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THIS EXHIBIT CONTAINS CONFIDENTIAL INFORMATION WHICH HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A
CONFIDENTIAL TREATMENT REQUEST UNDER RULE 406 OF THE SECURITIES ACT OF 1933, AS
AMENDED. THE CONFIDENTIAL INFORMATION ON PAGES 8 AND 9 HAS BEEN REPLACED
WITH ASTERISKS.
EXHIBIT 10.5
RECEIVABLES CONTRIBUTION AGREEMENT
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MIDLAND CREDIT MANAGEMENT, INC.
(SELLER)
MIDLAND FUNDING 98-A CORPORATION
(ISSUER)
DATED AS OF MARCH 31, 1999
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MIDLAND CREDIT MANAGEMENT RECEIVABLES-BACKED VARIABLE FUNDING NOTE, SERIES
1999-A
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RECEIVABLES CONTRIBUTION AGREEMENT
This RECEIVABLES CONTRIBUTION AGREEMENT (this "Agreement") is made as
of March 31, 1999, by and among MIDLAND CREDIT MANAGEMENT, INC., a Kansas
corporation (the "Seller"), and MIDLAND FUNDING 98-A CORPORATION, a Delaware
Corporation (the "Issuer").
W I T N E S S E T H:
WHEREAS, the Issuer is a limited purpose finance subsidiary of the
Seller;
WHEREAS, the Issuer, Midland Credit Management, Inc., as servicer (the
"Servicer"), Norwest Bank Minnesota, National Association, as trustee (the
"Trustee") and Asset Guaranty Insurance Company as Note Insurer ("Note Insurer")
propose to enter into an Indenture and Servicing Agreement (the "Indenture and
Servicing Agreement") dated as of March 31, 1999 pursuant to which the Midland
Credit Management Receivables-Backed Variable Funding Notes, Series 1999-A (the
"Notes") will be issued;
WHEREAS, the Notes to be issued by the Issuer pursuant to the Indenture
and Servicing Agreement will be collateralized by certain Receivables and
related property and certain monies in respect thereof now owned and to be
hereafter acquired by the Issuer; and
WHEREAS, as of the date hereof, the Seller is the sole stockholder of
the Issuer and, in consideration of the transfer to the Seller of the
Receivables and related property, both now owned and hereafter acquired by the
Seller, upon the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
SECTION 1. DEFINITIONS. This Agreement is entered into in connection with the
terms and conditions of the Indenture and Servicing Agreement, and each of the
terms and conditions of the Indenture and Servicing Agreement are hereby
incorporated by reference. Any capitalized term used herein and not otherwise
defined herein shall have the meaning given to it in the Indenture and Servicing
Agreement.
SECTION 2. TRANSFER AND ASSIGNMENT OF RECEIVABLES.
(a) The Seller, from time to time hereafter, shall transfer to the Issuer
and the Issuer shall acquire from the Seller additional Receivables pursuant to
a Schedule of Receivables substantially in the form of Exhibit A hereto and
shall be executed by the Issuer and the Seller. Upon such execution, the
Consumer Accounts described therein shall become "Receivables" and a portion of
the Contributed Assets (as defined in Section 2(b)) under this Agreement and a
part of the Trust Estate under the Indenture and Servicing Agreement, together
with all of the additional property and interests in property
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described in Section 2(b). Each Schedule of Receivables is incorporated by this
reference into this Agreement and the Indenture and Servicing Agreement.
(b) Subject to the terms and conditions contained herein, the Seller hereby
assigns and transfers to the Issuer, and the Issuer hereby accepts, all of the
Seller's right, title and interest in, to and under the following described
property and interests in property (the "Contributed Assets"):
(i) the Receivables identified on each Schedule of Receivables
hereafter entered into between the Seller and the Issuer, delivered by
the Seller to the Issuer and Trustee in connection with each Funding
Date, and all monies due thereon or paid thereunder or in respect
thereof (including fees and charges paid by Obligors) on and after the
Funding Date related to such Schedule of Receivables;
(ii) all right, title and interest of the Seller in, to and
under each Asset Sale Agreement, and all related documents, instruments
and agreements pursuant to which the Seller acquired, or acquired an
interest in, any of the Receivables from an Originating Institution;
(iii) all books, records and documents relating to the
Receivables in any medium including without limitation paper, tapes,
disks and other electronic media; and
(iv) all proceeds, products, rents and profits of any of the
foregoing and all other amounts payable in respect of the foregoing,
including, without limitation, proceeds of insurance policies insuring
any of the foregoing or any indemnity or warranty payable by reason of
loss or damage to or otherwise in respect of any of the foregoing.
