Execution Version
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ASSET PURCHASE AGREEMENT
among
ABFS WAREHOUSE TRUST 2003-1
as Seller
and
ABFS WAREHOUSE TRUST 2003-2
as Purchaser
Dated as of October 14, 2003
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of October 14, 2003 (this
"Agreement"), between ABFS WAREHOUSE TRUST 2003-1, a Delaware statutory trust
(the "Seller") and ABFS WAREHOUSE TRUST 2003-2, a Delaware statutory trust (the
"Purchaser").
W I T N E S S E T H
WHEREAS, Seller owns and from time to time originates and acquires
certain Mortgage Loans (as defined in the Loan Agreement defined below) as
described in the APA Assignment (as hereinafter defined) secured primarily by
mortgages, deeds of trust and security deeds on certain Mortgaged Properties (as
defined in the Loan Agreement) and the Mortgage Loan Documents (as defined in
the Loan Agreement) related thereto;
WHEREAS, (a) the Mortgage Loans, (b) the related Mortgage Loan
Documents together with all promissory notes, and Servicing Records and any
other collateral pledged or otherwise relating to such Mortgage Loans, all
files, material documents, instruments, surveys, certificates, correspondence,
appraisals, computer records, computer storage media, accounting records and
books and records relating thereto, (c) the related Mortgaged Properties or any
interest in real property collateralizing any Mortgage Loan, (d) the related
Mortgage Files, (e) the related Servicing Files, (f) all mortgage guaranties and
insurance (issued by governmental agencies or otherwise) and any mortgage
insurance certificate or other document evidencing such mortgage guaranties or
insurance relating to any Mortgage Loans and all claims and payments thereunder,
(g) all other insurance policies and insurance proceeds relating to any Mortgage
Loans or the related Mortgaged Property, (h) all Interest Rate Protection
Agreements (as defined in the Loan Agreement defined below), (i) all rights
under the Servicing Agreement (as defined in the Loan Agreement), the Custodial
Agreement (as defined in the Loan Agreement) or any other document related to
Mortgage Loans or the related Mortgaged Properties, (j) all purchase or take-out
commitments relating to or constituting any or all of the related Mortgage Loans
or the Mortgaged Properties, and (k) all of the Seller's right, title and
interest in and to the Initial Asset Purchase Agreement (as defined in the Loan
Agreement); together with any other property and any other rights related
thereto the foregoing assets and property described in (a) through (k) are
hereinafter referred to, collectively, as the "Assets");
WHEREAS, the parties hereto desire that on each Transfer Date (as
defined in the related APA Assignment) the Seller sell all of its right, title
and interest in and to certain of the Assets to Purchaser pursuant to the terms
of this Agreement; and
WHEREAS, the Purchaser and Chrysalis Warehouse Funding, LLC (with its
successors and assigns, the "Lender"), will be parties to the Master Loan and
Security Agreement, dated as of the date hereof (as amended, supplemented or
otherwise modified and in effect from time to time, the "Loan Agreement"),
pursuant to which the Lender shall agree, subject to the terms and conditions of
the Loan Agreement, to make revolving credit loans to the Purchaser to finance
the Purchaser's acquisition of the Assets.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
Section 1.01 Definitions. For purposes of this Agreement all
capitalized terms used but not defined herein shall have the meanings assigned
thereto in the Loan Agreement.
Section 1.02 Construction. Unless the context of this Agreement
clearly requires otherwise, references to the plural include the singular,
references to the singular include the plural, the term "including" is not
limiting, and the term "or" has, except where otherwise indicated, the inclusive
meaning represented by the phrase "and/or." The words "hereof," "herein,"
"hereby," "hereunder," and similar terms in this Agreement refer to this
Agreement or such other Loan Document as a whole and not to any particular
provision of this Agreement or such other Loan Document. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in the other Loan
Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to any Person
shall be construed to include such Person's successors and assigns. Any
requirement of a writing contained herein or in the other Loan Documents shall
be satisfied by the transmission of a record and any record transmitted shall
constitute a representation and warranty as to the accuracy and completeness of
the information contained therein.
ARTICLE II
SALE OF ASSETS; PAYMENT OF PURCHASE PRICE
Section 2.01 Sale of Assets to Purchaser. On the terms and
conditions of this Agreement:
(a) On each Transfer Date, Seller agrees to offer for sale, and to
sell, transfer, assign, set over and otherwise convey absolutely and not as
collateral security, without recourse, the Assets described in the related APA
Assignment substantially in the form attached hereto as Exhibit A (the "APA
Assignment") to the Purchaser and to deliver, transfer, assign, set over and
otherwise convey absolutely and not as collateral security, without recourse,
all of its rights under and to the related Mortgage Loan Documents, to the
Purchaser or such other Person at the Purchaser's direction, as applicable, and
the Purchaser agrees to purchase such Assets offered for sale by the Seller.
(b) The price paid by the Purchaser for the Assets sold on each
Transfer Date (the "Sales Price") shall be the sum of the Collateral Values as
of the Transfer Date with respect to the Assets conveyed on such date
(determined after giving effect to all payments of principal received thereon on
or prior to the Cut-off Date as set forth in the related APA Assignment).
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(c) On each Transfer Date, Seller shall sell, transfer, assign,
set over and otherwise convey absolutely and not as collateral security, without
recourse, to the Purchaser the Assets and the Purchaser shall pay or cause to be
paid to the Seller or to such other Person at the direction of Seller the Sales
Price in respect of such Assets; provided, however, that the Purchaser's
obligation under this clause (c) shall be subject to the satisfaction of each of
the following conditions on or prior to such Transfer Date:
(i) the Seller shall have delivered to the Purchaser a duly
executed APA Assignment with respect to all of the Assets conveyed on
such Transfer Date, which shall have attached thereto an Asset Schedule
(as defined in the APA Assignment) setting forth the appropriate
information with respect to all Assets conveyed on such Transfer Date
and shall have delivered to the Lender a computer readable transmission
of such Asset Schedule;
(ii) the Seller shall have provided to the Servicer for
deposit in the related Collection Account all collections received with
respect to each of the Assets relating to the period after the
applicable Cut-off Date (as set forth in the related APA Assignment);
(iii) as of such date, neither the Seller nor the Purchaser
shall (A) be insolvent, (B) be made insolvent by its respective sale or
purchase of Assets or (C) have reason to believe that its insolvency is
imminent;
(iv) the Seller shall have delivered the underlying Mortgage
Files conveyed on such Transfer Date to the Custodian in accordance
with the Custodial Agreement and the Purchaser and the Lender shall
have received a copy of the Custodian Loan Transmission and Exception
Report and a copy of the Trust Receipt;
(v) each of the representations and warranties made by Seller
set forth in Schedules 1 and 2 shall be true and correct as of the
related Transfer Date with the same effect as if then made, and Seller
shall have performed all obligations to be performed by it under each
of the related Mortgage Loan Documents on and prior to such Transfer
Date;
(vi) the Seller shall, at its own expense, on the Transfer
Date, indicate in its computer files that the Assets identified in the
related APA Assignment have been sold to the Purchaser pursuant to this
Agreement and provide evidence of the same to the Purchaser and Lender
in form and substance satisfactory to Lender within one Business Day of
the Transfer Date;
(vii) the Seller shall have taken any action requested by the
Purchaser or the Lender required to maintain the ownership interest of
the Purchaser in the Collateral and the first priority perfected
security interest therein of the Lender; and
(viii) all conditions precedent in Sections 2.03, 5.01 and
5.02 of the Loan Agreement shall have been satisfied.
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(d) Each of the conveyances contemplated hereby shall be sales
from the Seller to the Purchaser of all of the Seller's right, title and
interest in and to the Assets. Notwithstanding the foregoing, in the event the
transactions set forth herein are deemed not to be sales, Seller hereby grants
to the Purchaser a security interest in all of Seller's right, title and
interest in, to and under the Assets, whether now existing or hereafter created,
to secure Seller's obligations hereunder, and this Agreement shall constitute a
security agreement under applicable law, in which event Purchaser shall have all
the rights and remedies of a secured party under the Uniform Commercial Code and
other applicable law.
Section 2.02 Obligations of Seller.
