EXHIBIT 10.3

IBM 401(k) PLUS PLAN

(As Amended and Restated effective as of January 1, 2008 )

IBM 401(k) PLUS PLAN

TABLE OF CONTENTS

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PREAMBLE

International Business Machines Corporation (“IBM”) has established the IBM Tax Deferred Savings Plan (the “Plan”) to assist eligible employees in saving for retirement.  The Plan was initially effective as of July 1, 1983 and has since been amended from time to time.  Effective as of July 1, 1999, the name of the Plan was changed to the IBM TDSP 401(k) Plan.  The Plan was renamed the IBM Savings Plan, effective October 1, 2002.  The Plan was renamed the IBM 401(k) Plus Plan, effective January 1, 2008.

The Plan is intended to be a qualified plan under Section 401(a) of the Internal Revenue Code (the “Code”) that includes a qualified cash or deferred arrangement pursuant to Section 401(k) of the Code.  Effective as of January 1, 2002, the Plan is intended to comprise two constituent plans: a qualified plan under Section 401(a) of the Code that includes a qualified cash or deferred arrangement pursuant to Section 401(k) of the Code, and an employee stock ownership plan, within the meaning of Section 4975(e)(7) of the Code (“the ESOP”).  Except as otherwise explicitly provided, the provisions set forth herein shall apply to each such constituent plan.

The Plan is also intended to be a qualified plan under Section 1165(a) of Puerto Rico Internal Revenue Code (the “Puerto Rico Code”), including a qualified cash or deferred contributions arrangement under Section 1165(e) of the Puerto Rico Code, in furtherance of which intention,

special provisions applicable to employees employed in Puerto Rico are incorporated in the Plan in Appendix C.  The Plan shall, at all times, be construed and administered in a manner consistent with such intentions.

From time to time, the Plan has included and may include, as participating employers, and has covered or may cover eligible employees of, certain entities in which IBM had or has an ownership interest, but which were or are not members of any controlled group of corporations, within the meaning of Section 414(b) of the Code, that included or includes IBM, and were or are not trades or business under common control, within the meaning of Section 414(c) of the Code, with IBM.  Accordingly, at such times, the Plan shall be deemed a plan maintained by more than one employer, within the meaning of Section 413(c) of the Code.  The Plan shall, at such times, be construed and administered in a manner consistent with its status as a multiple employer plan.  All provisions of the Plan shall be applicable to all participating employers and to the employees of all participating employers, except to the extent that any such provision is modified by an Appendix to the Plan that is specifically made applicable to a named participating employer and its employees.

The Plan was amended and restated as of January 1, 2002 (“the January 1, 2002 Restatement”) and was submitted to the Internal Revenue Service for a favorable determination letter.  The Plan was further amended, restated, and recodified as of January 1, 2005 (“the January 1, 2005 Recodification”) in order to incorporate amendments theretofore made to the Plan, including amendments adopted pursuant to Section 401(b) of the Code in connection with and pursuant to the issuance of a favorable determination letter by the Internal Revenue Service on September 10, 2004, and to make additional amendments to the Plan.  The January 1, 2005 Recodification was generally effective as of January 1, 2005, provided, however, that

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the amendments made to the January 1, 2002 Restatement were effective as specified in the instruments by which such amendments were adopted, and provided further, however, that the effective date of any provision or provisions of the Plan shall, to the extent required by specific provisions of the Plan, the Uruguay Round Agreements Act, the Uniformed Services Employment and Reemployment Rights Act of 1994, the Small Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, the Internal Revenue Service Restructuring and Reform Act of 1998, the Community Renewal Tax Relief Act of 2000, the Economic Growth and Tax Relief Reconciliation Act of 2001, or other law, be any such earlier or other effective date required by the Plan, such acts, or such law.

The Plan is hereby amended and restated as of January 1, 2008 (“the 2008 Restatement”), in order to  incorporate amendments that have been made to the Plan after the adoption of the January 1, 2005 Recodification and to make additional amendments to the Plan, including certain changes required or permitted by the Pension Protection Act of 2006.  This 2008 Restatement is generally effective as of January 1, 2008, provided, however, that amendments made to the January 1, 2005 Recodification prior to the adoption of this 2008 Restatement were effective as specified in the instruments by which such amendments were adopted.  This 2008 Restatement includes all provisions of the Plan that are applicable as of its effective date.

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ARTICLE 1.  DEFINITIONS

1.01                            “ Account ” means, with respect to each Participant, the total of his Before-Tax Deferral Account, Roth Contributions Account, After-Tax Account, Employer Account, Rollover Account, Roth Rollover Account, Catch-Up Account, Roth Catch-Up Account, After-Tax Rollover Account and any other sub-account established by the Plan Administrator pursuant to Section 13.02(d).  That portion of his Account, if any, that is invested in the IBM Stock Fund pursuant to the provisions of Article 5, and any separate sub-account established in accordance with Section 5.09(d) shall be deemed to be his ESOP Account.

1.02                            “ Actual Contribution Percentage ” means, with respect to a specified group of Employees, the average of the ratios, calculated separately for each Employee in that group, of (a) the sum of (i) the Employee’s Matching Contributions for that Plan Year, excluding any Matching Contributions forfeited under the provisions of Sections 4.01(f) and 4.06(c)(iii) plus (ii) the Employee’s After-Tax Contributions for that Plan Year, to (b) his Statutory Compensation for that Plan Year.  The Actual Contribution Percentage for each group and the ratio determined for each Employee in the group shall be calculated to the nearest one one-hundredth of 1% (0.0001).  Any Matching Contributions that are taken into account in determining the Actual Deferral Percentage for any group of Employees for a Plan Year shall not be taken into account in determining the Actual Contribution Percentage for such group of Employees for such Plan Year.  At the election of the Plan Administrator, which election may be made or changed each Plan Year, all or any portion of Non-Matching Employer Contributions made pursuant to

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Section 4.02A with respect to such Plan Year may be taken into account in determining the Average Contribution Percentage of any group or groups of Employees, in accordance with and to the extent permitted by Section 1.401(m)-2(a)(6) of the Regulations.

1.03                            “ Actual Contribution Ratio ” means the ratio taken into account with respect to an Employee in the determination of the Actual Contribution Percentage for a group of Employees in which he is included.

1.04                            “ Actual Deferral Percentage ” means, with respect to a specified group of Employees, the average of the ratios, calculated separately for each Employee in that group, of (a)  the amount of Deferred Cash Contributions made pursuant to Section 4.01 for a Plan Year, including Deferred Cash Contributions returned to a Highly Compensated Employee under Section 4.01(d) and Deferred Cash Contributions returned to any Employee pursuant to Section 4.01(e), to (b) the Employees’ Statutory Compensation for that Plan Year.  The Actual Deferral Percentage for each group and the ratio determined for each Employee in the group shall be calculated to the nearest one one-hundredth of 1% (0.0001).  For purposes of determining the Actual Deferral Percentage for a Plan Year, Deferred Cash Contributions may be taken into account for a Plan Year only if they:

(i)                                      relate to compensation that either would have been received by the Employee in the Plan Year but for his deferral election, or are attributable to services performed by the Employee in the Plan Year and would have been received by the Employee within 2½ months after the close of the Plan Year but for his deferral election,

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(ii)           are allocated to the Employee as of a date within that Plan Year and are not contingent on the participation or performance of service after such date, and

(iii)                                are actually paid to the Trustee no later than 12 months after the end of the Plan Year to which the contributions relate.

At the election of the Plan Administrator, which election may be made or changed each Plan Year, all or any portion of Matching Contributions made pursuant to Section 4.02 or Non-Matching Employer Contributions made pursuant to Section 4.02A with respect to such Plan Year may be taken into account in determining the Average Deferral Percentage of any group or groups of Employees, in accordance with and to the extent permitted by Section 1.401(k)-2(a)(6) of the Regulations.

1.05                            “ Actual Deferral Ratio ” means the ratio taken into account with respect to an Employee in the determination of the Actual Deferral Percentage.

1.06                            “ Affiliate ” means, with respect to any Employer, any company that is a member of a controlled group of corporations, as defined in Section 414(b) of the Code, which also includes such Employer as a member; any trade or business under common control, as defined in Section 414(c) of the Code, with such Employer; any organization, whether or not incorporated, which is a member of an affiliated service group, as defined in Section 414(m) of the Code, which includes such Employer; and any other entity required to be aggregated with such Employer pursuant to Regulations under Section 414(o) of the Code.  Solely for the purpose of determining whether an individual is a Leased Employee and for purposes of Section 4.10, the definitions in Sections 414(b) and (c) of the Code shall be modified by substituting the phrase “more

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than 50 percent” for the phrase “at least 80 percent” in each place it appears in Section 1563(a)(1) of the Code.

1.06A                  “ After-Tax Account ” means the account credited with the After-Tax Contributions made by a Participant and earnings on those contributions.

1.06B                    “ After-Tax Contributions ” means amounts contributed to the Plan in accordance with Section 4.01(h).

1.06C                    “After-Tax Rollover Account” means the account credited with After-Tax Rollover Contributions and earnings on those contributions.

1.06D                   “After-Tax Rollover Contributions” means amounts contributed pursuant to Section 4.03(g).

1.07                            “ Annual Dollar Limit ” means, for Plan Years commencing after December 31, 1993 and prior to January 1, 2002, $150,000, as adjusted from time to time in accordance with Section 401(a)(17)(B) of the Code, as in effect for Plan Years commencing prior to January 1, 2002; and, effective January 1, 2002, $200,000, as adjusted from time to time in accordance with Section 401(a)(17)(B) of the Code as in effect for Plan Years commencing after December 31, 2001.

