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Exhibit 10.17    
  

 
 

Amendment to 1997 Stock Option Plan    
  

    The Health Net, Inc. 1997 Stock Option Plan (the "1997 Plan") was amended on December 18, 2000 to delete subsection 6.8(b) of the 1997 Plan in
its entirety and to replace it with the following new subsection 6.8(b): 

	``(b)
	Definition of Change in Control.  A "Change in Control" shall mean: 

    (i)  Consummated Transaction.  Consummation of (a) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to which shares of Common Stock are converted into cash, securities or other property, other than a Merger, or
(b) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, or (c) the
liquidation or dissolution of the Company; 

    (ii) Control Purchase.  The purchase by any person (as such term is defined in Sections 13(d)(3) and
14(d)(2) of the Exchange Act), corporation or other entity (other than the Company or any employee benefit plan sponsored by an Employer) of any Common Stock of the Company (or securities convertible
into the Company's Common Stock) for cash, securities or any other consideration pursuant to a tender offer or exchange offer, without the prior consent of the Board and, after such purchase, such
person shall be the "beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing
20 percent or more of the combined voting power of the then outstanding securities of the Company ordinarily (and apart from rights accruing under special circumstances) having the right to
vote in the election of directors (calculated as provided in Section (d) of such Rule 13d-3 in the case of rights to acquire the Company's securities); 

    (iii) Board Change.  A change in the composition of the Board during any period of two consecutive years,
such that individuals who at the beginning of such period constitute the entire Board shall cease for any reason to constitute a majority thereof unless the election, or the nomination for election by
the Company's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period; or 

    (iv) Other Transactions.  The occurrence of such other transactions involving a significant issuance of
voting stock or change in the composition of the Board that the Board determines to be a Change in Control for purposes of the Plan. 

    The
Agreement evidencing options or Restricted Stock granted under the Plan may contain provisions limiting the acceleration of the exercisability of options and the acceleration of
the vesting of Restricted Stock as provided in this Section as the Committee deems appropriate to ensure that the penalty provisions of Section 4999 of the Code, or any successor thereto in
effect at the time of such acceleration, will not apply to any stock, cash or other property received by the holder from the Company." 

1

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Exhibit 10.17

Amendment to 1997 Stock Option PlanPrepared by MERRILL CORPORATION www.edgaradvantage.com

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Exhibit 10.19  

 
  Amendments to Amended and Restated 1998 Stock Option Plan    
  

    The Health Net, Inc. Amended and Restated 1998 Stock Option Plan (the "1998 Plan"), was amended on December 18, 2000 to delete subsection 6.8(b)
of the 1998 Plan in its entirety and to replace it with the following new subsection 6.8(b): 

	"(b)
	Definition of Change in Control.  A "Change in Control" shall mean: 

    (i)  Consummated Transaction.  Consummation of (a) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to which shares of Common Stock are converted into cash, securities or other property, other than a Merger, or
(b) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company, or (c) the
liquidation or dissolution of the Company; 

    (ii) Control Purchase.  The purchase by any person (as such term is defined in Sections 13(d)(3) and
14(d)(2) of the Exchange Act), corporation or other entity (other than the Company or any employee benefit plan sponsored by an Employer) of any Common Stock of the Company (or securities convertible
into the Company's Common Stock) for cash, securities or any other consideration pursuant to a tender offer or exchange offer, without the prior consent of the Board and, after such purchase, such
person shall be the "beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing
20 percent or more of the combined voting power of the then outstanding securities of the Company ordinarily (and apart from rights accruing under special circumstances) having the right to
vote in the election of directors (calculated as provided in Section (d) of such Rule 13d-3 in the case of rights to acquire the Company's securities); 

    (iii) Board Change.  A change in the composition of the Board during any period of two consecutive years,
such that individuals who at the beginning of such period constitute the entire Board shall cease for any reason to constitute a majority thereof unless the election, or the nomination for election by
the Company's stockholders, of each new director was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period; or 

    (iv) Other Transactions.  The occurrence of such other transactions involving a significant issuance of
voting stock or change in the composition of the Board that the Board determines to be a Change in Control for purposes of the Plan. 

    The
Agreement evidencing Options or Restricted Stock granted under the Plan may contain such provisions limiting the acceleration of the exercisability of options and the acceleration
of the vesting of Restricted Stock as provided in this Section as the Committee deems appropriate to ensure that the penalty provisions of Section 4999 of the Code, or any successor thereto in
effect at the time of such acceleration, will not apply to any stock, cash or other property received by the holder from the Company." 

    The
1998 Plan was also amended on October 13, 2000 to increase the number of shares of Common Stock available under the 1998 Plan from 5,000,000 shares up to 8,256,243 shares. 

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Exhibit 10.24

 
 

HEALTH NET, INC.
  
    401(k) SAVINGS PLAN    
  

 
 
 

HEALTH NET, INC.
  401(k) SAVINGS PLAN    
  

 
 

TABLE OF CONTENTS    
  

	 
	 	 
	 	 
	 	PAGE

	
ARTICLE 1	
 	

TITLE AND PURPOSE	
 	

1
	
ARTICLE 2	
 	

DEFINITIONS	
 	

1
	
ARTICLE 3	
 	

PARTICIPATION	
 	

5
	

 	
 	

Section 3.1.	
 	

Eligibility for Participation	
 	

5
	 	 	Section 3.2.	 	Application for Salary Deferral Contributions	 	5
	 	 	Section 3.3.	 	Transfer to Affiliates	 	5
	
ARTICLE 4	
 	

EMPLOYER CONTRIBUTIONS	
 	

6
	

 	
 	

Section 4.1.	
 	

Profit Sharing Contributions	
 	

6
	 	 	Section 4.2.	 	Salary Deferral Contributions	 	6
	 	 	Section 4.3.	 	Annual Limit on Salary Deferral Contributions	 	7
	 	 	Section 4.4.	 	Matching Contributions	 	7
	 	 	Section 4.5.	 	Limitations on Contributions for Highly Compensated Employees	 	8
	 	 	Section 4.6.	 	Limitation on Employer Contributions	 	12
	
ARTICLE 5	
 	

ROLLOVER CONTRIBUTIONS	
 	

13
	

 	
 	

Section 5.1.	
 	

Requirements for Rollover Contributions	
 	

13
	 	 	Section 5.2.	 	Delivery of Rollover Contributions	 	13
	 	 	Section 5.3.	 	Special Accounting Rules for Rollover Contributions	 	13
	
ARTICLE 6	
 	

TRUST AND INVESTMENT FUNDS	
 	

14
	

 	
 	

Section 6.1.	
 	

Trust	
 	

14
	 	 	Section 6.2.	 	Investment Funds	 	14
	
ARTICLE 7	
 	

PARTICIPANT ACCOUNTS	
 	

14
	

 	
 	

Section 7.1.	
 	

Participant Accounts and Investment Elections	
 	

14
	 	 	Section 7.2.	 	Investments in Company Stock Fund	 	15
	 	 	Section 7.3.	 	Valuation of Funds and Plan Accounts	 	16
	 	 	Section 7.4.	 	Allocation of Contributions and Forfeitures Among Participants' Accounts	 	16
	 	 	Section 7.5.	 	Statutory Limitations on Allocations to Accounts	 	17
	 	 	Section 7.6.	 	Correction of Error	 	18

i

 

	
ARTICLE 8	
 	

WITHDRAWALS, LOANS AND DISTRIBUTIONS	
 	

19
	

 	
 	

Section 8.1.	
 	

Vesting	
 	

19
	 	 	Section 8.2.	 	Withdrawals Prior to Termination of Employment	 	20
	 	 	Section 8.3.	 	Loans to Participants	 	21
	 	 	Section 8.4.	 	Distribution Upon Termination of Employment	 	22
	 	 	Section 8.5.	 	Time and Form of Distribution upon Termination of Employment	 	22
	 	 	Section 8.6.	 	Special Rules Relating to Election of Annuity Form of Benefit	 	25
	 	 	Section 8.7	 	Designation of Beneficiary	 	25
	 	 	Section 8.8.	 	Distributions to Minor and Disabled Distributees	 	26
	 	 	Section 8.9.	 	Missing Person	 	27
	 	 	Section 8.10.	 	Successive Employer	 	27
	
ARTICLE 9	
 	

SPECIAL PARTICIPATION RULES	
 	

28
	

 	
 	

Section 9.1.	
 	

Change of Employment Status	
 	

28
	 	 	Section 9.2.	 	Reemployment of a Terminated Participant	 	28
	 	 	Section 9.3.	 	Employment by Related Entities	 	28
	 	 	Section 9.4.	 	Leased Employees	 	29
	 	 	Section 9.5.	 	Reemployment of Veterans	 	29
	
ARTICLE 10	
 	

SHAREHOLDER RIGHTS WITH RESPECT TO COMPANY STOCK	
 	

30
	

 	
 	

Section 10.1.	
 	

Voting Shares of Company Stock	
 	

30
	 	 	Section 10.2.	 	Tender Offers	 	31
	
ARTICLE 11	
 	

ADMINISTRATION	
 	

32
	

 	
 	

Section 11.1.	
 	

The Committee	
 	

32
	 	 	Section 11.2.	 	Claims Procedure	 	33
	 	 	Section 11.3.	 	Notices to Participants	 	34
	 	 	Section 11.4.	 	Notices	 	34
	 	 	Section 11.5.	 	Records	 	34
	 	 	Section 11.6.	 	Reports of Trustee and Accounting to Participants	 	34
	
ARTICLE 12	
 	

PARTICIPATION BY OTHER EMPLOYERS	
 	

34
	

 	
 	

Section 12.1.	
 	

Adoption of Plan	
 	

34
	 	 	Section 12.2.	 	Withdrawal from Participation	 	34
	 	 	Section 12.3.	 	Continuance by a Successor	 	35
	 	 	Section 12.4.	 	Company as Agent for Employers	 	35

ii

 

	
ARTICLE 13	
 	

MISCELLANEOUS	
 	

35
	

 	
 	

Section 13.1.	
 	

Expenses	
 	

35
	 	 	Section 13.2.	 	Non-Assignability	 	35
	 	 	Section 13.3.	 	Employment Non-Contractual	 	36
	 	 	Section 13.4.	 	Limitation of Rights	 	36
	 	 	Section 13.5.	 	Merger or Consolidation with Another Plan	 	36
	 	 	Section 13.6.	 	Gender and Plurals	 	36
	 	 	Section 13.7.	 	Applicable Law	 	36
	 	 	Section 13.8.	 	Severability	 	36
	 	 	Section 13.9.	 	No Guarantee	 	36
	 	 	Section 13.10.	 	Plan Voluntary	 	37
	 	 	Section 13.11.	 	Tax Withholding	 	37
	
ARTICLE 14	
 	

TOP-HEAVY PLAN REQUIREMENTS	
 	

37
	

 	
 	

Section 14.1.	
 	

Top-Heavy Plan Determination	
 	

37
	 	 	Section 14.2.	 	Definitions and Special Rules	 	37
	 	 	Section 14.3.	 	Minimum Contribution for Top-Heavy Years	 	38
	 	 	Section 14.4.	 	Special Rules for Applying Statutory Limitations on Benefits	 	38
	
ARTICLE 15	
 	

AMENDMENT, ESTABLISHMENT OF SEPARATE PLAN AND TERMINATION	
 	

38
	

 	
 	

Section 15.1.	
 	

Amendment	
 	

38
	 	 	Section 15.2.	 	Establishment of Separate Plan	 	38
	 	 	Section 15.3.	 	Termination	 	39
	 	 	Section 15.4	 	Trust Fund to Be Applied Exclusively for Participants and Their Beneficiaries.	 	39

iii

 
 

ARTICLE 1
  
    TITLE AND PURPOSE    
  

    The title of the Plan shall be the "Health Net, Inc. 401(k) Savings Plan." The Plan is an amendment and restatement of the Plan as in effect as of
December 31, 2000, and is effective as of January 1, 2001, unless any provision specifies a different effective date. 

    The
Plan is designated as a "profit sharing plan" within the meaning of U.S. Treasury Regulation § 1.401-1(a)(2)(ii). 

 
 

ARTICLE 2
  
    DEFINITIONS    
  

    As used herein, the following words and phrases shall have the following respective meanings when capitalized: 

    (1)  Affiliate.  (a) A corporation that is a member of the same controlled group of corporations
(within the meaning of section 414(b) of the Code) as an Employer, (b) a trade or business (whether or not incorporated) under common control (within the meaning of section 414(c)
of the Code) with an Employer, (c) any organization (whether or not incorporated) that is a member of an affiliated service group (within the meaning of section 414(m) of the Code) that
includes an Employer, a corporation described in clause (a) of this subdivision or a trade or business described in clause (b) of this subdivision, or (d) any other entity that is
required to be aggregated with an Employer pursuant to regulations promulgated under section 414(o) of the Code. 

    (2)  After-Tax Account.  The account established pursuant to Section 7.1 to which a
Participant's after-tax contributions, if any, transferred to the Plan from the FHC Plan or the QualMed Plan (or any other plan qualified under section 401(a) of the Code) and any
earnings (or losses) thereon are credited. 

    (3)  Beneficiary.  A person entitled under Section 8.7 to receive benefits in the event of the
death of a Participant. 

    (4)  Board of Directors.  The board of directors of the Company. 

    (5)  Break in Service.  Any period during which an Employee does not perform any Hour of Service for an
Employer. For purposes of this definition, an Employee shall be credited with Hours of Service for any period of absence from an Employer during which such Employee (a) is in Qualified Military
Service, provided that the Employee returns to the employ of an Employer within the period prescribed by USERRA, (b) is on an uncompensated leave
of absence duly granted by an Employer, or (c) is absent from work for a maximum of 24 consecutive months because of (i) the pregnancy of the Employee, (ii) the birth of the
Employee's child, (iii) the placement of a child with the Employee in connection with the Employee's adoption of such child, or (iv) the need to care for any such child for a period
beginning immediately following such birth or placement. Notwithstanding the foregoing, no Hours of Service shall be credited to an Employee under clause (c) of this subdivision unless the
Employee timely furnishes to the Committee a certificate of birth, proof of adoption or other appropriate legal documentation setting forth parentage or adoption. 

    (6)  Code.  The Internal Revenue Code of 1986, as amended. 

    (7)  Committee.  The committee designated in Section 11.1 to administer the Plan, or any person,
corporation, partnership or committee to which the Committee has delegated its responsibilities pursuant to Section 11.1. 

    (8)  Company.  Health Net, Inc., a Delaware corporation, and any successor to such corporation
that adopts the Plan pursuant to Article 12. 

    (9)  Company Stock.  Class A Common Stock of Health Net, Inc. 

 

    (10)  Company Stock Fund.  The investment fund established and maintained by the Trustee in accordance
with Section 6.2. 

    (11)  Compensation.  The total cash earnings paid by an Employer to an Eligible Employee and properly
reportable on Form W-2 for a Plan Year (including bonuses and overtime), and all amounts not
includible in such Eligible Employee's gross income for federal income tax purposes solely on account of his or her election to have compensation reduced pursuant to the Plan or any other qualified
cash or deferred arrangement described in section 401(k) of the Code or a cafeteria plan as defined in section 125 of the Code, but excluding (i) any reimbursements or other
allowances for automobile, relocation, travel, education expenses or other expenses (even if includible in the Employee's gross income for federal income tax purposes), (ii) severance payments,
(iii) retention payments, (iv) disability payments, and (v) extraordinary items of remuneration. An Employee's Compensation in excess of (I) $160,000 for the Plan Year
beginning January 1, 1997, and (II) for each subsequent Plan Year, the dollar amount prescribed by section 401(a)(17) of the Code (as adjusted for increases in the
cost-of-living) shall not be taken into account for any purposes under the Plan. 

    (12)  Compensation and Stock Option Committee.  The Compensation and Stock Option Committee of the Board
of Directors of the Company. 

    (13)  Disability.  A total physical or mental inability to perform work, resulting from injury or
disease, which is expected to be permanent, as determined by the Committee. The existence of a "Disability" shall be determined by the Committee according to uniform principles consistently applied,
and based upon such evidence as the Committee believes necessary or desirable. 

    (14)  Effective Date.  Except as provided elsewhere, the effective date of this amendment and restatement
of the Plan with respect to the Company and each other entity that is an Employer on December 31, 2000 shall be January 1, 2001, and in the case of any other Employer shall be the date
designated by such Employer. 

    (15)  Eligible Employee.  With respect to each Employer, unless specified otherwise by the board of
directors of each Employer, any Employee thereof, excluding: 

	(i)
	an
Employee who (A) is scheduled to perform fewer than 20 Hours of Service per week and (B) performs fewer than 1,000 Hours of Service
during the Plan Year,

	(ii)
	an
Employee whose employment is governed by the terms of a collective bargaining agreement under which retirement benefits were the subject of good
faith bargaining, but which does not provide for participation in the Plan, and

	(iii)
	an
Employee who is a nonresident alien (within the meaning of section 7701(b)(1)(B) of the Code). 

    (16)  Employee.  An individual whose relationship with an Employer is, under common law, that of an
employee. Notwithstanding the foregoing, no individual who renders services for an Employer shall be considered an Employee for purposes of the Plan if such individual renders such services pursuant
to (i) an agreement providing that such services are to be rendered by the individual as an independent contractor, (ii) an agreement with an entity, including a leasing organization
within the meaning of section 414(n)(2) of the Code, that is not an Employer or Affiliate or (iii) an agreement that contains a waiver of participation in the Plan. 

