Document:

EX-10.1

[HEALTH NET, INC. LETTERHEAD]

June 28, 2006

Mr. B. Curtis Westen

[Address]

Dear Curt:

You have informed Health Net, Inc. (the “Company”) of your intention to relinquish your duties
as the Company’s Senior Vice President, General Counsel and Secretary. In light of this intention,
you and the Company have entered into this letter agreement (the “Agreement”) in order to
memorialize the agreement reached between you and the Company regarding the terms and conditions of
your continued employment with, and eventual separation from, the Company. As you are aware, you
and the Company are currently party to an Offer of Relocation and Employment Letter Agreement,
dated June 25, 1998; a Severance Payment Agreement dated December 4, 1998 (the “Severance Payment
Agreement”); an Agreement dated January 1, 2001 providing for your consent to certain changes under
the Severance Payment Agreement and the Company’s Second Amended and Restated 1991 Stock Option
Plan, 1997 Stock Option Plan, as amended, and the 1998 Stock Option Plan, as amended (the “January
1, 2001 Agreement”); stock option agreements dated as of September 4, 1997, December 4, 1998,
February 14, 2000, February 9, 2001, August 12, 2002, February 20, 2003, March 25, 2004 and May
13, 2005 under the Company’s various stock option plans (all such stock option agreements shall be
referred to herein collectively as the “Stock Option Agreements”) and a restricted stock agreement
dated as of August 12, 2002 under the Health Net, Inc. 1997 Stock Option Plan (the “Restricted
Stock Agreement”) (all of the above collectively, the “Employment Agreement”). By executing this
Agreement, you agree to the amendment and restatement of your Employment Agreement as set forth
herein.

1. General

A. Employment and Title. Unless your employment is earlier terminated pursuant to
Section 4 hereof, you will continue to be employed by the Company and hold the title of Senior Vice
President, General Counsel and Secretary until the earlier of (a) January 1, 2007 and (b) the date
on which a new General Counsel is hired by the Company and commences employment in such role (the
earlier of such two dates being referred to herein as the “Transition Date”). Following the
Transition Date, you will continue to be employed full time until June 30, 2007 (the “Termination
Date”) by the Company as Senior Vice President and Special Counsel, unless your employment is
earlier terminated pursuant to Section 4 hereof.

B. Salary. You will continue to be paid your base salary at the annual rate of
$550,000 (your “Salary”), prorated bi-weekly in the amount of $21,153.85, less applicable
withholdings, covering all hours worked until the Termination Date or such earlier date on which
your employment is terminated pursuant to Section 4 hereof.

C. Stock Option Agreements. All options subject to the Stock Option Agreements and
shares of restricted stock subject to the Restricted Stock Agreement will continue to vest
according to the terms and conditions of such agreements until the Termination Date.
Notwithstanding the previous sentence, if prior to the exercise of any stock option granted
pursuant to any Stock Option Agreement your employment with the Company terminates for any reason
other than for “Cause” (as such term is defined in the relevant Stock Option Agreement(s)) during a
Company blackout period established pursuant to the Company’s then existing Insider Trading
Blackout Policy or on any other date on which the Company determines that its directors and
executive officers are precluded from trading in Company securities due to the possession or
imputed possession of material inside information regarding the Company (a “Trading Blackout”) and
you are subject to the Trading Blackout, then any vested stock options held at the time of such
termination may be exercised at any time starting from the date of such termination through the
last day of the first month, third month or twelfth month following the expiration date of such
Trading Blackout (such one month, three month or twelve month time period shall be determined by
reference to the terms and conditions of the relevant Stock Option Agreement(s) based on the nature
of the termination) provided, however, that no portion of a stock option shall be
exercisable after the tenth anniversary of its grant date. The Company shall notify you of the
Trading Blackout Expiration Date.

D. Duties. Prior to the Transition Date, your duties and responsibilities as Senior
Vice President, General Counsel and Secretary shall be generally consistent with your duties and
responsibilities in such roles immediately prior to the date of this Agreement. Your duties as
Senior Vice President and Special Counsel on and after the Transition Date and prior to the
Termination Date, or such earlier date on which your employment is terminated pursuant to Section 4
hereof, shall be to work on special assignments assigned by the Company’s Chief Executive Officer
or new General Counsel. You will be available on site at the Company’s offices in Woodland Hills,
California as the Company determines is reasonably necessary to perform your duties and
responsibilities as Senior Vice President and Special Counsel. Your assignments as Senior Vice
President and Special Counsel may include, but shall not be limited to:

	 	•	 	participating with the defense team and serving as a witness as required in
litigation matters (including any appeals of those matters) involving the
Company and its subsidiaries, including, but not limited to matters described
in the Company’s Annual Report on Form 10-K for the year ended December 31,
2005, Form 10-Q for the quarter ended March 31, 2006 and other periodic reports
filed from time to time with the Securities and Exchange Commission;

	 	•	 	providing counsel to the Company’s management to strengthen overall
organizational compliance, including implementation of the Compliance Oversight
Committee and oversight of other compliance initiatives as are assigned to you;

	 	•	 	transitioning the Company’s legal matters to the new General Counsel; and

	 	•	 	evaluating business opportunities for the Company.

E. Post-Termination Date Matters. Your employment as Senior Vice President and
Special Counsel may be extended beyond the Termination Date by mutual written agreement between you
and the Company. You agree that you presently intend to be available, for a maximum of an
additional one year period following the termination of your employment with the Company, to
consult from time to time on the Company’s legal matters at a reasonable rate of compensation to be
mutually agreed upon by you and the Company.

F. Disclosure of Personal Compensation Information. As an “executive officer” of the
Company (as such term is defined in the rules and regulations of the Securities and Exchange
Commission (“SEC”), information regarding your employment arrangements with the Company, including,
among other things, the terms of this Agreement and any other agreements you enter into with the
Company from time to time (collectively, “Personal Compensation Information”), may be disclosed in
filings with the SEC, the New York Stock Exchange (“NYSE”) or other regulatory organizations upon
the occurrence of certain triggering events. Such triggering events include, but are not limited
to, the execution of this Agreement and any amendments thereto. Your execution of this Agreement
will serve as your acknowledgement that your Personal Compensation Information may be publicly
disclosed from time to time, including after the Transition Date and the Termination Date, in
filings with the SEC, NYSE or otherwise as required by applicable law.

2. Employee Benefits 

A. Employee Benefit Programs. You will continue to be eligible to participate in the
Company’s various employee benefit programs and plans as long as you remain employed by the
Company, on the terms of such programs and plans, if you meet the applicable participation
requirements. These benefit programs and plans include paid time off, holidays, group medical,
dental, vision, term life, and short and long term disability insurance and participation in the
Company’s 401(k) plan, deferred compensation plan, Supplemental Executive Retirement Plan and
tuition reimbursement plan. You will also be eligible to participate in any employee benefit
programs added at any future time that are generally applicable to executives of the Company and
that have been approved by the Compensation Committee of the Company’s Board of Directors (the
“Committee”) as long as you remain employed by the Company, provided that you meet the
applicable participation requirements; further provided, however, that this
provision does not extend to any individually negotiated or tailored benefits, plans or programs
covering a particular employee or employees. Although the Company may sponsor a benefit or plan or
program for some employees, it is not required to do so for all employees and may exclude certain
employees now or in the future from one or more benefits, plans or programs. The Company or its
subsidiaries or affiliates may modify, terminate or amend any benefit or plan in its discretion,
retroactively or prospectively, subject only to applicable law. Notwithstanding any of the
foregoing provisions of this Paragraph A of Section 2, you shall not be eligible for a stock option
or other equity grant in 2007.

B. Required Insurance. You will continue to be covered by workers’ compensation
insurance and state disability insurance as long as you remain employed by the Company, as required
by state law.

C. Financial Counseling Allowance. You will continue to be eligible to be reimbursed
to a maximum of $5,000 per year for substantiated costs incurred for personal financial counseling
services provided to you, including tax preparation, as long as you remain employed by the Company.

D. Car Allowance. You will continue to be entitled to a car allowance of $1,000 per
month as long as you remain employed by the Company.

E. Club Membership. You will continue to be reimbursed for the reasonable expense of
one country or social club membership as long as you remain employed by the Company.

F. Bonus. You will be eligible for an award in respect of fiscal 2006 under the
Health Net, Inc. Executive Incentive Plan (“EIP”) in accordance with the terms of the EIP, in the
amount of $385,000. It is understood that the Committee will award bonus amounts, if any, as it
deems appropriate consistent with the guidelines of the EIP. You will not be eligible for any
bonus in respect of fiscal year 2007.

G. Expenses. Subject to and in accordance with the Company’s written guidelines and
procedures for business and travel expenses, you will receive reimbursement for all business travel
and other out-of-pocket expenses reasonably incurred by you in the performance of your duties
pursuant to this Agreement.

3. Stock Plan Amendments. You acknowledge that, pursuant to the January 1, 2001 Agreement,
(i) you previously consented to the application of the amendments to the “Accelerated Provisions”
of the Company’s Second Amended and Restated 1991 Stock Option Plan, the Company’s 1997 Stock
Option Plan, as amended, and the Company’s 1998 Stock Option Plan (collectively, the “Plans”), set
forth in Exhibit A hereto, to the stock options granted to you under the Plans and (ii) you
previously agreed to the amendments of the stock option agreements evidencing your then outstanding
stock options under the Plans to the extent such agreements had stated anything to the contrary to
such amendments. You agree by entering into this Agreement that your previous consent and
agreement described in the immediately preceding sentence shall survive as part of this Agreement.

4. Termination of Employment, Etc. 

A. Termination By The Company Without Cause. In the event that the Company terminates
your employment without Cause (as defined in Paragraph C of this Section 4) at any time prior to
the Transition Date, you shall be entitled, provided that you sign a Waiver and Release of Claims
substantially in the form attached hereto as Exhibit B, which is incorporated into this
Agreement by reference, (i) to receive a lump sum cash payment equal to two (2) times your Salary
and (ii) to receive the continuation of all medical, health, disability, life and accident
insurance maintained for your benefit immediately prior to the date of your termination
(collectively, “Benefits”) either (a) for a period of two (2) years from the date of your
employment termination, to the extent that the Company determines that such Benefits are not
subject to the additional twenty percent (20%) tax imposed under section 409A of the Code of 1986,
as amended (the “Code”), or (b) if you become employed by another employer before the expiration of
such two (2) year period, until the effective date of your new employment. To the extent that the
Company determines that any Benefits would be subject to the additional twenty percent (20%) tax
imposed under section 409A of the Code, you (or your beneficiaries or estate) shall not have a
right to such Benefits and instead the Company shall pay you (or your beneficiaries or estate) a
cash lump sum amount that is intended to be the economic equivalent thereof. Regardless of whether
any Benefits are subject to such additional tax, if the Company determines that you are a
“specified employee” within the meaning of section 409A of the Code as of the date of your
employment termination, then you shall not have a right to any Benefits and instead the Company
shall pay you a cash lump sum amount that is intended to be the economic equivalent thereof. All
lump sum payments pursuant to this Paragraph A of Section 4 shall be made within 30 days of the
date your employment with the Company is terminated pursuant to this Section 6 and, in any event,
no later than 21/2 months after the end of the year in which your employment termination occurs.

B. Change in Assignment Between Transition Date and Termination Date. In the event
that the Company removes you from the position of Senior Vice President and Special Counsel prior
to the Termination Date, you shall not be entitled to any severance payments, but if you sign on
the Termination Date a Waiver and Release of Claims substantially in the form attached hereto as
Exhibit B, which is incorporated into this Agreement by reference, your employment with the
Company shall continue, including for purposes of the Company’s various stock option plans and the
Stock Option Agreements, until Termination Date, and regardless of your new assignment you shall be
entitled (i) to be paid the bi-weekly payments of your Salary, less applicable withholdings, and
benefits, until the Termination Date and (ii) to continue to vest in your options evidenced by the
Stock Option Agreements in accordance with their terms, as modified by Paragraph C of Section 1,
until the Termination Date. If you do not sign on the Termination Date such Waiver and Release of
Claims, or if you sign and subsequently attempt to revoke such Waiver and Release of Claims, you
shall forfeit (i) and repay to the Company all the bi-weekly payments of Salary paid to you after
your change in assignment that the Company, in its sole discretion, deems is in excess of the
compensation it would ordinarily pay to an individual performing services in a substantially
similar assignment and (ii) all stock options which became vested after such change in your
assignment.

C. Termination By The Company For Cause. The Company may terminate your employment
for Cause (as defined below) at any time without notice. In the event of such termination, you
shall not be eligible to receive any payments set forth in this Section 4. For purposes of this
Agreement, Cause shall include, without limitation, (a) an act of dishonesty causing harm to the
Company, (b) the knowing disclosure of confidential information relating to the Company’s business,
(c) habitual drunkenness or narcotic drug addiction, (d) conviction of a felony, (e) willful
refusal to perform or gross neglect of the duties assigned to you, (f) the willful breach of any
law that, directly or indirectly, affects the Company, (g) a material breach by you following a
Change of Control of those duties and responsibilities of yours that do not differ in any material
respect from your duties and responsibilities during the 90-day period immediately prior to such
Change of Control (other than as a result of incapacity due to physical or mental illness) which is
demonstrably willful and deliberate on your part, which is committed in bad faith or without
reasonable belief that such breach is in the best interests of the Company and which is not
remedied in a reasonable period of time after receipt of written notice form the Company specifying
such breach or (h) breach of the provisions of Section 9 of this Agreement. For purposes of this
Agreement, Change of Control shall mean any of the following which occurs subsequent to the date
hereof:

(a) Any person (as such term is defined under Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)), corporation or other entity (other
than the Company or any employee benefit plan sponsored by the Company or any of its
subsidiaries) is or becomes the beneficial owner (as such term is defined in Rule 13d-3
under the Exchange Act) of securities of the Company representing twenty percent (20%) or
more of the combined voting power of the outstanding securities of the Company which
ordinarily (and apart from rights accruing under special circumstances) have the right to
vote in the election of directors (calculated as provided in paragraph (d) of such Rule
13d-3 in the case of rights to acquire the Company’s securities) (the “Securities”);

(b) As a result of a tender offer, merger, sale of assets or other major transaction,
the persons who are directors of the Company immediately prior to such transaction cease to
constitute a majority of the Board of Directors of the Company (or any successor
corporations) immediately after such transaction;

(c) The Company is merged or consolidated with any other person, firm, corporation or
other entity and, as a result, the shareholders of the Company, as determined immediately
before such transaction, own less than eighty percent (80%) of the outstanding Securities of
the surviving or resulting entity immediately after such transaction;

(d) A tender offer or exchange offer is made and consummated for the ownership of
twenty percent (20%) or more of the outstanding Securities of the Company;

(e) The Company transfers substantially all its assets to another person, firm,
corporation or other entity that is not a wholly-owned subsidiary of the Company; or

(f) The Company enters into a management agreement with another person, firm,
corporation or other entity that is not a wholly-owned subsidiary of the Company and such
management agreement extends hiring and firing authority over you to an individual or
organization other than the Company.

