Document:

QuickLinks
 -- Click here to rapidly navigate through this document
  

 
 

Exhibit 10.12    
  

 
 

SEPARATION, WAIVER AND RELEASE AGREEMENT    
  

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

        WHEREAS,
Employee was employed as the Executive Vice President and Chief Financial Officer of the Company, which title was relinquished by Employee on January 28, 2002; and 

        WHEREAS,
Employee and the Company both desire to transition Employee's duties as the Executive Vice President and Chief Financial Officer of the Company to other employees and officers
of the Company and to terminate Employee's employment upon the terms and conditions set forth in this Agreement; and 

        WHEREAS,
the Company anticipates requiring ongoing cooperation and assistance from Employee relating to such transition; and 

        WHEREAS,
Employee desires to provide such cooperation and assistance upon the terms and conditions set forth in this Agreement. 

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

        1.    Termination of Employment    

        1.1  Employee's
employment with the Company will terminate on January 1, 2003 (the "Termination Date"). Employee shall be entitled to his accrued and unpaid base
annual salary in effect as of January 28, 2002 ("Base Salary"), less required payroll taxes and other applicable deductions, through the Termination Date. In addition, he shall continue to
accrue paid-time-off ("PTO") through the Termination Date and it is acknowledged that Employee will receive a lump sum payment equal to the maximum amount of 384 hours
of PTO, less required payroll taxes and other applicable deductions, accrued as of the Termination Date. Employee is not entitled to receive any payments under any bonus plans of the Company for the
Plan Year 2002. 

        1.2  On
and after the Termination Date, Employee will not represent to anyone that he is an employee of the Company or any of its affiliated entities and will not say or do
anything purporting to bind the Company or any of its affiliated entities, and during the Transition Period (as defined in Section 3.1 below). Employee will not say or do anything purporting to
bind the Company or any of its affiliated entities except as necessary to perform the Transition Services (as defined in Section 3.1 below). As of January 28, 2002, Employee shall be
deemed to have resigned from all officer and director positions with the Company and any of its affiliated entities that may be held by Employee. 

        2.    Severance Benefits    

        2.1  After
Employee signs a further release agreement with the Company (the "Second Release Agreement") on or about the Termination Date updating Section 6 to cover
the time period from the Effective Date (as defined in Section 7) up to and including the Termination Date and provided that Employee does not exercise his revocation rights during the
seven-day revocation period following his signing of the Second Release Agreement such that it becomes effective on the eighth day of his execution (the "Second Effective Date"), Employee
shall be entitled to receive (i) as a severance payment, either (a) a lump sum payment in the amount of $770,000 (less required payroll taxes and other applicable deductions)
representing twenty-one (21) months of Employee's base annual salary in effect as of January 28, 2002, or (b) in the event 

1

 

of a Change of Control (as defined in Section 2.4), Employee will receive a lump sum payment in the amount of $1,210,000 (less required payroll taxes and other applicable deductions)
representing thirty-three (33) months of Employee's base annual salary in effect as of January 28, 2002 and (ii) the Benefits referenced in Section 2.2 below. 

        2.2  All
medical and dental insurance maintained for Employee's benefit on the same terms and conditions provided immediately prior to the Termination Date (collectively,
"Benefits") shall be
continued by the Company for a period of twenty-one (21) months after the Termination Date; provided, however, in the event of a
Change of Control (as defined in Section 2.4), Employee shall instead receive Benefits continued by the Company for a period of thirty-three (33) months after the Termination Date. The
Company will continue such Benefits either through the payment of 100 percent of the applicable COBRA premiums by the Company or through the payment of 100 percent of the premiums on a
comparable policy or policies. Accordingly, Employee agrees to execute all documents presented to him by the Company that are required to elect COBRA coverage on or after the Termination Date. 

        2.3  Upon
attainment of age 62, Employee shall become eligible for receipt of payment under the Company's Supplemental Executive Retirement Plan (the "SERP") according to the
terms and conditions of the SERP, as modified pursuant to the acceleration of the vesting schedule set forth in his employment letter agreement dated March 11, 1998 (the "Employment Letter
Agreement"). In the event of a Change of Control (as defined in Section 2.4), Employee will become fully vested in the SERP in the same manner as if Employee had been employed for
15 years and reached age 62. 

        2.4  Change
of Control shall mean any of the following which occurs prior to the Termination Date: (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 the Company or any employee benefit plan sponsored by the
Company or any of its subsidiaries) is or becomes the beneficial owner (as such term is defined in Rule 13d-3 under the Exchange Act) of securities of the Company representing
twenty percent (20%) or more of the combined voting power of the outstanding securities of the Company which ordinarily (and apart from rights accruing under special circumstances) have the right to
vote in the election of directors (calculated as provided in paragraph (d) of such Rule 13d-3 in the case of rights to acquire the Company's securities) (the "Securities");
(ii) as a result of a tender offer, merger, sale of assets or other major transaction, the persons who are directors of the Company immediately prior to such transaction cease to constitute a
majority of the Board of Directors of the Company (or any successor corporations) immediately after such transaction; (iii) the Company is merged or consolidated with any other person, firm,
corporation or other entity and, as a result, the shareholders of the Company, as determined immediately before such transaction, own less than eighty percent (80%) of the outstanding Securities of
the surviving or resulting entity immediately after such transaction; (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 the company; (v) the Company transfers substantially all of its assets to another person, firm, corporation or other entity that is not a wholly-owned subsidiary of
the Company; or (vi) the Company enters into a management agreement with another person, firm, corporation or other entity that is not a wholly-owned subsidiary of the Company and such
management agreement extends hiring and firing authority over Employee to an individual or organization other than the Company. 

