Document:

EXHIBIT 10.45 TO CURRENT REPORT ON FORM 8-K DATED AS OF APRIL 15, 2003

                 ASSUMPTION AND INDEMNITY REINSURANCE AGREEMENT

     THIS  ASSUMPTION  AND  INDEMNITY  REINSURANCE AGREEMENT (this "Agreement"),
                                                                    ---------
dated  as  of  April  7,  2003,  is  made by and among HEALTH NET LIFE INSURANCE
COMPANY,  a  California  domiciled  life  and  disability insurance company (the
"Company"),  and  SAFEHEALTH LIFE INSURANCE COMPANY, a California domiciled life
--------
and  disability  insurance  company  (the  "Reinsurer").  The  Company  and  the
                                            ---------
Reinsurer  are  referred  to  herein  collectively  as  the  "Parties".
                                                              -------

     WHEREAS, the Company desires to transfer and assign to the Reinsurer all of
the  Company's  right, title and interest in and to the Novated Dental Policies;

     WHEREAS,  the  Reinsurer  desires to assume all of the Company's duties and
obligations  in connection with, relating to, or arising at any time out of such
Novated  Dental  Policies  upon  the  terms  and  conditions  set  forth herein;

     WHEREAS, the Company desires to cede, on an indemnity reinsurance basis, to
the  Reinsurer, the Company's Policy Liabilities in connection with, relating to
and  arising  out  of  the  Non-Novated  Dental  Policies,  upon  the  terms and
conditions  set  forth  herein;

     WHEREAS,  the  Reinsurer  desires  to  reinsure on an indemnity reinsurance
basis  the  Company's Policy Liabilities arising under or in connection with the
Non-Novated Dental Policies, upon the terms and conditions set forth herein; and

     WHEREAS,  in  connection  with  the  foregoing,  the  Health  Net, Inc. and
SafeGuard  Health  Enterprises,  Inc.  have  entered  into the Purchase and Sale
Agreement  dated  as  of April 7, 2003 (the "Purchase and Sale Agreement") which
                                             ---------------------------
calls  for the execution and delivery of this Agreement as of the Closing of the
transactions  contemplated  thereunder.

     NOW,  THEREFORE, in consideration of the mutual covenants and promises, and
upon the terms and conditions hereinafter set forth, the Parties hereto agree as
follows.

                                    ARTICLE I
                                   DEFINITIONS
                                   -----------

     Capitalized  terms  used  in this Agreement and not otherwise defined shall
have  the  meanings  given  such  terms in the Purchase and Sale Agreement.  For
purposes  of  this  Agreement,  the  following  terms  shall  have  the meanings
specified  below.

     "Claims"  shall  have  the  meaning  set  forth  in  Section  7.03.
      ------

     "Dental  Policies"  means  all  policies or other agreements (including all
      ----------------
supplements,  endorsements,  riders  and  ancillary  agreements  in  connection
therewith) with individuals, employers or other group sponsors that obligate the
Company  to  provide, arrange for the provision of, or indemnify for the cost of
dental care services and dental supplies as specified therein, which policies or
other  agreements  (i)  are  in  effect  as  of  the  Effective  Time  or  (ii)

<PAGE>
become  effective  after  the  Effective  Time,  including  through  (A)  the
reinstatement of lapsed policies pursuant to provisions therein or of applicable
law,  or  (B) the issuance or renewal thereof by the Company after the Effective
Time to honor quotes outstanding as of the Effective Time, or to satisfy renewal
rights  of  individuals,  employers  or  other  group sponsors under contractual
provisions or applicable law, or (C) modifications agreed to by the Reinsurer on
behalf  of  the Company pursuant to the authority granted to the Reinsurer under
Section  7.01  of  this  Agreement, provided, however, Dental Policies shall not
                                    --------  -------
include any policy or other agreements (including all supplements, endorsements,
riders  and  ancillary  agreements  in  connection  therewith) with individuals,
employers  or other group sponsors that obligate the Company to provide, arrange
for  the  provision  of,  or  indemnify for the cost of dental care services and
dental  supplies as a Medicare + Choice Preferred Provider Organization pursuant
to  Contract  Number  P01239  by  and  between  the  Company and the Centers for
Medicare  and  Medicaid  Services.

     "Dental  Services"  shall  have  the  meaning  set  forth  in Section 7.07.
      ----------------

     "Dispute"  shall  have  the  meaning  set  forth  in  Section  11.02.
      -------

     "Disputed  Claim"  shall  have  the  meaning  set  forth  in  Section 7.03.
      ---------------

     "Disputed  Complaint"  shall  have  the  meaning set forth in Section 7.05.
      -------------------

     "Effective  Time"  means  11:59  p.m.  Pacific  Time,  on the Closing Date.
      ---------------

     "Extra-Contractual  Liabilities"  means  any  and  all  liabilities  and
      ------------------------------
obligations  of  any  nature,  kind  or  description  (i)  for  consequential,
extra-contractual,  tort,  bad  faith,  exemplary,  punitive, special or similar
damages  and  (ii)  for  statutory  or  regulatory  damages,  fines,  penalties,
forfeitures,  and  similar  charges  of  a  penal  or  disciplinary  nature.

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

     "JAMS"  shall  have  the  meaning  set  forth  in  Section  11.03.
      ----

     "Member  Materials"  shall  have  the  meaning  set  forth in Section 3.01.
      -----------------

     "Members"  means  the  individuals  (including  their  covered  spouses and
      -------
covered  dependents)  entitled  to  Dental Services pursuant to Dental Policies.

     "Non-Novated  Dental  Policies" shall have the meaning set forth in Section
      ----------------------------
2.04.

     "Novated  Dental  Policies"  means those Dental Policies transferred to the
      -------------------------
Reinsurer  by  novation  as of the Novation Date and under which Dental Policies
the  Reinsurer  shall  have become the successor to the Company under the Dental
Policies  as  described  in  Section  2.03.

     "Novation  Date"  shall  have the meaning set forth in Section 3.02 hereof.
      --------------

     "Obligations"  shall  have  the  meaning  set forth in Section 2.01 hereof.
      -----------

                                      -2-
<PAGE>
     "Policy  Liabilities" means the Company's gross liabilities and obligations
      -------------------
arising  under  or in connection with the Dental Policies to the extent the same
are  unpaid  or unperformed on or after the Effective Time, before deduction for
all other applicable cessions, if any, under the Company's reinsurance programs.
In  addition,  the  term  "Policy  Liabilities"  shall  include:

     (a)  all  Extra-Contractual  Liabilities  that arise from any act, error or
          omission  after the Effective Time, whether or not intentional, in bad
          faith  or otherwise, by the Reinsurer or any of its affiliates, or any
          of  their  respective  officers,  employees, agents or representatives
          relating  to  the Dental Policies, and any attorneys' fees incurred by
          the  Reinsurer  or  the  Company  related  to  such  Extra-Contractual
          Liabilities;

     (b)  all  liabilities  and obligations for premium taxes arising on account
          of  any  premiums  with  respect  to  the Dental Policies allocable to
          coverage  after  the  Effective  Time;

     (c)  all  liabilities  and  obligations  for returns or refunds of premiums
          (irrespective  of  when  due)  under  the  Dental  Policies;

     (d)  any  assessment  required  by  any  insurance  guaranty,  insolvency,
          comprehensive  health  association or other similar fund maintained by
          any  jurisdiction  relating to the Dental Policies assessed or imposed
          on  the  basis  of  premium  for  coverage  after  the Effective Time;

     (e)  all  liabilities  and  obligations  for  commission payments and other
          compensation,  if  any,  due  and  payable  with respect to the Dental
          Policies  to  or  for  the benefit of agents and brokers to the extent
          that  such  amount  accrues  after  the  Effective  Time;

     (f)  all  liabilities  and  obligations  for payment of any compensation to
          providers  relating  to  Dental Services provided to Members under the
          Dental  Policies  regardless  of  the  "date  of  service";  and

     (g)  any  obligation  arising  as  a  result of the Reinsurer 's failure to
          perform  its  obligations  pursuant  to  Section  7.07.

     "SAP"  means  statutory  accounting  practices  prescribed  or permitted by
      ---
applicable  insurance regulatory authorities consistently applied throughout the
specified period and in the comparable period in the immediately preceding year.

     "Services"  shall  have  the  meaning  set  forth  in  Section  7.02.
      --------

                                   ARTICLE II
                       BUSINESS TRANSFERRED AND REINSURED
                       ----------------------------------

     Section  2.01.  Assignment  of  Dental  Policies.  As of the Effective Time
                     -----------------------------
(i)  except  as  is otherwise provided in Section 5.01 below, the Company hereby
transfers  and  assigns  to  the Reinsurer all of the Company's right, title and
interest  in  the  Dental  Policies  identified  in

                                      -3-
<PAGE>
Schedule  2.01  attached  hereto  and  made  a  part hereof and delegates to the
--------------
Reinsurer all of the Company's duties and obligations of performance and payment
under  the  Dental  Policies  arising  after  the  Effective  Time, and (ii) the
Reinsurer  hereby  accepts,  assumes  and agrees to perform all of the Company's
duties  and  obligations,  whether  direct,  indirect, contingent, unliquidated,
unmatured  or  otherwise  arising  after  the  Effective  Time  (collectively,
"Obligations"),  in  connection  with, relating to, or arising out of the Dental
 -----------
Policies.

     Section  2.02.  Novation.  As  soon  as  practicable  after  the  Effective
                     --------
Time,  the Reinsurer shall use all commercially reasonable efforts to effect the
assumption by novation by the Reinsurer of the Dental Policies (each such Dental
Policy  being  referred  to  herein  as  a "Novated Dental Policies" and Novated
                                            -----------------------
Dental  Policies  shall  include any such subsequently novated Dental Policies).
If  the  Reinsurer does not for any reason assume by novation any Dental Policy,
then the Reinsurer shall accept and reinsure, on an indemnity reinsurance basis,
100%  of  the  Policy Liabilities related to such Non-Novated Dental Policies in
accordance  with  the  terms  and  conditions  of  this  Agreement.

     Section  2.03. Direct Obligations. To the extent that the Reinsurer assumes
                    ------------------
by  novation  any  Dental Policies under applicable law, as of the Novation Date
(i)  the  Reinsurer  shall  be  the  successor to the Company under such Novated
Dental  Policies  as  if  such  Novated  Dental Policies were direct obligations
originally  issued  by  the Reinsurer and the Reinsurer shall be responsible for
the  performance  of all obligations and the payment of all benefits and amounts
due  under  the Novated Dental Policies in accordance with their terms, (ii) the
Reinsurer  shall  be substituted in the place and stead of the Company, and each
Member  under  any  such  Novated Dental Policy shall disregard the Company as a
party  thereto  and  treat  the Reinsurer as if it had been originally obligated
thereunder  except  as  otherwise  provided  herein,  (iii) the Company shall be
released of all liability with respect to such Novated Dental Policies, (iv) the
Members  under  such Novated Dental Policies shall have the right to file claims
arising under such Novated Dental Policies directly with the Reinsurer and shall
have  a  direct right of action for indemnification, benefits and services under
such  Novated  Dental  Policies  against the Reinsurer, and the Reinsurer hereby
consents  to  be subject to any such direct action taken by any such Member, (v)
the Reinsurer shall be responsible for all matters relating to administration of
the  Novated  Dental  Policies,  including  but  not  limited to policy changes,
reinstatement  standards,  premium  rate  changes,  policy  renewals,  agent
commissions  and  administrative  methods and procedures, and (vi) any indemnity
reinsurance  of  such Novated Dental Policies and related liabilities thereunder
by  the  Reinsurer  shall  cease  and  instead be replaced by such assumption by
novation.

     Section  2.04.  Indemnity  Reinsurance. Effective as of the Effective Time,
                     ----------------------
the Company shall cede to the Reinsurer, and the Reinsurer shall assume from the
Company  on an indemnity reinsurance basis, 100% of the Policy Liabilities under
all  Dental  Policies  (including  those  Dental Policies that are identified in
Schedule  2.01  attached  hereto and made a part hereof) which the Reinsurer has
--------------
not  for any reason (including the lack of any required approval or consent of a
party  to  a  Dental  Policy) as of the Effective Time assumed by novation (each
such  Dental  Policy being referred to herein as a "Non-Novated Dental Policy").
                                                    -------------------------
Notwithstanding  the  foregoing,  the term "Non-Novated Dental Policy" shall not
include  any Dental Policy from and after the date of its assumption by novation
at  any  time  by  the  Reinsurer.

                                      -4-
<PAGE>
     Section  2.05.  Policy  Liabilities.  The Reinsurer accepts, reinsures, and
                     -------------------
assumes  the  Policy  Liabilities  subject to any and all defenses, setoffs, and
counterclaims  to which the Company would be entitled with respect to the Policy
Liabilities, it being expressly understood and agreed by the Parties hereto that
no  such  defenses,  setoffs,  or  counterclaims  are  or shall be waived by the
execution and delivery of this Agreement or the consummation of the transactions
contemplated  hereby, and that the Reinsurer is and shall be fully subrogated in
and  to  all  such  defenses,  setoffs,  and  counterclaims.  From and after the
Effective  Time,  as  among the Parties, the Reinsurer shall bear and shall have
responsibility  for  paying  or  performing  all Policy Liabilities.  The Policy
Liabilities  ceded under this Agreement shall be subject to any changes required
by  law  or  regulation  and  the  same  rates,  terms,  conditions,  waivers,
interpretations,  modifications  and  alterations  as  the  Non-Novated  Dental
Policies.

                                   ARTICLE III
                     ASSUMPTION CERTIFICATES; OPTION LETTERS
                     ---------------------------------------

     Section  3.01.  Member  Materials.  The  Reinsurer  shall  prepare  and
                     -----------------
deliver  to  every party to a Dental Policy a Notice of Transfer, Certificate of
Assumption,  and  Notice  of  Rejection  of  Assumption  substantially  in  the
appropriate  forms  set  forth  in  Exhibit A attached hereto (collectively, the
                                    ---------
"Member  Materials") and otherwise acceptable to both the Reinsurer and Company,
------------------
which  shall  inform  each party to a Dental Policy of the proposed transfer and
enable  such  party  to  accept  or  reject  the  assumption  and  novation.

     Section  3.02.  Mailing.  The  Member  Materials  shall be mailed on a date
                     -------
agreed  upon  by  the  Reinsurer and the Company, and, to the extent required by
applicable  law,  shall  be  reviewed  by  and  found  acceptable  to applicable
regulatory  authorities  prior  to  mailing.  The  Reinsurer  shall deliver only
Member  Materials  that  are  in  compliance  with applicable law, regulation or
regulatory  authority.  No  assumption by novation of a Dental Policy shall take
effect  until  the earlier of the acceptance of the assumption by the party to a
Dental  Policy  or  90 days (or such other period, if any, as may be required by
applicable law) (the "Novation Date") after Member Materials have been mailed to
                      -------------
the  party  to  such  Dental  Policy.

     Section  3.03.  Expenses.  All  expenses  incurred  by  the  Parties hereto
                     --------
pursuant  to  this  Article  shall  be  shared  equally  by  the  Parties.

                                   ARTICLE IV
                                      TERM
                                      ----

     Section  4.01.  Term.  This  Agreement  shall  remain  in  force and effect
                     ----
until  all  Policy  Liabilities  reinsured  and  assumed  by Reinsurer have been
discharged  in  full,  or all Dental Policies are transferred and assumed by the
Reinsurer  by  novation and all obligations of the Reinsurer hereunder have been
discharged  in  full.

                                    ARTICLE V
                                  CONSIDERATION
                                  -------------

     Section  5.01.  Consideration  to  the  Reinsurer.  The  Reinsurer shall be
                     -------------------------------
entitled  to  all premium, premium adjustments and other consideration allocable
to  coverage after the Effective Time (irrespective of when due) received by the
Company or the Reinsurer with respect to the

                                      -5-
<PAGE>
Dental  Policies.  In  the  event that the Company receives any premium or other
consideration  with  respect  to a Dental Policy allocable to coverage after the
Effective  Time,  the  Company  shall  promptly  remit  such  premiums and other
consideration  to  the Reinsurer along with all pertinent information pertaining
thereto  including the nature of the payment, source of funds, policy number and
period to which it relates. In the event that the Reinsurer receives any premium
or  other  consideration  with respect to a contractual liability or contractual
obligation  arising under a Dental Policy paid or performed by the Company prior
to  the  Effective  Time,  the  Reinsurer shall promptly remit such premiums and
other  consideration  to  the  Company  along  with  all  pertinent  information
pertaining  thereto including the nature of the payment, source of funds, policy
number  and  period  to  which  it  relates.

     Section  5.02.  Application  of  Future Consideration. Any premium, premium
                     --------------------------------------
adjustments  and  other  consideration  received  and  retained by the Reinsurer
pursuant  to Section 5.01 shall be applied by the Reinsurer to the oldest unpaid
obligations  or  outstanding invoices relating to the period after the Effective
Time.

     Section  5.03.  Additional  Consideration  for  Indemnity  Reinsurance  of
                     ----------------------------------------------------------
Non-Novated  Dental Policies.  As additional consideration for the assumption by
----------------------------
Reinsurer  on  an  indemnity reinsurance basis of 100% of the Policy Liabilities
under  the  Non-Novated  Dental  Policies,  the  Company  shall  (i) transfer to
Reinsurer  at  the  Effective  Time  admitted assets having a net admitted asset
value  determined  in  accordance  with  SAP  as  prescribed or permitted by the
California  Department  of Insurance equal to the Company's net unearned premium
reserve  and  loss  and loss adjustment expense (including losses that have been
incurred but not reported) reserve, if any, attributable to claims arising under
the  Non-Novated Dental Policies prior to the Effective Time; and (ii) assign to
Reinsurer  any amounts due to Company under any reinsurance agreements in effect
on  the  Effective  Time  between  the Company and any reinsurer (other than the
Reinsurer)  relating  to  the  Policy Liabilities assumed by the Reinsurer under
this  Agreement.

