Health Net, Inc. 401(K) Savings Plan

EXHIBIT 10.46

HEALTH NET, INC.

401(k) SAVINGS PLAN

HEALTH NET, INC.

401(k) SAVINGS PLAN

TABLE OF CONTENTS PAGE ARTICLE 1 TITLE AND PURPOSE 1 ARTICLE 2 DEFINITIONS 1 ARTICLE 3 PARTICIPATION 7 Section 3.1. Eligibility for Participation 7 Section 3.2. Application for Salary Deferral Contributions 7 Section 3.3. Transfer to Affiliates 8 ARTICLE 4 EMPLOYER CONTRIBUTIONS 8 Section 4.1. Profit Sharing Contributions 8 Section 4.2. Salary Deferral Contributions 10 Section 4.3. Annual Limit on Salary Deferral Contributions 11 Section 4.4. Matching Contributions 12 Section 4.5. Limitations on Contributions for Highly Compensated Employees 14 Section 4.6. Limitation on Employer Contributions 19 ARTICLE 5 ROLLOVER CONTRIBUTIONS 20 Section 5.1. Requirements for Rollover Contributions 20 Section 5.2. Delivery of Rollover Contributions 21 Section 5.3. Special Accounting Rules for Rollover Contributions 21 ARTICLE 6 TRUST AND INVESTMENT FUNDS 22 Section 6.1. Trust 22 Section 6.2. Investment Funds 23 ARTICLE 7 PARTICIPANT ACCOUNTS 23 Section 7.1. Participant Accounts and Investment Elections 23 Section 7.2. Investments in Company Stock Fund 26 Section 7.3. Valuation of Funds and Plan Accounts 26 Section 7.4. Allocation of Contributions and Forfeitures Among Participants' Accounts 27 Section 7.5. Statutory Limitations on Allocations to Accounts 28 Section 7.6. Correction of Error 30


i PAGE ARTICLE 8 WITHDRAWALS, LOANS AND DISTRIBUTIONS 30 Section 8.1. Vesting 30 Section 8.2. Withdrawals Prior to Termination of Employment 32 Section 8.3. Loans to Participants 36 Section 8.4. Distribution Upon Termination of Employment 37 Section 8.5. Time and Form of Distribution upon Termination of Employment 37 Section 8.6. Designation of Beneficiary 40 Section 8.7. Distributions to Minor and Disabled Distributees 42 Section 8.8. Missing Person 43 ARTICLE 9 SPECIAL PARTICIPATION RULES 44 Section 9.1. Change of Employment Status 44 Section 9.2. Reemployment of an Eligible Employee Whose Employment Terminated Prior to Becoming a Participant 44 Section 9.3. Reemployment of a Terminated Participant 44 Section 9.4. Employment by Related Entities 46 Section 9.5. Leased Employees 46 Section 9.6. Reemployment of Veterans 46 ARTICLE 10 SHAREHOLDER RIGHTS WITH RESPECT TO COMPANY STOCK 48 Section 10.1. Voting Shares of Company Stock 48 Section 10.2. Tender Offers 49 ARTICLE 11 ADMINISTRATION 51 Section 11.1. The Committee 51 Section 11.2. Claims Procedure 54 Section 11.3. Notices to Participants 55 Section 11.4. Notices 56 Section 11.5. Records 56 Section 11.6. Reports of Trustee and Accounting to Participants 56 ARTICLE 12 PARTICIPATION BY OTHER EMPLOYERS 57 Section 12.1. Adoption of Plan 57 Section 12.2. Withdrawal from Participation 57 Section 12.3. Continuance by a Successor 58 Section 12.4. Company as Agent for Employers 58 ARTICLE 13 MISCELLANEOUS 59 Section 13.1. Expenses 59


ii PAGE Section 13.2. Non-Assignability 59 Section 13.3. Employment Non-Contractual 61 Section 13.4. Limitation of Rights 61 Section 13.5. Merger or Consolidation with Another Plan 61 Section 13.6. Gender and Plurals 61 Section 13.7. Applicable Law 61 Section 13.8. Severability 61 Section 13.9. No Guarantee 62 Section 13.10. Plan Voluntary 62 Section 13.11. Tax Withholding 62 ARTICLE 14 TOP-HEAVY PLAN REQUIREMENTS 62 Section 14.1. Top-Heavy Plan Determination 62 Section 14.2. Definitions and Special Rules 63 Section 14.3. Minimum Contribution for Top-Heavy Years 64 ARTICLE 15 AMENDMENT, ESTABLISHMENT OF SEPARATE PLAN AND TERMINATION 65 Section 15.1. Amendment 65 Section 15.2. Establishment of Separate Plan 65 Section 15.3. Termination 65 Section 15.4. Trust Fund to Be Applied Exclusively for Participants and Their Beneficiaries 66