(a) Within ten days after the Closing Date (or such other time as
may be agreed to by Lender including, as agreed in the Custodial Agreement) and
on or prior to each Transfer Date, the Lender shall have received evidence
satisfactory to it of (i) the completion of all recordings, registrations and
filings as may be necessary or, in the opinion of the Lender, desirable to
perfect or evidence the sale and assignment by the Seller to the Purchaser of
the Seller's ownership interest in the Assets, the related property and the
proceeds thereof, and (ii) the completion of all recordings, registrations and
filings as may be necessary or, in the opinion of the Lender, desirable to
perfect or evidence the grant of a first priority perfected security interest in
the Assets, the related property and the proceeds thereof granted by the Seller
in favor of the Purchaser (as contemplated by Section 2.01(d)). Seller agrees to
file all necessary continuation statements and any amendments to the UCC-1
financing statements necessary to perfect the interest of the Purchaser and the
Lender in and to the Assets and the Purchaser's rights under this Agreement and
to take such other action as may be necessary or, in the opinion of the
Purchaser or the Lender, desirable to perfect or evidence the Purchaser's and
the Lender's interest in the Assets and the Purchaser's rights under this
Agreement conveyed under the Loan Documents.
(b) (i) In connection with each sale of an Asset hereunder, Seller
shall deliver to and deposit with the Custodian, on behalf of the Purchaser for
the benefit of Purchaser and Lender, the underlying Mortgage File with respect
to each Asset conveyed on such Transfer Date on or before the related Transfer
Date. With respect to any Assets that are set forth as exceptions in the
Custodian Loan Transmission and Exception Report, Seller hereby agrees and
covenants that it shall take all such actions and shall perform all such
obligations, on behalf of the Purchaser, and Lender necessary to cure such
exceptions, repurchase such Assets or provide substitute Eligible Mortgage Loans
in accordance with Section 5 of the Custodial Agreement.
(ii) It is understood and agreed that the obligations set
forth in Section 2.02(b)(i) shall survive delivery of the Mortgage
Files to the Custodian (as the agent of the Purchaser and Lender) and
shall inure to the benefit of the Purchaser and the Lender.
(c) In connection with each sale of an Asset hereunder, Seller
shall deliver to, and deposit with the Custodian, as the designated agent of the
Purchaser and the Lender, on or before the related Transfer Date, the underlying
Mortgage File with respect to the Mortgage Loan conveyed on such Transfer Date.
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(d) Seller hereby further confirms to the Purchaser that, within
one Business Day of the Closing Date and each Transfer Date, it shall provide
evidence to the Purchaser and the Lender that the portions of Seller's
electronic ledger relating to the Assets have been clearly and unambiguously
marked to indicate that the Assets have been sold to the Purchaser hereunder,
and the Assets have been pledged to the Lender by the Purchaser.
(e) On and after each Transfer Date, the Purchaser shall own the
Assets which have been identified as being sold by the applicable APA
Assignment, and the Seller shall not take any action inconsistent with such
ownership and shall not claim any ownership interest in any such conveyed Asset.
Section 2.03 Dispositions.
Seller hereby agrees and covenants that in connection with each
disposition of Assets it shall perform, on behalf of Purchaser, such duties and
take such actions as specified in Sections 7.17, 7.20, 7.21, 7.22, 7.28. 11.15
and 11.16 of the Loan Agreement.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES; REMEDIES FOR BREACH
Section 3.01 Seller's Representations and Warranties. (a) Seller
makes each of the representations and warranties set forth in Schedule 1 hereto
to the Purchaser (i) as of the Closing Date, (ii) as of each Transfer Date with
respect to the Assets conveyed on such Transfer Date, and (iii) as of each date
on which an Eligible Mortgage Loan is being substituted in accordance with
Section 5 of the Custodial Agreement (each, a "Substitution Date").
(b) Seller further makes, as of the Closing Date, as of each
Transfer Date and as of each Substitution Date, each of the representations and
warranties set forth in Schedule 2 hereto.
It is understood and agreed that the representations and warranties set forth in
this Section 3.01 shall survive delivery of the respective Mortgage Files to the
Custodian (as the agent of the Purchaser and Lender) and shall inure to the
benefit of the Purchaser, the Servicer, the Custodian, and the Lender. Upon the
discovery by the Servicer, the Custodian, the Seller, the Purchaser, or the
Lender of a breach of any of the representations and warranties of the Seller
set forth in Schedule 1 or 2 hereto that materially and adversely affects the
value of any of the Assets, or the interests of the Lender in any Asset, with
respect to which such representation or warranty is made, the Seller shall (a)
promptly cure such breach in all material respects, (b) purchase such Mortgage
Loan on the next succeeding Payment Date, at the Repurchase Price (as
hereinafter defined), or (c) remove such Mortgage Loan from the Owner Trust
Estate (as defined in the 2003-2 Trust Agreement) and substitute one or more
Eligible Mortgage Loans. Repurchase Price shall mean with respect to any
Mortgage Loan, the principal balance of such Mortgage Loan as of the date of
re-purchase, plus all accrued and unpaid interest on such principal balance
computed, as of the date of re-purchase, at the Mortgage Interest Rate, plus the
amount of any unreimbursed Servicing Advances (as defined in the Servicing
Agreement) made by the Servicer with respect to such Mortgage Loan, which
purchase price shall be deposited in the Collection Account on the next
succeeding Determination Date (as defined in the Servicing Agreement), after
deducting therefrom any amounts received in respect of such repurchased Mortgage
Loan or Loans and being held in the Collection Account for future payment to the
extent such amounts have not yet been applied to principal or interest on such
Mortgage Loan. The obligations of the Seller set forth herein to cure such
breach or substitute for or repurchase an affected Asset or, as the case may be,
shall constitute the sole remedies available hereunder to the Purchaser
respecting a breach of the representations and warranties contained in Section
3.01(a) and (b) hereof or Schedules 1 and 2 hereto.
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Section 3.02 Reconstitution of Mortgage Loans.
(a) The Seller acknowledges that with respect to some or all of
the Mortgage Loans, such Mortgage Loans may be subject to:
(i) one or more sales as whole loan transfers by the Purchaser
(each, a "Whole Loan Transfer"); and/or
(ii) one or more sales as public or private pass-through
transfers (each, a "Pass-Through Transfer").
(b) With respect to each Whole Loan Transfer or Pass-Through
Transfer, as the case may be, the Seller agrees:
(i) to cooperate with any prospective purchaser with respect
to all reasonable requests and due diligence procedures (including
participating in a reasonable number of meetings with rating agencies,
bond insurers and such other parties as Purchaser shall designate and
participating in meetings with prospective purchasers of the Mortgage
Loans or interests therein and providing information as reasonably
requested by such purchasers), and with respect to the preparation
(including, but not limited to, the endorsement, delivery, assignment,
and execution) of the Mortgage Loan documents and other related
documents, and with respect to servicing requirements reasonably
requested by the rating agencies and credit enhancers;
(ii) to execute all reconstitution agreements reasonably
required to be executed by the Seller in connection with such
Pass-Through Transfer or Whole Loan Transfer (including a mutually
acceptable assignment assumption and recognition agreement);
(iii) to deliver for inclusion in any prospectus or other
offering material such publicly available information regarding the
Seller, its financial condition and its mortgage loan delinquency,
foreclosure and loss experience and any additional information
reasonably requested, and which the Seller is capable of providing
without unreasonable effort or expense, and to deliver any similar non
public, unaudited financial information and such statements and audit
letters of reputable, certified public accountants pertaining to
information provided by the Seller pursuant to the above as shall be
reasonably requested, and to indemnify a certain Person for material
misstatements or omissions contained in such information;
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(iv) to deliver such statements and audit letters of
reputable, certified public accountants pertaining to information
pursuant to clause (iv) above as shall be reasonably requested; and
(v) to deliver such legal documents and in-house opinions of
counsel as are customarily delivered by originators or servicers, as
the case may be in connection with Whole Loan Transfers or Pass-Through
Transfers.
