As filed with the Securities and Exchange Commission on ___________, 1996
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------------
WELLPOINT HEALTH NETWORKS INC.
(Exact name of Registrant as specified in its charter)
California 95-3760980
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
21555 Oxnard Street
Woodland Hills, California 91367
(Address of principal executive offices) (zip code)
--------------------
WELLPOINT HEALTH NETWORKS INC. EMPLOYEE STOCK PURCHASE PLAN
WELLPOINT HEALTH NETWORKS INC. STOCK OPTION\AWARD PLAN
WELLPOINT HEALTH NETWORKS INC. EMPLOYEE STOCK OPTION PLAN
SALARY DEFERRAL SAVINGS PROGRAM OF WELLPOINT HEALTH NETWORKS, INC
(Full title of the plan)
--------------------
LEONARD D. SCHAEFFER
Chairman of the Board and Chief
Executive Officer WELLPOINT
HEALTH NETWORKS INC.
21555 Oxnard Street, Woodland Hills, California 91367
(Name and address of agent for service)
(818) 703-4000
(Telephone number, including area code, of agent for service)
Copies to:
Barry W. Homer, Esq.
William L. Hudson, Esq.
Brobeck, Phleger & Harrison LLP
One Market Plaza
Spear Street Tower
San Francisco, California 94105
--------------------
<TABLE>
This Registration Statement shall become effective immediately upon filing with
the Securities and Exchange Commission in accordance with Section 8(a) of the
Securities Act of 1933 and Rule 462 thereunder.
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered (1) Registered (2) per Share (3) Price (3) Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
$.01 par value,
issued pursuant to:
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
WellPoint Health Networks Inc. 400,000 $35.625 $14,250,000 $ 4,914
Employee Stock Purchase Plan --------- -------- ----------- ----------
WellPoint Health Networks Inc. 2,600,000 $35.625 $92,625,000 $31,940
Stock Option\Award Plan --------- -------- ----------- ----------
WellPoint Health Networks Inc. 2,000,000 $35.625 $71,250,000 $24,569
Employee Stock Option Plan --------- -------- ----------- ----------
Salary Deferral Savings Program of 500,000 $35.625 $17,812,500 $ 6,142
WellPoint Health Networks Inc. (1) --------- -------- ----------- ----------
====================================================================================================================================
<FN>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
this Registration Statement also covers an indeterminate amount of plan
interests to be offered or sold pursuant to the Salary Deferral Savings
Program of WellPoint Health Networks Inc.
(2) This Registration Statement also covers any additional shares of Common
Stock that are acquired under the employee benefit plans listed above
by reason of any stock dividend, stock split, recapitalization or other
similar transaction effected without the receipt of consideration which
results in an increase in the number of the Registrant's outstanding
shares of Common Stock.
(3) Calculated solely for purposes of this offering under Rule 457(h) of
the Securities Act of 1933 on the basis of the average of the high and
low selling price per share of Common Stock of WellPoint Health
Networks Inc. on May 30, 1996, as reported by the New York Stock
Exchange.
</FN>
</TABLE>
<PAGE>
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Certain Documents by Reference
The Registrant hereby incorporates by reference into this
Registration Statement the following documents previously filed with the
Commission by the Registrant:
(a) The Annual Report on Form 10-K for the year ended December 31,
1995 and Quarterly Report of Form 10-Q for the quarter ending
March 31, 1996 (File No. 01-11628) of WellPoint Health
Networks Inc., a Delaware corporation and a subsidiary of the
Registrant ("Old WellPoint"), which was merged into the
Registrant, which was renamed WellPoint Health Networks Inc.,
effective May 20, 1996;
(b) Old WellPoint's Current Reports on Form 8-K dated January 5,
1996, February 20, 1996 and March 5, 1996;
(c) The Registrant's Current Report on Form 8-K dated May 20,
1996;
(d) The description of the terms, rights and provisions applicable
to the Registrant's Common Stock contained in Registrant's
Registration Statement on Form 8-B, File No. 1-14340, filed
with the Commission on May 20, 1996 and any amendment or
report filed for the purpose of updating such description
filed after the date of this Registration Statement; and
(e) The Salary Deferral Savings Program of WellPoint Health
Network Inc.'s latest annual report on Form 11-K filed with
the Commission on June 29, 1995.
All reports and definitive proxy or information statements
filed pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 after the date of this Registration Statement and prior to the
filing of a post-effective amendment which indicates that all securities offered
hereby have been sold or which deregisters all securities then remaining unsold
shall be deemed to be incorporated by reference into this Registration Statement
and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any subsequently filed document which also is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
The Registrant is incorporated in California. Under Section 317 of the
California Corporation Code (the "CCC"), a California corporation generally has
the power to indemnify its present and former directors and officers against
expenses, judgments, fines, settlements and other amounts actually paid and
reasonably incurred
II-1.
<PAGE>
by them in connection with any threatened, pending or completed action or
proceeding so long as they acted in good faith and in a manner they reasonably
believed to be in the best interests of the company, and with respect to any
criminal action, they had no reasonable cause to believe their conduct was
unlawful.
The Articles of Incorporation of the Registrant (the "Articles") and
the Bylaws of the Registrant (the "Bylaws") provide that the Registrant (i) must
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding"), by reason of
the fact that he or she is or was a director or an officer of the Registrant or
of a Predecessor Corporation (as defined below) against expenses (including, but
not limited to, attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her in connection with
such proceeding to the fullest extent and in the manner set forth in and
permitted by the CCC and any other applicable law, as from time to time in
effect and (ii) may indemnify any person who was or is a party or is threatened
to be made a party to any proceeding, by reason of the fact that he or she is or
was an employee or agent of the Registrant (or a Predecessor Corporation), or is
or was serving at the request of the Registrant (or a Predecessor Corporation),
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including, but not
limited to, attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such proceeding to
the extent and in the manner set forth in and permitted by the CCC and any other
applicable law as from time to time in effect. For purposes of the Articles and
the Bylaws, "Predecessor Corporation" means WellPoint Health Networks Inc., a
Delaware corporation ("Old WellPoint"), and its subsidiaries, as such
corporations existed prior to the effective time of the merger of Old WellPoint
into Blue Cross of California (pursuant to the Amended and Restated
Recapitalization Agreement dated as of March 31, 1995 (the "Recapitalization
Agreement") among Blue Cross of California, a California nonprofit public
benefit corporation ("BCC"), Old WellPoint and Western Health Partnerships and
Western Foundation for Health Improvement. The Registrant is the surviving
corporation of such merger.
Section 204(a)(10) of the CCC provides that articles of incorporation
may, subject to certain provisos, contain a provision eliminating or limiting
the personal liability of a director for monetary damages in an action brought
by or in the right of the company for breach of a director's duty to the company
and its shareholders. The Articles provide that the liability of the directors
of the Registrant for monetary damages will be eliminated to the fullest extent
permissible under California law.
Pursuant to the Recapitalization Agreement, from and after the
effective time thereof, and for a period of six years thereafter, the Registrant
will continue the indemnification rights of present and former directors and
officers of BCC provided for in BCC's charter documents as in effect on the date
immediately prior to the conversion of BCC from a non-profit corporation to a
for-profit corporation (the "BCC Conversion"), with respect to indemnification
for acts and omissions occurring prior to the effective time for so long as such
matters that have arisen prior to the end of such six-year period remain
outstanding.
The Recapitalization Agreement also provides that, subject to certain
provisos, for three years after the effective time of the merger, the Registrant
will cause to be maintained the policies of the officers' and directors'
liability insurance maintained by BCC as in effect on the date immediately
preceding the BCC Conversion covering the persons who are presently covered by
such company's respective officers' and directors' liability policies with
respect to actions and omissions occurring prior to and including the effective
time to the extent available.
The preceding discussion of the Articles, the Bylaws, Sections 317 and
204(a)(10) of the CCC and the Recapitalization Agreement is not intended to be
exhaustive and is qualified in its entirety by reference to the Articles, the
Bylaws, Sections 317 and 204(a)(10) of the CCC and the Recapitalization
Agreement.
Item 7. Exemption from Registration Claimed
Not Applicable.
II-2.
<PAGE>
Item 8. Exhibits
Exhibit Number Exhibit
- ------------- -------
4.1 Amended and Restated Articles of Incorporation of the Company
(Filed as Exhibit 3.1 to the Company's Current Report on Form
8-K dated May 20, 1996 and incorporated herein by this
reference).
4.2 Bylaws of the Company (Filed as Exhibit 3.2 to the Company's
Current Report on Form 8-K dated May 20, 1996 and incorporated
herein by this reference).
4.3 Agreement of Merger dated as of May 20, 1996 by and among the
Company, Old WellPoint, Western Health Partnerships and
Western foundation for Health Improvement (Filed as Exhibit
3.3 to the Company's Current Report on Form 8-K dated May 20,
1996 and incorporated herein by this reference).
4.4 Share Escrow Agent Agreement (Filed as Exhibit 99.4 to the
Company's Current Report on Form 8-K dated May 20, 1996 and
incorporated herein by this reference).
4.5 WellPoint Health Networks Inc. Employee Stock Purchase Plan.
4.6 WellPoint Health Networks Inc. Stock Option\Award Plan.
4.7 WellPoint Health Networks Inc. Employee Stock Option Plan.
4.8 Salary Deferral Savings Program of WellPoint Health Networks
Inc.
5.1 Opinion of Brobeck Phleger & Harrison LLP.
5.2 Internal Revenue Service determination letter, dated November
8, 1995, that the WellPoint Health Networks Inc. Salary
Deferral Savings Program is qualified under Section 401 of the
Internal Revenue Code.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to the signature page of
this Registration Statement.
Item 9. Undertakings.
A. The undersigned Registrant hereby undertakes: (1) to file, during
any period in which offers or sales are being made, a post-effective amendment
to this registration statement (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, (ii) to reflect in the prospectus any
facts or events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
the registration statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement; provided, however, that clauses (1)(i) and (1)(ii) shall not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference into the Registration Statement; and (2) that for the
purpose of determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
II-3.
<PAGE>
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference into the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-4.
<PAGE>
SIGNATURES
Registrant. Pursuant to the requirements of the Securities Act
of 1933, as amended, Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-8 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Woodland Hills, State of
California, on this 21st day of May, 1996.
WELLPOINT HEALTH NETWORKS INC.
By: /s/ Leonard D. Schaeffer
-----------------------------------
Leonard D. Schaeffer
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of WellPoint
Health Networks Inc., a California corporation, do hereby constitute and appoint
Leonard D. Schaeffer, Chairman of the Board of Directors and Chief Executive
Officer and Thomas C. Geiser, Esq., Executive Vice President, General Counsel
and Secretary, or any one of them, the lawful attorney-in-fact and agent, each
with full power and authority to do any and all acts and things and to execute
any and all instruments which said attorney and agent determines may be
necessary or advisable or required to enable said corporation to comply with the
Securities Act of 1933, as amended, and any rules or regulation or requirements
of the Commission in connection with this Registration Statement. Without
limiting the generality of the foregoing power and authority, the powers granted
include the power and authority to sign the names of the undersigned officers
and directors in the capacities indicated below to this Registration Statement,
to any and all amendments, both pre-effective and post-effective, and
supplements to this Registration Statement and to any and all instruments or
documents filed as part of or in conjunction with this Registration Statement or
amendments or supplements thereof, and each of the undersigned hereby ratifies
and confirms all that said attorneys and agents, or any one of them, shall do or
cause to be done by virtue hereof. This Power of Attorney may be signed in
several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this
Power of Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signatures Title Date
- ---------- ----- ----
/s/ Leonard D. Schaeffer
- ------------------------ Chairman of the Board of Directors May 21, 1996
Leonard D. Schaeffer and Chief Executive Officer
(Principal Executive Officer)
/s/ Howard G. Phanstiel
- ------------------------ Executive Vice President, Finance May 21, 1996
Howard G. Phanstiel and Information Services (Principal
Financial Officer)
II-5.
<PAGE>
Signatures Title Date
- ---------- ----- ----
/s/ Yon Y. Jorden
- -------------------------- Senior Vice President and May 21, 1996
Yon Y. Jorden Chief Financial Officer (Principal
Accounting Officer)
/s/ David R. Banks
- -------------------------- Director May 21, 1996
David R. Banks
/s/ W. Toliver Besson, Esq.
- -------------------------- Director May 21, 1996
W. Toliver Besson, Esq.
/s/ Roger E. Birk
- -------------------------- Director May 21, 1996
Roger E. Birk
/s/ Stephen L. Davenport
- -------------------------- Director May 21, 1996
Stephen L. Davenport
/s/ Julie A. Hill
- -------------------------- Director May 21, 1996
Julie A. Hill
/s/ Robert T. Knight
- ------------------------- Director May 21, 1996
Robert T. Knight
/s/ Elizabeth A. Sanders
- ------------------------- Director May 21, 1996
Elizabeth A. Sanders
Salary Deferral Savings Program. Pursuant to the requirements
of the Securities Act of 1933, as amended, the 1994 Restatement of the Salary
Deferral Savings Program of WellPoint Health Networks, Inc. has caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Woodland Hills, State of California, on this day
of May 21, 1996.
SALARY DEFERRAL SAVINGS PROGRAM OF WELLPOINT
HEALTH NETWORKS, INC.
By: /s/ Thomas C. Geiser
-----------------------------------------
II-6.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
WELLPOINT HEALTH NETWORKS INC.
II-7.
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit
- ------- -------
4.1 Amended and Restated Articles of Incorporation of the Company
(Filed as Exhibit 3.1 to the Company's Current Report on Form
8-K dated May 20, 1996 and incorporated herein by this
reference).
4.2 Bylaws of the Company (Filed as Exhibit 3.2 to the Company's
Current Report on Form 8-K dated May 20, 1996 and incorporated
herein by this reference).
4.3 Agreement of Merger dated as of May 20, 1996 by and among the
Company, Old WellPoint, Western Health Partnerships and Western
foundation for Health Improvement (Filed as Exhibit 3.3 to the
Company's Current Report on Form 8-K dated May 20, 1996 and
incorporated herein by this reference).
4.4 Share Escrow Agent Agreement (Filed as Exhibit 99.4 to the
Company's Current Report on Form 8-K dated May 20, 1996 and
incorporated herein by this reference).
4.5 WellPoint Health Networks Inc. Employee Stock Purchase Plan.
4.6 WellPoint Health Networks Inc. Stock Option\Award Plan
4.7 WellPoint Health Networks Inc. Employee Stock Option Plan
4.8 Salary Deferral Savings Program of WellPoint Health Networks
Inc.
5.1 Opinion of Brobeck Phleger & Harrison LLP
5.2 Internal Revenue Service determination letter, dated November
8, 1995, that the WellPoint Health Networks Inc. Salary
Deferral Savings Program is qualified under Section 401 of the
Internal Revenue Code
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24 Power of Attorney. Reference is made to the signature page of
this Registration Statement.
EXHIBIT 4.1
Amended and Restated Articles of Incorporation of the Company (Filed as
Exhibit 3.1 to the Company's Current Report on Form 8-K dated May
20, 1996 and incorporated herein by this reference).
EXHIBIT 4.2
Bylaws of the Company (Filed as Exhibit 3.2 to the Company's Current Report
on Form 8-K dated May 20, 1996 and incorporated herein by this reference).
EXHIBIT 4.3
Agreement of Merger dated as of May 20, 1996 by and among the
Company, Old WellPoint, Western Health Partnerships and Western foundation
for Health Improvement (Filed as Exhibit 3.3 to the Company's
Current Report on Form 8-K dated May 20, 1996 and incorporated
herein by this reference).
EXHIBIT 4.4
Share Escrow Agent Agreement
(Filed as Exhibit 99.4 to the Company's Current Report
on Form 8-K dated May 20, 1996 and incorporated herein
by this reference).
EXHIBIT 4.5
WellPoint Health Networks Inc. Employee Stock Purchase Plan.
<PAGE>
WELLPOINT HEALTH NETWORKS INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose
The WellPoint Health Networks Inc. Employee Stock Purchase Plan (the
"Plan") is intended to provide an opportunity to participate in the ownership of
Wellpoint Health Networks, Inc. (the "Company") for eligible employees of the
Company and such other companies ("Participating Companies") as the Board of
Directors of the Company (the "Board") or the Committee (as defined below) shall
from time to time designate; provided that each such company shall qualify as a
"parent corporation" or "subsidiary corporation" (a "Corporate Affiliate"), as
defined in Section 425(e) and (f) of the Internal Revenue Code of 1986 (the
"Code"), on the first day of the relevant Offering Period. It is further
intended that the Plan shall qualify as an "employee stock purchase plan" as
defined in Section 423 of the Code.
2. Administration
(a) Administrative Body. The Plan shall be administered by a committee
or committees (the "Committee") appointed by the Board. The Committee shall have
full authority to interpret and construe any provision of the Plan and to adopt
such rules and regulations for administering the Plan as it may deem necessary.
Decisions of the Committee shall be final and binding on all parties who have an
interest in the Plan.
(b) Rule 16b-3 Limitations. Notwithstanding the provisions of
Subsection 2(a), in the event that Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended, or any successor provision ("Rule 16b-3")
provides specific requirements for the administrators of plans of this type, the
Plan shall be only administered by such a body and in such a manner as shall
comply with the applicable requirements of Rule 16b-3. Unless permitted by Rule
16b-3, no discretion concerning decisions regarding the Plan shall be afforded
to any committee or person that is not "disinterested" as that term is used in
Rule 16b-3.
3. Effective Date and Term of Plan
(a) Effective Date. Subject to 3(b), the Plan shall become effective on
May 21, 1996.
(b) Escrow Shares. Pending such further approval of the Plan by the
Company's stockholders as the Committee shall deem advisable, all shares issued
under the Plan shall be nontransferable and shall be held in escrow by the
Company. If the Company's stockholders approve the Plan within one year of the
date of adoption of the Plan by the
1.
<PAGE>
Board, the escrowed shares will thereafter be subject to the conditions
described in Section 7(g) of the Plan. If the stockholders do not approve the
Plan within such one year period, such shares shall be cancelled and the Company
shall refund to participants the amount of payroll deductions collected with
interest thereon at the rate equal to the rate for one-year Treasury bills
immediately before the first day of the first Offering Period.
(c) Termination of Plan. The Plan shall continue in effect until the
date on which all shares available for issuance under the Plan shall have been
issued unless earlier terminated pursuant to Section 9 or 10.
4. Stock Subject to the Plan
(a) Number of Shares. The stock subject to the Plan shall be shares of
the common stock of the Company which are authorized but unissued or which have
been reacquired (the "Common Stock"). In connection with the sale of shares
under the Plan, the Company may repurchase shares of Common Stock in the open
market. The aggregate amount of Common Stock which may be issued pursuant to the
Plan shall not exceed 400,000 shares (subject to further adjustment thereafter
as provided in 4(b)).
