Document:

EX-4.2

 

Exhibit 4.2

 

SERIES 2008-4 SUPPLEMENT

Dated as of April 17, 2008

to

POOLING AND SERVICING AGREEMENT

Dated as of May 16, 1996,

as amended and restated as of January 1, 2006

$607,956,000

 

AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST

Series 2008-4

 

among

AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION II

AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION III LLC

AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION IV LLC

as Transferors

AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.

as Servicer

and

THE BANK OF NEW YORK

as Trustee

on behalf of the Series 2008-4 Certificateholders

 

(Series 2008-4 Supplement)

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	ARTICLE I Creation of the Series 2008-4 Certificates
	 	 	1	 
	Section 1.01. Designation
	 	 	1	 
	ARTICLE II Definitions
	 	 	2	 
	Section 2.01. Definitions
	 	 	2	 
	ARTICLE III Servicing Fee
	 	 	14	 
	Section 3.01. Servicing Compensation
	 	 	14	 
	ARTICLE IV Rights of Series 2008-4 Certificateholders and Allocation and Application of Collections
	 	 	15	 
	Section 4.01. Collections and Allocations
	 	 	15	 
	Section 4.02. Determination of Monthly Interest
	 	 	17	 
	Section 4.03. Principal Funding Account; Controlled Accumulation Period
	 	 	18	 
	Section 4.04. Required Amount
	 	 	20	 
	Section 4.05. Application of Class A Available Funds, Class B Available Funds, Collateral Available Funds and Available Principal Collections
	 	 	21	 
	Section 4.06. Defaulted Amounts; Investor Charge-Offs
	 	 	22	 
	Section 4.07. Excess Spread; Excess Finance Charge Collections
	 	 	24	 
	Section 4.08. Reallocated Principal Collections
	 	 	25	 
	Section 4.09. Excess Finance Charge Collections
	 	 	25	 
	Section 4.10. Reallocated Investor Finance Charge Collections
	 	 	26	 
	Section 4.11. Shared Principal Collections
	 	 	27	 
	Section 4.12. Reserve Account
	 	 	27	 
	Section 4.13. Investment Instructions
	 	 	28	 
	Section 4.14. Determination of LIBOR
	 	 	29	 
	ARTICLE V Distributions and Reports to Series 2008-4 Certificateholders
	 	 	30	 
	Section 5.01. Distributions
	 	 	30	 
	Section 5.02. Reports and Statements to Series 2008-4 Certificateholders
	 	 	31	 
	ARTICLE VI Pay-Out Events
	 	 	31	 
	Section 6.01. Pay-Out Events
	 	 	31	 
	ARTICLE VII Optional Repurchase; Series Termination
	 	 	33	 
	Section 7.01. Optional Repurchase
	 	 	33	 
	Section 7.02. Series Termination
	 	 	33	 

-i-

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 
	 	 	Page
	ARTICLE VIII Final Distributions
	 	 	34	 
	Section 8.01. Sale of Receivables or Certificateholders’ Interest pursuant to Section 2.06 or 10.01 of the Agreement and Section 7.01 or 7.02 of this Supplement
	 	 	34	 
	Section 8.02. Distribution of Proceeds of Sale, Disposition or Liquidation of the Receivables pursuant to Section 9.01 of the Agreement
	 	 	35	 
	ARTICLE IX Miscellaneous Provisions
	 	 	36	 
	Section 9.01. Ratification of Agreement
	 	 	36	 
	Section 9.02. Counterparts
	 	 	36	 
	Section 9.03. Governing Law
	 	 	36	 
	Section 9.04. [Reserved]
	 	 	36	 
	Section 9.05. [Reserved]
	 	 	36	 
	Section 9.06. Uncertificated Securities
	 	 	36	 
	Section 9.07. Transfers of the Collateral Interest
	 	 	36	 

(Series 2008-4
Supplement)

-ii-

 

SERIES 2008-4 SUPPLEMENT, dated as of April 17, 2008 (the
“Supplement”), among AMERICAN EXPRESS RECEIVABLES FINANCING
CORPORATION II, a Delaware corporation, AMERICAN EXPRESS RECEIVABLES
FINANCING CORPORATION III LLC, a Delaware limited liability company,
and AMERICAN EXPRESS RECEIVABLES FINANCING CORPORATION IV LLC, a
Delaware limited liability company, as Transferors, AMERICAN EXPRESS
TRAVEL RELATED SERVICES COMPANY, INC., a New York corporation, as
Servicer, and THE BANK OF NEW YORK, a banking corporation organized
and existing under the laws of the State of New York, not in its
individual capacity, but solely as Trustee.

          Pursuant to the Pooling and Servicing Agreement, dated as of May 16, 1996, as amended and
restated as of January 1, 2006 (as amended and restated and as otherwise amended and supplemented,
the “Agreement”), among the Transferors, the Servicer and the Trustee, the AMERICAN EXPRESS
CREDIT ACCOUNT MASTER TRUST (the “Trust”) has been created. Section 6.03 of the Agreement
provides that the Transferors may from time to time direct the Trustee to authenticate one or more
new Series of Investor Certificates representing fractional undivided interests in the Trust. The
Principal Terms of any new Series are to be set forth in a Supplement to the Agreement.

          Pursuant to this Supplement, the Transferors and the Trustee shall create a new Series of
Investor Certificates and specify the Principal Terms thereof.

ARTICLE I

Creation of the Series 2008-4 Certificates

          Section 1.01. Designation.

          (a) There is hereby created a Series of Investor Certificates to be issued pursuant to the
Agreement and this Supplement to be known as “American Express Credit Account Master Trust, Series
2008-4.” The Series 2008-4 Certificates shall be issued in two Classes, the first of which shall
be known as the “Class A Series 2008-4 Floating Rate Asset Backed Certificates” and the second of
which shall be known as the “Class B Series 2008-4 Floating Rate Asset Backed Certificates.” In
addition, there is hereby created a third Class of uncertificated interests in the Trust which
shall be known as the “Collateral Interest, Series 2008-4” and which shall be deemed to be
“Investor Certificates” for all purposes under the Agreement and this Supplement other than for
purposes of the definition of the term “Tax Opinion” in Section 1.01 of the Agreement. The
Collateral Interest shall be considered a Class of Series 2008-4 for all purposes of the Agreement
and this Supplement, including for purposes of voting concerning the liquidation of the Trust
pursuant to Section 9.01 of the Agreement. The Collateral Interest Holder shall be deemed to be
the Series Enhancer for all purposes under the Agreement and this Supplement.

          (b) Series 2008-4 shall be included in Group II and shall be a Principal Sharing Series.
Series 2008-4 shall be an Excess Allocation Series. Series 2008-4 shall not be subordinated to any
other Series. Notwithstanding any provision in the Agreement or in this Supplement to the
contrary, the first Distribution Date with respect to Series 2008-4 shall be the May 2008
Distribution Date and the first Monthly Period shall begin on and include the Closing Date and end
on and include April 24, 2008.

          (c) Except as expressly provided herein, (i) the provisions of Article VI and Article XII of
the Agreement relating to the registration, authentication, delivery, presentation, cancellation
and surrender of Registered Certificates shall not be applicable to the Collateral Interest, and
(ii) the

1

 

provisions of Section 3.07 of the Agreement shall not cause the Collateral Interest to be
treated as debt for federal, state and local income and franchise tax purposes, but rather the
Transferors intend, and together with the Collateral Interest Holder, agree to treat the Collateral
Interest for federal, state and local income and franchise tax purposes as representing an equity
interest in the assets of the Trust.

ARTICLE II

Definitions

          Section 2.01. Definitions.

          (a) Whenever used in this Supplement, the following words and phrases shall have the following
meanings, and the definitions of such terms are applicable to the singular as well as the plural
forms of such terms and the masculine as well as the feminine and neuter genders of such terms.

          “Additional Interest” means, with respect to any Distribution Date, the Class A
Additional Interest, the Class B Additional Interest and the Collateral Additional Interest for
such Distribution Date.

          “Adjusted Invested Amount” shall mean, with respect to any date of determination, an
amount equal to the Invested Amount less the Principal Funding Account Balance on such date of
determination.

          “Assignee” shall have the meaning specified in subsection 9.07(a).

          “Available Principal Collections” shall mean, with respect to any Monthly Period, an
amount equal to the sum of (a) (i) an amount equal to the
Principal Allocation Percentage of Series 2008-4 Allocable Principal Collections received during such Monthly Period minus (ii) the
amount of Reallocated Principal Collections with respect to such Monthly Period which pursuant to
Section 4.08 are required to fund the Required Amount for the related Distribution Date, (b) any
Shared Principal Collections with respect to other Series that are allocated to Series 2008-4 in
accordance with Section 4.04 of the Agreement and Section 4.11 of this Supplement, and (c) any
other amounts which pursuant to Section 4.05 or 4.07 of this Supplement are to be treated as
Available Principal Collections with respect to the related Distribution Date.

          “Available Reserve Account Amount” shall mean, with respect to any Distribution Date,
the lesser of (a) the amount on deposit in the Reserve Account on such date (before giving effect
to any deposit to be made to the Reserve Account on such date) and (b) the Required Reserve Account
Amount.

          “Base Rate” shall mean, with respect to any Monthly Period, the annualized percentage
equivalent of a fraction, the numerator of which is equal to the sum of the Class A Monthly
Interest, the Class B Monthly Interest (calculated as if the Class B Invested Amount equals the
outstanding principal balance of the Class B Certificates), the Collateral Minimum Monthly Interest
and the Monthly Servicing Fee with respect to the related Distribution Date and the denominator of
which is the Invested Amount as of the last day of the preceding Monthly Period.

          “Class A Additional Interest” shall have the meaning specified in subsection 4.02(a).

          “Class A Adjusted Invested Amount” shall mean, with respect to any date of
determination, an amount equal to the Class A Invested Amount less the Principal Funding Account
Balance (but not in excess of the Class A Invested Amount) on such date.

2

 

          “Class A Available Funds” shall mean, with respect to any Monthly Period, an amount
equal to the sum of (a) if such Monthly Period relates to a Distribution Date with respect to the
Controlled Accumulation Period, the Class A Floating Percentage of Principal Funding Account
Investment Proceeds, if any, with respect to such Distribution Date, (b) the Class A Floating
Percentage of the Reallocated Investor Finance Charge Collections and (c) the amount of funds, if
any, to be withdrawn from the Reserve Account which, pursuant to subsection 4.12(d), are required
to be included in Class A Available Funds with respect to such Distribution Date.

          “Class A Certificate Rate” shall mean, for any Interest Accrual Period with respect to
the Class A Certificates, a per annum rate equal to LIBOR plus 1.40%.

          “Class A Certificateholder” shall mean the Person in whose name a Class A Certificate
is registered in the Certificate Register.

          “Class A Certificates” shall mean any one of the Certificates executed by the
Transferors and authenticated by or on behalf of the Trustee, substantially in the form of
Exhibit A-l.

          “Class A Floating Percentage” shall mean, with respect to any Monthly Period, the
percentage equivalent (which percentage shall never exceed 100%) of a fraction, the numerator of
which is equal to the Class A Adjusted Invested Amount as of the close of business on the last day
of the preceding Monthly Period and the denominator of which is equal to the Adjusted Invested
Amount as of such day; provided, however, that with respect to the first Monthly Period, the Class
A Floating Percentage shall mean the percentage equivalent of a fraction, the numerator of which is
the Class A Initial Invested Amount and the denominator of which is the Initial Invested Amount.

          “Class A Initial Invested Amount” shall mean $535,000,000.

          “Class A Interest Shortfall” shall have the meaning specified in subsection 4.02(a).

          “Class A Invested Amount” shall mean, on any date of determination, an amount equal to
(a) the Class A Initial Invested Amount, minus (b) the aggregate amount of principal payments made
to the Class A Certificateholders on or prior to such date, minus (c) the excess, if any, of (i)
the aggregate amount of Class A Investor Charge-Offs for all prior Distribution Dates over (ii)
Class A Investor Charge-Offs reimbursed pursuant to subsection 4.07(b) prior to such date.

          “Class A Investor Charge-Offs” shall have the meaning specified in subsection 4.06(a).

          “Class A Investor Default Amount” shall mean, with respect to each Distribution Date,
an amount equal to the product of (i) the Investor Default Amount for such Distribution Date and
(ii) the Class A Floating Percentage for such Monthly Period.

          “Class A Monthly Interest” shall have the meaning specified in subsection 4.02(a).

          “Class A Principal Percentage” shall mean, with respect to any Monthly Period (i)
during the Revolving Period, the percentage equivalent (which percentage shall never exceed 100%)
of a fraction, the numerator of which is the Class A Invested Amount as of the last day of the
immediately preceding Monthly Period and the denominator of which is the Invested Amount as of such
day and (ii) during the Controlled Accumulation Period, the Early Amortization Period or any
Partial Amortization Period, the percentage equivalent (which percentage shall never exceed 100%)
of a fraction, the numerator of which is the Class A Invested Amount as of the close of business on
the date on which the Revolving Period shall have terminated and the denominator of which is the
Invested Amount as of the close of business on the date on which the Revolving Period shall have
terminated; provided, however, that with respect to the first Monthly Period, the Class A Principal
Percentage shall mean the percentage

3

 

equivalent of a fraction, the numerator of which is the Class A Initial Invested Amount and
denominator of which is the Initial Invested Amount.

          “Class A Required Amount” shall have the meaning specified in subsection 4.04(a).

          “Class A Servicing Fee” shall have the meaning specified in Section 3.01.

          “Class B Additional Interest” shall have the meaning specified in subsection 4.02(b).

          “Class B Adjusted Invested Amount” shall mean, with respect to any date of
determination, an amount equal to the Class B Invested Amount less the positive difference, if any,
between the Principal Funding Account Balance and the Class A Invested Amount on such date.

          “Class B Available Funds” shall mean, with respect to any Monthly Period, an amount
equal to the sum of (a) the Class B Floating Percentage of the Reallocated Investor Finance Charge
Collections and (b) if such Monthly Period relates to a Distribution Date with respect to the
Controlled Accumulation Period, the Class B Floating Percentage of the Principal Funding Account
Investment Proceeds, if any, with respect to such Distribution Date.

          “Class B Certificate Rate” shall mean, for any Interest Accrual Period with respect to
the Class B Certificates, a per annum rate equal to LIBOR plus 4.25%; provided, however, that the
Transferors may adjust the Class B Certificate Rate from time to time only upon the satisfaction of
the Rate Adjustment Conditions.

          “Class B Certificateholder” shall mean the Person in whose name a Class B Certificate
is registered in the Certificate Register.

          “Class B Certificates” shall mean any one of the Certificates executed by the
Transferors and authenticated by or on behalf of the Trustee, substantially in the form of
Exhibit A-2.

          “Class B Floating Percentage” shall mean, with respect to any Monthly Period, the
percentage equivalent (which percentage shall never exceed 100%) of a fraction, the numerator of
which is equal to the Class B Adjusted Invested Amount as of the close of business on the last day
of the preceding Monthly Period and the denominator of which is equal to the Adjusted Invested
Amount as of the close of business on such day; provided, however, that with respect to the first
Monthly Period, the Class B Floating Percentage shall mean the percentage equivalent of a fraction,
the numerator of which is the Class B Initial Invested Amount and the denominator of which is the
Initial Invested Amount.

          “Class B Initial Invested Amount” shall mean $33,438,000.

          “Class B Interest Shortfall” shall have the meaning specified in subsection 4.02(b).

          “Class B Invested Amount” shall mean, on any date of determination, an amount equal to
(a) the Class B Initial Invested Amount, minus (b) the aggregate amount of principal payments made
to the Class B Certificateholders prior to such date, minus (c) the aggregate amount of Class B
Investor Charge-Offs for all prior Distribution Dates, minus (d) the amount of Reallocated
Principal Collections allocated on all prior Distribution Dates pursuant to subsection 4.08(a)
(excluding any Reallocated Principal Collections that have resulted in a reduction in the
Collateral Invested Amount pursuant to Section 4.08), minus (e) an amount equal to the amount by
which the Class B Invested Amount has been reduced on all prior Distribution Dates pursuant to
subsection 4.06(a) and plus (f) the amount of Excess Spread and Excess Finance Charge Collections
allocated and available on all prior Distribution Dates pursuant to subsection 4.07(e) for the
purpose of reimbursing amounts deducted pursuant to the foregoing

4

 

clauses (c), (d) and (e); provided, however, that the Class B Invested Amount may not be
reduced below zero.

          “Class B Investor Charge-Offs” shall have the meaning specified in subsection 4.06(b).

          “Class B Investor Default Amount” shall mean, with respect to each Distribution Date,
an amount equal to the product of (i) the Investor Default Amount for such Distribution Date and
(ii) the Class B Floating Percentage for such Monthly Period.

          “Class B Monthly Interest” shall have the meaning specified in subsection 4.02(b).

          “Class B Principal Percentage” shall mean, with respect to any Monthly Period, (i)
during the Revolving Period, the percentage equivalent (which percentage shall never exceed 100%)
of a fraction, the numerator of which is the Class B Invested Amount as of the last day of the
immediately preceding Monthly Period and the denominator of which is the Invested Amount as of such
day and (ii) during the Controlled Accumulation Period, the Early Amortization Period or any
Partial Amortization Period, the percentage equivalent (which percentage shall never exceed 100%)
of a fraction, the numerator of which is the Class B Invested Amount as of the close of business on
the date on which the Revolving Period shall have terminated and the denominator of which is the
Invested Amount as of the close of business on the date on which the Revolving Period shall have
terminated; provided, however, that with respect to the first Monthly Period, the Class B Principal
Percentage shall mean the percentage equivalent of a fraction, the numerator of which is the Class
B Initial Invested Amount and the denominator of which is the Initial Invested Amount.

          “Class B Required Amount” shall have the meaning set forth in subsection 4.04(b).

          “Class B Servicing Fee” shall have the meaning specified in Section 3.01.

          “Closing Date” shall mean April 17, 2008; provided that, for purposes of determining
the date on which the first Monthly Period begins, the Closing Date shall be deemed to be the close
of business on the last day of the seventh billing cycle applicable to the Accounts ending in March
2008.

          “Collateral Additional Interest” shall have the meaning specified in subsection
4.02(c).

          “Collateral Available Funds” shall mean with respect to any Distribution Date, the
Collateral Floating Percentage of Reallocated Investor Finance Charge Collections with respect to
the preceding Monthly Period.

          “Collateral Charge-Offs” shall have the meaning specified in subsection 4.06(c).

          “Collateral Default Amount” shall mean, with respect to any Distribution Date, the
product of the Investor Default Amount for such Distribution Date and the Collateral Floating
Percentage.

          “Collateral Floating Percentage” shall mean, with respect to any Distribution Date,
the percentage equivalent (which percentage shall never exceed 100%) of a fraction, the numerator
of which is equal to the Collateral Invested Amount as of the close of business on the last day of
the preceding Monthly Period and the denominator of which is the Adjusted Invested Amount as of the
close of business on such last day; provided, however, that with respect to the first Monthly
Period, the Collateral Floating Percentage shall mean the percentage equivalent of a fraction, the
numerator of which is the Collateral Initial Invested Amount and the denominator of which is the
Initial Invested Amount.

          “Collateral Initial Invested Amount” shall mean $39,518,000.

5

 

          “Collateral Interest” shall mean a fractional undivided interest in the Trust which
shall consist of the right to receive, (i) to the extent necessary to make the required payments to
the Collateral Interest Holder under this Supplement, the portion of Collections allocable thereto
under the Agreement and this Supplement and funds on deposit in the Collection Account allocable
thereto pursuant to the Agreement and this Supplement and (ii) amounts available for payment to the
Collateral Interest Holder pursuant to subsections 4.07(k), 4.12(e), 4.12(f), 8.01(b), 8.02(a) and
8.02(b) or any other provision of this Supplement.

          “Collateral Interest Holder” shall mean the entity so designated in the Transfer
Agreement.

          “Collateral Interest Shortfall” shall have the meaning specified in subsection
4.02(c).

          “Collateral Invested Amount” shall mean, when used with respect to any date, an amount
equal to (a) the Collateral Initial Invested Amount, minus (b) the aggregate amount of principal
payments made to the Collateral Interest Holder prior to such date, minus (c) the aggregate amount
of Collateral Charge-Offs for all prior Distribution Dates pursuant to subsection 4.06(c), minus
(d) the aggregate amount of Reallocated Principal Collections allocated on all prior Distribution
Dates pursuant to Section 4.08 allocable to the Collateral Invested Amount, minus (e) an amount
equal to the amount by which the Collateral Invested Amount has been reduced on all prior
Distribution Dates pursuant to subsections 4.06(a) and (b), and plus (f) the amount allocated and
available on all prior Distribution Dates pursuant to subsection 4.07(i), for the purpose of
reimbursing amounts deducted pursuant to the foregoing clauses (c), (d) and (e); provided, however,
that the Collateral Invested Amount may not be reduced below zero.

          “Collateral Minimum Interest Rate” shall mean the rate specified in the Transfer
Agreement; provided that for purposes of this Supplement, such rate shall not exceed LIBOR plus
6.50% per annum.

          “Collateral Minimum Monthly Interest” shall have the meaning specified in subsection
4.02(c).

          “Collateral Principal Percentage” shall mean, with respect to any Monthly Period, (i)
during the Revolving Period, the percentage equivalent (which percentage shall never exceed 100%)
of a fraction, the numerator of which is the Collateral Invested Amount as of the last day of the
immediately preceding Monthly Period and the denominator of which is the Invested Amount as of such
day and (ii) during the Controlled Accumulation Period, the Early Amortization Period or any
Partial Amortization Period, the percentage equivalent (which percentage shall never exceed 100%)
of a fraction, the numerator of which is the Collateral Invested Amount as of the close of business
on the date on which the Revolving Period shall have terminated and the denominator of which is the
Invested Amount as of the close of business on the date on which the Revolving Period shall have
terminated; provided, however, that with respect to the first Monthly Period, the Collateral
Principal Percentage shall mean the percentage equivalent of a fraction, the numerator of which is
the Collateral Initial Invested Amount and the denominator of which is the Initial Invested Amount.

          “Collateral Servicing Fee” shall have the meaning set forth in Section 3.01.

          “Controlled Accumulation Amount” shall mean, for any Distribution Date with respect to
the Controlled Accumulation Period, $47,369,833.34; provided, however, that, if the Controlled
Accumulation Period Length is determined to be less than 12 months, the Controlled Accumulation
Amount for each Distribution Date with respect to the Controlled Accumulation Period will be equal
to (i) the product of (x) the sum of the Class A Initial Invested Amount and the Class B Initial
Invested Amount and (y) the Controlled Accumulation Period Factor for the related Monthly Period
divided by (ii) the Required Accumulation Factor Number.

6

 

          “Controlled Accumulation Period” shall mean, unless a Pay-Out Event shall have
occurred prior thereto, the period commencing at the close of business on the last day of the March
2013 Monthly Period or such later date as is determined in accordance with subsection 4.03(c) and
ending on the first to occur of (a) the commencement of the Early Amortization Period, (b) the
payment in full of the Invested Amount and (c) the Expected Final Payment Date.

          “Controlled Accumulation Period Factor” shall mean, for each Monthly Period, a
fraction, the numerator of which is equal to the sum of the series invested amounts as of the last
day of the prior Monthly Period of all outstanding Series, and the denominator of which is equal to
the sum (without duplication) of (a) the Series Invested Amount as of the last day of the prior
Monthly Period, (b) the series invested amounts as of the last day of the prior Monthly Period of
all outstanding Series (other than Series 2008-4) that are not expected to be in their revolving
periods, and (c) the series invested amounts as of the last day of the prior Monthly Period of all
other outstanding Series that are not Principal Sharing Series and are in their revolving periods.

          “Controlled Accumulation Period Length” has the meaning specified in subsection
4.03(c).

          “Controlled Deposit Amount” shall mean, for any Distribution Date with respect to the
Controlled Accumulation Period, an amount equal to the sum of the Controlled Accumulation Amount
for such Distribution Date and any Deficit Controlled Accumulation Amount for the immediately
preceding Distribution Date.

          “Covered Amount” shall mean, for any Distribution Date with respect to the Controlled
Accumulation Period or the first Special Payment Date, if such Special Payment Date occurs prior to
the date the Class A Invested Amount is paid in full, an amount equal to the sum of (x) with
respect to the Class A Certificates, the product of (i) the Class A Certificate Rate, (ii) a
fraction, the numerator of which is the actual number of days from and including the prior
Distribution Date to but excluding the then current Distribution Date and the denominator of which
is 360 and, (iii) the Principal Funding Account Balance, if any, as of the preceding Distribution
Date that is allocable to the principal of the Class A Certificates and (y) with respect to the
Class B Certificates, the product of (i) the Class B Certificate Rate, (ii) a fraction, the
numerator of which is the actual number of days from and including the prior Distribution Date to
but excluding the then current Distribution Date and the denominator of which is 360 and (iii) the
Principal Funding Account Balance, if any, as of the preceding Distribution Date that is allocable
to the principal of the Class B Certificates.

          “Deficit Controlled Accumulation Amount” shall mean (a) on the first Distribution Date
with respect to the Controlled Accumulation Period, the excess, if any, of the Controlled
Accumulation Amount for such Distribution Date over the amount deposited in the Principal Funding
Account on such Distribution Date and (b) on each subsequent Distribution Date with respect to the
Controlled Accumulation Period, the excess, if any, of the Controlled Deposit Amount for such
subsequent Distribution Date over the amount deposited in the Principal Funding Account on such
subsequent Distribution Date.

          “Distribution Date” shall mean May 15, 2008, and the 15th day of each calendar month
thereafter, or if such 15th day is not a Business Day, the next succeeding Business Day.

          “Early Amortization Period” shall mean the period commencing at the close of business
on the Business Day immediately preceding the day on which a Pay-Out Event with respect to Series
2008-4 is deemed to have occurred, and ending on the first to occur of (i) the payment in full of
the Invested Amount or (ii) the Series 2008-4 Termination Date.

7

 

          “Excess Finance Charge Collections” shall mean collections of Finance Charge
Receivables and certain other amounts allocable to the Certificateholders’ Interest of any Excess
Allocation Series in excess of the amounts necessary to make required payments with respect to such
series (including payments to the provider of any related Series Enhancement) that are payable out
of collections of Finance Charge Receivables.

          “Excess Spread” shall mean, with respect to any Distribution Date, the sum of the
amounts, if any, specified pursuant to subsections 4.05(a)(iv), 4.05(b)(iii) and 4.05(c)(ii) with
respect to such Distribution Date.

          “Expected Final Payment Date” shall mean the April 2014 Distribution Date.

          “Finance Charge Shortfall” shall have the meaning specified in Section 4.09.

          “Floating Allocation Percentage” shall mean, with respect to any Monthly Period, the
percentage equivalent (which percentage shall never exceed 100%) of a fraction, the numerator of
which is the Adjusted Invested Amount as of the last day of the preceding Monthly Period (or with
respect to the first Monthly Period, the Initial Invested Amount) and the denominator of which is
the product of (x) the Series 2008-4 Allocation Percentage with respect to such Monthly Period and
(y) the sum of (i) the total amount of Principal Receivables in the Trust as of such day (or with
respect to the first Monthly Period, the total amount of Principal Receivables in the Trust on the
Closing Date) and (ii) the principal amount on deposit in the Special Funding Account as of such
last day (or with respect to the first Monthly Period, as of the Closing Date); provided, however,
that with respect to any Monthly Period in which an Addition Date for an Aggregate Addition or a
Removal Date occurs the amount in (y)(i) above shall be (1) the aggregate amount of Principal
Receivables in the Trust at the end of the day on the last day of the prior Monthly Period for the
period from and including the first day of such Monthly Period to but excluding the related
Addition Date or Removal Date and (2) the aggregate amount of Principal Receivables in the Trust at
the end of the day on the related Addition Date or Removal Date for the period from and including
the related Addition Date or Removal Date to and including the last day of such Monthly Period.

          “Group II” shall mean Series 2008-4 and each other Series specified in the related
Supplement to be included in Group II.

          “Group II Investor Additional Amounts” shall mean, with respect to any Distribution
Date, the sum of (a) Series 2008-4 Additional Amounts for such Distribution Date and (b) for all
other Series included in Group II, the sum of (i) the aggregate net amount by which the Invested
Amounts of such Series have been reduced as a result of investor charge-offs, subordination of
principal collections and funding the investor default amounts in respect of any Class or Series
Enhancement interests of such Series as of such Distribution Date and (ii) if the applicable
Supplements so provide, the aggregate unpaid amount of interest at the applicable certificate rates
that has accrued on the amounts described in the preceding clause (i) for such Distribution Date.

          “Group II Investor Default Amount” shall mean, with respect to any Distribution Date,
the sum of (a) the Investor Default Amount for such Distribution Date and (b) the aggregate amount
of the investor default amounts for all other Series included in Group II for such Distribution
Date.

          “Group II Investor Finance Charge Collections” shall mean, with respect to any
Distribution Date, the sum of (a) Investor Finance Charge Collections for such Distribution Date
and (b) the aggregate amount of the investor finance charge collections for all other Series
included in Group II for such Distribution Date.

8

 

          “Group II Investor Monthly Fees” shall mean with respect to any Distribution Date, the
sum of (a) Series 2008-4 Monthly Fees for such Distribution Date and (b) the aggregate amount of
the servicing fees, investor fees, fees payable to any Series Enhancer and any other similar fees,
which are payable out of reallocated investor finance charge collections pursuant to the related
Supplements, for all other Series included in Group II for such Distribution Date.

          “Group II Investor Monthly Interest” shall mean, with respect to any Distribution
Date, the sum of (a) Series 2008-4 Monthly Interest for such Distribution Date and (b) the
aggregate amount of monthly interest, including overdue monthly interest and interest on such
overdue monthly interest, if such amounts are payable out of reallocated investor finance charge
collections pursuant to the related Supplements, for all other Series included in Group II for such
Distribution Date.

          “Initial Invested Amount” shall mean $607,956,000.

          “Interest Accrual Period” shall mean, with respect to any Distribution Date, the
period (a) from and including the Distribution Date immediately preceding such Distribution Date
(or, in the case of the first Distribution Date, from and including the Closing Date) and (b) to
but excluding such Distribution Date.

          “Invested Amount” shall mean, as of any date of determination, an amount equal to the
sum of (a) the Class A Invested Amount as of such date, (b) the Class B Invested Amount as of such
date and (c) the Collateral Invested Amount as of such date.

          “Investment Letter” shall have the meaning specified in subsection 9.07(a).

          “Investor Charge-Offs” shall mean Class A Investor Charge-Offs, Class B Investor
Charge-Offs and Collateral Charge-Offs.

          “Investor Default Amount” shall mean, with respect to any Distribution Date, an amount
equal to the product of (a) the Series 2008-4 Allocable Defaulted Amount for the related Monthly
Period and (b) the Floating Allocation Percentage for such Monthly Period.

          “Investor Finance Charge Collections” shall mean with respect to any Distribution
Date, an amount equal to the product of (a) the Floating Allocation Percentage for the related
Monthly Period and (b) Series 2008-4 Allocable Finance Charge Collections deposited in the
Collection Account for the related Monthly Period.

          “LIBOR” shall mean, for any Interest Accrual Period, a per annum interest rate
determined by the Trustee for such Interest Accrual Period in accordance with the provisions of
Section 4.14.

          “LIBOR Determination Date” shall mean April 15, 2008 for the period from and including
the Closing Date to but excluding May 15, 2008, and for every other Interest Accrual Period, the
second London Business Day prior to the commencement of such Interest Accrual Period.

          “London Business Day” shall mean any day on which dealings in deposits in United
States dollars are transacted in the London interbank market.

          “Monthly Interest” means, with respect to any Distribution Date, the Class A Monthly
Interest, the Class B Monthly Interest and the Collateral Minimum Monthly Interest for such
Distribution Date.

9

 

          “Monthly Receivables Percentage” shall mean, for any day, the percentage equivalent of
a fraction, the numerator of which is an amount equal to the sum of the aggregate amount of
Principal Receivables outstanding in the Trust attributable to the Transferor or Account Owner with
respect to which an Insolvency Event or a Transfer Restriction Event has occurred, and the
denominator of which is an amount equal to the sum of the aggregate amount of Principal Receivables
outstanding in the Trust, in each as of the last day of the immediately preceding Monthly Period.

          “Monthly Servicing Fee” shall have the meaning specified in subsection 3.01.

          “Pay-Out Event” shall mean any Pay-Out Event specified in Section 6.01.

          “Permitted Assignee” shall mean any Person who, if it were the Collateral Interest
Holder or a holder of an interest in the Trust, as applicable, would not cause the Trust to be
taxable as a publicly traded partnership for federal income tax purposes.

          “Principal Allocation Percentage” shall mean, with respect to any day during a Monthly
Period, the percentage equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is (a) during the Revolving Period, the Series Adjusted Invested Amount for
Series 2008-4 as of the last day of the immediately preceding Monthly Period (or, in the case of
the first Monthly Period, the Initial Invested Amount) and (b) during the Controlled Accumulation
Period, the Early Amortization Period or any Partial Amortization Period, the Series Adjusted
Invested Amount for Series 2008-4 as of the close of business on the date on which the Revolving
Period shall have terminated and the denominator of which is the product of (x) the sum of (i) the
total amount of Principal Receivables in the Trust as of the last day of the immediately preceding
Monthly Period (or with respect to the first Monthly Period, the total amount of Principal
Receivables in the Trust as of the Closing Date) and (ii) the principal amount on deposit in the
Special Funding Account as of such last day (or with respect to the first Monthly Period, the
Closing Date) and (y) the Series 2008-4 Allocation Percentage as of the last day of the immediately
preceding Monthly Period; provided, however, that with respect to any Monthly Period in which an
Addition Date for an Aggregate Addition or a Removal Date occurs the amount in (x)(i) above shall
be (1) the aggregate amount of Principal Receivables in the Trust at the end of the day on the last
day of the prior Monthly Period for the period from and including the first day of such Monthly
Period to but excluding the related Addition Date or Removal Date and (2) the aggregate amount of
Principal Receivables in the Trust at the end of the day on the related Addition Date or Removal
Date for the period from and including the related Addition Date or Removal Date to and including
the last day of such Monthly Period; and provided further, that if after the commencement of the
Controlled Accumulation Period a Pay-Out Event occurs with respect to another Series that was
designated in the Supplement therefor as a Series that is a “Paired Series” with respect to Series
2008-4, the Transferors may, by written notice delivered to the Trustee and the Servicer, designate
a different numerator for the foregoing fraction, provided that (x) such numerator is not less than
the Adjusted Invested Amount as of the last day of the revolving period for such Paired Series, (y)
the Transferors shall have received written notice from each Rating Agency that the Rating Agency
Condition has been satisfied with respect to such designation and shall have delivered copies of
each such written notice to the Servicer and the Trustee and (z) each Transferor shall have
delivered to the Trustee an Officer’s Certificate of such Transferor to the effect that, based on
the facts known to such officer at such time, in the reasonable belief of such Transferor, such
designation will not cause a Pay-Out Event or an event that, after the giving of notice or the
lapse of time, would constitute a Pay-Out Event, to occur with respect to Series 2008-4.

          “Principal Funding Account” shall have the meaning specified in subsection 4.03(a)(i).

          “Principal Funding Account Balance” shall mean, with respect to any date of
determination during the Controlled Accumulation Period, the principal amount, if any, on deposit
in the Principal Funding Account on such date of determination.

10

 

          “Principal Funding Account Investment Proceeds” shall have the meaning specified in
subsection 4.03(a)(ii).

          “Principal Funding Account Investment Shortfall” shall mean, with respect to each
Distribution Date during the Controlled Accumulation Period, the amount, if any, by which the
Principal Funding Account Investment Proceeds are less than the Covered Amount.

          “Rate Adjustment Conditions” shall mean, with respect to any modification of the Class
B Certificate Rate by the Transferors, (i) the Transferors shall provide written notice to the
Trustee of the modified Class B Certificate Rate no later than two Business Days prior to the date
on which such modified rate is to become effective; (ii) the modified Class B Certificate Rate
shall not exceed a per annum rate equal to LIBOR plus 4.25%, (iii) the Class B Certificate Rate
shall not be modified more than two times during any Interest Accrual Period; (iv) the Transferors
shall certify in the related notice that the modified Class B Certificate Rate is a fixed rate or a
“qualified floating rate” (within the meaning of Treasury Regulations section 1.1275-5) otherwise
meeting such relevant requirements as would cause the Class B Certificates to constitute variable
rate debt instruments (within the meaning of Treasury Regulations section 1.1275-5, including
without limitation paragraph (a)(4) thereof) and determined under procedures consistent with those
applicable to reset bonds (as described in Treasury Regulations section 1.1275-5(f)) such that, in
either case, the fair market value of the Class B Certificates will be the Class B Invested Amount;
(v) the Transferors shall certify in the related notice that the Class B Certificates have not been
previously sold by TRS or any of its Affiliates (including, without limitation, within the meaning
of Affiliate, solely for purposes of this clause (v), any Person related to TRS within the meaning
of sections 267(b) or 707(b)(1) of the Internal Revenue Code) to a Person who is not TRS or any of
its Affiliates; (vi) the Transferors shall provide to the Trustee an Opinion of Counsel to the
effect that such modification shall not adversely affect the status of the Class B Certificates as
debt for federal income tax purposes; (vii) if the modified Class B Certificate Rate is a fixed
rate or a rate based on an index other than LIBOR, the Transferors shall provide two days’ notice
of such modified rate to the Rating Agencies; and (viii) if the modified Class B Certificate Rate
is a fixed rate or a rate based on an index other than LIBOR, the Transferors shall certify in the
related notice to the Trustee that the Rating Agencies have been notified pursuant to clause (vii)
above.

          “Reallocated Investor Finance Charge Collections” shall mean that portion of Group II
Investor Finance Charge Collections allocated to Series 2008-4 pursuant to Section 4.10.

          “Reallocated Principal Collections” shall mean, with respect to any Monthly Period,
the product of (a) the Series 2008-4 Allocable Principal Collections deposited in the Collection
Account for such Monthly Period and (b) the sum of the Class B Principal Percentage and the
Collateral Principal Percentage.

          “Reassignment Amount” shall mean, with respect to any Distribution Date, after giving
effect to any deposits and distributions otherwise to be made on such Distribution Date, the sum of
(i) the Adjusted Invested Amount on such Distribution Date, plus (ii) Monthly Interest for such
Distribution Date and any Monthly Interest previously due but not distributed to the Series 2008-4
Certificateholders on a prior Distribution Date, plus (iii) the amount of Additional Interest, if
any, for such Distribution Date and any Additional Interest previously due but not distributed to
the Series 2008-4 Certificateholders on a prior Distribution Date.

          “Reference Banks” shall mean four major banks in the London interbank market selected
by the Servicer.

          “Required Accumulation Factor Number” shall be equal to a fraction, rounded upwards to
the nearest whole number, the numerator of which is one and the denominator of which is equal to
the

11

 

lowest monthly principal payment rate on the Accounts, expressed as a decimal, for the three
months preceding the date of such calculation.

          “Required Amount” shall mean, with respect to any Monthly Period, the sum of the Class
A Required Amount and the Class B Required Amount.

          “Required Reserve Account Amount” shall mean, with respect to any Distribution Date on
or after the Reserve Account Funding Date, an amount equal to (1) 0.50% of the Class A Invested
Amount as of the preceding Distribution Date (after giving effect to all changes therein on such
date) or (2) any other percentage (which may be 0%) of the Class A Invested Amount designated by
the Transferors, provided that if such percentage is less than the percentage specified in clause
(1) above, the Transferors shall have received the prior written consent of the Collateral Interest
Holder and written notice from each Rating Agency that the Rating Agency Condition shall have been
satisfied with respect to such designation and shall have delivered copies of each such written
notice to the Servicer and the Trustee.

          “Reserve Account” shall have the meaning specified in subsection 4.12(a).

          “Reserve Account Funding Date” shall mean the Distribution Date which occurs not later
than the earliest of (a) the Distribution Date with respect to the Monthly Period that commences
not later than three months prior to the Distribution Date with respect to the first Monthly Period
in the Controlled Accumulation Period, (b) in the event that the average Excess Spread Percentage
for any three consecutive Monthly Periods ending in the April 2012 Monthly Period or any Monthly
Period thereafter is less than 2%, the Distribution Date with respect to such Monthly Period, (c)
in the event that the average Excess Spread Percentage for any three consecutive Monthly Periods
ending in the October 2012 Monthly Period or any Monthly Period thereafter is less than 3%, the
Distribution Date with respect to such Monthly Period and (d) such earlier Distribution Date as the
Transferors may determine by written notice to the Trustee and the Servicer. For this purpose, the
“Excess Spread Percentage” for any Monthly Period shall be equal to the Series Adjusted
Portfolio Yield for such Monthly Period minus the Base Rate for such Monthly Period.

          “Reserve Account Surplus” shall mean, as of any date of determination, the amount, if
any, by which the amount on deposit in the Reserve Account exceeds the Required Reserve Account
Amount.

          “Reserve Draw Amount” shall have the meaning specified in subsection 4.12(c).

          “Reuters Screen LIBOR01 Page” shall mean the display page currently designated as page
LIBOR01 on the Reuters Screen (or such other page as may replace that page on that service for the
purpose of displaying comparable rates or prices).

          “Revolving Period” shall mean the period beginning at the close of business on the
Series Cut-Off Date and ending on the earlier of (a) the close of business on the day immediately
preceding the day the Controlled Accumulation Period commences and (b) the close of business on the
day immediately preceding the day the Early Amortization Period commences.

          “Series Adjusted Portfolio Yield” shall mean, with respect to any Monthly Period, the
annualized percentage equivalent of a fraction, (A) the numerator of which is equal to (a)
Reallocated Investor Finance Charge Collections with respect to such Monthly Period, plus (b) the
amount of any Principal Funding Account Investment Proceeds for the related Distribution Date, plus
(c) provided that each Rating Agency has consented in writing to the inclusion thereof in
calculating the Series Adjusted Portfolio Yield, any Excess Finance Charge Collections that are
allocated to Series 2008-4 with respect to such Monthly Period, plus (d) the amount of funds, if
any, withdrawn from the Reserve Account which

12

 

pursuant to subsection 4.12(d) are required to be deposited into the Collection Account and
included as Class A Available Funds for the Distribution Date with respect to such Monthly Period,
minus (e) the Investor Default Amount for the Distribution Date with respect to such Monthly
Period, and (B) the denominator of which is the Invested Amount as of the last day of the preceding
Monthly Period.

          “Series Cut-Off Date” shall mean the close of business on April 17, 2008.

          “Series 2008-4” shall mean the Series of Certificates the terms of which are specified
in this Supplement.

          “Series 2008-4 Additional Amounts” shall mean, with respect to any Distribution Date,
the sum of the amounts determined pursuant to subsections 4.07(b), (e) and (i) for such
Distribution Date.

          “Series 2008-4 Allocable Defaulted Amount” shall mean the Series Allocable Defaulted
Amount with respect to Series 2008-4.

          “Series 2008-4 Allocable Finance Charge Collections” shall mean the Series Allocable
Finance Charge Collections with respect to Series 2008-4.

          “Series 2008-4 Allocable Principal Collections” shall mean the Series Allocable
Principal Collections with respect to Series 2008-4.

          “Series 2008-4 Allocation Percentage” shall mean the Series Allocation Percentage with
respect to Series 2008-4.

          “Series 2008-4 Certificate” shall mean a Class A Certificate or a Class B Certificate
or the Collateral Interest.

          “Series 2008-4 Certificateholder” shall mean a Class A Certificateholder or a Class B
Certificateholder or the Collateral Interest Holder.

          “Series 2008-4 Certificateholders’ Interest” shall mean the Certificateholders’
Interest for Series 2008-4, including the Collateral Interest.

          “Series 2008-4 Monthly Fees” shall mean, with respect to any Distribution Date, the
amount determined pursuant to subsections 4.05(a)(ii), (b)(ii) and (c)(i) and subsection 4.07(g).

          “Series 2008-4 Monthly Interest” shall mean the amounts determined pursuant to
subsections 4.02(a), (b) and (c).

          “Series 2008-4 Principal Shortfall” shall have the meaning specified in Section 4.11.

          “Series 2008-4 Termination Date” shall mean the November 2016 Distribution Date.

          “Series Invested Amount” shall mean the Initial Invested Amount.

          “Series Required Transferor Amount” shall mean an amount equal to 7% of the Invested
Amount.

          “Servicing Base Amount” shall have the meaning specified in Section 3.01.

          “Servicing Fee Rate” shall mean 2.0% per annum.

13

 

          “Special Payment Date” shall mean each Distribution Date with respect to the Early
Amortization Period.

          “Transfer” shall have the meaning specified in subsection 9.07(a).

          “Transfer Agreement” shall mean the Transfer and Administration Agreement, dated as of
April 17, 2008, among RFC II, RFC III and RFC IV, as transferors, TRS, as administrator, and the
American Express Credit Account Secured Note Trust 2008-4, as issuer, as the same may be amended,
supplemented or otherwise modified from time to time.

          “Transferor Percentage” shall mean 100% minus (a) the Floating Allocation Percentage,
when used at any time with respect to Finance Charge Receivables and Defaulted Receivables, or (b)
the Principal Allocation Percentage, when used at any time with respect to Principal Receivables.

          (b) Notwithstanding anything to the contrary in this Supplement or the Agreement, the term
“Rating Agency” shall mean, whenever used in this Supplement or the Agreement with respect
to Series 2008-4, Moody’s and Standard & Poor’s. As used in this Supplement and in the Agreement
with respect to Series 2008-4, “highest investment category” shall mean (i) in the case of Standard
& Poor’s, AAA or A-1+, as applicable and (ii) in the case of Moody’s, Aaa or P-1, as applicable.

          (c) Each capitalized term defined herein shall relate to the Series 2008-4 Certificates and no
other Series of Certificates issued by the Trust, unless the context otherwise requires. All
capitalized terms used herein and not otherwise defined herein have the meanings ascribed to them
in the Agreement. In the event that any term or provision contained herein shall conflict with or
be inconsistent with any term or provision contained in the Agreement, the terms and provisions of
this Supplement shall govern.

          (d) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this
Supplement shall refer to this Supplement as a whole and not to any particular provision of this
Supplement; references to any Article, subsection, Section or Exhibit are references to Articles,
subsections, Sections and Exhibits in or to this Supplement unless otherwise specified; and the
term “including” means “including without limitation.”

ARTICLE III

Servicing Fee

          Section 3.01. Servicing Compensation. The share of the Servicing Fee allocable to the
Series 2008-4 Certificateholders with respect to any Distribution Date (the “Monthly Servicing
Fee”) shall be equal to one-twelfth of the product of (a) the Servicing Fee Rate and (b) (i)
the Adjusted Invested Amount as of the last day of the Monthly Period preceding such Distribution
Date minus (ii) the product of the amount, if any, on deposit in the Special Funding Account as of
the last day of the Monthly Period preceding such Distribution Date and the Series 2008-4
Allocation Percentage with respect to such Monthly Period (the amount calculated pursuant to this
clause (b) is referred to as the “Servicing Base Amount”). The share of the Monthly
Servicing Fee allocable to the Class A Certificateholders with respect to any Distribution Date
(the “Class A Servicing Fee”) shall be equal to one-twelfth of the product of (a) the Class
A Floating Percentage, (b) the Servicing Fee Rate and (c) the Servicing Base Amount. The share of
the Monthly Servicing Fee allocable to the Class B Certificateholders with respect to any
Distribution Date (the “Class B Servicing Fee”) shall be equal to one-twelfth of the
product of (a) the Class B Floating Percentage, (b) the Servicing Fee Rate and (c) the Servicing
Base Amount. The share of the Monthly Servicing Fee allocable to the Collateral Interest with
respect to any Distribution Date (the “Collateral Servicing Fee”) shall be equal to
one-twelfth of the product of the (a) Collateral Floating Percentage, (b) the Servicing Fee Rate
and (c) the Servicing Base

14

 

Amount. The remainder of the Servicing Fee shall be paid by the Holders of the Transferor Certificates or the investor
certificateholders of other Series (as provided in the related Supplements) and in no event shall
the Trust, the Trustee or the Series 2008-4 Certificateholders be liable for the share of the
Servicing Fee to be paid by the Holders of the Transferor Certificates or the investor
certificateholders of any other Series. To the extent that the Class A Servicing Fee, the Class B
Servicing Fee and the Collateral Servicing Fee are not paid in full pursuant to the preceding
provisions of this Section 3.01, and Sections 4.05 and 4.07, they shall be paid by the Holders of
the Transferor Certificates.

ARTICLE IV

Rights of Series 2008-4 Certificateholders and

Allocation and Application of Collections

          Section 4.01. Collections and Allocations.

          (a) Allocations. Collections of Finance Charge Receivables and Principal Receivables
and Defaulted Receivables allocated to Series 2008-4 pursuant to Article IV of the Agreement (and,
as described herein, Collections of Finance Charge Receivables reallocated from other Series in
Group II) shall be allocated and distributed or reallocated as set forth in this Article.

          (b) Payments to the Transferor. The Servicer shall on each Deposit Date withdraw from
the Collection Account and pay to the Holders of the Transferor Certificates the following amounts:

     (i) an amount equal to the Transferor Percentage for the related Monthly Period
of Series 2008-4 Allocable Finance Charge Collections to the extent such amount is
deposited in the Collection Account; and

     (ii) an amount equal to the Transferor Percentage for the related Monthly
Period of Series 2008-4 Allocable Principal Collections deposited in the Collection
Account, if the Transferor Amount (determined after giving effect to any Principal
Receivables transferred to the Trust on such Deposit Date) exceeds zero.

