Flexible Benefit Plan. II. OPERATION 2.1 How Does The Plan Operate? Before the start of each Plan Year (as defined below), you may elect to have a portion of your salary or wages deducted on a pre-tax basis, and allocate your salary reductions to pay for the cost of the employee portion of the premiums due under any of the health and welfare plans available under the Plan, and fund the Health Care Flexible Spending Account and/or Dependent Care Assistance Account. 2.2 Who Is a Dependent? For purposes of the Health Care Flexible Spending Account Program, or other Qualified Benefit Plans which provides accident or health coverage for which a premium is required, a "dependent" is your child (as defined in Code Section 152(f)(1)) who has not attained age 27 by the end of the calendar year, and any individual who is a tax dependent of yours as defined in Code Section 152 (determined without regard to Sections 152(b)(1), (b)(2) and (d)(1) (B)). For purposes of the Dependent Care Assistance Account Program, please see Section 6.2 below for more information about who is an "eligible dependent" for reimbursement of dependent care expenses. NOTE THAT THE HEALTH AND WELFARE PLANS MAY HAVE DIFFERENT DEFINITIONS OF "DEPENDENT" FOR PURPOSES OF COVERAGE AND ELIGIBILITY FOR BENEFITS. AS A RESULT, FOR TAX PURPOSES, IF YOU ARE COVERING AN ELIGIBLE DEPENDENT UNDER A HEALTH AND WELFARE PLAN WHO DOES NOT MEET THE DEFINITIONS ABOVE, THEN THE BENEFITS FOR SUCH DEPENDENTS MAY BE TAXABLE TO YOU. NOTE: Please see the Plan Administrator if you have any questions about the "dependent" status of any individual in your family and/or whether or not coverage for certain dependents may be taxable to you. III. CONTRIBUTIONS 3.1 How Is My Compensation Measured Under The Plan? Compensation under the Plan means the total cash amount that is paid to you each year. 3.2 What Contributions Are Made To The Plan? Contributions to the Plan consist of contributions made by your election to reduce your salary or wages by a certain amount that represents your share of cost of the underlying health and welfare benefits in which you are enrolled, and for the funds you elect to contribute to fund a Health Care Flexible Spending Account and/or Dependent Care Assistance Account. NOTE THAT THE AMOUNT OF THE EMPLOYER CONTRIBUTIONS MADE TO THE PLAN ON YOUR BEHALF ARE WITHIN THE SOLE DISCRETION OF THE EMPLOYER, AND YOU HAVE NO CONTRACTUAL RIGHT TO ANY EMPLOYER CONTRIBUTIONS. YOUR EMPLOYER MAY INCREASE, DECREASE OR ELIMINATE SUCH CONTRIBUTIONS AT ANY TIME WITHIN ITS SOLE DISCRETION. 3.3 What Happens To Contributions That Are Made To The Plan? All contributions to the Plan, including your salary or wage reductions, may be used to pay for benefits under the Plan in any way that you want (as long as such benefits are covered under the Plan). By your election, contributions that you defer are set aside into your Health Care Flexible Spending Account and/or Dependent Care Assistance Account only to be reimbursed for eligible expenses, and/or used to pay the cost of the employee portion of applicable premiums in the health and welfare plans you choose. 3.4 When Must I Decide What Coverage I Want? Except as described in Section 3.6 below, you may elect benefits under the Plan only during the "election Page 5