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Exhibit 10.1    
  

 
  AMENDED AND RESTATED EMPLOYMENT AGREEMENT    
  

        THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into this 2nd day of April and effective as of the 14th day of
February, 2002 (the "Effective Date") by and between Hispanic Broadcasting Corporation, a Delaware corporation (together with its successors and assigns permitted hereunder and as further defined in
Section 8(c) hereof, the "Company"), and McHenry T. Tichenor, Jr. (the "Executive"). 

        WHEREAS,
the Company and the Executive previously entered into an Employment Agreement dated as of February 14, 1997 (the "Prior Employment Agreement"); 

        WHEREAS,
the Prior Employment Agreement expires according to its terms on February 14, 2002; and 

        WHEREAS,
the Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its stockholders to, and the Executive desires to, amend
and restate the Prior Employment Agreement as set forth herein. 

        NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 

        1.    Employment
Period. Subject to Section 3, the Company hereby agrees to employ the Executive, and the Executive hereby agrees to be employed by the Company, in
accordance with the terms and provisions of this Agreement, for the period commencing on the Effective Date and ending at the close of business on February 14, 2005 (the "Initial Employment
Period"). Thereafter, unless either the Company or the Executive elects to terminate this Agreement as of the end of the Initial Employment Period by giving written notice thereof to the other party
not later than the close of business on
August 14, 2004 (a "Termination Election"), the Company hereby agrees to employ the Executive, and the Executive hereby agrees to be employed by the Company, in accordance with the terms and
provisions of this Agreement, for the period commencing at the close of business on February 14, 2005 and ending at the close of business on February 14, 2007 (such two-year
term following the Initial Employment Period being referred to herein as the "Subsequent Employment Period"). The term "Employment Period" as used in this Agreement shall mean the Initial Employment
Period until the close of business on August 14, 2004, has occurred without a Termination Election having been given by either the Company or the Executive, after which time the Employment
Period shall mean the Initial Employment Period and the Subsequent Employment Period. 

        2.    Terms
of Employment. 

	(a)
	Position
and Duties. 

                        (i)    During
the term of the Executive's employment, the Executive shall serve as Chairman, President and Chief Executive Officer of the Company and, in so doing, shall
report to the Board. The Executive shall have supervision and control over, and responsibility for, such management and operational functions of the Company currently assigned to such position, and
shall have such other powers and duties (including holding officer positions with one or more subsidiaries of the Company) as may from time to time be prescribed by the Board, so long as such powers
and duties are reasonable and customary for the Chairman, President and Chief Executive Officer of an enterprise comparable to the Company. 

                        (ii)  During
the term of the Executive's employment, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote
full business time to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive's reasonable best
efforts to perform faithfully, effectively and efficiently such responsibilities. During the term of the Executive's 

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employment it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures or fulfill speaking
engagements and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company
in accordance with this Agreement. 

	(b)
	Compensation.

                        (i)    Base
Salary. During the term of the Executive's employment, the Executive shall receive an annual base salary ("Annual Base Salary"), which shall be paid in accordance
with the customary payroll practices of the Company, at least equal to $400,000. During the term of the Executive's employment,
the Annual Base Salary shall be reviewed at least annually by the Compensation Committee of the Board (the "Compensation Committee") and shall be increased annually by an amount equal to the greater
of (A) five percent (5%) of the Annual Base Salary in effect for the immediately preceding year, and (B) such amount as the Compensation Committee shall consider appropriate in
accordance with the compensation practices and guidelines of the Company for its executive officers. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. The term Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as so increased. 

                        (ii)  Bonus.
In addition to Annual Base Salary, the Executive shall be awarded during the term of the Executive's employment such bonuses (each a "Bonus"), if any, as shall
be determined by the Compensation Committee consistent with its practices for executive officers of the Company. 

                        (iii)  Stock
Option Grant. The Company hereby agrees to grant to the Executive as of April 2, 2002, (the "Date of Grant") stock options (the "Options") to purchase
100,000 shares of Class A Common Stock, par value $.001 per share, of the Company (the "Common Stock"), in accordance with the terms of (A) the Company's Long-Term Incentive
Plan and (B) a stock option award agreement to be entered into between the Executive and the Company in a form consistent with that used by the Company for grants of stock options in the
ordinary course of its business except as otherwise provided herein (the "Option Agreement"). The exercise price of the Options shall be the fair market value of the Common Stock on the Date of Grant
as determined in accordance with the terms of the Company's Long-Term Incentive Plan. One-half of such Options shall be vested and exercisable as of the Date of Grant, and
1/6 of such Options shall become vested and exercisable on each of the first, second and third anniversaries of the Date of Grant of such Options. The grant of such Options shall be
subject to approval by the Compensation Committee or a subcommittee thereof. 

                        (iv)  Incentive,
Savings and Retirement Plans. During the term of the Executive's employment, the Executive shall be entitled to participate in all incentive, savings and
retirement plans, practices, policies and programs applicable generally to other executives of the Company ("Investment Plans"). 

                        (v)  Welfare
Benefit Plans. During the term of the Executive's employment, the Executive and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs ("Welfare Plans") provided by the Company (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other
executives of the Company. 

                        (vi)  Perquisites.
During the term of the Executive's employment, the Executive shall be entitled to receive (in addition to the benefits described above) such perquisites
and fringe benefits appertaining to his position in accordance with any practice established by the Board. 

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                        (vii) Expenses.
During the term of the Executive's employment, the Executive shall be entitled to receive prompt reimbursement for all reasonable employment expenses
incurred by the Executive in accordance with the policies, practices and procedures of the Company. 

                        (viii)Vacation
and Holidays. During the term of the Executive's employment, the Executive shall be entitled to paid vacation and paid holidays in accordance with the
plans, policies, programs and practices of the Company for its executive officers. 

