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Exhibit 10(as)    
  

 
  EMPLOYMENT AGREEMENT    
  

        THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into by and between    Mark S. Demilio, an
individual ("Officer") and Magellan Health Services, Inc., a Delaware corporation ("Employer"). 

        WHEREAS, Officer has been employed as Employer's Executive Vice President, Legal and Finance; and 

        WHEREAS, Employer desires to retain the services of Officer as Executive Vice President, Legal and Finance, and Officer desires to render
services to Employer; and 

        WHEREAS, Officer and Employer intend to enter into this Agreement for purposes of, among other things, documenting the terms of Officer's
continued employment with Employer. 

        NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, the parties agree as follows: 

STATEMENT OF AGREEMENT  

	1.
	Employment. Employer agrees to employ Officer, and Officer accepts such employment in accordance with the terms of this Agreement, for a
term of two years commencing as of October 1, 2002 and ending, unless terminated earlier in accordance with the provisions of this Agreement, on September 30, 2004; provided that this
Agreement shall automatically renew for consecutive one-year periods thereafter unless and until either party shall elect to not renew this Agreement. If either party elects to not renew
this Agreement at the expiration of the initial term or upon any anniversary, they shall provide the other party with written notice at least ninety days prior thereto. In the event the Employer
elects to not renew this Agreement at any time, such election shall be deemed a "termination without cause" and the provisions of Section 6(b) shall apply to such election.

	2.
	Position and Duties of Officer. Officer will serve as Executive Vice President and Chief Financial Officer, of Employer, or such other
title upon which Employer and Officer agree. Employer agrees that Officer's duties under this Agreement will be the usual and customary duties of an Executive Vice President and Chief Financial
Officer, consistent with the foregoing, as are determined from time to time by the Board, and will not be inconsistent with the provisions of the Certificate of Incorporation of Employer or applicable
law.

	3.
	Time Devoted and Location of Officer.

	a.
	Officer
will devote his full business time and energy to the business affairs and interests of Employer and will use his best efforts and abilities to promote Employer's interests.
Officer agrees that he will diligently endeavor to perform services contemplated by this Agreement in a manner consistent with his corporate title and in accordance with the policies and directives
established by the Board.

	b.
	Officer's
primary business office will be located in Columbia, Maryland.

	c.
	Officer
may serve as an officer, director, agent or employee of any direct or indirect subsidiary or other affiliate of Employer but may not serve as an officer, director, agent or
employee of any other business enterprise without the written approval of the Board; provided that Officer may make and manage personal business investments of his choice (and, in so doing, may serve
as an officer, director, agent or employee of entities and business enterprises that are related to such personal business investments) and serve in any capacity with any civic, educational or
charitable organization, or any governmental entity or trade association, 

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without
seeking or obtaining such written approval of the Board if such activities and services do not significantly interfere or conflict with the performance of his duties under this Agreement. 

	4.
	Compensation.

	a.
	Base Salary. Employer will pay Officer a base salary in the amount of Four Hundred Thousand dollars ($400,000.00) per year. Officer's
base salary under this Section will be paid in semi-monthly intervals less appropriate withholdings for federal and state taxes and other deductions authorized by Officer. Such salary will
be subject to review and adjustment by the Board, or its Compensation Committee, from time to time consistent with prevailing practices of Employer. Employer will also pay Officer a vehicle stipend of
$1,000 per month.

	b.
	Annual Bonus. Officer also will be eligible to receive an annual bonus conditioned upon Officer and/or Employer meeting certain goals or
objectives to be established for this purpose by the Board or its Compensation Committee. The target amount for such bonus shall be fifty percent (50%) of Officer's base salary and whether to pay an
amount in excess of the target shall be determined by the Board or its Compensation Committee in its discretion.

	c.
	Benefits. Officer will be eligible to participate in Employer's Executive Benefit Plan commensurate with his position. Officer will
receive separate information detailing the terms of the Executive Benefit Plan and the terms of that plan will control. Officer will be eligible to participate in any applicable annual incentive plan
and stock option plan available to senior officers of the Employer. Officer will be entitled during the term of this Agreement to such other benefits of employment with Employer as are now or may
later be in effect for the most senior salaried officers of Employer.

	d.
	Indemnification. Officer will be entitled to indemnification from Employer as set forth in the Certificate of Incorporation and
By-Laws of the Employer on the date hereof. 

