SERVICING AGREEMENT
Exhibit 10.3
[***] TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
[EXECUTION COPY]
SERVICING AGREEMENT
by and among
MIDLAND FUNDING NCC-1 CORPORATION,
as Borrower,
MIDLAND CREDIT MANAGEMENT, INC.,
as Servicer,
and
PATRIOT CAPITAL MARKETS, LLC
as Lender
Dated as of July 25, 2003
CONFIDENTIAL [***] Omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.............................................................................................3
Section 1.1 Defined Terms..........................................................................3
ARTICLE II SERVICING..............................................................................................8
Section 2.1 Appointment of the Servicer as Servicer................................................8
Section 2.2 Documents Evidencing Assets............................................................9
Section 2.3 Duties of Servicer.....................................................................9
Section 2.4 Servicing Standards; Subservicing.....................................................10
Section 2.5 Power and Authority...................................................................10
Section 2.6 Settlement Authority and Re-Write Notes...............................................10
Section 2.7 Account Sales.........................................................................11
Section 2.8 Legal Compliance......................................................................11
Section 2.9 Remittance Account....................................................................12
Section 2.10 Distributions from the Remittance Account.............................................13
Section 2.11 Accounting for Fees...................................................................13
Section 2.12 Insurance.............................................................................13
ARTICLE III SERVICING AND OTHER FEES; REIMBURSEMENT OF EXPENSES..................................................13
Section 3.1 Servicing Fees; Legal Outsourcing Management Fees.....................................13
Section 3.2 Nonreimbursable Expenses of the Servicer..............................................14
ARTICLE IV ACCOUNTING, STATEMENTS AND REPORTS....................................................................14
Section 4.1 Books and Records.....................................................................14
Section 4.2 Periodic Reporting....................................................................15
Section 4.3 Inspection Rights.....................................................................17
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS..............................................................17
Section 5.1 Representations and Warranties of the Servicer........................................17
Section 5.2 Covenants of the Servicer.............................................................20
ARTICLE VI TERMINATION; TRANSFER OF SERVICING; INDEMNITY.........................................................21
Section 6.1 Termination Events....................................................................21
Section 6.2 Termination; Removal of the Servicer..................................................24
Section 6.3 Effect of Termination.................................................................24
Section 6.4 Indemnity by the Servicer.............................................................25
ARTICLE VII MISCELLANEOUS........................................................................................25
Section 7.1 Severability Clause...................................................................25
Section 7.2 Notices...............................................................................25
Section 7.3 Costs and Expenses....................................................................26
Section 7.4 Assignment............................................................................27
Section 7.5 Counterparts..........................................................................27
Section 7.6 Governing Law; Jurisdiction; Waiver of Jury Trial.....................................27
Section 7.7 Amendments............................................................................27
Section 7.8 Integration...........................................................................27
Section 7.9 Agreement Effectiveness...............................................................27
Section 7.10 Headings Descriptive..................................................................28
Section 7.11 Advice from Independent Counsel.......................................................28
Section 7.12 Judicial Interpretation...............................................................28
Section 7.13 Term................................................................................. 28
Section 7.14 Confidentiality.......................................................................28
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SERVICING AGREEMENT
This SERVICING AGREEMENT (this “Agreement”) is made as of July 25, 2003, by and among MIDLAND FUNDING
NCC-1 CORPORATION, a Delaware corporation (the “Borrower”), MIDLAND CREDIT MANAGEMENT, INC., a Kansas corporation
(the “Servicer”) and PATRIOT CAPITAL MARKETS, LLC, a Delaware limited liability company (the “Lender”).
WHEREAS, the Borrower has purchased a pool or pools (each, a “Portfolio”) which assets include
delinquent or deficiency consumer obligations other than charged off credit card accounts.
WHEREAS, the Borrower and the Lender are parties to a Loan and Security Agreement of even date herewith,
as the same may be amended or supplemented from time to time (the “Loan Agreement”) pursuant to which the Lender
has made a Loan secured by such Portfolios.
WHEREAS, the Servicer and the Lender desire that the Servicer manage and service collection of such
assets so purchased by the Borrower and financed by the Lender, the Borrower and the Servicer is desirous of
providing such services.
NOW THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter set
forth, the Lender, the Borrower and the Servicer (sometimes singularly referred to as a “Party” and collectively
referred to as the “Parties”) hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Defined Terms. For all purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(a) the terms defined in the preamble hereto have the meanings therein assigned to them;
(b) the terms defined in this Article have the meanings assigned to them in this Article, and include the
plural as well as the singular;
(c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with
GAAP;
(d) all accounting terms, unless otherwise specified, shall be deemed to refer to Persons and their
subsidiaries on a consolidated basis in accordance with GAAP;
(e) “including” shall mean including but not limited to; “from”, when used with respect to a period of time,
shall mean from and including; and “to”, when used with respect to a period of time, shall mean to and including;
and
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(f) if any action or event is to occur on a day that is not a Business Day, then such action or event shall
occur on the first Business Day occurring thereafter.
“ACCOUNT” means an obligation of an Obligor to pay money, whether under an open account balance,
consumer loan, installment sales or payment agreement, deficiency balance, deferred payment contract or any other
arrangement whatsoever, as set forth and described in a Purchase Agreement, and all unpaid balances due from the
Obligors with respect to such obligations, together with all documents evidencing such Obligors' agreement to
make payment of such unpaid balances, including without limitation each loan application or agreement, and each
promissory note, loan agreement, receivable, chattel paper, payment agreement, contract, installment sales
agreement or other obligation or promise to pay of an Obligor, all as described and referred to in a Purchase
Agreement.
“AFFILIATED PARTY” means a Person which is related to, affiliated with or controlled by, or under common
control with, or common ownership of, the Borrower, the Servicer or Encore Capital Group.
“ASSET” means each Account and any property or other right obtained by the Borrower in connection with
collection of any such Account or in substitution therefor, all of which constitute a part of the Portfolio into
which such Account was initially delivered.
“ASSET DOCUMENTS” has the meaning set forth in Section 2.2.
“BANKRUPT ACCOUNT” means any Account the Obligor of which is subject to (i) a petition filed under the
United States Bankruptcy Code by or against such Obligor, (ii) a decree or order for relief in a bankruptcy,
insolvency, readjustment of debt or similar proceeding enforced by a court of supervising authority having
jurisdiction in respect of such Obligor, or (iii) the appointment of a trustee in bankruptcy, conservator or
receiver for such Obligor in any bankruptcy, insolvency, readjustment of debt or similar proceeding.
“BULK TRANSFER” has the meaning set forth in Section 2.7.
“BUSINESS DAY” means any day other than (a) a Saturday or Sunday and (b) a day on which banking
institutions in the states of California or New York are authorized or obligated by law, executive order or
governmental decree to be closed.
“CLOSING DATE” means July 25, 2003.
“COLLATERAL” has the meaning specified in the Loan Agreement.
“COLLECTIONS” means any and all monies, payments, revenues, income, receipts, collections, recoveries
and other proceeds or assets, representing collected available funds, net of checks returned for insufficient
funds, received or otherwise recovered on or with respect to Assets (net of Permitted Third-Party Costs and
Permitted Third-Party Fees retained by Permitted Third Parties out of collections received by such Permitted
Third Parties) including (a) payments of principal, interest, fees, late charges, insufficient funds charges,
guaranty payments and any interest thereon, credit insurance payments and other cash receipts on account of any
Asset, (b) interest on the Remittance Account or any other account created in connection herewith, (c)
court-awarded legal fees and expenses, court-awarded reimbursement of fees, costs and expenses, (d) legal fees,
credit insurance costs, guaranty fees and other amounts recovered on account of any Asset, to the extent the
obligation giving rise thereto has previously been paid or is otherwise not due and payable with any such
receipts, (e) settlements, compromises, liquidations, foreclosure proceeds, dispositions, sales, transfers or
other proceeds, whether cash or otherwise, received as a result of or in any way in connection with collection
activities related to any Asset or in connection with the sale, transfer or disposition of any Asset, (f)
payments, fees, rebates, refunds, commissions, kickbacks, rakeoffs, discounts, deductions, whether cash or
otherwise, received by Borrower, or any Affiliated Party, as a result of or in any way in connection with
collection activities related to any Asset or in connection with the sale, disposition or transfer of any Asset,
and (g) proceeds from the sale of Accounts pursuant to Section 2.7.
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“DEFAULT” means an event that, with giving of notice or passage of the grace period (if any) or both,
would constitute an Event of Default.
“ELIGIBLE ACCOUNT” means a segregated account, which may be an account (i) maintained with a depository
institution or trust company whose long term unsecured debt obligations are rated at least BBB+ by Standard &
Poor’s Ratings Services and Baal by Xxxxx’x Investors Service, Inc.; provided that if only one such rating agency
rates such institution, such single rating shall suffice), or (ii) a segregated account maintained with a
federally or state chartered depository institution subject to regulations regarding fiduciary funds on deposit
substantially similar to 12 C.F.R. § 9.10(b).
