EXHIBIT 10.48 TO CURRENT REPORT ON FORM 8-K DATED AS OF JUNE 30, 2003
      ---------------------------------------------------------------------




--------------------------------------------------------------------------------





                           PURCHASE AND SALE AGREEMENT



                                 BY AND BETWEEN



                       SAFEGUARD HEALTH ENTERPRISES, INC.
                                    PURCHASER

                                       AND

                                HEALTH NET, INC.
                                     SELLER



                             HEALTH NET VISION, INC.


                            DATED AS OF JUNE 30, 2003



--------------------------------------------------------------------------------



<PAGE>
<TABLE>
<CAPTION>
                                     TABLE OF CONTENTS

<S>                                                                                      <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2
     Section 1.1   Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . .   2
     Section 1.2   Other Definitions. . . . . . . . . . . . . . . . . . . . . . . . . .   6

ARTICLE II THE TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7
     Section 2.1   General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   7
     Section 2.2   Purchase and Sale of the Shares. . . . . . . . . . . . . . . . . . .   8
     Section 2.3   Assumption and Indemnity Reinsurance Agreement . . . . . . . . . . .   8
     Section 2.4   HNL Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . .   8
     Section 2.5   Non-Assignable Contracts.. . . . . . . . . . . . . . . . . . . . . .   8
     Section 2.6   Replacement of Vision HMO Contracts of Joint Health Net Subscribers.   9
     Section 2.7   Transfer of Government Sponsored.. . . . . . . . . . . . . . . . . .  10
     Section 2.8   Replacement of Employee Vision Contacts and Policies.. . . . . . . .  10
     Section 2.9   Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . .  12
     Section 2.10  Administrative Services Agreement. . . . . . . . . . . . . . . . . .  12
     Section 2.11  Transition Services Agreement. . . . . . . . . . . . . . . . . . . .  12
     Section 2.12  Network Access Agreement . . . . . . . . . . . . . . . . . . . . . .  12
     Section 2.13  Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . .  12
     Section 2.14  Distribution of Excess Tangible Net Equity . . . . . . . . . . . . .  13
     Section 2.15  Purchase Price Allocation. . . . . . . . . . . . . . . . . . . . . .  13
     Section 2.16  Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  13
     Section 2.17  Adjustment to Purchase Price.. . . . . . . . . . . . . . . . . . . .  13
     Section 2.18  Deliveries at the Closing by Seller. . . . . . . . . . . . . . . . .  15
     Section 2.19  Deliveries at the Closing by Purchaser . . . . . . . . . . . . . . .  15

ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER. . . . . . . . . . . . . . . . . .  16
     Section 3.1   Organization of Seller . . . . . . . . . . . . . . . . . . . . . . .  16
     Section 3.2   Authorization, Validity and Enforceability . . . . . . . . . . . . .  16
     Section 3.3   No Violation or Breach . . . . . . . . . . . . . . . . . . . . . . .  16
     Section 3.4   Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . .  17
     Section 3.5   Organization and Qualification of the Company. . . . . . . . . . . .  17
     Section 3.6   Organization and Qualification of HNL. . . . . . . . . . . . . . . .  17
     Section 3.7   Capitalization of the Company. . . . . . . . . . . . . . . . . . . .  17
     Section 3.8   Title to the Shares. . . . . . . . . . . . . . . . . . . . . . . . .  17
     Section 3.9   Options or Other Rights. . . . . . . . . . . . . . . . . . . . . . .  18
     Section 3.10  Financial Statements.. . . . . . . . . . . . . . . . . . . . . . . .  18
     Section 3.11  No Material Adverse Change . . . . . . . . . . . . . . . . . . . . .  19
     Section 3.12  Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20
     Section 3.13  Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . .  20
     Section 3.14  Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . .  20
     Section 3.15  Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
     Section 3.16  Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  22
     Section 3.17  Employee Benefit Matters.. . . . . . . . . . . . . . . . . . . . . .  23
     Section 3.18  No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23
     Section 3.19  Title to and Condition of Properties . . . . . . . . . . . . . . . .  23
     Section 3.20  Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . .  24


                                      -i-
<PAGE>
     Section 3.21  Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
     Section 3.22  Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . .  24
     Section 3.23  Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
     Section 3.24  Transactions With Affiliates . . . . . . . . . . . . . . . . . . . .  24
     Section 3.25  Improper Payments. . . . . . . . . . . . . . . . . . . . . . . . . .  24

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER. . . . . . . . . . . . . . . . .  24
     Section 4.1   Organization of Purchaser. . . . . . . . . . . . . . . . . . . . . .  24
     Section 4.2   Authorization, Validity and Enforceability . . . . . . . . . . . . .  25
     Section 4.3   No Violation or Breach . . . . . . . . . . . . . . . . . . . . . . .  25
     Section 4.4   Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . .  25
     Section 4.5   Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . .  26
     Section 4.6   Certain Governmental Consents. . . . . . . . . . . . . . . . . . . .  26
     Section 4.7   Investment Representation. . . . . . . . . . . . . . . . . . . . . .  26
     Section 4.8   No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  26
     Section 4.9   Investigation by Purchaser . . . . . . . . . . . . . . . . . . . . .  26

ARTICLE V COVENANTS OF PURCHASER AND SELLER . . . . . . . . . . . . . . . . . . . . . .  27
     Section 5.1   Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . . .  27
     Section 5.2   Consents and Approvals.. . . . . . . . . . . . . . . . . . . . . . .  29
     Section 5.3   Cooperation and Further Assurances . . . . . . . . . . . . . . . . .  29
     Section 5.4   Access to Information. . . . . . . . . . . . . . . . . . . . . . . .  30
     Section 5.5   Notice of Litigation and Requests. . . . . . . . . . . . . . . . . .  30
     Section 5.6   Notice of Changes and Defaults . . . . . . . . . . . . . . . . . . .  30
     Section 5.7   Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . .  31
     Section 5.8   Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  31
     Section 5.9   Distribution of Excess Tangible Net Equity . . . . . . . . . . . . .  32
     Section 5.10  Transfer of HNL Contracts. . . . . . . . . . . . . . . . . . . . . .  32
     Section 5.11  Replacement of Seller Employee Vision Contracts and Policies.. . . .  32
     Section 5.12  Replacement of Vision HMO Contracts of Joint Health Net Subscribers.  32
     Section 5.13  Transfer of Government Sponsored.. . . . . . . . . . . . . . . . . .  32
     Section 5.14  Reinsurance Agreement. . . . . . . . . . . . . . . . . . . . . . . .  32
     Section 5.15  Administrative Services Agreement. . . . . . . . . . . . . . . . . .  32
     Section 5.16  Transition Service Agreement . . . . . . . . . . . . . . . . . . . .  32
     Section 5.17  Network Access Agreement . . . . . . . . . . . . . . . . . . . . . .  33
     Section 5.18  Termination of Contracts . . . . . . . . . . . . . . . . . . . . . .  33
     Section 5.19  Employment Matters; Severance. . . . . . . . . . . . . . . . . . . .  33
     Section 5.20  Name Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  34
     Section 5.21  Interaffiliate Accounts. . . . . . . . . . . . . . . . . . . . . . .  34
     Section 5.22  Non-Competition. . . . . . . . . . . . . . . . . . . . . . . . . . .  34

ARTICLE VI CONDITIONS TO PURCHASER'S OBLIGATIONS. . . . . . . . . . . . . . . . . . . .  34
     Section 6.1   Representations, Warranties and Covenants. . . . . . . . . . . . . .  35
     Section 6.2   No Proceeding or Litigation. . . . . . . . . . . . . . . . . . . . .  35
     Section 6.3   Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . .  35
     Section 6.4   Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . .  35
     Section 6.5   Transfer of Government Sponsored Contacts. . . . . . . . . . . . . .  35
     Section 6.6   Resignation of Officers and Directors. . . . . . . . . . . . . . . .  35


                                      -ii-
<PAGE>
     Section 6.7   Transfer of HNL Contracts. . . . . . . . . . . . . . . . . . . . . .  35
     Section 6.8   Administrative Services Agreement. . . . . . . . . . . . . . . . . .  35
     Section 6.9   Transfer of Books and Records. . . . . . . . . . . . . . . . . . . .  35
     Section 6.10  Reinsurance Agreement. . . . . . . . . . . . . . . . . . . . . . . .  36
     Section 6.11  Network Access Agreement . . . . . . . . . . . . . . . . . . . . . .  36
     Section 6.12  Transition Services Agreement. . . . . . . . . . . . . . . . . . . .  36

ARTICLE VII CONDITIONS TO SELLER'S OBLIGATIONS. . . . . . . . . . . . . . . . . . . . .  36
     Section 7.1   Representations, Warranties and Covenants. . . . . . . . . . . . . .  36
     Section 7.2   No Proceeding or Litigation. . . . . . . . . . . . . . . . . . . . .  36
     Section 7.3   Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . .  36
     Section 7.4   Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . .  36
     Section 7.5   Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
     Section 7.6   Administrative Services Agreement. . . . . . . . . . . . . . . . . .  37
     Section 7.7   Reinsurance Agreement. . . . . . . . . . . . . . . . . . . . . . . .  37
     Section 7.8   Network Access Agreement . . . . . . . . . . . . . . . . . . . . . .  37
     Section 7.9   Transition Services Agreement. . . . . . . . . . . . . . . . . . . .  37

ARTICLE VIII SURVIVAL, INDEMNIFICATION AND ARBITRATION. . . . . . . . . . . . . . . . .  37
     Section 8.1   Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  37
     Section 8.2   Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . .  37
     Section 8.3   Treatment of Indemnity Payments. . . . . . . . . . . . . . . . . . .  38
     Section 8.4   Mitigation of Loss . . . . . . . . . . . . . . . . . . . . . . . . .  38
     Section 8.5   Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38
     Section 8.6   Tax Indemnification. . . . . . . . . . . . . . . . . . . . . . . . .  39
     Section 8.7   Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . .  39
     Section 8.8   Arbitration. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  39

ARTICLE IX TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  40
     Section 9.1   Seller Indemnification . . . . . . . . . . . . . . . . . . . . . . .  40
     Section 9.2   Purchaser and the Company Indemnification. . . . . . . . . . . . . .  40
     Section 9.3   Preparation of Tax Returns . . . . . . . . . . . . . . . . . . . . .  40
     Section 9.4   Refunds or Credits . . . . . . . . . . . . . . . . . . . . . . . . .  41
     Section 9.5   [Section 338(h)(10) Election.. . . . . . . . . . . . . . . . . . . .  41
     Section 9.6   Mutual Cooperation . . . . . . . . . . . . . . . . . . . . . . . . .  42
     Section 9.7   Contests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43
     Section 9.8   Survival of Obligations. . . . . . . . . . . . . . . . . . . . . . .  43

ARTICLE X TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43
     Section 10.1  Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  43
     Section 10.2  Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . .  43

ARTICLE XI MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  44
     Section 11.1  Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  44
     Section 11.2  Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . .  45
     Section 11.3  Entire Agreement; Waivers and Amendments . . . . . . . . . . . . . .  45
     Section 11.4  Assignment; Binding Effect . . . . . . . . . . . . . . . . . . . . .  45
     Section 11.5  Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . .  45


                                      -iii-
<PAGE>
     Section 11.6  Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . . .  45
     Section 11.7  Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
     Section 11.8  Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
     Section 11.9  Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . .  46
     Section 11.10 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . .  46

SCHEDULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  47
EXHIBIT A     REINSURANCE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . .  49
EXHIBIT B      ADMINISTRATIVE SERVICES AGREEMENT. . . . . . . . . . . . . . . . . . . .  50
EXHIBIT C     NETWORK ACCESS AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . .  51
EXHIBIT D     HEALTH NET SEVERANCE POLICY . . . . . . . . . . . . . . . . . . . . . . .  52
</TABLE>


                                      -iv-
<PAGE>
                           PURCHASE AND SALE AGREEMENT

     This  PURCHASE  AND  SALE AGREEMENT is made and entered into as of June 30,
2003, by and between SafeGuard Health Enterprises, Inc., a Delaware corporation,
or  its  Designee  ("Purchaser")  and  Health  Net, Inc., a Delaware corporation
("Seller").

                                    RECITALS
                                    --------

     WHEREAS,  Seller  is  the  beneficial and record owner of 486,380 shares of
common stock, no par value per share (the "Shares"), of Health Net Vision, Inc.,
a  California specialized health care service plan (the "Company"), which Shares
constitute  all  of  the  issued  and  outstanding capital stock of the Company;

     WHEREAS,  the  Company  provides  prepaid  vision  HMO  coverage  for  both
commercial  and  government members in California and administers vision PPO and
vision  indemnity  products underwritten by Health Net Life Insurance Company, a
wholly-owned  subsidiary  of  Seller  ("HNL");

     WHEREAS,  Purchaser  desires to purchase the Shares from Seller, and Seller
desires  to  sell  the  Shares  to  Purchaser, upon the terms and subject to the
conditions  set  forth  herein;

     WHEREAS, Purchaser desires to purchase from HNL, and HNL desires to sell to
Purchaser  or  its  Designee,  all  of  the California commercial vision PPO and
vision  indemnity  insurance  business  underwritten  and/or  controlled by HNL,
including  all  the  group  and  individual  vision  insurance  policies  and
certificates,  vision  provider agreements and producer contracts comprising the
Vision  Business  Assets;

     WHEREAS,  Seller  and  Purchaser agree that those commercial vision PPO and
vision  indemnity  policies  and  the  liabilities  relating  thereto  shall  be
transferred  by  HNL  to  SafeHealth  Life  Insurance  Company,  an Affiliate of
Purchaser  ("SafeHealth"),  through  an  Assumption  and  Indemnity  Reinsurance
Agreement  (the  "Reinsurance  Agreement");

     WHEREAS,  Purchaser  and  Seller  desire  to  enter  into an Administrative
Service  Agreement  effective  upon the Closing to provide for the transition of
the  Arizona  vision  business maintained by Health Net of Arizona, Inc. and HNL
through  December  31,  2004  (the  "Administrative  Service  Agreement");

     WHEREAS,  Purchaser  and  Seller  desire  to  enter  into  a Network Access
Agreement to provide Purchaser with access to California vision providers of HNL
and  a  Transition  Services  Agreement  to  provide  Purchaser  with transition
services  necessary  to  operate  the  Vision  Business;

     WHEREAS,  the  transactions contemplated by this Agreement, the Reinsurance
Agreement,  the  Administrative  Services  Agreement,  the  Transition  Services
Agreement  and  the  Network  Access  Agreement  constitute  the "Transactions."

     NOW, THEREFORE, in consideration of the promises set forth above and of the
representations,  warranties,  covenants and agreements contained herein, Seller
and  Purchaser  hereby  agree  as  follows:


<PAGE>
                                    ARTICLE I
                                   DEFINITIONS

     Section  1.1     Certain  Definitions.  The  following  terms  shall,  when
used  in  this  Agreement, have the  following  meanings:

     "Affiliate"  means, with respect to any Person, any entity that directly or
      ---------
indirectly  through one or more intermediaries controls, is controlled by, or is
under  common control with such Person.  For purposes of this definition and the
definition  of "Subsidiaries" below, "control" (or "controlled", "controlled by"
and  "under  common  control with" as the context may require) of a Person means
the  possession, direct or indirect, of the power to vote fifty percent (50%) or
more  of  the  voting  securities  of  such  Person.

     "Books  and Records" means the originals or copies of all books and records
      ------------------
(including  computer  generated  or  stored  information)  in  the possession or
control  of  HNL,  the  Company  or  the  Seller  and  relating primarily to and
necessary for the operation by Purchaser of the Vision Business, including lists
of  commercial  vision  PPO  and  commercial vision indemnity insureds of HNL in
California,  claims  files, information files and data related to the commercial
vision  PPO  and  commercial  vision  indemnity insurance underwritten by HNL in
California,  communications,  inventory of current forms, business and corporate
records,  claim  forms,  sales records, underwriting records, financial records,
personnel  records  and  compliance records, but excluding (i) personnel records
relating  to Employees terminated by Seller as of the Closing Date to the extent
transfer  of such personnel records is limited by applicable Law, (ii) except to
the  extent  expressly  provided  herein,  information  constituting proprietary
information,  trade  secrets,  or  know-how  of Seller, HNL or their Affiliates,
including  internal management reports but excluding such information and report
that  are  required  by  Purchaser to operate the Vision Business, and (iii) any
records  that  Seller  or  HNL  is  required  by  any  applicable Law to retain.

     "Business  Day"  means  any day except a Saturday, Sunday or a day on which
      -------------
banks  located  in Los Angeles, California are required or are authorized by Law
or  by  executive  order  to  close.

     "Closing  Balance  Sheet" means that balance sheet of the Company as of the
      -----------------------
Closing  Date prepared by Seller in accordance with SAP separately setting forth
the  Excess  Tangible  Net Equity, the other assets, properties, liabilities and
stockholders'  equity  of  the  Company  as  of  the  Closing  Date.

     "Code" means the Internal Revenue Code of 1986 and the Treasury Regulations
      ----
promulgated  thereunder,  as  in  effect  on  the  date  hereof.

     "Department"  means  the  California  Department  of  Managed  Health Care.
      ----------

     "Designee"  means  an  Affiliate  or  Subsidiary  of Purchaser approved by
      --------
Seller.

     "Effective  Date"  means  effective  date  of  the  Reinsurance  Agreement.
      ---------------

     "ERISA"  means  the  Employee  Retirement  Income  Security Act of 1974, as
      -----
amended.


                                      -2-
<PAGE>
     "GAAP"  means generally accepted accounting principles consistently applied
      ----
throughout  the specified period and in the comparable period in the immediately
preceding  year.

     "Governmental  Authority"  means  any  government  or political subdivision
      -----------------------
thereof,  whether federal, state or local, or any agency, commission, department
or  other  instrumentality  of  any  such  government  or political subdivision.

     "Government  Sponsored  Contracts"  means any arrangement or contract under
      --------------------------------
which  the  Company or HNL is obligated to provide vision benefits pursuant to a
government  sponsored  vision  program,  including but not limited to, Medi-Cal.

     "Joint  Health  Net  Subscribers"  means  those  California  commercial
      -------------------------------
Subscribers  who are enrolled in both (i) a pre-paid vision HMO product provided
      ----
by  the Company or a vision PPO or vision indemnity product provided by HNL, and
(ii)  a  Medical  Product  provided  by  any  Affiliate  of  Seller.

     "Knowledge  of  Seller"  means  the  actual knowledge of David W. Anderson,
      ---------------------
Roupen  Berberian,  Douglas  A.  King,  Susan  Klarner,  Juanell  Hefner, Gerald
Nosewicz  and  Christopher  P.  Wing.

     "Knowledge  of  Purchaser"  means the actual knowledge of James E. Buncher,
      ------------------------
Dennis  L.  Gates,  Ronald  I.  Brendzel  and  Stephen  J.  Baker.

     "Law" means all applicable laws, decisions, rules, regulations, ordinances,
      ---
codes,  statutes,  judgments,  injunctions,  orders, decrees, licenses, permits,
policies,  administrative interpretations and other requirements of Governmental
Authorities.

     "Liabilities"  means,  with  respect  to any Person, any direct or indirect
      -----------
indebtedness,  liability, claim, loss, damage, deficiency or obligation required
to  be  set forth or otherwise disclosed on a financial statement of such Person
under  GAAP  or  SAP,  as  appropriate.

     "Lien"  means any lien, pledge, mortgage, security interest, claim, charge,
      ----
lease, easement, option, right of first refusal or other limitation on transfer,
or  other  encumbrance  or  restriction.


     "Litigation" means any action, suit, claim or administrative or arbitration
      ----------
proceeding.

