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FIRST AMENDED AND RESTATED
INTERIM WAREHOUSE AND
SECURITY AGREEMENT
among
PRUDENTIAL SECURITIES
CREDIT CORPORATION,
as Lender,
AMERICAN BUSINESS CREDIT, INC.,
as Borrower
and
HOMEAMERICAN CREDIT, INC. D/B/A UPLAND MORTGAGE,
as Borrower
Dated as of June 9, 1997
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Table of Contents
Page
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Section 1. The Loan.............................................................................1
Section 2. Additional Conditions Precedent to Advance...........................................5
Section 3. Mortgage Files and Custodian.........................................................6
Section 4. Representations, Warranties and Covenants............................................6
Section 5. Mandatory Prepayment of Loan........................................................11
Section 6. Release of Mortgage Files following Payment of Loan.................................12
Section 7. Servicing...........................................................................12
Section 8. No Oral Modifications; Successors and Assigns; Assignment of Collateral.............12
Section 9. Reports.............................................................................12
Section 10. Events of Default...................................................................13
Section 11. Remedies Upon Default...............................................................14
Section 12. Indemnification.....................................................................15
Section 13. Power of Attorney...................................................................16
Section 14. Agreement Constitutes Security Agreement............................................16
Section 15. Lender May Act Through Affiliates...................................................16
Section 16. Notices.............................................................................16
Section 17. Severability........................................................................18
Section 18. Counterparts........................................................................18
Section 19. Certain Definitions.................................................................18
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FIRST AMENDED AND RESTATED
INTERIM WAREHOUSE AND SECURITY AGREEMENT
This FIRST AMENDED AND RESTATED INTERIM WAREHOUSE AND SECURITY
AGREEMENT, dated as of June 9, 1997 (as amended or otherwise modified from time
to time, this "Agreement") among PRUDENTIAL SECURITIES CREDIT CORPORATION, a
Delaware corporation, having an office at 0000 X. Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000 (the "Lender"), AMERICAN BUSINESS CREDIT, INC., a Pennsylvania
corporation, having its principal office at 000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxx
Xxxxxx, Xxxxxxxxxxxx 00000 ("ABC"), and HOMEAMERICAN CREDIT, INC. doing business
as UPLAND MORTGAGE, a Pennsylvania corporation, having its principal office at
000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxx Xxxxxx, Xxxxxxxxxxxx 00000 ("Upland", and
together with ABC, the "Borrowers").
WHEREAS, the Lender intends to lend and the Borrowers intend
to borrow up to $50,000,000 (fifty million dollars) to fund the purchase or
origination by the Borrowers of fixed and floating-rate, first and second lien,
business and consumer purpose residential mortgage loans; and
WHEREAS, the Lender's affiliate, Prudential Securities
Incorporated ("PSI") will act as the sole or lead manager on a mortgage-backed
securities issuance (a "Securitization") to be sponsored by the Borrower (or by
an affiliate thereof) from time to time and collateralized by the Pledged
Mortgage Loans.
An index to the location of the definitions of the defined
terms used herein is set forth in Section 19 hereof.
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the parties hereto hereby agree as follows:
Section 1. The Loan.
A. Subject to the terms of this Agreement:
1. The Lender agrees to lend to the Borrowers up to
$50,000,000 (such borrowing, the "Loan") to be made in one or more
advances (each, an "Advance"); provided, however, that, at any time
when funds are on deposit in a Pre-Funding Account (as defined herein),
the amount of the Loan shall not exceed the amount on deposit in such
Pre-Funding Account. The Borrower agrees that the Loan shall be used to
warehouse fixed and adjustable rate, first or second lien, business and
consumer purpose residential mortgage loans that are to be included in
a Securitization (the "Mortgage Loans"), as such Mortgage Loans are
identified to the Lender in writing and in electronic form from time to
time. Such Mortgage Loans may be (a) included at the time of closing of
the Securitization or (b) purchased by the Securitization trust
subsequent to closing with funds on deposit in an account (a
"Pre-Funding Account") relating to the Securitization and designated
for such purpose. All Mortgage Loans financed hereunder shall be closed
loans; i.e., this facility shall not be used for "wet" or "table"
fundings. The Lender may refuse to lend against any Mortgage Loan(s)
which the Lender reasonably believes will not be eligible for inclusion
in a securitized pool either (x) due to the characteristics of such
Mortgage Loan or (y) due to the expected aggregate characteristics of
the Mortgage Loans.
2. Each Advance shall be made on a date prior to the Maturity
Date referred to below (each such date, a "Funding Date"); provided
that:
(i) the conditions precedent to the making of
Advances set forth in Section 2 hereof shall have been satisfied, and
the representations and warranties of the Borrowers in Section 4 hereof
shall be true and correct on and as of such Funding Date as if made on
and as of such date;
(ii) no Event of Default shall have occurred and be
continuing or would exist after the making of the Advance on such
Funding Date;
(iii) the Lender shall have received (A) in
connection with each Advance, no later than 12:00 noon (Eastern
Standard Time) on the related Funding Date, a certificate from the
Custodian referred to below to the effect that it has in its possession
and has reviewed the mortgage files relating to the Mortgage Loans
being pledged in connection with the Advance being made on such Funding
Date and has found no material deficiencies in such mortgage files (the
"Custodian's Certification") and (B) prior to the initial Advance,
legal opinions from counsel (which may be in-house counsel) to ABC and
Upland in the form of Exhibit B-1 and Exhibit B-2, respectively,
attached hereto;
(iv) the Borrowers shall have delivered or caused to
be delivered to the Custodian all required documents with respect to
the Mortgage Loans being pledged on such Funding Date;
(v) the applicable Borrower shall deliver evidence of
the release of any prior security interest that may have been granted
with respect to the Pledged Mortgage Loans.
(vi) to the extent described in Section 5(C) hereof,
no notice described in said Section 5(C) shall have been received by
PSI; and
(vii) there shall be in full force and effect from
American Business Financial Services, Inc. (the "Guarantor") a Guaranty
(the "Guaranty") in the form attached hereto as Exhibit E.
3. The Loan shall accrue interest daily on its outstanding
principal amount, with interest calculated for the actual number of
days elapsed, based on a 360-day year. The interest rate shall be
(except as otherwise provided in Section 1(E)(2) or Section 10(D)
hereof) LIBOR plus 1.25%, and shall be reset on each business day.
Interest which accrues during each calendar month shall be payable on
the 3rd (third) business day of the following month, with any
outstanding interest due and payable in its entirety on the date of
termination of this warehouse facility (including the Maturity Date).
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"LIBOR" shall mean, the London interbank offered rate for
one-month U.S. dollar deposits, as set forth in the most
recently-published Eastern edition of The Wall Street Journal.
Any amounts pre-paid under this Agreement prior to the
Maturity Date may be re-borrowed, subject to the terms and conditions
of this Agreement, until the Maturity Date.