	5.
	Expenses. During the term of this Agreement, Employer will reimburse Officer promptly for all reasonable travel, entertainment, parking,
business meetings and similar expenditures incurred in pursuance and furtherance of Employers business upon receipt of reasonable supporting documentation as required by Employer's policies applicable
to its officers generally.

	6.
	Termination.

	a.
	Termination Due to Resignation and Termination For Cause. Except as otherwise set forth in this Agreement, this Agreement, Officer's
employment, and all of Officer's rights to receive compensation and benefits from Employer, will terminate upon the occurrence of any of the following events: (i) the effective date of
Officer's resignation without good reason, or (ii) termination for cause at the discretion of Employer under the following circumstances:

	(i)
	The
death of Officer;

	(ii)
	The
disability of Officer as defined in Section 6(d);

	(iii)
	The
deliberate and intentional refusal to perform Officer's duties for Employer as provided in Sections 2 or 3. If Employer determines that Officer has deliberately or intentionally
failed to perform his duties for Employer as provided in Sections 2 or 3, Employer will notify Officer in writing of the reasons for its determination and will provide Officer a reasonable period in
which to either contest the determination or to correct the defects in performance, but in no event more than thirty days;

	(iv)
	Officer
has breached or otherwise failed to comply with the provisions of Section 7; or 

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	(v)
	Officer
has committed an act of dishonesty, fraud, misrepresentation or other acts of moral turpitude involving his duties on behalf of Employer, which
in the reasonable opinion of the Board causes it to conclude that the continuation of employment is not in the best interest of Employer. 

	b.
	Termination Without Cause. Employer may terminate this Agreement without cause at any time by giving thirty days prior written notice to
Officer. If Employer terminates this Agreement without cause, Employer may direct Officer to immediately cease providing services. If Employer terminates this Agreement without cause or if Employer
elects to not renew this Agreement at any time:

	(i)
	Employer
will continue to pay Officer his base salary in effect as of the date of such termination or expiration for a period of two years following the
effective date of such termination or expiration. (Such continued salary payments shall be made, less taxes and other normal withholdings in accordance with Employer's normal payroll procedures.);

	(ii)
	Employee
shall have all of the rights under any stock option or other stock-based compensation plan pursuant to the terms of such plans (and any
related stock option or similar agreements); and

	(iii)
	The
portion or portions of any bonus or other cash incentive compensation that had been accrued with respect to Officer on the books of Employer
through the date of termination pursuant to this Section 6(b) or otherwise will be paid to Officer in accordance with the applicable plan. 

        If
Officer dies after Employer has terminated this Agreement without cause or provided notice of its election to not renew this Agreement, but before Employer has made all of the
payments required
under this Section, Employer shall make all such remaining payments under this Section to Officer's estate pursuant to the schedule for such payments set forth in this Section and the Officer's estate
is an express third party beneficiary hereof. 

	c.
	Termination by Officer for Good Reason. Officer may terminate this Agreement, and Officer's employment with Employer, for "good reason"
(except as provided in Section 6(c)(v)) upon the occurrence of any of the following:

	(i)
	The
assignment to Officer of any duties inconsistent with the status of his positions from time to time under Section 2, or a substantial
alteration in the nature or status of his responsibilities from those in effect from time to time under Section 2; or

	(ii)
	A
reduction by Employer of Officer's annual base salary as in effect from time to time during the term of this Agreement or the restriction on
eligibility of Employee to any other benefit set forth in Section 6(c) that is not applied to all officers of the Employer or the material restriction to indemnification from Employer as set
forth in Section 6(d); or

	(iii)
	A
request by Employer for Officer to relocate his office, or to expend a portion of his time at an office outside the greater Baltimore area; or

	(iv)
	The
failure of Employer to comply with Section 4; or

	(v)
	Any
material breach of this Agreement by Employer. 

