Health Net 2015 Annual Report Download - page 27

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pay a lower price to our stockholders than it might otherwise have proposed to pay absent such a fee.
If the Merger Agreement is terminated and we determine to seek another business combination, we may not be
able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Merger.
We are subject to business uncertainties and contractual restrictions while the proposed Merger is pending, which
could adversely affect our business and operations.
In connection with the pendency of the Merger, it is possible that some customers, suppliers and other persons
with whom we have a business relationship may delay or defer certain business decisions or might decide to seek to
terminate, change or renegotiate their relationships with us as a result of the Merger, which could negatively affect our
revenues, earnings and cash flows, as well as the market price of our common stock, regardless of whether the Merger
is completed.
In addition, due to the deferral of the Cognizant Transaction, we have been making ongoing efforts to negotiate
alternative arrangements for the consulting, technology and administrative services that were to be provided under the
Master Services Agreement. If we are unable to successfully negotiate such alternative arrangements in a timely or cost
effective manner, if we experience a loss or disruption in the provision of any of these functions or services, or if these
functions or services are not performed in a timely, satisfactory or compliant manner we may be subject to regulatory
enforcement actions; we may, among other things, incur unexpected costs; become vulnerable to security breaches that
threaten the security and confidentiality of our information and data; or be unable to meet the full demands of our
customers or be subject to claims against us by our members. Any of the foregoing could have an adverse impact on our
business.
Under the terms of the Merger Agreement, we are subject to certain restrictions on the conduct of our business
prior to completing the Merger, which may adversely affect our ability to execute certain of our business strategies,
including the ability in certain cases to enter into or amend contracts, acquire or dispose of assets, incur indebtedness or
incur capital expenditures. Such limitations could negatively affect our business and operations prior to the completion
of the Merger.
Each of the risks described above may be exacerbated by delays or other adverse developments with respect to
the completion of the Merger.
Uncertainties associated with the Merger may cause a loss of management personnel and other key employees which
could adversely affect our business and results of operations.
We are dependent on the experience and industry knowledge of our officers and other key employees to execute
our business plan. Prior to completion of the Merger, current and prospective employees of the Company may
experience uncertainty about their roles within the combined company following the completion of the Merger, which
may have an adverse effect on our ability to attract or retain key management and other key personnel and in turn could
adversely affect our business and results of operations.
In connection with the Merger, litigation may be filed against the Company, Centene, Merger Sub I, Merger Sub II
and the members of the Company's Board, which could result in substantial costs to us.
In connection with the Merger, two purported Company stockholders filed two putative stockholder class action
lawsuits against the Company, Centene, Merger Sub I, Merger Sub II and the members of the Company's Board. The
lawsuits, as amended and consolidated, alleged, among other things, that the merger consideration was inadequate, that
the process culminating in the Merger was flawed, that the directors of the Company breached their fiduciary duties in
connection with the Merger, and that Centene, Merger Sub I and Merger Sub II aided and abetted the breaches of
fiduciary duty. The amended complaint stated that the Registration Statement on Form S-4 filed by Centene on August
19, 2015 contained material misstatements and omitted material information. The consolidated lawsuit was dismissed
without prejudice on January 25, 2016. Additional lawsuits may be filed against Centene, the Company, Merger Sub I,
Merger Sub II or the directors and officers of either company in connection with the Merger.