“ENCORE CAPITAL GROUP” means Encore Capital Group, Inc., a Delaware corporation, which is the parent
corporation of the Borrower and the Servicer and which is a publicly traded company.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“EVENT OF DEFAULT” has the meaning specified in Section 7.1 of the Loan Agreement.
“GAAP” means accounting principles generally accepted in the United States of America.
“INITIAL TRANSACTIONAL EXPENSES” has the meaning specified in Appendix A of the Loan Agreement.
“LEGAL OUTSOURCING MANAGEMENT FEE” has the meaning specified in Section 3.1.
“LOAN” means the loan made by the Lender to the Borrower pursuant to the Loan Agreement.
“LOAN DOCUMENTS” means this Agreement, the Loan Agreement, the Account Control Agreement and any related
agreement or document contemplated thereunder.
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“MIDLAND CREDIT” means Midland Credit Management, Inc., a Kansas corporation.
“MONTHLY RECONCILIATION REPORT” means, as to any Monthly Report Date, a report delivered to the Lender
on such date substantially in the form of Exhibit C hereto, setting forth as of the end of immediately preceding
month all Collections received, all Servicing Fees, Legal Outsourcing Management Fees, Permitted Third-Party
Costs and Permitted Third-Party Fees netted from Collections, interest and principal calculations with respect to
the Loan, and other relevant information to determine the use and application of Collections during such month.
“MONTHLY REPORT DATE” means the date on which the Monthly Reconciliation Report is required to be
delivered by the Servicer to the Lender, which date shall be the fifteenth (15th) day of each month, or, if such
fifteenth (15th) day is not a Business Day, the next succeeding Business Day.
“NAN” or “National Attorney Network” means the National Attorney Network, a division of TSYS Total Debt
Management, Inc.
“NET NEGATIVE PERMITTED THIRD-PARTY COSTS” means the amount of Permitted Third-Party Costs expended with
respect to the Assets which have been paid from sources other than collections arising from the Assets.
“NOTE” means the promissory note, dated as of the Closing Date, substantially in the form of Exhibit A
to the Loan Agreement, issued by the Borrower to the order of the Lender.
“OBLIGOR” means the customer, obligor, maker, borrower or other party primarily obligated to pay an
Account.
“PERMITTED THIRD PARTY” means (i) any member of the National Attorney Network, (ii) Automated
Collections Control, Inc. d/b/a XxxxxXxxXxxxxx.xxx and each collections attorney or agency engaged in connection
with the use thereof, (iii) [***] with respect to its balance transfer program, and (iv) any other Person
reasonably acceptable to the Lender selected by Servicer to assist in the collection process.
“PERMITTED THIRD-PARTY COSTS” means all out-of-pocket costs and expenses incurred by a Permitted Third
Party retained or otherwise engaged by the Servicer in connection with collection actions or proceedings related
to the enforcement or collection of any Account, which may be retained by such Permitted Third Party solely out
of collections collected by such Permitted Third Party.
“PERMITTED THIRD-PARTY FEES” means the amount of any fees or compensation paid or owed to a Permitted
Third Party retained or otherwise engaged by the Servicer under fee or compensation arrangements that are
contingent upon, and determined by reference to, the amounts (net of related Permitted Third-Party Costs)
recovered by such Permitted Third Party in respect of the related Accounts.
[***] Omitted pursuant to a request for confidential
treatment. The omitted material has been filed
separately with the Securities and Exchange
Commission.
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“PERSON” means any individual, corporation, partnership, limited liability company, joint venture,
association, joint-stock company, trust, unincorporated organization or government or any agency or political
subdivision thereof.
“PLAN” means an employee benefit plan or other plan maintained for employees and covered by Title IV of
ERISA.
“PORTFOLIO” means all Accounts and other Assets purchased from a Portfolio Seller, together with (a)
each and every Asset obtained in replacement or satisfaction of or substitution for, any such Account so
purchased, (b) each and every item of property obtained by the Borrower as a result of its collection activities
with respect to any such Account, including Re-Write Notes, (c) each and every item of collateral or security,
including all security interests, liens, guarantees and other interests securing payment of any Account, and all
other rights and interests of the Borrower with respect to each Account, (d) each judgment rendered against an
Obligor in respect of an Account, together with all lien rights related thereto, (e) Collections derived from or
paid or payable with respect thereto, together with any and all earnings thereon, and (f) each and every other
right, claim and interest associated therewith.
“PORTFOLIO SELLER” means the party that sold or has agreed to sell a specified Portfolio to the Borrower
pursuant to the terms and conditions of a Purchase Agreement.
“POST-CLOSING TRANSACTIONAL EXPENSES” shall mean all reasonable out-of-pocket costs and expenses
incurred by the Lender in connection with the interpretation, enforcement, exercise of rights or amendment (in
each case, whether or not definitive action is taken) of the Loan Documents.
“PURCHASE AGREEMENT” means the asset or account purchase and sale agreement by and between the Borrower
and a Portfolio Seller pursuant to which such Portfolio Seller agrees to sell (i) a specified Portfolio to the
Borrower for a specified purchase price, or (ii) a number of Portfolios to the Borrower pursuant to a Forward
Flow Purchase Agreement.
“REMITTANCE ACCOUNT” has the meaning set forth in Section 2.9.
“REMITTANCE DATE” means each Friday commencing on August 1, 2003 until all amounts due and payable under
the Loan Agreement have been satisfied.
“REMITTANCE PERIOD” means, with respect to each Remittance Date, the period of time commencing with the
Friday occurring two (2) weeks prior to the applicable Remittance Date and ending on the Thursday first occurring
after such Friday; provided, however, that the initial Remittance Period shall mean the period of time commencing
with July 1, 2003 and ending on July 24, 2003.
“REMITTANCE REPORT” means, with respect to a Remittance Period, a report substantially in the form of
Exhibit B hereto, setting forth the Collections, Servicing Fees, Legal Outsourcing Management Fees, outstanding
balance of the Loan, Permitted Third-Party Costs and Permitted Third-Party Fees netted from Collections by
Permitted Third Parties, Net Negative Permitted Third-Party Costs, and other relevant information to determine
the use and application of Collections during such Remittance Period.
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“REMITTANCE REPORT DATE” means, with respect to a Remittance Date, the second Business Day immediately
preceding such Remittance Date.
“REPORTABLE EVENT” has the meaning assigned to that term in Title IV of ERISA.
“RE-WRITE NOTE” means a promissory note issued by an Obligor in favor of the Borrower in replacement or
settlement of the Account of such Obligor.
“SERVICER” initially means Midland Credit, and, if thereafter replaced, means any replacement servicer
or any permitted successor or assign thereof.
“SERVICER'S COLLECTION ACCOUNT” means account [***] maintained by the Servicer with Xxxxx Fargo
Bank, National Association, or such other collection account as may be approved in writing from time to time by
the Lender, which account the Servicer shall use solely for receipt of collections.
“SERVICING FEE” means the fee payable to the Servicer for services rendered during the related
Collection Period, computed in accordance with Exhibit A hereto; provided, however, that the Servicing Fee shall
not be payable with respect to any Collections to the extent that they are a result of repurchase of Assets by a
Portfolio Seller.
“SUBSIDIARY” means, with respect to any Person, (i) any corporation of which more than 50% of the
outstanding shares of capital stock having general voting power under ordinary circumstances to elect a majority
of the board of directors of such corporation, irrespective of whether or not at the time stock of any other
class or classes has or might have voting power by reason of the happening of any contingency, is at the time
directly or indirectly owned by such Person, by such Person and one or more other Subsidiaries, or by one or more
other Subsidiaries, (ii) any partnership of which 50% or more of the partnership interests therein are directly
or indirectly owned by such Person, by such Person and one or more other Subsidiaries, or by one or more other
Subsidiaries, and (iii) any limited liability company or other form of business organization the effective
control of which is held by such Person, such Person and one or more other Subsidiaries, or by one or more other
Subsidiaries.
“TERMINATION EVENT” has the meaning set forth in Section 6.1.
“UCC” means the Uniform Commercial Code as in effect from time to time in New York or in any state whose
laws are held to govern the creation, perfection or foreclosure of any security interest granted pursuant to the
Loan Agreement.
“YGC” means Automated Collections Control, Inc. d/b/a XxxxxXxxXxxxxx.xxx and collections attorneys and
agencies engaged in connection with the use thereof.
ARTICLE II
SERVICING
Section 2.1 Appointment of the Servicer as Servicer. The Servicer shall collect, administer and service
all Accounts and other Assets from time to time constituting a part of any Portfolio financed in whole or in part
by the Lender in accordance with this Agreement and shall have full power and authority, to the extent not
limited hereunder, to do or cause to be done any and all things in connection with such servicing, administration
and collection. In the performance of its duties and responsibilities under this Agreement, the Servicer may
engage Permitted Third Parties to commence collection actions, foreclosure proceedings and/or the like; provided,
however, that each Permitted Third Party shall be engaged on a contingency fee basis and all Permitted
Third-Party Costs and Permitted Third-Party Fees shall be payable only by such Permitted Third Party retaining
such Permitted Third-Party Costs and Permitted Third-Party Fees from collections collected by such Permitted
Third Party. The Servicer acknowledges that the Borrower has assigned to the Lender for security all of the
Borrower’s rights under this Agreement.
