EX-10.5 6 p64073ex10-5.txt EX-10.5 1 Exhibit 10.5 FIRST AMENDMENT TO INDENTURE AND SERVICING AGREEMENT (MIDLAND RECEIVABLES-BACKED NOTES, SERIES 1999-1) This FIRST AMENDMENT TO INDENTURE AND SERVICING AGREEMENT, dated as of September 22, 2000 (this "Amendment"), is executed by and among MIDLAND RECEIVABLES 99-1 CORPORATION, as issuer (the "Issuer"), WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, fka Norwest Bank Minnesota, National Association, as trustee (in such capacity, the "Trustee"), and as backup Servicer (in such capacity, the "Backup Servicer"), MIDLAND CREDIT MANAGEMENT, INC., as servicer (the "Servicer"), ASSET GUARANTY INSURANCE COMPANY, as note insurer (the "Note Insurer"), PFL LIFE INSURANCE COMPANY, LIFE INVESTORS INSURANCE COMPANY OF AMERICA, RELIANCE STANDARD LIFE INSURANCE COMPANY AND N M ROTHSCHILD & SONS (AUSTRALIA) LIMITED (the "Noteholders"). RECITALS A. The Issuer, the Trustee, the Backup Servicer, the Servicer and the Note Insurer are parties to an Indenture and Servicing Agreement dated as of December 14, 1999 (as amended, supplemented or otherwise modified, the "Indenture and Servicing Agreement") relating to the Midland Receivables-Backed Notes, Series 1999-1; and B. The Issuer, the Servicer, the Trustee, the Backup Servicer, the Note Insurer and the Noteholders agree that certain amendments to the Indenture and Servicing Agreement are necessary and in the best interests of each party; and C. The Noteholders are the only holders of the Notes issued by the Issuer pursuant to the Indenture and Servicing Agreement on the date hereof; and D. Section 12.01 of the Indenture and Servicing Agreement permits amendment of the Indenture and Servicing Agreement on the terms and subject to the conditions provided therein. NOW THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows: SECTION 1. AMENDMENTS. Subject to the terms and conditions set forth herein, the Indenture and Servicing Agreement is hereby amended as follows: (a) Section 1.01 is amended by adding the following definitions: "Bankrupt Sale Net Proceeds" means the portion of Net Proceeds arising from the sale of Bankrupt Sales Receivables pursuant to Section 3.13(a). 1 2 (b) Section 1.01 is amended by adding the following definition: "Bankrupt Sale Receivable" means any Receivable the Obligor of which is subject to (i) a petition filed by or against the Obligor, (ii) a decree or order for relief entered by a court or agency or supervisory authority having jurisdiction in respect of the Obligor, or (iii) the appointment of a trustee in bankruptcy, conservator or receiver for the Obligor in any bankruptcy, insolvency, readjustment of debt or similar proceeding. (c) Section 1.01 is amended by replacing the current definition of "Liquidity" with the following definition: "Liquidity" shall mean unrestricted cash and/or availability under one or more committed working capital facilities the provider of each of which (A) has (i) a short-term rating of at least A-1 from S&P or P-1 from Moody's and (ii) a long term rating of at least A from S&P or A2 from Moody's, or (B) is CTW Funding, LLC ("CTW") or such other provider reasonably acceptable to the Controlling Party, the terms and conditions of each of which (including, without limitation, the conditions precedent to funding) are in all material respects no less favorable to the Servicer than the terms and conditions which are customary in the market for committed commercial lending facilities, or such other terms and conditions reasonably acceptable to the Controlling Party, and the remaining term of each of which is at least 6 months or such lesser period of time acceptable to the Controlling Party; provided, that, with respect to the revolving facility provided by CTW pursuant to the Credit and Security Agreement, dated September 22, 2000, as it may be amended, the undrawn commitment thereunder will be counted as Liquidity through its term. (d) Section 1.01 is amended by replacing the definition of "Net Proceeds" it with the following definition: "Net Proceeds" means, with respect to a Receivable, all monies representing collected available funds, net of checks returned for insufficient funds, received or otherwise recovered by the Servicer or Permitted Third Parties on or with respect to a Receivable or from or for the account of the related Obligor on such Receivable including, without limitation in connection with a sale thereof pursuant to Section 3.13. Third-Party Fees and Third-Party Costs incurred by Permitted Third Parties and paid in connection with collecting or enforcing a Receivable will be deducted from collections on any Receivable by either the applicable Permitted Third-Party or by the Servicer on their behalf and will not constitute Net Proceeds. Notwithstanding the foregoing, proceeds from the sale of accounts pursuant to Section 3.13(b) and Net Seller Recoveries shall not be Net Proceeds for purposes of 2 3 computing the Servicing Fee or the cumulative amount of Net Proceeds for purposes of Section 9.01(h) and Exhibit 9.01(h). (e) Section 1.01 is amended by replacing the current definition of "Note Rate" with the following definition: "Note Rate" means 10% per annum, calculated on the basis of a 360-day year consisting of twelve (12) 30-day months. (f) Section 1.01 is amended by adding the following definition of "Permitted Third Party": "Permitted Third Party" means (i) any member of the National Attorney Network, (ii) any member of American Alliance of Creditor Attorneys; and (iii) any other Person that the Controlling Party has agreed in writing to be a Permitted Third Party. (g) Article 1.01 is amended by adding the following definition of "Net Seller Recoveries": "Net Seller Recoveries" means any and all monies, property, rights or interests, including, without limitation, any accounts or receivables directly or indirectly received by the Issuer on or after September 22, 2000 from BankOne, Corporation First USA Bank, N.A., MBNA America Bank, N.A., or Chase Manhattan Bank USA, N.A., or any affiliate of any of the foregoing (collectively, the "Receivable Sellers") resulting from claims that the Issuer or Midland may have or had against any of the Receivable Sellers or that Note Insurer or the Issuer may have or had as a third-party beneficiary against any of the Receivable Sellers arising from or relating to the previous purchase of Receivables by Midland from the Receivable Sellers that are or were part of the Trust Estate, net of (i) third-party expenses which, in the aggregate, do not exceed $75,000 without