     Section  5.04.  Additional  Consideration  for Assumption of Novated Dental
                     -----------------------------------------------------------
Policies.  As  additional  consideration  for  the  assumption  by  novation  by
--------
Reinsurer  of  the  Novated  Dental  Policies, the Company shall (i) transfer to
Reinsurer  at  the  within  five (5) Business Days after the end of the calendar
month  following  the  Novation Date admitted assets having a net admitted asset
value  determined  in  accordance  with  SAP  as  prescribed or permitted by the
California  Department  of Insurance equal to the Company's net unearned premium
reserve  and  loss  and loss adjustment expense (including losses that have been
incurred but not reported) reserve, if any, attributable to claims arising under
the  Novated  Dental  Policies  prior  to the Effective Time; and (ii) assign to
Reinsurer  any amounts due to Company under any reinsurance agreements in effect
on  the  Effective  Time  between  the Company and any reinsurer (other than the
Reinsurer)  relating  to  the  Novated  Dental Policies assumed by the Reinsurer
under  this  Agreement.

                                   ARTICLE VI
                            ACCOUNTING AND SETTLEMENT
                            -------------------------

     Section  6.01.  Accounting  Reports.  On  or  before  the last Business Day
                     -------------------
of  each  month,  the  Reinsurer  shall  provide  the  Company  with  reports of
activities  under this Agreement with respect to the Non-Novated Dental Policies
for the preceding month showing any amounts due the Company or the Reinsurer, as
the  case  may  be,  as  reimbursement  for  paid  claims,  premiums

                                      -6-
<PAGE>
or  other  amounts  due  with respect to the Non-Novated Dental Policies and any
information  required  by  the  Statement of Statutory Accounting Principles, as
amended,  of  the National Association of Insurance Commissioners.  On or before
the  last  Business Day of January, April, July and October, the Reinsurer shall
provide  the  Company  with  quarterly  reports  or  an  annual  report  of such
activities  as  appropriate.

     Section  6.02.  Financial  Statement  Information.  The  Reinsurer  and the
                     ---------------------------------
Company  shall  each  provide  the  other  with  the  financial,  accounting and
actuarial information necessary to prepare SAP regulatory, tax and GAAP monthly,
quarterly  and  annual  financial  statements  and  returns  and  satisfy  other
requirements  including  reserve  and  related  calculations  regarding  the
Non-Novated Dental Policies in the form reasonably required by the Reinsurer and
the  Company.  The  Company and the Reinsurer shall agree to mutually acceptable
procedures  and  time  schedules  for  the  transmission  and  receipt  of  such
information.

     Section  6.03. Settlements. Within ten (10) Business Days after delivery of
                    -----------
each  monthly report, the Reinsurer and the Company shall settle on an estimated
basis,  all amounts then due under this Agreement for that month.  The Reinsurer
and  the  Company  shall  make  a  final  settlement of all amounts due for each
calendar  year within twenty (20) Business Days after the delivery of the annual
report  referred  to  in  Section  6.01  hereof.

     Section  6.04.  Net  Payment Basis. Amounts payable under this Agreement by
                     -------------------
the  Parties  hereto shall be settled against each other, dollar for dollar, and
only  a  net  payment shall be due; provided, however, that no balance or amount
                                    --------  -------
due  by  the  Parties  under  any  other  agreement  shall be offset against any
obligation  arising  under  this  Agreement.

     Section  6.05.  Late Payments. Should any payment due any party be received
                     --------------
by  such  party  more  than  sixty (60) days after the due date for such payment
under  this Agreement, interest shall accrue from the date on which such payment
was  due  (taking  into  account the provisions of 6.06 hereof) until payment is
received  by  the party entitled thereto, at an annual rate equal to the Bank of
America  Reference  Rate  quoted  for  six month periods as reported in The Wall
Street  Journal  on  the  first  Business Day of the month in which such payment
first  becomes  due.

     Section  6.06.  Federal  Funds.  All  settlements  in  accordance with this
                     --------------
Agreement  shall  be made by wire transfer of immediately available funds on the
due  date,  or  if  such  day  is not a Business Day, on the next day which is a
Business  Day.  Payment  may  be  made by check payable in immediately available
funds  in  the event the party entitled to receive payment has failed to provide
wire  transfer  instructions.

     Section  6.07.  Reports  to Regulatory Authorities. During the term of this
                     -----------------------------------
Agreement, the Reinsurer and the Company shall promptly furnish the other copies
of  any  and  all filings with, and reports or communications received from, any
regulatory  authority  which  relates directly and materially to the Non-Novated
Dental  Policies,  including,  without  limitation,  each annual statement, each
quarterly  financial  report to the regulatory authority of the party's domicile
having  principal  jurisdiction  over  the  party  and  each  report on periodic
examination  issued by such regulatory authority to the extent it relates to the
Non-Novated  Dental  Policies.

                                      -7-
<PAGE>
                                   ARTICLE VII
                     DENTAL POLICY ADMINISTRATION; REPORTING
                     ---------------------------------------

     Section  7.01.  Administration  of  Non-Novated  Dental  Policies.  The
                     -------------------------------------------------
Company  hereby  grants  the  Reinsurer  authority  in  all  matters relating to
administration  of  the  Non-Novated  Dental Policies to the fullest extent such
authority  may  be  granted  pursuant  to applicable law.  In furtherance of the
foregoing,  the Company hereby nominates, constitutes and appoints the Reinsurer
as  its  attorney-in-fact  with  respect  to  the rights, duties, privileges and
obligations  of the Company in and to the Non-Novated Dental Policies, with full
power  and  authority  to  act  in the name, place and stead of the Company with
respect  to  the  Non-Novated  Dental  Policies.

     Section  7.02. Administration. The Reinsurer shall, at its expense, provide
                    --------------
the  technical  and  administrative  service,  assistance  and support functions
described in Schedule 7.02 attached hereto (the "Services") reasonably necessary
             -------------                       --------
or  appropriate  for the proper management and administration of the Non-Novated
Dental  Policies,  which shall include, but not be limited to, Services required
for  the  proper  administration of the Non-Novated Dental Policies prior to the
Effective  Time and not performed as of the Effective Time.  The Services at all
times shall be consistent with the Company's prevailing practices and procedures
as  of  the  Effective  Time  with respect to similar types of policies actually
communicated  by  the Company to Reinsurer and all applicable laws, regulations,
and  regulatory  actions  and  pronouncements.  (As  used  elsewhere  in  this
Agreement,  the  terms  "prevailing  practices and procedures" will refer to the
Company's  prevailing  practices  and  procedures  as  of  the  Effective  Time
communicated  by  the  Company  to  the  Reinsurer).

     Section  7.03.  Claims  Payment Instructions. The Reinsurer at its own cost
                     -----------------------------
shall administer and process all payments to reimburse providers and Members for
covered  Dental Services under the Non-Novated Dental Policies (the "Claims") in
                                                                     ------
conformance  with the Company's prevailing practices and procedures with respect
to  similar  types  of  policies,  including  review, investigation, adjustment,
settlement,  defense and payment of Claims, special investigation and anti-fraud
compliance,  and  preparation  of  any  report required concerning the foregoing
Services and will, in connection with such Claims administration, retain, at its
sole  discretion and cost, any outside investigation firms, adjusters, attorneys
or  other  professionals that the Reinsurer deems necessary in the adjustment of
such Claims.  If a Claim arising prior to the Effective Time under a Non-Novated
Dental  Policy  is  presented  that  the  Reinsurer  in good faith disputes, the
Reinsurer  shall  consult  with  the  Company.  If, after such consultation, the
Reinsurer  and  the  Company  disagree as to how to resolve a Claim, the Company
shall  be entitled to assume, at its own expense, the control of the handling or
the  defense of such a disputed Claim (a "Disputed Claim"), including employment
                                          --------------
of  counsel.  The  Company  shall  apprise the Reinsurer of and consult with the
Reinsurer  with respect to the progress of a Disputed Claim.  In exercising such
control,  the  Company  shall  act  in  good  faith in accordance with generally
accepted  claims  practices  of  similar  insurance  companies  under  similar
circumstances.  Any  payment  of  any  portion  of  a Disputed Claim made by the
Company  shall  be  added to the Policy Liabilities and shall be unconditionally
binding  on  the  Reinsurer;  provided, however, that if the Company receives an
                              --------  -------
offer of settlement or compromise from the other parties to a Disputed Claim for
a  particular  amount  or obtains a commitment from such other parties that they
would accept a compromise or settlement requiring only the payment of a specific
amount, the granting of an appropriate release or similar accommodation, and the
Company,  after  mandatory

                                      -8-
<PAGE>
consultation  with  and  over the objection of the Reinsurer, refuses to consent
thereto  and  elects  to  continue  to dispute or otherwise pursue such Disputed
Claim,  then  the liability of the Reinsurer with respect of such Disputed Claim
shall  be  deemed  limited  to  that amount including expenses which the Company
would have been liable if such compromise or settlement had been accepted by the
Company.

     Section  7.04.  Communications  Relating  to  Non-Novated  Dental Policies.
                     -------------------------------------------------------
On  and  after  the  Effective  Time,  the Company shall forward promptly to the
Reinsurer  all  notices and other written communications it receives relating to
the  Non-Novated  Dental  Policies  (including  all inquiries or complaints from
state  insurance  regulators,  agents,  brokers  and  Members and all notices of
claims,  suits  and  actions  for  which  it  receives service of process).  The
Company  shall  be  entitled  to  retain  copies  of  all  such  materials.

     Section  7.05.  Complaint  Handling  Procedure. The Parties shall cooperate
                     ------------------------------
with  each  other in providing information necessary to respond to any inquiries
and  complaints  concerning  the Non-Novated Dental Policies.  All inquiries and
complaints  concerning  the  Non-Novated Dental Policies received by the Company
shall  be  forwarded  immediately  by  facsimile  or overnight mail to a contact
person  designated  by  the  Reinsurer  for  reply.  After consultation with the
Company,  except as provided below, the Reinsurer shall answer all inquiries and
complaints  received  by  it concerning the Non-Novated Dental Policies.  If the
Reinsurer  and the Company disagree as to the appropriate response to an inquiry
or  complaint,  the Company shall be entitled to assume, at its own expense, the
control  of  the  handling  of  the  response  to  such  inquiry or complaint (a
"Disputed  Complaint"),  including  employment  of  counsel.  The  Company shall
 -------------------
apprise  the  Reinsurer  of  and  consult with the Reinsurer with respect to the
progress of a Disputed Complaint.  In exercising such control, the Company shall
act  in  good  faith  consistent  with  the  Company's  prevailing practices and
procedures  as  of  the  Effective  Time  with  respect  to similar inquiries or
complaints.  Any  payment  arising out of a Disputed Complaint controlled by the
Company,  to the extent such payment constitutes an Extra Contractual Liability,
shall be added to the Policy Liabilities and shall be unconditionally binding on
the  Reinsurer;  provided,  however,  that  if  the Company receives an offer of
                 --------   -------
settlement  or  compromise  from the other parties to a Disputed Complaint for a
particular  amount  or  obtains  a  commitment from such other parties that they
would accept a compromise or settlement requiring only the payment of a specific
amount, the granting of an appropriate release or similar accommodation, and the
Company,  after  mandatory  consultation  with  and  over  the  objection of the
Reinsurer,  refuses  to  consent  thereto  and  elects to continue to dispute or
otherwise  pursue  such  Disputed Complaint, then the liability of the Reinsurer
with  respect  of such Disputed Complaint shall be deemed limited to that amount
including  expenses  for  which  the  Company  would  have  been  liable if such
compromise and settlement had been accepted by the Company.  Upon answering such
inquiries  or complaints, the Reinsurer shall furnish the Company with a copy of
the  complaint  file.  The Reinsurer shall be solely responsible for maintaining
any complaint files, complaint registers or other reports of any kind, which are
required  to  be  maintained  under  applicable  law.

     Section  7.06.  Filings.  The  Reinsurer  shall  handle  all compliance and
                     -------
regulatory  matters  relating  to  the  administration of the Non-Novated Dental
Policies,  including  monitoring  changes in applicable law, filing and refiling
forms and rates, and preparing and filing all reports and other filings required
by  applicable  law.  The  Reinsurer  shall  provide  to  the  Company copies of

                                      -9-
<PAGE>
all reports and filings with respect to the Non-Novated Dental Policies required
to  be  made  with  any  Governmental  Authority.

     Section  7.07. Provider Services. In fulfilling its Obligations pursuant to
                    -----------------
Section  2.01,  the  Reinsurer  shall  provide, arrange for the provision of, or
indemnify  for the cost of dental care services and supplies ("Dental Services")
                                                               ---------------
required  to  satisfy  all  obligations  with respect to the provision of Dental
Services  to Members and their dependents under the Non-Novated Dental Policies.
The  Reinsurer  shall  be  responsible  for  the  recruitment, credentialing and
management  of,  and  for contracting with, or gaining access to dental care and
service  providers  adequate  for the delivery of all Dental Services to Members
required  by  or  incidental  to  the  Non-Novated  Dental  Policies.

     Section  7.08.  Administration of Novated Dental Policies. Except for those
                     ------------------------------------------
services  to  be  provided  to  the  Reinsurer  by  the  Company pursuant to the
Transition  Services  Agreement,  administration  and  servicing  of the Novated
Dental  Policies  shall  be  the  sole  responsibility  of  the  Reinsurer.

     Section  7.09.  Communications  Relating to Novated Dental Policies. On and
                     ----------------------------------------------------
after  the  Effective  Time, the Company shall forward promptly to the Reinsurer
all  notices  and  other  written  communications received by it relating to the
Novated  Dental  Policies  (including  all  inquiries  or  complaints from state
insurance  regulators,  agents,  brokers and insureds and all notices of claims,
suits  and actions for which it receives service of process).  The Company shall
be  entitled  to  retain  copies  of  all  such  materials.

     Section 7.10. Novation Reports. Within ten (10) Business Days after the end
                   ----------------
of  each  month  after the Effective Time, beginning with the month in which the
first  novation  of  an Dental Policy occurs, the Reinsurer shall provide to the
Company  a report indicating all Dental Policies that have been the subject of a
novation  by  the  Reinsurer  during  the  prior  month.

     Section  7.11.  Inspection. Each party hereto and its respective authorized
                     ----------
representatives  shall  have the right, upon prior written notice, at reasonable
times  during  normal  business hours, to inspect and review all books, records,
accounts,  reports, tax returns, files and information of the other party hereto
reasonably  relating  to  this Agreement.  The Parties shall keep all non-public
information  received  from  the  other  party strictly confidential, and unless
otherwise  required  by  applicable  Law  or  Governmental  Authority, shall not
disclose  any  of  the  same  without  obtaining the prior approval of the party
providing  the  information.  The  rights of the Parties under this Section 7.11
shall  survive  termination  of  this  Agreement.

                                  ARTICLE VIII
                     REGULATORY APPROVALS; STATEMENT CREDIT
                     --------------------------------------

     Section  8.01.  Regulatory  Approvals.  The  consummation of this Agreement
                     --------------------
and  the  transactions  contemplated  hereby  are  expressly contingent upon and
subject  to obtaining any and all such approvals and consents as may be required
by  applicable law, regulation, or Governmental Authority.  No provision in this
Agreement  shall  be  deemed  to  require  any  party  hereto to take any action
prohibited  by applicable law, regulation, or regulatory authority.  The form of
any  application  for  any  such  approvals  or  consents  as may be required by
applicable  law,

                                      -10-
<PAGE>
regulation,  or  Governmental Authority shall be approved by the Company and the
Reinsurer  prior  to  the  filing  of  any  such  application.

     Section  8.02.  Statement  Credit.  The  Reinsurer shall at its own expense
                     ----------------
take  all  actions  reasonably  necessary  to  permit the Company to obtain full
financial  statement  credit in all applicable jurisdictions for the reinsurance
provided to it by the Reinsurer and the assumptions by novation pursuant to this
Agreement,  including,  if  necessary,  posting  acceptable  security.

                                   ARTICLE IX
                                 INDEMNIFICATION
                                 ---------------

     Section  9.01.  Indemnification  by  the  Reinsurer.  The  Reinsurer  shall
                     ----------------------------------
indemnify,  defend  and  hold  the  Company harmless from and against all Policy
Liabilities and all losses, liabilities, claims, damages and expenses (including
reasonable attorneys' fees and expenses) that are based upon or arise out of the
breach  of  any  obligation  of  the  Reinsurer  provided for in this Agreement.

     Section  9.02.  Indemnification by the Company. The Company shall indemnify
                     -------------------------------
the  Reinsurer  against,  and  hold them harmless from, all losses, liabilities,
claims, damages and expenses (including reasonable attorneys' fees and expenses)
that  are based upon or arise out of the breach of any obligation of the Company
provided  for  in  this  Agreement.

                                    ARTICLE X
                                   INSOLVENCY
                                   ----------

     Section  10.01.  Payments  by  the  Reinsurer.  With  respect  to  any
                      ----------------------------
Non-Novated  Dental  Policy,  the  Reinsurer  hereby agrees that all amounts due
under  this  Agreement  with respect to the Non-Novated Dental Policies shall be
payable  by the Reinsurer to any conservator, liquidator, or statutory successor
of  the  Company  on  the basis of the claims allowed against the Company by any
court  of competent jurisdiction or by any conservator, liquidator, or statutory
successor  of  the  Company  having  authority  to  allow  such  claims, without
diminution  because  of that insolvency, or because the conservator, liquidator,
or  statutory  successor  has  failed  to  pay  all  or a portion of any claims.
Payments  by  the  Reinsurer  as  set  forth in this Section 10.01 shall be made
directly  to  the  Company  or  to  its  conservator,  liquidator,  or statutory
successor,  except  where  the  Non-Novated  Dental Policy specifically provides
another payee of such reinsurance in the event of the insolvency of the Company.

     Section  10.02. Claims. It is agreed that in the event of the insolvency of
                     ------
the  Company,  the  liquidator,  receiver  or  other  statutory successor of the
Company  shall  give  prompt  written notice to the Reinsurer of the pendency or
submission of a Claim under the Non-Novated Dental Policies reinsured hereunder.
During  the pendency of such claim, the Reinsurer may investigate such Claim and
interpose,  at  its  own  expense,  in  the proceeding where such claim is to be
adjudicated,  any defense available to the Company or its receiver.  The expense
thus incurred by the Reinsurer is chargeable against the Company, subject to any
court  approval,  as  a  part  of  the  expense  of  insolvency, liquidation, or
rehabilitation  to  the  extent  of  a  proportionate share of the benefit which
accrues  to  the  Company  solely  as  a result of the defense undertaken by the
Reinsurer.

