Document:

Amended and Restated Employment Agreement

 Exhibit 10.6 
 AMENDED AND RESTATED EMPLOYMENT AGREEMENT 
 This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
“Agreement”) is made and entered into as of October 4, 2006 (the “Effective Date”), by and between Health Net, Inc., a Delaware corporation (the “Company”), with its principal place of business located at 21650
Oxnard Street, Woodland Hills, California 91367, and Karin D. Mayhew (“Executive”). 
 RECITALS 
 WHEREAS, the Company desires to continue Executive’s employment as Senior Vice President, Organization Effectiveness; and 
 WHEREAS, the Company and Executive are entering into this Agreement to establish the terms and conditions of the employment relationship; and 

WHEREAS, this Agreement is intended to amend and restate in its entirety the Offer Letter Agreement, dated January 22, 1999, the Severance
Payment Agreement dated April 1, 1999 and the Agreement dated January 1, 2001 by and between Executive and the Company relating to Executive’s employment with the Company (collectively, the “Prior Agreement”). 
 NOW, THEREFORE, in consideration of the following covenants, conditions and promises contained herein, and other good and valuable consideration, the
Company and Executive hereby agree as follows: 
 1. Duties and Salary. 
 A. Duties. Executive’s title is Senior Vice President, Organization Effectiveness, but may be changed at the discretion of the
Company to a title that reflects a similarly situated senior executive position. Executive shall report directly to Jay Gellert, President and Chief Executive Officer of the Company, but Executive’s reporting relationship may be changed from
time to time at the discretion of the Company. Executive’s duties and responsibilities are to provide executive leadership and management of the corporate organization effectiveness functions, but the Company reserves the right to assign
Executive other duties as needed and to change Executive’s duties from time to time on reasonable notice, based on Executive’s skills and the needs of the Company. 
 B. Salary. Executive will be paid an annual base salary of $412,500, which salary will be paid on a pro-rated bi-weekly basis, less
applicable withholdings (“Base Salary”), covering all hours worked. Generally, Executive’s Base Salary will be reviewed annually, but the Company reserves the right to change Executive’s compensation from time-to-time. Pursuant
to the charter of the Compensation Committee of the Company’s Board of Directors (the “Committee”), any adjustment to Executive’s compensation must be made with the approval of the Committee and, in the event that Executive
constitutes one of the top two (2) highest paid executive officers of the Company, with the ratification of the Company’s Board of Directors. 
  

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 C. Disclosure of Personal Compensation Information. As an “executive
officer” of the Company (as such term is defined in the rules and regulations of the Securities and Exchange Commission (“SEC”)), information regarding Executive’s employment arrangements with the Company, including, among other
things, the terms of this Agreement and any stock option agreement, restricted stock agreement, restricted stock unit agreement and/or severance agreement Executive enters into with the Company from time to time (collectively, “Personal
Compensation Information”), may be disclosed in filings with the SEC, the New York Stock Exchange (“NYSE”) and/or other regulatory organizations upon the occurrence of certain triggering events. Such triggering events include, but are
not limited to, the execution of this Agreement and any amendments thereto, changes in Executive’s Base Salary, any annual incentive payment (whether in the form of cash or equity) awarded to Executive (in the past or after the date hereof),
and the establishment of performance goals under the Company’s incentive plans. Executive’s execution of this Agreement will serve as Executive’s acknowledgement that Executive’s Personal Compensation Information may be publicly
disclosed from time to time in filings with the SEC, NYSE or otherwise as required by applicable law. 
 2. Adjustments and Changes in
Employment Status. Executive understands that the Company reserves the right to make personnel decisions regarding Executive’s employment, including, but not limited to, decisions regarding any promotion, salary adjustment, transfer or
disciplinary action, up to and including termination, consistent with the needs of the business of the Company. 
 3. Protection of
Proprietary and Confidential Information. Executive agrees that Executive’s employment creates a relationship of confidence and trust with the Company with respect to Proprietary and Confidential Information (as defined below) of the
Company learned by Executive during Executive’s employment. 
 A. Executive agrees not to directly or indirectly use or
disclose any of the Proprietary and Confidential Information of the Company or any of its affiliates at any time except in connection with the services Executive provides to such entities. “Proprietary and Confidential Information”
shall mean trade secrets, confidential knowledge, data or any other proprietary or confidential information of the Company or any of its affiliates, or of any customers, members, employees or directors of any of such entities, but shall not include
any information that (i) was publicly known and made generally available in the public domain prior to the time of disclosure to Executive by the Company or (ii) becomes publicly known and made generally available after disclosure to
Executive by the Company other than as a result of a disclosure by Executive in violation of this Agreement. By way of illustration but not limitation, “Proprietary and Confidential Information” includes: (i) trade secrets, documents,
memoranda, reports, files, correspondence, lists and other written and graphic records affecting or relating to any such entity’s business; (ii) confidential marketing information including without limitation marketing strategies, customer
and client names and requirements, services, prices, margins and costs; (iii) confidential financial information; (iv) personnel information (including without limitation employee compensation); and (v) other confidential business
information. 
 B. Executive further agrees that at all times during Executive’s employment and thereafter, Executive
will keep in confidence and trust all Proprietary and Confidential 

  

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Information, and that Executive will not use or disclose any Proprietary and Confidential Information or anything related to such information without the
written consent of the Company, except as may be necessary in the ordinary course of performing Executive’s duties to the Company. 
 C. All Company property, including, but not limited to, Proprietary and Confidential Information, documents, data, records, apparatus, equipment and other physical property, whether or not pertaining to Proprietary
and Confidential Information, provided to Executive by the Company or any of its affiliates or produced by Executive or others in connection with Executive’s providing services to the Company or any of its affiliates shall be and remain the
sole property of the Company or its affiliates (as the case may be) and shall be returned promptly to such appropriate entity as and when requested by such entity. Executive shall return and deliver all such property upon termination of
Executive’s employment, and Executive may not take any such property or any reproduction of such property upon such termination. 
 D. Executive recognizes that the Company and its affiliates have received and in the future will receive information from third parties which is private, proprietary or confidential information subject to a duty on
such entity’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. Executive agrees that during Executive’s employment, and thereafter, Executive owes such entities and such third
parties a duty to hold all such private, proprietary or confidential information received from third parties in the strictest confidence and not to disclose it, except as necessary in carrying out Executive’s work for such entities consistent
with such entities’ agreements with such third parties, and not to use it for the benefit of anyone other than for such entities or such third parties consistent with such entities’ agreements with such third parties. 
 E. Executive’s obligations under this Section 3 shall continue after the termination of Executive’s employment and any
breach of this Section 3 shall be a material breach of this Agreement. 
 4. Physical Exam. Executive will be required, on an
annual basis, to undergo a physical examination and to send evidence that Executive has undergone such exam (but in no case the results of such exam) to Debbie Colia, Vice President, OE Consulting Services. The Company shall reimburse Executive for
any out-of-pocket expenses relating to the physical examination that are not otherwise covered by Executive’s health insurance plan. 
 5. Representations and Warranties of Executive. 
 A. No Violation; No Conflicts. Executive represents
and warrants to the Company that the entering into of this Agreement and Executive’s performance of Executive’s duties hereunder, will not violate any agreements with, or trade secrets of, any other person or entity. Executive further
represents and warrants that Executive does not have any relationship or commitment to any other person or entity that might be in conflict with Executive’s obligations to the Company under this Agreement, including but not limited to outside
employment, sales broker relationships, investments or business activities. Executive understands and agrees that while employed by the Company Executive is expected to refrain from engaging in any outside 

  

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activities that might be in conflict with the business interests of the Company. In addition, Executive represents and warrants to the Company that Executive
has not shared with or disclosed to, and will not share with or disclose to, the Company any proprietary or confidential information of Executive’s previous employers or any other third party. 
 B. Legal Proceedings. Executive represents and warrants to the Company that Executive has not been arrested, indicted, convicted or
otherwise involved in any criminal or civil action or legal matter that could affect Executive’s ability to perform Executive’s duties hereunder or that may have a negative impact on the Company, its reputation or its operations. Executive
agrees, to the extent permitted by applicable law, to notify the Company’s General Counsel immediately in the event that Executive becomes party to any criminal or civil action or other legal matter in the future that could have an affect on
the foregoing representation. 
 6. Executive Benefits. 
 A. Employee Benefit Programs. Executive shall be eligible to participate in the Company’s various employee benefit programs
and plans in place from time to time as long as Executive remains employed by the Company and Executive meets the applicable participation requirements. These benefit programs and plans include paid time off (“PTO”), holidays, group
medical, dental, vision, term life, and short and long term disability insurance and participation in the Company’s 401(k) plan, tuition reimbursement plan, deferred compensation plan, and Supplemental Executive Retirement Plan
(“SERP”). Under the SERP Executive is entitled to vest and accrue a retirement benefit of up to 50% of Executive’s Base Salary plus incentive compensation. This SERP benefit is offset with other retirement benefits provided by the
Company to Executive and with 50% of Executive’s Social Security benefits. Executive has received credit for one additional year of service under the SERP upon Executive’s completion of five years of service with the Company. The Company
or its subsidiaries or affiliates may modify, terminate or amend any benefit or plan in its discretion, retroactively or prospectively, subject only to applicable law. 
 B. Required Insurance. Executive is covered by workers’ compensation insurance and state disability insurance, as required by
state law. 
 C. Financial Counseling Allowance. Executive is entitled to be reimbursed up to the amount of $5,000 per
year for documented costs incurred for personal financial counseling services provided to Executive, including tax preparation, as long as Executive remains employed by the Company. 
 D. Incentive Bonus. Executive is eligible to participate in the Health Net, Inc. Executive Incentive Plan (“EIP”) in
accordance with the terms of the EIP, which provides Executive with a target opportunity to earn each plan year up to 70% of Executive’s Base Salary as additional compensation according to the terms of the actual EIP documents. The bonus
payment will range from 0% to 200% of target depending upon the actual results achieved, and specific, individually tailored measures will be established by the Company that must be achieved by Executive in order for Executive to be eligible to
receive bonus payments for a given plan year. It is understood that the Committee and the Company will award bonus amounts, if any, as it deems appropriate consistent with the guidelines of the EIP. 
  

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 E. Car Allowance. Executive is entitled to a car allowance of $1,000 per month.

 F. Expenses. Subject to and in accordance with the Company’s written policies for business and travel expenses,
Executive will receive reimbursement for all business travel and other out-of-pocket expenses reasonably incurred by Executive in the performance of Executive’s duties pursuant to this Agreement. 
 7. Equity Grants. 
 A.
Future Equity Grants. Any future equity grants made to Executive will be granted under one of the Company’s Long-Term Incentive Plans, and will be subject to the terms of such plan and of the agreement executed in connection with such
grant. Any future equity grants to Executive will be made at the discretion of the Committee. 
 B. Company Stock Ownership
Requirement. In accordance with the Executive Officer Stock Ownership Policy adopted by the Board of Directors of the Company (the “Executive Stock Ownership Policy”), Executive is required to own shares of Common Stock of the Company
having a value of one times (1x) Executive’s Base Salary in effect from time to time pursuant to this Agreement (the “Stock Ownership Requirement”). The number of shares of Common Stock Executive is required to own will be
calculated based on the average NYSE closing price per share of the Company’s Common Stock (as adjusted for stock splits and similar changes to the Common Stock) for the most recently completed fiscal year of the Company. 
 Using Executive’s current salary of $412,500 and a stock price of $39.3033, which is the average closing price per share of the Company’s
Common Stock as of December 31, 2005, Executive’s current stock ownership requirement is 10,495 (“Target Amount”). The Target Amount is subject to change from time to time based on (1) changes in the average closing sales
price of the Company’s Common Stock on an annual basis and (2) any changes in Executive’s Base Salary made pursuant to and in accordance with Section 1B of this Agreement. Any shares of Company Common Stock that Executive owns,
and any restricted stock units or shares of restricted stock of the Company that Executive owns and have vested count toward the Target Amount. Stock options, unvested restricted stock units, unvested shares of restricted stock and shares of Common
Stock gifted to others do not count toward the Target Amount. Executive will be notified on an annual basis of any changes in Executive’s Target Amount. 
 8. Term of Employment. Executive’s employment with the Company is at the mutual consent of Executive and the Company. Nothing in this Agreement is intended to guarantee Executive’s continuing
employment with the Company or employment for any specific length of time. Accordingly, either Executive or the Company may terminate the employment relationship at any time, with or without advance notice and with or without “Cause” (as
defined below). Upon termination of Executive’s employment for any reason, in addition to any other payments that may be payable to Executive hereunder, Executive (or Executive’s beneficiaries or estate) will be paid (in each case to the
extent not theretofore paid) within thirty (30) days following Executive’s date of termination (or such shorter period that may be required by applicable law): (a) Executive’s annual Base Salary through the date of 

  

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termination, (b) any compensation previously deferred by Executive (together with any interest and earnings therein), (c) accrued but unused PTO,
(d) reimbursable expenses incurred by Executive prior to the termination date and (e) amounts under any other compensatory plan, arrangement or program payment to which Executive may be entitled. This Agreement constitutes a final and
fully binding integrated agreement with respect to the at-will nature of the employment relationship. 
 9. Termination of
Employment/Severance Pay. 
 A. Termination Without Cause Not Following Change in Control. If Executive’s
employment is terminated by the Company without “Cause” (as defined in Section 9(D) below) at any time that is not within two (2) years after a “Change in Control” (as defined below) of Health Net, Inc., Executive will
be entitled to receive, within thirty (30) days following the termination of Executive’s employment, provided Executive signs a Separation Agreement, Waiver and Release of Claims substantially in the form attached hereto as Exhibit
A, which is incorporated into this Agreement by reference, (i) a lump sum cash payment equal to twenty-four (24) months of Executive’s Base Salary in effect immediately prior to the date of Executive’s termination, and
(ii) the continuation of Executive’s medical, dental, vision, disability, life and accident benefits (as maintained for Executive’s benefit immediately prior to the date of Executive’s termination) (the “Benefits”) for
Executive and Executive’s dependents for a period of twenty-four (24) months following the effective date of Executive’s termination. 
 For purposes of this Agreement, “Change in Control” is defined as any of the following which occurs subsequent to the effective date of Executive’s employment: 
 (i) Any person (as such term is defined under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), corporation or other entity (other than Health Net, Inc. or any of its subsidiaries, or any employee benefit plan sponsored by Health Net, Inc. or any of its subsidiaries) is or becomes the beneficial owner (as such term is defined in
Rule 13d-3 under the Exchange Act) of securities of Health Net, Inc. representing twenty percent (20%) or more of the combined voting power of the outstanding securities of Health Net, Inc. which ordinarily (and apart from rights accruing under
special circumstances) have the right to vote in the election of directors (calculated as provided in paragraph (d) of such Rule 13d-3 in the case of rights to acquire Health Net, Inc.’s securities) (the “Securities”);

 (ii) As a result of a tender offer, merger, sale of assets or other major transaction, the persons who are directors of
Health Net, Inc. immediately prior to such transaction cease to constitute a majority of the Board of Directors of Health Net, Inc. (or any successor corporations) immediately after such transaction; 
 (iii) Health Net, Inc. is merged or consolidated with any other person, firm, corporation or other entity and, as a result, the
shareholders of Health Net, Inc., as determined immediately before such transaction, own less than eighty percent (80%) of the outstanding Securities of the surviving or resulting entity immediately after such transaction: 
  

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 (iv) A tender offer or exchange offer is made and consummated for the ownership of twenty
percent (20%) or more of the outstanding Securities of Health Net, Inc.; 
 (v) Health Net, Inc. transfers substantially
all of its assets to another person, firm, corporation or other entity that is not a wholly-owned subsidiary of Health Net, Inc.; or 
 (vi) Health Net, Inc. enters into a management agreement with another person, firm, corporation or other entity that is not a wholly-owned subsidiary of Health Net, Inc. and such management agreement extends hiring and firing authority over
Executive to an individual or organization other than Health Net, Inc. 
 B. Termination Without Cause or For Good Reason
Following Change in Control. If at any time within two (2) years after a Change in Control of Health Net, Inc. Executive’s employment is terminated by the Company without Cause or Executive terminates Executive’s employment for
“Good Reason” (as defined below) (by giving the Company at least fourteen (14) days prior written notice of the effective date of termination), then Executive will be entitled to receive, within thirty (30) days following the
termination of Executive’s employment, provided Executive signs a Separation Agreement, Waiver and Release of Claims substantially in the form attached hereto as Exhibit A, which is incorporated into this Agreement by reference,
(i) a lump sum payment equal to thirty-six (36) months of Executive’s Base Salary in effect immediately prior to the date of Executive’s termination, and (ii) the continuation of Executive’s Benefits for thirty-six
(36) months following Executive’s date of termination, provided, that Executive properly elects to continue those benefits under COBRA, and provided, further, that in the event the Company requests, in writing, prior
to such voluntary termination by Executive for Good Reason that Executive continue in the employ of the Company for a period of time up to 90 days following such Change in Control, then Executive shall forfeit such severance allowance if Executive
voluntarily leaves the employ of the Company prior to the expiration of such period of time. 
 For purposes of this
Agreement, the term “Good Reason” means any of the following which occurs, without Executive’s consent, subsequent to the effective date of a Change in Control as defined above: 
 (i) A demotion or a substantial reduction in the scope of Executive’s position, duties, responsibilities or status with the Company,
or any removal of Executive from or any failure to reelect Executive to any of the positions (or functional equivalent of such positions) referred to in the introductory paragraphs hereof, except in connection with the termination of
Executive’s employment for Disability (as defined below), normal retirement or Cause or by Executive voluntarily other than for Good Reason; 
 (ii) A reduction by the Company in Executive’s Base Salary or a material reduction in the benefits or perquisites available to Executive as in effect immediately prior to any such reduction; 
 (iii) A relocation of Executive to a work location more than fifty (50) miles from Executive’s work location immediately prior
to such proposed relocation; provided 

  