                        (ix)  Employment
Credit. For the purpose of determining the Executive's eligibility, and the extent of his and his family's benefits, under the Investment Plans, the We1fare
Plans, and his rights under clauses (iv), (v), (vi) and (viii) above, the Executive shall be deemed to have been employed by the Company since the commencement of his employment with
Tichenor Media System, Inc., a Texas corporation. 

        3.    Termination
of Employment. 

                (a)  Death
or Disability. The Executive's employment shall terminate automatically upon the Executive's death during the Employment Period. If the Disability of the
Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), the Company may give to the Executive written notice in accordance with
Section 11(b) of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective on the 30th day after receipt of
such notice by the Executive (the "Disability Effective Date"), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance
of the Executive's duties. For purposes of this Agreement, "Disability" shall mean the Executive's incapacity due to mental or physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative (such agreement as to acceptability not to be withheld unreasonably). 

                (b)  Cause.
The Company may terminate the Executive's employment during the Employment Period for Cause or without Cause. For purposes of this Agreement, "Cause" shall mean
(i) a breach by the Executive of the Executive's obligations under Section 2(a) (other than as a result of incapacity due to physical or mental illness) which constitutes a continued
material nonperformance by the Executive of his obligations and duties thereunder, as determined by the Board, and which is not remedied within 60 days after receipt of written notice from the
Company specifying such breach, (ii) commission by the Executive of an act of fraud upon, or willful misconduct toward, the Company, as reasonably determined by a majority of the disinterested
members of the Board (neither the Executive nor members of his family being deemed disinterested for this purpose) after a hearing by the Board following ten days' notice to the Executive of such
hearing, (iii) a material breach by the Executive of Section 6 or Section 9, or (iv) the conviction of the Executive of any felony (or a plea of nolo contendere thereto). 

                (c)  Good
Reason. The Executive's employment may be terminated during the Employment Period by the Executive for Good Reason or without Good Reason; provided, however that
the Executive agrees not to terminate his employment for Good Reason unless (i) the Executive has given the Company at least 30 days' prior written notice of his intent to terminate his
employment for Good Reason, which notice shall specify the facts and circumstances constituting Good Reason, and (ii) the Company has not remedied such facts and circumstances constituting Good
Reason within such 30 day period. For purposes of this Agreement, "Good Reason" shall mean: 

                        (i)    the
assignment to the Executive of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section 2(a) or any other action by the Company which results in a material diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the 

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Company promptly after receipt of notice thereof given by the Executive (without limiting the foregoing, the Company and the Executive agree that the Executive's failure to serve as the sole chief
executive officer of the Company or the delegation of the authority, duties or responsibilities of the chief executive officer to another person or persons, including any committee, shall be deemed to
be an action by the Company which results in a material diminution in the Executive's position, authority, duties, or responsibilities as contemplated by Section 2(a)); 

                        (ii)  any
termination or material reduction of a material benefit under any Investment Plan or Welfare Plan in which the Executive participates unless (A) there is
substituted a comparable benefit that is economically substantially equivalent to the terminated or reduced benefit prior to such termination or reduction or (B) benefits under such Investment
Plan or Welfare Plan are terminated or reduced with respect to all employees previously granted benefits thereunder; 

                        (iii)  any
failure by the Company to comply with any of the provisions of Section 2(b), other than an isolated, insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; 

                        (iv)  any
failure by the Company to comply with and satisfy Section 8(c), provided that such successor has received at least ten days prior written notice from the
Company or the Executive of the requirements of Section 8(c); 

                        (v)  prior
to the termination of the Executive for Cause, the Executive's ceasing to be a director of the Company for any reason other than his death, Disability (as defined
above) or voluntary resignation; 

                        (vi)  the
relocation or transfer of the Company's senior management executive offices to a location more than 15 miles from the Executive's current principal residence set
forth in Section 11(b) hereof; or 

                        (vii) without
limiting the generality of the foregoing, any material breach by the Company or any of its subsidiaries or other affiliates (as defined below) of
(A) this Agreement or (B) any other agreement between the Executive and the Company or any such subsidiary or other affiliate. 

        As
used in this Agreement, "affiliate" means, with respect to a person, any other person controlling, controlled by or under common control with the first person; the term "control," and
correlative terms, means the power, whether by contract, equity ownership or otherwise, to direct the policies or management of a person; and "person" means an individual, partnership, corporation,
limited liability company, trust or unincorporated organization, or a government or agency or political subdivision thereof. 

                (d)  Notice
of Termination. Any termination by the Company for Cause or without Cause, or by the Executive for Good Reason or without Good Reason, shall be communicated by
Notice of Termination to the other party hereto given in accordance with Section 11(b). For purposes of this Agreement, a "Notice of Termination" means a written notice which
(i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such
notice, specifies the termination date (which date shall not be more than 15 days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company hereunder or preclude the Executive or the Company
from asserting such fact or circumstances in enforcing the Executive's or the Company's rights hereunder. 

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                (e)  Date
of Termination. "Date of Termination" means (i) if the Executive's employment is terminated by the Company for Cause or without Cause or by the Executive
for Good Reason or without Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be and (ii) if the Executive's employment is
terminated by reason of death or Disability, the date of death of the Executive or the Disability Effective Date, as the case may be. 