    (17)  Employer.  The Company, each Affiliate listed in  Exhibit A hereto (as such exhibit is revised from time to time), and each other entity that, with the
consent of the Company, elects to
participate in the Plan in the manner described in Section 12.1 and any successor entity that adopts the Plan pursuant to Section 12.3. If any such entity withdraws from participation in
the Plan pursuant to Section 12.2, or terminates its participation in the Plan pursuant to Section 15.3, then such entity shall 

2

 

thereupon cease to be an Employer. An entity shall cease being an Employer as of the date it ceases to be an Affiliate, unless the Company consents to such entity's continued participation in the
Plan. 

    (18)  Entry Date.  The first day of each payroll period. 

    (19)  ERISA.  The Employee Retirement Income Security Act of 1974, as amended from time to time. 

    (20)  FHC Plan.  The former Foundation Health Corporation Profit Sharing and 401(k) Plan. 

    (21)  401(k) Administrator.  The person or persons appointed by the Committee to perform the duties of
the 401(k) Administrator as described herein. 

    (22)  Hour of Service.  Each hour for which: 

    (a) an
Employee is paid, or entitled to payment, for the performance of duties as an Employee; 

    (b) an
Employee is paid, or entitled to payment, by an Employer on account of a period of time during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), lay-off, jury, military duty or leave of absence,  provided that no more than 501 Hours
of Service will be credited under this paragraph (b) for any single continuous period (regardless of
whether such period occurs in a single Plan Year); 

    (c) back
pay is awarded or agreed to by the Employer or an Affiliate, provided that such hours shall be credited
to the Plan Years to which the award, agreement or payment pertains rather than the Plan Year in which the award, agreement or payment is made. 

For
purposes of paragraphs (b) and (c) above, an Hour of Service shall be calculated in accordance with U.S. Department of Labor Regulation § 2530.200b-2 which
provides that (i) if a payment is based upon hours, days, weeks or other unit of time the number of Hours of Service credited will be the number of regularly scheduled working hours for such
Employee for such unit of time, and (ii) if the payment due is not based upon units of time, the number of Hours of Service credited shall be equal to the amount of the payment divided by the
Employee's most recent hourly rate of compensation. For payments made to an Employee without a regular work schedule, the number of hours credited shall be calculated on a reasonable basis which
reflects the average hours worked by the Employee, or by other employees in the same job classification, over a representative period of time and which is consistently applied with respect to all
employees within the same job classification. In order to avoid double counting, the same Hours of Service shall not be credited both under paragraph (c) and either paragraph (a) or
paragraph (b), as applicable. 

    (23)  HSI Plan.  The former Health Systems International, Inc. 401(k) Associate Savings Plan. 

    (24)  Matching Contributions.  Matching contributions and supplemental matching contributions made to the
Plan by an Employer pursuant to Section 4.4. 

    (25)  Matching Contributions Account.  The account established pursuant to Section 7.1 to which
Matching Contributions, if any, made on behalf of a Participant and earnings (or losses) thereon are credited. 

    (26)  Merger Date.  The date as of which the trust holding the assets of the FHC Plan, the provisions of
which are set forth herein, merged into the trust holding the assets of the HSI Plan, as set forth herein. 

    (27)  Participant.  Subject to Section 5.3, an Eligible Employee who has satisfied the
requirements set forth in Article 3. An individual shall cease to be a Participant upon the complete distribution of his or her accounts under the Plan. 

3

 

    (28)  Plan.  The plan herein set forth, and as from time to time amended. 

    (29)  Plan Year.  The twelve-month period beginning on January 1 of each calendar year. 

    (30)  Profit Sharing Account.  The account established pursuant to Section 7.1 to which Profit
Sharing Contributions, if any, allocated to a Participant and earnings (or losses) thereon are credited. 

    (31)  Profit Sharing Contribution.  A profit sharing contribution made to the Plan by an Employer
pursuant to Section 4.1. 

    (32)  Qualified Nonelective Contribution Account.  The account established pursuant to Section 7.1
to which qualified nonelective contributions, if any, allocated to a Participant and earnings (or losses) thereon are credited. 

    (33)  Qualified Matching Contribution Account.  The account established pursuant to Section 7.1 to
which qualified matching contributions, if any, allocated to a Participant and earnings (or losses) thereon are credited. 

    (34)  Qualified Military Service.  Any service in the uniformed services (as defined in 38 U.S.C.
§ 4303) by an individual if such individual is entitled to reemployment rights under USERRA with respect to such service. 

    (35)  QualMed Plan.  The former QualMed, Inc. Employee Savings Plan. 

    (36)  Rollover Account.  The account established pursuant to Section 7.1 to which a Participant's
Rollover Contributions, if any, and any earnings (or losses) thereon are credited. 

    (37)  Rollover Contributions.  Rollover contributions made by a Participant pursuant to
Section 5.1. 

    (38)  Salary Deferral Contributions.  Before-tax payroll reduction contributions made to the
Plan by an Employer on behalf of Participants pursuant to Section 4.2. 

    (39)  Salary Deferral Contributions Account.  The account established pursuant to Section 7.1 to
which a Participant's Salary Deferral Contributions, if any, and any earnings (or losses) thereon are credited. 

    (40)  Service.  The aggregate of the periods during which an Employee is employed by an Employer and any
periods of employment required to be taken into account pursuant to Section 9.4. Notwithstanding the previous sentence, in the case of an Employee who was a Participant in the HSI Plan
immediately prior to the Effective Date of the September 1, 1997 amendment and restatement of the Plan, such Employee's Service shall be the sum of (i) the Employee's Years of Service as
of December 31, 1996, determined under, and as defined by, the terms of such plan as in effect immediately prior to such Effective Date, (ii) the aggregate of the periods commencing on
and after January 1, 1998 during which the Employee is employed by an Employer and any periods of employment on and after such date that are required to be taken into account pursuant to
Section 9.4 and (iii) the greater of (A) the Service that would be credited to the Employee during the Plan Year beginning January 1, 1997 under the provisions of such plan
in effect immediately prior to such Effective Date and (B) the Service that would be credited to the Employee in such year under clause (ii) above. 

    For
purposes of the first sentence of this subdivision (40) and clause (ii) above, an Employee shall be deemed to be employed by an Employer during (i) any period
of absence from employment by an Employer which is of less than twelve (12) months duration, (ii) the first twelve months of any period of absence from employment for any reason other
than the Employee's quitting, retiring or being discharged and (iii) any period of absence from such employment during which the Employee is in 

4

 

Qualified Military Service, provided that the Employee returns to the employ of the Employer within the period prescribed by USERRA. 

    An
Employee's Service prior to a Break in Service of five consecutive years shall be disregarded if such Employee had no vested interest in his or her Profit Sharing Account or
Matching Contributions Account upon the commencement of such Break in Service. 

    (41)  Trust.  A Trust created by agreement between the Company and the Trustee, as from time to time
amended. 

    (42)  Trustee.  The trustee provided for in Article 6, or any successor trustee or, if there is
more than one trustee acting at any time, all of such trustees collectively. 

    (43)  Trust Fund.  All money and property of every kind of the Trust held by the Trustee pursuant to the
terms of the agreement governing the Trust. 

    (44)  USERRA.  The Uniformed Services Employment and Reemployment Rights Act of 1994. 

    (45)  Valuation Date.  Each business day on which the New York Stock Exchange is open for business or
such other days as the Committee may determine. 

 
 

ARTICLE 3
  
    PARTICIPATION    
  

    Section 3.1.  Eligibility for Participation.  Each Eligible Employee who
immediately before the Effective Date was a Participant shall continue to be a Participant as of the Effective Date. Each other Employee shall become a Participant as soon as administratively
practicable after the later of (i) the first Entry Date coincident with or next following the date the Employee becomes an Eligible Employee and (ii) the date the Employee is hired by
his or her Employer. 

    Section 3.2.  Application for Salary Deferral Contributions.  A Participant who desires to make
Salary Deferral Contributions shall execute and deliver to his or her Employer, in accordance with procedures prescribed by the Committee, an application on the form, or by telephonic or such
electronic means as may be prescribed by the Committee, specifying his or her chosen rate of Salary Deferral Contributions. Such application shall authorize the Participant's Employer to reduce the
Participant's
Compensation by the amount of any such Salary Deferral Contributions. The application shall constitute the Participant's acceptance of and agreement to all provisions of the Plan. Any election made
pursuant to this Section shall be effective on the Entry Date occurring as soon as administratively practicable after the Salary Deferral Contribution application is received by the recordkeeper. 

    Section 3.3.  Transfer to Affiliates.  If a Participant is transferred from one Employer to
another Employer or from an Employer to an Affiliate that is not an Employer, then such transfer shall not terminate the Participant's participation in the Plan, and the Participant shall continue to
participate in the Plan until an event occurs that would have entitled the Participant to a complete distribution of the Participant's vested interest in his or her accounts under the Plan had the
Participant continued to be employed by an Employer until the occurrence of such event. Nevertheless, a Participant shall not be entitled to make Salary Deferral Contributions to the Plan, to borrow
from the Plan pursuant to Section 8.3 (except to the extent required by law), or to receive allocations of Matching Contributions or Profit Sharing Contributions during any period of employment
by any Affiliate that is not an Employer, and periods of employment with an Affiliate that is not an Employer shall be taken into account only to the extent set forth in Section 9.4. 

5

  

 
 

ARTICLE 4
  
    EMPLOYER CONTRIBUTIONS    
  

    Section 4.1.  Profit Sharing Contributions.

    (a)  Employer Profit Sharing Contributions.  Subject to the limitations of Sections 4.6 and 7.5, for each
Plan Year, each Employer shall contribute on behalf of each Participant a Profit Sharing Contribution in such amount as the Employer may, in its sole discretion, determine. 

    (b)  Company Profit Sharing Contributions.  Subject to the limitations set forth in Section 7.5,
in addition to any Profit Sharing Contribution that an Employer may make pursuant to subsection (a) of this Section 4.1, for each Plan Year, each Employer shall contribute on behalf of
each Participant a Profit Sharing Contribution in such amount as the Company may, in its sole discretion, determine. 

    (c)  General.  Profit Sharing Contributions made pursuant to subsections (a) and (b) of
this Section 4.1 shall be allocated in the manner as set forth in Section 7.4(a). Any Profit Sharing Contribution made pursuant to this Section 4.1 shall be made wholly in cash,
wholly in shares of Company Stock, or in a combination thereof, as determined by the Company. A Profit Sharing Contribution made pursuant to this Section 4.1 for any Plan Year shall be
delivered by the Employer making the contribution to the Trustee prior to the due date, including any extensions thereof, of the Employer's federal income tax return for the fiscal year of the
Employer which ends with or within such Plan Year. If any such Profit Sharing Contribution is made by the delivery to the Trustee of shares of Company Stock, then such stock shall be valued either
(i) at the closing price of the stock as reported in The Wall Street Journal on the New York Stock Exchange Composite Transactions List (or the
consolidated tape of such other principal exchange on which such stock is traded) as of the date such shares are delivered to the Trustee or purchased by the Trustee or, if such date is not a trading
day, such price on the most recent trading day prior thereto or (ii) by the average trading price of the stock, as determined by the Committee in its sole discretion, on such date. 

    (d)  Special Company Contribution.  Effective January 1, 1999, the Company shall make to the Plan
on behalf of each Participant who during the period from March 1, 1998 until December 31, 1998 directed the purchase or sale of shares of Company Stock in the Company Stock Fund for his
or her account, a special Company Contribution equal to the aggregate amount of the brokerage commissions charged to
such Participants for the purchase and sale of shares of Company Stock in the Company Stock Fund during such period. Each such Participant described in this subsection (d) shall receive an
allocation equal to the Special Contribution multiplied by a fraction, the numerator of which is the total number of shares of Company Stock purchased and sold in respect of such Participant's account
for the period beginning on March 1, 1998 and ending on December 31, 1998 and the denominator of which is the total number of shares of Company Stock purchased and sold in respect of all
Plan accounts for such period. 

    Section 4.2.  Salary Deferral Contributions.

    (a)  Initial Election.  Subject to the limitations set forth in Sections 4.3, 4.5, 4.6, 7.5, and 8.2(c),
each Employer shall contribute on behalf of each Participant who is an Employee of such Employer an amount equal to a whole percentage not less than one percent (1%) and not more than
17 percent (17%) of such Participant's Compensation for each payroll period as designated by the Participant on his or her application pursuant to Section 3.2. Salary Deferral
Contributions shall be delivered to the Trustee as soon as practicable after the end of each payroll period in which the amount of such contribution would otherwise have been paid to the Participant. 

    (b)  Changes in the Rate or Suspension of Salary Deferral Contributions.  A Participant's Salary Deferral
Contributions shall continue in effect at the rate designated by such Participant pursuant to subsection (a) of this Section until the Participant changes such designation or such contributions
are 

6

 

suspended. A Participant may change such designation or suspend such contributions as of such time and in such manner as may be prescribed by the Committee. Any election made pursuant to this
subsection shall be effective only with respect to Compensation not yet earned as of the effective date of such election. 

    Section 4.3.  Annual Limit on Salary Deferral Contributions.

    (a)  General Rule.  Notwithstanding the provisions of Section 4.2, a Participant's Salary Deferral
Contributions for any calendar year shall not exceed (i) $9,500 for the 1997 calendar year and (ii), for each subsequent year, the dollar amount prescribed by section 402(g) of the Code
(as adjusted for increases in the cost-of-living in accordance with section 402(g)(5) of the Code). 

    (b)  Correction of Excess Salary Deferral Contributions.  If for any calendar year, the aggregate of the
(i) Salary Deferral Contributions to the Plan and (ii) amounts contributed under other qualified cash or deferred arrangements (described in section 401(k) of the Code) which are
maintained by an Employer or Affiliate exceeds the limit imposed by Section 4.3(a) for the calendar year in which such contributions were made ("Excess Salary Deferral Contributions"), then, to
the extent administratively practicable, the Trustee shall distribute an amount equal to such Excess Salary Deferral Contributions (adjusted for gains and losses as determined pursuant to applicable
regulations) to such Participant no later than the April 15th following such calendar year. 

    (c)  Correction of Other Excess Contributions.  If for any calendar year a Participant determines that
the aggregate of the (i) Salary Deferral Contributions to the Plan and (ii) amounts contributed under all other plans or arrangements described in section 401(k), 408(k) or 403(b)
of the Code, including those maintained by other employers, will exceed the limit imposed by Section 4.3(a) for the calendar year in which such contributions were made, such Participant shall
be permitted, pursuant to such rules and at such time prior to the April 15 following such calendar year as determined by the Committee, to submit a written request for the distribution of an
amount equal to or less than the amount of such excess contributions. The request described in this Section 4.3(c) shall be made on a form designated by the Committee and shall specify the
amount of such excess contributions and the amount to be distributed from the Plan. The request shall be accompanied by the Participant's written statement that if such amount is not distributed, the
amounts contributed by the Participant under all plans and arrangements described under sections 401(k), 408(k), and 403(b) of the Code will exceed the limit for such Participant under
section 402(g) of the Code. The Committee shall direct the Trustee to distribute such amount no later than such April 15. 

    Section 4.4.  Matching Contributions.

    (a)  Employer Matching Contributions.  Subject to the limitations set forth in Sections 4.5, 4.6 and 7.5,
each Employer shall contribute for each payroll period on behalf of each Participant, an amount equal to 50 percent (50%) of the Salary Deferral Contributions made on behalf of the Participant
for such payroll period, but only to the extent that such Salary Deferral Contributions do not exceed six percent (6%) of such Participant's Compensation for such payroll period. Matching
Contributions for a Plan Year by an Employer shall be made wholly in cash, wholly in shares of Company Stock, or in a combination thereof, as determined by the Company. Matching Contributions shall be
delivered to the Trustee as soon as practicable after the end of each payroll period to which such contributions relate. If any such Matching Contribution is made by the delivery to the Trustee of
shares of Company Stock, then such stock shall be valued either (i) at the closing price of the stock as reported in The Wall Street Journal on
the New York Stock Exchange Composite Transactions List (or the consolidated tape of such other principal exchange on which such stock is traded) as of the date such shares are delivered to the
Trustee or, if such date is not a trading day, such price on the most recent trading day prior thereto, or (ii) by the average trading price of the stock, as determined by the Committee in its
sole discretion, on such date. 

7

 

    (b)  Other Matching Contributions.

    (1) Supplemental Matching Contributions.  Subject to the limitations set forth in Sections 4.5, 4.6 and
7.5, each Employer also shall contribute for each Plan Year on behalf of each Participant (i) who on the last day of such Plan Year is an Eligible Employee of such Employer, (ii) who
first incurs a Disability within such Plan Year or (iii) who terminated employment during such Plan Year on account of death or after attaining age 55, a supplemental Matching Contribution
equal to the excess of 50 percent (50%) of the Salary Deferral Contributions made on behalf of the Participant for the Plan Year, but only to the
extent that such Salary Deferral Contributions do not exceed six percent (6%) of such Participant's Compensation for such Plan Year, over the Matching
Contributions made on behalf of such Participant pursuant to Section 4.4(a) for such Plan Year. 

