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Exhibit 10.40    
    

 
 

AMENDMENT TO EMPLOYMENT AGREEMENT (TIER I)    
    

This
Amendment to Employment Agreement between Magellan Health Services, Inc. ("Employer") and R. Caskie Lewis-Clapper entered into as of this
28th day of July, 2006 ("Employee"). 

WHEREAS, Employer and Employee desire to amend the terms of the Employment Agreement currently in effect between Employer and Employee (the "Employment
Agreement"). 

NOW THEREFORE, Employer or Employee agree that the Employment Agreement is hereby amended as follows: 

I.     New Change in Control Provisions—Add the following new paragraphs:  

	1.
	Termination Without Cause by the Company or With Good Reason By Executive In connection With, Or Within Two Years After, A Change In
Control:    If Employer terminates this Agreement and Employee's employment without cause, or if Employee terminates this Agreement and Employee's employment with
Good Reason, in connection with a Change in Control (as defined below) (whether before or at the time of such Change in control) or within two years after a change in Control, Employee shall receive
the following, in lieu of the amounts and benefits described in Section 6:

	(i)
	Base
Salary through the date of termination;

	(ii)
	pro-rata
Target Bonus for the year in which termination occurs, payable in a single installment immediately after termination;

	(iii)
	2
times the sum of (a) Base Salary plus (b) Target bonus, payable in a single cash installment immediately after termination;

	(iv)
	if
employee elects COBRA coverage for health, dental and vision benefits, Employer shall pay Employer's contributions for health insurance and Employee shall pay
Employee's contributions rate for health, dental and vision insurance for up to eighteen (18) months after termination.

	(v)
	any
other amounts earned, accrued or owing to Executive but not yet paid;

	(vi)
	other
payments, entitlements or benefits, if any, that are payable in accordance with applicable plans, programs, arrangements or other agreements of the company or any
affiliate; and

	(vii)
	all
stock options granted to Employee from January 4, 2004 and prior to March 10, 2005 shall vest and become immediately exercisable. 

	2.
	Definitions:

	A.
	Change
in Control: 

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

	(i)
	any
"person," as such term is used in Sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), becomes a "beneficial
owner," as such term is used in Rule 13d-3 promulgated under the Exchange Act, of 51% or more of the Voting Stock (as defined below) of the Company;

	(ii)
	the
majority of the Board of Directors of the Company consists of individuals other than "Continuing Directors," which shall mean the members of the Board on the date
hereof, provided that any person becoming a director subsequent to the date hereof whose election or nomination for election was supported by a vote of the directors who then comprised the Continuing
Directors, shall be considered to be a Continuing Director;

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

	(iv)
	all
or substantially all of the assets of the Company are disposed of pursuant to a merger, consolidation, share exchange, reorganization or other transaction unless
the shareholders of the Company immediately prior to such merger, consolidation, share exchange, reorganization or other transaction beneficially own, directly or indirectly, in substantially the same
proportion as they previously owned the Voting Stock or other ownership interests of the Company, 51% of the Voting Stock or other ownership interests of the entity or entities, if any, that succeed
to the business of the Company; or

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

	B.
	"Cause"
in connection with a Change in Control shall mean:

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

	(ii)
	Employee's
commission of an act of fraud or dishonesty involving his or her duties on behalf of the Company;

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

	(iv)
	Employee's
willful failure or refusal to abide by the Company's policies, rules, procedures or directives, including any material violation of the Company's Code of
Ethics.

	C.
	"Good
Reason" shall mean:

	(i)
	a
reduction in Employee's salary in effect at the time of a Change in Control, unless such reduction is comparable in degree to the reduction that takes place for all
other employees of the Company of comparable rank, or a reduction in Employee's target bonus opportunity for the year in which or any year after the year in which the Change of Control occurs from
Employee's target bonus opportunity for the year in which the Change in Control occurs (if any) as established under any employment agreement Employee has with the Company or any bonus plan of the
Company applicable to Employee (or, if no such target bonus opportunity has yet been established for Employee under a bonus plan applicable to Employee for the year in which the Change of Control has
occurred, the target bonus opportunity so established for Employee for the immediately preceding year, if any);

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

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

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

	D.
	"Company"
shall include any entity that succeeds to all or substantially all of the business of the Company,

	E.
	"Affiliate"
of a person or other entity shall mean a person or other entity that directly or indirectly controls, is controlled by, or is under common control with the person or other
entity specified,

	F.
	"Voting
Stock" shall mean any capital stock of any class or classes having general voting power under ordinary circumstances, in the absence of contingencies, to elect the directors of
a corporation and reference to a percentage of Voting Stock shall refer to such percentage of the votes that all such Voting Stock is entitled to cast.