        4.    Obligations
of the Company upon Termination. 

                (a)  Good
Reason; Other Than for Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the Executive's employment other than for either
Cause or Disability or the
Executive shall terminate his employment for Good Reason, and the termination of the Executive's employment in any case is not due to his death: 

                        (i)    the
Company shall pay to the Executive in a lump sum in cash within ten days after the Date of Termination the aggregate of the following amounts: (A) the sum of
the Executive's Annual Base Salary through the Date of Termination to the extent not theretofore paid and any compensation previously deferred by the Executive (together with any accrued interest or
earnings thereon) and any accrued vacation pay ("Accrued Obligations"); (B) an amount equal to the product of (x) the sum of (1) the Executive's Annual Base Salary at the Date of
Termination plus (2) the Executive's Bonus for the immediately preceding year multiplied by (y) 3; and (C) any amount arising from Executive's participation in, or benefits under,
any Investment Plans ("Accrued Investments"), which amounts shall be payable in accordance with the terms and conditions of such Investment Plans; 

                        (ii)  for
the remainder of the Employment Period, or such longer period as any plan, program, practice or policy may provide, the Company shall continue benefits provided
under Welfare Plans to the Executive and/or the Executive's family at least equal to those which would have been provided to them if the Executive's employment had not been terminated or pay the
Executive monthly an amount of cash equal to the value of benefits under Welfare Plans; provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive
similar benefits under another employer provided plan, such benefits or cash described herein shall be secondary to and not duplicate those provided under such other plan during such applicable period
of eligibility (such continuation of such benefits or cash for the applicable period hereinabove set forth in this clause (ii) shall he hereinafter referred to as "Welfare Benefit
Continuation"). For purposes of determining eligibility of the Executive for retiree benefits pursuant to such plans, practices, programs and policies, the Executive shall be considered to have
remained employed until the end of the Employment Period and to have retired on the last day of such period; 

                        (iii)  for
the remainder of the Employment Period, to the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive and/or the
Executive's family any other amounts or benefits required to be paid or provided or which the Executive and/or the Executive's family is eligible to receive pursuant to this Agreement and under any
plan, program, policy or practice or contract or agreement of the Company ("Other Benefits"); and 

                        (iv)  notwithstanding
the terms or conditions of any stock option, stock appreciation right or similar agreements between the Company and the Executive, the Executive shall
vest, as of the Date of Termination, in all rights under such agreements (i.e., stock options that would otherwise vest after the Date of Termination) and thereafter shall be permitted to exercise any
and all such rights until the first anniversary of the Date of Termination. 

                (b)  Death.
If the Executive's employment is terminated by reason of the Executive's death during the Employment Period, the Company shall pay to his legal representatives
in a lump sum in cash within ten days after the Date of Termination the aggregate of the following amounts: (i) the Accrued Obligations; and (ii) the Accrued Investments. The Company
shall have no further payment obligations to the Executive or his legal representatives under this Agreement, other than for payment 

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of Other Benefits and the timely provision of the Welfare Benefit Continuation to the Executive's family. 

                (c)  Disability.
If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, the Company shall have no further payment
obligations to the Executive or his legal representatives under this Agreement, other than for (i) payment of Accrued Obligations, Accrued Investments and Other Benefits and (ii) the
timely provision of the Welfare Benefit Continuation to the Executive and his family; provided however, that if the Executive is covered by a Company-provided group or individual disability insurance
policy at the date the Executive's employment is terminated by reason of the Executive's Disability and benefits under such policy are not then payable to the Executive pursuant to the terms of such
policy, then the Company shall continue to pay the Executive his Annual Base Salary in effect at the date of such termination (in accordance with the customary payroll practices of the Company) until
the first to occur of six months after such termination date or benefits becoming payable to the Executive under such policy. 

                (d)  Cause;
Other than for Good Reason. If the Executive's employment shall be terminated by the Company for Cause or by the Executive without Good Reason during the
Employment Period, the Company shall have no further payment obligations to the Executive other than for payment of Accrued Obligations, Accrued Investments and Other Benefits to the Date of
Termination. 

        5.    Full
Settlement. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others; provided, however, that the Company may reduce
any payments it is required to make to the Executive under Section 4 by the amount of the principal and accrued interest on any loans or advances made to the Executive by the Company that are
outstanding on the Date of Termination (and such reduction in payments shall be deemed to be payment in full by the Executive of such loans or advances to the extent of such reduction). In no event
shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and,
except as provided in Section 4(a)(ii), such amounts shall not be reduced whether or not the Executive obtains other employment. Neither the Executive nor the Company shall be liable to the
other party for any damages in addition to the amounts payable under Section 4 hereof arising out of the termination of the Executive's employment prior to the end of the Employment Period;
provided, however, that the Company shall be entitled to seek damages for any breach of Sections 6 or 9 or criminal misconduct. 

        6.    Confidential
Information. 

                (a)  The
Executive acknowledges that the Company and its affiliates have trade, business and financial secrets and other confidential and proprietary information
(collectively, the "Confidential Information"). As defined herein, Confidential Information shall not include (i) information that is
generally known to other persons or entities who can obtain economic value from its disclosure or use and (ii) information required to be disclosed by the Executive pursuant to a subpoena or
court order, or pursuant to a requirement of a governmental agency or law of the United States of America or a state thereof or any governmental or political subdivision thereof; provided, however,
that the Executive shall take all reasonable steps to prohibit disclosure pursuant to subsection (ii) above. 

                (b)  The
Executive agrees (i) to hold such Confidential Information in confidence and (ii) not to release such information to any person (other than Company
employees and other persons to whom the Company has authorized the Executive to disclose such information and then only to the extent that such Company employees and other persons authorized by the
Company have a need for such knowledge). 

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                (c)  The
Executive further agrees not to use any Confidential Information for the benefit of any person or entity other than the Company. 