the consent of the Note Issuer, and (ii) attorney fees and attorney costs incurred by Midland or the Issuer in connection with the receipt of such monies, property, rights or interests. (h) Section 1.01 is amended by adding the following definition of "Re-Write Note": "Re-Write Note " has the meaning set forth in Section 3.15. (i) Section 1.01 is amended by replacing the current definition of "Servicing Fee" with the following definition: "Servicing Fee" means the fee payable to the Servicer, calculated pursuant to Section 3.05, for services rendered during the related time period, which shall be equal to (i) 35% of all Net Proceeds received during the related time period for services rendered 3 4 during such time period that are not (A) Bankrupt Sale Net Proceeds, or (B) Net Proceeds arising from a sale of Receivables pursuant to Section 3.13(b), and (ii) 25% of all Bankrupt Sale Net Proceeds, received during the related time period. The term "Servicing Fee" shall also mean the additional amounts payable to a Successor Servicer for servicing pursuant to Section 9.03, but only to the extent such amounts do not exceed the amount calculated in accordance with the preceding sentence; all amounts in excess thereof are herein called the "Additional Servicing Fee." The Servicer shall also receive as a "Servicing Fee" $20,000 from the proceeds of the first sale of Receivables pursuant to Section 3.13(a) occurring after September 22, 2000. (j) Section 1.01 is amended by adding the following definition of "Third-Party Costs": "Third-Party Costs" means all out-of-pocket costs and expenses incurred by a Permitted Third Party in connection with collection actions or proceedings related to the enforcement or collection of any Receivable. (k) Article 2.01 is hereby amended by adding the following subsection (e) thereto which shall read as follows: (e) Midland and the Issuer acknowledge and agree that any Net Seller Recovery (i) is included as part of the "Contributed Assets," as defined in the Contribution Agreement, and (ii) is, and shall be, property of the Issuer free of any right, claim or interest of Midland, and (iii) is, and shall be, part of the Trust Estate. Issuer shall immediately advise in writing the Trustee and the Controlling Party of the receipt of the Issuer of any Net Seller Recovery and the Issuer shall (i) within one (1) Business Day of receipt deposit all money received in respect thereof to the Collection Account, and (ii) shall execute, deliver and file any and all financing statements, and deliver such documents and records to the Trustee as the Controlling Party may reasonably request to perfect or continue perfection of the Trustee's Security Interest in such Net Seller Recovery. Any Receivables received as part of any Net Seller Recovery shall become a Receivable subject to this Indenture and shall be serviced by the Servicer pursuant hereto. (l) Section 2.04(i) is amended by deleting the provision in its entirety and replacing it with the following provision: (i) UCC Status. No Receivable is secured by "real property" or "fixtures" or, except for Re-Write Notes, evidenced by an "instrument" under, and as defined in, the UCC. (m) Section 3.03(a)(iv) is amended by deleting the provision in its entirety and replacing it with the following provision: 4 5 (iv) No Instruments. Except for Re-Write Notes, or in connection with the Servicer's enforcement or collection of the Receivables, the Servicer shall take no action to cause any Receivables to be evidenced by any instruments (as defined in the UCC) and if any Receivable is so evidenced, except for Re-Write Notes, such Receivable shall be assigned to the Servicer as provided in Section 3.04. (n) Section 3.03(b) is amended by deleting the current provision in its entirety and replacing it with the following provision: (b) The Servicer shall not purchase any Receivables under or in connection with a Consumer Account if after giving effect to the purchase of such Receivables and the funding of such purchase the Servicer would have less than $2,000,000 of Liquidity. (o) Section 3.05 is amended by: (i) deleting the first sentence in its entirety and replacing it with the following sentence: As compensation for the performance of its obligations hereunder, the Servicer shall be entitled to receive the Servicing Fee as provided in Section 4.02 and Section 4.04. and (ii) deleting the first parenthetical in the second (2nd) sentence in its entirety and replacing it with the following parenthetical: (other than Third-Party Fees, Third-Party Costs and those specified in the following proviso) (p) Article III is amended by deleting the current Section 3.13 and replacing it with the following: (a) The Servicer, as agent of the Trustee and the Issuer, may, without the consent of any Person, sell Bankrupt Sale Receivables in arm's length transactions with third parties who are not Affiliates of the Issuer or the Servicer in a manner consistent with the procedures set forth in Exhibit 3.13(a). The Net Proceeds of all sales of Bankrupt Sale Receivables must be in immediately available funds. (b) The Servicer, as agent of the Trustee and the Issues, may sell any Receivable in arm's length transactions with third parties who are not Affiliates of the Issuer or the Servicer upon receipt of the prior written consent from the Controlling Party. The Servicer shall deliver to the Controlling Party no later than five (5) Business 5 6 Days preceding the date of such proposed sale, an Officer's Certificate in the form of Exhibit 3.13(b). The Controlling Party shall within five (5) Business Days of receipt of the foregoing notice advise the Servicer and the Trustee of its consent or withholding consent to the proposed sale. The Net Proceeds of all sales of such Receivables must be in immediately available funds. Exhibit 3.13(a) and Exhibit 3.13(b) to the Amendment are hereby deemed attached to the Indenture. (q) Article III is amended by adding the following Section 3.15 entitled "Re-Write Program": Section 3.15. Re-Write Program. In furtherance of the collection of the Receivables, the Servicer may accept, on behalf of the Issuer and subject to the Trustee's security interest, a promissory note in replacement of any Receivable (a "Re-Write Note"). The Re-Write Note shall be in compliance with all applicable laws and, upon execution by the Obligor, the Servicer shall, within ten (10) days of such execution, deliver each Re-Write Note to the Trustee. The Trustee shall hold the Re-Write Note for the sole purpose of perfecting the