FORM OF NON-COMPETITION AGREEMENT

                  THIS NON-COMPETITION AGREEMENT (this "Agreement"), dated as of
October 24, 1997, among Magellan Health Services,  Inc., a Delaware  corporation
(the "Parent"), Merit Behavioral Care Corporation, a Delaware corporation (the
"Company"), and ___________ (the "Shareholder"),

                                               W I T N E S S E T H:

                  WHEREAS,  the  Parent  and the  Company  are  parties  to that
certain  Agreement  and Plan of Merger  dated  October  24,  1997  (the  "Merger
Agreement")  pursuant to which the Parent, by virtue of the merger  contemplated
thereby, will acquire from the shareholders of the Company all of the issued and
outstanding shares of capital stock of the Company (the "Shares") upon the terms
and subject to the conditions set forth herein;

                  WHEREAS,  in order to  induce  the  Parent to  consummate  the
transactions contemplated by the Merger Agreement, the Shareholder has agreed to
enter into this Agreement for and in favor of the Parent and the Company;

                  NOW,  THEREFORE,  in  consideration  of the  mutual  covenants
contained  herein and other good and  valuable  consideration,  the  receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:

                  SECTION 1.        DEFINITIONS.

                  Section  1.1   Definitions.   Unless  the  context   otherwise
requires,  as used  in this  Agreement,  the  following  terms  shall  have  the
following meanings (terms defined in the singular to have the same meanings when
used in the plural and vice versa):

(a) "Affiliate" shall have the meaning set forth in the Merger Agreement.

(b) "Agreement"  shall have the meaning set forth in the introductory  paragraph
hereto.

(c) "Behavioral  Health  Services" shall mean integrated and managed  behavioral
health care services or providing  behavioral  health care  services,  including
integrated  and managed  mental health  programs and substance  abuse  programs,
employee assistance programs,  and utilization  management,  care management and
network management concerning behavioral health care services.

(d) "Business" shall mean the business of providing or administering (or owning,
operating,  administering  or managing a company or facility  which  provides or
administers)  Behavioral  Health  Services,  as conducted by the Company and the
Company  Subsidiaries,  for and on  behalf  of a  health  care  plan  (including
self-insured plans) for a fee (or any other financial benefit).

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(e) "Closing" shall have the meaning set forth in the Merger Agreement.

(f) "Closing Date" shall have the meaning set forth in the Merger Agreement.

(g) "Code" shall have the meaning set forth in the Merger Agreement.

(h)  "Company"  shall have the meaning set forth in the  introductory  paragraph
hereto.

(i)  "Company  Subsidiary"  shall  have the  meaning  set  forth  in the  Merger
Agreement.

(j)  "Confidential  Information"  shall mean  information  that is not generally
known to the public and that is used,  developed  or  obtained by the Company or
Company Subsidiaries in connection with its business, including but not limed to
(i)  products  or  services,  (ii) fees,  costs and  pricing  structures,  (iii)
designs, (iv) computer software,  including operating systems,  applications and
program listings, (v) flow charts,  manuals and documentation,  (vi) data bases,
(vii)  accounting  and  business  methods,   (viii)  inventions,   devices,  new
developments,  methods and processes,  whether  patentable or  unpatentable  and
whether or not reduced to practice,  (ix)  customers and clients and customer or
client lists,  (x) other  copyrightable  works,  (xi) all  technology  and trade
secrets,  and (xii) all  similar  and  related  information  in  whatever  form.
Confidential  Information  will  not  include  any  information  that  has  been
published  in a form  generally  available  to the public  prior to the date the
Shareholder proposes to disclose or use such information.

(k)  "Parent"  shall have the  meaning set forth in the  introductory  paragraph
hereto.

(l)  "Person"  shall  mean any  individual,  corporation,  partnership,  limited
liability  company,  joint venture,  association,  joint-stock  company,  trust,
unincorporated organization or Governmental Authority.

(m) "Shareholder" shall have the meaning set forth in the introductory paragraph
hereto.

(n)  "Territory"  shall mean the United States of America,  its  territories and
possessions (including, without limitation, Puerto Rico).