                (d)  The
Executive's obligations under this Section 6 shall terminate (i) on the first anniversary of the Date of Termination if the Executive's employment is
terminated by the Company for Cause or due to Disability or by the Executive without Good Reason or (ii) on the later of (A) the end of the Employment Period or (B) the first
anniversary of the Date of Termination if the Executive's employment is terminated by the Company without Cause (and not due to Disability) or by the Executive for Good Reason; provided, however, that
notwithstanding subsections (i) and (ii) of this Section 6(d), if the Company is obligated to make payments to the Executive pursuant to Section 4 and the Company fails to
make any such payment on the date it is due, then the Executive's obligations pursuant to this Section 6 shall cease to apply as of such date. 

        7.    Surrender
of Materials Upon Termination. Upon any termination of the Executive's employment, the Executive shall immediately return to the Company all copies, in whatever
form, of any and all Confidential Information and other properties of the Company and its affiliates which are in the Executive's possession, custody or control. 

        8.    Successors.

                (a)  This
Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. 

                (b)  This
Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. 

                (c)  The
Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise and including as a successor any direct or indirect
ultimate parent company of the Company) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which is obligated to assume and agree to perform this Agreement by operation of law or pursuant to the first sentence of this Section 8(c). 

        9.    Non-Competition. 

                (a)  The
term of Non-Competition (herein so called) shall be for a term beginning on the date hereof and continuing until (i) the first anniversary of the
Date of Termination if the Executive's employment is terminated by the Company for Cause or due to Disability or by the Executive without Good Reason or (ii) the end of the later of
(A) Employment Period or (B) the first anniversary of the Date of Termination, if the Executive's employment is terminated by the Company without Cause (and not due to Disability) or by
the Executive for Good Reason; provided, however, that notwithstanding subsections (i) and (ii) of this Section 9(a), if the Company is obligated to make payments to the Executive
pursuant to Section 4 and the Company fails to make any such payment on the date it is due, then the Executive's obligations pursuant to this Section 9 shall cease to apply as of such
date. 

                (b)  During
the term of Non-Competition, the Executive shall not (other than for the benefit of the Company pursuant to this Agreement) directly or indirectly,
individually or as an officer, director, employee, shareholder, consultant, contractor, partner, joint venturer, agent, equity owner or in any capacity whatsoever, (i) engage in any Spanish
language radio or television broadcasting business that transmits a primary or city-grade signal within a Metro Survey Area (as currently defined by The Arbitron Company in its Radio
Markets Reports) in which a station directly operated by the Company 

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transmits a primary or city-grade signal (A), with respect to the term of Non-Competition that is during the Executive's employment, during such term of employment, and (B),
with respect to the term of Non-Competition that is after the term of the Executive's employment, on the Date of Termination (all such areas being collectively called the "Geographic
Area") (a "Competing Business"), (ii) hire, attempt to hire, or contact or solicit with respect to hiring any employee of the Company, or (iii) divert or take away any customers or
suppliers of the Company in the Geographic Area. Notwithstanding the foregoing, the Company agrees that the Executive may own less than five percent of the outstanding voting securities of any
publicly traded company that is a Competing Business so long as the Executive does not otherwise participate in such competing business in any way prohibited by the preceding clause. As used in this
Section 9(b), "Company" shall include the Company and any of its subsidiaries. 

                (c)  During
the term of Non-Competition, the Executive shall not use the Executive's access to, knowledge of, or application of Confidential Information to
perform any duty for any Competing Business; it being understood and agreed to that this paragraph 9(c) shall be in addition to and not be construed as a limitation upon the covenants in
paragraph 9(b) hereof. 

                (d)  The
Executive acknowledges that the geographic boundaries, scope of prohibited activities, and time duration of the preceding paragraphs are reasonable in nature and
are no broader than are necessary to maintain the confidentiality and the goodwill of the Company's proprietary information, plans and services and to protect the other legitimate business interests
of the Company. 

        10.  Effect
of Agreement on Other Benefits. The existence of this Agreement shall not prohibit or restrict the Executive's entitlement to full participation in the executive
compensation, employee benefit and other plans or programs in which executives of the Company are eligible to participate. 

        11.  Miscellaneous.

                (a)  This
Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without reference to principles of conflict of laws. The captions
of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties
hereto or their respective successors and legal representatives. 

                (b)  All
notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows: 

	If to the Executive:	 	 	 	McHenry T. Tichenor, Jr.

3924 Mockingbird Lane

Dallas, Texas 75205
	

If to the Company:	
 	

 	
 	

Hispanic Broadcasting Corporation

3102 Oak Lawn Avenue, Suite 215

Dallas, Texas 75219

Attention: Chief Financial Officer

or
to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. 

                (c)  If
any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such
provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the
remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement.
Furthermore, in lieu of such illegal, 

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invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible
and be legal, valid and enforceable. 

                (d)  The
Company agrees to attempt to obtain and maintain a director's and officer's liability insurance policy during the term of the Executive's employment covering the
Executive on commercially reasonable terms, and the amount of coverage shall be reasonable in relation to the Executive's position and responsibilities hereunder; provided, however, that such coverage
may be reduced or eliminated to the extent that the Company reduces or eliminates coverage for its directors and executives generally. 

                (e)  The
Company may withhold from any amounts payable under this Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any applicable
law or regulation. 

                (f)    The
Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the
Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason, shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement. 

                (g)  The
Executive acknowledges that money damages would be both incalculable and an insufficient remedy for a breach of Section 6 or 9 by the Executive and that any
such breach would cause the Company irreparable harm. Accordingly, the Company, in addition to any other remedies at law or in equity it may have, shall be entitled, without the requirement of posting
of bond or other security, to equitable relief, including injunctive relief and specific performance, in connection with a breach of Section 6 or 9 by the Executive. 

                (h)  The
provisions of this Agreement and the Option Agreement constitute the entire understanding and agreement between the parties with respect to the subject matter
hereof. 

                (i)    This
Agreement may be executed in two or more counterparts. 