1.08                            “ Attributed Earnings ” means the amount of investment income attributed to Excess Contributions or Excess Deferrals or to any Deferred Cash Contributions in excess of the limit described in Section 4.10(a), that are required to be returned to the Participant

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in accordance with Sections 4.01(f), 4.06(c), or 4.10(d)(i) or (ii), as applicable, and the amount of investment income attributed to Excess Aggregate Contributions or any Matching Contributions or any Non-Matching Employer Contributions in excess of the limit described in Section 4.10(a), that are required to be forfeited in accordance with Section 4.07(c) or 4.10(d)(ii).  Attributed Earnings on Excess Deferrals, Excess Contributions, or Deferred Cash Contributions required to be returned shall be determined (i) by multiplying the income earned on the Deferred Account for the Plan Year by a fraction, the numerator of which is the Excess Deferrals, Excess Contributions, or Deferred Cash Contributions that are required to be returned for the Plan Year and the denominator of which is the Deferred Account balance at the end of the Plan Year, disregarding any income or loss occurring during the Plan Year and (ii), effective January 1, 2006, by adding to the amount determined under clause (i) the product of (A) the income earned on the Deferred Account from the end of the Plan Year to the date such Excess Deferrals, Excess Contributions or Deferred Cash Contributions that are required to be returned for the Plan Year are returned to the Participant (the “gap period”), and the denominator of which is the Deferred Account balance on the date distribution, disregarding any income or loss occurring during the gap period; provided, however, that (X) effective January 1, 2008, the sum of the Participant’s Before-Tax Deferral Account and his Roth Contributions Account shall be taken into account in clause (i), in lieu of his Deferred Account; (Y) effective January 1, 2008, clause (ii) shall be disregarded in determining the Attributed Earnings on Excess Contributions; and (Z) clause (ii) shall be disregarded in determining the Attributed Earnings on Excess Deferrals for any Plan Year beginning before January 1, 2008.  Attributed Earnings on Excess Aggregate Contributions, Matching Contributions, or Non-Matching Employer Contributions that are required to be forfeited shall be

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determined in a similar manner by substituting the Employer Account for the Deferred Account (or, effective January 1, 2008, the sum of the Before-Tax Deferral Account and the Roth Contributions Account), and the Excess Aggregate Contributions or Matching Contributions or Non-Matching Employer Contributions, required to be forfeited for the Excess Deferrals, Excess Contributions, or Deferred Cash Contributions required to be returned in the preceding sentence; provided, however, that effective January 1, 2008, clause (ii) of the preceding sentence shall be disregarded in determining Attributed Earnings on Excess Aggregate Contributions.

1.08A                  “Automatic Contributions” means contributions made to a Participant’s Employer Account in accordance with Section 4.02A(a).

1.08B “Before-Tax Contributions” means, effective January 1, 2008, Deferred Cash Contributions made on behalf of a Participant, excluding any amount designated as Roth Contributions, in accordance with Section 4.01(a)(x).

1.08C                    “Before-Tax Deferral Account” means, effective January 1, 2008, the account credited with the Deferred Cash Contributions made on a Participant’s behalf prior to January 1, 2008 and the Before-Tax Contributions made on a Participant’s behalf after December 31, 2007, and earnings on those contributions.  Prior to January 1, 2008, a Participant’s Before-Tax Deferral Account was known as his Deferred Account.

1.09                            “ Beneficiary ” means any person, persons or entity designated, or deemed to have been designated, by a Participant to receive any benefits payable in the event of the Participant’s death in accordance with the provisions of Section 10.09.

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1.10         “ Board of Directors ” or “ Board ” means the Board of Directors of IBM.

1.11                            “ Catch-Up Account ” means the account credited with the Catch-Up Contributions made on a Participant’s behalf and earnings on those contributions.

1.12                            “ Catch-Up Contributions ” means amounts contributed to the Plan that satisfy the requirements of Section 4.01(g) and, effective January 1, 2008, excluding any amount designated as Roth Catch-Up Contributions, in accordance with Section 4.01(g)(viii).

1.12A                  “Certificate of Disability Insurance” means the certificate issued in accordance with the terms of the Disability Insurance Policy by the Disability Insurer and furnished to a Participant who has elected, in accordance with Section 5A.03(a), to invest a portion of his Account in the payment of premiums under the Disability Insurance Policy.

1.13                            “ Code ” means the Internal Revenue Code of 1986, as amended from time to time.  References to specific sections of the Code shall be deemed to refer to such sections as they may be amended or redesignated.

1.14                              “Committee” means the Retirement Plans Committee of IBM, which shall consist of the individuals with the following positions (or successor positions) at IBM: Senior Vice President and Chief Financial Officer; Senior Vice President, Human Resources; Vice President & Treasurer; and Senior Vice President & General Counsel.

1.15                            “ Compensation ” means the cash remuneration paid to an Employee for services rendered to the Employer, including salary, commission payments, and recurring

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payments under any form of variable compensation plan and additional compensation paid for nonscheduled workdays, overtime, and shift premium, determined after any reduction pursuant to deferrals made under the IBM Excess 401(k) Plus Plan, or any predecessor or successor plan, and then determined before any reduction pursuant to Section 4.01 or pursuant to a cafeteria plan under Section 125 of the Code, or pursuant to a qualified transportation fringe under Section 132(f) of the Code, but excluding special awards, other nonrecurring payments, expenses or relocation reimbursements, sign-on bonuses, separation pay, termination incentive payments, payments for accrued or deferred vacations, and payments made to Executives during the first quarter of 2008 under the Employer’s Annual Incentive Plan or other sales and services incentives programs.  Amounts other than Variable Pay paid after the first regularly scheduled payroll date coincident with or next following the date of an Employee’s termination of employment shall not be taken into account as Compensation.  Any amount of Variable Pay shall not be taken into account if the payroll processing for an Employee’s termination of employment preceded the payroll processing date for such Variable Pay. Compensation shall not include any amount earned during, or payable on the basis of, employment with any entity at a time when such entity was not an Employer, regardless of when or by what entity such amount may be paid.  Compensation shall not include any amount payable as a retention bonus or retention incentive to any person who becomes an Employee in connection with the acquisition of any entity, or of the assets of any entity, by an Employer.  The Plan Administrator, in its discretion, shall determine whether any form of remuneration not described in this Section shall be treated as Compensation for purposes of the Plan.  Compensation taken into account for a Plan Year shall not exceed the Annual Dollar Limit.

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1.16                            “ Deferred Account ” means the account credited with the Deferred Cash Contributions made on a Participant’s behalf prior to January 1, 2008 and Before-Tax Contributions made on a Participant’s behalf after December 31, 2007, and earnings on those contributions.  Effective January 1, 2008, a Participant’s Deferred Account shall be known as his Before-Tax Deferral Account.

1.17                            “ Deferred Cash Contributions ” means amounts contributed pursuant to Section 4.01(a).  For Plan Years beginning after December 31, 2007, the term Deferred Cash Contributions shall be deemed to include both Before-Tax Contributions and Roth Contributions.

1.17A                  “Designated Mutual Fund” means a mutual fund that is established and maintained in accordance with the requirements of Investment Company Act of 1940, that offers shares for purchase by the general public, and that is designated by the Committee, in accordance with Section 5.01A(a), to be available to Participants for investment under the terms of the Mutual Fund Window Program, as in effect from time to time.  A Designated Mutual Fund shall not be deemed an Investment Fund for purposes of Section 5.01.

1.17B                    “Disability Insurance Policy” means the insurance policy underwritten by the Disability Insurer under which premiums are paid through investments made in accordance with the Disability Protection Program and benefits are payable in accordance with the Disability Protection Program.

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1.17C                    “Disability Insurer” means the insurance company selected by the Plan Administrator that underwrites the Disability Insurance Policy.

1.17D                   “Disability Protection Program” means the program provided in Article 5A, effective as of January 1, 2005, under which a Participant who satisfies specified eligibility requirements is permitted to elect to invest a portion of his Account in the payment of premiums under the Disability Insurance Policy and pursuant to which benefit payments made from the Disability Insurance Policy and in accordance with the Certificate of Disability Insurance are allocated to the Accounts of Participants who suffer a Total and Permanent Disability while enrolled thereunder.

1.17E                     “Domestic Partner” means a person who is named as the Participant’s domestic partner on a form that is acceptable to the Plan Administrator, and who is unable to legally marry the Participant under applicable state law.  For purposes of Section 10.09, Domestic Partner means a person who is the legal spouse of the Participant under applicable state law.

1.18                            “ Domestic Subsidiary ” means a Subsidiary organized and existing under the laws of the United States, or any state, territory, or possession thereof.

1.19                            “ Effective Date ” means July 1, 1983.  The Effective Date of this amendment and restatement of the Plan shall be January 1, 2008, except as otherwise specified herein, and subject to the Preamble hereto.

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1.20                            “ Employee ” means an employee of any Employer who receives stated compensation other than a pension, severance pay, retainer, or fee under contract.  The term “Employee” excludes any Leased Employee and any person who is included in a unit of employees covered by a collective bargaining agreement that does not provide for his membership in the Plan.  Any person deemed to be an independent contractor by any Employer and paid by the Employer in accordance with its practices for the payment of independent contractors, including the provision of tax reporting on Internal Revenue Service Form 1099, shall be excluded from the definition of Employee for all purposes under the Plan, notwithstanding any subsequent reclassification of such person for any purpose under the Code, whether agreed to by the Employer or adjudicated under applicable law.

1.21                            “ Employer ” means IBM or any successor by merger, purchase or otherwise, with respect to its employees, or any other entity participating in the Plan as provided in Article 2, with respect to its employees.  All entities that are members of a controlled group of corporations, within the meaning of Section 414(b) of the Code, or a group of trades or businesses under common control, within the meaning of Section 414(c) of the Code, and that are participating in the Plan in accordance with Article 2, shall be deemed to be a single Employer for all purposes under the Plan.

1.22                            “ Employer Account ” means the account credited with Matching Contributions, Automatic Contributions, Transition Credit Contributions, and Special Savings Award Contributions, and earnings on those contributions. The Plan Administrator shall establish rules for the maintenance of sub-accounts within a Participant’s Employer Account.

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1.22A                  “ Employer Contributions ” mean any contributions made by the Employer that are either Matching Contributions, Automatic Contributions, Transition Credit Contributions or Special Savings Awards.

1.23                            “ Enrollment Date ” means the date on which a Participant makes the election described in Section 4.01.

1.24                            “ Excess Aggregate Contributions ” means the amount of Matching Contributions and, effective as of January 1, 2004, After-Tax Contributions on behalf of Highly Compensated Employees in excess of the limitation described in Section 4.07(a) for a Plan Year, as determined in accordance with Section 4.07(c)(i).

1.25                            “ Excess Contributions ” means the amount of Deferred Cash Contributions on behalf of Highly Compensated Employees in excess of the limitation described in Section 4.06(a) for a Plan Year, as determined in accordance with Section 4.06(c)(i).

1.26                            “ Excess Deferrals ” means the amount of Deferred Cash Contributions on behalf of a Participant that, taken together with similar contributions on his behalf to any other plan described in Section 401(a)(30) of the Code, exceed the dollar limitation described in Section 4.01(c) for a calendar year.

1.27                            “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time.  References to sections of ERISA shall be deemed to refer to such sections as they may be amended or redesignated.

