Exhibit 10.6
Clearwing Capital, LLC
c/o Chrysalis Management Group, LLC
The Belgravia Building
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
November 12, 2004
ABFS Warehouse Trust 2003-1
c/o Wilmington Trust Company as Owner Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Fax No.: (000) 000-0000
Attention: Corporate Trust Administration
Re: PATRIOT - PURCHASED SECURITIES TRANSACTION
To Whom It May Concern:
Reference is made to (a) that certain Loan and Security
Agreement, dated as of October 14, 2003 (the "Loan Agreement"), between ABFS
Warehouse Trust 2003-2 (the "Borrower") and Chrysalis Warehouse Funding, LLC
(the "Lender"), a wholly-owned affiliate of Clearwing Capital, LLC
("Clearwing"), (b) that certain Trust Agreement, dated as of October 14, 2003
(the "Trust Agreement"), among ABFS Consolidated Holdings, Inc. ("Holdings") and
certain subsidiaries of Holdings and Wilmington Trust Company, as trustee for
ABFS Warehouse Trust 2003-1, a Delaware statutory trust ("Trust 2003-1"), (c)
that certain Pledge and Security Agreement, dated as of October 14, 2003 (the
"Pledge Agreement"), between Trust 2003-1 and Clearwing, and (d) that certain
Fee Letter, dated as of October 14, 2003, by and among Borrower and certain of
its affiliates (Borrower and such affiliates, the "Obligors") and Clearwing, as
amended by that certain letter agreement, dated as of September 27, 2004, by and
among Clearwing and the Obligors (the "2003 Fee Letter"). Except as provided in
Paragraph 4 herein or as otherwise indicated, capitalized terms used herein and
not otherwise defined shall have the meaning ascribed to them in the Pledge
Agreement.
Further reference is made to that certain Consent and
Amendment to Fee Letter, dated as of October 26, 2004 (the "October 26
Consent"), executed by Clearwing and accepted and agreed to by the Obligors.
Trust 2003-1 has advised Clearwing (a) that American Business
Financial Services, Inc. ("ABFS") desires to consummate the transaction for the
"Purchased Securities" (as such term is defined in the Patriot Commitment
Letter, the "Purchased Securities Transaction") prior to the consummation of the
transaction for the "Wet Warehouse" (as such term is defined in the Patriot
Commitment Letter); and (b) that certain of the conditions precedent to the
effectiveness of the October 26 Consent will not be satisfied prior to the
consummation of the Purchased Securities Transaction.
To enable ABFS to consummate solely the Purchased Securities
Transaction, Trust 2003-1 has requested that Clearwing agree solely to (a)
release its lien on the interest-only strips listed on Schedule 1 attached
hereto (the "Schedule 1 IOS"), and (b) release any lien that Clearwing might
have on any of Trust 2003-1's rights to servicing advances arising under any of
the agreements listed on Schedule 2 attached hereto (the "Schedule 2 Servicing
Agreements").
Now therefore:
1. October 26 Consent. The parties hereby confirm that the
October 26 Consent is not effective.
2. Consent. Subject to the terms and conditions contained
herein (including without limitation Paragraph 4), Clearwing hereby (a) agrees
to release its lien on the Schedule 1 IOS, (b) consents to the distribution by
Trust 2003-1 to Holdings of the Schedule 1 IOS, (c) agrees to release any lien
that Clearwing might have on any of Trust 2003-1's rights to servicing advances
arising under the Schedule 2 Servicing Agreements, (d) consents to the
distribution by Trust 2003-1 to American Business Credit, Inc. of any rights
that Trust 2003-1 has to the servicing advances arising under the Schedule 2
Servicing Agreements, and (e) agrees to release any rights that Clearwing might
have in or to Class X Certificate, No. X-1, issued by ABFS Mortgage Loan Trust
2001-2.