[***] Omitted pursuant to a request for confidential
treatment. The omitted material has been filed
separately with the Securities and Exchange
Commission.
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Section 2.2 Documents Evidencing Assets. To the extent delivered to the Borrower by a Portfolio Seller, the Borrower will deposit with the Servicer copies of each document evidencing or relating to an Account or other Asset to be serviced by the Servicer, together with such other documents available to the Borrower as the Servicer may reasonably require in order to perform its duties under this Agreement. In addition, the Servicer shall (i) maintain and retain physical possession of good and legible copies of all other instruments or documents, including original Re-Write Notes to the extent permitted under this Agreement, executed by an Obligor and/or the Servicer to modify, supplement, compromise, settle, restructure or otherwise modify the terms or conditions of any Account during the term that the Servicer is servicing the Accounts, and (ii) maintain and retain originals or copies, as appropriate, of all instruments and documents generated by or coming into the possession of the Servicer (including current and historical computerized data files, whether developed or originated by the Servicer or others) that are reasonably required to evidence, document, collect or service any Asset. All documents described in this Section 2.2 are referred to collectively herein as the “Asset Documents”. All Asset Documents shall remain the property of the Borrower, subject to the security interest of the Lender, and shall be kept by the Servicer at the address set forth in Section 7.2 and shall not, without the prior written consent of the Lender, be moved therefrom. Section 2.3 Duties of Servicer. Without limiting the generality of Section 2.1, the Servicer shall undertake commercially reasonable efforts to collect or otherwise realize upon each Asset comprising a part of a Portfolio being serviced hereunder, including, without limitation, commencing (i) collection actions, (ii) foreclosure proceedings and repossession activities, if applicable, and (iii) other customary collection practices. In that connection, the Servicer shall be solely responsible for the retention and compensation of attorneys (other than Permitted Third Parties) engaged for purposes of pursuing collection litigation against Obligors, collection and posting of all payments, responding to inquiries of Obligors of Accounts, investigating delinquencies, sending statements to Obligors, reporting any required tax information to Obligors, reporting any required credit information on Obligors to the credit bureaus, accounting for Collections collected on account of any Asset, monitoring the status of any guaranties or insurance policies relating to any Asset, commencing and pursuing collection actions, entering into agreements for the settlement, compromise or satisfaction of Assets and such other practices and procedures as are generally employed in collecting similar accounts, loan portfolios and other receivables. To the extent that the Servicer, in the performance of its duties and responsibilities under this Agreement, engages Permitted Third Parties or other attorneys for purposes of pursuing collection litigation or other purposes, the Servicer shall also have sole responsibility for monitoring the activities and actions of such Permitted Third Parties and such other attorneys and shall use reasonable efforts to require, by enforcement of the applicable contract of placement or engagement, that such activities and actions are in compliance with provisions of this Agreement.
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Section 2.4 Servicing Standards; Subservicing. (a) The Servicer agrees that it shall service, administer, collect, market and sell the Assets in a commercially reasonable manner. (b) In addition to Permitted Third Parties, the Servicer, with the prior approval of the Lender, which approval shall not be unreasonably withheld, delayed or conditioned, may appoint one or more subservicers to perform the Servicer's duties hereunder. No appointment of any subservicer or engagement of any attorney for collection litigation or other purposes by the Servicer shall relieve the Servicer of any of its duties or responsibilities under this Agreement, including without limitation, its servicing responsibilities hereunder and its reporting responsibilities hereunder. The Servicer shall not be entitled to payment of any Servicing Fee on account of the Assets subject to a subservicing agreement, but the amount of such subservicing fees payable under such subservicing agreement shall be payable from Collections from such Assets serviced by such subservicer in lieu of the Servicing Fee which would otherwise be payable to the Servicer with respect to such Assets. Section 2.5 Power and Authority. The Servicer is hereby granted the full power and authority to conduct its servicing, administration and collection activities for and on behalf of the Borrower and the Lender as contemplated herein and, without limiting the generality of the foregoing, is authorized and empowered to (a) make all communications with Obligors under Accounts in the Borrower's name and (b) execute and deliver, on behalf of the Borrower, any and all instruments of amendment, modification, satisfaction, cancellation, sale, transfer, release, discharge and all other comparable instruments with respect to any such Asset; provided, however, that the authority granted above shall not be exercised by the Servicer unless consistent with Section 2.6 and Section 2.7 hereof. To the extent permitted by applicable law, the Servicer is hereby authorized to commence, in the name of the Borrower, legal proceedings to collect Accounts and to commence or participate in any other legal proceeding otherwise relating to or involving an Account or any other Asset. If the Servicer commences or participates in any such legal proceedings, the Servicer is authorized and empowered to execute and deliver, in the Borrower's name, any notices, demands, claims, complaints, responses, affidavits or other documents or instruments in connection with any such proceeding. Upon request, the Borrower shall furnish the Servicer with any powers of attorney or other documents which the Servicer may reasonably request and which the Borrower may reasonably approve in order to take such steps as the Servicer deems necessary, appropriate or expedient to carry out its servicing, administration and collection activities under this agreement. Section 2.6 Settlement Authority and Re-Write Notes. The Servicer shall have authority to compromise, settle or cooperate with the Borrower in selling any Account or other Asset. In furtherance of the Servicer's collection of Accounts, the Servicer may accept, on behalf of the Borrower and subject to the Lender's security interest, a promissory note issued by an Obligor in favor of the Borrower in replacement or settlement of an Account (a “Re-Write Note”). Each Re-Write Note shall be in compliance with all applicable laws and, upon execution and delivery of such Re-Write Note by the Obligor to the Servicer, the Servicer shall affix thereto a legend clearly stating that all right, title and interest thereto shall be the exclusive property of the Borrower subject to the lien and security interest of the Lender. So long as no Default or Event of Default exists under the Loan Agreement and no Termination Event exists under this Agreement, the Lender shall permit the Servicer, as agent for the Lender (for the sole purpose of perfecting the Lender's security interest in Re-Write Notes) to retain possession of Re-Write Notes. The Servicer hereby acknowledges and agrees that it shall retain possession (in the same manner as, and consistent with, Section 2.2 hereof) of the Re-Write Notes as agent for the Lender for the purpose of perfecting the Lender's security interest in the Re-Write Notes. Upon the occurrence of a Default or an Event of Default under the Loan Agreement or upon the occurrence of a Termination Event, upon written request of the Lender, the Servicer shall immediately deliver all Re-Write Notes to the Lender. If after delivery of the Re-Write Notes to the Lender (at a time when the Servicer has not been terminated as servicer for the Assets), the Servicer needs possession of a Re-Write Note for amendment, enforcement or return to the applicable Obligor upon final payment of such Re-Write Note, the Servicer shall provide the Lender with a written request for the applicable Re-Write Note. Upon receipt of such written request from the Servicer, the Lender shall promptly provide to the Servicer the requested Re-Write Note. Unless such 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 amount owing under such Re-Write Note, the Servicer shall promptly return such Re-Write Note to the Lender when the Servicer no longer needs possession of such Re-Write Note for amendment or enforcement.
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Section 2.7 Account Sales. The Servicer may, and the Borrower may, without the consent of the Lender, sell Bankrupt Accounts to a third party who is not an Affiliated Party in an arm's length transaction. The Servicer may also, without the consent of the Lender, sell, assign or otherwise transfer Accounts from more than one (1) Obligor (a “Bulk Transfer”) to a third party who is not an Affiliated Party in an arm's length transaction; provided, that the purchase price percentage is not less than the applicable purchase price percentage paid by Borrower for the receivables being sold, in each case as set forth in the applicable Purchase Agreements. Except as permitted herein, the Servicer may not, without the consent of the Lender, convey, sell, lease or otherwise dispose of the Receivables, or any portion of the Receivables. Any Bulk Transfer of Accounts or any sale of a Bankrupt Account pursuant to this paragraph is sometimes referred to as a “Permitted Sale”. Upon deposit into the Remittance Account of the Collections generated from a Permitted Sale, such Permitted Sale shall be free and clear of any lien or security interest of the Lender, and the Lender, upon request of the Borrower, shall execute and deliver to the Servicer UCC releases prepared by the Servicer, in form and content acceptable to the Lender, with respect to the Accounts sold or transferred pursuant to such Permitted Sale. Upon request of the Borrower, the Lender shall provide prior to the closing of a Permitted Sale a “payment letter” in form and content acceptable to the Lender which will provide that, among other things, upon deposit into the Remittance Account of immediately available funds by the date and in the amount specified in such “payment letter”, the Lender shall execute and deliver UCC releases prepared by the Servicer, in form and content acceptable to the Lender, with respect to the Accounts sold or transferred pursuant to such Permitted Sale. Section 2.8 Legal Compliance. The Servicer shall perform all of its obligations under this Agreement in full compliance with all applicable laws, rules and regulations, including laws, rules and regulations governing debt collection practices and procedures. To the extent that the Servicer places Assets for collection with any subservicer or engages any Permitted Third Party or any other attorney to commence collection actions, foreclosure proceedings and/or the like with respect to the Assets, the Servicer shall advise each such subservicer, Permitted Third Party or other attorney of provisions in this Agreement and the Loan Agreement which are relevant to such placement or engagement. The Servicer shall use reasonable efforts to require, by enforcement of the applicable contract of such placement or engagement, each such subservicer and each such Permitted Third Party or other attorney to perform all of its obligations with respect to the Assets in full compliance with the provisions of this Agreement and the Loan Agreement and in full compliance with all applicable laws, rules and regulations, including laws, rules and regulations governing debt collection practices and procedures. The Servicer specifically represents and warrants to the Borrower and the Lender that the Servicer is knowledgeable and experienced in complying with such laws, rules and regulations as they pertain to debt collection practices and procedures.