(b) Adjustment. If any change is made in the Common Stock subject to
the Plan, or subject to any purchase right granted under the Plan (through
merger, consolidation, reorganization, recapitalization, stock dividend,
split-up, combination of shares, exchange of shares, change in corporate
structure, or otherwise), the Committee shall make appropriate adjustments as to
(i) the class and maximum number of shares subject to the Plan, (ii) the class
and maximum number of shares purchasable by each participant per Offering
Period, and (iii) the class and number of shares and price per share of stock
subject to outstanding purchase rights in order to prevent the dilution or
enlargement of benefits thereunder.
(c) Corporate Affiliate Stock. Subject to such limits, regulatory
approvals and stockholder approvals as the Committee determines to be necessary,
Common Stock issuable under the Plan may include the stock of a Corporate
Affiliate.
5. Offering Periods
(a) Terms of Offering Period. Common Stock shall be offered for
purchase under the Plan through a series of successive Offering Periods until
such time as (i) the maximum number of shares of Common Stock available for
issuance under the Plan shall have been issued pursuant to purchase rights
granted under the Plan or (ii) the Plan shall have been sooner terminated in
accordance with Article 9 or 10. The Committee shall determine, in its
discretion, the length of each Offering Period and may provide for more than one
"Purchase Period" within each Offering Period, in which case the purchase right
for such Offering Period shall be exercised in successive installments on the
last business day of each Purchase Period within the Offering Period, but no
more frequently than quarterly. No Offering Period shall have a term exceeding
27 months.
2.
<PAGE>
(b) Initial Offering Periods. The initial Offering Period under the
Plan will begin on such date as the Board or Committee shall specify and end on
December 31, 1996. Unless the Committee otherwise determines, subsequent
Offering Periods will begin on the first business day, and end on the last
business day, of each calendar year that begins thereafter.
(c) Purchase Rights. Each participant shall be granted a separate
purchase right for each Offering Period in which the individual participates.
The purchase right shall be granted on the first day of such Offering Period and
shall be automatically exercised on the last day of the Offering Period or in
installments on the last day of each separate Purchase Period authorized within
such Offering Period.
6. Eligibility and Participation
(a) General Rules. Each employee of the Company or any of the
Participating Companies shall be an eligible employee on any date if, on or
before that date he or she has attained age 18 and completed one year of service
with the Company or any of the Participating Companies. An employee who has
become an eligible employee before the first day of an Offering Period shall be
eligible to participate in the Plan during that Offering Period. Eligible
employees may become participants with respect to an Offering Period by
executing such instruments as the Committee may specify and delivering them to
such persons and at such time prior to the first day of that Offering Period as
the Committee may specify.
(b) Five Percent Owner. Under no circumstances shall purchase rights be
granted under the Plan to any employee if such individual would, immediately
after the grant, own (within the meaning of Code Section 424(d)), or hold
outstanding options or other rights to purchase, stock possessing five percent
(5%) or more of the total combined voting power or value of all classes of stock
of the Company or any Corporate Affiliate.
7. Purchase Rights
Purchase rights shall be evidenced by instruments in such form as the
Committee may from time to time approve, and shall conform to the following
terms and conditions:
(a) Purchase Price. The Purchase Price per share of each share
purchased on any date within an Offering Period shall be the lower of (i) a
percentage specified by the Committee (but not less than eighty-five percent
(85%)) of the fair market value per share of the Company's Common Stock on the
first day of the Offering Period, or (ii) a percentage specified by the
Committee (but not less than eighty-five percent (85%)) of the fair market value
per share of the Company's Common Stock on the purchase date.
(b) Fair Market Value. For purposes of the Plan, the fair market value
per share of the Company's Common Stock on any day shall be the closing price on
that date as recorded by the Wall Street Journal in the New York Stock Exchange
Composite
3.
<PAGE>
Transactions, or on the next regular business date on which shares of the Common
Stock are traded in the event that no shares of the Common Stock have been
traded on the relevant day. If such exchange shall cease to be the primary
exchange or market for the Company's Common Stock, fair market value shall be
determined based on the closing price (or, if not available, the mean between
the high and low selling or bid and asked prices) as reported for the exchange
or market that the Committee determines to be the primary market for such Common
Stock.
(c) Payroll Deductions. Payment for Common Stock under the Plan shall
be effected by means of the participant's authorized payroll deductions or such
other means as the Committee may authorize. Such deductions shall begin with the
first pay day following the commencement of the Offering Period and shall
(unless sooner terminated by the participant) remain in effect for successive
Offering Periods. The Committee may permit participants to elect payroll
deductions pursuant to one or either of the following methods:
(i) Flat Dollar Amount. A participant may elect a
flat dollar amount per biweekly payroll check, to be
contributed to the Plan. The minimum contribution is $20 per
payroll check. The maximum contribution is $21,250 per year. A
participant may also make a separate election to contribute to
the Plan a specified dollar amount from annual scheduled bonus
payments made in the month of March.
(ii) Percentage of Compensation. A participant may
elect a percentage of the participant's compensation paid
during the Offering Period, in one percent (1%) increments
(not to exceed fifteen percent (15%)), to be contributed to
the Plan. Compensation for this purpose means the
participant's total compensation, which includes regular base
earnings paid by a Participating Company, sales commissions,
overtime, bonuses and incentive payments, and elective
contributions that are not includible in income under Sections
125, 402(a)(8), 401(h) or 403(b) of the Code.
(d) Number of Shares. On the first day of any Offering Period, a
participant shall be granted a purchase right to purchase up to a fixed number
of shares of Common Stock determined as of such date by dividing the total
amount anticipated to be collected pursuant to Section 7(c), together with any
amount carried over from the preceding Offering Period, by one hundred percent
(100%) of the fair market value of the Company's Common Stock on the first day
of the Offering Period and multiplying the result by a constant number, not to
exceed one and one-half (1-1/2), specified by the Committee for such Offering
Period. Any payroll deductions not applied to such purchase because they are not
sufficient to purchase a whole share shall be held for the purchase of Common
Stock on the next purchase date.
(e) Termination of or Changes to Payroll Deductions. Unless a
participant has irrevocably elected otherwise, the participant may terminate
payroll deductions at any time
4.
<PAGE>
by filing the appropriate form with the Committee. Such termination will become
effective on the first day of the first full payroll period following the filing
of such form. Any payroll deductions previously collected from the participant
and not previously applied to the purchase of Common Stock during that Offering
Period shall, at the participant's election, immediately be refunded or held for
the purchase of shares on the next purchase date immediately following such
termination. If no such election is made, then such funds shall be refunded as
soon as possible after the purchase date. Prior to the commencement of any new
Offering Period, a participant may resume, increase or decrease payroll
deductions by filing the appropriate form with the Committee. The new payroll
deduction shall become effective on the first day of the first Offering Period
following the filing of such form. Distribution of Common Stock held in a
participant's account shall be distributed pursuant to Section 7(g).
(f) Termination of Employment. If a participant ceases to be employed
by the Company or a Participating Company for any reason, including death or
disability, prior to the end of an Offering Period, the participant's purchase
right shall terminate, and any payroll deductions previously collected from the
participant and not previously applied to the purchase of Common Stock during
that Offering Period shall, at the participant's election (or at the election of
the estate of the deceased participant) immediately be paid to the participant
or the participant's personal representative, or held for the purchase of shares
on the next purchase date immediately following such termination. If no such
election is made, then such funds shall be refunded as soon as possible after
the purchase date. The Committee may provide, on a uniform basis with respect to
any Offering Period, that an employee who is on a leave of absence will be
deemed to have terminated employment after a specified period.
(g) Transfer Restrictions on Shares.
(i) Restrictions and Escrow. The Committee may determine, in
its discretion, that shares of Common Stock acquired under the Plan during an
Offering Period shall not be transferable by the participant, other than by
reason of death or such other reasons as the Committee may specify, for a period
not to exceed one (1) year following the purchase date. If the Committee does so
determine, shares so acquired shall be held in escrow by the Company until such
transfer restrictions lapse. The Committee may also provide with respect to any
Offering Period, that in the event that a participant attempts to transfer
shares held in escrow on his or her behalf or terminates employment with the
Company or Participating Company while shares are held in escrow on his or her
behalf, the Company shall have an automatic right to repurchase, unless such
repurchase is prohibited or restricted by law, such shares, for an amount equal
to the lesser of (i) the price paid for the shares by the participant, or (ii)
the fair market value (determined in accordance with Section 7(b)) of the shares
on the date of repurchase.
(ii) Additional Shares and Dividends. In the event of any
stock dividend, stock split, recapitalization, reorganization or other change in
corporate structure effected without receipt of consideration, then any new,
substituted or additional securities or other
5.
<PAGE>
property (including money paid other than as a regular cash dividend) which is
by reason of such transaction distributed with respect to any escrowed shares
shall be reinvested in shares of Common Stock under the Plan, and shares
purchased pursuant to such reinvestment shall be immediately subject to the
above transfer and escrow provisions to the same extent the previously escrowed
shares are at the time. All regular cash dividends on shares or other securities
at the time held on behalf of a participant shall be reinvested in shares of
Common Stock under the Plan.
(h) Proration of Purchase Rights. If the total number of shares of
Common Stock for which purchase rights are to be granted on any date in
accordance with the terms of the Plan exceed the number of shares then remaining
available under the Plan (after deduction of all shares for which purchase
rights have been exercised or are then outstanding), the Committee shall make a
pro rata allocation of the shares remaining available in as near as uniform a
manner as shall be practicable and as it shall deem equitable. The Committee
shall give written notice of such allocation to each participant affected
thereby.
(i) Exercise. Each purchase right shall be exercised automatically on
the purchase date for the full number of purchasable shares, unless the purchase
right has been previously terminated pursuant to Section 7(e) or 7(f).
(j) Assignability. Subject to Section 8, purchase rights under the Plan
shall not be assignable or transferable by the participant other than by will or
by the laws of descent and distribution and during the life of the participant
shall be exercisable only by the participant.
(k) Rights as Stockholder. A participant shall have no rights as a
stockholder with respect to shares covered by any purchase right granted under
the Plan until the purchase right is exercised. No adjustments will be made for
dividends or other rights for which the record date is prior to the date of
exercise.
(l) Accrual Limitations. No purchase right shall permit the rights of a
participant to purchase stock under all "employee stock purchase plans" (as
defined in Section 423 of the Code) of the Company or a Corporate Affiliate to
accrue at a rate that exceeds $25,000 of fair market value of such stock
(determined at the time such purchase right is granted) for each calendar year
in which such purchase right is outstanding at any time.
(m) Regulatory Approval. The implementation of the Plan, the granting
of any purchase right under the Plan, and the issuance of Common Stock upon the
exercise of any such purchase right shall be subject to the Company's compliance
with all applicable requirements of the Securities Act of 1933, all applicable
listing requirements of any securities exchange on which the Common Stock is
listed and all other applicable requirements established by law or regulation.
(n) Other Provisions. Instruments evidencing purchase rights may
contain such other provisions, not inconsistent with the Plan, as the Committee
deems advisable.
6.
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8. Designation of Beneficiary
A participant may file a written designation of a beneficiary who is to
receive shares and cash, if any, credited on behalf of the participant under the
Plan in the event of such participant's death. Such designation of beneficiary
may be changed by the participant at any time by filing the appropriate form
with the Committee. In the event of the death of a participant and in the
absence of a beneficiary validly designated under the Plan who is living at the
time of such participant's death, the Company shall deliver such shares and/or
cash to the executor or administrator of the estate of the participant, or if no
such executor or administrator has been appointed (to the knowledge of the
Company), the Company shall deliver such shares and/or cash to the participant's
spouse or if no spouse is living, to the children of the participant in equal
shares.
9. Corporate Transactions
(a) Termination. In the event of the disposition of all or
substantially all of the assets or outstanding capital stock of the issuer of
the Common Stock by means of a sale, merger, reorganization, or liquidation (a
"Corporate Transaction"), each purchase right under this Plan, unless assumed
pursuant to a written agreement by the successor corporation or a parent or
subsidiary thereof, will automatically be exercised immediately prior to the
consummation of the Corporate Transaction as if such date were the last purchase
date of the Offering Period. Any payroll deductions not applied to such purchase
shall be promptly refunded to the participant.
(b) Corporate Structure. The grant of purchase rights under this Plan
will in no way affect the right of the issuer of Common Stock to adjust,
reclassify, reorganize, or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
10. Amendment and Termination
(a) Amendment. The Board may from time to time alter, amend, suspend,
or discontinue the Plan with respect to any shares at any time not subject to
purchase rights; provided, however, that no such action of the Board may,
without the approval of stockholders of the Company, (i) increase the number of
shares subject to the Plan (unless necessary to effect the adjustments required
under Section 4(b)), or (ii) make any other change with respect to which the
Board determines that stockholder approval is required by applicable law or
regulatory standards.
(b) Termination. The Board shall have the right, exercisable in its
sole discretion, to terminate the Plan immediately following any purchase date.
Should the Board elect to exercise such right, then no further purchase rights
shall thereafter be granted or exercised, and no further payroll deductions
shall thereafter be collected under the Plan.
7.
<PAGE>
11. No Employment Obligation
Nothing contained in the Plan (or in any purchase right granted
pursuant to the Plan) shall confer upon any employee any right to continue in
the employ of the Company or any Corporate Affiliate or constitute any contract
or agreement of employment or interfere in any way with the right of the Company
or a Corporate Affiliate to reduce such employee's compensation from the rate in
existence at the time of the granting of a purchase right or to terminate such
employee's employment at any time, with or without cause. However, nothing
contained herein or in any purchase right shall affect any contractual rights of
an employee pursuant to a written employment agreement.
12. Governing Law
To the extent not otherwise governed by federal law, the Plan and its
implementation shall be governed by and construed in accordance with the laws of
the State of California.
8.
EXHIBIT 4.6
WellPoint Health Networks Inc. Stock Option\Award Plan
<PAGE>
WELLPOINT HEALTH NETWORKS INC. STOCK OPTION/AWARD PLAN
ARTICLE ONE
GENERAL PROVISIONS
1.1 PURPOSE OF THE PLAN
This WellPoint Health Networks Inc. Stock Option\Award Plan ("Plan") is
implemented as of January 1, 1994 ("Effective Date"), to enable WellPoint Health
Networks Inc. ("Company") to offer options, restricted stock, performance
shares, performance units, phantom stock, and automatic stock appreciation
rights to the following eligible individuals ("Eligible Individuals"): Key
employees and officers of the Company or of an affiliate ("Affiliate") of the
Company linked to the Company by a 50% or greater chain of ownership. For these
purposes, ownership means ownership of stock possessing 50% or more of the total
combined voting power of the owned entity. In addition, this Plan provides for
automatic stock grants to non-employee members of the Board of Directors of the
Company ("Board").
1.2 ADMINISTRATION OF THE PLAN
A. Committee. The Plan will be administered by a committee or
committees appointed by the Board and consisting of two or more members of the
Board. If no committee is appointed, the Board will serve as the committee. The
Board may delegate responsibility for administration of the Plan with respect to
designated grant and award recipients to different committees, subject to such
limitations as the Board deems appropriate. The term "Committee," when used in
this Plan, refers to the committee that has been delegated authority with
respect to a matter, or to the Board if no committee has been delegated such
authority. Members of a committee will serve for such term as the Board may
determine, and may be removed by the Board at any time.
B. Authority. Each Committee has full authority to administer the Plan
within the scope of its delegated responsibilities, including authority to
interpret and construe any relevant provision of the Plan, to adopt rules and
regulations that it deems necessary, to determine which individuals are Eligible
Individuals and which Eligible Individuals are to receive grants and/or awards
under the Plan, to determine the amount and/or number of shares subject to such
a grant or award, and to determine the terms of such a grant or award made under
the Plan (which terms need not be identical).
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Decisions of a Committee made within the discretion delegated to it by the Board
are final and binding on all persons.
1.3 STOCK SUBJECT TO THE PLAN
A. Number of Shares. Shares of the Company's Class A Common Stock
("Common Stock") available for issuance under the Plan will be drawn from the
Company's authorized but unissued shares of Common Stock or from reacquired
shares of Common Stock, including shares repurchased by the Company on the open
market. The number of shares of Common Stock that may be issued under the Plan
will not exceed 2.6 million, subject to adjustment in accordance with the terms
of the Plan. Notwithstanding the foregoing, as of January 1 of each fiscal year
after 1995, the aggregate number of shares of Common Stock issuable under the
Plan will be increased by 1.3% of the number of the Company's Common Equivalent
Shares (as defined below) outstanding as of December 31 of the preceding fiscal
year. Subject to adjustment as provided in Paragraph 1.3.D, not more than 2.6
million shares may be subject to Incentive Options (as defined below). The
"Company's Common Equivalent Shares" are the total number of outstanding shares
of Common Stock plus the total number of shares of Common Stock issuable upon
conversion or exercise of outstanding warrants, options and convertible
securities.
B. Affiliate Stock. Subject to such limits, regulatory approvals and
stockholder approvals as the Committee determines to be necessary, Common Stock
issuable under the Plan may include the stock of an Affiliate, a subsidiary, or
a joint venture in which the Company is a participant.
C. Expired Grants and Awards. If any outstanding grant or award under
the Plan expires, is terminated, is cancelled or is forfeited for any reason
before the full number of shares governed by the grant or award are issued,
those remaining shares will not be charged against the limit in Paragraph A
above and will become available for subsequent grants and awards under the Plan.
Notwithstanding the foregoing, shares for which a cash payment is made in lieu
of payment in stock as provided under this Plan and shares forfeited to or
repurchased by the Company pursuant to its forfeiture and repurchase rights
under this Plan will not be available for subsequent grants and awards under
this Plan.
D. Adjustments. If any change is made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without receipt of consideration, then
appropriate adjustments will be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the number and/or class of securities
and price per share in effect under each outstanding grant and award under the
Plan and (iii) the maximum number of shares issuable to one individual pursuant
to Paragraph 1.3.E. The purpose of these adjustments will be to preclude the
enlargement or dilution of rights and benefits under the grants and awards.
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<PAGE>
E. Individual Limit. No Eligible Individual will receive options,
restricted stock, performance shares, performance units, phantom stock,
automatic stock appreciation rights or any combination of each under this Plan
for more than 750,000 shares (subject to adjustment as provided in Paragraph
1.3.D) during any five-year period.
ARTICLE TWO
OPTIONS
2.1 TERMS AND CONDITIONS OF OPTIONS
A. Type and Term. The Committee has full authority to determine whether
options are to be incentive stock options ("Incentive Options") that satisfy the
requirements of Section 422 of the Internal Revenue Code or non-qualified
options not intended to satisfy those requirements ("Non-Qualified Options"),
the time or times at which grants become exercisable, and the maximum term for
which grants remain outstanding. No grants under the Plan will be exercisable
after the expiration of 10 years from the date of grant.
B. Price. The option price per share will be fixed by the Committee;
provided, however, that in no event will the option price per share for
Incentive Options be less than 100% of the Fair Market Value of a share of
Common Stock on the date of the grant.