     "Material  Contract"  means  any  written contract, agreement, arrangement,
      ------------------
instrument,  bond,  commitment, franchise, indemnity, indenture, lease, license,
or  understanding (other than the Transaction Documents) to which the Company is
subject or which is a HNL Contract that (i) obligates the Company or HNL, solely
with  respect  to the HNL Vision Business, to pay an amount in excess of $50,000
in any twelve-month period or $100,000 in any two year period; (ii) provides for
the extension of credit to an unaffiliated third party in an amount greater than
$50,000  (other  than  capitation  payments  made  in  the  ordinary  course  of
business); (iii) provides for a guaranty by the Company of obligations of others
in  excess  of  $50,000;  (iv)  constitutes  an employment agreement or personal
service  contract  not  terminable  on less than sixty (60) days' notice without
penalty;  or  (v)  expressly limits, in any material respect, the ability of the
Company to engage in any line of business, compete with any person or expand the
nature  or geographic scope of its business.  Notwithstanding the foregoing, the
term  "Material  Contract(s)"


                                      -3-
<PAGE>
does  not include (i) agreements with vision service providers, or purchasers of
vision  coverage  entered  into  by the Company or HNL in the ordinary course of
business,  unless  such  contract  includes a provision for a minimum payment in
excess of $50,000 in any twelve-month period or $100,000 in any two year period,
and (ii) the Purchase and Sale Agreement by and between the Seller and Purchaser
dated  April  7,  2003 with respect to the sale by Seller to Purchaser of, among
other  things,  Health  Net  Dental,  Inc.  (the  "HND  Transaction")  and  all
Transaction  Documents  (as  defined in the HND Transaction) relating to the HND
Transaction.

     "Medical  Product"  means  (i) PPO and indemnity health insurance contracts
      ----------------
covering  the  medical  costs  or  services  of Subscribers and (ii) medical HMO
contracts.

     "Person"  means any individual, corporation, partnership, limited liability
      ------
company,  firm,  joint  venture,  association,  joint-stock  company,  trust,
unincorporated  association,  Governmental  Authority  or  other  entity  or
organization.

     "Policy  Liabilities"  means those liabilities of HNL reinsured and assumed
      -------------------
by  SafeHealth  pursuant  to  the Reinsurance Agreement and as more specifically
defined  by  the  Reinsurance  Agreement.

     "Purchaser  Material  Adverse Effect" means any material adverse change in,
      -----------------------------------
or  material  adverse effect on, the business, financial condition or operations
of Purchaser and its Subsidiaries, taken as a whole; provided, however, that the
                                                     --------  -------
effects  of  changes  that  are  generally  applicable  to (i) the industries or
markets  in which Purchaser and its Subsidiaries operate; (ii) the United States
economy  or  local  economy in which the Purchaser operates; or (iii) the United
States  securities markets shall be excluded from the determination of Purchaser
Material  Adverse  Effect;  and  provided,  further,  that any adverse effect on
                                 --------   -------
Purchaser  and  its  Subsidiaries resulting from the execution of this Agreement
and  the  Transactions  contemplated  hereby  shall  also  be  excluded from the
determination  of  Purchaser  Material  Adverse  Effect.

     "SAP"  means statutory accounting principles prescribed or permitted by the
      ---
Department  consistently  applied  throughout  the  specified  period and in the
comparable  period  in  the  immediately  preceding  year in connection with the
preparation  of  the  Financial  Statements  of  the  Company.

     "Seller  Material  Adverse Effect" means any material adverse change in, or
      --------------------------------
material  adverse effect on, the business, financial conditions or operations of
the  Company  or  the  HNL Vision Business, taken as a whole; provided, however,
                                                              --------  -------
that  the effects of changes that are generally applicable to (i) the industries
or markets in which Seller, the HNL Vision Business or Company operate; (ii) the
United  States economy or local economy in which Seller, the HNL Vision Business
or  the  Company operate; or (iii) the United States securities markets shall be
excluded from the determination of Seller Material Adverse Effect; and provided,
                                                                       --------
further,  that  any  adverse  effect  on  Seller, the HNL Vision Business or the
-------
Company resulting from (A) the execution of this Agreement, (B) the transactions
contemplated  hereby,  including  but  not  limited to, the removal from Company
prior  to  the  Closing  of  any contracts or policies obligating the Company to
provide  vision  benefits in connection with any Government Sponsored Contracts,
the  removal  from  the  Company  or  termination  of  any contracts or policies
obligating  the Company to provide vision benefits to employees of Seller or any
Affiliate  of Seller, and the replacement commencing prior to the Closing of the
vision  benefits provided by the Company and HNL to Joint Health Net Subscribers
with  vision  benefits  provided  by  the  strategic  partner  of


                                      -4-
<PAGE>
Seller,  and  (C)  any facts or circumstances primarily related to Purchaser, or
changes  in  the business, financial conditions or operations of Seller, the HNL
Vision  Business  or  the Company resulting from the continuation of an existing
trend  shall  also be excluded from the determination of Seller Material Adverse
Effect.

     "Statutory  Tangible  Net  Equity"  means  the  minimum Tangible Net Equity
      --------------------------------
required  of  the Company by Title 28, section 1300.76 of the California Code of
Regulations.

     "Subscriber"  means  the  person  who  has enrolled in a Medical Product, a
      ----------
pre-paid vision HMO product, a vision PPO or vision indemnity insurance product.

     "Subsidiaries" means, with respect to any Person, each entity controlled by
      ------------
such  Person.  For  purposes  of  this  definition, "controlled" has the meaning
specified  in  the  definition  of  "Affiliate."

     "Tangible  Net  Equity" means the actual tangible net equity of the Company
      ---------------------
calculated  in  accordance with Title 28, section 1300.76 of the California Code
of  Regulations.

     "Tax"  means  any  federal,  state,  county,  local,  foreign  or other tax
      ---
(including, without limitation, income taxes, premium taxes, excise taxes, sales
taxes,  use  taxes,  gross  receipts  taxes,  franchise taxes, ad valorem taxes,
severance taxes, capital levy taxes, transfer taxes, withholding, employment and
payroll-related taxes, property taxes and import duties), and includes interest,
additions  to  tax  assessments,  fines  and  penalties  with  respect  thereto.

     "Tax  Returns"  means  any  report,  return,  statement,  or  other written
      ------------
information  required  to  be  supplied to a taxing authority in connection with
Taxes.

     "Transaction  Documents" means this Agreement, the Assumption and Indemnity
      ----------------------
Reinsurance  Agreement,  the  Administrative  Services Agreement, the Transition
Services  Agreement,  the Network Access Agreement, and each other agreement and
document  required  to  be  executed  and  delivered  in  connection  with  this
Agreement,  the  Assumption and Indemnity Agreement, the Administrative Services
Agreement,  the  Transition Services Agreement and the Network Access Agreement.

     "Vision  Business"  means  (i) the pre-paid vision HMO coverage provided by
      ----------------
the  Company to commercial members in California, and (ii) the commercial vision
PPO  and  commercial  vision  indemnity  insurance  policies  and  certificates
underwritten  by HNL and providing coverage to insureds in California, provided,
                                                                       --------
however, Purchaser acknowledges and agrees that commencing prior to the Closing,
-------
the  contracts  or  policies  providing  vision  benefits  to  Joint  Health Net
Subscribers  may  be  replaced  with  vision contracts or policies provided by a
strategic partner of Seller.  Notwithstanding the foregoing, the Vision Business
shall  not  include  any  contracts or policies of either the Company or HNL (A)
obligating  the Company or HNL to provide vision benefits in connection with any
Government Sponsored Contracts; and (B) any contracts or policies obligating the
Company  or  HNL  to  provide  vision  benefits  to  employees  of Seller or any
Affiliate  of  Seller.

     "Vision  Business Assets" means (i) the Vision Business, (ii) the Books and
      -----------------------
Records,  and  (iii)  the  HNL  Contracts.


                                      -5-
<PAGE>
     "WARN"  means  the  Worker  Adjustment  and Retraining Notification Act (29
      ----
U.S.C.  Sec.  2101  et  seq.)

     Section 1.2 Other Definitions. The following terms shall, when used in this
Agreement,  have  the  meanings ascribed to such terms in the Sections set forth
below:


     Term                                   Section
     ----                                   -------

     338  Elections                          9.5(a)

     Additional  Tax  Reimbursement          9.5(c)

     Allocation                              9.5(b)

     Balance  Sheet  Accountants             2.17

     Closing                                 2.16

     Closing  Date                           2.16

     Company                                 Recitals

     Competitor                              5.22

     Dispute                                 8.8

     Employees                               3.16

     Employee  Plans                         3.17

     Excess  Tangible  Net  Equity           2.14

     Final  Balance  Sheet                   2.17

     Financial  Statements                   3.10

     HND  Transaction                        2.16

     HNL                                     Recitals

     HNL  Contracts                          2.4

     HNL  Financial  Information             3.10(e)

     Indemnifiable  Loss                     8.3

     Indemnified  Party                      8.2(d)

     Indemnifying  Party                     8.2(d)




                                      -6-
<PAGE>
     Indemnitee                              8.3

     Indemnity  Payment                      8.3

     JAMS                                    8.8(a)

     Multi-Business  Company                 5.22

     Network  Access  Agreement              2.12

     Optional  Termination  Date             10.1

     Permit(s)                               3.12

     Proposed  Adjustment  Notice            2.17

     Purchase  Price                         2.13

     Purchaser                               Preamble

     Reinsurance  Agreement                  Recitals

     Retained  Employees                     5.19

     SafeHealth                              Recitals

     Securities  Act                         4.7

     Seller                                  Preamble

     Seller  Entity                          5.22

     Shares                                  Recitals

     Software                                3.23

     Survival  Period                        8.1

     Transactions                            Recitals

     Transition  Services  Agreement         2.11

                                   ARTICLE II
                                THE TRANSACTIONS
                                ----------------

     Section  2.1  General.  Subject  to the terms, provisions and conditions of
this  Agreement,  on  the  Closing  Date,  Seller  shall,  or  shall  cause  the
appropriate Seller Subsidiary to, (i) sell, convey, transfer, assign, deliver or
otherwise  transfer  to Purchaser or its Designee, and Purchaser or its Designee
shall  acquire  from  Seller,  or  the appropriate Seller Subsidiary, the Vision
Business  Assets  and  the


                                      -7-
<PAGE>
Shares, and (ii) enter into the Transactions with the Purchaser or its Designee.
The  designation  of  a  Designee by Purchaser shall not affect any liability of
Purchaser  hereunder,  and  except  as  Seller  may  otherwise agree in writing,
Purchaser  shall  be  liable  for  all  obligations  of  any Designee under this
Agreement  and  the  other  Transaction  Documents.  The  material  assets  and
properties  owned  or  leased  by  the  Company  are  set forth in Schedule 2.1.
                                                                   ------------

     Section  2.2 Purchase and Sale of the Shares. Upon the terms and subject to
the  conditions  set  forth in this Agreement, on the Closing Date, Seller shall
sell,  transfer,  assign  and deliver to Purchaser, and Purchaser shall purchase
and  acquire  the  Shares  from  Seller.

     Section  2.3 Assumption and Indemnity Reinsurance Agreement. On the Closing
Date,  Seller shall cause HNL and Purchaser shall cause SafeHealth to enter into
the Reinsurance Agreement attached hereto as Exhibit A, whereby effective on the
                                             ---------
Effective  Date, HNL shall cede to SafeHealth, and SafeHealth shall reinsure and
assume  the  Policy  Liabilities.

     Section  2.4     HNL Contracts.  On the Closing Date, except as provided in
Section  2.5, Seller shall cause HNL to transfer and assign to Purchaser, or its
Designee,  all  of  HNL's  right,  title  and  interest  in  its agreements with
California  providers  of  vision  services  and  vision  supplies,  California
producers  and  other  contracts  or  agreements set forth on Schedule 2.4 which
                                                              ------------
contracts  represent the vision provider and producer agreements of HNL relating
to  the  Vision  Business in California (collectively, the "HNL Contracts"); and
Purchaser  or  its  Designee  shall  assume the liabilities of HNL under the HNL
Contracts,  provided, however, that neither Purchaser nor any Purchaser Designee
            --------  -------
shall  assume  (x)  any  obligation  to  pay  any amounts (whether or not due at
Closing)  arising  under  the  HNL  Contracts  prior  to the Closing, or (y) any
liability  attributable to a failure by HNL to comply with its obligations under
the  HNL  Contracts prior to the Closing Date.  Any such assignment and transfer
shall  be  evidenced  by  an  assignment  and assumption agreement or such other
agreement  as  the  parties  reasonably  determine  is necessary or appropriate.

Section  2.5     Non-Assignable  Contracts.

     (a)     Notwithstanding  anything to the contrary in this Agreement, to the
extent  that  any HNL Contract would be subject to termination or restriction or
is not capable of being assigned, transferred or sublicensed without the consent
or waiver of the other party thereto or any third party (which consent or waiver
has  not  been  obtained),  or  if such assignment, transfer or sublicense would
constitute  a  breach  thereof or a violation of any Law, this Agreement and the
other  Transaction  Agreements  shall  not  constitute  an assignment, transfer,
sublease  or  sublicense  thereof.

     (b)     Seller  agrees  to use commercially reasonable efforts prior to the
Closing  to  obtain  consents  and  waivers  and  to  attempt  to  eliminate any
impediments to an assignment of any HNL Contract referred to above and to obtain
any  other  consents  and  waivers  necessary  to  assign  and  transfer the HNL
Contracts  to  Purchaser  or  Purchaser's  Designee  at  the  Closing.

     (c)     To  the  extent  that  any HNL Contract cannot be transferred, then
Seller  and  Purchaser  or  its  Designee  shall  enter  into  such commercially
reasonable  arrangements  (including  subcontracting if permitted) to provide to
the  parties  the  economic  (taking  into  account  Tax costs and benefits) and
operational  equivalent,  to  the extent permitted, of obtaining such consent or
waivers  necessary  to  assign  and  transfer  the  HNL  Contracts.


                                      -8-
<PAGE>
     Section  2.6     Replacement  of  Vision  Benefits  of  Joint  Health  Net
Subscribers.

     (a)     Seller  shall  offer  to  replace,  with vision benefits offered by
Seller's strategic partner, the pre-paid vision HMO contracts of the Company and
the  vision  PPO  and vision indemnity insurance policies of HNL which as of the
date  hereof provide vision benefits to Joint Health Net Subscribers.  The Joint
Health  Net  Subscribers  are  set forth on Schedule 2.6.  The offers to replace
                                            ------------
such  contracts  and policies shall commence prior to Closing and shall occur no
later  than  the  first renewal date after Closing of each such Company pre-paid
vision  HMO  contract  or  HNL vision PPO and vision indemnity insurance policy.
Purchaser shall provide Seller with information reasonably required by Seller to
offer  the  Joint Health Net Subscribers replacement vision benefits provided by
Seller's  strategic partner, including but not limited to, group experience data
and  monthly  eligibility  reports  showing  all  individuals eligible to obtain
covered  vision services under the Company pre-paid vision HMO contracts and the
HNL  vision  PPO  and vision indemnity insurance policies issued to Joint Health
Net Subscribers.  Notwithstanding the foregoing, in the event a Joint Health Net
Subscriber  chooses  to remain enrolled after the Closing in any pre-paid vision
HMO  product  provided  by the Company, after the Closing the Company shall have
the  right  set  the  rate  for such pre-paid vision HMO products and change the
product  design  of  such  pre-paid  vision  HMO  products.

     (b)     Purchaser  shall  provide  or  cause  the  Company  to  provide all
necessary  or  appropriate  administrative  services  relating  to  the  Company
pre-paid  vision  HMO  contracts  and  the  HNL  vision PPO and vision indemnity
insurance  policies  issued to Joint Health Net Subscribers until such contracts
are  cancelled,  nonrenewed or otherwise replaced by vision benefits provided by
Seller's  strategic  partner.

     (c)     Purchaser  shall  cause the Company to bill and collect any premium
or  contract  fees attributable to the Company pre-paid vision HMO contracts and
the  HNL  vision  PPO  and  vision  indemnity insurance policies issued to Joint
Health  Net  Subscribers  until the earlier of (i) the date such pre-paid vision
HMO  contracts,  vision  PPO  and  vision  indemnity  policies  are  cancelled,
nonrenewed  or  otherwise  replaced  with  vision  benefits provided by Seller's
strategic  partner,  or (ii) the date sixty (60) days after the date that Seller
provides written notice to Purchaser of Seller's intent to assume responsibility
to  bill  and  collect  premium  or  contract  fees  attributable to the Company
pre-paid  vision  HMO  contracts  and  the  HNL  vision PPO and vision indemnity
insurance  policies  issued  to  Joint  Health Net Subscribers.  Any billing and
collection  activities  of  the  Company  with  respect  to the Joint Health Net
Subscribers  shall  be  conducted  in  the  name of "Health Net" and in a manner
consistent  with  applicable  Law.  If Seller assumes responsibility to bill and
collect premium or contract fees attributable to the Company pre-paid vision HMO
contracts  and the HNL vision PPO and vision indemnity insurance policies issued
to  Joint  Health Net Subscribers, the transition of such billing and collection
responsibility  from Purchaser and Company to Seller shall occur in no more than
four  installments.

     (d)     As consideration for Company billing and collecting all premium and
contract  fees attributable to the Company pre-paid vision HMO contracts and the
HNL  vision  PPO  and vision indemnity insurance policies issued to Joint Health
Net Subscribers, the Company shall be entitled to retain any premium or contract
fees  collected  by  the Company and attributable to the Company pre-paid vision
HMO  contracts  and  the  HNL vision PPO and vision indemnity insurance policies
issued  to  Joint  Health  Net  Subscribers.


                                      -9-
<PAGE>
     (e)     In the event that Seller assumes responsibility to bill and collect
premium  or  contract  fees  attributable  to  the  Company  pre-paid vision HMO
contracts  and the HNL vision PPO and vision indemnity insurance policies issued
to  Joint  Health  Net Subscribers, Seller shall provide Purchaser no later than
the  fifth  (5TH)  day  of  each  month a monthly eligibility report showing all
individuals  eligible  to  obtain  covered  vision  services  under  the Company
pre-paid  vision  HMO  contracts  and  the  HNL  vision PPO and vision indemnity
insurance  policies  issued to Joint Health Net Subscribers.  Seller shall remit
to  the  Company  any  premium  or contract fees attributable to the individuals
reported  to  Purchaser by Seller as eligible to receive covered vision services
under  the  Company  pre-paid  vision  HMO  contracts and the HNL vision PPO and
vision  indemnity  insurance  policies issued to Joint Health New Subscribers no
later  than  the  fifth  (5th)  day  of  each  month.  In  the event Seller pays
Purchaser  premium  or  contract  fees  for individuals who were not eligible to
receive  covered  vision services under the Company prepaid vision HMO contracts
or  the  HNL  vision PPO and vision indemnity insurance policies issued to Joint
Health  Net  Subscribers,  Seller shall receive from Purchaser up to a two month
retrospective  credit  or  refund of premium or contracts fees paid by Seller to
Purchaser  for  such  individuals.

     (f)     As  consideration for Seller billing and collecting all premium and
contract  fees attributable to the Company pre-paid vision HMO contracts and the
HNL  vision  PPO  and vision indemnity insurance policies issued to Joint Health
Net  Subscribers  pursuant  to  subdivision  (e),  Purchaser  shall pay Seller a
service  fee  equal  to fifteen percent (15%) of such premium and contract fees.
Seller  shall  be  authorized  to  deduct  the  service fee from the premium and
contract fees payable to Purchaser for the Company pre-paid vision HMO contracts
and  the  HNL  vision  PPO and vision indemnity insurance policies issued to the
Joint  Health Net Subscribers and remit to Purchaser only the net amount of such
premium  and  contract  fees.

     (g)     During  the  period that the Company bills and collects any premium
or  contract  fees attributable to the Company pre-paid vision HMO contracts and
the  HNL  vision  PPO  and  vision  indemnity insurance policies issued to Joint
Health  Net  Subscribers  pursuant  to  subsection  (c) above, Purchaser and its
employees  and  agents  shall not, without the prior written approval of Seller,
contact  any Joint Health Net Subscriber set forth on Schedule 2.6 or respond to
                                                      ------------
any  proposal  to provide vision benefits to any Joint Health Net Subscriber for
the  purpose of selling or attempting to sell any vision product or service, and
Purchaser  shall not permit any of its Affiliates or their respective employees,
representatives  or  agents  to  contact any Joint Health Net Subscriber for the
purpose  of  selling or attempting to sell any vision product or service without
obtaining the prior written consent of Seller, provided, however, that Purchaser
                                               --------  -------
and  its  Affiliates,  employees  and agents may communicate directly with Joint
Health  Net  Subscribers  solely  for the purpose of performing their respective
obligations  under  this  Agreement.

     Section  2.7     Transfer  of  Government  Sponsored.  At  or  prior to the
Closing,  subject  to  receipt  of  any necessary regulatory approvals therefor,
Seller  shall  cause  the  Government  Sponsored  Contracts  to  be  removed  or
transferred  from  the  Company.

Section  2.8     Replacement  of  Employee  Vision  Benefits.

