TRANSITION SERVICES, SEPARATION AGREEMENT AND RELEASE OF ALL CLAIMS

This TRANSITION SERVICES, SEPARATION AGREEMENT AND RELEASE OF ALL CLAIMS (this “Release” or “Agreement”) is made and entered into by and between Health Net, Inc. and its affiliates and subsidiaries (hereinafter referred to as the “Company”) and Angelee F. Bouchard (hereinafter referred to as the “Employee”).

WHEREAS, the Company and the Employee previously entered into an Amended and Restated Employment Agreement effective December 14, 2009 (the “Employment Agreement”) that currently governs the terms of the Employee’s employment with the Company.

WHEREAS, the Employee desires to resign and voluntarily terminate her employment with the Company following a Transition Period (as defined below);

WHEREAS, pursuant to the terms and conditions set forth herein, the parties desire to set forth their mutual obligations during the Transition Period and thereafter;

WHEREAS, the Company and the Employee mutually desire to terminate the employment relationship, subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the mutual promises and conditions set forth herein, and for other good and sufficient consideration, the sufficiency of which is hereby acknowledged, the Company and the Employee agree as follows:

(a)    The Employee agrees to provide services to the Company on a transitional basis pursuant to the terms of this Agreement from the Effective Date (as defined below) until March 31, 2015 (the “Transition Period”). During the Transition Period, the Employee will continue in her current roles as Senior Vice President, General Counsel and Corporate Secretary of the Company and during such period will continue to perform the duties as set forth in Section 1.A. of the Employment Agreement. During the period that the Employee is the Senior Vice President, General Counsel and Corporate Secretary of the Company, the Employee will continue to be subject to the Company’s Executive Officer Stock Ownership Policy, as set forth in Section 8.C of the Employment Agreement.

(b)    If the Company hires a new General Counsel prior to the end of the Transition Period, the Employee agrees that her title will automatically change to Special Counsel for the remainder of the Transition Period, in which case she will be assigned, and agrees to carry out, all duties and responsibilities commensurate with such position within the Company in good faith, as determined by the new General Counsel, and to the best of her ability, including, but not limited to, assisting with an efficient transition of some or all of those duties and responsibilities her successor as requested by the Company.

(c)    During the Transition Period, the Company will allow the Employee to work from Denver, Colorado rather than the Company’s headquarters in Woodland Hills, CA.

(d)    Following the conclusion of the Transition Period, the Employee will be on paid time off until May 26, 2015 (the “Resignation Date” and such period, the “PTO Period”). During the PTO Period, the Employee be treated like any other employee of the Company taking PTO and, therefore, will not be required to report to work or otherwise perform any duties or provide active services to the Company during the PTO Period.

(e)    During the Transition Period and the PTO Period, the Employee shall continue to receive her base salary at her current annual rate of base salary of $527,875, which shall be paid in accordance with the Company’s normal payroll practices, subject to applicable federal, state, local and employment tax withholding.

(f)    If the Employee remains employed through and including December 31, 2014, the Employee shall be eligible to receive an annual bonus for calendar year 2014 subject to the terms of the Management Incentive Plan (the “MIP”) based on actual performance against the applicable metrics for calendar year 2014 (the “2014 Bonus”). The 2014 Bonus, if any, will be paid to the Employee at the same time annual bonuses under the MIP are paid to other the Employees of the Company. The Employee will not be eligible for an annual bonus for calendar year 2015 under the MIP or otherwise. Additionally, if the Employee has a Separation Date (as defined below) prior to December 31, 2014, the Employee will not receive the 2014 Bonus.

(g)    During the Transition Period, the Employee shall continue to vest in any outstanding equity awards, but vesting will cease during the PTO Period. During the Transition Period and the PTO Period, the Employee shall remain eligible to participate in the Employee benefits offered by the Company in accordance with the terms of such the Employee benefit plans, including, but not limited to, the benefits set forth in Sections 7.A, 7.B, 7.C and 7.E of the Employment Agreement.

(h)    Absent a written agreement to the contrary, the Employee’s employment relationship with the Company will terminate pursuant to the terms of this Agreement upon earliest of: (i) the Resignation Date; (ii) the date the Employee voluntarily terminates employment; or (iii) the date the Company terminates the employment of the Employee, either with or without Cause (as defined in the Employment Agreement) or as a result of death or Disability (as defined in the Employment Agreement). The date on which this Agreement terminates pursuant to this Section 1(h) hereof is referred to in this Agreement as the “Separation Date”. Nothing herein shall alter the “at-will” nature of the Employee’s employment with the Company or modify the Section 9 of the Employment Agreement. Following Separation Date, the Employee shall not represent to anyone that she is an employee of the Company and shall not say or do anything purporting to bind the Company.

(i)    Except to the extent specifically amended under this Agreement, the terms of the Employment Agreement shall remain in effect, specifically including, but in no way limiting, Sections 3, 12 and 13 of the Employment Agreement.

(a)    The Employee acknowledges and agrees that she is not entitled to, and specifically waives any right to, the severance benefits set forth in Section 10.A. of the Employment Agreement. Notwithstanding the forgoing, if the Company terminates the Employee’s employment without

Cause (as defined in the Employment Agreement) prior to the conclusion of the Transition Period, the Employee will be eligible for the severance benefits set forth in Section 10.A of the Employment Agreement, subject to the terms and conditions set forth in the Employment Agreement.

(b)    If the Company consummates a Change in Control (as defined in the Employment Agreement) prior to the conclusion of the Transition Period and the Employee has not incurred a Separation Date, upon the Employee’s Separation Date, the Employee will be entitled to the severance benefits set forth in Section 10.B. of the Employment Agreement, subject to the terms and conditions set forth in the Employment Agreement. For the avoidance of doubt, if the Company consummates a Change in Control after the Transition Period, but during the PTO Period, the Employee will not be entitled to the severance benefits set forth in Section 10.B. of the Employment Agreement.

(c)    If the Employee remains employed by the Company through the conclusion of the Transition Period, and the Employee executes a release of claims in favor of the Company, in substantially the form attached to the Employment Agreement as Exhibit A, that becomes effective and irrevocable no later than thirty (30) days following the Separation Date (such deadline, the “Release Deadline”), the Company will pay the Employee a lump sum cash payment equal to two hundred and fifty thousand dollars ($250,000) at the conclusion of the Release Deadline.

(d)    The Employee acknowledges and agrees that benefits set forth in Sections 1 and 2 hereof are benefit to which the Employee is not otherwise entitled, and the Employee understands that if she does not sign this Release, or if she revokes acceptance of this Release, the Employee shall not be entitled to such benefits.

(e)    By signing below, the Employee confirms and agrees that as of the Effective Date, the Employee has been paid all compensation due the Employee as of the Effective Date by virtue of her employment, in keeping with the Company’s policy and practice.

(a)    General Release. In return for the consideration set forth in Sections 1 and 2 above, the Employee, on behalf of herself, as well as the Employee’s heirs, beneficiaries, successors, representatives, trustees, administrators and assigns, freely and voluntarily hereby waives and releases the Company, and each of its past, present and future officers, directors, shareholders, the Employees, consultants, accountants, attorneys, agents, managers, insurers, sureties, parent and sister corporations, divisions, subsidiary corporations and entities, partners, joint venturers and affiliates (and each of their respective beneficiaries, successors, representatives and assigns) and all persons acting in concert with them (collectively, “Affiliates”) from any and all claims, demands, damages, debts, liabilities, controversies, obligations, actions or causes of action of any nature whatsoever, whether based on tort, statute, contract, indemnity, rescission or any other theory of recovery, and whether for compensatory, punitive, equitable or other relief, whether known, unknown, suspected or unsuspected, against the Company and/or its Affiliates, including without limitation claims which may have arisen or may in the future arise in connection with any event that occurred on or before the date of the Employee’s execution of this Release.

These claims include but are not limited to claims arising under federal, state and local statutory or common law, including, but not limited to the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. (“ADEA”); Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, 42 U.S.C. § 2000 et seq.; Equal Pay Act, 29 U.S.C. § 206(d); the Civil Rights Act of 1866, 42 U.S.C. § 1981; the Family and Medical Leave Act of 1993, 29 U.S.C. § 2601 et seq.; the Americans with Disabilities Act of 1990, 42 U.S.C. § 12101 et seq.; the False Claims Act, 31 U.S.C. § 3729 et seq.; the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq.; the Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101 et seq.; the California Fair Employment and Housing Act, Cal. Lab. Code § 12940 et seq.; the California Equal Pay Law, Cal. Lab. Code §§ 1197.5(a),1199.5; the Moore-Brown-Roberti Family Rights Act of 1991, Cal. Gov’t Code §§12945.2, 19702.3; the California WARN Act, Cal. Lab. Code § 1400 et seq,; the California Labor Code; the California Constitution; (all as amended) claims arising out of any legal restrictions on the Company’s right to terminate its the Employees; or claims arising under state and federal whistleblower statutes to the maximum extent permitted by law. Nothing herein shall be construed to impede the Employee from communicating directly with, cooperating with or providing information to any government regulator.

(b)    Unknown Claims. The Employee expressly waives any right or claim of right to assert hereafter that any claim, demand, obligation and/or cause of action has, through ignorance, oversight or error, been omitted from the terms of this Release. The Employee makes this waiver with full knowledge of her rights and with specific intent to release both her known and unknown claims, and therefore specifically waives her rights under Section 1542 of the Civil Code of California or other similar provisions of any other applicable law (collectively, “Section 1542”), which reads as follows:

(c)    Claims Not Released. This Release does not waive rights or claims under federal or state law that the Employee cannot waive by private agreement, including, but not limited to those she may have under Sections 2800 and 2802 of the California Labor Code, the Employee’s right to file a claim for unemployment benefits, worker’s compensation benefits, claims under the Fair Labor

Standards Act, health insurance benefits under COBRA, or claims with regards to vested benefits under a retirement plan governed by ERISA.

(d)    Review and Revocation. In accordance with the Older Workers Benefit Protection Act, the Employee acknowledges and agrees this Agreement includes a waiver and release of all claims that the Employee have or may have under the ADEA. With respect to the release of claims under the ADEA, the Employee acknowledges that:

(i)    This Agreement is written in a manner calculated to be understood by the Employee and the Employee understands it.

(ii)    The waiver and release of claims under the ADEA contained in this Agreement does not cover rights or claims that may arise after the date on which the Employee signs this Agreement.

(iii)    This Agreement provides for consideration in addition to anything of value to which the Employee is already entitled.

(iv)    The Employee is hereby advised to consult an attorney before signing this Agreement.

(v)    The Employee has been granted twenty-one (21) days after receiving this Agreement to decide whether or not to sign this Agreement. If the Employee signs this Agreement prior to the expiration of the twenty-one (21) day period, the Employee does so voluntarily and after having had the opportunity to consult with an attorney, and the Employee hereby waives the remainder of the twenty-one (21) day period.

(vi)    The Employee has the right to revoke this Agreement within seven (7) days of signing this Agreement, and this Agreement shall not be enforceable or effective until the eighth (8th) day after she signs this Agreement (the “Effective Date”).

(vii)    In the event this Agreement is revoked, this Agreement will be null and void in its entirety, and the Employee will not be entitled to the vesting acceleration provided in Section 2 of this Agreement. If the Employee wishes to revoke this Agreement, the Employee must deliver written notice stating her intent to revoke this Agreement to Karin Mayhew, the Company’s SVP, Organization Effectiveness, on or before 5:00 p.m. on the seventh (7th) day after the date on which the Employee signed this Agreement.

The Employee agrees that if she, or anyone purporting to act on his behalf or under any assignment of claims from the Employee, hereafter commences any suit arising out of, based upon, or relating to any of the claims released by the Agreement or in any manner asserts against the Company and/or its Affiliates, any of the claims released hereunder, then, to the maximum extent permitted by law, the Employee will pay to the Company and/or its Affiliates, as applicable, in addition to any other damages caused to them thereby, all attorneys’ fees incurred by the Company and/or its Affiliates, as applicable, in defending or otherwise responding to said suit or claim.

The foregoing shall not apply if the Employee is required to participate by legal process or other requirement of applicable law, provided that the Employee gives the Company notice if legal process is served on the Employee; or to any challenge by the Employee to the validity of any release herein of ADEA claims or to any to suit or action brought by the Employee to assert such a challenge.

Additionally, nothing in this Release precludes the Employee from participating in any investigation or proceeding before any federal or state agency, or governmental body, including, but not limited to, the Equal Employment Opportunity Commission, the Securities and Exchange Commission, and/or the Department of Justice. However, while the Employee may file a charge, provide information, or participate in any investigation or proceeding, by signing this Release, the Employee, to the maximum extent permitted by law, waives any right to bring a lawsuit against the Company, and waives any right to any individual monetary recovery in any such proceeding or lawsuit or in any proceeding brought based on any communication by the Employee to any federal, state or local government agency or department.

without limitation, any technical, actuarial, economic, financial, procurement, provider, enrollee, customer, underwriting, contractual, managerial, marketing or other information of any type regarding the business in which the Company is engaged, but not including any previously published information or other information generally in the public domain. The Employee also agrees that she shall not without the Company’s written consent by an authorized representative, directly or indirectly use the Company’s trade secret information, including but not limited to customer lists, to solicit business of any customers of the Company (other than on behalf of the Company). The Employee acknowledges and agrees that any “Invention,” including without limitation, any developments or discoveries by the Employee during the course of her employment with the Company through the date of execution of this Release resulting in patents, lists of customers, trade secrets, specialized know-how or other intellectual property useful in the then-current business of the Company and any original works of authority are the property of the Company and shall be used for the sole benefit of the Company. If not previously assigned to the Company, the Employee hereby assigns ownership of any and all Inventions to the Company, provided, however, that the provisions of this Agreement requiring assignment of Inventions to the Company do not apply to any invention which qualifies fully under the provisions of California Labor Code section 2870, which provides as follows:

This provision shall supplement, but not limit or supersede any other agreement between the Employee and the Company concerning any Confidential Information or other intellectual property.

Notwithstanding the above paragraph, the arbitration procedure shall not prohibit the Employee or the Company from seeking injunctive relief, including without limitation, temporary or preliminary injunctive relief, through any court of competent jurisdiction if such relief is not available or is not available in a timely manner, through arbitration.