D. Voluntary Termination. Notwithstanding anything to the contrary in this Agreement,
whether express or implied, you may at any time terminate your employment for any reason by giving
the Company fourteen (14) days prior written notice of the effective date of termination. In the
event that you voluntarily terminate employment with the Company at any time, (i) you shall not be
eligible to receive any payments set forth in this Section 4 and (ii) the continuation of Benefits
and lump sum cash payment payable pursuant to Section 6 shall not be available.

5. Other Payments Upon Termination of Employment. Upon the termination of your employment,
the Company shall pay to you (or your beneficiaries or estate) in addition to any payments that may
be due under Section 4 or 6 of this Agreement, within 30 days following the date of your employment
termination, a cash amount equal to the sum of the following (in each case to the extent not
theretofore paid): your Salary from the Company through the date of your employment termination,
any vacation pay accrued prior to the date of employment termination, any reimbursable expense
incurred by you prior to the date of employment termination, any compensation previously deferred
by you, together with any interest and earnings thereon (unless the plan or program provides for
payment at another time or in accordance with another payment schedule), and any other compensatory
plan, arrangement or program payment to which you may be entitled provided, however, that
all such payments and payments of deferred compensation shall be made so that they are not subject
to the additional twenty percent (20%) tax imposed under section 409A of the Code). The Company
acknowledges and agrees that, following the termination of your employment, you shall continue to
be entitled to received any vested benefit you have accrued pursuant to the Company’s 401(k) Plan
and Supplemental Executive Retirement Plan as of the date of your termination in accordance with
the terms of such plans, as they may be amended from time to time, provided, however, that
to the extent that the Company determines that any benefits under the Supplemental Executive
Retirement Plan would be subject to the additional twenty percent (20%) tax under section 409A of
the Code, you (or your beneficiaries or estate) shall be paid such benefits in a cash lump sum
amount no later than the earlier of 30 days after your employment termination date and 21/2 months
after the end of the year in which your employment termination occurs.

6. Termination Due to Death or Disability. In the event that your employment is terminated
at any time prior to the Termination Date due to your death or Disability, you (or your
beneficiaries or estate) shall nevertheless be entitled to receive, provided that you (or your
beneficiaries or estate) sign a Waiver and Release of Claims substantially in the form attached
hereto as Exhibit B (i) continuation of all Benefits for a period of one (1) year from the
date of termination to the extent that the Company determines that such Benefits are not subject to
the additional twenty percent (20%) tax imposed under section 409A of the Code, and (ii) a lump sum
cash payment equal to one (1) times your Salary. If the Company determines that any Benefits would
be subject to the additional twenty percent (20%) tax imposed under section 409A of the Code, then
you (or your beneficiaries or estate) shall not have a right to such Benefits, but instead the
Company shall pay a lump sum cash amount that is intended to be the economic equivalent thereof.
All lump sum payments pursuant to this Section 6 shall be made within 30 days of the date your
employment with the Company is terminated pursuant to this Section 6 and, in any event, no later
than 21/2 months after the end of the year in which your employment termination occurs. For purposes
of this Agreement, a termination for “Disability” shall mean a termination of your employment due
to your absence from your duties with the Company on a full-time basis for at least 180 consecutive
days as a result of your incapacity due to physical or mental illness. If you terminate employment
with the Company due to your Disability and your Disability is not a disability within the meaning
of section 409A of the Code, then you shall not have a right to any Benefits after 21/2 months after
the end of the year in which your employment termination occurs and any remaining Benefits to which
you would otherwise be entitled shall be monetized and paid to you in a lump sum amount within 30
days of the date your employment with the Company is terminated pursuant to this Section 6 and, in
any event, before the expiration of such 21/2 months. If you terminate employment with the Company
due to your death or Disability and the Company determines that as of your employment termination
date you are a specified employee within the meaning of section 409A of the Code, then you shall
not have a right to any Benefits and instead the Company shall pay you within 30 days of the date
your employment with the Company is terminated pursuant to this Section 6 and, in any event, before
the expiration of the 21/2 month period beginning after the end of the year in which your employment
termination occurs a cash lump sum amount that is intended to be the economic equivalent of such
Benefits.

7. Withholding. All payments required to be made by the Company hereunder to you or your
estate or beneficiaries shall be subject to the withholding of such amounts relating to taxes as
the Company may reasonably determine should be withheld pursuant to any applicable law or
regulation.

8. Potential Tax Consequences for “Parachute” Payments. 

A. Tax Gross-Up. Notwithstanding any other provisions of this Agreement, in the event
that (i) any payment or distribution by the Company to or for your benefit (whether paid or payable
or distributed or distributable pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any person whose actions result in a Change of Control
or any person affiliated with the Company or such person) (all such payments and distributions,
including the severance payments and benefits provided for in Section 4 hereof (the “Severance
Payments”), being hereinafter called “Total Payments”) would be subject (in whole or part) to the
excise tax imposed under section 4999 of the Code, or any interest or penalties are incurred by you
with respect to such excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the “Excise Tax”) and (ii) there are any excess
parachute payments (within the meaning of section 280G(b) of the Code), in the aggregate, in
respect of such Total Payments in excess of $50,000, then the Company shall pay you an additional
cash payment (the “Tax Gross-Up”) so that after receipt of such Tax Gross-Up, the payment of any
additional federal, state and local income taxes on such Tax Gross-Up amount and the payment of any
Excise Taxes, you shall receive such net amount of Total Payments equal to the amount that you
would have received if no Excise Tax was due; provided, however that you shall
cooperate in good faith with the Company to minimize the amount of the Excise Tax that may become
payable by taking any such action or making any such election as may be reasonably requested by the
Company in respect of the Total Payments due to you.

B. Accounting Firm Determination. Subject to the provisions of Paragraph C of this
Section 8, all determinations required to be made under this Section 8, including whether and when
a Tax Gross-Up is required and the amount of such Tax Gross-Up and the assumptions to be utilized
in arriving at such determination, shall be made by the public accounting firm that, immediately
prior to the Change of Control, was the Company’s independent auditor (the “Accounting Firm”) which
shall provide detailed supporting calculations both to the Company and you within 15 business days
of the receipt of notice from you that you have received Total Payments, or such earlier time as is
requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the
Company. Any Tax Gross-Up, as determined pursuant to this Section 8, shall be paid by the Company
to you within five days of the receipt of the Accounting Firm’s determination, except that if the
Company determines that you are a “specified employee” as of your employment termination date, then
the Tax Gross-Up shall not be paid to you until six months after your employment termination date.
If the Accounting Firm determines that no Excise Tax is payable by you, then the Accounting Firm
shall furnish to you a written opinion that failure to report the Excise Tax on your applicable
federal income tax return would not result in the imposition of a negligence or similar penalty.
Any determination by the Accounting Firm shall be binding upon the Company and you. As a result of
any uncertainty in the application of section 4999 of the Code at the time of the determination by
the Accounting Firm hereunder, it is possible that Tax Gross-Up which will not have been made by
the Company should have been made (“Underpayment”), consistent with the calculations required to be
made hereunder. In the event that the Company exhausts its remedies pursuant to Section 8.3 and you
thereafter are required to make a payment of any Excise Tax, the Accounting Firm shall determine
the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the benefit of you.

C. Notifications. You shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the Company of the Tax
Gross-Up. Such notification shall be given as soon as practicable but no later than 10 business
days after you are informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. You shall not pay such claim
prior to the expiration of the 30-day period following the date on which you give such notice to
the Company (or such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies you in writing prior to the expiration of such period
that it desires to contest such claim, you shall:

(1) give the Company any information reasonably requested by the Company relating to
such claim,

(2) take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably selected by the
Company,

(3) cooperate with the Company in good faith in order effectively to contest such
claim, and

(4) permit the Company to participate in any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold you harmless, on an after-tax basis, for any Excise Tax
or income tax (including interest and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expenses. Without limitation on the foregoing
provisions of this Paragraph C of Section 8, the Company shall control all proceedings taken
in connection with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct you to pay the tax claimed
and sue for a refund or contest the claim in any permissible manner, and you agree to
prosecute such contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall determine;
provided further, that if the Company directs you to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to you on an interest-free
basis and shall indemnify and hold you harmless, on an after-tax basis, from any Excise Tax
or income tax (including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance; and
provided further, that any extension of the statute of limitations relating to
payment of taxes for the taxable year of yours with respect to which such contested amount
is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s
control of the contest shall be limited to issues with respect to which a Tax Gross-Up would
be payable hereunder and you shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing authority.

D. Refunds. If, after the receipt by you of an amount advanced by the Company
pursuant to Paragraph C of this Section 8, you becomes entitled to receive, and receives, any
refund with respect to such claim, you shall (subject to the Company’s complying with the
requirements of Paragraph C of Section 8) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by you of an amount advanced by the Company pursuant to Paragraph C of this Section 8, a
determination is made that you shall not be entitled to any refund with respect to such claim and
the Company does not notify you in writing of your intent to contest such denial of refund prior to
the expiration of 30 days after such determination, then such advance shall be forgiven and shall
not be required to be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Tax Gross-Up required to be paid.

E. Payment Calculation Explanation. At the time that payments are made under this
Agreement, the Company shall provide you with a written statement setting forth the manner in which
such payments were calculated and the basis for such calculations including, without limitation,
any opinions or other advice the Company has received from tax counsel, the Auditor or other
advisors or consultants (and any such opinions or advice which are in writing shall be attached to
the statement).

9. Confidentiality. You acknowledge and agree that, during the period of your employment
by the Company, you have and will continue to have access to and become acquainted with various
trade secrets, including, but not limited to, various procedures, practices, information regarding
the organization and operation of the Company, confidential customer information, marketing
methods, compilations of information and records that are owned by the Company and that are
regularly used in the operation of its business. The parties stipulate that such items of
information are important, material and confidential trade secrets and affect the successful
conduct of the Company’s business and its goodwill, and that any breach of this Section shall be a
material breach of this Agreement. All documents, memoranda, reports, files, correspondence, lists
and other written and graphic records affecting or relating to the Company’s business that you may
prepare, use, observe, possess or control shall be and remain the Company’s sole property. You
shall not disclose any of these trade secrets, directly or indirectly, or use them in any way,
either during the term of this Agreement or at any time thereafter, except as required in the
course of your employment by the Company or as otherwise authorized in writing by the Company. In
the event of the termination of your employment with the Company, you shall deliver promptly to the
Company all written or graphic records containing such trade secrets or confidential information of
the Company.

10. Restrictive Covenants.

A. Noncompetition. You hereby agree that, during (i) the six-month period following a
termination of your employment with the Company that entitles you to receive severance benefits
under a written agreement with or policy of the Company or (ii) the twelve-month period following a
termination of your employment with the Company that does not entitle you to receive such severance
benefits (the period referred to in either clause (i) or (ii), the “Noncompetition Period”), you
shall not undertake any employment or activity (including, but not limited to, consulting services)
with a Competitor (as defined below), in any geographic areas in which the Company or any
subsidiary of the Company (a “Subsidiary”) operates (the “Market Area”) where the loyal and
complete fulfillment of the duties of the competitive employment or activity would call upon you 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 you had access during your
employment with the Company. For purposes of this Section, “Competitor” shall refer to any health
maintenance organization, health care management company, physician group, insurance company or
similar entity that provides managed health care or related services similar to those provided by
the Company or any Subsidiary.

B. Nonsolicitation, Etc. In addition, you agree that, during the Noncompetition
Period applicable to you following termination of employment with the Company, you 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 at the time of such solicitation,
interference, hiring, offering to hire or inducement, 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 you or any other entity or person.

C. Modification of Restrictions. It is hereby further agreed that if any court of
competent jurisdiction shall determine that the restrictions imposed in this Section 10 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.

D. Injunction Rights. You acknowledge that the services to be rendered by you to the
Company are of a special and unique character, which gives this 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 you of any of the provisions
contained in this Section 10 will cause the Company irreparable injury. You therefore agree that
the Company may be entitled, in addition to the remedies set forth above in this Section 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 you from any such violation or threatened violations.

11. Successors; Binding Agreement; Etc.

A. Agreement Survives Merger, Consolidation or Asset Transfer. This Agreement shall
not be terminated by any merger or consolidation of the Company whereby the Company is or is not
the surviving or resulting corporation or as a result of any transfer of all or substantially all
of the assets of the Company. In the event of any such merger, consolidation or transfer of
assets, the provisions of this Agreement shall be binding upon the surviving or resulting
corporation or the person or entity to which such assets are transferred.

B. Survivor’s Assumption of Agreement. The Company agrees that concurrently with any
merger, consolidation or transfer of assets referred to in Paragraph A of this Section 11, it will
cause any successor or transferee to unconditionally assume, by written instrument delivered to you
(or your beneficiary or estate), all of the obligations of the Company hereunder. Failure of the
Company to obtain such assumption prior to the effectiveness of any such merger, consolidation or
transfer of assets shall entitle you to compensation and other benefits from the Company in the
same amount and on the same terms as you would be entitled hereunder if your employment were
terminated without Cause. For purposes of implementing the foregoing, the date on which any such
merger, consolidation or transfer becomes effective shall be deemed the date of termination.

C. Enforceability. This Agreement shall inure to the benefit of and be enforceable by
your personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If you shall die while any amounts would be payable to you hereunder had
you continued to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to such person or persons appointed in writing by you
to receive such amounts or, if no person is so appointed, to your estate.