          The withdrawals to be made from the Collection Account pursuant to this subsection 4.01(b) do
not apply to deposits into the Collection Account that do not represent Collections, including
payment of the purchase price for the Certificateholders’ Interest pursuant to Section 2.06 or
10.01 of the Agreement, payment of the purchase price for the Series 2008-4 Certificateholders’
Interest pursuant to Section 7.01 of this Supplement and proceeds from the sale, disposition or
liquidation of Receivables pursuant to Section 9.01 or 12.02 of the Agreement.

          (c) Allocations to the Series 2008-4 Certificateholders. The Servicer shall, prior to
the close of business on each Deposit Date, allocate to the Series 2008-4 Certificateholders the
following amounts as set forth below:

     (i) Allocations of Finance Charge Collections. The Servicer shall
allocate to the Series 2008-4 Certificateholders and retain in the Collection
Account for application as provided herein an amount equal to the product of (A) the
Floating Allocation Percentage and (B) the Series 2008-4 Allocation Percentage and
(C) the aggregate amount of Collections of Finance Charge Receivables deposited in
the Collection Account on such Deposit Date.

     (ii) Allocations of Principal Collections. The Servicer shall allocate
to the Series 2008-4 Certificateholders the following amounts as set forth below:

15

 

     (x) Allocations During the Revolving Period. During the
Revolving Period (A) an amount equal to the product of (I) the sum of the
Class B Principal Percentage and the Collateral Principal Percentage and
(II) the Principal Allocation Percentage and (III) the Series 2008-4
Allocation Percentage and (IV) the aggregate amount of Collections of
Principal Receivables deposited in the Collection Account on such Deposit
Date, shall be allocated to the Series 2008-4 Certificateholders and
retained in the Collection Account until applied as provided herein and (B)
an amount equal to the product of (I) the Class A Principal Percentage and
(II) the Principal Allocation Percentage and (III) the Series 2008-4
Allocation Percentage and (IV) the aggregate amount of Collections of
Principal Receivables deposited in the Collection Account on such Deposit
Date shall be allocated to the Series 2008-4 Certificateholders and first,
if any other Principal Sharing Series is outstanding and in its amortization
period or accumulation period, retained in the Collection Account for
application, to the extent necessary, as Shared Principal Collections on the
related Distribution Date, and second paid to the Holders of the Transferor
Certificates; provided, however, that such amount to be paid to the Holders
of the Transferor Certificates on any Deposit Date shall be paid to such
Holders only if the Transferor Amount on such Deposit Date is greater than
the Required Transferor Amount (after giving effect to all Principal
Receivables transferred to the Trust on such day) and otherwise shall be
deposited in the Special Funding Account.

     (y) Allocations During the Controlled Accumulation Period.
During the Controlled Accumulation Period (A) an amount equal to the product
of (I) the sum of the Class B Principal Percentage and the Collateral
Principal Percentage and (II) the Principal Allocation Percentage and (III)
the Series 2008-4 Allocation Percentage and (IV) the aggregate amount of
Collections of Principal Receivables deposited in the Collection Account on
such Deposit Date, shall be allocated to the Series 2008-4
Certificateholders and retained in the Collection Account until applied as
provided herein and (B) an amount equal to the product of (I) the Class A
Principal Percentage and (II) the Principal Allocation Percentage and (III)
the Series 2008-4 Allocation Percentage and (IV) the aggregate amount of
Collections of Principal Receivables deposited in the Collection Account on
such Deposit Date (the product specified in this clause (B) for any such
date is hereinafter referred to as a “Percentage Allocation”) shall
be allocated to the Series 2008-4 Certificateholders and retained in the
Collection Account until applied as provided herein; provided, however, that
if the sum of such Percentage Allocation and all preceding Percentage
Allocations with respect to the same Monthly Period exceeds the Controlled
Deposit Amount during the Controlled Accumulation Period for the related
Distribution Date, then such excess shall not be treated as a Percentage
Allocation and shall be first, if any other Principal Sharing Series is
outstanding and in its amortization period or accumulation period, retained
in the Collection Account for application, to the extent necessary, as
Shared Principal Collections on the related Distribution Date, and second
paid to the Holders of the Transferor Certificates only if the Transferor
Amount on such Deposit Date is greater than the Required Transferor Amount
(after giving effect to all Principal Receivables transferred to the Trust
on such day) and otherwise shall be deposited in the Special Funding
Account.

     (z) Allocations During the Early Amortization Period. During
the Early Amortization Period, an amount equal to the product of (A) the
Principal Allocation Percentage and (B) the Series 2008-4 Allocation
Percentage and (C) the aggregate amount of Collections of Principal
Receivables deposited in the

16

 

Collection Account on such Deposit Date, shall be allocated to the
Series 2008-4 Certificateholders and retained in the Collection Account
until applied as provided herein; provided, however, that after the date on
which an amount of such Collections equal to the Adjusted Invested Amount
has been deposited into the Collection Account and allocated to the Series
2008-4 Certificateholders, the remainder that has not been so deposited and
allocated shall be first, if any other Principal Sharing Series is
outstanding and in its amortization period or accumulation period, retained
in the Collection Account for application, to the extent necessary, as
Shared Principal Collections on the related Distribution Date, and second
paid to the Holders of the Transferor Certificates only if the Transferor
Amount on such date is greater than the Required Transferor Amount (after
giving effect to all Principal Receivables transferred to the Trust on such
day) and otherwise shall be deposited in the Special Funding Account.

          Section 4.02. Determination of Monthly Interest.

          (a) The amount of monthly interest (“Class A Monthly Interest”) distributable from the
Collection Account with respect to the Class A Certificates on any Distribution Date shall be an
amount equal to the product of (i) a fraction, the numerator of which is the actual number of days
in the period from (and including) the immediately preceding Distribution Date (or in the case of
the first Distribution Date, the Closing Date) to (but excluding) such Distribution Date and the
denominator of which is 360, (ii) the Class A Certificate Rate for such Distribution Date and (iii)
the outstanding principal balance of the Class A Certificates as of close of business on the
immediately preceding Record Date.

          On the Determination Date preceding each Distribution Date, the Servicer shall determine the
excess, if any (the “Class A Interest Shortfall”), of (x) the Class A Monthly Interest for
such Distribution Date over (y) the aggregate amount of funds allocated and available to pay such
Class A Monthly Interest on such Distribution Date. If the Class A Interest Shortfall with respect
to any Distribution Date is greater than zero, on each subsequent Distribution Date until such
Class A Interest Shortfall is fully paid, an additional amount (“Class A Additional
Interest”) equal to the product of (i) a fraction, the numerator of which is the actual number
of days in the period from (and including) the immediately preceding Distribution Date (or in the
case of the first Distribution Date, the Closing Date) to (but excluding) such Distribution Date
and the denominator of which is 360, (ii) the sum of (x) the Class A Certificate Rate and (y) 2.0%
per annum and (iii) such Class A Interest Shortfall (or the portion thereof which has not been paid
to the Class A Certificateholders) shall be payable as provided herein with respect to the Class A
Certificates. Notwithstanding anything to the contrary herein, Class A Additional Interest shall
be payable or distributed to the Class A Certificateholders only to the extent permitted by
applicable law.

          (b) The amount of monthly interest (“Class B Monthly Interest”) distributable from the
Collection Account with respect to the Class B Certificates on any Distribution Date shall be an
amount equal to the product of (i) a fraction, the numerator of which is the actual number of days
in the period from (and including) the immediately preceding Distribution Date (or in the case of
the first Distribution Date, the Closing Date) to (but excluding) such Distribution Date and the
denominator of which is 360, (ii) the Class B Certificate Rate for such Distribution Date and (iii)
the Class B Invested Amount as of the close of business on the immediately preceding Record Date;
provided, however, that in the event the Class B Certificate Rate has been modified (as described
in the definition thereof) during the period from and including the preceding Distribution Date to
but excluding such Distribution Date, the rate described in (ii) above shall reflect a weighted
average rate calculated on the basis of the actual number of days each Class B Certificate Rate was
in effect during such period and a year of 360 days.

17

 

          On the Determination Date preceding each Distribution Date, the Servicer shall determine the
excess, if any (the “Class B Interest Shortfall”), of (x) the Class B Monthly Interest for
such Distribution Date over (y) the aggregate amount of funds allocated and available to pay such
Class B Monthly Interest on such Distribution Date. If the Class B Interest Shortfall with respect
to any Distribution Date is greater than zero, on each subsequent Distribution Date until such
Class B Interest Shortfall is fully paid, an additional amount (“Class B Additional
Interest”) equal to the product of (i) a fraction, the numerator of which is the actual number
of days in the period from (and including) the immediately preceding Distribution Date (or in the
case of the first Distribution Date, the Closing Date) to (but excluding) such Distribution Date
and the denominator of which is 360, (ii) the sum of (x) the Class B Certificate Rate and (y) 2.0%
per annum and (iii) such Class B Interest Shortfall (or the portion thereof which has not been paid
to the Class B Certificateholders) shall be payable as provided herein with respect to the Class B
Certificates. Notwithstanding anything to the contrary herein, Class B Additional Interest shall
be payable or distributed to the Class B Certificateholders only to the extent permitted by
applicable law.

          (c) The amount of monthly interest (“Collateral Minimum Monthly Interest”)
distributable from the Collection Account with respect to the Collateral Invested Amount on any
Distribution Date shall be an amount equal to the product of (i) (A) a fraction, the numerator of
which is the actual number of days in the period from (and including) the immediately preceding
Distribution Date (or in the case of the first Distribution Date, the Closing Date) to (but
excluding) such Distribution Date and the denominator of which is 360 and (B) the Collateral
Minimum Interest Rate in effect with respect to the period from (and including) the immediately
preceding Distribution Date (or in the case of the first Distribution Date, the Closing Date) to
(but excluding) such Distribution Date, and (ii) the Collateral Initial Invested Amount less the
aggregate amount of principal payments distributed to the Collateral Interest Holder on all prior
Distribution Dates; provided, however, that in the event the Collateral Minimum Interest Rate has
been modified (as described in the definition thereof) during the period from (and including) the
immediately preceding Distribution Date (or in the case of the first Distribution Date, the Closing
Date) to (but excluding) such Distribution Date, the rate described in (i)(B) above shall reflect a
weighted average rate calculated on the basis of the actual number of days each Collateral Minimum
Interest Rate was in effect during such period and a year of 360 days.

          On the Determination Date preceding each Distribution Date, the Servicer shall determine an
amount (the “Collateral Interest Shortfall”) equal to (x) the aggregate Collateral Minimum
Monthly Interest for such Distribution Date minus (y) the aggregate amount of funds allocated and
available to pay such Collateral Minimum Monthly Interest on such Distribution Date. If the
Collateral Interest Shortfall with respect to any Distribution Date is greater than zero, on each
subsequent Distribution Date until such Collateral Interest Shortfall is fully paid, an additional
amount (“Collateral Additional Interest”) shall be payable as provided herein with respect
to the Collateral Invested Amount equal to the product of (i) (A) a fraction, the numerator of
which is the actual number of days in the period from (and including) the immediately preceding
Distribution Date to (but excluding) such Distribution Date and the denominator of which is 360 and
(B) the Collateral Minimum Interest Rate in effect during the period from (and including) the
immediately preceding Distribution Date to (but excluding) such Distribution Date, and (ii) such
Collateral Interest Shortfall (or the portion thereof which has not been paid to the Collateral
Interest Holder). Notwithstanding anything to the contrary herein, Collateral Additional Interest
shall be payable or distributed to the Collateral Interest Holder only to the extent permitted by
applicable law.

          Section 4.03. Principal Funding Account; Controlled Accumulation Period.

          (a) (i) The Servicer, for the benefit of the Series 2008-4 Certificateholders, shall establish
and maintain in the name of the Trustee, on behalf of the Trust, an Eligible Deposit Account (the
“Principal Funding Account”), bearing a designation clearly indicating that the funds
deposited therein

18

 

and the property credited thereto are held for the benefit of the Series 2008-4
Certificateholders. The Principal Funding Account shall initially be established with The Bank of
New York.

                    (ii) At the written direction of the Servicer, funds on deposit in the Principal Funding
Account shall be invested by the Trustee in Eligible Investments selected by the Servicer. All
such Eligible Investments shall be held by the Trustee for the benefit of the Series 2008-4
Certificateholders; provided that on each Distribution Date all interest and other investment
income (net of losses and investment expenses) (“Principal Funding Account Investment
Proceeds”) on funds on deposit therein shall be applied as set forth in paragraph (iii) below.
Funds on deposit in the Principal Funding Account shall be invested in Eligible Investments that
will mature so that such funds will be available at the close of business on the Transfer Date
preceding the following Distribution Date. Unless the Servicer directs otherwise, funds deposited
in the Principal Funding Account on a Transfer Date (which immediately precedes a Distribution
Date) upon the maturity of any Eligible Investments are not required to be invested overnight. No
such Eligible Investment shall be disposed of prior to its maturity; provided, however, that the
Trustee shall sell, liquidate or dispose of any such Eligible Investment if, prior to the maturity
of such Eligible Investment, a default occurs in the payment of principal, interest or any other
amount with respect to such Eligible Investment; provided further, however, that the Servicer shall
deliver prompt written notice to the Trustee of any such default; and provided further that,
subject to Section 11.01 of the Agreement, the Trustee will not in any way be held liable by reason
of any insufficiency in such Principal Funding Account resulting from any loss on any Eligible
Investment included therein except for losses attributable to the Trustee’s failure to make
payments on such Eligible Investments issued by the Trustee, in its commercial capacity, in
accordance with their terms.

                    (iii) On each Distribution Date with respect to the Controlled Accumulation Period, the
Servicer shall direct the Trustee in writing to withdraw from the Principal Funding Account and
deposit into the Collection Account all Principal Funding Account Investment Proceeds then on
deposit in the Principal Funding Account and such Principal Funding Account Investment Proceeds
shall be treated as a portion of Class A Available Funds and Class B Available Funds.

                    (iv) Reinvested interest and other investment income on funds deposited in the Principal
Funding Account shall not be considered to be principal amounts on deposit therein for purposes of
this Supplement.

          (b) (i) The Trustee shall possess all right, title and interest in all funds and property from
time to time deposited in or credited to the Principal Funding Account and in all proceeds thereof.
The Principal Funding Account shall be under the sole dominion and control of the Trustee for the
benefit of the Series 2008-4 Certificateholders. If, at any time, the Principal Funding Account
ceases to be an Eligible Deposit Account, the Trustee (or the Servicer on its behalf) shall within
10 Business Days (or such longer period, not to exceed 30 calendar days, as to which each Rating
Agency may consent) establish a new Principal Funding Account meeting the conditions specified in
paragraph (a)(i) above as an Eligible Deposit Account and shall transfer any cash or any
investments to such new Principal Funding Account.

                    (ii) Pursuant to the authority granted to the Servicer in subsection 3.01(b) of the Agreement,
the Servicer shall have the power to make withdrawals and payments or to instruct the Trustee to
make withdrawals and payments from the Principal Funding Account for the purposes of carrying out
the Servicer’s or Trustee’s duties hereunder. Pursuant to the authority granted to the Paying
Agent in Section 5.01 of this Supplement and Section 6.07 of the Agreement, the Paying Agent shall
have the power to withdraw funds from the Principal Funding Account for the purpose of making
distributions to the Series 2008-4 Certificateholders.

19

 

          (c) The Controlled Accumulation Period is scheduled to commence at the close of business on
the last day of the March 2013 Monthly Period; provided, however, that if the Controlled
Accumulation Period Length (which shall be determined as described below) is less than 12 months,
the date on which the Controlled Accumulation Period actually commences will be delayed to the
close of business on the last day of the month preceding the month that is the number of months
prior to the Expected Final Payment Date at least equal to the Controlled Accumulation Period
Length and, as a result, the number of Monthly Periods in the Controlled Accumulation Period will
at least equal the Controlled Accumulation Period Length. On the Determination Date immediately
preceding the March 2013 Distribution Date, and on each Determination Date thereafter that occurs
prior to the Determination Date occurring in the Monthly Period in which the Controlled
Accumulation Period commences, the Servicer will determine the “Controlled Accumulation Period
Length” which will equal the number of months such that the sum of the Controlled Accumulation
Period Factors for each month during such period will be equal to or greater than the Required
Accumulation Factor Number; provided, however, that the Controlled Accumulation Period Length shall
not be less than one month. Notwithstanding the foregoing, if the Controlled Accumulation Period
Length shall have been determined to be less than 12 months and, after the date on which such
determination is made, a Pay-Out Event or Reinvestment Event (as those terms are defined in the
Supplement for such Series) shall occur with respect to any outstanding Principal Sharing Series
other than Series 2008-4, the Controlled Accumulation Period will commence on the earlier of (i)
the first day of the Monthly Period immediately succeeding the date that such Pay-Out Event or
Reinvestment Event shall have occurred with respect to such Series and (ii) the date on which the
Controlled Accumulation Period is then scheduled to commence.

          Section 4.04. Required Amount.

          (a) With respect to each Distribution Date, on the related Determination Date, the Servicer
shall determine the amount (the “Class A Required Amount”), if any, by which (x) the sum of
(i) Class A Monthly Interest for such Distribution Date, (ii) any Class A Monthly Interest
previously due but not paid to the Class A Certificateholders on a prior Distribution Date, (iii)
any Class A Additional Interest for such Distribution Date and (iv) any Class A Additional Interest
previously due but not paid to the Class A Certificateholders on a prior Distribution Date, (v) if
TRS or an Affiliate of TRS is no longer the Servicer, the Class A Servicing Fee for such
Distribution Date, (vi) if TRS or an Affiliate of TRS is no longer the Servicer, any Class A
Servicing Fee previously due but not paid to the Servicer, and (vii) the Class A Investor Default
Amount, if any, for such Distribution Date exceeds (y) the Class A Available Funds. In the event
that the difference between (x) the Class A Required Amount for such Distribution Date and (y) the
amount of Excess Spread and Excess Finance Charge Collections applied with respect thereto pursuant
to subsection 4.07(a) on such Distribution Date is greater than zero, the Servicer shall give
written notice to the Transferors and the Trustee of such excess Class A Required Amount on the
date of computation.

          (b) With respect to each Distribution Date, on the related Determination Date, the Servicer
shall determine the amount (the “Class B Required Amount”), if any, equal to the sum of (x)
the amount, if any, by which (A) the sum of (i) Class B Monthly Interest for such Distribution
Date, (ii) any Class B Monthly Interest previously due but not paid to the Class B
Certificateholders, (iii) Class B Additional Interest, if any, for such Distribution Date, (iv) any
Class B Additional Interest previously due but not paid to the Class B Certificateholders on a
prior Distribution Date, (v) if TRS or an Affiliate of TRS is no longer the Servicer, the Class B
Servicing Fee for such Distribution Date and (vi) if TRS or an Affiliate of TRS is no longer the
Servicer, any Class B Servicing Fee previously due but not paid to the Servicer exceeds (B) the
Class B Available Funds and (y) the Class B Investor Default Amount for such Distribution Date. In
the event that the difference between (x) the Class B Required Amount for such Distribution Date
and (y) the amount of Excess Spread and Excess Finance Charge Collections applied with respect
thereto pursuant to subsection 4.07(d) on such Distribution Date is greater than zero, the Servicer
shall give written notice to the Transferors and the Trustee of such excess Class B Required Amount
on the date of computation.

20

 

          Section 4.05. Application of Class A Available Funds, Class B Available Funds, Collateral
Available Funds and Available Principal Collections. The Servicer shall apply, or shall cause
the Trustee to apply by written instruction to the Trustee substantially in the form of Exhibit B,
on each Distribution Date, Class A Available Funds, Class B Available Funds, Collateral Available
Funds and Available Principal Collections on deposit in the Collection Account with respect to such
Distribution Date to make the following distributions:

          (a) On each Distribution Date, an amount equal to the Class A Available Funds with respect to
such Distribution Date will be distributed or deposited in the following priority:

     (i) an amount equal to Class A Monthly Interest for such Distribution Date,
plus the amount of any Class A Monthly Interest previously due but not distributed
to Class A Certificateholders on a prior Distribution Date, plus the amount of any
Class A Additional Interest for such Distribution Date and any Class A Additional
Interest previously due but not distributed to Class A Certificateholders on a prior
Distribution Date, shall be distributed to the Paying Agent for payment to the Class
A Certificateholders;

     (ii) if TRS or an Affiliate of TRS is no longer the Servicer, an amount equal
to the Class A Servicing Fee for such Distribution Date, plus the amount of any
Class A Servicing Fee previously due but not distributed to the Servicer on a prior
Distribution Date, shall be distributed to the Servicer;

     (iii) an amount equal to the Class A Investor Default Amount for such
Distribution Date shall be treated as a portion of Available Principal Collections
for such Distribution Date; and

     (iv) the balance, if any, shall constitute Excess Spread and shall be allocated
and distributed or deposited as set forth in Section 4.07.

          (b) On each Distribution Date, an amount equal to the Class B Available Funds with respect to
such Distribution Date will be distributed or deposited in the following priority:

     (i) an amount equal to Class B Monthly Interest for such Distribution Date,
plus the amount of any Class B Monthly Interest previously due but not distributed
to Class B Certificateholders on a prior Distribution Date, plus the amount of any
Class B Additional Interest for such Distribution Date and any Class B Additional
Interest previously due but not distributed to Class B Certificateholders on a prior
Distribution Date, shall be distributed to the Paying Agent for payment to the Class
B Certificateholders;

     (ii) if TRS or an Affiliate of TRS is no longer the Servicer, an amount equal
to the Class B Servicing Fee for such Distribution Date, plus the amount of any
Class B Servicing Fee previously due but not distributed to the Servicer on a prior
Distribution Date, shall be distributed to the Servicer; and

     (iii) the balance, if any, shall constitute Excess Spread and shall be
allocated and distributed or deposited as set forth in Section 4.07.

          (c) On each Distribution Date, an amount equal to the Collateral Available Funds with respect
to such Distribution Date will be distributed or deposited in the following priority:

21

 

          (i) if TRS or an Affiliate of TRS is no longer the Servicer, an amount equal to
the Collateral Servicing Fee for such Distribution Date, plus the amount of any
Collateral Servicing Fee previously due but not distributed to the Servicer on a
prior Distribution Date, shall be distributed to the Servicer; and

          (ii) the balance, if any, shall constitute Excess Spread and shall be allocated
and distributed or deposited as set forth in Section 4.07.

          (d) On each Distribution Date with respect to the Revolving Period, an amount equal to the
Available Principal Collections deposited in the Collection Account for the related Monthly Period
shall be treated as Shared Principal Collections and applied in accordance with Section 4.04 of the
Agreement.

          (e) On each Distribution Date with respect to the Controlled Accumulation Period, an amount
equal to the Available Principal Collections deposited in the Collection Account for the related
Monthly Period shall be distributed in the following order of priority:

     (i) an amount equal to the lesser of (x) the Controlled Deposit Amount and (y)
the sum of the Class A Adjusted Invested Amount and the Class B Adjusted Invested
Amount shall be deposited in the Principal Funding Account;

     (ii) for each Distribution Date beginning on the Distribution Date on which the
Class B Invested Amount shall have been paid in full, an amount up to the Collateral
Invested Amount shall be distributed to the Collateral Interest Holder; and

     (iii) the balance of such Available Principal Collections shall be treated as
Shared Principal Collections and applied in accordance with Section 4.04 of the
Agreement.

          (f) On each Distribution Date with respect to the Early Amortization Period, an amount equal
to Available Principal Collections deposited in the Collection Account for the related Monthly
Period shall be distributed or deposited in the following order of priority:

     (i) an amount up to the Class A Adjusted Invested Amount on such Distribution
Date shall be deposited in the Principal Funding Account for distribution to the
Class A Certificateholders;

     (ii) for each Distribution Date beginning on the Distribution Date on which the
Class A Invested Amount is paid in full, an amount up to the Class B Adjusted
Invested Amount on such Distribution Date shall be deposited in the Principal
Funding Account for distribution to the Class B Certificateholders;

     (iii) for each Distribution Date beginning on the Distribution Date on which
the Class B Invested Amount is paid in full, an amount up to the Collateral Invested
Amount on such Distribution Date shall be distributed to the Collateral Interest
Holder; and

     (iv) for each Distribution Date, after giving effect to paragraphs (i), (ii)
and (iii) above, an amount equal to the balance, if any, of such Available Principal
Collections will be treated as Shared Principal Collections and applied in
accordance with Section 4.04 of the Agreement.

          Section 4.06. Defaulted Amounts; Investor Charge-Offs.

22

 

          (a) On each Determination Date, the Servicer shall calculate the Class A Investor Default
Amount, if any, for the related Distribution Date. If, on any Distribution Date, the Class A
Required Amount for the related Monthly Period exceeds the sum of (x) the amount of Reallocated
Principal Collections allocated to Series 2008-4 with respect to such Monthly Period and (y) the
amount of Excess Spread and the Excess Finance Charge Collections allocable to Series 2008-4 with
respect to such Monthly Period, the Collateral Invested Amount, if any, will be reduced by the
amount of such excess, but not by more than the Class A Investor Default Amount for such
Distribution Date. In the event that such reduction would cause the Collateral Invested Amount to
be a negative number, the Collateral Invested Amount will be reduced to zero and the Class B
Invested Amount shall be reduced by the amount by which the Collateral Invested Amount would have
been reduced below zero, but not by more than the excess, if any, of the Class A Investor Default
Amount for such Distribution Date over the amount of such reduction, if any, of the Collateral
Invested Amount with respect to such Distribution Date. In the event that such reduction would
cause the Class B Invested Amount to be a negative number, the Class B Invested Amount shall be
reduced to zero, and the Class A Invested Amount shall be reduced by the amount by which the Class
B Invested Amount would have been reduced below zero, but not by more than the excess, if any, of
the Class A Investor Default Amount for such Distribution Date over the aggregate amount of the
reductions, if any, of the Collateral Invested Amount and the Class B Invested Amount for such
Distribution Date (a “Class A Investor Charge-Off”). Class A Investor Charge-Offs shall
thereafter be reimbursed and the Class A Invested Amount increased (but not by an amount in excess
of the aggregate unreimbursed Class A Investor Charge-Offs) on any Distribution Date by the amount
of Excess Spread and Excess Finance Charge Collections allocated and available for that purpose
pursuant to subsection 4.07(b). References to “negative numbers” above shall be determined without
regard to the requirement that the Invested Amount of a Class not be reduced below zero.

          (b) On each Determination Date, the Servicer shall calculate the Class B Investor Default
Amount, if any, for the related Distribution Date. If, on any Distribution Date, the Class B
Required Amount for such Distribution Date exceeds the sum of (x) the amount of Excess Spread and
Excess Finance Charge Collections allocated to Series 2008-4 with respect to the related Monthly
Period which are allocated and available to pay such amount pursuant to subsection 4.07(d) and (y)
the Reallocated Principal Collections allocable to the Collateral Interest and not required to pay
the Class A Required Amount with respect to such Distribution Date, then the Collateral Invested
Amount shall be reduced by the amount of such excess. In the event that such reduction would cause
the Collateral Invested Amount to be a negative number, the Collateral Invested Amount shall be
reduced to zero, and the Class B Invested Amount shall be reduced by the amount by which the
Collateral Invested Amount would have been reduced below zero, but not by more than the excess, if
any, of the Class B Investor Default Amount for such Distribution Date over the amount of such
reduction, if any, of the Collateral Invested Amount with respect to such Distribution Date (a
“Class B Investor Charge-Off”). Class B Investor Charge-Offs shall thereafter be
reimbursed and the Class B Invested Amount increased (but not by an amount in excess of the
aggregate unreimbursed Class B Investor Charge-Offs) on any Distribution Date by the amount of
Excess Spread and Excess Finance Charge Collections allocated and available for that purpose
pursuant to subsection 4.07(e). References to “negative numbers” above shall be determined without
regard to the requirement that the Invested Amount of a Class not be reduced below zero.

          (c) On each Determination Date, the Servicer shall calculate the Collateral Default Amount.
If on any Distribution Date the Collateral Default Amount for the previous Monthly Period exceeds
the amount of Excess Spread and Excess Finance Charge Collections allocated to Series 2008-4 with
respect to the related Monthly Period which are allocated and available to pay such amount pursuant
to subsection 4.07(h), the Collateral Invested Amount will be reduced by the amount of such excess
but not by more than the lesser of the Collateral Default Amount and the Collateral Invested Amount
for such Distribution Date (a “Collateral Charge-Off”). The Collateral Invested Amount
will be reimbursed after any reduction pursuant to this Section 4.06 on any Distribution Date by
the amount of Excess Spread and Excess Finance Charge Collections allocated and available on such
Distribution date for that purpose as described under subsection 4.07(i).

23

 

          Section 4.07. Excess Spread; Excess Finance Charge Collections. The Servicer shall
apply, or shall cause the Trustee to apply by written instruction to the Trustee substantially in
the form of Exhibit B, on each Distribution Date, Excess Spread and Excess Finance Charge
Collections allocated to Series 2008-4 with respect to the related Monthly Period, to make the
following distributions or deposits in the following order of priority:

          (a) an amount equal to the Class A Required Amount, if any, with respect to such Distribution
Date shall be distributed by the Trustee to fund the Class A Required Amount in accordance with,
and in the priority set forth in, subsections 4.05(a)(i), (ii) and (iii);

          (b) an amount equal to the aggregate amount of Class A Investor Charge-Offs which have not
been previously reimbursed shall be treated as a portion of Available Principal Collections for
such Distribution Date;

          (c) an amount equal to interest on the aggregate outstanding principal balance of the Class B
Certificates not otherwise distributed to the Class B Certificateholders pursuant to Section
4.05(b)(i), at a rate per annum equal to the Class B Certificate Rate, shall be distributed to the
Class B Certificateholders, except that interest previously due but not paid will accrue interest
at a rate per annum equal to the Class B Certificate Rate plus 2% per annum;

          (d) an amount equal to the Class B Required Amount, if any, with respect to such Distribution
Date will be (i) used to fund the Class B Required Amount and be applied in accordance with
subsections 4.05(b)(i) and 4.05(b)(ii), and then (ii) an amount up to the Class B Investor Default
Amount will be treated and applied as Available Principal Collections for such Distribution Date;

          (e) an amount equal to the aggregate amount by which the Class B Invested Amount has been
reduced pursuant to clauses (c), (d) and (e) of the definition of “Class B Invested Amount” in
Section 2.01 of this Supplement (but not in excess of the aggregate amount of such reductions which
have not been previously reimbursed) shall be treated as a portion of Available Principal
Collections for such Distribution Date;

          (f) an amount equal to Collateral Minimum Monthly Interest for such Distribution Date, plus
the amount of any Collateral Minimum Monthly Interest previously due but not distributed to the
Collateral Interest Holder on a prior Distribution Date, plus the amount of any Collateral
Additional Interest for such Distribution Date and any Collateral Additional Interest previously
due but not distributed to the Collateral Interest Holder on a prior Distribution Date, shall be
distributed to the Collateral Interest Holder;

          (g) an amount equal to the Monthly Servicing Fee for such Distribution Date that has not been
paid to the Servicer and any Monthly Servicing Fee due but not paid to the Servicer on a prior
Distribution Date shall be paid to the Servicer;

          (h) an amount equal to the Collateral Default Amount, if any, for such Distribution Date shall
be treated as a portion of Available Principal Collections for such Distribution Date;

          (i) an amount equal to the aggregate amount by which the Collateral Invested Amount has been
reduced pursuant to clauses (c), (d) and (e) of the definition of “Collateral Invested Amount” (but
not in excess of the aggregate amount of such reductions which have not been previously reimbursed)
shall be treated as a portion of Available Principal Collections for such Distribution Date;

          (j) on each Distribution Date from and after the Reserve Account Funding Date, but prior to
the date on which the Reserve Account terminates pursuant to subsection 4.12(f), an amount up to

24

 

the excess, if any, of the Required Reserve Account Amount over the Available Reserve Account
Amount shall be deposited into the Reserve Account; and

          (k) the balance, if any, will be distributed to the Collateral Interest Holder.

          Section 4.08. Reallocated Principal Collections. On each Distribution Date, the
Servicer shall apply, or shall cause the Trustee to apply by written instruction to the Trustee
substantially in the form of Exhibit B, Reallocated Principal Collections with respect to such
Distribution Date, to make the following distributions or deposits in the following order of
priority

          (a) an amount equal to the excess, if any, of (i) the Class A Required Amount, if any, with
respect to such Distribution Date over (ii) the amount of Excess Spread and Excess Finance Charge
Collections allocated to Series 2008-4 with respect to the related Monthly Period shall be
distributed by the Trustee to fund any deficiency pursuant to and in the priority set forth in
subsections 4.05(a)(i), (ii) and (iii); and

          (b) an amount equal to the excess, if any, of (i) the Class B Required Amount, if any, with
respect to such Distribution Date over (ii) the amount of Excess Spread and Excess Finance Charge
Collections allocated and available to the Class B Certificates pursuant to subsections 4.07(c) and
(d) on such Distribution Date shall be applied first to fund any deficiency pursuant to subsections
4.05(b)(i) and (ii) and then to fund any deficiency pursuant to and in the priority set forth in
subsections 4.07(c) and (d).

          All Reallocated Principal Collections with respect to the Collateral Invested Amount shall be
applied prior to applying any such Reallocated Principal Collections with respect to the Class B
Invested Amount. Only Reallocated Principal Collections with respect to the Collateral Invested
Amount shall be applied pursuant to clause (b) above.

          On each Distribution Date, the Collateral Invested Amount shall be reduced by the amount of
Reallocated Principal Collections for such Distribution Date. In the event that such reduction
would cause the Collateral Invested Amount (after giving effect to any Collateral Charge-Offs for
such Distribution Date) to be a negative number, the Collateral Invested Amount (after giving
effect to any Collateral Charge-Offs for such Distribution Date) shall be reduced to zero and the
Class B Invested Amount shall be reduced by the amount by which the Collateral Invested Amount
would have been reduced below zero. In the event that the reallocation of Reallocated Principal
Collections would cause the Class B Invested Amount (after giving effect to any Class B Investor
Charge-Offs for such Distribution Date) to be a negative number on any Distribution Date,
Reallocated Principal Collections shall be reallocated on such Distribution Date in an aggregate
amount not to exceed the amount which would cause the Class B Invested Amount (after giving effect
to any Class B Investor Charge-Offs for such Distribution Date) to be reduced to zero. References
to “negative numbers” above shall be determined without regard to the requirement that the Invested
Amount of a Class not be reduced below zero.

          Section 4.09. Excess Finance Charge Collections. Series 2008-4 shall be an Excess
Allocation Series. Subject to Section 4.05 of the Agreement, Excess Finance Charge Collections
with respect to the Excess Allocation Series for any Distribution Date will be allocated to Series
2008-4 in an amount equal to the product of (x) the aggregate amount of Excess Finance Charge
Collections with respect to all the Excess Allocation Series for such Distribution Date and (y) a
fraction, the numerator of which is the Finance Charge Shortfall for Series 2008-4 for such
Distribution Date and the denominator of which is the aggregate amount of Finance Charge Shortfalls
for all the Excess Allocation Series for such Distribution Date. The “Finance Charge
Shortfall” for Series 2008-4 for any Distribution Date will be equal to the excess, if any, of
(a) the full amount required to be paid, without duplication, pursuant to subsections 4.05(a),
4.05(b) and 4.05(c) and subsections 4.07(a) through (j) on such Distribution Date and the full
amount required to be paid, without duplication, pursuant to subsection 3.02(a)(iii) of the
Transfer

25

 

Agreement on the related Payment Date (as such term is defined in the Transfer Agreement) over
(b) the sum of (i) the Reallocated Investor Finance Charge Collections, (ii) if such Monthly Period
relates to a Distribution Date with respect to the Controlled Accumulation Period or Early
Amortization Period, the amount of Principal Funding Account Investment Proceeds, if any, with
respect to such Distribution Date and (iii) the amount of funds, if any, to be withdrawn from the
Reserve Account which, pursuant to subsection 4.12(d), are required to be included in Class A
Available Funds with respect to such Distribution Date. The amount of Excess Finance Charge
Collections for Series 2008-4 for any Distribution Date shall be specified in subsection 3.02(a)(v)
of the Transfer Agreement. On each Distribution Date, the Trustee shall deposit into the
Collection Account for application in accordance with Section 4.05 of the Agreement the aggregate
amount of Excess Finance Charge Collections received by the Trustee pursuant to the Transfer
Agreement on such date.

          Section 4.10. Reallocated Investor Finance Charge Collections.

          (a) That portion of Group II Investor Finance Charge Collections for any Distribution Date
equal to the amount of Reallocated Investor Finance Charge Collections for such Distribution Date
will be allocated to Series 2008-4 and will be distributed as set forth in this Supplement.

          (b) Reallocated Investor Finance Charge Collections with respect to any Distribution Date
shall equal the sum of (i) the aggregate amount of Series 2008-4 Monthly Interest, Investor Default
Amount, Series 2008-4 Monthly Fees and Series 2008-4 Additional Amounts for such Distribution Date
and (ii) that portion of excess Group II Investor Finance Charge Collections to be included in
Reallocated Investor Finance Charge Collections pursuant to subsection (c) hereof; provided,
however, that if the amount of Group II Investor Finance Charge Collections for such Distribution
Date is less than the sum of (w) Group II Investor Monthly Interest, (x) Group II Investor Default
Amount, (y) Group II Investor Monthly Fees and (z) Group II Investor Additional Amounts, then
Reallocated Investor Finance Charge Collections shall equal the sum of the following amounts for
such Distribution Date:

     (A) The product of (I) Group II Investor Finance Charge Collections (up to the
amount of Group II Investor Monthly Interest) and (II) a fraction, the numerator of
which is Series 2008-4 Monthly Interest and the denominator of which is Group II
Investor Monthly Interest;

     (B) the product of (I) Group II Investor Finance Charge Collections less the
amount of Group II Investor Monthly Interest (up to the Group II Investor Default
Amount) and (II) a fraction, the numerator of which is the Investor Default Amount
and the denominator of which is the Group II Investor Default Amount;

     (C) the product of (I) Group II Investor Finance Charge Collections less the
amount of Group II Investor Monthly Interest and the Group II Investor Default
Amount (up to Group II Investor Monthly Fees) and (II) a fraction, the numerator of
which is Series 2008-4 Monthly Fees and the denominator of which is Group II
Investor Monthly Fees; and

     (D) the product of (I) Group II Investor Finance Charge Collections less the
sum of (i) Group II Investor Monthly Interest, (ii) the Group II Investor Default
Amount and (iii) Group II Investor Monthly Fees and (II) a fraction, the numerator
of which is Series 2008-4 Additional Amounts and the denominator of which is Group
II Investor Additional Amounts.

          (c) If the amount of Group II Investor Finance Charge Collections for such Distribution Date
exceeds the sum of (i) Group II Investor Monthly Interest, (ii) Group II Investor Default Amount,
(iii) Group II Investor Monthly Fees and (iv) Group II Investor Additional Amounts, then

26

 

Reallocated Investor Finance Charge Collections for such Distribution Date shall include an
amount equal to the product of (x) the amount of such excess and (y) a fraction, the numerator of
which is the Invested Amount as of the last day of the second preceding Monthly Period (or, for
Series 2008-4 only, with respect to the first Distribution Date, as of the Closing Date) and the
denominator of which is the sum of such Invested Amount and the aggregate invested amounts for all
other Series included in Group II as of such last day (or, for Series 2008-4 only, with respect to
the first Distribution Date, as of the Closing Date).

          Section 4.11. Shared Principal Collections. Subject to Section 4.04 of the Agreement,
Shared Principal Collections for any Distribution Date will be allocated to Series 2008-4 in an
amount equal to the product of (x) the aggregate amount of Shared Principal Collections with
respect to all Principal Sharing Series for such Distribution Date and (y) a fraction, the
numerator of which is the Series 2008-4 Principal Shortfall for such Distribution Date and the
denominator of which is the aggregate amount of Principal Shortfalls for all the Series which are
Principal Sharing Series for such Distribution Date. The “Series 2008-4 Principal
Shortfall” will be equal to (a) for any Distribution Date with respect to the Revolving Period,
zero, (b) for any Distribution Date with respect to the Controlled Accumulation Period, the excess,
if any, of the Controlled Deposit Amount with respect to such Distribution Date over the amount of
Available Principal Collections for such Distribution Date (excluding any portion thereof
attributable to Shared Principal Collections), and (c) for any Distribution Date with respect to
the Early Amortization Period, the excess, if any, of the Invested Amount over the amount of
Available Principal Collections for such Distribution Date (excluding any portion thereof
attributable to Shared Principal Collections).

          Section 4.12. Reserve Account.

          (a) The Servicer shall establish and maintain, in the name of the Trustee, on behalf of the
Trust, for the benefit of the Series 2008-4 Certificateholders, an Eligible Deposit Account (the
“Reserve Account”) bearing a designation clearly indicating that the funds deposited
therein and the property credited thereto are held for the benefit of the Series 2008-4
Certificateholders. The Reserve Account shall initially be established with The Bank of New York.
The Trustee shall possess all right, title and interest in all funds and property from time to time
deposited in or credited to the Reserve Account and in all proceeds thereof. The Reserve Account
shall be under the sole dominion and control of the Trustee for the benefit of the Series 2008-4
Certificateholders. If at any time the Reserve Account ceases to be an Eligible Deposit Account,
the Trustee (or the Servicer on its behalf) shall within 10 Business Days (or such longer period,
not to exceed 30 calendar days, as to which each Rating Agency shall consent) establish a new
Reserve Account meeting the conditions specified above as an Eligible Deposit Account, and shall
transfer any cash or any investments to such new Reserve Account. The Trustee, at the direction of
the Servicer, shall (i) make withdrawals from the Reserve Account from time to time in an amount up
to the Available Reserve Account Amount at such time, for the purposes set forth in this
Supplement, and (ii) on each Distribution Date (from and after the Reserve Account Funding Date)
prior to the termination of the Reserve Account make a deposit into the Reserve Account in the
amount specified in, and otherwise in accordance with, subsection 4.07(j).

          (b) Funds on deposit in the Reserve Account shall be invested at the written direction of the
Servicer by the Trustee in Eligible Investments. Funds on deposit in the Reserve Account on any
Transfer Date, after giving effect to any withdrawals from the Reserve Account on such Transfer
Date, shall be invested in such investments that will mature so that such funds will be available
for withdrawal on or prior to the following Transfer Date. No such Eligible Investment shall be
disposed of prior to its maturity; provided, however, that the Trustee shall sell, liquidate or
dispose of any such Eligible Investment if, prior to the maturity of such Eligible Investment, a
default occurs in the payment of principal, interest or any other amount with respect to such
Eligible Investment; provided further, however, that the Servicer shall deliver prompt written
notice to the Trustee of any such default; and provided further that, subject to Section 11.01 of
the Agreement, the Trustee will not in any way be held

27

 

liable by reason of any insufficiency in such Reserve Account resulting from any loss on any
Eligible Investment included therein except for losses attributable to the Trustee’s failure to
make payments on such Eligible Investments issued by the Trustee, in its commercial capacity, in
accordance with their terms. On each Distribution Date, all interest and earnings (net of losses
and investment expenses) accrued since the preceding Distribution Date on funds on deposit in the
Reserve Account shall be retained in the Reserve Account (to the extent that the Available Reserve
Account Amount is less than the Required Reserve Account Amount) and the balance, if any, shall be
deposited in the Collection Account and treated as collections of Finance Charge Receivables
allocable to Series 2008-4. For purposes of determining the availability of funds or the balance
in the Reserve Account for any reason under this Supplement, except as otherwise provided in the
preceding sentence, investment earnings on such funds shall be deemed not to be available or on
deposit.

          (c) On the Determination Date preceding each Distribution Date with respect to the Controlled
Accumulation Period and the first Special Payment Date, the Servicer shall calculate the
“Reserve Draw Amount” which shall be equal to the excess, if any, of the Covered Amount
with respect to such Distribution Date or Special Payment Date over the Principal Funding Account
Investment Proceeds with respect to such Distribution Date or Special Payment Date; provided, that
such amount will be reduced to the extent that funds otherwise would be available for deposit in
the Reserve Account under subsection 4.07(j) with respect to such Distribution Date or Special
Payment Date.

          (d) In the event that for any Distribution Date the Reserve Draw Amount is greater than zero,
the Reserve Draw Amount, up to the Available Reserve Account Amount, shall be withdrawn from the
Reserve Account on the related Transfer Date by the Trustee (acting in accordance with the
instructions of the Servicer), deposited into the Collection Account and included in Class A
Available Funds for such Distribution Date.

          (e) In the event that the Reserve Account Surplus on any Distribution Date, after giving
effect to all deposits to and withdrawals from the Reserve Account with respect to such
Distribution Date, is greater than zero, the Trustee, acting in accordance with the written
instructions of the Servicer, shall withdraw from the Reserve Account, and distribute to the
Collateral Interest Holder, an amount equal to such Reserve Account Surplus.

          (f) Upon the earliest to occur of (i) the day on which the Invested Amount is paid in full to
the Series 2008-4 Certificateholders, (ii) if the Controlled Accumulation Period has not commenced,
the occurrence of a Pay-Out Event with respect to Series 2008-4, (iii) if the Controlled
Accumulation Period has commenced, the earlier of the first Special Payment Date and the Expected
Final Payment Date and (iv) the termination of the Trust pursuant to the Agreement, the Trustee,
acting in accordance with the instructions of the Servicer, after the prior payment of all amounts
owing to the Class A Certificateholders which are payable from the Reserve Account as provided
herein, shall withdraw from the Reserve Account and pay to the Collateral Interest Holder all
amounts, if any, on deposit in the Reserve Account and the Reserve Account shall be deemed to have
terminated for purposes of this Supplement.

          Section 4.13. Investment Instructions.

          (a) Any investment instructions required to be given to the Trustee pursuant to the terms
hereof must be given to the Trustee no later than 10:30 a.m. (New York City time) on the date such
investment is to be made. In the event the Trustee receives such investment instruction later than
such time, the Trustee may, but shall have no obligation to, make such investment. In the event
the Trustee is unable to make an investment required in an investment instruction received by the
Trustee after 10:30 a.m. (New York City time) on such day, such investment shall be made by the
Trustee on the next succeeding Business Day. In no event shall the Trustee be liable for any
investment not made pursuant to

28

 

investment instructions received after 10:30 a.m. (New York City time) on the day such
investment is requested to be made.

          (b) The Trustee shall hold each Eligible Investment that constitutes investment property
through a securities intermediary, which securities intermediary shall agree with the Trustee that
(i) such investment property at all times shall be credited to a securities account of the Trustee,
(ii) all property credited to such securities account shall be treated as a financial asset, (iii)
such securities intermediary shall treat the Trustee as entitled to exercise the rights that
comprise each financial asset credited to such securities account, (iv) such securities
intermediary shall comply with entitlement orders originated by the Trustee without the further
consent of any other person or entity, (v) such securities intermediary shall not agree with any
person or entity other than the Trustee to comply with entitlement orders originated by any person
or entity other than the Trustee, (vi) such securities account and all property credited thereto
shall not be subject to any lien, security interest, right of set-off, or encumbrance in favor of
such securities intermediary or anyone claiming through such securities intermediary (other than
the Trustee), (vii) such agreement between such securities intermediary and the Trustee shall be
governed by the laws of the State of New York, and (viii) such securities intermediary’s
jurisdiction for purposes of the Uniform Commercial Code shall be the State of New York. The
Trustee shall maintain possession of each other Eligible Investment in the State of New York,
separate and apart from all other property held by the Trustee. Notwithstanding any other provision
of this Supplement, the Trustee shall not hold any Eligible Investment through an agent except as
expressly permitted by this Section 4.13(b). Each term used in this Section 4.13(b) and defined in
the New York Uniform Commercial Code shall have the meaning set forth in the New York Uniform
Commercial Code.

          Section 4.14. Determination of LIBOR.

          (a) On each LIBOR Determination Date, the Trustee will determine LIBOR for the related
Interest Accrual Period, which shall be the rate for deposits in United States dollars for a period
equal to one month (commencing on the first day of such Interest Accrual Period) that appears on
Reuters Screen LIBOR01 Page as of 11:00 a.m., London time, on such date. Upon such determination,
the Trustee shall notify the Servicer of LIBOR for such LIBOR Determination Date. If such rate
does not appear on Reuters Screen LIBOR01 Page, the rate for the LIBOR Determination Date will be
determined on the basis of the rates at which deposits in United States dollars are offered by the
Reference Banks at approximately 11:00 a.m., London time, on that day to prime banks in the London
interbank market for a period equal to one month (commencing on the first day of such Interest
Accrual Period). The Servicer will request the principal London office of each of the Reference
Banks to provide a quotation of its rate. If at least two such quotations are provided, the rate
for that LIBOR Determination Date will be the arithmetic mean of the quotations. If fewer than two
quotations are provided as requested, the rate for that LIBOR Determination Date will be the
arithmetic mean of the rates quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m., New York City time, on that day for loans in United States dollars to
leading European banks for a period equal to one month (commencing on the first day of such
Interest Accrual Period). If the banks selected by the Servicer are not quoting rates as provided
in the immediately preceding sentence, LIBOR for such Interest Accrual Period will be LIBOR in
effect for the immediately preceding Interest Accrual Period.