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that such proposed relocation results in a materially greater commute for Executive based on Executive’s residence immediately prior to such relocation;
or 
 (iv) The failure of the Company to obtain an assumption agreement from any successor contemplated under Section 13
of this Agreement. 
 C. Voluntary Termination. Notwithstanding anything to the contrary in this Agreement, whether
express or implied, Executive may at any time terminate Executive’s employment for any reason by giving the Company fourteen (14) days prior written notice of the effective date of termination. In the event that Executive voluntarily
terminates employment with the Company (except for Good Reason within two (2) years after a Change in Control of Health Net, Inc.), then Executive shall not be eligible to receive any payments or continuation of Benefits set forth in this
Section 9). 
 D. Termination by the Company for Cause. The Company may terminate Executive’s employment for
Cause at any time with or without advance notice. In the event of such termination, Executive will not be eligible to receive any of the payments set forth in Section 9(A) or 9(B) above. For purposes of this Agreement, a termination for
“Cause” is defined as: (i) an act of dishonesty causing harm to the Company or any of its affiliates, (ii) the knowing unauthorized disclosure of confidential information relating to the business of the Company or any of
its affiliates, (iii) habitual drunkenness or narcotic drug addiction, (iv) conviction of a felony or a misdemeanor involving moral turpitude, (v) willful refusal to perform or gross neglect of the duties assigned to Executive,
(vi) the willful breach of any law that, directly or indirectly, affects the Company or any of its affiliates, (vii) a material breach by Executive following a Change in Control of those duties and responsibilities of Executive that do not
differ in any material respect from Executive’s duties and responsibilities during the 90-day period immediately prior to such Change in Control (other than as a result of incapacity due to physical or mental illness) which is demonstrably
willful and deliberate on Executive’s part, which is committed in bad faith or without reasonable belief that such breach is in the best interests of the Company or any of its affiliates and which is not remedied in a reasonable period of time
after receipt of written notice from the Company specifying such breach, or (viii) breach of Executive’s obligations hereunder (or under any Company policy) to protect the proprietary and confidential information of the Company or any of
its affiliates. 
 E. Termination Due to Death or Disability. In the event that Executive’s employment is
terminated at any time due to death or “Disability” (as defined below), Executive (or Executive’s beneficiaries or estate) shall be entitled to receive, provided Executive (or Executive’s beneficiaries or estate, as applicable)
signs a Separation Agreement, Waiver and Release of Claims substantially in the form attached hereto as Exhibit A, which is incorporated into this Agreement by reference, (i) continuation of Executive’s Benefits for a period of 12
months from the date of termination and (ii) a lump sum payment equal to one times (1x) Executive’s Base Salary in effect immediately prior to the date of Executive’s termination, to be paid within thirty (30) days following
Executive’s termination of employment. For purposes of this Agreement, a termination for “Disability” shall mean a termination of Executive’s employment due to Executive’s absence from Executive’s duties with the
Company on a full-time basis for at least 180 consecutive days as a result of Executive’s incapacity due to physical or mental illness. 
  

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 10. Withholding. All payments required to be made by the Company hereunder to Executive or
Executive’s estate or beneficiaries shall be subject to the withholding of such amounts relating to taxes as the Company may reasonably determine should be withheld pursuant to any applicable law or regulation. 
 11. Potential Tax Consequences for “Parachute” Payments. 
 A. Tax Gross-Up. Notwithstanding any other provisions of this Agreement, in the event that (i) any payment or distribution by
the Company to or for Executive’s benefit (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result in a Change
in Control or any person affiliated with the Company or such person) (all such payments and distributions, including the severance payments and benefits provided for in Section 9 hereof (the “Severance Payments”), being hereinafter
called (“Total Payments”) would be subject (in whole or part) to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any successor provision enacted under the Code or
any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”) and (ii) the amount of
such Total Payments subject to such Excise Tax exceeds $50,000, then the Company shall pay to Executive an additional cash payment (the “Tax Gross-Up”) so that after receipt of such Tax Gross-Up, the payment of any additional federal,
state and local income taxes on such Tax Gross-Up amount and the payment of any Excise Taxes, Executive shall receive such net amount of Total Payments equal to the amount that Executive would have received if no Excise Tax was due. If the amount of
Total Payments subject to the Excise Tax does not exceed $50,000, then the Tax-Gross-Up shall not be paid and the Severance Payments shall be reduced (if necessary, to zero) to the extent necessary so that no portion of the Total Payments is subject
to the Excise Tax. 
 B. Accounting Firm Determination. All determinations required to be made under this
Section 11, including whether and when a Tax Gross-Up is required and the amount of such Tax Gross-Up and the assumptions to be utilized in arriving at such determination, shall be made by the public accounting firm that, immediately prior to
the Change in Control, was the Company’s independent auditor (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Company and Executive within fifteen (15) business days of the receipt of
notice from Executive that Executive has received Total Payments, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Tax Gross-Up, as determined pursuant to
this Section 11, shall be paid by the Company to Executive within five (5) days of the receipt of the Accounting Firm’s determination. If the Accounting Firm determines that no Excise Tax is payable by Executive, then the Accounting
Firm shall furnish to Executive a written opinion that failure to report the Excise Tax on Executive’s applicable federal income tax return would not result in the imposition of any tax assessment or a negligence or similar penalty. As a result
of any uncertainty in the application of Section 4999 of the Code at the time of the determination by the Accounting Firm hereunder, it is possible that Tax Gross-Up which will not have been made by the Company should have been made
(“Underpayment”),or that amount of the Tax Gross-Up will exceed the amount required under Section 11(A) (“Overpayment”). In the event that the Accounting Firm shall determine that an Underpayment or Overpayment has occurred,
either 

  

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Executive or the Company, as applicable, shall promptly reimburse the other for the amount of such Underpayment or Overpayment that has occurred 

C. Notifications. Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the Tax Gross-Up. Such notification shall be given as soon as practicable but no later than ten (10) business days after Executive is informed in writing of such claim and shall apprise
the Company of the nature of such claim and the date on which such claim is requested to be paid. Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the
existence or amount of liability for Excise Tax with respect to Total Payments. 
 D. Payment Calculator. At the time
that payments are made under this Section 11, the Company shall provide Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any
opinions or other advice the Company has received from tax counsel, the Accounting Firm or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement). 
 12. Restrictive Covenants. 
 A. Non-Competition. Executive hereby agrees that, during (i) the six (6)-month period following a termination of Executive’s employment with the Company that entitles Executive to receive severance benefits under this
Agreement or a written agreement with or policy of the Company or (ii) the twelve (12)-month period following a termination of Executive’s employment with the Company that does not entitle Executive to receive such severance benefits (the
period referred to in either clause (i) or (ii), the “Restricted Period”), Executive shall not undertake any employment or activity (including, but not limited to, consulting services) with a Competitor (as defined below) in any
geographic area in which the Company or any of its affiliates operate (the “Market Area”), where the loyal and complete fulfillment of the duties of the competitive employment or activity would call upon Executive to reveal, to make
judgments on or otherwise use or disclose any confidential business information or trade secrets of the business of the Company or any of its affiliates to which Executive had access during Executive’s employment with the Company. For purposes
of this Section, “Competitor” shall refer to any health maintenance organization, health care management company, physician group, insurance company or similar entity that provides managed health care or related services similar to those
provided by the Company or any of its affiliates. 
 B. Non-Solicitation. In addition, Executive agrees that, during
the applicable Restricted Period following termination of Executive’s employment with the Company, Executive shall not, directly or indirectly, (i) solicit, interfere with, hire, offer to hire or induce any person, who is or was an
employee of the Company or any of its affiliates at the time of such solicitation, interference, hiring, offering to hire or inducement, to discontinue his/her relationship with the Company or any of its affiliates or to accept employment by, or
enter into a business relationship with, Executive or any other entity or person or (ii) solicit, interfere with or otherwise contact any customer or client of the Company or any of its affiliates. 
  

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 C. Modification of Restrictions. It is hereby further agreed that if any court of
competent jurisdiction shall determine that the restrictions imposed in this Section 12 are unreasonable (including, but not limited to, the definition of Market Area or Competitor or the time period during which this provision is applicable),
the parties hereto hereby agree to any restrictions that such court would find to be reasonable under the circumstances. 
 D.
Injunction Rights. Executive also acknowledges that the services to be rendered by Executive to the Company are of a special and unique character, which gives this Agreement a peculiar value to the Company or any of its affiliates, the loss
of which may not be reasonably or adequately compensated for by damages in an action at law, and that a material breach or threatened breach by Executive of any of the provisions contained in this Section 12 will cause the Company or any of its
affiliates irreparable injury. Executive therefore agrees that the Company may be entitled, in addition to the remedies set forth above in this Section 12 and any other right or remedy, to a temporary, preliminary and permanent injunction,
without the necessity of proving the inadequacy of monetary damages or the posting of any bond or security, enjoining or restraining Executive from any such violation or threatened violations. 
 13. Successors; Binding Agreement. 
 A. Survival Following Merger, Consolidation or Asset Transfer. This Agreement shall not be terminated by any merger or consolidation of the Company whereby the Company is or is not the surviving or resulting
corporation or as a result of any transfer of all or substantially all of the assets of the Company. In the event of any such merger, consolidation or transfer of assets, the provisions of this Agreement shall be binding upon the surviving or
resulting corporation or the person or entity to which such assets are transferred. 
 B. Survivor’s Assumption of
Agreement. The Company agrees that concurrently with any merger, consolidation or transfer of assets referred to in this Section 13, it will cause any successor or transferee to unconditionally assume, by written instrument delivered to
Executive (or Executive’s beneficiary or estate), all of the obligations of the Company hereunder. Failure of the Company to obtain such assumption prior to the effectiveness of any such merger, consolidation or transfer of assets shall entitle
Executive to compensation and other benefits from the Company in the same amount and on the same terms as Executive would be entitled hereunder if Executive’s employment were terminated without Cause. For purposes of implementing the foregoing,
the date on which any such merger, consolidation or transfer becomes effective shall be deemed the date of termination. 
 C.
Enforceability. This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Executive shall die
while any amounts would be payable to Executive hereunder had Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to such person or persons appointed in
writing by Executive to receive such amounts or, if no person is so appointed, to Executive’s estate. 
 14. Section 409(A) of
the Internal Revenue Code. It is the intention of the Company and Executive that this Agreement not result in unfavorable tax consequences to Executive under Section 409A of the Code, and the regulations and guidance promulgated thereunder.