                (j)    Except
as otherwise provided in Section 11(k) below, in the event any dispute or controversy arises under this Agreement and is not resolved by mutual written
agreement between the Executive and the Company within 30 days after notice of the dispute is first given, then, upon the written request of the Executive or the Company, such dispute or
controversy shall be submitted to arbitration to be conducted in accordance with the rules of the American Arbitration Association. Judgment may be entered thereon and the results of the arbitration
shall be binding and conclusive on the parties hereto. Any arbitrator's award or finding or any judgment or verdict thereon shall be final and unappealable. All parties agree that venue for
arbitration shall be in Dallas, Texas, and that any arbitration commenced in any other venue shall be transferred to Dallas, Texas, upon the written request of any party to this Agreement. All
arbitrations shall have three individuals acting as arbitrators: one arbitrator shall be selected by the Executive, one arbitrator shall be selected by the Company, and the two arbitrators so selected
shall select a third arbitrator. Any arbitrator selected by a party shall not be affiliated, associated or related to the party selecting that arbitrator in any matter whatsoever. The decision of the
majority of the arbitrators shall be binding on all parties. The Company shall be responsible for paying its own and the Executive's attorneys fees, costs and other expenses pertaining to any such
arbitration and enforcement regardless of whether an arbitrator's award or finding or any judgment or verdict thereon is entered against the Executive. The Company shall promptly (and in no event
after ten days following its receipt from the Executive of each written request therefor) reimburse the Executive for his reasonable attorneys fees, costs and other expenses pertaining to any such
arbitration and the enforcement thereof. 

	(k)
	Gross-Up
for Certain Taxes. 

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                        (i)    In
the event that any part of any payment or benefit received (including, without limitation, acceleration of vesting of stock options) pursuant to the terms of this
Agreement or the Option Agreement (the "Contract Payments") or any part of any payment or benefit received or to be received by the Executive or for the Executive's benefit pursuant to any other plan,
arrangement or agreement of the Company or any affiliate ("Other Payments" and, together with the Contract Payments, the "Payments") would be subject to taxes (the "Excise Tax") imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), determined as provided below, the Company shall pay to the Executive, at the time specified in paragraph (ii)
below, an additional amount (the "Gross-Up Payment") such that the net amount retained by the Executive, after deduction of the Excise Tax on the Payments and any federal, state and local
income tax and the Excise Tax on the Gross-Up Payment, and any interest, penalties or additions to tax payable by the Executive with respect thereto, shall be equal to the total present
value (using the applicable federal rate as defined in Section 1274(d) of the Code in such calculation) of the Payments at the time such Payments are to be made. For purposes of determining
whether any of the Payments shall be subject to the Excise Tax and the amounts of such Excise Tax, (A) the total amount of the Payments shall be treated as "parachute payments" within the
meaning of Section 280G(b)(2) of the Code, and all "excess parachute payments" within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, except
to the extent that, in the opinion of independent counsel selected by the Company and reasonably acceptable to the Executive ("Independent Counsel"), a Payment (in whole or in part) does not
constitute a "parachute payment" within the meaning of Section 280G(b)(2) of the Code, or such "excess parachute payments" (in whole or in part) are not subject to the Excise Tax,
(B) the amount of the Payments that shall be treated as subject to the Excise Tax shall be equal to the lesser of (1) the total amount of the Payments or (2) the amount of "excess
parachute payments" within the meaning of Section 280G(b)(1) of the Code (after applying clause (A) hereof), and (C) the value of any noncash benefits or any deferred payment or
benefit shall be determined by Independent Counsel in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the amount of the
Gross-Up Payment, the Executive shall be deemed to pay federal income taxes at the highest marginal rates of federal income taxation applicable to individuals in the calendar year in which
the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rates of taxation applicable to individuals as are in effect in the state and locality of the
Executive's residence in the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes that can be obtained from deduction of such
state and local taxes, taking into account any limitations applicable to individuals subject to federal income tax at the highest marginal rates. 

                        (ii)  The
Gross-Up Payments provided for in paragraph (i) hereof shall be made upon the earlier of (A) the payment to the Executive of any Payment
or (B) the imposition upon the Executive or payment by the Executive of any Excise Tax. 

                        (iii)  If
it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding or the opinion of Independent Counsel that the Excise Tax
is less than the amount taken into account under paragraph (i) hereof, the Executive shall repay to the Company within thirty (30) days of the Executive's receipt of notice of such final
determination or opinion the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax and
federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Executive if such repayment results in a reduction in Excise Tax or a federal, state and local
income tax deduction) plus any interest received by the Executive on the amount of such repayment. If it is established pursuant to a final determination of a court or an Internal Revenue Service
proceeding or the opinion of Independent Counsel that the Excise Tax exceeds the amount
taken into account hereunder (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall 

10

 

make an additional Gross-Up Payment in respect of such excess within thirty (30) days of the Company's receipt of notice of such final determination or opinion. 

                        (iv)  In
the event of any change in, or further interpretation of, Sections 280G or 4999 of the Code and the regulations promulgated thereunder, the Executive shall be
entitled, by written notice to the Company, to request an opinion of Independent Counsel regarding the application of such change or interpretation to any of the foregoing, and the Company shall use
its best efforts to cause such opinion to be rendered as promptly as practicable. All fees and expenses of Independent Counsel incurred in connection with this Agreement shall be paid by the Company. 

                        (v)  The
Company shall indemnify and hold harmless the Executive from and against any fees and expenses (including fees and expenses of attorneys and accountants) incurred
in connection with any Internal Revenue Service audit or proceeding that relates to the Excise Tax. 

                (l)    All
fees and expenses (including attorneys fees and expenses) incurred by the Executive in connection with the drafting and negotiation of this Agreement shall be paid
by the Company. 