        Prior
to terminating this Agreement pursuant to this Section, Officer will give to Employer written notice of his "good reason" for terminating this Agreement and provide Employer with a
reasonable period in which to contest or correct the "good reason", but in no event less than thirty days. In the event of a termination for "good reason" pursuant to any subsection of this
Section 6(c), Officer will be 

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entitled to receive all compensation and benefits provided for in this Agreement as though Employer had terminated this Agreement on such date without cause under Section 6(b). 

	d.
	Disability. Officer will be deemed to be "disabled" or to suffer from a "disability" within the meaning of
Section 6(a)(ii) if, because of a physical or mental impairment, Officer has been unable to perform the essential functions of his position (even with reasonable accommodation) for a
period of 180 days within a one-year period, or if Officer reasonably can be expected to be unable to perform the essential
functions of his position (even with reasonable accommodation) for such period. "Essential duties" include, without limitation, travel to company meetings and functions, and all other duties
customarily performed by corporate executives generally occupying similar positions as Officer. Upon termination of Officer's employment pursuant to Section 6(a)(ii), Officer will be entitled
to receive from Employer an amount equal to sixty percent of Officer's base salary payable over the greater of the two years immediately following Officer's termination or the remainder of the term of
this Agreement, reduced by payment received by Officer from Employer's long-term disability plan.

	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 Officer has not been compensated or reimbursed for services performed prior to
termination (the amount to be prorated for the portion of the pay period prior to termination) including payment of any earned but unpaid Paid Time Off, payments under any benefit plan and any other
rights and obligations under any benefit plan (including stock compensation plan) or agreement; the rights and obligations under Sections 6(d), 7, 8, and 9; and all procedural and remedial provisions
of this Agreement. A termination of this Agreement will constitute a termination of Officer's employment with Employer.

	f.
	Termination Upon a Change of Control. Officer will be entitled to terminate this Agreement upon a change of control and will be entitled
to all of the salary, benefits and other rights provided in this Agreement as though the termination had been initiated by Employer on such date without cause under Section 6(b). For purposes
of this Agreement, a change of control will take place upon the occurrence of any of the following events: (a) the acquisition after the beginning of the term of this Agreement in one or more
transactions of beneficial ownership (within the meaning of Rule 13d-3(a)(1) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) by any person or entity
(other than Officer) or any group of persons or entities (other than Officer) who constitute a group (within the meaning of Rule 13d-5 of the Exchange Act) of any securities of
Employer such that as a result of such acquisition such person or entity or group beneficially owns (within the meaning of Rule 13d-3(a)(1) under the Exchange Act) more than fifty
percent of Employer's then outstanding voting securities entitled to vote on a regular basis for a majority of the Board; or (b) the sale of all or substantially all of the assets of Employer
(including, without limitation, by way of merger, consolidation, lease or transfer) in a transaction (except for a sale-leaseback transaction) where Employer or the holders of common stock
of Employer do not receive: (i) voting securities representing a majority of the voting power entitled to vote on a regular basis for the Board of Directors of the acquiring entity or of an
affiliate which controls the acquiring entity; or (ii) securities representing a majority of the equity interest in the acquiring entity or of an affiliate that controls the acquiring entity,
if other than a corporation. 

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	7.
	Protection of Confidential Information/Non-Competition/Non-Solicitation. 

        Officer
covenants and agrees as follows: 