C. Exercise and Payment. After any option granted under the Plan
becomes exercisable, it may be exercised by notice to the Company at any time
before termination of the option. The option price will be payable in full in
cash or check made payable to the Company; provided, however, that the Committee
may, either at the time the option is granted or at any subsequent time, and
subject to such limitations as it may determine, authorize payment of all or a
portion of the option price in one or more of the following alternative forms:
(1) in shares of Common Stock valued as of the Exercise Date
(defined below) and held for the requisite period to avoid a charge to earnings;
or
(2) through a sale and remittance procedure under which the
option holder delivers a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale proceeds to pay the option price.
For purposes of Subparagraph (2) immediately above, the "Exercise Date" is the
date on which written notice of the exercise of the option is delivered to the
Company. In all
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other cases, the Exercise Date is the date on which written notice and actual
payment is received by the Company.
D. Stockholder Rights. An option holder will have no stockholder rights
with respect to any shares covered by an option before the Exercise Date of the
option, as defined in the immediately preceding Paragraph.
E. Separation from Service. The Committee will determine and set forth
in each option whether the option will continue to be exercisable, and the terms
of such exercise, on and after the date that an optionee ceases to be employed
by or to provide services to the Company or an Affiliate. The date of
termination of an optionee's employment or services will be determined by the
Committee, which determination will be final.
F. Incentive Options. Options granted under the Plan that are intended
to be Incentive Options will be subject to the following additional terms:
(1) Dollar Limit. To the extent that the aggregate fair market
value (determined as of the respective date or dates of grant) of shares with
respect to which options that would otherwise be Incentive Options are
exercisable for the first time by any individual during any calendar year under
the Plan (or any other plan of the Company, a parent or subsidiary corporation
or predecessor thereof) exceeds the sum of $100,000 (or a greater amount
permitted under the Internal Revenue Code), whether by reason of acceleration or
otherwise, those options will not be treated as Incentive Options. In making
this determination, options will be taken into account in the order in which
they were granted.
(2) 10% Stockholder. If any employee to whom an Incentive
Option is to be granted is, on the date of grant, the owner of stock (determined
using the attribution rules of Section 424(d) of the Internal Revenue Code)
possessing more than 10% of the total combined voting power of all classes of
stock of his or her employer corporation or of its parent or subsidiary ("10%
Stockholder"), then the following special provisions will apply to the option
granted to that individual:
(i) The option price per share of the stock subject to
that Incentive Option will not be less than 110% of the Fair Market Value of the
option shares on the date of grant; and
(ii) The option will not have a term in excess of 5
years from the date of grant.
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<PAGE>
(3) Parent and Subsidiary. For purposes of this Paragraph,
"parent" and "subsidiary" will have the meaning attributed to those terms, as
they are used in Section 422(b) of the Internal Revenue Code.
(4) Employees. Incentive Options may only be granted to
employees of the Company or of a parent or subsidiary.
G. Transferability. During the lifetime of the optionee, options will
be exercisable only by the optionee and will not be assignable or transferable
by the optionee otherwise than by Will or by the laws of descent and
distribution following the optionee's death.
2.2 CORPORATE TRANSACTIONS
A. Termination. In the event of the disposition of all or substantially
all of the assets or outstanding capital stock of the issuer of Common Stock by
means of a sale, merger, reorganization, or liquidation, each award under this
Plan will terminate unless assumed pursuant to a written agreement by the
successor corporation or a parent or subsidiary thereof.
B. Corporate Structure. The grant of awards under this Plan will in no
way affect the right of the issuer of Common Stock to adjust, reclassify,
reorganize, or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
2.3 REPURCHASE RIGHTS
The Committee may in its discretion determine that it shall be a term
and condition of one or more options exercised under the Plan that the Company
or its assigns will have the right, exercisable upon the optionee's separation
from service with the Company and/or its Affiliates, to repurchase any or all of
the shares of Common Stock previously acquired by the optionee upon the exercise
of that option. Any such repurchase right will be exercisable on such terms and
conditions (including the establishment of the appropriate vesting schedule and
other provisions for the expiration of the repurchase right in one or more
installments) as the Committee may specify in the instrument evidencing the
right. The Committee will also have full power and authority to provide for the
automatic termination of repurchase rights, in whole or in part, thereby
accelerating the vesting of any or all of the purchased shares.
ARTICLE THREE
AUTOMATIC STOCK APPRECIATION RIGHTS,
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<PAGE>
RESTRICTED STOCK, PERFORMANCE SHARES,
PERFORMANCE UNITS, AND PHANTOM STOCK
3.1 AUTOMATIC STOCK APPRECIATION RIGHT
Each option grant may, in the discretion of the Committee, be
accompanied by the grant of an automatic stock appreciation right ("ASAR").
Under the terms of the ASAR, unless the Committee determines otherwise, the
holder of an option will receive cash instead of shares on exercise of an option
if issuance of shares on exercise would cause Blue Cross' ownership of the
Company to drop below the ownership required for Blue Cross and the Company to
file a consolidated Federal income tax return. The cash distribution will be
equal to the difference between (i) the Fair Market Value (on the Exercise Date)
of the shares to be replaced by the cash and (ii) the aggregate option price
payable for the shares to be replaced by the cash.
3.2 RESTRICTED STOCK
Restricted stock granted under the Plan consists of shares of Common
Stock (together with cash dividend equivalents if so determined by the
Committee), the retention and transfer of which is subject to such terms,
conditions and restrictions (whether based on performance standards or periods
of service or otherwise and including repurchase and/or forfeiture rights in
favor of the Company) as the Committee shall determine. The terms, conditions
and restrictions to which restricted stock is subject will be evidenced by such
instruments as the Committee may from time to time approve and may vary from
grant to grant. The Committee has the absolute discretion to determine whether
any consideration (other than the services of the potential award holder) is to
be received by the Company or its Affiliates as a condition precedent to the
issuance of restricted stock.
3.3 PERFORMANCE SHARES
Performance shares granted under the Plan consist of the right, subject
to such terms, conditions and restrictions as the Committee may determine
(including, but not limited to performance standards), to receive a share of
Common Stock. Performance shares will be evidenced by such instruments as the
Committee may from time to time approve. The Committee has the absolute
discretion to determine whether any consideration (other than the services of
the potential award holder) is to be received by the Company or its Affiliates
as a condition precedent to the issuance of shares pursuant to performance
shares. The terms, conditions and restrictions to which performance shares are
subject may vary from grant to grant.
3.4 PHANTOM STOCK
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<PAGE>
Phantom stock granted under the Plan consists of the right to receive
an amount in cash equal to the Fair Market Value of one share of Common Stock on
the date of valuation of the phantom stock (together with cash dividend
equivalents if so determined by the Committee) less such amount, if any, as the
Committee shall specify. Phantom stock will be evidenced by such instruments as
the Committee may from time to time approve. The date of valuation and payment
of cash under phantom stock and the conditions, if any, to which such payment
will be subject (whether based on performance standards or periods of service or
otherwise) will be determined by the Committee.
3.5 PERFORMANCE UNITS
Performance units granted under the Plan consist of the right to
receive cash, subject to such terms, conditions and restrictions (including, but
not limited to performance standards) as the Committee may determine.
Performance units will be evidenced by such instruments as the Committee may
from time to time approve. The terms, conditions and restrictions to which
performance units are subject may vary from grant to grant.
3.6 CASH PAYMENTS
The Committee may provide award holders with an election, or require a
holder, to receive a portion of the total value of the Common Stock subject to
restricted stock or performance shares in the form of a cash payment, subject to
such terms, conditions and restrictions as the Committee may specify.
3.7 ELECTIVE AND TANDEM AWARDS
The Committee may award stock options, restricted stock, performance
shares, phantom stock and performance units independently of other compensation
or in lieu of other compensation whether at the election of the potential award
holder or otherwise. The number of shares subject to options or shares of
restricted stock, phantom stock, performance shares, or performance units to be
awarded in lieu of other compensation will be determined by the Committee in its
sole discretion and need not be equal to the foregone compensation in Fair
Market Value. In addition, stock options, restricted stock, performance shares,
phantom stock and performance units may be awarded in tandem, so that a portion
of that award becomes payable or becomes free of restrictions only if and to the
extent that the tandem award is not exercised or is forfeited, subject to such
terms and conditions as the Committee may specify.
ARTICLE FOUR
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<PAGE>
AUTOMATIC STOCK GRANTS TO NON-EMPLOYEE DIRECTORS
In consideration of their past services, individuals who have been
non-employee members of the Board for at least six full calendar months on the
Automatic Grant Date defined below ("Independent Directors") will automatically
be granted Common Stock ("Automatic Stock Grants") for the number of shares of
Common Stock set forth below (subject to adjustment under Paragraph 1.3.D. of
this Plan) on the dates and terms set forth below, in consideration of their
past services.
A. No Discretion. No person will have any discretion to select which
Independent Directors will be granted Common Stock or to determine the number of
shares of Common Stock to be granted to Independent Directors; provided,
however, that nothing in this Plan will be construed to prevent an Independent
Director from declining to receive Common Stock under this Plan.
B. Date of Grant. On the last business day of the second quarter of
each fiscal year of the Company that occurs after all approvals referenced in
Paragraph 5.4.C. of the Plan have been obtained ("Automatic Grant Date"), each
continuing Independent Director will automatically receive 500 shares of Common
Stock.
ARTICLE FIVE
MISCELLANEOUS
5.1 AMENDMENT
A. Board Action. The Board may amend, suspend or discontinue the Plan
in whole or in part at any time; provided, however, that (1) except to the
extent necessary to qualify as Incentive Options any or all options granted
under the Plan that are intended to so qualify, such action shall not adversely
affect a holder's rights and obligations with respect to grants and awards at
the time outstanding under the Plan and (2) the Board shall not, without the
approval of the Company's stockholders (i) materially increase the number of
shares of Common Stock that may be issued under the Plan (except to make
permissible adjustments related to changes in the Common Stock issuable under
the Plan and designed to preclude the enlargement or dilution of rights and
benefits under the Plan), (ii) materially modify the eligibility requirements
for grants under the Plan, or (iii) make any other change with respect to which
the Board determines that stockholder approval is required by applicable law or
regulatory standards.
B. Modification of Grants and Awards. The Committee has full power and
authority to modify or waive any or all of the terms, conditions or restrictions
applicable to any outstanding grant or award under the Plan (other than an
Automatic Stock Grant), to the extent not inconsistent with the Plan; provided,
however, that no such
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<PAGE>
modification or waiver shall, without the consent of the holder of the grant or
award, adversely affect the holder's rights thereunder.
5.2 TAX WITHHOLDING
A. Obligation. The Company's obligation to deliver shares or cash upon
the exercise of grants and awards under the Plan is subject to the satisfaction
of all applicable Federal, State and local income and employment tax withholding
requirements.
B. Stock Withholding. The Committee may require or permit, in its
discretion and upon such terms and conditions as it may deem appropriate
(including the applicable safe-harbor provisions of SEC Rule 16b-3) any or all
holders of outstanding grants or awards under the Plan to elect to have the
Company withhold, from the shares of Common Stock otherwise issuable pursuant to
such grant or award, one or more of such shares with an aggregate Fair Market
Value equal to the Federal, State and local employment and income taxes
("Taxes") incurred in connection with the acquisition of such shares. Holders of
grants or awards under the Plan may also be granted the right to deliver
previously acquired shares of Common Stock held for the requisite period to
avoid a charge to earnings in satisfaction of such Taxes. The withheld or
delivered shares will be valued at Fair Market Value on the applicable
determination date for such Taxes.
5.3 VALUATION
For all purposes under this Plan, the fair market value per share of
Common Stock on any relevant date under the Plan ("Fair Market Value") will be
determined as follows:
(1) National Exchange. If the Common Stock is at the time
listed or admitted to trading on any national stock exchange, then the Fair
Market Value will be the closing selling price per share of Common Stock on the
day before the date in question on the stock exchange determined by the
Committee to be the primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions on such exchange. If
there is no reported sale of Common Stock on such exchange on the day before the
date in question, then the Fair Market Value will be the closing selling price
on the exchange on the last preceding date for which such quotation exists.
(2) NASDAQ. If the Common Stock is not at the time listed or
admitted to trading on any national stock exchange but is traded in the
over-the-counter market, the fair market value will be the mean between the
highest bid and lowest asked prices (or, if such information is available, the
closing selling price) per share of
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<PAGE>
Common Stock on the date in question in the over-the-counter market, as such
prices are reported by the National Association of Securities Dealers through
its NASDAQ system or any successor system. If there are no reported bid and
asked prices (or closing selling price) for the Common Stock on the date in
question, then the mean between the highest bid price and lowest asked price (or
the closing selling price) on the last preceding date for which such quotations
exist will be determinative of fair market value.
(3) Committee. Notwithstanding the foregoing, if the Committee
determines that, as a result of circumstances existing on any date, the use of
the above rules is not a reasonable method of determining Fair Market Value on
that date or if Common Stock is not at the time listed or admitted to trading as
outlined above, the Committee may use such other method as, in its judgment, is
reasonable.
5.4 EFFECTIVE DATE AND TERM OF PLAN
A. Effective Date. This Plan will become effective on the Effective
Date, but no Common Stock will be issued under the Plan before the Plan is
approved by the holders of at least a majority of the Company's voting stock. If
such stockholder approval is not obtained within twelve (12) months of the
Effective Date of the Plan, then all grants and awards under the Plan will
terminate, and no further grants or awards will be made under the Plan.
B. Term. Incentive Options may be granted under the Plan only within 10
years of the Effective Date of the Plan. Subject to this limit, the Committee
may make grants and awards under the Plan at any time after the Effective Date
of the Plan and before the Plan is terminated by the Board.
C. Approvals. Notwithstanding anything to the contrary in this Plan, no
grants or awards will be made under this Plan until the Plan is approved by the
shareholders and the Plan has received any other required regulatory approvals.
5.5 USE OF PROCEEDS
Any cash proceeds received by the Company from the sale of shares
pursuant to grants and awards under the Plan will be used for general corporate
purposes.
5.6 REGULATORY APPROVALS
The implementation of the Plan, any grants and awards under the Plan,
and the issuance of stock pursuant to any grant or award is subject to the
procurement by the Company of all approvals and permits required by regulatory
authorities having
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<PAGE>
jurisdiction over the Plan, grants and awards made under the Plan, and stock
issued pursuant to the Plan.
5.7 NO EMPLOYMENT/SERVICE RIGHTS
Neither the establishment of this Plan, nor any action taken under the
terms of this Plan, nor any provision of this Plan will be construed to grant
any individual the right to remain in the employ or service of the Company (or
any subsidiary or parent of the Company) for any period of specific duration,
and the Company (or any subsidiary or parent of the Company retaining the
services of such individual) may terminate such individual's employment or
service at any time and for any reason, with or without cause. Nothing contained
in this Plan or in any grant or award under this Plan will affect any
contractual rights of an employee pursuant to a written employment agreement.
- 11 -
EXHIBIT 4.7
WellPoint Health Networks Inc. Employee Stock Option Plan
<PAGE>
WELLPOINT HEALTH NETWORKS INC.
EMPLOYEE STOCK OPTION PLAN
ARTICLE ONE
GENERAL PROVISIONS
1.1 PURPOSE OF THE PLAN
This WellPoint Health Networks Inc. Employee Stock Option Plan ("Plan")
is adopted effective May 21, 1996 (the "Effective Date"), to enable WellPoint
Health Networks Inc. (the "Company") to offer stock options to non-executive
officers of the Company or any affiliate.
1.2 ELIGIBILITY
The following individuals ("Eligible Individuals") shall be eligible to
be granted stock options under the Plan: Each employee of the Company or of an
affiliate ("Affiliate") of the Company linked to the Company by a 50% or greater
chain of ownership who, on the date of grant or such date before the date of
grant as the Committee (as defined below) shall specify for administrative
purposes, (i) is not an executive officer of the Company and (ii) has not
received a grant under the WellPoint Health Networks Inc. 1994 Stock
Option\Award Plan and has not been determined to be eligible for a grant
thereunder by the committee administering such plan. For these purposes,
ownership means ownership of stock possessing 50% or more of the total combined
voting power of the owned entity.
1.3 ADMINISTRATION OF THE PLAN
A. Committee. The Plan will be administered by a committee or
committees appointed by the Board of Directors of the Company (the "Board") and
consisting of two or more members of the Board. If no committee is appointed,
the Board will serve as the committee. The term "Committee," when used in this
Plan, refers to the committee that has been delegated authority with respect to
a matter, or to the Board if no committee has been delegated such authority.
Members of a committee will serve for such term as the Board may determine, and
may be removed by the Board at any time.
B. Authority. The Committee has full authority to administer the Plan
within the scope of its delegated responsibilities, including authority to
interpret and construe any relevant provision of the Plan, to adopt rules and
regulations that it deems necessary, to determine which individuals are Eligible
Individuals, to determine which Eligible Individuals shall be granted options
under the Plan, to determine the amount and/or number of shares subject to such
options, and to determine the terms of such an option (which terms need not
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<PAGE>
be identical). Decisions of a Committee made within the discretion delegated to
it by the Board are final and binding on all persons.
1.4 STOCK SUBJECT TO THE PLAN
A. Number of Shares. Shares of the Company's Common Stock ("Common
Stock") available for issuance under the Plan will be drawn from the Company's
authorized but unissued shares of Common Stock or from reacquired shares of
Common Stock, including shares purchased by the Company on the open market. The
number of shares of Common Stock that may be issued under the Plan will not
exceed two (2) million, subject to adjustment in accordance with Paragraph C
below.
B. Expired Options. If any outstanding option under the Plan expires,
is terminated, is cancelled or is forfeited for any reason before the full
number of shares subject to such option are issued, the remaining shares will
not be charged against the limit in Paragraph A above and will become available
for subsequent option grants under the Plan.
C. Adjustments. If any change is made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without receipt of consideration, then the
Committee shall make appropriate adjustments to (i) the maximum number and/or
class of securities issuable under the Plan and (ii) the number and/or class of
securities and price per share in effect under each option outstanding under the
Plan. The purpose of these adjustments will be to preclude the enlargement or
dilution of rights and benefits under the options.
ARTICLE TWO
TERMS OF OPTIONS
2.1 TERMS AND CONDITIONS OF OPTIONS
A. Type and Term. All options granted under the Plan shall be
non-qualified options not intended to satisfy the requirements for incentive
stock options under Section 422 of the Internal Revenue Code. No grants under
the Plan will be exercisable after the expiration of 10 years from the date of
grant.
B. Price and Exercisability. The option price per share and the period
or periods within the term of an option that such option may be exercised will
be fixed by the Committee.
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<PAGE>
C. Exercise and Payment. After any option granted under the Plan
becomes exercisable, it may be exercised by notice to the Company at any time
before termination of the option. The option price will be payable in full in
cash or check made payable to the Company or, subject to such limitations as the
Committee may determine, in one or more of the following alternative forms:
(1) in shares of Common Stock valued as of the Exercise Date (defined
below) and held by the optionee for the requisite period to avoid a charge to
earnings; or
(2) through a sale and remittance procedure under which the option
holder delivers a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
proceeds to pay the option price.