B. The amount of each Advance shall not be less than $1,000,000 or
greater than the lesser of:
1. 100% of the aggregate outstanding principal balance of the
Mortgage Loans (calculated as of the related Cut-Off Date or, if the
related Borrower is using the proceeds of the Advance to purchase or
originate the related Mortgage Loans at their aggregate outstanding
principal balance as of the settlement date for the purchase, then
their aggregate outstanding principal balance as of such settlement
date) proposed to be pledged to the Lender in connection with such
Advance, minus, in the event that a Collateral Deficiency Situation
exists as of the date of such Advance, the Restoration Amount as of the
date of such Advance; and
2. the product of (x) the Market Value of the Mortgage Loans
proposed to be pledged to the Lender in connection with such Advance
and (y) 0.92, minus, in the event that a Collateral Deficiency
Situation exists as of the date of such Advance, the Restoration Amount
as of the date of such Advance.
For purposes of this Agreement:
A Collateral Deficiency Situation shall be deemed to be
existing as of any day on which (x) the outstanding principal amount of
the Loan as of such day exceeds (y) the lesser of (i) the outstanding
principal balance of the Pledged Mortgage Loans and (ii) the product of
(I) the Market Value of the Pledged Mortgage Loans (disregarding the
Market Value of any Mortgage Loans proposed to be pledged to the Lender
on such day) and (II) 0.92.
Cut-Off Date means, as of any date, the close of business on
the date set forth in the related Mortgage Loan Schedule (as defined in
the Custodial Agreement). In no event shall the Cut-Off Date precede by
more than two weeks the date on which the related Mortgage Loan
Schedule is delivered.
Market Value means, as of any date and with respect to any
Mortgage Loans, the whole-loan servicing-retained fair market value of
such Mortgage Loans as of such date as determined by the Lender (or an
affiliate thereof) in its sole discretion.
Maturity Date means, the earliest of (i) September 30, 1997
and (ii) the date on which a Securitization occurs (other than the ABFS
Home Equity Asset Backed Certificates 1997-1 Securitization (the "97-1
Securitization")). The Maturity Date may be extended by Lender, in
Lender's sole and unreviewable discretion, on any date by the execution
and delivery of a Credit Increase Confirmation and Note Amendment in
the form of Exhibit C hereto.
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Pledged Mortgage Loans means, as of any date of determination,
any Mortgage Loans then held by the Custodian on behalf of the Lender
to secure the Loan.
Restoration Amount means, as of any date of determination, the
amount, if any, by which (x) the outstanding principal amount of the
Loan as of such date (including accrued interest) exceeds (y) the
lesser of (i) the product of (I) the Market Value of the Pledged
Mortgage Loans (disregarding the Market Value of any Mortgage Loans
proposed to be pledged to the Lender on such date) and (II) 0.92 and
(ii) the outstanding principal balance of the Pledged Mortgage Loans
(disregarding the outstanding principal balance of any Mortgage Loans
to be pledged to the Lender on such date).
C. The Loan evidenced hereby shall mature on the Maturity Date and all
amounts outstanding hereunder shall be due and payable on the Maturity Date.
D. The Loan is pre-payable at any time without premium or penalty, in
whole or in part; provided, that Pledged Mortgage Loans may not be removed from
this facility (including in connection with any prepayment of the Loan in part)
with the result that, in the Lender's sole reasonable determination, the
remaining Pledged Mortgage Loans, are, in the aggregate, materially inferior as
collateral as compared to the pool of Pledged Mortgage Loans immediately prior
to such removal. In addition, no Pledged Mortgage Loans may be removed from this
facility with the result that a Collateral Deficiency Situation would then
exist. Notwithstanding the foregoing, however, a Pledged Mortgage Loan, may in
any event be removed from this facility if such Pledged Mortgage Loan has been
paid in full by the mortgagor. If the Borrowers intend to prepay the Loan in
whole or in substantial part from a source other than the proceeds of the
Securitization, the Borrowers shall give two business days' written notice to
the Lender.
E. 1.If the Loan is not extended by means of a Credit Increase
Confirmation and Note Amendment, the Loan shall immediately and automatically
become due and payable without any further action by the Lender on the then
scheduled Maturity Date, and in the event of non-payment in full on such
Maturity Date the Lender may exercise all rights and remedies available to it as
the holder of a first perfected security interest under the Uniform Commercial
Code of the State of New York (the "New York UCC").
2. If the Borrowers award a Securitization or whole-loan trade
involving any Pledged Mortgage Loans to an investment banking house, agent,
broker or underwriter other than PSI or to a group of managers for which PSI is
not the lead manager, then the interest rate on the Loan shall increase to LIBOR
plus 500 basis points, which higher rate shall retroactively be applied as of
the related Funding Date for all prior Advances or Pledged Mortgage Loans so
involved; provided, however, that if the Borrowers had first offered such
Securitization or whole-loan trade to PSI and PSI refused such offer, then this
subsection 2 shall have no effect.
F. The Loan shall be evidenced by the secured promissory note of the
Borrowers in the form attached hereto as Exhibit A (the "Secured Note").
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G. In the event that the Loan is extended beyond its then scheduled
Maturity Date by means of a Credit Increase Confirmation and Note Amendment, the
factors set forth in the definitions of "Collateral Deficiency Situation" and
"Restoration Amount" may be revised downward by the Lender in its sole
discretion.
Section 2. Additional Conditions Precedent to Advance.
A. Not later than two business days prior to the proposed Funding Date
for an Advance the applicable Borrower shall deliver to the Lender (i) a written
notice in the form of Exhibit D hereto and (ii) an electronic disk or tape, in a
mutually satisfactory form to be agreed upon detailing certain specified
characteristics of the Mortgage Loans proposed to be pledged in connection with
such Advance (each such schedule, a "Mortgage Loan Schedule").
B. Prior to the initial Funding Date, Lender shall have received:
1. Duly executed originals of (i) this Agreement, (ii) the
Custodial Agreement, (iii) the Secured Note and (iv) the Guaranty.
2. A certificate of the Secretary of each Borrower certifying
(i) a copy of such Borrower's articles of incorporation; (ii) a copy of
such Borrower's by-laws; (iii) the names and signature of officers of
such Borrower authorized on its behalf to execute this Agreement and
any other documents to be delivered by it hereunder (on which Lender
may conclusively rely until such time as Lender shall receive from such
Borrower a revised certificate); and (iv) a copy of minutes of a
meeting of such Borrower's board of directors authorizing the
authorized signatories to enter into this Agreement.
3. Lender shall have received a certificate of the Secretary
of the Guarantor's certifying (i) a copy of the Guarantor's articles of
incorporation; (ii) a copy of Guarantor's by-laws; (iii) the names and
signatures of the officers authorized on its behalf to execute the
Guaranty, and any other documents to be delivered by it thereunder (on
which Lender may conclusively rely until such time as Lender shall
receive from the Guarantor a revised certificate); and (iv) a copy of
the resolutions of the executive committee of the board of directors of
the Guarantor authorizing the Guarantor to deliver the Guaranty.
4. Lender shall have received an opinion of the counsel ABC
and Upland which may be an attorney employed by one of its affiliates,
in substantially the form of Exhibit B-1 and Exhibit B-2, respectively,
attached hereto.
5. Lender shall have received an opinion of the counsel to the
Guarantor in substantially the form of Exhibit B-3 hereto.
6. Lender shall have received the most recent available
servicing reports, if any, with respect to the Mortgage Loans.
7. Lender and/or any independent contractor appointed by
Lender shall have completed such investigation as Lender may reasonably
require with respect to each Mortgage Loan which is the subject of any
funding and the results of such investigation (and all other legal and
documentary matters with respect to such Mortgage Loan) shall be
satisfactory to Lender.
