8-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 8K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT — September 25, 2003
(Date of Earliest Event Reported)MAGELLAN HEALTH SERVICES, INC.(Exact name of registrant as specified in its charter)

Commission File No. 1-6639

Delaware	58-1076937
(State of Incorporation)	(I.R.S. Employer Identification No.)
6950 Columbia Gateway Drive Suite 400 Columbia, Maryland	21046
(Address of principal executive offices)	Zip Code
Registrant’s telephone number, including area code:  (410)  953-1000

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Item 5.            Other Events and Required Regulation FD Disclosure.

On September 25, 2003, Magellan Health Services, Inc. (“Magellan”), filed with the U.S. Bankruptcy Court for the Southern District of New York(the “Court”) certain exhibits to its Third Joint Amended Plan of Reorganization (the “Plan”).  Magellan filed with the Court its plan of reorganization and a proposed Disclosure Statement with respect to the Plan on August 18, 2003.  A copy of the Third Joint Amended Joint Plan of Reorganization and a copy of the Disclosure Statement with respect to the Third Joint Amended Joint Plan of Reorganization, each as filed with the Court, were filed with the U.S. Securities and Exchange Commission as Exhibits 2(a) and 2(b), respectively, to Magellan’s Current Report on Form 10-Q dated August 19, 2003.

The exhibits to the Plan filed with the court by Magellan include:  (i) the form of the certificate of incorporation and bylaws for Magellan as it will be reorganized under the Plan, (ii) the form of indenture with respect to new notes which may be issued under the Plan, (iii) the form of warrant agreement with respect to warrants potentially to be issued under the Plan to holders of Magellan preferred stock and common stock in partial exchange for such interests, (iv) the form of management incentive plan to be established for the management of the reorganized company, (v), the form of new note to be issued to Aetna Inc. (“Aetna”) under the Plan, (vi) the form of warrant for Aetna to purchase 1.0% of the common stock of the reorganized company, (vii) the form of master service agreement, dated as of August 5, 1997, by and among Aetna, Magellan and Magellan’s subsidiary Human Affairs International, as amended, (viii) the form of registration rights agreement which Magellan will enter into for the benefit of certain holders of common shares of Magellan upon consummation of the Plan, (ix) the form of employment agreement for Steven J. Shulman, Dr. Rene Lerer and Mark S. Demilio, the senior executives of Magellan, as discussed below, (x) the form of equity commitment letter and definitive subscription agreement by and between Magellan and Onex Corporation, which implements the equity commitment letter.  Each of these matters is discussed in the Disclosure Statement.  A copy of each of these exhibits is attached hereto as Exhibits 99.1, 99.2, 99.3, 99.4, 99.5, 99.6, 99.7, 99.8, 99.9, 99.10, 99.11, 99.12 respectively, and are incorporated by reference herein.

In connection with this filing, Magellan advised the court that material terms of the employment agreements between Magellan and each of Steve Shulman, Rene Lerer and Mark S. Demilio are still being negotiated.  There can be no assurance that a final agreement will be reached related to their continued employment for a period extending beyond the 45 days after the consummation of the Plan to which they have already committed to continue in Magellan’s employ.  Magellan will disclose, at or prior to the October 8, 2003 confirmation hearing on the Plan, whether there have been agreements as to their employment and the final terms of such employment.

Magellan did not file certain of the exhibits provided for by the Plan.  A form of senior secured credit agreement was not filed because it intends to pay its senior secured lenders in full, in cash.  However, a new form of senior secured credit agreement will be filed at a later date in the event they determine it is necessary.  Forms of guarantees and security agreements related to the new note to be issued to Aetna under

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the Plan and Aetna’s option to purchase Aetna-dedicated business were not filed, pending agreement on them between Aetna and Magellan, with the consent of Onex Corporation and the official unsecured creditors’ committee, and will be filed at a later date.

As previously disclosed, the Court approved the Disclosure Statement with respect to the Plan on August 19, 2003.  On August 29, 2003, Magellan circulated the Disclosure Statement to Magellan’s creditors to solicit their votes on whether to approve the Plan.  On September 4, 2003, Disclosure Statements were sent to certain additional creditors who were originally mistakenly sent mailings for an unimpaired class of creditors.  The voting deadline is 4:00 p.m. (Eastern Time) on September 30, 2003 for those creditors whose disclosure statements were sent on August 29, 2003 and 4:00 p.m. (Eastern Time) on October 6, 2003 for those whose disclosure statements were sent on September 4, 2003.  The deadline for parties in interest to object to the Plan was 4:00 p.m. (Eastern Time) September 25, 2003 for those creditors whose disclosure statements were sent on August 29, 2003 and  not extended and remains 4:00 p.m. (Eastern Time) on October 6, 2003 for those whose disclosure statements were sent on September 4, 2003.  A hearing on confirmation of the Plan is scheduled for October 8, 2003.  If the Plan is confirmed at or about the time of the scheduled hearing, Magellan currently expects that the Plan will become effective during the fourth quarterof 2003.

Item 7.            Financial Statements,Pro Forma Financial Information and Exhibits.

(a)	Financial Statements
	Not applicable.
(b)	Pro Forma Financial Information
	Not applicable
(c)	Exhibits.

Exhibit No.	Description
99.1	Form of Amended and Restated Certificate of incorporation of Magellan Health Services, Inc., as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003
99.2	Form of Amended and Restated By-Laws of Magellan Health Services, Inc., as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003

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99.3	Form of Indenture between Magellan Health Services, Inc. and HSBC Bank or another indenture trustee, as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003
99.4	Form of Warrant Agreement between Magellan Health Services, Inc. and a warrant agent, as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003
99.5	Form of New Long-Term Incentive Plan of Magellan Health Services, Inc., as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003
99.6	Form of New Aetna Note to be issued by Magellan Health Services, Inc. to Aetna Inc. with a final maturity date of December 31, 2005, as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003
99.7	Form of New Aetna Warrant to purchase 1.0% of the common stock of Magellan Health Services Inc., exercisable on or after January 1, 2006, as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003
99.8	Form of Master Service Agreement, dated as of August 5, 1997, by and among Aetna, Magellan Health Services, Inc. and HAI, as amended, , as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003 (incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K dated March 12, 2003).
99.9	Form of Registration Rights Agreement among Magellan Health Services, Inc., Onex American Holdings II LLC, Aetna, Inc., and               , as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003
99.10	Form of Employment Agreement for Steven J. Shulman, Dr. Rene Lerer and Mark S. Demilio, as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003

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99.11	Equity Commitment Letter dated July 14, 2003, by and between Magellan Health Services, Inc. and Onex Corporation (incorporated by reference to Exhibit 99.1 to the Company’s current report on Form 8-K dated July 3, 2003)
99.12	Form of Definitive Subscription Agreement by and between Magellan Health Services, Inc. and Onex Corporation

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

MAGELLAN HEALTH SERVICES, INC.
By:	/s/ Mark S. Demilio
	Name:	Mark S. Demilio
	Title:	Chief Financial Officer

Dated:  September 25, 2003

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Form of Amended and Restated Certificate of incorporation of Magellan Health Services, Inc., as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003
99.2	Form of Amended and Restated By-Laws of Magellan Health Services, Inc., as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003
99.3	Form of Indenture between Magellan Health Services, Inc. and HSBC Bank or another indenture trustee, as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003
99.4	Form of Warrant Agreement between Magellan Health Services, Inc. and a warrant agent, as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003
99.5	Form of New Long-Term Incentive Plan of Magellan Health Services, Inc., as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003
99.6	Form of New Aetna Note to be issued by Magellan Health Services, Inc. to Aetna Inc. with a final maturity date of December 31, 2005, as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003
99.7	Form of New Aetna Warrant to purchase 1.0% of the common stock of Magellan Health Services Inc., exercisable on or after January 1, 2006, as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003

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99.8	Form of Master Service Agreement, dated as of August 5, 1997, by and among Aetna, Magellan Health Services, Inc. and HAI, as amended, , as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003 (incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K dated March 12, 2003).
99.9	Form of Registration Rights Agreement among Magellan Health Services, Inc., Onex American Holdings II LLC, Aetna, Inc., and               , as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003
99.10	Form of Employment Agreement for Steven J. Shulman, Dr. Rene Lerer and Mark S. Demilio, as filed with the U.S. Bankruptcy Court for the Southern District of New York on September 25, 2003
99.11	Equity Commitment Letter dated July 14, 2003, by and between Magellan Health Services, Inc. and Onex Corporation (incorporated by reference to Exhibit 99.1 to the Company’s current report on Form 8-K dated July 3, 2003)
99.12	Form of Definitive Subscription Agreement by and between Magellan Health Services, Inc. and Onex Corporation

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EX-99.1

EXHIBIT 99.1

Form of Amended Certificate of Incorporation of Reorganized Magellan

(Sept. 25, 2003)

AMENDED AND RESTATED CERTIFICATE  OF INCORPORATION

OF

MAGELLAN HEALTH SERVICES, INC.

1.  The name of the Corporation is Magellan Health Services, Inc. (the “Corporation”).  [The name under which the Corporation was originally incorporated was                  .]   The original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on [                         ,] 1969 (the “Original Certificate of Incorporation.”.

2.  This Amended and Restated Certificate of Incorporation amends and restates the Original Certificate of Incorporation, as amended to date, and has been duly adopted in accordance with Sections 242, 245 and 303 of the DGCL, without approval of the stockholders thereof pursuant to the authority granted to the Corporation under Section 303 of the DGCL to put into effect and carry out the Third Amended Plan of Reorganization of the Corporation dated as of August 18, 2003 (the “Plan”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”), as confirmed on [                 , 2003] by order (the “Order”) of the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) (Case No. 03-40515 (PCB)).  Provision for the making of this Amended and Restated Certificate of Incorporation is contained in the Order.

3.  All previously outstanding shares of capital stock of the Corporation will be cancelled on the Effective Date (as defined in Article Tenth hereof).

4.  The text of the certificate of incorporation of the Corporation as amended and restated by this Amended and Restated Certificate of Incorporation reads in its entirety as follows:

ARTICLE FIRST:Name.  The name of the Corporation is Magellan Health Services, Inc.

ARTICLE SECOND:  Registered Office.  The location and post office address of its registered office in this State is [Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware  19801 in New Castle County, Delaware].

ARTICLE THIRD:Purposes.  The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware, as from time to time amended (“DGCL”).

ARTICLE FOURTH:Duration.  The term of its existence is perpetual.

ARTICLE FIFTH: Authorized Stock.

Part A:  Authorized Number of Shares.  The total number of shares of capital stock that the Corporation shall have the authority to issue is 50,000,000 shares, consisting of:  (i) 20,000,000 shares of Ordinary Common Stock, par value $.01 per share (the “Ordinary Common Stock”), (ii) 20,000,000 shares of  Multiple and Variable Vote Restricted Convertible Common Stock, par value $.01 per share (the “Multi-Vote Common Stock”) and (iii) 10,000,000 shares of Preferred Stock, par value $.01 per share (the “Preferred Stock”).  The Ordinary Common Stock and the Multi-Vote Common Stock are hereinafter referred to collectively as “Common Stock.” and no other class or series of capital stock of the Corporation shall be considered as “Common Stock” for purposes of the certificate of incorporation of the Corporation.  No share of Multi-Vote Common Stock shall be issued by the Corporation at any time when there is not already outstanding a share of Multi-Vote Common Stock (except for the initial issuance of shares of Multi-Vote Common Stock as provided by the Plan in connection with the consummation of the reorganization of the Company under the Plan on or about the Effective Date (as defined in Article Tenth hereof)).

Part B:  Certain Definitions.  As used in this Amended and Restated Certificate of Incorporation, the following capitalized terms have the following respective meanings:

(1)“Affiliate” shall have the meaning ascribed thereto by Rule 12b-2 (as in effect on the Effective Date) promulgated under the Exchange Act.

(2)“Business Day”shall mean any day other than a Saturday, a Sunday, or any day on which banking institutions in Columbia, Maryland are required or authorized to close by law or executive order.

(3)“Control.”  The term “control” (including the term “controlled by”), means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.

(4)“Equity Investor” means Onex American Holdings II LLC, a Delaware limited liability company, and a subsidiary of Onex.

(5)“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).

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(6)“Minimum Hold Condition” means, at any time, the state of affairs where (i) the number of outstanding shares of Multi-Vote Common Stock is at least 15.33% of the total number of shares of Common Stock issued on the Effective Date and (ii) the number of outstanding shares of Multi-Vote Common Stock is at least 10% of the aggregate number of shares of Common Stock then outstanding.  The Minimum Hold Condition is not met if, at any time, the requirements of clause (i) or of clause (ii) of the immediately preceding sentence is not satisfied.

(7)“Onex” means Onex Corporation, a corporation organized and existing on the Effective Date under the laws of the Province of Ontario, Canada, and any successor to all or substantially all the assets and business thereof, including any interest owned by Onex in the shares of capital stock of the Corporation.

(8)“Onex Group” means the Equity Investor, Onex, Onex Partners and any entity at the time controlled by the Equity Investor, Onex or Onex Partners, each of which shall be considered “a member of the Onex Group” for purposes hereof.   For purposes hereof, Onex shall be deemed to control any entity controlled by Mr. Gerald W. Schwartz so long as Mr. Gerald W. Schwartz controls Onex.

(9)“Onex Partners” means Onex Partners LP, a limited partnership organized and existing on the Effective Date under the laws of the State of Delaware, and any successor to all or substantially all the assets and business thereof, including any interest owned by Onex Partners in shares of capital stock of the Corporation.

(10)“R Squared” shall mean R² Investments, LDC (“Investments”), a limited duration company organized and existing on the Effective Date under laws of the Cayman Island, Amalgamated Gadget, L.P. (“Amalgamated”), a limited partnership organized and existing on the Effective Date under the laws of the State of Texas and the investment manager of Investments, or any entity controlling, controlled by or under common control with Investments or Amalgamated, as well as any successor to all or substantially all the assets thereof, including any interest owned by R Squared in the shares of capital stock of the Corporation.

(11)“Transfer” with respect to shares of Common Stock means to sell, assign, donate, contribute, place in trust (including a voting trust), or otherwise voluntarily or involuntarily dispose of, directly or indirectly, such shares and shall include in the case of any member of the Onex Group other than Onex or Onex Partners that holds Multi-Vote Common Stock a change in control of such entity such that it is no longer within the Onex Group.

Part C:Powers, Privileges and Rights of the Common Stock.  All shares of Common Stock (both shares of Ordinary Common Stock and shares of Multi-Vote Common Stock ) will be identical in all respects and will entitle the holders thereof to the same powers, privileges and rights, except as otherwise provided by law or the following provisions of this article or any other provision of the Corporation’s certificate of incorporation from time to time in effect.  Without limiting the foregoing provisions of

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this paragraph, whenever any dividend or distribution (including any distribution upon liquidation, dissolution or winding up of the Corporation or upon the reclassification of shares or a recapitalization of the Corporation) is made on the shares of Ordinary Common Stock, a like dividend or distribution shall be made on the shares of Multi-Vote Common Stock, and, whenever any dividend or distribution is made on the shares of Multi-Vote Common Stock, a like dividend or distribution shall be made on the shares of Ordinary Common Stock; provided, however, that at any time when shares of Multi-Vote Common Stock are outstanding no dividend or other distribution shall be payable in shares of Ordinary Common Stock or Multi-Vote Common Stock or securities convertible into, exchangeable for or exercisable to acquire shares of Ordinary Common Stock or Multi-Vote Common Stock (including a distribution pursuant to a stock split or a division of such class of stock or a recapitalization of the Corporation), unless only shares of Ordinary Common Stock or securities convertible into, exchangeable for or exercisable to acquire shares of Ordinary Common Stock shall be distributed with respect to any outstanding shares of Ordinary Common Stock and simultaneously only a like number per share of shares of Multi-Vote Common Stock or securities convertible into, exchangeable for or exercisable to acquire shares of Multi-Vote Common Stock and otherwise in all material respects having the same powers, privileges and rights as the securities distributed with respect to the shares of Ordinary Common Stock shall be distributed with respect to any outstanding shares of Multi-Vote Common Stock.  The Corporation shall not subdivide or combine (by stock split, reverse stock split, recapitalization, merger, consolidation or other transaction) its shares of Ordinary Common Stock or Multi-Vote Common Stock, as the case may be, without in the same manner subdividing or combining its shares of Multi-Vote Common Stock or Ordinary Common Stock, respectively.

Section 1:Mandatory Conversion and Optional Conversion of Shares of Multi-Vote Common Stock; Mandatory Conversion of Certain Shares of Ordinary Common Stock.

(a)Upon the Transfer of a share of Multi-Vote Common Stock to any person other than a member of the Onex Group, such share of Multi-Vote Common Stock Transferred shall automatically, and without any notice to or action by the Corporation, the holder thereof or any other person (other than the effectuation of the Transfer), convert into one share of Ordinary Common Stock.  The Corporation shall not register or otherwise give effect to a Transfer of shares of Multi-Vote Common Stock referred to in the foregoing sentence without reflecting the conversion of such shares into shares of Ordinary Common Stock and, as soon as practicable after the Corporation has knowledge of any purported Transfer of shares of Multi-Vote Common Stock as to which conversion of such shares into shares of Ordinary Common Stock is required, shall effectuate the conversion of such shares.  For the purpose of effectuating the conversion of shares of Multi-Vote Common Stock into shares of Ordinary Common Stock in accordance with the provisions of this paragraph, the provisions of paragraph (e) of this section shall apply.  The Corporation shall require a legend on any certificate representing shares of

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Multi-Vote Common Stock indicating that the Transfer thereof may require conversion of such shares into shares of Ordinary Common Stock as provided by this paragraph.

(b)In the event any member of the Onex Group shall acquire any share of Ordinary Common Stock, including pursuant to a conversion as provided for in clause (c) of this section, at a time when a share of  Multi-Vote Common Stock is outstanding, the share of Ordinary Common Stock so acquired shall automatically, and without any notice to or action by the Corporation, the holder thereof or any other person (other than the effectuation of the acquisition of the share of Ordinary Common Stock), convert into one share of Multi-Vote Common Stock.  For the purpose of effectuating the conversion of shares of Ordinary Common Stock into shares of Multi-Vote Common Stock in accordance with the provisions of this paragraph, the provisions of paragraph (e) of this section shall apply.

(c)Each holder of fully paid and non-assessable shares of Multi-Vote Common Stock shall be entitled to convert at any time and from time to time, at the option of the holder thereof and in the manner provided by paragraph (d) of this section, all, but not less than all, of such holder’s shares of Multi-Vote Common Stock into shares of fully paid and non-assessable Ordinary Common Stock at the ratio of one share of Ordinary Common Stock for each share of Multi-Vote Common Stock so converted.

(d)The right to convert shares of Multi-Vote Common Stock into shares of Ordinary Common Stock as provided by paragraph (c) of this section shall be exercised by the surrender to the Corporation of the certificate or certificates representing the shares to be converted at any time during normal business hours at the principal executive offices of the Corporation or at the office of the Corporation’s transfer agent (the “Transfer Agent”), accompanied by a written notice of the holder of such shares stating that such holder desires to convert such shares, or a stated number of the shares represented by such certificate or certificates, into shares of Ordinary Common Stock, as shall be stated in such notice, and, if certificates representing any of the shares to be issued upon such conversion are to be issued in a name other than that of the holder of the share or shares converted, accompanied by an instrument of transfer, in form satisfactory to the Corporation and to the Transfer Agent, duly executed by such holder or such holder’s duly authorized attorney, and the holder shall at such time also make payment or provision for payment of any taxes applicable to such Transfer if required by the following provisions of this subsection.  As promptly as practicable following the surrender for conversion of a certificate representing shares to be converted with the notice and in the manner provided in this paragraph, and, in the event the conversion is effected in connection with a Transfer, the payment of any amount required by the provisions of this section to be paid by the holder in connection with such Transfer, the Corporation shall deliver or cause to be delivered at the office of the Transfer Agent a certificate or certificates representing the number of whole shares of Ordinary Common Stock issuable upon such conversion, issued in such name or names as such holder may have directed.  The issuance of certificates for shares upon such a conversion shall be made without charge to the holders of the shares to be converted for any stamp or other similar stock transfer or documentary tax assessed in respect of such issuance; provided,

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however, that, if any such certificate is to be issued in a name other than that of the holder of the share or shares to be converted, then the person or persons requesting the issuance thereof shall pay to the Corporation the amount of any tax that may be payable in respect of any Transfer involved in such issuance or shall establish to the satisfaction of the Corporation that such tax has been paid or is not payable.  Any such conversion of shares shall be considered to have been effected immediately prior to the close of business on the date of the surrender of the certificate or certificates representing the shares to be converted accompanied by the required notice and payment, if any.  Upon the date any such conversion is deemed effected, all rights of the holder of the converted shares as such holder shall cease, and the person or persons in whose name or names the certificate or certificates representing the shares to be issued upon conversion of the shares surrendered for conversion shall be treated for all purposes as having become the record holder or holders of the shares of Ordinary Common Stock issuable upon such conversion; provided, however, that, if any such surrender and payment occurs on any date when the stock transfer books of the Corporation shall be closed, the person or persons in whose name or names the certificate or certificates representing shares are to be so issued shall be deemed the record holder or holders thereof for all purposes immediately prior to the close of business on the next succeeding day on which the stock transfer books are open.

(e)In the event of any conversion effected automatically without notice pursuant to paragraph (a) or (b) of this section, until the certificates representing shares which have been converted shall have been surrendered to the Corporation, such certificates shall represent the appropriate number of shares of Multi-Vote Common Stock or Ordinary Common Stock, as the case may be, into which the shares represented by such certificates shall have been converted.  Upon surrender by any holder of certificates representing shares which have been automatically converted pursuant to paragraph (a) or (b) of this section, the Corporation shall issue to such holder a new certificate or certificates representing the number of shares of Multi-Vote Common Stock or Ordinary Common Stock, as the case may be, into which the shares represented by the surrendered certificates shall have been converted, without charge to the holder, provided that, in the event conversion is effected in connection with a Transfer, all required stamp and transfer taxes required to be paid in connection with such Transfer shall have been paid.  Upon conversion of such shares, all rights of the holder of the converted shares as such holder shall cease, and the holder of such converted shares and/or such holder’s transferee(s) shall be treated for all purposes as having become the record holder or holders of the shares of Ordinary Common Stock or Multi-Vote Common Stock, as the case may be, issuable upon such conversion.  Any such conversion of shares shall be considered to have been effected immediately prior to the close of business on the date such conversion has been automatically effected, or if such automatic conversion is effected on any date when the stock transfer books of the Corporation shall be closed, such automatic conversion shall be considered to have been effected immediately prior to the close of business on the next succeeding day on which the stock transfer books are open.

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(f)No adjustments in respect of dividends declared and payable on Common Stock (of any class), or any other security into which shares of Multi-Vote Common Stock or Ordinary Common Stock shall be convertible, shall be made upon the conversion of shares of Multi-Vote Common Stock or Ordinary Common Stock as provided in this section; provided, however, that, if a share of Common Stock shall be converted subsequent to the record date for the payment of a dividend or other distribution on the shares or other security into which such share is convertible but prior to such payment, then the registered holder of such share at the close of business on such record date shall be entitled to receive the dividend or other distribution payable on such share on such date notwithstanding the conversion thereof or any default in payment of the dividend or distribution due before the conversion.

(g)In the event of a reclassification of the Ordinary Common Stock or the Multi-Vote Common Stock, or a recapitalization of the Corporation or similar transaction, as a result of which the shares of Ordinary Common Stock or Multi-Vote Common Stock are converted into or exchanged for another security, then a holder of Multi-Vote Common Stock or Ordinary Common Stock, as the case may be, shall be entitled to receive upon conversion of such holder’s shares where permitted in accordance with the foregoing provisions of this section the amount per share of such other security that such holder would have received if such holder had converted any or all of such holder’s shares of Multi-Vote Common Stock into Ordinary Common Stock, or all of such holder’s shares of Ordinary Common Stock into Multi-Vote Common Stock, as the case may be, immediately prior to the record date of such reclassification, recapitalization or similar transaction.

(h)The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Ordinary Common Stock (or any other security of the Corporation into which the Multi-Vote Common Stock becomes convertible), solely for the purpose of issuance upon conversion of the outstanding shares of Multi-Vote Common Stock, such number of shares of Ordinary Common Stock (or any other security of the Corporation into which the Multi-Vote Common Stock becomes convertible) that shall be issuable upon the conversion of all outstanding shares of Multi-Vote Common Stock.

(i)Shares of Multi-Vote Common Stock that are converted into shares of Ordinary Common Stock (or another security) as provided herein shall continue as authorized but unissued shares of Multi-Vote Common Stock and shall be available for reissue by the Corporation; provided, however, that no shares of Multi-Vote Common Stock shall be re-issued at any time when no shares of Multi-Vote Common Stock are outstanding.  Shares of Ordinary Common Stock that are converted into shares of Multi-Vote Common Stock as provided herein shall continue as authorized but unissued shares of Ordinary Common Stock and shall be available for reissue by the Corporation.

Section 2.  Voting Powers.  Except as otherwise provided by law, by the following provisions of this section or by Part D of this article or by any other provision of the Corporation’s certificate of incorporation from time to time in effect, the holders of

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shares of Common Stock shall have the sole power to vote on all matters on which stockholders of the Corporation may vote  (or to consent in lieu of a vote at a meeting) and on all matters on which the holders of Common Stock shall be entitled to vote (or consent in lieu of a vote at a meeting) the holders of shares of Ordinary Common Stock and the holders of shares of Multi-Vote Common Stock shall vote together as though holders of a single class of capital stock (or, if any holders of any other class or series of capital stock of the Corporation are entitled to vote together with the holders of Common Stock of any class, as though a single class with the holders of such other class or series as well as the holders of Common Stock) and shall have on each such matter the voting powers provided by the following provisions of this part.

(a)Holders of Ordinary Common Stock shall have one vote per share on all matters on which such holders are entitled to vote.

(b)Subject to the provisions of paragraph (c) and (e) of this section, on all matters on which the holders of Multi-Vote Common Stock are entitled to vote, holders of Multi-Vote Common Stock shall have the number of votes per share provided by the provisions of this section. As long as the Minimum Hold Condition continues to be satisfied at the time, whenever a vote is to be taken by  (or consent in lieu of a vote at a meeting is to be given by) the holders of Common Stock (including with respect to the election of members of the Board of Directors of the Corporation), the aggregate number of votes to which the holders of Multi-Vote Common Stock shall be entitled shall equal the aggregate number of shares of Ordinary Common Stock outstanding and entitled to vote on the matter and the number of votes per share which a holder of a share of Multi-Vote Common Stock shall be entitled (which may be more than one vote per share or a fraction of a vote per share) shall equal such aggregate number of votes divided by the number of shares of Multi-Vote Common Stock outstanding, all with the result that the holders of Multi-Vote Common Stock in the aggregate shall be entitled to fifty percent of the number of votes to which all holders of Common Stock (including shares of Ordinary Common Stock and Multi-Vote Common Stock) are entitled.  Whenever a vote is to be taken by (or a consent in lieu of a vote at a meeting is to be given by) the holders of Multi-Vote Common Stock as a separate class, each holder of Multi-Vote Common Stock shall be entitled to one vote per share, as provided in paragraph (c) of this section.  Notwithstanding anything herein to the contrary, from and after such time as the Minimum Hold Condition first ceases to be satisfied, any and all special rights, powers and privileges associated with the Multi-Vote Common Stock shall cease, and the holder of a share of Multi-Vote Common Stock shall thereafter only have the same rights, powers and privileges as the holder of a share of Ordinary Common Stock, including that each holder of a share of Multi-Vote Common Stock shall only be entitled to have one vote per share.

(c)In addition to any other voting right or power to which the holders of Multi-Vote Common Stock shall be entitled by law or other provisions of the certificate of incorporation of the Corporation from time to time in effect, holders of Multi-Vote Common Stock shall be entitled to vote as a separate class, in addition to any other vote of stockholders that may be required, on approval of (i) any alteration, repeal or

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amendment of the certificate of incorporation of the Corporation which would adversely affect the powers, preferences or rights of the holders of Multi-Vote Common Stock, and (ii) any merger or consolidation of the Corporation with any other entity if, as a result, shares of Multi-Vote Common Stock would be converted into or exchanged for, or receive, any consideration that differs from that applicable to the shares of Ordinary Common Stock as a result of such merger or consolidation.  In respect of any matter as to which the holders of the Multi-Vote Common Stock shall be entitled to a class vote in accordance with this section, holders shall have one vote per share and the affirmative vote of the holders of a majority of the shares of Multi-Vote Common Stock shall be required for approval.

(d)  In addition to any other voting right or power to which the holders of Ordinary Common Stock shall be entitled by law or other provisions of the certificate of incorporation of the Corporation from time to time in effect, holders of Ordinary Common Stock shall be entitled to vote as a separate class, in addition to any other vote of stockholders that may be required, on approval of (i) any alteration, repeal or amendment of the certificate of incorporation of the Corporation which would adversely affect the powers, preferences or rights of the holders of Ordinary Common Stock, including any alteration, appeal or amendment of the last sentence of Part A of Article Fifth and the proviso in the first sentence of Section 1(i) of Part C of Article Fifth of this Amended and Restated Certificate of Incorporation and (ii) any merger or consolidation of the Corporation with any other entity if, as a result, shares of Multi-Vote Common Stock would be converted into or exchanged for, or receive, any consideration that differs from that applicable to the shares of Ordinary Common Stock as a result of such merger or consolidation.  In respect of any matter as to which the holders of the Ordinary Common Stock shall be entitled to a class vote in accordance with this section, holders shall have one vote per share and the affirmative vote of the holders of a majority of the shares of Ordinary Common Stock shall be required for approval.

(e)With respect to the election of directors of the Corporation by the stockholders, as long as the Minimum Hold Condition is satisfied and except as otherwise provided in the resolution or resolutions fixing and determining the powers, privileges and rights of a series of Preferred Stock in effect as provided by Part D of Article Fifth hereof with respect to a director as to whose election the holders of such series of Preferred Stock are entitled to vote, the holders of Multi-Vote Common Stock, voting alone as a separate class, shall be entitled to elect the Class 1 Directors, the holders of Common Stock, voting as provided in paragraph (b) of this section, shall be entitled to elect the Class 2 Directors and the holders of Ordinary Common Stock, voting alone as a separate class, shall be entitled to elect the Class 3 Directors, in each case as the Class 1 Directors, Class 2 Directors and Class 3 Directors are designated in accordance with Part A of Article Sixth of this Amended and Restated Certificate of Incorporation.  At such time as the Minimum Hold Condition is no longer satisfied, all directors of the Corporation shall be elected by vote of the holders of the Common Stock, both holders of Ordinary Common Stock and holders of Multi-Vote Common Stock, voting together as though a single class, as provided by the last sentence of Section 2(b) of this part, except

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as otherwise provided in the resolution or resolutions fixing and determining the powers, privileges and rights of a series of Preferred Stock in effect as provided by Part D of Article Fifth hereof with respect to a director as to whose election the holders of such series of Preferred Stock are entitled to vote.  Except as otherwise provided in the resolution or resolutions fixing and determining the powers, privileges and rights of a series of Preferred Stock in effect as provided by Part D of Article Fifth with respect to a director as to whose election the holders of such series of Preferred Stock are entitled to vote, in any election of directors of the Corporation by the stockholders, the individual receiving the highest number of votes in favor of his or her election from the stockholders entitled to vote thereon shall be elected.

Section 3:  Certain Restrictions on Transfer of Certain Shares of Common Stock; “Tag-Along Rights” of Certain Holders of Shares of Common Stock.  Prior to the earlier of the third anniversary of the Effective Date or the date on which the Minimum Hold Condition is no longer met, no member of the Onex Group shall Transfer, and neither R Squared nor any Affiliate thereof shall Transfer (any such member of the Onex Group or R Squared or an Affiliate thereof, as the case may be, a “Selling Shareholder”), whether in one transaction or a series of related transactions, shares of Common Stock representing more than fifteen  percent of the outstanding shares of Common Stock to any Person or group other than to an Affiliate thereof who shall be subject to the same restrictions on Transfer as the transferor (a “Proposed Purchaser”), and the Corporation will not register or give effect to any such Transfer, unless (A) such Transfer (1) is pursuant to a bona fide underwritten public offering or other bona fide public distribution made either under an effective registration statement under the Securities Act of 1933, as amended (and from time to time in effect), or occurring outside of the United States within the meaning of Regulation S (as from time to time in effect) under such Act, (2) is in a transaction satisfying the requirements of  Rule 144 (as from time to time in effect) under such Act, other than by reason of satisfying the provisions of Rule 144(k) thereof, (3) is effected through “brokers’ transactions” within the meaning of Section 4(4) of such Act or a transaction with a “market maker” as defined in Section 3(c)(38) of the Exchange Act or (4) is effected through a prepaid variable share forward contract or other derivative contract (such as those known as TRACES or SAILS) or (B) all other holders of Common Stock are afforded the opportunity to participate in the transaction or series of transactions on the same terms per share as the Selling Shareholder, which requirement shall be deemed satisfied if the Transfer by the Selling Shareholder is pursuant to a tender offer by the Proposed Purchaser for Common Stock, or (C) in the case of a disposition of shares of Common Stock of a Selling Shareholder pursuant to a merger, consolidation, recapitalization or similar corporate transaction involving the Corporation, all holders of shares of Common Stock are entitled to receive in such transaction the same per share consideration (in amount and kind).

Part D:  Preferred Stock.Shares of Preferred Stock may be issued from time to time in one or more series, each such series having such powers, preferences and rights, and the qualifications, limitations or restrictions thereof, as are stated and expressed in the resolution or resolutions providing for the issuance of such series adopted by the

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Board of Directors of the Corporation as hereinafter provided.  Authority is hereby granted to the Board of Directors of the Corporation to issue from time to time shares of the Preferred Stock in one or more series, each such series to include such number of shares and to have such powers, preferences and rights as are stated and expressed in a resolution or resolutions adopted by the Board of Directors of the Corporation and filed as required by the DGCL before such issuance and determining and fixing such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating, optional or other special rights of such series of Preferred Stock, and the qualifications, limitations or restrictions thereof (including without limitation, dividend rights, special voting rights or powers, conversion rights, redemption privileges and liquidation preferences), as shall in the discretion of the Board of Directors of the Corporation be stated and expressed in such resolutions, all to the full extent now or hereafter permitted by the DGCL.  Any shares of Preferred Stock which may be redeemed, repurchased or otherwise acquired by the Corporation may be reissued except as otherwise provided by law.

Part E:Uncertificated Shares.  Any or all classes and series of stock of the Corporation, or any part thereof, may be represented by uncertificated stock to the extent permitted by the DGCL. The rights and obligations of the holders of stock represented by certificates and the rights and obligations of the holders of uncertificated stock of the same class and series shall be identical.

Part F:  Prohibition on Issuance of Nonvoting Equity Securities.  Notwithstanding the foregoing provisions of this Article Fifth, the Board  of Directors shall not issue or cause to be issued nonvoting shares of the Corporation or warrants, rights or options to acquire nonvoting shares of the Corporation (to the extent that issuance of nonvoting equity securities is prohibited by a debtor corporation by section 1123(a)(6) of the Bankruptcy Code).

ARTICLE SIXTH: Management of the Corporation’s Business and Affairs

Part A: The Board of Directors.  The business and affairs of the Corporation shall be managed by or under the authority of the Board of Directors of the Corporation, which shall be constituted and act in accordance with law and the provisions of the certificate of incorporation and bylaws of the Corporation.

Section 1.  Number of Members and Allocation to Classes.  Commencing with the Effective Date, the number of members of the Board of Directors shall be nine and, thereafter, the number of members of the Board of Directors shall be as provided by the Bylaws.  On the Effective Date, the members of the Board of Directors shall be as provided in the Order and each shall be allocated, as provided in the Order, to one of three classes, designated Class 1, Class 2 or Class 3, and of the nine initial directors as of the Effective Date, four shall be Class 1 Directors, two shall be Class 2 Directors and three shall be Class 3 Directors, as provided in the Order, and, until the time when the Minimum Hold Condition is no longer satisfied, the successors of each such director (including any successor to any director removed from office with or without cause

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pursuant to Section 3 of this Part A as of the Effective Date) shall also be allocated to, and designated as a director of, the same Class 1, Class 2 or Class 3 as such director who he or she succeeded (the directors so allocated to such class being “Class 1 Directors,” “Class 2 Directors” and “Class 3 Directors,” respectively).  At such time as the Minimum Hold Condition shall no longer be satisfied, none of the directors shall be designated as Class 1 Directors, Class 2 Directors or Class 3 Directors.  In the event of an increase in the number of members of the Board of Directors above nine at a time when directors are designated as Class 1 Directors, Class 2 Directors and Class 3 Directors, the directors who occupy the additional positions on the Board and who are not successors of the directors who were designated as Class 1 Directors, Class 2 Directors or Class 3 Directors as of the Effective Date, shall be allocated to and designated as Class 2 Directors, unless such directors are to be elected exclusively by the holders of one or more series of Preferred Stock as provided in the resolution or resolutions setting the designation, powers, preferences and rights of such series of Preferred Stock.  Only the stockholders referred to in paragraph (e) of Section 2 of Part C of Article Fifth hereof and Section 2 of this article shall be entitled to vote on the election or removal (with or without Cause) of Class 1 Directors, Class 2 Directors or Class 3 Directors, respectively.

Section 2.  Term of Office of Members.  All of the directors (whether Class 1 Directors, Class 2 Directors or Class 3 Directors or not allocated to or designated as any of the Class 1 Directors, Class 2 Directors or Class 3 Directors and whether in office at a time when the Minimum Hold Condition is satisfied or at any time thereafter) shall be further divided into three classes, each class having a different three year term of office, as hereinafter further provided, except that of the initial directors as of the Effective Date three shall have a one year term of office, two shall have a two year term of office and four shall have a three year term of office, all as provided by the Order, such term of office in each case commencing with the Effective Date and ending at the earlier of (i) the first annual meeting of shareholders held in the calendar year next following the Effective Date or the annual meeting of shareholders held in the second calendar year following the Effective Date or the annual meeting of shareholders held in the third calendar year following the Effective Date and (ii) in each case, the election and qualification of his or her successor or upon his or her earlier death, incapacity, resignation or removal; provided, however, that any director elected exclusively by the holders of one or more series of Preferred Stock shall have such term of office as shall be provided in the resolution or resolutions fixing and determining the designation, powers, preferences and rights of such series of Preferred Stock in effect as provided by Part D of Article Fifth hereof.  Each director selected as a successor to a director in office as of the Effective Date shall have the remaining term of office of the director he or she succeeded, except that, if such successor director is elected at an annual meeting of shareholders at which the term of the director succeeded by such successor director expired, such term shall extend until the third succeeding annual meeting of shareholders.

Section 3.  Selection and Removal of Directors.  Except for the directors in office as of the Effective Date, the directors of the Corporation shall be elected by the stockholders entitled to vote thereon as provided by law and the certificate of

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incorporation and bylaws of the Corporation or, for so long as there shall be Class 1, Class 2 and Class 3 Directors, in the event of a vacancy in the office of a Class 1 or Class 2 Director, may be elected by the affirmative vote of a majority of the remaining Class 1 and Class 2 Directors, voting together or, in the event of a vacancy in the office of a Class 3 Director, may be elected by the affirmative vote of a majority of the remaining Class 3 Directors and, at such time as there are no longer Class 1 Directors, Class 2 Directors and Class 3 Directors, in the event of any vacancy may be elected by the affirmative vote of a majority of the remaining directors.  After the Effective Date (and for so long as there shall be Class 1, Class 2 and Class 3 Directors), whenever a Class 1, Class 2 or Class 3 Director is to be elected by the stockholders, a Class 1 Director shall be elected by vote of the holders of the Multi-Vote Common Stock alone voting as a separate class, a Class 2 Director shall be elected by vote of the holders of the Common Stock (both Ordinary Common Stock and Multi-Vote Common Stock) and a Class 3 Director shall be elected by vote of the holders of the Ordinary Common Stock alone voting as a separate class, in each case as provided by section 2 of Part C of Article Fifth of this Amended and Restated Certificate of Incorporation.  Once the Minimum Hold Condition is no longer satisfied, whenever a director is to be elected by the stockholders, such director shall be elected by the vote of the stockholders otherwise provided by law and the certificate of incorporation and bylaws of the Corporation.  Election of directors need not be by ballot.  Except as otherwise provided in the resolution or resolutions fixing and determining the powers, privileges and rights of a series of Preferred Stock in effect as provided by Part D of Article Fifth hereof with respect to the vote of the holders of such series on the removal of a director as to whose election the holders of such series were entitled to vote, any director may be removed from office with Cause (as hereinafter defined) and any Class 1 or Class 2 Director (and after the three-year anniversary of the effective date of the Plan, the Class 3 Directors) may be removed from office without Cause, in each case by the affirmative vote of the holders of Common Stock entitled to cast a majority of the votes which all holders of Common Stock entitled to vote on the election of such director’s successor as set forth in paragraph (e) of section 2 of Part C of Article Fifth hereof would be entitled to cast at the meeting held to vote on removal of such director (whether such holders of Common Stock are holders of Ordinary Common Stock or holders of Multi-Vote Common Stock or both, as the case may be) (or by such written consent in lieu of a meeting of holders of Common Stock as provided for such action by law and the certificate of incorporation and bylaws of the Corporation) and may be removed from office without Cause.  For purposes hereof, “Cause” for the removal of a director shall mean conviction of a felony, any act of dishonesty in respect of the Corporation or a breach of fiduciary duty to the Corporation.

Part B: Certain Affiliate Transactions.  Until the Minimum Hold Condition is not met, all transactions between the Corporation and the any member of the Onex Group (other than transactions and agreements contemplated by the Plan), as such transactions may be identified in good faith by the Class 3 Directors, must be approved, in addition to approval by any vote of the Board of Directors or stockholders of the Corporation required by law or the certificate of incorporation or bylaws of the Corporation, by the

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affirmative vote of a majority of the Class 3 Directors; provided, however, that, by such vote of the Class 3 Directors, the Class 3 Directors may delegate to one or more officers of the Corporation approval of a class of such transactions which the Class 3 Directors in good faith have determined is immaterial to the Corporation.

Part C:Certain Business Acquisition Transactions.  The Corporation may not consummate any acquisition of any business prior to the 210th day following the Effective Date unless such transaction has been approved by the affirmative vote of a majority of the members of the Board of Directors of the Corporation (assuming no vacancies on the Board of Directors), excluding the two Class 1 Directors identified, as indicated in the Order, as designated by the Equity Investor  and who are not members of management and who are not identified therein as independent directors.

Part D:  Director Liability.  A director of the Corporation shall not be personally liable either to the Corporation or to any stockholder for monetary damages for breach of fiduciary duty as a director, except (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, or (ii) for acts or omissions which are not in good faith or which involve intentional misconduct or knowing violation of the law, or (iii) for any matter in respect of which such director shall be liable under Section 174 of the DGCL or any amendment thereto or successor provision thereto, or (iv) for any transaction from which the director shall have derived an improper personal benefit.  Neither amendment nor repeal of this part nor the adoption of any provision of the certificate of incorporation of the Corporation inconsistent with this part shall eliminate or reduce the effect of this part in respect of any matter occurring, or any cause of action, suit or claim that, but for this part, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.

Part E:  Indemnification of Directors, Officers, Employees and Agents.  To the fullest extent permitted by law from time to time in effect, the Corporation shall indemnify persons who, from and after the Effective Date, serve as its directors or officers and shall advance to them expenses incurred in defending or responding to claims, actions, investigations, inquiries and other proceedings and may, by provisions in its bylaws, by contract and by any other means permitted by law, establish reasonable procedures for the making of such indemnification and advancement of expenses and may further obligate itself to provide indemnification or to advance expenses to such persons and may purchase insurance with respect to liabilities imposed on its directors and officers and set apart funds to provide for the payment thereof.  To the fullest extent permitted by law from time to time in effect, the Corporation may indemnify persons who [before the Effective Date served as directors or officers of the Corporation and persons who, before or after the Effective Date,] serve as its employees or agents and may advance to them expenses incurred in defending or responding to claims, actions, investigations, inquiries and other proceedings and may, by provisions in its bylaws, by contract and by any other means permitted by law, obligate itself to provide indemnification or to advance expenses to such persons and may purchase insurance with respect to liabilities imposed on its employees and agents and set apart funds to provide for the payment thereof.  Neither amendment nor repeal of this part nor the adoption of

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any provision of the certificate of incorporation of the Corporation inconsistent with this part shall eliminate or reduce the effect of this part in respect of any matter occurring, or any cause of action, suit or claim that, but for this part, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision.

ARTICLE SEVENTH:  By-Laws:  In furtherance and not in limitation of the powers conferred by law and subject to any limitations contained in the certificate of incorporation of the Corporation, the by-laws of the Corporation may be adopted, amended or repealed by a majority of the Board of Directors, but any by-laws adopted by the Board of Directors may be amended or repealed by the stockholders entitled to vote thereon; provided, however, that so long as the Minimum Hold Condition is satisfied, any amendment to or repeal of the by-laws in sections                       of the by-laws shall also require the affirmative vote of a majority of the Class 3 Directors.

ARTICLE EIGHTH:Amendment of the Certificate of Incorporation.

(a)  The certificate of incorporation of the Corporation may be amended, modified or repealed and new provisions adopted as permitted by law and this Amended and Restated Certificate of Incorporation, including the affirmative vote of any class or series of capital stock of the Corporation, voting as though a separate class, required by law for any amendment which adversely affects the powers, privileges or rights of such class or series of stock as provided hereby; provided, however, that so long as the Minimum Hold Condition is satisfied, any amendment to or repeal of sections                    of this Amended and Restated Certificate of Incorporation shall also require the affirmative vote of a majority of the Class 3 Directors, and provided, further, that any amendment to or repeal of Section 3 of Part C of Article Fifth of this Amended and Restated Certificate of Incorporation shall also require the approval of the Equity Investor and R Squared.

(b)  Any powers, privileges or rights granted pursuant hereto are subject to alteration, amendment or repeal as provided herein.

[ARTICLE NINTH:  DGCL Section 203.  The Corporation elects not to be governed by Section 203 of the DGCL.]

ARTICLE TENTH Effective Time.  This Amended and Restated Certificate of Incorporation shall become effective, in accordance with the DGCL, upon filing with the office of the Secretary of State of the State of Delaware [at   :       .m. on                   ,     , 200   ] (the date of such effectiveness, the “Effective Date”).

IN WITNESS WHEREOF, the undersigned, [a duly authorized officer of the Corporation], has duly executed this Amended and Restated Certificate of Incorporation on this      day of                   , 200    .

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Name:

Title:

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EX-99.2

EXHIBIT 99.2

Form of Amended Bylaws of Reorganized Magellan (Sept. —, 2003)

BYLAWS
of
MAGELLAN HEALTH SERVICES, INC.

(A Delaware corporation)

As in effect on [                  , 2003]

ARTICLE I

Certain Definitions; Principal Office; Notices to the Corporation

SECTION 1.Certain Definitions.  Unless the context otherwise requires, the following terms when used herein shall have the following meanings:

(a)“20% Beneficial Owner” shall mean any person who has Beneficial Ownership of shares of the Corporation that are entitled to exercise 20% or more of the voting power in the election of any class of directors of the Corporation.

(b)“Affiliate” shall have, for the purposes of Article IX herein, the meaning ascribed to such term in Rule 12b-2 promulgated under the Exchange Act (as from time to time in effect).

(c)“Certificate of Incorporation” shall mean the Amended and Restated Certificate of Incorporation, as filed with the Secretary of State of the State of Delaware on                , 2003, of the Corporation, as it may from time to time be amended and in effect in accordance with law, and shall include any certificate of designations determining the designation, voting rights, preferences, limitations and special rights of any shares of the Corporation which have been adopted by the Board as permitted by the certificate of incorporation and the law, as then in effect.

(d)“Beneficial Ownership” shall have the same meaning as provided by Regulation 13D-G under the Exchange Act, as from time to time in effect (and any successor regulation).

(e)“Board” shall mean the Board of Directors of the Corporation as constituted in accordance with the Certificate of Incorporation and Article III of the Bylaws.

(f)“Business Day” shall mean any day other than a Saturday, a Sunday, or any day on which banking institutions in Columbia, Maryland are required or authorized to close by law or executive order.

(g)“Bylaws” shall mean these Bylaws, dated as of [                       , 2003], as the same may from time to time be amended and in effect in accordance with law.  References in the Bylaws to “herein,” “hereof” or “hereto,” or any like reference, shall refer to the Bylaws (as amended and in effect from time to time) as a whole and not to any specific article, section, subsection, paragraph, sentence or clause of the Bylaws unless explicitly provided.

(h)“Class 1 Director”, “Class 2 Director” and “Class 3 Director” shall have the meanings ascribed thereto in the Certificate of Incorporation.

(i)“Common Stock” shall mean all common stock of the Corporation, including the Ordinary Common Stock and the Multi-Vote Common Stock.

(j)“Corporation” shall mean Magellan Health Services, Inc., the Delaware corporation incorporated by the filing of a certificate of incorporation with the Secretary of State of the State of Delaware on [                   ],1969.

(k)“Effective Time” shall mean the effective time of these Bylaws as provided by Article XI hereof.

(l)“Equity Investor” shall be Onex American Holdings II LLC, a Delaware limited liability company, and a subsidiary of Onex Corporation, a corporation organized and existing under the laws of the Province of Ontario, Canada.

(m)“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).

(n)“Independent Director” shall mean a director who meets the criteria of independence established by the standards for the listing of the Ordinary Common Stock of the Corporation on Nasdaq or, if the Ordinary Common Stock is listed at the time on the NYSE, on the NYSE (or, if at any time the Ordinary Common Stock is not listed on either such market, as would be applicable if the Ordinary Common Stock were then listed on Nasdaq) in order for such director to be treated as independent under such listing standards [and, to the extent different, who also meets the minimum requirements of independence established for membership on the audit committee of a listed company by Rule 10A-3 under the Exchange Act (as from time to time in effect)]; provided, however, that, for purposes of Article IX hereof, a director shall not be considered to be independent unless he or she, in addition to satisfying the foregoing requirements, has, directly or indirectly, no personal or financial interest, material to such director, in the transaction or category of transaction he or she is to review and vote on.

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(o)“Multi-Vote Common Stock” shall mean the Multiple and Variable Vote Restricted Convertible Common Stock of the Corporation, as designated in the Certificate of Incorporation.

(p)“Nasdaq” shall mean the Nasdaq Stock Market.

(q)“Ordinary Common Stock” shall mean the Ordinary Common Stock of the Corporation, as designated in the Certificate of Incorporation.

(r)“NYSE” shall mean the New York Stock Exchange.

(s)“Plan” shall be the Corporation’s Third Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code.

(t)“Subsidiary” shall mean any company controlled, directly or indirectly, by the Corporation.  Unless otherwise determined by the Board, the Corporation shall be considered to control any company of which it, directly or through one of more Subsidiaries, owns a majority of the securities entitled to vote in the election of the directors thereof (or persons performing similar functions) or securities entitled to elect a majority of the directors thereof (or persons performing similar functions) and any partnership of which it owns, directly or through one or more Subsidiaries, a general partner interest and any limited liability company of which it owns, directly or through one or more Subsidiaries, a managing member interest, and the Corporation shall not be considered to control a company in which it does not own, directly or through one or more Subsidiaries, such an interest.

(u)“Whole Board” shall mean the number of members of the Board at any time if there were then no vacancies on the Board.

SECTION 2.Principal Office; Notices to the Corporation.  The principal office of the Corporation shall be at such location in Columbia, Maryland as the Board shall from time to time determine.  All notices to the Corporation required or permitted by the Bylaws may be addressed to the principal office of the Corporation and shall be marked to the attention of the Secretary unless otherwise provided herein.

ARTICLE II

Stockholders’ Meetings

SECTION 1.Annual Meetings of Stockholders.  An annual meeting of stockholders shall be held in each year on such date and at such time as may be set by the Board (or by an officer of the Corporation authorized to do so by the Board) for the purpose of electing directors and the transaction of such other business as may properly come before the meeting.

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SECTION 2.Special Meetings of Stockholders.  Special meetings of the stockholders may be called at any time by the Board (or by an officer of the Corporation authorized to do so by the Board ).  A special meeting of stockholders may also be called by the holders of at least [40]% of the votes that all stockholders are entitled to cast on the matter to be voted on at the particular meeting, including (i) a special meeting of the holders of Multi-Vote Common Stock for the purpose of electing directors who may be elected by such holders alone or taking any other action that such holders alone may take or, (ii)  a special meeting of the holders of Ordinary Common Stock for the purpose of electing directors who may be elected by such holders alone or taking any other action that such holders alone may take.

At any time, upon written request of any person or persons entitled to call and who have duly called a special meeting, it shall be the duty of the Secretary to set the date of the meeting, if such date has not been set by the Board, on a day not more than sixty days after the receipt of the request, and to give due notice of such meeting to the stockholders.  If the Secretary shall neglect or refuse to set the date of the meeting and give notice thereof, the person or persons calling the meeting may do so.

SECTION 3.Place and Notice of Meetings of Stockholders.  All meetings of stockholders shall be held at the principal office of the Corporation unless the Board (or an officer of the Corporation authorized to do so by the Board) shall decide otherwise, in which case such meetings may be held at such location within or without the State of Delaware as the Board may from time to time direct.  Written notice of the place, day, and hour of all meetings of stockholders and, in the case of a special meeting, of the general nature of the business to be transacted at the meeting, shall be given to each stockholder of record entitled to vote at the particular meeting either personally or by sending a copy of the notice through the mail or by overnight courier to the address of the stockholder appearing on the books of the Corporation or supplied by him to the Corporation for the purpose of notice or by other means including electronic means permitted by law.  Except as otherwise provided by the Bylaws or by law, such notice shall be given at least 10 days before the date of the meeting by the President, Vice President, or Secretary, provided however, that, any notice pertaining to the election of directors at a meeting of stockholders  shall (other than a meeting called by stockholders pursuant to the second sentence of section 2 of this article) provide notice to the stockholders  in a manner reasonably calculated to provide them sufficient time to nominate directors for election pursuant to the procedures set forth in section 4 of this article.  A waiver in writing of any written notice required to be given, signed by the person entitled to such notice, whether before or after the time stated, shall be deemed equivalent to the giving of such notice.  Attendance of a person, either in person or by proxy, at any meeting shall constitute a waiver of notice of such meeting, except where a person attends a meeting for the express purpose of objecting to the transaction of any business because the meeting was not lawfully called or convened.

SECTION 4.Nominations by Stockholders of Candidates for Election as Directors.  In addition to the nomination by the Board of candidates for election to the Board as hereinafter provided, candidates may be nominated by any stockholder of the

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Corporation entitled to notice of, and to vote at, any meeting called for the election of directors.  Subject to the last sentence of this section, nominations, other than those made by or on behalf of the Board, shall be made in writing and shall be received by the Secretary of the Corporation not later than (i) with respect to an election of directors to be held at an annual meeting of stockholders, 90 days prior to the anniversary date of the immediately preceding annual meeting, provided that, if the date of the annual meeting is more than 30 days before or after the anniversary date of the immediately preceding annual meeting, the stockholder nomination shall be received within 15 days after the public announcement by the Corporation of the date of the annual meeting, and (ii), with respect to an election of directors to be held at a special meeting of stockholders, the close of business on the 15th day following the date on which notice of such meeting is first given to stockholders or public disclosure of the meeting is made, whichever is earlier.  Such nomination shall contain the following information to the extent known to the notifying stockholder: (a) the name, age, business address, and residence address of each proposed nominee and of the notifying stockholder; (b) the principal occupation of each proposed nominee; (c) a representation that the notifying stockholder intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (d) the class and total number of shares of capital stock and other securities of the Corporation that are Beneficially Owned by the notifying stockholder and by the proposed nominee and, if such securities are not owned solely and directly by the notifying stockholder or the proposed nominee, the manner of Beneficial Ownership; (e) a description of all arrangements or understandings between the notifying stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the notifying stockholder; (f) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Exchange Act had the nominee been nominated, or intended to be nominated, by the Board; and (g) the consent of each nominee to serve as a director of the Corporation if so elected.  The Corporation may request any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the qualifications of the proposed nominee to serve as a director of the Corporation.  Within 15 days following the receipt by the Secretary of a stockholder notice of nomination pursuant hereto, the nominating and governance committee (as set forth in article III, section 10, subsection (c)) shall instruct the Secretary of the Corporation to advise the notifying stockholder of any deficiencies in the notice as determined by such committee.  The notifying stockholder shall cure such deficiencies within 15 days of receipt of such notice.  No persons shall be eligible for election as a director of the Corporation unless nominated in accordance with the Bylaws.  Nominations not made in accordance herewith may, in the discretion of the presiding officer at the meeting and with the advice of the nominating and governance committee, be disregarded by the presiding officer and, upon his or her instructions, all votes cast for each such nominee may be disregarded.  The determinations of the presiding officer at the meeting shall be conclusive and binding upon all stockholders of the Corporation for all purposes.  The provisions of this section shall not apply to the

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nomination by any holder(s) of Multi-Vote Common Stock of any candidate for election as director.

SECTION 5.Advance Notice of Other Matters to be Presented by Stockholders.  At any annual meeting or special meeting of stockholders, only such business as is properly brought before the meeting in accordance with this paragraph may be transacted.  To be properly brought before any meeting, any proposed business (a “Stockholder Notification”) must be either (a) specified in the notice of the meeting (or any supplement thereto) given by or at the direction of the Board or, with respect to any matter to be voted on by the holders of Multi-Vote Common Stock as a separate class, by any holder(s) of Multi-Vote Common Stock, (b) otherwise properly brought before the meeting by or at the direction of the Board, or, whenever a vote is to be taken by the holders of Multi-Vote Common Stock as a separate class, by any holder(s) of Multi-Vote Common Stock, or (c) if brought before the meeting by a stockholder other than a holder of Multi-Vote Common Stock, then (1) written notification of such proposed business must have been received by the Secretary of the Corporation from a stockholder of record on the record date for the determination of stockholders entitled to vote at such meeting not later than (i), with respect to business to be proposed at an annual meeting of stockholders, 90 days prior to the anniversary date of the immediately preceding annual meeting (provided, that if the date of the annual meeting is more than 30 days before or after the anniversary date of the immediately preceding annual meeting, the Stockholder Notification must have been received within 15 days after the public announcement by the Corporation of the date of the annual meeting) and (ii) with respect to business to be proposed at a special meeting of stockholders, the close of business on the 15th day following the date on which notice of such meeting is first given to stockholders or public disclosure of the meeting is made, whichever is earlier.  Such Stockholder Notification shall set forth the nature of and reasons for the proposal in reasonable detail and, as to the stockholder giving notification, (1) the name and address of such stockholder and (2) the class and series of all shares of the Corporation that are beneficially owned by such stockholder.  Within 15 days following receipt by the Secretary of a Stockholder Notification pursuant hereto, the Corporation shall advise the stockholder of any deficiencies in the Stockholder Notification.  The notifying stockholder may cure such deficiencies within 15 days after receipt of such advice, failing which the Stockholder Notification shall be deemed invalid.

SECTION 6.Quorum for Stockholder Meetings.  At any meeting of the stockholders, the presence, in person or by proxy, of stockholders entitled to cast at least a majority of the votes which all stockholders are entitled to cast upon a matter shall constitute a quorum for the transaction of business upon such matter, and the stockholders present at a duly organized meeting can continue to do business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.  If a meeting cannot be organized because a quorum has not attended, those present may, except as otherwise provided by law, adjourn the meeting to such time and place as they may determine, but in the case of any meeting called for the election of

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directors, those who attend the second of such adjourned meetings, although less than a quorum, shall nevertheless constitute a quorum for the purpose of electing directors.

SECTION 7.Votes Per Share.  Except as otherwise provided in the Certificate of Incorporation (including in respect of the voting rights of shares of the Multi-Vote Common Stock), every stockholder of record shall have, at every stockholders’ meeting, one vote for every share standing in his or her name on the books of the Corporation.

SECTION 8.Proxies.  Every stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for him by proxy.  A proxy may be submitted to the Secretary by a stockholder in writing, by telephone, electronically or any other means permitted by law.

SECTION 9.Required Votes for Stockholder Action.  Except in respect of the election of directors (as to which a plurality of the votes of the shares entitled to vote on the election of a director and voted in favor thereof shall be required), all questions submitted to the stockholders and all actions by the stockholders shall be decided by the affirmative vote of the stockholders present, in person or by proxy, entitled to cast at least a majority of the votes which all stockholders present are entitled to vote on the matter, unless otherwise provided by the Certificate of Incorporation, the Bylaws or by law.  For purposes of this section, in the event that a holder of shares of a class or series which are entitled to vote on a matter is present in person or by proxy at a meeting but is not permitted by reason of a legal disability or by a contractual restriction or otherwise to vote the shares such holder holds on such matter, the shares held by such holder and not so permitted to be voted shall nevertheless be considered entitled to vote and present for purposes of determining the number of votes required for stockholder action.

SECTION 10.Ballots; Judges of Election.  Elections for directors need not be by ballot but the Board of Directors or the presiding officer at a meeting of stockholders may direct the use of ballots for voting at the meeting.  In advance of any meeting of stockholders, the Board may appoint judges of election who need not be stockholders to act at such meeting or any adjournment thereof, and if such appointment is not made, the presiding officer of any such meeting may, and on request of any stockholder or his proxy shall, make such appointment at the meeting.  The number of judges shall be one or three and, if appointed at a meeting on request of one or more stockholders or their proxies, the majority of the shares present and entitled to vote shall determine whether one or three judges are to be appointed.  No person who is a candidate for office shall act as a judge.  In case any person appointed as judge fails to appear or fails or refuses to act, the vacancy may be filled by appointment made by the Board in advance of the convening of the meeting or at the meeting by the person or officer presiding at the meeting.  On request of the presiding officer of the meeting or of any stockholder or his proxy, the judges shall make a report in writing of any challenge or question or matter determined by them and execute a certificate of any fact found by them.