        [Signature
page follows] 

11

 

        IN
WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from the Board, the Company has caused this Agreement to be executed in its
name on its behalf, all as of the day and year first above written. 

	 	 	EXECUTIVE
	

 	
 	

/s/  MCHENRY T. TICHENOR, JR.      
 McHenry T. Tichenor, Jr.
	

 	
 	
HISPANIC BROADCASTING CORPORATION
	

 	
 	

By:	
 	

/s/  JEFFREY T. HINSON      
Name: Jeffrey T. Hinson
Title: Senior Vice President,
CFO and Treasurer

12

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Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENTQuickLinks
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Exhibit 10.13

EXECUTION COPY  

 
  SEPARATION, WAIVER AND RELEASE AGREEMENT    
  

        This Separation, Waiver and Release Agreement (this "Agreement") is entered by and between Health Net, Inc., a Delaware corporation (the "Company"), on the
one hand, and Gary S. Velasquez ("Employee"), on the other hand (collectively, the "Parties"). 

        WHEREAS,
Employee was employed as the President, Business Transformation & Innovation Services Division of the Company, which title has been relinquished by Employee; and 

        WHEREAS,
the Company and Employee are parties to a Severance Payment Agreement dated December 4, 1998 (the "Severance Payment Agreement"), and are entering into this Agreement in
full and final settlement of all obligations of the Company, including but not limited to those obligations under the Severance Payment Agreement. 

        NOW,
THEREFORE, in consideration of the mutual agreements and covenants contained herein, the validity and sufficiency of which are expressly recognized, the Company and Employee hereby
agree as follows: 

        1.    Termination of Employment

        1.1  Employee's
employment with the Company will terminate as of April 15, 2002 (the "Termination Date"). Employee shall be entitled to his accrued and unpaid base
annual salary ("Base Salary"), less required payroll taxes and other applicable deductions, through the Termination Date. Employee agrees
that $118,989.60 less required payroll taxes and other applicable deductions is the total amount of earned and unused vacation/paid-time-off owing to Employee as of the
Termination Date, and Employee acknowledges that no further vacation/paid-time-off benefits will accrue after such date. It is agreed that Employee is not entitled to receive
any payments under any bonus plans of the Company for the Plan Years 2001 or 2002. 

        1.2  On
and after the Termination Date, Employee will not represent to anyone that he is an employee of the Company or any of its affiliated entities and will not say or do
anything purporting to bind the Company or any of its affiliated entities. As of April 15, 2002, Employee shall be deemed to have resigned from all officer and director positions with the
Company and any of its affiliated entities that may be held by Employee. 

        2.    Severance Benefits and Option Cancellation

        2.1  Provided
that Employee does not exercise his revocation rights during the seven day revocation period following his signing of this Agreement such that it becomes
effective on the eighth day of his execution thereof, Employee shall be entitled to receive a lump sum payment in the amount of $920,000 (less required payroll taxes and other applicable deductions). 

        2.2  Employee
hereby acknowledges and agrees that as of January 1, 2002 he forfeited fifty-percent (50%) of the options covered by the following Nonqualified Stock
Option Agreements (the "Forfeited Options") in partial return for the Company agreeing to keep him in the employment of the Company in 2002 through the Termination Date: 

	•
	Nonqualified
Stock Option Agreement dated December 4, 1998 covering 200,000 shares of Common Stock at an exercise price of $12.9375 per share.

	•
	Nonqualified
Stock Option Agreement dated February 14, 2000 covering 100,000 shares of Common Stock at an exercise price of $9.00 per share. 

1

 

It
is agreed that all of these Forfeited Options have expired unexercised and have been cancelled as of January 1, 2002. It is further acknowledged and agreed by Employee that the forfeiture
and cancellation of the Forfeited Options has already taken place and that the Forfeited Options will not be reinstated in the event Employee revokes execution of the other portions of this Agreement
during the seven-day revocation period referenced elsewhere in this Agreement. 

        2.3  All
medical and dental insurance maintained for Employee's benefit immediately prior to the Termination Date (collectively, "Benefits") shall be continued by the Company
on the same terms and conditions for a period of twenty-four (24) months after the Termination Date. The Company will continue such Benefits either through the payment of
100 percent of the applicable COBRA premiums by the Company or through the payment of 100 percent of the premiums on a comparable policy or policies. Accordingly, Employee agrees to
execute all documents presented to him by the Company that are required to elect COBRA coverage on or after the Termination Date. 

        2.4  Upon
attainment of age 62, Employee shall become eligible for receipt of payment under the Company's Supplemental Executive Retirement Plan (the "SERP") according to the
terms and conditions of the SERP. 

        2.5  Employee's
participation in all Company employee benefit plans (except as provided for in Section 2.3 of this Agreement) as an active employee shall cease on the
Termination Date, and Employee shall not be eligible to make contributions to or to receive Company allocations under the Health Net, Inc. 401(k) Associate Savings Plan, or to make any
deferrals pursuant to any deferred compensation plan of the Company on or after the Termination Date. 

        3.    Cooperation in Litigation

        Upon
request by the Company, Employee shall provide reasonable assistance and cooperation to the Company and its designees in activities related to the prosecution or defense of any
pending or future lawsuits, arbitrations, regulatory inquiries or other legal proceedings or claims involving the Company or its affiliates (excluding any proceeding involving any alleged breach of
this Agreement), and make himself available to Company representatives, including legal counsel, upon reasonable notice and without the need for issuance of any subpoena or similar process to testify
in any such proceeding. 

        4.    Expenses

        The
Company shall reimburse Employee for his reasonable expenses that are consistent with the expense reimbursement policy of the Company and are incurred in connection with his
activities undertaken pursuant to Section 3 of this Agreement. All requests for reimbursement of such expenses shall be submitted to the attention of the office of the Company's General
Counsel. 