(c) In consideration of the transfer and conveyance of the Contributed
Assets by the Seller to the Issuer, the Issuer shall on each Funding Date pay to
the Seller an amount equal to the Purchase Price.
(d) It is the intention of the Seller that the transfer and assignment
contemplated by this Agreement shall constitute an absolute sale of the
Contributed Assets from the Seller to the Issuer and that the Contributed Assets
shall not be part of the Seller's estate in the event of the filing of a
bankruptcy petition by or against the Seller under any bankruptcy law. The
Seller agrees to execute and file all filings (including filings under the UCC)
necessary in any jurisdiction to provide third parties with notice of the sale
of the Contributed Assets pursuant to this Agreement and to perfect such sale
under the UCC.
(e) Although the parties hereto intend that the transfer and assignment
contemplated by this Agreement be a sale, in the event such transfer and
assignment is deemed to be other than a sale, the parties intend that (i) all
filings described in the foregoing paragraph shall give the Issuer a first
priority perfected security interest in, to
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and under the Contributed Assets, and other property conveyed hereunder and all
proceeds of any of the foregoing and (ii) this Agreement shall be deemed to be
the grant of a security interest from the Seller to the Issuer in the
Contributed Assets and the Issuer shall have all rights, powers and privileges
of a secured party under the UCC. In furtherance of the foregoing intent, the
Seller hereby grants to the Issuer a security interest in the Contributed Assets
to secure the obligations of the Seller to the Issuer under all Transaction
Documents.
(f) In connection with the foregoing conveyance, the Seller shall ensure
that, from and after the time of sale of the Receivables to the Issuer under
this Agreement, the master computer records (including any back-up archives)
maintained by or on behalf of the Seller that refer to any Receivable indicate
clearly the interest of the Issuer in such Receivable and that the Receivable is
owned by the Issuer. Indication of the Issuer's ownership of a Receivable shall
be deleted from or modified on such computer records when, and only when, the
Receivable has been paid in full, repurchased or assigned by the Issuer.
(g) The Seller agrees that all Contributed Assets transferred, assigned and
delivered to the Issuer hereunder shall comply with all the representations and
warranties set forth in this Agreement and all other Transaction Documents.
(h) As of each Funding Date, the Seller and the Issuer shall execute a
Schedule of Receivables, which shall subject the Receivables described therein
and any related Contributed Assets to the provisions hereof and the other
Transaction Documents as of such Funding Date.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER.
The Seller hereby makes the following representations and warranties on
which the Issuer is relying in accepting the Receivables and executing this
Agreement. Except to the extent otherwise specifically provided in clause (x),
the representations shall speak as of the execution and delivery of this
Agreement, and as of each Funding Date. Such representations and warranties
shall survive the transfer, assignment and conveyance of any Receivables to the
Issuer and are as follows:
(a) Organization and Good Standing. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Kansas with corporate power and authority to own its properties and to conduct
its business as such properties shall be currently owned and such business is
presently conducted, and had at all relevant times, and shall now have, power,
authority and legal right to acquire, own, hold, transfer, assign and convey the
Receivables.
(b) Due Qualification. The Seller is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business shall require such qualifications, licenses or
approvals and as to which the failure to obtain such licenses or approvals would
have a material and adverse impact upon the value or collectability of the
Receivables.
