Exhibit 10.3


MAGELLAN
HEALTH SERVICES, INC.


2006 MANAGEMENT INCENTIVE PLAN


RESTRICTED STOCK UNIT AGREEMENT


REFERENCE NUMBER:  2006-    


SECTION 1.         GRANT OF RESTRICTED STOCK UNITS.


(a)           Restricted Stock Units. On the terms and
conditions set forth in this Agreement and each Notice of Restricted Stock Unit
Award referencing this Agreement, Magellan Health Services, Inc. (the “Company,”
as further defined below) grants to the Grantee referred to on the signature page hereof
the right to receive on the Settlement Date (as hereinafter defined) the number
of shares of Ordinary Common Stock, $0.01 par value per share, of the Company (“Shares,”
as further defined below) equal to the number of “Stock Units” awarded to the
Grantee as set forth in the Notice of Restricted Stock Unit Award, subject to
adjustment thereto on account of any change that may be made in the Shares as
provided by Section 4 below (the “Unit Shares”). Each such Notice
of Restricted Stock Unit Award, together with this referenced Agreement, shall
be a separate “Restricted Stock Unit” governed by the terms of this
Agreement and any such separate Restricted Stock Unit may be referred to herein
as the “Restricted Stock Unit,” and, as pertinent, any of multiple Notices of
Restricted Stock Unit Award referencing this Agreement may be referred to
herein as the “Restricted Stock Unit Award Notice.”


(b)           2006 Management Incentive Plan and Defined Terms.
The Restricted Stock Unit Award is granted under and subject to the terms of
the 2006 Management Incentive Plan, as amended and supplemented from time to
time (the “Plan”), which is incorporated herein by this reference. Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
ascribed to them in the Plan.



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(c)           Scope of this Agreement. This Agreement
shall apply both to the Restricted Stock Unit and to any Unit Shares acquired
upon the settlement of the Restricted Stock Units.


SECTION 2.         VESTING AND SETTLEMENT OF RESTRICTED
STOCK UNITS.


(a)           Vesting. The Restricted Stock Unit shall
vest in whole in part on the date or dates provided by the Notice of Restricted
Stock Unit Award, provided that Grantee remains in the Service of the Company,
a Subsidiary or a Parent company at such date; it being understood that the
Notice of Restricted Stock Unit Award may provide that the Restricted Stock
Unit shall vest upon termination of Optionee’s Service in such circumstances as
are provided in the Notice of Restricted Stock Unit Award.


(b)           Settlement in Shares. Subject to following
provisions of this Section 2, the Company shall settle the Restricted
Stock Unit, to the extent it has vested, on the date on which the Restricted
Stock Unit has vested (or, if such date is not a Business Day, the next
Business Day) by the delivery to Grantee of the number of Unit Shares equal to
the number of Restricted Stock Units so vested. The date on which a Restricted
Stock Unit is to be settled in herein referred to as the “Settlement Date.”  Subject to subsection 2(b) below, in
settlement of the Restricted Stock Unit, the Company shall cause to be issued
on the Settlement Date or as soon as practicable thereafter an appropriate
certificate or certificates for the Unit Shares, registered in the name of the
Grantee (or, at the direction of the Grantee, in the names of such person and
his or her spouse as community property or as joint tenants with right of
survivorship or as tenants in the entirety); provided, however, that
such Unit Shares shall be subject to such restrictions on transfer or other
restrictions as are provided by the Restricted Stock Unit Award Notice and the
certificates so issued may bear a legend reflecting such restrictions and any
restrictions applicable in accordance with subsections 2(g) and 3(c) below.


(c)           Alternative Settlement in Cash. In lieu of
settlement of the Restricted Stock Unit in Unit Shares, the Committee may in
its sole discretion elect to settle all or a portion of the Restricted Stock
Unit by a cash payment equal to the Fair Market Value as of the Settlement Date
of the Unit Shares that would otherwise have been issued under this Agreement. Such
payment may be made by good check of the Company issued in accordance with its
normal payroll practices or such other means as are acceptable to the Company.