Trustee's security interest in the Re-Write Note. If the Servicer ever needs possession of the Re-Write Note for amendment, enforcement or return to the Obligor upon final payment, it shall provide the Trustee with written request for the applicable Re-Write Note. Upon receipt of such a request, the Trustee shall promptly provide the Servicer with the requested Re-Write Note. Unless the Re-Write Note is paid in full or a lesser amount is accepted by the Servicer in its reasonable judgment in full satisfaction of the amounts owing thereunder, the Servicer shall promptly return the Re-Write Note to the Trustee when the Servicer no longer has immediate need for the possession thereof. (r) Section 4.02 is amended by deleting the first sentence in its entirety and replacing it with the following sentence: For Net Proceeds received on and after August 1, 2000, if the amount on deposit in the Collection Account is sufficient to pay the Trustee Fee (reasonably estimated by the Servicer) payable on the next two (2) occurring Payment Dates, then beginning on September 22, 2000 and on each Friday thereafter, the Servicer shall submit to the Trustee and Note Insurer a notice of calculation of (i)) the Servicing Fee for the period beginning with the immediately-preceding Friday through the immediately-preceding Thursday, plus (ii) accrued and unpaid Servicing Fee for any time beginning on or after August 1, 2000, and upon receipt of such notice, the Trustee shall send to the Servicer via wire transfer the owing Servicing Fee as computed on such notice. 6 7 (s) Section 4.03(a) is amended by deleting the word "and" which immediately proceeds "(ii)", deleting the period at the end of such subsection and adding the following provision at the end of the subsection: ; and (iii) the Servicer shall remit on each Determination Date the positive amount, if any, by which (A) the payments to the Servicer of the Servicing Fee for the immediately preceding Collection Period pursuant to Section 4.02 exceeded (B) the amount of the Servicing Fee that should be paid to the Servicer for such Collection Period. (t) Section 4.04(a) is amended by deleting the current provision in its entirety and replacing it with the following provision: (a) On each Determination Date, the Servicer shall calculate (i) the amount of funds on deposit in each of the Accounts and the amount of Available Funds, and (ii) as applicable, the Trustee Fee, the Backup Servicing Fee, the Servicing Fee calculated with reference to the related Collection Period, the amounts paid to the Servicer on a weekly basis as payment of the Servicing Fee during the related Collection Period, a reconciliation of the Collections from the applicable Collection Period which were used to pay the Servicing Fee for the previous Collection Period pursuant to Section 4.02, the Additional Servicing Fee, the Interest Distributable Amount, the Required Reserve Amount, the Reserve Fund Reimbursement Amount, the aggregate Principal Distributable Amount, the unpaid Note Balance before and after giving effect to any Principal Distributable Amount, the Prepayment Amount, the Release Payment, the Facility Fee, and the amount payable by the Note Insurer pursuant to the Policy, which amounts shall be set forth in the Monthly Servicer Report for the related Payment Date. The Servicer shall send the Monthly Servicer Report to the Trustee and the Note Insurer by 11:00 a.m. New York, New York time on each such Determination Date. (u) Section 4.04(b)(ii) is amended by deleting the current provision in its entirety and replacing it with the following provision: (ii) to the Servicer, from the Available Funds in the Collection Account, (A) the amount, if any, by which (i) the Servicing Fee calculated for the related Collection Period exceeds, (ii) the aggregate amount previously retained by the Servicer on a weekly basis for payment of the Servicing Fee for the related Collection Period pursuant to Section 4.02, plus (B) all accrued and unpaid Servicing Fees, if any, for prior Collection Periods (plus an amount equal to any Transition Fees then owing to the Successor Servicer, if any); 7 8 (v) Section 8.06(c) is amended by deleting the current provision in its entirety and replacing it with the following provision: (c) The Backup Servicer shall assume its duties as Successor Servicer in accordance with Sections 9.02 and 9.03 except upon determination that the Backup Servicer is legally unable to perform the duties of the Servicer under this Agreement as provided in Section 9.03; and neither the Backup Servicer nor the Trustee shall be held liable for any costs, claims, damages or liabilities incurred by any Person arising as a result of the Backup Servicer's failure to perform its duties as Successor Servicer to the extent such performance is prevented by applicable law or court order. (w) Section 8.07(b) is amended by deleting the current provision in its entirety and replacing it with the following provision: (b) Outside Parties. Servicer will not engage outside parties for the collection of Receivables on any basis except Permitted Third Parties. (x) Section 9.01(f) is amended by deleting the current provision in its entirety and replacing it with the following provision: (f) for the period of time during which Midland acts as Servicer, Midland's consolidated Stockholder's Equity as required to be shown on its consolidated financial statements is less than the amount set forth on Exhibit 9.01(f) attached hereto for the applicable period; Exhibit 9.01(f) attached to this Amendment is hereby deemed attached to the Indenture. (y) Section 9.01(h) is amended by deleting the current section in its entirety and replacing it with the following provision: (h) commencing with the January 2001 Collection Period, and at the end of each Collection Period thereafter, both (i) the cumulative amount of Net Proceeds in respect of all Receivables for such Collection Period and the two preceding Collection Periods is less than the amount specified in Exhibit 9.01(h) for such period of three Collection Periods, and (ii) the cumulative amount of Net Proceeds in respect of all Receivables for such Collection Period and all preceding Collection Periods from and after the January 2001 Collection Period is less than the amount specified in Exhibit 9.01(h) for such Collection Periods (the lesser of any such deficiency in (i) and (ii) is a "Cumulative Collections Deficiency"); provided, however, that a Cumulative Collections Deficiency shall not be a Servicer Default if the Issuer deposits an amount equal to the Cumulative Collections Deficiency to the Reserve Account within ten (10) calendar days of the end of the Collection Period during which the Cumulative Collections Deficiency occurred. 