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=Chips, Inc. =

Oct. 15, 2010

Dear Mr. or Ms. [Name of Employee]:

We would like to thank you for your hard work, loyalty and faithfulness to Chips Inc. Without hard working employees such as you. our company could not have survived for the past three generations.

This has been a difficult year for Chips Inc. This past August, we were required to make a very difficult decision. With rising costs, our company was faced with the option of possible layoffs or exploring other possible avenues of cost reduction in order to keep everyone's job intact. We chose the latter because Chips Inc. values each and every one of it's employees. While we have been fortunate to provide you with our current health insurance plan since 1973, unfortunately, we were forced to adjust our current plan.

Due to the increase in insurance claims, it is necessary to decrease the coverage provided while remaining at the current cost. Please see the enclosed document from US Insurance stating your new coverage benefits which will take effect on November 1, 2010.

We understand that you may have questions regarding these changes and we are happy to answer any questions you may have. On October 19, from 12:00 p.m. to 2:00 p.m., we will be holding a meeting in the main conference room at our headquarters location where lunch will be provided. The purpose of our meeting will be to discuss your concerns, answer any questions, and discuss new incentive plans to bring home company snacks. We will also discuss and introduce healthy cooking tips and possible wellness programs. We hope to see you there!

If you have any questions or concerns, please feel free to speak with your supervisor, attend our lunch, or call the insurance company at 1-800-LOW-COST. With trained professionals ready to answer your questions, we are confident that you will receive the attention and time you deserve.

We look forward to our future together at Chips, Inc. Your continuing hard work and dedication will certainly contribute to the overcoming of this recent obstacle and lead to successful years ahead.

Very truly yours,

Cynthia Powers

VP of Chips Inc.