Document:

ECPG-2015.6.30 Ex 10.4

Exhibit 10.4

AMENDMENT NO. 2 TO  
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDMENT NO. 2 TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”), dated as of July 9, 2015, is entered into by and among ENCORE CAPITAL GROUP, INC., a Delaware corporation (the “Borrower”), the Guarantors identified on the signature pages hereto, the Lenders party hereto, and SUNTRUST BANK, as Administrative Agent (in such capacity, the “Administrative Agent”), Collateral Agent, Swingline Lender and Issuing Bank. 
RECITALS
WHEREAS, the Borrower, the Lenders and the Administrative Agent are parties to that certain Second Amended and Restated Credit Agreement dated as of February 25, 2014 (as amended by that certain Amendment No. 1 to Second Amended and Restated Credit Agreement dated as of August 1, 2014 and as the same may be further amended, restated, extended, supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to which the Lenders have extended revolving credit and term loan facilities to the Borrower; and  
WHEREAS, the Borrower has requested certain amendments to the Credit Agreement set forth herein, and the Administrative Agent, the Collateral Agent, the Swingline Lender, the Issuing Bank and the undersigned Lenders have agreed to such requests, subject to the terms and conditions of this Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:
1.    Defined Terms.  Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to such terms in the Credit Agreement, as amended by this Amendment.  
2.    Amendments to Credit Agreement.  Subject to the terms and conditions hereof and with effect from and after the Second Amendment Effective Date (as defined below), the Credit Agreement is hereby amended as follows:
(a)    Section 1.1 of the Credit Agreement is hereby amended by adding the following new definitions in proper alphabetical order: 
“‘Cash Flow Secured Leverage Ratio’ has the meaning specified in Section 6.2.”
“‘Consolidated Secured Funded Indebtedness’ means, as of any date of determination, the amount of Consolidated Funded Indebtedness as of such date that is secured by any Lien on the property or assets of the Borrower or its Restricted Subsidiaries.”
“‘Initial Trigger Quarter’ has the meaning specified in Section 6.2.
“‘Second Amendment Effective Date’ means July 9, 2015.”
‘“Trigger Quarter’ has the meaning specified in Section 6.2.”
(b)    Section 1.1 of the Credit Agreement is hereby further amended by:

1

Exhibit 10.4

(i)    deleting the defined term “Excluded Subsidiaries” in its entirety, 
(ii)    deleting the defined term “Minority Investment” in its entirety, 
(iii)     amending and restating clause (d) of the definition of “Permitted Foreign Subsidiary Non-Recourse Indebtedness” in its entirety to read as follows:
“(d)    the total principal amount outstanding of such Indebtedness does not at any time exceed 40% of Consolidated Net Worth of the Borrower and its Restricted Subsidiaries”
(iv)    amending and restating the proviso at the end of the definition of “Permitted Restructuring” in its entirety to read as follows: 
“provided that (i) no Receivables or other assets of Unrestricted Subsidiaries shall be commingled with the assets of a Loan Party as a result of such Permitted Restructuring, (ii) no such transfers shall take place from a Loan Party to an Unrestricted Subsidiary or to any other Subsidiary that is not a Loan Party and (iii) such transactions are effected for tax planning and related general corporate purposes.”
(v)    amending and restating clause (II) of subsection (a)(iii) of the definition of “Unrestricted Subsidiary” in its entirety to read as follows:
“(II)    the Fair Market Value of the Borrower’s direct or indirect equity interest in such Subsidiary, in each case, at the time that such Subsidiary is designated an Unrestricted Subsidiary and the Borrower shall be permitted to make such Investment under Section 7.4(i),”
(vi)    amending and restating subsection (a)(iv) of the definition of “Unrestricted Subsidiary” in its entirety to read as follows: 
“(iv)    neither the Borrower nor any Restricted Subsidiary shall at any time be directly, indirectly or contingently liable for any Indebtedness or other liability of any Unrestricted Subsidiary, except to the extent the same would constitute a permitted Investment under Section 7.4(i),”
(c)    Section 5.9 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“The Borrower will, and will cause each Restricted Subsidiary to, use the proceeds of the Loans for working capital and general corporate purposes, which may include, without limitation, purchases of Receivables Portfolios, Permitted Acquisitions, Acquisitions permitted pursuant to Section 7.4(c) and repayment of Indebtedness under the Existing Financing Arrangements.  The Borrower shall use the proceeds of Credit Extensions in compliance with all applicable legal and regulatory requirements and any such use shall not result in a violation of any such requirements, including, without limitation, Regulation U and X, the Securities Act of 1933, and the Exchange Act, and the rules and regulations promulgated under any of the foregoing.”

2

Exhibit 10.4

(d)    The first sentence of Section 5.10 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
“The Borrower shall cause each of its Restricted Subsidiaries (other than Immaterial Subsidiaries and each member of the Propel Group) to guarantee pursuant to the Guaranty Agreement or supplement thereto (or, in the case of a Foreign Subsidiary, any other guaranty agreement requested by the Administrative Agent) the Secured Obligations.”
(e)    The first paragraph of Section 6.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 
“The Borrower will not permit the ratio (the “Cash Flow Leverage Ratio”), determined as of the end of each of its fiscal quarters (commencing with the fiscal quarter ending June 30, 2015), of (i) Consolidated Funded Indebtedness to (ii) Consolidated EBITDA for the then most-recently ended four fiscal quarters to be greater than 2.50:1.00 for each four fiscal-quarter period.”
(f)    The last sentence of Section 6.1 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 
“For purposes of this Section 6.1 and Section 6.2, “Material Acquisition” means any Acquisition or series of related Acquisitions that involves the payment of consideration by the Borrower and its Restricted Subsidiaries in excess of $10,000,000; and “Material Disposition” means any Asset Sale or series of related Asset Sales that yields gross proceeds to the Borrower or any of its Restricted Subsidiaries in excess of $10,000,000.”
(g)    Article VI of the Credit Agreement is hereby amended by (i) renumbering Section 6.2 as Section 6.3; (ii) renumbering Section 6.3 as Section 6.4; and (iii) adding the following new Section 6.2 in proper order therein: 
“Section 6.2        Cash Flow Secured Leverage Ratio.
The Borrower will not permit the ratio (the “Cash Flow Secured Leverage Ratio”) determined as of the end of each of its fiscal quarters (commencing with the fiscal quarter ending June 30, 2015) of (i) Consolidated Secured Funded Indebtedness to (ii) Consolidated EBITDA for the then most-recently ended four fiscal quarters to be greater than 2.00:1.00 for each fiscal four-quarter period; provided that the Cash Flow Secured Leverage Ratio may be increased up to (but not to exceed) 2.25:1.00 for any fiscal quarter ending after the Second Amendment Effective Date during which the Borrower or any of its Restricted Subsidiaries has consummated a Permitted Acquisition in which the is $100,000,000 or more (a “Trigger Quarter”) and for the next succeeding fiscal quarter; provided, further, that the Cash Flow Secured Leverage Ratio shall return to 2.00:1.00 no later than the end of the second fiscal quarter after such Trigger Quarter; provided, further, that following the occurrence of a Trigger Quarter (any such Trigger Quarter, an “Initial Trigger Quarter”), no subsequent Trigger Quarter shall be permitted to occur for purposes of this Section 6.2 unless and until the Cash Flow Secured Leverage Ratio 

3

Exhibit 10.4

is less than or equal to 2.00:1.00 as of the end of at least one fiscal quarter following such Initial Trigger Quarter.
The Cash Flow Secured Leverage Ratio shall be calculated (i) based upon (a) for Consolidated Secured Funded Indebtedness, as of the last day of each such fiscal quarter and (b) for Consolidated EBITDA, the actual amount as of the last day of each fiscal quarter for the most recently ended four consecutive fiscal quarters and (ii) giving pro forma effect to any Material Acquisition and Material Disposition.”
(h)    Section 7.1 of the Credit Agreement is hereby amended by amending and restating subsection (d) thereof in its entirety to read as follows: 
“(d)    Secured or unsecured purchase money Indebtedness (including Capitalized Leases) incurred by the Borrower or any of its Restricted Subsidiaries after the Closing Date to finance the acquisition of assets used in its business, if (1) the total of all such Indebtedness for the Borrower and its Restricted Subsidiaries taken together incurred on or after the Closing Date, when aggregated with the Indebtedness permitted under clause (i) immediately below, shall not exceed an aggregate principal amount of $20,000,000 at any one time outstanding (excluding Capitalized Leases, which shall not be subject to any dollar limitation under this clause (d)), (2) such Indebtedness when incurred shall not exceed the purchase price of the asset(s) financed, (3) no such Indebtedness shall be refinanced for a principal amount in excess of the principal balance outstanding thereon at the time of such refinancing, and (4) any Lien securing such Indebtedness is permitted under Section 7.2 (such Indebtedness being referred to herein as “Permitted Purchase Money Indebtedness”);”
(i)    Section 7.1 of the Credit Agreement is hereby further amended by amending and restating clauses (ii) and (iv) of subsection (e) thereof in their entirety to read as follows: 
“(ii) made by any Loan Party to any other Loan Party;”
“(iv) made by the Borrower or any other Restricted Subsidiary to any Subsidiaries of Propel Acquisition LLC (other than a Blocked Propel Subsidiary) to the extent such loan would be permitted as an investment in compliance with the proviso of Section 7.4(f) or any Unrestricted Subsidiary to the extent such loan would be permitted as an investment in compliance Section 7.4(i);”
(j)    Section 7.1 of the Credit Agreement is hereby further amended by amending and restating subsection (f) thereof in its entirety to read as follows: 
“(f)    Guaranty obligations of the Borrower or any other Loan Party of any Indebtedness of any Restricted Subsidiary permitted under clause (b) of this Section 7.1 or of any Indebtedness of any Subsidiary permitted as an Investment under Section 7.4(i);”
(k)    Section 7.1 of the Credit Agreement is hereby further amended by amending and restating subsection (m) thereof in its entirety to read as follows:

4

Exhibit 10.4

“(m)    Permitted Foreign Subsidiary Investments/Loans, to the extent permitted as an Investment in compliance with Section 7.4(i);”
(l)    Section 7.1 of the Credit Agreement is hereby further amended by amending and restating subsection (n) thereof in its entirety to read as follows: 
“(n)    Additional unsecured or Subordinated Indebtedness of the Borrower or any of its Restricted Subsidiaries, to the extent not otherwise permitted under this Section 7.1; provided, however, that (i) the aggregate principal amount of such additional Indebtedness shall not exceed $1,100,000,000, (ii) such Indebtedness shall not mature, and shall not be subject to any scheduled mandatory prepayment, redemption or defeasance, in each case prior to five (5) years from the date of issuance of such Indebtedness and (iii) if such Indebtedness is Subordinated Indebtedness, the terms of subordination thereof shall be reasonably acceptable to the Administrative Agent;”
(m)    Section 7.1 of the Credit Agreement is hereby further amended by amending and restating subsection (o) thereof in its entirety to read as follows: 
“(o)    The Propel Indebtedness; provided that the aggregate principal amount thereof does not exceed $400,000,000 (exclusive of intercompany loans), and the unsecured guaranty obligations of the Borrower or any other Loan Party of such Propel Indebtedness;”
(n)    Section 7.2 of the Credit Agreement is amended by (i) deleting the word “and” at the end of clause (o) thereof, (ii) replacing the “.” at the end of clause (p) thereof with “; and”, and (iii) adding the following new clauses (q), (r) and (s) at the end of such section: 
“(q)    Liens on Receivables owned by any Foreign Subsidiary solely to secure Indebtedness permitted to be incurred by such Foreign Subsidiary under Section 7.1(l); provided that such Receivables are not Collateral;
(r)     Liens securing Subordinated Indebtedness of the Borrower or any of its Restricted Subsidiaries permitted under this Section 7.1; provided, however, that a representative acting on behalf of the lenders or investors providing such Indebtedness shall have entered into a customary intercreditor agreement reasonably satisfactory to the Administrative Agent; and
(s)    Liens on cash balances in deposit accounts of the Borrower or any Restricted Subsidiary in favor of credit card or other payment processors arising under processor agreements entered into in the ordinary course of business to secure fees, chargebacks and other amounts required to be secured under such agreements; provided, that (i) such Liens attach solely to funds in the deposit accounts that are the subject of such processor agreements and not to any other assets of the Borrower or any Restricted Subsidiary and (ii) such Liens do not secure any obligations for borrowed money.”
(o)    Section 7.4 of the Credit Agreement is hereby amended by amending and restating clause (v) of subsection (d) thereof in its entirety to read as follows: 

5

Exhibit 10.4

“(v)    the aggregate Purchase Price for all such Permitted Acquisitions in any fiscal year shall not exceed $225,000,000;”
(p)    Section 7.4 of the Credit Agreement is hereby further amended by amending and restating the proviso at the end of clause (vii) of subsection (d) thereof in its entirety to read as follows: 
“provided, however, that no such compliance with Sections 6.1, 6.2 or 6.3 is required to be demonstrated in such Acquisition Pro Forma for an Acquisition which is either (x) solely a purchase of assets or (y) an acquisition of an entity or a going business for which no financial statements are available;”
(q)    Section 7.4 of the Credit Agreement is hereby further amended by amending and restating subsection (f) thereof in its entirety to read as follows: 
“(f)    Creation of, or Investment in, a Restricted Subsidiary (other than (i) a Blocked Propel Subsidiary and (ii) a Foreign Subsidiary that is not a Loan Party) and in respect of which the Borrower has otherwise complied with Section 5.10 and Section 5.11; provided that in the case of any investments in any Subsidiaries of Propel Acquisition LLC, such investment shall be permitted only to the extent that after giving effect to such investment, no Default shall exist and continue and that the Borrower shall be in compliance with Section 6.1, Section 6.2 and Section 6.4 on a pro forma basis as if the Investment occurred on the first day of the applicable period being tested pursuant to such Sections;”
(r)    Section 7.4 of the Credit Agreement is hereby further amended by amending and restating subsection (g) thereof in its entirety to read as follows: 
“(g)    Investments constituting Indebtedness permitted by Section 7.1(e), Section 7.1(f), Section 7.1(g) and Section 7.1(o);”
(s)    Section 7.4 of the Credit Agreement is hereby further amended by replacing the “;” at the end of subjection (h) thereof with “; and”.
(t)    Section 7.4 of the Credit Agreement is hereby further amended by amending and restating subsection (i) thereof in its entirety to read as follows: 
“(i)    Investments of the Borrower or any of its Restricted Subsidiaries; provided that the sum of (x) $180,127,845 plus (y) the aggregate amount (valued at the time of the making thereof, and without giving effect to any write-downs or write-offs thereof) of all Investments made on or after the Second Amendment Effective Date pursuant to this clause (i) shall not, at the time of the making of the proposed Investment, exceed the greater of (1) an amount equal to 200% of the Consolidated Net Worth (determined as of the last day of the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 5.1(a) or (b), as applicable) of the Borrower and its Restricted Subsidiaries and (2) an amount such that, after giving effect on a pro forma basis to the making of such Investment and the incurrence of any Indebtedness in connection therewith, the Cash Flow Leverage Ratio (determined as of the last day of the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 5.1(a) or (b), as applicable) is less than 1.25:1.00.”

6

Exhibit 10.4

(u)    Section 7.4 of the Credit Agreement is hereby further amended by amending and restating subsection (j) thereof in its entirety to read as follows: 
“(j)    Investments made by any Foreign Subsidiary that is not a Loan Party in any other Foreign Subsidiary that is not a Loan Party.”
(v)    Section 7.4 of the Credit Agreement is hereby further amended by amending and restating subjection (k) thereof in its entirety to read as follows: 
“(k)    Investments made by any Domestic Subsidiary that is not a Loan Party in any other Domestic Subsidiary that is not a Loan Party.”
(w)    Section 7.4 of the Credit Agreement is hereby further amended by deleting subsection (l) thereof in its entirety.
(x)    Section 7.4 of the Credit Agreement is hereby further amended by adding the following sentence to the end of the unnumbered paragraph at the end of such Section: 
“To the extent that any proposed Investment would be permitted pursuant to more than one of the foregoing clauses of this Section 7.4, the Borrower may in its discretion designate which clause (or clauses to the extent such Investment is to be split or divided into more than one clause) shall be utilized for such Investment.”
(y)    Section 7.5 of the Credit Agreement is hereby amended by amending and restating clause (v) thereof in its entirety to read as follows: 
“(v) the Borrower may, so long as the Payment Conditions (as defined below) are satisfied, make repurchases of its capital stock so long as the aggregate cumulative amount expended on and after the Second Amendment Effective Date for all such repurchases of capital stock does not exceed $150,000,000.”
(z)    Section 7.6 of the Credit Agreement is hereby amended by amending and restating subsection (e) thereof in its entirety to read as follows: 
“(e)    So long as the Borrower makes the prepayments and/or reinvestment of proceeds required under Section 2.12(a) in respect thereof, sales or dispositions of assets outside the ordinary course of business with an aggregate fair market value not to exceed $20,000,000 in any fiscal year; and
(aa)    Section 7.14 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 
“7.14        [Reserved.]”
(bb)    Section 7.15 of the Credit Agreement is hereby amended by deleting the “)” at the end of such Section. 
(cc)    Section 7.16 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: 

7

Exhibit 10.4

“7.16        [Reserved.]”
3.    Representations and Warranties.  The Borrower and the Guarantors hereby represent and warrant to the Administrative Agent, the Collateral Agent, the Swingline Lender, the Issuing Bank and the Lenders as follows:
(a)    No Default or Event of Default has occurred and is continuing as of the date hereof, nor will any Default or Event of Default exist immediately after giving effect to this Amendment.
(b)    The representations and warranties contained in Article V of the Credit Agreement are true and correct in all material respects (except for representations and warranties already covered by concepts of materiality, which shall be true and correct in all respects) as of the date hereof (except for representations and warranties made with reference to an earlier date, which are true and correct in all material respects (except for representations and warranties already covered by concepts of materiality, which shall be true and correct in all respects) as of such date). 
(c)    The execution, delivery and performance by each Loan Party of this Amendment are within such Loan Party’s organizational powers and have been duly authorized by all necessary organizational, and if required, shareholder, partner or member, action.  This Amendment has been duly executed and delivered by each Loan Party.  Each of this Amendment and the Credit Agreement, as amended hereby, constitute the valid and binding obligations of the Loan Parties, enforceable against them in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.
(d)    The execution and delivery of this Amendment by the Loan Parties, and performance by the Borrower of this Amendment and the Credit Agreement, as amended hereby (i) do not require any consent or approval of, registration or filing with, or any action by, any Governmental Authority, except those as have been obtained or made and are in full force and effect, (ii) will not violate any organizational documents of, or any law applicable to, any Loan Party or any judgment, order or ruling of any Governmental Authority, (iii) will not violate or result in a default under the Credit Agreement, the Prudential Senior Secured Note Agreement, any Material Indebtedness Agreement, any other material agreement or other material instrument binding on any Loan Party or any of their assets or give rise to a right thereunder to require any payment to be made by any Loan Party, (iv) will not result in the creation or imposition of any Lien on any asset of any Loan Party, except Liens (if any) created under the Loan Documents and/or (v) will not result in a material limitation on any licenses, permits or other governmental approvals applicable to the business, operations or properties of the Loan Parties.
(e)    The execution, delivery, performance and effectiveness of this Amendment will not: (i) impair the validity, effectiveness or priority of the Liens granted pursuant to any Loan Document, and such Liens continue unimpaired with the same priority to secure repayment of all of the applicable Obligations, whether heretofore or hereafter incurred and (ii) require that any new filings be made or other action taken to perfect or to maintain the perfection of such Liens.
(f)    The Borrower has determined that this Amendment does not constitute a “significant modification” within the meaning of Treasury Regulations Section 1.1001-3(e).

8

Exhibit 10.4

4.    Effective Date.  
(a)    This Amendment will become effective on the date on which each of the following conditions has been satisfied (the “Second Amendment Effective Date”) to the satisfaction of the Administrative Agent:
(i)    the Administrative Agent shall have received counterparts of this Amendment duly executed by the Loan Parties and the Required Lenders;
(ii)    the Borrower shall have paid to Administrative Agent all amounts, including any fees, due and payable hereunder or in connection herewith on or prior to the date hereof, including reimbursement or payment of all out-of-pocket expenses, including all fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent invoiced at least two (2) Business Days prior to or on the Second Amendment Effective Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings; 
(iii)    the Administrative Agent shall have received a certified copy of an amendment to, or an amendment and restatement of, the Prudential Senior Secured Note Agreement duly executed by each party thereto, in form and substance acceptable to the Administrative Agent; and
(iv)    the Administrative Agent shall have received such other instruments, documents and certificates as the Administrative Agent shall reasonably request in connection with the execution of this Amendment. 
(b)    For purposes of determining compliance with the conditions specified in this Section 4, each Lender that has executed this Amendment and delivered it to the Administrative Agent shall be deemed to have consented to, approved or accepted, or to be satisfied with, each document or other matter required under this Section 4 to be consented to or approved by or acceptable or satisfactory to such Lender unless the Administrative Agent shall have received written notice from such Lender prior to the proposed Second Amendment Effective Date specifying its objection thereto.
(c)    From and after the Second Amendment Effective Date, the Credit Agreement is amended as set forth herein.  Except as expressly amended pursuant hereto, the Credit Agreement shall remain unchanged and in full force and effect and is hereby ratified and confirmed in all respects.    
(d)    The Administrative Agent will notify the Borrower and the Lenders of the occurrence of the Second Amendment Effective Date.
5.    Miscellaneous.
(a)    Except as herein expressly amended, all terms, covenants and provisions of the Credit Agreement and each other Loan Document are and shall remain in full force and effect and all references in any Loan Document to the “Credit Agreement” shall henceforth refer to the Credit Agreement as amended by this Amendment.  Nothing in this Amendment or in any of the transactions contemplated hereby is intended, or shall be construed, to constitute a novation or an accord and satisfaction of any of the Obligations of the Borrower under the Credit Agreement or to modify, affect or impair the perfection, priority or continuation of the security interests in, security titles to or other Liens on any Collateral for the Obligations.

9

Exhibit 10.4

(b)    This Amendment shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns.  
(c)    THIS AMENDMENT IS SUBJECT TO THE PROVISIONS OF SECTIONS 10.6 AND 10.7 OF THE CREDIT AGREEMENT RELATING TO GOVERNING LAW, JURISIDICTION AND WAIVER OF RIGHT TO TRIAL BY JURY, THE PROVISIONS OF WHICH ARE BY THIS REFERENCE INCORPORATED HEREIN IN FULL.
(d)    This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Amendment and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Subject to Section 4 above, this Amendment shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties required to be a party hereto.  Delivery of an executed counterpart of a signature page of this Amendment by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Amendment.  This Amendment may not be amended except in accordance with the provisions of Section 10.2 of the Credit Agreement.
(e)    If any provision of this Amendment or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Amendment and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.  The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  Nothing contained herein shall be deemed to constitute a waiver of compliance with any term or condition contained in the Credit Agreement or any of the other Loan Documents, or to constitute a course of conduct or dealing among the parties.  The Administrative Agent and the Lenders reserve all rights, privileges and remedies under the Loan Documents.
(f)    The Borrower shall reimburse the Administrative Agent upon demand for all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) incurred by the Administrative Agent in connection with the preparation, negotiation and execution of this Amendment and the other agreements and documents executed and delivered in connection herewith.  
(g)    In consideration of the amendments contained herein, each of the Loan Parties hereby waives and releases each of the Lenders, the Administrative Agent and the Collateral Agent from any and all claims and defenses, known or unknown, existing as of the date hereof with respect to the Credit Agreement and the other Loan Documents and the transactions contemplated hereby and thereby. 
(h)    This Amendment shall constitute a “Loan Document” under and as defined in the Credit Agreement.
[Remainder of this page intentionally left blank.]

10

Exhibit 10.4

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.
ENCORE CAPITAL GROUP, INC.  
 
 
By: /s/ Jonathan Clark
Name: Jonathan Clark 
Title: Executive Vice President, CFO and Treasurer

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2 

Exhibit 10.4

SUNTRUST BANK,  
as Administrative Agent, Collateral Agent, Swingline Lender, Issuing Bank and as a Lender 
 
 
By: /s/ Paula Mueller
Name: Paula Mueller 
Title: Director

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2 

Exhibit 10.4

BANK OF AMERICA, N.A.,
as Lender 
 
 
By: /s/ Christopher D. Pannacciulli
Name: Christopher D. Pannacciulli 
Title: Senior Vice President

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

FIFTH THIRD BANK, as Lender  
 
 
By: /s/ Scott Kilgore
Name: Scott Kilgore 
Title: Vice President

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

ING CAPITAL LLC, as Lender 
 
 
By: /s/ Mary C. Forstner 
Name: Mary Forstner 
Title: Director

By: /s/ Robert D. Miners 
Name: Robert D. Miners 
Title: Director

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2 

Exhibit 10.4

MORGAN STANLEY BANK, N.A., as Lender 
 
 
By: /s/ Harry Comninellis 
Name: Harry Comninellis 
Title: Authorized Signatory

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

DEUTSCHE BANK AG, NEW YORK BRANCH, as Lender 
 
 
By: /s/ Randal Johnson
Name: Randal Johnson 
Title: Director

By: /s/ Kevin Tanzer
Name: Kevin Tanzer  
Title: Director

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

CALIFORNIA BANK & TRUST, as Lender 
 
 
By: /s/ Michael Powell 
Name: Michael Powell 
Title: Senior Vice President    

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

CITIBANK, N.A., as Lender  
 
 
By: /s/ Jamal Toukhi 
Name: Jamal Toukhi 
Title: Vice President

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

BANK LEUMI USA, as Lender 
 
 
By: /s/ Marianne M. Evans
Name: Marianne M. Evans 
Title: Senior Vice President

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

ISRAEL DISCOUNT BANK OF NEW YORK, as Lender 
 
 
By: /s/ Dionne S. Rice 
Name: Dionne S. Rice 
Title: First Vice President

By: /s/ Richard Miller 
Name: Richard Miller 
Title: Senior Vice President

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

FIRST BANK, as Lender 
 
 
By: /s/ Tomas J. Schmidt 
Name: Tomas J. Schmidt
Title: Vice President

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

AMALGAMATED BANK, as Lender 
 
 
By: /s/ Jackson Eng 
Name: Jackson Eng 
Title: First Vice President

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

MUFG UNION BANK, as Lender 
 
 
By: /s/ [Illegible] 
Name: [Illegible] 
Title: Vice President

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

CATHAY BANK, CALIFORNIA BANKING CORPORATION, as Lender 
 
 
By: /s/ Ayaz M. Dadabhoy
Name: Ayaz M. Dadabhoy 
Title: Vice President

 

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

MANUFACTURERS BANK, as Lender 
 
 
By: /s/ Sandy Lee 
Name: Sandy Lee 
Title: Vice President

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

BARCLAYS BANK PLC, as Lender 
 
 
By: /s/ Matthew Cybul 
Name: Matthew Cybul 
Title: Assistant Vice President

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

RAYMOND JAMES BANK, N.A., as Lender 
 
 
By: /s/ Jason Williams 
Name: Jason Williams 
Title: Vice President

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

FLAGSTAR BANK, as Lender 
 
 
By: /s/ Kelly M. Hamrick 
Name: Kelly M. Hamrick 
Title: First Vice President

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

THE PRIVATEBANK AND TRUST COMPANY, as Lender 
 
 
By: /s/ Jennifer St. Aubin 
Name: Jennifer St. Aubin 
Title: Managing Director

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

CITIZENS BANK, N.A. (formerly known as RBS Citizens, N.A.), as Lender 
 
 
By: /s/ Darran Wee 
Name: Darran Wee 
Title: Senior Vice President

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

WESTERN ALLIANCE BANK, as Lender 
 
 
By: /s/ William Koenig 
Name: William Koenig 
Title: Executive Vice President 

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

UBS AG, STAMFORD BRANCH, as Lender 
 
 
By: /s/ Houssem Daly 
Name: Associate Director 
Title: Banking Products Services, US

By: /s/ Darlene Arias 
Name: Darlene Arias 
Title: Director

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

CTBC BANK CORP. (USA), as Lender 
 
 
By: /s/ Shahid Kathrada
Name: Shahid Kathrada 
Title: First Vice President

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

Each of the undersigned hereby makes the representations and warranties set forth above in this Amendment, consents to this Amendment and the terms and provisions hereof and hereby (a) confirms and agrees that notwithstanding the effectiveness of such Amendment, each Loan Document to which it is a party and their respective payment, performance and observance obligations and liabilities (whether contingent or otherwise) is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that, on and after the effectiveness of such Amendment, each reference in the Loan Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like import shall mean and be a reference to the Credit Agreement, as amended by this Amendment, (b) confirms and agrees that the pledge and security interest in the Collateral granted by it pursuant to the Collateral Documents to which it is a party shall continue in full force and effect, and (c) acknowledges and agrees that such pledge and security interest in the Collateral granted by it pursuant to such Collateral Documents shall continue to secure the Obligations purported to be secured thereby, as amended or otherwise affected hereby.
ENCORE CAPITAL GROUP, INC.
MIDLAND CREDIT MANAGEMENT, INC.
MIDLAND INTERNATIONAL LLC 
MIDLAND PORTFOLIO SERVICES, INC.
MIDLAND FUNDING LLC
MRC RECEIVABLES CORPORATION
MIDLAND FUNDING NCC-2 CORPORATION
PROPEL ACQUISITION LLC
PROPEL FUNDING LLC
ASSET ACCEPTANCE CAPITAL CORP.
ASSET ACCEPTANCE, LLC
ATLANTIC CREDIT AND FINANCE, INC.

By:  /s/ Jonathan Clark
Name: Jonathan Clark 
Title: Treasurer

MIDLAND INDIA LLC

By:  /s/ Glen V. Freter
Name: Glen V. Freter 
Title: Treasurer

ASSET ACCEPTANCE RECOVERY   SERVICES, LLC
ASSET ACCEPTANCE SOLUTIONS GROUP, LLC
LEGAL RECOVERY SOLUTIONS, LLC

By:  /s/ Darin Herring
Name: Darin Herring 
Title: Vice President

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2

Exhibit 10.4

ATLANTIC CREDIT & FINANCE SPECIAL FINANCE UNIT, LLC
ATLANTIC CREDIT & FINANCE SPECIAL FINANCE UNIT III, LLC

By:  /s/ Shawn Thomas
Name: Shawn Thomas 
Title: General Manager

Encore Capital Group, Inc.
Signature Pages to Amendment No. 2ECPG-2015.6.30 Ex 10.5

Exhibit 10.5

AMENDMENT NO. 4
Dated as of July 9, 2015
to
SECOND AMENDED AND RESTATED SENIOR SECURED NOTE PURCHASE AGREEMENT
Dated as of May 9, 2013
THIS AMENDMENT NO. 4 (“Amendment”) is made as of July 9, 2015 by and among Encore Capital Group, Inc. (the “Company”) and the undersigned holders of Notes (the “Noteholders”).  Reference is made to that certain Second Amended and Restated Senior Secured Note Purchase Agreement, dated as of May 9, 2013, between the Company, on the one hand, and the Purchasers named therein, on the other hand (as amended by that certain Amendment No. 1 to Second Amended and Restated Senior Secured Note Purchase Agreement, dated as of May 29, 2013, that certain Amendment No. 2 to Second Amended and Restated Senior Secured Note Purchase Agreement, dated as of February 25, 2014 and that certain Amendment No. 3 to Second Amended and Restated Senior Secured Note Purchase Agreement, dated as of August 1, 2014, and as the same may be further amended, supplemented or otherwise modified from time to time, the “Note Agreement”).  Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given to them in the Note Agreement.
WHEREAS, the Company has requested that the Noteholders agree to certain amendments with respect to the Note Agreement as provided in this Amendment;
WHEREAS, the Noteholders party hereto have agreed to such amendments on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Noteholders party hereto have agreed to enter into this Amendment.
1.    Amendments to Note Agreement.  Effective as of the Effective Date, the Note Agreement is hereby amended as follows:
(a)    The first sentence of Section 9.7 is amended and restated, as follows:
“The Company shall cause each of its Restricted Subsidiaries (other than Immaterial Subsidiaries and each member of the Propel Group)) to guarantee pursuant to the Multiparty Guaranty or supplement or counterpart thereto (or, in the case of a Foreign Subsidiary, any other guaranty agreement requested by the Required Holders) the obligations of the Company evidenced by the Notes and under the other Transaction Documents.”
(b)    The reference to “Excluded Subsidiary,” in clause (ii) of the second sentence of Section 9.7 is deleted.

Exhibit 10.5

(c)    Section 10.1 is amended by amending and restating clause (v) thereof, as follows:
“(v) the Company may, so long as the Payment Conditions are satisfied, make repurchases of its capital stock so long as the aggregate cumulative amount expended on and after the Amendment No. 4 Effective Date for all such repurchases of capital stock does not exceed $150,000,000.”
(d)    Section 10.3.5 is amended and restated, as follows:
  “10.3.5    sales or dispositions of assets outside the ordinary course of business with an aggregate fair market value not to exceed $20,000,000 in any fiscal year; and”
(e)    Section 10.4.4 is amended by amending and restating clause (v) thereof as follows:
“(v)    the aggregate Purchase Price for all such Permitted Acquisitions in any fiscal year shall not exceed $225,000,000;”
(f)    Section 10.4.7 is amended and restated, as follows:
  “10.4.7    Investments constituting Indebtedness permitted by Section 10.5.5, Section 10.5.6, Section 10.5.7 or Section 10.5.16; ”
(g)    Section 10.4.9 is amended and restated, as follows:
  “10.4.9    Investments of the Company or any of its Restricted Subsidiaries; provided that the sum of (x) $180,127,845 plus (y) the aggregate amount (valued at the time of the making thereof, and without giving effect to any write-downs or write-offs thereof) of all Investments made on or after the Amendment No. 4 Effective Date pursuant to this clause 10.4.9 shall not, at the time of the making of the proposed Investment, exceed the greater of (1) an amount equal to 200% of the Consolidated Net Worth (determined as of the last day of the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 7.1.1 or 7.1.2, as applicable) of the Company and its Restricted Subsidiaries and (2) an amount such that, after giving effect on a pro forma basis to the making of such Investment and the incurrence of any Indebtedness in connection therewith, the Cash Flow Leverage Ratio (determined as of the last day of the most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 7.1.1 or 7.1.2, as applicable) is less than 1.25:1.00;”
(h)    Section 10.4.10 is amended and restated, as follows:
“10.4.10    Investments made by any Foreign Subsidiary that is not a Credit Party in any other Foreign Subsidiary that is not a Credit Party; and”
(i)    Section 10.4.11 is amended and restated, as follows:
“10.4.11    Investments made by any Domestic Subsidiary that is not a Credit Party in any other Domestic Subsidiary that is not a Credit Party.”
(j)    Section 10.4.12 is deleted in its entirety.
(k)    Section 10.4 is further amended by adding the following sentence to the end of the unnumbered paragraph at the end of such Section:

2

Exhibit 10.5

“To the extent that any proposed Investment would be permitted pursuant to more than one of the foregoing clauses of this Section 10.4, the Company may in its discretion designate which clause (or clauses to the extent such Investment is to be split or divided into more than one clause) shall be utilized for such Investment.”
(l)    Section 10.5.4 is amended and restated, as follows:
  “10.5.4    secured or unsecured purchase money Indebtedness (including Capitalized Leases) incurred by the Company or any of its Restricted Subsidiaries after the Amendment No. 2 Effective Date to finance the acquisition of assets used in its business, if (1) the total of all such Indebtedness for the Company and its Restricted Subsidiaries taken together incurred on or after the Amendment No. 2 Effective Date, when aggregated with the Indebtedness permitted under Section 10.5.9, shall not exceed an aggregate principal amount of $20,000,000 at any one time outstanding (excluding Capitalized Leases, which shall not be subject to any dollar limitation under this Section 10.5.4), (2) such Indebtedness when incurred shall not exceed the purchase price of the asset(s) financed, (3) no such Indebtedness shall be refinanced for a principal amount in excess of the principal balance outstanding thereon at the time of such refinancing, and (4) any Lien securing such Indebtedness is permitted under Section 10.6 (such Indebtedness being referred to herein as “Permitted Purchase Money Indebtedness”);”
(m)    Section 10.5.5 is amended by amending and restated clauses (ii) and (iv) thereof, as follows:
“(ii) made by any Credit Party to any other Credit Party,”
“(iv) made by the Company or any Restricted Subsidiary to any Subsidiaries of Propel Acquisition LLC (other than a Blocked Propel Subsidiary) to the extent such loan would be permitted as an investment in compliance with the proviso of Section 10.4.6 or any Unrestricted Subsidiary to the extent such loan would be permitted as an investment in compliance with Section 10.4.9;”
(n)    Section 10.5.6 is amended and restated, as follows:
  “10.5.6    guaranty obligations of the Company or any other Credit Party of any Indebtedness of any Restricted Subsidiary permitted under Section 10.5.2 or of any Indebtedness of any Subsidiary permitted as an Investment under Section 10.4.9;”
(o)    Section 10.5.14 is amended and restated, as follows:
“10.5.14    Indebtedness constituting Permitted Foreign Subsidiary Investments/Loans, to the extent permitted as an Investment in compliance with Section 10.4.9;”
(p)    Section 10.5.15 is amended and restated, as follows:
“10.5.15    additional unsecured or Subordinated Indebtedness of the Company or any of its Restricted Subsidiaries, to the extent not otherwise permitted under this Section 10.5; provided, however, that (i) the aggregate principal amount of such additional Indebtedness shall not exceed $1,100,000,000, (ii) such Indebtedness shall not mature, and shall not be subject to any scheduled mandatory prepayment, redemption or defeasance, in each case prior to five (5) years from the date of issuance of such Indebtedness, and (iii) if such Indebtedness is Subordinated Indebtedness, the terms of subordination thereof shall be reasonably acceptable to the Required Holders;”

3

Exhibit 10.5

(q)    Section 10.5.16 is amended and restated, as follows:
“10.5.16    the Propel Indebtedness, provided that the aggregate principal amount thereof does not exceed $400,000,000 (exclusive of intercompany loans), and the unsecured guaranty obligations of the Company or any other Credit Party of such Propel Indebtedness;”
(r)    The word “and” at the end of Section 10.6.15 is deleted, the “.” at the end of Section 10.6.16 is deleted and replaced with “;” and the following new Sections 10.5.17, 10.5.18 and 10.5.19 are added, as follows:
“10.6.17    Liens on Receivables owned by any Foreign Subsidiary solely to secure Indebtedness permitted to be incurred by such Foreign Subsidiary under Section 10.5.13; provided that such Receivables are not Collateral;
  10.6.18    Liens securing Subordinated Indebtedness of the Company or any of its Restricted Subsidiaries permitted under Section 10.5.15; provided, however, that the lenders or investors providing such Indebtedness, or a representative acting on behalf of the lenders or investors providing such Indebtedness, shall have entered into an intercreditor agreement satisfactory to the Required Holders in their sole and absolute discretion; and
  10.6.19    Liens on cash balances in deposit accounts of the Company or any Restricted Subsidiary in favor of credit card or other payment processors arising under processor agreements entered into in the ordinary course of business to secure fees, chargebacks and other amounts required to be secured under such agreements; provided, that (i) such Liens attach solely to funds in the deposit accounts that are the subject of such processor agreements and not to any other assets of the Company or any Restricted Subsidiary and (ii) such Liens do not secure any obligations for borrowed money.”
(s)    Section 10.12 is amended and restated, as follows:
“10.12    Leverage Ratios.
  10.12.1    Cash Flow Leverage Ratio.  The Company will not at any time permit the ratio (the “Cash Flow Leverage Ratio”) of (i) Consolidated Funded Indebtedness at such time to (ii) Consolidated EBITDA for the then most-recently ended four fiscal quarters to be greater than 2.50 to 1.00.
The Cash Flow Leverage Ratio shall be calculated:  (i) based upon (a) Consolidated Funded Indebtedness at the applicable time of determination, and (b) for Consolidated EBITDA, the actual amount as of the last day of each fiscal quarter for the most recently ended four consecutive fiscal quarters; and (ii) giving pro forma effect to any Material Acquisition and Material Disposition.  For purposes of this Section 10.12.1 and Section 10.12.2, “Material Acquisition” means any Acquisition or series of related Acquisitions that involves the payment of consideration by the Company and its Restricted Subsidiaries in excess of $10,000,000; and “Material Disposition” means any Asset Sale or series of related Asset Sales that yields gross proceeds to the Company or any of its Restricted Subsidiaries in excess of $10,000,000.
  10.12.2    Cash Flow Secured Leverage Ratio.  The Company will not at any time permit the ratio (the “Cash Flow Secured Leverage Ratio”) of (i) Consolidated Secured Funded Indebtedness at such time to (ii) Consolidated EBITDA for the then most-recently ended four fiscal 

4

Exhibit 10.5

quarters to be greater than 2.00 to 1.00; provided that the Cash Flow Secured Leverage Ratio may exceed 2.00 to 1.00, so long as it does not exceed 2.25 to 1.00, for the period (the “Relief Period”) commencing on any date after the Amendment No. 4 Effective Date on which the Company or any of its Restricted Subsidiaries has consummated a Permitted Acquisition in which the Purchase Price is $100,000,000 or more (a “Trigger Acquisition”) and continuing until (but excluding) the end of the second full fiscal quarter immediately succeeding the fiscal quarter during which the Trigger Acquisition occurred; provided, further, that the maximum permitted Cash Flow Secured Leverage Ratio shall return to 2.00 to 1.00 on and after the end of the second full fiscal quarter immediately succeeding the fiscal quarter during which the Trigger Acquisition occurred; provided, further, that following the termination of any Relief Period, no subsequent Relief Period shall be permitted to occur for purpose of the initial proviso of this Section 10.12.2 unless and until the Cash Flow Secured Leverage Ratio is less than or equal to 2.00 to 1.00 as of the end of at least one fiscal quarter following the most recent Relief Period.
The Cash Flow Secured Leverage Ratio shall be calculated:  (i) based upon (a) Consolidated Secured Funded Indebtedness at the applicable time of determination, and (b) for Consolidated EBITDA, the actual amount as of the last day of each fiscal quarter for the most recently ended four consecutive fiscal quarters; and (ii) giving pro forma effect to any Material Acquisition and Material Disposition.
  10.12.3    Minimum Net Worth.  The Company will not permit the Consolidated Net Worth of the Company and its Restricted Subsidiaries to be less than the sum of (i) a dollar amount equal to $166,506,500, plus (ii) 50% of such Consolidated Net Income earned in each fiscal quarter beginning with the quarter ending March 31, 2009 (without deduction for losses), plus (iii) 100% of the amount by which the Company’s “total stockholders’ equity” is increased after February 8, 2010 as a result of the issuance or sale by the Company or any of its Restricted Subsidiaries of, or the conversion of any Indebtedness of such Person into, any equity interests (including warrants and similar investments) in such Person, minus (iv) amounts expended by the Company and its Restricted Subsidiaries to repurchase the Company’s capital stock to the extent such repurchases are permitted under Section 10.1(v).”
(t)    Section 10.14 is amended and restated, as follows:
“10.14    [Reserved].”
(u)    Section 10.15 is amended and restated, as follows:
“10.15    [Reserved].”
(v)    Schedule B of the Note Agreement is amended to insert the following new definitions in their proper alphabetical order:
““Amendment No. 4 Effective Date” means July 9, 2015.
“Cash Flow Secured Leverage Ratio” has the meaning specified in Section 10.12.2.
“Consolidated Secured Funded Indebtedness” means, at any time of determination, the amount of Consolidated Funded Indebtedness as of such time that is secured by any Lien on the property or assets of the Company or its Restricted Subsidiaries.

5

Exhibit 10.5

“Relief Period” has the meaning specified in Section 10.12.2.
“Trigger Acquisition” has the meaning specified in Section 10.12.2.”
(w)    Schedule B of the Note Agreement is amended to delete the definitions for “Capital Expenditures,” “Consolidated Rentals,” “Excluded Subsidiaries,” “Minority Investment” and “Rentals.”
(x)    Schedule B of the Note Agreement is amended to delete the reference to “Section 10.4.3(vi)” in the definition of “Acquisition Pro Forma” and to replace such reference with “Section 10.4.4(vii).”
(y)    Schedule B of the Note Agreement is amended to amend and restate clause (d) of the definition of “Permitted Foreign Subsidiary Non-Recourse Indebtedness”, as follows:
“(d)    the total principal amount outstanding of such Indebtedness does not at any time exceed 40% of the Consolidated Net Worth of the Company and its Restricted Subsidiaries.”
(z)    Schedule B of the Note Agreement is amended to amend and restate the proviso at the end of the definition of “Permitted Restructuring”, as follows:
“provided that (i) no Receivables or other assets of Unrestricted Subsidiaries shall be commingled with the assets of a Credit Party as a result of such Permitted Restructuring, (ii) no such transfers shall take place from a Credit Party to an Unrestricted Subsidiary or to any other Subsidiary that is not a Credit Party, and (iii) such transactions are effected for tax planning and related general corporate purposes.”
(aa)    Schedule B of the Note Agreement is amended to amend and restate clause (II) of subsection (a)(iii) of the definition of “Unrestricted Subsidiary”, as follows:
“(II) the Fair Market Value of the Company’s direct or indirect equity interest in such Subsidiary, in each case at the time that such Subsidiary is designated an Unrestricted Subsidiary and the Company shall be permitted to make such Investment under Section 10.4.9,”
(bb)    Schedule B of the Note Agreement is amended to amend and restate subsection (a)(iv) of the definition of “Unrestricted Subsidiary”, as follows:
“(iv) neither the Company nor any Restricted Subsidiary shall at any time be directly, indirectly or contingently liable for any Indebtedness or other liability of any Unrestricted Subsidiary, except to the extent the same would constitute a permitted Investment under Section 10.4.9,”
2.    Conditions of Effectiveness.  The effectiveness of this Amendment is subject to the following conditions precedent (the date on which each of which has been satisfied or waived in writing being referred to in this Amendment as the “Effective Date”):  (a) the Noteholders shall have received (i) counterparts of this Amendment, duly executed by the Company and the Required Holders, and the Consent and Reaffirmation attached hereto duly executed by the Guarantors, (ii) a fully executed copy of an amendment to the Credit Agreement, which shall be in form and substance reasonably satisfactory to the Required Holders, (iii) their ratable share of an amendment fee in the aggregate amount of $19,375, and (iv) such other instruments, documents and documents as are reasonably requested by the Noteholders in connection with this Amendment; and (b) the Company shall have paid, to the extent invoiced, all fees and 