(d)           Withholding Requirements. The Company may
withhold any tax (or other governmental obligation) the Company is required to
withhold as a result of the grant of the Restricted Stock Unit and/or the
issuance of Unit Shares (or cash in lieu of Unit Shares) in 



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settlement of a Restricted Stock Unit and, as a condition to the grant
of the Restricted Stock Unit or issuance of the Unit Shares in settlement
thereof, the Grantee shall make arrangements satisfactory to the Company to
enable it to satisfy all such withholding requirements.


(e)           Injurious Conduct. Except as otherwise
explicitly provided by the Restricted Stock Unit Award Notice or other Award
document or by an agreement executed by the Company with the approval of the
Committee, in the event the Grantee has engaged in Injurious Conduct as defined
in, and as determined to have occurred in accordance with, Section 12 of
the Plan during Grantee’s Service or during the year following termination of
Grantee’s Service, then (i) no Unit Shares shall be issued to Grantee in
connection with the settlement of a Restricted Stock Unit Award under the Plan
after such determination (even if such Award is fully vested) nor shall any
other benefit of any Award thereafter accrue to the Grantee under this
Agreement or the Plan (including by reason of the lapse of any restriction on
transfer or other restriction then applicable to Unit Shares that have been issued),
and the Company shall not complete the settlement of any other Award, and (ii) any
such unsettled Restricted Stock Unit Award shall be forfeited and shall
terminate and any Unit Shares subject to any such restrictions shall be
forfeited (provided, however, that the foregoing shall not excuse the
Company from settling, completing delivery of or removing any legend
restricting the transfer of (A) any Restricted Stock Award or (B) Restricted
Stock Unit Awards and any related Dividend Equivalent Rights the settlement of
which have been deferred at the election of the Grantee, if such Restricted
Stock Award or Restricted Stock Unit Awards were fully vested before the date
such Injurious Conduct occurred (as so determined)). In addition, except as
otherwise specifically provided by a Restricted Stock Unit Award Notice or
other Award document or by an agreement executed by the Company with the
approval of the Committee, in the event the Grantee has engaged in Injurious
Conduct as defined in, and as determined to have occurred in accordance with, Section 12
of the Plan during Grantee’s Service or during the year following termination
of Grantee’s Service, any benefits realized by Grantee as a result of any Award
under the Plan at any time after such Injurious Conduct occurred (as so
determined), whether upon vesting or exercise of an Option, lapse of
restrictions on Option Shares, vesting of Restricted Stock Awards or Stock
Units or related Dividend Equivalent Rights, or the lapse of any restrictions
on Shares issued as a result thereof, or as a result of any other settlement of
an Award, shall be forfeited by Grantee and Grantee shall pay over to the
Company in cash the amount of any benefits so received by Grantee or deliver to
the Company any Shares so received by Grantee and still owned by Grantee (provided,
however, that the foregoing shall not require the forfeiture of or
excuse the Company from settling, completing delivery of or removing any legend
restricting the transfer of (i) any Restricted Stock Award or (ii) Stock
Units and any related Dividend Equivalent Rights the settlement of which have
been deferred at the election of the Grantee, if such Restricted Stock Award or
Stock Units were fully vested before the date such Injurious Conduct occurred
(as so determined)). A forfeiture of benefits as provided hereby upon the
Committee determining that Grantee has engaged in Injurious Conduct during
Grantee’s Service or during the year following termination of Grantee’s Service
shall not relieve Grantee of any other liability he or she may have to the
Company, any Subsidiary or any Parent as a result of engaging in the Injurious
Conduct.


(f)            Transfer Restrictions On Unit Shares. Subject
to subsection 2(d) above and subsections 2(f) and 3(c) below,
unless otherwise provided by the Restricted Stock Unit Award Notice or another
agreement between Grantee and the Company, upon the acquisition of Unit 



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Shares pursuant to the settlement of a Restricted Stock Unit Award,
Grantee shall be free to dispose of the Unit Shares so acquired in any manner
and at any time.