                                      -11-
<PAGE>
     Section  10.03. Novated Dental Contacts. All amounts due a Member under the
                     -----------------------
Novated  Dental  Policies  shall be payable by the Reinsurer on the basis of the
liability of the Reinsurer under the Novated Dental Policies, without diminution
because  of  the  insolvency  of  the  Company.  Any  benefits or amounts due to
Members  with  respect  to a Novated Dental Policy shall be paid or performed by
the  Reinsurer  in  accordance  with  the  Novated  Dental  Policy.

                                   ARTICLE XI
                                   ARBITRATION
                                   -----------

     Section  11.01.  Conciliation.  If  a  dispute  between  any of the Parties
                      ------------
relating  to  this  Agreement is not resolved within ten (10) Business Days from
the  date  that  any  party has notified another party that such dispute exists,
then  such  dispute shall be submitted on the next Business Day for conciliation
to  a  senior  executive  officer or his or her designee of each party.  If such
senior  executive officers are unable to resolve the dispute within fifteen (15)
Business  Days  from  the  date  that  it  is first presented to them, then such
dispute  shall  be  referred  to  binding  arbitration.

     Section 11.02. Arbitration. In the event of any dispute between the Parties
                    -----------
hereto  relating to, arising out of, or in connection with any provision of this
Agreement  (hereinafter  a  "Dispute"),  the Parties to this Agreement and their
representatives,  designees,  successors and assigns agree that any such Dispute
shall  be  settled  by  binding  arbitration  to  take  place  in Orange County,
California.

     Section  11.03.  Appointment of Arbitrator. Any arbitration hereunder shall
                      --------------------------
be  conducted by a single arbitrator chosen from the panel of arbitrators of the
Judicial Arbitration & Mediation Services ("JAMS") with experience and expertise
in  the dental HMO or dental indemnity insurance business.  If a JAMS arbitrator
with  specific  experience  in  the  dental  HMO  or  dental indemnity insurance
business  is  not  available, the arbitrator must have general experience in the
health  insurance  industry.  Within  ten  (10) days of notice of a Dispute from
Company  to  Reinsurer  or  notice  from  Reinsurer  to Company, the Company and
Reinsurer  shall  use  their  best  efforts  to  choose  a  mutually  agreeable
arbitrator.  If the Company and the Reinsurer cannot agree on an arbitrator, the
arbitrator  shall  promptly  be  selected  by  JAMS.

     Section  11.04.  Procedures.  The party submitting a Dispute to arbitration
                      ----------
hereunder shall present its case to the arbitrator and the other party hereto in
written  form  within  twenty (20) days after the appointment of the arbitrator.
The  other  party  hereto  shall  then have twenty (20) days to submit a written
response  to  the arbitrator and the original party who submitted the Dispute to
arbitration.  After  timely  receipt  of each party's case, the arbitrator shall
have  twenty  (20)  days  to  render  his  or  her  decision.

     Section  11.05.  Applicable  Law.  The arbitrator is relieved from judicial
                      ---------------
formalities  and,  in  addition to considering the rules of law, the limitations
contained  in  this  Agreement  and the customs and practices of the health care
industry,  shall make his or her award with a view to effectuating the intent of
this  Agreement.

     Section  11.06.  Decisions  Final.  The  decision  of  the arbitrator shall
                      ----------------
be  final and binding upon the Parties, and judgment may be entered thereon in a
court  of  competent  jurisdiction.

                                      -12-
<PAGE>
     Section  11.07.  Costs.  Each party shall bear its own cost of arbitration,
                      -----
and  the  costs  of  the  arbitrator  shall  be  shared  equally by the Parties.

     Section  11.08.  Equitable Relief. Sections 11.01 and 11.02 shall not apply
                      -----------------
to  any  claim  for  equitable relief, including, without limitation, claims for
specific  performance,  a  preliminary  injunction,  or  a temporary restraining
order.  Such claims shall be submitted to a court of competent jurisdiction, and
neither  party shall be required to post any bond or other security.  If a party
chooses  to  pursue equitable relief, such conduct shall not constitute a waiver
of, or be deemed inconsistent with, the arbitration provisions set forth in this
Article  XI.  Once  the claims for equitable relief are finally decided, any and
all remaining claims shall be submitted to arbitration pursuant to Section 11.02
and  the  arbitrator  shall be bound by the findings and rulings of the court on
the  claims  for  equitable  relief.

     Section  11.09.  Survival  of  Article.  This  Article  XI  shall  survive
                      ---------------------
termination  of  this  Agreement.

                                   ARTICLE XII
                                  MISCELLANEOUS
                                  -------------

     Section  12.01.  Notices.  Any  notice  or  other communication required or
                      -------
permitted  hereunder  shall  be  in  writing  and  shall be delivered by hand by
certified  process  server,  certified  or  registered mail (postage prepaid and
return  receipt requested), by a nationally recognized overnight courier service
(appropriately  marked for overnight delivery) or by facsimile (with request for
immediate  confirmation  of  receipt in a manner customary for communications of
such  respective  type).  Notices  shall  be effective upon receipt and shall be
addressed  as  follows:

     If to the Reinsurer:

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

                       with a copy to:

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

                       and

                                      -13-
<PAGE>
                            David K. Meyercord
                            Strasburger and Price, LLP
                            901 Main Street, Ste. 4300
                            Dallas, Texas  75202-3794
                            Tel: (214) 651-4525
                            Fax: (214) 659-4023

     If to the Company:

                            Health Net, Inc.
                            21650 Oxnard Street
                            Woodland Hills, California  91367
                            Attention:  General Counsel
                            Facsimile: (818) 676-7503

                       with a copy to:

                            Sonnenschein Nath & Rosenthal
                            685 Market Street, 6th Floor
                            San Francisco, California  94105
                            Attention:  Kenneth B. Schnoll
                            Facsimile:  (415) 543-5472

     All  notices and other communications required or permitted under the terms
of  this  Agreement  that are addressed as provided in this Section shall (i) if
delivered  personally  or  by  overnight express, be deemed given upon delivery;
(ii) if delivered by facsimile transmission, be deemed given when electronically
confirmed;  and  (iii)  if sent by registered or certified mail, be deemed given
when  received.  Any  party  from time to time may change its address for notice
purposes by giving a similar notice specifying a new address, but no such notice
shall  be  deemed  to have been given until it is actually received by the party
sought  to  be  charged  with  the  contents  thereof.

     Section 12.02. Entire Agreement. This Agreement (including the Exhibits and
                    ----------------
Schedules  hereto)  and  the Transaction Agreements contain the entire agreement
and  understanding  among  the  Parties  with  respect  to  the  transactions
contemplated  hereby,  and  supersedes  all prior agreements and understandings,
written  or  oral,  with  respect  thereto.

     Section  12.03.  Expenses.  Except  as otherwise expressly provided in this
                      --------
Agreement,  whether or not the transactions contemplated hereby are consummated,
each  of  the  Parties  hereto  shall pay its own costs and expenses incident to
preparing  for,  entering  into  and  carrying  out  this  Agreement  and  the
consummation  of  the  transactions  contemplated  hereby.

     Section  12.04. Counterparts. This Agreement may be executed in one or more
                     ------------
counterparts,  each of which shall be deemed an original, but all of which shall
constitute  one  and  the same instrument and shall become effective when one or
more  counterparts  have been signed by each of the Parties and delivered to the
other  Parties.

                                      -14-
<PAGE>
     Section  12.05.  No  Third  Party  Beneficiary.  Except  as  otherwise
                      -----------------------------
specifically  provided  in this Agreement, nothing in this Agreement is intended
or  shall  be construed to give any person, other than the Parties hereto, their
successors  and permitted assigns, any legal or equitable right, remedy or claim
under  or  in  respect of this Agreement or any provisions contained herein, and
Reinsurer  shall  not  be  directly  liable  hereunder  to  any Member under any
Non-Novated  Dental  Policy.

     Section 12.06. Amendment. This Agreement may only be amended or modified by
                    ---------
a  written  instrument  executed  on  behalf  of the Parties hereto and any such
amendment  shall  be  subject  to  receipt  of  any and all consents, approvals,
permits  and  authorizations  required  to  be  obtained  from  Governmental
Authorities.

     Section  12.07.  Assignment; Binding Effect. Neither this Agreement nor any
                      ---------------------------
of  the rights, interests or obligations under this Agreement shall be assigned,
in  whole  or in part, by either of the Parties hereto without the prior written
consent  of  the  other party, and any such assignment that is attempted without
such  consent  shall  be null and void.  Subject to the preceding sentence, this
Agreement  shall be binding upon, inure to the benefit of, and be enforceable by
the  Parties  and  their  respective  successors  and  permitted  assigns.

     Section  12.08.  Invalid  Provisions. If any provision of this Agreement is
                      -------------------
held  to  be illegal, invalid, or unenforceable under any present or future law,
and if the rights or obligations of the Parties under this Agreement will not be
materially  and  adversely  affected  thereby, (a) such provision shall be fully
severable;  (b)  this  Agreement  shall  be  construed  and  enforced as if such
illegal,  invalid, or unenforceable provision had never comprised a part hereof;
and  (c)  the  remaining provisions of this Agreement shall remain in full force
and  effect  and shall not be affected by the illegal, invalid, or unenforceable
provision  or  by  its  severance  herefrom.

     Section 12.09. Duty of Cooperation. Each party hereto shall cooperate fully
                    -------------------
with  the  other  party hereto in all reasonable respects in order to accomplish
the  objectives  of  this  Agreement.

     Section  12.10.  Governing  Law.  This  Agreement  shall be governed by and
                      --------------
construed  in  accordance  with  the  laws  of  the  State  of  California.

     Section  12.11.  Waiver.  Any  term  or  condition of this Agreement may be
                      ------
waived  in  writing  at  any  time  by the party that is entitled to the benefit
thereof.  A  waiver  on  one  occasion shall not be deemed to be a waiver of the
same  or any other breach or nonfulfillment on a future occasion.  All remedies,
either under the terms of this Agreement, or by law or otherwise afforded, shall
be  cumulative  and  not  alternative,  except  as  otherwise  provided  by law.

     Section  12.12.  Errors  and  Omissions.  Inadvertent  delays,  errors  or
                      ----------------------
omissions  that  occur  or  are  made  in  connection  with  the  transactions
contemplated  by  this  Agreement shall not relieve any party from any liability
that  would  have  attached  had  such  delay,  error  or omission not occurred,
provided that such error or omission is rectified by the party making such error
or  omission  as  soon  as  possible  after  discovery thereof and such error or
omission  does  not  prejudice  any  other  party.

                                      -15-
<PAGE>
     Section  12.13.  Interpretation.  For purposes of this Agreement, the terms
                      --------------
"hereof", "herein", "hereto", "hereunder", and derivative or similar words refer
  -----    ------    ------    ---------
to  this  Agreement  (including the exhibits hereto) as a whole unless otherwise
indicated.  Whenever  the words "include", "includes" or "including" are used in
                                 -------    --------      ---------
this  Agreement,  they  shall  be  deemed  to  be followed by the words "without
                                                                         -------
limitation".  Whenever  the  singular is used herein, the same shall include the
      ----
plural,  and  whenever  the  plural  is  used herein, the same shall include the
singular,  where  appropriate.  The  headings  used  in this Agreement have been
inserted  for  convenience  and  do  not  constitute  matter  to be construed or
interpreted  in  connection  with  this  Agreement.

     Section  12.14. Business Associate. In performing functions, activities, or
                     ------------------
services  for,  or  on behalf of, the Company involving the use or disclosure of
Protected  Health  Information,  as  that term is defined in 45 CFR 164.501, the
Reinsurer  shall  comply  with  the  Business  Associate  Addendum  set forth in
Schedule  12.14  hereto.
---------------

     IN  WITNESS  WHEREOF, the Company and the Reinsurer have each executed this
Agreement  as  of  the  date  first  written  above.

                                 SAFEHEALTH LIFE INSURANCE COMPANY

                                      /s/ James E. Buncher
                                 ----------------------------------------
                                      James E. Buncher
                                      President and Chief Executive Officer

                                      /s/ Ronald I. Brendzel
                                 ----------------------------------------
                                      Ronald I. Brendzel
                                      Senior Vice President and Secretary

                                 HEALTH NET LIFE INSURANCE COMPANY

                                      /s/ David W. Anderson
                                 ----------------------------------------
                                      David W. Anderson
                                      President

                                      -16-
<PAGE>
                                  SCHEDULE 2.01

                        HEALTH NET LIFE INSURANCE COMPANY
                                 DENTAL POLICIES

     The  Dental Policies identified by group and individual contract number and
name:

                    To be determined as of the Effective Time

                                      -1-
<PAGE>
                                  SCHEDULE 7.02

                                    SERVICES

     The  Reinsurer  agrees to perform, consistent with the Company's prevailing
practices  and  procedures and the terms of the Non-Novated Dental Policies, all
services  reasonably  necessary  for,  and incident to the proper management and
administration of, the Non-Novated Dental Policies, including but not limited to
the  following  services:

A.   All  Member  services relating to the Non-Novated Dental Policies including
     the  following:

     1.   Billing  and  collection  of  premiums;

     2.   Process  and  payment  of  claims;

     3.   Handle  Member service requests (including adding new Members to group
          Dental  Policies,  deleting  Members  from  group  Dental  Policies),
          administration  of  COBRA  responsibilities,  inquiries and complaints
          relating  to  the  Non-Novated  Dental  Policies;

     4.   Preparation  and  mailing  of  premium  notices  on  a timely basis to
          Members  and  parties to the Non-Novated Dental Policies; transmission
          of additional premium notices, lapse notices, reinstatement offers and
          other  notices  to  Members  and  parties  to  Dental  Policies;

     5.   Underwriting  and  processing  of  any  and  all  policy  changes  and
          reinstatements;

     6.   Member  mailings  of  any  necessary  endorsements  or  other contract
          documents;

     7.   Preparation of quarterly financial statement data (within ten Business
          Days  after  the  end  of  a  calendar  quarter)  and annual financial
          statement  data (within 35 calendar days after the end of the calendar
          year), for inclusion in the Company's applicable financial statements;

     8.   Administration  of  any  agreement  providing  for  the  payment  of
          commissions  relating  to  any  Non-Novated  Dental  Policy;

     9.   Development,  as  necessary,  and  maintenance  of  computer  systems
          required  to  provide  the  Services.

     10.  Recruitment,  credentialing  and  management  of, and contracting with
          sufficient  dental  providers  adequate for the delivery of all Dental
          Services  to  Members  required  by  or  incidental to the Non-Novated
          Dental  Policies  as  determined  by  applicable  law.

                                      -2-
<PAGE>
B.   All  services  performed  by  the  Reinsurer's  employees  providing legal,
     compliance,  actuarial,  accounting,  treasury,  human  resources  and data
     processing,  including  the  preparation  of  financial  and other relevant
     reports.

                                      -3-
<PAGE>
                                 SCHEDULE 12.14

                           BUSINESS ASSOCIATE ADDENDUM

This Business Associate Addendum (the "Addendum") supplements and is made a part
of  the  Assumption and Indemnity Reinsurance Agreement (the "Agreement") by and
between  Health  Net  Life Insurance Company (the "Company") and SafeHealth Life
Insurance  Company  (the "Reinsurer"), and is effective as of the effective date
of  the  Agreement.

                                    Recitals

A.   The  Company  may disclose certain information to the Reinsurer pursuant to
     the  terms  of the Agreement, some of which may constitute Protected Health
     Information,  as  defined  below.

B.   The  parties  intend to protect the privacy and provide for the security of
     Protected  Health  Information  in  compliance  with  the  Health Insurance
     Portability  and  Accountability  Act  of  1996,  Public  law  No.  104-191
     ("HIPAA") and the regulations promulgated thereunder by the U.S. Department
     of Health and Human Services (the "HIPAA Regulations") and other applicable
     laws.

C.   The  purpose  of  this  Addendum  is  to  satisfy  certain  standards  and
     requirements of HIPAA and the HIPAA Regulations, including, but not limited
     to,  45  CFR  164.502(e)  and  45  CFR  164.504(e).

In  consideration  of  the mutual promises below and the exchange of information
pursuant  to  the  Agreement  and  this  Addendum, the parties agree as follows:

1.   Definitions

(a)     Business  Associate  means  the  Reinsurer  to  the  extent  it performs
functions, activities, or services for, or on behalf of, the Company pursuant to
the  Agreement  involving the use or disclosure of Protected Health Information.

(b)     Covered  Entity  means  the  Company.

(c)     "Privacy  Rule"  means  the  Standards  for  Privacy  of  Individually
Identifiable  Health Information at 45 CFR part 160 and part 164, subparts A and
E.

(d)     "Protected  Health  Information"  has  the  same  meaning  as  the  term
"protected  health  information"  in  45 CFR 164.501, limited to the information
created  or  received by Business Associate from or on behalf of Covered Entity.

(e)     Capitalized  terms  used but not otherwise defined in this Addendum have
the  same  meaning  as  those  terms  in  the  Privacy  Rule.

                                      -4-
<PAGE>
2.   Obligations  and  Activities  of  Business  Associate

(a)     Business  Associate  shall  not  use  or  disclose  Protected  Health
Information  other than as permitted or required by this Addendum or as Required
By  Law.

(b)     Business  Associate  shall  use appropriate safeguards to prevent use or
disclosure of the Protected Health Information other than as provided for by the
Agreement  and  this  Addendum.

(c)     Business  Associate  agrees  to mitigate, to the extent practicable, any
harmful  effect  that  is  known to Business Associate of a use or disclosure of
Protected  Health  Information  by  Business  Associate  in  violation  of  the
requirements  of  this  Addendum.

(d)     Business  Associate shall report to Covered Entity any use or disclosure
of  the  Protected Health Information not provided for by this Addendum of which
it  becomes  aware.

(e)     Business  Associate  shall  ensure  that  any  agent,  including  a
subcontractor,  to  whom it provides Protected Health Information received from,
or created or received by Business Associate on behalf of, Covered Entity agrees
to  the  same  restrictions  and  conditions that apply through this Addendum to
Business  Associate  with  respect  to  such  information.