8. The related Borrower shall have executed all documents,
including but not limited to financing statements under the Uniform
Commercial Code as in effect in any applicable jurisdictions, as Lender
may reasonably require to effectively perfect and evidence Lender's
first priority security interest in the Collateral.
Section 3. Mortgage Files and Custodian.
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The related Borrower shall deliver to The Chase Manhattan
Bank, as custodian (the "Custodian") on behalf of the Lender, the documents and
instruments listed in Section 2 of that certain First Amended and Restated
Custodial Agreement dated as of June 9, 1997 (the "Custodial Agreement") among
the Lender, the Borrowers, and the Custodian. Such documents and instruments
evidencing and relating to the Mortgage Loans, together with any proceeds
thereof are hereinafter referred to as the "Collateral". The related Borrower
hereby pledges all of its right, title and interest in and to the Collateral to
the Lender to secure the repayment of principal of and interest on the Loan and
all other amounts owing by the Borrowers to the Lender hereunder or under any
other agreement or arrangement (collectively, the "Secured Obligations").
Section 4. Representations, Warranties and Covenants.
A. Each of the Borrowers represents and warrants to the Lender
that:
1. It has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of
Pennsylvania.
2. It is duly licensed as a "Licensee" or is otherwise
qualified in each state in which it transacts business and is not in
default of such state's applicable laws, rules and regulations, except
where failure to so qualify or such default would not have a material
adverse effect on the ability of such Borrower to conduct its business
or to perform its obligations under this Agreement. It has the
requisite power and authority and legal right to own and xxxxx x xxxx
on all of its right, title and interest in and to the Collateral, and
to execute and deliver, engage in the transactions contemplated by, and
perform and observe the terms and conditions of, this Agreement, the
Custodial Agreement and the Secured Note.
3. At all times after the Custodian has received a Mortgage
Loan from such Borrower and until payment in full of the Loan, such
Borrower will not knowingly and intentionally commit any act in
violation of applicable laws, or regulations promulgated with respect
thereto.
4. Such Borrower is solvent and is not in default under any
mortgage, borrowing agreement or other instrument or agreement
pertaining to indebtedness for borrowed money, and the execution,
delivery and performance by such Borrower of this Agreement, the
Custodial Agreement, and the Secured Note do not conflict with any term
or provision of the certificate of incorporation or by-laws of such
Borrower or any law, rule, regulation, order, judgment, writ,
injunction or decree applicable to such Borrower of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over such Borrower and will not result in any violation of
any such mortgage, instrument or agreement.
5. All financial statements or certificates of such Borrower,
any Affiliate of such Borrower or any of its officers furnished to the
Lender are true and complete and do not omit to disclose any material
liabilities or other facts relevant to such Borrower's or such
Affiliate's condition. As used in this Agreement, "Affiliate" means (i)
American Business Financial Services, Inc., Processing Service Center,
Inc., American Business Leasing, Inc., ABC Holdings Corporation and
HomeAmerican Consumer Discount Company and (ii) any person directly or
indirectly controlling, controlled by, or under common control (within
the definition of "control" set forth in the Securities and Exchange
Act of 1934, as amended) with, such Borrower. All such financial
statements have been prepared in accordance with GAAP. No financial
statement or other financial information as of a date later than that
supplied to the Lender, has been furnished by such Borrower or any of
its Affiliates to another lender of such Borrower or any of its
Affiliates that has not been furnished to the Lender.
6. No consent, approval, authorization or order of,
registration or filing with, or notice to any governmental authority or
court is required under applicable law in connection with the
execution, delivery and performance by such Borrower of this Agreement,
the Custodial Agreement and the Secured Note.
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7. There is no action, proceeding or investigation pending
with respect to which such Borrower has received service of process or,
to the best of such Borrower's knowledge threatened against it before
any court, administrative agency or other tribunal (A) asserting the
invalidity of this Agreement, the Custodial Agreement or the Secured
Note, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, the Custodial Agreement or
the Secured Note, or (C) which might materially and adversely affect
the validity of the Mortgage Loans or the performance by it of its
obligations under, or the validity or enforceability of, this
Agreement, the Custodial Agreement or the Secured Note.
8. There has been no material adverse change in the business,
operations, financial condition, properties or prospects of such
Borrower or any Affiliate since the date set forth in the financial
statements supplied to the Lender.
9. This Agreement, the Custodial Agreement and the Secured
Note have been duly authorized, executed and delivered by such Borrower
all requisite corporate action having been taken, and each is valid,
binding and enforceable against such Borrower in accordance with its
terms except as such enforcement may be affected by bankruptcy, by
other insolvency laws, or by general principles of equity.
B. With respect to every Mortgage Loan delivered to the
Custodian, the related Borrower represents and warrants to the Lender that:
1. Such Mortgage Loan and all accompanying documents are
complete and authentic and all signatures thereon are genuine.
2. Such Mortgage Loan arose from a bona fide loan, complying
with all applicable State and Federal laws and regulations, to persons
having legal capacity to contract and is not subject to any defense,
set-off or counterclaim.
3. All amounts represented to be payable on such Mortgage Loan
are, in fact, payable in accordance with the provisions of such
Mortgage Loan.
4. No default has occurred in any provisions of such Mortgage
Loan (other than a payment delinquency not exceeding 30 days).
5. Any property subject to any security interest given in
connection with such Mortgage Loan is not subject to any encumbrance
other than (i) a stated first mortgage, (ii) liens for taxes not yet
due and payable or similar governmental charges not yet due and payable
or still subject to payment without interest or penalty or (iii) zoning
restrictions, utility easements, covenants or conditions and
restrictions of record which will neither defeat nor render invalid
such security interest or the priority thereof nor materially impair
the marketability or value of such property nor be violated by the
existing improvements or the intended use thereof.
6. Such Borrower holds good and indefeasible title to, and is
the sole owner of, such Mortgage Loan subject to no liens, charges,
mortgages, participations, encumbrances or rights of others or other
liens released simultaneously with such pledge.
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7. Each Mortgage Loan conforms to the description thereof as
set forth on the related Mortgage Loan Schedule delivered to the
Custodian and the Lender.
8. All disclosures required by the Real Estate Settlement
Procedures Act, by Regulation X promulgated thereunder and by
Regulation Z of the Board of Governors of the Federal Reserve System
promulgated pursuant to the statute commonly known as the
Truth-in-Lending Act and the Notice of the Right of Recision required
by said statute and regulation have been properly made and given.
9. The Mortgage Loans do not have characteristics which are
materially worse than those of other mortgage loans financed by such
Borrower during the twelve-month period preceding the initial Funding
Date.
10. The representations and warranties set forth in Section
2.04 (other than any representation and warranty referencing either (x)
the specific mortgage loan schedule referred to in said Section 2.04 or
(y) specific statistical characteristics of any mortgage loan pool) of
the Pooling and Servicing Agreement to be executed in connection with
the 97-1 Securitization (the "Designated Pooling and Servicing
Agreement"), between The Chase Manhattan Bank, as Trustee, American
Business Credit, Inc., as Servicer and Prudential Securities Secured
Financing Corporation, as depositor, are true with respect to the
Mortgage Loans, mutatis mutandis.
