Exhibit 10.4
[***] TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
SUPPLEMENT TO SERVICING AGREEMENT
(With Consent and Agreement)
This SUPPLEMENT TO SERVICING AGREEMENT “Supplement”) is entered into this 22nd day of May 2000, by and
among WEST CAPITAL FINANCIAL SERVICES CORP. (“West”), a California corporation, as servicer (as servicer, the
“Current Servicer”), WEST CAPITAL RECEIVABLES CORPORATION I, a California corporation (the “Borrower”), NORWEST
BANK MINNESOTA, NATIONAL ASSOCIATION, as collateral agent (the “Collateral Agent”), and MIDLAND CREDIT
MANAGEMENT, INC., a Kansas corporation (individually “MCM” or as the successor servicer, the “Servicer”).
RECITALS
A. The Current Servicer, the Borrower and the Collateral Agent are parties to that
certain Servicing Agreement, dated as of January 29, 1998 (the “Current Servicing Agreement”). Pursuant to the
Current Servicing Agreement, the Current Servicer services, on behalf of the Borrower and the Collateral Agent, a
pool of charged-off consumer accounts that are owned by the Borrower (the “Pool”). The Pool is pledged by the
Borrower to the Collateral Agent as security for the obligations of the Borrower pursuant to that certain Credit
Agreement, dated as of January 29, 1998, by and among the Borrower, Daiwa Finance Corporation (“Daiwa”), as the
lender (the “Lender”), and West, as the seller and the servicer (as amended, the “Credit Agreement”), and
pursuant to the Note (as defined below). Pursuant to the Credit Agreement, the Borrower issued a certain Note to
the Lender, dated January 29, 1998, in the original principal amount of Sixty Million Dollars ($60,000,000.00)
(the “Note”). The Lender has participated a portion of the Note to SunAmerica Inc., a Delaware Corporation
(“SunAmerica”), and may further participate the Note to third parties (SunAmerica, as such participant, and such
additional participants, collectively, the “Participants”). The Credit Agreement has been amended by that certain
First Amendment to Credit Agreement, dated June 28, 1999.
B. There are currently one or more Events of Default, as defined in, and pursuant to, the
Credit Agreement, and Servicer Termination Events, as defined in, and pursuant to, the Current Servicing
Agreement, which give the Collateral Agent on behalf of the Lender the current right to terminate the Current
Servicer as servicer under and pursuant to the Current Servicing Agreement. Additionally, the Current Servicer is
having liquidity difficulties and has advised the Lender that it likely will not be able to continue to service
the Pool.
X. Xxxx has agreed to sell its servicing platform and certain other assets to an
affiliate of MCM pursuant to that certain Asset Purchase Agreement, dated as of May 11, 2000, by and between
Midland Acquisition Corporation, a Delaware corporation, and West (the “Purchase Agreement”). MCM is willing to
assume the obligations as successor servicer to the Current Servicer, pursuant to the terms and conditions of
this Supplement. The Borrower, the Lender, the Collateral Agent and the Participants are willing to accept MCM as
the successor servicer.
NOW, THEREFORE, in consideration of the premises and the mutual promises herein made, and in
consideration of the representations, warranties and covenants contained herein, the parties agree as follows:
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[***] Omitted pursuant to a request for confidential treatment. The omitted material has been filed separately
with the Securities and Exchange Commission.
ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms shall have the meaning set forth in this Section 1.1.
Any capitalized term in this Supplement that is not defined in this Supplement shall have the meaning set forth
in the Current Servicing Agreement, either directly or by reference to another document or agreement.
“Additional Servicing Fee” means, for any Payment Date, a fee in the amount of [***%] of the
Servicing Fee Collections and the proceeds from the sale of Bankruptcy Receivables to the extent included in Net
Collections during the preceding Measurement Period; provided, that, the Additional Servicing Fee shall only be
payable on any Payment Date if (a) with respect to each Payment Date occurring in July, 2000 and August, 2000,
the Lender Net Collections for the immediately preceding Measurement Period exceed 100 percent (100%) of the
aggregate Projected Lender Net Collections for such Measurement Period, and (b) with respect to all Payment Dates
thereafter, both (A) the Lender Net Collections for the immediately-preceding Measurement Period were equal to or
exceeded 100 percent (100%) of the aggregate Projected Lender Net Collections for such Measurement Period, and
(B) the aggregate Lender Net Collections for the immediately preceding three (3) Measurement Periods exceed 100
percent (100%) of the aggregate Projected Lender Net Collections for such three (3) Measurement Periods; provided
that, if any sale of Designated Receivables occurs pursuant to Section 4.6 below during a Measurement Period, the
Projected Lender Net Collections for such shortened Measurement Period will be calculated on a per diem basis
based on the number of Business Days of such month.
“Advance Date” means each Friday or such other agreed-upon day of each week during which the
Servicer (or the Trustee by a sweep of the Lockbox Account) remits Net Collections to the Receivables Revenue
Account, provided, that, if any Friday or other agreed- upon day is not a Business Day, then the Advance Day
shall be the first Business Day occurring thereafter.
“Applicable Hourly Rate” means the hourly rate of the officers and employees of the Servicer as
set forth on Exhibit A.
“Bankruptcy Receivable” means a Designated Receivable with respect to which the obligor is the
debtor in a bankruptcy proceeding.