D. Company Representatives. Any action to be taken by the Company or any of its
successors or assigns pursuant to this Agreement may be taken by its authorized representative.

12. Severability. If any term of this Agreement is held to be invalid, void or
unenforceable, the remainder of this Agreement shall remain in full force and effect and shall in
no way be affected and the parties shall use their best efforts to find an alternative way to
achieve the same result.

13. Integrated Agreement. This Agreement constitutes the full, complete and exclusive
agreement between you and the Company with respect to the subject matters herein and supersedes any
prior agreements, representations or promises of any kind, whether written, oral, express or
implied between the parties hereto with respect to the subject matters herein, including, but not
limited, to the Employment Agreement, provided, however that the terms of the Stock
Option Agreements and the Restricted Stock Agreement shall remain unchanged except to the extent
expressly modified herein. The Company acknowledges and agrees that nothing contained herein
shall be deemed to supersede, amend or otherwise modify the terms of the Amended and Restated
Indemnification Agreement dated December 17, 2004 between you and the Company. This Agreement
cannot be changed unless in writing, signed by you and the Chief Executive Officer of the Company
and approved by the Board of Directors of the Company (or the Committee, if permitted by the
Committee’s charter).

14. Waiver. No waiver of any default hereunder shall operate as a waiver of any subsequent
default. Failure by either party to enforce any of the terms or conditions of this Agreement, for
any length of time or from time to time, shall not be deemed to waive or decrease the rights of
such party to insist thereafter upon strict performance by the other party.

15. Notices. All notices and communications required or permitted hereunder shall be in
writing and shall be deemed given (a) on the date of delivery if delivered personally, (b) one (1)
business day after being sent by Federal Express or a similar commercial overnight service, or
(c) three (3) business days after being mailed by registered or certified mail, return receipt
requested, prepaid and addressed to the following addresses, or at such other addresses as the
parties may designate by written notice in the manner aforesaid:

If to the Company:

Health Net, Inc.

Organization Effectiveness Department

21650 Oxnard Street, 22nd Floor

Woodland Hills, CA 91367

Attention: Karin Mayhew

If to the Employee:

Mr. B. Curtis Westen

[Address]

16. Governing Law. The interpretation, construction and performance of this Agreement
shall be governed by and construed and enforced in accordance with the internal laws of the State
of Delaware without regard to the principle of conflicts of laws. The invalidity or
unenforceability of any provision of this Agreement shall not affect the validity or enforceability
of any other provisions of this Agreement, which other provisions shall remain in full force and
effect.

17. Survival and Enforcement. Sections 4, 5, 6, 8, 9, 10, 11, 12, 13 and 15 of this
Agreement and any rights and remedies arising out of this Agreement shall survive and continue in
full force and effect in accordance with the respective terms thereof, notwithstanding any
termination of this Agreement or your employment. The parties agree that the Company would be
damaged irreparably in the event any provision of Section 9 or 10 of this Agreement were not
performed in accordance with its terms or were otherwise breached and that money damages would be
an inadequate remedy for any such nonperformance or breach. Therefore, the Company or its
successors or assigns shall be entitled in addition to other rights and remedies existing in their
favor, to an injunction or injunctions to prevent any breach or threatened breach of any of such
provisions and to enforce such provisions specifically (without posting a bond or other security).

18. Acknowledgement. You acknowledge that you have had the opportunity to discuss the
content of this Agreement with and obtain advice from your attorney, have had sufficient time to
and have carefully read and fully understood all of the provisions of this Agreement, and you are
knowingly and voluntarily entering into this Agreement. You further acknowledge that you are
obligated to become familiar with and comply at all times with all written policies of the Company.

In order to confirm your agreement with the Company and your acceptance of these terms, please
sign one copy of this letter and return it to me.

Sincerely,

/s/ Jay M. Gellert

President and Chief Executive Officer

cc: Karin D. Mayhew 

This will confirm my agreement to the terms set forth in this letter.

/s/ B. Curtis Westen

1

AMENDMENT TO SECOND AMENDED AND

RESTATED 1991 STOCK OPTION PLAN

The Health Net, Inc. Second Amended and Restated 1991 Stock Option Plan (the “1991 Plan”) is
hereby amended to delete Paragraph 8 of the 1991 Plan in its entirety and to replace it with the
following new Paragraph 8:

“8. ACCELERATION OF OPTIONS AND RESTRICTED SHARES.

Notwithstanding any contrary waiting period or installment period in any Stock Option
Agreement or any Restriction Period in any Restricted Shares Agreement or in the Restated 1991
Plan, each outstanding Option granted under the Restated 1991 Plan shall, except as otherwise
provided in the applicable Stock Option Agreement, become exercisable in full for the aggregate
number of shares covered thereby, and each Restricted Share, except as otherwise provided in the
Restricted Shares Agreement, shall vest unconditionally, in the event (i) the Company shall
consummate (a) any consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of Common Stock are converted into
cash, securities or other property, other than a Merger, or (b) any sale, lease, exchange, or other
transfer (in one transaction or a series of related transactions) of all, or substantially all, of
the assets of the Company, or (c) the liquidation or dissolution of the Company, or (ii) any person
(as such term is defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), corporation or
other entity (other than the Company or any employee benefit plan sponsored by the Company or any
Subsidiary) (A) shall purchase any Common Stock of the Company (or securities convertible into the
Company’s Common Stock) for cash, securities or any other consideration pursuant to a tender offer
or exchange offer, without the prior consent of the Board, and (B) shall become the “beneficial
owner” (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20 percent or more of the combined voting power of the then
outstanding securities of the Company ordinarily (and apart from rights accruing under special
circumstances) having the right to vote in the election of directors (calculated as provided in
paragraph (d) of such Rule 13d-3 in the case of rights to acquire the Company’s securities), or
(iii) during any period of two consecutive years, individuals who at the beginning of such period
constitute the entire Board shall cease for any reason to constitute a majority thereof unless the
election, or the nomination for election by the Company’s stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office who were directors
at the beginning of the period, or (iv) there occurs such other transactions involving a
significant issuance of voting stock or change in the composition of the Board that the Board
determines to be an accelerating event under this paragraph 8. Any transaction referred to in the
foregoing clause (i) is herein called a Consummated Transaction, any purchase pursuant to a tender
offer or exchange offer or otherwise as described in the foregoing clause (ii) is herein called a
Control Purchase, the cessation of individuals constituting a majority of the Board as described in
the foregoing clause (iii) is herein called a Board Change and such other transactions as described
in the foregoing clause (iv) is herein called an “Other Accelerating Event”. The Stock Option
Agreement and Restricted Shares Agreement evidencing Options or Restricted Shares granted under
the Restated 1991 Plan may contain such provisions limiting the acceleration of the exercisability
of Options and the acceleration of the vesting of Restricted Shares as provided in this paragraph 8
as the Committee deems appropriate to ensure that the penalty provisions of Section 4999 of the
Code, or any successor thereto in effect at the time of such acceleration, will not apply to any
stock, cash or other property received by the Holder from the Company.”

The 1991 Plan is hereby further amended to delete all references to “Approved Transaction” in
the 1991 Plan and to replace all such references with “Consummated Transaction.”

Amendment to 1997 Stock Option Plan

The Health Net, Inc. 1997 Stock Option Plan (the “1997 Plan”) is hereby amended to delete
subsection 6.8(b) of the 1997 Plan in its entirety and to replace it with the following new
subsection 6.8(b):

“(b) Definition of Change in Control. A “Change in Control” shall mean:

(i) Consummated Transaction. Consummation of (a) any consolidation or merger of the Company
in which the Company is not the continuing or surviving corporation or pursuant to which shares of
Common Stock are converted into cash, securities or other property, other than a Merger, or (b) any
sale, lease, exchange, or other transfer (in one transaction or a series of related transactions)
of all, or substantially all, of the assets of the Company, or (c) the liquidation or dissolution
of the Company;

(ii) Control Purchase. The purchase by any person (as such term is defined in Sections
13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other entity (other than the Company or
any employee benefit plan sponsored by an Employer) of any Common Stock of the Company (or
securities convertible into the Company’s Common Stock) for cash, securities or any other
consideration pursuant to a tender offer or exchange offer, without the prior consent of the Board
and, after such purchase, such person shall be the “beneficial owner” (as such term is defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company
representing 20 percent or more of the combined voting power of the then outstanding securities of
the Company ordinarily (and apart from rights accruing under special circumstances) having the
right to vote in the election of directors (calculated as provided in Section (d) of such Rule
13d-3 in the case of rights to acquire the Company’s securities);

(iii) Board Change. A change in the composition of the Board during any period of two
consecutive years, such that individuals who at the beginning of such period constitute the entire
Board shall cease for any reason to constitute a majority thereof unless the election, or the
nomination for election by the Company’s stockholders, of each new director was approved by a vote
of at least two-thirds of the directors then still in office who were directors at the beginning of
the period; or

(iv) Other Transactions. The occurrence of such other transactions involving a significant
issuance of voting stock or change in the composition of the Board that the Board determines to be
a Change in Control for purposes of the Plan.

The Agreement evidencing options or Restricted Stock granted under the Plan may contain
provisions limiting the acceleration of the exercisability of options and the acceleration of the
vesting of Restricted Stock as provided in this Section as the Committee deems appropriate to
ensure that the penalty provisions of Section 4999 of the Code, or any successor thereto in effect
at the time of such acceleration, will not apply to any stock, cash or other property received by
the holder from the Company.”

Amendment to the 1998 Stock Option Plan

The Health Net, Inc. 1998 Stock Option Plan, as amended (the “1998 Plan”), is hereby further
amended to delete subsection 6.8(b) of the 1998 Plan in its entirety and to replace it with the
following new subsection 6.8(b):

“(b) Definition of Change in Control. A “Change in Control” shall mean:

(i) Consummated Transaction. Consummation of (a) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to which shares of
Common Stock are converted into cash, securities or other property, other than a Merger, or (b) any
sale, lease, exchange, or other transfer (in one transaction or a series of related transactions)
of all, or substantially all, of the assets of the Company, or (c) the liquidation or dissolution
of the Company;

(ii) Control Purchase. The purchase by any person (as such term is defined in Sections
13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other entity (other than the Company or
any employee benefit plan sponsored by an Employer) of any Common Stock of the Company (or
securities convertible into the Company’s Common Stock) for cash, securities or any other
consideration pursuant to a tender offer or exchange offer, without the prior consent of the Board
and, after such purchase, such person shall be the “beneficial owner” (as such term is defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company
representing 20 percent or more of the combined voting power of the then outstanding securities of
the Company ordinarily (and apart from rights accruing under special circumstances) having the
right to vote in the election of directors (calculated as provided in Section (d) of such Rule
13d-3 in the case of rights to acquire the Company’s securities);

(iii) Board Change. A change in the composition of the Board during any period of two
consecutive years, such that individuals who at the beginning of such period constitute the entire
Board shall cease for any reason to constitute a majority thereof unless the election, or the
nomination for election by the Company’s stockholders, of each new director was approved by a vote
of at least two-thirds of the directors then still in office who were directors at the beginning of
the period; or

(iv) Other Transactions. The occurrence of such other transactions involving a significant
issuance of voting stock or change in the composition of the Board that the Board determines to be
a Change in Control for purposes of the Plan.

The Agreement evidencing Options or Restricted Stock granted under the Plan may contain such
provisions limiting the acceleration of the exercisability of options and the acceleration of the
vesting of Restricted Stock as provided in this Section as the Committee deems appropriate to
ensure that the penalty provisions of Section 4999 of the Code, or any successor thereto in effect
at the time of such acceleration, will not apply to any stock, cash or other property received by
the holder from the Company.”

2

WAIVER AND RELEASE OF CLAIMS

This WAIVER AND RELEASE OF CLAIMS (this “Release”) is made and entered into by and between
Health Net, Inc. and its affiliates and subsidiaries (hereinafter referred to as the “Company”) and
B. Curtis Westen (hereinafter referred to as the “Employee”).

WHEREAS, the Company and Employee are parties to an Employment Agreement dated as of May      ,
2006 (the “Employment Agreement”) and are entering into this Release as a condition to Employee’s
receipt of a severance payment thereunder (capitalized terms used but not defined herein shall have
the meanings set forth in the Employment Agreement).

NOW, THEREFORE, the Company and Employee agree as follows:

	1.	 	Employee’s employment with the Company will terminate on [TERM DATE ] (the “Termination
Date”). Upon termination of employment, Employee will not represent to anyone that he is an
employee of the Company and will not say or do anything purporting to bind the Company. Upon
Employee’s termination of employment, Employee shall be deemed to have resigned from all other
positions with the Company, if any, held by Employee.

	2.	 	Employee’s termination of employment with the Company shall be considered a [DESCRIBE TYPE OF
TERMINATION] under the Employment Agreement, and Employee is therefore eligible to receive
[DESCRIBE PAYMENTS AND OTHER BENEFITS TO BE RECEIVED].

	3.	 	Employee acknowledges that all unused accrued vacation and unused personal absence time will
be paid in his final regular paycheck in keeping with the company’s policy and practice or
such shorter time as may be required by applicable law. Employee further acknowledges that no
further vacation/paid-time-off benefits will accrue after the Termination Date.

	4.	 	Employee’s participation in all Company employee benefit plans as an active employee shall
cease on the Termination Date, and Employee shall not be eligible after the Termination Date
to make contributions to or to receive allocations under the Health Net, Inc. 401(k) Associate
Savings Plan, to earn any additional benefits under the Health Net, Inc. Supplemental
Executive Retirement Plan (the “SERP”) or to make any deferrals pursuant to any deferred
compensation plan of the Company (it being understood that Employee shall be entitled to all
vested benefits accrued as of the date hereof under the Company’s 401(k) Plan, SERP and any
deferred compensation plan).

