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Exhibit 10.1
EXECUTION COPY
SECOND AMENDMENT TO INDENTURE AND SERVICING AGREEMENT
(FLOATING RATE MIDLAND RECEIVABLES-BACKED
VARIABLE FUNDING NOTES, SERIES 1999-A)
This SECOND AMENDMENT TO INDENTURE AND SERVICING AGREEMENT, dated as of
January 31, 2000 (this "Amendment"), is executed by and among Midland Funding
98-A Corporation, as issuer (the "Issuer"), Norwest Bank Minnesota, National
Association, as trustee (in such capacity, the "Trustee"), and as backup
Servicer (in such capacity, the "Backup Servicer"), Midland Credit Management,
Inc., as servicer (the "Servicer"), Asset Guaranty Insurance Company, as note
insurer (the "Note Insurer"), Banco Santander Central Hispano, S.A., New York
Branch and Warehouse Line, L.L.C. (the "Noteholders").
RECITALS
A. The Issuer, the Trustee, the Backup Servicer, the Servicer and the Note
Insurer are parties to an Indenture and Servicing Agreement dated as of March
31, 1999 (as amended, supplemented or otherwise modified, the "Indenture and
Servicing Agreement") relating to the Floating Rate Midland Receivables-Backed
Variable Funding Notes, Series 1999-A; and
B. Pursuant to that certain Funding Agreement dated as of January 14, 2000
among the Issuer, the Servicer, the Trustee, the Backup Servicer, the Note
Insurer and the Noteholders, each party agreed to certain amendments to the
Indenture and Servicing Agreement and also agreed to execute an amendment to the
Indenture and Servicing Agreement containing the provisions set forth herein;
and
C. The Noteholders are the only holders of the Notes issued by the
Issuer pursuant to the Indenture and Servicing Agreement on the date hereof; and
D. Section 12.01 of the Indenture and Servicing Agreement permits
amendment of the Indenture and Servicing Agreement on the terms and subject to
the conditions provided therein.
NOW THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS. Subject to the terms and conditions set forth herein,
the Indenture and Servicing Agreement is hereby amended as follows:
(a) Section 1.01 is amended by replacing the percentages set forth in the tables
found in the definition of "Acquisition Price" with the following:
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<TABLE>
<CAPTION>
NUMBER OF PRIOR MAJOR CARD OTHER CARD
AGENCY PLACEMENTS PERCENTAGE PERCENTAGE
<S> <C> <C>
Zero 10.00 8.00%
One 8.20% 6.60%
Two 3.60% 2.90%
Three or more 2.00% 1.60%
</TABLE>
<TABLE>
<CAPTION>
AVERAGE AGE MAJOR CARD OTHER CARD
SINCE CHARGE-OFF PERCENTAGE PERCENTAGE
<S> <C> <C>
0 Months 10.00% 8.00%
1-3 Months 9.10% 7.30%
4-6 Months 8.20% 6.60%
7-9 Months 6.70% 5.40%
10-12 Months 5.30% 4.20%
13-15 Months 4.60% 3.70%
16-18 Months 4.10% 3.30%
19-21 Months 4.00% 3.20%
22-24 Months 3.80% 3.10%
25-30 Months 3.50% 2.80%
31-36 Months 2.80% 2.30%
37-42 Months 2.30% 1.80%
43-48 Months 1.50% 1.20%
49 or more Months 0.00% 0.00%
</TABLE>
(b) Section 1.01 is amended by adding the following language to the
definition of Funding Amount in Clause A of such definition, immediately
preceding the word ", minus (B)":
or for Pools purchased under a forward flow contract, prior to any
Pool purchased under such forward flow contract demonstrating
Satisfactory Performance, eighty-five and a half percent (85.5%) for
Major Cards and eighty-one percent (81%) for Other Cards (and upon
any Pool purchased under such forward flow contract demonstrating
Satisfactory Performance, an amount equal to one ninth (1/9) of all
Fundings with respect to all Pools purchased under such forward flow
contract prior to such Satisfactory Performance.