SECTION 11.Action Without a Meeting.  To the fullest extent and in the manner permitted by law, any action required or permitted to be taken at a meeting of the

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stockholders or of a class or series of stockholders may be taken without a meeting of the stockholders or of such class or series of stockholders upon the consent in writing  signed by such stockholders who would have been entitled to vote the minimum number of votes that would be necessary to authorize the action at a meeting at which all the stockholders entitled to vote thereon were present and voting.  The consents shall be filed with the Secretary.

ARTICLE III

The Board of Directors

SECTION 1.Authority of the Board of Directors.  Except as otherwise provided by law and subject to the provisions of the Certificate of Incorporation and the Bylaws, all powers vested by law in the Corporation may be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, a Board that shall be constituted as provided by law, the Certificate of Incorporation and the Bylaws.

SECTION 2.Number Of Directors and Selection Thereof.  In accordance with the Certificate of Incorporation, commencing with the Effective Time and continuing until the first annual meeting of the stockholders  held following the expiration of the three-year period that shall commence on the date on which the Plan shall become effective (or written consent of the stockholders , as permitted by law, the Certificate of Incorporation and the Bylaws, in lieu of such annual meeting), the Board shall consist of nine members and, thereafter, the Board of Directors shall have not fewer than five and not more than thirteen members, the exact number of members to be determined from time to time by resolution adopted by the affirmative vote of a majority of the Whole Board or the vote required by Article IX of the Bylaws, plus, in either case, any members who may be elected exclusively by the holders of one or more series of Preferred Stock of the Corporation, as provided by the resolution or resolutions adopted by the Board of Directors and setting the powers, preferences and rights of a series of Preferred Stock of the Corporation; provided that no reduction in the number of members shall end the term of office of any director earlier than such term of office would otherwise end.  Directors shall be selected as provided by law, the Certificate of Incorporation (including Part A of Article Sixth of the Certificate of Incorporation) and the Bylaws (including Section 4 of this Article III).

SECTION 3.Independent Directors.  The Board shall present to the stockholders nominees for election to the Board (or recommend the election of such candidates as nominated by others) and take such other corporate actions as may be reasonably required to provide that, to the best knowledge of the Board, if such candidates are elected by the stockholders, (i) the composition of the Board shall meet any independence requirements under the then applicable listing standards to which the Corporation is subject, after giving effect to any exemption for “controlled companies”, (ii) the requirements of subsection 10(a) of this article regarding the composition of the audit committee shall be satisfied and (iii) the requirements of subsection 10(b) of this article

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regarding the composition of the management compensation committee shall be satisfied.  The foregoing provisions of this section shall not cause a director who, by reason of any change in circumstances, has ceased to qualify as an independent director or ceased to qualify for service on the audit committee or management compensation committee from serving the remainder of the term as a director for which such director has been elected.  Notwithstanding the foregoing provisions of this section, no action of the Board shall be invalid by reason of the failure at any time of the Board to be constituted in accordance with this section 3.

SECTION 4.Vacancies.  Vacancies on the Board (including any vacancy created by an increase in the size of the Board) may be filled as provided by the Certificate of Incorporation (including Section 2 of Part A of Article Sixth of the Certificate of Incorporation).

SECTION 5.Annual Organizational Meeting of the Board.  The Board shall hold an annual organizational meeting immediately following the annual meeting of the stockholders at the place thereof, without notice in addition to the notice of the annual meeting of stockholders, or at such other time as soon as practicable after such meeting as the Board shall determine and shall at the annual organizational meeting elect a President, a Secretary and a Treasurer of the Corporation and such other officers of the Corporation as shall be provided by the Bylaws or determined by the Board to be appropriate, shall establish the standing committees of the Board provided by the Bylaws and may take such other action as the Board determines to be appropriate.  Officers of the Corporation and standing and other committees of the Board may also be elected at any other time by the Board.

SECTION 6.Other Meetings of the Board.  All meetings of the Board, other than the annual organizational meeting, shall be held at the principal office of the Corporation unless the Board (or the person or persons entitled to call and calling the meeting) shall decide otherwise, in which case such meetings may be held at such location within or without the State of Delaware as the Board (or the person or persons entitled to call and calling the meeting) may from time to time direct.  Regular meetings of the Board shall be held at such time (and place) in accordance with such schedule as the Board shall have determined in advance and no further notice of regular meetings of the Board shall be required.  The Independent Directors shall meet periodically without any member of management present and, except as the Independent Directors may otherwise determine, without any other director present to consider the overall performance of management and the performance of the role of the Independent Directors in the governance of the Corporation; such meetings shall be held in connection with a regularly scheduled meeting of the Board except as the Independent Directors shall otherwise determine.  Special meetings of the Board may be called by the Chairman of the Board (if any), a Vice Chairman of the Board (if any), the President or by any two or more directors by giving written notice at least two Business Days in advance of the day and hour of the meeting to each director (unless it is determined by the President or the Chairman of the Board (if any) to be necessary to meet earlier, in which case no less than twenty-four hours written notice shall be given), either personally or by facsimile, or

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other means including electronic means permitted by law.  Attendance at any meeting of the Board shall be a waiver of notice thereof, unless such lack of notice is protested at the outset of the meeting.  If all the members of the Board are present at any meeting, no notice of the meeting shall be required.

SECTION 7.Quorum.  A majority of the whole number of the directors then in office and entitled to vote on a particular matter shall constitute a quorum for the transaction of business with respect to such matter, but if at any meeting a quorum shall not be present, the meeting may adjourn from time to time until a quorum shall be present.

SECTION 8.Telephonic Participation.  Directors may participate in a meeting of the Board or a committee thereof by conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other.

SECTION 9.Chairman and Vice Chairman of the Board.  The Board may, by resolution adopted by a majority of the Whole Board, at any time designate one of its members as Chairman of the Board.  The Chairman of the Board shall preside at the meetings of the Board, shall be responsible for the orderly conduct by the Board of its oversight of the business and affairs of the Corporation and its other duties as provided by law, the Certificate of Incorporation and the Bylaws and shall have such other authority and responsibility as the Board may designate.  The Board may, by resolution adopted by  a majority of the Whole Board, at any time also designate one or more of its members as Vice Chairman of the Board.  A Vice Chairman of the Board shall assist the Chairman of the Board in the conduct of his duties, including by presiding at meetings of the Board in the absence of the Chairman of the Board, and shall have such other authority and responsibility as the Board may designate.  A Chairman or Vice Chairman of the Board shall not be considered an officer of the Corporation unless otherwise provided by the Board.

SECTION 10.Committees of the Board.  The Board may, by resolution adopted by a majority of the Whole Board, at any time designate one or more committees, each committee to consist of one or more of the directors of the Corporation, except as otherwise provided by the Bylaws.  The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.  Subject to the following provisions of this section, any such committee to the extent provided in such resolution shall have and may exercise any or all of the authority and responsibility of the Board in the management of the business and affairs of the Corporation, except as otherwise provided by law, the Certificate of Incorporation or the Bylaws.  Except as otherwise provided by the Certificate of Incorporation, the Bylaws or action of the Board, a quorum for action by a committee shall be a majority of the members (assuming no vacancy) and action by vote of a majority of the members at a meeting duly called at which a quorum is present shall constitute action by the committee.  Each committee shall keep a record of its actions and all material actions taken by a committee on behalf of the Board shall be reported to the

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full Board periodically.  In all other respects, the Board may, by resolution adopted by a majority of the Whole Board, establish rules of procedure for a committee, including designating a member of a committee as its chair.  In the absence of the designation by the Board of the chairman of a committee or the adoption by the Board of rules of procedure for a committee, the committee shall adopt its own rules of procedure and elect its chair.  The Board shall establish standing committees of the Board as provided by the following provisions of this section.  In the event any or all of the members of any committee are required to be independent under any then applicable listing standards to which the Company is subject or any other legal requirement, for the performance of some, but not all, of the duties of such committee, the Board may establish a separate committee for the performance of only those duties the performance of which requires such independent Directors.

(a)Audit Committee.  The audit committee shall be composed of at least three members of the Board, each of whom shall be an Independent Director, shall not, in relation to the Corporation, be an “affiliated person” as defined in Rule 10A-3 under the Exchange Act (as from time to time in effect) and shall meet such other qualifications for membership on the audit committee as are from time to time required by the listing standards of the Nasdaq or NYSE applicable to the Corporation.  The audit committee shall assist the Board in overseeing the Corporation’s financial reporting and shall have such authority and responsibility as is provided in the committee’s charter (as hereinafter provided for) and, subject thereto, as is normally incident to the functioning of the audit committee of a publicly-traded company and shall perform the other functions provided to be performed by it by the Bylaws and such other functions as are from time to time assigned to it by the Board.

(b)Management Compensation Committee.  The management compensation committee shall be composed of at least three members of the Board, each of whom shall be independent, if required, under any then applicable listing standards to which the Corporation is subject, after giving effect to any exemption for “controlled companies,” and shall meet such other qualifications as may be necessary to qualify as a non-employee director under Rule 16b-3 under the Exchange Act (as from time to time in effect) and as an outside director under Section 162(m) of the Internal Revenue Code of 1986, as amended (and as from time to time in effect).  No member of the committee shall be eligible to participate in any compensation plan or program of the Corporation or any Subsidiary of the Corporation that is administered or overseen by the committee.  The management compensation committee shall assist the Board in overseeing the compensation of the Corporation’s officers, the Corporation’s employee stock option or other equity-based compensation plans and programs and the Corporation’s management compensation policies and shall have such authority and responsibility as is provided in the committee’s charter (as hereinafter provided for) and, subject thereto and subject to other direction of the Board, as is normally incident to the functioning of the management compensation committee of a publicly-traded

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company and shall perform the other functions provided to be performed by it by the Bylaws and such other functions as are from time to time assigned to it by the Board.  Unless reviewed and, if necessary, approved by the committee, the Corporation shall not cause or permit any Subsidiary of the Corporation to pay or grant any compensation to any officer or employee of the Corporation which, if paid or granted by the Corporation, would require review or approval of the committee.

(c)Nominating and Governance Committee.  The nominating and governance committee shall be composed of at least three members of the Board, each of whom shall be independent, if required, under any then applicable listing standards to which the Corporation is subject, for giving effect to any exemption for “controlled companies.”  The nominating and governance committee (i) shall have authority and responsibility to recommend to the Board for approval the candidates to be recommended by the Board to the stockholders  for election as directors of the Corporation or to be elected by the Board to fill a vacancy on the Board, who shall be such as to cause, if such candidates are elected, the composition of the Board to satisfy the requirements of the Certificate of Incorporation regarding director independence and the requirements of this section and any other requirements of any then applicable listing standards, (ii) shall advise the Board on its policies and procedures for carrying out its responsibilities and on the Corporation’s policies and procedures respecting shareholder participation in corporate governance and (iii) shall have such authority and responsibility as is provided in the committee’s charter (as hereinafter provided for) and, subject thereto and subject to other direction of the Board, as is normally incident to the functioning of the nominating or governance committee of a publicly-traded company and (iv) shall perform the other functions provided to be performed by it by the Bylaws and such other functions as are from time to time assigned to it by the Board.

(d)Class 3 Directors Committee.  The Class 3 Directors committee shall be composed of the Class 3 Directors.  The Class 3 Directors committee shall assist the Board in evaluating any proposed transactions or other matters that would require action on the part of the Class 3 Directors pursuant to the Certificate of Incorporation or these Bylaws and shall assist the Board in interpreting provisions thereof and provisions of the Plan and the Order entered on October     , 2003, by the United States Bankruptcy Court for the Southern District of New York confirming the Plan that relate to the Class 3 Directors.

(e)Committee Charters.  The Board, by majority vote of the Whole Board, shall approve a charter describing the purposes, functions and responsibilities of each standing committee of the Board.  Each standing committee of the Board shall prepare and recommend to the Board for its approval the committee’s charter and shall, at least annually, review and report to the Board on the adequacy thereof.  In addition to and without limiting the provisions of paragraphs (a) through (c) of this section, each standing committee of the Board shall have the

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authority and responsibility provided by its Board-approved charter, subject to further action by the Board, and no further authorization of the Board shall be necessary for actions by a committee within the scope of its charter.  Any other committee of the Board may likewise prepare and recommend to the Board a charter for the committee and shall have the authority and responsibility provided by its Board-approved charter.

(f)Committee Advisors and Resources. Each standing committee of the Board shall have the authority to retain, at the Corporation’s expense, such legal and other counsel and advisors as it determines to be necessary or appropriate to carry out its responsibilities within the scope of its charter.  Each other committee of the Board shall have like authority to the extent provided by its charter or otherwise authorized by the Board.  The Corporation shall pay the compensation of the independent auditor of the Corporation for all audit services, as approved by the audit committee, without need for further authorization.

SECTION 11.Director Compensation.  The Board may set the compensation of directors as permitted by law.

ARTICLE IV

Officers

SECTION 1.Officers Generally.  The Board shall designate a President, one or more Vice Presidents, a Treasurer, a Secretary and a General Counsel and shall designate an officer as chief financial officer and an officer as chief accounting officer and may designate such other officers, with such titles, authority and responsibility (including Assistant Vice Presidents, Assistant Treasurers and Assistant Secretaries), as the Board considers appropriate for the conduct of the business and affairs of the Corporation.  Any two or more offices may be held by the same individual.  Unless sooner removed by the Board, all officers shall hold office until the next annual organizational meeting of the Board and until their successors shall have been elected.  Any officer may be removed from office at any time, with or without cause, by action of the Board.

SECTION 2.President.  The President shall be the chief executive officer of the Corporation, shall have general supervision of the business and affairs and all other officers of the Corporation and, subject to the direction of the Board, shall have the authority and responsibility customary to such office.  The President shall preside at all meetings of the stockholders and, in the absence of a Chairman of the Board (if any), at all meetings of the Board at which the President is present.

SECTION 3.Vice Presidents;.  The Board may elect one or more Vice Presidents, with such further titles (including designation as President of a division or operation of the Corporation) and with such authority and responsibility as the Board may determine.  In the absence or disability of the President, his duties shall be performed by one or more Vice Presidents as designated by the Board.

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SECTION 4.Chief Financial Officer; Controller.  The Board shall designate an officer as the chief financial officer of the Corporation, who shall have general supervision of the financial affairs of  the Corporation, such other authority and responsibility as the Board may designate and, subject to the direction of the Board, the authority and responsibility customary to such office.  In the absence or disability of the chief financial officer, his or her duties may be performed by any other officer designated by him or her, by the President or by the Board.  The Board shall also designate an officer as the Controller of the Corporation, who shall be the chief accounting officer of the Corporation (and may be the same as or different from the chief financial officer).  The Controller shall have general supervision of the books and accounts of the Corporation, such other authority and responsibility as the Board may designate and, subject to the direction of the Board, the authority and responsibility customary to such office.  In the absence or disability of the Controller, his or her duties may be performed by any other officer designated by him or her, by the President or by the Board.

SECTION 5.Treasurer.  The Treasurer (who may be the same as or different from the chief financial officer and/or the Controller) shall have supervision and custody of all funds and securities of the Corporation and keep or cause to be kept accurate accounts of all money received or payments made by the Corporation, and shall have such other authority and responsibility as provided by the Bylaws or as the Board may designate and, subject to the direction of the Board, the authority and responsibility customary to such office.  The Treasurer shall be ex-officio, and have the authority and responsibility of, an Assistant Secretary.

SECTION 6.General Counsel.  The Board shall designate a General Counsel for the Corporation, who shall be the Corporation’s chief legal officer and shall have general supervision of the legal affairs of the Corporation and such other authority and responsibility as the Board may designate and, subject to the direction of the Board, the authority and responsibility customary to such office.

SECTION 7.Secretary.  The Secretary shall have custody of the minutes of the meetings of the Board, its committees and the stockholders, of the Certificate of Incorporation and the Bylaws (as amended from time to time) and such other records of the Corporation as respect its existence and authority to conduct business, shall have such other authority and responsibility as provided by the Bylaws or as the Board may designate and, subject thereto, the authority and responsibility customary to such office.  The Secretary shall send out notices of meetings of the Board and stockholders as required by law or the Bylaws.  The Secretary shall attend and keep the minutes of the Board except as the Board may otherwise designate.  The Secretary shall be ex-officio, and have the authority and responsibility of, an Assistant Treasurer.

SECTION 8.Assistant Treasurers; Assistant Secretaries.  In the absence or disability of the Secretary, his or her duties may be performed by an Assistant Secretary.  In the absence or disability of the Treasurer, his or her duties may be performed by an Assistant Treasurer.  Such assistant officers shall also have such authority and responsibility as may be assigned to them by the Board.

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SECTION 9.Bonded Officers and Employees.  Such officers and employees of the Corporation as the Board shall determine shall give bond for the faithful discharge of their duties in such form and for such amount and with such surety or sureties as the Board shall require.  The expense of procuring such bonds shall be borne by the Corporation.

ARTICLE V

Indemnification  of Directors, Officers, Employees and Agents

SECTION 1.Indemnification of Directors and Officers

(a)Indemnification of Directors and Officers.  The Corporation shall indemnify to the full extent permitted by law any person made, or threatened to be made, a party to or otherwise involved in (as a witness or otherwise) an action, suit or proceeding (whether civil, criminal, administrative, legislative or investigative, and whether by or in the right of the Company or otherwise asserted) by reason of the fact that the person

(1)is or was a director or officer of the Corporation or

(2)while a director or officer of the Corporation, either

(i)serves or served as a director, officer, partner, member, trustee, employee or agent of any subsidiary of the Corporation or other related enterprise at the request of the Corporation or in connection with a related employee benefit plan of the Corporation, any Subsidiary or any such enterprise,

(ii)serves or served as a director, officer, partner, member, trustee, employee or agent of any other unrelated enterprise (including any charitable organization)  in furtherance of the interests of, and at the specific written request of the Corporation, or in connection with a related employee benefit plan of such enterprise,

against any expenses, judgments, fines, and amounts paid in settlement actually and reasonably incurred in defending or responding to any such pending or threatened action, suit or proceeding (including any incurred in connection with any actions brought by or in the right of the Corporation).  A resolution or other action by the Corporation or subsidiary electing, nominating or proposing a person to a position referred to in this subsection 2(a) shall constitute a specific written request of the Corporation sufficient for the purposes of this section.  Upon written request of a person claiming to be entitled to indemnification hereunder and specifying the expenses, judgments, fines and amounts paid in settlement against which indemnity is sought, the Corporation shall, as soon as practicable and in any event within 90 days of its receipt of such request, make a

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determination, in such manner as is required by law, as to the entitlement of such person to indemnification against such expenses as provided by this subsection 2(a).  Such a determination, however, shall not be conclusive as to such person’s entitlement to indemnification pursuant to this subsection 2(a) and such person may seek to enforce an entitlement to indemnification pursuant to this subsection 2(a) by appropriate proceedings in any court of competent jurisdiction by showing that, notwithstanding such determination, such person satisfied the standard of conduct required by law to be satisfied in order for such person to be entitled to indemnification from the Corporation as permitted by law.

(b)Advancement of Expenses.  Expenses reasonably incurred by a person referred to in subsection 2(a) above in defending or responding to a civil, criminal, administrative, legislative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of the action, suit or proceeding upon receipt of an undertaking by or on behalf of such person to repay such amount to the extent it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation against such expenses or, in the case of a criminal action in which a judgment has been entered against such person, as the Board so determines.

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SECTION 2.Indemnification of Employees and Agents.  The Corporation may, upon authorization by the Board or any officer expressly authorized to do so by the Board, indemnify, or agree to indemnify, and advance expenses to any person who is or was an employee or agent of the Corporation or any Subsidiary to the same extent (or any lesser extent) to which it may indemnify and advance expenses to a director or officer of the Corporation in accordance with section 1 of this article.

SECTION 3.Non-Exclusivity.  The right to indemnification and advancement of expenses conferred in this article shall not be deemed exclusive of any other rights to which any person indemnified may be entitled under any agreement, vote of stockholders or directors or otherwise, the Corporation having the express authority to enter such agreements or make other provision for the indemnification of and advancement of expenses to any or all of its representatives as the Board deems appropriate, including establishing corporate policies with respect thereto and the creation of one or more funds or equivalent guarantees for indemnity payments and/or expense advancements to present or future indemnified persons.

SECTION 4.Continuing Contractual Rights.  The right to indemnification and the advancement of expenses provided by Section 1 of this article shall be a contract right, shall continue as to a person who has ceased to serve in the capacities described therein, and shall inure to the benefit of the heirs, executors and administrators of such person.  Expenses reasonably incurred by a person in successfully enforcing a right to indemnification or advancement of expenses provided to such person by, or as permitted by, this article shall be paid by the Corporation.

SECTION 5.No Retroactive Amendment.  No amendment, alteration or repeal of this article, nor the adoption of any provision inconsistent with this article, shall adversely affect the rights of a person to indemnification and advancement of expenses hereunder existing at the time of such amendment, modification or repeal, or the adoption of such an inconsistent provision.

ARTICLE VI

Seal

The Corporation shall have a seal that shall contain the words “Magellan Health Services, Inc.” and may be affixed to documents of the Corporation as prima facie evidence of the act of the Corporation to the extent provided by law.

ARTICLE VII

Share Certificates and Transfers

SECTION 1.Form of Share Certificates.  Shares of the Corporation may be represented by certificates or may be uncertificated, but stockholders shall be entitled to receive share certificates representing their shares as provided by law.  Share certificates

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shall be in such form as the Board may from time to time determine and shall be signed by the President or one of the Vice Presidents and countersigned by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary and embossed with the seal of the Corporation or, if not so signed and sealed, shall bear the engraved or printed facsimile signatures of the officers authorized to sign and the engraved or printed facsimile of the seal of the Corporation.  The death, incapacity, resignation or removal of an officer who signed or whose facsimile signature appears on a share certificate shall not affect the validity of the share certificate.

SECTION 2.Transfers of Record.  The shares of the Corporation shall, upon the surrender and cancellation of the certificate or certificates representing the same, be transferred upon the books of the Corporation at the request of the holder thereof, named in the surrendered certificate or certificates, in person or by his legal representatives or by his attorney duly authorized by written power of attorney filed with the Corporation or its transfer agent.  In case of loss or destruction of a certificate of stock, another may be issued in lieu thereof in such manner and upon such terms as the Board shall authorize.

SECTION 3.Record Dates.  The Board may set a time, not more than 60 days nor less than 10 days prior to the date of any meeting of the stockholders, or not more than 60 days prior to the date set for the payment of any dividend or distribution or the date for the allotment of rights, or the date when any change or conversion or exchange of shares stock will be made or go into effect, as a record date for the determination of the stockholders entitled to notice of, or to vote at, any such meeting, or entitled to receive payment of any such dividend or distribution, or to receive any such allotment of rights, or to exercise the rights in respect to any such change, conversion, or exchange of shares of the Corporation.  In such case, only such Stockholders as shall be stockholders of record on the date so set shall be entitled to notice of, or to vote at, such meeting, or to receive payment of such dividend or distribution, or to receive such allotment of rights, or exercise such rights, as the case may be, notwithstanding any transfer of shares of the Corporation on the books of the Corporation after any record date set as aforesaid.

ARTICLE VIII

Fiscal Year

The fiscal year of the Corporation shall end on the 31st day of December.

ARTICLE IX

Other Special Approval Requirements

The vote required for any action of the Board or the stockholders shall be only such vote as is required by law, the Certificate of Incorporation or other provisions of the Bylaws, except that at any time when any shares of Multi-Vote Common Stock are outstanding (i) any action by the Board of Directors pursuant to Section 2 of Article III

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(as in effect at the Effective Time) of the Bylaws to increase the number of members of the Board of Directors above nine, other than in respect of any directors to be elected exclusively by the holders of one or more series of Preferred Stock, shall require the affirmative vote of three-fourths of the Whole Board and (ii) any amendment of the Bylaws that would repeal or modify, or would adopt any provision inconsistent with, the provisions of Sections 2 or 3 of Article III hereof (in each case as in effect at the Effective Time), or of this Article IX (as in effect at the Effective Time), shall require, in addition to any other vote required by law or the Certificate of Incorporation or Bylaws, the affirmative vote of the holders of at least two-thirds of the voting power of all the shares of Common Stock.

ARTICLE X

Amendments

Except as provided in Article IX hereof (as in effect at the Effective Time), the Bylaws, as from time to time in effect, may be amended, modified or repealed, in whole or in part, at any time and from time to time in any respect by either (i) the stockholders, by the affirmative vote of the holders of a majority of the voting power of the outstanding shares of Common Stock, or (ii) by the Board, by the affirmative vote of a majority of the Whole Board, in either case except as otherwise provided by law or by the Certificate of Incorporation; ; provided, however, that so long as the Minimum Hold Condition (as defined in the Certificate of Incorporation) is satisfied, any amendment to or repeal of the sections                           of these Bylaws shall also require the affirmative vote of a majority of the Class 3 Directors.

ARTICLE XI

Effective Time

The foregoing Bylaws shall be effective upon the filing with the Secretary of State of the State of Delaware and the effectiveness of such Amended and Restated Certificate of Incorporation in accordance with the law (the “EffectiveTime”).

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EX-99.3

EXHIBIT 99.3

MAGELLAN HEALTH SERVICES, INC.

9 ³/₈% Series A Senior Notes due 2008
9 ³/₈% Series B Senior Notes due 2008

INDENTURE

Dated as of                  , 2003

HSBC Bank USA,

Trustee

TABLE OF CONTENTS

ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01.	Definitions.
SECTION 1.02.	Other Definitions.
SECTION 1.03.	Incorporation by Reference of Trust Indenture Act
SECTION 1.04.	Rules of Construction
ARTICLE 2 THE NOTES
SECTION 2.01.	Form and Dating
SECTION 2.02.	Execution and Authentication
SECTION 2.03.	Registrar and Paying Agent
SECTION 2.04.	Paying Agent To Hold Money in Trust
SECTION 2.05.	Noteholder Lists
SECTION 2.06.	Transfer and Exchange
SECTION 2.07.	Replacement Notes
SECTION 2.08.	Outstanding Notes
SECTION 2.09.	Temporary Notes
SECTION 2.10.	Cancellation
SECTION 2.11.	Defaulted Interest
SECTION 2.12.	CUSIP Numbers
ARTICLE 3 REDEMPTION
SECTION 3.01.	Notices to Trustee
SECTION 3.02.	Selection of Notes To Be Redeemed
SECTION 3.03.	Notice of Redemption
SECTION 3.04.	Effect of Notice of Redemption
SECTION 3.05.	Deposit of Redemption Price
SECTION 3.06.	Notes Redeemed in Part
ARTICLE 4 COVENANTS
SECTION 4.01.	Payment of Notes
SECTION 4.02.	Provisions of Reports and Other Information
SECTION 4.03.	Limitation on Additional Indebtedness
SECTION 4.04.	Limitation on Restricted Payments
SECTION 4.05.	Limitation on Payment Restrictions Affecting Restricted Subsidiaries
SECTION 4.06.	Limitation on Use of Proceeds from Asset Sales
SECTION 4.07.	Limitation on Transactions with Affiliates
SECTION 4.08.	Change of Control
SECTION 4.09.	Compliance Certificate
SECTION 4.10.	Further Instruments and Acts
SECTION 4.11.	Limitation on Liens
SECTION 4.12.	Limitation on Sale/Leaseback Transactions
SECTION 4.13.	Limitation on Layering Debt
SECTION 4.14.	Future Subsidiary Guarantors
ARTICLE 5 SUCCESSOR COMPANY
SECTION 5.01.	Merger, Consolidation or Sale of Assets
ARTICLE 6 DEFAULTS AND REMEDIES
SECTION 6.01.	Events of Default
SECTION 6.02.	Acceleration
SECTION 6.03.	Other Remedies
SECTION 6.04.	Waiver of Past Defaults

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SECTION 6.05.	Control by Majority
SECTION 6.06.	Limitation on Suits
SECTION 6.07.	Rights of Holders to Receive Payment
SECTION 6.08.	Collection Suit by Trustee
SECTION 6.09.	Trustee May File Proofs of Claim
SECTION 6.10.	Priorities
SECTION 6.11.	Undertaking for Costs
SECTION 6.12.	Waiver of Stay or Extension Laws
ARTICLE 7 TRUSTEE
SECTION 7.01.	Duties of Trustee
SECTION 7.02.	Rights of Trustee
SECTION 7.03.	Individual Rights of Trustee
SECTION 7.04.	Trustee’s Disclaimer
SECTION 7.05.	Notice of Defaults
SECTION 7.06.	Reports by Trustee to Holders
SECTION 7.07.	Compensation and Indemnity
SECTION 7.08.	Replacement of Trustee
SECTION 7.09.	Successor Trustee by Merger
SECTION 7.10.	Eligibility; Disqualification
SECTION 7.11.	Preferential Collection of Claims Against Company
ARTICLE 8 DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01.	Discharge of Liability on Notes; Defeasance
SECTION 8.02.	Conditions to Defeasance
SECTION 8.03.	Application of Trust Money
SECTION 8.04.	Repayment to Company
SECTION 8.05.	Indemnity for Government Obligations
SECTION 8.06.	Reinstatement
ARTICLE 9 AMENDMENTS
SECTION 9.01.	Without Consent of Holders
SECTION 9.02.	With Consent of Holders
SECTION 9.03.	Compliance with Trust Indenture Act
SECTION 9.04.	Revocation and Effect of Consents and Waivers
SECTION 9.05.	Notation on or Exchange of Notes
SECTION 9.06.	Trustee to Sign Amendments
SECTION 9.07.	Payment for Consent
ARTICLE 10 MISCELLANEOUS
SECTION 10.01.	Trust Indenture Act Controls
SECTION 10.02.	Notices
SECTION 10.03.	Communication by Holders with Other Holders
SECTION 10.04.	Certificate and Opinion as to Conditions Precedent
SECTION 10.05.	Statements Required in Certificate or Opinion
SECTION 10.06.	When Notes Disregarded
SECTION 10.07.	Rules by Trustee, Paying Agent and Registrar
SECTION 10.08.	Legal Holidays
SECTION 10.09.	GOVERNING LAW
SECTION 10.10.	No Personal Liability of Directors, Officers, Employees and Stockholders
SECTION 10.11.	Successors
SECTION 10.12.	Multiple Originals
SECTION 10.13.	Table of Contents; Headings

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CROSS-REFERENCE TABLE

TIA Section	Indenture Section
310(a)(1)	7.10
(a)(2)	7.10
(a)(3)	N.A.
(a)(4)	N.A.
(a)(5)	7.10
(b)	7.08; 7.10
(c)	N.A.
311(a)	7.11
(b)	7.11
(c)	N.A.
312(a)	2.05
(b)	10.03
(c)	10.03
313(a)	7.06
(b)(1)	N.A.
(b)(2)	7.06
(c)	10.02
(d)	7.06
314(a)	4.02; 4.09
(b)	N.A.
(c)(1)	10.04
(c)(2)	10.04
(c)(3)	N.A.
(d)	N.A.
(e)	10.05
(f)	N.A.
315(a)	7.01
(b)	7.05; 10.02
(c)	7.01
(d)	7.01
(e)	6.11
316(a)(last sentence)	10.06
(a)(1)(A)	6.05
(a)(1)(B)	6.04
(a)(2)	N.A.
(b)	6.07
317(a)(1)	6.08
(a)(2)	6.09
(b)	2.04
318(a)	10.01

N.A. means Not Applicable.

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be part of the Indenture.

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INDENTURE dated as of                   , 2003, between MAGELLAN HEALTH SERVICES, INC., a Delaware corporation (the “Company”), and HSBC Bank USA, a New York banking corporation and trust company, as trustee (the “Trustee”).

RECITALS OF THE COMPANY

A.The Company and certain of its subsidiaries filed for reorganization under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”); and

B.By order, dated                          , 2003, the Bankruptcy Court has confirmed the Company’s Third Amended Joint Plan of Reorganization (the “Plan”) in accordance with section 1129 of the Bankruptcy Code and such Plan has become effective as of                 , 2003; and

C.As part of the Plan, the Company has agreed, inter alia, to issue (i) $      million principal amount of 9 ³/₈% Series A Senior Notes due 2008 (the “Series A Notes”) to holders of the Company’s outstanding 9 ³/₈% Senior Notes due 2007 (the “Old Notes”) in exchange for all of the Company’s outstanding Old Notes and obligations thereunder and (ii) $      million principal amount of 9 ³/₈% Series B Senior Notes due 2008 (the “Series B Notes”; collectively, with the Series A Notes referred to as the “Notes”) to the holders of Other General Unsecured Claims (Class 9) under the Plan and to Houlihan Lokey Howard & Zukin Capital.

All things necessary to make the Notes, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the issuance of the Notes to the Holders (as defined herein) thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Notes, as follows:

ARTICLE 1

Definitions and Incorporation by Reference

SECTION 1.01.Definitions.

“Aetna Note” means the $45 million (plus an additional amount equal to the aggregate amount of accrued and unpaid interest on $60 million Aetna Claim (as defined in the Plan) from February 15, 2003 through the Effective Date) note due December 31, 2005 (subject to partial extension) received by Aetna, Inc. for the Aetna Claim pursuant to the Plan.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  A Person shall be deemed to “control” (including the correlative meanings, the terms “controlling”, “controlled by”, and “under common control with”) another Person if the controlling Person (a) possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of voting securities, by agreement or otherwise, or (b) owns, directly or indirectly, equity securities having 10% or more of the voting power of the issued and outstanding equity securities having ordinary voting power for the election of directors (or equivalent governing body) of the controlled Person.

“Asset Sale” means, with respect to any Person, the sale, lease, conveyance, disposition or other transfer by such Person of any of its assets (including by way of a sale-and-leaseback and including the sale or other transfer of any Equity Interests in any Restricted Subsidiary or the issuance of any Equity Interests in any Restricted Subsidiary) which results in proceeds with a fair market value of $1 million or more.  However, the following shall

not constitute an Asset Sale: (i) unless part of a disposition including other assets or operations, (A) dispositions of Cash, Cash Equivalents and Investment Grade Securities, (B) payments on or in respect of non-Cash proceeds of Asset Sales, and (C) dispositions of Investments by Foreign Subsidiaries of the Company in Cash and instruments or securities or in certificates of deposit (or comparable instruments) with banks or similar institutions; (ii) the lease of space in the ordinary course of business and in a manner consistent with either past practices or the healthcare industry generally; (iii) the issuance or sale by the Company of any Equity Interests in the Company; (iv) the sale, lease, conveyance, disposition or other transfer of assets to the Company or any Restricted Subsidiary thereof; (v) the sale, lease, conveyance, disposition or other transfer of assets in the ordinary course of business; (vi) the sale or discount of accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof; (vii) the exercise of the Aetna Purchase Option, as defined in and in accordance with the Plan; or (viii) the sale, lease, conveyance, disposition or other transfer of all or substantially all of the assets of the Company as permitted by Section 5.01 or any disposition that constitutes a Change of Control.

“Attributable Debt” in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended); provided, however, that if such Sale/Leaseback Transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby will be determined without duplication in accordance with the definition of Capital Lease Obligation.

“Average Life” means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment (assuming the exercise by the obligor of such Indebtedness of all unconditional (other than as to the giving of notice) extension options of each such scheduled payment date) of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such principal payment by (ii) the sum of all such principal payments.

 “Board of Directors” means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of such Board.

“Business Day” means each day which is not a Legal Holiday.

“Capital Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease which would at such time be so required to be capitalized on the balance sheet in accordance with GAAP.

“Capital Stock” means any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock (including, without limitation, common and preferred stock), excluding warrants, options or similar instruments or other rights to acquire Capital Stock.

“Cash” means money or currency or a credit balance in a Deposit Account.

“Cash Equivalents” means (i) securities issued or directly and fully guaranteed or insured by the United States of America or any agency, instrumentality or sponsored corporation thereof and backed by the full faith and credit of the United States of America, and in each case having maturities of not more than one year from the date of acquisition, (ii) time deposits, certificates of deposit, Eurodollar time deposits, overnight bank deposits and bankers’ acceptances with any commercial bank of recognized standing, having capital and surplus in excess of $250 million and the commercial paper of the holding company of which, at the time of acquisition thereof, is rated at least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody’s (or if at such time neither is issuing ratings, then a comparable rating of another nationally recognized rating agency), or, if no such commercial paper rating is available, a long-term debt rating, at the time of acquisition thereof, of at least A or the equivalent thereof by S&P or at least A-2 or the equivalent thereof by Moody’s (or if at such time neither is issuing ratings, then a comparable rating of another nationally recognized rating agency), (iii) repurchase obligations with a term of not more than 92 days for underlying securities of the types described in clause (i) above entered into with any commercial bank meeting the qualifications specified in clause (ii) above, (iv) other investment instruments offered or sponsored by financial institutions having capital and surplus in excess of $250 million and the commercial paper

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of the holding company of which, at the time of acquisition thereof, is rated at least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody’s (or if at such time neither is issuing ratings, then a comparable rating of another nationally recognized rating agency), or, if no such commercial paper rating is available, a long-term debt rating, at the time of acquisition thereof, of at least A or the equivalent thereof by S&P or at least A-2 or the equivalent thereof by Moody’s (or if at such time neither is issuing ratings, then a comparable rating of another nationally recognized rating agency), (v) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having, at the time of acquisition thereof, one of the two highest rating categories obtainable from either Moody’s or S&P (or if at such time neither is issuing ratings, then a comparable rating of another nationally recognized rating agency), (vi) commercial paper rated, at the time of acquisition thereof, at least A-2 or the equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody’s (or if at such time neither is issuing ratings, then a comparable rating of another nationally recognized rating agency), in each case maturing within one year after the date of acquisition, (vii) investments in money market funds which invest substantially all their assets in securities of the types described in clauses (i) through (vi) above, and (viii) other money market investments with a weighted average maturity of less than one year in an aggregate amount not to exceed $10 million at any time outstanding.

“Change of Control” means (a) the sale, lease, transfer or other disposition in one or more related transactions of all or substantially all of the Company’s assets, or the sale of substantially all of the Capital Stock or assets of the Company’s Subsidiaries that constitutes a sale of substantially all of the Company’s assets, to any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act), (b) the merger or consolidation of the Company with or into another corporation, or the merger of another corporation into the Company or any other transaction, with the effect, in any such case, that the stockholders of the Company immediately prior to such transaction hold 50% or less of the total voting power entitled to vote in the election of directors, managers or trustees of the surviving corporation or, in the case of a triangular merger, the parent corporation of the surviving corporation resulting from such merger, consolidation or such other transaction, (c) any Person (except for the parent corporation of the surviving corporation in a triangular merger) or group acquires beneficial ownership (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such person or group shall be deemed to have “beneficial ownership” of all shares that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), of a majority in interest of the voting power or voting Capital Stock of the Company, (d) the liquidation or dissolution of the Company.  The purchase by the Onex Group (as defined below) of the Company’s Multi-Vote Common Stock (the “MV Stock”) shall not be deemed to be a Change of Control, and transfers of MV Stock among members of the Onex Group will not constitute a Change of Control so long as the Minimum Hold Condition (as defined in the Plan) is still met after giving effect to such transfer.  “Onex Group” means Onex American Holdings II, LLC, Onex (as defined below), Onex Partners (as defined below) and any company at the time controlled by Onex or Onex Partners, each of which shall be considered “a member of the Onex Group” for purposes hereof.  For purposes hereof, Onex shall be deemed to control any Person controlled by Mr. Gerald W. Schwartz so long as Mr. Gerald W. Schwartz controls Onex.  “Control” has the meaning given to that term in Rule 12b-2 under the Exchange Act.  “Onex” means Onex Corporation, a corporation organized and existing on the Effective Date under the laws of the Province of Ontario, Canada, and any successor to all or substantially all the assets and business thereof, including any interest owned by Onex in the shares of capital stock of the Corporation.  “Onex Partners” means Onex Partners LP, a limited partnership organized and existing on the Effective Date under the laws of the State of Delaware, and any successor to all or substantially all the assets and business thereof, including any interest owned by Onex Partners in shares of capital stock of the Company.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor on the indenture securities.

“Consolidated Cash Interest Coverage Ratio” means the ratio of (i) Consolidated Net Income plus the sum of Consolidated Interest Expense, income tax expense, depreciation expense, amortization expense and other non-cash charges of the Company and its Restricted Subsidiaries (to the extent such items were deducted in computing Consolidated Net Income of the Company) (collectively, “EBITDA”) for such preceding four fiscal quarters for which financial statements are available to (ii) the Consolidated Cash Interest Expense of the Company and its

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Restricted Subsidiaries for the preceding four fiscal quarters; provided that (without duplication):  (A) if the Company or any of its Restricted Subsidiaries incurs, assumes, Guarantees, prepays, repays or redeems any Indebtedness subsequent to the commencement of the period for which the Consolidated Cash Interest Coverage Ratio is being calculated but prior to the event for which the calculation of the Consolidated Cash Interest Coverage Ratio is made (other than the incurrence or prepayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to revolving credit facilities) or if the transaction giving rise to the need to calculate the Consolidated Cash Interest Coverage Ratio is an incurrence, assumption, Guarantee, prepayments, repayment or redemption of Indebtedness, then the Consolidated Cash Interest Coverage Ratio will be calculated giving pro forma effect to any such incurrence, assumption, Guarantee, prepayments, repayment or redemption of Indebtedness, as if the same had occurred at the beginning of the applicable period, (B) if the Company or any Restricted Subsidiary shall have made any Material Asset Sale subsequent to the commencement of the period for which the Consolidated Cash Interest Coverage Ratio is being calculated but prior to the event for which the calculation of the Consolidated Cash Interest Coverage Ratio is made, the EBITDA for such period shall be reduced by an amount equal to the EBITDA (if positive) directly attributable to the assets that are the subject of such Material Asset Sale for such period or increased by an amount equal to the EBITDA (if negative) directly attributable thereto for such period, and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense for such period directly attributable to any Indebtedness of the Company or any Restricted Subsidiary prepaid, repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Material Asset Sale (or, if the Equity Interests of any Restricted Subsidiary are sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale), (C) if the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any Person that becomes a Restricted Subsidiary) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which Investment or acquisition of assets constitutes all or substantially all of an operating unit of a business subsequent to the commencement of the period for which the Consolidated Cash Interest Coverage Ratio is being calculated but prior to the event for which the calculation of the Consolidated Cash Interest Coverage Ratio is made, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto (including the incurrence, assumption, Guarantee, prepayment, repayment or redemption of any Indebtedness and any pro forma expense and cost reductions that are directly attributable to such transaction), as if such Investment or acquisition occurred at the beginning of the applicable period and (D) if subsequent to the commencement of the period for which the Consolidated Cash Interest Coverage Ratio is being calculated but prior to the event for which the calculation of the Consolidated Cash Interest Coverage Ratio is made any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Material Asset Sale or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (B) or (C) above if made by the Company or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Material Asset Sale, Investment or acquisition of assets occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is given for a transaction, the pro forma calculation shall be made in good faith by a responsible financial or accounting officer of the Company.  In making such calculations on a pro forma basis, interest attributable to Indebtedness bearing a floating interest rate shall be computed as if the rate in effect on the date of computation had been the applicable rate for the entire period.

“Consolidated Cash Interest Expense” of any Person means, for any period for which the determination thereof is to be made, the Consolidated Interest Expense of such Person less, to the extent incurred, assumed or Guaranteed by such Person and its Subsidiaries in such period and included in such Consolidated Interest Expense, (i) deferred financing costs and (ii) other noncash interest expense and noncash dividends on Preferred Stock; provided, however, that amortization of original issue discount shall be included in Consolidated Cash Interest Expense.

“Consolidated Interest Expense” of any Person means, for any period for which the determination thereof is to be made, the total interest expense of such Person and its consolidated Restricted Subsidiaries, plus, without duplication, to the extent incurred, assumed or Guaranteed by such Person and its Subsidiaries in such period but not included in such interest expense, (A)(i) all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing, (ii) all but the principal component of rentals in respect of

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Capital Lease Obligations, paid, accrued or scheduled to be paid or accrued by such Person during such period, (iii) capitalized interest, (iv) amortization of original issue discount and deferred financing costs, (v) noncash interest expense, (vi) interest accruing on any Indebtedness of any other Person to the extent such Indebtedness is Guaranteed by such Person or any of its Restricted Subsidiaries; provided that payment of such amounts by the Company or any Restricted Subsidiary is being made to, or is sought by, the holders of such Indebtedness pursuant to such guarantee, (vii) net costs (benefits) associated with Hedging Obligations relating to interest rate protection (including amortization of fees), (viii) Preferred Stock dividends paid in respect of all Preferred Stock of the Subsidiaries of such Person and Redeemable Stock of such Person in either case held by Persons other than such Person or a Wholly-owned Subsidiary of such Person, and (ix) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than such Person) in connection with Indebtedness incurred, assumed or Guaranteed by such plan or trust, all as determined in accordance with GAAP, less (B) interest expense of the type described in clause (A) above attributable to Unrestricted Subsidiaries of such Person to the extent the related Indebtedness is not Guaranteed or paid by such Person or any Restricted Subsidiary of such Person.

“Consolidated Net Income” means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP, plus the sum of the amount allocated to excess reorganization value, employee stock ownership plan expense and consolidated stock option expense (to the extent such items were taken into account in computing the Net Income of such Person and its Subsidiaries); provided, however, that:

(i)the Net Income of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions actually paid in Cash to the referent Person or its Restricted Subsidiaries;

(ii)the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded;

(iii)the cumulative effect of a change in accounting principles shall be excluded; and

(iv)that portion of any net income (loss) of any Restricted Subsidiary of such Person if such Restricted Subsidiary of such Person is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to such Person that violate Section 4.05 (without giving effect to clause (6) thereof with respect to any Indebtedness) shall be excluded, except that (A) such Person’s equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of Cash that could have been distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or otherwise (subject, in the case of a dividend or distribution that could have been made to another Restricted Subsidiary, to the limitation contained in this clause) and (B) the Company’s equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income.

Notwithstanding the foregoing, for the purposes of Section 4.04 only, there shall be excluded from Consolidated Net Income any dividends, repayments of loans or advances or other transfers of assets or other amounts from or in respect of Unrestricted Subsidiaries to such Person or a Restricted Subsidiary of such Person to the extent such dividends, repayments or transfers or other amounts increase the amount of Restricted Payments permitted pursuant to Section 4.04(a)(2)(F).

“Credit Agreement” means the Credit Agreement, dated as of                     , 2003, among the Company, the lenders party thereto in their capacities as lenders thereunder and Deutsche Bank Trust Company Americas, as administrative agent, together with the related documents thereto (including, without limitation, any notes, guarantee agreements and security documents), in each case as such agreements may be amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, including any agreement extending the maturity of, refinancing, replacing or otherwise restructuring (including increasing the amount of available borrowings thereunder or adding Subsidiaries of the Company as additional borrowers or guarantors thereunder) all

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or any portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders.

“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.

“Deposit Account” means a demand, savings, passbook, money market or like account with or sponsored by a commercial bank, financial institution, investment bank or brokerage firm, savings and loan association or like organization or a government securities dealer, other than an account evidenced by a negotiable certificate of deposit.

“Disinterested Director” means, with respect to any specific transaction, any director of the Company that does not have a direct or indirect interest (other than any interest resulting solely from such director’s ownership of Equity Interests in the Company) in such transaction.

“Domestic Subsidiary” means a Restricted Subsidiary of the Company incorporated or organized under the laws of the United States of America, any State thereof or the District of Columbia.

“Effective Date” means the Effective Date as defined in the Plan.

“Equity Interests” means (a) Capital Stock, warrants, options or similar instruments or other rights to acquire Capital Stock (but excluding any debt security which is convertible into, or exchangeable for, Capital Stock), and (b) limited and general partnership interests, interests in limited liability companies, joint venture interests and other ownership interests in any Person.

“Equity Offering” means an underwritten primary public offering of common stock of the Company pursuant to an effective registration statement under the Securities Act or a private primary offering of common stock of the Company.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Foreign Subsidiary” means a Restricted Subsidiary of the Company that is not a Domestic Subsidiary.

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession, as in effect on the Effective Date.

“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by arrangements to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business.  The term “Guarantee” used as a verb has a corresponding meaning.

“Healthcare Service Business” means a business, the majority of whose revenues are derived from providing or arranging to provide or administering, managing or monitoring healthcare services or any business or activity that is reasonably similar thereto or a reasonable extension, development or expansion thereof or ancillary thereto.

“Hedging Obligations” means, with respect to any Person, the obligations of such Person under (i) currency exchange or interest rate swap agreements, currency

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exchange or interest rate cap agreements and currency exchange or interest rate collar agreements and (ii) other agreements or arrangements designed to protect such Person against fluctuations in currency exchange or interest rates.

“Holder” or “Noteholder” means the Person in whose name a Note is registered on the Registrar’s books.

“Incur” means to create, issue, assume, guarantee, incur or otherwise become directly or indirectly liable with respect to any Indebtedness. The term “Incurrence” when used as a noun shall have a correlative meaning.

“Indebtedness” of any Person means, without duplication at the date of determination thereof:

(i)the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money (including in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments) or for the deferred purchase price of property or services (other than (a) trade payables on terms of 365 days or less incurred in the ordinary course of business and (b) deferred earn-out and other performance-based payment obligations incurred in connection with acquisitions of Healthcare Service Businesses), all as determined in accordance with GAAP;

(ii)all Capital Lease Obligations and Attributable Debt of such Person;

(iii)all Guarantees of such Person in respect of Indebtedness of others;

(iv)the aggregate amount of all unreimbursed drawings in respect of letters of credit or other similar instruments issued for the account of such Person (less the amount of Cash, Cash Equivalents or Investment Grade Securities on deposit securing reimbursement obligations in respect of such letters of credit or similar instruments) to the extent that same remains unreimbursed for more than four Business Days;

(v)all Indebtedness, obligations or other liabilities otherwise nonrecourse to such Person of such Person or of others for borrowed money secured by a Lien on any property of such Person, whether or not such indebtedness, obligations or liabilities are assumed by such Person, the amount of such Indebtedness being deemed to be the lesser of the fair market value of such property or the amount so secured;

(vi)the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Redeemable Stock and, with respect to any Subsidiary of the Company, any Preferred Stock (but excluding, in each case, any accrued dividends); and

(vii)to the extent not otherwise included in this definition actual (rather than notional) liabilities under Hedging Obligations of such Person;

provided, however, that (i) capital stock (other than Redeemable Stock) shall not constitute Indebtedness and (ii) all or any portion of Indebtedness that becomes the subject of a defeasance (whether a “legal” defeasance or a “covenant” or “in substance” defeasance) shall, at all times that such defeasance remains in effect, cease to be treated as Indebtedness for purposes of this Indenture.

“Indenture” means this Indenture as amended or supplemented from time to time.

“Insurance Subsidiary” means, with respect to the Company, (a) so long as they are Restricted Subsidiaries of the Company, Golden Isle Assurance Company and Plymouth Insurance Company, Ltd., each a corporation organized under the laws of Bermuda, and their respective successors and assigns, and (b) any other Restricted Subsidiaries of the Company that are authorized or admitted to carry on or transact one or more aspects of the business of selling, issuing or underwriting insurance in any jurisdiction and are regulated by the insurance departments or similar regulatory authorities of such jurisdiction or of the jurisdictions where they are domiciled or primarily doing business.

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“Investment” means, when used with respect to any Person, any direct or indirect advance, loan or other extension of credit (other than the creation of receivables in the ordinary course of business) or capital contribution by such Person (by means of transfers of cash or property (other than Equity Interests in the Company) to others or payments for property or services for the account or use of others, or otherwise) to any other Person, or any direct or indirect purchase or other acquisition by such Person of a beneficial interest in capital stock, bonds, notes, debentures or other securities issued by any other Person, or any Guarantee by such Person of the Indebtedness of any other Person (in which case such Guarantee shall be deemed an Investment in such other Person in an amount equal to the aggregate amount of Indebtedness so guaranteed). For purposes of the definition of “Unrestricted Subsidiary” and Section 4.04, (i) ”Investment” shall include the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to (x) the Company’s “Investment” in such Subsidiary at the time of such redesignation less (y) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and (ii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in the case of property with a fair market value of up to $15 million, as determined in good faith by a responsible financial officer of the Company, and in the case of property with a fair market value in excess of $15 million, as determined in good faith by the Board of Directors.

“Investment Grade Securities” means: (i) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (other than Cash Equivalents), (ii) debt securities or debt instruments with a rating of BBB- or higher by S&P, Baa3 or higher by Moody’s or Class (2) or higher by NAIC or the equivalent of such rating by such rating organization, or, if no rating of S&P, Moody’s or NAIC then exists, the equivalent of such rating by any other nationally recognized securities rating agency, but excluding any debt securities or instruments constituting loans or advances among the Company and its Subsidiaries, and (iii) investments in any fund that invests exclusively in investments of the type described in clauses (i) and (ii) which fund may also hold immaterial amounts of Cash or Cash Equivalents pending investment and/or distribution.

 “Lien” means any mortgage, pledge, security interest, charge, hypothecation, collateral assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), or security agreement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing and the filing of any financing statement, other than notice or precautionary filings not perfecting a security interest, under the Uniform Commercial Code or comparable law of any jurisdiction, domestic or foreign, in respect of any of the foregoing).

“Material Asset Sale” means any Asset Sale exceeding $25 million of all or substantially all of an operating unit of a business.

“NAIC” means National Association of Insurance Commissioners.

“Net Cash Proceeds” means, with respect to any Asset Sale, the proceeds of such Asset Sale in the form of Cash or Cash Equivalents, including payments in respect of deferred payment obligations (to the extent corresponding to the principal, but not the interest, component thereof) when received in the form of Cash or Cash Equivalents (except to the extent such obligations are financed or sold with recourse to the Company or any Restricted Subsidiary of the Company), casualty loss insurance proceeds, condemnation awards and proceeds from the conversion of other property received when converted to Cash or Cash Equivalents, net of: (i) brokerage commissions and other fees and expenses related to such Asset Sale, (ii) provision for all taxes as a result of such Asset Sale without regard to the consolidated results of operations of the Company and its Subsidiaries, taken as a whole, (iii) payments made to repay Indebtedness or any other obligation outstanding at the time of such Asset Sale that either, (A) in the case of a sale of all of the Equity Interests in any Restricted Subsidiary, is a direct obligation of such Restricted Subsidiary or (B) is secured by the asset subject to such sale or was incurred to finance the acquisition or construction of, improvements on, or operations related to, the assets subject to such sale and (iv) appropriate amounts to be provided by the Company or any Restricted Subsidiary of the Company as a reserve against any liabilities associated with such Asset Sale (such reserves, however, to be counted as Net Cash Proceeds once released from reserve), including, without limitation, pension and other post-employment benefit liabilities,

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liabilities related to environmental matters and liabilities under indemnification obligations associated with such Asset Sale, all as determined in conformity with GAAP.

“Net Income” means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP, excluding, however, any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with any Asset Sale (including, without limitation, dispositions pursuant to Sale/Leaseback Transactions) not in the ordinary course of business, and excluding any extraordinary, unusual, non-recurring or similar type of gain or loss, together with any related provision for taxes.

“New Management Incentive Program” means a stock option plan for certain of the Company’s employees which provides for options to acquire shares of common stock representing up to 10% of the common stock of the Company on the terms and conditions established by the compensation committee of the Board of Directors and as allowed by the Plan.

“Non-Recourse Indebtedness” shall mean any Indebtedness of the Company or any of its Restricted Subsidiaries if the holder of such Indebtedness has no recourse, direct or indirect, absolute or contingent, to the general assets of the Company or any of its Restricted Subsidiaries.

“Officer” means the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer or the Secretary of the Company.

“Officers’ Certificate” means a certificate signed by two Officers.

“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company or the Trustee.

“Permitted Asset Swap” means any one or more transactions in which the Company or any of its Restricted Subsidiaries exchanges assets for consideration consisting of Equity Interests in or assets of a Person engaged in a Healthcare Service Business, or assets of a Person the Company or any of its Restricted Subsidiaries intends to use in a Healthcare Service Business, and, to the extent necessary to equalize the value of the assets being exchanged, cash; provided that cash does not exceed 30% of the sum of the amount of the cash and the fair market value of the Equity Interests or assets received or given by the Company and its Restricted Subsidiaries in such transaction.

“Permitted Investments” means (a) any Investment in the Company or any Restricted Subsidiary or any Permitted Joint Venture of the Company or of a Restricted Subsidiary that is a Healthcare Service Business; (b) any Investment in Cash, Cash Equivalents and Investment Grade Securities; (c) any Investment by the Company or any Restricted Subsidiary of the Company in a Person that is engaged in the Healthcare Service Business if as a result of such Investment (i) such Person becomes a Restricted Subsidiary or a Permitted Joint Venture of the Company or of a Restricted Subsidiary or (ii) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary or a Permitted Joint Venture of the Company or of a Restricted Subsidiary; (d) any Investment in securities, notes or other assets not constituting Cash or Cash Equivalents and received in connection with an Asset Sale made pursuant to Section 4.06 or any other disposition of assets not constituting an Asset Sale; (e) any Investment existing on the Effective Date; (f) any transaction to the extent it constitutes an Investment that is permitted by and made in accordance with Section 4.07(b)(ii); (g) any Investment in Healthcare Service Businesses having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (g) that are at that time outstanding, not to exceed 5% of Total Assets of the Company at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); (h) any Investment by Restricted Subsidiaries in other Restricted Subsidiaries and in the Company; (i) advances to employees in the ordinary course of business not in excess of $5 million outstanding at any one time; (j) any Investment acquired by the Company or any of its Restricted Subsidiaries (i) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or in good faith settlement of delinquent obligations to customers or (ii) as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment

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in default; (k) Hedging Obligations; (l) Investments the payment for which consists exclusively of Equity Interests (other than Redeemable Stock) of the Company; (m) Investments made in connection with Permitted Asset Swaps;  (n) guarantees by the Company or any Restricted Subsidiary to the extent permitted by Section 4.03; (o) Investments held by the Company consisting of obligations of officers, directors or employees of the Company or any of its Subsidiaries in connection with such officers’, directors’ or employees’ acquisition of shares of capital stock of the Company so long as no cash is paid by the Company or any of its Restricted Subsidiaries in connection with the acquisition of any such obligations; (p) advances to employees for moving, relocation and travel expenses in the ordinary course of business to the extent otherwise permitted by this Indenture, and (q) additional Investments having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (p) that are at that time outstanding, not to exceed $20 million at the time of such Investment (with fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value).

“Permitted Joint Venture” means, with respect to any Person: (i) any corporation, association, limited liability company or other business entity (other than a partnership) (A) of which 50% of the total voting power of shares of Capital Stock or other Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the Restricted Subsidiaries of that Person or a combination thereof and (B) which is either managed or controlled by such Person or any of its Restricted Subsidiaries and (ii) any partnership of which (x) 50% of the general or limited partnership interests are owned or controlled, directly or indirectly, by such Person or one or more of the Restricted Subsidiaries of that Person or a combination thereof and (y) which is either managed or controlled by such Person or any of its Restricted Subsidiaries, and which in the case of each of clauses (i) and (ii) is engaged in a Healthcare Service Business.

“Permitted Liens” means, with respect to the Company or any Restricted Subsidiary: (i) Liens on property or assets of the Company and its Restricted Subsidiaries existing on the Effective Date (excluding Liens permitted by clauses (ii) and (iii) hereof); (ii) any Lien created under the Credit Agreement and any lien securing other Indebtedness permitted pursuant to clauses (i) and (xi) of Section 4.03(b) (to the extent incurred under the Credit Agreement), and with respect to both such clauses (i) and (xi) of Section 4.03(b) replacements, refinancings, refundings, and substitute facility or facilities thereof, in whole or in part, and additional facility or facilities to the extent permitted by such clause (i) or (iv) of Section 4.03(b), as applicable; (iii) any Lien created under the Aetna Purchase Option, as defined in the Plan, and under the Aetna Note and with respect to clauses (iii) of Section 4.03(b), replacements, refinancings, refundings and substitute facilities for the Aetna Note, in whole or in part to the extent permitted by such clause (iv) of Section 4.03(b); (iv) any Lien existing on any property or asset prior to the acquisition thereof by the Company or any of its Restricted Subsidiaries (including any acquisition by means of a merger or consolidation with or into the Company or any of its Restricted Subsidiaries), provided that (A) such Lien is not created in contemplation of or in connection with such acquisition and (B) such Lien does not apply or extend to any other property or assets of the Company or any of its Restricted Subsidiaries (other than assets and property affixed or appurtenant thereto); (v) Liens for taxes not yet due or which are being contested in good faith or Liens for unpaid local or state taxes that are not in the aggregate material; (vi) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business and securing obligations that are not yet delinquent or are being contested in good faith or are not in the aggregate material; (vii) pledges and deposits made in the ordinary course of business in compliance with workmen’s compensation, unemployment insurance or other social security laws or regulations (including any such pledge or deposit securing letters of credit issued in connection therewith); (viii) deposits to secure the performance of bids, trade contracts (other than for Indebtedness for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (ix) zoning restrictions, easements, rights-of-way, restrictions on use of real property and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, are not substantial in amount and do not materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business of the Company and its Restricted Subsidiaries taken as a whole; (x) purchase money security interests in real property, improvements thereto or equipment hereafter acquired (or, in the case of improvements, constructed) by the Company or any of its Restricted Subsidiaries, provided that (A) such security interests secure Indebtedness permitted by Section 4.03, (B) such security interests and the Indebtedness secured thereby is created at the time of, or within 270 days after such acquisition (or construction), (C) the Indebtedness secured thereby does not exceed the fair market value of such real property, improvements or equipment at the time of such acquisition (or construction) and (D) such security interests do not apply to any other property or assets of the Company or any of its Restricted Subsidiaries; (xi) Liens securing

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Indebtedness or other obligations of a Restricted Subsidiary of the Company owing to the Company or a Restricted Subsidiary of the Company; (xii) any Lien incurred in connection with any Indebtedness permitted to be incurred pursuant to Section 4.03(b)(vii); (xiii) Liens to secure any Refinancing (or successive Refinancings) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (i), (iv), (x) and (xii); provided, however, that: (A) such new Lien shall be limited to all or part of the same property that secured the prior Lien (plus improvements or additions to or on such property) at the time of such Refinancing and (B) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of: (x) the outstanding principal amount or, if greater, committed amount of the Indebtedness secured by Liens described under clauses (i), (iv), (x) or (xii) at the time the prior Lien became a Permitted Lien under this Indenture and (y) an amount necessary to pay any fees and expenses, including premiums, related to such Refinancings; (iv) bankers’ liens and Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business consistent with past practices in connection with title insurance, purchase agreements, judgment liens (if released, bonded or stayed within 60 days) and leases and subleases; (xv) prejudgment liens in respect of property of a Foreign Subsidiary of the Company that are incurred in connection with a claim or action against such Foreign Subsidiary before a court or tribunal outside of the United States, provided that such liens do not, individually or in the aggregate, have a material adverse effect on the business, assets, operations, prospects or condition, financial or otherwise, of the Company and its Restricted Subsidiaries taken as a whole; (xvi) Liens on the assets of the Insurance Subsidiaries securing self insurance and reinsurance obligations and letters of credit or bonds issued in support of such self insurance and reinsurance obligations, provided that the assets subject to such Liens shall only be assets of the Insurance Subsidiaries; (xvii) Liens securing Hedging Obligations so long as such Hedging Obligations relate to Indebtedness that is, and is permitted under the Indenture to be, secured; (xviii) Liens in favor of issuers of surety bonds or letters of credit issued pursuant to the request of and for the account of the Company or any of its Restricted Subsidiaries in the ordinary course of its business; (ix) Liens not otherwise permitted by the foregoing clauses (i) through (xviii) securing any Indebtedness or other obligations, provided that the aggregate principal amount of such Indebtedness and other obligations secured by Liens permitted by this clause (ix) shall not exceed $30 million at any time outstanding.