For purposes of Subparagraph (2) immediately above, the "Exercise Date" is the
date on which written notice of the exercise of the option is delivered to the
Company. In all other cases, the Exercise Date is the date on which written
notice and actual payment is received by the Company.
D. Stockholder Rights. An option holder will have no stockholder rights
with respect to any shares covered by an option before the Exercise Date of the
option, as defined in the immediately preceding Paragraph.
E. Termination of Employment. If an optionee ceases to be an employee
of the Company or an Affiliate, any outstanding option held by such optionee
shall immediately terminate, except that, to the extent that such option was
exercisable on the date of termination of employment, such option may be
exercised following such termination to the extent set forth below:
(i) if the optionee's employment is terminated for any reason
other than death, Retirement, Permanent Disability or Misconduct,
the optionee shall have a period of forty-five (45) days (commencing
with the date of termination of employment) during which to exercise
the option, but in no event shall this option be exercisable at any
time after the expiration of 10 years from the date of grant.
(ii) if the optionee dies while an employee of the Company or
an Affiliate or within a period of post-termination exercisability
permitted under this Paragraph 2.1.E, the personal representative of
the optionee's estate or the person or persons to whom the option is
transferred pursuant to the optionee's will or in accordance with
the laws of descent and distribution shall have the right to
exercise this option. Such right shall lapse and this option shall
cease to be outstanding upon the earlier of (A) the expiration of
the twelve (12)- month period measured from the date of the
optionee's death or (B) the expiration of 10 years from the date of
grant.
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<PAGE>
(iii) if the optionee terminates employment by reason of
Retirement or Permanent Disability while this option is outstanding,
then the optionee shall have a period of five (5) years (commencing
with the date of termination) during which to exercise this option.
In no event shall this option be exercisable at any time after the
expiration of 10 years from the date of grant. "Permanent
Disability" shall mean the inability of Optionee to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death
or has lasted or can be expected to last for a continuous period of
twelve (12) months or more. "Retirement" shall mean termination of
employment with the Company or an Affiliate on or after attainment
of age sixty-five (65) or attainment of age fifty-five (55) with ten
(10) years of service.
(iv) if the optionee's employment is terminated for
Misconduct, the option shall terminate immediately and cease to
remain outstanding. "Misconduct" shall mean the commission of any
act of fraud, embezzlement or dishonesty by the optionee, any
unauthorized use or disclosure by the optionee of confidential
information or trade secrets of the Company (or an Affiliate), or
any other intentional misconduct by the optionee adversely affecting
the business or affairs of the Company (or an Affiliate). The
foregoing definition shall not be deemed to be inclusive of all the
acts or omissions which the Company (or an Affiliate) may consider
as grounds for the dismissal or discharge of an optionee or any
other individual in the service of the Company (or an Affiliate).
(v) During the limited period of post-termination
exercisability, an option may not be exercised in the aggregate for
more than the number of shares for which the option is exercisable
at the date of termination of employment. Upon the expiration of
such limited exercise period or (if earlier) upon the expiration of
10 years from the date of grant, the option shall terminate and
cease to be outstanding for any shares for which the option was
exercisable on the date of termination of employment but has not
been exercised. With respect to those shares for which the option is
not exercisable on the date of termination of employment, the option
shall immediately terminate and cease to be outstanding.
The date of termination of employment shall be determined by the Committee in
its sole discretion, which determination shall be binding on all parties. If the
Committee so determines, an option may provide that "employment" for this
purpose shall include services as a consultant.
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<PAGE>
F. Transferability. During the lifetime of the optionee, options will
be exercisable only by the optionee and will not be assignable or transferable
by the optionee otherwise than by will or by the laws of descent and
distribution following the optionee's death.
2.2 CORPORATE TRANSACTIONS
A. Acceleration and Termination. In the event of the disposition of all
or substantially all of the assets or outstanding capital stock of the Company
by means of a sale, merger, reorganization, or liquidation, each stock option
outstanding under this Plan will become immediately exercisable, unless the
option is assumed or replaced with a comparable option pursuant to a written
agreement by the successor corporation or a parent or subsidiary thereof. If an
option is not exercised or assumed by the successor corporation or a parent or
subsidiary thereof, the option will terminate upon consummation of the sale,
liquidation, reorganization or merger.
B. Change in Control. If there is a Change in Control as defined below,
each option outstanding under the Plan shall become immediately exercisable in
full. A "Change in Control" shall mean a change in ownership or control of the
Company effected through either of the following transactions:
(i) the acquisition, directly or indirectly, by any person or
related group of persons (other than Western Health Partnerships,
the Company or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Company), of
beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934) of securities possessing more than
fifty percent (50%) of the total combined voting power of the
Company's outstanding securities pursuant to a tender or exchange
offer made directly to the Company's stockholders on or after May
21, 1996 by a person or related group of persons which the Board
does not recommend such stockholders to accept, or
(ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less beginning on or after May
21, 1996 such that a majority of the Board members ceases, by reason
of one or more contested elections for Board membership, to be
comprised of individuals who either (A) have been Board members
continuously since the beginning of such period or (B) have been
elected or nominated for election as Board members during such
period by at least a majority of the Board members described in
clause (A) who were still in office at the time the Board approved
such election or nomination.
C. Corporate Structure. The grant of options under this Plan will in no
way affect the right of the Company to adjust, reclassify, reorganize, or
otherwise change its
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<PAGE>
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
ARTICLE THREE
MISCELLANEOUS
3.1 AMENDMENT
A. Board Action. The Board may amend, suspend or discontinue the Plan
in whole or in part at any time; provided, however, that (1) such action shall
not adversely affect a holder's rights and obligations with respect to options
at the time outstanding under the Plan and (2) the Board shall not, without the
approval of the Company's stockholders, make any change with respect to which
the Board determines that stockholder approval is required by applicable law or
regulatory standards.
B. Modification of Options. The Committee has full power and authority
to modify or waive any or all of the terms, conditions or restrictions
applicable to any outstanding option under the Plan, to the extent not
inconsistent with the Plan; provided, however, that no such modification or
waiver shall, without the consent of the holder of the option, adversely affect
the holder's rights thereunder.
3.2 TAX WITHHOLDING
A. Obligation. The Company's obligation to deliver shares or cash upon
the exercise of options under the Plan is subject to the satisfaction of all
applicable Federal, State and local income and employment tax withholding
requirements.
B. Stock Withholding. The Committee may require or permit, in its
discretion and upon such terms and conditions as it may deem appropriate, any or
all holders of outstanding options under the Plan to elect to have the Company
withhold, from the shares of Common Stock otherwise issuable pursuant to such
option, one or more of such shares with an aggregate Fair Market Value equal to
the Federal, State and local employment and income taxes ("Taxes") incurred in
connection with the acquisition of such shares. Holders of options under the
Plan may also be granted the right to deliver previously acquired shares of
Common Stock held for the requisite period to avoid a charge to earnings in
satisfaction of such Taxes. The withheld or delivered shares will be valued at
Fair Market Value on the applicable determination date for such Taxes.
3.3 VALUATION
For all purposes under this Plan, the fair market value per share of
Common Stock on any relevant date under the Plan ("Fair Market Value") will be
determined as follows:
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<PAGE>
(1) National Exchange. If the Common Stock is at the time listed or
admitted to trading on any national stock exchange, then the Fair Market Value
will be the closing selling price per share of Common Stock on the day before
the date in question on the stock exchange determined by the Committee to be the
primary market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no reported sale of
Common Stock on such exchange on the day before the date in question, then the
Fair Market Value will be the closing selling price on the exchange on the last
preceding date for which such quotation exists.
(2) NASDAQ. If the Common Stock is not at the time listed or
admitted to trading on any national stock exchange but is traded in the
over-the-counter market, the fair market value will be the mean between the
highest bid and lowest asked prices (or, if such information is available, the
closing selling price) per share of Common Stock on the date in question in the
over-the-counter market, as such prices are reported by the National Association
of Securities Dealers through its NASDAQ system or any successor system. If
there are no reported bid and asked prices (or closing selling price) for the
Common Stock on the date in question, then the mean between the highest bid
price and lowest asked price (or the closing selling price) on the last
preceding date for which such quotations exist will be determinative of fair
market value.
(3) Committee. Notwithstanding the foregoing, if the Committee
determines that, as a result of circumstances existing on any date, the use of
the above rules is not a reasonable method of determining Fair Market Value on
that date or if Common Stock is not at the time listed or admitted to trading as
outlined above, the Committee may use such other method as, in its judgment, is
reasonable.
3.4 EFFECTIVE DATE AND TERM OF PLAN
A. Effective Date. This Plan will become effective on the Effective
Date. Notwithstanding anything to the contrary in this Plan, no grants will be
made under this Plan until the Plan has received any required regulatory
approvals.
B. Term. The Committee may make grant options under the Plan at any
time after the Effective Date of the Plan and before the Plan is terminated by
the Board.
3.5 REGULATORY APPROVALS
The implementation of the Plan, any option grants under the Plan, and
the issuance of stock pursuant to any option granted under the Plan is subject
to the procurement by the Company of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, option grants made
under the Plan, and stock issued pursuant to the Plan.
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<PAGE>
3.6 NO EMPLOYMENT/SERVICE RIGHTS
Neither the establishment of this Plan, nor any action taken under the
terms of this Plan, nor any provision of this Plan will be construed to grant
any individual the right to remain in the employ or service of the Company (or
any subsidiary or parent of the Company) for any period of specific duration,
and the Company (or any subsidiary or parent of the Company retaining the
services of such individual) may terminate such individual's employment or
service at any time and for any reason, with or without cause; provided that
nothing contained in this Plan or in any option granted under this Plan will
affect any contractual rights of the Company or an employee pursuant to a
written employment agreement executed by the parties thereto.
- 8 -
EXHIBIT 4.8
Salary Deferral Savings Program of WellPoint Health Networks Inc.
<PAGE>
SALARY DEFERRAL SAVINGS PROGRAM
OF
BLUE CROSS OF CALIFORNIA
Effective July 1, 1992
(Amended and Restated through October 6, 1995)
<PAGE>
Salary Deferral Savings Program
of
Blue Cross of California
TABLE OF CONTENTS
Page
ARTICLE I HISTORY...................................................... 1
ARTICLE II DEFINITIONS.................................................. 1
ARTICLE III SERVICE...................................................... 4
ARTICLE IV PARTICIPATION................................................ 6
ARTICLE V CONTRIBUTIONS................................................ 7
ARTICLE VI INVESTMENT FUNDS AND WELLPOINT COMMON STOCK.................. 11
ARTICLE VII VALUATION.................................................... 13
ARTICLE VIII VESTING...................................................... 13
ARTICLE IX IN-SERVICE WITHDRAWALS....................................... 13
ARTICLE X LOANS........................................................ 14
ARTICLE XI DISTRIBUTION OF BENEFITS..................................... 16
ARTICLE XII BENEFICIARY DESIGNATIONS..................................... 19
ARTICLE XIII CLAIMS PROCEDURE............................................. 20
ARTICLE XIV ALIENATION AND QUALIFIED DOMESTIC RELATIONS
ORDERS....................................................... 20
ARTICLE XV ADMINISTRATION............................................... 20
ARTICLE XVI AMENDMENTS................................................... 21
ARTICLE XVII TERMINATION, MERGER AND TRANSFER............................. 22
ARTICLE XVIII MISCELLANEOUS................................................ 23
APPENDIX I: HIGHLY COMPENSATED EMPLOYEE.................................. 24
APPENDIX II: TESTING SALARY DEFERRAL AND MATCHING
CONTRIBUTIONS................................................ 25
APPENDIX III: LIMITATIONS ON ALLOCATIONS................................... 28
APPENDIX IV: TOP HEAVY PROVISIONS......................................... 31
APPENDIX V: PARTICIPATION OF UNICARE EMPLOYEES........................... 35
i.
<PAGE>
SALARY DEFERRAL SAVINGS PROGRAM
OF BLUE CROSS OF CALIFORNIA
ARTICLE I
HISTORY
Effective July 1, 1992, Blue Cross of California adopts this Salary
Deferral Savings Program of Blue Cross of California ("Plan") as a continuation
and restatement of a plan of the same name administered by the National Employee
Benefits Committee of Blue Cross and Blue Shield. As amended and restated, this
document permits certain employees of Participating Companies to participate in
the Plan.
This document also contains changes requested by the Internal Revenue
Service in September and October of 1995 as part of the determination letter
process.
ARTICLE II
DEFINITIONS
This Plan is subject to technical restrictions that are outlined in
Appendices which, by this reference, are incorporated into the Plan. Terms that
are used in a single Article or Appendix are generally defined in that Article
or Appendix. The following terms are used throughout the Plan.
2.01 "Account" means the value of all Accounts maintained on behalf of
a Participant or Beneficiary. An Account may include a Special Contributions
Account, a Salary Deferral Contributions Account, a Matching Contributions
Account, a Loan Account and a Rollover Account.
2.02 "Affiliated Company" means a Participating Company and, with
respect to a Participating Company, (i) any corporation that, pursuant to
Section 414(b) of the Code, is a member of a controlled group of corporations of
which the Participating Company is a member; (ii) any employer that, pursuant to
Section 414(c) of the Code, is under common control with the Participating
Company; (iii) any employer that, pursuant to Section 414(m) of the Code, is a
member of an affiliated service group of which the Participating Company is a
member and (iv) any employer that, pursuant to Section 414(o) of the Code, is
required to be aggregated with the Participating Company.
2.03 "Beneficiary" means the person(s) or entity entitled to receive a
Participant's Account if the Participant dies before distribution of his or her
entire Account.
2.04 "Code" means the Internal Revenue Code of 1986, as amended.
1.
<PAGE>
2.05 "Committee" means the entity that, pursuant to Article XV,
administers the Plan.
2.06 "Company" means Blue Cross of California, a California nonprofit
corporation, and any successor (other than WellPoint Health Networks Inc. or a
subsidiary of WellPoint Health Networks Inc.) to all or a major portion of the
assets or business of Blue Cross of California that, by appropriate action,
adopts the Plan.
2.07 "Compensation" means all regular base earnings paid by a
Participating Company, which includes vacations and sick leave paid by a
Participating Company. Compensation also includes sales commissions, overtime,
and elective contributions that are not includible in income under Code Sections
125, 402(e)(3), 402(h) or 403(b).
(a) Exclusions. Compensation does not include any bonuses,
incentive pay, severance pay, or payments made under any group insurance plan.
Notwithstanding the foregoing, Compensation will include all bonuses (except
starting bonuses) and incentive payments (except Instabucks) actually paid on or
after January 1, 1994; provided, however, that such bonuses and incentive
payments will not be included in the Compensation of a Participant whose
employment is governed by the terms of a collective bargaining agreement unless
the collective bargaining agreement specifically provides that bonuses and
incentive payments are to be included. Compensation will only be recognized
while an Employee is a Participant and an Eligible Employee.
(b) Limit. For a Plan Year, the Compensation of a Participant will
not exceed $200,000 (indexed). In determining this limit, the family aggregation
rules of Code Section 414(q)(6) apply, but the term "family" includes only the
spouse of the Participant and any lineal descendants of the Participant who have
not attained age 19 before the close of the Plan Year. To the extent required by
applicable Regulations, if the limitation is reached for a family group, then
the limitation amount will be prorated among each member of the family group in
the proportion that each family member's compensation bears to the total
Compensation of the family group.
(c) $150,000 Limit. In addition to other applicable limits set
forth in the Plan, and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994, the annual
compensation of each Employee taken into account under the Plan will not exceed
the Omnibus Budget Reconciliation Act of 1993 ("OBRA '93") annual compensation
limit. The OBRA '93 annual compensation limit is $150,000, as adjusted by the
Commissioner of Internal Revenue for increases in the cost of living in
accordance with Code Section 401(a)(17)(B). The cost-of-living adjustment in
effect for a calendar year applies to any period, not exceeding 12 months,
2.
<PAGE>
over which Compensation is determined ("Determination Period") beginning in such
calendar year. If a Determination Period consists of fewer than 12 months, the
OBRA '93 annual compensation limit will be multiplied by a fraction, the
numerator of which is the number of months in the Determination Period, and the
denominator of which is 12. For Plan Years beginning on or after January 1,
1994, any reference in this Plan document to the limit under Code Section
401(a)(17) means the OBRA '93 annual compensation limit set forth in this
provision.
2.08 "Directors" means the Board of Directors of the Company.
2.09 "Eligible Employee" means an Employee of a Participating Company,
other than (i) an Employee who has not attained the age of twenty-one (21), (ii)
a Leased Employee, and (iii) a non-resident alien who receives no earned income
from sources within the United States. Effective March 1, 1994, the reference to
age twenty-one (21) in the preceding sentence is changed to eighteen (18).
2.10 "Employee" means a person who is employed by an Affiliated Company
and any Leased Employee.
2.11 "Entry Date" means the first day of January, April, July and
October.
2.12 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
2.13 "Highly Compensated Employee" is defined in an Appendix to the
Plan.
2.14 "Hour of Service" is defined in Article III.
2.15 "Leased Employee" means an individual who is not otherwise an
Employee and who, pursuant to Code Section 414(n), performs services
historically performed by employees in the business area of the Participating
Company on a substantially full-time basis.
2.16 "Non-Highly Compensated Employee" is an Employee who is not a
Highly Compensated Employee.
2.17 "Participant" means any Employee who became a Participant and who
retains an Account under the Plan.
2.18 "Participating Company" means the Company (and, effective April 1,
1995 any other company) and any Affiliated Company that is authorized by the
Directors to participate in the Plan, and that elects to participate in the Plan
on behalf of its Eligible Employees. Notwithstanding the foregoing, effective
January 1, 1994, the phrase "authorized by the Directors" in the
3.
<PAGE>
preceding sentence is replaced by the phrase "authorized in writing by an
officer of the Company at the level of Senior Vice President or above."
2.19 "Plan" means this Salary Deferral Savings Program of Blue Cross of
California as amended from time to time.
2.20 "Plan Year" means the Company's fiscal year.
2.21 "Regulations" means the federal Income Tax Regula- tions, as
amended.
2.22 "Remuneration" means compensation as defined in Code Section
415(c)(3) and accompanying regulations. This alternate definition of
compensation is required by law to be used in certain Appendices to this Plan.
For purposes of the Highly Compensated Employee Appendix to this Plan and the
Top Heavy Appendix to this Plan, Remuneration also includes an Employee's
elective deferrals under a qualified cash or deferred arrangement described in
Code Sections 401(k) and 402(e)(3), a simplified employee pension plan described
in Code Section 408(k)(6), and a cafeteria plan described in Code Section 125.
2.23 "Six Months of Service" is defined in Article III of the Plan.
2.24 "Trust Agreement" means an agreement entered into between the
Company (on behalf of all Participating Companies) and a Trustee to provide for
the investment, management and control of Plan assets.
2.25 "Trustee" means any person or entity appointed by the Company to
hold the Plan's assets.
2.26 "Valuation Date" means the last business day of each Plan Year,
and such other date or dates as may be designated by the Committee for the
valuation of Accounts.
2.27 "Year of Service" is defined in Article III of the Plan.