        5.    Waivers and Releases of Claims

        5.1  In
consideration of the Company providing Employee those benefits and payments set forth herein, Employee knowingly and voluntarily enters into this Agreement and by
signing this Agreement, Employee, on his own behalf and on behalf of his 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, attorneys, 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 (collectively, the "Released Parties"),
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 

2

 

1964, the Civil Rights Act of 1866, the Americans with Disabilities Act, the Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection Act of 1990, the Worker
Adjustment and Retraining Notification Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, the California Fair Employment and Housing Act, the California Labor Code, the
California Civil Code, the California Business and Professions Code, and the California Constitution, all as amended from time to time, or claims growing out of any alleged legal restrictions on the
Company's right to terminate its employees and whether for compensatory, punitive, equitable or other relief, whether known or unknown, suspected or
unsuspected, that Employee or Employee's successors-in-interest had, now has, or may hereafter claim to have by reason of any matter or thing arising
from any cause whatsover, including without limitation any cause related to a purported agreement, whether written or oral, express or implied, on and before the date of Employee's execution of this
Agreement, with the exception of claims arising under this Agreement or the SERP. The provisions in this Section are not intended to prohibit Employee from filing a claim for unemployment insurance.
Furthermore, it is expressly agreed that the payments set forth herein shall fully and finally release the Released Parties from all obligations it may have under any and all prior agreements with
Employee, and that no other payments or benefits will be asserted or requested by Employee. 

        5.2  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 Agreement. 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 all rights under Section 1542 of the California Civil Code or any similar law against Released Parties. Section 1542 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 Agreement and of such specific waiver of Section 1542 or any similar law, 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. 

        5.3  Employee
agrees forever to refrain from filing or otherwise initiating or causing to be initiated against the Released Parties 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 claims released under Section 5, except to the extent required by law, order or regulation and Employee waives the right to any damages pursuant to any such action. 

        6.    Review and Revocation Period

        Employee
acknowledges that (i) Employee has not relied upon any representations, written or oral, not set forth in this Agreement and (ii) at the time Employee was given
this Agreement, including the Waivers and Releases contained herein, Employee was informed in writing by the Company that (a) Employee had at least twenty-one (21) days in
which to consider whether Employee would sign this Agreement, (b) to the extent that Employee takes less than twenty-one (21) days to consider this Agreement prior to
execution, Employee acknowledges that Employee had sufficient time to consider this Agreement with counsel and that Employee expressly, voluntarily and knowingly waives any additional time,
(c) Employee should consult with an attorney before signing this Agreement, and (d) Employee had an opportunity to consult with an attorney or has voluntarily decided to sign this 

3

 

Agreement without consulting an attorney. Employee further acknowledges that he may revoke acceptance of this Agreement, including the Waivers and Releases contained herein, by delivering a letter of
revocation no later than 5:00 p.m. Pacific Standard Time on the seventh (7th) day after Employee has signed this Agreement to: Health Net Corporate Legal Department, 21650 Oxnard
Street, Woodland Hills, California 91367. Employee acknowledges that he understands that this Agreement, including the Waivers and Releases contained herein, will not become effective or enforceable
until the date on which such seven (7) day-revocation period has expired (the "Effective Date") except as otherwise set forth herein. Employee further agrees that in the event that
he revokes this Agreement, it shall have no force or effect except to the extent otherwise expressly stated herein, and he shall have no right to receive any payment hereunder. 

        7.    Return of Company Property

        Employee
represents that (i) he has returned to the Company any and all building key(s), security pass or other access or identification cards and any and all Company property
that was in his possession, including but not limited to, any documents, credit cards, computer equipment or data files; (ii) he has cleared all expense accounts; (iii) he has paid all
amounts owed on any corporate credit card(s) which the Company previously issued to Employee and (iv) he has moved all cell phone and internet access accounts into his name in order to pay for
such items personally. To the extent Employee has not complied with (i), (ii), (iii) and (iv) above, Employee will immediately do so. 

        8.    Company Information

        Employee
acknowledges and agrees that during the period of his employment by the Company, and by virtue of his obligations of ongoing cooperation as specified herein, Employee had and
may continue to have access to and become acquainted with the Company's trade secrets and confidential and proprietary information, including but not limited to, various procedures, practices,
information regarding the organization and operation of the Company, confidential customer information, marketing methods and compilations of records and information that are owned by the Company and
that are regularly used in the operation of its business. The Parties agree that such items of information are important, material and confidential and/or proprietary information 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 Employee may prepare, use, observe, possess or control shall be and remain the
Company's sole property. Employee shall not without the Company's written consent, disclose (directly or indirectly), 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. 

        9.    Unfair Competition

        9.1  Employee
hereby agrees that, during the six (6)-month period following the Termination Date (the "Protected Period"), Employee 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 operates (the "Market Area") where the loyal and
complete fulfillment of the duties of the competitive employment or activity would inevitably call upon Employee to reveal, to make judgments on or otherwise use any confidential business information
or trade secrets of the business of the Company to which Employee had access during his employment with the Company. In the event Employee takes a position as a vice president (or higher position) or
as a director of a Competitor it will be presumed for purposes of this Agreement that the loyal and complete fulfillment of his duties would require him to use such 

4

 

information and Employee would therefore be deemed to be in breach of this provision. In the event that Employee breaches this provision: 

        (a)  all
of the options still outstanding referenced in Section 10 below shall immediately terminate; and 

        (b)  the
Employee shall promptly pay to the Company an amount of cash equal to the Gain Realized (as defined below) on any shares of Common Stock acquired upon exercise of
any options referenced in Section 10 below (the "Option Shares"). 