     (a)     At a time determined at the sole discretion of Seller, Seller shall
have  the  right  to  replace  the  pre-paid vision HMO contracts of the Company
providing vision benefits to employees of Seller or any Affiliate of Seller with
vision benefits provided by Seller's strategic partner.  Purchaser shall provide
Seller  with  information,  including but not limited to, group


                                      -10-
<PAGE>
experience  data,  reasonably  required by Seller to replace the pre-paid vision
HMO contracts of the Company providing vision benefits to employees of Seller or
any  Affiliate  of  Seller  with  vision benefits provided by Seller's strategic
partner.

     (b)     Purchaser  shall  cause the Company to bill and collect from Seller
or  any  Affiliate  of  Seller  any premium or contract fees attributable to the
Company  pre-paid  vision HMO contracts issued to the employees of Seller or any
Affiliate  of  Seller until the earlier of (i) the date such pre-paid vision HMO
contracts  are  cancelled, nonrenewed or otherwise replaced with vision benefits
provided  by  Seller's strategic partner, or (ii) the date sixty (60) days after
the  date that Seller provides written notice to Purchaser of Seller's intent to
assume  responsibility to bill and collect premium or contract fees attributable
to  the  Company  pre-paid vision HMO contracts issued to employees of Seller or
any  Affiliate  of Seller.  Any billing and collection activities of the Company
with  respect  to  the  employees  of Seller or any Affiliate of Seller shall be
conducted in the name of "Health Net" and in a manner consistent with applicable
Law.

     (c)     As consideration for Company billing and collecting all premium and
contract  fees  attributable to the Company pre-paid vision HMO contracts issued
to employees of Seller or any Affiliate of Seller, the Company shall be entitled
to retain any premium or contract fees collected by the Company and attributable
to  the  Company  pre-paid vision HMO contracts issued to employees of Seller or
any  Affiliate  of  Seller.

     (d)     In the event that Seller assumes responsibility to bill and collect
premium  or  contract  fees  attributable  to  the  Company  pre-paid vision HMO
contracts issued to employees of Seller or any Affiliate of Seller, Seller shall
provide  Purchaser  no  later  than  the fifth (5TH) day of each month a monthly
eligibility  report  showing  all  individuals eligible to obtain covered vision
services  under  the  pre-paid  vision  HMO  contracts  issued by the Company to
employees  of  Seller or any Affiliate of Seller.  No later than the fifth (5TH)
day  of  each  month,  Seller shall remit to the Company any premium or contract
fees attributable to the individuals reported to Purchaser by Seller as eligible
to  receive  covered  vision  services  under  the pre-paid vision HMO contracts
issued by the Company to employees of Seller or any Affiliate of Seller.  In the
event  Seller  pays  Purchaser premium or contract fees for individuals who were
not  eligible  to  receive  covered vision services under the prepaid vision HMO
contracts  issued  by  the  Company  to  employees of Seller or any Affiliate of
Seller,  Seller  shall  receive  from  Purchaser up to a two month retrospective
credit  or  refund  of premium or contracts fees paid by Seller to Purchaser for
such  individuals.  As  consideration  for  Seller  billing  and  collecting all
premium  and  contract  fees  attributable  to  the  Company pre-paid vision HMO
contracts  issued  to  employees of Seller or any Affiliate of Seller, Purchaser
shall  pay  Seller  a service fee equal to fifteen percent (15%) of such premium
and  contract  fees.  Seller  shall be authorized to deduct the service fee from
the  premium  and  contract  fees  payable to Purchaser for the Company pre-paid
vision  HMO  contracts  issued to employees of Seller or any Affiliate of Seller
and  remit  to  Purchaser only the net amount of such premium and contract fees.

     (e)   Purchaser shall provide or cause the Company to provide all necessary
or  appropriate  administrative  services  relating  to  the pre-paid vision HMO
contracts of the Company providing vision benefits to the employees of Seller or
any  Affiliate  of  Seller  until  such  contracts  are cancelled, nonrenewed or
otherwise  replaced  by  vision benefits provided by Seller's strategic partner.


                                      -11-
<PAGE>
     Section  2.9  Books  and  Records.  On the Closing Date, Seller shall sell,
convey,  assign,  deliver or otherwise transfer to Purchaser or its Designee the
Books  and Records, provided that Seller may retain copies of any such Books and
Records  as Seller or HNL may reasonably determine are necessary or desirable to
conduct  their  businesses.  Nothing in this Section 2.9 shall require Seller or
HNL  to  transfer to Purchaser or its Designee any Books and Records that Seller
or  HNL  is  required by any applicable Law to retain and such Books and Records
shall  remain  the property of Seller or HNL to the extent required by such Law.
Seller shall allow and Seller shall cause HNL to allow Purchaser or its Designee
reasonable  access  to,  and the right at Purchaser's written request and at its
own expense to make and retain copies of, any Books and Records described in the
preceding  sentence,  on  and  after  the  Closing Date. After the Closing Date,
Purchaser  shall  allow Seller and its representatives reasonable access to, and
the  right at Seller's written request and at its own expense to make and retain
copies  of  any  Books  and  Records  transferred  to  Purchaser.

     Section  2.10 Administrative Services Agreement. On the date hereof, Seller
and  Purchaser  or  its  Designee  shall  enter into the Administrative Services
Agreement,  substantially in the form attached hereto as Exhibit B, effective as
                                                         ---------
of  the  Closing  Date, under which Purchaser shall provide through December 31,
2004  the administrative services necessary or appropriate for the transition of
the  vision  business  maintained  by  Health  Net  of Arizona, Inc. to Seller's
strategic  partner.

     Section  2.11  Transition  Services  Agreement.  Seller and Purchaser shall
negotiate  in  good  faith  the  terms  of  a  transition service agreement (the
"Transition Service Agreement"), pursuant to which Seller or its designees shall
agree  to  provide  or  arrange  for the provision of certain administrative and
support  functions  on  or after the Closing Date, including but not limited to,
accounting  and information systems support, reasonably necessary or appropriate
for  the  proper  management  and  administration  of  the  Vision  Business  at
commercially  reasonable  pricing,  and Purchaser shall cause the Company or its
Designee to provide certain administrative and support functions at commercially
reasonable  pricing  on  or after the Closing Date necessary to support Seller's
vision  business.

     Section  2.12  Network  Access  Agreement.  On  the date hereof, Seller and
Purchaser shall cause their respective Affiliates to enter into a network access
agreement  substantially  in the form attached hereto as Exhibit C (the "Network
                                                         ---------
Access  Agreement"),  effective as of the Closing Date, pursuant to which Seller
shall  use  its  commercially  reasonable  efforts  to provide Purchaser and the
Company continued access after the Closing to the California providers of vision
service and vision supplies under contract with HNL to provide such services and
supplies in the event such contracts by their terms cannot be assigned by HNL to
Purchaser.

     Section  2.13  Purchase  Price.  As  consideration  for  the  Transactions,
Purchaser  shall pay to Seller on the Closing Date, an amount equal to (i) three
million  US  Dollars  ($3,000,000)  in  cash  or by wire transfer of immediately
available  funds  to  such  account  as  Seller shall designate at least two (2)
Business  Days  prior  to the Closing, plus (ii) if a positive number, an amount
equal  to the Excess Tangible Net Equity of the Company on the Closing Date (the
"Purchase  Price").  As additional consideration for the Transactions, Purchaser
shall  pay  to Seller by the fifteenth (15th) day of the month following receipt
by  Company,  fifty  percent  (50%)  of network rental payments for the month of
service  commencing the month following the Closing through the month of service
for  December  2004  received  by  the  Company  pursuant  to the Vision


                                      -12-
<PAGE>
Service  Agreement  by and between the Company and Pearle VisionCare, Inc. dated
as  of  October  31,  2002.  At  Closing,  Seller shall deliver to Purchaser the
Closing  Balance  Sheet.  The  Purchase  Price shall be subject to adjustment as
provided  in  Section  2.17.

     Section  2.14 Distribution of Excess Tangible Net Equity. Prior to Closing,
Seller  shall  cause  the  Company  to request from the Department permission to
reduce  the  Tangible  Net  Equity  of  the  Company  to  an amount equal to the
Statutory  Tangible Net Equity. The difference, if any, between the Tangible Net
Equity of the Company and the Statutory Tangible Net Equity of the Company as of
the  date  the  Tangible Net Equity is determined shall be referred to herein as
the "Excess Tangible Net Equity." Except for that portion of the Excess Tangible
Net  Equity  related solely to the Government Sponsored Contracts of the Company
set  forth  in  Schedule  2.14,  Seller  shall  cause the Company to dividend or
                --------------
otherwise  distribute  to  Seller  prior  to Closing, that portion of the Excess
Tangible  Net  Equity  authorized by the Department. If the Government Sponsored
Contracts  are  removed  from  the Company prior to Closing, that portion of the
Excess  Tangible Net Equity related solely to the Government Sponsored Contracts
of  the  Company  and  set  forth in Schedule 2.14 shall be paid by Purchaser to
                                     -------------
Seller on the last calendar day of the first full calendar quarter following the
Closing  Date.

     Section 2.15 Purchase Price Allocation. The parties agree that the Purchase
Price  shall  be  allocated  among  the  Transactions  in  accordance  with  the
allocation  set forth in Schedule 2.15. The parties shall file such forms as are
                         -------------
necessary  or  appropriate  with the Internal Revenue Service in accordance with
the  Code  reflecting such allocation. All Tax Returns filed and positions taken
with  respect  to  the  allocation  of  the  Purchase  Price  by the Company and
Purchaser  shall be on a basis consistent with the allocation agreed upon by the
parties  in  Schedule  2.15.
             --------------

     Section  2.16  Closing. Subject to the satisfaction or waiver of all of the
conditions  precedent  to  closing  set forth in Articles VI and VII hereof, the
closing  of  the Transactions (the "Closing") shall take place at the offices of
Health Net, Inc., 21650 Oxnard Street, Woodland Hills, California 91367 at 12:00
p.m.,  local  time,  on  the  last  day  of  the calendar month in which (A) all
necessary  approvals  from  Governmental  Authorities  have been obtained by the
parties hereto; (B) and the earlier of the following have occurred: (i) December
31, 2003; (ii) the Purchase and Sale Agreement dated as of April 7, 2003 between
Purchaser  and  Seller for the purchase and sale of Health Net Dental, Inc. (the
"HND  Transaction")  shall  have terminated; or (iii) the HND Transaction closes
(the  "Closing  Date").

Section  2.17     Adjustment  to  Purchase  Price.

     (a)     Not  more  than  one  hundred  and  eighty (180) days following the
Closing  Date,  Purchaser shall deliver to Seller a balance sheet of the Company
as  of  the  Closing Date (the "Final Balance Sheet") which shall be prepared in
accordance  with  SAP  utilizing  the  same methodologies and procedures used to
prepare  the  Closing  Balance  Sheet.  The  Final Balance Sheet shall provide a
categorization  of the assets and liabilities comprising the Excess Tangible Net
Equity  of the Company and the other assets and liabilities of the Company as of
the  Closing  Date.  At the same time Purchaser delivers the Final Balance Sheet
to  Seller,  Purchaser shall also deliver to Seller a statement setting forth in
reasonable  detail  the  calculation  of  the Excess Tangible Net Equity and the
other  assets  and  liabilities of the Company used to prepare the Final Balance
Sheet.


                                      -13-
<PAGE>
     (b)     Seller  shall  be  afforded  the  opportunity  to  review the Final
Balance  Sheet and shall be provided full access to the books, records and other
relevant  documents  containing  information on which the Final Balance Sheet is
based,  including  but  not  limited  to,  work  papers,  reserve  schedules and
actuarial reports, as well as access to the accountants of Purchaser responsible
for  the  preparation of the Final Balance Sheet.  The Final Balance Sheet shall
become final and binding on the parties on the sixtieth (60th) day following the
date  such  Final  Balance Sheet is delivered to Seller by Purchaser, unless (i)
Seller  delivers  to  Purchaser  during  such  sixty  (60)  day  period a notice
identifying proposed adjustment(s) to the Final Balance Sheet and explaining the
reasons  therefor  (a  "Proposed Adjustment Notice"), in which event such matter
shall  be  handled  as  set  forth  in  paragraph  (c) below, or (ii) Seller, in
connection  with  its  review  of  the Final Balance Sheet, does not receive all
documents  and  materials  and/or access to or cooperation from Purchaser or its
outside  accountants  that  are reasonably requested, in which event said period
for  delivering  a  Proposed  Adjustment  Notice  shall  be  extended  until the
twentieth  (20th)  day  following  the  date  on  which Seller receives all such
documents,  materials,  access  and  cooperation.  Any  Dispute  regarding  the
adequacy of the documents and materials provided by Purchaser to Seller shall be
resolved  by  the  Balance Sheet Accountants as provided in paragraph (c) below.

     (c)     If  a Proposed Adjustment Notice is delivered within the period set
forth  above, then Seller and Purchaser shall negotiate in good faith to attempt
to resolve any Dispute with respect to any proposed adjustments contained in the
Proposed Adjustment Notice.  If Seller and Purchaser cannot resolve such Dispute
within ten (10) Business Days commencing on the date of delivery of the Proposed
Adjustment  Notice,  then  either  Purchaser  or  Seller may recommend a firm of
independent  certified public accountants of nationally recognized standing that
is  not  providing  services  to either Purchaser, Seller or their Affiliates to
review  the  disputed calculation, and whose determination shall be binding upon
the parties.  The firm of independent certified public accounts retained to make
a  determination with respect to any disputed calculation shall be designated by
agreement  between  Seller  and  Purchaser  (the  "Balance  Sheet Accountants");
provided,  however,  if the parties fail to agree, the Balance Sheet Accountants
--------   -------
shall  be PriceWaterhouseCoopers.  If PriceWaterhouseCoopers acts as the Balance
Sheet  Accountants,  no  principal of PriceWaterhouseCoopers with a pre-existing
professional or familial relationship with either of the parties or any of their
respective  officers  or  directors  may

be  utilized.  In  making  its  determination  with  respect  to  whether  any
adjustments  to  the  Final  Balance  Sheet  are  appropriate, the Balance Sheet
Accountants shall evaluate those items or amounts in the disputed calculation to
which  Seller  has  objected  and  shall  determine whether such items have been
prepared  in  accordance  with  the  terms  of this Agreement and any applicable
accounting  principles.  The fees and expenses of the Balance Sheet Accountants,
if  any,  shall  be  borne  pro-rata  by  Seller  and  Purchaser, based upon the
difference  between  their respective calculations and the final calculations of
the  Balance  Sheet  Accountants.

     (d)     After  all  disputes  with  respect to the Final Balance Sheet have
been  resolved pursuant to the procedures set forth in this Section 2.17, (i) if
the  amount of the Excess Tangible Net Equity on the Final Balance Sheet exceeds
the  Excess  Tangible  Net  Equity  on the Closing Balance Sheet, then Purchaser
shall pay to Seller cash equal to the difference between the Excess Tangible Net
Equity  on  the  Final  Balance  Sheet and the Excess Tangible Net Equity on the
Closing  Balance  Sheet; and (ii) if the Excess Tangible Net Equity on the Final
Balance Sheet is less than the Excess Tangible Net Equity on the Closing Balance
Sheet,  Seller shall pay to


                                      -14-
<PAGE>
Purchaser cash equal to the amount of the difference between the Excess Tangible
Net  Equity on the Final Balance Sheet and the Excess Tangible Net Equity on the
Closing  Balance  Sheet.

     (e)     Purchaser  shall  not  compromise  or  settle  any claim or account
receivable of the Company for less than the full value assigned to such claim or
account  receivable  on  the Closing Balance Sheet in exchange for any direct or
indirect  benefit  prior  to  final  resolution  of  all Disputes respecting the
Purchase  Price  without  the  prior  written  consent  of  Seller.

     Section  2.18  Deliveries  at the Closing by Seller. At the Closing, Seller
shall  deliver  or  cause  to  be  delivered  to  Purchaser:

     (a)     a  stock  certificate  or  certificates  representing  the  Shares,
accompanied  by duly executed stock powers, in a form reasonably satisfactory to
Purchaser;

     (b)     written  assignments  of  the  HNL  Contracts,  as  applicable;

     (c)     a  receipt  for  the  Purchase  Price;

     (d)     the  opinions,  certificates  and  other  documents  required to be
delivered  by  Seller  to  Purchaser  at the Closing pursuant to this Agreement;

     (e)     the  Books and Records and such seals and stock certificates of the
Company  in  the  control  of  Seller  as  Purchaser  shall  reasonably request;

     (f)     the  Closing  Balance  Sheet;

     (g)     the  Reinsurance  Agreement,  duly  executed  by  HNL;

     (h)     the  Administrative Services Agreement, duly executed by Health Net
of  Arizona,  Inc.;

     (i)     the  Network  Access  Agreement,  duly  executed  by  HNL;  and

     (j)     the  Transition  Services  Agreement  duly  executed  by  Seller.

     Section  2.19     Deliveries  at the Closing by Purchaser.  At the Closing,
Purchaser  shall  deliver  or  cause  to  be  delivered  to  Seller:

     (a)     the  Purchase  Price  in  cash  or  by wire transfer of immediately
available  funds  to such account or accounts as Seller shall instruct Purchaser
in  writing  at  least  two  (2)  Business  Days  prior  to  the  Closing  Date;

     (b)     a  receipt  for  the  Shares;

     (c)     the  opinions,  certificates  and  other  documents  required to be
delivered  by  Purchaser  to  Seller  at the Closing pursuant to this Agreement;

     (d)     the  Reinsurance  Agreement,  duly  executed  by  SafeHealth;

     (e)     the  Administrative Services Agreement, duly executed by Purchaser
or  its  Designee;


                                      -15-
<PAGE>
     (f)     the  Network  Access  Agreement,  duly executed by Purchaser or its
Designee;  and

     (g)     the  Transition  Services  Agreement,  duly  executed by Purchaser.

                                   ARTICLE III
                    REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller  hereby  represents  and  warrants  to  Purchaser  as  follows:

     Section  3.1     Organization  of  Seller.  Seller  is  a  corporation duly
organized,  validly existing and in good standing under the laws of the State of
Delaware  and  has all requisite corporate power and authority to own the Shares
and  to  conduct  its  business  as it is presently being conducted except where
failure  to be so organized, existing and in good standing or to have such power
and  authority  would  not  have  a  Seller  Material  Adverse  Effect.

     Section  3.2     Authorization,  Validity  and Enforceability.  Seller, and
its  Affiliates  that  are parties to any of the Transaction Documents, have the
corporate  power and authority to execute, deliver and perform their obligations
under  the  Transaction  Documents  to  which  they are parties.  Seller and its
Affiliates  that are parties to any of the Transaction Documents, have taken all
necessary  corporate action to authorize the execution, delivery and performance
of  the  Transaction Documents to which they are parties and the consummation of
the  transactions  contemplated  thereby.  The  Transaction  Documents  to which
Seller  or  its  Affiliates are parties have been duly executed and delivered by
Seller,  or  its  Affiliate, and assuming due and valid authorization, execution
and  delivery  thereof by all other parties thereto, constitute the legal, valid
and binding obligations of Seller, or its Affiliate, enforceable against Seller,
or  its Affiliate that is party to the Transaction Documents, in accordance with
their  respective terms, except as such enforcement may be limited by applicable
bankruptcy,  insolvency,  reorganization,  moratorium  or similar laws affecting
rights  of  creditors  and by general principles of equity regardless of whether
enforcement  is  sought  in  a  proceeding  at  law  or  in  equity.

     Section  3.3     No  Violation  or Breach.  Except as set forth in Schedule
                                                                        --------
3.3  hereto,  Seller's execution, delivery and performance of this Agreement and
---
the  other  Transaction  Documents to which it is party, and the consummation by
Seller  of  the  transactions contemplated hereby and thereby in accordance with
the  terms and conditions hereof and thereof, do not and will not conflict with,
constitute  a  violation  or breach of, constitute a default or give rise to any
right  of termination or acceleration of any right or obligation of Seller, HNL,
solely  with  respect  to  the Vision Business, or the Company, or result in the
creation  or  imposition of any Lien upon the property of Seller, the Company or
the  Vision  Business  of  HNL  by reason of the terms of (a) the Certificate of
Incorporation  or  By-laws  of  Seller,  HNL  or  the Company, (b) any contract,
agreement,  lease,  indenture  or  other  instrument to which Seller, HNL or the
Company  is a party or by or to which Seller or its assets or properties, or the
Company or its assets or properties, or the Vision Business Assets of HNL may be
bound  or  subject,  or  (c)  to  the  Knowledge of Seller, any order, judgment,
injunction,  award or decree of any court, arbitrator or Governmental Authority,
or  any  statute,  law  or  regulation  applicable to Seller, the Company or the
Vision  Business  of HNL, except for such violations, breaches or defaults which
would  (A) not have a Seller Material Adverse Effect or (B) become applicable as
a  result  of the business or activities in which Purchaser is or proposes to be
engaged  or  as a result of any acts or omissions by, or the status of any facts
pertaining  to,  Purchaser.