  

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Notwithstanding anything to the contrary herein, if Executive is a “specified employee” (within the meaning of Section 409A(a)(2)(B)(i) of the
Code), any amounts (or benefits) otherwise payable to or in respect of Executive pursuant to Section 9 of this Agreement shall be delayed until the earliest date permitted by Section 409A(a)(2) of the Code. The Company and Executive agree
to cooperate in good faith in an effort to comply with Section 409A of the Code including, if necessary, amending this Agreement based on further guidance issued by the Internal Revenue Service from time to time, provided that the Company shall
not be required to assume any increased economic burden in connection with such amendment. 
 15. Company Policies. Executive’s
employment with the Company is subject to the terms and conditions contained in the Company’s Associate Policy Manual (the “Policy Manual”), the content of which is incorporated by reference herein. Executive shall be required to
read, understand and comply with the policies contained in the Policy Manual. 
 16. Severability. If any term of this Agreement is
held to be invalid, void or unenforceable, the remainder of this Agreement shall remain in full force and effect and shall in no way be affected and the parties shall use their best efforts to find an alternative way to achieve the same result.

 17. Integrated Agreement. This Agreement supersedes any prior agreements, representations or promises of any kind, whether written,
oral, express or implied between the parties hereto with respect to the subject matters herein, including, but not limited to, the Prior Employment Agreement. It constitutes the full, complete and exclusive agreement between Executive and the
Company with respect to the subject matters herein. This Agreement cannot be changed unless in writing, signed by Executive and the Chief Executive Officer of the Company and approved by the Board of Directors of the Company (or the Committee, if
permitted by the Committee’s charter). The Company acknowledges and agrees that nothing contained herein shall be deemed to supercede, amend or otherwise modify the terms of the Indemnification Agreement dated December 17, 2004 between
Executive and the Company. 
 18. Waiver. No waiver of any default hereunder shall operate as a waiver of any subsequent default.
Failure by either party to enforce any of the terms or conditions of this Agreement, for any length of time or from time to time, shall not be deemed to waive or decrease the rights of such party to insist thereafter upon strict performance by the
other party. 
 19. Notices. All notices and communications required or permitted hereunder shall be in writing and shall be deemed
given (a) if delivered personally, (b) one (1) business day after being sent by Federal Express or a similar commercial overnight service, or (c) three (3) business days after being mailed by registered or certified mail,
return receipt requested, prepaid and addressed to the following addresses, or at such other addresses as the parties may designate by written notice in the manner aforesaid: 
  

			
	If to the Company:	  	 Health Net, Inc.
 21650 Oxnard Street, 22nd
Floor
 Woodland Hills, CA 91367
 Attention: General
Counsel

  

 - 12 - 

			
	If to the Executive:	  	 Karin D. Mayhew
 [ADDRESS]
 [ADDRESS]

 20. Governing Law. The interpretation, construction and performance of this Agreement shall
be governed by and construed and enforced in accordance with the internal laws of the State of Delaware without regard to the principle of conflicts of laws. The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provisions of this Agreement, which other provisions shall remain in full force and effect. 
 21.
Survival and Enforcement. Sections 3, 8, 9, 11, 12 and 13 of this Agreement and any rights and remedies arising out of this Agreement shall survive and continue in full force and effect in accordance with the respective terms thereof,
notwithstanding any termination of this Agreement or Executive’s employment. The parties agree that the Company would be damaged irreparably in the event any provision of Sections 3, 12 and 13 of this Agreement were not performed in accordance
with its terms or were otherwise breached and that money damages would be an inadequate remedy for any such nonperformance or breach. Therefore, the Company or its successors or assigns shall be entitled in addition to other rights and remedies
existing in their favor, to an injunction or injunctions to prevent any breach or threatened breach of any of such provisions and to enforce such provisions specifically (without posting a bond or other security). 
 22. Acknowledgement. Executive acknowledges that Executive has had the opportunity to discuss the content of this Agreement with and obtain advice
from Executive’s attorney, have had sufficient time to and have carefully read and fully understood all of the provisions of this Agreement, and Executive is knowingly and voluntarily entering into this Agreement. Executive further acknowledges
that Executive is obligated to become familiar with and comply at all times with all written policies of the Company. 
 [Signature Page to
Follow] 
  

 - 13 - 

 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Effective Date set forth
above. 
  

									
	Executive	 		 	Health Net, Inc.
					
	By:	 	/s/ Karin D. Mayhew	 		 	By:	 	/s/ Jay M. Gellert
		 	Name: Karin D. Mayhew	 		 		 	Name: Jay M. Gellert
		 	Title:   Senior Vice President, Organization Effectiveness	 		 		 	Title:   President and Chief Executive Officer

  

	cc:	B. Curtis Westen 

	 	Debbie J. Colia/Karin Mayhew Personnel File 

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

  

 A - 1 

 
4999 of the Code, or any successor thereto in effect at the time of such acceleration, will not apply to any stock, cash or other property received by the
Holder from the Company.” 
 The 1991 Plan is hereby further amended to delete all references to “Approved Transaction” in the
1991 Plan and to replace all such references with “Consummated Transaction.” 
 Amendment to 1997 Stock Option Plan 
 The Health Net, Inc. 1997 Stock Option Plan (the “1997 Plan”) is hereby amended to delete subsection 6.8(b) of the 1997 Plan in its entirety and
to replace it with the following new subsection 6.8(b): 
 “(b) Definition of Change in Control. A “Change in Control” shall mean:

 (i) Consummated Transaction. Consummation of (a) any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which shares of Common Stock are converted into cash, securities or other property, other than a Merger, or (b) any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, or (c) the liquidation or dissolution of the Company; 
 (ii) Control Purchase. The purchase by any person (as such term is defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act),
corporation or other entity (other than the Company or any employee benefit plan sponsored by an Employer) of any Common Stock of the Company (or securities convertible into the Company’s Common Stock) for cash, securities or any other
consideration pursuant to a tender offer or exchange offer, without the prior consent of the Board and, after such purchase, such person shall be the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 20 percent or more of the combined voting power of the then outstanding securities of the Company ordinarily (and apart from rights accruing under special circumstances) having the
right to vote in the election of directors (calculated as provided in Section (d) of such Rule 13d-3 in the case of rights to acquire the Company’s securities); 
 (iii) Board Change. A change in the composition of the Board during any period of two consecutive years, such that individuals who
at the beginning of such period constitute the entire Board shall cease for any reason to constitute a majority thereof unless the election, or the nomination for election by the Company’s stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period; or 
 (iv) Other Transactions. The occurrence of such other transactions involving a significant issuance of voting stock or change in the composition of the Board that the Board determines to be a Change in Control for purposes of the
Plan. 
 The Agreement evidencing options or Restricted Stock granted under the Plan may contain provisions limiting the acceleration of the
exercisability of options and the acceleration of the vesting of Restricted Stock as provided in this Section as the Committee deems appropriate to 

  

 A - 2 

 
ensure that the penalty provisions of Section 4999 of the Code, or any successor thereto in effect at the time of such acceleration, will not apply to
any stock, cash or other property received by the holder from the Company.” 
 Amendment to the 1998 Stock Option Plan 
 The Health Net, Inc. 1998 Stock Option Plan, as amended (the “1998 Plan”), is hereby further amended to delete subsection 6.8(b) of the 1998
Plan in its entirety and to replace it with the following new subsection 6.8(b): 
 “(b) Definition of Change in Control. A “Change in
Control” shall mean: 
 (i) Consummated Transaction. Consummation of (a) any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of Common Stock are converted into cash, securities or other property, other than a Merger, or (b) any sale, lease, exchange, or other
transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, or (c) the liquidation or dissolution of the Company; 
 (ii) Control Purchase. The purchase by any person (as such term is defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act),
corporation or other entity (other than the Company or any employee benefit plan sponsored by an Employer) of any Common Stock of the Company (or securities convertible into the Company’s Common Stock) for cash, securities or any other
consideration pursuant to a tender offer or exchange offer, without the prior consent of the Board and, after such purchase, such person shall be the “beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 20 percent or more of the combined voting power of the then outstanding securities of the Company ordinarily (and apart from rights accruing under special circumstances) having the
right to vote in the election of directors (calculated as provided in Section (d) of such Rule 13d-3 in the case of rights to acquire the Company’s securities); 
 (iii) Board Change. A change in the composition of the Board during any period of two consecutive years, such that individuals who
at the beginning of such period constitute the entire Board shall cease for any reason to constitute a majority thereof unless the election, or the nomination for election by the Company’s stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period; or 
 (iv) Other Transactions. The occurrence of such other transactions involving a significant issuance of voting stock or change in the composition of the Board that the Board determines to be a Change in Control for purposes of the
Plan. 
 The Agreement evidencing Options or Restricted Stock granted under the Plan may contain such provisions limiting the acceleration of
the exercisability of options and the acceleration of the vesting of Restricted Stock as provided in this Section as the Committee deems appropriate to ensure that the penalty provisions of Section 4999 of the Code, or any successor thereto in
effect at the time of such acceleration, will not apply to any stock, cash or other property received by the holder from the Company.” 
  