    (2) Discretionary Matching Contributions.  Subject to the limitations of Sections 4.5, 4.6 and 7.5, for
each Plan Year, each Employer may contribute on behalf of each Participant (i) who on the last day of such Plan Year is an Eligible Employee of such Employer, (ii) who first incurs a
Disability within such Plan Year or (iii) who terminated employment during such Plan Year on account of death or after attaining age 55, a discretionary Matching Contribution in such amount or
such percentage of Compensation as the Company may, in its sole discretion, determine. 

    (3) General.  Matching Contributions for a Plan Year made pursuant to Section 4.4 by an Employer
shall be made wholly in cash, wholly in shares of Company Stock, or in a combination thereof, as determined by the Company. Matching Contributions for any Plan Year shall be delivered to the Trustee
prior to the due date, including extensions thereof, of the Employer's federal income tax return for the fiscal year of the Employer that coincides with such Plan Year. If any Matching Contributions
are made by the delivery to the Trustee of shares of Company Stock, then such stock shall be valued either (i) at the closing price of the stock as reported in The Wall
Street Journal on the New York Stock Exchange Composite Transactions List (or the consolidated tape of such other principal exchange on which such stock is traded) as of the
date such shares are delivered to the Trustee or, if such date is not a trading day, such price on the most recent trading day prior thereto or (ii) by the average trading price of the stock,
as determined by the Committee in its sole discretion, on such date. 

    Section 4.5.  Limitations on Contributions for Highly Compensated Employees.

    (a)  Actual Deferral Percentage Test—Section 401(k)(3) of the Code.  Notwithstanding
the provisions of Section 4.2, if the Salary Deferral Contributions made pursuant to such Section for a Plan Year fail to
satisfy both of the tests set forth in paragraphs (1) and (2) of this subsection, then the adjustments prescribed in paragraph (1) of subsection (e) of this Section shall
be made. 

    (1) The
Average Deferral Percentage for the group consisting of highly compensated Eligible Employees does not exceed the product of the Average Deferral Percentage for
the group consisting of all other Eligible Employees multiplied by 1.25. 

    (2) The
Average Deferral Percentage for the group consisting of highly compensated Eligible Employees (i) does not exceed the Average Deferral Percentage for the
group consisting of all other Eligible Employees by more than two percentage points, and (ii) does not exceed two times the Average Deferral Percentage of such group. 

    (b)  Actual Contribution Percentage Test—Section 401(m) of the Code.  Notwithstanding
the provisions of Section 4.4, if the Matching Contributions made pursuant to such Section for a Plan Year fail to satisfy both of the tests set forth in paragraphs (1) and (2) of
this subsection, then the adjustments prescribed in paragraph (2) of subsection (e) of this Section shall be made. 

8

 

    (1) The
Average Contribution Percentage for the group consisting of highly compensated Eligible Employees does not exceed the product of the Average Contribution
Percentage for the group consisting of all other Eligible Employees multiplied by 1.25. 

    (2) The
Average Contribution Percentage for the group consisting of highly compensated Eligible Employees (i) does not exceed the Average Contribution Percentage
for the group consisting of all other Eligible Employees by more than two percentage points, and (ii) does not exceed two times the Average Contribution Percentage of such group. 

    (c)  Aggregate Limit on Contributions.  Notwithstanding anything herein to the contrary, if the sum of
the Average Deferral Percentage (as determined under paragraph (1) of subsection (e) of this Section after making the adjustments required by such paragraph for the Plan Year) and the
Average Contribution Percentage (as determined under paragraph (2) of subsection (e) of this Section after making the adjustments required by such paragraph for the Plan Year) for the
group consisting of Participants who are highly compensated Eligible Employees exceeds, or in the judgment of the Committee is likely to exceed, the Aggregate Limit for such Plan Year, then the
adjustments prescribed in paragraph (3) of subsection (e) of this Section shall be made. 

    (d)  Definitions and Special Rules.  For purposes of this Section, the following terms shall have the
meaning set forth below: 

    (1) The
"Average Deferral Percentage" for a Plan Year for a group of Eligible Employees shall be the average of the ratios, calculated to the nearest
one-hundredth of one percent (.01%), of the Salary Deferral Contributions for the benefit of each Eligible Employee in such group, plus any qualified nonelective contributions or qualified
matching contributions designated by an Employer for this purpose pursuant to Section 4.5(f) for such Eligible Employee to the total compensation for such Plan Year paid to such Employee. The
Committee may elect, in the manner prescribed by U.S. Treasury Regulations, to compute the Average Deferral Percentage for a Plan Year for the group consisting of nonhighly compensated Eligible
Employees on the basis of prior Plan Year data. 

    (2) The
"Average Contribution Percentage" for a Plan Year for a group of Eligible Employees shall be the average of the ratios, calculated to the nearest
one-hundredth of one percent (.01%), of the Matching Contributions for the benefit of each Eligible Employee, plus any qualified nonelective contributions designated by an Employer for
this purpose pursuant to Section 4.5(f) for such Eligible Employee to the total compensation for such Plan Year paid to such Employee. The Committee may elect, in the manner prescribed by U.S.
Treasury Regulations, to compute the Average Contribution Percentage for a Plan Year for the group consisting of nonhighly compensated Eligible Employees on the basis of prior Plan Year data. 

    (3) The
"Aggregate Limit" shall equal the greater of: 

    (A) the
sum of (i) 1.25 times the greater of the Average Deferral Percentage or the Average Contribution Percentage for the group consisting of all Eligible
Employees who are nonhighly compensated Employees plus (ii) the lesser of (a) the sum of two percentage points and the lesser of the Average Deferral Percentage and the Average
Contribution Percentage for the group consisting of all Eligible Employees who are nonhighly compensated Employees and (b) 200 percent (200%) of the lesser of the Average Deferral
Percentage and the Average Contribution Percentage for the group consisting of all Eligible Employees who are nonhighly compensated Employees; and 

    (B) the
sum of (i) 1.25 times the lesser of the Average Deferral Percentage or the Average Contribution Percentage for the group consisting of all Eligible
Employees who are nonhighly compensated Employees plus (ii) two percentage points plus the greater of (a) the Average Deferral Percentage for the group consisting of all Eligible
Employees who are 

9

 

nonhighly compensated Employees and (b) the Average Contribution Percentage for the group consisting of all Eligible Employees who are nonhighly compensated Employees, but not greater than
200 percent (200%) of the greater of (a) and (b) above. 

    (4) A
"highly compensated" Employee or Eligible Employee, is an Employee or Eligible Employee, as the case may be, who is (a) a 5%-owner (as determined under
section 416(i)(1)(A)(iii) of the Code) at any time during the Plan Year or the preceding Plan Year or (b) is paid compensation in excess of $80,000 (as adjusted for increases in
the cost of living in accordance with section 415(d) of the Code) from an Employer for the prior Plan Year. If the Committee so elects for a Plan Year, then the Employees taken into account
under clause (b) above shall be limited to those Employees who were members of the "top-paid group" (as defined in section 414(q)(3) of the Code) for the preceding Plan Year. 

    (5) The
term "compensation" shall have the meaning set forth in section 414(s) of the Code or, in the discretion of the Committee, any other meaning in
accordance with the Code for these purposes. 

    (6) If
the Plan and one or more other plans of the Employer to which salary deferral contributions or qualified nonelective contributions (as such term is defined in
section 401(m)(4)(C) of the Code) are made are treated as one plan for purposes of section 410(b) of the Code, then such plans shall be treated as one plan for purposes of this Section. 

    (e)  Adjustments to Comply with Limits.  This subsection sets forth the adjustments and correction
methods that shall be used to comply with the actual deferral percentage test under section 401(k)(3) of the Code, and the actual contribution percentage test under section 401(m) of the
Code. 

	(1)
	Adjustments to Comply with Actual Deferral Percentage Test.

    (A) Adjustment to Salary Deferral Contributions of Highly Compensated Employees.  The Committee shall
cause to be made such periodic computations as it shall deem necessary or appropriate to determine whether either of the tests set forth in clause (1) or (2) of Section 4.5(a) is
satisfied during a Plan Year, and, if in the Committee's judgment it appears that neither of such tests will be satisfied, then the Committee shall take such steps as it deems necessary or appropriate
to adjust the Salary Deferral Contributions for all or a portion of such Plan Year on behalf of Participants who are highly compensated employees to the extent necessary in order for one of such tests
to be satisfied. If, as of the end of the Plan Year, the Committee determines that, notwithstanding any adjustments made
pursuant to the preceding sentence, neither of the tests set forth in Section 4.5(a) has been satisfied, the total amount by which Salary Deferral Contributions must be reduced in order to
satisfy either such test shall be determined by reducing contributions made on behalf of highly compensated employees in order of the actual deferral percentages beginning with the highest of such
percentages (as prescribed by section 401(k)(8)(B) of the Code) (the "excess contributions amount"). The amount to be returned to each Participant who is required to receive a portion of the
excess contribution amount shall be determined by first reducing the Salary Deferral Contributions of each Participant who is a highly compensated employee and whose actual dollar amount of Salary
Deferral Contributions for such Plan Year is the highest until such dollar amount equals the next highest actual dollar amount of Salary Deferral Contributions made for such Plan Year on behalf of any
highly compensated employee, or until the total reduction equals the excess contributions amount. If further reductions are necessary, then the Salary Deferral Contributions on behalf of each
Participant who is a highly compensated employee and whose actual dollar amount of Salary Deferral Contributions, after the reduction described in the preceding sentence, is the highest shall be
reduced in accordance with the previous sentence. Such reductions shall continue to be made to the extent necessary so that the total reduction equals the excess contributions amount. 

10

 

    (B) Corrective Distributions and Forfeitures.  No later than 21/2 months after the
end of the Plan Year (or if correction by such date is administratively impracticable, no later than the last day of the subsequent Plan Year), the Company shall cause to be distributed to each
affected Participant (i) the amount of Salary Deferral Contributions to be returned to such Participant pursuant to subparagraph (A) above, plus any income and minus any loss allocable
thereto, and any corresponding Matching Contributions plus any income and minus any loss allocable thereto shall be forfeited. The amount of any income or loss allocable to any such reductions to be
so distributed or forfeited shall be determined by the Committee in accordance with applicable U.S. Treasury Regulations. Any amounts forfeited pursuant to this paragraph shall be treated in the same
manner as forfeitures described in Section 8.3(c). The amount of Salary Deferral Contributions (and income or loss allocable thereto) to be distributed to a Participant hereunder shall be
reduced by any Salary Deferral Contributions previously distributed to such Participant pursuant to Section 4.3 in order to comply with the limitations of section 402(g) of the Code. The
unadjusted amount of any such reductions so distributed or forfeited shall be treated as "annual additions" for purposes of Section 7.5 relating to the limitations under section 415 of
the Code. 

	(2)
	Adjustments to Comply with the Actual Contribution Percentage Test.

    (A) Adjustment to Matching Contributions of Highly Compensated Employees.  If, as of the end of the Plan
Year but after taking into account the forfeiture of Matching Contributions made on behalf of highly compensated employees pursuant to subparagraph (1)(B) above, the Committee determines that neither
of the tests set forth in clause (1) or (2) of Section 4.5(b) is satisfied for such Plan Year, then the Committee shall calculate a total amount by which Matching Contributions
must be reduced in order to satisfy either such test, by reducing contributions made on behalf of highly compensated employees
in order of their contribution percentages beginning with the highest of such percentages (as prescribed by section 401(m)(6)(B) of the Code) (the "excess aggregate contributions amount"). The
amount to be reduced with respect to each Participant who is required to receive a portion of the excess aggregate contributions amount shall be determined by first reducing the Matching Contributions
for each Participant who is a highly compensated employee and whose actual dollar amount of Matching Contributions for such Plan Year is the highest until such reduced dollar amount equals the next
highest dollar amount of Matching Contributions made for such Plan Year on behalf of any highly compensated employee, or until the total reduction equals the excess aggregate contributions amount. If
further reductions are necessary then such Matching Contributions on behalf of each Participant who is a highly compensated employee and whose actual dollar amount of Matching Contributions made for
such Plan Year is the highest (determined after the reduction described in the preceding sentence) shall be reduced in accordance with the preceding sentence. Such reductions shall continue to be made
to the extent necessary so that the total reduction equals the excess aggregate contributions amount. 

    (B) Corrective Distributions and Forfeitures.  With respect to the Matching Contributions to be reduced
on behalf of Participants who are highly compensated employees as described in subparagraph (2)(A) above, the Committee shall distribute within 21/2 months after the end of the Plan
Year for which the adjustment is made, if possible, but no later than the last day of the subsequent Plan Year, the portion of such Matching Contributions plus any income and minus any loss allocable
thereto in which the Participant would be vested if he or she terminated employment on the last day of such Plan Year (or earlier if such Participant actually terminated employment at any earlier
date), and the portion of such Matching Contributions in which the Participant would not be vested plus any income and minus any loss allocable thereto shall be forfeited. The amount of any income or
loss allocable to any such reductions to be so distributed or forfeited shall be determined pursuant to applicable regulations promulgated by the U.S. Department of Treasury. Any amounts forfeited
pursuant 

11

 

to this paragraph shall be treated in the same manner as forfeitures described in Section 8.3(c). The unadjusted amount of any such reductions so distributed shall be treated as "annual
additions" for purposes of Section 7.5 relating to the limitations under section 415 of the Code. 

    (3)  Adjustments to Comply with the Aggregate Limit.  If, after making the adjustments required by
paragraphs (1) and (2) of this subsection for a Plan Year, the Committee determines that the sum of the Average Deferral Percentage and the Average Contribution Percentage for the group
consisting of Participants who are highly compensated employees exceeds the Aggregate Limit for such Plan Year, then the Committee shall adjust the Salary Deferral Contributions made for such Plan
Year on behalf of each Participant who is a highly compensated employee to the extent necessary to eliminate such excess. Such adjustment shall be effected in the same manner described in
paragraph (1) of this subsection and in accordance with section 401(k)(8)(B) of the Code. In the event that further reductions are necessary, the Committee shall adjust the Matching
Contributions made pursuant to Section 4.4 for such Plan Year on behalf of each Participant who is a highly compensated employee to the extent necessary to eliminate such excess. Such
adjustment shall be effected in the same manner described in paragraph (2) of this subsection and in accordance with section 401(m)(6)(B) of the Code. 

    (f)  Designation of Qualified Nonelective Contributions and Qualified Matching Contributions.  Each Plan
Year, the Committee may require some or all of the Employers to make, to the extent permitted by the Secretary of the U.S. Department of Treasury, a "qualified nonelective contribution," within the
meaning of section 401(m)(4)(C) of the Code, or a "qualified matching contribution," within the meaning of U.S. Treasury Regulation §1.401(k)-1(b)(5), to the Plan for
purposes of applying the tests set forth in Section 4.5(a) or (b) (or both). Any qualified nonelective contribution to the Plan shall be allocated to the accounts of those Participants
who are not highly compensated employees (as defined in Section 4.5(d)) for the Plan Year with respect to which such qualified nonelective contribution is made and who are actively employed by
the contributing Employer on the date such contribution is made, beginning with the Participant with the lowest Compensation for such Plan Year and allocating the maximum amount permissible under
Section 7.5 of the Plan before allocating any portion of such qualified nonelective contribution to the Participant with the next lowest Compensation. Such allocation shall continue until the
Plan satisfies the requirements in Section 4.5(a) and (b) of the Plan or until the amount of such qualified nonelective contribution has been completely allocated. Qualified matching
contributions shall be allocated to the accounts of Participants who are not highly compensated employees (as defined in Section 4.5(d)) for the Plan Year with respect to which such qualified
matching contribution is made and who are actively employed on the date such contribution is made as a percentage of all or a portion of each such employee's Salary Deferral Contributions as shall be
designated by the Company. 

    Section 4.6.  Limitation on Employer Contributions.  The contributions of an Employer for any Plan
Year shall not exceed the maximum amount for which a deduction is allowable to such Employer for federal income tax purposes for the fiscal year of such Employer that ends with or within such Plan
Year. 

12

  

    Any
contribution made by an Employer by reason of a good faith mistake of fact, or the portion of any contribution made by an Employer that exceeds the maximum amount for which a
deduction is allowable to such Employer for federal income tax purposes by reason of a good faith mistake in determining the maximum allowable deduction, shall upon the request of such Employer be
returned by the Trustee to the Employer. An Employer's request and the return of any such contribution must be made within one year after such contribution was mistakenly made or after the deduction
of such excess portion of such contribution was disallowed, as the case may be. The amount to be returned to an Employer pursuant to this paragraph shall be the excess of (i) the amount
contributed over (ii) the amount that would have been contributed had there not been a mistake of fact or a mistake in determining the maximum allowable deduction. Earnings attributable to the
mistaken contribution shall not be returned to the Employer, but losses attributable thereto shall reduce the amount to be so returned. If the return to the Employer of the amount attributable to the
mistaken contribution would cause the balance of any Participant's account as of the date such amount is to be returned (determined as if such date coincided with the close of a Plan Year) to be
reduced to less than what would have been the balance of such account as of such date had the mistaken amount not been contributed, the amount to be returned to the Employer shall be limited so as to
avoid such reduction. 