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1.27A                  “Executive” means an Employee who is classified as an executive, based on the compensation band to which he is assigned, in accordance with the personnel policies and practices of his Employer.

1.28                            “ Five Percent Owner ” means with respect to a corporation, any person who owns or is considered as owning within the meaning of Section 318 of the Code more than 5% of the outstanding stock of the corporation, or stock possessing more than 5% of the total voting power of the corporation.

1.29                            “ Foreign Branch ” means a branch, division, or other unit of IBM or a Domestic Subsidiary that operates principally outside the United States, its territories, or possessions.

1.29A                  “401(k) Pension Program Participant” means a Participant who becomes a participant in the Plan in accordance with Section 3.02A.

1.30                              “Fund” or “Investment Fund” means the IBM Stock Fund and the other separate funds authorized by the Committee in accordance with Section 5.01(c) in which Plan assets are invested.  Amounts invested under the Mutual Fund Window Program, effective as of January 1, 2005, shall not be deemed to be invested in any of the Investment Funds.

1.31                            “ Highly Compensated Employee ” means for a Plan Year commencing on or after January 1, 1997, any employee of the Employer or an Affiliate, whether or not eligible to participate in the Plan, who

(i)            was a Five Percent Owner for such Plan Year or the prior Plan Year, or

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(ii)                                   for the preceding Plan Year received Statutory Compensation in excess of the dollar amount specified in Section 414(q)(1)(B)(i) of the Code, which amount, as in effect for 1997 was $80,000 and has been adjusted to $105,000 for 2008, and, effective with respect to Plan Years commencing on or after January 1, 2002 , was among the highest 20% of employees for the preceding Plan Year when ranked by Statutory Compensation paid for that year.  No employee shall be excluded under Section 414(q)(5) of the Code for purposes of determining the number of such employees.  The dollar amount in this paragraph (ii)  shall be further adjusted from time to time in accordance with Section 414(q)(1) of the Code.

Notwithstanding the foregoing, employees who are nonresident aliens and who receive no earned income from the Employer or an Affiliate which constitutes income from sources within the United States shall be disregarded for all purposes of this Section. The provisions of this Section shall be further subject to such additional requirements as shall be described in Section 414(q) of the Code and Regulations thereunder, which shall override any provisions of this Section inconsistent therewith.

1.32                            “ Hour of Service ” means each hour for which an employee is paid or entitled to payment for the performance of duties for the Employer or an Affiliate.

1.33                            “ IBM ” means International Business Machines Corporation, a corporation organized and existing under the laws of the State of New York.

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1.34                            “ IBM Staff Investment Manager ” means one or more IBM employees who have been appointed by the Committee to direct, either jointly or severally, the management of the acquisition and disposition of all or any portion of the assets of the Trust Fund.

1.35                              “IBM Stock Fund” means the Investment Fund of the Plan that is invested in the common stock of IBM, in accordance with Section 5.01(b) and which shall be included within the ESOP.

1.36                            “ Independent Investment Manager ” means any person or entity that satisfies the requirements of Section 3(38)(B) of ERISA, which has been appointed by the Committee to manager, acquire, and dispose of all or any portion of the assets of the Trust Fund and which has acknowledged in writing that it is a fiduciary with respect to the Plan.

1.37                            “ Investment Manager ” means any Independent Investment Manager or any IBM Staff Investment Manager.

1.38                            “ Leased Employee ” means any person (other than a common law employee of the Employer) who, pursuant to an agreement between the Employer and any other person (“leasing organization”), has performed services for the Employer or any related persons determined in accordance with Section 414(n) of the Code on a substantially full-time basis for a period of at least one year and such services are performed under the primary direction of or control by the Employer.  In the case of any person who is a Leased Employee before or after a period of service as an Employee, the entire period during which he has performed services as a Leased Employee shall be counted as

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service as an Employee for all purposes of the Plan, except that he shall not, by reason of that status, become a participant in the Plan.

1.38A                  “Long-Term Supplemental Employee” means, effective as of January 1, 2004, a Supplemental Employee so designated by his Employer as a Long-Term Supplemental Employee, in accordance with its established personnel practices.  A Supplemental Employee who has not been explicitly designated as a Long-Term Supplemental Employee by his Employer shall not be a Long-Term Supplemental Employee.

1.39                            “ Matching Contributions ” means amounts contributed pursuant to Section 4.02.  For purposes of Section 1.401(k)-1(b)(5) of the Regulations, Matching Contributions made under the Plan shall be deemed “Qualified Matching Contributions,” provided, however, that, for the period commencing on January 1, 2002 and ending on December 31, 2004, Matching Contributions that are determined on the basis of Catch-Up Contributions made on a Participant’s behalf shall not be deemed “Qualified Matching Contributions”.

1.39A                  “Mutual Fund Window Program” means the program provided in Section 5.01A, as in effect from time to time, pursuant to which a Participant is permitted to elect to invest a portion of his Account in one or more Designated Mutual Funds.

1.39B                    “Non-Executive” means an Employee who is not an Executive.

1.39C                    “Non-Exempt Employee” means an Employee whose terms and conditions of employment are not exempt from the requirements of the Fair Labor Standards Act.

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1.40                            “ Non-Highly Compensated Employee ” means for any Plan Year an employee of the Employer or an Affiliate who is not a Highly Compensated Employee for that Plan Year.

1.40A                  “Non-Matching Employer Contributions” means the Automatic Contributions, Transition Credit Contributions, and Special Savings Award Contributions made to a Participant’s Employer Account in accordance with Section 4.02A.

1.41                            “ Notice ” means a specification by the Employee of his designation, election, or intention under any provision of the Plan, through written, electronic, or telephonic means, as provided for the particular purpose by the Plan Administrator, pursuant to Section 14.05.

1.41A                  “One-Year Period of Service” means with respect to any employee, effective as of January 1, 2005, a 12-month period of employment with the Employer or any Affiliate, whether or not as an Employee, beginning on the date he first completes an Hour of Service. For the purpose of determining whether an employee has completed a One-Year Period of Service, the following rules shall apply:

(a)                                   If an employee’s employment is terminated and he is later reemployed within one year of the date that is the earlier of (i) his date of termination of service or (ii) the first day of an absence from service immediately preceding his date of termination, the period between such date and his date of reemployment shall be included as a period of employment in determining whether he has completed a One-Year Period of Service, provided, however, that, effective as of January 1, 2007, this subsection shall apply only if the employee was a Regular Employee as of the date of his termination of service.

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(b)                                  If an employee’s employment is terminated and he is later reemployed more than one year after the date that is the earlier of (i) his date of termination of service or (ii) the first day of an absence from service immediately preceding his date of termination, his period of employment prior to such date shall be aggregated with his period of employment after his reemployment in determining whether he has completed a One-Year Period of Service, provided, however, that, effective as of January 1, 2007, this subsection shall apply only if the employee was a Regular Employee as of the date of his termination of service.

(c)                                   If an employee’s employment with a Foreign Branch is terminated and he is later reemployed by an Employer within one year after the date that is the earlier of (i) his date of termination of service or (ii) the first day of an absence from service immediately preceding his date of termination, the period between such date and his date of reemployment shall be included as a period of employment in determining whether he has completed a One-Year Period of Service.

(d)                                  If an employee’s employment with a Foreign Branch is terminated and is later reemployed by an Employer one or more years after the date that is the earlier of (i) his date of termination of service, or (ii) the first date of an absence from service immediately preceding his date of termination, but less than five years after such termination, the Participant’s period of employment prior to such termination date shall be aggregated with his period of employment after his reemployment in determining whether he has completed a One-Year Period of Service.

(e)                                   If an employee’s employment with a Foreign Branch is terminated and is later reemployed by an Employer more than five years after the date that is the earlier

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of (i) his date of termination of service, or (ii) the first date of an absence from service immediately preceding his date of termination, and the Participant’s prior service was less than the break in service, the Participant’s prior service will not be counted in determining whether he has completed a One-Year Period of Service.

(f)                                     If an employee’s employment with a Foreign Branch is terminated and is later reemployed by an Employer more than five years after the date that is the earlier of (i) his date of termination of service, or (ii) the first date of an absence from service immediately preceding his date of termination, and the Participant’s prior service was greater than or equal to the break in service, the Participant’s prior service will be counted in determining whether he has completed a One-Year Period of Service.

(g)                                  For the purpose of determining whether an employee has completed a One-Year Period of Service, his Recognized Predecessor Employment shall be taken into account as if it were employment with an Employer.

1.41B                    “PCF Participant” means an Employee who was a participant in the IBM Personal Pension Plan on December 31, 2007 and was employed as a Regular Employee on such date, whose benefit on December 31, 2007 was determined, in whole or in part, on the basis of the Pension Credit Formula of the IBM Personal Pension Plan who remains continuously employed as a Regular Employee after December 31, 2007.   For purposes of the foregoing sentence, a Participant who was on a leave of absence due to long term disability on December 31, 2007, and who returned to employment on or after January 1, 2008 will be deemed to have been in employment as a Regular Employee on

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December 31, 2007 until the date of his return to employment.  A PCF Participant who terminates employment and is later rehired as an Employee shall not be a PCF Participant after his reemployment, and shall be subject to the provisions applicable to 401(k) Pension Program Participants.

1.41C                    “PPA Participant” means a Participant who was a participant in the IBM Personal Pension Plan on December 31, 2007 and was employed as a Regular Employee on such date, whose benefit on December 31, 2007, was determined, on the basis of the Personal Pension Account provisions of the IBM Personal Pension Plan, and who remains continuously employed as a Regular Employee after December 31, 2007. For purposes of the foregoing sentence, a Participant who was on a leave of absence due to long term disability on December 31, 2007, and who returned to employment on or after January 1, 2008 will be deemed to have been employed as a Regular Employee on December 31, 2007 until the date of his return to employment.  A PPA Participant who terminates employment and is later rehired as an Employee shall not be a PPA Participant after his reemployment, and shall be subject to the provisions applicable to 401(k) Pension Program Participants.

1.42                            “ Participant ” means any person who has been admitted to participation in the Plan in accordance with Section 3.02, Section 3.02A, or Section 3.02B and has not ceased to be a Participant in accordance with Section 3.05.  Except to the extent otherwise specified, references to a Participant shall be deemed also to refer to a 401(k) Pension Program Participant and provisions of the Plan that apply to Participants shall apply equally to 401(k) Pension Program Participants.