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(c) Power and Authority. The Seller has all requisite corporate power and
authority to own the Receivables, to execute and deliver this Agreement and any
and all other instruments and documents necessary to consummate the transactions
contemplated hereby (the "Seller's Related Documents") and to perform each of
its obligations under this Agreement and under the Seller's Related Documents,
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and each of the Seller's Related
Documents by the Seller, the performance by the Seller of its obligations
hereunder and thereunder, and the consummation of the transactions contemplated
hereby and thereby have each been duly authorized by the Board of Directors of
the Seller and no further corporate actions are required to be taken by the
Seller in connection therewith.
(d) Valid Transfer; Binding Obligation. Upon the execution and delivery of
this Agreement and each Schedule of Receivables by each of the parties hereto,
this Agreement shall evidence a valid transfer, assignment and conveyance of the
Receivables, which is enforceable against creditors of and purchasers from the
Seller, and will constitute the legal, valid and binding obligation of the
Seller, enforceable against the Seller in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency or similar laws and
by equitable principles.
(e) No Violation. Neither the execution, delivery and performance of this
Agreement by the Seller nor the consummation by the Seller of the transactions
contemplated hereby nor the fulfillment of or compliance with the terms and
conditions of this Agreement (i) materially conflicts with or results in a
material breach of any terms, conditions or provisions of the articles of
incorporation or bylaws of the Seller or any indenture, agreement or other
instrument to which the Seller or any of its subsidiaries is a party or by which
it is bound, (ii) constitutes a material default (whether with notice or lapse
of time or both), or results in the creation or imposition of any material lien,
charge or encumbrance upon any of the property or assets of the Seller, under
the terms of any of the foregoing or (iii) violates any statute, ordinance or
law or any rule, regulation, order, writ, injunction or decree of any court or
of any public, governmental or regulatory body, agency or authority applicable
to the Seller.
(f) Litigation; Judicial Proceedings. There are no judicial or
administrative actions, proceedings or investigations pending or, to the
Seller's knowledge, threatened by or against the Seller with respect to the
transactions contemplated hereby, at law or in equity or before or by any
federal, state, municipal, foreign or other governmental department, commission,
board, agency, instrumentality or authority.
(g) All Consents Obtained. All approvals, authorizations, consents, orders
or other actions of any persons or of any governmental body or official required
in connection with the execution and delivery by the Seller of this Agreement
and the Transaction Documents to which the Seller is a party, the performance by
the Seller of the transactions contemplated by this Agreement and the
fulfillment by the Seller of the terms hereof and thereof, have been obtained.
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(h) Not an Investment Company. The Seller is not an "investment company" or
a company "controlled" by an "investment company" within the meaning of the
Investment Company Act, and none of the execution, delivery or performance of
obligations under this Agreement or any of the Seller's Related Documents, or
the consummation of any of the transactions contemplated thereby (including,
without limitation, the contribution of the Contributed Assets hereunder) will
violate any provision of the Investment Company Act, or any rule, regulation or
order issued by the Securities and Exchange Commission thereunder.
(i) All Tax Returns True, Correct and Timely Filed. All material tax
returns required to be filed by the Seller in any jurisdiction have in fact been
filed and all taxes, assessments, fees and other governmental charges upon the
Seller or upon any of its properties, income or franchises shown to be due and
payable on such returns have been paid. To the best of the Seller's knowledge
all such tax returns were true and correct in all material respects and the
Seller knows of no proposed material additional tax assessment against it nor of
any basis therefor. The provisions for taxes on the books of the Seller and each
subsidiary are in accordance with generally accepted accounting principles.
(j) No Restrictions on Seller Affecting Its Business. The Seller is not a
party to any contract or agreement, or subject to any charter or other corporate
restriction which materially and adversely affects its business.
(k) Perfection of Security Interest. All filings and recordings as may be
necessary to perfect the interest of the Issuer in the Receivables have been
accomplished and are in full force and effect. The Seller will from time to
time, at its own expense, execute and file such additional financing statements
(including continuation statements) as may be necessary to ensure that at any
time, the interest of the Issuer in all of the Receivables is fully protected.
(l) All Taxes, Fees and Charges Relating to Transaction and Transaction
Documents Paid. Any taxes, fees and other governmental charges in connection
with the execution and delivery of the Agreement and the transactions
contemplated hereby have been or will be paid by the Seller at or prior to the
Closing Date.