“Person” means any individual, corporation, partnership, joint venture, incorporated or unincorporated association, joint-stock company, limited liability company, trust, unincorporated organization or government or other agency or political subdivision thereof or other entity of any kind.

“Preferred Stock”, as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation.

“principal” of a Note means the principal of the Note plus the premium, if any, payable on the Note that is due or overdue at the relevant time.

“Prior Purchase Money Obligations” means purchase money obligations relating to property acquired by the Company or any of its Restricted Subsidiaries in the ordinary course of business that existed prior to the acquisition of such property by the Company or any of its Restricted Subsidiaries and that impose restrictions of the nature described in Section 4.05 on the property so acquired.

“Redeemable Stock” means that portion of any Equity Interest which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable), or upon the happening of any event (other than a change of control): (i) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or Redeemable Stock or (iii) is redeemable at the option of the holder thereof, in whole or in part, in each case on or prior to four months after the stated maturity of the Notes.

“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, refund, replace, substitute, repay, prepay, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for, in whole or in part, such Indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.

“Registration Rights Agreement” means the Registration Rights Agreement as defined in the Plan.

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“Restricted Subsidiary” means each of the Subsidiaries of the Company that has not been designated an Unrestricted Subsidiary.

“Sale/Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or a Restricted Subsidiary leases it from such Person, other than leases between the Company and a Wholly-owned Subsidiary or between Wholly-owned Subsidiaries.

“SEC” means the Securities and Exchange Commission.

“Secured Indebtedness” means any Indebtedness secured by a Lien.

“Securities Act” means the Securities Act of 1933, as amended.

“Senior Indebtedness” means the principal of and premium, if any, and interest on (such interest on Senior Indebtedness, wherever referred to in this Indenture, is deemed to include interest accruing after the filing of a petition initiating any proceeding pursuant to any bankruptcy law in accordance with and at the rate (including any rate applicable upon any default or event of default, to the extent lawful) specified in any document evidencing the Senior Indebtedness, whether or not the claim for such interest is allowed as a claim after such filing in any proceeding under such bankruptcy law) and other amounts (including, but not limited to, fees, expenses, reimbursement obligations in respect of letters of credit and indemnities) due or payable from time to time on or in connection with any Indebtedness of the Company unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall be junior in right of payment to the Notes.  Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness shall not include (a) any Indebtedness or obligation that is contractually subordinated in right of payment to any other Indebtedness or obligation of the Company, (b) any obligations with respect to any Capital Stock, (c) that portion of any Indebtedness Incurred in violation of this Indenture, except where at the time of such Incurrence, a responsible financial officer of the Company has delivered a certification as to the Company’s compliance at such time with Section 4.03(a), and the holder of such Indebtedness or its trustee, agent or representative is not aware of facts or circumstances such that such Person could not rely in good faith on such certification, (d) any obligation of the Company to any Subsidiary, (e) any liability for Federal, state, local or other taxes owed or owing by the Company or (f) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including Guarantees thereof or instruments evidencing such liabilities).

“Significant Subsidiary” means any Restricted Subsidiary that would be a “Significant Subsidiary” of the Company within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

“Stated Maturity” means, with respect to any Indebtedness, the date or dates specified in such Indebtedness as the fixed date or dates on which the payment of principal of such Indebtedness is due and payable, including pursuant to any mandatory redemption provision, it being understood that if an issue of Indebtedness has more than one fixed date on which the payment of principal is due and payable, each such fixed date shall be a separate Stated Maturity with respect to the principal amount of Indebtedness due on such date.

“Subordinated Obligation” means any Indebtedness of the Company (whether outstanding on the Effective Date or thereafter incurred, assumed or Guaranteed) that by its terms is subordinate or junior in right of payment to the Notes pursuant to a written agreement.

“Subsidiary” means with respect to any Person, (i) any corporation, association, limited liability company or other business entity (other than a partnership) of which more than 50% of the total voting power of the Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, (ii) any partnership of which more than 50% of the general or limited partnership interests are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof and (iii) any Permitted Joint Venture of such Person.

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“Subsidiary Guarantee” means any Guarantee of the Notes made by a Restricted Subsidiary pursuant to Section 4.14.

“Subsidiary Guarantor” means a Restricted Subsidiary that executes and delivers a Subsidiary Guarantee.

“Total Assets” means, with respect to any Person, the total consolidated assets of such Person and its Restricted Subsidiaries, as shown on the most recent balance sheet of such Person.

“TIA” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of this Indenture.

“Trustee” means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor.

“Trust Officer” means the Chairman of the Board, the President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters.

“Uniform Commercial Code” means the New York Uniform Commercial Code as in effect from time to time.

“Unrestricted Subsidiary” means: (i) any Subsidiary of the Company which at the time of determination is an Unrestricted Subsidiary (as designated by the Board of Directors of the Company, as provided below) and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the Company may designate any Subsidiary of the Company (including any Subsidiary and any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns any Equity Interests or Indebtedness (other than any Indebtedness incurred in connection with services performed in the ordinary course of business by such Subsidiary for the Company or any of its Restricted Subsidiaries) of, or owns, or holds any Lien on, any property of, the Company or any Restricted Subsidiary of the Company, provided that (a) any Unrestricted Subsidiary must be an entity of which shares of the Capital Stock or other Equity Interests (including partnership interests) entitled to cast at least a majority of the votes that may be cast by all shares or Equity Interests having ordinary voting power for the election of directors or other governing body are owned, directly or indirectly, by the Company, (b) such designation complies with Section 4.04 and (c) each of (I) the Subsidiary to be designated and (II) its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of the Company or any of its Restricted Subsidiaries.  The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that immediately after giving effect to such designation (x) the Company could Incur $1.00 of additional Indebtedness pursuant to Section 4.03(a) and (y) no Default shall have occurred and be continuing.  Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of the Board of Directors giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing provisions.

“U.S. Government Obligations” means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer’s option.

“Voting Stock” means, with respect to any Person, any class or series of Capital Stock of such Person that is ordinarily entitled to vote in the election of directors thereof at a meeting of stockholders called for such purpose, without the occurrence of any additional event or contingency.

“Wholly-owned Subsidiary” of any Person means any Restricted Subsidiary of such Person of which 95% or more of the outstanding Equity Interests of such Restricted Subsidiary are owned by such Person (either directly or indirectly through Wholly-owned Subsidiaries).

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SECTION 1.02.Other Definitions.

Term	Defined in Section
“Acceleration Notice”	6.02
“Affiliate Transaction”	4.07(a)
“Bankruptcy Law”	6.01
“Blockage Notice”	10.03
“Change of Control Offer”	4.08(a)
“Change of Control Payment Date”	4.08(b)
“covenant defeasance option”	8.01(b)
“Custodian”	6.01
“Event of Default”	6.01
“Excess Proceeds”	4.06(a)
“Excess Proceeds Offer”	4.06(a)
“Excess Proceeds Offer Payment Date”	4.06(b)
“Excess Proceeds Purchase Price”	4.06(a)
“Guaranteed Indebtedness”	4.14
“legal defeasance option”	8.01(b)
“Legal Holiday”	10.08
“Paying Agent”	2.03
“protected purchaser”	2.07
“Refinancing Indebtedness”	4.03(b)
“Registrar”	2.03
“Restricted Payments”	4.04(a)
“Successor Company”	5.01(a)

SECTION 1.03.Incorporation by Reference of Trust Indenture Act.  This Indenture is subject to the mandatory provisions of the TIA, which are incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings:

“Commission” means the SEC.

“indenture securities” means the Notes.

“indenture security holder” means a Holder or Noteholder.

“indenture to be qualified” means this Indenture.

“indenture trustee” or “institutional trustee” means the Trustee.

“obligor” on the indenture securities means the Company and any other obligor on the indenture securities.

All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.

SECTION 1.04.Rules of Construction.  Unless the context otherwise requires:

(1)a term has the meaning assigned to it;

(2)an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(3) “or” is not exclusive;

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(4) “including” means including without limitation;

(5)words in the singular include the plural and words in the plural include the singular;

(6)unsecured Indebtedness shall not be deemed to be subordinate or junior to Secured Indebtedness merely by virtue of its nature as unsecured Indebtedness;

(7)the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP;

(8)the principal amount of any Preferred Stock shall be (i) the maximum liquidation value of such Preferred Stock or (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock, whichever is greater.

ARTICLE 2

The Notes

SECTION 2.01.Form and Dating.  Provisions relating to the Notes are set forth in the Appendix, which is hereby incorporated in and expressly made a part of this Indenture.  The Notes and the Trustee’s certificate of authentication shall each be substantially in the form of Exhibit A hereto, which is hereby incorporated in and expressly made a part of this Indenture.  The Notes may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage (provided that any such notation, legend or endorsement shall be in a form acceptable to the Company).  Each Note shall be dated the date of its authentication.

SECTION 2.02.Execution and Authentication.  One or more Officers shall sign the Notes for the Company by manual or facsimile signature.

If an Officer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless.

A Note shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture.

The Trustee shall authenticate and make available for delivery Notes as set forth in the Appendix.

The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate the Notes. Any such appointment shall be evidenced by an instrument signed by a Trust Officer, a copy of which shall be furnished to the Company.  Unless limited by the terms of such appointment, an authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands.

SECTION 2.03.Registrar and Paying Agent.  The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (the “Registrar”) and an office or agency where Notes may be presented for payment (the “Paying Agent”).  The Registrar shall keep a register of the Notes and of their transfer and exchange.  The Company may have one or more co-registrars and one or more additional paying agents.  The term “Paying Agent” includes any additional paying agent, and the term “Registrar” includes any co-registrars.  The Company initially appoints the Trustee as (i) Registrar and Paying Agent in connection with the Notes, and (ii) the Securities Custodian (as defined in the Appendix) with respect to the Global Notes (as defined in the Appendix).

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The Company shall enter into an appropriate agency agreement with any Registrar or Paying Agent not a party to this Indenture, which shall incorporate the terms of the TIA.  The agreement shall implement the provisions of this Indenture that relate to such agent.  The Company shall notify the Trustee of the name and address of any such agent.  If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07.  The Company or any of its domestically organized Wholly-owned Subsidiaries may act as Paying Agent or Registrar.

The Company may remove any Registrar or Paying Agent upon written notice to such Registrar or Paying Agent and to the Trustee; provided, however, that no such removal shall become effective until (1) acceptance of an appointment by a successor as evidenced by an appropriate agreement entered into by the Company and such successor Registrar or Paying Agent, as the case may be, and delivered to the Trustee or (2) notification to the Trustee that the Trustee shall serve as Registrar or Paying Agent until the appointment of a successor in accordance with clause (1) above.  The Registrar or Paying Agent may resign at any time upon written notice; provided, however, that the Trustee may resign as Paying Agent or Registrar only if the Trustee also resigns as Trustee in accordance with Section 7.08.

SECTION 2.04.Paying Agent To Hold Money in Trust.  Prior to 11:00 a.m. (New York City time) on each due date of the principal of, premium, if any, and interest on any Note, the Company shall deposit with the Paying Agent (or if the Company or a Subsidiary is acting as Paying Agent, segregate and hold in trust for the benefit of the Persons entitled thereto) a sum sufficient to pay such principal, premium, if any, and interest when so becoming due.  The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Noteholders or the Trustee all money held by the Paying Agent for the payment of principal of, premium, if any, or interest on the Notes and shall notify the Trustee of any default by the Company in making any such payment.  If the Company or a Subsidiary of the Company acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund.  The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent.  Upon complying with this Section, the Paying Agent shall have no further liability for the money delivered to the Trustee.

SECTION 2.05.Noteholder Lists.  The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Noteholders.  If the Trustee is not the Registrar, the Company shall furnish, or cause the Registrar to furnish, to the Trustee, in writing at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Noteholders.

SECTION 2.06.Transfer and Exchange.  The Notes shall be issued in registered form and shall be transferable only upon the surrender of a Note for registration of transfer.  When a Note is presented to the Registrar with a request to register a transfer, the Registrar shall register the transfer as requested if the requirements of Section 8-401(a)(l) of the Uniform Commercial Code are met.  When Notes are presented to the Registrar with a request to exchange them for an equal aggregate principal amount of Notes of the same series of other denominations, the Registrar shall make the exchange as requested if the same requirements are met.  To permit registration of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Notes at the Registrar’s request.  Upon any transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by this Indenture.

The Company shall not be required to make and the Registrar need not register transfers or exchanges of Notes selected for redemption (except, in the case of Notes to be redeemed in part, the portion thereof not to be redeemed) or any Notes for a period of 15 days before a selection of Notes to be redeemed.

Prior to the due presentation for registration of transfer of any Note, the Company, the Trustee, the Paying Agent or the Registrar may deem and treat the Person in whose name a Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest, if any, on such Note and for all other purposes whatsoever, whether or not such Note is overdue, and none of the Company, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary.

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Any Holder of a Global Note shall, by acceptance of such Global Note, agree that transfers of beneficial interest in such Global Note may be effected only through a book-entry system maintained by (i) the Holder of such Global Note (or its agent) or (ii) any Holder of a beneficial interest in such Global Note, and that ownership of a beneficial interest in such Global Note shall be required to be reflected in a book entry.

All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture will evidence the same debt and will be entitled to the same benefits under this Indenture as the Notes surrendered upon such transfer or exchange.

SECTION 2.07.Replacement Notes.  If a mutilated Note is surrendered to the Registrar or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Note of the same series if the Holder (i) notifies the Company or the Trustee within a reasonable time after he has notice of such loss, destruction or wrongful taking and the Registrar has not registered a transfer prior to receiving such notification, (ii) makes such request to the Company or the Trustee prior to the Note being acquired by a protected purchaser as defined in Section 8-303 of the Uniform Commercial Code (a “protected purchaser”) and (iii) satisfies any other reasonable requirements of the Trustee and the Company including, without limitation, the requirements of Section 8-405 of the Uniform Commercial Code.  If required by the Trustee or the Company, such Holder shall furnish an indemnity bond sufficient in the reasonable judgment of the Trustee and the Company to protect the Company, the Trustee, the Paying Agent and the Registrar from any loss that any of them may suffer if a Note is replaced.  The Company and the Trustee may charge the Holder for their expenses in replacing a Note. In the event any such mutilated, lost, destroyed or wrongfully taken Note has become or is about to become due and payable, the Company in its discretion may pay such Note instead of issuing a new Note in replacement thereof.

Every replacement Note is an additional obligation of the Company.

The provisions of this Section 2.07 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, lost, destroyed or wrongfully taken Notes.

SECTION 2.08.Outstanding Notes.  Notes outstanding at any time are all Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section as not outstanding.  A Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note.

If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Note is held by a protected purchaser.

If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date money sufficient to pay all principal, premium, if any, and interest payable on that date with respect to the Notes (or portions thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is not prohibited from paying such money to the Noteholders on that date pursuant to the terms of this Indenture, then on and after that date such Notes (or portions thereof) cease to be outstanding and interest on them ceases to accrue.

SECTION 2.09.Temporary Notes.  In the event that Definitive Notes (as defined in the Appendix) are to be issued under the terms of this Indenture, until such Definitive Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of Definitive Notes but may have variations that the Company considers appropriate for temporary Notes.  Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Definitive Notes and deliver them in exchange for temporary Notes upon surrender of such temporary Notes at the office or agency of the Company, without charge to the Holder.

SECTION 2.10.Cancellation.  The Company at any time may deliver Notes to the Trustee for cancellation.  The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment.  The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment or cancellation and shall dispose of canceled Notes in accordance with

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its customary procedures or deliver canceled Notes to the Company pursuant to written direction by an Officer.  The Company may not issue new Notes to replace Notes it has redeemed, paid or delivered to the Trustee for cancellation. The Trustee shall not authenticate Notes in place of canceled Notes other than pursuant to the terms of this Indenture.

SECTION 2.11.Defaulted Interest.  If the Company defaults in a payment of interest on the Notes, the Company shall pay the defaulted interest (plus interest on such defaulted interest to the extent lawful) in any lawful manner.  The Company may pay the defaulted interest to the Persons who are Noteholders on a subsequent special record date.  The Company shall fix or cause to be fixed any such special record date and payment date to the reasonable satisfaction of the Trustee and shall promptly mail or cause to be mailed to each Noteholder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid.

SECTION 2.12.CUSIP Numbers.  The Company in issuing the Notes may use “CUSIP” numbers (if then generally in use) and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption shall not be affected by any defect in or omission of such numbers.

ARTICLE 3

Redemption

SECTION 3.01.Notices to Trustee.  If the Company elects to redeem Notes pursuant to paragraph 5 of the Notes, it shall notify the Trustee in writing of the redemption date, the principal amount of Notes to be redeemed and the paragraph of the Notes pursuant to which the redemption will occur.

The Company shall give each notice to the Trustee provided for in this Section at least 35 days before the redemption date unless the Trustee consents to a shorter period. Such notice shall be accompanied by an Officers’ Certificate and an Opinion of Counsel from the Company to the effect that such redemption will comply with the conditions herein. If fewer than all the Notes are to be redeemed, the record date relating to such redemption shall be selected by the Company and given to the Trustee, which record date shall be not fewer than 15 days after the date of notice to the Trustee.  Any such notice may be canceled at any time prior to notice of such redemption being mailed to any Holder and shall thereby be void and of no effect.

SECTION 3.02.Selection of Notes To Be Redeemed.  If less than all of the Notes are to be redeemed at any time, selection of the Notes for redemption shall be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not listed on a national securities exchange, on a pro rata basis.  The Trustee shall make the selection from outstanding Notes not previously called for redemption.  The Trustee may select for redemption portions of the principal of Notes that have denominations larger than $1,000.  Notes and portions of them the Trustee selects shall be in amounts of $1,000 or a whole multiple of $1,000.  Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.  The Trustee shall notify the Company promptly of the Notes or portions of Notes to be redeemed.

SECTION 3.03.Notice of Redemption.  At least 30 days but not more than 60 days before a date for redemption of Notes, the Company shall mail a notice of redemption by first-class mail to each Holder of Notes to be redeemed at such Holder’s registered address.

The notice shall identify the Notes to be redeemed and shall state:

(1)the redemption date;

(2)the redemption price;

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(3)the name and address of the Paying Agent;

(4)that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;

(5)if fewer than all the outstanding Notes are to be redeemed, the certificate numbers and principal amounts of the particular Notes to be redeemed;

(6)that, unless the Company defaults in making such redemption payment or the Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture, interest on Notes (or portion thereof) called for redemption ceases to accrue on and after the redemption date;

(7)the paragraph of the Notes pursuant to which the Notes called for redemption are being redeemed;

(8)the CUSIP number, if any, printed on the Notes being redeemed; and

(9)that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes.

At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at the Company’s expense. In such event, the Company shall provide the Trustee with the information required by this Section.

SECTION 3.04.Effect of Notice of Redemption.  Once notice of redemption is mailed, Notes called for redemption become due and payable on the redemption date and at the redemption price stated in the notice.  Upon surrender to the Paying Agent, such Notes shall be paid at the redemption price stated in the notice, plus accrued interest and premium, if any, to the redemption date; provided, however, that if the redemption date is after a regular record date and on or prior to the interest payment date, the accrued interest and premium, if any, shall be payable to the Noteholder of the redeemed Notes registered on the relevant record date.  Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder.

SECTION 3.05.Deposit of Redemption Price.  Prior to 11:00 a.m. (New York City time) on the redemption date, the Company shall deposit with the Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date other than Notes or portions of Notes called for redemption that have been delivered by the Company to the Trustee for cancellation.  On and after the redemption date, interest shall cease to accrue on Notes or portions thereof called for redemption so long as the Company has deposited with the Paying Agent funds sufficient to pay the principal of, and premium, if any, plus accrued and unpaid interest on the Notes to be redeemed.

SECTION 3.06.Notes Redeemed in Part.  Upon surrender of a Note that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder (at the Company’s expense) a new Note equal in principal amount to the unredeemed portion of the Note surrendered.

ARTICLE 4

Covenants

SECTION 4.01.Payment of Notes.  The Company shall promptly pay the principal of and premium (if any) and interest and on the Notes on the dates and in the manner provided in the Notes and in this Indenture.  Principal, premium (if any) and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal, premium (if any) and

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interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Noteholders on that date pursuant to the terms of this Indenture.

The Company shall pay interest on overdue principal at the rate specified therefor in the Notes, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.  With respect to the Notes the term interest shall be deemed to include liquidated damages, if any, payable under the Registration Rights Agreement.

SECTION 4.02.Provisions of Reports and Other Information.  At all times while any Note is outstanding, the Company shall timely file with the SEC and provide a copy to the Trustee and to each Noteholder, and, upon request, any beneficial owner of Notes without cost, all such reports and other information as required by Section 13 or 15(d) of the Exchange Act, including, without limitation, Forms 10-K, 10-Q and 8-K.  Upon request without cost, the Company shall also provide Noteholders and beneficial owners of Notes copies of all Officers’ Certificates delivered to the Trustee under this Indenture.  At such time as the Company is not subject to the reporting requirements of the Exchange Act, promptly after the same would be required to be filed with the SEC if the Company then were subject to Section 13 or 15(d) of the Exchange Act, the Company shall file with the Trustee and supply to each Holder and, upon request, to any beneficial owner of Notes and any prospective purchaser of Notes, without cost, copies of its financial statements and certain other reports or information comparable to that which the Company would have been required to report pursuant to Sections 13 and 15(d) of the Exchange Act, including, without limitation, the information that would be required by Forms 10-K, 10-Q and 8-K.  The Company also shall comply with the other provisions of TIA § 314(a).

SECTION 4.03.Limitation on Additional Indebtedness(a).    (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries, directly or indirectly, to Incur any Indebtedness; provided, however, the Company and its Restricted Subsidiaries may Incur Indebtedness if, after giving pro forma effect to the Incurrence of such Indebtedness and the application of any of the proceeds therefrom to repay Indebtedness, the Consolidated Cash Interest Coverage Ratio of the Company for the four most recent consecutive fiscal quarters for which financial statements are available on or prior to the date such additional Indebtedness is Incurred shall be at least 2.25 to 1.00.  Any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary of the Company (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Restricted Subsidiary of the Company.

(b)Notwithstanding Section 4.03(a), the Company and its Restricted Subsidiaries may Incur the following Indebtedness:

(i)Indebtedness (including Guarantees) under the Credit Agreement in an aggregate principal amount not to exceed $280,000,000 at any time outstanding.  In no event shall any Indebtedness incurred under this clause (i) be in the form of, or refunded, refinanced, substituted or replaced, whether directly or indirectly through the use of a special purpose entity or otherwise, with, any Indebtedness that is issued pursuant to Rule 144A or Regulation S of the Securities Act or is registered or is anticipated to be registered with the SEC;

(ii)Indebtedness of the Company and its Restricted Subsidiaries, which Indebtedness was in existence on the Effective Date (excluding Indebtedness permitted by clause (i) above or clause (iii) below);

(iii)Indebtedness represented by the Aetna Note and the Notes;

(iv)Indebtedness of the Company and its Restricted Subsidiaries Incurred in exchange for, or the proceeds of which are used to Refinance, in whole or in part, Indebtedness (subject to the following proviso, “Refinancing Indebtedness”) permitted by clauses (ii) and (iii) of this Section 4.03(b); provided, however, that:  (A) the principal amount of such Refinancing Indebtedness shall not exceed the principal amount of Indebtedness (including unused commitments) so Refinanced (plus costs of issuance), (B) such Refinancing Indebtedness ranks, relative to the Notes, no more senior than the Indebtedness being Refinanced thereby, (C) such Refinancing Indebtedness bears interest at a market rate, (D) such Refinancing Indebtedness: (1) shall have an Average Life equal to or greater than the Average Life of the

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Indebtedness being Refinanced and (2) shall not have a Stated Maturity prior to the Stated Maturity of the Indebtedness being Refinanced, (E) such Refinancing Indebtedness shall not include: (x) Indebtedness of a Restricted Subsidiary (other than Refinancing Indebtedness the proceeds of which are used to Refinance Indebtedness that was Guaranteed by such Restricted Subsidiary) that refinances Indebtedness of the Company or (y) Indebtedness of the Company or a Restricted Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary;

(v)Indebtedness of the Company or any Restricted Subsidiary to any Restricted Subsidiary or to the Company; provided, however, that, any subsequent issuance or transfer of any Capital Stock or any other event that results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of any such Indebtedness (except to the Company or a Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the issuer thereof;

(vi)Indebtedness arising from Guarantees, letters of credit, and bid, performance, appeal or surety bonds or similar bonds or instruments securing any obligations of the Company or any Restricted Subsidiary Incurred in the ordinary course of business, which Guarantees, letters of credit, bonds or similar instruments do not secure other Indebtedness;

(vii)(A) Indebtedness (including Capital Lease Obligations) Incurred by the Company or any of its Restricted Subsidiaries to finance the purchase, lease or improvement of property (real or personal) (whether through the direct purchase, lease or improvement of assets or purchase of the Equity Interests of any Person owning such assets), and (B) Attributable Debt of the Company or any of its Restricted Subsidiaries; provided that the aggregate principal amount of Indebtedness outstanding under clauses (A) and (B) does not exceed 5% of Total Assets of the Company at the time of any Incurrence thereof (including any Refinancing Indebtedness with respect thereto);

(viii)Non-Recourse Indebtedness Incurred in connection with the acquisition of real and/or personal property by the Company or its Restricted Subsidiaries; provided that such Indebtedness was in existence prior to the time of such acquisition and was not Incurred by the Person from whom such property was acquired in contemplation of such acquisition or in order to provide all or any portion of the funds or credit support utilized to consummate such acquisition;

(ix)Guarantees of any Indebtedness otherwise permitted under this Section 4.03;

(x)Indebtedness under Hedging Obligations entered into for bona fide hedging purposes of the Company or any of its Restricted Subsidiaries and not for speculative purposes; provided, however, that such Hedging Obligations do not increase the Indebtedness of the Company or any of its Restricted Subsidiaries outstanding at any time other than as a result of fluctuations in foreign currency exchange rates or interest rates, as applicable, or by reason of fees, indemnities and compensation payable thereunder;

(xi)Indebtedness other than that permitted pursuant to clauses (i) through (x) of this Section 4.03(b); provided that the aggregate outstanding amount of the Indebtedness permitted does not at any time exceed $30 million;

(xii) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within four Business Days of incurrence; and

(xiii)Indebtedness of the Company or any Restricted Subsidiary consisting of guarantees, indemnities or obligations in respect of purchase price adjustments in connection with the acquisition or disposition of assets.

For purposes of determining any particular amount of Indebtedness under this Section 4.03, guarantees, Liens or letter of credit obligations supporting Indebtedness otherwise included in the

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determination of such particular amount shall not be included.  For purposes of determining compliance with this Section 4.03 in the event that an item of Indebtedness meets the criteria of more than one of the categories of Indebtedness described in clauses (i) through (xiii) above or is permitted to be incurred pursuant to Section 4.03(a), the Company shall, in its sole discretion, classify (or later reclassify) such item of Indebtedness in any manner that complies with such covenant.  Accrual of interest, accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the payment of dividends on Redeemable Capital Stock in the form of additional shares of the same class of Redeemable Capital Stock and change in the amount outstanding due solely to the result of fluctuations in the exchange rate of currencies will not be deemed to be an incurrence of Indebtedness or an issuance of Redeemable Capital Stock for purposes of this Section 4.03;

SECTION 4.04.Limitation on Restricted Payments.  (a) The Company shall not, and shall not permit any of its Restricted Subsidiaries, directly or indirectly, to: (i) declare or pay any dividend or make any distribution on or in respect of the Company’s or any of its Restricted Subsidiaries’ Capital Stock or other Equity Interests, including any such payment in connection with any merger or consolidation (other than dividends or distributions payable to the Company or any of its Restricted Subsidiaries or payable in shares of Capital Stock or other Equity Interests of the Company other than Redeemable Stock); (ii) purchase, repurchase, redeem or otherwise acquire or retire for value any Equity Interests of the Company or any of its Subsidiaries from any Person (other than from the Company or any of its Restricted Subsidiaries); (iii) purchase, repurchase, redeem, prepay, defease or otherwise acquire or retire for value (A) any Subordinated Obligations prior to scheduled maturity, repayment or sinking fund payment or (B) any Indebtedness of any Unrestricted Subsidiary; or (iv) make any Investment other than a Permitted Investment (the foregoing actions set forth in clauses (i) through (iv) being referred to as “Restricted Payments”), if at the time the Company or such Restricted Subsidiary makes such Restricted Payment:

(1)a Default or Event of Default shall have occurred and be continuing or shall occur as a consequence thereof; or

(2)such Restricted Payment (the amount so expended, if other than in cash and if greater than $20 million, to be determined in good faith by the Board of Directors, whose determination shall be conclusive and evidenced by a resolution of the Board of Directors), together with the aggregate of all other Restricted Payments made on or after the Effective Date, exceeds the sum of:

(A)$10 million;

(B)50% of the Consolidated Net Income of the Company accrued on a cumulative basis for the period beginning on the first day of the first quarter following the Effective Date and ending on the last day of the last month immediately preceding the month in which such Restricted Payment occurs (or, if aggregate cumulative Consolidated Net Income for such period is a deficit, minus 100% of such deficit);

(C)100% of the aggregate net cash proceeds received by the Company after the Effective Date from the issuance or sale of Capital Stock or other Equity Interests of, or capital contribution to, the Company (other than such Capital Stock or other Equity Interests issued or sold to a Subsidiary of the Company or an employee stock ownership plan or similar trust established by the Company or any of its Subsidiaries and other than Redeemable Stock);

(D)the aggregate net cash proceeds received after the Effective Date by the Company from the issuance or sale of debt securities of the Company that have subsequently been converted into or exchanged for Capital Stock or other Equity Interests of the Company (other than Redeemable Stock) plus the aggregate net cash proceeds received by the Company at the time of such conversion or exchange less the amount of any cash or other property distributed by the Company or any Restricted Subsidiary upon such conversion or exchange;

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(E)100% of the aggregate net cash proceeds received by the Company after the Effective Date upon the exercise of options, warrants or similar instruments or rights (whether issued prior to or after the Effective Date) to purchase the Company’s Capital Stock (other than Redeemable Stock); and

(F)100% of the aggregate net cash proceeds received by the Company or any Restricted Subsidiary after the Effective Date from (i) the sale or other disposition of Investments (other than Permitted Investments) made by the Company and its Restricted Subsidiaries in an Unrestricted Subsidiary or (ii) a dividend from, or the sale of the stock of, an Unrestricted Subsidiary; or

(3)the Company would not be permitted to Incur $1.00 of additional Indebtedness pursuant to Section 4.03(a).

(b)The provisions of Section 4.04(a) shall not prohibit:

(i)the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of this Indenture;

(ii)the acquisition or retirement of Capital Stock of the Company held by any future, present or former employee, officer, director or consultant of the Company or any Subsidiary of the Company pursuant to the New Management Incentive Program or any other management or employee equity, stock option or benefit plan or any other agreement in an aggregate amount not to exceed $5 million in any fiscal year;

(iii)the acquisition by the Company or any of its Restricted Subsidiaries of Equity Interests of the Company or such Restricted Subsidiary, if the exclusive consideration for such acquisition is the issuance by the Company or such Restricted Subsidiary of its Equity Interests (other than Redeemable Stock);

(iv)the redemption, repurchase, acquisition or retirement of Indebtedness of the Company or its Restricted Subsidiaries being concurrently Refinanced by Refinancing Indebtedness permitted under Section 4.03;

(v)the purchase, repayment, redemption, prepayment, defeasance, acquisition or retirement of any Indebtedness, if the exclusive consideration therefor is the issuance by the Company of its Equity Interests (other than Redeemable Stock);

(vi)the redemption, repurchase, acquisition or retirement of Equity Interests in a Permitted Joint Venture of the Company or of a Restricted Subsidiary, provided that (A) if the Company or any of its Restricted Subsidiaries incurs Indebtedness in connection with such redemption, repurchase, acquisition or retirement, after giving effect to such incurrence and such redemption, repurchase, acquisition or retirement, the Company could Incur $1.00 of additional Indebtedness pursuant to Section 4.03(a) and (B) no Default or Event of Default has occurred and is continuing or would result therefrom;

(vii)dividend payments to the holders of interests in Permitted Joint Ventures of the Company or of a Restricted Subsidiary, ratably in accordance with their respective Equity Interests or, if not ratably, then in accordance with the priorities set forth in the respective organizational documents for, and agreements among holders of Equity Interests in, such Permitted Joint Ventures or Restricted Subsidiary;

(viii)the acquisition or retirement of options, warrants and similar instruments and rights upon the exercise thereof;

(ix)any purchase, redemption or other acquisition of Equity Interests of a Healthcare Service Business which is required by applicable law, regulation, rule, order, approval, license, permit or similar

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restriction (in each case issued by a governmental authority) to be purchased, redeemed or otherwise acquired by the Company or one of its Restricted Subsidiaries;

(x)the acquisition or retirement for value of any Equity Interests of the Company, or the making of any Investments in any Subsidiaries or joint ventures of the Company which previously constituted a part of the Company’s provider and healthcare franchising segment, consisting of loans, advances or other extensions of credit, in any case as acquired, retired or made as part of the consideration for the sale by the Company of Equity Interests in any such Subsidiaries or joint ventures and related transactions, where the aggregate value of such Equity Interests of the Company and the aggregate amount of such Investments made after the Effective Date do not collectively exceed a total of $5 million;

(xi)Restricted Payments required under the Plan;

(xii)repurchase of Capital Stock deemed to occur upon the exercise of stock options or warrants if such Capital Stock represents a portion of the exercise price thereof; provided however, that such repurchases will be excluded from subsequent calculations of the amount of Restricted Payments; or

(xiii)other Restricted Payments (excluding Investments that were Restricted Payments when made but are no longer outstanding at the time of determination of Restricted Payments permitted by this clause (xiii), but not excluding Investments made in accordance with this clause (xiii) that are subsequently sold or otherwise disposed of, to the extent such sale or other disposition increases the amount of Restricted Payments permitted to be made in accordance with Section 4.04(a)(2)(F)) made after the Effective Date in an aggregate amount not to exceed $15 million.

(c)The Company shall deliver to the Trustee within 60 days after the end of each of the Company’s first three fiscal quarters (and 120 days after the end of the Company’s fiscal year) in which a Restricted Payment is made under Section 4.04(a), an Officers’ Certificate setting forth each Restricted Payment made in such fiscal quarter, stating that each such Restricted Payment is permitted and setting forth the basis upon which the calculations required by Section 4.04 were computed, which calculations may be based on the Company’s financial statements included in filings required under the Exchange Act for such quarter or such year. For purposes of calculating the aggregate amount of Restricted Payments that are permitted under Section 4.04(a)(2), the amounts expended for Restricted Payments permitted under clauses (ii) through (xiii) of Section 4.04(b) shall be excluded.

SECTION 4.05.Limitation on Payment Restrictions Affecting Restricted Subsidiaries.  The Company shall not, and shall not permit any of its Restricted Subsidiaries to, from and after the Effective Date, directly or indirectly, create or otherwise cause or permit to exist or become effective or enter into any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to: (i) pay dividends or make any other distributions on its Equity Interests, the Equity Interests of any of its Restricted Subsidiaries or on any other interest or participation in, or measured by, its profits, which interest or participation is owned by the Company or any of its Restricted Subsidiaries; (ii) pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; (iii) make loans or advances to the Company or any of its Restricted Subsidiaries; or (iv) sell, lease or transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries except, in each case, for such encumbrances or restrictions existing under or by reason of:

(1)applicable law, regulation, rule, order, approval, license, permit or similar restriction, in each case issued by a governmental authority;

(2)this Indenture and the Notes;

(3)the Credit Agreement, the Aetna Note and the Aetna Amended MSA (as defined in the Plan);

(4)contractual encumbrances or restrictions in effect on the Effective Date;

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(5)in the case of clause (iv) of this Section 4.05, by reason of customary non-assignment or subletting provisions in leases entered into in the ordinary course of business;

(6)Prior Purchase Money Obligations;

(7)Indebtedness or Capital Stock of Restricted Subsidiaries that have been or are acquired by or merged with or into the Company or any of its Restricted Subsidiaries after the Effective Date; provided that such Indebtedness or Capital Stock was or is in existence prior to the time of such acquisition or merger and was not incurred, assumed or issued by the Person so acquired or merged in contemplation of such acquisition or merger or to provide all or any portion of the funds or credit support utilized to consummate such acquisition or merger; provided further that such restrictions only apply to such Restricted Subsidiary and its Subsidiaries;

(8)contracts for the sale of assets not otherwise prohibited by this Indenture, including without limitation customary restrictions with respect to a Subsidiary pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of such Subsidiary;

(9)in the case of clause (iv) of this Section 4.05, Secured Indebtedness otherwise permitted to be Incurred pursuant to Section 4.03 and Section 4.11 that limits the right of the debtor to sell, lease, transfer or otherwise dispose of the assets securing such Indebtedness;

(10)customary provisions contained in leases, licenses or other agreements entered into in the ordinary course of business or in Indebtedness permitted to be incurred pursuant to Section 4.03, in each case which do not limit the ability of any Restricted Subsidiary to take any of the actions described in clauses (i) through (iv) of this Section 4.05 with respect to a material amount of dividends, distributions, Indebtedness, loans, advances or sales, leases or transfers of properties or assets, as applicable;

(11)provisions in joint venture agreements and other similar agreements in each case related to Permitted Joint Ventures of the Company or of a Restricted Subsidiary that are materially similar to customary provisions entered into by parties to joint ventures in the Healthcare Service Business at the time of such joint venture or similar agreement;

(12)restrictions on cash or other deposits or net worth or similar type restrictions imposed by customers under contracts entered into in the ordinary course of business; and

(13)any encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (12) of this Section 4.05, in whole or in part, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are not materially more restrictive with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

SECTION 4.06.Limitation on Use of Proceeds from Asset Sales.

(a)The Company and its Restricted Subsidiaries shall not, directly or indirectly, consummate any Asset Sale with or to any Person other than the Company or a Restricted Subsidiary, unless:  (i) the Company or such Restricted Subsidiary, as the case may be, receives consideration at the time of any such Asset Sale at least equal to the fair market value of the asset sold or otherwise disposed of, (ii) at least 70% of the net proceeds from such Asset Sale are received in Cash or Cash Equivalents at closing (unless (A) such Asset Sale is a lease, or (B) such Asset Sale is in connection with the creation of, Investment in, or issuance or sale of Equity Interests by, a Permitted Joint Venture of the Company or of a Restricted Subsidiary or other Permitted Investment) and (iii) with

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respect to any Asset Sale involving the Equity Interests of any Restricted Subsidiary (unless such Restricted Subsidiary is, or after giving effect to such Asset Sale would be, a Permitted Joint Venture of the Company or of a Restricted Subsidiary or other Permitted Investment), the Company shall sell all of the Equity Interests of such Restricted Subsidiary it owns.  Within 365 days after the receipt of Net Cash Proceeds in respect of any Asset Sale, the Company must use all such Net Cash Proceeds either to invest in properties and assets used in a Healthcare Service Business (including, without limitation, a capital investment in any Person which becomes a Restricted Subsidiary) and/or to reduce the Indebtedness under Credit Agreement, the Aetna Note or other Senior Indebtedness or Indebtedness of a Restricted Subsidiary; provided that when any non-Cash proceeds are liquidated, such proceeds (to the extent they are Net Cash Proceeds) will be deemed to be Net Cash Proceeds at that time.  When the aggregate amount of Excess Proceeds (as defined below) exceeds $20 million, the Company shall make an offer (the “Excess Proceeds Offer”) to apply the Excess Proceeds to repurchase the Notes at a purchase price equal to 100% of the principal amount of such Notes, plus accrued and unpaid interest to the date of purchase (the “Excess Proceeds Purchase Price”), in accordance with the terms contemplated in Section 4.06(b).  If the Company is required to do so by the terms of any other Indebtedness, the Excess Proceeds Offer may be made ratably to purchase the Notes and other Senior Indebtedness from the Company on the terms contemplated by such other Senior Indebtedness.  To the extent that the aggregate principal amount of the Notes (plus accrued interest thereon) (and, if applicable, other Senior Indebtedness) tendered pursuant to the Excess Proceeds Offer is less than the Excess Proceeds, the Company may use such deficiency, or a portion thereof, for general corporate purposes or for other purposes permitted under this Indenture.  If the aggregate principal amount of the Notes surrendered by Holders thereof (and, if applicable, other Senior  Indebtedness surrendered by holders thereof) exceeds the amount of Excess Proceeds, the Company shall select the Notes to be purchased in accordance with the procedures (including prorating in the event of oversubscription) described under Sections 4.06(b), 4.06(c) and 4.06(d).  “Excess Proceeds” shall mean any Net Cash Proceeds from an Asset Sale that is not invested or used to reduce the Senior Indebtedness, or Indebtedness of a Restricted Subsidiary as provided in the second sentence of this paragraph.  Notwithstanding the foregoing, any Asset Sale which results in Net Cash Proceeds of less than $5 million and all Asset Sales (including any Asset Sale which results in Net Cash Proceeds of less than $5 million) in any twelve consecutive-month period which result in Net Cash Proceeds of less than $10 million in the aggregate shall not be subject to the requirement of Section 4.06(a)(ii).

(b)Within 10 days following the occurrence of an event which mandates an Excess Proceeds Offer under Section 4.06(a), the Company shall mail a notice (along with any other instructions determined by the Company, consistent with this Section 4.06, that a Holder must follow in order to have its Notes purchased) to the Trustee and to each Holder stating:

(1)that the Excess Proceeds Offer is being made pursuant to this Section 4.06 and that all Notes tendered and not subsequently withdrawn will be accepted for payment and paid for by the Company;

(2)the Excess Proceeds Purchase Price and the purchase date (which shall not be less than 30 days nor more than 60 days after the date such notice is mailed) (the “Excess Proceeds Offer Payment Date”);

(3)that any Note not tendered shall continue to accrue interest and shall continue to be governed by the terms of this Indenture in all respects;

(4)that, unless the Company defaults in the payment thereof, all Notes accepted for payment pursuant to the Excess Proceeds Offer shall cease to accrue interest on and after the Excess Proceeds Offer Payment Date;

(5)that Holders electing to have any Notes purchased pursuant to an Excess Proceeds Offer will be required to surrender the Notes to be purchased to the Paying Agent at the address specified in the notice prior to the close of business on the Business Day next preceding the respective Excess Proceeds Offer Payment Date;

(6)that Holders will be entitled to withdraw their election on the terms and conditions set forth in such notice; and

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(7)that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered; provided that each Note purchased and each such new Note issued shall be in a principal amount of $1,000 or integral multiples thereof.

(c)Holders electing to have a Note purchased shall be required to surrender the Note, with an appropriate form duly completed, to the Paying Agent at the address specified in the notice prior to the close of business on the Business Day next preceding the Excess Proceeds Offer Payment Date.  Holders shall be entitled to withdraw their election if the Trustee or the Company receives not later than one Business Day prior to the purchase date a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note which was delivered for purchase by the Holder and a statement that such Holder is withdrawing his election to have such Note purchased. If on the Excess Proceeds Offer Payment Date the aggregate principal amount of Notes and, if applicable, any other Senior Indebtedness included in the Excess Proceeds Offer surrendered by holders thereof exceeds the Exceeds Proceeds, the Company shall select the Notes and, if applicable, other Senior Indebtedness to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Notes and other Senior Indebtedness in denominations of $1,000, or integral multiples thereof, shall be purchased).

(d)On (or, in the case of clause (ii) of this Section 4.06(d), at the Company’s election, before) the Excess Proceeds Offer Payment Date, the Company shall (i) accept for payment all Notes or portions thereof tendered and not theretofore withdrawn and which are selected for repurchase pursuant to the Excess Proceeds Offer, (ii) deposit with the Paying Agent immediately available funds sufficient to pay the Excess Proceeds Purchase Price of all Notes or portions thereof accepted for payment, and (iii) deliver or cause to be delivered to the Trustee all Notes so tendered, together with an Officers’ Certificate specifying the Notes or portions thereof tendered to the Company or the Paying Agent.  The Paying Agent shall promptly mail or deliver to each holder of Notes so tendered payment in an amount equal to the Excess Proceeds Purchase Price for such Notes, and the Trustee shall promptly authenticate and mail or deliver to such Holder one or more certificates evidencing new Notes equal in aggregate principal amount to any unpurchased portion of the Notes surrendered; provided that each such new Note shall be in a principal amount of $1,000 or integral multiples thereof.

(e)The Company shall comply with the requirements of Regulation 14E and Rule 13e-4 (other than the filing requirements of such rule) under the Exchange Act, and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Notes pursuant to an Excess Proceeds Offer.  To the extent that the provisions of any such securities laws or regulations conflict with provisions of this Section, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section by virtue thereof.

SECTION 4.07.Limitation on Transactions with Affiliates.

(a)The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or conduct any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of the Company (an “Affiliate Transaction”):  (i) on terms that are materially less favorable to the Company or such Restricted Subsidiary, as the case may be, than those that could be obtained at the time of such transaction in arm’s-length dealings with a Person who is not such an Affiliate and (ii) that, in the event such Affiliate Transaction involves an aggregate amount in excess of $15 million, is not in writing and has not been approved by a majority of the Disinterested Directors. In addition, if such Affiliate Transaction involves an amount in excess of $30 million, a fairness opinion must be provided by a nationally recognized appraisal or investment banking firm.

(b)The provisions of Section 4.07(a) shall not prohibit:  (i) any Restricted Payment or Permitted Investment permitted to be paid pursuant to Section 4.04, (ii) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, or indemnities provided under, employment arrangements, stock options and stock ownership plans approved by the Board of Directors, (iii) loans or advances to employees in the ordinary course of business in accordance with past practices of the Company, but in any event not to exceed $2 million in the aggregate outstanding at any one time, (iv) the payment of reasonable fees to, and indemnities provided on behalf of, directors of the Company and its Subsidiaries who are not employees of the

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Company or its Subsidiaries, (v) any transaction between the Company and a Restricted Subsidiary or between Restricted Subsidiaries or (vi)arrangements in existence as of the Effective Date with Persons that employ staff providers and which provide service exclusively on behalf of the Company and its Subsidiaries, which arrangements are not material to the Company and its Subsidiaries taken as a whole.

SECTION 4.08.Change of Control.

(a)Upon the occurrence of a Change of Control, each Holder shall have the right to require that the Company repurchase all or any part of such Holder’s Notes (the “Change of Control Offer”) at a purchase price in cash equal to 101% of the aggregate principal amount thereof and premium, if any, plus accrued and unpaid interest to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest and premium, if any, due on the relevant interest payment date), in accordance with the terms contemplated in Section 4.08(b); provided, however, that notwithstanding the occurrence of a Change in Control, the Company shall not be obligated to purchase the Notes pursuant to this Section 4.08 in the event that it has exercised its right to redeem all the Notes under paragraph 5 of the Notes. In the event that at the time of such Change of Control the terms of any Indebtedness restrict or prohibit the repurchase of Notes pursuant to this Section 4.08, then prior to the mailing of the notice to Holders provided for in Section 4.08(b), the Company shall (i) repay in full all such Indebtedness or offer to repay in full all such Indebtedness and repay the Indebtedness of each lender who has accepted such offer or, (ii) (x) obtain any requisite consent under the agreements governing such Indebtedness to permit the repurchase of Notes as provided for in this Section 4.08 or (y) deliver to the Trustee an Officers’ Certificate stating that no such consent is required.

(b)Within 10 days following any Change of Control (except as provided in the proviso to the first sentence of Section 4.08(a)), the Company shall mail a notice (along with any other instructions determined by the Company, consistent with this Section 4.08, that a Holder must follow in order to have its Notes purchased) to the Trustee and to each Holder stating:

(1)that the Change of Control Offer is being made pursuant to Section 4.08 of this Indenture and that all Notes tendered and not subsequently withdrawn shall be accepted for payment and paid for by the Company;

(2)the purchase price and the purchase date (which shall not be less than 30 days nor more than 60 days after the date such notice is mailed) (the “Change of Control Payment Date”);

(3)that any Note not tendered shall continue to accrue interest and shall continue to be governed by the terms of this Indenture in all respects;

(4)that, unless the Company defaults in the payment thereof, all Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest on and after the Change of Control Payment Date;

(5)that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes to be purchased to the Paying Agent at the address specified in the notice prior to the close of business on the Business Day next preceding the Change of Control Payment Date;

(6)that Holders shall be entitled to withdraw their election on the terms and conditions set forth in such notice;

(7)that Holders whose Notes are being purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered; provided that each Note purchased and each such new Note issued shall be in a principal amount of $1,000 or integral multiples thereof; and

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(8)the circumstances and relevant facts as determined by the Company regarding such Change of Control.

(c)Holders electing to have a Note purchased shall be required to surrender the Note, with an appropriate form duly completed, to the Paying Agent at the address specified in the notice prior to the close of business on the Business Day next preceding the Change of Control Payment Date. Holders shall be entitled to withdraw their election if the Trustee or the Company receives not later than one Business Day prior to the purchase date a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note which was delivered for purchase by the Holder and a statement that such Holder is withdrawing his election to have such Note purchased.

(d)On (or, in the case of clause (ii) of this Section 4.08(d), at the Company’s election, before) the Change of Control Payment Date, the Company shall (i) accept for payment all Notes or portions thereof tendered and not theretofore withdrawn, pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent immediately available funds sufficient to pay the purchase price of all Notes or portions thereof accepted for payment, and (iii) deliver or cause to be delivered to the Trustee all Notes so tendered, together with an Officers’ Certificate specifying the Notes or portions thereof tendered to the Company or the Paying Agent.  The Paying Agent shall promptly mail or deliver to each Holder of Notes so tendered payment in an amount equal to the purchase price for such Notes, and the Trustee shall promptly authenticate and mail or deliver to such Holder one or more certificates evidencing new Notes equal in aggregate principal amount to any unpurchased portion of the Notes surrendered; provided that each such new Note shall be in a principal amount of $1,000 or integral multiples thereof.  The Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

(e)Notwithstanding the foregoing provisions of this Section, the Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in Section 4.08(b) applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.

(f)The Company shall comply with the requirements of Regulation 14E and Rule 13e-4 (other than the filing requirements of such rule) under the Exchange Act, and any other securities laws and regulations thereunder that are applicable in connection with the repurchase of the Notes resulting from a Change of Control.  To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this Section by virtue thereof.

SECTION 4.09.Compliance Certificate.  The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company an Officers’ Certificate stating that in the course of the performance by the signers of their duties as Officers of the Company they would normally have knowledge of any Default and whether or not the signers know of any Default that occurred during such period. If they do, the certificate shall describe the Default, its status and what action the Company is taking or proposes to take with respect thereto.  The Company also shall comply with Section 314(a)(4) of the TIA.

SECTION 4.10.Further Instruments and Acts.  Upon request of the Trustee, the Company shall execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture.

SECTION 4.11.Limitation on Liens.  The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien, other than Permitted Liens, on any of their respective assets, now owned or hereafter acquired, securing any Indebtedness, unless the Notes are equally and ratably secured; provided that if the Indebtedness which is secured is by its terms expressly subordinate or junior in right of payment to the Notes, the Lien securing such subordinate or junior Indebtedness shall be subordinate and junior to the Lien securing the Notes with the same relative priority as such subordinated or junior Indebtedness shall have with respect to the Notes.

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SECTION 4.12.Limitation on Sale/Leaseback Transactions.  The Company shall not, and shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback Transaction with respect to any property unless: (i) the Company or such Restricted Subsidiary would be entitled to (A) Incur Indebtedness in an amount equal to the Attributable Debt with respect to such Sale/Leaseback Transaction pursuant to Section 4.03 and (B) create a Lien on such property securing such Attributable Debt without equally and ratably securing the Notes pursuant to Section 4.11, (ii) the net proceeds received by the Company or such Restricted Subsidiary in connection with such Sale/Leaseback Transaction are at least equal to the fair market value of such property and (iii) the transfer of such property is permitted by, and the Company applies the proceeds of such transaction in compliance with, Section 4.06.

SECTION 4.13.Future Subsidiary Guarantors.  The Company will not permit any Restricted Subsidiary, directly or indirectly, to guarantee any Indebtedness of the Company other than the Credit Agreement, the Aetna Note, the Aetna Purchase Option, (as defined in the Plan and to the extent it constitutes Indebtedness) and Hedging Obligations permitted by this Indenture (“Guaranteed Indebtedness”) unless (i) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to this Indenture providing for a Subsidiary Guarantee of payment of the Notes by such Restricted Subsidiary and (ii) such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Company or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Subsidiary Guarantee.  If the Guaranteed Indebtedness is pari passu with the Notes, then the guarantee of such Guaranteed Indebtedness shall be pari passu with or subordinated to the Subsidiary Guarantee; and if the Guaranteed Indebtedness is subordinated to the Notes, then the guarantee of such Guaranteed Indebtedness shall be subordinated to the Subsidiary Guarantee at least to the extent that all Guaranteed Indebtedness is subordinated to the Notes.  Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted Subsidiary shall provide by its terms that it shall be automatically and unconditionally released and discharged upon the release or discharge of the guarantee which resulted in the creation of such Restricted Subsidiary’s Subsidiary Guarantee, except a discharge or release by, or as a result of, payment under such guarantee.

ARTICLE 5

Successor Company

SECTION 5.01.Merger, Consolidation or Sale of Assets.

(a)The Company shall not consolidate with, merge with or into, or transfer all or substantially all of its assets (in one transaction or a series of related transactions) to, any Person or permit any party to merge with or into it unless:

(i)the Company shall be the continuing Person, or the Person (if other than the Company) (the “Successor Company”) formed by such consolidation or into or with which the Company is merged or to which the properties and assets of the Company are transferred shall be a corporation organized and existing under the laws of the United States or any State thereof or the District of Columbia and shall expressly assume, by a supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all of the obligations of the Company under the Notes and this Indenture and this Indenture remains in full force and effect;

(ii)immediately before and immediately after giving effect to such transaction (and treating any Indebtedness which becomes an obligation of the Company, the Successor Company or any Restricted Subsidiary as a result of such transaction as having been incurred by the Company, the Successor Company or such Restricted Subsidiary at the time of such transaction), no Event of Default or Default shall have occurred and be continuing;

(iii)except in the case of a merger of the Company with a Wholly-owned Subsidiary (which does not have assets or liabilities in excess of $1 million) of a newly-formed holding company for the sole purpose of forming a holding company structure, the Company or the Successor Company, as applicable, could, after giving pro forma effect to such transaction, Incur $1.00 of Indebtedness pursuant to Section 4.03(a); and

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(iv)the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture (provided that the Opinion of Counsel will not be required to cover compliance with any financial tests or financial covenants).

(b)Notwithstanding clauses (ii) and (iii) of Section 5.01(a), (a) any Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company or another Restricted Subsidiary and (b) the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company in another jurisdiction.

(c)The Successor Company shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, and the predecessor Company in the case of a conveyance, transfer or lease of all or substantially all its assets shall be released from all obligations under this Indenture, including, without limitation, any obligation to pay the principal of and interest on the Notes.

ARTICLE 6

Defaults and Remedies

SECTION 6.01.Events of Default.  An “Event of Default” occurs if:

(1)the Company defaults in any payment of interest on any Note when the same becomes due and payable and such default continues for a period of 30 days;

(2)the Company (i) defaults in the payment of the principal of any Note when the same becomes due and payable at its Stated Maturity, upon redemption, upon acceleration or otherwise or (ii) fails to redeem or purchase Notes when required pursuant to this Indenture or the Notes;

(3)the Company fails to comply with Section 5.01;

(4)the Company fails to comply in any respect with any of its agreements in the Notes or this Indenture (other than those referred to in (1), (2) or (3) above) and such failure continues for 30 days after receipt of the notice specified in the penultimate paragraph of this Section 6.01;

(5)default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness of the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness is now existing or hereafter created, which default results from the failure to pay any such Indebtedness at its stated final maturity or results in the acceleration of such Indebtedness prior to its stated final maturity and the aggregate principal amount of such Indebtedness is at least $20 million, or the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness the maturity of which has been accelerated, aggregates $35 million or more;

(6)the Company or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

(A)commences a voluntary case;

(B)consents to the entry of an order for relief against it in an involuntary case;

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(C)consents to the appointment of a Custodian of it or for any substantial part of its property; or

(D)makes a general assignment for the benefit of its creditors; or takes any comparable action under any foreign laws relating to insolvency;

(7)a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(A)is for relief against the Company or any Significant Subsidiary in an involuntary case;

(B)appoints a Custodian of the Company or any Significant Subsidiary or for any substantial part of its property; or

(C)orders the winding up or liquidation of the Company or any Significant Subsidiary;

or any similar relief is granted under any foreign laws, and in each case the order or decree remains unstayed and in effect for 60 days; or

(8)the Company or any Restricted Subsidiary fails to pay final judgments aggregating in excess of $20 million which judgments are not paid, discharged or stayed within 60 days after their entry.

The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body.

The term “Bankruptcy Law” means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. The  term “Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

A Default under clause (4) is not an Event of Default until the Trustee or the Holders of at least 25% in aggregate principal amount of the outstanding Notes notify the Company of the Default and the Company does not cure such Default within the time specified after receipt of such notice. Such notice must be in writing and specify the Default, demand that it be remedied and state that such notice is a “Notice of Default”.

The Company shall deliver to the Trustee, within 30 days after becoming aware of the occurrence thereof, written notice in the form of an Officers’ Certificate of any Event of Default and any event which with the giving of notice or the lapse of time would become an Event of Default, its status and what action the Company is taking or proposes to take with respect thereto.

SECTION 6.02.Acceleration.  If an Event of Default (other than an Event of Default specified in Section 6.01(6) or (7) with respect to the Company) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% of the principal amount of the Notes then outstanding, by written notice to the Company (and to the Trustee if such notice is given by such Holders) (the “Acceleration Notice”), may, and the Trustee at the request of such Holders shall, declare all unpaid principal of, and accrued interest on, such Notes to be due and payable immediately. Upon a declaration of acceleration, such principal and accrued interest shall be due and payable.  If an Event of Default specified in Section 6.01(6) or (7) with respect to the Company occurs, all unpaid principal of and accrued interest on the Notes then outstanding shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Company, the Trustee or any Holder.  The Holders of a majority of the aggregate principal amount of the Notes outstanding by notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become

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due solely because of acceleration.  No such rescission shall affect any subsequent Default or impair any right consequent thereto.

SECTION 6.03.Other Remedies.  If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding.  A delay or omission by the Trustee or any Noteholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy.  All available remedies are cumulative.

SECTION 6.04.Waiver of Past Defaults.  The Holders of a majority in aggregate principal amount of the outstanding Notes by notice to the Trustee may waive an existing Default or Event of Default and its consequences, except (i) a Default in the payment of the principal of or interest on a Note or (ii) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Noteholder affected. When a Default or Event of Default is waived, it is cured and ceases to exist, but no waiver shall extend to any subsequent or other Default or impair any consequent right.

SECTION 6.05.Control by Majority.  The Holders of a majority in principal amount of the Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee.  However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of other Noteholders or would involve the Trustee in personal liability; provided, however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any action hereunder, the Trustee shall be entitled to indemnification by the Noteholders satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action.

SECTION 6.06.Limitation on Suits.  Except to enforce the right to receive payment of principal or interest when due, no Noteholder may pursue any remedy with respect to this Indenture or the Notes unless:

(1)the Holder gives to the Trustee written notice stating that an Event of Default is continuing;

(2)the Holders of at least 25% in principal amount of the Notes outstanding make a written request to the Trustee to pursue the remedy;

(3)such Holder or Holders offer to the Trustee security or indemnity reasonably satisfactory to the Trustee against any loss, liability or expense;

(4)the Trustee does not comply with the request within 30 days after receipt thereof and the offer of security or indemnity; and

(5)during such 30-day period the Holders of a majority of the aggregate principal amount of the outstanding Notes do not give the Trustee a direction which is inconsistent with the request.

