Document:

EXHIBIT 4.2

 

 

 

SERIES 2014-4 INDENTURE SUPPLEMENT

 

between

 

FORD CREDIT FLOORPLAN MASTER OWNER TRUST A,
 as Issuer

 

and

 

THE BANK OF NEW YORK MELLON,
 as Indenture Trustee

 

Dated as of August 1, 2014

 

 

 

 

TABLE OF CONTENTS

 

	
ARTICLE I USAGE AND   DEFINITIONS
    	
1
    
	
Section 1.1.
    	
Usage and Definitions
    	
1
    
	
Section 1.2.
    	
Defined Terms for Other Series
    	
15
    
	
 
    	
 
    	
 
    
	
ARTICLE II CREATION OF   SERIES 2014-4 NOTES
    	
15
    
	
Section 2.1.
    	
Principal Terms of Series 2014-4 Notes
    	
15
    
	
Section 2.2.
    	
Additional Issuance; Reopening
    	
16
    
	
Section 2.3.
    	
Payments
    	
17
    
	
 
    	
 
    	
 
    
	
ARTICLE III REPORTS AND   SERVICING
    	
18
    
	
Section 3.1.
    	
Reports and Statements to Noteholders of Series 2014-4   Notes
    	
18
    
	
Section 3.2.
    	
Servicing Compensation
    	
19
    
	
 
    	
 
    	
 
    
	
ARTICLE IV RIGHTS OF   NOTEHOLDERS OF SERIES 2014-4 NOTES AND ALLOCATION AND APPLICATION OF COLLECTIONS
    	
19
    
	
Section 4.1.
    	
Collections and Allocations
    	
19
    
	
Section 4.2.
    	
Application of Available Funds in Collection Account and   Other Sources
    	
22
    
	
Section 4.3.
    	
Investor Charge-Offs
    	
25
    
	
Section 4.4.
    	
Reallocated Principal Collections
    	
26
    
	
Section 4.5.
    	
Excess Interest Collections
    	
26
    
	
Section 4.6.
    	
Shared Principal Collections
    	
26
    
	
Section 4.7.
    	
Series 2014-4 Accounts
    	
26
    
	
Section 4.8.
    	
Permitted Investments
    	
28
    
	
Section 4.9.
    	
Investment Instructions
    	
28
    
	
Section 4.10.
    	
Determination and Notification of LIBOR
    	
28
    
	
 
    	
 
    	
 
    
	
ARTICLE V THE NOTES
    	
29
    
	
Section 5.1.
    	
Retention By Depositors
    	
29
    
	
Section 5.2.
    	
Securities Act Restrictions
    	
29
    
	
Section 5.3.
    	
Note Owner Representations
    	
30
    
	
Section 5.4.
    	
Amendments to Comply with Law Relating to Restricted   Securities
    	
31
    
	
 
    	
 
    	
 
    
	
ARTICLE VI SERIES 2014-4   AMORTIZATION EVENTS
    	
31
    
	
Section 6.1.
    	
Series 2014-4 Amortization Events
    	
31
    
	
 
    	
 
    	
 
    
	
ARTICLE VII SERIES FINAL   MATURITY; FINAL PAYMENTS
    	
32
    
	
Section 7.1.
    	
Series Final Maturity
    	
32
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII MISCELLANEOUS   PROVISIONS
    	
33
    
	
Section 8.1.
    	
Ratification of Agreement
    	
33
    
	
Section 8.2.
    	
GOVERNING LAW
    	
33
    
	
Section 8.3.
    	
Counterparts
    	
33
    
	
 
    	
 
    	
 
    
	
Exhibit A
    	
Form of   Class [A/B/C/D] Note
    	
A-1
    
	
Exhibit B
    	
Form of   Monthly Investor Report
    	
B-1
    
				

 

i

 

SERIES 2014-4 INDENTURE SUPPLEMENT, dated as of August 1, 2014 (this “Indenture Supplement”), between FORD CREDIT FLOORPLAN MASTER OWNER TRUST A, a Delaware statutory trust, as Issuer, and THE BANK OF NEW YORK MELLON, a New York banking corporation, as Indenture Trustee.

 

BACKGROUND

 

Section 2.2 of the Indenture provides, among other things, that the Issuer and the Indenture Trustee may at any time enter into an Indenture Supplement to authorize the issuance by the Issuer of Notes in one or more Series.

 

The parties to this Indenture Supplement, by executing and delivering this Indenture Supplement, are providing for the creation and specifying the Principal Terms of the Series 2014-4 Notes.

 

The parties agree as follows:

 

GRANTING CLAUSES

 

In addition to the Grant of the Indenture, the Issuer Grants to the Indenture Trustee, as Indenture Trustee for the benefit of the Series 2014-4 Noteholders, all of the Issuer’s right, title and interest, whether now owned or hereafter acquired, in, to and under the Series 2014-4 Collateral.

 

The foregoing Grant is made in trust to secure (a) the payment of principal of, interest on and any other amounts owing in respect of the Series 2014-4 Notes as provided in the Indenture and this Indenture Supplement for the benefit of the Series 2014-4 Noteholders and (b) compliance by the Issuer with the provisions of the Indenture and this Indenture Supplement, all as provided in the Series 2014-4 Notes, the Indenture and this Indenture Supplement.

 

The Indenture Trustee acknowledges the Grant, accepts the trusts under this Indenture Supplement in accordance with this Indenture Supplement and agrees to perform the duties in this Indenture Supplement so that the interests of the Series 2014-4 Noteholders may be adequately protected.

 

ARTICLE I
 USAGE AND DEFINITIONS

 

Section 1.1.                                 Usage and Definitions.  Capitalized terms used but not otherwise defined in this Indenture Supplement are defined in Appendix A to (a) the Fifth Amended and Restated Sale and Servicing Agreement, dated as of August 1, 2001, as amended and restated as of December 1, 2010, among Ford Credit Floorplan Corporation, as Depositor, the Issuer and Ford Motor Credit Company LLC, as Servicer, and (b) the Fifth Amended and Restated Sale and Servicing Agreement, dated as of August 1, 2001, as amended and restated as of December 1, 2010, among Ford Credit Floorplan LLC, as Depositor, the Issuer and the Servicer.  Each Appendix A also contains rules of usage applicable to this Indenture Supplement.  Each Appendix A is incorporated by reference in this Indenture Supplement.

 

 

In addition, the following terms have the following meanings:

 

“Accrued Note Interest” means, for a Class and a Payment Date, the sum of the Note Monthly Interest and the Note Interest Shortfall for that Class.

 

“Accumulation Period Factor” means, for any Collection Period, a fraction:

 

(a)                                 the numerator of which equals the sum of the “Initial Invested Amounts” of all Series in Principal Sharing Group One; and

 

(b)                                 the denominator of which equals the sum of (i) the Initial Invested Amount, plus (ii) the “Initial Invested Amounts” of all Series in Principal Sharing Group One, other than Series 2014-4, that are not expected to be in their “Revolving Periods” from that date to the Expected Final Payment Date.

 

“Accumulation Period Length” means, for any Determination Date, the number of Collection Periods needed for the sum of the Accumulation Period Factors for those Collection Periods to be equal to or greater than the Required Accumulation Factor Number for that Determination Date.

 

“Adjusted Invested Amount” means, as of any date, (a) the Invested Amount, minus (b) during an Accumulation Period or Amortization Period for Series 2014-4, the amount of any Principal Collections in the Collection Account allocable to Series 2014-4, minus (c) the amount in the Series 2014-4 Principal Funding Account (excluding any net investment earnings), each as of that date.

 

“Available Investor Interest Collections” means, for any Payment Date, an amount equal to the sum of (a) the Investor Interest Collections for the related Collection Period, plus (b) any net investment earnings on amounts in the Series 2014-4 Accounts for the related Collection Period, plus (c) the Series 2014-4 Accumulation Period Reserve Draw Amount for that Payment Date, plus (d) on the termination of the Series 2014-4 Accumulation Period Reserve Account under Section 4.7(c)(iii), all remaining amounts in the Series 2014-4 Accumulation Period Reserve Account (excluding any net investment earnings), plus (e) the Monthly Depositor Servicing Fee for that Payment Date.

 

“Available Investor Principal Collections” means, for any Payment Date, an amount equal to the excess of (a) the sum of (i) the Investor Principal Collections for the related Collection Period, plus (ii) any Available Investor Interest Collections, Series 2014-4 Reserve Account Available Amounts, Excess Interest Collections from other Series in Excess Interest Sharing Group One and Available Depositor Collections that, under Sections 4.2(a) and (b), are to be treated as Available Investor Principal Collections for that Payment Date, plus (iii) the Series 2014-4 Excess Funding Amount, plus (iv) any Shared Principal Collections for other Series in Principal Sharing Group One (including any amounts in the Excess Funding Account that are made available to Series 2014-4 under the Indenture as Shared Principal Collections), plus (v) on the termination of the Series 2014-4 Reserve Account under Section 4.7(b)(ii), all remaining amounts in the Series 2014-4 Reserve Account (excluding any net investment earnings and after giving effect to Section 4.2(b)(iii)), over (b) any Reallocated Principal Collections for that Payment Date.

 

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“Available Subordinated Amount” means (a) for the first Determination Date following the Closing Date, an amount equal to the Required Subordinated Amount for the first Determination Date and (b) for any subsequent Determination Date, an amount equal to the lesser of (i) the Required Subordinated Amount for that Determination Date and (ii) an amount equal to:

 

(A)                               the Available Subordinated Amount for the prior Determination Date; minus

 

(B)                               the amount of any Available Depositor Principal Collections used to cover shortfalls on the related Payment Date under Section 4.2(b)(ii); minus

 

(C)                               the amount of the Investor Charge Offs and Reallocated Principal Collections for the related Payment Date applied to reduce the Available Subordinated Amount under Sections 4.3 and 4.4; plus

 

(D)                               the amount of any Available Investor Interest Collections paid under Section 4.2(a)(xiii) to the Depositor Interest Account for distribution to the holders of the Depositor Interest; minus

 

(E)                                the Incremental Subordinated Amount for the prior Determination Date; plus

 

(F)                                 the Incremental Subordinated Amount for that Determination Date; minus

 

(G)                               the Subordinated Percentage of the increase in the Series 2014-4 Excess Funding Amount since the prior Payment Date to the succeeding Payment Date; plus

 

(H)                              the Subordinated Percentage of the decrease in the Series 2014-4 Excess Funding Amount since the prior Payment Date to the succeeding Payment Date; plus

 

(I)                                   an amount equal to the increase, if any, in the Required Subordinated Amount as a result of a change in the Subordination Factor since the prior Determination Date, minus

 

(J)                                   an amount equal to the decrease, if any, in the Required Subordinated Amount as a result of a change in the Subordination Factor since the prior Determination Date, plus

 

(K)                              any increases in the Available Subordinated Amount elected by the Depositors; provided, that the cumulative amount of the increases may not exceed 3.5% of the initial Note Balance of the Series 2014-4 Notes.

 

“Back-up Servicing Fee Rate” means 0.0065% per annum or a lesser percentage as may be specified by the Back-up Servicer, if any, in an Officer’s Certificate delivered to the Indenture Trustee; provided, that if no Back-up Servicing Agreement is in effect on any date, all references to the Back-up Servicing Fee Rate in this Indenture Supplement will be deemed to be deleted from this Indenture Supplement and have no further effect.

 

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“Benefit Plan” means an employee benefit plan or other retirement plan or arrangement that is subject to Title I of ERISA, Section 4975 of the Code or any Similar Law.

 

“Class” means the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes and the Class D Notes, as applicable.

 

“Class A-1 Notes” means any one of the Series 2014-4 Class A-1 Notes executed by the Issuer and authenticated by or on behalf of the Indenture Trustee, substantially in the form of Exhibit A.

 

“Class A-2 Notes” means any one of the Series 2014-4 Class A-2 Notes executed by the Issuer and authenticated by or on behalf of the Indenture Trustee, substantially in the form of Exhibit A.

 

“Class A Notes” means the Class A-1 Notes and the Class A-2 Notes.  Unless the context otherwise requires, the Class A-1 Notes and the Class A-2 Notes will be treated as a single Class for purposes of allocations, distributions or payments.

 

“Class B Invested Amount” means, as of any date, an amount (not less than zero) equal to (a) the initial Note Balance of the Class B Notes, minus (b) the aggregate amount of any principal payments made to the Noteholders of the Class B Notes before that date, minus (c) the cumulative amount of unreimbursed Investor Charge-Offs applied to reduce the Class B Invested Amount under Section 4.3 before that date, minus (d) the cumulative amount of unreimbursed Reallocated Principal Collections applied to reduce the Class B Invested Amount under Section 4.4 before that date.

 

“Class B Notes” means any one of the Series 2014-4 Class B Notes executed by the Issuer and authenticated by or on behalf of the Indenture Trustee, substantially in the form of Exhibit A.

 

“Class C Invested Amount” means, as of any date, an amount (not less than zero) equal to (a) the initial Note Balance of the Class C Notes, minus (b) the aggregate amount of any principal payments made to the Noteholders of the Class C Notes before that date, minus (c) the cumulative amount of unreimbursed Investor Charge-Offs applied to reduce the Class C Invested Amount under Section 4.3 before that date, minus (d) the cumulative amount of unreimbursed Reallocated Principal Collections applied to reduce the Class C Invested Amount under Section 4.4 before that date.

 

“Class C Notes” means any one of the Series 2014-4 Class C Notes executed by the Issuer and authenticated by or on behalf of the Indenture Trustee, substantially in the form of Exhibit A.

 

“Class D Invested Amount” means, as of any date, an amount (not less than zero) equal to (a) the initial Note Balance of the Class D Notes, minus (b) the aggregate amount of any principal payments made to the Noteholders of the Class D Notes before that date, minus (c) the cumulative amount of unreimbursed Investor Charge-Offs applied to reduce the Class D Invested Amount under Section 4.3 before that date, minus (d) the cumulative amount of unreimbursed

 

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Reallocated Principal Collections applied to reduce the Class D Invested Amount under Section 4.4 before that date.

 

“Class D Notes” means any one of the Series 2014-4 Class D Notes executed by the Issuer and authenticated by or on behalf of the Indenture Trustee, substantially in the form of Exhibit A.

 

“Closing Date” means August 26, 2014.

 

“Controlled Accumulation Amount” means, for any Payment Date in the Controlled Accumulation Period, an amount equal to the Initial Invested Amount divided by six; provided, however, that if the Controlled Accumulation Period begins after February 1, 2017, the Controlled Accumulation Amount for each Payment Date in the Controlled Accumulation Period will be equal to (a) the product of (i) the Initial Invested Amount, times (ii) the Accumulation Period Factor for the last Collection Period of the Revolving Period, divided by (b) the Required Accumulation Factor Number for the last Determination Date during the Revolving Period.

 

“Controlled Accumulation Period” means, unless an Early Amortization Period has commenced, the period beginning on the first day of the February 2017 Collection Period or a later date as is determined in accordance with Section 4.2(g) and ending on the earlier to occur of (a) the day before the start of the Early Amortization Period and (b) the end of the Collection Period prior to the Payment Date on which the Note Balance of the Series 2014-4 Notes will be paid in full.

 

“Controlled Deposit Amount” means, for any Payment Date in the Controlled Accumulation Period, an amount equal to the sum of (a) the Controlled Accumulation Amount for that Payment Date and (b) any Deficit Controlled Accumulation Amount for the prior Payment Date.

 

“Dealer Overconcentration” means, for any Determination Date, the excess, if any, of (a) the aggregate principal amount of Receivables originated in all Accounts of a Dealer or a group of affiliated Dealers on the last day of the related Collection Period, over (b) 2% (or 5% in the case of Dealers affiliated with AutoNation, Inc. (or its successors in interest)) of the Pool Balance on the last day of that Collection Period (or, in either case, a higher percentage so long as the Rating Agency Condition has been satisfied).

 

“Defaulted Amount” means, for any Determination Date, an amount (not less than zero) equal to (a) the principal amount of all Receivables that became Defaulted Receivables during the related Collection Period, minus (b) the amount of any Defaulted Receivables that are reassigned to the Depositors in accordance with the Sale and Servicing Agreements (except that if an Insolvency Event occurs for a Depositor, the amount of the Defaulted Receivables that are reassigned to that Depositor will be zero), minus (c) the amount of any Defaulted Receivables that are assigned to the Servicer in accordance with the Sale and Servicing Agreements (except that if an Insolvency Event occurs for the Servicer, the amount of the Defaulted Receivables that are assigned to the Servicer will be zero).

 

“Deficit Controlled Accumulation Amount” means (a) for the first Payment Date in the Controlled Accumulation Period, the excess, if any, of the Controlled Accumulation Amount for

 

5

 

that Payment Date, over the amount deposited in the Series 2014-4 Principal Funding Account on that Payment Date and (b) for each subsequent Payment Date in the Controlled Accumulation Period, the excess, if any, of the Controlled Deposit Amount for that Payment Date, over the amount deposited in the Series 2014-4 Principal Funding Account on that Payment Date.

 

“Development Dealer Overconcentration” means, for any Determination Date, the excess, if any, of (a) the aggregate principal amount of Receivables that are Development Dealer Receivables on the last day of the related Collection Period, over (b) 4% of the Pool Balance on the last day of that Collection Period (or, a higher percentage so long as the Rating Agency Condition has been satisfied).

 

“Early Amortization Period” means the period beginning on the day on which an Amortization Event for Series 2014-4 occurs (or, if the Servicer is not required to make daily deposits of Collections in the Collection Account under Section 8.4(b) of the Indenture, beginning on the first day of the Collection Period in which the Amortization Event occurs) and ending on the earlier to occur of (a) the end of the Collection Period prior to the Payment Date on which the Note Balance of the Series 2014-4 Notes will be paid in full and (b) the Series 2014-4 Final Maturity Date.

 

“ERISA” means the Employee Retirement Income Security Act of 1974.

 

“Excess Interest Collections” means, for any Payment Date, an amount equal to the excess, if any, of (a) the Available Investor Interest Collections for that Payment Date, over (b) the amount required to be paid, without duplication, under Sections 4.2(a)(i) through (xv) on that Payment Date.

 

“Expected Final Payment Date” means the August 2017 Payment Date.

 

“Fixed Investor Percentage” means, for any Deposit Date or Collection Period (or portion of any Collection Period occurring after the end of the Revolving Period), the percentage equivalent (not to exceed 100%) of a fraction (a) the numerator of which is the Invested Amount on the last day of the Revolving Period and (b) the denominator of which is the greater of (i) the Adjusted Pool Balance on the last day of the prior Collection Period and (ii) the sum of the numerators used to calculate the applicable “Investor Percentages” for allocating Principal Collections to all Series for that Collection Period; provided, that for any Deposit Date or Collection Period occurring after the Collection Period on the last day of which the Adjusted Invested Amount is zero, the Fixed Investor Percentage will be deemed to be zero.

 

“Fleet Overconcentration” means, for any Determination Date, the excess, if any, of (a) the aggregate principal amount of the Receivables that are Fleet Receivables on the last day of the related Collection Period, over (b) 4% of the Pool Balance on the last day of that Collection Period (or a higher percentage so long as the Rating Agency Condition has been satisfied).

 

“Floating Investor Percentage” means, for any Deposit Date or Collection Period (or portion of any Collection Period occurring prior to the end of the Revolving Period), the percentage equivalent (not to exceed 100%) of a fraction (a) the numerator of which is the Adjusted Invested Amount on the last day of the prior Collection Period (or for the first Collection Period, the initial Note Balance of the Series 2014-4 Notes) and (b) the denominator

 

6

 

of which is the Adjusted Pool Balance on the last day of the prior Collection Period (or for the first Collection Period, the Adjusted Pool Balance as of the Series Cutoff Date).

 

“Incremental Subordinated Amount” means, for any Determination Date, the product of:

 

(a)                                 a fraction, (i) the numerator of which is an amount (not less than zero) equal to (A) the Adjusted Invested Amount as of the related Payment Date, plus (B) the product of the initial Note Balance of the Series 2014-4 Notes times the excess of the Required Pool Percentage over 100%, plus (C) the Required Subordinated Amount on that Determination Date (without giving effect to the Incremental Subordinated Amount), minus (D) the Series 2014-4 Excess Funding Amount as of that Determination Date and (ii) the denominator of which is the Pool Balance on that Determination Date; times

 

(b)                                 the Non-Conforming Receivable Amount on that Determination Date.

 

“Initial Invested Amount” means, for the Series 2014-4 Notes and for any date, $1,150,327,000; provided, that the Initial Invested Amount will be reduced by the initial Note Balance of any Series 2014-4 Notes that are determined to be no longer Outstanding on the day prior to the start of the Early Amortization Period.

 

“Interest Collections Shortfall” means, for any Payment Date, an amount equal to the excess, if any, of (a) the amount required to be paid, without duplication, under Sections 4.2(a)(i) through (xv) on that Payment Date, over (b) the Available Investor Interest Collections for that Payment Date.

 

“Interest Period” means, for any Payment Date (a) for each Class of Notes, except the Class A-2 Notes, the period from the 15th day of the calendar month prior to that Payment Date to the 15th day of the following calendar month (or from the Closing Date to September 15, 2014 in the case of the first Payment Date), and (b) for the Class A-2 Notes, the period from the Payment Date prior to that Payment Date to such Payment Date (or, from the Closing Date to September 15, 2014 in the case of the first Payment Date).

 

“Invested Amount” means, as of any date, an amount equal to (a) the initial Note Balance of the Series 2014-4 Notes, minus (b) the aggregate amount of any principal payments made to the Noteholders of the Series 2014-4 Notes before that date, minus (c) the cumulative amount of unreimbursed Investor Charge-Offs applied to reduce the Invested Amount under Section 4.3 before that date, minus (d) the cumulative amount of unreimbursed Reallocated Principal Collections applied to reduce the Invested Amount under Section 4.4 before that date.

 

“Investor Charge-Off” means, for any Payment Date, the excess, if any, of the amount of the unfunded Investor Default Amount for that Payment Date over the amount of the Investor Default Amount applied to reduce the Available Subordinated Amount under Section 4.3 for that Payment Date.

 

“Investor Default Amount” means, for any Payment Date, an amount equal to the product of (a) the Floating Investor Percentage for the related Collection Period, times (b) the Defaulted Amount for that Collection Period.

 

7

 

“Investor Interest Collections” means, for any Deposit Date or Collection Period, an amount equal to the product of (a) the Floating Investor Percentage for the related Collection Period, times (b) the Interest Collections for that Deposit Date or Collection Period, as applicable.

 

“Investor Percentage” means, for any Collection Period (a) for Interest Collections and Defaulted Amounts at any time and Principal Collections during the Revolving Period, the Floating Investor Percentage and (b) for Principal Collections during the Controlled Accumulation Period or the Early Amortization Period, the Fixed Investor Percentage.

 

“Investor Principal Collections” means, for any Deposit Date or Collection Period, an amount equal to the product of (a) the Investor Percentage for the related Collection Period, times (b) the Principal Collections for that Deposit Date or Collection Period, as applicable.

 

“LIBOR” means, for any Interest Period, the rate determined by the Indenture Trustee on each LIBOR Determination Date on the basis of the rate for deposits in United States dollars for a period of one month which appears on the Reuters Screen LIBOR01 Page as of 11:00 a.m., London time, on that date.  If that rate does not appear on the Reuters Screen LIBOR01 Page, the rate for that LIBOR Determination Date will be determined on the basis of the rates at which deposits in U.S. 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 of one month commencing on that date and in a principal amount of at least U.S. $1,000,000.  The Indenture Trustee will request the principal London office of each of the Reference Banks to provide a quotation of its rate.  If at least two 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, the rate for that LIBOR Determination Date will be the arithmetic mean of the rates quoted by three 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 U.S. dollars to leading European banks for a period of one month commencing on that date and in a principal amount of at least U.S. $1,000,000; provided, however, that if the banks selected by the Servicer are not quoting rates, LIBOR for that date will be the same as LIBOR for the prior LIBOR Determination Date.

 

“LIBOR Determination Date” means, for any Interest Period, the date that is two London Banking Days prior to the start of the Interest Period.

 

“London Banking Day” means any day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in London.

 

“Manufacturer Overconcentration” means, for any Determination Date, the sum of:

 

(a)                                 the excess, if any, of (i) the aggregate principal amount of Receivables that relate to a particular Manufacturer (other than Ford or one of its associated Manufacturers) with a long-term unsecured rating of “A-” or better by Standard & Poor’s and Fitch (if rated by Fitch), and “A3” or better by Moody’s (if rated by Moody’s) on the last day of the related Collection Period, over (ii) 10% of the Pool Balance on the last day of that Collection Period (or a higher percentage so long as the Rating Agency Condition has been satisfied); plus

 

8

 

(b)                                 the excess, if any, of (i) the aggregate principal amount of Receivables that relate to a particular Manufacturer (other than Ford or one of its associated Manufacturers) with a long-term unsecured rating of “BBB+” or lower by Standard & Poor’s or unrated by Standard & Poor’s, or “BBB+” or lower by Fitch (if rated by Fitch), or “Baa1” or lower by Moody’s (if rated by Moody’s) on the last day of the related Collection Period, over (ii) 2% of the Pool Balance on the last day of that Collection Period (or a higher percentage so long as the Rating Agency Condition has been satisfied).

 

“Medium and Heavy Truck Overconcentration” means, for any Determination Date, the excess, if any, of (a) the aggregate principal amount of Receivables that are Medium and Heavy Truck Receivables on the last day of the related Collection Period, over (b) 2% of the Pool Balance on the last day of that Collection Period (or a higher percentage so long as the Rating Agency Condition has been satisfied).

 

“Monthly Back-up Servicing Fee” means, for any Payment Date, an amount equal to one-twelfth of the product of (a) the Back-up Servicing Fee Rate, times (b) the percentage equivalent of a fraction, the numerator of which is the Floating Investor Percentage for the related Collection Period and the denominator of which is the sum of the “Floating Investor Percentages” for all Series for that Collection Period, times (c) the aggregate principal amount of Receivables on the last day of the prior Collection Period.  If no Back-up Servicing Agreement is in effect on any date, all references to the Monthly Back-up Servicing Fee in this Indenture Supplement will be deemed to be deleted from this Indenture Supplement and have no further effect.

 

“Monthly Depositor Servicing Fee” means, for any Payment Date, an amount equal to one-twelfth of the product of (a) the product of (i) the sum of the Servicing Fee Rate and the Back-up Servicing Fee Rate, times (ii) 100% minus the sum of the “Floating Investor Percentages” for all Series for the related Collection Period, times (iii) the aggregate principal amount of Receivables on the last day of the prior Collection Period, times (b) the percentage equivalent of a fraction, the numerator of which is the Floating Investor Percentage for the related Collection Period and the denominator of which is the sum of the “Floating Investor Percentages” for all Series for that Collection Period.

 

“Monthly Investor Report” has the meaning specified in Section 3.1(a).

 

“Monthly Principal Amount” means, for each Payment Date, beginning with the Payment Date in the month following the month in which (a) the Controlled Accumulation Period begins, an amount equal to the lesser of (i) the Controlled Deposit Amount for that Payment Date and (ii) the Adjusted Invested Amount on that Payment Date or (b) the Early Amortization Period begins, the Adjusted Invested Amount on that Payment Date.

 

“Monthly Principal Payment Rate” means, for any Collection Period, the percentage equivalent of a fraction (a) the numerator of which is the Principal Collections for that Collection Period and (b) the denominator of which is the Pool Balance on the first day of that Collection Period.

 

9

 

“Monthly Servicing Fee” means, for any Payment Date, an amount equal to one-twelfth of the product of (a) the Servicing Fee Rate, times (b) the percentage equivalent of a fraction, the numerator of which is the Floating Investor Percentage for the related Collection Period and the denominator of which is the sum of the “Floating Investor Percentages” for all Series for that Collection Period, times (c) the aggregate principal amount of Receivables on the last day of the prior Collection Period, or for the first Collection Period, the aggregate principal amount of Receivables on the Series Cutoff Date.

 

“Non-Conforming Receivable Amount” means, for any Determination Date, the excess, if any, of:

 

(a)                                 the sum, without duplication, of (i) the principal amount of Receivables constituting Ineligible Receivables for that Determination Date, plus (ii) the aggregate amount of Dealer Overconcentrations, Development Dealer Overconcentrations, Fleet Overconcentrations, Manufacturer Overconcentrations, Medium and Heavy Truck Overconcentrations and Used Vehicle Overconcentrations for that Determination Date; over

 

(b)                                 the sum, without duplication, of (i) the principal amount of Receivables constituting Ineligible Receivables that became Defaulted Receivables during the period from the prior Determination Date to the current Determination Date, plus (ii) the aggregate principal amount of Receivables contributing to Dealer Overconcentrations, Development Dealer Overconcentrations, Fleet Overconcentrations, Manufacturer Overconcentrations, Medium and Heavy Truck Overconcentrations and Used Vehicle Overconcentrations that, in each case, became Defaulted Receivables during the period from the prior Determination Date (or, in the case of the first Determination Date, the Series Cutoff Date) to the current Determination Date.

 

“Note Interest Rate” means, for each Class, the interest rate per annum specified in Section 2.1(b).

 

“Note Interest Shortfall” means, for a Class and a Payment Date, an amount equal to:

 

(a)                                 the Note Monthly Interest for the prior Payment Date for that Class; plus

 

(b)                                 any Note Interest Shortfall for that Class for the prior Payment Date together with interest on the Note Interest Shortfall, to the extent lawful, at the Note Interest Rate for that Class for the related Interest Period; minus

 

(c)                                  the amount of Interest that was paid to the Noteholders of that Class on the prior Payment Date.

 

“Note Monthly Interest” means, for a Class and a Payment Date, the aggregate amount of interest accrued on the Note Balance of that Class at the Note Interest Rate for that Class for the related Interest Period.

 

“Note Transfer” has the meaning specified in Section 5.2(b).

 

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“Payment Date” means the 15th day of each month, or if not a Business Day, the next Business Day, commencing in the first full month after the Closing Date.

 

“Principal Sharing Group One” means Series 2014-4 and each other Series specified in the related Indenture Supplement to be included in Principal Sharing Group One.

 

“Principal Shortfall” means, for Series 2014-4 and any Payment Date, an amount equal to (a) for any Payment Date in the Revolving Period, zero, and (b) for any Payment Date in the Controlled Accumulation Period or Early Amortization Period, the excess, if any, of the Monthly Principal Amount for that Payment Date, over the amount of Available Investor Principal Collections for that Payment Date (excluding any Available Investor Principal Collections attributable to Shared Principal Collections).

 

“QIB” means a “Qualified Institutional Buyer” as specified in paragraph (a) of Rule 144A.

 

“Rating Agency” means each of DBRS and Standard & Poor’s.

 

“Rating Agency Condition” means:

 

(a)                                 for Standard & Poor’s and any proposed action, that Standard & Poor’s has notified the Depositors, the Servicer or the Indenture Trustee that the proposed action will not result in a downgrade or withdrawal of its then-current rating of any Series 2014-4 Notes; and

 

(b)                                 for DBRS and any proposed action, the Issuer has given ten Business Days’ prior notice to DBRS of the proposed action, and DBRS has not notified the Depositors, the Servicer or the Indenture Trustee within that period that the action will result in a downgrade or withdrawal of its then-current rating on any of the Series 2014-4 Notes; provided, that DBRS may, at its option, notify the Depositors, the Servicer and the Indenture Trustee that the action will not result in a reduction or withdrawal of its then-current rating of any of the Series 2014-4 Notes.

 

“Reallocated Principal Collections” means, for any Payment Date, the amount of Investor Principal Collections applied in accordance with Sections 4.2(b)(iv) and 4.4 in an amount not to exceed:

 

(a)                                 for the Class A Notes, the sum of (i) the Available Subordinated Amount plus (ii) the Class B Invested Amount plus (iii) the Class C Invested Amount plus (iv) the Class D Invested Amount, in each case, for that Payment Date;

 

(b)                                 for the Class B Notes, the sum of (i) the Available Subordinated Amount plus (ii) the Class C Invested Amount plus (iii) the Class D Invested Amount, in each case, for that Payment Date;

 

(c)                                  for the Class C Notes, the sum of (i) the Available Subordinated Amount plus (ii) the Class D Invested Amount, in each case, for that Payment Date; and

 

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(d)                                 for the Class D Notes, the Available Subordinated Amount for that Payment Date.

 

“Reassignment Amount” means, for any Payment Date, the sum of (a) the Note Balance of the Series 2014-4 Notes on that Payment Date, plus (b) the Accrued Note Interest for each Class for that Payment Date, plus (c) any other amounts due and payable by the Issuer on that Payment Date in respect of Series 2014-4, in each case, after giving effect to any payments to be made on that Payment Date.

 

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

 

“Required Accumulation Factor Number” means, for any Determination Date, a fraction, rounded upwards to the nearest whole number, the numerator of which is one and the denominator of which is equal to the lowest Monthly Principal Payment Rate, expressed as a decimal, for the twelve Collection Periods prior to the date of the calculation.

 

“Required Pool Percentage” means 100%.

 

“Required Subordinated Amount” means, as of any date, the sum of:

 

(a)                                 the greater of (i) zero and (ii) the product of (A) the Subordinated Percentage, times (B) the excess of the initial Note Balance of the Series 2014-4 Notes over the Series 2014-4 Excess Funding Amount on that date; plus

 

(b)                                 the Incremental Subordinated Amount for that date.

 

“Reuters Screen LIBOR01 Page” means the display page currently designated on the Reuters Capital Markets service (or another page in that service that replaces that page for the purpose of displaying comparable rates or prices).

 

“Revolving Period” means the period beginning on the Closing Date and ending on the earlier of the day prior to the date on which the Controlled Accumulation Period or the Early Amortization Period starts.

 

“Rule 144A” means Rule 144A under the Securities Act.

 

“Rule 144A Information” has the meaning specified in Section 5.2(d).

 

“Series 2014-4” means the Series of Notes, the Principal Terms of which are specified in this Indenture Supplement.

 

“Series 2014-4 Accounts” means the Series 2014-4 Principal Funding Account, the Series 2014-4 Reserve Account and the Series 2014-4 Accumulation Period Reserve Account, which will constitute the “Series Accounts” for Series 2014-4 for purposes of the Indenture.

 

“Series 2014-4 Accumulation Period Reserve Account” means the account designated under Section 4.7(c).

 

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“Series 2014-4 Accumulation Period Reserve Account Available Amount” means, for each Payment Date, the lesser of:

 

(a)                                 the amount in the Series 2014-4 Accumulation Period Reserve Account on that Payment Date (excluding any net investment earnings and before giving effect to any deposits or withdrawals made or to be made on that Payment Date); and

 

(b)                                 the Series 2014-4 Accumulation Period Reserve Account Required Amount.

 

“Series 2014-4 Accumulation Period Reserve Account Deposit Amount” means, for each Payment Date beginning on the Series 2014-4 Accumulation Period Reserve Account Funding Date and until termination of the Series 2014-4 Accumulation Period Reserve Account under Section 4.7(c)(iii), the excess of (a) the Series 2014-4 Accumulation Period Reserve Account Required Amount, over (b) the Series 2014-4 Accumulation Period Reserve Account Available Amount for that Payment Date.

 

“Series 2014-4 Accumulation Period Reserve Account Funding Date” means the Payment Date occurring in the second Collection Period prior to the scheduled commencement of the Controlled Accumulation Period (or an earlier or later date as may be directed by the Servicer; provided that, if the Series 2014-4 Accumulation Period Reserve Account Funding Date occurs on a later date, the Series 2014-4 Accumulation Period Reserve Account is expected to be fully funded by the commencement of the Controlled Accumulation Period).

 

“Series 2014-4 Accumulation Period Reserve Account Required Amount” means an amount equal to 0.25% of the initial Note Balance of the Series 2014-4 Notes.

 

“Series 2014-4 Accumulation Period Reserve Draw Amount” means, for any Payment Date relating to the Controlled Accumulation Period or the first Payment Date in the Early Amortization Period, the lesser of (a) the excess, if any, of (i) an amount equal to one-twelfth of the product of (A) the amount in the Series 2014-4 Principal Funding Account on the prior Payment Date (excluding net investment earnings), times (B) the weighted average (weighted by the aggregate Note Balance of each Class of Series 2014-4 Notes) of the Note Interest Rate for each Class of Series 2014-4 Notes for the related Interest Period, over (ii) the portion of the Available Investor Interest Collections for that Payment Date constituting net investment earnings from the Series 2014-4 Accounts and (b) the Series 2014-4 Accumulation Period Reserve Account Available Amount for that Payment Date.

 

“Series 2014-4 Amortization Event” has the meaning specified in Section 6.1.

 

“Series 2014-4 Collateral” means (a) all Collections on the Receivables allocated to the Series 2014-4 Noteholders, (b) all security entitlements relating to the Series 2014-4 Accounts and the property deposited in or credited to any of the Series 2014-4 Accounts, (c) all present and future claims, demands, causes in action and choses in action in respect of the foregoing and (d) all payments on and proceeds of the foregoing.

 

“Series 2014-4 Excess Funding Amount” means, as of any date, the product of (a) the amount in the Excess Funding Account (excluding any net investment earnings) on that date,

 

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times (b) a fraction (i) the numerator of which is the Adjusted Invested Amount as of that date and (ii) the denominator of which is the sum of the “Adjusted Invested Amounts” of all Series.

 

“Series 2014-4 Final Maturity Date” means the August 2019 Payment Date.

 

“Series 2014-4 Notes” has the meaning specified in Section 2.1(a).

 

“Series 2014-4 Principal Funding Account” means the account designated under Section 4.7(a).

 

“Series 2014-4 Reserve Account” means the account designated under Section 4.7(b).

 

“Series 2014-4 Reserve Account Available Amount” means, for any Payment Date, the lesser of (a) the amount in the Series 2014-4 Reserve Account on that date (excluding any net investment earnings and before giving effect to any deposit or withdrawal on that Payment Date) and (b) the Series 2014-4 Reserve Account Required Amount for that Payment Date.

 

“Series 2014-4 Reserve Account Deposit Amount” means, for any Payment Date, the excess, if any, of (a) the Series 2014-4 Reserve Account Required Amount for that Payment Date, over (b) the Series 2014-4 Reserve Account Available Amount for that Payment Date.

 

“Series 2014-4 Reserve Account Required Amount” means, for any Payment Date, an amount equal to the product of (a) the Series 2014-4 Reserve Account Required Percentage, times (b) the Initial Invested Amount; provided, that the Reserve Account Required Amount for the Closing Date is $11,503,270.

 

“Series 2014-4 Reserve Account Required Percentage” means, (a) for any Payment Date not described in clauses (b) or (c), 1.0%, (b) for any Payment Date during a Subordination Step-up Period for which the Depositors have elected to increase the Series 2014-4 Reserve Account Required Percentage in accordance with Section 4.7(b), 1.0% plus the Step-up Percentage or (c) for any Payment Date in the Early Amortization Period on which the Depositors have not elected to increase the Series 2014-4 Reserve Account Required Percentage under clause (b), 5.0%; provided, that the Depositors may reduce any of these percentages so long as the Rating Agency Condition is satisfied.

 

“Series Cutoff Date” means the close of business on July 31, 2014.

 

“Servicing Fee Rate” means 1% per annum.

 

“Shared Principal Collections” means, for Series 2014-4 and any Payment Date, an amount equal to the excess, if any, of (a) the Available Investor Principal Collections for that Payment Date (without giving effect to clause (a)(iv) of the definition of “Available Investor Principal Collections”), over (b) the amount required to be deposited or distributed, without duplication, under Sections 4.2(c)(i) on that Payment Date.

 

“Similar Law” means any federal, state, local or non-U.S. law or regulation substantially similar to the provisions of Title I of ERISA or Section 4975 of the Code.

 

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“Step-up Percentage” means the excess of the Subordinated Percentage calculated using a Subordination Factor of 16.00% over the Subordinated Percentage calculated using a Subordination Factor of 12.00%.

 

“Subordinated Percentage” means the percentage equivalent of a fraction (a) the numerator of which is the Subordination Factor and (b) the denominator of which is the excess of 100%, over the Subordination Factor.

 

“Subordination Factor” means, for the Series 2014-4 Notes, (a) for any Determination Date not described in clause (b), 12.00% or (b) for any Determination Date during a Subordination Step-up Period, unless the Depositors have elected to increase the Series 2014-4 Reserve Account Required Percentage in accordance with Section 4.7(b), 16.00%.

 

“Subordination Step-up Period” means any period beginning on the Determination Date for which the average of the Monthly Principal Payment Rates for the three prior Collection Periods is less than 25% and ending on the Determination Date for which the average of the Monthly Principal Payment Rates for the three prior Collection Periods is equal to or greater than 25%.

 

“Used Vehicle Overconcentration” means, for any Determination Date, the excess, if any, of (a) the aggregate principal amount of Receivables on credit lines that are designated by the Servicer specifically for purchases of Used Vehicles on the last day of the related Collection Period, over (b) 20% of the Pool Balance on the last day of that Collection Period (or a higher percentage so long as the Rating Agency Condition has been satisfied).

 

“Void Note Transfer” has the meaning specified in Section 5.2(b).

 

Section 1.2.                                 Defined Terms for Other Series.  Capitalized terms in this Indenture Supplement, when used in quotation marks with a reference to one or more Series, have the respective meanings specified for each of those Series in the related Indenture Supplement.

 

ARTICLE II
 CREATION OF SERIES 2014-4 NOTES

 

Section 2.1.                                 Principal Terms of Series 2014-4 Notes.  The Principal Terms for the Series 2014-4 Notes are as follows:

 

(a)                                 Creation and Designation.  This Indenture Supplement creates a Series of Notes to be issued by the Issuer on the Closing Date under the Indenture and this Indenture Supplement to be known as the “Series 2014-4 Asset Backed Notes” or the “Series 2014-4 Notes.”

 

(b)                                 Note Interest Rate and Initial Note Balance.  The Indenture Trustee will, on Issuer Order, authenticate and deliver the Series 2014-4 Notes for original issue in the following Classes, each having the Note Interest Rates and initial Note Balances specified below.

 

	
Class
    	
 
    	
Note Interest Rate
    	
 
    	
Initial Note Balance
    	
 
    
	
Class A-1 Notes
    	
 
    	
1.40%
    	
 
    	
$
    	
550,000,000
    	
 
    
	
Class A-2 Notes
    	
 
    	
One-month LIBOR + 0.35%
    	
 
    	
$
    	
450,000,000
    	
 
    
	
Class B Notes
    	
 
    	
1.65%
    	
 
    	
$
    	
45,752,000
    	
 
    
	
Class C Notes
    	
 
    	
1.90%
    	
 
    	
$
    	
65,359,000
    	
 
    
	
Class D Notes
    	
 
    	
2.35%
    	
 
    	
$
    	
39,216,000
    	
 
    

 

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(c)                                  Sharing Groups.  Series 2014-4 will be in Excess Interest Sharing Group One and in Principal Sharing Group One.

 

(d)                                 Form of Notes.  Each Class of Series 2014-4 Notes, together with the Indenture Trustee’s certificate of authentication, will be in substantially the form of Exhibit A with variations as are required or permitted by this Indenture Supplement and the Indenture.  The Series 2014-4 Notes may have marks of identification and legends or endorsements placed on them as may be determined, consistent with this Indenture Supplement and the Indenture, by the Responsible Persons executing the Series 2014-4 Notes, as evidenced by their execution of the Series 2014-4 Notes.

 

(e)                                  Book-Entry Series 2014-4 Notes.  The Series 2014-4 Notes initially will be issued as Book-Entry Notes.  On or before the Series Issuance Date, Global Notes representing each Class of Series 2014-4 Notes will be deposited with the Clearing Agency.

 

(f)                                   Series Issuance Date.  The Series Issuance Date for the Series 2014-4 Notes will be the Closing Date.

 

(g)                                  Final Maturity Date.  The Series 2014-4 Notes will be payable on the Series 2014-4 Final Maturity Date.

 

(h)                                 Denominations.  The Series 2014-4 Notes will be issued in fully registered form in minimum amounts of $1,000 and in integral multiples of $1,000 in excess of that minimum amount (except that one Note of each Class may be issued in a different amount so long as the amount exceeds $1,000).

 

(i)                                     Indenture.  The Series 2014-4 Notes are “Notes” and this Indenture Supplement is an “Indenture Supplement” for all purposes of the Indenture.  If any provision of the Series 2014-4 Notes or this Indenture Supplement conflicts with or is inconsistent with the Indenture, the provisions of the Series 2014-4 Notes or this Indenture Supplement, as the case may be, control.

 

(j)                                    Events of Default.  There will be no additional Events of Default for the Series 2014-4 Notes.

 

Section 2.2.                                 Additional Issuance; Reopening.

 

The Issuer may from time to time, without notice to, or the consent of, Noteholders of any Series, create and issue additional Series 2014-4 Notes of the same Class as any Class issued on the Closing Date.  Any additional Series 2014-4 Notes will form part of and have the same Principal Terms as the previously issued Class, except for (i) the initial principal amount of the previously issued Class, the Initial Invested Amount and the initial Note Balance of the previously issued Class on the Closing Date, (ii) the accrual and payment of interest prior to the issuance date of the additional Series 2014-4 Notes and (iii) the first payment of interest following the issuance of the additional Series 2014-4 Notes.  When issued, the additional Series 

 

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2014-4 Notes will be equally and ratably entitled to the benefits of the Indenture and this Indenture Supplement applicable to those Series 2014-4 Notes of the same Class issued on the Closing Date without preference, priority or distinction.  The obligation of the Indenture Trustee to authenticate and deliver additional Series 2014-4 Notes after the Closing Date and to execute and deliver any amendments to this Indenture Supplement to facilitate the additional issuance will be subject to the satisfaction of the following conditions:

 

(a)                                 on or before the second Business Day prior to the issuance of the additional Series 2014-4 Notes, the Issuer has given the Indenture Trustee and each Rating Agency notice of the additional issuance and the date of the additional issuance;

 

(b)                                 the Issuer has delivered to the Indenture Trustee any amendments to this Indenture Supplement required to facilitate the additional issuance, in form reasonably satisfactory to the Indenture Trustee executed by the Issuer;

 

(c)                                  the Rating Agency Condition has been satisfied for the additional issuance;

 

(d)                                 each Depositor has delivered to the Indenture Trustee an Officer’s Certificate, dated the date of the additional issuance, stating that:

 

(i)                           the additional issuance will not have an Adverse Effect or cause an Amortization Event to occur for any Series; and

 

(ii)                        all conditions precedent under this Section 2.2 to the issuance of the additional Series 2014-4 Notes have been complied with;

 

(e)                                  on or before the additional issuance date for any Class (treating the Class A-1 Notes and the Class A-2 Notes as a single Class), the Issuer will have issued Notes of each Class that is junior to that Class so that the proportion of the Note Principal Balance of each junior Class to the Note Principal Balance of any more senior Class is equal to or greater than the proportion that existed on the Closing Date;

 

(f)                                   the Depositors have deposited in the Series 2014-4 Reserve Account from the proceeds of the issuance the amount as is necessary to cause the amount on deposit to equal the Series 2014-4 Reserve Account Required Amount after giving effect to the issuance; and

 

(g)                                  the Net Adjusted Pool Balance equals or exceeds the Required Pool Balance after giving effect to the additional issuance (taking into account any deposit of the proceeds of the additional Series 2014-4 Notes in the Excess Funding Account).

 

Section 2.3.                                 Payments.

 

(a)                                 Each Class of Notes will accrue interest at the applicable Note Interest Rate.  Interest on each Note will be due and payable on each Payment Date as specified in the Note.  Interest on the Notes (other than the Class A-2 Notes) will be computed on the basis of a 360-day year consisting of twelve 30-day months.  Interest on the Class A-2 Notes will be computed on the basis of actual number of days elapsed and a 360-day year.

 

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(b)                                 Interest and principal payments on each Class of Notes will be made ratably to the Noteholders of that Class entitled to those payments.  On each Payment Date, distributions of interest on and principal of the Book-Entry Notes will be paid to the registered Noteholder by wire transfer in immediately available funds to the account designated by the nominee of the Clearing Agency (initially, the nominee will be Cede & Co.).  Distributions of interest on and principal of the Definitive Notes will be paid to the registered Noteholder (i) if the Noteholder has provided to the Note Registrar appropriate instructions at least five Business Days before that Payment Date and the aggregate original principal amount of the Noteholder’s Notes is at least $1,000,000, by wire transfer in immediately available funds to the account of the Noteholder or (ii) by check mailed first class mail, postage prepaid, to the registered Noteholder’s address as it appears on the Note Register on the related Record Date.  However, the final installment of principal (whether payable by wire transfer or check) of each Note on a Payment Date or the Series 2014-4 Final Maturity Date will be payable only on presentation and surrender of the Note.  The Indenture Trustee will notify each registered Noteholder of the date on which the Issuer expects that the final installment of principal of and interest on the registered Noteholder’s Notes will be paid not later than five days before that date.  The notice will be prepared by the Issuer and will specify the place where the Notes may be presented and surrendered for payment of the final installment.  All funds paid by wire transfers or checks that are returned undelivered will be held under Section 3.3 of the Indenture.

 

(c)                                  The principal of each Note will be payable in installments on each Payment Date as specified in the Note.  The entire unpaid Note Balance of each Class of Notes will be due and payable on the Series 2014-4 Final Maturity Date.  Notwithstanding the foregoing, the entire unpaid principal amount of the Notes will be due and payable on the date on which the Notes are declared to be immediately due and payable in the manner provided in Section 5.2(a) of the Indenture.

 

ARTICLE III
 REPORTS AND SERVICING

 

Section 3.1.                                 Reports and Statements to Noteholders of Series 2014-4 Notes.

 

(a)                                 On or before each Determination Date, the Servicer will deliver to the Issuer, the Indenture Trustee and each Rating Agency a report substantially in the form of Exhibit B or another form as the Servicer may determine; provided that the report contains substantially the same information as set forth in Exhibit B (a “Monthly Investor Report”).  A Responsible Person of the Servicer will certify the accuracy of the information in the Monthly Investor Report under Section 3.6 of the Sale and Servicing Agreements.

 

(b)                                 On each Payment Date, the Indenture Trustee will deliver to each Noteholder of Series 2014-4 Notes a Monthly Investor Report; provided, that, in lieu of the Indenture Trustee’s delivering the statement, the Indenture Trustee may make the statement available to the Noteholders of the Series 2014-4 through the Indenture Trustee’s internet website, which initially is located at http://GCTInvestorreporting.bnymellon.com.

 

(c)                                  A copy of each Monthly Investor Report may be obtained by any Noteholder of Series 2014-4 Notes by a request to the Servicer.

 

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(d)                                 If required by law, on or before January 31 of each calendar year, beginning with the calendar year following the Closing Date, the Indenture Trustee will furnish or cause to be furnished to each Person who at any time during the prior calendar year was a Noteholder of the Series 2014-4 Notes, a statement prepared by the Servicer containing the information that is required to be contained in the statements to the Noteholders of the Series 2014-4 Notes, as described in Section 3.1(a), aggregated for the prior calendar year, together with other information required to be provided by an issuer of indebtedness under the Code; provided, however, that in lieu of the Indenture Trustee’s delivering the statement, the Indenture Trustee may make the statement available to the Noteholders of the Series 2014-4 Notes through the Indenture Trustee’s internet website, which initially is located at http://GCTInvestorreporting.bnymellon.com.  This obligation of the Servicer will be deemed to have been satisfied to the extent that substantially comparable information is provided by the Indenture Trustee under any requirements of the Code as from time to time in effect.

 

Section 3.2.                                 Servicing Compensation.  The share of the Servicing Fee allocable to Series 2014-4 for any Payment Date is equal to the Monthly Servicing Fee.  The portion of the Servicing Fee that is not allocable to Series 2014-4 will be paid by the holders of the Depositor Interest or the Noteholders of other Series (under the related Indenture Supplement) and in no event will the Issuer, the Indenture Trustee or the Noteholders of the Series 2014-4 Notes be liable for the share of the Servicing Fee to be paid by the holders of the Depositor Interest or the Noteholders of any other Series.

 

ARTICLE IV
 RIGHTS OF NOTEHOLDERS OF SERIES 2014-4 NOTES
 AND ALLOCATION AND APPLICATION OF COLLECTIONS

 

Section 4.1.                                 Collections and Allocations.

 

(a)                                 Allocations.  Under Section 8.4(a) of the Indenture, Interest Collections, Principal Collections and Defaulted Receivables will be allocated between Series 2014-4 and the Depositor Interest and then applied to Series 2014-4 and the Depositor Interest under this Article IV.

 

(b)                                 Allocations to Depositor Interest.

 

(i)             Available Depositor Collections.  On each Deposit Date, the Servicer will make the following deposits and payments from Available Depositor Collections for that Deposit Date or the related Collection Period, as applicable, in the following order of priority:

 

(A)                               to the Collection Account, but only to the extent needed to pay, to the knowledge of the Servicer on that Deposit Date, the following amounts on the related Payment Date: (I) to cover shortfalls in applications, payments and deposits of Available Investor Interest Collections on the related Payment Date required under Section 4.2(b)(ii), and to cover similar shortfalls for other Series and (II)

 

19

 

during an Early Amortization Period, to cover amounts to be deposited under Section 4.2(e) on that Payment Date;

 

(B)                               to the Excess Funding Account, to the extent that the Required Depositor Amount for the prior Calculation Date (and, if that Calculation Date is a Determination Date, after giving effect to the allocations, payments, withdrawals and deposits to be made on the Payment Date following that Determination Date) exceeds the Depositor Amount; and

 

(C)                               (1) if the Depositors are the sole holders of the Depositor Interest, to the Depositors in accordance with their respective percentage interests in the Depositor Interest or (2), otherwise, to the Depositor Interest Account for distribution to the holders of the Depositor Interest in accordance with the Trust Agreement, any remaining amount.

 

(ii)          Excess Depositor Interest Collections.  On each Deposit Date, the Servicer will make the following deposits and payments from Excess Depositor Interest Collections for that Deposit Date or the related Collection Period, as applicable, in the following order of priority:

 

(A)                               to the Collection Account, until the amount deposited under this clause (A) is equal to the Monthly Depositor Servicing Fee for all Series for that Collection Period; and

 

(B)                               (1) if the Depositors are the sole holders of the Depositor Interest, to the Depositors in accordance with their respective percentage interests in the Depositor Interest or (2), otherwise, to the Depositor Interest Account for distribution to the holders of the Depositor Interest in accordance with the Trust Agreement, any remaining amount.

 

(iii)       Excess Depositor Principal Collections.  On each Deposit Date, the Servicer will make the following deposits and payments from Excess Depositor Principal Collections for that Deposit Date or the related Collection Period, as applicable, in the following order of priority:

 

(A)                               to the Excess Funding Account, to the extent that the Required Depositor Amount for the prior Calculation Date (and, if that Calculation Date is a Determination Date, after giving effect to the allocations, payments, withdrawals and deposits to be made on the Payment Date following that Determination Date) exceeds the Depositor Amount;

 

(B)                               to the Collection Account, until the amount deposited under this clause (B) is equal to the excess, if any, of the Monthly Depositor Servicing Fee for all Series for that Collection Period over the amount deposited in the Collection Account under Section 4.1(b)(ii)(A); and

 

20

 

(C)                               (1) if the Depositors are the sole holders of the Depositor Interest, to the Depositors in accordance with their respective percentage interests in the Depositor Interest or (2), otherwise, to the Depositor Interest Account for distribution to the holders of the Depositor Interest in accordance with the Trust Agreement, any remaining amount.

 

(iv)      Available Depositor Collections True-up.  On each Determination Date, the Servicer will deposit in the Collection Account the lesser of (A) the portion, if any, of the amount described in Section 4.1(b)(i)(A)(I) for the related Collection Period that has not previously been deposited in the Collection Account under Section 4.1(b)(i)(A)(I) and (B) the aggregate amount paid to the Depositors or to the Depositor Interest Account for distribution to the holders of the Depositor Interest for the related Collection Period under Section 4.1(b)(i)(C).  Any amount deposited under this Section 4.1(b)(iv) will be repaid to the Servicer by the holders of the Depositor Interest or, if not so repaid, may be withheld by the Servicer from subsequent distributions to the holders of the Depositor Interest.

 

(c)                                  Allocations to Series 2014-4.  The Servicer will allocate to the Noteholders of Series 2014-4 Notes and deposit in the Collection Account for application under this Indenture Supplement the following amounts:

 

(i)             on each Deposit Date, an amount equal to the Investor Interest Collections for that Deposit Date or the related Collection Period, as applicable, until the amount in the Collection Account allocated to Series 2014-4 equals the excess of (I) the amounts to be paid or distributed, to the knowledge of the Servicer on that Deposit Date, on the related Payment Date under Section 4.2(a)(i) through (xvi), over (II) the Monthly Depositor Servicing Fee for the related Collection Period;

 

(ii)          on each Deposit Date, an amount equal to the Investor Principal Collections for that Deposit Date or the related Collection Period, as applicable, until the amount in the Collection Account allocated to Series 2014-4 equals the amounts to be paid or distributed, to the knowledge of the Servicer on that Deposit Date, on the related Payment Date under Section 4.2(b)(iv), (c) or (d), as applicable;

 

(iii)       on each Determination Date, an amount equal to the lesser of (A) the portion, if any, of the excess of (I) the amounts to be paid or distributed on the related Payment Date under Section 4.2(a)(i) through (xvi), over (II) the Monthly Depositor Servicing Fee for the related Collection Period that has not previously been deposited in the Collection Account under Section 4.1(c)(i) and (B) the amount of Investor Interest Collections for the related Collection Period that has not previously been deposited in the Collection Account under Section 4.1(c)(i); and

 

(iv)      on each Determination Date, an amount equal to the lesser of (A) the portion, if any, of the amounts to be paid or distributed on the related Payment Date under Section 4.2(b)(iv), (c) or (d), as applicable, that has not previously been deposited in the Collection Account under Section 4.1(c)(ii) and (B) the amount of Investor 

 

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Principal Collections for the related Collection Period that has not previously been deposited in the Collection Account under Section 4.1(c)(ii).

 

Section 4.2.                                 Application of Available Funds in Collection Account and Other Sources.

 

(a)                                 As long as the Indenture Trustee has received the Monthly Investor Report by the related Determination Date, the Indenture Trustee (based on the information in the Monthly Investor Report) will, on each Payment Date and to the extent of Available Investor Interest Collections in the Collection Account, make the following applications, payments or deposits in the following order of priority:

 

(i)                  to the Noteholders of each Class of Class A Notes, the Accrued Note Interest for each Class of Class A Notes for that Payment Date or, if Available Investor Interest Collections are insufficient to pay the Accrued Note Interest in full for each Class of Class A Notes, to the Noteholders of each Class of Class A Notes, pro rata, based on the Note Balance of each Class of Class A Notes;

 

(ii)               to the Noteholders of the Class B Notes, the Accrued Note Interest for the Class B Notes for that Payment Date;

 

(iii)            to the Noteholders of the Class C Notes, the Accrued Note Interest for the Class C Notes for that Payment Date;

 

(iv)           to the Noteholders of the Class D Notes, the Accrued Note Interest for the Class D Notes for that Payment Date;

 

(v)              pro rata, to the payment of all amounts, including indemnities, then due to the Owner Trustee and the Indenture Trustee for the Series 2014-4 Notes, and any expenses incurred by the Issuer for the Series 2014-4 Notes in accordance with the Transaction Documents, in each case, to the extent not paid by the Servicer or the Administrator, up to a maximum of $150,000 per year;

 

(vi)           pro rata (A) to the Back-up Servicer, the Monthly Back-up Servicing Fee for that Payment Date, if any, together with any Monthly Back-up Servicing Fees previously due but not paid on prior Payment Dates and (B) if Ford Credit or one of its Affiliates is no longer the Servicer, to the Servicer, the Monthly Servicing Fee for that Payment Date, together with any Monthly Servicing Fees previously due but not paid on prior Payment Dates (unless that amount has been netted against deposits in the Collection Account in accordance with Section 8.4(c) of the Indenture);

 

(vii)        to treat as Available Investor Principal Collections for that Payment Date, the Investor Default Amount for that Payment Date;

 

(viii)     to the Series 2014-4 Reserve Account, the Series 2014-4 Reserve Account Deposit Amount for that Payment Date;

 

(ix)           to treat as Available Investor Principal Collections for that Payment Date, the sum of Investor Charge-Offs that have not been previously reimbursed;

 

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(x)              to treat as Available Investor Principal Collections for that Payment Date, the sum of Reallocated Principal Collections that have not been previously reimbursed;

 

(xi)           beginning on the Series 2014-4 Accumulation Period Reserve Account Funding Date, to the Series 2014-4 Accumulation Period Reserve Account, the Series 2014-4 Accumulation Period Reserve Account Deposit Amount for that Payment Date;

 

(xii)        if Ford Credit or one of its Affiliates is the Servicer, to the Servicer, the Monthly Servicing Fee for that Payment Date, together with any Monthly Servicing Fees previously due but not paid on prior Payment Dates (unless that amount has been netted against deposits in the Collection Account in accordance with Section 8.4(c) of the Indenture);

 

(xiii)     to the Depositor Interest Account for distribution to the holders of the Depositor Interest in accordance with the Trust Agreement to increase the Available Subordinated Amount, the excess of the Required Subordinated Amount over the Available Subordinated Amount (unless that amount has been netted against deposits in the Collection Account in accordance with Section 8.4(c) of the Indenture);

 

(xiv)    pro rata, to the payment of all amounts, including indemnities, then due to the Owner Trustee and the Indenture Trustee for the Series 2014-4 Notes, and any expenses incurred by the Issuer for the Series 2014-4 Notes in accordance with the Transaction Documents, in each case, to the extent not paid by the Servicer or the Administrator or under clause (v) above;

 

(xv)       to the Back-up Servicer, any amounts due under Section 2.3(b) of the Back-up Servicing Agreement and any Transition Costs due under Section 2.3(c) of the Back-up Servicing Agreement in excess of the amount in the Back-up Servicer Reserve Account, in each case, for the Series 2014-4 Notes;

 

(xvi)    to treat as Excess Interest Collections available from Series 2014-4, the Interest Collections Shortfalls for other Series in Excess Interest Sharing Group One; and

 

(xvii)  to the Depositor Interest Account for distribution to the holders of the Depositor Interest in accordance with the Trust Agreement, all remaining Available Investor Interest Collections.

 

(b)                                 If Available Investor Interest Collections for any Payment Date are insufficient to make the applications, payments and deposits required under Section 4.2(a), as long as the Indenture Trustee has received the Monthly Investor Report by the related Determination Date, the Indenture Trustee (based on the information in the Monthly Investor Report) will, on or before that Payment Date, apply available funds from the following sources in the following order of priority:

 

(i)             from Excess Interest Collections available from other Series in Excess Interest Sharing Group One, to cover shortfalls in the applications, payments and deposits under Sections 4.2(a)(i) through (xv) in that order;

 

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(ii)          from Available Depositor Interest Collections and Available Depositor Principal Collections (for Available Depositor Principal Collections, in an amount not exceeding the Available Subordinated Amount (before giving effect to Section 4.3) for that Payment Date), to cover shortfalls in the applications, payments and deposits required under Sections 4.2(a)(i) through (x) in that order; provided that, if the amount of Available Depositor Collections is insufficient to cover those shortfalls for Series 2014-4, as well as any similar shortfalls for other Series, then Available Depositor Collections will be allocated to Series 2014-4 based on the ratio that the Available Subordinated Amount for Series 2014-4 bears to the aggregate “Available Subordinated Amounts” for all Series having those shortfalls; provided, further, that if the amount of Available Depositor Collections exceeds the aggregate amount of those shortfalls for all Series, then the excess Available Depositor Collections will be applied to cover any unpaid Adjustment Payments;

 

(iii)       from the Series 2014-4 Reserve Account Available Amount, to cover shortfalls in the applications, payments and deposits required under Sections 4.2(a)(i) through (vii) in that order; and

 

(iv)      from the Reallocated Principal Collections for that Payment Date, to cover shortfalls in the payments required under Sections 4.2(a)(i) through (iv).

 

(c)                                  As long as the Indenture Trustee has received the Monthly Investor Report by the related Determination Date, the Indenture Trustee (based on information in the Monthly Investor Report) will, on each Payment Date and to the extent of Available Investor Principal Collections on deposit in the Collection Account, make the following applications, payments or deposits in the following order of priority:

 

(i)             on any Payment Date in the Controlled Accumulation Period or Early Amortization Period, to the Series 2014-4 Principal Funding Account, the excess, if any, of the Monthly Principal Amount for that Payment Date over the amount deposited in the Series 2014-4 Principal Funding Account from the Excess Funding Account under Section 4.2(d) on that Payment Date;

 

(ii)          to other Principal Sharing Series in Principal Sharing Group One, the Shared Principal Collections for that Payment Date;

 

(iii)       to the Excess Funding Account, the excess, if any, of the Required Pool Balance over the Net Adjusted Pool Balance under Section 8.3(b)(ii) of the Indenture; and

 

(iv)      to the Depositor Interest Account for distribution to the holders of the Depositor Interest in accordance with the Trust Agreement, all remaining Available Investor Principal Collections.

 

(d)                                 As long as the Indenture Trustee has received the Monthly Investor Report by the related Determination Date, the Indenture Trustee (based on information in the Monthly Investor Report) will, on each Payment Date in the Controlled Accumulation Period or an Early Amortization Period, deposit in the Series 2014-4 Principal Funding Account from the Excess

 

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Funding Account the lesser of (i) the Series 2014-4 Excess Funding Amount and (ii) the Monthly Principal Amount for that Payment Date.

 

(e)                                  If Available Investor Principal Collections for any Payment Date in an Early Amortization Period are insufficient to deposit the amount required under Section 4.2(c)(i), as long as the Indenture Trustee has received the Monthly Investor Report by the related Determination Date, the Indenture Trustee (based on the information in the Monthly Investor Report) will, on that Payment Date, deposit in the Series 2014-4 Principal Funding Account Available Depositor Interest Collections and Available Depositor Principal Collections (for Available Depositor Principal Collections, in an amount not to exceed the Available Subordinated Amount) on that Payment Date in an amount equal to the excess of the Adjusted Invested Amount over the sum of the amounts deposited in the Series 2014-4 Principal Funding Account from Available Investor Principal Collections under Section 4.2(c)(i) and from the Excess Funding Account under Section 4.2(d).

 

(f)                                   So long as an Early Amortization Period has not begun, on the Expected Final Payment Date, or on each Payment Date in an Early Amortization Period, as long as the Indenture Trustee has received the Monthly Investor Report by the related Determination Date, the Indenture Trustee (based on the information in the Monthly Investor Report) will withdraw an amount up to the aggregate Note Balance of Series 2014-4 from the Series 2014-4 Principal Funding Account for payment in the following order of priority: (i) to the Noteholders of Class A Notes, pro rata based on the principal amount of each class of Class A Notes, until the Note Balance of the Class A Notes is reduced to zero, (ii) to the Noteholders of Class B Notes until the Note Balance of the Class B Notes is reduced to zero, (iii) to the Noteholders of the Class C Notes until the Note Balance of the Class C Notes is reduced to zero and (iv) to the Noteholders of the Class D Notes until the Note Balance of the Class D Notes is reduced to zero.

 

(g)                                  The Controlled Accumulation Period is scheduled to begin on the first day of the February 2017 Collection Period.  However, if the Accumulation Period Length is less than six Collection Periods, the date on which the Controlled Accumulation Period actually begins will be delayed to the first day of the Collection Period that is the number of Collection Periods before the Expected Final Payment Date at least equal to the Accumulation Period Length.  On or before each Determination Date beginning with the Determination Date in the January 2017 Collection Period and ending when the Controlled Accumulation Period begins, the Servicer will determine the “Accumulation Period Length.”

 

Section 4.3.                                 Investor Charge-Offs.  On each Determination Date, the Servicer will calculate the Investor Default Amount, if any, for the related Payment Date.  If the Investor Default Amount for any Payment Date exceeds the sum of the amounts applied to fund the Investor Default Amount under Section 4.2(a)(vii) (including any amounts applied under Section 4.2(b)), then the excess will be applied in the following order of priority to reduce (a) the Available Subordinated Amount for the related Determination Date (after giving effect to any reductions of the Available Subordinated Amount under Section 4.2(b)(ii)), (b) the Class D Invested Amount, (c) the Class C Invested Amount, (d) the Class B Invested Amount and (e) the remaining Invested Amount.

 

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Section 4.4.                                 Reallocated Principal Collections.  On each Payment Date, the Reallocated Principal Collections for that Payment Date will be applied in the following order of priority to reduce (a) the Available Subordinated Amount for the related Determination Date (after giving effect to any reductions of the Available Subordinated Amount under Section 4.2(b)(ii) and Section 4.3), (b) the Class D Invested Amount, (c) the Class C Invested Amount and (d) the Class B Invested Amount.

 

Section 4.5.                                 Excess Interest Collections.  On each Payment Date, Series 2014-4 will be allocated an amount equal to the product of (a) the aggregate amount of Excess Interest Collections for all Excess Interest Sharing Series in Excess Interest Sharing Group One for that Payment Date, times (b) a fraction, the numerator of which is the Interest Collections Shortfall for Series 2014-4 for that Payment Date and the denominator of which is the aggregate amount of Interest Collections Shortfalls for all Excess Interest Sharing Series in Excess Interest Sharing Group One for that Payment Date.

 

Section 4.6.                                 Shared Principal Collections.  On each Payment Date, Series 2014-4 will be allocated an amount equal to the product of (a) the aggregate amount of Shared Principal Collections for all Principal Sharing Series in Principal Sharing Group One for that Payment Date, times (b) a fraction, the numerator of which is the Principal Shortfall for Series 2014-4 for that Payment Date and the denominator of which is the aggregate amount of Principal Shortfalls for all Principal Sharing Series in Principal Sharing Group One for that Payment Date.

 

Section 4.7.                                 Series 2014-4 Accounts.

 

(a)                                 The Servicer will, before the Closing Date, establish and maintain a Qualified Account in the name “The Bank of New York Mellon, as Indenture Trustee, as secured party for Ford Credit Floorplan Master Owner Trust A in respect of Series 2014-4” that is designated as the “Series 2014-4 Principal Funding Account”, which account will be beneficially owned by the Issuer.  The Series 2014-4 Principal Funding Account will initially be account number 560572.

 

(b)                                 The Servicer will, before the Closing Date, establish and maintain a Qualified Account in the name “The Bank of New York Mellon, as Indenture Trustee, as secured party for Ford Credit Floorplan Master Owner Trust A in respect of Series 2014-4” that is designated as the “Series 2014-4 Reserve Account”, which account will be beneficially owned by the Issuer.  The Series 2014-4 Reserve Account will initially be account number 560571.

 

(i)             The Series 2014-4 Reserve Account will be funded by the Depositors on the Closing Date in the amount equal to the Series 2014-4 Reserve Account Required Amount for that date and will be increased and decreased as described in this Indenture Supplement.

 

(ii)          On or prior to the first day of any Subordination Step-up Period, the Depositors may elect to increase the Series 2014-4 Reserve Account Required Percentage for that Subordination Step-up Period in lieu of increasing the Subordination Factor as contemplated by the definition thereof, by (i) notifying the Servicer and the Indenture Trustee of their election and (ii) depositing the amount of the related increase of the Series 2014-4 Reserve Account Required Amount in the Series 2014-4 Reserve Account;

 

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provided, that, if the Depositors fail to deposit the amount of the increase in the Series 2014-4 Reserve Account on or prior to the Payment Date of that Subordination Step-up Period, the Subordination Factor will automatically increase in accordance with the definition of Subordination Factor.

 

(iii)       On the earlier to occur of (A) the payment in full of the Series 2014-4 Notes and (B) the Series 2014-4 Final Maturity Date, any funds remaining in the Series 2014-4 Reserve Account will be treated as Available Investor Principal Collections. The Series 2014-4 Reserve Account will, following that occurrence, be deemed to have terminated for the purposes of this Indenture Supplement.

 

(c)                                  The Servicer will, before the Closing Date, establish and maintain a Qualified Account in the name “The Bank of New York Mellon, as Indenture Trustee, as secured party for Ford Credit Floorplan Master Owner Trust A in respect of Series 2014-4” that is designated as the “Series 2014-4 Accumulation Period Reserve Account”, which account will be beneficially owned by the Issuer.  The Series 2014-4 Accumulation Period Reserve Account will initially be account number 560573.

 

(i)             The Series 2014-4 Accumulation Period Reserve Account will be funded by the Issuer, beginning on the Series 2014-4 Accumulation Period Reserve Account Funding Date, in the amount equal to the Series 2014-4 Accumulation Reserve Account Required Amount for that date and will be increased and decreased as described in this Indenture Supplement.

 

(ii)          On or before each Payment Date in the Controlled Accumulation Period, the Servicer will calculate the Series 2014-4 Accumulation Period Reserve Draw Amount and instruct the Indenture Trustee to withdraw that amount from the Series 2014-4 Accumulation Period Reserve Account on that Payment Date and deposit that amount in the Collection Account for application as Available Investor Interest Collections.

 

(iii)       On the earliest to occur of (A) the payment in full of the Series 2014-4 Notes, (B) the first Payment Date relating to an Early Amortization Period and (C) the Series 2014-4 Final Maturity Date, any funds remaining in the Series 2014-4 Accumulation Period Reserve Account will be treated as Available Investor Interest Collections.  The Series 2014-4 Accumulation Period Reserve Account will, following that occurrence, be deemed to have terminated for purposes of this Indenture Supplement.

 

(d)                                 Each Series 2014-4 Account will be under the sole dominion and control of the Indenture Trustee, except that the Servicer may make deposits in and direct the Note Paying Agent or the Indenture Trustee to make withdrawals from each Series 2014-4 Account in accordance with this Indenture Supplement.

 

(e)                                  The Series 2014-4 Accounts and all amounts, securities, investments, financial assets and other property deposited in or credited to those accounts will be held by the Indenture Trustee as secured party for the Issuer for the benefit of the Secured Parties of Series 2014-4 and, after payment in full of the Series 2014-4 Notes and all other amounts owing or to be distributed to the Secured Parties under this Indenture Supplement and the Sale and Servicing Agreements,

 

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as agent of the Issuer.  All deposits in and withdrawals from those accounts will be made in accordance with the Transaction Documents.

 

(f)                                   If at any time any of the Series 2014-4 Accounts ceases to be a Qualified Account, the Servicer will direct the Indenture Trustee to establish a new account to replace that account within 30 calendar days, which account will be a Qualified Account and from the date of establishment, the new account will be the Series 2014-4 Principal Funding Account, the Series 2014-4 Reserve Account or the Series 2014-4 Accumulation Period Reserve Account, as applicable, for the purposes of this Indenture Supplement.

 

(g)                                  If on any Payment Date, after giving effect to all withdrawals from and deposits in the Series 2014-4 Accounts, the amount in any Series 2014-4 Account exceeds the amount required to be in that Series 2014-4 Account under this Indenture Supplement or any other Transaction Document, then the Indenture Trustee will, at the direction of the Servicer, distribute the excess to the Depositor Interest Account for distribution to the holders of the Depositor Interest in accordance with the Trust Agreement.

 

Section 4.8.                                 Permitted Investments.  Funds in the Series 2014-4 Accounts will, at the direction of the Servicer, be invested by the Indenture Trustee in Permitted Investments selected by the Servicer.  All Permitted Investments will be held by the Indenture Trustee on behalf of the Issuer for the benefit of the Secured Parties of Series 2014-4 Notes.  Funds in the Series 2014-4 Accounts will be invested in Permitted Investments that will mature no later than the following Payment Date.  On each Payment Date, any net investment earnings on funds in those accounts will be deposited in the Collection Account and treated as Available Investor Interest Collections for that Payment Date.  The Indenture Trustee will bear no responsibility or liability for any losses resulting from investment or reinvestment of any funds in accordance with this Section 4.8 nor for the selection of Permitted Investments in accordance with this Indenture Supplement, the Indenture or the Sale and Servicing Agreements.

 

Section 4.9.                                 Investment Instructions.  Any investment instructions required to be given to the Indenture Trustee under Section 4.8 must be given to the Indenture Trustee no later than 10:00 a.m. (New York City time) on the date the investment is to be made.  Any investment instructions may be in the form of standing instructions given to the Indenture Trustee by the Servicer.  If the Indenture Trustee receives the investment instructions later than that time, the Indenture Trustee may, but is not obligated to, make the investment.  If the Indenture Trustee is unable to make an investment required in any investment instructions received by the Indenture Trustee after 10:00 a.m. (New York City time) on that day, the investment will be made by the Indenture Trustee on the next Business Day.  In no event will the Indenture Trustee be liable for any investment not made under investment instructions received after 10:00 a.m. (New York City time) on the day the investment is requested to be made.

 

Section 4.10.                          Determination and Notification of LIBOR.  On each LIBOR Determination Date, the Indenture Trustee will determine LIBOR and notify the Servicer, the Issuer and the Administrator by email of LIBOR for the following Interest Period.

 

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ARTICLE V
 THE NOTES

 

Section 5.1.           Retention By Depositors.  Any Note retained or acquired by the Depositors at any time on or after the Closing Date may be issued, transferred or exchanged by the Depositors only on the delivery to the Indenture Trustee of an Opinion of Counsel dated as of the date of the issuance, transfer or exchange, as the case may be, to the effect that the issuance, transfer or exchange will not cause (i) any other security issued by the Issuer to be deemed sold or exchanged for purposes of Section 1001 of the Code or (ii) the Issuer to be treated as an association or publicly traded partnership taxable as a corporation for U.S. federal income tax purposes.

 

Section 5.2.           Securities Act Restrictions.

 

(a)           The Class C and Class D Notes have not been registered under the Securities Act or any State securities law.  None of the Issuer, the Transferors or the Indenture Trustee is obligated to register the Class C or Class D Notes under the Securities Act or any other securities or “blue sky” laws or to take any other action not otherwise required under this Indenture Supplement to permit the transfer of any Class C or Class D Note without registration.  The Issuer, at the direction of the Transferors or the Administrator, may elect to register, or cause the registration of, the Class C and/or Class D Notes under the Securities Act and any applicable State securities law, in which case the Issuer will deliver, or cause to be delivered, to the Indenture Trustee and the Transfer Agent and Registrar opinions of counsel, Officer’s Certificates and other information as determined by the Transferors as necessary to effect the registration.

 

(b)           Until the Class C or Class D Notes have been registered under the Securities Act and any applicable State securities law under Section 5.2(a), no Class C or Class D Note may be sold, transferred, assigned, participated, pledged or otherwise disposed of (a “Note Transfer”) to any Person except in accordance with the provisions of this Section 5.2 or Section 5.3, and any attempted Note Transfer in violation of this Section 5.2 or Section 5.3 will be null and void (each, a “Void Note Transfer”).

 

(c)           Each Class C and Class D Note will bear a legend to the effect of the legend contained in Exhibit A unless determined otherwise by the Administrator (as certified to the Indenture Trustee in an Officer’s Certificate) consistent with applicable law.

 

(d)           The Depositors will make available to the prospective transferor and transferee of a Class C or Class D Note information requested to satisfy the requirements of paragraph (d)(4) of Rule 144A (the “Rule 144A Information”).  The Rule 144A Information will include any or all of the following items requested by the prospective transferee:

 

(i)    the offering memorandum relating to the Class C Notes (if any) or Class D Notes (if any), as applicable, and any amendments or supplements to the offering memorandum;

 

(ii)   the Monthly Investor Report for each Payment Date prior to the request; and

 

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(iii)  other information as is reasonably available to the Indenture Trustee in order to comply with requests for information under Rule 144A.

 

Section 5.3.           Note Owner Representations.

 

(a)           Each Series 2014-4 Note Owner, by its acceptance of a beneficial interest in the Series 2014-4 Notes, is deemed to represent, warrant and covenant to the Issuer, the Depositors and the Indenture Trustee that:

 

(i)    either (A) it is not a Benefit Plan and is not acting on behalf of or investing the assets of a Benefit Plan or (B) its purchase, holding or disposition of a beneficial interest in the Series 2014-4 Notes does not constitute and will not result in a non-exempt prohibited transaction under Title I of ERISA or Section 4975 of the Code due to the applicability of a statutory or administrative exemption from the prohibited transaction rules (or, if the Series 2014-4 Note Owner is subject to any Similar Law, the purchase, holding or disposition does not constitute and will not result in a violation of Similar Law); and

 

(ii)   it will treat the Series 2014-4 Notes for U.S. federal, state and local income and franchise tax purposes as indebtedness secured by the Trust Property.

 

(b)           Each Series 2014-4 Note Owner of a Class C or Class D Note (other than the Depositors or their Affiliates), by its acceptance of a beneficial interest in a Class C or Class D Note, specifically agrees with and represents to the Depositors, the Issuer, the Indenture Trustee and the Transfer Agent and Registrar, that no Note Transfer will be made unless (i) the registration requirements of the Securities Act and any applicable State securities laws have been complied with in respect of that class in accordance with Section 5.02(a), (ii) the Note Transfer is to the Depositors or their Affiliates or (iii) the Note Transfer is exempt from the registration requirements under the Securities Act because the Note Transfer is in compliance with Rule 144A under the Securities Act, to a transferee who the transferor reasonably believes is a QIB that is purchasing for its own account or for the account of a QIB and to whom notice is given that the Note Transfer is being made in reliance on Rule 144A under the Securities Act.

 

(c)           Until the Class C or Class D Notes have been registered under the Securities Act and any applicable State securities law under Section 5.2(a), each Series 2014-4 Note Owner of a Class C or Class D Note (other than the Depositors or their Affiliates), by its acceptance of a beneficial interest in the Class C or Class D Note, is deemed to represent, warrant and covenant to the Issuer, the Depositors and the Indenture Trustee that:

 

(i)    It understands that the Series 2014-4 Notes have not been and will not be registered under the Securities Act or any State or other applicable securities or “blue sky” law.

 

(ii)   It understands that Note Transfers are only permitted if made in compliance with the Securities Act and other applicable laws and only to a person that the holder reasonably believes is a QIB or to a Depositor or its Affiliates.

 

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(iii)  It (A) is a QIB, (B) is aware that the sale to it is being made in reliance on Rule 144A under the Securities Act and if it is acquiring the Series 2014-4 Notes or any interest or participation in the Series 2014-4 Notes for the account of another QIB, the other QIB is aware that the sale is being made in reliance on Rule 144A under the Securities Act and (C) is acquiring the Series 2014-4 Notes or any interest or participation in the Series 2014-4 Notes for its own account or for the account of another QIB.

 

(iv)  It is purchasing the 2014-4 Notes for its own account or for one or more investor accounts for which it is acting as fiduciary or agent, in each case for investment, and not with a view to offer, transfer, assign, participate, pledge or otherwise dispose of the Series 2014-4 Notes in connection with any distribution of the Series 2014-4 Notes that would violate the Securities Act.

 

Section 5.4.           Amendments to Comply with Law Relating to Restricted Securities.  The Class C and Class D Notes and related documentation may be amended or supplemented from time to time in accordance with Section 9.1 of the Indenture to modify the restrictions on, and procedures for, resales and other transfers of the Class C and Class D Notes to reflect any change in applicable law or regulation (or the interpretation thereof).  Each Series 2014-4 Noteholder of a Class C or Class D Note will be deemed, by the acceptance of the Class C and Class D Note, to have agreed to any such amendment or supplement.

 

ARTICLE VI
 SERIES 2014-4 AMORTIZATION EVENTS

 

Section 6.1.           Series 2014-4 Amortization Events.  If any of the following events occurs for the Series 2014-4 Notes:

 

(a)           failure by either Depositor (i) to make any payment or deposit required to be made under the related Sale and Servicing Agreement, the Indenture or this Indenture Supplement on or before the date occurring five Business Days after the date the payment or deposit is required to be made or (ii) to observe or perform in any material respect any other covenants or agreements of the Depositor in the related Sale and Servicing Agreement, the Indenture or this Indenture Supplement that has an Adverse Effect and continues for 60 days after the date on which notice of the failure, requiring the same to be remedied, has been given to the Depositor by the Indenture Trustee and continues to have an Adverse Effect for that 60-day period;

 

(b)           any representation or warranty made by either Depositor in the related Sale and Servicing Agreement, the Indenture or this Indenture Supplement, or any information contained in a computer file or other list required to be delivered by the Depositor under the related Sale and Servicing Agreement, proves to have been incorrect in any material respect when made or when delivered and has an Adverse Effect, which continues to be incorrect in any material respect for 60 days after the date on which notice of the failure, requiring the same to be remedied, has been given to the Depositor by the Indenture Trustee and continues to have an Adverse Effect for that 60-day period; provided, however, that a Series 2014-4 Amortization Event under this clause (b) will be deemed remedied if the Depositor has accepted reassignment

 

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of the related Receivable, or all of those Receivables, if applicable, during that period in accordance with the related Sale and Servicing Agreement;

 

(c)           a Servicer Termination Event that has an Adverse Effect;

 

(d)           the Note Balance of the Series 2014-4 Notes is not paid in full on the Expected Final Payment Date;

 

(e)           the average of the Monthly Principal Payment Rates for the three prior Collection Periods is less than 21%;

 

(f)            on any Determination Date, the Available Subordinated Amount for the next Payment Date will be less than the Required Subordinated Amount after giving effect to any payments to be made on that Payment Date, and continues unremedied for five Business Days after that Payment Date; provided that, for the purpose of determining whether a Series 2014-4 Amortization Event has occurred under this clause (f), any reduction of the Available Subordinated Amount resulting from reallocations of the Available Depositor Principal Collections to pay interest on the Series 2014-4 Notes if LIBOR is equal to or greater than the prime rate upon which interest on the receivables is calculated on the applicable LIBOR Determination Date will be considered a Series 2014-4 Amortization Event only if LIBOR remains equal to or greater than prime rate for the next 30 consecutive days following that LIBOR Determination Date;

 

(g)           the amounts in the Excess Funding Account exceed 30% of the sum of the “Adjusted Invested Amounts” of all Series for three consecutive Collection Periods, after giving effect to any payments to be made on each related Payment Date; or

 

(h)           the occurrence of an Event of Default for Series 2014-4 and an acceleration of the maturity of the Series 2014-4 Notes under Section 5.2 of the Indenture,

 

then, in the case of any event described in clauses (a) through (c) above that is continuing, after any applicable grace period, either the Indenture Trustee or the Noteholders of a majority of the Note Balance of the Series 2014-4 Notes by notice to the Depositors and the Servicer (and to the Indenture Trustee if given by the Noteholders of Series 2014-4 Notes) may declare that an Amortization Event for the Series 2014-4 Notes (a “Series 2014-4 Amortization Event”) has occurred as of the date of the notice, and, in the case of any event described in clauses (d) through (h) above, a Series 2014-4 Amortization Event, will occur without any notice or other action on the part of the Indenture Trustee or the Series 2014-4 Noteholders immediately on the occurrence of the event.

 

ARTICLE VII
 SERIES FINAL MATURITY; FINAL PAYMENTS

 

Section 7.1.           Series Final Maturity.

 

(a)           The amount to be paid for Series 2014-4 in connection with a reassignment of the Sold Receivables under Section 2.3(c) or 6.1(b) of the Sale and Servicing Agreements will be the Reassignment Amount for the first Payment Date following the Collection Period in which the

 

32

 

reassignment obligation arises under the Sale and Servicing Agreements. For the Reassignment Amount deposited in the Collection Account under Section 2.3(c) or 6.1(b) of the Sale and Servicing Agreements or the proceeds from any liquidation of Collateral allocable to Series 2014-4 under Section 5.6(c) of the Indenture, the Indenture Trustee will, (based on the information in the most recent Monthly Investor Report) on the related Payment Date, make payments or distributions of those amounts under Section 4.2.

 

(b)           Notwithstanding anything to the contrary in this Indenture Supplement, the Indenture or the Sale and Servicing Agreements, (i) all amounts distributed to the Note Paying Agent under Section 7.1(a) for payment to the Noteholders of the Series 2014-4 Notes will be deemed paid in full to the Noteholders the Series 2014-4 Notes on the date on which those funds are distributed to the Note Paying Agent under this Section 7.1(b) and will be deemed to be a final payment of the Series 2014-4 Notes and (ii) if the amounts available for final payment to the Noteholders of the Series 2014-4 Notes and to the Noteholders of any other Series on any Payment Date are less than the amount required to be so paid, the available amounts will be allocated to each Series based on the respective amounts required to be paid to each Series on that Payment Date.

 

ARTICLE VIII
 MISCELLANEOUS PROVISIONS

 

Section 8.1.           Ratification of Agreement.  As supplemented by this Indenture Supplement, the Indenture is in all respects ratified and confirmed and the Indenture as so supplemented by this Indenture Supplement is to be read, taken and construed as one and the same instrument.

 

Section 8.2.           GOVERNING LAW.  THIS INDENTURE SUPPLEMENT AND EACH SERIES 2014-4 NOTE ARE TO BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES.

 

Section 8.3.           Counterparts.  This Indenture Supplement may be executed in any number of counterparts (and by different parties on separate counterparts), each of which will be an original, but all of which will constitute one and the same instrument.

 

[Remainder of Page Intentionally Left Blank]

 

33

 

EXECUTED BY:

 

	
 
    	
FORD   CREDIT FLOORPLAN MASTER OWNER
    
	
 
    	
 
    	
TRUST A,
    
	
 
    	
 
    	
as Issuer
    
	
 
    	
 
    
	
 
    	
By:
    	
U.S.   BANK TRUST NATIONAL ASSOCIATION,
    
	
 
    	
 
    	
not   in its individual capacity, but solely as Owner Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
THE   BANK OF NEW YORK MELLON,
    
	
 
    	
 
    	
not   in its individual capacity, but solely as Indenture Trustee, Securities   Intermediary and Bank
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[Signature Page to Series 2014-4 Indenture Supplement]

 

 

Exhibit A

 

Form of Class [A/B/C/D] Note

 

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN ANOTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO THE OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE OF THIS NOTE FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER OF THIS NOTE, CEDE & CO., HAS AN INTEREST IN THIS NOTE.

 

[Class C/D only] THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE OF THE UNITED STATES. THE HOLDER OF THIS NOTE (OR AN INTEREST OR PARTICIPATION IN THIS NOTE), BY PURCHASING THIS NOTE (OR AN INTEREST OR PARTICIPATION IN THIS NOTE), AGREES FOR THE BENEFIT OF THE ISSUER AND THE DEPOSITORS THAT THIS NOTE (OR AN INTEREST OR PARTICIPATION IN THIS NOTE) MAY BE SOLD, TRANSFERRED, ASSIGNED, PARTICIPATED, PLEDGED OR OTHERWISE DISPOSED OF ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS, AND ONLY (I) UNDER AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (II) UNDER RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) TO A PERSON THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, WITHIN THE MEANING OF RULE l44A (A “QIB”), PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB, WHOM THE HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A OR (III) TO OR BY THE DEPOSITORS OR THEIR AFFILIATES, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES AND SECURITIES AND BLUE SKY LAWS OF THE STATES OF THE UNITED STATES.

 

EACH HOLDER OF THIS NOTE (OR AN INTEREST OR PARTICIPATION IN THIS NOTE) THAT IS SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”), OR ANY FEDERAL, STATE, LOCAL OR NON-U.S. LAW OR REGULATION THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF TITLE I OF ERISA OR SECTION 4975 OF THE CODE (A “SIMILAR LAW”), BY ACCEPTING THIS NOTE (OR AN INTEREST OR PARTICIPATION IN THIS NOTE), IS DEEMED TO REPRESENT THAT ITS PURCHASE, HOLDING AND DISPOSITION OF THIS NOTE (OR AN INTEREST OR PARTICIPATION IN THIS NOTE) DOES NOT CONSTITUTE AND WILL NOT RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER TITLE I OF ERISA OR SECTION 4975 OF THE CODE DUE TO THE APPLICABILITY OF A STATUTORY OR ADMINISTRATIVE

 

A-1

 

EXEMPTION FROM THE PROHIBITED TRANSACTION RULES (OR, IF THE HOLDER IS SUBJECT TO ANY SIMILAR LAW, THE PURCHASE, HOLDING OR DISPOSITION DOES NOT CONSTITUTE AND WILL NOT RESULT IN A VIOLATION OF THAT SIMILAR LAW).

 

A-2

 

	
Registered
    	
$                            (1)
    
	
No. [A-[    ]/B/C/D]-
    	
CUSIP No. [                          ]
    
	
 
    	
ISIN No. [                          ]
    

 

FORD CREDIT FLOORPLAN MASTER OWNER TRUST A
 SERIES 2014-4 ASSET BACKED NOTES, CLASS [A-[    ]/B/C/D]

 

Ford Credit Floorplan Master Owner Trust A (the “Trust” or the “Issuer”), a Delaware statutory trust governed by the Second Amended and Restated Trust Agreement, dated as of August 1, 2001, as amended and restated as of December 1, 2010, for value received, promises to pay to CEDE & CO., or registered assigns, subject to the following provisions, the principal sum of                                                                Dollars, or a greater or lesser amount as determined in accordance with the Indenture and the Indenture Supplement (each as defined on the reverse of this Class [A-[    ]/B/C/D] Note), on the August 2019 Payment Date (the “Series 2014-4 Final Maturity Date”), except as otherwise provided below or in the Indenture or the Indenture Supplement.  Beginning on September 15, 2014 and on each subsequent Payment Date until the principal amount of this Class [A-[    ]/B/C/D] Note is paid in full, the Issuer will pay interest on the unpaid principal amount of this Class [A-[    ]/B/C/D] Note at an annual rate equal to [the sum of LIBOR and] [    ]% (the “Class [A-[    ]/B/C/D] Note Interest Rate”), as determined under the Indenture Supplement.  Interest on this Class [A-[    ]/B/C/D] Note will begin accruing from August 26, 2014 (the “Closing Date”) and will be payable in arrears on each Payment Date, computed on the basis of a 360-day year [and the actual number of days elapsed] [consisting of twelve 30-day months].  The principal of this Class [A-[    ]/B/C/D] Note will be paid in the manner specified on the reverse of this Class [A-[    ]/B/C/D] Note.

 

The principal of and interest on this Class [A-[    ]/B/C/D] Note are payable in the currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

 

Reference is made to the further provisions of this Class [A-[    ]/B/C/D] Note set forth on the reverse of this Class [A-[    ]/B/C/D] Note, which will have the same effect as though fully set forth on the face of this Class [A-[    ]/B/C/D] Note.

 

Unless the certificate of authentication on this Class [A-[    ]/B/C/D] Note has been executed by or on behalf of the Indenture Trustee, by manual signature, this Class [A-[    ]/B/C/D] Note will not be entitled to any benefit under the Indenture or the Indenture Supplement referred to on the reverse of this Class [A-[    ]/B/C/D] Note, or be valid for any purpose.

 

(1)           Denominations of $1,000 and integral multiples of $1,000 in excess thereof.

 

A-3

 

The Issuer has caused this Class [A-[    ]/B/C/D] Note to be duly executed.

 

	
 
    	
FORD   CREDIT FLOORPLAN MASTER OWNER
    
	
 
    	
 
    	
TRUST   A, as Issuer
    
	
 
    	
 
    
	
 
    	
By:
    	
U.S.   BANK TRUST NATIONAL ASSOCIATION,
   not in its individual capacity, but solely as Owner Trustee
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
Dated:                   ,         
    	
 
    
				

 

Indenture Trustee’s Certificate of Authentication

 

This is one of the Class [A-[    ]/B/C/D] Notes described in the within-mentioned Indenture.

 

	
 
    	
THE   BANK OF NEW YORK MELLON,
    
	
 
    	
 
    	
not   in its individual capacity, but solely as Indenture Trustee
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Responsible   Person
    

 

A-4

 

FORD CREDIT FLOORPLAN MASTER OWNER TRUST A
 SERIES 2014-4 ASSET BACKED NOTES, CLASS [A-[    ]/B/C/D]

 

Summary of Terms and Conditions

 

This Class [A-[    ]/B/C/D] Note is one of a duly authorized issue of Notes of the Issuer, designated as the Series 2014-4 Asset Backed Notes (the “Notes”), issued under the Second Amended and Restated Indenture, dated as of August 1, 2001, as amended and restated as of December 1, 2010 (as amended and supplemented, the “Indenture”), between the Issuer and The Bank of New York Mellon, as indenture trustee (the “Indenture Trustee”), as supplemented by the Series 2014-4 Indenture Supplement, dated as of August 1, 2014 (the “Indenture Supplement” and, together with the Indenture, the “Series Agreement”), and representing the right to receive certain payments from the Issuer.  The Notes are subject to all of the terms of the Series Agreement.  All terms used in this Class [A-[    ]/B/C/D] Note that are defined in the Series Agreement have the meanings specified in the Series Agreement.  In the event of any conflict or inconsistency between the Series Agreement and this Class [A-[    ]/B/C/D] Note, the Series Agreement controls.

 

The Class [A-[    ]] Notes, in an initial aggregate principal amount of $                      , the Class [A-[    ]/B] Notes, in an initial aggregate principal amount of $                      , the Class [B/C/D] Notes, in an initial aggregate principal amount of $                           and the Class [C/D] Notes, in an initial aggregate principal amount of $                           will also be issued under the Series Agreement.  The rights of the holders of the Class A-1 and Class A-2 Notes rank pari passu for payments of interest and principal.  The rights of the holders of the [Class B/Class C and] Class D Notes to receive payments on the [Class B/Class C and] Class D Notes are subordinate to the rights of the holders of the Class A-1, Class A-2 [Class B and Class C] Notes to receive payments as specified in the Series Agreement.

 

The Noteholder, by its acceptance of this Class [A-[    ]/B/C/D] Note, agrees that it will look solely to the property of the Issuer allocated to the payment of the Notes for payment under this Class [A-[    ]/B/C/D] Note and under the Series Agreement and that neither the Issuer nor the Indenture Trustee is liable to the Noteholders for any amount payable under the Notes or the Series Agreement or, except as provided in the Series Agreement, subject to any liability under the Series Agreement.

 

This Class [A-[    ]/B/C/D] Note does not purport to summarize the Series Agreement and reference is made to the Series Agreement for the interests, rights and limitations of rights, benefits, obligations and duties evidenced by this Class [A-[    ]/B/C/D] Note, and the rights, duties and immunities of the Indenture Trustee.

 

The initial Note Balance of this Class [A-[    ]/B/C/D] Note is $                            .  The Note Balance of this Class [A-[    ]/B/C/D] Note on any date of determination will be an amount equal to (a) the initial Note Balance of this Class [A-[    ]/B/C/D] Note, minus (b) the aggregate amount of principal payments made to the Noteholders of this Class [A-[    ]/B/C/D] Note on or before that date.

 

A-5

 

The Expected Final Payment Date is the August 2017 Payment Date, but principal of the Class [A-[    ]/B/C/D] Notes may be paid earlier or later under certain circumstances described in the Series Agreement.  Payments of principal of the Notes will be payable in accordance with the Series Agreement.

 

Subject to the terms and conditions of the Series Agreement, the Depositors may, from time to time, direct the Owner Trustee, on behalf of the Issuer, to issue one or more new Series of notes.

 

On each Payment Date, the Note Paying Agent will pay to each Class [A-[    ]/B/C/D] Noteholder of record on the related Record Date (except for the final payment in respect of this Class [A-[    ]/B/C/D] Note) the Class [A-[    ]/B/C/D] Noteholder’s pro rata share of the amounts held by the Note Paying Agent that are allocated and available on that Payment Date to pay interest and principal on the Class [A-[    ]/B/C/D] Notes under the Indenture Supplement. Except as provided in the Series Agreement for a final payment, payments to the Noteholders will be made (a) (i) if the Noteholder has provided the Note Registrar appropriate instructions at least five Business Days before that Payment Date and the aggregate original principal amount of the Noteholder’s Class [A-[    ]/B/C/D] Notes is at least $1,000,000, by wire transfer in immediately available funds to the account of the Noteholder or (ii) by check mailed first class, postage prepaid to each Noteholder (at the Noteholder’s address as it appears in the Note Register), except that for any Notes registered in the name of the nominee of the Clearing Agency, the distribution will be made in immediately available funds and (b) without presentation or surrender of any Note or the making of any notation on that Note.  Final payment of this Class [A-[    ]/B/C/D] Note will be made only on presentation and surrender of this Class [A-[    ]/B/C/D] Note at the office or agency specified in the notice of final payment delivered by the Indenture Trustee to the Noteholders in accordance with the Series Agreement.

 

This Class [A-[    ]/B/C/D] Note does not represent an obligation of, or an interest in, Ford Credit Floorplan Corporation or Ford Credit Floorplan LLC (the “Depositors”), Ford Motor Credit Company LLC, Ford Motor Company or any Affiliate of any of them and is not insured or guaranteed by any governmental agency or instrumentality.

 

Each Noteholder, by accepting a Note, covenants and agrees that it will not at any time institute against the Issuer or the Depositors, or join in instituting against the Issuer or the Depositors, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States federal or state bankruptcy or similar law.

 

Except as otherwise provided in the Indenture Supplement, the Class [A-[    ]/B/C/D] Notes are issuable only in minimum denominations of $1,000 and integral multiples of $1,000. The transfer of this Class [A-[    ]/B/C/D] Note will be registered in the Note Register on surrender of this Class [A-[    ]/B/C/D] Note for registration of transfer at any office or agency maintained by the Note Registrar accompanied by a written instrument of transfer, in a form satisfactory to the Indenture Trustee or the Note Registrar, duly executed by the Class [A-[    ]/B/C/D] Noteholder or the Noteholder’s attorney, and duly authorized in writing with the signature guaranteed, and on the surrender one or more new Class [A-[    ]/B/C/D] Notes in any authorized denominations of like aggregate principal amount will be issued to the designated transferee or transferees.

 

A-6

 

As provided in the Series Agreement and subject to certain limitations forth in the Series Agreement, Class [A-[    ]/B/C/D] Notes are exchangeable for new Class [A-[    ]/B/C/D] Notes in any authorized denominations and of like aggregate principal amount, on surrender of the Notes to be exchanged at the office or agency of the Note Registrar.  No service charge may be imposed for any exchange, but the Issuer or Note Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with the exchange.

 

The Issuer, the Depositors, the Indenture Trustee and any agent of the Issuer, the Depositors or the Indenture Trustee will treat the person in whose name this Class [A-[    ]/B/C/D] Note is registered as the owner of this Class [A-[    ]/B/C/D] Note for all purposes, and none of the Issuer, the Depositors, the Indenture Trustee or any agent of the Issuer, the Depositors or the Indenture Trustee will be affected by notice to the contrary.

 

The holder of this Class [A-[    ]/B/C/D] Note, by its acceptance of this Class [A-[    ]/B/C/D] Note, and the owner of a beneficial interest in this Class [A-[    ]/B/C/D] Note, by its acceptance of a beneficial interest in this Class [A-[  ]/B/C/D] Note, covenant and agree that (a) they will not at any time institute against the Issuer or the Depositors, or join in instituting against the Issuer or the Depositors, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other proceedings under any United States federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture, the Indenture Supplement or any of the other related transaction documents and (b) if any Depositor becomes a debtor or debtor in possession in a case under any applicable United States federal or state bankruptcy, insolvency or other similar law now or hereafter in effect or otherwise subject to any insolvency, reorganization, liquidation, rehabilitation or other similar proceedings, any claim that the holders of the Notes of any Series may have at any time against the Issuer’s assets allocated in accordance with the Indenture to any Series unrelated to the Notes, and any claim that the holders of the Notes have at any time against the Depositors that they may seek to enforce against the Issuer’s assets allocated to any unrelated Series, will be subordinate to the payment in full (including post-petition interest) of the claims of the holders of any Notes of the unrelated Series and of the holders of any other notes, bonds, contracts or other obligations relating to the unrelated Series.

 

The holder of this Class [A-[    ]/B/C/D] Note, by acceptance of this Class [A-[    ]/B/C/D] Note, and each holder of a beneficial interest therein, agree to treat the Class [A-[    ]/B/C/D] Notes as indebtedness of the Issuer for applicable United States federal, state and local income and franchise tax purposes.

 

THIS CLASS [A-[    ]/B/C/D] NOTE IS TO 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 ARE TO BE DETERMINED IN ACCORDANCE WITH THOSE LAWS.

 

A-7

 

Assignment

 

Social Security or other identifying number of assignee                                                      

 

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

 

 

(name and address of assignee)

 

the within note and all rights under that note, and irrevocably constitutes and appoints                                                                                                                   , attorney, to transfer that note on the books kept for registration of that note, with full power of substitution in the premises.

 

	
Dated:
    	
 
    	
 
    	
 
    	
(1)
    

 

	
 
    	
Signature   Guaranteed:
    
	
 
    	
 
    
	
 
    	
 
    

 

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

 

A-8

 

Exhibit B

 

Form of Monthly Investor Report

 

B-1

 

Ford Credit Floorplan Master Owner Trust A

Monthly Servicing Report

 

	
Collection   Period
    	
 
    	
    /    /20    -    /    /20    
    
	
Payment   Date
    	
 
    	
/    /20    
    

 

	
Contents
    	
 
    	
Pages
    
	
Trust   Summary
    	
 
    	
1 - 5
    
	
20    -
    	
 
    	
6 - 8
    

 

Trust Summary

 

I. Principal Receivables

 

	
 
    	
 
    	
Trust Total
    	
 
    
	
A. Beginning Adjusted Pool   Balance
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
B. Principal Collections
    	
 
    	
$
    	
 
    	
 
    
	
C. Principal Adjustments
    	
 
    	
$
    	
 
    	
 
    
	
D. Principal Reduction - Redesignated Accounts
    	
 
    	
$
    	
 
    	
 
    
	
E. Defaulted Receivables
    	
 
    	
$
    	
 
    	
 
    
	
F. New Principal Receivables
    	
 
    	
$
    	
 
    	
 
    
	
G. Principal Increase - Additional Accounts
    	
 
    	
$
    	
 
    	
 
    
	
H. Net Deposits / (Withdrawals) to the Excess   Funding Account
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Ending Adjusted Pool Balance   (A-B-C-D-E+F+G+H)
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Monthly Principal Payment Rate 
    	
 
    	
 
    	
%
    

 

II. Interest Collections

 

	
 
    	
 
    	
Trust Total
    	
 
    
	
Gross Interest Collections
    	
 
    	
$
    	
 
    	
 
    
	
Interest Adjustments
    	
 
    	
$
    	
 
    	
 
    
	
Recoveries
    	
 
    	
$
    	
 
    	
 
    
	
Interest Earned on Collection Account
    	
 
    	
$
    	
 
    	
 
    
	
Interest Earned on Excess Funding Account 
    	
 
    	
$
    	
 
    	
 
    
	
Interest Earned on Backup Servicer Reserve Account   
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Interest Collections
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Memo: Monthly Yield 
    	
 
    	
 
    	
%
    

 

III. Principal Collections

 

	
 
    	
 
    	
Trust Total
    	
 
    
	
Principal Collections
    	
 
    	
$
    	
 
    	
 
    
					

 

2

 

IV. Series

 

	
Series
    	
 
    	
Beg of Period
   Adjusted Invested
   Amount
    	
 
    	
Increase/
   (Decrease)
    	
 
    	
End of Period
   Adjusted Invested
   Amount
    	
 
    	
Increase/
   (Decrease)
    	
 
    	
Payment Date
   Adjusted Invested
   Amount
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
20    -    
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    
	
20    -    
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    
	
Depositor Amt.
    	
 
    	
$
    	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total
    	
 
    	
$
    	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

V. Principal and Interest

 

	
Series
    	
 
    	
Floating Investor
   Percentage
    	
 
    	
Investor Principal
   Collections
    	
 
    	
Investor Interest
   Collections
    	
 
    
	
20    -       
    	
 
    	
 
    	
%
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    
	
20    -       
    	
 
    	
 
    	
%
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    
	
Depositor Pct. 
    	
 
    	
 
    	
%
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
%
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Memo
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Excess Depositor Percentage 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
%
    
	
Excess Depositor Collection
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    
	
Depositor Servicing Fee
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    
	
Depositor Backup Servicing fee
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    

 

VI. Redesignated Accounts - Reassigned 

 

	
 
    	
 
    	
Trust Total
    	
 
    
	
Principal Reduction - Receivables relating to   accounts (including Performance Impaired Accounts) that were reassigned by   the Issuer to the Depositors
    	
 
    	
$
    	
 
    	
 
    
					

 

VII. Excess Funding Account/Backup Servicer Reserve Account

 

	
Beginning Period Balance
    	
 
    	
$
    	
 
    	
 
    
	
Net Deposits / (Withdrawals)
    	
 
    	
$
    	
 
    	
 
    
	
Ending Period Balance
    	
 
    	
$
    	
 
    	
 
    
	
Determination Date balance before giving effect to   Payment Date Cashflows
    	
 
    	
$
    	
 
    	
 
    
	
Determination Date balance after giving effect to   Payment Date Cashflows
    	
 
    	
$
    	
 
    	
 
    
	
Backup Servicer Reserve Account
    	
 
    	
$
    	
 
    	
 
    
	
Memo
    	
 
    	
 
    	
 
    
	
Excess Funding Account as a pct. of aggregate   Adjusted Invested Amount 
    	
 
    	
 
    	
%
    
	
Interest earned on Excess Funding Account
    	
 
    	
$
    	
 
    	
 
    

 

3

 

VIII. Non-Conforming Receivables

 

	
 
    	
 
    	
Trust Total
    	
 
    
	
Ineligible Receivables
    	
 
    	
$
    	
 
    	
 
    
	
Dealer Overconcentration
    	
 
    	
$
    	
 
    	
 
    
	
Manufacturer Overconcentration (>6% of pool   balance) (a)
    	
 
    	
$
    	
 
    	
 
    
	
Manufacturer Overconcentration (2% to 6% of pool   balance) (b)
    	
 
    	
$
    	
 
    	
 
    
	
Used Vehicle Overconcentration (c)
    	
 
    	
$
    	
 
    	
 
    
	
Medium and Heavy Truck Overconcentration
    	
 
    	
$
    	
 
    	
 
    
	
Development Dealer Overconcentration
    	
 
    	
$
    	
 
    	
 
    
	
Fleet Overconcentration
    	
 
    	
$
    	
 
    	
 
    
	
Non-Conforming Receivable Amount
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Memo
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Principal Receivables relating to Vehicles on Used   Lines.
    	
 
    	
$
    	
 
    	
 
    
	
Principal Receivables relating to Vehicles on Used   Lines as a pct. of Pool Bal. 
    	
 
    	
 
    	
%
    
	
Principal Receivables relating to AutoNation
    	
 
    	
$
    	
 
    	
 
    
	
Principal Receivables relating to AutoNation as a   pct. of Pool Bal. 
    	
 
    	
 
    	
%
    
	
Principal Receivables relating to Development   Dealers
    	
 
    	
$
    	
 
    	
 
    
	
Principal Receivables relating to Development   Dealers as a pct. of Pool Bal. 
    	
 
    	
 
    	
%
    
	
Principal Receivables relating to Fleet
    	
 
    	
$
    	
 
    	
 
    
	
Principal Receivables relating to Fleet as a pct.   of Pool Bal. 
    	
 
    	
 
    	
%
    
	
Principal Receivables relating to New and Used   Medium Heavy Truck Lines
    	
 
    	
$
    	
 
    	
 
    
	
Principal Receivables relating to New and Used   Medium Heavy Truck Lines as a pct. of Pool Bal. 
    	
 
    	
 
    	
%
    
	
Principal Receivables relating to Program Vehicles   (d)
    	
 
    	
$
    	
 
    	
 
    
	
Principal Receivables relating to Program Vehicles   as pct of Pool Bal 
    	
 
    	
 
    	
%
    

 

(a) Non-Conforming Receivables Amount for Series with a 6% Manufacturer Overconcentration Threshold (Series 20    -    , 20    -    )

(b) Non-Conforming Receivables Amount for Series with a 2% Manufacturer Overconcentration Threshold (Series 20    -    , 20    -    )

(c) Includes receivables related to vehicles on Used Lines and Program Lines

(d) Primarily off-lease vehicles purchased by a dealer at a Ford Credit approved auction.  Program lines are separate from Used Lines

 

4

 

IX. Subordination and Depositor Amount as of Determination Date

 

	
Series
    	
 
    	
Subordinated
   Pct.
    	
 
    	
Subordinated Pct.
   times (Adj. Invested
   Amount minus EFA)
   (A)
    	
 
    	
Incremental
   Subordinated
   Amount
   (B)
    	
 
    	
Required
   Subordinated
   Amount
   (B)
    	
 
    
	
20    -       
    	
 
    	
 
    	
%
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    
	
20    -       
    	
 
    	
 
    	
%
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    

 

	
Series
    	
 
    	
Required
   Subordinated
   Amount
   (C)
    	
 
    	
Required Pool Pct
   minus 100% times
   Initial Invested
   Amount
   (D)
    	
 
    	
Required Depositor
   Amount as of
   Determination Date
   (C+D)
    	
 
    	
 
    	
 
    
	
20    -    
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
 
    
	
20    -    
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Required Depositor Amount
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
 
    
	
Depositor Amount
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Memo: Determination Date Pool   Balance
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    
														

 

X. Redesignation Notice

 

Notice is hereby given, under Section 2.7(b)(i) of the Fifth Amended and Restated Sale and Servicing Agreement dated as of December 1, 2010, that the redesignation of certain Accounts and the reassignment of the Receivables and Related Security arising in connection with those Accounts occurred on the Redesignation Date of     /    /20    , and a Redesignated Account Schedule has been delivered to the Owner Trustee and the Indenture Trustee in accordance with the Sale and Servicing Agreements.

 

	
 
    	
 
    	
 
    	
 
    	
Resesignated Accounts
    	
 
    
	
Depositor
    	
 
    	
Trust
    	
 
    	
Yes
    	
 
    	
No
    	
 
    
	
Ford Credit Floorplan Corporation
    	
 
    	
Ford   Credit Floorplan Master Owner Trust A
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Ford Credit Floorplan LLC
    	
 
    	
Ford   Credit Floorplan Master Owner Trust A
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

5

 

XI. Early Amortization Declarations

 

	
 
    	
 
    	
Yes
    	
 
    	
No
    
	
1.   Breach of covenants or agreements made in the SSA, Indent. or Supp. and   uncured for 60 days
    	
 
    	
 
    	
 
    	
 
    
	
2.   Failure to make any req. pmt. or deposit under SSA, Indent. or Supp. and   uncured for 5 bus. days
    	
 
    	
 
    	
 
    	
 
    
	
3.   Breach of any rep. or warranty made in the SSA, Indent. or Supp. and   uncured for 60 days
    	
 
    	
 
    	
 
    	
 
    
	
4.   Bankruptcy, insolvency or receivership of Ford Credit, FCFMOTA or Ford
    	
 
    	
 
    	
 
    	
 
    
	
5.   FCFMOTA is an investment company within the meaning of the ICA of 1940
    	
 
    	
 
    	
 
    	
 
    
	
6.   Failure of FCF Corp or FCF LLC to convey Receiv. under the SSA and uncured   for 10 days
    	
 
    	
 
    	
 
    	
 
    
	
7.   Available Sub. Amt. is less than the Required Sub. Amt. and uncured for 5   days
    	
 
    	
 
    	
 
    	
 
    
	
8.   Servicer default or an event of default for the outstanding notes has   occurred
    	
 
    	
 
    	
 
    	
 
    
	
9.   Average monthly payment rate for the past three periods is less than 21%
    	
 
    	
 
    	
 
    	
 
    
	
10.   Excess Funding Acct. Bal. exceeds 30% of Outstanding Series Adj. Inv.   Amts. for 3 periods
    	
 
    	
 
    	
 
    	
 
    

 

Memo

Additional statistical information regarding Ford Credit’s U.S. Dealer Floorplan portfolio and the Trust’s portfolio for the most recently available quarter can be found on Ford Credit’s website at http://fordcredit.com/institutionalinvestments/jindex.html.

 

6

 

Series 20    -     Summary

 

I.  20    -     Origination Information

 

	
Date   of Origination:
    	
 
    	
             ,   20    
    
	
Expected   Final Maturity Date
    	
 
    	
            ,   20    
    
	
Final   Maturity Date
    	
 
    	
            ,   20    
    

 

	
 
    	
 
    	
Beginning of Period
   Adjusted Invested
   Amount
    	
 
    	
Increase /
   (Decrease)
    	
 
    	
End of Period
   Adjusted
   Invested Amount
    	
 
    	
Increase /
   (Decrease)
    	
 
    	
Payment Date
   Adjusted
   Invested Amount
    	
 
    
	
Class     
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    
	
Class     
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    
	
Class     
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    
	
Class     
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
II.  Series Allocations
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Current Floating Investor Percentage 
    	
 
    	
 
    	
%
    
	
Investor Principal Collections
    	
 
    	
$
    	
 
    	
 
    
	
Principal Default Amounts
    	
 
    	
$
    	
 
    	
 
    
	
Investor Interest Collections
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
III.  Collections
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Interest
    	
 
    	
 
    	
 
    
	
Investor Interest Collections
    	
 
    	
$
    	
 
    	
 
    
	
Reserve Fund Investment Proceeds
    	
 
    	
$
    	
 
    	
 
    
	
Accumulation Period Reserve Account Release
    	
 
    	
$
    	
 
    	
 
    
	
Accumulation Period Reserve Account Investment   Proceeds
    	
 
    	
$
    	
 
    	
 
    
	
Principal Funding Account Investment Proceeds
    	
 
    	
$
    	
 
    	
 
    
	
Excess Depositor Interest Allocation
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Available Investor Interest   Collections
    	
 
    	
$
    	
 
    	
 
    
	
Shared Interest Collections from Excess Interest   Sharing Group One
    	
 
    	
$
    	
 
    	
 
    
	
Available Subordination Draw 
    	
 
    	
$
    	
 
    	
 
    
	
Reserve Fund Draw
    	
 
    	
$
    	
 
    	
 
    
	
Reallocated Principal Allocations
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Total Interest Collections
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Principal
    	
 
    	
 
    	
 
    
	
Investor Principal Collections 
    	
 
    	
$
    	
 
    	
 
    
	
Investor Default Amount, Investor Charge-Off   and Reallocated Principal Collections
    	
 
    	
$
    	
 
    	
 
    
	
Shared Principal Collections from Principal   Sharing Group One (Withdrawal from EFA)
    	
 
    	
$
    	
 
    	
 
    
	
Reserve Fund Draw
    	
 
    	
$
    	
 
    	
 
    
	
Available Investor Principal   Collections
    	
 
    	
$
    	
 
    	
 
    
																		

 

7

 

IV. Interest Calculations

 

	
 
    	
 
    	
Class      Notes
    	
 
    	
Class      Notes
    	
 
    	
Class      Notes
    	
 
    	
Class      Notes
    	
 
    
	
Original Principal Outstanding
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    
	
LIBOR 
    	
 
    	
 
    	
%
    	
 
    	
%
    	
 
    	
%
    	
 
    	
%
    
	
Spread 
    	
 
    	
 
    	
%
    	
 
    	
%
    	
 
    	
%
    	
 
    	
%
    
	
Note Interest Rate 
    	
 
    	
 
    	
%
    	
 
    	
%
    	
 
    	
%
    	
 
    	
%
    
	
Days in Interest Period
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Monthly Interest
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
V.  Available Investor Interest Collections   Distribution Payments by Priority
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Total Interest Amount
    	
 
    	
$
    	
 
    	
 
    
	
(1) Accrued Note Interest —   Class      Notes 
    	
 
    	
$
    	
 
    	
 
    
	
(2) Accrued Note Interest —   Class      Notes
    	
 
    	
$
    	
 
    	
 
    
	
(3) Accrued Note Interest —   Class      Notes
    	
 
    	
$
    	
 
    	
 
    
	
(4) Accrued Note Interest —   Class      Notes
    	
 
    	
$
    	
 
    	
 
    
	
(5) Unpaid Fees and Disbursements to   Owner/Indenture Trustee up to a max of $150,000.00 per year
    	
 
    	
$
    	
 
    	
 
    
	
(6) Current and past due Back-up Servicing   Fee or Servicing Fee if Ford Credit is no longer Servicer
    	
 
    	
$
    	
 
    	
 
    
	
(7) Investor Default Amount, to be added to   Principal Collections
    	
 
    	
$
    	
 
    	
 
    
	
(8) Replenish Reserve Fund
    	
 
    	
$
    	
 
    	
 
    
	
(9) Investor Chargeoffs not previously   reimbursed, to be added to Principal Collections 
    	
 
    	
$
    	
 
    	
 
    
	
(10) Reallocated Principal Collections not   previously reimbursed, to be added to Principal Collections
    	
 
    	
$
    	
 
    	
 
    
	
(11) Fund Accumulation Period Reserve Account
    	
 
    	
$
    	
 
    	
 
    
	
(12) Servicing Fees due Ford Credit
    	
 
    	
$
    	
 
    	
 
    
	
(13) Required Subordination Shortfall to be sent   to holders of Depositor Interest
    	
 
    	
$
    	
 
    	
 
    
	
(14) Unpaid Fees and Disbursements to   Owner/Indenture Trustee under clause (5) 
    	
 
    	
$
    	
 
    	
 
    
	
(15) Other Amounts due to Back-up Servicer or Successor   Servicer
    	
 
    	
$
    	
 
    	
 
    
	
(16) Shared with other series in Excess Interest   Sharing Group One
    	
 
    	
$
    	
 
    	
 
    
	
(17) Remainder released to holders of Depositor   Interest
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
VI.  Available Investor Principal Collections   Distribution Payments by Priority
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Available Investor Principal Collections
    	
 
    	
$
    	
 
    	
 
    
	
Deposit to Principal Funding Account
    	
 
    	
$
    	
 
    	
 
    
	
Shared with other series in Principal Sharing   Group One
    	
 
    	
$
    	
 
    	
 
    
	
Remainder released to holders of Depositor   Interest
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
VII.  Subordination and Participation
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Subordination Percentage 
    	
 
    	
 
    	
%
    
	
Incremental Subordinated Amount
    	
 
    	
$
    	
 
    	
 
    
	
Required Subordinated Amount
    	
 
    	
$
    	
 
    	
 
    
	
Required Pool Pct. minus 100% times Initial   Invested Amount
    	
 
    	
$
    	
 
    	
 
    
	
Required Depositor Amount   Series 20    -    
    	
 
    	
$
    	
 
    	
 
    

 

8

 

VIII.  Distribution to Holders of Notes

 

	
(per $1,000 denomination note)
    	
 
    	
 
    	
 
    
	
Total Amount Allocable to Principal   Class     
    	
 
    	
$
    	
 
    	
 
    
	
Total Amount Allocable to Interest   Class     
    	
 
    	
$
    	
 
    	
 
    
	
Total Amount Distributed to   Class     
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Total Amount Allocable to Principal   Class     
    	
 
    	
$
    	
 
    	
 
    
	
Total Amount Allocable to Interest   Class     
    	
 
    	
$
    	
 
    	
 
    
	
Total Amount Distributed to   Class     
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Total Amount Allocable to Principal   Class     
    	
 
    	
$
    	
 
    	
 
    
	
Total Amount Allocable to Interest   Class     
    	
 
    	
$
    	
 
    	
 
    
	
Total Amount Distributed to   Class     
    	
 
    	
$
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Total Amount Allocable to Principal   Class     
    	
 
    	
$
    	
 
    	
 
    
	
Total Amount Allocable to Interest   Class     
    	
 
    	
$
    	
 
    	
 
    
	
Total Amount Distributed to   Class     
    	
 
    	
$
    	
 
    	
 
    

 

IX.  Reserve Fund

 

	
Beginning of Collection Period Balance
    	
 
    	
$
    	
 
    	
 
    
	
Reserve Fund Draw
    	
 
    	
$
    	
 
    	
 
    
	
Increases/(Decreases)
    	
 
    	
$
    	
 
    	
 
    
	
End of Collection Period Balance
    	
 
    	
$
    	
 
    	
 
    
	
Increases/(Decreases)
    	
 
    	
$
    	
 
    	
 
    
	
Payment Date Balance
    	
 
    	
$
    	
 
    	
 
    

 

X.  Memo Items

 

	
Excess Funding Amount   Series 20    -    
    	
 
    	
$
    	
 
    	
 
    
	
Accumulation Period Reserve Account Balance
    	
 
    	
$
    	
 
    	
 
    
	
Controlled Accumulation Amount - This Period
    	
 
    	
$
    	
 
    	
 
    
	
Controlled Accumulation Amount - Cumulative
    	
 
    	
$
    	
 
    	
 
    

 

9NEITHER
THE ISSUANCE
AND
SALE
OF
THE SECURITIES
REPRESENTED BY THIS
CERTIFICATE NOR
THE SECURITIES
INTO WHICH
THESE SECURITIES
ARE CONVERTIBLE
HAVE BEEN
REGISTERED UNDER
THE SECURITIES
ACT OF
1933, AS
AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES
MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR
ASSIGNED (I) IN THE ABSENCE
OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS
AMENDED, OR (B) AN
OPINION OF COUNSEL (WHICH COUNSEL
SHALL BE SELECTED
BY THE HOLDER),
IN A GENERALLY
ACCEPTABLE FORM,
THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT
OR (II) UNLESS SOLD PURSUANT
TO RULE
144 OR
RULE 144A
UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING,
THE SECURITIES MAY BE PLEDGED
IN CONNECTION WITH
A BONA
FIDE MARGIN
ACCOUNT OR OTHER
LOAN OR
FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.

 

	Principal Amount:
    $32,500.00	Issue Date: June 5, 2014
	Purchase Price: $32,500.00	 

 

CONVERTIBLE
PROMISSORY NOTE

 

FOR
VALUE RECEIVED,
CO-SIGNER, INC.,
a Nevada
corporation (hereinafter
called the
“Borrower”), hereby
promises to pay
to the order
of KBM
WORLDWIDE, INC.,
a New
York corporation,
or registered
assigns (the “Holder”)
the sum of $32,500.00 together
with any interest as
set forth herein,
on March
9, 2015 (the
“Maturity Date”), and
to pay interest
on the unpaid principal balance
hereof at the rate of eight percent
(8%) (the “Interest Rate”)
per annum from the date
hereof (the “Issue Date”) until the same
becomes due and payable,
whether at maturity or
upon acceleration or by prepayment
or otherwise. This Note
may not be prepaid in whole
or in part except as
otherwise explicitly set forth
herein. Any amount of principal or interest
on this Note which is not paid
when due shall bear interest
at the rate of
twenty two percent (22%) per
annum from the due date thereof until
the same is paid (“Default Interest”).
Interest shall commence accruing
on the date that the Note
is fully paid and shall
be computed on the basis
of a 365-day year and
the actual number of days
elapsed. All
payments due hereunder (to the
extent not converted into common stock,
$0.001 par value per share
(the “Common Stock”)
in accordance with the terms
hereof) shall be made in lawful
money of the United States of
America. All
payments shall be made
at such address as
the Holder shall hereafter give
to the Borrower by written
notice made in accordance with
the provisions
of this Note. Whenever any
amount expressed
to be due by
the terms of this Note
is due on any
day which
is not a business
day, the same shall
instead be due on the next succeeding
day which is a business day and,
in the case of any
interest payment date
which is not the date on which
this Note is paid in full,
the extension of the due date
thereof shall not be taken
into account for
purposes of determining
the amount
of interest
due on
such date. As
used in this
Note, the
term “business
day” shall
mean any day
other than a Saturday,
Sunday or a day
on which commercial
banks in the city of
New York,
New York are authorized or required
by law or executive
order to remain closed. Each
capitalized term
used herein,
and not otherwise
defined, shall
have the
meaning ascribed thereto
in that certain
Securities Purchase Agreement
dated the
date hereof, pursuant to
which this
Note was originally
issued (the “Purchase Agreement”).

 

This
Note is
free from
all taxes, liens,
claims and
encumbrances with
respect to the
issue thereof
and shall
not be subject
to preemptive
rights or other
similar rights
of shareholders
of the Borrower
and will not impose personal
liability upon the holder thereof.

 

The
following terms
shall apply to this Note:

 

ARTICLE
I.
CONVERSION RIGHTS

 

1.1                            Conversion
Right. The
Holder shall have
the right from
time to time,
and at
any time during
the period beginning
on the date
which is one
hundred eighty
(180) days
following the date
of this Note
and ending
on the later
of: (i)
the Maturity
Date and
(ii) the date
of payment of the Default Amount
(as defined in Article
III) pursuant to Section 1.6(a)
or Article III, each in respect
of the remaining outstanding principal
amount of this Note to convert
all or any part of the outstanding
and unpaid principal amount of
this Note into fully
paid and non- assessable
shares of Common Stock, as such
Common Stock exists on the Issue
Date, or any shares of capital
stock or other
securities of the
Borrower into which
such Common Stock shall hereafter
be changed or
reclassified at
the conversion price (the
“Conversion Price”)
determined as provided
herein (a “Conversion”);
provided, however, that
in no event shall the Holder
be entitled to convert any portion of
this Note in excess of that portion
of this Note upon conversion
of which the sum of (1) the number of shares
of Common Stock beneficially
owned by the Holder and
its affiliates
(other than shares
of Common Stock
which may be deemed
beneficially owned through the
ownership of the unconverted portion of the Notes
or the unexercised or unconverted
portion of any other
security of the Borrower subject
to a limitation on conversion or
exercise analogous to the
limitations contained
herein) and (2)
the number
of shares of Common Stock
issuable upon the conversion of the portion
of this Note with respect
to which the determination of this
proviso is being made, would
result in beneficial ownership by the Holder
and its affiliates of more
than 4.99% of the outstanding shares
of Common Stock. For purposes
of the proviso to the immediately preceding sentence, beneficial
ownership shall be determined
in accordance with
Section 13(d)
of the
Securities Exchange Act
of 1934, as amended
(the “Exchange Act”),
and Regulations 13D-G
thereunder, except as otherwise
provided in clause (1) of such
proviso, provided, further,
however, that the limitations
on conversion may be waived by the Holder
upon, at the election of the
Holder, not less than
61 days’ prior notice
to the Borrower,
and the provisions
of the conversion limitation
shall continue to apply until such
61st day (or such later date,
as determined by the Holder,
as may be specified in such
notice of waiver). The
number of shares of Common Stock to be issued
upon each conversion of this
Note shall be determined
by dividing the Conversion Amount
(as defined below)
by the applicable Conversion
Price then in
effect on the date specified
in the notice of conversion, in the
form attached hereto
as Exhibit A (the “Notice
of Conversion”), delivered to
the Borrower by the Holder in
accordance with
Section 1.4 below; provided that
the Notice of Conversion is submitted
by facsimile or
e-mail (or by other means
resulting in, or reasonably expected to
result in,
notice) to the Borrower
before 6:00 p.m., New
York, New York
time on such conversion date
(the “Conversion Date”).
The term “Conversion Amount”
means, with respect to any
conversion of this Note, the
sum of (1) the principal amount of this
Note to be converted
in such
conversion plus (2)
at the
Holder’s option, accrued
and unpaid
interest, if any,
on such
principal amount
at the interest
rates provided in
this Note to
the Conversion
Date, plus (3)
at the Holder’s
option, Default
Interest, if any, on
the amounts referred
to in the immediately
preceding clauses (1)
and/or (2)
plus (4) at
the Holder’s option,
any amounts owed
to the Holder pursuant
to Sections 1.3 and 1.4(g) hereof.

 

    	 

    	 

    

 

1.2                             
Conversion Price.

 

(a)                               
Calculation of
Conversion Price.
The conversion
price (the
“Conversion Price”)
shall equal
the Variable
Conversion Price
(as defined
herein) (subject
to equitable
adjustments for
stock splits,
stock dividends
or rights
offerings by
the  Borrower
relating to
the Borrower’s securities
or the securities of any
subsidiary of the Borrower, combinations,
recapitalization, reclassifications, extraordinary
distributions and similar events).
The "Variable
Conversion Price"
shall mean
58% multiplied
by the Market Price
(as defined herein)
(representing a discount rate
of 42%). “Market
Price” means
the average
of the
lowest three (3)
Trading Prices (as
defined below)
for the
Common Stock
during the ten
(10) Trading Day
period ending on the
latest complete
Trading Day prior to
the Conversion
Date. “Trading Price”
means, for any
security as of
any date, the closing
bid price on the
Over-the-Counter Bulletin Board,
or applicable trading market
(the “OTCBB”) as
reported by
a reliable reporting service
(“Reporting Service”)
designated by the
Holder (i.e. Bloomberg) or,
if the OTCBB
is not the principal trading market
for such security, the closing
bid price of such security on the principal
securities exchange or trading
market where such
security is listed or traded or,
if no closing
bid price of such
security is available in any
of the foregoing
manners, the average
of the closing bid prices
of any market
makers for such security that
are listed in
the “pink
sheets” by the National Quotation
Bureau, Inc. If the Trading
Price cannot be calculated for
such security on such
date in
the manner provided
above, the Trading Price
shall be the
fair market
value as mutually determined
by the Borrower
and the holders of a
majority in interest of the Notes
being converted for which the
calculation of the Trading Price
is required in order to determine
the Conversion Price
of such Notes.
“Trading Day” shall
mean any
day on which
the Common Stock
is tradable for
any period
on the OTCBB,
or on the principal
securities exchange
or other securities
market on which the Common Stock
is then being traded.

 

(b)                              
Conversion Price
During Major Announcements.
Notwithstanding anything contained
in Section 1.2(a)
to the contrary,
in the event
the Borrower
(i) makes
a public announcement
that it intends
to consolidate
or merge
with any
other corporation
(other than
a merger in which the Borrower
is the surviving or continuing
corporation and its capital stock
is unchanged) or sell or transfer
all or substantially all of the
assets of the Borrower
or (ii) any person,
group or entity (including the Borrower)
publicly announces a tender offer
to purchase 50% or more of the Borrower’s
Common Stock (or any
other takeover scheme) (the
date of the announcement
referred to in clause
(i) or
(ii) is
hereinafter referred
to as the
“Announcement Date”), then
the Conversion Price shall, effective
upon the Announcement Date and
continuing through the Adjusted
Conversion Price Termination Date (as
defined below), be equal to the
lower of (x)
the Conversion Price
which would
have been applicable for
a Conversion occurring on the
Announcement Date
and (y) the
Conversion Price that
would otherwise
be in effect.
From and after
the Adjusted Conversion
Price Termination
Date, the Conversion
Price shall be determined
as set forth
in this Section
1.2(a). For purposes
hereof, “Adjusted
Conversion Price
Termination Date” shall mean,
with respect to any proposed transaction or
tender offer (or takeover scheme)
for which a public announcement as contemplated
by this Section 1.2(b)
has been made,
the date
upon which
the Borrower
(in the case
of clause
(i) above)
or the person,
group or entity (in
the case
of clause
(ii) above)
consummates or
publicly announces the
termination or abandonment of
the proposed transaction or tender offer
(or takeover scheme) which
caused this Section 1.2(b) to become
operative.

 

1.3                             
  Authorized
Shares. The
Borrower covenants
that during
the period
the conversion
right exists,
the Borrower
will reserve
from its authorized
and unissued
Common Stock
a sufficient
number of
shares, free
from preemptive
rights, to
provide for
the issuance
of Common Stock upon the
full conversion of this Note
issued pursuant to the Purchase
Agreement. The Borrower
is required at
all times to have
authorized and
reserved five times
the number of shares
that is actually issuable upon full
conversion of the Note (based
on the Conversion Price
of the Notes in effect from time
to time)(the “Reserved Amount”).
The Reserved Amount shall
be increased from time to
time in accordance with the Borrower’s
obligations hereunder. The Borrower
represents that upon issuance,
such shares will be duly
and validly issued,
fully paid and
non-assessable. In addition,
if the
Borrower shall
issue any
securities or
make any change
to its capital structure which
would change the number of shares
of Common Stock into which the
Notes shall
be convertible at
the then current
Conversion Price, the
Borrower shall
at the
same time make
proper provision so
that thereafter
there shall be
a sufficient number
of shares
of Common Stock authorized
and reserved, free from preemptive
rights, for conversion of the outstanding
Notes. The Borrower (i)
acknowledges that it has irrevocably
instructed its transfer agent
to issue certificates
for the Common
Stock issuable
upon conversion of
this Note,
and

(ii)      
agrees that
its issuance
of this Note
shall constitute
full authority
to its officers
and agents
who are
charged with
the duty of
executing stock certificates
to execute
and issue
the necessary certificates
for shares
of Common Stock
in accordance with
the terms
and conditions
of this Note.

 

If,
at any
time the
Borrower does
not maintain
the Reserved
Amount it
will be
considered an
Event of Default under Section
3.2 of the Note.

 

1.4                             
Method of Conversion.

 

(a)                               
Mechanics of
Conversion. Subject
to Section
1.1, this
Note may
be converted
by the Holder
in whole
or in part
at any time
from time
to time after
the Issue
Date, by

(A)     
submitting to
the Borrower
a Notice
of Conversion
(by facsimile,
e-mail or
other reasonable
means of communication
dispatched on the
Conversion Date
prior to
6:00 p.m., New
York, New
York time)
and (B) subject
to Section
1.4(b), surrendering
this Note
at the
principal office
of the Borrower.

 

(b)                              
Surrender of
Note
Upon
Conversion.
Notwithstanding anything
to the contrary
set forth
herein, upon conversion
of this Note
in accordance
with the
terms hereof,
the Holder shall
not be required
to physically surrender this
Note to the Borrower
unless the entire unpaid
principal amount of this Note
is so converted. The Holder and the
Borrower shall maintain
records showing the principal amount
so converted and the
dates of such conversions
or shall use such
other method,
reasonably satisfactory to the Holder
and the Borrower,
so as not to require
physical surrender of this Note
upon each such conversion.
In the event of any dispute
or discrepancy, such
records of the
Borrower shall,
prima facie,
be controlling
and determinative
in the absence of manifest error.
Notwithstanding the foregoing, if any
portion of this Note is converted
as aforesaid,
the Holder may
not transfer this
Note unless
the Holder first
physically surrenders this Note
to the Borrower,
whereupon the Borrower will forthwith
issue and deliver upon the
order of
the Holder
a new
Note of
like tenor, registered
as the Holder
(upon payment by
the Holder of any
applicable transfer taxes) may request,
representing in the aggregate the remaining
unpaid principal amount
of this Note.
The Holder and
any assignee,
by acceptance of this
Note, acknowledge
and agree
that, by
reason of the
provisions of
this paragraph,
following conversion of
a portion of
this Note,
the unpaid and
unconverted principal
amount of this
Note represented by this Note
may be less than
the amount stated on the face
hereof.

 

    	2

    	 

    

 

(c)                               
Payment of
Taxes.
The Borrower
shall not
be required
to pay
any tax
which may
be payable
in respect
of any
transfer involved
in the issue
and delivery of
shares of
Common Stock or other
securities or property on conversion
of this Note in a name
other than that
of the Holder (or
in street name),
and the Borrower
shall not be required
to issue or deliver any
such shares
or other
securities or property
unless and
until the person
or persons
(other than the Holder
or the custodian in whose street
name such shares are to be held
for the Holder’s account)
requesting the
issuance thereof
shall have
paid to the
Borrower the
amount of
any such tax or shall
have established to the satisfaction
of the Borrower that such
tax has been paid.

 

(d)                              
Delivery of Common
Stock Upon
Conversion. Upon receipt
by the
Borrower from
the Holder of
a facsimile
transmission or
e-mail (or
other reasonable
means of
communication) of
a Notice of
Conversion meeting the requirements
for conversion as
provided in this Section 1.4, the Borrower
shall issue and deliver or cause
to be issued and delivered
to or upon the order of the Holder
certificates for the Common Stock issuable
upon such conversion within
three (3) business days after
such receipt (the “Deadline”)
(and, solely in the case of conversion
of the entire
unpaid principal
amount hereof,
surrender of this
Note) in
accordance with the terms hereof
and the Purchase Agreement.

 

(e)                               
Obligation of
Borrower to
Deliver Common
Stock.
Upon receipt
by the
Borrower of
a Notice
of Conversion,
the Holder
shall be
deemed to
be the holder
of record
of the Common
Stock issuable
upon such
conversion, the
outstanding principal
amount and
the amount of accrued and
unpaid interest on this Note
shall be reduced to reflect
such conversion, and, unless
the Borrower defaults on its
obligations under this Article I, all
rights with respect to the portion
of this Note being so converted
shall forthwith terminate except
the right to receive
the Common Stock or other securities,
cash or other assets, as
herein provided, on such conversion.
If the Holder shall
have given a Notice
of Conversion as provided herein,
the Borrower’s obligation
to issue and deliver the certificates
for Common Stock shall be absolute
and unconditional, irrespective
of the absence of any action by the Holder
to enforce the same, any waiver
or consent with
respect to any provision thereof,
the recovery of any judgment
against any person or
any action to enforce the
same, any failure or
delay in the enforcement of
any other obligation
of the Borrower
to the holder
of record,
or any setoff,
counterclaim, recoupment,
limitation or
termination, or
any breach
or alleged
breach by
the Holder of any
obligation to
the Borrower, and
irrespective of any other circumstance
which might otherwise
limit such obligation
of the Borrower to
the Holder in connection
with such conversion.
The Conversion Date specified
in the Notice of Conversion shall
be the Conversion Date so long
as the Notice of Conversion is received
by the Borrower before
6:00 p.m., New York, New York
time, on such date.

 

(f)                               
Delivery of
Common Stock
by Electronic
Transfer. In
lieu of
delivering physical
certificates representing
the Common
Stock issuable
upon conversion,
provided the Borrower is participating
in the Depository Trust Company (“DTC”)
Fast Automated Securities
Transfer (“FAST”) program,
upon request
of the Holder and
its compliance with the provisions
contained in Section 1.1 and in this
Section 1.4, the Borrower shall
use its best
efforts to
cause its transfer
agent to electronically
transmit the Common Stock
issuable upon conversion
to the Holder
by crediting the account
of Holder’s
Prime Broker
with DTC through
its Deposit Withdrawal Agent
Commission (“DWAC”) system.

 

(g)                              
Failure to
Deliver Common
Stock Prior
to Deadline.
Without in any
way limiting the
Holder’s right to pursue
other remedies, including
actual damages and/or equitable
relief, the
parties agree
that if delivery
of the Common
Stock issuable
upon conversion of this Note
is not delivered by the Deadline
(other than a failure due to the
circumstances described
in Section 1.3 above,
which failure shall be governed
by such Section)
the Borrower shall
pay to the Holder $2,000 per day
in cash, for each day
beyond the Deadline that
the Borrower fails
to deliver
such Common
Stock. Such
cash amount
shall be paid
to Holder
by the fifth day of the month following
the month in which it has accrued
or, at the option of the Holder
(by written notice
to the Borrower by the first
day of the month following
the month in which it has
accrued), shall be added
to the principal
amount of this
Note, in
which event
interest shall
accrue thereon
in accordance with
the terms
of this
Note and
such additional
principal amount shall
be convertible into Common Stock
in accordance with the terms
of this Note. The Borrower
agrees that the right to convert
is a valuable right to the Holder.
The damages resulting from a
failure, attempt to frustrate,
interference with such conversion
right are difficult if not impossible
to qualify. Accordingly
the parties acknowledge that
the liquidated damages provision
contained in this Section 1.4(g)
are justified.

 

1.5                             
  Concerning
the Shares.
The shares
of Common Stock
issuable upon conversion
of this Note
may not be
sold or transferred
unless (i)
such shares
are sold pursuant
to an
effective registration
statement under
the Act or (ii)
the Borrower or its
transfer agent
shall have been furnished with
an opinion of counsel (which
opinion shall be in form, substance
and scope customary for
opinions of counsel in comparable
transactions) to the effect that
the shares to be
sold or transferred
may be sold or
transferred pursuant
to an
exemption from such
registration or (iii) such
shares are
sold or transferred
pursuant to Rule 144 under the
Act (or a successor
rule) (“Rule 144”) or
(iv) such shares
are transferred to an “affiliate”
(as defined in Rule 144) of the Borrower
who agrees
to sell
or otherwise transfer the
shares only in accordance
with this Section 1.5 and
who is an Accredited Investor
(as defined in the Purchase Agreement).
Except as otherwise provided
in the Purchase Agreement (and
subject to the removal provisions
set forth
below), until such
time as
the shares
of Common Stock
issuable upon conversion
of this Note have
been registered under the Act
or otherwise may
be sold pursuant to Rule 144 without any
restriction as to the
number of securities as
of a particular date that
can then be immediately
sold, each
certificate for shares
of Common
Stock issuable
upon conversion of
this Note
that has not been
so included in an effective
registration statement or that
has not been sold pursuant
to an effective
registration statement
or an exemption
that permits
removal of the legend,
shall bear a
legend substantially in the following form,
as appropriate:

 

“NEITHER
THE ISSUANCE
AND SALE OF
THE SECURITIES
REPRESENTED BY
THIS CERTIFICATE
NOR THE SECURITIES
INTO WHICH
THESE SECURITIES
ARE EXERCISABLE
HAVE BEEN
REGISTERED UNDER
THE SECURITIES
ACT OF
1933, AS
AMENDED, OR APPLICABLE
STATE SECURITIES
LAWS. THE
SECURITIES MAY
NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I)
IN THE ABSENCE OF (A)
AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER
THE SECURITIES ACT OF
1933, AS AMENDED,
OR (B) AN
OPINION OF COUNSEL
(WHICH COUNSEL SHALL
BE SELECTED BY THE HOLDER),
IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT
OR (II) UNLESS SOLD PURSUANT
TO RULE 144 OR RULE
144A UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE
PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR
OTHER  LOAN 
OR  FINANCING 
ARRANGEMENT  SECURED
 BY  THE
SECURITIES.”

 

The
legend set
forth above
shall be
removed and
the Borrower
shall issue to
the Holder
a new certificate
therefore free
of any
transfer legend
if (i)
the Borrower
or its
transfer agent
shall have received
an opinion of
counsel, in form,
substance and scope
customary for opinions of counsel in comparable
transactions, to the effect that
a public sale or transfer of such
Common Stock may be made without
registration under the
Act, which opinion shall
be accepted by the
Company so that
the sale
or transfer
is effected
or (ii)
in the case
of the Common Stock
issuable upon conversion of this Note,
such security is registered for
sale by the Holder under an
effective registration statement
filed under the Act or otherwise
may be
sold pursuant to Rule 144 without
any restriction as to the number
of securities as of
a particular date that can then
be immediately sold. In the event
that the Company does not accept
the opinion of counsel provided
by the Holder with respect
to the transfer of Securities
pursuant to an exemption from registration,
such as Rule 144 or Regulation S, at
the Deadline, it will be considered
an Event of Default
pursuant to Section 3.2 of the
Note.

 

    	3

    	 

    

 

1.6                             
Effect of
Certain Events.

 

(a)                               
Effect of
Merger,
Consolidation,
Etc.
At the
option of the
Holder, the
sale, conveyance
or disposition of
all or
substantially all
of the assets
of the Borrower,
the effectuation
by the Borrower
of a transaction or
series of
related transactions in which
more than 50% of the voting power
of the Borrower is disposed of, or
the consolidation, merger or other
business combination of the Borrower
with or into any other Person
(as defined below) or Persons
when the Borrower is not the survivor
shall either: (i)
be deemed to be an Event of Default
(as defined
in Article III)
pursuant to which
the Borrower
shall be
required to
pay to the Holder
upon the consummation of
and as
a condition to
such transaction
an amount
equal to
the Default Amount (as
defined in Article III) or (ii)
be treated pursuant to Section
1.6(b) hereof. “Person”
shall mean any
individual, corporation,
limited liability
company, partnership, association,
trust or other entity or
organization.

 

(b)                              
Adjustment Due
to Merger,
Consolidation, Etc.
If, at
any time
when this
Note is
issued and
outstanding and
prior to
conversion of
all of
the Notes, there
shall be
any merger,
consolidation, exchange
of shares,
recapitalization, reorganization,
or other 
similar event, as
a result of which shares of Common Stock
of the Borrower shall be changed
into the same or a different number
of shares of another class
or classes of stock or securities
of the Borrower or another entity, or
in case of any sale
or conveyance of all or substantially
all of the assets
of the Borrower other than
in connection with a plan
of complete liquidation of the
Borrower, then
the Holder of
this Note
shall thereafter
have the
right to
receive upon
conversion of this Note,
upon the basis and
upon the terms
and conditions specified
herein and
in lieu
of the shares
of Common Stock immediately theretofore
issuable upon conversion, such stock,
securities or assets
which the Holder
would have been
entitled to receive
in such
transaction had this Note
been converted in full immediately prior to such
transaction (without regard to any
limitations on conversion
set forth herein),
and in any such
case appropriate provisions shall
be made with
respect to the rights
and interests
of the Holder of this
Note to the end that
the provisions hereof (including,
without limitation, provisions
for adjustment of the Conversion
Price and of the number of shares
issuable upon conversion of the Note)
shall thereafter be applicable,
as nearly as may be
practicable in relation to any
securities or assets thereafter
deliverable upon the
conversion hereof.
The Borrower
shall not affect
any transaction
described in this Section 1.6(b)
unless (a) it first gives,
to the extent practicable, thirty
(30) days prior
written notice (but in any
event at least fifteen
(15) days prior written notice)
of the record date of the
special meeting of shareholders
to approve, or if there
is no such record
date, the consummation of, such
merger, consolidation, exchange of
shares, recapitalization, reorganization
or other similar event or sale
of assets (during which time the Holder
shall be entitled to convert
this Note) and (b)
the resulting successor or acquiring
entity (if not the Borrower)
assumes by written
instrument the obligations of this Section
1.6(b). The above provisions
shall similarly apply to successive
consolidations, mergers, sales, transfers
or share exchanges.

 

(c)                               
Adjustment Due
to Distribution.
If the
Borrower shall
declare or
make any distribution
of its assets
(or rights
to acquire
its assets)
to holders
of Common Stock
as a dividend,
stock repurchase,
by way
of return
of capital
or otherwise
(including any dividend
or distribution to the Borrower’s
shareholders in cash or shares
(or rights to acquire shares) of capital
stock of a subsidiary (i.e.,
a spin-off)) (a
“Distribution”), then the
Holder of this Note
shall be entitled, upon any conversion
of this Note after the date of
record for determining shareholders
entitled to such Distribution, to receive
the amount of
such assets which would
have been payable to the Holder
with respect to the shares of
Common Stock issuable upon such
conversion had such Holder been
the holder of such shares of Common Stock
on the record date for
the determination of shareholders
entitled to such Distribution.

 

(d)                              
Adjustment Due
to Dilutive
Issuance.
If, at
any time
when any
Notes are
issued and
outstanding, the
Borrower issues
or sells,
or in accordance
with this Section
1.6(d) hereof
is deemed
to have issued
or sold, any
shares of Common
Stock for
no consideration
or for a consideration
per share (before deduction of reasonable
expenses or commissions or underwriting
discounts or
allowances in
connection therewith)
less than
the Conversion
Price in
effect on the date of such
issuance (or deemed issuance)
of such shares of Common Stock
(a “Dilutive Issuance”),
then immediately
upon the Dilutive Issuance,
the Conversion Price
will be reduced to the amount
of the
consideration per share received
by the
Borrower in such Dilutive
Issuance.

 

The
Borrower shall
be deemed
to have
issued or
sold shares
of Common Stock
if the Borrower
in any
manner issues
or grants
any warrants,
rights or options
(not including
employee stock option
plans), whether
or not immediately exercisable,
to subscribe for
or to purchase Common Stock
or other securities
convertible into or
exchangeable for
Common Stock (“Convertible
Securities”) (such warrants,
rights and
options to purchase
Common Stock or
Convertible Securities are hereinafter
referred to as “Options”)
and the price per share
for which Common Stock is issuable
upon the exercise of such Options
is less than the Conversion
Price then in effect, then the
Conversion Price shall
be equal to such price per share.
For purposes of the preceding sentence,
the “price per share for which
Common Stock is issuable upon
the exercise of such Options”
is determined by dividing (i)
the total amount, if any, received
or receivable by the
Borrower as consideration
for the issuance or
granting of all such
Options, plus the minimum aggregate
amount of additional consideration, if any,
payable to the Borrower upon the exercise of all
such Options, plus, in the case
of Convertible Securities
issuable upon the exercise of such Options,
the minimum aggregate amount
of additional consideration payable
upon the conversion or exchange
thereof at the time such Convertible
Securities first become convertible
or exchangeable, by (ii)
the maximum total number of shares
of Common Stock issuable upon
the exercise of all such
Options (assuming full conversion
of Convertible Securities, if
applicable). No further
adjustment to the Conversion Price
will be made upon the
actual issuance of
such Common Stock upon the exercise
of such Options or
upon the conversion or exchange
of Convertible Securities issuable
upon exercise of such Options.

 

Additionally,
the Borrower
shall be deemed
to have issued
or sold shares
of Common Stock
if the Borrower
in any
manner issues
or sells
any Convertible
Securities, whether
or not immediately convertible
(other than
where the same are
issuable upon  the exercise
of Options), and the price per share for
which Common Stock is issuable
upon such conversion or exchange
is less
than the Conversion
Price then in
effect, then
the Conversion Price shall be
equal to such price per share.
For the purposes of
the preceding sentence, the “price
per share for which
Common Stock is issuable upon
such conversion or exchange”
is determined by
dividing (i) the total amount,
if any, received or
receivable by the Borrower as
consideration for the issuance or sale of all
such Convertible Securities,
plus the minimum aggregate amount
of additional consideration, if any,
payable to the Borrower upon the conversion
or exchange thereof
at the time such
Convertible Securities first
become convertible or exchangeable,
by (ii) the maximum total
number of shares of Common Stock
issuable upon the
conversion or exchange
of all
such Convertible Securities.
No further
adjustment to
the Conversion Price
will be made
upon the actual
issuance of such
Common Stock
upon conversion or
exchange of such Convertible Securities.

 

(e)                               
Purchase Rights.
If,
at
any time
when any
Notes are
issued and
outstanding, the Borrower
issues any convertible
securities or rights
to purchase
stock, warrants,
securities or other
property (the
“Purchase Rights”)
pro rata
to the record
holders of any
class of
Common Stock,
then the
Holder of this Note will
be entitled to
acquire, upon
the terms applicable
to such
Purchase Rights,
the aggregate Purchase
Rights which
such Holder
could have acquired
if such Holder
had held the number of shares
of Common Stock acquirable upon
complete conversion of
this Note (without regard
to any limitations on conversion
contained herein)
immediately before the
date on which a record
is taken for the
grant, issuance or
sale of such
Purchase Rights or, if no such
record is taken, the date as
of which the record holders
of Common Stock are to be
determined for the grant,
issue or sale of
such Purchase Rights.

 

    	4

    	 

    

 

(f)                               
Notice of
Adjustments.
Upon the occurrence
of each
adjustment or readjustment
of the Conversion
Price as
a result
of the events
described in
this Section
1.6, the Borrower,
at its expense,
shall promptly
compute such
adjustment or readjustment
and prepare and
furnish to the Holder a certificate
setting forth such adjustment
or readjustment and showing in
detail the facts upon which
such adjustment or readjustment is
based. The Borrower
shall, upon the written request
at any time of the Holder, furnish
to such Holder a like certificate
setting forth
(i) such adjustment
or readjustment,
(ii) the
Conversion Price
at the time
in effect and
(iii) the number of shares
of Common Stock
and the amount,
if any, of other securities
or property which at the
time would be received upon conversion
of the Note.

 

1.7                             
Trading Market
Limitations.
Unless
permitted
by
the applicable
rules and
regulations of
the principal
securities market
on which
the Common Stock
is then
listed or
traded, in no event shall the
Borrower issue upon conversion of or
otherwise pursuant to this Note
and the other Notes issued pursuant
to the Purchase Agreement more
than the maximum number
of shares of Common
Stock that
the Borrower can
issue pursuant to any rule
of the principal United States
securities market on which the Common
Stock is then traded
(the “Maximum Share Amount”),
which shall be 4.99%
of the total
shares outstanding on the Closing
Date (as defined in the Purchase Agreement),
subject to equitable adjustment
from time to time for
stock splits, stock dividends,
combinations, capital reorganizations
and similar events
relating to the Common Stock occurring
after the date hereof.
Once the Maximum Share Amount
has been issued,
if the Borrower fails to eliminate
any prohibitions under applicable
law or the rules or regulations
of any stock exchange, interdealer
quotation system or other self-regulatory
organization with jurisdiction
over the Borrower
or any of its securities
on the Borrower’s ability
to issue shares
of Common Stock
in excess
of the Maximum Share
Amount, in lieu
of any further
right to convert this Note, this
will be considered an
Event of Default under Section
3.3 of the Note.

 

1.8                             
Status as
Shareholder. Upon
submission of a
Notice of
Conversion by
a Holder,
(i) the
shares covered
thereby (other than
the shares,
if any,
which cannot
be issued
because their
issuance would
exceed such
Holder’s allocated
portion of
the Reserved
Amount or Maximum Share
Amount) shall be deemed converted
into shares of Common Stock
and (ii) the Holder’s
rights as
a Holder of such
converted portion
of this Note shall cease
and terminate, excepting
only the right to
receive certificates
for such
shares of
Common Stock
and to
any remedies provided herein
or otherwise available at
law or in equity to such Holder
because of a failure by
the Borrower to comply with the
terms of this Note. Notwithstanding
the foregoing, if a Holder has
not received certificates for
all shares of Common Stock
prior to the tenth (10th) business
day after the expiration of the
Deadline with respect
to a conversion of any portion of this Note
for any reason, then (unless
the Holder otherwise elects to
retain its status as
a holder of Common Stock by so notifying
the Borrower) the Holder shall
regain the rights of a Holder
of this Note with respect
to such unconverted
portions of this Note and the
Borrower shall, as
soon as practicable, return
such unconverted Note to the Holder
or, if the Note has not been surrendered,
adjust its records to reflect
that such portion of this Note
has not been converted. In all
cases, the Holder shall retain
all of its rights and
remedies (including, without
limitation, (i) the right
to receive Conversion Default
Payments pursuant to Section
1.3 to the extent required thereby for
such Conversion Default
and any subsequent Conversion
Default and
(ii) the
right to have the Conversion
Price with respect to subsequent
conversions determined in accordance
with Section 1.3) for the Borrower’s
failure to convert this Note.

 

1.9                              Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on the Issue
Date and ending on the date which is thirty (30)
days following the Issue Date,
the Borrower shall
have the right, exercisable on
not less than three (3)
Trading Days prior written
notice to the Holder of the Note to
prepay the outstanding Note
(principal and accrued
interest), in full, in accordance with this Section 1.9. Any notice of prepayment
hereunder (an “Optional Prepayment
Notice”) shall be delivered to
the Holder of the Note
at its registered addresses and
shall state: (1) that the Borrower is exercising its right
to prepay the Note, and (2) the date of prepayment which
shall be not more than three (3)
Trading Days from the date of the Optional Prepayment
Notice. On the date fixed for prepayment
(the “Optional Prepayment Date”),
the Borrower shall make payment of
the Optional Prepayment Amount (as defined below)
to or upon the order of the Holder as
specified by the Holder in writing to
the Borrower at least one (1) business
day prior to the Optional Prepayment
Date. If the Borrower exercises
its right to prepay the Note, the Borrower shall make payment
to the Holder of an amount in
cash (the “Optional Prepayment
Amount”) equal to 110%, multiplied by the
sum of: (w) the then outstanding
principal amount of this Note plus (x)
accrued and unpaid interest on
the unpaid principal amount of
this Note to the Optional Prepayment Date plus (y) Default
Interest, if any, on the amounts referred
to in clauses (w) and (x) plus (z) any amounts
owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers
an Optional Prepayment
Notice and fails to pay the Optional Prepayment Amount
due to the Holder of the Note within two (2) business days following
the Optional Prepayment Date, the Borrower shall forever
forfeit its right to prepay the
Note pursuant to this Section 1.9.

 

Notwithstanding
anything to
the contrary contained
in this Note,
at any
time during
the period beginning
on the date
which is
thirty-one (31)
days following
the Issue
Date and ending
on the date which is sixty
(60) days following the Issue
Date, the Borrower shall have
the right, exercisable on not
less than three
(3) Trading Days prior
written notice to the Holder
of the Note to prepay
the outstanding Note (principal
and accrued interest),
in full, in accordance with
this Section 1.9. Any
Optional Prepayment Notice
shall be
delivered to
the Holder
of the Note at
its registered
addresses and
shall state:
(1) that the Borrower
is exercising its right
to prepay the Note, and
(2) the date of prepayment
which shall be not more
than three (3) Trading
Days from the
date of
the Optional Prepayment
Notice. On the
Optional Prepayment
Date, the Borrower shall make
payment of the Second
Optional Prepayment Amount (as
defined below) to or upon the order
of the Holder as specified
by the Holder in writing to the
Borrower at least
one (1) business day
prior to the Optional Prepayment
Date. If the Borrower exercises
its right to prepay the Note,
the Borrower shall make
payment to the Holder of an amount
in cash (the “Second
Optional Prepayment
Amount”) equal to
115%, multiplied
by the sum of:
(w) the then outstanding
principal amount of this Note plus (x)
accrued and unpaid interest
on the unpaid principal
amount of this Note
to the Optional
Prepayment Date
plus (y) Default
Interest, if any,
on the amounts referred to in
clauses (w) and
(x) plus (z) any amounts owed
to the Holder pursuant
to Sections
1.3 and 1.4(g) hereof. If the
Borrower delivers an
Optional Prepayment Notice
and fails to
pay the Second
Optional Prepayment
Amount due to the Holder
of the Note within two
(2) business days following the
Optional Prepayment Date, the Borrower
shall forever forfeit its right
to prepay the Note
pursuant to this Section 1.9.

 

Notwithstanding
anything to
the contrary contained
in this Note,
at any
time during
the period beginning
on the date
which is
sixty-one (61)
days following
the Issue
Date and
ending on the
date which
is ninety (90)
days following
the Issue Date,
the Borrower
shall have the right, exercisable
on not less than three (3)
Trading Days prior written
notice to the Holder of the Note
to prepay the outstanding Note (principal
and accrued interest),
in full, in accordance with
this Section 1.9. Any Optional
Prepayment Notice shall be delivered
to the Holder of the Note at
its registered addresses and
shall state: (1) that
the Borrower is exercising its
right to
prepay the Note,
and (2)
the date
of prepayment
which shall
be not more
than three (3) Trading Days
from the date of
the Optional Prepayment Notice.
On the Optional Prepayment Date,
the Borrower
shall make
payment of
the Third Optional
Prepayment Amount
(as defined
below) to or upon the order
of the Holder
as specified by the
Holder in writing to the Borrower
at least one (1)
business day prior to the
Optional Prepayment Date.
If the Borrower exercises
its right to
prepay the Note,
the Borrower
shall make
payment to the
Holder of
an amount
in cash (the
“Third Optional Prepayment
Amount”) equal to 120%, multiplied
by the sum of: (w) the then
outstanding principal amount
of this Note plus (x)
accrued and unpaid interest
on the unpaid principal
amount of this Note to the Optional
Prepayment Date plus (y)
Default Interest, if
any, on the amounts referred
to in clauses (w) and
(x) plus (z) any amounts owed
to the Holder pursuant
to Sections 1.3 and 1.4(g) hereof.
If the Borrower delivers an
Optional Prepayment Notice and
fails to pay the Third
Optional Prepayment Amount due
to the Holder of the Note within
two (2) business
days following the Optional Prepayment
Date, the  Borrower 
shall forever forfeit its right
to prepay the Note pursuant to
this Section 1.9.

 

    	5

    	 

    

 

Notwithstanding
any
to the
contrary stated
elsewhere herein,
at any
time during
the period
beginning on the
date that
is ninety-one
(91) day
from the
Issue Date
and ending one hundred
twenty (120) days
following the Issue Date,
the Borrower shall
have the right, exercisable
on not less than three (3)
Trading Days prior written notice
to the Holder of the
Note to prepay the outstanding
Note (principal and
accrued interest),
in full,
in accordance with
this Section 1.9. Any Optional
Prepayment Notice
shall be delivered
to the Holder of the Note
at its registered addresses
and shall state: (1)
that the Borrower is exercising
its right to prepay the Note,
and (2)
the date
of prepayment which
shall be not
more than
three (3) Trading
Days from the date
of the Optional
Prepayment Notice.
On the Optional
Prepayment Date,
the Borrower shall
make payment
of the Fourth Optional
Prepayment Amount
(as defined
below) to or upon the
order of the Holder as
specified by the
Holder in writing
to the Borrower at
least one (1) business day prior
to the Optional Prepayment
Date. If the
Borrower exercises
its right to prepay the Note,
the Borrower shall make
payment to the Holder of an
amount in cash (the “Fourth
Optional Prepayment Amount”) equal
to 125%, multiplied
by the sum of:
(w) the then outstanding principal
amount of this Note plus (x)
accrued and unpaid interest
on the unpaid principal
amount of this Note
to the Optional
Prepayment Date plus (y)
Default Interest, if any,
 on the amounts referred to in
clauses (w) and
(x) plus (z) any amounts owed
to the Holder pursuant to Sections
1.3 and 1.4(g) hereof. If the Borrower
delivers an Optional Prepayment
Notice and fails
to pay the Fourth
Optional Prepayment
Amount due to
the Holder of the Note within
two (2) business
days following the Optional Prepayment
Date, the Borrower  shall
forever forfeit its right to prepay the
Note pursuant to this Section
1.9.

 

Notwithstanding
any
to the
contrary stated
elsewhere herein,
at any
time during
the period
beginning on
the date
that is
one hundred
twenty-one (121)
day from
the Issue
Date and
ending one
hundred fifty
(150) days
following the Issue
Date, the Borrower
shall have the right,
exercisable on not less than
three (3) Trading Days
prior written notice
to the Holder of the Note
to prepay the outstanding Note (principal
and accrued interest), in full,
in accordance with this Section
1.9. Any Optional Prepayment Notice
shall be delivered to the
Holder of
the Note
at its registered addresses
and shall state: (1)
that the Borrower is exercising
its right to prepay the Note, and
(2) the date of prepayment which
shall be not more than three
(3) Trading Days from
the date
of the Optional
Prepayment Notice. On
the Optional
Prepayment Date,
the Borrower shall
make payment of the Fifth Optional
Prepayment Amount (as defined
below) to or upon the order of
the Holder as specified by the
Holder in writing to the
Borrower at least
one (1)
business day prior to the Optional
Prepayment Date. If the Borrower
exercises its right to prepay the
Note, the Borrower shall
make payment to the Holder of an
amount in cash (the “Fifth
Optional Prepayment Amount”)
equal to 130%, multiplied
by the sum of: (w)  the then outstanding
principal amount of this Note
 plus (x) accrued and
unpaid interest on the unpaid principal
amount of this Note to the Optional
Prepayment Date plus (y) Default
Interest, if any, on the amounts
referred to in clauses (w)
and (x) plus (z) any amounts
owed to the Holder pursuant
to Sections 1.3 and 1.4(g)
hereof. If the Borrower
delivers an Optional Prepayment
Notice and fails to pay the Fifth
Optional Prepayment Amount due
to the Holder of the Note within
two (2) business days
following the Optional Prepayment
Date, the Borrower shall
forever forfeit its right to
prepay the Note pursuant
to this Section 1.9.

 

Notwithstanding
any
to the
contrary stated
elsewhere herein,
at any
time during
the period
beginning on the
date that
is one hundred
fifty-one (151)
day from
the Issue
Date and ending
one hundred eighty (180) days
following the Issue Date, the Borrower
shall have the right,
exercisable on not
less than
three (3) Trading Days
prior written
notice to
the Holder of
the Note to prepay the outstanding
Note (principal and accrued
interest), in full, in accordance
with this Section
1.9. Any Optional Prepayment
Notice shall be
delivered to
the Holder
of the Note
at its registered addresses and
shall state: (1)
that the Borrower is exercising
its right to prepay the

 

Note,
and (2)
the date
of prepayment
which shall
be not more
than three (3)
Trading Days
from the
date of
the Optional
Prepayment Notice.
On the Optional
Prepayment Date,
the Borrower
shall make
payment of the Sixth Optional
Prepayment Amount
(as defined
below) to or upon the order of the
Holder as specified
by the Holder in writing to the
Borrower at least one (1)
business day prior to the Optional Prepayment
Date. If the Borrower exercises
its right to prepay the Note,
the Borrower shall make
payment to the Holder of an amount
in cash (the “Sixth Optional
Prepayment Amount”) equal
to 135%, multiplied by the sum
of: (w) the then outstanding principal
amount of this Note plus (x)
accrued and unpaid interest
on the unpaid principal amount
of this Note to the Optional
Prepayment Date plus (y) Default
Interest, if any, on the amounts
referred to
in clauses
(w) and
(x) plus (z)
any amounts
owed to
the Holder
pursuant to Sections
1.3 and 1.4(g) hereof. If
the Borrower delivers an Optional
Prepayment Notice and fails to pay the Sixth Optional
Prepayment Amount due to the Holder
of the Note within two
(2) business days following
the Optional Prepayment Date,
the Borrower shall forever
forfeit its right to prepay the
Note pursuant to this Section
1.9.

 

After
the expiration
of one
hundred eighty
(180) following
the date
of the Note,
the Borrower shall have
no right of prepayment.

 

 

ARTICLE
II.
 CERTAIN COVENANTS

 

2.1                             
Distributions on
Capital Stock.
So long as
the Borrower
shall have
any obligation
under this
Note, the Borrower
shall not without
the Holder’s
written consent
(a) pay, declare
or set
apart for
such payment,
any dividend
or other
distribution (whether
in cash,
property or other securities)
on shares of
capital stock other than dividends
on shares of
Common Stock solely in the form
of additional shares of Common Stock
or (b) directly or indirectly or through
any subsidiary make any
other payment or distribution
in respect of its capital stock
except for distributions pursuant
to any shareholders’ rights plan
which is approved by
a majority of the
Borrower’s disinterested directors.

 

2.2                             
Restriction on
Stock Repurchases.
So long as
the Borrower
shall have
any obligation
under this Note,
the Borrower
shall not
without the
Holder’s written
consent redeem, repurchase
or otherwise
acquire (whether
for cash
or in exchange
for property or
other securities
or otherwise) in any one
transaction or series
of related transactions any shares
of capital stock
of the Borrower or
any warrants, rights
or options to purchase or
acquire any such shares.

 

2.3                             
Borrowings. So
long as the
Borrower shall
have any
obligation under
this Note,
the Borrower
shall not, without
the Holder’s
written consent,
create, incur,
assume guarantee,
endorse, contingently agree to purchase
or otherwise become liable upon
the obligation of any
person, firm,
partnership, joint venture
or corporation, except by
the endorsement of
negotiable instruments
for deposit or
collection, or suffer
to exist any liability for borrowed
money, except (a)
borrowings in existence
or committed
on the date
hereof and
of which the Borrower
has informed Holder
in writing prior
to the date
hereof, (b)
indebtedness to trade
creditors or financial institutions incurred
in the ordinary course of business
or (c) borrowings, the
proceeds of which shall be
used to repay this Note.

 

    	6

    	 

    

 

2.4                             
Sale of
Assets. So
long as
the Borrower
shall have any
obligation under
this Note,
the Borrower
shall not, without
the Holder’s
written consent,
sell, lease
or otherwise
dispose of any
significant portion
of its assets
outside the ordinary course
of business. Any consent
to the disposition of any assets
may be conditioned on a specified
use of the proceeds of disposition.

 

2.5                             
Advances and
Loans. So
long as
the Borrower shall
have any
obligation under
this Note,
the Borrower
shall not,
without the
Holder’s written
consent, lend
money, give
credit or make
advances to
any person, firm,
joint venture
or corporation, including,
without limitation, officers,
directors, employees, subsidiaries
and affiliates of the Borrower,
except loans, credits
or advances (a) in existence
or committed on the date hereof
and which the Borrower
has informed
Holder in writing
prior to the date
hereof, (b)
made in the ordinary course
of business or
(c) not in excess of
$100,000.

 

ARTICLE
III.
 EVENTS OF
DEFAULT

 

If
any
of the
following events of default (each,
an “Event
of Default”) shall occur:

 

3.1                             
Failure to
Pay Principal
or Interest.
The Borrower
fails to pay
the principal
hereof or
interest thereon
when due on
this Note,
whether at
maturity, upon
acceleration or
otherwise.

 

3.2                             
Conversion and
the Shares.
The Borrower
fails to
issue shares
of Common Stock
to the Holder
(or announces
or threatens
in writing
that it
will not
honor its obligation
to do so) upon
exercise by the Holder of the
conversion rights
of the Holder
in accordance with
the terms of this
Note, fails
to transfer or
cause its transfer agent
to transfer (issue)
(electronically or in certificated form)
any certificate for shares
of Common Stock issued to the
Holder upon conversion of or otherwise
pursuant to this Note as and
when required by this Note, the Borrower
directs its transfer agent not
to transfer or delays,
impairs, and/or hinders its transfer
agent in transferring (or issuing)
(electronically or in certificated
form) any certificate for shares
of Common Stock to be issued
to the Holder upon conversion
of or otherwise pursuant to this
Note as and
when required by this Note, or fails
to remove (or directs
its transfer agent not to remove
or impairs, delays,
and/or hinders its transfer
agent from removing)
any restrictive legend
(or to withdraw any stop transfer
instructions in respect thereof) on any certificate
for any shares of
Common Stock
issued to
the Holder
upon conversion
of or otherwise
pursuant to this Note
as and when required by this
Note (or makes any written
announcement, statement or threat
that it does not intend
to honor the obligations described
in this paragraph) and any
such failure
shall continue uncured (or
any written announcement, statement
or threat not to honor its obligations
shall not be rescinded
in writing)
for three
(3) business
days after
the Holder
shall have delivered
a Notice of Conversion. It
is an
obligation of the
Borrower to remain
current in its obligations to its
transfer agent. It shall
be an event of default
of this Note, if a conversion
of this Note
is delayed,
hindered or frustrated
due to a balance owed
by the Borrower to its
transfer agent. If at
the option of the Holder, the Holder
advances any funds to the Borrower’s
transfer agent in order to process
a conversion, such
advanced funds
shall be paid by the Borrower
to the Holder within forty eight
(48) hours of a demand from the Holder.

 

3.3                             
Breach of
Covenants.
The Borrower
breaches any
material covenant
or other
material term
or condition
contained in
this Note
and any
collateral documents
including but
not limited
to the Purchase
Agreement and
such breach
continues for
a period of
ten (10)
days after
written notice thereof to the
Borrower from the Holder.

 

3.4                             
Breach of
Representations and
Warranties.
Any representation
or warranty
of the
Borrower made
herein or
in any
agreement, statement
or certificate
given in
writing pursuant
hereto or
in connection
herewith (including,
without limitation,
the Purchase
Agreement), shall
be false or misleading
in any material respect when
made and the
breach of which has
(or with the passage
of time
will have) a
material adverse
effect on the rights
of the Holder
with respect to this Note or the
Purchase Agreement.

 

3.5                             
Receiver or
Trustee.
The Borrower
or any
subsidiary of
the Borrower
shall make
an assignment
for the benefit
of creditors,
or apply for
or consent
to the appointment
of a receiver
or trustee
for it
or for
a substantial
part of
its property or
business, or
such a
receiver or
trustee shall otherwise be
appointed.

 

3.6                             
Judgments. Any
money judgment,
writ or
similar process
shall be entered
or filed
against the
Borrower or
any subsidiary of
the Borrower
or any of
its property or
other assets
for more
than $50,000,
and shall remain
unvacated, unbonded
or unstayed
for a
period of
twenty (20) days
unless otherwise consented
to by
the Holder, which
consent will not be unreasonably withheld.

 

3.7                             
Bankruptcy. Bankruptcy,
insolvency, reorganization
or liquidation
proceedings or
other proceedings,
voluntary or
involuntary, for
relief under any
bankruptcy law or
any law for
the relief
of debtors shall
be instituted by
or against the Borrower
or any
subsidiary of the Borrower.

 

3.8                             
Delisting of
Common Stock.
The Borrower shall
fail to maintain the listing
of the
Common Stock
on at least
one of the
OTCBB or an
equivalent replacement
exchange, the
Nasdaq National
Market, the
Nasdaq SmallCap
Market, the
New York Stock
Exchange, or the American
Stock Exchange.

 

3.9                             
Failure to
Comply with
the Exchange
Act.
The Borrower
shall fail
to comply with
the reporting
requirements of
the Exchange Act;
and/or the Borrower
shall cease
to be subject
to the reporting requirements
of the Exchange
Act.

 

3.10                         
Liquidation. Any
dissolution, liquidation,
or winding
up of Borrower
or any substantial
portion of its business.

 

3.11                         
Cessation of Operations.
Any cessation of
operations by
Borrower or Borrower
admits it is
otherwise generally
unable to pay
its debts
as such debts
become due, provided,
however, that any
disclosure of the
Borrower’s ability to continue
as a “going concern”
shall not be an admission that
the Borrower cannot
pay its debts as
they become due.

 

    	7

    	 

    

 

3.12                         
Maintenance of
Assets.The
failure
by
Borrower
to maintain
any material intellectual
property rights, personal, real
property or
other assets
which are necessary to
conduct its business (whether
now or in the
future).

 

3.13                         
Financial Statement
Restatement.
The
restatement
of
any
financial statements filed
by the Borrower
with the SEC
for any date
or period from
two years
prior to the
Issue Date
of this Note
and until this
Note is
no longer
outstanding, if the
result of
such restatement
would, by
comparison to
the unrestated
financial statement,
have constituted
a material adverse effect
on the rights of the Holder with
respect to this Note or the Purchase
Agreement.

 

3.14                         
Reverse Splits.
The Borrower effectuates
a reverse
split of
its Common Stock
without twenty
(20) days prior written notice
to the Holder.

 

3.15                         
Replacement of
Transfer Agent.
In
the event that
the Borrower proposes to replace
its transfer
agent, the Borrower
fails to provide,
prior to the
effective date
of such
replacement, a
fully executed
Irrevocable Transfer
Agent Instructions
in a form
as initially delivered pursuant
to the Purchase Agreement (including
but not limited to the provision to
irrevocably reserve shares of Common
Stock in the Reserved
Amount) signed by the successor
transfer agent to Borrower
and the Borrower.

 

3.16                         
Cross-Default. Notwithstanding
anything to
the contrary contained
in this Note
or the other
related or companion
documents, a breach
or default
by the
Borrower of
any covenant
or other term
or condition
contained in any of
the Other Agreements,
after the passage of
all applicable notice and cure
or grace periods,
shall, at the
option of the Holder,
be considered a default
under this Note and the Other
Agreements, in which event the Holder
shall be entitled (but in no
event required) to apply all
rights and remedies
of the Holder under the terms of this Note
 and the
 Other  Agreements
 by 
reason  of
 a  default
 under 
said  Other
 Agreement 
or hereunder. “Other Agreements”
means, collectively, all agreements
and instruments between, among
or by: (1) the Borrower,
and, or for the benefit of,
(2) the Holder and
any affiliate
of the Holder, including, without
limitation, promissory notes;
provided, however, the term “Other
Agreements” shall not include
the related or companion documents to
this Note. Each of the loan transactions
will be cross-defaulted with
each other loan
transaction and with all
other existing and future debt
of Borrower to the
Holder.

 

Upon
the occurrence
and during
the continuation
of any
Event of
Default specified
in Section
3.1 (solely with
respect to failure
to pay the
principal hereof
or interest
thereon when
due at
the Maturity
Date), the
Note shall
become immediately due
and payable
and the
Borrower shall
pay to the Holder,
in full
satisfaction of
its obligations hereunder,
an amount
equal to the Default
Sum (as defined herein).
UPON THE OCCURRENCE AND
DURING THE CONTINUATION OF ANY
EVENT OF DEFAULT SPECIFIED
IN SECTION 3.2, THE
NOTE SHALL BECOME
IMMEDIATELY DUE AND
PAYABLE AND THE BORROWER
SHALL PAY TO THE HOLDER,
IN FULL SATISFACTION OF ITS OBLIGATIONS
HEREUNDER, AN AMOUNT EQUAL TO:
(Y) THE DEFAULT SUM (AS
DEFINED HEREIN); MULTIPLIED
BY (Z) TWO
(2). Upon the
occurrence and during the
continuation of
any Event of Default specified
in Sections 3.1 (solely with
respect to failure to pay the principal
hereof or interest thereon when
due on this Note upon a Trading Market Prepayment
Event pursuant
to Section
1.7 or upon acceleration),
3.3, 3.4, 3.6, 3.8, 3.9,
3.11, 3.12, 3.13, 3.14, and/or
3. 15 exercisable
through the delivery of written
notice to the Borrower
by such
Holders (the
“Default Notice”), and
upon the occurrence of an Event
of Default specified the remaining
sections of Articles III (other
than failure to pay the principal
hereof or interest thereon
at the Maturity Date specified
in Section 3,1 hereof),
the Note shall become
immediately due and payable
and the Borrower
shall pay to
the Holder, in
full satisfaction
of its
obligations hereunder,
an amount
equal to
the greater of (i) 150% times
the sum of (w) the
then outstanding principal
amount of this Note plus (x) accrued
and unpaid interest on the unpaid
principal amount of this Note
to the
date of
payment (the “Mandatory
Prepayment Date”)
plus (y)
Default Interest,
if any, on the amounts
referred to in clauses (w)
and/or (x) plus (z) any amounts
owed to the Holder pursuant to
Sections 1.3 and 1.4(g)
hereof (the then outstanding
principal amount of this Note
to the date of
payment plus the amounts
referred to in clauses (x), (y)
and (z) shall collectively be known
as the “Default Sum”)
or (ii) the “parity value”
of the Default Sum to be prepaid, where
parity value means (a) the highest
number of shares of Common Stock
issuable upon conversion of or otherwise
pursuant to such Default Sum in accordance
with Article I, treating the
Trading Day immediately preceding the Mandatory Prepayment
Date as the “Conversion
Date” for purposes of determining
the lowest applicable Conversion
Price, unless the Default
Event arises as
a result of a breach
in respect
of a specific Conversion Date
in which case such
Conversion Date shall be the
Conversion Date), multiplied
by (b) the highest
Closing Price for the Common
Stock during
the period beginning
on the date of first
occurrence of the Event
of Default
and ending one day
prior to the Mandatory Prepayment
Date (the “Default
Amount”) and all other
amounts payable hereunder shall
immediately become due and payable,
all without demand, presentment
or notice, all of
which hereby are expressly waived, together
with all costs, including, without
limitation, legal fees and
expenses, of collection, and the Holder
shall be entitled to exercise all
other rights and remedies
available at law or in equity.

 

If
the Borrower
fails to pay
the Default
Amount within
five (5)
business days
of written
notice that
such amount
is due and
payable, then the
Holder shall
have the
right at
any time,
so long as
the Borrower remains
in default (and
so long and
to the extent that
there are sufficient
authorized shares),
to require the Borrower,
upon written
notice, to immediately issue,
in lieu
of the Default Amount, the number
of shares of Common Stock
of the Borrower equal to the
Default Amount divided by
the Conversion Price then in
effect.

 

ARTICLE
IV.
MISCELLANEOUS

 

4.1                             
Failure or
Indulgence Not
Waiver. No
failure or delay
on the part
of the
Holder in
the exercise of
any power,
right or
privilege hereunder
shall operate
as a
waiver thereof,
nor shall any
single or partial
exercise of any
such power,
right or privilege preclude other or further
exercise thereof or of any
other right, power or privileges.
All rights and remedies
existing hereunder
are cumulative
to, and
not exclusive
of, any
rights or
remedies otherwise available.

 

4.2                             
Notices. All
notices, demands,
requests, consents,
approvals, and
other communications
required or
permitted hereunder
shall be in
writing and,
unless otherwise
specified herein,
shall be
(i) personally served,
(ii) deposited
in the
mail, registered
or certified,
return receipt requested, postage
prepaid, (iii) delivered
by reputable air courier service
with charges prepaid, or
(iv) transmitted
by hand delivery,
telegram, or facsimile, addressed
as set forth
below or
to such
other address
as such
party shall have
specified most
recently by written
notice. Any
notice or other communication
required or permitted
to be given
hereunder shall
be deemed
effective (a) upon
hand delivery or
delivery by facsimile, with
accurate confirmation generated
by the
transmitting facsimile machine,
at the
address or
number designated below (if
delivered on a business day during
normal business hours where
such notice is to be received),
or the first
business day
following such delivery
(if delivered
other than on
a business day
during normal business hours
where such notice is to be received)
or (b) on the second business
day following
the date of mailing
by express courier
service, fully prepaid, addressed to such
address, or upon actual
receipt of such mailing,
whichever shall first occur.
The addresses for such
communications shall be:

 

    	8

    	 

    

 

If
to the Borrower, to:

 

CO-SIGNER, INC.

8275 South
Eastern Avenue -
Suite 200-661

 Las
Vegas, NV
89123

Attn:
KURTIS A. KRAMARENKO,
Chief Executive Officer

facsimile:

 

With
a copy by
fax only to (which
copy shall not constitute notice):

[enter name of law
firm]

Attn:
[attorney name]

[enter address line
1]

[enter city, state, zip]

facsimile:
[enter fax number]

 

If
to the Holder:

 

KBM
WORLDWIDE, INC.

80 Cuttermill
Road – Suite 410 

Great
Neck, NY 11021

Attn:
Seth Kramer, President

e-mail:
info@kbmworldwide.com

 

With
a copy by
fax only to (which
copy shall not constitute notice):

Naidich Wurman Birnbaum &
Maday, LLP

Attn:
Bernard S. Feldman,
Esq.

facsimile: 516-466-3555

e-mail:
dyork@nwbmlaw.com

 

4.3                             
Amendments. This
Note and
any
provision hereof
may only
be amended
by an
instrument in writing
signed by
the Borrower and
the Holder. The term
“Note” and
all reference thereto,
as used throughout
this instrument,
shall mean
this instrument (and
the other Notes
issued pursuant
to the Purchase Agreement)
as originally executed,
or if later amended
or supplemented, then as so
amended or supplemented.

 

4.4                             
Assignability. This
Note shall
be binding upon
the Borrower
and its
successors and
assigns, and
shall inure
to be the
benefit of
the Holder
and its
successors and
assigns. Each
transferee of this Note
must be an
“accredited investor” (as defined
in Rule 501(a) of the 1933 Act).
Notwithstanding anything
in this Note
to the contrary, this
Note may be pledged as
collateral in connection with
a bona fide margin account or
other lending arrangement

 

4.5                             
Cost of Collection.
If default
is made in the
payment of this Note,
the Borrower shall pay
the Holder hereof costs of
collection, including
reasonable attorneys’ fees.

 

4.6                             
Governing Law.
This
Note
shall
be governed
by and
construed in accordance
with the laws
of the State
of New
York without
regard to
principles of
conflicts of
laws. Any
action brought
by either
party against the other
concerning the transactions contemplated
by this Note
shall be
brought only
in the state
courts of New
York or
in the federal
courts located
in the state
and county of Nassau. The
parties to this Note
hereby irrevocably waive any
objection to jurisdiction and
venue of any action instituted hereunder
and shall not assert any defense
based on lack
of jurisdiction
or venue
or based
upon forum non
conveniens.
The Borrower
and Holder
waive trial by jury.
The prevailing party shall be
entitled to recover from the other
party its reasonable attorney's
fees and costs. In the event that
any provision of this Note or any other
agreement delivered
in connection
herewith is
invalid or unenforceable
under any applicable statute
or rule of law, then such provision
shall be deemed inoperative
to the extent that it may conflict
therewith and shall be deemed
modified to conform with such
statute or rule of law. Any
such provision
which may prove invalid or
unenforceable under
any law shall
not affect the validity or enforceability
of any other provision of any agreement.
Each party hereby irrevocably
waives personal service of process
and consents to process being
served in any suit, action
or proceeding in connection with
this Agreement or any other Transaction
Document by mailing a copy thereof
via registered or certified mail
or overnight delivery (with evidence
of delivery) to such
party at the address
in effect
for notices
to it under
this Agreement and
agrees that such service
shall constitute good and
sufficient service of process and
notice thereof. Nothing
contained herein shall be deemed
to limit in any way any right
to serve process in any other
manner permitted by law.

 

    	9

    	 

    

\

4.7                             
Certain Amounts.
Whenever pursuant
to this
Note the
Borrower is
required to pay
an amount
in excess
of the outstanding
principal amount
(or the
portion thereof
required to be
paid at
that time)
plus accrued
and unpaid
interest plus Default
Interest on such
interest, the Borrower
and the Holder agree that
the actual damages to the
Holder from the receipt
of cash payment on this Note
may be difficult to determine
and the amount to be so paid
by the Borrower represents
stipulated damages and not a
penalty and is intended to compensate
the Holder in part
for loss of the opportunity to
convert this
Note and
to earn
a return from
the sale of shares of Common
Stock acquired upon conversion
of this Note at a price in excess
of the price paid
for such shares pursuant to this
Note. The
Borrower and the Holder hereby agree
that such amount of stipulated
damages is not plainly disproportionate to the possible loss to the Holder
from the receipt of a cash
payment without the opportunity to convert this Note
into shares of Common Stock.

 

4.8                             
Purchase Agreement.
By its
acceptance of
this Note,
each party
agrees to
be bound by
the applicable
terms of the Purchase
Agreement.

 

4.9                             
Notice of
Corporate Events.
Except as
otherwise provided
below, the
Holder of this
Note shall
have no
rights as
a Holder
of Common
Stock unless
and only to the
extent that
it converts
this Note
into Common
Stock. The
Borrower shall
provide the
Holder with
prior notification of any meeting of
the Borrower’s shareholders (and
copies of proxy materials and other
information sent to shareholders). In the event of any
taking by the Borrower of a record
of its shareholders for the purpose
of determining shareholders who
are entitled to receive payment
of any dividend
or other distribution, any
right to subscribe for, purchase
or otherwise acquire
(including by way of merger, consolidation,
reclassification or recapitalization) any share of
any class or any other
securities or property,
or to receive
any other right, or
for the
purpose of
determining shareholders who are entitled to vote in connection
with any proposed sale, lease or conveyance
of all or substantially all of the assets of the Borrower or any proposed liquidation,
dissolution or winding up of the Borrower, the Borrower shall mail a notice
to the Holder, at least twenty (20) days prior to
the record date specified therein (or thirty
(30) days prior to the consummation of the transaction
or event, whichever is earlier), of the date on which any
such record is to be
taken for the purpose of such dividend, distribution, right or other event,
and a brief statement regarding the amount and character of such
dividend, distribution, right or other event to the extent known at
such time. The Borrower shall make a public announcement of any event
requiring notification to the Holder hereunder substantially simulta11eously
with the notification to the Holder in accordance with
the terms of this
Section 4.9.

 

4.10                         
Remedies.
The Borrower acknowledges that
a breach by
it of its
obligations hereunder
will cause irreparable
harm to the Holder, by vitiating
the intent and purpose of the transaction contemplated hereby.
Accordingly, the Borrower acknowledges that the remedy at law for a
breach of its obligations under this Note
will be inadequate and agrees, in the event of
a breach or threatened breach by the Borrower of the provisions of this Note,
that the Holder shall be entitled, in addition
to all other available remedies at law or in
equity, and in addition to the penalties assessable
herein, to an injunction or injunctions
restraining, preventing or curing any breach of
this Note and to
enforce specifically
the terms and provisions thereof, without the necessity of showing
economic loss and without
any bond or other security being required.

 

 

IN
WITNESS WHEREOF, Borrower has
caused this Note
to be signed
in its name by
its duly authorized officer
this June 5,
2014.

 

CO-SIGNER,
INC.

 

/s/
Kurtis A. Kramarenko 

By:
KURTIS A. KRAMARENKO

Chief
Executive Officer

 

    	10

    	 

    

 

EXHIBIT
A 
NOTICE OF
CONVERSION

 

The
undersigned hereby
elects to convert
$principal amount
of the
Note (defined
below) into
that number
of shares
of Common
Stock to be
issued pursuant
to  the
conversion of
the Note
(“Common Stock”)
as set
forth below,
of CO-SIGNER,
INC., a Nevada
corporation (the
“Borrower”) according
to the
conditions of
the convertible
note of
the Borrower
dated as of
June 5, 2014 (the “Note”),
as of the date written
below. No fee will be charged
to the Holder for any conversion,
except for transfer
taxes, if any.

 

Box
Checked as to applicable
instructions:

 

[
] The Borrower
shall electronically
transmit the
Common Stock
issuable pursuant
to this
Notice of
Conversion to
the account
of the
undersigned or
its nominee
with DTC
through its Deposit
Withdrawal Agent Commission
system (“DWAC Transfer”).

 

Name
of DTC Prime
Broker: Account
Number:

 

[
 ]  The
undersigned hereby requests
that the Borrower
issue a certificate
or certificates
for the number
of shares
of Common
Stock set forth
below (which
numbers are
based on
the Holder’s
calculation attached
hereto) in the
name(s) specified
immediately below
or, if additional
space is necessary,
on an attachment hereto:

 

KBM
WORLDWIDE, INC.

80
Cuttermill Road – Suite
410 Great
Neck, NY 11021 Attention:
Certificate Delivery

e-mail:
info@kbmworldwide.com

 

Date
of
Conversion:

Applicable
Conversion Price:$

Number of
Shares of Common Stock
to be Issued

Pursuant
to Conversion
of the Notes:

Amount of Principal Balance
Due remaining

Under
the Note
after this
conversion: 

 

KBM
WORLDWIDE, INC.

 

By:

Name:
 Seth
Kramer

Title:
President 

Date:

 

    	11

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