 
 

ARTICLE 5
  
    ROLLOVER CONTRIBUTIONS    
  

    Section 5.1.  Requirements for Rollover Contributions.   If an Employee receives an eligible
rollover distribution (within the meaning of section 402(c)(4) of the Code) from a qualified trust (within the meaning of section 402(c)(8)(A) of the Code), then such Employee may
contribute to this Plan an amount which does not exceed the amount of such eligible rollover distribution. If an Employee receives a distribution or distributions from an individual retirement account
(within the meaning of section 408 of the Code) and the amount received represents the entire amount in such account and no amount in such account is attributable to any source other than an
eligible rollover distribution or a "qualified total distribution" (within the meaning of section 402(a)(5)(E)(i) of the Code as in effect prior to January 1, 1993) and any
earnings on such a rollover contribution, then such Employee may contribute to this Plan such distribution or distributions. An Employee may make a Rollover Contribution pursuant to this Article prior
to the date on which he or she satisfies the eligibility requirement described in Section 3.1. 

    Section 5.2.  Delivery of Rollover Contributions.  Any Rollover Contribution made pursuant to this
Article shall be delivered by the Participant to the Committee and by the Committee to the Trustee on or before the 60th day after the day on which the Participant receives the distribution, or on or
before such later date as may be prescribed by law. Any such contribution must be accompanied by (i) a statement of the Participant that to the best of his or her knowledge the amount so
transferred meets the conditions specified in this Section and (ii) a copy of such documents as may have been received by the Participant advising him or her of the amount of and the character
of such distribution. Notwithstanding the foregoing, the Committee shall not accept a Rollover Contribution if in its judgment accepting such contribution would cause the Plan to violate any provision
of the Code or regulations promulgated by the U.S. Department of Treasury. 

    Section 5.3.  Special Accounting Rules for Rollover Contributions.  An Employee's Rollover
Contribution shall be credited to such Employee's Rollover Account as of the date on which such contribution is received by the Trustee. If such contribution is made by an Employee prior to his or her
becoming a Participant, then until such time as the Employee becomes a Participant he or she shall be deemed to be a Participant for all purposes of the Plan except for the purposes of electing Salary
Deferral Contributions and sharing in allocations of Profit Sharing Contributions, Matching Contributions or any other Employer contributions pursuant to Article 4. Upon making a Rollover 

13

 

Contribution to the Plan as described in this Article 5, an Employee shall make an investment election in the time and manner prescribed by the Committee (in multiples established by the
Committee from time to time) which shall apply to the investment of such Rollover Contribution. Notwithstanding anything contained herein to the contrary, any future changes in investment elections
made pursuant to Section 7.1(c)(i) shall supersede the original investment election applicable to any Rollover Contribution made pursuant to this Section 5.3. The "annual
additions" to a Participant's accounts, as defined in Section 7.5, shall not include any Rollover Contribution made to the Plan pursuant to this Article. 

 
 

ARTICLE 6
  
    TRUST AND INVESTMENT FUNDS    
  

    Section 6.1.  Trust.  A Trust created by the execution of a trust agreement between the Company
(acting on behalf of the Employers pursuant to Section 12.4) and the Trustee has been established to receive, hold, invest and dispose of the assets of the Trust Fund. All contributions under
the Plan shall be paid to the Trustee. The Trustee shall hold all monies and other property received by it and invest and reinvest the same, together with the net income therefrom, on behalf of the
Participants collectively in accordance with the provisions of the trust agreement. The Trustee shall make distributions from the Trust Fund at
such time or times to such person or persons and in such amounts as the Committee directs in accordance with the Plan. 

    Section 6.2.  Investment Funds.  

    (a)  In General.  The Committee shall cause the Trustee to establish, operate and
maintain three or more separate investment funds exclusively for the collective investment and reinvestment of moneys directed by the Participants to be invested in such funds on their behalf.
Additional investment funds may be established as determined by the Committee from time to time, in its sole discretion. 

    (b)  Company Stock Fund.  The Committee shall cause the Trustee to establish, operate and maintain a Company Stock Fund.
The assets of the Company Stock Fund shall be invested primarily in shares of Company Stock and short-term liquid investments in a commingled money market fund maintained by the Trustee,
to the extent determined by the Trustee to be necessary to satisfy such fund's cash needs. In making purchases or sales of shares of Company Stock for the Company Stock Fund, the Trustee shall
purchase or sell shares of Company Stock in the manner and in the proportion as prescribed by the Committee in accordance with rules adopted for such purpose. 

 
 

ARTICLE 7
  
    PARTICIPANT ACCOUNTS    
  

    Section 7.1.  Participant Accounts and Investment Elections.  

    (a)  Participant Accounts.  Separate accounts shall be maintained for each
Participant. The accounts maintained for a Participant, to the extent applicable, shall consist of (i) a Profit Sharing Account, to which shall be credited the portion of the Participant's
account balance attributable to Profit Sharing Contributions made prior to the Merger Date and all Profit Sharing Contributions made on behalf of the Participant pursuant to Section 4.1,
(ii) a Salary Deferral Contributions Account, to which shall be credited all Salary Deferral Contributions made pursuant to Section 4.2, (iii) a Matching Contributions Account, to
which shall be credited all Matching Contributions made pursuant to Section 4.4, (iv) a Rollover Account, to which shall be credited all Rollover Contributions made pursuant to
Article 5, (v) an After-Tax Account, to which shall be credited all after-tax contributions transferred to the Plan from the FHC Plan and the QualMed Plan (or any
other plan qualified under section 401(a) of the Code), (vi) a Qualified Nonelective Contribution Account and (vii) a Qualified 

14

 

Matching Contribution Account. Unless the context otherwise requires, a Participant's "account balance" shall mean the aggregate value of all separate accounts maintained for such Participant pursuant
to the Plan and Trust. A Participant shall be fully vested at all times in his or her Salary Deferral Contributions Account, Rollover Account, After-Tax Account, Qualified Nonelective
Contribution Account and Qualified Matching Contribution Account under the Plan. A Participant shall be vested in his or her Profit Sharing Account and Matching Contributions Account only to the
extent provided in Section 8.1. Each account shall, to the extent appropriate, be composed of (i) investment subaccounts in respect of each investment fund to which amounts contributed
under the Plan shall be credited pursuant to subsections (b), (c) and (d) of this Section and (ii) administrative subaccounts in respect of accounts transferred to the Plan from
other plans qualified under section 401(a) of the Code. Such accounts and subaccounts shall be solely for accounting purposes, and there shall be no segregation of assets of the Trust or of any
separate investment fund among separate accounts. The books of account, forms and accounting methods used in the administration of Participants' accounts shall be the responsibility of, and shall be
subject to the supervision and control of, the Committee. 

    (b)  Initial Investment Election.  Except as set forth in Sections 5.3 and 7.2, each Participant, as part
of his or her commencement of participation shall make an investment election, in the time and manner prescribed by the Committee, that shall apply to the investment of (i) Profit Sharing
Contributions credited to such Participant's account and any earnings thereon, (ii) Salary Deferral Contributions made on such Participant's behalf under the Plan, and any earnings thereon,
(iii) Matching Contributions made on such Participant's behalf under the Plan, and any earnings thereon, (iv) Rollover Contributions made by the Participant under the Plan and any
earnings thereon and (v) any qualified nonelective contributions or qualified matching contributions and any earnings thereon. A single investment election shall apply to all such contributions
and earnings thereon, unless the Committee prescribes rules for separate investment elections to be made with respect to any such contributions and earnings. Such elections shall specify that such
contributions, and earnings thereon, be invested either (i) wholly in one of the funds maintained or employed by the Trustee pursuant to Section 6.2(a) or (ii) divided among such
funds in multiples established by the Committee from time to time. During any period in which no direction as to the investment of a Participant's account is on file with the Committee, contributions
made by such Participant or on his or her behalf to the Plan shall be invested in such manner as the Committee shall determine. 

    (c)  Change of Investment Election.  Except as set forth in Section 7.2, a Participant may elect
to change his or her investment election at such intervals as may be determined by the Committee in the time and the manner prescribed by the Committee (in multiples established by the Committee from
time to time). Such change shall be limited to the investment funds then maintained or employed by the Trustee pursuant to Section 6.2(a). A Participant may change his or her investment
election in the time and manner designated by the Committee among the funds maintained pursuant to Section 6.2(a), with respect to (i) contributions and earnings thereon made on behalf
of or by the Participant under Article 4 or Article 5 prior to such change, (ii) to future contributions made pursuant to such Articles, or (iii) both. 

    Section 7.2.  Investments in Company Stock Fund.  

    (a)  Election of Investments in Company Stock Fund.   Notwithstanding the
provisions of Section 7.1: 

	(1)
	A
Participant's election to invest any portion of his or her account balance in the Company Stock Fund shall apply only to contributions made to the Plan on and after the date such
election becomes effective. 

15

 

	(2)
	The
percentage of any contribution that is invested in the Company Stock Fund shall not exceed 20%, or such other percentage as may be prescribed by the Committee from time to time.

	(3)
	An
Employee whose compensation is determined by the Compensation and Stock Option Committee pursuant to the bylaws of the Company shall not be permitted to elect the investment of
any portion of his or her account balance in the Company Stock Fund.

	(4)
	Profit
Sharing Contributions credited to a Participant's account for Plan Years beginning prior to January 1, 1998 shall be invested in the Company Stock Fund, and shall not
be subject to the election of such Participant. 

    (b)  Crediting of Company Stock Fund Subaccount.  As of the Valuation Date coinciding with or next
following the date an amount is credited to a Company Stock Fund subaccount, such subaccount shall be credited with the number of whole and fractional shares of Company Stock which have a fair market
value as of such Valuation Date equal to the amount credited to such subaccount. For this purpose, the price of each share of Company Stock shall be the average of the prices paid by the Trustee for
shares of Company Stock on such Valuation Date. 

    Section 7.3.  Valuation of Funds and Plan Accounts.   The value of an investment fund as of any
Valuation Date shall be the market value of all assets (including any uninvested cash) held by the fund as determined by the Trustee, reduced by the amount of any accrued liabilities of the fund on
such Valuation Date. The Trustee's determination of market value shall be binding and conclusive upon all parties. 

    The
value of a Participant's Plan accounts as of any Valuation Date shall be the sum of the values of his or her investment subaccounts in each of the Participant's Profit Sharing
Account, Salary Deferral Contributions Account, Matching Contributions Account, Rollover Account, After-Tax Account, Qualified Nonelective Contributions Account and Qualified Matching
Contributions Account. The Committee shall furnish to each Participant, not less frequently than annually, a statement setting forth the balances in the Plan accounts of such Participant. 

    Section 7.4.  Allocation of Contributions and Forfeitures Among Participants' Accounts.  

    (a)  Allocation of Profit Sharing Contributions.  A portion of a Profit Sharing
Contribution made by an Employer pursuant to Section 4.1 for a Plan Year shall be allocated to the Profit Sharing Account of each Participant who was an Employee of the Employer that made such
Profit Sharing Contribution and who (i) was an Eligible Employee on the last day of the Plan Year, (ii) first incurred a Disability within such Plan Year or (iii) terminated
employment with the Employer during the Plan Year on account of death or after attaining age 55. Such portion shall be allocated to each such Participant's Profit Sharing Account in proportion to the
Participant's Compensation payable by such Employer for the Plan Year compared to the Compensation payable for the Plan Year to either (i) all Participants employed by such Employer or
(ii) all Participants employed by the Employers, as determined by the Company. Profit Sharing Contributions shall be allocated to the Profit Sharing Account of each such Participant as of the
date on which such contributions are delivered to the Trustee. 

    (b)  Allocation of Salary Deferral Contributions.  A Participant's Salary Deferral Contributions made
pursuant to Section 4.2 shall be allocated to the Participant's Salary Deferral Contributions Account as of the date on which such contributions are delivered to the Trustee. 

    (c)  Allocation of Matching Contributions.  Matching Contributions made pursuant to Section 4.4
shall be allocated to the Matching Contributions Account of each Participant for whom such contributions are made as of the date on which such contributions are delivered to the Trustee. 

16

 

    (d)  Allocation of Rollover Contributions.  Subject to the special accounting rules contained in
Section 5.3, a Rollover Contribution made pursuant to Article 5 shall be allocated to the Rollover Account of the Participant who makes such contribution as soon as practicable after the
date on which such contribution is delivered to the Trustee. 

    (e)  Allocation of Forfeitures.  The excess, if any, of (i) the amounts forfeited in a Plan Year
pursuant to Section 8.1(c) by all Participants employed by an Employer over (ii) the amount of such forfeitures applied to restore previous forfeitures as provided in
Section 9.3(b) shall be allocated and credited to Profit Sharing Accounts in the next following Plan Year in the manner described in subsection (a) above, so as to reduce the amount
which such Employer contributes to the Plan in such Plan Year pursuant to Section 4.1. If such forfeited amounts exceed the amount of such Employer's Profit Sharing Contribution for such Plan
Year, then any remaining forfeited amounts shall be allocated to the Matching Contribution Accounts of Participants employed by such Employer during such Plan Year, in the manner described in
subsection (c) above, so as to reduce the amount which such Employer contributes to the Plan for such Plan Year pursuant to Section 4.4. 

    Section 7.5.  Statutory Limitations on Allocations to Accounts.  Notwithstanding any other
provision of the Plan, the amount allocated to a Participant's accounts under the Plan for each Plan Year shall be limited as follows: 

    (1) the
aggregate annual additions to such accounts and to the Participant's accounts in all other defined contribution plans maintained by an employer shall not exceed
the lesser of (A) $30,000 (as adjusted in accordance with section 415(d) of the Code) and (B) twenty-five percent (25%) of the Participant's compensation for such Plan
Year; and 

    (2) with
respect to Plan Years commencing prior to January 1, 2000, the sum of (A) and (B) below shall not exceed 1. 

    (A) The
sum of the separate amounts determined as follows for each Plan Year during which the Participant shall have participated in the Plan or in any other defined
contribution plans maintained by an employer (computed as of the close of the Plan Year for which such computations are made): 

    (I) the
aggregate annual additions to the Participant's accounts in all of such plans for each such Plan Year, divided by 

    (II) the
lesser of (i) 125 percent (125%) of the maximum dollar amount under section 415(c)(1)(A) of the Code, and (ii) 35 percent
(35%) of the Participant's compensation, for each such Plan Year, respectively. 

    (B) The
aggregate projected annual benefit of the Participant under all defined benefit plans maintained by an employer (determined as of the close of the Plan Year for
which such computations are made) divided by the lesser of 

    (I) 125 percent
(125%) of the maximum dollar limitation contained in section 415(b)(1)(A) of the Code (as adjusted for increases in the
cost-of-living pursuant to section 415(d) of the Code), and 

    (II) 140 percent
(140%) of the average of the Participant's compensation for the three consecutive calendar years of his or her participation in such defined
benefit plans during which his or her compensation was the highest. 

    If
as a result of the allocation of amounts to Participant's accounts pursuant to Section 7.4 for a Plan Year, a reasonable error in estimating a Participant's compensation, a
reasonable error in determining the amount of elective deferrals (within the meaning of section 402(g)(3) of the Code) that may be made with respect to a Participant under the limits of
section 415 of the Code, or under other 

17

 

limited facts and circumstances as determined by the Commissioner of Internal Revenue, the annual additions to a Participant's accounts would exceed the limitations set forth above for any Plan Year: 

    (i)  Salary
Deferral Contributions made pursuant to Section 4.2 (plus any income and minus any loss allocable thereto) shall be distributed to the Participant to
the extent necessary to comply with such limitations, and if such limitations would still be exceeded after returning such contributions, 

    (ii) the
amount of annual additions in excess of such limitations (after making the distributions under clause (i) above) shall be held in a segregated suspense
account which shall be invested but shall not be credited or debited with its own gains or losses and shall not share in gains or losses of the Trust, and which shall be treated in each succeeding
Plan Year until exhausted as a Matching Contribution or Profit Sharing Contribution, thereby reducing amounts actually contributed by the Employer for such year. The balance, if any, in such suspense
account shall be returned to the Employer upon termination of the Plan only if the allocation upon Plan termination of such amount to Participants would cause all Participants to receive annual
additions in excess of the limitations of section 415 of the Code. 

    For
purposes of this Section 7.5, the "annual additions" for a Plan Year to a Participant's accounts under the Plan and under any other defined contribution plan maintained by
an employer is the sum during such Plan Year of: 

    (i)  the
value of allocations made to such Participant's accounts pursuant to Section 7.4 including any Excess Salary Deferral Contributions distributed in
accordance with Section 4.3), 

    (ii) the
amount of all other employer contributions (within the meaning of section 415(c) of the Code) and forfeitures, if any, allocated to such Participant's
accounts under all other defined contribution plans maintained by an employer, 

    (iii) the
amount of contributions by the Participant to any such plan (excluding any rollover contributions as defined in sections 402(c), 403(a)(4), 403(b)(8) and
408(d)(3) of the Code), and 

    (iv) contributions
allocated on behalf of the Participant to any individual medical benefit account that is part of a pension or annuity plan within the meaning of
section 415(l) of the Code. 

For
purposes of this Section 7.5, the terms "compensation," "defined contribution plan," "projected annual benefit" and "defined benefit plan" shall have the meanings set forth in
section 415 of the Code (as amended from time to time), and the term "employer" shall include all corporations and entities determined under section 414(b) and (c) of the Code as
modified by section 415(h) of the Code. 