(c) With respect to each Whole Loan Transfer or Pass-Through
Transfer, as the case may be, the Servicer agrees to make all the
representations and warranties set forth in Schedule 1 and 2, as of the date of
the Whole Loan Transfer or Pass-Through Transfer (1) modified to the extent
necessary to reflect the pool statistics of the Mortgage Loans as of the date of
such Whole Loan Transfer or Pass-Through Transfer, (2) supplemented by
additional representations and warranties that are not unreasonable under the
circumstances as of the date of such Whole Loan Transfer or Pass-Through
Transfer and to the extent that any events or circumstances, including changes
in applicable law occurring subsequent to the related closing date(s), would
render a related Mortgage Loan unmarketable to a material segment of the
secondary mortgage or mortgage-backed securities market if such additional
representations and warranties were not made, and (3) subject to exceptions
relating to conditions or circumstances with respect to the Mortgage Loans that
arose after the Transfer Date and are identified by the Servicer.
ARTICLE IV
SELLER COVENANTS
Section 4.01 No Further Sale or Transfer. Seller hereby covenants
that except for the sales hereunder and transactions contemplated by the Loan
Documents, Seller will not sell, pledge, assign or transfer to any other Person,
or grant, create, incur, assume or suffer to exist any lien on, any Asset, or
any interest therein.
Section 4.02 Defense of Right, Title and Interest. Seller will
defend the right, title and interest of the Purchaser in, to and under the
Assets against all claims of third parties claiming through or under Seller.
Section 4.03 Separateness Covenants. Seller hereby covenants that
it will not take any actions or fail to take any actions which would cause the
Purchaser to violate the covenants set forth in Article V.
Section 4.04 Further Assurances. Whenever and so often as
reasonably requested by the Purchaser, or the Lender, Seller shall promptly
execute and deliver or cause to be executed and delivered all such other and
further instruments, documents, or assurances, and promptly do or cause to be
done all such other things, as may be necessary and reasonably required to vest
more fully in the requesting party all rights, both directly and indirectly,
interests, powers, benefits, privileges and advantages conferred or intended to
be conferred upon it by this Agreement.
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ARTICLE V
PURCHASER COVENANTS
The Purchaser hereby covenants that it will:
(a) maintain books and records separate from any other person or
entity;
(b) maintain its bank accounts separate from any other person or
entity;
(c) not commingle its assets with those of any other person or
entity;
(d) conduct its own business in its own name;
(e) other than as contemplated by the Basic Documents (as defined
in the 2003-2 Trust Agreement) and related documentation, pay its own
liabilities and expenses only out of its own funds;
(f) observe all formalities required under the Statutory Trust
Statute (as defined in the 2003-2 Trust Agreement);
(g) enter into transactions with Affiliates only if each such
transaction is intrinsically fair, commercially reasonable, and on the same
terms as would be available in an arm' s length transaction with a person or
entity that is not an Affiliate;
(h) not guarantee or become obligated for the debts of any other
entity or person;
(i) not hold out its credit as being available to satisfy the
obligation of any other person or entity;
(j) not acquire the obligations or securities of its Affiliates;
(k) other than as contemplated by the Basic Documents and related
documentation, not make loans to any other person or entity or buy or hold
evidence of indebtedness issued by any other person or entity;
(l) other than as contemplated by the Basic Documents and related
documentation, not pledge its assets for the benefit of any other person or
entity;
(m) hold itself out as a separate entity from the Seller and not
conduct any business in the name of the Seller;
(n) correct any known misunderstanding regarding its separate
identity; and
(o) not identify itself as a division of any other person or
entity.
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ARTICLE VI
TERMINATION
Section 6.01 Termination. The respective obligations and
responsibilities of the Seller and the Purchaser created hereby shall terminate
upon payment in full of all Obligations under the Loan Agreement.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01 Amendment. This Agreement may be amended from time to
time with the prior written consent of the Lender, in its sole discretion, by a
written agreement signed by the Seller and the Purchaser.
Section 7.02 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws. With respect to all legal proceedings arising out of
or relating to this Agreement or the transactions contemplated hereby, each
party irrevocably submits to the non-exclusive jurisdiction of the courts of the
State of New York and the United States District Court located in the Borough of
Manhattan, City of New York, and each party irrevocably waives any objection
which it may have at any time to the laying of venue of any suit, action or
proceeding arising out of or relating hereto brought in any such court,
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in any inconvenient forum and further
irrevocably waives the right to object, with respect to such claim, suit, action
or proceeding brought in any such court, that such court does not have
jurisdiction over such party, provided that service of process is made by any
lawful means. Nothing in this Section 7.02 shall affect the right of any party
hereto or its assignees, or of the Lender or its assignees, to bring any other
action or proceeding against any party hereto or its property in the courts of
other jurisdictions.
Section 7.03 Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given upon
receipt thereof if (i) personally delivered or mailed by registered mail,
postage prepaid, or (ii) transmitted by facsimile (with a copy delivered by
overnight courier) upon telephone confirmation of receipt of such transmission,
as follows:
(a) if to the Seller:
ABFS Warehouse Trust 2003-1
c/o Wilmington Trust Company as Owner Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Corporate Trust Administration
Telecopy number: (000) 000-0000
Telephone number: (000) 000-0000
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With copies to:
American Business Credit, Inc.
The Xxxxxxxxx Building
000 Xxxx Xxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx, Esq., General Counsel
Telecopy number: (000) 000-0000
Telephone number: (000) 000-0000
with a copy to:
Blank Rome LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxxx X. Xxxxx XX
Telecopy number: (000) 000-0000
Telephone number: (000) 000-0000
or, such other persons and at such other addresses, facsimile numbers and
confirmation numbers as may hereafter be furnished to the Purchaser in writing
by ABFS.
(b) if to the Purchaser:
ABFS Warehouse Trust 2003-2
c/o Wilmington Trust Company as Owner Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Corporate Trust Administration
Telecopy number: (000) 000-0000
Telephone number: (000) 000-0000
With copies to:
American Business Credit, Inc.
The Xxxxxxxxx Building
000 Xxxx Xxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxx, Esq., General Counsel
Telecopy number: (000) 000-0000
Telephone number: (000) 000-0000
Blank Rome LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxxx X. Xxxxx XX
Telecopy number: (000) 000-0000
Telephone number: (000) 000-0000
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or such other addresses, facsimile numbers and confirmation numbers as may
hereafter be furnished to the Seller in writing by the Purchaser.
Section 7.04 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Section 7.05 Counterparts. This Agreement may be executed in one
or more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an original
and such counterparts, together, shall constitute one and the same agreement.
Section 7.06 Further Agreements. The Seller and the Purchaser each
agree to execute and deliver to the other such amendments to documents and such
additional documents, instruments or agreements as reasonably may be necessary
or appropriate to effectuate the purposes of this Agreement or in connection
with the offering of securities representing interests in the Assets.
Section 7.07 Recordation and Sales. The Purchaser is hereby
purchasing the Assets and the Seller is hereby selling the Assets. Accordingly,
as of the Closing Date and as of each Transfer Date, the sale of each of the
Assets conveyed by the Seller on the Closing Date or such Transfer Date shall be
reflected on the balance sheets and other financial statements (including the
footnotes thereto) of the Seller as a sale of such Assets by the Seller under
GAAP.
Section 7.08 Successors and Assigns; Assignment of Purchase
Agreement. This Agreement shall bind Seller and the Purchaser and inure to the
benefit of and be enforceable by Seller, and the Purchaser, together with the
Lender as a third party beneficiary. The obligations of the Seller under this
Agreement cannot be assigned or delegated to a third party without the consent
of each of the Purchaser and the Lender, which consent shall be at each such
Person's sole discretion. The parties hereto acknowledge that the Purchaser will
borrow under the Loan Agreement, with its obligations thereunder secured by such
Assets. As an inducement to the Purchaser to purchase the Assets and to the
Lender to enter into the Loan Agreement with the Purchaser, Seller acknowledges
and consents to the assignment by the Purchaser to the Lender of all of the
Purchaser's rights against the Seller pursuant to this Agreement and to the
enforcement or exercise of any right or remedy against the Seller pursuant to
this Agreement by the Purchaser or the Lender. Such enforcement of a right or
remedy by the Purchaser or the Lender, shall have the same force and effect as
if the right or remedy had been enforced or exercised by the Purchaser directly.
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Section 7.09 Survival. The representations and warranties set
forth in Article III and the provisions of Articles II, IV, V, VI and VII shall
survive the Purchaser's purchase of the Assets hereunder.