(f)     Business  Associate  shall  provide  access,  at  the request of Covered
Entity,  and  in  the time and manner designated by Covered Entity, to Protected
Health Information in a Designated Record Set, to Covered Entity or, as directed
by  Covered  Entity, to an Individual in order to meet the requirements under 45
CFR  164.524

(g)     Business  Associate  agrees to make any amendment(s) to Protected Health
Information in a Designated Record Set that the Covered Entity directs or agrees
to pursuant to 45 CFR 164.526 at the request of Covered Entity or an Individual,
and  in  the  time  and  manner  designated  by  Covered  Entity.

(h)     Business  Associate  agrees  to  make its internal practices, books, and
records,  including  policies and procedures, relating to the use and disclosure
of  Protected  Health  Information  received  from,  or  created  or received by
Business Associate on behalf of, Covered Entity available to the Secretary, in a
time  and  manner  designated  by  the  Secretary, for purposes of the Secretary
determining  Covered  Entity's  compliance  with  the  Privacy  Rule.

(i)     Business  Associate  agrees  to  document  such disclosures of Protected
Health  Information  and  information  related  to  such disclosures as would be
required  for  Covered  Entity  to  respond to a request by an Individual for an
accounting  of disclosures of Protected Health Information in accordance with 45
CFR  164.528.

(j)     Business  Associate agrees to provide to Covered Entity, in the time and
manner  designated  by  Covered Entity, information collected in accordance with
Section  (2)(i)  of  this  Addendum,  to  permit  Covered Entity to respond to a
request  by  an  Individual for an accounting of disclosures of Protected Health
Information  in  accordance  with  45  CFR  164.528.

3.   Permitted  Uses  and  Disclosures  by  Business  Associate  General Use and
     Disclosure  Provisions

                                      -5-
<PAGE>
     Except as otherwise limited in this Addendum, Business Associate may use or
disclose  Protected  Health  Information  to  perform  functions, activities, or
services  for,  or  on  behalf of, Covered Entity as specified in the Agreement,
provided  that such use or disclosure would not violate the Privacy Rule if done
by  Covered  Entity.

4.   Specific  Use  and  Disclosure  Provisions

(a)     Except as otherwise limited in this Addendum, Business Associate may use
Protected  Health  Information  for  the proper management and administration of
Business  Associate  or  to  carry  out  the  legal responsibilities of Business
Associate.

(b)     Except  as  otherwise  limited  in this Addendum, Business Associate may
disclose  Protected  Health  Information  for  the  proper  management  and
administration  of Business Associate, provided that disclosures are Required By
Law, or Business Associate obtains reasonable assurances from the person to whom
the  information  is  disclosed  that  it  will  remain confidential and used or
further  disclosed  only  as Required By Law or for the purpose for which it was
disclosed  to the person (which purpose shall be consistent with the limitations
imposed  by this Addendum) and the person notifies the Business Associate of any
instances  of  which it is aware in which the confidentiality of the information
has  been  breached.

(c)     Except as otherwise limited in this Addendum, Business Associate may use
Protected  Health  Information  to  provide Data Aggregation services to Covered
Entity  as  permitted  by  42  CFR  164.504(e)(2)(i)(B).

(d)     Business  Associate  may  use  Protected  Health  Information  to report
violations  of law to appropriate Federal and State authorities, consistent with
45  CFR  164.502(j)(1).

5.   Obligations  of  Covered  Entity  Provisions  for  Covered Entity To Inform
     Business  Associate  of  Privacy  Practices  and  Restrictions

(a)     Covered  Entity shall notify Business Associate of any limitation in its
notice  of  privacy  practices  in accordance with 45 CFR 164.520, to the extent
that  such  limitation  may  affect  Business  Associate's  use or disclosure of
Protected  Health  Information.

(b)     Covered  Entity  shall  notify  Business Associate of any changes in, or
revocation  of,  permission by an Individual to use or disclose Protected Health
Information, to the extent that such changes may affect Business Associate's use
or  disclosure  of  Protected  Health  Information.

(c)     Covered Entity shall notify Business Associate of any restriction on the
use or disclosure of Protected Health Information that Covered Entity has agreed
to  in  accordance  with 45 CFR 164.522, to the extent that such restriction may
affect  Business  Associate's use or disclosure of Protected Health Information.

(d)     Covered  Entity  shall not request Business Associate to use or disclose
Protected  Health  Information in any manner that would not be permissible under
the Privacy Rule if done by Covered Entity, except as permitted by Sections 4(b)
and  4(c)  of  this  Addendum.

                                      -6-
<PAGE>
6.   Term  and  Termination

(a)     This  Addendum  shall  be  effective  as  of  the  effective date of the
Agreement,  and  shall  terminate  when  all of the Protected Health Information
provided  by  Covered  Entity  to  Business Associate, or created or received by
Business  Associate  on  behalf  of  Covered Entity, is destroyed or returned to
Covered  Entity,  or,  if it is infeasible to return or destroy Protected Health
Information,  protections  are  extended to such information, in accordance with
the  termination  provisions  in  this  Section.

(b)     Upon Covered Entity's knowledge of a material breach of this Addendum by
Business  Associate, Covered Entity shall either: (i) provide an opportunity for
Business  Associate  to  cure the breach or end the violation and terminate this
Addendum,  and  the  provision  for  performance  of  functions,  activities, or
services  for,  or  on behalf of Covered Entity under the Agreement, if Business
Associate  does  not  cure  the  breach  or  end  the  violation within the time
specified  by  Covered Entity; (ii) immediately terminate this Addendum, and the
provision  for  performance  of  functions,  activities,  or services for, or on
behalf of Covered Entity under the Agreement, if Business Associate has breached
a  material  term of this Addendum and cure is not possible; or (iii) if neither
termination  nor  cure  is  feasible,  report  the  violation  to the Secretary.

(c)  Effect  of  Termination.

     (i)  Except as provided in paragraph (ii) of this section, upon termination
     of  this  Addendum,  for  any  reason,  Business  Associate shall return or
     destroy  all  Protected Health Information received from Covered Entity, or
     created  or received by Business Associate on behalf of Covered Entity, and
     shall  retain no copies of the Protected Health Information. This provision
     shall  apply  to  Protected Health Information that is in the possession of
     subcontractors  or  agents  of  Business  Associate.

     (ii)  In  the  event  that  Business Associate determines that returning or
     destroying  the  Protected  Health  Information  is  infeasible,  Business
     Associate  shall  provide  to Covered Entity notification of the conditions
     that  make  return  or  destruction  infeasible. Upon mutual agreement that
     return  or  destruction  of  Protected  Health  Information  is infeasible,
     Business  Associate  shall  extend the protections of this Addendum to such
     Protected Health Information and limit further uses and disclosures of such
     Protected  Health  Information  to  those  purposes that make the return or
     destruction  infeasible,  for  so long as Business Associate maintains such
     Protected  Health  Information.

7.   Miscellaneous

(a)     Regulatory  References. A reference in this Addendum to a section in the
        ----------------------
Privacy  Rule  means  the  section  as  in  effect  or  as  amended.

(b)     Amendment.  The  Parties  agree  to  take such action as is necessary to
        ---------
amend  this  Addendum  from  time  to time as is necessary for Covered Entity to
comply  with  the  requirements  of  the  Privacy  Rule  and  the  HIPAA.

(c)     Survival.  The  respective  rights and obligations of Business Associate
        --------
under  Section  6(c)  of  this  Addendum  shall  survive the termination of this
Addendum.

                                      -7-
<PAGE>
(d)     Interpretation.  The  provisions of this Addendum shall prevail over any
        --------------
provisions  in  the Agreement that may conflict with or appear inconsistent with
any  provision  of  this  Addendum.  Any  ambiguity  in  this  Addendum shall be
resolved  to  permit  Covered  Entity  to  comply  with  the  Privacy  Rule.

                                      -8-
<PAGE>
                                    EXHIBIT A
                                    ---------

                TO ASSUMPTION AND INDEMNITY REINSURANCE AGREEMENT

                                MEMBER MATERIALS

NOTICE OF TRANSFER (Arizona and California)

Dear Policyholder:

     This notifies you of an agreement reached between Health Net Life Insurance
Company  ("Health Net") and SafeHealth Life Insurance Company ("SafeHealth") for
the  transfer  of  your  dental  policy  by SafeHealth.  This assumption will be
effective  as  of  12:01  a.m.  Pacific  Time,  on  _______________,  2003.

     SafeHealth  Life  Insurance Company is licensed to provide dental insurance
products  in  [STATE].  To introduce you to SafeHealth, attached is a summary of
essential  information  about  SafeHealth.

     Your  rights as a policyholder and the terms of your policy will not change
as  a  result  of the transfer. Your benefits will not change as a result of the
transfer  [although  Health  Net's  provider  network  will be replaced with the
provider  network of SafeHealth and certain providers in the Health Net provider
network  may not be available in the SafeHealth provider network]. If you accept
the  transfer,  SafeHealth  will  provide  your  coverage.  It  will have direct
responsibility  for  the  payment  of  all claims and benefits and for all other
policy  obligations.  Health  Net  will  no  longer have any obligations to you.

     You  have  the  following  options  with  regard  to the assumption of your
     policy:

     Option 1.      Accept  the  transfer  of  your  policy from Health Net to
                    SafeHealth.

     Option  2.     Reject  the proposed transfer of your policy from Health Net
                    to  SafeHealth.  If  you choose this option, Health Net will
                    remain your insurer and you will have no rights to claim any
                    payments  from  SafeHealth[,  although  SafeHealth  will  be
                    administering  your  Health  Net  dental  policy  until your
                    insurance  terminates,  as  indicated  below].

     Health  Net  and  SafeHealth  recommend  that  you  choose  Option  1.

     If you wish to choose Option 1, simply do not return the Rejection Form and
you  will  automatically  be  deemed to have accepted this option upon _________
[date].  You  should  then attach the [enclosed] Certificate of Assumption [that
you  will  be  receiving  under  separate  cover]  to  your  policy.

     If  you  wish  to choose Option 2, you must complete the enclosed Rejection
Form,  sign  it  and  return  it within _____ days of this Notice. If you do not
return  the  Rejection  Form  within

                                      -9-
<PAGE>
that  time,  you  will  be  deemed to have accepted the transfer of your policy.
[You  should  also  return  the  [enclosed]  Certificate  of  Assumption.]

     In  considering  whether  to accept the assumption, please note that Health
Net  intends to cease offering dental insurance as promptly as practicable after
the  transfer  and assumption of its dental business to SafeHealth. Rejection of
the  assumption  may  ultimately result in termination of your coverage. [Please
also  note  that  Health  Net  has  contracted with SafeHealth to administer its
dental  insurance  policies until Health Net is able to withdraw completely from
the  market. As a result, if you reject the assumption although Health Net would
remain legally responsible for its policy obligations to you, SafeHealth will be
administering  your  Health  Net dental policy until your insurance terminates.]

     The  enclosed  Certificate  of Assumption should be attached to your policy
unless  you  choose  to  reject  the  assumption  of  your  policy.

     Your  current  and  future  premiums  should  be  paid as indicated by your
premium  notices.

     If  you  have  any  questions  about the assumption of your policy or about
SafeHealth,  please  feel  fee  to call SafeHealth at (____) ____-_____. Written
inquiries  may  be  mailed  to:  SafeHealth  at  __________________  [address].

                                 Sincerely,

_________________________________          _________________________________

SAFEHEALTH LIFE INSURANCE                  HEALTH NET LIFE INSURANCE COMPANY
COMPANY

                                      -10-
<PAGE>
                           NOTICE OF TRANSFER [OREGON]

Dear Policyholder:

Important:  Please  read this notice carefully.  This notice affects your rights
under  your  insurance  policy.

TRANSFER OF POLICY

SafeHealth  Life  Insurance  Company ("SafeHealth") has agreed to replace Health
Net  Life  Insurance Company ("Health Net") as your insurer under [insert policy
or  certificate  name  and  number],  effective as of 12:01 a.m. Pacific Time on
_______________,  2003.  SafeHealth's  principal  place  of  business  is
________________.

At  your  request,  Health  Net  Life  will furnish to you financial information
concerning  both  companies.  This  information  will  include  the  following:

(1)  Ratings for the previous year, if available, from two nationally recognized
insurance  rating  services.  If  a  rating  of either insurance company changed
during  the  previous year, the ratings for the year preceding will be furnished
as  well.

(2)  Balance  sheets  for the previous year, if available, and as of the date of
the  most  recent  quarterly  statement.

(3)  A  copy  of  the  Management's  Discussion and Analysis that was filed as a
supplement  to  the  previous  year's  annual  statement.

(4)  An  explanation  of  the  reason  for  the  transfer.

You  may  obtain  additional  information  concerning  SafeHealth from reference
materials  in  your local library or by contacting the Oregon Insurance Division
at  350  Winter  St.  NE,  Room  440-1  Salem,  Oregon  97301-0220.

SafeHealth  is  authorized  to  write  this  coverage in Oregon.  [The Insurance
Commissioner  of  Oregon  has  reviewed  the  potential  effect  of the proposed
transaction,  and  has  approved  the  transaction.]

YOUR RIGHTS

You  may  choose  to  consent  to  or  reject  the  transfer  of  your policy to
SafeHealth.  If  you  want your policy transferred, you may notify us in writing
by  signing  and  returning the enclosed pre- addressed, postage-paid card or by
writing  to  us  at:

[Insert name, address and facsimile number of contact person]

Payment  of your premium to the assuming company will also constitute acceptance
of  the  transaction. [If premium notices are used: The first premium notice you
receive from SafeHealth, however, will provide you with a method that will allow
you  to  pay  the premium while reserving the right to reject the transfer.] [If
premium notices are NOT used: SafeHealth will provide you with a method by which
you  may  pay  the  premium  while  reserving the right to reject the transfer.]

If you reject the transfer, you may keep your policy with Health Net or exercise
any  option  under  your  policy.  If  we do not receive a written rejection you
will,  as  a matter of law, have consented

                                      -11-
<PAGE>
to  the  transfer. Before this consent is final, however, you will be provided a
second notice of the transfer twelve months from now. After the second notice is
provided  you  will  have  one  month to reply. If you have paid your premium to
SafeHealth  without  reserving  your  right to reject the transfer, you will not
receive  a  second  notice.

EFFECT OF TRANSFER

If  you  accept  this  transfer,  SafeHealth will be your insurer.  It will have
direct responsibility to you for the payment of all claims, benefits and for all
other  policy  obligations.  Health  Net  will no longer have any obligations to
you.

If  you  accept  this  transfer, you should make all premium payments and claims
submissions  to  SafeHealth  and  direct  all  questions  to  SafeHealth.

In  considering  whether  to  accept the assumption, please note that Health Net
intends  to cease offering dental insurance as promptly as practicable after the
transfer  and assumption of its dental business to SafeHealth.  Rejection of the
assumption  may ultimately result in termination of your coverage.  [Please also
note  that  Health  Net  has contracted with SafeHealth to administer its dental
insurance  policies  until  Health  Net  is able to withdraw completely from the
market.  As  a  result,  if  you reject the assumption although Health Net would
remain legally responsible for its policy obligations to you, SafeHealth will be
administering  your  Health  Net dental policy until your insurance terminates.]

Sincerely,

_____________

Health Net Life Insurance Company

[Address]
[Telephone Number]

For  your  convenience,  we have enclosed a pre-addressed postage- paid response
card.  Please  take time now to read the enclosed notice and complete and return
the  response  card  to  us.

                                      -12-
<PAGE>
                             NOTICE TO GROUP MEMBERS

     Health  Net Life Insurance Company ("Health Net") is presently implementing
a  plan that is intended to ensure uninterrupted coverage for our customers.  As
part  of  the  plan,  we  have  entered  into  an agreement with SafeHealth Life
Insurance Company ("SafeHealth"), that will assume Health Net's dental insurance
business.  SafeHealth  will  replace  Health  Net  under  your  dental insurance
coverage  with  Health  Net  effective  ________________,  2003.

     Your  rights  as  an  insured and the terms of your certificate of coverage
will not change as a result of the transfer, except as set forth in the enclosed
Certificate  of  Assumption.  Your  benefits  will not change as a result of the
transfer.

     The  enclosed  Certificate  of  Assumption  should  be  attached  to  your
certificate  of  coverage.

     Assumption  of  your  dental  insurance  coverage  will  be effective as of
____________,  2003, at 12:01 a.m. Pacific Time. If you have any questions about
the  assumption  of  your  contract or about SafeHealth, please feel fee to call
SafeHealth  at (____) ____-_____. Written inquiries may be mailed to: SafeHealth
at  [_____________].

                              Sincerely,

_________________________________          _________________________________

SAFEHEALTH LIFE INSURANCE                  HEALTH NET LIFE INSURANCE COMPANY
COMPANY

                                      -13-
<PAGE>
                            CERTIFICATE OF ASSUMPTION

[Individual]

     You  are  hereby  notified  that  SafeHealth  Life  Insurance  Company has,
effective  as  of  _________,  2003  (the "Effective Time"), assumed all rights,
liabilities,  and  obligations  of  Health Net Life Insurance Company under your
dental  insurance  policy  with  Health  Net  Life  Insurance  Company.

     From  and  after  the  Effective  Time,  all  references  in your policy or
certificate  to  "Health  Net  Life  Insurance  Company"  are  hereby changed to
"SafeHealth  Life  Insurance Company." Except for the substitution of SafeHealth
for Health Net as your insurer, your rights as a insured will not be affected by
the  change  in  companies,  and  the  terms  and  conditions  of your policy or
certificate  will  not  be  changed  by  reason  of  the  assumption.

     All  correspondence  and  inquiries  concerning your policy or certificate,
including  premium  payments,  policy  or  certificate  changes,  and notices of
claims,  should  be  submitted  to:

                        SafeHealth Life Insurance Company
                                      [address]

     This  Certificate  of Assumption, as of the Effective Time, forms a part of
and  should be attached to the policy or certificate issued to you by Health Net
Life  Insurance  Company.

     IN  WITNESS  WHEREOF,  SafeHealth  Life  Insurance  Company has caused this
Certificate  of  Assumption  to  be  duly  signed  and  issued.

