Health Net, Inc. ▼

[HEALTHNET LETTERHEAD]

News Release

HEALTH NET'S SECOND QUARTER EARNINGS BEFORE CHARGES
AND OTHER ITEMS FOR FLORIDA SALE REACH $.38 PER SHARE

    California Enrollment Climbs, SG&A Drops, Reserves Rise and Debt Falls Again

    LOS ANGELES, July 31, 2001?Health Net, Inc. (NYSE:HNT) today announced that second quarter earnings reached $. . . .

Contacts: David Olson

818.676.6978

david.w.olson@health.net

Michael Engelhard

818.676.7620

michael.engelhard@health.net

HEALTH NET REPORTS FIRST QUARTER 2004 INCOME OF

$.13 PER DILUTED SHARE

$64 Million in Expenses Related to Prior Periods Drive Health Care Costs Higher;

Enrollment Climbs as Administrative Ratio Falls;

TRICARE Margins Rise

LOS ANGELES, May 4, 2004 ? Health Net, Inc. (NYSE:HNT) today announced 2004 first quarter income from operations per diluted share of $.13 compared with $.60 in the first quarter of 2003.  . . .

ARTICLE 1

TITLE AND PURPOSE

    The title of the Plan shall be the "Health Net, Inc. 401(k) Savings Plan." The Plan is an amendment and restatement of the Plan as in effect as of December 31, 2000, and is effective as of January 1, 2001, unless any provision specifies a different effective date.

    The Plan is designated as a "profit sharing plan" within the meaning of U.S. Treasury Regulation 1.401-1(a)(2)(ii).

ARTICLE 2

DEFINITIONS

    As used herein, the following words and phrases shall have the following respective meanings when capitalized:

    (1)  Affiliate.  (a) A corporation that is a member of the same controlled group of corporations (within the meaning of section 414(b) of the Code) as an Employer, (b) a trade or business (whether or not incorporated) under common control (within the meaning of section 414(c) of the Code) with an Employer, (c) any organization (whether or not incorporated) that is a member of an affiliated service group (within the meaning of section 414(m) of the Code) that includes an Employer, a corporation described in clause (a) of this subdivision or a trade or business described in clause (b) of this subdivision, or (d) any other entity that is required to be aggregated with an Employer pursuant to regulations promulgated under section 414(o) of the Code.

    (2)  After-Tax Account.  The account established pursuant to Section 7.1 to which a Participant's after-tax contributions, if any, transferred to the Plan from the FHC Plan or the QualMed Plan (or any other plan qualified under section 401(a) of the Code) and any earnings (or losses) thereon are credited.

    (3)  Beneficiary.  A person entitled under Section 8.7 to receive benefits in the event of the death of a Participant.

    (4)  Board of Directors.  The board of directors of the Company.

    (5)  Break in Service.  Any period during which an Employee does not perform any Hour of Service for an Employer. For purposes of this definition, an Employee shall be credited with Hours of Service for any period of absence from an Employer during which such Employee (a) is in Qualified Military Service, provided that the Employee returns to the employ of an Employer within the period prescribed by USERRA, (b) is on an uncompensated leave of absence duly granted by an Employer, or (c) is absent from work for a maximum of 24 consecutive months because of (i) the pregnancy of the Employee, (ii) the birth of the Employee's child, (iii) the placement of a child with the Employee in connection with the Employee's adoption of such child, or (iv) the need to care for any such child for a period beginning immediately following such birth or placement. Notwithstanding the foregoing, no Hours of Service shall be credited to an Employee under clause (c) of this subdivision unless the Employee timely furnishes to the Committee a certificate of birth, proof of adoption or other appropriate legal documentation setting forth parentage or adoption.

    (6)  Code.  The Internal Revenue Code of 1986, as amended.

    (7)  Committee.  The committee designated in Section 11.1 to administer the Plan, or any person, corporation, partnership or committee to which the Committee has delegated its responsibilities pursuant to Section 11.1.

    (8)  Company.  Health Net, Inc., a Delaware corporation, and any successor to such corporation that adopts the Plan pursuant to Article 12.

    (9)  Company Stock.  Class A Common Stock of Health Net, Inc.

    (10)  Company Stock Fund.  The investment fund established and maintained by the Trustee in accordance with Section 6.2.

    (11)  Compensation.  The total cash earnings paid by an Employer to an Eligible Employee and properly reportable on Form W-2 for a Plan Year (including bonuses and overtime), and all amounts not includible in such Eligible Employee's gross income for federal income tax purposes solely on account of his or her election to have compensation reduced pursuant to the Plan or any other qualified cash or deferred arrangement described in section 401(k) of the Code or a cafeteria plan as defined in section 125 of the Code, but excluding (i) any reimbursements or other allowances for automobile, relocation, travel, education expenses or other expenses (even if includible in the Employee's gross income for federal income tax purposes), (ii) severance payments, (iii) retention payments, (iv) disability payments, and (v) extraordinary items of remuneration. An Employee's Compensation in excess of (I) $160,000 for the Plan Year beginning January 1, 1997, and (II) for each subsequent Plan Year, the dollar amount prescribed by section 401(a)(17) of the Code (as adjusted for increases in the cost-of-living) shall not be taken into account for any purposes under the Plan.