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ARTICLE 1

TITLE AND PURPOSE

The title of the Plan shall be the " Health Net, Inc. 401(k) Savings Plan." The Plan is an amendment and restatement of the Plan as in effect as of December 31, 2007, and is effective as of January 1, 2008, unless any provision specifies a different effective date. The Plan is designated as a " profit sharing plan" within the meaning of U.S. Treasury Regulation a7 1.401-1(a)(2)(ii). ARTICLE 2

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

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

(3) Beneficiary . A person entitled under Section 8.6 to receive benefits in the event of the death of a Participant.

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

(5) Break in Service . Any period during which an Employee does not perform any Hour of Service for an Employer. For purposes of this definition, an Employee shall be credited with Hours of Service for any period of absence from an Employer during which such Employee (a) is in Qualified Military Service, provided that the Employee returns to the employ of an Employer within the period prescribed by USERRA, (b) is on an uncompensated leave of absence duly

granted by an Employer, or (c) is absent from work for a maximum of 24 consecutive months because of (i) the pregnancy of the Employee, (ii) the birth of the Employee' s child, (iii) the placement of a child with the Employee in connection with the Employee' s adoption of such child, or (iv) the need to care for any such child for a period beginning immediately following such birth or placement. Notwithstanding the foregoing, no Hours of Service shall be credited to an Employee under clause (c) of this subdivision unless the Employee timely furnishes to the Committee a certificate of birth, proof of adoption or other appropriate legal documentation setting forth parentage or adoption.

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

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

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

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

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

(11) Compensation . The total cash earnings paid by an Employer to an Eligible Employee and properly reportable on Form W-2 for a Plan Year (including bonuses, overtime and, effective January 1, 2009, differential wage payments (as defined in section 3401(h) of the Code)), and all amounts not includible in such Eligible Employee' s gross income for federal income tax purposes solely on account of his or her election to have compensation reduced pursuant to the Plan or any other qualified cash or deferred arrangement described in section 401(k) of the Code, a qualified transportation fringe benefit plan described in section 132(f) of the Code or a cafeteria plan as defined in section 125 of the Code, but excluding (i) any reimbursements or other allowances for automobile, relocation, travel, education expenses or other expenses (even if includible in the Eligible Employee' s gross income for federal income tax purposes), (ii) severance payments, (iii) retention payments, (iv) disability payments, and (v) extraordinary items of remuneration. An Eligible Employee' s Compensation in excess of (I) $230,000 for the Plan Year beginning January 1, 2008, and (II) for each subsequent Plan Year, the dollar amount prescribed by section 401(a)(17) of the Code (as adjusted for increases in the cost-of-living) shall not be taken into account for any purposes under the Plan. For each Plan Year, an Eligible Employee' s Compensation shall include only compensation that is actually paid or made available to such Eligible Employee (or, if earlier, includible in the gross income of an Eligible Employee) in such Plan Year and paid to such Eligible Employee prior to his or her severance from employment; provided, however , that, with respect to an Eligible Employee who experiences a severance from employment during a Plan Year, Compensation shall include amounts paid after such Eligible Employee' s severance from employment if such amounts (a) are paid by the later of (i) 2 1 / 2 months after such severance from employment and (ii) the end of the Plan Year that includes the date of severance from employment and (b) are payments of regular compensation for services performed during such Eligible Employee' s regular working


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hours or outside of such working hours, such as overtime, commissions, bonuses, and other similar payments that would have been paid to the Eligible Employee prior to a severance from employment if the Eligible Employee had continued in employment with his or her Employer. Compensation, as defined in this subsection (11) and in Sections 4.5(c)(5), 7.5, 9.6 and 14.2(a)(4) of the Plan, shall include amounts not available to a Participant in cash because such amounts are used to purchase group health coverage under a cafeteria plan described in section 125 of the Code that requires participants in such plan to certify that they have other health coverage in order to receive cash rather than group health coverage, provided that such Participant' s Employer does not request or collect information regarding the Participant' s other health coverage as part of the enrollment process for the cafeteria plan.