        2.5  Notwithstanding
any other provisions of this Agreement, in the event that (i) any payment or distribution by the Company to or for the benefit of Employee
(whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result in a
Change of Control or any person affiliated with the Company or such person, all such payments and 

2

 

distributions, including the severance payments and benefits provided for in this Section ("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 interest or penalties are incurred by Employee with respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax") and (ii) there are any excess parachute payments (within the meaning of section 280G(b) of the Code), in the
aggregate, in respect of such Total Payments in excess of $50,000, then the Company shall pay to Employee 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, Employee shall receive such net
amount of Total Payments equal to the amount that he would have received if no Excise Tax was due; provided however that Employee shall cooperate in
good faith with the Company to minimize the amount of the Excise Tax that may become payable by taking any such action or making any such election as may be reasonably requested by the Company in
respect of the Total Payments due to Employee. 

        2.6  Subject
to the provisions of Section 2.7, all determinations required to be made under this Section, including whether and when a Tax Gross-Up is
required and the amount of such Tax Gross-Up and the assumptions to be utilized in arriving at such determination, shall be made by the public accounting firm that, immediately prior to
the Change of Control, was the Company's independent auditor (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and Employee within fifteen
(15) business days of the receipt of notice from Employee that Employee 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, shall be paid by the Company to Employee within five days of the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that no Excise Tax is payable by Employee, then the Accounting Firm shall furnish to Employee a written opinion that failure to
report the Excise Tax on Employee's applicable federal income tax return would not result in the imposition of a negligence or similar penalty. Any determination by the Accounting Firm shall be
binding upon the Company and Employee. As a result of any uncertainty in the application of section 4999 of the Code at the time of the determination by the Accounting Firm hereunder, it is
possible that Tax Gross-Up which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 2.7 and Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Employee. 

        2.7  Employee
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 Employee 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. Employee shall not pay such claim prior to the expiration of the thirty (30)-day period
following the date on which Employee gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies
Employee in writing prior to the expiration of such period that it desires to contest such claim, Employee shall: (1) give the Company any information reasonably requested by the Company
relating to such claim, (2) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (3) cooperate with the Company 

3

 

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

        2.8  If,
after the receipt by Employee of an amount advanced by the Company pursuant to Section 2.7, Employee becomes entitled to receive, and receives, any refund
with respect to such claim, Employee shall (subject to the Company's complying with the requirements of Section 2.7) promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Employee of an amount advanced by the Company pursuant to Section 2.7, a determination is made that
Employee shall not be entitled to any refund with respect to such claim and the Company does not notify Employee in writing of its intent to contest such denial of refund prior to the expiration of
thirty (30) days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the
amount of Tax Gross-Up required to be paid. 

        3.    Cooperation in Transition Period    

        3.1  From
January 28, 2002 through the Termination Date (the "Transition Period"), and upon request by the Company after reasonable prior notice, Employee shall
provide reasonable assistance to the Company and its designees with respect to the Company's transition of the management functions previously handled by Employee as the Executive Vice President and
Chief Financial Officer of the Company to other employees and officers of the Company (collectively, the "Transition Services"). 

        3.2  It
is agreed that Employee shall have the ability to undertake outside consulting services during the Transition Period provided that (i) such consulting services
do not interfere with Employee's provision of the Transition Services in any way, (ii) such work is not provided to a Competitor of the Company as defined in Section 10 below, and
(iii) unless the Company provides prior written consent, no single consulting engagement shall exceed ninety (90) consecutive days. 

        3.3  During
the Transition Period, Employee shall be provided with office space to the extent required to perform the Transition Duties requested by the Company; provided
that all access to 

4

 

the Company's offices by Employee shall be coordinated through the office of the Company's General Counsel. The Company shall also continue to afford Employee his reserved parking space at the
Company's headquarters through the later date to apply from the Transition Period or the Outplacement Services Period (as defined in Section 3.5); provided Employee continues to pay the monthly
parking co-payment applicable to senior executives of the Company. 

        3.4  Employee
shall be entitled to continued participation as an active employee in all employee benefit plans maintained by the Company, including an automobile allowance of
$1,000 per month (subject to payroll taxes and other applicable deductions) and reimbursement of up to $5,000 per calendar year for expenses incurred by Employee in receiving tax preparation
assistance and/or financial planning services, during the Transition Period on the same terms and conditions applicable to Employee on the Effective Date. 

        3.5  Employee
shall be entitled to outplacement services offered under the Company's executive-level program for twelve (12) consecutive months commencing on a date
selected by Employee in the year 2002; provided, however, receipt of such outplacement services will automatically cease once Employee secures
full-time employment or consulting services not otherwise permitted under Section 3.2 (the "Outplacement Services Period"). 

        3.6  Employee
acknowledges that no further PTO benefits will accrue after the Termination Date. 

        3.7  Employee's
participation in all Company employee benefit plans (except as provided for in Sections 2.2 and 2.3 of this Agreement) as an active employee shall cease on
the Termination Date, and Employee shall not be eligible to make contributions to or to receive Company allocations under the Health Net, Inc. 401(k) Associate Savings Plan, or to make any
deferrals pursuant to any deferred compensation plan of the Company on or after the Termination Date. 