                                               ---------------------------------
                                               SafeHealth Life Insurance Company

                                      -14-
<PAGE>
                        NOTICE OF REJECTION OF ASSUMPTION

                            [Arizona and California]

To:  HEALTH  NET  LIFE  INSURANCE  COMPANY

     REJECTION
     ---------

     I  have  reviewed  the  Certificate  of  Assumption whereby SafeHealth Life
Insurance  Company  would assume all of the rights, liabilities, and obligations
of  Health  Net  Life  Insurance  Company  under  my  dental insurance policy or
certificate previously issued by Health Net Life Insurance Company.  I have also
reviewed  the  Notice  of  Transfer  describing  the  transaction.

     I  hereby  notify you that I REJECT the proposed assumption of my policy or
                                --------
certificate  and  substitution  of SafeHealth Life Insurance Company thereunder,
and  I  wish  to  retain my policy or certificate with Health Net Life Insurance
Company.  I  UNDERSTAND  THAT  HEALTH  NET  LIFE  INSURANCE  COMPANY  INTENDS TO
DISCONTINUE  ITS  DENTAL INSURANCE BUSINESS AND THAT REJECTION OF THE ASSUMPTION
MAY  ULTIMATELY  RESULT  IN  TERMINATION  OF  MY  COVERAGE.

DATE:

--------------------------------------------------
Policyholder Signature

--------------------------------------------------
Print or Type Name

--------------------------------------------------
ID # from the Health Net Life Insurance Company
Identification Card Issued to Policy Holder

                                      -15-
<PAGE>
                                  RESPONSE CARD

                                    [Oregon]

___  Yes,  I  accept  the  transfer  of my policy from Health Net Life Insurance
Company  to  SafeHealth  Life  Insurance  Company.

___  No,  I  reject the proposed transfer of my policy Health Net Life Insurance
Company to SafeHealth Life Insurance Company and wish to retain my policy Health
Net  Life  Insurance  Company

DATE:

-------------------------------------------------------------------
Policy Holder Signature

--------------------------------------------------
Print or Type Name

--------------------------------------------------
Street Address

--------------------------------------------------
City, State, Zip

--------------------------------------------------
ID # from the Health Net Life Insurance Company
Identification Card Issued to Policy Holder

                                      -16-
<PAGE>
                            CERTIFICATE OF ASSUMPTION

[Group]

     You  are  hereby  notified  that  SafeHealth  Life  Insurance  Company has,
effective  as of _____________, 2003 (the "Effective Time"), assumed all rights,
liabilities,  and  obligations  of  Health Net Life Insurance Company under your
dental  insurance  policy  with  Health  Net  Life  Insurance  Company.

     From and after the Effective Time, all references in your policy to "Health
Net  Life  Insurance  Company"  are hereby changed to "SafeHealth Life Insurance
Company."

     All  correspondence and inquiries concerning your policy, including premium
payments,  policy  changes,  and  notices  of  claims,  should  be submitted to:

                        SafeHealth Life Insurance Company
                                      [address]

     Except  as  described  in  this Certificate of Assumption, your rights as a
policy holder will not be affected by the change in companies, and the terms and
conditions of your policy will not be changed by reason of the assumption.  This
Certificate  of Assumption, as of the Effective Time, forms a part of and should
be  attached  to  the  dental  insurance policy issued to you by Health Net Life
Insurance Company.  Copies of this Certificate of Assumption must be distributed
to  covered  group members under the policy for attachment to their certificates
of  coverage.

     IN  WITNESS  WHEREOF, Health Net Life Insurance Company and SafeHealth Life
Insurance  Company  have caused this Certificate of Assumption to be duly signed
and  issued.

---------------------------------              ---------------------------------
Health Net Life Insurance Company              SafeHealth Life Insurance Company

                                      -17-
<PAGE>EXHIBIT 10.46 TO CURRENT REPORT ON FORM 8-K DATED AS OF APRIL 7, 2003
      ---------------------------------------------------------------------

                        STRATEGIC RELATIONSHIP AGREEMENT

     This  STRATEGIC  RELATIONSHIP  AGREEMENT  ("Agreement") is made and entered
into  this  7th  day of April, 2003, by and between Health Net, Inc., a Delaware
corporation  ("Health  Net")  and SafeGuard Health Enterprises, Inc., a Delaware
corporation  ("SafeGuard").

                                    RECITALS
                                    --------

     WHEREAS,  Health  Net, through its Subsidiaries, is authorized to offer the
Health  Net  Products  (as defined herein) for sale in the Territory (as defined
herein);

     WHEREAS,  SafeGuard  desires  to make the Health Net Products available for
sale  by  the  SafeGuard  Marketing  Force (as defined herein) in the Territory;

     WHEREAS,  Health  Net  is willing to make the Health Net Products available
for  sale  in  the  Territory  by  the  SafeGuard  Marketing  Force;

     WHEREAS,  SafeGuard  through  its  Subsidiaries  is authorized to offer the
SafeGuard  Dental  Products  (as  defined  herein)  for  sale  in the Territory;

     WHEREAS,  SafeGuard  is willing to make the Health Net Branded Products (as
defined herein) available for sale by the Health Net Marketing Force (as defined
herein)  in  the  Territory;  and

     WHEREAS,  pursuant to the Purchase and Sale Agreement by and between Health
Net  and SafeGuard dated April 7, 2003, Health Net and SafeGuard agreed to enter
into a strategic relationship agreement at the Closing to promote and facilitate
the  sale  of Health Net Branded Products through the Health Net Marketing Force
and  the  sale  of  Health  Net  Products through the SafeGuard Marketing Force.

     NOW  THEREFORE, in consideration of the mutual agreements contained herein,
the  sufficiency  of  which  is hereby acknowledged, and in consideration of the
performance  by  the  parties  of  their  obligations  under this Agreement, the
parties  agree  as  follows:

                                    ARTICLE I
                                   DEFINITIONS
                                   -----------

     Capitalized  terms  used  in this Agreement and not otherwise defined shall
have  the  meanings  given  such  terms in the Purchase and Sale Agreement.  For
purposes  of  this  Agreement,  the  following  terms  shall  have  the meanings
specified  below (definitions are applicable to both the singular and the plural
form  of  each  term  defined  herein).

     "Ancillary  SafeGuard  Products"  means dental HMO products, dental PPO and
      ------------------------------
dental  indemnity  products developed by SafeGuard with benefit designs and rate
structures  that  differentiate such products from the SafeGuard Dental Products
offered  generally  by  SafeGuard

                                      -1-
<PAGE>
in the Territory and which shall be sold exclusively by the Health Net Marketing
Force  only  to  Health  Net  Clients.

     "Benchmark  Products"  means  those  SafeGuard  Dental  Products  that  are
      -------------------
determined  by  the  parties  to be materially similar to the Health Net Branded
Products  as  of  the  Effective  Date.

     "Branding"  shall  have  the  meaning  set  forth  in  Section  2.7.
      --------

     "Change  of Control" means the acquisition, in a single transaction or in a
      -------------------
series  of related transactions, by a person, an entity or a group of persons or
entities  acting  in  concert  of  fifty-one percent (51%) or more of the voting
securities of a party, or fifty-one percent (51%) or more of the aggregate value
of  the  assets  of  a  party.

     "Contractholder"  means  an  employer or individual in the Territory who or
      --------------
which  executes  an  enrollment agreement with respect to any Product subject to
this  Agreement.

     "Dispute"  shall  have  the  meaning  set  forth  in  Section  9.1.
      -------

     "Eligible  Employee" means an employee who is eligible to enroll in a group
      ------------------
Product  issued  to  a  Contractholder.

     "Effective  Date" means the Closing Date of the Purchase and Sale Agreement
      ---------------
by  and  between  Health  Net  and  SafeGuard  dated  as  of  April  7,  2003.

     "Health  Net  Branded  Products"  means  SafeGuard  dental  HMO  Products,
      ------------------------------
SafeGuard dental PPO Products or SafeGuard dental indemnity Products selected by
Health  Net  to  market  through the Health Net Marketing Force in the Territory
after  the  Effective  Date  with  the  Branding  of  Health  Net  and  issued,
underwritten  and  administered  by  either  SafeGuard  Health  Plans,  Inc.  or
SafeHealth  Insurance  Company.

     "Health  Net  Clients"  shall  have  the  meaning set forth in Section 2.1.
      --------------------

     "Health  Net  Dental Products" means the dental HMO Products offered in the
      -----------------------------
Territory  as  of  the Effective Date by Health Net Dental, Inc., the dental PPO
Product  offered in Oregon by Health Net Health Plan of Oregon, Inc., the dental
indemnity  Product  offered  in  Arizona  by Health Net of Arizona, Inc. and the
dental  PPO  and  dental  indemnity  Products offered in the Territory as of the
Effective  Date  by  Health  Net  Life  Insurance  Company.

     "Health  Net  Indemnities" shall have the meaning set forth in Section 8.1.
      ------------------------

     "Health  Net  Marketing  Force"  means  (i)  employees of Health Net or its
      -----------------------------
Subsidiaries who are licensed in one or more states within the Territory to sell
Products  in any state within the Territory; (ii) any agents under contract with
any Health Net Subsidiary who or which are licensed in one or more states within
the  Territory  and  authorized  to  sell  Products  on behalf of any Health Net
Subsidiary  in any of the states within the Territory; and (iii) any independent
brokers  who or which are licensed in one or more states within the Territory to
sell  Products  and who or which are authorized to represent specific purchasers
of  Products.

                                      -2-
<PAGE>
     "Health  Net  Mark-Up"  except as otherwise set forth in Section 5.5, means
      --------------------
the dollar amount equal to [SAFEGUARD-HEALTH NET PROPRIETARY INFORMATION] of the
Net  Price  for Health Net Branded dental HMO Products and [SAFEGUARD-HEALTH NET
PROPRIETARY  INFORMATION] of the Net Price for the Health Net Branded dental PPO
and  dental  indemnity  Products.

     "Health  Net  Products"  means Medical Products, life insurance, vision and
      ---------------------
behavior  health  HMO,  PPO  and  indemnity  products  offered  by  Health  Net
Subsidiaries  in  the  Territory.

     "HMO"  means  a  commercial  contract  for health care services provided by
      ---
Health  Net Subsidiaries to Contractholders in the Territory utilizing a network
of  providers  who  or which are under direct or indirect contract with a Health
Net  Subsidiary to provide health care services. "HMO" includes HMO plans with a
"point-of-service"  feature that permits Enrollees to seek medical services from
providers  outside  the  network  of  providers who or which are under direct or
indirect  contract with a Health Net Subsidiary to provide health care services.

     "JAMS"  shall  have  the  meaning  set  forth  in  Section  9.2.
      ----

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

     "Most  Favored  Nation  Price"  means  the  Net  Price  plus the Health Net
      ----------------------------
Mark-Up.

     "Net  Price"  means the amount equal to the estimated health care costs per
      ----------
Subscriber  established  by SafeGuard for Health Net Branded Products multiplied
by  an  administrative  expense  factor  of  [SAFEGUARD-HEALTH  NET  PROPRIETARY
INFORMATION]  for  dental  HMO  Products  and  [SAFEGUARD-HEALTH NET PROPRIETARY
INFORMATION]  for  dental  PPO  and  dental  indemnity  Products.

     "Pooled  Net  Price"  means the amount equal to the pooled estimated health
      ------------------
care  costs  determined  by  SafeGuard  for each Health Net Branded Product plan
design  multiplied  by an administrative expense factor of [SAFEGUARD-HEALTH NET
PROPRIETARY  INFORMATION]  for  dental  HMO  Products  and [SAFEGUARD-HEALTH NET
PROPRIETARY  INFORMATION]  for  dental  PPO  and  dental  indemnity  Products.

     "Producer" means an insurance agent, broker or employee of either SafeGuard
      --------
or  Health  Net  or  any of their Subsidiaries authorized to market and sell the
Products  of  a  party  in  any  state  within  the  Territory.

     "Product"  means  any  Health  Net  Product,  Health  Net  Branded Product,
      -------
SafeGuard  Dental Product or Ancillary Product offered for sale or sold pursuant
to  this  Agreement.

     "SafeGuard  Clients"  shall  have  the  meaning  set  forth in Section 2.4.
      ------------------

     "SafeGuard  Dental  Products"  means the dental HMO products offered in the
      ---------------------------
Territory  by  SafeGuard  Health  Plans,  Inc.,  and  the  dental PPO and dental
indemnity  products  offered  in  the  Territory  by  SafeHealth  Life Insurance
Company.

                                      -3-
<PAGE>
     "SafeGuard  Indemnities"  shall  have the meaning set forth in Section 8.2.
      ----------------------

     "SafeGuard  Subcapitation  Amount"  means  the  dollar amount arrived at by
      --------------------------------
multiplying  the  total  number  of Subscribers covered under Health Net Branded
Products  issued  on  or  after  the  Effective  Date  by the Net Price of their
respective  Health  Net  Branded  Products.  The  number  of Subscribers used to
calculate  the  SafeGuard  Subcapitation  Amount  shall be subject to adjustment
based  on  SafeGuard's  standard  retroactivity  adjustment  policy  as  of  the
adjustment  date.

     "Supplemental  Subcapitation Amount" means that dollar amount calculated in
      -----------------------------------
the  manner  described  in  Section  5.5.

     "Subscriber"  means  the  persons  including,  but not limited to, Eligible
      ----------
Employees,  who  meet  the  eligibility  requirements for a Product and who have
enrolled  in  such  Product.

     "Territory"  means Arizona, Oregon and California for dental PPO and dental
      ---------
indemnity  Products  and  California  for  dental  HMO  Products.

     "Term"  means  that  period  of  time  commencing on the Effective Date and
      ----
ending  on  the  termination  date  of  this  Agreement.

                                   ARTICLE II
                               MARKETING AND SALES
                               -------------------

     Section 2.1 Marketing and Sale of the Health Net Branded Products to Health
Net Clients. Subject to the terms, conditions and limitations of this Agreement,
Health  Net  shall  have  the right to utilize the Health Net Marketing Force to
offer  Health Net Branded Products to existing and prospective individual, small
group  [SAFEGUARD-HEALTH  NET  PROPRIETARY  INFORMATION],  mid-market  group
[SAFEGUARD-HEALTH  NET  PROPRIETARY  INFORMATION],  large  group  and government
clients  of  Health  Net in the Territory (jointly referred to herein as "Health
Net  Clients")  when the Health Net Marketing Force has or is offering to sell a
Medical  Product  to  such  Health  Net  Clients.

     Section  2.2 Development of Ancillary Dental Products. SafeGuard and Health
Net  shall  develop  jointly  Ancillary  SafeGuard  Products  that  Health  Net
reasonably  determines  would provide a marketing opportunity for the Health Net
Marketing  Force  in  the  Territory. Any Ancillary SafeGuard Products developed
jointly  by  Health Net and SafeGuard shall be offered exclusively by the Health
Net Marketing Force only as Health Net Branded Products to Health Net Clients in
the  Territory.

     Section  2.3  Exclusive  Agreement.

     (a)  Except  with Health Net's prior written consent and except as provided
in  this  Section 2.3(a) and Section 7.3(f), during the Term SafeGuard shall not
enter into any agreement substantially similar to this Agreement with any entity
other  than  Health Net for the purpose of offering Medical Products for sale to
SafeGuard  Clients  in  the  Territory,  provided,  however,  that  nothing
                                         --------   -------
contained  in  this  Agreement shall limit SafeGuard's right to market SafeGuard
Dental

                                      -4-
<PAGE>
Products  or  any  other  products  not  subject  to  this Agreement directly to
SafeGuard  Clients  through  the  SafeGuard Marketing Force and provided further
                                                                -------- -------
that the provisions of this Section 2.3(a) shall have no further force or effect
if  Health  Net  or  a  Health  Net  Subsidiary  acquires  ownership,  merges or
consolidates  with  an  entity  that  offers  or operates a dental HMO or dental
insurance  business  in the Territory, or ownership of Health Net is acquired by
an entity that offers or operates a dental HMO or a dental insurance business in
the  Territory  and the dental HMO and dental insurance business of the combined
entities  accounts  for more than [SAFEGUARD-HEALTH NET PROPRIETARY INFORMATION]
percent  of  the  annual  gross  revenues  of  the  combined  entities.

     (b) Except with SafeGuard's prior written consent and except as provided in
this  Section  2.3(b)  and  Section 7.3(f), during the Term Health Net shall not
enter into any agreement substantially similar to this Agreement with any entity
other  than  SafeGuard for the purpose of offering any dental HMO, dental PPO or
dental  indemnity  insurance  products  for  sale  to  Health Net Clients in the
Territory,  provided,  however,  nothing contained in this Agreement shall limit
            --------   -------
Health  Net's  right  to  market  Health  Net Products or any other products not
subject  to this Agreement directly to Health Net Clients through the Health Net
Marketing  Force and provided further that the provisions of this Section 2.3(b)
                     -------- -------
shall  have  no  further  force or effect if SafeGuard or a SafeGuard Subsidiary
acquires  ownership,  merges  or  consolidates  with  an  entity  that offers or
operates  a  health  insurance  business  that  provides Medical Products in the
Territory,  or  ownership  of  SafeGuard is acquired by an entity that offers or
operates  a  health  insurance  business  that  provides Medical Products in the
Territory  and  the  health insurance business of the combined entities accounts
for more than [SAFEGUARD-HEALTH NET PROPRIETARY INFORMATION] of the annual gross
revenues  of  the  combined  entities.

     (c)  Health  Net  shall  have  the option to expand the exclusive strategic
relationship described in this Agreement to additional states in which SafeGuard
is  appropriately  licensed  to  offer the Health Net Branded Products, provided
that  SafeGuard  has  no  prior commitments in such additional states that would
conflict with the obligations of SafeGuard under this Agreement. SafeGuard shall
provide  notice to Health Net of its intent to enter into an exclusive strategic
relationship  in  any  state  outside  the Territory that would be substantially
similar  to its relationship with Health Net described in this Agreement. Health
Net  shall  have  twenty  (20)  days  from  the  date of the SafeGuard notice to
exercise  its  option  to  expand  its  exclusive  strategic  relationship  with
SafeGuard into the states identified in the SafeGuard notice, provided, however,
                                                              --------  -------
Health  Net  shall  not  have  the  option to exercise its option to expand this
strategic relationship in either Texas or Florida unless Health Net has at least
[SAFEGUARD-HEALTH  NET  PROPRIETARY  INFORMATION]  Subscribers  enrolled  in its
Medical  Products  in  the  relevant  state at the time Health Net exercises its
option  to  expand  this  strategic  relationship  to  such  state.