(c) Section 1.01 is amended by adding the following definition:
"Liquidity" shall mean unrestricted cash and/or availability under
one or more committed working capital facilities the provider of
each of which has (i) a short-term rating of at least A-1 from S&P
or P-1 from Moody's and (ii) a long-term rating of at least A from
S&P or A2 from Moody's, the terms and conditions of each of which
(including without limitation the conditions precedent to funding)
are in all material respects no less favorable to the Servicer than
the terms and conditions which are customary in the market for
committed commercial lending facilities, or such other provider,
terms and conditions reasonably acceptable to the Controlling Party,
and the remaining term of each of which is at least 6
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months; provided that, prior to the earlier of April 15, 2000 or the
day upon which the Servicer receives written notice that such
Promissory Note will not be renewed with respect to the Third
Amended and Restated Promissory Note payable to Bank of America,
N.A., availability under such Promissory Note shall be included
notwithstanding the stated maturity of April 15, 2000.
(d) Section 1.01 is amended by replacing the period (".") at the end of
the definition of Required Reserve Amount and adding the following language
thereto to read as follows:
; provided that, if the Servicer or Issuer fail to comply with
Section 3.10(b), Section 8.07(p), Section 9.01(n) and the delivery
of the monthly compliance report pursuant to Section 3.06(a), then
so long as such failure continues and if the Issuer submits a
Request for Funding during the continuation of such failure, then
upon the related Funding, the Required Reserve Amount shall be
increased by the amount of such Funding.
(e) Section 1.01 is amended by adding the following definition:
"Satisfactory Performance" shall mean, for a Pool purchased,
cumulative collections shall exceed 20% of the respective Purchase
Price by the end of the sixth full month since purchase.
(f) Section 3.10 is amended by adding "(a)" to the existing paragraph and
by adding a new subsection (b) thereafter to read as follows:
(b) In addition to, and not by way of limitation of, any other
rights of the Note Insurer hereunder, each of the Issuer and the
Servicer shall permit the Note Insurer, upon reasonable notice and
during normal business hours, to visit and inspect the properties of
the Issuer or Servicer, to examine its books of account, records,
reports, and other papers, to make copies and extracts therefrom and
to discuss its affairs, finances and accounts with its officers,
employees, and independent public accountants, all at such
reasonable times and as often as may be reasonably requested.
(g) Section 3.06(a) is amended by adding the following sentence thereto:
The Servicer shall include as part of each Monthly Servicing Report
a monthly compliance report calculated as of the end of each
Collection Period substantially in the form attached hereto as
Exhibit 3.06(a).
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(h) Section 6.11 is amended by adding a new subsection (j) thereto to read
as follows:
(j) If the Servicer or Issuer fail to comply with Section 3.10(b),
Section 8.07(p), Section 9.01(n) and the delivery of the monthly
compliance report pursuant to Section 3.06(a), then so long as such
failure continues, the Noteholders shall not be required to make
such a Funding during such time unless (i) such Funding is required
pursuant to this Agreement and (ii) the Issuer concurrent with such
Funding, deposits an amount in the Reserve Account so that after
such Funding the balance in the Reserve Account shall equal the then
adjusted Required Reserve Amount.
(i) Section 7.07 is amended by adding a new subsection (s) thereto to read
as follows:
(s) The Issuer shall provide the Trustee within ten (10) Business
Days subsequent to each Funding Date a CD-ROM or computer tape
listing of all Receivables which became subject to this Agreement on
such Funding Date.
(j) Section 8.07 is amended by adding a new subsection (p) thereto to read
as follows:
(p) The Servicer shall not purchase more than $3,000,000 of
additional receivables under or in connection with a Consumer
Account during each period that the Servicer has less than
$10,000,000 in Liquidity.
(k) Section 9.01 is amended by replacing the period (".") at the end of
subsection (m) with ";or" and adding a new subsection (n) and (o) thereto to
read as follows:
(n) the Servicer shall have at any time during the periods set forth
below, Liquidity in at least the amounts set forth below:
<TABLE>
<CAPTION>
Period (all dates inclusive) Required Liquidity
---------------------------- ------------------
<S> <C>
Closing Date - March 31, 2000 $5,000,000
April 1- April 30, 2000 $4,250,000
May 1- May 31, 2000 $3,500,000
June 1- June 30, 2000 $3,000,000
July 1- July 31, 2000 $2,500,000
August 1- August 31, 2000 $1,750,000
September 1- September 30, 2000 $1,250,000
October 1 - November 29, 2000 $1,000,000
November 30 - December 30, 2000 $2,000,000
December 31, 2000 - January 30,2001 $3,250,000
January 31 - February 27, 2001 $4,250,000
February 28, 2001 and thereafter $5,000,000
</TABLE>
; or
(o) the existence and continuation of a "Servicer Default" or an
"Event of Default" (which has not been waived) as defined in and
pursuant to any securitization transaction to which the Servicer and
Note Insurer are parties.