(g)           Securities Law Restrictions On Issuance of Unit Shares.
Unless a registration statement under the Securities Act permitting the sale
and delivery of Unit Shares upon settlement of the Restricted Stock Unit Award
is in effect on the Settlement Date, the Company shall not be required to issue
Unit Shares upon such settlement, except as otherwise provided in this
subsection. The Company shall use its commercially reasonable efforts to
register under the Securities Act sufficient Unit Shares to permit delivery to
Grantee of all Unit Shares that may be acquired by Grantee upon the settlement
of the Restricted Stock Unit Award; provided, however, that the
Company shall only be so required to register the Unit Shares on Form S-8
under the Securities Act (or any successor form). Notwithstanding the
foregoing, the Company shall, if Grantee has given the Company at least 90 days’
notice requesting the Company to register in accordance with the foregoing
provisions of this subsection the Unit Shares that may then be acquired by
Grantee upon settlement of the Restricted Stock Unit Award and the Company has
failed to do so, issue Unit Shares to Grantee upon settlement of the Restricted
Stock Unit Award without registration thereof under the Securities Act if (i) Grantee
represents, effective on the date of such issuance, in writing in a form
acceptable to the Company (A) that such Unit Shares are being acquired for
investment and not with a present view to distribution, (B) Grantee
understands that the Unit Shares have not been registered under the Securities
Act and cannot be sold or otherwise Transferred unless a registration statement
under the Securities Act is in effect with respect thereto or the Company has
received an opinion of counsel, satisfactory to it, to the effect that such
registration is not required, (C) that Grantee has, alone or together with
any qualified advisor, such knowledge and experience in financial and business
matters as is necessary to evaluate the risks of an investment in the Unit
Shares, is acquiring the Unit Shares based on an independent evaluation of the
long-term prospects of an investment in the Unit Shares and has been furnished
with such financial and other information regarding the Company as the Grantee
has requested for purposes of making such evaluation, and (D) Grantee is
able to bear the economic risk of an investment in the Unit Shares subject to
such restrictions on Transfer and (ii) if the Company determines that
under the circumstances issuing the Unit Shares pursuant to such settlement of
the Restricted Stock Unit Award is lawful; provided, however,
that the Company may require, as a condition of such issuance of Unit Shares,
that Grantee execute and deliver to it such other certificates, agreements and
other instruments as in the judgment of the Company, upon advice of counsel,
are necessary or appropriate to assure that the 
Unit Shares are issued to Grantee in accordance with the Securities Act
and any other applicable securities law and may require that any certificates
representing Unit Shares so issued bear any restrictive legend appropriate for
such purpose. In addition, even if a registration statement under the
Securities Act permitting the delivery of Unit Shares upon settlement of the
Restricted Stock Unit Award is in effect at the Settlement Date, the Company
may suspend the issuance of Unit Shares pursuant to the settlement of all
Restricted Stock Unit Awards issued under the Plan for such period of time as
in the judgment of the Company, upon advice of counsel, is necessary in order
for the Company to come into compliance with all the reporting requirements
applicable to the Company pursuant to Section 13(a) of the Exchange
Act or to otherwise avoid in connection with the issuance of the  Unit Shares under such registration statement
a violation of Sections 10, 11 or 12 of the Securities Act. If the Company
suspends the issuance of Unit Shares pursuant to the settlement of Restricted
Stock Unit Awards issued under the Plan, the Company shall give prompt written
notice thereof to the Grantee (but the failure of the Company to give 



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such notice shall not prevent the Company from suspending the issuance
of Unit Shares as permitted hereby) and, at such time as such period of
suspension ends, shall give prompt written notice thereof to Grantee. Notwithstanding
that the Company in accordance with this subsection may not be able to issue
Unit Shares in settlement of a Restricted Stock Unit, the Company shall not be
required to settle a Restricted Stock Unit in cash, but may do so if it elects
in its discretion to do so, as provided by subsection 2(c) above.


