Exhibit 10.4


MAGELLAN HEALTH SERVICES, INC.


2006 MANAGEMENT INCENTIVE PLAN


NOTICE OF RESTRICTED STOCK UNIT AWARD


(REFERENCE NO. 20    -  -  )


	
  Name of Grantee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date of Grant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Type of Award:

  	
   

  	
  Restricted Stock Units, each Restricted Stock Unit
  representing the right to receive on the terms and conditions of the
  Restricted Stock Unit Agreement between Grantee and the Company referenced
  below and the terms and conditions of this notice a share of Ordinary Common
  Stock, par value $0.01 per share (“Share”), of Magellan Health
  Services, Inc. (the “Company”), subject to adjustment thereto as
  provided in such Restricted Stock Unit Agreement (a “Unit Share”), or
  at the election of the Company a cash payment in lieu thereof.

  
	
   

  	
   

  	
   

  
	
  Total Number of Restricted Stock Units Awarded:

  	
   

  	
         
  Restricted Stock Units.

  
	
   

  	
   

  	
   

  
	
  Vesting :

  	
   

  	
  This Award shall vest in accordance with the vesting
  schedule set forth below, provided that the Grantee’s Service with the
  Company, a Subsidiary or a Parent company has not terminated prior to the
  vesting date [and the performance criteria described on Attachment A has been
  satisfied]1.

  



 


	
  

  	
  Vesting
  Date

  	
   

  	
  Vesting Percentage

  
	
   

  	
  1st anniversary of the Date of Grant

  	
   

  	
  33.4%

  
	
   

  	
  2nd anniversary of the Date of Grant

  	
   

  	
  66.7% (i.e., an additional 33.3%)

  
	
   

  	
  3rd anniversary of the Date of Grant

  	
   

  	
  100% (i.e., an additional 33.3%)

  
	
   

  	
   

  	
   

  	
   

  



 


	
  

  	
   

  	
  Notwithstanding the preceding paragraph, this Restricted
  Stock Unit shall earlier vest immediately with respect to 100% of the Unit Shares
  subject hereto in the event, after the date hereof, a Change in Control of
  the Company (as defined below) shall have occurred and within the period of
  eighteen months (or such other period as is provided by Grantee’s employment
  agreement, if any, in effect at the time of the Change of Control) following
  occurrence of the Change in Control, Grantee’s Service with the Company shall
  be terminated by the Company without Cause (as defined below) or by the Grantee
  with Good Reason (as defined below), provided that the Grantee’s Service with
  the Company has not previously terminated after the date hereof for any other
  reason, and upon such accelerated vesting this Restricted Stock Unit shall continue
  to be exercisable for the same period after such termination of Grantee’s
  Service as provided above.  For purposes
  of this Restricted Stock Unit, the terms “Change in Control,” “Cause” and
  “Good Reason” shall have the same meanings as provided in any employment
  agreement between the Company and Grantee in effect at the time of the Change
  in Control (including any terms of substantially comparable significance in
  any such employment agreement even if not of identical wording) or, if no
  such employment agreement is in effect at such time or no such meanings are
  provided in such employment agreement, shall have the meanings ascribed
  thereto below:

  



 


	
  

  	
   

  	
  (1)

  	
  A “Change in Control” of the Company shall mean the
  first to occur after the date hereof of any of the following events:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  a.

  	
  any “person,” as such term is used in Sections
  3(a)(9) and 13(d) of the Securities Exchange Act of 1934, as amended (the
  “Exchange Act”), becomes a “beneficial owner,” as such term is used in Rule
  13d-3 promulgated under the Exchange Act, of 30% or more of the Voting Stock
  (as defined below) of the Company;

  
	
   

  	
   

  	
   

  	
   

  	
   

  



 






(1)             To
be included where performance criteria apply to vesting.


 



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  b.

  	
  the majority of the Board of Directors of the
  Company consists of individuals other than “Continuing Directors,” which
  shall mean the members of the Board on the date hereof;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  c.

  	
  the Board of Directors of the Company adopts and, if
  required by law or the certificate of incorporation of the Corporation, the
  shareholders approve the dissolution of the Company or a plan of liquidation
  or comparable plan providing for the disposition of all or substantially all
  of the Company’s assets;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  d.

  	
  all or substantially all of the assets of the
  Company are disposed of pursuant to a merger, consolidation, share exchange,
  reorganization or other transaction unless the shareholders of the Company
  immediately prior to such merger, consolidation, share exchange,
  reorganization or other transaction beneficially own, directly or indirectly,
  in substantially the same proportion as they previously owned the Voting
  Stock or other ownership interests of the Company, a majority of the Voting
  Stock or other ownership interests of the entity or entities, if any, that
  succeed to the business of the Company; or

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  e.

  	
  the Company merges or combines with another company
  and, immediately after the merger or combination, the shareholders of the
  Company immediately prior to the merger or combination own, directly or
  indirectly, 50% or less of the Voting Stock of the successor company, provided
  that in making such determination there shall being excluded from the number
  of shares of Voting Stock held by such shareholders, but not from the Voting
  Stock of the successor company, any shares owned by Affiliates of such other
  company who were not also Affiliates of the Company prior to such merger or
  combination.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2)

  	
  “Cause” shall mean:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  a.