3. Conditions Precedent. The effectiveness of this letter
agreement (and the consents provided herein) are subject to the fulfillment, to
the satisfaction of Clearwing, of the following conditions:
(a) Clearwing shall have received this letter agreement duly
executed by the parties hereto, and the same shall be in full force and effect;
(b) All documents and legal matters in connection with the
Purchased Securities Transaction shall have been delivered, executed, or
recorded and shall be in form and substance satisfactory to Clearwing;
(c) All of the conditions set forth in the documents
evidencing the Purchased Securities Transaction shall have been satisfied and
the Purchased Securities Transaction shall be consummated in accordance with its
terms;
(d) The Obligors shall have received all licenses, approvals,
or consents necessary to consummate the Purchased Securities Transaction;
(e) The representations and warranties in this letter
agreement, the Pledge Agreement, the Trust Agreement, and the 2003 Fee Letter
shall be true and correct in all material respects as of the date hereof, as
though made on such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(f) No Event of Default under the Pledge Agreement and no
Event of Default under and as defined in the Loan Agreement shall have occurred
and be continuing on the date hereof, nor shall result from the consummation of
the transactions contemplated herein;
(g) No injunction, writ, restraining order, or other order of
any nature prohibiting, directly or indirectly, the consummation of the
transactions contemplated herein shall have been issued and remain in force by
any governmental authority against any of the Obligors, Patriot, Clearwing, any
of their affiliates, or any other Person;
(h) The Obligors shall have paid Clearwing, for the benefit of
Clearwing, the Lender, and their affiliates, a work fee in an amount equal to
$500,000, which amount (i) shall be in addition to all other work fees and all
expense deposits paid by any of the Obligors to Clearwing or the Lender, (ii)
shall be applied to the payment of costs and expenses incurred at any time by
Clearwing and its affiliates in connection with the Patriot Financing or any
other financing in favor of any of the Obligors, and (iii) shall be paid as
follows: (x) $200,000 of such work fee shall be paid on the date of execution of
this letter agreement, and (y) the remaining $300,000 of such work fee shall be
paid on the date of the initial funding of the Purchased Securities Transaction.
(i) Clearwing shall have received the fees set forth in the
2003 Fee Letter, as amended by Paragraph 4 of this letter agreement;
(j) Clearwing shall have received an opinion from counsel for
Trust 2003-1 in form and substance satisfactory to Clearwing;
(k) Clearwing shall have received the consent, if necessary or
appropriate, from the Pledgee Lender (as defined in the Loan Agreement); and
(l) The Lender shall have (i) consummated an amendment to the
Loan Agreement, which increases the advance rate on Eligible Mortgage Loans to
an advance rate satisfactory to the Lender and the Borrower, and (ii) received
the consent of the Pledgee Lender (as defined in the Loan Agreement) to such
amendment.
4. Amendments to 2003 Fee Letter and Loan Agreement. Each
capitalized term used solely in this Paragraph 4 and not otherwise defined in
this letter agreement shall have the meaning ascribed to such term in the 2003
Fee Letter. As consideration for Clearwing's consent as provided herein and
effective upon the date of execution of the documents evidencing the Purchased
Securities Transaction (the "Patriot Closing Date"), the Obligors, jointly and
severally, and Clearwing agree to the following amendments to the 2003 Fee
Letter and the Loan Agreement:
(a) The expiration date of the Commitment Transaction Fee set
forth in Section 4(b) of the 2003 Fee Letter shall be extended from January 11,
2005 to and including September 30, 2006;
(b) Subject to the amendment set forth in Section 4(c) below,
the definition of "Maximum Credit" as set forth in the Loan Agreement shall be
amended and restated to read as follows:
"Maximum Credit" means $250,000,000, provided, however,
that the amount of the Maximum Credit may, in the sole discretion
of the Lender at any time after the first anniversary of the
Closing Date up November 30, 2005, be increased to at least
$400,000,000, provided further, however, that the Company shall
have the right to terminate the option of the Lender to so
increase the amount of the Maximum Credit so long as (i) the
Company and the Lender agree in writing to terminate such option,
and (ii) the Increase Option Termination Fee (as defined in the
Fee Letter) is paid to Clearwing pursuant to the terms of the Fee
Letter.
(c) Section 5 of the 2003 Fee Letter shall be amended and
restated to read as follows:
"5. Increase Commitment Fees. If the Maximum Credit
is increased to at least $400,000,000 at the sole discretion
of Clearwing (the date of such increase, the "Increase Date"),
the Obligors shall pay to Clearwing the following fees:
a. Increase Commitment Exercise Fee. A commitment
exercise fee (the "Increase Commitment Exercise Fee") of
$10,000,000, which shall be fully earned on the Increase Date,
nonrefundable when paid, and due and payable in equal monthly
installments on the first day of each month commencing with
the first day of the first full month following the Increase
Date and continuing until all Obligations have been paid in
full, with any remaining balance due and payable on the
Termination Date, provided, however, that if the Increase Date
is on or after June 30, 2005, the Increase Commitment Exercise
Fee shall be reduced by an amount equal to (i) $250,000, times
(ii) the total number of full months that exist during the
period from June 30, 2005 through and including the Increase
Date.
b. Increase Credit Support Fee. An increase credit
support fee of $1,350,000, which fee shall be fully earned and
due and payable on the Termination Date, and nonrefundable
when paid.