11. Each Mortgage Loan will be eligible for inclusion in a
pool to be securitized on substantially the same terms as the 97-1
Securitization or which is insured by a credit enhancer; the Lender may
refuse to lend against any Mortgage Loan(s) which the Lender reasonably
believes will not be eligible for inclusion in such a securitized,
insured pool either (x) due to the characteristics of such Mortgage
Loan or (y) due to the expected aggregate characteristics of the
Mortgage Loans.
12. Every person who has a fee interest in any property
subject to a mortgage given in connection with such Mortgage Loan has
signed the instrument creating such mortgage.
13. Every person, upon whose credit the Lender relied in
originating or purchasing a Mortgage Loan, has signed the related
Mortgage Note.
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C. Each of the Borrowers covenants with the Lender that,
during the term of this facility:
1. Such Borrower and any of its Affiliates shall not create or
suffer to exist any Lien, other than Permitted Liens, on any of such
Borrower's or any of its Affiliate's assets.
2. Such Borrower shall not pledge, assign or grant to any
other party any security interest in any Pledged Mortgage Loan.
For purposes of this Agreement:
Lien means, with respect to any asset of a Borrower or any of
its Affiliates, any mortgage, lien, pledge, charge, security interest
or other similar encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable
law (including, without limitation, any conditional sale or other title
retention agreement, and any financing lease in the nature thereof, any
agreement to sell, and any filing of, or agreement to give, any
financing statement (other than notice filings not perfecting a
security interest) under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).
Permitted Lien means (i) Liens for taxes, assessments or
governmental charges or claims that either (a) are not yet delinquent
or (b) are being contested in good faith by appropriate proceedings and
as to which appropriate reserves or other provisions have been made in
accordance with GAAP; (ii) statutory Liens of landlords and carriers',
warehousemen's, mechanics', suppliers', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business and with
respect to amounts that either (a) are not yet delinquent or (b) are
being contested in good faith by appropriate proceedings and as to
which appropriate reserves or other provisions have been made in
accordance with GAAP; (iii) Liens (other than any Lien imposed by the
Employee Retirement Income Security Act of 1974, as amended) incurred
or deposits due in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security; (iv) Liens incurred or deposits made to secure the
performance of tenders, bids, leases, statutory obligations, surety and
appeal bonds, progress payments, government contracts and other
obligations of like nature (exclusive of obligations for the payment of
borrowed money), in each case incurred in the ordinary course of
business; (v) attachment or judgment Liens not giving rise to an Event
of Default; (vi) easements, rights-of-way, restrictions and other
similar charges or encumbrances not interfering with the ordinary
conduct of the business of a Borrower or any of its Affiliates; (vii)
leases or subleases granted to others not interfering with the ordinary
conduct of the business of a Borrower or any of its Affiliates; (viii)
the Lien granted to the Lender pursuant hereto; (ix) secured borrowing
facilities or other Liens which are secured by assets of a Borrower or
any of its Affiliates other than the Mortgage Loans; provided, that no
such secured borrowing facility or other Lien may be secured by a
blanket lien on the assets of a Borrower or any of its Affiliates; and
(x) any other Lien to which Lender has given its prior written consent.
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Section 5. Mandatory Prepayment of Loan.
A. Upon discovery by either Borrower or the Lender of any
breach of any of the representations and warranties listed in Section
4(B) preceding, the party discovering such breach shall promptly give
notice of such discovery to the others.
The Lender has the right to require, in its unreviewable
discretion, the related Borrower to repay the Loan in part in an amount
equal to the amount of the Advance relating to such Mortgage Loan with
respect to any Mortgage Loan which breaches one or more of the
representations and warranties listed in Section 4(B) preceding or
which is determined by the Lender to be unacceptable for inclusion in
such Securitization; provided, however, that upon the Lender's written
consent, then in lieu of any prepayment required by this Section 5(A),
such Borrower may pledge additional Mortgage Loans complying with the
terms of this Agreement with an aggregate outstanding principal balance
equal to or greater than the amount of such required prepayment.
B. If any Mortgage Loan, as indicated on any Supplemental
Mortgage Loan Schedule delivered pursuant to Section 9(A) hereof,
becomes 31 or more days delinquent on two or more occasions, the Lender
may require the related Borrower to prepay the Loan in part in an
amount equal to the amount of the Advance relating to such Mortgage
Loan with respect to such Mortgage Loan, or, with the Lender's consent,
deliver a qualifying substitute mortgage loan in its place.
C. If the Borrowers award a Securitization or any whole-loan
trade involving any Pledged Mortgage Loans to an investment banking
house, agent or underwriter other than PSI, or to a group of managers
for which PSI is not the lead manager, then (x) the Lender may demand
that the Borrowers prepay any portion of the Loan evidenced hereby
relating to the dollar amount of the Mortgage Loans to be included in
such Securitization or whole loan trade, in which PSI has not been
selected for participation, for payment within five business days of
the demand for prepayment, (y) the Lender may refuse to make further
Advances hereunder if such Advances would relate to Mortgage Loans to
be included in such Securitization or whole-loan trade in which PSI has
not been selected for participation and (z) the interest rate on the
Loan shall increase as set forth in Section 1(E)(2) hereof. The
Borrowers shall give immediate notice, by facsimile transmission, to
the attention of Xxxx Xxxxxxx at the Lender and to the attention of Xxx
Xxxx at PSI (fax 000-000-0000) of any decision to award the lead
manager role or to name any group of managers for any Securitization or
whole-loan trade involving any Pledged Mortgage Loans.
D. If, on any date other than a Funding Date, the Lender
determines that a Collateral Deficiency Situation exists, the Lender
shall so notify the Borrowers, and the Borrowers, within one business
day, shall either (i) pay to the Lender the Restoration Amount or (ii)
deliver to the Custodian on behalf of the Lender additional Mortgage
Loans having an aggregate Market Value at least equal to the
Restoration Amount. The provisions of Section 1(B) shall govern with
regard to a Collateral Deficiency Situation as of a Funding Date.
10
Section 6. Release of Mortgage Files following Payment of
Loan.
The Lender agrees to cause to be released from the lien hereof
the documents described in Section 2 of the Custodial Agreement at the request
of the Borrowers upon payment in full of the Loan, or, if a partial payment of
the Loan occurs, the documents relating to a pro rata portion of the Pledged
Mortgage Loans.
Section 7. Servicing.
The Borrowers shall service the Mortgage Loans with the degree
of skill and care consistent with that which the Borrower customarily exercises
with respect to similar contracts owned, managed, or serviced by it and all
applicable industry standards. The Borrowers shall comply with all applicable
Federal and State laws and regulations; shall maintain all State and Federal
licenses and franchises necessary for it to perform its servicing
responsibilities hereunder and shall not impair the rights of the Lender in any
Mortgage Loans or for payment thereunder.
Section 8. No Oral Modifications; Successors and Assigns;
Assignment of Collateral.
No provisions of this Agreement shall be waived or modified
except by a writing duly signed by the authorized agents of the Lender and each
of the Borrowers. This Agreement shall be binding upon the successors and
assigns of the parties hereto. The Borrowers acknowledge and agrees that the
Lender may re-pledge, enter into repurchase transactions, and otherwise
re-hypothecate (including the granting of participation interests therein) the
Collateral for the Loan; provided that no such act shall in any way affect the
Borrowers' rights to the Collateral.