     Section 2.4 Marketing and Sale of Health Net Products by SafeGuard. Subject
to  the  terms  and  conditions of this Agreement, the SafeGuard Marketing Force
shall  have  the right to market Health Net Products to existing and prospective
individual  and  group accounts of SafeGuard Dental Products or SafeGuard vision
products  in  the  Territory  ("SafeGuard  Clients").

     Section  2.5  Identification of Health Net Branded Products. Subject to the
requirements and limitations of Section 2.7 of this Agreement and all applicable
Law,  the  Health

                                      -5-
<PAGE>
Net  Branded Products shall be marketed under the collective designation "Health
Net Dental."  Each Health Net Branded Product shall be assigned a specific trade
name, to be agreed to by the parties.  Notwithstanding the foregoing, the Health
Net  Branded Products shall be marketed in a way that clearly indicates that the
benefits provided under Health Net Branded Products are obligations of SafeGuard
Health  Plans,  Inc.  or  SafeHealth Life Insurance Company, as appropriate, and
does  not suggest that such benefits are obligations of Health Net or any Health
Net  Subsidiary.

     Section  2.6 Marketing Materials. Each party shall bear the cost of its own
marketing and promotional efforts, including but not limited to, the development
and  production  of  any  marketing  and collateral materials used to promote or
market  their  respective  Products.  Any  marketing  and  collateral  materials
developed  by  a  party to promote or market Products pursuant to this Agreement
shall  be  approved  by  the  other  party  prior  to  use.

     Section  2.7  Branding.  Neither  party shall make use of the other party's
trade  marks,  service  marks,  trade  names  or  logos, including domain names,
electric  or written content or other materials, descriptions or representations
of  any  kind  that mentions the other party or its Affiliates, or refers to any
Products or services of the other party (collectively referred to as "Branding")
without  obtaining  the  prior  written consent of such other party. The parties
shall  use  commercially reasonable efforts to provide the other party with such
consent  to utilize their respective Branding where reasonably necessary for the
other  party  to perform its duties and exercise its rights under this Agreement
and  any  such  consent granted to utilize a party's Branding shall constitute a
non-exclusive,  revocable  license that is limited to use of the Branding of the
party  in  the  Territory  consistent  with  this  Agreement.

     Section  2.8  Training.  Health  Net  and  SafeGuard  shall develop jointly
programs  or  prepare  materials to train all necessary Health Net and SafeGuard
personnel  and  the  respective  Marketing  Forces  of the parties regarding the
marketing  and  administration  of  the  Products.

                                   ARTICLE III
                     UNDERWRITING, RATES AND ADMINISTRATION
                     --------------------------------------

     Section  3.1  Authority  Regarding  Products.

     (a)     Except  as  provided  below  and  in  Article  V,  nothing  in this
Agreement confers or is intended to confer on a party any authority with respect
to  the  Products  of  the  other  party,  including  but  not  limited  to  (i)
underwriting  criteria;  (ii)  pricing;  (ii)  participation requirements; (iii)
minimum  employer  contributions;  (iv)  approval  of  applications;  or (v) the
authority  to  issue  policies,  contracts  or  any  other  documents conferring
coverage  under  a  Product  of  the  other party.  Except as otherwise provided
herein,  each party reserves the right, in its sole discretion, to amend, change
or  abolish  coverage  forms,  premium  rates  or fees, underwriting guidelines,
eligibility  criteria  and  other internal rules and regulations with respect to
its  own  Products.

     (b)  Subject  to  any limitations imposed by applicable Law, the respective
Marketing  Forces  of the parties shall be permitted to obligate the other party
to  provide  coverage to their respective Clients under the Products offered for
sale  pursuant  to  this  Agreement  if  such  Clients

                                      -6-
<PAGE>
meet  the  eligibility  and  underwriting  criteria  established  by  the  party
providing  the Product.  In the event a Client does not meet the eligibility and
underwriting  criteria  established  by  the  party  providing  the Product, the
Marketing  Force of the other party shall not have the authority to obligate the
party providing the Product to provide coverage without the prior consent of the
party  providing  the  Product.  Except as provided in this Section 3.1(b), each
party retains the exclusive right, exercisable without permission from the other
party,  to  accept or reject any application or enrollment request, or to cancel
the  coverage  with  respect  to their respective Products.  Notwithstanding the
foregoing,  neither  party shall impose any limitations or criteria with respect
to  a  Product  offered  for  sale  pursuant  to  this  Agreement  that  is more
restrictive  than  the  limitations  and  criteria  applicable  generally to the
Products  offered  for  sale  by  the  party  in  the  Territory.

     Section  3.2  Product  Administration.

     (a) Except as specifically provided herein, each party shall be responsible
for  the design and implementation of all administrative services and procedures
with  respect  to  its  respective  Products,  including  without  limitation,
enrollment,  applications,  setting  the  Net  Price,  underwriting,  reporting,
coverage  determinations,  claims,  grievances, correspondence and communication
with  eligible  and  covered  persons,  employers, Contractholders, Subscribers,
providers  and Governmental Authorities, compliance, record keeping, eligibility
verification,  and  providing  any notices required by applicable Law, provided,
                                                                       --------
however,  the  parties  shall attempt to coordinate enrollment, underwriting and
-------
the  application  process  to the extent possible and permitted by Law under the
circumstances.

     (b)  To  the  extent  permitted by applicable Law, the parties may elect to
coordinate  the  provision  of  one  or  more administrative service to minimize
duplication  of  resources and to promote greater profitability of the Products.
The  fees  payable  for such services, if any, shall be separately negotiated by
the  parties.

     Section  3.3  Enrollment. Health Net shall enroll Health Net Clients in the
Health  Net  Branded  Products  sold by the Health Net Marketing Force when such
Health  Net  Branded  Products are sold to a Health Net Client together with any
Health  Net  Medical  Product. In the event the Health Net Marketing Force sells
any  Health Net Branded Product to a Health Net Client without contemporaneously
selling  such Health Net Client a Health Net Medical Product, SafeGuard shall be
responsible  for  enrolling  the  Eligible  Employees in such Health Net Branded
Products.  Health Net and SafeGuard shall cooperate and coordinate in conducting
employee  on-site  enrollment  meetings.

     Section  3.4  Enrollment Materials. Each party shall be responsible for the
preparation  and  distribution  of  Product  booklets,  certificates,  provider
directories,  identification  cards,  and  all  other  materials relating to the
party's  respective  Products.  All  enrollment  agreements,  forms  and  other
materials,  including  Subscriber  handbooks  and identification cards, used for
Contractholders  and  Subscribers  shall  be  either Health Net's or SafeGuard's
existing  approved  forms,  as appropriate, modified as necessary to reflect the
terms  of  this  Agreement and the administrative requirements of Health Net and
SafeGuard,  respectively.  All  such  materials  shall specify the Subsidiary of
Health  Net  that  is  the  underwriter  of  the  Health  Net  Products, and the

                                      -7-
<PAGE>
Subsidiary of SafeGuard that is the underwriter of SafeGuard Products, including
but  not  limited  to, the Health Net Branded Products.  Neither party shall use
enrollment  materials  using  the  name  of  the  other party, without the other
party's  written  approval.

     Section  3.5  Enrollment  Reports.  Health  Net and SafeGuard shall prepare
periodic  and  timely  reports  showing all Products sold, renewed or terminated
pursuant  to this Agreement, and other enrollment information required by either
party to perform its duties with respect to such Products. Such reports shall be
made  by each party on a periodic and timely basis within five (5) Business Days
following  the  end  of  the  month  in  which the transactions or other matters
occurred,  and  shall  be  transmitted  by  electronic  transmission  in  a form
reasonably  acceptable  to  the  receiving party. Health Net and SafeGuard shall
each  prepare  periodic  reconciliations  of the enrollment information in their
possession.

     Section  3.6 Books and Records. Each party shall keep and maintain true and
complete  records  of  all  transactions  pursuant to this Agreement. Each party
shall  permit  the other party reasonable access during normal business hours to
its  records  related  to  its  rights  and obligations under this Agreement for
inspection  and copying by the other party or its authorized representatives, or
by  a  legally  authorized  and properly identified Governmental Authority. Each
party  shall  furnish  the other party, upon its written request, all reasonably
required  information  in  the party's possession regarding any and all matters,
transactions  or  activities  pertaining  to  the  Products  of  the other party
including  information  required for financial reporting purposes, at such times
and  in  such  formats  as  mutually  agreed  upon  by  the  parties.

                                   ARTICLE IV
                       MANAGED CARE SERVICES AND PRODUCTS
                       ----------------------------------

     Section  4.1  Network  Management.

     (a)  Except  as  otherwise  provided in the Network Access Agreement by and
between  Health Net Life Insurance Company and SafeHealth Life Insurance Company
dated  April  7,  2003,  (i)  all  terms  and  conditions of provider contracts,
including  all  compensation  arrangements  and/or negotiated fees, shall be the
sole  responsibility  of  the  party  contracting  with  the providers, and (ii)
provider  network  recruitment  and management, credentialing protocols, quality
assurance,  utilization  management,  case  management,  and  other managed care
services  with  respect  to each party's Products shall be designed, managed and
performed  by  the party providing the Product with which the services are to be
associated. Each party may recommend to the other additions to or deletions from
such  party's  provider  networks,  provided,  however,  that  the  decision  to
                                    --------   -------
include  or  exclude  any  provider  shall  be  the decision solely of the party
responsible  for  making  the  network  of  providers  available.

     (b)  Neither  party  shall  be  required to disclose to the other party its
proprietary  information, including without limitation, information with respect
to  utilization review, case management, procedure specific protocols, physician
and  provider  profiling,  credentialing criteria, software systems or any other
information which that party, in its sole discretion, designates as proprietary.
If a party elects to disclose any such proprietary information, such information
shall  be  deemed Confidential Information subject to the limitations of Section
10.16.

                                      -8-
<PAGE>
                                    ARTICLE V
                   PRODUCT PRICING, COMPENSATION AND EXPENSES
                   ------------------------------------------

     Section  5.1  Determination  of  Benchmark  Products.  Promptly  after  the
Effective  Date,  SafeGuard  and  Health Net shall compare the Health Net Dental
Products  to the SafeGuard Dental Products and determine which Health Net Dental
Products are materially similar to comparable SafeGuard Dental Products, and any
such SafeGuard Dental Products determined to be materially similar to the Health
Net  Dental  Products  and  selected  by  Health  Net to be a Health Net Branded
Product  shall be considered "Benchmark Products." If, as of the Effective Date,
there  is  no  Health  Net  Dental  Product  materially  similar  to an existing
SafeGuard  Dental Product, at the request of Health Net, SafeGuard shall develop
a  Health  Net  Branded  Product  substantially similar to such SafeGuard Dental
Product.  Health  Net  Branded  dental  HMO products created by SafeGuard at the
request of Health Net to match the SafeGuard Dental Products shall have features
identical  to  the  features of the "Health Net Advantage" suite of products. As
SafeGuard  develops  new  Dental  Products,  Health Net shall have the option to
request  SafeGuard  to  develop  an  identical  Health  Net  Branded  Product. A
SafeGuard Product for which a Health Net Branded Product is created by SafeGuard
at  the request of Health Net pursuant to this Section 5.1 shall be considered a
Benchmark  Product.

     Section 5.2 Pricing of Benchmark Products. During the Term, SafeGuard shall
not  sell  any  Benchmark Product in the Territory for a price less than the Net
Price of the comparable Health Net Branded Products plus the Health Net Mark-Up.

     Section  5.3  Pricing  of  Health  Net  Branded  Products.  The  Health Net
Marketing  Force  shall be permitted to offer the Health Net Branded Products to
individual,  small  group  [SAFEGUARD-HEALTH  NET  PROPRIETARY  INFORMATION] and
mid-market  group  [SAFEGUARD-HEALTH  NET  PROPRIETARY  INFORMATION]  Health Net
Clients  at  prices  to  be  determined  by  Health  Net in its sole discretion.

     Section  5.4  Pricing  of  Large  Group  and  Government  Clients. In those
circumstances  where  the Health Net Marketing Force has or is providing a quote
to  a  Large  Group  or  Government  account  on  one or more Health Net Medical
Products within the Territory, the Health Net Marketing Force shall be permitted
to  offer  the  Health  Net  Branded  Products to such Large Group or Government
account  at  rates  that  are  competitive  in  the  relevant  market within the
Territory and based upon the health care costs of each Large Group or Government
account  offered  the  Health Net Branded Product. The Net Price for such groups
shall  be  established by SafeGuard and based on the estimated health care costs
of  the  Subscribers covered under the Health Net Branded Products issued to the
group  multiplied  by  an administrative expense factor of [SAFEGUARD-HEALTH NET
PROPRIETARY  INFORMATION]  for dental HMO Products and an administrative expense
factor  of  [SAFEGUARD-HEALTH  NET  PROPRIETARY  INFORMATION] for dental PPO and
dental  indemnity  insurance  Products.

     Section  5.5  Replacement  of  Health  Net  Dental  Products.

     (a)  Health  Net  shall  use commercially reasonably efforts to replace any
Health  Net  Dental Product with a Health Net Branded Product for any Health Net
Client  that  also  purchased

                                      -9-
<PAGE>
prior to the Effective Date one or more Health Net Medical Products.  Health Net
shall  receive  an  adjusted  Health  Net  Mark-Up and SafeGuard shall receive a
Supplemental  Subcapitation  Amount  equal  to  the  Supplemental  Subcapitation
percentages  set forth below multiplied by the Pooled Net Price for those Health
Net  Subscribers  set forth in Schedule 5.5 (i) who are covered by both a Health
                               ------------
Net Dental Product and a Health Net Medical Product prior to the Effective Date,
(ii)  who  are covered under both such Products on the Effective Date, and (iii)
whose  Health  Net  Dental  Product  is replaced by a Health Net Branded Product
after  the  Effective  Date  as  follows:

     [SAFEGUARD-HEALTH NET PROPRIETARY INFORMATION]

     (b)  For  those  Health  Net  Subscribers  set  forth on Schedule 5.5 whose
                                                              ------------
Health  Net  Dental  Products  are not converted to a Health Net Branded Product
after  the  Effective  Date,  all  revenue attributable to the Health Net Dental
Product  less  Producer commissions shall be paid to SafeGuard as a Supplemental
Subcapitation  Amount.

     (c)  Health  Net  shall  use commercially reasonable efforts to replace the
Health  Net  Dental Products with Health Net Branded Products for any Subscriber
of  Health Net Health Plans of Oregon, Inc. who or which also purchased a Health
Net  Medical Product prior the Effective Date. Health Net shall use commercially
reasonable efforts to effect such replacement upon the first renewal date of the
Health  Net  Dental Products following the Effective Date, but in no event later
than  December  31,  2004. The Health Net Marketing Force shall be authorized to
sell  the  Health  Net Branded Products to such Subscribers of Health Net Health
Plan  of  Oregon,  Inc.  at  prices  to  be determined by Health Net in its sole
discretion.  Any  Subscriber  of  Health Net Health Plans of Oregon, Inc. who or
which  purchased  only  a Health Net Dental Product shall be offered a SafeGuard
Dental  Product  upon the first renewal date of such Health Net Dental Products.

     (d)  Health  Net  shall  use commercially reasonable efforts to replace the
Health  Net  Dental Products with Health Net Branded Products for any Subscriber
of  Health Net of Arizona, Inc. or Health Net Life Insurance Company residing in
Arizona  upon the first renewal date of the Health Net Dental Products following
the  Effective  Date. The Health Net Marketing Force shall be authorized to sell
the  Health  Net  Branded  Products  to such Arizona Subscribers at prices to be
determined  by  Health  Net  in  its  sole  discretion.

     (e)  Any Health Net Dental Product purchased prior to the Effective Date by
a  Subscriber of Health Net of California, Inc. in conjunction with a "Seniority
Plus"  plan shall be considered a Health Net Branded Product as of the Effective
Date  and  SafeGuard  shall  be  entitled to receive the SafeGuard Subcapitation
Amount  with  respect  to  such  Health Net Dental Products commencing as of the
Effective  Date.

     Section  5.6 Stand Alone Presentation of Benchmark Products. In the event a
member  of the SafeGuard Marketing Force presents a price quote to a prospective
account  only  for  one or more Benchmark Product and a member of the Health Net
Marketing  Force  also  presents  a  price  quote to the same account for both a
Medical  Product  and  one  or  more Health Net Branded Products which match the
Benchmark  Products  quoted  by  the  SafeGuard  Marketing  Force,

                                      -10-
<PAGE>
Health  Net  shall  be  permitted  to sell the Health Net Branded Products which
match  the Benchmark Products offered by SafeGuard to the account for the lowest
price  SafeGuard  offered  such Benchmark Products to the account.  If SafeGuard
lowers  the  price  of the Benchmark Products offered to an account described in
this  Section  5.6,  SafeGuard  shall  promptly  notify Health Net of such price
reduction and adjust the Net Price of the comparable Health Net Branded Products
offered  to  the  account by the Health Net Marketing Force to match the reduced
price  of  the  Benchmark  Products  offered  to  the  account  by  SafeGuard.

     Section  5.7  Health  Net  Sales of Health Net Branded Products. Health Net
shall  receive  the  Health  Net  Mark-Up  on  any  Health  Net Branded Products
purchased by Health Net Subscribers as a result of the efforts of the Health Net
Marketing  Force subsequent to the Effective Date, provided, however, Health Net
shall  not  be  entitled  to  the  Health  Net  Mark-Up  (i)  for any Health Net
Subscribers who are also SafeGuard Subscribers; (ii) if the Health Net Marketing
Force  sells  a  Medical  Product to an account who or which is a Contractholder
under  a  SafeGuard  Dental  Product;  or  (iii) if SafeGuard sells a Health Net
Medical  Product  together with a SafeGuard Dental Product or a SafeGuard vision
product  to  a  new  SafeGuard  Client  after  the  Effective  Date.

