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Exhibit
10.1
[Name]
FORM OF PERFORMANCE SHARE
AWARD AGREEMENT
This Performance Share Award
Agreement (this “ Performance Share 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 Share 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
Performance Share Award consisting of [TARGET NUMBER] (the
“ Target Award ”) rights to receive (“
Performance Shares ”), upon vesting, a share of the
Common Stock, par value $.001 per share (the “ Common
Stock ”) of the Company, subject to all of the terms and
conditions of this Performance Share Award Agreement. The actual
number of shares earned by the Recipient may be less than or
greater than the Target Award, as set forth in
Section 2.
2. Lapse of
Restrictions . Except as otherwise provided in Section 3
or 10 hereof, the Performance Shares shall vest with respect a
percentage of the Performance Shares (with such percentage ranging
between 0% to 200% of the Target Award) on a date, which shall be
as soon as practicable following the completion of the performance
period (which shall be set forth on Appendix I), upon which the
Committee makes a determination (the “ Vesting Date
”) whether, as of the completion of the performance period ,
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. 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 .
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(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.
(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 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
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the loyal and complete fulfillment of
the duties of the competitive employment or activity would call
upon the Recipient to reveal, to make judgments on or otherwise use
any confidential business information or trade secrets of the
business of the Company or any Subsidiary to which the Recipient
had access during the Recipient’s employment with the
Employer. In addition, the Recipient agrees that, during the
Noncompetition Period applicable to the Recipient following
termination of employment with the Employer, the Recipient shall
not, directly or indirectly, solicit, interfere with, hire, offer
to hire or induce any person, who is or was an employee of the
Company or any of its Subsidiaries during the 12 month period prior
to the date of such termination of employment, to discontinue his
or her relationship with the Company or any of its Subsidiaries or
to accept employment by, o
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