CAPITAL ASSURANCE
AND LIQUIDITY MAINTENANCE AGREEMENT
This Capital Assurance and Liquidity
Maintenance Agreement (“Agreement”) is entered into by
and between World Financial Network National Bank (the
“Bank”), Columbus, Ohio, and Alliance Data Systems
Corporation (“ADSC”), Dallas, Texas, a Delaware
corporation and the parent company that wholly-owns the Bank.
WHEREAS , on or about
August 14, 2009, the Bank and ADSC entered into a revised
operating agreement with the OCC (the “Operating
Agreement”) that sets forth measures that the Bank and ADSC
would take to ensure that the Bank, and each company that from time
to time is an operating subsidiary of the Bank, would operate in a
safe and sound manner and in accordance with all applicable laws,
rules, regulations, including the entry into a legally enforceable
revised capital assurance and liquidity maintenance agreement
between the Bank and ADSC;
WHEREAS , the Bank and ADSC
hereby enter into this Agreement setting forth the Bank’s
continuing obligation to seek and ADSC’s continuing
obligation to provide the Bank necessary capital and liquidity
support, in order to ensure that the Bank continues to operate
safely and soundly and in accordance with all applicable laws,
rules and regulations, and in accordance with the terms of the
Operating Agreement;
NOW THEREFORE , in
consideration of the mutual covenants, conditions and promises set
forth herein, and other good and valuable consideration, the
receipt and sufficiency of which is expressly acknowledged by both
parties, the Bank and ASDC hereby enter into this Agreement setting
forth ASDC’s continuing obligations to provide to the Bank
necessary capital and liquidity support, in order to ensure that
the Bank continues to operate safely and soundly and in accordance
with all applicable laws, rules and regulations, and in accordance
with the terms of the Operating Agreement, and hereby agree as
follows:
1. CAPITAL ASSURANCES
A. The Bank’s Minimum
Capital Requirement. The parties acknowledge that the Bank is
obligated to maintain sufficient capital such that the Bank’s
capital meets or exceeds the levels required by the Operating
Agreement or any modifications thereof (the “Minimum Capital
Requirement”).
B. Bank’s Obligation to
Notify ASDC of Deficiency and Seek ADSC’s Assistance. The
Bank agrees that if it becomes necessary for it to secure capital
infusions so as to remain in compliance with the Minimum Capital
Requirement the Bank shall promptly notify and request ADSC to make
such capital infusions. Any Bank request to ADSC for such capital
infusions shall be in writing, and the Bank shall provide the OCC
with a copy of such written demand within one (1) business day
after delivery to ADSC.
C. Capital Infusions from
ADSC. ADSC hereby agrees to make such capital infusions as may
be requested by Bank from time to time to ensure the Bank remains
in compliance with its Minimum Capital Requirement. If at any time,
the Bank’s capital level falls below the Minimum Capital
Requirement (“Capital Deficiency”), ASDC agrees it
will, at the request of the Bank, contribute sufficient additional
capital in a form acceptable to the Bank, subject to the
OCC’s right to raise a supervisory objection, so as to bring
the Bank into compliance with the Minimum Capital Requirement. Such
capital contribution will be: (i) made not later than five
(5) business days after receiving notification of the Capital
Deficiency and request from the Bank or the OCC; (ii) in the
form of cash, or if appropriate, other acceptable assets; and
(iii) accounted for pursuant to Generally Accepted Accounting
Principles (“GAAP”).
D. Higher Minimum Capital
Requirement. If the OCC subsequently deems it necessary,
pursuant to the regulatory authority of 12 C.F.R. Part 3, to
require that the Bank achieve and thereafter maintain a higher
Minimum Capital Requirement, ADSC agrees it will contribute
sufficient additional capital in a form acceptable to the OCC, so
that the Bank achieves and thereafter maintains compliance with the
Higher Minimum Capital Requirement. Such capital contribution will
be: (i) made not later than ten (10) business days after
receiving notification of the higher Minimum Capital Requirement
from the Bank or the OCC; (ii) in the form of cash, or if
appropriate, other acceptable assets; and (iii) accounted for
pursuant to Generally Accepted Accounting Principles
(“GAAP”).
2. LIQUIDITY
MAINTENANCE
A. The Bank’s Minimum
Liquidity Requirement. The parties acknowledge that the Bank is
required to maintain sufficient liquidity such that the
Bank’s liquidity meets or exceeds the levels required by the
Operating Agreement and any modifications thereto (the
“Minimum Liquidity Requirement”). At all times, the
Bank and ADSC will maintain sufficient liquidity in the Bank such
that the Bank’s liquidity meets or exceeds the Minimum
Liquidity Requirement. The Minimum Liquidity Requirement includes,
but is not limited to, the following:
