Exhibit 10.2
Clearwing Capital, LLC
c/o Chrysalis Management Group, LLC
The Belgravia Building
0000 Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopier No. (000) 000-0000
January 26, 2005
Mr. Xxxx Xxxxxxxx
Greenwich Capital Financial Products, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Telecopier No. (000) 000-0000
Re: Interest Only Strip issued by ABFS Mortgage Loan Trust 2002-4
Dear Xx. Xxxxxxxx:
Reference is made to (a) that certain Trust Agreement, dated as of
October 14, 2003 (the "TRUST AGREEMENT"), by and among Wilmington Trust Company,
as trustee for ABFS Warehouse Trust 2003-1, a Delaware statutory trust ("TRUST
2003-1"), and the Depositors party thereto, and (b) that certain Pledge and
Security Agreement, dated as of October 14, 2003 (the "PLEDGE AGREEMENT"),
between Trust 2003-1 and Clearwing Capital, LLC ("CLEARWING"), pursuant to which
Trust 2003-1 pledged to Clearwing certain interest only strips, including the
interest only strip, represented by that certain Class X Certificate, No. X-1,
issued by ABFS Mortgage Loan Trust 2002-4. Any capitalized term used herein and
not defined herein shall have the meaning ascribed to such term in the Pledge
Agreement.
We understand that on January 21, 2005, American Business Financial
Services, Inc., a Delaware corporation, American Business Credit, Inc., a
Pennsylvania corporation ("ABC"), American Business Mortgage Services, Inc., a
New Jersey corporation, and HomeAmerican Credit, Inc., a Pennsylvania
corporation (the "DEBTORS"), filed Chapter 11 bankruptcy cases in the United
States Bankruptcy Court for the District of Delaware (the "BANKRUPTCY CASES").
We also understand that (a) ABC has made an offer to purchase from Trust
2003-1 that certain interest only strip, issued by ABFS Mortgage Loan Trust
2002-4 (the "2002-4 IOS") represented by Class X Certificate, No. X-1, for the
sum of $2,330,000 in cash, subject to Clearwing's lien on the 2002-4 IOS as
subordinated hereby (the "IOS SALE"); (b) concurrently with the consummation of
the IOS Sale, Greenwich Capital Financial Products, Inc. ("GREENWICH") desires
to purchase the 2002-4 IOS from ABC, pursuant to that certain Master Repurchase
Agreement (the "REPURCHASE AGREEMENT"), for $6,830,000 (such transaction, the
1
"INTERIM DIP FINANCING"), and (c) upon such purchase, the Class X Certificate,
No. X-1 (currently in the name of Trust 2003-1) will be cancelled and reissued
in the form of Class X Certificate, No. X-1 (in the name of Greenwich).
To enable Greenwich to consummate the Interim DIP Financing with ABC,
Greenwich has requested that Clearwing subordinate its lien on the 2002-4 IOS to
Greenwich's interest in the 2002-4 IOS solely in an amount not to exceed the
amount of $6,830,000 plus interest, fees, costs, and expenses as specified in
the Repurchase Agreement (the "PREFERRED INTEREST AMOUNT").
Now therefore:
1. SUBORDINATION.
(a) Subject to the terms and conditions set forth in SECTION
2 below, Clearwing hereby agrees that (i) the lien of Clearwing on the 2002-4
IOS shall in all respects be junior and subordinate to Greenwich's interest in
the 2002-4 IOS solely to secure the obligations under the Interim DIP Financing
up to the Preferred Interest Amount; and (ii) Clearwing shall not be entitled to
receive any payment or distribution with respect to the 2002-4 IOS unless and
until all obligations owed to Greenwich in respect of the Interim DIP Financing
in an amount not to exceed the Preferred Interest Amount has been paid in full
in cash.
(b) Greenwich hereby (i) acknowledges and agrees that the
2002-4 IOS is and at all times relevant hereto (including from and after the
purchase by Greenwich of the 2002-4 IOS from ABC pursuant to the Repurchase
Agreement) shall be subject to the lien of Clearwing and acknowledges and agrees
that Greenwich has no interest in the 2002-4 IOS other than the interest
described in this letter agreement up to the Preferred Interest Amount, and (ii)
agrees that immediately upon payment in full of the Preferred Interest Amount,
Greenwich will and does hereby agree to transfer and assign the 2002-4 IOS,
subject to the lien of Clearwing, back to ABC.
(c) ABC hereby agrees that upon the transfer and assignment
by Greenwich of the 2002-4 IOS to ABC, the 2002-4 IOS shall remain subject to
the lien of Clearwing until such time as all of the obligations of Trust 2003-1
to Clearwing have been paid in full in cash.