SECTION 3.                            Transfer
of RESTRICTED STOCK UNIT AWARD OR UNIT SHARES


(a)           Transfers Generally Prohibited. Except as
otherwise provided by the Restricted Stock Unit Award Notice or otherwise
permitted by the Plan or in the case of a transfer permitted by subsection 3(b) below,
the Restricted Stock Unit Award may be settled only during the Grantee’s
lifetime and only by the issuance of Unit Shares (or a cash payment in lieu
thereof where permitted by the Restricted Stock Unit Award Notice) to Grantee. Except
as otherwise provided in subsection 3(b) below, the Restricted Stock Unit
Award and the rights and privileges conferred by the Restricted Stock Unit
Award shall not be sold or otherwise Transferred.


(b)           Certain Transfers Permitted. Notwithstanding
the foregoing provisions of this Section 3, the Restricted Stock Unit
Award may be Transferred (i) in the event of the Grantee’s death, by will
or the laws of descent and distribution or by a written beneficiary designation
accepted by the Company, (ii) by operation of law in connection with a
merger, consolidation, recapitalization, reclassification or exchange of
Shares, reorganization or similar transaction involving the Company and
affecting the Shares generally or (iii) with the approval of the
Committee, to a member of Grantee’s family, or a trust primarily for the
benefit of Grantee and/or one or more members of Grantee’s family, or to a
corporation, partnership or other entity primarily for the benefit of Grantee
and/or one or more such family members and/or trusts or (iv) with the
approval of the Committee, in another estate or personal financial planning
transaction; provided, however, that in any such case the
Restricted Stock Unit Award so Transferred and, upon issuance of Unit Shares in
settlement thereof, the Unit Shares issued to the Transferee shall remain
subject in the hands of the Transferee to the restrictions on Transfer provided
hereby and all other terms hereof, including the terms of subsection 2(c) above.


(c)           Fiduciary And Securities Law Restrictions. As
a employee, officer and/or director of the Company, Grantee may be subject to
restrictions on his or her ability to sell or otherwise Transfer Unit Shares by
reason of being a fiduciary for the Company or by reason of federal or state
securities laws and/or the policies regarding transactions in securities of the
Company from time to time adopted by the Company and applicable to Grantee in
connection therewith. Nothing contained herein shall relieve Grantee of any
restriction on sale or other Transfer of Unit Shares provided thereby and any
other restrictions of sale or other Transfer of Unit Shares provided herein (including
in an Restricted Stock Unit Award Notice or in the Plan) shall be in addition
to and not in lieu of any other restrictions provided thereby.


SECTION 4.         ADJUSTMENT OF SHARES.


(a)           Adjustment Generally. If while the
Restricted Stock Unit remains in effect there shall be any change in the
outstanding Shares of the class which are to be issued upon settlement of 



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the Restricted Stock Unit, through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, reverse stock
split, combination of shares, exchange of shares for other securities or other
like change in the outstanding Shares, or any spin-off, split-off, dividend in
kind or other extraordinary dividend or other distribution in respect of such
outstanding Shares or other extraordinary change in the capital structure of
the Company, an adjustment shall be made to the terms of the Restricted Stock
Unit so that the Restricted Stock Unit shall thereafter be ultimately settled,
otherwise on the same terms and conditions as provided by the Restricted Stock
Unit Award Notice, this Agreement and the Plan, for such securities, cash
and/or other property as would have been received in respect of the Shares that
would have been issued upon settlement of the Restricted Stock Unit had the
Restricted Stock Unit been settled in full immediately prior to such change or
distribution (whether or not the Restricted Stock Unit was then fully vested)
or, if and to the extent the Committee determines that so adjusting the
consideration to be received upon settlement of the Restricted Stock Unit, in
whole or in part, is not practicable, the Committee shall equitably modify the
consideration to be received in respect of the settlement of the Restricted
Stock Unit or other pertinent terms and conditions of the Restricted Stock Unit
as provided by subsection 4(b) below. Such an adjustment shall be made
successively each time any such change in the outstanding Shares of the class
which may be received upon settlement of the Restricted Stock Unit or extraordinary
distribution in respect of such outstanding Shares or extraordinary change in
the capital structure of the Company shall occur.