8 9 Exhibit 9.01(h) attached to this Amendment is hereby deemed attached to the Indenture. (z) Section 9.01(m) is amended by deleting the current provision in its entirety and replacing it with the following provision: (m) the Servicer fails to have at any time at least $2,000,000 of Liquidity; or (aa) Section 9.02(a) is amended by deleting the current first two (2) sentences thereof and replacing them with the following provision: The rights and obligations of the Servicer shall terminate upon the earlier of (i) the occurrence and continuation of a Servicer Default or (ii) the last day of each Collection Period, unless the Servicer had been appointed by the Controlling Party on or prior to the first day of such Collection Period for next occurring Collection Period. If a Servicer Default shall occur and be continuing, so long as such Servicer Default has not been cured or waived pursuant to Section 9.05, the Trustee shall, upon the direction of the Controlling Party, by notice then given in writing to the Servicer and the Note Insurer terminate immediately, all (but not less than all) of the rights and obligations of the Servicer, as Servicer under this Agreement and the other Transaction Documents, and in and to the Receivables and proceeds thereof. If the Controlling Party does not appoint the Servicer to a successive Collection Period by the first day of the immediately preceding Collection Period, at the end of the Collection Period through which the Servicer has previously been appointed, all (but not less than all) of the rights and obligations of the Servicer, as Servicer under this Agreement and the other Transaction Documents, and in and to the Receivables and proceeds thereof shall be deemed to have automatically terminated, except for accrued and unpaid Servicer Fees. Notwithstanding such termination any Permitted Third Party shall be allowed to continue to service any Receivable serviced by them at the time of such Termination, and collect and receive the related Third Party Costs and Third Party Fees. (bb) Exhibit A to the Indenture and Servicing Agreement is amended by deleting the current Exhibit A in its entirety and replacing it with Exhibit A attached hereto. The Servicer shall also provide a weekly report to the Trustee and the Note Insurer on the date the weekly Servicer Fee is due setting forth (i) the collections for the prior week and for the then current Collection Period; (ii) the Liquidity of the Servicer and (iii) the computation of the Servicing Fee for such week. (bb) On the Payment Date occurring on November 15, 2000, and prior to making any distributions pursuant to Section 4.04(b), the Trustee shall pay from Available Funds to Mayer Brown & Platt $10,000.00 in payment of services rendered in representing the Noteholders in connection with this Amendment. 9 10 SECTION 2. CROSS-ASSIGNMENT. Article XII is amended by adding the following as a new Section 12.12. Section 12.12 Cross Assignment. Notwithstanding any provision in this Indenture and Servicing Agreement, the Issuer shall not receive any distributions pursuant to Section 4.04(b)(x)(E), Section 4.05(b) and Section 4.05(d) (collectively, the "99-1 Distributions") during any period of time that any amount remains payable to the Noteholders, the Trustee, the Servicer, the Back-up Servicer or the Note Insurer and any such amounts shall be deposited to or remain on deposit in the Reserve Account, as applicable. Upon payment in full of all amounts to the Noteholders, the Trustee, the Servicer, the Back-up Servicer, and the Note Insurer, the Trustee shall pay (i) all amounts otherwise payable to the Issuer to the "Trustee" for deposit under the "Indenture and Servicing Agreement" and the other "Transaction Documents" to the "Reserve Account" as such terms are defined in and pursuant to that certain Indenture and Servicing Agreement dated as of March 31, 1999, among Midland Funding 98-A Corporation, as "Issuer" ("Funding 98-A"); Wells Fargo Minnesota Bank N.A., fka Norwest Bank Minnesota, National Association, as Trustee and Back-Up Servicer; Midland Credit Management, Inc., as Servicer; and Asset Guaranty Insurance Company, as Note Insurer (the "99-A Indenture") provided that if at such time all amounts payable under the 99-A Indenture and the "Transaction Documents" related thereto, as defined in the 99-A Indenture have been paid to the "Noteholders," the "Trustee," the "Servicer," the "Back-up Servicer" and the "Note Insurer" as each are defined in and pursuant to the 99-A Indenture, then amounts payable to the Issuer shall be so paid to the Issuer pursuant to this Indenture and Servicing Agreement. Any amounts received by the Trustee from the "Trustee" under the 99-A Indenture shall be deposited by the Trustee into the Reserve Account, shall for all purposes become part of the Reserve Account, and shall be held, invested, and disbursed by the Trustee pursuant to the Indenture and Servicing Agreement. The Issuer is willing to agree to the terms of this Section 12.12 in consideration of (i) the amendments made to the terms of the First Amendment hereto, dated as of September 22, 2000; and (ii) the similar cross-assignment by Funding 99-A in that certain Third Amendment to Indenture and Servicing Agreement regarding the 99-A Indenture of even date therewith, and further agrees that the "Trustee" under the 99-A Indenture and the "Note Insurer" thereunder are entitled to enforce the Issuer's rights to have the Trustee make the cross-assignment of funds to the "Trustee" of the 99-A Indenture required pursuant to this Section 12.12. The Issuer shall execute any documents and take any action requested by the Note Insurer to evidence or give effect to the foregoing cross-assignment. SECTION 3. EFFECTIVENESS. This amendment provided for by this Amendment shall become effective as of the date hereof upon the occurrence of each of the following events: (a) the Trustee, the Seller, the Servicer, the Note Insurer and the Noteholders shall have received counterparts of this Amendment, duly executed by the parties hereto; 10 11 (b) the Issuer shall have executed and filed a UCC-1 Financing Statement in the States of Delaware and California, to perfect the security interest granted to the Note Insurer pursuant to Section 2 of this Amendment; (c) the Trustee shall have furnished the Rating