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Section 2.9 Remittance Account. (a) The Servicer shall cause to be established and, in accordance with the Account Control Agreement, maintained at all times an Eligible Account (the “Remittance Account”) on behalf of and in the name of the Borrower. The Borrower shall possess all right, title and interest in all funds on deposit from time to time in the Remittance Account subject to the security interest of the Lender and shall hold all funds therein in trust on behalf of and as fiduciary for the Lender. The Borrower shall have no right of withdrawal from the Remittance Account. (b) The Servicer shall deposit into the Remittance Account on a daily basis, all Collections posted by it on the prior Business Day, net of (i) all Servicing Fees (or fees payable in lieu thereof to a subservicer pursuant to Section 2.4) and Legal Outsourcing Management Fees earned that are due and payable to the Servicer, and (ii) all Net Negative Permitted Third Party Costs. The Servicer shall use reasonable efforts to require by enforcement of the applicable contract of placement or engagement, all Collections whether received by a subservicer, a Permitted Third Party or any other attorney engaged to commence collection actions, foreclosure procedures and/or the like, to be paid to the Servicer for deposit into the Remittance Account pursuant to the applicable contract of placement or engagement. To the extent that Collections are received (whether by wire transfer, money order or otherwise) in the Servicer's Collection Account and posted, the Servicer shall transfer all Collections (net of the amounts set forth in clauses (i) and (ii) above) on a daily basis from the Servicer's Collection Account to the Remittance Account. Except for the temporary deposit of Collections in the Servicer's Collection Account as provided in the preceding sentence, the Servicer shall not commingle any Collections collected with respect to the Assets with any moneys or other funds which are not Collections. Pending distribution pursuant thereto, all Collections at any time held by the Servicer, any subservicer, any Permitted Third Party or any other attorney shall be held in trust for the benefit of the Lender. The Servicer acknowledges that the Borrower has granted a security interest to the Lender in all of the Borrower's right, title and interest in and to all Collections, including those from time to time on deposit in the Servicer's Collection Account and those from time to time on deposit in the Remittance Account. The Servicer has not granted, and will not grant, to any Person (i) a security interest in the Servicer's Collection Account or in the Collections at any
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(c) time on deposit in the Servicer's Collection Account. or (ii) the right to control in any respect the Servicer's Collection Account or any Collections at any time on deposit therein. Section 2.10 Distributions from the Remittance Account. All Collections from time to time on deposit in the Remittance Account in accordance with Section 2.9(b) shall be held therein until distribution on the appropriate Remittance Date. Not later than 3:00 p.m. Eastern time on the applicable Remittance Report Date, the Servicer shall deliver to the Lender the Remittance Report for the related Remittance Period. Not later than 3:00 p.m. Eastern time on the applicable Remittance Date, the Servicer shall wire all amounts with respect to the corresponding Remittance Period on deposit in the Remittance Account to a bank account designated by Lender for application on the applicable Monthly Report Date in accordance with Section 2.2 of the Loan Agreement, until such time as all amounts due and payable under the Loan Agreement have been satisfied. Section 2.11 Accounting for Fees. The Servicer shall provide to the Lender on each Remittance Report Date a detailed accounting of all Servicing Fees and Legal Outsourcing Management Fees actually incurred and paid to the Servicer for the immediately preceding Remittance Period. In the event that the amounts paid exceed or fall short of the Servicing Fees and Legal Outsourcing Management Fees actually due and payable pursuant to the Loan Agreement and/or the Servicing Agreement for such preceding Remittance Period, an appropriate adjustment shall be made in the disbursement from the Remittance Account. Section 2.12 Insurance. The Servicer shall maintain at all times during the term of this Agreement insurance coverage substantially similar (including amounts of monetary coverage) to the policies set forth in Schedule 5.1(l). ARTICLE III SERVICING AND OTHER FEES; REIMBURSEMENT OF EXPENSES Section 3.1 Servicing Fees; Legal Outsourcing Management Fees. (a) Except to the extent that the provisions of this Agreement or the Loan Agreement provide that the Servicer is not entitled to a Servicing Fee, the Servicer shall be entitled to a Servicing Fee with respect to Collections, computed in accordance with Exhibit A. Any Servicing Fee shall be payable solely from Collections and shall be without recourse to the Lender. (b) As compensation for its services in managing the legal placement of accounts through YGC, Servicer shall receive a Legal Outsourcing Management Fee equal to [ *** ] percent ( *** %) of gross collections received through the use of YGC, out of which fee Servicer shall be responsible for paying all fees owing to YGC (but not the Permitted Third-Party Costs incurred by, or the Permitted Third-Party Fees payable to, the collections attorneys engaged in connection with the use of YGC). [***] Omitted pursuant to a request for confidential treatment. The omitted material has been filed separately with the Securities and Exchange Commission.
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Section 3.2 Nonreimbursable Expenses of the Servicer. Except for Permitted Third Party Costs and Permitted
Third Party Fees retained by Permitted Third Parties from collections received by such Permitted Third Parties
and except with respect to a subservicer to the extent contemplated by Section 2.4, the Servicer shall be solely
responsible for payment of all costs and expenses incurred in connection with the servicing, administration or
collection of Assets. Without limiting the generality of the foregoing, and with the exception of Net Negative
Permitted Third Party Costs, it is understood and agreed that the Servicer shall not be entitled to payment or
reimbursement for any costs of collecting or realizing upon any Account (including, without limitation, any
filing fees, court costs, legal fees or other costs or expenses incurred by the Servicer) or for any overhead
expenses of the Servicer, salaries, wages or other compensation of employees of the Servicer or travel and other
expenses incurred by any employees of the Servicer. In addition, except for Permitted Third-Party Costs and
Permitted Third-Party Fees retained by Permitted Third Parties from collections received by such Permitted Third
Parties and except with respect to a subservicer to the extent contemplated by Section 2.4, to the extent the
Servicer engages any other party to perform any aspects of its duties under this Agreement, any such fees,
charges, costs or expenses therefor shall be paid by the Servicer and shall not be reimbursable from Collections.
ARTICLE IV
ACCOUNTING, STATEMENTS AND REPORTS
Section 4.1 Books and Records.
(a) The Servicer shall keep accurate books and records pertaining to the operations, business and financial
condition of the Servicer and to such other matters as the Lender may from time to time reasonably request with
respect to the Servicer.
(b) The Servicer shall (i) maintain and retain detailed records with respect to each Asset setting forth the
status of such Asset, the amount and application of any funds received on account of such Asset, or other
realization upon, such Asset, and (ii) maintain and retain notes related to the servicing, administration and
collection efforts and activities with respect to each Asset as are reasonably necessary to continue servicing
the Asset. The Servicer shall also make periodic reports in accordance with Section 4.2. To the extent that the
Servicer has placed any of the Assets with a subservicer or has engaged a Permitted Third Party or any other
attorney to commence collection actions, foreclosure proceedings and/or the like, the Servicer shall use
reasonable efforts to require, by enforcement of the applicable contract of placement or engagement, each such
subservicer and each such Permitted Third Party and each such other attorney to keep detailed records pertaining
to such Assets. Such records may not be destroyed or otherwise disposed of except as provided herein. All
records and all Asset Documents, whether or not developed or originated by the Servicer, any such subservicer or
any such attorney, shall remain at all times the property of the Borrower, subject to the security interests of
the Lender therein. None of the Servicer, any such subservicer, any such Permitted Third Party or any such other
attorney shall acquire any property rights with respect to any such books or records or Asset Documents, and none
of the Servicer, any such subservicer, any such Permitted Third Party or any such other attorney shall have any
right to possession of any of them except pursuant to this Agreement. Upon termination of this Agreement, the
Servicer shall immediately deliver, and the Servicer shall use reasonable efforts to require, by enforcement of
the applicable contract of placement or engagement, each such subservicer, each such Permitted Third Party and
each such other attorney to immediately deliver, all such records and Asset Documents to the Lender or its
designee. The Servicer shall bear the entire cost of restoration in the event any such books or records or Asset
Documents shall become damaged, lost or destroyed while in the possession of the Servicer, any such subservicer,
any such Permitted Third Party or any such other attorney.
