Exhibit 10.2
[Name]
FORM OF
PERFORMANCE AWARD
AGREEMENT
This Performance Award Agreement
(this “ Performance Award Agreement ”) is made
and entered into as of [DATE OF
GRANT] (the “ Date of Grant ”), by
and between Health Net, Inc., a Delaware corporation (the “
Company ”), and [NAME] (the “
Recipient ”).
WHEREAS, the Compensation Committee
(the “ Committee ”) of the Board of Directors
(the " Board ”) of the Company has approved the grant
of a Performance Award, as hereinafter defined, to the Recipient as
set forth below under the Company’s 2006 Long-Term Incentive
Plan (the " Plan ”). Capitalized terms used but not
defined herein shall have the meanings set forth in the Plan.
NOW, THEREFORE, in consideration of
the covenants and agreements herein contained and intending to be
legally bound hereby, the parties agree as follows:
1. Grant of Performance
Shares . The Company hereby grants to the Recipient a right to
receive a Performance Award denominated in shares of Common Stock,
par value $.001 per share (the " Common Stock ”),
referred to hereinafter as “ Performance Shares
” payable only upon vesting, either as (1) shares of
Common Stock, (2) a cash payment equal the Fair Market Value
of the shares of Common Stock as of the Vesting Date (as defined
below) or (3) a combination of Common Stock and cash, subject
to all of the terms and conditions of this Performance Award
Agreement. The actual number of shares of Common Stock (or cash
payment in lieu of such shares) which may be earned by the
Recipient, subject to the provisions of Section 2, are set
forth in Appendix I. The determination as to whether the
earned Performance Shares will be paid in the form of Common Stock,
in the form of cash or in a combination of cash and Common Stock
shall be made by the Board at or before the Vesting Date, in its
sole discretion.
2. Lapse of
Restrictions . Except as otherwise provided in Section 3
or 10 hereof, the Performance Shares shall vest according to the
schedule in Appendix I on a date, which shall be as soon as
practicable following the third anniversary of the Grant Date, upon
which the Committee makes a determination (the “ Vesting
Date ”) whether, as of the third anniversary of the Grant
Date, the performance goals set forth on Appendix I hereto
have been achieved, with the extent of such vesting to be
determined in the manner set forth in such Appendix. Upon the
Vesting Date, the Recipient shall pay to the Company the par value
in cash for each share of Common Stock delivered pursuant to this
grant, if and to the extent that the Committee has determined to
pay the Performance Shares in the form of Common Stock. In the
event of a payment in the form of Common Stock, shares that have
become vested may be evidenced by stock certificates, at the
request of the Recipient, which certificates shall be registered in
the name of the Recipient and delivered to Recipient within ten
(10) days of such request. If the Minimum Performance Levels
(as defined on Appendix I) have not been achieved as of the
Vesting Date, the unvested Performance Shares shall be forfeited
without consideration upon the Vesting Date.
3. Termination of
Employment .
(a) Except as otherwise set
forth in Section 10, if prior to the Vesting Date, the
Recipient’s employment with the Company is terminated by
either the Recipient or the Company for any reason (a "
Termination Event ”) other than due to a Retirement
(as defined below) which occurs on or following the second
anniversary of the Date of Grant, then all of the Performance
Shares shall be immediately forfeited at such time. If the
Recipient’s employment with the Company is terminated due to
Retirement prior to the Vesting Date, but on or following the
second anniversary of the Date of Grant, then a portion of the
Performance Shares not yet vested shall remain eligible to vest on
the Vesting Date, which portion shall equal the total number of
Performance Shares multiplied by a fraction, the numerator of which
is the number of calendar days which have elapsed from the Date of
Grant to the date of Retirement and the denominator of which is the
number of calendar days from the Date of Grant until the Vesting
Date (such portion, the “ Eligible Performance Shares
”). The portion of the Performance Shares which do not remain
eligible to vest in accordance with the foregoing sentence shall be
forfeited without consideration upon the date of Retirement. The
Eligible Performance Shares which remain eligible to vest shall
vest only of the Minimum Performance Levels are attained, and the
extent of such vesting shall be determined in the manner set forth
on Appendix I. For purposes hereof “Retirement”
shall mean the Recipient’s voluntary termination of
employment at or after the date upon which the Recipient has
attained both age 55 and 10 years of continuous service with
the Company.
(b) If the Recipient violates
the terms of Section 4 of this Agreement (a “ Breach
Event ”), in addition to being subject to all remedies in
law or equity that the Company may assert, then at any time
thereafter the Company, in its sole and absolute discretion, may,
with respect to any Common Stock attributable to a Performance
Share: (i) to the extent that the Common Stock is beneficially
owned by the Recipient, reacquire from the Recipient, in return for
an amount equal to the par value of the Common Stock which was paid
by the Recipient to the Company as described in Section 2
above, any or all of the shares of such Common Stock; and
(ii) to the extent that the Common Stock has been sold,
assigned or otherwise transferred by the Recipient, recover from
the Recipient an amount equal to the Gain Realized (as defined in
Section 4 below) from such sale, assignment or transfer. In
the event of (and to the extent of) a payment in the form of cash,
the Company’s remedy under this Section 3(b) shall be to
require the Recipient to repay to the Company an amount, in cash,
equal to the gross amount of cash paid to the Recipient in respect
of the Performance Shares paid in cash.
(c) Upon the occurrence of a
Breach Event, the Company may elect to purchase all or any portion
of the Common Stock pursuant to this Section 3 (or require the
Recipient to repay to the Company an amount in cash, as set forth
in Section 3(b)) by delivery of written notice (the "
Repurchase Notice ”) to the Recipient within ninety
(90) days after the occurrence of such Breach Event.
4. Employment/Association
with Company Competitor . The Recipient hereby agrees that,
during (i) the six-month period following a termination of the
Recipient’s employment with an Employer that entitles the
Recipient 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 Recipient’s employment with an
Employer that does not entitle the Recipient to receive such
severance benefits (the period referred to in either clause
(i) or (ii), the “ Noncompetition Period
”), the Recipient shall not undertake any employment or
activity (including, but not limited to, consulting services) with
a Competitor (as defined below), where the loyal and complete
fulfillment of the duties of the competitive employm