Section 9. Reports.
A. The related Borrower shall provide the Lender with an
electronic disk or tape or hard copy (each, a "Supplemental Mortgage Loan
Schedule") (i) on the date any additional Mortgage Loans are delivered pursuant
to Section 5(D) and at the earliest of (A) two business days before each Funding
Date or (B) two weeks following the date that the last such schedule was
provided and (ii) within two business days following any request by the Lender
or any affiliate thereof for such a schedule. Such Supplemental Mortgage Loan
Schedule will contain information concerning (x) the Mortgage Loans then held in
the warehouse facility and (y) any Mortgage Loans proposed to be delivered to
the facility on the next Funding Date or in connection with Collateral
maintenance pursuant to Section 5(D) hereof, and shall be in the format as may
be agreed upon by the Borrowers and the Lender from time to time.
B. Each Borrower shall furnish to Lender (x) promptly, copies
of any material and adverse notices (including, without limitation, notices of
defaults, breaches, potential defaults or potential breaches) given to or
received from its other lenders, (y) immediately, notice of the occurrence of
any "Event of Default" hereunder or of any situation which such Borrower, with
the passage of time, reasonably expects to develop into an "Event of Default"
hereunder and (z) the following:
(i) audited financial statements of such Borrower and its
Affiliates, within 90 days of such Borrower's fiscal year end;
(ii) unaudited financial statements of such Borrower and its
Affiliates for each of such Borrower's first three quarters of each
fiscal year, within 45 days after quarter end;
(iii) unaudited financial statements of such Borrower within
45 days after quarter end; and
(iv) copies of all SEC filings by such Borrower and its
Affiliates, within five business days of their filing with the SEC.
All required financial statements, information and reports
shall be prepared in accordance with U.S. GAAP, or, if applicable to SEC
filings, SEC accounting regulations.
C. On the fifth business day of each calendar month, the
Borrowers shall provide the Lender with a report both in hardcopy and on a
computer diskette or via electronic transmission, which report shall contain
information concerning the portfolio performance data with respect to the
Pledged Mortgage Loans, including, without limitation, information regarding any
outstanding delinquencies, prepayments in whole or in part and any repurchases
by the Borrowers, in a format as may be agreed upon by the Borrowers and the
Lender from time to time.
11
D. In conjunction with the delivery of each of the financial
statements to be delivered by the Borrowers pursuant to Section 9(B), each
Borrower shall deliver to the Lender an officer's certificate of such Borrower
certifying that, as of the date of delivery of such financial statements, such
Borrower is in compliance with all the terms of this Agreement including,
without limitation, each of the covenants set forth in Section 4(C).
Section 10. Events of Default.
Each of the following shall constitute an "Event of Default"
hereunder:
A. Failure of either Borrower to (i) make any payment of
interest or principal or any other sum which has become due, whether by
acceleration or otherwise, under the terms of the Secured Note, this Agreement,
any warehouse and security agreement or any other document evidencing or
securing indebtedness of either Borrower to the Lender or to any affiliate of
the Lender, or (ii) pay or deliver any Restoration Amount.
B. Any "event of default" or any occurrence which with the
passage of time would become an "event of default" by either Borrower or the
Guarantor under any agreement relating to any indebtedness of either Borrower or
the Guarantor to any other lender.
C. Any default of any term, condition or agreement or any
breach of any representation or warranty of the Guarantor under the Guaranty.
D. Assignment or attempted assignment by the Borrowers of this
Agreement or any rights hereunder, without first obtaining the specific written
consent of the Lender, or the granting by the Borrowers of any security
interest, lien or other encumbrance on any Collateral to other than the Lender.
E. The filing by either Borrower or the Guarantor of a
petition for liquidation, reorganization, arrangement or adjudication as a
bankrupt or similar relief under the bankruptcy, insolvency or similar laws of
the United States or any state or territory thereof or of any foreign
jurisdiction; the failure of either Borrower or the Guarantor to secure
dismissal of any such petition filed against it within thirty (30) days of such
filing; the making of any general assignment by either Borrower or the Guarantor
for the benefit of creditors; the appointment of a receiver or trustee for
either Borrower or the Guarantor, or for any part of either Borrower's or the
Guarantor's assets; the institution by either Borrower or the Guarantor of any
other type of insolvency proceeding (under the Bankruptcy Code or otherwise) or
of any formal or informal proceeding, for the dissolution or liquidation of,
settlement of claims against, or winding up of the affairs of, either Borrower
or the Guarantor; the institution of any such proceeding against either Borrower
or the Guarantor if such party shall fail to secure dismissal thereof within
thirty (30) days thereafter; the consent by either Borrower or the Guarantor to
any type of insolvency proceeding against either Borrower or the Guarantor
(under the Bankruptcy Code or otherwise); the occurrence of any event or
existence of any condition which could be the ground, basis or cause for any
proceeding or petition described in this Section 10.
F. Any materially adverse change in the financial condition of
either Borrower or any of its Affiliates or the existence of any other condition
which, in the Lender's sole determination, constitutes an impairment of either
Borrower's ability to perform its obligations under this Agreement or the
Secured Note.
12
G. Failure by either Borrower to service the Mortgage Loans in
substantial compliance with the servicing requirements set forth in Section 7
hereof.
H. A breach by either Borrower of any representation, warranty
or covenant set forth in Section 4(A), 4(C) or Section 9 hereof or a use by
either Borrower of the proceeds of the Loan for a purpose other than as set
forth in Section 1(A) hereof.
Section 11. Remedies Upon Default.
A. Upon the happening of one or more Events of Default, the
Lender may (x) refuse to make further Advances hereunder and (y) immediately
declare the principal of the Secured Note then outstanding to be immediately due
and payable, together with all interest thereon and fees and expenses accruing
under this Agreement; provided that, upon the occurrence of the Event of Default
referred to in Section 10(D), such amounts shall immediately and automatically
become due and payable without any further action by any person or entity. Upon
such declaration or such automatic acceleration, the balance then outstanding on
the Secured Note shall become immediately due and payable without presentation,
demand or further notice of any kind to the Borrowers.
B. Upon the happening of one or more Events of Default, the
Lender shall have the right to obtain physical possession, and to commence an
action to obtain physical possession, of all files of the Borrowers relating to
the Collateral and all documents relating to the Collateral which are then or
may thereafter come in to the possession of the Borrowers or any third party
acting for the Borrowers. The Lender shall be entitled to specific performance
of all agreements of the Borrowers contained in this Agreement. The Borrowers
and the Lender hereby acknowledge that the Lender's right to obtain physical
possession of the Collateral is deemed for all purposes to be equivalent to the
rights of "seizure of property or maintenance or continuation of perfection of
an interest in property" as specified under Bankruptcy Code Sections 362(b) and
546(b)(2).