“Base Servicing Fee” means for any Advance Date, an amount equal to the aggregate of (i) [***%]
of the Servicing Fee Collections, (ii) [***%] of the proceeds from the sale of Bankruptcy Receivables pursuant to
Section 4.5 that, in the aggregate, do not exceed $250,000 (or with the prior written consent of the Lender, such
greater amount in a month), and (iii) [***%] of all Third Party Collections received since the
immediately-preceding Advance Date, or, with respect to the first Advance Date, since the Effective Date;
provided, that the Base Servicing Fee payable with respect to Third Party Collections shall only be payable to
the extent such Third Party Collections (net of the amount of collection or contingency fee paid to or deducted
by any Person arising from Designated Receivables for which there is a collection or contingency fee that is
payable to any person other than the Servicer) that are deposited in the Receivable Revenue Account. The Base
Servicing Fee shall also include the reimbursements (as additional servicing fee) as provided for and pursuant to
the penultimate paragraph of Section 4.6 and Section 4.12.
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[***] Omitted pursuant to a request for confidential treatment. The omitted material has been filed separately
with the Securities and Exchange Commission.
“Collection Measurement Period” means, on any Payment Date, for purposes of Section 6.1(f), the
three (3) Measurement Periods immediately preceding the applicable Payment Date.
“Collection Policies” means the Servicer's written collection policies and procedures
applicable to the collection of the Designated Receivables, updated as of May 22, 2000, a certified copy of which
has been delivered to the Lender.
“Current Service” means West Capital Financial Services Corp., a California corporation.
“Current Servicer Liabilities” has the meaning given in Section 2.1.
“Current Servicing Agreement” means the Current Servicing Agreement without reference to this
Supplement.
“Effective Date” means May 22, 2000.
“Exhausted Receivable” means a Designated Receivable (or the obligor thereof) that fall into
one of the following groupings:
1. Expiration of the 7 year Federal Credit Bureau Reporting Period, no
payment activity and a bad address and/or phone.
2. Expiration of the legal statute for a particular state, no payment activity,
balance <$1,000, low credit bureau scores and a bad address and/or phone.
3. Chapter 7 Bankruptcy.
4. Death of all parties on the account and no verifiable estate.
5. Cease and Desist requests from customers that are out of the state legal statute or in
states where litigation is not prudent.
6. Balance <$300 that did not respond to a direct mail solicitation.
7. No calls, skip tracing, mailing or other efforts to collect for any period of seven
months from and after January 1, 2000.
“Existing Defaults” means the existing Events of Default and Servicer Termination Events as
defined in and pursuant to the Credit Agreement or Current Servicing Agreement respectively, or any other event,
occurrence or set of facts existing before or as of the Effective Date that could, or with the passage of time or
the giving of notice would, allow the Collateral Agent or the Lender to exercise any rights or remedies against
or with respect to the Designated Accounts, the Current Servicer or the Borrower as a result thereof.
“Expiration Date” means the earliest of (i) the end of the Servicing Term, (ii) the effective
date the Servicer is removed as the Servicer pursuant to the second sentence of Section 4. 1, as a result of a
Servicer Termination Event, or (iii) the Collateral Agent, at the direction of the Lender, delivers to the
Borrower and the Servicer a written notice of the
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Collateral Agent's election, at the direction of the Lender, to sell all, or substantially all, of the then
remaining Designated Receivables after and during the continuation of a Servicer Termination Event.
“Forbearance Period” means the period of time commencing on the Effective Date and ending on
the Expiration Date.
“Lender Net Collections” means, for any Payment Date, the amount of Net Collections received in
the immediately preceding Measurement Period less the amount of Base Servicing Fees and Additional Servicing Fees
paid in respect of such immediately preceding Measurement Period.
“Liguidity Event” means any of the following transactions occurring on or prior to the
Expiration Date (i) any transaction, sale, conveyance or transfer of any of the Designated Receivables, or any
interest directly or indirectly therein, other than the sale of Bankruptcy Receivables pursuant to Section 4.5 of
this Supplement or the sale by the Lender of Exhausted Receivables, whereby the Lender (or any Participant)
receives or has a right to receive, any cash proceeds or other monetary payment, or (ii) either (A) any
securitization of any of the Designated Receivables, or (B) any structured finance transaction that is secured by
any of the Designated Receivables and that receives not less than an investment grade rating from the Standard &
Poor’s Rating Services, Xxxxx’x Investor Services, Inc., Duff & Xxxxxx, Fitch IBCA, or any other
nationally-recognized rating agency.
“Measurement Period” means a calendar month.
“Net Collections” means the aggregate of (i) all monies (other than Third Party Collections)
deposited in the Receivables Revenue Account representing collected available funds, net of checks returned for
insufficient funds, received or otherwise recovered from or for the account of a Designated Receivable, other
than in connection with a sale thereof (the “Servicing Fee Collections''), and (ii) all Third Party Collections
(net of the amount of collection or contingency fee paid to or deducted by any Person arising from Designated
Receivables for which there is a collection or contingency fee that is payable to any person other than the
Servicer), but only to the extent such amounts are deposited in the Receivables Revenue Account, provided that,
proceeds from the sale of Bankruptcy Receivables pursuant to Section 4.5 that, in the aggregate, do not exceed
$250,000 (or with the prior written consent of the Lender, such greater in a month) in a month shall be included
as Net Collections.