                  Section 1.2 Principles of  Construction.  Definitions  used in
this Agreement  shall apply equally to both the singular and plural forms of the
terms defined.  Whenever used in this Agreement, the words "include," "includes"
and  "including"  shall  be  deemed  to  be  followed  by  the  phrase  "without
limitation."  Unless the context  otherwise  requires,  all references herein to
Articles,  Sections,  Exhibits  and  Schedules  shall be  deemed  references  to
articles and sections of, and  schedules to this  Agreement.  All pronouns  used
herein shall be deemed to refer to the masculine, feminine or

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neuter gender as the context requires.  Unless the context  otherwise  requires,
the term "party" when used in this  agreement  means a party to this  agreement,
and references to a party or other Person shall be deemed to include  successors
and permitted  assigns of such party. All references  herein to any agreement or
document shall be deemed to include such agreement or document  (unless specific
reference  is made to that  agreement  or  document  as in effect on a  specific
date), as the same may be amended,  supplemented or otherwise modified from time
to time. The parties  acknowledge  and agree that they have been  represented by
counsel and that each of the parties has  participated  in the  drafting of this
Agreement.  Accordingly,  it is the  intention and agreement of the parties that
the language,  terms and conditions of this Agreement are not to be construed in
any  way   against   or  in  favor  of  any  party   hereto  by  reason  of  the
responsibilities in connection with the preparation of this Agreement.

                  SECTION 2.        COVENANTS; CONSIDERATION.

                  Section 2.1       Covenant Not to Compete.

                  (a) The  Shareholder  covenants and agrees that,  for a period
commencing  on the  Closing  Date and  ending  on the third  anniversary  of the
Closing Date,  without the written consent of the Parent,  the Shareholder shall
not,  directly or indirectly,  engage in or have any interest in any Person that
is engaged in  (whether as an owner,  proprietor,  shareholder,  partner,  joint
venturer, investor, operator, manager, officer, director, employee,  contractor,
consultant, licensor of technology, agent, broker, lender, guarantor, advisor or
otherwise) the Business anywhere in the Territory.

                  (b) Notwithstanding anything to the contrary set forth herein,
the  restrictions set forth in this Section 2.1 shall not apply to the ownership
by the  Shareholder  of an  aggregate  of not  more  than 5% of the  outstanding
capital  stock  of  any  public  corporation  that  provides  Behavioral  Health
Services.

                  Section 2.2  Non-Solicitation  of Customers.  The  Shareholder
covenants and agrees that,  except as required in the  performance of his duties
to the Company or any Affiliate of the Company,  for a period  commencing on the
Closing Date and ending on the third  anniversary  of the Closing Date,  without
the written consent of the Parent, it will refrain from, directly or indirectly,
soliciting  or  accepting,  or  attempting  to solicit or provide,  itself or by
assisting others, any business from any of the Company's of Company Subsidiary's
customers,  including  actively sought  prospective  customers,  for purposes of
providing  products or services that are competitive  with those provided by the
Company or any Company Subsidiary.  In addition,  the Shareholder  covenants and
agrees that, for a period commencing on the Closing Date and ending on the third
anniversary  of the  Closing  Date,  that it will not  advise  any  customer  or
prospective  customer  of the Company or any  Company  Subsidiary  to stop doing
business, either in whole or in part with the Company or any Company Subsidiary.

                  Section 2.3 Non-Solicitation of Contractors and Employees.  
The Shareholder agrees for a period commencing on the Closing Date and ending 
on the third anniversary of the

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Closing  Date,  not,  directly  or  indirectly,  for itself or in the service of
another,  to make,  offer,  solicit or induce to enter into, any written or oral
arrangement,  agreement or understanding  regarding employment or retention as a
consultant or independent  contractor with any Person who is at the time of such
solicitation an employee of the Company or any Company  Subsidiary,  without the
written consent of the Parent.