Section 7.10 Restrictions on Transfer. Aside from any of Seller's
repurchase obligations pursuant to Section 3.01(c), the Purchaser shall not be
permitted to transfer, assign, set over, contribute or sell the Assets to the
Seller. Any such transfer shall be null and void and of no force and effect
whatsoever.
Section 7.11 Limitation of Liability. It is expressly understood
and agreed by the parties hereto that (a) this Agreement is executed and
delivered by Wilmington Trust Company, not individually or personally, but
solely as Owner Trustee of ABFS Warehouse Trust 2003-1 and as Owner Trustee of
ABFS Warehouse Trust 2003-2, in the exercise of the powers and authority
conferred and vested in it, (b) each of the representations, undertakings and
agreements herein made on the part of the Seller and Purchaser is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Seller and Purchaser, (c) nothing herein contained shall be construed
as creating any liability on Wilmington Trust Company, individually or
personally, to perform any covenant either expressed or implied contained
herein, all such liability, if any, being expressly waived by the parties hereto
and by any Person claiming by, through or under the parties hereto and (d) under
no circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Seller and Purchaser or be liable
for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by Seller and Purchaser under this Agreement or any
other related documents.
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IN WITNESS WHEREOF, the Seller and the Purchaser have caused this Asset
Purchase Agreement to be duly executed on their behalf by their respective
officers thereunto duly authorized as of the day and year first above written.
ABFS WAREHOUSE TRUST 2003-1,
as Seller
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as trustee of ABFS
Warehouse Trust 2003-1
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
----------------------------------
Title: Financial Services Officer
----------------------------------
ABFS WAREHOUSE TRUST 2003-2,
as Purchaser
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as trustee of ABFS
Warehouse Trust 2003-2
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
----------------------------------
Title: Financial Services Officer
----------------------------------
-13-
AGREEMENT TO BE BOUND
The undersigned agrees to be bound by the provisions of Section 3.02(c) of this
Asset Purchase Agreement.
Dated: October 14, 2003
AMERICAN BUSINESS CREDIT, INC.:
By: /s/ Xxxxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxxxx Xxxxxxxx
-------------------------------
Title: President
-------------------------------
-14-
Schedule 1
REPRESENTATIONS AND WARRANTIES RE: MORTGAGE LOANS
As to each Mortgage Loan that forms part of the Assets being
transferred hereunder (and the related Mortgage, Mortgage Note, Assignment of
Mortgage and Mortgaged Property), Seller shall make the following
representations and warranties to the Purchaser:
(a) The information set forth in each Mortgage Loan Data
Transmission with respect to the Mortgage Loan is complete, true and correct;
(b) The information provided by the Seller or any Related Party in
connection with a Mortgage Loan will be true and correct in all material
respects on the date or dates when such information is furnished;
(c) Each Mortgage is a valid and enforceable first or second lien
on a fee simple (or its equivalent under applicable state law) estate in the
real property securing the amount owed by the Mortgagor under the Mortgage Note
subject only to Permitted Liens;
(d) Seller has good title to, and is the sole owner of each
Mortgage Loan, free of any interest, including, without limitation, any and all
liens, charges or security interests of any nature of any other Person, and the
Seller has granted a valid and enforceable first priority security interest in
each Mortgage Loan to the Purchaser, which security interest is perfected.
Furthermore, immediately prior to the grant of the aforementioned security
interest to Purchaser, neither the Mortgage Loan nor any of the Mortgage Loan
Documents were subject to any liens, charges or security interests of any nature
of any other Person;
(e) At origination, no Mortgage Loan had an original term to
maturity of greater than 360 months;
(f) There is no mechanics' lien or claim for work, labor or
material (and no rights are outstanding that under law could give rise to such
lien) affecting the premises subject to any Mortgage which is or may be a lien
prior to, or equal or coordinate with, the lien of such Mortgage, except those
which are insured against by the title insurance policy referred to in (bb)
below;
(g) There is no delinquent tax or assessment lien against any
Mortgaged Property;
(h) Such Mortgage Loan, the Mortgage, and the Mortgage Note,
including, without limitation, the obligation of the Mortgagor to pay the unpaid
principal of and interest on the Mortgage Note, are each not subject to any
right of rescission (or any such rescission right has expired in accordance with
applicable law), set-off, counterclaim, or defense, including the defense of
usury, nor will the operation of any of the terms of the Mortgage Note or the
Mortgage, or the exercise of any right thereunder, render either the Mortgage
Note or the Mortgage unenforceable, in whole or in part, or subject to any right
of rescission, set-off, counterclaim, or defense, including the defense of
usury, and no such right of rescission, set-off, counterclaim, or defense has
been asserted with respect thereto;
(i) The Mortgaged Property is free of any material damage and is
in generally good repair, and there is no pending or threatened proceeding for
the total or partial condemnation of the Mortgaged Property;
(j) Neither the Company, the Seller, or any Related Party has
received a notice of default of any mortgage loan secured by the Mortgaged
Property which has not been cured by a party;
(k) Each Mortgage Note and Mortgage are in substantially the forms
previously provided to the Purchaser on behalf of the Seller;
(l) No Mortgage Loan had, at the date of origination, a Combined
LTV in excess of 100.00%;
(m) [Reserved];
(n) The Mortgage Loans were (i) originated by an Approved Mortgage
Originator in the normal course of its business or purchased by an Approved
Mortgage Purchaser pursuant to an Approved Purchase Agreement, (ii) not selected
by the Purchaser or Lender or the Approved Mortgage Purchaser for sale to
Purchaser on any basis adverse to the Purchaser or Lender relative to the
portfolio of similar mortgage loans of the Approved Mortgage Purchaser and (iii)
prior to the Closing Date, serviced by the Approved Mortgage Originator or an
Affiliate thereof in accordance with Accepted Servicing Practices;
(o) With respect to such Mortgage Loan where a material portion of
the estate of the related Seller is a leasehold estate, the cost of the
leasehold expense has been factored into the debt-to-income calculations with
respect to the related Mortgagor and the maturity date of the ground lease is
later than the maturity date of the Mortgage Loan. In addition, the
aforementioned ground lease is prior to any mortgage or other lien upon the
related fee interest and the landlord under the ground lease has not entered
into any agreement to subordinate the ground lease to future mortgages or liens
on the fee interest;
(p) Each Mortgage and related Mortgage Note contains customary and
enforceable provisions which render the rights and remedies of the holder
thereof adequate for the realization against the related Mortgaged Property of
the benefits of the security including (A) in the case of a Mortgage designated
as a deed of trust, by trustee's sale and (B) otherwise by judicial foreclosure.