“Payment Date” means the 20th day of each calendar month, commencing on June 20, 2000, provided
that if the 20th day of any calendar month is not a Business Day, then the Payment Date shall be the first
occurring Business Day thereafter.
“Protected Lender Net Collections” means for any Measurement Period the amount set forth for
such period in the column entitled “Projected Net Cash to Daiwa” in Exhibit B attached to this Supplement.
“Responsible Officer” means the president or the chief financial officer of the Servicer or any
officer or employee who has management responsibility with respect to the deposit or transfer of any Net
Collections of Designated Receivables.
“Servicer” means MCM, as the successor servicer.
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“Servicer Report” means a report of the Servicer in the form of Exhibit C hereto.
“Servicer Termination Event” has the meaning set forth in Article VI of this Supplement.
“Servicing Agreement” means from and after the Effective Date, the Current Servicing Agreement
as supplemented and amended by this Supplement.
“Servicing Term” means period of time commencing on the Effective Date and ending two years
thereafter, or, if earlier, the date on which the Servicer ceases to be the Servicer by termination without
cause, pursuant to the second sentence of Section 4.1 of this Supplement.
“Third Party Collections” means the gross collections, net of checks returned for insufficient
funds, on Designated Receivables for which there is a collection or contingent fee payable to any party other
than the Servicer, including without limitation National Attorney Network (NAN) or any third party collection
agency.
1.2 General. The words “herein,” “hereof,” “hereunder,” and other words of similar import
refer to this Supplement as a whole, including the Schedules and Exhibits hereto, as the same may from time to
time be amended or supplemented, and not to any particular section, subsection or clause contained in this
Supplement. References herein to an Exhibit, Schedule, Section, subsection or clause refer to the appropriate
Exhibit or Schedule to, or Section, subsection or clause in this Supplement. Wherever from the context it appears
appropriate, each term stated in either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the
neuter.
ARTICLE 11
TERMINATION OF CURRENT SERVICER; OTHER MATTERS
2.1 The Current Servicer is terminated as the “Servicer” effective on the Effective Date.
Neither such termination nor this Supplement, as to the Servicer, shall in any way reduce, or limit or release
the Current Servicer from, any of the duties, obligations, responsibilities, indemnities or liabilities arising
out of actions, omissions, events or facts that exist before or as of the Effective Date, whether provided by the
terms of the Current Servicing Agreement, or arising by operation of law or otherwise (the “Current Servicer
Liabilities”). The Current Servicer, at the Servicer's sole cost and expense, shall use commercially reasonable
efforts to cooperate with the Lender, the Collateral Agent and the Servicer with the orderly transition of the
servicing obligations and responsibilities from and after the Effective Date to the Servicer, including without
limitation the transfer to the Servicer for administration by it of all cash amounts that at the Effective Date
are held or should have been held for deposit, or shall thereafter be received with respect to a Designated
Receivable and the delivery to the Servicer of copies of all files and records concerning the Designated
Receivables. The Current Servicer shall not be required to maintain the current errors and omissions insurance
policy of the Current Servicer required pursuant to Section 2.01(g) of the Current Servicing Agreement. Nothing
in this Supplement or the Servicing Agreement is intended to or shall be read that the Servicer is in any way
assuming any of the Current Servicer Liabilities or any other obligation,
5
responsibility or liability for any acts or omissions (i) of the Current Servicer, or (ii) of any person or
events occurring prior to the Effective Date or on or after the Expiration Date.
2.2 Notwithstanding anything to the contrary contained herein, in the Credit Agreement or
any of the Program Documents, the parties hereto acknowledge that after the Effective Date, West, the Current
Servicer, intends to wind down its activities and shall not take any actions to collect the Pool. Accordingly,
the parties hereto agree (a) that from and after the Effective Date, the Current Servicer shall have no further
obligations under the Servicing Agreement, (b) that each of West and the Borrower (each of West and Borrower, in
any capacity, the “West Parties”) will have no liability to any of the parties hereto resulting from or arising
out of actions or omissions taken by any person (other than such West Party) from and after the Effective Date
and (c) that the Collateral Agent, the Servicer and the Lender covenant not to xxx any West Party for any such
action.
2.3 The parties hereto agree that the West Parties shall not be required to comply with or
perform under the covenants contained in (i) Sections 5.01(c)(second sentence only), 5.01(d)(provisions relating
compliance with Collection Policies and Procedures only), 5.01(e)(ii), 5.01(h), 5.01(i), 5.01(j), 5.01 (m) and
5.01(o) and Article 6 of the Credit Agreement (ii) Sections 5(d)(last sentence only, which shall be an obligation
of the Servicer), 5(e), 6.02(a)(clause (ii) of which shall be an obligation of the Servicer), 6.02(d),
6.03(second sentence only, which shall be an obligation of the Servicer) and 6.05(which investment direction
shall be provided by the Lender) of the Security Agreement and (iii) Sections 5.01(b)(second and third sentences
only), 5.01(c), 5.01(e), 5.01(f), 5.01(h), 5.01(i), 5.01(k), 6.01, 6.02, 6.03, 6.04, 6.05, 6.06 and 9.04 and
Article 8 of the Receivable Acquisition Agreement. Lender acknowledges that the principal place of business and
chief executive office of the West Parties shall be moved to the address set forth under the Borrowers signature
on this Supplement. Lender acknowledges that any action taken by Servicer is not an action taken by Borrower.