    Section 7.6.  Correction of Error.   If it comes to the attention of the Committee that an error
has been made in any of the allocations prescribed by this Article 7 or in the crediting of any amount to a Participant's account or in any other manner, then appropriate adjustment shall be
made to the accounts of all Participants and designated Beneficiaries that are affected by such error, except that no adjustment need be made with respect to any Participant or Beneficiary whose
account has been distributed in full prior to the discovery of such error. Correction of such error may be made by any method deemed appropriate by the Committee applied in a nondiscriminatory manner
and may include discretionary or nonelective contributions by an Employer. 

18

  

 
 

ARTICLE 8
  
    WITHDRAWALS, LOANS AND DISTRIBUTIONS    
  

    Section 8.1.  Vesting.  

    (a)  In General.  A Participant who terminates employment after the Effective
Date shall be entitled upon his termination of employment to the entire balance of the Participant's Salary Deferral Contributions Account, Rollover Account, After-Tax Account, Qualified
Nonelective Contributions Account and Qualified Matching Contributions Account, and a percentage of his or her Profit Sharing Account and Matching Contributions Account determined by reference to the
number of the Participant's years of Service, in accordance with the following schedule: 

	Years of Service
 
	 	Percentage of Profit Sharing and

Matching Contributions Accounts
	 
	less than 1	 	0	%
	at least 1, but less than 2	 	25	%
	at least 2, but less than 3	 	50	%
	3 or more	 	100	%

Notwithstanding
the foregoing, a Participant shall become 100% vested in his account balance upon his death, attainment of age 55 or, when the Committee makes a determination that the Participant has
a Disability. 

    (b)  Grandfathered Vesting Schedules.  Each Eligible Employee who was a participant in the FHC Plan
immediately prior to the Effective Date of the September 1, 1997 amendment and restatement of the
Plan and had commenced employment with an employer in the FHC Plan prior to January 1, 1995 shall be vested in his or her Profit Sharing Account and Matching Contributions Account in accordance
with the following schedule: 

	Years of Service
 
	 	Percentage of Profit Sharing and

Matching Contributions Accounts
	 
	less than 1	 	0	%
	at least 1, but less than 2	 	34	%
	at least 2, but less than 3	 	67	%
	3 or more	 	100	%

The
vesting schedule set forth in this paragraph (ii) shall not apply, however, to any participant in the FHC Plan who was employed by Intergroup HealthCare Corporation of Utah, Intergroup
HealthCare Corporation of Arizona, Gem Holding Company (or any of its affiliates) or CareFlorida on the date that Foundation Health Corporation first owned, directly or indirectly, at least 80% of the
stock of such Employer. 

    (c)  Forfeitures.  If upon a Participant's termination of employment the Participant is not fully vested
in the balance of his or her Profit Sharing Account or Matching Contributions Account, then the difference between the value of each such account and the amount distributable with respect thereto
under subsection (a) or (b) of this Section shall be charged to such account and forfeited. Such forfeiture shall occur as of the Valuation Date coinciding with or next following the
earlier of (i) the date the Participant takes a distribution of his or her vested interest in such account as provided in Section 8.5 and (ii) the date as of which the Participant
incurs a Break in Service of five consecutive years. For purposes of the preceding sentence, a Participant who does not have a vested interest in his or her Profit Sharing Account or Matching
Contributions Account (or both) shall be deemed to have received a distribution of such account as of the date of such Participant's termination of employment. 

19

 

If such Participant is reemployed prior to incurring a Break in Service of five consecutive years, then such forfeiture shall be reinstated as prescribed in Section 9.3(b). 

    Section 8.2.  Withdrawals Prior to Termination of Employment.  

    (a)  Withdrawals of After-Tax and Rollover Accounts. While a Participant is an
Employee, the Participant may at any time, by instructions at the time and in the manner prescribed by the 401(k) Administrator, make a request to withdraw all or any part of the value of the balances
credited to his or her After-Tax Account and Rollover Account. A Participant shall not be permitted to withdraw any portion of his or her After-Tax Account or earnings thereon
more frequently than once during any calendar year. 

    (b)  Withdrawals After Age 591/2.  Upon attaining age 591/2, a Participant
may at any time, by instructions at the time and in the manner prescribed by the 401(k) Administrator, make a request to withdraw any portion of the Participant's vested interest in his or her
accounts under the Plan. 

    (c)  Hardship Withdrawals.  A Participant who has incurred a financial hardship while he or she is an
Employee and who has not attained age 591/2 may withdraw any portion of the balance of his or her Salary Deferral Contributions Account and any portion of the Participant's vested
interest in his or her Matching Contributions Account in an amount necessary to satisfy the financial hardship, provided that such portion is not held
as collateral for an outstanding plan loan. The determination of whether a financial hardship exists and the amount required to be distributed to satisfy the need created by the hardship will be made
by the 401(k) Administrator in a uniform and non-discriminatory manner according to the following rules: 

    (A) A
financial hardship shall be deemed to exist if the Participant certifies to the 401(k) Administrator that the financial need is on account of: 

    (i)  expenses
for medical care described in section 213(d) of the Code previously incurred by the Participant, the Participant's spouse, or any dependents of the
Participant (as defined in section 152 of the Code) or necessary for these persons to obtain medical care described in section 213(d) of the Code; 

    (ii) costs
directly related to the purchase of a principal residence for the Participant (excluding mortgage payments); 

    (iii) payment
of tuition, related educational fees, and room and board expenses, for the next 12 months of post-secondary education for the
Participant, the Participant's spouse, the Participant's children, or any dependents of the Participant (as so defined); 

    (iv) payments
necessary to prevent the eviction of the Participant from the Participant's principal residence or foreclosure on the mortgage on that residence; or 

    (v) such
other immediate and heavy financial needs as determined by the Commissioner of the Internal Revenue Service and announced by publication of revenue rulings,
notices or other documents of general applicability. 

    (B) A
distribution shall be deemed necessary to satisfy a financial need if (i) the distribution is not in excess of the amount of the immediate and heavy
financial need to the Participant, as determined by the 401(k) Administrator, and (ii) the Participant has obtained all distributions (including withdrawals from the Participant's
After-Tax Account and Rollover Account), other than hardship distributions, and all nontaxable loans currently available under all plans maintained by the Participant's Employer, if any.
The Participant shall be required to submit any supporting documentation as may be requested by the 401(k) Administrator. 

    (C) Notwithstanding
any provision of the Plan to the contrary, a Participant who receives a hardship distribution hereunder shall be prohibited from making any Salary
Deferral Contributions 

20

 

under Section 4.2 until the first payroll period following the first Entry Date which is at least 12 months after the date of the hardship distribution. Such a Participant may elect to
resume making Salary Deferral Contributions in accordance with the procedures established by the 401(k) Administrator pursuant to Section 4.2. For purposes of Section 4.3, the applicable
limit for the Plan Year following the Plan Year in which the hardship distribution is made shall be the limit as in effect under section 402(g) of the Code for such year less the amount of
Salary Deferral Contributions made by the Participant under Section 4.2 during the Plan Year in which the hardship distribution is made. 

    (D) Notwithstanding
anything herein to the contrary, earnings after December 31, 1988 credited to a Participant's Salary Deferral Contributions Account shall not
be available for withdrawal pursuant to this subsection. The Participant shall give the 401(k) Administrator notice of such Participant's intent to make any such withdrawal permitted by this
subsection in the time and manner prescribed by the 401(k) Administrator. 

    (d)  Miscellaneous Rules Relating to Withdrawals.  For purposes of determining the value of a
Participant's account balance under the Plan for purposes of this Section, the Participant's account balance shall be valued as of the date the Participant's request for a withdrawal is received by
the 401(k) Administrator in acceptable form and substance, or such other date prescribed by the 401(k) Administrator in conjunction with the Plan's recordkeeper (such date to be applied in a uniform
manner), and shall be paid within a reasonable period of time after the withdrawal request is received by the recordkeeper. All withdrawals under this Section shall be paid in cash. For purposes of
this paragraph, the value of a Participant's accounts shall be determined by excluding the portion credited to the Participant's loan fund subaccount under Section 8.3(b), if any. To the extent
permitted by the 401(k) Administrator, a Participant who elects a withdrawal under this Section shall designate the extent to which any such withdrawal shall be made from the various investment funds
in which his or her account balance is invested, but absent any such designation such withdrawal shall be made from such funds as the 401(k) Administrator shall, in its sole discretion, determine. The
amount of any withdrawal pursuant to this Section shall not be less than $500 or, if lesser, the value of the Participant's account from which the withdrawal is made. Notwithstanding the foregoing, a
Participant whose compensation is determined by the Compensation and Stock Option Committee pursuant to the by-laws of the Company shall not be permitted to elect a withdrawal pursuant to
this Section 8.2 from such Participant's Profit Sharing Contributions Account to the extent such account is invested in the Company Stock Fund. 

    Section 8.3.  Loans to Participants.  

    (a)  Making of Loans.  Subject to the restrictions set forth in this Section, the
401(k) Administrator shall establish a loan program whereby any Participant who is an Employee may request pursuant to procedures established by the 401(k) Administrator, to borrow funds from the
Plan. The principal balance of such loan shall be not less than $1,000 and shall not exceed the lesser of (1) 50 percent (50%) of the aggregate of the Participant's vested account
balances as of the Valuation Date coinciding with or immediately preceding the day on which the loan is made, and (2) $50,000, reduced by the excess, if any, of the highest outstanding loan
balance of the Participant under all plans maintained by the Employer during the period of time beginning one year and one day prior to the date such loan is to be made and ending on the date such
loan is to be made over the outstanding balance of loans from all such plans on the date on which such loan was made. 

    (b)  Restrictions.  Amounts equal to any such loan shall be debited proportionately from each of the
Participant's accounts and investment subaccounts (other than subaccounts invested in the Company Stock Fund), subject to any other ordering rules adopted by the Committee. Each loan 

21

 

approved by the 401(k) Administrator shall be subject to the loan program and only upon the following terms and conditions: 

    (1) The
period for repayment of the loan shall not exceed five years from the date of the loan; provided, however, that
if the purpose of the loan, as determined by the 401(k) Administrator, is to acquire any dwelling unit that within a reasonable period of time is to be used as the principal residence of the
Participant, then such period for repayment may exceed five (5) years to the extent permitted by the 401(k) Administrator, but not to exceed 15 years. 

    (2) Each
loan shall be secured by an assignment of a portion of the Participant's vested benefit under the Plan at least equal to the initial principal amount of such
loan and such other collateral as may be required by the 401(k) Administrator. 

    (c)  Applicability.  The provisions of this Section 8.3 shall apply to any person who is a
Participant but who is not an Employee and any Beneficiary of a deceased Participant if such Participant or Beneficiary is a "party in interest" as defined in section 3(14) of ERISA. The grant
of a loan pursuant to this Section 8.3 and the terms and conditions thereof shall apply to any such Participant or Beneficiary in the same manner as to a Participant who is an Employee, except
that the requirements of Section 8.3(b)(2) shall be met with respect to each such Participant and Beneficiary if such Participant or Beneficiary consents to have such loan repaid in
substantially equal installments as determined by the 401(k) Administrator, but not less frequently than quarterly. 

    Section 8.4.  Distribution Upon Termination of Employment.  Except as provided in Sections 8.1(b)
and 8.10, a Participant or his or her designated Beneficiary, as the case may be, shall be entitled to receive the Participant's entire vested account balance as soon as administratively practicable
following the date of the Participant's termination of employment. 

    Section 8.5.  Time and Form of Distribution upon Termination of Employment.  

    (a)  Normal Form of Distribution.  Unless a Participant or a Beneficiary elects
an optional form of distribution as described in subsection (b), any distribution upon termination of a Participant's employment shall be made by the Trustee at the direction of the 401(k)
Administrator by payment in a lump sum in cash. 

    (b)  Optional Forms of Distribution.  (1) A Participant who has completed at least one Hour of
Service after August 22, 1984 and whose Plan accounts contain amounts transferred to the HSI Plan prior to the Merger Date from a qualified plan (within the meaning of sections 501(a) and
401(a) of the Code) may elect to receive a distribution of the vested portion of his or her Plan accounts in the form of a single premium annuity in an amount equal to such transferred amounts. Such
an annuity shall provide for payments over the life of the Participant, if the Participant is not married, or the joint lives of the Participant and the Participant's spouse if the Participant is
married. An annuity providing for payments over the joint lives of the Participant and the Participant's spouse shall provide for equal monthly payments for the Participant's life, and after the
Participant's death, for monthly payments equal to 50 percent (50%) of such payments for the life of the Participant's spouse. A Participant who elects a distribution in the form of an annuity
shall be subject to the election procedures described in Section 8.6. 

    (2)
A Participant who immediately prior to the Merger Date was a participant in the FHC Plan and who on the Merger Date is a Participant in the Plan may elect to receive a
distribution of the vested portion of his or her Plan accounts in an amount equal to the Participant's account balance in the FHC Plan immediately prior to the Merger Date in a series of quarterly,
semiannual or annual installments of substantially nonincreasing designated amounts over a period of years certain. The amount of each installment payment shall be adjusted, in accordance with the
payment frequency elected by the Participant, so that the Participant's account is exhausted as of the end of the payment period. 

22

 

    (3) A Participant who (i) immediately prior to the Merger Date was a participant in the FHC Plan, (ii) participated in the FHC Plan before January 1, 1997, and
(iii) is a Participant in the Plan on the Merger Date may elect to receive a distribution hereunder in the form of a single premium annuity in an amount equal to balance of the Participant's
Plan accounts on the Merger Date. Such an annuity shall provide for payments over the life of the Participant or the joint lives of the Participant and a Beneficiary designated by the Participant. An
annuity providing for payments over the joint lives of the Participant and the Participant's Beneficiary shall provide for equal monthly payments for the Participant's life, and after the
Participant's death, for monthly payments equal to 50 percent (50%) of such payments for the life of the Participant's Beneficiary. A Participant who elects a distribution in the form of an
annuity shall be subject to the election procedures described in Section 8.6. 

    (4)
Participant who (i) immediately prior to the Merger Date was a participant in the FHC Plan with an account balance attributable to his or her employment by Managed Health
Network, Inc. prior to January 1, 1997 and (ii) is a Participant in the Plan on the Merger Date may elect to have the balance of his or her Plan accounts on the Merger Date be
used to purchase one of the following two types of annuity contracts: 

    (A) A
ten year certain and life annuity providing equal monthly payments for the Participant's life, and in the event the Participant dies before 120 monthly
payments have been paid, annuity payments in the same amount to the Participant's Beneficiary commencing on the first day of the month following the month in which the Participant's death occurs and
continuing until an aggregate of 120 monthly payments have been made to the Participant and the Participant's Beneficiary. 

    (B) A
single premium annuity providing for payments over the life of the Participant, if the Participant is not married, or the joint lives of the Participant and the
Participant's spouse if the Participant is married. An annuity providing for payments over the joint lives of the Participant and the Participant's Beneficiary shall provide for equal monthly payments
for the Participant's life, and after the Participant's death, for monthly payments equal to 100 percent (100%) of such payments for the life of the Participant's Beneficiary. 

A
Participant who elects an annuity contract described in either paragraph (A) or (B) shall be subject to the election procedures described in Section 8.6. 

    (c)  Small Benefits Payable in Lump Sum.  Notwithstanding any provision of the Plan to the contrary, if
the vested balance of a Participant's Plan accounts does not exceed $5,000 (or such other amount prescribed by section 411(a)(11) of the Code) (such amount referred to herein as the "small
benefit amount"), then such balance shall be distributed in a lump sum cash payment after the Participant's termination of employment in accordance with administrative practices and procedures. For
purposes of this subsection (c), to the extent required by law, if at the time a Participant is scheduled to receive the first payment in a series of installment payments (as described in
Section 8.4(b)(2)) the value of such Participant's account balance exceeds $5,000, then such account balance will be deemed to exceed $5,000 at the time of any subsequent installment payment. 

    (d)  Time of Distribution.  Except as provided in Section 8.10, upon a Participant's termination
of employment, the payment of a lump sum shall be made, or installment or annuity payments shall commence, as the case may be, as soon as administratively feasible on the Valuation Date occurring on
or immediately after the date on which such termination of employment occurs or at such later time as the Participant or his or her Beneficiary, as the case may be, shall elect, which election may be
changed as of any Valuation Date by advance written notice to the Committee, provided, however, that: 

    (1) subject
to Section 8.5(c), no payments shall be made before the Participant's 65th birthday unless the Participant has consented in writing; 

23

 

    (2) in the case of a Participant who does not elect any distribution to which such Participant becomes entitled upon termination of employment, distribution shall be
made to such Participant by payment in a lump sum no later than 60 days after the end of the Plan Year which contains the later of (i) the date of the Participant's termination of
employment and (ii) the Participant's 65th birthday, and; 

    (3) distributions
commencing after the Participant's death shall be completed within five years after the death of the Participant, except that (i) if the
Participant's Beneficiary is the Participant's spouse, distribution may be deferred until the last day of the Plan Year in which the Participant would have attained age 69 had he or she survived and
(ii) if the Participant's Beneficiary is a natural person other than the Participant's spouse and distributions commence not later than one year after the Participant's death, such
distributions may be made over a period not longer than the life expectancy of such Beneficiary. If at the time of the Participant's death, distribution of the Participant's benefit has commenced, the
remaining portion of the Participant's benefit shall be paid in the manner elected by the Participant's Beneficiary, but at least as rapidly as was the method of distribution being used prior to the
Participant's death; 

    (4) with
respect to a Participant who continues in employment after attaining age 701/2, distribution of the Participant's account balance shall commence
no later than the Participant's required beginning date. For purposes of this paragraph, the term "required beginning date" shall mean (i) with respect to a Participant who is a 5%-owner
(within the meaning of section 416(i) of the Code), April 1 of the calendar year following the calendar year in which the Participant attains age 701/2 and
(ii) with respect to any other Participant, April 1 of the calendar year following the calendar year in which the Participant retires. A Participant who (i) is not a 5%-owner,
(ii) attained age 701/2 before 1997 and (iii) remains in employment with an Employer shall be permitted to elect to cease receiving distributions while the Participant
remains in employment with an Employer. If such distributions are paid in the form of a joint and survivor annuity, however, a Participant may elect to cease such distribution only if the spousal
consent and other applicable requirements of sections 401(a)(11) and 417 of the Code are satisfied. Distributions made under this paragraph shall be made in the form of installment payments in the
minimum amount required by section 401(a)(9) of the Code over a period equal to the life of the Participant, or if applicable, the joint lives of such Participant and the Participant's
Beneficiary. Unless the Participant elects otherwise prior to the date on which payment of installments commence pursuant to this paragraph, such period shall be recalculated annually to the extent
permitted by regulations promulgated by the U.S. Department of Treasury. 