                                      -16-
<PAGE>
     Section  3.4     Consents  and  Approvals.  Except as set forth in Schedule
                                                                        --------
3.4  hereto,  no  consent,  approval, authorization or order of, registration or
---
filing  with,  or  notice  to, any Governmental Authority or any other Person is
necessary  to  be  obtained,  made  or  given  by  Seller, HNL or the Company in
connection  with  the execution, delivery and performance by Seller, HNL and the
Company of this Agreement or any other Transaction Document to which Seller, HNL
or the Company is party or for the consummation by Seller, HNL or the Company of
the  transactions  contemplated  hereby  or  thereby  except  for  such filings,
registrations,  notifications, authorizations, consents or approvals the failure
of which to obtain would (A) not have a Seller Material Adverse Effect and would
not  materially  adversely  affect  the ability of Seller, HNL or the Company to
consummate  the  transactions contemplated by this Agreement and the Transaction
Documents  or (B) become applicable as a result of the business or activities in
which  Purchaser  is  or  proposes  to  be engaged or as a result of any acts or
omissions  by,  or  the  status  of  any  facts  pertaining  to,  Purchaser.

     Section 3.5     Organization and Qualification of the Company.  The Company
is  a California corporation operating as a specialized health care service plan
duly  organized,  validly  existing  and  in good standing under the laws of the
State  of  California.  The  Company  has  all  requisite  corporate  power  and
authority  to  own  its  assets  and  to conduct its business as such assets and
business are presently owned and conducted except where the failure to have such
power  and  authority, either individually or in the aggregate, would not have a
Seller  Material Adverse Effect.  Except as set forth in Schedule 3.5 hereto, on
                                                         ------------
the  date  of  this  Agreement,  the Company is duly licensed or qualified to do
business  and is in good standing in each jurisdiction in which the operation of
its  business or the properties owned by it make such licensing or qualification
necessary  or  desirable  except where failure to be licensed as qualified to do
business,  and  to  be in good standing would not have a Seller Material Adverse
Effect.  The  Company  does  not  have  any  Subsidiaries.

     Section 3.6     Organization and Qualification of HNL.  Except as set forth
in  Schedule 3.6 hereto, HNL is a California corporation operating as a life and
    ------------
disability  insurance  company  duly  organized,  validly  existing  and in good
standing  under  the  laws  of  the  State of California.  HNL has all requisite
corporate  power and authority to own the Vision Business Assets owned by it and
to  conduct  its Vision Business as such assets and business are presently owned
and conducted, except where the failure to have such power and authority, either
individually  or  in  the  aggregate,  would  not have a Seller Material Adverse
Effect.

     Section  3.7     Capitalization of the Company.  As of the date hereof, the
Company's  authorized  capital stock consists of 500,000 shares of common stock,
no  par  value  per  share,  of  which  486,380  shares have been issued and are
outstanding.  Seller  is  the  record  and  beneficial owner of the Shares which
constitute  all of the issued and outstanding capital stock of the Company.  The
Shares  are  duly authorized, validly issued, fully paid and non-assessable, and
are  free  of  any  contractual  or  statutory  preemptive  rights.

     Section  3.8     Title  to the Shares.  Upon delivery of the certificate or
certificates  representing  the  Shares  in  accordance  with  this  Agreement,
Purchaser  will  acquire good and marketable title to the Shares, free and clear
of  any Liens (except for any Liens arising from acts of Purchaser or any of its
Affiliates  or  representatives), subject to the restrictions on transferability
imposed  by  applicable  federal  and  state  securities  Law.


                                      -17-
<PAGE>
     Section  3.9     Options or Other Rights.  Except for this Agreement, there
is no (a) outstanding right, subscription, warrant, call, unsatisfied preemptive
right,  option  or  other  contract  or  agreement  of  any  kind to purchase or
otherwise  to  receive  from  the Company or Seller or any Affiliate thereof any
outstanding,  authorized but unissued, unauthorized or treasury shares of common
stock or any other security of the Company, (b) outstanding security of any kind
of  the  Company  other  than  the  Shares, or (c) outstanding contract or other
agreement  to  purchase,  redeem  or otherwise acquire any outstanding shares of
common  stock  or  any  other  security  of  the  Company.

     Section  3.10     Financial  Statements.

     (a)     Seller has heretofore made available to Purchaser true and complete
copies  of  the  annual  statutory  financial  statements  and audited statutory
financial  statements  of the Company for the calendar years ending December 31,
2000,  December  31,  2001,  and  December  31, 2002 and the unaudited statutory
financial  statements  for  the first quarter of calendar year 2003 in each case
filed  with  the  Department  (the  "Financial  Statements").  The  Financial
Statements, at the time such Financial Statements were prepared, present fairly,
in all material respects, the statutory financial condition of the Company as of
the  dates  thereof  and  the  statutory  results  of operations for each of the
periods  ended  at  such  dates  in  each  case  in  accordance  with  SAP.

     (b)     Except  as  disclosed on Schedule 3.10(b) hereto and except (a) for
                                      ----------------
liabilities  and  obligations  incurred in the ordinary course of business after
December  31,  2002, (b) for liabilities and obligations disclosed in or covered
by  the  audited statutory financial statement of the Company as of December 31,
2002,  and  (c)  for liabilities and obligations incurred in connection with the
transactions contemplated hereby or otherwise as contemplated by this Agreement,
since  December  31,  2002,  the  Company  has  not  incurred any liabilities or
obligations  that  would  be  required  to be reflected or reserved against in a
balance  sheet  of  the  Company,  prepared in accordance with SAP as applied in
preparing  the  unaudited consolidated balance sheet of the Company, as included
in  the  Financial Statements.  Seller has made available to Purchaser copies of
all  material  disclosed  on  Schedule  3.10(b).
                              -----------------

     (c)     To  the  Knowledge  of  Seller,  all  accounts  receivable,  notes
receivable and other receivables of the Company, whether or not reflected in the
Financial  Statements,  arise  out  of  transactions  in  the ordinary course of
business.  Aged  accounts  receivable reports for commercial vision business and
Government  Sponsored Contracts of the Company dated as of December 31, 2002 are
attached  as  Schedule  3.10(c).  Except  as  reflected  in  the  aged  accounts
              -----------------
receivable  reports  and  to  the  extent of the accrued reserve, if any, to the
Knowledge  of  Seller,  none  of  such accounts receivable have been disputed or
denied  or is uncollectible for any reasons or subject to any legitimate offsets
of  any  kind.

     (d)     To  the  Knowledge  of  Seller,  the  accounts  payable and accrued
expenses  reflected on the Financial Statements, except those to be reflected on
the  Closing  Balance Sheet, reflect all material amounts owed by the Company in
respect  of  trade  accounts  due  and  other  payables  required  by  SAP to be
identified  on such Company Financial Statement.  To the Knowledge of Seller, no
account  payable  or accrued expenses of the Company is past due or otherwise in
default  in  any  material  respect  by  the  Company.

     (e)     Schedule  3.10  (e)  sets  forth  the  2002  consolidated  year end
             -------------------
financial  information  for  the  HNL  Vision  Business  (the  "HNL  Financial
Information").  The  HNL  Financial  Information,


                                      -18-
<PAGE>
at the time such HNL Financial Information was prepared, presents fairly, in all
material respects, the unaudited results of operation of the HNL Vision Business
as  of  the  dates  thereof.

     Section  3.11     No  Material  Adverse  Change.  Since  December 31, 2002,
except  as  (i) contemplated hereby or relating to the Transactions contemplated
hereby  (ii)  disclosed  on  Schedule  3.11  hereto,  or  (iii) disclosed in the
                             --------------
Financial  Statements:

     (a)     the  Company  and  the Vision Business of HNL have not suffered any
change  constituting  a  Seller  Material  Adverse  Effect;

     (b)     the  Company  has  not agreed to the attaching, placing or granting
of,  or  the  agreement  to attach, place or grant, any Lien on any asset of the
Company,  or any agreement relating to or contemplating any of the foregoing not
in  the  ordinary  course  of business, and HNL has not agreed to the attaching,
placing  or  granting  of,  or  the  agreement  to  attach,  place or grant, any
Lien  on  any of the HNL Vision Business Assets, or any agreement relating to or
contemplating  any  of  the  foregoing  not  in the ordinary course of business;

     (c)     the Company has not sold or transferred assets of the Company worth
in  excess  of $50,000 in the aggregate, excluding the disposition of damaged or
obsolete  equipment  in  the  ordinary  course  of  business;

     (d)     HNL  has  not sold or transferred any of the Vision Business Assets
of  HNL  worth  in  excess  of  $50,000  in  the  aggregate;

     (e)     the  Company and HNL, solely with respect to HNL's Vision Business,
have  not  made  any  material  change  in  its  accounting systems, policies or
practices;

     (f)     the  Company and HNL, solely with respect to HNL's Vision Business,
have  not  entered  into  or  terminated  any  contract or any other commitment,
contract, agreement, or transaction (including, without limitation, any material
borrowing  or  capital  expenditure or sale or other disposition of any material
assets),  in  excess  of  $50,000  outside  the  ordinary  course  of  business;

     (g)     the Company has not authorized any redemption, repurchase, or other
acquisition  of, or redeemed, repurchased or acquired, any of its capital stock;

     (h)     the Company has not authorized any issuance of or issued any of its
capital  stock  or  securities  convertible  into  or rights to acquire any such
capital  stock;

     (i)     the  Company has not suffered any default or breach in any material
respect  under  any  Material  Contract or Permit that is material to the Vision
Business,  and  HNL,  solely  with  respect  to  HNL's  Vision Business, has not
suffered  any  default  or  breach  in  any  material respect under any Material
Contract  or  any  Permit  that  is  material  to  HNL's  Vision  Business;

     (j)     the  Company has not authorized any material change to (i) increase
Employee  compensation  levels,  (ii)  change  the manner in which Employees are
compensated,  (iii)  increased  supplemental,  fringe,  or  health  and  welfare
benefits  provided  to  any  employees, or (iv) paid any bonuses to Employees or
officers  of  the  Company;  and


                                      -19-
<PAGE>
     (k)     the  Company and HNL have not made any agreements or commitments by
the  Company  or  HNL,  respectively,  to  do  any  of  the  foregoing.

     Section  3.12     Permits.  Except  as listed on Schedule 3.12, the Company
                                                      -------------
has  the  lawful  authority and all governmental authorizations, certificates of
authority, licenses or permits necessary for or required to conduct its business
operations  as  presently  conducted  as  a  Knox-Keene  Specialized Health Care
Service  Plan  and  HNL  has  the  lawful  authority  and  all  governmental
authorizations,  certificates  of  authority,  licenses  or permits necessary to
conduct  its  Vision  Business  as  presently  conducted  (collectively,  the
"Permits").  As  of  the date of this Agreement, there are no pending or, to the
Knowledge  of  Seller,  threatened  legal, administrative, arbitration, or other
proceedings  of  any  kind  nor  any  pending  or,  to  the Knowledge of Seller,
threatened  governmental  investigations by any Governmental Authority or by any
public or private group, with respect to revocation, cancellation, suspension or
nonrenewal  of  any Permit, or which assert or allege any material violation of,
or  non-compliance  with,  any  governmental  requirements or which would have a
Seller  Material  Adverse  Effect.

     Section  3.13     Compliance  with  Law.

     (a)     Except  as listed on Schedule 3.13, to the Knowledge of Seller, the
                                  -------------
Company  has  made  all  material  filings  with Governmental Authorities in all
states  in  which the Company operates, required for the conduct of its business
operations  as  such  are  presently  conducted,  and  HNL has made all material
filings  with  Governmental  Authorities  required for the conduct of the Vision
Business  in  California.  Except  as  listed  on  Schedule  3.13,  the  Company
                                                   --------------
currently  satisfies  in  all  material  respects  the  requirements  under  the
regulations  of  the  Department  for  its operation as a Specialized Knox-Keene
Health  Care  Service Plan, and HNL currently satisfies in all material respects
the  requirements for the operation of the Vision Business under the regulations
of  the California Department of Insurance, except where the Company's and HNL's
failure  to satisfy any requirement would not, individually or in the aggregate,
have  a  Seller  Material  Adverse  Effect.

     (b)     There  are  no  judgments,  consent  decrees, or injunctions of any
court,  or  Governmental  Authority  by which the Company or HNL are bound or to
which  the  Company  and/or  HNL's  Vision  Business  is  subject,  except  such
judgments, decrees or injunctions which would not have a Seller Material Adverse
Effect.  To  the  Knowledge of Seller, except as set forth on Schedule 3.13, the
                                                              -------------
Company  and  HNL, solely with respect to HNL's Vision Business, are not subject
to  and  have  not  received any request for information, notice, demand letter,
administrative  inquiry  or  formal  or  informal  complaint  or  claim from any
Governmental Authority.  Except as set forth on Schedule 3.13, the Company's and
                                                -------------
HNL's operation of the Vision Business as presently conducted, do not violate or
fail  to  comply  in  any material respect with any applicable Law, except those
which  would not have a Seller Material Adverse Effect, and, to the Knowledge of
Seller,  the  Company  and  HNL  have not received any notices alleging any such
violation  or  non-compliance.

     Section  3.14     Legal  Proceedings.  Except as set forth on Schedule 3.14
                                                                   -------------
hereto,  there  is  no  pending  or,  to  the  Knowledge  of  Seller, threatened
Litigation,  against  or  involving  the  Company or the Vision Business of HNL.


                                      -20-
<PAGE>
     Section  3.15     Contracts.

     (a)     Seller  has delivered or made available to Purchaser, copies of all
the  Material  Contracts in effect on the date of this Agreement.  Except as set
forth  on  Schedule  3.15(a),  to the Knowledge of Seller, the Company is not in
           -----------------
violation  or  in  breach  of,  or  default under any Material Contract.  To the
Knowledge  of  Seller,  (i)  the  Company has not received any written notice of
cancellation  with  respect  to  any  Material Contract or been advised that the
other  party  thereto  intends  to  cancel any such agreement; (ii) there are no
outstanding  disputes  under  any Material Contract; (iii) each such contract is
with  an  unrelated  third  party  entered  into  on an arms-length basis in the
ordinary  course of business, (iv) there are no verbal amendments, modifications
or  other  understandings relating to such contracts that are legally binding on
the  parties  thereto;  and  (v)  there  are no obligations that have accrued to
refund  all  or  any  portion of the fees that have been paid under any Material
Contract.  To  the Knowledge of Seller, except as set forth on Schedule 3.15(a),
                                                               ----------------
the  Company  is  not  party  to  a provider or producer agreement that contains
pricing  terms materially different from the vision provider agreements referred
to in Section 3.15(b) or the producer agreements referred to in Section 3.15(h).

     (b)     Vision  Provider Contracts.  Seller has made available to Purchaser
             --------------------------
copies of all representative forms of contracts with providers of vision service
and  vision  supplies in California to which the Company and HNL were a party as
of  December  31,  2002.  As  of  December  31,  2002,  the Company was party to
approximately  2,751  contracts  with vision providers in California and HNL was
party  to  approximately  3,704  contracts  with vision providers in California.
Attached hereto as Schedule 3.15(b) is a list of all California vision providers
                   ----------------
who  or which were a party to a vision provider contract with the Company or HNL
as  of  December  31,  2002.

     (c)     Group  Contracts.  Seller has made available to Purchaser copies of
             ----------------
all  representative  forms  employer  group  agreements  with  200  or  more
employees/Subscribers  to which the Company or HNL in connection with the Vision
Business  were  a  party  as  of December 31, 2002. As of December 31, 2002, the
Company  was  a  party to approximately 23 employer group agreements with 200 or
more  Subscribers,  and  HNL in connection with the Vision Business was party to
approximately  9  employer  group  agreements  with  200  or  more  Subscribers.

     (d)     Individual  Subscriber  Contracts.  Seller  has  made  available to
             ---------------------------------
Purchaser  copies  of  all  representative  forms  of  all individual Subscriber
agreements  to which the Company or HNL with respect to the Vision Business were
a  party  as  of  December 31, 2002.  As of December 31, 2002, the Company was a
party  to  approximately  6,524  individual  Subscriber  agreements,  and HNL in
connection  with  the  Vision Business was a party to approximately 5 individual
Subscriber  agreements.

     (e)     Management  Contracts.  Schedule  3.15(e)  lists  all  management
             ---------------------   -----------------
services  agreements,  marketing,  administrative  services  and  third-party
administrator  contracts  to  which  the  Company  or HNL in connection with its
Vision  Business  were  a  party  as  of  December 31, 2002.  Copies of all such
contracts  have  been  made  available  to  Purchaser.

     (f)     ASO  Contracts.  As  of  December 31, 2002, neither the Company nor
             --------------
HNL  was  a  party  to  any  ASO  contracts.


                                      -21-
<PAGE>
     (g)     Commission  Agreements.  Schedule  3.15(g)  lists all the contracts
             ----------------------   -----------------
with  other  entities  to which the Company or HNL in connection with its Vision
Business  were  a  party  and by which the Company or HNL in connection with its
Vision  Business  received  commission  or  fee  income as of December 31, 2002.
Copies  of  all  such  contracts  have  been  made  available  to  Purchaser.

     (h)     Producer Agreements.  Seller has made available to Purchaser copies
             -------------------
of  all representative forms of contracts with California producers with whom or
which  the Company or HNL in connection with the Vision Business were a party as
of  December  31, 2002.  As of December 31, 2002, the Company paid commission in
connection  with the sale of vision HMO products to approximately 469 California
producers,  and HNL paid commission to approximately 168 California producers in
connection  with the sale of vision PPO and vision indemnity insurance products.
Attached  hereto  as  Schedule  3.15(h) is a list as of December 31, 2002 of all
                      -----------------
California  producers  who  or  which  were  paid a commission by the Company in
connection  with  the  sale  of  its  vision  HMO  products.

     (i)     Network Lease Agreements.  Schedule 3.15(i) lists all Network Lease
             ------------------------   ----------------
Agreements  to  which  the Company was a party as of December 31, 2002 and under
which  the  Company  obtained  as  of  such  date  access to providers of vision
services  and  vision  supplies in California.  Copies of all such Network Lease
Agreements  have  been  made  available  to  Purchaser.

     Section  3.16     Employees.

     (a)     Schedule  3.16(a) hereto lists (i) all employees of the Company and
             -----------------
all  persons employed by the Company or Health Net Dental, Inc., an Affiliate of
the  Company,  on  the  date  hereof that support or service the Vision Business
("Employees"),  (ii)  their job titles, (iii) annual rates of compensation, (iv)
accrued  vacation  and  personal days as of the most recent regular payroll date
immediately preceding December 31, 2002, (v) other fringe benefits, if any, (vi)
a  description  of  any  severance  arrangements,  if any, and (vii) the amounts
payable  with  respect to such accrued vacation and personal days as of the most
recent  payroll  date  immediately  preceding  December 31, 2002 and the rate at
which  such  vacation  and  personal  days  will  accrue  after the date of this
Agreement.

     (b)     Except  as  shown  on Schedule 3.16(b), the Company is not bound by
                                   ----------------
any  written  contract of employment or any consulting or similar agreement with
any  Employee of the Company and, subject to applicable Law, all oral employment
contracts  are terminable at will.  A copy of all such employment, consulting or
similar  agreements  have  been  made  available  to  Purchaser.

     (c)     Except as set forth in Schedule 3.16(c), the Company is not a party
                                    ----------------
to  any  employment  or other agreement with an Employee of the Company, whether
written  or oral, pursuant to which the Company has agreed to make a loan to, or
guarantee  any  loan  of, any Employee of the Company, or relating to any bonus,
deferred  compensation, severance pay or similar plan, agreement, arrangement or
understanding.