                  Section 2.4  Restriction on Use and  Disclosure.  For a period
commencing  on the  Closing  Date and  ending  on the third  anniversary  of the
Closing  Date,  the  Shareholder  will  not  disclose  or use at  any  time  any
Confidential  Information of which the Shareholder is or becomes aware,  whether
or not such  information  is  developed  by him,  except to the extent that such
disclosure  or use is  directly  related to and  required  by the  Shareholder's
performance of duties,  if any, assigned to the Shareholder by the Parent or the
Company,  or such  Confidential  Information  becomes  public other than through
action of the  Shareholder  or is compelled by legal  process.  The  Shareholder
hereby  acknowledges  and agrees that the  prohibitions  against  disclosure  of
Confidential  Information recited herein are in addition to, and not in lieu of,
any  rights or  remedies  which the  Parent or the  Company  may have  available
pursuant  to the  laws of any  jurisdiction  or at  common  law to  prevent  the
disclosure of trade secrets and other  confidential  proprietary  data,  and the
enforcement by the Parent or the Company of its rights and remedies  pursuant to
this  Agreement  shall  not be  construed  as a waiver  of any  other  rights or
available remedies which it may possess in law or equity absent this Agreement.

                  Section 2.5  Consideration; Cancellation of Prior Agreements.

                  (a) The Shareholder acknowledges and agrees that the covenants
set  forth in this  Agreement  are  ancillary  to the sale of the  Shareholder's
shares of stock in the Company pursuant to the Merger  Agreement.  As additional
consideration  for the covenants and agreements of the  Shareholder set forth in
this Agreement,  the Company agrees to pay the Shareholder the aggregate  amount
of  $________  payable  in two (2)  equal  installments  of  $_________  each as
follows:  the first installment shall be due and payable on the Closing Date and
the second  installment shall be due and payable on the first anniversary of the
Closing Date. The amounts  payable to the  Shareholder  pursuant to this Section
2.5(a) shall be subject to all applicable  withholding  obligations for federal,
state and local taxes.

                  (b) The Shareholder  acknowledges  and agrees that the payment
described in Section 2.5(a) shall be in full satisfaction and in lieu of (i) the
payment to which the Shareholder otherwise would be entitled pursuant to any and
all  severance  agreements  between  the  Shareholder  and  the  Company  or any
Affiliate of the Company, including without limitation, pursuant to Section 2 of
that certain Severance  Agreement dated October 6, 1995 to which the Shareholder
and Medco Behavioral Care  Corporation are parties (the "Severance  Agreement"),
and (ii) any other  payment in the nature of  severance  from the  Company or an
Affiliate of the Company under any employment,  consulting or other agreement or
otherwise including,  without,  limitation,  under Section 2(y) of the Severance
Agreement.  The Shareholder  acknowledges  and agrees that any and all severance
and/or  consulting  agreements  between the  Shareholder  and the Company or any
Affiliate of the Company

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shall  terminate  and be of no further  force or effect as of the Closing  Date.
Nothing set forth in this Section shall apply to or affect that certain  Amended
and Restated Employment Agreement (the "Employment  Agreement") dated August 17,
1992 between  American  Biodyne,  Inc.  ("ABI") and the Shareholder  which shall
continue  in full  force and  effect  in  accordance  with its  terms  except as
modified by that  certain  letter dated  October 24, 1997  pursuant to which the
Shareholder  notified  ABI of his  election  to  change  his  status  to that of
Chairman Emeritus and except that Section 4.4 of the Employment  Agreement shall
be of no further force or effect.

                  (c)  The  payment  of the  consideration  set  forth  in  this
Agreement shall be contingent upon and subject to the receipt of the approval of
the shareholders of the Company pursuant to the provisions of Section 280G(b)(5)
of the Code.

                  (d) The Shareholder shall be eligible for health care coverage
with the health care plan of the  Company,  as the same may be amended from time
to time, at no cost to the  Shareholder,  which  coverage shall be continued for
the period  commencing on the later of (i) the Closing Date or (ii) the date the
Shareholder's eligibility for such coverage under the Company's health care plan
otherwise  lapses and the date the  Shareholder  attains  age  sixty-five  (65);
provided, that eligibility for health care coverage shall cease in the event the
Shareholder becomes eligible for health care coverage under either an individual
health care policy or a group health plan.