A Noteholder may not use this Indenture to prejudice the rights of another Noteholder or to obtain a preference or priority over another Noteholder.

SECTION 6.07.Rights of Holders to Receive Payment.  Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of, premium, if any, and interest on the Notes held by such Holder, on or after the respective due dates expressed in the Notes, or to bring suit for the enforcement of

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any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

SECTION 6.08.Collection Suit by Trustee.  If an Event of Default specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.07.

SECTION 6.09.Trustee May File Proofs of Claim.  The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Noteholders allowed in any judicial proceedings relative to the Company, any Subsidiary, their creditors or their property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and may become a member, voting or nonvoting, of any committee of creditors appointed in any such judicial proceedings.  Any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07.

SECTION 6.10.Priorities.  If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order:

FIRST: to the Trustee for amounts due under Section 7.07;

SECOND: to Noteholders for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; and

THIRD: to the Company.

The Trustee may fix a record date and payment date for any payment to Noteholders pursuant to this Section.  At least 15 days before such record date, the Trustee shall mail to each Noteholder and the Company a notice that states the record date, the payment date and amount to be paid.

SECTION 6.11.Undertaking for Costs.  In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in principal amount of the Notes.

SECTION 6.12.Waiver of Stay or Extension Laws.  The Company (to the extent it may lawfully do so) shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.

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ARTICLE 7

Trustee

SECTION 7.01.Duties of Trustee.

(a)If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs.

(b)Except during the continuance of an Event of Default:

(1)the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(2)in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

(c)The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

(1)this paragraph does not limit the effect of paragraph (b) of this Section;

(2)the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

(3)the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.

(d)Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.

(e)The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company.

(f)Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

(g)No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

(h)Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section and to the provisions of the TIA.

SECTION 7.02.Rights of Trustee.

(a)The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document.

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(b)Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel (provided that the Opinion of Counsel will not be required to cover compliance with any financial tests or financial covenants).  The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers’ Certificate or Opinion of Counsel.

(c)The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.

(d)The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Trustee’s conduct does not constitute willful misconduct or negligence.

(e)The Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

(f)The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, note or other paper or document unless requested in writing to do so by the Holders of not less than a majority in principal amount of the Notes at the time outstanding, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney, upon reasonable notice to the Company and during normal business hours.

SECTION 7.03.Individual Rights of Trustee.  The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.  Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.

SECTION 7.04.Trustee’s Disclaimer.  The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company’s use of the proceeds from the Notes, and it shall not be responsible for any statement of the Company in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee’s certificate of authentication.

SECTION 7.05.Notice of Defaults.  If a Default or an Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Noteholder notice of the Default or Event of Default within 90 days after it becomes known to the Trustee, unless such Default or Event of Default has been cured or waived. Except in the case of a Default or an Event of Default in the payment of principal of or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interest of the Noteholders.

SECTION 7.06.Reports by Trustee to Holders.  As promptly as practicable after each February 1 beginning with the February 1 following the date of this Indenture, and in any event prior to April 1 in each year, the Trustee shall mail to each Noteholder a brief report dated as of February 1 that complies with Section 313(a) of the TIA. The Trustee shall also comply with Section 313(b) of the TIA.

A copy of each report at the time of its mailing to Noteholders shall be filed with the SEC and each stock exchange (if any) on which the Notes are listed. The Company agrees to notify promptly the Trustee whenever the Notes become listed on any stock exchange and of any delisting thereof.

SECTION 7.07.Compensation and Indemnity.  The Company shall pay to the Trustee from time to time reasonable compensation for its services.  The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust.  The Company shall reimburse the Trustee upon request for all

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reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services.  Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee’s agents, counsel, accountants and experts.  The Company shall indemnify the Trustee against any and all loss, liability or expense (including reasonable attorneys’ fees) incurred by or in connection with the acceptance or administration of this trust and the performance of its duties hereunder including the reasonable costs and expenses of enforcing this Indenture against the Company (including this Section 7.07) and defending itself against any claim (whether asserted by the Company or any Holder or any other Person) or liability in connection with the exercise or performance of any of the powers or duties hereunder.  The Trustee shall notify the Company of any claim for which it may seek indemnity promptly upon obtaining actual knowledge thereof; provided, however, that any failure so to notify the Company shall not relieve the Company of its indemnity obligations hereunder.  The Company shall defend the claim and the indemnified party shall provide reasonable cooperation at the Company’s expense in the defense. Such indemnified parties may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel; provided, however, that the Company shall not be required to pay such fees and expenses if it assumes such indemnified parties’ defense and, in such indemnified parties’ reasonable judgment, there is no conflict of interest between the Company and such parties in connection with such defense.  The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by an indemnified party through such party’s own willful misconduct, negligence or bad faith.

To secure the Company’s payment obligations in this Section, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of, premium, if any, and interest on particular Notes.

The Company’s payment obligations pursuant to this Section shall survive the satisfaction or discharge of this Indenture, any rejection or termination of this Indenture under any bankruptcy law or the resignation or removal of the Trustee.  When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(6) or (7) with respect to the Company, the expenses are intended to constitute expenses of administration under the Bankruptcy Law.

SECTION 7.08.Replacement of Trustee.  The Trustee may resign at any time by so notifying the Company.  The Holders of a majority in principal amount of the Notes may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee.  The Company shall remove the Trustee if:

(1)the Trustee fails to comply with Section 7.10;

(2)the Trustee is adjudged bankrupt or insolvent;

(3)a receiver or other public officer takes charge of the Trustee or its property; or

(4)the Trustee otherwise becomes incapable of acting.

If the Trustee resigns, is removed by the Company or by the Holders of a majority in principal amount of the Notes and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee), the Company shall promptly appoint a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company.  Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture.  The successor Trustee shall mail a notice of its succession to Noteholders.  The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07.

If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of 10% in principal amount of the Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.

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If the Trustee fails to comply with Section 7.10, any Noteholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

Notwithstanding the replacement of the Trustee pursuant to this Section, the Company’s obligations under Section 7.07 shall continue for the benefit of the retiring Trustee.

SECTION 7.09.Successor Trustee by Merger.  If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.

In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificates shall have the full force that certificates of the Trustee are provided anywhere in the Notes or in this Indenture.

SECTION 7.10.Eligibility; Disqualification.  The Trustee shall at all times satisfy the requirements of TIA § 310(a).  The Trustee shall have a combined capital and surplus of at least $100,000,000 as set forth in its most recent published annual report of condition.  The Trustee shall comply with TIA § 310(b); provided, however, that there shall be excluded from the operation of TIA § 310(b)(1) any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in TIA § 310(b)(1) are met.

SECTION 7.11.Preferential Collection of Claims Against Company.  The Trustee shall comply with TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b).  A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated.

ARTICLE 8

Discharge of Indenture; Defeasance

SECTION 8.01.Discharge of Liability on Notes; Defeasance.

(a)When (i) the Company delivers to the Trustee all outstanding Notes (other than Notes replaced pursuant to Section 2.07) for cancellation or (ii) all outstanding Notes have become due and payable, whether at maturity or as a result of the mailing of a notice of redemption pursuant to Article 3 hereof and the Company irrevocably deposits with the Trustee funds or U.S. Government Obligations on which payment of principal, premium, if applicable, and interest when due will be sufficient to pay at maturity or upon redemption all outstanding Notes, including interest thereon to maturity or such redemption date (other than Notes replaced pursuant to Section 2.07), and if in either case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 8.01(c), cease to be of further effect.  The Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers’ Certificate and an Opinion of Counsel that the conditions precedent to satisfaction and discharge have been satisfied (provided that the Opinion of Counsel will not be required to cover compliance with any financial tests or financial covenants) and at the cost and expense of the Company.

(b)Subject to Sections 8.01(c) and 8.02, the Company at any time may terminate (i) all of its obligations under the Notes and this Indenture (“legal defeasance option”) or (ii) its obligations under Sections 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14 and 5.01 and the operation of Sections 6.01(3), 6.01(4), 6.01(5), 6.01(6) (with respect only to Restricted Subsidiaries of the Company), 6.01(7) (with respect only to Restricted Subsidiaries of the Company) and 6.01(8) (“covenant defeasance option”).  The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option.

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If the Company exercises its legal defeasance option, payment of the Notes may not be accelerated because of an Event of Default. If the Company exercises its covenant defeasance option, payment of the Notes may not be accelerated because of an Event of Default specified in Section 6.01(3), 6.01(4), 6.01(5), 6.01(6) (with respect to Restricted Subsidiaries of the Company only), 6.01(7) (with respect to Restricted Subsidiaries of the Company only) or 6.01(8).

Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates.

(c)Notwithstanding clauses (a) and (b) above, the Company’s obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 7.07, 7.08 and in this Article 8 shall survive until the Notes have been paid in full.  Thereafter, the Company’s obligations in Sections 7.07, 8.04 and 8.05 shall survive.

SECTION 8.02.Conditions to Defeasance.  The Company may exercise its legal defeasance option or its covenant defeasance option only if:

(1)the Company irrevocably deposits in trust with the Trustee, for the benefit of the Holders, cash in U.S. Dollars, U.S. Government Obligations, or a combination thereof, in such amounts as shall be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest on the outstanding Notes on the stated maturity of such principal or installment of interest or upon redemption;

(2)the Company shall have delivered to the Trustee an Opinion of Counsel stating that the Holders of the outstanding Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such defeasance and shall be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such defeasance had not occurred, which such opinion, in the case of legal defeasance, shall also state that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling to such effect or (B) since the Effective Date there has been a change in the applicable Federal income tax laws or regulations to such effect or (C) there exists controlling precedent to such effect;

(3)no Default or Event of Default shall have occurred and be continuing on the date of such deposit (other than a Default or an Event of Default resulting from the incurrence of Indebtedness all or a portion of which will be used to fund such deposit and the granting of any Lien to secure such Indebtedness);

(4)such defeasance shall not result in a breach or violation of or constitute a default under any other material agreement or instrument to which the Company is a party or by which it is bound; and

(5)the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent to such defeasance have been satisfied.

Before or after a deposit, the Company may make arrangements satisfactory to the Trustee for the redemption of Notes at a future date in accordance with Article 3.

SECTION 8.03.Application of Trust Money.  The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article 8.  It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal of and premium, if applicable, and interest on the Notes.

SECTION 8.04.Repayment to Company.  The Trustee and the Paying Agent shall promptly turn over to the Company upon request any excess money or securities held by them at any time.

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Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon written request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Noteholders entitled to the money must look to the Company for payment as general creditors.

SECTION 8.05.Indemnity for Government Obligations.  The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations.

SECTION 8.06.Reinstatement.  If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article 8; provided, however, that, if the Company has made any payment of interest on, premium, if any, or principal of any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.

ARTICLE 9

Amendments

SECTION 9.01.Without Consent of Holders.  The Company and the Trustee may amend or supplement this Indenture or the Notes without notice to or consent of any Noteholder:

(1)to cure any ambiguity, defect or inconsistency;

(2)to comply with Article 5;

(3)to provide for certificated or uncertificated Notes (provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code);

(4)to add guarantees with respect to the Notes or to secure the Notes;

(5)to add to the covenants of the Company for the benefit of the Holders or to surrender any right or power herein conferred upon the Company;

(6)to comply with any requirements of the SEC in connection with qualifying, or maintaining the qualification of, this Indenture under the TIA; or

(7)to make any change that does not adversely affect the rights of any Noteholder.

After an amendment under this Section becomes effective, the Company shall mail to Noteholders a notice briefly describing such amendment.  The failure to give such notice to all Noteholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section.

SECTION 9.02.With Consent of Holders.  The Company and the Trustee may amend or supplement this Indenture or the Notes without notice to any Noteholder but with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange for the Notes). However, without the consent of each Noteholder affected, an amendment may not:

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(1)reduce the percentage of the principal amount of the Notes whose Holders must consent to an amendment, supplement or waiver;

(2)change the Stated Maturity or the time or currency of payment of the principal, or any interest on or reduce the rate of interest on or principal of any Note or alter the redemption provisions with respect thereto;

(3)impair the right of any Holder to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes;

(4)waive a default in the payment of the principal of or interest on any Note;

(5)make any change to the provisions of this Indenture relating to the Excess Proceeds Offer;

(6)make any change to Section 9.07 of this Indenture; or

(7)make any change in Section 6.04 or 6.07 or the second sentence of this Section 9.02.

It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof.

After an amendment under this Section becomes effective, the Company shall mail to Noteholders a notice briefly describing such amendment.  The failure to give such notice to all Noteholders, or any defect therein, shall not impair or affect the validity of an amendment under this Section.

SECTION 9.03.Compliance with Trust Indenture Act.  Every amendment to this Indenture or the Notes shall comply with the TIA as then in effect.

SECTION 9.04.Revocation and Effect of Consents and Waivers.  A consent to an amendment or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent or waiver is not made on the Note.  However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s Note or portion of the Note if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective.  After an amendment or waiver becomes effective, it shall bind every Noteholder.  An amendment or waiver becomes effective once both (i) the requisite number of consents have been received by the Company or the Trustee and (ii) such amendment or waiver has been executed by the Company and the Trustee.

The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Noteholders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture.  If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Noteholders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date.

SECTION 9.05.Notation on or Exchange of Notes.  If an amendment changes the terms of a Note, the Trustee may require the Holder of the Note to deliver it to the Trustee.  The Trustee may place an appropriate notation on the Note regarding the changed terms and return it to the Holder.  Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms.  Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment.

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SECTION 9.06.Trustee to Sign Amendments.  The Trustee shall sign any amendment authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it.  In signing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to receive, and (subject to Section 7.01) shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture and that such amendment is the legal, valid and binding obligation of the Company enforceable against it in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof (including Section 9.03).

SECTION 9.07.Payment for Consent.  Neither the Company nor any of its Subsidiaries shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to obtaining any consent, waiver or amendment of, or direction in respect of, any of the terms or provisions of this Indenture or the Notes, unless such consideration is offered or agreed to be paid, and paid, to all Holders which so consent, waive, agree or direct in the time frame set forth in solicitation documents relating to such consent, waiver, agreement or direction.

ARTICLE 10

Miscellaneous

SECTION 10.01.Trust Indenture Act Controls.  If and to the extent that any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control.

SECTION 10.02.Notices.  Any notice or communication shall be in writing and delivered in person or mailed by first-class mail addressed as follows:

if to the Company:

Magellan Health Services, Inc.
6950 Columbia Gateway Drive
Columbia, MD 21046
Attention of: Chief Financial Officer

with a copy to:

Weil Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153-0119
Attention of: Steven Karotkin

if to the Trustee:

HSBC Bank USA
[Issuer Services
452 Fifth Avenue
New York, NY 10018-2706
Attention of: Frank Godino]

The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

Any notice or communication mailed to a Noteholder shall be mailed to the Noteholder at the Noteholder’s address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed.

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Failure to mail a notice or communication to a Noteholder or any defect in it shall not affect its sufficiency with respect to other Noteholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it; except that notices or communications to the Trustee shall be effective only upon receipt.

SECTION 10.03.Communication by Holders with Other Holders.  Noteholders may communicate pursuant to TIA § 312(b) with other Noteholders with respect to their rights under this Indenture or the Notes.  The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).

SECTION 10.04.Certificate and Opinion as to Conditions Precedent.  Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee:

(1)an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(2)an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent (provided that the Opinion of Counsel will not be required to cover compliance with any financial tests or financial covenants) have been complied with.

SECTION 10.05.Statements Required in Certificate or Opinion.  Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include:

(1)a statement that the individual making such certificate or opinion has read such covenant or condition;

(2)a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(3)a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(4)a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with.

SECTION 10.06.When Notes Disregarded.  In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which the Trustee knows are so owned shall be so disregarded. Subject to the foregoing, only Notes outstanding at the time shall be considered in any such determination.

SECTION 10.07.Rules by Trustee, Paying Agent and Registrar.  The Trustee may make reasonable rules for action by or a meeting of Noteholders. The Registrar and the Paying Agent may make reasonable rules for their functions.

SECTION 10.08.Legal Holidays.  A “Legal Holiday” is a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York.  If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.  If a regular record date is a Legal Holiday, the record date shall not be affected.

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SECTION 10.09.GOVERNING LAW.  THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

SECTION 10.10.No Personal Liability of Directors, Officers, Employees and Stockholders.  No director, officer, employee or stockholder of the Company shall have any liability for any obligations of the Company under the Notes or this Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation.  Each Noteholder by accepting a Note waives and releases all such liability.  The waiver and release are part of the consideration for issuance of the Notes.

SECTION 10.11.Successors.  All agreements of the Company in this Indenture and the Notes shall bind its successors.  All agreements of the Trustee in this Indenture shall bind its successors.

SECTION 10.12.Multiple Originals.  The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.  One signed copy is enough to prove this Indenture.

SECTION 10.13.Table of Contents; Headings.  The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

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IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.

MAGELLAN HEALTH SERVICES, INC.
By:
Name:	Mark Demilio
Title:	Executive Vice President & Chief Financial Officer
HSBC BANK USA, as Trustee,
By:
Name:
Title:

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APPENDIX A

PROVISIONS RELATING TO NOTES

1.Definitions

1.1Definitions

For the purposes of this Appendix A capitalized terms used but not defined herein shall have the meanings given to such terms in the Indenture.  In addition, the following terms shall have the meanings indicated below:

“Definitive Note” means a certificated Note (bearing a restricted securities legend if the transfer of such Note is restricted by applicable law) that does not include the Global Notes Legend.

“Depositary” means The Depository Trust Company, its nominees and their respective successors.

“Global Notes Legend” means the legend set forth under that caption in Exhibit A to this Indenture.

“Securities Custodian” means the custodian with respect to a Global Note (as appointed by the Depositary) or any successor person thereto, who shall initially be the Trustee.

1.2Other Definitions

Term	Defined in Section
“Agent Members”	2.2(b)
“Global Notes”	2.2

2.The Notes

2.1Title of the Notes

There shall be (i) a series of Notes designated as the “9 ³/₈% Series A Senior Notes due 2008” (the “Series A Notes”) and (ii) a series of Notes designated as the “9 ³/₈% Series B Senior Notes due 2008” (the “Series B Notes”).

2.2Form and Dating

Upon their original issuance, Notes shall be issued in the form of one or more global notes (“Global Notes”) registered in the name of DTC, as Depositary, or its nominee and deposited with the Trustee, as Securities Custodian for DTC, for credit by DTC to the respective accounts of beneficial owners of the Notes represented thereby (or such other accounts as they may direct).  The Series A Notes and the Series B Notes shall be identical, and have different CUSIP Numbers, and shall otherwise constitute one series for purposes of this Indenture, including Articles 3, 6 and 9 hereof except that the two series may differ with respect to their transferability under the Securities Act.

(a)Global Notes.  Notes issued in global form shall be substantially in the form of Exhibit A attached hereto (including the Global Notes Legend thereon and the “Schedule of Increases or Decreases in the Global Note” attached thereto).  Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions.  Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes

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represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 of the Indenture.

Except as set forth in Section 2.06 of the Indenture, the Global Notes may be transferred, in whole and not in part, only to another nominee of the Depositary or to a successor of the Depositary or its nominee.

(b)Book-Entry Provisions.  This Section 2.2(b) shall apply only to a Global Note deposited with or on behalf of the Depositary.

The Company shall execute and the Trustee shall, in accordance with this Section 2.2(b) and pursuant to an order of the Company, authenticate and deliver initially one or more Global Notes that (a) shall be registered in the name of the Depositary for such Global Note or Global Notes or the nominee of such Depositary and (b) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary’s instructions or held by the Trustee as Securities Custodian.

Members of, or participants in, the Depositary (“Agent Members”) shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary or by the Trustee as Securities Custodian or under such Global Note, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Note.

(c)Definitive Notes.  Except as provided in Section 2.4 or 2.5, owners of beneficial interests in Global Notes will not be entitled to receive physical delivery of certificated Notes.

2.3Authentication.  The Trustee shall authenticate and make available for delivery upon a written order of the Company signed by two Officers Notes for original issue on the date hereof in an aggregate principal amount of up to $             of Series A Notes and aggregate principal amount of up to $             of Series B Notes.  Such order shall specify the amount of the Notes to be authenticated, whether the Notes are Series A Notes or Series B Notes, and the date on which the original issue of Notes is to be authenticated.  The aggregate principal amount of Notes of any series outstanding at any time may not exceed the aggregate amount of Notes authorized for issuance by the Company pursuant to one or more authentication orders except as provided in Section 2.07 of the Indenture.  At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Notes executed by the Company to the Trustee for authentication, together with an order signed by two officers for the authentication and delivery of such Notes; and the Trustee in accordance with the order shall authenticate and make available for delivery such Notes as provided in this Indenture and not otherwise.

2.4Transfer and Exchange.

(a)Transfer and Exchange of Global Notes.  (i) The transfer and exchange of Global Notes or beneficial interests therein shall be effected through the Depositary, in accordance with the Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depositary therefor.  A transferor of a beneficial interest in a Global Note shall deliver a written order given in accordance with the Depositary’s procedures containing information regarding the participant account of the Depositary to be credited with a beneficial interest in such Global Note or another Global Note of the same series and such account shall be credited in accordance with such order with a beneficial interest in the applicable Global Note and the account of the Person making the transfer shall be debited by an amount equal to the beneficial interest in the Global Note being transferred.

(ii)If the proposed transfer is a transfer of a beneficial interest in one Global Note to a beneficial interest in another Global Note of the same series, the Registrar shall reflect on its books and

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records the date and an increase in the principal amount of the Global Note to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of Global Note from which such interest is being transferred.

(iii)Notwithstanding any other provisions of this Appendix (other than the provisions set forth in Section 2.4), a Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.

(b)Legend.  Each Global Note shall bear a legend in substantially the following form:

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

Each Definitive Note will also bear the following additional legend:

[IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.]

(c)Cancellation or Adjustment of Global Note.  At such time as all beneficial interests in a Global Note have either been exchanged for Definitive Notes, transferred, redeemed, repurchased or canceled, such Global Note shall be returned by the Depositary to the Trustee for cancellation or retained and canceled by the Trustee.  At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for Definitive Notes, transferred in exchange for an interest in another Global Note, redeemed, repurchased or canceled, the principal amount of Notes represented by such Global Note shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Securities Custodian for such Global Note) with respect to such Global Note, by the Trustee or the Securities Custodian, to reflect such reduction.

(d)Obligations with Respect to Transfers and Exchanges of Notes.

(i)To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate, Definitive Notes and Global Notes at the Registrar’s request.

(ii)No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax, assessments, or similar governmental charge payable in connection therewith (other than any such transfer taxes, assessments or similar governmental charge payable upon exchange or transfer pursuant to Section 3.06, 4.06, 4.08 and 9.05 of the Indenture).

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(iii)Prior to the due presentation for registration of transfer of any Note, the Company, the Trustee, the Paying Agent or the Registrar may deem and treat the Person in whose name a Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Note and for all other purposes whatsoever, whether or not such Note is overdue, and none of the Company, the Trustee, the Paying Agent or the Registrar shall be affected by notice to the contrary.

(iv)All Notes issued upon any transfer or exchange pursuant to the terms of this Indenture shall evidence the same debt and shall be entitled to the same benefits under this Indenture as the Notes surrendered upon such transfer or exchange.

(e)No Obligation of the Trustee.

(i)The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Note, a member of, or a participant in the Depositary or any other Person with respect to the accuracy of the records of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depositary) of any notice (including any notice of redemption or repurchase) or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to the Holders and all payments to be made to Holders under the Notes shall be given or made only to the registered Holders (which shall be the Depositary or its nominee in the case of a Global Note).  The rights of beneficial owners in any Global Note shall be exercised only through the Depositary subject to the applicable rules and procedures of the Depositary.  The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners.

(ii)The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depositary participants, members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

2.5Definitive Notes

(a)A Global Note deposited with the Depositary or with the Trustee as Securities Custodian pursuant to Section 2.2 shall be transferred to the beneficial owners thereof in the form of Definitive Notes in an aggregate principal amount equal to the principal amount of such Global Note, in exchange for such Global Note, only if such transfer complies with Section 2.4 and (i) the Depositary notifies the Company that it is unwilling or unable to continue as a Depositary for such Global Note or if at any time the Depositary ceases to be a “clearing agency” registered under the Exchange Act, and a successor depositary is not appointed by the Company within 90 days of such notice or after the Company becomes aware of such cessation, or (ii) an Event of Default has occurred and is continuing or (iii) the Company, in its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of certificated Notes under this Indenture.

(b)Any Global Note that is transferable to the beneficial owners thereof pursuant to this Section 2.5 shall be surrendered by the Depositary to the Trustee, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Note, an equal aggregate principal amount of Definitive Notes of authorized denominations of the same series. Any portion of a Global Note transferred pursuant to this Section shall be executed, authenticated and delivered only in denominations of $1,000 and any integral multiple thereof and registered in such names as the Depositary shall direct.

(c)Subject to the provisions of Section 2.5(b), the registered Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes.

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(d)In the event of the occurrence of any of the events specified in Section 2.5(a)(i), (ii) or (iii), the Company will promptly make available to the Trustee a reasonable supply of Definitive Notes in fully registered form without interest coupons.

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EXHIBIT A

[FORM OF FACE OF NOTE]

[Global Notes Legend]

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

[Restricted Notes Legend](1)

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR OF SUCH NOTE), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE NOTE FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE NOTES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR

(1)  Include this additional legend for the Series B Notes as needed.

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TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.

[IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.](2)

(2)  Include this additional legend for each Definitive Note.

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No. $        

9 ³/₈% Series [A] [B] Senior Notes due 2008

CUSIP No.        

MAGELLAN HEALTH SERVICES, INC., a Delaware corporation, promises to pay to Cede & Co., or registered assigns, the principal sum [of Dollars] [listed on the Schedule of Increases or Decreases in Global Note attached hereto](3) on November 15, 2008.

Interest Payment Dates:	May 15 and November 15.
Record Dates:	May 1 and November 1.

(3)  Use the bracketed language for a Global Note.

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Additional provisions of this Note are set forth on the other side of this Note.

IN WITNESS WHEREOF, the parties have caused this instrument to be duly executed.

MAGELLAN HEALTH SERVICES, INC.
By:
Name:	Mark Demilio
Title:	Executive Vice President & Chief Financial Officer

[CORPORATE SEAL]

Dated:

TRUSTEE’S CERTIFICATE OF
AUTHENTICATION

HSBC BANK USA,
as Trustee, certifies that this is one of the Notes referred to in the Indenture.
By:
	Authorized Signatory

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[FORM OF REVERSE SIDE OF NOTE]

9 3/8% NOTE DUE 2008

Capitalized terms used but not defined herein shall have the meanings given to such terms in the Indenture (as defined).

1.Interest

(a)MAGELLAN HEALTH SERVICES, INC., a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this Note at the rate per annum shown above semiannually in arrears on May 15 and November 15 of each year, commencing on November 15, 2003.  Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the Effective Date.

Interest will be computed on the basis of a 360-day year of twelve 30-day months.  The Company shall pay interest on overdue principal at the rate borne by the Notes plus 1% per annum, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful.

2.Method of Payment

The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the May 1 or November 1 next preceding the interest payment date even if Notes are canceled after the record date and on or before the interest payment date. Holders must surrender Notes to a Paying Agent to collect principal payments.  The Company will pay principal, premium, if any, and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Notes represented by a Global Note (including principal, premium, if any, and interest) will be made by wire transfer of immediately available funds to the accounts specified by The Depository Trust Company.  The Company, through the Paying Agent, will make all payments in respect of a certificated Note (including principal, premium, if any, and interest), by mailing a check to the registered address of each Holder thereof; provided, however, that payments on the Notes may also be made, in the case of a Holder of at least $1,000,000 aggregate principal amount of Notes, by wire transfer to a U.S. dollar account maintained by the payee with a bank in the United States if such Holder elects payment by wire transfer by giving written notice to the Trustee or the Paying Agent to such effect designating such account no later than 30 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

3.Paying Agent and Registrar

Initially, HSBC Bank USA, a New York banking corporation and trust company (the “Trustee”), will act as Paying Agent and Registrar.  The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice.  The Company or any of its domestically incorporated Wholly-owned Subsidiaries may act as Paying Agent, Registrar or co-registrar.

4.Indenture

The Company issued the Notes under an Indenture dated as of the Effective Date (the “Indenture”), between the Company and the Trustee.  The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the date of the Indenture (the “TIA”).  Capitalized terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture.  The Notes are subject to all terms and provisions of the Indenture, and Noteholders are referred to the Indenture and the TIA for a statement of those terms.

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The Notes are unsecured obligations of the Company issuable in two series consisting of 9 3/8% Series A Senior Notes due 2008 limited to $                 aggregate principal amount at any one time outstanding and consisting of 9 3/8% Series B Notes due 2008 limited to $                    aggregate principal amount at any time outstanding (subject, in each case, to Section 2.07 of the Indenture).  This Note is one of the 9 3/8% Series [A] [B] Senior Notes due 2008.  The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries to, among other things, make certain Investments and other Restricted Payments, pay dividends and other distributions, incur Indebtedness, enter into consensual restrictions upon the payment of certain dividends and distributions by such Restricted Subsidiaries, enter into or permit certain transactions with Affiliates, create or incur Liens, enter into sale and leaseback transactions and make asset sales.  The Indenture also imposes limitations on the ability of the Company to consolidate or merge with or into any other Person or convey, transfer or lease all or substantially all of the property of the Company.

5.Optional Redemption

Except as set forth in the following paragraph, the Notes will not be redeemable at the option of the Company prior to November 15, 2005.  The Notes will be redeemable at the option of the Company on or after such date, in whole or in part, upon not less than 30 nor more than 60 days prior notice, at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest (if any) to the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period beginning on November 15 of the years set forth below:

Year	Redemption Prices
2005	104.688	%
2006	102.344	%
2007	101.172	%

In addition, at any time and from time to time prior to November 15, 2005, the Company may, at its option, redeem up to 35% of the original aggregate principal amount of Notes at a redemption price (expressed as a percentage of the principal amount) of 109.375%, plus accrued and unpaid interest thereon, if any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date), with the net cash proceeds of one or more Equity Offerings; provided that at least 65% of such original aggregate principal amount of Notes remains outstanding immediately after the occurrence of such redemption; and provided, further, that such redemption shall occur within 60 days of the date of the closing of any such Equity Offering.  Any such redemption shall be made upon not less than 30 nor more than 60 days notice mailed to each Holder of Notes being redeemed and otherwise in accordance with the procedures set forth in the Indenture.

6.Sinking Fund

The Notes are not subject to any sinking fund.

7.Notice of Redemption

Notice of redemption will be mailed by first-class mail at least 30 days but not more than 60 days before the redemption date to each Holder of Notes to be redeemed at his or her registered address.  Notes in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000.  If money sufficient to pay the redemption price of and accrued interest on all Notes (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Notes (or such portions thereof) called for redemption.

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8.Repurchase of Notes at the Option of Holders

(a)Upon a Change of Control, any Holder of Notes will have the right, subject to certain conditions specified in the Indenture, to cause the Company to repurchase all or any part of the Notes of such Holder at a purchase price equal to 101% of the principal amount of the Notes to be repurchased plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date that is on or prior to the date of purchase) as provided in, and subject to the terms of, the Indenture.

(b)If the Company or any Restricted Subsidiary consummates an Asset Sale, the Company shall promptly commence a pro rata offer to all Holders of Notes and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in the Indenture with respect to offers to purchase or redeem with the proceeds of sales of assets (an “Excess Proceeds Offer”) pursuant to Section 4.06 of the Indenture to purchase the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, thereon, to the date of purchase in accordance with the procedures set forth in the Indenture.  If the aggregate principal amount of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds allocated for repurchase of Notes, the Trustee shall select the Notes to be purchased on a pro rata basis.  Holders of Notes that are the subject of an offer to purchase will receive an Excess Proceeds Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled “Option of Holder to Elect Purchase” on the reverse of the Notes.

9.Denominations; Transfer; Exchange

The Notes are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000.  A Holder may transfer or exchange Notes in accordance with the Indenture.  Upon any transfer or exchange, the Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture.  The Registrar need not register the transfer of or exchange any Notes selected for redemption (except, in the case of a Note to be redeemed in part, the portion of the Note not to be redeemed) or to transfer or exchange any Notes for a period of 15 days prior to a selection of Notes to be redeemed.

10.Persons Deemed Owners

The registered Holder of this Note may be treated as the owner of it for all purposes.

11.Unclaimed Money

If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its written request unless an abandoned property law designates another Person.  After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment.

12.Discharge and Defeasance

Subject to certain conditions, the Company at any time may terminate some of or all its obligations under the Notes and the Indenture if the Company deposits with the Trustee money or U.S. Government Obligations for the payment of principal of, premium, if any, and interest on the Notes to redemption or maturity, as the case may be.

13.Amendment, Waiver

Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Notes may be amended or supplemented without prior notice to any Noteholder but with the written consent of the Holders of at least a majority in principal amount of the outstanding Notes and (ii) any default or compliance with any provision may be waived with the written consent of the Holders of at least a majority in principal amount of the outstanding Notes.  Subject to certain exceptions set forth in the Indenture, without the consent of any Holder of Notes, the Company

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and the Trustee may amend or supplement the Indenture or the Notes (i) to cure any ambiguity, defect or inconsistency; (ii) to comply with Article 5 of the Indenture; (iii) to provide for certificated or uncertificated Notes (provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code); (iv) to add Guarantees with respect to the Notes or to secure the Notes; (v) to add additional covenants for the benefit of the Holders or to surrender rights and powers conferred on the Company; (vi) to comply with the requirements of the SEC in connection with the qualification of the Indenture or the Trustee under the TIA; or (vii) to make any change that does not adversely affect the rights of any Noteholder.

14.Defaults and Remedies

If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Notes then outstanding, subject to certain limitations, may declare all the Notes to be immediately due and payable.  Certain events of bankruptcy or insolvency are Events of Default and shall result in the Notes being immediately due and payable upon the occurrence of such Events of Default without any further act of the Trustee or any Holder.

Holders of Notes may not enforce the Indenture or the Notes except as provided in the Indenture.  The Trustee may refuse to enforce the Indenture or the Notes unless it receives reasonable indemnity or security.   Subject to certain limitations, Holders of a majority in principal amount of the Notes may direct the Trustee in its exercise of any trust or power under the Indenture.  The Holders of a majority in aggregate principal amount of the Notes, by written notice to the Trustee and the Company, may rescind any declaration of acceleration and its consequences if the rescission would not conflict with any judgment or decree, and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration.

15.Trustee Dealings with the Company

Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.

16.No Personal Liability of Directors, Officers, Employees and Stockholders

No director, officer, employee or stockholder of the Company shall have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation.  Each Noteholder by accepting a Note waives and releases all such liability.  The waiver and release are part of the consideration for issuance of the Notes.

17.Authentication

This Note shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Note.

18.Abbreviation

Customary abbreviations may be used in the name of a Noteholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).

19.Governing Law

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES

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OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

20.CUSIP Numbers

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Noteholders.  No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

The Company will furnish to any Holder of Notes upon written request and without charge to the Holder a copy of the Indenture which has in it the text of this Note.

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ASSIGNMENT FORM

To assign this Note, fill in the form below:

I or we assign and transfer this Note to

(Print or type assignee’s name, address and zip code)

(Insert assignee’s soc. sec. or tax I.D. No.)

and irrevocably appoint                                agent to transfer this Note on the books of the Company. The agent may substitute another to act for him.

Date:	Your Signature:
Sign exactly as your name appears on the other side of this Note.

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[TO BE ATTACHED TO GLOBAL NOTES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE

The initial principal amount of this Global Note is $[  ]. The following increases or decreases in this Global Note have been made:

Date of Exchange Amount of decrease in
Amount of Principal
this Global Note Amount of Increase in
Principal Amount of
this Global Note Principal amount of
this Global Note
following such
decrease or increase Signature of authorized
signatory of Trustee or
Securities Custodian

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OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture, check the box:

o Section 4.08 o Section 4.06

If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture, state the amount (must be an integral multiple of $1,000):

$

Date:	Your Signature:
	(Sign exactly as your name appears on the other side of the Note)

Signature Guarantee:

Signature must be guaranteed by a participant in a recognized signature guaranty medallion program or other signature guarantor acceptable to the Trustee

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EX-99.4

EXHIBIT 99.4

WGM Draft: Sept. 23, 2003

WARRANT AGREEMENT

between

MAGELLAN HEALTH SERVICES, INC.

and

[                                 ]

as Warrant Agent

[         ] Warrants to Purchase Common Stock

Dated as of [            ], 2003

THIS WARRANT AGREEMENT (this “Warrant Agreement”), dated as of [           ], 2003, is made by and between Magellan Health Services, Inc., a Delaware corporation (the “Company”), and [                      ], as warrant agent (the “Warrant Agent”).

W I T N E S S E T H :

WHEREAS, the Company proposes to issue warrants (the “Warrants”) to purchase Common Stock (as defined below) pursuant to the Debtor’s Third Amended Plan of Reorganization of the Company under Chapter 11 of the Bankruptcy Code (the “Plan of Reorganization”), as confirmed pursuant to the order, dated [           ], 2003, of the United States Bankruptcy Court for the Southern District of New York, and the terms and conditions of this Warrant Agreement; and

WHEREAS, the Company has requested the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing so to act, in connection with the issuance, division, transfer, exchange and exercise of Warrants pursuant to the terms and conditions of this Warrant Agreement;

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto agree as follows:

1.Definitions.

As used in this Warrant Agreement, the following capitalized terms have the respective meanings set forth below:

“Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Global Warrant, the rules and procedures of the Depositary and Euroclear that apply to such transfer or exchange.

“Business Day” shall mean any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed in the State of New York or the State of Delaware.

“Common Stock” shall mean the Ordinary Common Stock, par value $ 0.01 per share, of the Company.

“Company” has the meaning specified in the preamble hereof.

“Definitive Warrants” means Warrants issued in definitive form as set forth in Section 5.1 hereof.

“Depositary” shall mean the Person specified in Section 3.2 hereof as the Depositary with respect to the Warrants and any and all successors thereto appointed as Depositary hereunder.

“Euroclear” means Euroclear Bank S.A./N.V., as operator of the Euroclear system.

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“Exercise Price” shall be equal to $      (1) per share of Common Stock, as such price may be adjusted pursuant to Section 6 of this Agreement.

“Expiration Date” shall mean [             ], 2010.(2)  After the Expiration Date, the Warrants will become void and of no value.

“Global Warrants” means a global Warrant substantially in the form of Exhibit A hereto bearing the Global Warrant Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee.

“Global Warrant Legend” means the legend set forth in Section 5.4, which is required to be placed on all Global Warrants issued under this Warrant Agreement.

“Holder” shall mean the Person in whose name a Warrant is registered in the warrant register of the Company maintained by or on behalf of the Company for such purpose.

“Other Property” shall have the meaning set forth in Section 6.3.

“Person” shall mean any individual, sole proprietorship, partnership, joint venture, trust, incorporated organization, association, corporation, limited liability company, limited liability partnership, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof).

“Transaction” shall have the meaning set forth in Section 6.3.

“Warrants” has the meaning specified in the recitals hereto, and shall include all Warrants issued upon registration of transfer, division or combination of, or in substitution for, any thereof.  All Warrants shall be issued in the form of a Global Warrant.

“Warrant Agent” has the meaning specified in the preamble hereof and shall include any successor Warrant Agent hereunder.

“Warrant Agent’s Principal Office” shall mean the principal office of the Warrant Agent at [                        ] (or such other office of the Warrant Agent or any successor thereto hereunder acceptable to the Company as set forth in a written notice provided to the Company and the Holders).

“Warrant Agreement” has the meaning specified in the preamble hereof.

(1) [Exercise price to be equal to $625 million divided by the number of shares of “New Common Stock” issued to holders of “Senior Subordinated Note Claims” (without regard to the New Common Stock issued upon consummation of the “Equity Offering” and the “Investment”), all as determined pursuant to the Plan of Reorganization (or approximately $69.46 per share, as set forth in the Disclosure Statement).]

(2) [The 7th anniversary of the Effective Date, as defined in the Plan of Reorganization.]

2

“Warrant Price” shall mean an amount equal to (i) the number of shares of Common Stock being purchased upon exercise of a Warrant pursuant to Section 4.1, multiplied by (ii) the Exercise Price.

“Warrant Stock” shall mean the shares of Common Stock purchased by the Holders of the Warrants upon the exercise thereof.

2.Appointment of Warrant Agent.  The Company hereby appoints the Warrant Agent to act as agent for the Company in accordance with the instructions set forth in this Warrant Agreement, and the Warrant Agent hereby accepts such appointment.

3.Issuance; Registration; Form and Execution of Warrants.

3.1Issuance.  The Company hereby authorizes the Warrants and issues and grants to the Holders listed on Schedule A hereto, a copy of which has been delivered by the Company to the Warrant Agent, the number of Warrants set forth opposite the name of such Holder on Schedule A  hereto.  The aggregate number of Warrants to be issued under this Agreement is [                ].(3)  Each Warrant shall entitle the Holder, subject to the satisfaction of the conditions to exercise set forth in Section 4 hereof, to purchase from and after the date hereof and until 5:00 p.m., New York City time, on the Expiration Date, one share of Common Stock of the Company at the Exercise Price.  The number of Warrants issued to the Holders pursuant to this Warrant Agreement, the number of shares of Common Stock issuable on exercise of each Warrant and the Exercise Price are all subject to adjustment pursuant to Section 6 hereof.

3.2Warrant Registrar and Depositary.  A register of the Warrants and of their transfer shall be maintained at the Warrant Agent’s Principal Office by the Warrant Agent (the “Warrant Register”).

The Company initially appoints the Warrant Agent to act as the registrar with respect to the Global Warrants (the “Warrant Registrar”).

The Company initially appoints [The Depository Trust Company] to act as Depositary with respect to the Global Warrants.

3.3Form of Warrant.

(a)General.  The Warrants shall be issued in global form and shall be substantially in the form of Exhibit A hereto (including the Global Warrant Legend thereon and the “Schedule of Exchanges of Interests in the Global Warrant” attached thereto).  The Warrants may have notations, legends or endorsements required by law, stock exchange rule or usage.  Warrants shall be dated the date of the countersignature.

(3) [2.5% of the New Common Stock to be issued on the Effective Date (without regard to the New Common Stock to be issued upon exercise of the Equity Subscription Rights, the Investment, the New Warrants, the New Management Incentive Plan, and the New Aetna Warrants), as determined in accordance with the Plan of Reorganization (or approximately 248,185 shares, as set forth in the Disclosure Statement).]

3

The terms and provisions contained in the Warrants shall constitute, and are hereby expressly made, a part of this Warrant Agreement.  The Company and the Warrant Agent, by their execution and delivery of this Warrant Agreement, expressly agree to such terms and provisions and to be bound thereby.  However, to the extent any provision of any Warrant conflicts with the express provisions of this Warrant Agreement, the provisions of this Warrant Agreement shall govern and be controlling.

(b)Global Warrants.  Each Global Warrant shall represent such of the outstanding Warrants as shall be specified therein and shall provide that it shall represent the number of outstanding Warrants from time to time endorsed thereon and that the number of outstanding Warrants represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions.

3.4Execution of Warrants.  An Officer shall sign the Warrants on behalf of the Company by manual or facsimile signature.

If the Officer whose signature is on a Warrant no longer holds that office at the time a Warrant is countersigned, the Warrant shall nevertheless be valid.

A Warrant shall not be valid until countersigned by the manual signature of the Warrant Agent.  The signature shall be conclusive evidence that the Warrant has been properly issued under this Warrant Agreement.

The Warrant Agent shall, upon a written order of the Company signed by an Officer, countersign Warrants for original issue up to the number stated in Section 3.1 hereof.

The Warrant Agent may appoint an agent acceptable to the Company to countersign Warrants.  Such an agent may countersign Warrants whenever the Warrant Agent may do so.  Each reference in this Warrant Agreement to a countersignature by the Warrant Agent includes a countersignature by such agent.  Such agent shall have the same rights as the Warrant Agent in dealing with the Company.

4.Exercise of Warrants.

4.1Manner of Exercise.  In order to exercise all or any of the Warrants, the exercising Holder whose name appears on a securities position listing of the Depositary as the holder of such book-entry interest must comply with the Depositary’s procedures relating to the exercise of such book-entry interest in such Global Warrant.  In addition, the Holder shall deliver to the Company at the Warrant Agent’s Principal Office, (i) the Form of Election to Purchase substantially in the form attached hereto as Exhibit A duly executed by such Holder or its agent or attorney and (ii) payment of the Warrant Price to the Warrant Agent for the account of the Company.

4.2Payment of Taxes.  The Company shall pay all expenses and costs, and any transfer taxes, documentary stamp taxes or similar governmental charges imposed, in connection with the issuance or delivery of Warrant Shares pursuant to the Warrants to a Holder of Warrants.  The Holder shall be responsible for any transfer taxes, documentary stamp taxes or

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similar governmental charges imposed with respect to any issuance or delivery of Warrant Shares to or in the name of any person other than a Holder.

4.3Fractional Shares.  The Company shall not issue fractional shares of Common Stock upon exercise of any Warrant.  Whenever any distribution of Warrants exercisable into fractional shares of Common Stock would otherwise be called for, the actual distribution thereof shall be rounded as follows: (i) fractions of ½ or greater shall be rounded to the next higher whole number and (ii) fractions of less than ½ shall be rounded to the next lower whole number.

5.Transfer and Exchange.

5.1Transfer and Exchange of Global Warrants.  A Global Warrant may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.  All Global Warrants will be exchanged by the Company for Definitive Warrants if (i) the Company delivers to the Warrant Agent notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 120 days after the date of such notice from the Depositary or (ii) the Company in its sole discretion determines that the Global Warrants (in whole but not in part) should be exchanged for Definitive Warrants and delivers a written notice to such effect to the Warrant Agent.  Upon the occurrence of either of the preceding events, Definitive Warrants shall be issued in such names as the Depositary shall instruct the Warrant Agent.  Global Warrants may also be exchanged or replaced, in whole or in part, as provided in Section 11 hereof.  A Global Warrant may not be exchanged for another Warrant other than as provided in this Section 5.1; however, beneficial interests in a Global Warrant may be transferred and exchanged as provided in Section 5.2 hereof.

5.2Transfer and Exchange of Beneficial Interests in the Global Warrants.  The transfer and exchange of beneficial interests in the Global Warrants shall be effected through the Depositary, in accordance with the Applicable Procedures.

5.3Transfer and Exchange of Definitive Warrants for Definitive Warrants.  Upon request by a holder of Definitive Warrants and such holder’s compliance with the provisions of this Section 5.3, the Warrant Registrar shall register the transfer or exchange of Definitive Warrants on the Warrant Register.  Prior to such registration of transfer or exchange, the requesting holder shall present or surrender to the Warrant Registrar the Definitive Warrants duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Warrant Registrar duly executed by such holder or by its attorney, duly authorized in writing.

5.4Global Warrant Legend.  Each Global Warrant shall bear a legend in substantially the following form:

“THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE WARRANT AGREEMENT GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT

5

TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 5 OF THE WARRANT AGREEMENT, (II) THIS GLOBAL WARRANT MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 5.1 OF THE WARRANT AGREEMENT, (III) THIS GLOBAL WARRANT MAY BE DELIVERED TO THE WARRANT AGENT FOR CANCELLATION PURSUANT TO SECTION 13.5 OF THE WARRANT AGREEMENT AND (IV) THIS GLOBAL WARRANT MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.”

5.5General Provisions Relating to Transfers and Exchanges.

(a)To permit registrations of transfers and exchanges, the Company shall execute and the Warrant Agent shall countersign Global Warrants and Definitive Warrants upon the Company’s order or at the Warrant Registrar’s request.

(b)No service charge shall be made to a holder of a beneficial interest in a Global Warrant or to a holder of a Definitive Warrant for any registration of transfer or exchange, but the Holder shall be responsible for any transfer taxes, documentary stamp taxes or similar governmental charges imposed with respect to any transfer of a beneficial interest in a Global Warrant or Definitive Warrant and the Company may require payment of a sum sufficient to cover any such tax or charge payable in connection therewith.

(c)All Global Warrants and Definitive Warrants issued upon any registration of transfer or exchange of Global Warrants or Definitive Warrants shall be duly authorized, executed and issued Warrants for Common Stock of the Company, not subject to any preemptive rights, and entitled to the same benefits under this Warrant Agreement, as the Global Warrants or Definitive Warrants surrendered upon such registration of transfer or exchange.

(d)Prior to due presentment for the registration of a transfer of any Warrant, the Warrant Agent, and the Company may deem and treat the Person in whose name any Warrant is registered as the absolute owner of such Warrant for all purposes and neither the  Warrant Agent nor the Company shall be affected by notice to the contrary.

(e)The Warrant Agent shall countersign Global Warrants and Definitive Warrants in accordance with the provisions of Section 3.4 hereof.

5.6Facsimile Submissions to Warrant Agent.  All instructions required to be submitted to the Warrant Registrar pursuant to this Section 5 to effect a registration of transfer or exchange may be submitted by facsimile.

6.Adjustments.  The number of shares of Common Stock for which a Warrant is exercisable, and the Exercise Price shall be subject to adjustment from time to time as set forth in this Section 6.

6.1Stock Dividends, Subdivisions and Combinations.  If at any time the Company shall: (i) take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend payable in, or other distribution of, additional shares of Common

6

Stock; (ii) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then (a) the number of shares of Common Stock for which a Warrant is exercisable immediately after the occurrence of any such event shall be adjusted to equal the number of shares of Common Stock that a record holder of the same number of shares of Common Stock for which a Warrant is exercisable immediately prior to the occurrence of such event would own or be entitled to receive after the happening of such event and (b) the Exercise Price shall be adjusted to equal (1) the Exercise Price prior to such adjustment multiplied by the number of shares of Common Stock for which a Warrant is exercisable immediately prior to the adjustment divided by (2) the number of shares for which a Warrant is exercisable immediately after such adjustment.

6.2Other Provisions Applicable to Adjustments under this Section.  The following provisions shall be applicable to the making of adjustments of the number of shares of Common Stock for which a Warrant is exercisable and the Exercise Price provided for in this Section 6:

(a)When Adjustments to Be Made.  The adjustments required by this Section 6 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that any adjustment of the number of shares of Common Stock for which a Warrant is exercisable that otherwise would be required may be postponed (except in the case of a subdivision or combination of shares of Common Stock, as provided for in Section 6.1) up to, but not later than the date of exercise if such adjustment either by itself or with other adjustments not previously made would result in an increase or decrease, as the case may be, of less than 1% of the shares of Common Stock for which a Warrant is exercisable immediately prior to the making of such adjustment.  Any adjustment representing a change of less than such minimum amount (except as aforesaid) which is postponed shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Section 6 and not previously made, would result in a minimum adjustment or on the date of exercise.  For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence.

(b)Fractional Interests.  In computing adjustments pursuant to this Section 6 (but subject to Section 4.3), fractional interests in Common Stock shall be taken into account to the nearest 1/1000th of a share.

6.3Reorganization, Reclassification, Merger, Consolidation or Sale of Substantially all Assets of the Company.  If the Company (or any other entity, the stock or other securities of which are at the time receivable on the exercise of the Warrants) shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another Person (where the Company is not the surviving corporation or resulting entity or where there is a change in or distribution with respect to the Common Stock of the Company), other than as a result of a stock dividend, stock split, reverse stock split, recapitalization or the like provided for in Section 6.1 above (each such event hereinafter referred to as a “Transaction”), and pursuant to the terms of any such Transaction, the consideration to be paid or distributed to or otherwise received by the holders of Common Stock consists of shares of common stock of the surviving corporation or resulting entity and/or any cash, shares of stock (not constituting common stock) or other

7

securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) (such non-common stock property hereinafter referred to as “Other Property”), then each Holder shall have the right thereafter to receive, upon exercise of a Warrant, solely the number of shares of common stock of the surviving corporation or resulting entity and/or such amount of Other Property receivable pursuant to such Transaction by a holder of the number of shares of Warrant Stock for which a Warrant is exercisable immediately prior to the effective time of such Transaction.  In the case of any Transaction of the type described in the preceding sentence, it shall be a condition precedent to consummation of the Transaction that the surviving corporation or resulting entity assume the due and punctual observance and performance of each and every covenant and condition of this Warrant Agreement and the Warrants to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined by resolution of the Board of Directors of the Company) in order to provide for adjustments of shares of the Warrant Stock for which a Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 6.3.  For purposes of this Section 6.3, “common stock of the surviving corporation or resulting entity” shall include stock of such corporation of any class which does not have a preference as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exercisable or exchangeable for any such stock, either immediately or after the lapse of any prescribed time period or the occurrence of a specified event, and any warrants or other rights to subscribe for or purchase any such stock.  The foregoing provisions of this Section 6.3 shall similarly apply to successive Transactions.

6.4Certain Limitations.  Notwithstanding anything herein to the contrary, the Company agrees not to enter into any transaction which, by reason of any adjustment hereunder, would cause the Exercise Price to be less than the par value per share of Common Stock unless the Company shall take such corporate action in order that the Company may validly and legally issue fully paid and nonassessable shares of such Common Stock at such adjusted Exercise Price.

7.Notice to Warrant Holders.  Whenever the number of shares of Common Stock for which a Warrant is exercisable, or whenever the Exercise Price shall be adjusted pursuant to Section 6, the Company shall forthwith prepare a certificate setting forth, in reasonable detail, the event requiring the adjustment and the method by which such adjustment was calculated, specifying the number of shares of Common Stock for which a Warrant is exercisable and describing the number and kind of any other shares of stock or Other Property for which a Warrant is exercisable, and any change in the purchase price or prices thereof, after giving effect to such adjustment or change.  The Company shall promptly cause a signed copy of such certificate to be delivered to the Warrant Agent in accordance with Section 14.2.  The Company shall keep at its office or agency designated by the Company pursuant to Section 12 copies of all such certificates and cause the same to be available for inspection at said office during normal business hours by any Holder or any prospective purchaser of a Warrant designated by a Holder thereof.

8.No Impairment.  The Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary

8

action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant Agreement or any Warrant.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any shares of Common Stock receivable upon the exercise of a Warrant above the amount payable therefor upon such exercise immediately prior to such increase in par value and (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of any Warrant.

9.Reservation and Authorization of Common Stock.  From and after the date hereof, the Company shall at all times reserve and keep available for issue upon the exercise of Warrants such number of its authorized but unissued shares of Common Stock as will be sufficient to permit the exercise in full of all outstanding Warrants.  All shares of Common Stock which shall be so issuable, when issued upon exercise of any Warrant and payment therefor in accordance with the terms of this Warrant Agreement and such Warrant, shall be duly and validly issued and fully paid and nonassessable, and not subject to preemptive rights.

10.Stock and Warrant Transfer Books.  The Company will not at any time, except upon dissolution, liquidation or winding up of the Company, close its stock transfer books or Warrant transfer books so as to result in preventing or delaying the exercise or transfer of any Warrant (except as may be necessary for the Company to comply with applicable law).

11.Loss or Mutilation.  Upon receipt by the Company and the Warrant Agent from any Holder of evidence reasonably satisfactory to them of the ownership of and the loss, theft, destruction or mutilation of such Holder’s Warrant and indemnity reasonably satisfactory to them, and in case of mutilation upon surrender and cancellation thereof, the Company will execute and the Warrant Agent will countersign and deliver in lieu hereof a new Warrant of like tenor and representing an equal number of Warrants to such Holder; provided, in the case of mutilation, no indemnity shall be required if such Warrant in identifiable form is surrendered to the Company or the Warrant Agent for cancellation.

12.Office of Company.  As long as any of the Warrants remain outstanding, the Company shall maintain an office or agency (which may be the principal executive offices of the Company) where the Warrants may be presented for exercise, registration of transfer, division or combination as provided in this Warrant Agreement.  The Company shall initially maintain such an agency at the Warrant Agent’s Principal Offices.

13.Warrant Agent.

13.1Merger or Consolidation or Change of Name of Warrant Agent.  Any Person into which the Warrant Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Warrant Agent shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Warrant Agent, shall be the successor to the Warrant Agent hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto.  If, at the time such successor by merger or consolidation to the Warrant Agent shall succeed to the agency created by this Warrant Agreement, any of the Warrants shall have been countersigned but not delivered, any such successor to the Warrant Agent may adopt the countersignature of the predecessor

9

Warrant Agent and deliver such Warrants so countersigned; and if at that time any of the Warrants shall not have been countersigned, any successor to the Warrant Agent may countersign such Warrants either in the name of the predecessor Warrant Agent or in the name of the successor Warrant Agent; and in all such cases Warrants shall have the full force provided in the Warrants and in this Warrant Agreement.  If at any time the name of the Warrant Agent shall be changed and at such time any of the Warrants shall have been countersigned but not delivered, the Warrant Agent may adopt the countersignatures under its prior name and deliver such Warrants so countersigned; and if at that time any of the Warrants shall not have been countersigned as provided in Section 3.4, the Warrant Agent may countersign such Warrants either in its prior name or in its changed name; and in all such cases such Warrants shall have the full force provided in the Warrants and in this Warrant Agreement.

13.2Certain Terms and Conditions Concerning the Warrant Agent.  The Warrant Agent undertakes the duties and obligations imposed by this Warrant Agreement upon the following terms and conditions,(4) by all of which the Company and the Holders, by their acceptance of Warrants, shall be bound:

(a)Correctness of Statements.  The statements contained herein and in the Warrants shall be taken as statements of the Company, and the Warrant Agent assumes no responsibility for the correctness of any of the same.  The Warrant Agent assumes no responsibility with respect to the distribution of the Warrants except as herein expressly provided.

(b)Breach of Covenants.  The Warrant Agent shall not be responsible for any failure of the Company to comply with any of the covenants contained in this Warrant Agreement or in the Warrants to be complied with specifically by the Company.

(c)Performance of Duties.  The Warrant Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents (which shall not include its employees) and shall not be responsible for the misconduct or negligence of any agent appointed with due care.

(d)Reliance on Counsel.  The Warrant Agent may consult at any time with legal counsel satisfactory to it, and the Warrant Agent shall incur no liability or responsibility to the Company or to any Holder in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with the opinion or the advice of such counsel provided that such counsel shall have been selected with due care.

(e)Proof of Actions Taken.  Whenever in the performance of its duties under this Warrant Agreement the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed conclusively to be proved and established by a certificate signed by

(4) [The wording of this section is subject to modification by agreement of the Company and the Warrant Agent.]

10

the President, a Vice President, the Secretary or an Assistant Secretary of the Company and delivered to the Warrant Agent; and such certificate shall be full authorization to the Warrant Agent for any action taken or suffered in good faith by it under the provisions of this Warrant Agreement in reliance upon such certificate.

(f)Legal Proceedings.  The Warrant Agent shall be under no obligation to institute any action, suit or legal proceeding or to take any other action likely to involve expense unless the Company or one or more Holders shall furnish the Warrant Agent with reasonable security and indemnity for any costs and expenses that may be incurred, but this provision shall not affect the power of the Warrant Agent to take such action as the Warrant Agent may consider proper, whether with or without any such security or indemnity.  All rights of action under this Warrant Agreement or under any of the Warrants may be enforced by the Warrant Agent without the possession of any of the Warrants or the production thereof at any trial or other proceeding relative thereto, and any such action, suit or proceeding instituted by the Warrant Agent shall be brought in its name as Warrant Agent, and any recovery of judgment shall be for the ratable benefit of the Holders, as their respective rights or interests may appear.

(g)Other Transactions in Securities of the Company.  The Warrant Agent and any stockholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Warrant Agent under this Warrant Agreement.  Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity.

(h)Liability of Warrant Agent.  The Warrant Agent shall act hereunder solely as agent, and its duties shall be determined solely by the provisions hereof.  The Warrant Agent shall not be liable for anything that it may do or refrain from doing in connection with this Warrant Agreement except for its own gross negligence or bad faith.

(i)Reliance on Documents.  The Warrant Agent will not incur any liability or responsibility to the Company or to any Holder for any action taken in reliance on any notice, resolution, waiver, consent, order, certificate, or other paper, document or instrument reasonably believed by it to be genuine and to have been signed, sent or presented by the proper party or parties.

(j)Validity of Agreements.  The Warrant Agent shall not be under any responsibility in respect of the validity of this Warrant Agreement or the execution and delivery hereof (except the due execution and delivery hereof by the Warrant Agent) or in respect of the validity or execution of any Warrant (except its countersignature and delivery thereof); nor shall the Warrant Agent by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any Common Stock (or other stock or other property) to be issued pursuant to this Warrant Agreement or any Warrant, or as to whether any Common Stock (or other stock or other property) will, when issued, be validly issued, fully paid and nonassessable, or as to the Warrant Price or the number or amount of Common Stock or other securities or other property issued upon exercise of any Warrant.

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(k)Instructions from Company.  The Warrant Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from the President, a Vice President, the Secretary or any Assistant Secretary of the Company, and to apply to such officers for advice or instructions in connection with its duties, and shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer or officers.

13.3Change of Warrant Agent.  The Warrant Agent may resign and be discharged from its duties under this Warrant Agreement by giving to the Company 30 days’ advance notice in writing.  The Warrant Agent may be removed by like notice to the Warrant Agent from the Company.  If the Warrant Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Warrant Agent.  If the Company shall fail to make such appointment within a period of 30 days after such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Warrant Agent, then any Holder may apply to a court of competent jurisdiction for the appointment of a successor to the Warrant Agent.  Pending the appointment of the successor warrant agent, the Company shall perform the duties of the Warrant Agent.  After appointment, the successor warrant agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Warrant Agent without further act or deed; provided, however, the former Warrant Agent shall be required to deliver and transfer to the successor warrant agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose.  Failure to file any notice provided for in this Section 13.3, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Warrant Agent or the appointment of the successor warrant agent, as the case may be.  In the event of such resignation or removal, the successor warrant agent shall mail, first class, to each Holder, written notice of such removal or resignation and the name and address of such successor warrant agent.