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Section 4.2 Periodic Reporting. Until such time as all amounts due and payable under the Loan Agreement have been satisfied, the Servicer shall provide to the Borrower and the Lender the following periodic reports, in form and content acceptable to the Borrower and the Lender: (a) As soon as available, and in any event within one hundred twenty (120) days after the end of each fiscal year of Encore Capital Group, a copy of the annual audit report of Encore Capital Group and its Subsidiaries, including the Borrower and the Servicer, with the opinion of their respective certified public accountants (which opinion shall not contain any “going concern” qualifications to Encore Capital Group or the Servicer and which shall not contain any other qualification as to the Collateral or as to the ability of the Borrower or the Servicer to perform any of its respective obligations under any Loan Documents to which it is a party), together with the audited financial statements of Encore Capital Group and its Subsidiaries, including the Borrower and the Servicer, which financial statements shall include the consolidated balance sheets and the consolidated statements of operations, shareholder's equity and cash flows as of and for such fiscal year end for Encore Capital Group and its Subsidiaries, all in reasonable detail and stating in comparative form the figures for the previous fiscal year, all prepared in accordance with GAAP, applied on a consistent basis; provided that so long as Encore Capital Group is a reporting company, delivery of the Form 10-K filed by Encore Capital Group with respect to a fiscal year shall satisfy the requirement for the annual audit report and consolidated financial statements under this section). (b) As soon as available and in any event within sixty (60) days after the end of each of the first three quarters of each fiscal year of Encore Capital Group, a copy of the interim unaudited financial statements of Encore Capital Group and its Subsidiaries, including the Borrower and the Servicer, which financial statements shall include the consolidated balance sheets and the consolidated statements of operations, shareholder's equity and cash flows as of and for the end of such quarter for Encore Capital Group and its Subsidiaries, all in reasonable detail and stating in comparative form the figures for the corresponding date and period in the previous fiscal year, all prepared in accordance with GAAP, applied on a consistent basis (provided that so long as Encore Capital Group is a reporting company, delivery of the Form 10-Q filed by Encore Capital Group with respect to a fiscal quarter shall satisfy the requirement for quarterly consolidated financial statements under this section). (c) As soon as available and in any event within thirty (30) days after the end of each month, (i) a copy of the monthly unaudited financial statements of Encore Capital Group and its Subsidiaries, including the Borrower and the Servicer, which financial statements shall include the consolidated balance sheets and the consolidated statements of operations, shareholder's equity and cash flows as at the end of such month for Encore Capital Group and its Subsidiaries, all in reasonable detail and stating in comparative form the figures for the corresponding date and period in the previous fiscal year, all (except for the statement of cash flows) prepared in accordance with GAAP, applied on a consistent basis, and (ii) a copy of the monthly unaudited balance sheet of the Borrower at the end of such month, certified by a responsible officer of the Servicer.
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(d) On each Monthly Report Date, beginning August 15, 2003, a Monthly Reconciliation Report.
(e) Not later than 3:00 p.m., Eastern time, two (2) Business Days immediately preceding each Remittance
Date, (i) a Remittance Report for the applicable Remittance Period, (ii) a cash receipts report by Asset, and
(iii) such other reports as the Lender shall reasonably require regarding the Portfolios or the Collections.
(f) As promptly as practicable (but in any event not later than five (5) Business Days) after the Servicer
obtains knowledge of the occurrence of any default by the Servicer in the performance of any of its obligations
under this Agreement or under any other Loan Document to which the Servicer is a party, notice of such
occurrence, together with a detailed statement by the Servicer of the steps being taken by the Servicer to cure
the effect of such event.
(g) As promptly as practicable (but in any event not later than five (5) Business Days) after the Servicer
obtains knowledge thereof, notice of any pending or overtly threatened litigation against Encore Capital Group or
any of its Subsidiaries (i) which must be reported in a Form 8-K filed by Encore Capital Group or (ii) which, if
successful, would likely result in a judgment of $1,000,000 or more or (iii) which involves the Borrower or any
of the Assets (other than routine litigation customary in the collection industry).
(h) Such other information respecting any Portfolio, the Servicer, any Permitted Third Party, any
subservicer or any attorney engaged by the Servicer as the Lender may from time to time reasonably request.
The Lender acknowledges that certain information provided to it pursuant to this Agreement, including,
pursuant to this Section 4.2, may consist of material nonpublic information regarding Encore Capital Group and
its Subsidiaries, and Lender acknowledges and agrees that it is aware (and that any Person to whom any such
information may be disclosed as permitted by this Agreement has been, or upon receiving such information will be,
advised) of the restrictions imposed by federal and state securities laws on a Person possessing material
nonpublic information regarding an issuer of securities. In the event the Servicer is required to provide to the
Lender material nonpublic information regarding Encore Capital Group and its Subsidiaries pursuant to this
Agreement, including, without limitation, pursuant to this Section 4.2, and to the extent that applicable federal
securities laws, rules and regulations require that the Lender execute and deliver a confidentiality agreement in
connection with its receipt of such material nonpublic information, upon request of the Servicer, the Lender will
execute and deliver a confidentiality agreement reasonably acceptable to Lender which has been prepared by the
Servicer and which is consistent with the minimum requirements for confidentiality agreements set forth in such
federal securities laws, rules and regulations. Notwithstanding any other provision in this Agreement, this
paragraph shall survive and continue to be binding against Lender after any sale, conveyance, assignment or
transfer by any such Person of the Note.
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Section 4.3 Inspection Rights. At any time and from time to time during regular business hours, the
Servicer shall permit, and shall use reasonable efforts to require, by enforcement of the applicable contract of
placement or engagement, each subservicer which is servicing any of the Assets to permit, the Borrower, the
Lender or their respective agents, representatives or designees, at the sole cost and expense of such requesting
party, (a) to examine or make copies of abstracts from all books, records and documents (including, without
limitation) computer tapes and disks and constituting Asset Documents or otherwise in any way relating to any
Asset or the Servicer's or any subservicer’s collection activities with respect thereto, (b) to visit the offices
and properties of the Servicer or any subservicer for purposes of examining such materials or the Servicer's or
any subservicer’s procedures, processes and activities relating to the exercise of its duties hereunder and (c)
to discuss matters relating to Assets or the servicing, collection or liquidation thereof or the performance by
the Servicer or any subservicer with respect thereto with any officers or employees having knowledge of any such
matters. Without limiting the foregoing, at any time and from time to time during regular business hours, the
Servicer shall permit, and the Servicer shall use reasonable efforts to require, by enforcement of the applicable
contract of placement or engagement, each subservicer to permit, certified public accountants or other auditors
designated by the Borrower or the Lender to conduct a review of the Servicer's or any subservicer's books,
records and procedures with respect to the servicing, administration, collection and/or disposition of the
Assets. In connection with the Lender's exercise of the inspection rights granted to the Lender pursuant to this
Section 4.3, the Lender will use reasonable efforts not to interfere with the preparation by employees and agents
of Encore Capital Group and its Subsidiaries of financial statements or other reports or filings required by
applicable federal securities laws, rules and regulations.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations and Warranties of the Servicer. The Servicer hereby represents and warrants to
the Lender and the Borrower as follows:
(a) The Servicer is a corporation duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation, and is duly qualified and licensed to conduct collection activities and is
in good standing in each jurisdiction in which such qualification or licensing is necessary as a condition to
conducting collection activities with respect to Assets being serviced hereunder and where the failure to obtain
such licensing or qualification would have a material adverse effect on the Servicer or its ability to perform
its obligations hereunder. The Servicer has all requisite power and authority to own and operate its properties,
carry out its business as presently conducted and as proposed to be conducted and to enter into and discharge its
obligations under this Agreement and the other Loan Documents to which it is a party. Within the last five (5)
years, the Servicer has done business only under its current name as specified herein. As of the Closing Date,
the chief executive office and principal place of business of the Servicer is located at the address set forth in
Section 7.2, and all of the Servicer's records relating to its businesses are kept at one or more of the
following locations: (i) the location set forth in Section 7.2, (ii) 0000 Xxxx Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxxx
00000 or (iii) 00000 Xxxxxx Xxxxxx, Xxxxx, Xxxxxxxxxx 00000. The Servicer will not change its chief executive
office or principal place of business without sixty (60) days prior written notice to the Lender.