(m) Standard & Poor's Ratings Services. The information supplied by the
Seller to Standard & Poor's Ratings Services in connection with obtaining a
rating for the Notes did not contain any untrue statement of a material fact or
omit to state any material fact required to be stated in order to make such
information not misleading.
(n) No Broker, Finder or Financial Adviser Other Than Rothschild. Neither
the Seller nor any of its officers, directors, employees or agents has employed
any broker, finder or financial adviser other than Rothschild Inc. or incurred
any liability for fees or commissions to any person other than Rothschild Inc.
in connection with the offering, issuance or sale of the Notes.
(o) Location of Chief Executive Office and Records. The principal place of
business and chief executive office of the Seller, and the office where the
Seller
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maintains all of its records, is located at 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxx 00000; provided that, at any time after the Closing Date, upon 30 days'
prior written notice to each of the Issuer, the Note Insurer and the Trustee,
the Seller may relocate its principal place of business and chief executive
office, and/or the office where it maintains all of its records, to another
location within the United States to the extent that the Seller shall have taken
all actions necessary or reasonably requested by the Issuer, the Trustee or the
Note Insurer to amend its existing financing statements and continuation
statements, and file additional financing statements and to take any other steps
reasonably requested by the Issuer, the Trustee or the Note Insurer to further
perfect or evidence the rights, claims or security interests of any of the
Issuer or any assignee or beneficiary of the Issuer's rights under this
Agreement, including the Trustee or the Note Insurer under any of the
Transaction Documents.
(p) Ownership of the Issuer. One hundred percent (100%) of the stock of the
Issuer is directly owned (both beneficially and of record) by the Seller. Such
shares of stock are validly issued, fully paid and nonassessable and no one
other than the Seller has any rights to acquire stock of the Issuer.
(q) Solvency. The Seller, both prior to and after giving effect to each
contribution of Receivables identified in a Schedule of Receivables on the
Closing Date (or on any Funding Date thereafter, as the case may be) (i) is not
"insolvent" (as such term is defined in Section 101(32)(A) of the Bankruptcy
Code), (ii) is able to pay its debts as they become due, and (iii) does not have
unreasonably small capital for the business in which it is engaged or for any
business or transaction in which it is about to engage.
(r) Reporting and Accounting Treatment. For reporting and accounting
purposes, and in its books of account and records, the Seller will treat the
sale of Receivables pursuant to this Agreement as an absolute assignment of the
Seller's full right, title and ownership interest in each such Receivable and
the Seller has not in any other manner accounted for or treated the
transactions.
(s) Receivables.
(i) Each Receivable is payable in United States dollars and
has been purchased by the Seller from the related Originating
Institution under an Asset Sale Agreement between the Seller and the
applicable Originating Institution, in accordance with the Customary
Procedures of the Seller. Each such Originating Institution is the
Person that made the original extension of credit, or, if such
Originating Institution did not make such original extension of credit,
no more than $200,000 in aggregate Purchase Price of Receivables have
been purchased from such Person and subsequently transferred, assigned
and conveyed by the Seller to the Issuer pursuant to this Agreement. No
more than $1,000,000 in aggregate Purchase Price of Receivables from
all Persons that did not make such original extensions of credit have
been transferred, assigned and conveyed by the Seller to the Issuer
pursuant to this Agreement.
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(ii) The information set forth in any Schedule of Receivables
shall be true and correct in all material respects as of the Funding
Date and in the event the Seller owns Consumer Accounts other than the
Receivables, no selection procedures adverse to the Issuer shall have
been utilized in selecting the Receivables from the Consumer Accounts
of the Seller.
(iii) None of the Receivables shall be due from the United
States or any state or local government, or from any agency, department
or instrumentality of the United States or any state or local
government.
(iv) None of the Receivables shall be due from any employee of
the Seller or any of its affiliates, or predecessors.