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1.43                            “ Plan ” means the IBM 401(k) Plus Plan, as set forth in this document or as amended from time to time.  Effective as of January 1, 2002, the IBM Stock Fund maintained pursuant to Section 5.01, together with any separate sub-account established pursuant to Section 5.09(d) shall be designated as an ESOP, within the meaning of Section 4975(e)(7) of the Code and shall be a separate constituent plan.

1.44                            “ Plan Year ” means the 12-month period beginning on any January 1, on or after the Effective Date.

1.44A                  “Predecessor Employment” means employment with any entity prior to the date that (a) such entity becomes a member of a controlled group of corporations that also includes any Employer as a member, (b) substantially all of the assets of such entity are acquired by a member of a controlled group of corporations that includes any Employer as a member, or (c) such entity enters into a contractual relationship with an Employer pursuant to which employees of such entity become Employees.  For purposes of this Section, the term “controlled group of corporations” shall have the meaning specified in Section 414(b) of the Code.

1.45                            “ Profits ” means both (a) the accumulated earnings and profits of an Employer and (b) an Employer’s current net taxable income, before deduction of Federal, state, or local income taxes and before any contributions made by the Employer to this Plan or any other employee benefit plan, as determined by its independent public accountants in accordance with generally accepted accounting principles.

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1.45A                  “Program Eligibility Date” means, with respect to a 401(k) Pension Program Participant, the earliest day during his employment or reemployment as a Regular Employee that is coincident with or next following the date as of which he completes or is deemed to have completed a One-Year Period of Service.

1.45B                    “Recognized Predecessor Employment” means Predecessor Employment that is taken into account under the Plan pursuant to rules established by the Plan Administrator, which rules shall apply uniformly to all individuals who become Employees as the result of the same transaction.

1.46                            “ Regular Employee ” means an Employee as so defined by the rules and regulations of his Employer, who is (i) compensated by salary or by commission, or partly by salary and partly by commission, (ii) subject to the Employer’s performance evaluation program, and (iii) employed for an indefinite period.

1.47                            “ Regulations ” means the Income Tax Regulations Code codified at Title 26 of the Code of Federal Regulations, as amended from time to time.  References to specific sections of the Regulations shall be deemed to refer to such sections as they may be amended or redesignated.

1.48                            “ Rollover Account ” means the account credited with the Rollover Contributions made by a Participant and earnings on those contributions.

1.49         “ Rollover Contributions ” means amounts contributed pursuant to Section 4.03.

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ARTICLE 2.  PARTICIPATING EMPLOYERS

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ARTICLE 3.  ELIGIBILITY AND PARTICIPATION

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(a)            the first day of the first payroll period beginning after the date he files with the Plan Administrator the Notice prescribed by the Plan Administrator in which he:

(i)             makes the election described in Section 4.01(a), and

(ii)            authorizes the Employer to reduce his Compensation by the percentage or the amount specified in his election; or, if earlier,

(b)           the first day of the first payroll period beginning after July 1, 2004 after the date he files with the Plan Administrator the Notice prescribed by the Plan Administrator in which he

(i)             makes the election described in Section 4.01(h), and

(ii)            authorizes the Employer to withhold from his Compensation, on an after-tax basis, the percentage specified in his election and to pay the amount so withheld to the Plan on his behalf.

3.02A       Participation by 401(k) Pension Program Participants after December 31, 2004

(a)            The provisions of this Section shall be applicable to any Employee who becomes a Regular Employee after December 31, 2004.

(b)            An Employee described in subsection (a) shall be become a 401(k) Pension Program Participant as of:

(i)             the first day of the first payroll period beginning after the date he files with the Plan Administrator the Notice prescribed by the Plan Administrator in which he:

(A)           makes the election described in Section 4.01(a), and

(B)           authorizes the Employer to reduce his Compensation by the percentage or the amount specified in his election; or, if earlier,

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(ii)            the first day of the first payroll period beginning after the date he files with the Plan Administrator the Notice prescribed by the Plan Administrator in which he

(A)           makes the election described in Section 4.01(h), and

(B)           authorizes the Employer to withhold from his Compensation, on an after-tax basis, the percentage specified in his election and to pay the amount so withheld to the Plan on his behalf.

(c)            (i)             An Employee described in subsection (a) who becomes a Regular Employee prior to November 17, 2007 and who has not become a 401(k) Pension Program Participant in accordance with subsection (b) shall be deemed to have made an election in accordance with Section 4.01(a), effective as of the first payroll processing date that occurs on or after the 30 ^th day following his date of hire, to reduce his Compensation by 3% and to have that amount contributed to the Plan by his Employer as a Deferred Cash Contribution, and shall become a 401(k) Pension Program Participant as of such date, unless he revokes such deemed election in advance of the effective date thereof, by electing, in accordance with Section 4.04(f), not to reduce his Compensation.

(ii)            An Employee described in subsection (a) who was hired on or after January 1, 2008 who has not become a 401(k) Pension Program Participant in accordance with subsection (b) shall be deemed to have made an election in accordance with Section 4.01(a), effective as of the first payroll processing date that occurs on or after the 30 ^th day following his date of hire, to reduce his Compensation by 5% and to have that amount contributed to the Plan by his Employer as a Deferred Cash Contribution, and shall become a 401(k) Pension Program Participant as of such date, unless he revokes such deemed election in advance of the effective date thereof, by electing, in accordance with Section 4.04(f), not to reduce his Compensation.  Notwithstanding the

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foregoing, the date on which an Employee described in subsection (a) who was hired after November 16, 2007, and prior to January 1, 2008, who has not become a 401(k) Pension Program Participant in accordance with subsection (b) shall be deemed to have made an election in accordance with Section 4.01(a), shall be February 27, 2008, and not the payroll processing date that is on or after the 30 ^th day following the Participant’s date of hire.

(iii)           A 401(k) Program Participant who became a Participant in accordance with subsection (c)(i) and who has not made any election in accordance with Section 4.04(a) or 4.04(f) to change the election he was deemed to have made pursuant to subsection (c)(1) shall be deemed to have made an election effective as of the first payroll processing date that occurs on or after January 1, 2008 to increase the percentage by which his Compensation is reduced from 3% to 5%, unless he revokes such deemed election in advance of the effective date thereof, in accordance with Section 4.04(f).

(iv)          For purposes of this Section 3.02A (c), for Participants who are hired on and after January 1, 2005 but before November 16, 2007, and for Participants who are hired on and after January 1, 2009, Compensation shall include Variable Pay.  For Participants who are hired on and after November 16, 2007 but before January 1, 2009, Compensation shall exclude Variable Pay.

(d)            An Employee who is eligible to become a 401(k) Pension Program Participant in accordance with subsection (b) but who does not become a Participant in accordance with subsection (c), because he made an election in accordance with Section 4.04(f) not to reduce his Compensation, shall remain eligible to become a Participant and shall become a Participant in accordance with the procedures set forth in Section 3.02.  An

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reemployment, and who has not ceased to be a Participant in accordance with Section 3.05, shall be permitted to make an election under Section 4.01 immediately upon reemployment by an as a Long-Term Supplemental Employee.

3.04          Effect of Status Change on Participation

(a)            Except as provided in subsection (b), a Participant who

(i)             had been employed by the Employer or an Affiliate as a Regular Employee, then

(ii)            ceases to be a Regular Employee, but

(iii)           remains in the employ of an Employer or an Affiliate

shall continue to be a Participant in the Plan, but shall not be eligible to receive allocations of Deferred Cash Contributions or any Employer Contributions, as applicable, and shall not be eligible to make After-Tax Contributions, while his employment status is other than as a Regular Employee.

(b)            Notwithstanding the provisions of subsection (a), a Participant who

(i)             had been employed by the Employer or an Affiliate as a Regular Employee, then

(ii)            ceases to be a Regular Employee, but

(iii)           remains in the employ of an Employer or an Affiliate as a Long-Term Supplemental Employee after December 31, 2003

shall, effective as of January 1, 2004, be eligible to receive allocations of Deferred Cash Contributions, and shall. effective July 1, 2004, be eligible to make After-Tax Contributions, but ineligible to receive allocations of any Employer Contributions, as applicable, while his employment status remains that of a Long-Term Supplemental Employee.

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(c)            A Participant who

(i)             had been employed by the Employer or an Affiliate as a Long-Term Supplemental Employee after December 31, 2003, then

(ii)            ceases to be a Long-Term Supplemental Employee, but

(iii)           remains in the employ of the Employer or an Affiliate (other than as a Regular Employee)

shall continue to be a Participant in the Plan, but shall not be eligible to receive allocations of Deferred Cash Contributions and shall not be eligible to make After-Tax Contributions.

(d)            A Participant who

(i)             had been employed by the Employer or an Affiliate as a Long-Term Supplemental Employee after December 31, 2003, then

(ii)            ceased to be a Long-Term Supplemental Employee prior to January 1, 2005, but

(iii)           upon ceasing to be a Long-Term Supplemental Employee remained in the employ of the Employer as a Regular Employee, which status became effective for the Participant prior to January 1, 2005,

shall continue to be a Participant in the Plan, shall continue to be eligible to receive allocations of Deferred Cash Contributions, shall be eligible to receive allocations of Employer Contributions, as applicable, and shall be eligible to make After-Tax Contributions.

3.05          Termination of Participation

Participation shall terminate on the latest of (a) the date a Participant is no longer employed by an Employer or any Affiliate, (b) the date that a Participant receives a distribution that reduces the balance of his Account to zero, or (c) the date of the Participant’s death.

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ARTICLE 4.  CONTRIBUTIONS

4.01                            Deferred Cash Contributions, Catch-Up Contributions, and After-Tax Contributions

(a)                                   A Participant may elect in the Notice filed under Section 3.02(a), Section 3.02A(b), Section 4.04(c), or Section 4.05(b), as applicable, to reduce his Compensation payable while a Participant and have the amount by which his Compensation is so reduced contributed to the Plan by his Employer as Deferred Cash Contributions. A Participant’s election under this subsection shall be subject to the following conditions:

(i)                                      Except as provided in paragraph (xi), the minimum reduction shall be 1%, the maximum shall be 15%, and the Participant’s election shall be in multiples of 1%. Effective as of January 1, 2002, the 15% maximum specified in the foregoing sentence shall be increased to 80%.

(ii)                                   The amount of the reduction may, in the discretion of the Plan Administrator, be rounded to the next higher or lower multiple of $1.00 per pay period.

(iii)                                Deferred Cash Contributions shall be further limited as provided in subsections (c), (d), and (e) and in Sections 4.06, 4.09 and 4.10.