There is no homestead or other exemption available to the related Mortgagor
which would materially interfere with the right to sell the related Mortgaged
Property at a trustee's sale or the right to foreclose the related Mortgage. The
Mortgage contains customary and enforceable provisions for the acceleration of
the payment of the principal balance of such Mortgage Loan in the event all or
any part of the related Mortgaged Property is sold or otherwise transferred
without the prior written consent of the holder thereof;
-2-
(q) The proceeds of such Mortgage Loan have been fully disbursed,
including reserves set aside by the Approved Mortgage Originator, and there is
no requirement for, and neither the Seller, the Company, or any Related Party
shall make any, future advances thereunder. Any future advances made prior to
the applicable Funding Date have been consolidated with the principal balance
secured by the Mortgage, and such principal balance, as consolidated, bears a
single interest rate and single repayment term reflected on the applicable
Mortgage Loan Data Transmission. The principal balance of the Mortgage Loan as
of the applicable Funding Date does not exceed the original principal amount of
such Mortgage Loan. Any and all requirements as to completion of any on-site or
off-site improvements and as to disbursements of any escrow funds therefor have
been complied with. All costs, fees and expenses incurred in making or recording
such Mortgage Loan have been paid;
(r) All Mortgage Loans were originated in compliance with the
Approved Underwriting Guidelines;
(s) Since origination, the terms of the Mortgage and the Mortgage
Note have not been impaired, waived, altered, or modified in any respect, except
by a written instrument which has been recorded, if necessary, to protect the
interest of the mortgagee and which has been delivered to the Custodian. The
substance of any such alteration or modification will be reflected on the
applicable Mortgage Loan Data Transmission and, to the extent necessary, has
been or will be approved by (i) the insurer under the applicable mortgage title
insurance policy, and (ii) the insurer under any other insurance policy required
hereunder for such Mortgage Loan where such insurance policy requires approval
and the failure to procure approval would impair coverage under such policy;
(t) No instrument of release, waiver, alteration or modification
has been executed in connection with such Mortgage Loan, and no Mortgagor has
been released, in whole or in part, except in connection with an assumption
agreement which has been approved by the insurer under any insurance policy
required hereunder for such Mortgage Loan where such policy requires approval
and the failure to procure approval would impair coverage under such policy, and
which is part of the mortgage file and has been delivered to the Custodian, and
the terms of which are reflected in the applicable Mortgage Loan Data
Transmission;
(u) Except as disclosed in the applicable Mortgage Loan Data
Transmission, there is no default, breach, violation or event of acceleration
existing under the Mortgage or the Mortgage Note and no event which, with the
passage of time or with notice and the expiration of any grace or cure period,
would constitute such a default, breach, violation or event of acceleration, and
neither the Approved Mortgage Originator nor the Seller has waived any such
default, breach, violation or event of acceleration. All taxes, governmental
assessments (including assessments payable in future installments), insurance
premiums, water, sewer, and municipal charges, leaseholder payments or ground
rents which previously became due and owing in respect of or affecting the
related Mortgaged Property have been paid. Neither the Approved Mortgage
Originator nor the Seller has advanced funds or induced, solicited or knowingly
received any advance of funds by a party other than the Mortgagor, directly or
indirectly, for the payment of any amount required by the Mortgage or the
Mortgage Note;
-3-
(v) All of the improvements which were included for the purposes
of determining the Appraised Value of the Mortgaged Property were completed
prior to or at the time that such Mortgage Loan was originated and lie wholly
within the boundaries and building restriction lines of such Mortgaged Property.
No improvements on adjoining properties encroach upon the Mortgaged Property. No
improvement located on or being part of the Mortgaged Property is in violation
of any applicable zoning law or regulation. All inspections, licenses and
certificates required to be made or issued with respect to all occupied portions
of the Mortgaged Property (including all such improvements which were included
for the purpose of determining such Appraised Value) and, with respect to the
use and occupancy of the same, including, but not limited, to certificates of
occupancy and fire underwriter's certificates, have been made or obtained from
the appropriate authorities and the Mortgaged Property is lawfully occupied
under applicable law. In addition, each Mortgaged Property (i) is located on or
adjacent to a dedicated road, or has access to an irrevocable easement
permitting ingress and egress, (ii) is served by public utilities, water and
sewer (or septic facilities), and (iii) has parking as required under applicable
law;
(w) There do not exist any circumstances or conditions with
respect to the Mortgage, the Mortgaged Property, the Mortgagor or the
Mortgagor's credit standing that can be reasonably expected to cause such
Mortgage Loan to become delinquent or adversely affect the value or
marketability of such Mortgage Loan, other than any such circumstances or
conditions expressly permitted under the Approved Underwriting Guidelines;
(x) All parties which have had any interest in the Mortgage,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) (i) in compliance with
any and all applicable licensing requirements of the laws of the state wherein
the Mortgaged Property is located, and (ii) (A) organized under the laws of such
state, (B) qualified to do business in such state, (C) federal savings and loan
associations or national banks having principal offices in such state, (D) not
doing business in such state, or (E) not required to qualify to do business in
such state;
(y) The Mortgage Note and the Mortgage are genuine, and each is
the legal, valid and binding obligation of the maker thereof, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and except that the
equitable remedy of specific performance and other equitable remedies are
subject to the discretion of the courts. All parties to the Mortgage Note and
the Mortgage had legal capacity to execute the Mortgage Note and the Mortgage
and convey the estate therein purported to be conveyed, and the Mortgage Note
and the Mortgage have been duly and properly executed by such parties or
pursuant to a valid power-of-attorney that has been recorded with the Mortgage;
(z) The sales, transfers and conveyances of the Mortgage Note and
the Mortgage as and in the manner contemplated this Agreement are sufficient (i)
to fully transfer to the Purchaser all right, title and interest of the Seller
thereto as note holder and mortgagee, and (ii) to the extent that the Seller
retains an interest in such Mortgage Note or Mortgage despite such sale,
transfer and conveyance, to grant to Purchaser the security interest referred to
in this Agreement. The Mortgage has been duly assigned by the Seller to the
Purchaser, and the Mortgage Note has been duly endorsed as required under the
terms of the Loan Agreement. The Assignment of Mortgage delivered pursuant to
Section 2(a) and Annex 14 of the Custodial Agreement is in recordable form and
is acceptable for recording under the laws of the applicable jurisdiction. The
endorsement of the Mortgage Note, the delivery to the Purchaser, of the endorsed
Mortgage Note, and such Assignment of Mortgage, and the delivery of such
Assignment of Mortgage to the Purchaser are sufficient to permit the Purchaser
to avail itself of all protection available under applicable law against the
claims of any present or future creditors of the Seller, the Related Parties or
the Approved Mortgage Originator, and are sufficient to prevent any other sale,
transfer, assignment, pledge or hypothecation of the Mortgage Note and Mortgage
by the Seller, the Related Parties or the Approved Mortgage Originator from
being enforceable, even if the Purchaser does not record such Assignment of
Mortgage in the applicable recording office.;
-4-
(aa) Any and all requirements of any federal, state, or local law
including, without limitation, usury, truth-in-lending, real estate settlement
procedures, consumer credit protection, equal credit opportunity, predatory and
abusive lending or disclosure laws applicable to such Mortgage Loan have been
complied with, and the Subservicer shall maintain in its possession, available
for the Purchaser's inspection, and shall deliver to the Purchaser or its
designee upon demand, evidence of compliance with all such requirements. The
consummation of the transactions contemplated by this Agreement will not cause
the violation of any such laws;
(bb) Such Mortgage Loan is covered by an ALTA mortgage title
insurance policy or such other generally used and acceptable form of policy,
issued by and valid and binding obligation of a title insurer qualified to do
business in the jurisdiction where the Mortgaged Property is located, insuring
the Seller, the Company, and the Related Parties, and its successors and
assigns, as to the first or second priority lien, as applicable, of the Mortgage
in the original principal amount of such Mortgage Loan. The assignment to the
Purchaser of the Seller's interest in such mortgage title insurance policy does
not require the consent of or notification to the insurer. Such mortgage title
insurance policy is in full force and effect and will be in full force and
effect and inure to the benefit of the Purchaser upon the consummation of the
transactions contemplated by the Loan Agreement. No claims have been made under
such mortgage title insurance policy and none of the Company, the Seller, or any
Related Party, or any prior holder of the Mortgage has done, by act or omission,
anything which would impair the coverage of such mortgage title insurance
policy;
(cc) All improvements upon the Mortgaged Property are insured
against loss by fire, hazards of extended coverage, and such other hazards as
are customary in the area where the Mortgaged Property is located, including,