	a.
	During
the term of this Agreement and continuing for a period of five years after the expiration or termination of this Agreement for any reason, Officer 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 Officer's employment or, thereafter, upon receipt of the prior written
consent of Employer, any confidential business information, information that derives economic value from not being generally known to the public, or trade secrets of Employer or any corporate
affiliate or subsidiary, including, but not limited to: lists of past, current or potential customers; all systems, manuals, materials, processes and other intellectual property of any type used in
connection with business operations; financial statements, cost reports and other financial information; contract proposals and bidding information; rate and fee structures; policies and procedures
developed as part of a confidential business plan; and management systems and procedures, including manuals and supplements ("Confidential Information"). The obligation not to use or disclose any of
the Confidential Information will not apply, to: (i) any Confidential Information known by Officer before commencing employment with Employer and any predecessor or affiliated entities of
Employer; or (ii) as to times following the termination of the employment of Officer with Employer, any information that is or becomes public knowledge, through no unauthorized action or
inaction of Officer, 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 knowledge will run only from the date such information becomes public knowledge. The provisions above will be without prejudice to any rights or remedies of
Employer under any state or federal law protecting trade secrets or confidential information.

	b.
	During
the term of this Agreement and continuing for a period of two years after the expiration or termination of this Agreement for any reason, Officer will not, within a radius of
fifty miles of any operation of Employer or a corporate affiliate or subsidiary of Employer involved in the same business as Employer, engage, directly or indirectly, as a manager, consultant,
salesperson, officer, director or in any other role involving customer relations or senior management duties, in the business of behavioral managed care services. This prohibition will relate only to
sites of operations of Employer or its corporate affiliates or subsidiaries existing as of the date of the making of this Agreement. The parties agree, however, that in consideration of the covenants
made by Employer in this Agreement, Employer will be entitled to provide an updated list on an annual basis of sites of operations of Employer and its corporate affiliates and subsidiaries which
updated list will then constitute the pertinent sites for interpreting the geographic scope of the restrictions set forth in this Section. No failure to provide such a list, however, will establish a
waiver or prejudice Employer's right to provide a list at a later time.

	c.
	During
the term of this Agreement and continuing for a period of two years after the expiration or termination of this Agreement for any reason, Officer will not solicit, or attempt to
solicit, any current or prospective customer of Employer or of any corporate affiliate or subsidiary of Employer involved in the same business as Employer for the purpose of promoting the delivery of
behavioral managed care services by an entity or person(s) other than Employer or a corporate affiliate or subsidiary of Employer. For purposes of this Section, the term "current customer" is defined
as any entity or person(s) with whom Employer or its corporate affiliates or subsidiaries has provided, or has contracted to provide, behavioral or other specialty health managed care services during
the year preceding the expiration or termination of Officer's employment with Employer provided Officer either has had personal 

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contact
with such customer or received confidential business information about such customer. For purposes of this Section, the term "prospective customer" is defined as: (i) any entity or
person(s) with whom Employer or its corporate affiliates or subsidiaries have actively solicited or made presentations or proposals to, or negotiated with, to provide behavioral or other specialty
health managed care services during the year preceding the expiration or termination of Officer's employment with Employer provided Officer had personal contact with such prospective customer or
received confidential business information about such prospective customer; or (ii) any entity or person(s) with respect to which Officer was actively engaged in the planning or targeting of
such entity or person(s) for purposes of soliciting behavioral or other specialty health managed care services during the year preceding the expiration or termination of Officer's employment with
Employer. 

	d.
	During
the term of this Agreement and continuing for a period of one year after the expiration or termination of this Agreement for any reason, Officer will not, by himself or in
conjunction with or on behalf of any other person or entity, directly or indirectly, solicit or induce any employee of Employer or any of its corporate affiliates or subsidiaries to terminate his or
her employment with Employer or any of its corporate affiliates or subsidiaries. This prohibition will apply only to persons employed by Employer or any of its corporate affiliates or subsidiaries
during the one year immediately prior to the expiration or termination of this Agreement.

	e.
	Notwithstanding
anything else set forth in this Agreement, Officer's compliance with the terms of this Section 7 is an express condition precedent to Officer's entitlement to
any of the compensation and benefits set forth in this Agreement. Absent such compliance, Officer will gain no ownership or rights to said compensation and benefits. 