     (d)     Except  as  specified  in  the  written  agreements  identified  in
Schedule  3.16(d),  the Company is not bound, and following the Closing will not
       ----------
be bound, by any express or implied contract or agreement to employ, directly or
as  a  consultant  or  otherwise,  any person for any specific period of time or
until  any  specific  age.


                                      -22-
<PAGE>
     (e)     Except  as  listed on Schedule 3.16(e), to the Knowledge of Seller,
                                   ----------------
no  "leased  employees"  within  the meaning of Section 414(n)(2) of the Code or
temporary  employees  work,  on  average,  more  than ten hours per week for the
Company,  or  as  of  the date of this Agreement have worked for the Company for
more  than  six  months,  except  for providers who or which contracted with the
Company  to  provide  vision  services  or  vision  supplies  to  Subscribers in
connection  with  the  Vision  Business.

     Section  3.17     Employee  Benefit  Matters.

     (a)     Schedule  3.17  includes a correct and complete list of, and Seller
             --------------
has  made  available  to  Purchaser true and correct copies of material employee
benefit plans maintained for the benefit of employees or former employees of the
Company or dependents or beneficiaries of any employee or former employee of the
Company,  whether  or  not  subject  to  ERISA  (the  "Employee  Plans").

     (b)     Each  Employee  Plan  has  been  operated  and  administered in all
material  respects  in  accordance  with its terms and applicable Law, including
without  limitation  ERISA  and the Code, except where the failure to administer
the  Employee  Plan  would  not reasonably be expected to have a Seller Material
Adverse  Effect.

     Section  3.18     No  Brokers.  Except  as  set  forth on Schedule 3.18, no
                                                               -------------
broker,  finder  or  investment banker has been retained or engaged on behalf of
Seller  or  the  Company or is entitled to any brokerage, finder's or other fee,
commission  or  compensation  from  Seller or the Company in connection with the
transactions  contemplated  by  this Agreement.  Seller shall pay any brokerage,
finder's or other fee, commission or compensation owing to any broker, finder or
investment  banker  retained  or engaged on behalf of Seller or the Company, and
Seller shall indemnify and hold Purchaser harmless for any such fees, commission
or  compensation.

     Section 3.19     Title to and Condition of Properties.  Except as set forth
on  Schedule  3.19,  the  Company  has  good  and marketable title, or valid and
    --------------
effective  leasehold rights in the case of leased property, to all of the assets
reflected on the Financial Statements, and all personal property owned or leased
by  it or used by it in the conduct of its business are used in such a manner as
to  create  the  appearance  or reasonable expectation that the same is owned or
leased by it, free and clear of all Liens.  HNL has good and marketable title to
all  of  the  Vision Business Assets owned by it and such Vision Business Assets
are used by HNL in the conduct of the Vision Business of HNL in such a manner as
to create the appearance or reasonable expectation that the same is owned by it,
free  and clear of all Liens.  To the Knowledge of Seller, there is no potential
action  or  assertion  of  rights  by  any  party, governmental or other, and no
proceedings  with  respect  thereto  have  been  instituted of which Seller, the
Company  or  HNL has notice, that is reasonably likely to have a Seller Material
Adverse  Effect.  To  the  Knowledge of Seller, the Company has not received any
notices of default or other violations from any landlord or lessor regarding any
properties leased by the Company which, either individually or in the aggregate,
is  reasonably  likely  to  have  a Seller Material Adverse Effect.  None of the
assets owned, leased or used by the Company in the operation of its business, or
by  HNL  in operation of its Vision Business, violates or fails to comply in any
material  respect  with  any  applicable  Law  and  the Company and HNL have not
received  any  notice  of  an  alleged  violation  thereof  except  such alleged
violations  that  would  not  have  a  Seller  Material  Adverse  Effect.


                                      -23-
<PAGE>
     Section  3.20     Real  Property Leases.  The Company is not a party to any
real  property  leases.

     Section 3.21     Insurance.  Schedule 3.21 lists all insurance policies and
                                  -------------
coverages  maintained  by or for the Company, including but not limited to, real
and  personal  property insurance, comprehensive liability insurance, automobile
liability  insurance,  workers'  compensation  insurance,  stop  loss insurance,
reinsurance, medical malpractice insurance and professional liability insurance.
Schedule  3.21  lists  all  stop  loss  or  reinsurance  policies  and coverages
--------------
maintained  by  or  for  HNL  with  respect  to  the Vision Business.  Except as
reflected  on  Schedule  3.21, all such insurance shall remain in full force and
               --------------
effect  after  the  Closing.

     Section  3.22     Environmental  Matters.  To  the Knowledge of Seller, the
Company  has  not received any notice from any Governmental Authority or private
person  or  entity  advising  it  that  the  Company, its assets or its business
operations,  is  or  has  been  in  violation  of  any  environmental law or any
applicable  environmental  permit  or  that  the  Company  is  responsible  (or
potentially  responsible)  for  the  cleanup  of  any  pollutants, contaminants,
hazardous or toxic wastes, substances or materials.  To the Knowledge of Seller,
the Company is not the subject of federal, state, local or private litigation or
proceedings  involving  a  demand  for damages or other potential liability with
respect to violations of environmental laws except such litigation or proceeding
which  would  not  have  a  Seller  Material  Adverse  Effect.

     Section  3.23     Software.  Schedule  3.23  sets forth a true and complete
                                  --------------
list of all software programs and other information technology owned directly by
the  Company  or  licensed directly by the Company (the "Software").  Except for
the  Software,  the  Company shall not, as of the Closing Date, own or otherwise
have  the  right  to  use  by  license  or  otherwise,  any  software  programs,
technologies,  information  systems  or other information technology used by the
Company.

     Section  3.24     Transactions  With  Affiliates.  Except  as  disclosed on
Schedule  3.24,  to the Knowledge of Seller, other than vision benefits provided
--------------
by  the  Company  or  HNL to employees of Seller or its Affiliates, there are no
loans,  leases,  agreements, contracts or other transactions between the Company
and  any  Affiliate  of  the  Company.

     Section  3.25     Improper Payments.  Except as listed on Schedule 3.25, to
                                                               --------------
the  Knowledge  of  Seller, neither the Company nor HNL, with respect to the HNL
Vision  Business,  nor  any stockholder, director, officer, employee or agent of
the Company or HNL has made any improper bribes, kickbacks or other payments to,
or  received  any  such  payments  from,  customers, vendors, suppliers or other
persons  contracting  with  the  Company  or HNL, with respect to the HNL Vision
Business,  and has not proposed or offered to make or receive any such payments.

                                   ARTICLE IV
                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

     Purchaser  represents  and  warrants  to  Seller  as  follows:

     Section 4.1     Organization of Purchaser.  Purchaser is a corporation duly
organized,  validly existing and in good standing under the laws of the State of
Delaware  and  has all requisite corporate power and authority to own, lease and
operate its assets and properties and to


                                      -24-
<PAGE>
conduct  its business as presently being conducted except where failure to be so
organized,  existing,  and  in good standing or to have such power and authority
would  not  have  a  Purchaser  Material  Adverse  Effect.

     Section 4.2     Authorization, Validity and Enforceability.  Purchaser, and
its  respective Affiliates that are parties to any of the Transaction Documents,
have  the  corporate  power  and authority to execute, deliver and perform their
obligations  under  the  Transaction  Documents  to  which  they  are  parties.
Purchaser,  or  its  Affiliates  that  are  parties  to  any  of the Transaction
Documents, have taken all necessary corporate action to authorize the execution,
delivery  and performance of the Transaction Documents to which they are parties
and  the consummation of the transactions contemplated thereby.  The Transaction
Documents  to  which  Purchaser,  or  its Affiliates, are parties have been duly
executed  and  delivered  by  Purchaser, or its Affiliate, and, assuming due and
valid authorization, execution, and delivery by all of the other parties thereto
constitute  the  legal,  valid  and  binding  obligations  of  Purchaser, or its
Affiliate,  enforceable  against Purchaser, or its Affiliate, in accordance with
their  respective terms, except as such enforcement may be limited by applicable
bankruptcy,  insolvency,  reorganization,  moratorium  or similar laws affecting
rights  of creditors generally and by general principles of equity regardless of
whether  enforcement  is  sought  in  a  proceeding  at  law  or  in  equity.

     Section  4.3     No  Violation  or Breach.  Except as set forth in Schedule
                                                                        --------
4.3, Purchaser's and Purchaser's Affiliates' execution, delivery and performance
---
of  this Agreement and the other Transaction Documents to which Purchaser or its
Affiliate  is party, and the consummation by Purchaser and its Affiliates of the
transactions  contemplated  hereby  and thereby in accordance with the terms and
conditions  hereof  and thereof, do not and will not conflict with, constitute a
violation  or  breach  of,  constitute  a  default  or give rise to any right of
termination  or  acceleration  of any right or obligation of Purchaser or any of
its  Affiliates  under, or result in the creation or imposition of any Lien upon
the  property  of  Purchaser  by  reason  of the terms of (a) the Certificate of
Incorporation  or  By-laws  of  Purchaser  or  any  of  its  Affiliates, (b) any
contract,  agreement, lease, indenture or other instrument to which Purchaser or
any  of  its  Affiliates  is a party or by or to which Purchaser's or any of its
Affiliate's  assets  or  properties  may  be  bound  or  subject,  or (c) to the
Knowledge  of Purchaser, any order, judgment, injunction, award or decree of any
court,  arbitrator  or Governmental Authority or any Law applicable to Purchaser
or  any of its Affiliates except for such violations, breaches or defaults which
would  (A) not have a Purchaser Material Adverse Effect or (B) become applicable
as  a result of business activities in which Seller is or proposes to be engaged
or  as  a  result  of  any  acts  or  omissions  by,  or the status of any facts
pertaining  to,  Seller.

     Section  4.4     Consents  and  Approvals.  Except as set forth in Schedule
                                                                        --------
4.4  hereto,  no  consent,  approval, authorization or order of, registration or
---
filing  with,  or  notice  to, any Governmental Authority or any other Person is
necessary to be obtained, made or given by Purchaser or any of its Affiliates in
connection  with  the  execution,  delivery and performance by Purchaser of this
Agreement  or  the  other Transaction Documents to which Purchaser or any of its
Affiliates  is  party  or  for  the  consummation  by  Purchaser  or  any of its
Affiliates  of  the  transactions contemplated hereby or thereby except for such
filings, registrations, notifications, authorizations, consents or approvals the
failure  of  which  to  obtain  would  (A) not have a Purchaser Material Adverse
Effect  and  would  not  materially adversely affect the ability of Purchaser to
consummate  the  transactions contemplated by this Agreement and the Transaction
Documents  or (B) become applicable as a result of the business or activities in
which  Seller  is  or


                                      -25-
<PAGE>
proposes to be engaged or as a result of any acts or omissions by, or the status
of  any  facts  pertaining  to,  Seller.

     Section  4.5     Legal  Proceedings.  Except  as  set forth in Schedule 4.5
                                                                    ------------
hereto, Purchaser is not bound by or subject to any order, judgment, injunction,
award  or  decree  of  any court, Governmental Authority or arbitration tribunal
which,  either  individually or in the aggregate, is reasonably likely to have a
Purchaser  Material  Adverse Effect.  Except as set forth in Schedule 4.5, there
                                                             ------------
is  no  pending or, to the Knowledge of Purchaser, threatened Litigation against
or  involving  Purchaser  or  any  Affiliate  that  is  a party to a Transaction
Document which, either individually or in the aggregate, is reasonably likely to
have  a  Purchaser  Material  Adverse  Effect.

     Section  4.6     Certain  Governmental Consents.  As of the date hereof, to
the  Knowledge  of  Purchaser,  there  is  no reason to believe that any Person,
judicial  authority,  or Governmental Authority whose authorization, consent, or
approval  of  the  transactions  contemplated  by  this  Agreement  or any other
Transaction  Document  to which it or any of its Affiliates is party is required
to  be  obtained  will  not  give such authorization, approval, or consent based
solely  on  facts and circumstances relating to Purchaser, any of its Affiliates
or  the  past  operations  of  Purchaser  or  any  Affiliate  of  Purchaser.

     Section  4.7     Investment  Representation.  Purchaser  has such knowledge
and  experience  in  financial  and  business  matters  that  it  is  capable of
evaluating  the merits and risks of its investment in the Shares.  Purchaser has
been  given  the  opportunity  to examine all documents provided by, conduct due
diligence  and  ask  questions  of,  and to receive answers from, Seller and the
Company  and  their  representatives  concerning  the terms and conditions of an
investment  in  the  Shares;  provided,  however,  that  the representations and
                              --------   -------
warranties  made  by  Seller pursuant to Article III, shall be unaffected by any
such  examination,  due  diligence  or  any  information  which  may  have  been
discovered by Purchaser as a result thereof.  Purchaser is purchasing the Shares
for  its  own  account  for  investment  purposes only and without a view to the
public  distribution  or  resale  thereof or of any interest therein.  Purchaser
acknowledges  that  the  offering and sale of the Shares as contemplated by this
Agreement  are  intended to be exempt from registration under the Securities Act
of  1933,  as  amended  (the  "Securities Act"), pursuant to Section 4(1) of the
Securities  Act,  and  may  not  be  resold  by  Purchaser except pursuant to an
effective  registration  statement under the Securities Act or an exemption from
registration  thereunder  and  pursuant  to  registration  or  qualification (or
exemption  therefrom)  under  applicable  state  securities  laws.

     Section  4.8     No  Brokers.  No  broker,  finder or investment banker has
been retained or engaged on behalf of Purchaser or is entitled to any brokerage,
finder's  or  other fee, commission or compensation from Purchaser in connection
with  the  transactions  contemplated  by  this  Agreement.

     Section  4.9     Investigation  by  Purchaser.  In  entering  into  this
Agreement,  Purchaser:

     (a)     acknowledges  that,  except  for  the  specific representations and
warranties  of  Seller  contained  in  Article  III  hereof, none of Seller, the
Company,  HNL,  or  any  of  their  respective  directors,  officers, employees,
Affiliates,  controlling  persons, agents, advisors or representatives, makes or
shall  be  deemed to have made any representation or warranty, either express or
implied,  as  to  the  accuracy  or  completeness  of  any  of  the  information
(including,  without


                                      -26-
<PAGE>
limitation,  any  reserve  estimates,  projections,  forecasts, budgets or other
forward-looking  information)  provided or otherwise made available to Purchaser
or  any  of its directors, officers, employees, Affiliates, controlling persons,
agents,  advisors  or  representatives  (including,  without  limitation, in any
management  presentations,  supplemental  information  or  other  materials  or
information  with respect to any of the above). With respect to any such reserve
estimate,  projection  or  forecast  delivered  by  or  on  behalf  of Seller to
Purchaser,  except  for  the representations and warranties of Seller in Article
III,  Purchaser  acknowledges  that:  (A)  there  are  uncertainties inherent in
attempting  to  make such projections and forecasts or reserve calculations; (B)
it is familiar with such uncertainties; (C) it is taking full responsibility for
making  its  own evaluation of the adequacy and accuracy of all such projections
and  forecasts  or reserve calculations so furnished to it; (D) it is not acting
in  reliance  on  any  such  projection  or  forecast  or reserve calculation so
furnished  to  it;  and  (E) except for proposed Final Balance Sheet adjustments
consistent  with the procedure set forth in Section 2.17, it shall have no claim
against  any  such  Person  with  respect  to any such projection or forecast or
reserve  calculation;  and

     (b)     agrees, to the fullest extent permitted by Law, that Seller and its
directors,  officers,  employees,  Affiliates,  controlling  persons,  agents,
advisors  or  representatives  shall  not  have  any liability or responsibility
whatsoever  to  Purchaser  or  any  of  its  directors,  officers,  employees,
Affiliates,  controlling  persons,  agents,  advisors  or representatives on any
basis  (including,  without  limitation,  in  contract or tort, under federal or
state  securities  laws  or  otherwise)  based  upon any information provided or
otherwise  made available, or statements made, (or omissions to so provide, make
available  or state), to Purchaser or any of its directors, officers, employees,
Affiliates, controlling persons, agents, advisors or representatives, including,
without  limitation,  in  respect  of  the  specific written representations and
warranties  of Seller set forth in Article III hereof, except as and only to the
extent  expressly  set  forth  in  this  Agreement  with  respect  to  such
representations  and  warranties and subject to the limitations and restrictions
contained  in  this Agreement; provided, however, that nothing contained in this
                               --------  -------
Section  4.9(b)  shall  limit liability for the specific written representations
and  warranties  of  Seller  set  forth  in  Article  III  hereof.

                                    ARTICLE V
                        COVENANTS OF PURCHASER AND SELLER
                        ---------------------------------

     Purchaser  and  Seller  hereby  covenant  and  agree  as  follows:

     Section  5.1     Conduct  of  Business.  From and after the date hereof and
prior  to  the  Closing  Date,  except for the transactions contemplated hereby,
including  but  not limited to, the removal from Company prior to the Closing of
any  contracts  or policies obligating the Company to provide vision benefits in
connection with any Government Sponsored Contracts, the removal from the Company
or  termination  of  any contracts or policies obligating the Company to provide
vision  benefits  to  employees  of  Seller  or any Affiliate of Seller, and the
replacement  commencing  prior to the Closing of the vision benefits provided by
the  Company  and  HNL  to  Joint  Health  Net  Subscribers with vision benefits
provided by the strategic partner of Seller, and except as otherwise required or
contemplated  hereunder,  disclosed on Schedule 5.1 hereto or as consented to in
                                       ------------
writing  by  Purchaser,  Seller  shall  use  its  reasonable  best  efforts  to:

     (a)     cause  the  Company  and HNL to carry on the Vision Business in the
ordinary  course  and substantially in the same manner as heretofore carried on;


                                      -27-
<PAGE>
     (b)     cause  the  Company  to use its reasonable best efforts to preserve
its  assets  and  cause  HNL  to use its reasonable best efforts to preserve the
Vision  Business  Assets;

     (c)     cause  the  Company not to enter into any contract or agreement and
cause  HNL  not  to  enter into any contract or agreement relating to the Vision
Business,  other  than (i) such contracts or agreements that are entered into in
the ordinary course of business consistent with past practice; and (ii) any such
contract  or  agreement  not  entered  into  in  the ordinary course of business
consistent  with past practice and pursuant to which the Company or HNL receives
or  is  reasonably  expected  to  receive  payments,  or  makes or is reasonably
expected  to  make  payments  of  less  than  $50,000  per  calendar  year;

     (d)     cause  the  Company  and HNL, solely with respect to the HNL Vision
Business,  not  to  make,  without  prior  written  notice  to Purchaser (i) any
material  change,  except  in  the  ordinary  course  of business, in its assets
(including,  but not limited to, any change in the composition of such assets so
as  to  materially alter the proportion of cash thereof) or liabilities, or (ii)
any  commitment  for  any  capital  expenditures  including, without limitation,
replacements  of equipment in the ordinary course of business, involving, in the
aggregate,  more  than  $50,000;

     (e)     cause  the  Company and Health Net Dental, Inc. not to (i) make any
increase  in  the  compensation  payable  or  to  become  payable  to any of the
Employees  of  the  Company  or  Health Net Dental, Inc. (including any bonus or
incentive payment or arrangement), other than normal yearly salary increases and
scheduled  increases  under presently existing compensation plans, and currently
anticipated  bonuses  pursuant  to  existing  bonus  arrangements; or (ii) make,
amend,  or  enter  into  any  written employment or consulting contract with any
Employee  or  independent consultant or any bonus, stock option, profit sharing,
pension,  retirement  or  other similar payment or arrangement other than in the
ordinary  course  of  business;

     (f)     cause  the Company not to enter into any agreement for the purchase
of  capital  stock  of  any  other  entity;

     (g)     cause  the  Company  not  to  carry  on any negotiations with other
parties  relating  to the acquisition of capital stock or any material assets of
the Company or merge or consolidate with or into any entity or sell or otherwise
dispose  of, or purchase, any material assets or properties (other than sales of
obsolete inventory or equipment and purchases of items of inventory or equipment
in replacement therefor, in the ordinary course of business consistent with past
business  practice)  or  enter  into  any  agreement  in respect of such merger,
consolidation,  purchases,  sales,  and  dispositions;

     (h)     cause  HNL  not to carry on any negotiations or enter any agreement
with  other parties relating to the sale of any of HNL's Vision Business Assets;

     (i)     cause  the  Company  not  to  enter  into or engage in any material
transaction  with any officer, director, shareholder or Affiliate of the Company
except  for  the  payment  of  salaries  in  the  ordinary  course  of business;

     (j)     cancel,  surrender  or  let  lapse  any  insurance  or  reinsurance
policies  issued  to  the  Company  or to HNL, solely as such policies relate to
HNL's  Vision  Business;


                                      -28-
<PAGE>
     (k)     not  permit the Company, except in the ordinary course of business,
to  (i)  create,  incur  or  assume  any  indebtedness  for borrowed money; (ii)
mortgage,  pledge  or  otherwise  encumber  or  subject  to  any Lien any of its
properties  or  assets;  or  (iii)  create  or  assume  any  other indebtedness;

     (l)     not  permit the Company to issue any shares of capital stock of any
class  or  grant  any warrants, options or rights to subscribe for any shares of
capital  stock  of any class or securities convertible into or exchangeable for,
or  which  otherwise  confer  on  the holder any right to acquire, any shares of
capital  stock  of  any  class;

     (m)      inform  Purchaser  regarding  all  discussions,  correspondence or
negotiations  relating  to any existing or proposed new group vision HMO, vision
PPO  or vision indemnity contracts of the Company or HNL involving 1,000 or more
Subscribers;

     (n)     not  modify,  amend  or  renew  any group vision HMO, vision PPO or
vision  indemnity  contract  of  the  Company  or  HNL  involving  1,000 or more
Subscribers  without the prior written consent of Purchaser, which consent shall
not  be  unreasonably  withheld  or delayed other than in the ordinary course of
business;

     (o)     advise Purchaser promptly in writing of any material adverse change
in  the  financial  condition  of  the  Company  or  HNL's  Vision Business; and

     (p)     cause the Company and HNL to use reasonable efforts not to take any
action that would prevent compliance with any of the conditions in Article VI of
                                                                   ----------
this  Agreement.