ARTICLE III
SERVICE
3.01 Hour of Service. An Hour of Service is each hour for which an
Employee is paid or entitled to payment for the performance of services for an
Affiliated Company.
3.02 Year of Service. A Year of Service is a consecutive or
non-consecutive 12-month period beginning on the first date that an Employee
performs an Hour of Service, on a Reemployment Date (as defined below) or on an
anniversary of either of these
4.
<PAGE>
dates. Any period of less than 12 consecutive months during which an Employee
does not perform an Hour of Service will be counted when computing Years of
Service. A One Year (or longer) Period of Severance (as defined below) will not
be counted when computing Years of Service.
3.03 Six Months of Service. An Employee will be credited with Six
Months of Service on the date that the Employee has been on the payroll of an
Affiliated Company, as a full-time Employee, for six full consecutive calendar
months.
3.04 One Year Period of Severance. A One Year Period of Severance is a
12 consecutive month period that begins on an individual's Severance from
Service Date, or on an anniversary of that date, during which the individual
does not perform an Hour of Service.
3.05 Severance from Service Date. An Employee's Severance from Service
Date is the earliest of the date on which the Employee quits, retires, is
discharged or dies, or the first anniversary of the first date of an Employee's
absence for any other reason.
(a) Crediting. Solely for the purpose of determining whether a
Participant has incurred a One Year Period of Severance, a Participant will not
incur the first One Year Period of Severance that would otherwise be counted if
severance is due to an Authorized Leave of Absence (as defined below) or a
Maternity Leave (as defined below).
(b) Authorized Leave of Absence. Authorized Leave of Absence means
an unpaid, temporary cessation from active employment with an Affiliated Company
pursuant to an established policy, due to illness, disability, vacation, a
temporary layoff, public service, or any other reason.
(c) Maternity Leave. Maternity Leave means an unpaid absence from
work for any period by reason of the Employee's pregnancy, birth of the
Employee's child, placement of a child with the Employee in connection with the
adoption of such child, or any absence for the purpose of caring for such child
for a period immediately following such birth or placement.
(d) Failure to Return. If a Participant fails to return to work
immediately on expiration of an Authorized Leave of Absence or Maternity Leave,
no credit shall be given for the Authorized Leave of Absence or Maternity Leave
pursuant to this Section.
3.06 Reemployment Date. An Employee's Reemployment Date is the first
date on which the Employee performs an Hour of Service after a One Year Period
of Severance.
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3.07 Military Service. To the extent required by law, Hours of Service
will be credited for periods of military service.
3.08 One Month of Service. An Employee will be credited with One Month
of Service on the date that the Employee has been on the payroll of an
Affiliated Company, as a full-time Employee, for one full calendar month.
ARTICLE IV
PARTICIPATION
4.01 Service. Every individual who was a Participant on June 30, 1992
will continue to be a Participant. Every Eligible Employee who was not a
Participant on June 30, 1992 may become a Participant on the first Entry Date
coincident with or following the earliest of the following dates:
(a) Six Months of Service. The date on which the Eligible Employee
has completed Six Months of Service; or
(b) One Year of Service. The date that the Employee has been
credited with One Year of Service.
If an Employee is not an Eligible Employee on this date, the Employee will
become a Participant on the first Entry Date coincident with or following the
date that the Employee performs an Hour of Service as an Eligible Employee.
4.02 Service. Effective August 1, 1995, every individual who was a
Participant on July 31, 1995 will continue to be a Participant. Every Eligible
Employee who was not a Participant on July 31, 1995 will become a Participant on
the first day of the first calendar month coincident with or next following the
earliest of the following dates:
(a) One Month of Service. The date on which the Eligible Employee
has completed One Month of Service; or
(b) One Year of Service. The date that the Employee has been
credited with One Year of Service.
Notwithstanding the foregoing, no individual will become a Participant pursuant
to this Section 4.02 before August 1, 1995. If an Employee is not an Eligible
Employee on the participation date provided for in this Section 4.02, the
Employee will become a Participant on the first day of the first calendar month
coincident with or next following the date that the Employee performs an Hour of
Service as an Eligible Employee.
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4.03 Cessation and Resumption. An individual ceases to be a Participant
when he or she ceases to have an Account. Such an individual will again become a
Participant on the date that the individual again performs an Hour of Service as
an Eligible Employee.
ARTICLE V
CONTRIBUTIONS
5.01 Salary Deferral Contributions. A Participant may elect to have a
Participating Company reduce the amount of his or her Compensation for each
payroll period by from 2% to 15% and to have that amount contributed to the Plan
as a Salary Deferral Contribution on his or her behalf. A Participant may
initiate or change the percentage of Salary Deferral Contribution (in 1%
increments) by submitting a written notice to the Committee that satisfies such
requirements as the Committee shall determine.
(a) Timing. Salary Deferral Contributions will be paid to the
Trustee as soon as practical after the date on which those amounts would have
been paid to Participants in the absence of a salary deferral election and in no
event later than 90 days after that date.
(b) Allocation. Salary Deferral Contributions will be credited to
Participants' Salary Deferral Contributions Accounts as of the date of payment
to the Trustee, or as of the last day of the Plan Year for which the
contribution is made, if earlier.
(c) Highly Compensated Limit. Unless otherwise communicated in
writing to Participants before the beginning of the Plan Year, Highly
Compensated Employees (determined as of the end of the immediately preceding
Plan Year) will not be permitted to authorize Salary Deferral Contributions in
excess of 8% of their Compensation.
5.02 Matching Contributions. Each payroll period, each Participating
Company may make a Matching Contribution on behalf of each of its Employees who
is a Salary Deferral Participant.
(a) Salary Deferral Participant. A Salary Deferral Participant is
a Participant who directed Salary Deferral Contributions during the payroll
period in question.
(b) Timing. Matching Contributions will be paid to the Trustee as
soon as practical after the payment of the Salary Deferral Contribution to which
the Matching Contribution relates and no later than the last day for filing the
Participating Company's federal income tax return (including extensions) with
respect to the Participating Company's taxable year ending with or within the
Plan Year. Matching Contributions will be credited
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to the Participant's Matching Contributions Account as of the date of payment to
the Trustee, or as of the last day of the Plan Year for which the Matching
Contribution is made, if earlier.
(c) Amount. Matching Contributions for a payroll period will equal
75% (or a greater or lesser percentage determined by each Participating Company
before the payroll period) of the Salary Deferral Contribution that the
Participant directed during the payroll period. However, no Matching
Contribution will be made with respect to that portion of the Salary Deferral
Participant's Salary Deferral Contribution that exceeds 6% of the Participant's
Compensation in the Plan Year, or such greater or lesser amount as each
Participating Company may determine before the payroll period.
(i) 1994. Notwithstanding the foregoing, unless provided
otherwise in a writing signed by an officer of the Company at the level of
Senior Vice President or above, and subject to the proviso in (iv) below, for
payroll periods ending on or after January 1, 1994, the schedule outlined in
(ii) below will be used to determine the amount of Matching Contributions.
(ii) Schedule. For Participants with less than 10 Years of
Service at the beginning of a payroll period, Matching Contributions for that
payroll period will equal 75% of the Salary Deferral Contribution that the
Participant directed during the payroll period. For Participants with 10 or more
but less than 20 Years of Service at the beginning of a payroll period, Matching
Contributions for that payroll period will equal 85% of the Salary Deferral
Contribution that the Participant directed during the payroll period. For
Participants with 20 or more Years of Service at the beginning of a payroll
period, Matching Contributions for that payroll period will equal 100% of the
Salary Deferral Contribution that the Participant directed during the payroll
period. However, no Matching Contribution will be made with respect to that
portion of the Salary Deferral Participant's Salary Deferral Contribution that
exceeds 6% of the Participant's Compensation in the Plan Year.
(iii) Year of Service. For purposes of (ii) above, "Year of
Service" includes all Years of Service performed for an Affiliated Company while
it was an Affiliated Company. In addition, a Year of Service includes service
with another Blue Cross Plan if that service is not already included due to the
preceding sentence.
(iv) Collective Bargaining Agreement. The Schedule in (ii)
above will not apply to a Participant whose employment is governed by the terms
of a collective bargaining agreement unless the collective bargaining agreement
specifically provides that the Schedule in (ii) above is to apply.
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(d) Sick Leave. Effective February 1, 1993, and notwithstanding
anything to the contrary in this Plan, a Participant's eligibility to receive
Matching Contributions will cease as of the first day of the first full payroll
period immediately following 8 consecutive work days (excluding weekends and
holidays) during which the Participant was absent from work due to a paid sick
leave. Such a Participant will again become eligible to receive Matching
Contributions, as otherwise provided under this Section, as of the first day of
the first full payroll period immediately following the Participant's return to
work after such a paid sick leave.
(e) No Match. Effective April 1, 1995, and notwithstanding
anything to the contrary in this Plan, if WellPoint Dental Services, Inc., The
Professional Medical Associates of Santa Barbara, Health Management Associates
of Santa Barbara, The Professional Medical Associates of San Luis Obispo, Health
Management Associates of San Luis Obispo, and/or AHI Healthcare Corporation,
and/or any subsidiary of AHI Healthcare Corporation, and/or any successor to any
of them become a Participating Companies, their Employees will not be eligible
to receive Matching Contributions under this Plan.
(f) One Year Hold Out. Employees hired or rehired on or after
August 1, 1995, will not be eligible to receive a Matching Contribution under
this Plan until the first day of the first calendar month coincident with or
next following the Employee's completion of One Year of Service measured from
his or her date of hire (if a new Employee) or date of rehire (following the
Employee's separation from service with all Affiliated Companies for any
reason).
5.03 Special Contributions. A Participating Company may authorize
qualified nonelective employer contributions to the extent, and only to the
extent, needed to satisfy the tests described in the TESTING SALARY DEFERRAL AND
MATCHING CONTRIBUTIONS Appendix to this Plan. These qualified nonelective
employer contributions will be allocated to Non-Highly Compensated Eligible
Employees from the lowest paid to the highest paid in an amount up to or equal
to their Code Section 415 allocation limit.
5.04 Rollover Contributions. Subject to the non-discrimination
provisions of Code Section 401(a)(4), the Committee may authorize a Trustee to
accept a Rollover Contribution made in cash and attributable to a distribution
received by an Eligible Employee from another tax-qualified plan. Rollover
Contributions will be held in the Participant's Rollover Account. Effective
February 28, 1994, Rollover Contributions from IRAs will not be accepted.
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5.05 Trust-to-Trust Transfers. Subject to the non-discrimination
provisions of Code Section 401(a)(4), the Committee may authorize a Trustee to
accept a Trust-to-Trust Transfer of assets, except for securities of other
companies, or assets that are subject to the survivor annuity requirements of
Code Section 401(a)(11), from another tax-qualified plan. Notwithstanding the
foregoing, effective April 1, 1994, or as soon as administratively feasible
thereafter, the Trustee is authorized to accept a transfer of assets from the
UniCARE Financial Corp. Profit Sharing Plan.
5.06 Restoration. If a Participant was improperly excluded at any time
from an allocation, an amount computed on the same basis as the allocation will
be added to that Participant's Account, after that amount has been adjusted to
reflect the gain or loss that was allocated to Participants' Accounts in each
Plan Year since the Plan Year for which the restoration is to be made.
5.07 Initial Qualification. If the Internal Revenue Service fails to
issue a favorable written determination regarding the initial qualification of
the Plan and Trust, the Trustee will return (at their then current value) all
contributions to the Participating Companies within one year from the date of
the denial of the favorable determination.
5.08 Deductibility. To the extent that a Participating Company is not
allowed a current deduction under the Code for any contribution made to the
Plan, the Participating Company may, within one year following a final
determination of the disallowance, whether by agreement with the Internal
Revenue Service or by final decision of a court of competent jurisdiction,
demand repayment of the disallowed contribution, and the Trustee shall return
the contribution within one year following the disallowance. Earnings of the
Plan attributable to such a contribution may not be returned to the
Participating Company, but losses attributable to such a contribution will
reduce the amount returned.
5.09 Mistake of Fact. If, within one year of the making of a
contribution to the Plan, the Committee certifies to the Trustee that the
contribution was made by a Participating Company under a mistake of fact, the
Trustee will, before the expiration of that year, return the contribution to the
Participating Company.
5.10 Limits. As more fully discussed in the Appendices to this Plan,
Salary Deferral, Matching and Special Contributions are subject to additional
limits.
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ARTICLE VI
INVESTMENT FUNDS AND WELLPOINT COMMON STOCK
6.01 Individual Direction of Investments. At the direction of the
Committee, the Trustee will establish separate funds to which Participants may
direct the investment of their Accounts. Notwithstanding the foregoing,
effective January 1, 1994 the phrase "the direction of the Committee" in the
preceding sentence is replaced with the phrase "the written direction of an
officer of the Company at the level of Senior Vice President or above."
Investment in these funds will be subject to such restrictions and
administrative procedures as are imposed by the Committee, pursuant to its
discretionary authority to administer and interpret the Plan, including, but not
limited to, procedures for investment of amounts for which no investment
direction is given by a Participant.
6.02 WellPoint Common Stock Fund. At the discretion of the Committee,
the Plan may acquire and hold Class A Common Stock of WellPoint Health Networks
Inc. ("WellPoint Stock"). Participants may elect to invest amounts held in their
Account in units of a WellPoint Stock fund ("WellPoint Common Stock Fund")
established by the Trustee pursuant to Section 6.01 of the Plan subject to such
restrictions and administrative procedures as are imposed by the Committee,
pursuant to its discretionary authority to administer and interpret the Plan.
6.03 Purchase Price. All acquisitions and sales of WellPoint Stock by
the WellPoint Common Stock Fund will be effected at the prevailing market price.
6.04 Voting and Tender Offers.
(a) Proxy Votes. A Participant may direct voting of the shares of
WellPoint Common Stock underlying the Participant's interest in the WellPoint
Common Stock Fund. The Trustee will vote such shares in accordance with the
directions of Participants, as communicated in writing to the Trustee.
(i) Notification. A Participant whose Account is invested in
the WellPoint Common Stock Fund will be notified by the Trustee (or by WellPoint
Health Networks Inc., pursuant to its normal communications with shareholders)
of each occasion for the exercise of voting rights, within a reasonable time
before those voting rights are to be exercised. This notification will include
all proxy statements and other information distributed by WellPoint Health
Networks Inc. to shareholders generally, regarding the exercise of voting
rights.
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(ii) No Direction. To the extent that a Participant fails to
direct the Trustee, in whole or in part, as to the exercise of voting rights
with respect to any WellPoint Common Stock underlying the Participant's interest
in the WellPoint Common Stock Fund, those shares will not be voted.
(b) Right to Tender. Subject to (b)(iii) below, if the Trustee
receives a tender offer to buy WellPoint Common Stock held by the Trustee, a
Participant may direct tender of the shares of WellPoint Common Stock underlying
the Participant's interest in the WellPoint Common Stock Fund. The Trustee will
tender such shares in accordance with the directions of Participants, as
communicated in writing to the Trustee.
(i) Notification. All Participants entitled to tender
WellPoint Common Stock held by the WellPoint Common Stock Fund will be so
notified by the Trustee (or by WellPoint Health Networks Inc.) within a
reasonable time before the right to tender is to be exercised. This notification
will include information received by the Trustee as shareholder, or distributed
by WellPoint Health Networks Inc. to shareholders generally, regarding their
right to tender.
(ii) No Direction. To the extent that a Participant fails to
direct the Trustee, in whole or in part, to tender WellPoint Common Stock
underlying the Participant's interest in the WellPoint Common Stock Fund, those
shares will not be tendered.
(iii) Non-Cash Tender. The Trustee will not permit
Participants to direct the tender of WellPoint Common Stock, to the extent that
the receipt or holding of the property offered in exchange for the shares would
violate any applicable law, including ERISA. The Committee will make investment
decisions regarding any non-cash property received by the WellPoint Common Stock
Fund as a result of a tender.
(c) Deemed Participant. For purposes of this Article VI, the
Beneficiary of a deceased Participant will be treated as though he or she were a
Participant.
6.05 Responsibility. Each Participant is solely responsible for the
investment of his or her Account. No Plan fiduciary and no Employee is
authorized to advise a Participant regarding such investment.
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ARTICLE VII
VALUATION
The value of the Account of a Participant on any date will be deemed to
be the net balance of the Account on the Valuation Date immediately preceding or
coincident with the date as of which such value is to be determined, adjusted by
the Committee, pursuant to its discretionary authority to administer and
interpret the Plan and to determine eligibility for benefits under the Plan.
Adjustments will include increases due to contributions to the Account since the
relevant Valuation Date; decreases due to Plan expenses, distributions, loans,
or withdrawals paid from the Account since the relevant Valuation Date; and
adjustments for income or loss.
ARTICLE VIII
VESTING
All Plan Accounts are vested and nonforfeitable.
ARTICLE IX
IN-SERVICE WITHDRAWALS
(See Appendices for added information regarding merged assets)
9.01 Hardship Withdrawals. If a Participant has an immediate and heavy
financial need (as defined below), and has no other resources reasonably
available to meet this need (as defined below), the Participant may request a
hardship withdrawal from his or her Salary Deferral Contributions Account and
Rollover Account. The amount will be limited to the combined balance of the
Participant's (i) Salary Deferral Contributions Account excluding earnings after
December 31, 1988, (ii) Rollover Account, and (iii) 401(k) elective deferrals
excluding earnings after December 31, 1988, added to the Participant's Account
due to a Trustee-to-Trustee transfer.
(a) Immediate and Heavy Financial Need. A Parti- cipant's request
for a hardship withdrawal may not exceed the amount immediately required
(including the amount necessary to pay any federal, state or local income taxes
or penalties reasonably anticipated to result from the withdrawal) by the
Participant to (i) purchase the Participant's primary residence (excluding
mortgage payments), (ii) pay deductible medical expenses incurred in the last 12
months by the Participant, the Participant's dependents or the Participant's
spouse, or necessary for those persons to obtain medical care, (iii) prevent
eviction from, or foreclosure of, the Participant's primary residence, or (iv)
pay for post-high school tuition and related educational fees for the next 12
months for the Participant, the Participant's spouse, or the Participant's
dependents.
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(b) No Other Resources Reasonably Available. A Participant who
makes a hardship withdrawal request must represent in writing that his or her
immediate and heavy financial need cannot be relieved (i) through reimbursement
or compensation by insurance or otherwise, (ii) by reasonable liquidation of the
Participant's assets, to the extent such liquidation would not itself cause an
immediate and heavy financial need, (iii) by cessation of Salary Deferral
Contributions to this Plan or of contributions to any other plan of deferred
compensation, (iv) by other distributions or nontaxable (at the time of the
loan) loans from plans maintained by any employer, or (v) by borrowing from
commercial sources on reasonable commercial terms. For purpose of this Section,
the Participant's assets are deemed to include those assets of the Participant's
spouse and minor children that are reasonably available to the Participant.
