Exhibit 10.3
[DIRECTOR NAME]
[TYPE OF GRANT]
FORM OF
NONQUALIFIED STOCK OPTION
AGREEMENT
FOR NON-EMPLOYEE
DIRECTORS
UNDER THE HEALTH NET,
INC.
2006 LONG-TERM INCENTIVE
PLAN,
AS AMENDED
This agreement (the “Option
Agreement”) is made as of [DATE] (the “Grant
Date”), between Health Net, Inc., a Delaware corporation (the
“Company”), and [NAME] , a non-employee director
of the Company (the “Optionee”).
Pursuant to the Health Net, Inc.
2006 Long-Term Incentive Plan, as amended (the “Plan”),
the Optionee is to be granted, on the terms and conditions set
forth herein, a nonqualified stock option (the
“Option”) to purchase shares of Common Stock of the
Company, par value $.001 per share (the “Common
Stock”).
1. Number of Shares and Option
Price . The Option is to purchase [NUMBER OF SHARES]
shares of Common Stock (the “Option Shares”) at a price
of [GRANT PRICE] per share (the “Option Price”),
which is equal to the Fair Market Value (as defined in the Plan) of
an Option Share as of the Grant Date.
2. Exercise of Option . The
Option shall become exercisable on the date that is one year after
the Grant Date to the extent of 33 1/3 % of the Option Shares
covered by the Option, and shall become exercisable on each
subsequent anniversary of the Grant Date to the extent of an
additional 33 1/3 % of the Option Shares covered by the Option
until the Option becomes fully exercisable. The Option may be
exercised only to purchase whole shares, and in no case may a
fraction of a share be purchased.
3. Term of Option and Termination
of Service .
(a) General Term . The term
of the Option and this Option Agreement shall commence on the date
hereof. The right of the Optionee to exercise the Option with
respect to any Option Shares, to purchase any such Option Shares
and all other rights of the Optionee with respect to any such
Option Shares shall terminate on the seventh anniversary of the
Grant Date, unless the Option has been earlier terminated as
provided in paragraphs (b) through (e) below, or under
the Plan.
(b) Death of the Optionee .
If the Optionee shall die prior to the exercise of the Option,
then:
(i) if the Optionee dies while
serving as a member of the board of directors of the Company (a
“Director”), then the Option (subject to clause
(g) below) may be exercised by the legatee(s) or personal
representative of the Optionee at any time within one year after
the Optionee’s death;
(ii) if the Optionee’s service
as a Director was terminated due to Permanent and Total Disability
(as defined in Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended, or any successor thereto) (hereinafter,
“Permanent and Total Disability”) and the Optionee dies
within one year after termination of service, then the Option
(subject to clause (g) below) may be exercised by the
legatee(s) or personal representative of the Optionee at any time
during the remainder of the period during which the Optionee would
have been able to exercise the Option had the Optionee not died;
and
(iii) if the Optionee dies within
three months after termination of service as a Director and clause
(ii) is not applicable, then the Option (subject to clause
(g) below) may be exercised by the legatee(s) or personal
representative of the Optionee at any time within one year after
the Optionee’s death.
(c) Permanent and Total
Disability . If the Optionee’s service as a Director
shall terminate prior to the exercise of the Option as a result of
Permanent and Total Disability, then the Option (subject to clause
(g) below) may be exercised by the Optionee (or his or her
personal representative) at any time within one year after such
termination of service as a Director.
(d) Removal by Stockholders for
Cause . If the Optionee shall be removed from the board of
directors of the Company by the Company’s stockholders prior
to the exercise of the Option for cause (for these purposes, if
such termination occurs within 12 months after a Change in Control,
as defined in Section 8.9 of the Plan, removal for cause shall
only mean a felony conviction for fraud, misappropriation or
embezzlement), then upon such removal the Option shall immediately
terminate.
(e) Removal by Stockholders
Without Cause and Expiration of Term of Office . If prior to
the exercise of the Option, the Optionee’s service as a
Director shall be terminated as a result of expiration of the
Director’s term of office without an accompanying
renomination or reelection of such Director, then the Option
(subject to clause (g) below) shall become exercisable at the
time of such termination and may be exercised at any time within
three months after the Optionee’s termination of service as a
Director, provided that , if such termination occurs during
a Company trading blackout period established pursuant to the
Company’s then existing Insider Trading Policy (the
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