                  (e) The Parent and the Shareholder covenant and agree to enter
into a  consulting  agreement  for a term of three (3) years  commencing  on the
Closing Date;  upon the mutual  consent of the Parent and the  Shareholder,  the
term of the  agreement  may be extended for a two (2) year renewal  period after
the   expiration  of  the  initial  term.   The  terms  and  conditions  of  the
Shareholder's  consulting  responsibilities  shall  be  negotiated  between  the
parties and set forth in the  consulting  agreement.  The  Shareholder  shall be
entitled under the consulting  agreement to an annual consulting fee of $______,
which shall be payable under terms and  conditions  set forth in the  consulting
agreement.

                  Section 2.6       Shareholder's Acknowledgments.

                  (a)  The  Shareholder  acknowledges  and  agrees  that  it has
received adequate  consideration for the execution,  delivery and performance of
this  Agreement.  The  Shareholder  acknowledges  and  agrees  further  that the
execution and delivery of this Agreement is a mandatory  condition to the Parent
entering  into the Merger  Agreement,  without  which the Parent would not enter
into the Merger Agreement.

                  (b)  The   Shareholder   acknowledges   and  agrees  that  the
restrictions   set  forth  in  this  Agreement,   including  the  scope  of  the
restrictions  in time,  geography and activities in this Agreement is reasonable
and  necessary  to  protect  the  legitimate  business  interests  of the Parent
including the goodwill of the Company being  acquired by the Parent  pursuant to
the Merger Agreement and the substantial  relationships (as reflected,  in part,
in the contracts of the Company) with payors and other

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medical  providers and patients that are enuring to the benefit of the Parent as
contemplated by the Merger Agreement.

                  SECTION 3. REMEDIES.  The Shareholder  acknowledges and agrees
that the rights of the Parent  under this  Agreement  are of a  specialized  and
unique  character,  that a monetary  remedy for a breach of the  agreements  set
forth in this Agreement will be inadequate and  impracticable and that immediate
and irreparable  damage will result to Parent and the Company if the Shareholder
fails  to  or  refuse  to  perform  its   obligations   under  this   Agreement.
Notwithstanding any election by any Person to claim damages from the Shareholder
as a result of any such  failure or refusal,  the Parent may, in addition to any
other remedies and damages  available,  seek temporary and permanent  injunctive
relief  (without the necessity of proving actual damages and without the posting
of a bond or other  security) in a court of competent  jurisdiction  to restrain
any such failure or refusal and the  Shareholder,  for itself and its Affiliates
waives any defense that the aggrieved  party has an adequate  remedy at law. The
Shareholder  agrees that, in addition to all other remedies  available at law or
in equity,  the Parent shall be entitled to such  injunctive  relief,  including
temporary restraining orders,  preliminary injunctions and permanent injunctions
as a court of competent jurisdiction shall determine.

                  SECTION 4.        MISCELLANEOUS.

                  Section  4.1   Successors   and   Assigns;   Restrictions   on
Assignment.  Except as  otherwise  provided in this  Agreement,  no party hereto
shall assign this Agreement or any rights or obligations  hereunder  without the
prior  written  consent  of the  other  party  hereto  and  any  such  attempted
assignment  without such prior written consent shall be void and of no force and
effect,  provided, that the Parent may assign its rights hereunder to any of its
Affiliates  and any Person  succeeding  to the  business and  operations  of the
Parent or the Company including,  without limitation,  any Person with which the
Parent or the Company may be merged,  by which it may be acquired or to which it
sells substantially all of its assets or transfers its business.  The Parent may
assign  its  rights to damages  hereunder  to the  lender or  lenders  providing
financing to the Parent.  This Agreement shall inure to the benefit of and shall
be binding upon the parties hereto and their  respective  successors,  permitted
assigns, heirs, beneficiaries, estates, executors and personal representatives.

                  Section 4.2 Governing Law, Jurisdiction.  This Agreement shall
be construed,  performed and enforced in accordance  with,  and governed by, the
laws of the State of New  York,  without  giving  effect  to the  principles  of
conflicts of laws thereof.