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(l) Section 9.02(a) is amended by deleting the first sentence in its
entirety and replacing it with the following:
The rights and obligations of the Servicer shall terminate upon the
earlier of (i) the occurrence and continuation of a Servicer Default
or (ii) the last day of each calendar quarter, unless the Servicer
is appointed by the Controlling Party for successive quarterly
periods. If a Servicer Default shall occur and be continuing, so
long as such Servicer Default has not been cured or waived pursuant
to Section 9.05, or if the Controlling Party does not appoint the
Servicer to a successive quarterly term at least ten (10) Business
Days prior to the end of a calendar quarter, the Trustee shall, upon
the direction of the Controlling Party, by notice then given in
writing to the Servicer and the Note Insurer terminate all (but not
less than all) of the rights and obligations of the Servicer, as
Servicer under this Agreement and the other Transaction Documents,
and in and to the Receivables and proceeds thereof.
(m) Section 9.08 is amended by replacing the period (".") at the end of
subsection (k) with ";or" and adding a adding a new subsection (l) thereto to
read as follows:
(l) the Issuer does not deposit in the Reserve Account the required
amount indicated in the proviso of the definition of Required
Reserve Amount within two Business Days of the date of the related
Funding.
SECTION 2. EFFECTIVENESS. This amendment provided for by this Amendment
shall become effective as of the date hereof upon the occurrence of each of the
following events:
(a) the Trustee, the Seller, the Servicer and the Note Insurer
shall have received counterparts of this Amendment, duly
executed by the parties hereto; and
(b) the Trustee shall have furnished the Rating Agency and the
Placement Agent with written notification of the substance of
this Amendment.
SECTION 3. REPRESENTATIONS. Each party hereto hereby represents and
warrants that this Amendment has been duly executed and delivered by such party
and constitutes the legal, valid and binding obligation of such party,
enforceable against such party in accordance with its terms except as the
enforceability hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws affecting creditors' rights and remedies in general.
SECTION 4. REFERENCE. On and after the effective date of this Amendment,
each reference in the Indenture and Servicing Agreement to "this Agreement",
"hereunder", "herein" or words of like import referring to the Indenture and
Servicing Agreement, and each reference in the other Transaction Documents to
the "Indenture and Servicing Agreement", "thereunder", "thereof", or words of
like import referring to the Indenture and Servicing Agreement shall mean and be
a reference to the Indenture and Servicing Agreement as amended by this
Amendment.
SECTION 5. COUNTERPARTS; EFFECTIVENESS; FULL FORCE AND EFFECT. This
Amendment may be executed by one or more of the parties to this Amendment on any
number of separate counterparts (including by facsimile transmission), and all
of said counterparts taken together all shall be deemed to constitute one and
the same instrument. A copy of this Amendment signed by all the parties shall be
lodged with the Trustee. Except as expressly set forth herein, the
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terms, provisions and conditions of the Indenture and Servicing Agreement and
the other Transaction Documents shall remain in full force and effect and in all
other respects are hereby ratified and confirmed.
SECTION 6. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
SECTION 7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 8. DEFINED TERMS. Capitalized terms used herein and not otherwise
defined shall have the meanings given to such terms in the Indenture and
Servicing Agreement.
(BALANCE OF PAGE INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first above written.
MIDLAND FUNDING 98-A CORPORATION, as Issuer
By:
---------------------------------------
R. Brooks Sherman, Treasurer
MIDLAND CREDIT MANAGEMENT, INC., as Servicer
By:
---------------------------------------
R. Brooks Sherman, Executive Vice
President
NORWEST BANK MINNESOTA, National
ASSOCIATION, not in its individual
capacity, but solely as Trustee and as
Backup Servicer
By:
---------------------------------------
Casey Kelly, Corporate Trust Officer
ASSET GUARANTY INSURANCE COMPANY
By:
---------------------------------------
Scott Mangan, Vice President
BANCO SANTANDER CENTRAL HISPANO, S.A., NEW
YORK BRANCH
By:
---------------------------------------
Name:
---------------------------------------
Title:
-------------------------------------
By:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
WAREHOUSE LINE, L.L.C.