     Section  5.2     Consents  and  Approvals.

     (a)     Within  thirty  (30)  days  of  the date hereof, the parties hereto
shall file with the appropriate Governmental Authority any applications, notices
or other documents necessary to obtain any authorizations, consents or approvals
that  are  required to be obtained, made or given to consummate the Transactions
contemplated  hereby  and  each  of  the parties shall use their reasonable best
efforts  to obtain any such necessary authorization, consent, approval from such
Governmental  Authority  as  is  required  to be obtained, made or given by such
party  to  consummate  the  Transactions  contemplated  by  this  Agreement.

     Section  5.3     Cooperation  and Further Assurances.  Subject to the terms
and  conditions  hereof,  each of the parties hereto covenants and agrees to use
its reasonable best efforts to take, or cause to be taken, all actions or do, or
cause  to be done, all things necessary, proper or appropriate to consummate and
make  effective  the  transactions  contemplated  hereby  and  to



                                      -29-
<PAGE>
cause  the  fulfillment of the parties' obligations hereunder and to satisfy the
conditions  set  forth in Articles VI and VII, to the extent within its control.
                          -----------     ---

     Section  5.4     Access to Information.  Prior to the Closing Date, subject
to  Section  5.7 hereof, Seller shall make available and allow Purchaser and its
authorized representatives, at Purchaser's expense, to have reasonable access to
the  Company's  books, records, contracts, facilities and personnel and to HNL's
books,  records,  contracts,  facilities  and  personnel  relating solely to the
Vision  Business,  and to personnel of Seller having knowledge of the Company or
the  Vision  Business  of HNL, for inspection, examination or verification.  Any
such  access  or examination shall be conducted upon reasonable prior notice and
under  reasonable  circumstances  during  normal  business  hours  and shall not
unreasonably  interfere with the operations and activities of Seller, HNL or the
Company.  Seller shall cause its employees and representatives, and those of the
Company  and  HNL,  to  cooperate  in  good  faith  with  Purchaser  and  its
representatives  in  connection  with any such access and examination, provided,
                                                                       --------
however,  that  nothing  herein  shall  require  Seller,  HNL  or the Company to
-------
disclose  any  information  to  Purchaser  if  such  disclosure  would  violate
applicable  Law  or  the  provisions  of  any confidentiality agreement to which
Seller,  HNL  or  the  Company  or  any  of  their  Affiliates  is  a party.  If
information  requested by Purchaser is withheld pursuant to this Section 5.4 and
not  disclosed  by  Seller,  HNL  or  Company,  Seller,  HNL  or the Company, as
appropriate, shall notify Purchaser that certain requested information shall not
be  disclosed  and  provide  a  general  description  of the type of information
withheld  and the basis for nondisclosure.  Unless otherwise required by Law and
until  the  Closing  Date,  Purchaser  shall  hold any such information which is
nonpublic  in  confidence  in  accordance  with  Section  5.7 of this Agreement.

     Section  5.5     Notice  of  Litigation  and  Requests.

     (a)     From  the  date  hereof  through  the  Closing  Date,  Seller shall
promptly notify Purchaser of any Litigation of the type required to be disclosed
in  Section  3.14  hereof  that  is  commenced  or,  to the Knowledge of Seller,
threatened against the Company, or against any property or asset of the Company,
or against any officer or director of the Company with respect to the affairs of
the  Company,  or with respect to the Vision Business of HNL, and of any request
for  additional  information  or  documentary  materials  by  any  Governmental
Authority,  in  connection  with  the  transactions  contemplated  hereby.

     (b)     From  the  date  hereof  through  the Closing Date, Purchaser shall
promptly notify Seller of any Litigation of the type required to be described in
Section  4.5  hereof  that  is  commenced  or  to  the  Knowledge  of Purchaser,
threatened  against Purchaser, or against any property or asset of Purchaser, or
against  any  officer  or  director  of Purchaser with respect to the affairs of
Purchaser,  or against any Affiliate of Purchaser that is party to a Transaction
Document  and of any request for additional information or documentary materials
by  any Governmental Authority, in connection with the transactions contemplated
hereby.

     Section  5.6     Notice  of  Changes  and  Defaults.  From  the date hereof
through  the  Closing  Date,  (i)  Seller shall promptly notify Purchaser of the
occurrence or the non-occurrence of any event, condition or circumstance, or the
discovery  of  an  inaccuracy,  omission  or  mistake, of which it becomes aware
during  such  period  that would have a Seller Material Adverse Effect, and (ii)
Purchaser  shall  promptly notify Seller of the occurrence or the non-occurrence
of  any  event,  condition  or circumstance, or the discovery of any inaccuracy,
omission  or  mistake,  of


                                      -30-
<PAGE>
which  it  becomes aware during such period that would have a Purchaser Material
Adverse  Effect.

     Section  5.7     Confidentiality.

     (a)     From  the  date  hereof  through  the  Closing Date, Purchaser, its
Affiliates  and  their  respective  representatives  shall  keep  all non-public
information  with  respect  to  Seller,  the  Company,  HNL and their Affiliates
provided  to  it  by Seller or any of its representatives in connection with the
transactions  contemplated  hereby strictly confidential, and shall not disclose
any  of  the  same  without  obtaining  Seller's  prior  written consent, unless
otherwise  required  by  applicable Law or Governmental Authority.  In the event
that  this Agreement is terminated, Purchaser and its Affiliates shall return to
Seller  all  non-public  documents, and copies thereof, provided to Purchaser or
its  Affiliates  by  Seller  or  any of its representatives, and shall otherwise
continue  to comply with the foregoing provisions of this Section 5.7.  From and
after  the  Closing  Date,  Purchaser  and  its  Affiliates and their respective
representatives  shall  keep,  and  Purchaser  shall  cause  the Company and its
representatives  to keep, all non-public information with respect to Seller, its
Affiliates  other  than the Company, and the pre-Closing business and operations
of  the  Company  and  HNL  provided to it by Seller, the Company, HNL or any of
their  representatives  strictly confidential, and shall not disclose any of the
same  without obtaining Seller's prior written consent unless otherwise required
by  applicable  Law  or  Governmental  Authority.  Before  any  disclosure  of
information,  Purchaser  shall  give  reasonable  prior  notice to Seller of the
intended disclosure and, if requested by Seller, shall use reasonable efforts to
obtain a protective order or similar protection for Seller, HNL and the Company.

     (b)     Seller  and  its  representatives  shall  keep  all  non-public
information  with  respect  to  Purchaser  and  its Affiliates provided to it by
Purchaser  or  any  of  its  representatives in connection with the transactions
contemplated  hereby  strictly  confidential,  and shall not disclose any of the
same  without  obtaining  Purchaser's  prior  written  consent  unless otherwise
required  by applicable Law or Governmental Authority.  Before any disclosure of
information,  Seller  shall  give  reasonable  prior  notice to Purchaser of the
intended disclosure and, if requested by Purchaser, shall use reasonable efforts
to  obtain a protective order or similar protection for Purchaser.  In the event
that  this  Agreement  is  terminated,  Seller  shall  return  to  Purchaser all
non-public documents, and copies thereof, provided to Seller by Purchaser or any
of  its  representatives.

          Section 5.8     Publicity.  Except as may be required under applicable
Law or stock exchange rules, from the date hereof through the Closing Date, each
of the parties hereto shall use its best efforts to prevent, and shall cause its
Affiliates  and  all  representatives to not engage in, encourage or support any
publicity,  announcement  or  disclosure  of any kind or form in connection with
this  Agreement  or  the  transactions  contemplated  hereby, unless the parties
hereto  agree  in advance on the form, timing and content of any such publicity,
announcement  or  disclosure,  whether  to the financial community, Governmental
Authorities or members of the public.  If any such announcement or disclosure is
required  by  applicable Law or stock exchange rules, the party required to make
such disclosure shall use its reasonable best efforts to provide the other party
with  prior  notice  of the required disclosure.  Notwithstanding the foregoing,
Seller  acknowledges  that  Purchaser will be required to disclose and generally
describe  this  Agreement and the Transactions contemplated by this Agreement in
public  filings  with  the  Securities and Exchange Commission.  Purchaser shall
share  drafts  of  any filings Purchaser is required to make with the Securities
and  Exchange  Commission  prior  to  making  such  filings  and


                                      -31-
<PAGE>
Purchaser  shall  incorporate any revisions to such filings reasonably requested
by  Seller  which are provided to Purchaser by Seller within ten (10) days after
receipt by Seller of a proposed draft of such filing.  The parties shall jointly
prepare and issue a press release regarding the Transactions, in such form as is
mutually  agreeable  to  the  parties.

     Section 5.9     Distribution of Excess Tangible Net Equity.  At or prior to
the  Closing, subject to receipt of all necessary regulatory approvals therefor,
except  for that portion of the Excess Tangible Net Equity related solely to the
Government Sponsored Contracts of the Company set forth in Schedule 2.14, Seller
                                                           -------------
shall  cause  the  Company  to  dividend  or otherwise distribute to Seller that
portion  of the Excess Tangible Net Equity authorized by the Department.  If the
Government  Sponsored  Contracts  are removed from the Company prior to Closing,
that  portion of the Excess Tangible Net Equity related solely to the Government
Sponsored  Contracts of the Company and set forth in Schedule 2.14 shall be paid
                                                     -------------
by  Purchaser  to  Seller  on  the  last calendar day of the first full calendar
quarter  following  the  Closing  Date.

     Section  5.10     Transfer  of  HNL  Contracts.  At the Closing, subject to
receipt  of  necessary regulatory approvals therefor, if any, and subject to the
limitations of Section 2.5 hereof, Seller shall cause HNL to transfer and assign
to Purchaser, or its Designee, all of HNL's right, title and interest in the HNL
Contracts;  and  Purchaser  or  its Designee shall assume the liabilities of HNL
under  the  HNL  Contracts  provided,  however,  that  neither Purchaser nor any
                            --------   -------
Purchaser  Designee  shall assume (x) any obligation to pay any amounts (whether
or  not due at Closing) arising under the HNL Contracts prior to the Closing, or
(y)  any liability attributable to a failure by HNL to comply with the foregoing
prior  to the Closing Date.  Any such assignment and transfer shall be evidenced
by an assignment and assumption agreement or such other agreement as the parties
reasonably  determine  is  necessary  or  appropriate.

     Section  5.11     Replacement  of  Vision  Benefits  of  Joint  Health  Net
Subscribers.  Purchaser  and  Seller shall comply with the provisions of Section
2.6  relating to the pre-paid vision HMO contracts of the Company and the vision
PPO  and vision indemnity insurance policies of HNL providing vision benefits to
Joint  Health  Net  Subscribers.

     Section  5.12     Replacement  of  Seller  Employee  Vision  Contracts  and
Policies.  Purchaser  and Seller shall comply with the provisions of Section 2.8
relating  to the pre-paid vision HMO contracts of the Company and the vision PPO
and  vision  indemnity  insurance  policies  of HNL providing vision benefits to
employees  of  Seller  or  any  Affiliate  of  Seller.

     Section  5.13     Transfer  of Government Sponsored Contracts.  At or prior
to  the  Closing,  subject  to  receipt  of  any  necessary regulatory approvals
therefor, Seller shall cause the Government Sponsored Contracts to be removed or
transferred  from  the  Company.

     Section  5.14     Reinsurance  Agreement.  Seller and Purchaser shall cause
their respective Affiliates to enter into, effective as of the Closing Date, the
Reinsurance  Agreement.

     Section  5.15     Administrative  Services Agreement.  Seller and Purchaser
or  its  Designee  shall  enter  into,  effective  as  of  the Closing Date, the
Administrative  Service  Agreement.

     Section  5.16     Transition Service Agreement.  Seller and Purchaser shall
negotiate  in  good faith and enter into on or after the Closing, the Transition
Service  Agreement.


                                      -32-
<PAGE>
     Section  5.17     Network  Access  Agreement.  Seller  and  Purchaser shall
cause  their  respective  Affiliates  to enter into, effective as of the Closing
Date,  the  Network  Access  Agreement.

     Section  5.18     Termination  of  Contracts.  Except  for  any  (i)
inter-Affiliate  contracts  necessary  to  administer  the Vision Business on or
after  the  Closing  Date,  and  (ii)  any  contract  under which the Company is
obligated  to  provide, arrange for the provision of, or indemnify for the costs
of  vision  services and supplies of the employees of Seller and its Affiliates,
all  contracts  between  the  Company  and any Affiliate of the Company shall be
terminated  effective as of the Closing Date.  Seller and Purchaser agree to use
their  commercially reasonable efforts and exercise good faith to take, or cause
to  be  taken, all actions, and to do, or cause to be done, all things necessary
and  proper  to  settle  expeditiously  any  obligations  arising  from  any
inter-Affiliate  contract  terminated  as  required  by  this  Section  5.18.

     Section  5.19     Employment  Matters;  Severance.

     (a)     Purchaser  may,  but  is  not  required by this Agreement, to offer
continued  employment  to the Employees after the Closing Date.  Purchaser shall
pay  all  costs  associated  with  any  such continued employment, including all
salary,  benefits,  relocation  expenses,  and  other  compensation to Employees
accruing  from  and after the Closing Date.  Schedule 5.19 contains a summary of
                                             -------------
the  benefit  plans  and  arrangements  Purchaser  intends  to provide Employees
retained  after  the  Closing.  Not  later  than  ninety  (90) days prior to the
Closing  Date,  Purchaser shall provide Seller with a list of those Employees it
intends  to  retain after the Closing (the "Retained Employees") and the list of
Retained  Employees  may  be  amended  by  Purchaser prior to Closing unless any
proposed amendment would result in any cost, liability or prejudice to Seller or
any  Employee.  Purchaser  shall  offer  or  cause the Company to offer Retained
Employees  cash  compensation  for  a period of six (6) months after the Closing
equivalent  to  their  most  recent  base compensation immediately preceding the
Closing  Date,  provided,  however,  Purchaser shall have the right to negotiate
                --------   -------
with  individual  Retained  Employees  for the purpose of offering such Retained
Employees  alternative  positions  with  cash  compensation appropriate for such
positions which may be less than their most recent base compensation immediately
preceding  the  Closing  Date.  On  or  prior  to  the  Closing Date, Seller may
terminate  or  transfer  any  Employee  other  than the Retained Employees.  Any
Employee  not  terminated or transferred by Seller prior to the Closing Date may
be  terminated by Purchaser, at its option, after the Closing Date utilizing the
criteria  applied by Purchaser for such terminations as of the date hereof.  Any
Employee  terminated  by  Purchaser  after Closing pursuant to this Section 5.19
shall be provided severance (i) according to Seller's severance policy set forth
as  Exhibit  D hereto, if such Employee is terminated by Purchaser at Closing or
    ----------
within  the  six  (6)  month  period  immediately following the Closing; or (ii)
according  to  Purchaser's  then  current  severance policy, if such Employee is
terminated  after  expiration  of such six (6) month period.  Calculation of all
employee benefits provided to Retained Employees by Purchaser, including but not
limited  to,  severance  for any Retained Employee terminated by Purchaser after
the  expiration  of  the  six  (6)  month  period  shall include credit for such
Retained  Employee's  time  as  an employee of the Company or Health Net Dental,
Inc.

     (b)     Seller shall provide any notice required by WARN resulting from the
termination  of Employees prior to the Closing Date, and Purchaser shall provide
any  notice  required  by  WARN  resulting  from the termination of any Retained
Employees.


                                      -33-
<PAGE>
     Section  5.20     Name  Change.  Purchaser  shall  cease  using any and all
trade  names,  trademarks,  logos  and  trade  dress  belonging to Seller or its
Affiliates,  including,  without  limitation, those containing the words "Health
Net"  "Health  Net  Vision,"  "Health  Net  Life"  or  any  other  name, term or
identification that suggests, simulates or is confusing due to its similarity to
any  of the foregoing, in its literature, inventory, products, labels packaging,
supplies  or other materials relating to the Company as soon as practicable, but
in  any  event,  subject to any applicable approval by Governmental Authorities,
within  one  hundred  and  twenty  (120) days after the Closing Date.  After one
hundred  and  twenty (120) days after the Closing Date, any inventory of Company
supplies  utilized  by  Purchaser  shall  be  relabeled  (by  sticker  or  other
reasonable  method) with Purchaser's own trade name and trade marks.  Insofar as
the  Company's  name  is used in the Company's outstanding agreements, Purchaser
and  the  Company  shall  be  entitled to use the names set forth therein to the
extent  necessary  to enforce fully the provisions of those agreements until the
termination  or  renewal  of  those  agreements  in  the  ordinary  course.

     Section 5.21     Interaffiliate Accounts.  The parties acknowledge that all
interaffiliate  accounts of the Company may not be settled as of the Closing and
that  any  post-Closing  settlements of interaffiliate accounts shall be settled
within  sixty (60) days after the Closing, provided that any further adjustments
required  thereafter shall be taken into account in the preparation of the Final
Balance  Sheet.  Purchaser  agrees  to cooperate as necessary to settle any such
interaffiliate  accounts.

     Section  5.22  Non-Competition.  Except as provided below, during the sixty
(60)  months  immediately  following the Closing Date, neither Seller nor any of
its  Affiliates  (a "Seller Entity") shall, without the prior written consent of
Purchaser,  directly  or  indirectly  acquire  a  majority  interest (whether by
merger,  consolidation,  purchase  of  stock  or  assets,  or  otherwise) of any
Competitor  (as  defined  below).

     For  purposes  of  this  Section,  a "Competitor" shall mean an entity that
derives 25% or more of its gross revenue during the calendar year next preceding
the  date of determination, from commercial vision HMO, commercial vision PPO or
commercial  vision  indemnity insurance business in California.  Notwithstanding
the  foregoing,  the  restrictions  contained  in  this  Section  5.22 shall not
prohibit  the  acquisition  by  a  Seller  Entity of ownership of an entity that
offers  or operates a commercial vision HMO, commercial vision PPO or commercial
vision indemnity insurance business in California and is part of an organization
with  multiple businesses (a "Multi-Business Company"), whether the ownership by
a  Seller  Entity  results  from  the consummation of a transaction in which the
Multi-Business  Company  is  either  acquired by a Seller Entity or in which the
Multi-Business  Company acquires a Seller Entity, or by merger or consolidation;
provided  that  the  commercial vision HMO, commercial vision PPO and commercial
--------
vision  indemnity  insurance  business  of  the  Multi-Business Company does not
account  for  more than thirty (30%) percent of the annual gross revenues of the
combined  operations  of  the  Multi-Business  Company  and  the  Seller Entity.