2.4 The Borrower, the Lender, the Servicer and the Participants further agree
that at any time after the Effective Date the Borrower may, at its option, transfer to the Lender (and the
Participants) all of its right, title and interest in and to the Pool in satisfaction of all of the Borrower's
obligations to the Lender under the Program Documents. Upon any such Transfer, the Lender, the Servicer and the
Participants shall enter into a new servicing agreement containing provisions substantially similar (but with the
same economic terms) to the
Servicing Agreement.
2.5 All obligations and liabilities of the West Parties under the Credit Agreement, all
Program Documents and this Supplement from and after the Effective Date shall be limited to the proceeds of the
Pool, and the Servicer and the Lender agree to look solely to such proceeds for any recourse for reimbursement of
any fees, expenses, damages, losses, obligations, liabilities or breaches under such documents; provided,
however, that recourse for the obligations and liabilities of the Current Servicer existing prior to the
Effective Date under the Current Servicing Agreement shall not be so limited.
ARTICLE III
FORBEARANCE
During the Forbearance Period (1) none of the Collateral Agent, Lender, Daiwa, or any
Participant shall (A) exercise any rights or remedies pursuant to the Program Documents
6
with respect to any Existing Defaults, or (B) prior to the occurrence and continuation of a Servicer Termination
Event, sell or direct or instruct the sale of any of the Designated Receivables, except as provided in Section
4.6 of this Supplement, and (ii) interest on the Note shall accrue at the Interest Rate as if none of the Existing
Defaults occurred or are continuing, provided, that, upon the occurrence of a Servicer Termination Event interest
on the Note shall accrue, from and after the Effective Date, at the interest rate applicable for the occurrence
and continuation of an Event of Default. From and after the Expiration Date, each of the Collateral Agent, the
Lender, Daiwa, and any Participant may exercise any rights or remedies that it may have pursuant to any of the
Program Documents as a result of any of (i) the Existing Defaults or (ii) any Event of Default or Servicer
Termination Event as defined in and pursuant to the Credit Agreement or the Servicing Agreement, respectively.
Notwithstanding the foregoing, in the event the Borrower becomes subject to, and is a debtor, directly or by
consolidation with West or any other affiliate of West in any bankruptcy proceeding, each of the Collateral
Agent, the Lender, Daiwa, and any Participant may exercise any rights or remedies that it may have pursuant to
the Credit Agreement, the Servicing Agreement or any of the Program Documents provided that none of them shall
take any action or consent to any action that results or may result in (i) the liquidation or sale of any of the
Designated Accounts other than as provided in this Supplement, (ii) removal of the Servicer other than as
provided in this Supplement, (iii) any reduction, limit or delay of the payment of any fees or compensation or
amounts payable to the Servicer pursuant to the Servicing Agreement, or (iv) the impairment, limitation or
restriction of any rights, powers or remedies that the Servicer may have pursuant to the Servicing Agreement.
ARTICLE IV
SERVICING
4.1 Successor Servicer Appointment. MCM is hereby appointed the successor servicer from and
after the Effective Date. MCM shall serve as Servicer during the Servicing Term subject to the Lender's and the
Collateral Agent's right to (i) terminate the Servicer without cause, upon the Collateral Agent, at the direction
of the Lender, giving the Servicer not less than 270 days' prior written notice of such termination, provided,
that, no such prior written notice of termination shall be given prior to September 1, 2000, or (ii) remove the
Servicer, at the direction of the Lender, upon the occurrence and continuation of a Servicer Termination Event.
Except as may be required under Article 7 of the Purchase Agreement, MCM as Servicer shall have no duty,
obligation or liability with respect to any obligations, liabilities or responsibilities of the Current Servicer
accruing or to be performed prior to the Effective Date. MCM as Servicer makes no representations or warranties
regarding (i) any of the Designated Receivables, (ii) the performance of the Current Servicer pursuant to the
Current Servicing Agreement or (iii) the Borrower or West or any other party, other than the Servicer, with
respect to, or relating to, any of the Program Documents. All information regarding the Designated Receivables
provided by MCM in carrying out its obligations under the Servicing Agreement, whether in the form of the
Servicer Reports or otherwise, shall be based solely upon MCM's actual knowledge concerning such information and
MCM makes no representation or warranty otherwise. Except as specifically contemplated hereby, the Servicer shall
not make any arrangement with respect to any Designated Receivable under which any third party has a Lien on any
Designated Receivable. Any referral by the Servicer of any Designated Receivable to a third-party servicer,
attorney or collection agency shall be in the conformity with the Collection Policies.
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4.2 Compensation. As compensation for the performance of its obligations as Servicer
pursuant to the Servicing Agreement, the Servicer shall be entitled to receive (and the Collateral Agent shall
pay to the Servicer upon written instruction from the Lender, which instruction the Lender agrees to give) (i) on
each Advance Date, the Base Servicing Fee; and (ii) on each Payment Date, the Additional Servicing Fee, if
applicable. Notwithstanding any provision in the Program Documents, the right of the Servicer to receive the Base
Servicing Fee and the Additional Servicing Fee shall be senior in right of payment or distribution to any other
person or entity pursuant to the Program Documents, other than the payment of the Collateral Agent Fee and
Expenses to the Collateral Agent and fees payable to the backup servicer, if any.
