Health Net 2009 Annual Report Download - page 75

of our strategic review, which included entering into the Stock Purchase Agreement for the sale of our Northeast
business. On December 8, 2009, we announced that our Board of Directors has authorized the Company to
resume repurchases of its common stock under the existing stock repurchase program.
We repurchased 860,737 shares of our common stock during the year ended December 31, 2009, for
aggregate consideration of approximately $20.6 million. We used net free cash available, including proceeds
received from the Northeast Sale, to fund the share repurchases. As of December 31, 2009, the remaining
authorization under our stock repurchase program was $82.7 million and, since its inception, we had repurchased
an aggregate of 37,484,084 shares of our common stock at an average price of $34.16 for aggregate consideration
of approximately $1,280.4 million. As of February 22, 2010, the remaining authorization under our stock
repurchase program was approximately $3 million due to share repurchases that occurred after December 31,
2009.
Amortizing Financing Facility
On December 19, 2007, we entered into a five-year, non-interest bearing, $175 million amortizing financing
facility with a non-U.S. lender and we entered into amendments to the financing facility on April 29, 2008 and
November 10, 2008, which were administrative in nature. On March 9, 2009, we amended certain terms of the
documentation relating to the financing facility to, among other things, (i) eliminate the requirement that we
maintain certain minimum public debt ratings throughout the term of the financing facility and (ii) provide that
the financing facility may be terminated at any time at the option of one of our wholly-owned subsidiaries or the
non-U.S. lender. The proceeds from the financing facility were used for general corporate purposes.
As amended, the financing facility requires one of our subsidiaries to pay semi-annual distributions, in the
amount of $17.5 million, to a participant in the financing facility. Unless terminated earlier, the final payment
under the facility is scheduled to be made on December 19, 2012.
The financing facility includes limitations (subject to specified exclusions) on certain of our subsidiaries’
ability to incur debt; create liens; engage in certain mergers, consolidations and acquisitions; engage in
transactions with affiliates; enter into agreements which will restrict the ability of our subsidiaries to pay
dividends or other distributions with respect to any shares of capital stock or the ability to make or repay loans or
advances; make dividends; and alter the character of the business we and our subsidiaries conducted on the
closing date of the financing facility. In addition, the financing facility also requires that we maintain a specified
consolidated leverage ratio and consolidated fixed charge coverage ratio throughout the term of the financing
facility. As of December 31, 2009, we were in compliance with all of the covenants under the financing facility.
The financing facility provides that it may be terminated through a series of put and call transactions (1) at
the option of one of our wholly-owned subsidiaries or the non-U.S. lender at any time, or (2) upon the occurrence
of certain defined early termination events. These early termination events, include, but are not limited to:
• nonpayment of certain amounts due by us or certain of our subsidiaries under the financing facility
(if not cured within the related time period set forth therein);
• a change of control (as defined in the financing facility);
• cross-acceleration and cross-default to other indebtedness of the Company in excess of $50 million,
including our revolving credit facility;
• certain ERISA-related events;
• noncompliance by the Company with any material term or provision of the HMO Regulations or
Insurance Regulations (as each such term is defined in the financing facility);
• events in bankruptcy, insolvency or reorganization of the Company;
• undischarged, uninsured judgments in the amount of $50 million or more against the Company; or
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