	8.
	Work Made for Hire. Officer agrees that any written program materials, protocols, research papers and all other writings (the "Work"),
which Officer develops for the use of Employer or a corporate affiliate or subsidiary during the term of this Agreement, 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 Employer. If, however, any court of competent jurisdiction finally declares that the Work is not
or was not a work made for hire as agreed, Officer agrees to assign, convey, and transfer to the Employer all right, title and interest Officer 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, Officer agrees to execute any documents necessary for Employer
to record and/or perfect its ownership of the Work and the applicable copyright. Notwithstanding anything to the contrary in this Section 8, Section 8 will not apply to any writings
Officer develops which are not for the use of Employer or a corporate affiliate or subsidiary or are in each instance specifically excluded in advance of publication from the coverage of the foregoing
by the Board.

	9.
	Property of Employer. Officer agrees that, upon the termination of this Agreement, Officer will immediately surrender to Employer all
property, equipment, funds, lists, books, records and other materials of Employer or any corporate affiliate or subsidiary in Officers possession or control.

	10.
	Governing Law. This Agreement and all issues relating to the validity, interpretation and enforcement of this Agreement will be
governed by and interpreted under the laws of the State of Maryland.

	11.
	Remedies. Employer and Officer agree that an actual or threatened violation by Officer of the covenants and obligations set forth in
Sections 7, 8 and 9 would cause irreparable harm to Employer and that the remedy at law for any such violation will be inadequate. Officer agrees, 

6

 

therefore,
that Employer 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. The provisions of Sections 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, through the use of and in accordance with the applicable rules of the American Arbitration Association relating to arbitration of
commercial disputes and pursuant to the Federal Arbitration Act. The determination and findings of such arbitrator(s) will be binding on all parties and may be enforced, if necessary, in any court of
competent jurisdiction. 

	 	 	
 Officer's Initials

	13.
	Notices. Any notice or other communication required to be given to any party under this Agreement will be given in writing and will be
deemed to have been fully given: (a) if mailed, first class mail, postage prepaid, five days after it is sent; (b) if sent by a nationally recognized next day delivery service that
obtains a receipt on delivery, the day after it is sent; and (c) in any other case, when actually received. In each case, notice will be sent to the following address (or such other addresses
as will be given in writing pursuant to this notice provision by any party to the other parties): 

	 	 	To Officer:	 	Mark S. Demilio

643 Sussex Road

Towson, Maryland 21286
	

 	
 	

To Employer:	
 	

Magellan Health Services, Inc.

6950 Columbia Gateway Drive

Suite 400

Columbia, MD 21046

Attention: President & CEO
	

 	
 	

With a copy to:	
 	

Magellan Health Services, Inc.

6950 Columbia Gateway Drive

Suite 400

Columbia, MD 21046

Attention: General Counsel

	14.
	Headings. The headings of the Sections of this Agreement have been inserted for convenience of reference only and will 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 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, if such reformation is allowable under applicable law. 

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	16.
	Binding Effect. This Agreement will be binding upon and will inure to the benefit of Employer's successors and assigns. This Agreement
may not be assigned by Officer to any other person or entity but may be assigned by Employer to any subsidiary or affiliate of Employer (provided Officer's duties
for the consolidated enterprise are not diminished) or to any successor to or transferee of all, or any part, of the stock or assets of Employer (subject to Officer's rights under
Section 6(f)).

	17.
	Employer Policies, Regulations and Guidelines for Officers. Employer may issue policies, rules, regulations, guidelines, procedures or
other informational material, whether in the form of handbooks, memoranda, or otherwise, relating to its officers. These materials are general guidelines for Officer's information and should not be
construed to alter, modify or amend this Agreement for any purpose whatsoever.

	18.
	Negotiated Document. The parties acknowledge and agree that this Agreement has been arrived at through a process of negotiation and no
one party should be deemed to be the drafter of this Agreement.