    (12)  Compensation and Stock Option Committee.  The Compensation and Stock Option Committee of the Board of Directors of the Company.

    (13)  Disability.  A total physical or mental inability to perform work, resulting from injury or disease, which is expected to be permanent, as determined by the Committee. The existence of a "Disability" shall be determined by the Committee according to uniform principles consistently applied, and based upon such evidence as the Committee believes necessary or desirable.

    (14)  Effective Date.  Except as provided elsewhere, the effective date of this amendment and restatement of the Plan with respect to the Company and each other entity that is an Employer on December 31, 2000 shall be January 1, 2001, and in the case of any other Employer shall be the date designated by such Employer.

    (15)  Eligible Employee.  With respect to each Employer, unless specified otherwise by the board of directors of each Employer, any Employee thereof, excluding:

(i)


an Employee who (A) is scheduled to perform fewer than 20 Hours of Service per week and (B) performs fewer than 1,000 Hours of Service during the Plan Year,




(ii)


an Employee whose employment is governed by the terms of a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining, but which does not provide for participation in the Plan, and




(iii)


an Employee who is a nonresident alien (within the meaning of section 7701(b)(1)(B) of the Code).

    (16)  Employee.  An individual whose relationship with an Employer is, under common law, that of an employee. Notwithstanding the foregoing, no individual who renders services for an Employer shall be considered an Employee for purposes of the Plan if such individual renders such services pursuant to (i) an agreement providing that such services are to be rendered by the individual as an independent contractor, (ii) an agreement with an entity, including a leasing organization within the meaning of section 414(n)(2) of the Code, that is not an Employer or Affiliate or (iii) an agreement that contains a waiver of participation in the Plan.

    (17)  Employer.  The Company, each Affiliate listed in Exhibit A hereto (as such exhibit is revised from time to time), and each other entity that, with the consent of the Company, elects to participate in the Plan in the manner described in Section 12.1 and any successor entity that adopts the Plan pursuant to Section 12.3. If any such entity withdraws from participation in the Plan pursuant to Section 12.2, or terminates its participation in the Plan pursuant to Section 15.3, then such entity shall

AGREEMENT

    This Agreement (this "Agreement") is entered into as of        , 2001 between Health Net, Inc., a Delaware corporation (the "Company"), on the one hand, and         ("Employee"), on the other hand.

    WHEREAS, the Company and Employee are parties to a Severance Payment Agreement dated ____________, _____ (the "Severance Agreement"); and

    WHEREAS, the Company has adopted certain amendments to the acceleration/change in control provisions ("Acceleration Provisions") of its 1991 Stock Option Plan (the "1991 Plan"), 1997 Stock Option Plan (the "1997 Plan") and 1998 Stock Option Plan (the "1998 Plan" and collectively with the 1991 Plan and 1997 Plan, the "Plans"); and

    WHEREAS, the Company desires that the Employee consent to the governance and application of the amended Acceleration Provisions of the Plans to the outstanding options of the Employee under the Plans; and

    WHEREAS, Employee is willing to consent to the governance and application of the amended Acceleration Provisions of the Plans to his/her outstanding options under the Plans in exchange for an amendment of the Severance Agreement to provide for a full tax gross-up of any severance payments for any excise taxes under Section 280G of the Internal Revenue Code (the "Code") applicable to the severance payments, as set forth in this Agreement.

    NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein contained, the parties hereto agree as follows:

    1.  Plans. Employee hereby consents, in accordance with Section 14 of the 1991 Plan, Section 6.2 of the 1997 Plan and Section 6.2 of the 1998 Plan, that the Plans, as amended by the amendments to the Acceleration Provisions of the Plans set forth in Appendix A attached hereto, shall govern and apply to all outstanding options of the Employee under the Plans, regardless of the date such options were granted. To the extent the option agreements for the outstanding options of Employee under the Plans state anything to the contrary, the parties agree that such option agreement(s) are hereby amended to be consistent with the foregoing sentence.

    2.  Severance Agreement. The parties agree that the Severance Agreement is hereby amended to delete Section 7 of the Severance Agreement in its entirety and to replace it with the following new Section 7:

    7.  Tax Consequences.

    7.1 Notwithstanding any other provisions of this Agreement, in the event that (i) any payment or distribution by the Company to or for the benefit of the Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result in a Change of Control or any person affiliated with the Company or such person) (all such payments and distributions, including the severance payments and benefits provided for in Section 3 hereof (the "Severance Payments"), being hereinafter called "Total Payments") would be subject (in whole or part) to the excise tax imposed under section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or any interest or penalties are incurred by the Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax") and (ii) there are any excess parachute payments (within the meaning of section 280G(b) of the Code), in the aggregate, in respect of such Total Payments in excess of $50,000, then the Company shall pay to Employee an additional cash payment (the "Tax Gross-Up") so that after receipt of such Tax Gross-Up, the payment of any additional federal, state and local income taxes on such Tax Gross-Up amount and the payment of

                            ASSET PURCHASE AGREEMENT

                                      AMONG

                             CHOLESTECH CORPORATION,

                                 WELLCHECK, INC,

                                HEALTH NET, INC.,

                                THOMAS M. CHAUVIN

                                       AND

                                VIKKI L. CHAUVIN


                                JANUARY 21, 2000



<PAGE>   2

                                TABLE OF CONTENTS




<TABLE>
<CAPTION>
                                                . . .