	5.	 	In partial consideration of the Company providing Employee the payments and benefits set
forth above and as a condition to receive such payments and benefits, Employee freely and
voluntarily enters into this Release and by signing this Release Employee, on his own behalf
and on behalf of his or her heirs, beneficiaries, successors, representatives, trustees,
administrators and assigns, hereby waives and releases the Company, and each of its past,
present and future officers, directors, shareholders, employees, consultants, accountants,
attorneys, agents, managers, insurers, sureties, parent and sister corporations, divisions,
subsidiary corporations and entities, partners, joint venturers, affiliates, beneficiaries,
successors, representatives and assigns, from any and all claims, demands, damages, debts,
liabilities, controversies, obligations, actions or causes of action of any nature whatsoever,
whether based on tort, statute, contract, indemnity, rescission or any other theory of
recovery, including but not limited to claims arising under federal, state or local laws
prohibiting discrimination in employment, including Title VII of the Civil Rights Act of 1964,
as amended, the Civil Rights Act of 1866, as amended, claims of disability discrimination
under the Americans with Disabilities Act, the Age Discrimination in Employment Act, as
amended (“ADEA”), the Worker Adjustment and Retraining Notification Act (“WARN”), or claims
growing out of any legal restrictions on the Company’s right to terminate its employees and
whether for compensatory, punitive, equitable or other relief, whether known, unknown,
suspected or unsuspected, against the Company, including without limitation claims which may
have arisen or may in the future arise in connection with any event which occurred on or
before the date of Employee’s execution of this Release. The provisions in this paragraph do
not extend to any rights Employee may have to enforce the terms of this Agreement and are not
intended to prohibit Employee from filing a claim for unemployment insurance.

	6.	 	Employee expressly waives any right or claim of right to assert hereafter that any claim,
demand, obligation and/or cause of action has, through ignorance, oversight or error, been
omitted from the terms of this Release. Employee makes this waiver with full knowledge of his
rights and with specific intent to release both his known and unknown claims, and therefore
specifically waives the provisions of Section 1542 of the Civil Code of California or other
similar provisions of any other applicable law, which reads as follows:

“A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if known
by him must have materially affected his settlement with the debtor.”

Employee understands and acknowledges the significance and consequence of this Release and
of such specific waiver of Section 1542, and expressly agrees that this Agreement shall be
given full force and effect according to each and all of its express terms and provisions,
including those relating to unknown and unsuspected claims, demands, obligations and causes
of action herein above specified.

	7.	 	Employee shall not initiate or cause to be initiated against the Company any compliance
review, suit, action, investigation or proceeding of any kind, or voluntarily participate in
same, individually or as a representative, witness or member of a class, under contract, law
or regulation, federal, state or local, pertaining to any matter related to his employment
with the Company, unless Employee first cooperates in making his allegations known to the
Company for the Company to take corrective action at a time and place designated by the
Company. In addition, Employee shall, without further compensation, cooperate with and assist
the Company in the investigation of, preparation for or defense of any actual or threatened
third party claim, investigation or proceeding involving the Company or its predecessors or
affiliates and arising from or relating to, in whole or in part, Employee’s employment with
the Company or its predecessors or affiliates for which the Company requests Employee’s
assistance, which cooperation and assistance shall include, but not be limited to, providing
testimony and assisting in information and document gathering efforts. In this connection, it
is agreed that the Company will use its reasonable best efforts to assure that any request for
such cooperation will not unduly interfere with Employee’s other material business and
personal obligations and commitments.

	8.	 	Employee agrees he will return to the Company immediately upon termination any building keys,
security passes or other access or identification cards and any Company property that was in
his or her possession, including but not limited to any documents, credit cards, computer
equipment, mobile phones or data files. Employee agrees to clear all expense accounts and pay
all amounts owed on any corporate credit cards which the Company previously issued to
Employee, subject to the Company’s obligation to reimburse Employee for any properly
reimbursable business expenses in accordance with the Company’s expense policies and
procedures then in effect.

	9.	 	Employee shall not, without the Company’s written consent by an authorized representative, at
any time prior or subsequent to the execution of this Release, disclose, use, remove or copy
any confidential, trade secret or proprietary information he acquired during the course of his
employment by the Company, including without limitation, any technical, actuarial, economic,
financial, procurement, provider, customer, underwriting, contractual, managerial, marketing
or other information of any type that has economic value in the business in which the Company
is engaged, but not including any previously published information or other information
generally in the public domain.

	10.	 	In addition to any other part or term of this Release or the Employment Agreement, Employee
agrees that he will not, (a) for a period of one (1) year from the date of this Agreement,
irrespective of the reason for the termination, either directly or indirectly, on his own
behalf or on behalf of any other person: (1) make known to any person, firm, corporation or
other entity of any type, the names and addresses of any of the Company’s customers, enrollees
or providers or any other information pertaining to them; or (2) disrupt, solicit or influence
or attempt to solicit, disrupt or influence any of the Company’s customers, providers,
vendors, agents or independent contractors with whom the Employee became acquainted during the
course of employment or service for the purpose of terminating such a person’s or entity’s
relationship with the Company or causing such a person or entity to associate with a
competitor of the Company, and (b) for the six month period following the Termination Date
undertake any employment or activity prohibited by the Employment Agreement for the time
periods set forth therein. The prohibitions of this paragraph are not intended to deny
employment opportunities within the Employee’s field of employment but are limited only to
those prohibitions necessary to protect the Company from unfair competition. In addition,
Employee agrees that, during the applicable “Noncompetition Period” (defined below) following
his termination of employment with the Company, he 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 at the time of such solicitation, interference, hiring, offering to hire or
inducement, to discontinue his or her relationship with the Company or to accept employment
by, or enter into a business relationship with Employee or any other entity or person. The
“Noncompetition Period” shall be the six-month period following Employee’s termination of
employment with the Company that entitles Employee to receive severance benefits under a
written agreement with or policy of the Company or (ii) the twelve-month period following a
termination of Employee’s employment with the Company that does not entitle Employee to
receive such severance benefits.

	11.	 	Nothing contained herein shall be construed as an admission of any wrongful act, including
but not limited to violation of any contract, express or implied, or any federal, state or
local employment laws or regulations, and nothing contained herein shall be used for any
purpose except in proceedings related to the enforcement of this Release.

	12.	 	If any part or term of this Release is held invalid or unenforceable, such invalidity or
unenforceability shall not affect in any way the validity or enforceability of any other part
or term of this Release. In addition, if any court of competent jurisdiction construes the
covenants contained in Section 9 hereof, or any part thereof, to be unenforceable in any
respect, the court may reduce the duration or scope to the extent necessary so that the
provision is enforceable, and the provision, as reduced, shall then be enforceable.

	13.	 	Employee agrees and acknowledges that this Release recites all payments and benefits Employee
is entitled to receive hereunder and under the Employment Agreement, and that no other
payments or benefits will be asserted or requested by Employee.

	14.	 	The Employee acknowledges that he has had an opportunity to consult and be represented by
counsel of his own choosing in the review of this Release, and that he has been advised by the
Company to do so, that the Employee is fully aware of this Release and of its legal effect,
that the preceding paragraphs recite the sole consideration for this Release, and that
Employee enters into this Release freely, without coercion, and based on the Employee’s own
judgment and not in reliance upon any representation or promise made by the other party, other
than those contained herein. There may be no modification of the terms of this Release except
in writing signed by the parties hereto including an appropriately authorized Officer of the
Company.

	15.	 	This Release constitutes the full, complete and exclusive agreement between you and the
Company with respect to the subject matters herein and supersedes any prior agreements,
representations or promises of any kind, whether written, oral, express or implied, with
respect to the subject matters herein. The Company acknowledges and agrees that nothing
contained herein shall be deemed to supersede, amend or otherwise modify the terms of the
Amended and Restated Indemnification Agreement dated December 17, 2004 between you and the
Company, the terms of which shall remain in full force and effect following the execution of
this Release. This Release cannot be changed unless in writing, signed by you and the Chief
Executive Officer of the Company.

	16.	 	This Release shall be construed and governed by the laws of the State of Delaware.

EMPLOYEE ACKNOWLEDGES BY SIGNING BELOW that (i) Employee has not relied upon any
representations, written or oral, not set forth in this Release; (ii) at the time Employee was
given this Release Employee was informed in writing by the Company that (a) Employee had at least
21 days in which to consider whether Employee would sign the Release and (b) Employee should
consult with an attorney before signing the Release; and (iii) Employee had an opportunity to
consult with an attorney and either had such consultations or has freely decided to sign this
Release without consulting an attorney.

Employee further acknowledges that he may revoke acceptance of this Release by delivering a
letter of revocation within seven (7) days after the later of the dates set forth below addressed
to: Health Net, Inc., Organization Effectiveness Department, 21650 Oxnard Street, Woodland Hills,
California 91367, Attention: Karin Mayhew.

Finally, Employee acknowledges that he understands that this Release will not become effective
until the eighth (8th) day following his signing this Release and that if Employee does not revoke
his acceptance of the terms of this Release within the seven (7) day period following the date on
which Employee signs this Release as set forth above, this Release will be binding and enforceable.

IN WITNESS WHEREOF, the parties hereto have executed this Release as of the dates set forth
below.

	 	 	 	 	 	 	 
	Employee

By:

	 	       [EXHIBIT COPY]        
	 	Health Net, Inc.

By:
	 	

       [EXHIBIT COPY]        
	
 
	 	 
	 	 	 	 
	
 
	 	Name:
	 	 	 	Name:
	
 
	 	Title:
	 	 	 	Title:
	Dated:

	 	       [TO BE INSERTED]    
	 	Dated:
	 	       [TO BE INSERTED]    
	
 
	 	 
	 	 	 	 
	 
	 	 	 	 	 	 

3Agreement of Lease commencing as of July 1, 2006 between White Properties No.
      II, LLC and Champion Industries, Inc. regarding a portion of 120 Hills Plaza,
      Charleston, West Virginia.

    

    Exhibit
      10.1

     

    AGREEMENT
      OF LEASE COMMENCING AS OF JULY 1, 2006 BETWEEN WHITE PROPERTIES NO. II, LLC
      AND CHAMPION INDUSTRIES, INC. REGARDING A PORTION OF 120 HILLS PLAZA,
      CHARLESTON, WEST VIRGINIA. 

    THIS
      LEASE, Made and entered into in duplicate this 27th day of June, 2006, by and
      between WHITE
      PROPERTIES NO. II, LLC, a
      West
      Virginia limited liability company, party of the first part, hereinafter
      referred to as "Lessor", and CHAMPION
      INDUSTRIES, INC., a
      West
      Virginia corporation, party of the second part, hereinafter referred to as
      "Lessee".

    NOW,
      THEREFORE, THIS AGREEMENT WITNESSETH: That for and in consideration of the
      undertakings and agreements of the Lessee hereinafter set out and subject to
      the
      terms and provisions hereinafter contained, the Lessor does hereby let, lease
      and demise unto the Lessee and the Lessee does hereby accept such let, lease
      and
      demise of all those certain premises containing 22,523 square feet, more or
      less, in Lessor’s Building (formerly occupied by Ames Department Store) situate
      at 120 Hills Plaza, Charleston, West Virginia, which premises are outlined
      in
      blue on Annexus A, all of which may hereinafter be referred to as the “Demised
      Premises”, “Leased Premises” or “Premises”, together with the nonexclusive right
      to use in common with the Lessor and all others that the Lessor has heretofore
      and may hereafter grant the right of user the portions of the Lessor’s Parking
      Lot that are designated for parking use in the plan attached to this lease
      as
      Annexus B, subject to reasonable rules and regulations covering the use of
      Lessor’s Parking Lot as Lessor may from time to time promulgate and communicate
      to Lessee in writing, subject, however, to Lessor’s right to prescribe from time
      to time areas in Lessor’s Parking Lot that Lessee’s employees, agents,
      contractors, customers, representatives and visitors may not park (“Lessor’s
      Parking Lot”), all of which may hereinafter be referred to as the “Nonexclusive
      Demised Premises”, “Nonexclusive Leased Premises” or “Nonexclusive
      Premises”.

    Lessor’s
      Property means Lessor’s Building, the separate tax lot or parcel of land on
      which Lessor’s Building is located and all other improvements that are located
      on that parcel of land, but not Lessor’s Parking Lot.

    1. INITIAL
      TERM:
      The
      initial term of this lease is for a period of five (5) years beginning at 12:01
      a.m. on July 1, 2006, and terminating at 12:00 p.m. on June 30,
      2011.

    Lessor
      grants Lessee the right to enter the Leased Premises prior to said beginning
      date for the permissive purposes of installing its fixtures and preparing the
      Premises for its occupancy (but not for any other purposes, e.g., the purpose
      of
      doing business), in which event, Lessee shall be responsible for all utility
      charges to the Premises. If the Lessee shall have occupied the Leased Premises
      for any purpose other than installing its fixtures and preparing the Premises
      for its occupancy, e.g., for the purpose of doing business, prior to said
      beginning date, the term of this lease shall be increased to cover said
      additional days and rent for that period shall be paid on a proportionate basis,
      i.e., $322.00 per day, and Lessee shall comply with all other costs, charges
      and
      obligations placed on it during the initial term hereof for said additional
      days.

    Lessor
      shall not be liable to Lessee for any of Lessee's business losses occasioned
      by
      any delay in delivering possession of the Premises. 

    2. RENTAL:
      During
      the initial term of this lease, Lessee shall pay to Lessor, at the address
      set
      forth in paragraph 22, a total rental of Five Hundred Seventy-Nine Thousand
      Nine
      Hundred Sixty Dollars ($579,960.00) payable without demand in monthly
      installments of Nine Thousand Six Hundred Sixty-Six Dollars ($9,666.00) each,
      in
      advance, beginning on July 1, 2006, and continuing thereafter on the first
      day
      of each succeeding calendar month until said sum of Five Hundred Seventy-Nine
      Thousand Nine Hundred Sixty Dollars ($579,960.00) has been fully paid. All
      rental and all other sums of money, however described, payable to Lessor
      pursuant to this lease shall be paid without setoff, recoupment, counterclaim
      or
      deduction.