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

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

(14) Effective Date . Except as provided elsewhere, the effective date of this amendment and restatement of the Plan with respect to the Company and each other entity that is an Employer on December 31, 2008 shall be January 1, 2009, and in the case of any other Employer shall be the date designated by such Employer.

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

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

(ii) an Employee whose employment is governed by the terms of a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining, but which does not provide for participation in the Plan, and (iii) an Employee who is a nonresident alien (within the meaning of section 7701(b)(1)(B) of the Code). An Employee who is scheduled to work less than 20 Hours of Service per week shall become an Eligible Employee on the first Entry Date coinciding with or next following either (i) the end of the 12-consecutive month period beginning on the Employee' s employment commencement date if such Employee performs at least 1,000 Hours of Service in such 12-consecutive month period or (ii) the first Plan Year beginning in such 12-consecutive month period or any Plan Year beginning thereafter in which such Employee performs at least 1,000 Hours of Service.


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(16) Employee . An individual whose relationship with an Employer is, under common law, that of an employee. Notwithstanding the foregoing, no individual who renders services for an Employer shall be considered an Employee for purposes of the Plan if such individual renders such services pursuant to (i) an agreement providing that such services are to be rendered by the individual as an independent contractor, (ii) an agreement between an Employer and a leasing organization that is not an Employer or Affiliate on a substantially full-time basis for a period of at least one year under the " primary direction or control" (within the meaning of section 414(n)(2)(C) of the Code) of the Employer or (iii) an agreement that contains a waiver of participation in the Plan. (17) Employer . The Company, each Affiliate listed in Exhibit A hereto (as such exhibit is revised from time to time), and each other entity that, with the consent of the Company, elects to participate in the Plan in the manner described in Section 12.1 and any successor entity that adopts the Plan pursuant to Section 12.3. If any such entity withdraws from participation in the Plan pursuant to Section 12.2, or terminates its participation in the Plan pursuant to Section 15.3, then such entity shall thereupon cease to be an Employer. An entity shall cease being an Employer as of the date it ceases to be an Affiliate, unless the Company consents to such entity' s continued participation in the Plan.

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

(19) ERISA . The Employee Retirement Income Security Act of 1974, as amended from time to time. (20) FHC Plan . The former Foundation Health Corporation Profit Sharing and 401(k) Plan. (21) 401(k) Administrator . The person or persons appointed by the Committee to perform the duties of the 401(k) Administrator as described herein.

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

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


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For purposes of paragraphs (b) and (c) above, an Hour of Service shall be calculated in accordance with U.S. Department of Labor Regulation a7 2530.200b-2 which provides that (i) if a payment is based upon hours, days, weeks or other unit of time the number of Hours of Service credited will be the number of regularly scheduled working hours for such Employee for such unit of time, and (ii) if the payment due is not based upon units of time, the number of Hours of Service credited shall be equal to the amount of the payment divided by the Employee' s most recent hourly rate of compensation. For payments made to an Employee without a regular work schedule, the number of hours credited shall be calculated on a reasonable basis which reflects the average hours worked by the Employee, or by other employees in the same job classification, over a representative period of time and which is consistently applied with respect to all employees within the same job classification. In order to avoid double counting, the same Hours of Service shall not be credited both under paragraph (c) and either paragraph (a) or paragraph (b), as applicable.

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

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

(25) Matching Contributions Accounts . The Pre-2006 Matching Contributions Account and the Post-2005 Matching Contributions Account.

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

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

(28) Plan . The plan herein set forth, and as from time to time amended. (29) Plan Year . The twelve-month period beginning on January 1 of each calendar year. (30) Post-2005 Matching Contributions Account . The account established pursuant to Section 7.1 to which all Matching Contributions made on behalf of a Participant on or after January 1, 2006 pursuant to Section 4.4 and earnings (or losses) thereon are credited.

(31) Pre-2006 Matching Contributions Account . The account established pursuant to Section 7.1 to which all Matching Contributions made on behalf of a Participant before January 1, 2006 pursuant to Section 4.4 and earnings (or losses) thereon are credited.

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


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

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

(35) Qualified Matching Contribution Account . The account established pursuant to Section 7.1 to which qualified matching contributions, if any, allocated to a Participant and earnings (or losses) thereon are credited. (36) Qualified Military Service . Any service in the uniformed services (as defined in 38 U.S.C. a7 4303) by an individual if such individual is entitled to reemployment rights under USERRA with respect to such service.