  	
  Grantee is convicted of (or pleads guilty or nolo
  contendere to) a felony or a crime involving moral turpitude;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  b.

  	
  Grantee’s commission of an act of fraud or
  dishonesty involving his or her duties on behalf of the Company;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  c.

  	
  Grantee’s willful failure or refusal to faithfully
  and diligently perform duties lawfully assigned to Grantee as an officer or
  employee of the Company or other willful breach of any material term of any
  employment agreement at the time in effect between the Company and Grantee;
  or

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  d.

  	
  Grantee’s willful failure or refusal to abide by the
  Company’s policies, rules, procedures or directives, including any material
  violation of the Company’s Code of Ethics.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (3)

  	
  “Good Reason” shall mean:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  a.

  	
  a reduction in Grantee’s salary in effect at the
  time of a Change in Control, unless such reduction is comparable in degree to
  the reduction that takes place for all other employees of the Company of
  comparable rank (for which purpose any person who is an executive officer of
  the Company (as determined for purposes of the Exchange Act shall be
  considered of comparable rank) or a reduction in Grantee’s bonus for the year
  in which or any year after the year in which the Change of Control occurs
  from Grantee’s maximum bonus opportunity for the year in which the Change in
  Control occurs (if any) as established under any employment agreement Grantee
  has with the Company or any bonus plan of the Company applicable to Grantee
  (or, if no such maximum bonus opportunity has yet been established for
  Grantee under a bonus plan applicable to Grantee for the year in which the
  Change of Control has occurred, the maximum bonus opportunity so established
  for Grantee for the immediately preceding year (if any));

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  b.

  	
  a material diminution in Grantee’s position, duties
  or responsibilities as in effect at the time of a Change in Control or the
  assignment to Grantee of duties which are materially inconsistent with such
  position, duties and authority, unless in either case such change is made
  with the consent of the Grantee; or

  
	
   

  	
   

  	
   

  	
   

  	
   

  




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  c.

  	
  the relocation by more than 50 miles of the offices
  of the Company which constitute at the time of the Change in Control
  Grantee’s principal location for the performance of his or her services to
  the Company;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  provided that, in each such case, such event or
  condition continues uncured for a period of more than 15 days after Grantee
  gives notice thereof to the Company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For purposes of the foregoing definitions, (A) “the
  Company” shall include any entity that succeeds to all or substantially all
  of the business of the Company, (B) “Affiliate” of a person or other entity
  shall mean a person or other entity that directly or indirectly controls, is
  controlled by, or is under common control with the person or other entity
  specified, and (C) “Voting Stock” shall mean any capital stock of any class
  or classes having general voting power under ordinary circumstances, in the
  absence of contingencies, to elect the directors of a corporation and
  reference to a percentage of Voting Stock shall refer to such percentage of
  the votes that all such Voting Stock is entitled to cast.

  



 


	
  Settlement of Award:

  	
   

  	
  Unit Shares in settlement of this Award (or, at the
  Company’s election, cash in lieu therof) shall be delivered to Grantee on the
  Vesting Date (such date, the “Settlement Date”) as further provided in
  Grantee’s Restricted Stock Unit Agreement with the Company.

  
	
   

  	
   

  	
   

  
	
  Dividend Equivalent Rights:

  	
   

  	
  None

  
	
   

  	
   

  	
   

  
	
  Transfer Restrictions

  	
   

  	
  Unit Shares issued in settlement of this Award shall
  not be subject to any additional transfer restrictions, other than those
  provided by Grantee’s Restricted Stock Unit Agreement.

  
	
  Other Terms

  	
   

  	
   

  



 



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By signing your name below,
you acknowledge and agree that this Award is governed by the terms and
conditions of the Magellan Health Services, Inc. 2006 Management Incentive
Plan (“Plan”) and the Restricted Stock Unit Agreement reference number
20    -     -)) (“Agreement”),
both of which are hereby made a part of this document. Capitalized terms used
but not defined in this Notice of Restricted Stock Unit Award shall have the
meanings assigned to them in the Plan and Agreement.


	
  Grantee:

  	
   

  	
  MAGELLAN HEALTH SERVICES, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  



 



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