13.4Disposition of Proceeds on Exercise of Warrants; Inspection of Warrant Agreement.  The Warrant Agent shall account promptly to the Company with respect to Warrants exercised and concurrently pay to the Company in immediately available funds all amounts received by the Warrant Agent for the purchase of the Warrant Stock through the exercise of such Warrants.  The Warrant Agent shall, upon request of the Company from time to time, deliver to the Company such complete reports of registered ownership of the Warrants and such complete records of transactions with respect to the Warrants as the Company may request.  The Warrant Agent shall also make available to the Company for inspection by the Company’s agents or employees, from time to time as the Company may request, such original books of accounts and records maintained by the Warrant Agent in connection with the issuance and exercise of Warrants hereunder, such inspections to occur at the Warrant Agent’s Principal Office.  The Warrant Agent shall keep copies of this Warrant Agreement and any notices given or received hereunder available for inspection by the Company or the Holders at the Warrant Agent’s Principal Office.  The Company shall supply the Warrant Agent from time to time with such numbers of copies of this Warrant Agreement as the Warrant Agent may request.

13.5Cancellation.  The Warrant Agent shall cancel all Warrant certificates properly surrendered for exercise, exchange, substitution, or transfer.  The Warrant Agent shall

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destroy all cancelled Warrant certificates and, if requested, deliver a certificate of such destruction to the Company.

13.6Survival.  This Section 13 shall survive the resignation or removal of the Warrant Agent and the termination of this Warrant Agreement.

14.Miscellaneous.

14.1Rights of Holders.  Holders of unexercised Warrants are not entitled to (i) receive dividends or other distributions, (ii) receive notice of or vote at any meeting of the stockholders, (iii) consent to any action of the stockholders, (iv) exercise any preemptive right, or (v) exercise any other right whatsoever granted to stockholders of the Company.

14.2Notice Generally.  Any notice, demand, request, consent, approval, declaration, delivery or other communication hereunder to be made pursuant to the provisions of this Warrant Agreement shall be sufficiently given or made if in writing and either delivered in person with receipt acknowledged or sent by registered or certified mail, return receipt requested, postage prepaid or by facsimile, addressed as follows:

If to any Holder or holder of Warrant Stock, at its last known address appearing on the Warrant Register of the Company maintained for such purpose.

If to the Company at:

Magellan Health Services, Inc.

6950 Columbia Gateway Drive

Suite 400

Columbia, Maryland  21046

Attention: Mark Demilio

Telephone: (410) 953-1258

Fax: (410) 953-5215

If to the Warrant Agent at:

[                                   ]

[                                   ]

[                                   ]

Attention: [                                   ]

Telephone: (     )                  

Fax: (     )                  

or at such other address as may be substituted by notice given as herein provided.  The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice.  Every notice, demand, request, consent, approval, declaration, delivery or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered, the first Business Day after delivery by facsimile, receipt

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acknowledged, or the third Business Day after deposit in the United States mail, whichever is earliest.

14.3Successors and Assigns.  All covenants and provisions of this Warrant Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.

14.4Supplements and Amendment.

(a)This Warrant Agreement constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof and may not be amended, except in a writing signed by both of them.

(b)The Company and the Warrant Agent may from time to time supplement or amend this Warrant Agreement (a) without the approval of any Holders of Warrants in order to cure any ambiguity, manifest error or other mistake in this Warrant Agreement, or to correct or supplement any provision contained herein that may be defective or inconsistent with any other provision herein, or to make any other provisions in regard to matters or questions arising hereunder that the Company and the Warrant Agent may deem necessary or desirable and that shall not adversely affect, alter or change the interests of the Holders of the Warrants or (b) with the prior written consent of Holders of the Warrants exercisable for a majority of the Common Stock then issuable upon exercise of the Warrants then outstanding.

14.5Third-Party Beneficiaries.  All covenants and provisions of this Warrant Agreement shall inure to the benefit of each Holder from time to time of Warrants.

14.6Severability.  Wherever possible, each provision of this Warrant Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Warrant Agreement.

14.7Headings.  The headings used in this Warrant Agreement are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant Agreement.

14.8Governing Law.  This Warrant Agreement and the Warrants shall be governed by the laws of the State of New York, without regard to the provisions thereof relating to conflict of laws.

14.9Counterparts.  This Warrant Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

* * * * *

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In witness whereof, each of the Company and the Warrant Agent has caused this Warrant Agreement to be executed by its duly authorized officers as of the date first above written.

MAGELLAN HEALTH SERVICES, INC.

By:

Name:

Title:

[                                   ]

as Warrant Agent

By:

Name:

Title:

Schedule A

Holder Aggregate Number of Warrants

Exhibit A

[Form of Face of Warrant Certificate]

WARRANT
TO PURCHASE SHARES OF ORDINARY COMMON STOCK, PAR VALUE $0.01 PER SHARE,
OF
MAGELLAN HEALTH SERVICES, INC.

Certificate No.:              Number of Warrants:                      

Exercisable from and after the date hereof until 5:00 p.m., New York City time on [                ], 20[    ] (the “Expiration Date”).

THIS GLOBAL WARRANT IS HELD BY THE DEPOSITARY (AS DEFINED IN THE WARRANT AGREEMENT GOVERNING THIS WARRANT) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE WARRANT AGENT MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 5 OF THE WARRANT AGREEMENT, (II) THIS GLOBAL WARRANT MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 5.1 OF THE WARRANT AGREEMENT, (III) THIS GLOBAL WARRANT MAY BE DELIVERED TO THE WARRANT AGENT FOR CANCELLATION PURSUANT TO SECTION 13.5 OF THE WARRANT AGREEMENT AND (IV) THIS GLOBAL WARRANT MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

The sale, encumbrance or other disposition of the Warrants and any securities acquired upon exercise of the Warrants is subject to the provisions of the Warrant Agreement (as defined below), a copy of which may be inspected at the principal office of the Warrant Agent or obtained from the Company without charge.  No registration or transfer of the securities issuable pursuant to the Warrant will be recorded on the books of the Company until such provisions have been complied with.

This Warrant Certificate certifies that                                       , or its registered assigns, is the registered holder (“Holder”) of the number of  Warrants set forth above expiring at 5:00 p.m., New York City time, on the Expiration Date (the “Warrants”) to purchase common stock, par value [$       ] per share (the “Common Stock”), of Magellan Health Services, Inc., a Delaware corporation (the “Company”).  The Common Stock issuable upon exercise of the Warrants is hereinafter referred to as the “Warrant Stock.”  Each Warrant entitles the Holder, upon exercise thereof, to purchase from the Company at any time from and after the date hereof until 5:00 p.m., New York City time, on the Expiration Date, one (1) share of Common Stock at the purchase price of [$       ] per share subject to adjustment and the other terms and conditions set forth herein and in the Warrant Agreement dated as of [                   ], 2003 (the “Warrant Agreement”) by and between the Company and [                         ], as warrant agent (the “Warrant Agent”).  Such purchase shall be payable in lawful money of the United States of America by certified or official bank check or any combination thereof to the order of the Warrant Agent for the account of the Company at the principal office of the Warrant Agent, subject to the conditions set forth herein and in the Warrant Agreement.  The number of shares of Common Stock for which each Warrant is exercisable, and the price at which such shares may be purchased upon exercise of each Warrant, are subject to adjustment upon the occurrence of certain events as set forth in the Warrant Agreement.  Whenever the number of shares of Common Stock for which a Warrant is exercisable, or the price at which a share of such Common Stock may be purchased upon exercise of the Warrants, is adjusted pursuant to the Warrant Agreement, the Company shall cause written notice of such adjustment to be given to each Holder at such Holder’s address appearing on the Warrant register by first class mail postage pre-paid.

No Warrant may be exercised after 5:00 p.m., New York City time, on the Expiration Date, and to the extent not exercised by such time such Warrants shall be void.

Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse side hereof, and such further provisions shall for all purposes have the same effect as though fully set forth at this place.

This Warrant Certificate is not valid unless countersigned by the Warrant Agent.

THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF [NEW YORK], WITHOUT REGARD TO THE PROVISIONS THEREOF RELATING TO CONFLICT OF LAWS.

In witness whereof, the undersigned, duly authorized officer of the Company has caused this Warrant Certificate to be signed as of this [      ] day of [             ], 2003.

MAGELLAN HEALTH SERVICES, INC.

By:

Name:

Title:

COUNTERSIGNED:

[                                   ]

as Warrant Agent

By:

Name:

Title:

[Form of Reverse of Warrant Certificate]

The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of up to [                  ] Warrants expiring at 5:00 p.m., New York City time, on the Expiration Date, entitling the Holder, on exercise, to purchase shares of Common Stock, par value [$       ] per share, of the Company, and are issued or to be issued pursuant to the Warrant Agreement, which Warrant Agreement is hereby incorporated by reference and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the Holders.  A copy of the Warrant Agreement may be obtained by the Holder hereof upon written request to the Company or the Warrant Agent at the addresses set forth below.

Warrants may be exercised by surrendering this Warrant Certificate, with the Election to Purchase set forth hereon properly completed and executed, together with payment of the purchase price by certified or official bank check payable to the order of the Warrant Agent for the account of the Company.  In the event that the number of Warrants exercised shall be less than the total number of Warrants evidenced hereby, there shall be issued to the Holder hereof or the Holder’s assignee a new Warrant Certificate evidencing the number of Warrants not exercised.

The Warrant Agreement provides that the number of shares of Common Stock for which each Warrant is exercisable, and the price at which such shares may be purchased upon exercise of each Warrant, are subject to adjustment upon the occurrence of certain events as set forth in the Warrant Agreement.  The Company shall not issue fractional shares of Common Stock upon the exercise of any Warrant, and the Company shall round up or down, as the case may be, to the nearest share of Common Stock as provided in the Warrant Agreement.

Warrant Certificates, when surrendered at the office of the Warrant Agent by the registered Holder thereof in person or by legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants.

Upon due presentation for registration of transfer of this Warrant Certificate at the office of the Warrant Agent, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement.

* * * * *

COMPANY:	WARRANT AGENT:
Magellan Health Services, Inc.	[                                   ]
6950 Columbia Gateway Drive, Suite 400	[                                   ]
Columbia, Maryland  21046	[                                   ]
[(410) 953-1258]	(     )

* * * * *

ELECTION TO PURCHASE

The undersigned registered owner of this Warrant irrevocably exercises this Warrant for the purchase of             shares of Common Stock of Magellan Health Services, Inc. and herewith makes payment therefor, all at the price and on the terms and conditions specified in this Warrant and the Warrant Agreement and requests that certificates for the shares of Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in and delivered to the name and address specified below and, if such shares of Common Stock shall not include all of the shares of Common Stock issuable as provided in this Warrant, that a new Warrant of like tenor and date for the balance of the shares of Common Stock issuable hereunder be delivered to the undersigned.

Date:
	Signature of Registered Owner*

Name Common Stock to be Registered Under

Address Common Stock to be Registered Under

* * * * *

SCHEDULE OF EXCHANGES OF INTERESTS OF GLOBAL WARRANTS

The following exchanges of a part of this Global Warrant have been made:

Date of Exchange Amount of decrease
in number of
warrants in this
Global Warrant Amount of increase
in number of
Warrants in this
Global Warrant Number of Warrants
in this Global Warrant
following such
decrease or increase Signature of
authorized officer
of Warrant Agent

EX-99.5

EXHIBIT 99.5

Form of Management Incentive Plan (Sept. —, 2003)

MAGELLAN HEALTH SERVICES, INC.

2003 MANAGEMENT INCENTIVE PLAN

EFFECTIVE AS OF           , 2003

Index of Defined Terms

Term	Section Where Defined or First Used
Beneficial Owner		13(c)(ii)
Benefits		4
Code		2(a)
Committee		2(a)
Common Stock		5(a)
Company		1
Dividend Equivalent Right		9(c)
Effective Date		23
Exchange Act		2(a)
Fair Market Value		16
Incentive Stock Option		6(a)
Injurious Conduct		12
Multi-Vote Common Stock		13(c)(iii)
Non-Employee Director		2(a)
Nonqualified Stock Option		6(a)
Parent Corporation		6(f)
Performance-Based Awards		10(a)
Person		13(c)(iv)
Plan		1
Restoration Stock Options		6(e)
Restricted Stock Award		8
Stock Appreciation Rights		7
Stock Options		6
Stock Unit		9(c)
Subsidiary Corporation		6(f)

MAGELLAN HEALTH SERVICES, INC.

2003 MANAGEMENT INCENTIVE PLAN

1.Purpose.  Magellan Health Services, Inc. 2003 Management Incentive Plan (the “Plan”) is intended to provide incentives which will attract, retain and motivate highly competent persons as officers and key employees of Magellan Health Services, Inc., a Delaware corporation (the “Company”), and its subsidiaries and affiliates, by providing them with appropriate incentives and rewards to encourage them to enter into and continue in the employ of the Company, to acquire a proprietary interest in the long-term success of the Company and to reward the performance of individuals in fulfilling their personal responsibilities for achievement of the Company’s objectives.

2.Administration.

(a)Committee.  The Plan will be administered by a committee (the “Committee”) appointed by the Board of Directors of the Company from among its members and shall be comprised, unless otherwise determined by the Company’s Board of Directors, solely of not less than two (2) members who shall be (i) “Non-Employee Directors” within the meaning of Rule 16b-3(b)(3) (or any successor rule) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and (ii) “outside directors” within the meaning of Treasury Regulation Section 1.162-27(e)(3) under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

(b)Authority.  The Committee is authorized, subject to the provisions of the Plan, to make and administer grants under the Plan (including to determine the terms and conditions of benefits granted and to waive conditions initially established for grants, including to accelerate vesting and to extend the exercisability of grants, except as specifically restricted by this Plan) and to establish such rules and regulations as it deems necessary for the proper administration of the Plan, including to make such determinations and interpretations and to take such action in connection with the Plan and any Benefits granted hereunder as it deems necessary or advisable to carry out its purposes.  All determinations and interpretations made by the Committee shall be binding and conclusive on all participants and their legal representatives.

(c)Delegation and Advisers.  The Committee may delegate to one or more of its members, to counsel for or advisors or consultants to the Committee and to management of the Company or to one or more other agents appointed by the Committee, such administrative duties as the Committee may deem advisable; provided, such delegation does not adversely effect the exemption provided by Rule 16b-3 of the Exchange Act, prevent a Benefit from qualifying as a Performance-Based Award, if so intended, and complies with applicable law.  The Committee, or any person to whom it has delegated duties as aforesaid, may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Plan.  The Committee may employ such legal or other counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion or

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computation received from any such counsel, consultant or agent.  Expenses incurred by the Committee in the engagement of such counsel, consultant or agent shall be paid by the Company, or the subsidiary or affiliate whose employees have benefited from the Plan, as determined by the Committee.

(d)Indemnification.  No member of the Committee and no officer or employee of the Company shall be liable for any act or failure to act hereunder, except in circumstances involving his or her bad faith or willful misconduct, or for any act or failure to act hereunder by any other member or officer or employee or by any agent to whom duties in connection with the administration of this Plan have been delegated.  The Company shall indemnify members of the Committee, any counsel or advisors appointed by the Company to assist it in carrying out its responsibilities hereunder and any officer of the Company or any employee of the Company, a subsidiary or an affiliate designated to act on behalf of the Company or the Committee with regard to the Plan against any and all liabilities or expenses to which they may be subjected by reason of any act or failure to act in connection with the Plan to the same extent and on the same terms and conditions as indemnity is provided to officers of the Company in accordance with the Company’s Bylaws, including advancing costs and expenses incurred by them in the defense of claims relating thereto.

3.Participants.  Participants will consist of such officers and key employees of the Company and its subsidiaries and affiliates as the Committee in its sole discretion determines to be responsible for the success and future growth and profitability of the Company and whom the Committee may designate from time to time to receive Benefits under the Plan.  Designation of a participant in any year shall not require the Committee to designate such person to receive a Benefit in any other year or, once designated, to receive the same type or amount of Benefit as granted to the participant in any other year.  The Committee shall consider such factors as it deems pertinent in selecting participants and in determining the type and amount of their respective Benefits.

4.Type of Benefits.  Benefits under the Plan may be granted in any one or a combination of  (a) Stock Options, (b) Stock Appreciation Rights, (c) Restricted Stock Awards and (d) Stock Units (each as described below, and collectively, the “Benefits”).  Restricted Stock Awards and Stock Units may, as determined by the Committee in its discretion, constitute Performance-Based Awards, as described in Section 10 hereof.  Benefits granted under the Plan shall be evidenced by an agreement (which need not be identical with respect to each grant or grantee) that may provide additional terms and conditions associated with such Benefits, as determined by the Committee in its sole discretion, provided, however, that in the event of any conflict between the provisions of the Plan and any such agreement, the provisions of the Plan shall prevail.  Nothing contained herein shall prevent the Company from making cash bonus payments or providing other benefits (other than Stock Options, Stock Appreciation Rights, Restricted Stock Awards and Stock Units) pursuant to any employment agreement, bonus plan or arrangement or other employee benefit plan or program.

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5.Common Stock Available Under the Plan.

(a)Basic Limitations.  The aggregate number of shares of capital stock of the Company that may be subject to Benefits granted under this Plan shall be [2,693,498]  shares of Ordinary Common Stock (as designated pursuant to the Amended and Restated Certificate of Incorporation of the Company executed on [     ] [  ], 2003) (the “Common Stock”), which may be authorized and unissued shares or treasury shares or may be purchased on the open market or by private purchase, subject to any adjustments made in accordance with Section 13(a) hereof, but such limit shall also be subject to adjustment in accordance with Sections 5(b) and 5(c) hereof.  The maximum number of shares of Common Stock with respect to which Benefits may be granted or measured to any individual participant under the Plan in any one calendar year shall not exceed [750,000] (subject to adjustments made in accordance with Section 13(a) hereof).

(b)Additional Shares.  Any shares of Common Stock subject to (or referenced by) a Benefit which are not ultimately used to settle a Benefit shall again be available for Benefits under this Plan and any shares of Common Stock delivered to the Company as part or full payment for the exercise of a Stock Option, Stock Appreciation Right, or Restricted Stock Award or to satisfy a tax obligation shall also be available for Benefits under this Plan.  This includes shares of Common Stock that are:  (i) covered by a Stock Option or referenced by a Stock Appreciation Right which for any reason is cancelled or terminated without having been exercised, (ii) subject to Restricted Stock Awards or Stock Units which are forfeited, or (iii) not delivered to a participant because all or a portion of a Benefit is settled in cash.  The preceding sentences of this Section shall apply only for purposes of determining the aggregate number of shares of Common Stock subject to Benefits but shall not apply for purposes of determining the maximum number of shares of Common Stock with respect to which Benefits (including the maximum number of shares of Common Stock subject to Stock Options and Stock Appreciation Rights) that may be granted to any individual participant under the Plan.

(c)Business Acquisition Grants.  In connection with the acquisition of any business by the Company or any of its subsidiaries or affiliates, any then outstanding grants, awards or sales of options or other similar rights pertaining to such business may be assumed or replaced by Benefits under the Plan upon such terms and conditions as the Committee determines in its sole discretion and, to the extent any shares of Common Stock are to be issued as Benefits under the Plan in replacement for any such grants, awards, options or rights of another business, such shares shall be in addition to those available for the award of Benefits as provided by Sections 5(a) and 5(b).

6.Stock Options.

(a)Generally.  Stock Options will consist of awards from the Company that will enable the holder to purchase a number of shares of Common Stock, at set terms.  Stock Options may be “incentive stock options” (“Incentive Stock Options”), within the meaning of Section 422 of the Code, or Stock Options which do not constitute Incentive Stock Options (“Nonqualified Stock Options”).  The Committee will have the authority to grant to any participant one or more Incentive Stock Options, Nonqualified Stock

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Options, or both types of Stock Options (in each case with or without Stock Appreciation Rights).  Each Stock Option shall be subject to such terms and conditions, including vesting, (which may be accelerated, including upon a change of control of the Company) consistent with the Plan as the Committee may impose or determine from time to time, subject to the following limitations.

(b)Exercise Price.  Each Nonqualified Stock Option granted hereunder shall have a per-share exercise price as the Committee may determine on the date of grant.

(c)Payment of Exercise Price.  The option exercise price may be paid in cash or, in the discretion of the Committee, by the delivery of shares of Common Stock of the Company then owned by the participant, provided such shares have been held by such participant for at least six (6) months.  In the discretion of the Committee, payment may also be made by delivering a properly executed exercise notice to the Company together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the exercise price as long as such transaction does not constitute an impermissible loan to an executive officer under Section 13(k) of the Exchange Act (Section 402 of the Sarbanes-Oxley Act of 2002).  To facilitate the foregoing, the Company may enter into agreements for coordinated procedures with one or more brokerage firms.  The Committee may prescribe any other method of paying the exercise price that it determines to be consistent with applicable law and the purpose of the Plan, including, without limitation, in lieu of the exercise of a Stock Option by delivery of shares of Common Stock of the Company then owned by a participant, providing the Company with a notarized statement attesting to the number of shares owned, where upon verification by the Company, the Company would issue to the participant only the number of incremental shares to which the participant is entitled upon exercise of the Stock Option.

(d)Exercise Period.  Stock Options granted under the Plan shall be exercisable at such time or times and subject to such terms and conditions, including vesting, as shall be determined by the Committee; provided, however, that no Stock Option shall be exercisable later than ten (10) years after the date it is granted.  All Stock Options shall terminate at such earlier times and upon such conditions or circumstances as the Committee shall in its discretion set forth in such option agreement on the date of grant.

(e)Restoration of Stock Options.  The Committee may, at the time of grant of an option, provide for the grant of a subsequent Restoration Stock Option if the exercise price is paid for by delivering previously owned shares of Common Stock of the Company.  Restoration Stock Options (i) may be granted in respect of no more than the number of shares of Common Stock tendered in exercising the predecessor Stock Option, (ii) shall have an exercise price equal to the Fair Market Value (as defined in Section 15 below) on the date the Restoration Stock Option is granted, and (iii) may have an exercise period that does not extend beyond the remaining term of the predecessor Stock Option.  In determining which methods a participant may utilize to pay the exercise price, the Committee may consider such factors as it determines are appropriate.

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(f)Limitations on Incentive Stock Options.  Incentive Stock Options may be granted only to participants who are employees of the Company or of a “Parent Corporation” or “Subsidiary Corporation” (as defined in Sections 424(e) and (f) of the Code, respectively) on the date of grant.  The aggregate Fair Market Value (determined as of the time the Stock Option is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by a participant during any calendar year (under all option plans of the Company and of any Parent Corporation or Subsidiary Corporation) shall not exceed one hundred thousand dollars ($100,000), provided, however, that if such $100,000 limit is exceeded, the excess Incentive Stock Options shall be treated as Nonqualified Stock Options.  For purposes of the preceding sentence, Incentive Stock Options will be taken into account in the order in which they are granted.  The per-share exercise price of an Incentive Stock Option shall not be less than one hundred percent (100%) of the Fair Market Value of the Common Stock on the date of grant, and no Incentive Stock Option may be exercised later than ten (10) years after the date it is granted.

(g)Additional Limitations on Incentive Stock Options for Ten Percent Shareholders.  Incentive Stock Options may not be granted to any participant who, at the time of grant, owns stock possessing (after the application of the attribution rules of Section 424(d) of the Code) more thanten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent Corporation or Subsidiary Corporation, unless the exercise price of the option is fixed at not less thanone hundred ten percent (110%) of the Fair Market Value of the Common Stock on the date of grant and the exercise of such option is prohibited by its terms after the expiration of five (5) years from the date of grant of such option.

7.Stock Appreciation Rights.

(a)Generally.  The Committee may, in its discretion, grant Stock Appreciation Rights, including a concurrent grant of Stock Appreciation Rights in tandem with any Stock Option grant.  A Stock Appreciation Right means a right to receive a payment in cash, Common Stock or a combination thereof, as determined by the Committee, in an amount equal to the excess of (i) the Fair Market Value, or other specified valuation, of a specified number of shares of Common Stock on the date the right is exercised over (ii) the Fair Market Value of such shares of Common Stock on the date the right is granted, or other specified amount, all as determined by the Committee; provided, however, that if a Stock Appreciation Right is granted in tandem with or in substitution for a Stock Option, the designated Fair Market Value in the award agreement shall reflect the Fair Market Value on the date such Stock Option was granted.  Each Stock Appreciation Right shall be subject to such terms and conditions including vesting, (which may be accelerated, including upon a change of control of the Company), as the Committee shall impose or determine from time to time, provided, however, that if a Stock Appreciation Right is granted in connection with a Stock Option, the Stock Appreciation Right shall become exercisable, be transferable and shall expire according to the same vesting, transferability and expiration rules as the corresponding Stock Option.

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(b)Exercise Period.  Stock Appreciation Rights granted under the Plan shall be exercisable at such time or times and subject to such terms and conditions including vesting, (which may be accelerated, including upon a change of control of the Company), as shall be determined by the Committee; provided, however, that no Stock Appreciation Rights shall be exercisable later than ten (10) yearsafter the date it is granted.  All Stock Appreciation Rights shall terminate at such earlier times and upon such conditions or circumstances as the Committee shall in its discretion set forth in such right at the date of grant.

8.Restricted Stock Awards.

(a)Generally.  The Committee may, in its discretion, grant Restricted Stock Awards consisting of Common Stock issued or transferred to participants with or without cash or other payment therefor in whole or in part.  Each participant granted a Restricted Stock Award shall execute and deliver to the Company an agreement with respect to the Restricted Stock setting forth the restrictions applicable to such Restricted Stock.  If a participant fails to execute such an agreement, the Restricted Stock Award shall be null and void.

(b)Payment of the Purchase Price.  If the Restricted Stock Award requires payment therefor, the purchase price of any shares of Common Stock subject to a Restricted Stock Award may be paid in any manner authorized by the Committee, which may include any manner authorized under the Plan for the payment of the exercise price of a Stock Option.  Restricted Stock Awards may also be made solely in consideration of services rendered to the Company or its subsidiaries or affiliates.

(c)Additional Terms.  Restricted Stock Awards may be subject to such terms and conditions including vesting, (which may be accelerated, including upon a change of control of the Company), as the Committee determines appropriate, including, without limitation, (i) restrictions on the sale or other disposition of such shares, and (ii) the right of the Company to reacquire such shares for no consideration upon termination of the participant’s employment within specified periods, the participant’s competition with the Company, or the participant’s breach of other obligations to the Company.  Restricted Stock Awards may constitute Performance-Based Awards, as described in Section 10 hereof.  The Committee may require the participant to deliver a duly signed stock power, endorsed in blank, relating to the Common Stock covered by such an Award.  The Committee may also require that the stock certificates evidencing such shares be held in custody or bear restrictive legends until the restrictions thereon shall have lapsed.

(d)Rights as a Shareholder.  The participant shall have, with respect to the shares of Common Stock subject to a Restricted Stock Award, all of the rights of a holder of shares of Common Stock of the Company, including the right to vote the shares, except as may be otherwise provided in a Restricted Stock Award agreement as determined by the Committee.  At the discretion of the Committee, cash dividends and stock dividends with respect to the Restricted Stock may be either currently paid to the participant or withheld by the Company for the participant’s account, and interest may be credited on the amount of cash dividends withheld at a rate and subject to such terms

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(which may be accelerated, including upon a change of control of the Company) as determined by the Committee.  The cash dividends or stock dividends so withheld by the Committee and attributable to any particular share of Restricted Stock (and earnings thereon, if applicable) shall be distributed to the participant upon the release of restrictions on such shares and, if such share is forfeited, the participant shall have no right to such cash dividends or stock dividends.

9.Stock Units.

(a)Generally.  The Committee may, in its discretion, grant Stock Units (as defined in subsection (c) below) to participants hereunder.  Stock Units may be subject to such terms and conditions including vesting, (which may be accelerated, including upon a change of control of the Company), as the Committee determines appropriate.  Stock Units may constitute Performance-Based Awards, as described in Section 10 hereof.  A Stock Unit granted by the Committee shall provide payment in shares of Common Stock at such time as the award agreement shall specify.  Shares of Common Stock issued pursuant to this Section 9 may be issued with or without other payments therefor as may be required by applicable law or such other consideration as may be determined by the Committee.  The Committee shall determine whether a participant granted a Stock Unit shall be entitled to a Dividend Equivalent Right (as defined in subsection (c) below).

(b)Settlement of Stock Units.  Shares of Common Stock representing the Stock Units shall be distributed to the participant unless the Committee provides for the payment of the Stock Units in cash equal to the value of the shares of Common Stock which would otherwise be distributed to the participant or partly in cash and partly in shares of Common Stock.

(c)Definitions.  A “Stock Unit” means a notional account representing one (1) share of Common Stock.  A “Dividend Equivalent Right” means the right to receive the amount of any dividend paid on the share of Common Stock underlying a Stock Unit, which shall be payable in cash or in the form of additional Stock Units.

10.Performance-Based Awards.

(a)Generally.  Any Benefits granted under the Plan may be granted in a manner such that the Benefits qualify for the performance-based compensation exemption of Section 162(m) of the Code (“Performance-Based Awards”).  As determined by the Committee in its sole discretion, either the granting or vesting of such Performance-Based Awards shall be based on achievement of performance objectives that are based on one or more of the business criteria described below that apply to the individual participant, one or more business units or the Company as a whole.

(b)Business Criteria.  The business criteria shall be as follows, individually or in combination: (i) net earnings; (ii) earnings per share; (iii) sales; (iv) operating income; (v) earnings before interest and taxes (EBIT); (vi) earnings before interest, taxes, depreciation and amortization (EBITDA); (vii) cash flow; (viii) working capital targets; (ix) return on equity; (x) return on capital; (xi) market price per share; and (xii) total

1.90-7

return to shareholders.  In addition, Performance-Based Awards may include comparisons to the performance of other companies, such performance to be measured by one or more of the foregoing business criteria, and may be determined by such index based thereon as is approved by the Committee.

(c)Establishment of Performance Goals.  With respect to Performance-Based Awards, the Committee shall establish in writing (i) the performance goals applicable to a given period, and such performance goals shall state, in terms of an objective formula or standard, the method for computing the amount of compensation payable to the participant if such performance goals are obtained and (ii) the individual employees or class of employees to which such performance goals apply; provided, however, that such performance goals shall be established in writing no later thanninety (90) days after the commencement of the applicable performance period (but in no event after twenty-five percent (25%) of such performance period has elapsed).

(d)Certification of Performance.  No Performance-Based Awards shall be payable to or vest with respect to, as the case may be, any participant for a given period until there has been certified in writing by or on behalf of the Committee that the objective performance goals (and any other material terms) applicable to such period have been satisfied.

(e)Modification of Performance-Based Awards.  With respect to any Benefits intended to qualify as Performance-Based Awards, after establishment of a performance goal, the Committee shall not revise such performance goal or increase the amount of compensation payable thereunder (as determined in accordance with Section 162(m) of the Code) upon the attainment of such performance goal.  Notwithstanding the preceding sentence, the Committee may reduce or eliminate the number of shares of Common Stock or cash granted or the number of shares of Common Stock vested upon the attainment of such performance goal.

11.Foreign Laws.  The Committee may grant Benefits to individual participants who are subject to the tax laws of nations other than the United States, which Benefits may have terms and conditions as determined by the Committee as necessary to comply with applicable foreign laws and that may differ from those applicable to other participants.  The Committee may take any action which it deems advisable to obtain approval of such Benefits by the appropriate foreign governmental entity; provided, however, that no such Benefits may be granted pursuant to this Section 11 and no action may be taken which would result in a violation of the Exchange Act, the Code or any other applicable law.

12.Certain Terminations of Employment; Forfeitures.

(a)Forfeiture of Unsettled Benefits.  Unless the Committee or any agreement relating to Benefits under this Plan shall otherwise provide, a participant shall forfeit all Benefits he or she holds at the time and which have not been settled under this Plan (other than fully vested Restricted Stock Awards) if:

1.90-8

(i)the participant’s employment with the Company or with any Parent Corporation or Subsidiary Corporation is terminated for willful, deliberate, or gross misconduct in the performance of the participant’s duties to the Company, Parent Corporation or Subsidiary Corporation, as determined by the Committee in its good faith judgment, or any other event which constitutes “cause” under an employment agreement to which such participant is a party or

(ii)following the participant’s termination of employment with the Company or with any Parent Corporation or Subsidiary Corporation and for a period of two (2) yearsthereafter, the participant engages in any business or enters into any employment relationship in violation of any non-competition obligation which such participant has to the Company,  a Parent Corporation or Subsidiary Corporation or in violation of any restriction to which the participant is subject on, directly or indirectly, soliciting the employment of or any business from, or employing or doing business with, any of the employees or former employees of the Company (or any Parent Corporation or Subsidiary Corporation) or any customer or supplier to the Company (or any Parent Corporation or Subsidiary Corporation), or any other party with which the Company (or any Parent Corporation or Subsidiary Corporation) has a business relationship (including any such obligation or restriction contained in any agreement pursuant to which  any Benefit is provided or any other agreement), and  the Committee in its sole discretion has determined the results of such violation to have been injurious to the Company’s business interests.

The activities described in (i) and (ii) above are hereafter referred to as “Injurious Conduct”.

(b)Effect on Settled Benefits.  A forfeiture of Benefits provided by Section 12(a) upon the Committee determining that a participant has engaged in Injurious Conduct during the course of his employment or during thetwo (2) yearperiod following his or her termination of employment, shall not relieve the participant of any liability he or she may have to the Committee as a result of engaging in the Injurious Conduct.

(c)Timing.  The Committee shall exercise the right of forfeiture provided to the Company in this Section 12 withinninety (90) daysafter the discovery of the activities giving rise to the Company’s right of forfeiture, which activities must have occurred no later than twenty-four (24) months after the participant’s termination of employment.

(d)Determination from the Committee.  A participant may make a request to the Committee in writing for a determination regarding whether any proposed business or activity would constitute Injurious Conduct.  Such request shall fully describe the proposed business or activity.  The Committee shall respond to the participant in writing and the Committee’s determination shall be limited to the specific business or activity so described.

1.90-9

(e)Condition Precedent.  Unless the Committee or any agreement relating to  Benefits under this Plan shall otherwise provide, all Benefits shall be considered  awarded under this Plan subject to the applicability of this Section 12.

(f)Enforceability.  The purpose of this Section 12 is to protect the Company (and any Parent and Subsidiaries) from Injurious Conduct.  To the extent that this Section 12 is not fully enforceable as written, the unenforceable provisions shall be modified so as to provide the Company with the fullest protection permitted by law.

13.Adjustment Provisions.  Benefits granted under the Plan and any agreements evidencing such Benefits, the maximum number of shares of Common Stock subject to all Benefits stated in Section 5(a) and the maximum number of shares of Common Stock with respect to which Benefits may be granted to any one person during any period stated in Section 5(a) shall be subject to adjustment or substitution, as determined by the Committee in its sole discretion, as to the number, price or kind of a share of Common Stock or other consideration subject to such Benefits or as otherwise determined by the Committee to be equitable (i) in the event of changes in the outstanding Common Stock or in the capital structure of the Company by reason of stock or extraordinary cash dividends, stock splits, reverse stock splits, recapitalization, reorganizations, mergers, consolidations, combinations, exchanges, or other relevant changes in capitalization occurring after the date of grant of any such Benefit or (ii) 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, participants, or which otherwise warrants equitable adjustment because it interferes with the intended operation of the Plan.  Any adjustment in Incentive Stock Options under this Section 13 shall be made only to the extent not constituting a “modification” within the meaning of Section 424(h)(3) of the Code, and any adjustments under this Section 13 shall be made in a manner which does not adversely affect the exemption provided pursuant to Rule 16b-3 under the Exchange Act.  Further, with respect to Benefits intended to qualify as “performance-based compensation” under Section 162(m) of the Code, such adjustments or substitutions shall be made only to the extent that the Committee determines that such adjustments or substitutions may be made without causing the Company to be denied a tax deduction on account of Section 162(m) of the Code.  The Company shall give each participant notice of an adjustment hereunder and, upon notice, such adjustment shall be conclusive and binding for all purposes.

14.Nontransferability.  Each Benefit granted under the Plan to a participant (other than unrestricted Stock Awards, vested restricted Stock Awards) shall not be transferable otherwise than by will or the laws of descent and distribution, and shall be exercisable, during the participant’s lifetime, only by the participant.  In the event of the death of a participant, each Stock Option or Stock Appreciation Right theretofore granted to him or her shall be exercisable during such period after his or her death as the Committee shall in its discretion set forth in such option or right at the date of grant and then only by the executor or administrator of the estate of the deceased participant or the person or persons to whom the deceased participant’s rights under the Stock Option or Stock Appreciation Right shall pass by will or the laws of descent and distribution.  Notwithstanding the foregoing, at the discretion of the Committee, an award of a Benefit

1.90-10

other than an Incentive Stock Option may permit the transferability of a Benefit by a participant solely to the participant’s spouse, siblings, parents, children and grandchildren or trusts for the benefit of such persons or partnerships, corporations, limited liability companies or other entities owned solely by such persons, including trusts for such persons, subject to any restriction included in the award of the Benefit.

15.Other Provisions.  The award of any Benefit under the Plan may also be subject to such other provisions (whether or not applicable to the Benefit awarded to any other participant) as the Committee determines appropriate, including, without limitation, provisions for the forfeiture of, or restrictions on resale or other disposition of, Common Stock acquired under any form of Benefit, for the acceleration of exercisability or vesting of Benefits, or to comply with federal and state securities laws, or understandings or conditions as to the participant’s employment in addition to those specifically provided for under the Plan.

16.Fair Market Value.  For purposes of this Plan and any Benefits awarded hereunder, Fair Market Value on any given date means (i) if the Common Stock is listed on a national securities exchange or is quoted in the National Market System of the National Association of Securities Dealers Automated Quotation System (“NASDAQ”) on a last sale basis, the closing price reported as having occurred on such date, or, if there is no sale on such date, then on the last preceding date on which such a sale was reported, or (ii) if the Common Stock is not listed on a national securities exchange nor quoted in NASDAQ on a last sale basis, the amount determined by the Committee to be the fair market value based upon a good faith attempt to value the Common Stock accurately.

17.Withholding.  All payments or distributions of Benefits made pursuant to the Plan shall be net of any amounts required to be withheld pursuant to applicable federal, state and local tax withholding requirements.  If the Company proposes or is required to distribute Common Stock pursuant to the Plan, it may require the recipient to remit to it or to the corporation that employs such recipient an amount sufficient to satisfy such tax withholding requirements prior to the delivery of any certificates for such Common Stock.  In lieu thereof, the Company or the employing corporation shall have the right to withhold the amount of such taxes from any other sums due or to become due from such corporation to the recipient as the Committee shall prescribe.  The Committee may, in its discretion and subject to such rules as it may adopt (including any as may be required to satisfy applicable tax and/or non-tax regulatory requirements), permit an optionee or award or right holder to pay all or a portion of the federal, state and local withholding taxes arising in connection with any Benefit consisting of shares of Common Stock by electing to have the Company withhold shares of Common Stock having a Fair Market Value equal to the amount of tax to be withheld, such tax calculated at minimum statutory withholding rates.

18.Employment Rights.  Neither the Plan nor any action taken hereunder shall be construed as giving any participant the right to be retained in the employ or service of the company or any of its subsidiaries or affiliates.

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19.Unfunded Plan.  Participants shall have no right, title, or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations under the Plan.  Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any participant, beneficiary, legal representative or any other person.  To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company.  All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan.  The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.

20.No Fractional Shares.  No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan or any Benefit.  The Committee shall determine whether cash, or Benefits, or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

21.Duration, Amendment and Termination.  No Benefit shall be granted more thanten (10) years after the Effective Date.  The Company may amend the Plan from time to time or suspend or terminate the Plan at any time.  However, no amendment of the Plan may be made without approval of holders of a majority of the voting power of the Common stock and Multi-Vote Common Stock (as defined in the Company’s Amended and Restated Certificate of Incorporation as in effect immediately after the Effective Date), voting together as a single class, if the amendment will: (i) increase the aggregate number of shares of Common Stock that may be delivered through Stock Options under the Plan; (ii) increase the maximum number of shares that may be awarded to any participant under Section 5 hereof; (iii) change the types of business criteria on which Performance-Based Awards are to be based under the Plan; or (iv) modify the requirements as to eligibility for participation in the Plan.

22.Governing Law.  This Plan, Benefits granted hereunder and actions taken in connection herewith shall be governed and construed in accordance with the laws of the State of Delaware (regardless of the law that might otherwise govern under applicable Delaware principles of conflict of laws).

23.Effective Date.  This Plan is adopted by the Company in anticipation of its emergence from chapter 11 of title 11 of the United States Bankruptcy Code, as a publicly-owned issuer which files reports under Section 12 of the Exchange Act  The Plan shall be effective as of the date on which all the conditions to the effectiveness of the Reorganization Plan are satisfied and shares of Common Stock are issued pursuant to the Plan (the “Effective Date”), provided that the Plan is approved by holders of a majority of the voting power of the Common stock and Multi-Vote Common Stock (as defined in the Company’s Amended and Restated Certificate of Incorporation as in effect immediately after the Effective Date) within twelve (12) monthsof the Effective Date.  Such shareholder approval shall be a condition to the right of each participant to receive

1.90-12

any Benefits hereunder.  Any Benefits granted under the Plan prior to such shareholder approval shall be effective as of the date of grant (unless, with respect to any Benefit, the Committee specifies otherwise at the time of grant), but no such Benefit may be exercised or settled and no restrictions relating to any Benefit may lapse prior to such shareholder approval and, if such shareholder approval is not obtained as provided hereunder, any such Benefit shall be cancelled.

1.90-13

EX-99.6

EXHIBIT 99.6

WGM DRAFT

03/10/03

PROMISSORY NOTE

U.S. $[45,000,000]	New York, New York
	[Effective Date of Plan]

FOR VALUE RECEIVED, the undersigned, MAGELLAN HEALTH SERVICES, INC., a Delaware corporation (the “Company”), hereby promises to pay to the order of AETNA INC., a Pennsylvania corporation (“Aetna”), (Aetna being the “Payee”), the principal amount of [FORTY-FIVE MILLION U.S. DOLLARS] (U.S. $[45,000,000])(1) on the Maturity Date (as defined below).  Both principal and interest hereunder are payable in lawful money of the United States of America to the Payee at its principal place of business at [                        ], Attention:  [              ], or at such other place as the Payee may designate from time to time in writing (such principal place of business or other place being the “Payment Place”), in cash or other immediately available funds.  Unless otherwise defined in the text of this Note, capitalized terms used herein shall have the meaning ascribed to such terms in Section 17.

SECTION 1.Interest.  (a)  The Company hereby promises to pay interest on the unpaid principal amount of this Note from [the Effective Date of Plan] until the Maturity Date, in cash or other immediately available funds, at the Applicable Rate, payable as set forth in Section 1(b) and computed on the basis of a year of 365/6 days for the actual number of days elapsed (including the first day but excluding the last day).

(b)Interest accruing pursuant to Section 1(a) of this Note shall be payable as set forth in this Section 1(b):

(i)Interest accruing pursuant to Section 1(a) on the unpaid principal amount of this Note from and after the date hereof shall be payable in arrears on each Interest Payment Date, in cash or other immediately available funds, to the Payee at the Payment Place.

(ii)On each date on which any principal amount of this Note shall be paid, the Company shall pay to the Payee at the Payment Place accrued interest on the amount of such principal so paid, in cash or other immediately available funds.

(iii)If any Interest Payment Date, Maturity Date or other date fixed for payment hereunder is not a Business Day, such payment date shall be extended to the next succeeding Business Day, and during any such extension, interest on the unpaid principal amount of this Note shall accrue and be payable at the Applicable Rate as set forth in Section 1(a).

(1)  To be increased by interest on $60 million from February 15, 2003 through the Effective Date of the Plan, as set forth in the Restructuring Term Sheet.

SECTION 2.Term.  The Maturity Date of this Note shall be the Initial Maturity Date unless either of the two following conditions shall apply:

(a)in the event that the term of the Aetna Services Agreement is extended for the “Extension Term” (as such term is defined in the Aetna Services Agreement) pursuant to the terms and conditions set forth in Section 9.A of the Aetna Services Agreement, then the Maturity Date shall be the Final Maturity Date and the mandatory prepayment described in Section 3(a) of this Note shall be payable; and

(b)in the event that (i) the Purchase Option is exercised pursuant to the terms and conditions set forth in Section 7.B of the Aetna Services Agreement and (ii) the purchase contemplated by the Purchase Option is consummated on the terms and conditions set forth in the Asset Purchase Agreement, then the Maturity Date shall be the Early Maturity Date.

SECTION 3.Payment of Principal; Mandatory Prepayment.  (a)   Scheduled Payment.  On the applicable Maturity Date, the Company shall pay to the Payee, in cash or other immediately available funds, the entire unpaid principal amount of this Note, plus all accrued and unpaid interest thereon.  In the event the term of the Aetna Services Agreement is extended for the “Extension Term” (as such term is defined in the Aetna Services Agreement) pursuant to the terms and conditions set forth in Section 9.A of the Aetna Services Agreement, then the Company shall pay to the Payee, as a mandatory prepayment, on the date that would otherwise have been the Initial Maturity Date, an amount equal to 50% of the original principal amount of this Note, plus all accrued and unpaid interest thereon.

(b)Optional Prepayment.

(i)The Company may, at any time and from time to time, without premium or penalty, prepay all or a portion of the unpaid principal amount of this Note, together with unpaid accrued interest on the amount so prepaid to the date chosen for prepayment, payable in cash or other immediately available funds.

(ii)Any prepayment under clause (i) above made prior to the Maturity Date shall be deemed credited against principal and interest payments outstanding as of such prepayment date pursuant to the terms hereof (applied first to the payment of interest and then to the payment of principal).

(iii)In the event the Company is required to make a mandatory prepayment under subsection (a) above, any prepayment under clause (i) above made prior to such scheduled mandatory prepayment shall be deemed credited against the amount of such mandatory prepayment.

(c)Replacement Note.  In the event that the Company shall prepay less than all of the outstanding principal amount of this Note, the Company shall, at the

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request of the Payee, deliver to the Payee upon such prepayment a replacement Note representing the remaining outstanding principal amount of this Note.

SECTION 4.General Provisions Regarding Payments.  The Company will pay all amounts due hereunder free and clear of and without reduction for any taxes, levies, imposts, deductions, withholding or charges and without set-off or counterclaim (other than as provided in Section 15).  The Company hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever.

SECTION 5.Representations and Warranties.  The Company represents and warrants to the Payee as of the date hereof that (i) the Company is a duly organized and existing corporation and is duly authorized to enter into, deliver and perform this Note, which constitutes a valid and binding obligation of the Company, enforceable in accordance with its terms, (ii) neither the making of this Note nor the performance by the Company of its obligations hereunder will violate any provision of law or, with the exception of the Senior Secured Credit Agreement and any related documents, any agreement, indenture, note or other instrument binding upon the Company or any of its Subsidiaries or the Company’s certificate of incorporation or by-laws or other constitutional documents or, with the exception of the Senior Secured Credit Agreement and any related documents, give cause for acceleration of any indebtedness of the Company or any of its Subsidiaries (iii) no authority from or approval by any governmental body, commission or agency is required in connection with the making or validity of and the execution, delivery and performance of this Note, (iv) there are no actions, suits or proceedings pending against or, to the knowledge of the Company, threatened against or affecting, the Company or any of its Subsidiaries, in any court or before or by any governmental department, agency or instrumentality, an adverse decision in which could materially and adversely affect the financial condition, business or operations of the Company or the ability of the Company to perform its obligations under this Note and (v) the Company and each of its Subsidiaries is in compliance in all material respects with all applicable laws, ordinances, rules, regulations and requirements of governmental authorities.

SECTION 6.Events of Default.  (a)  For purposes of this Note, an “Event of Default” shall be deemed to have occurred upon:

(i)any failure by the Company to pay (by delivery of cash or other immediately available funds) all or any portion of principal under this Note when the same shall be due and payable in accordance with the terms hereof, whether on the Maturity Date, by acceleration or otherwise; or

(ii)any failure by the Company to pay (by delivery of cash or other immediately available funds) all or any portion of any interest under

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this Note when the same shall be due and payable, which failure continues unremedied for a period of [              ] (   )(2) Business Days; or

(iii)(A) the filing by the Company of a voluntary petition seeking liquidation, reorganization, arrangement, dissolution or readjustment, in any form, of its debts under Title 11 of the United States Code (or corresponding provisions of future laws) or any other applicable state, federal or foreign bankruptcy, insolvency or similar law, or the filing by the Company of an answer consenting to or acquiescing in any such petition, (B) the making by the Company of any assignment for the benefit of its creditors, or any failure, inability or admission by the Company in writing of its inability to pay its debts as they become due, (C) the filing of (x) an involuntary petition against the Company  under Title 11 of the United States Code, or any other applicable bankruptcy, insolvency or similar law (or corresponding provisions of future laws), (y) an application for the appointment of a custodian, receiver, trustee or other similar official for the Company  for all or a substantial part of the assets of the Company or (z) an involuntary petition against the Company seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, dissolution, relief or composition of the Company or any of the Company’s debts under any other federal or state or foreign insolvency or similar law, provided that any such filing referred to in this clause (c) shall not have been vacated, set aside or stayed within a 45 day period from the date thereof, (D) the entry against the Company of a final and nonappealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect or (E) any corporate action to effect or in furtherance of any of the foregoing;

(iv)for any reason any Collateral Document ceases to be in full force and effect or any Lien intended to be created thereby ceases to be or is not valid and perfected; or any Lien in favor or made for the benefit of the Payee contemplated by any Collateral Document, shall, at any time, be invalidated or otherwise cease to be in full force and effect;

(v)any representation or warranty made by the Company in this Note shall prove to have been incorrect in any material respect when made; or

(vi)there is an Event of Default under the Senior Secured Credit Agreement and the lenders or the agent on behalf of the lenders have caused, with the giving of notice if required, the Company’s obligations thereunder to become due and payable prior to its stated maturity.

(2)  To match the grace period in the Senior Secured Credit Agreement.

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(b)Upon the occurrence and during the continuance of any Event of Default described in Section 6(a) other than in clause (iii) thereof, the Payee may, by written notice to the Company, declare all or any portion of the unpaid principal amount of this Note and all interest accrued thereon to be immediately due and payable.  Upon the occurrence of any Event of Default described in clause (iii) of Section 6(a), the unpaid principal amount of this Note and all interest accrued thereon shall automatically become due and payable, without any action or notice by the Payee.  Demand, presentment, protest and notice of non-payment, or any other notice or demand whatsoever, are hereby waived by the Company.  All payments made following an Event of Default and all proceeds of Collateral received by the Payee in respect of this Note shall be applied first to the payment of all expenses owing to the Payee hereunder, second to interest and last to the original principal amount of this Note.

SECTION 7.Collateral.  The obligations of the Company under this Note are secured and guaranteed as provided in the Collateral Documents executed in connection herewith, and reference is made to such documents for the terms and conditions governing the collateral security for, and guarantee of, the obligations of the Company hereunder.

SECTION 8.Waiver or Alteration.  None of the provisions hereof may be waived, altered or amended, except by a written instrument signed by the Payee and the Company.  In the case of any waiver, the Company and the Payee shall be restored to their former respective positions and rights hereunder, and any Event of Default waived shall be deemed to be cured and not continuing, but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon except to the extent expressly provided in such waiver.

SECTION 9.Remedies Cumulative.  No failure to exercise or delay in exercising any right, remedy, power or privilege hereunder or under the Collateral Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or under the Collateral Documents preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges provided herein and in the Collateral Documents are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

SECTION 10.Notices.  Any notices or other communications required or permitted hereunder shall be given in writing and personally delivered with receipt acknowledged or mailed, postage prepaid, via registered mail, return receipt requested, if to the Payee, at its address first set forth above or any other address notified in writing by the Payee to the Company, and if to the Company, at its address at [                                   ], Attention: [                       ], with a copy to [                       ], Attention: [                       ], or any other address notified in writing by the Company to the Payee.  Any notice given in conformity with the foregoing shall be deemed given when personally delivered or upon the date of delivery specified in the registered mail receipt.

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SECTION 11.Governing Law; Jurisdiction.  This Note shall be governed by, and construed and enforced in accordance with the laws of the State of New York as in effect from time to time, without giving effect to any choice of laws or conflict of laws principles thereof (other than Section 5-1401 of the General Obligations Law).  The Company hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for purposes of all legal proceedings arising out of or relating to this Note.  The company irrevocably waives, to the fullest extent permitted by law, any objection which the Company may now or hereafter have to the laying of the venue of any such proceeding brought in such court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.  The Company irrevocably waives any and all right to trial by jury in any legal proceeding arising out of or relating to this Note.

SECTION 12.Severability.  If any provision of this Note is invalid or unenforceable in any jurisdiction, the other provisions hereof shall remain in full force and effect in such jurisdiction and the remaining provisions hereof shall be liberally construed in favor of the holder hereof in order to effectuate the provisions hereof and the invalidity of any provision hereof in any jurisdiction shall not affect the validity or enforceability of any other provision in any other jurisdiction, including the State of New York.

SECTION 13.Successors and Assigns; Transferability.  This Note shall be binding upon the Company and its successors and assigns and is for the benefit of the Payee and its successors and assigns, except that the Company may not assign or otherwise transfer its rights or obligations under this Note.  The Payee may at any time and from time to time without the consent of the Company assign all or any portion of its rights under this Note to one or more affiliates of the Payee.

SECTION 14.Replacement of Note.  Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and the Company’s receipt of an indemnity agreement of the Payee reasonably satisfactory to the Company, the Company will, at the expense of the Payee, execute and deliver, in lieu thereof, a new Note of like terms.

SECTION 15.Right of Set-off.  In the event that (i) the Purchase Option is exercised pursuant to the terms and conditions set forth in Section 7.B of the Aetna Services Agreement and (ii) the purchase contemplated by the Purchase Option is consummated, then the Company shall, at the Closing, set-off the “Purchase Price” and the “Closing Network Adjustment” (each term as defined in the Asset Purchase Agreement) payable by Payee to the Company under Section 2.07(a) of the Asset Purchase Agreement, against the principal amount of this Note plus all accrued but unpaid interest thereon.

SECTION 16.Expenses; Indemnity.  The Company shall pay (i) all reasonable out-of pocket expenses of the Payee in connection with the preparation of this Note, any waiver or consent hereunder or any amendment hereof or any Event of Default or alleged

6

Event of Default hereunder and (ii) if an Event of Default occurs, all reasonable out-of pocket expenses incurred by the Payee, including (without duplication) the reasonable fees and disbursements of outside counsel in connection with such Event of Default and collection, bankruptcy, insolvency and other enforcement proceedings resulting therefrom.  Without limitation of the foregoing, the Company agrees to indemnify the Payee, its affiliates and the respective directors, officers, agents and employees of the foregoing (each, an “Indemnitee”) and hold each Indemnitee harmless from and against any and all liabilities, losses, damages, costs and reasonable expenses of any kind, including, without limitation, the reasonable fees and disbursements of counsel and settlement costs, which may be incurred by such Indemnitee in connection with any investigative, administrative or judicial proceeding (whether or not such Indemnitee shall be designated a party thereto) brought or threatened relating to or arising out of this Note; provided that no Indemnitee shall have the right to be indemnified hereunder for such Indemnitee’s own gross negligence, recklessness or willful misconduct.

SECTION 17.Definitions.

(a)For purposes of this Note, the following terms have the following meanings:

“Aetna” shall have the meaning ascribed to such term in the first paragraph of this Note.

“Aetna Services Agreement” shall mean the Master Service Agreement dated as of August 5, 1997 by and among Aetna, the Company and a Subsidiary of the Company, as amended from time to time prior to the date hereof (including without limitation by the Second Amendment thereto dated as of March [__], 2003) and as such agreement may be further amended, supplemented or modified from time to time.

“Applicable Rate” shall mean the sum of (i) [insert definition of Alternate Base Rate in the Senior Secured Credit Agreement-expected to be the higher of the Prime Rate and the Federal Funds Effective Rate plus 1/2 of 1%] plus (ii) 3.25% plus (iii) solely in the case of overdue amounts of principal or interest, 2.0%.(3)

“Asset Purchase Agreement” shall mean an agreement between the Company and the Payee substantially in the form of Exhibit D to the Aetna Services Agreement.

“Business Day” shall mean a day other than a Saturday, Sunday or other day on which commercial banks in New York are authorized or required by law to close.

(3)  Clauses (i), (ii) and (iii) will be conformed to definitions and margins in the Senior Secured Credit Agreement.

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“Closing” shall have the meaning ascribed to such term in the Asset Purchase Agreement.

“Collateral” shall have the meaning ascribed to such term in the Security Agreement.

“Collateral Documents” shall mean [Security Agreement/Guarantees] and all other security agreements, guarantees, mortgages, deeds of trust, collateral assignments and other agreements or conveyances at any time delivered to the Payee to create or evidence Liens to secure the obligations of the Company hereunder.

“Company” shall have the meaning ascribed to such term in the first paragraph of this Note.

“Early Maturity Date” shall mean the date of the Closing.

“Final Maturity Date” shall mean December 31, 2006.

“Initial Maturity Date” shall mean December 31, 2005.

“Interest Payment Date” shall mean the last day of each March, June, September and December, commencing on first such date after the date hereof.

“Lien” shall mean any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of any asset, whether now owned or hereafter acquired, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

“Maturity Date” shall mean the Initial Maturity Date, the Final Maturity Date or the Early Maturity Date as the case may be.

“Note” means this Note.

“Payee” shall have the meaning ascribed to such term in the first paragraph of this Note.

“Payment Place” shall have the meaning ascribed to such term in the first paragraph of this Note.

“Purchase Option” shall have the meaning set forth in the Aetna Services Agreement.

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“Senior Secured Credit Agreement” shall mean the Credit Agreement dated as of March __, 2003 among the Company and its senior bank lenders as such agreement may be amended, supplemented or modified from time to time.

“Subsidiary” shall mean any person or entity of which at least a majority of the capital stock or other equity interests (including partnership interests) having ordinary voting power for the election of directors or other governing body of such person or entity is owned or controlled by the Company, directly or indirectly through one or more subsidiaries.

(b)Unless otherwise provided herein, (i) the word “from” shall mean from and including and (ii) the words “to” or “until” shall mean to and until but excluding.

(c)All references to “Sections” in this Note shall be to Sections of this Note unless otherwise specifically provided.

SECTION 18.Descriptive Headings.  The descriptive headings of this Note are inserted for convenience only and do not constitute a part of this Note.

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MAGELLAN HEALTH SERVICES, INC.
By:
	Name:
	Title:

[SIGNATURE PAGE TO THE PROMISSORY NOTE]

EX-99.7

EXHIBIT 99.7

EXECUTION COPY

3/10/03

THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF THIS WARRANT.

No. of Shares of Common Stock:  [100,000]

WARRANT

To Purchase Common Stock of

MAGELLAN HEALTH SERVICES, INC.

THIS IS TO CERTIFY THAT AETNA, INC., (“Aetna” or “Holder”) is entitled, at the times specified herein, to purchase from MAGELLAN HEALTH SERVICES, INC., a Delaware corporation (the “Company”), up to 100,000(1) shares of Common Stock (the “Common Stock”) of the Company par value $0.01 per share (the Common Stock issuable on exercise or exchange of this Warrant (this “Warrant”) being referred to herein as the “Warrant Shares”) at a purchase price of $          (2) per share (the “Exercise Price”), all on the terms and conditions and pursuant to the provisions hereinafter set forth.  The number of shares of Common Stock to be received upon any exercise or exchange of this Warrant and the purchase price per share of Common Stock are subject to adjustment from time to time as provided in Section 6.

W I T N E S S E T H

WHEREAS, in connection with the financial restructuring of the Company, pursuant to the Joint Plan of Reorganization of the Company and certain of its subsidiaries, dated as of                   , 2003 (the “Plan”), Aetna has a claim under the master service agreement, dated August 5, 1997 between Aetna, the Company and a subsidiary of the Company, as amended from time to time, (the “Master Service Agreement”) of $60 million as of February 15, 2003, (the “Aetna Claim”);

(1)  The number of shares equal to 1% of the outstanding common stock of the Company as of the Effective Date of the Plan (without giving effect to any rights offering consummated in connection therewith).

(2)  To be determined on the Effective Date of the Plan by reference to the Midpoint valuation as set forth in the Company’s Disclosure Statement related to the Plan.

WHEREAS, pursuant to the Plan and in order to induce the Holder to enter into that certain Second Amendment to the Master Service Agreement dated as of March [     ], 2003, the Company proposes to issue this Warrant.

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto agree as follows:

SECTION 1.EXERCISE OF WARRANTS.   Subject to the terms hereof, this Warrant may be exercised or exchanged in whole or in part, at any time or from time to time, on any business day commencing at the opening of business on January 1, 2006 and until 5:00 p.m., New York City time on [5 years from the Effective Date] (the “Expiration Date”).  This Warrant represents the right to receive from the Company the number of fully paid and nonassessable Warrant Shares which the Holder may at any time be entitled to receive upon exercise or exchange of this Warrant and payment of the Exercise Price for the Warrant Shares.  This Warrant if not exercised or exchanged prior to 5:00 p.m., New York City time, on the Expiration Date shall become void and all rights hereunder shall cease as of such time.

This Warrant may be exercised or exchanged upon surrender to the Company at its office designated for such purpose (the address of which is set forth in Section 9 hereof) of this Warrant with the form of election to purchase attached hereto as Exhibit A duly filled in and signed and upon payment to the Company of the Exercise Price which is set forth in Section 2 (as adjusted as herein provided) for the number of Warrant Shares in respect of which this Warrant is then exercised or exchanged.