        4.    Cooperation in Litigation    

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

        5.    Expenses    

        The
Company shall reimburse Employee for his reasonable expenses that are consistent with the expense reimbursement policy of the Company and are incurred in connection with his
activities undertaken pursuant to Sections 3 and 4 of this Agreement. All requests for reimbursement of such expenses shall be submitted to the attention of the office of the Company's General
Counsel. 

        6.    Waivers and Releases of Claims    

        6.1  In
consideration of the Company providing Employee those benefits and payments set forth herein, Employee knowingly and voluntarily enters into this Agreement and by
signing this Agreement, Employee, on his own behalf and on behalf of his heirs, beneficiaries, successors, representatives, trustees, administrators and assigns, hereby waives and releases the
Company, and each of its past, present and future officers, directors, shareholders, employees, attorneys, consultants, accountants, attorneys, agents, managers, insurers, sureties, parent and sister
corporations, divisions, subsidiary corporations and entities, partners, joint venturers, affiliates, beneficiaries, successors, representatives and assigns (collectively, the "Released Parties"),
from any and all claims, demands, damages, debts, liabilities, controversies, obligations, actions or causes of action of any nature whatsoever, whether based on tort, statute, contract, indemnity,
rescission or any other theory of recovery, including but not limited to claims arising under federal, state or 

5

 

local laws prohibiting discrimination in employment, including Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1866, the Americans with Disabilities Act, the Age Discrimination in
Employment Act, as amended by the Older Workers Benefit Protection Act of 1990, the Worker Adjustment and Retraining Notification Act, the Fair Labor Standards Act, the Employee Retirement Income
Security Act, the California Fair Employment and Housing Act, the California Labor Code, the California Civil Code, the California Business and Professions Code, and the California Constitution, all
as amended from time to time, or claims growing out of any alleged legal restrictions on the Company's right to terminate its employees and whether for compensatory, punitive, equitable or other
relief, whether known or unknown, suspected or unsuspected, that Employee or Employee's successors-in-interest had, now has, or
may hereafter claim to have by reason of any matter or thing arising from any cause whatsover on and before the date of Employee's execution of this Agreement, with the exception of claims arising
under this Agreement, the SERP, and the Company's 1997 Stock Option Plan, along with the Employee's non-qualified stock option agreements dated March 11, 1998, December 4,
1998, February 14, 2000, and February 9, 2001 (collectively, the "Stock Option Agreements"). The provisions in this Section are not intended to prohibit Employee from filing a claim for
unemployment insurance. Furthermore, it is expressly agreed that the payments set forth herein shall fully and finally release the Released Parties from all obligations it may have under any and all
prior agreements with Employee, and that no other payments or benefits will be asserted or requested by Employee. 

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

	A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH
THE DEBTOR.

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

        6.3  Employee
agrees forever to refrain from filing or otherwise initiating or causing to be initiated against the Released Parties any compliance review, suit, action,
investigation or proceeding of any kind, or voluntarily participate in same, individually or as a representative, witness or member of a class, under contract, law or regulation, federal, state or
local, pertaining to any claims released under Section 6, except to the extent required by law, order or regulation and Employee waives the right to any damages pursuant to any such action. 

        7.    Review and Revocation Period    

        Employee
acknowledges that (i) Employee has not relied upon any representations, written or oral, not set forth in this Agreement and (ii) at the time Employee was given
this Agreement, including the Waivers and Releases contained herein, Employee was informed in writing by the Company that (a) Employee had at least twenty-one (21) days in
which to consider whether Employee would sign this 

6

 

Agreement, (b) to the extent that Employee takes less than twenty-one (21) days to consider this Agreement prior to execution, Employee acknowledges that Employee had
sufficient time to consider this Agreement with counsel and that Employee expressly, voluntarily and knowingly waives any
additional time, (c) Employee should consult with an attorney before signing this Agreement, and (d) Employee had an opportunity to consult with an attorney or has voluntarily decided to
sign this Agreement without consulting an attorney. Employee further acknowledges that he may revoke acceptance of this Agreement, including the Waivers and Releases contained herein, by delivering a
letter of revocation no later than 5:00 p.m. Pacific Standard Time on the seventh (7th) day after Employee has signed this Agreement to: Health Net Corporate Legal Department,
21650 Oxnard Street, Woodland Hills, California 91367. Employee acknowledges that he understands that this Agreement, including the Waivers and Releases contained herein, will not become effective or
enforceable until the date on which such seven (7) day-revocation period has expired (the "Effective Date"). Employee further agrees that in the event that he revokes this
Agreement, it shall have no force or effect except to the extent otherwise expressly stated herein, and he shall have no right to receive any payment hereunder. 

        8.    Return of Company Property    

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

        9.    Company Information    

        Employee
acknowledges and agrees that during the period of his employment by the Company, and by virtue of his obligations of ongoing cooperation as specified herein, Employee had and
may continue to have access to and become acquainted with the Company's trade secrets and confidential and proprietary information, including but not limited to, various procedures, practices,
information regarding the organization and operation of the Company, confidential customer information, marketing methods and compilations of records and information that are owned by the Company and
that are regularly used in the operation of its business. The Parties agree that such items of information are important, material and confidential and/or proprietary information and affect the
successful conduct of the Company's business and its goodwill, and that any breach of this Section shall be a material breach of this Agreement. All documents, memoranda, reports, files,
correspondence, lists, and other written and graphic records affecting or relating to the Company's business that Employee may prepare, use, observe, possess or control shall be and remain the
Company's sole property. Employee shall not without the Company's written consent, disclose (directly or indirectly), use, remove or copy any confidential, trade secret or proprietary information he
acquired during the course of his employment by the Company, including without limitation, any technical, actuarial, economic, financial, procurement, provider, customer, underwriting, contractual,
managerial, marketing or other information of any type that has economic value in the business in which the Company is engaged, but not including any previously published information or other
information generally in the public domain. 