Agency and the Placement Agent with written notification of the substance of this Amendment; and (d) the Servicer shall have closed and has available the revolving credit facility provided by CTW Funding, LLC referenced in Section (d) above. After this Amendment becomes effective, all amendments herein will be effective for and after the October 2000 Collection Period. SECTION 4. EFFECTIVENESS. This amendment provided for by this Amendment shall become effective as of the date hereof upon the occurrence of each of the following events: (a) the Trustee, the Seller, the Servicer and the Note Insurer shall have received counterparts of this Amendment, duly executed by the parties hereto; and (b) the Trustee shall have furnished the Rating Agency and the Placement Agent with written notification of the substance of this Amendment. SECTION 5. REPRESENTATIONS. Each party hereto hereby represents and warrants that this Amendment has been duly executed and delivered by such party and constitutes the legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms except as the enforceability hereof may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors' rights and remedies in general. SECTION 6. REFERENCE. On and after the effective date of this Amendment, each reference in the Indenture and Servicing Agreement to "this Agreement", "hereunder", "herein" or words of like import referring to the Indenture and Servicing Agreement, and each reference in the other Transaction Documents to the "Indenture and Servicing Agreement", "thereunder", "thereof", or words of like import referring to the Indenture and Servicing Agreement shall mean and be a reference to the Indenture and Servicing Agreement as amended by this Amendment. SECTION 7. COUNTERPARTS; EFFECTIVENESS; FULL FORCE AND EFFECT. This Amendment may be executed by one or more of the parties to this Amendment on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together all shall be deemed to constitute one and the same instrument. A copy of this Amendment signed by all the parties shall be lodged with the Trustee. Except as expressly set forth herein, the terms, provisions and conditions of the Indenture and Servicing Agreement and the other Transaction Documents shall remain in full force and effect and in all other respects are hereby ratified and confirmed. 11 12 SECTION 8. REPRESENTATIONS, ENFORCEABILITY AND NO WAIVER. (a) Each Issuer and the Servicer hereby reaffirm all covenants, representations and warranties made by it in Indenture and Servicing Agreement, and (ii) agree that all such covenants, representations and warranties shall be deemed to have been re-made as of the date of this Amendment. (b) Each Issuer and the Servicer hereby represent and warrant that this Amendment constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms. (c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any of the parties hereto under the Indenture and Servicing Agreement or any other Transaction Document or any other document, instrument or agreement executed in connection therewith. SECTION 9. MISCELLANEOUS. The Amendment is not evidence of any position by the Note Insurer, affirmative or negative, as to whether any action by the Noteholders, or any other party, is required in addition to the execution of the Amendment by the Note Insurer. No representation is made by the Note Insurer as to the necessity or the satisfaction of any additional action or condition under the Indenture and Servicing Agreement with respect to this Amendment. This Amendment does not modify the obligations of the Note Insurer under the Policy as defined in the Indenture and Servicing Agreement. Except as specifically provided in this Agreement, the terms and conditions of the Indenture and Servicing Agreement shall remain in full force and effect. Except as specifically provided in this Amendment, none of the Trustee's, Note Insurer's or the Noteholders' rights, interests or remedies pursuant to the Indenture and Servicing Agreement shall be reduced or limited in any way by this Agreement. This Agreement may be executed in any number of counterparts, each of which shall be an original, and each of which shall constitute one in the same Agreement. Time is of the essence of this Agreement. SECTION 10. HEADINGS. Section and subsection headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive effect. SECTION 11. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. SECTION 12. DEFINED TERMS. Capitalized terms used herein and not otherwise defined shall have the meanings given to such terms in the Indenture and Servicing Agreement. SECTION 13. NO OTHER AGREEMENTS. All of the parties to this Agreement hereby acknowledge and agree that there no other Agreements by or among any of them with respect to the amendments to the Indenture and Servicing Agreement other than as set forth in this Amendment. 12 13 (BALANCE OF PAGE INTENTIONALLY LEFT BLANK) 13 14 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first above written. MIDLAND RECEIVABLE 99-1 CORPORATION, as Issuer By: ___________________________________________ Name: Carl C. Gregory III Title: President MIDLAND CREDIT MANAGEMENT, INC., as Servicer By: ___________________________________________ Name: Carl C. Gregory III Title: President WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, fka NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Trustee and as Backup Servicer By: ___________________________________________ Name: _________________________________________ Title: ________________________________________ ASSET GUARANTY INSURANCE COMPANY By: ___________________________________________ Name: _________________________________________ Title: ________________________________________ PFL LIFE INSURANCE COMPANY By: ___________________________________________ Name: _________________________________________ Title: ________________________________________ LIFE INVESTORS INSURANCE COMPANY OF AMERICA By: ___________________________________________ Name: _________________________________________ Title: ________________________________________ 14 15 RELIANCE STANDARD LIFE INSURANCE COMPANY By: ___________________________________________ Louis C. Lucido, Chief Investment Officer N M ROTHSCHILD & SONS (AUSTRALIA) LIMITED By: ___________________________________________ Bruce R. Arnold, Head of Debt Capital Markets 15 16 EXHIBIT A MONTHLY SERVICER REPORT [ATTACHED] 17 MONTHLY SERVICER REPORT OF MIDLAND CREDIT MANAGEMENT, INC. FOR MIDLAND RECEIVABLES-BACKED NOTES SERIES 1999-1 Pursuant to the Indenture