 A - 3 

 EXHIBIT B 
 [FORM OF SEPARATION AGREEMENT, WAIVER AND RELEASE OF CLAIMS] 
 This SEPARATION AGREEMENT, WAIVER AND
RELEASE OF CLAIMS (this “Separation Agreement and Release”) is made and entered into as of the dates set forth on the signature pages hereto by and between Health Net, Inc. and its affiliates and subsidiaries (hereinafter referred
to as the “Company”) and [EXECUTIVE NAME] (hereinafter referred to as the “Executive”). 
 WHEREAS,
the Company and Executive are parties to an Employment Agreement dated as of [DATE] (the “Employment Agreement”) and are entering into this Separation Agreement and Release as a condition to Executive’s receipt of a severance
payment thereunder (capitalized terms used but not defined herein shall have the meanings set forth in the Employment Agreement). 
 NOW,
THEREFORE, the Company and Executive agree as follows: 
  

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

  

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

  

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

  

	4.	 Executive’s participation in all Company employee benefit plans as an active employee shall cease on the Termination Date, and Executive shall not be eligible
to make contributions to or to receive Company matching contributions under the Health Net, Inc. 401(k) Associate Savings Plan, or to make any deferrals pursuant to any deferred compensation plan of the Company after the Termination Date (it being
understood that Executive shall be entitled to all vested benefits accrued as of the date hereof under the Company’s 401(k) Savings Plan and any deferred compensation plan). If, immediately prior to the Termination Date, Executive participates
in any Company employee welfare benefit plan, Executive’s participation in such plan shall continue on the same terms and 

  

 B - 1 

	 	 
conditions, including the same co-payment terms, until 11:59 p.m. (Pacific Time) on the last day of the month in which the Termination Date occurs. In
partial consideration of the Company providing Executive the payments and benefits set forth above and as a condition to receive such payments and benefits, which Executive acknowledges he is not otherwise entitled to receive, Executive freely and
voluntarily enters into this Separation Agreement and Release and, by signing this Separation Agreement and Release, Executive, on his own behalf and on behalf of his heirs, beneficiaries, successors, representatives, trustees, administrators and
assigns, hereby waives and releases the Company, and each of its past, present and future officers, directors, shareholders, employees, consultants, accountants, attorneys, agents, managers, insurers, sureties, parent and sister corporations,
divisions, subsidiary corporations and entities, partners, joint venturers, affiliates, beneficiaries, successors, representatives and assigns, from any and all claims, demands, damages, debts, liabilities, controversies, obligations, actions or
causes of action of any nature whatsoever, whether based on tort, statute, contract, indemnity, rescission or any other theory of recovery, including but not limited to claims arising under federal, state or local laws prohibiting discrimination in
employment, including Title VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1870, as amended, claims of disability discrimination under the Americans with Disabilities Act, the Age Discrimination in Employment Act, as
amended (“ADEA”), the Worker Adjustment and Retraining Notification Act (“WARN”), or claims growing out of any legal restrictions on the Company’s right to terminate its employees and whether for compensatory,
punitive, equitable or other relief, whether known, unknown, suspected or unsuspected, against the Company, including without limitation claims which may have arisen or may in the future arise in connection with any event which occurred on or before
the date of Executive’s execution of this Separation Agreement and Release. The provisions in this paragraph do not extend to any rights Executive may have to enforce the terms of this Agreement and are not intended to prohibit Executive from
filing a claim for unemployment insurance. 

  

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

 “A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the
debtor.” 
 Executive understands and acknowledges the significance and consequence of this Separation Agreement and Release and of such
specific waiver of Section 1542, and expressly agrees that this Agreement shall be given full force and effect according to each and all of its express terms and provisions, including those relating to unknown and unsuspected claims, demands,
obligations and causes of action herein above specified. 
  

 B - 2 

	6.	Executive shall not initiate or cause to be initiated against the Company any compliance review, suit, action, investigation or proceeding of any kind, or voluntarily participate in
same, individually or as a representative, witness or member of a class, under contract, law or regulation, federal, state or local, pertaining to any matter related to his employment with the Company, unless Executive first cooperates in making his
allegations known to the Company for the Company to take corrective action at a time and place designated by the Company. Executive represents and warrants that he has not, to date, initiated (or caused to be initiated) any such review, suit,
action, investigation or proceeding; provided, however, that nothing in this Section 7 shall restrict Executive’s ability to challenge the validity of any release herein of ADEA claims nor to any suit or action brought by
Executive to assert such a challenge. In addition, Executive shall, without further compensation, cooperate with and assist the Company in the investigation of, preparation for or defense of any actual or threatened third party claim, investigation
or proceeding involving the Company or its predecessors or affiliates and arising from or relating to, in whole or in part, Executive’s employment with the Company or its predecessors or affiliates for which the Company requests
Executive’s assistance, which cooperation and assistance shall include, but not be limited to, providing testimony and assisting in information and document gathering efforts. In this connection, it is agreed that the Company will use its
reasonable best efforts to assure that any request for such cooperation will not unduly interfere with Executive’s other material business and personal obligations and commitments. 

  

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

  

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

  

	9.	 In addition to any other part or term of this Separation Agreement and Release or the Employment Agreement, Executive agrees that he will not, (a) for a period
of one (1) year from the date of this Agreement, irrespective of the reason for the termination, either directly or indirectly, on his own behalf or on behalf of any other person: (1) make known to any person, firm, corporation or other
entity of any type, the names and addresses of any of the Company’s customers, enrollees or providers or any other information pertaining to them; or (2) disrupt, solicit or influence or attempt to solicit, 

  

 B - 3 

	 	 
disrupt or influence any of the Company’s customers, providers, vendors, agents or independent contractors with whom the Executive became acquainted
during the course of employment or service for the purpose of terminating such a person’s or entity’s relationship with the Company or causing such a person or entity to associate with a competitor of the Company, and (b) for [a
period of one (1) year] [the six (6) month period] following the Termination Date undertake any employment or activity prohibited by the Employment Agreement. The prohibitions of this paragraph are not intended to deny employment
opportunities within the Executive’s field of employment but are limited only to those prohibitions necessary to protect the Company from unfair competition. In addition, Executive agrees that, for [a period of one (1) year] [the six
(6) month period] following the Termination Date, he shall not, directly or indirectly solicit, interfere with, hire, offer to hire or induce any person, who is or was an employee of the Company or any of its affiliates at the time of such
solicitation, interference, hiring, offering to hire or inducement, to discontinue his/her relationship with the Company or any of its affiliates or to accept employment by, or enter into a business relationship with, Executive or any other entity
or person. 

  

	10.	Executive further agrees that, in exchange for the consideration set forth in Section 2 hereof, Executive shall not make any disparaging comments and/or statements to anyone
either orally or in writing about the Company and/or its employees. 

  

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

  

	12.	If any part or term of this Separation Agreement and Release is held invalid or unenforceable by any court or arbitrator, such invalidity or unenforceability shall not affect in any
way the validity or enforceability of any other part or term of this Separation Agreement and Release. In addition, if any court of competent jurisdiction construes the covenants contained in Section 10 hereof, or any part thereof, to be
unenforceable in any respect, the court may reduce the duration or scope to the extent necessary so that the provision is enforceable, and the provision, as reduced, shall then be enforceable. 

  

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

  

	14.	 The Executive acknowledges that he has had an opportunity to consult and be represented by counsel of his own choosing in the review of this Separation Agreement
and Release, and that he has been advised by the Company to do so, that the Executive is fully aware of this Separation Agreement and Release and of its legal effect, that the preceding paragraphs recite the sole consideration for this Separation
Agreement and Release, and that Executive enters into this Separation Agreement and Release freely, without coercion, and based on the Executive’s own judgment and not in reliance upon any representation or promise made by the other party,
other than those contained herein. 

  

 B - 4 

	 	 
There may be no modification of the terms of this Separation Agreement and Release except in writing signed by the parties hereto including an appropriately
authorized officer of the Company. 

  

	15.	This Separation Agreement and Release constitutes the full, complete and exclusive agreement between Executive and the Company with respect to the subject matters herein and
supersedes any prior agreements, representations or promises of any kind, whether written, oral, express or implied, with respect to the subject matters herein. This Separation Agreement and Release cannot be changed unless in writing, signed by
Executive and an authorized officer of the Company. 

  

	16.	If there is any dispute between the Company and Executive over the terms or obligations under this Separation Agreement and Release, that dispute shall be resolved by binding
arbitration before a single neutral arbitrator who shall be a retired judge. The arbitration shall proceed in accordance with the then-current rules of the Commercial American Arbitration Association to the extent not inconsistent with this
Separation Agreement and Release. The judgment of the arbitrator shall be final, binding and nonappealable, and may be entered in any state or federal court having jurisdiction thereafter. The arbitrator shall be bound to apply and follow the
applicable state or federal laws in reaching a decision in this matter. Any disagreement regarding whether a dispute is required to be arbitrated pursuant to this Separation Agreement and Release shall be decided by the arbitrator. The Federal
Arbitration Act, 9 U.S.C. Sections 1-16, shall govern the interpretation and enforcement of this Section 17. The prevailing party will be entitled to recover reasonable attorney’s fees and costs incurred in any action to enforce or defend
this Separation Agreement and Release. 

  

	17.	This Separation Agreement and Release shall be construed and governed by the laws of the State of Delaware. 

 EXECUTIVE ACKNOWLEDGES BY SIGNING BELOW that (i) Executive has not relied upon any representations, written or oral, not set forth in this
Separation Agreement and Release; (ii) at the time Executive was given this Separation Agreement and Release Executive was informed in writing by the Company that (a) Executive had at least 21 days in which to consider whether Executive
would sign the Separation Agreement and Release and (b) Executive should consult with an attorney before signing the Separation Agreement and Release; and (iii) Executive had an opportunity to consult with an attorney and either had such
consultations or has freely decided to sign this Separation Agreement and Release without consulting an attorney. 
 Executive further
acknowledges that he may revoke acceptance of this Separation Agreement and Release by delivering a letter of revocation within seven (7) days after the later of the dates set forth below addressed to: Health Net, Inc., Organization
Effectiveness Department, 21650 Oxnard Street, Woodland Hills, California 91367, Attention: General Counsel. 
 Finally, Executive
acknowledges that he understands that this Separation Agreement and Release will not become effective until the eighth (8th) day following his signing this Separation Agreement and Release and that if Executive does not revoke his acceptance of
the terms of this Separation Agreement and Release within the seven (7) day period following the date on which Executive signs this Separation Agreement and Release as set forth above, this Separation Agreement and Release will be binding and
enforceable. 
 [Signature Page Follows] 
  

 B - 5 

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

									
	Executive	 		 	Health Net, Inc.
					
	By:	 	[EXHIBIT COPY]	 		 	By:	 	[EXHIBIT COPY]
		 	Name:	 		 		 	Name:
		 	Title:	 		 		 	Title:
	Dated:	 	[TO BE INSERTED]	 		 	Dated:	 	[TO BE INSERTED]

  

 B - 6Employment Agreement dated as of July 18, 2006

 Exhibit 10.1 
  
 EMPLOYMENT AND NONCOMPETITION AGREEMENT 
 (Richard Anderson) 
  
 THIS
AGREEMENT (the “Agreement”) is executed as of this 6 day of July, 2006, and effective as of July 18, 2006 (the “Date of Hire”), by and between Tempur-Pedic International Inc., a Delaware corporation the
“Company”) and Richard W. Anderson, an individual (“Employee”). In consideration of the premises and the mutual agreements and covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged by the Company and Employee. 
  
 IT IS HEREBY AGREED AS FOLLOWS: 
  
 ARTICLE I 
  
 EMPLOYMENT 
  
 1.1 Term of Employment. Effective as of the Date of Hire, the Company
agrees to employ Employee, and Employee accepts employment by the Company, for the period commencing on the Date of Hire and ending on the first anniversary of the Date of Hire (the “Initial Term”), subject to earlier termination as
hereinafter set forth in Article III. Unless earlier terminated in accordance with Article III, following the expiration of the Initial Term, this Agreement shall be automatically renewed for successive one-year periods (collectively, the
“Renewal Terms”; individually, a “Renewal Term”) unless, at least 90 days prior to the expiration of the Initial Term or the then current Renewal Term, either party provides the other with a written notice of
intention not to renew, in which case the Employee’s employment with the Company, and the Company’s obligations hereunder, shall terminate as of the end of the Initial Term or said Renewal Term, as applicable, provided however that
Employee shall agree to continue his employment hereunder at the option of the Company for a period of 6 months following written notice by either party of intention to terminate or not to renew (other than any such written notice given within 90
days following a Change in Control). Except as otherwise expressly provided herein, the terms of this Agreement during any Renewal Term shall be the same as the terms in effect immediately prior to such renewal, subject to any such changes or
modifications as mutually may be agreed between the parties as evidenced in a written instrument signed by both the Company and Employee. As used herein, “Change in Control” shall mean a change in the ownership of the Company, such that
more than 50% of the equity securities of the Company are acquired by any person or group (as such terms are defined for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) that does not own common stock of the
Company on the Date of Hire; provided, however, no Change in Control shall be deemed to occur if such Change in Control is effected pursuant to any internal reorganization of the Company (including, by way of example, establishment of a new holding
company for the Company) that does not result in a change of more than 50% of the ultimate equity ownership of the Company. 
  
 1.2 Position and Duties. Employee shall be employed in the position of Executive Vice President and President, North America or such other
executive position as may be assigned from time to time by the Company’s Chief Executive Officer. In such capacity, Employee shall be subject to the authority of, and shall report to, the Company’s Chief Executive Officer. Employee’s
duties and responsibilities shall be generally as described in the letter agreement dated June 12, 2006 by and between the Company and Employee, a copy of which is attached hereto (the “Offer Letter”), and include all those
customarily attendant to Employee’s position and such other duties and responsibilities as may be assigned from time to time by the Chief Executive Officer. Employee shall devote Employee’s entire business time, loyalty, attention and
energies exclusively to the business interests of the Company while employed by the Company, and shall perform his duties and responsibilities diligently and to the best of his ability. 
  

 1 

 ARTICLE II 
  
 COMPENSATION AND OTHER BENEFITS 
  
 2.1 Base Salary. The Company shall pay Employee an initial annual salary of $300,000.00 (“Base
Salary”), payable in accordance with the normal payroll practices of the Company. The Employee’s Base Salary will be reviewed and be subject to adjustment by the Board of Directors on or about January 1 of each year beginning with
January 1, 2007. 
  
 2.2 Performance Bonus. Employee
will be eligible to earn an annual performance-based bonus based on a formula approved by the Company’s Board of Directors or its Compensation Committee and incorporated herein by this reference for each full fiscal year during which Employee
is employed by the Company beginning after the Date of Hire (each, a “Bonus Year”), the terms and conditions of which as well as Employee’s entitlement thereto being determined annually in the sole discretion of the
Company’s Board of Directors or its Compensation Committee (the “Performance Bonus”). The amount of the Performance Bonus will vary based on the achievement of performance criteria in the formula established by the
Company’s Board of Directors, but the formula will be set to target a Performance Bonus equal to 50% of Base Salary as of January 1st of the Bonus Year if the performance criteria in the formula are met. Notwithstanding the foregoing, the terms and conditions of the Performance Bonus for fiscal 2006 will be consistent with the
description thereof contained in the Offer Letter, the description of which is incorporated herein by reference. 
  
 2.3 Benefit Plans. Employee will be eligible to participate in the Company’s retirement plans that are qualified under Section 401(a) of
the Internal Revenue Code of 1986, as amended, and in the Company’s welfare benefit plans that are generally applicable to all executive employees of the Company (the “Plans”), in accordance with the terms and conditions
thereof. 
  
 2.4 Expenses. The Company shall reimburse
Employee for all authorized and approved expenses incurred in the course of the performance of Employee’s duties and responsibilities pursuant to this Agreement and consistent with the Company’s policies with respect to travel,
entertainment and miscellaneous expenses, and the requirements with respect to the reporting of such expenses. 
  
 2.5 Automobile Allowance. The Company shall pay to Employee an automobile allowance of $600.00 per month. 
  
 2.6 Vacation. Employee shall be entitled to fifteen (15) vacation
days in any calendar year beginning after the Date of Hire subject to and to be taken in accordance with the Company’s general vacation policies for similarly situated executive employees. 
  
 2.7 Grant of Stock Option. Pursuant to the Tempur-Pedic International
Inc. 2003 Equity Incentive Plan, effective as of the Date of Hire the Employee shall be granted an option to purchase one hundred thousand (100,000) shares of the common stock of the Company (the “Optioned Shares”) at a
purchase price per Optioned Share equal to the NYSE closing price of the Company’s common stock on the Date of Hire. This grant shall be made pursuant to a Stock Option Agreement between the Company and Employee in the Company’s customary
form, provided that such option shall become exercisable, subject to Employee’s continued employment, as to 25% of the Optioned Shares on the first anniversary of the Date of Hire, and as to 25% of the Optioned Shares on the first day following
the completion of each twelve-month period thereafter (so that, for example, the first 25% increment would become exercisable twelve months from Date of Hire, and all options would be vested forty eight months from Date of Hire). 
  
 2.8 Hiring Bonus. As additional consideration for Employee’s
agreement to accept employment with the Company, the Company will pay to Employee a one-time bonus of ten thousand dollars ($10,000). This bonus is payable on or within sixty (60) days of the Date of Hire, provided that, as of the date payment
would otherwise be made, the Employee is considered an employee of the Company in good standing. 
  

 2 

 ARTICLE III 
  
 TERMINATION 
  
 3.1 Right to Terminate; Automatic Termination. 
  
 (a) Termination by Company Without Cause. Subject to Section 3.2, the Company may terminate Employee’s employment and all
of the Company’s obligations under this Agreement at any time and for any reason. 
  
 (b) Termination by Employee for Good Reason. Subject to Section 3.2, Employee may terminate his employment obligation
hereunder (but not his obligation under Article IV hereof) for “Good Reason” (as hereinafter defined) if Employee gives written notice thereof to the Company within 30 days of the event he deems to constitute Good Reason (which notice
shall specify the grounds upon which such notice is given) and the Company fails, within 30 days of receipt of such notice, to cure or rectify the grounds for such Good Reason termination set forth in such notice. “Good Reason” shall mean
any of the following: (i) relocation of Employee’s principal workplace over 60 miles from the Company’s existing workplaces without the consent of Employee (which consent shall not be unreasonably withheld, delayed or conditioned), or
(ii) the Company’s material breach of this Agreement which is not cured within 30 days after receipt by the Company from Employee of written notice of such breach. 
  
 (c) Termination by Company For Cause. Subject to Section 3.2, the Company may terminate
Employee’s employment and all of the Company’s obligations under this Agreement at any time “For Cause” (as defined below) by giving notice to Employee stating the basis for such termination, effective immediately upon giving
such notice or at such other time thereafter as the Company may designate. “For Cause” shall mean any of the following: (i) Employee’s willful and continued failure to substantially perform the reasonably assigned duties with the
Company which are consistent with Employee’s position and job description referred to in this Agreement, other than any such failure resulting from incapacity due to physical or mental illness, after a written notice is delivered to Employee by
the Board of Directors of the Company which specifically identifies the manner in which Employee has not substantially performed the assigned duties, (ii) Employee’s willful engagement in illegal conduct which is materially and
demonstrably injurious to the Company, (iii) Employee’s conviction by a court of competent jurisdiction of, or his pleading guilty or nolo contendere to, any felony, or (iv) Employee’s commission of an act of fraud, embezzlement,
or misappropriation against the Company, including, but not limited to, the offer, payment, solicitation or acceptance of any unlawful bribe or kickback with respect to the Company’s business. For purposes of this paragraph, no act, or failure
to act, on Employee’s part shall be considered “willful” unless done, or omitted to be done, in knowing bad faith and without reasonable belief that the action or omission was in, or not opposed to, the best interests of the Company.
Any act, or failure to act, expressly authorized by a resolution duly adopted by the Board of Directors or based upon the written advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, in good faith and
in the best interests of the Company. Notwithstanding the foregoing, Employee shall not be deemed to have been terminated For Cause unless and until there shall have been delivered to Employee a copy of a resolution, duly adopted by the Board of
Directors at a meeting of the Board called and held for such purpose (after reasonable notice to Employee and an opportunity for Employee, together with Employee’s counsel, to be heard before the Board), finding that in the good faith opinion
of the Board of Directors Employee committed the conduct set forth above in (i), (ii), (iii) or (iv) of this Section and specifying the particulars thereof in detail. 
  
 (d) Termination Upon Death or Disability. Subject to Section 3.2, Employee’s employment and
the Company’s obligations under this Agreement shall terminate: (i) automatically, effective immediately and without any notice being necessary, upon Employee’s death; and (ii) in the event of the disability of Employee, by the
Company giving notice of termination to Employee. For purposes of this Agreement, “disability” means the inability of Employee, due to a physical or mental impairment, for 90 days (whether or not consecutive) during any period of 360 days,
to perform, with reasonable accommodation, the essential functions of the work contemplated by this Agreement. In the event of any dispute as to whether 

  

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Employee is disabled, the matter shall be determined by the Company’s Board of Directors in consultation with a physician selected by the Company’s
health or disability insurer or another physician mutually satisfactory to the Company and the Employee. The Employee shall cooperate with the efforts to make such determination or be subject to immediate discharge. Any such determination shall be
conclusive and binding on the parties. Any determination of disability under this Section 3.1 is not intended to alter any benefits any party may be entitled to receive under any long-term disability insurance policy carried by either the
Company or Employee with respect to Employee, which benefits shall be governed solely by the terms of any such insurance policy. Nothing in this subsection shall be construed as limiting or altering any of Employee’s rights under State workers
compensation laws or State or federal Family and Medical Leave laws. 
  
 3.2 Rights Upon Termination. 
  
 (a) Section 3.1(a) and 3.1(b) Termination. If Employee’s employment terminates pursuant to Section 3.1(a) or 3.1(b) hereof, Employee shall have no further rights against the Company hereunder, except for the right to
receive, following execution of a release and waiver in form satisfactory to the Company, (i) any unpaid Base Salary, the value of any accrued but unused vacation, a pro-rata portion (based on the number of days of the Bonus Year prior to the
effective date of termination) of any Performance Bonus that would be payable with respect to the Bonus Year in which the termination occurs and whatever rights as to Optioned Shares as Employee may have pursuant to the Stock Option Agreement
(ii) payment of Base Salary for twelve (12) months (the “Severance Period”), payable in accordance with the normal payroll practices of the Company, (iii) reimbursement of expenses to which Employee is entitled under
Section 2.4 hereof, and (iv) continuation of the welfare plans of the Company as detailed in Section 2.3 hereof for the duration of the Severance Period. 
  
 (b) Section 3.1(c) and 3.1(d) Termination. If Employee’s employment is terminated pursuant
to Sections 3.1(c) or 3.1(d) hereof, or if Employee quits employment (other than for Good Reason) notwithstanding the terms of this Agreement, Employee or Employee’s estate shall have no further rights against the Company hereunder, except for
the right to receive, following execution of a release and waiver in form satisfactory to the Company, (i) any unpaid Base Salary, (ii) in the case of Section 3.1(d) hereof, the value of any accrued but unused vacation, a pro-rata
portion (based on the number of days of the Bonus Year prior to the effective date of termination) of any Performance Bonus that would be payable with respect to the Bonus Year in which the termination occurs, and whatever rights as to Optioned
Shares as Employee may have pursuant to the Stock Option Agreement and (iii) reimbursement of expenses to which Employee is entitled under Section 2.4 hereof. 
  
 ARTICLE IV 
  
 CONFIDENTIALITY; NONCOMPETITION; NONSOLICITATION 
  
 4.1 Covenants Regarding Confidential Information, Trade Secrets and Other Matters. Employee covenants and agrees as follows: 
  
 (a) Definitions. For purposes of this Agreement, the
following terms are defined as follows: 
  
 (1)
“Trade Secret” means all information possessed by or developed for the Company or any of its subsidiaries, including, without limitation, a compilation, program, device, method, system, technique or process, to which all of the
following apply: (i) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its
disclosure or use and (ii) the information is the subject of efforts to maintain its secrecy that are reasonable under the circumstances. 
  
 (2) “Confidential Information” means information, to the extent it is not a Trade Secret, which is possessed by or
developed for the Company or any of its subsidiaries and which relates to the Company’s or any of its subsidiaries’ existing or potential business or technology, which information is 

  

 4 

 
generally not known to the public and which information the Company or any of its subsidiaries seeks to protect from disclosure to its existing or potential
competitors or others, including, without limitation, for example: business plans, strategies, existing or proposed bids, costs, technical developments, existing or proposed research projects, financial or business projections, investments,
marketing plans, negotiation strategies, training information and materials, information generated for client engagements and information stored or developed for use in or with computers. Confidential Information also includes information received
by the Company or any of its subsidiaries from others which the Company or any of its subsidiaries has an obligation to treat as confidential. 
  
 (b) Nondisclosure of Confidential Information. Except as required in the conduct of the Company’s or any of its
subsidiaries’ business or as expressly authorized in writing on behalf of the Company or any of its subsidiaries, Employee shall not use or disclose, directly or indirectly, any Confidential Information during the period of his employment with
the Company. In addition, following the termination for any reason of Employee’s employment with the Company, Employee shall not use or disclose, directly or indirectly, any Confidential Information. This prohibition does not apply to
Confidential Information after it has become generally known in the industry in which the Company conducts its business. This prohibition also does not prohibit Employee’s use of general skills and know-how acquired during and prior to
employment by the Company, as long as such use does not involve the use or disclosure of Confidential Information or Trade Secrets. 
  
 (c) Trade Secrets. During Employee’s employment by the Company, Employee shall do what is reasonably necessary to prevent
unauthorized misappropriation or disclosure and threatened misappropriation or disclosure of the Company’s or any of its subsidiaries’ Trade Secrets and, after termination of employment, Employee shall not use or disclose the
Company’s or any of its subsidiaries’ Trade Secrets as long as they remain, without misappropriation, Trade Secrets. 
  
 4.2 Noncompetition. 
  
 (a) During Employment. During Employee’s employment hereunder, Employee shall not engage, directly or indirectly, as an
employee, officer, director, partner, manager, consultant, agent, owner (other than a minority shareholder or other equity interest of not more than 1% of a company whose equity interests are publicly traded on a nationally recognized stock exchange
or over-the-counter) or in any other capacity, in any competition with the Company or any of its subsidiaries. 
  
 (b) Subsequent to Employment. For a two year period following the termination of Employee’s employment for any reason or
without reason, Employee shall not in any capacity (whether in the capacity as an employee, officer, director, partner, manager, consultant, agent or owner (other than a minority shareholder or other equity interest of not more than 1% of a company
whose equity interests are publicly traded on a nationally recognized stock exchange or over-the-counter), directly or indirectly advise, manage, render or perform services to or for any person or entity which is engaged in a business competitive to
that of the Company or any of its subsidiaries within any geographical location wherein the Company or any of its subsidiaries produces, sells or markets its goods and services at the time of such termination or within a one-year period prior to
such termination. 
  
 4.3 Nonsolicitation. For a two year
period following the termination of Employee’s employment for any reason or without reason, Employee shall not solicit or induce any person who was an employee of the Company or any of its subsidiaries on the date of Employee’s termination
or within three months prior to leaving his or her employment with the Company or any of its subsidiaries. 
  
 4.4 Return of Documents. Immediately upon termination of employment, Employee will return to the Company, and so certify in writing to the Company,
all the Company’s or any of its subsidiaries’ papers, documents and things, including information stored for use in or with computers and software applicable to the Company’s and its subsidiaries’ business (and all copies
thereof), which are in Employee’s possession or under Employee’s control, regardless whether such papers, documents or things contain Confidential Information or Trade Secrets. 
  

 5 

 4.5 No Conflicts. To the extent that they exist, Employee will not disclose to the Company or any
of its subsidiaries any of Employee’s previous employer’s confidential information or trade secrets. Further, Employee represents and warrants that Employee has not previously assumed any obligations inconsistent with those of this
Agreement and that employment by the Company does not conflict with any prior obligations to third parties. 
  
 4.6 Agreement on Fairness. Employee acknowledges that: (i) this Agreement has been specifically bargained between the parties and reviewed by
Employee, (ii) Employee has had an opportunity to obtain legal counsel to review this Agreement, and (iii) the covenants made by and duties imposed upon Employee hereby are fair, reasonable and minimally necessary to protect the legitimate
business interests of the Company, and such covenants and duties will not place an undue burden upon Employee’s livelihood in the event of termination of Employee’s employment by the Company and the strict enforcement of the covenants
contained herein. 
  
 4.7 Equitable Relief and Remedies.
Employee acknowledges that any breach of this Agreement will cause substantial and irreparable harm to the Company for which money damages would be an inadequate remedy. Accordingly, notwithstanding the provisions of Article V below, the Company
shall in any such event be entitled to obtain injunctive and other forms of equitable relief to prevent such breach and the prevailing party shall be entitled to recover from the other, the prevailing party’s costs (including, without
limitation, reasonable attorneys’ fees) incurred in connection with enforcing this Agreement, in addition to any other rights or remedies available at law, in equity, by statute or pursuant to Article V below. 
  
 ARTICLE V 
  
 AGREEMENT TO SUBMIT ALL EXISTING OR FUTURE DISPUTES 
 TO BINDING ARBITRATION 
  
 The Company and Employee agree that any controversy or claim arising out of or related to this Agreement or Employee’s employment with or termination
by the Company that is not resolved by the parties shall be settled by arbitration administered by the American Arbitration Association under its National Rules for the Resolution of Employment Disputes. Said arbitration shall be conducted in
Lexington, Kentucky. The parties further agree that the arbitrator may resolve issues of contract interpretation as well as law and award damages, if any, to the extent provided by the Agreement or applicable law. The parties agree that the costs of
the arbitrator’s services shall be borne by the Company. The parties further agree that the arbitrator’s decision will be final and binding and enforceable in any court of competent jurisdiction. In addition to the A.A.A.’s
Arbitration Rules and unless otherwise agreed to by the parties, the following rules shall apply: 
  
 (a) Each party shall be entitled to discovery exclusively by the following means: (i) requests for admission, (ii) requests for
production of documents, (iii) up to 15 written interrogatories (with any subpart to be counted as a separate interrogatory), and (iv) depositions of no more than six individuals. 
  
 (b) Unless the arbitrator finds that delay is reasonably
justified or as otherwise agreed to by the parties, all discovery shall be completed, and the arbitration hearing shall commence within five months after the appointment of the arbitrator. 
  
 (c) Unless the arbitrator finds that delay is reasonably
justified, the hearing will be completed, and an award rendered within 30 days of commencement of the hearing. 
  
 The arbitrator’s authority shall include the ability to render equitable types of relief and, in such event, any aforesaid court may enter an order
enjoining and/or compelling such actions or relief ordered or as found by the arbitrator. The arbitrator also shall make a determination regarding which party’s legal position in any such controversy or claim is the more substantially correct
(the “Prevailing Party”) and the arbitrator shall require the other party to pay the legal and other professional fees and costs incurred by the Prevailing Party in connection with such arbitration proceeding and any necessary court
action. 
  

 6 

 Notwithstanding the foregoing provisions of this Article V, the parties expressly agree that a court of
competent jurisdiction may enter a temporary restraining order or an order enjoining a breach of Article IV of this Agreement without submission of the underlying dispute to an arbitrator. Such remedy shall be cumulative and nonexclusive, and shall
be in addition to any other remedy to which the parties may be entitled. 
  
 ARTICLE VI 
  
 GENERAL PROVISIONS

  
 6.1 Notices. Any and all notices provided for in
this Agreement shall be given in writing and shall be deemed given to a party at the earlier of (i) when actually delivered to such party, or (ii) when mailed to such party by registered or certified mail (return receipt requested) or sent
to such party by courier, confirmed by receipt, and addressed to such party at the address designated below for such party as follows (or to such other address for such party as such party may have substituted by notice pursuant to this
Section 6.1): 
  

			
	(a) If to the Company:	  	Tempur-Pedic International Inc.
	 	  	1713 Jaggie Fox Way
	 	  	Lexington, KY 40511
	 	  	Attention: Chief Executive Officer
		
	(b) If to Employee:	  	Richard Anderson
	 	  	3 Connelly Hill Road
	 	  	Hopkinton, MA 01748

  
 6.2 Entire
Agreement. This Agreement, together with the Stock Option Agreement referenced in Sections 2.7, contains the entire understanding and the full and complete agreement of the parties and, effective as of the Date of Hire, supersedes and replaces
any prior understandings and agreements among the parties with respect to the subject matter hereof (including, without limitation, the Offer Letter, except to the extent of those certain provisions of the Offer Letter which have been specifically
incorporated herein by reference). 
  
 6.3 Amendment. This
Agreement may be altered, amended or modified only in a writing, signed by both of the parties hereto. Headings included in this Agreement are for convenience only and are not intended to limit or expand the rights of the parties hereto. References
to Sections herein shall mean sections of the text of this Agreement, unless otherwise indicated. 
  
 6.4 Assignability. This Agreement and the rights and duties set forth herein may not be assigned by either of the parties without the express
written consent of the other party. This Agreement shall be binding on and inure to the benefit of each party and such party’s respective heirs, legal representatives, successors and assigns. 
  
 6.5 Severability. If any court of competent jurisdiction determines
that any provision of this Agreement is invalid or unenforceable, then such invalidity or unenforceability shall have no effect on the other provisions hereof, which shall remain valid, binding and enforceable and in full force and effect, and such
invalid or unenforceable provision shall be construed in a manner so as to give the maximum valid and enforceable effect to the intent of the parties expressed therein. 
  
 6.6 Waiver of Breach. The waiver by either party of the breach of any provision of this Agreement shall not operate
or be construed as a waiver of any subsequent breach by either party. 
  
 6.7 Governing Law; Construction. This Agreement shall be governed by the internal laws of the State of Kentucky, without regard to any rules of construction concerning the party responsible for the drafting hereof. 
  

 7 

 6.8. Effective Date. The terms and conditions of this Agreement shall be effective as of the Date
of Hire. In the event of the failure of Employee to commence his employment with the Company (or at such other date as the Employee and the Company may mutually agree), this Agreement shall be null and void and of no force or effect. 
  
 6.9. Tax Compliance. All payments due hereunder shall be made net of
all federal, state or local taxes required by law to be withheld with respect to such payments and any other deductions required by law or authorized by Employee. If any payment otherwise due hereunder would be, when otherwise due, subject to
additional taxes and interest under Section 409A of the Internal Revenue Code of 1986, as amended, then such payment shall be deferred to the extent required to avoid such additional taxes and interest. 
  
 [Remainder of Page Intentionally Left Blank] 
  

 8 

 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above.

  

			
	COMPANY:
	
	TEMPUR-PEDIC INTERNATIONAL, INC.
		
	By:	 	 /s/ H. THOMAS BRYANT

	 Title: 
	 	 CEO

	
	EMPLOYEE:
	
	 /s/ RICHARD ANDERSON

	 Richard Anderson

	
	WITNESSED BY:
	
	 /s/ HUGH MURPHY

	 VP Human Resources

	
	 Date: 7/18/06

  

 9

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