    3. EXTENSION
      TERMS:
      If the
      Lessee shall have kept and performed each and all of its covenants and
      conditions, it shall have the right to extend this lease for three (3)
      consecutive terms, the first extension term for three (3) years and the second
      and third extension terms for five (5) years each, said first extension term
      beginning at the expiration of the initial term hereof, i.e., at 12:00 midnight
      on June 30, 2011, and terminating at 12:00 midnight on June 30, 2014, said
      second extension term beginning at the expiration of the first extension term,
      i.e., at 12:00 midnight on June 30, 2014, and terminating at 12:00 midnight
      on
      June 30, 2019, and said third extension term beginning at the expiration of
      the
      second extension term, i.e., at 12:00 midnight on June 30, 2019, and terminating
      at 12:00 midnight on June 30, 2024; provided that at least one hundred eighty
      (180) days prior to the expiration of the initial term and at least one hundred
      eighty (180) days prior to the expiration of the said first and second extension
      terms, if exercised as aforesaid, the Lessee notifies the Lessor, in writing,
      of
      its election so to do, and all covenants and agreements herein agreed to be
      kept
      and performed by Lessee shall continue throughout each such extension term,
      if
      exercised as aforesaid, except rental. It shall be a condition of Lessee's
      right
      to exercise the option to extend herein that Lessee is in compliance with all
      the terms and conditions of this lease both at the time of Lessee's exercise
      of
      this option and at the time the extension term is scheduled to commence; and
      this condition may be waived by Lessor at its sole discretion and may not be
      used by Lessee as a means to negate the effectiveness of Lessee's exercise
      of
      this option. 

    If
      the
      Lessee exercises its right to extend this lease, as aforesaid, then the Lessee
      shall pay to Lessor rental as follows:

    Rental
      for the First Extension Term:

    For
      the
      period July 1, 2011, through June 30, 2014, a total rental of Three Hundred
      Seventy-One Thousand Six Hundred Twenty-Eight Dollars ($371,628.00) payable
      in
      monthly installments of Ten Thousand Three Hundred Twenty-Three Dollars
      ($10,323.00) each, in advance, beginning on July 1, 2011, and continuing
      thereafter on the first day of each succeeding calendar month until said sum
      of
      Three Hundred Seventy-One Thousand Six Hundred Twenty-Eight Dollars
      ($371,628.00) has been fully paid.

    

    Rental
      for the Second Extension Term:

    For
      the
      period July 1, 2014, through June 30, 2016, a total rental of Two Hundred
      Forty-Seven Thousand Seven Hundred Fifty-Two Dollars ($247,752.00) payable
      in
      monthly installments of Ten Thousand Three Hundred Twenty-Three Dollars
      ($10,323.00) each, in advance, beginning on July 1, 2014, and continuing
      thereafter on the first day of each succeeding calendar month until said sum
      of
      Two Hundred Forty-Seven Thousand Seven Hundred Fifty-Two Dollars ($247,752.00)
      has been fully paid; and for the period July 1, 2016, through June 30, 2019,
      a
      total rental of Four Hundred Five Thousand Three Hundred Ninety-Six Dollars
      ($405,396.00) payable in monthly installments of Eleven Thousand Two Hundred
      Sixty-One Dollars ($11,261.00) each, in advance, beginning on July 1, 2016,
      and
      continuing thereafter on the first day of each succeeding calendar month until
      said sum of Four Hundred Five Thousand Three Hundred Ninety-Six Dollars
      ($405,396.00) has been fully paid.

    

    

    Rental
      for the Third Extension Term:

    For
      the
      period July 1, 2019, through June 30, 2021, a total rental of Two Hundred
      Seventy Thousand Two Hundred Sixty-Four Dollars ($270,264.00) payable in monthly
      installments of Eleven Thousand Two Hundred Sixty-One Dollars ($11,261.00)
      each,
      in advance, beginning on July 1, 2019, and continuing thereafter on the first
      day of each succeeding calendar month until said sum of Two Hundred Seventy
      Thousand Two Hundred Sixty-Four Dollars ($270,264.00) has been fully paid;
      and
      for the period July 1, 2021, through June 30, 2024, a total rental of Three
      Hundred Eighty-Eight Thousand Five Hundred Twelve Dollars ($388,512.00) payable
      in monthly installments of Ten Thousand Seven Hundred Ninety-Two Dollars
      ($10,792.00) each, in advance, beginning on July 1, 2021, and continuing
      thereafter on the first day of each succeeding calendar month until said sum
      of
      Three Hundred Eighty-Eight Thousand Five Hundred Twelve Dollars ($388,512.00)
      has been fully paid.

    

    This
      is a
      lease for a term and not a lease from year to year or month to month.

    Any
      holding over by Lessee or retention of the Demised Premises beyond the initial
      term of this lease or extension terms of this lease, if exercised as aforesaid,
      shall not be construed as renewing or extending this lease in any manner
      whatsoever, but it may, at the option of the Lessor, be construed as creating
      a
      tenancy from month to month, at a monthly rental equal to one hundred
      twenty-five percent (125%) of the monthly rental Lessee was paying when the
      Lessee's term expired, or extension term expired, if exercised as aforesaid,
      payable monthly, in advance, and on the same other terms herein contained
      insofar as applicable. This provision does not give Lessee any right to hold
      over. 

    It
      is
      hereby witnessed, unless in this lease specifically to the contrary provided,
      that this lease as between Lessor and Lessee is on an absolute net basis to
      the
      Lessor, the Lessor being entitled to receive the aforesaid monthly rental as
      an
      absolute net to Lessor. 

    4. USE
      OF THE PREMISES:
      

    (a) Printing
      Facility Use and Restrictions on Use. The Demised Premises shall be used for
      the
      purpose of office products, office furniture, mail center, data processing
      or
      print on demand printing facility and of furnishing services incidental thereto
      and for no other purpose without the written consent of Lessor first had and
      obtained which consent shall not be unreasonably withheld. Lessee agrees that
      it
      will not use or occupy said Premises or permit the same to be used or occupied
      for any use, purpose or business deemed hazardous or deleterious by Lessor
      on
      account of fire or otherwise; that it will not do, use or permit upon or in
      said
      Premises anything that will invalidate any policy or policies of insurance
      now
      or hereafter carried on said building, or that may be dangerous to life or
      limb;
      that it will not in any manner deface or injure said building or any part
      thereof, or overload the floors of the Demised Premises; that it will keep
      all
      of the sidewalks abutting the Leased Premises free and clear of all obstruction,
      foreign matter, ice and snow as the same may from time to time accumulate;
      that
      it will keep all trash and garbage hauled away from the Demised Premises as
      the
      same accumulates, and will keep the Premises in a clean and sanitary condition;
      that it will not permit any objectionable or loud noises or odor to escape
      or be
      emitted from said Premises, or do or permit anything to be done thereon in
      any
      way tending to create a nuisance; and that it will comply with all governmental
      and health laws, ordinances and police and fire department requirements and
      regulations respecting said Premises and the use of said Premises, now in force
      or which may hereafter be in force during the term of this lease, including
      without limiting the generality of the foregoing compliance with the
      Occupational Safety and Health Act of 1970, as said Act may be amended from
      time
      to time, and all standards, rules and regulations promulgated thereunder, now
      in
      force or which may hereafter be in force during the term of this lease. Lessor
      represents to the Lessee that to the best of its knowledge and belief the Leased
      Premises as constructed and completed will comply with Title III of the
      Americans with Disabilities Act of 1990, P.L.101-336 ("the ADA Act"), as now
      in
      force. The Lessee agrees to comply with the ADA Act as said Act may be amended
      from time to time, and all standards, rules and regulations promulgated
      thereunder, now in force or which may hereafter be in force during the term
      of
      this lease, as the same pertain to both the use of the Premises as well as
      the
      condition of the Premises, and indemnify, defend and hold harmless the Lessor
      for any and all loss, cost, claim or liability of every type and character
      that
      the Lessor incurs as a consequence of Lessee's breach of, purported breach
      of or
      noncompliance with the ADA Act, Lessee's obligations under this sentence and
      the
      following provision of this subparagraph (a) of paragraph 4 as a consequence
      of
      the Lessee's occupancy or use of the Premises or the condition of the Premises.
      Lessee will be responsible to insure that any and all alterations or changes
      it
      makes in the Premises or its use in the Premises comply with the ADA Act and
      will further be responsible for any "path of travel" costs that result from
      alterations the Lessee makes. Further, the Lessee will not make any change
      in
      the use of the Premises so that such change of use will make the Premises a
      "place of public accommodation" pursuant to the ADA Act. Lessor will not be
      responsible for any unlawful discrimination by the Lessee nor will the Lessor
      be
      responsible for any change in the Premises to accommodate disabled employees
      of
      the Lessee, it being understood and agreed that the Lessee is responsible for
      making all such physical changes in the Premises required to accommodate its
      disabled employees. If any changes in the Premises are required during the
      term
      hereof to be made to comply with the ADA Act, the Lessor will cooperate with
      Lessee in all its efforts to make the building to so comply. Further, Lessee
      covenants never to permit the Leased Premises to remain unoccupied and unused
      for the purposes authorized in this agreement for a period of thirty (30)
      consecutive days, the Leased Premises being available for such use during the
      whole of said period. Lessee hereby releases the Lessor from any claims or
      actions arising out of the Lessee's use of the Premises. 

    (b) Lessee's
      Responsibility Regarding Hazardous Substances.

    (1) Hazardous
      Substances. The term "Hazardous Substances", as used in this lease, shall
      include, without limitation, flammables, explosives, radioactive materials,
      asbestos, polychlorinated biphenyls (PCBs), chemicals known to cause cancer
      or
      reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic
      substances or related materials, petroleum and petroleum products, and
      substances declared to be hazardous or toxic under any law or regulation now
      or
      hereafter enacted or promulgated by any governmental authority.

    (2) Lessee's
      Restrictions. Except as may be used in the ordinary course of the Lessee’s
      business and in compliance with all applicable laws and regulations, Lessee
      shall not cause or permit to occur:

    (A) Any
      violation of any federal, state or local law, ordinance, or regulation now
      or
      hereafter enacted, related to environmental conditions on, under or about the
      Premises and the Nonexclusive Premises, or arising from Lessee's use or
      occupancy of the Premises and Nonexclusive Premises, including, but not limited
      to, soil and ground water conditions; or

    (B) The
      use,
      generation, release, manufacture, refining, production, processing, storage
      or
      disposal of any Hazardous Substance on, under or about the Premises and
      Nonexclusive Premises, or the transportation to or from the Premises and
      Nonexclusive Premises of any Hazardous Substance.

    (3) Environmental
      Cleanup.

    (A) Lessee
      shall, at Lessee's own expense, comply with all laws regulating the use,
      generation, storage, transportation or disposal of Hazardous Substances
      ("Laws").

    (B) Lessee
      shall, at Lessee's own expense, make all submissions to, provide all information
      required by, and comply with all requirements of all governmental authorities
      (the "Authorities") under the Laws.

    (C) Should
      any Authority or any third party demand that a cleanup plan be prepared and
      that
      a cleanup be undertaken because of any deposit, spill, discharge or other
      release of Hazardous Substances that occurs during the term of this lease,
      at or
      from the Premises, or which arises at any time from Lessee's use or occupancy
      of
      the Premises and Nonexclusive Premises, then Lessee shall, at Lessee's own
      expense, prepare and submit the required plans and all related bonds and other
      financial assurances; and Lessee shall carry out all such cleanup
      plans.

    (D) Lessee
      shall promptly provide all information regarding the use, generation, storage,
      transportation or disposal of Hazardous Substances that is requested by Lessor.
      If Lessee fails to fulfill any duty imposed under this subparagraph (3) within
      a
      reasonable time, Lessor may do so; and in such case, Lessee shall cooperate
      with
      Lessor in order to prepare all documents Lessor deems necessary or appropriate
      to determine the applicability of the Laws to the Premises and Nonexclusive
      Premises and Lessee's use thereof, and for compliance therewith, and Lessee
      shall execute all documents promptly upon Lessor's request. No such action
      by
      Lessor and no attempt made by Lessor to mitigate damages under any Law shall
      constitute a waiver of any of Lessee's obligations under this subparagraph
      (3).

    (E) Lessee's
      obligations and liabilities under this subparagraph (3) shall survive the
      expiration or termination of this lease.

    (4) Lessee's
      Indemnity.

    (A) Lessee
      shall indemnify, defend and hold harmless Lessor, the manager of the property,
      and their respective officers, directors, beneficiaries, shareholders, partners,
      agents and employees, from all fines, suits, procedures, claims and actions
      of
      every kind, and all costs associated therewith (including attorney's and
      consultant's fees) arising out of or in any way connected with any deposit,
      spill, discharge or other release of Hazardous Substances that occurs during
      the
      term of this lease, at or from the Premises, or which arises at any time from
      Lessee's use or occupancy of the Premises, or from Lessee's failure to provide
      all information, make all submissions, and take all steps required by all
      Authorities under the Laws and all other environmental laws.

    (B) Lessor’s
      Representations Regarding Hazardous Substances.

    Lessor
      hereby represents and warrants that to the best of Lessor’s knowledge no
“Hazardous Substances”, as defined hereinabove, have been discharged, dispersed,
      released, stored, treated, generated, disposed of, or allowed to escape on
      the
      Premises or Nonexclusive Premises nor shall Lessor, its employees or agents
      allow or cause any Hazardous Substances to be discharged, dispersed, released,
      stored, treated, generated, disposed of, or allowed to escape on the Premises
      or
      Nonexclusive Premises. The Lessor shall, at its expense, take all necessary
      remedial action(s) in response to the presence of any Hazardous Substances
      in,
      on, under or about the Premises or Nonexclusive Premises that were discharged,
      dispersed, released, stored, treated, generated or disposed of, or allowed
      to
      escape on the Premises or Nonexclusive Premises (i) prior to the commencement
      of
      this lease or (ii) by the Lessor, its employees, agents or invitees. The Lessor
      shall be solely responsible for, and shall indemnify and hold harmless the
      Lessee, its officers, directors, beneficiaries, shareholders, partners, agents,
      employees, successors and assigns from and against all fines, suits, procedures,
      claims and actions of every kind, and all costs associated therewith (including
      attorney’s and consultant’s fees), arising out of or in any way connected with
      any use, generation, storage, release, threatened release, discharge, disposal,
      or presence of Hazardous Substances in, on, under or about the Premises or
      Nonexclusive Premises prior to the commencement of this lease, or at any time
      by
      the Lessor, its employees or agents, or from Lessor’s failure to provide all
      information, make all submissions, and take all steps required by all
      Authorities under the laws and all other environmental laws.

    (C) Lessor’s
      and Lessee's obligations and liabilities under the above subsections (A) and
      (B)
      shall survive the expiration or termination of this lease.