and Servicing Agreement, dated as of January 18, 2000 (the "Indenture and Servicing Agreement"), among Midland Receivables 99-1 Corp., as Issuer (the "Issuer"), Midland Credit Management, Inc., as servicer (the "Servicer"), Norwest Bank Minnesota, N.A., as trustee (in such capacity, the "Trustee") and as Backup Servicer, and Asset Guaranty Insurance Company, as Note Insurer (the "Note Insurer"), the Servicer submits the following information for the relevant Dates set forth below with respect to the Midland Receivables-Backed Notes, Series 1999-1. Capitalized terms used in this certificate have the meanings set forth in the Indenture and Servicing Agreement. Collection Period covered by this Report: ____________________________________ through __________________________________ Determination Date of this Report: __________________________________________________ Payment Date for this Report: __________________________________________________ A. AVAILABLE FUNDS: Amount of funds on deposit and the Available Funds for this Collection Period: Collections for the Month $ -------------- Refunds From Issuers $ -------------- Bankrupt Sale Proceeds $ -------------- Non-Bankrupt Sale Proceeds $ -------------- less Permitted Third Party Fees and Costs $ -------------- Earnings on Collection Account during the period $ -------------- Note Payment Account at end of Current Month $ -------------- Earnings on Note Payment Account during the period $ -------------- Reserve Account at end of Current Month $ -------------- Earnings on Reserve Account during the period $ -------------- Deposit by Servicer of excess Servicing Fee paid during prior Collection Period $ -------------- Total Available Funds plus Reserve Account $ --------------
Page 1 of 6 18 B. TRUSTEE FEE: (i) the total Trustee Fee accrued with respect to the current Payment Date - computed on ending note balance of preceding Payment Date $ -------------- (ii) the total accrued and past due Trustee Fee with respect to prior Payment Dates $ -------------- (iii) the total amount of Trustee Fees from (i) and (ii) to be paid on the next Payment Date $ -------------- (iv) Trustee's out-of-pocket expenses $ -------------- (v) the total amount of accrued and unpaid Trustee Fees and expenses to be carried forward $ -------------- (vi) Remaining Available Funds plus Reserve Account $ -------------- C. SERVICING FEE: (i) the total Servicing Fee accrued with respect to the current Payment Date (excluding Servicing Fee on Bankrupt Sale Proceeds) $ -------------- (ii) Servicing fee on Bankrupt Sale Proceeds accrued with respect to the current Payment $ -------------- (iii) less Weekly Servicing Fee previously retained $ -------------- (iv) the total accrued and past due Servicing Fee(s) owed form prior Payment Dates $ -------------- (v) less Acquisition Payment due for the period (See H(i)) $ ** -------------- (vi) Refunds to Debtors Paid by Servicer $ -------------- (vii) the total amount of Servicer Fee(s) from (i) and (ii) to be paid on the next Payment Date $ -------------- (viii) the total amount of all Servicer Fee(s) to be carried forward to a subsequent Payment Date $ -------------- (ix) Remaining Available Funds plus Reserve Account $ -------------- In the event of a Servicer Default during the reporting period, Calculate the amount of Transition Fees owed $ --------------
Page 2 of 6 19 D. BACKUP SERVICER FEE: (i) the total Backup Servicer Fee accrued with respect to the current Payment Date computed on ending note balance of preceding Payment Date $ -------------- (ii) the total amount of accrued and past due Backup Servicer Fee(s) with respect to prior Payment Dates $ -------------- (iii) the total amount of all Backup Servicer Fee(s) from (i) and (ii) to be paid on the next Payment Date $ -------------- (iv) the total amount of accrued and unpaid Backup Servicer Fee(s) to be carried forward to the next Payment Date $ -------------- (v) Remaining Available Funds plus Reserve Account $ -------------- E. INTEREST DISTRIBUTABLE AMOUNT: (i) Interest Distributable Amount for the current Payment Date computed on note balance on last day of immediately preceding Collection Period $ -------------- (ii) the total Interest Carryover Shortfall with respect to Prior Payment Date $ -------------- (iii) the total Interest Distributable Amount and Interest Carryover Shortfall from (i) and (ii) to be paid on the next Payment Date $ -------------- (iv) the total amount required from the Reserve Account to pay (iii) due to deficiencies in Available funds $ -------------- (v) the total amount required form the Note Insurer to pay (iii) due to deficiencies in the Reserve Account and Available Funds $ -------------- (vi) the total amount of accrued and unpaid Interest Distributable Amount(s) and Interest Carryover Shortfall to be carried forward to the next Payment Date $ -------------- (ix) Remaining Available Funds plus Reserve Account --------------
Page 3 of 6 20 F. NOTE INSURER PAYMENTS: (i) Note Insurer Base Premium accrued with respect to the current Payment Date computed on Average Daily Balance $ -------------- (ii) the total Note Insurer Obligations payable on the current Payment Date (if any) $ -------------- (iii)the total amount of all Note Insurer Premiums and Note Insurer Obligations from (i) and (ii) to be paid on the next Payment Date $ -------------- (iv) the total amount of accrued and unpaid Note Insurer Base Premium(s) and Note Insurer Obligations to be carried forward to the next Payment Date $ -------------- (v) Cumulative Note Insurer Additional Premium accrued and unpaid with respect to the prior Payment Date computed on Average Daily Balance $ -------------- (vi) Cumulative Note Insurer Additional Premium accrued and unpaid with respect to the current Payment Date computed on Average Daily Balance $ -------------- (vii)Remaining Available Funds plus Reserve Account $ --------------
G. ACQUISITION PAYMENT: Are there any Removed Receivables for the reporting period? Yes No ------ ------ (if "NO" proceed to section "J") (if "YES" complete attached Schedule I) (i) the total Acquisition Payment due for the current Payment Date See Line C (iii) ** ** Netted with Service Fee at line C(iii) ------ H. NOTE BALANCE PAYMENT: (i) Remaining Available Funds plus Reserve Account $ -------------- (ii) less Reserve Account balance end of Current Period $ -------------- (iii)amount available for note balance payments $ -------------- (iv) Note Balance at End of Month: $ -------------- (v) Note Balance payment for the current Payment Date: $ -------------- I. NOTE BALANCE AFTER PRINCIPAL PAYMENT $ --------------
