AMERICAN BUSINESS FINANCIAL SERVICES, INC.
[COMPANY LOGO]
SUBORDINATED INVESTMENT NOTE
NUMBER _______________________ DATE ISSUED ___________________
PRINCIPAL AMOUNT $____________ TERM __________________________
INTEREST RATE PER ANNUM _____% MATURITY DATE _________________
INTEREST COMPOUNDED DAILY
PAYABLE ________________
AMERICAN BUSINESS FINANCIAL SERVICES, INC., a Delaware corporation herein called
the Company, for value received, hereby promises to pay to:
_______________________________________________________________________________
(the "Holder" or "Noteholder")
Interest payments shall be made by check delivered by mail to the
address of the Holder appearing on the Note register maintained by the Registrar
(which address may be changed from time to time by notice given by Xxxxxx in
writing to the Registrar) on the Regular Record Date preceding the subject
payment Date; principal and interest payment at the end of the term hereof shall
be made in person to Holder at the offices or agency of the Payment Agent in
exchange for this Note. Holder shall be notified prior to such payment of the
address at which such payment shall occur.
All payments hereunder shall be made in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts.
All interest on the Notes will be compounded daily and computed on the
basis of a calendar year.
This Note is being issued pursuant to an Indenture dated as of
_________, 1997 ("Indenture") between the Company and First Trust, National
Association, a national banking association, as Trustee and in connection with
an offering by the Company of an aggregate of $125,000,000 U.S. principal amount
Unsecured, Subordinated Investment Notes ("Notes") and Unsecured, Adjustable
Rate, Subordinated Money Market Notes as described in the Company's Prospectus
dated ___________, 1997, as amended and supplemented from time to time, and a
current interest rate supplement thereto. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb)
("TIA"). The Notes are subject to all such terms, and Holder is referred to the
Indenture and such Act for a statement of such terms. All capitalized terms not
otherwise defined herein shall have the meaning given to such terms in the
Indenture.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, American Business Financial Services, Inc. has
caused this Note to be signed on the date first above written.
ISSUER:
AMERICAN BUSINESS FINANCIAL SERVICES, INC.
(SEAL) BY: _____________________________________________
Xxxxxxx X. Xxxxxxxx, Xx., Chairman, President
and Chief Executive Officer
Attest: _________________________________________
Officer of Company
COUNTERSIGNED AND REGISTERED BY
FIRST TRUST, NATIONAL ASSOCIATION, a
national banking association
BY: ______________________________________________
Authorized Signature
-2-
[REVERSE SIDE OF NOTE]
1. Subordination. The indebtedness evidenced by the Note shall be
postponed and subordinated and is subject in right of payment, to the extent and
in the manner set forth in the Indenture, to the prior payment in full of all
"Senior Debt" of the Company. "Senior Debt" means any indebtedness (whether
outstanding on the date of issuance of this Note or thereafter created) incurred
by the Company in connection with borrowings by the Company (including its
subsidiaries) from a bank, trust company, insurance company, other institutional
lender or other entity which lends funds in connection with its primary business
activities whether such indebtedness is or is not specifically designated by the
Company as being "Senior Debt" in its defining instruments. The Company agrees,
and Xxxxxx by accepting this Note consents and agrees, to the subordination
provided for in the Indenture and authorizes the Trustee to give it effect.
2. Subrogation. As more fully set forth in the Indenture, subject to
the payment in full of all Senior Debt of the Company, Holder shall be
subrogated to the rights of the holders of Senior Debt of the Company to receive
payments or distributions of assets of the Company made on the Senior Debt of
the Company until the principal of and interest on this Note shall be paid in
full, and for purposes of such subrogation, no such payment or distributions of
the holders of Senior Debt of the Company of cash, property or securities, which
otherwise would be payable or distributable to Holder, shall be between the
Company, its creditors other than the holders of Senior Debt of the Company, and
Holder, be deemed to be a payment by the Company to or on account of this Note,
it being understood that the provisions of this paragraph are intended solely
for the purpose of defining the relative rights of Holder, on the one hand, and
the holders of Senior Debt of the Company, on the other hand.
3. Nonimpairment. Nothing contained in this Note is intended to or
shall impair, as between the Company, the Company's creditors other than the
holders of Senior Debt of the Company, and Holder, the obligation of the
Company, which is absolute and unconditional, to pay to Holder the principal of
and interest on this Note, as and when the same shall become due and payable in
accordance with its terms, and which, subject to the rights under Article X of
the Indenture of the holders of Senior Debt of the Company, is intended to rank
equally with all other general obligations of the Company. In addition, nothing
contained in this Note is intended to or shall affect the relative rights of
Holder and creditors of the Company other than the holders of Senior Debt of the
Company, nor shall anything herein or therein prevent the Holder of this Note
from exercising all remedies otherwise permitted by the Indenture and applicable
law upon the occurrence of an Event of Default, subject to the rights, if any,
under Article X of the Indenture of the holders of Senior Debt of the Company in
respect of cash, property or securities of the Company received upon the
exercise of any such remedy.
4. Mandatory Redemption. Except as provided in Article III of the
Indenture with respect to the Company's obligation to redeem Notes at the
request of certain Holders (in the event of such Xxxxxx's Total Permanent
Disability), the estate of a Holder (in the event of Xxxxxx's death) or a
jointholder (in the event this Note is held jointly by a husband and wife and
one spouse suffers
-3-
a Total Permanent Disability or dies), the Company has no mandatory redemption
or sinking fund obligations with respect to this Note.
