Exhibit 10.2
FORM OF
NONQUALIFIED STOCK OPTION
AGREEMENT
UNDER THE HEALTH NET,
INC.
2006 LONG-TERM INCENTIVE
PLAN,
AS AMENDED
This agreement (together with the
Notice of Grant of Stock Options (the “Grant Notice”)
attached hereto and incorporated by reference herein, the
“Option Agreement”) is made as of the grant date set
forth on the Grant Notice (the “Grant Date”), by and
between Health Net, Inc., a Delaware corporation (the
“Company”), and the participant identified on the Grant
Notice, an employee of the Company or a Subsidiary of the Company
(the “Optionee”).
Pursuant to the Health Net, Inc.
2006 Long-Term Incentive Plan, as amended (the “Plan”),
the Compensation Committee of the Board of Directors of the Company
(the “Committee”) or an appropriate executive officer
of the Company empowered by the Committee, has determined that the
Optionee is to be granted, on the terms and conditions set forth in
this Option Agreement, a nonqualified stock option (the
“Option”) to purchase shares of Common Stock of the
Company, par value $.001 per share (the “Common
Stock”), and hereby grants such Option. Capitalized terms
used but not defined herein shall have the meanings set forth in
the Plan.
1. Number of Shares and Exercise
Price . The Option is to purchase the number of shares of
Common Stock set forth on the Grant Notice (the “Option
Shares”) at a price per share set forth on the Grant Notice
(the “Exercise Price”), which is equal to the Fair
Market Value (as defined in the Plan) of the Option Shares as of
the Grant Date.
2. Exercise of Option .
Except as set forth in Sections 3 and 9, the Option shall become
exercisable in cumulative installments beginning on the
[first] anniversary of the Grant Date to the extent of
[__%] of the Option Shares covered by the Option, and [on
each subsequent anniversary of the Grant Date to the extent of an
additional __%] of the Option Shares covered by the Option,
until the Option has become exercisable as to all of the Option
Shares (the “Vesting Dates”). 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 Employment .
(a) General Term. The term of
the Option and this Option Agreement shall commence on the Grant
Date. 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 either in
paragraphs (b) through (g) below or under the
Plan.
(b) Death of Optionee . If
the Optionee shall die prior to the exercise of the Option,
then:
(i) if the Optionee dies while
employed by an Employer (as defined in the Plan), then the Option
(subject to subsection (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
employment with the Employer was terminated due to a Disability (as
defined in the Plan) and the Optionee dies within one year after
termination of employment, then the Option (subject to subsection
(g) below) may be exercised by the legatee(s) or personal
representative of the Optionee any time during the remainder of the
period during which the Optionee would have been able to exercise
the Option pursuant to subsection (c) below had the Optionee
not died;
(iii) if the Optionee dies within
three months after termination of employment by the Employer
without Cause, as determined pursuant to Subsection 3(g), and
clause (ii) is not applicable, then the Option (subject to
subsection (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) Disability . If the
Optionee’s employment with the Employer shall terminate prior
to the exercise of the Option as a result of a Disability, then the
Option (subject to subsection (g) below) may be exercised by
the Optionee (or his or her personal representative) at any time
within one year after the Optionee’s termination of
employment.
(d) Termination by the Employer
for Cause . If the Optionee’s employment with the
Employer shall be terminated by the Employer prior to the exercise
of the Option for Cause then the Option shall immediately terminate
and shall immediately cease to be exercisable and shall be
forfeited to the Company. For purposes of this Option Agreement,
“Cause” shall have the meaning set forth in Section
[INSERT SECTION NUMBER] of the Plan.
(e) Termination by the Employer
Without Cause . If prior to the exercise of the Option, the
Optionee’s employment with the Employer shall be terminated
by the Employer without Cause, then the Option (subject to
subsection (g) below) held by the Optionee may be exercised at
any time within three months after the Optionee’s termination
of employment, provided that , if such termination of the
Optionee’s employment occurs during a Company trading
blackout period established pursuant to the Company’s then
existing Insider Trading Policy (the “Trading
Blackout”), and the Optionee is subject to such Trading
Blackout, such Option (subject to subsection (g) below) may be
exercised at any time starting from the Optionee’s
termination date through the last day of the third month following
the expiration date of such Trading Blackout. For purposes of this
Option Agreement, if a Subsidiary by which the Optionee is employed
ceases to be a Subsidiary, whether through a sale by the Company of
all or a portion of the stock or assets of such Subsidiary, a
merger or otherwise (a “Subsidiary Transaction”), the
Optionee’s employment with the Employer shall be deemed to
have been terminated by the Employer without Cause as of the
effective date of such Subsidiary Transaction.
(f) Termination for Other
Reason . If prior to the exercise of the Option, the
Optionee’s employment with the Employer shall be terminated
for any reason other than as set forth in paragraphs
(b) through (e) above, then the Option (subject to
subsection (g) below) held by the Optionee may be exercised at
any time within one month after the Optionee’s termination of
employment, provided that , if such termination of the
Optionee’s employment occurs during a Trading Blackout and
the Optionee is subject to such Trading Blackout, such Option
(subject to subsection (g) below) may be exercised at any time
starting from the Optionee’s termination date through the
last day of the first month following the expiration date of such
Trading Blackout.
(g) Post-Termination
exercisability . Notwithstanding any other provision of this
Section 3 to the contrary, following termination of employment
of the Optionee for any reason: (i) the Option shall be
exercisable during any of the post-employment periods described in
subparagraphs (b) through (f) of this Section 3 if
and only to the extent the Option was exercisable (i.e., vested) at
the time of such termination of employment and (ii) no portion
of the Option shall be exercisable following the seventh
anniversary of the Grant Date.
4. Employment/Association with
Company Competitor . The Optionee hereby agrees that, during
(i) the six-month period following a termination of the
Optionee’s employment with an Employer that entitles the
Optionee to receive severance benefits under an agreement with or
the policy of the Company or (ii) the twelve-month period
following a termination of the Optionee’s employment with an
Employer that does not entitle the Optionee to receive such
severance benefits (the period referred to in either clause
(i) or (ii), the “Noncompetition Period”), the
Optionee shall not undertake
