of Common Stock of the
Company. It is the intention of the Company to have the Plan qualify as an
"employee stock purchase plan" under Section 423 of the Internal Revenue Code of
1986 (the "Code"). The provisions of the Plan shall, accordingly, be construed
so as to extend and limit participation in a manner consistent with the
requirements of that section of the Code.
2. Definitions.
(a) "Base Pay" means the compensation payable to an employee
by the Company or a designated subsidiary (as defined in Code Section 424(f)) (a
"subsidiary") calculated at that employee's base salary or standard hourly rate
of compensation, but excluding overtime, commissions, shift differential,
incentive bonus compensation and compensation payable under any deferred
compensation or other fringe benefit plan.
(b) "Employee" means any person who is employed by the Company
or by any subsidiary of the Company designated from time to time by the
Committee (as defined in Section 13).
3. Eligibility.
(a) Any Employee who shall be employed on the 60th day
preceding the Offering Date of an Offering Period shall be eligible to
participate in the Plan for such Offering Period except that no Officer can
participate in the Plan. Notwithstanding the foregoing, the Committee, in its
sole discretion, may credit the employment service of persons employed by a
business acquired by the Company or by any subsidiary thereof for the purpose of
satisfying the 60-day rule herein. The term "Officer" shall mean the position of
Assistant Vice President and officer positions that are senior to the position
of Assistant Vice President with respect to the Company and Charter Behavioral
Health Systems, Inc., and also shall mean senior officers of Green Spring Health
Services, Inc. and Magellan Public Solutions, Inc.
(b) Any provision of the Plan to the contrary
notwithstanding, no Employee shall be granted an option:
(i) If, immediately after the grant such
Employee would own shares, and/or hold
outstanding options to purchase stock,
possessing 5% or more of the total combined
voting power or value of all classes of
shares of the Company or of any subsidiary
of the Company; or
1
<PAGE>
(ii) Which permits his rights to purchase shares
under all employee stock purchase plans of
the Company and its subsidiaries to accrue
at a rate which exceeds $25,000 of the fair
market value of the shares (determined at
the time such option is granted) for each
calendar year in which such stock option is
outstanding at any time.
4. Offering Periods. The Committee shall establish the Offering Periods
under the Plan which shall be of not less than three months nor more than twelve
months duration each, the first of which shall not begin before January 1, 1997,
and the last of which shall end not later than December 31, 1999. The beginning
date (the "Offering Date") and the ending date (the "Termination Date") of each
Offering Period shall be set in advance of each Offering Period by the
Committee.
5. Participation. An eligible Employee may become a participant only
by completing an election notice provided by the Company and filing it with the
designated representative of the Company no later than the date specified by the
Company in the election notice form.
Unless otherwise adjusted in accordance with Section 6(a), payroll
deductions for a participant with respect to an Offering Period shall commence
with the first pay date beginning on or after the Offering Date, and shall end
with the last pay date ending on or before the Termination Date, unless sooner
terminated by the participant as provided in Section 10. An eligible Employee
who becomes an Officer, as defined in Section 3(a), after becoming a participant
in accordance with this Section 5 shall terminate his participation in the Plan
as of the date such Employee becomes an Officer and shall be deemed to have
elected to withdraw in cash any payroll deductions then credited to his account
in accordance with Section 10. All Employees granted options under the Plan
shall have the same rights and privileges, except that the amount of stock which
may be purchased under such option may vary in a uniform manner as described in
Section 7.
6. Method of Payment. Payments for shares under the Plan may be made
only by payroll deductions, as follows:
(a) If a participant wishes to participate in the Plan, then
at the time he files his election notice, he shall elect to have deductions made
from his Base Pay at a rate, expressed as a percentage, not to exceed 10% of his
annualized Base Pay as of the Offering Date. Amounts withheld during the
one-month period immediately preceding the Termination Date in any Offering
Period may be applied to the purchase of shares on the Termination Date or to
the purchase of shares offered for the next subsequent Offering Period in a
manner as may be determined by the Committee, in its sole discretion.
(b) All payroll deductions made for a participant shall be
credited to his account under the Plan. A participant may not make any separate
cash payment into such account. A participant's account shall be no more than a
bookkeeping account maintained by the Company,
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and neither the Company nor any subsidiary shall be obligated to segregate or
hold in trust or escrow any funds in a participant's account.
(c) A participant's election to have deductions made from his
Base Pay shall be effective for all pay dates occurring during the Offering
Period which commences immediately following the filing, in accordance with
Section 5, of the participant's election notice and for each subsequent Offering
Period until such election is modified or revoked by the participant or until
such participant no longer meets the eligibility requirements of Section 3(a). A
participant may discontinue his participation in the Plan as provided in Section
10.