	3
	Tax Gross-Up.    The following provisions shall apply with respect to any excise tax imposed under
Section 4999 of the Internal Revenue Code as amended (the "Code"), (the "Excise Tax):

	a.
	If
any of the payments or benefits received or to be received by Employee in connection with a Change in Control or Employee's termination of employee (whether pursuant to the terms of
this Agreement or any other plan, arrangement of agreement with the Company, any person whose actions result in a Change on Control of the Company or any person affiliated with the Company or such
person (the "Total Payments")) will be subject to the Excise Tax, the Company shall pay to Employee an additional amount (the "Gross-Up Payment") such that the net amount retained by
Employee after payment of (a) the Excise Tax, if any, on the Total Payments and (b) any Excise Tax and income tax due in respect of the Gross-Up Payment, shall equal the
Total Payments. Such payment shall be made in a single lump sum within 10 days following the date of a determination that only such payment is required.

	b.
	For
purposes of determining whether any of the Total payments will be subject to Excise Tax and the amount of such Excise Tax, (i) any Total Payments shall be treated as
"parachute payments" (within the meaning of Section280G(b) (2) of the Code) unless, in the opinion of tax counsel selected by the Company and reasonably acceptable to Employee, such payments or
benefits (in whole or in part) should not constitute parachute payments, including by reason of Section 280G (b) (4) (A) of the Code, and all "excess parachute payments" (within
the meeting of Section 280G(b) (1) of the Code) shall be treated as subject to the Excise Tax unless, in the opinion of such tax counsel, such excess parachute payments (in whole or in
part) represent reasonable compensation for services actually rendered 

(within
the meaning of Section 280G(b) (4) (B) of the Code), or are otherwise not subject to the Excise Tax, and (ii) the value of any noncash benefits or any deferred payment or
benefit shall be determined by the Company's independent auditors in accordance with the principles of Section 280G(d) (3) of the Code. For purposes of determining the amount of the
Gross-Up payment, Employee shall be deemed to pay federal income and employment taxes at the highest marginal rate of federal income and employment taxation in the calendar year in which
the Gross-Up Payment is to be made and state and local income and employment taxes at the highest marginal rate of taxation in the state and locality of Employee's residence on the date of
termination of employment (or such other time as hereinafter described), net of the maximum reduction in federal income or employment taxes which could be obtained from deduction of such state and
local taxes. 

In
the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time of termination of Employee's employment (or such other time as is
hereinafter described), Employee shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment
attributable to such reduction plus interest on the amount of such repayment at the applicable federal rate, as defined in Section 1274(b) (2) (B) of the Code. In the event that the
Excise Tax is determined to
exceed the amount taken into account hereunder at the time of the termination of Employee's employment (or such other time as is hereinafter described) (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus
any interest at the applicable federal rate, penalties or additions payable by Employee with respect to such excess) at the time that the amount of such excess is finally determined. Employee and the
Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the
Total payments. 

II.    Other Changes  

	1.
	Amendment to Section 6(c)

Section 6 (c) in the Employment Agreement is hereby amended to change the reference in the fifth line from "35 miles" to "50 miles".

	2.
	Amendment to Section 7(b)(i):

Section 7(b)(i) is hereby amended to delete it and insert the following in place thereof:

(i)    Employee covenants and agrees that during any period in which Base Salary is continued after termination of this Agreement (or in respect of which Base Salary is paid in a lump sum)
or for one year after Employee's voluntary termination of employment without Good Reason or termination of Employee's employment for cause, 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 services in the 

United
States that are services offered by Employer at the time of the termination of this Agreement, unless waived in writing by Employer in its sole discretion. Employee recognizes that the above
restriction is reasonable and necessary to protect the interest of the Employer and its controller subsidiaries and affiliates. 

IN WITNESS WHEREOF, Employer and Employee have executed this Amendment to Employment Agreement as of the date first above written. 

	Magellan Health Services, Inc.	 
	