(v) It is the intention of the Seller that the transfer and
assignment herein contemplated, taken as a whole, constitute a sale of
the Receivables from the Seller to the Issuer and that the Receivables
shall not be part of the Seller's estate in the event of the filing of
a bankruptcy petition by or against the Seller under any bankruptcy
law. No Receivable has been sold, transferred, assigned or pledged by
the Seller to any Person other than the Issuer. Immediately prior to
the transfer and assignment herein contemplated, the Seller had good
and marketable title to each Receivable, free and clear of all Liens
and rights of others; immediately upon the transfer and assignment
thereof, the Issuer shall have good and marketable title to each
Receivable, free and clear of all Liens and rights of others; and the
transfer and assignment herein contemplated has been perfected under
the UCC.
(vi) As of the Funding Date with respect to the Receivables
transferred on such Funding Date, the Seller has not taken any action
that, or failed to take any action the omission of which, would
materially impair the rights of the Issuer with respect to any
Receivable.
(vii) As of the Funding Date with respect to the Receivables
transferred on such Funding Date, no Receivable has been identified by
the Seller or reported to the Seller by the related Originating
Institution as having resulted from fraud perpetrated by the Obligor
with respect to the related account.
(viii) All filings (including UCC filings) necessary in any
jurisdiction to provide third parties with notice of the transfer and
assignment herein contemplated, to perfect the transfer of the
Receivables hereunder and to give the Issuer a first priority security
interest in the Receivables that is prior to any other interest held by
any other person (except the Trustee on behalf of the Noteholders)
shall have been made.
(ix) No Receivable is secured by "real property" or "fixtures"
or evidenced by an "instrument" under and as defined in the UCC.
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*Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
(x) As of the Funding Date, with respect to the Receivables
transferred on such Funding Date, each Receivable File is kept at the
location identified for such purpose in the Indenture and Servicing
Agreement.
(xi) Each Receivable is part of a Pool which satisfies each of
the requirements set forth in the subsection 3(t) hereof, provided that
such Pools are aggregated with all other Pools to the extent set forth
therein.
(xii) Each Receivable has been serviced by the Seller in
accordance with the Customary Procedures from the date each such
Receivable was purchased by the Seller.
(t) Pools and Concentration Limits.
(i) Each Pool has been acquired by the Seller within [*] prior
to the Funding Date, or with respect to Pools contributed to the Issuer
on the first Funding Date, such longer period as may be acceptable to
the Note Insurer.
(ii) Since the acquisition of each such Pool by the Seller,
there have been no sales of Receivables from such Pool other than arm's
length sales of randomly selected Receivables to third parties who are
not Affiliates of the Seller or the Servicer.
(iii) Each Pool consists solely of Receivables which comply
with the representations set forth in Section 3(s).
(iv) (A) Each Pool consists solely of Receivables originated
by a single Originator under a single Major Card or Other Card and (B)
the addition of the Receivables of any such Pool to the Receivables
then subject to this Agreement would not cause the Charged-Off Balances
of all Receivables acquired from any single Originator to exceed an
amount equal to 45% of the Charged-Off Balances of all Receivables
calculated as of the date each Pool was acquired by Seller.
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* Confidential information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment
request.
[*]
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Each of the foregoing representations and warranties may be waived with
the prior written consent of the Note Insurer and the Rating Agency. Each of the
representations and warranties set forth in clauses 3(t)(iv) through (xi)
applies only with respect to the additional contribution of Receivables to the
Issuer which occurs more than sixty (60) days after the Closing Date (or, in the
case of paragraph (iv)(B) of this subsection, ninety (90) days), and after the
occurrence of any Prepayment Date, which occurs more than sixty (60) days after
such Prepayment Date.
SECTION 4. REACQUISITION OF RECEIVABLES UPON BREACH.