without limitation, earthquake hazards, pursuant to insurance policies
conforming to the requirements of the Accepted Servicing Practices and
consistent with the Approved Underwriting Guidelines. If the Mortgaged Property
at origination was located in an area identified on a flood hazard boundary map
or flood insurance rate map issued by the Federal Emergency Management Agency as
having special flood hazards (and such flood insurance has been made available),
such Mortgaged Property was covered by flood insurance at origination. Each
individual insurance policy is the valid and binding obligation of the insurer,
is in full force and effect, and will be in full force and effect and inure to
the benefit of the Purchaser upon the consummation of the transactions
contemplated by this Agreement, and contain a standard mortgage clause naming
the originator of such Mortgage Loan, and its successors and assigns, as
mortgagee and loss payee. All premiums thereon have been paid. In addition each
insurance policy requires prior notice to the insured of termination or
cancellation and no such notice has been received. The Mortgage obligates the
Mortgagor to maintain all such insurance at the Mortgagor's cost and expense,
and upon the Mortgagor's failure to do so, authorizes the holder of the Mortgage
to obtain and maintain such insurance at the Mortgagor's cost and expense and to
seek reimbursement therefor from the Mortgagor, and none of the Company, the
Seller, the Related Parties, or any prior holder of the Mortgage has acted or
failed to act so as to impair the coverage of any such insurance policy or the
validity, binding effect, and enforceability thereof;
-5-
(dd) If the Mortgage constitutes a deed of trust, a trustee, duly
qualified under applicable law to serve as such, has been properly designated
and currently so serves and is named in such Mortgage, and no fees or expenses
are or will become payable by the Purchaser or any other Person to any trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor;
(ee) The Mortgaged Property consists of one or more parcels of
real property separately assessed for tax purposes. To the extent there is
erected thereon a detached or an attached one-family residence or a detached
two-to-six-family dwelling, or an individual condominium unit in a low-rise
condominium, or an individual unit in a planned unit development, or a
commercial property, a manufactured home, or a mixed use or multiple purpose
property, such residence, dwelling or unit is not (i) a unit in a cooperative
apartment, (ii) a property constituting part of a syndication, (iii) a time
share unit, (iv) a property held in trust, (v) a mobile home, (vi) a
log-constructed home, or (vii) a recreational vehicle;
(ff) There exist no material deficiencies with respect to escrow
deposits and payments, if such are required, for which customary arrangements
for repayment thereof have not been made or which the Seller expects not to be
cured, and no escrow deposits or payments of other charges or payments due the
mortgagee have been capitalized under the Mortgage or the Mortgage Note. All
escrow deposits and similar payments required pursuant to the Mortgage Loans are
in the Escrow Account;
(gg) Such Mortgage Loan was not originated at a below market
interest rate. Such Mortgage Loan does not have a shared appreciation feature,
or other contingent interest feature, or negative amortization;
(hh) The origination and collection practices used by the Seller
and the Approved Mortgage Seller with respect to such Mortgage Loan have been in
all respects legal, proper, prudent, and customary in the mortgage origination
and servicing business with respect to mortgage loans similar to the Mortgage
Loans. No fraudulent acts were committed by the Company, the Seller, or any
Related Party, or the Servicer in connection with or related to the origination,
servicing or collection of each Mortgage Loan;
(ii) The Mortgagor has, to the extent required by applicable law,
executed a statement to the effect that the Mortgagor has received all
disclosure materials, if any, required by applicable law with respect to the
making of fixed-rate mortgage loans. The Servicer has maintained or caused to be
maintained such statement in the Servicing File;
(jj) All amounts received by the Approved Mortgage Originators
with respect to such Mortgage Loan after the applicable Cut-Off Date and
required to be deposited in the Collection Account have been so deposited in the
Collection Account and are, as of the Closing Date, or will be as of the Funding
Date, as applicable, in the Collection Account;
-6-
(kk) The appraisal report with respect to the Mortgaged Property
contained in the Servicing File was signed prior to the approval of the
application for such Mortgage Loan by a qualified appraiser, duly appointed by
the originator of such Mortgage Loan, who had no interest, direct or indirect,
in the Mortgaged Property or in any loan made on the security thereof and whose
compensation is not affected by the approval or disapproval of such application;
(ll) Except as disclosed in the related Mortgage Loan Data
Transmission, the Mortgagor represented at the time of origination that the
Mortgagor would occupy the Mortgaged Property as the Mortgagor's primary
residence;
(mm) There has been no governmental or regulatory action or third
party claim made, instituted or threatened in writing with respect to the
Mortgaged Property relating to a violation of any applicable federal, state or
local environmental law, statute, ordinance, regulation, order, decree or
standard;
(nn) Each Mortgage Loan is eligible to be a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code assuming a REMIC election
were to be made and an Eligible Mortgage Loan;
(oo) With respect to Second Lien Mortgage Loans:
(i) the Mortgagor has not received notice from the holder of
the prior mortgage that such prior mortgage is in default;
(ii) no consent from the holder of the prior mortgage is
needed for the creation of the second lien Mortgage or, if required,
has been obtained and is in the related Servicing File;
(iii) if the prior mortgage has a negative amortization, the
Combined LTV was determined using the maximum loan amount of such prior
mortgage; and
(iv) the related first mortgage loan encumbering the related
Mortgaged Property does not have a mandatory future advance provision.
(pp) No error, omission, misrepresentation, negligence, fraud or
similar occurrence with respect to a Mortgage Loan has taken place on the part
of any person, including, without limitation, the Mortgagor, any appraiser, any
builder or developer, or any other party involved in the origination of the
Mortgage Loan or in the application of any insurance in relation to such
Mortgage Loan;
-7-
(qq) Each Mortgaged Property is in compliance with all
environmental laws, ordinances, rules, regulations and orders of federal, state
or governmental authorities relating thereto. No hazardous material has been or
is incorporated in, stored on or under (other than properly stored materials
used for reasonable residential purposes), released from, treated on,
transported to or from, or disposed of on or from, any Mortgaged Property such
that, under applicable law (A) any such hazardous material would be required to
be eliminated before the Mortgaged Property could be altered, renovated,
demolished or transferred, or (B) the owner of the Mortgaged Property, or the
holder of a security interest therein, could be subjected to liability for the
removal of such hazardous material or the elimination of the hazard created
thereby. Neither Seller, the Company nor any Related Party has received
notification from any federal, state or other governmental authority relating to
any hazardous materials on or affecting the Mortgaged Property or to any
potential or known liability under any environmental law arising from the
ownership or operation of the Mortgaged Property. For the purposes of this
subsection, the term "hazardous materials" shall include, without limitation,
gasoline, petroleum products, explosives, radioactive materials, polychlorinated
biphenyls or related or similar materials, asbestos or any material containing
asbestos, lead, lead-based paint and any other substance or material as may be
defined as a hazardous or toxic substance by any federal, state or local
environmental law, ordinance, rule, regulation or order, including, without
limitation, CERCLA, the Clean Air Act, the Clean Water Act, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act and any
regulations promulgated pursuant thereto;
(rr) No Mortgage Loan is a loan the proceeds of which was to be
used for business purposes, except for those indicated by code in the Mortgage
Loan Data Transmission;
(ss) No Mortgage Loan has been made to limited or no documentation
borrowers unless such Mortgage Loan conforms to a limited documentation program
identified in the Approved Underwriting Guidelines;
(tt) No Mortgage Loan is cross-collateralized or cross-defaulted
except as has been disclosed to and approved by Purchaser in writing;
(uu) No Mortgage Loan is (a) subject to the provisions of the
Homeownership and Equity Protection Act of 1994 as amended ("HOEPA"), (b) a
"high cost" mortgage loan, "covered" mortgage loan or "predatory" mortgage loan
or any other comparable term, no matter how defined, under any federal, state or
local law, or (c) subject to any comparable federal, state or local statutes or
regulations, including, without limitation, the provisions of the Georgia Fair
Lending Act, the City of Oakland, California Anti-Predatory Lending Ordinance
No. 12361 or any other statute or regulation providing assignee liability to
holders of such mortgage loans. The total combined points and fees charged in
connection with the origination of the Mortgage Loan does not exceed 8% of the
original principal balance of the Mortgage Loan;
(vv) No predatory, abusive or deceptive lending practices,
including but not limited to, the extension of credit to a mortgagor without
regard for the mortgagor's ability to repay the Mortgage Loan and the extension
of credit to a mortgagor which has no apparent benefit to the mortgagor, were
employed in connection with the origination of the Mortgage Loan;
(ww) The Mortgage Loan complies with all applicable consumer
credit statutes and regulations, including, without limitation, the respective
Uniform Consumer Credit Code laws in effect in Colorado, Idaho, Indiana, Iowa,
Kansas, Maine, Oklahoma, South Carolina, Utah and Wyoming, has been originated