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(b) The execution and delivery by the Servicer of this Agreement and the other Loan Documents to which it is a party and performance and compliance by the Servicer with the terms of this Agreement and the other Loan Documents to which it is a party have been duly authorized by all necessary action on the part of the Servicer and will not violate the Servicer's organizational documents or constitute a default under any indenture or loan or credit agreement or any other material agreement, lease or instrument to which the Servicer is a party or by which it or its properties may be bound or affected. (c) This Agreement and the other Loan Documents to which it is a party constitute the valid, legal and binding obligations of the Servicer, enforceable against it in accordance with their respective terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and by general principles of equity (whether considered in a proceeding or action in equity or at law). (d) As of the Closing Date, no litigation is pending or, to the best of the Servicer's knowledge, threatened against the Servicer, the consequences of which would prohibit its entering into this Agreement or that would materially and adversely affect the condition (financial or otherwise) or operations of the Servicer or its properties or the consequences of which would materially and adversely affect its performance hereunder. (e) The Servicer has heretofore furnished to the Borrower and the Lender consolidated financial statements of Encore Capital Group and its Subsidiaries, including the Servicer, as of May 31, 2003. Those consolidated financial statements fairly present the consolidated financial condition of Encore Capital Group and its Subsidiaries, including the Servicer, on the date thereof and the results of their respective operations for the period ending on May 31, 2003, and, except for the consolidated statement of cash flows, which is presented in an internal company format, were prepared in accordance with GAAP. From May 31, 2003 through the Closing Date, there has been no material adverse change in the business, properties or condition (financial or otherwise) of Encore Capital Group and its Subsidiaries, including the Servicer. (f) All actions, approvals, consents, waivers, exemptions, variances, franchises, orders, permits, authorizations, rights and licenses required to be taken, given or obtained, as the case may be, by or from any federal, state or other governmental authority or agency, that are necessary or advisable in connection with the execution and delivery by the Servicer of this Agreement and the other Loan Documents to which it is a party have been duly taken, given or obtained, as the case may be, are in full force and effect on the date hereof, are not subject to any pending proceedings or appeals (administrative, judicial or otherwise) and either the time within which any appeal therefrom may be taken or review thereof may be obtained has expired or no review thereof may be obtained or appeal therefrom taken, and are adequate to authorize this Agreement and the other Loan Documents to which it is a party and, as of the Closing Date, the performance by the Servicer of its obligations under this Agreement and the other Loan Documents to which it is a party. (g) The Servicer has paid or caused to be paid to the proper authorities when due all federal, state and local taxes required to be withheld by it (other than any taxes which are being contested in good faith and by proper proceedings and for which the Servicer shall have set aside on its books adequate reserves). The Servicer has filed all federal, state and local tax returns which to the knowledge of the officers of the Servicer, are required to be filed, and the Servicer has paid or caused to be paid to the respective taxing authorities all taxes as shown on said returns or on any assessment received by it to the extent such taxes have become due (other than any taxes which are being contested in good faith and by proper proceedings and for which the Servicer shall have set aside on its books adequate reserves).
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(h) The Servicer has no ownership interest in the Assets or the Asset Proceeds and the Servicer has not
granted, or attempted to grant, to any other Person any security interest in the Assets or the Collections, and
no financing statement naming the Servicer as debtor and covering the Assets or the Collections is on file in any
office.
(i) As of the Closing Date, the Servicer does not maintain and has not in the past maintained any Plan. The
Servicer has not received any notice or has any knowledge to the effect that it is not in full compliance with
any of the requirements of ERISA. No Reportable Event or other fact or circumstance which may have an adverse
effect on the Plan's tax qualified status exists in connection with any Plan. The Servicer does not have:
i) any accumulated funding deficiency within the meaning of ERISA; or
ii) any liability or know of any fact or circumstances which could result in any liability to the Pension
Benefit Guaranty Corporation, the Internal Revenue Service, the Department of Labor or any participant
in connection with any Plan (other than accrued benefits which are or which may become payable to
participants or beneficiaries of any such Plan).
(j) As of the Closing Date, the Servicer is in compliance with all provisions of all agreements,
instruments, decrees and orders to which it is a party or by which it or its property is bound or affected, the
breach or default of which could have a material adverse effect on the financial condition, properties or
operations of the Servicer.
(k) All financial and other information regarding the Servicer or Encore Capital Group and its Subsidiaries
provided to the Borrower and/or the Lender by or on behalf of the Servicer in connection with the Borrower's
request for the Loan is true and correct in all material respects and, as to projections, valuations or proforma
financial statements for the Servicer or Encore Capital Group, or any Portfolio, present a good faith opinion as
to such projections, valuations and proforma condition and results. The foregoing information regarding the
Servicer or Encore Capital Group and its Subsidiaries provided to the Borrower and/or the Lender by or on behalf
of the Servicer contains no omissions which would cause such information to be misleading. All information
provided to the Borrower and/or the Lender with respect to the Assets, the Portfolios, the Collections and
related matters by or on behalf of the Servicer is, to the knowledge of the Servicer, true and correct in all
material respects and, to the knowledge of the Servicer, does not contain any omissions which would cause such
information to be misleading.
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(l) The attached Schedule5.1(l) lists and briefly describes each insurance policy maintained for or on behalf of the Servicer with respect to its properties, assets and business. All of such insurance policies are in full force and effect, and no default exists with respect to the obligations of the Servicer under any such insurance policies and the Servicer has not received any notification of cancellation of any of such insurance policies. Except as set forth on Schedule 5.1(l), the Servicer does not have any self-insurance or co-insurance programs. Section 5.2 Covenants of the Servicer. The Servicer will comply with the following covenants: (a) The Servicer will pay or discharge, when due, (i) all taxes, assessments and governmental charges levied or imposed upon it or upon its income or profits, upon any properties belonging to it prior to the date on which penalties attach thereto, (ii) all federal, state and local taxes required to be withheld by it, and (iii) all lawful claims for labor, materials and supplies which, if unpaid, would by law become a lien or charge upon any properties of the Servicer; provided, that the Servicer shall not be required to pay any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings. (b) The Servicer will keep and maintain all of its properties necessary or useful in its business in good condition, repair and working order (normal wear and tear excepted); provided, however, that nothing in this Section 5.2(b) shall prevent the Servicer from discontinuing the operation and maintenance of any of its properties if such discontinuance is, in the reasonable judgment of the Servicer, desirable in the conduct of the Servicer's business and not disadvantageous in any material respect to the Borrower or the Lender. (c) The Servicer will preserve and maintain its legal existence and all of its rights, privileges and franchises necessary or desirable in the normal conduct of its business and shall conduct its business in an orderly, efficient and regular manner. (d) The Servicer will conduct all collection activities and all sales, transfers and dispositions relating to the Assets on an arms-length basis and so as to cause all collections and all consideration received upon the sale, transfer or disposition of an Asset to (i) become and constitute Collections, and (ii) be distributed as Collections in accordance with Section 2.10. (e) The Servicer will not create, or attempt to create, any pledge, lien, security interest, assignment or transfer upon or in any of the Assets or the Collections, or assign or otherwise convey, or attempt to assign or otherwise convey, any right to receive collections or other income with respect thereto, except as contemplated by the Loan Documents. (f) The Servicer will not sell, lease, assign, transfer or otherwise dispose of all or a substantial part of its assets (whether in one transaction or in a series of transactions) which materially and adversely affects the Assets or the ability of the Servicer to perform its obligations under the Loan Documents to which it is a party. (g) Except for the right of the Servicer to remit Collections net of certain amounts pursuant to Section 2.9, the Servicer shall not assert any claims or set-off rights against the Collections.
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(h) In the fulfillment of Servicer’s obligations under this Agreement, Servicer shall not, and no person
under its direct control or direction shall, (i) engage in any fraudulent activity or (ii) knowingly engage in
any other activity which would constitute a violation of law or other governmental requirement.
(i) Servicer will use reasonable efforts to maintain systems, personnel and facilities, including back-up
and disaster recovery capability, that will enable it to perform fully its obligations under this Agreement.
(j) Unless Lender otherwise consents in writing:
i) Servicer shall not resign from the obligations and duties imposed on it by this Agreement as the
Servicer.
ii) Servicer shall not assign this Agreement or any of its rights, powers, duties or obligations hereunder,
except as authorized pursuant to this Agreement.
iii) The duties and obligations of Servicer under this Agreement shall continue until this Agreement expires
or shall have been terminated and shall survive the exercise by the Parties of any right or remedy under
this Agreement, or the enforcement by the Parties of any provision of this Agreement.
(k) The Servicer shall not liquidate, dissolve, terminate or suspend its business operations or otherwise
fail to operate its business in the ordinary course.
(l) The Servicer will not consolidate with or merge into any Person, or permit any other Person to merge
into it, or acquire (in a transaction analogous in purpose or effect to a consolidation or merger) all or
substantially all the assets of any other Person.
(m) The Servicer will not accept or receive or agree to accept or receive any rebate, refund, commission,
fee (other than the Servicing Fee and the Legal Outsourcing Management Fee), kickback or rakeoff, whether cash or
otherwise and whether paid by or originating with an Obligor, any subservicer or any other party (including but
not limited to brokers and agents), as a result of or in any way in connection with collection activities related
to any Asset or in connection with the sale, disposition, transfer or servicing of any Asset.
(n) Upon termination of this Agreement for any reason, the Servicer shall, in addition to the obligations of
the Servicer set forth in Section 6.3 hereof, provide its reasonable cooperation to Lender, Borrower and any
successor servicer in the transfer of management responsibilities contemplated by this Agreement.