Page 4 of 6 21 J. RESERVE ACCOUNT: (i) Beginning Balance of Reserve Account $ -------------- (ii) Earnings on Reserve Account for current month $ -------------- (iii)Deposit by Issuer of Cumulative Collections Deficiency $ -------------- (iv) the total Reserve Fund Reimbursement Amount due for $ -------------- the current Payment Date -- Payable to Issuer (v) the Ending Balance of the Reserve Account after $ -------------- payment to Issuer K. CUMULATIVE COLLECTIONS & LIQUIDITY (i) Cumulative Net Collections for current and prior two Collection Periods (beginning Nov00) $ -------------- (ii) Required three month Cumulative Collections $ -------------- (iii)Cumulative Collections Deficiency (additional deposit $ -------------- to reserve account) (iv) Liquidity as of the end of the current Collection Period $ --------------
Page 5 of 6 22 MIDLAND CREDIT MANAGEMENT, INC. BY:_______________________________ Date_____________________ Vice President WIRING INSTRUCTIONS FOR ISSUER: Wells Fargo Bank, ABA Routing Number 121000248 For Credit To: Midland Credit Management, Inc. Account No.: 4758372635 WIRING INSTRUCTIONS FOR SERVICER: Wells Fargo Bank, ABA Routing Number 121000248 For Credit To: Midland Credit Management, Inc. Account No.: 4758372635 SCHEDULE I See Servicer's Remittance Date Certificate pursuant to Section 3.04 identifying all Removed Receivables including name, MCM #, address, acquisition price, acquisition date, charge-off balance, Net-Proceeds collected of all accounts removed during the reporting period. Additional Information: Last day of preceding Collection Period, Note Balance Preceding Payment Date Ending Note Balance Average Daily Balance of Preceding Collection Period Monthly Note Rate, Interest Distributable 0.80250000% Monthly rate, Trustee Fee 0.00416667% Note insurer base premium rate, monthly 0.06250000% Note insurer additional premium rate, monthly 0.27083333% Monthly rate, Backup Servicer 0.01541667%
Page 6 of 6 23 EXHIBIT 3.13(a) BANKRUPT ACCOUNT SALE PROCEDURES 1. Receivable must be Bankrupt Sale Receivables. 2. Price must be 7.5% of the face amount or greater. 3. Seller only to represent and warrant the following: 1. The Seller is duly organized, existing and in good standing as a corporation under the laws of the State of Delaware; the Seller's execution, delivery and performance of the Agreement are within the Seller's corporate powers and have been duly authorized by all necessary action; this Agreement is the legal, valid and binding obligation of the Seller enforceable against the Seller in accordance with its terms except that enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting enforcement of creditors' rights generally and by general equity principles; and the Agreement is not in conflict with the terms of the Seller's charter or bylaws, or of any material indenture, agreement or undertaking to which the Seller is bound. 2. The Seller has marketable title to the Receivables free and clear of any liens or encumbrances (i) by or through it, or (ii) based on actions or failure to act of Seller. 3. Except for the filing of the UCC Financing Statement and any approval that has been obtained or notice that has been given, no approval or other action by, or notice to or filing with, any [Debtor], any governmental authority or any other entity is required to be obtained by the Seller in conjunction with the transaction contemplated by the Agreement. 4. Performance of the Agreement by the Seller will not violate any order of any court or governmental body having competent jurisdiction or any law or regulation that applies to the Seller. 5. No action, suit or proceeding against the Seller before any court, administrative agency or arbitrator, individually or collectively would reasonably be expected to materially and adversely affect the Buyer. Upon reasonable request, the Seller will review any action, suit or proceeding against the Seller with the Buyer to confirm the accuracy of this representation. 6. The Seller is knowledgeable, sophisticated and experienced in making, and is qualified to make, decisions like the decision involved in the sale of the Accounts, the Seller has made its own review of the Accounts and the Seller understands the terms and conditions of the sale of the Accounts. 7. The Seller has not employed any investment banker, broker or finder in connection with the transaction contemplated by the Agreement who might be entitled to a fee or commission upon consummation of such transaction. 8. The location of the Seller's chief place of business and chief executive office is _______________________. -2- 24 9. Each Account is an account or a general intangible, as such term is defined in Article 9 of the UCC; [and no Account is evidenced by an instrument, as such term is defined in Section 9-106 of the UCC]. -3- 25 EXHIBIT 3.13(b) NOTICE OF PROPOSED SALE OF NON-BANKRUPT ACCOUNTS This NOTICE OF PROPOSED SALE is given by MIDLAND CREDIT MANAGEMENT, INC., as servicer (the "Servicer"), pursuant to Section 3.13(b) of that certain Indenture and Servicing Agreement, dated as of December 14, 1999, as amended, supplemented or otherwise modified (the "Indenture"), among Servicer, MIDLAND RECEIVABLE 99-1 CORPORATION, as Issuer, WELLS FARGO BANK OF MINNESOTA, NATIONAL ASSOCIATION, FKA NORWEST BANK MINNESOTA, A NATIONAL ASSOCIATION, as Trustee and Back-up Servicer, and ASSET GUARANTY INSURANCE COMPANY, as Note Insurer. All capitalized terms that are not defined herein shall have the meaning assigned to such terms in the Indenture. 1. The Servicer proposes to sell Receivables (the "Sale Receivables") pursuant to Section 3.13(b) of the Indenture. 2. The pool identification number of the Sale Receivables and the date of MCM's purchase for each of the Sale Receivables is as set forth on Exhibit A attached hereto. 3. Attached as Exhibit B to this Notice of Proposed Sale is a true and complete copy of the offering information distributed to the prospective purchaser of the Sale Receivables. 4. The sale price for the Sale Receivables is $_______________. 5. The proposed date for the sale is _________________. 6. The original purchase price paid by Midland Credit Management, Inc. for the Sale Receivables was $__________________. 7. The terms and conditions of the sale are as set forth on Exhibit C attached hereto. 8. The only representations to be made by the Issuer in connection with the sale is as set forth on Exhibit D attached hereto. Executed this _____ day of ___________. MIDLAND CREDIT MANAGEMENT, INC. By: _____________________________ Its: _____________________________ -4- 26 EXHIBIT 9.01(f) NET WORTH TABLE