     Section 5.8 Compensation to SafeGuard for Sale of Health Net Products. If a
member  of  the  SafeGuard Marketing Force sells a SafeGuard Subscriber a Health
Net  Product  after  the  Effective  Date,  Health  Net  shall  pay  SafeGuard
[SAFEGUARD-HEALTH  NET  PROPRIETARY  INFORMATION]  of  the  collected first year
premium  (net  of Producer commission) for any such Health Net Product not later
than  the  tenth  (10th)  calendar  day  of  the  month  of  eligibility for the
Subscribers.  The  SafeGuard  Marketing Force shall offer Health Net Products to
SafeGuard  Subscribers  only  at  the  price  authorized  by  Health  Net.

                                   ARTICLE VI
           BILLING AND COLLECTION OF PREMIUMS; PAYMENT OF COMMISSIONS
           ----------------------------------------------------------

     Section  6.1  Billing  and  Collection  of  Premiums.

     (a)  Health  Net  shall  bill and collect premium and contract fees for all
Health  Net  Branded Products sold by the Health Net Marketing Force to a Health
Net  Client.  Health  Net  shall  bill and collect all premium and contract fees
attributable  to  Health Net Products sold to SafeGuard Clients by the SafeGuard
Marketing  Force.

     (b)  Health  Net  shall  notify  SafeGuard if Health Net determines that an
individual  or  group  who  or  which  purchased a Health Net Branded Product is
ineligible  for  any  reason  including,  but  not  limited  to,  failure to pay
premiums.  Any  adjustments  to  the  eligible  Subscribers  and  the  resulting
SafeGuard  Subcapitation  Amount  shall be subject to the standard retroactivity
adjustment  policy  of  SafeGuard  at  the  time  of  the  adjustment.

     Section  6.2  Commissions.

     (a)  Health  Net shall make payment of all commissions (i) owing to members
of the Health Net Marketing Force to the extent that such commissions become due
as  a  result  of  the sale of Health Net Medical Products or Health Net Branded
Products  pursuant  to  this  Agreement,

                                      -11-
<PAGE>
and  (ii)  owing  to  SafeGuard  to  the extent such commissions become due as a
result  of  the  sale  of  Health Net Medical Products to SafeGuard Clients by a
member  of  the  SafeGuard Marketing Force.  SafeGuard shall make payment of all
commissions  to  members  of  the  SafeGuard  Marketing Force to the extent such
commissions become due as a result of the sale of Health Net Medical Products to
SafeGuard  Clients.

     (b)  Each  party  shall be responsible for ensuring that each member of its
respective  Marketing  Force  is  appropriately  licensed  and  appointed,  as
necessary,  to  sell  the Products and to receive commissions. The parties shall
not authorize any person or entity to solicit sales of Products pursuant to this
Agreement in any state unless such person or entity is properly licensed in that
state.  All  payments  of  commissions to members of the marketing forces of the
respective  parties  shall  comply  with  applicable  Law.

     Section  6.3  Subcapitation  Payments  to  SafeGuard.  The  SafeGuard
Subcapitation  Amount  plus  any  Supplemental Subcapitation Amount shall be the
sole  compensation  payable  by  Health  Net to SafeGuard in connection with the
Health  Net  Branded Products sold by the Health Net Marketing Force pursuant to
this Agreement. The SafeGuard Subcapitation Amount shall be paid to SafeGuard no
later  than  the  tenth  (10th) calendar day of the month of eligibility for the
Subscribers  under  the  Health  Net  Branded  Products  sold  pursuant  to this
Agreement.

     Section  6.4  Accounting and Reporting. Each party shall prepare and supply
the  other  party  with  any  accounting  reports and reports of activities with
respect  to  the  Products  and  sales  activities  pursuant  to  this Agreement
reasonably  requested  by  the  other  party.

                                   ARTICLE VII
                              TERM AND TERMINATION
                              --------------------

     Section  7.1  Term.  This Agreement shall become effective on the Effective
Date  and  shall  continue  in  effect  for  sixty (60) months unless terminated
pursuant  to  the  terms  of  this  Article  VII. Unless this Agreement has been
terminated  pursuant to the terms of this Article VII, Health Net shall have the
option  to  extend  this  Agreement  on  the  same  terms  and conditions for an
additional  sixty  (60)  months by providing written notice to SafeGuard no less
than  one  hundred  and eighty (180) days prior to the expiration of the initial
sixty  (60)  months.

     Section 7.2 Termination on Mutual Consent. This Agreement may be terminated
at  any  time  by  mutual  agreement  of  the  parties  hereto  in  writing.

     Section  7.3  Termination  for  Cause.  Either  party  may  terminate  this
Agreement for cause by providing the other party written notice of its intention
to  terminate  upon  the  occurrence  of  any  of  the  following:

     (a)  If  a party fails to remit any amounts due under this Agreement within
twenty-five  (25)  days  of  the  date  such  amount  is  due  and  payable.

     (b)  If  a  party  breaches  a material term, covenant or condition of this
Agreement  and  fails  to  cure such breach within thirty (30) days of receiving
written  notice  of such breach from the non-breaching party. The written notice
of  such  breach  shall  make  specific  reference  to  the

                                      -12-
<PAGE>
action  causing  breach.  If the breaching party fails to cure its breach to the
reasonable  satisfaction  of  the non-breaching party during the thirty (30) day
cure  period,  this Agreement shall terminate at the option of the non-breaching
party.  In the event such cure cannot reasonably be completed within such thirty
(30) day period, then commencement of such cure within such thirty (30) days and
its  diligent  prosecution  to  completion  shall,  subject to the party's other
rights  to  terminate the Agreement, extend the period to cure the breach for an
additional  period  reasonably  necessary  to  complete  the  cure.

     (c)  If  a  party  shall engage in fraudulent, illegal or grossly negligent
conduct  with  respect  to  its duties and obligations under this Agreement, the
other  party  shall have the right to terminate this Agreement, upon delivery of
written  notice  of  such  termination  to  the defaulting party, which shall be
effective  upon  receipt,  without  prejudice  to  any  other rights or remedies
available  to  the  non-defaulting  party  by  reason  of the defaulting party's
conduct.

     (d)  If  a party shall become unable to perform its obligations under their
respective  Products because of financial impairment or loss of authority to act
under  Law,  or  by  action of any Governmental Authority, the other party shall
have  the  right  to  terminate  this  Agreement  immediately.

     (e) In the event of a Change of Control of one party, the other party shall
have the right to terminate this Agreement effective as of the effective date of
the  Change  of  Control.

     (f)  If  the parties fail to reach the membership acquisition targets for a
state  other  than California set forth in Schedule 7.3, either party shall have
                                           ------------
the right to enter into an agreement with a third party substantially similar to
this  Agreement  with  respect  to  such state and the exclusivity provisions of
Section  2.3  (a) and (b) with respect to such state shall have no further force
and  effect.  If the parties fail to reach the membership acquisition target for
California  specified  in  Schedule  7.3,  either  party shall have the right to
                           -------------
terminate this Agreement in its entirety upon ninety (90) days written notice to
the  other  party.

     Section  7.4  Post-Termination  Rights and Responsibilities. Termination of
this  Agreement  shall not terminate rights and obligations of the parties which
by  their  nature  extend beyond the term. Termination of this Agreement for any
reason  shall not release any party from any liability which has already accrued
to  another  party  at  the  time of termination. In the event this Agreement is
terminated,  the  parties  shall continue to perform all customary and necessary
services  regarding  their respective Products in accordance with the provisions
of  this  Agreement  until  all  such  Products  have  been completely canceled,
transitioned,  nonrenewed,  or  otherwise  terminated.

                                  ARTICLE VIII
                                 INDEMNIFICATION
                                 ---------------

     Section 8.1      Indemnification  by  SafeGuard.  SafeGuard  shall  defend,
indemnify  and  hold harmless Health Net and its directors, officers, employees,
shareholders, and Affiliates ("Health Net Indemnities") from and against any and
all  loss, claim, damage, liability, or action in respect hereof which is caused
by  or  results  from  the  malfeasance,  negligence,  action  or

                                      -13-
<PAGE>
inaction  of  SafeGuard  of its duties and obligations under this Agreement.  If
any claim, demand, action, suit, or proceeding is made or brought against any of
the  Health Net Indemnities with respect to matters that are the subject of this
indemnity,  SafeGuard  shall  assume the defense thereof with counsel reasonably
satisfactory  to  the  Health  Net  Indemnities  and shall pay all costs of such
defense.

     Section  8.2  Indemnification  by  Health  Net.  Health  Net  shall defend,
indemnify  and  hold  harmless SafeGuard and its directors, officers, employees,
shareholders,  and Affiliates ("SafeGuard Indemnities") from and against any and
all  loss, claim, damage, liability, or action in respect hereof which is caused
by or results from the malfeasance, negligence, action or inaction of Health Net
of  its  duties  and  obligations  under  this  Agreement. If any claim, demand,
action,  suit,  or  proceeding  is  made or brought against any of the SafeGuard
Indemnities  with  respect  to  matters  that are the subject of this indemnity,
Health Net shall assume the defense thereof with counsel reasonably satisfactory
to  the  SafeGuard  Indemnities  and  shall  pay  all  costs  of  such  defense.

     Section  8.3  Liability  under  SafeGuard's  Products.  Health Net is not a
guarantor,  insurer,  or  reinsurer  of,  or  joint venturer with, SafeGuard and
Health  Net  shall  have no risk of loss for, nor provide any indemnification to
SafeGuard,  any  Contractholder  or Subscriber, any provider or any other person
with  respect to any SafeGuard Product. SafeGuard shall indemnify Health Net for
all  liabilities,  losses,  suits,  damages,  costs  and  expenses  (including
reasonable  fees  of  Health Net's attorneys, and other expenses of litigation),
net  of  recoveries  from  third parties, arising in connection with a SafeGuard
Product,  including  action  or failure to act by SafeGuard, or its employees or
agents.

     Section  8.4  Liability  under  Health  Net  Products.  SafeGuard  is not a
guarantor,  insurer,  or  reinsurer  of,  or joint venturer with, Health Net and
SafeGuard  shall have no risk of loss, nor provide any indemnification to Health
Net,  any  Contractholder  or  Subscriber, any provider or any other person with
respect  to  a  Health Net Product. Health Net shall indemnify SafeGuard for all
liabilities,  losses,  suits,  damages, costs and expenses (including reasonable
fees  of  SafeGuard's  attorneys,  and  other  expenses  of  litigation), net of
recoveries  from third parties, arising in connection with a Health Net Product,
including  action  or  failure to act by Health Net, or its employees or agents.

     Section  8.5  Survival  of  Article.  This  Article  VIII shall survive the
termination  of  this  Agreement.

                                   ARTICLE IX
                                   ARBITRATION
                                   -----------

     Section  9.1          Arbitration.  In the event of any dispute between the
parties  hereto relating to, arising out of, or in connection with any provision
of  this  Agreement (hereinafter a "Dispute"), the parties to this Agreement and
their  representatives,  designees,  successors  and assigns agree that any such
Dispute  shall be settled by binding arbitration to take place in Orange County,
California;  provided,  however,  that nothing herein shall preclude the parties
from

                                      -14-
<PAGE>
seeking equitable judicial relief pending arbitration, including but not limited
to  injunctive  or  other  provisional  relief.

     Section  9.2  Selection  of  Arbitrator. Any arbitration hereunder shall be
conducted  by  a  single  arbitrator chosen from the panel of arbitrators of the
Judicial Arbitration & Mediation Services ("JAMS") with experience and expertise
in  the  dental HMO or dental indemnity insurance business. If a JAMS arbitrator
with  specific  experience  in  the  dental  HMO  or  dental indemnity insurance
business  is  not  available, the arbitrator must have general experience in the
health  insurance  industry.  Within  ten  (10) days of notice of a Dispute from
Health  Net  to  SafeGuard or notice from SafeGuard to Health Net, SafeGuard and
Health  Net  shall  use  their  best  efforts  to  choose  a  mutually agreeable
arbitrator.  If  Health  Net  and  SafeGuard  cannot agree on an arbitrator, the
arbitrator  shall  promptly  be  selected  by  JAMS.

     Section  9.3  Procedures.  The  party  submitting  a Dispute to arbitration
hereunder shall present its case to the arbitrator and the other party hereto in
written  form  within  twenty (20) days after the appointment of the arbitrator.
The  other  party  hereto  shall  then have twenty (20) days to submit a written
response  to  the arbitrator and the original party who submitted the Dispute to
arbitration.  After  timely  receipt  of each party's case, the arbitrator shall
have  twenty  (20)  days  to  render  his  or  her  decision.

     Section  9.4  Applicable  Law.  The  arbitrator  is  relieved from judicial
formalities  and,  in  addition to considering the rules of law, the limitations
contained  in  this  Agreement  and the customs and practices of the health care
industry,  shall make his or her award with a view to effectuating the intent of
this  Agreement.  The decision of the arbitrator shall be final and binding upon
the  parties,  and  judgment  may  be  entered  thereon  in a court of competent
jurisdiction.

     Section  9.5  Expenses.  Each party shall bear its own cost of arbitration,
and  the  costs  of the arbitrator shall be shared equally among each party to a
Dispute.

     Section  9.6 Survival of Article. This Article IX shall survive termination
of  this  Agreement.

                                    ARTICLE X
                                  MISCELLANEOUS
                                  -------------

     Section  10.1  Misunderstandings  and  Oversights.  If any delay, omission,
error  or failure to perform any act required by this Agreement is unintentional
and  caused  by  misunderstanding  or  oversight,  the  parties shall adjust the
situation  to  what it would have been had the misunderstanding or oversight not
occurred.  The  party  that first discovers such oversight or incorrect act as a
result  of  the misunderstanding will notify the other party in writing promptly
upon  discovery  of  the misunderstanding or oversight. The parties shall act to
correct the error, omission or oversight within thirty (30) days of notification
of  the  problem. This Section 10.1 shall not be construed as a waiver by either
party  of  its  right  to  enforce  strictly  the  terms  of  this  Agreement.

                                      -15-
<PAGE>
     Section  10.2  Performance  by  Affiliates.  The  parties  acknowledge that
certain  obligations  required  to  be  performed  may, by their nature, require
specific legal authority to perform or will be more effectively performed by the
parties' Affiliates. The parties will, to the extent required in order for their
respective Affiliates to perform the obligations of the respective parties under
this  Agreement,  cause  their respective Affiliates to perform such obligations
hereunder  as  if  such Affiliates were themselves parties hereto. In connection
with  the  performance  of  such obligations, the parties' respective Affiliates
shall  be  subject  to  the  terms  and  conditions of this Agreement as if such
Affiliates  were  themselves  parties  hereto.

     Section  10.3 Regulatory Approval. Performance of the obligations of either
party  under  this  Agreement  shall  be subject to the receipt of any necessary
regulatory  approvals  under  the  applicable  Law and practices of Governmental
Authorities  in  the  Territory.  Health  Net  and  SafeGuard shall cooperate in
attempting  to  obtain  expeditiously  any  necessary  regulatory approvals from
Governmental  Authorities.  Each  party  will bear its own expenses in obtaining
such  approvals.

     Section  10.4 Compliance with Laws. Each party shall, in the performance of
their  obligations  set  forth in this Agreement, comply with all applicable Law
and  the rules and regulations of all Governmental Authorities with jurisdiction
over  the  parties  and  each  party shall maintain all licenses or certificates
necessary  or appropriate for the performance of the functions set forth in this
Agreement.  Each  party  shall  conform  its actions under this Agreement to any
orders  concerning  the  activities  covered  by  this Agreement by Governmental
Authorities having jurisdiction over the parties' Products, business affairs and
operations.  Each party shall take all actions and make all filing, applications
and  provide all notices required by applicable Law to maintain their respective
Products  in  compliance  in  all  material  respects  with  existing and future
applicable  Law.  Each  party  shall  promptly  notify  the  other  party of any
complaint,  inquiry  or  lawsuit  by  any Governmental Authority relating to the
Products  or  to  this  Agreement.

     Section  10.5  Audits.  Each  party  shall  have the right, upon reasonable
notice  to  the other party, and at the requesting party's expense, to audit the
books  and  records of the other party relating to this Agreement during regular
business  hours  at  the  premises  of  the audited party where such records are
normally  maintained,  including but not limited to, verifying that SafeGuard is
providing  Health  Net  Clients the Most Favored Nation Price. The audited party
shall  reasonably  cooperate  in  any  such  audit.

     Section  10.6  Headings and Schedules. Headings used herein are not part of
this  Agreement.  Any  Schedules or Exhibits attached hereto are incorporated by
this  reference  and  made  a  part  of  this  Agreement.

     Section  10.7  Force Majeure. No party hereto shall be liable for any delay
or  failure in the performance of any obligation under this Agreement or for any
loss  or  damage (including indirect or consequential damage) to the extent that
such nonperformance, delay, loss or damage results from any contingency which is
beyond the control of such party, provided such contingency is not caused by the
fault  or negligence of such party. A contingency for purposes of this Agreement
shall  be  acts  of  God,  fires, floods, earthquakes, explosions, storms, wars,
hostilities,  acts  of  terrorism,  blockades,  public  disorders,  quarantines,
restrictions,  embargoes,

                                      -16-
<PAGE>
strikes  or  other  labor  disturbances,  and  compliance with any Law, order or
control  of,  or insistence of any Governmental Authority or military authority.

     Section  10.8  Successors and Assigns; Binding Effect. This Agreement shall
not be assigned by Health Net or SafeGuard without the prior written approval of
the  other  party.  The  provisions  of this Agreement shall be binding upon and
inure  to  the  benefit  of  and  be enforceable by the parties hereto and their
respective  permitted  successors  and  assigns.

     Section 10.9 Counterparts. This Agreement may be executed simultaneously in
any number of counterparts, each of which will be deemed an original, but all of
which  will  constitute  one  and  the  same  agreement.

     Section  10.10  Entire Agreement; Amendment. This Agreement constitutes the
entire  agreement between the parties with respect to the strategic relationship
of  the  parties,  and  supersedes any previous written or oral agreements. This
Agreement shall be amended only by written agreement signed by a duly authorized
officer  of  each  of Health Net and SafeGuard, and any change to this Agreement
shall be null and void unless made by such written agreement; provided, however,
that where, under insurance, health or other applicable Law, the approval of any
such  amendment  to  this  Agreement  by  one  or more Governmental Authority is
required,  the  amendment  shall  not  take  effect  unless  and  until all such
necessary  approvals  have  been  obtained  and  received by both Health Net and
SafeGuard.  In  the  event  that  any  such approval is required, Health Net and
SafeGuard  shall  each  take  all  necessary  actions  in  order  to obtain such
approval.