4.3 Standard of Care. MCM shall carry out its obligations and perform its duties under the
Servicing Agreement using the degree of skill and attention that MCM exercises with respect to all comparable
defaulted consumer receivables that it services for itself or others. Notwithstanding the foregoing and any other
provisions to the contrary contained in this Supplement or the Servicing Agreement, except for the payment,
deposit and distribution of monies or a breach of a covenant of the Servicer in the Servicing Agreement, MCM
shall be liable in connection with the performance of its duties under the Servicing Agreement only for its gross
negligence or willful misconduct.
4.4 Lockbox Reports, Information and Insurance.
(a) Lockbox. The Servicer shall perform as required of the "Servicer" pursuant to Section
6.01 of the Security Agreement with respect to the Lockbox.
(b) Servicer Report. The Servicer shall deliver the Servicer Report at such times as the
"Monthly Servicer Report" was required to have been delivered pursuant to the Current Servicing Agreement. The
Servicer shall only represent and warrant that the information in the Servicer Reports is correct as to the
knowledge of the Servicer. In addition, the Servicer will, at its expense, also provide such additional reports
and such information regarding the Pool, and collections and distributions thereof as is reasonably requested by
West or the Borrower, including without limitation in connection with financial and tax reporting, provided that,
all such information shall be solely to the Servicer's actual knowledge without any further representation or
warranty. If the Servicer is requested by the Lender to provide any reports or information other than the
Servicer Report, the Servicer shall promptly be paid, as additional servicing fee, according to the Applicable
Hourly Rate for providing such additional reports or information.
(c) Financial Statements. So long as the parent corporation of MCM is subject to the
reporting requirements of Section 13(d) or (g) of the Securities Exchange Act of 1934, as amended, the Servicer
shall not be required to deliver copies of its quarterly and annual financial statements at the times set forth
under to Section 2.05(b) and (c) of the Servicing Agreement, but shall instead deliver copies of such financial
information at the time the parent corporation of MCM makes its filings on Form 10-Q or 10K for such period.
(d) Insurance. The policy limits for the errors and omissions policy and the general
comprehensive liability policy required pursuant to Section 2.01(g) of the Servicing Agreement shall be
$3,000,000 per occurrence and $3,000,000 in the aggregate.
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4.5 Exhausted Receivables and Bankruptcy Receivables.
(a) Recall Exhausted Receivables. Each Servicer Report shall contain a listing of
Exhausted Receivables. The Lender may at any time, upon written notice to the Servicer, recall servicing (for the
benefit of Lender and the Participants) in connection with any Exhausted Receivables and remove the Servicer as
servicer of such Exhausted Receivables. Upon such removal the Servicer shall cease servicing such Exhausted
Receivables and shall promptly turn over to the Lender, or to such person or entity identified by the Lender, the
original collection file, including collector comments for such removed Exhausted Receivables. The Servicer shall
reasonably cooperate with the removal, transfer or transition of any such removed Exhausted Receivable. If the
Servicer shall receive any collections after such removal such collections shall be counted as Servicer Fee
Collections. Any sale proceeds of such Exhausted Receivables shall not be considered Net Collections.
(b) Sale of Certain Receivables. From time to time the Servicer may sell Exhausted
Receivables with the prior written consent of the Lender and upon such terms and conditions acceptable to the
Lender. The Servicer may also sell all Bankruptcy Receivables consistent with the Current Servicer's historic
practices and procedures. The Servicer shall deliver to the Lender and the Collateral Agent no later than three
(3) Business Days preceding the date of such sales a certificate of the Servicer identifying the Bankruptcy
Receivables (as the case may be) to be sold, and the general terms upon which the Servicer plans to sell such
Designated Receivables. The Borrower hereby grants to the Servicer a limited power of attorney for the sole
purpose of selling, pursuant to this Section 4.5, Exhausted Receivables and Bankruptcy Receivables on an
as-is-where-is basis, without representation or warranty (express or implied) by the Borrower, without indemnity
by or further obligation or liability on the part of the Borrower, and with an express acknowledgement from the
buyer of such receivables give any representations or warranties in connection with any such sale (other than
customary representations and warranties solely with regard to its servicing of the Designated Receivables to be
sold), and the Borrower shall not be required to give any representation or warranty in connection with any such
sale (other than reasonable and customary representations regarding (a) due incorporation, (b) due authorization,
execution and delivery, (c) title, and (d) absence of litigation, in each case only to the extent the Borrower is
able to give such representation or warranty and in each case with such disclosure as the Borrower in its sole
and absolute discretion deems appropriate).
4.6 Sale of all Designated Receivables. The Collateral Agent or the Borrower, with the
consent of the Lender, may sell all, or substantially all, of the Designated Receivables then subject to the
Servicing Agreement upon payment to the Servicer directly from the proceeds of such sale (i) all accrued and
unpaid Base Service Fees and Additional Servicing Fees, and (ii) a breakage fee (the “Breakage Fee”) (as computed
below):
9
Months in Servicing Term
in which Sale Occurs Breakage Fee*
1 - 6 6 month Servicing Fee
7 - 12 4 month Servicing Fee
13 - 18 2 month Servicing Fee
19 - 24 None
Provided that, no Breakage Fee shall be payable if, at the time of the sale, either (i) the Borrower and the
Designated Receivables are subject to a pending Bankruptcy proceeding as a direct result of an action of the
Servicer or any affiliate of the Servicer, or (ii) there is a continuing Servicer Termination Event that has not
been waived by the Lender; provided further, that, no such fee shall be paid if the Servicer or an Affiliate
continues to service the Designated Receivables for the purchaser thereof.