        10.    Unfair Competition    

        10.1     Employee
hereby agrees that, during the Transition Period and the six (6)-month period following the Termination Date (the "Protected Period"), Employee
shall not undertake any employment or activity (including, but not limited to, consulting services) with a Competitor (as defined below), in any geographic areas in which the Company operates (the
"Market Area") 

7

 

where the loyal and complete fulfillment of the duties of the competitive employment or activity would inevitably call upon Employee to reveal, to make judgments on or otherwise use any confidential
business information or trade secrets of the business of the Company to which Employee had access during his employment with the Company. For purposes of this Section, "Competitor" shall refer to any
health maintenance organization or insurance company that provides managed health care or related services similar to those provided by the Company or any of its affiliates. 

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

        10.3     It
is hereby further agreed that if any court of competent jurisdiction shall determine that the restrictions imposed in this Section are unreasonable
(including, but not limited to, the definition of Market Area or Competitor or the time period during which this provision is applicable), the Parties hereby agree to any restrictions that such court
would find to be reasonable under the circumstances. 

        10.4     Employee
acknowledges that a material breach or threatened breach by him/her of any of the provisions contained in this Section will cause the Company
irreparable injury which may not be reasonably or adequately compensated for by damages in an action at law. Employee therefore agrees that the Company may be entitled, in addition to any other
remedies, to a temporary, preliminary and permanent injunction, without the necessity of proving the inadequacy of monetary damages or the posting of any bond or security, enjoining or restraining
Employee from any such violation or threatened violations. 

        11.    Exercise of Company Options/Loan Forgiveness    

        11.1     It
is agreed that Employee shall only have three (3) months after the Termination Date (i.e., only
until April 1, 2003) to exercise his outstanding vested options, at which time all outstanding options held by Employee which were not previously exercised shall expire. Employee's outstanding
options shall continue to vest through the Termination Date, but all options not yet vested as of the Termination Date shall expire as of such date. 

        11.2     It
is acknowledged that the outstanding loan to Employee in the principal amount of $125,000 shall be forgiven (along with all accrued interest) by the
Company on March 11, 2002, and that Employee shall be obligated to pay all taxes (including all applicable tax-withholding amounts) related to such forgiveness (except that the
interest amount forgiven shall be "grossed up" by the Company for tax purposes). 

        12.    Status as Officer and Director    

        12.1     It
is acknowledged that as of January 28, 2002, the Company no longer considers Employee to be an executive officer of the Company for purposes of
securities laws or regulations. 

        12.2     It
is acknowledged that in accordance with Article VI, Section 1 of the Company's By-Laws, the Company will provide
indemnification to Employee if he is ever made a party to any legal action, suit, or proceeding by reason of the fact that he was an officer or director of the Company through January 28, 2002.
In addition, it is acknowledged that the Company's director and officer liability insurance will cover eligible acts committed by Employee as an officer or director of the Company through
January 28, 2002. 

8

 

        13.    No Admission of Liability    

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

        14.    No Disparagement    

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

        15.    Successors; Binding Agreement    

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

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

        16.    Severability and Enforceability    

        If
any part or term of this Agreement is held invalid or unenforceable, such invalidity or unenforceability shall not affect in any way the validity or enforceability of any other part
or term of this Agreement. 

        17.    Choice of Law    

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

        18.    Counterparts    

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

        19.    Entire Agreement    

        This
Agreement shall constitute the full and complete agreement of the Parties and shall supercede all prior agreements, communications, or understandings, whether oral or in writing,
between Employee and Company on the subject matter hereof, including but not limited to the Employment Letter Agreement, but specifically not including the SERP (except as its terms have been modified
in this Agreement) and the Stock Option Agreements. There may be no modification of the terms of this Agreement except in writing signed by both Parties. 

        20.    Voluntary Agreement    

        Employee
acknowledges that he has had an opportunity to consult and be represented by counsel of his own choosing in the review of this Agreement including the Waivers and Releases
contained herein, that he has been advised by the Company to do so, that Employee has read this Agreement and understands its terms, and that Employee enters into this Agreement freely, voluntarily,
without coercion, and based on Employee's own judgment and that this Agreement fully and accurately reflects the content of any and all understandings and agreements between the Parties concerning the
matters 

9

 

referenced herein, and that Employee is not relying upon any other representations or promises whatsoever as an inducement to execute this Agreement. 

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

	Employee	 	Health Net, Inc.
	

