Health Net 2011 Annual Report Download - page 195

reduction in the Purchase Price, an amount equal to such reduction. Any payment required under this Section 4.2(b) shall be made by
wire transfer of immediately available funds to an account designated by the receiving Party within ten (10) Business Days after the
Post-Closing Enrollment Number has been determined.
4.3 Post-Closing Financial Purchase Price Adjustments. In addition to the adjustment provided for in Section 4.2, the
Purchase Price shall be subject to further adjustment after the Closing as follows:
(a) Within five (5) Business Days of Purchaser’s receipt of the 2012 Risk Adjuster Information from CMS, Purchaser shall
deliver a complete copy of such 2012 Risk Adjuster Information to Seller. Not later than the later of July 31, 2012, thirty (30) days
following the Closing Date, or the fifteenth (15 ) Business Day after the 2012 Risk Adjuster Information is received by Seller
pursuant to the previous sentence, Seller will prepare and deliver to Purchaser (i) an income statement for the PDP Business for the
Pre-Closing Period, and (ii) a statement of the Assets and the Assumed Liabilities as of 12:01 a.m. in Washington, D.C. on the
Closing Date (such statements, the “Closing Statements”). The Closing Statements shall include Seller’s computation in reasonable
detail of (1) the Closing GM Net Assets (which shall be based on the assets and liabilities statement included in the Closing
Statements), (2) the Closing Pass Through Net Assets (which shall be based on the assets and liabilities statement included in the
Closing Statements), (3) the Pre-Closing PDP Pre-Tax Income (which shall be based on the income statement included in the Closing
Statements), and (4) the Closing Pre-Paid Broker and ANOC Amount and an itemization of all Broker and ANOC Costs included in
such amount. The Closing Statements shall be prepared on an accrual basis in accordance with GAAP applied in a manner consistent
with Seller’s past practices, including in a manner consistent with the policies, methodologies and principles used by Seller to prepare
the 2011 Financial Statements. For the avoidance of doubt, the Closing Statements shall be prepared without regard to the reinsurance
agreement described on Schedule 6.5(c) and in particular without regard to any accruals, payments or receipts under or pursuant to
such reinsurance agreement. In addition, with respect to all entries, accruals, estimates and reserves for or applicable to CMS risk
adjuster settlements, the Closing Statements shall be prepared on a basis that is consistent with the 2012 Risk Adjuster Information.
(b) If Purchaser disagrees with Seller’s computation of the Closing GM Net Assets, the Closing Pass Through Net Assets,
the Pre-Closing PDP Pre-Tax Income and/or the Closing Pre-Paid Broker and ANOC Amount as shown on the Closing Statements,
Purchaser shall notify Seller in writing of such disagreement within forty-five (45) days after Seller’s delivery of the Closing
Statements, which notice shall describe the nature of any such disagreement in reasonable detail, identify the specific items involved
and the dollar amount of each such disagreement and provide reasonable supporting documentation for each such disagreement. If
Purchaser delivers to Seller a notice accepting the Closing Statements, or Purchaser does not deliver a written objection to the Closing
Statements within such forty-five (45) day period, then, effective as of either the date of delivery of such notice of acceptance or upon
the expiration of such forty-five (45) day period, the Closing Statements (including Seller’s computation of the Closing GM Net
Assets, the Closing Pass Through Net Assets, the Pre-Closing PDP Pre-Tax Income and Closing Pre-Paid Broker and ANOC
Amount) shall be deemed to be accepted and agreed to by Purchaser. During the forty-five (45) day period of its review, Seller shall
provide Purchaser with reasonable access to any books, records, documents, schedules or work papers used in or relevant to the
preparation of the Closing Statements.
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