By	

/s/ Daniel Gregoire
 Duly Authorized	

 
	

 	

 	

 
	/s/ R. Caskie Lewis-Clapper
	 
	 	Employee	 

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Exhibit 10.40

AMENDMENT TO EMPLOYMENT AGREEMENT (TIER I)QuickLinks
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Exhibit 10.43    
    

EXECUTION
COPY 

 
 

EMPLOYMENT AGREEMENT    
    

        THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into by and between Raju Mantena, an individual
("Employee"), and Magellan Health Services, Inc. ("Magellan"), on behalf of itself and its subsidiaries and affiliates (collectively referred to herein as "Employer"), this 27th day of
June 2006. 

        WHEREAS, Employee currently is the chief executive officer and president of ICORE Healthcare, LLC ("ICORE') and owns an equity
interest in ICORE; and 

        WHEREAS, Magellan, Green Spring Health Services Inc., a Delaware corporation and wholly-owned subsidiary of Employer ("Acquiring
Corp."), Magellan Sub Co. II, Inc. (a wholly-owned subsidiary of Acquiring Corp.) and ICORE have entered into the Agreement and Plan of Merger, dated as of June 27, 2006 (the
"Merger Agreement"), pursuant to which, on the terms and conditions therein provided, Magellan Sub Co. II, Inc., will be merged with and into ICORE which will continue as the surviving
entity and which will continue the business of ICORE (the "Merger"); and 

        WHEREAS, Employee has entered into a Subscription Agreement with Magellan, dated as of June 27, 2006 (the "Subscription
Agreement"), pursuant to which, on the terms and conditions therein provided, Employee has agreed to purchase certain shares of common stock of Magellan; and 

        WHEREAS, Employer desires to obtain the services of Employee and Employee desires to render services to Employer, effective upon the
Merger, with Employee in such employment continuing to serve as chief executive of ICORE's business; 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, effective upon and subject to the closing of the Merger, for a term commencing on the Closing Date provided by the Merger Agreement (the "Commencement
Date") and continuing until December 31, 2008, unless terminated earlier in accordance with the terms of this Agreement. The duration of Employee's employment hereunder shall automatically
renew for successive twelve (12) month periods as of the day it would otherwise terminate, unless prior notice of termination is given as provided herein. Until December 31, 2008, 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 and eighty (180) days prior to the next
renewal date. Starting in 2009, if either party decides not to renew this Agreement, they must provide the other party notice of their intent not to renew the Agreement at least ninety
(90) days prior to the next renewal date. Employer's notice of intent not to renew the Agreement shall be deemed to be a termination of employment by Employer without cause and the provisions
of Section 6(c) shall apply. On the Commencement Date, Employee shall deliver to Magellan a General Release and Covenant Not to Sue, signed by Employee, in the form of  Exhibit A attached
hereto, effective upon delivery on the Commencement Date (the "Commencement Date Release"). Delivery by Employee of the signed
Commencement Date Release to Magellan is a material term of this Agreement. 

        2.    Position and Duties of Employee.    Employee will serve as
President and Chief Executive Officer of ICORE Healthcare, LLC, and Senior Vice President of Magellan, Specialty Pharmacy Strategic Business Unit. In both of these capacities, Employee will
report to the President and Chief Operating Officer of Magellan. Subsequent to December 31, 2008, Employee agrees to serve in such other positions, and to perform the duties that Employer may
assign from time to time to Employee after such date in
connection with such position, as are consistent with Employee's status as an executive of Magellan of comparable rank and at the same or greater base salary level and a similar location. 

        3.    Time Devoted.    Employee 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. Employee agrees that he 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. Employee shall not participate on any outside boards, public or private,
without the prior written permission of Employer. 

        4.    Compensation.    

        (a)    Base Salary.    Employer will pay Employee a base annual salary in the amount of Two Hundred Seventy Thousand
($270,000) dollars, 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 upward adjustment by Employer from time to time. 

        (b)    Benefits.    Except as otherwise provided by Section 4(c), Employee will be eligible to participate in
Employer's benefit plans commensurate with his position. Employee will receive separate information detailing the terms of such benefit plans and the terms of those plans will control. 

        (c)    Bonus.    It is understood and agreed that Employee shall not, unless otherwise agreed in writing by Employer,
be eligible to participate in any annual incentive plan or in Magellan's 2006 Management Incentive Plan (and any comparable subsequent stock incentive plan). 

        (d)    Withholding.    The Company shall be entitled to deduct and withhold from any payment to be made to Employee
hereunder such amounts as may be required to be deducted 

and
withheld by it (or any affiliated company) with respect to the making of such payment under the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder (the
"Code"), or under any provision of state, local or foreign tax law and any regulations thereunder. To the extent amounts are so withheld and paid over
to the appropriate taxing authority in respect of
Employee, the withheld amounts shall be treated for all purposes of this Agreement as having been paid to Employee. 

        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.    

        (i)    Without "Good Reason."    Employee may resign his employment at any time without "Good Reason" (as defined in
Section 6(a)(ii)) by giving one hundred and eighty (180) days' prior written notice of resignation to Employer, prior to December 31, 2008, and ninety (90) days prior
written notice of resignation to Employer, after December 31, 2008. Except as otherwise set forth in this Agreement or as otherwise required by law, Employee's employment, and Employee's right
to receive compensation and benefits from Employer, will terminate upon the effective date of Employee's termination due to resignation without "Good Reason". If Employee resigns pursuant to this
Section 6(a)(i), Employer's only remaining financial obligation to Employee under this Agreement will be to pay Employee: (a) any earned but unpaid Base Salary and accrued paid time off
through the effective date of Employee's termination; (b) reimbursement of expenses incurred by Employee through the effective date of termination which are reimbursable pursuant to this
Agreement; (c) the Employee's vested portion of any Magellan deferred compensation or other benefit plan, as determined in accordance with the provisions of such plan; and (d) any other
sums due and owing to Employee as of the date of termination. 

        (ii)    With "Good Reason."    Employee may resign his employment at any time with "Good Reason" by giving thirty
(30) days prior written notice of resignation to Employer, provided that Employer will have thirty (30) days following receipt of such notice to cure any conduct or act, if curable,
alleged to provide grounds for termination for Good Reason hereunder. Except as otherwise set forth in this Agreement or as otherwise required by law, Employee's employment, and Employee's right to
receive compensation and benefits from Employer, will terminate upon the effective date of Employee's termination due to resignation with "Good Reason". If Employee resigns pursuant to this
Section 6(a)(ii), Employer's only remaining financial obligation to Employee under this Agreement will be to provide the payments and 

benefits
delineated in Section 6(c) of this Agreement, on the terms and conditions included therein (including the requirement for delivery by Employee to Magellan of the release provided
therein), as if Employer had terminated Employee's employment hereunder without cause. "Good Reason" shall mean the occurrence of any of the following events: (x) a material breach by Employer
of its obligations to Employee under this Agreement or the Merger Agreement; (y) a material reduction in Employee's duties or title without Employee's prior written consent; or (z) a
change or termination of any benefit plan in which Employee participates, in a manner that has an adverse effect on the Employee in comparison to other executives of similar rank. It is understood and
agreed that, in connection with Magellan's acquisition of ownership of ICORE and the on-going operation of ICORE as a subsidiary of Magellan, Magellan may be providing certain
administrative services with respect to ICORE's business, as have customarily been provided by Magellan to its subsidiary operations as "corporate office" services, such as internal audit, treasury,
accounting, financial, legal, information technology and human resources services. Accordingly, clause (y) of the foregoing definition of Good Reason shall be applied in the context that
ICORE's administrative processes in such areas may change and that changes of such nature will not constitute a change in Employee's duties. In addition, for further clarification with respect to
clause (z) of the foregoing definition of Good Reason, the termination by Employer of a benefit plan in which Employee and similarly situated employees participate on the same terms as to
Employee as applicable to similarly situated employees shall not constitute "Good Reason." 

        (b)    Termination with Cause.    Except as otherwise set forth in this Agreement or as otherwise required by law,
Employee's employment, and Employee's right to receive compensation and benefits from Employer, may be terminated for cause at the discretion of Employer under the following circumstances: 

	(i)
	Employee's
commission of an act of fraud or dishonesty involving his duties on behalf of Employer;

	(ii)
	Employee's
failure or refusal to faithfully and diligently perform duties assigned to Employee in accordance with, or other breach of any material term of, this
Agreement;

	(iii)
	Employee's
failure or refusal to abide by Employer's policies, rules or directives; or

	(iv)
	Employee's
conviction of a felony or a misdemeanor involving moral turpitude. 

If
Employee is terminated pursuant to this Section 6(b), Employer's only remaining financial obligation to Employee under this Agreement will be to pay Employee the following: (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 any Magellan deferred compensation or other benefit plan, as determined in 

accordance
with the provisions of such plan; and (iv) any other sums due and owing Employee as of the date of termination. 