by a properly licensed entity, and in all other respects, complies with all of
the material requirements of any such applicable laws;
-8-
(xx) The information set forth in the Mortgage Loan Schedule is
complete, true and correct in all material respects and each prepayment charge
is permissible, enforceable and collectable under applicable federal and state
law;
(yy) No Mortgage Loan secured by a mortgaged property located in
the State of Georgia was originated prior to March 7, 2003;
(zz) Each Mortgage Loan is eligible for sale in the secondary
market or for inclusion in a pass-through transfer without unreasonable credit
enhancement;
(aaa) All points, fees and charges related to each Mortgage Loan
(whether or not financed, assessed, collected or to be collected in connection
with the origination and servicing of each Mortgage Loan) were disclosed in
writing to the Mortgagor in accordance with applicable state and federal law and
regulation. No Mortgagor was charged "points and fees" (whether or not financed)
in an amount greater than 5% of the principal amount of the related Mortgage
Loan;
(bbb) Except as set forth on the related Mortgage Loan Schedule,
none of the Mortgage Loans are subject to a prepayment penalty. For any Mortgage
Loan originated prior to October 1, 2002 that is subject to a prepayment
penalty, such prepayment penalty does not extend beyond five years after the
date of origination. For any Mortgage Loan originated on or following October 1,
2002 that is subject to a prepayment penalty, such prepayment penalty does not
extend beyond three years after the date of origination. With respect to any
Mortgage Loan that contains a provision permitting imposition of a premium upon
a prepayment prior to maturity: (i) prior to the Mortgage Loan's origination,
the Mortgagor agreed to such premium in exchange for a monetary benefit,
including but not limited to a rate or fee reduction, (ii) prior to the Mortgage
Loan's origination, the Mortgagor was offered the option of obtaining a Mortgage
Loan that did not require payment of such a premium, (iii) the prepayment
premium is disclosed to the Mortgagor in the loan documents pursuant to
applicable state and federal law, and (iv) notwithstanding any state or federal
law to the contrary, each Approved Mortgage Originator shall not impose such
prepayment premium in any instance when the mortgage debt is accelerated as the
result of the Mortgagor's default in making the loan payments;
(ccc) Each Approved Mortgage Originator has complied with all
applicable anti-money laundering laws and regulations, including without
limitation the USA Patriot Act of 2001, as amended (collectively, the
"Anti-Money Laundering Laws"); the Approved Mortgage Originator has established
an anti-money laundering compliance program as required by the Anti-Money
Laundering Laws, has conducted the requisite due diligence in connection with
the origination of each Mortgage Loan for purposes of the Anti-Money Laundering
Laws, including with respect to the legitimacy of the applicable Mortgagor and
the origin of the assets used by the said Mortgagor to purchase the property in
question, and maintains, and will maintain, sufficient information to identify
the applicable Mortgagor for purposes of the Anti-Money Laundering Laws;
(ddd) No Mortgage Loan is secured by real property or secured by a
manufactured home located in the state of Georgia unless (x) such Mortgage Loan
was originated prior to October 1, 2002 or after March 6, 2003, or (y) the
property securing the Mortgage Loan is not, nor will be, occupied by the
Mortgagor as the Mortgagor's principal dwelling. No Mortgage Loan is a "High
Cost Home Loan" as defined in the Georgia Fair Lending Act, as amended (the
"Georgia Act"). Each Mortgage Loan that is a "Home Loan" under the Georgia Act
complies with all applicable provisions of the Georgia Act. No Mortgage Loan
secured by owner occupied real property or an owner occupied manufactured home
located in the State of Georgia was originated (or modified) on or after October
1, 2002 through and including March 6, 2003;
-9-
(eee) No Mortgagor was encouraged or required to select a Mortgage
Loan product offered by the Mortgage Loan's originator which is a higher cost
product designed for less creditworthy borrowers, unless at the time of the
Mortgage Loan's origination, such Mortgagor did not qualify taking into account
credit history and debt to income ratios for a lower cost credit product then
offered by the Mortgage Loan's originator or any affiliate of the Mortgage
Loan's originator;
(fff) The methodology used in underwriting the extension of credit
for each Mortgage Loan employs objective mathematical principles which relate
the Mortgagor's income, assets and liabilities to the proposed payment and such
underwriting methodology does not rely on the extent of the Mortgagor's equity
in the collateral as the principal determining factor in approving such credit
extension. Such underwriting methodology confirmed that at the time of
origination (application/approval) the Mortgagor had a reasonable ability to
make timely payments on the Mortgage Loan;
(ggg) All fees and charges (including finance charges) and whether
or not financed, assessed, collected or to be collected in connection with the
origination and servicing of each Mortgage Loan have been disclosed in writing
to the Mortgagor in accordance with applicable state and federal law and
regulation;
(hhh) With respect to any Mortgage Loan which is secured by
manufactured housing, such Mortgage Loan satisfies the requirements for
inclusion in residential mortgage backed securities transactions rated by
Standard & Poor's Ratings Services;;
(iii) Each Mortgage File delivered to the Custodian pursuant to
the terms hereof is complete in all material respects; and
(jjj) No proceeds from any Mortgage Loan were used to finance
single-premium credit life insurance.
-10-
Schedule 2
REPRESENTATIONS AND WARRANTIES RE: SELLER
Seller represents and warrants to the Purchaser that:
(a) Existence. The Seller (a) is corporation duly incorporated, validly
existing and in good standing under the laws of the state of its incorporation,
(b) has all requisite corporate or other power, and has all governmental
licenses, authorizations, consents and approvals, necessary to own its assets
and carry on its business as now being or as proposed to be conducted, except
where the lack of such licenses, authorizations, consents and approvals would
not be reasonably likely to have a Material Adverse Effect; and (c) is qualified
to do business and is in good standing in all other jurisdictions in which the
nature of the business conducted by it makes such qualification necessary,
except where failure so to qualify would not be reasonably likely (either
individually or in the aggregate) to have a Material Adverse Effect, and (d) is
in compliance in all material respects with all Requirements of Law.
(b) Financial Condition. The Seller has heretofore furnished to the
Lender the related consolidated statements of income and retained earnings and
of cash flows for American Business Financial Services, Inc. and its
consolidated Subsidiaries for the one year period ending June 30, 2003, setting
forth comparative form the figures for the previous year. All such financial
statements are materially complete and correct and fairly present the
consolidated financial condition of the Seller and its Subsidiaries and the
consolidated results of their operations for the fiscal year ended on said date,
all in accordance with GAAP applied on a consistent basis. Except as disclosed
in the Loan Agreement, there has been no development or event nor any
prospective development or event which has had or should reasonably be expected
to have a Material Adverse Effect.
(c) Litigation. Except as disclosed in the Loan Agreement, there are no
actions, suits, arbitrations, investigations or proceedings pending or, to its
knowledge, threatened against the Seller or any of its Subsidiaries or affecting
any of the property thereof before any Governmental Authority, (i) as to which
individually or in the aggregate there is a reasonable likelihood of an adverse
decision which would be reasonably likely to have a Material Adverse Effect, or
(ii) which questions the validity or enforceability of this Agreement, the Loan
Documents or any action to be taken in connection with the transactions
contemplated hereby or thereby and there is a reasonable likelihood of a
materially adverse decision or a Material Adverse Effect.
(d) No Breach. Neither (a) the execution and delivery of this Agreement
or any of the other the Loan Documents nor (b) the consummation of the
transactions herein and therein contemplated in compliance with the terms and
provisions hereof and thereof, will conflict with or result in a breach of the
charter or by-laws of the Seller, or any applicable law, rule or regulation, or
any order, writ, injunction or decree of any Governmental Authority, or
instrument, indenture or other material agreement to which the Seller or any of
its Subsidiaries, is a party or by which any of them or any of their property is
bound or to which any of them is subject, or constitute a default under any such
instrument, indenture or other material agreement, or (except for the Liens
created pursuant to the Loan Agreement) result in the creation or imposition of
any Lien upon any property of the Seller or any of its Subsidiaries, pursuant to
the terms of any such agreement or instrument.
(e) Action. The Seller has all necessary corporate or other power,
authority and legal right to execute, deliver and perform its obligations
hereunder and under each of the Loan Documents to which it is a party; the
execution, delivery and performance by the Seller of this Agreement and each of
the Loan Documents to which it is a party has been duly authorized by all
necessary corporate or other action on its part; and this Agreement and each
Loan Document to which it is a party has been duly and validly executed and
delivered by the Seller and constitutes a legal, valid and binding obligation of
the Seller, enforceable against it in accordance with its terms.
(f) Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any Governmental Authority, or any other Person,
are necessary for the execution, delivery or performance by the Seller of this
Agreement, and each of the Loan Documents to which it is a party or for the
legality, validity or enforceability hereof and thereof, except for filings and
recordings in respect of the Liens created pursuant to the Loan Agreement.