(c) Suspension. Any withdrawal from a Participant's Salary
Deferral Contributions Account will result in a suspension of the Participant's
right to direct Salary Deferral Contributions under the Plan. Such a suspension
will be for a period of 12 months following the effective date of the
withdrawal. Such a suspension will expire on the first day of the month next
following the end of the 12 month suspension.
9.02 Rollover Account Withdrawals. A Participant may withdraw up to the
entire balance from his or her Rollover Account.
(a) Permitted Frequency. Only one such withdrawal will be
permitted in any six month period.
(b) Two Year/Five Year Requirement. The Participant may only
withdraw funds that have been held in the Plan for at least two full years,
provided, however, if the Participant has completed five Years of Service for an
Affiliated Company, the two year rule is inapplicable.
9.03 Form. All withdrawals from the Plan will be made in the form of a
single sum cash payment.
ARTICLE X
LOANS
10.01 Authorization. The Committee may direct the Trustee to make a
loan to a Participant who is employed by a Participating Company and, to the
extent required under ERISA or the Code (but only to that extent), to other
Participants and to Beneficiaries (collectively referred to as "Borrowers") of
the Plan. Loans will be made from a Participant's Account and will be limited to
the amount specified below. A Borrower may not have more than three loans
outstanding from the Plan at any one
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time. No loan will be approved unless the Participant's spouse (if any) consents
to the loan, in writing, no more than 90 days from the loan date.
10.02 Amount. The amount of any loan will not be less than $1,000.
Immediately after the origination of the loan, the loan may not exceed 50% of
the Borrower's vested benefits under this Plan. Furthermore, the amount of any
loan, when added to the outstanding balance of all other loans to the Borrower
from this Plan and the plans of Affiliated Companies, may not exceed the lesser
of (a) one half of the Borrower's vested benefits under this Plan and the plans
of Affiliated Companies, valued as of each plan's most recent valuation date;
and (b) $50,000 reduced by the excess, if any, of (i) the Borrower's highest
outstanding loan balance under this Plan and the plans of Affiliated Companies
during the 12-month period ending on the day before the loan is made; over (ii)
the Borrower's outstanding loan balance under this Plan and the plans of
Affiliated Companies on the date the loan is made.
10.03 Application and Note. Each loan will be evidenced by the
Borrower's note, payable to the Trustee, for the loan plus interest.
10.04 Individual Account. All loans will be investments of the
Borrower's Account. Costs charged by the Trustee to establish, process or
collect the loan will be charged to the Borrower's Account.
10.05 Interest. Interest will be charged on Plan loans at a formula
rate based on factors considered by commercial entities that make similar loans.
At the discretion of the Committee, the interest rate will be redetermined as
new loans are made.
10.06 Repayment. The term of any loan will not exceed 5 years;
provided, however, that a loan to purchase a principal residence for the
Borrower must not exceed 30 years. Substantially level amortization of the loan,
with payments not less frequently than quarterly, will be required over the term
of the loan. The Trustee and the Committee may require that the loan be repaid
by payroll deduction. Periodic cash payments may be made when payroll deduction
is not possible.
10.07 Default. If a Borrower fails to repay a loan within the time
prescribed by the Committee, the Trustee may levy on the Borrower's Loan Account
at such time as the Borrower is eligible for a distribution or a withdrawal
under the Plan. In addition, in the event of a failure to repay, the Trustee may
exercise every creditor's right at law or equity available to the Trustee.
10.08 Guidelines. The Committee will develop written guidelines for
administration of the Plan's loan program.
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ARTICLE XI
DISTRIBUTION OF BENEFITS
(See Appendices for added information regarding merged assets)
11.01 Date Benefits Become Distributable. Plan benefits will become
distributable when (a) the Participant separates from service, including but not
limited to a separation due to death, disability or retirement at age 65, (b)
the Participant attains age 59-1/2, (c) subject to Code Section 401(k)(10), if
substantially all the assets of a Participating Company are sold to an unrelated
corporation, if the Participant continues employment with the unrelated
corporation and the Participating Company continues to maintain this Plan, or
(d) subject to Code Section 401(k)(10), if a Participating Company's interest in
a subsidiary is sold to an unrelated entity and the Participant continues
employment with the subsidiary and the Participating Company continues to
maintain this Plan.
11.02 Date Benefits Will Be Distributed. Once Plan benefits become
distributable, they will be distributed as soon as administratively practicable
after the Participant has elected, in writing, to receive a distribution, and in
the case of a Beneficiary, as soon as administratively practicable after the
Participant's death, but in no event later than December 31 of the calendar year
containing the fifth anniversary of the Participant's death.
11.03 No Election. If a Participant separates from service, or a sale
has occurred as described in subsections 10.01(c) or (d), and the Participant
does not elect, in writing, to receive his or her distributable Plan benefits
earlier, benefits will be distributed as a total distribution to the Participant
as soon as administratively practicable after the Participant attains age 65.
Notwithstanding anything to the contrary in this Plan, distribution must begin
no later than April 1 of the calendar year following the calendar year in which
the Participant attains age 70-1/2. Consequently, unless elected by the
Participant, distribution of the Participant's benefit will begin no later than
60 days after the later of the Participant's attainment of age 65, the
Participant's termination of employment, or the 10th anniversary of the
Participant's participation in the Plan, or a reasonable time thereafter. A
Participant's failure to request a distribution before age 65 will be deemed an
election to defer distribution.
11.04 Retroactive Payment. If the amount of a distribution cannot be
determined by the date payment is required, or it is not possible to make
payment because the Committee cannot locate the Participant or Beneficiary after
making reasonable efforts to do so, a payment retroactive to the date payment is
required may be made no later than 60 days after the earliest date on which
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the amount of the payment can be determined under the Plan, or the date on which
the recipient is located.
11.05 Inability to Locate Recipient. If a Plan benefit remains unpaid
for 2 years from the date it becomes payable because the Committee, exercising
due diligence, cannot locate the recipient, the benefit will be forfeited and
used for other Plan purposes, including reduction of Participating Companies'
Matching Contributions. On presentation of an authenticated written claim by the
recipient or the recipient's representative, amounts forfeited will be restored,
without earnings, from forfeitures for the Plan Year in question or from a
contribution made by the appropriate Participating Company(s), as determined by
the Committee.
11.06 Distribution to Minor or Incompetent. The Committee may direct
that distributions to be paid to a minor or an incompetent person be paid to the
legal guardian, or if none, to a parent of such person, or to a responsible
adult with whom the person maintains residence, or to the custodian for the
person under the Uniform Gift to Minors Act or Gift to Minors Act, if permitted
by the laws of the state in which the person resides.
11.07 Small Account. Notwithstanding any provision of this Plan, if the
vested portion of a Participant's Account on the date the Participant ceases to
be an Employee is, and at the time of any earlier distribution or withdrawal
was, $3,500 or less, the Participant's Account will be distributed to the
Participant, or Beneficiary, as the case may be, as soon as practicable, without
the consent of the Participant or the Participant's spouse.
11.08 Form of Distribution. Amounts held in a Participant's Account
will be paid in cash as a total distribution, unless the Participant (or
Beneficiary) elects otherwise pursuant to Section 11.09. Except as provided in
one or more Appendices to this Plan, distributions will be made in a lump sum,
in accordance with the above provisions, which satisfy the Regulations under
Code Section 401(a)(9). In any event, distributions will be made in accordance
with the Regulations, including the minimum distribution and minimum
distribution incidental benefit requirement of Code Section 401(a)(9)(G).
Distributions will not violate Code Section 401(k)(10).
11.09 Distributions from the WellPoint Common Stock Fund. When
requesting a distribution under this Article XI, a Participant (or Beneficiary)
may elect to receive the portion of his or her Account that is invested in the
WellPoint Common Stock Fund in whole shares of WellPoint Common Stock. Any
balance representing fractional shares will be distributed in cash.
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11.10 Direct Rollover. Effective for distributions made on or after
January 1, 1993, notwithstanding any provision of this Plan to the contrary that
would otherwise limit a Distributee's election under this Plan, a Distributee
may elect, at the time and in the manner prescribed by the Committee, to have
any portion of an Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a Direct Rollover. For these
purposes, the following definitions apply:
(a) Eligible Rollover Distribution. An Eligible Rollover
Distribution is any distribution of all or any portion of the balance to the
credit of the Distributee, except that an Eligible Rollover Distribution does
not include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or joint life expectancies)
of the Distributee and the Distributee's designated Beneficiary, or for a
specified period of 10 years or more; any distribution to the extent that
distribution is required under Section 401(a)(9) of the Code; and the portion of
any distribution that is not includible in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to employer
securities.
(b) Eligible Retirement Plan. An Eligible Retirement Plan is an
individual retirement account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity plan described
in Code Section 403(a), or a qualified trust described in Code Section 401(a),
that accepts the Distributee's Eligible Rollover Distribution. However, in the
case of an Eligible Rollover Distribution to the surviving spouse, an Eligible
Retirement Plan is an individual retirement account or individual retirement
annuity.
(c) Distributee. A Distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's surviving spouse and
the Employee's or former Employee's spouse or former spouse who is the alternate
payee under a Qualified Domestic Relations Order, as defined in Code Section
414(p), are Distributees with regard to the interest of the spouse or former
spouse.
(d) Direct Rollover. A Direct Rollover is a payment by the Plan to
the Eligible Retirement Plan specified by the Distributee.
11.11 Notice. Notwithstanding anything to the contrary in this Plan, if
a distribution is one to which Sections 401(a)(11) and 417 of the Internal
Revenue Code do not apply, such distribution may commence less than 30 days
after the notice required under Section 1.411(a)-11(c) of the Income Tax
Regulations is given, provided that (1) the plan administrator clearly informs
the Participant that the Participant has a right
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to a period of at least 30 days after receiving the notice to consider the
decision of whether or not to elect a distribution (and, if applicable, a
particular distribution option), and (2) the Participant, after receiving the
notice, affirmatively elects a distribution.
ARTICLE XII
BENEFICIARY DESIGNATIONS
12.01 All Participants. Subject to Appendix V, a Participant may
designate one or more primary Beneficiaries and one or more secondary
Beneficiaries to receive any benefit payable from the Participant's Account on
the Participant's death. A Participant's Beneficiary designation will be made on
a form prepared by, and delivered to, the Committee before the Participant's
death. The Participant may revoke or change this designation at any time before
his or her death by delivering a subsequent form to the Committee.
12.02 Married Participants. If the Participant is married, and if the
Participant names a Beneficiary other than his or her surviving spouse as a
primary Beneficiary, the Participant's surviving spouse must waive his or her
right to the Participant's Account in a written document, delivered to the
Committee, that acknowledges the effect of the waiver, and that is witnessed by
a notary public. In the waiver, the Participant's surviving spouse must consent
to the specific non-spouse Beneficiary(s) named by the Participant. The waiver
will be effective only with respect to that spouse. If the Participant is
legally separated or abandoned and the Participant has a court order to that
effect (and there is no qualified domestic relations order that provides
otherwise), or the surviving spouse cannot be located, then a waiver need not be
filed with the Committee when a married Participant names a Beneficiary other
than his or her spouse.
12.03 Ineffective Designation. If a Participant does not have an
effective Beneficiary designation on file when he or she dies, the Participant's
Account will be distributed to the Participant's spouse if then living or, if
the spouse is not then living, to the Participant's children (in equal shares),
or if no such children are then living, according to the laws of intestate
succession in effect in the State of California on the date of the Participant's
death.
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ARTICLE XIII
CLAIMS PROCEDURE
If a Participant or Beneficiary ("Claimant") believes that he or she is
entitled to a greater benefit under the Plan, the Claimant may submit a signed,
written application to the Committee within 90 days of having been denied such a
greater benefit. The Claimant will generally be notified of the approval or
denial of this application within 90 days of the date that the Committee
receives the application. If the claim is denied, the notification will state
specific reasons for the denial and the Claimant will have 60 days to file a
signed, written request for a review of the denial with the Committee. This
request will include the reasons for requesting a review, facts supporting the
request and any other relevant comments. The Committee, operating pursuant to
its discretionary authority to administer and interpret the Plan and to
determine eligibility for benefits under the terms of the Plan, will generally
make a final, written determination of the Claimant's eligibility for benefits
within 60 days of receipt of the request for review.
ARTICLE XIV
ALIENATION AND QUALIFIED DOMESTIC RELATIONS ORDERS
14.01 Prohibition. Plan benefits may not be assigned or alienated and
will not be subject to the claims of creditors. The Plan will, however, honor
properly executed federal tax levies, executions on federal tax judgments,
Qualified Domestic Relations Orders within the meaning of Code Section 414(p), a
direction to pay third parties pursuant to Regulation 1.401(a)- 13(e), and the
provisions of this Plan regarding loans and distributions to minors and
incompetent persons.
14.02 Qualified Domestic Relations Order. A distribution to an
alternate payee authorized by a Qualified Domestic Relations Order may be made
even if the affected Participant would not be eligible to receive a similar
distribution from the Plan at that time.
ARTICLE XV
ADMINISTRATION
15.01 Committee. The Board of Directors of the Company may appoint a
Committee to administer the Plan. The Committee will hold office at the pleasure
of the Directors and will be a named fiduciary of the Plan. To the extent that
the Company does not appoint a Committee, the Company will administer the Plan
and will be a named fiduciary of the Plan. To the extent that the Company has
not appointed a Committee, the term Committee, as used in this Article, shall be
deemed to refer to the Company.
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15.02 Power. The Committee has full discretionary authority to
administer and interpret the Plan, including discretionary authority to
determine eligibility for participation and benefits under the Plan, to appoint
one or more investment managers and to correct errors. Effective January 1,
1994, the preceding sentence is clarified to confirm that the Committee has full
discretionary authority to construe ambiguous terms under the Plan and that the
Committee's discretionary authority includes, but is not limited to, the powers
listed in this document. The Committee may delegate its discretionary authority
and such duties and responsibilities as it deems appropriate to facilitate the
day-to-day administration of the Plan. Determinations by the Committee or the
Committee's delegate will be final and conclusive upon all persons.
15.03 Indemnification. The Participating Companies will indemnify and
hold harmless the Directors, the members of the Committee, and any Employees who
may be deemed fiduciaries of the Plan within the meaning of ERISA, from and
against any and all liabilities, claims, costs and expenses, including
attorneys' fees, arising out of an alleged breach in the performance of their
fiduciary duties under the Plan and under ERISA, other than such liabilities,
claims, costs and expenses as may result from the gross negligence or willful
misconduct of such persons. The Participating Companies shall have the right,
but not the obligation, to conduct the defense of such persons in any proceeding
to which this Section applies.
15.04 Expenses. All proper expenses incurred in administering the Plan
will be paid by the Participating Companies if not paid from the Trust. If
expenses are initially paid by a Participating Company, the Participating
Company may be reimbursed from the Trust. Committee members will receive no
compensation for their services in administering the Plan.
ARTICLE XVI
AMENDMENTS
The Board of Directors of the Company or a committee appointed by the
Board of Directors of the Company, by written action, may amend the Plan
(prospectively or retroactively). Upon adoption, the amendment will become
effective in accordance with its terms. Except as provided elsewhere in this
Plan, no amendment will (a) cause Plan assets to revert to a Participating
Company or to be used for purposes other than the exclusive benefit of
Participants and Beneficiaries and payment of reasonable expenses, (b) deprive
any Participant of a benefit already accrued, or (c) change the duties or
liabilities of a Trustee without written consent of the Trustee.
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ARTICLE XVII
TERMINATION, MERGER AND TRANSFER
17.01 Participating Companies. A Participating Company may, in its sole
discretion, by written action of its board of directors or by a committee
appointed by its board of directors, discontinue contributions to or terminate
the Plan, in whole or in part, at any time with respect to its own Employees
without any liability whatsoever.
17.02 Company. The Board of Directors of the Company reserves the right
to terminate the Plan, at any time, in its sole and absolute discretion by its
written action or by a written action of a committee appointed by the Board of
Directors of the Company. If the Plan is terminated with respect to all
Participating Companies, the Trustees will pay to each Participant affected by
the termination, or that Participant's Beneficiary, within a reasonable time,
the net value of the Participant's Account in accordance with the written
directions of the Committee; provided that, if termination of the Plan does not
constitute a distribution event within the meaning of Code Section 401(k), the
Participants' Salary Deferral Contributions Accounts shall continue to be held
in trust for subsequent distribution in accordance with the requirements of Code
Section 401(k).
17.03 Determination of Partial Termination. A partial termination of
the Plan will not be deemed to occur solely by reason of the sale or transfer of
all or substantially all of the assets of a Participating Company, but will be
deemed to occur only if there is a determination, either made or agreed to by
the Committee, or made by the Internal Revenue Service and upheld by a decision
of a court of last resort, that a particular event or transaction constitutes a
partial termination within the meaning of Code Section 411(d)(3)(A).
17.04 Mergers and Transfers. This Plan may be merged or consolidated
with another tax-qualified retirement Plan and assets and liabilities may be
transferred from this Plan to any other retirement plan qualified under Section
401 of the Code if each Participant is entitled to receive from this Plan, or
from the surviving or transferee plan, immediately after the merger,
consolidation or transfer, a benefit equal to or greater than the benefit the
Participant would have been entitled to receive under this Plan if this Plan had
been terminated immediately before the merger, consolidation or transfer.
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ARTICLE XVIII
MISCELLANEOUS
18.01 Limitation of Rights. Participation in this Plan will not give to
any Employee the right to be retained in the employ of an Affiliated Company,
nor any right or interest in this Plan other than as provided in this Plan
document.
18.02 Satisfaction of Claims. Any payment to a Participant, the
Participant's legal representative or Beneficiary, in accordance with the terms
of this Plan and the appropriate Trust Agreement, will, to the extent thereof,
be in full satisfaction of all claims such person may have against each Trustee,
the Committee and all Participating Companies, any of whom may require the
recipient, as a condition precedent to such payment, to execute a receipt and
release therefor in such form as shall be determined by the Trustee, the
Committee or a Participating Company, as the case may be.
18.03 Construction. Although contributions made by the Participating
Companies are not limited to profits, the Plan is intended to be a profit
sharing plan. The Plan is to be construed and administered in accordance with
ERISA and other pertinent federal laws and in accordance with the laws of the
State of California to the extent not preempted by ERISA; provided, however,
that if any provision is susceptible of more than one interpretation, such
interpretation shall be given thereto as is consistent with the intent that this
Plan and its related Trusts be exempt from federal income tax under Code
Sections 401(a) and 501(a), respectively. The headings and subheadings of this
instrument are inserted for convenience of reference only and are not to be
considered in the construction of this Plan.
18.04 Severability. If a provision of this Plan is held by a court of
competent jurisdiction to be invalid or unenforceable, the remaining provisions
of the Plan will remain fully effective.
18.05 Source of Benefits. All benefits payable under the Plan shall be
paid and provided for solely from the Trust, and the Participating Companies
assume no liability or responsibility therefor.
IN WITNESS WHEREOF, the Company has caused this Plan
to be executed this _____ day of ____________, 19____.