Before
terminating Employee's employment by reason of any of the deficiencies in performance described in Sections 6(b)(i), (ii), (iii) and (iv), Employer will give Employee written
notice indicating the specific termination provision relied upon and setting forth in reasonable detail the facts and circumstances claimed to provide the basis for the termination and will provide a
reasonable opportunity to cure such situation (if cure is possible), but in no event less then twenty (20) days or more than thirty (30) days. 

        (c)    Termination Without Cause.    Employer may terminate this Agreement without cause at any time by giving thirty
(30) days prior written notice to Employee. "Without cause" termination shall include Employer's notice to Employee of its intent not to renew this Agreement in accordance with the provisions
of Section 1 hereof. If Employer terminates this Agreement without cause, Employer shall pay Employee the following in accordance with Employer's payroll practices: (i) any earned but
unpaid Base Salary and accrued paid time off through the effective date of Employee's termination; (ii) Employee's annual Base Salary over the subsequent 12 months (such 12 month
period, the "Severance Period"); (iii) reimbursement of expenses incurred by Employee through the effective date of termination which are reimbursable pursuant to this Agreement;
(iv) the Employee's vested portion of any Magellan deferred compensation or other benefit plan, as determined in accordance with the provisions of such plan; and (v) any other sums due
and owing Employee as of the date of termination. The payments to be made to Employee pursuant to this Section 6(c) shall, unless otherwise required to be made under the terms of a benefit
plan, be contingent upon Employee executing and delivering to Magellan upon or as soon as practicable after the effective date of the termination of his employment a release in the form attached to
this Agreement as Exhibit B, and Employee not having given notice of cancellation thereof in accordance therewith during the period provided
thereby. Employee may elect "COBRA coverage" so as to continue health, dental, and vision insurance during the Severance Period and beyond. If COBRA coverage is elected, Employer will continue to pay
the Employer's contribution rate for the health, dental, and vision insurance during the Severance Period as it does for continuing employees; it being understood that currently Employer makes no
contribution to dental or vision insurance coverage for its employees. 

        (d)    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 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 position for such period, in either case as
determined, in the event of a disagreement, by a medical doctor selected by Employer and acceptable to Employee. If Employee is terminated pursuant to this Section 6(d), Employee will receive
the following in accordance with Employer's payroll practices: (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 any deferred compensation or other benefit plan, including but not limited to any stock incentive plan, as determined in accordance with the provisions of
such plan; and (iv) any other sums due and owing Employee as of the date of termination. 

        (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 (i) 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), (ii) the rights and obligations under
Sections 7, 8 and 9 and (iii) all procedural and remedial provisions of this Agreement. 

        (f)    Provisions Related to the Merger Agreement.    As long as Employee is employed pursuant to this Agreement or
his employment has terminated pursuant to Section 6(a)(ii), 6(c) or 6(d) (a "Qualifying Reason"), Employee shall be considered an Employee in Good Standing for purposes of the Merger Agreement. 

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

        Employee
covenants and agrees that in consideration of the Merger Consideration in connection with the Merger and in consideration of Employer employing Employee pursuant to the terms of
this agreement as follows: 

        (a)(i)    Confidential Information.    During Employer's employment of Employee and 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 knowledge during his employment by Employer (the "Confidential Information" as hereinafter
further 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 or
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 knowledge during his 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. 

        It
is understood that neither "Confidential Information" nor "Trade Secrets" include information which: 

	(a)
	is
or subsequently becomes publicly available without the breach of any obligation owed to the Employer;

	(b)
	is
disclosed with the prior written approval of the Employer; or

	(c)
	is
obligated to be produced under order of a court of competent jurisdiction or a valid administrative, congressional, or other subpoena, civil investigative demand or similar
process; provided, however, that upon issuance of any such order, subpoena, demand or other process, the Employee shall promptly notify the Employer and
shall provide the Employer with an opportunity (if then available) to contest, at the Employer's expense, the propriety of such order or subpoena (or to arrange for appropriate safeguards against any
further disclosure by the court or administrative or congressional body seeking to compel disclosure of such Confidential Information). 

        (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.    

