EXHIBIT 10(x)
June 4, 1999
Mr. Mark Demilio
643 Sussex Road
Towson, Maryland 21286
Dear Mark:
This letter is to confirm our revised offer to you for the position of Executive
Vice President and General Counsel for Magellan Health Services. In this
position, you will report to me and receive an annualized salary of $230,000,
payable semi-monthly. You will also receive a car allowance of $1000 per month
payable semi-monthly.
Regarding additional executive compensation, you will participate (in accordance
with plan eligibility rules) in the Magellan Health Services Short-Term
Incentive (STI) Program at a target level of 40% of your base salary. Payment is
based on corporate performance as well as individual performance against
objectives and approved plan funding. As you are not eligible to participate in
this plan for FY '99, I will consider you for a bonus in the range of $10 - 20K
assuming Magellan Health Services hits all '99 STI targets. As a further
statement of our confidence in you to successfully take on the challenges of
this position, I am awarding you 40,000 stock options which will have a strike
price based on the market value on the date of your employment with Magellan.
This option grant has a three-year graduated vesting schedule.
Regarding our benefits programs, you will be eligible for enrollment in health,
dental, vision, life insurance and flexible spending accounts on the first of
the month following 30 days of employment. Both short-term and long-term
disability programs have a six-month eligibility waiting period. These benefits
are highlighted in the attached brochure. In addition to a 401(k) Plan, which is
also described in the brochure, there is a 401(k) Plus program that has a
company contribution target of 2% of the employee's compensation (up to the IRS
limit for qualified plans) regardless of participation in the 401(k). This has a
three-year cliff vesting schedule. The Employee Stock Purchase Plan, while
described in the brochure, is not available to employees who report directly to
me.
In addition to these benefits and the time off benefits noted for management,
you will be eligible for a new executive benefit that we are currently designing
for rollout later this year. This will be a 100% company contributed annual
deferred compensation program. The target contribution for officers in positions
equivalent to yours is projected to be in the range of 7 - 9% of base
compensation. Contributions will be self-directed by the officer within an array
of investment funds designated for the plan.
As discussed, we will provide you with severance protection of one year's base
compensation if there is a change of control for Magellan Health Services and
your employment is terminated for any reason other than "for cause". Voluntary
resignation would only trigger severance in the event you resign with good
cause, i.e. you resign as a result of your duties being materially reduced; your
salary being reduced if the reduction is not part of a general reduction for
officers in equivalent positions; your eligibility for bonus plans or benefits
plans is restricted unless the restriction applies in general to officers in
equivalent positions; or you are asked to relocate your office outside the
greater Baltimore area. The severance arrangement would be as follows: In the
event you leave the company for reasons other than voluntary
resignation or dismissal for "cause", you will be eligible for twelve months of
severance. "Cause" for termination includes any of the following: commission of
an act of fraud or dishonestly involving his or her duties on behalf of
Magellan; willful failure or refusal to faithfully and diligently perform duties
as assigned or breech of material terms under any employment agreement; willful
failure or refusal to abide by Magellan's policies, rules, procedures or
directives; conviction of a felony or misdemeanor involving moral turpitude; or
breech of the non-competition and non-solicitation provisions in this offer
letter.
As a general policy of our company, by accepting this offer, you agree that,
during the tenure of your employment with the company and for a period of one
year thereafter, you will not directly or indirectly (i) solicit or contact for
business purposes any existing customer of the company or any prospective
customer of the company with which you had contact during your employment, or
(ii) offer employment to any of the company's employees, agents or consultants,
or (iii) induce, or attempt to induce, any of the company's employees, agents or
consultants to do anything for which you are restricted by reason of this
covenant for non-Magellan business, or (iv) assist any firm, corporation or
business entity as an owner, officer, director, employee, agent, security holder
or creditor that engages in the managed specialty and/or behavioral health
field. Also, please note that nothing in this letter is to be construed or
interpreted as a promise of employment for a particular term or period of time
and this letter supersedes any and all prior communications, both written and
verbal, concerning your employment with the company.
We are enthused about the prospect of your acceptance of this position and would
like your decision by Tuesday, June 1. If you have any questions about this
offer, please talk with Chris Pettingill, our Senior Vice President of Human
Resources at 410-953-1101 or me.
Sincerely,
/s/ Henry Harbin
Henry Harbin
CEO
Magellan Health Services
/s/ Mark Demilio
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Accepted by Mark Demilio Date