*The relevant Servicing Fee for the Breakage Fee shall be computed on the
basis of the sum of the Base Servicing Fee and the Additional Servicing Fee
during the prior 6-month, 4-month and 2-month period, as applicable.
The Servicer shall be given not less than 30 days prior written notice of such sale, which notice shall identify
the Designated Receivables to be sold and contain the proposed date of such sale and the manner in which the sale
shall be effected. The Servicer shall, at its cost and expense, cooperate with (based upon reasonable requests
by) the Collateral Agent, the Borrower and the Lender to effect any such sale, provided, that, if such sale does
not close, the Servicer shall be promptly paid, as additional servicing fee, according to the Applicable Hourly
Rate for such cooperation. The Servicer shall not be required to give any representation or warranties (other
than customary representations and warranties solely with regard to its servicing of the Designated Receivables
to be sold) in connection with any such sale and the Borrower shall not be required to give any representation or
warranty in connection with any such sale (other than reasonable and customary representations regarding (a) due
incorporation, (b) due authorization, execution and delivery, (c) title, and (d) absence of litigation, in each
case only to the extent the Borrower is able to give such representation or warranty and in each case with such
disclosure as the Borrower in its sole and absolute discretion deems appropriate)..
To the extent that any Designated Receivable sold hereunder is subject to any pending collection and/or
contingent fee agreement, other than the Servicing Agreement, then the transfer of such Designated Receivable
shall be made subject to the rights of any such entity or person and the terms of such sale shall require the
purchaser to assume the collection and/or contingent fee agreement to the extent applicable to a Designated
Receivable for which either (i) judgment has been entered and continues to be valid, or (ii) there is and
continues to be a valid and enforceable payment plan.
4.7 Liquidity Event. The Servicer shall also be paid an additional fee upon the closing
of a Liquidity Event in such amount as is mutually agreeable by the Servicer and the Lender; provided, that any
fee that exceeds 2.5% of the consideration received shall require the written consent of the Participants.
4.8 Information Furnished. Section 2.04(e) of the Servicing Agreement shall be amended as
to the Servicer to read as follows:
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All information furnished by the Servicer to the Borrower, the Lender or the
Collateral Agent, with respect to the Designated Receivables and the
Collections will, to the best knowledge of the Servicer, be true and correct
in all material respects at the time such information is furnished.
4.9 Indemnity. The Current Servicer and its assigns, transferees, participants, employees
and officers shall also be an “Indemnified Party.” Section 5.09(h) of the Servicing Agreement shall be amended to
read in its entirety as follows:
Any claim brought by any person (other than an Indemnified Party) against an
Indemnified Party arising from (i) any gross negligence or willful misconduct
of the Servicer, its employees, or any of its affiliates in servicing,
administering or collecting any Designated Receivables or (ii) any failure of
the Servicer to comply with any applicable law, rule or regulation with
respect to the collection of any Designated Receivables.
4.10 Inapplicable Provisions. The following provisions of the Servicing Agreement shall be
deleted:
(i) Section 2. 01(f)
(ii) Exhibit B;
(ii) Clause (a) of Section 3.02;
(iii) Section 5.06; and
(iv) Sections 5.09(a) through (g).
4.11 Court Costs in Litigation Process. Notwithstanding any other provision of the
Servicing Agreement or any of the Program Documents, the Servicer is authorized to apply funds collected by
third-party collections attorneys to the reimbursement of court costs advanced by such attorneys in other
collections lawsuits filed with respect to Designated Receivables placed for collection litigation.
4.12 Provisions for Incurred Expenses. In the event that the Servicer ceases to be the
servicer of all or a portion of the Designated Receivables due to the sale of Designated Receivables or the
exercise of the Lender's remedies following a Servicer Termination Event, the Servicer shall be entitled to
reimbursement, as additional servicing fee, for previously unreimbursed court costs advanced with respect to
Designated Receivables that are at the time of termination of servicing or at any time prior to termination of
servicing subject to litigation.
ARTICLE V
REPRESENTATIONS OF MCM
The Servicer hereby makes the following representations in substitution for Section 2.03 the
Servicing Agreement, on which the Borrower, the Collateral Agent, the
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Lender and the Participants are relying in accepting MCM as the successor servicer. The representations shall
speak both as of the execution and delivery of this Supplement and on the Effective Date.
5.1 Organization and Good Standing. MCM is duly organized and validly existing as a
corporation in good standing under the laws of the state of its incorporation, with corporate power and authority
to own its properties and to conduct its business as such properties are currently owned and such business is
presently conducted, and has full corporate power, authority and legal right to service the Designated
Receivables and to perform its obligations pursuant to the Servicing Agreement.
5.2 Due Qualification. MCM 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 (including the servicing of the Designated Receivables)
requires such qualification, licenses and approvals except where the failure to be qualified or to obtain such
qualifications, licenses and approvals would not have a material adverse effect on its abilities to service the
Designated Receivables and to perform its obligations pursuant to the Servicing Agreement.
5.3 Power and Authority. MCM has the corporate power and authority to execute and deliver this Supplement
and to carry out its terms and the terms of the Servicing Agreement; and the execution, delivery and performance
of this Supplement and the Servicing Agreement have been duly authorized by MCM by all necessary corporate action.