(iv)                               A Participant’s election pursuant to this subsection shall become effective as soon as administratively practicable after his provision of Notice, but shall in any event be effective as of the first day of a payroll period.

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(v)                                  Any Deferred Cash Contributions shall be paid to the Trustee as soon as practicable.  Deferred Cash Contributions attributable elections applicable to Compensation payable prior to January 1, 2008 shall be allocated to the Participant’s Deferred Account.  Deferred Cash Contributions attributable to elections applicable to Compensation payable after December 31, 2007 shall be allocated to the Participant’s Before-Tax Deferral Account, except that, to the extent that such Deferred Cash Contributions have been designated as Roth Contributions pursuant to paragraph (x), the amount so designated shall be allocated to the Participant’s Roth Contributions Account.

(vi)                               An election made by a Participant in accordance with this subsection, including for this purpose any separate Deferred Cash Contribution election with respect to Variable Pay in accordance with paragraph (vii), shall remain in effect until it is changed in accordance with Section 4.04 or suspended in accordance with Sections 4.05, 8.02(c)(iii), or 9.02(c)(i), provided however, that any election shall cease to be effective upon a Participant’s termination of employment.

(vii)                            Effective for the period beginning on January 1, 2002 and ending on December 31, 2004, and effective on and after January 1, 2008, a Participant may make separate Deferred Cash Contribution elections with respect to that portion of his Compensation that is not Variable Pay and with respect to that portion of his Compensation that is Variable Pay.  Effective for the period commencing January 1, 2005 and ending on December 31, 2007, a Participant may make separate Deferred Cash Contribution Elections with respect to that portion of his Compensation that is not Variable Pay and with respect to (I) any portion of his

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Compensation that is Variable Pay paid under a program maintained by an Employer for Non-Executives or (II) any portion of his Compensation that is Variable Pay paid under a program maintained by an Employer for Executives and attributable to any period of employment in which the Participant was a Non-Executive , provided, however, that:

(A)       if a Participant fails to make a separate Deferred Cash Contribution election with respect to any portion of his Compensation that is Variable Pay that is payable to him after December 31, 2005 and before January 1, 2007, he shall be deemed to have made a 0% Deferred Cash Contribution election with respect to such Variable Pay;

(B)         if a Participant fails to make a separate Deferred Cash Contribution election with respect to any portion of his Compensation that is Variable Pay that is payable to him after December 31, 2006, he shall be deemed to have made a Deferred Cash Contribution election with respect to such Variable Pay of the same percentage that is then in effect with respect to that portion of his Compensation that is not Variable Pay; and

(C)         effective January 1, 2008, a Participant who makes a Deferral Maximizer Election pursuant to paragraph (xi) shall be deemed to have made a 0% Deferred Cash Contribution Election with respect to such Variable Pay.

(viii)        Effective for the period beginning January 1, 2005 and ending December 31, 2007, a Participant’s Deferred Cash Contribution Election shall apply only to his Compensation as determined without regard to any Variable Pay paid under any program maintained by an Employer for Executives and shall not be effective with respect to any portion of his Compensation that is Variable Pay

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paid under any program maintained by an Employer for Executives, except as provided in paragraph (vii) with respect to amounts attributable to any period of employment in which the Participant was a Non-Executive.   Effective January 1, 2008, a Participant who makes a Deferral Maximizer Election pursuant to paragraph (xi) shall be deemed to have made a 0% Deferred Cash Contribution Election with respect to his Variable Pay.

(ix)            Effective January 1, 2002, Deferred Cash Contributions that are allocated to the IBM Stock Fund in accordance with the provisions of Section 5.02 shall be deemed to be contributions to the ESOP.

(x)             Effective January 1, 2008, a Participant who has made, or is deemed to have made, an election to reduce his Compensation may elect, in accordance with procedures prescribed by the Plan Administrator, that all or a portion of the Deferred Cash Contributions that otherwise would be contributed to his Before-Tax Deferral Account as Before-Tax Contributions shall instead be designated as Roth Contributions and included in his gross income at the time of deferral.  The Deferred Cash Contributions so designated shall be contributed to his Roth Contributions Account.  An election pursuant to this paragraph may be revoked only with respect to Deferred Cash Contributions to be contributed after the effective date of the revocation election.

(xi)            Effective January 1, 2008, in accordance with procedures established by the Plan Administrator, a Participant may elect that his Compensation be reduced by a dollar amount per payroll period that will cause his total Deferred Cash Contributions for the Plan Year to equal the amount permitted to be deferred

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under Code Section 402(g) and Code Section 414(v), as applicable, for such Plan Year in accordance with subsection (c) (“Deferral Maxizimer Election”).  No Deferral Maximizer Election with respect to a Plan Year may be made under this paragraph after June 30 of such Plan Year, or such later date as determined by the Plan Administrator.  In the event that a Participant has made a Deferral Maximizer Election under this paragraph and later terminates employment with the Employer, no reduction will be applied to Compensation payable to him for the payroll period that includes his final day of employment or any subsequent payroll period.  A Participant who makes a  Deferral Maximizer Election may not make an election pursuant to paragraph (x), except for an election to designate all of his Deferred Cash Contributions as Roth Contributions for the period during which his Deferral Maximizer Election is in effect.  A Participant who makes a Deferral Maximizer Election may revoke such election at any time during the Plan Year and, coincident with or subsequent to such revocation, may make a percentage election in accordance with paragraph (i), provided, however, that (A) no such percentage election shall be permitted if the Participant’s Compensation for the Plan Year prior to the effective date of the percentage election has exceeded the Annual Dollar Limit, and (B) a Participant who revoked the Deferral Maximizer Election and who is prevented from making a percentage election by clause (A) shall not be permitted to make another Deferral Maximizer Election for such Plan Year.  If a Participant makes a Deferral Maximizer Election, and thereafter goes on a leave of absence from employment, the Deferral Maximizer Election will not be automatically restarted upon returning from such leave of absence.  For purposes of this subsection (xi) Compensation shall exclude any

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Compensation that is not paid on a bi-monthly basis (including amount paid on a weekly basis or amounts that are paid for overtime).

(b)                                  Notwithstanding any other provision of this Section, the Plan Administrator, in its sole discretion, may restrict the percentage of Compensation reduction that may be elected by any Highly Compensated Employee, in order to achieve or maintain compliance with the limitations described in Sections 4.06, 4.07, and 4.08.

(c)                                   In no event shall the Participant’s Deferred Cash Contributions and similar contributions made on his behalf by an Employer or an Affiliate to all plans, contracts or arrangements subject to the provisions of Section 401(a)(30) of the Code, in any calendar year commencing prior to January 1, 2002, exceed $7,000, as adjusted from time to time pursuant to Section 402(g)(4) of the Code (as in effect on the day before the date of enactment of Public Law 107-16).  The Participant’s Deferred Cash Contributions and similar contributions made on his behalf by an Employer or an Affiliate to all plans contracts or arrangements subject to the provisions of Section 401(a)(30) in calendar years beginning after December 31, 2001 and prior to January 1, 2009 shall be limited in accordance with the following table:

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Deferred Cash Contributions made on a Participant’s behalf with respect to any calendar year beginning after December 31, 2008 are limited to $15,500 (or such higher dollar limit as may be in effect with respect to such year in accordance with Section 402(g)(4) of the Code (as amended and redesignated by Public Law 107-16), as in effect for calendar years beginning after December 31, 2001).  If a Participant’s Deferred Cash Contributions in a calendar year reach the dollar limitation in effect for such calendar year, his election of Deferred Cash Contributions for the remainder of the calendar year will be canceled.  As of the first pay period of the calendar year following such cancellation, the Participant’s election of Deferred Cash Contributions shall again become effective in accordance with his previous election, unless a Participant changes his elections.

(d)                                  If a Participant makes elective deferrals, within the meaning of Section 402(g)(3) of the Code, under any other qualified defined contribution plan maintained by an Employer or Affiliate for any calendar year and the sum of such elective deferrals and his Deferred Cash Contributions under the Plan exceed the dollar limitation specified in subsection (c) for that calendar year, then the amount by which such sum exceeds such limitation shall be deemed Excess Deferrals for such calendar year.  The Participant shall be deemed to have elected to receive a return from this Plan of the full amount of any Excess Deferrals determined in accordance with this subsection.  A return of Excess Deferrals pursuant to this subsection shall be subject to the provisions of subsection (f).

(e)                                   If a Participant makes elective deferrals, within the meaning of Section 402(g)(3) of the Code, under a qualified defined contribution plan maintained by an employer other than any Employer or any Affiliate for any calendar year, and the sum of such elective

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deferrals and his Deferred Cash Contributions under the Plan exceed the dollar limitation specified in Section 4.01(c) for that calendar year, then the amount by which such sum exceeds such limitation shall be deemed Excess Deferrals for such calendar year.  The Participant may elect to receive a return from this Plan of all or a portion of any Excess Deferrals determined in accordance with this subsection, provided, however, that the Plan shall not be required to make a return of Excess Deferrals, unless the Participant notifies the Plan Administrator, in writing, by March 1 of the following calendar year of the amount of the Excess Deferrals that the Participant wishes to have returned by this Plan.  A return of Excess Deferrals pursuant to this subsection shall be subject to the provisions of subsection (f).

(f)                                     Any return of Excess Deferrals required under subsection (d) or (e) shall include Attributed Earnings and shall be made no later than the April 15 following the end of the calendar year in which the Excess Deferrals were made.  The amount of Excess Deferrals to be returned for any calendar year shall be reduced by any Deferred Cash Contributions previously returned to the Participant under Section 4.06 for that calendar year.  In the event any Deferred Cash Contributions required to be returned under subsection (d) or (e) were matched by Matching Contributions under Section 3.02, those Matching Contributions, together with Attributed Earnings, shall be forfeited and used to reduce Employer contributions.

(g)                                  Effective for Plan Years commencing after December 31, 2001, a Participant who satisfies the requirements of paragraph (i) for a Plan Year may elect, in accordance with paragraph (ii), to reduce his Compensation and to have the amount by which his Compensation is so reduced contributed to the Plan by his Employer as a Catch-Up

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Contribution, provided, however, that such Catch-Up Contributions shall be subject to the conditions set forth in paragraphs (iii), (iv), (v), (vi) , (vii), and (viii).

