Chief Operating Officer Employment Agreement

Exhibit 10


EMPLOYMENT AGREEMENT


THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into by and between John Wider, an individual ("Officer"), and MAGELLAN BEHAVIORAL HEALTH, INC., a Delaware corporation ("Employer").


WHEREAS, Employer desires to obtain the services of Officer and Officer desires to render services to Employer; and


WHEREAS, Employer and Officer desire to set forth the terms and conditions of Officer'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 Officer, and Officer accepts such employment in accordance with the terms of this Agreement, for an initial term of three years commencing on November 17, 1998 and, unless terminated earlier in accordance with the terms of this Agreement, ending on November 16, 2001. After the initial three-year term has expired, this Agreement will renew automatically on the anniversary date of each year for a one-year term. 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 one hundred twenty days prior to the next anniversary date.


2. POSITION AND DUTIES OF OFFICER. Officer will serve as President and Chief Operating Officer of Employer. Officer agrees to serve in such position, or in such other positions of a similar status or level with substantially similar duties, and to perform the duties commensurate with such position that Employer may assign from time to time to Officer until the expiration of the term or such time as Officer's employment with Employer is terminated pursuant to this Agreement. The parties acknowledge and agree that shifts in reporting relationships from "straight line" to "dotted line" or vice versa for certain corporate functions will not be deemed a violation of this Section or Section 6(c)(iv).


3. TIME DEVOTED AND LOCATION OF OFFICER.


(a) Officer will devote his or 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 or she will diligently endeavor to perform services contemplated by this Agreement in a manner consistent with his position and in accordance with the policies established by the Employer.


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


4. COMPENSATION.


(a) BASE SALARY. Employer will pay Officer a base salary in the amount of three hundred eighty thousand dollars per year, which amount will be paid in bi-weekly intervals less appropriate withholdings for federal and state taxes and other deductions authorized by Officer. Such salary will be subject to review and potential increase by Employer from time to time. Any reduction in Officer's base salary will be consistent with and the result of reductions made regarding other officers or employees at his level including the President and Chief Executive Officer of Magellan Health Services.


(b) BENEFITS. Officer will be eligible to participate in benefit plans commensurate with his position. Officer will receive separate information detailing the terms of such benefits and the terms of such plans will control. Officer also will be eligible to participate in any annual incentive plan and stock option plan applicable to Officer by its terms. 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 salaried officers or employees of Employer, and also will be eligible to participate in other executive level benefits adopted for officers or employees at his level. This Agreement shall not be construed to modify or limit Officer's right to applicable COBRA benefits in the event of termination of this Agreement.


5. EXPENSES. During the term of this Agreement, Employer will reimburse Officer 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 officers and employees generally.


6. TERMINATION.


(a) TERMINATION DUE TO RESIGNATION AND TERMINATION WITH CAUSE. Except as otherwise set forth in this Agreement, this Agreement, Officer's employment, and 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, or (ii) termination for cause at the discretion of Employer under the following circumstances: (w) Officer's commission of an act of fraud or dishonesty involving his duties on behalf of Employer; (x) Officer's willful failure or refusal to faithfully and diligently perform duties assigned to Officer or other breach of any material term under this Agreement; (y) Officer's willful failure or refusal to abide by Employer's policies, rules, procedures or directives; or (z) Officer's conviction of a felony or a misdemeanor involving moral turpitude. If Officer resigns or is terminated pursuant to this Section 6(a), Employer's only remaining financial obligation to Officer under this Agreement will be to pay any earned but unpaid base salary through the date of Officer's termination.


For the events described in Sections 6(a)(ii)(x) and (y), Employer will give Officer written notice of such event and a reasonable opportunity to cure such situation, but in no event less than thirty days.


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(b) TERMINATION WITHOUT CAUSE AND EXPIRATION. 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 shall continue to pay Officer severance as hereinafter defined for a period of time equal to the greater of (i) the remaining term of this Agreement or (ii) two years. For purposes of this Section 6(b), "severance" shall mean the compensation provided for in Section 4(a) of this Agreement plus a prorated bonus calculated with reference to any existing bonus plan and the date of termination of this Agreement. Officer's entitlement to a pro-rated bonus will be subject to established terms of such bonus plan and the performance of Officer's relevant business unit. In addition, Employer will continue to pay, during the severance period, the portion of premiums for life, health and disability insurance maintained by Employer in which Officer participated at the date of termination. No other severance benefits or compensation will be paid to Officer if he is terminated pursuant to this Section 6(b), unless otherwise provided for in the terms of the applicable benefit plan. In the event of non-renewal of this Agreement by Employer, Employer shall pay Officer severance for a period of two years from the date of expiration of this Agreement. As a precondition to the right to receive any severance, Officer shall be in strict compliance with Officer's obligations as set forth in Section 7 of this Agreement.


(c) TERMINATION BY OFFICER FOR GOOD CAUSE. Officer may terminate this Agreement, and his employment with Employer, for "good cause" upon the occurrence of any of the following:


(i) a requirement by Employer that Officer relocate his personal residence in order to fulfill Officer's duties under this Agreement;


(ii) the failure of Employer to comply with Section 4;


(iii) any material breach of this Agreement by Employer; or


(iv) the assignment to Officer of any duties inconsistent with Officer's status as President and Chief Operating Officer of Employer or a substantial alteration in the nature or status of his responsibilities.


Prior to terminating this Agreement pursuant to this Section, Officer shall give to Employer written notice of his "good cause" for terminating this Agreement and provide Employer with a reasonable period in which to contest or correct the "good cause", but in no event less than thirty days. In the event of a termination for "good cause" pursuant to this Section, Officer will be entitled to receive all compensation and benefits provided for in this Agreement for a termination by Employer without cause.


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(d) AUTOMATIC TERMINATION. This Agreement will terminate automatically upon the death or permanent disability of Officer. Officer 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, Officer has been unable to perform the essential functions of his position for a period of 180 consecutive days, or if Officer can reasonably be expected to be unable to perform the essential functions of his position for such period. The term "essential duties" is defined as the ability to consistently perform his assigned duties, including travel requirements. Subject to continuing coverage under applicable benefit plans, if Officer is terminated pursuant to this Section 6(d), Employer's only remaining financial obligation to Officer under this Agreement will be to pay any earned but unpaid base salary t ...