If, as a result of a breach of any of the representations and
warranties made by the Seller to the Issuer hereunder, the Issuer breaches
similar representations and warranties made by it under the Indenture and
Servicing Agreement and thereby becomes obligated under the Indenture and
Servicing Agreement to make a repayment in respect of any Receivables under
Section 2.05 or 7.02 or to substitute Receivables under Section 2.05, in
addition to any other rights or remedies that the Issuer may have against the
Seller as a result of such breach, the Seller shall be obligated to (i) accept a
retransfer of such Receivables from the Issuer for an amount equal to the amount
the Issuer is required to deposit under the Indenture and Servicing Agreement in
connection with such retransfer or (ii) accept retransfer of any such Receivable
in exchange for the sale, transfer and conveyance hereunder, pursuant to a
Schedule of Receivables, of Receivables of equal or greater value from the
Originating Institution (the "Substitute Receivables") of the affected
Receivables, if and to the extent that the Seller has the right to demand, or is
obligated to accept such substitution, pursuant to the terms of the applicable
Asset Sale Agreement.
SECTION 5. TERMINATION.
This Agreement (a) may not be terminated prior to the termination of
the Indenture and Servicing Agreement and (b) may be terminated at any time
thereafter by either party upon written notice to the other party.
SECTION 6. GENERAL COVENANTS OF SELLER.
The Seller covenants and agrees that from the Closing Date until the
termination of the Indenture and Servicing Agreement:
(a) No Change in Name or Chief Executive Office or Location of Records. The
Seller covenants that it shall not change its name, and shall maintain its
principal place of business and chief executive office, and the office where it
maintains all of its records, at 000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxx
00000; provided that, at any time after the Closing Date, upon 30 days' prior
written notice to each of the Issuer, the Note Insurer and the Trustee, the
Seller may change its name and/or relocate its principal place of business and
chief executive office, and/or the office where it maintains all of its records,
to another location within the United States to the extent that the Seller shall
have taken all actions necessary or reasonably requested by the Issuer, the
Trustee or the Note Insurer to amend its existing financing statements and
continuation statements, and file additional financing statements and to take
any other steps reasonably requested by the Issuer, the Trustee or the Note
Insurer to further perfect or evidence the rights, claims
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or security interests of any of the Issuer or any assignee or beneficiary of the
Issuer's rights under the Agreement including the Trustee or the Note Insurer
under any of the Transaction Documents.
(b) Separate Identity. The Seller hereby covenants and agrees to take all
actions required to maintain the Issuer's status as a separate legal entity.
Without limiting the foregoing, the Seller shall:
(i) cause the Issuer to conduct all of its business, and make
all communications to third parties (including all invoices (if any),
letters, checks and other instruments) solely in its own name (and not
as a division of any other Person), and require that its employees, if
any, when conducting its business identify themselves as employees of
the Issuer (including, without limitation, by means of providing
appropriate employees with business or identification cards identifying
such employees as the Issuer's employees):
(ii) cause the Issuer to compensate all employees, consultants
and agents directly or indirectly through reimbursement of the Seller,
from the Issuer's bank accounts, for services provided to the Issuer by
such employees, consultants and agents and, to the extent any employee,
consultant or agent of the Issuer is also an employee, consultant or
agent of the Seller, allocate the compensation of such employee,
consultant or agent between the Issuer and the Seller on a basis which
reflects the respective services rendered to the Issuer and the Seller;
(iii) cause the Issuer to (A) pay its own incidental
administrative costs and expenses from its own funds and (B) allocate
all other shared overhead expenses (including, without limitation,
telephone and other utility charges, the services of shared employees,
consultants and agents, and reasonable legal and auditing expenses)
which are not reflected in the Servicing Fee, and other items of cost
and expense shared between the Issuer and the Seller, on the basis of
actual use to the extent practicable, and to the extent such allocation
is not practicable, on a basis reasonably related to actual use or the
value of services rendered;
(iv) cause the Issuer to at all times have at least two
independent directors, as provided in the Issuer's Certificate of
Incorporation;
(v) cause the Issuer to maintain its books and records
separate from those of any Affiliate;
(vi) cause the Issuer to prepare its financial statements
separately from those of its Affiliates and ensure that any
consolidated financial statements have notes to the effect that the
Issuer is a separate entity whose creditors have a claim on its assets
prior to those assets becoming available to its equity holders and
therefore to any creditors, as the case may be;