                                   ARTICLE VI
                      CONDITIONS TO PURCHASER'S OBLIGATIONS
                      -------------------------------------

     The  obligation  of  Purchaser  to  purchase  the  Shares at the Closing is
subject  to  the  satisfaction  or waiver on or prior to the Closing Date of the
following  conditions:


                                      -34-
<PAGE>
     Section  6.1     Representations,  Warranties  and  Covenants.  All  of the
representations  and  warranties  of Seller contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same  force and effect as though made on and as of the Closing Date, except that
any  such  representation and warranty that is given as of a particular date and
relates  solely  to a particular date or period shall be true as of such date or
period,  and  Seller  shall have performed and complied in all material respects
with  all covenants and agreements required by this Agreement to be performed or
complied  with  by  Seller  on  or prior to the Closing Date.  Seller shall have
delivered  to  Purchaser  a  certificate dated the Closing Date and signed by an
executive  officer  of  Seller  to  the  foregoing  effect.

     Section  6.2     No Proceeding or Litigation.  No injunction, order, decree
or  other  relief having the force of law shall have been issued by any judicial
authority  or Governmental Authority and be in effect, restraining, prohibiting,
modifying  or  preventing  the  consummation  of  the  transactions contemplated
hereby.  No  action,  suit  or  proceeding  shall  have  been  instituted and be
continuing by any Governmental Authority or any other Person to restrain, modify
or  prevent  the  consummation  of  the  transactions  contemplated  hereby.

     Section 6.3     Corporate Action.  Seller shall have delivered to Purchaser
a  copy  of  the  resolutions  duly  adopted by the Board of Directors of Seller
authorizing  the execution and delivery of this Agreement and the performance of
the transactions contemplated hereby by Seller, certified by the Secretary or an
Assistant  Secretary  of  Seller.

     Section  6.4     Consents  and  Approvals.  All  approvals, authorizations,
consents  and  other  actions  required to be obtained from, and all filings and
notices  required  to  be  made  with  or  given  to,  any judicial authority or
Governmental  Authority in connection with the transactions contemplated by this
Agreement shall have been obtained, made or given, as the case may be, and shall
be  in  full  force  and  effect  (without  any  term,  condition or restriction
reasonably  unacceptable  to  Purchaser),  and  any  waiting  period required by
applicable  Law or any Governmental Authority shall have expired or been earlier
terminated.  Purchaser  shall  have  been  furnished  with appropriate evidence,
reasonably  satisfactory  to  it  and  its  counsel,  of  the  granting  of such
approvals,  authorizations,  consents  and  other  actions,  the  making of such
filings  and  the  giving  of  such  notices.

     Section  6.5  Transfer  of Government Sponsored Contacts. Seller shall have
caused  the  Government  Sponsored  Contracts  to  be  removed from the Company.

     Section  6.6     Resignation  of Officers and Directors.  Seller shall have
caused the officers and directors of the Company to have tendered to the Company
their resignations as officers and directors of the Company, effective as of the
Closing  Date.

     Section  6.7     Transfer  of  HNL  Contracts.  Subject  to the limitations
contained  in  Section  2.5, Seller shall have caused HNL to assign or otherwise
transfer  the  HNL  Contracts  to  Purchaser,  or  its  Designee.

     Section  6.8     Administrative  Services  Agreement.  Purchaser,  or  its
Designee,  and  Health  Net  of  Arizona,  Inc.  shall  have  entered  into  the
Administrative  Services  Agreement.

     Section 6.9 Transfer of Books and Records. HNL and Seller shall transfer to
Purchaser  or  its  Designee  the  Books  and  Records.


                                      -35-
<PAGE>
     Section  6.10     Reinsurance  Agreement.  HNL  and  SafeHealth  shall have
entered  into  the  Reinsurance  Agreement.

     Section 6.11     Network Access Agreement.  Seller and Purchaser shall have
entered  into  the  Network  Access  Agreement.

          Section  6.12     Transition Services Agreement.  Seller and Purchaser
shall  have  entered  into  the  Transition  Services  Agreement.


                                   ARTICLE VII
                       CONDITIONS TO SELLER'S OBLIGATIONS
                       ----------------------------------

     The  obligation of Seller to sell the Shares to Purchaser at the Closing is
subject  to  the  satisfaction  or waiver on or prior to the Closing Date of the
following  conditions:

     Section  7.1     Representations,  Warranties  and  Covenants.  All  of the
representations and warranties of Purchaser contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same  force  and  effect  as  though  made  on  and  as of the Closing Date, and
Purchaser  shall  have  performed and complied in all material respects with all
covenants  and agreements required by this Agreement to be performed or complied
with  by  Purchaser  on  or  prior  to  the  Closing Date.  Purchaser shall have
delivered  to  Seller  a  certificate  dated  the  Closing Date and signed by an
executive  officer  of  Purchaser  to  the  foregoing  effect.

     Section  7.2     No Proceeding or Litigation.  No injunction, order, decree
or  other  relief having the force of law shall have been issued by any judicial
authority  or Governmental Authority and be in effect, restraining, prohibiting,
modifying  or  preventing  the  consummation  of  the  transactions contemplated
hereby.  No  action,  suit  or  proceeding  shall  have  been  instituted and be
continuing by any Governmental Authority or any other Person to restrain, modify
or  prevent  the  consummation  of  the  transactions  contemplated  hereby.

     Section 7.3     Corporate Action.  Purchaser shall have delivered to Seller
a  copy  of  the resolutions duly adopted by the Board of Directors of Purchaser
authorizing  the execution and delivery of this Agreement and the performance of
the transactions contemplated hereby by Purchaser, certified by the Secretary or
an  Assistant  Secretary  of  Purchaser.

     Section  7.4     Consents  and  Approvals.  All  approvals, authorizations,
consents  and  other  actions  required to be obtained from, and all filings and
notices  required  to  be  made  with  or  given  to,  any judicial authority or
Governmental  Authority in connection with the transactions contemplated by this
Agreement shall have been obtained, made or given, as the case may be, and shall
be  in  full  force  and  effect  (without  any  term,  condition or restriction
reasonably  unacceptable  to  Seller),  and  any  waiting  period  required  by
applicable  Law or any Governmental Authority shall have expired or been earlier
terminated.  Seller  shall  have  been  furnished  with  appropriate  evidence,
reasonably  satisfactory  to  it  and  its  counsel,  of  the  granting  of such
approvals,  authorizations,  consents  and  other  actions,  the  making of such
filings  and  the  giving  of  such  notices.



                                      -36-
<PAGE>
     Section  7.5     Purchase  Price.  Seller  shall have received the Purchase
Price  in  the  manner  specified  in  Section  2.13.

     Section  7.6     Administrative  Services  Agreement.  Purchaser,  or  its
Designee,  and  Health  Net  of  Arizona,  Inc.  shall  have  entered  into  the
Administrative  Services  Agreement.

     Section  7.7     Reinsurance  Agreement.  HNL  and  SafeHealth  shall  have
entered  into  the  Reinsurance  Agreement.

     Section  7.8     Network Access Agreement.  Seller and Purchaser shall have
entered  into  the  Network  Access  Agreement.

     Section  7.9 Transition Services Agreement. Seller and Purchaser shall have
entered  into  the  Transition  Services  Agreement.


                                  ARTICLE VIII
                    SURVIVAL, INDEMNIFICATION AND ARBITRATION
                    -----------------------------------------

     Section  8.1     Survival.  The  representations  and  warranties  of  the
parties  contained herein, or in any Schedule hereto or certificate delivered as
provided  hereunder,  shall  survive  until the second annual anniversary of the
Closing  Date  (the  "Survival  Period").

     Section  8.2     Indemnification.  Seller  hereby  agrees  to  indemnify
Purchaser  against and to hold Purchaser harmless from any damages, liabilities,
losses  or  costs (including, without limitation, reasonable attorneys' fees and
expenses)  (i)  arising out of or due to any inaccuracy in any representation or
breach  of any warranty of Seller contained herein (or in any Schedule hereto or
certificate  delivered  as  provided  hereunder)  or  in  any  other Transaction
Document  to which it is party, or the breach or nonfulfillment of any covenant,
agreement  or  other  obligation  of  Seller  under  this Agreement or any other
Transaction  Document to which it is party, provided, however, that Seller shall
                                            --------  -------
have  no  liability to Purchaser as a result of the breach of any representation
or  warranty  to  the  extent  that  Purchaser  had  actual  knowledge that such
representation  or  warranty  was incorrect or untrue prior to the Closing Date,
and (ii) arising out of or due to any Litigation pending or hereafter instituted
respecting  actions  or  omissions by the Company occurring prior to the Closing
Date, including but not limited to, any matters set forth in Schedule 3.14.  Any
                                                             -------------
provision  or  reserve for damages, liabilities, losses or costs relating to any
Litigation  pending  or  threatened  against  the  Company included on Financial
Statements  of  the  Company  shall  be  reversed  prior  to  the  Closing.

     (a)     Purchaser  hereby  agrees  to  indemnify Seller against and to hold
Seller  harmless  from  any  damages,  liabilities,  losses or costs (including,
without  limitation,  reasonable attorneys' fees and expenses) arising out of or
resulting  directly  or  indirectly from any inaccuracy in any representation or
breach  of any warranty of Purchaser contained herein (or in any Schedule hereto
or  certificate  delivered  as  provided  hereunder) or in any other Transaction
Document  to  which it is party or the breach or nonfulfillment of any covenant,
agreement  or  other  obligation  of Purchaser under this Agreement or any other
Transaction  Document  to  which  it is party, provided, however, that Purchaser
                                               --------  -------
shall  have  no  liability  to  Seller  as  a  result  of  the  breach  of  any
representation  or  warranty to the extent that Seller had actual knowledge that
such  representation  or  warranty  was incorrect or untrue prior to the Closing
Date.


                                      -37-
<PAGE>
     (b)     The  right  of any party hereto to indemnification shall be limited
to  claims asserted in writing delivered by such party to the other party hereto
during the Survival Period.  The indemnification to which either party hereto is
entitled  from  the other party hereto pursuant to this Section 8.2 shall become
effective  only  after  the amount of such liability suffered or incurred by the
party  entitled  to  indemnification  exceeds in the aggregate $100,000 and such
liability  shall  be  limited to those amounts in excess thereof.  In any event,
the maximum indemnification amount to which either party hereto is entitled from
the other party hereto pursuant to this Section 8.2 shall not exceed $2,000,000.

     (c)     Any dispute with respect to any amounts owed by Seller to Purchaser
or  by Purchaser to Seller under this indemnification provision shall be subject
to  arbitration  as  provided  in  Section  8.8  hereunder.

     (d)     The  party  seeking  indemnification  under  this  Section  (the
"Indemnified  Party")  agrees  to  give  prompt notice to the party against whom
indemnity is sought (the "Indemnifying Party") of the assertion of any claim, or
the  commencement  of any claim, suit, action or arbitration in respect of which
indemnity  may be sought under this Section.  The Indemnifying Party may, and at
the  request  of  the  Indemnified  Party  shall, participate in and control the
defense  of  any  such  claim, suit, action or arbitration proceeding at its own
expense.  The  Indemnifying Party shall not be liable under this Section for any
settlement  effected  without  its  consent  (which  shall  not  be unreasonably
withheld  or  delayed)  of  any  claim, suit, action or proceeding in respect of
which  indemnity  may  be  sought  hereunder.

     Section  8.3     Treatment  of  Indemnity  Payments.

     (a)     The  parties  agree  that any payment made under Section 8.2 hereof
will be treated by Seller and/or Purchaser on their Tax Returns as an adjustment
to  the  Purchase  Price.  The amount which an Indemnifying Party is required to
pay  to,  for  or  on  behalf  of the other party (hereinafter referred to as an
"Indemnitee")  pursuant  to  this  Article  VIII  shall  be adjusted (including,
without  limitation,  retroactively)  (i)  by  any  insurance  proceeds actually
recovered  by  or  on  behalf  of  such  Indemnitee  in reduction of the related
indemnifiable  loss  (the  "Indemnifiable Loss") and (ii) to take account of any
Tax benefit realized as a result of any Indemnifiable Loss.  Amounts required to
be paid, as so reduced, are hereinafter sometimes called an "Indemnity Payment."
If an Indemnitee has received or has had paid on its behalf an Indemnity Payment
for  an Indemnifiable Loss and subsequently receives insurance proceeds for such
an  Indemnifiable  Loss,  or  realizes  any  Tax  benefit  as  a  result of such
Indemnifiable  Loss,  then  the  Indemnitee  shall  (i)  promptly  notify  the
Indemnifying  Party  of  the amount and nature of such proceeds and benefits and
(ii)  pay to the Indemnifying Party the amount of such insurance proceeds or Tax
benefits  or,  if  lesser,  the  amount  of  the  Indemnity  Payment.

     Section  8.4  Mitigation  of  Loss.  Each  Indemnitee  is  obligated to use
reasonable  efforts  to mitigate the amount of any Loss for which it is entitled
to  seek  indemnification  hereunder,  and  the  Indemnifying Party shall not be
required  to  make  any  payment to an Indemnitee in respect of such Loss to the
extent  such  Indemnitee  failed  to  comply  with  the  foregoing  obligation.

     Section  8.5     Subrogation.  Upon  making  any  Indemnity  Payment,  the
Indemnifying  Party  will,  to  the extent of such payment, be subrogated to all
rights of the Indemnitee against any third party in respect of the Loss to which
the  payment  relate; provided, however, that until the Indemnitee recovers full
                      --------  -------
payment  of  its  Loss,  any  and  all  claims  of  the  Indemnifying  Party


                                      -38-
<PAGE>
against  any  such  third  party  on  account  of  such  payment are hereby made
expressly  subordinated  and  subjected  in right of payment of the Indemnitee's
rights  against  such third party.  Without limiting the generality of any other
provision  hereof, each such Indemnitee and Indemnifying Party will duly execute
upon  request  all  instruments reasonably necessary to evidence and perfect the
above  described  subrogation  and  subordination  rights.

     Section  8.6     Tax  Indemnification.  Notwithstanding  anything  in  this
Article  VIII  to  the  contrary, the rights and obligations of the parties with
respect  to  indemnification  (and  all  limitations  applicable  to  such
indemnification)  for  any  and  all representations, warranties, covenants, and
other  agreements  set  forth  in  Article  IX  shall  be governed solely by the
indemnification  provisions  of  Article  IX.

     Section  8.7     Exclusive  Remedy.  Following the Closing, the indemnities
provided  for  in  this Article VIII shall be the sole and exclusive remedies of
the  parties  and  their  respective officers, directors, employees, Affiliates,
agents,  representatives, successors and assigns for any breach of or inaccuracy
in  any  representation  or warranty or any breach, nonfulfillment or default in
the  performance  of  any  of  the  covenants  or  agreements  contained in this
Agreement  (but  not  any such covenants or agreements to the extent they are by
their  terms  to be performed after the Closing Date).  The parties shall not be
entitled  to  a  rescission  of this Agreement or to any further indemnification
rights  or  claims  of  any  nature  whatsoever  in  respect thereof (whether by
contract,  common law, statute, law, regulation or otherwise, including, without
limitation, under the Racketeer Influence and Corrupt Organizations Act of 1970,
as  amended),  all of which the parties hereby waive, provided, however, nothing
                                                      --------  -------
herein  is  intended  to  waive  any  claims  for  intentional  fraud.

Section  8.8     Arbitration.

     (a)     In the event of any dispute between the parties hereto relating to,
arising  out  of,  or  in connection with any provision of this Agreement or any
other  Transaction  Document  (hereinafter  a  "Dispute"),  the  parties to this
Agreement  and  their  representatives,  designees, successors and assigns agree
that  any  such Dispute shall be settled by binding arbitration to take place in
Orange County, California; provided, however, that nothing herein shall preclude
the  parties  from  seeking  equitable  judicial  relief  pending  arbitration,
including  but  not  limited  to  injunctive  or  other provisional relief.  The
parties  agree that this agreement to arbitrate shall survive any termination of
this  Agreement  or  any  other  Transaction  Document.

     (b)     Any arbitration hereunder shall be conducted by a single arbitrator
chosen  from  the  panel  of arbitrators of the Judicial Arbitration & Mediation
Services  ("JAMS")  with  experience  and  expertise in the vision HMO or vision
indemnity  insurance business.  If a JAMS arbitrator with specific experience in
the  vision  HMO  or  vision  indemnity insurance business is not available, the
arbitrator  must  have  general  experience  in  the  health insurance industry.
Within  ten  (10) days of notice of a Dispute from Seller to Purchaser or notice
from  Purchaser to Seller, the Seller and Purchaser shall use their best efforts
to  choose  a  mutually  agreeable  arbitrator.  If the Purchaser and the Seller
cannot  agree  on  an  arbitrator,  the arbitrator shall promptly be selected by
JAMS.

     (c)     The  party  submitting  a  Dispute  to  arbitration hereunder shall
present  its  case  to the arbitrator and the other party hereto in written form
within  twenty  (20)  days  after  the appointment of the arbitrator.  The other
party  hereto  shall  then  have  twenty  (20)  days  to  submit


                                      -39-
<PAGE>
a  written  response  to the arbitrator and the original party who submitted the
Dispute  to  arbitration.  After  timely  receipt  of  each  party's  case,  the
arbitrator  shall  have  twenty  (20)  days  to  render  his  or  her  decision.

     (d)     The  arbitrator  is  relieved  from  judicial  formalities  and, in
addition  to  considering  the  rules  of law, the limitations contained in this
Agreement  and the customs and practices of the health care industry, shall make
his  or her award with a view to effectuating the intent of this Agreement.  The
decision  of  the  arbitrator  shall  be final and binding upon the parties, and
judgment  may  be  entered  thereon  in a court of competent jurisdiction.  Each
party  shall  bear  its own cost of arbitration, and the costs of the arbitrator
shall  be  shared  equally  among  each  party  to  a  Dispute.

                                   ARTICLE IX
                                   TAX MATTERS
                                   -----------

     Section  9.1     Seller  Indemnification.  Seller  shall be liable for, and
shall  indemnify  and  hold Purchaser harmless against, all Taxes of the Company
payable  for  any taxable year or taxable period ending on or before the Closing
Date,  but  only  to  the extent such Taxes exceed the amount of Taxes that have
been  reserved for in the Financial Statements, and any premium taxes arising on
account  of  any  premium  with  respect to the HNL Vision Business allocable to
coverage prior to the Closing Date.  To appropriately apportion any income Taxes
relating  to  any  taxable  year beginning before (and ending after) the Closing
Date, the parties shall apportion such income Taxes to the taxable period ending
on  or  before  the  Closing Date by a closing of the Company's books consistent
with  its  past  practice  for  reporting  items,  except  that  (i) exemptions,
allowances  or  deductions  that  are  calculated  on  a time basis, such as the
deduction  for  depreciation,  shall be apportioned on a time basis and (ii) all
Taxes  relating  to  actions  outside the ordinary course of business, occurring
after  the  Closing  shall be apportioned to the period ending after the Closing
Date  and all Taxes relating to actions outside the ordinary course of business,
occurring  prior to the Closing shall be apportioned to the period ending on the
Closing  Date.  To  appropriately apportion any non-income Taxes relating to any
taxable  year  beginning before (and ending after) the Closing Date, the parties
shall  apportion such non-income Taxes to the taxable period ending on or before
the  Closing  Date  as  follows:  (x)  ad  valorem  Taxes  (including,  without
                                       -----------
limitation, real and personal property taxes ) shall be accrued on a daily basis
over  the  period for which such Taxes are levied, or if it cannot be determined
over  the  period  such  Taxes  are  being levied, over the fiscal period of the
relevant  taxing  authority, in each case irrespective of the lien or assessment
date  of  such  Taxes,  (y)  all  Taxes relating to actions outside the ordinary
course  of  business  occurring  after  the  Closing shall be apportioned to the
period ending after the Closing Date and (z) franchise and other privilege Taxes
not  measured  by  income  shall  be accrued on a daily basis over the period to
which  the  privilege  relates.

     Section  9.2     Purchaser  and the Company Indemnification.  Purchaser and
the  Company shall be liable for, and shall indemnify and hold Seller and any of
its  Affiliates  harmless  against,  any  and  all  Taxes imposed on the Company
relating  or apportioned to any taxable year or portion thereof ending after the
Closing  Date  including,  without  limitation,  all  Taxes  relating to actions
outside  the  ordinary  course  of  business occurring after the Closing, on the
Closing  Date.