          (b) The Servicer shall determine, and promptly notify the Transferors and the Trustee of, the
Class A Certificate Rate and the Class B Certificate Rate for the applicable Interest Accrual
Period. The Class A Certificate Rate and Class B Certificate Rate applicable to the then current
and the immediately preceding Interest Accrual Periods may be obtained by any Investor
Certificateholder by telephoning the Trustee at its Corporate Trust Office at (212) 815-6258.

          (c) On each LIBOR Determination Date prior to 3:00 p.m., New York City time, the Trustee shall
send to the Transferors and the Servicer by facsimile, notification of LIBOR for the following
Interest Accrual Period.

29

 

ARTICLE V

Distributions and Reports to

Series 2008-4 Certificateholders

          Section 5.01. Distributions.

          (a) On each Distribution Date, the Paying Agent shall distribute to each Class A
Certificateholder of record on the related Record Date (other than as provided in Section 12.02 of
the Agreement) such Class A Certificateholder’s pro rata share of the amounts held by the Paying
Agent that are allocated and available on such Distribution Date to pay interest on the Class A
Certificates pursuant to this Supplement.

          (b) On each Special Payment Date and on the Expected Final Payment Date, the Paying Agent
shall distribute (in accordance with the Certificate delivered by the Servicer pursuant to Section
3.04(b) of the Agreement) to each Class A Certificateholder of record on the related Record Date
(other than as provided in Section 12.02 of the Agreement) such Class A Certificateholder’s pro
rata share of the amounts on deposit in the Principal Funding Account or otherwise held by the
Paying Agent that are allocated and available on such date to pay principal of the Class A
Certificates pursuant to this Supplement up to a maximum amount on any such date equal to the Class
A Invested Amount on such date (unless there has been an optional repurchase of the Series 2008-4
Certificateholders’ Interest pursuant to Section 10.01 of the Agreement, in which event the
foregoing limitation will not apply).

          (c) On each Distribution Date, the Paying Agent shall distribute (in accordance with the
Certificate delivered by the Servicer pursuant to Section 3.04(b) of the Agreement) to each Class B
Certificateholder of record on the related Record Date (other than as provided in Section 12.02 of
the Agreement) such Class B Certificateholder’s pro rata share of the amounts held by the Paying
Agent that are allocated and available on such Distribution Date to pay interest on the Class B
Certificates pursuant to this Supplement.

          (d) On each Special Payment Date, and on the Expected Final Payment Date, the Paying Agent
shall distribute (in accordance with the Certificate delivered by the Servicer pursuant to Section
3.04(b) of the Agreement) to each Class B Certificateholder of record on the related Record Date
(other than as provided in Section 12.02 of the Agreement) such Class B Certificateholder’s pro
rata share of the amounts on deposit in the Principal Funding Account or otherwise held by the
Paying Agent that are allocated and available on such date to pay principal of the Class B
Certificates pursuant to this Supplement up to a maximum amount on any such date equal to the Class
B Invested Amount on such date (unless there has been an optional repurchase of the Series 2008-4
Certificateholders’ Interest pursuant to Section 10.01 of the Agreement, in which event the
foregoing limitation will not apply).

          (e) On each Distribution Date, the Trustee shall distribute to the Collateral Interest Holder
the aggregate amount payable to the Collateral Interest Holder pursuant to Sections 4.05, 4.07,
4.12, 8.01 and 8.02 to the Collateral Interest Holder’s account, as specified in writing by the
Collateral Interest Holder, in immediately available funds.

          (f) The distributions to be made pursuant to this Section 5.01 are subject to the provisions
of Sections 2.06, 9.02, 10.01 and 12.02 of the Agreement and Sections 8.01 and 8.02 of this
Supplement.

          (g) Except as provided in Section 12.02 of the Agreement with respect to a final distribution,
distributions to Series 2008-4 Certificateholders hereunder shall be made by check mailed to each
Series 2008-4 Certificateholder at such Series 2008-4 Certificateholder’s address appearing in the
Certificate Register without presentation or surrender of any Series 2008-4 Certificate or the
making of

30

 

any notation thereon; provided, however, that with respect to Series 2008-4 Certificates
registered in the name of a Clearing Agency, such distributions shall be made to such Clearing
Agency in immediately available funds.

          (h) The distributions to be made pursuant to this Section 5.01 are to be made pursuant to the
written instructions of the Servicer substantially in the form of Exhibit B.

          Section 5.02. Reports and Statements to Series 2008-4 Certificateholders.

          (a) On each Distribution Date, the Paying Agent, on behalf of the Trustee, shall forward to
each Series 2008-4 Certificateholder a statement substantially in the form of Exhibit C-1
to this Supplement prepared by the Servicer and delivered to the Paying Agent.

          (b) Not later than each Determination Date, the Servicer shall deliver to the Trustee, the
Paying Agent, the Transferors, each Rating Agency and the Collateral Interest Holder (i) a
statement substantially in the form of Exhibit C-1 to this Supplement prepared by the Servicer and
(ii) a certificate of a Servicing Officer substantially in the form of Exhibit D.

          (c) A copy of each statement or certificate provided pursuant to paragraph (a) or (b) may be
obtained by any Series 2008-4 Certificateholder or any Certificate Owner thereof by a request in
writing to the Servicer.

          (d) On or before January 31 of each calendar year, beginning with calendar year 2009, the
Paying Agent, on behalf of the Trustee, shall furnish or cause to be furnished to each Person who
at any time during the preceding calendar year was a Series 2008-4 Certificateholder, a statement
substantially in the form of Exhibit C-2 to this Supplement prepared by the Servicer for
such calendar year or the applicable portion thereof during which such Person was a Series 2008-4
Certificateholder, together with other information as is required to be provided by an issuer of
indebtedness under the Code. Such obligation of the Servicer shall be deemed to have been
satisfied to the extent that substantially comparable information shall be provided by the Paying
Agent pursuant to any requirements of the Code as from time to time in effect.

ARTICLE VI

Pay-Out Events

          Section 6.01. Pay-Out Events. If any one of the following events shall occur with
respect to the Series 2008-4 Certificates:

          (a) the occurrence of an Insolvency Event relating to any Transferor or other holder of the
Original Transferor Certificate;

          (b) the Trust becomes an investment company within the meaning of the Investment Company Act;

          (c) failure on the part of any Transferor (i) to make any payment or deposit required by the
terms of the Agreement or this Supplement on or before the date occurring five Business Days after
the date such payment or deposit is required to be made therein or herein or (ii) duly to observe
or perform any other covenants or agreements of the Transferors set forth in the Agreement or this
Supplement, which failure has a material adverse effect on the Series 2008-4 Certificateholders
and which continues unremedied for a period of 60 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to such Transferor by the
Trustee, or to the Transferors and the Trustee by any Holder of the Series 2008-4 Certificates;

31

 

          (d) any representation or warranty made by any Transferor in the Agreement or this Supplement,
or any information contained in a computer file or microfiche list required to be delivered by any
Transferor pursuant to Section 2.01 or subsection 2.08(f) of the Agreement shall prove to have been
incorrect in any material respect when made or when delivered, which continues to be incorrect in
any material respect for a period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to such Transferor by the
Trustee, or to such Transferor and the Trustee by any Holder of the Series 2008-4 Certificates and
as a result of which the interests of the Series 2008-4 Certificateholders are materially and
adversely affected for such period; provided, however, that a Pay-Out Event pursuant to this
subsection 6.01(d) shall not be deemed to have occurred hereunder if a Transferor has accepted
reassignment of the related Receivable, or all of such Receivables, if applicable, during such
period (or such longer period not to exceed an additional 60 days as the Trustee may specify) in
accordance with the provisions of the Agreement;

          (e) a failure by a Transferor to convey Receivables in Additional Accounts or Participation
Interests to the Trust within five Business Days after the day on which it is required to convey
such Receivables or Participation Interests pursuant to subsection 2.09(a) of the Agreement;

          (f) any Servicer Default which would have an Adverse Effect shall occur;

          (g) the average Series Adjusted Portfolio Yield for any three consecutive Monthly Periods is
reduced to a rate which is less than the average of the Base Rates for such period;

          (h) the Class A Invested Amount, the Class B Invested Amount or the Collateral Invested Amount
shall not be paid in full on the Expected Final Payment Date;

          (i) a Transfer Restriction Event shall occur;

          (j) the occurrence of an Insolvency Event as defined in the Receivables Purchase Agreement
relating to any Account Owner; or

          (k) a Transfer Restriction Event as defined in the Receivables Purchase Agreements shall occur
between an Account Owner and the related Transferor;

then, (A) in the case of any event described in subparagraph (c), (d) or (f), after the applicable
grace period, if any, set forth in such subparagraphs, either the Trustee or the Investor
Certificateholders of this Series evidencing more than 50% of the aggregate unpaid principal amount
of the Investor Certificates of this Series by notice then given in writing to the Transferors and
the Servicer (and to the Trustee if given by the Investor Certificateholders of this Series) may
declare that a Pay-Out Event has occurred with respect to this Series as of the date of such
notice; (B) in the case of any event described in subparagraph (b), (e), (g) or (h), a Pay-Out
Event shall occur with respect to this Series without any notice or other action on the part of the
Trustee or the Investor Certificateholders of this Series immediately upon the occurrence of such
event; and (C) in the case of any event described in subparagraph (a), (i), (j) or (k), a Pay-Out
Event shall occur with respect to this Series without any notice or other action on the part of the
Trustee or the Investor Certificateholders of this Series immediately upon the occurrence of such
event (or, in the case of clause (y) below, immediately following the expiration of the 60-day
grace period), but only to the extent that (x) as of the date of such event, the average of the
Monthly Receivables Percentage for the immediately preceding three Monthly Periods is equal to or
greater than 10% or (y) as of the date of such event, the average of the Monthly Receivables
Percentage for the immediately preceding three Monthly Periods is less than 10%, and within 60 days
following the occurrence of the related Insolvency Event or Transfer Restriction Event, the
aggregate amount of Principal Receivables outstanding in the Trust does not at least equal the
Required Minimum Principal Balance (without giving effect to Principal Receivables attributable to
the Transferor or the Account Owner with respect to which the Insolvency Event or the Transfer
Restriction Event has occurred).

32

 

ARTICLE VII

Optional Repurchase; Series Termination

          Section 7.01. Optional Repurchase.

          (a) So long as a Transferor is the Servicer or an Affiliate of the Servicer, on any day
occurring on or after the date on which the Invested Amount is reduced to 5% or less of the Initial
Invested Amount, such Transferor shall have the option to purchase the Series 2008-4
Certificateholders’ Interest, at a purchase price equal to (i) if such day is a Distribution Date,
the Reassignment Amount for such Distribution Date or (ii) if such day is not a Distribution Date,
the Reassignment Amount for the Distribution Date following such day. If, on the date on which a
Transferor exercises such option, the long-term unsecured debt obligations of such Transferor
purchasing the Series 2008-4 Certificateholders’ Interest is not rated at least in the third
highest rating category by the Rating Agency, such Transferor shall deliver to the Trustee, with a
copy to the Rating Agency, an Officer’s Certificate of such Transferor which shall have attached to
it the relevant fraudulent conveyance statute, if any, and set forth the factual basis for a
conclusion that the exercise of such optional repurchase would not constitute a fraudulent
conveyance of such Transferor.

          (b) The Transferors shall give the Servicer and the Trustee at least 30 days prior written
notice of the date on which the Transferors intend to exercise such purchase option. Not later
than 12:00 noon, New York City time, on such day the Transferors shall deposit the Reassignment
Amount into the Collection Account in immediately available funds. Such purchase option is subject
to payment in full of the Reassignment Amount. Following the deposit of the Reassignment Amount
into the Collection Amount in accordance with the foregoing, the Invested Amount for Series 2008-4
shall be reduced to zero and the Series 2008-4 Certificateholders shall have no further interest in
the Receivables. The Reassignment Amount shall be distributed as set forth in subsection 8.01(b).

          Section 7.02. Series Termination.

          (a) If, on the September 2016 Distribution Date, the Invested Amount (after giving effect to
all changes therein on such date) would be greater than zero, the Servicer, on behalf of the
Trustee, shall, within the 40-day period which begins on such Distribution Date, solicit bids for
the sale of Principal Receivables and the related Finance Charge Receivables (or interests therein)
in an amount equal to the Invested Amount at the close of business on the last day of the Monthly
Period preceding the Series 2008-4 Termination Date (after giving effect to all distributions
required to be made on the Series 2008-4 Termination Date, except pursuant to this Section 7.02).
Such bids shall require that such sale shall (subject to subsection 7.02(b)) occur on the Series
2008-4 Termination Date. No Transferor, any Affiliate thereof, any agent thereof or any other
party consolidated with such Transferor for purposes of United States generally accepted
accounting principles shall be entitled to participate in such bidding process or to purchase the
Receivables; provided, however, that, to the extent the Collateral Interest Holder
is not a Transferor, an Affiliate thereof, an agent thereof or any other party consolidated with a
Transferor for purposes of United States generally accepted accounting principles, the Collateral
Interest Holder may participate in such bidding process.

          (b) The Servicer, on behalf of the Trustee, shall sell such Receivables (or interests therein)
on the Series 2008-4 Termination Date to the bidder who made the highest cash purchase offer. The
proceeds of any such sale shall be treated as Collections on the Receivables allocated to the
Series 2008-4 Certificateholders pursuant to the Agreement and this Supplement; provided, however,
that the Servicer shall determine conclusively the amount of such proceeds which are allocable to
Finance Charge Receivables and the amount of such proceeds which are allocable to Principal
Receivables. During the period from the September 2016 Distribution Date to the Series 2008-4
Termination Date, the Servicer

33

 

shall continue to collect payments on the Receivables and allocate and deposit such
Collections in accordance with the provisions of the Agreement and the Supplements.

ARTICLE VIII

Final Distributions

          Section 8.01.  Sale of Receivables or Certificateholders’ Interest pursuant to Section
2.06 or 10.01 of the Agreement and Section 7.01 or 7.02 of this Supplement.

(a) (i) The amount to be paid by the Transferors with respect to Series 2008-4 in
connection with a reassignment of Receivables to the Transferors pursuant to Section
2.06 of the Agreement shall equal the Reassignment Amount for the first Distribution
Date following the Monthly Period in which the reassignment obligation arises under
the Agreement.

     (ii) The amount to be paid by the Transferors with respect to Series 2008-4 in
connection with a repurchase of the Certificateholders’ Interest pursuant to Section
10.01 of the Agreement shall equal the sum of (x) the Reassignment Amount for the
Distribution Date of such repurchase and (y) the sum of (A) the excess, if any, of
(I) a price equivalent to the average of bids quoted on the Record Date preceding
the date of repurchase or, if not a Business Day, on the next succeeding Business
Day by at least two recognized dealers selected by the Trustee for the purchase by
such dealers of a security which is similar to the Class A Certificates with a
remaining maturity approximately equal to the remaining maturity of the Class A
Certificates and rated by each Rating Agency in the rating category originally
assigned to the Class A Certificates over (II) the portion of the Reassignment
Amount attributable to the Class A Certificates and (B) the excess, if any, of (I) a
price equivalent to the average of bids quoted on such Record Date, or if not a
Business Day, on the next succeeding Business Day by at least two recognized dealers
selected by the Trustee for the purchase by such dealers of a security which is
similar to the Class B Certificates with a remaining maturity approximately equal to
the remaining maturity of the Class B Certificates and rated by each Rating Agency
in the rating category originally assigned to the Class B Certificates over (II) the
portion of the Reassignment Amount attributable to the Class B Certificates.

          (b) With respect to the Reassignment Amount deposited into the Collection Account pursuant to
Section 7.01 or any amounts allocable to the Series 2008-4 Certificateholders’ Interest deposited
into the Collection Account pursuant to Section 7.02, the Trustee shall, in accordance with the
written direction of the Servicer, not later than 12:00 noon, New York City time, on the related
Distribution Date, make deposits or distributions of the following amounts (in the priority set
forth below and, in each case after giving effect to any deposits and distributions otherwise to be
made on such date) in immediately available funds: (i) (x) the Class A Invested Amount on such
Distribution Date will be distributed to the Paying Agent for payment to the Class A
Certificateholders and (y) an amount equal to the sum of (A) Class A Monthly Interest for such
Distribution Date, (B) any Class A Monthly Interest previously due but not distributed to the Class
A Certificateholders on a prior Distribution Date and (C) the amount of Class A Additional
Interest, if any, for such Distribution Date and any Class A Additional Interest previously due but
not distributed to the Class A Certificateholders on any prior Distribution Date, will be
distributed to the Paying Agent for payment to the Class A Certificateholders, (ii) (x) the Class B
Invested Amount on such Distribution Date will be distributed to the Paying Agent for payment to
the Class B Certificateholders and (y) an amount equal to the sum of (A) Class B Monthly Interest
for such Distribution Date, (B) any Class B Monthly Interest previously due but not distributed to
the Class B Certificateholders on a prior Distribution Date and (C) the amount of Class B
Additional Interest, if any, for such Distribution Date and any Class B Additional Interest
previously due but not distributed to the

34

 

Class B Certificateholders on any prior Distribution Date, will be distributed to the Paying
Agent for payment to the Class B Certificateholders and (iii) the balance, if any, will be
distributed to the Collateral Interest Holder.

          (c) Notwithstanding anything to the contrary in this Supplement or the Agreement, all amounts
distributed to the Paying Agent pursuant to subsection 8.01(b) for payment to the Series 2008-4
Certificateholders shall be deemed distributed in full to the Series 2008-4 Certificateholders on
the date on which such funds are distributed to the Paying Agent pursuant to this Section and shall
be deemed to be a final distribution pursuant to Section 12.02 of the Agreement.

          Section 8.02. Distribution of Proceeds of Sale, Disposition or Liquidation of the
Receivables pursuant to Section 9.01 of the Agreement.

          (a) Not later than 12:00 noon, New York City time, on the Distribution Date following the date
on which the Insolvency Proceeds are deposited into the Collection Account pursuant to subsection
9.01(b) of the Agreement, the Trustee shall in accordance with the written direction of the
Servicer (in the following priority and, in each case, after giving effect to any deposits and
distributions otherwise to be made on such Distribution Date) (i) deduct an amount equal to the
Class A Invested Amount on such Distribution Date from the portion of the Insolvency Proceeds
allocated to Series 2008-4 Allocable Principal Collections and distribute such amount to the Paying
Agent for payment to the Class A Certificateholders, provided that the amount of such distribution
shall not exceed the product of (x) the portion of the Insolvency Proceeds allocated to Series
2008-4 Allocable Principal Collections and (y) the Principal Allocation Percentage with respect to
the related Monthly Period, (ii) deduct an amount equal to the Class B Invested Amount on such
Distribution Date from the portion of the Insolvency Proceeds allocated to Series 2008-4 Allocable
Principal Collections and distribute such amount to the Paying Agent for payment to the Class B
Certificateholders, provided that the amount of such distribution shall not exceed (x) the product
of (A) the portion of such Insolvency Proceeds allocated to Series 2008-4 Allocable Principal
Collections and (B) the Principal Allocation Percentage with respect to the related Monthly Period
minus (y) the amount distributed to the Paying Agent pursuant to clause (i) of this sentence and
(iii) distribute the remaining amount of the Insolvency Proceeds to the Collateral Interest Holder.

          (b) Not later than 12:00 noon, New York City time, on such Distribution Date, the Trustee
shall in accordance with the written direction of the Servicer (in the following priority and, in
each case, after giving effect to any deposits and distributions otherwise to be made on such
Distribution Date) (i) deduct an amount equal to the sum of (w) Class A Monthly Interest for such
Distribution Date, (x) any Class A Monthly Interest previously due but not distributed to the Class
A Certificateholders on a prior Distribution Date and (y) the amount of Class A Additional
Interest, if any, for such Distribution Date and any Class A Additional Interest previously due but
not distributed to the Class A Certificateholders on a prior Distribution Date from the portion of
the Insolvency Proceeds allocated to Collections of Finance Charge Receivables and distribute such
amount to the Paying Agent for payment to the Class A Certificateholders, provided that the amount
of such distribution shall not exceed the product of (x) the portion of the Insolvency Proceeds
allocated to Series 2008-4 Allocable Finance Charge Collections, (y) the Floating Allocation
Percentage with respect to the related Monthly Period and (z) the Class A Floating Percentage with
respect to such Monthly Period and (ii) deduct an amount equal to the sum of (w) Class B Monthly
Interest for such Distribution Date, (x) Class B Monthly Interest previously due but not
distributed to the Class B Certificateholders on a prior Distribution Date and (y) the amount of
Class B Additional Interest, if any, for such Distribution Date and any Class B Additional Interest
previously due but not distributed to the Class B Certificateholders on a prior Distribution Date
from the portion of the Insolvency Proceeds allocated to Series 2008-4 Allocable Finance Charge
Collections and distribute such amount to the Paying Agent for payment to the Class B
Certificateholders, provided that the amount of such distribution shall not exceed the product of
(x) the portion of the Insolvency Proceeds allocated to Series 2008-4 Allocable Finance Charge
Collections, (y) the Floating

35

 

Allocation Percentage with respect to the related Monthly Period and (z) the Class B Floating
Percentage with respect to such Monthly Period. To the extent that the product of (A) the portion
of the Insolvency Proceeds allocated to Series 2008-4 Allocable Finance Charge Collections and (B)
the Floating Allocation Percentage with respect to the related Monthly Period exceeds the aggregate
amount distributed to the Paying Agent pursuant to the preceding sentence, the excess shall be
distributed to the Collateral Interest Holder.

          (c) Notwithstanding anything to the contrary in this Supplement or the Agreement, all amounts
distributed to the Paying Agent pursuant to this Section for payment to the Series 2008-4
Certificateholders shall be distributed in full to the Series 2008-4 Certificateholders on the date
on which funds are distributed to the Paying Agent pursuant to this Section and shall be deemed to
be a final distribution pursuant to Section 12.02 of the Agreement.

ARTICLE IX

Miscellaneous Provisions

          Section 9.01. Ratification of Agreement. As supplemented by this Supplement, the
Agreement is in all respects ratified and confirmed and the Agreement as so supplemented by this
Supplement shall be read, taken and construed as one and the same instrument.

          Section 9.02. Counterparts. This Supplement may be executed in two or more
counterparts, and by different parties on separate counterparts, each of which shall be an
original, but all of which shall constitute one and the same instrument.

          Section 9.03. Governing Law. THIS SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.

          Section 9.04.
[Reserved].

          Section 9.05. [Reserved].

          Section 9.06. Uncertificated Securities. The Collateral Interest shall be delivered
in uncertificated form.

          Section 9.07. Transfers of the Collateral Interest.

          (a) Unless otherwise consented to by the Transferors, no portion of the Collateral Interest or
any interest therein may be sold, conveyed, assigned, hypothecated, pledged, participated,
exchanged or otherwise transferred (each, a “Transfer”) except in accordance with this
Section 9.07 and only to a Permitted Assignee. Any attempted or purported transfer, assignment,
exchange, conveyance, pledge, hypothecation or grant other than to a Permitted Assignee shall be
void. Unless otherwise consented to by the Transferors, no portion of the Collateral Interest or
any interest therein may be Transferred to any Person (each such Person acquiring the Collateral
Interest or any interest therein, an “Assignee”) unless such Assignee shall have executed
and delivered to the Transferors on or before the effective date of any Transfer a letter
substantially in the form attached hereto as Exhibit E (an “Investment Letter”),
executed by such Assignee, with respect to the related Transfer to such Assignee of all or a
portion of the Collateral Interest.

36

 

          (b) Each Assignee will certify that the Collateral Interest or the interest therein purchased
by such Assignee will be acquired for investment only and not with a view to any public
distribution thereof, and that such Assignee will not offer to sell or otherwise dispose of the
Collateral Interest or any interest therein so acquired by it in violation of any of the
registration requirements of the Securities Act, or any applicable state or other securities laws.
Each Assignee will acknowledge and agree that (i) it has no right to require the Transferors to
register under the Securities Act or any other securities law the Collateral Interest or the
interest therein to be acquired by the Assignee and (ii) the sale of the Collateral Interest is not
being made by means of the prospectus prepared in connection with the sale of the Series 2008-4
Certificates. Each Assignee will agree with the Transferors that: (a) such Assignee will deliver
to the Transferors an Investment Letter and (b) all of the statements made by such Assignee in its
Investment Letter shall be true and correct as of the date made.

          (c) No portion of the Collateral Interest or any interest therein may be Transferred, and each
Assignee will certify that it is not, (a) an “employee benefit plan” (as defined in Section 3(3) of
ERISA and subject to Title I of ERISA), (b) any “plan” (as defined in and subject to Section 4975
of the Code) including individual retirement accounts and Keogh plans, or (c) any other entity
whose underlying assets include “plan assets” (within the meaning of U.S. Department of Labor
Regulation Section 2510.3-101, 29 C.F.R. § 2510.3-101, as modified by Section 3(42) of ERISA) by
reason of a plan’s investment in the entity, including, without limitation, an insurance company
general account.

[The signature page follows this page.]

37

 

          IN WITNESS WHEREOF, the undersigned have caused this Supplement to be duly executed and
delivered by their respective duly authorized officers on the day and year first above written.

	 	 	 	 	 	 	 
	 	 	AMERICAN EXPRESS RECEIVABLES	 	 
	 	 	 	 	FINANCING CORPORATION II,	 	 
	 	 	 	 	as a Transferor	 	 
	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Maureen Ryan	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Maureen Ryan	 	 
	 	 	 	 	Title: President	 	 
	 	 	 	 	 	 	 
	 	 	AMERICAN EXPRESS RECEIVABLES	 	 
	 	 	 	 	FINANCING CORPORATION III LLC,	 	 
	 	 	 	 	as a Transferor	 	 
	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Catherine M. Hogan	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Catherine M. Hogan	 	 
	 	 	 	 	Title: President	 	 
	 	 	 	 	 	 	 
	 	 	AMERICAN EXPRESS RECEIVABLES	 	 
	 	 	 	 	FINANCING CORPORATION IV LLC,	 	 
	 	 	 	 	as a Transferor	 	 
	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Robert Radle	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Robert Radle

Title: President	 	 
	 	 	 	 	 	 	 
	 	 	AMERICAN EXPRESS TRAVEL RELATED	 	 
	 	 	 	 	SERVICES COMPANY, INC.,	 	 
	 	 	 	 	as the Servicer	 	 
	 	 	 	 	 	 	 
	 	 	By:	 	/s/ David L. Yowan	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: David L. Yowan	 	 
	 	 	 	 	Title: Senior Vice President	 	 
	 	 	 	 	 	 	 
	 	 	THE BANK OF NEW YORK,	 	 
	 	 	 	 	as Trustee	 	 
	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Catherine L. Cerilles	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Catherine L. Cerilles

Title: Vice President	 	 

[Signature page – Series 2008-4 Supplement]

 

EXHIBIT A-1

FORM OF CLASS A CERTIFICATE

			
	 	 	 
	REGISTERED
	 	$                     1/
	 	 	 
	No. R-                                  
	 	CUSIP No.  02582JFC9

          Unless this Class A Certificate is presented by an authorized representative of The Depository
Trust Company, a New York corporation (“DTC”), to American Express Receivables Financing
Corporation II, American Express Receivables Financing Corporation III LLC, American Express
Receivables Financing Corporation IV LLC or their agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.

AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST

SERIES 2008-4

CLASS A FLOATING RATE ASSET BACKED CERTIFICATE

Expected Final Payment Date:

The April 2014 Distribution Date

Each $100,000 minimum denomination represents a

1/5,350ths undivided interest

in Class A of the

AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST, SERIES 2008-4

Evidencing an undivided interest in certain assets of a trust, the corpus of which consists
primarily of an interest in receivables generated from time to time in the ordinary course of
business in a portfolio of credit and charge accounts serviced by

AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.,

and other assets and interests constituting Trust Assets under the Pooling and Servicing Agreement
referred to below.

(Not an interest in or obligation of American Express Travel Related Services Company, Inc.,
American Express Centurion Bank, American Express Bank, FSB, American Express Receivables Financing
Corporation II, American Express Receivables Financing Corporation III LLC, American Express
Receivables Financing Corporation IV LLC or any of their respective affiliates)

 

			
	1/	 	Denominations of $100,000 and integral multiples of $1,000 in excess thereof.

(Series 2008-4 Supplement)

 

 

This certifies that CEDE & CO. (the “Class A Certificateholder”) is the registered owner of
a fractional undivided interest in certain assets of a trust (the “Trust”) created pursuant
to the Pooling and Servicing Agreement, dated as of May 16, 1996, as amended and restated as of
January 1, 2006 (as amended and restated and as otherwise amended and supplemented, the
“Agreement”), as supplemented by the Series 2008-4 Supplement, dated as of April 17, 2008
(as amended and supplemented, the “Supplement”), among American Express Receivables
Financing Corporation II, American Express Receivables Financing Corporation III LLC and American
Express Receivables Financing Corporation IV LLC, as transferors (together, the
“Transferors”), American Express Travel Related Services Company, Inc., as servicer, and
The Bank of New York, a New York banking corporation, as trustee (the “Trustee”). The
corpus of the Trust consists of (i) the Transferors’ ownership interest in a portfolio of
receivables (the “Receivables”) existing in credit and charge accounts identified under the
Agreement from time to time (the “Accounts”), (ii) all Receivables generated under the
Accounts from time to time thereafter, (iii) funds collected or to be collected from cardmembers in
respect of the Receivables, (iv) all funds which are from time to time on deposit in the Collection
Account, the Special Funding Account and any other Series Accounts and (v) all other assets and
interests constituting the Trust. The Holder of this Certificate is entitled to the benefits of
the subordination of the Class B Certificates and the Collateral Interest to the extent provided in
the Supplement. Although a summary of certain provisions of the Agreement and the Supplement is
set forth below and in the Summary of Terms and Conditions attached hereto and made a part hereof,
this Class A Certificate does not purport to summarize the Agreement and the Supplement and
reference is made to the Agreement and the Supplement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby and the rights,
duties and obligations of the Trustee. A copy of the Agreement and the Supplement (without
schedules) may be requested from the Trustee by writing to the Trustee at the Corporate Trust
Office. To the extent not defined herein, the capitalized terms used herein have the meanings
ascribed to them in the Agreement or the Supplement, as applicable.

          This Class A Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement and the Supplement, to which Agreement and Supplement, each as amended
and supplemented from time to time, the Class A Certificateholder by virtue of the acceptance
hereof assents and is bound.

          It is the intent of the Transferors and the Class A Certificateholder that, for federal, state
and local income and franchise tax purposes, the Class A Certificates will qualify as indebtedness
of the Transferors secured by the Receivables. The Class A Certificateholder, by the acceptance of
this Class A Certificate, agrees to treat this Class A Certificate for federal, state and local
income and franchise tax purposes as debt of the Transferors.

          In general, payments of principal with respect to the Class A Certificates are limited to the
Class A Invested Amount, which may be less than the unpaid principal balance of the Class A
Certificates. The Expected Final Payment Date is the April 2014 Distribution Date, but principal
with respect to the Class A Certificates may be paid earlier or later under certain circumstances
described in the Agreement and the Supplement. If for one or more months during the Controlled
Accumulation Period there are not sufficient funds to pay the Controlled Deposit Amount, then to
the extent that excess funds are not available on subsequent Distribution Dates with respect to the
Controlled Accumulation Period to make up for such shortfalls, the final payment of principal of
the Class A Certificates will occur later than the Expected Final Payment Date.

          Unless the certificate of authentication hereon has been executed by or on behalf of the
Trustee, by manual signature, this Class A Certificate shall not be entitled to any benefit under
the Agreement or the Supplement or be valid for any purpose.

(Series 2008-4 Supplement)

A-1-2

 

          IN WITNESS WHEREOF, the Transferors have caused this Class A Certificate to be duly executed.

	 	 	 	 	 
	 	AMERICAN EXPRESS RECEIVABLES FINANCING 

CORPORATION II

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	AMERICAN EXPRESS RECEIVABLES FINANCING

CORPORATION III LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	AMERICAN EXPRESS RECEIVABLES FINANCING 

CORPORATION IV LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Dated: April 17, 2008

(Series 2008-4 Supplement)

A-1-3

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

This is one of the American Express Credit Account Master Trust Series 2008-4 Class A Certificates
described in the within-mentioned Agreement and Supplement.

	 	 	 	 	 	 	 
	 	 	THE BANK OF NEW YORK,

as Trustee	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Authorized Signatory
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	or	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

as Authenticating Agent

for the Trustee
	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Authorized Signatory
	 	 

(Series 2008-4 Supplement)

A-1-4

 

AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST

SERIES 2008-4

CLASS A FLOATING RATE ASSET BACKED CERTIFICATE

Summary of Terms and Conditions

          The Receivables consist of Principal Receivables which arise generally from the purchase of
goods and services and amounts advanced to cardmembers as cash advances and Finance Charge
Receivables. This Class A Certificate is one of a Series of Certificates entitled American Express
Credit Account Master Trust, Series 2008-4 (the “Series 2008-4 Certificates”), and one of a
class thereof entitled Class A Series 2008-4 Floating Rate Asset Backed Certificates (the
“Class A Certificates”), each of which represents a fractional, undivided interest in
certain assets of the Trust. The assets of the Trust are allocated in part to the investor
certificateholders of all outstanding Series (the “Certificateholders’ Interest”) with the
remainder allocated to the Holders of the Transferor Certificates. The aggregate interest
represented by the Class A Certificates at any time in the Principal Receivables in the Trust shall
not exceed an amount equal to the Class A Invested Amount at such time. The Class A Initial
Invested Amount is $535,000,000. The Class A Invested Amount on any date will be an amount equal
to (a) the Class A Initial Invested Amount, minus (b) the aggregate amount of principal payments
made to the Class A Certificateholder on or prior to such date, minus (c) the excess, if any, of
the aggregate amount of Class A Investor Charge-Offs for all prior Distribution Dates over Class A
Investor Charge-Offs reimbursed pursuant to subsection 4.07(b) of the Supplement prior to such
date.

          Subject to the terms and conditions of the Agreement, the Transferors may, from time to time,
direct the Trustee, on behalf of the Trust, to issue one or more new Series of Investor
Certificates, which will represent fractional, undivided interests in certain of the Trust Assets.

          On each Distribution Date, the Paying Agent shall distribute to each Class A Certificateholder
of record on the last day of the preceding calendar month (each a “Record Date”) such Class
A Certificateholder’s pro rata share of such amounts (including amounts on deposit in the
Collection Account and Principal Funding Account) as are payable to the Class A Certificateholder
pursuant to the Agreement and the Supplement. Distributions with respect to this Class A
Certificate will be made by the Paying Agent by check mailed to the address of the Class A
Certificateholder of record appearing in the Certificate Register without the presentation or
surrender of this Class A Certificate or the making of any notation thereon (except for the final
distribution in respect of this Class A Certificate) except that with respect to Class A
Certificates registered in the name of Cede & Co., the nominee for The Depository Trust Company,
distributions will be made in the form of immediately available funds. Final payment of this Class
A Certificate will be made only upon presentation and surrender of this Class A Certificate at the
office or agency specified in the notice of final distribution delivered by the Trustee to the
Series 2008-4 Certificateholders in accordance with the Agreement and the Supplement.

          On any day occurring on or after the day on which the Invested Amount is reduced to 5% or less
of the Initial Invested Amount, the Transferors have the option to repurchase the Series 2008-4
Certificateholders’ Interest in the Trust. The repurchase price will be equal to (a) if such day
is a Distribution Date, the Reassignment Amount for such Distribution Date or (b) if such day is
not a Distribution Date, the Reassignment Amount for the Distribution Date following such day.
Following the deposit of the Reassignment Amount in the Collection Account, Series 2008-4
Certificateholders will not have any interest in the Receivables and the Series 2008-4 Certificates
will represent only the right to receive such Reassignment Amount.

(Series 2008-4 Supplement)

A-1-5

 

          This Class A Certificate does not represent an obligation of, or an interest in, the
Transferors or the Servicer or any affiliate of any of them and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other governmental agency or instrumentality. This
Class A Certificate is limited in right of payment to certain Collections with respect to the
Receivables (and certain other amounts), all as more specifically set forth hereinabove and in the
Agreement and the Supplement.

          The Class A Certificates are issuable only in minimum denominations of $100,000 and integral
multiples of $1,000. The transfer of this Class A Certificate shall be registered in the
Certificate Register upon surrender of this Class A Certificate for registration of transfer at any
office or agency maintained by the Transfer Agent and Registrar accompanied by a written instrument
of transfer, in a form satisfactory to the Trustee or the Transfer Agent and Registrar, duly
executed by the Class A Certificateholder or such Class A Certificateholder’s attorney, and duly
authorized in writing with such signature guaranteed, and thereupon one or more new Class A
Certificates of authorized denominations and for the same aggregate fractional undivided interest
will be issued to the designated transferee or transferees.

          As provided in the Agreement and subject to certain limitations therein set forth, Class A
Certificates are exchangeable for new Class A Certificates evidencing like aggregate fractional,
undivided interests as requested by the Class A Certificateholder surrendering such Class A
Certificates. No service charge may be imposed for any such exchange but the Servicer or Transfer
Agent and Registrar may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.

          The Servicer, the Transferors, the Trustee, the Paying Agent and the Transfer Agent and
Registrar and any agent of any of them, may treat the person in whose name this Class A Certificate
is registered as the owner hereof for all purposes, and none of the Servicer, the Transferors, the
Trustee, the Paying Agent, the Transfer Agent and Registrar, or any agent of any of them, shall be
affected by notice to the contrary except in certain circumstances described in the Agreement.

          THIS CLASS A CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

(Series 2008-4 Supplement)

A-1-6

 

ASSIGNMENT

Social Security or other identifying number of assignee                                              

          FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

	 	 	 
	 

          (name and address of assignee)

	 	 

the within certificate and all rights thereunder, and hereby irrevocably constitutes and appoints
                                        , attorney, to transfer said certificate on the
books kept for registration thereof, with full power of substitution in the premises.

			
	 	 	 
	Dated:                     
	 	                                                         2/

Signature Guaranteed:          

                                                                 

 

			
	2/	 	NOTE: The signature to this assignment must correspond
with the name of the registered owner as it appears on the face of the within
Certificate in every particular, without alteration, enlargement or any change
whatsoever.

(Series 2008-4 Supplement)

A-1-7

 

EXHIBIT A-2

FORM OF CLASS B CERTIFICATE

THIS CLASS B CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF PERSONS INVESTING ASSETS OF A
BENEFIT PLAN (AS DEFINED BELOW) OR AN INDIVIDUAL RETIREMENT ACCOUNT OTHER THAN BY INSURANCE
COMPANIES INVESTING ASSETS SOLELY OF THEIR GENERAL ACCOUNTS.

			
	 	 	 
	REGISTERED
	 	$                    3/
	 	 	 
	No. R-                    
	 	CUSIP No.  02582JFD7

          Unless this Class B Certificate is presented by an authorized representative of The Depository
Trust Company, a New York corporation (“DTC”), to American Express Receivables Financing
Corporation II, American Express Receivables Financing Corporation III LLC, American Express
Receivables Financing Corporation IV LLC or their agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.

AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST

SERIES 2008-4

CLASS B FLOATING RATE ASSET BACKED CERTIFICATE

Expected Final Payment Date:

The April 2014 Distribution Date

Each $100,000 minimum denomination represents a

1/33438/100ths undivided interest

in Class B of the

AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST, SERIES 2008-4

Evidencing an undivided interest in certain assets of a trust, the corpus of which consists
primarily of an interest in receivables generated from time to time in the ordinary course of
business in a portfolio of credit and charge accounts serviced by

AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.,

and other assets and interests constituting Trust Assets under the Pooling and Servicing Agreement
referred to below.

(Not an interest in or obligation of American Express Travel Related Services Company, Inc.,
American Express Centurion Bank, American Express Bank, FSB, American Express Receivables

 

			
	3/	 	Denominations of $100,000 and integral multiples of $1,000 in excess thereof.

(Series 2008-4 Supplement)

 

 

Financing Corporation II, American Express Receivables Financing Corporation III LLC, American
Express Receivables Financing Corporation IV LLC or any of their respective affiliates)

This certifies that CEDE & CO. (the “Class B Certificateholder”) is the registered owner of
a fractional, undivided interest in certain assets of a trust (the “Trust”) created
pursuant to the Pooling and Servicing Agreement, dated as of May 16, 1996, as amended and restated
as of January 1, 2006 (as amended and restated and otherwise amended and supplemented, the
“Agreement”), as supplemented by the Series 2008-4 Supplement, dated as of April 17, 2008
(as amended and supplemented, the “Supplement”), among American Express Receivables
Financing Corporation II, American Express Receivables Financing Corporation III LLC and American
Express Receivables Financing Corporation IV LLC, as transferors (together, the
“Transferors”), American Express Travel Related Services Company, Inc., as servicer, and
The Bank of New York, a New York banking corporation, as trustee (the “Trustee”). The
corpus of the Trust consists of (i) the Transferors’ ownership interest in a portfolio of
receivables (the “Receivables”) existing in credit and charge accounts identified under the
Agreement from time to time (the “Accounts”), (ii) all Receivables generated under the
Accounts from time to time thereafter, (iii) funds collected or to be collected from cardmembers in
respect of the Receivables, (iv) all funds which are from time to time on deposit in the Collection
Account, the Special Funding Account, and any other Series Accounts and (v) all other assets and
interests constituting the Trust. Although a summary of certain provisions of the Agreement and
the Supplement is set forth below and in the Summary of Terms and Conditions attached hereto and
made a part hereof, this Class B Certificate does not purport to summarize the Agreement and the
Supplement and reference is made to the Agreement and the Supplement for information with respect
to the interests, rights, benefits, obligations, proceeds and duties evidenced hereby and the
rights, duties and obligations of the Trustee. A copy of the Agreement and the Supplement (without
schedules) may be requested from the Trustee by writing to the Trustee at the Corporate Trust
Office. To the extent not defined herein, the capitalized terms used herein have the meanings
ascribed to them in the Agreement or the Supplement, as applicable.

          This Class B Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement and the Supplement, to which Agreement and Supplement, each as amended
and supplemented from time to time, the Class B Certificateholder by virtue of the acceptance
hereof assents and is bound.

          No Class B Certificate may be acquired by or for the account of any employee benefit plan,
trust or account, including an individual retirement account, that is subject to the Employee
Retirement Income Security Act of 1974, as amended, or that is described in Section 4975(e)(1) of
the Internal Revenue Code of 1986, as amended, or an entity whose underlying assets include plan
assets by reason of a plan’s investment in such entity (a “Benefit Plan”), unless (i) such acquirer
or holder is an insurance company, (ii) the source of funds used to acquire or hold such
Certificate (or interest therein) is an “insurance company general account” (as defined in U.S.
Department of Labor Prohibited Transaction Class Exemption (“PTCE”) 95-60), and (iii) the
conditions set forth in Sections I and III of PTCE 95-60 have been satisfied. By acquiring any
interest in this Class B Certificate, each applicable Certificate Owner shall be deemed to have
represented and warranted either (i) that it is not a Benefit Plan and is not acting for the
account of any Benefit Plan or (ii) that (1) it is an insurance company, (2) the source of funds
used to acquire or hold an interest in such Certificate is an “insurance company general account”
(as such term is defined in PTCE 95-60), and (3) the conditions set forth in Sections I and III of
PTCE 95-60 have been satisfied.

          THIS CLASS B CERTIFICATE IS SUBORDINATED TO THE EXTENT NECESSARY TO FUND PAYMENTS ON THE CLASS
A CERTIFICATES TO THE EXTENT SPECIFIED IN THE SUPPLEMENT.

(Series 2008-4 Supplement)

A-2-2

 

          It is the intent of the Transferors and the Class B Certificateholder that, for federal, state
and local income and franchise tax purposes, the Class B Certificates will qualify as indebtedness
of the Transferors secured by the Receivables. The Class B Certificateholder, by the acceptance of
this Class B Certificate, agrees to treat this Class B Certificate for federal, state and local
income and franchise tax purposes as debt of the Transferors.

          In general, payments of principal with respect to the Class B Certificates are limited to the
Class B Invested Amount, which may be less than the unpaid principal balance of the Class B
Certificates. The Expected Final Payment Date is the April 2014 Distribution Date, but principal
with respect to the Class B Certificates may be paid earlier or later under certain circumstances
described in the Agreement and the Supplement. If for one or more months during the Controlled
Accumulation Period there are not sufficient funds to pay the Controlled Deposit Amount, then to
the extent that excess funds are not available on subsequent Distribution Dates with respect to the
Controlled Accumulation Period to make up for such shortfalls, the final payment of principal of
the Class B Certificates will occur later than the Expected Final Payment Date.

          Unless the certificate of authentication hereon has been executed by or on behalf of the
Trustee, by manual signature, this Class B Certificate shall not be entitled to any benefit under
the Agreement or the Supplement or be valid for any purpose.

(Series 2008-4 Supplement)

A-2-3

 

          IN WITNESS WHEREOF, the Transferors have caused this Class B Certificate to be duly executed.

	 	 	 	 	 
	 	AMERICAN EXPRESS RECEIVABLES FINANCING 

CORPORATION II

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	AMERICAN EXPRESS RECEIVABLES FINANCING 

CORPORATION III LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	AMERICAN EXPRESS RECEIVABLES FINANCING 

CORPORATION IV LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Dated: April 17, 2008

(Series 2008-4 Supplement)

A-2-4

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

          This is one of the American Express Credit Account Master Trust Series 2008-4 Class B
Certificates described in the within mentioned Agreement and Supplement.

	 	 	 	 	 	 	 
	 	 	THE BANK OF NEW YORK,

as Trustee	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Authorized Signatory
	 	 
	 
	 	 	 	 	 	 
	 

	 	or	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

as Authenticating Agent

for the Trustee
	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Authorized Signatory
	 	 

(Series 2008-4 Supplement)

A-2-5

 

AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST

SERIES 2008-4

CLASS B FLOATING RATE ASSET BACKED CERTIFICATE

Summary of Terms and Conditions

          The Receivables consist of Principal Receivables which arise generally from the purchase of
goods and services and amounts advanced to cardmembers as cash advances and Finance Charge
Receivables. This Class B Certificate is one of a Series of Certificates entitled American Express
Credit Account Master Trust, Series 2008-4 (the “Series 2008-4 Certificates”), and one of a
class thereof entitled Class B Series 2008-4 Floating Rate Asset Backed Certificates (the
“Class B Certificates”), each of which represents a fractional, undivided interest in
certain assets of the Trust. The assets of the Trust are allocated in part to the investor
certificateholders of all outstanding Series (the “Certificateholders’ Interest”) with the
remainder allocated to the Holders of the Transferor Certificates. The aggregate interest
represented by the Class B Certificates at any time in the Principal Receivables in the Trust shall
not exceed an amount equal to the Class B Invested Amount at such time. The Class B Initial
Invested Amount is $33,438,000. The Class B Invested Amount on any date will be an amount equal to
(a) the Class B Initial Invested Amount, minus (b) the aggregate amount of principal payments made
to the Class B Certificateholder on or prior to such date, minus (c) the excess, if any, of the
aggregate amount of Class B Investor Charge-Offs for all prior Distribution Dates over Class B
Investor Charge-Offs reimbursed, minus (d) the amount of Reallocated Principal Collections
allocated on all prior Distribution Dates pursuant to subsection 4.08(a) of the Supplement
(excluding any Reallocated Principal Collections that have resulted in a reduction in the
Collateral Invested Amount pursuant to Section 4.08), minus (e) an amount equal to the amount by
which the Class B Invested Amount has been reduced to cover the Class A Investor Default Amount on
all prior Distribution Dates, and plus (f) the amount of Excess Spread and Excess Finance Charge
Collections allocated to Series 2008-4 and applied on all prior Distribution Dates for the purpose
of reimbursing amounts deducted pursuant to the foregoing clauses (c), (d) and (e); provided,
however, that the Class B Invested Amount may not be reduced below zero.

          Subject to the terms and conditions of the Agreement, the Transferors may, from time to time,
direct the Trustee, on behalf of the Trust, to issue one or more new Series of Investor
Certificates, which will represent fractional, undivided interests in certain of the Trust Assets.

          On each Distribution Date, the Paying Agent shall distribute to each Class B Certificateholder
of record on the last day of the preceding calendar month (each a “Record Date”) such Class
B Certificateholder’s pro rata share of such amounts (including amounts on deposit in the
Collection Account and Principal Funding Account) as are payable to the Class B Certificateholder
pursuant to the Agreement and the Supplement. Distributions with respect to this Class B
Certificate will be made by the Paying Agent by check mailed to the address of the Class B
Certificateholder of record appearing in the Certificate Register without the presentation or
surrender of this Class B Certificate or the making of any notation thereon (except for the final
distribution in respect of this Class B Certificate) except that with respect to Class B
Certificates registered in the name of Cede & Co., the nominee for The Depository Trust Company,
distributions will be made in the form of immediately available funds. Final payment of this Class
B Certificate will be made only upon presentation and surrender of this Class B Certificate at the
office or agency specified in the notice of final distribution delivered by the Trustee to the
Series 2008-4 Certificateholders in accordance with the Agreement and the Supplement.

          On any day occurring on or after the day on which the Invested Amount is reduced to 5% or less
of the Initial Invested Amount, the Transferors have the option to repurchase the Series 2008-4

(Series 2008-4 Supplement)

A-2-6

 

Certificateholders’ Interest in the Trust. The repurchase price will be equal to (a) if such
day is a Distribution Date, the Reassignment Amount for such Distribution Date or (b) if such day
is not a Distribution Date, the Reassignment Amount for the Distribution Date next following such
day. Following the deposit of the Reassignment Amount in the Collection Account, Series 2008-4
Certificateholders will not have any interest in the Receivables and the Series 2008-4 Certificates
will represent only the right to receive such Reassignment Amount.