For
the purposes of this Section, "Gain Realized" shall equal the difference between (x) the exercise price applicable to the Option Shares and (y) the greater of the Fair Market Value
(as defined in the applicable Stock Option Plan) of the Option Shares (i) on the date of acquisition of such Option Shares or (ii) on the date such competitive activity with a Competitor
was commenced by the Optionee; and "Competitor" shall refer to any health maintenance organization or insurance company that provides managed health care or related services similar to those provided
by the Company or any of its affiliates. 

        9.2  In
addition, Employee agrees that, during the Protected Period, Employee shall not, directly or indirectly, solicit, recruit, interfere with or induce any person, who is
or was an employee of the Company or any of its subsidiaries at the time of such solicitation, recruitment, interference or inducement, to discontinue his relationship with the Company or any of its
subsidiaries or to accept employment by, or enter into a business relationship with, Employee or any other entity or person. 

        9.3  It
is hereby further agreed that if any court of competent jurisdiction shall determine that the restrictions imposed in this Section 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 hereby agree to any restrictions that such court would find to be
reasonable under the circumstances. 

        9.4  Employee
acknowledges that a material breach or threatened breach by him/her of any of the provisions contained in this Section will cause the Company irreparable injury
which may not be reasonably or adequately compensated for by damages in an action at law. Employee therefore agrees that the Company may be entitled, in addition to any other remedies, 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 Employee from any such
violation or threatened violations. 

        10.  Exercise of Vested Company Options

        It
is agreed that Employee shall only have three (3) months after the Termination Date (i.e., only until July 15, 2002) to
exercise the outstanding vested options held by him as of such date, at which time all outstanding options held by Employee which were not previously exercised shall expire. In this connection, the
following options are currently vested: (i) options to purchase 15,600 shares of Common Stock at $23.95 per share, (ii) options to purchase 26,000 shares of Common Stock at $30.97 per
share, (iii) options to purchase 175,000 shares of Common Stock at $32.50 per share, and (iv) options to purchase 53,333 shares of Common Stock at $23.02 per share. In addition, the
following options are not yet vested but may vest prior to the termination date in the event the vesting acceleration requirements set forth in the applicable Stock Option Agreements evidencing such
options are
achieved: (x) options to purchase 50,000 shares of Common Stock at $9.00 per share and (y) options to purchase 100,000 shares of Common Stock at $12.9375 per share. It is acknowledged by
Employee that the one year "holding period" applicable to the shares obtained upon exercise of the options referenced in clauses (x) and (y) above shall continue to apply to such shares,
except as set 

5

 

forth in the applicable Stock Option Agreements evidencing such options. All options held by Employee that were not yet vested as of the Termination Date shall expire as of such date. 

        11.  Status as Officer and Director

        11.1 It
is acknowledged that as of April 15, 2002, the Company no longer considers Employee to be an executive officer of the Company for purposes of securities laws
or regulations. 

        11.2 It
is acknowledged that in accordance with Article VI, Section 1 of the Company's By-Laws, the Company will provide indemnification to
Employee if he is ever made a party to any legal action, suit, or proceeding by reason of the fact that he was an officer or director of the Company through April 15, 2002. In addition, it is
acknowledged that the Company's director and officer liability insurance will cover eligible acts committed by Employee as an officer or director of the Company through April 15, 2002. 

        12.  No Admission of Liability

        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 Agreement. 

        13.  No Disparagement

        Employee
agrees not to make any public or private statements disparaging any of the Released Parties. 

        14.  Successors; Binding Agreement

        14.1 This
Agreement shall not be terminated by any merger or consolidation of the Company, irrespective of whether the Company is 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. 

        14.2 This
Agreement shall inure to the benefit of and be enforceable by Employee's personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If Employee shall die while any amounts would be payable to Employee hereunder had Employee 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 Employee to receive such amounts or, if no person is so appointed, to Employee's estate. 

        15.  Severability and Enforceability

        If
any part or term of this Agreement 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 Agreement. 

        16.  Choice of Law

        The
interpretation, construction and performance of this Agreement shall be construed and governed by the laws of the State of Delaware without regard to its conflicts of laws rules. 

        17.  Counterparts

        This
Agreement may be executed in one or more counterparts, and may include multiple signature pages, all of which shall be deemed to be one instrument. Fully executed copies of this
Agreement may be used in lieu of the original. 

6

 

        18.  Entire Agreement

        This
Agreement shall constitute the full and complete agreement of the Parties and shall supercede all prior agreements, communications, or understandings, whether oral or in writing,
between Employee and Company on the subject matter hereof, including but not limited to the Severance Payment Agreement.. There may be no modification of the terms of this Agreement except in writing
signed by both Parties. 

        19.  Voluntary Agreement

        Employee
acknowledges that he has had an opportunity to consult and be represented by counsel of his own choosing in the review of this Agreement including the Waivers and Releases
contained herein, that he has been advised by the Company to do so, that Employee has read this Agreement and understands its terms, and that Employee enters into this Agreement freely, voluntarily,
without coercion, and based on Employee's own judgment and that this Agreement fully and accurately reflects the content of any and all understandings and agreements between the Parties concerning the
matters referenced herein, and that Employee is not relying upon any other representations or promises whatsoever as an inducement to execute this Agreement. 

        IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the dates set forth below. 

	Employee	 	Heath Net, Inc.
	

 	

 	
 	

 	

 
	By:	/s/  GARY S. VELASQUEZ      
 Name: Gary S. Velasquez	 	By:	/s/  KARIN MAYHEW      
 Name: Karin Mayhew

Title: Senior Vice President,

Organizational Effectiveness
	

 	

 	
 	

 	

 
	Date:	4-10-02
	 	Date:	4-11-02

7

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SEPARATION, WAIVER AND RELEASE AGREEMENT

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