EXHIBIT 2.1

   1

                                   EXHIBIT 2.1

                            ASSET PURCHASE AGREEMENT

                                      AMONG

                             CHOLESTECH CORPORATION,

                                 WELLCHECK, INC,

                                HEALTH NET, INC .,

                                THOMAS M. CHAUVIN

                                       AND

                                VIKKI L. CHAUVIN

                                JANUARY 21, 2000

   2

                                TABLE OF CONTENTS

                                                                                 PAGE
                                                                           
1.      Definitions.......................................................         1

2.      Acquisition of Assets by 

the "Agreement") is entered into on
January 21, 2000 by and among Cholestech Corporation, a California
corporation("Parent"), WellCheck Inc. , a California corporation and
wholly-owned subsidiary of Parent ("Buyer"), Health Net, Inc ., a Louisiana
corporation ("Seller") and Thomas M. Chauvin and Vikki L. Chauvin (together, the
"Shareholders" and each a "Shareholder"). Parent, Buyer, Seller and Shareholders
are referred to collectively herein 

Tel:  (510) 732-7200                      Tel:  (650) 493-9300
    Fax:  (510) 732-7227                      Fax:  (650) 493-6811
    Attention:  Chief Financial Officer       Attention:  Robert P. Latta, Esq.

If to Seller:                             Copy to:
    Health Net, Inc .                          Seale, Daigle & Ross
    207 West Thomas Street                    200 N. Cate Street, P.O. Drawer 699
    Hammond, LA 70401                         Hammond, LA 70404
    Tel: (504) 549-0894                       Tel: (504) 542-8500
    

Tel: (504) 549-0894                       Tel: (504) 542-8500
    Fax: (504) 429-0664                       Fax: (504) 542-4111
    Attention: Thomas Chauvin                 Attention: T. Jay Seale, III, Esq.

If to Shareholders:                       Copy to:
    Health Net, Inc .                          Seale, Daigle & Ross
    207 West Thomas Street                    200 N. Cate Street, P.O. Drawer 699
    Hammond, LA 70401                         Hammond, LA 70404
    Tel: (504) 549-0894                       Tel: (504) 542-8500
    

s/ WARREN E. PINCKERT II
                                ---------------------------------------------
                                Signature

                                Warren E. Pinckert II
                                ---------------------------------------------
                                Print Name

                                President
                                ---------------------------------------------
                                Title

        "BUYER"                 WellCheck Inc.

                                /s/ ANDREA J. TILLER
                                ---------------------------------------------
                                Signature

                                Andrea J. Tiller
                                ---------------------------------------------
                                Print Name

                                CFO
                                ---------------------------------------------
                                Title

        "SELLER"                HEALTH NET, INC .

                                /s/ THOMAS M. CHAUVIN
                                ---------------------------------------------
                                Signature

                                Thomas M. Chauvin
                                ---------------------------------------------
                                Print Name

                                President
                                ---------------------------------------------
                                Title

        "SHAREHOLDERS"          THOMAS M. CHAUVIN
                                ---------------------------------------------
                                Thomas M. Chauvin

                                VIKKI L. CHAUVIN
                                ---------------------------------------------
                                Vikki L. Chauvin

   39

                                    EXHIBIT A

                               

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) 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.

        "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;

BRIDGE LOAN AGREEMENT

Dated as of June 23, 2006

among

HEALTH NET, INC.,

as the Borrower,

THE LENDERS PARTY HERETO

and

THE BANK OF NOVA SCOTIA,

as Administrative Agent

THE BANK OF NOVA SCOTIA

as Sole Lead Arranger and as Sole Bookrunner

TABLE OF CONTENTS

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

1.01

Defined Terms

1.02

Other Interpretive Provisions

1.03

Accounting Terms

BRIDGE LOAN AGREEMENT

Dated as of June 23, 2006

among

HEALTH NET, INC.,

as the Borrower,

THE LENDERS PARTY HERETO

and

THE BANK OF NOVA SCOTIA,

as Administrative Agent

THE BANK OF NOVA SCOTIA

as Sole Lead Arranger and as Sole Bookrunner

TABLE OF CONTENTS

1.01

Defined Terms

1.02

Other Interpretive Provisions

1.03

Accounting Terms

CERTIFICATE OF OWNERSHIP AND MERGER
OF
HNI SHELL, INC.
INTO
FOUNDATION HEALTH SYSTEMS, INC.

Pursuant to Section 253(a) of the General Corporation Law of the State of Delaware

    Foundation Health Systems, Inc., a Delaware corporation, does hereby certify to the following facts relating to the merger of HNI Shell, Inc. into Foundation Health Systems, Inc. (the "Merger"):

    FIRST:  The names and states of incorporation of the constituent corporations to the Merger are as follows:  . . .