	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 the same subject matter unless expressly provided otherwise within this Agreement and except for any Stock
Option Agreements previously entered into by Officer and Employer. Officer acknowledges and agrees that this Agreement supersedes and extinguishes all obligations owed to Officer under any prior
agreement with Magellan Health Services, Inc. or any other corporate affiliate or subsidiary of Employer. Officer and Employer acknowledge and agree that Employer's corporate affiliates and
subsidiaries are express third party beneficiaries of this Agreement. Without limitation, this Agreement supersedes those agreements referenced-in the first  Whereas clause of this Agreement. No
amendment or modification of this Agreement will be valid unless made in writing and signed by each of the parties
whose rights, duties or obligations would in any way be affected by an amendment or modification. No representations, inducements or agreements have been made to induce either Officer or Employer to
enter into this Agreement other than those expressly set forth within this Agreement. Except as expressly set forth herein, this Agreement is the sole source of rights and duties as between Employer
and Officer relating to the subject matter of this Agreement. 

        IN
WITNESS WHEREOF, the parties have executed this Agreement on the 14th day of October, 2002. 

	OFFICER	 	MAGELLAN HEALTH SERVICES, INC.
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
Mark S. Demilio	 	By:	
 David S. Messina
 President & Chief Executive Officer

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Exhibit 10(as)

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Exhibit 10(at)    
  

 
  EMPLOYMENT AGREEMENT    
  

        THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into by and between Megan
Arthur, 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 August 1, 2002 and, unless terminated earlier in accordance with the terms of this Agreement, ending on July 31, 2003. Thereafter, this
Agreement shall automatically renew for twelve-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 ninety-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(b.) shall apply.

	2.
	Position and Duties of Employee. Employee's primary business office will be located in Columbia, Maryland. Employee will serve as
Executive Vice President and General Counsel, 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 until the expiration of the term or such time as Employee's employment with Employer is terminated pursuant to this Agreement. Notwithstanding
anything to the contrary contained herein, Employer may not materially decrease Employee's duties hereunder without his or her written consent. Breach of the foregoing sentence shall be deemed a
termination by Employer of Employee's employment without cause.

	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 Two Hundred Sixty Thousand ($260,000.00) 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 from time to time. Any reduction in Employee's base salary will be consistent with and the result of reductions made regarding other employees at his or her level.

	(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 

1

 

participate
in any annual incentive plan and stock option plan applicable to Employee by its terms. Employee will be entitled during the term of this Agreement 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 and 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 terminate upon the occurrence of any of the following events:

	(i)
	the
effective date of Employee's resignation (pursuant to paragraph 6(b.)), or;

	(ii)
	termination
for cause at the discretion of Employer under the following circumstances:

	1.
	Employee's
commission of an act of fraud or dishonesty involving his or her duties on behalf of Employer;

	2.
	Employee's
failure or refusal to faithfully and diligently perform duties assigned to Employee or other breach of any material term under this Agreement;

	3.
	Employee's
failure or refusal to abide by Employer's policies, rules, procedures or directives; or

	4.
	Employee's
conviction of a felony or a misdemeanor involving moral turpitude. 

If
Employee is terminated pursuant to this Section 6(a.), Employer's only remaining financial obligations 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; (iii) the Employee's vested portion of the Magellan Health Services Supplemental Accumulation Plan, Employer's 401(k) plan and any other retirement, deferred compensation or
other benefit plan; and (iv) any other sums due and owing to Employee as of the date of termination hereof. 

For
the events described in Sections 6(a.)(ii), (2.), and (3.), 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. 

	(b.)
	Termination Without Cause. Employee may terminate his or her employment without cause at any time by giving thirty-days
written notice of resignation to Employer. Employer may terminate this Agreement without cause at any time by giving thirty-days prior written notice to Employee. "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 may direct Employee to immediately cease providing services. 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 one-year. In addition, Employee 

2

 

shall
be entitled to payment for all accrued Paid Time Off, declared but unpaid bonuses (as defined in Section 7(a.)), and unreimbursed expenses in accordance with this Agreement. Such
payment(s) are contingent upon Employee executing Employer's standard severance agreement, which incorporates a general release, at the time of termination. No other benefits or compensation will be
paid to Employee if he or she is terminated pursuant to this Section 6(b.), unless otherwise provided for in this Agreement or under the terms of the applicable plan or benefit. 

	(c.)
	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(c.), Employer's only remaining financial obligation to Employee under this Agreement, in
addition to obligations, if any, under any applicable benefit plans, will be to pay any earned but unpaid base salary through the date of Employee's termination.