(d) Anything in this letter agreement to the contrary
notwithstanding, upon the occurrence of (i) an event of default under the
Repurchase Agreement and (ii) Greenwich's determination to take control of and
sell the 2002-4 IOS to repay the Preferred Interest Amount, Greenwich shall (x)
consult with Clearwing regarding such sale, and (y) if such sale is to an
independent third person with no affiliation or relation to Greenwich or any of
its officers or directors, such sale shall be free and clear of Clearwing's lien
on the 2002-4 IOS; PROVIDED THAT the proceeds of any such sale to a third party
shall be applied FIRST to the repayment of the Preferred Interest Amount, SECOND
to the repayment of all amounts secured by Clearwing's lien and thereafter, any
surplus shall be remitted to ABC.
2. CONDITIONS PRECEDENT. The effectiveness of this letter agreement
and the agreements 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
IOS Sale and the Interim DIP Financing shall have been delivered, executed, or
recorded and shall be in form and substance satisfactory to Clearwing, all of
the conditions set forth in the documents evidencing the IOS Sale and the
Interim DIP Financing shall have been satisfied, and the IOS Sale and the
Interim DIP Financing shall have been consummated in accordance with its terms
on or before January 26, 2005;
(c) Clearwing shall have received a copy of the signed and
entered order from the United States Bankruptcy Court for the District of
Delaware approving the IOS Sale, the Interim DIP Financing, and this letter
agreement, which order shall (i) provide that upon the transfer of the 2002-4
IOS from Greenwich to ABC pursuant to SECTION 1(b) and (c) of this letter
agreement, (x) the 2002-4 IOS shall be free and clear of all interests and
claims (if any) other than Clearwing's lien, (y) the 2002-4 IOS shall remain
subject to the lien of Clearwing until such time as all of the obligations of
Trust 2003-1 to Clearwing have been paid in full in cash, and (z) Clearwing's
lien shall be a valid, perfected and enforceable security interest in the 2002-4
IOS that shall constitute a first priority lien in the 2002-4 IOS without any
further action by Clearwing or any other person, and (ii) otherwise be in form
and substance satisfactory to Clearwing, in full force and effect, final and
shall not have been vacated, stayed, reversed, modified, amended or appealed, in
any respect;
(d) all other approvals, licenses, or consents necessary to
consummate the IOS Sale and the Interim DIP Financing shall have been obtained;
(e) No Event of Default under and as defined in the Pledge
Agreement shall have occurred and be continuing on the date hereof, nor shall
result from the consummation of the transactions contemplated herein;
(f) 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; and
(g) Trust 2003-1 shall have received from ABC the sum of
$2,330,000 in cash, and, in consideration of the subordination provided herein,
Clearwing shall have received from Trust 2003-1 the sum of $2,330,000 in cash,
which amount shall be used to prepay the obligations owed by Trust 2003-1 to
Clearwing, in the inverse order of maturity.
3. WILMINGTON TRUST. It is expressly understood and agreed by the
parties hereto that this letter agreement is executed and delivered by
Wilmington Trust Company, not individually or personally, but solely in its
capacity as Owner Trustee, in the exercise of the powers and authority conferred
and vested in it, (b) each of the undertakings and agreements herein made on the
part of Trust 2003-1, is made and intended not as personal representations,
undertakings and agreements by Wilmington Trust Company, but is made and
intended for the purpose of binding only Trust 2003-1, (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 Trust 2003-1 or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by Trust 2003-1 under this letter agreement or any other related
documents.
4. 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 page follows]
Sincerely,
CLEARWING CAPITAL, LLC,
a Delaware limited liability company
By: Chrysalis Capital Partners, LLC,
a Delaware limited liability company
Its Manager
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman & Managing Director
AGREED AND CONSENTED TO BY:
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
By: /s/ Xxxxxxx Bastich
------------------------
Name: Xxxxxxx Bastich
Title: Senior Vice President
ABFS WAREHOUSE TRUST 2003-1
By: Wilmington Trust Company, acting
solely in its capacity as Owner Trustee and
not in its individual capacity
By: /s/ Xxxxxxx X. Xxxxx
------------------------
Name: Xxxxxxx X. Xxxxx
Title: Senior Financial Services Officer
AMERICAN BUSINESS CREDIT, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President and General Counsel
cc: Blank Rome LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Telecopier No. (000) 000-0000
Attention: Xxxxxxxx X. Xxxxx XX, Esq.
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Telecopier No. (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Telecopier No. (000) 000-0000
Attention: Xxxxx X. Xxxxx P.C.