    5. UTILITIES,
      PUBLIC SERVICES, REAL ESTATE TAXES, ETC.:

    5.1 The
      Lessee covenants that it will furnish and pay for all gas, water, heat, air
      conditioning, light and power necessary for the Lessee's enjoyment of its
      leasehold estate. The Lessee shall pay for its sanitary sewer charge,
      incinerator fee and cost of trash and refuse removal. 

    5.2 During
      each extension term of this lease that is exercised, the Lessee covenants and
      agrees to pay to the Lessor twenty-eight and fifteen one hundredths percent
      (28.15%), as to Lessor’s Property, and sixteen and sixty-six one hundredths
      percent (16.66%), as to Lessor’s Parking Lot, of all (i) ad valorem real estate
      taxes, all fire protection and service fees or charges and property and
      liability insurance costs, including by way of illustration and not of
      limitation, premiums, surcharges, deductibles and taxes (the "Insurance Costs"),
      for all insurance coverages carried by Lessor for Lessor's Property and Lessor's
      Parking Lot, and (ii) cost of repair and maintenance of all rights of way and
      service drives connecting the Lessor's Property and the Lessor's Parking Lot
      to
      Patrick Street and the Private Street abutting McDonald's Restaurant, Weight
      Watchers and K-Mart connecting Lessor's Building and Lessor's Parking Lot to
      Patrick Street, and of the cost of illumination (including cost of electricity
      and repair and replacement of electric wiring and lighting fixtures), repair
      and
      maintenance of asphaltic concrete, striping, snow removal and cleaning from
      time
      to time of Lessor's Parking Lot (collectively referred to as "Operating
      Expenses"), which may be taxed, charged, assessed, imposed, incurred or agreed
      to by Lessor upon the whole of Lessor's Property and Lessor's Parking Lot during
      the term of this lease, beginning with the 2011 ad valorem real estate taxes
      which will attach as a lien on July 1, 2010, the July 1, 2010 through June
      30,
      2011 fire protection or service fee or charge and the December 1, 2010 to
      December 1, 2011 insurance policies; however, said beginning and ending year
      of
      the lease extension term taxes, service fee or charge, Insurance Costs, Lessor's
      Parking Lot costs and rights of way and service drives and Private Street costs
      and repairs (Operating Expenses) shall be prorated between Lessor and Lessee,
      e.g., the Lessee shall pay 6/12ths of the 2011 ad valorem real estate taxes,
      0/12th of the 2010-11 fire protection or service fee or charge, 5/12ths of
      the
      2010-11 insurance policies premiums and 6/12ths of the 2011 calendar year
      Lessor's Parking Lot, rights of way and service drives and Private Street costs,
      and the Lessor shall pay the balance. Lessee agrees to pay to Lessor as an
      additional charge each month an administrative charge in an amount equal to
      fifteen percent (15%) of all of the foregoing Operating Expenses set forth
      in
      this subparagraph 5.2. The sum of said Operating Expenses and the fifteen
      percent (15%) administrative charge arrived at as aforesaid as of the date
      hereof approximates Two Thousand Five Hundred Eighty-Three Dollars ($2,583.00)
      per month and Lessee shall pay such sum to Lessor on the first (1st) day of
      each
      month in advance during each extension term of this lease and holding over
      hereunder until such time as Lessor notifies Lessee of a different monthly
      sum.
      At least once each year the estimated payments shall be credited or debited
      to
      the year's actual Operating Expenses and the parties shall settle this account
      without interest accordingly - refund by Lessor if Lessee has overpaid or
      additional payment by Lessee if it has underpaid. Lessee covenants and agrees
      to
      reimburse Lessor, on demand, for all increase, if any, in Lessor's insurance
      premium for Lessor's Building of which the Leased Premises are a part, due
      to
      Lessee's use of or failure to occupy the Premises. Lessor shall provide Lessee
      with a statement from its agent setting forth (i) the amount of the Lessor's
      insurance premium (for the above set forth insurance coverages) based on
      Lessee's use or failure to occupy, and (ii) the amount of Lessor's insurance
      premium as aforesaid if Lessee's use of or failure to occupy the Leased Premises
      was not prohibited by Lessor's insurance policy or policies, as the case may
      be.
      Lessee agrees to pay any and all other public or private services to the
      Premises and Lessor's Parking Lot, whether a fee, charge, tax, lien or
      otherwise, including without limiting the generality of the foregoing any
      additional fire fee, charge or tax levied on account of the Leased Premises
      and/or Lessee's occupancy of the Leased Premises, e.g., per tenant fee. In
      addition, during each extension term of this lease that is exercised, Lessee
      agrees to pay to Lessor all sums of any business and occupation tax on the
      rental and other monies payable to Lessor pursuant to this lease or other tax,
      whether similar or dissimilar, substituted for and as a replacement of business
      and occupation tax levied by the State of West Virginia or any other
      governmental body, including by way of illustration and not of limitation the
      West Virginia business franchise tax. Lessee alone shall be responsible for
      payment of and pay Lessor on demand any type of tax, excise or assessment;
      regardless of label or whether in the form of a rental tax, gross receipts
      tax,
      sales tax, business or occupation tax, use assessments, privilege tax, franchise
      tax, or otherwise, except any tax, excise or assessment which in substance
      is a
      net income or franchise tax that is based solely on Lessor's net income; levied,
      assessed or imposed at any time by any governmental authority upon or against
      the Demised Premises, Lessor's Parking Lot, the use or occupancy of the Demised
      Premises and/or Lessor's Parking Lot, the rents and other charges payable by
      Lessee to Lessor, or otherwise with respect to the landlord-tenant relationship.
      All sums payable to the Lessor by the Lessee pursuant to the terms of this
      subparagraph 5.2 are to be treated as additional rent reserved by the Lessor
      and
      paid without setoff, recoupment, counterclaim or deduction. 

    6. ALTERATIONS:
      By
      executing this lease, Lessor evidences its approval of the plans, specifications
      and working drawings of the initial build-out plans of Lessee (Annexus C).
      Thereafter, Lessee agrees to make no alterations, erections, additions, or
      improvements in or to the Demised Premises and not to place any fixtures in
      or
      on the Demised Premises without first obtaining the written consent of the
      Lessor, which consent shall not be unreasonably withheld. Lessor's approval
      of
      the plans, specifications and working drawings for Lessee's alterations shall
      create no responsibility or liability on the part of Lessor for their
      completeness, design sufficiency or compliance with all laws, rules and
      regulations of all governmental agencies or authorities. Lessee may remove
      all
      fixtures it installs or places in or attaches to the Demised Premises, which
      removal shall be accomplished so as not to damage the Demised Premises and
      shall
      be completed prior to the termination of this lease. All property remaining
      within the Leased Premises on the day next following the day this lease expires
      or terminates shall be deemed to be abandoned and the Lessor may dispose of
      such
      as Lessor chooses and all reasonable expense incurred by Lessor in disposing
      of
      such abandoned property within thirty (30) days following termination or
      expiration of this lease shall be repaid to Lessor by Lessee within thirty
      (30)
      days following the mailing of a written statement of such by Lessor to Lessee.
      

    7. SIGNS:
      Lessee
      agrees not to attach, inscribe, paint or place any signs or structures to or
      upon the exterior of said building or within any window or door of the Leased
      Premises without first obtaining the written approval of Lessor, which approval
      shall not be unreasonably withheld. Anything herein contained to the contrary
      notwithstanding, Lessee’s signage shall not exceed its proportionate share of
      signage for Lessor’s Building under the City of Charleston zoning ordinance. Its
      proportionate share shall be determined by multiplying the total signage square
      footage permitted for the Lessor’s Building by a fraction, the numerator shall
      be the total square footage of the Leased Premises and the denominator shall
      be
      the total square footage in the Lessor’s Building. Any and all signs placed on
      the Leased Premises by Lessee shall be maintained in compliance with all
      applicable governmental laws and regulations, and Lessee shall be responsible
      to
      Lessor for any damage caused by installation, use or maintenance of its signs.
      At the expiration or earlier termination of this lease, Lessee shall remove
      all
      of its signs and shall repair any damages incidental to this removal, which
      covenant shall survive the expiration or termination of this lease.

    8. REPAIRS
      AND REPLACEMENTS:
      Lessee
      agrees to make all repairs and replacements to the Demised Premises and
      Nonexclusive Demised Premises as may be made necessary by the willfulness,
      fault
      or neglect of Lessee or its agents, employees, invitees, contractors or
      representatives, and the Lessor agrees to be responsible for structural repairs
      to the roof, front wall, rear wall and exterior side walls of said Premises
      not
      occasioned by the willfulness, fault or neglect of Lessee or Lessee's agents,
      employees, invitees, contractors or representatives. Lessee further agrees
      to
      keep the interior of the Demised Premises (including by way of specification
      and
      not of limitation heating and air conditioning equipment, plumbing fixtures,
      water, sewer and gas lines, lighting fixtures and electric wiring and equipment)
      in a good and proper state of repair (including replacements when and as prudent
      building management practices deem such should be replaced) at all times and
      to
      surrender the Demised Premises at the expiration of this lease with the interior
      thereof in good repair, work order and condition, damage by fire and other
      unavoidable casualty, condemnation and appropriation excepted. It is further
      witnessed that the Lessee is responsible for repairs and replacements of glass,
      doors and windows, including the encasement frames of and appurtenances to
      the
      glass, doors and windows. It is further understood and agreed that Lessee takes
      the Demised Premises and Nonexclusive Demised Premises in its present condition
      and that Lessor is to make no repairs, replacements or alterations to the
      Demised Premises and Nonexclusive Demised Premises at any time except as it
      has
      specifically agreed to do in this paragraph.

      9. FIRE
      PREVENTION SYSTEMS, ETC.: 

    (a) If
      the
      National Board of Fire Underwriters or any local Board of Fire Underwriters
      or
      Insurance Exchange (or other bodies hereafter exercising similar functions)
      shall require or recommend the installation of fire extinguishers, a "sprinkler
      system," fire detection and prevention equipment (including, but not limited
      to,
      smoke detectors and heat sensors), or any changes, modifications, alterations,
      both structural and nonstructural, or the installation of additional sprinkler
      heads or other equipment for any reason attributable to Lessee's use of the
      Premises or alterations performed by Lessee; or

    (b) If
      any
      law, regulation, or order or if any bureau, department, or official of the
      Federal, State, and/or Municipal Governments shall require or recommend the
      installation of fire extinguishers, a "sprinkler system", fire detection and
      prevention equipment (including but not limited to, smoke detectors and heat
      sensors), or any changes, modifications, alterations (both structural and
      nonstructural, or the installation of additional sprinkler heads or other
      equipment for any existing sprinkler system, fire extinguishing system, and/or
      fire detection system for any reason attributable to Lessee's use of the
      Premises or alterations performed by Lessee; or

    (c) If
      any
      such installations, changes, modifications, alterations, sprinkler heads, or
      other equipment become necessary to prevent the imposition of a penalty, an
      additional charge, or an increase in the fire insurance rate as fixed by said
      Board or Exchange, from time to time, or by any fire insurance company as a
      result of the use of the Premises,

    then
      Lessor shall, at Lessor's sole cost and expense, promptly make such
      installations within the Premises and make such changes, modifications,
      alterations, both structural and nonstructural, or the installation of
      additional sprinkler heads or other required or recommended
      equipment.

    10. LESSOR'S
      RIGHT TO EXAMINE PREMISES:
      Lessee
      agrees to allow the Lessor's agents reasonable free access to the Demised
      Premises during reasonable hours for the purpose of examining the same, to
      ascertain if the same are in good repair, to make repairs or alterations to
      the
      Demised Premises and to other portions of Lessor's building, and to exhibit
      the
      same to prospective tenants; provided, however, Lessor gives Lessee at least
      twenty-four (24) hours’ notice and the use of the Demised Premises by Lessee is
      not unreasonably interfered with. Lessee agrees that Lessor shall have the
      right
      to immediate free access to the Demised Premises for repairs to the balance
      of
      Lessor's building where an emergency exists and Lessor shall be the sole judge
      of the existence of an emergency. 

    11. LESSOR
      NOT LIABLE FOR DEFECTS:
      In the
      absence of willfulness on its part or breach of any of its agreements or
      covenants under this lease, Lessor shall not be liable to Lessee or third
      parties for any damage or injury to Lessee or third parties or the property
      of
      either occasioned by or arising out of any defect in or condition of the
      Premises or the Nonexclusive Demised Premises, now existing or hereafter
      existing, or occasioned by fire, water, explosion, wind, snow, ice or other
      casualty, unless said defect is caused by Lessor's gross negligence.

    12. INSURANCE
      REQUIREMENTS AND INDEMNIFICATION:

    12.1 All
      insurance policies covering the obligations of Lessee under this lease shall
      be
      endorsed to provide the Lessor with the same notice of cancellation, material
      change, termination or nonrenewal as is provided to the Lessee in those
      policies, but not less than thirty (30) days' prior written notice by certified
      or registered mail, return receipt requested.

    All
      insurance policies required by this lease shall be endorsed to provide Lessor
      with thirty (30) days' written notice, following procedures required by West
      Virginia Department of Insurance, before such insurance can be cancelled as
      to
      Lessor because of a breach of warranty by the policy holder. 

    Lessee
      agrees to deliver to Lessor a true copy of any notice of cancellation, material
      change, termination or nonrenewal Lessee receives within five (5) days following
      receipt of any such notice by Lessee.

    The
      Lessee agrees to obtain and provide on or before the commencement of the initial
      term of this lease and keep in force at all times thereafter, the following
      insurance and other coverages with respect to the Leased Premises:

    Damage
      Claims:

    (a) Lessee
      shall carry Commercial General Liability insurance with the coverage at least
      as
      broad as Insurance Services Office ("ISO") Commercial General Liability coverage
      "occurrence" form CG 00 01 10 01 or its equivalent, without modification, and
      which may be written on a manuscript form, with limits of One Million Dollars
      ($1,000,000.00) combined single limit per occurrence for bodily injury, personal
      injury and property damage.

    The
      following amendments and endorsements to coverage shall be
      provided:

    (1) The
      policy general aggregate shall be amended to apply separately to the Demised
      Premises and Nonexclusive Demised Premises, using amendatory language at least
      as broad as ISO CG 25 04, without modification.

