Exhibit 10.1
FORM OF
PERFORMANCE SHARE AWARD
AGREEMENT
This Performance Share Award
Agreement (together with the Notice of Grant of Performance Share
Award (the “ Grant Notice ”) attached hereto and
incorporated by reference herein, the “ Performance Share
Award Agreement ”) is made and entered into as of the
grant date set forth on the Grant Notice (the “ Date of
Grant ”), by and between Health Net, Inc., a Delaware
corporation (the “ Company ”), and the recipient
identified on the Grant Notice, an employee of the Company or a
subsidiary of the Company (the “ Recipient
”).
WHEREAS, the Compensation Committee
(the “ Committee ”) of the Board of Directors
(the “ Board ”) of the Company has approved the
grant (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, as amended
from time to time (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 the target number set forth
on the Grant Notice (the “ Target Award ”) of
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; provided, however , that
in no event shall the Company deliver the vested Performance Shares
to Recipient later than March 15 following the calendar year
in which such Performance Shares vest, subject to Recipient’s
payment of the par value (if any) for such Performance Shares. Upon
the Vesting Date, the Recipient shall pay to the Company the par
value for each share of Common Stock delivered pursuant to this
Grant in such consideration as determined by the Committee in its
sole discretion. 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 ”), then all of the Performance
Shares shall be immediately forfeited at such time.
(b) If the Recipient violates the
terms of Section 4 of this Performance Share Award 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 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, or enter into a business relationship
with, the Recipient or any other entity or person. In the event
that the Recipient breaches the covenants set forth in this first
paragraph of Section 4, it shall be considered a Breach Event
under Section 3 above.
For purposes of this Section 4:
“ Gain Realized ” shall equal the difference
between (x) the par val
