Health Net 2009 Annual Report Download - page 188

included in the Total Payments shall be determined by the Independent Advisors in accordance with the principles of Sections 280G
(d)(3) and (4) of the Code
15. Section 409A of the Internal Revenue Code. It is the intention of the Company and Executive that this Agreement not result
in unfavorable tax consequences to Executive under Section 409A of the Code, and the Treasury Regulations and Internal Revenue
Service guidance promulgated thereunder (“Section 409A”) and the Agreement shall be interpreted, construed and administered as to
so comply with, or be exempt from, Section 409A. Notwithstanding anything to the contrary herein, the Company and Executive
agree to the provisions set forth in this Section 15 in order to comply with, or be exempt from, the requirements of Section 409A
A. If Executive is a “specified employee” (as determined under the Company’s Specified Employee Policy as in effect
from time to time, or, in the absence of such policy, within the meaning of Section 409A) with respect to the Company, any non-
exempt non-qualified deferred compensation that is subject to Section 409A and otherwise payable to or in respect of Executive in
connection with Executive’s Separation from Service pursuant to this Agreement shall be delayed until the earlier of (i) the expiration
of six (6) months measured from the date of Executive’s Separation from Service, or (ii) the date of Executive’s death. Any amount,
the payment or benefit of which is delayed by application of the preceding sentence, shall be paid as soon as possible following the
expiration of such period.
B. All incentive bonus payments described in Section 7(D) shall be paid to Executive, to the extent earned, in no event
later than the last day of the “applicable 2-1/2 month period”, as such term is defined in Treasury Regulation Section 1.409A-1(b)(4)
(i)(A) with respect to such payment’s treatment as a “short-term deferral” for purposes of Section 409A.
C. With respect to the Company’s reimbursement obligations under Sections 7(C) and 7(E) hereof and the provision of
Benefits to Executive, (i) in no event shall any such reimbursements or in-kind benefits be made or provided later than the last day of
Executive’s taxable year following the taxable year in which the fee or expense was incurred, (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits provided, during Executive’s taxable year may not affect the expenses eligible for reimbursement,
or in-kind benefits to be provided, in any other taxable year of Executive, and (iii) the right to reimbursement or in-kind benefits is
not subject to liquidation or exchange for another benefit, in accordance with Treasury Regulation Section 1.409A-3(i)(1)(iv).
D. The Company and Executive agree to cooperate in good faith in an effort to comply with Section 409A. Under no
circumstances shall the Company be responsible for any taxes, penalties, interest or other losses or expenses incurred by the
Executive due to any failure to comply with Section 409A. To the extent payments and benefits under this Agreement are subject to
Section 409A, and such payments and benefits do not so comply, the Company shall amend this Agreement, or take such other
actions as the Company deems reasonably necessary or appropriate, to comply with Section 409A. If any provision of the Agreement
would cause such payments and benefits to fail to so comply, such provision shall not be effective and shall be null and void with
respect to such payments or benefits, and such provision shall otherwise remain in full force and effect.
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