C. Upon the happening of one or more Events of Default, the
Lender shall have the right to direct all servicers then servicing any Pledged
Mortgage Loans to remit all collections on the Pledged Mortgage Loans to the
Lender, and if any such payments are received by either Borrower, such Borrower
shall not commingle the amounts received with other funds of such Borrower and
shall promptly pay them over to the Lender. In addition, the Lender shall have
the right to dispose of the Collateral as provided herein, or as provided in the
other documents executed in connection herewith, or in any commercially
reasonable manner, or as provided by law. Such disposition may be on either a
servicing-released or a servicing-retained basis. The Lender shall be entitled
to place the Mortgage Loans which it recovers after any default in a pool for
issuance of mortgage-backed securities at the then-prevailing price for such
securities and to sell such securities for such prevailing price in the open
market as a commercially reasonable disposition of Collateral, subject to the
applicable requirements of the New York UCC. The Lender shall also be entitled
to sell any or all of such Mortgage Loans individually for the prevailing price
as a commercially reasonable disposition of Collateral subject to the applicable
requirements of the New York UCC. The specification in this Section of manners
of disposition of collateral as being commercially reasonable shall not preclude
the use of other commercially reasonable methods (as contemplated by the New
York UCC) at the option of the Lender.
D. Following the occurrence and during the continuance of an
Event of Default, interest shall accrue on the Loan at a default interest rate
of LIBOR plus 5.00%.
13
Section 12. Indemnification.
Each of the Borrowers agrees to hold the Lender harmless from
and indemnifies the Lender against all liabilities, losses, damages, judgments,
costs and expenses of any kind which may be imposed on, incurred by, or asserted
against the Lender relating to or arising out of this Agreement, the Custodial
Agreement, the Secured Note, the Guaranty or any transaction contemplated hereby
or thereby resulting from anything other than the Lender's gross negligence or
willful misconduct. Each of the Borrowers also agrees to reimburse the Lender
for all reasonable expenses in connection with the enforcement of this
Agreement, the Custodial Agreement, the Secured Note and the Guaranty, including
without limitation the reasonable fees and disbursements of counsel. Each of the
Borrowers's agreements in this Section shall survive the payment in full of the
Secured Note and the expiration or termination of this Agreement. Each of the
Borrowers hereby acknowledges that, notwithstanding the fact that the Secured
Note is secured by the Collateral, the obligations of such Borrower under the
Secured Note are recourse obligations of such Borrower.
Section 13. Power of Attorney.
The related Borrower hereby authorizes the Lender, at such
Borrower's expense, to file such financing statement or statements relating to
the Collateral without such Borrower's signature thereon as the Lender at its
option may deem appropriate, and appoints the Lender as such Borrower's
attorney-in-fact to execute any such financing statement or statements in such
Borrower's name and to perform all other acts which the Lender deems appropriate
to perfect and continue the security interest granted hereby and to protect,
preserve and realize upon the Collateral, including, but not limited to, the
right to endorse notes, complete blanks in documents, transfer servicing, and
sign assignments on behalf of such Borrower as its attorney-in-fact. This Power
of Attorney is coupled with an interest and is irrevocable without the Lender's
consent. Notwithstanding the foregoing, the power of attorney hereby granted may
be exercised only during the occurrence and continuance of any Event of Default
hereunder.
Section 14. Agreement Constitutes Security Agreement.
This Agreement is intended by the parties hereto to be
governed by New York Law, and to constitute a security agreement within the
meaning of the New York UCC.
Section 15. Lender May Act Through Affiliates.
The Lender may, from time to time, designate one or more
affiliates for the purpose of performing any action hereunder.
Section 16. Notices.
All demands, notices and communications relating to this
Agreement shall be in writing and shall be deemed to have been duly given if
mailed, by registered or certified mail, return receipt requested, or by
overnight courier, or, if by other means, when received by the other party or
parties at the address shown below, or such other address as may hereafter be
furnished to the other party or parties by like notice. Any such demand, notice
or communication hereunder shall be deemed to have been received on the date
delivered to or received at the premises of the addressee (as evidenced, in the
case of registered or certified mail, by the date noted on the return receipt).
14
If to ABC:
Xxxxxxx X. Xxxxxxxx
Chairman
American Business Credit, Inc.
000 Xxxxxxxxxxxx Xxxx.
Xxxx Xxxxxx, XX 00000
Phone Number: (000) 000-0000
Fax Number: (000) 000-0000
with a copy to:
Xxxxxxxx X. Xxxxx, XX, Esq.
Blank Rome Xxxxxxx & XxXxxxxx
Four Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Phone Number: 000-000-0000
Fax Number: 000-000-0000
If to Upland:
Xxxxxxx X. Xxxxxxxx
Chairman
HomeAmerican Credit, Inc.
000 Xxxxxxxxxxxx Xxxx.
Xxxx Xxxxxx, XX 00000
Phone Number: (000) 000-0000
Fax Number: (000) 000-0000
with a copy to:
Xxxxxxxx X. Xxxxx, XX, Esq.
Blank Rome Xxxxxxx & XxXxxxxx
Four Xxxx Xxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Phone Number: 000-000-0000
Fax Number: 000-000-0000
If to the Lender:
Prudential Securities Credit Corporation
One Seaport Plaza, 27th Floor
Treasury Department
New York, New York 10292
Attention: Xxxxxxxxx Xxxxxxxx
Phone Number: 000-000-0000
Fax Number:000-000-0000
With copies to:
Prudential Securities Incorporated
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Mr. Xxx Xxxx
Phone Number: 000-000-0000
Fax Number: 000-000-0000
15
Section 17. Severability.
Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition, unenforceability
or non-authorization, without invalidating the remaining provisions hereof or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction.
Section 18. Counterparts.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, and all such counterparts shall
together constitute one and the same instrument.
Section 19. Certain Definitions.
The following capitalized terms are defined in the
corresponding sections specified below:
"Advance" - Section 1(A)(1).
"Affiliate" - Section 4(5).
"Agreement" - Introductory Clause.
"Borrowers" - Introductory Clause.
"Collateral" - Section 3.
"Collateral Deficiency Situation" - Section 1(B)(2).
"Custodian" - Section 3.
"Custodial Agreement" - Section 3.
"Custodian's Certification" - Section 1(A)(2)(iii).
"Cut-Off Date" - Section 1(B)(2).
"Event of Default" - Section 9.
"Funding Date" - Section 1(A)(2).
"Guarantor" - Section 1(A)(2)(vii).
"Guaranty" - Section 1(A)(2)(vii)
"Lien" - Section 4.
"Lender" - Introductory Clause.
"LIBOR" - Section 1(A)(3).
"Loan" - Section 1(A)(1).
"Market Value" - Section 1(B)(2).
"Maturity Date" - Section 1(B)(2).
"Mortgage Loans" - Section 1(A)(1).
"Mortgage Loan Schedule" - Section 2(A).
"NY UCC" - Section 1(E)(1).
16
"97-1 Securitization" - Section 1(B) (within the definition
of "Maturity Date" set forth following subsection (2) thereof).
"Permitted Lien" - Section 4.
"Pledged Mortgage Loans" - Section 1(B)(2).
"PSI" - Recitals.
"Purchase Agreements" - Section 2(B)(i).
"Restoration Amount" - Section 1(B)(2).
"Secured Note" - Section 1(F).
"Secured Obligations" - Section 3.
"Securitization" - Recitals.
"Supplemental Mortgage Loan Schedule" - Section 9(A).
17
IN WITNESS WHEREOF, the parties have executed this Agreement
the day and year first above written.
HOMEAMERICAN CREDIT, INC.
d/b/a UPLAND MORTGAGE
By: /s/ Xxxxxxx X. Xxxxxxxx, Xx.
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxx, Xx.