                  Section 4.3  Severability;  Independence of Covenants.  In the
event that any provision of this Agreement or any word, phrase, clause, sentence
or other portion thereof should be held to be  unenforceable  or invalid for any
reason, such provision or portion thereof shall be modified or deleted in such a
manner so as to make this Agreement,  as modified,  legal and enforceable to the
fullest extent permitted under applicable laws. The Shareholder,  the Parent and
the Company hereby  expressly  authorize any court of competent  jurisdiction to
enforce any such provision or portion thereof or to modify any such provision or
portion  thereof in order that any such  provision or portion  thereof  shall be
enforced by such court to the fullest  extent  permitted by applicable  laws. In
the event

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that any part of this  Agreement  is declared by any court or other  judicial or
administrative  body to be null,  void or  unenforceable,  said provision  shall
survive to the extent it is not so declared,  and all of the other provisions of
this Agreement shall remain in full force and effect.

                  Section 4.4 Notices. All notices,  requests, demands and other
communications  under this Agreement  shall be in writing and shall be deemed to
have been duly  given (i) on the date of  service  if served  personally  on the
party to whom notice is to be given; (ii) on the day of transmission if sent via
facsimile  transmission  to the  facsimile  number given below,  and  telephonic
confirmation of receipt is obtained  promptly after  completion of transmission;
(iii) on the day after delivery to Federal Express or similar overnight courier;
or (iv) on the fifth day after mailing, if mailed to the party to whom notice is
to be given, by first class mail,  registered or certified,  postage prepaid and
properly addressed, to the party as follows:

                           If to the Shareholder:
                           ===============
                           ===============

                           If to the Parent or Company:

                           Magellan Health Services, Inc.
                           3414 Peachtree Road, NE, Suite 1400
                           Atlanta, Georgia  30326
                           Attention: Vice President-Mergers and Acquisitions

                           Copy to:

                           Magellan Health Services, Inc.
                           3414 Peachtree Road, NE, Suite 1400
                           Atlanta, Georgia  30326
                           Attention: General Counsel

                  Any party may  change  its  address  for the  purpose  of this
Section  by giving  the other  party  written  notice of its new  address in the
manner set forth above.

                  Section 4.5 Amendments; Waivers. This Agreement may be amended
or modified,  and any of the terms,  covenants,  representations,  warranties or
conditions hereof may be waived,  only by a written  instrument  executed by the
parties hereto, or in the case of a waiver, by the party waiving compliance. Any
waiver by any party of any condition,  or of the breach of any provision,  term,
covenant,  representation or warranty contained in this Agreement, in any one or
more instances, shall not be deemed to be nor construed as further or continuing
waiver of any such  condition,  or of the breach of any other  provision,  term,
covenant, representation or warranty of this Agreement.

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                  Section 4.6 Entire  Agreement.  This  Agreement  contains  the
entire understanding between the parties hereto with respect to the transactions
contemplated  hereby and supersedes  and replaces all prior and  contemporaneous
agreements   and   understandings,   oral  or  written,   with  regard  to  such
transactions.

                  Section 4.7 Section and  Paragraph  Headings.  The section and
paragraph  headings in this Agreement are for reference  purposes only and shall
not affect the meaning or interpretation of this Agreement.

                  Section 4.8 Headings.  The section and other  headings in this
Agreement are inserted  solely as a matter of convenience  and for reference and
are not a part of this Agreement.

                  Section 4.9  Counterparts.  This  Agreement may be executed in
multiple  counterpart  copies,  each of which will be considered an original and
all of which will constitute one and the same instrument, binding on all parties
hereto,  even though all the parties are not signatory to the same  counterpart.
Any  counterpart of this Agreement  which has attached to it separate  signature
pages,  which taken together contain the signature of all parties hereto,  shall
for all purposes be deemed a fully executed original.

                  Section 4.10 Effectiveness;  Termination. This Agreement shall
become  effective as of the Closing Date. If the Merger  Agreement is terminated
prior to the Closing Date, this Agreement shall be null and void and without any
legal effect.


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                  IN WITNESS  WHEREOF,  the  parties  hereto  have  caused  this
Agreement to be executed either in an individual capacity or by their respective
officers  thereunto  duly  authorized,  as the case may be, as of the date first
above written.

                                      SHAREHOLDER:



                                      ---------------------------------------


                                      PARENT:

                                      MAGELLAN HEALTH SERVICES, INC.



                                      By:
                                      Name:
                                      Title:

                                      COMPANY:

                                      MERIT BEHAVIORAL CARE CORPORATION


                                      By:
                                      Name:
                                      Title:



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