(i)                                      A Participant satisfies the requirements of this paragraph for a Plan Year if:

(A)                               his 50 ^th birthday is coincident with or prior to the last day of the Plan Year; and

(B)                                 the Deferred Cash Contributions made on his behalf for the Plan Year have reached the applicable dollar limitation for the calendar year coincident with such Plan Year, as set forth in subsection (c).

(ii)                                   A Participant described in paragraph (i) shall be deemed to have elected to continue to reduce his Compensation at the rate in effect under his most recent Deferred Cash Contribution election, including for this purpose any separate Deferred Cash Contribution with respect to Variable Pay then in effect for the Participant in accordance with subsection (a)(vii), and to have the amount contributed to the Plan by his Employer as a Catch-Up Contribution, unless he provides Notice, in accordance with procedures established by the Plan Administrator, that he elects not to continue to reduce his Compensation.

(iii)                                Any Catch-Up Contributions shall be paid to the Trustee as soon as practicable . Catch-Up Contributions attributable elections applicable to Compensation payable prior to January 1, 2008 shall be allocated to the Participant’s Catch-Up Account.  Catch-Up Contributions attributable to elections applicable to Compensation payable after December 31, 2007 shall be allocated to the Participant’s Catch-Up Account, except that, to the extent that such Catch-Up

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Contributions have been designated as Roth Catch-Up Contributions pursuant to paragraph (vii), the amount so designated shall be allocated to the Participant’s Roth Catch-Up Account.

(iv)                               A Participant’s Catch-Up Contributions in calendar years beginning after December 31, 2001 and prior to January 1, 2009 shall be limited in accordance with the following table:

Catch-Up Contributions made on a Participant’s behalf with respect to any calendar year beginning after December 31, 2008 shall limited to $5,000, as adjusted in accordance with Section 414(v)(2)(C) of the Code.  In no event shall the Participant’s Catch-Up Contributions for a Plan Year exceed the excess of his Statutory Compensation for such Plan Year over his Deferred Cash Contributions for such Plan Year.

(v)                                  Catch-Up Contributions that are allocated to the IBM Stock Fund in accordance with the provisions of Section 5.02 shall be deemed to be contributions to the ESOP.

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(vi)                               The provisions of this subsection shall be subject to the requirements of Section 414(v) of the Code and Regulations thereunder.

(vii)                            An election in accordance with this subsection shall apply only to that portion of the Participant’s Compensation to which a Deferred Cash Contribution would be applicable in accordance with subsection (a), but for the limitation imposed by subsection (c).

(viii)                         Effective January 1, 2008, a Participant is deemed to have made an election to reduce his Compensation in accordance with paragraph (ii) may elect, in accordance with procedures prescribed by the Plan Administrator, that all or a portion of the amounts that otherwise would be contributed to his Catch-Up Account as Catch-Up Contributions shall instead be designated as Roth Catch-Up Contributions and included in the Participant’s gross income at the time of deferral.  An amount so designated shall be contributed to the Participant’s Roth Catch-Up Account.  An election pursuant to this paragraph may be revoked only with respect to amounts to be contributed after the effective date of the revocation election.

(h)                                  Effective July 1, 2004, a Participant may elect in the Notice filed under Section 3.02(b), Section 3.02A(b)(ii), Section 4.04(e), or Section 4.05(b), as applicable, to make After-Tax Contributions, provided, however, that After-Tax Contributions shall be subject to the conditions set forth in paragraphs (i), (ii), (iii), (iv) and (v).

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(i)             The Participant’s election to make After-Tax Contributions shall specify the rate of After-Tax Contributions as a percentage of his Compensation, which rate shall not exceed 10% and shall be an integral multiple of 1%.

(ii)            Any After-Tax Contributions shall be paid to the Trustee as soon as practicable and shall be allocated to the Participant’s After-Tax Account.

(iii)           After-Tax Contributions that are allocated to the IBM Stock Fund in accordance with the provisions of Section 5.02 shall be deemed to be contributions to the ESOP.

(iv)           A Participant may make separate After-Tax Contribution elections with respect to that portion of his Compensation that is not Variable Pay and with respect to that portion of his Compensation that is Variable Pay.  Effective January 1, 2005, a Participant may make separate After-Tax Contribution elections with respect to that portion of his Compensation that is not Variable Pay and with respect to any portion of his Compensation that is Variable Pay paid under a program maintained by an Employer for Non-Executives, provided, however, that if a Participant fails to make a separate After-Tax Contribution election with respect to any portion of his Compensation that is Variable Pay that is payable to him after December 31, 2005, he shall be deemed to have made a 0% After-Tax Contribution election with respect to such Variable Pay.

(v)            [Reserved]

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(vi)                               Notwithstanding any other provision of this subsection, the Plan Administrator, in its sole discretion, may reduce the rate of After-Tax Contributions that may be elected by any Highly Compensated Employee, in order to achieve or maintain compliance with the limitations described in Sections 4.07, 4.09, and 4.10.

4.02                            Employer Matching Contributions

(a)                                   (i)                                      Matching Contributions for Participants other than 401(k) Pension Program Participants:

(A)                               For Plan Years commencing after December 31, 1994 and prior to January 1, 2008, each Employer shall contribute, out of its Profits, on behalf of each of its Participants who is not a 401(k) Pension Program Participant and who elects to make Deferred Cash Contributions, an amount equal to 50% of the Deferred Cash Contributions made on behalf of the Participant to the Plan during each payroll period, provided, however, that for this purpose Deferred Cash Contributions in excess of 6% of the Participant’s Compensation for a payroll period shall not be taken into account.  In no event shall the Matching Contributions pursuant to this Section with respect to a Plan Year exceed 3% of the Participant’s Compensation while a Participant during such Plan Year.

(B)                                 For Plan Years commencing after December 31, 2007, each Employer shall contribute, out of its Profits, on behalf of each of its Participants who is not a 401(k) Pension Program Participant and who elects to make Deferred Cash Contributions, an amount equal to 100% of the Deferred Cash Contributions made on behalf of the Participant to the Plan during each payroll period, provided, however, that for this purpose Deferred

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Cash Contributions in excess of 6% of the Participant’s Compensation for a payroll period shall not be taken into account.  In no event shall the Matching Contributions pursuant to this Section with respect to a Plan Year exceed 6% of the Participant’s Compensation while a Participant during such Plan Year.

(ii)                                   Matching Contributions for 401(k) Pension Program Participants:

(A)                               Effective January 1, 2005, each Employer shall contribute, out of its Profits, on behalf of each of its Participants who (I) is a 401(k) Pension Program Participant, (II) elects or is deemed to have elected to make Deferred Cash Contributions, and (III) has, on or before the last day of the payroll period, attained his Program Eligibility Date an amount equal to 100% of the Deferred Cash Contributions made on behalf of the Participant to the Plan during each payroll period, provided, however, that for this purpose Deferred Cash Contributions in excess of 6% of the Participant’s Compensation for a payroll period shall not be taken into account.  In no event shall the Matching Contributions pursuant to this Section with respect to a Plan Year exceed 6% of the Participant’s Compensation while a Participant during such Plan Year.

(B)                                 Effective January 1, 2008, each Employer shall contribute, out of its Profits, on behalf of each of its Participants who (I) is a 401(k) Pension Program Participant, (II) elects or is deemed to have elected to make Deferred Cash Contributions, and (III) has, on or before the last day of the payroll period, attained his Program Eligibility Date an amount equal to 100% of the Deferred Cash Contributions made on behalf of the

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Participant to the Plan during each payroll period, provided, however, that for this purpose Deferred Cash Contributions in excess of 5% of the Participant’s Compensation for a payroll period shall not be taken into account.  In no event shall the Matching Contributions pursuant to this Section with respect to a Plan Year exceed 5% of the Participant’s Compensation while a Participant during such Plan Year.

(iii)                                Employer Matching Contributions made in accordance with paragraph (i) or paragraph (ii) shall be paid to the Trustee as soon as practicable and shall be allocated to the Participant’s Employer Account.

(iv)                               Match Maximizer for 401(k) Pension Program Participants for 2005, 2006, and 2007 Plan Years:

Effective as of January 1, 2005, if as of the last day of the Plan Year, the amount of Matching Contributions allocated in accordance with paragraph (ii) for such Plan Year to the Employer Account of a 401(k) Pension Program Participant who satisfies the requirements set forth in the following sentence is less than the lesser of (A) 6% of his Compensation or (B) the amount contributed on behalf of such Participant as Deferred Cash Contributions for the Plan Year, the Employer shall make a special Matching Contribution on behalf of such Participant in an amount equal to the lesser of (X) such difference or (Y) the excess of (I) the dollar limitation determined in accordance with Section 4.01(c) over (II) the amount of Matching Contributions allocated in accordance with paragraph (ii).  A Participant shall satisfy the requirements set forth in this sentence for a Plan Year if (A) he remains in employment with the Employer on the last day of such

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Plan Year, (B) he was a Non-Executive at all times during such Plan Year, provided, however, that this requirement shall apply only for the Plan Year beginning before January 1, 2006, and (C) no portion of his Compensation was deferred in accordance with any salary deferral election or incentive pay deferral election under any plan maintained by the Employer, including but not limited to the Executive Deferred Compensation Plan, but excluding this Plan, at any time during such Plan Year, provided, however, that this requirement shall apply only to Plan Years beginning after December 31, 2005. For purposes of this paragraph, a Participant’s Compensation shall not include any amount earned prior to the first day of the payroll period that includes  his Program Eligibility Date, shall not include any amount earned during a period in which Deferred Cash Contributions were not permitted to be made on his behalf in accordance with Sections 8.02(c) or 9.02(c)(i), shall not include any amount of Variable Pay attributable to any period in any prior Plan Year during which he was an Executive, and shall not include Compensation earned during any period in which the Participant was not a Regular Employee.    Any special Matching Contribution made pursuant to this paragraph shall be paid to the Trustee as soon as practicable following the close of the Plan Year to which it relates and the determination of the amount thereof by the Plan Administrator or its designee.  This paragraph shall not apply for Plan Years beginning after December 31, 2007.

(v)                                  Employer Matching Contributions that are allocated to the IBM Stock Fund in accordance with the provisions of Section 5.02 shall be deemed to be contributions to the ESOP.

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(vi)                               A Participant’s Compensation, as taken into account for purposes of this subsection, shall be determined in accordance with the requirements set forth in Section 4.01 for the determination of Compensation to which a Deferred Cash Contribution Election shall be applicable.