Title: Chairman
AMERICAN BUSINESS CREDIT, INC.
By: /s/ Xxxxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President
PRUDENTIAL SECURITIES CREDIT
CORPORATION
By: /s/ Xxxxxxx Xxxxxx
--------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Vice President
18
Exhibit A
SECURED NOTE
Dated as of June 9, 1997
FOR VALUE RECEIVED, the undersigned, HOMEAMERICAN CREDIT, INC.
doing business as UPLAND MORTGAGE, a corporation organized under the laws of the
State of Pennsylvania, whose address is 000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxx Xxxxxx,
Xxxxxxxxxxxx 00000 ("Upland") and AMERICAN BUSINESS CREDIT, INC., a corporation
organized under the laws of the State of Pennsylvania, whose address is 000
Xxxxxxxxxxxx Xxxxxxxxx, Xxxx Xxxxxx, Xxxxxxxxxxxx 00000 ("ABC", and together
with Upland, the "Borrowers"), jointly and severally promise to pay to the order
of PRUDENTIAL SECURITIES CREDIT CORPORATION, a Delaware corporation, whose
address is Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Lender") on or
before the Maturity Date the amount then outstanding (including accrued
interest) under that certain First Amended and Restated Interim Warehouse and
Security Agreement dated as of June 9, 1997 (the "Agreement"). Initially, the
maximum principal amount which may be outstanding is $50,000,000 (as such amount
may be amended from time to time by a Credit Increase Confirmation and Note
Amendment). Capitalized terms used herein and not defined herein shall have
their respective meanings as set forth in the Agreement.
The holder of this Note is authorized to record the date and
amount of each Advance and the date and amount of each repayment of principal
thereof on the schedule to be maintained by the Lender (which schedule may be
obtained upon the Borrowers' request), and any such recordation shall constitute
prima facie evidence of the accuracy of the amount so recorded; provided that
the failure of the holder hereof to make such recordation (or any error in such
recordation) shall not affect the obligations of the Borrowers hereunder or
under the Agreement.
MAXIMUM RATE OF INTEREST: It is intended that the rate of
interest herein shall never exceed the maximum rate, if any, which may be
legally charged on the Loan evidenced by this Note ("Maximum Rate"), and if the
provisions for interest contained in this Note would result in a rate higher
than the Maximum Rate, interest shall nevertheless be limited to the Maximum
Rate and any amounts which may be paid toward interest in excess of the Maximum
Rate shall be applied to the reduction of principal, or, at the option of the
Lender, returned to the Borrowers.
DUE DATE: The Loan evidenced hereby not paid before the
Maturity Date shall be due and payable on the Maturity Date.
PLACE OF PAYMENT: All payments hereon shall be made, and all
notices to the Lender required or authorized hereby shall be given, at the
office of the Lender at the address designated in the heading of this Note, or
to such other place as the Lender may from time to time direct by written notice
to the Borrowers.
PAYMENT AND EXPENSES OF COLLECTION: All amounts payable
hereunder are payable by wire transfer in immediately available funds to the
account number specified by the Lender, in lawful money of the United States.
Payments remitted by the Borrowers via wire transfer initiated after 1:00 p.m.
New York City time shall be deemed to be received on the next business day. The
Borrowers agree to pay all costs of collection when incurred, including, without
limiting the generality of the foregoing, reasonable attorneys' fees through
appellate proceedings, and to perform and comply with each of the covenants,
conditions, provisions and agreements contained in every instrument now
evidencing or securing said indebtedness.
SECURITY: This Note is issued pursuant to the Agreement and is
secured by a pledge of the collateral described therein. Notwithstanding the
pledge of the collateral, each of the Borrowers hereby acknowledges, admits and
agrees that the Borrower's obligations under this Note are recourse obligations
of such Borrower to which such Borrower pledges its full faith and credit.
DEFAULTS: Upon the happening of an Event of Default (as
defined in the Agreement), the Lender shall have all rights and remedies set
forth in the Agreement.
The failure to exercise any of the rights and remedies set
forth in the Agreement shall not constitute a waiver of the right to exercise
the same or any other option at any subsequent time in respect of the same event
or any other event. The acceptance by the Lender of any payment hereunder which
is less than payment in full of all amounts due and payable at the time of such
payment shall not constitute a waiver of the right to exercise any of the
foregoing rights and remedies at that time or at any subsequent time or nullify
any prior exercise of any such rights and remedies without the express consent
of Lender, except as and to the extent otherwise provided by law.
A-1
WAIVERS: Each of the Borrowers waives diligence, presentment,
protest and demand and also notice of protest, demand, dishonor and nonpayments
of this Note, and expressly agrees that this Note, or any payment hereunder, may
be extended from time to time, and consents to the acceptance of further
collateral, the release of any collateral for this Note, the release of any
party primarily or secondarily liable hereon, and that it will not be necessary
for the Lender, in order to enforce payment of this Note, to first institute or
exhaust Lender's remedies against such Borrower or any other party liable hereon
or against any collateral for this Note. None of the foregoing shall affect the
liability of such Borrower. No extension of time for the payment of this Note,
or an installment hereof, made by agreement by the Lender with any person now or
hereafter liable for the payment of this Note, shall affect the liability under
this Note of the Borrowers, even if the Borrowers are not a party to such
agreement; provided, however, that the Lender and the Borrowers, by written
agreement between them, may affect the liability of the Borrowers.
TERMINOLOGY: If more than one party joins in the execution of
this Note, the covenants and agreements herein contained shall be the joint and
several obligation of each and all of them and of their respective heirs,
executors, administrators, successors and assigns, and relative words herein
shall be read as if written in the plural when appropriate. Any reference herein
to the Lender shall be deemed to include and apply to every subsequent holder of
this Note. Words of masculine or neuter import shall be read as if written in
the neuter or masculine or feminine when appropriate.
AGREEMENT: Reference is made to the Agreement for provisions
as to Advances, rates of interest, mandatory principal repayments, collateral
and acceleration. If there is any conflict between the terms of this Note and
the terms of the Agreement, the terms of the Agreement shall control.
APPLICABLE LAW: This Note shall be governed by and construed
under the laws of the State of New York, the laws of which the Borrowers hereby
expressly elect to apply to this Note. The Borrowers agree that any action or
proceeding brought to enforce or arising out of this Note may be commenced in
the Supreme Court of the State of New York, or in the District Court of the
United States for the Southern District of New York.
HOMEAMERICAN CREDIT, INC. D/B/A UPLAND MORTGAGE
By:__________________________________________
Name:
Title:
AMERICAN BUSINESS CREDIT, INC.
By:___________________________________________
Name:
Title:
A-2
Exhibit E
FORM OF GUARANTY
THIS GUARANTY is given as of the 9th day of June, 1997 by
AMERICAN BUSINESS FINANCIAL SERVICES, INC. (the "Guarantor"), a corporation
organized and existing under the laws of the State of Pennsylvania and having
its principal office at 000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxx Xxxxxx, Xxxxxxxxxxxx
00000.