ARTICLE VI
TERMINATION; TRANSFER OF SERVICING; INDEMNITY
Section 6.1 Termination Events. Any of the following acts or occurrences shall constitute a Termination
Event under this Agreement (each, a “Termination Event”):
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(a) The Servicer shall fail to deposit to the Remittance Account any Collections received by the Servicer as and when required in accordance with this Agreement, or the Servicer shall fail to pay to the Lender any payment in the amount and on the date required to be made in accordance with this Agreement, and any such failure shall continue for more than two (2) Business Days; (b) The Servicer shall fail to observe or perform in any respect any covenant or agreement required to be performed thereby under this Agreement or under any other Loan Document to which the Servicer is a party, and the continuance of such default or breach for a period of fifteen (15) calendar days after there has been given to the Servicer a written notice specifying the default or breach and requiring it to be remedied; (c) Any representation, warranty or statement of the Servicer made in this Agreement shall prove to have been incorrect in any material respect, or any representation, warranty or statement of the Servicer in any certificate, report or other statement, in writing or orally, delivered to any party hereto shall not satisfy the standard applicable to such representation or warranty as set forth in Section 5.1(k) of this Agreement; (d) The Servicer or Encore Capital Group shall be or become insolvent, or admit in writing its inability to pay its debts as they mature, or make a general assignment for the benefit of creditors; or the Servicer or Encore Capital Group shall apply for or consent to the appointment of any receiver, trustee, or similar officer for it or for all or any substantial part of its property; or such receiver, trustee or similar officer shall be appointed without the application or consent of the Servicer or Encore Capital Group and shall not be discharged within sixty (60) days of appointment; or the Servicer or Encore Capital Group shall institute (by petition, application, answer, consent or otherwise) any insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction; or any such proceeding shall be instituted (by petition, application or otherwise) against the Servicer or Encore Capital Group; or any judgment, writ, warrant of attachment or execution or similar process shall be issued or levied against a substantial part of the property of the Servicer or Encore Capital Group and such shall remain unstayed or undismissed for sixty (60) days; (e) A voluntary petition naming the Servicer or Encore Capital Group, as debtor, is filed under the United States Bankruptcy Code, or an involuntary petition naming the Servicer or Encore Capital Group, as debtor, is filed under the United States Bankruptcy Code and such involuntary petition shall remain undismissed for sixty (60) days; (f) An Event of Default as specified in the Loan Agreement shall exist and shall not have been remedied to the written satisfaction of the Lender or waived in writing by the Lender; (g) A material adverse change shall occur in the financial, business or operational condition of the Servicer or Encore Capital Group as compared to the status of the Servicer or Encore Capital Group as of the date of this Agreement, which material adverse change materially impacts the ability of the Servicer to perform its obligations under any Loan Document to which it is a party;
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(h) Any Reportable Event, which the Lender determines in good faith might constitute grounds for the termination of any Plan or for the appointment by the appropriate United States District Court of a trustee to administer any Plan, shall have occurred and be continuing thirty (30) days after written notice to such effect shall have been given to the Servicer or Encore Capital Group by the Lender; or any Plan shall have been terminated, or a trustee shall have been appointed by an appropriate United States District Court to administer any Plan, or the Pension Benefit Guaranty Corporation shall have instituted proceedings to terminate any Plan or to appoint a trustee to administer any Plan; (i) The Servicer or Encore Capital Group shall liquidate, dissolve, terminate or suspend its business operations or otherwise fail to operate its business in the ordinary course; (j) The Servicer or Encore Capital Group shall sell, lease, assign, transfer or otherwise dispose of all or a substantial part of its assets (whether in one transaction or in a series of transactions) which materially and adversely affects the Collateral or the ability of the Servicer to perform its obligations under the Loan Documents to which it is a party; (k) The Servicer or Encore Capital Group shall fail to pay, withhold, collect or remit any tax or tax deficiency when assessed or due (other than any tax or tax deficiency which is being contested in good faith and by proper proceedings and for which it shall have set aside on its books adequate reserves therefor) or notice of any state or federal tax liens shall be filed or issued (other than with respect to any taxes or tax deficiencies which are being contested in good faith and by proper proceedings and for which it shall have set aside on its books adequate reserves therefor); (l) A continuing default in the payment of $100,000 or more under any note, agreement or other evidence of indebtedness or similar obligation of the Servicer (other than a default whose breach is elsewhere in this Section 6.1 specifically dealt with) or under any instrument under which such evidence of indebtedness or similar obligation has been issued or by which it is governed and the expiration of the applicable period of grace, if any, specified in such evidence of indebtedness or other instrument; (m) The rendering against the Servicer or Encore Capital Group of a final judgment, decree or order for the payment of money in excess of $1,000,000 (unless the payment of such judgment in excess of $1,000,000 is fully waived) which materially and adversely affects the ability of the Servicer or Encore Capital Group to perform its obligations under the Loan Documents to which it is a party and such judgment, decree or order remains unsatisfied and unstayed for more than sixty (60) days; or (n) Any of the following shall occur: (i) entry of a court order which enjoins, restrains or in any way prevents the Servicer or Encore Capital Group from conducting all or any material part of its business affairs in the ordinary course of business, or (ii) withdrawal or suspension of any license required for the conduct of any material part of the business of the Servicer or Encore Capital Group, or (iii) any assets of the Servicer or Encore Capital Group having a fair market value of $1,000,000 or more in the aggregate are subject to an order or writ granting a motion or action to replevy, sequester, garnish, attach or levy against such assets.
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Section 6.2 Termination; Removal of the Servicer. Immediately upon the occurrence of a Termination Event, the Lender, upon written notice to the Servicer and the Borrower, may terminate this Agreement with respect to any or all of the Assets or Portfolios, whereupon the Servicer shall be removed from its duties and obligations as Servicer under this Agreement with respect to such Assets and Portfolios and the Lender shall have the right to appoint one or more replacement servicers to service and collect all such Assets and Portfolios. Selection of one or more replacement servicers and execution of one or more replacement servicing agreements shall be in the sole discretion of the Lender and shall be subject to such terms and conditions, including as to the servicing fee which shall be payable to such one or more replacement servicers, as the Lender shall require in its sole discretion. Each such replacement servicing agreement shall contain a confidentiality provision in substantially the form of Section 7.14 of this Agreement. In addition, upon the occurrence of a Termination Event, the Lender may pursue the Servicer for damages and exercise any other right or remedy against the Servicer as may be available under applicable law as a result of the Servicer's acts or omissions, whether arising under contract law, tort law or otherwise. Without the prior written consent of the Lender, the Servicer may not resign from its obligations under this Agreement, unless it is determined by the Lender and the Servicer that the performance by the Servicer of its obligations under this Agreement is prohibited by applicable law. Section 6.3 Effect of Termination. Upon termination of this Agreement pursuant to Section 6.2, except for any accrued and unpaid Servicing Fee or Legal Outsourcing Management Fee owing to the Servicer with respect to a Remittance Period ended before the termination of this Agreement or with respect to any Collections collected by Permitted Third Parties who have authority to continue collection services after termination of this Agreement pursuant to the terms of this Section 6.3, the Servicer shall not be entitled to any compensation with respect to any Assets which are no longer being serviced by Servicer after the date of such termination. Upon termination of this Agreement, the Servicer shall promptly deliver, and use reasonable efforts, by enforcement of the applicable contract of placement or engagement, to require each Permitted Third Party and other subservicer to deliver, to the replacement servicer all books and records that the Servicer and/or any Permitted Third Party or any other subservicer has maintained with respect to such Assets, including all Asset Documents then in the possession of the Servicer or any Permitted Third Party or any other subservicer. Any Collections received by the Servicer with respect to an Asset no longer serviced by the Servicer hereunder after removal of such servicing responsibilities shall be remitted by the Servicer directly and immediately to the Remittance Account. The Servicer shall promptly transfer all right, title and interest in the Remittance Account to Lender. The Servicer agrees to cooperate and agrees to use reasonable efforts to require, by enforcement of the applicable contract of placement or engagement, each Permitted Third Party and any other subservicer to cooperate, with any such replacement servicer in effecting the termination of any of the Servicer's servicing responsibilities and rights under this Agreement and shall promptly provide such replacement servicer with all documents and records reasonably requested by it to enable it to assume the functions of the Servicer and shall promptly transfer to the Remittance Account any Collections then on deposit with the Servicer. Notwithstanding the foregoing, in the event of a termination of this Agreement pursuant to Section 6.2, so long as such termination was not as a result of a Termination Event under Section 6.1(d) or Section 6.1(e) or as a result of any Termination Event arising from an act of fraud or misappropriation of funds on the part of the Servicer, the Lender shall allow Permitted Third Parties to continue to perform collection actions, foreclosure proceedings, repossession activities and other related collection activities with respect to Accounts which were being collected by such Permitted Third Parties at the time of termination of this Agreement (and such Permitted Third Parties may continue to retain Permitted Third-Party Fees and Permitted Third-Party Costs with respect to such Accounts) so long as all Collections generated from such collection activities of such Permitted Third Parties continue to be timely deposited into the Remittance Account as required by the terms of Section 2.9. Upon any removal of the Servicer, the Servicer shall join in, and the Servicer shall use reasonable efforts to require, by enforcement of the applicable contract of placement or engagement, each subservicer to join in, any written notice to affected Obligors of the transfer of the servicing to such replacement servicer.