    (e)  Direct Rollover Option.  In the case of a distribution that is an "eligible rollover distribution"
within the meaning of section 402(c)(4) of the Code, a distributee may elect that all or any portion of such distribution to which he or she is entitled shall be directly transferred from the
Plan to an individual retirement account or annuity described in section 408 of the Code, to another retirement plan qualified under section 401(a) of the Code (the terms of which permit
the acceptance of rollover distributions) or to an annuity plan described in section 403(a) of the Code; provided, however, that if the
distributee is a surviving spouse of a Participant, such distribution may be transferred only to an individual retirement account or annuity. Notwithstanding the foregoing, a distributee shall not be
entitled to elect to have
an eligible rollover distribution transferred pursuant to this subsection (i) if the total of all eligible rollover distributions with respect to such distributee for the Plan Year is not
reasonably expected to equal at least $200, or (ii) in the case of a partial direct rollover, the portion so rolled over equals at least $500. For purposes of this subsection, the term
"distributee" shall mean (i) a Participant, (ii) an alternate payee (within the meaning of section 414(p)(8) of the Code) with respect to a Participant under a qualified domestic
relations order or (iii) a surviving spouse of a Participant. 

    (f)  Valuation of Accounts.  For purposes of determining the value of a Participant's account balance
under the Plan for purposes of this Section, the Participant's account balance shall be valued as 

24

 

of the date the Participant's request for a distribution is received by the Committee in acceptable form and substance, or such other date prescribed by the Committee in conjunction with the Plan's
recordkeeper (such date to be applied in a uniform manner). 

    Section 8.6.  Special Rules Relating to Election of Annuity Form of Benefit.  The provisions of
this Section shall apply only to a Participant who is entitled to receive payment of his or her account in an optional annuity form of benefit described in Section 8.5 and makes an election to
receive payment of his or her account in such a form. 

    (a)  QJSA Notice.  No less than 30 days (or such shorter period as may be permitted by regulations
promulgated by the U.S. Department of Treasury, and as determined by the Committee) and no more than 90 days before the date of distribution, the Committee shall give the Participant by mail or
personal delivery written notice a general description of the single premium annuity, a general description of the circumstances under which a single premium annuity contract will be purchased and
general information on the amount of each payment under a typical single premium annuity contract. Such notice also shall advise the Participant that, upon written request to the Committee prior to
the end of his or her election period, the Participant shall be given a written explanation in nontechnical language of the terms and conditions of the single premium annuity contract, of the other
methods of distribution available pursuant to Section 8.5 and of the amount of each payment that he or she would be entitled to receive under such a contract or under the other methods of
distribution. Such explanation shall be mailed or personally delivered to the Participant within 30 days from the date the Participant's written request is received by the Committee and the
Participant's election period shall end no earlier than 90 days after such explanation is so mailed or delivered. 

    (b)  Qualified Pre-Retirement Survivor Annuity.  If the Participant is married and dies after
making an election to have his or her account distributed in an annuity form of benefit but prior to his or her annuity starting date, then such Participant's account shall be applied to purchase a
single premium annuity contract providing for payment over the lifetime of the Participant's surviving spouse.
Notwithstanding the foregoing, the Participant's surviving spouse may elect, in the time and manner prescribed by the Committee, to receive payment of the Participant's account in the form of a single
sum, in lieu of a single premium annuity contract. 

    (c)  Election and Waiver Procedures.  A Participant may, subject to the last sentence of this paragraph,
revoke the annuity form of distribution provided under the Plan at any time during the 90-day period ending on the Participant's benefit commencement date (the "election period"). Such a
revocation shall be made by delivering a written notice describing the election, change or revocation to the Committee on a form provided by the Committee for this purpose;  provided, however, that if
the Participant has been married for the one-year period ending on his or her benefit commencement date, and as a
result of such revocation, the Participant's spouse would not be entitled to receive a survivor's benefit at least equal to that provided by the 50 percent (50%) joint and survivor annuity form
of benefit, such election shall not be effective unless it shall have been consented to, at the time of such election, revocation or change, in writing by the Participant's spouse and such consent
acknowledges the effect of such revocation and is witnessed by either a Plan representative or a notary public, or it is established to the satisfaction of the Committee that such consent cannot be
obtained because the Participant's spouse cannot be located or such other circumstances as may be prescribed in regulations promulgated by the U.S. Department of Treasury. 

    Section 8.7.  Designation of Beneficiary.  Each Participant shall have the right to designate a
Beneficiary or Beneficiaries (who may be designated contingently or successively and that may be an entity other than a natural person) to receive any distribution to be made under Section 8.4
upon the death of such Participant or, in the case of a Participant who dies subsequent to termination of his or her employment but prior to the distribution of the entire amount to which such
Participant is entitled under the Plan, any undistributed balance to which such Participant would have been entitled, provided,  

25

 

 however, that no such designation (or change thereof) shall be effective if the Participant was married through the one-year period ending on the date of the
Participant's death unless such designation (or change thereof) was consented to at the time of such designation (or change thereof) by the person who was the Participant's spouse during such period,
in writing, acknowledging the effect of such consent and witnessed by a notary public or a Plan representative, or it is established to the satisfaction of the Committee that such consent could not be
obtained because the Participant's spouse cannot be located or such other circumstances as may be prescribed in Regulations. Subject to the preceding sentence, a Participant may from time to time,
without the consent of any Beneficiary, change or cancel any such designation. Such designation and each change therein shall be made in the form prescribed by the Committee and shall be filed with
the Committee. If (i) no Beneficiary has been named by a deceased Participant, (ii) such designation is not effective pursuant to the proviso contained in the first sentence of this
Section, or (iii) the designated Beneficiary has predeceased the Participant, any undistributed balance of the deceased Participant's account shall be distributed by the Trustee at the
direction of the Committee (a) to the surviving spouse of such deceased Participant, if any, or (b) if there is no surviving spouse, to the then living children, if any, of the
Participant in equal shares, or (c) if there are no such children, to the executor or administrator of the estate of such deceased
Participant. The marriage of a Participant shall be deemed to revoke any prior designation of a Beneficiary made by him or her and a divorce shall be deemed to revoke any prior designation of the
Participant's divorced spouse if written evidence of such marriage or divorce shall be received by the Committee before distribution of the Participant's account balance has been made in accordance
with such designation. If within a period of three years following the death or other termination of employment of any Participant the Committee in the exercise of reasonable diligence has been unable
to locate the person or persons entitled to benefits under this Article 8, the rights of such person or persons shall be forfeited, provided,
however, that the Plan shall reinstate and pay to such person or persons the amount of the benefits so forfeited upon a claim for such benefits made by such person or persons.
The amount to be so reinstated shall be obtained from the total amount that shall have been forfeited pursuant to this Section 8.7 during the Plan Year that the claim for such forfeited benefit
is made. If the amount to be reinstated exceeds the amount of such forfeitures, the Employer in respect of whose Employee the claim for forfeited benefit is made shall make a contribution in an amount
equal to the remainder of such excess. Any such contribution shall be made without regard to whether or not the limitations set forth in Section 4.6 will be exceeded by such contribution. For
purposes of this Section 8.7 only, an individual who is designated by a Participant as such Participant's life partner and satisfies the conditions established by the Committee to be considered
the life partner of a Participant shall be deemed and treated as married to, and the spouse of, such Participant. Such designation and any changes thereto shall be made in the form and in the time and
manner prescribed by the Committee and shall be filed with the Committee. 

    Section 8.8.  Distributions to Minor and Disabled Distributees.  Any distribution under this
Article that is payable to a distributee who is a minor or to a distributee who, in the opinion of the Committee, is unable to manage his or her financial affairs by reason of illness or mental
incompetency may be made to or for the benefit of any such distributee at such time consistent with the provisions of Section 8.5 and in such of the following ways as the legal representative
of such distributee shall direct: (a) directly to any such minor distributee if, in the opinion of such legal representative, he or she is able to manage his or her financial affairs,
(b) to such legal representative, (c) to a custodian under a Uniform Gifts to Minors Act for any such minor distributee, or (d) to some near relative of any such distributee to be
used for the latter's benefit. Neither the Committee nor the Trustee shall be required to see to the application by any third party other than the legal representative of a distributee of any
distribution made to or for the benefit of such distributee pursuant to this Section. 

    Section 8.9.  Missing Person.  If within a period of three years following the death or other
termination of employment of any Participant the Committee in the exercise of reasonable diligence has been unable to locate the person or persons entitled to benefits under this Article 8,
then the rights 

26

 

of such person or persons shall be forfeited, and, subject to the following sentence, the amount so forfeited shall be used to reduce the Profit Sharing Contributions or Matching Contributions
otherwise made pursuant to Sections 4.1 or 4.4 of the Plan for the Plan Year in which such forfeiture occurs; provided, however, that the Plan shall
reinstate and pay to such person or persons the amount of the benefits so forfeited upon a claim for such benefits made by such person or persons. The amount to be
so reinstated shall be obtained from the total amount that shall have been forfeited pursuant to this Section 8.9 during the Plan Year that the claim for current forfeited benefit is made, or
if such amount is insufficient, from the amounts forfeited pursuant to Sections 4.5(e) and 8.1(c). If the amount to be reinstated exceeds the amount of such forfeitures, then the Employer in respect
of whose Employee the claim for forfeited benefits is made shall make a contribution in an amount equal to the remainder of such excess. Any such contribution shall be made without regard to whether
or not the limitations set forth in Section 4.6 will be exceeded by such contribution. 

    Section 8.10.  Successive Employer.  

    (a)  In General.  Notwithstanding the foregoing provisions of this
Article 8, distributions of Salary Deferral Contribution Accounts of Participants whose employment with an Employer terminates and who continue employment with a Successive Employer (as
hereinafter defined) shall be subject to the provisions set forth in this Section 8.10, unless otherwise permitted under the law and the Plan. 

    (b)  Separation from Service or Age 591/2.  Such a Participant who has incurred a
Separation from Service (as hereinafter defined) or has attained age 591/2 as of the date his or her employment with an Employer terminates shall be eligible to receive a distribution
of his or her Salary Deferral Contribution Account in accordance with Section 8.5(d). 

    (c)  Sale of Assets or Subsidiary.  Such a Participant who has not incurred a Separation from Service (as
hereinafter defined) and has not attained age 591/2 as of the date his or her employment with an Employer terminates shall be eligible to receive a distribution of his or her Salary
Deferral Contribution Account in accordance with Section 8.5(d) only if the following conditions are satisfied: 

    (1) the
Successive Employer does not maintain the Plan after the Participant's employment terminates, within the meaning of Treasury Regulation §
1.401(k)-1(d)(4); 

    (2) the
distribution is made in the form of a lump sum distribution (within the meaning of section 402(d)(4) of the Code, without regard to
section 402(d)(4)(A)(i) through (iv), (B) and (F) of the Code) by the end of the second calendar year after the calendar year in which the Participant's employment
terminated; 

    (3) the
Successive Employer is not an Affiliate of an Employer; 

    (4) the
Successive Employer purchases (i) at least 85 percent of the assets used by the Employer in a trade or business of the Employer or (ii) the
Employer's interest in a subsidiary (in each case within the meaning of Treasury Regulation § 1.401(k)-1(d)(1)); 

    (5) both
the Employer and the Successive Employer are corporations; and 

    (6) the
Company determines in its sole discretion that a distribution under this Section 8.10(c) is permissible. 

    (d)  Deferral of Distributions.  Such a Participant who is not eligible for a distribution under
Section 8.10(b) or (c) may not receive a distribution of his or her Salary Deferral Contribution Account until such Participant has incurred a Separation from Service, attained age
591/2 or otherwise become eligible to receive a distribution of such account under section 401(k)(2)(B) of the Code. 

27

  

    (e)  Transfer of Accounts to Successive Employer's Plan.  The Company may determine in its sole and
absolute discretion to transfer the accounts of some or all of the Participants who are employed by a Successive Employer to a tax-qualified retirement plan maintained by such Successive
Employer. 

    (f)  Definitions.  For purposes of this Section, the following terms shall have the meaning set forth
below: 

          (i)  "Separation
from Service" shall mean the date on which a Participant has separated from service with the meaning of
section 401(k)(2)(b)(i)(I) of the Code. The determination of whether a Participant has incurred a Separation from Service shall be made by the Committee in its sole and absolute
discretion and shall be conclusive and binding on all persons. 

          (ii) "Successive
Employer" shall mean an entity that either (i) purchases from an Employer some or all of its interest in a trade or business or
a business unit or (ii) enters into a contract with an Employer pursuant to which such entity assumes responsibility for the management or operation of a trade or business or a business unit of
such Employer. 

 
 

ARTICLE 9
  
    SPECIAL PARTICIPATION RULES    
  

    Section 9.1.  Change of Employment Status.  If an Employee who is not a Participant becomes
eligible to participate because of a change in his or her employment status, then such Employee shall be entitled to become a Participant as soon as administratively practicable following the first
Entry Date coincident with or next following the Employee's satisfaction of the eligibility requirements. 

    Section 9.2.  Reemployment of an Eligible Employee Whose Employment Terminated Prior to Becoming a
Participant.  (a)  If an Eligible Employee whose employment terminated before the Employee had satisfied the requirements of Section 3.1 or
9.1 is reemployed by an Employer, such Employee's prior service
shall be disregarded and such Employee shall be eligible to become a Participant in accordance with Section 3.1. 

    (b)  If
an Eligible Employee whose employment terminated after he or she had satisfied the requirements of Section 3.1 or 9.1 but prior to becoming a Participant
is reemployed by an Employer, then he or she shall not be required to satisfy again such requirements and shall be eligible to become a Participant as soon as administratively practicable on the Entry
Date coincident with or next following the date of his or her reemployment date. 

    Section 9.3.  Reemployment of a Terminated
Participant.  (a)  Participation.  If a terminated Participant is reemployed, then he or she shall not be required to satisfy the
requirements of Section 3.1, and shall be eligible to participate as of the first Entry Date on or after the date of his or her reemployment date, provided that such rehired Participant shall
be eligible to make Salary Deferral Contributions on the first day of the first payroll period occurring after such Entry Date as of which the Plan's recordkeeper has all the documentation it deems
necessary to process such contributions. 

    (b)  Restoration of Forfeitures.  If a Participant who terminated employment with the Employers is
reemployed prior to incurring a Break in Service of five consecutive years and if upon his termination of employment such a Participant received a distribution pursuant to Section 8.4 and a
portion of his Profit Sharing Account or Matching Contributions Account was forfeited pursuant to Section 8.1(c), then the Participant shall have the right to repay to the Trustee an amount
equal to the amount distributed, provided that the repayment is made on or before the last day of the Plan Year in which the fifth anniversary of the
Participant's date of reemployment occurs. An amount so repaid shall be allocated to the Participant's account as soon as administratively practicable after the repayment is received by the Trustee.
Regardless of whether a Participant repays the amount equal to his or her 

28

 

previous distribution, an amount equal to the portion forfeited from the Participant's Profit Sharing Account and Matching Contributions Account shall be credited to such account. The source of funds
for the formerly forfeited amounts which are so credited in a Plan Year shall be the forfeitures pursuant to Sections 4.5(e) and 8.1(c) for such Plan Year. If the forfeitures pursuant to Sections
4.5(e) and 8.1(c) for any Plan Year are less than the formerly forfeited amounts which are credited in such Plan Year to Participants' accounts pursuant to this Section, then the Company shall direct
the Employer of each such Participant to make an additional contribution in an amount determined by the Company so that the amount of such additional contributions and the forfeitures pursuant to
Sections 4.5(e) and 8.1(c) are equal to the amounts credited to such Participants' accounts that are attributable to the previously forfeited amounts. Any such additional contribution is not subject
to the deduction limitation set forth in Section 4.6. 