5.4 Binding Obligations. This Supplement and the Servicing Agreement constitute the legal, valid and
binding obligations of MOM, enforceable in accordance with their terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights
generally or by general principles of equity (whether considered in a proceeding in equity or at law).
5.5 No Violation. The fulfillment by MCM of the terms of this Supplement and the Servicing
Agreement do not conflict with, result in any breach of any of the terms and provisions of, nor constitute (with
or without notice or lapse of time) a default under, the articles of incorporation or bylaws of MCM, or conflict
with or breach any of the material terms or provisions of, or constitute (with or without notice or lapse of
time) a default under, any material indenture or agreement to which MCM is a party or by which it shall be bound;
nor violate, any law, order, rule or regulation applicable to MCM of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality having jurisdiction over MCM or its
properties; which breach, default, conflict, Lien or violation would have, or would have, a material adverse
effect.
5.6 Reguired Consents. All approvals, authorizations and consents of any Person required
in connection with the execution and delivery by MCM of this Supplement, the performance by MCM of the
transactions contemplated by this Supplement and the Servicing Agreement and the fulfillment by MCM of the terms
hereof and thereof have been obtained (or will be obtained prior to the time required) and are in full force and
effect, if the failure to have such would have a material adverse affect on the ability of the Servicer to
perform pursuant to the Servicing Agreement.
5.7 No Litigation. There are no lawsuits, administrative proceeds or investigations
pending or, to the best knowledge of the Servicer, overtly threatened against the
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Servicer before any court, regulatory body, administrative agency or other tribunal or governmental
instrumentality relating to the Servicer's collection activities which, if adversely determined, would have a
material adverse effect on the ability of the Servicer to perform pursuant to the Servicing Agreement.
5.8 Compliance. The Servicer has complied with all Requirements of Law in respect of the
conduct of its business and ownership of its property, except where the failure to comply does not materially
adversely affect its ability to perform its obligations hereunder or has no reasonable likelihood of resulting in
any material liability for the Borrower, the Lender and the Collateral Agent.
ARTICLE VI
SERVICER TERMINATION EVENTS
6.1 Servicer Termination Events. The occurrence of any one of the following events shall
with respect to the Servicer be a “Servicer Termination Even” which are in full substitution for the Service
Termination Events contained in Section 4.01 of the Current Servicing Agreement.
(a) the Servicer fails to make any payment, transfer or deposit pursuant to the Servicing
Agreement on the day when due, in each case that continues unremedied for a period of two (2) Business Days after
the earlier to occur of (x) actual discovery by a Responsible Officer of the Servicer, or (y) the date on which
written notice requiring the same to be remedied has been given to the Servicer by Lender;
(b) any representation or warranty made by the Servicer in this Supplement or the
Servicing Agreement or in any certificate or report delivered pursuant to the Servicing Agreement shall prove to
have been incorrect in any material respect when made and such is not cured within thirty (30) days after the
earlier to occur of (x) actual discovery by a Responsible Officer of the Servicer, or (y) the date on which
written notice requiring the same to be remedied has been given to the Servicer by Lender; provided, however,
that if any such breach is reasonably remediable within 180 days after its occurrence, such breach shall not be a
Servicer Termination Event hereunder for such period of time (but not longer than 180 days following the
occurrence thereof) as the Servicer is attempting to remedy it;
(c) any failure on the part of the Servicer to observe or perform any covenant of the
Servicer set forth in the Servicing Agreement which is not cured within 30 days after the earlier to occur of (x)
actual discovery by responsible officer of the Servicer, or (y) the date on which written notice requiring the
same to remedied has been given to the Servicer by the Lender;
(d) the Servicer shall fail to deliver any monthly Servicer Report required to be
delivered under the Servicing Agreement on or before the day when due, and such failure continues unremedied for
a period of three (3) Business Days;
(e) it shall become unlawful for any reason for the Servicer to continue to service the
Designated Receivables or otherwise perform its obligations under the Servicing Agreement or the Servicer shall
cease to possess all material and necessary licenses to carry out its obligations under the Servicing Agreement;
provided if the Servicer can continue
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servicing the Designated Receivables and perform its obligations under the Servicing Agreement without one or
more material and necessary licenses that the failure to have does not have a material adverse effect on the
Lender or the Servicer's performance under the Servicing Agreement, the Servicer shall have ninety (90) days to
obtain such licenses after the earlier to occur of (x) actual discovery by a Responsible Officer of the Servicer,
or (y) the date on which written notice requiring the same to be remedied has been given to the Servicer by
Lender;
(f) For any Measurement Period ending on or after September 30, 2000, both (i) the Lender
Net Collections for the Collection Measurement Period then ending are less than 90% of the Projected Lender Net
Collections for such Collection Measurement Period (the amount of any such deficit, a “Shortfall”) and (ii) there
was also a Shortfall for the immediately-preceding Measurement Period for the Collection Measurement Period then
ended; provided that no Servicer Termination Event shall occur under this clause (f) if and to the extent that as
of the last day of any Measurement Period (A) the aggregate Lender Net Collections from all prior Measurement
Periods exceeded 90% of the Projected Lender Net Collections from all such prior Measurement Periods such surplus
then exceeds the applicable Shortfall (as determined in clause (i) above) in the current Collection Measurement
Period or (B) the Servicer pays to the Lender for application to the amounts owing pursuant to the Note an amount
equal to or greater than the applicable Shortfall (as determined in clause (i) above after application of clause
(A) above) in the current Collection Measurement Period;
(g) the Servicer's consolidated stockholder's equity as required to be shown on its
consolidated financial statements is less than $5,000,000;
(h) the Servicer shall consent to the appointment of a conservator, receiver or liquidator
in any insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or
relating to it or of or relating to all or substantially all of its property;
(i) a decree or order of a court or agency or supervisory authority having jurisdiction in
the premises for the appointment of a conservator, receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days;
(j) the Servicer shall be in default in the payment of any debt in excess of $100,000
beyond any applicable grace or cure period and which default is not currently waived;
(k) the Servicer shall be in breach in the performance of any material agreement or
material contract beyond any applicable grace or cure period and such breach is not cured or currently waived
within forty-five (45) days of such breach; or
(l) the removal of the Servicer as Servicer under any securitization of the Servicer
during the continuation of an Event of Default or Servicer Termination Event thereunder.