(vii)                            Match Maximizer for Participants other than 401(k) Pension Program Participants for 2006 and 2007 Plan Years:

Effective as of January 1, 2006, if as of the last day of the Plan Year, the amount of Matching Contributions allocated in accordance with paragraph (ii) for such Plan Year to the Employer Account of a Participant who satisfies the requirements set forth in the following sentence is less than the lesser of (A) 3% of his Compensation or (B) 50% of the amount contributed on behalf of such Participant as Deferred Cash Contributions for the Plan Year, the Employer shall make a special Matching Contribution on behalf of such Participant in an amount equal to the lesser of (X) such difference or (Y) the excess of (I) 50% of the dollar limitation determined in accordance with Section 4.01(c) over (II) the amount of Matching Contributions allocated in accordance with paragraph (ii).  A Participant shall satisfy the requirements set forth in this sentence for a Plan Year if (A) he is not a 401(k) Pension Program Participant, (B) he remains in employment with the Employer on the last day of such Plan Year, and (C) no portion of his Compensation was deferred in accordance with any salary deferral election or incentive pay deferral election under any plan maintained by the Employer, including but not limited to the Executive Deferred Compensation Plan, but excluding this Plan, at any time during such Plan Year. For purposes of this paragraph, a Participant’s Compensation shall not include any amount earned during a period in which Deferred Cash Contributions were

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not permitted to be made on his behalf in accordance with Sections 8.02(c) or 9.02(c)(i), shall not include any amount of Variable Pay attributable to any period in any prior Plan Year during which he was an Executive, and shall not include Compensation earned during any period in which the Participant was not a Regular Employee.  Any special Matching Contribution made pursuant to this paragraph shall be paid to the Trustees as soon as practicable following the close of the Plan Year to which it relates and the determination of the amount thereof by the Plan Administrator or its designee. This paragraph shall not apply for Plan Years beginning after December 31, 2007.

(viii)                         Match Maximizer for Plan Years beginning after 2007:

(A)                               Match Maximizer for Participants other than 401(k) Pension Program Participants :

Effective January 1, 2008, and subject to the provisions of subparagraph (C), if as of the close of any payroll period, the amount of Matching Contributions allocated in accordance with paragraph (ii) and this paragraph (viii) to the Employer Account of a Participant other than a 401(k) Pension Program Participant for such period and for all payroll periods to date ending within such Plan Year is less than the lesser of (A) 6% of his Compensation or (B) 100% of the amount contributed on behalf of such Participant as Deferred Cash Contributions for all payroll periods to date ending within the Plan Year, the Employer shall make a special Matching Contribution on behalf of such Participant in an amount equal to the lesser of (X) such difference or (Y) the excess of (I) 100% of the dollar limitation determined in accordance with Section 4.01(c) over (II) the amount of Matching Contributions allocated in accordance with paragraph (ii) and this paragraph (viii).

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(B)                                 Match Maximizer for 401(k) Pension Program Participants:

Effective January 1, 2008, and subject to the provisions of subparagraph (C), if as of the close of any payroll period, the amount of Matching Contributions allocated in accordance with paragraph (ii) and this section (viii) to the Employer Account of a 401(k) Pension Program Participant for such period and for all prior payroll periods to date ending within such Plan Year is less than the lesser of (A) 5% of his Compensation or (B) 100% of the amount contributed on behalf of such Participant as Deferred Cash Contributions for all payroll periods to date ending within the Plan Year, the Employer shall make a special Matching Contribution on behalf of such Participant in an amount equal to the lesser of (X) such difference or (Y) the excess of (I) 100% of the dollar limitation determined in accordance with Section 4.01(c) over (II) the amount of Matching Contributions allocated in accordance with paragraph (ii) and this paragraph (viii).

(C)                                 For purposes of this paragraph (viii), a Participant’s Compensation (i) shall only include Compensation that is earned on and after a Participant has attained his Program Eligibility Date; (ii) shall not include any amount earned during a period in which Deferred Cash Contributions were not permitted to be made on his behalf in accordance with Sections 8.02(c) and, (iii) shall not include Compensation earned during any period in which the Participant was not a Regular Employee.  Any special Matching Contribution made pursuant to this paragraph shall be paid to the Trustees as soon as practicable following the close of the payroll period

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to which it relates and the determination of the amount thereof by the Plan Administrator or its designee.

(b)                                  Matching Contributions are made expressly conditional on the Plan satisfying the provisions of Sections 4.01(c), (d), and (e), 4.06, 4.07, and 4.08.  If any portion of the Deferred Cash Contribution to which a Matching Contribution relates is returned to the Participant pursuant to Section 4.01(d) or (e), 4.06(c), or 4.08, the corresponding Matching Contribution shall be forfeited, and if any amount of the Matching Contribution is deemed an Excess Aggregate Contribution under Section 4.07 such amount shall be forfeited in accordance with the provisions of that Section.

(c)                                   Effective only for the period beginning on January 1, 2002 and ending on December 31, 2004, and solely for purposes of subsection (a), a Participant’s Deferred Cash Contributions shall be deemed to include his Catch-Up Contributions.

(d)                                  Effective January 1, 2004, and solely for purposes of subsection (a), a Participant’s Compensation shall not include any amount earned while employed by the Employer or an Affiliate as a Long-Term Supplemental Employee.

4.02A                  Non-Matching Employer Contributions

(a)                                   Automatic Contributions:

                                                (i)                                      401(k) Pension Program Participants:

Effective January 1, 2008, each Employer shall contribute, out of its Profits, on behalf of each of its Participants who is a 401(k) Pension Program Participant and who has, on or before the last day of the payroll period, attained his

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Program Eligibility Date, an amount equal to 1% of the Participant’s Compensation during each payroll period, as an Automatic Contribution.

(ii)                                   PPA Participants:

Effective January 1, 2008, each Employer shall contribute, out of its Profits, on behalf of each of its Participants who is a PPA Participant an amount equal to 2% of the Participant’s Compensation during each payroll period, as an Automatic Contribution.

(iii)                                PCF Participants:

Effective January 1, 2008, each Employer shall contribute, out of its Profits, on behalf of each of its Participants who is a PCF Participant an amount equal to 4% of the Participant’s Compensation during each payroll period, as an Automatic Contribution.

(iv)                               Automatic Contributions made in accordance with paragraph (i) paragraph (ii), or paragraph (iii) shall be paid to the Trustee as soon as practicable after the payroll period to which they relate and shall be allocated to the Participant’s Employer Account.

(b)                                  Transition Credit Contributions for PPA Participants:

(i)                                      Effective January 1, 2008, each Employer shall contribute, out of its Profits, on behalf of each of its Participants who is a PPA Participant and who, as of June 30, 1999 had satisfied the age and service requirements for transition credits under the terms of the IBM Personal Pension Plan as in effect on July 1, 1999,

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an amount equal to the applicable percentage of the Participant’s Compensation, as a Transition Credit Contribution.  For each PPA Participant who is eligible to receive Transition Credit Contributions, the applicable percentage shall be no less than 1% and no more than 4% and shall be same percentage that would have been credited to the Participant benefit under the Personal Pension Account Formula of the IBM Personal Pension Plan for the latest monthly pay credit period that began prior to January 1, 2008, but based on the PPA Participant’s age and service as of June 30, 1999.  A PPA Participant shall cease to be eligible to receive Transition Credit Contributions at the earlier of June 30, 2009 or the date on which the PPA Participant has completed 30 years of Service as determined in accordance with the provisions of the IBM Personal Pension Plan.

(ii)            Transition Credit Contributions made in accordance with paragraph (i) shall be paid to the Trustee as soon as practicable after the payroll period to which they relate and shall be allocated to the Participant’s Employer Account.

(c)                                   Special Savings Award Contributions for PCF Participants who are Non-Exempt Employees:

(i)                                      Effective January 1, 2008, each Employer shall contribute, out of its Profits, on behalf of each of its Participants who is a PCF Participant and who is a Non-Exempt Employee as of the last business day of the calendar year, ,an amount equal to 5% of the Participant’s Compensation during the Calendar Year, as a Special Savings Award Contribution.

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(ii)            Special Savings Award Contributions made in accordance with paragraph (i) shall be paid to the Trustee as soon as practicable after the close of the calendar year to which they relate and shall be allocated to the Participant’s Employer Account.

(d)            Any Non-Matching Employer Contribution that is allocated to the IBM Stock Fund in accordance with the provisions of Section 5.02 shall be deemed to be a contribution to the ESOP.

4.03          Rollover Contributions, Roth Rollover Contributions, and After-Tax Rollover Contributions

(a)            Without regard to any limitations on contributions set forth in this Article 4, the Plan may receive from or on behalf of a Participant who is then a Regular Employee, in cash, as a Rollover Contribution or, effective January 1, 2008, as a Roth Rollover Contribution, an amount previously distributed or deemed to be distributed to him

(i)             from a plan that satisfies the requirements of Section 401(a) of the Code, or

(ii)            from an individual retirement account described in Section 408(a) of the Code which contains only amounts that were originally distributed from a qualified plan described in Section 401(a) or 403(a) of the Code, or

(iii)           from an eligible deferred compensation plan described in Section 457(b) of the Code that is maintained by an employer that is described in Section 457(e)(1)(A) of the Code,

(iv)           from an annuity contract described in Section 403(b) of the Code, or

(v)            from the Federal Thrift Savings Plan, in a distribution described in Section 8433(c) of Title 5 of the United States Code,

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provided, however, clauses (ii), (iii), and (iv) of this sentence shall be effective only with respect to Rollover Contributions made subsequent to March 31, 2002 and clause (v) of this sentence shall be effective only with respect to Rollover Contributions made subsequent to December 31, 2001.  The Plan may receive such amount either directly from the Participant, or from an individual retirement account that satisfies the requirements of Section 408(d)(3)(A)(ii) of the Code, or from a qualified plan in the form of a direct rollover that satisfies the requirements of Section 401(a)(31) of the Code.   For purposes of this subsection, a distribution made or deemed to be made to a Participant who is then a Regular Employee to which the Participant is entitled on account of his status as an alternate payee or surviving spouse under the terms of the plan from which such distribution is made shall be treated in the same manner as if he were entitled to such a distribution on account of his status as a participant in such plan.