    (c)  Vesting Service Credit.  For purposes of Section 8.1, if a terminated Participant is
reemployed, then he or she shall receive credit for Service earned prior to such termination according to the following rules: 

          (i)  if
such terminated participant is reemployed prior to incurring a one year Break in Service, he or she shall receive credit for all Service earned
prior to such Break in Service; 

          (ii) if
such terminated participant is reemployed after incurring a one year Break in Service he or she shall receive credit for Service earned prior
to such Break in Service, if: 

          (A) he
or she had a vested interest in any portion of his or her Matching Contributions Account or Profit Sharing Account; or 

          (B) the
number of consecutive Breaks in Service does not equal or exceed the greater of five (5) years or the number of years of Service he or
she had before such Break in Service. 

    Section 9.4.  Employment by Related Entities.   If an individual is employed by an Affiliate that
is not a participating Employer, then any period of such employment shall be taken into account to the same extent it would have been had such period of employment been as an Employee of his or her
Employer solely for the purposes of (i) determining whether and when such individual is eligible to participate in the Plan under Article 3, (ii) measuring such individual's years
of Service and (iii) determining when such individual has retired or otherwise terminated his or her employment for purposes of Article 8. 

    Section 9.5.  Leased Employees.  If an individual who performed services as a leased employee
(within the meaning of section 414(n)(2) of the Code) of an Employer or an Affiliate becomes an Employee, or if an Employee becomes such a leased employee, then any period during which such
services were so performed shall be taken into account solely for the purposes of determining whether and when such individual is eligible to participate in the Plan under Article 3, measuring
such individual's years of Service and determining when such individual has retired or otherwise terminated his or her employment for purposes of Article 8 to the same extent it would have been
had such service been as an Employee. This Section shall not apply to any period of service during which such a leased employee was covered by a plan described in section 414(n)(5) of the Code. 

    Section 9.6.  Reemployment of Veterans.  (a)  General.  The
provisions of this Section shall apply in the case of the reemployment by an Employer of an Eligible Employee, within the period prescribed by USERRA, after the Employee's completion of a period of
Qualified Military Service. The provisions of this
Section are intended to provide such Employees with the rights required by USERRA and section 414(u) of the Code, and shall be interpreted in accordance with such intent. 

    (b)  Make Up of Salary Deferral Contributions.  Such Employee shall be entitled to make contributions
under the Plan ("Make-Up Deferrals"), in addition to any Salary Deferral Contributions 

29

 

which the Employee elects to have made under the Plan pursuant to Section 4.2. From time to time while employed by an Employer, such Employee may elect to make such Make-Up
Deferrals during the period beginning on the date of such Employee's reemployment and ending on the earlier of: 

	(i)
	the
end of the period equal to the product of three and such Employee's period of Qualified Military Service, and

	(ii)
	the
fifth anniversary of the date of such reemployment. 

    Such
Employee shall not be permitted to contribute Make-Up Deferrals to the Plan in excess of the amount which the Employee could have elected to have made under the Plan
in the form of Salary Deferral Contributions if the Employee had continued in employment with his or her Employer during such period of Qualified Military Service. Such Employee shall be deemed to
have earned "Compensation" from his or her Employer during such period of Qualified Military Service for this purpose in the amount prescribed by sections 414(u)(2)(B) and 414(u)(7) of the Code. The
manner in which an Eligible Employee may elect to make Make-Up Deferrals pursuant to this subsection (b) shall be prescribed by the 401(k) Administrator. 

    (c)  Make-Up of Matching Contributions.  An Eligible Employee who contributes
Make-Up Deferrals as described in subsection (b) shall be entitled to an allocation of Matching Contributions ("Make-Up Matching Contributions") in an amount equal to
the amount of Matching Contributions which would have been allocated to the Matching Contributions Account of such Eligible Employee under the Plan if such Make-Up Deferrals had been made
in the form of Salary Deferral Contributions during the period of such Employee's Qualified Military Service. The amounts necessary to make such allocation of Make-Up Matching
Contributions shall be derived from forfeitures not yet applied towards Matching Contributions for the Plan Year in which the Make-Up Deferrals are made, and if such forfeitures are not
sufficient for this purpose, then the Eligible Employee's Employer shall make a special contribution which shall be utilized solely for purposes of such allocation. 

    (d)  Profit Sharing Contributions.  Such Employee shall be entitled to share in any allocations of Profit
Sharing Contributions with respect to such period of Qualified Military Service as an Eligible Employee. Such Employee shall be deemed to have earned "Compensation" from his or her Employer during
such period of Qualified Military Service for this purpose in the amount prescribed by sections 414(u)(2)(B) and 414(u)(7) of the Code. 

    (e)  Application of Limitations and Nondiscrimination Rules.  Any contributions made by an Eligible
Employee or an Employer pursuant to this Section on account of a period of Qualified Military Service in a prior Plan Year shall not be subject to the limitations prescribed by Sections 4.3, 4.6 and
7.5 of the Plan (relating to sections 402(g), 404 and 415 of the Code) for the Plan Year in which such contributions are made. The Plan shall not be treated as failing to satisfy the nondiscrimination
rules of Section 4.5 of the Plan (relating to sections 401(k)(3) and 401(m) of the Code) for any Plan Year solely on account of any make up contributions made by an Eligible Employee or an
Employer pursuant to this Section. 

 
 

ARTICLE 10
  
    SHAREHOLDER RIGHTS WITH RESPECT TO COMPANY STOCK    
  

    Section 10.1.  Voting Shares of Company Stock.  Each Participant (or Beneficiary) shall be
entitled to give voting instructions, in the time and manner prescribed by the Trustee, with respect to the number of whole shares of Company Stock allocated to his or her accounts. The Trustee shall
vote, in person or by proxy, such shares according to the voting instructions of Participants (or Beneficiaries) which have been timely submitted to the Trustee. To the extent permitted by law, the
Trustee shall vote the shares of Company Stock credited to Participants' (or Beneficiaries') accounts with respect to which 

30

 

the Trustee does not timely receive voting instructions, shares of Company Stock that are not allocated to Participants' (or Beneficiaries') accounts (if any) and fractional shares in the same
proportion by which the Trustee votes shares of Company Stock for which instructions are timely received. 

    Written
notice of any meeting of shareholders of the Company and a request for voting instructions shall be given by the Trustee, at such time and in such manner as the Trustee shall
determine, to each Participant (or Beneficiary) entitled to give instructions for voting shares of Company Stock at such meeting. The Company shall establish a means by which such voting instructions
can expeditiously be
delivered to the Trustee. All such instructions shall be confidential and shall not be disclosed to any person, including any Employer. 

    Section 10.2.  Tender Offers.  (a)  Rights of Participants.  In the
event a tender offer is made generally to the shareholders of the Company to transfer all or a portion of their shares of Company Stock in return for valuable consideration, including, but not limited
to, offers regulated by section 14(d) of the Securities Exchange Act of 1934, as amended, the Trustee shall respond to such tender offer in respect of shares of Company Stock held by the
Trustee in the Company Stock Fund in accordance with instructions obtained from Participants (or Beneficiaries). Each Participant (or Beneficiary) shall be entitled to instruct the Trustee regarding
how to respond to any such tender offer with respect to the number of shares of Company Stock then allocated to his or her accounts. Each Participant (or Beneficiary) who does not provide timely
instructions to the Trustee shall be presumed to have directed the Trustee not to tender shares of Company Stock allocated to his or her accounts. A Participant (or Beneficiary) shall not be limited
in the number of instructions to tender or withdraw from tender which he or she can give, but a Participant (or Beneficiary) shall not have the right to give instructions to tender or withdraw from
tender after a reasonable time established by the Trustee pursuant to paragraph (c) below. 

    (b)  Duties of the Company.  Within a reasonable time after the commencement of a tender offer, the
Company shall cause the Trustee to provide to each Participant or Beneficiary, as the case may be: 

	(i)
	the
offer to purchase as distributed by the offeror to the shareholders of the Company,

	(ii)
	a
statement of the number of shares of Company Stock allocated to his or her account, and

	(iii)
	directions
as to the means by which instructions with respect to the tender offer can be given. 

    The
Company shall establish and pay for a means by which instructions with respect to a tender offer can expeditiously be delivered to the Trustee. All such instructions shall be
confidential and shall not be disclosed to any person, including any Employer. The Company at its election may engage an agent to receive such instructions and transmit them to the Trustee. 

    For
purposes of allocating the proceeds of any sale or exchange pursuant to a tender offer, the Trustee shall then treat as having been sold or exchanged from each of the individual
accounts of Participants (and Beneficiaries) who provided timely directions to the Trustee under this Section that number of
shares of Company Stock subject to such directions and the proceeds of such sale or exchange shall be allocated accordingly. Any proceeds from the sale or exchange of shares of Company Stock shall be
invested in a commingled fund maintained by the Trustee designated to hold such amounts pending investment instructions from Participants (and Beneficiaries). 

    (c)  Duties of the Trustee.  The Trustee shall follow the instructions of the Participants (and
Beneficiaries) with respect to the tender offer as transmitted to the Trustee. The Trustee may establish a reasonable time, taking into account the time restrictions of the tender offer, after which
it shall not accept instructions of Participants (or Beneficiaries). 

31

 
 
 

ARTICLE 11
  
    ADMINISTRATION    
  

    Section 11.1.  The Committee.  (a)  Either (i) the Compensation and Stock
Option Committee or (ii) the Chairman of the Board of Directors or the President of the Company, to the extent authorized by the Compensation and Stock Option Committee, shall appoint a
Committee consisting of three or more members that shall be the "administrator" of the Plan within the meaning of such term as used in ERISA. The Committee shall be a "named fiduciary" within the
meaning of such term as used in ERISA. The Compensation and Stock Option Committee or an authorized officer shall have the right at any time, with or without cause, to remove one or more members of
the Committee. In addition, any member of the Committee may resign and such resignation shall be effective upon delivery of the written resignation to the Company. Notwithstanding anything contained
in this Section 11.1, an Employee of the Company who serves on the Committee shall be deemed to resign upon the termination of such Employee's employment with the Company. Such deemed
resignation shall be effective as of the date of the termination of employment. Upon the resignation, removal or failure or inability for any reason of any member of the Committee to act hereunder,
the Compensation and Stock Option Committee or an authorized officer shall appoint a successor. Any successor members of the Committee shall have all the rights, privileges and duties of the
predecessor, but shall not be held accountable for the acts of the predecessor. 

    (b)
Any member of the Committee may, but need not, be an employee, director, officer or shareholder of an Employer and such status shall not disqualify him or her from taking any
action hereunder or render him or her accountable for any distribution or other material advantage received by him or her
under the Plan, provided that no member of the Committee who is a Participant shall take part in any action of the Committee or any matter involving solely his or her rights under the Plan. 

    (c)
Promptly after the appointment of the members of the Committee and from time to time thereafter, and promptly after the appointment of any successor member of the Committee, the
Trustee shall be notified as to the names of the persons appointed as successor members of the Committee by delivery to the Trustee of a written notice of such appointment. 

    (d)
The Committee shall have the duty and authority to interpret and construe, in its sole discretion, the terms of the Plan in regard to all questions of eligibility, the status and
rights of Participants, distributees and other persons under the Plan, and the manner, time, and amount of payment of any distribution under the Plan. Each Employer shall, from time to time, upon
request of the Committee, furnish to the Committee such data and information as the Committee shall require in the performance of its duties. All determinations and actions of the Committee shall be
conclusive and binding upon all affected parties, except that the Committee may revoke or modify a determination or action that it determines to have been in error. 

    (e)
The Committee or the 401(k) Administrator shall direct the Trustee to make payments of amounts to be distributed from the Trust under Article 8. 

    (f)
The Committee may allocate its responsibilities among its members and may designate any other person, partnership, corporation or another committee to carry out any of its
responsibilities with respect to administration of the Plan. Any such allocation or designation shall be reduced to writing and such writing shall be kept with the records of the Plan. Any reference
in the Plan to the Committee shall include any person, partnership, corporation or committee to which the Committee has delegated any of its responsibilities. 

    (g)
The Committee may act at a meeting, or by writing without a meeting, by the vote or written assent of a majority of its members. The Compensation and Stock Option Committee shall
designate 

32

 

one member of the Committee as its chairman, and the chairman of the Committee shall appoint one member of the Committee as its secretary. The Committee shall keep the Trustee advised of the identity
of the members holding such offices. The Committee, as Plan Administrator, shall be the Plan's agent for service of legal process and shall be authorized to forward all necessary communications to the
Trustee. The secretary of the Committee shall keep records of all meetings of the Committee. The Committee may adopt such rules and procedures as it deems desirable for the conduct of its affairs and
the administration of the Plan, provided that any such rules and procedures shall be consistent with the provisions of the Plan and ERISA. 

    (h)
The members of the Committee shall discharge their duties with respect to the Plan (i) solely in the interest of the Participants and Beneficiaries, (ii) for the
exclusive purpose of providing benefits to Employees participating in the Plan and their Beneficiaries and of defraying reasonable expenses of administering the Plan and (iii) with the care,
skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a
like character and with like aims. The Employers hereby jointly and severally indemnify the members of the Committee from the effects and consequences of their acts, omissions and conduct in their
official capacity, except to the extent that such effects and consequences result from their own willful misconduct. 

    (i)
The members of the Committee may not receive any compensation or fee for services as members of the Committee. The Employer shall reimburse the members of the Committee for any
necessary expenditures incurred in the discharge of their duties as members of the Committee. 

    (j)
The Committee may employ such counsel (who may be counsel for an Employer) and agents and may arrange for such clerical and other services as it may require in carrying out the
provisions of the Plan. 

    Section 11.2.   Claims Procedure.  Any Participant or distributee who believes he or she is
entitled to benefits in an amount greater than those which he or she is receiving or has received may file a claim with the Committee. Such a claim shall be in writing and state the nature of
the claim, the facts supporting the claim, the amount claimed, and the address of the claimant. The Committee shall review the claim and, unless special circumstances require an extension of time,
within 90 days after receipt of the claim, give written notice by registered or certified mail to the claimant of its decision with respect to the claim. If special circumstances require an
extension of time, the claimant shall be so advised in writing within the initial 90-day period and in no event shall such an extension exceed 90 days. The notice of the decision of
the Committee with respect to the claim shall be written in a manner calculated to be understood by the claimant and, if the claim is wholly or partially denied, set forth the specific reasons for the
denial, specific references to the pertinent Plan provisions on which the denial is based, a description of any additional material or information necessary for the claimant to perfect the claim and
an explanation of why such material or information is necessary, and an explanation of the claim review procedure under the Plan. The Committee shall also advise the claimant that the claimant or his
or her duly authorized representative may request a review by the Committee of the denial by filing with the Committee within 60 days after notice of the denial has been received by claimant, a
written request for such review. The claimant shall be informed that he or she may have reasonable access to pertinent documents and submit comments in writing to the Committee within the same
60-day period. If a request is so filed, review of the denial shall be made by the Committee within, unless special circumstances require an extension of time, 60 days after receipt
of such request, and the
claimant shall be given written notice of the Committee's final decision. If special circumstances require an extension of time, the claimant shall be so advised in writing within the initial
60-day period and in no event shall such an extension exceed 60 days. The notice of the Committee's final decision shall include specific reasons for the decision and specific
references to the pertinent Plan provisions on which the decision is based and shall be written in a manner calculated to be understood by the claimant. 

33

 

    Section 11.3.  Notices to Participants.  All notices, reports and statements given, made,
delivered or transmitted to a Participant or distributee or any other person entitled to or claiming benefits under the Plan shall be deemed to have been duly given, made or transmitted when mailed by
first class mail with postage prepaid and addressed to the Participant or distributee or such other person at the address last appearing on the records of the Committee. A Participant or distributee
or other person may record any change of his or her address from time to time by written notice filed with the 401(k) Administrator. 

    Section 11.4.  Notices.  Written directions, notices and other communications from Participants or
distributees or any other person entitled to or claiming benefits under the Plan to the Committee or the 401(k) Administrator shall be deemed to have been duly given, made or transmitted either when
delivered to such location as shall be specified upon the forms prescribed by the Committee or the 401(k) Administrator for the giving of such directions, notices and other communications or when
mailed by first class mail with postage prepaid and addressed to the addressee at the address specified upon such forms. 

    Section 11.5.  Records.  The Committee shall keep a record of all of its proceedings with respect
to the Plan and shall keep or cause to be kept all books of account, records and other data as may be necessary or advisable in the Committee's judgment for the administration of the Plan. 

    Section 11.6.  Reports of Trustee and Accounting to Participants.  The Committee shall keep on
file, in such form as it shall deem convenient and proper, all reports concerning the Trust Fund received by it from the Trustee, and the Committee shall, as soon as possible after the close of each
Plan Year, advise each Participant and Beneficiary of the balance credited to any account for his or her benefit as of the close of such Plan Year pursuant to Article 7 hereof. 

 
 

ARTICLE 12
  
    PARTICIPATION BY OTHER EMPLOYERS    
  

    Section 12.1.  Adoption of Plan.  With the consent of the Company, any
entity may become a participating Employer under the Plan by (a) taking such action as shall be necessary to adopt the Plan and (b) executing and delivering such instruments and taking
such other action as may be necessary or desirable to put the Plan into effect with respect to such entity. However, the sole, exclusive right of any other amendment of whatever kind or extent to the
Plan or Trust is reserved by the Company. The administrative powers and control of the Company, as provided in the Plan and Trust agreement, including the sole right of amendment, and of appointment
and removal of the Trustee and its successors, shall not be diminished by reason of the participation of any such adopting entity in the Plan. 

    Section 12.2.  Withdrawal from Participation.  Any Employer may withdraw from participation in the
Plan at any time by filing with the Company a duly certified copy of a written instrument duly adopted by the Employer to that effect and giving notice of its intended withdrawal to the Company, the
other Employers and the Trustee prior to the effective date of withdrawal. Any Employer, by action of its board of directors or other governing authority, may withdraw from the Plan and Trust after
giving 90 days' notice to the Board of Directors, provided the Board of Directors consents to such withdrawal. Distribution may be implemented through continuation of the Trust, or transfer to
another trust fund exempt from tax under section 501(a) of the Code, or to a group annuity contract qualified under section 401(a) of the Code, or distribution may be made as an
immediate cash payment in accordance with the directions of the Company; provided, however, that no such action shall divert any part of such fund to
any purpose other than the exclusive benefit of the Employees of such Employer. 

34

  

    Section 12.3.  Continuance by a Successor.  In the event that an Employer is reorganized by way of
merger, consolidation, transfer of assets or otherwise, so that another entity succeeds to all or substantially all of the Employer's business, such successor entity may be substituted for the
Employer under the Plan by adopting the Plan, with the written consent of the Board of Directors. Contributions by the Employer shall be automatically suspended from the effective date of any such
reorganization until the date upon which the substitution of such successor entity for the Employer under the Plan becomes effective. If, within 90 days following the effective date of any such
reorganization, such successor entity shall not have elected to become a party to the Plan, the Board of Directors does not consent to the adoption of the Plan by such successor entity or the Employer
adopts a plan of complete liquidation other than in connection with a reorganization, the Plan shall be automatically terminated with respect to employees of such Employer as of the close of business
on the 90th day following the effective date of such reorganization or as of the close of business on the date of adoption of such plan of complete liquidation, as the case may be, and the Company
shall direct the Trustee to distribute the portion of the Trust Fund applicable to such Employer in the manner provided in Article 15. 

    If
such successor entity is substituted for an Employer, by electing to become a party to the Plan as described above, then, for all purposes of the Plan, employment of such Employee
with such Employer, including service with and compensation paid by such Employer, shall be considered to be employment with such Employer. 

    Section 12.4.  Company as Agent for Employers.  Each entity that becomes a participating Employer
pursuant to Section 12.1 or 12.3 by so doing shall be deemed to have appointed the Company its agent to exercise on its behalf all of the powers and authorities hereby conferred upon the
Company by the terms of the Plan, including, but not by way of limitation, the power to amend and terminate the Plan and shall be deemed to have consented to (i) any delegation by the Company
of any of its powers, duties or responsibilities to another person and (ii) the designation of the 401(k) Administrator to perform the duties set forth herein. The authority of the Company to
act as such agent shall continue unless and until the portion of the Trust Fund held for the benefit of Employees of the particular Employer and their Beneficiaries is set aside in a separate Trust
Fund as provided in Section 15.2. 

 
 

ARTICLE 13
  
    MISCELLANEOUS    
  

    Section 13.1.  Expenses.  All costs and expenses incurred in administering
the Plan and the Trust, including the expenses of the Company, the Committee and the 401(k) Administrator, the fees of counsel and
any agents for the Company and the Committee, the fees and expenses of the Trustee, the fees of counsel for the Trustee and other administrative expenses shall be paid under the direction of the
Committee from the Trust Fund to the extent such expenses are not paid by the Employers. The Committee, in its sole discretion, having regard to the nature of a particular expense, shall determine the
portion of such expense that is to be borne by each Employer. 

    Section 13.2.  Non-Assignability.  (a)  In
General.  It is a condition of the Plan, and all rights of each Participant and Beneficiary shall be subject thereto, that no right or interest of any
Participant or Beneficiary in the Plan shall be assignable or transferable in whole or in part, either directly or by operation of law or otherwise, including, but not by way of limitation, execution,
levy, garnishment, attachment, pledge or bankruptcy, but excluding devolution by death or mental incompetency, and no right or interest of any Participant or Beneficiary in the Plan shall be liable
for, or subject to, any obligation or liability of such Participant or Beneficiary, including claims of a Life Partner and claims for alimony or the support of any spouse except as provided below. 

35

 

    (b)  Exception for Qualified Domestic Relations Orders.  Notwithstanding any provision of the Plan to the
contrary, if a Participant's account balance under the Plan, or any portion thereof, is the subject of one or more qualified domestic relations orders, as defined below, such account balance or
portion thereof shall be paid to the person at the time and in the manner specified in any such order. For purposes of this subsection (b), the term "qualified domestic relations order" shall have the
meaning prescribed by section 414(p) of the Code. The Committee, in its sole discretion, shall determine whether any order constitutes a "qualified domestic relations order" under this
subsection. A domestic relations order shall not fail to constitute a "qualified domestic relations order" under this subsection (b) solely because such order provides for immediate payment to
an alternate payee of the portion of the Participant's accounts assigned to the alternate payee under the terms of such order. 

    (c)  Other Exception.  Notwithstanding any provision of the Plan to the contrary, if a Participant is
ordered or required to pay an amount to the Plan pursuant to (i) a judgment of conviction for a crime involving the Plan, (ii) a civil judgment in connection with a violation (or alleged
violation) of Part 4 of Subtitle B of Title I of ERISA or (iii) a settlement agreement between the Secretary of Labor and the Participant or the Pension Benefit Guaranty Corporation and
the Participant in connection with a violation (or an alleged violation) of Part 4 of Subtitle B of Title I of ERISA, such amount may, to the extent permitted by law, be offset against such
Participant's benefits under the Plan. 

    Section 13.3.  Employment Non-Contractual.  The Plan confers no right upon an Employee
to continue in employment. 

    Section 13.4.  Limitation of Rights.  The Employers do not guarantee or promise to pay or to cause
to be paid any of the benefits provided by the Plan. A Participant or distributee shall have no right, title or claim in or to any specific asset of the Trust Fund, but shall have the right only to
distributions from the Trust Fund on the terms and conditions herein provided. 

    Section 13.5.  Merger or Consolidation with Another Plan.  A merger or consolidation with, or
transfer of assets or liabilities to, any other plan shall not be effected unless the terms of such merger, consolidation or transfer are such that each Participant, distributee, Beneficiary or other
person entitled to receive benefits from the Plan would, if the Plan were to terminate immediately after the merger, consolidation or transfer, receive a benefit equal to or greater than the benefit
such person would be entitled to receive if the Plan were to terminate immediately before the merger, consolidation, or transfer. 

    Section 13.6.  Gender and Plurals.  Wherever used in the Plan, references exclusively to one
gender are intended to include the masculine and feminine genders, and, unless the context otherwise requires, words in the singular shall include the plural, and words in the plural shall include the
singular. 

    Section 13.7.  Applicable Law.  The Plan and all rights hereunder shall be governed by and
construed in accordance with the laws of the State of Delaware to the extent such laws have not been preempted by applicable federal law. 

    Section 13.8.  Severability.  If a provision of the Plan shall be held illegal or invalid, the
illegality or invalidity shall not affect the remaining parts of the Plan and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included in the Plan. 

    Section 13.9.  No Guarantee.  None of the Company, the Employers, the Committee or the Trustee in
any way guarantees the Trust from loss or depreciation nor the payment of any money that may be or become due to any person from the Trust Fund. Nothing herein contained shall be deemed to give any
Participant, distributee, or Beneficiary an interest in any specific part of the Trust Fund or any other interest except the right to receive benefits out of the Trust Fund in accordance with the
provisions of the Plan and the Trust Fund. 

36

 

    Section 13.10.  Plan Voluntary.  Although it is intended that the Plan shall be continued and that
contributions shall be made as herein provided, the Plan is entirely voluntary on the part of the Employers and the continuance of the Plan and the payment of contributions hereunder are not to be
regarded as contractual obligations of the Employers. 

    Section 13.11.  Tax Withholding.  The Employer shall have the right to require, prior to any
distribution, payment by the Participant of any Federal, state, local or other taxes which may be required to be withheld or paid in connection with any distribution hereunder. The Employer shall have
the right to withhold from a distribution, which would otherwise be distributable to a Participant, any amount necessary to satisfy any such obligation. 

 
 

ARTICLE 14
  
    TOP-HEAVY PLAN REQUIREMENTS    
  

    Section 14.1.  Top-Heavy Plan Determination.  If as of the
determination date (as hereinafter defined) for any Plan Year (a) the sum of the account balances under the Plan and all other defined contribution plans in the aggregation group (as defined
below) and (b) the present value of accrued benefits under all defined benefit plans in such aggregation group of all Participants in such plans who are key employees (as hereinafter defined)
for such Plan Year exceeds 60 percent (60%) of the aggregate of the account balances and present value of accrued benefits of all Participants in such plans as of the determination date (as
hereinafter defined), then the Plan shall be a "top-heavy plan" for such Plan Year, and the requirements of Sections 14.3 and 14.4 shall be applicable for such Plan Year as of the first
day thereof. If the Plan is a top-heavy plan for any Plan Year and is not a top-heavy plan for any subsequent Plan Year, the requirements of this Article 14 shall not be
applicable for such subsequent Plan Year. 

    Section 14.2.  Definitions and Special
Rules.  (a)  Definitions.  For purposes of this Article 14, the following
definitions shall apply: 

    (1) Determination Date.  The determination date for all plans in the aggregation group shall be the last
day of the preceding Plan Year, and the valuation date applicable to a determination date shall be (i) in the case of a defined contribution plan, the date as of which account balances are
determined that is coinciding with or immediately precedes the determination date, and (ii) in the case of a defined benefit plan, the date as of which the most recent actuarial valuation for
the Plan Year that includes the determination date is prepared, except that if any such plan specifies a different determination or valuation date, such different date shall be used with respect to
such plan. 

    (2) Aggregation Group.  The aggregation group shall consist of (a) each plan of an Employer in
which a key employee is a Participant, (b) each other plan that enables such a plan to be qualified under section 401(a) of the Code, and (c) any other plans of an Employer that
the Company designates as part of the aggregation group. 

	(3)
	Key Employee.  Key employee shall have the meaning set forth in section 416(i) of the Code.

	(4)
	Compensation.  Compensation shall have the meaning set forth in U.S. Treasury Regulation
§1.415-2(d). 

    (b)  Special Rules.  For the purpose of determining the accrued benefit or account balance of a
Participant, the accrued benefit or account balance of any person who has not performed services for an employer at any time during the 5-year period ending on the determination date shall
not be taken into account pursuant to this Section, and any person who received a distribution from a plan (including a plan that has terminated) in the aggregation group during the 5-year
period ending on the last day of the preceding Plan Year shall be treated as a Participant in such plan, and any such 

37

 

distribution shall be included in such Participant's account balance or accrued benefit, as the case may be. 

    Section 14.3.  Minimum Contribution for Top-Heavy Years.  Notwithstanding any
provision of the Plan to the contrary, the sum of the Employer contributions made pursuant to Article 4 allocated during any Plan Year to the accounts of each Participant (other than a key
employee) for which the Plan is a top-heavy plan shall in no event be less than the lesser of (i) 3 percent (3%) of such Participant's compensation during such Plan Year and
(ii) the highest percentage at which contributions are made on behalf of any key employee for such Plan Year. If during any Plan Year for which this Section 14.3 is applicable a defined
benefit plan is included in the aggregation group and such defined benefit plan is a top-heavy plan for such Plan Year, the percentage set forth in clause (i) of the first sentence
of this Section shall be 5 percent (5%). The percentage referred to in clause (ii) of the first sentence of this Section shall be obtained by dividing the aggregate of contributions made
pursuant to Article 4 and pursuant to any other defined contribution plan that is required to be included in the aggregation group (other than a defined contribution plan that enables a defined
benefit plan that is required to be included in such group to be qualified under section 401(a) of the Code) during the Plan Year on behalf of such key employee by such key employee's
compensation for the Plan Year. 

    Section 14.4.  Special Rules for Applying Statutory Limitations on Benefits.  The provisions of
this Section shall apply only with respect to Plan Years commencing prior to January 1, 2000. 

    (a)  In
any Plan Year for which the Plan is a top-heavy plan, clause (2)(A)(II) of Section 7.5 shall be applied by substituting
"100 percent (100%)" for "125 percent (125%)" appearing therein unless for any such Plan Year (i) the percentage of account balances of Participants who are key employees does not
exceed 90 percent (90%) and (ii) employer contributions and forfeitures allocated to the accounts of Participants who are not key employees equals at least 4 percent (4%) of the
compensation (within the meaning of section 415 of the Code) of each such Participant. 

    (b)  In
any Plan Year for which the Plan is a top-heavy plan, clause (2)(B)(I) of Section 7.5 shall be applied by substituting
"100 percent (100%)" for "125 percent (125%)" appearing therein unless for any such Plan Year (i) the percentage of accrued benefits of Participants who are key employees does not
exceed 90 percent (90%) and (ii) the minimum accrued benefit of each Participant under all defined benefit plans in the aggregate group is at least 3 percent (3%) of his or her
average compensation (determined under section 416 of the Code) multiplied by each year of Service after 1983, not in excess of 10, for which such plans are top-heavy plans. 

 
 

ARTICLE 15
  
    AMENDMENT, ESTABLISHMENT OF SEPARATE
  PLAN AND TERMINATION    
  

    Section 15.1.  Amendment.  The Company shall have the right to amend the
Plan at any time, and from time to time, by resolution of the Board of Directors. Any such amendment shall become effective as of the date the Board of Directors shall determine and may apply to
Participants in the Plan at the time thereof as well as to future Participants. 

    Section 15.2.  Establishment of Separate Plan.  If an Employer withdraws from the Plan under
Section 12.2, then the Committee shall determine, in the manner hereinafter described, the portion of each of the funds of the Trust Fund which is allocable to the Participants (and
Beneficiaries) of such Employer and direct the Trustee to segregate such portions in a separate trust. Such separate trust shall thereafter be held and administered as a part of the separate plan of
such Employer. 

    The
portion of a fund in the Trust Fund applicable to the Participants (and Beneficiaries) of a particular Employer shall be an amount which bears the same ratio to the value of such
fund as the 

38

 

total value of the fund accounts of Participants employed or formerly employed by such Employer bears to the total value of the fund accounts of all Participants and former Participants. 

    Section 15.3.  Termination.  The Company shall have the right to terminate the Plan at any time by
resolution of its Board of Directors. Any Employer may at any time terminate its participation in the Plan by resolution of its board of directors to that effect. In the event of any such termination,
or in the event of a partial termination of the Plan with respect to a group of Participants, the accounts which are applicable to the Participants with respect to whom the Plan is terminated shall
become fully vested and shall not thereafter be subject to forfeiture. In the event that an Employer terminates its participation in the Plan, the Committee shall determine, in the manner provided in
Section 15.2, the portion of the Trust Fund held by the Trustee which is applicable to the Participants (and Beneficiaries) of such Employer and direct the Trustee to distribute such portion to
Participants (and Beneficiaries) in proportion to the balances of their respective accounts. A permanent suspension of contributions by an Employer shall be deemed a termination of such Employer's
participation in the Plan for purposes of this Section. A complete discontinuance of contributions by an Employer shall be deemed a termination of such Employer's participation in the Plan for
purposes of this Section. 

    If
the Internal Revenue Service shall refuse with respect to any Employer to issue an initial favorable determination letter that the Plan and Trust as adopted by such Employer meet
the requirements of section 401(a) of the Code and that the Trust is exempt from tax under section 501(a) of the Code, such Employer may terminate its participation in the Plan and the
Company shall direct the Trustee to pay and deliver the portion of the Trust Fund applicable to the Participants and former Participants of such Employer, determined in the manner provided in
Section 15.2, to such Employer and such Employer shall pay to Participants or their Beneficiaries the part of such Employer's portion of the Trust Fund which is attributable to contributions
made by Participants. 

    Section 15.4.  Trust Fund to Be Applied Exclusively for Participants and Their
Beneficiaries.  Subject only to the provisions of Sections 4.6, 7.5 and 15.3, and any other provision of the Plan to the contrary notwithstanding, it shall be
impossible for any part of the Trust Fund to be used for or diverted to any purpose not for the exclusive benefit of Participants and their beneficiaries either by operation or termination of the
Plan, power of amendment or other means. 

39

QuickLinks

HEALTH NET, INC. 401(k) SAVINGS PLAN

HEALTH NET, INC. 401(k) SAVINGS PLAN

TABLE OF CONTENTS

ARTICLE 1 TITLE AND PURPOSE

ARTICLE 2 DEFINITIONS

ARTICLE 3 PARTICIPATION

ARTICLE 4 EMPLOYER CONTRIBUTIONS

ARTICLE 5 ROLLOVER CONTRIBUTIONS

ARTICLE 6 TRUST AND INVESTMENT FUNDS

ARTICLE 7 PARTICIPANT ACCOUNTS

ARTICLE 8 WITHDRAWALS, LOANS AND DISTRIBUTIONS

ARTICLE 9 SPECIAL PARTICIPATION RULES

ARTICLE 10 SHAREHOLDER RIGHTS WITH RESPECT TO COMPANY STOCK

ARTICLE 11 ADMINISTRATION

ARTICLE 12 PARTICIPATION BY OTHER EMPLOYERS

ARTICLE 13 MISCELLANEOUS

ARTICLE 14 TOP-HEAVY PLAN REQUIREMENTS

ARTICLE 15 AMENDMENT, ESTABLISHMENT OF SEPARATE PLAN AND TERMINATION

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