BLUE CROSS OF CALIFORNIA
By: __________________________
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APPENDIX I: HIGHLY COMPENSATED EMPLOYEE
1.01 Definition. Highly Compensated Employee means, with respect to a
Plan Year ("current year"), an Employee who, during the Plan Year or the
preceding 12-month period: was a 5% owner within the meaning of Code Section
416(i)(1)(B)(i), received Remuneration from all Affiliated Companies in excess
of $75,000 (or a greater amount permitted under Code Section 414(q)(1)),
received Remuneration from all Affiliated Companies in excess of $50,000 (or a
greater amount permitted under Code Section 414(q)(1)) and was among the top 20%
of Employees when ranked on the basis of Remuneration paid during that year, or
was at any time an officer and received Remuneration greater than 50% of the
dollar limit under Code Section 415(b)(1)(A) for that year or (if no officer
received such Remuneration), the officer who received the most Remuneration.
1.02 Top 100. For the current year, no Employee (other than a 5% owner)
who was not a Highly Compensated Employee in the preceding year will be a Highly
Compensated Employee unless the Employee is among the 100 Employees paid the
greatest Remuneration by all Affiliated Companies in the current year.
1.03 Family. Members of a 5% owner's family, or of the family of a
Highly Compensated Employee who is one of the 10 most Highly Compensated
Employees, will be aggregated and treated as a single Employee, with a single
Remuneration, and a single Plan benefit. "Family," for purposes of the preceding
sentence, includes a Participant's spouse, and the Participant's lineal
ascendants and descendants, and their spouses.
1.04 Top 20%. When determining the number of Employees in the top 20%
of Employees by Remuneration, the Committee will exclude Employees who (i) have
not completed 6 months of service, (ii) normally work less than 17-1/2 hours per
week, (iii) normally work during not more than 6 months during any year, (iv)
have not attained age 21, (v) are included in a unit of employees covered by a
collective bargaining agreement (except to the extent provided in Treasury
Regulations), (vi) are nonresident aliens and receive no earned income from a
Participating Company that constitutes income from sources within the United
States, or (vii) rendered no services to any Affiliated Company during the year.
1.05 Officers. No more than 50 Employees (or, if less, the greater of 3
Employees or 10% of the Employees) will be treated as officers.
1.06 Calendar Year. In the discretion of the Committee, the
determination of Highly Compensated Employees for any Plan Year will be made
using the calendar year calculation election in Regulation 1.414(q)-1T Q&A 14.
1.07 Affiliated Companies. This Appendix will be administered
separately with regard to Affiliated Companies (if any) that are unrelated
within the meaning of Code Section 414.
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APPENDIX II: TESTING SALARY DEFERRAL AND MATCHING CONTRIBUTIONS
2.01 Individual Limit on Elective Deferrals.
(a) Definition. "Elective Deferrals" means con- tributions on
behalf of a Participant under a qualified cash or deferred arrangement described
in Code Section 402(e)(3), under a simplified employee pension plan described in
Code Section 408(k)(6), and under a salary reduction agreement to purchase an
annuity contract described in Code Section 403(b).
(b) Limit. A Participant's Salary Deferral Contributions under the
Plan for any calendar year may not exceed the $7,000 (indexed) limit of Code
Section 401(a)(30).
(c) Distribution. If a Participant notifies the Committee in
writing by March 1 following the close of the Participant's taxable year that
the Participant's total Elective Deferrals for the taxable year exceed the
$7,000 (indexed) limit of Code Section 402(g) or if Salary Deferral
Contributions exceed the amount permitted by Code Section 401(a)(30), the
excess, together with income earned on the excess during the calendar year will
be distributed to the Participant by April 15 following the year in which the
excess contribution was made. Income will be determined using a method used for
allocating income to Participants' Accounts during the Plan Year and will not
include income earned after the end of the Plan Year.
2.02 Limit on Salary Deferral Contributions.
(a) Deferral Percentage means, for a group of Eligible Employees,
the average of the ratios (calculated separately for each individual) of (i) to
(ii) where (i) is the Salary Deferral Contributions allocated for the Plan Year
to the individual, and (ii) is the Code Section 414(s) compensation of the
individual for the Plan Year. The Deferral Percentage for an Eligible Employee
who does not elect to make Salary Deferral Contributions is zero.
(b) Family Member means, with respect to a Participant, the
Participant's spouse, and the Participant's lineal ascendants and descendants
and their spouses.
(c) Family Group means a group of two or more Participants that
includes a 5% owner, as defined in Code Section 416(i)(1)(B)(i), and/or one of
the 10 most Highly Compensated Employees, and one or more of the Participants'
Family Members.
(d) $150,000/$200,000 Limit means that, with respect to this
Appendix, the annual Code Section 414(s) compensation of any Participant taken
into account in any Plan Year will be subject to the same $200,000 limit applied
to the Plan's definition of Compensation. Effective January 1, 1994, the
reference to $200,000 in the preceding sentence is changed to a reference to
$150,000 (indexed).
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(e) Salary Deferral Contributions must satisfy one of the
following tests:
(i) The Deferral Percentage for Highly Compensated Employees
must not be more than 125% of the Deferral Percentage for Non-Highly Compensated
Employees.
(ii) The Deferral Percentage for Highly Compensated Employees
must not be more than 2 percentage points plus the Deferral Percentage for
Non-Highly Compensated Employees.
(f) Deferral Percentage Test Operational Rules.
(i) Family Groups. To the extent required by law, a single
Deferral Percentage will apply to all members of a Family Group, and will be the
greater of (i) a Deferral Percentage determined by totalling the amounts
credited as Salary Deferral Contributions to all members of the Family Group who
are Highly Compensated Employees and dividing by the total Code Section 414(s)
compensation received by these members, or (ii) a Deferral Percentage determined
as in (i), but based on all members of the Family Group.
(ii) Aggregated Plans. If 2 or more plans that include cash or
deferred arrangements are considered a single plan for purposes of Code Section
401(a)(4) or Code Section 410(b) (other than for purposes of the average
benefits test of Code Section 410(b)), the cash or deferred arrangements
included in those plans will be treated as a single arrangement.
(iii) Highly Compensated. If an eligible Highly Compensated
Employee is a participant under two or more cash or deferred arrangements of an
Affiliated Employer, for purposes of determining that Employee's Deferral
Percentage, all such cash or deferred arrangements will be treated as a single
cash or deferred arrangement.
(iv) Disregarded Employees. Any Employee who is not, at any
time during the Plan Year, eligible to authorize a Salary Deferral Contribution
will be disregarded.
(g) Satisfaction of Deferral Percentage Test.
(i) Reduction of Contributions. If, at any time, the Committee
determines that the Deferral Percentage test is not likely to be satisfied, the
Committee may reduce the Salary Deferral Contributions of Highly Compensated
Employees or a Participating Company make a Special Contribution to the Plan.
(ii) Recalculation. If the Plan does not satisfy the Deferral
Percentage test the Deferral Percentage for the Highly Compensated Employee with
the greatest Deferral Percentage will be reduced to the extent required to
enable the Plan to satisfy the Deferral Percentage test, or to cause the
Deferral Percentage of the Highly Compensated Employee with the
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greatest Deferral Percentage to equal the Deferral Percentage of the Highly
Compensated Employee with the next greatest Deferral Percentage. The Deferral
Percentages of these Highly Compensated Employees will then be reduced together
and this process will be repeated as necessary until the Plan satisfies the
Deferral Percentage test.
(iii) Recalculation for Family Group. To the extent required
by law, Deferral Percentages of members of a Family Group will be recalculated
pursuant to Regulations applying Code Section 414(q)(6) to the Code Section
401(k).
(iv) Excess Contributions. A Highly Compensated Employee's
excess contributions are the amount by which the Salary Deferral Contribution
made on behalf of the Highly Compensated Employee for the Plan Year must be
reduced pursuant to the recalculation provisions of this paragraph (2) for the
Plan to satisfy the Deferral Percentage test. Subject to the following
provisions, excess contributions will be distributed to the Participant for whom
they were contributed.
(v) Adjustments. Distributions of excess contributions will be
adjusted for income and loss using a method used for allocating income to
Participants' Accounts during the Plan Year and they will be reduced by the
excess deferrals distributed pursuant to Section 2.01 of this Appendix. Income
earned after the end of the Plan Year will not be distributed. Federal, state or
local income tax withholding obligations attributable to the distribution may be
satisfied out of the distribution. Distributions of excess contributions will be
reduced by distributions of excess deferrals.
(vi) Timing. Excess contributions for a Plan Year will be
distributed no later than the last day of the Plan Year immediately following
the Plan Year for which the contributions were made.
2.03 Deferral Percentage Test. Matching Contributions will be tested
like Salary Deferral Contributions under the Limit on Salary Deferral
Contributions provisions outlined above. If, pursuant to these limits, excess
contributions are required to be distributed, unmatched Salary Deferral
Contributions will be distributed before matched Salary Deferral Contributions.
If matched Salary Deferral Contributions must also be distributed, they will be
accompanied by the forfeiture of a proportionate share of Matching
Contributions. Forfeitures will be used to pay Plan administrative expenses.
2.04 Records. The Committee will maintain records demonstrating
compliance with Code Section 401(k)(3).
2.05 Affiliated Companies. All of this Appendix except Section 2.01
will be administered separately with regard to Affiliated Companies (if any)
that are unrelated within the meaning of Code Section 414.
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APPENDIX III: LIMITATIONS ON ALLOCATIONS
3.01 Basic Limitation. The total Annual Addition to Participants under
this Plan and under any other defined contribution plan maintained by an
Affiliated Company may not, for any Limitation Year, exceed the lesser of (i)
the dollar limit which is $30,000, or if greater 25% of the dollar limitation in
effect under Code Section 415(b)(1)(A), or (ii) 25% of the Participant's
Remuneration for that Limitation Year, as adjusted for cost of living under
Section 415(d) of the Code.
(a) Employer Contributions. An amount shall be an Annual Addition
under a defined contribution plan for a Limitation Year if, with respect to
employer contributions (including salary deferral contributions), such
contributions are made during the Limitation Year or no later than 30 days
following the end of the taxable year (including extensions) with or within
which the Limitation Year ends.
(b) Participant Contributions. An amount shall be an Annual
Addition under a defined contribution plan for a Limitation Year if, with
respect to the Participant's own contributions, the contributions are made
during the Limitation Year or no later than 30 days following the end of such
Limitation Year.
3.02 Annual Addition. "Annual Addition" means, for any Limitation Year,
the aggregate amount (excluding Rollover Contributions and Trust-to-Trust
Transfers) credited to a Participant's account under this Plan and to a
Participant's accounts under each other defined contribution plan of an
Affiliated Company with respect to such Limitation Year from employer
contributions and forfeitures allocated to a Participant's account (excluding
any amount reinstated to an account pursuant to Code Sections 411(a)(7)(C)
(cash-outs) or 411(a)(3)(D) (mandatory contributions)), a Participant's own
contributions made on behalf of the Participant, and contributions to an
individual medical account (as defined in Section 415(1) of the Code) for a
Participant as part of a defined benefit plan.
(a) Welfare Benefit Fund Contributions. For purposes of the
application of the dollar limit of clause (i) of Section 1.01 of this Appendix
to a Participant who is a Key Employee, as defined in Code Section 416(i), with
respect to a Limitation Year, any amount paid or accrued to that Participant's
account under a welfare benefit fund pursuant to Section 419A(d) of the Code is
an Annual Addition.
(b) Combined Limit. If a Participant also parti- cipates in a
qualified defined benefit plan maintained by an Affiliated Company, the sum of
(i) the Defined Benefit Fraction and (ii) the Defined Contribution Fraction (as
defined below) shall not exceed 1.0 for any Limitation Year.
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(c) Defined Benefit Fraction means that fraction, the numerator of
which is the Participant's projected annual benefit, determined as of the close
of the Limitation Year, under all defined benefit plans of all Affiliated
Companies and the denominator of which is the lesser of (i) the product of 1.25
and the dollar limits in effect under Code Section 415(b)(1)(A) for the
Limitation Year or (ii) the product of 1.4 and the Participant's average annual
Remuneration for the 3 consecutive Limitation Years for which such average is
the highest. A Participant's "projected annual benefit" is the annual benefit to
which the Participant would be entitled under all defined benefit plans of all
Affiliated Companies if the Participant were to remain an Employee until normal
retirement age under each such plan and all other relevant factors used to
determine benefits under such plans were to remain constant.
(d) Defined Contribution Fraction means that fraction, the
numerator of which is the sum of the Annual Additions to the Participant's
accounts under each defined contribution plan maintained by an Affiliated
Company for the Limitation Year and all prior Limitation Years (less the amount,
if any, permitted to be subtracted under (i) the transitional rule of Section
235(g)(3) of the Tax Equity and Fiscal Responsibility Act of 1982 or (ii) the
transitional rule of Section 1106(h)(4) of the Tax Reform Act of 1986) and the
denominator of which is the lesser of the following amounts with respect to the
Limitation Year and each prior Limitation Year during which the Participant was
an employee of an Affiliated Company: (1) the product of 1.25 and the dollar
limit in effect under Code Section 415(c)(1)(A) (but without regard to Code
Section 415(c)(6)) for such Limitation Year or (2) the product of 1.4 and 25% of
the Participant's Remuneration for such Limitation Year; provided that the
Committee may calculate the denominator of the Defined Contribution Fraction for
all defined contribution plans of Affiliated Companies using the alternative
method set forth in Code Section 415(e)(6).
(e) Top Heavy Adjustment. For any Plan Year that the Plan is Top
Heavy, the definitions of Defined Contribution Fraction and Defined Benefit
Fraction are modified by substituting 1.0 for 1.25; provided, however, in no
event, will the accrued benefit or account balance of a Participant be reduced
below the amount of such accrued benefit or account balance immediately before
the Plan became Top Heavy.
3.03 Compliance with Basic Limitation. If the Annual Addition to a
Participant's accounts in this Plan and any other defined contribution plan of
any Affiliated Company would exceed the limits described in 1.01 of this
Appendix, the Annual Addition to this Plan and to each other defined
contribution plan of any Affiliated Company will be reduced but only to the
extent necessary to comply with Section 1.01 of this Appendix, as follows:
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(a) Participant Contributions. First, the Participant's own
contributions to each such plan, to the extent that they constitute an Annual
Addition, will be reduced pro rata, and the excess, together with earnings
thereon, returned to the Participant.
(b) Employer Contributions. Then, employer contributions for the
Limitation Year that have not been allocated to such participants will be
reduced pro rata.
(c) Suspense Account. Then, amounts that cannot be allocated to
participants' accounts will be credited to a suspense account that will be used
to reduce future employer contributions. The suspense account will not share in
investment earnings and no employer contributions may be made while amounts
remain unallocated in the suspense account.
3.04 Compliance with Combined Limitation. If for a Limitation Year the
sum of the Defined Benefit Fraction and the Defined Contribution Fraction would
exceed 1.0, then the following actions will be taken in the following order, to
the extent necessary for compliance with Section 1.03 of this Appendix, taking
into account the transition provisions of Section 1106(h)(3) of the Tax Reform
Act of 1986:
(a) Defined Benefit Plan. The Participant's accrued benefits under
each defined benefit plan of an Affiliated Company will be reduced in accordance
with the terms of each such plan.
(b) Defined Contribution Plan. Annual Additions to the
Participant's accounts in this Plan and each other defined contribution plan of
an Affiliated Company will be reduced.
3.05 Limitation Year. The Limitation Year is the Plan Year.
3.06 Affiliated Company. For purposes of this Appendix, the
determination of an Affiliated Company will be made with the adjustment required
by Code Section 415(h).
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APPENDIX IV: TOP HEAVY PROVISIONS
4.01 Definitions. For purposes of this Appendix, the following terms
shall have the meaning indicated:
(a) Determination Date shall mean, for the Plan's first Plan Year,
the last day of such Plan Year, and for any other Plan Year, the last day of the
preceding Plan Year.
(b) Key Employee shall mean, with respect to any Plan Year, a
Participant or former Participant (and the Beneficiaries of a deceased
Participant) who, at any time during the Plan Year containing the Determination
Date for the Plan Year in question, or any of the four immediately preceding
Plan Years, was:
(i) Officer. An officer, for purposes of this Appendix, is an
officer of an Affiliated Company having annual Remuneration from all Affiliated
Companies for a Plan Year greater than 50% of the maximum dollar limitation in
effect under Code Section 415(b)(1)(A) for the calendar year in which such Plan
Year ended. The individuals actually considered as Key Employees by virtue of
being officers (I) shall not in number exceed the lesser of 50 or that number
not in excess of the greater of three officers or 10% of the total number of
Employees of all the Affiliated Companies, and (II) shall be those individuals
belonging to the group of all Participants determined to be officers for the
Plan Year containing the Determination Date or any of the preceding four Plan
Years, who received the highest annual Remuneration for any Plan Year during
such five-year period.
(ii) Owners of Largest Interests. The owners of the largest
interests are the 10 Employees of any Affiliated Company owning the largest
interests in any Affiliated Company, provided that such Employee owns more than
a 1/2% interest in such Affiliated Company, and that such Employee's aggregate
annual Remuneration from all the Affiliated Companies exceeds the maximum dollar
limitation under Section 415(c)(1)(A) of the Code. Should two Employees own the
same percentage interest in one or more Affiliated Companies, then the Employee
having the greater annual Remuneration shall be deemed to own the larger
percentage interest.
(iii) 5% Owner. A 5% owner is an individual who owns more than
5% of the outstanding stock or stock possessing more than 5% of the total
combined voting power of all stock of any Affiliated Company (or, if the
Affiliated Company is not a corporation, more than 5% of the capital or profits
interest of the Affiliated Company).
(iv) 1% Owner. A 1% owner is an individual who -------- owns
more than 1% of the outstanding stock or stock possessing more than 1% of the
total combined voting power of all stock of any Affiliated Company, (or, if such
Affiliated Company is not a corporation, more than 1% of the capital or profits
interest of
31.
<PAGE>
the Affiliated Company), and whose annual Remuneration from all the Affiliated
Companies exceeds $150,000.
For purposes of determining ownership in an Affiliated Company under this
subsection, the attribution principles of Code Section 318 shall apply by
substituting "5%" for "50%" in Section 318(a)(2)(C).
(c) Non-Key Employee shall mean, with respect to any Plan Year,
any Employee who is not a Key Employee, including Employees who are former Key
Employees.
(d) Top Heavy Ratio of a plan or group of plans shall be a
fraction, the numerator of which is the sum of (I) account balances of all Key
Employees under each defined contribution plan (including any simplified
employee pension plan) included in the determination and (II) the present value
of cumulative accrued benefits of all Key Employees under each defined benefit
plan included in the determination, and the denominator of which is the sum of
the account balances for all Participants under each defined contribution plan
(including any simplified employee pension plan) included in the determination
and the present value of cumulative accrued benefits for all Participants under
each defined benefit plan included in the determination. In determining the
Top-Heavy Ratio, the following rules apply:
(i) Valuation. The value of account balances shall be
determined as of the most recent Valuation Date that falls within or ends within
the 12-month period ending on the Determination Date. Present value of accrued
benefits under a defined benefit plan shall be calculated under the method used
for accrual purposes in all defined benefit plans of the Affiliated Companies,
or, if there is no such method, as if such benefit accrued not more rapidly than
the slowest accrual rate permitted under Code Section 411(b)(1)(C). Account
balances and accrued benefits so determined shall be adjusted for the amount of
any contributions (I) made after the date of such valuation but on or before the
Determination Date or (II) due but unpaid as of the Determination Date, and,
except as otherwise provided in (2) or (3) below, shall include any amount
distributed during the five-year period ending on the Determination Date.