(b)           Modification Of Restricted Stock Unit. In
the event any change in the outstanding Shares of the class which may be
received upon settlement of the Restricted Stock Unit or extraordinary
distribution in respect of such outstanding Shares or extraordinary change in
the capital structure of the Company described in subsection 4(a) above
occurs, or in the event of any change in applicable laws or any change in
circumstances which results in or would result in any substantial dilution or
enlargement of the rights granted to, or available for, Grantee in respect of a
Restricted Stock Unit or otherwise as a participant in the Plan or which
otherwise warrants equitable adjustment to the terms and conditions of the
Restricted Stock Unit because such event or circumstances interferes with the
intended operation of the Plan (including the intended tax consequences of
Awards) occurs, then the Committee may, and shall where required by subsection
7(a) above, adjust the number and kind of Unit Shares and/or other
securities and/or cash or other property that may be issued or delivered upon
the settlement of the Restricted Stock Unit and/or adjust the other terms and
conditions of the Restricted Stock Unit as the Committee in its discretion
determines to be equitable in order to prevent dilution or enlargement of the
Grantee’s rights in respect of the Restricted Stock Unit as such existed before
such event. Appropriate adjustments may likewise be made by the Committee in
other terms and conditions of the Restricted Stock Unit to reflect equitably
such changes in circumstances, including modifications of performance targets
and changes in the length of performance periods relating to the vesting of the
Restricted Stock Unit or any restrictions on Unit Shares. Notwithstanding the
foregoing, no adjustment shall be made which is prohibited by Section 13
of the Plan.


(c)           Modifications To Comply With Section 409A. To
the extent applicable, this Agreement (including any related Notice of
Restricted Stock Award) shall be interpreted in accordance with Section 409A
of Code and Department of Treasury regulations and other interpretive guidance
issued thereunder, including without limitation any such regulations or 



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guidance that may be issued after the date on which a Restricted Stock
Unit was awarded. Without limiting the authority of the Committee under
subsection 4(b) above to make modifications to the Restricted Stock Unit
by reason of changes in law or circumstances that would result in any
substantial dilution or enlargement of the rights granted to, or available for,
Grantee in respect of a Restricted Stock Unit or otherwise as a participant in
the Plan or which otherwise warrants equitable adjustment to the terms and
conditions of the Restricted Stock Unit because such event interferes with the
operation of the Plan, and notwithstanding any provision of this Agreement to
the contrary, in the event that the Committee or an authorized officer of the
Company determines that any amounts will be immediately taxable to the
Participant under Section 409A of the Code and related Department of
Treasury guidance (or subject the Grantee to a penalty tax) in connection with
the grant or vesting of the Restricted Stock Unit or any other provision of the
Restricted Stock Unit Award Notice or this Agreement or the Plan, the Company
may (a) adopt such amendments to the Restricted Stock Unit, including
amendments to this Agreement (having prospective or retroactive effect), that
the Committee or authorized officer determines to be necessary or appropriate
to preserve the intended tax treatment of the Restricted Stock Unit and/or (b) take
such other actions as the Committee or authorized officer determines to be
necessary or appropriate to comply with the requirements of Section 409A
of the Code and related Department of Treasury guidance, including such
Department of Treasury guidance and other interpretive materials as may be
issued after the date on which such Restricted Stock Unit was awarded.                          .


SECTION 5.         MISCELLANEOUS PROVISIONS.