A participant may elect to change the rate of payroll deductions at such times
and in accordance with such rules as may be prescribed by the Committee; any
such change in the rate of payroll deductions shall be applicable only with
respect to Offering Periods commencing after a participant files with the
Committee an election notice requesting such change.
7. Granting of Option.
(a) Subject to any adjustment under Sections 12 or 17, on the
Offering Date for each Offering Period, a participant shall be granted an option
to purchase a number of whole shares determined by dividing the amount to be
withheld for participation in the Plan and applied to such Offering Period by
the option price per share of Common Stock determined in accordance with Section
7(b) but, in no event shall the maximum number of shares for which an option is
granted to a participant with respect to any single Offering Period exceed
two-hundred (200) shares for each full or partial month during the Offering
Period.
(b) The option price per share of shares purchased with
payroll deductions for a participant will be equal to the lesser of: (i) 85% of
the opening price of the Common Stock on the American Stock Exchange on the
Offering Date; or (ii) 85% of the opening price of the Common Stock on the
American Stock Exchange on the Termination Date. If no shares are traded on such
exchange on either such date, such price shall be determined on the last trading
date for such shares immediately preceding the Offering Date or the Termination
Date, as applicable.
8. Exercise of Option. Unless a participant gives written notice of
withdrawal pursuant to Section 10(a) or such participant's payroll deductions
are returned in accordance with Section 10(c), his option for the purchase of
shares during an Offering Period with payroll deductions will be exercised
automatically for him on the Termination Date of that Offering Period. The
automatic exercise shall, subject to Sections 12 and 17, be for the purchase of
the maximum number of full shares subject to his option which the sum of payroll
deductions credited to the participant's account on the Termination Date can
purchase at the option price.
9. Delivery. As promptly as practicable after the end of an Offering
Period, the Company will deliver the shares purchased upon the exercise of the
option to a designated broker selected by the Company to administer and hold
shares in individual accounts established for the benefit of each participant.
The Committee, in its sole discretion, may establish procedures to
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permit a participant to receive such shares directly. Amounts credited to the
participant's account in excess of the amount necessary to pay the option price
for the maximum number of full shares subject to his option shall either be
refunded to the participant or credited to the participant's account for the
next subsequent Offering Period as may be determined by the Committee, in its
sole discretion.
10. Withdrawal.
(a) A participant may withdraw payroll deductions credited to
his account under the Plan by giving written notice to the representative of the
Company designated on the election notice form. A participant may withdraw
amounts credited to his account at any time prior to the first day of the
calendar month ending on the Termination Date or such later date as may be
established by the Committee in its sole discretion. All of the participant's
payroll deductions credited to his account will be paid to him promptly after
receipt of his notice of withdrawal, and no further deductions will be made from
his pay during that Offering Period.
(b) A participant's withdrawal will not limit his eligibility
to participate in any similar plan which may hereafter be adopted by the Company
or in any subsequent Offering Period.
(c) Upon termination of the participant's employment during an
Offering Period for any reason, including death or retirement, the payroll
deductions credited to his account for such period will be returned to him or,
in the case of his death, to the person or persons entitled thereto under
Section 14. Notwithstanding the foregoing, the payroll deductions credited to
the account of any participant whose employment is terminated during the
calendar month ending on the Termination Date shall not be returned but shall
instead be used to purchase shares in accordance with Section 8.
11. No Interest. No interest shall be accrued or payable with
respect to amounts in a participant's account.
12. Stock.
(a) The shares of Common Stock to be sold to participants
under the Plan may, at the election of the Company, be either treasury shares or
shares originally issued for such purpose. The maximum number of shares which
shall be made available for sale under the Plan shall be 600,000 shares and the
maximum number of shares available for sale in each Offering Period shall be
determined by the Committee in its sole discretion, subject in each case to
adjustment upon changes in capitalization of the Company as provided in Section
17. If the total number of shares for which options are to be exercised for an
Offering Period in accordance with Section 8 exceeds the number of shares then
available under the Plan for such Offering Period, the Company shall make a pro
rata allocation of the shares available based on a fraction, the numerator of
which shall be the number of shares with respect to which a participant has an
option
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to purchase for an Offering Period and the denominator of which shall be the
number of shares available for purchase, with rounding down for each participant
to the nearest whole number.
(b) A participant will have no interest in shares covered by
an option until such option has been exercised.
13. Administration. The Plan shall be administered by a Committee (the
"Committee") consisting of not less than three members who shall be appointed by
the Chief Executive Officer of the Company. Each member of the Committee shall
be either a director, an officer, or an employee of the Company or of a
subsidiary thereof. The Committee shall be vested with full authority to make,
administer, and interpret such rules and regulations as it deems necessary to
administer the Plan, and any determination, decision, or action of the Committee
in connection with the construction, interpretation, administration, or
application of the Plan shall be final, conclusive, and binding upon all
participants and all persons claiming under or through any participant.