By:	
 	

/s/  STEVEN P. ERWIN      
	
 	

By:	
 	

/s/  JAY M. GELLERT      

	Name:	 	Steven P. Erwin	 	Name:	 	Jay M. Gellert
	 	 	 	 	 	 	 
	 	 	 	 	Title:	 	President and Chief

Executive Officer
	 	 	 	 	 	 	 
	Dated:	 	March 15, 2002	 	Dated:	 	March 15, 2002
	 	 	
	 	 	 	

10

QuickLinks

Exhibit 10.12

SEPARATION, WAIVER AND RELEASE AGREEMENTQuickLinks
 -- Click here to rapidly navigate through this document
  

 
 

Exhibit 10.25    
  

 
 

HEALTH NET, INC.
  EMPLOYEE STOCK PURCHASE PLAN
  (as amended and restated effective January 1, 2002)

 
 

I. INTRODUCTION    
  

        The title of this Plan shall be the Health Net, Inc. Employee Stock Purchase Plan (the "Plan"). This Plan is an amendment and restatement of the Foundation
Health Systems, Inc. Employee Stock Purchase Plan which was originally effective as of September 1, 1997, and is effective as of January 1, 2002. This Plan was established by
Health Net, Inc. (formerly, Foundation Health Systems, Inc.) (the "Company") to encourage and facilitate the purchase of shares of common stock of the Company by eligible employees of
the Company and its subsidiaries. 

 
 

II. DEFINITIONS    
  

        For
purposes of the Plan, the following capitalized terms shall have the meanings set forth in this Article. 

        2.1  "Benefits
Committee" means the committee designated by the Committee (as defined below) (or its designee) to assist in the review, administration and fiduciary
compliance of all the Company's benefit plans. 

        2.2  "Benefits
Representative" means the Human Resources Department of the Company or such other person or persons designated by the Committee to assist the Committee with
the administration of the Plan. 

        2.3  "Board"
means the Board of Directors of the Company as from time to time constituted. 

        2.4  "Committee"
means the Compensation and Stock Option Committee of the Board. 

        2.5  "Common
Stock" means the Class A Common Stock, par value $.001 per share, of the Company. 

        2.6  "Company"
means Health Net, Inc., a Delaware corporation, and any successor thereto. 

        2.7  "Compensation"
means the base compensation paid to a Participant by an Employer, including shift differentials but excluding bonuses, commissions, overtime or any other
pay outside the regular work schedule, as determined by the Committee. 

        2.8  "Effective
Date" means September 1, 1997. 

        2.9  "Employee
Stock Purchase Account" means the account established pursuant to Section 5(c) of the Plan to which a Participant's payroll deductions are credited. 

        2.10 "Employer"
means the Company and each Subsidiary, other than a Subsidiary, if any, which the Committee excludes from participation in the Plan. 

        2.11 "Entry
Date" means a date which is September 1, 1997, or the first day of each subsequent month. 

        2.12 "Excluded
Employee" means an employee of an Employer who (i) is one of up to thirty-five senior officers of the Company and its Subsidiaries whose
compensation is subject to Committee approval under the by-laws of the Company or (ii) is scheduled to work less than 20 hours a week. 

1

 

        2.13 "Fair
Market Value" means the closing price of a share of Common Stock as reported in The Wall Street Journal on the New
York Stock Exchange Composite Transactions list for the date as of which such value is being determined or, if there shall be no reported transaction on such date or if such date is not a trading day,
on the next immediately preceding date for which a transaction was reported or which was a trading day, provided that if Fair Market Value for any date
cannot be so determined, Fair Market Value shall be determined by the Committee by whatever means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem
appropriate. 

        2.14 "Participant"
means any employee of an Employer who meets the eligibility requirements of Article III and has elected to participate in the Plan as described in
such Article. An individual shall cease to be a Participant as of the date he or she terminates employment with all Employers, for whatever reason, or abandons his or her election pursuant to
Article VII hereof. 

        2.15 "Plan"
means the Health Net, Inc. Employee Stock Purchase Plan herein set forth and any amendment hereto. 

        2.16 "Purchase
Date" means a date which is September 30, 1997, or the last day of each subsequent month. 

        2.17 "Purchase
Period" means a monthly period ending on a Purchase Date. 

        2.18 "Purchase
Price" means, with respect to a share of Common Stock purchased on a Purchase Date, the lesser of (i) 85 percent of the Fair Market Value of a
share of Common Stock on the first day of the Purchase Period ending on such Purchase Date or (ii) 85 percent of the Fair Market Value of a share of Common Stock on such Purchase Date,  provided that if such price includes a fraction of a cent, the Purchase Price shall be rounded up to the next whole cent. 

        2.19 "Subsidiary"
means a corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50 percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. Any
corporation that satisfies the
conditions set forth in the immediately preceding sentence after the date the Plan is adopted by the Board shall be a "Subsidiary" beginning on the date such corporation satisfies such conditions. 

        2.20 "Termination
Date" means the earlier of (i) the date as of which the Board terminates the Plan or (ii) the Purchase Date on which all shares available for
issuance under the Plan shall have been purchased by Participants under the Plan. 

 
 

III. ELIGIBILITY AND ADMINISTRATION    
  

        3.1    ELIGIBILITY AND PARTICIPATION.    

        (a)  Any
employee of an Employer who is not an Excluded Employee shall be eligible to participate in the Plan as of the first Entry Date following such employee's
satisfaction of the "eligibility service requirement" (as defined below in this Section 4(a)), or, if later, the first Entry Date following the date on which the employee's Employer adopted the
Plan. An employee shall have satisfied the eligibility service requirement on the Entry Date following his or her completion of at least 30 days of continuous service with an Employer. For the
sole purpose of calculating days of continuous service under the Plan, employees shall be credited with service for an Employer or a Subsidiary (even though such service may have been performed prior
to (i) the Effective Date or (ii) the Company's acquisition of such Subsidiary. No eligibility provision hereof shall permit participation in the Plan in a manner contrary to the
applicable requirements of the Code and the regulations promulgated thereunder. 