6.2 Rights and Remedies. Upon the occurrence and continuation of a Servicer Termination
Event, the Collateral Agent and the Lender shall have such rights and remedies as it may have pursuant to the
Program Documents as a result of such Servicer Termination Event.
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ARTICLE VII
MISCELLANEOUS
7.1 Notices, etc. All notices and other communications under the Servicing Agreement
shall, unless otherwise stated herein, be in writing (which shall include facsimile communication) and be faxed
or delivered, to each party hereto, at its address set forth under its name on the signature pages hereof or at
such other address as shall be designated by such party in a written notice to the other parties hereto. Notices
and communications by facsimile shall be effective when sent (and shall be followed by hard copy sent by regular
mail), and notices and communications sent by other means shall be effective when received.
7.2 Complete Agreement Successors and Assigns: Relationship of Parties. The Servicing
Agreement constitutes the complete agreement between the parties hereto with respect to the subject matter hereof
and supersedes all existing agreements and all oral, written or other communications between them concerning its
subject matter. The Servicing Agreement shall be binding upon the parties hereto and their respective successors
and permitted assigns and shall inure to the benefit of the parties hereto and their respective successors and
permitted assigns; provided that the Servicer shall not assign any of its rights or obligations hereunder without
the prior written consent of the Lender. The parties are entering into this Supplement and the Servicing
Agreement as independent contractors. In no event shall either party be deemed an agent, employee, joint venturer
or partner of the other.
7.3 No Waiver. None of the undertakings, agreements, warranties, covenants or
representations of the Servicer contained in the Servicing Agreement and no Servicer Termination Event shall be
deemed to have been suspended or waived unless such suspension or waiver is by an instrument in writing signed by
an officer of the Collateral Agent at the direction of the Lender. Any failure by the Borrower, the Servicer, the
Lender or the Collateral Agent, at any time or times, to require strict performance by any other party of any
provision of the Servicing Agreement shall not waive, affect or diminish its respective right thereafter to
demand strict compliance and performance therewith. Any suspension or waiver by the Collateral Agent of a
Servicer Termination Event shall not suspend, waive or affect any other Servicer Termination Event, whether the
same is prior or subsequent thereto and whether of the same or of a different type.
7.4 Severabilily. Any provision of the Servicing Agreement which is prohibited 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.
7.5 Amendments; Governing Law. The Servicing Agreement and the rights and obligations of
the parties hereunder (a) may not be changed orally but only by an instrument in writing signed by the party
against which enforcement is sought and (b) shall be construed in accordance with and governed by the laws of the
State of New York.
7.6 Counterparts. This Supplement may be executed in any number of copies (including
copies sent by facsimile or other electronic transmission), and by the different parties hereto on the same or
separate counterparts, each of which shall be deemed to be an original instrument.
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7.7 Headings. Section headings used in this Supplement and the Servicing Agreement
are for convenience of reference only and shall not affect the construction or interpretation of this Supplement
or the Servicing Agreement.
[Remainder of page Intentionally blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective officers thereunto duly authorized as of the day and year first above written.
WEST CAPITAL RECEIVABLES
CORPORATION I, a California corporation
By: ___________________________________
Its: ___________________________________
_________________________________________
_________________________________________
Facsimile: ________________________________
_________________________________________
“Borrower”
WEST CAPITAL FINANCIAL SERVICES
CORP., a California corporation
By: ___________________________________
Its: ___________________________________
_________________________________________
Facsimile: ________________________________
“Current Servicer”
NORWEST BANK MINNESOTA, N.A., as
Collateral Agent
By: ___________________________________
Name: ____________________________
Title: ____________________________
MAC X0000-000
Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: 000-000-0000
“Collateral Agent”
S-1
MIDLAND CREDIT MANAGEMENT, INC.
a Kansas corporation
By: ________________________________
Name: __________________________
Title: __________________________
0000 Xxxx Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Facsimile: 000-000-0000
“Servicer”
Consented and agreed to this 22_ day of May 2000
DAIWA FINANCE CORPORATION
By: _/s/ H. [illegible]_______________
Its: __EVP______________________
_______________________________
_______________________________
Facsimile: _____________________
“Lender”
SUNAMERICA INC., a Delaware
Corporation, as participant
By: ___________________________
Its: ___________________________
_______________________________
_______________________________
Facsimile: ______________________
“Participant”
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