(ii) Transfers. With respect to a transfer from one qualified
plan to another (by rollover or trust-to-trust transfer) which is (A) incident
to a merger or consolidation of two or more plans or a division of a single plan
into two or more plans, (B) made between two plans maintained by the same
employer or by employers required to be aggregated under Section 414(b), (c),
(m) or (o) of the Code, or (C) otherwise not initiated by the Employee, a
Participant's accrued benefit or account balance under a plan shall include any
amount attributable to any such transfer received or accepted by such plan on or
before the Determination Date but shall not include any amount transferred by
such plan to any other plan in such a transfer on or before the Determination
Date. With respect to any rollover or trust-
32.
<PAGE>
to-trust transfer not described in the preceding sentence, a Participant's
accrued benefit or account balance under a plan (I) shall include any amount
distributed or transferred by such plan, unless the distributed or transferred
amount is excludable under paragraph (1), and (II) shall not include any amount
attributable to assets received by such plan.
(iii) Exclusions. No accrued benefit for any Participant or
Beneficiary shall be taken into account for purposes of calculating the
Top-Heavy Ratio with respect to (I) a Participant who is not a Key Employee with
respect to the Plan Year in question, but who was a Key Employee with respect to
a prior Plan Year, or (II) an Employee who has performed no services for any
Affiliated Company within the five-year period ending with the Determination
Date, unless such Employee becomes re-employed after such 5-year period.
(e) Required Aggregation Group means a group of two or more plans
(including terminated plans) consisting of (1) a qualified plan of an Affiliated
Company (including a simplified employee pension plan) in which at least one Key
Employee participates, and (2) any other qualified plan or plans of the
Affiliated Company which enable the plan described in (1) to meet the
requirements of Code Sections 401(a)(4) and 410 (except Average Benefits).
(f) Permissive Aggregation Group means a group of plans consisting
of a Required Aggregation Group of plans plus one or more other plan or plans of
an Affiliated Company which, when considered as a group with the Required
Aggregation Group, would continue to satisfy the requirements of Code Sections
401(a)(4) and 410.
4.02 Top-Heavy Status. This Plan shall be considered "Top-Heavy" with
respect to any Plan Year if, as of the Determination Date for such Plan Year,
either:
(a) No Required Aggregation. The Top-Heavy Ratio for this Plan
exceeds 60% and this Plan is not part of any Required Aggregation Group, or
(b) Required Aggregation. This Plan is part of a Required
Aggregation Group of plans and the Top-Heavy Ratio for the group of plans
exceeds 60%; provided that, if this Plan is part of one or more Permissive
Aggregation Groups of plans for which the Top-Heavy Ratio does not exceed 60%,
this Plan shall not be Top-Heavy.
4.03 Minimum Contribution.
(a) Recipients. With respect to any Plan Year for which the Plan
is Top-Heavy, each Participant who is not a Key Employee, and who has not ceased
to be an Employee prior to the end of such Plan Year, shall be entitled to a
contribution under this section. No Participant otherwise entitled to an
allocation under this subsection shall be ineligible for such allocation
33.
<PAGE>
solely because he or she has not completed 1,000 Hours of Service
for the Plan Year.
(b) Amounts. The benefit of each Participant who meets the
requirements of subsection (a), and who does not participate in any defined
benefit plan of any Affiliated Company, shall be such Participant's Company
Contribution (including forfeitures) under the other provisions of the Plan;
provided that the total employer contribution (including forfeitures) allocated
to the Account of such Participant shall be not less than an amount which, when
added to such Participant's allocable share of employer contributions and
forfeitures under any other defined contribution plan of any of the Affiliated
Companies, equals at least 3% of his or her Remuneration. The benefit described
in this subsection (b) is subject to the following:
(i) Limit. In the event that the percentage of employer
contributions and forfeitures under the plans in which such Participant
participates for the Plan Year on behalf of the Key Employee for whom such
percentage is greatest is less than 3% of such Key Employee's Remuneration for
the Plan Year, then such Participant shall not be entitled to a contribution
under this subsection (b) for the Plan Year in excess of such percentage of such
Participant's Remuneration, unless this Plan enables a defined benefit plan
included in a Required Aggregation Group with this Plan to satisfy the
requirements of Section 401(a) or 410 of the Code (except the average benefits
test).
(ii) Salary Reduction. Notwithstanding the preceding
paragraph, if the highest rate allocated to a Key Employee is less than 3%,
amounts contributed as a result of a salary reduction agreement will be included
when determining contributions made on behalf of Key Employees.
(iii) Adjustment. If a Participant also participates in a
defined benefit plan of an Affiliated Company, then the minimum contribution
requirement of this Section for that Participant will be fulfilled in accordance
with this subsection, except that "3%" shall be substituted for "5%."
4.04 Affiliated Companies. This Appendix will be administered separately
with regard to Affiliated Companies (if any) that are unrelated within the
meaning of Code Section 414.
34.
<PAGE>
APPENDIX V: PARTICIPATION OF UNICARE EMPLOYEES
Effective for Compensation paid to Employees of UniCARE Financial Corp.
("UniCARE") on and after March 25, 1994, and subject to the terms and conditions
outlined below, UniCARE will become a Participating Company under this Plan.
5.01 Eligibility. Effective March 25, 1994, notwithstanding anything to
the contrary in this Plan, Employees of UniCARE who are actively at work with
UniCARE on March 25, 1994 and who were participants in the UniCARE Financial
Corp. Profit Sharing Plan ("UniCARE Plan") for the payroll period ending
February 28, 1994 will be eligible to Participate in this Plan.
5.02 Service. Effective March 25, 1994, notwithstanding anything to the
contrary in this Plan, hours of service with UniCARE will be treated as Hours of
Service with Blue Cross for all purposes under the Plan including, but not
limited to, determinations regarding eligibility to participate in the Plan and
determinations regarding a Participant's level of Matching Contributions (if
any) under the Plan.
5.03 Plan Merger. On June 1, 1994, the UniCARE Plan, which contains
certain annuity and installment options that are generally unavailable under the
terms of this Plan, was merged into this Plan. This Appendix is designed to
preserve withdrawal, distribution, and restoration of forfeiture provisions
contained in the UniCARE Plan to the extent required by the Retirement Equity
Act and by Code Section 411. Consequently, this appendix is applicable only to
assets (adjusted for future gains losses, expenses and restorations of
forfeitures transferred to this Plan from the UniCARE Plan ("UniCARE Amount").
All references to a Participant's UniCARE Amount in this Appendix are to that
Participant's UniCARE Amount as of the most recent Valuation Date.
5.04 UniCARE Distribution and Withdrawal Options. A Participant may
elect to receive a withdrawal or a distribution (as the case may be) of his or
her UniCARE Amount as provided in (a), (b), or (c) immediately below.
(a) General Plan Provisions. A Participant may elect to receive
his or her UniCARE Amount pursuant to the withdrawal or the distribution
provisions generally applicable to assets held under the Plan.
(b) Installment Distribution. A Participant may elect to receive
his or her UniCARE Amount in substantially equal annual, or more frequent
installments over a period certain which does not extend beyond the life
expectancy of the Participant or the joint life expectancies of the Participant
and the Participant's Beneficiary. For these purposes, life expectancies will
not be recalculated.
35.
<PAGE>
(c) Annuity Option. A Participant may elect to have his or her
UniCARE Amount used to purchase a nontransferable annuity contract that will be
distributed to the Participant in full satisfaction of all Plan obligations to
the Participant and the Participant's Beneficiaries with regard to the
Participant's UniCARE Amount. A Participant who makes such an election will be
subject to the Notice and Waiver Provisions contained in Section 5.05 of this
Appendix and to the following additional requirements.
(i) Annuity Starting Date. The Annuity Starting Date is the
first date for which an amount is payable as an annuity or, in the case of a
benefit not payable as an annuity, the first day on which all events have
occurred that entitle a Participant, or Beneficiary, as the case may be, to a
benefit pursuant to the terms of this Plan.
(ii) Normal Form. If the Participant is not married on his or
her Annuity Starting Date, the Participant's Normal Form will be a single life
annuity. If the Participant is married on his or her Annuity Starting Date, the
Participant's Normal Form will be an immediate annuity for the life of the
Participant with a survivor annuity for the life of the Participant's spouse
(determined as of the date of distribution of the contract) which is 50% of the
amount of the annuity which is payable during the joint lives of the Participant
and the Participant's spouse.
(iii) Alternate Form. Subject to the requirements of Code
Section 401(a)(9), a Participant may elect to receive an immediate annuity for
his or her life or a reduced immediate annuity for his or her life with a
survivor annuity for the life of a Beneficiary that is 50% or 100% of the amount
of the annuity that is payable during the joint lives of the Participant and the
Beneficiary. An alternate form of annuity may also provide for an annuity
certain feature for a period not exceeding the life expectancy of the
Participant.
5.05 Notice and Waiver Provisions. The following provisions are
applicable to distributions and withdrawals described in Section 5.04(c) and
Section 5.06(a) of this Appendix.
(a) Notice. No less than 30 days and no more than 90 days before
the Annuity Starting Date, the Committee will provide the Participant, or the
Participant's surviving spouse, as the case may be, with a written explanation
of the terms and conditions of the Normal Form, the right to make, and the
effect of, an election to waive the Normal Form, the right of the Participant's
spouse (if any) to approve a Participant's waiver, the right to revoke a waiver
and the effect of revoking a waiver.
(b) Procedure. A waiver must be made on a form prepared by, and
delivered to, the Committee no earlier than 90 days before the Annuity Starting
Date. The Participant, or the Participant's surviving spouse, as the case may
be, may revoke or
36.
<PAGE>
change a waiver at any time before the Annuity Starting Date by delivering a
subsequent form to the Committee that satisfies the Plan's waiver procedures.
(c) Additional Conditions Applicable to Married Participants.
(i) A Participant's spouse must waive any rights to the
Participant's Normal Form in a written document prepared by and delivered to the
Committee, that acknowledges the effect of the waiver, and that is witnessed by
a notary public. In the waiver, the Participant's spouse must either consent to
the specific non-spouse Beneficiary or Beneficiaries named by the Participant,
and the optional form of benefit selected by the Participant, or acknowledge
that the surviving spouse had the right to limit consent only to a specific
non-spouse Beneficiary or Beneficiaries, and to a specific optional form of
benefit, and that the surviving spouse voluntarily elected to relinquish that
right.
(ii) Consent Unnecessary. If the Participant is legally
separated or abandoned (within the meaning of local law) and the Participant has
a court order to that effect (and there are no Qualified Domestic Relations
Orders as defined in Code Section 414(p) that provide otherwise), or the spouse
cannot be located, then the waiver described in the preceding paragraph need not
be filed with the Committee when a married Participant elects an optional form
of benefit.
(iii) Effect of Consent. Any waiver by a spouse obtained
pursuant to these procedures (or establishment that the consent of a spouse
could not be obtained) is effective only with respect to that spouse.
5.06 Death Benefits. Subject to the requirements of Code Section
401(a)(9), the following death benefit provisions apply to UniCARE Amounts.
(a) Married Participant Who Elected an Annuity. If a married
Participant properly elects an annuity pursuant to the terms of this Appendix
and dies before his or her Annuity Starting Date, the Participant's UniCARE
Amount will be used to purchase a single life annuity (the Normal Form) for the
Participant's surviving spouse as soon as administratively possible after the
Participant's spouse requests purchase of such an annuity. Pursuant to the
Notice provisions of Sections 5.05(a) and (b) of this Appendix, the
Participant's surviving spouse may elect to receive the Participant's UniCARE
Amount pursuant to the distribution provisions generally applicable to assets
held under the Plan instead of in the Normal Form of a single life annuity.
(b) Unmarried Participant. If an unmarried Participant dies before
his or her Annuity Starting Date, the Participant's UniCARE Amount will be
distributed pursuant to the distribution provisions generally applicable to
assets held under
37.
<PAGE>
the Plan and neither the annuity nor the installment provisions of this Appendix
will not apply.
(c) Married Participant Who Did Not Elect an Annuity. If a married
Participant who did not properly elect an annuity pursuant to the terms of this
Appendix dies before his or her Annuity Starting Date, the Participant's UniCARE
Amount will be distributed pursuant to the distribution provisions generally
applicable to assets held under the Plan and neither the annuity nor the
installment provisions of this Appendix will apply.
5.07 Restoration of Forfeitures. Under the UniCARE Plan, an individual
who separated from service with UniCARE and who received a distribution (or a
deemed distribution) of the vested portion of his or her account under the
UniCARE Plan forfeited (or was deemed to forfeit) his or her unvested benefits
under the UniCARE Plan.
(a) Return to Service. If such an individual (i) was reemployed by
UniCARE or (ii) became an Employee after January 20, 1994 (when UniCARE became a
wholly owned subsidiary of WellPoint Health Networks Inc.), the amount forfeited
will be restored (without earnings) as part of the individual's UniCARE Amount
if the individual pays to this Plan (or in the case of a deemed forfeiture, the
Participant is deemed to have repaid the Plan) the full amount of the
distribution before the earlier of (x) 5 years after the applicable event
described in (i) or (ii) above, or (y) the close of the first period of 5
consecutive 1- year breaks in service (as defined in the UniCARE Plan) following
the date of the distribution.
(b) Funds. Funds for restoring forfeitures under this Section will
be drawn from a special contribution to the Plan to be made by the appropriate
Participating Company, as determined by the Committee. This special contribution
will not be subject to the limitations under Internal Revenue Code Section 415.
38.
EXHIBIT 5.1
Opinion of Brobeck, Phleger & Harrison LLP
II-10.
<PAGE>
May 31, 1996
WellPoint Health Networks Inc.
21555 Oxnard Street
Woodland Hills, CA 91367
Re: Registration Statement on Form S-8 ("Registration Statement") of
WellPoint Health Networks Inc.
Ladies and Gentlemen:
We have acted as counsel to WelllPoint Health Networks Inc., a
California corporation (the "Company"), with respect to the issuance of this
opinion relating to the proposed offering by the Company of up to 5,500,000
shares (the "Shares") of the Common Stock of the Company, par value $.01 per
share (the "Common Stock"), pursuant to certain employee benefit plans (the
"Plans").
As such counsel, we have examined such corporate records, certificates
and other documents and have made such other factual and legal investigations as
we have deemed relevant and necessary as the basis for the opinions hereinafter
expressed. In such examinations, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals
and the conformity to original documents of all documents submitted to us as
conformed or photostatic copies.
Based on the foregoing, we are of the opinion that:
1. The issuance by the Company of the Shares puruant to the Plans has
been duly authorized by all necessary corporate action on the part of the
Company.
2. When issued pursuant to the Plans, the Shares will be duly and
validly issued and outstanding, fully paid and non-assessable shares of Common
Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
II-11.
EXHIBIT 5.2
Internal Revenue Service Determination Letter, Dated November 8, 1995
II-12.
<PAGE>
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
2 CUPANIA CIRCLE
MONTEREY PARK, CA 91755
Date: Nov 08, 1995 Employer Identification Number:
95-3760980
File Folder Number:
BLUE CROSS OF CALIFORNIA 951002347
21555 OXNARD STREET Person to Contact:
WOODLAND HILLS, CA 91367 DOUGLAS WEST
Contact Telephone Number:
(213) 725-7099
Plan Name:
SALARY DEFERRAL SAVINGS
PROGRAM OF BLUE CROSS OF
CALIFORNIA
Plan Number:
004
Dear Applicant:
We have made a favorable determination on your plan,
identified above, based on the information supplied. Please keep this letter in
your permanent records.
Continued qualification of the plan under its present form
will depend on its effect in operation. (See section 1.401-1(b)(3) of the Income
Tax Regulations.) We will review the status of the plan in operation
periodically.
The enclosed document explains the significance of this
favorable determination letter, points out some features that may affect the
qualified status of your employee retirement plan, and provides information on
the reporting requirements for your plan. It also describes some events that
automatically nullify it. It is very important that you read the publication.
This letter relates only to the status of your plan under the
Internal Revenue Code. It is not a determination regarding the effect of other
federal or local statutes.
This determination is subject to your adoption of the proposed
amendments submitted in your letter dated 100695. The proposed amendments should
be adopted on or before the date prescribed by the regulations under Code
section 401(b).
This determination letter is applicable for the amendment(s)
adopted on 120894.
This plan has been mandatorily disaggregated, permissively
aggregated, or restructured to satisfy the nondiscrimination requirements.
This letter is issued under Rev. Proc. 93-39 and considers the
amendments required by the Tax Reform Act of 1986 except as otherwise specified
in this letter.
This plan satisfies the nondiscriminatory current availability
requirements of section 1.401(a)(4)-4(b) of the regulations with respect to
those benefits, rights, and features that are currently available to all
employees in the plan's coverage group. For this purpose, the plan's coverage
group
Letter 835 (D)/CG)
<PAGE>
2
BLUE CROSS OF CALIFORNIA
consists of those employees treated as currently benefiting for purposes of
demonstrating that the plan satisfies the minimum coverage requirements of
section 410(b) of the Code.
This plan also satisfies the requirements of section
1.401(a)(4)-4(b) of the regulations with respect to the specific benefits,
rights, or features for which you have provided information.
This letter may not be relied upon with respect to whether the
plan satisfies the qualification requirements as amended by the Uruguay Round
Agreements Act, Pub. L. 103-465.
The information on the enclosed addendum is an integral part
of this determination. Please be sure to read and keep it with this letter.
We have sent a copy of this letter to your representative as
indicated in the power of attorney.
If you have questions concerning this matter, please contact
the person whose name and telephone number are shown above.
Sincerely yours,
Richard R. Orosco
District Director
Enclosures:
Publication 794
Addendum
<PAGE>
3
BLUE CROSS OF CALIFORNIA
This plan also satisfies the requirements of Code section 401(k).
EXHIBIT 23.1
Consent of Coopers & Lybrand L.L.P.
II-13.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement on Form S-8 of our reports dated February 20, 1996, on our audits of
the consolidated financial statements of WellPoint Health Networks Inc. and
Subsidiaries and our audits of the Blue Cross of California Commercial
Operations and our report dated February 23, 1996, except for Note 12 as to
which the date is March 1, 1996, on our audits of the Post-Reorganization
combined financial statements of the Life & Health Benefits Management Division
of Massachusetts Mutual Life Insurance Company and Subsidiaries.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
May 31, 1996
EXHIBIT 23.2
Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5
II-14.
Exhibit 24
Power of Attorney (Reference is made to the signature page of this
Registration Statement.)
II-15.