        (b)  At
least 15 days (or such other period as may be prescribed by the Committee) prior to any Entry Date, an employee who is eligible to participate in the Plan
pursuant to subsection 

2

 

(a) of this Section may execute and deliver to the Benefits Representative an application on the prescribed form specifying his or her chosen rate of payroll deductions, as described in
Article IV. Such application shall authorize the employee's Employer to reduce the employee's Compensation by the amount of any such payroll deductions. The application shall also evidence the
employee's acceptance of and agreement to all provisions of the Plan. 

        (c)  If
a Participant is transferred from one Employer to another Employer, such transfer shall not terminate the Participant's participation in the Plan. Such Participant
shall continue to make payroll deductions under the Plan, provided that such Participant completes any forms as the Committee may require, in the time
and manner prescribed by the Committee. 

        (d)  If
an individual terminates employment with all Employers so as to discontinue participation in the Plan, and such individual is subsequently reemployed by an Employer,
such individual shall be required to satisfy the eligibility service requirement described in subsection (a) of this Section as if he or she were a new employee. 

        (e)  Notwithstanding
anything herein to the contrary, no employee shall be entitled to participate in the Plan for a Purchase Period if such employee, on the first day of
such Purchase Period would own shares (including shares which may be purchased under the Plan during such Purchase Period) possessing five percent or more of the total combined voting power or value
of all classes of stock of the Company or any of its Subsidiaries. For purposes of the foregoing sentence, the rules of stock attribution set forth in Section 424(d) of the Code shall apply in
determining share ownership. 

        3.2    ADMINISTRATION.    The Plan shall be administered by the Committee. Subject to the express provisions hereof,
the Committee shall have complete authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it and to make all other determinations necessary or advisable for
its administration. Such determinations made by the Committee shall be conclusive. No member of the Committee shall be personally liable for any decision or determination made in good faith under the
Plan. The Committee may delegate some or all of the Committee's powers and authority hereunder to the Benefits Committee of the Company and further authorizes the Benefits Committee to delegate any of
the powers and authority delegated to the Benefits Committee by the Committee to any other person the Benefits Committee in its discretion deems appropriate to carry out such delegated powers and
authority. 

 
 

IV. PARTICIPANT PAYROLL DEDUCTIONS    
  

        4.1    ELECTIONS.    Each Participant may elect, in the manner described in Section 4, to make payroll
deductions under the Plan in an amount equal to a whole dollar amount or a whole percentage, of such Participant's Compensation for each payroll period, beginning with the first pay date which occurs
on or after the Entry Date as of which such Participant commences participation in the Plan. Payroll deductions for each payroll period under the Plan shall be at least two percent of a Participant's
Compensation for such payroll period and may be limited by such maximum percentage or whole dollar amount, if any, as the Committee may designate from time to time. Once a Participant's participation
in the Plan commences, such Participant shall continue to participate in the Plan for each succeeding Purchase Period until he or she withdraws from the Plan pursuant to Article VII or ceases
to be an eligible employee. 

        4.2    ELECTION CHANGES.    At least 15 days (or such other period as may be prescribed by the Committee) prior
to the first day of any Purchase Period, a Participant shall have the right to elect to increase or decrease his or her designated rate of payroll deductions under the Plan by executing and
delivering to the Benefits Representative an application on the prescribed form specifying his or her chosen rate of payroll deductions. 

3

 

        4.3    ACCOUNTS.    The Committee shall cause to be established a separate Employee Stock Purchase Account on behalf
of each Participant. Such Employee Stock Purchase Accounts shall be solely for accounting purposes, and there shall be no segregation of assets among the separate accounts. Such accounts shall not be
credited with interest or other investment earnings. 

 
 

V. PURCHASE OF COMMON SHARES    
  

        5.1    NUMBER OF SHARES PURCHASED.    Subject to a Participant's right of abandonment described in Article VII,
the balance of each Participant's Employee Stock Purchase Account shall be applied on each Purchase Date to purchase the number of whole and fractional shares of Common Stock determined by dividing
the balance of such Participant's Employee Stock Purchase Account as of such date by the Purchase Price. The Participant's Employee Stock Purchase Account shall be debited accordingly. 

        5.2    MAXIMUM SHARES PURCHASED.    

        (a)  Notwithstanding
any provision of the Plan to the contrary, the maximum number of shares which shall be available for purchase under the Plan shall be 1,000,000 shares of
Common Stock, subject to adjustment as provided in Section 9.2. The shares of Common Stock available under the Plan may be treasury shares, shares originally issued for such purpose or shares
purchased by the Company, as the Company may decide. In the event that the aggregate number of shares of Common Stock which all Participants elect to purchase during a Participation Period exceeds the
number of shares remaining available for issuance under the Plan, then the number of shares to which each Participant is entitled shall be determined by multiplying the number of shares available for
issuance by a fraction, the numerator of which is the number of shares which such Participant has elected to purchase and the denominator of which is the number of shares which all Participants have
elected to purchase. 

