Document:

EX-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. 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.

(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 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 Optionee 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 Optionee had access during his employment with the Employer. In
addition, the Optionee agrees that, during the Non-competition Period applicable to the Optionee
following termination of employment with the Employer, the Optionee 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
Optionee or any other entity or person. In the event that the Optionee breaches the covenants set
forth in this first paragraph of Section 4:

	 	(a)	 	the Option shall immediately terminate; and

(b) the Optionee shall promptly pay to the Company an amount of cash equal to the Gain
Realized (as defined below) on any Option Shares acquired during the Restricted Period (as
defined below).

For the purposes of this Section 4: “Restricted Period” shall refer to the period of time
commencing ninety days prior to such termination of the Optionee’s employment and ending (x) in the
case of an Optionee terminated under clause (i) of the first paragraph of this Section 4, six
months after such termination or (y) in the case of an Optionee terminated under clause (ii) of the
first paragraph of this Section 4, twelve months after such termination; “Gain Realized” shall
equal the difference between (x) the Exercise Price applicable to the Option Shares and (y) the
greater of the Fair Market Value (as defined in the Plan) of the Option Shares (I) on the date of
acquisition of such Option Shares or (II) on the date such competitive activity with a Competitor
was commenced by the Optionee; 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 or any Subsidiary.

It is hereby further agreed that if any court of competent jurisdiction shall determine that the
restrictions imposed in this Section 4 are unreasonable (including, but not limited to, the
definition of Market Area or 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 be
reasonable under the circumstances.

The Optionee acknowledges that the services to be rendered by him/her to the Company are of a
special and unique character, which gives this Option 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 him/her of any of the provisions contained
in this Section 4 will cause the Company irreparable injury. Optionee therefore agrees that the
Company may be entitled, in addition to the remedies set forth above in this Section 4 and any
other 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 Optionee from any such violations or threatened violations.

4A. Compensation Recovery (Clawback). In the event that Optionee is subject to the
Company’s Compensation Recovery Policy, as such policy may be amended from time to time (the
“Compensation Recovery Policy”), notwithstanding anything in this Option Agreement to the contrary,
any Options granted (or Option Shares vesting) hereunder shall be subject to the terms and
conditions of the Compensation Recovery Policy.

5. Notices. Any notice or communication given hereunder shall be in writing and shall
be given electronically (e.g., email), or 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 an email or a fax to the following addresses:

To the Recipient at: Address on record at Health Net, Inc. as of the date any notice is to be
delivered.

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, except that notices of change of address shall be effective only upon receipt.

6. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any time
any provision of this Option Agreement or the Plan shall in no way be construed to be a waiver of
such provision or of any other provision hereof.

7. Incorporation of Plan; Entire Agreement. The Plan is hereby incorporated by
reference and made a part hereof, and the Option and this Option Agreement are subject to all terms
and conditions of the Plan. This Option Agreement and the Plan, taken together, constitutes the
entire agreement between the parties relating to or effecting the Option, and no promises, terms,
conditions or obligations other than those contained in this Option Agreement or the Plan shall be
valid or binding. Any prior agreements, statements or promises, either oral or written, made by
any party or agent of any party relating to or effecting the Option that are not contained in the
Option Agreement or the Plan are of no force or effect.

8. Rights of a Stockholder. The Optionee shall have no rights as a stockholder with
respect to any Option Shares unless and until certificates for shares of Common Stock are issued to
the Optionee.

9. Change of Control. Notwithstanding the provisions of Section 2 and 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 Optionee shall be terminated within the two year period following the Change in
Control but prior to any Vesting Date either (A) by the Company without Cause or (B) under
circumstances which entitle the Optionee to Change in Control severance benefits under an effective
employment agreement between the Optionee and the Company or the Company’s Safety Net Security
Program, each Option shall become fully vested and the date of such vesting shall be deemed to be
the Vesting Date hereunder; such termination shall be treated as having occurred pursuant to
Section 3(e) hereof for purposes of determining the post-termination exercise period. For purposes
of this Section 9, “Cause” shall have the meaning set forth in the Plan.

