Exhibit 10.2
AMENDED AND RESTATED SERVICING AGREEMENT
dated as of May 19, 2008
among
PALISADES ACQUISITION XVI, LLC,
as the Borrower,
PALISADES COLLECTION, L.L.C.,
as the Servicer,
and
BMO CAPITAL MARKETS CORP.,
as the Collateral Agent

 

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AMENDED AND RESTATED SERVICING AGREEMENT
     THIS AMENDED AND RESTATED SERVICING AGREEMENT is entered into effective as
of May 19 , 2008 (as amended, supplemented or otherwise modified from time to
time, the “Servicing Agreement”), among PALISADES ACQUISITION XVI, LLC, a
Delaware limited liability company (the “Borrower”), PALISADES COLLECTION,
L.L.C., a Delaware limited liability company (“Palisades Collection”), as the
initial servicer of the Receivables (in such capacity, the “Servicer”), and BMO
CAPITAL MARKETS CORP. (“BMO CM”), as collateral agent for the Secured Parties
(in such capacity, the “Collateral Agent”), as acknowledged and agreed to by
Fairway Finance Company, LLC and Bank of Montreal.
R E C I T A L S
          1. The Borrower, Palisades Collection, Fairway Finance Company, LLC, a
Delaware limited liability company (together with its successors and permitted
assigns, the “Lender”), BMO CM, as administrative agent for the Lender (in such
capacity, the “Administrator”) and as Collateral Agent, and Bank of Montreal, as
liquidity agent for the Liquidity Providers (in such capacity, the “Liquidity
Agent”), are parties to the Receivables Financing Agreement, dated as of
March 2, 2007 (as amended, supplemented or otherwise modified from time to time,
the “Receivables Financing Agreement”), pursuant to which, on the terms and
subject to the conditions set forth therein, the Lender agreed to make Loans to
the Borrower.
          2. The Borrower and the Collateral Agent are parties to the Security
Agreement, dated as of March 2, 2007 (as amended, supplemented or otherwise
modified from time to time, the “Security Agreement”), pursuant to which the
Borrower granted to the Collateral Agent, for the benefit of the Secured
Parties, a security interest in the Collateral, as security for the Obligations.
          3. The Borrower requested Palisades Collection undertake certain
collecting and servicing responsibilities in respect of the Receivables, and
Palisades Collection, as the Servicer, agreed to undertake such responsibilities
and accept such bailment.
          4. In connection therewith, the Borrower, the Servicer and the
Collateral Agent entered into that certain servicing agreement, dated as of
March 2, 2007 (the “Existing Servicing Agreement”).
          5. After March 2, 2007, the Servicer entered into certain Subservicing
Agreements with Subservicers, and the parties hereto desire to amend and restate
this Servicing Agreement to reflect material changes in the obligations of the
Servicer hereunder in connection with such Subservicing Agreements.
          6. The Borrower, the Servicer and the Collateral Agent have determined
to amend and restate the Existing Servicing Agreement in its entirety.

 

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     NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the Borrower, the Servicer and the Collateral Agent agree that the Existing
Servicing Agreement is hereby amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS
     Section 1.1 Definitions.
     Whenever used in this Servicing Agreement, the following words and phrases,
unless the context otherwise requires, shall have the meanings specified in this
Article (such meanings to be equally applicable to both the singular and plural
forms of the terms defined and to all genders):
     “Administrator” has the meaning set forth in the first Recital.
     “Borrower” has the meaning set forth in the Preamble.
     “Collateral Agent” has the meaning set forth in the Preamble.
     “Exempted Receivables” means Judgment Asset Receivables and Paying
Receivables.
     “Judgment Asset Receivables” means each Receivable (a) that is in active
litigation or (b) for which a judgment has been rendered within the preceding
120 days or (c) that is in post judgment enforcement or (d) at any time prior to
the second anniversary of that certain Subservicing Agreement, dated as of
March 2, 2007 (as amended or otherwise modified from time to time), that has
been identified by the Subservicer named therein as subject to litigation;
provided, however, in the case of a sale by the Borrower of Receivables that are
judgments that are non-liquidating and have no post-judgment enforcement
activity occurring or imminent, such Receivables shall not be deemed to be
Judgment Asset Receivables.
     “Lender” has the meaning set forth in the first Recital.
     “Liquidation Expenses” means all court costs, arbitration fees, broker fees
and costs and reasonable out-of-pocket expenses that are incurred by the
Servicer or any Subservicer in connection with the collection or liquidation of
any Receivable or related collateral, if any, such expenses including, without
limitation, legal and arbitration fees and expenses (including, but not limited
to, service of process fees), any file fees and foreclosure or repossession
expenses and any unreimbursed amount expended by the Servicer or Subservicer
pursuant to Section 3.02 (to the extent such amount is reimbursable under the
terms of Section 3.02) respecting the related Receivable.
     “Liquidation Proceeds” means cash received in connection with the
collection or liquidation of Receivables or related collateral, if any, whether
through sale or otherwise.
     “Loan Agreement” means the fourth amended and restated loan agreement,
dated as of July 11, 2006, as amended (the “Loan Agreement”) among the Servicer,
as borrower representative, the other credit parties signatory thereto, Israel
Discount Bank of New York, as

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administrative agent as collateral agent for itself and the lenders party
thereto, and as co-lead arranger, and the lenders party thereto.
     “Officer’s Certificate” means a certificate signed by the Chief Executive
Officer, the President, the Chief Financial Officer, a Manager or any Vice
President of the Borrower or the Servicer, as the case may be, and delivered to
the Collateral Agent or the Servicer (as applicable), as required by this
Servicing Agreement.
     “Palisades Collection” has the meaning set forth in the Preamble.
     “Paying Receivables” means each Receivable, the Obligor of which (a) is
currently paying under a payment plan or (b) accounts that have active
garnishments, attachments, lien proceedings or other involuntary, judicial
executions or (c) has committed to enter into a payment plan or to remit the
full or agreed settlement amount thereof within the next 60 days.
     “Receivables Financing Agreement” has the meaning set forth in the first
Recital.
     “Security Agreement” has the meaning set forth in the second Recital.
     “Servicer” means Palisades Collection or its successor in interest, or any
successor Servicer appointed as provided in Section 5.02.
     “Servicer Extension Notice” has the meaning set forth in Section 5.03.
     “Servicer Termination Event” has the meaning set forth in Section 5.01.
     “Servicing Agreement” has the meaning set forth in the Preamble.
     “Servicing Fee” means as to any Collection Period and any Receivable, the
monthly fee payable to the Servicer, which, so long as Palisades Collection is
the Servicer, shall be (i) the product of the percentage applicable to the class
of Receivable for such Receivable, as set forth on Schedule 1 hereto, multiplied
by the Collections (determined excluding clauses (c) and (d) of such definition)
on such Receivable received during such Collection Period or (ii) such other
Servicing Fee set forth on Schedule 1 hereto; provided, further, that the
Servicer shall be paid a one-time supplemental management fee of $8,226,278 no
later than May 31, 2008. The Servicing Fee for any successor Servicer shall be
determined as provided in Section 5.02.
     “Subservicer” means any Person that is providing servicing, management
and/or administration services with respect to some or all of the Receivables
under one or more Subservicing Agreement pursuant to Section 4.01.
     “Subservicing Agreement” means one or more written contracts between the
Servicer and any Subservicer relating to the servicing, management and/or
administration of some or all of the Receivables as provided in Section 4.01,
each as set forth on Schedule 2. References to the “servicing” of Receivables by
a Subservicer shall be deemed to including the management and administration of
Receivables.