(g) Taxes. The Seller and its Subsidiaries have filed all Federal
income tax returns and all other material tax returns that are required to be
filed by them and have paid all taxes due pursuant to such returns or pursuant
to any assessment received by any of them, except for any such taxes, if any,
that are being appropriately contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves have been
provided. The charges, accruals and reserves on the books of the Seller and its
Subsidiaries in respect of taxes and other governmental charges are adequate.
(h) Investment Company Act. Neither the Seller nor any of its
Subsidiaries is an "investment company," or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended. Neither the Seller, nor any of its Subsidiaries is subject to any
Federal or state statute or regulation which limits its ability to incur
indebtedness.
(i) No Legal Bar. The execution, delivery and performance of this
Agreement, will not violate any Requirement of Law or Contractual Obligation of
the Seller or of any of its Subsidiaries and will not result in, or require, the
creation or imposition of any Lien (other than the Liens created under the Loan
Agreement) on any of its or their respective properties or revenues pursuant to
any such Requirement of Law or Contractual Obligation.
(j) No Default. Neither the Seller nor any of its Subsidiaries is in
default under or with respect to any of its Contractual Obligations in any
respect which should reasonably be expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.
(k) Chief Operating Office. The Seller's chief executive office and
operating office on the Effective Date are located at the locations described in
the Loan Agreement.
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(l) Location of Books and Records. The location where the Seller keeps
its books and records including all computer tapes and records relating to the
Assets is its chief executive office or chief operating office.
(m) True and Complete Disclosure. The information, reports, financial
statements, exhibits and schedules furnished in writing by or on behalf of the
Seller to the Purchaser or the Lender in connection with the negotiation,
preparation or delivery of this Agreement, the Loan Agreement, the other Loan
Documents or included herein or therein or delivered pursuant hereto or thereto,
when taken as a whole, do not contain any untrue statement of material fact or
omit to state any material fact necessary to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading. All written information furnished after the date hereof by or on
behalf of the Seller to the Purchaser or the Lender in connection with this
Agreement, the Loan Agreement, and the other Loan Documents and the transactions
contemplated hereby and thereby will be true, complete and accurate in every
material respect, or (in the case of projections) based on reasonable estimates,
on the date as of which such information is stated or certified. There is no
Material Adverse Change and no fact known to a Responsible Officer that, after
due inquiry, could reasonably be expected to have a Material Adverse Effect that
has not been disclosed herein, the Loan Agreement in the other Loan Documents or
in a report, financial statement, exhibit, schedule, disclosure letter or other
writing furnished to the Lender for use in connection with the transactions
contemplated hereby or thereby.
(n) ERISA. Each Plan to which the Seller or its Subsidiaries make
direct contributions, and, to the knowledge of Seller, each other Plan and each
Multiemployer Plan, is in compliance in all material respects with, and has been
administered in all material respects in compliance with, the applicable
provisions of ERISA, the Code and any other Federal or State law. No event or
condition has occurred and is continuing as to which the Seller would be under
an obligation to furnish a report to the Lender under the Loan Agreement. No
accumulated funding deficiency (as defined in Section 412 of the Code or Section
302 of ERISA) has occurred with respect to any Plan. Neither the Seller nor any
ERISA Affiliate is subject to any present or potential liability under Title IV
of ERISA which, individually or in the aggregate, could have a Materially
Adverse Effect. No material liability to the PBGC (other than required premium
payments), the Internal Revenue Service, any Plan or trust established under
Title IV of ERISA has been, or is expected by the Seller or any ERISA Affiliate
to be, incurred by the Seller or any ERISA Affiliate. None of the Seller nor any
ERISA Affiliate has any contingent liability with respect to any post-retirement
benefit under any "welfare plan" (as defined in Section 3(1) of ERISA), other
than liability for continuation coverage under Part 6 of Title I of ERISA. No
lien under Section 412(n) of the Code or 302(f) of ERISA or requirement to
provide security under Section 401(a)(29) of the Code or Section 307 of ERISA
has been or is reasonably expected by the Seller or ERISA Affiliate to be
imposed on the assets of the Seller or any member ERISA Affiliate. Neither the
Seller nor any ERISA Affiliate has engaged in any transaction prohibited by
Section 408 of ERISA or Section 4975 of the Code. As of the Closing Date and
throughout the term of the Agreement, the Seller is not and will not be an
"employee benefit plan" as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA, and none of the assets of the Seller will constitute "plan
assets" of one or more such plans for purposes of Title I of ERISA or section
4975 of the Code.
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(o) Licenses. The Purchaser will not be required as a result of
acquiring title to the Assets hereunder to be licensed, registered or approved
or to obtain permits or otherwise qualify (i) to do business in any state in
which it currently so required or (ii) under any state consumer lending, fair
debt collection or other applicable state statute or regulation.
(p) Relevant States. The Seller is licensed (or exempt from licensing)
to originate Mortgage Loans in its own name or through brokers on the date of
this Agreement in all states where it originates Mortgage Loans.
(q) True Sales. Any and all interest of a Qualified Originator in, to
and under any Mortgage funded in the name of or acquired by such Qualified
Originator or seller which is an Affiliate of the Purchaser has been sold,
transferred, conveyed and assigned to the Seller pursuant to a legal sale and
such Qualified Originator retains no interest in such Mortgage Loan, and if so
requested by the Purchaser, is covered by an opinion of counsel to that effect
in form and substance acceptable to the Purchaser.
(r) No Burdensome Restrictions. Other than as disclosed in the Loan
Agreement, no Requirement of Law or Contractual Obligation of the Seller or any
of its Subsidiaries has been enacted or entered into since the date of the
financial statements previously delivered to Lender which would preclude Seller
from continuing its operations consistent with past practices or which is
reasonably expected to have a Material Adverse Effect.
(s) Subsidiaries. All of the Subsidiaries of the Seller at the date
hereof are listed on Schedule 6.22 to the Loan Agreement.
(t) Seller Solvent; Fraudulent Conveyance. As of the date hereof and
immediately following each Transfer Date after giving effect to purchase, the
fair value of the assets of the Seller is greater than the fair value of its
respective liabilities (including, without limitation, contingent liabilities if
and to the extent required to be recorded as a liability on the financial
statements of the Seller in accordance with GAAP), and the Seller is and will be
solvent, is and will be able to pay its debts as they mature and does not and
will not have an unreasonably small capital to engage in the business in which
it is engaged and proposes to engage. The Seller does not intend to incur, nor
believes that it has incurred, debts beyond its ability to pay such debts as
they mature. The Seller is not contemplating the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of the
Seller or any of its assets. The Seller is not transferring any Mortgage Loans
with any intent to hinder, delay or defraud any of its respective creditors.
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS; CONSTRUCTION..................................................................2
Section 1.01 Definitions.......................................................................2
Section 1.02 Construction......................................................................2
ARTICLE II SALE OF ASSETS; PAYMENT OF PURCHASE PRICE..................................................2
Section 2.01 Sale of Assets to Purchaser.......................................................2
Section 2.02 Obligations of Seller.............................................................4
Section 2.03 Dispositions......................................................................5
ARTICLE III REPRESENTATIONS AND WARRANTIES; REMEDIES FOR BREACH........................................5
Section 3.01 Seller's Representations and Warranties...........................................5
Section 3.02 Reconstitution of Mortgage Loans..................................................6
ARTICLE IV SELLER COVENANTS...........................................................................7
Section 4.01 No Further Sale or Transfer.......................................................7
Section 4.02 Defense of Right, Title and Interest..............................................7
Section 4.03 Separateness Covenants............................................................7
Section 4.04 Further Assurances................................................................7
ARTICLE V PURCHASER COVENANTS........................................................................7
ARTICLE VI TERMINATION................................................................................8
Section 6.01 Termination.......................................................................8
ARTICLE VII MISCELLANEOUS PROVISIONS...................................................................9
Section 7.01 Amendment.........................................................................9
Section 7.02 Governing Law.....................................................................9
Section 7.03 Notices...........................................................................9
Section 7.04 Severability of Provisions.......................................................10
Section 7.05 Counterparts.....................................................................10
Section 7.06 Further Agreements...............................................................10
Section 7.07 Recordation and Sales............................................................10
Section 7.08 Successors and Assigns; Assignment of Purchase Agreement.........................10
Section 7.09 Survival.........................................................................11
Section 7.10 Restrictions on Transfer.........................................................11