(b)            Without regard to any limitations on contributions set forth in this Article 4, the Plan may receive from or on behalf of a Participant who has terminated employment with the Employer in cash, as a Rollover Contribution, any amount previously distributed or deemed to be distributed to him from a retirement plan sponsored by IBM that is qualified under Section 401(a) of the Code.  The Plan may receive such amount either directly from the Participant, or from such qualified plan in the form of a direct rollover that satisfies the requirements of Section 401(a)(31) of the Code.  For purposes of this subsection, a distribution made or deemed to be made to a Participant who has terminated employment with the Employer to which such Participant is entitled on account of his status as an alternate payee or surviving spouse under the terms of the retirement plan sponsored by IBM from which such distribution is made shall be treated in the same manner as if he were entitled to such a distribution on account of his status

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as a participant in such plan and the Plan shall be treated in the same manner as any other retirement plan sponsored by IBM.

(c)            Notwithstanding the provisions of subsections (a) or (b), the Plan shall not accept any amount as a Rollover Contribution, unless such amount is eligible to be rolled over to a qualified trust in accordance with applicable law and the Participant provides evidence satisfactory to the Plan Administrator that such amount qualifies as an eligible rollover distribution, within the meaning of Section 402(c)(4) of the Code.  Unless received by the Plan in the form of a direct rollover, the Rollover Contribution must be paid to the Trustee on or before the 60th day after the day it was received by the Employee.  For purposes of this Section, the terms “eligible rollover distribution” and “direct rollover” shall have the meaning specified in Section 10.14.

(d)            Except as provided in subsection (f), any Rollover Contribution shall be allocated to a Participant’s Rollover Account.

(e)            Any Rollover Contribution that is allocated to the IBM Stock Fund in accordance with the provisions of Section 5.02 shall be deemed to be a contribution to the ESOP.

(f)             Any Rollover Contribution made prior to January 1, 2008 shall not include any Roth contributions made in accordance with Section 402A(c)(1)(B) of the Code.  Effective January 1, 2008, any Roth contributions made in accordance with Section 402A(c)(1)(B) of the Code may be directly rolled over from an eligible employer plan qualified under Section 401(a) of the Code to the Plan, which amount shall be deemed to be a Roth Rollover Contribution and shall be credited to the Participant’s Roth Rollover Account.

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(g)            Any Rollover Contribution that is made prior to January 1, 2008 shall not include any  after-tax contributions.  Effective January 1, 2008, an amount that had been treated as after-tax contributions by the plan to which such contributions were made may be directly rolled over from an eligible employer plan qualified under Section 401(a) of the Code to the Plan, which amount shall be deemed to be an After-Tax Rollover Contribution and shall be credited to the Participant’s After-Tax Rollover Account.

4.04          Changes in Contribution Rates

(a)            The percentage of Compensation designated by a Participant under Section 4.01(a) shall automatically apply to increases and decreases in his Compensation.  A Participant may change his election under Section 4.01(a) at any time during the Plan Year by giving such advance Notice as the Plan Administrator shall prescribe.  The changed percentage shall become effective as of the first day of the first payroll period beginning after the provision of the Notice, or as soon thereafter as may be administratively practicable.

(b)            Effective as of January 1, 2004, and solely for purposes of subsection (a), a Participant’s deemed election to make Catch-Up Contributions, in accordance with Section 4.01(g)(ii), shall be treated as a designation under Section 4.01(a) for the period beginning on the date that the Participant first satisfies the condition set forth in Section 4.01(g)(i)(B) for a Plan Year and ending on the last day of such Plan Year.

(c)            If an eligible Employee has become a Participant in accordance with Section 3.02(b), then he shall be permitted to make an initial designation under Section 4.01(a) at any time thereafter, in accordance with the procedure specified in subsection (a).

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(d)            The percentage of Compensation designated by a Participant under Section 4.01(h) shall automatically apply to increases and decreases in his Compensation.  A Participant may change his election under Section 4.01(h) at any time during the Plan Year by giving such advance Notice as the Plan Administrator shall prescribe.  The changed percentage shall become effective as of the first day of the first payroll period beginning after the provision of the Notice, or as soon thereafter as may be administratively practicable.

(e)            If an eligible Employee has become a Participant in accordance with Section 3.02(a), then he shall be permitted to make an initial election under Section 4.01(h) at any time thereafter, in accordance with the procedure specified in subsection (a).

(f)             An eligible Employee who is deemed, in accordance with Section 3.02A(c),  to have made an election under Section 4.01(a) to commence Deferred Cash Contributions, shall be permitted to change such election, either before the first payroll period for which it is effective, or at any time thereafter, in accordance with the procedure specified in subsection (a).  An election in accordance with this subsection to reduce the percentage of his Deferred Cash Contributions to 0% shall be deemed a revocation of such election for purposes of Section 4.05.

(g)            If an eligible Employee has become a Participant in accordance with Section 3.02A(c), then he shall be permitted to make an initial election  under Section 4.01(h) at any time thereafter, in accordance with the procedure specified in subsection (a).

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(h)            Effective January 1, 2008 and in accordance with procedures established by the Plan Administrator, a Participant who has not made an election pursuant to Section 4.01(a)(xi) with respect to a Plan Year may elect automatic annual increases in the percentage of his Compensation that shall be contributed as Deferred Cash Contributions pursuant to Section 4.01(a).  Such automatic increases shall be in integral multiples of 1% and shall not exceed 3% each year and shall become effective in each Plan Year on the date specified by the Participant; provided, however, that no such automatic increase shall become effective during any period in which Deferred Cash Contributions were not permitted to be made on his behalf in accordance with Section 8.02(c).

4.05          Suspension and Resumption of Contributions

(a)            A Participant may suspend and/or revoke his election under Section 4.01(a) or Section 4.01(h) by giving such advance Notice as the Plan Administrator shall prescribe.  The suspension or revocation shall become effective as of the first day of the first payroll period beginning after the provision of the Notice, or as soon thereafter as may be administratively practicable.

(b)            A Participant who has suspended and/or revoked his election under Section 4.01(a) or Section 4.01(h) may elect to reinstate such election by giving such advance Notice as the Plan Administrator shall prescribe.  Such reinstatement shall be effective as of the first day of the first payroll period beginning after the provision of the Notice, or as soon thereafter as may be administratively practicable.

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4.06          Actual Deferral Percentage Test

(a)            With respect to each Plan Year commencing on or after January 1, 1997, the Actual Deferral Percentage for that Plan Year for Highly Compensated Employees of each Employer who are Participants or eligible to become Participants for that Plan Year shall not exceed the greater of:

(i)             the product of:

(A)           Actual Deferral Percentage for the preceding Plan Year for all Non-Highly Compensated Employees of such Employer for the preceding Plan Year who were Participants or eligible to become Participants during such preceding Plan Year, and

(B)            1.25, or

(ii)            the lesser of:

(A)           the sum of:

(I)             the Actual Deferral Percentage for the preceding Plan Year for all Non-Highly Compensated Employees of such Employer for the preceding Plan Year who were Participants or eligible to become Participants during the preceding Plan Year, and

(II)            2.00%, or

(B)            the product of:

(I)             the Actual Deferral Percentage for the preceding Plan Year for all Non-Highly Compensated Employees of such Employer for the preceding Plan Year who were Participants or eligible to become Participants during the preceding Plan Year, and

(II)            2.00.

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(b)            For purposes of subsection (a), an Employer, with the consent of the Plan Administrator, may elect to use the Actual Deferral Percentage for Non-Highly Compensated Employees for the Plan Year being tested rather than the preceding Plan Year, provided that any such election, except an election applicable to a Plan Year ending before January 1, 2000, may not be changed for any subsequent Plan Year, except as provided by the Secretary of the Treasury, and that any such election is incorporated in an amendment to the Plan adopted by the Plan Administrator, pursuant to Section 13.01(c).

(c)            If the Plan Administrator determines that the limitation under subsection (a) has been exceeded in any Plan Year, with respect to the Highly Compensated Employees of any Employer, the following provisions shall apply with respect to such group of Highly Compensated Employees:

(i)             The Actual Deferral Ratio of the Highly Compensated Employee with the highest Actual Deferral Ratio shall be reduced to the extent necessary to satisfy the limitation set forth in subsection (a) or to cause such ratio to equal the Actual Deferral Ratio of the Highly Compensated Employee with the next highest ratio.  This process shall be repeated until the limitation set forth in subsection (a) is satisfied.  The sum of the amounts of Deferred Cash Contributions made by each Highly Compensated Employee in excess of the amount permitted under his revised deferral ratio shall be deemed to be Excess Contributions.  This total dollar amount of Excess Contributions shall then be allocated to some or all Highly Compensated Employees in accordance with the provisions of paragraph (ii).

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(ii)            The Deferred Cash Contributions of the Highly Compensated Employee with the highest dollar amount of Deferred Cash Contributions shall be reduced by the lesser of (A) the amount required to cause that Participant’s Deferred Cash Contributions to equal the dollar amount of the Deferred Cash Contributions of the Highly Compensated Employee with the next highest dollar amount of Deferred Cash Contributions, or (B) an amount equal to the total Excess Contributions.  This procedure shall be repeated until all Excess Contributions are allocated.  The amount of Excess Contributions allocated to each Highly Compensated Employee, together with Attributed Earnings, shall be distributed to him in accordance with the provisions of paragraph (iii).

(iii)           The Excess Contributions allocated to a Participant shall be paid to the Participant before the close of the Plan Year following the Plan Year in which the Excess Contributions were made, and to the extent practicable, within 2½ months of the close of the Plan Year in which the Excess Contributions were made.  Any Excess Contributions for any Plan Year shall be reduced by any Deferred Cash Contributions previously returned to the Participant under Section 4.01 for that Plan Year.  In the event any Deferred Cash Contributions returned under this Section were matched by Matching Contributions under Section 4.02, such corresponding Matching Contributions, with Attributed Earnings, shall be forfeited and used to reduce Employer contributions.

(d)            For Plan Years commencing after December 31, 2001, and before January 1, 2006, the Actual Deferral Percentage Test described in this Section shall be applied separately with respect to Deferred Cash Contributions that are deemed, pursuant to

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Section 4.01(a) to be contributions to the ESOP and with respect to Deferred Cash Contributions that are not deemed to be contributions to the ESOP.

4.07          Actual Contribution Percentage Test

(a)            With respect to each Plan Year commencing on or after January 1, 1997, the Actual Contribution Percentage for that Plan Year for Highly Compensated Employees of each Employer who are Participants or eligible to become Participants for that Plan Year shall not exceed the greater of:

(i)             the product of:

(A)           the Actual Contribution Percentage for the preceding Plan Year for all Non-Highly Compensated Employees of such Employer for the preceding Plan Year who were Participants or eligible to become Participants during the preceding Plan Year, and

(B)            1.25, or

(ii)            the lesser of: