[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]    
 
           
 
           

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