    (2) Lessee's
      insurance shall contain an endorsement providing coverage at least equal to
      that
      of ISO Form 20 26, Additional Insured - Designated Person or Organization,
      or
      its equivalent, without modification, which shall name the Lessor Parties as
      an
      additional insured as respects all covered claims arising out of the performance
      of this Lease of Premises and shall be primary insurance as respects any such
      claims arising out of the performance of this Lease of Premises. Any insurance
      maintained by the Lessor Parties shall be excess, secondary and non-contributing
      to Lessee's insurance.

    (b) Lessee
      shall carry at least One Million Dollars ($1,000,000.00) excess or umbrella
      liability insurance excess of the Commercial General Liability insurance
      described in subparagraph (a), above.

    (c) Lessee
      shall carry Workers' Compensation insurance, as required by the law of the
      State
      of West Virginia, covering all employees of Lessee who perform any finish work
      or any repair or alteration authorized by this lease or consented to by Lessor
      and all other employees of Lessee with respect to whom death or bodily injury
      claims could be asserted against Lessee.

    (d) Unless
      covered under existing insurance policies, before undertaking any alterations,
      additions, improvements or construction, Lessee shall obtain, or cause its
      sublessee to obtain, at its expense a general liability insurance policy
      insuring Lessee and Lessor Parties against any liability which may arise on
      account of such proposed alterations, additions, improvements or construction
      on
      an occurrence basis with the minimum limits set forth in this paragraph
      12.

    All
      such
      primary insurance shall be placed with insurers having a Best's rating of no
      less than A:VII. All primary insurers shall be admitted to or licensed with
      the
      Department of Insurance of the State of West Virginia and shall use forms filed
      with and approved by the insurance regulator of the State of West
      Virginia.

    Lessee
      shall be responsible for any deductible amount under any coverage or insurance
      coverages required by this lease. Lessee shall provide coverage and pay any
      increased premium resulting from Lessee's use of the Leased Premises and
      Nonexclusive Leased Premises.

    Upon
      reasonable request, Lessee shall provide the Lessor with a certified true copy
      of all insurance policies providing coverage required by this lease. Lessor
      may
      accept, as an alternative, ACORD form 25 or comparable-type certificates of
      insurance, prepared and signed by an employee of the insurer, describing in
      detail all property and liability insurance required by this lease with all
      special endorsements required to be provided for the benefit of Lessor attached
      thereto, including by way of illustration and not of limitation endorsements
      adding the Lessor Parties as an additional insured and agreement by the
      insurance company to waive subrogation rights against the Lessor Parties (see
      paragraph 13, below) shall be delivered to Lessor at least ten (10) days prior
      to the time such insurance is first required to be carried by Lessee and upon
      renewals not less than ten (10) days prior to the expiration of any such
      policy.

    For
      the
      purposes of this paragraph 12.1, "Lessor Parties" shall mean:

    (a) Lessor,

    (b) any
      lender whose loan is secured by a lien against the Leased Premises,

    (c) Leased
      Premises Manager, and

    (d) the
      respective affiliates, subsidiaries, successors, assigns, heirs, officers,
      directors, shareholders, partners, members, employees, agents, contractors
      and
      representatives of Lessor, Lender and Leased Premises Manager.

    If
      Lessee
      fails to provide and maintain insurance as required in this lease, the Lessor
      may, at its option, do so and bill the Lessee for the premium. Such premiums
      shall be immediately due and payable to the Lessor by the Lessee.

    No
      insurance coverage shall contain a deductible or self-insured retention in
      excess of One Thousand Dollars ($1,000.00) without prior written consent of
      Lessor. All deductibles and/or retentions shall be paid by, assumed by, for
      the
      account of, and at the Lessee's sole risk.

    12.2 Lessee
      hereby agrees to reimburse, indemnify, save harmless and defend, including
      paying or causing to be paid the reasonable fees and expenses of counsel
      reasonably selected by Lessor, the Lessor from all claims, loss, damage or
      injury to persons and property arising out of, from or incident to Lessee's
      performance of this Lease of Premises, whether or not resulting from the
      negligence of or failure to comply with the terms of this lease by Lessee,
      or
      its employees, agents, invitees, contractors or representatives.

    Lessee
      shall reimburse Lessor for any and all damages suffered by the Lessor as a
      consequence of the negligence, fault or willfulness of Lessee and Lessee's
      agents, employees, invitees, representatives, independent contractors and
      others.

    13. SUBROGATION:
      Each
      party shall look first to any insurance in its favor before making any claim
      against the other party (including its agents, employees, invitees, contractors
      and representatives) for recovery for loss or damage resulting from fire or
      other casualty, and to the extent that such insurance is in force and
      collectible and to the extent permitted by law, Lessor and Lessee each hereby
      releases and waives all right of recovery against the other (including its
      agents, employees, invitees, contractors and representatives) or any one
      claiming through or under each of them by way of subrogation or otherwise.
      The
      foregoing release and waiver shall not be in force if either releasors'
      insurance policies contain a clause providing that such a release or waiver
      shall invalidate the insurance and, also, provided that a policy that provides
      that such a release or waiver shall not invalidate the insurance can be obtained
      without additional premiums. Lessee hereby agrees to obtain and deliver to
      the
      Lessor a copy of the endorsement from the Lessee's insurance carrier clearly
      indicating that the Lessee's insurance carrier has agreed to waive subrogation
      rights against the Lessor. 

    14. ASSIGNMENT:
      The
      Lessee covenants for itself and its successors and assigns not to assign this
      lease in whole or in part and not to sublet the Leased Premises or any part
      thereof without first obtaining the written consent of the Lessor, which shall
      not be unreasonably withheld. It shall be a condition to any consent to
      subletting or assignment that: (i) at the time of any such proposed subletting
      or assignment, Lessee shall not be in default under any of the terms, provisions
      or conditions of this lease; (ii) the sublessee or assignee shall intend only
      to
      occupy the Premises and conduct its business therein in accordance with the
      use
      set forth in paragraph 4 hereof; (iii) the financial responsibility, suitability
      and business character and nature of the proposed occupancy are sufficient
      to
      equal or exceed that of Lessee; (iv) Lessee and its assignee or sublessee shall
      execute, acknowledge and deliver to Lessor a fully executed counterpart of
      a
      written assignment of lease or sublease, as the case may be, by the terms of
      which in case of any assignment, Lessee will assign to such assignee Lessee's
      entire interest in this lease, together with all prepaid rents hereunder, and
      the assignee will accept said assignment and assume and agree to perform,
      directly for the benefit of Lessor, all of the covenants and agreements
      contained in this lease on the Lessee's part to be performed hereunder; (v)
      sublessee must agree to a waiver of claims against Lessor and the sublessee's
      insurer must issue waiver of subrogation rights endorsement to all policies
      of
      insurance carried in connection with the Leased Premises and the contents
      thereof (which waiver must be in form and substance acceptable to Lessor);
      and
      (vi) notwithstanding any such assignment or subletting under the terms of this
      paragraph, Lessee will acknowledge that, notwithstanding such assignment or
      sublease and the consent of Lessor thereto, Lessee will not be released or
      discharged from any liability whatsoever under this lease and will continue
      liable thereon with the same force and effect as though no assignment or
      sublease had been made. In the event any such proposed assignment or sublease
      provides for, or Lessee otherwise receives, rent, additional rent or other
      consideration in excess of that provided for in this lease, Lessee agrees that
      in the event Lessor grants its consent, Lessee shall pay Lessor sixty-five
      percent (65%) of the amount of such excess as it is received by or becomes
      due
      to Lessee. Any such consented to or unconsented to assigning or subletting
      in
      whole or in part shall not relieve the Lessee in any way of its obligations
      hereunder. All costs incurred by Lessor in connection with any request for
      consent to an assignment or other transfer, including costs of investigation
      and
      the reasonable fees of Lessor's counsel, up to but not exceeding the total
      sum
      of One Thousand Dollars ($1,000.00) for each such request, shall be paid by
      Lessee to Lessor at the time a request to assign or sublet is delivered in
      writing to Lessor. Lessor's consent to one assignment or sublease will not
      waive
      the requirement of obtaining the Lessor's consent to any subsequent assignment
      or sublease. During the term hereof and all extension terms, if exercised,
      and
      holding over hereunder, if any, the Lessee covenants not to be adjudicated
      a
      bankrupt, not to file a voluntary petition in bankruptcy, not to permit a
      receivership proceeding to be instituted by or against Lessee, not to permit
      the
      appointment of a receiver for Lessee, not to make or suffer an assignment for
      the benefit of creditors and that this lease will not be rejected after filing
      a
      petition in bankruptcy or insolvency or for reorganization or arrangement under
      Federal bankruptcy laws or State insolvency act. 

    15. DEFAULT
      AND REMEDIES:
      In the
      event the Lessee assigns this lease in whole or in part or sublets the Leased
      Premises or any part thereof without the written consent of the Lessor first
      had
      and obtained, as provided in paragraph 14; or if Lessee files a voluntary
      petition in bankruptcy or if receivership proceedings are instituted by or
      against Lessee, or if a receiver is appointed for Lessee, or if Lessee makes
      an
      assignment for the benefit of creditors, or if this lease is rejected after
      filing a petition in bankruptcy or insolvency or for reorganization or
      arrangement under Federal bankruptcy laws or under any State insolvency act
      as
      is prohibited in paragraph 14; or if Lessee shall fail to pay any rent or other
      charge herein provided for or hereby required when and as the same becomes
      due,
      as provided in paragraphs 1, 2, 3, 4, 5, 12, 14, 15, 19 and 25, and after ten
      (10) days have elapsed from demand for the payment thereof has been made in
      writing by Lessor; or if Lessee uses the Premises for any use or purpose not
      permitted in paragraph 4, or if Lessee does not comply with its responsibility
      regarding hazardous substances as required by paragraph 4, or if Lessee does
      not
      comply with any governmental or health law, ordinance or police or fire
      department requirement or regulation respecting said Premises, including without
      limiting the generality of the foregoing, the Occupational Safety and Health
      Act
      and the Americans with Disabilities Act, all as required by paragraph 4, or
      if
      Lessee makes alterations, erections, additions or improvements or places
      fixtures in the Leased Premises other than as permitted in paragraph 6, or
      if
      Lessee does not comply with the provisions of paragraph 7 as to signs, or if
      Lessee does not make repairs and replacements to the Demised Premises or if
      Lessee fails to keep the Leased Premises in a good and proper state of repair
      as
      required by paragraph 8, or if Lessee does not comply with the fire prevention
      system requirements of paragraph 9, or if the Lessee does not permit the Lessor
      to examine the Premises as required in paragraph 10, or if Lessee does not
      hold
      Lessor harmless and indemnify Lessor as required by paragraphs 4, 12 and 15,
      or
      if Lessee does not carry insurance or deliver policies or certificates as
      required by and in conformance with paragraph 12, or if Lessee does not execute
      any certificate or instrument as required by paragraphs 23 and 24, or if Lessee
      permits or suffers any lien on the Premises in contravention to paragraph 25,
      or
      if Lessee shall fail to perform or observe any of the other terms, provisions
      or
      requirements of this instrument, and shall continue in such failure, breach
      or
      violation for thirty (30) days after notice in writing to perform or observe
      the
      same has been given by Lessor, unless such failure (default) is of such a nature
      that it cannot be cured within said thirty (30) day period, in which event
      a
      default shall be deemed to have occurred unless Lessee shall commence the curing
      of such default within said thirty (30) day period and shall thereafter
      diligently and continuously prosecute the curing of such default until
      completion, but in no event shall such cure period exceed sixty (60) days;
      or if
      Lessee fails at any time for a period of thirty (30) consecutive days to occupy
      and use the Leased Premises for the purposes allowed by this agreement, the
      Premises being available for such use during the whole of such period as is
      provided in paragraph 4; then, and in any of such events, the Lessor may, at
      its
      option, terminate this lease by written notice to that effect to the Lessee,
      or
      it may, at its option, reenter and repossess the Demised Premises, with or
      without force, for the remainder of the term of the lease and rerent or sublet
      the same, in whole or in part, for the whole or any part of the unexpired term,
      and any rental so obtained shall be credited first to Lessor's reasonable costs
      and expenses including but not limited to attorney's fees, insurance, expenses
      of reletting, subletting, repairs, brokerage fees, subdividing, alterations
      or
      renovations of the Leased Premises and then to the obligation of the Lessee
      already accrued and thereafter accruing under the provisions of this instrument,
      and Lessee shall remain liable for any deficiency. 

    In
      the
      event the lease is terminated by the Lessor as above provided, or as provided
      in
      paragraph 16, below, REPEATED
      DEFAULT AND REMEDIES,
      Lessor
      shall have the right, and Lessee hereby grants it the right, to reenter the
      Premises, and to have, repossess and enjoy the same as of its first and former
      estate therein.

    If
      at any
      time the Lessor has possession, or is entitled to possession of the Demised
      Premises under the provisions hereof, it may shut off heat and water and any
      other service from the Demised Premises, may change locks on doors and may
      exercise all usual rights of proprietorship over the same. 

    The
      Lessee agrees to indemnify the Lessor for any charge, costs, liability, or
      expense, including reasonable attorney's fees, which may be imposed upon,
      incurred by, or asserted against Lessor by reason of (i) any failure on the
      part
      of the Lessee to perform or comply with any covenant required to be performed
      or
      complied with by the Lessee hereunder, or (ii) the existence of this lease,
      and/or their relationship of landlord and tenant. The provisions of this
      paragraph shall survive the expiration or termination of this lease and all
      extensions, renewals and holdovers hereunder, if any.

    In
      addition to the rights and remedies hereinbefore specifically given to the
      Lessor, it shall in all instances have all rights and remedies afforded
      landlords by the laws of the State of West Virginia. 

    TIME
      IS
      OF THE ESSENCE FOR THIS AGREEMENT. 

    16. REPEATED
      DEFAULT AND REMEDIES:
      Notwithstanding anything to the contrary set forth in this lease, if Lessee
      shall fail to pay any rent or any other charge herein provided for or hereby
      required when and as the same becomes due, and after five (5) days have elapsed
      from demand for the payment thereof has been made in writing by Lessor, as
      provided in paragraphs 1, 2, 3, 4, 5, 12, 14, 15, 19 and 25, and any such
      default shall be repeated two (2) times in any period of twelve (12) consecutive
      months, then, notwithstanding that such defaults shall have each been cured
      by
      Lessee after notice as provided in this lease, any further similar default
      within said twelve (12) month period shall be deemed to be a Repeated Default
      without the ability to cure. 