c. Increase Loan Commitment Fee. An increase loan
commitment fee of $10,500,000, which fee shall be fully earned
and due and payable on the Increase Date, and nonrefundable
when paid, and shall be payable in advance in 24 equal monthly
installments of $437,500 each, payable on the first day of
each calendar month from and after the Increase Date through
the date on which all of the Obligations are paid in full in
accordance with the terms of the Loan Agreement, and the
commitments of the Lender under the Loan Agreement are
terminated, provided, however, that (a) the increase loan
commitment fee that is due in advance for the period from the
Increase Date through the last day of the calendar month in
which the Increase Date falls shall be due and payable on the
Increase Date and shall be an amount equal to (i) $437,500,
times (ii) the result of the total number of days that will
elapse from (and including) the Increase Date through the last
day of the calendar month in which the Increase Date falls
divided by the total number of days in such month, and (b) on
the Termination Date, the Obligors shall pay an amount
necessary to pay in full the remaining balance of the increase
loan commitment fee, provided further, however, that if the
Increase Date is on or after June 30, 2005, the Increase Loan
Commitment Fee shall be reduced by an amount equal to (i)
$437,500, times (ii) the total number of full months that
exist during the period from June 30, 2005 through and
including the Increase Date.
d. Increase Option Termination Fee. The Increase
Option Termination Fee (as referenced in the definition of
Maximum Credit Amount in the Loan Agreement) shall be an
amount equal to (i) $7,500,000 plus (ii) an amount equal to
$500,000 times each month during the term of the Loan
Agreement that the Maximum Credit was not increased to at
least $400,000,000."
(d) The unpaid balance of the Loan Commitment Fee set forth in
Paragraph 2 of the 2003 Fee Letter shall be accelerated such that (i) $2,000,000
of such unpaid balance shall be due and payable on the Patriot Closing Date, and
(ii) the balance remaining after payment of such $2,000,000 shall be paid in
equal monthly of $1,000,000 on the first day of each month commencing with the
first day of the first full month following the Patriot Closing Date until the
Loan Commitment Fee is paid in full.
(e) The following new Paragraph 10 shall be added to the Fee
Letter:
10. Evergreen Expense Deposit. From and after October
26, 2004 through and including the date that all Obligations
have been paid in full in accordance with the terms of the
Loan Agreement, the Obligors shall maintain at all times a
$100,000 expense deposit with Clearwing, for the benefit of
Clearwing, the Lender, and their affiliats.
5. Limited Consent. The consent provided in this letter
agreement shall be limited precisely as provided for herein, and shall not be
deemed to be a waiver of, amendment of, consent to or modification of any other
term, provision or Event of Default under Loan Agreement, the Pledge Agreement
or of any term or provision of any other Loan Document or other instrument
referred to therein or herein or of any transaction or further or future action
on the part of the Borrower or Trust 2003-1 which would require the consent of
the Lender or Clearwing under the Loan Agreement or the Pledge Agreement.
6. Reservation of Rights. You are hereby advised that the
Lender and Clearwing expressly reserve all of their respective rights and
remedies against the Borrower and Trust 2003-1 under the Loan Agreement, the
Pledge Agreement and the other Loan Documents and at law and in equity with
respect to all existing or future Events of Default. Neither the Lender nor
Clearwing shall be deemed to have waived any term or condition of the Loan
Agreement, the Pledge Agreement or any other Loan Document or to have agreed to
a forbearance with respect to any right or remedy which the Lender or Clearwing
may now have or in the future may have under the Loan Agreement, the Pledge
Agreement or any other Loan Document, at law, in equity or otherwise on account
of any Default or Events of Default. Neither the Lender nor Clearwing shall by
virtue of any action or omission be deemed to have altered or prejudiced any
rights or remedies under or in connection with the Loan Agreement, the Pledge
Agreement or under or in connection with any Default under the Loan Documents
except as specifically set forth herein. All of the terms and conditions of the
Loan Agreement and the other Loan Documents are and shall remain in full force
and effect.
7. Miscellaneous
(a) This letter agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement. Delivery of an executed counterpart
of this letter agreement by facsimile or electronic mail shall be equally
effective as delivery of a manually executed counterpart.
(b) Section and paragraph headings herein are
included for convenience of reference only and shall not constitute a part of
this letter agreement for any other purpose.
[Signature Pages Follow]
(c) THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.
Very truly yours,
CLEARWING CAPITAL, LLC
By: Chrysalis Capital Partners, LLC,
Its Manager
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: Managing Member
Accepted and Agreed to this th day of November 2004:
ABFS WAREHOUSE TRUST 2003-2
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
ABFS WAREHOUSE TRUST 2003-1
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
AMERICAN BUSINESS FINANCIAL SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
ABFS CONSOLIDATED HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
AMERICAN BUSINESS CREDIT, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
AMERICAN BUSINESS MORTGAGE SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
HOMEAMERICAN CREDIT, INC.,
D/B/A UPLAND MORTGAGE
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