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(vii) cause the Issuer to not commingle its funds or other
assets with those of any of its Affiliates (other than in respect of
items of payment or funds which may be commingled until deposit into
the Collection Account in accordance with the Indenture and Servicing
Agreement), and not to hold its assets in any manner that would create
an appearance that such assets belong to any such Affiliate, not
maintain bank accounts or other depository accounts to which any such
Affiliate is an account party, into which any such Affiliate makes
deposits or from which any such Affiliate has the power to make
withdrawals, and not act as an agent or representative of any of its
Affiliates in any capacity;
(viii) not permit any of its Affiliates to pay the Issuer's
operating expenses;
(ix) not permit the Issuer to guarantee any obligation of any
of its Affiliates, have any of its obligations guaranteed by any such
Affiliate (either directly or by seeking credit based on the assets of
such Affiliate), or otherwise hold itself out as responsible for the
debts of any Affiliate;
(x) cause the Issuer to maintain at all times stationery
separate from that of any Affiliate and have all its officers and
employees conduct all of its business solely in its own name;
(xi) hold regular meetings of its Board of Directors in
accordance with the provisions of its Certificate of Incorporation and
bylaws and otherwise take such actions as are necessary on its part to
ensure that all corporate procedures required by its Certificate of
Incorporation and bylaws are duly and validly taken;
(xii) cause the Issuer to respond to any inquires with respect
to ownership of a Receivable by stating that it is the owner of such
contributed Receivable, and, if requested to do so, that the Trustee
has been granted a security interest in such Receivable; and
(xiii) cause the Issuer to take such other actions as are
necessary on its part to ensure that the facts and assumptions set
forth in the non-consolidation opinion delivered by the Issuer's
counsel remain true and correct at all times.
(c) No Liens, Etc. Against Receivables and Trust Property. The Seller
hereby covenants and agrees not to create or suffer to exist (by operation of
law or otherwise), any Lien upon or with respect to, any Receivables or the
Trust Estate, or any interest in either thereof, or upon or with respect to any
Account, or assign any right to receive income in respect thereof, except for
the Lien created by the Indenture and Servicing Agreement. The Seller shall
immediately notify the Trustee of the existence of any Lien on any Receivables
or the Trust Estate, and the Seller shall defend the right, title and interest
of each of the Issuer and the Trustee in, to and under the Receivables and Trust
Estate, against all claims of third parties.
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SECTION 7. MISCELLANEOUS.
(a) This Agreement may not be amended except by an instrument in writing
signed by the Seller and the Issuer. In addition, so long as the Notes are
outstanding, this Agreement may not be amended without the prior written consent
of (i) Noteholders holding a majority of the outstanding principal on the Notes
unless the Seller and the Issuer deliver to the Trustee written evidence from
the Rating Agency that such Rating Agency has reviewed such proposed amendment
and that the amendment of this Agreement will not result in a reduction or
withdrawal of its rating on the Notes and (ii) the Note Insurer.
(b) The covenants, agreements, rights and obligations contained in this
Agreement shall be binding upon the successors and assigns of the Seller and
shall inure to the benefit of the successors and assigns of the Issuer, and all
persons claiming by, through or under the Issuer.
(c) Any provision of this Agreement which is prohibited, unenforceable or
not authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability or
non-authorization without invalidating the remaining provisions hereof or
affecting the validity, enforceability or legality of such provision in any
other Jurisdiction.
(d) This Agreement shall be governed by and construed in accordance with
the laws of the State of Kansas.
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(e) This Agreement may be executed in several counterparts and all so
executed shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties have not signed the original or the same
counterpart. Any counterpart hereof signed by a party against whom enforcement
of this Agreement is sought shall be admissible into evidence as an original
hereof to prove the contents hereof.
(f) The Seller covenants and agrees that prior to the date which is one
year and one day after the termination of the Indenture and Servicing Agreement,
it will not institute against, or join any other Person in instituting against,
the Issuer any bankruptcy, reorganization arrangement, insolvency or liquidation
proceeding or other proceedings under any federal or state bankruptcy or similar
law. This Section 7(f) shall survive the termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Receivables Contribution
Agreement to be duly executed as of the date first above written.
MIDLAND CREDIT MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President
MIDLAND FUNDING 98-A CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
Title: Treasurer
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