    In
      the
      event of a Repeated Default, Lessor, without giving Lessee any notice and
      without affording Lessee an opportunity to cure the default, may terminate
      this
      lease forthwith without notice to Lessee and Lessor may, at its option, avail
      itself of any and all remedies set forth in paragraph 15.

    17. FIRE:
      It is
      understood and agreed that in case the improvements on the Demised Premises
      shall be destroyed or so damaged by fire or other cause as to render it unfit
      for occupancy or use, the Lessor shall have the right to elect whether it will
      rebuild or repair the said building in a condition similar to its condition
      prior to such casualty and to continue this lease in full force and virtue,
      or
      whether it will elect to terminate the lease; such election to be made in
      writing within thirty (30) days after the loss. If the Lessor shall elect to
      repair said Premises, then it shall also notify the Lessee as to the estimated
      time required for such repairs, and if it is estimated that said building cannot
      be repaired within a period of one hundred fifty (150) days, then the Lessee
      shall have the option of terminating this lease by giving the Lessor notice
      in
      writing within thirty (30) days after receipt of notice of Lessor's election
      as
      to the repair of the Premises. During the time said Premises shall be unfit
      for
      occupancy, the rent hereby reserved, or a fair and just proportion thereof,
      according to the nature and extent of the damage sustained, shall be suspended
      and cease to be payable until the Leased Premises shall be rebuilt or repaired
      for occupation and use, or this lease terminated and ended by the Lessor or
      the
      Lessee as herein provided. If the Lessor is not insured for loss of rental
      income coverage, then it is agreed that no suspension or ceasing of rent shall
      be required if such unfitness for occupancy is caused by the fault, negligence
      or willfulness of the Lessee.

    18. EMINENT
      DOMAIN:
      If the
      whole of the Demised Premises and Nonexclusive Demised Premises or any part
      thereof is taken under the power of eminent domain or conveyed under the threat
      of the power of eminent domain, all sums payable thereunder shall belong to
      and
      be paid to the Lessor, the Lessee having no right therein, except Lessee shall
      be entitled to all sums separately payable to the Lessee for its claim for
      compensation or damages based upon its moving costs and loss of business.
      Further, if the whole of the Demised Premises and Nonexclusive Demised Premises
      or such part of the Demised Premises and Nonexclusive Demised Premises so as
      to
      substantially interfere with Lessee's use of the Demised Premises and
      Nonexclusive Demised Premises is taken under the power of eminent domain, or
      conveyed under the threat of the power of eminent domain, then the Lessee may
      terminate this lease by giving the Lessor at least thirty (30) days' written
      notice prior to such termination date; provided, however, if no notice is given
      or if the taking is not substantial (and it shall be conclusively presumed
      to be
      not substantial if a partial taking and no notice is given) then in any such
      event there shall be no abatement of rent reserved hereunder and this lease
      shall continue in all respects as to the balance of said property. The notice
      provided for above may be given at any time not later than thirty (30) days
      next
      following physical possession of the Premises and Nonexclusive Premises being
      taken, the judgment in a condemnation proceeding becoming final or from the
      date
      notice by the Lessor is given the Lessee of its voluntary conveying, whichever
      occurs first and as the case may be. 

    19. INTEREST
      AND OVERDUE PAYMENT CHARGE:
      Any
      payment not promptly made by Lessee to the Lessor shall bear interest from
      the
      date due at two percentage (2%) points per annum above the prevailing prime
      interest rate then charged by United Bank, Inc., of Charleston, West Virginia,
      to its most credit worthy customers, but not in excess of any applicable
      interest rate ceiling, or eight percent (8%) per annum, whichever is the
      greater, during the period said payment remains unpaid. Any payment not made
      within five (5) days of its due date by Lessee to Lessor shall, in addition
      to
      interest, bear an overdue payment charge equal to five percent (5%) of the
      amount due plus a service fee of Fifteen Dollars ($15.00) per day for each
      day
      said payment remains unpaid after its due date to reimburse Lessor for its
      additional administrative costs. A payment is made on the day it is delivered
      to
      Lessor. 

    20. WAIVER:
      A waiver
      by the Lessor of any default, omission or violation by Lessee shall not be
      construed as a waiver of any subsequently occurring default, omission or
      violation. 

    If
      at any
      time hereafter a dispute shall arise between Lessor and Lessee with respect
      to
      any amount of money to be paid by either of them to the other under any of
      the
      provisions of this lease, the party against whom the obligation shall be
      asserted shall have the right to make payment "under protest", and if such
      party
      shall exercise such right, such payment shall not be deemed a voluntary payment
      but there shall be deemed reserved to such party the right to institute
      appropriate action or proceeding against the other for recovery of the whole
      or
      such part of said sum as such party shall claim it was not obligated to pay
      hereunder. If at any time a dispute shall arise between Lessor and Lessee as
      to
      any act to be done or work to be performed by either of them on, in or about
      the
      Leased Premises under any of the provisions of this lease, the party against
      whom the obligation to do such act or perform such work shall be asserted,
      may
      do such act or perform such work and pay the cost thereof "under protest",
      and
      if such party shall do so, the performance of such act or work and payment
      of
      such cost shall not be deemed a voluntary performance or voluntary payment,
      but
      there shall be deemed reserved to such party the right to institute appropriate
      action or proceedings against the other for recovery of the whole of such cost
      or such part thereof as shall represent the cost of performing the act or work
      under which such party shall claim it was not obligated to perform hereunder.
      

    21. ACCORD
      AND SATISFACTION:
      No
      payment by Lessee or receipt or acceptance by Lessor from Lessee of less than
      the monthly rent herein stipulated or any other payment herein provided to
      be
      paid by Lessee to Lessor shall be deemed to be other than a partial payment on
      account for any due and unpaid stipulated rent or any other payment herein
      provided to be paid by Lessee to Lessor, as the case may be, and no endorsement
      or statement on any check or payment of rent or any other payment herein
      provided to be paid by Lessee to Lessor, as the case may be, shall be deemed
      an
      accord and satisfaction. 

    22. NOTICES:
      Unless
      herein elsewhere set forth to the contrary for a specified notice, all notices
      required or proper under this lease shall be deemed to be properly given when
      sent by registered or certified mail, postage prepaid, addressed to the last
      address previously furnished by the parties hereto. Until otherwise changed
      by
      the parties by notice in writing, notices shall be sent as follows:

    To
      the
      Lessor:

    

    White
      Properties No. II, LLC

    Post
      Office Box 6767

    Charleston,
      West Virginia 25362

    

    To
      the
      Lessee:

    

    Champion
      Industries, Inc.

    Post
      Office Box 2968

    Huntington,
      West Virginia 25728

     

    The
      date
      of service of such notice shall be the date it is deposited in a postal
      receptacle or post office of the United States Postal Service, as the case
      may
      be. 

    23. LEASE
      SUBORDINATE TO LIEN INDEBTEDNESSES:
      This
      lease is subject and subordinate to any mortgage or deed of trust which may
      now
      or hereafter encumber the building and premises of which the Leased Premises
      form a part and to all renewals, modifications, consolidations, replacements
      and
      extensions thereof. This clause shall be self-operative and no further
      instrument of subordination need be required by any mortgagee or lender. In
      confirmation of such subordination, however, Lessee shall at Lessor's request
      execute promptly any appropriate certificate or instrument that Lessor may
      request and deliver such to Lessor within fifteen (15) days following receipt
      by
      Lessee of such certificate or instrument. In the event of the enforcement by
      the
      trustee or the beneficiary under any such mortgage or deed of trust of the
      remedies provided for by law or by such mortgage or deed of trust, Lessee will,
      upon request of any person or party succeeding to the interest of Lessor as
      a
      result of such enforcement, automatically become the lessee of such successor
      in
      interest without change in the terms or other provisions of such lease;
      provided, however, that such successor in interest shall not be bound by (i)
      any
      payment of rent or additional rent for more than one month in advance except
      prepayments in the nature of security for the performance by Lessee of its
      obligations under this lease, or (ii) any amendment or modification of this
      lease made without the written consent of such trustee or such beneficiary
      or
      such successor in interest. Upon request by such successor in interest, Lessee
      shall execute and deliver an instrument or instruments confirming the attornment
      herein provided for.

    24. LESSEE
      TO EXECUTE ESTOPPEL CERTIFICATE:
      At
      Lessor's request, Lessee will execute either an estoppel certificate addressed
      to any mortgagee or lender of Lessor or a three-party agreement among Lessor,
      Lessee and such mortgagee or lender certifying as to such facts (if true) and
      agreeing to such notice provisions and other matters as such mortgagee or lender
      may reasonably require in connection with Lessor's financing.

    25. LIENS
      NOT PERMITTED:
      Lessee
      shall not, at any time, suffer or permit the attachment to the Leased Premises
      or Nonexclusive Demised Premises of any lien for work done or materials
      furnished in connection with the improvements, maintenance, repair and/or
      alterations of the Premises or Nonexclusive Premises by Lessee. If any such
      lien
      attaches to the Premises or Nonexclusive Premises and is not discharged or
      released within sixty (60) days from the date of attachment, Lessor may, at
      its
      option, pay to the lien claimant the amount of such lien and notify Lessee
      of
      such payment, in which event such amount shall be immediately due and payable
      by
      Lessee and shall bear interest as provided in paragraph 19; provided, however,
      that if Lessee desires to contest said lien, Lessee shall furnish to Lessor
      a
      bond written by a surety company licensed to do business in the State of West
      Virginia or other security satisfactory to Lessor for an amount of at least
      equal to two hundred percent (200%) of the amount of the lien for the Lessor's
      protection against all loss or expense on account of such asserted lien during
      the period of contest.

    26. SPECIAL
      AGREEMENT:
      It is
      understood and agreed that the Leased Premises do not contain an HVAC system.
      Lessor agrees that Lessee may (but is not required), at its expense, install
      HVAC equipment in the Leased Premises. Lessee may (but is not required), at
      its
      expense, after execution of this lease, make alterations, erections, additions
      or improvements in or to the Demised Premises, but not without first submitting
      plans and specifications to the Lessor for the written consent of the Lessor,
      which consent shall not be unreasonably withheld or delayed.

    27. COVENANTS
      OF LESSOR:

    Lessor
      covenants and agrees that:

    (a)
       Lessor
      has full power and authority to execute and deliver this agreement.

    (b)
       Lessor
      owns good title to the Leased Premises and Lessor shall have good title to
      all
      improvements to be constructed on the Leased Premises.

    (c)
       On
      or
      before the beginning of the term, Lessor will deliver possession of the Premises
      to Lessee in good condition and repair, ready for said occupancy and free and
      clear of all tenancies and occupancies. 

    (d)
       Lessee,
      upon paying the rent and performing Lessee's other obligations herein provided,
      shall and may peaceably and quietly have, hold and enjoy the Leased Premises
      for
      the term hereof.

    28. JURISDICTION
      AND VENUE:
      Lessee
      agrees that any suit or action by Lessor against the Lessee in any manner
      arising out of this lease or in the breach thereof may be maintained in such
      court or courts situate in the State of West Virginia as may have subject matter
      jurisdiction thereof. The Lessee appoints the Secretary of State of the State
      of
      West Virginia to act as agent for the service of process in connection with
      any
      such suit or action.

    29. LIMITATION
      OF ACTIONS:
      Any
      claim, demand, right or defense of any kind by Lessee which is based upon or
      arises in any connection with this lease or the negotiations prior to its
      execution, shall be barred unless Lessee commences an action thereon, or
      interposes in a legal proceeding a defense by reason thereof, within six (6)
      months after the date of the inaction or omission or the date of the occurrence
      of the event or of the action which the claim, demand or right or defense
      relates, whichever applies. In no event shall Lessee have the right to terminate
      this lease as a result of Lessor's default, and Lessee's remedies shall be
      limited to damages and/or an injunction. 

    30. WAIVER
      OF JURY TRIAL:
      Lessor
      and Lessee hereby waive their respective right to trial by jury of any cause
      of
      action, claim, counterclaim or cross-complaint in any action, proceeding and/or
      hearing brought by either Lessor against Lessee or Lessee against Lessor on
      any
      matter whatsoever arising out of, or in any way connected with, this lease,
      the
      relationship of landlord and tenant, Lessee's use or occupancy of the Premises,
      or any claim of injury or damage, or the enforcement of any remedy under any
      law, statute or regulation, emergency or otherwise, now or hereafter in effect.
      

    31. NO
      PRESUMPTION AGAINST DRAFTER:
      Lessor
      and Lessee understand, agree and acknowledge that:

    (a) This
      lease has been freely negotiated by both parties; and

    (b) In
      any
      controversy, dispute or contest over the meaning, interpretation, validity
      or
      enforceability of this lease or any of its terms or conditions, there shall
      be
      no inference, presumption or conclusion drawn whatsoever against either party
      by
      virtue of that party having drafted this lease or any portion thereof.

    32. SINGULAR,
      PLURAL, GENDER, ETC.:
      When
      required by the context hereof, the singular number shall include the plural,
      the plural the singular, and the use of any gender shall include all others.
      

    33. BINDING
      THE PARTIES, ETC.:
      The
      respective rights and obligations provided in this lease shall bind and shall
      inure to the benefit of the parties hereto, their legal representatives, heirs,
      successors and assigns; provided, however, that no rights shall inure to the
      benefit of any successor of Lessee unless Lessor's written consent for the
      transfer to such successor has first been obtained as provided in paragraph
      14.

     

    

    

    

    

    

    WITNESS
      the following signatures and seals:

    

    LESSOR:

    

    WHITE
      PROPERTIES NO. II, LLC,

    a
      West
      Virginia limited liability company

    

    

    By
/s/
      Paul
      White                                   

                        
      Its Manager

    

    

    LESSEE:

    

    CHAMPION
      INDUSTRIES, INC.,

    a
      West
      Virginia corporation

    

    

    By
/s/
      Toney K.
      Adkins                             

    Its
      President &
COO

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