By:
---------------------------------------
Name:
---------------------------------------
Title:
-------------------------------------
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EXHIBIT 3.06(a)
MONTHLY COMPLIANCE REPORT
MIDLAND CREDIT MANAGEMENT, INC.
FOR
FLOATING RATE MIDLAND RECEIVABLES-BACKED NOTES, SERIES 1999-A
Pursuant to the Indenture and Servicing Agreement, dated as of March 31,
1999 (the "Indenture and Servicing Agreement"), Midland Credit Management, Inc.,
as "Servicer" submits the following information for the Collection Period set
out herein as it relates to the Floating Rate Midland Receivables-Backed Notes,
Series 1999-A.
Capitalized terms used in this certificate have the meanings set forth in the
Indenture and Servicing Agreement.
Collection Period covered by this Report:
_________________, _____ through _________________, _____
Determination Date of this Report:
_________________, _____
Payment Date for this Report:
_________________, _____
A. LIQUIDITY
Cash $_____________
Availability under the Third Amended and $_____________
Restated Promissory Note payable to Bank
of America N.A. (the "B of A Note")
Total amount available under the
B of A Note $________________
Maturity Date _________________
Other Liquidity
Source:
1) __________________________________ $_____________
Total amount available under such
source $________________
Commitment Expiration Date _________________
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2) __________________________________ $_____________
Total amount available under such
source $________________
Commitment Expiration Date _________________
3) __________________________________ $_____________
Total amount available under such
source $________________
Commitment Expiration Date _________________
4) __________________________________ $_____________
Total amount available under such
source $________________
Commitment Expiration Date _________________
Total Liquidity $_____________
B. POOL INFORMATION
1. Acquisition Date - Section 2.04(l)(i)
<TABLE>
<CAPTION>
Pool # Date of Acquisition
(2.04(l)(i))
<S> <C>
</TABLE>
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2. Originator Concentration - Section 2.04(l)(iv)
<TABLE>
<CAPTION>
Name of Originator Charged-Off Balance of
Receivables acquired
from such Originator
divided by the
Charged-Off Balance of
all Receivables
(expressed as a
percentage)
--------------------------------------------------
<S> <C>
</TABLE>
3. Average Age Since Charge-Off - Section 2.04(l)(v)
The Average Age since Charge-Off for all Receivables is _________ months.
4. State Concentration - Section 2.04(l)(vi)
<TABLE>
<CAPTION>
Obligor Location by Charged-Off Balance Charged-Off Balance of
mailing address Location divided by
aggregate Charged-Off
Balance of all
Receivables
-----------------------------------------------------------------------
<S> <C> <C>
</TABLE>
5. Average Charged-Off Balance - Section 2.04(l)(vii)
The Average Charged-Off Balance of all Receivables (per account) is
$ .
6. Charged-Off Balance Concentration Limit - Section 2.04(l)(viii)
The percentage of accounts with a Charged-Off Balance in excess of
$7,500.00 is %.
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7. Originating Institution Concentration Limits - Section 2.04(l)(ix)
<TABLE>
<CAPTION>
Rating Agency Rating of the Charged-Off Balance of Charged-Off Balance of
Originating Institution(s) accounts related to accounts related to
Major Cards divided by Other Cards divided by
the aggregate the aggregate
Charged-Off Balance of Charged-Off Balance of
the Receivables the Receivables
(expressed as a (expressed as a
percentage) percentage)
---------------------------------------------------------------------------------
<S> <C> <C>
A- or Better
BBB+
BBB
BBB-
BB+
BB and lower (including
unrated)
</TABLE>
8. Previous Agency Placement Concentration Limits - Section 2.04(l)(x)
<TABLE>
<CAPTION>
Previous Agency Placement Charged-Off Balance Percentage of
Charged-Off Balance to
the aggregate
Charged-Off Balance of
the Receivables
------------------------------------------------------------------------------
<S> <C> <C>
Zero
One
Two
Three
</TABLE>
9. Private Label Retail Receivables Concentration Limit - Section 2.04(l)(xi)
The aggregate Charged-Off Balances of all private label retail Receivables
is % of the aggregate Charged-Off Balance of all Receivables.
C. MONTHLY COLLECTIONS
<TABLE>
<CAPTION>
Pool # Collections for the Servicing Fee Percentage
Collection Period
--------------------------------------------------------------------
<S> <C> <C>
</TABLE>
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