5. Events of Default. An event of Default is:
(a) Default in the payment of any interest upon this Note when
it becomes due and payable and continuance of such default for a period of 30
days; or
(b) Default in the payment of principal of this Note when it
becomes due and payable at maturity, upon redemption or otherwise and
continuance of such default for 30 days; or
(c) Failure by the Company to comply with any of its
agreements upon a liquidation, consolidation, merger or transfer of
substantially all of the Company's assets; or
(d) Failure by the Company for 60 days after notice to comply
with any of its other agreements in the Indenture or this Note; or
(e) Certain events of bankruptcy or insolvency.
If an Event of Default occurs and is continuing, the Trustee or the
holders of at least a majority in principal amount of the then outstanding Notes
may declare all the Notes to be due and payable immediately, except that in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Notes become due and payable immediately without
further action or notice. Holders of Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Notes. Subject to
certain limitations, holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or powers.
The Trustee may withhold from Noteholders notice of any continuing default
(except a default in payment of principal or interest) if it determines that
withholding notice would have no material adverse effect on the Noteholders. The
Company must furnish an annual compliance certificate to the Trustee.
6. Transfer and Exchange. The transfer of Notes may be registered and
Notes may be exchanged as provided in the Indenture. This Note may not be
assigned, transferred or otherwise alienated without the prior written consent
of the Company (which shall not be unreasonably withheld) and shall be subject
to the Company's right to demand and receive an opinion of Xxxxxx's legal
counsel (which counsel shall be reasonably acceptable to the Company) that the
transfer does not violate any applicable securities laws and/or a signature
guarantee.
7. Automatic Extension. At least seven (7) days prior to a Note's
stated maturity date, the Company will notify the registered Noteholder of such
maturity date. If at such time, the Company does not notify the Noteholder of
its intention to repay, subject to the Noteholder's demand for repayment, the
term of such Note will be automatically extended. If, within seven days after a
-4-
Note's maturity date, the Noteholder thereof has not demanded repayment of such
Note, and the Company has not notified the Noteholder of its intention to repay
such Note, such Note shall be extended for the same term identical to the term
of the original Note. The Note will continue to renew as described herein absent
some action permitted under the Indenture and the Notes by either the Noteholder
or the Company. Interest shall continue to accrue from the first day of such
renewal term. Such Note, as renewed, will continue in all its provisions,
including provisions relating to payment, except that the interest rate payable
during any renewed term shall be the interest rate which is then being offered
by the Company on similar Notes being offered as of the renewed date. If similar
Notes are not then being offered, the interest rate upon renewal will be the
rate specified by the Company on or before the maturity date, or the Note's
current rate if no such rate is specified. If the Company gives notice to a
Noteholder of the Company's intention to repay a Note at maturity no interest
will accrue after the date of maturity. Otherwise, if a Noteholder requests
repayment within seven days after its maturity date, the Company will pay
interest during the period after its maturity date and prior to repayment at the
lower of (i) the lowest interest rate then being paid on debt securities being
offered by the Company to the general public or (ii) the rate being paid on such
Note immediately prior to its maturity.
8. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.
9. Amendments and Waivers. Subject to certain exceptions, the Indenture
or the Notes may be amended or supplemented and any existing Default under, or
compliance with any provision of, the Indenture may be waived with the written
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding. Without the consent of any Holder, the Company and the Trustee
may amend or supplement the Indenture or the Notes to cure any ambiguity, defect
or inconsistency; to provide for uncertificated Securities in addition to or in
place of certificated Securities; to comply with Section 5.1 of the Indenture;
to change the elective redemption provisions applicable upon the death or Total
Permanent Disability of a Holder (but only to the extent such change does not
alter such rights with respect to any outstanding Note); to make any change that
would provide any additional rights or benefits to the Holder; or to comply with
requirements of the SEC in order effect or maintain the qualification of the
Indenture under the TIA.
10. Trustee Dealings with Company. So long as done in accordance with
the TIA, the Trustee, in its individual or any other capacity, may make loans
to, accept deposits from, and perform services for the Company or its
affiliates, and may otherwise deal with the Company or its Affiliates, as if it
were not Trustee.
11. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
-5-
12. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Requests may be made to:
AMERICAN BUSINESS FINANCIAL SERVICES, INC.
BALAPOINTE OFFICE CENTRE
000 XXXXXXXXXXXX XXXX., XXXXX 000
XXXX XXXXXX, XX 00000
--------------------------------------
The following abbreviations, when used in the inscription on the face
of the within Note, shall be construed as though they were written out if full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in common
UNIF GIFT MIN ACT - __________ Custodian __________
(Cust) (Minor)
under Uniform Gifts/Transfers to Minors
Act ____________________________
(State)
Additional abbreviations may also be used though not in the above list.
--------------------------------------
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE:
_____________________________________
_______________________________________________________________________________
(NAME AND ADDRESS OF ASSIGNEE, INCLUDING ZIP CODE,
MUST BE TYPEWRITTEN)
_______________________________________________________________________________
the within Note, and all rights thereunder, hereby irrevocably
-6-
_______________________________________________________________________________
constitute and appoint
____________________________________________________________________ Attorney
to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated:
________________________________
NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Note in every particular, without alteration
or enlargement, or any change whatever.
-7-