	(d.)
	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.

	(e.)
	Termination Upon a Change of Control. Employee, for a period of ninety-days following a change in control, will be
entitled to terminate this Agreement upon a change of control and will be entitled to the compensation provided in Section 4(a.) of this Agreement for a period of twelve-months. If Employer
terminates this Agreement without cause following a change in control, Employee will be entitled to the compensation provided for in Section 4(a.) of this Agreement, as if the termination had
been initiated without cause. For purposes of this Agreement, a change of control will take place upon the occurrence of any of the following events: (a) the acquisition after the beginning of
the term in one or more transactions of beneficial ownership (within the meaning of Rule 13d-3 (a)(1) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) by
any person or entity (other
than Employee or the Chief Executive Officer) who constitute a group (within the meaning of Rule 13d-5 of the Exchange Act) of any securities of Employer so that as a result of such
acquisition such person or entity or group beneficially owns (within the meaning of Rule 13d-3 (a)(i) under the Exchange Act) more than 50% of Employer's then outstanding
voting securities entitled to vote on a regular basis for a majority of the Board of Directors of Employer; or (b) the sale of all or substantially all of the assets of Employer (including,
without limitation, by way of merger, consolidation, lease or transfer) in a transaction where Employer or the holders of common stock of Employer do not receive: (i) voting securities
representing a majority of the voting power entitled to vote on a regular basis for the Board of Directors of the acquiring entity or of an affiliate which controls the acquiring entity, or
(ii) securities representing a majority of the equity interest in the acquiring entity or of an affiliate that controls the acquiring entity, if other than a corporation;  provided, that if Employee
becomes entitled to any payments (whether hereunder or otherwise) by reason of an event described in Internal Revenue Code
Section 280G (a "Parachute Event") that would constitute "excess parachute payments" (as defined in Internal Revenue Code Section 280G) if paid, then Employee's 

3

 

entitled
to such payments will be reduced by such amount as will cause none of such payments to constitute excess parachute payments, if and only if, the net amount received by Employee by reason of
the Parachute Event, after imposition of all applicable taxes (including taxes under Internal Revenue Code Section 4099), would be greater after such reduction than if such reduction were not
made. 

	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
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. 

"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. 

	(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. 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 behavioral managed care services in the United States.
Employee recognizes that the above 

4

 

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. Notwithstanding anything to the contrary contained herein, nothing herein shall be construed to limit Employee's right to engage in, consult with, act as an officer,
employee or director of, or have an equity or other interest in a diversified managed health care network, which does not earn more than twenty percent (20%) of its revenues from behavioral managed
care services in the United States, including without limitation a health maintenance organization or preferred provider organization. 

	(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 behavioral managed care services 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, behavioral managed care services and with whom Employee had, alone or in conjunction with others, Material Contact during
the twelve months prior to the termination of his or her employment. For purposes of this Section 7(c.), Employee had "Material Contact" with a customer if: (i) Employee 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 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 and all other writings (the "Work"),
which Employee develops for Employer's use, or for use by Employer's controlled subsidiaries or affiliates, during the term of this Agreement, 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. The foregoing will not apply to any writings Employee develops which
are not for Employer's use or are in each instance specifically excluded in advance of publication from the coverage of the foregoing by Employer's Board of Directors. 

5

 
	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 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 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:	 	Megan Arthur

7706 Graystone Court

Ellicott City, MD 21043

410/379-9378
	

 	
 	

To Employer:	
 	

Magellan Health Services, Inc.

6950 Columbia Gateway Drive

Columbia, Maryland 21046

Attention: President and CEO

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. 

6

 
	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 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.
	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. 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the 1st day of October, 2002. 

	

"Employee"	 	Magellan Health Services, Inc.

"Employer"
	

    
MEGAN ARTHUR	
 	

By:	

    
 Daniel S. Messina
 President and CEO

7

QuickLinks

Exhibit 10(at)

EMPLOYMENT AGREEMENT

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