          This Class B Certificate does not represent an obligation of, or an interest in, the
Transferors or the Servicer or any affiliate of any of them and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other governmental agency or instrumentality. This
Class B Certificate is limited in right of payment to certain Collections with respect to the
Receivables (and certain other amounts), all as more specifically set forth hereinabove and in the
Agreement and the Supplement.

          The Class B Certificates are issuable only in minimum denominations of $100,000 and integral
multiples of $1,000. The transfer of this Class B Certificate shall be registered in the
Certificate Register upon surrender of this Class B Certificate for registration of transfer at any
office or agency maintained by the Transfer Agent and Registrar accompanied by a written instrument
of transfer, in a form satisfactory to the Trustee or the Transfer Agent and Registrar, duly
executed by the Class B Certificateholder or such Class B Certificateholder’s attorney, and duly
authorized in writing with such signature guaranteed, and thereupon one or more new Class B
Certificates of authorized denominations and for the same aggregate fractional undivided interest
will be issued to the designated transferee or transferees.

          As provided in the Agreement and subject to certain limitations therein set forth, Class B
Certificates are exchangeable for new Class B Certificates evidencing like aggregate fractional
undivided interests as requested by the Class B Certificateholder surrendering such Class B
Certificates. No service charge may be imposed for any such exchange but the Servicer or Transfer
Agent and Registrar may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.

          The Servicer, the Transferors, the Trustee, the Paying Agent and the Transfer Agent and
Registrar and any agent of any of them, may treat the person in whose name this Class B Certificate
is registered as the owner hereof for all purposes, and none of the Servicer, the Transferors, the
Trustee, the Paying Agent, the Transfer Agent and Registrar, or any agent of any of them, shall be
affected by notice to the contrary except in certain circumstances described in the Agreement.

          THIS CLASS B CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

(Series 2008-4 Supplement)

A-2-7

 

ASSIGNMENT

Social Security or other identifying number of assignee                                              

          FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

	 	 	 
	 

          (name and address of assignee)

	 	 

the within certificate and all rights thereunder, and hereby irrevocably constitutes and appoints
                                        , attorney, to transfer said certificate on the
books kept for registration thereof, with full power of substitution in the premises.

			
	 	 	 
	Dated:                     
	 	                                                         4/

Signature Guaranteed:          

                                                                 

 

			
	4/	 	NOTE: The signature to this assignment must correspond
with the name of the registered owner as it appears on the face of the within
Certificate in every particular, without alteration, enlargement or any change
whatsoever.

(Series 2008-4 Supplement)

A-2-8

 

EXHIBIT B

FORM OF MONTHLY PAYMENT INSTRUCTIONS AND

NOTIFICATION TO THE TRUSTEE

 

AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST

SERIES 2008-4

 

          The undersigned, a duly authorized representative of American Express Travel Related Services
Company, Inc. (“TRS”), as Servicer pursuant to the Pooling and Servicing Agreement, dated
as of May 16, 1996, as amended and restated as of January 1, 2006 (as amended and restated and as
otherwise amended and supplemented, the “Pooling and Servicing Agreement”), among TRS,
American Express Receivables Financing Corporation II, American Express Receivables Financing
Corporation III LLC and American Express Receivables Financing Corporation IV LLC, as transferors
(together, the “Transferors”), and The Bank of New York, as trustee (the
“Trustee”), does hereby certify as follows:

          1. Capitalized terms used in this Certificate have their respective meanings set forth in the
Pooling and Servicing Agreement or the Series 2008-4 Supplement, dated as of April 17, 2008, among
TRS, the Transferors and the Trustee (as amended and supplemented, the “Supplement”), as
applicable.

          2. TRS is the Servicer.

          3. The undersigned is a Servicing Officer.

I. INSTRUCTION TO MAKE A WITHDRAWAL

          Pursuant to subsections 4.05(a), (b) and (c), the Servicer does hereby instruct the Trustee
(i) to make withdrawals from the Collection Account on                     ,
___, which date is a Distribution Date under the Supplement, in the aggregate amounts
(equal to the Class A Available Funds, Class B Available Funds and Collateral Available Funds,
respectively) as set forth below in respect of the following amounts and (ii) to apply the proceeds
of such withdrawals in accordance with subsections 4.05(a), (b) and (c):

          With respect to the Class A Certificates,

	 	 	 	 	 
	A) Pursuant to subsection 4.05(a)(i):
	 	 	 	 
	 
	 	 	 	 
	(1) Interest at the Class A
Certificate Rate for the related Interest
Accrual Period on the Class A Invested Amount
	 	$	                    	 
	 
	 	 	 	 
	(2) Class A Monthly
Interest previously
due but not paid
	 	$	                    	 

B-1

 

	 	 	 	 	 
	(3) Class A Additional
Interest and any Class A Additional Interest
due but not paid
	 	$	                    	 
	 
	 	 	 	 
	B) Pursuant to subsection 4.05(a)(ii):
	 	 	 	 
	 
	 	 	 	 
	(1) The Class A Servicing
Fee for the preceding Monthly Period, if
applicable
	 	$	                    	 
	 
	 	 	 	 
	(2) Accrued and unpaid
Class A Servicing Fees, if applicable
	 	$	                    	 
	 
	 	 	 	 
	C) Pursuant to subsection 4.05(a)(iii):
	 	 	 	 
	 
	 	 	 	 
	(1) Class A Investor
Default Amount for the preceding Monthly Period
	 	$	                    	 
	 
	 	 	 	 
	With respect to the Class B Certificates,
	 	 	 	 
	 
	 	 	 	 
	A) Pursuant to subsection 4.05(b)(i):
	 	 	 	 
	 
	 	 	 	 
	(1) Interest at the Class B
Certificate Rate for the related Interest
Accrual Period on the Class B Invested Amount
	 	$	                    	 
	 
	 	 	 	 
	(2) Class B Monthly
Interest previously due but not paid
	 	$	                    	 
	 
	 	 	 	 
	(3) Class B Additional
Interest and any Class B Additional Interest
previously due but not paid
	 	$	                    	 
	 
	 	 	 	 
	B) Pursuant to subsection 4.05(b)(ii):
	 	 	 	 
	 
	 	 	 	 
	(1) The Class B Servicing
Fee for the preceding Monthly Period, if
applicable
	 	$	                    	 
	 
	 	 	 	 
	(2) Accrued and unpaid
Class B Servicing Fees, if applicable
	 	$	                    	 
	 
	 	 	 	 
	With respect to the Collateral Interest
	 	 	 	 
	 
	 	 	 	 
	A) Pursuant to subsection 4.05(c)(i):
	 	 	 	 
	 
	 	 	 	 
	(1) The Collateral
Servicing Fee for the preceding Monthly Period,
if applicable
	 	$	                    	 
	 
	 	 	 	 
	(2) Accrued and unpaid
Collateral Servicing Fees, if applicable
	 	$	                    	 

          Pursuant to subsections 4.05(d), (e) and (f), the Servicer hereby instructs the Trustee (i) to
make withdrawals from the Collection Account on                     , which date is a
Distribution Date under the Supplement, in the aggregate amounts (equal to the Available Principal
Collections) as set

B-2

 

forth below in respect of the following amounts and (ii) to apply the proceeds of such
withdrawals in accordance with subsections 4.05(d), (e) and (f):

	 	 	 	 	 
	A) Pursuant to subsection 4.05(d):
	 	 	 	 
	 
	 	 	 	 
	(1) Amount to be treated as
Shared Principal Collections
	 	$	                    	 
	 
	 	 	 	 
	B) Pursuant to subsection 4.05(e):
	 	 	 	 
	 
	 	 	 	 
	(1) The lesser of the
Controlled Deposit Amount and the sum of the
Class A Adjusted Invested Amount and the Class
B Adjusted Invested Amount deposited in the
Principal Funding Account
	 	$	                    	 
	 
	 	 	 	 
	(2) After the Class B
Invested Amount is paid in full, the amount
paid to the Collateral Interest Holder (up to
the Collateral Invested Amount)
	 	$	                    	 
	 
	 	 	 	 
	(3) Prior to the date the
Class B Invested Amount is paid in full, amount
to be treated as Shared Principal Collections
	 	$	                    	 
	 
	 	 	 	 
	C) Pursuant to subsection 4.05(f):
	 	 	 	 
	 
	 	 	 	 
	(1) An amount up to the
Class A Adjusted Invested Amount deposited in
the Principal Funding Account
	 	$	                    	 
	 
	 	 	 	 
	(2) On and after the
Distribution Date on which the Class A Invested
Amount is paid in full, an amount up to the
Class B Invested Amount deposited in the
Principal Funding Account
	 	$	                    	 
	 
	 	 	 	 
	(3) On and after the
Distribution Date on which the Class B Invested
Amount is paid in full, an amount up to the
Collateral Invested Amount distributed to the
Collateral Interest Holder
	 	$	                    	 

          Pursuant to Section 4.07, the Servicer does hereby instruct the Trustee to apply on
                                        , which is a Distribution Date under the Supplement, any Excess Spread
and Excess Finance Charge Collections allocated to Series 2008-4 as follows:

	 	 	 	 	 
	A) Pursuant to subsection 4.07(a):
	 	 	 	 
	 
	 	 	 	 
	Class A Required Amount applied in the priority set
forth in subsections 4.05(a)(i), (ii) and (iii)
	 	$	                    	 
	 
	 	 	 	 
	B) Pursuant to subsection 4.07(b):
	 	 	 	 

B-3

 

	 	 	 	 	 
	Aggregate amount of Class A Investor Charge-Offs not
previously reimbursed allocated to Available
Principal Collections
	 	$	                    	 
	 
	 	 	 	 
	C) Pursuant to subsection 4.07(c):
	 	 	 	 
	 
	 	 	 	 
	Class B Required Amount applied in the priority set
forth in subsections 4.05(b)(i)
	 	$	                    	 
	 
	 	 	 	 
	D) Pursuant to subsection 4.07(d):
	 	 	 	 
	 
	 	 	 	 
	Interest accrued on aggregate outstanding principal
balance of the Class B Certificates not otherwise
distributed to Class B Certificateholders pursuant
to Section 4.07(c)
	 	$	                    	 
	 
	 	 	 	 
	E) Pursuant to subsection 4.07(d):
	 	 	 	 
	 
	 	 	 	 
	Amount (up to the Class B Investor Default) to be
applied as Available Principal Collections
	 	$	                    	 
	 
	 	 	 	 
	F) Pursuant to subsection 4.07(e):
	 	 	 	 
	 
	 	 	 	 
	The amount by which the Class B Invested Amount has
been reduced pursuant to clauses (c), (d) and (e) of
the definition thereof allocated to Available
Principal Collections
	 	$	                    	 
	 
	 	 	 	 
	G) Pursuant to subsection 4.07(f):
	 	 	 	 
	 
	 	 	 	 
	(1) Collateral Minimum Monthly Interest
	 	$	                    	 
	 
	 	 	 	 
	(2) Collateral Minimum
Monthly Interest previously due but not paid
	 	$	                    	 
	 
	 	 	 	 
	(3) Collateral Additional
Interest and any Collateral Additional Interest
previously due and not paid
	 	$	                    	 
	 
	 	 	 	 
	H) Pursuant to subsection 4.07(g):
	 	 	 	 
	 
	 	 	 	 
	Monthly Servicing Fee for such Distribution Date
that has not been paid to the Servicer and any
Monthly Servicing Fee previously due but not paid to
the Servicer
	 	$	                    	 
	 
	 	 	 	 
	I) Pursuant to subsection 4.07(h):
	 	 	 	 
	 
	 	 	 	 
	Collateral Default Amount allocated to Available
Principal Collections
	 	$	                    	 
	 
	 	 	 	 
	J) Pursuant to subsection 4.07(i):
	 	 	 	 

B-4

 

	 	 	 	 	 
	The amount by which the Collateral Invested Amount
has been reduced pursuant to clauses (c), (d) and
(e) of the definition thereof allocated to Available
Principal Collections
	 	$	                    	 
	 
	 	 	 	 
	K) Pursuant to subsection 4.07(j):
	 	 	 	 
	 
	 	 	 	 
	The excess of the Required Reserve Account Amount
over the Available Reserve Amount deposited into the
Reserve Account
	 	$	                    	 
	 
	 	 	 	 
	L) Pursuant to subsection 4.07(k):
	 	 	 	 
	 
	 	 	 	 
	Amount distributed to the Collateral Interest Holder
	 	$	                    	 

          Pursuant to Section 4.08, the Servicer does hereby instruct the Trustee to apply on
                    , which is a Distribution Date under the Pooling and Servicing
Agreement, $                     of Reallocated Principal Collections to fund any
deficiencies in the Required Amount after applying Class A Available Funds, Class B Available
Funds, Excess Spread and Excess Finance Charge Collections thereto.

II. INSTRUCTION TO MAKE CERTAIN PAYMENTS

          Pursuant to Section 5.01 of the Series Supplement, the Servicer does hereby instruct the
Trustee to pay in accordance with Section 5.01 from the Interest Funding Account or the Principal
Funding Account, as applicable, on                     , which date is a Payment Date under
the Supplement, the following amounts as set forth below:

	 	 	 	 	 
	A) Pursuant to subsection 5.01(a):
	 	 	 	 
	 
	 	 	 	 
	Interest to be distributed to Class A
Certificateholders
	 	$	                    	 
	 
	 	 	 	 
	B) Pursuant to subsection 5.01(b):
	 	 	 	 
	 
	 	 	 	 
	On the Expected Final Payment Date or a Special
Payment Date, principal to be distributed to the
Class A Certificateholders
	 	$	                    	 
	 
	 	 	 	 
	C) Pursuant to subsection 5.01(c):
	 	 	 	 
	 
	 	 	 	 
	Interest to be distributed to Class B
Certificateholders
	 	$	                    	 
	 
	 	 	 	 
	D) Pursuant to subsection 5.01(d):
	 	 	 	 
	 
	 	 	 	 
	On the Expected Final Payment Date or a Special
Payment Date, on or after the date Class A Invested
Amount is paid in full, principal to be distributed
to the Class B Certificateholders
	 	$	                    	 
	 
	 	 	 	 
	E) Pursuant to subsection 5.01(e):
	 	 	 	 

B-5

 

	 	 	 	 	 
	Aggregate amount to be distributed to the Collateral
Interest Holder
	 	$	                    	 

III. ACCRUED AND UNPAID AMOUNTS

          After giving effect to the withdrawals and transfers to be made in accordance with this
notice, the following amounts will be accrued and unpaid with respect to all Monthly Periods
preceding the current calendar month.

	 	 	 	 	 
	1. Subsection 4.06(a):
	 	 	 	 
	 
	 	 	 	 
	The aggregate amount of all unreimbursed Class A
Investor Charge-Offs
	 	$	                    	 
	 
	 	 	 	 
	2. Subsection 4.06(a), (b) and
4.08(a):
	 	 	 	 
	 
	 	 	 	 
	The aggregate amount by which the Class B Invested
Amount has been reduced pursuant to clauses (c), (d)
and (e) of the definition thereof
	 	$	                    	 
	 
	 	 	 	 
	3. Subsection 4.06(a), (b), (c) and
4.08(a) and (b):
	 	 	 	 
	 
	 	 	 	 
	The aggregate amount by which the Collateral
Invested Amount has been reduced pursuant to clauses
(c), (d) and (e) of the definition thereof
	 	$	                    	 

          IN WITNESS WHEREOF, the undersigned has duly executed this Certificate this         
day of                     , ___.

	 	 	 	 	 
	 	AMERICAN EXPRESS TRAVEL RELATED 

SERVICES COMPANY, INC., as Servicer

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

B-6

 

EXHIBIT C-1

FORM OF MONTHLY STATEMENT

AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST

SERIES 2008-4

	 	 	 	 	 
	A) Information regarding distributions on
the Distribution Date in respect of the Class A
Certificates per $1,000 original certificate principal
amount
	 	 	 	 
	 
	 	 	 	 
	(1) The total amount of
the distribution
	 	$	                    	 
	 
	 	 	 	 
	(2) The amount of the
distribution in respect of Class A Monthly
Interest
	 	$	                    	 
	 
	 	 	 	 
	(3) The amount of the
distribution in respect of Class A Outstanding
Monthly Interest
	 	$	                    	 
	 
	 	 	 	 
	(4) The amount of the
distribution in respect of Class A Additional
Interest
	 	$	                    	 
	 
	 	 	 	 
	(5) The amount of the
distribution in respect of principal of the
Class A Certificates
	 	$	                    	 
	 
	 	 	 	 
	B) Class A Investor Charge-Offs and
Reimbursement of Class A Investor Charge-Offs
	 	 	 	 
	 
	 	 	 	 
	(1) The total amount of
Class A Investor Charge-Offs
	 	$	                    	 
	 
	 	 	 	 
	(2) The amount of Class A
Investor Charge-Offs per $1,000 original
certificate principal amount
	 	$	                    	 
	 
	 	 	 	 
	(3) The total amount
reimbursed in respect of Class A Investor
Charge-Offs
	 	$	                    	 
	 
	 	 	 	 
	(4) The amount reimbursed
in respect of Class A Investor Charge-Offs per
$1,000 original certificate principal amount
	 	$	                    	 
	 
	 	 	 	 
	(5) The amount, if any, by
which the outstanding principal balance of the
Class A Certificates exceeds the Class A
Invested Amount after giving effect to all
transactions on such Distribution Date
	 	$	                    	 

C-1-1

 

	 	 	 	 	 
	C) Information regarding distributions in
respect of the Class B Certificates, per $1,000
original certificate principal amount
	 	 	 	 
	 
	 	 	 	 
	(1) The total amount of
the distribution in respect of Class B
Certificates
	 	$	                    	 
	 
	 	 	 	 
	(2) The amount of the
distribution in respect of Class B Monthly
Interest
	 	$	                    	 
	 
	 	 	 	 
	(3) The amount of the
distribution in respect of Class B Outstanding
Monthly Interest
	 	$	                    	 
	 
	 	 	 	 
	(4) The amount of the
distribution in respect of Class B Additional
Interest
	 	$	                    	 
	 
	 	 	 	 
	(5) The amount of the
distribution in respect of principal of the
Class B Certificates
	 	$	                    	 
	 
	 	 	 	 
	D) Amount of reductions in Class B
Invested Amount pursuant to clauses (c), (d), and (e)
of the definition of Class B Invested Amount on such
Distribution Date
	 	 	 	 
	 
	 	 	 	 
	(1) The amount of
reductions in Class B Invested Amount pursuant
to clauses (c), (d) and (e) of the definition
of Class B Invested Amount
	 	$	                    	 
	 
	 	 	 	 
	(2) The amount of the
reductions in the Class B Invested Amount per
$1,000 original certificate principal amount
	 	$	                    	 
	 
	 	 	 	 
	(3) The total amount
reimbursed in respect of such reductions in
the Class B Invested Amount
	 	$	                    	 
	 
	 	 	 	 
	(4) The amount reimbursed
in respect of such reductions in the Class B
Invested Amount, per $1,000 original
certificate principal amount
	 	$	                    	 
	 
	 	 	 	 
	(5) The amount, if any, by
which the outstanding principal balance of the
Class B Certificates exceeds the Class B
Invested Amount after giving effect to all
transactions on such Distribution Date
	 	$	                    	 
	 
	 	 	 	 
	E) Information regarding distributions on
the Distribution Date to the Collateral Interest Holder
	 	 	 	 
	 
	 	 	 	 
	(1) The total amount
distributed to the Collateral Interest Holder
	 	$	                    	 

C-1-2

 

	 	 	 	 	 
	(2) The amount of the
distribution in respect of Collateral Minimum
Monthly Interest
	 	$	                    	 
	 
	 	 	 	 
	(3) The amount of the
distribution in respect of Collateral
Additional Interest
	 	$	                    	 
	 
	 	 	 	 
	(4) The amount distributed
to the Collateral Interest Holder in respect
of principal on the Collateral Invested Amount
	 	$	                    	 
	 
	 	 	 	 
	(5) The amount of the
distribution to the Collateral Interest Holder
in respect of remaining Excess Spread
	 	$	                    	 
	 
	 	 	 	 
	F) Amount of reductions in Collateral
Invested Amount pursuant to clauses (c), (d), and (e)
of the definition of Collateral Invested Amount
	 	 	 	 
	 
	 	 	 	 
	(1) The amount of
reductions in the Collateral Invested Amount
pursuant to clauses (c), (d) and (e) of the
definition of Collateral Invested Amount
	 	$	                    	 
	 
	 	 	 	 
	(2) The total amount
reimbursed in respect of such reductions in
the Collateral Invested Amount
	 	$	                    	 

C-1-3

 

	 	 	 	 	 
	 	 	TRUST	 
	TRUST ACTIVITY	 	TOTALS	 
	Record Date
	 	 	 	 
	 	 	 	 
	Number of days in Monthly Period
	 	 	 	 
	 	 	 	 
	Beginning Number of Accounts
	 	 	 	 
	 	 	 	 
	Beginning Principal Receivable Balance, including any
Addition or Removal of Principal Receivables during the
Monthly Period	 	$	 	 
	 	 	 	 
	a. Addition of the Principal Receivables
	 	$	 	 
	 	 	 	 
	b. Removal of the Principal Receivables
	 	$	 	 
	 	 	 	 
	Special Funding Account Balance
	 	$	 	 
	 	 	 	 
	Beginning Total Principal Balance
	 	$	 	 
	 	 	 	 
	Finance Charge Collections (excluding Recoveries)
	 	$	 	 
	 	 	 	 
	Recoveries
	 	$	 	 
	 	 	 	 
	Total Collections of Finance Charge Receivables
	 	$	 	 
	 	 	 	 
	Total Collections of Principal Receivables
	 	$	 	 
	 	 	 	 
	Monthly Payment Rate
	 	 	  	%
	 	 	 	 
	Defaulted Amount
	 	$	 	 
	 	 	 	 
	Annualized Default Rate
	 	 	  	%
	 	 	 	 
	Trust Portfolio Yield
	 	 	 	%
	 	 	 	 
	New Principal Receivables
	 	$	 	 
	 	 	 	 
	Ending Number of Accounts
	 	 	 	 
	 	 	 	 
	Ending Principal Receivables Balance
	 	$	 	 
	 	 	 	 
	Ending Required Minimum Principal Balance
	 	$	 	 
	 	 	 	 
	Ending Transferor Amount
	 	$	 	 
	 	 	 	 
	Ending Special Funding Account Balance
	 	$	 	 
	 	 	 	 
	Ending Total Principal Balance
	 	$	 	 
	 	 	 	 
	 	 	 	 	 
	SERIES ALLOCATIONS
	 	 	 	 
	Group Number
	 	 	 	 
	 	 	 	 
	Invested Amount
	 	$	 	 
	 	 	 	 
	Adjusted Invested Amount
	 	$	 	 
	 	 	 	 
	Principal Funding Account Balance
	 	$	 	 
	 	 	 	 
	Series Required Transferor Amount
	 	$	 	 
	 	 	 	 
	Series Allocation Percentage
	 	 	 	%
	 	 	 	 
	Series Allocable Finance Charge Collections
	 	$	 	 
	 	 	 	 
	Series Allocable Recoveries
	 	$	 	 
	 	 	 	 
	Series Allocable Principal Collections
	 	$	 	 
	 	 	 	 
	Series Allocable Defaulted Amount
	 	$	 	 
	 	 	 	 
	 	 	 	 	 
	GROUP ALLOCATIONS
	 	 	 	 
	Group Number
	 	 	 	 
	 	 	 	 
	Invested Amount
	 	$	 	 
	 	 	 	 
	Investor Finance Charge Collections
	 	$	 	 
	 	 	 	 
	Investor Monthly Interest
	 	$	 	 
	 	 	 	 
	Investor Default Amount
	 	$	 	 
	 	 	 	 

C-1-4

 

	 	 	 	 	 
	 	 	TRUST	 
	TRUST ACTIVITY	 	TOTALS	 
	Investor Monthly Fees
	 	$	 	 
	 
	 	 	 
	Investor Additional Amounts
	 	$	 	 
	 
	 	 	 
	Total
	 	$	 	 
	 
	 	 	 
	Reallocated Investor Finance Charge Collections
	 	$	 	 
	 
	 	 	 
	Investment Funding Account Proceeds
	 	$	 	 
	 
	 	 	 
	Available Excess
	 	$	 	 
	 
	 	 	 
	Group Investor Finance Charge Collections
	 	$	 	 
	 
	 	 	 
	Group Expenses
	 	$	 	 
	 
	 	 	 
	Group Reallocable Investor Finance Charge Collections
	 	$	 	 
	 
	 	 	 
	 
	 	 	 	 
	TRUST PERFORMANCE
	 	 	 	 
	Delinquencies
	 	 	 	 
	31-60 Days

Delinquent
	 	 	 	 
	 
	 	 	 
	61-90 Days 

Delinquent
	 	 	 	 
	 
	 	 	 
	90+ Days

Delinquent
	 	 	 	 
	 
	 	 	 
	Total 30+ Days

Delinquent
	 	 	 	 
	 
	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	TOTAL	 	 	 	 
	INVESTOR/TRANSFEROR	 	SERIES	 	 	INVESTOR	 	 	TRANSFERORS’	 
	ALLOCATIONS	 	ALLOCATIONS	 	 	INTEREST	 	 	INTEREST	 
	Beginning Invested
Amount/Transferor Amount
	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 
	Beginning Adjusted
Invested Amount
	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 
	Floating Allocation
Percentage
	 	 	  	%	 	 	  	%	 	 	  	%
	 
	 	 	 	 	 	 	 	 	 
	Principal Allocation
Percentage
	 	 	  	%	 	 	  	%	 	 	  	%
	 
	 	 	 	 	 	 	 	 	 
	Collections of Finance
Charge Receivables
	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 
	Collections of Principal
Receivables
	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 
	Defaulted Amount
	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 
	Ending Invested
Amount/Transferor Amount
	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 

C-1-5

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	MONTHLY PERIOD	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FUNDING	 	 	 	 	 	 	 	 	 	COLLATERAL	 	 	 	 
	REQUIREMENTS	 	CLASS A	 	 	CLASS B	 	 	INTEREST	 	 	TOTAL	 
	Principal Funding Account
Balance
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Investment Proceeds for
Monthly Period
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Reserve Account Opening
Balance
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Reserve Account Deposit
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Reserve Draw Amount
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Reserve Account Surplus
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Reserve Account Closing
Balance
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	LIBOR Determination Date
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	Coupon (__/__/__ to
__/__/__)
	 	 	  	%	 	 	  	%	 	 	  	%	 	 	  	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Monthly Interest Due
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Outstanding Monthly
Interest Due
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Additional Interest Due
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total Interest Due
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Investor Default Amount
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Investor Monthly Fees Due
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Investor Additional
Amounts Due
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total Due
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Reallocated Investor
Finance Charge Collections
	 	 	 	 	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Interest and Principal
Funding Investment
Proceeds
	 	 	 	 	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Interest on Reserve Account
	 	 	 	 	 	 	 	 	 	 	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Series Adjusted Portfolio
Yield
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Base Rate
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Excess Spread Percentage
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	CERTIFICATES -	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	BALANCES	 	 	 	 	 	 	 	 	 	COLLATERAL	 	 	 	 
	AND DISTRIBUTIONS	 	CLASS A	 	 	CLASS B	 	 	INTEREST	 	 	TOTAL	 
	Beginning Certificates
Balance
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Distributions of Interest
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Deposits to the Principal
Funding Account
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Distributions of Principal
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Total Distributions
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Ending Certificates Balance
	 	$	 	 	 	$	 	 	 	$	 	 	 	$	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 

C-1-6

 

	 	 	 	 	 
	APPLICATION OF REALLOCATED INVESTOR FINANCE CHARGE COLLECTIONS
	 	 	 	 
	1. CLASS A AVAILABLE FUNDS
	 	 	 	 
	a. Class A Monthly Interest
	 	$	 	 
	 
	 	 	 
	b. Class A Outstanding Monthly Interest
	 	$	 	 
	 
	 	 	 
	c. Class A Additional Interest
	 	$	 	 
	 
	 	 	 
	d. Class A Investor Default Amount (treated as
Available Principal Collections)
	 	$	 	 
	 
	 	 	 
	e. Excess Spread
	 	$	 	 
	 
	 	 	 
	2. CLASS B AVAILABLE FUNDS
	 	 	 	 
	a. Class B Monthly Interest
	 	$	 	 
	 
	 	 	 
	b. Class B Outstanding Monthly Interest
	 	$	 	 
	 
	 	 	 
	c. Class B Additional Interest
	 	$	 	 
	 
	 	 	 
	d. Excess Spread
	 	$	 	 
	 
	 	 	 
	3. COLLATERAL AVAILABLE FUNDS
	 	 	 	 
	a. Excess Spread
	 	$	 	 
	 
	 	 	 
	 
	 	 	 	 
	4. TOTAL EXCESS SPREAD
	 	 	 	 
	REALLOCATED PRINCIPAL COLLECTIONS
	 	$	 	 
	 
	 	 	 
	1. Principal Allocation Percentage
	 	 	  	%
	 
	 	 	 
	2. Series 2008-4 Allocable Principal Collections
	 	$	 	 
	 
	 	 	 
	3. Principal Allocation Percentage of Series
2008-4 Allocable Principal Collections
	 	$	 	 
	 
	 	 	 
	4. Reallocated Principal Collections Required to fund
the Required Amount
	 	$	 	 
	 
	 	 	 
	5. Item 3 minus Item 4
	 	$	 	 
	 
	 	 	 
	6. Shared Principal Collections from other Series
allocated to Series 2008-4
	 	$	 	 
	 
	 	 	 
	7. Other amounts treated as Available Principal
Collections
	 	$	 	 
	 
	 	 	 
	8. Available Principal Collections (total of items 5, 6
and 7)
	 	$	 	 
	 
	 	 	 
	 
	 	 	 	 
	APPLICATION OF AVAILABLE PRINCIPAL COLLECTIONS DURING REVOLVING PERIOD
	 	 	 	 
	1. Collateral Invested Amount
	 	$	 	 
	 
	 	 	 
	2. Required Collateral Invested Amount
	 	$	 	 
	 
	 	 	 
	3. Excess of Collateral Invested Amount over Required
Collateral Invested Amount
	 	$	 	 
	 
	 	 	 
	4. Treated as Shared Principal Collections
	 	$	 	 
	 
	 	 	 
	 
	 	 	 	 
	APPLICATION OF PRINCIPAL COLLECTIONS DURING ACCUMULATION OR AMORTIZATION PERIOD
	 	 	 	 
	1. Principal Funding Account
	 	$	 	 
	 
	 	 	 
	2. Excess of Collateral Invested Amount over Required
Collateral Invested Amount
	 	$	 	 
	 
	 	 	 

C-1-7

 

	 	 	 	 	 
	3. Distribution of Principal
	 	$	 	 
	 
	 	 	 
	4. Treated as Shared Principal Collections
	 	$	 	 
	 
	 	 	 
	 
	 	 	 	 
	APPLICATION OF EXCESS SPREAD AND EXCESS FINANCE CHARGE
COLLECTIONS ALLOCATED TO SERIES 2008-4
	 	 	 	 
	1. Excess Spread
	 	$	 	 
	 
	 	 	 
	2. Excess Finance Charge Collections
	 	$	 	 
	 
	 	 	 
	3. Applied to fund Class A Required Amount
	 	$	 	 
	 
	 	 	 
	4. Class A Investor Charge-Offs treated as Available
Principal Collections
	 	$	 	 
	 
	 	 	 
	5. Applied to fund overdue Class B Interest
	 	$	 	 
	 
	 	 	 
	6. Applied to fund Class B Required Amount
	 	$	 	 
	 
	 	 	 
	7. Reduction of Class B Invested Amount treated as
Available Principal Collections
	 	$	 	 
	 
	 	 	 
	8. Applied to Collateral Minimum Monthly Interest
	 	$	 	 
	 
	 	 	 
	9. Applied to unpaid Monthly Servicing Fee
	 	$	 	 
	 
	 	 	 
	10. Collateral Default Amount treated as Available
Principal Collections
	 	$	 	 
	 
	 	 	 
	11. Reduction of Collateral Invested Amount treated as
Available Principal Collections
	 	$	 	 
	 
	 	 	 
	12. Deposited to Reserve Account
	 	$	 	 
	 
	 	 	 
	13. Remaining Excess Spread distributed to Collateral
Interest Holder(s)
	 	$	 	 
	 
	 	 	 
	 
	 	 	 	 
	YIELD AND BASE RATE
	 	 	 	 
	1. Base Rate
	 	 	 	 
	Current Monthly Period
	 	 	  	%
	 
	 	 	 
	Prior Monthly Period
	 	 	  	%
	 
	 	 	 
	Second Prior Monthly
Period
	 	 	  	%
	 
	 	 	 
	2. Three Month Average
Base Rate
	 	 	  	%
	 
	 	 	 
	3. Series Adjusted
Portfolio Yield
	 	 	 	 
	Current Monthly Period
	 	 	  	%
	 
	 	 	 
	Prior Monthly Period
	 	 	  	%
	 
	 	 	 
	Second Prior Monthly
Period
	 	 	  	%
	 
	 	 	 
	4. Three Month average
Series Adjusted Portfolio
Yield
	 	 	  	%
	 
	 	 	 

C-1-8

 

	 	 	 	 	 
	5. Is the 3 month average
Series Adjusted Portfolio
Yield more than the 3
month average Base Rate?
	 	[Yes/No]

C-1-9

 

EXHIBIT C-2

FORM OF ANNUAL PAYMENT INFORMATION

AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST

SERIES 2008-4

FOR THE YEAR ENDED DECEMBER 31, 200[_]

     The undersigned, a duly authorized representative of American Express Travel Related Services
Company, Inc. (“TRS”), as Servicer pursuant to the Pooling and Servicing Agreement, dated as of May
16, 1996, as amended and restated as of January 1, 2006 (as amended and restated and as otherwise
amended and supplemented, the “Pooling and Servicing Agreement”), among TRS, American Express
Receivable Financing Corporation II, American Express Receivable Financing Corporation III LLC and
American Express Receivable Financing Corporation IV LLC, as transferors (together, the
“Transferors”) and The Bank of New York, as trustee (the “Trustee”), does hereby certify as
follows:

     Capitalized terms used in this Certificate have their respective meanings set forth in the
Pooling and Servicing Agreement or the Series 2008-4 Supplement, dated as of April 17, 2008, among
TRS, the Transferors and the Trustee (as amended and supplemented, the “Supplement”), as
applicable.

     Pursuant to Section 5.01 of the Series Supplement, the Servicer instructed the Trustee to pay
in accordance with Section 5.01 from the Interest Funding Account or the Principal Funding Account,
as applicable, the following aggregate amounts during the year ended December 31, 200[_]:

	 	 	 	 	 
	A) Pursuant to subsection 5.01(a):
	 	 	 	 
	Interest distributed to Class A Certificateholders
	 	$	 	 
	 
	 	 	 
	B) Pursuant to subsection 5.01(b):
	 	 	 	 
	On the Expected Final Payment Date or a Special
Payment Date, if applicable, principal distributed
to the Class A Certificateholders
	 	$	 	 
	 
	 	 	 
	C) Pursuant to subsection 5.01(c):
	 	 	 	 
	Interest distributed to Class B Certificateholders
	 	$	 	 
	 
	 	 	 
	D) Pursuant to subsection 5.01(d):
	 	 	 	 
	On the Expected Final Payment Date or a Special
Payment Date, if applicable, on or after the date
Class A Invested Amount is paid in full, principal
distributed to the Class B Certificateholders
	 	$	 	 
	 
	 	 	 
	E) Pursuant to subsection 5.01(e):
	 	 	 	 
	Aggregate amount distributed to the Collateral
Interest Holder in respect of interest
	 	$	 	 
	 
	 	 	 

C-2-1

 

	 	 	 	 	 
	Aggregate amount distributed to the Collateral
Interest Holder in respect of principal
	 	$	 	 
	 
	 	 	 

IN WITNESS WHEREOF, the undersigned has duly executed this Certificate this [_] day of January,
200[_].

	 	 	 	 	 
	 	AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY,
INC., as Servicer
 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

C-2-2

 

EXHIBIT D

FORM OF MONTHLY SERVICER’S CERTIFICATE

AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC.

AMERICAN EXPRESS CREDIT ACCOUNT MASTER TRUST

     The undersigned, a duly authorized representative of American Express Travel Related Services
Company, Inc., as Servicer (“TRS”), pursuant to the Pooling and Servicing Agreement, dated
as of May 16, 1996, as amended and restated as of January 1, 2006 (as amended and restated and as
otherwise amended and supplemented, the “Agreement”), as supplemented by the Series
Supplements (as amended and supplemented, the “Series Supplements”), among TRS, as
Servicer, American Express Receivables Financing Corporation II, American Express Receivables
Financing Corporation III LLC and American Express Receivables Financing Corporation IV LLC, as
Transferors, and The Bank of New York, as Trustee, does hereby certify as follows:

     1. Capitalized terms used in this Certificate have their respective meanings as set forth in
the Agreement or the Series Supplement, as applicable.

     2. TRS is, as of the date hereof, the Servicer under the Agreement.

     3. The undersigned is a Servicing Officer.

     4. This Certificate relates to the Distribution Date occurring on                                          ,200        
            and covers activity from
                                         ,200                     through               
                           ,200           .

     5. As of the date hereof, to the best knowledge of the undersigned, the Servicer has performed
in all material respects all its obligations under the Agreement through the Monthly Period
preceding such Distribution Date [or, if there has been a default in the performance of any such
obligation, set forth in detail the (i) nature of such default, (ii) the action taken by the
Servicer, if any, to remedy such default and (iii) the current status of each such default; if
applicable, insert “None”].

     6. As of the date hereof, to the best knowledge of the undersigned, no Pay Out Event occurred
on or prior to such Distribution Date.

     IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Certificate this
                     day of                     , 20         .

	 	 	 	 	 	 	 
	 	 	AMERICAN EXPRESS TRAVEL RELATED	 	 
	 	 	SERVICES COMPANY, INC.,	 	 
	 	 	as Servicer	 	 
	 	 	 	 	 	 	 
	 	 	By:	 	 	 	 
	 	 	 	 	 
Name:	 	 
	 	 	 	 	Title:	 	 

D- 1

 

EXHIBIT E

FORM OF INVESTMENT LETTER

[Date]

	 	 	 	 	 
	 

	 	Re:
	 	American Express Credit Account Master Trust;
	 

	 	 	 	Purchases of Series 2008-4 Collateral Interest

Ladies and Gentlemen:

     This letter (the “Investment Letter”) is delivered by the undersigned (the “Purchaser”)
pursuant to Section 9.07 of the Series 2008-4 Supplement, dated as of April 17, 2008 (the “Series
Supplement”) to the Pooling and Servicing Agreement, dated as of May 16, 1996, as amended and
restated as of January 1, 2006 (as amended and restated and as otherwise amended and supplemented,
the “Agreement”), each among The Bank of New York, as Trustee, American Express Receivables
Financing Corporation II, American Express Receivables Financing Corporation III LLC and American
Express Receivables Financing Corporation IV LLC, as Transferors, and American Express Travel
Related Services Company, Inc., as Servicer. Capitalized terms used herein without definition
shall have the meanings set forth in the Agreement. The Purchaser represents to and agrees with
the Transferors as follows:

	 	(a)	 	The Purchaser has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of its
investment in the Collateral Interest and is able to bear the economic risk of
such investment.
	 
	 	(b)	 	The Purchaser is an “accredited investor,” as defined in Rule
501, promulgated by the Securities and Exchange Commission (the “Commission”)
under the Securities Act of 1933, as amended (the “Securities Act”), or is a
sophisticated institutional investor. The Purchaser understands that the
offering and sale of the Collateral Interest has not been and will not be
registered under the Securities Act and has not and will not be registered or
qualified under any applicable “Blue Sky” law, and that the offering and sale
of the Collateral Interest has not been reviewed by, passed on or submitted to
any federal or state agency or commission, securities exchange or other
regulatory body.
	 
	 	(c)	 	The Purchaser is acquiring an interest in the Collateral
Interest without a view to any distribution, resale or other transfer thereof
except, with respect to any Collateral Interest or any interest or
participation therein, as contemplated in the following sentence. The
Purchaser will not resell or otherwise transfer any interest or participation
in the Collateral Interest, except in accordance with Section 9.07 of the
Series Supplement and (i) in a transaction exempt from the registration
requirements of the Securities Act and applicable state securities or “blue
sky” laws; (ii) to a Transferor or any affiliate of a Transferor; or (iii) to a
person who the Purchaser reasonably believes is a qualified institutional buyer
(within the meaning thereof in Rule 144A under the Securities Act) that is
aware that the resale or other transfer is being made in reliance upon Rule
144A. In connection therewith, the Purchaser hereby agrees that it will not
resell or otherwise transfer the Collateral Interest or any interest therein
unless the purchaser thereof provides to the addressee hereof a letter
substantially in the form hereof.

E- 1

 

	 	(d)	 	No portion of the Collateral Interest or any interest therein
may be Transferred, and each Assignee will certify that it is not, (a) an
“employee benefit plan” (as defined in Section 3(3) of ERISA), including
governmental plans and church plans, (b) any “plan” (as defined in Section
4975(e)(1) of the Code) including individual retirement accounts and Keogh
plans, or (c) any other entity whose underlying assets include “plan assets”
(within the meaning of Department of Labor Regulation Section 2510.3-101, 29
C.F.R. § 2510.3-101 or otherwise under ERISA) by reason of a plan’s investment
in the entity, including, without limitation, an insurance company general
account.
	 
	 	(e)	 	This Investment Letter has been duly executed and delivered and
constitutes the legal, valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles affecting the enforcement of
creditors’ rights generally and general principles of equity.

	 	 	 	 	 
	 	Very truly yours,

[NAME OF PURCHASER]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	AGREED TO AS OF THE DATE FIRST ABOVE	 	 
	WRITTEN:
	 	 	 	 
	 
	 	 	 	 
	AMERICAN EXPRESS RECEIVABLES FINANCING	 	 
	CORPORATION II,	 	 
	as Transferor	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	AMERICAN EXPRESS RECEIVABLES	 	 
	FINANCING CORPORATION III LLC,	 	 
	as Transferor	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	AMERICAN EXPRESS RECEIVABLES FINANCING	 	 
	CORPORATION IV LLC,	 	 
	as Transferor	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 

E- 2exv4w2

 

MACKINAC FINANCIAL CORPORATION 401(K) PLAN

Established as of January 1, 1994

Amended and Restated as of May 1, 2008

Copyright 2002-2008

Miller, Canfield, Paddock and Stone, P.L.C.

All Rights Reserved.

 

 

MACKINAC FINANCIAL CORPORATION 401(K) PLAN

TABLE OF CONTENTS

	 	 	 	 	 
	ARTICLE 1 INTRODUCTION
	 	 	 	 
	Section 1.01 Plan and Trust
	 	 	1	 
	Section 1.02 Application of Amended and Restated Plan and Trust
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2 DEFINITIONS
	 	 	 	 
	 
	 	 	 	 
	ARTICLE 3 PARTICIPATION
	 	 	 	 
	Section 3.01 Elective Deferrals
	 	 	15	 
	Section 3.02 Matching Contributions
	 	 	15	 
	Section 3.03 Transfers
	 	 	15	 
	Section 3.04 Termination and Rehires
	 	 	15	 
	Section 3.05 Procedures for Admission
	 	 	16	 
	Section 3.06 Waiver
	 	 	16	 
	 
	 	 	 	 
	ARTICLE 4 CONTRIBUTIONS
	 	 	 	 
	Section 4.01 Elective Deferrals
	 	 	17	 
	Section 4.02 Matching Contributions
	 	 	17	 
	Section 4.03 Qualified Nonelective Contributions
	 	 	18	 
	Section 4.04 Rollover Contributions
	 	 	19	 
	Section 4.05 Transfers
	 	 	19	 
	Section 4.06 Military Service
	 	 	19	 
	Section 4.07 Timing of Contributions
	 	 	20	 
	Section 4.08 Multiple Employer Plan
	 	 	20	 
	 
	 	 	 	 
	ARTICLE 5 LIMITATIONS ON CONTRIBUTIONS
	 	 	 	 
	Section 5.01 Limitations on Elective Deferrals
	 	 	21	 
	Section 5.02 Nondiscrimination
	 	 	21	 
	Section 5.03 Correction of Discriminatory Contributions
	 	 	23	 
	Section 5.04 Maximum Amount of Annual Additions
	 	 	25	 
	 
	 	 	 	 
	ARTICLE 6 VESTING
	 	 	 	 
	Section 6.01 Participant Contributions
	 	 	28	 
	Section 6.02 Matching Contributions
	 	 	28	 
	Section 6.03 Forfeitures
	 	 	28	 
	 
	 	 	 	 
	ARTICLE 7 DISTRIBUTIONS
	 	 	 	 
	Section 7.01 Commencement of Distributions
	 	 	30	 
	Section 7.02 Timing and Form of Distributions
	 	 	30	 
	Section 7.03 Cash-Out of Small Balances
	 	 	32	 
	Section 7.04 Beneficiary
	 	 	33	 
	Section 7.05 Restrictions on Deferral
	 	 	34	 
	Section 7.06 Direct Rollovers
	 	 	35	 
	Section 7.07 Minor or Legally Incompetent Payee
	 	 	36	 
	Section 7.08 Missing Payee
	 	 	36	 

i

 

	 	 	 	 	 
	Section 7.09 Distributions on Termination of Plan or Disposition of Assets or Subsidiary
	 	 	36	 
	 
	 	 	 	 
	ARTICLE 8 IN-SERVICE DISTRIBUTIONS AND LOANS
	 	 	 	 
	Section 8.01 Standard Withdrawals
	 	 	37	 
	Section 8.02 Withdrawals at any Time
	 	 	38	 
	Section 8.03 Transfer Account
	 	 	38	 
	Section 8.04 Rules Regarding Distributions
	 	 	38	 
	Section 8.05 Loans
	 	 	38	 
	 
	 	 	 	 
	ARTICLE 9 INVESTMENT AND VALUATION OF TRUST FUND
	 	 	 	 
	Section 9.01 Investment of Assets
	 	 	41	 
	Section 9.02 Participant Self Direction
	 	 	41	 
	Section 9.03 Individual Accounts
	 	 	42	 
	Section 9.04 Qualifying Employer Investments
	 	 	42	 
	Section 9.05 Allocation of Earnings and Losses
	 	 	42	 
	Section 9.06 Voting Rights
	 	 	43	 
	 
	 	 	 	 
	ARTICLE 10 TRUST FUND
	 	 	 	 
	Section 10.01 Trust Fund
	 	 	44	 
	Section 10.02 Duties of the Trustee
	 	 	45	 
	Section 10.03 General Investment Powers
	 	 	46	 
	Section 10.04 Other Investment Powers
	 	 	49	 
	Section 10.05 Instructions
	 	 	49	 
	Section 10.06 Investment of the Fund
	 	 	50	 
	Section 10.07 Compensation and Indemnification
	 	 	52	 
	Section 10.08 Resignation and Removal
	 	 	52	 
	 
	 	 	 	 
	ARTICLE 11 SPECIAL “TOP-HEAVY” RULES
	 	 	 	 
	Section 11.01 “Top-Heavy” Status
	 	 	54	 
	Section 11.02 Minimum Allocations
	 	 	54	 
	Section 11.03 Minimum Vesting
	 	 	54	 
	 
	 	 	 	 
	ARTICLE 12 PLAN ADMINISTRATION
	 	 	 	 
	Section 12.01 Plan Administrator
	 	 	56	 
	Section 12.02 Investment Fiduciary
	 	 	57	 
	Section 12.03 Compensation of Plan Administrator and Investment Fiduciary
	 	 	58	 
	Section 12.04 Plan Expenses
	 	 	58	 
	Section 12.05 Allocation of Fiduciary Responsibility
	 	 	58	 
	Section 12.06 Indemnification
	 	 	58	 
	Section 12.07 Claims Procedures
	 	 	59	 
	 
	 	 	 	 
	ARTICLE 13 AMENDMENT, MERGER AND TERMINATION
	 	 	 	 
	Section 13.01 Amendment
	 	 	61	 
	Section 13.02 Merger and Transfer
	 	 	62	 
	Section 13.03 Termination
	 	 	62	 
	 
	 	 	 	 
	ARTICLE 14 MISCELLANEOUS
	 	 	 	 
	Section 14.01 Nonalienation of Benefits
	 	 	63	 
	Section 14.02 Rights of Alternate Payees
	 	 	63	 
	Section 14.03 No Right to Employment
	 	 	65	 

ii

 

	 	 	 	 	 
	Section 14.04 No Right to Trust Assets
	 	 	65	 
	Section 14.05 Participant Benefiting
	 	 	65	 
	Section 14.06 Governing Law
	 	 	65	 
	Section 14.07 Severability of Provisions
	 	 	65	 
	Section 14.08 Headings and Captions
	 	 	65	 
	Section 14.09 Gender and Number
	 	 	65	 
	 
	 	 	 	 
	EGTRRA ADDENDUM
	 	 	67	 
	 
	 	 	 	 
	REQUIRED MINIMUM DISTRIBUTION ADDENDUM
	 	 	72	 
	 
	 	 	 	 
	FINAL 401(k)-(m) REGULATION ADDENDUM
	 	 	77	 

iii

 

PREAMBLE

     WHEREAS, Mackinac Financial Corporation, a Michigan Corporation (formerly known as North
Country Financial Corporation)(the “Plan Sponsor”), adopted a qualified profit-sharing plan, with a
cash-or-deferred arrangement forming part of the Plan, for the benefit of its eligible employees,
effective January 1, 1994;

     NOW, THEREFORE, the Plan Sponsor hereby amends and restates the Mackinac Financial Corporation
401(k) Plan, effective as of May 1, 2008 (except as otherwise noted) pursuant to the following
provisions:

iv

 

ARTICLE 1

INTRODUCTION

Section 1.01 PLAN AND TRUST

     The Plan Sponsor hereby amends and restates this Plan, effective May 1, 2008. This Plan and
its related Trust are intended to qualify as a tax-exempt profit-sharing plan and trust under Code
sections 401(a) and 501(a), respectively, and the cash-or-deferred arrangement forming part of the
Plan is intended to qualify under Code section 401(k).

Section 1.02 APPLICATION OF AMENDED AND RESTATED PLAN AND TRUST

     Except as otherwise specifically provided herein, the provisions of this amended and restated
Plan shall apply to those individuals who are Eligible Employees of the Company on or after May 1,
2008. Except as otherwise specifically provided herein, the rights and benefits, if any, of former
Eligible Employees of the Company whose employment terminated prior to May 1, 2008, shall be
determined under the provisions of the Plan, as in effect from time to time prior to that date.

1

 

ARTICLE 2

DEFINITIONS

     “Account” means the balance of a Participant’s interest in the Trust Fund as of the
applicable date. “Account” or “Accounts” shall include, for any Participant, his Elective Deferral
Account, Matching Contribution Account, Rollover Contribution Account, Qualified Nonelective
Contribution Account, Transfer Account and such other account(s) or subaccount(s) as the Plan
Administrator, in its discretion, deems appropriate.

     “Actual Contribution Percentage” means the ratio (expressed as a percentage) of
Matching Contributions (excluding Matching Contributions forfeited pursuant to Sections 5.01 and
5.03) for a Participant for the Plan Year to the Participant’s Testing Compensation for such year.
A Matching Contribution shall be considered “for the Plan Year” only if (a) it is made on account
of the Participant’s Elective Deferral for that Plan Year, (b) it is allocated to his Matching
Contribution Account during such Plan Year, and (c) it is paid to the Trust Fund by the last day of
the 12th month after the end of such Plan Year. The Actual Contribution Percentage of a
Participant who does not receive a Matching Contribution shall be zero. Testing Compensation shall
include any amount which is contributed by the Company pursuant to a salary reduction agreement and
which is not includable in the gross income of the Employee under Code sections 125, 402(e)(3),
402(h)(1)(B), 403(b) or 457. For Plan Years beginning on and after January 1, 2001, Testing
Compensation shall include elective amounts that are not includable in the gross income of the
Participant under Code sections 125, 132(f), 402(e)(3), 402(h), 403(b) or 457.

     “Actual Deferral Percentage” means the ratio (expressed as a percentage) of the sum of
Elective Deferrals and Qualified Nonelective Contributions made on behalf of a Participant for the
Plan Year to the Participant’s Testing Compensation for that year. An Elective Deferral shall be
considered “for the Plan Year” only if it relates to Compensation that either (a) would have been
received by the Participant in the Plan Year, but for his deferral election, or (b) is attributable
to services performed by the Participant during the Plan Year and would have been received by him
within 2-1/2 months after the close of the Plan Year, but for his deferral election. In addition,
an Elective Deferral will not be counted in the Actual Deferral Percentage for the Plan Year unless
it is allocated to the Participant’s Elective Deferral Account by the last day of the Plan Year and
is actually paid to the Trust Fund by the last day of the 12th month after the end of such Plan
Year, nor shall a Nonhighly Compensated Employee’s Excess Elective Deferrals be counted in the
Actual Deferral Percentage. Qualified Nonelective Contributions shall be counted in the Actual
Deferral Percentage only if they satisfy the additional requirements set forth in the Treasury
Regulations prescribed under Code section 401(k)(3)(D)(ii) and if they are treated as an Elective
Deferral pursuant to Section 5.02. The Actual Deferral Percentage of a Participant who is eligible
but does not make an Elective Deferral and who does not receive an allocation of a Qualified
Nonelective Contribution shall be zero. Testing Compensation shall include any amount which is
contributed by the Company pursuant to a salary reduction agreement and which is not includable in
the gross income of the Employee under Code sections 125, 402(e)(3), 402(h), 403(b) or 457. For
Plan Years beginning on and after January 1, 2001, Testing Compensation shall include elective
amounts that are not

2

 

includable in the gross income of the Participant under Code sections 125, 132(f), 402(e)(3),
402(h), 403(b) or 457.

     “Alternate Payee” means the person entitled to receive payment of benefits under the
Plan pursuant to a Qualified Domestic Relations Order.

     “Annual Addition” means the sum of the following amounts credited to a Participant’s
Account for the Limitation Year:

     (a) Company contributions allocated to a Participant’s Account, including Elective Deferrals,
Matching Contributions and Qualified Nonelective Contributions. Company contributions shall also
include Excess Elective Deferrals, unless such amounts are distributed no later than the first May
15 following the close of the Participant’s taxable year;

     (b) forfeitures;

     (c) amounts allocated, after March 31, 1984, to an individual medical account, as defined in
Code section 415(l)(2), which is part of a pension or annuity plan maintained by the Employer;

     (d) amounts derived from contributions paid or accrued after December 31, 1985, in taxable
years ending after such date, which are attributable to post-retirement medical benefits, allocated
to the separate account of a key employee, as defined in Code section 419A(d)(3), under a welfare
benefit fund, as defined in Code section 419(e), maintained by the Employer; and

     (e) allocations under a simplified employee pension.

     “Annuity Starting Date” means the first day of the first period for which an amount is
paid as an annuity or any other form.

     “Average Contribution Percentage” means the average (expressed as a percentage) of the
Actual Contribution Percentages of the Participants in a specified group.

     “Average Deferral Percentage” means the average (expressed as a percentage) of the
Actual Deferral Percentages of the Participants in a specified group.

     “Beneficiary” means the person(s) entitled to receive benefits, under Section 7.04 of
the Plan, upon the Participant’s death.

     “Board” means the Board of Directors of the Plan Sponsor.

     “Code” means the Internal Revenue Code of 1986, as amended from time to time.

     “Company” means the Plan Sponsor and any other entity that has adopted the Plan with
the approval of the Plan Sponsor.

3

 

     “Compensation” means wages within the meaning of Code section 3401(a) and all other
payments of compensation to an Employee by the Employer (in the course of the Employer’s trade or
business) for which the Employer is required to furnish the Employee a written statement under Code
sections 6041(d), 6051(a)(3), and 6052. Compensation must be determined without regard to any
rules under Code section 3401(a) that limit the remuneration included in wages based on the nature
or location of the employment or the services performed (such as the exception for agricultural
labor in Code section 3401(a)(2)). For any Self-Employed Individual covered under the Plan,
Compensation will mean Earned Income.

     Compensation shall also include any amount which is contributed by the Company pursuant to a
salary reduction agreement and which is not includable in the gross income of the Employee under
Code sections 125, 132(f), 402(e)(3), 402(h), 403(b) or 457.

     Compensation shall include only that remuneration which is actually paid to the Participant by
the Company during the Plan Year.

     Compensation shall exclude all of the following items (even if includable in gross income):
reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses,
deferred compensation, and welfare benefits.

     For any Plan Year, the annual Compensation of each Employee taken into account for determining
all benefits provided under the Plan shall not exceed $150,000 or such other amount in effect under
Code section 401(a)(17)(B). The amount in effect for a calendar year applies to any determination
period that begins during such calendar year.

     If a determination period consists of fewer than 12 months, the annual Compensation limit is
an amount equal to the otherwise applicable annual Compensation limit multiplied by a fraction, the
numerator of which is the number of months in the short determination period, and the denominator
of which is 12.

     “Determination Date” means the last day of the preceding Plan Year.

     “Disabled” or “Disability” means a finding by the Plan Administrator that the
Participant is mentally or physically disabled under uniform rules consistently applied to all
Participants in like circumstances.

     “Earned Income” means the net earnings from self-employment in the trade or business
with respect to which the Plan is established, for which personal services of the individual are a
material income-producing factor. Net earnings will be determined without regard to items not
included in gross income and the deductions allocable to such items. Net earnings are reduced by
contributions by the Employer to a qualified plan to the extent deductible under Code section 404.
Net earnings shall be determined with regard to the deduction allowed to the taxpayer by Code
section 164(f) for taxable years beginning after December 31, 1989.

4

 

     “Effective Date” means May 1, 2008; provided, however, that when a provision of the
Plan states an effective date other than May 1, 2008, such stated specific effective date shall
apply as to that provision. The Plan is an amendment and restatement of a Plan that was originally
effective January 1, 1994.

     “Elective Deferral” means an Employee contribution made to the Plan on a pre-tax basis
pursuant to Article 4 of the Plan.

     “Elective Deferral Account” means so much of a Participant’s Account as consists of a
Participant’s Elective Deferrals made to the Plan.

     “Eligible Employee” means any Employee employed by the Company but excluding (a) any
Employee who is included in a unit of Employees covered by a collective bargaining agreement, if
retirement benefits were the subject of good faith bargaining, and if the collective bargaining
agreement does not provide for participation in this Plan or (b) any Employee who is a non-resident
alien who received no earned income (within the meaning of Code section 911(d)(2)) which
constitutes income from services performed within the United States (within the meaning of Code
section 861(a)(3)).

     If an individual (other than a Self-Employed Individual) is subsequently reclassified as, or
determined to be, an Employee by a court, the Internal Revenue Service or any other governmental
agency or authority, or if the Company is required to reclassify such individual as an Employee as
a result of such reclassification determination (including any reclassification by the Company in
settlement of any claim or action relating to such individual’s employment status), such individual
shall not become an Eligible Employee by reason of such reclassification or determination.

     In addition, an individual who becomes employed by the Employer in a transaction between the
Employer and another entity that is a stock or asset acquisition, merger, or other similar
transaction involving a change in the employer of the employees of the trade or business shall not
become eligible to participate in the Plan until such time as the Plan Sponsor specifically
authorizes such participation.

     “Employee” means any individual who is employed by the Employer, including a
Self-Employed Individual. The term “Employee” includes any Leased Employee of the Employer. No
Leased Employee may become a Participant hereunder unless he becomes an Eligible Employee. The
term “Employee” shall not include a person who is classified by the Employer as an independent
contractor or a person (other than a Self-Employed Individual) who is not treated an employee for
purposes of withholding federal employment taxes.

     “Employer” means the Company or any other employer required to be aggregated with the
Company under Code sections 414(b), (c), (m) or (o); provided, however, that
“Employer” shall not include any entity or unincorporated trade or business prior to the date on
which such entity, trade or business satisfies the affiliation or control tests described above.
In identifying “Employer” for purposes of Section 5.04, the definition in Code sections 414(b) and
(c) shall be modified as provided in Code section 415(h).

5

 

     “Employment Commencement Date” means the first date on which the Eligible Employee
performs an Hour of Service.

     “ERISA” means the Employee Retirement Income Security Act of 1974, all amendments
thereto and all federal regulations promulgated pursuant thereto.

     “Excess Elective Deferral” means Elective Deferrals made in excess of the limit
described in Section 5.01.

     “Highly Compensated Employee” means any Employee who during the Plan Year performs
services for the Employer and who:

     (a) was a More Than 5% Owner at any time during the Plan Year or the preceding Plan Year; or

     (b) during the calendar year beginning with or within the preceding Plan Year received Testing
Compensation in excess of the Code section 414(q)(1) amount ($80,000 as adjusted) and was a member
of the top paid group of Employees within the meaning of Code section 414(q)(3). Notwithstanding
the foregoing, for the Plan Year beginning between January 1, 1997 and December 31, 1997 the
determination under this Subsection (b) shall be made with regard to Testing Compensation paid for
the calendar year ending within such Plan Year.

     For purposes of determining who is a Highly Compensated Employee, Testing Compensation shall
include amounts excludable under Code sections 125, 132(f), 402(e)(3), 402(h), 403(b) or 457.

     The determination of who is a Highly Compensated Employee will be made in accordance with Code
section 414(q) and the regulations thereunder to the extent they are not inconsistent with the
method established above.

     The term Highly Compensated Employee also includes a former Employee who was a Highly
Compensated Employee when he separated from service or at any time after attaining age 55.

     “Hour of Service” means:

     (a) Each hour for which an Employee is paid, or entitled to payment, for the performance of
duties for the Employer. These hours will be credited to the Employee for the computation period
in which the duties are performed.

     (b) Each hour for which an Employee is paid, or entitled to payment, by the Employer on
account of a period of time during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence. No more than 501 hours of
service will be credited under this paragraph for any single continuous period (whether

6

 

or not such period occurs in a single computation period). Hours under this paragraph will be
calculated and credited pursuant to DOL Reg. section 2530.200b-2 which is incorporated herein by
this reference.

     (c) Each hour for which back pay, irrespective of mitigation of damages, is either awarded or
agreed to by the Employer. The same hours of service will not be credited both under paragraph (a)
or paragraph (b), as the case may be, and under this paragraph (c). These hours will be credited
to the Employee for the computation period or periods to which the award or agreement pertains
rather than the computation period in which the award, agreement or payment is made.

     Solely for purposes of determining whether a One-Year Break in Service for vesting purposes
has occurred, an individual who is absent from work for maternity or paternity reasons shall
receive credit for the hours of service which would otherwise have been credited to such individual
but for such absence, or in any case in which such hours cannot be determined, 8 hours of service
per day of such absence. For purposes of this paragraph, an absence from work for maternity or
paternity reasons means an absence (1) by reason of the pregnancy of the individual, (2) by reason
of a birth of a child of the individual, (3) by reason of the placement of a child with the
individual in connection with the adoption of such child by such individual, or (4) for purposes of
caring for such child for a period beginning immediately following such birth or placement. The
hours of service credited under this paragraph shall be credited (1) in the computation period in
which the absence begins if the crediting is necessary to prevent a break in service in that
period, or (2) in all other cases, in the following computation period.

     Notwithstanding the foregoing, for determining service under the elapsed time method, an Hour
of Service means each hour for which an Employee is paid or entitled to payment for the performance
of duties for the Employer.

     Hours of service will be credited for employment with the Employer. Hours of service will
also be credited for any individual considered an Employee for purposes of this Plan under Code
sections 414(n) or 414(o).

     If the Employer maintains the plan of a predecessor employer, service with such employer will
be treated as service for the Employer.

     Service with respect to qualified military service shall be credited in accordance with Code
section 414(u) and service shall also be determined to the extent required by the Family and
Medical Leave Act of 1993.

     “Investment Fiduciary” means the fiduciary appointed by the Plan Sponsor pursuant to
Section 12.02.

     “Investment Funds” means the funds in which the Trust Fund is invested.

     “Investment Manager” means an investment manager as described in section 3(38) of
ERISA.

7

 

     “Key Employee” means an Employee or former Employee (and each of his Beneficiaries)
who, at any time during the Plan Year containing the Determination Date for the Plan Year in
question or any of the four preceding Plan Years, is:

     (a) An officer of the Employer (as that term is defined in Treasury Regulations promulgated
under Code section 416) if such officer’s Testing Compensation for such Plan Year exceeds 50% of
the amount in effect under Code section 415(b)(1)(A); or

     (b) One of the 10 Employees owning (directly or by attribution, under Code section 318) the
largest interests in the Employer, provided:

          (1) the Employee’s Testing Compensation from the Employer for the Plan Year exceeds 100% of
the amount in effect under Code section 415(c)(1)(A), and

          (2) the Employee owns (either directly or by attribution, under Code section 318) more than
one-half of one percent (.5%) of the outstanding stock of the Employer or stock possessing more
than one-half of one percent (.5%) of the total combined voting power of all stock of the Employer
or, in the case of an unincorporated business, more than one-half of one percent (.5%) of the
capital or profits interest in the Employer; or

     (c) A More Than 5% Owner; or

     (d) A “more than 1% owner” of the Employer, meaning an Employee who (1) has Testing
Compensation from the Employer of more than $150,000 for such Plan Year, and (2) owns (either
directly or by attribution, under Code section 318) more than 1% of the outstanding stock of the
Employer or stock possessing more than 1% of the total combined voting power of all stock of the
Employer or, in the case of an unincorporated business, any person who owns more than 1% of the
capital or profits interest in the Employer.

     For purposes of this definition and the definition of More Than 5% Owner, employers that would
otherwise be aggregated under Code section 414(b), (c), or (m) shall be treated as separate
employers in determining percentage ownership, and Testing Compensation shall include amounts
deducted pursuant to a salary reduction agreement which are excludable from the Employee’s gross
income under Code section 125, 402(e)(3), 402(h), 403(b) or 457. For Plan Years beginning on and
after January 1, 2001, Testing Compensation shall include elective amounts that are not includable
in the gross income of the Participant under Code sections 125, 132(f), 402(e)(3), 402(h), 403(b)
or 457.

     “Leased Employee” means any person (other than an 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 for the Employer and related persons determined in
accordance with Code section 414(n)(6)) on a substantially full time basis for a period of at least
one year, and such services are performed under primary direction or control by the Employer.
Contributions or benefits provided a Leased Employee by the leasing organization which are
attributable to services performed for the Employer shall be treated as provided by the Employer.

8

 

A person shall not be considered a Leased Employee if: (i) such person is covered by a money
purchase pension plan providing: (1) a nonintegrated employer contribution rate of at least 10
percent of compensation, as defined in Code section 415(c)(3), but including amounts contributed
pursuant to a salary reduction agreement which are excludable from the employee’s gross income
under Code sections 125, 402(e)(3), 402(h)(1)(B), 403(b) or 457 (Effective for Plan Years beginning
on or after January 1, 2001, Code sections 125, 132(f), 402(e)(3), 402(h)(1)(B), 403(b) or 457),
(2) immediate participation, and (3) full and immediate vesting; and (ii) Leased Employees do not
constitute more than 20 percent of the Employer’s nonhighly compensated work force.

     “Limitation Year” means the Plan Year. All qualified plans maintained by the Employer
must use the same Limitation Year. If the Limitation Year is amended to a different 12-consecutive
month period, the new Limitation Year must begin on a date within the Limitation Year in which the
amendment is made.

     “Matching Contribution” means an Employer Matching Contribution made to the Plan on
behalf of the Participant pursuant to Article 4 of the Plan.

     “Matching Contribution Account” means so much of a Participant’s Account as consists
of Matching Contributions made to the Plan.

     “Month of Eligibility Service” means a one-month period of service commencing with an
Employee’s Employment Commencement Date (and each one month anniversary thereof) and ending on the
date on which eligibility service is being determined. In order to determine the number of whole
Months of Eligibility Service, nonsuccessive periods of service and less than whole month periods
of service shall be aggregated on the basis that 30 days are deemed to be a month. In order to
determine the number of whole Months of Eligibility Service, an Employee will receive credit for
any Period of Severance of less than 12 consecutive months. Service with North Country Financial
Corporation shall be treated as service with the Employer for eligibility purposes. All Months of
Eligibility Service with the Employer are taken into account except that in the case of a
Participant who does not have any nonforfeitable right to the Account balance derived from Employer
contributions, Months of Eligibility Service before a period of five (5) consecutive One-Year
Periods of Severance will not be taken into account in computing eligibility service. If a
Participant’s Months of Eligibility Service are disregarded pursuant to the preceding sentence,
such Participant will be treated as a new Employee for eligibility purposes. If a Participant’s
Months of Eligibility Service may not be disregarded pursuant to the foregoing, such Participant
shall participate in the Plan pursuant to the terms of Article 3.

     “More Than 5% Owner” means any person who owns (either directly or by attribution,
under Code section 318) more than 5% of the outstanding stock of the Employer or stock possessing
more than 5% of the total combined voting power of all stock of the Employer or, in the case of an
unincorporated business, any person who owns more than 5% of the capital or profits interest in the
Employer.

     “Non-Key Employee” means any Employee or former Employee who is not a Key Employee.

9

 

     “Nonhighly Compensated Employee” means an Employee who is not a Highly Compensated
Employee.

     “Normal Retirement Age” means attainment of age 65.

     “One-Year Break in Service” means, for purposes of determining a Year of Vesting
Service, a Vesting Computation Period during which an Employee is credited with 500 or fewer Hours
of Service.

     “One-Year Period of Severance” means a Period of Severance of at least 12 consecutive
months. In the case of an individual who is absent from work for maternity or paternity reasons,
the 12-consecutive month period beginning on the first anniversary of the first date of such
absence shall not constitute One-Year Period of Severance. For purposes of this paragraph, an
absence from work for maternity or paternity reasons means an absence (1) by reason of the
pregnancy of the individual, (2) by reason of the birth of a child of the individual, (3) by reason
of the placement of a child with the individual in connection with the adoption of such child by
such individual, or (4) for purposes of caring for such child for a period beginning immediately
following such birth or placement.

     “Participant” means an Eligible Employee who participates in the Plan in accordance
with Article 3.

     “Period of Severance” means a continuous period of time during which the Employee does
not perform an Hour of Service for the Employer. Such period begins on the date the Employee
retires, dies, quits or is discharged, or if earlier, the 12 month anniversary of the date on which
the Employee was otherwise first absent from service.

     “Permissive Aggregation Group” means the Required Aggregation Group of plans, plus any
other plan or plans of the Employer which, when considered as a group with the Required Aggregation
Group, would continue to satisfy the requirements of Code sections 401(a)(4) and 410.

     “Plan” means the Mackinac Financial Corporation 401(k) Plan, as set forth in this
instrument and any amendments or supplements thereto.

     “Plan Administrator” means the person(s) designated pursuant to Section 12.01 of the
Plan.

     “Plan Sponsor” means Mackinac Financial Corporation and any successor thereto.

     “Plan Year” means the 12-consecutive month period ending on each December 31.

     “Present Value” means a benefit of equivalent value and shall be based only on the
interest and mortality rates specified in the defined benefit plan, if any. In the absence of such
specifications in the defined benefit plan, Present Value shall be determined by applying the

10

 

then-current purchase rates for qualified, single payment non-participating immediate annuities
discounting the resulting value by 6% per annum.

     “Qualified Domestic Relations Order” means any judgment, decree, or order (including
approval of a property settlement agreement) that constitutes a “qualified domestic relations
order” within the meaning of Code section 414(p).

     “Qualifying Employer Security” means, pursuant to ERISA section 407(d)(5), an employer
security which is stock, a marketable obligation (as defined in ERISA section 407(e)) or an
interest in a publicly traded partnership (as defined in Code section 7704(b)), but only if such
partnership is an existing partnership as defined in 10211(c)(2)(A) of the Revenue Act of 1987
(Public Law 100-203). For purposes of the Plan, Qualifying Employer Security shall only include
the Company’s Class A Common Stock.

     “Qualified Nonelective Contribution” means a contribution made by the Company that is
allocated to a Participant’s Qualified Nonelective Contribution Account pursuant to Article 4.

     “Qualified Nonelective Contribution Account” means so much of a Participant’s Account
as consists of Qualified Nonelective Contributions made to the Plan.

     “Required Aggregation Group” means (a) each qualified plan of the Employer in which at
least one Key Employee participates in the Plan Year containing the Determination Date or any of
the four preceding Plan Years, and (b) each other plan (including a terminated plan) of the
Employer which, during the period, enables any plan in which a Key Employee participates to meet
the requirements of Code sections 401(a)(4) or 410.

     “Required Beginning Date” means the later of the May 1 of the calendar year following
the calendar year in which the Participant attains age 70-1/2 or retires; except that benefit
distributions to a More Than 5% Owner must commence by the May 1 of the calendar year following the
calendar year in which the Participant attains age 70-1/2.

     “Rollover Contribution” means an Employee contribution made to the Plan as a rollover
from another qualified plan or individual retirement account pursuant to Article 4 of the Plan.

     “Rollover Contribution Account” means so much of a Participant’s Account as consists
of a Participant’s Rollover Contributions made to the Plan.

     “Self-Employed Individual” means any individual who has Earned Income for the taxable
year from the trade or business for which the Plan is established, including an individual who
would have Earned Income but for the fact that the trade or business had no net profits for the
taxable year.

     “Termination” and Termination of Employment” means any absence from service
that ends the employment of the Employee with the Employer.

11

 

     “Testing Compensation” means wages within the meaning of Code section 3401(a) and all
other payments of compensation to an Employee by the Employer (in the course of the Employer’s
trade or business) for which the Employer is required to furnish the Employee a written statement
under Code sections 6041(d), 6051(a)(3), and 6052. Testing Compensation must be determined without
regard to any rules under Code section 3401(a) that limit the remuneration included in wages based
on the nature or location of the employment or the services performed (such as the exception for
agricultural labor in Code section 3401(a)(2)). For any Self-Employed Individual, Testing
Compensation shall mean Earned Income.

     Notwithstanding any other provision hereof to the contrary, the annual Testing Compensation of
each Employee taken into account under the Plan for any Plan Year shall not exceed the amount in
effect for such year under Code section 401(a)(17). If a Plan Year consists of fewer than 12
months, the applicable limitation under Code section 401(a)(17) will be multiplied by a fraction,
the numerator of which is the number of months in such year, and the denominator of which is 12.

     “Top-Heavy Ratio” means:

     (a) If the Employer maintains one or more defined contribution plans and the Employer has not
maintained any defined benefit plan which, during the five-year period ending on the Determination
Date, has or has had accrued benefits, the Top-Heavy Ratio for this Plan alone or for the Required
or Permissive Aggregation Group, as appropriate, is a fraction, the numerator of which is the sum
of the Account balances of all Key Employees as of the Determination Date (including any part of
any Account balance distributed in the five-year period ending on the Determination Date, including
any distributions during that period from a terminated plan), and the denominator of which is the
sum of all Account balances (including any part of any Account balance distributed in the five-year
period ending on the Determination Date, including any distributions during that period from a
terminated plan), both computed in accordance with Code section 416 and the Treasury Regulations
promulgated thereunder. Both the numerator and denominator of the Top-Heavy Ratio shall be
adjusted to reflect any contribution not actually made as of the Determination Date, but which is
required to be taken into account on that date under Code section 416 and the Treasury Regulations
thereunder.

     (b) If the Employer maintains one or more defined contribution plans and maintains or has
maintained one or more defined benefit plans which, during the five-year period ending on the
Determination Date, has or has had any accrued benefits, the Top-Heavy Ratio for any Required or
Permissive Aggregation Group, as appropriate, is a fraction, the numerator of which is the sum of
account balances under the aggregated defined contribution plan or plans for all Key Employees,
determined in accordance with subsection (a) above, and the Present Value of accrued benefits under
the aggregated defined benefit plan or plans for all Key Employees as of the Determination Date,
and the denominator of which is the sum of the account balances under the aggregated defined
contribution plan or plans for all Participants (determined in accordance with subsection (c)
below), and the Present Value of accrued benefits under the defined benefit plan or plans for all
Participants as of the Determination Date, all determined in accordance with Code section 416 and
the Treasury Regulations promulgated thereunder. The accrued benefits under a defined benefit plan
in both the numerator and denominator of the Top-Heavy Ratio are
adjusted for any distribution of an accrued benefit made in the five-year period ending on the
Determination Date.

12

 

     (c) For purposes of subsections (a) and (b) above, the value of Account balances and the
Present Value of accrued benefits will be determined as of the most recent Valuation Date during
the 12-month period ending on the Determination Date, except as provided in Code section 416 and
the Treasury Regulations thereunder for the first and second plan years of a defined benefit plan.
The Account balances and accrued benefits of a Participant (1) who is not a Key Employee but who
was a Key Employee in a prior year, or (2) who has not performed any services for the Employer
maintaining the Plan at any time during the five-year period ending on the Determination Date will
be disregarded. The calculation of the Top-Heavy Ratio, and the extent to which distributions,
rollovers, and transfers are taken into account will be made in accordance with Code section 416
and the Treasury Regulations promulgated thereunder. Deductible Employee contributions will not be
taken into account for purposes of computing the Top-Heavy Ratio. When aggregating plans, the
value of Account balances and accrued benefits will be calculated with reference to the
Determination Dates that fall within the same calendar year.

     “Transfer Account” means so much of a Participant’s Account as consists of amounts
transferred from another qualified plan pursuant to Article 4 in a transaction that was not an
eligible rollover distribution within the meaning of Code section 402.

     “Trust Fund” means all of the assets of the Plan held by the Trustee pursuant to
Article 10 or held by an insurance company pursuant to section 403 of ERISA.

     “Trustee” means Linda Bolda, Kelly W. George and Ernie R. Krueger.

     “Valuation Date” means each business day; provided however, investments in Qualifying
Employer Securities shall be valued as of the last business day of each month (or, as soon as
administratively feasible after the last business day of each month).

     “Vesting Computation Period” means, for purposes of determining Years of Vesting
Service, the Plan Year.

     “Year of Vesting Service” means a Vesting Computation Period during which the Employee
completes at least 1,000 Hours of Service.

     The following service shall be disregarded in determining Years of Vesting Service:

     (a) For an Employee who has five consecutive One-Year Breaks in Service and except to the
extent provided in Article 6, all periods of service after such One-Year Breaks in Service shall be
disregarded for the purpose of vesting the Employee’s employer-derived Account balance that accrued
before such Breaks in Service, but except as provided in (b) below, both the service before and
after such One-Year Breaks in Service shall count for purposes of vesting the Employee’s
employer-derived Account balance that accrues after such One-Year Breaks in Service.

13

 

     (b) If an Employee does not have any nonforfeitable right to the Account balance derived from
Employer contributions, Years of Vesting Service before a period of five (5) consecutive One-Year
Breaks in Service will not be taken into account in computing vesting service.

     Service with North Country Financial Corporation shall be treated as service with the Employer
for vesting purposes.

14

 

ARTICLE 3

PARTICIPATION

Section 3.01 ELECTIVE DEFERRALS

     Each Eligible Employee as of the Effective Date who was eligible to participate in the Plan
with respect to Elective Deferrals immediately prior to the Effective Date shall be a Participant
eligible to make Elective Deferrals pursuant Article 4 on the Effective Date. Each other Eligible
Employee who was not a Participant in the Plan with respect to Elective Deferrals immediately prior
to the Effective Date, shall become a Participant eligible to make Elective Deferrals on the
business day following his attainment of age 18 and the completion of one (1) Hour of Service in
three (3) consecutive months (such period shall commence on his Employment Commencement Date);
provided, that he is an Eligible Employee at the end of that period.

Section 3.02 MATCHING CONTRIBUTIONS

     Each Eligible Employee as of the Effective Date who was eligible to participate in the Plan
with respect to Matching Contributions immediately prior to the Effective Date shall be a
Participant eligible to receive Matching Contributions pursuant to Article 4 on the Effective Date.
Each other Eligible Employee who was not a Participant in the Plan with respect to Matching
Contributions immediately prior to the Effective Date, shall become a Participant eligible to
receive Matching Contributions on the business day following his attainment of age 18 and the
completion of one (1) Hour of Service in three (3) consecutive months (such period shall commence
on his Employment Commencement Date); provided, that he is an Eligible Employee at the end of that
period.

Section 3.03 TRANSFERS

     If a change in job classification or a transfer results in an individual no longer qualifying
as an Eligible Employee, such Employee shall cease to be a Participant for purposes of Article 4
(or shall not become eligible to become a Participant) as of the effective date of such change of
job classification or transfer. Should such Employee again qualify as an Eligible Employee or if
an Employee who was not previously an Eligible Employee becomes an Eligible Employee, he shall
become a Participant with respect to the contributions for which the eligibility requirements have
been satisfied as of the later of the effective date of such subsequent change of status or the
date the Employee meets the eligibility requirements of this Article 3.

Section 3.04 TERMINATION AND REHIRES

     If an Employee has a Termination of Employment, such Employee shall cease to be a Participant
for purposes of Article 4 (or shall not become eligible to become a Participant) as of his
Termination of Employment. An individual who has satisfied the applicable eligibility requirements
set forth in Article 3 as of his Termination date, and who is subsequently reemployed by the
Company as an Eligible Employee, shall resume or become a Participant

15

 

immediately upon his rehire date with respect to the contributions for which the eligibility
requirements of this Article 3 have been satisfied. An individual who has not so qualified for
participation on his Termination date, and who is subsequently reemployed by the Company as an
Eligible Employee, shall be eligible to participate as of the later of the effective date of such
reemployment or the date the individual meets the eligibility requirements of this Article 3. The
determination of whether a rehired Eligible Employee satisfies the requirements of Article 3 shall
be made after the application of any applicable break in service rules.

Section 3.05 PROCEDURES FOR ADMISSION

     The Plan Administrator shall prescribe such forms and may require such data from Participants
as are reasonably required to effectuate any Participant elections made pursuant to this Article 3.

Section 3.06 WAIVER

     An Employee may irrevocably elect not to participate in the Plan.

16

 

ARTICLE 4

CONTRIBUTIONS

Section 4.01 ELECTIVE DEFERRALS

     (a) Elections. Each Participant may execute elections pursuant to this Section 4.01 in the
form and manner prescribed by the Plan Administrator. The Plan Administrator shall provide each
Participant with the forms necessary to elect the amount of Elective Deferrals. An Elective
Deferral election shall provide that a Participant may elect to reduce his Compensation by an
amount from one percent (1%) to eighty percent (80%) of his Compensation.

     (b) Modifications. As of the date a Participant first meets the eligibility requirements of
Section 3.01, he may elect to contribute to the Plan. Subsequent to that date, a Participant may
elect to start, increase or reduce his elections pursuant to this Section 4.01, effective as of the
dates established pursuant to Plan Administrator procedures. Notwithstanding the foregoing, a
Participant may totally suspend his elections at any time.

     (c) Procedures. A Participant shall make an election described in Subsection (b) in such form
and manner as may be prescribed by the Plan Administrator at such time in advance as the Plan
Administrator may require. A Participant’s election regarding Elective Deferrals may be made only
with respect to an amount which the Participant could otherwise elect to receive in cash and which
is not currently available to the Participant.

     (d) Reduction in Elections. The Plan Administrator may reduce or totally suspend a
Participant’s election if the Plan Administrator determines that such election may cause the Plan
to fail to satisfy any of the requirements of Article 5.

     (e) Contribution and Allocation of Elective Deferrals. The Company shall contribute to the
Plan with respect to each pay period an amount equal to the Elective Deferrals of Participants for
such pay period, as determined pursuant to the Elective Deferral elections in force pursuant to
this Section. They shall be directly and promptly allocated to the Elective Deferral Account of
each Participant the Elective Deferrals contributed by the Employer to the Plan by reason of any
Elective Deferral election in force with respect to that Participant.

     (f) Participant. For purposes of this Section, “Participant” shall mean an Eligible Employee
who has met the eligibility requirements of Article 3 with respect to Elective Deferrals.

Section 4.02 MATCHING CONTRIBUTIONS

     (a) Amount of Matching Contributions. Subject to the limitations described in Article 5, the
Company shall contribute to the Plan on behalf of each Participant who made an Elective Deferral
and who has completed at least 1,000 Hours of Service during the Plan Year and is employed by the
Company on the last day of the Plan Year an amount determined by the Board. Matching Contributions
shall not take into account catch-up contributions made pursuant

17

 

to Code Section 414(v). Notwithstanding the foregoing, a Participant who terminated employment
with the Employer during the Plan Year due to death, Disability or attainment of Normal Retirement
Age shall be eligible to receive a Matching Contribution regardless of whether such Participant
meets the requirements of this Subsection.

     (b) Contribution and Allocation of Matching Contributions. Matching Contributions shall be
made to the Plan and promptly allocated to the Matching Contribution Accounts of Participants who
meet the requirements of Subsection (a) and in the amount determined pursuant to Subsection (a)
after the end of the Plan Year.

     (c) Participant. For purposes of this Section, “Participant” shall mean an Eligible Employee
who has met the eligibility requirements of Article 3 with respect to Matching Contributions.

     (d) Coverage Failures. If the application of the rules described above causes the Plan to
fail to meet the minimum coverage requirements of Code section 410(b)(1)(B) for any Plan Year with
respect to Matching Contributions because the Company’s Matching Contributions have not been
allocated to a sufficient number or percentage of Participants for such year, then:

          (1) The list of Participants eligible to share in the Company’s Matching Contributions for
such Plan Year shall be expanded to include the minimum number of Participants who would not
otherwise be eligible as are necessary to satisfy the minimum coverage requirements under Code
section 410(b)(1)(B). The specific Participants who shall become eligible to share in the
Company’s Matching Contribution for such Plan Year pursuant to this Paragraph (1) shall be those
Participants who remain in the Company’s employ on the last day of such Plan Year and who have
completed the greatest amount of service during the Plan Year.

          (2) If, after the application of Paragraph (1) above, the minimum coverage requirements of
Code section 410(b)(1)(B) are still not satisfied, then the list of Participants eligible to share
in the Company’s Matching Contribution for such Plan Year shall be further expanded to include the
minimum number of Participants who do not remain in the Company’s employ on the last day of the
Plan Year as are necessary to satisfy such requirements. The specific Participants who shall
become eligible to share in the Company’s contribution for such Plan Year pursuant to this
Paragraph (2) shall be those Participants who had completed the greatest amount of service during
the Plan Year before terminating their employment with the Employer.

Section 4.03 QUALIFIED NONELECTIVE CONTRIBUTIONS

     (a) Amount of Qualified Nonelective Contributions. In addition to the contributions described
above, the Company in its discretion may make additional Qualified Nonelective Contributions for
the benefit of (a) all Participants, or (b) all Participants other than Highly Compensated
Employees. The Company may also determine, in its discretion, whether allocations of Qualified
Nonelective Contributions shall be limited to Participants who are credited with at least a certain
number of Hours of Service during the Plan Year, have made

18

 

Elective Deferrals, and/or who remain in the Company’s employ on the last day of the Plan Year. In
any event, any Qualified Nonelective Contribution shall be allocated to the Qualified Nonelective
Contribution Accounts of the eligible Participants in a nondiscriminatory manner within the meaning
of Code section 401(a)(4).

     (b) In addition, the Company may, in its discretion, make Qualified Nonelective Contributions
for a Plan Year that shall be allocated in the manner prescribed by the Company to correct any
operational or demographic failure pursuant to any correction program or policy established by the
Internal Revenue Service or the Department of Labor.

     (c) Qualified Nonelective Contributions shall be nonforfeitable when made and shall be
distributed only under the rules applicable for elective contributions in accordance with Code
section 401(m)(4)(C) and Treas. Reg. section 1.401(k)-1(g)(13).

Section 4.04 ROLLOVER CONTRIBUTIONS

     The Plan may accept Rollover Contributions made in cash on behalf of any Eligible Employee,
regardless of whether such Employee has met the applicable age and service requirements of Article
3; but only if the contribution qualifies as a tax-free rollover as defined in Code section 402
from: (i) a plan qualified under Code section 401(a), or (ii) a “Conduit Individual Retirement
Account”, as determined in accordance with procedures established by the Plan Administrator. If it
is later determined that the amount received does not qualify as a tax-free rollover, the amount
shall be refunded to the Eligible Employee. Rollover Contributions shall be allocated to the
Eligible Employee’s Rollover Contribution Account. An Eligible Employee who has not yet met any of
the eligibility requirements of Article 3 shall be deemed a Participant only with respect to
amounts, if any, in his Rollover Contribution Account.

Section 4.05 TRANSFERS

     The Trustee may accept a direct transfer of assets, made without the consent of the affected
Employees, from the trustee of any other qualified plan described in Code section 401(a) to the
extent permitted by the Code and the regulations and rulings thereunder. In the event assets are
transferred to the Plan pursuant to the foregoing sentence, the transferred assets shall be
accounted for separately in the Transfer Account of the affected Employees to the extent necessary
to preserve a more favorable vesting schedule or any other any legally-protected benefits available
to such Employees under the transferor plan. The Plan Administrator shall establish a vesting
schedule for the Transfer Account; provided that such schedule is not less favorable that the
vesting schedule under the transferor plan.

Section 4.06 MILITARY SERVICE

     Notwithstanding any provision of this Plan to the contrary, for reemployments initiated on or
after December 12, 1994, contributions, benefits and service credit with respect to qualified
military service shall be provided in accordance with Code section 414(u).

19

 

Section 4.07 TIMING OF CONTRIBUTIONS

     Amounts contributed to the Plan with funds provided by Participants will be remitted to the
Trustee as soon as practicable, but no later than ninety (90) days after the date on which such
contributions were received or withheld from the Participant’s Compensation; provided, however,
that effective February 3, 1997, such contributions will be remitted to the Trustee as soon as
practicable, but no later than the fifteenth (15th) business day of the month following the month
in which such contributions were received or withheld from the Participant’s Compensation unless a
longer period is permitted under applicable law or regulation.

Section 4.08 MULTIPLE EMPLOYER PLAN

     If the Employees of more than one employer within the meaning of Code section 413(c) are
covered under the Plan, the provisions of such section shall apply to the Plan.

20

 

ARTICLE 5

LIMITATIONS ON CONTRIBUTIONS

Section 5.01 ANNUAL LIMITATION ON ELECTIVE DEFERRALS

     (a) Amount. Notwithstanding anything herein to the contrary, elective deferrals (as defined
in Code section 402(g)(3)) made under this Plan, or any other qualified plan maintained by the
Employer may not exceed, during any taxable year, the dollar limitation contained in Code section
402(g) in effect at the beginning of such taxable year.

     (b) Refund of Excess Deferrals. In the event that Elective Deferrals under this Plan when
added to a Participant’s other elective deferrals under any other plan or arrangement (whether or
not maintained by the Employer) exceed the limit described in the preceding Subsection, the Plan
Administrator shall distribute, by May 15 of the following calendar year, the excess amount of
Elective Deferrals plus income thereon. Such income shall equal the sum of the allocable gain or
loss up to the end of the taxable year and shall be determined by the Plan Administrator under any
reasonable method; provided, that such method is used consistently for all Participants in a manner
consistent with applicable Treasury regulations. A Participant’s claim that the excess was caused
by elective deferrals made under a plan or arrangement not maintained by the Employer shall be made
in writing and shall be submitted to the Plan Administrator no later than the March 1 following the
calendar year in which such deferrals occurred. For purposes of determining the necessary
reduction, Elective Deferrals previously distributed or recharacterized pursuant to Section 5.03 or
returned to the Participant pursuant to Section 5.04 shall be treated as distributed under this
Section 5.01.

     (c) Forfeiture of Matching Contributions Related to Excess Elective Deferrals. In the event a
Participant receives a distribution of excess Elective Deferrals pursuant to Subsection (b), the
Participant shall forfeit any Matching Contributions (plus income thereon determined as described
in Section 5.01(b)) allocated to the Participant by reason of the distributed Elective Deferrals.
Elective Deferrals not taken into account in determining Matching Contributions under Section 4.02
shall be treated as being reduced first. Amounts forfeited shall be used to restore forfeitures,
reduce Company contributions made pursuant to Article 4 or to pay Plan expenses.

Section 5.02 NONDISCRIMINATION

     (a) Elective Deferrals. The Plan shall meet one of the following two tests with respect to
Elective Deferrals for any Plan Year:

          (1) The Average Deferral Percentage for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the Average Deferral Percentage for such year for Participants who
are Nonhighly Compensated Employees multiplied by 1.25; or

          (2) The Average Deferral Percentage for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the Average Deferral Percentage for

21

 

such year for Participants who
are Nonhighly Compensated Employees multiplied by 2.0; provided that the Average Deferral
Percentage for Participants who are Highly Compensated Employees does not exceed the Average
Deferral Percentage for Participants who are Nonhighly Compensated Employees by more than two
percentage points or such lesser amount as the Secretary of the Treasury shall prescribe.

     (b) Matching Contributions. The Plan must meet one of the following two tests with respect to
Matching Contributions for any Plan Year:

          (1) The Average Contribution Percentage for Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the Average Contribution Percentage for Participants for such
year who are Nonhighly Compensated Employees multiplied by 1.25; or

          (2) The Average Contribution Percentage for Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the Average Contribution Percentage for Participants for such
year who are Nonhighly Compensated Employees multiplied by 2.0; provided that the Average
Contribution Percentage for Participants who are Highly Compensated Employees does not exceed the
Average Contribution Percentage for Participants who are Nonhighly Compensated Employees by more
than two percentage points or such lesser amount as the Secretary of the Treasury shall prescribe.

     (c) Multiple Use. For any Plan Year in which both the limitations in Sections 5.02(a)(1) and
(b)(1) are exceeded, the sum of the Average Deferral Percentage and the Average Contribution
Percentage for Participants who are Highly Compensated Employees (determined after adjustments are
made under Sections 5.03(a) and (b) for purposes of satisfying the limitations described in
Sections 5.02(a) and (b)) shall not exceed the greater of:

          (1) The sum of (i) the greater of the Average Deferral Percentage or the Average Contribution
Percentage for all Participants who are Nonhighly Compensated Employees for the applicable Plan
Year multiplied by 1.25, plus (ii) the lesser of: (A) two multiplied by the lesser of the Average
Deferral Percentage or the Average Contribution Percentage for all Participants who are Nonhighly
Compensated Employees for the applicable Plan Year, or (B) two percent (2%) plus the lesser of the
Average Deferral Percentage or the Average Contribution Percentage for all Participants who are
Nonhighly Compensated Employees for the applicable Plan Year; or

          (2) The sum of (i) the lesser of the Average Deferral Percentage or the Average Contribution
Percentage for all Participants who are Nonhighly Compensated Employees for the applicable Plan
Year multiplied by 1.25, plus (ii) the lesser of (A) two multiplied by the greater of the Average
Deferral Percentage or the Average Contribution Percentage for all Participants who are Nonhighly
Compensated Employees for the applicable Plan Year, or (B) two percent (2%) plus the greater of the
Average Deferral Percentage or the
Average Contribution Percentage for all Participants who are Nonhighly Compensated Employees for
the applicable Plan Year.

22

 

     (d) Highly Compensated Employee in More Than One Plan. The Actual Deferral Percentage and
Actual Contribution Percentage for any Participant who is a Highly Compensated Employee for the
Plan Year and who is eligible to have Elective Deferrals and Matching Contributions (and Qualified
Nonelective Contributions if used to satisfy the tests described in Subsections (a) and (b))
allocated to his Accounts under two or more arrangements described in Code sections 401(k) and
401(m) that are maintained by the Employer, shall be determined as if such Elective Deferrals and
contributions were made under a single arrangement. If a Highly Compensated Employee participates
in two or more arrangements that have different Plan Years, all arrangements ending with or within
the same calendar year shall be treated as a single arrangement. Notwithstanding the foregoing,
certain plans shall be treated as separate if mandatorily disaggregated under regulations under
Code section 401(k).

     (e) Required Aggregation of Plans. In the event that this Plan satisfies the requirements of
Code sections 401(k), 401(m), 401(a)(4), or 410(b) only if aggregated with one or more other plans,
or if one or more other plans satisfy the requirements of such sections of the Code only if
aggregated with this Plan, then this Section 5.02 shall be applied as if all such plans were a
single plan. Plans may be aggregated in order to satisfy Code sections 401(k) or 401(m) only if
they have the same plan year and both use the current year testing method or both use the prior
year testing method.

     (f) Excludable Employees. The Company may treat, pursuant to applicable Treasury Regulations,
Participants who have not met the minimum age and service requirements of Code section 410(a)(1)(A)
as comprising a separate plan for purposes of this Section 5.02. Effective for Plan Years beginning
after December 31, 1998, the Company may exclude all Participants who are Nonhighly Compensated
Employees and who have not met the minimum age and service requirements of Code section
410(a)(1)(A) from consideration in determining whether the requirements of this Section 5.02 are
met.

     (g) Use of Elective Deferrals and Qualified Nonelective Contributions. To the extent
permitted by the regulations under Code sections 401(k) and 401(m), Elective Deferrals and
Qualified Nonelective Contributions may be used to satisfy the tests at Sections 5.02(b) to the
extent they are not used to satisfy the tests at Section 5.02(a) and are not used to satisfy Code
sections 401(k)(12) and 401(m)(11); provided that the Company is using the current year testing
method.

     (h) Special Rules. All or part of the Qualified Nonelective Contributions and Matching
Contributions that are 100% vested when made and that may not be withdrawn while the Participant is
employed before age 59-1/2 that are made with respect to any or all Participants may be treated as
Elective Deferrals, provided that the requirements of Treas. Reg. section 1.401(k)-1(b)(5) are
satisfied and provided that such contributions are not used to satisfy Code sections 401(k)(12) and
401(m)(11).

Section 5.03 CORRECTION OF DISCRIMINATORY CONTRIBUTIONS

     (a) Elective Deferrals. In the event the nondiscrimination tests of Section 5.02(a) are not
satisfied with respect to Elective Deferrals for any Plan Year, excess Elective Deferrals for
the Plan Year determined as set forth in Paragraph (1) shall be corrected as set forth in Paragraph
(2):

23

 

          (1) Determination of Excess Deferrals. The Elective Deferrals of the Highly Compensated
Employee with the highest Actual Deferral Percentage shall be reduced until the nondiscrimination
tests imposed by Section 5.02(a) would be satisfied, or until the Actual Deferral Percentage of the
Highly Compensated Employee would equal the Actual Deferral Percentage of the Highly Compensated
Employee with the next highest Actual Deferral Percentage. This process shall be repeated until
the nondiscrimination tests imposed by Section 5.02(a) are satisfied. The amount of excess
deferrals is equal to the sum of these hypothetical reductions multiplied, in each case, by the
respective Highly Compensated Employee’s Testing Compensation (including deferrals to the extent
that they are taken into account in determining testing ratios).

          (2) Distribution of Excess Deferrals. Excess deferrals shall be allocated to the Highly
Compensated Employees with the largest dollar amounts of contributions taken into account in
calculating the Average Deferral Percentage test for the year in which the excess arose, beginning
with the Highly Compensated Employee with the largest dollar amount of such employer contributions
and continuing in descending order until all the excess deferrals have been allocated. All such
distributions, as adjusted for gains and losses up to the end of the Plan Year, shall occur within
twelve (12) months of the close of the Plan Year for which the Elective Deferrals were made. The
amount of the distribution that otherwise would be required with respect to a Highly Compensated
Employee for a Plan Year shall be reduced by the amount of any distribution previously made to the
Participant for the same Plan Year pursuant to Section 5.01. Elective Deferrals not taken into
account in determining Matching Contributions under Section 4.02 shall be distributed first. In
the event a Participant receives a distribution of Elective Deferrals that were taken into account
in determining Matching Contributions, the Participant shall forfeit such Matching Contributions
(as adjusted for gains and losses up to the end of the Plan Year) that were allocated to the
Participant by reason of the distributed Elective Deferrals. Amounts forfeited shall be used to
restore forfeitures, reduce Company contributions made pursuant to Article 4 or to pay Plan
expenses.

     (b) Matching Contributions. In the event the nondiscrimination tests of Section 5.02(b) are
not satisfied with respect to Matching Contributions for any Plan Year, excess Matching
Contributions for the Plan Year determined as set forth in Paragraph (1) shall be corrected as set
forth in Paragraph (2).

          (1) Determination of Excess Contributions. The Matching Contributions of the Highly
Compensated Employee with the highest Actual Contribution Percentage shall be reduced until the
nondiscrimination tests imposed by Section 5.02(b) would be satisfied, or until the Actual
Contribution Percentage of the Highly Compensated Employee would equal the
Actual Contribution Percentage of the Highly Compensated Employee with the next highest Actual
Contribution Percentage. This process shall be repeated until the nondiscrimination tests imposed
by Section 5.02(b) are satisfied. The amount of excess Matching Contributions is equal to the sum
of these hypothetical reductions multiplied, in each case, by the respective Highly
Compensated Employee’s Testing Compensation (including deferrals to the extent that they are taken into account
in determining testing ratios).

24

 

          (2) Distribution of Excess Contributions. Excess Matching Contributions shall be allocated to
the Highly Compensated Employees with the largest dollar amounts of contributions taken into
account in calculating the Average Contribution Percentage test for the year in which the excess
arose, beginning with the Highly Compensated Employee with the largest dollar amount of such
contributions and continuing in descending order until all the excess contributions have been
allocated. All such distributions, as adjusted for gains and losses up to the end of the Plan
Year, shall occur within twelve (12) months of the close of the Plan Year for which the Matching
Contributions were made. Excess Matching Contributions shall be corrected by distributing vested
Matching Contributions and forfeiting nonvested Matching Contributions. Amounts forfeited shall be
used to restore forfeitures, reduce Company contributions made pursuant to Article 4 or to pay Plan
expenses.

     (c) Correction For Multiple Use. For purposes of satisfying the multiple use test described
in Section 5.02(c), the Matching Contributions of Highly Compensated Employees shall be reduced as
described in Subsection (b). In the event such multiple use test is not satisfied by the preceding
sentence, the Elective Deferrals of Highly Compensated Employees shall be reduced as described in
Subsection (a).

Section 5.04 MAXIMUM AMOUNT OF ANNUAL ADDITIONS

     The following rules shall be applicable with respect to limitations on contributions:

     (a) Annual Addition Limit. The Annual Additions credited to a Participant’s Accounts under
this Plan and all other qualified defined contribution plans, welfare benefit funds, individual
medical accounts, and simplified employee pensions maintained by the Employer for any Limitation
Year shall not exceed the lesser of:

          (1) $30,000 or such other amount in effect under Code section 415(c)(1)(A), or

          (2) 25% of Testing Compensation or such other limits as may be prescribed under the Code and
the Treasury Regulations thereunder. For Limitation Years beginning after December 31, 1997,
Testing Compensation shall include any amount which is contributed by the Company pursuant to a
salary reduction agreement and which is not includable in the gross income of the Employee under
Code sections 125, 402(e)(3), 402(h), 403(b) or 457. For Limitation Years beginning on and after
January 1, 2001, Testing Compensation shall include elective amounts that are not includable in the
gross income of the Participant under Code sections 125, 132(f), 402(e)(3), 402(h), 403(b) or 457.
Testing Compensation for a Limitation
Year is the compensation actually paid or made available in gross income during such Limitation
Year. Notwithstanding the preceding sentence, Testing Compensation for purposes of Section 5.04
for a Participant in a defined contribution plan who is permanently and totally disabled (as
defined in Code section 22(e)(3)) is the compensation such Participant would have received for the
Limitation Year if the Participant had been paid at the rate of compensation paid immediately

25

 

before becoming permanently and totally disabled. For Limitation Years beginning before January 1,
1997, but not for Limitation Years beginning after December 31, 1996, such imputed compensation for
the disabled Participant may be taken into account only if the Participant is a Nonhighly
Compensated Employee and contributions made on behalf of such Participant are nonforfeitable when
made.

     (b) Correction of Excess. If the Annual Additions with respect to the Participant under this
Plan and other qualified defined contribution plans, welfare benefit funds, individual medical
accounts, and simplified employee pensions maintained by the Employer exceed the maximum
permissible amount described in Subsection (a) as a result of the reallocation of forfeitures, a
reasonable error in estimating the Participant’s Compensation, a reasonable error in determining
the amount of elective deferrals (within the meaning of Code section 402(g)) that may be made under
the limitations of Code section 415, or such other circumstances as permitted by law, the Plan
Administrator shall distribute such excess as follows:

          (1) Participant Contributions. Any Participant Contributions described in Section 4.01 (plus
attributable earnings), to the extent they would reduce the excess amount, shall be returned to the
Participant.

          (2) Employer Contributions. If after the application of Paragraph (1) an excess amount still
exists, any Matching Contributions and Qualified Nonelective Contributions (plus attributable
earnings), to the extent they would reduce the excess amount, shall be forfeited and the excess
amount in the Participant’s Account shall be held unallocated in a suspense account for the
Limitation Year and allocated and reallocated pursuant to Article 4 in the next Limitation Year and
each succeeding Limitation Year if necessary. The suspense account will be applied to reduce
future Company contributions for all remaining Participants in the next Limitation Year, and each
succeeding Limitation Year if necessary. If a suspense account is in existence at any time during
a Limitation Year pursuant to this Section, other than the year in which the excess occurred, all
amounts in the suspense account must be allocated and reallocated to Participants’ accounts
(subject to the Annual Addition limitation) before any Company contributions and Participant
contributions which would constitute Annual Additions may be made to the Plan for that Limitation
Year. Excess amounts may not be distributed to Participants or former Participants.

     (c) Combined Limit.

          (1) Effective for Limitation Years beginning before January 1, 2000, if the Employer
maintains, or at any time maintained, a qualified defined benefit plan covering any Participant in
this Plan, the sum of the Participant’s “Defined Benefit Plan Fraction” and “Defined Contribution
Plan Fraction” will not exceed 1.0 in any Limitation Year.

          (2) “Defined Benefit Fraction” means the fraction, the numerator of which is the sum of the
Participant’s projected annual benefits under all the defined benefit plans (whether or not
terminated) maintained by the Employer, and the denominator of which is the lesser of 125 percent
of the dollar limitation determined for the Limitation Year under Code sections 415(b) and (d) or
140 percent of the highest average compensation, including any adjustments

26

 

under Code section
415(b). Notwithstanding the foregoing, if the Participant was a participant as of the first day of
the first Limitation Year beginning after December 31, 1986, in one or more defined benefit plans
maintained by the Employer which were in existence on May 6, 1986, the denominator of this fraction
will not be less than 125 percent of the sum of the annual benefits under such plans which the
Participant had accrued as of the close of the last Limitation Year beginning before January 1,
1987, disregarding any changes in the terms and conditions of the Plan after May 5, 1986. The
preceding sentence applies only if the defined benefit plans individually and in the aggregate
satisfied the requirements of Code section 415 for all Limitation Years beginning before January 1,
1987. The highest average compensation shall be the average compensation for the three consecutive
years of service with the Employer that produces the highest average. The projected annual benefit
is the annual retirement benefit (adjusted to an actuarially equivalent straight life annuity if
such benefit is expressed in a form other than a straight life annuity or qualified joint and
survivor annuity) to which the Participant would be entitled under the terms of the Plan assuming:
(i) the Participant will continue employment until normal retirement age under the Plan (or current
age, if later), and (ii) the Participant’s compensation for the current Limitation Year and all
other relevant factors used to determine benefits under the plan will remain constant for all
future Limitation Years.

          (3) “Defined Contribution Fraction” means the fraction, the numerator of which is the sum of
the Annual Additions to the Participant’s Account under all the defined contribution plans (whether
or not terminated) maintained by the Employer for the current and all prior Limitation Years
(including the annual additions attributable to the Participant’s nondeductible employee
contributions to all defined benefit plans, whether or not terminated, maintained by the Employer,
and the Annual Additions attributable to all welfare benefit funds, individual medical accounts,
and simplified employee pensions, maintained by the Employer), and the denominator of which is the
sum of the maximum aggregate amounts for the current and all prior Limitation Years of service with
the Employer (regardless of whether a defined contribution plan was maintained by the Employer).
The maximum aggregate amount in any Limitation Year is the lesser of 125 percent of the dollar
limitation determined under Code sections 415(b) and (d) in effect under Code section 415(c)(1)(A)
or 35 percent of the Participant’s compensation for such year. If the Employee was a Participant
as of the end of the first day of the first Limitation Year beginning after December 31, 1986, in
one or more defined contribution plans maintained by the Employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the sum of this fraction and the defined
benefit fraction would otherwise exceed 1.0 under the terms of this plan. Under the adjustment, an
amount equal to the product of (i) the excess of the sum of the fractions over 1.0 times (ii) the
denominator of this fraction, will be permanently subtracted from the numerator of this fraction.
The adjustment is calculated using the fractions as they would be computed as of the end of the
last Limitation Year beginning before January 1, 1987, and disregarding any changes in the terms
and conditions of the Plan made after May 5, 1986, but using the Code section 415 limitation
applicable to the first Limitation Year beginning on or after January 1, 1987.

          (4) Special Top-Heavy Rules. For any Plan Year during which this Plan is “top-heavy” (as
defined in Article 11), “100%” shall be substituted for “125%” in subsections (c)(2) and (c)(3) of
this Section.

27

 

ARTICLE 6

VESTING

Section 6.01 PARTICIPANT CONTRIBUTIONS

     A Participant shall have a fully vested and nonforfeitable interest in his Elective Deferral
Account, Rollover Contribution Account and Qualified Nonelective Contribution Account.

Section 6.02 MATCHING CONTRIBUTIONS

     The Participant’s interest in his Matching Contribution Account shall vest based on his Years
of Vesting Service in accordance with the following schedule:

	 	 	 	 	 
	 	 	Vesting
	Years of Vesting Service	 	Percentage
	Less than Three Years
	 	 	0	%
	Three or More Years
	 	 	100	%

Notwithstanding the foregoing, a Participant will become fully (100%) vested upon (1) his
attainment of Normal Retirement Age while an Employee, (2) his death while an Employee, or (3) his
suffering a Disability while an Employee.

Section 6.03 FORFEITURES

     (a) Participants Receiving a Distribution. A Participant who receives a distribution of the
value of the entire vested portion of his Account shall forfeit the nonvested portion of such
Account. For purposes of this Section, if the value of a Participant’s vested Account balance is
zero, the Participant shall be deemed to have received a distribution of such vested Account upon
Termination. A Participant’s vested Account balance shall not include accumulated deductible
employee contributions within the meaning of Code section 72(o)(5)(B) for Plan Years beginning
prior to January 1, 1989. If the Participant elects to the extent permitted by Article 7 to have
distributed less than the entire vested portion of the Account balance derived from Employer
contributions, the part of the nonvested portion that will be treated as a forfeiture is the total
nonvested portion multiplied by a fraction, the numerator of which is the amount of the
distribution attributable to Employer contributions and the denominator of which is the total value
of the vested Employer-derived Account balance. No forfeitures will occur solely as a result of a
Participant’s withdrawal of employee contributions.

     (b) Participants Not Receiving a Distribution. The nonvested portion of the Account balance
of a Participant who has a Termination of Employment and does not receive a complete distribution
of the vested portion of his Account shall be forfeited after the date he incurs five consecutive
One-Year Breaks in Service.

28

 

     (c) Reemployment.

          (1) Before Five One-Year Breaks in Service. If a Participant receives or is deemed to receive
a distribution pursuant to this Section and the Participant resumes employment covered under this
Plan, the Participant’s Employer-derived Account balance will be restored to the amount on the date
of distribution if the Participant repays to the Plan the full amount of the distribution
attributable to Employer contributions before the earlier of 5 years after the first date on which
the Participant is subsequently reemployed by the Employer, or the date the Participant incurs 5
consecutive One-Year Breaks in Service following the date of the distribution. If a zero-vested
Participant is deemed to receive a distribution pursuant to this Section, and the Participant
resumes employment covered under this Plan before the date the Participant incurs 5 consecutive
One-Year Breaks in Service, upon the reemployment of such Participant, the Employer-derived Account
balance of the Participant will be restored to the amount on the date of such deemed distribution.
Forfeitures that are restored pursuant to the foregoing shall be accomplished by an allocation of
forfeitures, or if such forfeitures are insufficient, by a special Company contribution.

          (2) After Five One-Year Breaks in Service. If a Participant resumes employment as an Eligible
Employee after forfeiting the nonvested portion of his Account balance after 5 consecutive One-Year
Breaks in Service and is not fully vested upon reemployment, the Participant’s Account balance
attributable to his pre-break service shall be kept separate from that portion of his Account
balance attributable to his post-break service until such time as his post-break Account balance
becomes fully vested.

     (d) Disposition of Forfeitures. Amounts forfeited from a Participant’s Account under this
Section shall be used to restore forfeitures, reduce Company contributions made pursuant to Article
4 or to pay Plan expenses.

     (e) Vesting Following In-Service Withdrawals or Payment in Installments. If a distribution is
made at a time when a Participant has a nonforfeitable right to less than 100 percent of his
Account derived from Employer contributions and the Participant may increase the nonforfeitable
percentage in the Account:

          (1) A separate account will be established for the Participant’s interest in the Plan as of
the time of the distribution, and

          (2) At any relevant time the Participant’s nonforfeitable portion of the separate account will
be equal to an amount (“X”) determined by the formula:

X = P(AB + (R x D)) - (R x D)

For purposes of applying the formula: P is the nonforfeitable percentage at the relevant time, AB
is the Account balance at the relevant time, D is the amount of the distribution, and R is the
ratio of the Account balance at the relevant time to the Account balance after distribution.

29

 

ARTICLE 7

DISTRIBUTIONS

Section 7.01 COMMENCEMENT OF DISTRIBUTIONS

     (a) Normal Retirement. A Participant, upon attainment of Normal Retirement Age shall be
entitled to retire and to receive his Account as his benefit hereunder pursuant to Section 7.02.

     (b) Late Retirement. If a Participant continues in the employ of the Company beyond his
Normal Retirement Age, his participation under the Plan shall continue, and his benefits under the
Plan shall commence following his actual Termination of Employment pursuant to Section 7.02.
Notwithstanding the preceding sentence, a Participant may, at any time after reaching his Normal
Retirement Age but before actual retirement, elect to have the Plan Administrator commence the
distribution of his benefit pursuant to Section 7.02 by providing the Plan Administrator with a
written election to that effect. Any such written election shall state the date upon which
distribution of benefits is to commence and shall be effective upon delivery to the Plan
Administrator.

     (c) Disability Retirement. If a Participant becomes Disabled, he shall become entitled to
receive his vested Account pursuant to Section 7.02 following the date he has a Termination of
Employment.

     (d) Death. If a Participant dies, either before or after his Termination of Employment, his
Beneficiary designated pursuant to Section 7.04 shall become entitled to receive the Participant’s
vested Account pursuant to Section 7.02.

     (e) Termination of Employment. A Participant shall become entitled to receive his vested
Account pursuant to Section 7.02 following the date he has a Termination of Employment. A
Participant shall not be entitled to a distribution from his Elective Deferral Account unless he
has had a “severance from employment” within the meaning of Code section 401(k)(2)(B)(i)(I).

Section 7.02 TIMING AND FORM OF DISTRIBUTIONS

     (a) Distribution for Reasons Other Than Death. If a Participant’s Account balance becomes
distributable pursuant to Section 7.01 for any reason other than death, payment of his vested
Account may commence as soon as administratively feasible with a final payment made consisting of
any allocations occurring after such Termination of Employment. Such Participant’s benefit shall
be payable, in cash, in a lump sum payment or substantially equal annual, or more frequent
installments over a period not to exceed the joint life expectancy of the Participant and his
Beneficiary; provided however, a Participant may elect, pursuant to
procedures established by the Plan Administrator, to receive an in-kind, lump-sum distribution of
the Participant’s whole shares of Qualifying Employer Securities.

30

 

     The method of distribution shall be selected by the Participant on a form prescribed by the
Plan Administrator. If no such selection is made by the Participant payment shall be made in the
form of a lump sum distribution.

     (b) Distribution on Account of Death.

          (1) Before Distribution Has Begun. If the Participant dies before distribution of his Account
begins, distribution of the Participant’s entire Account shall be completed by December 31 of the
calendar year containing the fifth anniversary of the Participant’s death unless an election is
made by his Beneficiary to receive distributions in accordance with (A) and (B) below:

               (A) Distributions may be made over the life or over a period certain not greater than the life
expectancy of the Beneficiary commencing on or before December 31 of the calendar year immediately
following the calendar year in which the Participant died;

               (B) If the Beneficiary is the Participant’s surviving spouse, the date distributions are
required to begin in accordance with Subparagraph (A) above shall not be earlier than the later of
(i) December 31 of the calendar year immediately following the calendar year in which the
Participant died and (ii) December 31 of the calendar year in which the Participant would have
attained age 70-1/2.

          If the Participant has not made an election as to form of payment by the time of his death,
the Participant’s Beneficiary must elect the method of distribution no later than the earlier of
(1) December 31 of the calendar year in which distributions would be required to begin under this
Section, or (2) December 31 of the calendar year which contains the fifth anniversary of the date
of death of the Participant. If the Participant has no designated beneficiary, or if the
designated beneficiary does not elect a method of distribution, distribution of the Participant’s
entire interest must be completed by December 31 of the calendar year containing the fifth
anniversary of the Participant’s death.

          If the surviving spouse dies after the Participant, the provisions of this Subsection (b)(1),
with the exception of Subparagraph (B) therein, shall be applied as if the surviving spouse were
the Participant.

          (2) After Distribution has Begun. If the Participant dies after distribution of his Account
has begun, the remaining portion of such Account will continue to be distributed at least as
rapidly as the method of distribution being used prior to the Participant’s death. If the
Participant’s Account was not being distributed in the form of an annuity at the time of his death,
the Beneficiary may elect to receive the Participant’s remaining vested Account balance in a lump
sum distribution.

     The Beneficiary shall provide the Plan Administrator with the death notice or other sufficient
documentation before any payments are made pursuant to this Subsection.

31

 

     (c) The distributable amount of a Participant’s Account is the vested portion of his Account
as of the Valuation Date coincident with or next preceding the date distribution is made to the
Participant or Beneficiary as reduced by any subsequent distributions, withdrawals or loans.

Section 7.03 CASH-OUT OF SMALL BALANCES

     (a) Vested Account Balance Does Not Exceed $1,000. Notwithstanding the foregoing, if the
vested amount of an Account payable to a Participant or Beneficiary does not exceed $1,000 at the
time such individual becomes entitled to a distribution hereunder (or at any subsequent time
established by the Plan Administrator to the extent provided in applicable Treasury regulations),
such vested Account shall be paid in a lump sum.

     (b) Vested Account Balance Exceeds $1,000. If the value of a Participant’s vested Account
balance exceeds $1,000, and the Account balance is immediately distributable, the Participant must
consent to any distribution of such Account balance; except that the Plan Administrator may
distribute such vested Account at the time such payments must begin pursuant to Section 7.05. The
Participant’s consent shall be obtained in writing within the 180-day period ending on the Annuity
Starting Date. The Plan Administrator shall notify the Participant of the right to defer any
distribution until the date such payments must begin pursuant to Section 7.05. Such notification
shall include a general description of the material features, and an explanation of the relative
values of, the optional forms of benefit available under the Plan, and shall be provided no less
than 30 days and no more than 180 days prior to the Annuity Starting Date. However, distribution
may commence less than 30 days after the notice described in the preceding sentence is given,
provided the Plan Administrator clearly informs the Participant that he has a right to a period of
at least 30 days after receiving the notice to consider the decision of whether or not to elect a
distribution (and, if applicable, a particular distribution option), and the Participant, after
receiving the notice, affirmatively elects a distribution. In the event a Participant’s vested
Account balance becomes distributable without consent pursuant to this Subsection (b), and the
Participant fails to elect a form of distribution, the vested Account balance of such Participant
shall be paid in a lump sum.

     (c) For purposes of this Section 7.03, the Participant’s vested Account balance shall not
include amounts attributable to accumulated deductible employee contributions within the meaning of
Code section 72(o)(5)(B).

     (d) Required Distributions and Plan Termination. Consent of the Participant shall not be
required to the extent that a distribution is required to satisfy Code sections 401(a)(9), 401(k),
401(m), 402(g) or 415. In addition, upon termination of this Plan the Participant’s Account
balance shall be distributed to the Participant in a lump sum distribution. However, if the
Employer maintains another defined contribution plan (other than an employee stock ownership plan
as defined in Code section 4975(e)(7)), then the Participant’s Account balance will be
transferred, without the Participant’s consent, to the other plan if the Participant does not
consent to an immediate distribution.

32

 

Section 7.04 BENEFICIARY

     (a) Spouse as Beneficiary. The Beneficiary of a death benefit payable pursuant to this
Article 7 shall be the Participant’s spouse; provided, however, that the Participant may designate
a Beneficiary other than his spouse if:

          (1) the spouse has waived the spouse’s right to be the Participant’s Beneficiary in accordance
with Subsection (c), or

          (2) the Participant has no spouse, or

          (3) the Plan Administrator determines that the spouse cannot be located or such other
circumstances exist under which spousal consent is not required, as prescribed by Treasury
regulations.

     (b) Beneficiary Designation Right. Each Participant who is permitted to designate a
Beneficiary other than his spouse pursuant to Subsection (a), and if the Participant has died, the
Beneficiary of such Participant, shall have the right to designate one or more primary and one or
more secondary Beneficiaries to receive any benefit becoming payable upon such individual’s death.
All Beneficiary designations shall be in writing in a form satisfactory to the Plan Administrator
and shall only be effective when filed with the Plan Administrator during the Participant’s
lifetime (or if the Participant has died, during the lifetime of the Beneficiary of such
Participant who desires to designate a further Beneficiary). Each Participant (or Beneficiary)
shall be entitled to change his Beneficiaries at any time and from time to time by filing written
notice of such change with the Plan Administrator. However, the Participant’s spouse must again
consent in writing to any such change, unless (1) the prior consent of the spouse expressly permits
designations by the Participant without any requirement of further consent by the spouse or (2) one
of the exceptions described in Paragraphs (a)(2) and (3) applies.

     (c) Form and Content of Spouse’s Consent. A spouse may consent to the designation of one or
more Beneficiaries other than such spouse provided that such consent: (i) shall be in writing, (ii)
relates only to the specific alternate beneficiary or beneficiaries designated (or permits
beneficiary designations by the Participant without the spouse’s further consent), (iii)
acknowledges the effect of the consent, and (iv) shall be witnessed by a plan representative or
notary public. Any consent by a spouse, or establishment that the consent of a spouse may not be
obtained, shall not be effective with respect to any other spouse. Any spousal consent that
permits subsequent changes by the Participant to the Beneficiary designation without the
requirement of further spousal consent shall acknowledge that the spouse has the right to limit
such consent to a specific Beneficiary, and that the spouse voluntarily elects to relinquish such
right.

     (d) In the event that the Participant fails to designate a Beneficiary, or in the event that
the Participant is predeceased by all designated primary and secondary Beneficiaries, the
death benefit shall be payable to the Participant’s spouse or, if there is no spouse, to the
Participant’s estate.

33

 

Section 7.05 RESTRICTIONS ON DEFERRAL

     (a) Retirement. Benefit payments under the Plan will begin to a Participant not later than
the 60th day after the latest of the close of the Plan Year in which:

          (1) the Participant attains Normal Retirement Age;

          (2) occurs the 10th anniversary of the year in which his participation commenced; or

          (3) the Participant has a Termination of Employment.

     (b) Distributions Before Death. Notwithstanding any other Plan provision to the contrary, all
distributions shall be determined and made in accordance with the proposed regulations under Code
section 401(a)(9), including the minimum distribution incidental benefit requirement of section
1.401(a)(9)-2 of the proposed regulations. The entire interest of a Participant shall be
distributed or begin to be distributed no later than the Required Beginning Date.

     As of the first distribution calendar year, distributions, if not made in a single-sum, may
only be made over a period not to exceed one of the following periods (or a combination thereof):

          (1) a period certain not extending beyond the life expectancy of the Participant, or

          (2) a period certain not extending beyond the joint and last survivor expectancy of the
Participant and a Beneficiary.

     The life expectancy (or joint and last survivor expectancy) is calculated using the attained
age of the Participant (or Beneficiary) as of the Participant’s (or Beneficiary’s) birthday in the
applicable calendar year reduced by one for each calendar year which has elapsed since the date
life expectancy was first calculated. Life expectancy and joint and last survivor expectancy are
computed by use of the expected return multiples in Tables V and VI of section 1.72-9 of the Income
Tax Regulations. Unless otherwise elected by the Participant (or, if applicable, spouse) by the
time distributions are required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable as to the Participant (or spouse) and shall apply to all subsequent
years. The life expectancy of a nonspouse beneficiary may not be recalculated. If life expectancy
is being recalculated, the applicable life expectancy shall be the life expectancy as so
recalculated. The applicable calendar year shall be the first distribution calendar year, and if
life expectancy is being recalculated, such succeeding calendar year.

     The amount to be distributed each year, beginning with distributions for the first
distribution calendar year shall not be less than the quotient obtained by dividing the
Participant’s benefit by the lesser of (1) the applicable life expectancy or (2) if the
Participant’s spouse is not the designated beneficiary, the applicable divisor determined from the
table set forth in Q&A-4

34

 

of section 1.401(a)(9)-2 of the proposed regulations. Distributions after
the death of the Participant shall be distributed using the applicable life expectancy as the
relevant divisor without regard to Proposed Regulations section 1.401(a)(9)-2. The minimum
distribution required for the Participant’s first distribution calendar year must be made on or
before the Participant’s Required Beginning Date. The minimum distribution for other calendar
years, including the minimum distribution for the distribution calendar year in which the
Participant’s Required Beginning Date occurs, must be made on or before December 31 of that
distribution calendar year.

Section 7.06 DIRECT ROLLOVERS

     (a) General Rule. Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee’s election under this part, a distributee may elect, at the time and
in the manner prescribed by the Plan Administrator, to have any portion of an eligible rollover
distribution that is equal to at least $200 paid directly to an eligible retirement plan specified
by the distributee in a direct rollover.

     (b) Definitions.

          (1) Eligible Rollover Distribution. An eligible rollover distribution is any distribution of
all or any portion of the balance to the credit of the distributee, except that an eligible
rollover distribution does not include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for the life (or life expectancy)
of the distributee or the joint lives (or joint life expectancies) of the distributee and the
distributee’s designated beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under Code section 401(a)(9); the portion
of any other distribution(s) that is not includable in gross income (determined without regard to
the exclusion for net unrealized appreciation with respect to Employer securities); effective
January 1, 2000, any hardship distribution to the extent it is derived from Elective Deferrals; and
any other distribution(s) that is reasonably expected to total less than $200 during a year.

          (2) Eligible Retirement Plan. An eligible retirement plan is an individual retirement account
described in Code section 408(a), an individual retirement annuity described in Code section
408(b), an annuity plan described in Code section 403(a), or a qualified plan described in Code
section 401(a), that accepts the distributee’s eligible rollover distribution. However, in the
case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is
an individual retirement account or individual retirement annuity.

          (3) Distributee. A distributee includes a Participant or former Participant. In addition,
the Participant’s or former Participant’s surviving spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Code section 414(p), are
distributees with regard to the interest of the spouse or former spouse.

          (4) Direct Rollover. A direct rollover is a payment by the Plan to the eligible retirement
plan specified by the distributee.

35

 

Section 7.07 MINOR OR LEGALLY INCOMPETENT PAYEE

     If a distribution is to be made to an individual who is either a minor or legally incompetent,
the Plan Administrator may direct that such distribution be paid to the legal guardian. If a
distribution is to be made to a minor and there is no legal guardian, payment may be made to a
parent of such minor or a responsible adult with whom the minor maintains his residence, or to the
custodian for such minor under the Uniform Transfer to Minors Act, if such is permitted by the laws
of the state in which such minor resides. Such payment shall fully discharge the Trustee, Plan
Administrator, Trust Fund, and the Employer from further liability on account thereof.

Section 7.08 MISSING PAYEE

     If all or any portion of the distribution payable to a Participant or Beneficiary shall, for a
period of more than five years after such distribution becomes payable, remain unpaid because the
Plan Administrator has been unable to ascertain the whereabouts of the Participant or Beneficiary
after sending a registered letter, return receipt requested, to the last known address of such
Participant or Beneficiary, the amount so distributable shall be treated as a forfeiture under
Article 6 hereof. Notwithstanding the foregoing, if a claim is subsequently made by the
Participant or Beneficiary for the forfeited benefit, such benefit shall be reinstated without any
credit or deduction for earnings and losses. Amounts forfeited from a Participant’s Account under
this Section shall be used to restore forfeitures, reduce Company contributions made pursuant to
Article 4 or to pay Plan expenses.

Section 7.09 DISTRIBUTIONS UPON TERMINATION OF PLAN OR DISPOSITION OF ASSETS OR
SUBSIDIARY

     A Participant may receive the balance of his Account in a lump sum payment in any of the
following circumstances:

     (a) Termination of the Plan without the establishment of another defined contribution plan
other than an employee stock ownership plan (as defined in Code section 4975(e) or Code section
409), a simplified employee pension plan (as defined in Code section 408(k)) or a SIMPLE IRA Plan
(defined in Code section 408(p)).

     (b) The disposition by the Employer to an unrelated corporation of substantially all of the
assets (within the meaning of Code section 409(d)(2)) used in a trade or business of such Employer
if such Employer continues to maintain this Plan after the disposition, but only with respect to
Employees who continue employment with the corporation acquiring such assets.

     (c) The disposition by the Employer to an unrelated entity of such Employer’s interest in a
subsidiary (within the meaning of Code section 409(d)(3)) if such Employer continues to
maintain this Plan, but only with respect to Employees who continue employment with such
subsidiary.

36

 

ARTICLE 8

IN-SERVICE DISTRIBUTIONS AND LOANS

Section 8.01 STANDARD WITHDRAWALS

	(a)	 	Hardship.

          (1) General Rule. A Participant may receive a distribution on account of hardship from the
vested portion of the following Accounts:

          Elective Deferral Account, except earnings thereon.

          Rollover Contribution Account.

          Transfer Account.

          (2) Immediate and Heavy Financial Need. A hardship distribution shall only be made upon the
finding of an immediate and heavy financial need where such Participant lacks other available
resources. The following are the only financial needs considered immediate and heavy:

               (A) Expenses incurred or necessary for medical care, described in Code section 213(d), of the
Participant, the Participant’s spouse, children or dependents;

               (B) The purchase (excluding mortgage payments) of a principal residence for the Participant;

               (C) Payment of tuition and related educational fees for the next 12 months of post-secondary
education for the Participant, the Participant’s spouse, children or dependents; or

               (D) The need to prevent the eviction of the Participant from, or a foreclosure on the mortgage
of, the Participant’s principal residence.

          (3) Amount Necessary to Satisfy Need. A distribution will be considered as necessary to
satisfy an immediate and heavy financial need of the Participant only if:

               (A) The Participant has obtained all distributions, other than hardship distributions, and all
nontaxable loans under all plans maintained by the Employer;

               (B) All plans maintained by the Employer provide that the Participant’s Elective Deferrals
(and after-tax contributions) will be suspended for twelve months after the receipt of the hardship
distribution;

37

 

               (C) The distribution is not in excess of the amount of an immediate and heavy financial need
(including amounts necessary to pay any federal, state or local income taxes or penalties
reasonably anticipated to result from the distribution); and

               (D) All plans maintained by the Employer provide that the Participant may not make Elective
Deferrals for the Participant’s taxable year immediately following the taxable year of the hardship
distribution in excess of the applicable limit under Code section 402(g) for such taxable year less
the amount of such Participant’s Elective Deferrals for the taxable year of the hardship
distribution.

     (b) Attainment of Age 59-1/2. A Participant may receive a distribution after attainment of
age 59-1/2 from the vested portion of all of his Accounts.

Section 8.02 WITHDRAWALS AT ANY TIME

     A Participant may receive a distribution from his Rollover Contribution Account at any time.

Section 8.03 TRANSFER ACCOUNT

     In addition to the foregoing, a Participant may receive a distribution from his Transfer
Account as permitted under the terms of any plan from which funds in such Account were transferred.

Section 8.04 RULES REGARDING IN-SERVICE DISTRIBUTIONS

     (a) Frequency and Amount of Withdrawals. The Plan Administrator may establish uniform
procedures that include, but are not limited to, prescribing limitations on the frequency and
minimum amount of withdrawals; provided, that no procedures involving minimum amounts shall
prescribe a minimum withdrawal greater than $1,000.

     (b) Form of Withdrawals. All distributions of amounts withdrawn pursuant to Sections 8.01,
8.02 and 8.03 shall be made in the form of a single sum as soon as practicable following the
Valuation Date as of which such withdrawal is made. Such distributions shall be paid in cash.

     (c) Active Employment. Only Employees shall be eligible to receive in-service distributions
pursuant to this Article 8.

Section 8.05 LOANS

     (a) Eligible Participants. A Participant who is an Employee may apply for a loan from the
Plan. Loans shall only be granted pursuant to the terms of this Section to persons who the Plan
Administrator determines have the ability to repay the loan. Loans shall not be made
available to Participants who are or were Highly Compensated Employees in an amount greater

38

 

than
the amount available to other Participants. Loans shall be made available to all Participants on a
nondiscriminatory and reasonably equivalent basis.

     (b) Maximum Loan Amount. No loan to any Participant can be made to the extent that such loan
when added to the outstanding balance of all other loans to the Participant would exceed the lesser
of:

          (1) $50,000 reduced by the excess (if any) of the highest outstanding balance of loans during
the one year period ending on the day before the loan is made, over the outstanding balance of
loans from the Plan on the date the loan is made, or

          (2) one-half the present value of the nonforfeitable accrued benefit of the Participant.

     For the purpose of the above limitation, all loans from all qualified plans of the Employer
are aggregated.

     (c) Loan Term and Amortization. Any loan shall by its terms require that repayment (principal
and interest) be amortized in level payments, not less frequently than quarterly, over a period not
extending beyond five years from the date of the loan, unless such loan is used to acquire a
dwelling unit which within a reasonable time (determined at the time the loan is made) will be used
as the principal residence of the Participant.

     (d) Minimum Loan Amount — Maximum Number of Loans. The minimum loan amount is $1,000 and the
maximum number of loans outstanding at any one time is 1.

     (e) Interest Rate. Interest shall be charged at a rate to be fixed by the Plan Administrator
and, in determining the interest rate, the Plan Administrator shall take into consideration
interest rates currently being charged on similar commercial loans by persons in the business of
lending money.

     (f) Security. All loans shall be secured by no more than one-half of the vested portion of
the Participant’s Accounts (determined immediately after the origination of the loan) and such
additional security as the Plan Administrator may deem necessary. All loans made to Participants
under this Section are to be considered Trust Fund investments segregated for purposes of Article 9
hereof.

     (g) Repayment. Loans shall be repaid in accordance with the foregoing and the Plan
Administrator may require as a condition to granting such loan that it be repaid through payroll
deductions. Unless the loan note provides otherwise, the principal amount of the loan and accrued
interest shall become immediately due and payable upon a Termination of Employment. Repayment may
be suspended pursuant to Code section 414(u).

     (h) Loan Fees. Fees properly chargeable in connection with a loan may be charged, in
accordance with a uniform and nondiscriminatory policy established by the Plan

39

 

Administrator, against the Account and/or the loan proceeds of the Participant to whom the loan is
granted.

     (i) Default. In the event of default, foreclosure on the note and attachment of security
shall not occur until a distributable event occurs in the Plan.

     (j) Loans to Self-Employed Persons. No loans will be made to any shareholder-employee or
owner-employee. For purposes of this requirement, a shareholder-employee means an employee or
officer of an electing small business (Subchapter S) corporation who owns (or is considered as
owning within the meaning of Code section 318(a)(1), on any day during the taxable year of such
corporation, more than 5% of the outstanding stock of the corporation. An owner-employee means, if
the Employer is a sole proprietorship, an individual who is the sole proprietor, or, if the
Employer is a partnership, a partner owning more than ten percent (10%) of either the capital or
profits interest of the partnership.

     (k) Loan Procedures. The Plan Administrator is authorized to adopt any administrative rules
or procedures that it deems necessary or appropriate with respect to the granting and administering
of loans under this Article 8.

40

 

ARTICLE 9

INVESTMENT AND VALUATION OF TRUST FUND

Section 9.01 INVESTMENT OF ASSETS

     All existing assets of the Trust Fund and all future contributions shall be invested in
accordance with the terms of this Article 9. All assets of the Trust Fund may be commingled for
investment purposes with the assets of any retirement plan which is maintained by the Company and
which qualifies under Code section 401(a) and may be held as a single fund under one or more trust
instruments; provided that the value of each plan’s assets can be determined at any time. The
assets allocable to each such plan shall in no event be used for the benefit of Participants in the
other plans.

     Notwithstanding any provision of the Plan to the contrary, the Trustee, in its discretion,
shall invest up to twenty-five percent (25%) of each Participant’s Matching Contributions
contributed to the Plan in Qualifying Employer Securities. Participants may modify the investment
of their Matching Contributions in accordance with Section 9.02.

Section 9.02 PARTICIPANT SELF DIRECTION

     (a) In General. The Plan Administrator shall permit Participants to direct the investment of
their Accounts pursuant to this Section 9.02. Any Participant self direction shall be made
pursuant to such uniform guidelines and procedures as the Plan Administrator may establish from
time to time. If permitted by the Plan Administrator, a Participant may direct the investment of
all of his Accounts.

     (b) Investment Elections. Each Participant shall direct in the form and manner and at the
time or times prescribed by the Plan Administrator the percentage of the applicable Accounts to be
invested in one or more of the available Investment Funds, subject to such rules and limitations as
the Plan Administrator may prescribe. After the death of the Participant, a Beneficiary shall be
entitled to make investment elections as if the Beneficiary were the Participant. Notwithstanding
the foregoing, the Plan Administrator may restrict investment transfers to the extent required to
comply with applicable law.

     (c) Loans. Any assets that are held in the form of a Participant loan made pursuant to
Article 8 shall be treated as a segregated investment.

     (d) Qualifying Employer Security Limits. Notwithstanding any provision of the Plan to the
contrary, only twenty-five percent (25%) of the assets of a Participant’s Accounts are permitted to
be invested in Qualifying Employer Securities. If a Participant’s Account exceeds this limit, the
Plan Administrator, pursuant to uniform and non-discriminatory guidelines, shall notify the
Participant and reinvest such excess amounts.

41

 

Section 9.03 INDIVIDUAL ACCOUNTS

     There shall be maintained on the books of the Plan with respect to each Participant, as
applicable, an Elective Deferral Account, Matching Contribution Account, Rollover Contribution
Account, Qualified Nonelective Contribution Account, Transfer Account and any other Account
established by the Plan Administrator. Each such Account shall separately reflect the
Participant’s interest in the Trust Fund relating to such Account. Each Participant shall receive,
at least annually, a statement of his Account. A Participant’s interest in the Trust Fund shall be
determined and accounted for based on his beneficial interest in such fund.

Section 9.04 QUALIFYING EMPLOYER INVESTMENTS

     In accordance with ERISA Section 407, the Trustee may invest and hold up to 100% of the fair
market value of the assets of the Trust Fund in Qualifying Employer Securities.

     Notwithstanding any provision of the Plan to the contrary, only twenty-five percent (25%) of
the assets of a Participant’s Accounts are permitted to be invested in Qualifying Employer
Securities. If a Participant’s Accounts exceed this limit, the Plan Administrator, pursuant to
uniform and non-discriminatory guidelines, shall notify the Participant of the excess and reinvest
the excess amounts.

Section 9.05 ALLOCATION OF EARNINGS AND LOSSES

     (a) Reinvestment. The dividends, capital gains distributions, and other earnings received on
the Trust Fund shall be allocated to such fund and reinvested. Dividends, if any, on Qualifying
Employer Securities shall be reinvested, at the Participant’s election pursuant to Section 9.02;
provided however, stock dividends on Qualifying Employer Securities shall be reinvested in
Qualifying Employer Securities unless the Participant specifically elects otherwise pursuant to
Section 9.02.

     (b) Valuation. The assets of each Investment Fund shall be valued by the Trustee at their
current fair market value as of each Valuation Date, and Accounts of each Participant with
interests in that Investment Fund shall be credited with such Participant’s allocable share of the
earnings and losses of each Investment Fund since the immediately preceding Valuation Date. Such
allocation shall be done on the basis of such Participant’s interest in the applicable Investment
Fund. For purposes of the allocation investment earnings and losses, the Plan Administrator may
adjust the value of interests of Investment Funds in Accounts as of the preceding Valuation Date to
account for any contributions, distributions or withdrawals that occur after such preceding
Valuation Date.

     (c) Allocation to Individual Accounts. The Accounts of each Participant shall be adjusted as
of each Valuation Date by (i) reducing such Accounts by any distributions and withdrawals made
therefrom since the preceding Valuation Date, (ii) increasing or reducing such Accounts by the
Participant’s share of earnings and losses and reasonable fees charged against

42

 

such accounts at the
direction of the Plan Administrator, and (iii) crediting such Accounts with any contributions made
thereto since the preceding Valuation Date.

     (d) Valuation for Distribution. For the purposes of paying the amounts to be distributed to a
Participant or Beneficiary pursuant to Articles 7 and 8, the value of the Participant’s interest
shall be determined in accordance with the provisions of this Article as of the Valuation Date
related to the date benefits are paid.

     (e) No Rights Created by Allocation. Any allocation of contributions or earnings to the
separate account of a Participant under this Article 9 shall not cause the Participant to have any
right, title or interest in any assets of the Plan except at the time and under the terms and
conditions expressly provided for in the Plan.

Section 9.06 VOTING RIGHTS

     A Participant and a Beneficiary of a deceased Participant shall have the right to direct the
Trustee as to the exercise of voting rights with respect to Qualifying Employer Securities as that
term is defined in ERISA with respect to such individual’s allocable share of such investment. An
individual’s allocable share shall be determined in the discretion of the Plan Administrator. As
soon as practicable prior to the occasion for the exercise of such voting rights, the Trustee shall
deliver or cause to be delivered, to each Participant and Beneficiary of a deceased Participant all
notices, prospectuses, financial statements, proxies and proxy soliciting material relating to such
investment allocated to the Participant’s Account. Instructions by Participants and Beneficiaries
to the Trustee shall be in such form and pursuant to such regulations as the Plan Administrator
shall prescribe. Any such instructions shall remain in the strict confidence of the Trustee. Any
investments for which no instructions are received by the Trustee within such time specified by
notice and, unless otherwise required by applicable law, any shares which are not allocated to
Participants’ Accounts shall be voted by the Trustee in the same proportion that the shares for
which instructions are received are voted. With respect to fractional shares for which
instructions are received by the Trustee, the Trustee shall aggregate all such fractional shares
for which the same instructions are received into whole shares and shall vote such whole shares as
instructed. Any remaining fractional shares shall be voted by the Trustee in the same proportion
that the shares for which instructions are received are voted.

43

 

ARTICLE 10

TRUST FUND

Section 10.01 TRUST FUND

     (a) Continuation of Trust Fund. A trust is hereby continued under the Plan and the Trustee
will maintain a trust account for the Plan and, as part thereof, Participants’ accounts for such
individuals as the Company shall from time to time give written notice to the Trustee are
Participants in the Plan. The Trustee will accept and hold in the Trust Fund such contributions on
behalf of Participants as it may receive from time to time from the Company, including amounts
transferred by any prior trustee of the Plan, and such earnings, income and appreciation as may
accrue thereon; less losses, depreciation and payments made by the Trustee to carry out the
purposes of the Plan. The Trust Fund shall be fully invested and reinvested in accordance with the
applicable provisions of the Plan.

     (b) Exclusive Benefit. All contributions made to the Plan are made for the exclusive benefit
of the Participants and their Beneficiaries, and such contributions shall not be used for, nor
diverted to, purposes other than for the exclusive benefit of the Participants and their
Beneficiaries (including the costs of maintaining and administering the Plan and corresponding
trust).

     (c) Return of Contributions. Notwithstanding any other provision of this the Plan: (i) as
contributions made prior to the receipt of an initial determination letter are conditional upon a
favorable determination as to the qualified status of the Plan under Code section 401(a), if the
Plan receives an adverse determination with respect to its initial qualification, then any such
contribution may be returned to the Company within one year after such determination, provided the
application for determination is made by the time prescribed by law; (ii) contributions made by the
Company based upon mistake of fact may be returned to the Company within one year of such
contribution; (iii) as all contributions to the Plan are conditioned upon their deductibility under
the Code, if a deduction for such a contribution is disallowed, such contribution may be returned
to the Company within one year of the disallowance of such deduction; and (iv) after all
liabilities under the Plan have been satisfied, the remaining assets of the Trust shall be
distributed to the Company if such distribution does not contravene any provision of applicable
law.

     In the case of the return of a contribution due to mistake of fact or the disallowance of a
deduction, the amount that may be returned is the excess of the amount contributed over the amount
that would have been contributed had there not been a mistake or disallowance. Earnings
attributable to the excess contributions may not be returned to the Company but losses attributable
thereto must reduce the amount to be so returned. Any return of contribution or distribution of
assets made by the Trustee pursuant to this Section shall be made only upon the direction of the
Company, which shall have exclusive responsibility for determining whether the conditions of such
return or distribution have been satisfied and for the amount to be returned.

     (d) Assets Not Held by Trustee. The Trustee shall not be responsible for any assets of the
Plan that are held outside of the Trust Fund. The Trustee is expressly hereby relieved of

44

 

any responsibility or liability for any losses resulting to the Plan arising from any acts or
omissions on the part of any insurance company holding assets outside of the Trust Fund.

Section 10.02 DUTIES OF THE TRUSTEE

     (a) In General. The Trustee is not a party to, and has no duties or responsibilities under,
the Plan other than those that may be expressly contained in this Article. The Trustee shall have
no duties, responsibilities or liability with respect to the acts or omissions of any prior
trustee. The Trustee shall discharge its assigned duties and responsibilities under this Article
and the Plan with the care, skill, prudence, and diligence under the circumstances then prevailing
that a prudent person acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims.

     (b) Contributions. The Trustee agrees to accept contributions that are paid to it by the
Company (as well as rollover contributions and direct transfers from other qualified retirement
plans) in accordance with the terms of this Article. Such contributions shall be in cash or in
such other form that may be acceptable to the Trustee. The Trustee shall have no duty to determine
or collect contributions under the Plan and shall have no responsibility for any property until it
is received by the Trustee. The Company shall have the sole duty and responsibility for the
determination of the accuracy or sufficiency of the contributions to be made under the Plan, the
transmittal of the same to the Trustee and compliance with any statute, regulation or rule
applicable to contributions.

     (c) Distributions. The Trustee shall make distributions out of the Trust Fund pursuant to
instructions described in Section 10.05. The Trustee shall not have any responsibility or duty
under this Article for determining that such are in accordance with the terms of the Plan and
applicable law, including without limitation, the amount, timing or method of payment and the
identity of each person to whom such payments shall be made. The Trustee shall have no
responsibility or duty to determine the tax effect of any payment or to see to the application of
any payment. In making payments to service providers pursuant to instructions, the Plan Sponsor
acknowledges that the Trustee is acting as a paying agent and not as the payor, for tax information
reporting and withholding purposes. In the event that any dispute shall arise as to the persons to
whom payment or delivery of any assets shall be made by the Trustee, the Trustee may withhold such
payment or delivery until such dispute shall have been settled by the parties concerned or shall
have been determined by a court of competent jurisdiction.

     (d) Records. The Trustee shall keep full and accurate accounts of all receipts, investments,
disbursements and other transactions hereunder, including such specific records as may be agreed
upon in writing between the Company and the Trustee. All such accounts, books and records shall be
open to inspection and audit at all reasonable times by any authorized representative of the
Company or the Plan Administrator. A Participant may examine only those individual account records
pertaining directly to him.

     (e) Accounting. The Trustee shall file with the Plan Administrator a written account of the
administration of the Trust Fund showing all transactions effected by the Trustee subsequent to the
period covered by the last preceding account and all property held at its fair

45

 

market value at the end of the accounting period. The Trustee shall use its best effort to file
such written account within ninety (90) days, but not later than one hundred twenty (120) days
after the end of each Plan Year. Upon approval of such accounting by the Plan Administrator,
neither the Company nor the Plan Administrator shall be entitled to any further accounting by the
Trustee. The Plan Administrator may approve such accounting by written notice of approval
delivered to the Trustee or by failure to express objection to such accounting in writing delivered
to the Trustee within six (6) months from the date on which the accounting is delivered to the Plan
Administrator.

     (f) Participant Eligibility. The Trustee shall not be required to determine the facts
concerning the eligibility of any Participant to participate in the Plan, the amount of benefits
payable to any Participant or Beneficiary under the Plan, or the date or method of payment or
disbursement. The Trustee shall be fully entitled to rely in good faith solely upon the written
advice and directions of the Plan Administrator as to any such question of fact.

     (g) Indicia of Ownership. The Trustee shall not hold the indicia of ownership of any assets
of the Trust Fund outside of the jurisdiction of the District Courts of the United States, unless
in compliance with section 404(b) of ERISA and regulations thereunder.

     (h) Notice. The Trustee shall provide the Company with advance notice of any legal actions
the Trustee may take with respect to the Plan and Trust and shall promptly notify the Company of
any claim against the Plan and Trust.

Section 10.03 GENERAL INVESTMENT POWERS

     In addition to all powers and authority under common law, statutory authority and other
provisions of this Article, the Trustee shall have the following powers and authorities to be
exercised in accordance with and subject to the provisions of Section 10.04 hereof:

     (a) Invest and reinvest the Trust Fund in any property, real, personal or mixed, wherever
situated, and whether situated, and whether or not productive of income or consisting of wasting
assets, including, without limitation, common and preferred stock, bonds, notes, debentures,
options, mutual funds, leaseholds, mortgages (including without limitation, any collective or part
interest in any bond and mortgage or note and mortgage), certificates of deposit, and oil, mineral
or gas properties, royalties, interests or rights (including equipment pertaining thereto), without
being limited to the classes of property in which trustees are authorized by law or any rule of
court to invest trust funds and without regard to the proportion any such property may bear to the
entire amount of the Trust Fund;

     (b) Hold property in nominee name, in bearer form, or in book entry form, in a clearinghouse
corporation or in a depository, so long as the Trustee’s records clearly indicate that the assets
held are a part of the Trust Fund;

     (c) Collect income payable to and distributions due to the Trust Fund and sign on behalf of
the Trust any declarations, affidavits, certificates of ownership and other documents
required to collect income and principal payments, including but not limited to, tax reclamations,
rebates and other withheld amounts;

46

 

     (d) To sell, exchange, convey, transfer, grant options to purchase, or otherwise dispose of
any securities or other property held by the Trustee. No person dealing with the Trustee shall be
bound to see to the application of the purchase money or to inquire into the validity, expediency,
or propriety of any such sale or other disposition;

     (e) Pursuant to the terms of Section 10.06, to vote upon any stocks, bonds, or other
securities; to give general or special proxies or powers of attorney with or without power of
substitution; to exercise any conversion privileges, subscription rights or other options, and to
make any payments incidental thereto; to oppose, or to consent to, or otherwise participate in,
corporate reorganizations or other changes affecting corporate securities, and to delegate
discretionary powers, and to pay any assessments or charges in connection therewith; and generally
to exercise any of the powers of an owner with respect to stocks, bonds, securities, or other
property;

     (f) Take all action necessary to pay for authorized transactions or make authorized
distributions, including exercising the power to borrow or raise moneys from any lender, upon such
terms and conditions as are necessary to settle such transactions or distributions;

     (g) To keep such portion of the Trust Fund uninvested in cash or cash balances as the Trustee
may, from time to time, deem to be in the best interests of the Plan, without liability for
interest thereon;

     (h) To accept and retain for such time as the Trustee may deem advisable any securities or
other property received or acquired as Trustee hereunder, whether or not such securities or other
property would normally be purchased as investments hereunder;

     (i) To make, execute, acknowledge, and deliver any and all documents of transfer and
conveyance and any and all other instruments that may be necessary or appropriate to carry out the
powers herein granted;

     (j) To settle, compromise, or submit to arbitration any claims, debts, or damages due or owing
to or from the Trust Fund, to commence or defend suits or legal or administrative proceedings, and
to represent the Plan and/or Trust Fund in all suits and legal and administrative proceedings;

     (k) To invest in Treasury Bills and other forms of United States government obligations;

     (l) Deposit cash in interest bearing accounts in the banking department of the Trustee or an
affiliated banking organization;

     (m) To deposit monies in federally insured savings accounts or certificates of deposit in
banks or savings and loan associations;

47

 

     (n) Invest and reinvest all or any portion of the Trust Fund collectively with funds of other
retirement plan trusts exempt from tax under Code section 501(a), including, without limitation,
the power to invest collectively with such other funds through the medium of one or more common,
collective or commingled trust funds which have been or may hereafter be operated by the Trustee,
the instrument or instruments establishing such trust fund or funds, as amended from time to time,
being made part of this Trust so long as any portion of the Trust Fund shall be invested through
the medium thereof;

     (o) Sell, either at public or private sale, option to sell, mortgage, lease for a term of
years less than or continuing beyond the possible date of the termination of the Trust created
hereunder, partition or exchange any real property which may from time to time constitute a portion
of the Trust Fund, for such prices and upon such terms as it may deem best, and to make, execute
and deliver to the purchasers thereof good and sufficient deeds of conveyance therefor and all
assignments, transfers and other legal instruments, either necessary or convenient for the passing
of the title and ownership thereof to the purchaser, free and discharged of all trusts and without
liability on the part of such purchasers to see to the proper application of the purchase price;

     (p) Repair, alter, improve or demolish any buildings which may be on any real estate forming
part of the Trust Fund or to erect entirely new structures thereon;

     (q) Renew, extend or participate in the renewal or extension of any mortgage, upon such terms
as may be deemed advisable, and to agree to a reduction in the rate of interest on any mortgage or
to any other modification or change in the terms of any mortgage or of any guarantee pertaining
thereto, in any manner and to any extent that may be deemed advisable for the protection of the
Trust Fund or the preservation of the value of the investment; to waive any default, whether in the
performance of any covenant or condition of any mortgage or in the performance of any guarantee, or
to enforce any such default in such manner and to such extent as may be deemed advisable; to
exercise and enforce any and all rights of foreclosure, to bid on property in foreclosure, to take
a deed in lieu of foreclosure with or without paying a consideration therefor, and in connection
therewith to release the obligation on the bond or note secured by the mortgage; and to exercise
and enforce in any action, suit or proceeding at law or in equity any rights or remedies in respect
to any mortgage or guarantee;

     (r) Purchase any authorized investment at a premium or at a discount;

     (s) Establish, manage and administer a securities lending program on behalf of the Trust Fund,
pursuant to which the Trustee shall have authority to cause any or all securities held in the Trust
Fund to be lent to such one or more borrowers as the Trustee shall determine, in accordance with
Prohibited Transaction Class Exemption 81-6. The Investment Fiduciary shall enter into a written
agreement with the Trustee setting forth the terms and conditions of the Trustee’s appointment,
including without limitation the compensation to be paid to the Trustee for its services with
respect to such securities lending program, in accordance with Prohibited Transaction Class
Exemption 82-63;

48

 

     (t) To do all such acts and exercise all such rights and privileges, although not specifically
mentioned herein, as the Trustee may deem necessary to carry out the purposes of the Plan.

Section 10.04 OTHER INVESTMENT POWERS

     (a) Requirement for Preapproval. The powers granted the Trustee under Section 10.03 shall be
exercised by the Trustee in its discretion insofar as such exercise does not contravene any written
direction from the Investment Fiduciary. Any written direction of the Investment Fiduciary may be
of a continuing nature, but may be revoked in writing by the Investment Fiduciary at any time. The
Trustee shall comply with any direction as promptly as possible, provided it does not contravene
the terms of the Plan or the provision of any applicable law. The Investment Fiduciary, by written
direction, may require the Trustee to obtain written approval of the Investment Fiduciary before
exercising such of its powers as may be specified in such direction. Any such direction may be of
a continuing nature or otherwise and may be revoked in writing by the Investment Fiduciary at any
time. The Trustee shall not be responsible for any loss that may result from the failure or
refusal of the Investment Fiduciary to give any such required approval.

     (b) Prohibited Transactions. The Trustee shall not engage in any non-exempt prohibited
transaction within the meaning of the Code and ERISA.

     (c) Legal Actions. The Trustee is authorized to execute all necessary receipts and releases
and shall be under the duty to make efforts to collect such sums as may appear to be due (except
contributions hereunder); provided, however, that the Trustee shall not be required to institute
suit or maintain any litigation to collect the proceeds of any asset unless it has been indemnified
to its satisfaction for counsel fees, costs, disbursements and all other expenses and liabilities
to which it may in its judgment be subjected by such action. Notwithstanding anything to the
contrary herein contained, the Trustee is authorized to compromise and adjust claims arising out of
any asset held in the Trust Fund upon such terms and conditions as the Trustee may deem just, and
the action so taken by the Trustee shall be binding and conclusive upon all persons interested in
the Trust Fund.

     (d) Retention of Advisors. The Trustee, with the consent of the Investment Fiduciary, may
retain the services of investment advisors to invest and reinvest the assets of the Trust Fund, as
well as employ such legal, actuarial, medical, accounting, clerical and other assistance as may be
required in carrying out the provisions of the Plan. The Trustee may also appoint custodians,
subcustodians or subtrustees as to part or all of the Trust Fund.

Section 10.05 INSTRUCTIONS

     (a) Reliance on Instructions. Whenever the Trustee is permitted or required to act upon the
directions or instructions of the Investment Fiduciary, Plan Administrator or Company, the Trustee
shall be entitled to act in good faith upon any written communication signed by any person or agent
designated to act as or on behalf of the Investment Fiduciary, Plan Administrator
or Company. Such person or agent shall be so designated either under the provisions of the Plan

49

 

or
in writing by the Company and their authority shall continue until revoked in writing. The Trustee
shall incur no liability for failure to act in good faith on such person’s or agent’s instructions
or orders without written communication, and the Trustee shall be fully protected in all actions
taken in good faith in reliance upon any instructions, directions, certifications and
communications believed to be genuine and to have been signed or communicated by the proper person.

     (b) Designation of Agent. The Company shall notify the Trustee in writing as to the
appointment, removal or resignation of any person designated to act as or on behalf of the
Investment Fiduciary, Plan Administrator or Company. After such notification, the Trustee shall be
fully protected in acting in good faith upon the directions of, or dealing with, any person
designated to act as or on behalf of the Investment Fiduciary, Plan Administrator or Company until
it receives notice to the contrary. The Trustee shall have no duty to inquire into the
qualifications of any person designated to act as or on behalf of the Investment Fiduciary, Plan
Administrator or Company.

     (c) Payment of Benefits. The Trustee shall pay benefits and expenses from the Trust Fund only
upon the written direction of the Plan Administrator. The Trustee shall be fully entitled to rely
in good faith on such directions furnished by the Plan Administrator, and shall be under no duty to
ascertain whether the directions are in accordance with the provisions of the Plan.

Section 10.06 INVESTMENT OF THE FUND

     (a) Investment Funds. The Investment Fiduciary shall have the exclusive authority and
discretion to select the Investment Funds available for investment under the Plan. In making such
selection, the Investment Fiduciary shall use the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in a like capacity and familiar with
such matters would use in the conduct of an enterprise of a like character and with like aims.
Subject to the first sentence of Subsection (b) below, the available investments under the Plan
shall be sufficiently diversified so as to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so. The Investment Fiduciary shall notify the
Trustee in writing of the selection of the Investment Funds currently available for investment
under the Plan, and any changes thereto.

     (b) Participant Self-Direction. To the extent permitted by the Plan Administrator pursuant to
Section 9.02, each Participant shall have the right, in accordance with the provisions of the Plan,
to direct the investment by the Trustee of all amounts allocated to the separate accounts of the
Participant under the Plan among any one or more of the available Investment Funds; provided,
however, that during any transition period as may be agreed by the Investment Fiduciary and the
Trustee, the Investment Fiduciary may direct the investment by the Trustee into the Investment
Funds available during such period with respect to which individual Participant’s directions shall
not have been made or shall not have been permitted to be made under the Plan. All investment
directions by Participants shall be timely furnished to the Trustee by the Plan Administrator,
except to the extent such directions are transmitted telephonically or
otherwise by Participants directly to the Trustee or its delegate in accordance with rules and

50

 

procedures established and approved by the Plan Administrator and communicated to the Trustee. In
making any investment of the assets of the Fund, the Trustee shall be fully entitled to rely on
such directions furnished to it by the Plan Administrator or by Participants in accordance with the
Plan Administrator’s approved rules and procedures, and shall be under no duty to make any inquiry
or investigation with respect thereto. If the Trustee receives any contribution under the Plan
that is not accompanied by instructions directing its investment, the Trustee shall immediately
notify the Plan Administrator of that fact, and the Trustee may, in its discretion, hold all or a
portion of the contribution uninvested without liability for loss of income or appreciation pending
receipt of proper investment directions.

     (c) Investment Managers.

          (1) Appointment of Investment Managers. The Investment Fiduciary may appoint one or more
Investment Managers with respect to some or all of the assets of the Trust Fund as contemplated by
section 402(c)(3) of ERISA. Any such Investment Manager shall acknowledge to the Investment
Fiduciary in writing that it accepts such appointment and that it is an ERISA fiduciary with
respect to the Plan and the Trust Fund. The Investment Fiduciary shall provide the Trustee with a
copy of the written agreement (and any amendments thereto) between the Investment Fiduciary and the
Investment Manager. By notifying the Trustee of the appointment of an Investment Manager, the
Investment Fiduciary shall be deemed to certify that such Investment Manager meets the requirements
of section 3(38) of ERISA. The authority of the Investment Manager shall continue until the
Investment Fiduciary rescinds the appointment or the Investment Manager has resigned.

          (2) Separation of Duties. The assets with respect to which a particular Investment Manager
has been appointed shall be specified by the Investment Fiduciary and shall be segregated in a
separate account for the Investment Manager (the “Separate Account”) and the Investment Manager
shall have the power to direct the Trustee in every aspect of the investment of the assets of the
Separate Account. The Trustee shall not be liable for the acts or omissions of an Investment
Manager and shall have no liability or responsibility for acting pursuant to the direction of, or
failing to act in the absence of, any direction from an Investment Manager, unless the Trustee
knows that by such action or failure to act it would be itself committing a breach of fiduciary
duty or participating in a breach of fiduciary duty by such Investment Manager, it being the
intention of the parties that each party shall have the full protection of section 405(d) of ERISA.

     (d) Proxies.

          (1) Delivery of Information. The Trustee shall deliver, or cause to be delivered, to the
Company or Plan Administrator all notices, prospectuses, financial statements, proxies and proxy
soliciting materials received by the Trustee relating to securities held by the Trust or, if
applicable, deliver these materials to the appropriate Participant or the Beneficiary of a deceased
Participant.

          (2) Voting. The Trustee shall not vote any securities held by the Trust except in accordance
with the written instructions of the Company, the Investment Fiduciary,

51

 

Participant or the
Beneficiary of the Participant, if the Participant is deceased. However, the Trustee may, in the
absence of instructions, vote “present” for the sole purpose of allowing such shares to be counted
for establishment of a quorum at a shareholders’ meeting. The Trustee shall have no duty to
solicit instructions from Participants, Beneficiaries, the Investment Fiduciary or the Company.

          (3) Investment Manager. To the extent not delegated to Participants pursuant to Subsection
(b), the Investment Manager shall be responsible for making any proxy voting or tender offer
decisions with respect to securities held in the Separate Account and the Investment Manager shall
maintain a record of the reasons for the manner in which it voted proxies or responded to tender
offers.

Section 10.07 COMPENSATION AND INDEMNIFICATION

     (a) Compensation. The Trustee shall be entitled to reasonable compensation for its services
as is mutually agreed upon with the Company. If approved by the Plan Administrator, the Trustee
shall also be entitled to reimbursement for all direct expenses properly and actually incurred on
behalf of the Plan. Such compensation or reimbursement shall be paid to the Trustee out of the
Trust Fund unless paid directly by the Company.

     (b) Indemnification. The Company shall indemnify and hold harmless the Trustee from all
claims, liabilities, losses, damages and expenses, including reasonable attorneys’ fees and
expenses, incurred by the Trustee in connection with its duties hereunder to the extent not covered
by insurance, except when the same is due to the Trustee’s own gross negligence, willful
misconduct, lack of good faith, or breach of its fiduciary duties under the Plan or ERISA.

Section 10.08 RESIGNATION AND REMOVAL

     (a) Resignation. The Trustee may resign at any time by written notice to the Plan
Administrator which shall be effective 60 days after delivery unless prior thereto a successor
Trustee assumes the responsibilities of Trustee hereunder.

     (b) Removal. The Trustee may be removed by the Company at any time.

     (c) Successor Trustee. The appointment of a successor Trustee hereunder shall be accomplished
by and shall take effect upon the delivery to the resigning or removed Trustee, as the case may be,
of written notice of the Company appointing such successor Trustee, and an acceptance in writing of
the office of successor Trustee hereunder executed by the successor so appointed. Any successor
Trustee may be either a corporation authorized and empowered to exercise trust powers or one or
more individuals. All of the provisions set forth herein with respect to the Trustee shall relate
to each successor Trustee so appointed with the same force and effect as if such successor Trustee
had been originally named herein as the Trustee hereunder. If
within 45 days after notice of resignation shall have been given under the provisions of this
Article a successor Trustee shall not have been appointed, the resigning Trustee or the Plan
Sponsor may apply to any court of competent jurisdiction for the appointment of a successor
Trustee.

52

 

     (d) Transfer of Trust Fund. Upon the appointment of a successor Trustee, the resigning or
removed Trustee shall transfer and deliver the Trust Fund to such successor Trustee, after
reserving such reasonable amount as it shall deem necessary to provide for its expenses in the
settlement of its account, the amount of any compensation due to it and any sums chargeable against
the Trust Fund for which it may be liable. If the sums so reserved are not sufficient for such
purposes, the resigning or removed Trustee shall be entitled to reimbursement for any deficiency
from the Plan Sponsor.

53

 

ARTICLE 11

SPECIAL “TOP-HEAVY” RULES

Section 11.01 “TOP-HEAVY” STATUS

     The special provisions set forth in this Article 11 shall apply during any Plan Year in which
this Plan, together with any other retirement plans required to be aggregated under Code section
416(g) and the Treasury Regulations promulgated thereunder, is “Top-Heavy.” This Plan is Top-Heavy
for any Plan Year beginning after 1983:

     (a) If the Top-Heavy Ratio for this Plan exceeds 60% and this Plan is not part of any Required
Aggregation Group or Permissive Aggregation Group of plans;

     (b) If this Plan is a part of a Required Aggregation Group of plans but not part of a
Permissive Aggregation Group and the Top-Heavy Ratio for the Required Aggregation Group of plans
exceeds 60%; or

     (c) If this Plan is a part of a Required Aggregation Group and part of a Permissive
Aggregation Group of plans and the Top-Heavy Ratio for the Permissive Aggregation Group exceeds
60%.

Section 11.02 MINIMUM ALLOCATIONS

     In any Plan Year in which the Plan is Top-Heavy, the Company contributions and forfeitures
allocated on behalf of any Participant who is (i) employed by the Employer on the last day of the
Plan Year and (ii) not a Key Employee shall not be less than the lesser of three percent (3%) of
such Participant’s Compensation or in the case where the Employer has no defined benefit plan which
designates this Plan to satisfy Code section 416, the largest percentage of Company contributions
(including Elective Deferrals) and forfeitures, as a percentage of Key Employee’s Compensation, as
limited by Code section 401(a)(17), allocated on behalf of any Key Employee for that Plan Year.
The minimum allocation is determined without regard to any Social Security contribution. This
minimum allocation shall be made even though, under other Plan provisions, the Participant would
not otherwise be entitled to receive an allocation, or would have received a lesser allocation for
the Plan Year because of (i) the Participant’s failure to complete 1,000 hours of service (or any
equivalent provided in the Plan), (ii) the Participant’s failure to make mandatory employee
contributions to the Plan, or (iii) compensation less than a stated amount.

Section 11.03 MINIMUM VESTING

     (a) For any Plan Year in which this Plan is Top-Heavy, the following vesting schedule shall
automatically apply to the Plan to the extent that it is more favorable than the vesting schedule
provided for in Article 6:

54

 

	 	 	 	 	 
	 	 	Vesting
	Years of Vesting Service	 	Percentage
	Less than Three Years
	 	 	0	%
	Three or More Years
	 	 	100	%

     (b) The minimum vesting schedule applies to all benefits within the meaning of Code section
411(a)(7) except those attributable to employee contributions or those already subject to a vesting
schedule which vests at least as rapidly as the schedule listed above, including benefits accrued
before the effective date of Code section 416 and benefits accrued before the Plan became
Top-Heavy. Further, no decrease in a Participant’s nonforfeitable percentage may occur in the
event the Plan’s status as Top-Heavy changes for any Plan Year. However, this Section does not
apply to the account balances of any Employee who does not have an hour of service after the Plan
initially became Top-Heavy and such Employee’s Account balance attributable to Company
contributions and forfeitures will be determined without regard to this Section. The minimum
allocation required (to the extent required to be nonforfeitable under Code section 416(b)) may not
be forfeited under Code sections 411(a)(3)(B) or 411(a)(3)(D).

55

 

ARTICLE 12

PLAN ADMINISTRATION

Section 12.01 PLAN ADMINISTRATOR

     (a) Designation. The Plan Administrator shall be the Plan Sponsor. The Plan Sponsor may
subsequently designate other persons to serve as Plan Administrator.

     (b) Authority and Responsibility of the Plan Administrator. The Plan Administrator shall be
the Plan “administrator” as such term is defined in section 3(16) of ERISA, and as such shall have
total and complete discretionary power and authority:

          (i) to make factual determinations, to construe and interpret the provisions of the Plan, to
correct defects and resolve ambiguities and inconsistencies therein and to supply omissions
thereto. Any construction, interpretation or application of the Plan by the Plan Administrator
shall be final, conclusive and binding;

          (ii) to determine the amount, form or timing of benefits payable hereunder and the recipient
thereof and to resolve any claim for benefits in accordance with this Article 12;

          (iii) to determine the amount and manner of any allocations hereunder;

          (iv) to maintain and preserve records relating to Participants, former Participants, and their
Beneficiaries and Alternate Payees;

          (v) to prepare and furnish to Participants, Beneficiaries and Alternate Payees all information
and notices required under federal law or the provisions of this Plan;

          (vi) to prepare and file or publish with the Secretary of Labor, the Secretary of the
Treasury, their delegates and all other appropriate government officials all reports and other
information required under law to be so filed or published;

          (vii) to approve and enforce any loan hereunder including the repayment thereof;

          (viii) to provide directions to the Trustee with respect to the purchase of life insurance,
methods of benefit payment, valuations at dates other than regular Valuation Dates and on all other
matters where called for in the Plan or requested by the Trustee;

          (ix) to hire such professional assistants and consultants as it, in its sole discretion, deems
necessary or advisable;

          (x) to determine all questions of the eligibility of Employees and of the status of rights of
Participants, Beneficiaries and Alternate Payees;

56

 

          (xi) to arrange for bonding, if required by law;

          (xii) to adjust Accounts in order to correct errors or omissions;

          (xiii) to determine whether any domestic relations order constitutes a Qualified Domestic
Relations Order and to take such action as the Plan Administrator deems appropriate in light of
such domestic relations order;

          (xiv) to retain records on elections and waivers by Participants, their spouses and their
Beneficiaries and Alternate Payees;

          (xv) to supply such information to any person as may be required;

          (xvi) to establish, revise from time to time, and communicate to the Trustee and/or the
Investment Fiduciary and Investment Manager(s), a funding policy and method for the Plan; and

          (xvii) to perform such other functions and duties as are set forth in the Plan that are not
specifically given to the Investment Fiduciary or Trustee.

     (c) Procedures. The Plan Administrator may adopt such rules and procedures as it deems
necessary, desirable, or appropriate for the administration of the Plan. When making a
determination or calculation, the Plan Administrator shall be entitled to rely upon information
furnished to it. The Plan Administrator’s decisions shall be binding and conclusive as to all
parties.

     (d) Allocation of Duties and Responsibilities. The Plan Administrator may designate other
persons to carry out any of his duties and responsibilities under the Plan.

Section 12.02 INVESTMENT FIDUCIARY

     (a) Designation. The Plan Investment Fiduciary shall be designated by the Plan Sponsor. In
the absence of a designation, the Plan Administrator shall be the Investment Fiduciary. The
Investment Fiduciary may consist of a committee consisting of one or more individuals who may be
Employees appointed by the Plan Sponsor. If a committee is appointed, the committee shall elect a
chairman and may adopt such rules and procedures as it deems desirable. The committee may take
action with or without formal meetings and may authorize one or more individuals, who may or may
not be members of the committee, to execute documents in its behalf.

     (b) Authority and Responsibility of the Investment Fiduciary. The Investment Fiduciary shall
have the following discretionary authority and responsibility:

          (i) to manage the investment of the Trust Fund;

          (ii) to appoint one or more Investment Managers;

57

 

          (iii) to hire such professional assistants and consultants as it, in its sole discretion,
deems necessary or advisable;

          (iv) to establish, revise from time to time, and communicate to the Trustee and/or Investment
Manager(s), an investment policy for the Plan; and

          (v) to supply such information to any person as may be required.

     (c) Procedures. The Investment Fiduciary may adopt such rules and procedures as it deems
necessary, desirable, or appropriate in furtherance of its duties hereunder. When making a
determination or calculation, the Investment Fiduciary shall be entitled to rely upon information
furnished to it.

Section 12.03 COMPENSATION OF PLAN ADMINISTRATOR AND INVESTMENT FIDUCIARY

     The Plan Administrator and Investment Fiduciary shall serve without compensation for their
services.

Section 12.04 PLAN EXPENSES

     All direct expenses of the Plan, Trustee, Plan Administrator and Investment Fiduciary or any
other person in furtherance of their duties hereunder shall be paid or reimbursed by the Company,
and if not so paid or reimbursed, shall be proper charges to the Trust Fund and shall be paid
therefrom.

Section 12.05 ALLOCATION OF FIDUCIARY RESPONSIBILITY

     A Plan fiduciary shall have only those specific powers, duties, responsibilities and
obligations as are explicitly given him under the Plan and Trust Agreement. It is intended that
each fiduciary shall not be responsible for any act or failure to act of another fiduciary. A
fiduciary may serve in more than one fiduciary capacity with respect to the Plan.

Section 12.06 INDEMNIFICATION

     The Company shall indemnify and hold harmless any person serving as the Investment Fiduciary
and/or Plan Administrator from all claims, liabilities, losses, damages and expenses, including
reasonable attorneys’ fees and expenses, incurred by such persons in connection with their duties
hereunder to the extent not covered by insurance, except when the same is due to such person’s own
gross negligence, willful misconduct, lack of good faith, or breach of its fiduciary duties under
this Plan or ERISA.

58

 

Section 12.07 CLAIMS PROCEDURES

     (a) Application for Benefits. A Participant or any other person entitled to benefits from the
Plan (a “Claimant”) may apply for such benefits by completing and filing a claim with the Plan
Administrator. Any such claim shall be in writing and shall include all information and evidence
that the Plan Administrator deems necessary to properly evaluate the merit of and to make any
necessary determinations on a claim for benefits. The Plan Administrator may request any
additional information necessary to evaluate the claim. The Plan Administrator shall normally
answer any written claim within 90 days (45 days if the claim relates to a disability
determination) of the date all the information and evidence necessary to process the claim is
received. However, if the Plan Administrator furnishes the Claimant with a written extension
notice during that period, the Plan Administrator may take up to 90 additional days (30 additional
days if the claim relates to a disability determination) to make its decision. Any written
extension notice shall indicate the special circumstances which make the extension necessary and
the date by which the Plan Administrator expects to render its decision. If the claim relates to a
disability determination, the period for making the determination may be extended for up to an
additional 30 days if the Plan Administrator notifies the Claimant prior to the expiration of the
first 30-day extension period. The notice shall include (1) the standards on which entitlement to
a benefit is based, (2) the unresolved issues that prevent a decision on the claim, and (3) the
additional information needed to resolve those issues. The Claimant shall have at least 45 days to
provide the requested information.

     (b) Denial of Claim. If a claim is wholly or partially denied, the Plan Administrator shall
provide the Claimant with a written notice identifying (1) the reason or reasons for such denial,
(2) the pertinent Plan provisions on which the denial is based, (3) any material or information
needed to grant the claim and an explanation of why the additional information is necessary, and
(4) an explanation of the steps that the Claimant must take if he wishes to appeal the denial.

     (c) Appeals of Denied Claims for Benefits. If a Claimant wishes to appeal the denial of a
claim, he shall file a written appeal with the Plan Administrator on or before the 60th day (180th
day if the claim relates to a disability determination) after he receives the Plan Administrator’s
written notice that the claim has been wholly or partially denied. The written appeal shall
identify both the grounds and specific Plan provisions upon which the appeal is based. The
Claimant shall be provided, upon request and free of charge, documents and other information
relevant to his claim. A written appeal may also include any comments, statements or documents
that the Claimant may desire to provide. The Plan Administrator shall consider the merits of the
Claimant’s written presentations, the merits of any facts or evidence in support of the denial of
benefits, and such other facts and circumstances as the Plan Administrator may deem relevant. The
Claimant shall lose the right to appeal if the appeal is not timely made. The Plan Administrator
shall ordinarily rule on an appeal within 60 days (45 days if the claim relates to a disability
determination). However, if special circumstances require an extension and the Plan Administrator
furnishes the Claimant with a written extension notice during the initial period, the Plan
Administrator may take up to 120 days (90 days if the claim relates to a disability determination)
to rule on an appeal.

59

 

     (d) Denial of Appeal. If an appeal is wholly or partially denied, the Plan Administrator
shall provide the Claimant with a written notice identifying (1) the reason or reasons for such
denial and (2) the pertinent Plan provisions on which the denial is based. The determination
rendered by the Plan Administrator shall be binding upon all parties.

     (e) Determinations of Disability. If the claim relates to a disability determination,
determinations of the Plan Administrator shall include the information required under applicable
United States Department of Labor regulations.

60

 

ARTICLE 13

AMENDMENT, MERGER AND TERMINATION

Section 13.01 AMENDMENT 

     The provisions of the Plan may be amended in writing at any time and from time to time by the
Plan Sponsor, provided, however, that:

     (a) No amendment to the Plan shall decrease a Participant’s accrued benefit. Notwithstanding
the preceding sentence, a Participant’s Account balance may be reduced to the extent permitted
under Code section 412(c)(8) and no amendment shall increase the duties and liabilities of the
Trustee without the Trustee’s consent. For purposes of this Subsection, a plan amendment which has
the effect of decreasing a Participant’s Account balance or eliminating an optional form of
benefit, with respect to benefits attributable to service before the amendment, shall be treated as
reducing an accrued benefit, unless such amendment is authorized under applicable Treasury
Regulations.

     (b) The Plan may be amended by the entity that is deemed under applicable Treasury Regulations
and procedures to be the Plan’s volume submitter sponsor.

     (c) If the Plan’s vesting schedule is amended, in the case of an Employee who is a Participant
as of the later of the date the amendment is adopted or the date it becomes effective, the
nonforfeitable percentage (determined as of such date) of such Employee’s employer-derived accrued
benefit will not be less than the percentage computed under the Plan without regard to such
amendment.

     (d) If the Plan’s vesting schedule is amended, or the Plan is amended in any way that directly
or indirectly affects the computation of the Participant’s nonforfeitable percentage or if the Plan
is deemed amended by an automatic change to or from a top-heavy vesting schedule, each Participant
with at least 3 years of vesting service with the Employer may elect, within a reasonable period
after the adoption of the amendment or change, to have the nonforfeitable percentage computed under
the Plan without regard to such amendment or change. For Participants who do not have at least 1
hour of service in any plan year beginning after December 31, 1988, the preceding sentence shall be
applied by substituting “5 years of service” for “3 years of service” where such language appears.
The period during which the election may be made shall commence with the date the amendment is
adopted or deemed to be made and shall end on the latest of:

          (1) 60 days after the amendment is adopted;

          (2) 60 days after the amendment becomes effective; or

          (3) 60 days after the Participant is issued written notice of the amendment by the Plan
Administrator.

61

 

     The election provided for in this Section 13.01 shall be made in writing and shall be
irrevocable when made.

     (e) Code section 411(d)(6) protected benefits will be available without regard to employer
discretion in accordance with Treas. Reg. section 1.411(d)(4), Q & A’s #8 & 9.

Section 13.02 MERGER AND TRANSFER

     (a) Merger. In the event of any merger or consolidation with, or transfer of assets or
liabilities to, any other plan, each Participant shall have a benefit in the surviving or
transferee plan (as if such plan were then terminated immediately after such merger, consolidation
or transfer) that is equal to or greater than the benefit he would have had immediately before such
merger, consolidation or transfer in the plan in which he was then a Participant had such plan been
terminated at that time.

     (b) Transfer. The Plan Administrator may direct the Trustee to accept assets and related
liabilities from another qualified plan provided that it receives sufficient evidence that the
transferor plan is a tax-qualified plan. The Plan Administrator may direct the Trustee to transfer
assets and related liabilities to another qualified plan provided that it receives sufficient
evidence that the transferee plan is a tax-qualified plan.

Section 13.03 TERMINATION

     (a) It is the intention of the Plan Sponsor that this Plan will be permanent. However, the
Plan Sponsor reserves the right to terminate the Plan at any time for any reason.

     (b) Each entity constituting the Company reserves the right to terminate its participation in
this Plan. Each such entity constituting the Company shall be deemed to terminate its
participation in the Plan if: (i) it is a party to a merger in which it is not the surviving entity
and the surviving entity is not an affiliate of another entity constituting the Company, or (ii) it
sells all or substantially all of its assets to an entity that is not an affiliate of another
entity constituting the Company.

     (c) Any termination of the Plan shall become effective as of the date designated by the Plan
Sponsor. Except as expressly provided elsewhere in the Plan, prior to the satisfaction of all
liabilities with respect to the benefits provided under this Plan, no termination shall cause any
part of the funds or assets held to provide benefits under the Plan to be used other than for the
benefit of Participants or to meet the administrative expenses of the Plan. In the event of the
termination or partial termination of the Plan the account balance of each affected Participant
will be nonforfeitable. In the event of a complete discontinuance of contributions under the Plan,
the account balance of each affected Participant will be nonforfeitable. Upon termination of the
Plan, Participant Accounts shall be distributed in a single lump sum payment unless otherwise
required pursuant to Article 7.

62

 

ARTICLE 14

MISCELLANEOUS

Section 14.01 NONALIENATION OF BENEFITS

     (a) Except as provided in Section 14.01(b), the Trust Fund shall not be subject to any form of
attachment, garnishment, sequestration or other actions of collection afforded creditors of the
Company, Participants or Beneficiaries under the Plan and all payments, benefits and rights shall
be free from attachment, garnishment, trustee’s process, or any other legal or equitable process
available to any creditor of such Company, Participant or Beneficiary. Except as provided in
Section 14.01(b), no Participant or Beneficiary shall have the right to alienate, anticipate,
commute, pledge, encumber or assign any of the benefits or payments which he may expect to receive,
contingently or otherwise, under the Plan, except the right to designate a Beneficiary. Any
reference to a Participant or Beneficiary shall include an Alternate Payee or the Beneficiary of an
Alternate Payee.

     (b) Notwithstanding the foregoing, the Trustee and/or Plan Administrator may:

          (1) Subject to Section 14.02 below, comply with the provisions and conditions of any Qualified
Domestic Relations Order pursuant to the provisions of Code section 414(p).

          (2) Comply with any federal tax levy made pursuant to Code section 6331.

          (3) Subject to the provisions of Code section 401(a)(13), comply with the provisions and
conditions of a judgment, order, decree or settlement agreement issued on or after August 5, 1997
between the Participant and the Secretary of Labor or the Pension Benefit Guaranty Corporation
relating to a violation (or alleged violation) of part 4 of subtitle B of title I of ERISA.

          (4) Bring action to recover benefit overpayments.

Section 14.02 RIGHTS OF ALTERNATE PAYEES

     (a) General. An Alternate Payee shall have no rights to a Participant’s benefit and shall have
no rights under this Plan other than those rights specifically granted to the Alternate Payee
pursuant to a Qualified Domestic Relations Order that are consistent with this Section 14.02.

     (b) Distribution. Notwithstanding any provision of the Plan to the contrary, the Plan
Administrator may direct the Trustee to distribute all or a portion of a Participant’s benefits
under the Plan to an Alternate Payee in accordance with the terms and conditions of a Qualified
Domestic Relations Order. The Plan hereby specifically permits and authorizes distribution of a
Participant’s benefits under the Plan to an Alternate Payee in accordance with a Qualified

63

 

Domestic Relations Order prior to the date the Participant has a Termination of Employment, or
prior to the date the Participant attains his earliest retirement age as defined in Code section
414(p).

     (c) Investment Funds. If the Qualified Domestic Relations Order does not specify the
Participant’s Accounts, or Investment Funds in which such Accounts are invested, from which amounts
that are separately accounted for shall be paid to an Alternate Payee, such amounts shall be
distributed, or segregated, from the Participant’s Accounts, and the Investment Funds in which such
Accounts are invested (excluding any amounts invested as a Participant loan), on a pro rata basis.
A Qualified Domestic Relations Order may not provide for the assignment to an Alternate Payee of an
amount that exceeds the balance of the Participant’s vested Accounts after deduction of any
outstanding loan.

     (d) Default Rules. Unless a Qualified Domestic Relations Order establishing a separate
account for an Alternate Payee provides to the contrary:

          (1) Withdrawals. An Alternate Payee shall not be permitted to make any withdrawals under
Article 8.

          (2) Death Benefits. An Alternate Payee shall have the right to designate a Beneficiary who
shall receive benefits payable to an Alternate Payee which have not been distributed at the time of
the Alternate Payee’s death. If the Alternate Payee does not designate a Beneficiary, or if the
Beneficiary predeceases the Alternate Payee, benefits payable to the Alternate Payee which have not
been distributed shall be paid to the Alternate Payee’s estate. Any death benefit payable to the
Beneficiary of an Alternate Payee shall be paid in a single sum as soon as administratively
practicable after the Alternate Payee’s death.

          (3) Investment Direction. An Alternate Payee shall have the right to direct the investment of
any portion of a Participant’s Accounts payable to the Alternate Payee under such order in the same
manner with respect to a Participant, which amounts shall be separately accounted for by the
Trustee in the Alternate Payee’s name.

          (4) Voting Rights. An Alternate Payee shall have the right to direct the Trustee as to the
exercise of voting rights in the same manner as provided with respect to a Participant.

          (e) Loans. An Alternate Payee shall not be permitted to make a loan from the separate account
established for the Alternate Payee pursuant to the Qualified Domestic Relations Order.

          (f) Treatment as Spouse. A former spouse may be treated as the spouse or surviving spouse and
a current spouse will not be treated as the spouse or surviving spouse to the extent provided under
a Qualified Domestic Relations Order.

          (g) Plan Procedures. The Plan Administrator shall be responsible for establishing reasonable
procedures for determining whether any domestic relations order received with
respect to the Plan qualifies as a Qualified Domestic Relations Order, and for administering
distributions in accordance with the terms and conditions of such procedures and any Qualified
Domestic Relations Order.

64

 

Section 14.03 NO RIGHT TO EMPLOYMENT

     Nothing contained in this Plan shall be construed as a contract of employment between the
Employer and the Participant, or as a right of any Employee to continue in the employment of the
Employer, or as a limitation of the right of the Employer to discharge any of its Employees, with
or without cause.

Section 14.04 NO RIGHT TO TRUST ASSETS

     No Employee, Participant, former Participant, Beneficiary or Alternate Payee shall have any
rights to, or interest in, any assets of the Trust upon termination of employment or otherwise,
except as specifically provided under the Plan. All Payments of benefits under the Plan shall be
made solely out of the assets of the Trust.

Section 14.05 PARTICIPANT BENEFITING

     A Participant shall be treated as benefiting under the Plan for any Plan Year during which the
Participant received or is deemed to receive an allocation in accordance with Treas. Reg. section
1.410(b)-3(a).

Section 14.06 GOVERNING LAW

     This Plan shall be construed in accordance with and governed by the laws of the State of
Michigan to the extent not preempted by Federal law.

Section 14.07 SEVERABILITY OF PROVISIONS

     If any provision of the Plan shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provisions hereof, and the Plan shall be construed and
enforced as if such provisions had not been included.

Section 14.08 HEADINGS AND CAPTIONS

     The headings and captions herein are provided for reference and convenience only, shall not be
considered part of the Plan, and shall not be employed in the construction of the Plan.

Section 14.09 GENDER AND NUMBER

     Except where otherwise clearly indicated by context, the masculine and the neuter shall
include the feminine and the neuter, the singular shall include the plural, and vice-versa.

65

 

     IN WITNESS WHEREOF, the parties have caused this Plan to be executed this 16th day of
April  , 2008.

	 	 	 	 	 	 	 
	 	 	MACKINAC FINANCIAL CORPORATION:	 	 
	 
	 	 	 	 	 	 
	 

	 	Signature:
	 	/s/ Ernie R. Krueger	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Print Name: ERNIE R. KRUEGER	 	 
	 
	 	 	 	 	 	 
	 	 	Title/Position: EVP/CFO	 	 
	 
	 	 	 	 	 	 
	 	 	TRUSTEES:	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Linda Bolda	 	 
	 	 	 	 	 
	 	 	Linda Bolda	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Kelly W. George	 	 
	 	 	 	 	 
	 	 	Kelly W. George	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Ernie R. Krueger	 	 
	 	 	 	 	 
	 	 	Ernie R. Krueger	 	 

66

 

EGTRRA ADDENDUM

MACKINAC FINANCIAL CORPORATION 401(K) PLAN

     1. This Addendum to the Plan is adopted to reflect certain provisions of the Economic Growth
and Tax Relief Reconciliation Act of 2001 (“EGTRRA”). This Addendum is intended as good faith
compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and
guidance issued thereunder. Except as otherwise provided, this Addendum shall be effective as of
the first day of the first Plan Year beginning after December 31, 2001.

     2. This Addendum shall supersede the provisions of the Plan to the extent those provisions are
inconsistent with the provisions of this Addendum.

     3. The definition of “Compensation” in Article 2 of the Plan is amended by adding the
following paragraph:

The annual compensation of each Participant taken into account in determining
allocations for any Plan Year beginning after December 31, 2001, shall not exceed
$200,000, as adjusted for cost-of-living increases in accordance with Code section
401(a)(17)(B). Annual compensation means Compensation during the Plan Year or such
other consecutive 12-month period over which Compensation is otherwise determined
under the Plan (the determination period). The cost-of-living adjustment in effect
for a calendar year applies to annual compensation for the determination period that
begins with or within such calendar year.

4. The following is added as Section 5.01(d) of the Plan:

     (d) This Subsection 5.01(d) shall apply to contributions on or after January 1,
2002. All Employees who are eligible to make Elective Deferrals under this Plan and
who have attained age 50 before the close of the Plan Year shall be eligible to make
catch-up contributions in accordance with, and subject to the limitations of, Code
section 414(v). Such catch-up contributions shall not be taken into account for
purposes of the provisions of the Plan implementing the required limitations of Code
sections 402(g) and 415. The Plan shall not be treated as failing to satisfy the
provisions of the Plan implementing the requirements of Code sections 401(k)(3),
401(k)(11), 401(k)(12), 410(b), or 416, as applicable, by reason of the making of
such catch-up contributions.

67

 

     5. Section 4.04 of the Plan is designated as Subsection 4.04(a) and the following is added as
Subsection 4.04(b) of the Plan:

     (b) Additional Rollovers. In addition to the Rollover Contributions specified
in Subsection (a), the Plan may accept the following Rollover Contributions made on
or after January 1, 2002:

          (1) A direct rollover of an eligible rollover distribution of after-tax
employee contributions from a qualified plan described in Code section 401(a) or
403(a).

          (2) Any rollover of an eligible rollover distribution from an annuity contract
described in Code section 403(b), excluding after-tax employee contributions.

          (3) Any rollover of an eligible rollover distribution from an eligible plan
under Code section 457(b) which is maintained by a state, political subdivision of a
state, or any agency or instrumentality of a state or political subdivision of a
state.

          (4) Any rollover contribution of the portion of a distribution from an
individual retirement account or annuity described in Code sections 408(a) or 408(b)
that is eligible to be rolled over and would otherwise be includible in gross
income.

     6. The following is added as Section 5.05 of the Plan:

     Section 5.05 MAXIMUM AMOUNT OF ANNUAL ADDITIONS

     (a) Effective Date. This Section shall be effective for Limitation Years
beginning after December 31, 2001.

     (b) Maximum Annual Addition. Except to the extent permitted under Section 5.01
of the Plan and Code section 414(v), if applicable, the Annual Addition that may be
contributed or allocated to a Participant’s Account under the Plan for any
Limitation Year shall not exceed the lesser of:

          (1) $40,000, as adjusted for increases in the cost-of-living under Code section
415(d), or

          (2) 100 percent of the Participant’s compensation, within the meaning of Code
section 415(c)(3), for the Limitation Year. The compensation limit referred to in
this Subsection (b)(2) shall not apply to any contribution for medical benefits
after separation from service (within the meaning of Code sections 401(h) or
419A(f)(2)) which is otherwise treated as an Annual Addition.

68

 

     7. The following is added as the final sentence of Section 5.02(c) of the Plan:

The multiple use test described in Treas. Reg. section 1.401(m)-2 and this Section
shall not apply for Plan Years beginning after December 31, 2001.

     8. The following is added as Section 7.01(f) of the Plan:

     (f) (1) Effective Date. This Subsection shall apply for distributions and
severances from employment occurring after December 31, 2001, regardless of when the
severance from employment occurred.

          (2) New Distributable Event. A Participant’s Elective Deferrals, Qualified
Nonelective Contributions, qualified matching contributions, and earnings
attributable to these contributions shall be distributed on account of the
Participant’s severance from employment. However, such a distribution shall be
subject to the other provisions of the Plan regarding distributions, other than
provisions that require a separation from service before such amounts may be
distributed.

     9. The following is added as Section 7.06(c) of the Plan:

     (c) (1) Effective date. This Subsection (c) shall apply to distributions made
after December 31, 2001.

          (2) Modification of Definition of Eligible Retirement Plan. For purposes of
the direct rollover provisions in this Section, an eligible retirement plan shall
also mean an annuity contract described in Code section 403(b) and an eligible plan
under Code section 457(b) which is maintained by a state, political subdivision of a
state, or any agency or instrumentality of a state or political subdivision of a
state and which agrees to separately account for amounts transferred into such plan
from this Plan. The definition of eligible retirement plan shall also apply in the
case of a distribution to a surviving spouse, or to a spouse or former spouse who is
the alternate payee under a qualified domestic relation order, as defined in Code
section 414(p).

          (3) Eligible Rollover Distribution Excludes Hardship Distributions. For
purposes of the direct rollover provisions in this Section, any amount that is
distributed on account of hardship shall not be an eligible rollover distribution
and the distributee may not elect to have any portion of such a distribution paid
directly to an eligible retirement plan.

     10. The following is added to the end of the hardship provisions in Article 8 the Plan:

     A Participant who receives a distribution of Elective Deferrals on account of
hardship shall be prohibited from making Elective Deferrals under this and all other
plans of the Employer for six (6) months after receipt of the distribution. A

69

 

Participant who receives a distribution of Elective Deferrals in calendar year 2001
on account of hardship shall be prohibited from making Elective Deferrals under this
and all other plans of the Employer for six (6) months after receipt of the
distribution or until January 1, 2002, if later. Effective January 1, 2001, any
requirement that the Participant’s limit on Elective Deferrals in the subsequent
year be reduced is eliminated.

     11. The following sentence is added to the end of Subsection (j) of the loan provisions in
Article 8 the Plan:

Effective for plan loans made after December 31, 2001, Plan provisions prohibiting
loans to any owner-employee or shareholder- employee shall cease to apply.

     12. The following is added as Section 11.04 of the Plan:

     Section 11.04 NEW RULES

     (a) Effective Date. This Section shall apply for purposes of determining
whether the Plan is a top-heavy plan under Code section 416(g) for Plan Years
beginning after December 31, 2001, and whether the Plan satisfies the minimum
benefits requirements of Code section 416(c) for such years.

     (b) Determination of Top-Heavy Status.

          (1) Key Employee. Key Employee means any Employee or former Employee
(including any deceased Employee) who at any time during the Plan Year that includes
the determination date was an officer of the Employer having annual compensation
greater than $130,000 (as adjusted under Code section 416(i)(1) for Plan Years
beginning after December 31, 2002), a 5-percent owner of the Employer, or a
1-percent owner of the Employer having annual compensation of more than $150,000.
For this purpose, annual compensation means compensation within the meaning of Code
section 415(c)(3). The determination of who is a Key Employee will be made in
accordance with Code section 416(i)(1) and the applicable regulations and other
guidance of general applicability issued thereunder.

          (2) Determination of Present Values and Amounts. This Subsection 11.04(b)(2)
shall apply for purposes of determining the present values of accrued benefits and
the amounts of Account balances of Employees as of the determination date.