----------------------------------- From and After Amount ----------------------------------- September 31, 2000 $ 13,600,000 ----------------------------------- December 31, 2000 12,900,000 ----------------------------------- March 31, 2001 11,700,000 ----------------------------------- June 31, 2001 10,000,000 ----------------------------------- September 31, 2001 7,300,000 -----------------------------------
-5- 27 EXHIBIT 9.01(h) CUMULATIVE NET COLLECTIONS
------------------------------------------------------------------------------ COLLECTION PERIOD AMOUNT 3-MONTH CUMULATIVE TOTAL COLLECTIONS COLLECTIONS ------------------------------------------------------------------------------ January 2001 $1,374,180 -- $ 1,374,180 ------------------------------------------------------------------------------ February 2001 $1,348,830 -- $ 2,723,010 ------------------------------------------------------------------------------ March 2001 $1,331,734 $4,054,744 $ 4,054,744 ------------------------------------------------------------------------------ April 2001 $1,317,393 $3,997,957 $ 5,372,137 ------------------------------------------------------------------------------ May 2001 $1,308,641 $3,957,768 $ 6,680,778 ------------------------------------------------------------------------------ June 2001 $1,289,438 $3,915,472 $ 7,970,216 ------------------------------------------------------------------------------ July 2001 $1,280,912 $3,878,991 $ 9,251,128 ------------------------------------------------------------------------------ August 2001 $1,266,442 $3,836,792 $10,517,570 ------------------------------------------------------------------------------ September 2001 $1,251,621 $3,798,975 $11,769,191 ------------------------------------------------------------------------------ October 2001 $1,239,954 $3,758,017 $13,009,145 ------------------------------------------------------------------------------ November 2001 $1,227,995 $3,719,570 $14,237,140 ------------------------------------------------------------------------------ December 2001 $1,215,772 $3,683,721 $15,452,912 ------------------------------------------------------------------------------ January 2002 $1,203,190 $3,646,957 $16,656,102 ------------------------------------------------------------------------------ February 2002 $1,190,081 $3,609,043 $17,846,183 ------------------------------------------------------------------------------ March 2002 $1,179,410 $3,572,681 $19,025,593 ------------------------------------------------------------------------------ April 2002 $1,161,907 $3,531,398 $20,187,500 ------------------------------------------------------------------------------ May 2002 $1,137,925 $3,479,242 $21,325,425 ------------------------------------------------------------------------------ June 2002 $1,115,322 $3,415,154 $22,440,747 ------------------------------------------------------------------------------ July 2002 $1,103,914 $3,357,161 $23,544,661 ------------------------------------------------------------------------------ August 2002 $1,113,929 $3,333,165 $24,658,590 ------------------------------------------------------------------------------ September 2002 $1,110,595 $3,328,438 $25,769,185 ------------------------------------------------------------------------------ October 2002 $ 549,286 $2,773,810 $26,318,471 ------------------------------------------------------------------------------ November 2002 $ 508,388 $2,168,269 $26,826,859 ------------------------------------------------------------------------------ December 2002 $ 467,372 $1,525,046 $27,294,231 ------------------------------------------------------------------------------ January 2003 $ 426,244 $1,402,004 $27,720,475 ------------------------------------------------------------------------------ February 2003 $ 385,010 $1,278,626 $28,105,485 ------------------------------------------------------------------------------ March 2003 $ 343,677 $1,154,931 $28,449,162 ------------------------------------------------------------------------------ April 2003 $ 302,249 $1,030,936 $28,751,411 ------------------------------------------------------------------------------ May 2003 $ 260,733 $ 906,659 $29,012,144 ------------------------------------------------------------------------------ June 2003 $ 220,480 $ 783,462 $29,232,624 ------------------------------------------------------------------------------ July 2003 $ 182,908 $ 664,121 $29,415,532 ------------------------------------------------------------------------------ August 2003 $ 146,771 $ 550,159 $29,562,303 ------------------------------------------------------------------------------ September 2003 $ 113,848 $ 443,527 $29,676,151 ------------------------------------------------------------------------------ October 2003 $ 83,006 $ 343,625 $29,759,157 ------------------------------------------------------------------------------ November 2003 $ 57,239 $ 254,093 $29,816,396 ------------------------------------------------------------------------------ December 2003 $ 35,187 $ 175,432 $29,851,583 ------------------------------------------------------------------------------ January 2004 $ 18,561 $ 110,987 $29,870,144 ------------------------------------------------------------------------------ February 2004 $ 7,176 $ 60,924 $29,877,320 ------------------------------------------------------------------------------ March 2004 $ 198 $ 25,935 $29,877,518 ------------------------------------------------------------------------------ April 2004 $ 0 $ 7,374 $29,877,518 ------------------------------------------------------------------------------ May 2004 $ 0 $ 198 $29,877,518 ------------------------------------------------------------------------------
-6- 28 EXHIBIT 9.01(H) (CONTINUED) CUMULATIVE NET COLLECTIONS
------------------------------------------------------------------------------ COLLECTION PERIOD AMOUNT 3-MONTH CUMULATIVE TOTAL COLLECTIONS COLLECTIONS ------------------------------------------------------------------------------ June 2004 $0 $0 $29,877,518 ------------------------------------------------------------------------------ July 2004 $0 $0 $29,877,518 ------------------------------------------------------------------------------ August 2004 $0 $0 $29,877,518 ------------------------------------------------------------------------------
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