The Exercise Price shall be payable, at the option of the Holder, either (i) by wire transfer of immediately available funds to an account designated by the Company or by certified or official bank check to the order of the Company (by “exercise”) or (ii) by acceptance of a reduced number of shares of Common Stock in accordance with the further provisions of this paragraph (by “exchange”).  If Holder elects to acquire shares of Common Stock pursuant to the cashless exchange procedure set forth in clause (ii), the Holder shall receive from the Company upon exchange of this Warrant the number of shares of Common Stock determined by multiplying (A) the number of shares of Common Stock with respect to which this Warrant is being exchanged at such time by (B) a fraction, (1) the numerator of which shall be the difference between (x) the Current Market Price per share of Common Stock at such time and (y) the Exercise Price per share of Common Stock, and (2) the denominator of which shall be the Current Market Price per share of Common Stock at such time.  The Company shall issue a new Warrant for the portion, if any, of this Warrant not being exercised or exchanged, as provided in the next paragraph.

If this Warrant shall have been exercised or exchanged only in part, the Company shall, at the time of delivery of the certificate or certificates or other evidence of ownership of Common Stock, execute and deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Common Stock called for by this Warrant, which new Warrant shall in all other respects be identical to this Warrant, or, at the request of the Holder, appropriate notation may be made on this Warrant and the same returned to the Holder.

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Subject to the provisions of Section 4 hereof, upon surrender of this Warrant and payment of the Exercise Price, the Company shall issue and cause to be delivered with all reasonable dispatch (and in any event within five business days after such receipt) to or upon the written order of the Holder and in such name or names as the Holder may designate, a certificate or certificates for the number of full Warrant Shares issuable upon the exercise or exchange of this Warrant together with cash as provided in Section 6 or Section 7; provided, however, that if any consolidation, merger or lease or sale of assets is proposed to be effected by the Company as described in subsection (i) of Section 6 hereof, or a tender offer or an exchange offer for shares of Common Stock of the Company shall be made, upon surrender of this Warrant and payment of the Exercise Price as aforesaid, the Company shall, as soon as possible, but in any event not later than two business days thereafter, issue and cause to be delivered the full number of Warrant Shares issuable upon the exercise or exchange of this Warrant in the manner described in this sentence together with cash, if any, as provided in Section 6.  Such certificate or certificates shall be deemed to have been issued and any person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares as of the date of the surrender of this Warrant and payment of the Exercise Price.

Prior to the exercise or exchange of this Warrant, except as may be specifically provided for herein, (i) the Holder, by reason of the ownership or possession of this Warrant, shall not be entitled to any of the rights of a holder of Common Stock of the Company, including, without limitation, the right to vote at or to receive any notice of any meetings of stockholders; (ii) the consent of the Holder, by reason of the ownership or possession of this Warrant,  shall not be required with respect to any action or proceeding of the Company; (iii) the Holder, by reason of the ownership or possession of this Warrant, shall not have any right to receive any cash dividends, stock dividends, allotments or rights or other distributions paid, allotted or distributed or distributable to the stockholders of the Company prior to, or for which the relevant record date preceded, the date of the exercise or exchange of this Warrant; and (iv) the Holder shall not have any right relating to its ownership or possession of this Warrant not expressly conferred by this Warrant.

SECTION 2.EXERCISE PRICE.  The aggregate Exercise Price shall be an amount equal to (i) the number of shares of Common Stock being purchased upon exercise or exchange of this Warrant pursuant to Section 1, multiplied by (ii) the Exercise Price, payable in accordance with clauses (i) or (ii) of the third paragraph of Section 1.

SECTION 3.NO TRANSFER OF WARRANT. The Holder shall not have the right to transfer this Warrant other than to an affiliate of the Holder.

SECTION 4.PAYMENT OF TAXES.  The Company will pay all documentary stamp taxes attributable to the initial issuance of Warrant Shares upon the exercise or exchange of this Warrant; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issue of this Warrant or any certificates for Warrant Shares in a name other than that of the Holder of this Warrant.

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SECTION 5.RESERVATION OF WARRANT SHARES.  The Company will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued Common Stock or its authorized and issued Common Stock held in its treasury, for the purpose of enabling it to satisfy any obligation to issue Warrant Shares upon exercise or exchange of this Warrant, the maximum number of shares of Common Stock which may then be deliverable upon the exercise or exchange of all this Warrant.

The Company or, if appointed, the transfer agent for the Common Stock (the “Transfer Agent”) and every subsequent transfer agent for any shares of the Company’s capital stock issuable upon the exercise of any of the rights of purchase aforesaid will be irrevocably authorized and directed at all times to reserve such number of authorized shares as shall be required for such purpose.  The Company will keep a copy of this Warrant on file with the Transfer Agent and with every subsequent transfer agent for any shares of the Company’s capital stock issuable upon the exercise of the rights of purchase represented by this Warrant.  The Company will furnish such Transfer Agent a copy of all notices of adjustments and certificates related thereto, transmitted to the Holder pursuant to Section 8 hereof.

Before taking any action which would cause an adjustment pursuant to Section 6 hereof to reduce the Exercise Price below the then par value (if any) of the Warrant Shares, the Company will take any corporate action which may, in the opinion of its counsel (which may be counsel employed by the Company), be necessary in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares at the Exercise Price as so adjusted.

SECTION 6.ADJUSTMENT OF NUMBER OF WARRANT SHARES ISSUABLE AND EXERCISE PRICE.  The number of Warrant Shares issuable upon the exercise or exchange of this Warrant, and the Exercise Price, are subject to adjustment from time to time upon the occurrence of the events enumerated in this Section 6.  For purposes of this Section 6, “Common Stock” means shares now or hereafter authorized of any class of common stock of the Company and any other stock of the Company, however designated, that has the right (subject to any prior rights of any class or series of preferred stock) to participate in any distribution of the assets or earnings of the Company without limit as to per share amount.

(a)Adjustment for Change in Capital Stock.

If the Company:

(1)pays a dividend or makes a distribution on its Common Stock in shares of its Common Stock;

(2)subdivides or splits its outstanding shares of Common Stock into a greater number of shares;

(3)combines its outstanding shares of Common Stock into a smaller number of shares;

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(4)makes a distribution on its Common Stock in shares of its capital stock other than Common Stock; or

(5)issues by reclassification of its Common Stock any shares of its capital stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation);

then the number and kind of shares of its capital stock issuable upon exercise or exchange of this Warrant in effect immediately prior to such action shall be proportionately adjusted so that, after giving effect to Section 6(k), the Holder thereafter may receive the aggregate number and kind of shares of capital stock of the Company which the Holder would have owned immediately following such action if this Warrant had been exercised or exchanged in full immediately prior to such action.

The adjustment shall become effective immediately after the record date in the case of a dividend or distribution and immediately after the effective date in the case of a subdivision, combination or reclassification.

If, after an adjustment, the Holder upon exercise or exchange of this Warrant may receive shares of two or more classes of capital stock of the Company, the exercise privilege of each class of capital stock shall thereafter be subject to adjustment on terms comparable to those applicable to Common Stock in this Section.

Such adjustment shall be made successively whenever any event listed above shall occur.

(b)Adjustment For Other Distributions.

If the Company distributes to all holders of its Common Stock any of its assets (including but not limited to cash), debt securities, or any rights or warrants to purchase debt securities, assets or other securities of the Company, the number of Warrant Shares issuable upon exercise or exchange of this Warrant shall be adjusted in accordance with the formula:

N' = N x	M
	M-F

where:

N'=the adjusted number of Warrant Shares issuable upon exercise or exchange of this Warrant.

N=the current number of Warrant Shares issuable upon exercise or exchange of this Warrant.

M=the Current Market Price per share of Common Stock on the record date mentioned below.

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F=the fair market value on the record date of the assets, securities, rights or warrants applicable to one share of Common Stock.  The Board of Directors shall determine the fair market value in good faith.

The adjustment shall be made successively whenever any such distribution is made and shall become effective immediately after the record date for the determination of stockholders entitled to receive the distribution.

No adjustment shall be made pursuant to this subsection (b) if the fair market value on the applicable record date of the assets, securities, rights or warrants applicable to one share of Common Stock is equal to or greater than the Current Market Price per share of Common Stock on such record date.

(c)Adjustment for Common Stock Issue.

If the Company issues shares of Common Stock for a consideration per share less than the Current Market Price per share on the date the Company fixes the offering price of such additional shares, the number of Warrant Shares issuable upon exercise or exchange of this Warrant shall be adjusted in accordance with the formula:

N' = N  x	A
	O +	P
		M

where:

N'=the adjusted number of Warrant Shares issuable upon exercise or exchange of this Warrant.

N=the then current number of Warrant Shares issuable upon exercise or exchange of this Warrant.

O=the number of shares outstanding immediately prior to the issuance of such additional shares.

P=the aggregate consideration received for the issuance of such additional shares.

M=the Current Market Price per share on the date of sale of such additional shares.

A=the number of shares outstanding immediately after the issuance of such additional shares.

The adjustment shall be made successively whenever any such issuance is made, and shall become effective immediately after such issuance.

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If the Company shall fix a record date for the issuance of rights, options or warrants to the holders of its Common Stock or other securities entitling such holders to subscribe for or purchase for a period expiring within 60 days of such record date shares of Common Stock (or securities convertible into shares of Common Stock) at a price per share of Common Stock (or having a conversion price per share of Common Stock, if a security convertible into shares of Common Stock) less than the current market price per share of Common Stock on such record date, then the maximum number of shares of Common Stock issuable upon exercise of such rights, options or warrants (or conversion of such convertible securities) shall be deemed to have been issued and outstanding as of such record date and the number of Warrant Shares issuable upon exercise or exchange of this Warrant shall be adjusted pursuant to this paragraph (c) as though such maximum number of shares of Common Stock had been so issued for an aggregate consideration payable by the holders of such rights, options, warrants or convertible securities prior to their receipt of such shares of Common Stock.  Such adjustment shall be made successively whenever such record date is fixed; and in the event that such rights, options or warrants are not so issued or expire unexercised, or in the event of a change in the number of shares of Common Stock to which the holders of such rights, options or warrants are entitled (other than pursuant to adjustment provisions therein comparable to those contained in this Section 6), then the number of Warrant Shares issuable upon exercise or exchange of this Warrant shall again be adjusted to be the number of Warrant Shares which would then be in effect if such record date had not been fixed, in the former event, or the number of Warrant Shares which would then be in effect if such holders had initially been entitled to such changed number of shares of Common Stock, in the latter event.

If the Company shall issue rights, options or warrants entitling the holders thereof to subscribe for or purchase Common Stock (or securities convertible into shares of Common Stock) or shall issue convertible securities, and the price per share of Common Stock of such rights, options, warrants or convertible securities (including, in the case of rights, options or warrants, the price at which they may be exercised) is less than the current market price per share of Common Stock, then the maximum number of shares of Common Stock issuable upon exercise of such rights, options or warrants or upon conversion of such convertible securities shall be deemed to have been issued and outstanding as of the date of such sale or issuance, and the number of Warrant Shares issuable upon exercise or exchange of this Warrant shall be adjusted pursuant to this paragraph (c) as though such maximum number of shares of Common Stock had been so issued for an aggregate consideration equal to the aggregate consideration paid for such rights, options, warrants or convertible securities and the aggregate consideration payable by the holders of such rights, options, warrants or convertible securities prior to their receipt of such shares of Common Stock.  Such adjustment shall be made successively whenever such rights, options, warrants or convertible securities are issued; and in the event that such rights, options or warrants expire unexercised, or in the event of a change in the number of shares of Common Stock to which the holders of such rights, options, warrants or convertible securities are entitled (other than pursuant to adjustment provisions therein comparable to those contained in this Section 6), then the number of Warrant Shares issuable upon exercise or exchange of this Warrant shall again be adjusted to be the number of Warrant Shares which would then be in effect if such rights, options, warrants or convertible securities had not been issued, in the former event, or the number of Warrant Shares which would then be in effect if

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such holders had initially been entitled to such changed number of shares of Common Stock, in the latter event.  No adjustment of the number of Warrant Shares issuable upon exercise or exchange of this Warrant shall be made pursuant to this paragraph to the extent that the number of Warrant Shares shall have been adjusted pursuant to the preceding paragraph upon the setting of any record date relating to such rights, options, warrants or convertible securities and such adjustment fully reflects the number of shares of Common Stock to which the holders of such rights, options, warrants or convertible securities are entitled and the price payable therefor.

This subsection (c) does not apply to:

(1)any of the transactions described in subsection (b) of this Section 6 or

(2)the exercise or exchange of this Warrant,

(d)Current Market Price.

In Section 1, Section 7 and in subsections (b) and (c) of this Section 6 the current market price per share of Common Stock (the “Current Market Price”) on any date is the average of the Quoted Prices of the Common Stock for 30 consecutive trading days commencing 45 trading days before the date in question.  The “Quoted Price” of the Common Stock is the last reported sales price of the Common Stock as reported by NASDAQ National Market System, or if the Common Stock is listed on a securities exchange, the last reported sales price of the Common Stock on such exchange which shall be for consolidated trading if applicable to such exchange, or if neither so reported or listed, the last reported bid price of the Common Stock.  In the absence of such quotations, the Board of Directors of the Company shall determine the Current Market Price (i) based on the most recently completed arm’s-length transaction between the Company and a person other than an affiliate of the Company and the closing of which occurs on such date or shall have occurred within the three months preceding such date or (ii) if no such transaction shall have occurred on such date or within such three-month period, the value of the security determined in good faith by (A) the Board of Directors of the Company, which determination shall be described in a Board resolution or (B) by an independent nationally recognized investment banking firm or appraisal firm.

(e)Consideration Received.

For purposes of any computation respecting consideration received pursuant to subsection (c) of this Section 6, the following shall apply:

(1)in the case of the issuance of shares of Common Stock for cash, the consideration shall be the amount of such cash, provided that in no case shall any deduction be made for any commissions, discounts or other expenses incurred by the Company for any underwriting of the issue or otherwise in connection therewith;

(2)in the case of the issuance of shares of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof as determined in good faith by the Board of Directors

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(irrespective of the accounting treatment thereof), whose determination shall be conclusive, absent manifest error, and described in a Board resolution;

(3)in the case of the issuance of securities convertible into or exchangeable for shares, the aggregate consideration received therefor shall be deemed to be the consideration received by the Company for the issuance of such securities plus the additional minimum consideration, if any, to be received by the Company upon the conversion or exchange thereof (the consideration in each case to be determined in the same manner as provided in clauses (1) and (2) of this subsection).

(f)When De Minimis Adjustment May Be Deferred.

No adjustment in the number of Warrant Shares issuable upon exercise or exchange of this Warrant need be made unless the adjustment would require an increase or decrease of at least 1% in the number of Warrant Shares issuable upon exercise or exchange of this Warrant.  Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment.

All calculations under this Section shall be made to the nearest 1/100th of a share or to the nearest 1/10th of a cent, as the case may be.

(g)When No Adjustment Required.

No adjustment need be made for a change in the par value or no par value of the Common Stock.

To the extent this Warrant becomes convertible into cash, interest will not accrue on the cash.

(h)Notice of Adjustment.

Whenever the number of Warrant Shares issuable upon exercise or exchange or the Exercise Price of this Warrant is adjusted, the Company shall provide the notices required by Section 8 hereof.

(i)Reorganization of Company.

If the Company consolidates or merges with or into, or transfers or leases all or substantially all its assets to, any person, upon consummation of such transaction this Warrant shall automatically become exercisable for the kind and amount of securities, cash or other assets which the Holder would have owned immediately after the consolidation, merger, transfer or lease if the Holder had exercised or exchanged this Warrant immediately before the effective date of the transaction.  Concurrently with the consummation of such transaction, the corporation formed by or surviving any such consolidation or merger if other than the Company, or the person to which such sale or conveyance shall have been made, shall enter into a supplemental Warrant so providing and further providing for adjustments which shall be as nearly equivalent as may be practical to the adjustments provided for in this Section.  The successor company shall

9

mail to the Holder a notice describing the supplemental Warrant as soon as reasonably practicable after the execution of any such supplemental Warrant.

If the issuer of securities deliverable upon exercise or exchange of this Warrant under the supplemental Warrant is an affiliate of the formed, surviving, transferee or lessee corporation, that issuer shall join in the supplemental Warrant.

If this subsection (i) applies, subsections (a) and (c) of this Section 6 do not apply.

(j)Company Determination Final.

Any determination that the Company or the Board of Directors must make pursuant to Section 6 which is made in good faith shall be conclusive absent manifest error.

(k) Adjustment in Exercise Price.

Upon each adjustment of the number of Warrant Shares pursuant to this Section 6, the Exercise Price for this Warrant prior to the making of the adjustment in the number of Warrant Shares shall thereafter be adjusted to the Exercise Price (calculated to the nearest hundredth of one cent) obtained from the following formula:

E'= E x	N
	N'

where:

E'=the adjusted Exercise Price.

E=the Exercise Price prior to adjustment.

N'=the adjusted number of Warrant Shares issuable upon exercise or exchange of this Warrant.

N=the number or Warrant Shares previously issuable upon exercise or exchange of this Warrant prior to adjustment.

(l)No Adjustment For Capital Stock Under Plan.  Notwithstanding the foregoing, no adjustment shall be made for any Common Stock or warrants to acquire Common Stock issued pursuant to the Offering (as defined in the Plan), the New Warrants (as defined in the Plan) and the Management Incentive Program (as defined in the Plan).(3)

SECTION 7.FRACTIONAL INTERESTS.  This Warrant shall be exercisable or exchangeable in whole or in part, but only for a whole number of Warrant Shares.

(3)To be updated as of the Effective Date of the Plan to include all equity to be issued under the Plan.

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The Company shall not be required to issue fractional Warrant Shares on the exercise or exchange of this Warrant.  If any fraction of a Warrant Share would, except for the provisions of this Section 7, be issuable on the exercise or exchange of such Warrant, the Company shall pay an amount in cash equal to the product of (i) such fraction of a Warrant Share and (ii) the difference between the Current Market Price of a share of Common Stock and the Exercise Price.

SECTION 8.NOTICES TO WARRANT HOLDER.  Upon any adjustment of the Exercise Price or the number of Warrant Shares issuable upon exercise or exchange of this Warrant pursuant to Section 6, the Company shall promptly thereafter (i) cause to be filed with the Company a certificate which includes the report of a firm of independent public accountants of recognized standing selected by the Board of Directors of the Company (who may be the regular auditors of the Company) setting forth the Exercise Price and the number of Warrant Shares issuable upon exercise or exchange of this Warrant after such adjustment and setting forth in reasonable detail the method of calculation and the facts upon which such calculations are based, which certificate shall be conclusive evidence of the correctness of the matters set forth therein absent manifest error, and (ii) cause to be given to the Holder written notice of such adjustments by first-class mail, postage prepaid.  Where appropriate, such notice may be given in advance and included as a part of the notice required to be mailed under the other provisions of this Section 8.

In case:

(a)of any consolidation or merger to which the Company is a party and for which approval of any shareholders of the Company is required, or of the conveyance or transfer of the properties and assets of the Company substantially as an entirety, or of any reclassification or change of Common Stock issuable upon exercise or exchange of the Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or a tender offer or exchange offer for shares of Common Stock; or

(b)of the voluntary or involuntary dissolution, liquidation or winding up of the Company; or

(c)the Company proposes to take any action which would require an adjustment of the number of Warrant Shares issuable upon exercise or exchange of this Warrant pursuant to Section 6;

then the Company shall cause to be given to the Holder at least 20 days (or 10 days in any case specified in clauses (a) or (b) above) prior to the applicable record date hereafter specified, or promptly in the case of events for which there is no record date, by first class mail, postage prepaid, a written notice stating (i) the date as of which the holders of record of shares of Common Stock to be entitled to receive any such rights, options, warrants or distribution are to be determined, or (ii) the initial expiration date set forth in any tender offer or exchange offer for shares of Common Stock, or (iii) the date on which any such consolidation, merger, conveyance, transfer, dissolution, liquidation or winding up is expected to become effective or consummated, and the date as of which it is expected that holders of record of shares of Common Stock shall be

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entitled to exchange such shares for securities or other property, if any, deliverable upon such reclassification, consolidation, merger, conveyance, transfer, dissolution, liquidation or winding up.  The failure to give the notice required by this Section 8 or any defect therein shall not affect the legality or validity of any distribution, right, option, warrant, consolidation, merger, conveyance, transfer, dissolution, liquidation or winding up, or the vote upon any action.

Nothing contained in this Warrant shall be construed as conferring upon the Holder, by reason of the ownership or possession of this Warrant, the right to vote or to consent or to receive notice as shareholders in respect of the meetings of shareholder or the election of Directors of the Company or any other matter, or any rights whatsoever as shareholder of the Company.

SECTION 9.NOTICES TO COMPANY AND HOLDER.  Any notice or demand authorized by this Warrant to be given or made by the Holder or on the Company shall be sufficiently given or made when and if deposited in the mail, first class or registered, postage prepaid, addressed to the office of the Company expressly designated by the Company at its office for purposes of this Warrant (until the Holder is otherwise notified in accordance with this Section by the Company), as follows:

Magellan Health Services, Inc.
6950 Columbia Gateway Drive
Columbia, MD 21046
Attention: Megan Arthur, Esq.
Corporate Executive Vice President and General Counsel
Facsimile: (410) 953-4715

Any notice pursuant to this Warrant to be given by the Company to the Holder shall be sufficiently given when and if deposited in the mail, first class or registered, postage prepaid, addressed (until the Company is otherwise notified in accordance with this Section by the Holder) to the Holder, as follows:

Aetna, Inc.
151 Farmington Avenue
Hartford, CT 06156
Attention: L. Edward Shaw, Jr., General Counsel
Facsimile: (860) 273-8340

SECTION 10.WAIVERS; AMENDMENTS.  No failure or delay of the Holder in exercising any power or right hereunder shall operate as a waiver thereof (except where a specific time period for the exercise of such power or right is expressly set forth herein), nor shall any single or partial exercise of any such right or power preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.  The provisions of this Warrant may be amended, waived or otherwise modified with (and only with) the written consent of the Company and the Holder.

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SECTION 11.SUCCESSORS.  All the covenants and provisions of  this Warrant by or for the benefit of the Company or the Holder shall bind and inure to the benefit of their respective successors and assigns hereunder.

SECTION 12.TERMINATION.  This Warrant shall terminate at 5:00 p.m., New York City time on the Expiration Date.

SECTION 13.GOVERNING LAW.  THIS WARRANT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF SAID STATE.

SECTION 14.BENEFITS OF THIS WARRANT.  Nothing in this Warrant shall be construed to give to any person or corporation other than the Company and the Holder any legal or equitable right, remedy or claim under this Warrant.  The Company and the Holder have entered into a Registration Rights Agreement dated as of [                        ] (the “Registration Rights Agreement”) and the Warrant Shares issued under this Warrant are entitled to the benefits of the Registration Rights Agreement.  Nothing herein shall prohibit or limit the Company from entering into an agreement providing holders of securities which may hereafter be issued by the Company with such registration rights exercisable at such time or times and in such manner as the Board of Directors shall deem in the best interests of the Company so long as the performance by the Company of its obligations under such other agreement will not cause the Company to breach its obligations hereunder to the Holder.

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IN WITNESS WHEREOF, the parties hereto have caused this Warrant to be duly executed by their respective authorized officers as of the day and year first above written.

MAGELLAN HEALTH SERVICES, INC.
By:
	Name:
	Title:
AETNA, INC.
By:
	Name:
	Title:

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EXHIBIT A

FORM OF ELECTION TO PURCHASE

(To Be Executed Upon Exercise or Exchange Of Warrant)

The undersigned hereby irrevocably elects to exercise or exchange this Warrant to receive      shares of Common Stock and herewith makes payment therefor of $                         (such payment being made (check item)):

(i)by wire transfer or in cash or by certified or official bank check; or

(ii)by acceptance of a reduced number of shares of Common Stock upon cancellation of this Warrant as provided in the third paragraph of Section 1 of this Warrant,

all on the terms and conditions specified in this Warrant;

The undersigned requests that (A) a certificate for such shares be registered in the name of                     , whose address is                                         , and that such shares be delivered to                                                                                                                          , whose address is                                                  and (B) if such shares shall not include all of the shares of Common Stock to which this Holder is entitled under this Warrant, that a new Warrant for the unpurchased balance of the shares of Common Stock issuable hereunder be delivered to the undersigned.

Signature:

Name:

Title:

Date:

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EX-99.9

EXHIBIT 99.9

[WGM Draft, 9/24/03]

Form of Registration Rights Agreement (Sept. —, 2003)

REGISTRATION RIGHTS AGREEMENT

by and among

MAGELLAN HEALTH SERVICES, INC.

ONEX AMERICAN HOLDINGS II LLC,

AETNA INC.,

and

HOULIHAN LOKEY HOWARD & ZUKIN CAPITAL

Dated as of                 , 2003

TABLE OF CONTENTS

ARTICLE I		DEFINITIONS
ARTICLE II		EQUITY REGISTRATION RIGHTS
2.1	Equity Security Registration
2.2	Piggyback Registration
2.4	Registration Procedures
2.5	Expenses
2.6	Indemnification and Contribution
2.7	Rule 144
2.8	Duration of Equity Registration Rights
2.9	“Market Stand-Off” Agreement
2.10	Transfer of Registration Rights
2.11	Granting of Additional Registration Rights
ARTICLE III		DEBT REGISTRATION RIGHTS
3.1	Debt Shelf Registration
3.2	Registration Procedures
3.3	Expenses
3.4	Indemnification and Contribution
3.5	Rule 144
3.6	Duration of Debt Registration Rights
3.7	Transfer of Registration Rights
ARTICLE V		MISCELLANEOUS PROVISIONS
5.1	Successor Securities
5.2	Equitable Relief.
5.3	No Inconsistent Agreements
5.4	Amendments and Waivers
5.5	Notice Generally
5.6	Successors and Assigns
5.7	Headings
5.8	Governing Law; Jurisdiction; Jury Waiver

i

5.9	Severability
5.10	Entire Agreement
5.11	Counterparts

ii

REGISTRATION RIGHTS AGREEMENT

Registration Rights Agreement, dated as of           ,    , 2003, by and between Magellan Health Services, Inc., a Delaware corporation (the “Company”), Onex American Holdings II LLC, a Delaware limited liability company  and [other Onex Purchasers] (“Onex”), Aetna, Inc., a Pennsylvania corporation (“Aetna”) and                  , a             (“” and, collectively, with Onex, Aetna and                   , and also with any successor or permitted transferee thereof as hereinafter provided, the “Securityholders”).

W I T N E S S E T H :

WHEREAS, the Company filed its Debtors’ Third Amended Joint Plan of Reorganization dated August 18, 2003 with the United States Bankruptcy Court for the Southern District of New York (the “Court”) pursuant to and in accordance with chapter 11 of the U.S. Bankruptcy Code (as so filed with the Court and as may be amended from time to time in accordance with its terms, the “Plan”), which was confirmed by the Court on         , 2003; and

WHEREAS, capitalized terms used herein and not defined above shall have the meanings provided by Article I hereof or otherwise provided below; and

WHEREAS, as contemplated by the Plan, on the Effective Date, (i) all previously outstanding shares of capital stock of the Company will be cancelled, (ii) Onex will receive from the Company up to 7,485,380 shares of Multi-Vote Common Stock, convertible at such time into the same number of shares of Ordinary Common Stock and representing    % of the shares of Common Stock to be outstanding on the Effective Date, (iii) Aetna will receive from the Company a warrant to purchase [100,000] shares of Ordinary Common Stock, (iv) Houlihan Lokey will receive from the Company (A)     shares of Ordinary Common Stock and (B) $           in principal amount of the Notes, as specified on Schedule 1 attached hereto; and

WHEREAS, in accordance with the Plan, the Company and the Securityholders are entering into this Agreement on the Effective Date (i) to provide for certain rights and obligations of the Securityholders (and any transferees of the shares of Common Stock or Notes of the Securityholders who may become permitted transferees of rights hereunder) with respect to their holdings of shares of Common Stock and Notes, as the case may be;

NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained, it is hereby agreed as follows:

ARTICLE I

DEFINITIONS.

As used in this Agreement, the following capitalized terms shall have the meanings ascribed thereto below (such meanings being equally applicable to both the singular and plural form of the terms defined):

“Action” shall have the meaning provided by Section 2.6(e) or 3.4(e) hereof, as the case may be.

“Affiliate,” with respect to a Person, means any other Person which directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person, within the meaning of Rule 12b-2 under the Exchange Act.

“Agreement” shall mean this Registration Rights Agreement, as the same may from time to time be amended, modified and supplemented in accordance with its terms.

“Certificate of Incorporation” shall mean the Amended and Restated Certificate of Incorporation of the Company, as in effect on the Effective Date and as the same may from time to time be amended or restated in accordance with its terms.

“Business Day” shall mean any day on which commercial banks are required to be open for business in New York, New York.

“Beneficially Owned” or “Beneficial Ownership” shall have the meaning prescribed by Regulation 13D-G under the Exchange Act, as amended and from time to time in effect.

“Bylaws” shall mean the amended and restated bylaws of the Company, as in effect on the Effective Date and as the same may from time to time be amended or restated in accordance with their terms.

“Common Stock” shall mean the shares of Common Stock, being either shares of Ordinary Common Stock or shares of Multi-Vote Common Stock, of the Company, as authorized by the Certificate of Incorporation on the Effective Date, and any successor security as provided by Section 5.1 hereof.

“control” (including the term “controlled by”) shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

“Debt Shelf Registration” shall have the meaning provided by Section 3.1(a) hereof.

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“Debt Shelf Registration Termination Date” shall mean the second anniversary of the date on which the Debt Shelf Registration first became effective under the Securities Act or such earlier date on which there no longer are any Registrable Debt Securities or on which all the Registrable Debt Securities may be disposed of by the Securityholders pursuant to Rule 144 either within a 90 day period in accordance with the volume limitations of such rule or without volume limitation in accordance with the provisions of Rule 144(k) or pursuant to another exemption from the registration  requirements of the Securities Act pursuant to which the Registrable Debt Securities are thereafter freely tradable without restriction under the Securities Act.

“Demanding Other Debt Security Holders” shall have the meaning provided by Section 2.2(a).

“Effective Date” shall mean the first Business Day on or after the date by which all of the conditions precedent to the effectiveness of the Plan specified in Section 10.2 of the Plan have been satisfied or waived or, if a stay of the order entered by the Court confirming the Plan in accordance with chapter 11 of the U.S. Bankruptcy Code is in effect on such date, the first Business Day on or after the date of the expiration, dissolution, or lifting of such stay.  The Effective Date for purposes of this Agreement shall be the same as the Effective Date for purposes of the Plan.

“Equity Demand Registration” shall have the meaning provided by Section 3.1(b).

“Equity Shelf Registration” shall have the meaning provided by Section 2.1(a).

“Equity Shelf Registration Termination Date” shall mean the second anniversary of the date on which the Equity Shelf Registration first became effective under the Securities Act or such earlier date on which there no longer are any Registrable Equity Securities or on which all the Registrable Equity Securities may be disposed of by the Securityholders pursuant to Rule 144 either within a 90 day period in accordance with the volume limitations of such rule or without volume limitation in accordance with the provisions of Rule 144(k) or pursuant to another exemption from the registration  requirements of the Securities Act pursuant to which the Registrable Equity Securities are thereafter freely tradable without restriction under the Securities Act.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations of the SEC promulgated thereunder, all as the same may be amended and shall be in effect from time to time.

“Houlihan Lokey” shall have the meaning set forth in the introductory paragraph of this Agreement.

“Indemnified Party” shall have the meaning provided by Section 2.6(e) or 3.4(e) hereof, as the case may be.

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“Indemnifying Party” shall have the meaning provided by Section 2.6(e) or 3.4(e) hereof, as the case may be.

“Management Incentive Plan” shall mean the “New Management Incentive Plan” defined in the Plan, in the form adopted by the Board of Directors, in effect as of the date hereof.

“Minimum Hold Condition” shall mean the following: at any time, (i) the number of outstanding shares of Multi-Vote Common Stock is at least 15.33% of the total number of shares of Multi-Vote Common Stock and shares of Ordinary Common Stock issued on the Effective Date and (ii) the number of outstanding shares of Multi-Vote Common Stock at such time is at least 10% of the aggregate number of shares of Multi-Vote Common Stock and shares of Ordinary Common Stock then outstanding.  The Minimum Hold Condition is not met if, at any time, the condition described in clause (i) or clause (ii) of the immediately preceding sentence is not satisfied.

“Multi-Vote Common Stock” shall mean the shares of Multiple and Variable Vote Restricted Convertible Common Stock, par value of $0.01 per share, of the Company, as authorized by the Certificate of Incorporation on the Effective Date, and any successor security as provided by Section 5.1 hereof.

“NASD” shall mean the National Association of Securities Dealers, Inc., or any successor corporation thereto.

“Nasdaq” shall mean the Nasdaq Stock Market.

“Notes” shall mean the unsecured notes issued or to be issued by the Company pursuant to an indenture qualified under the Trust Indenture Act of 1939 as provided by Section 1.74 of the Plan.

“NYSE” shall mean the New York Stock Exchange.

“Onex” shall have the meaning set forth in the introductory paragraph of this Agreement.

“Onex Group” shall mean (i) Onex, (ii) Onex Corporation, a corporation organized and existing under the laws of the Province of Ontario, Canada, (iii) Onex Partners LP, a limited partnership organized and existing under the laws of the State of Delaware, (iv) any successor to all or substantially all the assets and business (including any interest owned by it in the Company) of Onex Corporation or Onex Partners LP and (v) any company at the time controlled, singly or collectively, by any of such companies, each of which shall be considered “a member of the Onex Group” for purposes hereof.   For purposes hereof, Onex Corporation shall be deemed to control any entity controlled by Mr. Gerald W. Schwartz so long as Mr. Gerald W. Schwartz controls Onex Corporation.

“Ordinary Common Stock” shall mean the shares of Ordinary Common Stock, par value of $ 0.01 per share, of the Company, as authorized by the Certificate of

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Incorporation on the Effective Date, and any successor security as provided by Section 5.1 hereof.

“Person” shall mean any individual, partnership (general, limited or limited liability), corporation, limited liability company, trust, unincorporated organization or other legal entity, and a government or agency or political subdivision thereof.

“Piggyback Notice” shall have the meaning provided by Section 2.2(a) hereof.

“Piggyback Holders” shall have the meaning provided by Section 2.2(b) hereof.

“Pro Rata Share”, for purposes of Section 2.2(b) hereof, shall mean the ratio of (i) the number of shares of Ordinary Common Stock owned by, or issuable upon conversion of shares of Multi-Vote Common Stock owned by, a member of the Onex Group or Aetna, as the case may be, and sought to be included in such Registration Statement to (ii) the total number of shares of Ordinary Common Stock owned by, or issuable upon conversion of shares of Multi-Vote Common Stock owned by, all members of the Onex Group and Aetna and sought to  be included in the Registration Statement, such ratio calculated as of the date of filing of the applicable Registration Statement pursuant to Section 2.2(b).

“Prospectus” shall mean the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Equity Securities covered by such Registration Statement, and all amendments and supplements thereto and all material incorporated by reference therein.

“Registrable Debt Securities” shall mean (i) the Notes issued to the Securityholders pursuant to the Plan (if any), (ii) any other debt security issued by the Company in exchange for, upon conversion of or as a result of a reclassification of or otherwise in respect of the Notes or any other debt security issued by the Company that is a Registrable Debt Security, and (iii) any debt security issued by the Company in exchange for, as a reclassification of or otherwise in respect of any Registrable Equity Security, in each case for so long as such debt security is owned by any Securityholder or a permitted transferee of any Securityholder’s rights under ARTICLE III hereof in accordance with Section 3.7 hereof.  For the avoidance of doubt, it is understood and agreed that any particular Registrable Debt Security shall cease to be such when (A) a Registration Statement with respect to the sale of such security shall have become effective under the Securities Act and such security shall have been disposed of in accordance with such Registration Statement, (B) such security shall have been sold pursuant to Rule 144 or (C) such security shall have ceased to be outstanding.

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“Registrable Equity Securities” shall mean (i) shares of Ordinary Common Stock owned by a member of the Onex Group or issued or issuable upon conversion of shares of Multi-Vote Common Stock issued to or owned by a member of the Onex Group, (ii) the shares of Ordinary Common Stock issued to the Securityholderspursuant to the Plan, (iii) the shares of Ordinary Common Stock which may be acquired by Aetna pursuant to the Warrant, (iv) any additional shares of  Ordinary Common Stock or other equity securities issued by the Company to the Securityholders as a dividend upon or a distribution in respect of, or upon conversion of or in exchange for or as a result of any reclassification of, any such shares of  Ordinary Common Stock or any other equity security that is a Registrable Equity Security, (v) any equity security issued upon exercise of any warrant, right or option which is a Registrable Equity Security, (vi) any equity security issued by the Company in exchange for, as a reclassification of or otherwise in respect of any Registrable Debt Security and (vii) any other equity security which is considered a successor security in respect of any such security as provided in Section 5.1 hereof, in each case for so long as such equity security is owned by the Securityholders or permitted transferee of such the Securityholders’ rights under ARTICLE II hereof in accordance with Section 2.10 hereof.  For the avoidance of doubt, it is understood and agreed that any particular Registrable Equity Security shall cease to be such when (A) a Registration Statement with respect to the sale of such security shall have become effective under the Securities Act and such security shall have been disposed of in accordance with such Registration Statement, (B) such security shall have been sold pursuant to Rule 144 or pursuant to another exemption from registration under the Securities Act pursuant to which the securities sold are thereafter freely transferable without registration and without restriction under the Securities Act or (C) such security shall have ceased to be outstanding.

“Registration Statement” shall mean a registration statement of the Company as it may be amended or supplemented from time to time, including without limitation, all exhibits, financial statements, schedules and attachments thereto.

“Requisite Equity Securityholders” shall mean Securityholders who own at least [150,000] shares of Ordinary Common Stock (including for such purpose shares of Ordinary Common Stock issuable upon conversion of Multi-Vote Common Stock) (or equivalent successor securities as provided by Section 5.1) and who represent to the Company that they presently intend to sell at least such number of shares or such smaller number of shares as constituted their remaining holding of Registrable Equity Securities.

“Rule 144” shall mean Rule 144 promulgated by the SEC under the Securities Act, or any similar rule or regulation permitting the sale of securities without registration under the Securities Act hereafter promulgated by the SEC, as the same may be amended and in effect from time to time.

“Rule 415” shall mean Rule 415 promulgated by the SEC under the Securities Act, or any similar rule or regulation relating to registration of securities under the Securities Act for offering and sale by a continuous or delayed offering hereafter promulgated by the SEC, as the same may be amended and in effect from time to time.

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“SEC” shall mean the Securities and Exchange Commission or any other federal agency then administering the Securities Act and other federal securities laws.

“Securities Act” shall mean the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations of the SEC promulgated thereunder, all as the same may be amended and shall be in effect from time to time.

“Voting Stock” shall mean shares of the Company, of any class or series, entitled to vote for the election of directors of the Company, including shares of Ordinary  Common Stock and Multi-Vote Common Stock.

“Warrant” shall mean the New Aetna Warrant (as defined in the Plan) to purchase shares of Ordinary Common Stock issued to Aetna.

Other terms are defined herein and shall have the meanings elsewhere provided herein.  References herein to specific rules of the SEC refer to such rules as in effect on the date hereof and as the same may thereafter from time to time be amended and in effect.  References herein to “Sections” shall refer to the sections of this Agreement, unless otherwise specifically provided, and references to “hereof,” “herein” or “hereunder” shall refer to this Agreement as a whole and not to any particular Section, paragraph, sentence or clause unless otherwise specifically provided.

ARTICLE II

EQUITY REGISTRATION RIGHTS

2.1Equity Security Registration.

(a)Requirement to Effect Equity Shelf Registration.  The Company shall prepare and cause to be filed with the SEC, as promptly as practicable after but in no event later than 60 days following the Effective Date, a Registration Statement pursuant to Rule 415 on an appropriate form relating to the continuous offering and sale of the shares of Ordinary Common Stock which are Registrable Equity Securities in resales by selling Securityholders (or their permitted transferees) in market transactions on the Nasdaq or such other national securities exchange on which the Ordinary Common Stock is then listed (and through such other method or methods of distribution as hereinafter provided for) (the “Equity Shelf Registration”) and shall use its reasonable best efforts to cause the Equity Shelf Registration to become effective under the Securities Act, and for public sales of such shares otherwise to be permitted, within 60 days thereafter (including, without limitation, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations). The Company shall use its reasonable best efforts to keep the Equity Shelf Registration effective under the Securities Act, for so long as it is permitted to do so under Rule 415, until the Equity Shelf Registration Termination Date, including by preparing and filing such amendments to the Registration Statement and prospectus supplements as may be required therefor.  If at any time (before the Equity Shelf Registration Termination Date) it shall no longer be permissible for the Company to keep

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the Equity Shelf Registration effective under the Securities Act in accordance with Rule 415 but shall thereafter become permissible for the Company to file and have effective a Registration Statement pursuant to Rule 415 for Registrable Equity Securities, then the Company shall, upon reasonable request of a Securityholder, again likewise prepare and cause to be filed with the SEC, and shall use its reasonable best efforts to become effective, as promptly as practicable, a Registration Statement (on an appropriate form) for such purpose and (as long as permissible under Rule 415) to keep such Registration Statement effective until the Equity Shelf Registration Termination Date .  The obligations of the Company under this Section 2.1(a) are subject to the provisions of Section 2.1(d).  The Company shall provide for the offer and sale of such shares of Ordinary Common Stock pursuant to the Equity Shelf Registration, both upon its initial effectiveness or (as necessary, by amendment or supplement) at any time thereafter before the Equity Shelf Registration Termination Date, through such other methods of distribution as the Requisite Equity Securityholders may reasonably request.

(b)Request for Equity Demand Registration. If at any time after the Effective Date when, but only for so long as, the Minimum Hold Condition is met, the Company has received a written request (a “Demand Notice”) from one or more members of the Onex Group or Aetna (or a permitted transferee of either thereof in accordance herewith) requesting that the Company effect a registration under the Securities Act of Registrable Equity Securities and specifying the intended method or methods of disposition thereof, the Company shall use its best efforts to prepare and cause to be filed with the SEC, as promptly as practicable but in no event later than 60 days following receipt of the Demand Notice, a Registration Statement on the appropriate form relating to resales by members of the Onex Group or by Aetna of such Registrable Equity Securities (“Equity Demand Registration”) and shall use its reasonable best efforts to cause the Equity Demand Registration to become effective under the Securities Act, and for public sales of such shares otherwise to be permitted, within 60 days thereafter (including, without limitation, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations). The obligations of the Company under this Section 2.1(b) are subject to the provisions of Section 2.1(c), 2.1(d) and 2.1(e).

(c)Conditions on Requirement to Effect an Equity Demand Registration.  The obligations of the Company set forth in Section 2.1(b) are subject to each of the following limitations, conditions and qualifications:

(i)The Company shall not be required to take any action to effect an Equity Demand Registration unless the anticipated aggregate offering price of the Registrable Equity Securities to be offered and sold pursuant to such registration is at least [$50,000,000] or, in the event an Equity Demand Registration may be effected on Form S-3 or a comparable form and is not underwritten, [$25,000,000] (or, if the anticipated aggregate offering price for all Registrable Equity Securities owned by the Onex Group or Aetna, as the case may be, at the time such demand is made is less than [$50,000,000] or [$25,000,000], as applicable, such lesser amount).

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(ii)The Company shall not be required to effect an Equity Demand Registration more than once in any nine month period or at such time as the Company is in accordance with Section 2.2 providing to the members of the Onex Group and Aetna piggyback registration rights in connection with an underwritten registered public offering.

(iii)If the Company receives a request for an Equity Demand Registration during a “lock-up” period (the “Lock-Up Period”) pursuant to Section 2.9 in connection with any underwriting or purchase agreement relating to an equity offering under Rule 144A under the Securities Act (or any successor rule or regulation, as the same may be amended or in effect from time to time) or a registered public offering of Ordinary Common Stock or securities convertible into or exchangeable for Ordinary Common Stock, the Company shall not be required to cause a Registration Statement under Section 2.1(b) to become effective prior to the end of the Lock-Up Period.

(iv)The Company shall not be required to take any action to effect an Equity Demand Registration at any time when the Equity Shelf Registration is effective under the Securities Act if the Registrable Equity Securities that would be sold pursuant to the Equity Demand Registration could be sold pursuant to the Equity Shelf Registration, unless the Company is requested to prepare the Equity Demand Registration with respect to an underwritten offering of such Registrable Equity Securities.

(d)Conditions to Requirements to Effect an Equity Demand or Equity Shelf Registration.  The obligations of the Company set forth in Section 2.1(a) or 2.1(b) are subject to each of the following limitations, conditions and qualifications:

(i)The Company’s obligations shall be subject to the obligations of each Securityholder to furnish all information and materials and to take any and all actions as may be required of it under Federal and state securities laws and regulations to permit the Company to comply with all applicable requirements of the SEC and to obtain any acceleration of the effective date of such Registration Statement.  Without limiting the generality of the forgoing, the selling Securityholders shall each furnish to the Company in writing, promptly after receipt of a request therefor, the information specified in Item 507 or 508 of Regulation S-K, as applicable, of the Securities Act for use in connection with any Registration Statement or Prospectus or preliminary Prospectus included therein.  Each Securityholder agrees to promptly furnish additional information required to be disclosed in order to make the information previously furnished to the Company by such Securityholder not materially misleading.

(ii)The Company shall not be obligated to cause any special audit (other than a fiscal year-end audit) to be undertaken in connection with preparing or causing to become effective any Registration Statement.

(e)Underwriting.  The managing underwriter for any underwritten offering of Registrable Equity Securities pursuant to an Equity Demand Registration under Section 2.1(b) shall be selected by Onex and shall be reasonably acceptable to the

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Company, and the co-managing underwriter shall be selected by the Company and shall be reasonably acceptable to Onex.

2.2Piggyback Registration.

(a)If the Company at any time proposes to file on its behalf and/or on behalf of any of the holders of its equity securities (a “Demanding Other Equity Security Holder”) a Registration Statement under the Securities Act on any form (other than a Registration Statement on Form S-4 or S-8, or any successor form, for securities to be offered in a transaction of the type referred to in Rule 145 under the Securities Act or to employees of the Company pursuant to any employee benefit plan, respectively), which may be used for the registration of shares of Ordinary Common Stock, it will give written notice of such proposed filing to Onex and Aetna at least 20 Business Days before the initial filing with the SEC of such Registration Statement (the “Piggyback Notice”), which Piggyback Notice shall set forth the number of securities proposed to be offered and a description of the intended method of disposition of such securities.  The Piggyback Notice shall offer to include in such filing such number of Registrable Equity Securities as a member of the Onex Group or Aetna may request.  If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise Onex and Aetna as part of the Piggyback Notice.  In such event, the right of a member of the Onex Group or Aetna to include its Registrable Equity Securities in the registration shall be conditioned upon such member of the Onex Group or Aetna, as the case may be, entering into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company.

(b)A member of the Onex Group or Aetna shall advise the Company in writing within 10 Business Days after the date of receipt of the Piggyback Notice from the Company, of its election to accept the Company’s offer to include its Registrable Equity Securities in the Registration Statement to be filed by the Company pursuant to Section 2.2(a), setting forth the amount of such Registrable Equity Securities for which registration is requested (such Securityholders so electing, the “Piggyback Holders”).  The Company shall thereupon include in such filing the number of Registrable Equity Securities for which registration is so requested; provided, however, that (i) in connection with a primary offering by the Company, if the managing underwriter of such proposed underwritten offering shall advise the Company in writing that, in its opinion, the distribution of the Registrable Equity Securities requested to be included in the registration by all Piggyback Holders concurrently with the securities being registered by the Company would adversely affect the distribution of the shares of Ordinary Common Stock by the Company, then the Company and its underwriters shall be entitled to reduce the number of Registrable Equity Securities to be registered by the Piggyback Holders, and (ii) in connection with piggyback rights in a secondary offering by one or more selling Demanding Other Equity Securityholders only, if the managing underwriter of such proposed underwritten offering shall advise the Company in writing that, in its opinion, the distribution of the Registrable Equity Securities requested to be included in the registration by all Piggyback Holders concurrently with the securities being registered by the Demanding Other Equity Security Holder would adversely affect the distribution of the shares of Ordinary Common Stock by the Demanding Other Equity Security Holder, then the Company and such underwriters

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shall be entitled to reduce the number of Registrable Equity Securities to be registered by (i)  the Piggyback Holders, and (ii) if the Demanding Other Equity Securityholder is one or more members of the Onex Group or Aetna, the Demanding Other Equity Securityholder; provided, further, however, that, if after any such reduction any shares of Ordinary Common Stock are to be included in such Registration Statement on behalf of any Piggyback Holder, the number of Registrable Equity Securities to be included in such Registration Statement on behalf of any Piggyback Holder, and, if the Demanding Other Equity Securityholder is one or more members of the Onex Group or Aetna, the Demanding Other Equity Securityholder; shall be no less than such holder’s Pro Rata Share of all securities to be included in such Registration Statement.

(c)The Company shall not be obligated to continue, and shall have the right to terminate or withdraw, any Registration Statement subject to this Section 2.2 prior to the effectiveness of such registration, even though a member of the Onex Group or Aetna has elected to include securities in such registration.

2.3Postponement of Registration or Sales.  The Company shall be entitled to postpone, for a reasonable period of time (which shall be as short as practicable), during no more than two periods of 90 days each, aggregating not more than 120 days in total in any twelve-month period, the filing or effectiveness of, or suspend the right of the Securityholders (or permitted transferees thereof) to make sales pursuant to, any Registration Statement otherwise required to be prepared, filed and made and kept effective by it under the registration covenants described in Section 2.1 or 2.2 hereof, in the event that (i) (A) an event or circumstance occurs and is continuing as a result of which such Registration Statement, any related Prospectus or any document incorporated therein by reference as then amended or supplemented or proposed to be filed would, in the Company’s good faith judgment, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (in which case the Company will file an appropriate amendment to the Registration Statement as contemplated in Section 2.4(k) hereof), and (B) the Board of Directors of the Company determines in its good faith judgment that the disclosure of the event at that time would materially and adversely affect, interfere with or hinder the success of any financing, acquisition, merger or similar transaction involving the Company or otherwise have a material adverse effect on the business, operations or prospects of the Company or (ii) the Company shall have received a notice issued by the SEC of a stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose.  If the Company shall so postpone the filing or effectiveness of, or suspend the rights of Securityholders to make sales pursuant to, a Registration Statement it shall promptly notify the Securityholders in writing of such determination (a “Suspension Notice”).  The Suspension Notice shall contain a statement of the reasons for such suspension and an approximation of the anticipated delay.  A Securityholder shall keep confidential any information received by it in a Suspension Notice (including the fact that it has received a Suspension Notice), except as otherwise required by law, judicial or administrative order or legal process.  Upon receipt of such Suspension Notice from the Company, to the extent applicable, the Securityholders will forthwith discontinue disposition of Registrable Equity Securities pursuant to the Registration Statement until (i) they have received copies of the supplemented or amended

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Prospectus contemplated by Section 2.4(b) hereof, or (ii) they are advised in writing by the Company that the use of the Prospectus may be resumed, and have received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus (in each case, the “Recommencement Date”).  The time periods provided herein for which the Company is required to maintain the effectiveness of an Equity Shelf Registration or Equity Demand Registration shall be extended by the aggregate number of days by which sales of securities pursuant to any Registration Statement that has been declared effective has been delayed, postponed or suspended by the Company pursuant to this Section.

2.4Registration Procedures.  If the Company is required by the provisions of Article II to effect the registration of any Registrable Equity Securities under the Securities Act, the Company will, as promptly as practicable:

(a)prepare, file and cause to become effective in accordance with this Article II a Registration Statement with respect to such securities and, in the case of an Equity Demand Registration, use its best efforts to keep such Registration Statement effective under the Securities Act for at least one hundred and eighty (180) days or until the distribution described in the Registration Statement has been completed;

(b)prepare and file with the SEC such amendments (including post-effective amendments) to such Registration Statement, and such supplements to the related prospectus, as may be required by the applicable rules, regulations or instructions under the Securities Act during the applicable period for maintaining the effectiveness thereof in accordance with the intended methods of disposition, (ii) make generally available earnings statements satisfying the provisions of Section 11(a) of the Securities Act (provided that the Company shall be deemed to have complied with this clause if it has complied with Rule 158 under the Securities Act) and (iii) cause the related prospectus as so supplemented to be filed pursuant to Rule 424 under the Securities Act;

(c)notify the Securityholders promptly and, if requested, confirm such notice in writing (i) when a prospectus, prospectus supplement or post-effective amendment has been filed and, with respect to such Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC for amendments or supplements to such Registration Statement or the related Prospectus or for additional information regarding the Securityholders or any other securityholder whose shares are registered pursuant to such Registration Statement, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or the initiation of any proceedings for the purpose, and (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Equity Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;

(d)use best efforts to obtain the withdrawal of any order suspending the effectiveness of such Registration Statement, or the lifting of any suspension of the qualification or exemption from qualification of any Registrable Equity Securities for sale in any jurisdiction in the United States;

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(e)furnish to selling Securityholders, counsel for the selling Securityholders and each managing underwriter, if any, without charge, such number of copies of the Registration Statement as initially filed with the SEC and of each pre-effective and post-effective amendment or supplement thereto (in each case including at least one copy of all exhibits thereto and all documents incorporated by reference therein) and of the Prospectus included therein, including the preliminary Prospectus and any summary Prospectus, and any other Prospectus filed under Rule 424 under the Securities Act in connection with the disposition of any Registrable Equity Securities covered by such Registration Statement, and such other documents as the selling Securityholders may reasonably request;

(f)use its reasonable best efforts to register or qualify the Registrable Equity Securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions as the selling Securityholders may reasonably request (provided, however, that the Company shall not be obligated to qualify as a foreign corporation to do business under the laws of any jurisdiction in which it is not then qualified or to file any general consent to service of process to effect such registration), and do such other reasonable acts and things as may be required of it to enable the Securityholders to consummate the disposition in such jurisdiction of the Registrable Equity Securities covered by such Registration Statement;

(g)in the event of any underwritten public offering, use its reasonable best efforts to furnish, at the request of the selling Securityholders, on the date that such Registrable Equity Securities are delivered to the underwriters for sale pursuant to such registration, (1) an opinion, dated such date, of the independent counsel representing the Company for the purposes of such registration, addressed to the underwriters and the Selling Securityholders and covering matters of the type customarily covered in such legal opinions; (2) a comfort letter dated such date, and updates thereof, from the independent certified public accountants who have issued an audit report on the Company’s financial statements included or incorporated by reference in the Registration Statement, addressed to the underwriters and covering matters of the type customarily covered by such comfort letters and as the underwriters shall reasonably request and (3) if requested and if an underwriting agreement is entered into, indemnification of the underwriters pursuant to provisions and procedures reasonably requested by the underwriters; the procedures referred to in this paragraph shall be followed at each closing under such underwriting or similar agreement, as and to the extent required thereunder;

(h)enter into customary agreements (including an underwriting agreement in customary form), use its reasonable best efforts to cause the satisfaction of the conditions specified in any such underwriting agreement, and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Equity Securities;

(i)cooperate with the selling Securityholders, the underwriters participating in the offering and their counsel in any due diligence investigation reasonably requested by the selling Securityholders or the underwriters in connection therewith, and participate, to the extent reasonably requested by the managing underwriter for the offering

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or the Securityholders, in efforts to sell the Registrable Equity Securities in the offering (including, without limitation, participating in “roadshow” meetings with prospective investors) that would be customary for underwritten primary offerings of a comparable amount of equity securities by the Company;

(j)use its reasonable best efforts to cause the Registrable Equity Securities covered by a Registration Statement to be listed on each national securities exchange or Nasdaq, as applicable, on which the Company’s equity securities are then listed at the time of the sale of such Registrable Equity Securities pursuant to such Registration Statement;

(k)notify the selling Securityholders, at any time when a Prospectus is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which, such Prospectus (as then in effect) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein (including in a document incorporated by reference therein), in light of the circumstances under which they were made, not misleading, and as promptly as practicable prepare a supplement or post-effective amendment to such Registration Statement or the related prospectus or a supplement or amendment to any document incorporated or deemed to be incorporated therein by reference, and file with the SEC any other required document so that, as thereafter delivered to the purchasers of such Registrable Equity Securities, such Prospectus shall not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and

(l)on or before the effective date of such Registration Statement, provide the transfer agent of the Company for the Registrable Equity Securities with printed certificates for the Registrable Equity Securities by such Registration Statement, which are in a form eligible for deposit with The Depository Trust Company.

2.5Expenses.  All expenses incurred in complying with Article II, including, without limitation, all SEC or stock exchange registration or filing fees (including all expenses incident to filing with the NASD), stock exchange listing fees, Nasdaq quotation fees, printing expenses (including all expenses of printing certificates for Registrable Equity Securities and of printing prospectuses if the printing of prospectuses is requested by the selling Securityholders or the managing underwriter, if any), fees and disbursements of counsel for the Company, the reasonable fees and expenses of one counsel for the Securityholders and all other selling securityholders (selected by those holding a majority of the voting power of the Registrable Equity Securities being registered, with holders of Registrable Equity Securities issuable upon conversion of Multi-Vote Common Stock having the number of votes to which they are entitled as holders of such Multi-Vote Common Stock), fees of the Company’s independent public accountants and the expenses of any special audit work incident to or required for any such registration (including expenses of any “cold comfort” letters required in connection with this Article II), but subject to Section 2.1(d)(ii) hereof, the expenses of complying with the securities or blue sky laws of any jurisdiction and fees and disbursements of underwriters customarily paid by the issuers or sellers of securities (including reasonable fees of counsel to the underwriters

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to the extent customarily paid by the issuer or sellers of securities), shall be paid by the Company except that any discounts, commissions or brokers’ fees or fees of similar securities industries professionals and transfer taxes relating to the disposition of the Registrable Equity Securities will be payable by the Securityholders (or other securityholders participating in such registered offering) and the Company will have no obligation to pay any such amounts.

2.6Indemnification and Contribution.

(a)In the event of any registration of any Registrable Equity Securities under the Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless the selling Securityholders, their Affiliates, trustees, directors, officers and agents, and each other Person (including each underwriter) who participated in the offering of such Registrable Equity Securities and each other Person, if any, who controls any Securityholder or such participating person within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which the Securityholders or any such Affiliate, trustee, director, officer, agent or participating person or controlling person may become subject under the Securities Act or any other statute or at common law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement under which such Registrable Equity Securities were registered under the Securities Act, any preliminary Prospectus or final Prospectus contained therein, or any amendment or supplement thereto, or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse the Securityholders or such Affiliate, trustee, director, officer, agent or participating person or controlling person for any legal or any other expenses reasonably incurred by the Securityholders or such Affiliate, trustee, director, officer, agent or participating person or controlling person in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company shall not be liable in any such case to a selling Securityholder, or its Affiliates, trustees, directors, officers, agents or controlling persons to the extent that any such loss, claim, damage or liability arises out of or is based upon any actual or alleged untrue statement or actual or alleged omission made in such Registration Statement, preliminary Prospectus, Prospectus or amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Securityholder specifically for use therein or (in the case of any registration pursuant to Section 2.1) to any underwriter, to the extent that any such loss, claim, damage or liability arises out of or is based upon any actual or alleged untrue statement or actual or alleged omission made in such Registration Statement, preliminary Prospectus, Prospectus or amendment or supplement in reliance upon and in conformity with written information so furnished for such purposes by such underwriter.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Securityholders or such Affiliate, trustee, director, officer, agent or participating person or controlling person, and shall survive the transfer of such Registrable Equity Securities by the Securityholders.

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(b)Each selling Securityholder hereby agrees to severally, but not jointly, indemnify and hold harmless the Company, its directors and officers and each other Person, if any, who controls the Company within the meaning of the Securities Act against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director or officer or any such Person may become subject under the Securities Act or any other statute or at common law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement under which Registrable Equity Securities were registered under the Securities Act, any preliminary Prospectus or final Prospectus contained therein, or any amendment or supplement thereto or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if in any such case such statement or alleged statement or omission or alleged omission was made in reliance on and in conformity with information in writing provided to the Company by such Securityholder specifically for use in such Registration Statement, preliminary Prospectus or final Prospectus or any amendment or supplement thereto.  Notwithstanding the provisions of this paragraph (b) or paragraph (c) below, a Securityholder shall not be required to indemnify any Person pursuant to this Section 2.6 nor to contribute pursuant to paragraph (c) below in an amount in excess of the amount of the aggregate net proceeds received by such Securityholder in connection with any such registration under the Securities Act.

(c)If the indemnification provided for in this Section 2.6 from the Indemnifying Party (as defined in Section 2.6(e) hereof) is unavailable to an Indemnified Party (as defined in Section 2.6(e) hereof) hereunder in respect of any losses, claims, damages, liabilities or expenses referred to therein as being subject to indemnification, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations.  The relative fault of such Indemnifying Party and Indemnified Parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such Indemnifying Party or Indemnified Parties, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action.  The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding.  The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 2.6(c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph.  No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.  If indemnification is available under this Section 2.6, the Indemnifying Party shall indemnify the Indemnified Party to the full

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extent provided in Section 2.6(a) or 2.6(b), as applicable, without regard to the relative fault of the Indemnifying Party or the Indemnified Party or any other equitable consideration provided for in this Section 2.6(c).

(d)The indemnification and contribution required by this Section 2.6 shall be made by periodic payment of the amount thereof during the course of the investigation or defense, as and when bills are received or expenses are incurred.

(e)The party seeking indemnification pursuant to this Section 2.6 is referred to as the “Indemnified Party” and the party from whom indemnification is sought under this Section 2.6 is referred to as the “Indemnifying Party.”  The Indemnified Party shall give prompt written notice to the Indemnifying Party of the commencement of any action or proceeding involving a matter referred to in Section 2.6(a) or 2.6(b) (an “Action”), if an indemnification claim in respect thereof is to be made against the Indemnifying Party; provided, however, that the failure to give such prompt notice shall not relieve the Indemnifying Party of its indemnity obligations hereunder with respect to such Action, except to the extent that the Indemnifying Party is materially prejudiced by such failure.  The Indemnifying Party shall be entitled to participate in and to assume the defense of such Action, with counsel selected by the Indemnifying Party and reasonably satisfactory to the Indemnified Party; provided, however, that (i) the Indemnifying Party, within a reasonable period of time after the giving of notice of such indemnification claim by the Indemnified Party, (A) notifies the Indemnified Party of its intention to assume such defense and (B) appoints such counsel, and (ii) the Indemnifying Party may not, without the consent of the Indemnified Party, consent to entry of any judgment or enter into any settlement unless (A) there is as part thereof no finding or admission of any violation of any rights of any Person and no effect adverse to the Indemnified Party on any other claims that may be made against the Indemnified Party, (B) the sole relief provided is monetary damages that are paid in full by the Indemnifying Party and (C) such judgment or settlement includes as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release, in form and substance reasonably satisfactory to the Indemnified Party, from all liability in respect of such claim or litigation for which such Indemnified Party would be entitled to indemnification hereunder.  If the Indemnifying Party so assumes the defense of any such Action, (i) the Indemnifying Party shall pay all costs associated with, any damages awarded in, and all expenses arising from the defense or settlement of such Action, and (ii) the Indemnified Party shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise or settlement of such Action, but the fees and expenses of such counsel shall be at the expense of the Indemnified Party except that if (A) the Indemnified Party has been advised by its counsel that there are likely to be one or more defenses available to it which are different from or additional to those available to the Indemnifying Party, or (B) such counsel has been selected by the Indemnified Party solely due to a conflict of interest which exists between counsel selected by the Indemnifying Party and the Indemnified Party, the Indemnifying Party shall pay in any such case that portion of the reasonable fees and expenses of one separate counsel per Action for an Indemnified Party (or Indemnified Parties in the aggregate, as the case may be), that are reasonably related to matters covered by the indemnity provided in this Section 2.6.  If the Indemnifying Party does not so assume the defense of such Action, the Indemnified Party shall be entitled to exercise control of the defense, compromise or settlement of such

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Action.  No Indemnified Party shall settle or compromise any Action for which it is entitled to indemnification under this Agreement without the prior written consent of the Indemnifying Party (which consent may not be unreasonably withheld or delayed).  The other party shall cooperate with the party assuming the defense, compromise or settlement of any Action in accordance with this Agreement in any manner that such party reasonably may request and the party assuming the defense, compromise or settlement of any Action shall keep the other party fully informed in the defense of such Action.

(f)The provisions of this Section 2.6 shall be in addition to, and not in lieu of, the obligations of the Company and the Securityholders under any underwriting agreement to which they may be party.

2.7Rule 144.  So long as the Company has securities registered under the Exchange Act, it shall take all actions reasonably necessary to enable the Securityholders to sell Registrable Equity Securities without registration under the Securities Act within the limitations of the exemptions provided by Rule 144, including, without limiting the generality of the foregoing, filing on a timely basis all reports required to be filed by the Exchange Act.

2.8Duration of Equity Registration Rights.  The rights and obligations provided for under this Article II shall terminate (except for the indemnification and contribution obligations of Section 2.6) with respect to the Equity Shelf Registration on the Equity Shelf Registration Termination Date.  For purposes hereof, a member of the Onex Group who owns shares of Multi-Vote Common Stock shall be considered to own the shares of Ordinary Common Stock into which such shares of Multi-Vote Common Stock may be converted, and Aetna shall be considered to own the shares of Ordinary Common Stock into which the Warrant may be converted.

2.9“Market Stand-Off” Agreement.  Each Securityholder hereby agrees that for a period of not more than 90 days following the effective date of a Registration Statement of the Company (other than the Equity Shelf Registration) filed under the Securities Act relating to the sale by the Company of shares of Ordinary Common Stock or any other equity security of the Company (provided that a 180-day period shall apply in the case of a Registration Statement (other than the Equity Shelf Registration) related to the first registered public offering of equity by the Company after the Effective Date, other than such an offering that is registered on Form S-4 or S-8 or any similar form), it shall not, directly or indirectly, to the extent reasonably requested by the Company and the managing underwriter, sell, assign or otherwise transfer or dispose of (other than to transferees who agree to be similarly bound) any shares of Ordinary Common Stock held by it at any time during such period (including any sale pursuant to the Equity Shelf Registration), except shares of Ordinary Common Stock owned by a Securityholder included pursuant to Section 2.2 in the registration of the Company; provided, however, that all executive officers and directors of the Company shall enter into written agreements in a form satisfactory to the Company and applicable underwriter to be similarly bound; and provided further, however, that the market stand-off agreement contemplated by this Section 2.9 shall not apply to any Registrable Equity Securities in respect of which any Securityholder is entitled to and has exercised its demand registration rights under Section 2.1 hereof (unless and until the

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Registration Statement required thereby has been declared effective and such securities have not been sold pursuant thereto during the effective period thereof).  In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Registrable Equity Securities of the Securityholders (and the shares or securities of every other Person subject to the foregoing restriction) until the end of such period.  The time periods provided herein for which the Company is required to maintain the effectiveness of an Equity Shelf Registration and an Equity Demand Registration shall be extended by the aggregate number of days during which Securityholders shall be prohibited from selling shares of Ordinary Common Stock pursuant to this Section.

2.10Transfer of Registration Rights.

(a)The rights of a Securityholder under this Article II may not be transferred, except (a) to an Affiliate of the Securityholder, (b) as incident to the transfer of all the Registrable Equity Securities owned by a Securityholder to a successor to all or substantially all the business and assets of the Securityholder, or (c) in conformity with the provisions of Section 2.10(b) hereof; and provided that the transferee agrees in a writing executed by such transferee and delivered to the Company to assume the applicable obligations of the Securityholder under this Article II.

(b)The rights of the Securityholders under this Article II may be transferred by any Securityholder to a transferee of Registrable Equity Securities and, in the case of a member of the Onex Group, to a transferee of Multi-Vote Common Stock (or Ordinary Stock issued or issuable upon conversion of Multi-Vote Common Stock), and, in the case of Aetna, to a transferee of the Warrant, by such a transferee to a subsequent transferee of Registrable Equity Securities, but only where the transfer is not made pursuant to an effective Registration Statement or Rule 144 or pursuant to another exemption from registration under the Securities Act.

2.11Granting of Additional Registration Rights.  The Company shall not, without Onex’s prior written consent, grant to any third party (i) piggyback registration rights with respect to an Equity Demand Registration or (ii) any demand registration rights.

ARTICLE III

DEBT REGISTRATION RIGHTS

3.1Debt Shelf Registration.

(a)Requirement to Effect Debt Security Shelf Registration.  The Company shall prepare and cause to be filed with the SEC, as promptly as practicable after but in no event later than 60 days following the Effective Date, a Registration Statement pursuant to Rule 415 on an appropriate form relating to the continuous offering and sale of the Notes which are Registrable Debt Securities in resales by selling Securityholders (or their permitted transferees) in market transactions (and through such other method or methods of distribution as hereinafter provided for) (the “Debt Shelf Registration”) and shall use its reasonable best efforts to cause the Debt Shelf Registration to become effective

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under the Securities Act, and for public sales of such Notes otherwise to be permitted, within 60 days thereafter (including, without limitation, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations). The Company shall use its reasonable best efforts to keep the Debt Shelf Registration effective under the Securities Act, for so long as it is permitted to do so under Rule 415, until the Debt Shelf Registration Termination Date, including by preparing and filing such amendments to the Registration Statement and prospectus supplements as may be required therefor.  If at any time (before the Debt Shelf Registration Termination Date) it shall no longer be permissible for the Company to keep the Debt Shelf Registration effective under the Securities Act in accordance with Rule 415 but shall thereafter become permissible for the Company to file and have effective a Registration Statement pursuant to Rule 415 for Registrable Debt Securities, then the Company shall, upon reasonable request of a selling Securityholder, again likewise use its reasonable best efforts to prepare and cause to be filed with the SEC, and to become effective, as promptly as practicable, a Registration Statement (on an appropriate form) for such purpose and (as long as permissible under Rule 415) to keep such Registration Statement effective until the Debt Shelf Registration Termination Date.  The Company may, as permitted by applicable SEC requirements, satisfy its obligations under this Section 3.1 by a Registration Statement which also effects the Equity Shelf Registration.  The obligations of the Company under this Section 3.1(a) are subject to the provisions of Section 3.1(b) and 3.1(c).  The Company shall provide for the offer and sale of such Notes pursuant to the Debt Shelf Registration, both upon its initial effectiveness or (as necessary, by amendment or supplement) at any time thereafter before the Debt Shelf Registration Termination Date, through such other methods of distribution as the selling Securityholders may reasonably request.

(b)Conditions on Requirement to Effect the Debt Shelf Registration.

The obligations of the Company set forth in Section 3.1(a) are subject to each of the following limitations, conditions and qualifications:

(i)The Company’s obligations shall be subject to the obligations of the Securityholders to furnish all information and materials and to take any and all actions as may be required under Federal and state securities laws and regulations to permit the Company to comply with all applicable requirements of the SEC and to obtain any acceleration of the effective date of such Registration Statement.  Without limiting the generality of the forgoing, each selling Securityholder shall furnish to the Company in writing, promptly after receipt of a request therefor, the information specified in Item 507 or 508 of Regulation S-K, as applicable, of the Securities Act for use in connection with any Registration Statement or Prospectus or preliminary Prospectus included therein.  Each Securityholder agrees to promptly furnish additional information required to be disclosed in order to make the information previously furnished to the Company by such Securityholder not materially misleading.

(ii)The Company shall not be obligated to cause any special audit to be undertaken in connection with any Registration Statement pursuant to this Agreement.

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(c)Postponement of Registration or Sales. The Company shall be entitled to postpone, for a reasonable period of time (which shall be as short as practicable), during no more than two periods aggregating not more than 90 days in any twelve-month period, the filing or effectiveness of, or suspend the right of the Securityholders to make sales pursuant to, any Registration Statement otherwise required to be prepared, filed and made and kept effective by it under the registration covenants described in this Section 3.1, in the event that (i) (A) an event or circumstance occurs and is continuing as a result of which such Registration Statement, any related Prospectus or any document incorporated therein by reference as then amended or supplemented or proposed to be filed would, in the Company’s good faith judgment, contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (in which case the Company will file an appropriate amendment to the Registration Statement as contemplated in Section 3.2(i), and (B) the Company determines in its good faith judgment that the disclosure of the event at that time would materially and adversely affect, interfere with or hinder the success of any financing, acquisition, merger or similar transaction involving the Company or otherwise have a material adverse effect on the business, operations or prospects of the Company or (ii) the Company shall have received a notice issued by the SEC of a stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose.  If the Company shall so postpone the filing or effectiveness of, or suspend the rights of the Securityholders to make sales pursuant to, a Registration Statement it shall promptly notify the Securityholders in writing of such determination (a “Debt Offering Suspension Notice”).  The Debt Offering Suspension Notice shall contain a statement of the reasons for such suspension and an approximation of the anticipated delay.  Upon receipt of such Debt Offering Suspension Notice, to the extent applicable, each selling Securityholder will forthwith discontinue disposition of Registrable Debt Securities pursuant to the Registration Statement until (i) such Securityholder has received copies of the supplemented or amended Prospectus contemplated by Section 3.2(a) hereof, or (ii) is advised in writing by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus).  The time period provided herein for which the Company is required to maintain the effectiveness of a Debt Shelf Registration shall be extended by the aggregate number of days by which sales of securities pursuant to any Registration Statement that has been declared effective has been delayed, postponed or suspended by the Company pursuant to this Section.

3.2Registration Procedures.  If the Company is required by the provisions of this Article III to effect the registration of any Registrable Debt Securities under the Securities Act, the Company will, as promptly as practicable:

(a)prepare and file with the SEC such amendments (including post-effective amendments) to such Registration Statement, and such supplements to the related prospectus, as may be required by the applicable rules, regulations or instructions under the Securities Act during the applicable period in accordance with the intended methods of disposition specified by the Securityholders, (ii) make generally available earnings statements satisfying the provisions of Section 11(a) of the Securities Act (provided that the

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Company shall be deemed to have complied with this clause if it has complied with Rule 158 under the Securities Act) and (iii) cause the related prospectus as so supplemented to be filed pursuant to Rule 424 under the Securities Act;

(b)notify the Securityholders promptly and, if requested, confirm such notice in writing (i) when a prospectus, prospectus supplement or post-effective amendment has been filed and, with respect to such Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC for amendments or supplements to such Registration Statement or the related Prospectus or for additional information regarding the Securityholders or any other securityholder whose securities are registered pursuant to such Registration Statement, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or the initiation of any proceedings for the purpose, and (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Debt Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;

(c)use reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of such Registration Statement, or the lifting of any suspension of the qualification or exemption from qualification of any Registrable Debt Securities for sale in any jurisdiction in the United States;

(d)furnish to the Securityholders and counsel for the Securityholders, without charge, such number of copies of the Registration Statement as initially filed with the SEC and of each pre-effective and post-effective amendment or supplement thereto (in each case including at least one copy of all exhibits thereto and all documents incorporated by reference therein) and of the Prospectus included therein, including the preliminary Prospectus and any summary Prospectus, and any other Prospectus filed under Rule 424 under the Securities Act in connection with the disposition of any Registrable Debt Securities covered by such Registration Statement, and such other documents as the Securityholders may reasonably request;

(e)use its reasonable best efforts to register or qualify the Registrable Debt Securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions within the United States and Puerto Rico as the Securityholders may reasonably request (provided, however, that the Company shall not be obligated to qualify as a foreign corporation to do business under the laws of any jurisdiction in which it is not then qualified or to file any general consent to service of process to effect such registration), and do such other reasonable acts and things as may be required of it to enable the Securityholders to consummate the disposition in such jurisdiction of the Registrable Debt Securities covered by such Registration Statement;

(f)enter into customary agreements and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Debt Securities;

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(g)cooperate with the Securityholders and their counsel in any due diligence investigation reasonably requested by the Securityholders in connection with the offering and sale of the Registrable Debt Securities;

(h)use its reasonable best efforts to cause the Registrable Debt Securities covered by a Registration Statement to be listed on each national securities exchange on which the Company’s debt securities are then listed at the time of the sale of such Registrable Debt Securities pursuant to such Registration Statement;

(i)notify the Securityholders, at any time when a Prospectus is required to be delivered under the Securities Act, upon discovery that, or upon the happening of any event as a result of which, such Prospectus (as then in effect) contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein (including in a document incorporated by reference therein), in light of the circumstances under which they were made, not misleading, and promptly prepare a supplement or post-effective amendment to such Registration Statement or the related prospectus or a supplement or amendment to any document incorporated or deemed to be incorporated therein by reference, and file with the SEC any other required document so that, as thereafter delivered to the purchasers of such Registrable Debt Securities, such Prospectus shall not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

(j)on or before the effective date of such Registration Statement, provide the transfer agent of the Company for the Registrable Debt Securities with printed certificates for the Registrable Debt Securities by such Registration Statement, which are in a form eligible for deposit with The Depository Trust Company; and

(k)to the extent necessary, qualify the indenture under which the Registrable Debt Securities were issued under Trust Indenture Act of 1939, as amended.

3.3Expenses.  All expenses incurred in complying with Article III, including, without limitation, all SEC or stock exchange registration or filing fees (including all expenses incident to filing with the NASD), stock exchange listing fees, Nasdaq quotation fees, printing expenses (including all expenses of printing certificates for Registrable Debt Securities and of printing prospectuses if the printing of prospectuses is requested by the Securityholders), fees and disbursements of counsel for the Company, the reasonable fees and expenses of one counsel for the Securityholders (selected by those holding a majority of the Registrable Debt Securities being registered), fees of the Company’s independent public accountants and the expenses of any special audit work incident to or required for any such registration (including expenses of any “cold comfort” letters), but subject to Section 3.1(b)(ii) hereof, the expenses of complying with the securities or blue sky laws of any jurisdiction and fees and disbursements of underwriters customarily paid by the issuers or sellers of securities (including reasonable fees of counsel to the underwriters), shall be paid by the Company except that any discounts, commissions or brokers’ fees or fees of similar securities industries professionals and transfer taxes relating to the disposition of the Registrable Debt Securities will be payable by the Securityholders (or other securityholders

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participating in such registered offering) and the Company will have no obligation to pay any such amounts.

3.4Indemnification and Contribution.

(a)In the event of any registration of any Registrable Debt Securities under the Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless the Securityholders, their Affiliates, trustees, directors, officers and agents, and each other Person (including each underwriter) who participated in the offering of such Registrable Debt Securities and each other Person, if any, who controls any Securityholder or such participating person within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such Securityholder or any such Affiliate, trustee, director, officer, agent or participating person or controlling person may become subject under the Securities Act or any other statute or at common law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement under which such Registrable Debt Securities were registered under the Securities Act, any preliminary Prospectus or final Prospectus contained therein, or any amendment or supplement thereto, or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse such Securityholder or such Affiliate, trustee, director, officer, agent or participating person or controlling person for any legal or any other expenses reasonably incurred by such Securityholder or such Affiliate, trustee, director, officer, agent or participating person or controlling person in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any actual or alleged untrue statement or actual or alleged omission made in such Registration Statement, preliminary Prospectus, Prospectus or amendment or supplement in reliance upon and in conformity with written information furnished to the Company by the Securityholders specifically for use therein.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Securityholders or such Affiliate, director, officer, agent or participating person or controlling person, and shall survive the transfer of such Registrable Debt Securities by the Securityholders.

(b)Each selling Securityholder hereby agrees to severally, but not jointly, indemnify and hold harmless the Company, its directors and officers and each other person, if any, who controls the Company within the meaning of the Securities Act against any losses, claims, damages or liabilities, joint or several, to which the Company or any such director or officer or any such person may become subject under the Securities Act or any other statute or at common law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement under which Registrable Debt Securities were registered under the Securities Act, any preliminary Prospectus or final Prospectus contained therein, or any amendment or supplement thereto or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, if in any such case such

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statement or alleged statement or omission or alleged omission was made in reliance on and in conformity with information in writing provided to the Company by the Securityholder specifically for use in such Registration Statement, preliminary Prospectus or final Prospectus or any amendment or supplement thereto.  Notwithstanding the provisions of this paragraph (b) or paragraph (c) below, a Securityholder shall not be required to indemnify any person pursuant to this Section 3.4 nor to contribute pursuant to paragraph (c) below in an amount in excess of the amount of the aggregate net proceeds received by such Securityholder in connection with any such registration under the Securities Act.

(c)If the indemnification provided for in this Section 3.4 from an Indemnifying Party (as defined in Section 3.4(e) hereof) is unavailable hereunder to an Indemnified Party (as defined in Section 3.4(e) hereof) in respect of any losses, claims, damages, liabilities or expenses referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations.  The relative fault of such Indemnifying Party and Indemnified Parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such Indemnifying Party or Indemnified Parties, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action.  The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding.  The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 3.4(c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.  If indemnification is available under this Section 3.4, the Indemnifying Party shall indemnify the Indemnified Party to the full extent provided in Section 3.4(a) or 3.4(b) hereof, as applicable, without regard to the relative fault of the Indemnifying Party or the Indemnified Party or any other equitable consideration provided for in this Section 3.4(c).

(d)The indemnification and contribution required by this Section 3.4 shall be made by periodic payment of the amount thereof during the course of the investigation or defense, as and when bills are received or expenses are incurred.

(e)The party seeking indemnification pursuant to this Section 3.4 is referred to in this Section 3.4 as the “Indemnified Party” and the party from whom indemnification is sought under this Section 3.4 is referred to as the “Indemnifying Party.”  The Indemnified Party shall give prompt written notice to the Indemnifying Party of the

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commencement of any action or proceeding involving a matter referred to in Section 3.4(a) or 3.4(b) (an “Action”), if an indemnification claim in respect thereof is to be made against the Indemnifying Party; provided, however, that the failure to give such prompt notice shall not relieve the Indemnifying Party of its indemnity obligations hereunder with respect to such Action, except to the extent that the Indemnifying Party is materially prejudiced by such failure.  The Indemnifying Party shall be entitled to participate in and to assume the defense of such Action, with counsel selected by the Indemnifying Party and reasonably satisfactory to the Indemnified Party; provided, however, that (i) the Indemnifying Party, within a reasonable period of time after the giving of notice of such indemnification claim by the Indemnified Party, (x) notifies the Indemnified Party of its intention to assume such defense and (y) appoints such counsel, and (ii) the Indemnifying Party may not, without the consent of the Indemnified Party, consent to entry of any judgment or enter into any settlement unless (A) there is as part thereof no finding or admission of any violation of any rights of any person and no effect adverse to the Indemnified Party on any other claims that may be made against the Indemnified Party, (B) the sole relief provided is monetary damages that are paid in full by the Indemnifying Party and (C) such judgment or settlement includes as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release, in form and substance reasonably satisfactory to the Indemnified Party, from all liability in respect of such claim or litigation for which such Indemnified Party would be entitled to indemnification hereunder.  If the Indemnifying Party so assumes the defense of any such Action, (A) the Indemnifying Party shall pay all costs associated with, any damages awarded in, and all expenses arising from the defense or settlement of such Action, and (B) the Indemnified Party shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise or settlement of such Action, but the fees and expenses of such counsel shall be at the expense of the Indemnified Party except that if (x) the Indemnified Party has been advised by its counsel that there are likely to be one or more defenses available to it which are different from or additional to those available to the Indemnifying Party, or (y) such counsel has been selected by the Indemnified Party solely due to a conflict of interest which exists between counsel selected by the Indemnifying Party and the Indemnified Party, the Indemnifying Party shall pay in any such case that portion of the reasonable fees and expenses of one separate counsel per Action for an Indemnified Party (or Indemnified Parties in the aggregate, as the case may be), that are reasonably related to matters covered by the indemnity provided in this Section 3.4.  If the Indemnifying Party does not so assume the defense of such Action, the Indemnified Party shall be entitled to exercise control of the defense, compromise or settlement of such Action.  No Indemnified Party shall settle or compromise any Action for which it is entitled to indemnification under this Agreement without the prior written consent of the Indemnifying Party (which consent may not be unreasonably withheld or delayed).  The other party shall cooperate with the party assuming the defense, compromise or settlement of any Action in accordance with this Agreement in any manner that such party reasonably may request and the party assuming the defense, compromise or settlement of any Action shall keep the other party fully informed in the defense of such Action.

3.5Rule 144.  So long as the Company has securities registered under the Exchange Act, it shall use its best efforts to take all actions reasonably necessary to enable the Securityholders to sell Registrable Debt Securities without registration under the

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Securities Act within the limitations of the exemptions provided by Rule 144, including, without limiting the generality of the foregoing, filing on a timely basis all reports required to be filed by the Exchange Act.

3.6Duration of Debt Registration Rights.  The rights and obligations provided for under this Article III shall terminate (except for the indemnification and contribution obligations of Section 3.4) on the Debt Shelf Registration Termination Date.

3.7Transfer of Registration Rights.

(a)The rights of a Securityholder under this Article III may not be transferred, except (a) to an Affiliate of the Securityholder, (b) as incident to the transfer of all the Registrable Debt Securities owned by a Securityholder to a successor to all or substantially all the business and assets of the Securityholder, and (c) in conformity with the provisions of Section 3.7(b) hereof; and provided that the transferee agrees in a writing executed by such transferee and delivered to the Company to assume the applicable obligations of the Securityholder under this Article III.

(b)The rights of the Securityholders under this Article III may be transferred by any Securityholder to a transferee of Registrable Debt Securities and by such a transferee to a subsequent transferee of Registrable Debt Securities, but only where the transfer is not made pursuant to an effective Registration Statement or Rule 144 or pursuant to another exemption from registration under the Securities Act pursuant to which the securities sold are thereafter freely transferable without registration and without restriction under the Securities Act, and only to such a transferee.

3.8Liquidated Damages For Certain Defaults by the Company.  If (i) the Registration Statement required by Section 3.1 to be prepared and filed by the Company is not filed with the Commission on or prior to the date specified for such filing in Section 3.1 or (ii) such required Registration Statement has not been declared effective by the Commission on or prior to the date specified for such effectiveness in Section 3.1 or (iii) Registration Statement required by Section 3.1 is filed and declared effective but shall thereafter cease to be effective or fail to be usable in connection with resales of Registrable Debt Securities without being succeeded promptly by a post-effective amendment to such Registration Statement that cures such failure and that is itself immediately declared effective, except as permitted by Section 3.1(c) or the following provisions of this section (each such event referred to in clauses (i) through (iii), a “Debt Registration Default”), the Company shall pay, as liquidated damages for such Debt Registration Default, to each Securityholder adversely affected by an inability to sell Registrable Debt Securities by such Debt Registration Default an amount (together with the amounts referred to in the next sentence, the “Debt Illiquidity Fee”) equal to [$.05] per week per $1,000 principal amount of Registrable Debt Securities held by such Securityholder with respect to the first 90-day period immediately following the occurrence of such Debt Registration Default.  The amount of liquidated damages so payable by reason of a Debt Registration Default shall increase by an additional [$.05] per week per $1,000 principal amount of Registrable Debt Securities owned by a Securityholder so adversely affected with respect to each subsequent 90-day period (or

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portion thereof) until all Debt Registration Defaults have been cured or such Registrable Debt Securities have ceased to be Registrable Debt Securities, up to a maximum amount of Debt Illiquidity Fee of [$.50] per week per $1,000 principal amount of Registrable Debt Securities.  All accrued Debt Illiquidity Fees shall be paid by the Company to the record holders of such Registrable Debt Securities in the same manner as interest is paid under the Notes at each date after accrual of a Debt Illiquidity Fee when such interest is payable.  Following the cure of all Debt Registration Defaults relating to any particular Registrable Debt Securities, the accrual of Debt Illiquidity Fees with respect to such securities will cease.  A Debt Registration Default shall be deemed not to have occurred and be continuing in relation to a Registration Statement or the related Prospectus if (i) sales of Registrable Debt Securities may not be made pursuant thereto solely as a result of (A) the filing of a post-effective amendment to the Registration Statement to incorporate annual audited financial information with respect to the Company where such post-effective amendment is not yet effective and needs to be declared effective to permit Securityholders to use the related Prospectus or (B) the occurrence of other material events with respect to the Company that would need to be described in such Registration Statement or the related Prospectus and (C) in the case referred to in clause (B), the Company is proceeding promptly and in good faith to amend or supplement (including by way of filing documents under the Exchange Act which are incorporated by reference into the Registration Statement) such Registration Statement and the related Prospectus to describe such events; provided, however, that in any case sales pursuant to such Registration Statement are not permitted for a continuous period in excess of 30 days, a Debt Registration Default shall be deemed to have occurred on the 31st day of such inability to make sales and Debt Illiquidity Fees shall be payable in accordance with the foregoing provisions from the day such Debt Registration Default occurs until such Debt Registration Default is cured or until the Company is no longer required pursuant to this Agreement to keep such Registration Statement effective or such Registration Statement or the related Prospectus usable; provided, further, that in no event shall the total of all periods during which sales are not permitted pursuant to such Registration exceed 45 days in the aggregate of any 12-month period, exclusive of any periods referred to in Section 3.1(c).  All payment obligations of the Company with respect to Debt Illiquidity Fees that exist with respect to any Registrable Debt Securities at the time such securities cease to be Registrable Debt Securities shall survive until such Debt Illiquidity Fees have been satisfied in full.  Debt Illiquidity Fees shall constitute the exclusive remedy against the Company for failure to comply with any provision of this Article III (excluding Section 3.4)

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ARTICLE IV

CERTAIN SECURITYHOLDER COVENANTS

4.1Each Securityholder shall vote any shares of Voting Stock Beneficially Owned by it so that the Management Incentive Plan is authorized, approved and/or ratified by the shareholders of the Company as may from time to time be required by any legal regulation or listing standard or to satisfy any tax requirement; provided, however, that such vote is sought within twelve (12) monthsof the Effective Date.  This paragraph shall not apply to Aetna as it can not convert the Warrant into Voting Stock by such time.

ARTICLE V

MISCELLANEOUS PROVISIONS

5.1Successor Securities.  The provisions of this Agreement pertaining to shares of Ordinary Common Stock or Multi-Vote Common Stock shall apply equally to any additional shares of Ordinary Common Stock or Multi-Vote Common Stock authorized after the Effective Date and any shares of the Company, regardless of class, series, designation or par value, that are issued as a dividend on or in any other distribution in respect of, or as a result of a reclassification (including a change in par value) in respect of, shares of Ordinary Common Stock and shall also apply to any voting equity security (or, in the case of Article II, any equity security even if not voting) issued by any company that succeeds, by merger, consolidation, a share exchange, a reorganization of the Company or any similar transaction, to all or substantially all the business of the Company, or to the ownership thereof, if such security was issued in exchange for or otherwise as consideration for or in respect of shares of Ordinary Common Stock (or other shares considered as shares of Ordinary Common Stock, as provided by this Section) or Multi-Vote Common Stock in connection with such succession transaction.

5.2Equitable Relief.  It is hereby acknowledged that irreparable harm would occur in the event that any of the provisions of this Agreement were not performed fully by the parties hereto in accordance with the terms specified herein, and that, except where explicitly provided for herein, monetary damages are an inadequate remedy for breach of this Agreement because of the difficulty of ascertaining and quantifying the amount of damage that will be suffered by the parties relying hereon in the event that the undertakings and provisions contained in this Agreement were breached or violated.  Accordingly, each party hereto hereby agrees that each other party hereto shall be entitled to an injunction or injunctions to restrain, enjoin and prevent breaches of the undertakings and provisions hereof and to enforce specifically the undertakings and provisions hereof in any court of the United States or any state having jurisdiction over the matter; it being understood that such remedies shall be in addition to, and not in lieu of, any other rights and remedies available at law or in equity.

5.3No Inconsistent Agreements.  The Company has not previously, or simultaneously, entered into any agreement with respect to any of its securities granting any registration rights to any person (other than the agreement covering the Warrant provided

29

for in the Plan).  The Company shall not hereafter enter into any agreement with respect to its securities which is inconsistent with the rights granted to the Securityholders in this Agreement or which violates any of the covenants of the Company made in this Agreement.  The Securityholders have not previously, or simultaneously, entered into any agreement which is inconsistent with the performance of their obligations hereunder and shall not do so.

5.4Amendments and Waivers.  The provisions of this Agreement may be amended, modified or supplemented, and waivers or consents to departure from the provisions hereof may be given, only in a writing executed by the Company and [all of the] Securityholders.  To the extent permitted by law, no failure to exercise, and no delay on the part of the Securityholders or the Company in exercising any power or right in connection with this Agreement, or available at law or in equity, shall operate as a waiver thereof, and no single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, shall preclude any other or further exercise thereof or the exercise of any other rights or powers.  Any written  modification or waiver of any provision of this Agreement shall be effective only in the specific instance and for the purpose for which it is given.

5.5Notice Generally.  Any notice, demand, request, consent, approval, declaration, delivery or other communication to be made pursuant to the provisions of this Agreement or in connection herewith shall be deemed delivered, served and received:  (i) when delivered by hand to the recipient named below, (ii) on the date of delivery to the address indicated below, properly addressed, as confirmed by the agency or firm making delivery  if the notice is delivered by regularly operating overnight delivery service, such as Federal Express, (iii) on the date of delivery to the address indicated below, properly addressed, if sent via the United States Postal Service when sent by either registered or certified mail, postage prepaid, return receipt requested, (iv) if on a business day, on the date sent via telecopy, provided such delivery is confirmed (via a fax confirmation report), or (v) five business days after having been deposited with the United States Postal Service, properly addressed and postage prepaid.   Notices shall be addressed by name and address to the recipient, as follows:

if to any member of the Onex Group, at:

[address]

[Attention: ]

[Telecopier:],

with a copy similarly sent to:

Kaye Scholer LLP

425 Park Avenue

New York, NY  10022

Attention: Joel I. Greenberg, Esq.

Telecopier: 212-836-8689

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if to Aetna, at:

Aetna Inc.

151 Farmington Avenue

Hartford, CT  06156

Attention L. Edward Shaw, Jr., General Counsel

Telecopier:  (860) 273-8340

with a copy similarly sent to:

Davis Polk & Wardwell

450 Lexington Avenue

New York, NY  10017

Attention:  David L. Caplan

Telecopier:  (212) 450-4800

if to Houlihan Lokey, at:

Houlihan Lokey Howard & Zukin Capital,

686 Third Avenue

15th Floor

New York, NY  10017

Attention: Saul E. Burian

Telecopier: 212-661-3070

with a copy similarly sent to:

Akin Gump Strauss Hauer & Feld LLP

590 Madison Avenue

New York, NY 10022

Attention:Michael S. Stamer, Esq.

Telecopier:  212.872.1002, or

if to the Company, at:

Magellan Health Services, Inc.

[address]

[Attention: ]

[Telecopier:],

with a copy similarly sent to:

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York  10153

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Attention:  Robert L. Messineo, Esq.

Telecopier:  212-310-8007,

or at such other address as may be substituted by notice given as herein provided.  The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice.

5.6Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon a successor company to the Company by merger, consolidation, reorganization or any like transaction.   Except in respect of a successor company to the Company and except as provided in respect of the rights and obligations of the Securityholders under Articles II and III hereof, the rights and obligations of the parties hereunder shall not be assignable.

5.7Headings.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

5.8Governing Law; Jurisdiction; Jury Waiver.  This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Delaware without giving effect to the conflict or choice of laws provisions thereof.  Each of the parties hereby submits to the non-exclusive personal jurisdiction of, and waives any objection as to venue in respect of any litigation respecting this Agreement in, the Chancery Court of the State of Delaware or the United States District Court for the District of Delaware.  EACH PARTY HERETO WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHT HEREUNDER.

5.9Severability.  Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity only, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

5.10Entire Agreement.  This Agreement represents the complete agreement and understanding of the parties hereto in respect of the subject matter contained herein.  This Agreement supersedes all prior agreements and understandings between the parties with respect to the subject matter hereof.

5.11Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same agreement.

[Signature pages follow]

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IN WITNESS WHEREOF, the Company, Onex, Houlihan Lokey and the other parties hereto have executed this Agreement as of the date first above written.

MAGELLAN HEALTH SERVICES, INC.
By:
	Name:
	An authorized officer thereof
ONEX AMERICAN HOLDINGS II LLC
By:
	Name:
	An authorized officer thereof
HOULIHAN LOKEY HOWARD & ZUKIN CAPITAL
By:
	Name:
	An authorized officer thereof
AETNA INC.
By:
	Name:
	An authorized officer thereof

33

Schedule 1

Registrable Equity Securities and Registrable Debt Securities

of

HOULIHAN LOKEY HOWARD & ZUKIN CAPITAL

Shares of Ordinary
Common Stock Principal Amount
of Notes

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EX-99.10

EXHIBIT 99.10

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into by and between [Employee full name], an individual (“Employee”), and, Magellan Health Services, Inc. on behalf of itself and its subsidiaries and affiliates (collectively referred to herein as “Employer”).

WHEREAS, Employer desires to continue to obtain the services of Employee and Employee desires to continue to render services to Employer; and

WHEREAS, Employer and Employee desire to set forth the terms and conditions of Employee’s employment with Employer under this Agreement;

NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual covenants and agreements contained in this Agreement, the parties agree as follows:

STATEMENT OF AGREEMENT

1.Employment.  Employer agrees to employ Employee, and Employee accepts such employment in accordance with the terms of this Agreement, for a term of one year commencing on                         , 2003 and, unless terminated earlier in accordance with the terms of this Agreement, ending on                          , 2004.  Thereafter, this Agreement shall automatically renew for twelve (12) month periods, unless sooner terminated as provided herein.  If either party desires not to renew the Agreement, they must provide the other party with written notice of their intent not to renew the Agreement at least fifteen (15) days prior to the next renewal date. Employer’s notice of intent not to renew the Agreement shall be deemed to be a termination without cause and the provisions of Section 6(c) shall apply.

2.Position and Duties of Employee.  Employee will serve as [title] of Employer.  Employee agrees to serve in such position, or in such other positions as Employer determines from time to time, and to perform the duties that Employer may assign from time to time to Employee, at a similar salary level and location, until the expiration of the term or such time as Employee’s employment with Employer is terminated pursuant to this Agreement.

3.Time Devoted.  Employee will devote his or her full business time and energy to the business affairs and interests of Employer, and will use his or her best efforts and abilities to promote Employer’s interests.  Employee agrees that he or she will diligently endeavor to perform services contemplated by this Agreement in a manner consistent with his or her position and in accordance with the policies established by the Employer.

4.Compensation.

(a)Base Salary.  Employer will pay Employee a base salary in the amount of [salary] dollars per year, which amount will be paid in semi-monthly intervals less appropriate withholdings for federal and state taxes and other deductions authorized by Employee.  Such salary will be subject to review and adjustment by Employer not less than annually.

Employment Agreement

[Employee Name]

[date]

(b)Benefits.  Employee will be eligible to participate in Employer’s Benefit Plans commensurate with his or her position.  Employee will receive separate information detailing the terms of such Benefit Plans and the terms of those plans will control.  Employee also will be eligible to participate in any annual incentive plan and stock option plan applicable to Employee by their terms respectively. During the term of this Agreement, Employee will be entitled to such other benefits of employment with Employer as are now or may later be in effect for salaried employees of Employer, and also will be eligible to participate in other benefits adopted for employees at his or her level.

5.Expenses.  During the term of this Agreement, Employer will reimburse Employee promptly for all reasonable travel, entertainment, parking, business meetings and similar expenditures in pursuance and furtherance of Employer’s business upon receipt of reasonably supporting documentation as required by Employer’s policies applicable to its employees generally.

6.Termination.

(a)Termination Due to Resignation.  Employee may resign his or her employment at any time by giving 30 days written notice of resignation to Employer.  Except as otherwise set forth in this Agreement, Employee’s employment, and Employee’s right to receive compensation and benefits from Employer, will terminate upon the effective date of Employee’s termination.

If Employee resigns pursuant to this Section 6(a), Employer’s only remaining financial obligation to Employee under this Agreement will be to pay: (i) any earned but unpaid Base Salary and accrued Paid Time Off through the effective date of Employee’s termination; (ii) reimbursement of expenses incurred by Employee through the effective date of termination which are reimbursable pursuant to this Agreement; and (iii) the Employee’s vested portion of any Magellan deferred compensation or other benefit plan.

(b)Termination with Cause.  Except as otherwise set forth in this Agreement, Employee’s employment, and Employee’s right to receive compensation and benefits from Employer, will be terminated for cause at the discretion of Employer under the following circumstances:

(i)Employee’s commission of an act of fraud or dishonesty involving his or her duties on behalf of Employer;

(ii)Employee’s failure or refusal to faithfully and diligently perform duties assigned to Employee or other breach of any material term under this Agreement;

(iii)Employee’s failure or refusal to abide by Employer’s policies, rules, procedures or directives; or

(iv)Employee’s conviction of a felony or a misdemeanor involving moral turpitude.

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If Employee is terminated pursuant to this Section 6(b), Employer’s only remaining financial obligation to Employee under this Agreement will be to pay: (i) any earned but unpaid Base Salary and accrued Paid Time Off through the date of Employee’s termination; (ii) reimbursement of expenses incurred by Employee through the date of termination which are reimbursable pursuant to this Agreement; and (iii) the Employee’s vested portion of any Magellan deferred compensation or other benefit plan.

For the events described in Sections 6(b)(ii) and (iii), Employer will give Employee written notice of such deficiency and a reasonable opportunity to cure such situation, but in no event more than thirty days.

(c)Termination Without Cause.  Employer may terminate this Agreement without cause at any time.  “Without cause” termination shall include, but not be limited to: (i) Employer’s notice to Employee of its intent not to renew this Agreement in accordance with the provisions of Section 1 hereof; and (ii) Employer’s notice to Employee that his or her position will be relocated to an office which is greater than 35 miles from Employee’s prior office location.  If Employer terminates this Agreement without cause, Employer shall continue to pay Employee the compensation provided for in Section 4(a) of this Agreement for a period of time equal to [Insert Relevant Severance Period].  Such pay continuation is contingent upon Employee executing Employer’s standard severance agreement, which incorporates a general release, at the time of termination.  In addition, Employee will receive (i) any earned but unpaid Base Salary and accrued Paid Time Off through the date of Employee’s termination; (ii) reimbursement of expenses incurred by Employee through the date of termination which are reimbursable pursuant to this Agreement; and (iii) the Employee’s vested portion of any Magellan Health Services retirement, deferred compensation or other benefit plan, including but not limited to, any stock option or restricted stock grant plans, in accordance with the terms of those plans. If Employee participates in any bonus plan(s), including but not limited to, any long term bonus plan(s), Employer may pay Employee, on a pro-rata basis, the amount of such plan(s) as Employee would have earned if Employee had been employed for the full calendar year. The pro-ration will be determined by the fraction of the number of months in the calendar year in which the Employee worked (rounded to the nearest whole month) divided by 12 months. In determining whether a pro-rata bonus shall be paid to Employee, the Employer may consider factors that include but are not limited to (i) the Employee’s target bonus (percentage of base salary), (ii) the Company’s financial performance and (iii) the Employee’s achievement of his or her specific performance objectives. At the time of termination, Employer shall determine the Employee’s bonus amount, if any. Notwithstanding the foregoing, any payout of such bonus amount shall be contingent upon the Company satisfying the financial targets established by the Company’s Board of Directors. Payment of any bonus shall be made at the time of the annual bonus payout for all employees. COBRA coverage may be elected to continue health, dental, and vision insurance during the Severance Period and beyond. If COBRA coverage is elected, Employee will pay only the employee contribution rate for the health insurance portion of the COBRA coverage during the Severance Period.  Dental and vision coverage under COBRA will be billed at the full COBRA rate.

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(d)Automatic Termination.  This Agreement will terminate automatically upon the death or permanent disability of Employee.  Employee will be deemed to be “Disabled” or to suffer from a “Disability” within the meaning of this Agreement if, because of a physical or mental impairment, Employee has been unable to perform the essential functions of his or her position, with or without reasonable accommodation, for a period of 180 consecutive days, or if Employee can reasonably be expected to be unable to perform the essential functions of his or her position for such period.  If Employee is terminated pursuant to this Section 6(d), Employee will receive (i) any earned but unpaid Base Salary and accrued Paid Time Off through the date of Employee’s termination; (ii) reimbursement of expenses incurred by Employee through the date of termination which are reimbursable pursuant to this Agreement; and (iii) the Employee’s vested portion of any Magellan Health Services retirement, deferred compensation or other benefit plan, including but not limited to, any stock option or restricted stock grant plans, in accordance with the terms of those plans. If Employee participates in any bonus plan(s), including but not limited to, any long term bonus plan(s), Employer may pay Employee, on a pro-rata basis, the amount of such plan(s) as Employee would have earned if Employee had been employed for the full calendar year. The pro-ration will be determined by the fraction of the number of months in the calendar year in which the Employee worked (rounded to the nearest whole month) divided by 12 months.  In determining whether a pro-rata bonus shall be paid to Employee, the Employer may consider factors that include but are not limited to (i) the Employee’s target bonus (percentage of base salary); (ii) the Company’s financial performance; and (iii) the Employee’s achievement of his or her specific performance objectives. At the time of termination, Employer shall determine the Employee’s bonus amount, if any. Notwithstanding the foregoing, any payout of such bonus amount shall be contingent upon the Company satisfying the financial targets established by the Company’s Board of Directors. Payment of any bonus shall be made at the time of the annual bonus payout for all employees.

(e)Effect of Termination.  Except as otherwise provided for in this Section 6, upon termination of this Agreement, all rights and obligations under this Agreement will cease except for the rights and obligations under Sections 4 and 5 to the extent Employee has not been compensated or reimbursed for services performed prior to termination (the amount of compensation to be prorated for the portion of the pay period prior to termination); the rights and obligations under Sections 7, 8 and 9; and all procedural and remedial provisions of this Agreement.

7.Protection of Confidential Information/Non-Competition/Non-Solicitation.

Employee covenants and agrees as follows:

(a)(i)Confidential Information:  During Employer’s employment of Employee and for a period of one year following the termination of Employee’s employment for any reason, Employee will not use or disclose, directly or indirectly, for any reason whatsoever or in any way, other than at the direction of Employer during the course of Employee’s employment or after receipt of the prior written consent of Employer, any confidential information of Employer or its controlled subsidiaries or affiliates, that comes into his or her knowledge during his or her employment by

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Employer (the “Confidential Information” as hereinafter defined).  The obligation not to use or disclose any Confidential Information will not apply to any Confidential Information that is or becomes public knowledge through no fault of Employee, and that may be utilized by the public without any direct or indirect obligation to Employer, but the termination of the obligation for non-use or nondisclosure by reason of such information becoming public will extend only from the date such information becomes public knowledge.  The above will be without prejudice to any additional rights or remedies of Employer under any state or federal law protecting trade secrets or other information.

(a)(ii)Trade Secrets.  Employee shall hold in confidence all Trade Secrets of Employer, its direct and indirect subsidiaries, and/or its customers that came into his or her knowledge during his or her employment by Employer and shall not disclose, publish or make use of at any time after the date hereof such Trade Secrets, other than at the direction of Employer, for as long as the information remains a Trade Secret.

(a)(iii)For purposes of this Agreement, the following definitions apply:

“Confidential Information” means any data or information, other than Trade Secrets, that is valuable to Employer and not generally known to the public or to competitors of Employer.  It is understood that the term “Confidential Information” does not mean and shall not include information which:

(a)is or subsequently becomes publicly available without the breach of any obligation owed to the Employer;

(b)is disclosed with the prior written approval of the Employer; or

(c)is obligated to be produced under order of a court of competent jurisdiction or a valid administrative, congressional, or other  subpoena, civil investigative demand or similar process; provided, however, that upon issuance of any such order, subpoena, demand or other process, the Employee shall promptly notify the Employer and shall provide the Employer with an opportunity (if then available) to contest, at the Employer’s expense, the propriety of such order or subpoena (or to arrange for appropriate safeguards against any further disclosure by the court or administrative or congressional body seeking to compel disclosure of such Confidential Information).

“Trade Secret” means information including, but not limited to, any technical or non-technical data, formula, pattern, compilation, program, device, method, technique, drawing, process, financial data, financial plan, product plan, list of actual or potential customers or suppliers or other information similar to any of the foregoing, which (i) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can derive economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

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(a)(iv)Interpretation.  The restrictions stated in paragraphs 7(a)(i) and 7(a)(ii) are in addition to and not in lieu of protections afforded to trade secrets and confidential information under applicable state law.  Nothing in this Agreement is intended to or shall be interpreted as diminishing or otherwise limiting Employer’s right under applicable state law to protect its trade secrets and confidential information.

(b)Non-Competition.

(i)Employee covenants and agrees that during the term of his or her employment with Employer and for a period of one year immediately following the termination of said employment for any reason, he or she will not, on his or her own behalf or as a partner, officer, director, employee, agent, or consultant of any other person or entity, directly or indirectly, engage or attempt to engage in the business of providing or selling services in the United States that are services offered by Employer, unless waived in writing by Employer in its sole discretion. Employee recognizes that the above restriction is reasonable and necessary to protect the interest of the Employer and its controlled subsidiaries and affiliates, which are engaged in the provision, or sale of behavioral managed care services on a national basis.

(ii)During the one year period immediately following Employee’s termination from his or her employment with Employer, Employee may submit a written request to Employer outlining a proposed employment or other employment opportunity that Employee is considering. Employer will review such request and make a determination, in its sole discretion, as to whether the opportunity would constitute a breach of the non-competition covenant.

(c)Non-Solicitation.  To protect the goodwill of Employer and its controlled subsidiaries and affiliates, or the customers of Employer and its controlled subsidiaries and affiliates, Employee agrees that, for a period of one year immediately following the termination of his or her employment with Employer, he or she will not, without the prior written permission of Employer, directly or indirectly, for himself or herself or on behalf of any other person or entity, solicit, divert away, take away or attempt to solicit or take away any Customer of Employer for purposes of providing or selling services that are offered by Employer, if Employer, or the particular controlled subsidiary or affiliate of Employer, is then still engaged in the sale or provision of such services at the time of the solicitation.  For purposes of this Section 7(c), “Customer” means any individual or entity to whom Employer or its controlled subsidiaries or affiliates has provided, or contracted to provide, services and with whom Employee had, alone or in conjunction with others, contact with or knowledge of, during the twelve months prior to the termination of his or her employment.  For purposes of this Section 7(c), Employee had contact with or knowledge of a customer if (i) Employee

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had business dealings with the customer on behalf of Employer or its controlled subsidiaries or affiliates; (ii) Employee was responsible for supervising or coordinating the dealings between the customer and Employer or its controlled subsidiaries or affiliates; or (iii) Employee obtained or had access to trade secrets or confidential information about the customer as a result of Employee’s association with Employer or its controlled subsidiaries or affiliates.

(d)Solicitation of Employees.  During Employer’s employment of Employee and for a period of one year following the termination of Employee’s employment with Employer for any reason, Employee will not solicit for employment, directly or indirectly, any employee of Employer or any of its controlled subsidiaries or affiliates who was employed with Employer or its controlled subsidiaries or affiliates within the one year period immediately prior to Employee’s termination.

8.Work Made for Hire.  Employee agrees that any written program materials, protocols, research papers, other writings, as well as improvements, inventions, new techniques, programs or products (the “Work”) made or developed by Employee within or after normal working hours relating to the business or activities of Employer or any of its subsidiaries, shall be deemed to have been made or developed by Employee solely for the benefit of Employer and will be considered “work made for hire” within the meaning of the United States Copyright Act, Title 17, United States Code, which vests all copyright interest in and to the Work in the Employer.  In the event, however, that any court of competent jurisdiction finally declares that the Work is not or was not a work made for hire as agreed, Employee agrees to assign, convey, and transfer to the Employer all right, title and interest Employee may presently have or may have or be deemed to have in and to any such Work and in the copyright of such work, including but not limited to, all rights of reproduction, distribution, publication, public performance, public display and preparation of derivative works, and all rights of ownership and possession of the original fixation of the Work and any and all copies. Additionally, Employee agrees to execute any documents necessary for Employer to record and/or perfect its ownership of the Work and the applicable copyright.

9.Property of Employer.  Employee agrees that, upon the termination of Employee’s employment with Employer, Employee will immediately surrender to Employer all property, equipment, funds, lists, books, records and other materials of Employer or its controlled subsidiaries or affiliates in the possession of or provided to Employee.

10.Governing Law.  This Agreement and all issues relating to the validity, interpretation, and performance will be governed by, interpreted, and enforced under the laws of the State of Maryland.

11.Remedies.  An actual or threatened violation by Employee of the covenants and obligations set forth in Sections 7, 8 and 9 will cause irreparable harm to Employer or its controlled subsidiaries or affiliates and that the remedy at law for any such violation will be inadequate. Employee agrees, therefore, that Employer or its controlled subsidiaries or affiliates will be entitled to appropriate equitable relief, including, but not limited to, a temporary restraining order and a preliminary injunction, without the necessity of posting a bond.  Employee will also be entitled to

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seek equitable relief against Employer in connection with enforcement of the covenants and obligations set forth in Sections 7, 8 and 9.  The provisions of Sections 4, 5, 6, 7, 8 and 9 will survive the termination of this Agreement in accordance with the terms set forth in each Section.

12.Arbitration.  Except for an action for injunctive relief as described in Section 11, any disputes or controversies arising under this Agreement will be settled by arbitration in Columbia, Maryland in accordance with the rules of the American Arbitration Association relating to the arbitration of employment disputes.  The determination and findings of such arbitrators will be final and binding on all parties and may be enforced, if necessary, in any court of competent jurisdiction.  The costs and expenses of the arbitration shall be paid for by Employer, but each party shall pay its own attorney’s fees and other litigation costs.

Employee’s

Initials

13.Notices.  Any notice or request required or permitted to be given to any party will be given in writing and, excepting personal delivery, will be given at the address set forth below or at such other address as such party may designate by written notice to the other party to this Agreement:

To Employee:	[Employee name]
	[Employee address]
	[Employee Home Phone number]
To Employer:	Magellan Health Services, Inc.
	6950 Columbia Gateway Drive
	Columbia, Maryland  21046
	Attention:  General Counsel

Each notice given in accordance with this Section will be deemed to have been given, if personally delivered, on the date personally delivered; if delivered by facsimile transmission, when sent and confirmation of receipt is received; or, if mailed, on the third day following the day on which it is deposited in the United States mail, certified or registered mail, return receipt requested, with postage prepaid, to the address last given in accordance with this Section.

14.Headings.  The headings of the sections of this Agreement have been inserted for convenience of reference only and should not be construed or interpreted to restrict or modify any of the terms or provisions of this Agreement.

15.Severability.  If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective during the term of this Agreement, such provision will be fully severable and this Agreement and each separate provision will be construed

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and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement, and the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement.  In addition, in lieu of such illegal, invalid or unenforceable provision, there will be added automatically, as a part of this Agreement, a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable, to the extent such reformation is allowable under applicable law.

16.Binding Effect.  This Agreement will be binding upon and shall inure to the benefit of each party and each party’s respective successors, heirs and legal representatives.  This Agreement may not be assigned by Employee to any other person or entity but may be assigned by Employer to any subsidiary or affiliate of Employer or to any successor to or transferee of all, or any part, of the stock or assets of Employer.

17.Employer Policies, Regulations, and Guidelines for Employees.  Employer may issue policies, rules, regulations, guidelines, procedures or other material, whether in the form of handbooks, memoranda, or otherwise, relating to its Employees.  These materials are general guidelines for Employee’s information and will not be construed to alter, modify, or amend this Agreement for any purpose whatsoever.

18.Waiver of Claim Against Employer Pursuant to the Chapter 11 Filing. Employee agrees to waive any claim he/she may have relating to Employer’s rejection of Employee’s executory contract in the course of its Chapter 11 filing.  To the extent Employee has filed a proof of claim with the bankruptcy court, Employee agrees to take affirmative steps to withdraw such claim.

19.Entire Agreement.  This Agreement embodies the entire agreement and understanding between the parties with respect to its subject matter and supersedes all prior agreements and understandings, whether written or oral, relating to its subject matter, unless expressly provided otherwise within this Agreement.  No amendment or modification of this Agreement, will be valid unless made in writing and signed by each of the parties.  No representations, inducements, or agreements have been made to induce either Employee or Employer to enter into this Agreement, which are not expressly set forth within this Agreement.    Employee and Employer acknowledge and agree that Employer’s controlled subsidiaries and affiliates are express third party beneficiaries of this Agreement.

[signatures follow]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the          day of                          , 200   .

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	MAGELLAN HEALTH SERVICES, INC.
“Employee”	“Employer”
	By:
	Name:
	Title:

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EX-99.12

EXHIBIT 99.12

Magellan Health Services, Inc.

MULTIPLE AND VARIABLE VOTE
 RESTRICTED CONVERTIBLE COMMON STOCK,
$.01 Par Value per Share

STOCK PURCHASE AGREEMENT

Dated as of September           , 2003

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is entered into as of September      , 2003, by and among MAGELLAN HEALTH SERVICES, INC., a Delaware corporation (the “Company”), and the entities set forth on Schedule 1 attached hereto (individually, a “Purchaser” and collectively, the “Purchasers”).

RECITALS

The Company desires to sell and the Purchasers desire to purchase shares of Multiple and Variable Vote Restricted Convertible Common Stock of the Company, par value $.01 per share (“MVS Securities”), for the consideration and on the terms set forth in this Agreement.

Certain capitalized terms used in this Agreement are defined in Section 9.  Capitalized terms used but not defined herein have the meanings set forth in the Plan.  References to a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement and references to a “Section” are, unless otherwise specified, to one of the Sections of this Agreement.

AGREEMENT

The parties, intending to be legally bound, agree as follows:

1.             Authorization of Stock.  The Company will authorize the issue and sale of (i) 2,631,579 shares of MVS Securities (the “Definitive Shares”), (ii) up to 2,631,579 shares of MVS Securities to the extent the Equity Offering is not fully subscribed pursuant to Section 9.6 of the Plan (the “Offering Backstop Shares”) and (iii) up to 2,222,222 shares of MVS Securities to the extent necessary to fully fund the Partial Cash-Out Election (up to a maximum of $50 million) pursuant to the Plan (the “Partial Cash-Out Shares” and together with the Definitive Shares and the Offering Backstop Shares, the “Shares”).  The total number Offering Backstop Shares and Partial Cash-Out Shares to be authorized by the Company shall be the total number of Offering Backstop Shares and Partial Cash-Out Shares, respectively, which the Purchasers are required to purchase, which shall be determined as provided in the Plan.

2.             Sale and Purchase of Common Stock; Closing.

(a)           The Company agrees to issue and sell to the Purchasers and, subject to the terms and conditions of this Agreement, each Purchaser agrees to purchase from the Company, the respective percentages of the Shares specified opposite such Purchaser’s name in Schedule 1 (such percentage a Purchaser’s “Share Percentage”).  The total numbers of Shares to be purchased by the Purchasers shall be determined as provided in the Plan.  The purchase price for the Shares shall be (i) $28.50 per Share or $75,000,000 in the aggregate for the Definitive Shares, (ii) $28.50 per Share or up to $75,000,000 in the aggregate for the Offering Backstop Shares and (iii) $22.50 per Share or up to $50,000,000 in the aggregate for the Partial Cash-Out Shares.

(b)           The sale of the Definitive Shares and the Offering Backstop Shares to be purchased by the Purchasers shall take place at a closing (the “Closing”) at the offices of Weil, Gotshal & Manges, LLP, 767 Fifth Avenue, New York, NY 10153 at           , New York

City time, on the Effective Date, provided that the conditions set forth in Section 3 have been satisfied or waived by a Majority in Interest.  At the Closing, the Company will deliver to each Purchaser the Definitive Shares and the Offering Backstop Shares to be purchased by such Purchaser in the form of a single certificate (or such greater number of certificates representing such Shares as such Purchaser may request), each dated the date of the Closing and registered in such Purchaser’s name (or in the name of such Purchaser’s nominee), against delivery by such Purchaser to the Company or its order of immediately available funds in the amount of the purchase price for such Shares.  If at the Closing, the Company shall fail to tender to any Purchaser the Shares to be purchased by such Purchaser, as provided above in this Section 2, or any of the conditions specified in Section 3 shall not have been fulfilled to the satisfaction of such Purchaser, such Purchaser shall, at its election and upon written notice to the Company, be relieved of all further obligations under this Agreement.

(c)           Sales of Partial Cash-Out Shares to be purchased by the Purchasers shall take place at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, NY 10153 at           , New York City time, on the later of (i) the Closing Date and (ii) one Business Day prior to the date on which the proceeds of such sales of Partial Cash-Out Shares are required for the making of payments pursuant to the Partial Cash-Out Election (a “Partial Cash-Out Share Closing”).  At any Partial Cash-Out Share Closing, each Purchaser shall purchase a number of Partial Cash-Out Shares equal to such Purchaser’s Share Percentage of the total number of Partial Cash-Out Shares to be sold at such Partial Cash-Out Share Closing, rounded up to the next whole share; provided, that any fractional portion of a Partial Cash-Out Share which is issued to a Purchaser due to such rounding, and the purchase price therefor, shall be credited toward the number of Partial Cash-Out Shares to be purchased, and the purchase price to be paid therefor, by such Purchaser at the next Partial Cash-Out Share Closing, if any.  The Company shall give written notice to each Purchaser at least two (2) Business Days prior to the date of a Partial Cash-Out Share Closing, which notice shall state the date on which such Partial Cash-Out Share Closing shall occur, the total number of Partial Cash-Out Shares to be purchased by all Purchasers at such Partial Cash-Out Share Closing and the number of Partial Cash-Out Shares to be purchased by, and the purchase price to be paid by, such Purchaser at such Partial Cash-Out Share Closing.  No Partial Cash-Out Share Closing shall occur after           , 2003.  At each Partial Cash-Out Share Closing, the Company will deliver to each Purchaser the Partial Cash-Out Shares to be purchased by such Purchaser in the form of a single certificate (or such greater number of certificates representing such Partial Cash-Out Shares as such Purchaser may request), each dated the date of such Partial Cash-Out Share Closing and registered in such Purchaser’s name (or in the name of such Purchaser’s nominee), against delivery by such Purchaser to the Company or its order of immediately available funds in the amount of the purchase price for such Partial Cash-Out Shares.  If at such Partial Cash-Out Share Closing, the Company shall fail to tender to any Purchaser the Partial Cash-Out Shares to be purchased by such Purchaser, as provided above in this Section 2(c), such Purchaser shall, at its election and upon written notice to the Company, be relieved of all further obligations under this Agreement.

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3.             Conditions to Closing.  Unless waived in writing by a Majority in Interest, the obligation of each Purchaser to purchase and pay for the Shares to be sold to such Purchaser at any Closing is subject to the fulfillment to such Purchaser’s satisfaction, prior to or concurrently with such Closing, of the following conditions:

3.1.         Representations and Warranties.  The representations and warranties of the Company contained in this Agreement shall be true and correct in all material respects when made and at the time of the Closing, except to the extent such representations and warranties are made as of a specific date, in which case such representations and warranties shall be true and correct as of such date, and except as affected by the consummation of such transactions.

3.2.         Performance; No Default.  The Company shall have performed and complied in all material respects with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at the Closing.