(37) Qualified Reservist . An individual who is (i) a member of a reserve component (as defined in 37 U.S.C. a7 101) and (ii) ordered or called to active duty, for a period in excess of 179 days or for an indefinite period, after September 11, 2001. (38) QualMed Plan . The former QualMed, Inc. Employee Savings Plan.

(39) Rollover Account . The account established pursuant to Section 7.1 to which a Participant' s Rollover Contributions, if any, and any earnings (or losses) thereon are credited. (40) Rollover Contributions . Rollover contributions made by a Participant pursuant to Section 5.1. (41) Salary Deferral Contributions . Before-tax payroll reduction contributions made to the Plan by an Employer on behalf of Participants pursuant to Section 4.2.

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

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


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For purposes of the first sentence of this subdivision (41) and clause (ii) above, an Employee shall be deemed to be employed by an Employer during (i) any period of absence from employment by an Employer which is of less than twelve (12) months duration, (ii) the first twelve months of any period of absence from employment for any reason other than the Employee' s quitting, retiring or being discharged and (iii) any period of absence from such employment during which the Employee is in Qualified Military Service, provided that the Employee returns to the employ of the Employer within the period prescribed by USERRA.

(44) Spouse . Except as otherwise provided for herein, a person of the opposite sex who is a husband or a wife, within the meaning of such term as set forth in the Federal Defense of Marriage Act.

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

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

(47) Trust Fund . All money and property of every kind of the Trust held by the Trustee pursuant to the terms of the agreement governing the Trust. (48) USERRA . The Uniformed Services Employment and Reemployment Rights Act of 1994. (49) Valuation Date . Each business day on which the New York Stock Exchange is open for business or such other days as the Committee may determine.

ARTICLE 3

PARTICIPATION

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

Section 3.2. Application for Salary Deferral Contributions . A Participant who desires to make Salary Deferral Contributions shall execute and deliver to his or her Employer, in accordance with procedures prescribed by the Committee, an application on the form, or by


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

Section 3.3. Transfer to Affiliates . If a Participant is transferred from one Employer to another Employer or from an Employer to an Affiliate that is not an Employer, then such transfer shall not terminate the Participant' s participation in the Plan, and the Participant shall continue to participate in the Plan until an event occurs that would have entitled the Participant to a complete distribution of the Participant' s vested interest in his or her accounts under the Plan had the Participant continued to be employed by an Employer until the occurrence of such event. Nevertheless, a Participant shall not be entitled to make Salary Deferral Contributions to the Plan, to borrow from the Plan pursuant to Section 8.3 (except to the extent required by law), or to receive allocations of Matching Contributions or Profit Sharing Contributions during any period of employment by any Affiliate that is not an Employer, and periods of employment with an Affiliate that is not an Employer shall be taken into account only to the extent set forth in Section 9.4. ARTICLE 4

EMPLOYER CONTRIBUTIONS

Section 4.1. Profit Sharing Contributions . (a) Employer Profit Sharing Contributions . Subject to the limitations of Sections 4.6 and 7.5, for each Plan Year, each Employer shall contribute on behalf of each Participant a Profit Sharing Contribution in such amount as the Employer may, in its sole discretion, determine.

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(b) Company Profit Sharing Contributions . Subject to the limitations set forth in Sections 4.6 and 7.5, in addition to any Profit Sharing Contribution that an Employer may make pursuant to subsection (a) of this Section 4.1, for each Plan Year, each Employer shall contribute on behalf of each Participant a Profit Sharing Contribution in such amount as the Company may, in its sole discretion, determine.

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


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Section 4.2. Salary Deferral Contributions . (a) Initial Election . Subject to the limitations set forth in Sections 4.3, 4.5, 4.6, 7.5, and 8.2(c), each Employer shall contribute on behalf of each Participant who is an Employee of such Employer an amount equal to a whole percentage not less than one percent (1%) and not more than 30 percent (30%) of such Participant' s Compensation (or such higher percentage as deemed necessary to conform to the Company' s payroll practices) for each payroll period as designated by the Participant either on his or her application form or by telephone or such electronic means as may be prescribed by the Committee, as described in Section 3.2. Salary Deferral Contributions shall be delivered to the Trustee as soon as practicable after the end of each payroll period in which the amount of such contribution would otherwise have been paid to the Participant but in no case later than the 15 th business day of the month following the month in which such contribution would otherwise have been paid to the Participant. (b) Changes in the Rate or Suspension of Salary Deferral Contributions . A Participant' s Salary Deferral Contributions shall continue in effect at the rate designated by such Participant pursuant to subsection (a) of t ...