6

Exhibit 10.5

expenses of the Noteholders (including attorneys’ fees and expenses) in connection with this Amendment and the other Transaction Documents.
3.    Representations and Warranties of the Company.  The Company hereby represents and warrants as follows:
(a)    This Amendment and the Note Agreement as amended hereby constitute legal, valid and binding obligations of the Company and are enforceable against the Company in accordance with their terms.
(b)    As of the date hereof and giving effect to the terms of this Amendment, (i) there exists no Default or Event of Default and (ii) the representations and warranties contained in Section 5 of the Note Agreement are true and correct, except for representations and warranties made with reference solely to an earlier date, which are true and correct as of such earlier date.
4.    Reference to and Effect on the Note Agreement.
(a)    Upon the effectiveness hereof, each reference to the Note Agreement in the Note Agreement or any other Transaction Document shall mean and be a reference to the Note Agreement as amended hereby.
(b)    Except as specifically amended above, the Note Agreement and all other documents, instruments and agreements executed and/or delivered in connection therewith shall remain in full force and effect and are hereby ratified and confirmed.
(c)    Other than as expressly set forth herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Noteholders, nor constitute a waiver of any provision of the Note Agreement or any other documents, instruments and agreements executed and/or delivered in connection therewith.
(d)    This Amendment shall constitute a “Transaction Document.”
5.    Governing Law.  This Amendment shall be governed by and construed in accordance with the internal laws of the State of New York, excluding choice-of-law principles of the law of such state that would permit the application of the laws of a jurisdiction other than such state.
6.    Headings.  Section 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.
7.    Counterparts.  This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Signatures delivered by facsimile or PDF shall have the same force and effect as manual signatures delivered in person.
[Signature Pages Follow]

7

Exhibit 10.5

IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written.

ENCORE CAPITAL GROUP, INC.

By: /s/ Jonathan Clark
Name:  Jonathan Clark
Title:  Executive Vice President, CFO and Treasurer

Signature Page to Amendment No. 4
Encore Capital Group, Inc.
Second Amended and Restated Senior Secured Note Purchase Agreement dated as of May 9, 2013

Exhibit 10.5

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

By: /s/ Cornelia Cheng
Vice President

PRUCO LIFE INSURANCE COMPANY

By: /s/ Cornelia Cheng
Assistant Vice President

PRUDENTIAL RETIREMENT INSURANCE AND ANNUITY COMPANY

By:  Prudential Investment Management, Inc., investment manager

By: /s/ Cornelia Cheng
Vice President

PRUDENTIAL ANNUITIES LIFE ASSURANCE CORPORATION

By:  Prudential Investment Management, Inc., investment manager

By: /s/ Cornelia Cheng
Vice President

Signature Page to Amendment No. 4
Encore Capital Group, Inc.
Second Amended and Restated Senior Secured Note Purchase Agreement dated as of May 9, 2013

Exhibit 10.5

CONSENT AND REAFFIRMATION
Each of the undersigned hereby acknowledges receipt of a copy of the foregoing Amendment No. 4 to the Second Amended and Restated Senior Secured Note Agreement dated as of May 9, 2013 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Note Agreement”) by and between Encore Capital Group, Inc. (the “Company”) and the holders of Notes party thereto (the “Noteholders”), which Amendment No. 4 is dated as of July 9, 2015 (the “Amendment”).  Capitalized terms used in this Consent and Reaffirmation and not defined herein shall have the meanings given to them in the Note Agreement.  Without in any way establishing a course of dealing by any Noteholder, each of the undersigned agrees to be bound by its obligations under Section 1 of the Amendment and consents to the Amendment and reaffirms the terms and conditions of the Multiparty Guaranty, the Pledge and Security Agreement and any other Transaction Document executed by it and acknowledges and agrees that such agreement and each and every such Transaction Document executed by the undersigned in connection with the Note Agreement remains in full force and effect and is hereby reaffirmed, ratified and confirmed.
All references to the Note Agreement contained in the above-referenced documents shall be a reference to the Note Agreement as modified by the Amendment and as each of the same may from time to time hereafter be amended, modified or restated.

Dated:  July 9, 2015

[Signature Page Follows]

Exhibit 10.5

	
			
	MIDLAND CREDIT MANAGEMENT, INC.

By: /s/ Jonathan Clark
Name:  Jonathan Clark
Title:  Executive Vice President, CFO and Treasurer

	PROPEL ACQUISITION LLC
By: /s/ Jonathan Clark
Name:  Jonathan Clark 
Title:  Executive Vice President, CFO, and Treasurer

	MIDLAND PORTFOLIO SERVICES, INC.

By: /s/ Jonathan Clark
Name:  Jonathan Clark 
Title:  Treasurer

	MIDLAND FUNDING LLC

By: /s/ Jonathan Clark
Name:  Jonathan Clark 
Title:  Treasurer

	MIDLAND INDIA LLC

By: /s/ Glen V. Freter
Name: Glen V. Freter 
Title: Treasurer

	MIDLAND INTERNATIONAL LLC

By: /s/ Jonathan Clark
Name:  Jonathan Clark 
Title:  Treasurer

	MIDLAND FUNDING NCC-2 CORPORATION
By: /s/ Jonathan Clark
Name:  Jonathan Clark 
Title:  Treasurer

	MRC RECEIVABLES CORPORATION

By: /s/ Jonathan Clark
Name:  Jonathan Clark 
Title:  Treasurer

	PROPEL FUNDING LLC
By: /s/ Jonathan Clark
Name:  Jonathan Clark 
Title:  Treasurer

	ASSET ACCEPTANCE CAPITAL CORP.
By: /s/ Jonathan Clark
Name:  Jonathan Clark 
Title:  Executive Vice President, CFO and Treasurer

	ASSET ACCEPTANCE, LLC
By: /s/ Jonathan Clark
Name:  Jonathan Clark 
Title:  Treasurer

	ASSET ACCEPTANCE SOLUTIONS GROUP, LLC
By: /s/ Darin Herring
Name:  Darin Herring 
Title:  Vice President

	 
	ASSET ACCEPTANCE RECOVERY SERVICES, LLC
By: /s/ Darin Herring
Name:  Darin Herring 
Title:  Vice President

	LEGAL RECOVERY SOLUTIONS, LLC
By: /s/ Darin Herring
Name:  Darin Herring 
Title:  Vice President
 

Signature Page to Consent and Reaffirmation
Amendment No. 4
Encore Capital Group, Inc.
Second Amended and Restated Senior Secured Note Purchase Agreement dated as of May 9, 2013

Exhibit 10.5

	
			
	 
	ATLANTIC CREDIT & FINANCE, INC.
By: /s/ Jonathan Clark
Name:  Jonathan Clark 
Title:  Treasurer

	ATLANTIC CREDIT & FINANCE SPECIAL FINANCE UNIT, LLC
By: /s/ Shawn Thomas
Name:  Shawn Thomas 
Title:  General Manager

	 
	ATLANTIC CREDIT & FINANCE SPECIAL FINANCE UNIT III, LLC
By: /s/ Shawn Thomas
Name:  Shawn Thomas 
Title:  General Manager

	 

Signature Page to Consent and Reaffirmation
Amendment No. 4
Encore Capital Group, Inc.
Second Amended and Restated Senior Secured Note Purchase Agreement dated as of May 9, 2013

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00248-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00248-of-00352.parquet"}]]