               (A) Distributions during the Year Ending on the Determination Date. The
present values of accrued benefits and the amounts of Account balances of an
Employee as of the determination date shall be increased by the distributions made
with respect to the Employee under the Plan and any

70

 

plan aggregated with the Plan under Code section 416(g)(2) during the 1-year period
ending on the determination date. The preceding sentence shall also apply to
distributions under a terminated plan which, had it not been terminated, would have
been aggregated with the Plan under Code section 416(g)(2)(A)(i). In the case of a
distribution made for a reason other than separation from service, death, or
disability, this provision shall be applied by substituting “5-year period” for
“1-year period.”

               (B) Employees not Performing Services during Year. The accrued benefits and
Accounts of any individual who has not performed services for the Employer during
the 1-year period ending on the determination date shall not be taken into account.

     (c) Minimum Benefits.

          (1) Matching Contributions. Employer Matching Contributions shall be taken
into account for purposes of satisfying the minimum contribution requirements of
Code section 416(c)(2) and the Plan. The preceding sentence shall apply with respect
to Matching Contributions under the Plan or, if the Plan provides that the minimum
contribution requirement shall be met in another plan, such other plan. Employer
Matching Contributions that are used to satisfy the minimum contribution
requirements shall be treated as matching contributions for purposes of the actual
contribution percentage test and other requirements of Code section 401(m).

          (2) Contributions under other Plans. The minimum benefit requirement may be
met in another plan pursuant to the terms set forth in Article 11 (including another
plan that consists solely of a cash or deferred arrangement which meets the
requirements of Code section 401(k)(12) and matching contributions with respect to
which the requirements of Code section 401(m)(11) are met).

     (d) The top-heavy requirements of Code section 416 and this Section shall not
apply in any year beginning after December 31, 2001, in which the Plan consists
solely of a cash or deferred arrangement which meets the requirements of Code
section 401(k)(12) of the Code and matching contributions with respect to which the
requirements of Code section 401(m)(11) are met.

71

 

REQUIRED MINIMUM DISTRIBUTION ADDENDUM

MACKINAC FINANCIAL CORPORATION 401(K) PLAN

This Addendum to the Plan is adopted to reflect the final regulations issued under Section
401(a)(9).

The following is added as the final Section of Article 7:

     (a) General Rules.

          (1) Effective Date. The provisions of this Section will apply for purposes of determining
required minimum distributions for distribution calendar years beginning with the 2003 calendar
year.

          (2) Precedence. The requirements of this Section will take precedence over any inconsistent
provisions of the Plan.

          (3) Requirements of Treasury Regulations Incorporated. All distributions required under this
Section will be determined and made in accordance with the Treasury regulations under Code section
401(a)(9).

          (4) TEFRA Section 242(b)(2) Elections. Notwithstanding the other provisions of this Section,
distributions may be made under a designation made before January 1, 1984, in accordance with
section 242(b)(2) of the Tax Equity and Fiscal Responsibility Act (TEFRA) and the provisions of the
Plan that relate to section 242(b)(2) of TEFRA.

     (b) Time and Manner of Distribution.

          (1) Required Beginning Date. The Participant’s entire interest will be distributed, or begin
to be distributed, to the Participant no later than the Participant’s Required Beginning Date.

          (2) Death of Participant Before Distributions Begin. If the Participant dies before
distributions begin, the Participant’s entire interest will be distributed, or begin to be
distributed, no later than as follows:

               (A) If the Participant’s surviving spouse is the Participant’s sole designated primary
beneficiary, then distributions to the surviving spouse will begin by December 31 of the calendar
year immediately following the calendar year in which the Participant died, or by December 31 of
the calendar year in which the Participant would have attained age 70 1/2, if later.

               (B) If the Participant’s surviving spouse is not the Participant’s sole designated primary
beneficiary, then distributions to the designated beneficiary will begin by
December 31 of the calendar year immediately following the calendar year in which the Participant died.

72

 

               (C) If there is no designated beneficiary as of September 30 of the year following the year of
the Participant’s death, the Participant’s entire interest will be distributed by December 31 of
the calendar year containing the fifth anniversary of the Participant’s death.

               (D) If the Participant’s surviving spouse is the Participant’s sole designated primary
beneficiary and the surviving spouse dies after the Participant but before distributions to the
surviving spouse begin, this Subsection (b)(2), other than Subsection (b)(2)(A), will apply as if
the surviving spouse were the Participant.

For purposes of this Subsection (b)(2) and Subsection (d), unless Subsection (b)(2)(D) applies,
distributions are considered to begin on the Participant’s Required Beginning Date. If Subsection
(b)(2)(D) applies, distributions are considered to begin on the date distributions are required to
begin to the surviving spouse under Subsection (b)(2)(A). If distributions under an annuity
purchased from an insurance company irrevocably commence to the Participant before the
Participant’s Required Beginning Date (or to the Participant’s surviving spouse before the date
distributions are required to begin to the surviving spouse under section Subsection (b)(2)(A), the
date distributions are considered to begin is the date distributions actually commence.

          (3) Forms of Distribution. Unless the Participant’s interest is distributed in the form of an
annuity purchased from an insurance company or in a single sum on or before the Required Beginning
Date, as of the first distribution calendar year distributions will be made in accordance with
Subsections (c) and (d). If the Participant’s interest is distributed in the form of an annuity
purchased from an insurance company, distributions thereunder will be made in accordance with the
requirements of Code section 401(a)(9) and the Treasury regulations.

     (c) Required Minimum Distributions During Participant’s Lifetime.

          (1) Amount of Required Minimum Distribution For Each Distribution Calendar Year. During the
Participant’s lifetime, the minimum amount that will be distributed for each distribution calendar
year is the lesser of:

               (A) the quotient obtained by dividing the Participant’s account balance by the distribution
period in the Uniform Lifetime Table set forth in section 1.401(a)(9)-9 of the Treasury
regulations, using the Participant’s age as of the Participant’s birthday in the distribution
calendar year; or

               (B) if the Participant’s sole designated primary beneficiary for the distribution calendar
year is the Participant’s spouse, the quotient obtained by dividing the Participant’s account
balance by the number in the Joint and Last Survivor Table set forth in section 1.401(a)(9)-9 of
the Treasury regulations, using the Participant’s and spouse’s attained ages as of the
Participant’s and spouse’s birthdays in the distribution calendar year.

73

 

          (2) Lifetime Required Minimum Distributions Continue Through Year of Participant’s Death.
Required minimum distributions will be determined under this Subsection (c) beginning with the
first distribution calendar year and up to and including the distribution calendar year that
includes the Participant’s date of death

     (d) Required Minimum Distributions After Participant’s Death.

          (1) Death On or After Date Distributions Begin.

               (A) Participant Survived by Designated Beneficiary. If the Participant dies on or after the
date distributions begin and there is a designated beneficiary, the minimum amount that will be
distributed for each distribution calendar year after the year of the Participant’s death is the
quotient obtained by dividing the Participant’s account balance by the longer of the remaining life
expectancy of the Participant or the remaining life expectancy of the Participant’s designated
beneficiary, determined as follows:

                    (i) The Participant’s remaining life expectancy is calculated using the age of the Participant
in the year of death, reduced by one for each subsequent year.

                    (ii) If the Participant’s surviving spouse is the Participant’s sole designated primary
beneficiary, the remaining life expectancy of the surviving spouse is calculated for each
distribution calendar year after the year of the Participant’s death using the surviving spouse’s
age as of the spouse’s birthday in that year. For distribution calendar years after the year of the
surviving spouse’s death, the remaining life expectancy of the surviving spouse is calculated using
the age of the surviving spouse as of the spouse’s birthday in the calendar year of the spouse’s
death, reduced by one for each subsequent calendar year.

                    (iii) If the Participant’s surviving spouse is not the Participant’s sole designated primary
beneficiary, the designated beneficiary’s remaining life expectancy is calculated using the age of
the Beneficiary in the year following the year of the Participant’s death, reduced by one for each
subsequent year.

               (B) No Designated Beneficiary. If the Participant dies on or after the date distributions
begin and there is no designated beneficiary as of September 30 of the year after the year of the
Participant’s death, the minimum amount that will be distributed for each distribution calendar
year after the year of the Participant’s death is the quotient obtained by dividing the
Participant’s account balance by the Participant’s remaining life expectancy calculated using the
age of the Participant in the year of death, reduced by one for each subsequent year.

          (2) Death Before Date Distributions Begin.

               (A) Participant Survived by Designated Beneficiary. Except as provided in Subsection (f), if
the Participant dies before the date distributions begin and there is a designated beneficiary, the
minimum amount that will be distributed for each distribution
calendar year after the year of the Participant’s death is the quotient obtained by dividing the
Participant’s account balance by the remaining life expectancy of the Participant’s designated beneficiary, determined as provided in
Subsection (d)(1).

74

 

               (B) No Designated Beneficiary. If the Participant dies before the date distributions begin and
there is no designated beneficiary as of September 30 of the year following the year of the
Participant’s death, distribution of the Participant’s entire interest will be completed by
December 31 of the calendar year containing the fifth anniversary of the Participant’s death.

               (C) Death of Surviving Spouse Before Distributions to Surviving Spouse Are Required to Begin.
If the Participant dies before the date distributions begin, the Participant’s surviving spouse is
the Participant’s sole designated primary beneficiary, and the surviving spouse dies before
distributions are required to begin to the surviving spouse under Subsection (b)(2)(A), this
Subsection (d)(2) will apply as if the surviving spouse were the Participant.

     (e) Definitions.

          (1) Designated Beneficiary. The individual who is designated as the Beneficiary under Section
7.04 of the Plan and is the designated beneficiary under Code section 401(a)(9) and section
1.401(a)(9)-1, Q&A-4, of the Treasury regulations.

          (2) Distribution Calendar Year. A calendar year for which a minimum distribution is required.
For distributions beginning before the Participant’s death, the first distribution calendar year is
the calendar year immediately preceding the calendar year which contains the Participant’s Required
Beginning Date. For distributions beginning after the Participant’s Death, the first distribution
calendar year is the calendar year in which distributions are required to begin under Subsection
(b)(2). The required minimum distribution for the Participant’s first distribution calendar year
will be made on or before the Participant’s Required Beginning Date. The required minimum
distribution for other distribution calendar years, including the required minimum distribution for
the distribution calendar year in which the Participant’s Required Beginning Date occurs, will be
made on or before December 31 of that distribution calendar year.

          (3) Life Expectancy. Life expectancy as computed by use of the Single Life Table in section
1.401(a)(9)-9 of the Treasury regulations.

          (4) Participant’s Account Balance. The Account balance as of the last valuation date in the
calendar year immediately preceding the distribution calendar year (valuation calendar year)
increased by the amount of any contributions made and allocated or forfeitures allocated to the
Account balance as of dates in the valuation calendar year after the valuation date and decreased
by distributions made in the valuation calendar year after the valuation date. The account balance
for the valuation calendar year includes any amounts rolled over or transferred to the plan either
in the valuation calendar year or in the distribution calendar year if distributed or transferred
in the valuation calendar year.

75

 

          (5) Required Beginning Date. The date specified in Article 2 of the plan.

     (f) Other Rules.

          (1) Election to Allow Participants or Beneficiaries to Elect 5-Year Rule. Participants or
Beneficiaries may elect on an individual basis whether the 5-year rule or the life expectancy rule
in Subsections (b)(2) and (d)(2) applies to distributions after the death of a Participant who has
a designated beneficiary. The election must be made no later than the earlier of September 30 of
the calendar year in which distribution would be required to begin under Subsections (b)(2), or by
September 30 of the calendar year which contains the fifth anniversary of the Participant’s (or, if
applicable, surviving spouse’s) death. If neither the Participant nor Beneficiary makes an
election under this paragraph, distributions will be made in accordance with Subsections (b)(2) and
(d)(2).

          (2) Election to Allow Designated Beneficiary Receiving Distributions Under 5-Year Rule to
Elect Life Expectancy Distributions. A designated beneficiary who is receiving payments under the
5-year rule may make a new election to receive payments under the life expectancy rule until
December 31, 2003, provided that all amounts that would have been required to be distributed under
the life expectancy rule for all distribution calendar years before 2004 are distributed by the
earlier of December 31, 2003 or the end of the 5-year period.

          (3) Optional Forms of Payment. Nothing contained in this Section shall be deemed to create a
type of benefit (e.g., installment payments, lump sum within five years or immediate lump sum
payment) to any class of Beneficiaries that is not otherwise permitted by the Plan.

76

 

FINAL 401(k)-(m) REGULATION ADDENDUM

     This Addendum to the Plan reflects the final regulations under Code sections 401(k) and 401(m)
issued on December 29, 2004 (the “Final Regulations”). This Addendum is intended as good faith
compliance with the requirements of the Final Regulations and is to be construed in accordance with
same. This Addendum and the Final Regulations shall supersede the provisions of the Plan to the
extent those provisions are inconsistent with the provisions of this Addendum and the Final
Regulations.

     The provisions of this Addendum concerning Elective Deferrals shall apply only to the extent
that the Plan provides for Elective Deferrals. The provisions of this Addendum concerning Matching
Contributions and Voluntary Contributions shall apply only to the extent that the Plan provides for
such contributions. In addition, provisions regarding other features shall only apply to the extent
that the Plan provides for such features.

OPTIONAL PROVISIONS:

	1.	 	This Addendum shall be effective for Plan Years beginning on or after: January 1, 2006.
NOTE: Unless otherwise specified above, this Addendum shall be effective as of the first day
of the first Plan Year beginning on or after January 1, 2006. Any date entered prior to
January 1, 2006 must comply with applicable regulations.
	 
	2a. 	 	If the Plan is a safe harbor plan within the meaning of Treas. Reg. section 1.401(k)-3,
indicate the safe harbors the Plan is intended to satisfy for Plan Years beginning on or after
the effective date of this Addendum: (N/A)

	 	i.	 	[ ] ADP (Treas. Reg. section 1.401(k)-3) and ACP (Treas. Reg. section
1.401(m)-3).
	 
	 	ii.	 	[ ] ADP (Treas. Reg. section 1.401(k)-3) only.

	 	 	NOTE: Unless otherwise specified above if the Plan is a safe harbor plan within the meaning
of Treas. Reg. section 1.401(k)-3, the Plan shall meet the ADP and ACP safe harbors. Unless
otherwise specified in 2b, if the Plan is intended to meet the ADP and ACP safe harbors,
Paragraph 5.A shall apply and any allocation requirements for Matching Contributions shall
be waived pursuant to Paragraph 5.B. If the Plan is intended to meet the ADP safe harbor
only, the Plan shall be subject to the ACP test and the conditions and/or limitations of
Treas. Reg. section 1.401(m)-3 and Paragraphs 5.A and 5.B shall not apply.
	 
	2b. 	 	If 2a.i is selected (the Plan is intended to satisfy the ADP and ACP safe harbors) and a safe
harbor notice has already been provided for a Plan Year as of the time of execution of an
amendment that first adopts the Final Regulations indicating that Matching Contributions are
subject to allocation requirements, indicate whether such allocation requirements shall be
waived for such Plan Year:

	 	i.	 	[ ] No - the Matching Contribution allocation requirements and the ACP test
shall apply to the Plan Year for which the safe harbor notice has already been
provided.
	 
	 	ii.	 	[ ] Yes - the allocation requirements for Matching Contributions shall be
waived pursuant to Paragraph 5.B and the ACP test shall not apply.

77

 

	 	 	NOTE: Unless otherwise specified above, the Matching Contribution allocation requirements
and the ACP test shall apply to the Plan Year for which the safe harbor notice has already
been provided.

STANDARD PROVISIONS:

	3.	 	Timing of Contributions of Elective Deferrals. A contribution made pursuant to a cash
or deferred election must be made after the deferral election is made and after the employee’s
performance of service with respect to which the contributions are made (or when the cash or
other taxable benefit would be currently available, if earlier). Notwithstanding the
foregoing, the timing of contributions will not be treated as failing to satisfy the
requirements of this Paragraph merely because contributions for a pay period are occasionally
made before the services with respect to that pay period are performed, provided the
contributions are made early in order to accommodate bona fide administrative considerations
and are not paid early with a principal purpose of accelerating deductions.
	 
	4.	 	Timing of Contributions of Matching Contributions. Matching Contributions may not be
contributed to the Plan before the cash or deferred election is made or before the employees’
performance of services with respect to which the Elective Deferrals are made (or when the
cash that is subject to the cash or deferred elections would be currently available, if
earlier). An employer contribution is not a Matching Contribution made on account of a
Voluntary Contribution if it is contributed before the Voluntary Contribution.
Notwithstanding the foregoing, the timing of contributions will not be treated as failing to
satisfy the requirements of this Plan: (i) merely because contributions are occasionally made
before the employees’ performance of services with respect to which the Elective Deferrals are
made (or when the cash that is subject to the cash or deferred elections would be currently
available, if earlier) in order to accommodate bona fide administrative considerations and are
not paid early with a principal purpose of accelerating deductions, or (ii) because of a
forfeiture that is allocated as a matching contribution or an allocation of shares from an
ESOP loan suspense account made in accordance with Treas. Reg. 1.401(m)-1(a)(iii)(B). If the
Plan is a safe harbor plan within the meaning of Treas. Reg. section 1.401(k)-3 and safe
harbor Matching Contributions are made separately with respect to each payroll period (or with
respect to all payroll periods ending with or within each month or quarter of a Plan Year),
such safe harbor Matching Contributions must be contributed to the Plan by the last day of the
immediately following Plan Year quarter.
	 
	5.	 	Safe Harbor Matching Rules.

	 	A.	 	In General. If the Plan is a safe harbor plan within the meaning of Treas. Reg.
section 1.401(k)-3 and Paragraph 2 specifies that the Plan is intended to satisfy the
requirements of Treas. Reg. section 1.401(m)-3, the ratio of Matching Contributions on
behalf of a Highly Compensated Employee to that Highly Compensated Employee’s Elective
Deferrals or Voluntary Contributions (or the sum of Elective Deferrals and Voluntary
Contributions) for that Plan Year shall

78

 

	 	 	 	not be greater that the ratio of Matching Contributions to Elective Deferrals or
Voluntary Contributions (or the sum of Elective Deferrals and Voluntary
Contributions) that would apply with respect to any Nonhighly Compensated Employee
for whom the Elective Deferrals/Voluntary Contributions are the same percentage of
safe harbor compensation. If a Highly Compensated Employee participates in more than
one plan that provides for matching contributions, matching contributions made under
the other plan shall not be taken into account to determine the rate of Matching
Contributions under this Paragraph provided that: (i) the Highly Compensated
Employee is not simultaneously an eligible employee under two plans that provide for
Matching Contributions maintained by an employer for a Plan Year; and (ii) the
period used to determine compensation for purposes of determining Matching
Contributions under each such plan is limited to periods when the Highly Compensated
Employee participated in the plan.
	 
	 	B.	 	Waiver of Hours/Last Day Requirement for Matching Contribution in Safe Harbor
Plan. To the extent provided in Paragraph 2, any provision in the Plan with respect to
the allocation of Matching Contributions (other than the initial eligibility
requirements) that requires the Participant to perform any Hours of Service or be
employed on the last day of an applicable Plan Year shall be waived for any Plan Year
in which Paragraph 2 provides for such waiver.
	 
	 	C.	 	Application of ACP Test. If Paragraph 2 specifies that the Plan is not intended
to satisfy the requirements of Treas. Reg. section 1.401(m)-3, the ACP test shall be
performed for any Plan Year that the Plan is not intended to satisfy such requirements.

	6.	 	Disproportionate QNECs Used in ADP Test. All or part of a Nonhighly Compensated
Employee’s Qualified Nonelective Contributions may be taken into account in meeting the ADP
test only to the extent that such contributions are not treated as disproportionate within the
meaning of Treas. Reg. section 1.401(k)-2(a)(6). A Qualified Nonelective Contribution shall be
treated as disproportionate to the extent such contributions exceed the product of
compensation and the greater of: (i) 5%, or (ii) two times the Plan’s representative
contribution rate. Any Qualified Nonelective Contribution taken into account under the ACP
test (including the determination of the representative contribution rate), is not permitted
to be taken into account for purposes of this Paragraph (including the determination of the
representative contribution rate).

	 	A.	 	Representative Contribution Rate. For purposes of this Paragraph, the Plan’s
representative contribution rate is the lowest applicable contribution rate of any
eligible Nonhighly Compensated Employee among a group of eligible Nonhighly Compensated
Employees that consists of half of all eligible Nonhighly Compensated Employees for the
Plan Year (or, if greater, the lowest applicable contribution rate of any eligible
Nonhighly Compensated Employee in the group of all eligible Nonhighly Compensated
Employees for the Plan Year and who is employed by the Employer on the last day of the
Plan Year).

79

 

	 	B.	 	Applicable Contribution Rate. For purposes of this Paragraph, the applicable
contribution rate for an eligible Nonhighly Compensated Employee is the sum of such
employee’s qualified matching contributions taken into account in determining such
employee’s ADR for the Plan Year and Qualified Nonelective Contributions made for the
Nonhighly Compensated Employee during the Plan Year, divided by the eligible Nonhighly
Compensated Employee’s compensation for the same period.
	 
	 	C.	 	Special Rule for Davis Bacon. Notwithstanding the foregoing, Qualified
Nonelective Contributions that are made in connection with an employer’s obligation to
pay prevailing wages under the Davis-Bacon Act, Service Contract Act of 1965 or similar
legislation may be taken into account for a Plan Year for a Nonhighly Compensated
Employee to the extent such contributions do not exceed 10 percent of that Nonhighly
Compensated Employee’s compensation.
	 
	 	D.	 	Qualified Matching Contributions. Qualified matching contributions satisfy this
Paragraph only to the extent that such qualified matching contributions are Matching
Contributions that are not precluded from being taken into account under the ACP test
for the Plan Year under the rules of Treas. Reg. section 1.401(m)-2(a)(5)(ii).

	7.	 	Disproportionate QNECs Used in ACP Test. All or part of a Nonhighly Compensated
Employee’s Qualified Nonelective Contributions may be taken into account in meeting the ACP
test only to the extent that such contributions are not treated as disproportionate within the
meaning of Treas. Reg. section 1.401(m)-2(a)(6). A Qualified Nonelective Contribution shall be
treated as disproportionate to the extent such contributions exceed the product of
compensation and the greater of: (i) 5%, or (ii) two times the Plan’s representative
contribution rate. Any Qualified Nonelective Contribution taken into account in the ADP test
(including the determination of the representative contribution rate) is not permitted to be
taken into account for purposes of this Paragraph (including the determination of the
representative contribution rate for purposes of this Paragraph).

	 	A.	 	Representative Contribution Rate. For purposes of this Paragraph, the Plan’s
representative contribution rate is the lowest applicable contribution rate of any
eligible Nonhighly Compensated Employee among a group of eligible Nonhighly Compensated
Employees that consists of half of all eligible Nonhighly Compensated Employees for the
Plan Year (or, if greater, the lowest applicable contribution rate of any eligible
Nonhighly Compensated Employee in the group of all eligible Nonhighly Compensated
Employees for the Plan Year and who is employed by the Employer on the last day of the
Plan Year).
	 
	 	B.	 	Applicable Contribution Rate. For purposes of this Paragraph, the applicable
contribution rate for an eligible Nonhighly Compensated Employee is the sum of such
employee’s matching contributions taken into account in determining such employee’s ACR
for the Plan Year and Qualified Nonelective Contributions made for the Nonhighly Compensated Employee during the Plan Year, divided by the eligible
Nonhighly Compensated Employee’s compensation for the same period.

80

 

	 
	 	C.	 	Special Rule for Davis Bacon. Notwithstanding the foregoing, Qualified
Nonelective Contributions that are made in connection with an employer’s obligation to
pay prevailing wages under the Davis-Bacon Act, Service Contract Act of 1965 or similar
legislation may be taken into account for a Plan Year for a Nonhighly Compensated
Employee to the extent such contributions do not exceed 10 percent of that Nonhighly
Compensated Employee’s compensation.

	8.	 	Disproportionate Matching Contributions Used in ACP Test. All or part of a Nonhighly
Compensated Employee’s Matching Contributions may be taken into account in meeting the ACP
test only to the extent that such contributions are not treated as disproportionate within the
meaning of Treas. Reg. section 1.401(m)-2(a)(5)(ii). Such contributions shall be treated as
disproportionate to the extent such contributions exceed the greatest of: (1) 5% of
compensation; (2) the employee’s Elective Deferrals for a year; and (3) the product of 2 times
the Plan’s representative matching rate and the employee’s Elective Deferrals for a year.

	 	A.	 	Representative Matching Rate. For purposes of this Paragraph, the Plan’s
representative matching rate is the lowest matching rate for any eligible Nonhighly
Compensated Employee among a group of Nonhighly Compensated Employees that consists of
half of all eligible Nonhighly Compensated Employees in the Plan for the Plan Year who
make Elective Deferrals for the Plan Year (or, if greater, the lowest matching rate for
all eligible Nonhighly Compensated Employees in the Plan who are employed by the
employer on the last day of the Plan Year and who make Elective Deferrals for the Plan
Year).
	 
	 	B.	 	Matching Rate. For purposes of this Paragraph, the matching rate for an
employee generally is the Matching Contributions made for such employee divided by the
employee’s Elective Deferrals for the Plan Year. If the matching rate is not the same
for all levels of Elective Deferrals for an employee, the employee’s matching rate is
determined assuming that an employee’s Elective Deferrals are equal to 6 percent of
compensation.
	 
	 	C.	 	Application to Matching Contributions that Match Employee Contributions.
Modifications to the foregoing shall be made to the extent provided in applicable
Treasury Regulations if the Plan provides a Matching Contribution with respect to the
Voluntary Contributions.

	9.	 	Change from Current Year to Prior Year Testing. The Company may elect prior year
testing for a Plan Year only if the Plan has used current year testing for each of the
preceding 5 Plan Years (or if lesser, the number of Plan Years the Plan has been in existence)
or if, as a result of a merger or acquisition described in Code section 410(b)(6)(C)(i), the
Employer maintains both a plan using prior year testing and a plan using current year testing
and the change is made within the transition period described in Code section 410(b)(6)(C)(ii). The foregoing rules shall apply separately to the ADP and ACP
tests.

81

 

	 
	10.	 	Highly Compensated Employee in More Than One Plan. If a Highly Compensated Employee
participates in two or more CODAs of the same employer, all Elective Deferrals and other
contributions made during the Plan Year under all such arrangements (regardless of the plan
year of the other plans) shall be aggregated in determining the ADR and ACR in the Plan in
accordance with applicable Treasury Regulations.
	 
	11.	 	Plan Coverage Change. If the Plan uses the prior year testing method for either the
ADP or ACP test and is involved in a plan coverage change as defined in Treas. Reg. section
1.401(k)-2(c)(4) and/or 1.401(m)-2(c)(4), then any adjustments to the Nonhighly Compensated
Employees’ prior year percentages will be made in accordance with such regulations.
	 
	12.	 	Contributions Used to Satisfy the ADP/ACP Tests. The Plan Administrator may use any
employer and/or employee contribution to meet the requirements of the ADP and ACP tests to the
extent permitted by applicable Treasury Regulations.
	 
	13.	 	Correction Methods. The Plan Administrator may use any correction method to correct
excess contributions and/or excess aggregate contributions as permitted by applicable Treasury
Regulations. If the Plan Administrator uses the recharacterization method to correct, the Plan
Administrator may only treat excess contributions as an amount distributed to the Participant
and then contributed by the Participant to the Plan as a Voluntary Contribution if the Plan
uses the same testing methods (Current Year/Prior Year). Amounts may not be recharacterized
by a Highly Compensated Employee to the extent that such amount in combination with other
Voluntary Contributions made by that employee would exceed any stated limit under the Plan on
Voluntary Contributions.
	 
	14.	 	Plans Using Differing Testing Methods. A Plan other than a standardized plan may use
differing testing methods (i.e., current year /prior year) for the ADP and ACP tests. For
example, the Plan may use the prior year testing method for the ADP test and the current year
testing method for its ACP test for a Plan Year. In addition to the prohibition on
recharacterization specified in Paragraph 13, a Plan that uses differing methods may not use
Elective Deferrals in the ACP test and may not use qualified matching contributions in the ADP
test.
	 
	15.	 	Aggregation. The Plan may not be aggregated for testing purposes if the plans to be
aggregated use differing testing methods (i.e., current year/prior year). For example, a Plan
(within the meaning of Treas. Reg. section 1.410(b)-7(b)) that applies the current year
testing method may not be aggregated with another plan that applies the prior year testing
method. Similarly, an employer may not aggregate a plan (within the meaning of Treas. Reg.
section 1.410(b)-7(b)): (i) using the ADP safe harbor provisions of Code section 401(k)(12)
and another plan that is using the ADP test of Code section 401(k)(3), or (ii) using the ACP
safe harbor provisions of Code section 401(m)(11) and another plan that is using the ACP test
of Code section 401(m)(2).

82

 

	16.	 	Contributions Only Used Once. Qualified Nonelective Contributions and qualified
matching contributions shall not be taken into account under the ADP test to the extent such
contributions are taken into account for purposes of satisfying any other ADP test, any other
ACP test, or the requirements of Treas. Reg. sections 1.401(k)-3, 1.401(m)-3 or 1.401(k)-4.
If the Plan switches from the current year testing method to the prior year testing method,
Qualified Nonelective Contributions that are taken into account under the current year testing
method for a year may not be taken into account under the prior year testing method for the
next year.
	 
	17.	 	Refunds of Deferrals for Failed ADP Test. Any refunds of excess contributions
resulting from the failure of the ADP test shall be adjusted for income or loss up to the date
of distribution. The income/loss allocable to excess contributions is equal to the sum of the
allocable gain or loss for the Plan Year and, to the extent that such excess contributions
would otherwise be credited with gain or loss for the gap period (i.e., the period after the
close of the Plan Year and prior to the distribution) if the total account were to be
distributed, the allocable gain or loss during that period. The Plan Administrator may use any
reasonable method for computing the income allocable to excess contributions, provided that
the method does not violate Code section 401(a)(4), is used consistently for all Participants
and for all corrective distributions under the Plan for the Plan Year, and is used by the Plan
for allocating income to Participant’s Accounts. The Plan will not fail to use a reasonable
method for computing the income allocable to excess contributions merely because the income
allocable to excess contributions is determined on a date that is no more than 7 days before
the actual distribution. In addition, the Plan Administrator may allocate income in any manner
permitted under Treas. Reg. section 1.401(k)-2(b)(2)(iv).
	 
	18.	 	Refunds of Excess Aggregate Contributions for Failed ACP Test. Any refunds of excess
aggregate contributions resulting from the failure of the ACP test shall be adjusted for
income or loss up to the date of distribution. The income/loss allocable to excess aggregate
contributions is equal to the sum of the allocable gain or loss for the Plan Year and, to the
extent that the excess aggregate contributions would otherwise be credited with gain or loss
for the gap period (i.e., the period after the close of the Plan Year and prior to the
distribution) if the total account were to be distributed, the allocable gain or loss during
that period. The Plan Administrator may use any reasonable method for computing the income
allocable to excess aggregate contributions, provided that the method does not violate Code
section 401(a)(4), is used consistently for all Participants and for all corrective
distributions under the Plan for the Plan Year, and is used by the Plan for allocating income
to Participant Accounts. The Plan will not fail to use a reasonable method for computing the
income allocable to excess aggregate contributions merely because the income allocable to
excess aggregate contributions is determined on a date that is no more than 7 days before the
actual distribution. In addition, the Plan Administrator may allocate income in any manner
permitted under Treas. Reg. section 1.401(m)-2(b)(2)(iv).

83

 

	19.	 	Vesting. Elective Deferrals shall: (i) be 100% vested, (ii) be disregarded for
purposes of applying Code section 411(a)(2) to other contributions or benefits, and (iii)
remain nonforfeitable even if the employee makes no additional elective contributions under a
cash or deferred arrangement. An amount is immediately nonforfeitable if it is immediately
nonforfeitable within the meaning of Code section 411, and would be nonforfeitable under the
Plan regardless of the age and service of the employee or whether the employee is employed on
a specific date. The Elective Deferrals shall not be subject to forfeitures or suspensions
permitted by Code section 411(a)(3). Thus, for example, elective contributions under a
qualified CODA are taken into account for purposes of determining whether a Participant is a
nonvested participant for purposes of Code section 411(a)(6)(D)(iii) (the “rule of parity”).
	 
	20.	 	Hardship.

	 	A.	 	In General. A distribution on account of hardship must be limited to the
maximum distributable amount. The maximum distributable amount is equal to the
employee’s total Elective Deferrals as of the date of distribution, reduced by the
amount of previous distributions of Elective Deferrals. Thus, the maximum distributable
amount does not include earnings, Qualified Nonelective Contributions or qualified
matching contributions, unless grandfathered under Treas. Reg. section
1.401(k)-1(d)(3)(ii)(B) as of the earliest date provided therein. In addition, an
employee must obtain all other currently available distributions (including a
distribution of ESOP dividends under Code section 404(k)) before receiving a hardship
distribution.
	 
	 	B.	 	Safe Harbor - Deemed Immediate and Heavy. In determining whether a Participant
has a deemed immediate and heavy financial need, a Plan using the safe harbor hardship
criteria may consider the following financial needs as immediate and heavy:

	 	1.	 	Expenses for (or necessary to obtain) medical care that would
be deductible under Code section 213(d) (determined without regard to whether
the expenses exceed 7.5% of adjusted gross income);
	 
	 	2.	 	Costs directly related to the purchase of a principal residence
for the employee (excluding mortgage payments);
	 
	 	3.	 	Payment of tuition, related educational fees, and room and
board expenses, for up to the next 12 months of post-secondary education for
the employee, or the employee’s spouse, children, or dependents (as defined in
Code section 152, and, for taxable years beginning on or after January 1, 2005,
without regard to Code section 152(b)(1), (b)(2) and (d)(1)(B));
	 
	 	4.	 	Payments necessary to prevent the eviction of the employee from
the employee’s principal residence or foreclosure on the mortgage on that
residence;
	 
	 	5.	 	Payments for burial or funeral expenses for the employee’s
deceased parent, spouse, children or dependents (as defined in Code section
152, and, for taxable years beginning on or after January 1, 2005, without regard
to Code section 152(d)(1)(B));

84

 

	 
	 	6.	 	Expenses for the repair of damage to the employee’s principal
residence that would qualify for the casualty deduction under Code section 165
(determined without regard to whether the loss exceeds 10% of adjusted gross
income); or
	 
	 	7.	 	Other expenses as provided by the Commissioner as specified in
Treas. Reg. section 1.401(k)-1(d)(3)(v).

	 	C.	 	Safe Harbor - Deemed Necessary. Effective as provided in applicable IRS
guidance, if the Plan uses the safe harbor hardship criteria, the Participant’s limit
on Elective Deferrals under Code section 402(g) shall not be reduced solely on account
of receiving a hardship distribution.

	21.	 	Plan Year Requirements - Safe Harbor Plans. The following shall apply if the Plan
intends to satisfy Treas. Reg. section 1.401(k)-3 and/or Treas. Reg. section 1.401(m)-3:

	 	A.	 	Twelve Month Plan Year. The Plan must adopt the safe harbor provisions before
the first day of the Plan Year and remain in effect for an entire 12-month Plan Year.
If the Plan is a newly established plan it may have a Plan Year of less than 12 months,
provided that the Plan Year is at least 3 months long (or, if the Plan is established
as soon as administratively feasible after the employer comes into existence, a shorter
period). If the Plan is amended to provide a cash or deferred arrangement, the Plan
Year may be less than twelve months provided that: (i) the Plan is not a successor
plan; and (ii) the cash or deferred arrangement is made effective no later than 3
months prior to the end of the Plan Year. Similarly, the Plan will not fail to satisfy
the requirements of Treas. Reg. section 1.401(m)-3 for the first Plan Year in which
Matching Contributions are provided under the Plan provided that: (i) The Plan is not a
successor plan; and (ii) the amendment providing for Matching Contributions is made
effective at the same time as the adoption of a cash or deferred arrangement that
satisfies the requirements of Treas. Reg. section 1.401(k)-3, taking into account the
rules of Treas. Reg. section 1.401(k)-3(e)(2). In addition, if the Plan uses the
current year testing method, it may be amended to provide safe harbor nonelective
contributions after the first day of the Plan Year and no later than 30 days before the
last day of the Plan Year but only if the Plan provides the contingent and follow- up
notices described in applicable Treasury Regulations.
	 
	 	B.	 	Change of Plan Year. The Plan may have a short Plan Year as a result of
changing its Plan Year, provided that: (i) the Plan satisfied the applicable safe
harbor requirements for the immediately preceding Plan Year; and (ii) the Plan
satisfies the applicable safe harbor requirements for the immediately following Plan
Year (or for the immediately following 12 months if the immediately following Plan Year
is less than 12 months).

85

 

	 	C.	 	Final Plan Year. A Plan Year may be less than twelve months if the Plan is
terminated, provided that the Plan satisfies the applicable safe harbor requirements
through the date of termination and either: (i) the Plan would satisfy the requirements
of Subparagraph (D) as modified by applicable Treasury Regulations; or (ii) the plan
termination is in connection with a transaction described in Code section 410(b)(6)(C)
or the employer incurs a substantial business hardship comparable to a substantial
business hardship described in Code section 412(d).
	 
	 	D.	 	Safe Harbor Matching Contributions. If the Plan provides for safe harbor
Matching Contributions, the Plan may be amended during a Plan Year to reduce or suspend
safe harbor Matching Contributions on future elective contributions (and, if
applicable, Voluntary Contributions) provided that: (i) all eligible employees are
provided a supplemental notice appraising them of such amendment; (ii) the reduction or
suspension of safe harbor Matching Contributions is effective no earlier than the later
of 30 days after eligible employees are provided the supplemental notice and the date
the amendment is adopted; (iii) eligible employees are given a reasonable opportunity
(including a reasonable period after receipt of the supplemental notice) prior to the
reduction or suspension of safe harbor matching contributions to change their cash or
deferred elections and, if applicable, their Voluntary Contribution elections; (iv) the
Plan is amended to provide that the ADP test and, if applicable, the ACP test will be
satisfied for the entire Plan Year in which the reduction or suspension occurs using
the current year testing method; and (v) the Plan satisfies the requirements of Treas.
Reg. section 1.401(k)-3 and if so indicated in Paragraph 2, Treas. Reg. section
1.401(m)-3 with respect to amounts deferred through the effective date of the
amendment.

	22.	 	Plan Termination/Alternate Defined Contribution Plans. A distribution of Elective
Deferrals may not be made upon plan termination if the employer establishes or maintains an
alternative defined contribution plan. A plan is an alternative defined contribution plan only
if it is a defined contribution plan that exists at any time during the period beginning on
the date of plan termination and ending 12 months after distribution of all assets from the
terminated plan. However, if at all times during the 24-month period beginning 12 months
before the date of plan termination, fewer than 2% of the employees who were eligible under
the defined contribution plan that includes the cash or deferred arrangement as of the date of
plan termination are eligible under the other defined contribution plan, the other plan is not
an alternative defined contribution plan. In addition, a defined contribution plan is not
treated as an alternative defined contribution plan if it is an employee stock ownership plan
as defined in Code section 4975(e)(7) or 409(a), a simplified employee pension as defined in
Code section 408(k), a SIMPLE IRA plan as defined in Code section 408(p), a plan or contract
that satisfies the requirements of Code section 403(b), or a plan that is described in Code
section 457(b) or (f).

86

 

REQUIRED 2007 AMENDMENT ADDENDUM

     This Addendum to the Plan is adopted to reflect the provisions of applicable law and the
applicable regulations that are generally effective after December 31, 2006 (“Applicable Law”).
This Addendum is intended as good faith compliance with the requirements of Applicable Law and is
to be construed in accordance with same. This Addendum and the provisions of Applicable Law shall
supersede the provisions of the Plan to the extent those provisions are inconsistent with the
provisions of this Addendum and Applicable Law.

     Except as expressly provided herein, this Addendum shall be effective for Plan Years beginning
on or after January 1, 2007. Any effective dates specified herein shall be modified to the extent
necessary to comply with any superseding guidance.

OPTIONAL PROVISIONS:

415 Provisions

	1a.	 	 Include Post Severance Compensation in definition of Compensation for allocation purposes:
	 
	 	 	[ ] Yes [ X ] No
	 
	 	 	NOTE: This election will also apply for compensation for purposes of Code section 415.
	 
	1b.	 	 If 1a is “Yes”, Post Severance Compensation is included for the following purposes:

	 	i.	 	[ ] Elective Deferrals and Voluntary Contributions.
	 
	 	ii.	 	[ ] Matching Contributions.
	 
	 	iii.	 	[ ] Nonelective Contributions.

	1c.	 	 If 1a is “Yes”, effective date of inclusion of Post Severance Compensation shall be
limitation years beginning on or after:                     .
	 
	2a.	 	 Determine compensation for allocation purposes using Post Year End Compensation:
	 
	 	 	[ ] Yes [ X ] No
	 
	 	 	NOTE: If “Yes” is selected, amounts earned during the current year and paid during the first
few weeks of the next year will be included in current year compensation. This election will
also apply for compensation for purposes of Code section 415.
	 
	2b.	 	 If 2a is “Yes”, effective date of inclusion of Post Year End Compensation shall be limitation
years beginning on or after:                     .

Normal Retirement Age

	3a.	 	 Normal Retirement Age. It is necessary to amend the Plan to revise the definition of Normal
Retirement Age:
	 
	 	 	[ ] Yes [ X ] No
	 
	 	 	NOTE: If the Plan qualifies for the relief in IRS Notice 2007-69 and the prior Normal
Retirement Age was 55 or greater, and less than 62, the Plan does not need to be amended
until the last day of the Plan’s remedial amendment period for this provision (generally by
the later of (a) the last day of the first Plan year beginning after June 30, 2008, or (b)
the due date (including extensions) for filing the employer’s income tax return for the
employer’s taxable year that includes the first day of the first Plan year beginning after
June 30, 2008.).
	 
	3b.	 	 If 3a is “Yes”, Normal Retirement Age means:

	 	i.	 	[ ] Attainment of age                     .
	 
	 	ii.	 	[ ] Later of attainment of Age                      and the                      anniversary of
participation in the Plan.

	3c.	 	 If 3a is “Yes”, describe the Plan provisions that will prevent the Plan from violating the
Code and ERISA:                     .
	 
	 	 	NOTE: Item 3c must contain language to prevent the reduction of benefits that would cause
the Plan to fail to satisfy Code section 411(d)(6), Code section 411(a)(9) (requiring that
the normal retirement benefit not be less than the greater of any early retirement benefit
payable under the Plan or the benefit under the Plan commencing at normal retirement age),
Code section 411(a)(10) (if the amendment changes the Plan’s

87

 

	 	 	vesting rules), or Code section 4980F/ERISA section 204(h) (relating to amendments that
reduce the rate of future benefit accrual). See Treas. Reg. 1.411(d)-4, Q&A-12.
	 
	 	 	NOTE: If the Plan permits in-service distributions after the attainment of Normal Retirement
Age, the increase in the age component of Normal Retirement Age shall not be deemed a
violation of Code section 411(d)(6) provided that the amendment is adopted after May 22,
2007 and before the end of the Plan’s remedial amendment period specified in the NOTE
following 3a.
	 
	3d.	 	 If 3a is “Yes”, enter the effective date of change in the Normal Retirement Age:                     .
(If the Normal Retirement Age was 55 or greater, and less than 62, must be after May 22, 2007
and no later than the first day of the first Plan year beginning after June 30, 2008.

STANDARD PROVISIONS:

	A.	 	Annual Addition Limitations. Except as otherwise expressly provided, this Paragraph
shall be effective for limitation years beginning on or after July 1, 2007.

	 	1.	 	Any correction methods for excess annual additions set forth in the Plan that
were allowed pursuant to the prior version of Treas. Reg. 1.415-6(b)(6) shall not
apply. However, the Plan may be eligible for self-correction under Rev. Proc. 2006-27,
2006-22 I.R.B. 945 and any superseding guidance.
	 
	 	2.	 	Restorative payments allocated to a participant’s account, which include
payments made to restore losses to the Plan resulting from actions (or a failure to
act) by a fiduciary for which there is a reasonable risk of liability under Title I of
ERISA or under other applicable federal or state law, where similarly situated
participants are similarly treated, shall not give rise to an annual addition for any
limitation year.
	 
	 	3.	 	The Plan’s definition of compensation for a year that is used for purposes of
Code section 415 may not reflect compensation for a year greater than the limit under
Code section 401(a)(17) that applies to that year.
	 
	 	4.	 	If the Plan uses a definition of compensation for purposes of Code section 415
under prior regulations that included only those items specified in Treas. Reg. section
1.415-2(d)(2)(i) and excluding all of those items listed in Treas. Reg. section
1.415-2(d)(3), the definition shall be revised to indicate that compensation for such
purposes means all items of remuneration described in Treas. Reg. 1.415(c)-2(b), and
excluding the items of remuneration described in Treas. Reg. 1.415(c)-2(c).
	 
	 	5.	 	“Post Year End Compensation” means amounts earned during a year but not paid
during that year solely because of the timing of pay periods and pay dates if: (i)
these amounts are paid during the first few weeks of the next year; (ii) the amounts
are included on a uniform and consistent basis with respect to all similarly situated
Employees; and (iii) no compensation is included in more than one year.
	 
	 	6.	 	“Post Severance Compensation” means amounts paid by the later of: (1) 2-1/2
months after an employee’s severance from employment with the employer maintaining the
plan or (2) the end of the limitation year that includes the date of severance from
employment with the employer maintaining the plan; and those amounts would have been
included in the definition of compensation if they were paid prior to the employee’s
severance from employment with the employer maintaining the plan. However the payment
must be for (a) unused accrued bona fide sick, vacation, or other leave, but only if
the employee would have been able to use the leave if the employee had continued in
employment; or (b) received by an employee pursuant to a nonqualified unfunded deferred
compensation plan, but only if the payment would have been paid to the employee at the
same time if the employee had continued in employment with the employer and only to the
extent that the payment is includible in the employee’s gross income.

88

 

	 	7.	 	Compensation shall include other compensation paid by the later of: (1) 2-1/2
months after an employee’s severance from employment with the employer maintaining the
plan or (2) the end of the limitation year that includes the date of the employee’s
severance from employment with the employer maintaining the plan if: (a) the payment is
regular compensation for services during the employee’s regular working hours, or
compensation for services outside the employee’s regular working hours (e.g., overtime
or shift differential), commissions, bonuses, or other similar payments; and the
payment would have been paid to the employee prior to a severance from employment if
the employee had continued in employment with the employer.
	 
	 	 	 	The exclusions from compensation for payments after severance from employment do not
apply to payments to an individual who does not currently perform services for the
employer by reason of qualified military service (as that term is used in Code
section 414(u)(1)) to the extent those payments do not exceed the amounts the
individual would have received if the individual had continued to perform services
for the employer rather than entering qualified military service. To the extent
provided in the Plan, compensation shall include compensation paid to a participant
who is permanently and totally disabled.

	B.	 	Refunds of Excess Deferrals. Effective for taxable years beginning after December 31,
2006 (excesses distributed after December 31, 2007), any refunds of Elective Deferrals that
exceed the dollar limitation contained in Code section 402(g) shall be adjusted for income or
loss up to the date of distribution. The income/loss allocable to excess deferrals is equal to
the sum of the allocable gain or loss for the Plan Year and, to the extent that such excess
deferrals would otherwise be credited with gain or loss for the gap period (i.e., the period
after the close of the Plan Year and prior to the distribution) if the total account were to
be distributed, the allocable gain or loss during that period. The Plan Administrator may use
any reasonable method for computing the income allocable to excess deferrals, provided that
the method does not violate Code section 401(a)(4), is used consistently for all Participants
and for all corrective distributions under the Plan for the Plan Year, and is used by the Plan
for allocating income to Participant’s Accounts. The Plan will not fail to use a reasonable
method for computing the income allocable to excess contributions merely because the income
allocable to excess contributions is determined on a date that is no more than 7 days before
the actual distribution. In addition, the Plan Administrator may allocate income in any manner
permitted under applicable treasury regulations.
	 
	C.	 	N/A.
	 
	D.	 	Protected Benefits. This Paragraph is effective for plan amendments adopted after
August 9, 2006 (periods beginning on or after June 7, 2004 relating to suspension of benefit
payments).

	 	1.	 	Except as provided in Paragraph D.2, a plan amendment may not decrease a
participant’s accrued benefits, or otherwise place greater restrictions or conditions
on a participant’s rights to Code section 411(d)(6) protected benefits, even if the
amendment merely adds a restriction or condition that is permitted under the vesting
rules in Code section 411(a)(3) through (11).
	 
	 	2.	 	An amendment described in Paragraph D.1 does not violate Code section 411(d)(6)
to the extent: (i) it applies with respect to benefits that accrue after the applicable
amendment date; or (ii) the plan amendment changes the Plan’s vesting computation
period and it satisfies the applicable requirements under 29 CFR 2530.203-2(c).

89

 

     The undersigned agree to be bound by the terms of the forgoing addenda and acknowledge receipt
of same. These addenda are executed this 16th day of April, 2008.

	 	 	 
	 

	 	MACKINAC FINANCIAL CORPORATION:
	 
	 	 
	 

	Signature:	ERNIE R. KRUEGER

	 

	Print Name:	 ERNIE R. KRUEGER
	 

	Title/Position: 	 EVP/CFO

90

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00140-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00140-of-00352.parquet"}]]