        (b)  Notwithstanding
any provision contained herein to the contrary, no Participant shall be permitted to purchase shares of Common Stock in any calendar year under the Plan
and other employee stock purchase plans (within the meaning of Section 423 of the Code) of the Company and its Subsidiaries with an aggregate fair market value (determined at the time the
options to purchase such shares are granted) in excess of $25,000, all determined in the manner provided by Section 423 (b) (8) of the Code.
Any portion of the balance of a Participant's Employee Stock Purchase Account that is not applied to purchase shares of Common Stock due to the application of this subsection shall be refunded to such
Participant as soon as administratively practicable. 

        5.3    TERMINATION OF EMPLOYMENT.    If a Participant dies, terminates employment with all the Employers for any
reason or otherwise becomes an Excluded Employee, then the Participant's payroll deductions shall be suspended and the balance of the Participant's Employee Stock Purchase Account shall be applied to
purchase shares of Common Stock on the Purchase Date next occurring after the effective date of such transfer, except to the extent the Participant abandons his or her election to purchase shares of
Common Stock as described in Article VII. 

 
 

VI. ISSUANCE OF CERTIFICATES    
  

        As soon as administratively practicable after each Purchase Date, the Company, in its sole discretion, shall purchase or issue shares of Common Stock and at the
election of the Company, a certificate representing the shares of Common Stock purchased by such Participant under the Plan on such date shall be issued and delivered to such Participant or a notation
of noncertificated shares shall be made on the stock records of the Company. Shares of Common Stock purchased by a Participant under the Plan shall be registered in the name of the Participant. Shares
of Common Stock purchased hereunder may not be sold, assigned, transferred, pledged, exchanged, encumbered or otherwise disposed of in any way (other than by will or the laws of descent and
distribution) for a period 

4

 

commencing on the Purchase Date and ending one year thereafter (the "Holding Period"); provided, however, that the Committee or, in the event that the
Committee has delegated such power and authority to the Benefits Committee and/or the Benefits Committee has further delegated such power and authority to such other person(s) as the Benefits
Committee in its discretion deems appropriate, the Benefits Committee or its designee, in its discretion, may shorten the Holding Period or otherwise provide for the lapse of any restrictions
outstanding on any shares. All certificates issues to Participants following each Purchase Date shall bear a legend in substantially the following form: 

        The
shares represented by this certificate may not be sold, assigned, transferred, pledged, exchanged, encumbered or otherwise disposed of in any way (other than by will or the laws of
descent and distribution) for a period commencing on [insert applicable Purchase Date] and ending one year thereafter (the "Holding Period"); provided, however, that the
committee administering the Health Net, Inc. Employee Stock Purchase Plan, in its discretion, may shorten the Holding Period or otherwise provide for the lapse of any restrictions outstanding
on any such shares. 

 
 

VII. PARTICIPANT'S RIGHT TO ABANDON PURCHASE OF SHARES    
  

        At any time during a Purchase Period, but in no event later than 15 days (or such shorter period prescribed by the Committee) prior to a Purchase Date, a
Participant may elect to abandon his or her election to purchase shares of Common Stock under the Plan. Such abandonment election shall be made on forms prescribed by the Committee and delivered to
the Benefits Representative. Upon such an election by a Participant, the amount credited to the Participant's Employee Stock Purchase Account for the current Purchase Period shall be refunded to the
Participant as soon as is administratively practicable, and such Participant's participation in the Plan shall terminate. 

 
 

VIII. SUSPENSION ON ACCOUNT OF HARDSHIP WITHDRAWAL    
  

        If a Participant makes a hardship withdrawal from any plan with a cash or deferred arrangement qualified under Section 401(k) of the Code, which plan is
sponsored, or participated in, by the Participant's Employer, such Participant shall be suspended from making payroll deductions under the Plan for a period of twelve months from the date of such
withdrawal. The balance of such Participant's Employee Stock Purchase Account shall be applied to purchase shares of Common Stock on the Purchase Date next occurring after the effective date of such
withdrawal, except to the extent the Participant abandons his or her election to purchase shares of Common Stock as described in Article VII. After the expiration of such twelve-month period,
the Participant may resume his or her payroll deductions in accordance with Article IV. 

 
 

IX. GENERAL    
  

        9.1    RIGHTS NOT TRANSFERABLE.    The right to purchase shares of Common Stock under the Plan shall not be
transferable by any Participant other than by will or the laws of descent and distribution, and must be exercisable, during his or her lifetime, only by the Participant. 

        9.2    CHANGES IN THE COMPANY'S CAPITAL STRUCTURE.    

        (a)  The
existence of the Plan shall not affect in any way the right or power of the Company or its shareholders to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock
that affects the shares of Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise. 

5

 

        (b)  If,
during the term of the Plan, the Company shall effect (i) a distribution or payment of a dividend on its Common Stock in shares of the Company, (ii) a
subdivision of its outstanding Common Stock by a stock split or otherwise, (iii) a combination of the outstanding shares of Common Stock into a smaller number of shares by a reverse stock split
or otherwise, or (iv) an issuance by reclassification or other reorganization of its Common Stock (other than by merger or consolidation) of any shares of the Company, then each Participant
shall be entitled to receive upon the purchase of shares of Common Stock pursuant to the Plan such shares of the Company which the Participant would have owned or would have been entitled to receive
after the happening of such event had the Participant purchased shares of Common Stock pursuant to the Plan immediately prior to the happening of such event. If any other event shall occur that, in
the judgment of the Board, necessitates adjusting the Purchase Price, the number of shares of Common Stock offered or other terms of the Plan, the Board shall take any action that in its judgment
shall be necessary to preserve each Participant's rights substantially proportionate to the rights existing prior to such event. To the extent that any event or action pursuant to this paragraph shall
entitle Participants to purchase additional shares of Common Stock or other shares of the Company, the shares available under the Plan shall be deemed to include such additional shares of Common Stock
or such other shares. 