10. Rights to Terminate Employment. Nothing in the Plan or in this Option Agreement
shall confer upon the Optionee the right to continue in the employment of an Employer or affect any
right which an Employer may have to terminate the employment of the Optionee. The Optionee
specifically acknowledges that the Employer intends to review Optionee’s performance from time to
time, and that the Company and/or the Employer has the right to terminate Optionee’s employment at
any time, including a time in close proximity to a Vesting Date, for any reason, with or without
Cause. The Optionee acknowledges that upon his or her termination of employment with an Employer
for any reason, the Option shall be exercisable only to the extent it is exercisable on the
effective date of the Optionee’s termination of employment and only within the period following
such termination as is set forth in this Option Agreement.

11. Transferability. The Option may not be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by the Optionee otherwise than by will or by the laws
of descent and distribution, and any such purported assignment, alienation, pledge, attachment,
sale, transfer or encumbrance shall be void and unenforceable against the Company; provided that
the designation of a beneficiary shall not constitute an assignment, alienation, pledge,
attachment, sale, transfer or encumbrance.

12. Amendment. 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 Optionee, impair the rights of the Optionee under this Option Agreement.

13. Compliance with Applicable Law. The Option is subject to the condition that if
the listing, registration or qualification of the shares subject to the Option upon any securities
exchange or under any law, or the consent or approval of any governmental body, or the taking of
any other action, is necessary or desirable as a condition of, or in connection with, the purchase
or delivery of shares hereunder, the Option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval shall have been effected or obtained,
free of any conditions not acceptable to the Company. The Company agrees to use reasonable efforts
to effect or obtain any such listing, registration, qualification, consent or approval.

14. Decisions of Board or Committee. The Board of Directors or the Committee shall
have the right to resolve all questions which may arise in connection with the Option or its
exercise. Any interpretation, determination or other action made or taken by the Board of
Directors or the Committee regarding the Plan or this Option Agreement shall be final, binding and
conclusive.

15. Failure to Execute Agreement.  This Option Agreement and the Option granted
hereunder is subject to the Optionee returning a counter-signed copy of this Option Agreement to
the designated representative of the Company on or before 60 days after the date of its
distribution to the Optionee. In the event that the Optionee fails to so return a counter-signed
copy of this Option Agreement within such 60 day period, then this Option Agreement and the Option
granted hereunder shall automatically become null and void and shall have no further force or
effect. Electronic acceptance of this Option Agreement shall constitute an execution of the Option
Agreement by the Optionee and a return of the counter-signed copy to the Company for purposes of
this Section 15.

IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement as of the date and
year set forth above.

Health Net, Inc.

Name:

Title:

OPTIONEE HEREBY EXPRESSLY ACKNOWLEDGES AND AGREES THAT (I)
HE/SHE IS AN EMPLOYEE AT WILL AND MAY BE TERMINATED BY THE
EMPLOYER AT ANY TIME, WITH OR WITHOUT CAUSE, (II) THE OPTION
MAY NOT BE EXERCISED WITH RESPECT TO ANY OPTION SHARES THAT
ARE NOT VESTED ON THE DATE OF ANY SUCH TERMINATION AND (III)
THE OPTION MAY BE EXERCISED WITH RESPECT TO OPTION SHARES
THAT ARE VESTED ON THE DATE OF ANY SUCH TERMINATION ONLY TO
THE EXTENT EXPRESSLY PROVIDED IN THIS OPTION AGREEMENT.

Your acceptance of this Option Agreement indicates that you
hereby accept and agree to all the terms and provisions of
the foregoing Option Agreement and the attached Grant Notice,
and to all the terms and provisions of the Plan incorporated
by reference herein.

1

Notice of Grant of Stock Options

Health Net, Inc.

Plan Name:

Participant Name:

Participant ID:

Grant Date:

Grant Number:

	 
	Type of Options:Non-Qualified Stock Options

	Option Shares Granted:

	 

	Exercise Price:

	 

	Expiration Date:

	 

	Vesting Template:

	 

	Vesting Schedule:

	 

2EX-10.3

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 value paid by the Recipient for the Common Stock issued in respect of the Performance
Shares and (y) the greater of the Fair Market Value (as defined in the Plan) of the Common Stock
issued in respect of the Performance Shares (I) on the date of transfer of such Common Stock or
(II) on the date such competitive activity with a Competitor 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 or any
Subsidiary.

It is hereby further agreed that if any court of competent jurisdiction shall determine that
the restrictions imposed in this 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 be reasonable under the
circumstances.

The Recipient acknowledges that the services to be rendered by the Recipient to the Company
are of a special and unique character, which gives this Performance Share Award 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 the
Recipient 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 any other 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 or
threatened violations.