14. Designation of Beneficiary. A participant may file a written
designation of a beneficiary who is to receive any shares or cash to the
participant's credit under the Plan in the event of such participant's death
before, on, or after the Termination Date but prior to the delivery of shares
and, if applicable, cash. Such designation of beneficiary may be changed by the
participant at any time by written notice. Upon the death of a participant and
upon receipt by the Company of proof of the identity and existence at the
participant's death of a beneficiary validly designated by him under the Plan,
the Company shall deliver such shares or cash to the account of such
beneficiary. In the event of the death of a participant and in the absence of a
beneficiary validly designated under the Plan who is living at the time of such
participant's death, the Company shall deliver such shares or cash to the
account of the executor or administrator of the estate of the participant, or if
no such executor or administrator has been appointed (to the knowledge of the
Company) the Company, in its discretion, may deliver such shares or cash to the
account of the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent, or relative is known to the Company,
then to the account of such other person as the Company may designate. No
designated beneficiary shall, prior to the death of the participant by whom he
has been designated, acquire any interest in the shares or cash credited to the
participant under the Plan.
15. Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged, or
otherwise disposed of in any way by the participant. Any such attempted
assignment, transfer, pledge, or other disposition shall be without effect,
except that the Company may treat such act as an election to withdraw funds in
accordance with Section 10.
16. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose.
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17. Adjustments Upon Changes in Capitalization. In the event that the
outstanding shares of Common Stock of the Company are hereafter increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of a recapitalization,
reclassification, stock split, combination of shares, or dividend payable in
shares of Common Stock, an appropriate adjustment shall be made by the Committee
to the number and kind of shares as to which outstanding options shall be
exercisable and to the option price. No fractional shares shall be issued or
optioned in making the foregoing adjustments. All adjustments made by the
Committee under this paragraph shall be conclusive and binding on all
participants and all persons claiming under or through any participant.
Subject to any required action by the stockholders, if the Company
shall be a party to any reorganization involving merger, consolidation,
acquisition of the stock or acquisition of the assets of the Company, the
Committee in its discretion may declare (a) that all options granted hereunder
are to be terminated after giving at least ten days' notice to holders of
outstanding options, or (b) that any option granted hereunder shall pertain to
and apply with appropriate adjustment as determined by the Committee to the
securities of the resulting corporation to which a holder of the number of
shares of Common Stock subject to the option would have been entitled. The
adoption of a plan of dissolution or liquidation by the Board of Directors and
stockholders of the Company shall cause every option outstanding hereunder to
terminate on the fifteenth day thereafter, except that, in the event of the
adoption of a plan of dissolution or liquidation in connection with a
reorganization as provided in the preceding sentence, options outstanding
hereunder shall be governed by and shall be subject to the provisions of the
preceding sentence.
Any issue by the Company of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to any option, except as specifically provided
otherwise in this Section 17. The grant of an option pursuant to the Plan shall
not affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
18. Amendment or Termination. The Board of Directors of the Company may
at any time terminate or amend the Plan. No such termination can affect options
previously granted and no amendment can make any change in any option
theretofore granted which would adversely affect the rights of any participant.
No amendment can be made without prior approval of the stockholders of the
Company if such amendment would:
(a) Require the sale of more shares than are authorized
under Section 12; or
(b) Permit payroll deductions or cash payments at a rate
in excess of 10% of a participant's Base Pay.
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19. Notices. All notices or other communications by a participant to
the Company under or in connection with the Plan shall not be deemed to have
been duly given until actually received by the representative of the Company
designated on the election notice form provided by Section 5.
20. Missing Payee. If (i) the Company utilizes a designated broker to
administer and hold in individual accounts the shares purchased by the
participants, (ii) the Company subsequently cannot ascertain the whereabouts of
a participant whose account is held with the designated broker, (iii) after
three years from the date of the last purchase by such participant, a notice of
such account balance and pending action under this section is mailed to the last
known address of such person, as shown on the records of the designated broker
or the Company, and (iv) within three months after such mailing, such person has
not made written claim therefor, then the Committee may direct that such account
balance (including both shares and withholdings) otherwise due to such person be
canceled and returned to the Company. Upon such cancellation, the Company or the
designated broker shall have no further liability therefor, except that, in the
event such person, within one year of the date of the notice referred to in
(iii) above, notifies the Company or the broker of his whereabouts and requests
the amounts due to him under the Plan, the number of shares (as may be adjusted
to reflect any extraordinary corporate event or recapitalization) together with
any dividends or other accretions thereon and the amount of withholdings
contained in such account so canceled shall be delivered to him as provided
herein by the Plan.
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