	(i)
	Employee
covenants and agrees that during the term of his employment with Employer and for a period of two (2) years immediately following the termination of said
employment for any reason, he will not, on his 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 services in the United States that are services on the date hereof offered by Employer or offered at the time of the termination of this Agreement,
unless waived in writing by Employer in its sole discretion; provided, however, that the foregoing restriction shall only apply to services offered by Magellan and its subsidiaries and not to services
provided by a person who comes to control Magellan and not also provided by Magellan prior to such event. Employee recognizes that the above restriction is reasonable and necessary to protect the
interest of the Employer and its controlled subsidiaries and affiliates.

	(ii)
	During
the period immediately following Employee's termination from his employment with Employer, Employee may submit a written request to Employer outlining a proposed
employment or other employment opportunity that Employee is considering. Employer will review such request, and make a determination within ten (10) business days following receipt of such
request, in its sole discretion, as to whether the opportunity would constitute a breach of the non-competition covenant. 

        (c)    Non-Solicitation.    To protect the goodwill of Employer and its controlled subsidiaries and
affiliates, or the customers of Employer and their respective controlled subsidiaries and affiliates, Employee agrees that, for a period of two (2) years immediately following the termination
of his employment with Employer, he will not, without the prior written permission of Employer, directly or indirectly, for himself 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 services that were offered by Employer, if Employer is then still engaged in the sale or
provision of such services at the time of the solicitation; provided, however, that the foregoing restriction shall only apply to services offered by Magellan and its subsidiaries and not to services
provided by a person who comes to control Magellan and not also provided by Magellan prior to such event. For purposes of this Section 7(c), "Customer" means any individual or entity to whom
Employer has provided, or contracted to provide, services during Employee's employment with Employer. 

        (d)    Solicitation/Hiring of Employees.    During Employer's employment of Employee and for a period of two
(2) years following the termination of Employee's 

employment
with Employer for any reason, Employee will not solicit for employment or hire, directly or indirectly, any employee of Employer who was employed with Employer within the one
(1) year period immediately prior to Employee's termination. 

        (e)    Termination of Restrictive Covenants.    Notwithstanding the foregoing provisions of this Section 7, in
the event that the Deferred Payment (as defined in the Merger Agreement) required to be made to Company Unitholders (as defined in the Merger Agreement) is not made within five business days of the
day when such payment is due pursuant to the Merger Agreement, then the restrictive covenants of Sections 7(b), (c) and (d) hereof shall thereupon automatically terminate and be
of no further force or effect; it being understood and agreed that, in the event at the time the Deferred Payment is to be made a dispute exists with respect to the application of Article VIII
of the Merger Agreement to the calculation of the amount of the Deferred Payment, the failure to make payment of the amount so in
dispute shall not be considered as a failure to make payment of the Deferred Payment for purposes hereof. 

        8.    Work Made for Hire.    Employee agrees that any written program materials, protocols,
research papers, other writings, as well as improvements, inventions, new techniques, programs or products (the "Work") made or developed by Employee within or after normal working hours relating to
the business or activities of Employer or any of its subsidiaries, shall be deemed to have been made or developed by Employee solely for the benefit of Employer and 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. 

        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 Connecticut. 

        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 4, 5, 6, 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 Avon, Connecticut in accordance with the rules of the American Arbitration Association relating to the arbitration of
employment disputes in effect at the time. 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:	 	Raju Mantena

9512 Tavistock Road

Orlando, FL 32827
	

 	

To Employer:	
 	

Magellan Health Services, Inc.

55 Nod Road

Avon, CT 06001

Attention: General Counsel

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. 

        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
employees' information and will not be construed to alter, modify, or amend this Agreement for any purpose whatsoever. 

        18.    No Mitigation; No Set-off.    In the event of any termination of employment
under Section 6(a)(ii), (c) or (d), Employee shall be under no obligation to mitigate the amount of any payment by seeking other employment and there shall be no offset against any
amounts due the Employee under this Agreement on account of any remuneration attributable to any subsequent employment that Employee may obtain. 

        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 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. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK—SIGNATURES ON FOLLOWING PAGE] 

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the 27th day of June 2006. 

	 	 	MAGELLAN HEALTH SERVICES, INC.
	"Employee:"	 	"Employer"
	

/s/ Raju Mantena
	
 	

By:	

/s/ René Lerer

	RAJU MANTENA	 	Name:	  

	 	 	Title:	  

QuickLinks

Exhibit 10.43

EMPLOYMENT AGREEMENT

STATEMENT OF AGREEMENT

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