     Section 9.3     Preparation of Tax Returns.  Seller shall prepare and file,
or  cause  to be filed, all Tax Returns (including amended Tax Returns) relating
to  the  Company  for  any  Tax


                                      -40-
<PAGE>
period  ending  on  or  prior to the Closing Date.  Purchaser  shall prepare and
file,  or  cause  to  be  filed,  all other Tax Returns relating to the Company.

     Section  9.4     Refunds  or  Credits.  Purchaser  or  the  Company  shall
promptly  pay  to  Seller any refunds or credits (including interest paid by the
IRS  thereon) relating to Taxes for which Seller may be liable under Section 9.1
hereof except to the extent such refund or credit is included as an asset on the
Closing  Balance Sheet and used to calculate the Excess Tangible Net Equity.  If
Purchaser  or Company receives a refund from the IRS relating to Taxes for which
Seller  may  be  liable under Section 9.1 hereof and fails to pay such refund to
Seller  within thirty (30) days of receipt, Purchaser shall pay interest on such
refund at the rate of one-percent (1%) until such amount is paid to Seller.  For
purposes  of  this  Section 9.4, the terms "refund" and "credit" shall include a
reduction  in  Taxes and the use of an overpayment of Taxes as an audit or other
Tax  offset.  Receipt of a refund shall occur upon the filing of a Tax Return or
an  adjustment  thereto using such reduction, overpayment or offset, or upon the
receipt  of cash.  Upon the request of Seller, Purchaser shall prepare and file,
or  cause  to  be  prepared  and  filed, all claims for refunds relating to such
Taxes;  provided,  however,  that  Purchaser  shall not be required to file such
        --------   -------
claims  for  refund  to the extent such claims for refund would have a Purchaser
Material Adverse Effect in future periods or to the extent the claims for refund
relate  to  a  carryback  of  an item.  Purchaser shall be entitled to all other
refunds  and  credits of Taxes; provided, however, that Purchaser will not allow
                                --------  -------
the  amendment  of any Tax Return relating to any Taxes for a period (or portion
thereof) ending on or prior to the Closing Date or the carryback of an item to a
period  ending  prior  to  Closing  without  Seller's  consent.

     Section  9.5     Section  338(h)(10)  Election.

     (a)      Purchaser shall have the right, but not the obligation, to require
Seller  upon  written  request delivered to Seller within one hundred and eighty
(180)  days  after  the  Closing  Date,  to  join  with  Purchaser in making the
elections provided for in section 338(g) and section 338(h)(10) of the Code (the
"338  Elections").  If  Purchaser exercises its right to make the 338 Elections,
Purchaser  and  Seller  shall  also  make such other similar elections as may be
necessary  for  state and local income tax purposes provided that such elections
achieve  substantially  the same results to Purchaser, Seller and the Company as
the  338  Elections achieve for federal income tax purposes and, for purposes of
this  Agreement,  the  term  "338 Elections" shall be deemed to include any such
state  and  local income tax elections.  Purchaser and Seller shall comply fully
with  all  filings  and  other  requirements  necessary  to  effectuate  the 338
Elections on a timely basis and agree to cooperate in good faith with each other
in  the preparation and timely filing of all Tax Returns required to be filed in
connection  with  the  making  of  the  338 Elections, including the exchange of
information and the joint preparation and filing of Form 8023 (including related
schedules).

     (b)     The  fair  market  value,  "aggregate  deemed  sales  price,"  and
"adjusted  grossed-up  basis"  (as  those  terms  are  defined  in  the Treasury
Regulations  promulgated  under  section  338  of the Code) of each asset of the
Company shall be determined in accordance with the allocation (the "Allocation")
mutually agreed upon, in writing, by Purchaser and Seller.  Purchaser and Seller
shall  (i) assist each other in the preparation of the Allocation; (ii) agree to
act  in  accordance with the Allocation in the preparation and filing of all Tax
Returns  and  in  the  course of any tax audits, appeals, or litigation relating
thereto;  and  (iii)  each  notify  the  other  as  soon  as


                                      -41-
<PAGE>
reasonably  practicable  of any audit adjustment or proposed audit adjustment by
any  taxing  authority  that  affects  or  may  affect  the  Allocation.

     (c)     If  Purchaser  and  Seller  make  the  338  Elections,  the  Tax
attributable  to  the  gain  realized  by  the Company on the deemed sale of its
assets  pursuant to the 338 Elections shall be allocated and paid (i) by Seller,
to the extent of the amount of Tax that, if the 338 Elections had not been made,
would have been imposed on the gain realized by Seller on the sale of the Shares
pursuant  to  this  Agreement,  and  (ii)  by  Purchaser,  to  the extent of the
remaining  portion  of  such  Tax  .  Any  Tax  imposed  upon  Seller  that  is
attributable  to the 338 Elections and that is in excess of the amount described
in  clause  (i) of the immediately preceding sentence shall be paid by Purchaser
to  Seller  at least five (5) Business Days prior to the due date for payment of
such  Tax  (the  "Additional  Tax  Reimbursement").

     (d)     For purposes of Section 9.5(c), the "amount of the Tax that, if the
338 Elections had not been made, would have been imposed on the gain realized by
Seller on the sale of the Shares pursuant to this Agreement" shall be the excess
of  (i)  the  aggregate amount of Tax that would have been imposed on Seller (or
the  consolidated,  combined,  or unitary group of which Seller is a member) for
the  taxable  period that includes the Closing Date if the 338 Elections had not
been  made over (ii) the aggregate amount of Tax that would have been imposed on
Seller  (or  the  consolidated,  combined, or unitary group of which Seller is a
member)  for  such  taxable  period  if  the 338 Elections had not been made and
Seller recognized no gain on the sale of the Shares, and (iii) the amount of any
additional  taxes,  both  state  and  federal, owed by Seller as a result of the
receipt  of  the  Additional Tax Reimbursement. Within sixty (60) days following
the  Closing  Date, Seller shall provide Purchaser a calculation of such excess,
showing  all information necessary to the computation, and which shall include a
schedule  that  sets  forth the determination (including any and all adjustments
made  pursuant  to  the  federal  consolidated  tax  return rules as provided in
sections  1502  and  1503  of  the Code and the Treasury Regulations promulgated
pursuant  to  such  sections) of Seller's adjusted tax basis in the Shares as of
the  Closing  Date.

     (e)     The  Tax described in Sections 9.5(c) and 9.5(d) shall be increased
or  decreased,  as  the  case  may be, by any adjustments to such Tax that occur
after  the  Closing  Date.

     (f)     Each party shall use its best efforts to minimize the amount of any
Tax  allocable  to  the  other  pursuant  to  Section  9.5(c).

     (g)     Notwithstanding  anything  in  this  Article IX to the contrary, if
Purchaser  and Seller make the 338 Elections, Purchaser shall pay or cause to be
paid  all  Tax  allocable  to  Purchaser  pursuant  to  Section  9.5(c).

     Section  9.6     Mutual  Cooperation.  As  soon  as practicable, but in any
event  within fifteen (15) days after either Seller's or Purchaser's request, as
the  case  may  be, Purchaser shall deliver to Seller or Seller shall deliver to
Purchaser,  as  the case may be, such information and other data relating to the
Tax  Returns and Taxes of the Company and shall provide such other assistance as
may  reasonably  be  requested,  to  cause  the completion and filing of all Tax
Returns  or  to  respond to audits by any taxing authorities with respect to any
Tax  Returns  or taxable periods or to otherwise enable Seller, Purchaser or the
Company  to  satisfy their accounting or Tax requirements.  For a period of five
years  from  and  after the Closing, Purchaser and Seller shall, and shall cause
their  Affiliates  to,  maintain  and make available to the other party, on such
other


                                      -42-
<PAGE>
party's reasonable request, copies of any and all information, books and records
referred  to  in  this  Section  9.6.  After such five-year period, Purchaser or
Seller  may  dispose of such information, books and records, provided that prior
to  such  disposition,  Purchaser  or  Seller  shall  give  the  other party the
opportunity  to  take  possessions  of  such  information,  books  and  records.

     Section  9.7     Contests.  Whenever  any taxing authority asserts a claim,
makes  an  assessment or otherwise disputes the amount of Taxes for which Seller
is  or  may be liable under this Agreement, Purchaser shall, if informed of such
an  assertion,  promptly inform Seller within five (5) Business Days, and Seller
shall  have  the  right  to  control  any resulting proceedings and to determine
whether  and  when to settle any such claim, assessment or dispute to the extent
such  proceedings  or determinations affect the amount of Taxes for which Seller
may  be  liable  under the Agreement.  If Purchaser fails to provide such notice
and  such  failure  shall  prejudice Seller's ability to defend such assessment,
then Seller's obligation under Section 9.1 shall be null and void with regard to
such  assessment.  Whenever  any  taxing  authority  asserts  a  claim, makes an
assessment  or  otherwise  disputes  the  amount of Taxes for which Purchaser is
liable  under  this  Agreement,  Purchaser  shall  have the right to control any
resulting  proceedings  and  to  determine  whether  and when to settle any such
claim,  assessment  or dispute, except to the extent such proceedings affect the
amount  of  Taxes  for  which  Seller  may  be  liable  under  this  Agreement.

     Section  9.8     Survival  of  Obligations.  The obligations of the parties
set  forth  in  this  Article  IX shall be unconditional and absolute, and shall
remain  in  effect until thirty (30) days after the expiration of the applicable
statute  of  limitations.

                                    ARTICLE X
                                   TERMINATION
                                   -----------

     Section 10.1     Termination.  This Agreement may be terminated at any time
prior  to  the  Closing  Date:

     (a)     by  mutual  agreement  of  the  parties  hereto  in  writing;

     (b)     at  the election of either party hereto if any of the conditions to
its  obligation to consummate the transactions contemplated hereby have not been
fulfilled  as of September 30, 2003 (the "Optional Termination Date"), provided,
                                                                       --------
however,  that  in the event the Closing of the transactions contemplated hereby
-------
has  not  occurred  prior to the Optional Termination Date solely because of the
failure  to obtain consents, approvals, permits or authorizations as required by
the  conditions  set forth in Sections 6.4 or 7.4, despite the responsible party
using  its  commercially  reasonable  efforts to obtain such consents, approvals
permits  or  authorizations, the Optional Termination Date will automatically be
amended  to  be  December  31,  2003.

     Section  10.2     Effect  of  Termination.  If this Agreement is terminated
pursuant  to Section 10.1, this Agreement shall thereafter become void and of no
force and effect, and neither party hereto shall have any liability to the other
party  hereto  in  respect  of  this  Agreement,  except  that  Sections  5.7
(Confidentiality),  Section 8.8 (Arbitration)  and 11.2 (Fees and Expenses), and
this  Article  X  shall  survive  any  such  termination.


                                      -43-
<PAGE>
                                   ARTICLE XI
                                  MISCELLANEOUS
                                  -------------

     Section  11.1     Notices.  Any  notice  or other communication required or
permitted  hereunder  shall  be  in  writing  and  shall be delivered by hand by
certified  process  server,  certified  or  registered mail (postage prepaid and
return  receipt requested), by a nationally recognized overnight courier service
(appropriately  marked for overnight delivery) or by facsimile (with request for
immediate  confirmation  of  receipt in a manner customary for communications of
such  respective  type).  Notices  shall  be effective upon receipt and shall be
addressed  as  follows:

     (a)     if  to  Purchaser  to:

                              SafeGuard Health Enterprises, Inc.
                              95 Enterprise, Suite 100
                              Aliso Viejo, California 92656
                              Attn.: James E. Buncher
                              President and Chief Executive Officer
                              Tel: (949) 425-4100
                              Fax: (949) 425-4101

                         with a copy to:

                              Ronald I. Brendzel
                              Senior Vice President and General Counsel
                              SafeGuard Health Enterprises, Inc.
                              95 Enterprise, Suite 100
                              Aliso Viejo, California 92656
                              Tel: (949) 425-4110
                              Fax: (949) 425-4586

                         and

                              David K. Meyercord
                              Strasburger and Price, LLP
                              901 Main Street, Ste. 4300
                              Dallas, Texas 75202-3794
                              Tel: (214) 651-4525
                              Fax: (214) 659-4023

     (b)     if  to  Seller  to:

                              Health Net, Inc.
                              Att: General Counsel
                              21650 Oxnard Street
                              Woodland Hills, California 91367
                              Tel: (818) 676-7601
                              Fax: (818) 676-7503


                                      -44-
<PAGE>
                         with  a  copy  to:

                              Kenneth B. Schnoll
                              Sonnenschein Nath & Rosenthal
                              685 Market Street
                              San Francisco, CA 94105
                              Tel: (415) 882-0210
                              Fax: (415) 543-5472

or  to such other respective addresses as Seller or Purchaser shall designate to
the  other  by  notice  in  writing, provided that notice of a change of address
shall  be  effective  only  upon  receipt.

     Section  11.2     Fees  and Expenses.  Except as otherwise provided herein,
each of the parties to this Agreement shall pay its respective fees and expenses
(including, without limitation, the fees and expenses of any investment bankers,
counsel, actuaries, accountants or other representatives) incurred in connection
with  this  Agreement  and  the transactions contemplated hereby, whether or not
such  transactions  are  consummated.

     Section  11.3     Entire Agreement; Waivers and Amendments.  This Agreement
(including  the  Exhibits  and  the  Schedules hereto) and the other Transaction
Documents  contain  the  entire understanding of the parties with respect to the
subject  matter hereof and thereof and supersede all prior agreements written or
oral, with respect hereto and thereto.  This Agreement and the other Transaction
Documents  may  be  amended or modified, and the terms hereof and thereof may be
waived,  only  by a writing signed by parties hereto or thereto, as the case may
be,  or,  in  the  case  of  a  waiver,  by  the  party  waiving  compliance.

     Section  11.4     Assignment; Binding Effect.  This Agreement and the other
Transaction  Documents may not be assigned or delegated, in whole or in part, by
any  party  hereto  or  thereto  without  the prior written consent of the other
hereto  or  thereto,  which  consent  shall  not be unreasonably withheld.  This
Agreement and the other Transaction Documents shall be binding upon and inure to
the  benefit  of  the  parties hereto and thereto and their respective permitted
successors  and  assigns.

     Section  11.5     Severability.  In  the  event  that any provision of this
Agreement  or  any  other  Transaction  Document  shall  be  declared invalid or
unenforceable  by  a  court  of  competent  jurisdiction, such provision, to the
extent  declared  invalid  or  unenforceable,  shall  not affect the validity or
enforceability  of  the  other  provisions  of  this  Agreement  or  any  other
Transaction  Document, as the case may be.  In the event that any such provision
shall  be  declared unenforceable due to its scope, breadth or duration, then it
shall be modified to the scope, breadth or duration permitted by law or judicial
authority  and  shall  continue  to  be  fully  enforceable  as  so  modified.

     Section  11.6     Force  Majeure.  No  party hereto shall be liable for any
delay  or  failure  in the performance of any obligation under this Agreement or
for  any  loss  or  damage  (including  indirect or consequential damage) to the
extent  that  such  nonperformance,  delay,  loss  or  damage  results  from any
contingency which is beyond the control of such party, provided such contingency
is  not  caused  by  the  fault  or negligence of such party.  A contingency for
purposes


                                      -45-
<PAGE>
of  this Agreement shall be acts of God, fires, floods, earthquakes, explosions,
storms,  wars,  hostilities,  acts  of  terrorism,  blockades, public disorders,
quarantines,  restrictions,  embargoes, strikes or other labor disturbances, and
compliance  with any Law, order or control of, or insistence of any Governmental
Authority  or  military  authority.

     Section  11.7     Governing  Law.  This Agreement and the other Transaction
Documents  shall  be  governed  by and construed in accordance with the internal
laws  of  the  State  of  California, without giving effect to the principles of
conflicts  of  law  thereof.

     Section  11.8     Headings.  The  Article  and  Section  headings  in  this
Agreement  and  the  other Transaction Documents are inserted for convenience of
reference only, and shall not affect the interpretation of this Agreement or the
other  Transaction  Documents.

     Section  11.9     Counterparts.  This  Agreement  and  any  of  the  other
Transaction  Documents  may  be executed in counterparts, each of which shall be
deemed  an  original  and  both  of  which  shall  together constitute one fully
executed  agreement.

     Section  11.10     No Third Party Beneficiaries.  Nothing in this Agreement
or  in any other Transaction Document is intended to give any Person, other than
the  parties  to  the  Transaction  Documents,  their  successors, and permitted
assigns,  any  legal or equitable right or remedy hereunder or thereunder, or in
respect  to  any  provision  hereof  or  thereof.

     IN  WITNESS  WHEREOF,  each  of the parties has caused this Agreement to be
duly  executed  on  its  behalf  as  of  the  date  first  above  written.

                                SAFEGUARD  HEALTH  ENTERPRISES,  INC.
                                     Purchaser


                                By:    /s/  James  E.  Buncher
                                       -----------------------
                                       Name:  James  E.  Buncher
                                       Title: President and Chief Executive
                                              Officer


                                HEALTH  NET,  INC.
                                     Seller


                                By:    /s/  B.  Curtin  Westen
                                       -----------------------
                                       Name:  B.  Curtis  Westen
                                       Title: Senior  Vice  President,
                                              General  Counsel  and  Secretary


                                      -46-
<PAGE>
                              DISCLOSURE SCHEDULES
                              --------------------

THE  SECTION  NUMBERS  IN  THE  DISCLOSURE  SCHEDULES  CORRESPOND TO THE SECTION
NUMBERS IN THE PURCHASE AND SALE AGREEMENT PROVIDED, HOWEVER, IT IS ACKNOWLEDGED
BY  THE  PARTIES  THAT ANY INFORMATION DISCLOSED HEREIN UNDER ANY SECTION NUMBER
SHALL  BE  DEEMED TO BE DISCLOSED AND INCORPORATED IN EVERY OTHER SECTION OF THE
AGREEMENT.  NOTHING  HEREIN  CONSTITUTES AN ADMISSION OF LIABILITY OF THE SELLER
OR  AN  ADMISSION  AGAINST  THE  INTEREST  OF  SELLER.

2.1      Material  assets  and  Properties  Owned  or  Leased  by  the  Company

2.4      HNL  Contracts

2.6      Joint  Health  Net  Subscribers

2.14     Excess  Tangible  Net  Equity Related to Government Sponsored Contracts

2.15     Purchase  Price  Allocation

3.3      No  Violation  or  Breach

3.4      Consents  and  Approvals

3.5      Organization  and  Qualification  of  the  Company

3.6      Organization  and  Qualification  of  HNL

3.10(b)  Undisclosed  Liabilities

3.10(c)  Aged  Accounts  Receivable

3.10(e)  HNL  Financial  Information

3.11     No  Material  Adverse  Change

3.12     Permits

3.13     Compliance  with  Law

3.14     Legal  Proceedings

3.15(a)  Material  Contracts

3.15(b)  Vision  Provider  Contracts

3.15(e)  Management  Contracts

3.15(g)  Commission  Agreements

3.15(h)  Producer  Agreements


                                      -47-
<PAGE>
3.15(i)  Network  Lease  Agreements

3.16(a)  Employees

3.16(b)  Employer  Contracts

3.16(c)  Employer  Loans  and  Guarantees

3.16(d)  Consultant  List

3.16(e)  Leased  Employers  and  Temporary  Employees

3.17     Employee  Benefit  Plans

3.18     No  Brokers

3.19     Title  and  Condition  of  Properties

3.21     Insurance

3.23     Information  Technology  and  Software

3.24     Transactions  with  Affiliates

3.25     Improper  Payments

4.3     No  Violation  or  Breach  (Purchase)

4.4     Consents  and  Approvals  (Purchaser)

4.5     Legal  Proceedings  (Purchaser)

5.1     Conduct  of  Business

5.19     Employee  Benefit  Plans  (Purchaser)


                                      -48-
<PAGE>
                                    EXHIBIT A
                              REINSURANCE AGREEMENT
                              ---------------------


                                      -49-
<PAGE>
                                    EXHIBIT B
                        ADMINISTRATIVE SERVICES AGREEMENT
                        ---------------------------------


                                      -50-
<PAGE>
                                    EXHIBIT C
                            NETWORK ACCESS AGREEMENT
                            ------------------------


                                      -51-
<PAGE>
                                    EXHIBIT D
                           HEALTH NET SEVERANCE POLICY
                           ---------------------------


<PAGE>