        (c)  In
the event of a merger of one or more corporations into the Company, or a consolidation of the Company and one or more corporations in which the Company shall be the
surviving corporation, each Participant in the Plan shall, at no additional cost, be entitled, upon his or her payment for all or part of the shares of Common Stock purchasable by him or her under the
Plan, to receive (subject to any required action by shareholders) in lieu of the number of shares of Common Stock which he or she was entitled to purchase, the number and class of shares of stock or
other securities to which such holder would have been entitled pursuant to the terms of the agreement of merger or consolidation if, immediately prior to such merger or consolidation, such holder had
been the holder of record of the number of shares of Common Stock equal to the number of shares paid for by the Participant. 

        (d)  If
the Company is merged into or consolidated with another corporation under circumstances where the Company is not the surviving corporation, or if the Company sells or
otherwise disposes of substantially all its assets to another corporation during the term of the Plan, each holder of a right to purchase shall be entitled to receive, upon his or her payment for all
or part of the shares of Common Stock purchasable by him or her under the Plan and in lieu of such shares of Common Stock, shares of such stock or other securities as the holders of shares of Common
Stock received pursuant to the terms of the merger, consolidation or sale. 

        (e)  Except
as heretofore expressly provided, the issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash
or property, or for labor or services either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock then available for purchase
under the Plan. 

        9.3    SHAREHOLDER APPROVAL.    The Plan was originally submitted to the stockholders of the Company for approval and
approved by the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the1997 annual meeting of stockholders, and originally became effective as of
September 1,1997. 

        9.4    RIGHTS OF A SHAREHOLDER.    No Participant shall have rights or privileges of a shareholder of the Company with
respect to shares purchasable under the Plan unless and until the Participant shall become the holder of record of one or more shares of Common Stock. 

6

 

        9.5    NO REPURCHASE OF COMMON STOCK BY COMPANY.    The Company is not obligated to repurchase any shares of Common
Stock acquired under the Plan. 

        9.6    AMENDMENT OF THE PLAN.    The Board may amend the Plan as it shall deem advisable, subject to any requirement
of stockholder approval required by applicable law, rule or regulation, including Section 423 of the Code; provided, however, that no amendment shall be made without stockholder approval if
such amendment would increase the maximum number of shares of Common Stock available under the Plan (subject to Section 9.2). No amendment may impair the rights of a holder of an outstanding
award without the consent of such holder. 

        9.7    TERMINATION OF THE PLAN.    While it is intended that the Plan remain in effect as long as shares of Common
Stock are available for purchase under the Plan, the Board may terminate the Plan at any time in its discretion by resolutions duly adopted. Upon termination of the Plan, the Committee shall terminate
payroll deductions and shall apply the balance of each Participant's Employee Stock Purchase Account to purchase shares of Common Stock as described in Section 6 as if such termination date
were a Purchase Date under the Plan. Notwithstanding the foregoing, in the event of the termination of the Plan, a Participant may elect, in the time and manner prescribed by the Committee, to abandon
his or her right to purchase all or a portion of the shares of Common Stock purchasable by him. As soon as administratively practicable after the termination of the Plan, the Committee shall refund to
each Participant who elects to abandon his or her right to purchase shares of Common Stock, the entire balance of in his or her Employee Stock Purchase Plan Account, or the applicable portion thereof. 

        Notwithstanding
any provision in the Plan to the contrary, the Plan shall automatically terminate as of the Purchase Date on which all shares available for issuance under the Plan shall
have been purchased by Participants under the Plan. 

        9.8    COMPLIANCE WITH STATUTES AND REGULATIONS.    The sale and delivery of Common Stock under the Plan shall be in
compliance with relevant statutes and regulations of governmental
authorities, including state securities laws and regulations, and with the regulations of applicable stock exchanges. 

        9.9    GOVERNING LAW.    The Plan and all determinations made hereunder and actions taken pursuant hereto, to the
extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to
principles of conflicts of laws. 

        9.10    COMPANY AS AGENT FOR THE EMPLOYERS.    Each Employer, by adopting the Plan, appoints the Company, the Board
and the Committee as its agents to exercise on its behalf all of the powers and authorities hereby conferred upon the Company, the Board and the Committee by the terms of the Plan, including, but not
by way of limitation, the power to amend and terminate the Plan. The authority of the Company, the Board and the Committee to act as such agents shall continue for as long as necessary to carry out
the purposes of the Plan. 

7

QuickLinks

Exhibit 10.25

HEALTH NET, INC. EMPLOYEE STOCK PURCHASE PLAN (as amended and restated effective January 1, 2002)

I. INTRODUCTION

II. DEFINITIONS

III. ELIGIBILITY AND ADMINISTRATION

IV. PARTICIPANT PAYROLL DEDUCTIONS

V. PURCHASE OF COMMON SHARES

VI. ISSUANCE OF CERTIFICATES

VII. PARTICIPANT'S RIGHT TO ABANDON PURCHASE OF SHARES

VIII. SUSPENSION ON ACCOUNT OF HARDSHIP WITHDRAWAL

IX. GENERAL

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00035-of-00352.parquet"}]]