Health Net 2013 Annual Report Download - page 54

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and our industry when evaluating our forecasts and other forward-looking statements relating to our operations and
financial performance.
It may be difficult for a third party to acquire us, which could decrease the value of your shares of our common
stock.
We are subject to the Delaware anti-takeover laws regulating corporate takeovers. These provisions may prohibit
stockholders owning 15% or more of our outstanding voting stock from merging or combining with us. In addition,
federal antitrust laws apply to us, and any change in control of our state health plans or health insurance companies also
would require the approvals of the applicable regulatory agencies in each state in which we operate.
In addition to the Rights Agreement, our certificate of incorporation and bylaws also contain provisions that
could have the effect of delaying, deferring, or preventing a change in control of the Company that our stockholders
may consider favorable or beneficial. These provisions could discourage proxy contests and make it more difficult for
our stockholders to elect directors and take other corporate actions. These provisions could also limit the price that
investors might be willing to pay for shares of our common stock.
Large-scale public health epidemics and/or terrorist activity could cause us to incur unexpected health care and
other costs and could materially and adversely affect our business, financial condition and results of operations.
An outbreak of a pandemic disease and/or future terrorist activities, including bio-terrorism, could materially and
adversely affect the U.S. economy in general and the health care industry specifically. Depending on the government's
actions and the responsiveness of public health agencies and insurance companies, a large-scale public health epidemic
or future acts of bio-terrorism could lead to, among other things, increased utilization of health care services and the
associated increased health care costs due to increased in-patient and out-patient hospital costs, disruption of
information and payment systems and the cost of any anti-viral or other medication used to treat affected people.
Disasters, including earthquakes, fires and floods, could severely damage or interrupt our systems and operations
and result in an adverse effect on our business, financial condition or results of operations.
Disasters such as fires, floods, earthquakes, tornados, power losses, virus outbreaks, telecommunications failures,
break-ins or similar events could severely damage or interrupt our systems and operations, result in loss of data, and/or
delay or impair our ability to service our members and providers. We have in place a disaster recovery plan that is
intended to provide us with the ability to recover our critical information technology systems in the event of a natural
disaster utilizing various alternate sites provided by a national disaster recovery vendor. We also have business
continuity plans that provide for the processes and resources necessary to operate during and following a disaster.
However, there can be no assurance that such adverse effects will not occur in the event of a disaster. Any such disaster
or similar event could have a material adverse effect on our business, financial condition and results of operations.
Under the agreements that govern the Northeast Sale, we have retained responsibility for certain liabilities of the
acquired business, which could have an adverse effect on our business, financial condition and results of operations.
Under the Stock Purchase Agreement for the Northeast Sale, we are required to indemnify the Buyer and its
affiliates for all pre-closing liabilities of the acquired business and for a broad range of excluded liabilities, including
liabilities arising out of the acquired business incurred through the winding-up and running-out period of the acquired
business. The Stock Purchase Agreement does not limit the amount or duration of our obligations to the Buyer and its
affiliates with respect to these indemnities. As a result, in the event that the amount of these liabilities was to exceed our
expectations, we could be responsible to the Buyer and its affiliates for substantial indemnification obligations, which
could have an adverse effect on our business, financial condition and results of operations.
At the closing of the Northeast Sale, we entered into a Non-Competition Agreement with the Buyer that contains
prohibitions which could negatively impact our prospects, business, financial condition or results of operations.
Under the Stock Purchase Agreement, at the closing of the transactions contemplated by the agreement, we
entered into a Non-Competition Agreement with the Buyer, pursuant to which we generally are prohibited from
competing with the acquired business in the States of New York, New Jersey, Connecticut and Rhode Island for a period
of five years from the closing, and from engaging in certain other restricted activities. Although we currently do not
have any intention to engage in such prohibited activities during the term of the Non-Competition Agreement,
circumstances could change and it may become in our best interests to engage in a business that is prohibited by the