3.3.         Compliance Certificates.  The Company shall have delivered to the Purchasers a Certificate executed by the Chief Executive Officer and Chief Financial Officer of the Company, dated the date of the Closing, certifying that the conditions specified in Sections 3.1 and 3.2 have been fulfilled.

3.4.         Confirmation Order; Plan of Reorganization.  The Confirmation Order shall be in form and substance reasonably satisfactory to the Purchasers, shall have been entered by the Bankruptcy Court and shall be in full force and effect.  All conditions to the consummation of the Plan shall have been satisfied or waived by the Purchasers.  The Plan as confirmed by the Bankruptcy Court shall be in substantially the form filed with the Bankruptcy Court on [August 18], 2003.

3.5.         Amended Certificate of Incorporation.  The Amended Certificate of Incorporation, which shall be substantially in the form set forth in the Plan Supplement, shall have been duly filed under the laws of the State of Delaware, and the Amended Certificate of Incorporation shall be in full force and effect, and shall not have been otherwise amended or modified.

3.6.         Amended Bylaws.  The Amended Bylaws, which shall be substantially in the form set forth in the Plan Supplement, shall have been duly adopted by the Company under the laws of the State of Delaware, and the Amended Bylaws shall be in full force and effect, and shall not have been otherwise amended or modified.

3.7.         Registration Rights Agreement.  Each of the Purchasers shall have received a fully executed counterpart of the Registration Rights Agreement, substantially in the form set forth in the Plan Supplement, such agreement shall be in full force and effect and no term or condition thereof shall have been amended, modified or waived.

3.8.         Intentionally Omitted.

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3.9.         No Actions Pending.  There shall be no claim, suit, action, or proceeding by any Governmental Body or any other Person or any other legal or administrative proceeding pending which would restrict the Contemplated Transactions.

3.10.       Consents, Approvals, Etc.  All necessary governmental, regulatory and third party Consents in connection with the Contemplated Transactions, including, without limitation, all insurance-related state regulatory approvals [and CFIUS approval], shall have been obtained and remain in full force and effect

3.11.       Hart-Scott-Rodino.  All applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvement Act (the “HSR Act”) shall have expired or been terminated early.

3.12.       Proceedings and Documents.  All corporate and other proceedings in connection with the Contemplated Transactions and all documents and instruments incident to such transactions shall be satisfactory to each Purchaser and such Purchaser’s special counsel, and each Purchaser and such Purchaser’s special counsel shall have received all such counterpart originals or certified or other copies of such documents as it or they may reasonably request.

3.13.       No Material Adverse Change.  There shall not have occurred any material adverse change in the business, condition (financial or otherwise), operations, performance or properties of the Company and its direct or indirect subsidiaries, taken as whole, since September 30, 2002; provided, however, that (a) any change reflected in the Company’s 10-Q filings for the fiscal quarters ended December 31, 2002 or March 31, 2003 or any other information disclosed to the Purchasers (or known to the Purchasers) on July 14, 2003, and (b) the filing of the Chapter 11 Cases or the consummation of the Plan shall not be deemed a material adverse change.

3.14.       EBITDA and Revenue Targets.  As of the end of the month prior to the Effective Date, the Company shall have realized revenues and EBITDA for the period from January 1, 2003 through the end of such month that are no less than 85% of the projected revenues and EBITDA set forth in the Company’s business plan for fiscal year 2003, in the form attached hereto as Exhibit A, and the Company shall have delivered to the Purchasers on the Business Day immediately preceding the Effective Date, a statement, which shall be executed by the Chief Executive Officer and Chief Financial Officer of the Company, which shall set forth the actual revenues and EBITDA for the measurement period.

3.15.       Minimum Cash Availability.  The Company shall have cash in hand or borrowing availability of at least $20 million as of the Effective Date, after giving effect to $47.5 million of the proceeds of the sale of the Shares but taking into account distributions under the Plan (other than the cash payments used to reduce the New Notes or any payment of cash in lieu of issuing New Common Stock on account of an exercise of the Partial Cash-Out Election by a holder of an Allowed Senior Subordinated Note Claim or an Allowed Other General Unsecured Claim), and the Company shall have delivered to the Purchasers on the Business Day immediately preceding the Effective Date a certificate, executed by the Chief Executive Officer and the Chief Financial Officer of the Company, confirming that the Company

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projects that it will have cash (or cash equivalents) and/or availability under a revolving or similar credit facility during the period commencing on the Effective Date and continuing for 18 months thereafter in an amount of no less than $20 million.

3.16.       Limitation on Fees.  Total fees and expenses incurred from and after May 1, 2003, of the legal advisors to the Company, the Official Committee and the existing senior secured lenders’ agent related to the Chapter 11 Cases, Healthcare Partners, Inc., Houlihan Lokey, Alvarez & Marsal, Gleacher Partners, LLC and [Kekst] (such fees and expenses shall specifically exclude the success fee payable to Houlihan Lokey, and any fees payable in respect of any exit financing) shall not exceed $25 million, and the Purchasers shall have received evidence of the foregoing that is reasonably satisfactory to them.

3.17.       Senior Credit Facility.  Either the New Facilities shall have closed on substantially the terms set forth in the Plan and shall be in full force and effect or the Senior Secured Credit Agreement shall be paid in full in cash with the proceeds of not less than $100,000,000 in loans and $75,000,000 in replacement/backstop letters of credit from an exit facility, the terms of which are as or more favorable to the Company as the New Facilities on the terms set forth in the Plan.

3.18.       New Aetna Note and Aetna Purchase Option.  The New Aetna Note and the Aetna Amended MSA shall have been executed substantially in the form set forth in the Plan Supplement and shall be in full force and effect.

3.19.       Payment of Expenses and Commitment Fee.  The Company shall have paid on or before the Closing the Purchasers’ expenses incurred through the Closing Date, in accordance with Section 10 hereof and the remainder of the Commitment Fee, if any, in accordance with Section 11 hereof.

The Purchasers may not rely on the failure of any condition set forth in this Section 3 if such failure was caused by the Purchasers’ failure to comply with this Agreement.

4.             Representations and Warranties.  The Company represents and warrants that:

4.1.         Organization of the Company.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, with full corporate power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, except where the failure to do so would not be reasonably likely to have a Material Adverse Effect.  The Company is duly qualified or registered to do business as a foreign corporation and is in good standing under the laws of each jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification or registration, except where the failure to do so would not be reasonably likely to have a Material Adverse Effect.

4.2.         Capitalization of the Company.  As of the Effective Date, the authorized capital stock of the Company will consist entirely of            shares of Ordinary

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Common Stock,                        shares of MVS Securities [and             shares of Preferred Stock, par value $.01 per share], of which             shares of Ordinary Common Stock,             shares of MVS Securities [and             shares of Preferred Stock] will be issued and outstanding.  Except as provided in the Plan, there are no options, warrants, convertible securities or rights that are or may become exercisable or exchangeable for, convertible into, or that otherwise give the holder any right to acquire shares of capital stock of the Company or to receive payments based in whole or in part upon the value of the capital stock of the Company, whether pursuant to a phantom stock plan or otherwise.  There are no Contracts relating to the issuance, sale or transfer of any equity securities or other securities of the Company other than as contemplated by the Plan.  There are no outstanding Contracts of the Company to repurchase, redeem or otherwise acquire any of its equity securities or other securities other than as contemplated by the Plan.  As of the Effective Date, all of the outstanding equity securities of the Company will have been duly authorized and validly issued and are fully paid and nonassessable.  As of the Effective Date, none of the outstanding equity securities or other securities of the Company will have been issued in violation of any Legal Requirement.

4.3.         Organization and Capitalization of the Subsidiaries.

(a)           Exhibit 21 of the Company’s Transition Report on Form10-K for the transition period from October 1, 2002 to December 31, 2002 sets forth the name, jurisdiction of incorporation or organization (as applicable) and capitalization of each Subsidiary of the Company.  [Except for the Company’s Subsidiaries, and as otherwise described in the Disclosure Statement or the Filed SEC Reports or on Schedule 4.3, the Company does not have any direct or indirect equity interest constituting at least 10% of the voting securities of any corporation, partnership, limited liability company or other Person or business].  Except as described in the Disclosure Statement or the Filed SEC Reports, no Magellan Company has any Contract to directly or indirectly acquire any equity or other ownership interest in any Person or business.

(b)           Each Subsidiary is a corporation, partnership or limited liability company (as applicable), duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization (as applicable), with full corporate, partnership or limited liability company (as applicable) power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, except where the failure to do so would not be reasonably likely to have a Material Adverse Effect.  Each Subsidiary is duly qualified or registered to do business as a foreign corporation, partnership, limited liability company (as applicable) and is in good standing under the laws of each jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification or registration, except where the failure to do so would not be reasonably likely to have a Material Adverse Effect.

(c)           All of the outstanding capital stock or other equity securities of each Subsidiary directly or indirectly owned by any Magellan Company have been duly authorized and validly issued and are fully paid and nonassessable and the applicable Magellan Company has good and marketable title to such capital stock or other equity securities, free and clear of all Encumbrances, except as set forth on Schedule 4.3.  Except as set forth in the Disclosure Statement or the Filed SEC Reports or as contemplated by the Plan, there are, and will be on the Closing Date, no options, warrants, convertible securities or rights that are or may

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become exercisable or exchangeable for, convertible into, or that otherwise give the holder any right to acquire shares of capital stock of any Subsidiary or to receive payments based in whole or in part upon the value of the capital stock of any Magellan Company, whether pursuant to a phantom stock plan or otherwise.  There are no Contracts relating to the issuance, sale or transfer of any equity securities or other securities of any Subsidiary.  Except as contemplated by the Plan, there are, and will be on the Closing Date, no outstanding Contracts of any Magellan Company to repurchase, redeem or otherwise acquire any equity securities or other securities of any Subsidiary.

4.4.         Authority; No Conflict.

(a)           At the Closing, the execution, delivery and performance of this Agreement and the Contemplated Transactions will have been duly authorized by all necessary action on the part of the Company.  This Agreement constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.  The Company has the absolute and unrestricted right, power and authority to execute and deliver this Agreement and to perform its obligations hereunder.

(b)           Except as set forth in Schedule 4.4, neither the execution and delivery of this Agreement nor the consummation or performance of any of the Contemplated Transactions will (with or without notice or lapse of time):

(i)            contravene, conflict with, or result in a violation of (1) any provision of the Organizational Documents of the Magellan Companies, or (2) any resolution adopted by the board of directors (or similar governing body) of any Magellan Company;

(ii)           contravene, conflict with, or result in a violation of any Legal Requirement or any Order to which any Magellan Company, or any of the assets owned or used by any Magellan Company, may be subject;

(iii)          contravene, conflict with or result in a violation or breach of any provision of, or give any Person the right to declare a default under or terminate, any Contract; or

(iv)          result in the imposition or creation of any Encumbrance upon or with respect to any of the assets owned or used by any Magellan Company;

except, in the case of clauses (ii), (iii) and (iv) above, where such occurrence would not be reasonably likely to have a Material Adverse Effect.

Except for (i) the Confirmation Order, (ii) compliance with the HSR Act, (iii) where the failure to give any notice or obtain any Consent would not be reasonably likely to have a Material Adverse Effect and (iv) as set forth in Schedule 4.4, no Magellan Company is or will be required to give any notice to or obtain any Consent from any Person in connection with the execution and delivery of this Agreement or the consummation or performance of the Contemplated Transactions.

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4.5.         No Material Adverse Change.  Since September 30, 2002, there has not been any material adverse change in the business, condition (financial or otherwise), operations, performance or properties of the Magellan Companies, taken as whole, and no event has occurred or circumstance exists that may result in such a material adverse change; provided, however, that (a) any change reflected in the Company’s 10-Q filings for the fiscal quarters ended December 31, 2002 or March 31, 2003 or any other information disclosed to the Purchasers (or known to the Purchasers) on or before July 14, 2003, and (b) the filing of the Chapter 11 Cases or the consummation of the Plan shall not be deemed a material adverse change.

4.6.         Compliance with Legal Requirements; Governmental Authorizations.  Except as set forth in the Filed SEC Reports, the Disclosure Statement or Schedule 4.6:

(i)            each Magellan Company is, and at all times since January 1, 1999 has been, in substantial compliance with each Legal Requirement that is or was applicable to it or to the conduct or operation of its business or the ownership, possession or use of any of its assets and each Governmental Authorization held by it, except where the failure to do so would not be reasonably likely to have a Material Adverse Effect; and

(ii)           no Magellan Company has received, at any time since January 1, 1999, any notice or other written communication from any Governmental Body or any other Person regarding (A) any actual, alleged, possible or potential violation of, or failure to comply with, any Legal Requirement or any Governmental Authorization, or (B) any actual, alleged, possible or potential obligation on the part of any Magellan Company to undertake, or to bear all or any portion of the cost of, any remedial action of any nature, other than as filed in the Chapter 11 Cases, which violation, failure to comply or obligation would be reasonably likely to have a Material Adverse Effect.

4.7.         Legal Proceedings.

(a)           Except as set forth in the Filed SEC Reports, the Disclosure Statement or Schedule 4.7, there is no pending Proceeding, other than the Chapter 11 Cases:

(i)            that has been commenced by or against any Magellan Company or that otherwise relates to or may affect the business of, or any of the assets owned or used by, any Magellan Company;

(ii)           that challenges, or that may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions; or

(iii)          against any director or officer of any of the Magellan Companies pursuant to Section 8A or 20(b) of the Securities Act or Section 21(d) or 21C of the Exchange Act;

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in each of (i), (ii) or (iii), which, if adversely determined, would be reasonably likely to have a Material Adverse Effect.

(b)           The Proceedings set forth in the Filed SEC Reports, the Disclosure Statement or Schedule 4.7 will not have a Material Adverse Effect.

4.8.         Brokers or Finders.  Except as set forth in the Filed SEC Reports or the Disclosure Statement, neither any Magellan Company nor any of their respective agents has incurred any obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payment in connection with this Agreement or the Contemplated Transactions.

4.9.         Disclosure.  All written information and other materials concerning the Magellan Companies and the Plan (the “Information”) which has been, or is hereafter, prepared by, or on behalf of, the Company and delivered to any Purchaser, including, without limitation, the Disclosure Statement, is, or when delivered will be, when considered as a whole, complete and correct in all material respects and does not, or will not when delivered, contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading in light of the circumstances under which such statement has been made and (ii) to the extent that any such Information contains projections, such projections were prepared in good faith on the basis of (A) assumptions, methods and tests which were believed by the Company to be reasonable and (B) information believed by the Company to have been accurate based upon the information available to the Company, in each case, at the time such projections were furnished to such Purchaser.

4.10.       SEC Reports; Financial Statements.

(a)           The Company has on a timely basis (taking into account extensions) filed all forms, reports and documents required to be filed by it with the SEC since September 30, 2000.  Schedule 4.10 lists and the Company has made available to the Purchasers copies in the form filed with the SEC of all of the following, except to the extent available in full without redaction on the SEC’s web site through the Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”) two days prior to the date of this Agreement:  (i) the Company’s Annual Reports on Form 10-K for each fiscal year of the Company beginning since September 30, 2000 and the Company’s Transition Report on Form 10-K for the transition period from October 1, 2002 to December 31, 2002, (ii) its Quarterly Reports on Form 10-Q for each of the first three fiscal quarters in each of the fiscal years of the Company referred to in clause (i) above, (iii) all proxy statements relating to the Company’s meetings of stockholders (whether annual or special) held, and all information statements relating to stockholder consents, since the beginning of the first fiscal year referred to in clause (i) above, (iv) its Current Reports on Form 8-K filed since the beginning of the first fiscal year referred to in clause (i) above, (v) all other forms, reports, registration statements and other documents (other than preliminary materials if the corresponding definitive materials have been provided to the Purchasers pursuant to, or are available through EDGAR as contemplated by, this Section 4.10) filed by the Company with the SEC since the beginning of the first fiscal year referred to in clause (i) above (the forms, reports, registration statements and other documents referred to in clauses (i), (ii), (iii), (iv) and (v) above, whether or not available through EDGAR, are, collectively, the “SEC Reports” and, to

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the extent available in full without redaction on the SEC’s web site through EDGAR two days prior to the date of this Agreement, are, collectively, the “Filed SEC Reports”), (vi) all certifications and statements required by (x) the SEC’s Order dated June 27, 2002 pursuant to Section 21(a)(1) of the Exchange Act (File No. 4-460), (y) Rule 13a-14 or 15d-14 under the Exchange Act, or (z) 18 U.S.C. §1350 (Section 906 of the Sarbanes-Oxley Act of 2002) with respect to any report referred to in clause (i) or (ii) above (collectively, the “Certifications”), and (vii) all comment letters received by the Company from the Staff of the SEC since January 1, 2003 and all responses to such comment letters by or on behalf of the Company.  The SEC Reports (x) were or will be prepared in accordance with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder and (y) did not at the time they were filed with the SEC, or will not at the time they are filed with the SEC, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.  The Certifications are each true and correct.  No Subsidiary of the Company is or has been required to file any form, report, registration statement or other document with the SEC.  The Magellan Companies maintain disclosure controls and procedures required by Rule 13a-15 or 15d-15 under the Exchange Act; such controls and procedures are effective to ensure that all material information concerning the Magellan Companies is made known on a timely basis to the individuals responsible for the preparation of the Company’s filings with the SEC and other public disclosure documents.  As used in this Section 4.10, the term “file” shall be broadly construed to include any manner in which a document or information is furnished, supplied or otherwise made available to the SEC (regardless of whether public or confidential).

(b)           The financial statements of the Company and its subsidiaries included in the SEC Reports (including the related notes) complied as to form, as of their respective dates of filing with the SEC, in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto (including, without limitation, Regulation S-X), have been prepared in accordance with GAAP (except, in the case of unaudited statements, to the extent permitted by Regulation S-X for Quarterly Reports on Form 10-Q) applied on a consistent basis during the periods and at the dates involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial condition of the Company and its subsidiaries at the dates thereof and the consolidated results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to notes and normal year-end audit adjustments that were not material in amount or effect).  The Company has delivered to the Purchasers copies of the documentation creating or governing, all securitization transactions and “off-balance sheet arrangements” (as defined in Item 303(c) of Regulation S-K of the SEC) effected by the Company or its subsidiaries since September 30, 2000.  No financial statements of any Person other than the Magellan Companies are required by GAAP to be included in the consolidated financial statements of the Company.

5.             Representations and Warranties of the Purchasers.  Each Purchaser, severally and not jointly, hereby represents and warrants as follows:

5.1.         Organization of such Purchaser.  In the event such Purchaser is a corporation, partnership or limited liability company, such Purchaser is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization

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(as applicable), with full corporate, partnership or limited liability company (as applicable) power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use and to perform all its obligations under any Contract to which it is a party.

5.2.         Authority; No Conflict.

(a)           The execution, delivery and performance of this Agreement has been duly authorized by all necessary action on the part of such Purchaser.  This Agreement constitutes the legal, valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms.  Such Purchaser has the absolute and unrestricted right, power and authority to execute and deliver this Agreement and to perform its obligations hereunder.

(b)           Except as set forth in Schedule 5.2, the execution and delivery of this Agreement will not, directly or indirectly (with or without notice or lapse of time):

(i)            contravene, conflict with, or result in a violation of (1) any provision of the Organizational Documents of such Purchaser, if applicable, or (2) any resolution adopted by the board of directors (or similar governing body) or the stockholders of such Purchaser; or

(ii)           contravene, conflict with, or result in a violation of, or give any Governmental Body or other Person the right to challenge this Agreement or to exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which such Purchaser, or any of the assets owned or used by such Purchaser, may be subject.

Except as set forth in Schedule 5.2 and except for Consents which have been obtained and notices which have been given, such Purchaser is not and will not be required to give any notice to or obtain any Consent from any Person in connection with the execution and delivery by such Purchaser of this Agreement.

5.3.         Shares Not Registered.  Such Purchaser understands that the Shares have not been registered under the Securities Act.  Such Purchaser also understands that the Common Stock is being offered and sold pursuant to an exemption from registration contained in the Securities Act, based in part upon such Purchaser’s representations contained in this Agreement and cannot be sold unless subsequently registered under the Securities Act or an exemption is available.

5.4.         Economic Risk.  Such Purchaser understands that this is a highly speculative investment with a substantial risk of loss of such Purchaser’s entire investment.  Such Purchaser is in a position to bear the economic risk of such loss.  Such Purchaser understands that it has no registration rights with respect to the Shares except as provided in the Registration Rights Agreement.  Such Purchaser also understands that, even if available, such exemption may not allow it to transfer all or any portion of the Shares, if any, under the circumstances, in the amount or at the times it might propose.

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5.5.         Acquisition for Own Account.  Such Purchaser is acquiring the Shares for its own account for investment and not with a present view toward distribution as such term is defined in Section 2(a)(11) of the Securities Act.

5.6.         Ability to Protect Own Interests.  Such Purchaser represents that by reason of its business or financial experience, or the business and financial experience of its management, it has the capacity to protect its own interests in connection with the Contemplated Transactions.  Such Purchaser was not formed for the specific purpose of consummating this transaction.

5.7.         Accredited Investor.  Such Purchaser represents that it is an “accredited investor” as that term is defined in Regulation D promulgated under the Securities Act.

5.8.         Access to Information.  Such Purchaser has been given access to all Company documents, records, and other information, has received physical delivery of all those which it has requested, and has had adequate opportunity to ask questions of, and receive answers from, the Company’s officers, employees, agents, accountants, and representatives concerning the Company’s business, operations, financial condition, assets, liabilities, and all other matters relevant to its investment in the Shares.

5.9.         Brokers or Finders.  Such Purchaser has not, and its agents have not, incurred any obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payment in connection with this Agreement, for which the Company may be liable.

5.10.       Legal Proceedings.  Except as filed in the Chapter 11 Cases, there is no pending Proceeding against such Purchaser that challenges, or that may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement, which, if adversely determined, would be reasonably likely to have a Material Adverse Effect on the ability of such Purchaser to consummate the transactions contemplated by this Agreement.

6.             Registration, Transfer and Substitution of Certificates for Common Stock.

6.1.         Stock Register; Ownership of Stock.  (a)The Company will keep at its principal office, or will cause its registrar to keep at such registrar’s principal office a register in which the Company will provide for the registration of the MVS Securities and the registration of transfers of the MVS Securities.  The Company may treat the Person in whose name any of the Shares are registered on such register as the owner thereof and the Company shall not be affected by any notice to the contrary.  All references in this Agreement to a “holder” of any MVS Securities shall mean the Person in whose name such MVS Securities are at the time registered on such register.

(b)           Upon the surrender of any certificate for MVS Securities, properly endorsed, for registration of transfer or for conversion at the office of the Company or the

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Company’s registrar maintained pursuant to subdivision (a) of this Section 6.1, the Company at its expense will (subject to compliance with Section 6.2, if applicable) execute and deliver to or upon the order of the holder thereof (i) a new certificate or certificates for the same aggregate number of shares of  less the number of shares of MVS Securities being converted, if any, in the name of such holder or as such holder (upon payment by such holder of any applicable transfer taxes) may direct, and/or (ii) a certificate or certificates for the number of shares of Ordinary Common Stock to be issued upon conversion of the MVS Securities so surrendered.

6.2.         Replacement of Certificates.  Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any certificate representing shares of MVS Securities or Ordinary Common Stock issued upon the conversion of shares of MVS Securities and, in the case of any such loss, theft or destruction of any certificate representing shares of MVS Securities or Ordinary Common Stock issued upon the conversion of shares of MVS Securities, upon delivery of indemnity reasonably satisfactory to the Company in form and amount or, in the case of any such mutilation, upon surrender of such certificate representing shares of MVS Securities or Ordinary Common Stock issued upon the conversion of shares of MVS Securities for cancellation at the office of the Company or the Company’s registrar maintained pursuant to subdivision (a) of Section 6.1, the Company at its expense will execute and deliver, in lieu thereof, a new certificate representing shares of MVS Securities or Ordinary Common Stock of like tenor.

6.3.         Restrictive Legends.  Except as otherwise permitted by this Section 6, each certificate for MVS Securities (including each certificate for MVS Securities issued upon the transfer of any certificate for MVS Securities) shall be stamped or otherwise imprinted with a legend in substantially the following form:

“The shares represented by this Certificate and any shares of Ordinary Common Stock issuable upon conversion of any such shares have not been registered under the Securities Act of 1933 and may not be transferred in the absence of such registration or an exemption therefrom under such Act.”

Except as otherwise permitted by this Section 6, each certificate for Ordinary Common Stock issued upon the conversion of any of the MVS Securities, and each certificate issued upon the transfer of any such Ordinary Common Stock, shall be stamped or otherwise imprinted with a legend in substantially the following form:

“The shares represented by this certificate have not been registered under the Securities Act of 1933 and may not be transferred in the absence of such registration or an exemption therefrom under such Act.”

6.4.         Notice of Proposed Transfer; Opinions of Counsel.  Prior to any transfer of any Restricted Securities which are not registered under an effective registration statement under the Securities Act, the holder thereof will give written notice to the Company of such holder’s intention to effect such transfer and to comply in all other respects with this Section 6.4.  Each such notice shall describe the manner and circumstances of the proposed transfer and shall be accompanied by an opinion of counsel for such holder reasonably satisfactory to the Company that the proposed transfer may be effected without registration of

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such shares of Restricted Securities under the Securities Act.  Such holder shall thereupon be entitled to transfer such shares in accordance with the terms of the notice delivered by such holder to the Company.  Each certificate representing such shares issued upon or in connection with such transfer shall bear the restrictive legends required by Section 6.3, unless the related restrictions on transfer shall have ceased and terminated as to such shares pursuant to Section 6.5.

6.5.         Termination of Restrictions.  The restrictions imposed by this Section 6 upon the transferability of Restricted Securities shall cease and terminate as to any particular Restricted Securities (a) when such securities shall have been effectively registered under the Securities Act, or (b) when, in the opinion of counsel for the holder thereof, reasonably satisfactory to the Company, such restrictions are no longer required in order to insure compliance with the Securities Act. Whenever such restrictions shall cease and terminate as to any Restricted Securities, the holder thereof shall be entitled to receive from the Company, without expense (other than applicable transfer taxes, if any), new certificates for such securities of like tenor not bearing the applicable legends required by Section 6.3.

7.             Covenants Prior to Closing Date.

7.1.         Access and Investigation.  Between the date of this Agreement and the Closing Date, the Company will, and will cause each Magellan Company and their respective Representatives to, (a) afford the Purchasers and their Representatives reasonable access to each Magellan Company’s properties, Contracts, books and records and other documents and data, (b) furnish the Purchasers and their Representatives with copies of all such Contracts, books and records, and other existing documents and data as the Purchasers or their Representatives may reasonably request, (c) furnish the Purchasers and/or their Representatives with such additional financial, operating and other data and information as any Purchaser or any of their Representatives may reasonably request and (d) make available to the Purchasers and their Representatives, upon reasonable advance notice and during normal business hours, the officers of each Magellan Company as the Purchasers and/or their Representatives may reasonably request; provided, that such availability shall not interfere with the normal operations of such Magellan Company.

7.2.         Operation of Business.  Between the date of this Agreement and the Effective Date, the Company will, and will cause each Magellan Company to:

(a)           conduct the business of the Magellan Companies only in the Ordinary Course of Business and in compliance with all Legal Requirements; and

(b)           use their commercially reasonable best efforts to preserve intact the Magellan Companies’ business and the current business organization of the Magellan Companies, keep available the services of the current officers, employees and agents of the Magellan Companies, and maintain the relations and goodwill with suppliers, customers, landlords, creditors, employees, agents and others having business relationships with the Magellan Companies.

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7.3.         Negative Covenants.  Except as otherwise expressly permitted by this Agreement or as contemplated by the Plan, between the date of this Agreement and the Effective Date, the Company will not, and each will cause each Magellan Company not to, without the prior consent of a Majority in Interest (which, in the case of paragraph (f) below, shall not be unreasonably withheld in connection with the settlement of claims related to the Chapter 11 Cases):

(a)           amend the Organizational Documents of any Magellan Company;

(b)           except in the Ordinary Course of Business, pay or increase any bonuses, salaries, or other compensation to any stockholder, director, officer, or employee or enter into any employment, severance or similar Contract with any director, officer or employee;

(c)           except in the Ordinary Course of Business, adopt, amend or increase the payments to or benefits under, any profit sharing, bonus, deferred compensation, savings, insurance, pension, retirement or other employee benefit plan for or with any employees of any Magellan Company;

(d)           [except in the Ordinary Course of Business, enter into or terminate (i) any license, joint venture, credit, or similar agreement, or (ii) any Contract or transaction involving a total remaining commitment by or to any Magellan Company of at least $          ;]

(e)           sell (other than sales or other dispositions of equipment deemed surplus, obsolete or no longer necessary to the business of any Magellan Company), lease or otherwise dispose of any material asset or property of any Magellan Company or mortgage, pledge or impose any Encumbrance on any material asset or property of any Magellan Company;

(f)            cancel or waive any claims or rights with a value to any Magellan Company in excess of $          ;

(g)           materially change the accounting, actuarial, reserving, underwriting or claims administration or servicing policies, practices or procedures, standards, methods, assumptions or principles of the Magellan Companies;

(h)           make any capital expenditure commitment [other than capital expenditure commitments not in excess of $           for individual items and not in excess of $           in the aggregate];

(i)            pay, discharge or satisfy any Company Indebtedness other than the payment, discharge or satisfaction of such Company Indebtedness upon maturity or when otherwise due, other than Company Indebtedness not in excess of $           in the aggregate;

(j)            incur any Company Indebtedness in excess of $           in the aggregate;

(k)           settle any litigation on a basis that provides for material liability to any Magellan Company after the Effective Date, that imposes any material restrictions on any Magellan Company after the Effective Date or that includes a finding or admission of any

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violation of any Legal Requirement or violation of the rights of any Person by any Magellan Company or that may have an effect on other claims that might be made against any Magellan Company;

(l)            organize any subsidiary (other than a wholly-owned subsidiary) or acquire any material interest in any Person or any material equity or ownership interest in any business; or

(m)          enter into any agreement to do any of the foregoing.

7.4.         Consents.  Each Purchaser and the Company shall use (and the Company shall cause its Subsidiaries to use) their commercially reasonable best efforts to obtain at the earliest practicable date all consents and approvals required to consummate the Contemplated Transactions, including, without limitation, the consents and approvals identified in Schedules 4.4 and 5.2 or otherwise required as a condition to Closing pursuant to Section 3.10 or 3.11.

7.5.         Regulatory Approval.

(a)           Each of the Purchasers and the Company (if necessary) shall (a) make or cause to be made all filings required of each of them or any of their respective Subsidiaries or Affiliates under the HSR Act or other Antitrust Laws with respect to the Contemplated Transactions as promptly as practicable and, in any event, within ten (10) Business Days after the date of this Agreement in the case of all filings required under the HSR Act and within four (4) weeks in the case of all other filings required by other Antitrust Laws, (b) comply at the earliest practicable date with any request under the HSR Act or other Antitrust Laws for additional information, documents, or other materials received by each of them or any of their respective Subsidiaries from the FTC, the Antitrust Division or any other Governmental Body in respect of such filings or such transactions, and (c) cooperate with each other in connection with any such filing and in connection with resolving any investigation or other inquiry of any of the FTC, the Antitrust Division or other Governmental Body under any Antitrust Laws with respect to any such filing or any such transaction.  Each such party shall use its commercially reasonable best efforts to furnish to each other all information required for any application or other filing to be made pursuant to any applicable law in connection with the Contemplated Transactions.  Each such party shall promptly inform the other parties hereto of any oral communication with, and provide copies of written communications with, any Governmental Body regarding any such filings or any such transaction.  No party hereto shall independently participate in any formal meeting with any Governmental Body in respect of any such filings, investigation, or other inquiry without giving the other parties hereto prior notice of the meeting and, to the extent permitted by such Governmental Body, the opportunity to attend and/or participate.  Subject to applicable law, the parties hereto will consult and cooperate with one another in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any party hereto relating to proceedings under the HSR Act or other Antitrust Laws.  Any party may, as it deems advisable and necessary, reasonably designate any competitively sensitive material provided to the other parties under this Section 7.5 as “outside counsel only.”  Such materials and the information contained therein shall be given only to the outside legal counsel of the recipient and

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will not be disclosed by such outside counsel to employees, officers, or directors of the recipient, unless express written permission is obtained in advance from the source of the materials;

(b)           Each of the Purchasers and the Company shall use its commercially reasonable best efforts to resolve such objections, if any, as may be asserted by any Governmental Body with respect to the Contemplated Transactions under the HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and any other United States federal or state or foreign statutes, rules, regulations, orders, decrees, administrative or judicial doctrines or other laws that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade (collectively, the “Antitrust Laws”).  In connection therewith, if any Proceeding is instituted (or threatened to be instituted) challenging any transaction contemplated by this Agreement as in violation of any Antitrust Law, each of the Purchasers and the Company shall cooperate and use its commercially reasonable best efforts to contest and resist any such Proceeding, and to have vacated, lifted, reversed, or overturned any decree, judgment, injunction or other order whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents, or restricts consummation of the Contemplated Transactions, including by pursuing all available avenues of administrative and judicial appeal and all available legislative action, unless, by mutual agreement, the Purchasers and the Company decide that litigation is not in their respective best interests.  Each of the Purchasers and the Company shall use its commercially reasonable best efforts to take such action as may be required to cause the expiration of the notice periods under the HSR Act or other Antitrust Laws with respect to such transactions as promptly as possible after the execution of this Agreement.  In connection with and without limiting the foregoing, each of the Purchasers and the Company agrees to use its commercially reasonable best efforts to take promptly any and all steps necessary to avoid or eliminate each and every impediment under any Antitrust Laws that may be asserted by any Federal, state and local and non-United States antitrust or competition authority, so as to enable the parties to close the Contemplated Transactions as expeditiously as possible.  Notwithstanding anything to the contrary contained herein, no Purchaser (or its “ultimate parent entity”) shall be required to dispose of any assets or any portion of its business or make any change to its business, expend any material funds (other than filing fees) or incur any other material burden in order to comply with this Section 7.5.

7.6.         Reasonable Best Efforts.  Between the date of this Agreement and the Closing Date, the parties hereto will use their commercially reasonable best efforts to cause the conditions in Section 3 to be satisfied.

8.             Termination.

8.1.         Termination Events.  This Agreement may terminate upon the occurrence of any of the following events (each a “Termination Event”):

(i)            the mutual consent of the Company and a Majority in Interest;

(ii)           the Confirmation Order shall not have been entered by the Bankruptcy Court on or before November 15, 2003;

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(iii)          the Effective Date shall not have occurred on or before December 15, 2003;

(iv)          a trustee, responsible officer, or an examiner with powers beyond the duty to investigate and report, as set forth in subclauses (3) and (4) of clause (a) of Section 1106 of the Bankruptcy Code shall have been appointed under Section 1104 or 105 of the Bankruptcy Code for service in the Chapter 11 Cases;

(v)           the Chapter 11 Cases shall have been converted to cases under Chapter 7 of the Bankruptcy Code;

(vi)          the Company shall have breached any material provision of this Agreement and (A) a Majority in Interest shall have provided written notice to the Company that (1) the Company has breached a material provision of this Agreement and (2) sets forth the provisions of this Agreement that have been breached; provided that the Company hereby agrees to waive the requirement (if any) that the Automatic Stay be lifted in connection with giving such notice (and not to object to any Purchaser seeking to lift the Automatic Stay in connection with giving such notice, if necessary), and (B) a ten (10) day cure period with respect to such breach shall have occurred and such breach shall remain uncured;

(vii)         the failure or nonoccurrence of any condition set forth in Section 3;

(viii)        the Plan is modified to provide for any terms that are materially adverse to the Purchasers or are materially inconsistent with the terms and provisions of the Plan or this Agreement; or

(ix)           the Company (i) submits an additional or further amended plan of reorganization or liquidation that is materially adverse to the Purchasers or is materially inconsistent with the terms and provisions of the Plan or this Agreement or (ii) moves to withdraw or withdraws the Plan.

8.2.         Effect of Termination Events.  This Agreement shall terminate automatically without the act of any party to this Agreement upon the occurrence of any of the Termination Events, unless (x) the occurrence of such Termination Event is waived in writing within five (5) business days of its occurrence by a Majority in Interest.  Notwithstanding the foregoing, the provisions of Sections 10, 11, 13, 16 and 17 shall survive any termination of this Agreement.

9.             Definitions.

9.1.         Certain Defined Terms.  As used in this Agreement the following terms have the following respective meanings:

Affiliate:  With reference to any Person, a spouse of such Person, any relative (by blood, adoption or marriage) of such Person within the second degree, any director, officer or

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employee of such Person or any of its Affiliates, any other Person of which such Person is a member, director, officer or employee, and any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person.

Amended Commitment Letter:  The Amended Funding Commitment Letter dated July 14, 2003 from Onex Corporation to the Company.

Amended Term Sheet:  The Term Sheet accompanying the Amended Commitment Letter.

Antitrust Laws:  As defined in Section 7.5(b) of this Agreement.

Automatic Stay:  The automatic stay in effect pursuant to Section 362 of the Bankruptcy Code.

Balance Sheet:  The audited consolidated balance sheet of the Company and its Subsidiaries at December 31, 2002.

Business Day:  A day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close.

Capitalized Lease Obligations:  An obligation to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real and/or personal property which obligation is required to be classified and accounted for as a capital lease on a balance sheet prepared in accordance with GAAP, and for purposes hereof the amount of such obligation shall be the capitalized amount thereof determined in accordance with GAAP.

Certifications:  As defined in Section 4.10 of this Agreement.

Chapter 11 Cases:  The Chapter 11 Cases jointly administered as Case No. 03-40515 (PCB) in the United States Bankruptcy Court for the Southern District of New York, In re Magellan Health Services, et al., Debtors.

Closing:  As defined in Section 2 of this Agreement.

Closing Date:  The date of the Closing.

Commitment Letter:  The Funding Commitment Letter dated as of May 27, 2003 from Onex Corporation to the Company.

Company:  As defined in the introduction to this Agreement, and refers to both the Company as the parent debtor or debtor in possession, and as reorganized as of the Effective Date in accordance with the Plan, as the context requires.

Company Indebtedness:  (i) all obligations of the Magellan Companies for borrowed money, (ii) all obligations of the Magellan Companies evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of the Magellan Companies to pay the deferred purchase price of property or services, except current trade accounts payable

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arising in the Ordinary Course of Business, (iv) all of the Magellan Companies’ Capitalized Lease Obligations and (v) all obligations of the Magellan Companies to reimburse or repay any bank or other Person in respect of amounts paid or available to be drawn under a letter of credit or banker’s acceptance (each such obligation to be valued at the face amount of such instrument).

Consent:  Any approval, consent, ratification, waiver or other authorization (including any Governmental Authorization).

Contemplated Transactions:  All of the transactions contemplated by this Agreement and the Plan.

Contract:  Any written agreement, contract, obligation, promise or undertaking that is legally binding.

Definitive Shares:  As defined in Section 1 of this Agreement.

EBITDA:  Earnings before interest, taxes, depreciation and amortization, determined in accordance with GAAP, consistently applied.

EDGAR:  As defined in Section 4.10 of this Agreement.

Encumbrance: Any charge, claim, community property interest, condition, equitable interest, lien, option, pledge, security interest, right of first refusal or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

Exchange Act:  The Securities Exchange Act of 1934, as amended.

Filed SEC Reports:  As defined in Section 4.10 of this Agreement.

GAAP:  Generally accepted accounting principles set forth in the Opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants and in statements by the Financial Accounting Standards Board or in such other statement by such other entity as may be approved by a significant segment of the accounting profession; and the requisite that such principles be applied on a consistent basis shall mean that the accounting principles observed in a current period are comparable in all material respects to those applied in a preceding period.

Governmental Authorization:  Any material approval, consent, license, permit, waiver or other authorization issued, granted, given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement.

Governmental Body:  Any:

(a)           nation, state, county, city, town, village, district or other jurisdiction of any nature;

(b)           federal, state, local, municipal, foreign or other government;

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(c)           governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official or entity and any court or other tribunal);

(d)           multi-national organization or body; or

(e)           body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature.

HSR Act:  As defined in Section 3.11 of this Agreement.

Indemnified Party:  As defined in Section 13 of this Agreement.

Indemnity Claim:  As defined in Section 13 of this Agreement.

Legal Requirement:  Any federal, state, local, municipal, foreign, international, multinational or other administrative order, constitution, law, ordinance, principle of common law, regulation, statute or treaty.

Magellan Companies:  The Company and the Subsidiaries.

Majority in Interest:  At any time, the holders (or prior to the Effective Date, Persons who have agreed to become holders) of a majority, by voting power, of the outstanding Shares and the outstanding shares of Ordinary Common Stock issued upon conversion of any Shares, taken together as a single class.

Material Adverse Effect: means (i) a material adverse effect on the business,

condition (financial or otherwise), operations, performance or properties of the Company and its Subsidiaries (taken as a whole) or (ii) a material adverse effect on the ability of the Company to consummate the Contemplated Transactions.

MVS Securities:  As defined in the Recitals.

Offering Backstop Shares:  As defined in Section 1 of this Agreement.

Order:  Any award, decision, injunction, judgment, order, ruling, subpoena or verdict entered, issued, made, or rendered by any court, administrative agency or other Governmental Body or by any arbitrator.

Ordinary Common Stock:  The Ordinary Common Stock of the Company, par value $.01 per share, from and after the Effective Date.

Ordinary Course of Business:  An action taken by a Person will be deemed to have been taken in the “Ordinary Course of Business” only if:

(a)           such action is consistent with the past practices of such Person and is taken in the ordinary course of the normal day-to-day operations of such Person;

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(b)           such action is not required to be authorized by (i) if such action was taken on or after the Petition Date, the Bankruptcy Court and (ii) if such action was taken prior to the Petition Date, the board of directors of such Person (or by any Person or group of Persons exercising similar authority); and

(c)           such action is similar in nature and magnitude to actions customarily taken, without any authorization by the board of directors (or by any Person or group of Persons exercising similar authority), in the ordinary course of the normal day-to-day operations of other Persons that are in the same line of business, of comparable size in terms of revenue, and similarly closely-held in terms of stock ownership, as such Person.

Organizational Documents:  (a) the articles or certificate of incorporation and the by-laws or code of regulations of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (d) the operating or limited liability company agreement and the certificate of formation of a limited liability company; (e) any charter, joint venture agreement or similar document adopted or filed in connection with the creation, formation or organization of a Person; and (f) any amendment to any of the foregoing.

Partial Cash-Out Share Closing.  As defined in Section 2(c) of this Agreement.

Partial Cash-Out Shares:  As defined in Section 1 of this Agreement.

Petition Date:  March 11, 2003.

Person:  An individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated organization or a government or any department or agency thereof.

Plan:  The Debtors’ Third Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, as filed in the Chapter 11 Cases on [August 18], 2003.

Proceeding:  Any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, investigative or informal) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Body or arbitrator.

Purchaser(s).  As defined in the introduction to this Agreement.

Representative:  With respect to a particular Person, any director, officer, employee, agent, consultant, advisor or other representative of such Person, including legal counsel, accountants and financial advisors.

Restricted Securities:  All of the following: (a) any shares of MVS Securities which are evidenced by a certificate or certificates bearing the applicable legend or legends referred to in Section 6.3, (b) any shares of Ordinary Common Stock which have been issued upon the conversion of any of the MVS Securities and which are evidenced by a certificate or certificates bearing the applicable legend or legends referred to in Section 6.3 and (c) unless the context otherwise requires, any shares of Ordinary Common Stock which are at the time issuable

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upon the conversion of MVS Securities and which, when so issued, will be evidenced by a certificate or certificates bearing the applicable legend or legends referred to in Section 6.3.

SEC:  The U.S. Securities and Exchange Commission.

SEC Reports:  As defined in Section 4.10 of this Agreement.

Securities Act:  The Securities Act of 1933, as amended.

Share Percentage.  As defined in Section 2(a) of this Agreement.

Shares:  As defined in Section 1 of this Agreement.

Subsidiary:  With respect to any Person (the “Owner”), any corporation or other Person of which securities or other interests having the power to elect a majority of that corporation’s or other Person’s board of directors or similar governing body, or otherwise having the power to direct the business and policies of that corporation or other Person (other than securities or other interests having such power only upon the happening of a contingency that has not occurred), are held by the Owner or one or more of its Subsidiaries.

Termination Event.  As defined in Section 8.1 of this Agreement.

Term Sheet:  The Term Sheet accompanying the Commitment Letter.

Any of the above-defined terms may, unless the context otherwise requires, be used in the singular or plural depending on the reference.

9.2.         Accounting Terms.  As used in this Agreement, and in any certificate, report or other document made or delivered pursuant to this Agreement, accounting terms not defined in Section 9.1 and accounting terms partly defined in said Section 9.1 to the extent not defined, shall have the respective meanings given to them under GAAP.

9.3.         Other Provisions Regarding Definitions.  (a)  Capitalized terms used but not defined herein have the meanings set forth in the Plan.

(b)           Unless otherwise defined therein, all terms defined in this Agreement shall have the defined meanings when used in any certificate, report or other document made or delivered pursuant to this Agreement.

(c)           The words “hereof”, “herein”, and “hereunder and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

10.          Expenses.  The Company shall reimburse the Purchasers for all reasonable and documented out-of-pocket expenses incurred by the Purchasers after February 14, 2003 directly related to the negotiation, preparation, execution and delivery of this Agreement, the Commitment Letter, the Amended Commitment Letter, the Term Sheet, and the Amended Term Sheet with respect to the Contemplated Transactions and any and all definitive

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documentation or other acts relating hereto or thereto, including, but not limited to, the actual reasonable fees and expenses of counsel, accountants and/or consultants to the Purchasers and the fees and expenses incurred by the Purchasers in connection with any due diligence (including fees and expenses payable to consultants); provided that such expenses shall not exceed $1,200,000, plus any expenses incurred in connection with obtaining the necessary state regulatory approvals in connection with the Contemplated Transactions.

11.          Commitment Fee.  As a commitment fee for entering into the Amended Commitment Letter and causing certain of its Affiliates to enter into this Agreement, Onex Corporation , the parent company of certain of the Purchasers, is entitled to receive a fee (the “Commitment Fee”) equal to 1.75% of the aggregate purchase price for all of the Shares by all of the Purchasers.  Pursuant to the terms of the Amended Commitment Letter and the Amended Term Sheet, Onex Corporation has previously received an initial payment of $1,750,000.00 (the “Initial Installment”) of the Commitment Fee.  The remainder of the Commitment Fee (up to $1,750,000.00) shall be payable solely upon the Closing, and shall be paid on the Closing Date if the Closing occurs.  In the event the Closing occurs and the total Commitment Fee calculated based upon the actual amount of the aggregate purchase price for all of the Shares by all of the Purchasers is less than $1,750,000.00, then Onex Corporation will pay to the Company on the Closing Date the difference between $1,750,000.00 and the actual amount of the Commitment Fee.  Except as set forth in the previous sentence, the Initial Installment shall be non-refundable, regardless of whether the Closing occurs.

12.          Survival of Representations and Warranties.  All representations and warranties contained in this Agreement or made in writing by or on behalf of the Company to the Purchasers in connection with the Contemplated Transactions shall survive the execution and delivery of this Agreement, any investigation at any time made by any Purchaser or on any Purchaser’s behalf, the purchase of the Shares by the Purchasers under this Agreement and any conversion of any of the MVS Securities or any disposition of any shares of MVS Securities or Ordinary Common Stock issued upon conversion of any of the MVS Securities.  All statements contained in any certificate or other instrument delivered by or on behalf of the Company to any of the Purchasers or their Representatives pursuant to this Agreement shall be deemed representations and warranties of the Company under this Agreement.  For the avoidance of doubt, this Agreement shall be assumed by the Company pursuant to Section 8.1 of the Plan.

13.          Indemnification.

13.1.       Indemnification by the Company.  Excluding any Indemnity Claim (as defined herein) arising solely from an Indemnified Party’s (as defined herein) breach of this Agreement or breach of any other agreements between an Indemnified Party and the Company, the Company agrees to indemnify and hold harmless the Purchasers and their Affiliates, directors, officers, partners, members, employees, agents and assignees (including Affiliates thereof) (each an “Indemnified Party”) from and against any and all losses, claims, damages (including, without limitation, diminution in value of the Shares), liabilities or other expenses to which such Indemnified Party may become subject, insofar as such losses, claims, damages, liabilities (or actions or other proceedings commenced or threatened in respect thereof) or other expenses arise out of or in any way relate to or result from this Agreement, the Amended Commitment Letter or the Amended Term Sheet, including, without limitation, as a result of any

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breach by the Company of any representation, warranty, covenant or agreement contained herein or therein, or in any way arise from any use or intended use of this Agreement, the Amended Commitment Letter, the Amended Term Sheet or the proceeds of the purchase of the Shares, and the Company agrees to reimburse (on an as-incurred monthly basis) each Indemnified Party for any legal or other expenses incurred in connection with investigating, defending or participating in any such loss, claim, damage, liability or action or other proceeding (whether or not such Indemnified Party is a party to any action or proceeding out of which indemnified expenses arise), but excluding therefrom all expenses, losses, claims, damages and liabilities that are finally determined in a non-appealable decision of a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of such Indemnified Party (each, an “Indemnity Claim”).  In the event of any litigation or dispute involving this Agreement, the Amended Commitment Letter and/or the Amended Term Sheet, the Purchasers shall not be responsible or liable to the Company or any other Person for any special, indirect, consequential, incidental or punitive damages.  The obligations of the Company under this Section 13 shall remain effective whether or not any of the Contemplated Transactions are consummated and notwithstanding any termination of this Agreement and shall be binding upon the Company, and any successor-in-interest to the Company, in the event that the Plan or any alternative plan of reorganization of the Company is consummated.

13.2.       Limitations on Indemnification for Breaches of Representations and Warranties.

(a)           Notwithstanding anything herein to the contrary, any Indemnified Party must give written notice to the Company, in reasonable detail, prior to the expiration of the second anniversary of the Closing Date, of any claim for indemnification pursuant to Section 13.1 as a result of any breach by the Company of any representation or warranty.  Any claim for indemnification pursuant to Section 13.1 as a result of any breach by the Company of any representation or warranty, which claim is not made by an Indemnified Party on or prior to that date will be irrevocably and unconditionally released and waived.

(b)           No representation or warranty of the Company or any Purchaser contained herein shall be deemed untrue or incorrect, and none of the Company or any Purchaser shall be deemed to have breached a representation or warranty, as a consequence of the existence of any fact, circumstance or event (a) which is disclosed in response to another representation or warranty contained in this Agreement, to the extent the applicability of such disclosure to such other representation and warranty is reasonably apparent on the face of such disclosure, or (b) of which Robert LeBlanc or Michael Kahan is actually aware, without any duty to investigate, as of the Closing Date.

14.          Amendments and Waivers.  Any term of this Agreement may be amended or modified and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and a Majority in Interest.

15.          Notices, etc.  Except as otherwise provided in this Agreement, notices and other communications under this Agreement shall be in writing and shall be delivered, mailed by first-class mail, postage pre-paid or sent by facsimile, addressed, (a) if to a Purchaser, at the

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address set forth in Schedule 1 or at such other address as such Purchaser shall have furnished to the Company in writing, or (b) if to the Company at 6950 Columbia Gateway Drive, Columbia, MD 21046, Attn:  Megan Arthur, Esq., Corporate Executive Vice President and General Counsel, Fax: (410) 953-4715, with a copy to Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York  10153, Attn:  Stephen Karotkin, Esq., Fax:  (212) 310-8007, or at such other address, or to the attention of such other officer, as the Company shall have furnished to each Purchaser in writing.  Each such notice, request or other communication shall be effective (i) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, (ii) if sent by facsimile, when sent and receipt is telephonically confirmed or (iii) if given by any other means (including, without limitation, by air courier), when delivered at the address specified above.

16.          Press Releases.  The Company shall not issue any press release that references any Purchaser or the purchase of the Shares without the consent of such Purchaser, which consent shall not be unreasonably withheld; provided, however, that if the Company has provided such Purchaser with a copy of the press release, and such Purchaser has not responded within four (4) Business Day hours, the Company may proceed with issuance of the press release.

17.          Confidential Information.  For the purposes of this Section 17, “Confidential Information” means information delivered to any Purchaser by or on behalf of the Company or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature, whether in oral, written, graphic, model or machine readable form, provided that such term does not include information that (a) was publicly known or otherwise known to such Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by such Purchaser or any person acting on behalf thereof, or (c) otherwise becomes known to such Purchaser other than through disclosure by the Company or any Subsidiary or any other Person in violation of a confidentiality obligation to the Company known to such Purchaser.  For a period of three (3) years following the date of this Agreement, each Purchaser will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by it in good faith to protect confidential information of third parties delivered to it, provided that the Purchasers may deliver or disclose Confidential Information to (i) their respective directors, officers, employees, agents, accountants, attorneys, partners, members and Affiliates (to the extent such disclosure reasonably relates to the administration or evaluation of the investment represented by the Shares purchased by such Purchaser) who have agreed to hold confidential the Confidential Information, (ii) the financial advisors and other professional advisors to such Purchaser who are instructed and have agreed to hold confidential the Confidential Information, (iii) any Person from which such Purchaser offers to purchase any security of the Company, to the extent required by law, (iv) any federal or state regulatory authority having jurisdiction over such Purchaser, to the extent required by law or (v) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or order applicable to such Purchaser, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which such Purchaser is a party or (z) to the extent such Purchaser may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement of or for the protection of the rights and remedies under this Agreement.  The provisions of this Section 17 shall expire upon the Closing.  Notwithstanding

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the foregoing, each party to the transaction (and each employee, representative, or other agent of each such party) may disclose to any and all Persons, without limitations of any kind, the tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to the party relating to such tax treatment and tax structure; provided, however, that the foregoing permission to disclose the tax treatment and tax structure does not permit the disclosure of any information that is not relevant to understanding the tax treatment or tax structure of the transaction; provided, further, however, that the tax treatment and tax structure shall be kept confidential to the extent necessary to comply with federal or state securities laws.  In addition, no party is subject to any restriction concerning its consulting with its tax advisers regarding the tax treatment or tax structure of the transaction at any time.

18.          Miscellaneous.

18.1.       Successors and Assigns.  All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder of shares of MVS Securities or Ordinary Common Stock into which the shares of MVS Securities have been converted) whether so expressed or not.

18.2.       Assignments, Successors, and No Third-Party Rights.  No party may assign any of its rights under this Agreement without the prior consent of the other parties, which will not be unreasonably withheld; provided, however, that any Purchaser may assign its rights to purchase all or any portion of the Shares to any other Purchaser or any Affiliate of any Purchaser without the consent of the Company.  Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon and inure to the benefit of the successors and permitted assigns of the parties.  Except as set forth in Section 13 with respect to Indemnified Parties, nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement.  Except as set forth in Section 13 with respect to Indemnified Parties, this Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and assigns.

18.3.       Payments Due on Non-Business Days.  Anything in this Agreement or the Shares to the contrary notwithstanding, any payment on any Shares that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the amount payable on such next succeeding Business Day.

18.4.       Severability.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.

18.5.       Entire Agreement and Modification.  Except as set forth herein, this Agreement supersedes all prior agreements between the parties with respect to its subject

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matter, including, without limitation, the Commitment Letter, the Amended Commitment Letter, the Term Sheet and the Amended Term Sheet and constitutes (along with the documents referred to in this Agreement) a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter.  This Agreement may not be amended except by a written agreement executed by the party to be charged with the amendment.

18.6.       Construction.  Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant.  Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.

18.7.       Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument.  Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.

18.8.       Governing Law.  This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York, without giving effect to the conflicts of law principles thereof.

18.9.       Submission to Jurisdiction.  Each party of this Agreement irrevocably consents and agrees that any legal action or proceeding with respect to this Agreement and any action for enforcement of any judgment in respect thereof will be brought, (i) if prior to the Effective Date, in the Bankruptcy Court and (ii) if on or after the Effective Date, in the courts of the State of New York, County of New York or, if it has or can acquire jurisdiction, the United States District Court for the Southern District of New York, and, by execution and delivery of this Agreement, each party of this Agreement hereby submits to and accepts for itself and in respect of its property, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts and appellate courts from any appeal thereof.  Each party to this Agreement further irrevocably consents to the service of process out of any of the aforementioned courts in any such action or proceeding by the delivery of copies thereof in the manner set forth in Section 15.  Each party to this Agreement hereby irrevocably waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions or proceedings arising out of or in connection with this Agreement brought in the courts referred to above and hereby further irrevocably waives and agrees not to plead or claim in any such court that any such action or proceeding brought in any such court has been brought in an inconvenient forum.  Nothing in this Section shall be deemed to constitute a submission to jurisdiction, consent or waiver with respect to any matter not specifically referred to herein.

18.10.     Waiver of Trial by Jury.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM, ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER ARISING HEREUNDER.

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18.11.     Supplementation and Amendment of Schedules.  From time to time prior to the Closing, the Company shall have the right to supplement or amend the Schedules with respect to any matter hereafter arising or discovered after the delivery of the Schedules pursuant to this Agreement.  No such supplement or amendment shall have any effect on the satisfaction of the condition to closing set forth in Section 3.1 or on the truth or correctness of the representation and warranty set forth in Section 4.9; provided, however, if the Closing shall occur, then Purchaser shall be deemed to have waived any right or claim pursuant to the terms of this Agreement or otherwise, including pursuant to Section 13 hereof, with respect to any and all matters disclosed pursuant to any such supplement or amendment at or prior to the Closing except for any right or claim, pursuant to Section 13 or otherwise, arising out of or as a result of any breach of any representation or warranty set forth in Section 4.9, which representation and warranty shall be made without effect to any such supplement or amendment.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first written above.

MAGELLAN HEALTH SERVICES, INC.
By:
	Title
PURCHASERS:
ONEX AMERICAN HOLDINGS LLC
By:
	Title
[OTHER PURCHASERS]

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Schedule 1

Purchasers

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TABLE OF CONTENTS
1.	Authorization of Stock
2.	Sale and Purchase of Common Stock; Closing
3.	Conditions to Closing
	3.1.	Representations and Warranties
	3.2.	Performance; No Default
	3.3.	Compliance Certificates
	3.4.	Confirmation Order; Plan of Reorganization
	3.5.	Amended Certificate of Incorporation
	3.6.	Amended Bylaws
	3.7.	Registration Rights Agreement
	3.8.	Intentionally Omitted
	3.9.	No Actions Pending
	3.10.	Consents, Approvals, Etc
	3.11.	Hart-Scott-Rodino
	3.12.	Proceedings and Documents
	3.13.	No Material Adverse Change
	3.14.	EBITDA and Revenue Targets
	3.15.	Minimum Cash Availability
	3.16.	Limitation on Fees
	3.17.	Senior Credit Facility
	3.18.	New Aetna Note and Aetna Purchase Option
	3.19.	Payment of Expenses and Commitment Fee
4.	Representations and Warranties
	4.1.	Organization of the Company
	4.2.	Capitalization of the Company
	4.3.	Organization and Capitalization of the Subsidiaries.
	4.4.	Authority; No Conflict.
	4.5.	No Material Adverse Change
	4.6.	Compliance with Legal Requirements; Governmental Authorizations
	4.7.	Legal Proceedings.
	4.8.	Brokers or Finders
	4.9.	Disclosure
	4.10.	SEC Reports; Financial Statements
5.	Representations and Warranties of the Purchasers
	5.1.	Organization of such Purchaser
	5.2.	Authority; No Conflict

	5.3.	Shares Not Registered
	5.4.	Economic Risk
	5.5.	Acquisition for Own Account
	5.6.	Ability to Protect Own Interests
	5.7.	Accredited Investor
	5.8.	Access to Information
	5.9.	Brokers or Finders
	5.10.	Legal Proceedings
6.	Registration, Transfer and Substitution of Certificates for Common Stock.
	6.1.	Stock Register; Ownership of Stock
	6.2.	Replacement of Certificates
	6.3.	Restrictive Legends
	6.4.	Notice of Proposed Transfer; Opinions of Counsel
	6.5.	Termination of Restrictions
7.	Covenants Prior to Closing Date.
	7.1.	Access and Investigation
	7.2.	Operation of Business
	7.3.	Negative Covenants
	7.4.	Consents
	7.5.	Regulatory Approval
	7.6.	Reasonable Best Efforts
8.	Termination.
	8.1.	Termination Events
	8.2.	Effect of Termination Events
9.	Definitions.
	9.1.	Certain Defined Terms
	9.2.	Accounting Terms
	9.3.	Other Provisions Regarding Definitions
10.	Expenses
11.	Commitment Fee.
12.	Survival of Representations and Warranties
13.	Indemnification
	13.1.	Indemnification by the Company
	13.2.	Limitations on Indemnification for Breaches of Representations and Warranties
14.	Amendments and Waivers
15.	Notices, etc.

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16.	Press Releases
17.	Confidential Information
18.	Miscellaneous.
	18.1.	Successors and Assigns
	18.2.	Assignments, Successors, and No Third-Party Rights
	18.3.	Payments Due on Non-Business Days
	18.4.	Severability
	18.5.	Entire Agreement and Modification
	18.6.	Construction
	18.7.	Counterparts
	18.8.	Governing Law
	18.9.	Submission to Jurisdiction
	18.10.	Waiver of Trial by Jury
	18.11.	Supplementation and Amendment of Schedules

EXHIBITS
Exhibit A	-	EBITDA and Revenue Projections

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SCHEDULES

Schedule 1	Purchasers
Schedule 4.3	Organization and Capitalization of the Subsidiaries
Schedule 4.4	Authority; No Conflict
Schedule 4.6	Compliance with Legal Requirements
[Schedule 4.7	Legal Proceedings]
Schedule 4.10	SEC Reports
Schedule 5.2	Authority; No Conflict

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