(a)           Rights as a Shareholder. Neither the Grantee nor the Grantee’s
personal representative or permitted Transferee shall have any rights as a
shareholder with respect to any Unit Shares until the Grantee or his or her
personal representative or permitted Transferee becomes entitled to receive
such Unit Shares pursuant to this Agreement, the Plan and the applicable
Restricted Stock Unit Award Notice, and any such right shall also be subject to
subsections 2(g) and 3(c) above.


(b)           Tenure. Nothing in the Restricted Stock
Unit Award Notice, this Agreement or in the Plan shall confer upon the Grantee
any right to continue in the Company’s Service for any period of specific
duration or interfere with or otherwise restrict in any way the rights of the
Company (or any Parent or Subsidiary employing or retaining the Grantee) or of
the Grantee, which rights are hereby expressly reserved by each, to terminate
his or her Service at any time and for any reason, with or without cause.


(c)           Notification. Any notification required by
the terms of this Agreement shall be given in writing and shall be deemed
effective upon personal delivery to the President, Treasurer, General Counsel,
Secretary or any Assistant Secretary of the Company or five Business Days upon
deposit with the United States Postal Service, by registered or certified mail,
with postage and fees prepaid addressed to the Company. A notice shall be
addressed to the Company at its principal executive office, marked to the
attention of the Corporate Secretary, and to the Grantee at the address that he
or she most recently provided to the Company.


(d)           Entire Agreement. This Agreement, any
related Restricted Stock Unit Award Notice and the Plan constitute the entire
contract between the parties hereto with regard to the subject 



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matter hereof and supersede any other agreements, representations or
understandings (whether oral or written and whether express or implied) which
relate to the subject matter hereof.


(e)           Waiver. No waiver of any breach or
condition of this Agreement shall be deemed to be a waiver of any other or
subsequent breach or condition whether of like or different nature.


(f)            Successors and Assigns. The provisions of
this Agreement shall inure to the benefit of, and be binding upon, the Company
and its successors and assigns and upon the Grantee, the Grantee’s personal
representatives, heirs, legatees and other permitted Transferees, assigns and
the legal representatives, heirs and legatees of the Grantee’s estate, whether
or not any such person shall have become a party to this Agreement and have
agreed in writing to be joined herein and be bound by the terms hereof.


(g)           Choice of Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
Delaware, as such laws are applied to contracts entered into and performed in
such State.


SECTION 6.         DEFINITIONS.


(a)           “Code”
shall mean the Internal Revenue Code of 1986, as amended and as the same may be
amended from time to time, and the regulations promulgated thereunder.


(b)           “Company” shall mean Magellan Health
Services, Inc., a Delaware corporation, and any successor thereto.


(c)           “Exchange Act” shall mean the Securities Exchange Act of
1934, as amended and as the same may be amended from time to time, and any
successor statute, and the rules and regulations promulgated thereunder.


(d)           “Securities Act” shall mean the Securities
Act of 1933, as amended and as the same may be amended from time to time, and
any successor statute, and the rules and regulations promulgated
thereunder.


(e)           “Share” shall mean a share of Ordinary Common Stock,
$0.01 par value per share, of the Company, as the same may generally be
exchanged for or changed into any other share of capital stock or other
security of the Company or any other company in connection with a transaction
referred to in Section 4 above (and in the event of any such successive
exchange or change, any security resulting from any such successive exchange or
change).


(f)            “Transfer” shall mean, with respect to any
Restricted Stock Unit or any Unit Share, any sale, assignment, transfer,
alienation, conveyance, gift, bequest by will or under intestacy laws, pledge,
lien encumbrance or other disposition, with or without consideration, of all or
part of such Restricted Stock Unit or any Unit Share, or of any beneficial
interest therein, now or hereafter owned by the Grantee, including by execution,
attachments, levy or similar process



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In
consideration of the foregoing and intending to be legally bound hereby, the
Company and the Grantee named below have executed this Agreement as of the date
first above written.


	
  

  	
   

  	
   

  	
   

  	
  MAGELLAN HEALTH SERVICES, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
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  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
  GRANTEE:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
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  Address for
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  Social Security
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