Help for item C.60.

NOTE: The entry for item C.61 will be inserted in the position labeled [C.61].

Section 4.08 SIMPLE 401(K) PROVISIONS

(a) Rules of Application.

(1) The provisions of this Section 4.08 shall apply for a year only if:

(A) The Employer is an "eligible employer"; and

(B) No contributions are made, or benefits accrued for services during the year, on behalf of any eligible employee under any other plan, contract, pension, or trust described in Code section 219(g)(5)(A) or (B), maintained by the Employer.

(2) To the extent that any other provision of the Plan is inconsistent with the provisions of this Section, the provisions of this Section govern.

(b) Definitions.

(1) "Compensation" means, for purposes of Subsections (b)(2), (c)(1) and (c)(2) of this Section, the sum of the wages, tips, and other compensation from the Employer subject to federal income tax withholding (as described in Code section 6051(a)(3)) and the Employee's salary reduction contributions made under this or any other Code section 401(k) plan, and, if applicable, elective deferrals under a Code section 408(p) SIMPLE IRA Plan, a SARSEP, or a Code section 403(b) annuity contract, compensation deferred under a Code section 457 plan and, effective for Plan Years beginning on or after !@!EffectiveDate132, Code section 132(f), required to be reported by the Employer on Form W-2 (as described in Code section 6051(a)(8)). For Self-Employed Individuals, compensation means net earnings from self-employment determined under Code section 1402(a) prior to subtracting any contributions made under this Plan on behalf of the individual. The provisions of the Plan implementing the limit on compensation under Code section 401(a)(17) apply to the compensation under Subsection (c).

(2) An "eligible employer" means, with respect to any year, an employer that had no more than 100 employees who received at least $[C.61] of compensation from the employer for the preceding year. In applying the preceding sentence, all employees of controlled groups of corporations under Code section 414(b), all employees of trades or businesses (whether incorporated or not) under common control under Code section 414(c), all employees of affiliated service groups under Code section 414(m), and leased employees required to be treated as the employer's employees under Code section 414(n), are taken into account. An eligible employer that elects to have this Section 4.08 provisions apply to the Plan and that fails to be an eligible employer for any subsequent year, is treated as an eligible employer for the two (2) years following the last year the Employer was an eligible employer. If the failure is due to any acquisition, disposition, or similar transaction involving an eligible employer, the preceding sentence applies only if the provisions of Code section 410(b)(6)(C)(i) are satisfied.

(3) "Eligible employee" means, for purposes of this Section 4.08, any Employee who is entitled to make Elective Deferrals under the terms of the Plan.

(4) "Year" means the calendar year.

(c) Contributions.

(1) Salary Reduction Contributions.

(A) Each eligible employee may make a salary reduction election to have his or her Compensation reduced for the year in any amount selected by the Employee subject to the limitation in Subsection (c)(1)(B). The Employer will make a salary reduction contribution to the Plan, as an Elective Deferral, in the amount by which the Employee's Compensation has been reduced.

(B) The total salary reduction contribution for the year cannot exceed $6,000 for any employee. To the extent permitted by law, this amount will be adjusted to reflect any annual cost-of-living increases announced by the IRS.

(2) Other Contributions.

(A) Matching contributions. Each year, the Company will contribute a matching contribution to the plan on behalf of each employee who makes a salary reduction election under Subsection (c)(1). The amount of the matching contribution will be equal to the employee's salary reduction contribution up to a limit of three percent (3%) of the employee's compensation for the full year.

(B) Nonelective contribution. For any year, instead of a matching contribution, the Company may elect to contribute a nonelective contribution of 2 percent of compensation for the full year for each eligible employee who received at least $[C.61] of compensation for the year.

(3) Limitation on Other Contributions. No employer or employee contributions may be made to this plan for the year other than salary reduction contributions described in Subsection (c)(1), matching or nonelective contributions described in Subsection (c)(2) and rollover contributions described in Treas. Reg section 1.402(c)-2, Q&A-1(a).

(4) The provisions of the plan implementing the limitations of Code section 415 apply to contributions made pursuant to Subsections (c)(1) and (c)(2).

(d) Election and Notice Requirements.

(1) Election Period.

(A) In addition to any other election periods provided under the plan, each eligible employee may make or modify a salary reduction election during the 60-day period immediately preceding each January 1.

(B) For the year an employee becomes eligible to make salary reduction contributions under this Section 4.08, the 60-day election period requirement of Subsection (d)(1)(A) is deemed satisfied if the employee may make or modify a salary reduction election during a 60-day period that includes either the date the employee becomes eligible or the day before.

(C) Each employee may terminate a salary reduction election at any time during the year.

(2) Notice requirements.

(A) The Company will notify each eligible employee prior to the 60-day election period described in Subsection (d)(1) that he or she can make a salary reduction election or modify a prior election during that period.

(B) The notification described in Subsection (d)(2)(A) will indicate whether the Company will provide a 3-percent matching contribution described in Subsection (c)(2)(A) or a 2-percent nonelective contribution described in Subsection (c)(2)(B).

(e) Vesting Requirements. All benefits attributable to contributions described in Subsections (c)(1) and (c)(2) are nonforfeitable at all times, and all previous contributions made under the plan are nonforfeitable as of the beginning of the year the Section 4.08 provisions apply.

(f) Top-heavy Rules. The plan is not treated as a top-heavy plan under Code section 416 for any year for which this Section 4.08 applies.

(g) Nondiscrimination tests. The ADP and ACP tests described in section 5.02 of the Plan are treated as satisfied for any year for which this Section 4.08 applies.

The foregoing is only intended to be an illustration of how the response to this question will be used to build a document. The actual language that will appear in the document may vary from that illustrated above and the response to the checklist item may affect other parts of the document. You must carefully review the entire document after it is generated to ensure that the document accurately reflects the intended design.

SIMPLEPlan