**Exhibit 10.16**

[Name] 

**FORM**

**RESTRICTED STOCK UNIT AGREEMENT**

This Restricted Stock Unit Agreement (this “RestrictedStock Unit 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 Restricted Stock Units, as hereinafter defined, to the Recipient as set forth below under the Company’s **[NAME OFPLAN]** (the “Plan”).1 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 asfollows: 

1. Grant of Restricted Stock Units. The Company hereby grants to the Recipient **[NUMBER OF UNITS]** restricted stockunits (the “Restricted Stock Units”), each of which represent to rights to receive, upon vesting, a share of the Common Stock, par value $.001 per share (the “Common Stock”) of the Company, subject to all of theterms and conditions of this Restricted Stock Unit Agreement. 

2. Lapse of Restrictions. Except as otherwise provided inSection 3 hereof, the Restricted Stock Units shall vest with respect to all of the Restricted Stock Units on the **[NUMBER]** anniversary of the Grant Date (the “Vesting Date”). Upon the Vesting Date, the Recipient shall payto 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 inthe name of the Recipient and delivered to Recipient within ten (10) days of such request. 

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 isterminated by either the Recipient or the Company for any reason (a “Termination Event”) other than Retirement (as defined below), then all of the Restricted Stock Units shall be immediately forfeited at such time. If theRecipient’s employment with the Company is terminated prior to the Vesting Date due to Retirement, then a portion of the Restricted Stock Units not yet vested shall vest immediately, which portion shall equal the total number of RestrictedStock Units multiplied by a fraction, the numerator of which is the number of full years which have elapsed from the Date of Grant to the date of Retirement 

 

 

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and the denominator of which is the number of full years in the vesting period. For purposes hereof (but subject to Section 18 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 allremedies 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 Restricted Stock Unit that has vested within six(6) months of the Recipient’s termination of employment: (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 Stockwhich 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 Recipientwithin ninety (90) days after the occurrence of such Breach Event. 

4. Employment/Association with Company Competitor. TheRecipient 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 theCompany 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 ofthe 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 theRecipient 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 Recipientshall 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 thecovenants set forth in this first paragraph of Section 4, it shall be considered a Breach Event under Section 3 above. 

Forpurposes of this Section 4: “Gain Realized” shall equal the difference between 

 

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(x) the par value paid by the Recipient for the Common Stock issued in respect of the Restricted Stock Units and(y) the greater of the Fair Market Value (as defined in the Plan) of the Common Stock issued in respect of the Restricted Stock Units (I) on the date of transfer of such Common Stock or (II) on the date such competitive activity with aCompetitor was commenced by the Recipient; and “Competitor” shall refer to any health maintenance organization or insurance company that provides managed health care or related services similar to those provided by the Company orany Subsidiary. 

It is hereby further agreed that if any court of competent jurisdiction shall determine that the restrictions imposed inthis Section 4 are unreasonable (including, but not limited to, the definition of Competitor or the time period during which this provision is applicable), the parties hereto hereby agree to any restrictions that such court would find to bereasonable under the circumstances. 

The Recipient acknowledges that the services to be rendered by the Recipient to the Company are of aspecial and unique character, which gives this Agreement a peculiar value to the Company, the loss of which may not be reasonably or adequately compensated for by damages in an action at law, and that a material breach or threatened breach by theRecipient of any of the provisions contained in this Section 4 will cause the Company irreparable injury. Recipient therefore agrees that the Company may be entitled, in addition to the remedies set forth above in this Section 4 and anyother right or remedy, to a temporary, preliminary and permanent injunction, without the necessity of proving the inadequacy of monetary damages or the posting of any bond or security, enjoining or restraining Recipient from any such violations orthreatened violations. 

5. No Rights as a Stockholder. The Recipient shall not be entitled to dividends, if any, that are paid withrespect to the shares of Common Stock unless and until the Restricted Stock Units have vested. Recipient shall also not have the right to vote any shares subject to the Restricted Stock Units unless and until the Restricted Stock Units shall havevested. 

6. Notices. Any notice or communication given hereunder shall be in writing and shall be given by fax or first class mail,certified or registered with return receipt requested, and shall be deemed to have been duly given three (3) days after mailing or twenty-four (24) hours after transmission of a fax to the following addresses: 

 

To the Recipient at:
  **[NAME]**  **[ADDRESS]**
To the Company at:
  Health Net, Inc.  21650 Oxnard Street  Woodland Hills, California 91367  Attention: General Counsel
or to such other address as any party may have furnished to the other in writing in accordance herewith, exceptthat notices of change of address shall be effective only upon receipt. 

 

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7. Securities Laws Requirements. The Company shall not be obligated to transfer any shares ofCommon Stock from the Recipient to another party, if such transfer, in the opinion of counsel for the Company, would violate the Securities Act of 1933, as amended from time to time (the “Securities Act”) (or any other federal orstate statutes having similar requirements as may be in effect at that time). Further, the Company may require as a condition of transfer of any shares to the Recipient that the Recipient furnish a written representation that he or she is holdingthe shares for investment and not with a view to resale or distribution to the public. The Company either has or will file an appropriate Registration Statement on Form S-8 (or other applicable form), and has taken or will take such actions asnecessary to keep the information therein current from time to time, in order to register the Common Stock under the Securities Act and shall use its commercially reasonable efforts to cause such Registration Statement to become effective and tomaintain the effectiveness of such registration. 

8. Protections Against Violations of Restricted Stock Unit Agreement. ThisRestricted Stock Unit Agreement is not transferable, other than by will or pursuant to the laws of descent and distribution. 