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     “Unifund Servicing Agreement” shall mean, collectively, that certain master
servicing agreement, dated as of March 28, 2008, that certain management
agreement, dated as of March 28, 2008, and that certain confidentiality
agreement, dated as of March 5, 2007, each entered into between the Servicer and
Unifund CCR Partners.
     “Unmatured Servicer Termination Event” shall mean any event that, if it
continues uncured, will, with lapse of time or notice or lapse of time and
notice, constitute a Servicer Termination Event.
     “W&A Subservicing Agreement” shall mean that certain subservicing
agreement, dated as of March 2, 2007, between the Servicer and Wolpoff &
Abramson, L.L.P., together with that certain addendum, effective July 17, 2007,
by and among the Servicer, BMO CM, Wolpoff & Abramson, L.L.P., the Borrower and
Axiant, LLC.
     Section 1.2 Terms Defined in Receivables Financing Agreement. Capitalized
terms not otherwise defined herein shall have the respective meanings assigned
to such terms in the Receivables Financing Agreement.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
     Section 2.1 Representations, Warranties and Covenants of Servicer. (a) The
Servicer hereby represents, warrants and covenants to the Collateral Agent (for
the benefit of the Secured Parties) that:
               (i) the Servicer is duly organized, validly existing and in good
standing as a limited liability company under the laws of the State of Delaware
and is qualified to transact business in and is in good standing under the laws
of each state in which it is necessary for it to be so qualified in order to
carry on its business as now being conducted and has all licenses necessary to
carry on its business as now being conducted; the Servicer has the full power
and authority to own its property, to carry on its business as presently
conducted, and to execute, deliver and perform this Servicing Agreement and each
other Transaction Document to which the Servicer is a party; the execution,
delivery and performance of this Servicing Agreement and each other Transaction
Document to which the Servicer is a party by the Servicer and the consummation
of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary limited liability company action on the part of the
Servicer; and this Servicing Agreement and each other Transaction Document to
which the Servicer is a party evidences the legal, valid, binding and
enforceable obligation of the Servicer, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors’ rights generally and by general principles of equity.
               (ii) the Servicer is not required to obtain the consent of any
other party or obtain the consent, license, approval or authorization of, or
make any registration or declaration with, any governmental authority, bureau or
agency in connection with the execution,

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delivery, performance, validity or enforceability of this Servicing Agreement or
any other Transaction Document to which the Servicer is a party;
               (iii) the consummation of the transactions contemplated by this
Servicing Agreement and the other Transaction Documents to which the Servicer is
a party and the fulfillment of the terms hereby and thereby will not result in
the breach of any term or provision of the limited liability company agreement
of the Servicer or result in the breach of any term or provision of, or conflict
with or constitute a default under or result in the acceleration of any
obligation under, any agreement, indenture or loan or credit agreement or other
instrument to which the Servicer or its property is subject, or result in the
violation of any law, rule, regulation, order, judgment or decree to which the
Servicer or its property or the Receivables are subject;
               (iv) the Servicer is not a party to, bound by or in breach or
violation of any indenture or other agreement or instrument, or subject to or in
violation of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it, that
materially and adversely affects, or may in the future be reasonably expected to
materially and adversely affect, the ability of the Servicer to perform its
obligations under this Servicing Agreement or any other Transaction Document to
which the Servicer is a party;
               (v) there are no actions, suits or proceedings pending or, to the
knowledge of the Servicer, threatened against the Servicer, before or by any
court, administrative agency, arbitrator or governmental body with respect to
any of the transactions contemplated by this Servicing Agreement, that will, if
determined adversely to the Servicer, affect the validity or enforceability
hereof or materially and adversely affect the Servicer’s ability to perform its
obligations under this Servicing Agreement or any other Transaction Document to
which the Servicer is a party;
               (vi) attached as Exhibit A hereto is, in all material respects, a
true, complete and correct copy of the List of the Receivables as of the Closing
Date;
               (vii) as of the Transfer Date, the Servicer (i) is not
“insolvent” (as such terms is defined in §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;
               (viii) all certificates, reports, financial statements and
similar writings furnished by the Servicer at anytime to the Collateral Agent or
the Administrator under or in connection with this Servicing Agreement or
pursuant to any requirement of, or in response to any request of any such party
under the Receivables Financing Agreement or any other Transaction Document have
been, and all such certificates, reports, financial statements and similar
writings hereafter furnished by the Servicer to such parties will be, true and
accurate in every respect material to the transactions contemplated hereby on
the date as of which any such certificate, report, financial statement or
similar writing was or will be delivered, and shall not

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omit to state any material facts or any facts necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
materially misleading;
               (ix) the Servicer will comply in all material respects with all
applicable laws, rules, regulations and orders of all governmental authorities
(including those which relate to the Receivables) the violation of which could
have a Material Adverse Effect;
               (x) the Servicer will preserve and maintain its limited liability
company existence, rights, franchises and privileges in the jurisdiction of its
organization, and qualify and remain qualified in good standing as a foreign
organization in the jurisdiction where its principal place of business and its
chief executive office are located and in each other jurisdiction where the
failure to preserve and maintain such existence, rights, franchises, privileges
and qualifications could have a Material Adverse Effect.
               (xi) the Servicer will keep books and records that accurately
reflect all of Servicer’s business affairs and transactions, maintain and
implement administrative and operating procedures (including, without
limitation, an ability to re-create records evidencing the Receivables in the
event of the destruction of the originals thereof) and keep and maintain all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables;
               (xii) except in connection with litigation, actions and
proceedings in the ordinary course and relating to the Receivables relating to
the Servicer’s servicing duties as contemplated by the Accepted Servicing
Practices, the Servicer will furnish to the Administrator, the Collateral Agent:
          (A) As soon as possible, and in any event within three Business Days
after, the Servicer receives notice thereof, any settlement of, judgment
(including a judgment with respect to the liability phase of a bifurcated trial)
in or commencement of, any labor controversy, litigation, investigation, action
or proceeding of the type described in Section 2.01(v) and, upon the Collateral
Agent’s or the Administrator’s request, copies of all non-confidential or
non-privileged documentation relating thereto;
          (B) As soon as possible and in any event within three Business Days of
the Servicer’s knowledge thereof, notice of any material adverse development in
previously disclosed litigation, investigation or proceeding;
          (C) Promptly and in any event within three Business Days of the
Servicer’s knowledge thereof, notice of any other event or circumstance that, in
the reasonable judgment of the Servicer, could have a Material Adverse Effect on
the Servicer and notice of any accounting impairment of the “cumulative
collection curve” required in accordance with the Servicer’s standard accounting
procedures;

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          (D) As soon as possible and in any event within three Business Days
after the occurrence of each Servicer Termination Event and each Unmatured
Servicer Termination Event, notice of such occurrence setting forth details of
such event and the action that Servicer proposes to take with respect thereto;
and
          (E) Promptly, from time to time, such other information, documents,
records or reports respecting the Receivables, or the condition or operations,
financial or otherwise, of the Servicer as the Collateral Agent or the
Administrator may from time to time reasonably request.
               (xiii) subject to Section 2.01(a)(x), the Servicer will maintain
(and will obtain and maintain on behalf of the Borrower) all licenses, permits,
charters and registrations which are material to the performance of its or the
Borrower’s obligations under this Servicing Agreement and each other Transaction
Document to which the Servicer or the Borrower is a party;
               (xiv) except pursuant to, or as contemplated by, the Transaction
Documents, the Servicer shall not sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist voluntarily or,
for a period in excess of 10 days, involuntarily any Adverse Claims naming the
Servicer as debtor upon or with respect to any of the Collateral;
               (xv) the Servicer will not make any change in its instructions to
Obligors regarding payments to be made to the Servicer or any Subservicer that
could adversely affect the collectibility of any Receivable;
               (xvi) the Servicer will comply with Section 9.1.7 of the
Receivables Financing Agreement;
               (xvii) the Servicer shall ensure that any filings, notices,
consents or recordings required to perfect the transfer of the Receivable Assets
(excluding up to $100,000 worth of Receivable Assets in the aggregate) have been
duly made (or will be made prior to March 30, 2007) and the Borrower, and the
Collateral Agent as assignee, has the same rights as Originator has or would
have (if Originator or the Sellers were still the owner of such Receivables)
against the Obligors;
               (xviii) the Servicer shall ensure that, with respect to each
Receivable (excluding up to $100,000 of Receivables in the aggregate) related to
judgments, all required notices and recordings with respect to the related
transfer of such Receivable have been filed or otherwise made of record with the
applicable court on the first date after the Transfer Date when the Servicer
makes any filings or appearances with such court, except where in the reasonable
judgment of the Servicer or any applicable Subservicer, filing of such notices
and recordings is not cost-effective and in the best interests of the Borrower;
and

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               (xix) the Servicer will maintain with responsible insurance
companies, such insurance as may be required by any law or governmental
regulation or court decree or order applicable to it and such other insurance,
to such extent and against such hazards and liabilities, as is customarily
maintained by companies similarly situated, including, without limitation (1) an
errors and omissions insurance policy and (2) a blanket employee dishonest
coverage.
          (b) The Borrower hereby represents, warrants and covenants to the
Collateral Agent (for the benefit of the Secured Parties) and the Servicer that:
               (i) the Borrower is duly organized, validly existing and in good
standing as a limited liability company under the laws of the State of Delaware
and is qualified to transact business in and is in good standing under the laws
of each state in which it is necessary for it to be so qualified in order to
carry on its business as now being conducted; the Borrower has the full power
and authority to own its property, to carry on its business as presently
conducted, and to execute, deliver and perform this Servicing Agreement; the
execution, delivery and performance of this Servicing Agreement by the Borrower
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by all necessary partnership action on the part of the
Borrower; and this Servicing Agreement evidences the legal, valid, binding and
enforceable obligation of the Borrower, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors’ rights generally and by general principles of equity.
               (ii) the Borrower is not required to obtain the consent of any
other party or obtain the consent, license, approval or authorization of, or
make any registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Servicing Agreement;
               (iii) the consummation of the transactions contemplated by this
Servicing Agreement and the fulfillment of the terms hereof will not result in
the breach of any term or provision of the limited liability company agreement
of the Borrower or result in the breach of any term or provision of, or conflict
with or constitute a default under or result in the acceleration of any
obligation under, any agreement, indenture or loan or credit agreement or other
instrument to which the Borrower or its property is subject, or result in the
violation of any law, rule, regulation, order, judgment or decree to which the
Borrower or its property or the Receivables are subject;
               (iv) the Borrower is not a party to, bound by or in breach or
violation of any indenture or other agreement or instrument, or subject to or in
violation of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it, that
adversely affects, or may in the future be reasonably expected to adversely
affect, the ability of the Borrower to perform its obligations under this
Servicing Agreement; and

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               (v) there are no actions, suits or proceedings pending or, to the
knowledge of the Borrower, threatened against the Borrower, before or by any
court, administrative agency, arbitrator or governmental body with respect to
any of the transactions contemplated by this Servicing Agreement.
     Upon discovery by the Borrower, the Servicer or the Collateral Agent of a
breach of any of the representations and warranties set forth in this
Section 2.01, the party discovering such breach shall give prompt written notice
thereof to the other parties.
     Section 2.2 Indemnity of Initial Servicer. Without limiting any other
rights which any such Person may have hereunder or under applicable law, the
initial Servicer hereby agrees to indemnify each Indemnified Party forthwith on
demand, from and against any and all Indemnified Amounts awarded against or
incurred by any of them arising out of or relating to the failure of the
Servicer to perform its obligations under any Transaction Document, excluding,
however, Indemnified Amounts to the extent determined by a court of competent
jurisdiction to have resulted from gross negligence or willful misconduct on the
part of such Indemnified Party. Without limiting the foregoing, but subject to
the exclusions set forth in the immediately preceding sentence, the initial
Servicer hereby agrees to indemnify each Indemnified Party for Indemnified
Amounts arising out of or relating to:
     (a) the breach of any representation or warranty made by the Servicer (or
any of its respective officers) under or in connection with this Agreement or
the other Transaction Documents, any Periodic Report or any other information,
report or certificate delivered by the Servicer pursuant hereto or thereto,
which shall have been false or incorrect in any material respect when made or
deemed made;
     (b) the failure to take any action necessary by the Servicer to comply in
any material way with any applicable law, rule or regulation with respect to any
Receivable or the nonconformity of any Receivable with any such applicable law,
rule or regulation;
     (c) the failure to vest and maintain vested in the Collateral Agent a
first-priority perfected security interest in all the Receivables or the other
Collateral, free and clear of any Adverse Claim, other than an Adverse Claim
arising solely as a result of an act of Lender or the Collateral Agent, or any
assignee of Lender or the Collateral Agent;
     (d) the failure or delay in filing financing statements or other similar
instruments or documents under the UCC of any applicable jurisdiction or other
applicable laws with respect to any Receivables or other Collateral;
     (e) failure or delay in delivering any notices, obtaining any consents or
recording any transfers or pledge necessary to perfect the ownership interest of
the Borrower or security interest of the Collateral Agent, in the Receivables
and other Collateral, free and clear of any Adverse Claim;

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     (f) any failure of the Servicer to perform its duties or obligations in
accordance with the provisions of this Servicing Agreement, the Receivables
Financing Agreement or any provision contained in any other Transaction
Document; or
     (g) the commingling of the proceeds of the Receivables or other Collateral
at any time with other funds.
     If for any reason the indemnification provided above in this Section 2.02
is unavailable to an Indemnified Party or is insufficient to hold an Indemnified
Party harmless, then the initial Servicer shall contribute to the amount paid or
payable by such Indemnified Party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by such Indemnified Party, on the one hand, and the Servicer,
on the other hand, but also the relative fault of such Indemnified Party, on the
one hand, and the Servicer, on the other hand, as well as any other relevant
equitable considerations.
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
     Section 3.1 Servicer to Act as Servicer of Receivables. The Servicer shall
service, manage and administer the Receivables on behalf of the Borrower and the
Collateral Agent (for the benefit of the Secured Parties) and shall have full
power and authority, acting alone and/or through Subservicers as provided in
Section 4.01, to do any and all things that it may deem reasonably necessary or
desirable in connection with such servicing and administration and that do not
violate any of the material terms of this Servicing Agreement or the Accepted
Servicing Practices. Consistent with the terms of this Servicing Agreement and
the Accepted Servicing Practices, the Servicer may waive, modify or vary any
term of any Receivable or consent to the postponement of strict compliance with
any such term or in any manner, grant indulgence to any Obligor under a
Receivable if, in the Servicer’s reasonable determination, such waiver,
modification, postponement or indulgence is not adverse to the interests of the
Borrower, the Collateral Agent or any of the Secured Parties. Without limiting
the generality of the foregoing, the Servicer in its own name or in the name of
the Borrower is hereby authorized and empowered by the Borrower when the
Servicer believes it appropriate in its best judgment to execute and deliver, on
behalf of the Borrower, any and all instruments of satisfaction or cancellation,
or of partial or full release or discharge and all other comparable instruments,
with respect to the Receivables.
     The Servicer shall service, manage and administer the Receivables in
accordance with applicable law, including the Fair Debt Collection Practices Act
of 1968, as amended, and comparable state statutes, and by employing such
procedures (including collection procedures) and degree of care, in each case as
are customarily employed by the Servicer in servicing, managing and
administering contracts owned or serviced by the Servicer comparable to the
Receivables. The Servicer shall take all actions that are necessary or desirable
to maintain continuous perfection of security interests granted by the Obligors
in any collateral securing the Receivables, including, but not limited to,
recording, registering, giving notice, obtaining consents, filing, re-recording,
re-registering and refiling security agreements, financing

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'

statements, continuation statements, notices, recordings or communications with
court or other instruments as are necessary to maintain the security interest
granted by the Obligors under the respective Receivables or as are required to
perfect any Transfer of the Receivable Assets. The Servicer shall comply at all
times in all material respects with the Accepted Servicing Practices and shall
not take any action to impair the Collateral Agent’s security interest in any
Receivable or related collateral, if any, except to the extent allowed under
this Servicing Agreement, consistent with Accepted Servicing Practices or
required by law.
     The Servicer shall, at its expense, make, procure, execute and deliver such
financing statement or statements, or amendments thereof or supplements thereto,
or other instruments, certificates and supplemental writings, and do and deliver
all acts, things, writings and assurances as necessary in order to comply with
the UCC, or any other applicable law, to preserve and protect the security
interest granted under the Transaction Documents and the priority of such
security interest.
     The Servicer may perform any of its duties pursuant to this Servicing
Agreement, including those delegated to it pursuant to this Servicing Agreement,
through Subservicers appointed by the Servicer, including Affiliates of the
Servicer; provided, that, in each such delegation to a Subservicer: (i) such
Subservicing Agreement shall be entered into in accordance with Section 4.01;
and (ii) the Administrator, the Lender and the Collateral Agent shall have the
right to look solely to the Servicer for performance. Notwithstanding any such
delegation of a duty, the Servicer shall remain obligated and liable for the
performance of such duty as if the Servicer were performing such duty. No later
than June 30, 2008, each Subservicer shall agree in writing, to the extent not
provided for in a Subservicing Agreement, to the following terms, in form
reasonably acceptable to the Administrator: (i) following the termination of the
servicing by the Servicer hereunder, the Collateral Agent may, at its option,
(y) become, or appoint, an assignee under such Subservicing Agreement or
(z) after no more than thirty (30) days prior written notice to the Subservicer,
terminate the Subservicer under the related Subservicing Agreement (other than
under the W&A Subservicing Agreement, except in connection with a Subservicer
Termination Event (as defined therein), or under the Unifund Subservicing
Agreement, except in connection with a Servicer Event of Default (as defined
therein)) with respect to the Receivables other than Exempted Receivables,
(ii) the Subservicer shall deposit all Collections received by such Subservicer
directly into the Collection Account or an account designated in writing by the
Administrator to the Servicer and the Subservicer, and the Subservicer will not,
without the prior written consent of the Administrator, follow the instructions
of the Servicer with respect to the depositing of Collections, (iii) the
Subservicer will, upon the request of the Collateral Agent, deliver to the
Collateral Agent information with respect to the Receivables as reasonably
requested and (iv) the Subservicer shall agree to provide the Administrator with
the same audit and inspection rights provided to the Servicer and its lenders
under the related Subservicing Agreement.
     The Servicer may take such actions as are necessary to discharge its duties
as the Servicer in accordance with this Servicing Agreement, including the power
to execute and deliver on behalf of the Borrower such instruments and documents
as may be customary, necessary or desirable in connection with the performance
of the Servicer’s duties under this Servicing Agreement (including consents,
waivers and discharges relating to the Receivables and related collateral, if
any, and such instruments or documents as may be necessary to effect liquidation
of

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any Receivable or related collateral, if any). In furtherance thereof, the
Borrower hereby irrevocably appoints the Servicer as its attorney-in-fact to
execute on its behalf such documents or instruments as are necessary to effect
the liquidation of any Receivable or related collateral, if any.
     Section 3.2 Collection of Receivable Payments; Collection Account. The
Servicer shall comply in all material respects with generally accepted
collection industry standards and policies and procedures of the Servicer and
shall at all times in all material respects follow the Accepted Servicing
Practices in collecting and attempting to collect all payments called for under
the terms and provisions of the Receivables, and shall use servicing procedures
generally accepted in the collection industry for similar accounts and as
otherwise expressly provided by this Servicing Agreement; provided, however,
that the Servicer shall not be obligated to institute any action unless it
determines in its good faith judgment that Liquidation Proceeds that would be
realized in connection therewith would be sufficient for the reimbursement in
full of its out-of-pocket expenses pursuant to this Servicing Agreement. In
connection with such action, the Servicer shall follow such practices and
procedures required by Section 3.01 and make advances of its own funds for any
out-of-pocket expenses incurred. The Servicer shall be reimbursed for
Liquidation Expenses (including advances) by retention of the required
reimbursement from Liquidation Proceeds and shall deposit the excess of such
proceeds in the Collection Account.
     Subject to Section 3.06, the Servicer shall deposit in the Collection
Account no later than 1 Business Day following receipt thereof by the Servicer
the following amounts received by it:
               (i) All Liquidation Proceeds, including, without limitation, all
principal, finance charges, interest, late payment fees, insurance proceeds and
extension fees and all other amounts and charges but net of (x) charge backs
(attributable to errors in posting, returned checks), (y) rights of offset for
amounts that should not have been paid or that must be refunded as the result of
a successful claim or defense under bankruptcy or similar laws, and (z) proceeds
to be retained by the Servicer for reimbursement of Liquidation Expenses; and
               (ii) Any other proceeds of any Receivables or property acquired
in respect thereof and any other Collections received by the Servicer, in
respect of the purchase price for Receivables purchased by Borrower from
Originator pursuant to Section 4.1 of the Sale Agreement.
     From the time of receipt of any of the amounts specified in the preceding
three clauses of this paragraph until deposit thereof in the Collection Account,
the Servicer shall segregate such amounts from other funds held by it. The
Servicer shall not deposit or otherwise credit to the Collection Account, or
cause or permit to be so deposited or credited by any Person, any amounts not
representing proceeds of the Collateral. The Servicer agrees that it has no
ownership right or interest in amounts on deposit in the Collection Account,
except that which may arise indirectly through a right to receive distributions
from the Collection Account under this Servicing Agreement or under the
Receivables Financing Agreement. The Servicer shall have the right to request
the Collateral Agent to withdraw the following amounts from the Collection
Account for payment to the Servicer on each Distribution Date or such other
dates consented to by the Administrator: (a) chargebacks attributable to errors
in posting, returned

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checks, or rights of offset for amounts that should not have been paid or that
must be refunded as a result of a successful claim or defense under bankruptcy
or similar laws (to the extent such amounts have not already been retained by
the Servicer pursuant to clause (i) and (ii) of this paragraph) and (b) amounts
deposited in error by the Servicer (and the Collateral Agent may rely on the
Servicer’s calculation of such chargebacks and amounts).
     Notwithstanding the foregoing, in those cases where a Subservicer is
servicing a Receivable pursuant to a Subservicing Agreement, the Servicer shall
cause the Subservicer, pursuant to the Subservicing Agreement, to deposit all
Collections received directly or indirectly by the Subservicer into the
Collection Account (net of any servicing fee (not in excess of the Servicing Fee
with respect thereto)) within 2 Business Days of its receipt thereof in respect
of the Receivables being subserviced by such Subservicer or as otherwise set
forth on Schedule 2 hereto.
     Section 3.3 Custodial Arrangements.
          (a) Subject to the terms and conditions of this Section, the Servicer
shall maintain custody and possession of the Receivable Files with respect to
the Receivables (for the benefit of the Secured Parties).
          (b) To the extent any Receivable Files or any portion thereof are held
by the Servicer in accordance with Section 3.03(a), the Servicer agrees to act
with reasonable care, using that degree of skill and care that it exercises with
respect to similar contracts owned and/or serviced by it. The Servicer shall
promptly report to the Collateral Agent and the Administrator any material
failure by it to hold such Receivable Files as herein provided and shall
promptly take appropriate action to remedy such failure. In connection with
holding any Receivable Files, the Servicer agrees not to assert, and shall cause
each related Subservicer not to assert any beneficial ownership interests in the
Receivables. The Servicer agrees to indemnify the Collateral Agent, the other
Secured Parties and the Borrower, and their respective officers, directors,
employees, partners and agents for any and all liabilities, obligations, losses,
damages, payments, costs, or expenses of any kind whatsoever that may be imposed
on or incurred by any such Person arising from the negligence or willful
misconduct of the Servicer in holding of the Receivable Files pursuant to
Section 3.03(a); provided, however, that the Servicer will not be liable to the
extent that any such amount resulted from the gross negligence or willful
misconduct of such Person.
          (c) The Servicer shall not, without the prior written consent of the
Administrator, deliver or release to the Borrower or any other Person any
Receivable Files (or the security interest in the related collateral, if any)
except (i) to the Subservicers, (ii) in the ordinary course of its business in
connection with the release of collateral securing such Receivable after
satisfaction of the related indebtedness thereunder and (iii) in connection with
a purchase of a Receivable pursuant to the Sale Agreement or the Receivables
Financing Agreement. Upon the request of the Administrator following the
occurrence of a Termination Event, the Servicer shall deliver to the Collateral
Agent all Receivable Files held by the Servicer.

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     Section 3.4 Reports to Collateral Agent and Borrower.
          (a) Except as set forth on Schedule 2 hereto, the Servicer shall
prepare and deliver, on behalf of the Borrower, the Periodic Report in
accordance with Section 9.1.8(c) of the Receivables Financing Agreement.
          (b) The Servicer shall verify that Receivables included as Eligible
Receivables, for purposes of determining the Borrowing Base, are in fact
Eligible Receivables as of the date of such Periodic Report.
     Section 3.5 Annual Statement as to Compliance. The Servicer will deliver to
the Borrower, the Collateral Agent and the Administrator on or before April 30
of each year, beginning with April 30, 2008, an Officer’s Certificate stating
that (i) a review of the activities of the Servicer during the preceding
calendar year and of performance under this Servicing Agreement has been made
under such officer’s supervision, (ii) to the best of such officer’s knowledge,
based on such review, the Servicer has fulfilled all its obligations under this
Servicing Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof and (iii) to the best of such
officer’s knowledge, each Subservicer has fulfilled its obligations, or, if
there has been a default in the fulfillment of such obligations, specifying such
default known to such officer and the nature and status thereof.
     Section 3.6 Servicing Compensation. The Servicer, as compensation for its
activities hereunder, shall be entitled to receive the Servicing Fee, which,
except as set forth on Schedule 2 hereto, shall be payable by the Borrower on
each Distribution Date from funds on deposit in the Collection Account in
accordance with Section 4.2 of the Receivables Financing Agreement; provided,
however, in all instances with respect to Exempted Receivables and otherwise,
prior to the occurrence of a Termination Event or Unmatured Termination Event
(which has not been waived), the Servicer may withhold the Servicing Fee payable
thereto with respect to any Collections from the amount to be deposited thereby
into the Collection Account.
     The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder (including payment of the
fees and expenses of any Subservicer) and shall not be entitled to reimbursement
therefor except as specifically provided in Section 3.02.
     Section 3.7 Receivable Reviews. To the extent permitted under applicable
law any time during regular business hours and upon at least five Business Days’
prior notice (so long as no Servicer Termination Event or Unmatured Servicer
Termination Event has occurred within such calendar year), the Servicer shall
permit the Administrator or its agents or representatives (i) to examine and
make copies of, and abstracts from, the Receivable Files and of all books,
records and documents (including, without limitation, computer tapes and disks)
in possession or under control of the Servicer or any Subservicer (to the extent
permissible under the related Subservicing Agreement) relating to the
Receivables, (ii) to cause such books and records to be audited by independent
public accounts selected by the Administrator and (iii) to visit the offices

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and properties of the Servicer for the purposes of examining such materials
described above, and to discuss matters related to the Receivables with any of
the officers and employees of the Servicer having knowledge of such matters. Any
activities undertaken by the Administrator in connection with items (i) through
(iii) above, shall be at the expense of the Servicer; provided, however, that
the Servicer shall not be required to pay for more than two audits in any
calendar year unless a Termination Event or Unmatured Termination Event has
occurred and is continuing, in which event such audits may be as frequently as
the Administrator may determine in its sole discretion.
ARTICLE IV
SUBSERVICERS
     Section 4.1 Subservicing Agreements Between Servicer and the Subservicers.
The Servicer, with the prior written consent of the Administrator (if such
Subservicing Agreement is with a Subservicer other than each Subservicer listed
on Schedule 2 hereto, as amended or supplemented from time to time with the
prior written consent of the Administrator), may enter into Subservicing
Agreements with one or more Subservicers for the servicing and administration of
some or all of the Receivables. References in this Servicing Agreement to
actions taken or to be taken by the Servicer in servicing the Receivables
include actions taken or to be taken by a Subservicer on behalf of the Servicer.
Each Subservicing Agreement shall provide for each Subservicer to service the
related Receivables in accordance with Accepted Servicing Practices; provided,
that no Subservicing Agreement shall provide for the servicing of Receivables on
terms and conditions that would result in the failure of the Servicer to comply
with the terms and conditions of this Servicing Agreement (including the
modifications set forth on Schedule 2 hereto, as may be amended from time to
time) in any material respect. Each Subservicer may hire third party vendors,
provided that such Subservicers remain at all times in compliance with the
related Subservicing Agreement. The Servicer hereby acknowledges that it is
holding the Receivable Files and any other items of the Collateral in its
possession from time to time for the related Receivables as bailee of Borrower
and the Collateral Agent (for the benefit of the Secured Parties) in accordance
with Section 3.03.
     Section 4.2 Obligation of Servicer. Notwithstanding any Subservicing
Agreement, any of the provisions of this Servicing Agreement relating to
agreements or arrangements between the Servicer or a Subservicer or reference to
actions taken through a Subservicer or otherwise, the Servicer shall remain
obligated to the Borrower and the Collateral Agent for the servicing, managing
and administering of the Receivables in accordance with the provisions of
Section 3.01 without diminution of such obligation or liability by virtue of
such Subservicing Agreements or arrangements or by virtue of indemnification
from a Subservicer and to the same extent and under the same terms and
conditions as if the Servicer alone were servicing, managing and administering
the Receivables. The Servicer shall be entitled to enter into any agreement with
a Subservicer for indemnification of the Servicer and nothing contained in this
Servicing Agreement shall be deemed to limit or modify such indemnification.
     Section 4.3 No Contractual Relationship Between a Subservicer and Borrower
or Collateral Agent. Any Subservicing Agreement that may be entered into and any
other

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transactions or services relating to the Receivables involving a Subservicer in
its capacity as such and not as an originator shall be deemed to be between a
Subservicer and the Servicer alone and the Borrower and the Collateral Agent
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to a Subservicer except as set
forth in Section 4.04.
     Section 4.4 Assumption or Termination of Subservicing Agreement by
Collateral Agent. In the event the Servicer shall for any reason no longer be
the servicer of the Receivables (including by reason of a Servicer Termination
Event), the successor Servicer shall, at the direction of the Administrator, in
accordance with Section 3.01: (i) assume all of the rights and obligations of
the Servicer under one or more Subservicing Agreements that may have been
entered into by giving notice of such assumption to the related Subservicer or
Subservicers within ten (10) Business Days of the termination of the Servicer as
servicer of the Receivables or (ii) except with respect to Exempted Receivables,
terminate all of the rights and obligations of any Subservicer under the related
Subservicing Agreement. Upon the giving of such notice, the successor Servicer
shall be deemed to have assumed all of the Servicer’s interest therein and to
have replaced the Servicer as a party to the Subservicing Agreement to the same
extent as if the Subservicing Agreement had been assigned to the assuming party
except that the Servicer and the Subservicer, if any, shall not thereby be
relieved of any accrued liability or obligations under the Subservicing
Agreement and the Subservicer, if any, shall not be relieved of any liability or
obligation to the Servicer that survives the assignment or termination of the
Subservicing Agreement.
     The predecessor Servicer shall, upon request of the successor Servicer (at
the expense of the predecessor Servicer), deliver to the assuming party all
documents and records relating to the Subservicing Agreement and the Receivables
then being serviced and an accounting of amounts collected and held by it and
otherwise use its best efforts to effect the orderly and efficient transfer of
the Subservicing Agreement to the assuming party.
ARTICLE V
SERVICER TERMINATION EVENT
     Section 5.1 Servicer Termination Event. “Servicer Termination Event,”
wherever used herein, means any one of the following events:
          (i) the Servicer shall fail, or fail to cause any Subservicer, to
deposit all amounts required to be deposited in the Collection Account by the
Servicer or Subservicer when required to be deposited under this Servicing
Agreement and such failure shall continue unremedied for 1 Business Day after
the Servicer has knowledge or notice thereof, other than with respect to
administrative errors not to exceed $10,000 of Collections in any Collection
Period for which such grace period shall be 5 Business Days after the Servicer
has knowledge or notice thereof; or
          (ii) the Servicer shall fail to observe or perform in any material
respect any other of the covenants or agreements on the part of the Servicer
contained in this Servicing

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Agreement or any other Transaction Document to which it is a party and such
failure shall continue unremedied for a period of twenty (20) days after the
Servicer has knowledge or notice thereof;
          (iii) a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises in an involuntary case under any present or
future federal or state bankruptcy, insolvency or similar law or appointing a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Servicer;
          (iv) the Servicer shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of, or relating to, the Servicer
or of, or relating to, all or substantially all of the property of the Servicer;
          (v) the Servicer shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of, or commence
a voluntary case under, any applicable insolvency or reorganization statute,
make an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations;
          (vi) the Servicer shall have breached any of the representations and
warranties set forth in Section 2.01 in any material respect and the Servicer
shall have failed to cure such breach within ten (10) days of its receipt of a
notice of such breach;
          (vii) a Change in Control shall have occurred with respect to the
Servicer (if Palisades Collection is the Servicer);
          (viii) (a) the amendment of any Subservicing Agreement without the
prior written consent of the Administrator or (b) the Servicer or Borrower
enters into a new Subservicing Agreement with respect to the Receivables without
the written consent of the Administrator;
          (ix) an Event of Default (as defined in the Loan Agreement) has
occurred under such facility which has not been waived prior to termination of
the rights of the Servicer under this Servicing Agreement; or
          (x) a Termination Event shall have occurred under the Receivables
Financing Agreement.
     If a Servicer Termination Event shall occur (which has not been waived),
then, and in each and every such case, the Administrator may, by notice in
writing to the Servicer (with a copy to the Borrower and the Collateral Agent),
terminate all of the rights and obligations of the Servicer under this Servicing
Agreement and in and to the Servicer’s interest in and to the

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Receivables and the proceeds thereof (except with respect to a Subservicer’s
right to collect Exempted Receivables pursuant to the applicable Subservicing
Agreement or as otherwise set forth on Schedule 2 hereto), subject to
compensation, rights of reimbursement, indemnity and limitation on liability to
which the Servicer is then entitled, and the Servicer shall immediately provide
each Subservicer with a copy of such notice. Such notice shall specify, to the
extent possible, the timing and method of transition to a successor Servicer. On
and after the receipt by the Servicer of such written notice and upon the
effective date of the transfer to the new Servicer specified in such notice, all
authority and power of the Servicer under this Servicing Agreement, whether with
respect to the Receivables or otherwise, shall pass to and be vested in the
successor Servicer appointed pursuant to Section 5.02; provided, however, that
the successor Servicer shall not (i) be liable with respect to prior actions or
omissions of the predecessor Servicer or (ii) be required to make advances
pursuant to the terms of this Servicing Agreement; and, without limitation, such
Person is hereby authorized and empowered to execute and deliver, on behalf of
the Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Receivables and
related documents, or otherwise. The Servicer agrees to cooperate with such
responsibilities and rights hereunder, including, without limitation, the
transfer to such party for administration by it of all cash amounts that shall
at the time be credited to the Collection Account or thereafter be received with
respect to the Receivables. If the Servicer is terminated pursuant to this
Section 5.01, then the Servicer shall bear all of the costs and expenses of
transferring the duties and obligations of the Servicer to a successor Servicer;
provided, however, that if the Servicer fails to bear all such costs and
expenses the successor Servicer shall be entitled to reimbursement from amounts
realized on the related collateral, if any, by retention of such amounts prior
to the distribution of any Collections from the Collection Account in accordance
with Section 4.2 of the Receivables Financing Agreement.
     Section 5.2 Appointment of Successor. On and after the time the Servicer
receives a notice of termination pursuant to Section 5.01, the Administrator may
appoint (and provide written notice of such appointment to the Collateral Agent)
a successor Servicer, and such appointee shall be the successor in all respects
to the Servicer in its capacity as the Servicer under this Servicing Agreement
and the Receivables Financing Agreement; provided, however, that the successor
Servicer shall not (i) be liable with respect to prior actions or omissions of
the predecessor Servicer or (ii) be required to make advances pursuant to the
terms of this Servicing Agreement. As compensation therefor, the successor
Servicer shall be entitled to all funds relating to the Receivables that the
Servicer would have been entitled to receive if the Servicer had continued to
act hereunder; provided, however, the Administrator may approve such additional
amounts based upon servicing bids obtained thereby.
     Section 5.3 Term of Servicer. Upon 30 days prior written notice, the
Servicer may be removed by the Borrower (with the prior written consent of the
Administrator), such removal to become effective upon the approval of a
successor Servicer by the Administrator and the acceptance of such appointment
by such Servicer; provided that such successor Servicer shall assume the
obligations provided for in Section 4.04.

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     Section 5.4 Term of Agreement. This Agreement shall terminate upon the
earlier of: (i) the final and full payment of Obligations under the Receivables
Financing Agreement and (ii) any provision of this Servicing Agreement providing
for termination hereunder.
ARTICLE VI
MISCELLANEOUS PROVISIONS
     Section 6.1 Amendments, Etc. No amendment, modification or waiver of, or
consent with respect to, any provision of this Servicing Agreement shall be
effected unless the same shall be in writing and signed and delivered by each of
the Borrower, the Servicer and the Collateral Agent, and then any such waiver or
consent shall be effected only in the specific instance and for the specific
purpose for which given.
     Section 6.2 Acknowledgment of Servicer and Subservicers. The Servicer
hereby acknowledges that pursuant to the Security Agreement, the Borrower has
assigned its rights (but not its obligations) under this Servicing Agreement for
collateral purposes to the Collateral Agent (for the benefit of the Secured
Parties). The Servicer hereby consents to such assignment and agrees that upon
request from the Collateral Agent after the occurrence of a Termination Event,
the Servicer shall provide all services described in this Servicing Agreement
for the benefit of the Collateral Agent (for the benefit of the Secured Parties)
in accordance with the terms of this Servicing Agreement. The parties hereto
acknowledge and agree that each Servicer Termination Event, if any, existing on
May 11, 2008, and each Termination Event (as defined in the Receivables
Financing Agreement), if any, existing on May 11, 2008, arising in connection
with any discrepancies in the terms of this Servicing Agreement and any
Subservicing Agreement (other than with respect to the W&A Subservicing
Agreement, which had been entered into between the Servicer and Wolpoff &
Abramson, L.L.P. with the consent of BMO CM) is hereby waived and shall be
deemed to have been remedied for every purpose under the Transaction Documents.
     Section 6.3 Notices. Any notice required or permitted to be given under
this Servicing Agreement shall be in writing and shall be mailed by express
mail, postage prepaid, or personally delivered to an officer of the receiving
party. All such communications shall be mailed, sent or delivered to the parties
at their respective addresses as set forth opposite their respective signatures
to the Receivables Financing Agreement, or as to any party at such other address
as shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section. All such notices and
other communications shall, if properly addressed and sent by pre-paid courier
service, be deemed given when received; any notice or other communication, if
transmitted by facsimile, shall be deemed given when transmitted and receipt
thereof has been confirmed by telephone or electronic means.
     Section 6.4 GOVERNING LAW. THIS SERVICING AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
OTHER THAN THOSE SET FORTH IN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK.

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     Section 6.5 Successors and Assigns. This Servicing Agreement shall be
binding upon and shall inure to the benefit of the parties hereto, the Secured
Parties and their successors and assigns; provided, however, neither the
Borrower nor the Servicer may assign its rights, obligations or duties hereunder
without the prior written consent of the Administrator, except as otherwise set
forth in this Servicing Agreement.
     Section 6.6 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Servicing Agreement shall be
for any reason whatsoever held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Servicing Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Servicing
Agreement.
     Section 6.7 Consent to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS SERVICING AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
NEW YORK OR OF THE UNITED STATES FEDERAL COURT SITTING IN NEW YORK, NEW YORK,
AND BY EXECUTION AND DELIVERY OF THIS SERVICING AGREEMENT, EACH OF THE BORROWER
AND THE SERVICER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWER AND THE
SERVICER IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
SERVICING AGREEMENT OR ANY DOCUMENT RELATED HERETO.
     Section 6.8 Counterparts. This Servicing Agreement may be executed in two
or more counterparts, each of which shall be an original, but all of which
together shall constitute one and the same instrument.
     Section 6.9 Survival. The rights and remedies with respect to the
indemnification provisions of Section 2.02 shall be continuing and shall survive
any termination of this Agreement and any termination of any initial Servicer’s
rights to act as a “Servicer” hereunder or under any other Transaction Document.

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     IN WITNESS WHEREOF, the Borrower, the Servicer and the Collateral Agent
have caused their names to be signed hereto by their respective officers
thereunto duly authorized, all as of the day and year first above written.

            PALISADES ACQUISITION XVI, LLC
      By:   /s/ Mitchell Cohen         Name:   Mitchell Cohen        Title:  
Manager     

 

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            PALISADES COLLECTION, L.L.C.,
   as the Servicer
      By:   /s/ Mitchell Cohen         Name:   Mitchell Cohen        Title:  
Manager     

 

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                      BMO CAPITAL MARKETS CORP.
   as the Collateral Agent    
 
               
 
  By:       /s/ John Pappano                
 
      Name:   John Pappano    
 
               
 
      Title:   Managing Director    
 
               

 

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                      ACKNOWLEDGED AND AGREED:    
 
                    FAIRWAY FINANCE COMPANY, LLC    
 
               
 
  By:   /s/ Philip A. Martone                  
 
      Name:   Philip A. Martone    
 
               
 
      Title:   Vice President    
 
               

 

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                      ACKNOWLEDGED AND AGREED:    
 
                    BANK OF MONTREAL    
 
               
 
               
 
  By:   /s/ Masami Hida                  
 
      Name:   Masami Hida    
 
               
 
      Title:   Vice President    
 
               

 

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SCHEDULE 1
SERVICING FEE SCHEDULE
Servicing Fees relating to Receivables (a) with respect to which the Servicer
has not engaged a Subservicer or (b) under the W&A Subservicing Agreement:

          CLASS OF RECEIVABLE   PERCENTAGE
Receivables directly being serviced by the Servicer or a Subservicer; provided,
for the purposes of clarification, that any Receivable subserviced by a vendor
under a Subservicing Agreement, will not be deemed to be directly serviced by
the Servicer or a Subservicer
    24 %
All Bankrupt Receivables
    50 %
All Receivables outside of the related statute of limitations
    50 %
All other Receivables
    30 %

Notwithstanding the foregoing, the Servicer will undertake reasonable best
efforts to reduce the fee paid to the Subservicer under the W&A Subservicing
Agreement by 4%, to the extent W&A utilizes information obtained by the Servicer
in connection with the Unifund Servicing Agreement, and, in connection
therewith, reduce the corresponding Servicing Fee by such amount.
Servicing Fees relating to Receivables under the Unifund Subservicing Agreement:

  •   35% of gross collections (as defined in the master servicing agreement,
dated as of March 28, 2008, between the Servicer and Unifund CCR Partners)     •
  plus $275,000 per month through May 2009, inclusive     •   plus 3% of gross
cash receipts (as defined in the management agreement), dated as of March 28,
2008, between the Servicer and Unifund CCR Partners) for the first $500,000,000
of gross cash receipts on all Receivables under this Servicing Agreement     •  
plus 7% of gross cash receipts (as defined in the management agreement), dated
as of March 28, 2008, between the Servicer and Unifund CCR Partners) thereafter
on all Receivables under this Servicing Agreement

Servicing Fees relating to Receivables under the Allied Subservicing Agreement,
the FMS Subservicing Agreement, the FMS Inc. Subservicing Agreement, the Penncro
Subservicing Agreement, the Active Subservicing Agreement, the Constar
Subservicing Agreement, the AC Subservicing Agreement and the Plaza Subservicing
Agreement:

  •   50% of gross cash receipts

Servicing Fees relating to Receivables under the TRAKAmerica Subservicing
Agreement:

  •   For Receivables identified as “recalls”: 32% of gross cash receipts or    
•   For Receivables identified as “Telecom accounts”: 30% of gross cash receipts
for a six-month trial period or     •   For all other Receivables, 30% of gross
cash receipts plus

 

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  •   For all Receivables (a) for which a judgment has been rendered within the
preceding three years or (b) for which suit had been filed in the preceding
twelve months that is in post judgment enforcement, in each case to the extent
such Receivable has been closed or recalled from the Subservicer for reasons
unrelated to the Subservicer’s breach of or failure to perform under the
Subservicing Agreement before payments or promises for payments have been made,
a 5% non-contingent fee payable upon such closing or recall

Gross cash receipts for each Receivable means, for each Subservicing Agreement
other than the W&A Subservicing Agreement and the Unifund Servicing Agreement,
gross collections on such Receivable net, in the case of the TRAKAmerica
Subservicing Agreement, court costs.

 

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SCHEDULE 2
MODIFICATION SCHEDULE
MODIFICATIONS TO SECTION 1.01:
None.
MODIFICATIONS TO SECTION 1.02:
None.
MODIFICATIONS TO SECTION 2.01:
None.
MODIFICATIONS TO SECTION 2.02:
None.
MODIFICATIONS TO SECTION 3.01:
None.
MODIFICATIONS TO SECTION 3.02:

  •   Weekly net Collections under the Allied Subservicing Agreement, the Active
Subservicing Agreement, the Plaza Subservicing Agreement, the FMS Inc.
Subservicing Agreement, the Penncro Subservicing Agreement, the Constar
Subservicing Agreement, the AC Subservicing Agreement and the TRAKAmerica
Subservicing Agreement are remitted to the Servicer by the following Tuesday    
•   Weekly net Collections under the Unifund Subservicing Agreement are remitted
to the Servicer by the following Wednesday     •   Weekly net Collections under
the FMS Subservicing Agreement are remitted to the Servicer by the third
business day of the following week

For purposes of clarification, the collection accounts to which remittances are
made by each Subservicer will be revised in accordance with Section 3.02.
MODIFICATIONS TO SECTION 3.03:
None.
MODIFICATIONS TO SECTION 3.04:

 

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  •   Reports under the Unifund Subservicing Agreement are furnished to the
Servicer monthly by the 12th of each month     •   Reports under the Allied
Subservicing Agreement, the Penncro Subservicing Agreement, the Constar
Subservicing Agreement, the AC Subservicing Agreement and the FMS Inc.
Subservicing Agreement are furnished to the Servicer monthly by the last Tuesday
of each month     •   Reports under the FMS Subservicing Agreement are furnished
to the Servicer monthly by the 10th of each month     •   Reports under the
Active Subservicing Agreement, the Plaza Subservicing Agreement and the
TRAKAmerica Subservicing Agreement are furnished to the Servicer monthly by the
last Wednesday of each month

MODIFICATIONS TO SECTION 3.05:
None.
MODIFICATIONS TO SECTION 3.06:
As compensation for and reimbursements in connection with its duties thereunder,
each Subservicer shall be entitled to withhold an amount equal to the Servicing
Fee plus, in the case of the Non-Agency Subservicers, unreimbursed Liquidation
Expenses from remittances of Collections as compensation under the related
Subservicing Agreement. “Non-Agency Subservicers” means the Subservicers under
the W&A Subservicing Agreement, the Unifund Subservicing Agreement and the
TRAKAmerica Subservicing Agreement.
MODIFICATIONS TO SECTION 3.07:
None.
MODIFICATIONS TO SECTION 4.01:

  •   Unifund CCR Partners pursuant to the Unifund Subservicing Agreement     •
  Wolpoff & Abramson, L.L.P. and Axiant, LLC pursuant to the W&A Subservicing
Agreement     •   Allied International Credit Corp. pursuant to the agency
collection agreement, dated October 5, 2007 (the “Allied Subservicing
Agreement”), between Allied International Credit Corp. and the Servicer     •  
FMS Investment Corp. pursuant to the agency collection agreement, dated
December 13, 2006 (the “FMS Subservicing Agreement”), between FMS Investment
Corp. and the Servicer     •   Active Credit Services, Inc. pursuant to the
agency collection agreement, dated April 20, 2006 (the “Active Subservicing
Agreement”), between Active Credit Services, Inc. and the Servicer     •   Aid
Associates Inc. dba Plaza Associates pursuant to the agency collection
agreement, dated April 11, 2006 (the “Plaza Subservicing Agreement”), between
Aid Associates Inc. dba Plaza Associates and the Servicer

 

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  •   Data Search NY, Inc. d/b/a TRAKAmerica pursuant to the collection
management agreement, dated December 12, 2007 (the “TRAKAmerica Subservicing
Agreement”), between Data Search NY, Inc. d/b/a TRAKAmerica dba TRAKAmerica and
the Servicer     •   FMS Inc. pursuant to the agency collection agreement, dated
November 15, 2007, (the “FMS Inc. Subservicing Agreement”), between FMS Inc. and
the Servicer     •   Penncro Associates, Inc. pursuant to the agency collection
agreement, dated October 4, 2007 (the “Penncro Subservicing Agreement”), between
Penncro Associates, Inc. and the Servicer     •   Constar Financial Services,
LLC pursuant to the agency collection agreement, dated November 11, 2007 (the
“Constar Subservicing Agreement”), between Constar Financial Services, LLC and
the Servicer     •   American Coriadus International LLC pursuant to the agency
collection agreement, dated September 13, 2007 (the “AC Subservicing
Agreement”), between American Coriadus International LLC and the Servicer

Notwithstanding anything in this Servicing Agreement to the contrary, with
respect to each of the Allied Subservicing Agreement, the FMS Subservicing
Agreement, the FMS Inc. Subservicing Agreement, the Penncro Subservicing
Agreement, the Active Subservicing Agreement, the Plaza Subservicing Agreement,
the Constar Subservicing Agreement, the AC Subservicing Agreement and the
TRAKAmerica Subservicing Agreement, the Servicer shall enter into new
Subservicing Agreements with the related Subservicers on the same terms and
conditions as set forth in the existing Subservicing Agreements, subject to
adjustment by June 30, 2008, as applicable, in accordance with Section 3.01 of
this Servicing Agreement.
MODIFICATIONS TO SECTION 4.02:
None.
MODIFICATIONS TO SECTION 4.03:
None.
MODIFICATIONS TO SECTION 4.04:
None.
MODIFICATIONS TO SECTION 5.01:
See modifications to Section 3.06 of this Schedule 2 with respect to the right
of the Subservicer to withhold amounts in respect of compensation and
Liquidation Expenses.
MODIFICATIONS TO SECTION 5.02:
None.
MODIFICATIONS TO SECTION 5.03:

 

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None.
MODIFICATIONS TO SECTION 5.04:
None.
MODIFICATIONS TO SECTION 6.01:
None.
MODIFICATIONS TO SECTION 6.02:
None.
MODIFICATIONS TO SECTION 6.03:
None.
MODIFICATIONS TO SECTION 6.04:
None.
MODIFICATIONS TO SECTION 6.05:
None.
MODIFICATIONS TO SECTION 6.06:
None.
MODIFICATIONS TO SECTION 6.07:
None.
MODIFICATIONS TO SECTION 6.08:
None.
MODIFICATIONS TO SECTION 6.09:
None.
MODIFICATIONS TO SCHEDULE 1:
None.
OTHER MATERIAL MODIFICATIONS TO SERVICING AGREEMENT:
None.

 

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ARTICLE 1.
  DEFINITIONS     2    
Section 1.01
  Definitions     2  
Section 1.02
  Terms Defined in Receivables Financing Agreement     4    
ARTICLE 2.
  REPRESENTATIONS, WARRANTIES AND COVENANTS     4    
Section 2.01
  Representations, Warranties and Covenants of Servicer     4  
Section 2.02
  Indemnity of Initial Servicer     9    
ARTICLE 3.
  ADMINISTRATION AND SERVICING OF RECEIVABLES     10    
Section 3.01
  Servicer to Act as Servicer of Receivables     10  
Section 3.02
  Collection of Receivable Payments; Collection Account     12  
Section 3.03
  Custodial Arrangements     13  
Section 3.04
  Reports to Collateral Agent and Borrower     14  
Section 3.05
  Annual Statement as to Compliance     14  
Section 3.06
  Servicing Compensation     14  
Section 3.07
  Receivable Reviews     14    
ARTICLE 4.
  SUBSERVICERS     15    
Section 4.01
  Subservicing Agreements Between Servicer and the Subservicers     15  
Section 4.02
  Obligation of Servicer     15  
Section 4.03
  No Contractual Relationship Between a Subservicer and Borrower or Collateral
Agent     15  
Section 4.04
  Assumption or Termination of Subservicing Agreement by Collateral Agent     16
   
ARTICLE 5.
  SERVICER TERMINATION EVENT     16    
Section 5.01
  Servicer Termination Event     16  
Section 5.02
  Appointment of Successor     18  
Section 5.03
  Term of Servicer     18  
Section 5.04
  Term of Agreement     19    
ARTICLE 6.
  MISCELLANEOUS PROVISIONS     19    
Section 6.01
  Amendments, Etc     19  
Section 6.02
  Acknowledgment of Servicer     19  
Section 6.03
  Notices     19  
Section 6.04
  GOVERNING LAW     19  
Section 6.05
  Successors and Assigns     20  
Section 6.06
  Severability of Provisions     20  
Section 6.07
  Consent to Jurisdiction     20  
Section 6.08
  Counterparts     20  
Section 6.09
  Survival     20  

 

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Exhibits
           
 
           
Exhibit A
  List of Receivables        
 
           
Schedules
           
 
           
Schedule 1
  Servicing Fee Schedule        
Schedule 2
  Modification Schedule