4A. Compensation Recovery (Clawback). In the event that Recipient is subject to the
Company’s Compensation Recovery Policy, as such policy may be amended from time to time (the
“Compensation Recovery Policy”), notwithstanding anything in this Performance Share Award
Agreement to the contrary, any Performance Shares granted hereunder shall be subject to the terms
and conditions of the Compensation Recovery Policy.

5. No Rights as a Stockholder. The Recipient shall not be entitled to dividends, if
any, that are paid with respect to the shares of Common Stock unless and until the Performance
Shares have vested and shares of Common Stock have been delivered with respect thereto. Recipient
shall also not have the right to vote any shares subject to the Performance Shares unless and until
the Performance Shares shall have vested and shares of Common Stock have been delivered with
respect thereto.

6. Notices. Any notice or communication given hereunder shall be in writing and shall
be given electronically (e.g., email) or 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 an email or a fax to the following addresses:

	 	 	 	To the Recipient at: Address on record at Health Net, Inc. as of
the date

any notice is to be delivered.

	 	 	 
	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, except that notices of change of address shall be effective only upon receipt.

7. Securities Laws Requirements. The Company shall not be obligated to transfer any
shares of Common 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 or state 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
holding the 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 as necessary 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 to maintain the effectiveness of such registration.

8. Protections Against Violations of Performance Share Award Agreement. This
Performance Share Award 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 Performance Share Award Agreement and shall pay to the Company, in any method as set forth in
Section 8.6 of the Plan, the 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 in Control. Notwithstanding the provisions of Section 3 hereof, in the
event that there shall occur a Change in Control (as defined in the Plan), each Performance Share
shall become fully vested immediately upon the occurrence of the Change in Control at target.
Notwithstanding anything in the Plan or this Performance Share Award Agreement to the contrary,
there shall be no acceleration of the payment of the Performance Shares if such accelerated payment
would cause the Performance Shares to fail to comply with the provisions of Section 409A of the
Internal Revenue Code of 1986, as amended.

11. Failure to Enforce Not a Waiver. The failure of the Company to enforce at any
time any provision of this Performance Share Award Agreement shall in no way be construed to be a
waiver of such provision or of any other provision hereof.

12. Governing Law. This Performance Share Award 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.

13. Amendments. This Performance Share Award Agreement may be amended or modified at
any time only by 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, impair the rights of the Recipient under this Performance Share Award Agreement.

14. Survival of Terms. This Performance Share Award 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 Performance Shares, this Performance Share Award Agreement nor any other action
taken pursuant to this Performance Share Award 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 an officer, 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
Performance Share Award Agreement shall confer upon the Recipient the right to continue 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 from time 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 acknowledges that upon
his or her termination of employment with an Employer for any reason, then all Performance Shares
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 with this Performance Share Award Agreement
or the Performance Shares. Any interpretation, determination or other action made or taken by the
Board or the Committee regarding the Performance Shares, the Plan or this Performance Share Award
Agreement shall be final, binding and conclusive.

17. Failure to Execute Agreement. This Performance Share Award Agreement and the
Performance Shares granted hereunder is subject to the Recipient returning a counter-signed copy of
this Performance Share Award 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 fails
to so return a counter-signed copy of this Performance Share Award Agreement within such 60-day
period, then this Performance Share Award Agreement and the Performance Shares granted hereunder
shall automatically become null and void and shall have no further force or effect. Electronic
acceptance of this Performance Share Award Agreement shall constitute an execution of the
Performance Share Award Agreement by the Recipient and a return of the counter-signed copy to the
Company.

1

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Performance Share
Award Agreement on the day and year first above written.

Health Net, Inc.

      

Name:

Title:

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

Your acceptance of this Performance Share Award Agreement
indicates that you accept and agree to all the terms and
provisions of the foregoing Performance Share Award Agreement
and attached Grant Notice, and to all the terms and
provisions of the Health Net, Inc. 2006 Long-Term Incentive
Plan, as amended to date, incorporated by reference herein.

2

APPENDIX I

PERFORMANCE PERIOD AND PERFORMANCE GOALS

3

Notice of Grant of Performance Share Award

Health Net, Inc.

Plan Name: Health Net, Inc. 2006 Long-Term Incentive Plan, as amended

Recipient Name:

Recipient ID:

Grant Date:

Grant Number:

Target Number:

4

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