Health Net 2011 Annual Report Download - page 256

4. Employment/Association with Company Competitor. The Optionee hereby agrees that, during (i) the six-month period
following a termination of the Optionee’s employment with an Employer that entitles the Optionee to receive severance benefits
under an agreement with or the policy of the Company or (ii) the twelve-month period following a termination of the Optionee’s
employment with an Employer that does not entitle the Optionee to receive such severance benefits (the period referred to in either
clause (i) or (ii), the “Noncompetition Period”), the Optionee shall not undertake any employment or activity (including, but not
limited to, consulting services) with a Competitor (as defined below), where the loyal and complete fulfillment of the duties of the
competitive employment or activity would call upon the Optionee to reveal, to make judgments on or otherwise use any confidential
business information or trade secrets of the business of the Company or any Subsidiary to which the Optionee had access during his
employment with the Employer. In addition, the Optionee agrees that, during the Non-competition Period applicable to the Optionee
following termination of employment with the Employer, the Optionee shall not, directly or indirectly, solicit, interfere with, hire,
offer to hire or induce any person, who is or was an employee of the Company or any of its Subsidiaries during the 12 month period
prior to the date of such termination of employment, to discontinue his or her relationship with the Company or any of its Subsidiaries
or to accept employment by, or enter into a business relationship with, the Optionee or any other entity or person. In the event that the
Optionee breaches the covenants set forth in this first paragraph of Section 4:
(a) the Option shall immediately terminate; and
(b) the Optionee shall promptly pay to the Company an amount of cash equal to the Gain Realized (as defined below) on
any Option Shares acquired during the Restricted Period (as defined below).
For the purposes of this Section 4: “Restricted Period” shall refer to the period of time commencing ninety days prior to such
termination of the Optionee’s employment and ending (x) in the case of an Optionee terminated under clause (i) of the first paragraph
of this Section 4, six months after such termination or (y) in the case of an Optionee terminated under clause (ii) of the first paragraph
of this Section 4, twelve months after such termination; “Gain Realized” shall equal the difference between (x) the Exercise Price
applicable to the Option Shares and (y) the greater of the Fair Market Value (as defined in the Plan) of the Option Shares (I) on the
date of acquisition of such Option Shares or (II) on the date such competitive activity with a Competitor was commenced by the
Optionee; and “Competitor” shall refer to any health maintenance organization or insurance company that provides managed health
care or related services similar to those provided by the Company or any Subsidiary.
It is hereby further agreed that if any court of competent jurisdiction shall determine that the restrictions imposed in this Section 4 are
unreasonable (including, but not limited to, the definition of Market Area or Competitor or the time period during which this
provision is applicable), the parties hereto hereby agree to any restrictions that such court would find to be reasonable under the
circumstances.
The Optionee acknowledges that the services to be rendered by him/her to the Company are of a special and unique character, which
gives this Option Agreement a peculiar value to the Company, the loss of which may not be reasonably or adequately compensated
for by damages in an action at law, and that a material breach or threatened breach by him/her of any of the provisions contained in
this Section 4 will cause the Company irreparable injury. Optionee therefore agrees that the Company may be entitled, in addition to
the remedies set forth above in this Section 4 and any other right or remedy, to a temporary, preliminary and permanent injunction,
without the necessity of proving the inadequacy of monetary damages or the posting of any bond or security, enjoining or restraining
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such violations or threatened violations.