     Section  10.11  Waivers.  The  waiver by either of the parties of the other
party's  prompt  and  complete  performance,  or  breach  or  violation,  of any
provisions  of  this  Agreement  and  related  documents shall not operate or be
construed  as  a waiver of any subsequent breach or violation, and the waiver by
any  of  the  parties  to  exercise  any  right  or  remedy which it may possess
hereunder  shall  not  operate  or be construed as a bar to the exercise of such
right  or  remedy  by such party upon the occurrence of any subsequent breach or
violation.

     Section  10.12  Governing  Law.  This  Agreement  shall  be governed by and
construed  in accordance with the Law of the state of California, without giving
effect  to  the  principles  of  conflicts  of  laws  thereof.

     Section  10.13  Severability. In the event any section or provision of this
Agreement  or related documents is found to be void and unenforceable by a court
of  competent  jurisdiction,  the  remaining  sections  and  provisions  of this
Agreement  or  related  documents shall nevertheless be binding upon the parties
with  the same force and effect as though the void or unenforceable part had not
been  severed  or  deleted.

     Section  10.14  Notices.  Any  notice  or  other  communication required or
permitted  hereunder  shall  be  in  writing and shall be delivered by certified
process server, certified or registered mail (postage prepaid and return receipt
requested),  by a nationally recognized overnight courier service (appropriately
marked  for  overnight  delivery)  or  by  facsimile (with request for immediate
confirmation  of  receipt  in  a  manner  customary  for  communications of such
respective type). Notices shall be effective upon receipt and shall be addressed
as  follows:

                                      -17-
<PAGE>
     (a) if to SafeGuard to:

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

                          with a copy to:

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

                          and

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

     (b) if to Health Net to:

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

                          with a copy to:

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

                                      -18-
<PAGE>
     Section  10.15  Notice  of  Legal  Proceedings.  If either party receives a
notice  of the commencement of any legal proceedings involving the other party's
Products  or  actions  pursuant  to  this  Agreement, any communication from any
Governmental  Authority,  or  any  person  identifying  a  complaint  by  a
Contractholder  or  Subscriber  (other  than  a  routine inquiry not involving a
communication  from  a  Governmental  Authority  or  the suggestion of any legal
action),  the  party  receiving  such  notice shall immediately advise the other
party  of  such  notice and shall thereafter forward promptly to the other party
any  correspondence  or  information  pertaining to any such legal proceeding or
communication.

     Section  10.16  Confidentiality.

     (a)  Neither  Health  Net  nor  SafeGuard shall disclose any proprietary or
confidential information of the other party to a third party without the express
written  consent  of  the  other  party  to this Agreement. For purposes of this
Agreement,  "proprietary  and  confidential"  information  will include, without
limitation,  all  internal  business practices and business records, information
concerning  products  and  pricing, contracts, computer hardware and software or
business  methods  in  any  form  whatsoever, peer review, quality assurance and
grievance  procedures,  any  aspect of utilization review programs, provider fee
schedules,  reimbursement  schedules  or discounts, and advertising or marketing
information,  but  not  including information otherwise available to the public.
Neither  party  shall  use  any  proprietary and confidential information of the
other  party for its own benefit. Upon termination of this Agreement, each party
will  immediately return to the other party any confidential information, except
confidential  information  necessary  for  the  continued  administration of any
Product.

     (b)  The  parties  shall  maintain  the  confidentiality  of  any  personal
information,  including health information, pertaining to Subscribers including,
without  limitation, files, records, reports, and other information prepared and
maintained  in connection with this Agreement, in accordance with all applicable
Law.

     (c)  Each  party  shall  obtain any necessary consent or authorization from
Subscribers  with  respect  to  the release to the other party of any non-public
personal  information,  including  health  information,  relating  to  such
Subscribers,  by  means  of  general  or specific releases, as appropriate. Each
party  shall  notify the other if it becomes aware that proper releases have not
been  obtained.

     (d)  To  the  extent  that  either  of  the  parties  performs  functions,
activities,  or services for, or on behalf of, the other party to this Agreement
involving the use or disclosure of Protected Health Information, as that term is
defined  in 45 CFR 164.501, the parties shall comply with the Business Associate
Addendum  set  forth  in  Schedule  10.16  hereto.
                          ---------------

     Section  10.17  Press  Releases.  No  public  statement  or  press  release
regarding  the existence of this Agreement shall be made by either party without
obtaining  the  prior  written consent of the other party, except as required by
applicable  Law.

     Section  10.18  Relationship  of Parties. The parties to this Agreement are
and shall remain independent contractors. Neither party is the employee or agent
of  the  other  party,  except

                                      -19-
<PAGE>
as  set  forth herein, and neither party has an express or implied right to bind
the  other  party.  The  parties  do  not  intend  to  form  a  joint  venture,
partnership,  or  to  be governed by Law relating to any relationship other than
that  of  independent contractors.  Neither party is authorized to modify, alter
or  waive  the  terms  of  any  Product  issued  by  the  other  party.

     Section  10.19  No Third Party Rights. This Agreement has been made for the
benefit  of  the  parties hereto and respective successors and permitted assigns
and nothing in this Agreement is intended to confer any rights or remedies under
or  by reason of this Agreement on any other person other than the parties to it
and their respective successors and permitted assigns. Nothing in this Agreement
is  intended  to  relieve or discharge the obligations or liability of any third
person  to  any  party  to  this  Agreement.

     Section  10.20  Expenses.  Except  as otherwise provided herein, each party
shall  be  responsible  for  the  expenses  it  incurs  in  connection with this
Agreement.

     IN  WITNESS  WHEREOF,  the  parties hereto have caused this Agreement to be
executed  by  their  duly  authorized representatives as of the date first above
written.

                                        HEALTH NET, INC.

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

                                        SAFEGUARD HEALTH ENTERPRISES, INC.

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

                                        By: /s/ Stephen J. Baker
                                           -------------------------------------
                                        Name:  Stephen J. Baker
                                        Title: Executive Vice President and
                                               Chief Operating Officer

                                      -20-
<PAGE>
                                  SCHEDULE 5.5

                    REPLACEMENT OF HEALTH NET DENTAL PRODUCTS

To be determined as of the Effective Date

                                      -21-
<PAGE>
                                  SCHEDULE 7.3

                         MEMBERSHIP ACQUISITION TARGETS

STATE                       NET NEW MEMBERS PER YEAR
-----                       ----------------------------

CALIFORNIA                 [SAFEGUARD-HEALTH NET PROPRIETARY INFORMATION]

OREGON                     [SAFEGUARD-HEALTH NET PROPRIETARY INFORMATION]

ARIZONA                    [SAFEGUARD-HEALTH NET PROPRIETARY INFORMATION]

TEXAS (If applicable)      [SAFEGUARD-HEALTH NET PROPRIETARY INFORMATION]

FLORIDA (If applicable)    [SAFEGUARD-HEALTH NET PROPRIETARY INFORMATION]

                                      -22-
<PAGE>
                                 SCHEDULE 10.16

                           BUSINESS ASSOCIATE ADDENDUM

This Business Associate Addendum (the "Addendum") supplements and is made a part
of  the  Strategic  Relationship  Agreement  by and between Health Net, Inc. and
SafeGuard Health Enterprises, Inc. (the "Agreement"), and is effective as of the
Effective  Date  of  the  Agreement.

RECITALS

A.   The  parties may disclose certain information to each other pursuant to the
     terms  of  the  Agreement,  some  of  which may constitute Protected Health
     Information,  as  defined  below.

B.   The  parties  intend to protect the privacy and provide for the security of
     Protected  Health  Information  in  compliance  with  the  Health Insurance
     Portability  and  Accountability  Act  of  1996,  Public  law  No.  104-191
     ("HIPAA") and the regulations promulgated thereunder by the U.S. Department
     of Health and Human Services (the "HIPAA Regulations") and other applicable
     laws.

C.   The  purpose  of  this  Addendum  is  to  satisfy  certain  standards  and
     requirements of HIPAA and the HIPAA Regulations, including, but not limited
     to,  45  CFR  164.502(e)  and  45  CFR  164.504(e).

In  consideration  of  the mutual promises below and the exchange of information
pursuant  to  the  Agreement  and  this  Addendum, the parties agree as follows:

1.   Definitions

(a)     "Business  Associate"  means the party performing functions, activities,
or  services  for,  or  on behalf of, a Covered Entity pursuant to the Agreement
involving  the  use  or  disclosure  of  Protected  Health  Information.

(b)     "Covered  Entity"  means  the  party  for  whom,  or  on  whose  behalf,
functions,  activities,  or  services  are  performed  pursuant to the Agreement
involving  the  use  or  disclosure  of  Protected  Health  Information.

(c)     "Privacy  Rule"  means  the  Standards  for  Privacy  of  Individually
Identifiable  Health Information at 45 CFR part 160 and part 164, subparts A and
E.

(d)     "Protected  Health  Information"  has  the  same  meaning  as  the  term
"protected  health  information"  in  45 CFR 164.501, limited to the information
created  or  received by Business Associate from or on behalf of Covered Entity.

(e)     Capitalized  terms  used but not otherwise defined in this Addendum have
the  same  meaning  as  those  terms  in  the  Privacy  Rule.

                                      -23-
<PAGE>
2.   Obligations  and  Activities  of  Business  Associate

(a)     Business  Associate  shall  not  use  or  disclose  Protected  Health
Information  other than as permitted or required by this Addendum or as Required
By  Law.

(b)     Business  Associate  shall  use appropriate safeguards to prevent use or
disclosure of the Protected Health Information other than as provided for by the
Agreement  and  this  Addendum.

(c)     Business  Associate  agrees  to mitigate, to the extent practicable, any
harmful  effect  that  is  known to Business Associate of a use or disclosure of
Protected  Health  Information  by  Business  Associate  in  violation  of  the
requirements  of  this  Addendum.

(d)     Business  Associate shall report to Covered Entity any use or disclosure
of  the  Protected Health Information not provided for by this Addendum of which
it  becomes  aware.

(e)     Business  Associate  shall  ensure  that  any  agent,  including  a
subcontractor,  to  whom it provides Protected Health Information received from,
or created or received by Business Associate on behalf of, Covered Entity agrees
to  the  same  restrictions  and  conditions that apply through this Addendum to
Business  Associate  with  respect  to  such  information.

(f)     Business  Associate  shall  provide  access,  at  the request of Covered
Entity,  and  in  the time and manner designated by Covered Entity, to Protected
Health Information in a Designated Record Set, to Covered Entity or, as directed
by  Covered  Entity, to an Individual in order to meet the requirements under 45
CFR  164.524

(g)     Business  Associate  agrees to make any amendment(s) to Protected Health
Information in a Designated Record Set that the Covered Entity directs or agrees
to pursuant to 45 CFR 164.526 at the request of Covered Entity or an Individual,
and  in  the  time  and  manner  designated  by  Covered  Entity.

(h)     Business  Associate  agrees  to  make its internal practices, books, and
records,  including  policies and procedures, relating to the use and disclosure
of  Protected  Health  Information  received  from,  or  created  or received by
Business Associate on behalf of, Covered Entity available to the Secretary, in a
time  and  manner  designated  by  the  Secretary, for purposes of the Secretary
determining  Covered  Entity's  compliance  with  the  Privacy  Rule.

(i)     Business  Associate  agrees  to  document  such disclosures of Protected
Health  Information  and  information  related  to  such disclosures as would be
required  for  Covered  Entity  to  respond to a request by an Individual for an
accounting  of disclosures of Protected Health Information in accordance with 45
CFR  164.528.

(j)     Business  Associate agrees to provide to Covered Entity, in the time and
manner  designated  by  Covered Entity, information collected in accordance with
Section  (2)(i)  of  this  Addendum,  to  permit  Covered Entity to respond to a
request  by  an  Individual for an accounting of disclosures of Protected Health
Information  in  accordance  with  45  CFR  164.528.

3.   Permitted  Uses  and  Disclosures  by  Business  Associate  General Use and
     Disclosure  Provisions

                                      -24-
<PAGE>
     Except as otherwise limited in this Addendum, Business Associate may use or
disclose  Protected  Health  Information  to  perform  functions, activities, or
services  for,  or  on  behalf of, Covered Entity as specified in the Agreement,
provided  that such use or disclosure would not violate the Privacy Rule if done
by  Covered  Entity.

4.   Specific  Use  and  Disclosure  Provisions

(a)     Except as otherwise limited in this Addendum, Business Associate may use
Protected  Health  Information  for  the proper management and administration of
Business  Associate  or  to  carry  out  the  legal responsibilities of Business
Associate.

(b)     Except  as  otherwise  limited  in this Addendum, Business Associate may
disclose  Protected  Health  Information  for  the  proper  management  and
administration  of Business Associate, provided that disclosures are Required By
Law, or Business Associate obtains reasonable assurances from the person to whom
the  information  is  disclosed  that  it  will  remain confidential and used or
further  disclosed  only  as Required By Law or for the purpose for which it was
disclosed  to the person (which purpose shall be consistent with the limitations
imposed  by this Addendum) and the person notifies the Business Associate of any
instances  of  which it is aware in which the confidentiality of the information
has  been  breached.

(c)     Except as otherwise limited in this Addendum, Business Associate may use
Protected  Health  Information  to  provide Data Aggregation services to Covered
Entity  as  permitted  by  42  CFR  164.504(e)(2)(i)(B).

(d)     Business  Associate  may  use  Protected  Health  Information  to report
violations  of law to appropriate Federal and State authorities, consistent with
45  CFR  164.502(j)(1).

5.   Obligations  of  Covered  Entity  Provisions  for  Covered Entity To Inform
     Business  Associate  of  Privacy  Practices  and  Restrictions

(a)     Covered  Entity shall notify Business Associate of any limitation in its
notice  of  privacy  practices  in accordance with 45 CFR 164.520, to the extent
that  such  limitation  may  affect  Business  Associate's  use or disclosure of
Protected  Health  Information.

(b)     Covered  Entity  shall  notify  Business Associate of any changes in, or
revocation  of,  permission by an Individual to use or disclose Protected Health
Information, to the extent that such changes may affect Business Associate's use
or  disclosure  of  Protected  Health  Information.

(c)     Covered Entity shall notify Business Associate of any restriction on the
use or disclosure of Protected Health Information that Covered Entity has agreed
to  in  accordance  with 45 CFR 164.522, to the extent that such restriction may
affect  Business  Associate's use or disclosure of Protected Health Information.

(d)     Covered  Entity  shall not request Business Associate to use or disclose
Protected  Health  Information in any manner that would not be permissible under
the Privacy Rule if done by Covered Entity, except as permitted by Sections 4(b)
and  4(c)  of  this  Addendum.

                                      -25-
<PAGE>
6.   Term  and  Termination

(a)     This  Addendum  shall  be  effective  as  of  the  Effective Date of the
Agreement,  and  shall  terminate  when  all of the Protected Health Information
provided  by  Covered  Entity  to  Business Associate, or created or received by
Business  Associate  on  behalf  of  Covered Entity, is destroyed or returned to
Covered  Entity,  or,  if it is infeasible to return or destroy Protected Health
Information,  protections  are  extended to such information, in accordance with
the  termination  provisions  in  this  Section.

(b)     Upon Covered Entity's knowledge of a material breach of this Addendum by
Business  Associate, Covered Entity shall either: (i) provide an opportunity for
Business  Associate  to  cure the breach or end the violation and terminate this
Addendum,  and  the  provision  for  performance  of  functions,  activities, or
services  for,  or  on behalf of Covered Entity under the Agreement, if Business
Associate  does  not  cure  the  breach  or  end  the  violation within the time
specified  by  Covered Entity; (ii) immediately terminate this Addendum, and the
provision  for  performance  of  functions,  activities,  or services for, or on
behalf of Covered Entity under the Agreement, if Business Associate has breached
a  material  term of this Addendum and cure is not possible; or (iii) if neither
termination  nor  cure  is  feasible,  report  the  violation  to the Secretary.

(c)     Effect  of  Termination.

     (i)  Except as provided in paragraph (ii) of this section, upon termination
     of  this  Addendum,  for  any  reason,  Business  Associate shall return or
     destroy  all  Protected Health Information received from Covered Entity, or
     created  or received by Business Associate on behalf of Covered Entity, and
     shall  retain no copies of the Protected Health Information. This provision
     shall  apply  to  Protected Health Information that is in the possession of
     subcontractors  or  agents  of  Business  Associate.

     (ii)  In  the  event  that  Business Associate determines that returning or
     destroying  the  Protected  Health  Information  is  infeasible,  Business
     Associate  shall  provide  to Covered Entity notification of the conditions
     that  make  return  or  destruction  infeasible. Upon mutual agreement that
     return  or  destruction  of  Protected  Health  Information  is infeasible,
     Business  Associate  shall  extend the protections of this Addendum to such
     Protected Health Information and limit further uses and disclosures of such
     Protected  Health  Information  to  those  purposes that make the return or
     destruction  infeasible,  for  so long as Business Associate maintains such
     Protected  Health  Information.

7.   Miscellaneous

(a)     Regulatory  References. A reference in this Addendum to a section in the
        ----------------------
Privacy  Rule  means  the  section  as  in  effect  or  as  amended.

(b)     Amendment.  The  Parties  agree  to  take such action as is necessary to
        ---------
amend  this  Addendum  from  time  to time as is necessary for Covered Entity to
comply  with  the  requirements  of  the  Privacy  Rule  and  the  HIPAA.

(c)     Survival.  The  respective  rights and obligations of Business Associate
        --------
under  Section  6(c)  of  this  Addendum  shall  survive the termination of this
Addendum.

                                      -26-
<PAGE>
(d)     Interpretation.  The  provisions of this Addendum shall prevail over any
        --------------
provisions  in  the Agreement that may conflict with or appear inconsistent with
any  provision  of  this  Addendum.  Any  ambiguity  in  this  Addendum shall be
resolved  to  permit  Covered  Entity  to  comply  with  the  Privacy  Rule.

                                      -27-
<PAGE>

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