Document:

exhibit_10-4.htm

 

Exhibit 10.4

 

 

WFN CREDIT COMPANY, LLC

Transferor

 

COMENITY BANK

Servicer

 

and

 

DEUTSCHE BANK TRUST COMPANY AMERICAS

Trustee

 

on behalf of the Series 2009-VFC1 Holders

 

SECOND AMENDED AND RESTATED SERIES 2009-VFC1 SUPPLEMENT

 

Dated as of September 25, 2013

 

 

to

 

AMENDED AND RESTATED

POOLING AND SERVICING AGREEMENT

 

Dated as of January 30, 1998

(as amended and restated September 28, 2001 and

further amended as of April 7, 2004, March 23, 2005, October 26, 2007, March 30, 2010, and 

September 30, 2011, and, as modified by a Trust Combination Agreement dated as of April 26, 2005)

 

 

WORLD FINANCIAL NETWORK CREDIT CARD MASTER TRUST III

 

Class A Asset-Backed Certificates, Series 2009-VFC1

Class M Asset-Backed Certificates, Series 2009-VFC1

Class B Asset-Backed Certificates, Series 2009-VFC1

Class C Asset-Backed Certificates, Series 2009-VFC1

 

 

  

  

  

TABLE OF CONTENTS

Page

 

	
SECTION 1.

	
Designation; Ownership Interests 

	
1

 

	
SECTION 2.

	
Definitions 

	
2

 

	
SECTION 3.

	
Servicing Fee 

	
23

 

	
SECTION 4.

	
Variable Funding Mechanics 

	
23

 

	
SECTION 5.

	
Optional Repurchase; Reassignment and Termination Provisions 

	
26

 

	
SECTION 6.

	
Maximum Funded Amounts 

	
27

 

	
SECTION 7.

	
Delivery of the Investor Certificates 

	
28

 

	
SECTION 8.

	
Article IV of the Agreement 

	
28

 

	
SECTION 9.

	
Article V of the Agreement 

	
48

 

	
SECTION 10.

	
Early Amortization Events 

	
49

 

	
SECTION 11.

	
Series 2009-VFC1 Termination 

	
51

 

	
SECTION 12.

	
Periodic Finance Charges and Other Fees 

	
51

 

	
SECTION 13.

	
Limitations on Addition of Approved Portfolios 

	
51

 

	
SECTION 14.

	
Counterparts 

	
51

 

	
SECTION 15.

	
Governing Law 

	
51

 

	
SECTION 16.

	
Additional Reports and Notices 

	
51

 

	
SECTION 17.

	
Additional Provisions 

	
52

 

	
SECTION 18.

	
Amendments to the Agreement 

	
53

 

	
SECTION 19.

	
No Petition 

	
53

 

	
SECTION 20.

	
GAAP Sale 

	
53

 

	
SECTION 21.

	
Consents 

	
53

 

 

	
 EXHIBITS 

	
 

	
EXHIBIT A-1

	
Form of Class A Certificate

	
EXHIBIT A-2

	
Form of Class M Certificate

	
EXHIBIT A-3

	
Form of Class B Certificate

	
EXHIBIT A-4

	
Form of Class C Certificate

	
EXHIBIT B

	
Form of Monthly Payment Instructions and

	
  

	
Notification to Trustee

	
EXHIBIT C

	
Form of Monthly Investor Holder’s Statement

  

i

  

SECOND AMENDED AND RESTATED SERIES 2009-VFC1 SUPPLEMENT, dated as of September 25, 2013 (the “Series Supplement”), by and among WFN CREDIT COMPANY, LLC, a Delaware limited liability company, as Transferor (“Transferor”), COMENITY BANK (formerly known as World Financial Network Bank), a Delaware state bank (“Comenity”), as Servicer (in such capacity, “Servicer”), and DEUTSCHE BANK TRUST COMPANY AMERICAS, a New York banking corporation (as successor to Union Bank, N.A.), as Trustee (“Trustee”) under the Amended and Restated Pooling and Servicing Agreement, dated as of January 30, 1998, as amended and restated as of September 28, 2001, as further amended as of April 7, 2004, March 23, 2005, October 26, 2007, March 30, 2010, and September 30, 2011, and as modified by a Trust Combination Agreement dated as of April 26, 2005, and as the same may be further amended from time to time (the “Agreement”), by and among Transferor, Servicer and Trustee.

 

WHEREAS, the parties hereto are party to the Amended and Restated Series 2009-VFC1 Supplement, dated as of September 28, 2012 (the “Existing Series Supplement”).

 

NOW THEREFORE, in consideration of the mutual agreements contained herein, the Existing Series Supplement is hereby amended and restated in its entirety pursuant to Section 13.1(b) of the Agreement as follows and each party agrees as follows for the benefit of the other parties hereto and the Series 2009-VFC1 Certificateholders:

 

Section 6.3 provides, among other things, that Transferor and Trustee may at any time and from time to time enter into a supplement to the Agreement for the purpose of authorizing the delivery by Trustee to Transferor for the execution and redelivery to Trustee for authentication of one or more Series of Certificates.

 

Pursuant to this Series Supplement, the Transferor, the Servicer and the Trustee shall specify the Principal Terms of a Series of Investor Certificates.  The Transferor, the Servicer and the Trustee intend that the execution of this Series Supplement and each of the other Transaction Documents be effective contemporaneously with the delivery of the Certificates to the Transferor.

 

SECTION 1.                           Designation; Ownership Interests.  (a)  Pursuant to the Agreement and the Existing Series Supplement, a Series of Investor Certificates was issued known as the “Series 2009-VFC1 Certificates.”  The Series 2009-VFC1 Certificates were issued in four classes, known as the “Class A Asset-Backed Certificates, Series 2009-VFC1” or the “Class A Certificates,” the “Class M Asset-Backed Certificates, Series 2009-VFC1” or the “Class M Certificates,” the “Class B Asset-Backed Certificates, Series 2009-VFC1” or the “Class B Certificates, and the “Class C Asset-Backed Certificates, Series 2009-VFC1” or the “Class C Certificates”.  Each of the Series 2009-VFC1 Certificates shall be a Variable Interest. The Class A Certificates shall be substantially in the form of Exhibit A-1, the Class M Certificates shall be substantially in the form of Exhibit A-2, the Class B Certificates shall be substantially in the form of Exhibit A-3 and the Class C Certificates will be substantially in the form of Exhibit A-4.  The Class M Certificates, the Class B Certificates and the Class C Certificates shall be Subject Certificates.

 

  

  

  

(b)           Series 2009-VFC1 shall be included in Group One (as defined below).  Series 2009-VFC1 shall not be subordinated to any other Series.

 

(c)           The Class A Certificates may from time to time be divided into separate ownership interests (each, a “Class A Ownership Interest”) which shall be identical in all respects, except for their respective Class A Maximum Funded Amounts, Class A Funded Amounts and certain matters relating to the rate and payment of interest. The initial allocation of Class A Certificates among Class A Ownership Interests shall be made, and reallocations among such Class A Ownership Interests or new Class A Ownership Interests may be made, as provided in Section 4 of this Series Supplement and the Class A Certificate Purchase Agreement.

 

(d)           The Series 2009-VFC1 Certificates shall be “Designated Investor Certificates” for the purposes of Section 2.9(c) of the Agreement.

 

SECTION 2.                           Definitions.  If any term or provision contained herein shall conflict with or be inconsistent with any provision contained in the Agreement, the terms and provisions of this Series Supplement shall govern. References to any Article or Section are references to Articles or Sections of the Agreement, except as otherwise expressly provided.  Unless otherwise specified herein, all capitalized terms not otherwise defined herein are defined in the Agreement or the Class A Certificate Purchase Agreement, as the context may require, and the interpretive provisions set out in Section 1.2 of the Agreement apply to this Series Supplement. Each capitalized term defined herein relates only to the Investor Certificates and no other Series of Certificates issued by the Trust.

 

“Additional Minimum Transferor Amount” means (a) as of any date of determination falling in November, December and January of each calendar year, the product of (i) 1.0% and (ii) the aggregate Principal Receivables and (b) as of any date of determination falling in any other month, zero; provided that the amount specified in clause (a) shall be without duplication with the amount specified as the “Additional Minimum Transferor Amount” in any future Supplement that specifies such an amount and indicates that such amount is without duplication of the amount specified in clause (a)).  The Additional Minimum Transferor Amount is specified pursuant to Section 17(h) of this Series Supplement as an amount to be considered part of the Minimum Transferor Amount.

 

“Aggregate Investor Default Amount” means, as to any Monthly Period, the sum of the Investor Default Amounts in respect of such Monthly Period.

 

“Aggregate Optional Amortization Amount” means, as to any date of determination in any Monthly Period, the sum of any Optional Amortization Amounts scheduled to be distributed to one or more Investor Holders on or prior to the related Distribution Date (and which have not already been so distributed prior to that date of determination).

 

“Agreement” shall have the meaning ascribed thereto by the introductory paragraph hereto.

 

“Amendment Closing Date” means September 25, 2013.

 

  

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“Applicable Percentage” means, with respect to any Determination Date, if the Excess Spread Percentage averaged for the three Monthly Periods preceding such Determination Date is greater than the percentage (if any) set forth in the middle column below and less than or equal to the percentage (if any) set forth in the left column below, an amount equal to the percentage set forth opposite such percentage in the right-hand column below:

 

	
Less than or

Equal to:

	  	
Greater Than:

	  	
Applicable

Percentage:

	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  

 

“Available Cash Collateral Amount” means, with respect to any Transfer Date, the lesser of (a) the amount on deposit in the Cash Collateral Account on such date (such amount calculated before giving effect to any deposit to, or withdrawal from the Cash Collateral Account to be made with respect to such date) and (b) the Required Cash Collateral Amount as of such Transfer Date.

 

“Available Funds” means, as to any Monthly Period, an amount equal to the sum of (a) Collections of Finance Charge Receivables allocated to the Investor Certificates and deposited into the Finance Charge Account for such Monthly Period (or to be deposited in the Finance Charge Account on the related Transfer Date with respect to the preceding Monthly Period pursuant to Section 4.3(a)), including, without duplication the Investor Interchange Amount for such Monthly Period, (b) the interest and earnings in the Cash Collateral Account to be treated as Collections of Finance Charge Receivables pursuant to Section 4.17 on the related Transfer Date and (c) the Excess Finance Charge Collections, if any, allocated to the Investor Certificates pursuant to Section 4.5 on the Distribution Date related to such Transfer Date.

 

“Available Investor Principal Collections” means, as to any Monthly Period, an amount equal to (a) the Investor Principal Collections for such Monthly Period, minus (b) the amount of Reallocated Principal Collections with respect to such Monthly Period which, pursuant to Section 4.14, are required to fund the Class A Required Amount and the Class M Required Amount, plus (c) the amount of Shared Principal Collections with respect to Group One that are allocated to Series 2009-VFC1 in accordance with Section 4.15(b); minus (d) any portion of the foregoing applied to an Optional Amortization Amount pursuant to Section 4(b) of this Series Supplement for such Monthly Period.

 

“Available Shared Principal Collections” means Shared Principal Collections held in the Collection Account that are available to be applied to cover any Optional Amortization Amount in accordance with Section 4.4.

 

“Base Rate” means, as to any Monthly Period, the annualized percentage (based on actual days during the related Monthly Period, and a 360-day year) equivalent of a fraction, the

 

  

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numerator of which is equal to the sum of the Class A Monthly Interest, the Class M Monthly Interest, the Class B Monthly Interest, the Class C Monthly Interest, the Class A Non-Use Fee and any Class A Senior Additional Amounts, each for the related Distribution Period, and the Investor Servicing Fee with respect to such Monthly Period and the denominator of which is the Weighted Average Invested Amount during such Monthly Period.

 

“Breakage Payment” is defined in Section 4.8.

 

“Business Day” means any “Business Day” (as defined in the Agreement) other than a day on which dealings in U.S. Dollar deposits are not carried out on the London InterBank Market.

 

“Cash Collateral Account” is defined in Section 4.17(a).

 

“Cash Collateral Account Property” is defined in Section 4.17(a).

 

“Certificate Purchase Agreement” means, as the context requires, (i) the Class A Certificate Purchase Agreement, the Class M Certificate Purchase Agreement, the Class B Certificate Purchase Agreement and the Class C Certificate Purchase Agreement or (ii) any of the foregoing.

 

“Change in Control” means the failure of Holding to own, directly or indirectly, 100% of the outstanding shares of common stock (excluding directors’ qualifying shares) of Comenity.

 

“Class A Additional Amounts” is defined in Section 4.8(a).

 

“Class A Certificate” means a certificate substantially in the form of Exhibit A-1 executed by the Transferor and authenticated by the Trustee to be a Class A Asset-Backed Certificate, Series 2009-VFC1.

 

“Class A Certificate Purchase Agreement” means the Third Amended and Restated Class A Certificate Purchase Agreement dated as of the Amendment Closing Date among Transferor, Servicer and each of the Class A Holders, as the same may be amended or otherwise modified from time to time. The Class A Certificate Purchase Agreement is hereby designated as a “Transaction Document” for all purposes of the Agreement and this Series Supplement.

 

“Class A Fee Letter” is defined in the Class A Certificate Purchase Agreement.  Each Class A Fee Letter is hereby designated a “Transaction Document” for all purposes of the Agreement and this Series Supplement.

 

“Class A Fixed Allocation Percentage” means, for any Monthly Period, the percentage equivalent (which percentage shall never exceed 100%) of a fraction, (a) the numerator of which is the Class A Invested Amount as of the close of business on the last day of the Revolving Period and (b) the denominator of which is equal to the Invested Amount as of the close of business on the last day of the Revolving Period.

 

“Class A Floating Allocation Percentage” means, for any Monthly Period, the percentage equivalent (which percentage shall never exceed 100%) of a fraction:

 

  

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(a)           the numerator of which is the Class A Invested Amount as of the close of business on the last day of the preceding Monthly Period; and

 

(b)           the denominator of which is equal to the Invested Amount as of the close of business on the last day of the preceding Monthly Period;

 

provided that with respect to any Monthly Period in which a Reset Date occurs:

 

(x)           if such Reset Date is the result of an Incremental Funding or the issuance of a new Series, the numerator determined pursuant to clause (a) shall be (1) the Class A Invested Amount as of the close of business on the later of the last day of the prior Monthly Period or the preceding Reset Date, for the period from and including the first day of the current Monthly Period or the preceding Reset Date, as applicable, to but excluding such Reset Date and (2) the Class A Invested Amount as of the close of business on such Reset Date, for the period from and including such Reset Date to the earlier of the last day of such Monthly Period (in which case such period shall include such day) or the next succeeding Reset Date (in which case such period shall not include such succeeding Reset Date); and

 

(y)           if such Reset Date is the result of an Incremental Funding or the issuance of a new Series, the denominator determined pursuant to clause (b) shall be (1) the Invested Amount as of the close of business on the later of the last day of the prior Monthly Period or the preceding Reset Date, for the period from and including the first day of the current Monthly Period or preceding Reset Date, as applicable, to but excluding such Reset Date and (2) the Invested Amount as of the close of business on such Reset Date, for the period from and including such Reset Date to the earlier of the last day of such Monthly Period (in which case such period shall include such day) or the next succeeding Reset Date (in which case such period shall not include such succeeding Reset Date);

 

provided further that, for purposes of this definition, with respect to the first Monthly Period, the Closing Date shall be treated as the last day of the preceding Monthly Period.

 

“Class A Funded Amount” means, on any Business Day, an amount equal to the result of (a) $    , plus (b) the aggregate amount of all Class A Incremental Funded Amounts for all Class A Incremental Fundings occurring after the Amendment Closing Date and on or prior to that Business Day, minus (c) the aggregate amount of principal payments made to Class A Holders after the Amendment Closing Date and on or prior to such date. As applied to any particular Class A Certificate, the “Class A Funded Amount” means the portion of the overall Class A Funded Amount represented by that Class A Certificate. The Class A Funded Amount shall be allocated among the Class A Ownership Interests as provided in the Class A Certificate Purchase Agreement.

 

“Class A Funding Agent” is defined in the Class A Certificate Purchase Agreement.

 

“Class A Funding Tranche” is defined in Section 4.8(a).

 

“Class A Holder” means a Person in whose name a Class A Certificate is registered in the Certificate Register.

 

  

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“Class A Incremental Funded Amount” means the amount of the increase in the Class A Funded Amount occurring as a result of any Class A Incremental Funding, which amount shall equal the aggregate amount of the purchase price paid by the Class A Holders with respect to that Class A Incremental Funding pursuant to the Class A Certificate Purchase Agreement.

 

“Class A Incremental Funding” means any increase in the Class A Funded Amount during the Revolving Period made pursuant to the Class A Certificate Purchase Agreement.

 

“Class A Invested Amount” means, on any date of determination, an amount equal to (a) the Class A Funded Amount on that date, minus (b) the excess, if any, of the aggregate amount of reductions to the Class A Invested Amount as a result of Class A Investor Charge-Offs pursuant to Section 4.12(a) over Class A Investor Charge-Offs reimbursed pursuant to Section 4.11(a)(ix) prior to such date of determination; provided that the Class A Invested Amount may not be reduced below zero.

 

“Class A Investor Allocation Percentage” means, for any Monthly Period, (a) with respect to Default Amounts and Finance Charge Receivables at any time and Principal Receivables during the Revolving Period, the Class A Floating Allocation Percentage and (b) with respect to Principal Receivables during a Fixed Allocation Period, the Class A Fixed Allocation Percentage.

 

“Class A Investor Charge-Off” is defined in Section 4.12(a).

 

“Class A Investor Default Amount” means, as to each Transfer Date, an amount equal to the sum for all days during the related Monthly Period of the product of (a) the Investor Default Amount for such day and (b) the Class A Floating Allocation Percentage applicable on such day.

 

“Class A Maximum Funded Amount” means $    , as such amount may be increased or decreased from time to time pursuant to Section 6 of this Series Supplement.  As applied to any particular Class A Certificate, the “Class A Maximum Funded Amount” means the portion of the overall Class A Maximum Funded Amount represented by that Class A Certificate.

 

“Class A Monthly Interest” is defined in Section 4.10(a).

 

“Class A Monthly Principal” is defined in Section 4.9(a).

 

“Class A Non-Use Fee” is defined in Section 4.8(a).

 

“Class A Ownership Interest” is defined in Section 1(c) of this Series Supplement.

 

“Class A Ownership Group Percentage” means the “Ownership Group Percentage” as defined in the Class A Certificate Purchase Agreement.

 

“Class A Pro Rata Percentage” means     %.

 

“Class A Required Amount” is defined in Section 4.10(a).

 

  

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“Class A Senior Additional Amounts” is defined in Section 4.8(a).

 

“Class A Subordinate Additional Amounts” is defined in Section 4.8(a).

 

“Class B Certificate” means a certificate substantially in the form of Exhibit A-3 executed by the Transferor and authenticated by the Trustee to be a Class B Asset-Backed Certificate, Series 2009-VFC1.

 

“Class B Certificate Purchase Agreement” means the Class B Certificate Purchase Agreement dated as of the Closing Date among Transferor, Servicer and the Class B Holders, and as the same may be amended or otherwise modified from time to time.  The Class B Certificate Purchase Agreement is hereby designated a “Transaction Document” for all purposes of the Agreement and this Series Supplement.

 

“Class B Fixed Allocation Percentage” means, for any Monthly Period, the percentage equivalent (which percentage shall never exceed 100%) of a fraction, (a) the numerator of which is the Class B Invested Amount as of the close of business on the last day of the Revolving Period and (b) the denominator of which is equal to the Invested Amount as of the close of business on the last day of the Revolving Period.

 

“Class B Floating Allocation Percentage” means, for any Monthly Period, the percentage equivalent (which percentage shall never exceed 100%) of a fraction:

 

(a)           the numerator of which is the Class B Invested Amount as of the close of business on the last day of the preceding Monthly Period; and

 

(b)           the denominator of which is equal to the Invested Amount as of the close of business on the last day of the preceding Monthly Period;

 

provided that with respect to any Monthly Period in which a Reset Date occurs:

 

(x)           if such Reset Date is the result of an Incremental Funding or the issuance of a new Series, the numerator determined pursuant to clause (a) shall be (1) the Class B Invested Amount as of the close of business on the later of the last day of the prior Monthly Period or the preceding Reset Date, for the period from and including the first day of the current Monthly Period or the preceding Reset Date, as applicable, to but excluding such Reset Date and (2) the Class B Invested Amount as of the close of business on such Reset Date, for the period from and including such Reset Date to the earlier of the last day of such Monthly Period (in which case such period shall include such day) or the next succeeding Reset Date (in which case such period shall not include such succeeding Reset Date); and

 

(y)           if such Reset Date is the result of an Incremental Funding or the issuance of a new Series, the denominator determined pursuant to clause (b) shall be (1) the Invested Amount as of the close of business on the later of the last day of the prior Monthly Period or the preceding Reset Date, for the period from and including the first day of the current Monthly Period or preceding Reset Date, as applicable, to but excluding such Reset Date and (2) the Invested Amount as of the close of business on such Reset Date, for the period from and including such Reset Date to the earlier of the last day of such Monthly Period (in which case

 

  

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such period shall include such day) or the next succeeding Reset Date (in which case such period shall not include such succeeding Reset Date);

 

provided further that, with respect to the first Monthly Period, the Closing Date shall be treated as the last day of the preceding Monthly Period.

 

“Class B Funded Amount” means, on any Business Day, an amount equal to the result of (a) $    , plus (b) the aggregate amount of all Class B Incremental Funded Amounts for all Class B Incremental Fundings occurring after the Amendment Closing Date and on or prior to that Business Day, minus (c) the aggregate amount of principal payments made to the Class B Holder after the Amendment Closing Date and on or prior to such date.

 

“Class B Holder” means a Person in whose name a Class B Certificate is registered in the Certificate Register.

 

“Class B Incremental Funded Amount” means the amount of the increase in the Class B Funded Amount occurring as a result of any Class B Incremental Funding, which amount shall equal the aggregate amount of the purchase price paid by the Class B Holders with respect to that Class B Incremental Funding pursuant to the Class B Certificate Purchase Agreement.

 

“Class B Incremental Funding” means any increase in the Class B Funded Amount during the Revolving Period made pursuant to the Class B Certificate Purchase Agreement.

 

“Class B Invested Amount” means, on any date of determination, an amount equal to (a) the Class B Funded Amount on that date, minus (b) the excess, if any, of (x) the aggregate amount of reductions to the Class B Invested Amount as a result of Class B Investor Charge-Offs and Reallocated Principal Collections and reductions of the Class B Invested Amount pursuant to Sections 4.12(a) and (b) over (y) reimbursements of such reductions pursuant to Section 4.11(a)(xiii) prior to such date of determination; provided that the Class B Invested Amount may not be reduced below zero.

 

 “Class B Investor Allocation Percentage” means, for any Monthly Period, (a) with respect to Default Amounts and Finance Charge Receivables at any time and Principal Receivables during the Revolving Period, the Class B Floating Allocation Percentage and (b) with respect to Principal Receivables during a Fixed Allocation Period, the Class B Fixed Allocation Percentage.

 

“Class B Investor Charge-Off” is defined in Section 4.12(c).

 

“Class B Investor Default Amount” means, as to each Transfer Date, an amount equal to the sum for all days during the related Monthly Period of the product of (a) the Investor Default Amount for such day and (b) the Class B Floating Allocation Percentage applicable on such day.

 

“Class B Maximum Funded Amount” means $    , as such amount may be increased or decreased from time to time pursuant to Section 6 of this Series Supplement.

 

“Class B Monthly Interest” is defined in Section 4.10(e).

 

  

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“Class B Monthly Principal” is defined in Section 4.9(c).

 

“Class B Pro Rata Percentage” means     %.

 

“Class B Reallocated Principal Collections” means, with respect to any Transfer Date, Collections of Principal Receivables allocable to the related Monthly Period applied in accordance with Section 4.14 on such Transfer Date in an amount not to exceed the aggregate amount of Collections allocated to the Investor Certificates pursuant to Sections 4.7(a)(iii), (b)(iii) and (c)(iii) during the Monthly Period relating to such Transfer Date; provided that such amount shall not exceed the Class B Invested Amount after giving effect to any Class B Investor Charge-Offs for such Transfer Date.

 

“Class B Required Amount” is defined in Section 4.10(e).

 

“Class C Certificate” means a certificate substantially in the form of Exhibit A-4 executed by the Transferor and authenticated by the Trustee to be a Class C Asset-Backed Certificate, Series 2009-VFC1.

 

“Class C Certificate Purchase Agreement” means the Class C Certificate Purchase Agreement, dated as of September 28, 2012, among Transferor, Servicer and the Class C Holders, and as the same may be amended or otherwise modified from time to time.  The Class C Certificate Purchase Agreement is hereby designated a “Transaction Document” for all purposes of the Agreement and this Series Supplement.

 

“Class C Fixed Allocation Percentage” means, for any Monthly Period, the percentage equivalent (which percentage shall never exceed 100%) of a fraction, (a) the numerator of which is the Class C Invested Amount as of the close of business on the last day of the Revolving Period and (b) the denominator of which is equal to the Invested Amount as of the close of business on the last day of the Revolving Period.

 

“Class C Floating Allocation Percentage” means, for any Monthly Period, the percentage equivalent (which percentage shall never exceed 100%) of a fraction:

 

(a)           the numerator of which is the Class C Invested Amount as of the close of business on the last day of the preceding Monthly Period; and

 

(b)           the denominator of which is equal to the Invested Amount as of the close of business on the last day of the preceding Monthly Period;

 

provided that with respect to any Monthly Period in which a Reset Date occurs:

 

(x)           if such Reset Date is the result of an Incremental Funding or the issuance of a new Series, the numerator determined pursuant to clause (a) shall be (1) the Class C Invested Amount as of the close of business on the later of the last day of the prior Monthly Period or the preceding Reset Date, for the period from and including the first day of the current Monthly Period or the preceding Reset Date, as applicable, to but excluding such Reset Date and (2) the Class C Invested Amount as of the close of business on such Reset Date, for the period from and including such Reset Date to the earlier of the last day of such Monthly Period (in

 

  

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which case such period shall include such day) or the next succeeding Reset Date (in which case such period shall not include such succeeding Reset Date); and

 

(y)           if such Reset Date is the result of an Incremental Funding or the issuance of a new Series, the denominator determined pursuant to clause (b) shall be (1) the Invested Amount as of the close of business on the later of the last day of the prior Monthly Period or the preceding Reset Date, for the period from and including the first day of the current Monthly Period or preceding Reset Date, as applicable, to but excluding such Reset Date and (2) the Invested Amount as of the close of business on such Reset Date, for the period from and including such Reset Date to the earlier of the last day of such Monthly Period (in which case such period shall include such day) or the next succeeding Reset Date (in which case such period shall not include such succeeding Reset Date);

 

provided further that, with respect to the first Monthly Period, the Amendment Closing Date shall be treated as the last day of the preceding Monthly Period.

 

“Class C Funded Amount” means, on any Business Day, an amount equal to the result of (a) $    , plus (b) the aggregate amount of all Class C Incremental Funded Amounts for all Class C Incremental Fundings occurring after the Amendment Closing Date and on or prior to that Business Day, minus (c) the aggregate amount of principal payments made to the Class C Holder after the Amendment Closing Date and on or prior to such date.

 

“Class C Holder” means a Person in whose name a Class C Certificate is registered in the Certificate Register.

 

“Class C Incremental Funded Amount” means the amount of the increase in the Class C Funded Amount occurring as a result of any Class C Incremental Funding, which amount shall equal the aggregate amount of the purchase price paid by the Class C Holders with respect to that Class C Incremental Funding pursuant to the Class C Certificate Purchase Agreement.

 

“Class C Incremental Funding” means any increase in the Class C Funded Amount during the Revolving Period made pursuant to the Class C Certificate Purchase Agreement.

 

“Class C Invested Amount” means, on any date of determination, an amount equal to (a) the Class C Funded Amount on that date, minus (b) the excess, if any, of (x) the aggregate amount of reductions to the Class C Invested Amount as a result of Class C Investor Charge-Offs and Reallocated Principal Collections and reductions of the Class C Invested Amount pursuant to Sections 4.12(a), (b) and (c) over (y) reimbursements of such reductions pursuant to Section 4.11(a)(xv) prior to such date of determination; provided that the Class B Invested Amount may not be reduced below zero.

 

“Class C Investor Allocation Percentage” means, for any Monthly Period, (a) with respect to Default Amounts and Finance Charge Receivables at any time and Principal Receivables during the Revolving Period, the Class C Floating Allocation Percentage and (b) with respect to Principal Receivables during a Fixed Allocation Period, the Class C Fixed Allocation Percentage.

 

“Class C Investor Charge-Off” is defined in Section 4.12(d).

 

  

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“Class C Investor Default Amount” means, as to each Transfer Date, an amount equal to the sum for all days during the related Monthly Period of the product of (a) the Investor Default Amount for such day and (b) the Class C Floating Allocation Percentage applicable on such day.

 

“Class C Maximum Funded Amount” means $    , as such amount may be increased or decreased from time to time pursuant to Section 6 of this Series Supplement.

 

“Class C Monthly Interest” is defined in Section 4.10(g).

 

“Class C Monthly Principal” is defined in Section 4.9(d).

 

“Class C Pro Rata Percentage” means     %.

 

“Class C Reallocated Principal Collections” means, with respect to any Transfer Date, Collections of Principal Receivables allocable to the related Monthly Period applied in accordance with Section 4.14 on such Transfer Date in an amount not to exceed the aggregate amount of Collections allocated to the Investor Certificates pursuant to Sections 4.7(a)(ii), (b)(ii) and (c)(ii) during the Monthly Period relating to such Transfer Date; provided that such amount shall not exceed the Class C Invested Amount after giving effect to any Class C Investor Charge-Offs for such Transfer Date.

 

“Class C Required Amount” is defined in Section 4.10(g).

 

“Class M Certificate” means a certificate substantially in the form of Exhibit A-2 executed by the Transferor and authenticated by the Trustee to be a Class M Asset-Backed Certificate, Series 2009-VFC1.

 

“Class M Certificate Purchase Agreement” means the Class M Certificate Purchase Agreement dated as of the Closing Date among Transferor, Servicer and the Class M Holders, and as the same may be amended or otherwise modified from time to time.  The Class M Certificate Purchase Agreement is hereby designated a “Transaction Document” for all purposes of the Agreement and this Series Supplement.

 

“Class M Fixed Allocation Percentage” means, for any Monthly Period, the percentage equivalent (which percentage shall never exceed 100%) of a fraction, (a) the numerator of which is the Class M Invested Amount as of the close of business on the last day of the Revolving Period and (b) the denominator of which is equal to the Invested Amount as of the close of business on the last day of the Revolving Period.

 

“Class M Floating Allocation Percentage” means, for any Monthly Period, the percentage equivalent (which percentage shall never exceed 100%) of a fraction:

 

(a)           the numerator of which is the Class M Invested Amount as of the close of business on the last day of the preceding Monthly Period; and

 

(b)           the denominator of which is equal to the Invested Amount as of the close of business on the last day of the preceding Monthly Period;

 

  

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provided that with respect to any Monthly Period in which a Reset Date occurs:

 

(x)           if such Reset Date is the result of an Incremental Funding or the issuance of a new Series, the numerator determined pursuant to clause (a) shall be (1) the Class M Invested Amount as of the close of business on the later of the last day of the prior Monthly Period or the preceding Reset Date, for the period from and including the first day of the current Monthly Period or the preceding Reset Date, as applicable, to but excluding such Reset Date and (2) the Class M Invested Amount as of the close of business on such Reset Date, for the period from and including such Reset Date to the earlier of the last day of such Monthly Period (in which case such period shall include such day) or the next succeeding Reset Date (in which case such period shall not include such succeeding Reset Date); and

 

(y)           if such Reset Date is the result of an Incremental Funding or the issuance of a new Series, the denominator determined pursuant to clause (b) shall be (1) the Invested Amount as of the close of business on the later of the last day of the prior Monthly Period or the preceding Reset Date, for the period from and including the first day of the current Monthly Period or preceding Reset Date, as applicable, to but excluding such Reset Date and (2) the Invested Amount as of the close of business on such Reset Date, for the period from and including such Reset Date to the earlier of the last day of such Monthly Period (in which case such period shall include such day) or the next succeeding Reset Date (in which case such period shall not include such succeeding Reset Date);

 

provided further that, with respect to the first Monthly Period, the Closing Date shall be treated as the last day of the preceding Monthly Period.

 

“Class M Funded Amount” means, on any Business Day, an amount equal to the result of (a) $    , plus (b) the aggregate amount of all Class M Incremental Funded Amounts for all Class M Incremental Fundings occurring after the Amendment Closing Date and on or prior to that Business Day, minus (c) the aggregate amount of principal payments made to the Class M Holders after the Amendment Closing Date and on or prior to such date.

 

“Class M Holder” means a Person in whose name a Class M Certificate is registered in the Certificate Register.

 

“Class M Incremental Funded Amount” means the amount of the increase in the Class M Funded Amount occurring as a result of any Class M Incremental Funding, which amount shall equal the aggregate amount of the purchase price paid by the Class M Holders with respect to that Class M Incremental Funding pursuant to the Class M Certificate Purchase Agreement.

 

“Class M Incremental Funding” means any increase in the Class M Funded Amount during the Revolving Period made pursuant to the Class M Certificate Purchase Agreement.

 

“Class M Invested Amount” means, on any date of determination, an amount equal to (a) the Class M Funded Amount on that date, minus (b) the excess, if any, of (x) the aggregate amount of reductions to the Class M Invested Amount as a result of Class M Investor Charge-Offs and Reallocated Principal Collections and reductions of the Class M Invested Amount pursuant to Section 4.12(a) over (y) reimbursements of such reductions pursuant to

 

  

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Section 4.11(a)(xi) prior to such date of determination; provided that the Class M Invested Amount may not be reduced below zero.

 

“Class M Investor Allocation Percentage” means, for any Monthly Period, (a) with respect to Default Amounts and Finance Charge Receivables at any time and Principal Receivables during the Revolving Period, the Class M Floating Allocation Percentage and (b) with respect to Principal Receivables during a Fixed Allocation Period, the Class M Fixed Allocation Percentage.

 

“Class M Investor Charge-Off” is defined in Section 4.12(b).

 

“Class M Investor Default Amount” means, as to each Transfer Date, an amount equal to the sum for all days during the related Monthly Period of the product of (a) the Investor Default Amount for such day and (b) the Class M Floating Allocation Percentage applicable on such day.

 

“Class M Maximum Funded Amount” means $    , as such amount may be increased or decreased from time to time pursuant to Section 6 of this Series Supplement.

 

“Class  M Monthly Interest” is defined in Section 4.10(c).

 

“Class M Monthly Principal” is defined in Section 4.9(b).

 

“Class M Pro Rata Percentage” means     %.

 

“Class M Reallocated Principal Collections” means, with respect to any Transfer Date, Collections of Principal Receivables allocable to the related Monthly Period applied in accordance with Section 4.14 on such Transfer Date in an amount not to exceed the aggregate amount of Collections allocated to the Investor Certificates pursuant to Sections 4.7(a)(iv), (b)(iv) and (c)(iv) during the Monthly Period relating to such Transfer Date; provided that such amount shall not exceed the Class M Invested Amount after giving effect to any Class M Investor Charge-Offs for such Transfer Date.

 

“Class M Required Amount” is defined in Section 4.10(c).

 

“Closing Date” means March 31, 2009.

 

“Comenity” means Comenity Bank, a Delaware state bank, formerly known as World Financial Network Bank.

 

“Controlled Amortization Amount” means for any Transfer Date with respect to the Controlled Amortization Period, the Invested Amount as of the close of business on the last day of the Revolving Period divided by twelve.

 

“Controlled Amortization Period” means, unless an Early Amortization Event shall have occurred prior thereto, the period commencing at the opening of business on the first day of the Monthly Period beginning on or after the Purchase Commitment Expiration Date and ending on the earlier to occur of (a) the commencement of the Early Amortization Period, and (b) the Series 2009-VFC1 Termination Date; provided that Transferor may, by five Business Days’ prior

 

  

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written notice to Trustee and each Investor Holder (and so long as the Early Amortization Period has not begun), cause the Controlled Amortization Period to begin on any date earlier than the date otherwise specified above.

 

“Controlled Amortization Shortfall” means, with respect to any Transfer Date during the Controlled Amortization Period, the excess, if any, of the Controlled Payment Amount for such Transfer Date over the amounts distributed pursuant to Sections 4.11(c)(i), (ii), (iii) and (iv) for such Transfer Date.

 

“Controlled Payment Amount” means, with respect to any Transfer Date during the Controlled Amortization Period, the sum of (a) the Controlled Amortization Amount for such Transfer Date and (b) any Controlled Amortization Shortfall from the immediately preceding Transfer Date, provided that (a) Transferor may designate any amount greater than the foregoing as the Controlled Payment Amount upon five Business Days’ notice to the Investor Holders prior to the related Transfer Date and (b) in no event will the Controlled Payment Amount exceed the Invested Amount.

 

“Cumulative Principal Shortfall” means the sum of the Principal Shortfalls (as such term is defined in each of the related Series Supplements) for each Series in Group One.

 

“Day Count Fraction” means, as to any Class A Ownership Interest or Class A Funding Tranche for any Distribution Period, a fraction (a) the numerator of which is the number of days in that Distribution Period (or, if less, the number of days during that Distribution Period during which that Class A Ownership Interest or Class A Funding Tranche was outstanding, including the first, but excluding the last, such day) and (b) the denominator of which is the actual number of days in the related calendar year (or, if so specified in the Class A Certificate Purchase Agreement, 360).

 

“Delayed Funding Date” is defined in the Class A Certificate Purchase Agreement.

 

“Default Amount” means, as to any Defaulted Account, the amount of Principal Receivables (other than Ineligible Receivables, unless there is an Insolvency Event with respect to Transferor) in such Defaulted Account on the day it became a Defaulted Account.

 

“Defaulted Account” means an Account in which there are Defaulted Receivables.

 

“Distribution Account” is defined in Section 4.16(a).

 

“Distribution Date” means May 15, 2009 and the fifteenth day of each calendar month thereafter, or if such fifteenth day is not a Business Day, the next succeeding Business Day.

 

“Distribution Period” means, with respect to any Distribution Date, the related Accrual Period (as defined in the Class A Certificate Purchase Agreement).

 

“Early Amortization Commencement Date” means the date on which an Early Amortization Event is deemed to occur pursuant to Section 9.1 or an Early Amortization Event is deemed to occur pursuant to Section 10 of this Series Supplement.

 

  

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“Early Amortization Period” means the period commencing on the Early Amortization Commencement Date and ending on the Series 2009-VFC1 Termination Date.

 

“Excess Spread Percentage” means, for any Monthly Period, a percentage equal to the Portfolio Yield for each Monthly Period minus the Base Rate for such Monthly Period; provided that the Excess Spread Percentages for the February 2009 Monthly Period and the Excess Spread Percentage for the March 2009 Monthly Period shall be deemed to equal the Excess Spread Percentages (as defined in the Series 2005-VFC Supplement to the Agreement) related to the February 2009 and March 2009 Monthly Periods.

 

“Finance Charge Account” is defined in Section 4.16(a).

 

“Finance Charge Shortfall” means, for Series 2009-VFC1 with respect to any Transfer Date, an amount equal to the excess, if any, of (a) the sum of the amounts specified in subsections 4.11(a)(i) through (xx) for that Transfer Date over (b) Available Funds (excluding Excess Finance Charge Collections) with respect to such Transfer Date.

 

“Fixed Allocation Percentage” means, with respect to any Monthly Period, the percentage equivalent of a fraction (a) the numerator of which is the Invested Amount as of the close of business on the last day of the Revolving Period and (b) the denominator of which is the greater of (i) the aggregate amount of Principal Receivables in the Trust determined as of the close of business on (A) if only one Series is outstanding, the last day of the Revolving Period and (B) if more than one Series is outstanding, the last day of the prior Monthly Period and (ii) the sum of the numerators used to calculate the Investor Percentages for allocations with respect to Principal Receivables for all outstanding Series on such date of determination; provided that with respect to any Monthly Period in which a Reset Date occurs, (x) the denominator determined pursuant to subclause (b)(i) shall be (1) the aggregate amount of Principal Receivables in the Trust as of the close of business on the later of the last day of the prior Monthly Period or the preceding Reset Date, for the period from and including the first day of the current Monthly Period or the preceding Reset Date, as applicable, to but excluding such Reset Date and (2) the aggregate amount of Principal Receivables in the Trust as of the close of business on such Reset Date, for the period from and including such Reset Date to the later of the last day of such Monthly Period (in which case such period shall include such day) or the next succeeding Reset Date (in which case such period shall not include such succeeding Reset Date) and (y) the denominator determined pursuant to subclause (b)(ii) shall be (1) the sum of the numerators used to calculate the Investor Percentages for allocations with respect to Principal Receivables for all outstanding Series as of the close of business on the later of the last day of the prior Monthly Period or the preceding Reset Date, for the period from and including the first day of the current Monthly Period or the preceding Reset Date, as applicable, to but excluding such Reset Date and (2) the sum of the numerators used to calculate the Investor Percentages for allocations with respect to Principal Receivables for all outstanding Series as of the close of business on such Reset Date, for the period from and including such Reset Date to the earlier of the last day of such Monthly Period (in which case such period shall include such day) or the next succeeding Reset Date (in which case such period shall not include such succeeding Reset Date).

 

  

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“Fixed Allocation Period” means the Controlled Amortization Period or the Early Amortization Period.

 

“Fixed Period” is defined in Section 4.8(a).

 

“Floating Allocation Percentage” means, with respect to any Monthly Period, the percentage equivalent of a fraction:

 

(a)           the numerator of which is the Invested Amount as of the close of business on the last day of the preceding Monthly Period; and

 

(b)           the denominator of which is the greater of (i) the aggregate amount of Principal Receivables as of the close of business on the last day of the preceding Monthly Period and (ii) the sum of the numerators used to calculate the Investor Percentages for allocations with respect to Finance Charge Receivables, Default Amounts or Principal Receivables, as applicable, for all outstanding Series on such date of determination in subclause (b)(i);

 

provided that with respect to any Monthly Period in which a Reset Date occurs:

 

(x)           if such Reset Date is the result of an Incremental Funding or the issuance of a new Series, the numerator determined pursuant to clause (a) shall be (1) the Invested Amount as of the close of business on the later of the last day of the preceding Monthly Period or the preceding Reset Date, for the period from and including the first day of the current Monthly Period or the preceding Reset Date, as applicable, to but excluding such Reset Date and (2) the Invested Amount as of the close of business on such Reset Date, for the period from and including such Reset Date to the earlier of the last day of such Monthly Period (in which case such period shall include such day) or the next succeeding Reset Date (in which case such period shall not include such succeeding Reset Date);

 

(y)           the denominator determined pursuant to subclause (b)(i) shall be (1) the aggregate amount of Principal Receivables in the Trust as of the close of business on the later of the last day of the prior Monthly Period or the preceding Reset Date, for the period from and including the first day of the current Monthly Period or preceding Reset Date, as applicable, to but excluding such Reset Date and (2) the aggregate amount of Principal Receivables in the Trust as of the close of business on such Reset Date, for the period from and including such Reset Date to the earlier of the last day of such Monthly Period (in which case such period shall include such day) or the next succeeding Reset Date (in which case such period shall not include such succeeding Reset Date); and

 

(z)           the denominator determined pursuant to subclause (b)(ii) shall be (1) the sum of the numerators used to calculate the Investor Percentages for all outstanding Series for allocations with respect to Finance Charge Receivables, Defaulted Receivables or Principal Receivables, as applicable, for all such Series as of the close of business on the later of the last day of the prior Monthly Period or the preceding Reset Date, for the period from and including the first day of the current Monthly Period or preceding Reset Date, as applicable, to but excluding such Reset Date and (2) the sum of the numerators used to calculate the Investor Percentages for all outstanding Series for allocations with

 

  

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respect to Finance Charge Receivables, Defaulted Receivables or Principal Receivables, as applicable, for all such Series as the close of business on such Reset Date, for the period from and including such Reset Date to the earlier of the last day of such Monthly Period (in which case such period shall include such day) or the next succeeding Reset Date (in which case such period shall not include such succeeding Reset Date).

 

provided further that, with respect to the first Monthly Period, the Closing Date shall be treated as the last day of the preceding Monthly Period.

 

“Funded Amount” means, as the context requires, (i) the Class A Funded Amount, the Class M Funded Amount, the Class B Funded Amount  and the Class C Funded Amount or (ii) any of the foregoing.

 

“Group One” means Series 2009-VFC1 and each other Series specified in the related Supplement to be included in Group One.

 

“Holding” means Alliance Data Systems Corporation, a Delaware corporation.

 

“Incremental Funding” means any increase in the Class A Funded Amount, Class M Funded Amount, the Class B Funded Amount or the Class C Funded Amount during the Revolving Period made pursuant to the applicable Certificate Purchase Agreement.

 

“Invested Amount” means, on any date of determination, an amount equal to the sum of (a) the Class A Invested Amount, (b) the Class M Invested Amount, (c) the Class B Invested Amount and (d) the Class C Invested Amount, each as of such date.

 

“Investment Earnings” means, with respect to any Transfer Date, all interest and earnings on Eligible Investments included in the Spread Account (net of losses and investment expenses) during the Monthly Period immediately preceding such Transfer Date.

 

“Investor Certificates” means the Class A Certificates, the Class M Certificates, the Class B Certificates and the Class C Certificates.

 

“Investor Default Amount” means, with respect to any Defaulted Account, an amount equal to the product of (a) the Default Amount and (b) the Floating Allocation Percentage on the day such Account became a Defaulted Account.

 

“Investor Holder” means any Class A Holder, any Class M Holder, any Class B Holder or any Class C Holder.

 

“Investor Interchange Amount” is defined in Section 4.19.

 

“Investor Percentage” means, for any Monthly Period, (a) with respect to Finance Charge Receivables and Default Amounts at any time and Principal Receivables during the Revolving Period, the Floating Allocation Percentage and (b) with respect to Principal Receivables during a Fixed Allocation Period, the Fixed Allocation Percentage.

 

  

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“Investor Principal Collections” means, with respect to any Monthly Period, the sum of (a) the aggregate amount allocated to the Investor Holders for such Monthly Period pursuant to Sections 4.7(a)(ii), (iii), (iv) and (v), 4.7(b) (ii), (iii), (iv) and (v) and 4.7(c) (ii), (iii), (iv) and (v), in each case, as applicable to such Monthly Period, (b) the aggregate amount to be treated as Investor Principal Collections pursuant to Sections 4.11(a)(viii) through (xv) for such Monthly Period, and (c) the aggregate amount transferred from the Excess Funding Account to the Distribution Account pursuant to Sections 4.2 and 4.11(c).

 

“Investor Servicing Fee” is defined in Section 3 of this Series Supplement.

 

“Majority Series Holders” means (i) at any time that any Class A Certificate is Outstanding, the Class A Funding Agents for Ownership Groups (as defined in the Class A Certificate Purchase Agreement) evidencing more than 50% of the Class A Funded Amount, and (ii) if there are no Class A Notes Outstanding, Investor Holders evidencing more than 50% of the Invested Amount.

 

“Mandatory Limited Amortization Amount” means, for any Transfer Date with respect to the Mandatory Limited Amortization Period (beginning with the Transfer Date in the month following the month in which the Mandatory Limited Amortization Period begins) and the Transfer Date in the month in which the Controlled Amortization Period commences (unless the Non-Renewing Purchaser Funded Amount shall have been reduced to zero prior to such date), the lesser of (a) the Non-Renewing Purchaser Funded Amount (after giving effect to all reductions thereof on such Transfer Date pursuant to Section 4.12 and 4.14) as of the Mandatory Limited Amortization Date, divided by 12 (with the quotient rounded up to the nearest dollar) and (b) the excess of the Non-Renewing Purchaser Funded Amount over the Mandatory Limited Amortization Target.

 

“Mandatory Limited Amortization Date” means the Purchase Commitment Expiration Date (without giving effect to a requested extension) but only if all of the following have occurred: (x) the Transferor has requested an extension of such Purchase Commitment Expiration Date, (y) there are one or more Non-Renewing Ownership Groups and (z) the Trust has not repaid the outstanding Non-Renewing Purchaser Funded Amount on or prior to the related Purchase Commitment Expiration Date (without giving effect to the requested extension).

 

“Mandatory Limited Amortization Period” means the period commencing on the first day of the first month that commences on or after the Mandatory Limited Amortization Date and ending on the earliest to occur of (x) the payment in full of the Non-Renewing Purchaser Funded Amount, (y) the commencement of the Controlled Amortization Period or the Early Amortization Period and (z) Series 2009-VFC1 Termination Date.

 

“Mandatory Limited Amortization Shortfall” means, with respect to any Distribution Date, the excess, if any, of (a) the Mandatory Limited Payment Amount for the preceding Distribution Date over (b) the amounts paid pursuant to Section 4.11(b) with respect to the Class A Monthly Principal.

 

“Mandatory Limited Amortization Target” means, with respect to any Transfer Date, (a) the Non-Renewing Purchaser Funded Amount as of the Mandatory Limited Amortization Date

 

  

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less (b) the product (rounded up to the nearest dollar) of (i) a fraction, the numerator of which is the number of full months that have elapsed during the Mandatory Limited Amortization Period as of the such Transfer Date (which, for the avoidance of doubt, shall exclude the month in which such Transfer Date falls), and the denominator of which is 12 and (ii) the Non-Renewing Purchaser Funded Amount as of the Mandatory Limited Amortization Date.

 

“Mandatory Limited Payment Amount” means, with respect to any Transfer Date with respect to the Mandatory Limited Amortization Period, beginning with the Distribution Date in the month immediately following the month in which the Mandatory Limited Amortization Period begins, and the Transfer Date in the month in which the Controlled Amortization Period commences (unless the Non-Renewing Purchaser Funded Amount shall have been reduced to zero prior to such date), the sum of (a) the Mandatory Limited Amortization Amount for such Distribution Date, plus (b) any existing Mandatory Limited Amortization Shortfall.

 

“Merchant Bankruptcy” means the failure of a Merchant generally to, or admit in writing its inability to, pay its debts as they become due; or any proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of such Merchant in an involuntary case under any Debtor Relief Law, or for the appointment of a receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator or other similar official for any substantial part of its property, or for the winding-up or liquidation of its affairs, and such proceedings shall continue undismissed or unstayed and in effect for a period of 60 consecutive days or any of the actions sought in such proceeding shall occur; or any commencement by a Merchant of a voluntary case under any Debtor Relief Law, or such Merchant’s consent to the entry of an order for relief in an involuntary case under any Debtor Relief Law, or consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator or other similar official for any substantial part of its property, or any general assignment for the benefit of creditors; or any Merchant or any Affiliate of such Merchant shall have taken any corporate action in furtherance of any of the foregoing actions with respect to such Merchant; provided, however, that the confirmation of a Chapter 11 Plan under a Debtor Relief Law for a Merchant shall no longer be a Merchant Bankruptcy for such Merchant upon the occurrence of the effective date of such Chapter 11 Plan.  For purposes of this definition, a “Chapter 11 Plan” shall mean a plan filed and confirmed pursuant to the provisions of Chapter 11 of the United States Bankruptcy Code (11 U.S.C. §§ 101 et. seq.) but shall exclude a Chapter 11 Plan under which the Merchant liquidates all of its assets and discontinues operations.

 

“Monthly Deposit Period” means any period of time during which any of the following is true: (a) Comenity maintains a short term debt rating of A-1 or better by S&P, P-1 by Moody’s and, if rated by Fitch, F1 by Fitch (or such other rating below A-1, P-1 or F1, as the case may be, which satisfies the Rating Agency Condition); or (b) Comenity has provided to Trustee a letter of credit covering collection risk of Servicer that satisfies the Rating Agency Condition.

 

“Monthly Period” is defined in the Agreement, except that the first Monthly Period begins on and includes the Closing Date and ends on and includes April 30, 2009.

 

“Non-Renewing Ownership Group” means, commencing on the related Mandatory Limited Amortization Date, any Class A Ownership Interest that has not consented to the

 

  

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extension of the Purchase Commitment Expiration Date when requested as described in the Class A Certificate Purchase Agreement.

 

“Non-Renewing Purchaser Funded Amount” means the Class A Funded Amount allocated to Non-Renewing Ownership Groups.

 

“Non-Renewing Purchaser Scheduled Distribution Date” means the Distribution Date falling in the twelfth month following the month in which the Mandatory Limited Amortization Period begins.

 

“Notice of Class A Incremental Funding” has the meaning specified in the Class A Certificate Purchase Agreement.

 

“Optional Amortization Amount” is defined in Section 4(b) of this Series Supplement.

 

“Optional Amortization Date” is defined in Section 4(b) of this Series Supplement.

 

“Optional Amortization Funds” means the excess of (a) funds deposited into the Principal Account pursuant to Section 4.7(a)(v) or 4.7(b)(v), over (b) (i) during the Controlled Amortization Period, funds deposited into the Principal Account for the payment of the Controlled Payment Amount or (ii) during any Mandatory Limited Amortization Period, funds deposited into the Principal Account for the payment of the Mandatory Limited Payment Amount, if any.

 

“Optional Amortization Notice” is defined in Section 4(b) of this Series Supplement.

 

“Portfolio Yield” means, with respect to any Monthly Period, the annualized percentage (based on actual days during the related Monthly Period, and a 360-day year) equivalent of a fraction, the numerator of which is the sum of (a) an amount equal to the amount of Collections of Finance Charge Receivables allocated to the Investor Certificates for such Monthly Period pursuant to Section 4.7 such amount to be calculated on a cash basis after subtracting the Aggregate Investor Default Amount for such Monthly Period and (b) interest and earnings on the Series Accounts to be treated as Collections of Finance Charge Receivables allocable to the Investor Certificates on the Transfer Date related to such Monthly Period and the denominator of which is the Weighted Average Invested Amount during such Monthly Period.

 

“Principal Account” is defined in Section 4.16(a).

 

“Principal Shortfall” means, for Series 2009-VFC1 with respect to any Transfer Date, the excess, if any, of (a) (i) with respect to any Transfer Date relating to the Controlled Amortization Period, the sum of (A) the Aggregate Optional Amortization Amount and (B) the Controlled Payment Amount for such Transfer Date, (ii) with respect to any Transfer Date during the Early Amortization Period, the Invested Amount and (iii) with respect to any Transfer Date relating to the Revolving Period, the Aggregate Optional Amortization Amount over (b) the Investor Principal Collections, minus Reallocated Principal Collections.

 

“Prior Amendment Date” means September 28, 2012.

 

  

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 “Pro Rata Allocation” has the meaning specified in the Class A Certificate Purchase Agreement.

 

“Pro Rata Funding Event” has the meaning specified in the Class A Certificate Purchase Agreement.

 

“Purchase Commitment Expiration Date” has the meaning specified in the Class A Certificate Purchase Agreement.

 

“Rating Agency” means Fitch Ratings.

 

“Rating Agency Condition” shall mean for purposes of this Series Supplement and the Agreement with respect to Series 2009-VFC1 (i) the consent of all of the Class A Holders, the Class M Holders, the Class B Holders and the Class C Holders and (ii) 10 days’ prior written notice (or, if 10 days’ advance notice is impracticable, as much advance notice as is practicable) to Fitch delivered electronically to notifications.abs@fitchratings.com.

 

“Reallocated Principal Collections” means, with respect to any Transfer Date the sum of the Class M Reallocated Principal Collections, Class B Reallocated Principal Collections and Class C Reallocated Principal Collections for such Transfer Date.

 

“Record Date” means, for purposes of Series 2009-VFC1 with respect to any Distribution Date or Optional Amortization Date, the date falling five Business Days prior to such date.

 

“Refinancing Date” is defined in Section 4(c) of this Series Supplement.

 

“Required Cash Collateral Amount” means, as to any Transfer Date, if a Merchant Bankruptcy has occurred with respect to any Merchant(s), the excess of (a) the aggregate of the Principal Receivables in Accounts relating to such Merchant(s) as of the end of the prior Monthly Period over (b) the product of (i)     % and (ii) the aggregate Principal Receivables in all Accounts.

 

“Required Class B Funded Amount” means the product of (a) the quotient of the sum of the Class A Funded Amount and the Class M Funded Amount, divided by the sum of the Class A Pro Rata Percentage and the Class M Pro Rata Percentage, multiplied by (b) the Class B Pro Rata Percentage.

 

“Required Class C Funded Amount” means the product of (a) the quotient of the sum of the Class A Funded Amount, the Class M Funded Amount and the Class B Funded Amount, divided by the sum of the Class A Pro Rata Percentage, the Class M Pro Rata Percentage and the Class B Pro Rata Percentage, multiplied by (b) the Class C Pro Rata Percentage.

 

“Required Class M Funded Amount” means the product of (a) the quotient of Class A Funded Amount, divided by the Class A Pro Rata Percentage, multiplied by (b) the Class M Pro Rata Percentage.

 

“Required Draw Amount” is defined in Section 4.17(c).

 

  

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“Required Retained Transferor Percentage” means, for purposes of Series 2009-VFC1, at any time, 9.0%.  So long as Series 2009-VFC1 remains outstanding, the phrase “7% or, if less,” shall be deemed to have been deleted from the definition of “Required Retained Transferor Percentage” in the Agreement.

 

“Reset Date” means each of (a) an Addition Date relating to Supplemental Accounts, (b) a Removal Date on which, if any Series has been paid in full, Principal Receivables in an aggregate amount approximately equal to the initial investor interest of such Series are removed from the Trust, (c) a date on which an Incremental Funding occurs, (d) any date on which a new Series is issued and (e) any date on which the outstanding balance of any Variable Interest is increased.

 

“Revolving Period” means the period from and including the Closing Date to, but not including, the earlier of (a) the day the Controlled Amortization Period commences and (b) the Early Amortization Commencement Date.  For the avoidance of doubt, the Revolving Period shall not terminate upon the commencement of a Mandatory Limited Amortization period; provided that the Mandatory Limited Amortization Period shall be deemed to be an Amortization Period.

 

“Scheduled Final Payment Date” means the Distribution Date falling in the twelfth month following the month in which the Controlled Amortization Period begins.

 

“Series Account” means, as to Series 2009-VFC1, the Distribution Account, the Finance Charge Account, the Principal Account, the Cash Collateral Account and the Spread Account.

 

“Series 2009-VFC1” means the Series of the World Financial Network Credit Card Master Trust III represented by the Investor Certificates.

 

“Series 2009-VFC1 Termination Date” means the earliest to occur of (a) the Distribution Date falling in a Fixed Allocation Period on which the Invested Amount is paid in full, (b) the termination of the Trust pursuant to the Agreement and (c) the Distribution Date on or closest to the date falling 46 months after the Early Amortization Commencement Date.

 

“Series Servicing Fee Percentage” means 2.0%.

 

“Shared Principal Collections” means, as the context requires, either (a) the amount allocated to the Investor Certificates which may be applied to the Principal Shortfalls (as such term is defined in the Agreement) with respect to other outstanding Series in Group One or (b) the amounts allocated to the investor certificates of other Series in Group One which the applicable Supplements for such Series specify are to be treated as “Shared Principal Collections” and which may be applied to cover the Principal Shortfall with respect to the Investor Certificates.

 

“Specified Transferor Amount” means, at any time, the Minimum Transferor Amount (including the Additional Minimum Transferor Amount, if any) at that time.

 

“Spread Account” is defined in Section 4.20.

 

  

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“Spread Account Amount” shall mean, as of any date, an amount equal to the amount on deposit in the Spread Account (exclusive of Investment Earnings) on such date, after giving effect to all deposits, transfers and withdrawals from the Spread Account on such date.

 

“Spread Account Cap” with respect to any date of determination, shall mean the lesser of (a) the Class B Invested Amount on such date and (b) the result obtained by multiplying the sum of the Class A Invested Amount, the Class M Invested Amount, the Class B Invested Amount and the Class C Invested Amount by the Applicable Percentage in effect on such date.

 

“Target Amount” is defined in Section 4.7(d).

 

“Unfunded Mandatory Limited Payment Amount” means, at any date of determination during a Monthly Period, the excess, if any, of (1) the Mandatory Limited Payment Amount for the Transfer Date in the next following Monthly Period over (2) the amount on deposit in the Principal Account available for payment of such Mandatory Limited Payment Amount.

 

“Unfunded Optional Amortization Amount” means, at any time, the excess, if any, of the (1) the Aggregate Optional Amortization Amount over (2) the amount on deposit in the Principal Account available for payment of the Aggregate Optional Amortization Amount.

 

“Weighted Average Class A Funded Amount” means, as to any Class A Ownership Interest (or Class A Funding Tranche) for any Distribution Period, the quotient of (a) the summation of the portion of the Class A Funded Amount allocated to that Class A Ownership Interest (or Class A Funding Tranche) determined as of each day in that Distribution Period, divided by (b) the number of days in that Distribution Period.

 

“Weighted Average Class A Invested Amount” means, for any Monthly Period, the quotient of (a) the summation of the Class A Invested Amount determined as of each day in that Monthly Period, divided by (b) the number of days in that Monthly Period.

 

“Weighted Average Invested Amount” means, for any Monthly Period, the quotient of (a) the summation of the Invested Amount determined as of each day in that Monthly Period, divided by (b) the number of days in that Monthly Period.

 

SECTION 3.                           Servicing Fee.  The share of the Servicing Fee allocable to Series 2009-VFC1 with respect to any Transfer Date (the “Investor Servicing Fee”) shall be equal to one-twelfth of the product of (i) the Series Servicing Fee Percentage and (ii) the Weighted Average Invested Amount for the Monthly Period preceding such Transfer Date.  The Investor Servicing Fee shall be payable to Servicer solely to the extent amounts are available for distribution in respect thereof pursuant to Sections 4.11(a)(iv).

 

SECTION 4.                           Variable Funding Mechanics.  (a)  Incremental Fundings.  (i) From time to time during the Revolving Period and prior to the Purchase Commitment Expiration Date, Transferor and Servicer may notify one or more Class A Holders that a Class A Incremental Funding will occur, subject to the conditions of the Class A Certificate Purchase Agreement on the next or any subsequent Business Day by delivering a Notice of Class A Incremental Funding executed by Transferor and Servicer to the Class A Funding Agent for each such Class A Holder, specifying the amount of such Class A Incremental Funding allocated to

 

  

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each Class A Ownership Interest and the Business Day upon which such Class A Incremental Funding is to occur; provided that a Class A Incremental Funding shall not be requested from a Class A Funding Agent for a Class A Ownership Interest that is a Non-Renewing Ownership Group if the Class A Incremental Funding would occur on or after the Purchase Commitment Expiration Date (without giving effect to any requested extension of the Purchase Commitment Expiration Date to which the related Non-Renewing Ownership Group did not consent).  At any time that a Pro Rata Funding Event has occurred and is continuing, the amount of each Class A Incremental Funding shall be allocated among the Class A Ownership Interests on a pro rata basis based on their respective Class A Ownership Group Percentages; provided that if a Pro Rata Funding Event has occurred and is continuing, the amount of the Class A Incremental Funding may be allocated among the Class A Ownership Interests on a non-pro rata basis if such allocation results in a Pro Rata Allocation among the Class A Ownership Interests on or before the Delayed Funding Date with respect to the related Notice of Class A Incremental Funding, after giving effect to the Class A Incremental Funding, and any Class A Incremental Funding to occur on or before such Delayed Funding Date and any Optional Amortization Amount requested to be allocated to one or more Class A Ownership Interests on or before such Delayed Funding Date.  Upon any Class A Incremental Funding, the Class A Floating Allocation Percentage, the Class A Invested Amount, the Floating Allocation Percentage and the Invested Amount shall increase as provided herein.  The increase in the Class A Invested Amount and the Class A Funded Amount shall be allocated to the Class A Certificates held by the Class A Holders from which purchase prices were received in connection with the Class A Incremental Funding in proportion to the amount of such purchase prices received.

 

(ii)           From time to time during the Revolving Period, Transferor and Servicer may notify one or more Class M Holders that a Class M Incremental Funding will occur, subject to the conditions of the Class M Certificate Purchase Agreement on the next or any subsequent Business Day by delivering a Class M Incremental Funding Notice (as defined in the Class M Certificate Purchase Agreement) executed by Transferor and Servicer to the Class M Holders, specifying the amount of such Class M Incremental Funding and the Business Day upon which such Class M Incremental Funding is to occur. Upon any Class M Incremental Funding, the Class M Floating Allocation Percentage, the Class M Invested Amount, the Floating Allocation Percentage and the Invested Amount shall increase as provided herein.

 

(iii)           From time to time during the Revolving Period, Transferor and Servicer may notify one or more Class B Holders that a Class B Incremental Funding will occur, subject to the conditions of the Class B Certificate Purchase Agreement on the next or any subsequent Business Day by delivering a Class B Incremental Funding Notice (as defined in the Class B Certificate Purchase Agreement) executed by Transferor and Servicer to the Class B Holders, specifying the amount of such Class B Incremental Funding and the Business Day upon which such Class B Incremental Funding is to occur. Upon any Class B Incremental Funding, the Class B Floating Allocation Percentage, the Class B Invested Amount, the Floating Allocation Percentage and the Invested Amount shall increase as provided herein.

 

(iv)            From time to time during the Revolving Period, Transferor and Servicer may notify one or more Class C Holders that a Class C Incremental Funding will occur,

 

  

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subject to the conditions of the Class C Certificate Purchase Agreement on the next or any subsequent Business Day by delivering a Class C Incremental Funding Notice (as defined in the Class C Certificate Purchase Agreement) executed by Transferor and Servicer to the Class C Holders, specifying the amount of such Class C Incremental Funding and the Business Day upon which such Class C Incremental Funding is to occur. Upon any Class C Incremental Funding, the Class C Floating Allocation Percentage, the Class C Invested Amount, the Floating Allocation Percentage and the Invested Amount shall increase as provided herein.

 

(b)           Optional Amortization. On any Business Day in the Revolving Period or the Controlled Amortization Period, Transferor may cause Servicer to provide notice to Trustee and the Investor Holders (an “Optional Amortization Notice”) at least five Business Days prior to any Business Day (the “Optional Amortization Date”) stating its intention to cause a full or partial amortization of the Investor Certificates with Optional Amortization Funds and/or Shared Principal Collections on the Optional Amortization Date, in full or in part in an amount (the “Optional Amortization Amount”), which shall be allocated among the Class A Certificates, the Class M Certificates, the Class B Certificates and the Class C Certificates based on the Class A Pro Rata Percentage, the Class M Pro Rata Percentage, the Class B Pro Rata Percentage and the Class C Pro Rata Percentage, respectively; provided that if as a result of the payment of a Mandatory Limited Payment Amount, the Class M Invested Amount exceeds an amount equal to the Required Class M Funded Amount, the Class B Invested Amount exceeds an amount equal to the Required Class B Funded Amount or the Class C Invested Amount exceeds an amount equal to the Required Class C Funded Amount, the Optional Amortization Amount may be allocated on a non-pro rata basis among the Classes of Series 2009-VFC1 Certificates in order to first, reduce the Class M Invested Amount to an amount not less than the Required Class M Funded Amount, second, to reduce the Class B Invested Amount to an amount not less than the Required Class B Funded Amount, and third, to reduce the Class C Invested Amount to an amount not less than the Required Class C Funded Amount.  The portion of the Optional Amortization Amount allocated to any Class A Ownership Interest shall be in an aggregate amount not less than $3,000,000 or integral multiples of $100,000 in excess thereof, except that the portion of the Optional Amortization Amount allocated to any Class A Ownership Interest may equal the entire Class A Funded Amount of the related Class A Certificate.  The Optional Amortization Notice shall state the Optional Amortization Date, the Optional Amortization Amount and the allocation of such Optional Amortization Amount among the various Classes and Class A Ownership Interests; provided that at any time that a Pro Rata Funding Event has occurred and is continuing, the Class A Pro Rata Percentage of the Optional Amortization Amount (other than any Optional Amortization Amount to be allocated to a Non-Renewing Ownership Group) shall be allocated among the Class A Ownership Interests (excluding any Non-Renewing Ownership Groups) on a pro rata basis based on their respective Class A Ownership Group Percentages; provided further that if a Pro Rata Funding Event has occurred and is continuing, and a Pro Rata Allocation does not exist on the related Optional Amortization Date, then the Class A Pro Rata Percentage of the Optional Amortization Amount shall instead be allocated among the Class A Ownership Interests on a non-pro rata basis such that a Pro Rata Allocation would exist after giving effect to application of the Optional Amortization Amount, and any requested Class A Incremental Funding that has been requested on or before the related Optional Amortization Date.  The Optional Amortization Amount shall be paid from Optional Amortization Funds and/or Shared Principal Collections pursuant to Section 4.4. If a Class A Ownership Interest is divided into

 

  

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more than one Class A Funding Tranche, allocation of the Optional Amortization Amount for each Class A Ownership Interest among the various outstanding Class A Funding Tranches shall be at the discretion of Transferor, and accrued interest and any Class A Additional Amounts on the affected Class A Funding Tranches shall be payable on the first Distribution Date on or after the related Optional Amortization Date. On the Business Day prior to each Optional Amortization Date, Servicer shall instruct Trustee in writing (which writing shall be substantially in the form of Exhibit B) to withdraw Optional Amortization Funds from the Principal Account and/or Available Shared Principal Collections from the Collection Account in an aggregate amount sufficient to pay the Optional Amortization Amount on that Optional Amortization Date and deposit the same in the Distribution Account, and Trustee, acting in accordance with such instructions, shall on such Business Day make such withdrawal and deposit.

 

(c)           Refinanced Optional Amortization. On any Business Day in the Revolving Period or the Controlled Amortization Period, Transferor may, with the consent of each affected Investor Holder, cause Servicer to provide notice to Trustee and all of the Investor Holders at least five Business Days prior to any Business Day (the “Refinancing Date”) stating its intention to cause the Funded Amount to be prepaid in full or in part in an amount not less than $3,000,000 and integral multiples of $100,000 in excess thereof (or, if less, the remaining Funded Amount) on the Refinancing Date with the proceeds from the issuance of a new series of Certificates.  Any such prepayment of the Invested Amount shall be accompanied by a payment of (i) accrued and unpaid interest on the Funded Amount (or the portion thereof that is being prepaid) through the Refinancing Date, plus (ii) any accrued and unpaid Class A Non-Use Fees and Class A Additional Amounts in respect of the Funded Amount (or portion thereof that is being prepaid) through the Refinancing Date.  In the case of any such conveyance, the proceeds of the new issuance in an amount sufficient (together with Collections available for such purpose) to pay the required amounts shall be deposited in the Distribution Account and shall be distributed to the applicable Investor Holder on the Refinancing Date on a pro rata basis in accordance with the Class A Pro Rata Percentage, Class M Pro Rata Percentage, Class B Pro Rata Percentage and Class C Pro Rata Percentage and, with respect to the Class A Certificates, shall be allocated among the Class A Ownership Interests as specified by the Transferor.  At any time that a Pro Rata Funding Event has occurred and is continuing, the amount of any reduction in the Class A Funded Amount on the Refinancing Date shall be allocated among the Class A Ownership Interests on a pro rata basis based on their respective Class A Ownership Group Percentages; provided however that if a Pro Rata Funding Event has occurred and is continuing, and a reduction is requested at such time as a Pro Rata Allocation does not exist, then the amount of such reduction shall instead be allocated among the Class A Ownership Interests on a non-pro rata basis such that a Pro Rata Allocation would exist among the Class A Ownership Interests after giving effect to the payments made on the Refinancing Date, and any requested Class A Incremental Funding that has been requested on or before the related Refinancing Date.

 

SECTION 5.                           Optional Repurchase; Reassignment and Termination Provisions.  (a) The Investor Certificates shall be subject to purchase by the Servicer at its option on any Distribution Date, on or after the Distribution Date on which the Invested Amount is reduced to an amount less than or equal to 10% of the highest historical Invested Amount by deposit into the Collection Account a final distribution for application in accordance with Section 12.2 an amount which shall include the amount, if any, on deposit in the Principal Account and will be equal to the sum of (i) the Invested Amount, plus (ii) accrued and unpaid interest on the Investor

 

  

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Certificates through the day preceding the Distribution Date on which the repurchase occurs, plus (iii) any accrued and unpaid Class A Non-Use Fees and Class A Additional Amounts in respect of the Investor Certificates through the day preceding the Distribution Date on which the repurchase occurs.  Upon the tender of the outstanding Investor Certificates by the Investor Holders, Trustee shall, in accordance with the instructions of the Servicer, distribute the amounts, together with all funds on deposit in the Principal Account that are allocable to the Investor Certificates, to the Investor Holders on the next Distribution Date in repayment of the principal amount and accrued and unpaid interest owing to the Investor Holders. Following any redemption, the Investor Holders shall have no further rights with respect to the Receivables. In the event that Transferor fails for any reason to deposit in the Principal Account the aggregate purchase price for the Investor Certificates, payments shall continue to be made to the Investor Holders in accordance with the terms of the Agreement and this Series Supplement.

 

(b)           The amount required to be deposited by Transferor with respect to the Investor Certificates in connection with any reassignment of Receivables pursuant to Section 2.6 shall equal the sum of (i) the Invested Amount, plus (ii) accrued and unpaid interest on the Investor Certificates through the day preceding the Distribution Date on which the repurchase occurs, plus (c) any accrued and unpaid Class A Non-Use Fees and Class A Additional Amounts in respect of the Investor Certificates through the day preceding the Distribution Date on which the repurchase occurs.  The amount so deposited shall be distributed to the Investor Holders in final payment of the Invested Amount and all such other amounts on the Distribution Date on which it is deposited.

 

(c)           Proceeds available from the sale of Receivables in accordance with Section 12.2 on the Series 2009-VFC1 Termination Date shall be treated, to the extent of the Invested Amount, as Collections of Principal Receivables that have been allocated to the Investor Certificates and any excess shall be treated as Collections of Finance Charge Receivables that have been allocated to the Investor Certificates, in each case with respect to the prior Monthly Period.

 

SECTION 6.                           Maximum Funded Amounts.  (a) The initial Class A Maximum Funded Amount of each Class A Certificate is as set forth on the related Class A Certificate.  The Class A Maximum Funded Amount of each Class A Certificate may be reduced or increased from time to time as provided in the Class A Certificate Purchase Agreement.  Increases and decreases in the overall Class A Maximum Funded Amount are not required to be made ratably among the various Class A Certificates.  Any decrease in the Class A Maximum Funded Amount of any Class A Certificate shall be permanent, unless a subsequent increase in the Class A Maximum Funded Amount is made in accordance with the Class A Certificate Purchase Agreement.

 

(b)           The initial Class M Maximum Funded Amount of each Class M Certificate is as set forth on the related Class M Certificate.  The Class M Maximum Funded Amount of each Class M Certificate may be reduced or increased from time to time with the written consent of the related Class M Holder and as provided in the Class M Certificate Purchase Agreement.  Any decrease in the Class M Maximum Funded Amount of any Class M Certificate shall be permanent, unless a subsequent increase in the Class M Maximum Funded Amount is made in accordance with the Class M Certificate Purchase Agreement.

 

  

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(c)           The initial Class B Maximum Funded Amount of each Class B Certificate is as set forth on the related Class B Certificate.  The Class B Maximum Funded Amount of each Class B Certificate may be reduced or increased from time to time with the written consent of the related Class B Holder and as provided in the Class B Certificate Purchase Agreement.  Any decrease in the Class B Maximum Funded Amount of any Class B Certificate shall be permanent, unless a subsequent increase in the Class B Maximum Funded Amount is made in accordance with the Class B Certificate Purchase Agreement.

 

(d)           The initial Class C Maximum Funded Amount of each Class C Certificate is as set forth on the related Class C Certificate.  The Class C Maximum Funded Amount of each Class C Certificate may be reduced or increased from time to time with the written consent of the related Class C Holder and as provided in the Class C Certificate Purchase Agreement.  Any decrease in the Class C Maximum Funded Amount of any Class C Certificate shall be permanent, unless a subsequent increase in the Class C Maximum Funded Amount is made in accordance with the Class C Certificate Purchase Agreement.

 

SECTION 7.                           Delivery of the Investor Certificates.  (a) Transferor represents and warrants that is has delivered the Investor Certificates (in definitive, fully registered form) more fully described in Section 7(b) of this Series Supplement to Trustee for authentication in accordance with Section 6.1.

 

(b)           Trustee hereby acknowledges Transferor’s execution and delivery of the following Investor Certificates (in definitive, fully registered form) to Trustee pursuant to Section 6.1: (i) one (1) Class A Certificate designated R-8 in the principal amount of up to $    in the name of JPMorgan Chase Bank, N.A., (ii) one (1) Class A Certificate designated R-9 in the principal amount of up to $    in the name of The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, (iii) one (1) Class A Certificate designated R-10 in the principal amount of up to $    in the name of BNP Paribas, New York Branch, (iv) one (1) Class M Certificate designated R-4 in the principal amount of up to $    in the name of Comenity Bank, (v) one (1) Class B Certificate designated R-4 in the principal amount of up to $    in the name of Comenity Bank and (vi) one (1) Class C Certificate designated R-2 in the principal amount of up to $    in the name of WFN Credit Company, LLC.

 

(c)           Pursuant to Section 6.2, Transferor hereby authorizes and directs Trustee to authenticate and deliver each such Investor Certificate delivered in accordance with Section 7(a) of this Series Supplement to the Transferor.  The Transferor shall deliver such Investor Certificates as directed by the respective entities in whose names such Investor Certificates are held.

 

(d)           This Section 7 of this Series Supplement constitutes the order of the Transferor delivered pursuant to Section 6.2.

 

SECTION 8.                           Article IV of the Agreement.  Sections 4.1 through 4.5 shall read in their entirety as provided in the Agreement. Article IV (except for Sections 4.1 through 4.5 thereof) shall read in its entirety as follows and shall be applicable only to the Investor Certificates:

 

  

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ARTICLE IV         RIGHTS OF CERTIFICATEHOLDERS; ALLOCATIONS

 

SECTION 4.6.                       Rights of Investor Holders.  The Investor Certificates shall represent undivided interests in the Trust, consisting of the right to receive, to the extent necessary to make the required payments with respect to such Investor Certificates at the times and in the amounts specified in this Agreement, (a) the Floating Allocation Percentage and Fixed Allocation Percentage (as applicable from time to time) of Collections received with respect to the Receivables and (b) funds on deposit in the Collection Account, the Finance Charge Account, the Principal Account, the Distribution Account, the Excess Funding Account, the Cash Collateral Account and the Spread Account. The Class M Certificates, the Class B Certificates and the Class C Certificates shall be subordinate to the Class A Certificates to the extent described herein.  The Class B Certificates and the Class C Certificates shall be subordinate to the Class M Certificates to the extent described herein.  The Class C Certificates shall be subordinate to the Class B Certificates to the extent described herein.  The Transferor Certificate shall not represent any interest in the Collection Account, the Finance Charge Account, the Principal Account, the Distribution Account, the Excess Funding Account, the Cash Collateral Account or the Spread Account, except as specifically provided in this Article IV.

 

SECTION 4.7                         Allocations.  (a)  Allocations During the Revolving Period.  During the Revolving Period, Servicer shall allocate Collections to the Investor Holders as follows:

 

(i)           allocate to the Investor Holders an amount equal to the product of (A) the Investor Percentage on the Date of Processing of such Collections and (B) the aggregate amount of Collections processed in respect of Finance Charge Receivables on such Date of Processing;

 

(ii)           allocate to the Investor Holders an amount equal to the product of (A) the Class C Investor Allocation Percentage on the Date of Processing of such Collections, (B) the Investor Percentage on the Date of Processing of such Collections and (C) the aggregate amount of Collections processed in respect of Principal Receivables on such Date of Processing;

 

(iii)           allocate to the Investor Holders an amount equal to the product of (A) the Class B Investor Allocation Percentage on the Date of Processing of such Collections, (B) the Investor Percentage on the Date of Processing of such Collections and (C) the aggregate amount of Collections processed in respect of Principal Receivables on such Date of Processing;

 

(iv)           allocate to the Investor Holders an amount equal to the product of (A) the Class M Investor Allocation Percentage on the Date of Processing of such Collections, (B) the Investor Percentage on the Date of Processing of such Collections and (C) the aggregate amount of Collections processed in respect of Principal Receivables on such Date of Processing; and

 

(v)           allocate to the Investor Holders an amount equal to the lesser of (A) the product of (1) the Class A Investor Allocation Percentage on the Date of Processing of such Collections, (2) the Investor Percentage on the Date of Processing of such

 

  

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Collections and (3) the aggregate amount of Collections processed in respect of Principal Receivables on such Date of Processing and (B) the sum of any Unfunded Mandatory Limited Payment Amount and any Unfunded Optional Amortization Amount.

 

In addition, Servicer shall treat as Shared Principal Collections an amount equal to the excess, if any, of (1) the amount calculated pursuant to clause (v)(A) above over (2) the amount calculated pursuant to clause (v)(B) above.

 

(b)           Allocations During the Controlled Amortization Period. During the Controlled Amortization Period, Servicer shall allocate Collections to the Investor Holders as follows:

 

(i)           allocate to the Investor Holders an amount equal to the product of (A) the Investor Percentage on the Date of Processing of such Collections and (B) the aggregate amount of Collections processed in respect of Finance Charge Receivables on such Date of Processing;

 

(ii)           allocate to the Investor Holders an amount equal to the product of (A) the Class C Investor Allocation Percentage on the Date of Processing of such Collections, (B) the Investor Percentage on the Date of Processing of such Collections and (C) the aggregate amount of Collections processed in respect of Principal Receivables on such Date of Processing;

 

(iii)           allocate to the Investor Holders an amount equal to the product of (A) the Class B Investor Allocation Percentage on the Date of Processing of such Collections, (B) the Investor Percentage on the Date of Processing of such Collections and (C) the aggregate amount of Collections processed in respect of Principal Receivables on such Date of Processing;

 

(iv)           allocate to the Investor Holders an amount equal to the product of (A) the Class M Investor Allocation Percentage on the Date of Processing of such Collections, (B) the Investor Percentage on the Date of Processing of such Collections and (C) the aggregate amount of Collections processed in respect of Principal Receivables on such Date of Processing; and

 

(v)           allocate to the Investor Holders an amount equal to the product of (A) the Class A Investor Allocation Percentage on the Date of Processing of such Collections, (B) the Investor Percentage on the Date of Processing of such Collections and (C) the aggregate amount of Collections processed in respect of Principal Receivables on such Date of Processing.

 

(c)           Allocations During the Early Amortization Period. During the Early Amortization Period, Servicer shall allocate Collections to the Investor Holders as follows:

 

(i)           allocate to the Investor Holders an amount equal to the product of (A) the Investor Percentage on the Date of Processing of such Collections and (B) the aggregate amount of Collections processed in respect of Finance Charge Receivables on each Date of Processing;

 

  

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(ii)           allocate to the Investor Holders an amount equal to the product of (A) the Class C Investor Allocation Percentage on the Date of Processing of such Collections, (B) the Investor Percentage on the Date of Processing of such Collections and (C) the aggregate amount of Collections processed in respect of Principal Receivables on such Date of Processing;

 

(iii)           allocate to the Investor Holders an amount equal to the product of (A) the Class B Investor Allocation Percentage on the Date of Processing of such Collections, (B) the Investor Percentage on the Date of Processing of such Collections and (C) the aggregate amount of Collections processed in respect of Principal Receivables on such Date of Processing;

 

(iv)           allocate to the Investor Holders an amount equal to the product of (A) the Class M Investor Allocation Percentage on the Date of Processing of such Collections, (B) the Investor Percentage on the Date of Processing of such Collections and (C) the aggregate amount of Collections processed in respect of Principal Receivables on such Date of Processing; and

 

(v)           allocate to the Investor Holders an amount equal to the product of (A) the Class A Investor Allocation Percentage on the Date of Processing of such Collections, (B) the Investor Percentage on the Date of Processing of such Collections and (C) the aggregate amount of Collections processed in respect of Principal Receivables on such Date of Processing.

 

(d)           During a Monthly Deposit Period, amounts allocated to the Investor Holders pursuant to Sections 4.7(a), (b) and (c) during any Monthly Period need not be deposited into the Collection Account or any Series Account prior to the earlier of (i) the Business Day prior to the date on which such amounts are needed to make any payment on a Refinancing Date or an Optional Amortization Date, in which case such amounts shall be deposited only as required by Section 4(b) of this Series Supplement and (ii) the related Transfer Date, and when so deposited, (x) may be deposited net of any amounts required to be distributed to Transferor and the Servicer, if Comenity is Servicer and (y) shall be deposited into the Finance Charge Account (in the case of Collections of Finance Charge Receivables) and the Principal Account (in the case of Collections of Principal Receivables (not including any Shared Principal Collections allocated to Series 2009-VFC1 pursuant to Section 4.15)), subject in either case to the proviso to the next sentence.  At any other time, amounts so allocated to the Investor Holders on each Date of Processing shall be deposited on that Date of Processing into the Finance Charge Account (in the case of Collections of Finance Charge Receivables) and the Principal Account (in the case of Collections of Principal Receivables (not including any Shared Principal Collections allocated to Series 2009-VFC1 pursuant to Section 4.15)), provided that:  (w) so long as no draw has been made on the Cash Collateral Account and no Early Amortization Event has occurred with respect to each Monthly Period falling in the Revolving Period, Collections of Finance Charge Receivables shall be deposited into the Finance Charge Account only until such time as the aggregate amount so deposited equals an amount (the “Target Amount”) equal to the product of (i) the sum of (A) the amounts of Class A Monthly Interest, plus the Class M Monthly Interest, plus the Class B Monthly Interest, plus the Class C Monthly Interest, plus the Class A Senior Additional Amounts (if any), (B) if Comenity is not Servicer, the Investor Servicing Fee due on

 

  

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the related Distribution Date, and (C) any amount required to be deposited in the Cash Collateral Account on the related Transfer Date multiplied by (ii) 1.20; (x) with respect to each Monthly Period falling in the Revolving Period, Collections of Principal Receivables allocated to the Investor Holders pursuant to subsections 4.7(a)(ii), (iii) and (iv) shall be paid to Transferor (or, if the Transferor Amount is less than the Specified Transferor Amount, deposited into the Excess Funding Account); (y) with respect to any Monthly Period falling in the Controlled Amortization Period, Collections of Principal Receivables allocated to the Investor Holders pursuant to subsections 4.7(b)(ii) through (v) are only required to be deposited into the Principal Account until the amount on deposit in the Principal Account equals the sum of (i) the Controlled Payment Amount for the related Transfer Date, plus (ii) the Unfunded Optional Amortization Amount, if any, and any Collections of Principal Receivables in excess of such amount shall be paid to the Transferor (or, if the Transferor Amount is less than the Specified Transferor Amount, deposited into the Excess Funding Account) and (z) with respect to any Monthly Period falling in the Early Amortization Period, Collections of Principal Receivables allocated to the Investor Holders pursuant to subsections 4.7(c)(ii) through (v) are only required to be deposited into the Principal Account until the amount on deposit in the Principal Account equals the Funded Amount, and any Collections of Principal Receivables in excess of such amount shall be paid to the Transferor (or, if the Transferor Amount is less than the Specified Transferor Amount, deposited into the Excess Funding Account).

 

With respect to any Monthly Period when deposits of Collections of Finance Charge Receivables into the Finance Charge Account are limited in accordance with clause (x) of the preceding proviso, notwithstanding such limitation: Collections of Finance Charge Receivables released to Transferor pursuant to such clause (x) shall be deemed, for purposes of all calculations under this Series Supplement, to have been applied to the items specified in subsection 4.11(a), to which such amounts would have been applied (and in the priority in which they would have been applied) had such amounts been available in the Finance Charge Account on such Transfer Date. Notwithstanding such clause (x) above, if on any Business Day Servicer determines that the Target Amount for a Monthly Period exceeds the Target Amount for that Monthly Period as previously calculated by Servicer, then (x) Servicer shall (on the same Business Day) inform Transferor of such determination, and (y) within two Business Days of receiving such notice Transferor shall deposit into the Finance Charge Account funds in an amount equal to the amount of Collections of Finance Charge Receivables allocated to the Investor Holders for that Monthly Period but not deposited into the Finance Charge Account due to the operation of such clause (x) (but not in excess of the amount required so that the aggregate amount deposited for the subject Monthly Period equals the Target Amount). In addition, if on any Transfer Date the Transferor Amount will be less than the Specified Transferor Amount after giving effect to all transfers and deposits on that Transfer Date, Transferor shall, on that Transfer Date, deposit into the Principal Account funds in an amount equal to the amounts of available funds that are required to be treated as Investor Principal Collections pursuant to Sections 4.11(a)(viii) - (xv) but are not available from funds in the Finance Charge Account as a result of the operation of clause (x); and provided further that, except as provided in the immediately preceding proviso, no funds shall be required to be deposited to the Principal Account pursuant to Sections 4.11(a)(viii) – (xv) unless such funds are required to make payments pursuant to Sections 4.11(c)(i) – (iv) on the related Transfer Date.

 

  

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(e)           On any date, Servicer may withdraw from the Collection Account or any Series Account any amounts inadvertently deposited in such account that should have not been so deposited.

 

SECTION 4.8                         Interest, Class A Non-Use Fee and Breakage.  (a) Pursuant to the Class A Certificate Purchase Agreement, certain Class A Ownership Interests may from time to time be divided into one or more subdivisions (each, as further specified in the Class A Certificate Purchase Agreement, a “Class A Funding Tranche”) which will accrue interest on different bases.  For Class A Funding Tranches that accrue interest by reference to a commercial paper rate or the London interbank offered rate, a specified period (each, a “Fixed Period”) will be designated in the Class A Certificate Purchase Agreement during which that Class A Funding Tranche will accrue interest at a fixed rate.

 

In addition to Class A Monthly Interest, each Class A Holder (i) shall receive a monthly commitment fee (a “Class A Non-Use Fee”) with respect to each Distribution Period (or portion thereof) falling in the Revolving Period in an amount specified for each Class A Ownership Interest in the Class A Fee Letter (as defined in the Class A Certificate Purchase Agreement) and (ii) shall be entitled to receive certain other amounts identified as Class A Additional Amounts (such amounts, including Breakage Payments, being “Class A Additional Amounts”) in the Class A Certificate Purchase Agreement.  Class A Additional Amounts payable on any Distribution Date shall, so long as they equal less than 0.5% of the Weighted Average Class A Invested Amount over the related Distribution Period, constitute “Class A Senior Additional Amounts.” Any Class A Additional Amounts payable on any Distribution Date in excess of the foregoing limitation shall constitute “Class A Subordinate Additional Amounts.”

 

(b)           If any distribution of principal is made with respect to any Class A Funding Tranche with a Fixed Period and a fixed interest rate for such period other than (i) on the last day of that Fixed Period or (ii) on a Distribution Date during the Controlled Amortization Period, or if the Class A Funded Amount of any Class A Ownership Interest is reduced by an Optional Amortization Amount in an amount greater than the amount (if any) specified in the Certificate Purchase Agreement with respect to that Class A Ownership Interest without the applicable number (as specified in the Certificate Purchase Agreement) of Business Days’ prior notice to the affected Class A Holder, and in either case (i) the interest paid by the Class A Holder holding that Class A Funding Tranche to providers of funds to it to fund that Class A Funding Tranche exceeds (ii) returns earned by that Class A Holder through the last day of that Fixed Period by redeployment of such funds in highly rated short-term money market instruments, then, upon written notice (which notice shall be signed by an officer of that Class A Holder with knowledge of and responsibility for such matters and shall set forth in reasonable detail the basis for requesting the amounts, and shall be conclusive with respect to the amounts calculated thereon, absent manifest error) from such Class A Holder to Servicer, such Class A Holder shall be entitled to receive additional amounts in the amount of such excess (each, a “Breakage Payment”) on the Distribution Date on or immediately succeeding the date such distribution of principal is made with respect to that Class A Funding Tranche, so long as such written notice is received not later than noon, New York City time, on the Transfer Date related to such Distribution Date. For purposes of calculations under this paragraph, any payment received by a Class A Holder later than noon, New York City time, on any day shall be deemed to have been received on the next day.

 

  

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SECTION 4.9                       Determination of Monthly Principal.  (a) The amount of monthly principal (“Class A Monthly Principal”) distributable from the Principal Account with respect to the Class A Certificates (i) on each Transfer Date, beginning with the Transfer Date in the month following the month in which the Controlled Amortization Period begins (unless an Early Amortization Period shall have commenced prior to such Transfer Date) shall be the least of:  (x) the Class A Pro Rata Percentage of the Available Investor Principal Collections on deposit in the Principal Account with respect to such Transfer Date, (y) the Class A Pro Rata Percentage of the Controlled Payment Amount for such Transfer Date plus the Class A Pro Rata Percentage of the Unfunded Optional Amortization Amount, if any, for such Transfer Date and (z) the Class A Invested Amount (after giving effect to all reductions thereof on such Transfer Date pursuant to Sections 4.12 and 4.14), (ii) on each Transfer Date beginning with the Transfer Date in the month following the month in which the Early Amortization Period begins, the lesser of (x) the Available Investor Principal Collections on deposit in the Principal Account with respect to such Transfer Date and (y) the Class A Invested Amount (after giving effect to all reductions thereof on such Transfer Date pursuant to Sections 4.12 and 4.14), and (iii) on each Transfer Date, beginning with the Transfer Date in the month following the month in which the Mandatory Limited Amortization Period begins and on the Transfer Date in the month in which Controlled Amortization Period begins (unless an Early Amortization Period shall have commenced prior to the end of the month immediately preceding such Transfer Date), shall be equal to the least of (x) the Available Investor Principal Collections on deposit in the Principal Account with respect to such Transfer Date, (y) prior to the Non-Renewing Purchaser Scheduled Distribution Date, the Mandatory Limited Payment Amount for such Transfer Date and (z) the Non-Renewing Purchaser Funded Amount.

 

(b)           The amount of monthly principal (“Class M Monthly Principal”) distributable from the Principal Account with respect to the Class M Certificates (i) on each Transfer Date beginning with the Transfer Date in the month following the month in which the Controlled Amortization Period begins (unless an Early Amortization Period shall have commenced prior to such Transfer Date) shall be the least of:  (x) the Class M Pro Rata Percentage of the Available Investor Principal Collections on deposit in the Principal Account with respect to such Transfer Date, (y) the Class M Pro Rata Percentage of the Controlled Payment Amount for such Transfer Date plus the Class M Pro Rata Percentage of the Unfunded Optimal Amortization Amount, if any, for such Transfer Date, and (z) the Class M Invested Amount (after giving effect to all reductions thereof on such Transfer Date pursuant to Sections 4.12 and 4.14), and (ii) on each Transfer Date beginning with the Transfer Date in the month following the month in which the Early Amortization Period begins, the least of (x) the excess of the Available Investor Principal Collections on deposit in the Principal Account with respect to such Transfer Date over the Available Investor Principal Collections applied to Class A Monthly Principal on such Transfer Date, and (y) the Class M Invested Amount (after giving effect to all reductions thereof on such Transfer Date pursuant to Sections 4.12 and 4.14).

 

(c)           The amount of monthly principal (“Class B Monthly Principal”) distributable from the Principal Account with respect to the Class B Certificates shall be, on each Transfer Date beginning with the first Transfer Date in the month following the month in which the Controlled Amortization Period begins (unless an Early Amortization Period shall have commenced prior to such Transfer Date) shall be the least of:  (x) the Class B Pro Rata Percentage of the Available Investor Principal Collections on deposit in the Principal Account

 

  

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with respect to such Transfer Date, (y) the Class B Pro Rata Percentage of the Controlled Payment Amount for such Transfer Date plus the Class B Pro Rata Percentage of the Unfunded Optional Amortization Amount, if any, for such Transfer Date and (z) the Class B Invested Amount (after giving effect to all reductions thereof on such Transfer Date pursuant to Sections 4.12 and 4.14) and (ii) on each Transfer Date beginning with the Transfer Date in the month following the month in which the Early Amortization Period begins, the least of (x) the excess of the Available Investor Principal Collections on deposit in the Principal Account with respect to such Transfer Date over the Available Investor Principal Collections applied to Class A Monthly Principal and Class M Monthly Principal on such Transfer Date, and (y) the Class B Invested Amount (after giving effect to all reductions thereof on such Transfer Date pursuant to Sections 4.12 and 4.14).

 

(d)           The amount of monthly principal (“Class C Monthly Principal”) distributable from the Principal Account with respect to the Class C Certificates (i) on each Transfer Date beginning with the first Transfer Date in the month following the month in which the Controlled Amortization Period begins (unless an Early Amortization Period shall have commenced prior to such Transfer Date) shall be the least of:  (x) the Class C Pro Rata Percentage of the Available Investor Principal Collections on deposit in the Principal Account with respect to such Transfer Date, (y) the Class C Pro Rata Percentage of the Controlled Payment Amount for such Transfer Date plus the Class C Pro Rata Percentage of the Unfunded Optional Amortization Amount, if any, for such Transfer Date and (z) the Class C Invested Amount (after giving effect to all reductions thereof on such Transfer Date pursuant to Sections 4.12 and 4.14) and (ii) on each Transfer Date beginning with the Transfer Date in the month following the month in which the Early Amortization Period begins, the least of (x) the excess of the Available Investor Principal Collections on deposit in the Principal Account with respect to such Transfer Date over the Available Investor Principal Collections applied to Class A Monthly Principal, Class M Monthly Principal and Class C Monthly Principal on such Transfer Date, and (y) the Class C Invested Amount (after giving effect to all reductions thereof on such Transfer Date pursuant to Sections 4.12 and 4.14).

 

(e)           Notwithstanding anything to the contrary in this Section 4.9, on the date hereof, accrued interest on the Class A Certificates held by Credit Suisse AG, New York Branch shall be payable to Credit Suisse AG, New York Branch, as a Class A Funding Agent.  The Servicer shall instruct the Trustee to withdraw funds from the Finance Charge Account on the date hereof in an amount equal to all interest accrued on the Class A Certificate held by Credit Suisse AG, New York Branch through (but excluding) the date hereof and to pay such amount to Credit Suisse AG, New York Branch.

 

SECTION 4.10                       Coverage of Required Amount.  (a)  On or before each Determination Date, Servicer shall determine the amount (the “Class A Required Amount”) for the related Transfer Date, if any, by which the sum of (i) the Class A Monthly Interest for the related Distribution Period, plus (ii) the Class A Non-Use Fee, if any, for the related Distribution Period, plus (iii) the Class A Senior Additional Amounts, if any, for the related Transfer Date, plus (iv) the Investor Servicing Fee for the prior Monthly Period, plus (v) any Class A Non-Use Fee, Class A Senior Additional Amounts and the Investor Servicing Fee included in the Class A Required Amount for any prior Transfer Date but not yet paid exceeds the Available Funds for the related Monthly Period.  The “Class A Monthly Interest” for any Distribution Period shall

 

  

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equal the aggregate amount of interest that accrued over that Distribution Period on each Class A Funding Tranche, plus the aggregate amount of interest that accrued over any prior Distribution Period on any Class A Funding Tranche and has not yet been paid, plus additional interest (to the extent permitted by law) on such overdue amounts at the Class A Certificate Rate (as defined in the Class A Certificate Purchase Agreement) applicable to the related Class A Ownership Interest during that Distribution Period, all as determined by Servicer on the related Determination Date. For purposes of such determination, Servicer shall rely upon information provided by the various Class A Funding Agents pursuant to the Class A Certificate Purchase Agreement. The interest accrued on any Class A Funding Tranche for any Distribution Period shall be equal the product of the Weighted Average Class A Funded Amount for that Class A Funding Tranche, the applicable Funding Rate (as defined in the Class A Certificate Purchase Agreement) and the applicable Day Count Fraction.

 

(b)           If the Class A Required Amount for such Transfer Date is greater than zero, (i) Servicer shall give written notice to Trustee of such positive Class A Required Amount on or before such Transfer Date and (ii) the Available Cash Collateral Amount in an amount equal to the Class A Required Amount, to the extent available for such purpose in accordance with Section 4.17(c), shall be distributed from the Cash Collateral Account on such Transfer Date pursuant to Section 4.17(c) to cover any deficiency in payments pursuant to Sections 4.11(a)(i) – (iv), in the order of priority specified in Section 4.11(a).  If the Class A Required Amount for such Transfer Date exceeds the Available Cash Collateral Amount with respect to such Transfer Date, Reallocated Principal Collections with respect to the prior Monthly Period shall be applied as specified in Section 4.14.

 

(c)           On or before each Transfer Date, Servicer shall determine the amount (the “Class M Required Amount”), if any, by which the sum of (i) the Class M Monthly Interest for the related Distribution Period, plus (ii) any Class M Monthly Interest included in the Class M Required Amount for any prior Transfer Date but not yet paid, exceeds the funds applied to pay such amounts pursuant to Section 4.11(a)(v) for the related Monthly Period. The “Class M Monthly Interest” for any Distribution Period shall equal the aggregate amount of interest that accrued over that Distribution Period on the Class M Funded Amount, plus the aggregate amount of interest that accrued over any prior Distribution Period on the Class M Funded Amount and has not yet been paid, plus additional interest (to the extent permitted by law) on such overdue amounts at the Class M Certificate Rate (as defined in the Class M Certificate Purchase Agreement), all as calculated by Servicer in accordance with the Class M Certificate Purchase Agreement on the related Determination Date. For purposes of such determination, Servicer shall rely upon information provided by the Class M Holders pursuant to the Class M Certificate Purchase Agreement.

 

(d)           If the Class M Required Amount for such Transfer Date is greater than zero, (i) Servicer shall give written notice to Trustee of such positive Class M Required Amount on or before such Transfer Date and (ii) the Available Cash Collateral Amount in an amount equal to the Class M Required Amount for such Transfer Date, to the extent available for such purpose in accordance with Section 4.17(c), shall be distributed from the Cash Collateral Account on such Transfer Date pursuant to Section 4.17(c) to cover any deficiency in payments pursuant to Section 4.11(a)(v).  If the Class M Required Amount for such Transfer Date exceeds the amount of the Available Cash Collateral Amount with respect to such Transfer Date, Reallocated

 

  

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Principal Collections with respect to the prior Monthly Period shall be applied as specified in Section 4.14.

 

(e)           On or before each Transfer Date, Servicer shall determine the amount (the “Class B Required Amount”), if any, by which the sum of (i) the Class B Monthly Interest for the related Distribution Period, plus (ii) any Class B Monthly Interest included in the Class B Required Amount for any prior Transfer Date but not yet paid, exceeds the funds applied to pay such amounts pursuant to Section 4.11(a)(vi) for the related Monthly Period. The “Class B Monthly Interest” for any Distribution Period shall equal the aggregate amount of interest that accrued over that Distribution Period on each Class B Funded Amount, plus the aggregate amount of interest that accrued over any prior Distribution Period on the Class B Funded Amount and has not yet been paid, plus additional interest (to the extent permitted by law) on such overdue amounts at the Class B Certificate Rate (as defined in the Class B Certificate Purchase Agreement), all as calculated by Servicer in accordance with the Class B Certificate Purchase Agreement on the related Determination Date. For purposes of such determination, Servicer shall rely upon information provided by the Class B Holders pursuant to the Class B Certificate Purchase Agreement.

 

(f)           If the Class B Required Amount for such Transfer Date is greater than zero, (i) Servicer shall give written notice to Trustee of such positive Class B Required Amount on or before such Transfer Date and (ii) the Available Cash Collateral Amount in an amount equal to the Class B Required Amount, to the extent available for such purpose in accordance with Section 4.17(c), shall be distributed from the Cash Collateral Account on such Transfer Date pursuant to Section 4.17(c) to cover any deficiency in payments pursuant to Section 4.11(a)(vi).  If the Class B Required Amount for such Transfer Date exceeds the amount of the Available Cash Collateral Amount with respect to such Transfer Date, Reallocated Principal Collections with respect to the prior Monthly Period shall be applied as specified in Section 4.14.

 

(g)           On or before each Transfer Date, Servicer shall determine the amount (the “Class C Required Amount”), if any, by which the sum of (i) the Class C Monthly Interest for the related Distribution Period, plus (ii) any Class C Monthly Interest included in the Class C Required Amount for any prior Transfer Date but not yet paid, exceeds the funds applied to pay such amounts pursuant to Section 4.11(a)(vii) for the related Monthly Period. The “Class C Monthly Interest” for any Distribution Period shall equal the aggregate amount of interest that accrued over that Distribution Period on each Class C Funded Amount, plus the aggregate amount of interest that accrued over any prior Distribution Period on the Class C Funded Amount and has not yet been paid, plus additional interest (to the extent permitted by law) on such overdue amounts at the Class C Certificate Rate (as defined in the Class C Certificate Purchase Agreement), all as calculated by Servicer in accordance with the Class C Certificate Purchase Agreement on the related Determination Date. For purposes of such determination, Servicer shall rely upon information provided by the Class C Holders pursuant to the Class C Certificate Purchase Agreement.

 

(h)           If the Class C Required Amount for such Transfer Date is greater than zero,  Servicer shall give written notice to Trustee of such positive Class C Required Amount on or before such Transfer Date and (ii) the Available Cash Collateral Amount in an amount equal to the Class C Required Amount, to the extent available for such purpose in accordance with

 

  

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Section 4.17(c), shall be distributed from the Cash Collateral Account on such Transfer Date pursuant to Section 4.17(c) to cover any deficiency in payments pursuant to Section 4.11(a)(vii).

 

SECTION 4.11                       Monthly Payments.  On or before each Determination Date, Servicer shall instruct Trustee in writing (which writing shall be substantially in the form of Exhibit B) to withdraw, and Trustee, acting in accordance with such instructions, shall withdraw on the related Transfer Date or the related Distribution Date, as applicable, to the extent of available funds, the amounts required to be withdrawn from the Finance Charge Account, the Principal Account and the Distribution Account as follows:

 

(a)           An amount equal to the Available Funds for the related Monthly Period will be distributed on each Transfer Date, to the extent available, in the following priority:

 

(i)           an amount equal to the unpaid Class A Monthly Interest shall be deposited by Trustee into the Distribution Account for distribution to the Class A Holders in accordance with Section 5.1;

 

(ii)          an amount equal to the unpaid Class A Non-Use Fee, if any, for the related Distribution Period plus any Class A Non-Use Fee due but not paid to the Class A Holders on any prior Distribution Date shall be deposited by Trustee into the Distribution Account for distribution to the Class A Holders in accordance with Section 5.1;

 

(iii)         an amount equal to the Class A Senior Additional Amounts, if any, for the related Distribution Period plus any Class A Senior Additional Amounts due but not paid to the Class A Holders on any prior Distribution Date shall be deposited by Trustee into the Distribution Account for distribution to the Class A Holders in accordance with Section 5.1;

 

(iv)         an amount equal to the Investor Servicing Fee for such Transfer Date plus any Investor Servicing Fee due but not paid to Servicer on any prior Transfer Date shall be distributed to Servicer;

 

(v)          an amount equal to the unpaid Class M Monthly Interest shall be deposited by Trustee into the Distribution Account for distribution to the Class M Holders in accordance with Section 5.1;

 

(vi)         an amount equal to the unpaid Class B Monthly Interest shall be deposited by Trustee into the Distribution Account for distribution to the Class B Holders in accordance with Section 5.1;

 

(vii)        an amount equal to the unpaid Class C Monthly Interest shall be deposited by Trustee into the Distribution Account for distribution to the Class C Holders in accordance with Section 5.1;

 

(viii)       an amount equal to the Class A Investor Default Amount, if any, for the preceding Monthly Period shall be treated as a portion of Investor Principal Collections and, subject to Section 4.7(d), deposited into the Principal Account on such Transfer Date;

 

  

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(ix)          an amount equal to the aggregate amount of reductions to the Class A Invested Amount pursuant to Section 4.12 that have not been previously reimbursed will be treated as a portion of Investor Principal Collections and, subject to Section 4.7(d), deposited into the Principal Account on such Transfer Date;

 

(x)           an amount equal to the Class M Investor Default Amount, if any, for the preceding Monthly Period shall be treated as a portion of Investor Principal Collections and, subject to Section 4.7(d), deposited into the Principal Account on such Transfer Date;

 

(xi)          an amount equal to the aggregate amount of reductions to the Class M Invested Amount pursuant to Sections 4.12 and 4.14 that have not been previously reimbursed will be treated as a portion of Investor Principal Collections and, subject to Section 4.7(d), deposited into the Principal Account on such Transfer Date;

 

(xii)         an amount equal to the Class B Investor Default Amount, if any, for the preceding Monthly Period shall be treated as a portion of Investor Principal Collections and, subject to Section 4.7(d), deposited into the Principal Account on such Transfer Date;

 

(xiii)        an amount equal to the aggregate amount of reductions to the Class B Invested Amount (pursuant to Sections 4.12 and 4.14) that have not been previously reimbursed will be treated as a portion of Investor Principal Collections and, subject to Section 4.7(d), deposited into the Principal Account on such Transfer Date;

 

(xiv)        an amount equal to the Class C Investor Default Amount, if any, for the preceding Monthly Period shall be treated as a portion of Investor Principal Collections and, subject to Section 4.7(d), deposited into the Principal Account on such Transfer Date;

 

(xv)         an amount equal to the aggregate amount of reductions to the Class C Invested Amount pursuant to Sections 4.12 and 4.13) that have not been previously reimbursed will be treated as a portion of Investor Principal Collections and, subject to Section 4.7(d), deposited into the Principal Account on such Transfer Date;

 

(xvi)        first, an amount up to the excess, if any, of the Required Cash Collateral Amount (determined after all deposits, withdrawals, reductions, payments and adjustments to be made with respect to such date) over the Available Cash Collateral Amount (without going effect to any deposit made on such date hereunder) shall be deposited in the Cash Collateral Account and, second, an amount equal to the excess of the Spread Account Cap over the Spread Account Amount shall be deposited into the Spread Account;

 

(xvii)       an amount equal to the aggregate Class A Subordinate Additional Amounts shall be deposited by Trustee into the Distribution Account for distribution to the Class A Holders in accordance with Section 5.1;

 

  

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(xviii)           an amount equal to all other amounts due under the Class M Certificate Purchase Agreement shall be distributed in accordance with the Class M Certificate Purchase Agreement;

 

(xix)           an amount equal to all other amounts due under the Class B Certificate Purchase Agreement shall be distributed in accordance with the Class B Certificate Purchase Agreement;

 

(xx)           an amount equal to all other amounts due under the Class C Certificate Purchase Agreement shall be distributed in accordance with the Class C Certificate Purchase Agreement; and

 

(xxi)           the balance, if any, after giving effect to the payments made pursuant to clauses (i) through (xx) shall constitute “Excess Finance Charge Collections” to be applied with respect to other Series in accordance with Section 4.5.

 

In the event of any shortfall in the amount of the Available Funds available for distribution in respect of Class A Monthly Interest, Class A Non-Use Fee or Class A Senior Additional Amounts or Class A Subordinate Additional Amounts, (a) Available Funds shall be allocated ratably to each Class A Ownership Interest in accordance with its Class A Funded Amount and (b) any Available Funds allocated pursuant to the immediately preceding clause (a) to any Class A Ownership Interest in excess of the Class A Monthly Interest, Class A Non-Use Fee, Class A Senior Additional Amounts or Class A Subordinate Additional Amounts for such Class A Ownership Interest shall be reallocated to each Class A Ownership Interest that has a remaining shortfall in the Available Funds allocated to it pursuant to such clause (a) in order to cover its unpaid Class A Monthly Interest, Class A Non-Use Fee, Class A Senior Additional Amounts or Class A Subordinate Additional Amounts, which reallocation shall be made ratably in accordance with the Class A Funded Amounts of all such remaining Class A Ownership Interests;

 

(b)           On each Transfer Date during the Revolving Period and on the Transfer Date in the month in which the Controlled Amortization Period commences, an amount equal to the Available Investor Principal Collections for such Transfer Date shall be treated as Shared Principal Collections; provided, however, during any Mandatory Limited Amortization Period and on the Non-Renewing Purchaser Scheduled Distribution Date, an amount equal to the Available Investor Principal Collections for the related month shall be distributed or deposited in the following order of priority:

 

(i)           an amount equal to the Class A Monthly Principal shall be deposited into the Distribution Account on such Transfer Date for payment to the Class A Holder for each Class A Ownership Interest that is a Non-Renewing Ownership Group, on a pro rata basis, until the Non-Renewing Purchaser Funded Amount has been reduced to zero; and

 

(ii)           the balance shall be treated as Shared Principal Collections.

 

(c)           On each Transfer Date following a Monthly Period falling in a Fixed Allocation Period, an amount equal to the Available Investor Principal Collections for the related Monthly Period (including any amounts in the Excess Funding Account allocable to Series 2009-VFC1 in

 

  

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accordance with Sections 4.2 and 4.15(d)) will be distributed on each Transfer Date, to the extent available, in the following priority:

 

(i)           an amount equal to the Class A Monthly Principal for such Transfer Date shall be deposited into the Distribution Account to be distributed by Trustee, in accordance with Section 5.1, to the Class A Holders on the corresponding Distribution Date;

 

(ii)           an amount equal to the Class M Monthly Principal for such Transfer Date shall be deposited into the Distribution Account to be distributed by Trustee, in accordance with Section 5.1, to the Class M Holders on the corresponding Distribution Date;

 

(iii)           an amount equal to the Class B Monthly Principal for such Transfer Date shall be deposited into the Distribution Account to be distributed by Trustee, in accordance with Section 5.1, to the Class B Holders on the corresponding Distribution Date;

 

(iv)           an amount equal to the Class C Monthly Principal for such Transfer Date shall be deposited into the Distribution Account to be distributed by Trustee, in accordance with Section 5.1, to the Class C Holders on the corresponding Distribution Date; and

 

(v)           an amount equal to the excess, if any, of (A) the Available Investor Principal Collections over (B) the applications specified in Sections 4.11(c)(i), (ii), (iii) and (iv) shall be treated as Shared Principal Collections.

 

SECTION 4.12                        Investor Charge-Offs.  (a) On or before each Transfer Date, Servicer shall calculate the Class A Investor Default Amount. If, on any Transfer Date, the Class A Investor Default Amount for the prior Monthly Period exceeds the Available Funds allocated with respect thereto pursuant to Section 4.11(a)(viii), the Class C Invested Amount will be reduced by the amount of such excess.  If such reduction would cause the Class C Invested Amount (after giving effect to reductions for any Class C Investor Charge-Offs and Reallocated Principal Collections on such Transfer Date) to be a negative number, the Class C Invested Amount will be reduced to zero and the Class B Invested Amount will be reduced by the amount by which the Class C Invested Amount would have been reduced below zero.  If such reduction would cause the Class B Invested Amount (after giving effect to reductions for any Class B Investor Charge-Offs and Reallocated Principal Collections on such Transfer Date) to be a negative number, the Class B Invested Amount will be reduced to zero and the Class M Invested Amount will be reduced by the amount by which the Class B Invested Amount would have been reduced below zero.  If such reduction would cause the Class M Invested Amount (after giving effect to reductions for any Class M Investor Charge-Offs and Reallocated Principal Collections on such Transfer Date) to be a negative number, the Class A Invested Amount will be reduced by the amount by which the Class M Invested Amount would have been reduced below zero, but not by more than the Class A Investor Default Amount for such Transfer Date (a “Class A Investor Charge-Off”). If the Class A Invested Amount has been reduced by the amount of any Class A Investor Charge-Offs, it will be reimbursed on any Transfer Date (but not by an amount

 

  

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in excess of the aggregate Class A Investor Charge-Offs) by the amount of Available Funds allocated and available for such purpose, pursuant to Section 4.11(a)(ix).

 

(b)           On or before each Transfer Date, Servicer shall calculate the Class M Investor Default Amount. If, on any Transfer Date, the Class M Investor Default Amount for the prior Monthly Period exceeds the Available Funds allocated with respect thereto pursuant to Section 4.11(a)(x), the Class C Invested Amount will be reduced by the amount of such excess.  If such reduction would cause the Class C Invested Amount (after giving effect to reductions for any Class C Investor Charge-Offs and Reallocated Principal Collections and reductions pursuant to Section 4.12(a) on such Transfer Date) to be a negative number, the Class C Invested Amount will be reduced to zero and the Class B Invested Amount will be reduced by the amount by which the Class C Invested Amount would have been reduced below zero.  If such reduction would cause the Class B Invested Amount (after giving effect to reductions for any Class B Investor Charge-Offs and Reallocated Principal Collections and reductions pursuant to Section 4.12(a) on such Transfer Date) to be a negative number, the Class B Invested Amount will be reduced to zero and the Class M Invested Amount will be reduced by the amount by which the Class B Invested Amount would have been reduced below zero, but not by more than the Class M Investor Default Amount for such Transfer Date (a “Class M Investor Charge-Off”). If the Class M Invested Amount has been reduced by the amount of any Class M Investor Charge-Offs, it will be reimbursed on any Transfer Date (but not by an amount in excess of the aggregate Class M Investor Charge-Offs) by the amount of Available Funds allocated and available for such purpose, pursuant to Section 4.11(a)(xi).

 

(c)           On or before each Transfer Date, Servicer shall calculate the Class B Investor Default Amount.  If, on any Transfer Date, the Class B Investor Default Amount for the prior Monthly Period exceeds the amount of Available Funds allocated with respect thereto pursuant to Section 4.11(a)(xii), the Class C Invested Amount will be reduced by the amount of such excess.  If such reduction would cause the Class C Invested Amount (after giving effect to reductions for any Class C Investor Charge-Offs and Reallocated Principal Collections and reductions pursuant to Sections 4.12(a) and (b) for such Transfer Date) to be a negative number, the Class C Invested Amount will be reduced to zero and the Class B Invested Amount will be reduced by the amount by which the Class C Invested Amount would have been reduced below zero, but not by more than the Class B Investor Default Amount for such Transfer Date (a “Class B Investor Charge-Off”).  The Class B Invested Amount will thereafter be reimbursed on any Transfer Date by the amount of the Available Funds allocated and available for that purpose as described under Section 4.11(a)(xiii).

 

(d)           On or before each Transfer Date, Servicer shall calculate the Class C Investor Default Amount. If, on any Transfer Date, the Class C Investor Default Amount for the prior Monthly Period exceeds the Available Funds allocated with respect thereto pursuant to Section 4.11(a)(xiv), the Class C Invested Amount will be reduced by the amount of such excess (a “Class C Investor Charge-Off”).  The Class C Invested Amount will thereafter be reimbursed on any Transfer Date (but not by an amount in excess of the aggregate Class C Investor Charge-Offs) by the amount of Available Funds allocated and available for such purpose, pursuant to Section 4.11(a)(xv).

 

SECTION 4.13                        [Reserved].

 

  

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SECTION 4.14                      Reallocated Principal Collections.  On or before each Transfer Date, Servicer shall instruct Trustee in writing (which writing shall be substantially in the form of Exhibit B) to, and Trustee in accordance with such instructions shall, withdraw Reallocated Principal Collections with respect to such Transfer Date from the Principal Account, in an amount equal to the sum of the Class A Required Amount, if any, plus the Class M Required Amount, if any, plus the Class B Required Amount, if any, with respect to such Transfer Date (in each case after giving effect to the application of funds on deposit in the Cash Collateral Account in accordance with Section 4.17(c)) and such Reallocated Principal Collections shall be applied to fund any deficiency pursuant to and in the priority set forth in Section 4.11.  On each Transfer Date, the Class C Invested Amount shall be reduced by the amount of Reallocated Principal Collections applied on such Transfer Date.  If such reduction would cause the Class C Invested Amount (after giving effect to any Class C Investor Charge-Offs for such Transfer Date) to be a negative number, the Class C Invested Amount shall be reduced to zero and the Class B Invested Amount shall be reduced by the amount by which the Reallocated Principal Collections applied on such Transfer Date exceed the Class C Invested Amount (after giving effect to any Class C Investor Charge-Offs for such Transfer Date).  If such reduction would cause the Class B Invested Amount (after giving effect to any Class B Investor Charge-Offs for such Transfer Date) to be a negative number, the Class B Invested Amount shall be reduced to zero and the Class M Invested Amount shall be reduced by the amount by which the Reallocated Principal Collections applied on such Transfer Date exceed the Class B Invested Amount (after giving effect to any Class B Investor Charge-Offs for such Transfer Date).

 

SECTION 4.15                        Shared Principal Collections; Amounts Transferred from the Excess Funding Account to the Principal Account.  (a)  The amount of Shared Principal Collections allocable to Series 2009-VFC1 on any Transfer Date shall be applied as Available Investor Principal Collections pursuant to Section 4.11 and, pursuant to such Section 4.11, shall be deposited in the Distribution Account or distributed in accordance with the Certificate Purchase Agreements.

 

(b)           Shared Principal Collections allocable to Series 2009-VFC1 with respect to any Transfer Date means an amount equal to the Principal Shortfall, if any, with respect to Series 2009-VFC1 for such Transfer Date; provided that if the aggregate amount of Shared Principal Collections for all Series in Group One for such Transfer Date is less than the Cumulative Principal Shortfall for such Transfer Date, then Shared Principal Collections allocable to Series 2009-VFC1 on such Transfer Date shall equal the product of (i) Shared Principal Collections for all Series in Group One for such Transfer Date and (ii) a fraction, the numerator of which is the Principal Shortfall with respect to Series 2009-VFC1 for such Transfer Date and the denominator of which is the Cumulative Principal Shortfall for such Transfer Date.

 

(c)           [Reserved]

 

(d)           The aggregate amount allocable to Series 2009-VFC1 which shall be required to be transferred from the Excess Funding Account into the Principal Account with respect to any Transfer Date in a Fixed Allocation Period (commencing with the Transfer Date in the first calendar month after the calendar month in which the Fixed Allocation Period begins) shall equal the Principal Shortfall, if any, with respect to Series 2009-VFC1 for such Transfer Date minus the amount of Shared Principal Collections allocated to Series 2009-VFC1 from other Series in

 

  

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Group One on that Transfer Date; provided that if the aggregate amount required to be withdrawn from the Excess Funding Account pursuant to Section 4.2 for all Series (in each case, whether or not included in Group One) for such Transfer Date is less than the amount on deposit in the Excess Funding Account, then the aggregate amount allocable to Series 2009-VFC1 and required to be transferred on such Transfer Date shall equal the product of (i) the amount on deposit in the Excess Funding Account and (ii) a fraction, (A) the numerator of which is (A) the Principal Shortfall with respect to Series 2009-VFC1 for such Transfer Date minus the amount of Shared Principal Collections allocated to Series 2009-VFC1 from other Series in Group One on that Transfer Date and (B) the denominator of which is the aggregate amount required to be withdrawn from the Excess Funding Account pursuant to Section 4.2 for all Series for such Transfer Date.

 

SECTION 4.16                        Finance Charge Account, Principal Account and Distribution Account.

 

(a)           Trustee shall establish and maintain with an Eligible Institution, which may be Trustee, in the name of the Trust, on behalf of the Trust , as Series Accounts for the benefit of the Investor Holders, three segregated trust accounts with the corporate trust department of such Eligible Institution (the “Finance Charge Account”, the “Principal Account” and the “Distribution Account”), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Investor Holders.  Trustee shall possess all right, title and interest in all funds on deposit from time to time in the Finance Charge Account, the Principal Account and the Distribution Account and in all proceeds thereof. The Finance Charge Account, the Principal Account and the Distribution Account shall be under the sole dominion and control of Trustee for the benefit of the Investor Holders.  If at any time the institution holding the Finance Charge Account, the Principal Account and the Distribution Account ceases to be an Eligible Institution, Transferor shall notify Trustee, and Trustee upon being notified (or Servicer on its behalf) shall, within 10 Business Days, establish a new Finance Charge Account, a new Principal Account and a new Distribution Account meeting the conditions specified above with an Eligible Institution, and shall transfer any cash or any investments to such new Finance Charge Account, Principal Account and Distribution Account. Trustee, at the direction of Servicer, shall make withdrawals from the Finance Charge Account, the Principal Account and the Distribution Account from time to time, in the amounts and for the purposes set forth in this Series Supplement and the Agreement. Trustee at all times shall maintain accurate records reflecting each transaction in the Finance Charge Account, the Principal Account and the Distribution Account and that the funds held therein shall at all times be held in trust for the benefit of the Investor Holders.

 

(b)           Funds on deposit in the Finance Charge Account and the Principal Account shall be invested at the specific written direction of Servicer by Trustee in Eligible Investments. Funds on deposit in the Finance Charge Account and Principal Account on any Transfer Date, after giving effect to any withdrawals from the Principal Account on such Transfer Date, shall be invested in such investments that will mature so that such funds will be available for withdrawal on or prior to the following Transfer Date. The Trustee shall maintain for the benefit of the Investor Holders possession of the negotiable instruments or securities, if any, evidencing such Eligible Investments. Gains from such Eligible Investments shall be deposited into the Finance Charge Account and be treated as Finance Charge Receivables for purposes of this Series

 

  

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Supplement. No Eligible Investment shall be disposed of prior to its maturity unless prior to the maturity of such Eligible Investment, a default occurs in the payment of principal, interest or any other amount with respect to such Eligible Investment. On each Distribution Date, all interest and other investment earnings (net of losses and investment expenses) on funds on deposit in the Finance Charge Account and the Principal Account shall be treated as Collections of Finance Charge Receivables allocable to Series 2009-VFC1 with respect to the last day of the related Monthly Period.

 

SECTION 4.17                        Cash Collateral Account.  (a)  Servicer shall establish and maintain with an Eligible Institution, which, initially shall be the Trustee, in the name of Trustee, as a Series Account on behalf of the Investor Holders, a segregated trust account (the “Cash Collateral Account”) bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Investor Holders.  In order to provide for the prompt payment to the Investor Holders, to assure availability of the amounts maintained in the Cash Collateral Account and as security for the performance by the Transferor of its obligations hereunder, Transferor, on behalf of itself and its successors and assigns, and solely for the purpose of providing for payment of distributions provided for in Section 4.17(c), hereby grants a security interest in and pledges to the Trustee and its successors and assigns, all right, title and interest in and to the Cash Collateral Account and all proceeds of the foregoing, including all securities, investments, general intangibles, financial assets and investment property from time to time credited to and any security entitlement to the Cash Collateral Account subject to the limitations set forth below (all of the foregoing, subject to the limitations set forth in this section, the “Cash Collateral Account Property”), to have and to hold all the aforesaid property, rights and privileges unto Trustee, its successors and assigns, in trust for the uses and purpose, and subject to the terms and provisions, set forth in this Section.  Trustee hereby acknowledges such transfer and accepts the trust hereunder and shall hold and distribute the Cash Collateral Account Property in accordance with the terms of this Section.  Trustee shall possess all right, title and interest in all funds on deposit from time to time in the Cash Collateral Account and in all proceeds thereof.  The Cash Collateral Account shall be under the sole dominion and control of Trustee for the benefit of the Investor Holders.  If at any time an Eligible Institution holding the Cash Collateral Account ceases to be an Eligible Institution, Transferor shall notify Trustee, and Trustee upon being notified (or Servicer on its behalf) shall within 10 Business Days establish a new Cash Collateral Account meeting the conditions specified above, and shall transfer any cash or any investments to such new Cash Collateral Account.  Trustee, at the direction of Servicer, shall make deposits to and withdrawals from the Cash Collateral Account in the amounts and at the times set forth in this Series Supplement.  All withdrawals from the Cash Collateral Account shall be made in the priority set forth below.

 

(b)           Funds on deposit in the Cash Collateral Account from time to time shall be invested and/or reinvested at the specific written direction of Servicer by Trustee in Eligible Investments that will mature so that such funds will be available for withdrawal on the following Transfer Date.  No Eligible Investment shall be disposed of prior to its maturity unless prior to the maturity of such Eligible Investment, a default occurs in the payment of principal, interest or any other amount with respect to such Eligible Investment.  Trustee shall maintain for the benefit of the Investor Holders possession of the negotiable instruments or securities, if any, evidencing such Eligible Investments.  On each Transfer Date, all interest and earnings (net of losses and investment expenses) accrued since the preceding Transfer Date on funds on deposit in the Cash

 

  

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Collateral Account shall be treated as Collections of Finance Charge Receivables allocated to the Invested Amount and shall be part of Available Funds for such Transfer Date.  For purposes of determining the availability of funds or the balances in the Cash Collateral Account for any reason under this Series Supplement, all investment earnings on such funds shall be deemed not to be available or on deposit.

 

(c)           On each Determination Date, Servicer shall calculate the amount (the “Required Draw Amount”) by which the sum of the amounts specified in clauses (i) through (xv) of Section 4.11(a) with respect to the related Transfer Date exceeds the amount of Available Funds allocated with respect to the related Monthly Period.  In the event that for any Transfer Date the Required Draw Amount is greater than zero, Servicer shall give written notice to Trustee and the Investor Holders of such positive Required Draw Amount on the related Determination Date.  On the related Transfer Date, the Required Draw Amount, if any, up to the Available Cash Collateral Amount, shall be withdrawn from the Cash Collateral Account and distributed to fund any deficiency pursuant to Section 4.11(a)(i) through (xv) (in the order of priority set forth in Section 4.11(a)).

 

(d)           If, after giving effect to all deposits to and withdrawals from the Cash Collateral Account with respect to any Transfer Date, the amount on deposit in the Cash Collateral Account exceeds the Required Cash Collateral Amount, Trustee, acting in accordance with the instructions of Servicer, shall withdraw an amount equal to such excess from the Cash Collateral Account, and (i) deposit such amounts in the Spread Account, to the extent that the Spread Account Amount is less than the Spread Account Cap and (ii) distribute such amounts remaining after application pursuant to subsection 4.20(c) to the Transferor.

 

(e)           On each Transfer Date, Available Funds for the related Monthly Period, to the extent available for such purpose, will be deposited into the Cash Collateral Account in accordance with Section 4.11(a)(xvi).  In addition, the Transferor may, in its discretion, deposit additional amounts into the Cash Collateral Account from time to time.

 

SECTION 4.18                        Transferor’s or Servicer’s Failure to Make a Deposit or Payment.  If Servicer or Transferor fails to make, or give instructions to make, any payment or deposit required to be made or given by Servicer or Transferor, respectively, at the time specified in the Agreement (including applicable grace periods), Trustee shall make such payment or deposit from the Finance Charge Account, the Excess Funding Account, the Cash Collateral Account, the Principal Account or the Distribution Account without instruction from Servicer or Transferor.  Trustee shall be required to make any such payment, deposit or withdrawal hereunder only to the extent that Trustee has sufficient information to allow it to determine the amount thereof.  The Trustee shall have no liability for failing to make a payment in the event it reasonably believes it has insufficient information to allow it to determine the amount thereof.  Servicer shall, upon request of Trustee, promptly provide Trustee with all information necessary to allow Trustee to make such payment, deposit or withdrawal.  Such funds or the proceeds of such withdrawal shall be applied by Trustee in the manner in which such payment or deposit should have been made by Transferor or Servicer, as the case may be.

 

SECTION 4.19                        Interchange.  On or prior to each Determination Date, Transferor shall cause RPA Seller to notify Servicer of the Account Interchange Amount (as defined in the

 

  

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Receivable Purchase Agreement).  The portion of the Account Interchange Amount to be allocated to the Investor Holders for each Monthly Period (the “Investor Interchange Amount”) shall be equal to the product of:

 

(a) the Account Interchange Amount (as defined in the Receivable Purchase Agreement); and

 

(b) the Floating Allocation Percentage for such Monthly Period (or, if a Reset Date occurs during such Monthly Period, the average Floating Allocation Percentage for such Monthly Period determined as the quotient of the summation of the Floating Allocation Percentages for all days during such Monthly Period, divided by the number of days in such Monthly Period).

 

On each Transfer Date, Transferor shall pay to Servicer, and, unless the Target Amount shall have been met pursuant to Section 4.7(d), Servicer shall deposit into the Finance Charge Account, in immediately available funds, an amount equal to the Investor Interchange Amount to be included as Collections of Finance Charge Receivables allocable to the Investor Holders with respect to the related Monthly Period.

 

SECTION 4.20                        Spread Account.  (a)  Not later than the Closing Date, the Servicer shall establish and maintain with an Eligible Institution, which shall initially be the Trustee, in the name of the Trustee, on behalf of the Trust (the “Spread Account”) bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Class B Holders and the Transferor.  In the event that at any time the financial institution holding the Spread Account shall fail to be an Eligible Institution, the Servicer may direct the Spread Account to be moved to an Eligible Institution and all funds on deposit in the Spread Account be transferred to such new Spread Account at such Eligible Institution, whereupon such new Spread Account shall constitute the Spread Account hereunder.  Except as otherwise provided in this Agreement, the Class B Holders shall possess all right, title and interest in all funds on deposit from time to time in the Spread Account and in all proceeds thereof.  Except as otherwise provided in this Agreement, the Spread Account shall be under the sole dominion and control of the Trustee, on behalf of the Class B Holders and the Transferor.  On or prior to each Incremental Funding, the Transferor shall deposit into the Spread Account an amount equal to the excess, if any, of the Spread Account Cap (after giving effect to the Incremental Funding to take place on such date) and the Spread Account Amount on such date.

 

(b)           Funds on deposit in the Spread Account shall be invested at the specific written direction of the Servicer in Eligible Investments; provided, however, that  for purposes of the investment of funds on deposit in the Spread Account, references in the definition of “Eligible Investments” to “highest investment category” shall be modified to require a rating of not lower than “A-2” in the case of Standard & Poor’s, “P-2” in the case of Moody’s or the equivalent rating in the case of any other rating agency.  Funds on deposit in the Spread Account on any Transfer Date, after giving effect to any withdrawals from and deposits to the Spread Account on such Transfer Date, shall be invested in such investments that will mature so that such funds will be available for withdrawal on or prior to the following Transfer Date.  The holder of the Spread Account shall maintain for the benefit of the Class B Holders and the Transferor possession of the negotiable instruments or securities, if any, evidencing the investment of funds in the Spread

 

  

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Account in Eligible Investments.  On each Transfer Date (but subject to Section 4.20(c)), the Investment Earnings, if any, accrued since the preceding Transfer Date on funds on deposit in the Spread Account shall be paid to the Transferor by the holder of the Spread Account and for purposes of determining the availability of funds or the balance in the Spread Account for any reason under this Agreement, all Investment Earnings shall be determined not to be available or on deposit.

 

(c)           If, on any Transfer Date, the aggregate amount available for distribution pursuant to Section 4.11(a)(vi) is less than the unpaid Class B Monthly Interest, the Servicer shall direct the holder of the Spread Account to withdraw the amount of such deficiency, up to the Spread Account Amount and, if the Spread Account Amount is less than such deficiency, Investment Earnings credited to the Spread Account, from the Spread Account and distribute such amount to the Class B Holders.  If on the Amendment Closing Date or any Transfer Date, after giving effect to all withdrawals from, and deposits to, the Spread Account, the amount on deposit in the Spread Account (excluding Investment Earnings) would exceed the Spread Account Cap then in effect, the Servicer shall direct the holder of the Spread Account to release such excess to the Transferor.  On the date on which all amounts payable to the Class B Holders pursuant to the Class B Certificate Purchase Agreement have been paid in full, the Servicer shall direct the holder of the Spread Account to withdraw all amounts then remaining in the Spread Account (including Investment Earnings) and pay such amounts to the Transferor.

 

SECTION 9.                           Article V of the Agreement.  Article V of the Agreement shall read in its entirety as follows and shall be applicable only to the Investor Holders:

 

ARTICLE V    DISTRIBUTIONS AND REPORTS TO INVESTOR HOLDERS

 

SECTION 5.1                          Distributions.  On each Distribution Date, Refinancing Date and Optional Amortization Date Trustee shall distribute (in accordance with the certificate delivered on or before the related Transfer Date by Servicer to Trustee pursuant to Section 3.4), to each Investor Holder of record on the immediately preceding Record Date (other than as provided in Section 2.5 or Section 12.2 respecting a final distribution) such Investor Holder’s portion (determined in accordance with Article IV and Section 4(b) of this Series Supplement) of amounts on deposit in the Distribution Account. Distributions of Investor Monthly Interest, Class A Non-Use Fee and Class A Additional Amounts shall be made to each applicable Investor Holder in an amount equal to the amount payable to each or, if less, the aggregate amount allocated for such payment pursuant to Section 4.11(a).  Except as permitted by Section 4(b), all distributions with respect to principal shall be made on a pro rata basis. All such payments shall be made by wire transfer of immediately available funds, provided that the Paying Agent, not less than five Business Days prior to the Record Date relating to the first distribution to such Investor Holder, has been furnished with appropriate wiring instructions in writing.

 

SECTION 5.2                          Reports.

 

(a)           Monthly Series 2009-VFC1 Servicer’s Certificate. On or before each Distribution Date, Trustee shall forward to each Investor Holder a statement substantially in the form of Exhibit C prepared by Servicer, delivered to Trustee.

 

  

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(b)           Annual Holders’ Tax Statement. On or before January 31 of each calendar year, beginning with calendar year 2010, Trustee shall distribute to each Person who at any time during the preceding calendar year was an Investor Holder, a statement prepared by Servicer setting out the amount of interest and principal distributed to such Investor Holder with respect to its Certificates, during such preceding calendar year or the applicable portion thereof during which such Person was an Investor Holder together with such other customary information (consistent with the treatment of the Class A Certificates as debt) as Servicer deems necessary or desirable to enable the Investor Holders to prepare their tax returns. Such obligations of Trustee shall be deemed to have been satisfied to the extent that substantially comparable information shall be provided by Trustee pursuant to any requirements of the Internal Revenue Code.

 

SECTION 10.                          Early Amortization Events.  If any one of the following events shall occur with respect to the Investor Certificates:

 

(a)           failure on the part of Transferor (i) to make any payment or deposit required by the terms of (A) the Agreement, (B) this Series Supplement, (C) the Certificate Purchase Agreements or (D) any Class A Fee Letter, on or before the date occurring five days after the date such payment or deposit is required to be made herein or therein or (ii) duly to observe or perform in any material respect any covenants or agreements of Transferor set forth in the Agreement, this Series Supplement, the Certificate Purchase Agreements or any Class A Fee Letter, which failure (in the case of this clause (ii)) has a material adverse effect on the Investor Holders (which determination shall be made without reference to whether any funds are available from the Cash Collateral Account) and which continues unremedied for a period of 30 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to Transferor by Trustee, or to Transferor and Trustee by any Investor Holder and continues to affect materially and adversely the interests of the Investor Holders for such period;

 

(b)           any representation or warranty made by Transferor in the Agreement or this Series Supplement, or any information contained in an Account Schedule required to be delivered by Transferor pursuant to Section 2.1 or 2.6, (i) shall prove to have been incorrect in any material respect when made or when delivered, which continues to be incorrect in any material respect for a period of 30 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to Transferor by Trustee, or to Transferor and Trustee by any Investor Holder, and (ii) as a result of which the interests of the Investor Holders are materially and adversely affected (which determination shall be made without reference to whether any funds are available from the Cash Collateral Account) and continue to be materially and adversely affected for such period; provided that an Early Amortization Event pursuant to this Section 10(b) shall not be deemed to have occurred hereunder if Transferor has accepted reassignment of the related Receivable, or all of such Receivables, if applicable, during such period in accordance with the provisions of the Agreement;

 

(c)           the average of the Excess Spread Percentages for any three consecutive Monthly Periods is less than zero;

 

  

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(d)           Transferor shall fail to convey Receivables arising under Additional Accounts, or Participations, to the Trust, as required by Section 2.8(b); provided that such failure shall not give rise to an Early Amortization Event if, prior to the date on which such conveyance was required to be completed, Transferor causes a reduction in the Invested Amount to occur, so that, after giving effect to that reduction (i) the Transferor Amount is not less than the Minimum Transferor Amount and (ii) the sum of the aggregate amount of Principal Receivables plus amounts on deposit in the Excess Funding Account is not less than the Required Principal Balance;

 

(e)           any Servicer Default shall occur;

 

(f)           the Invested Amount shall not be paid in full on the Scheduled Final Payment Date or the Non-Renewing Purchaser Funded Amount shall not be paid in full on the Non-Renewing Purchaser Scheduled Distribution Date;

 

(g)           as of any Determination Date, the average of the monthly payment rates for that Determination Date and the preceding two Determination Dates is less than 7.75%, where the “monthly payment rate” for any Determination Date equals the percentage equivalent of a fraction (A) the numerator of which is the aggregate Collections received during the related Monthly Period and (B) the denominator of which is equal to the total Receivables held by the Trust at the close of business for the Monthly Period immediately prior to such related Monthly Period; provided that the monthly payment rates for the Determination Dates related to the February 2009 and March 2009 Monthly Periods shall be deemed to equal the “monthly payments rates” (calculated in accordance with the Series 2005-VFC Supplement to the Agreement) related to the February 2009 and March 2009 Monthly Periods;

 

(h)           the Pension Benefit Guaranty Corporation shall file notice of a lien pursuant to Section 4068 of the Employee Retirement Income Security Act of 1974 with regard to any of the assets of Comenity, which lien shall secure a liability in excess of $10,000,000 and shall not have been released within 40 days;

 

(i)           a default shall have occurred and be continuing under any instrument or agreement evidencing or securing indebtedness for borrowed money of Comenity in excess of $10,000,000 which default (i) is a default in payment of any principal or interest on such indebtedness when due or within any applicable grace period or (ii) shall have resulted in acceleration of the maturity of such indebtedness;

 

(j)           a Change in Control has occurred; or

 

(k)           the Available Cash Collateral Amount shall be less than the Required Cash Collateral Amount for three or more consecutive Monthly Periods following any Monthly Period in which the Supplemental Cash Collateral Account increases from zero to an amount greater than zero;

 

then, (x) in the case of any event described in Sections 10(a), (b), (e), (h), (i) or (j) of this Series Supplement, after the applicable grace period set forth in such Sections, either Trustee or the Majority Series Holders by notice then given in writing to Transferor and Servicer (and to Trustee if given by the Investor Holders) may declare that an early amortization event (an “Early

 

  

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Amortization Event”) has occurred as of the date of such notice, and (y) in the case of any event described in Section 10(c), (d), (f), (g) or (k) of this Series Supplement, an Early Amortization Event shall occur without any notice or other action on the part of Trustee or the Investor Holders immediately upon the occurrence of such event, unless such event shall be waived by the Investor Holders.

 

SECTION 11.                          Series 2009-VFC1 Termination.  The right of the Investor Holders to receive payments from the Trust will terminate on the first Business Day following the Series 2009-VFC1 Termination Date.

 

SECTION 12.                          Periodic Finance Charges and Other Fees.  Transferor hereby agrees that, except as otherwise required by any Requirement of Law, or as is deemed by Transferor to be necessary in order for Transferor to maintain its credit card business, based upon a good faith assessment by Transferor, in its sole discretion, of the nature of the competition in the credit card business, it shall not at any time reduce the Periodic Finance Charges assessed on any Receivable or other fees on any Account if, as a result of such reduction, Transferor’s reasonable expectation of the Portfolio Yield as of such date would be less than the then Base Rate.

 

SECTION 13.                          Limitations on Addition of Approved Portfolios.  Subject to Section 2.8, Transferor may designate additional Approved Portfolios if on or prior to the Addition Date related to any Account in such Approved Portfolio, (a) such designation shall be consented to in writing by each Investor Holder and (b) Transferor shall have provided the Investor Holders with an Officer’s Certificate certifying that the designation of such Approved Portfolios, as of the related Addition Date (and after giving effect to such designation) is not reasonably expected to cause an Early Amortization Event.

 

SECTION 14.                          Counterparts.  This Series Supplement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, but all of which counterparts shall together constitute but one and the same instrument.

 

SECTION 15.                           Governing Law.  THIS SERIES SUPPLEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

SECTION 16.                           Additional Reports and Notices.  On each Determination Date, Servicer shall provide copies of each Monthly Report to the Investor Holders.  In addition, upon request by any Investor Holder, Servicer shall make Daily Reports available at the office of Servicer for inspection by such Investor Holder on the days specified in Section 3.4(a).  Promptly following its receipt, Trustee shall provide copies to each Class A Holder of each notice Trustee receives from the Class M Holders, the Class B Holders, the Class C Holders or the Servicer (excluding Monthly Reports and Daily Reports).  Items required to be delivered to Class A Holders pursuant to this Section 16 shall be delivered to the address of such Class A Holder specified for notices in the Class A Certificate Purchase Agreement.

 

  

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SECTION 17.                          Additional Provisions.  Notwithstanding anything to the contrary in the Agreement, until the Series 2009-VFC1 Termination Date:

 

(a)           Trustee shall not agree to any extension of the 60 day periods referred to in Section 2.5, 2.6 or 3.3;

 

(b)           Servicer shall, in connection with each designation of Removed Accounts pursuant to Section 2.9(b), prepare and provide Trustee prior to the transfer of such Removed Accounts, and Trustee shall forward to each Investor Holder, a statement substantially in the form of Exhibit C for each of the three Monthly Periods preceding such designation as if the Receivables in such Removed Accounts never existed.

 

(c)           Without the consent of each Investor Holder (which consent shall not be unreasonably withheld or delayed), Transferor shall not (i) engage in any transaction described in Section 6.3(d) or 7.2, (ii) designate additional or substitute Transferors or Credit Card Originators as permitted by Section 2.11 or 2.12, (iii) increase the percentage of Principal Receivables referred to in the proviso to clause (f) of the definition of “Eligible Account”, (iv) purchase any Investor Certificate (as defined in the Agreement) unless such Investor Certificate is promptly retired, in accordance with the applicable Supplement, (v) amend any Transaction Document in a manner that adversely affects the Investor Holders, (vi) amend the Agreement to permit the addition of receivables arising in VISA, MasterCard or any other type of open end revolving credit card account other than those an Approved Portfolio as of the date hereof and (vii) amend this Series Supplement.

 

(d)           Notwithstanding the provisions of Section 3.9(a), the deposits into the Excess Funding Account required by the penultimate sentence of the first grammatical paragraph of that Section shall be made not later than the Business Day following the day on which the Transferor Amount falls below the Specified Transferor Amount. Amounts deposited in the Excess Funding Account pursuant to this Section 17(e) shall be deemed for all purposes of the Agreement to have been deposited pursuant to such penultimate sentence.

 

(e)           Upon the occurrence of a Merchant Bankruptcy (other than with respect to Service Merchandise), Comenity shall cause such Merchant to either segregate or stop In-Store Payments until such time as the Credit Card Processing Agreement of such Merchant is assumed by the trustee, debtor-in-possession, receiver, custodian or other similar official in the insolvency proceeding of that Merchant unless 100% of the Holders of Series 2009-VFC1 Certificateholders shall have consented to continuation of In-Store Payments without the requirement to segregate such In-Store Payments.

 

(f)           Notwithstanding Section 4.4, during any Amortization Period for any Series, Transferor may not apply Shared Principal Collections as principal with respect to any Variable Interest (including Series 2009-VFC1), unless such application of principal is made on any Transfer Date or related Distribution Date in connection with the application of Shared Principal Collections pursuant to Section 4.15 (and for purposes of such application pursuant to Section 4.15, the Principal Shortfall for any Variable Interest shall not include amounts required for any optional amortization amount).

 

  

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(g)           The Additional Minimum Transferor Amount is hereby specified as an additional amount to be considered part of the Minimum Transferor Amount pursuant to clause (b) of the definition of Minimum Transferor Amount.

 

(h)           The Transferor shall deposit into the Collection Account all amounts received from Comenity on account of merchant fees and discounts relating to the Accounts on the date received from Comenity.  Such amount shall be treated as Collections of Finance Charge Receivables and allocated in accordance with Article IV.

 

SECTION 18.                        Amendments to the Agreement.  Section 6.3(b)(iv) of the Agreement shall read in its entirety as follows “(iv) the Rating Agency Condition shall have been satisfied with respect to such issuance;”.

 

SECTION 19.                         No Petition.  Servicer, Transferor (with respect to the Trust only) and Trustee, by entering into this Series Supplement, and each Holder, by accepting a Series 2009-VFC1 Certificate, hereby covenant and agree that they will not at any time institute against the Trust, or join in any institution against the Trust or the Transferor of, any bankruptcy proceedings under any United States Federal or state bankruptcy or similar law in connection with any obligations relating to the Investor Holders, the Agreement or this Series Supplement.

 

SECTION 20.                          GAAP Sale.  The parties hereto intend the transfers of Receivables under the Agreement to be treated as a sale, and not a secured borrowing, for accounting purposes.

 

SECTION 21.                          Consents.  Comenity, in its capacity as Class M Holder and Class B Holder, and WFN Credit Company, LLC, in its capacity as Class C Holder, each, by executing this agreement, consents to (a) an increase in the Class M Maximum Funded Amount, Class B Maximum Funded Amount and Class C Maximum Funded Amount, as applicable, and (b) the execution of this Series Supplement.

 

  

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IN WITNESS WHEREOF, Transferor, Servicer and Trustee have caused this Series Supplement to be duly executed by their respective officers as of the day and year first above written.

 

WFN CREDIT COMPANY, LLC, as Transferor

By:   /s/ Ronald C. Reed                                                    

Name:  Ronald C. Reed

Title:     Vice President and Treasurer

 

COMENITY BANK, as Servicer

By:   /s/ John J. Coane                                                                         

Name:   John J. Coane

Title:    President

 

DEUTSCHE BANK TRUST COMPANY 

AMERICAS, not in its individual capacity, but 

solely as Trustee

By:   /s/ Louis Bodi                                                                         

Name:  Louis Bodi

Title:  Vice President

By:   /s/ Sue Kim                                                                         

Name:  Sue Kim

Title:  Assistant Vice President

S-1

  

  

  

Acknowledged and consented to as to Section 21 of this Series Supplement in its capacity as Class A Holder, as Class M Holder, as Class B Holder and as Class C Holder.

WFN CREDIT COMPANY, LLC, as Class C Holder

By:   /s/ Ronald C. Reed                                                                         

Name:  Ronald C. Reed

Title:  Vice President and Treasurer

 

COMENITY BANK, as Class M Holder and as Class B Holder

By:   /s/ John J. Coane                                                                         

Name:  John J. Coane

Title:  President

 

 

S-2Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is effective on the 29 day of July, 2013, by and between Insmed Incorporated, a Virginia corporation (the “Company”), and Christine A. Pellizzari (hereinafter, the “Executive”).

 

WITNESSETH:

 

WHEREAS, the Company desires to employ the Executive and the Executive desires to be employed by the Company on the terms herein described.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are mutually acknowledged, the Company and the Executive hereby agree as follows:

 

1.                                      Definitions. When used in this Agreement, the following terms shall have the following meanings:

 

(a)                                 “Accrued Obligations” means:

 

(i)                                     all accrued but unpaid Base Salary through the end of the Term of Employment;

 

(ii)                                  any unpaid or unreimbursed expenses incurred in accordance with Company policy, including amounts due under Section 5(a) hereof, to the extent incurred during the Term of Employment;

 

(iii)                               any accrued but unpaid benefits provided under the Company’s employee benefit plans, subject to and in accordance with the terms of those plans;

 

(iv)                              rights to indemnification by virtue of the Executive’s position as an officer or director of the Company or its subsidiaries and the benefits under any directors’ and officers’ liability insurance policy maintained by the Company, in accordance with its terms thereof; and

 

(v)                                 any accrued but unused vacation pay.

 

(b)                                 “Base Salary” means the salary provided for in Section 4(a) hereof or any increased salary granted to Executive pursuant to Section 4(a) hereof.

 

(c)                                  “Beneficial Ownership” shall have the meaning ascribed to such term in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended.

 

(d)                                 “Board” means the Board of Directors of the Company.

 

(e)                                  “Bonus” means any bonus payable to the Executive pursuant to Section 4(b) hereof.

 

(f)                                   “Cause” means:

 

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(i)                                     a conviction of the Executive, or a plea of nolo contendere, to a felony involving moral turpitude; or

 

(ii)                                  willful misconduct or gross negligence by the Executive resulting, in either case, in material economic harm to the Company or any Related Entities; or

 

(iii)                               a willful failure by the Executive to carry out the reasonable and lawful directions of the Board and failure by the Executive to remedy the failure within thirty (30) days after receipt of written notice of same from the Board; or

 

(iv)                              fraud, embezzlement, theft or dishonesty of a material nature by the Executive against the Company or any Related Entity, or a willful material violation by the Executive of a policy or procedure of the Company or any Related Entity, resulting, in any case, in material economic harm to the Company or any Related Entity; or

 

(v)                                 a willful material breach by the Executive of this Agreement and failure by the Executive to remedy the material breach within 30 days after receipt of written notice of same, by the Board.

 

(g)                                  “Change in Control” means:

 

(i)                                     The acquisition by any Person of Beneficial Ownership of at least 40% of either (A) the value of the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”) (the foregoing Beneficial Ownership hereinafter being referred to as a “Controlling Interest”); provided, however, that for purposes of this definition, the following acquisitions shall not constitute or result in a Change of Control: (v) any acquisition directly from the Company; (w) any acquisition by the Company; (x) any acquisition by any person that as of the Commencement Date owns Beneficial Ownership of a Controlling Interest; (y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary of the Company; or (z) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) below; or

 

(ii)                                  During any period of two consecutive years (not including any period prior to the Commencement Date) individuals who constitute the Board on the Commencement Date (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Commencement Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

 

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(iii)                               Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the Persons who were the Beneficial Owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding the Acquiring Corporation or any employee benefit plan (or related trust) of the Company or such Acquiring Corporation) beneficially owns, directly or indirectly, more than 40% of the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the Board of Directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

 

(iv)                              approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

 

Notwithstanding the foregoing, no event or transaction will constitute a Change in Control hereunder unless it also constitutes a “change in control event” under Section 409A of the Code.

 

(h)                                 “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended from time to time.

 

(i)                                     “Code” means the Internal Revenue Code of 1986, as amended.

 

(j)                                    “Commencement Date” means July 29, 2013.

 

(k)                                 “Competitive Activity” means (i) the discovery, design, development, distribution, marketing or sale of inhalation therapies for lung diseases and/or disorders, or (ii) any other activity in competition with the material activities of the Company or any of its Related Entities, in either case in any of the States within the United States, or countries within the world, in which the Company or any of its Related Entities conducts business.  For this purpose, the activities of the Company and its Related Entities, and where the Company and its Relates Entities do business, will be determined as of the earlier of the date of the application of this definition or the Termination Date.

 

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(l)                                     “Confidential Information” means all trade secrets and information disclosed to the Executive or known by the Executive as a consequence of or through the unique position of his employment with the Company or any Related Entity (including information conceived, originated, discovered or developed by the Executive and information acquired by the Company or any Related Entity from others) prior to or after the date hereof, and not generally or publicly known (other than as a result of unauthorized disclosure by the Executive), about the Company or any Related Entity or its business. Confidential Information includes, but is not limited to, inventions, ideas, designs, computer programs, circuits, schematics, formulas, algorithms, trade secrets, works of authorship, mask works, developmental or experimental work, processes, techniques, improvements, methods of manufacturing, know-how, data, financial information and forecasts, product plans, marketing plans and strategies, price lists, customer lists and contractual obligations and terms thereof, data, documentation and other information, in whatever form disclosed, relating to the Company or any Related Entity, including, but not limited to, financial statements, financial projections, business plans, listings and contractual obligations and terms thereof, components of intellectual property, unique designs, methods of manufacturing or other technology of the Company or any Related Entity.

 

(m)                             “Disability” means the Executive’s inability, or failure, to perform the essential functions of his position, with or without reasonable accommodation, for any period of six months or more in any 12 month period, by reason of any medically determinable physical or mental impairment.

 

(n)                                 “Equity Awards” means any stock options, restricted stock, restricted stock units, stock appreciation rights, phantom stock or other equity based awards granted by the Company to the Executive.

 

(o)                                 “Excise Tax” means any excise tax imposed by Section 4999 of the Code, together with any interest and penalties imposed with respect thereto, or any interest or penalties are incurred by the Executive with respect to any such excise tax.

 

(p)                                 “Good Reason” means the occurrence of any of the following: (i) a material diminution in the Executive’s base compensation; (ii) a material diminution in the Executive’s authority, duties, or responsibilities; (iii) a material diminution in the authority, duties, or responsibilities of the supervisor to whom the Executive is required to report; (iv) the Company’s or Related Entity’s requiring the Executive to be based at any office or location outside of 50 miles from the location of employment or service as of the effective date of this Agreement, except for travel reasonably required in the performance of the Executive’s responsibilities; or (v) any other action or inaction that constitutes a material breach by the Company of this Agreement.  For purposes of this Agreement, Good Reason shall not be deemed to exist unless the Executive’s termination of employment for Good Reason occurs within six months following the initial existence of one of the conditions specified in clauses (i) through (v) above, the Executive provides the Company with written notice of the existence of such condition within 90 days after the initial existence of the condition, and the Company fails to remedy the condition within 30 days after its receipt of such notice.

 

(q)                                 “Group” shall have the meaning ascribed to such term in Section 13(d) of the Securities Exchange Act of 1934.

 

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(r)                                    “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Securities Exchange Act of 1934 and used in Sections 13(d) and 14(d) thereof.

 

(s)                                   “Pro-Rata Bonus” means the Bonus that (but for the cessation of the Executive’s employment) would otherwise have been payable to the Executive for the fiscal year in which the Termination Date occurs (based on actual performance outcomes for that year), multiplied by the following fraction: (i) the number of days that the Executive was employed by the Company during that fiscal year, divided by (ii) 365.  For this purpose, the Bonus that would otherwise have been payable to the Executive shall be determined in good faith and in the same manner applicable to active named executive officers of the Company.

 

(t)                                    “Related Entity” means any Person controlling, controlled by or under common control with the Company or any of its subsidiaries.  For this purpose, the terms controlling,” “controlled by” and “under common control with” mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise, including (without limitation) the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.

 

(u)                                 “Restricted Period” shall be the Term of Employment and the one year period immediately following termination of the Term of Employment.

 

(v)                                 “Severance Amount” shall mean an amount equal to one-half of the Executive’s annual Base Salary, as in effect immediately prior to the Termination Date.

 

(w)                               “Severance Term” means the six month period following the date on which the Term of Employment ends.

 

(x)                                 “Target Bonus” has the meaning described in Section 4(b).

 

(y)                                 “Term of Employment” means the period during which the Executive shall be employed by the Company pursuant to the terms of this Agreement, which period shall begin on the Commencement Date and continue until terminated in accordance with Section 6 hereof.

 

(z)                                  “Termination Date” means the date on which the Term of Employment ends.

 

2.                                      Employment. The Company hereby agrees to employ the Executive and the Executive hereby agrees to serve the Company during the Term of Employment on the terms and conditions set forth herein.

 

3.                                      Duties of Executive. During the Term of Employment, the Executive shall be employed and serve as the General Counsel and Secretary, and shall have such duties typically associated with such title, including, without limitation all legal and corporate compliance activities. The Executive shall faithfully and diligently perform all services as may be assigned to him by Executive Management or the Board in their discretion of the company or its

 

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subsidiaries.  The Executive shall devote his full business time, attention and efforts to the performance of his duties under this Agreement, render such services to the best of his ability, and use his reasonable best efforts to promote the interests of the Company.  The Executive shall not engage in any other business or occupation during the Term of Employment, including, without limitation, any activity that (i) conflicts with the interests of the Company or its subsidiaries, (ii) interferes with the proper and efficient performance of his duties for the Company, or (iii) interferes with the exercise of his judgment in the Company’s best interests.  Notwithstanding the foregoing or any other provision of this Agreement, it shall not be a breach or violation of this Agreement for the Executive to (w) serve on up to two outside corporate or scientific advisory boards with prior notice to, and approval by, the Board, (x) serve on civic or charitable boards or committees, (y) deliver lectures, fulfill speaking engagements or teach at educational institutions, or (z) manage personal investments, so long as such activities do not constitute a Competitive Activity or significantly interfere with or significantly detract from the performance of the Executive’s responsibilities to the Company in accordance with this Agreement.

 

4.                                      Compensation.

 

(a)                                 Base Salary. The Executive shall receive a Base Salary at the annual rate of $350,000.00 during the Term of Employment, with such Base Salary payable in installments consistent with the Company’s normal payroll schedule, subject to applicable withholding and other taxes.  The Base Salary shall be reviewed, at least annually, for merit increases and may, by action and in the discretion of the Board, be increased at any time or from time to time, but may not be decreased from the then current Base Salary.

 

(b)                                 Bonuses.  During the Term of Employment, the Executive shall participate in the Company’s annual incentive compensation plan, program and/or arrangements applicable to senior-level executives, as established and modified from time to time by the Compensation Committee of the Board in its sole discretion.  During the Term of Employment, the Executive shall have a target bonus opportunity under such plan or program equal to 40% of his current Base Salary, (the “Target Bonus”), based on satisfaction of performance criteria to be established by the Compensation Committee of the Board within the first three months of each fiscal year that begins during the Term of Employment (or, for 2013, within 30 days of the Commencement Date).  The bonus calculation for 2013 shall be prorated based on the Executive’s date of hire.  Payment of annual incentive compensation awards shall be made in the same manner and at the same time that other senior-level executives receive their annual incentive compensation awards and, except as otherwise provided herein, will be subject to the Executive’s continued employment through the applicable payment date.

 

(c)                                  Sign On Bonus.  Upon completion of 60 days of employment you are eligible to receive a $15,000 sign-on bonus less all applicable withholdings.  Should your resign your employment within six months of your start date, you will be responsible for repayment of this bonus to Insmed.

 

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5.                                      Expense Reimbursement and Other Benefits.

 

(a)                                 Reimbursement of Expenses. Upon the submission of proper substantiation by the Executive, and subject to such rules and guidelines as the Company may from time to time adopt with respect to the reimbursement of expenses of executive personnel, the Company shall reimburse the Executive for all reasonable expenses actually paid or incurred by the Executive during the Term of Employment in the course of and pursuant to the business of the Company.  The Executive shall account to the Company in writing for all expenses for which reimbursement is sought and shall supply to the Company copies of all relevant invoices, receipts or other evidence reasonably requested by the Company. In addition, the Company shall reimburse the Executive for (or directly pay) reasonable attorneys’ fees incurred by the Executive in the negotiation and drafting of this Agreement, up to a maximum of $5,000.

 

(b)                                 Compensation/Benefit Programs. During the Term of Employment, the Executive shall be entitled to participate in all medical, dental, hospitalization, accidental death and dismemberment, disability, travel and life insurance plans, and any and all other plans as are from time to time offered by the Company to its executive personnel, including savings, pension, profit-sharing and deferred compensation plans, subject to the general eligibility and participation provisions set forth in such plans.

 

(c)                                  Working Facilities. During the Term of Employment, the Company shall furnish the Executive with an office, administrative help and such other facilities similar to those provided to similarly situated executives of the Company.  The Executive’s principal place of employment (subject to reasonable travel) shall be Monmouth Junction, NJ.

 

(d)                                 Stock Options.

 

(i)                                     As soon as is practicable, following Executive’s employment hereunder, and subject to final approval of the Compensation Committee of the Board of Directors, the Company will grant to the Executive a stock option with respect to 150,000 shares of the Company’s common stock in accordance with the Company’s standard option agreement.  During the Term of Employment, the Executive shall be eligible to be granted additional Equity Awards.  The number and type of such additional Equity Awards, and the terms and conditions thereof, shall be determined by the Compensation Committee of the Board, in its discretion.

 

(e)                                  Vacation. The Executive shall be entitled to four weeks of paid vacation each calendar year during the Term of Employment, to be taken at such times as the Executive and the Company shall mutually determine and provided that no vacation time shall significantly interfere with the duties required to be rendered by the Executive hereunder.  Up to two weeks of unused vacation time may be carried forward into any succeeding calendar year; provided, however, in no event shall the amount of vacation time available to the Executive annually under this Agreement, inclusive of any carryover time, exceed six weeks in the aggregate.

 

6.                                      Termination.

 

(a)                                 General. The Term of Employment shall terminate upon the earliest to occur of (i) the Executive’s death, (ii) a termination by the Company by reason of the Executive’s Disability, (iii) a termination by the Company with or without Cause, or (iv) a termination by Executive with or without Good Reason.  Upon any termination of Executive’s

 

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employment for any reason, except as may otherwise be requested by the Company in writing and agreed upon in writing by Executive, the Executive shall resign from any and all directorships, committee memberships or any other positions Executive holds with the Company or any of its Related Entities.

 

(b)                                 Termination By Company for Cause. The Company shall at all times have the right, upon written notice to the Executive, to terminate the Term of Employment, for Cause.  In no event shall a termination of the Executive’s employment for Cause occur unless the Company gives written notice to the Executive in accordance with this Agreement stating with reasonable specificity the events or actions that constitute Cause and providing the Executive with an opportunity to cure (if curable) within a reasonable period of time.  Cause shall in no event be deemed to exist except upon a decision made by the Board, at a meeting, duly called and noticed, to which the Executive (and the Executive’s counsel) shall be invited upon proper notice and shall be permitted to present evidence.  For purposes of this Section 6(b), any good faith determination by the Board of Cause shall be binding and conclusive on all interested parties.  In the event that the Term of Employment is terminated by the Company for Cause, Executive shall be entitled only to the Accrued Obligations, payable as and when those amounts would have been payable had the Term of Employment not ended.

 

(c)                                  Disability. The Company shall have the option, in accordance with applicable law, to terminate the Term of Employment upon written notice to the Executive, at any time during which the Executive is suffering from a Disability.  In the event that the Term of Employment is terminated due to the Executive’s Disability, the Executive shall be entitled to (i) the Accrued Obligations, payable as and when those amounts would have been paid had the Term of Employment not ended, (ii) the Pro-Rata Bonus, payable within 2 1⁄2 months following the end of the fiscal year in which the Termination Date occurs, and (iii) any insurance benefits to which he and his beneficiaries are entitled as a result of his Disability.

 

(d)                                 Death. In the event that the Term of Employment is terminated due to the Executive’s death, the Executive’s estate shall be entitled to (i) the Accrued Obligations, payable as and when those amounts would have been paid had the Term of Employment not ended, (ii) the Pro-Rata Bonus, payable within 2 1⁄2 months following the end of the fiscal year in which the Termination Date occurs, and (iii) any insurance benefits to which he and his beneficiaries are entitled as a result of his death.

 

(e)                                  Termination Without Cause or Resignation With Good Reason. The Company may terminate the Term of Employment without Cause, and the Executive may terminate the Term of Employment for Good Reason, at any time upon written notice.  If the Term of Employment is terminated by the Company without Cause (other than due to the Executive’s death or Disability) or by the Executive for Good Reason, in either case prior to the date of a Change in Control or more than one year after a Change in Control, the Executive shall be entitled to the following:

 

(i)                                     The Accrued Obligations, payable as and when those amounts would have been paid had the Term of Employment not ended;

 

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(ii)                                  Any unpaid Bonus in respect to any completed fiscal year that has ended on or prior to the Termination Date, payable within 2 1⁄2 months following the last day of the month in which the Termination Date occurs;

 

(iii)                               The Pro-Rata Bonus, payable within 2 1⁄2 months following the end of the fiscal year in which the Termination Date occurs;

 

(iv)                              The Severance Amount, payable in equal installments consistent with the Company’s normal payroll schedule over the 6 month period beginning with the first regularly scheduled payroll date that occurs more than 30 days following the Termination Date;

 

(v)                                 Provided that the Executive timely elects continued coverage under COBRA, the Company will reimburse the Executive for the monthly COBRA cost of continued health and dental coverage of the Executive and his qualified beneficiaries paid by the Executive under the health and dental plans of the Company, less the amount that the Executive would be required to contribute for health and dental coverage if the Executive were an active employee of the Company, for  6  months (or, if less, for the duration that such COBRA coverage is available to Executive); and

 

(vi)                              Accelerated vesting, as of the Termination Date, of any stock options that would have otherwise vested within six months following the Termination Date.

 

(f)                                   Termination by Executive Without Good Reason. The Executive may terminate his employment without Good Reason by providing the Company 30 days’ written notice of such termination.  In the event of a termination of employment by the Executive under this Section 6(f), the Executive shall be entitled only to the Accrued Obligations payable as and when those amounts would have been payable had the Term of Employment not ended.  In the event of termination of the Executive’s employment under this Section 6(f), the Company may, in its sole and absolute discretion, by written notice, accelerate such date of termination and still have it treated as a termination without Good Reason.

 

(g)                                  Change in Control of the Company. If the Executive’s employment is terminated by the Company (or any entity to which the obligations and benefits under this Agreement have been assigned, pursuant to Section 10) without Cause or by the Executive for Good Reason during the one year period immediately following the Change in Control, then the Executive shall be entitled to the same payments, rights and benefits described in Section 6(e), subject to the following enhancements:

 

(i)                                     The Severance Amount will be doubled and will be paid in a lump-sum on the first regularly scheduled payroll date that occurs more than 30 days following the Termination Date (rather than in installments over 12 months);

 

(ii)                                  Provided that the Executive timely elects continued coverage under COBRA, the Company will reimburse the Executive for the monthly COBRA cost of continued health and dental coverage of the Executive and his qualified beneficiaries paid by the Executive under the health and dental plans of the Company, less the amount that the Executive would be required to contribute for health and dental coverage if the Executive were an active employee of

 

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the Company, for  12  months (or, if less, for the duration that such COBRA coverage is available to Executive); and

 

(iii)                               All time-vested Equity Awards will vest in full.

 

(h)                                 Release.  All rights, payments and benefits due to the Executive under this Article 6 (other than the Accrued Obligations) shall be conditioned on the Executive’s execution of a general release of claims against the Company and its affiliates substantially in the form attached hereto as Exhibit A (the “Release”) and on that Release becoming effective and irrevocable within 30 days following the Termination Date.

 

(i)                                     Section 280G Certain Reductions of Payments by the Company.

 

(i)                                     Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a “Payment”), would be nondeductible by the Company for Federal income tax purposes because of Section 280G of the Code, then the aggregate present value of amounts payable or distributable to or for the benefit of the Executive pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as “Agreement Payments”) shall be reduced to the Reduced Amount.  The “Reduced Amount” shall be an amount expressed in present value that avoids any Payment being nondeductible by the Company because of Section 280G of the Code.  To the extent necessary to avoid imposition of the Excise Tax, the amounts payable or benefits to be provided to the Executive shall be reduced such that the reduction of compensation to be provided to the Executive is minimized.  In applying this principle, the reduction shall be made in a manner consistent with the requirements of Section 409A of the Code, and where two economically equivalent amounts are subject to reduction but payable at different times, such amounts shall be reduced on a pro rata basis (but not below zero).  Anything to the contrary notwithstanding, if the Reduced Amount is zero and it is determined further that any Payment which is not an Agreement Payment would nevertheless be nondeductible by the Company for Federal income tax purposes because of Section 280G of the Code, then the aggregate present value of Payments which are not Agreement Payments shall also be reduced (but not below zero) to an amount expressed in present value which maximizes the aggregate present value of Payments without causing any Payment to be nondeductible by the Company because of Section 280G of the Code.  If a reduction of any Payment is required pursuant to this Section 6(i), such reduction shall occur to the amounts in the order that results in the greatest economic present value of all payments and benefits actually made or provided to the Executive.  For purposes of this Section 6(i), present value shall be determined in accordance with Section 280G(d)(4) of the Code.

 

(ii)                                  All determinations required to be made under this Section 6(i) shall be made by a tax or compensation consulting firm of national reputation selected by the Company (the “Consulting Firm”), which shall provide detailed supporting calculations both to the Company and the Executive within 20 business days of the date of termination or such earlier time as is requested by the Company and an opinion to the Executive that he has substantial authority not to report any excise tax on his Federal income tax return with respect to any Payments.  Any such determination by the Consulting Firm shall be binding upon the Company

 

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and the Executive.  Within five business days thereafter, the Company shall pay to or distribute to or for the benefit of the Executive such amounts as are then due to the Executive under this Agreement.  All fees and expenses of the Consulting Firm incurred in connection with the determinations contemplated by this Section 6(i) shall be borne by the Company.

 

(iii)                               As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Consulting Firm hereunder, it is possible that Payments will have been made by the Company which should not have been made (“Overpayment”) or that additional Payments which will not have been made by the Company could have been made (“Underpayment”), in each case, consistent with the calculations required to be made hereunder. In the event that the Consulting Firm, based upon the assertion of a deficiency by the Internal Revenue Service against the Executive which the Consulting Firm believes has a high probability of success, determines that an Overpayment has been made, any such Overpayment paid or distributed by the Company to or for the benefit of the Executive shall be promptly repaid to the Company by the Executive.  In the event that the Consulting Firm, based upon controlling precedent or other substantial authority, determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code.

 

(j)                                    Cooperation. Following the Term of Employment, the Executive shall give his assistance and cooperation willingly, upon reasonable advance notice with due consideration for his other business or personal commitments, in any matter relating to his position with the Company, or his expertise or experience as the Company may reasonably request, including his attendance and truthful testimony where deemed appropriate by the Company, with respect to any investigation or the Company’s defense or prosecution of any existing or future claims or litigations or other proceedings relating to matters in which he was involved or potentially had knowledge by virtue of his employment with the Company. In no event shall his cooperation materially interfere with his services for a subsequent employer or other similar service recipient. To the extent permitted by law, the Company agrees that (i) it shall promptly reimburse the Executive for his reasonable and documented expenses in connection with his rendering assistance and/or cooperation under this Section 6(j) upon his presentation of documentation for such expenses and (ii) the Executive shall be reasonably compensated for any continued material services as required under this Section 6(j).

 

(k)                                 Return of Company Property. Following the Termination Date, the Executive or his personal representative shall return all Company property in his possession, including but not limited to all computer equipment (hardware and software), telephones, facsimile machines, palm pilots and other communication devices, credit cards, office keys, security access cards, badges, identification cards and all copies (including drafts) of any documentation or information (however stored) relating to the business of the Company, its customers and clients or its prospective customers and clients (provided that the Executive may retain a copy the addresses contained in his rolodex, palm pilot, PDA or similar device).

 

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(l)                                     Compliance with Section 409A.

 

(i)                                     General.  It is the intention of both the Company and the Executive that the benefits and rights to which the Executive could be entitled pursuant to this Agreement comply with Section 409A of the Code and the Treasury Regulations and other guidance promulgated or issued thereunder (“Section 409A”), to the extent that the requirements of Section 409A are applicable thereto, and the provisions of this Agreement shall be construed in a manner consistent with that intention.

 

(ii)                                  Distributions on Account of Separation from Service. If and to the extent required to comply with Section 409A, no payment or benefit required to be paid under this Agreement on account of termination of the Executive’s employment shall be made unless and until the Executive incurs a “separation from service” within the meaning of Section 409A.

 

(iii)                               Six Month Delay for Specified Employees.  If the Executive is a “specified employee” (within the meaning of Section 409A(a)(2)(B)(i) of the Code), then no payment or benefit that is considered deferred compensation subject to Section 409A of the Code (and not exempt from Section 409A of the Code as a short term deferral or otherwise) that is payable on account of the Executive’s “separation from service”, as that term is defined for purposes of Section 409A, shall be made before the date that is six months after the Executive’s “separation from service” (or, if earlier, the date of the Executive’s death) if and to the extent that such payment or benefit constitutes deferred compensation (or may be nonqualified deferred compensation) under Section 409A and such deferral is required to comply with the requirements of Section 409A.  Any payment or benefit delayed by reason of the prior sentence shall be paid out or provided in a single lump sum at the end of such required delay period in order to catch up to the original payment schedule.

 

(iv)                              Treatment of Each Installment as a Separate Payment. For purposes of applying the provisions of Section 409A to this Agreement, each separately identified amount to which the Executive is entitled under this Agreement shall be treated as a separate payment.  In addition, any series of installment payments under this Agreement shall be treated as a right to a series of separate payments.

 

(v)                                 Taxable Reimbursements and In-Kind Benefits.

 

(A)                               Any reimbursements by the Company to the Executive of any eligible expenses under this Agreement that are not excludable from the Executive’s income for Federal income tax purposes (the “Taxable Reimbursements”) shall be made by no later than the last day of the taxable year of the Executive following the year in which the expense was incurred.

 

(B)                               The amount of any Taxable Reimbursements and the value of any in-kind benefits to be provided to the Executive, during any taxable year of the Executive shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year of the Executive.

 

(C)                               The right to Taxable Reimbursement, or in-kind benefits, shall not be subject to liquidation or exchange for another benefit.

 

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(vi)                              No Guaranty of 409A Compliance. Notwithstanding the foregoing, the Company does not make any representation to the Executive that the payments or benefits provided under this Agreement are exempt from, or satisfy, the requirements of Section 409A, and the Company shall have no liability or other obligation to indemnify or hold harmless the Executive or any beneficiary of the Executive for any tax, additional tax, interest or penalties that the Executive or any beneficiary of the Executive may incur in the event that any provision of this Agreement, or any amendment or modification thereof, or any other action taken with respect thereto, is deemed to violate any of the requirements of Section 409A.

 

7.                                      Restrictive Covenants.

 

(a)                                 Non-competition. At all times during the Restricted Period, the Executive shall not, directly or indirectly (whether as a principal, agent, partner, employee, officer, investor, owner, consultant, board member, security holder, creditor or otherwise), engage in any Competitive Activity, or have any direct or indirect interest in any sole proprietorship, corporation, company, partnership, association, venture or business or any other person or entity that directly or indirectly (whether as a principal, agent, partner, employee, officer, investor, owner, consultant, board member, security holder, creditor, or otherwise) engages in a Competitive Activity; provided that the foregoing shall not apply to the Executive’s ownership of securities of the Company or the acquisition by the Executive, solely as an investment, of securities of any issuer that is registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, and that are listed or admitted for trading on any United States national securities exchange or that are quoted on the Nasdaq Stock Market, or any similar system or automated dissemination of quotations of securities prices in common use, so long as the Executive does not control, acquire a controlling interest in or become a member of a group which exercises direct or indirect control of, more than five percent of any class of capital stock of such corporation.

 

(b)                                 Nonsolicitation of Employees and Certain Other Third Parties. At all times during the Restricted Period, the Executive shall not, directly or indirectly, for himself or for any other person, firm, corporation, partnership, association or other entity (i) employ or attempt to employ or enter into any contractual arrangement with any employee, consultant or individual contractor performing services for the Company, or any Related Entity, unless such employee, consultant or independent contractor, has not been employed or engaged by the Company for a period in excess of six months, and/or (ii) call on, solicit, or engage in business with, any of the actual or targeted prospective customers or clients of the Company or any Related Entity on behalf of any person or entity in connection with any Competitive Activity, nor shall the Executive make known the names and addresses of such actual or targeted prospective customers or clients, or any information relating in any manner to the trade or business relationships of the Company or any Related Entities with such customers or clients, other than in connection with the performance of the Executive’s duties under this Agreement, and/or (iii) persuade or encourage or attempt to persuade or encourage any persons or entities with whom the Company or any Related Entity does business or has some business relationship to cease doing business or to terminate its business relationship with the Company or any Related Entity or to engage in any Competitive Activity on its own or with any competitor of the Company or any Related Entity.

 

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(c)                                  Confidential Information. The Executive shall not at any time divulge, communicate, use to the detriment of the Company or any Related Entity or for the benefit of any other person or persons, or misuse in any way, any Confidential Information pertaining to the business of the Company. Any Confidential Information or data now or hereafter acquired by the Executive with respect to the business of the Company or any Related Entity (which shall include, but not be limited to, information concerning the Company’s or any Related Entity’s financial condition, prospects, technology, customers, suppliers, sources of leads and methods of doing business) shall be deemed a valuable, special and unique asset of the Company and its Related Entities that is received by the Executive in confidence and as a fiduciary, and the Executive shall remain a fiduciary to the Company and its Related Entities with respect to all of such information. Notwithstanding the foregoing, nothing herein shall be deemed to restrict the Executive from disclosing Confidential Information as required to perform his duties under this Agreement or to the extent required by law. If any person or authority makes a demand on the Executive purporting to legally compel him to divulge any Confidential Information, the Executive immediately shall give notice of the demand to the Company so that the Company may first assess whether to challenge the demand prior to the Executive’s divulging of such Confidential Information. The Executive shall not divulge such Confidential Information until the Company either has concluded not to challenge the demand, or has exhausted its challenge, including appeals, if any. Upon request by the Company, the Executive shall deliver promptly to the Company upon termination of his services for the Company, or at any time thereafter as the Company may request, all memoranda, notes, records, reports, manuals, drawings, designs, computer files in any media and other documents (and all copies thereof) containing such Confidential Information.

 

(d)                                 Ownership of Developments. All processes, concepts, techniques, inventions and works of authorship, including new contributions, improvements, formats, packages, programs, systems, machines, compositions of matter manufactured, developments, applications and discoveries, and all copyrights, patents, trade secrets, or other intellectual prope1ty rights associated therewith conceived, invented, made, developed or created by the Executive during the Term of Employment either during the course of performing work for the Company or its Related Entities, or their clients, or which are related in any manner to the business (commercial or experimental) of the Company or its Related Entities or their clients (collectively, the “Work Product”) shall belong exclusively to the Company and its Related Entities and shall, to the extent possible, be considered a work made by the Executive for hire for the Company and its Related Entities within the meaning of Title 17 of the United States Code. To the extent the Work Product may not be considered work made by the Executive for hire for the Company and its Related Entities, the Executive agrees to assign, and automatically assign at the time of creation of the Work Product, without any requirement of further consideration, any right, title, or interest the Executive may have in such Work Product. Upon the request of the Company, the Executive shall take such further actions, including execution and delivery of instruments of conveyance, as may be appropriate to give full and proper effect to such assignment. The Executive shall further: (i) promptly disclose the Work Product to the Company; (ii) assign to the Company or its assignee, without additional compensation, all patent or other rights to such Work Product for the United States and foreign countries; (iii) sign all papers necessary to carry out the foregoing; and (iv) give testimony in support of his inventions, all at the sole cost and expense of the Company.

 

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(e)                                  Books and Records. All books, records, and accounts relating in any manner to the customers or clients of the Company or its Related Entities, whether prepared by the Executive or otherwise coming into the Executive’s possession, shall be the exclusive property of the Company and its Related Entities and shall be returned immediately to the Company on termination of the Executive’s employment hereunder or on the Company’s request at any time.

 

(f)                                   Acknowledgment by Executive. The Executive acknowledges and confirms that the restrictive covenants contained in this Section 7 (including without limitation the length of the term of the provisions of this Section 7) are reasonably necessary to protect the legitimate business interests of the Company and its Related Entities, and are not overbroad, overlong, or unfair and are not the result of overreaching, duress or coercion of any kind. The Executive further acknowledges and confirms that the compensation payable to the Executive under this Agreement is in consideration for the duties and obligations of the Executive hereunder, including the restrictive covenants contained in this Section 7, and that such compensation is sufficient, fair and reasonable. The Executive further acknowledges and confirms that his full, uninhibited and faithful observance of each of the covenants contained in this Section 7 will not cause him any undue hardship, financial or otherwise, and that enforcement of each of the covenants contained herein will not impair his ability to obtain employment commensurate with his abilities and on terms fully acceptable to him or otherwise to obtain income required for the comfortable support of him and his family and the satisfaction of the needs of his creditors. The Executive acknowledges and confirms that his special knowledge of the business of the Company and its Related Entities is such as would cause the Company and its Related Entities serious injury or loss if he were to use such ability and knowledge to the benefit of a competitor or were to compete with the Company or its Related Entities in violation of the terms of this Section 7. The Executive further acknowledges that the restrictions contained in this Section 7 are intended to be, and shall be, for the benefit of and shall be enforceable by, the Company’s successors and assigns. The Executive expressly agrees that upon any breach or violation of the provisions of this Section 7, the Company shall be entitled to seek in addition to any other rights or remedies it may have, to (i) temporary and/or permanent injunctive relief in any court of competent jurisdiction as described in Section 7(i) hereof, and (ii) such damages as are provided at law or in equity. The existence of any claim or cause of action against the Company or its Related Entities, whether predicated upon this Agreement or otherwise, shall not constitute a defense to the enforcement of the restrictions contained in this Section 7.

 

(g)                                  Reformation by Court. In the event that a court of competent jurisdiction shall determine that any provision of this Article 7 is invalid or more restrictive than permitted under the governing law of such jurisdiction, then only as to enforcement of this Article 7 within the jurisdiction of such court, such provision shall be interpreted or reformed and enforced as if it provided for the maximum restriction permitted under such governing law.

 

(h)                                 Extension of Time. If the Executive shall be in violation of any provision of this Section 7, then each time limitation set forth in this Section 7 shall be extended for a period of time equal to the period of time during which such violation or violations occur.  If the Company or any Related Entity seeks injunctive relief from such violation in any court, then the

 

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covenants set forth in this Section 7 shall be extended for a period of time equal to the pendency of such proceeding including all appeals by the Executive.

 

(i)                                     Injunction. It is recognized and hereby acknowledged by the parties hereto that a breach by the Executive of any of the covenants contained in Section 7 of this Agreement may cause irreparable harm and damage to the Company, and its Related Entities, the monetary amount of which may be virtually impossible to ascertain.  As a result, the Executive recognizes and hereby acknowledges that the Company and its Related Entities shall be entitled to seek an injunction from any court of competent jurisdiction enjoining and restraining any violation of any or all of the covenants contained in Section 7 of this Agreement by the Executive or any of his affiliates, associates, partners or agents, either directly or indirectly, and that such right to injunction shall be cumulative and in addition to whatever other remedies the Company may possess.

 

8.                                      Representations and Warranties of Executive. The Executive represents and warrants to the Company that:

 

(a)                                 The Executive’s employment will not conflict with or result in his breach of any agreement to which he is a party or otherwise may be bound;

 

(b)                                 The Executive has not violated, and in connection with his employment with the Company will not violate, any non-solicitation, non-competition or other similar covenant or agreement of a prior employer by which he is or may be bound; and

 

(c)                                  In connection with Executive’s employment with the Company, he will not use any confidential or proprietary information that he may have obtained in connection with employment with any prior employer; and

 

(d)                                 The Executive has not (i) been convicted of any felony; or (ii) committed any criminal act with respect to Executive’s current or any prior employment; and

 

(e)                                  The Executive is not dependent on alcohol or the illegal use of drugs. The Executive recognizes that Company shall have the right to conduct random drug testing of its employees and that Executive may be called upon in such a manner.

 

9.                                      Taxes.  All payments or transfers of property made by the Company to the Executive or his estate or beneficiaries shall be subject to the withholding of such amounts relating to taxes as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation.

 

10.                               Assignment. The Company shall have the right to assign this Agreement and its rights and obligations hereunder in whole, but not in part, to any corporation or other entity with or into which the Company may hereafter merge or consolidate or to which the Company may transfer all or substantially all of its assets, if in any such case said corporation or other entity shall by operation of law or expressly in writing assume all obligations of the Company hereunder as fully as if it had been originally made a party hereto, but may not otherwise assign this Agreement or its rights and obligations hereunder.  The Executive may not assign or transfer this Agreement or any rights or obligations hereunder.

 

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11.                               Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New Jersey, without regard to principles of conflict of laws.

 

12.                               Jurisdiction and Venue. The patties acknowledge that a substantial portion of the negotiations, anticipated performance and execution of this Agreement occurred or shall occur in Monmouth, New Jersey, and that, therefore, without limiting the jurisdiction or venue of any other federal or state courts, each of the parties irrevocably and unconditionally (i) agrees that any suit, action or legal proceeding arising out of or relating to this Agreement which is expressly permitted by the terms of this Agreement to be brought in a court of law, may be brought in the courts of record of the State of New Jersey in Monmouth County or the court of the United States, District of New Jersey; (ii) consents to the jurisdiction of each such court in any such suit, action or proceeding; (iii) waives any objection which it or he may have to the laying of venue of any such suit, action or proceeding in any of such courts; and (iv) agrees that service of any court papers may be effected on such party by mail, as provided in this Agreement, or in such other manner as may be provided under applicable laws or court rules in such courts.

 

13.                               Entire Agreement. This Agreement, together with the exhibit attached hereto, constitutes the entire agreement between the patties hereto with respect to the subject matter hereof and, upon its effectiveness, shall supersede all prior agreements, understandings and arrangements, both oral and written, between the Executive and the Company (or any of its Related Entities) with respect to such subject matter.  This Agreement may not be modified in any way unless by a written instrument signed by both the Company and the Executive.

 

14.                               Notices. All notices required or permitted to be given hereunder shall be in writing and shall be personally delivered by courier, sent by registered or certified mail, return receipt requested or sent by confirmed facsimile transmission addressed as set forth herein. Notices personally delivered, sent by facsimile or sent by overnight courier shall be deemed given on the date of delivery and notices mailed in accordance with the foregoing shall be deemed given upon receipt by the addressee, as evidenced by the return receipt thereof.  Notice shall be sent (i) if to the Company, addressed to 9 Deer Park Drive, Suite C, Monmouth Junction, NJ 08852-1919, Attention: General Counsel, and (ii) if to the Executive, to his address as reflected on the payroll records of the Company, or to such other address as either party shall request by notice to the other in accordance with this provision.

 

15.                               Benefits; Binding Effect. This Agreement shall be for the benefit of and binding upon the parties hereto and their respective heirs, personal representatives, legal representatives, successors and, where permitted and applicable, assigns, including, without limitation, any successor to the Company, whether by merger, consolidation, sale of stock, sale of assets or otherwise.

 

16.                               Right to Consult with Counsel; No Drafting Party. The Executive acknowledges having read and considered all of the provisions of this Agreement carefully, and having had the opportunity to consult with counsel of his own choosing, and, given this, the Executive agrees that the obligations created hereby are not unreasonable.  The Executive acknowledges that he has had an opportunity to negotiate any and all of these provisions and no rule of construction

 

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shall be used that would interpret any provision in favor of or against a patty on the basis of who drafted the Agreement.

 

17.                               Severability. The invalidity of any one or more of the words, phrases, sentences, clauses, provisions, sections or articles contained in this Agreement shall not affect the enforceability of the remaining portions of this Agreement or any part thereof, all of which are inserted conditionally on their being valid in law, and, in the event that any one or more of the words, phrases, sentences, clauses, provisions, sections or articles contained in this Agreement shall be declared invalid, this Agreement shall be construed as if such invalid word or words, phrase or phrases, sentence or sentences, clause or clauses, provisions or provisions, section or sections or article or articles had not been inserted.  If such invalidity is caused by length of time or size of area, or both, the otherwise invalid provision will be considered to be reduced to a period or area which would cure such invalidity.

 

18.                               Waivers.  The waiver by either party hereto of a breach or violation of any term or provision of this Agreement shall not operate nor be construed as a waiver of any subsequent breach or violation.

 

19.                               Damages; Attorneys’ Fees.  Nothing contained herein shall be construed to prevent the Company or the Executive from seeking and recovering from the other damages sustained by either or both of them as a result of its or his breach of any term or provision of this Agreement.  Each party shall bear its own costs and attorneys’ fees.

 

20.                               Waiver of Jury Trial. The Executive hereby knowingly, voluntarily and intentionally waives any right that the Executive may have to a trial by jury in respect of any litigation based hereon, or arising out of, under or in connection with this Agreement and any agreement, document or instrument contemplated to be executed in connection herewith, or any course of conduct, course of dealing statements (whether verbal or written) or actions of any party hereto.

 

21.                               No Set-off or Mitigation. The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others.  In the event of any termination of the Executive’s employment under this Agreement, he shall be under no obligation to seek other employment or otherwise in any way to mitigate the amount of any payment provided for hereunder.

 

22.                               Section Headings. The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

23.                               No Third Party Beneficiary.  The Related Entities are intended third party beneficiaries of this Agreement.  Otherwise, nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any person other than the Company, the parties hereto and their respective heirs, personal representatives, legal representatives, successors and permitted assigns, any rights or remedies under or by reason of this Agreement.

 

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24.                               Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument and agreement.

 

25.                               Indemnification.

 

(a)                                 Subject to limitations imposed by law, the Company shall indemnify and hold harmless the Executive to the fullest extent permitted by law from and against any and all claims, damages, expenses (including attorneys’ fees), judgments, penalties, fines, settlements, and all other liabilities incurred or paid by him in connection with the investigation, defense, prosecution, settlement or appeal of any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and to which the Executive was or is a party or is threatened to be made a party by reason of the fact that the Executive is or was an officer, employee or agent of the Company, or by reason of anything done or not done by the Executive in any such capacity or capacities, provided that the Executive acted in good faith, in a manner that was not grossly negligent or constituted willful misconduct and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The Company also shall pay any and all expenses (including attorney’s fees) incurred by the Executive as a result of the Executive being called as a witness in his capacity as a current or former officer or director of the Company.

 

(b)                                 The Company shall pay any expenses (including attorneys’ fees), judgments, penalties, fines, settlements, and other liabilities incurred by the Executive in investigating, defending, settling or appealing any action, suit or proceeding described in this Section 25 in advance of the final disposition of such action, suit or proceeding.  The Company shall promptly pay the amount of such expenses to the Executive, but in no event later than ten days following the Executive’s delivery to the Company of a written request for an advance pursuant to this Section 25, together with a reasonable accounting of such expenses.

 

(c)                                  The Executive hereby undertakes and agrees to repay to the Company any advances made pursuant to this Section 25 if and to the extent that it shall ultimately be found that the Executive is not entitled to be indemnified by the Company for such amounts.

 

(d)                                 The Company shall make the advances contemplated by this Section 25 regardless of the Executive’s financial ability to make repayment, and regardless whether indemnification of the Executive by the Company will ultimately be required.  Any advances and undertakings to repay pursuant to this Section 25 shall be unsecured and interest-free.

 

(e)                                  The provisions of this Section 25 shall survive the Term of Employment.

 

[Signatures on Following Page]

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement on the date first above written.

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Insmed   Incorporated, a Virginia corporation
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
William   H. Lewis
    
	
 
    	
Title:
    	
President   and CEO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
EXECUTIVE:
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Christine   A. Pellizzari
    
				

 

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Exhibit A

 

General Release of Claims

 

1.                                      Christine A. Pellizzari (“Executive”), for himself and his family, heirs, executors, administrators, legal representatives and their respective successors and assigns, in exchange for the consideration received pursuant to Sections 6(e) [and 6(g)] of the Employment Agreement (the “Severance Benefits”) to which this release is attached as Exhibit A (the “Employment Agreement”), does hereby release and forever discharge Insmed Incorporated (the “Company”), its subsidiaries, affiliated companies, successors and assigns, and its current or former directors, officers, employees, shareholders or agents in such capacities (collectively with the Company, the “Released Parties”) from any and all actions, causes of action, suits, controversies, claims and demands whatsoever, for or by reason of any matter, cause or thing whatsoever, whether known or unknown including, but not limited to, all claims under any applicable laws arising under or in connection with Executive’s employment or termination thereof, whether for tort, breach of express or implied employment contract, wrongful discharge, intentional infliction of emotional distress, or defamation or injuries incurred on the job or incurred as a result of loss of employment.  Without limiting the generality of the release provided above, Executive expressly waives any and all claims under Age Discrimination in Employment Act (“ADEA’’) that he may have as of the date hereof.  Executive further understands that, by signing this General Release of Claims, he is in fact waiving, releasing and forever giving up any claim under the ADEA as well as all other laws within the scope of this paragraph 1 that may have existed on or prior to the date hereof.  Notwithstanding anything in this paragraph 1 to the contrary, this General Release of Claims shall not apply to (i) any rights to receive any payments or benefits to which the Executive is entitled under COBRA, (ii) any rights or claims that may arise as a result of events occurring after the date this General Release of Claims is executed, (iii) any indemnification and advancement rights Executive may have as a former employee, officer or director of the Company or its subsidiaries or affiliated companies (including any rights under Section 25 of the Employment Agreement or under the Company’s charter or bylaws), (iv) any claims for benefits under any directors’ and officers’ liability policy maintained by the Company or its subsidiaries or affiliated companies in accordance with the terms of such policy, (v) rights to vested benefits under the Company’s 401(k) plan, and (vi) any rights as a holder of equity securities or debt securities/notes of the Company.

 

2.                                      Executive represents that he has not filed against the Released Parties any complaints, charges, or lawsuits arising out of his employment, or any other matter arising on or prior to the date of this General Release of Claims, and covenants and agrees that he will never individually or with any person file, or commence the filing of any lawsuits, complaints or proceedings with any governmental agency, or against the Released Parties with respect to any of the matters released by Executive pursuant to paragraph 1 hereof; provided, that nothing herein shall prevent you from filing a charge or complaint with the Equal Employment Opportunity Commission (“EEOC”) or similar federal or state agency or your ability to participate in any investigation or proceeding conducted by such agency.  Executive does agree, however, that he is waiving his right to recover any money in connection with such an

 

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investigation or charge filed by him or by any other individual, or a charge filed by the Equal Employment Opportunity Commission or any other federal, state or local agency.

 

3.                                      Executive acknowledges that, in the absence of his execution of this General Release of Claims, the Severance Benefits would not otherwise be due to him.

 

4.                                      Executive acknowledges and agrees that he received adequate consideration in exchange for agreeing to the covenants contained in Section 7 of the Employment Agreement, that such covenants remain reasonable and necessary to protect the legitimate business interests of the Company and its affiliates and that he will continue to comply with those covenants.

 

5.                                      Executive hereby acknowledges that the Company has informed him that he has up to 21 days to sign this General Release of Claims and he may knowingly and voluntarily waive that 21 day period by signing this General Release of Claims earlier.  Executive also understands that he shall have seven days following the date on which he signs this General Release of Claims within which to revoke it by providing a written notice of his revocation to the Company in the manner described in Section 14 of the Employment Agreement.

 

6.                                      Executive acknowledges and agrees that this General Release of Claims will be governed by and construed and enforced in accordance with the internal laws of the State of New Jersey applicable to contracts made and to be performed entirely within such State.

 

7.                                      Executive acknowledges that he has read this General Release of Claims, that he has been advised that he should consult with an attorney before he executes this general release of claims, and that he understands all of its terms and executes it voluntarily and with full knowledge of its significance and the consequences thereof.

 

8.                                      This General Release of Claims shall become irrevocable on the eighth day following Executive’s execution of this General Release of Claims, unless previously revoked in accordance with paragraph 5, above.

 

Intending to be legally bound hereby, Executive has executed this General Release of Claims on                       , 20    .

 

2

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