9.Taxes. The Recipient understands that he or she (and not the Company) shall be responsible for any tax obligation that may arise as a result of the transactions contemplated by this Restricted Stock Unit Agreement and shall pay to the Companythe amount determined by the Company to be such tax obligation at the time such tax obligation arises. If the Recipient fails to make such payment, the number of shares necessary to satisfy the tax obligations shall be forfeited. 

10. Change of Control. Notwithstanding the provisions of Section 3 hereof, in the event that (i) there shall occur a Change in Control(as defined in the Plan) and (ii) the employment of the Recipient shall be terminated within the two year period following the Change in Control but prior to the Vesting Date either (A) by the Company without Cause or (B) undercircumstances which entitle the Recipient to Change in Control severance benefits under an effective employment agreement between the Recipient and the Company or under the Company’s Safety Net Security Program, each Restricted Stock Unit shallbecome fully vested upon such termination and the date of such vesting shall be deemed to be the Vesting Date hereunder. For purposes of this Section 10, “Cause” shall have the meaning set forth in the Plan. 

11. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any time any provision of this Restricted Stock Unit Agreement shallin no way be construed to be a waiver of such provision or of any other provision hereof. 

12. Governing Law. This Restricted StockUnit Agreement shall be governed by and construed according to the laws of the State of Delaware without regard to its principles of conflict of laws. 

 

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13. Amendments. This Restricted Stock Unit Agreement may be amended or modified at any time onlyby an instrument in writing signed by each of the parties hereto, and approved by the Committee. The Board may terminate or amend the Plan at any time; provided, however, that the termination or any modification or amendment of the Plan shall not,without the consent of the Recipient, affect the rights of the Recipient under this Restricted Stock Unit Agreement. 

14. Survival ofTerms. This Restricted Stock Unit Agreement shall apply to and bind the Recipient and the Company and their respective permitted assignees and transferees, heirs, legatees, executors, administrators and legal successors. 

15. Agreement Not a Contract for Services; Rights to Terminate Employment. Neither the grant of the Restricted Stock Units, this Restricted StockUnit Agreement nor any other action taken pursuant to this Restricted Stock Unit Agreement shall constitute or be evidence of any agreement or understanding, express or implied, that the Recipient has a right to continue to provide services as anofficer, director, employee or consultant of the Company and/or the Employer for any period of time or at any specific rate of compensation. Nothing in the Plan or in this Restricted Stock Unit Agreement shall confer upon the Recipient the right tocontinue in the employment of an Employer or affect any right which an Employer may have to terminate the employment of the Recipient. The Recipient specifically acknowledges that the Employer intends to review the Recipient’s performance fromtime to time, and that the Company and/or the Employer has the right to terminate the Recipient’s employment at any time, including a time in close proximity to the Vesting Date, for any reason, with or without cause. The Recipient acknowledgesthat upon his or her termination of employment with an Employer for any reason (other than as set forth above with respect to Retirement), then all Restricted Stock Units not yet vested shall be immediately forfeited at such time. 

16. Decisions of Board or Committee. The Board or the Committee shall have the right to resolve all questions which may arise in connection withthe Restricted Stock Units. Any interpretation, determination or other action made or taken by the Board or the Committee regarding the Restricted Stock Units, the Plan or this Restricted Stock Unit Agreement shall be final, binding and conclusive.

17. Failure to Execute Agreement. This Restricted Stock Unit Agreement and the Restricted Stock Units granted hereunder is subjectto the Recipient returning a counter-signed copy of this Restricted Stock Unit Agreement to the designated representative of the Company on or before 60 days after the date of its distribution to the Recipient. In the event that the Recipient failsto so return a counter-signed copy of this Agreement within such 60-day period, then this Restricted Stock Unit Agreement and the Restricted Stock Units granted hereunder shall automatically become null and void and shall have no further force oreffect. Electronic acceptance of this Restricted Stock Unit Agreement shall constitute an execution of the Restricted Stock Unit Agreement by the Recipient and a return of the counter-signed copy to the Company. 

 

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18. Section 409A. For purposes of determining whether the Recipient has experienced aRetirement for purposes of this Restricted Stock Unit Agreement or whether the Recipient has experienced a termination of employment for purposes of Section 10 hereof, the Recipient will not be treated as having terminated employment unlesssuch termination constitutes a “Separation from Service” as defined for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). If the Recipient is “specified employee” (within themeaning of Section 409A) with respect to the Company at the time of a termination of employment and the Recipient becomes vested in Restricted Stock Units as a consequence of a termination of employment, the delivery of Common Stock in respectof such Restricted Stock Units shall be delayed until the earliest date upon which such Common Stock may be delivered to Recipient without being subject to taxation under Section 409A. 

 

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Restricted Stock Unit Agreementon the day and year first above written. 

 
**Health Net, Inc.**
 

Name:
 Jay M. Gellert
Title:
 President and Chief Executive Officer
 

**THE UNDERSIGNED RECIPIENT HEREBY EXPRESSLY ACKNOWLEDGES ANDAGREES THAT HE/SHE IS AN EMPLOYEE AT WILL AND MAY BE TERMINATED BY THE EMPLOYER AT ANY TIME, WITH OR WITHOUT CAUSE.**

 

The undersigned hereby accepts and agrees to all the terms andprovisions of the foregoing Restricted Stock Unit Agreement and to all the terms and provisions of the Health Net, Inc. **[PLAN NAME]**, as amended to date, incorporated by reference herein.

 

**Recipient:**

 
**[NAME]**
 

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