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Section 6.4 Indemnity by the Servicer. The Servicer agrees to indemnify, defend and hold harmless the
Borrower and the Lender (each an “Indemnitee”) from and against any and all claims, losses, liabilities, damages,
penalties, fines, forfeitures, legal and accounting fees and all other fees or costs of any kind, judgments or
expenses resulting from or arising out of any claims, actions or proceedings brought against an Indemnitee by any
third party as a result of or based upon actions or inactions by the Servicer in the performance of its
obligations under this Agreement (unless such action or inaction is not required by this Agreement and was
undertaken at the express written direction of such Indemnitee), including any failure by the Servicer, any
subservicer or any of their agents, representatives or employees to comply with all applicable debt collection
laws, rules and regulations and any other action taken in collection of the Assets. If any investigative,
judicial or administrative proceeding arising from any of the foregoing is brought against the Borrower or the
Lender, upon request of such party, the Servicer, or counsel designated by the Servicer and reasonably
satisfactory to the Indemnitee, will resist and defend such action, suit or proceeding to the extent and in a
manner reasonably directed by the Indemnitee, at the Servicer's sole cost and expense. Each Indemnitee will use
its best efforts to cooperate in the defense of any such action, suit or proceeding.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Severability Clause. Any part, provision, representation or warranty of this Agreement which
is prohibited or which is held to be void or unenforceable shall be ineffective to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof. Any part, provision, representation or
warranty of this Agreement which is prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereto waive any provision of law which prohibits or renders void or
unenforceable any provision hereof. If the invalidity of any part, provision, representation or warranty of this
Agreement shall deprive any party of the economic benefit intended to be conferred by this Agreement, the parties
shall negotiate in good faith to develop a structure the economic effect of which is as nearly as possible the
same as the economic effect of this Agreement without regard to such invalidity.
Section 7.2 Notices. Any notices, consents, directions, demands or other communications given under this
Agreement (unless otherwise specified herein) shall be in writing and shall be deemed to have been duly given
when delivered in person or by overnight delivery at, or telecopied to, the respective addresses or telecopy
numbers, as the case may be, set forth below (or to such other address or telecopy numbers as either party shall
give notice to the other party pursuant to this Section 7.2); provided, however, any notice of a Termination
Event given by Lender to Servicer shall be delivered either in person or by overnight mail:
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If to the Borrower:
Midland Funding NCC-1 Corporation
0000 Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Servicer:
Midland Credit Management, Inc.
0000 Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to the Lender:
Patriot Capital Markets, LLC
00 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Any such demand, notice or communication hereunder shall be deemed to have been duly given when received by the
other party or parties at the addresses described above, or such other address as may hereafter be furnished to
the other party or parties by like notice and shall be deemed to have been received on the date delivered to or
received at the premises of the addresses.
Section 7.3 Costs and Expenses. The Servicer agrees that neither the Borrower nor the Lender shall be
liable for any costs, expenses or disbursements which may be incurred or made in connection with servicing of any
Portfolios, or any action which may be taken by the Servicer to collect such costs, expenses or disbursements.
All legal costs and expenses incurred by the Lender in connection with the preparation, execution and delivery of
this Agreement and the other documents to be delivered hereunder, shall be Initial Transactional Expenses. The
Servicer shall pay all Post-Closing Transactional Expenses within thirty (30) days following the presentation of
invoices for the same.
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Section 7.4 Assignment. The obligations of the Servicer under this Agreement shall not be assigned without the prior written consent of the Lender. Section 7.5 Counterparts. For the purpose of facilitating the execution of this Agreement and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed to be an original, and together shall constitute and be one and the same instrument. Section 7.6 Governing Law; Jurisdiction; Waiver of Jury Trial. (a) Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. (b) Jurisdiction. The Servicer and the Borrower hereby irrevocably submit to the non-exclusive jurisdiction of any federal court sitting in New York, New York in any action or proceeding arising out of or relating to this Agreement, and the Servicer and the Borrower hereby irrevocably agree that all claims in respect of such action or proceeding may be heard and determined in such federal court. The Servicer and the Borrower hereby irrevocably waive, to the fullest extent they may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding and irrevocably consent to the service of any summons and complaint and any other process by the mailing of copies of such process to them at the addresses specified in Section 7.2. To the extent permitted by applicable law, and without limiting any right to appeal, the Servicer and the Borrower hereby agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Section 7.6 shall affect the right of any party to serve legal process in any other manner (or in any other jurisdiction) permitted by law or affect the right of any party to bring any action or proceeding under this Agreement in the courts of other jurisdictions. (c) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY AGREEMENT OR ANY INSTRUMENT OR DOCUMENT DELIVERED THEREUNDER. Section 7.7 Amendments. This Agreement may be amended from time to time by a written instrument signed by the Servicer, the Borrower and the Lender and no waiver of any of the terms hereof by any party shall be effective unless it is in writing and signed by the other parties. Section 7.8 Integration. The Servicing Agreement and the Loan Agreement together comprise the final and complete integration of all prior expressions by the parties hereto with respect to the subject matter hereof and shall constitute the entire agreement among the parties hereto with respect to such subject matter, superseding all prior oral or written understandings. Section 7.9 Agreement Effectiveness. This Agreement shall become effective upon delivery of fully executed counterparts hereof to each of the parties hereto.
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Section 7.10 Headings Descriptive. The headings of the sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. Section 7.11 Advice from Independent Counsel. The parties hereto understand that this Agreement is a legally binding agreement that may affect such party's rights. Each party hereto represents to the other that it has received legal advice from counsel of its choice regarding the meaning and legal significance of this Agreement and that it is satisfied with its legal counsel and the advice received from it. Section 7.12 Judicial Interpretation. Should any provision of this Agreement require judicial interpretation, it is agreed that a court interpreting or construing the same shall not apply a presumption that the terms hereof shall be more strictly construed against any person by reason of the rule of construction that a document is to be construed more strictly against the person who itself or through its agent prepared the same, it being agreed that all parties hereto have participated in the preparation of this Agreement. Section 7.13 Term. This Agreement shall terminate upon the satisfaction of all amounts due and payable under the Loan Agreement, unless earlier terminated pursuant to Article VI. Section 7.14 Confidentiality. (a) The Borrower, the Servicer and the Lender agree that the terms of the transaction set forth in this Agreement and the Loan Documents, along with all information regarding the Portfolios in connection with the loan approval process and all confidential, proprietary and non-public information regarding Encore Capital Group, the Servicer, the Borrower and their respective subsidiaries and affiliates and their business operations, procedures, methods and plans (together with all notes, analysis, compilations, studies and other documents, whether prepared by the Borrower, the Lender, Encore Capital Group, the Servicer and their respective subsidiaries and affiliates, or others, which contain or otherwise reflect such information (collectively, the “Confidential Information”) shall be considered confidential. Therefore, the Borrower, the Servicer and the Lender agree not to disclose any Confidential Information to any Person, except for affiliates of the Borrower or the Lender, as the case may be, nor provide copies of the Loan Documents, or earlier drafts of such Loan Documents, to any person, except for affiliates of the Borrower or the Lender, provided, however, that the Borrower, the Servicer and the Lender may disclose any such Confidential Information (i) to any party contemplated in this Agreement for purposes contemplated hereunder (including to any permitted assignee of any such parties' rights) provided that such party shall be informed of the confidential nature of the Confidential Information and shall agree to maintain its confidentiality in accordance with this Section 7.14; (ii) to the directors, employees, auditors, current or prospective investors, counsel or affiliates of the Lender, the Servicer or the Borrower, each of whom shall be informed of the confidential nature of the Confidential Information; (iii) as may be required by any municipal, state, federal or other regulatory body having or claiming to have jurisdiction over such party; (iv) in order to comply with any law, order, regulation, regulatory request or ruling applicable to such party; or (v) in the event any such party is legally compelled (by interrogatories, requests for information or copies, subpoena, civil investigative demand or similar process) to disclose any such Confidential Information. This Section 7.14 shall be inoperative as to those portions of the Confidential Information which are or become generally available to the public or to the Lender on a non-confidential basis from a source other than the Borrower or the Servicer or were known to the Lender on a non-confidential basis prior to its disclosure by the Borrower or the Servicer. The foregoing restrictions shall not prohibit the use of template documents in the form of the Loan Documents provided that all financial or economic terms, exhibits, appendices, schedules and identifying information with respect to the Parties have been redacted therefrom.
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(b) Notwithstanding anything herein to the contrary, each party hereto may disclose to any and all persons,
without limitation of any kind, the tax treatment and tax structure of the transaction contemplated by this
Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to such
party or such person relating to such tax treatment and tax structure. This authorization is not intended to
permit disclosure of any other information including terms or details not relevant to the tax treatment or the
tax structure of this transaction or the transactions designated by the Loan Documents.
[Signature page follows]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed by their respective
authorized officers as of the day and year first above written.
PATRIOT CAPITAL MARKETS, LLC
By: /s/ Xxxxxxx X. Xxxxxx, Xx.
Its: Chief Investment Officer
MIDLAND FUNDING NCC-1 CORPORATION
By: /s/ Xxxx X. Xxxxxxx, III
Its: President
MIDLAND CREDIT MANAGEMENT, INC.
By: /s/ Xxxx X. Xxxxxxx, III
Its: President & CEO