WHEREAS, Prudential Securities Credit Corporation (the
"Lender") has entered into an First Amended and Restated Interim Warehouse and
Security Agreement dated as of June 9, 1997 (the "Warehouse Agreement") with
HomeAmerican Credit, Inc. d/b/a Upland Mortgage ("Upland") and American Business
Credit, Inc. ("ABC", and together with Upland, the "Borrowers") (capitalized
terms not defined herein shall have the meanings set forth in the Warehouse
Agreement, unless otherwise noted) providing for a loan by Lender to the
Borrowers secured by certain Mortgage Loans; and
WHEREAS, the Lender and the Borrowers have entered into a
First Amended and Restated Custodial Agreement with The Chase Manhattan Bank
(the "Custodian") dated as of June 9, 1997 (the "Custodial Agreement") whereby
the Custodian agrees to act as Custodian on behalf of the Borrowers with respect
to the Mortgage Loans; and
WHEREAS, the Guarantor represents that it indirectly owns all
of the stock of the Borrowers and is financially interested in its affairs and
expects to derive advantage from the transactions contemplated by each of the
Warehouse Agreement and the Custodial Agreement;
NOW, THEREFORE, to induce the Lender to enter into the
transactions with the Borrowers contemplated by the Warehouse Agreement and the
Custodial Agreement and for other good and valuable consideration receipt of
which is hereby acknowledged, the Guarantor hereby agrees as follows:
1. The Guarantor hereby unconditionally and irrevocably
guaranties to the Lender the full and complete payment when due and performance
of each of the Borrowers' obligations under the Warehouse Agreement, every
Advance evidenced by the Secured Note issued pursuant to the Warehouse
Agreement, and the Custodial Agreement. In addition, the Guarantor agrees that
in the event that either of the Borrowers defaults in the performance of or
payment when due of any or all obligations or sums hereby guaranteed, the
Guarantor shall forthwith pay such sums or perform such obligations. All amounts
payable by the Guarantor to the Lender hereunder shall be paid in immediately
available funds in U.S. Dollars and at the place and otherwise in the manner and
on the terms required by the Warehouse Agreement or, if so specified and
applicable, the Custodial Agreement. This is a Guaranty of payment and not of
collection. This Guaranty shall be a continuing Guaranty and shall remain in
full force and effect until all the obligations of the Borrower hereby
guarantied are paid or performed in full. The Guarantor's obligations under this
Guaranty shall be reinstated and be continued in full force and effect if at any
time any payment received by the Lender under the Warehouse Agreement or the
Custodial Agreement is invalidated, declared to be fraudulent or preferentially
set aside and/or required to be repaid by the Lender.
E-1
2. The Guarantor hereby expressly waives all setoffs and
counterclaims and all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, notices of
acceptance of this Guaranty, notices of sale, surrender or other handling or
disposition of assets subject to the Warehouse Agreement or the Custodial
Agreement, any requirement that the Lender exhaust any right, power or remedy or
take any action against the Borrowers or against any assets subject to the
Warehouse Agreement or the Custodial Agreement, and other formalities of any
kind. The obligation of the Guarantor hereunder is absolute and unconditional
irrespective of the genuineness, legality, validity, regularity or
enforceability of the Warehouse Agreement, the Custodial Agreement, or any other
agreement, instrument or document contemplated therein or thereby and
irrespective of the obligation of any other party or person, and shall not in
any manner be affected by reason of any action taken or not taken by the Lender,
which action or inaction is herein consented and agreed to, or of any lack of
prior enforcement or retention of any rights against the Borrowers, the
Guarantor or any other person or property. The Guarantor hereby waives, to the
fullest extent permitted by applicable law, all defenses of a surety to which it
may be entitled by statute or otherwise. The Lender may neglect or forbear to
enforce payment or performance hereunder, under the Warehouse Agreement, the
Custodial Agreement, or under any other agreement, instrument or document
contemplated therein or thereby, or waive, amend or otherwise alter the terms of
the Warehouse Agreement or the Custodial Agreement in any manner, or release or
cause the release of any assets subject to the Warehouse Agreement, in each case
without in any way affecting or impairing the liability of the Guarantor
hereunder.
3. The Guarantor hereby waives all rights of subrogation,
exoneration, reimbursement or contribution, whether arising by contract or
operation of law (including, without limitation, any such right arising under
the Federal Bankruptcy Code) or otherwise by reason of any payment by it
hereunder and further agrees with the Borrowers for the benefit of its creditors
that any such payment by it shall constitute a contribution of capital by the
Guarantor to the related Borrower.
4. Any indebtedness of the Borrowers now or hereafter held by
Guarantor is hereby subordinated to any obligations of the Borrowers to the
Lender under the Warehouse Agreement and the Custodial Agreement.
5. If an Event of Termination under the Warehouse Agreement or
an Event of Default under the Custodial Agreement shall have occurred and be
continuing, the Guarantor agrees that, as between the Guarantor and the Lender,
the obligations of the Borrowers guaranteed hereunder may be declared to be due
for purposes of this Guaranty notwithstanding any stay, injunction or other
prohibition which may prevent, delay or vitiate any such declaration as against
the Borrowers and that, in the event of any such declaration (or attempted
declaration), such obligations shall forthwith become due by the Guarantor for
purposes of this Guaranty.
6. All of the Lender's rights and remedies shall be cumulative
and any failure of the Lender to exercise any right hereunder shall not be
construed as a waiver of the right to exercise the same or any other right any
time and from time to time thereafter.
7. All notices, demands and other communications hereunder
shall be given in writing and delivered or telefaxed (i) to the Guarantor, at
000 Xxxxxxxxxxxx Xxxxxxxxx, Xxxx Xxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxxxxxx
X. Xxxxxxxx, Facsimile: (000) 000-0000, and (ii) to the Lender at Prudential
Securities Credit Corporation, One Seaport Plaza, 27th Floor, Treasury
Department, New York, New York, 10292, Attention: Xxxxxxxxx Xxxxxxxx, Facsimile:
(000) 000-0000, and shall be effective upon actual receipt.
8. This Guaranty shall inure to the benefit of the Lender, its
successors, assigns and any person to whom the Lender may grant any interest in
any of the Secured Note or the Mortgage Loans, and shall be binding upon the
Guarantor, its successors, heirs, executors, administrators, legal
representatives and assigns.
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9. The Guarantor covenants with the Lender that, during the
term of this Guaranty: (i) the Guarantor's stated net worth less intangible
assets shall not be less than $22,000,000; (ii) the Guarantor shall maintain a
minimum of $15,000,000 of outstanding subordinated debentures maturing in more
than one year; (iii) the Guarantor's minimum adjusted capital shall not be less
than $37,000,000, such amount being the sum of (x) the Guarantor's stated net
worth less intangible assets and (y) the Guarantor's outstanding subordinated
debentures maturing in more than one year; (iv) the Guarantor's leverage ratio
shall not exceed (a) 3.5:1 for the period from April 1, 1997 through June 30,
1997 and (b) 3.75:1 for the period from July 1, 1997 through September 30, 1997,
such ratio being the ratio of (x) the excess of (A) the Guarantor's total
liabilities over (B) outstanding subordinated debentures maturing in more than
one year, to (y) the sum of (A) the Guarantor's stated net worth less intangible
assets and (B) outstanding subordinated debentures maturing in more than one
year; and (v) the subordinated debentures shall be subordinate to the
Guarantor's obligations hereunder.
10. As long as this Guaranty is in effect, Guarantor shall (i)
promptly upon preparation, but in no event later than 45 days following the end
of its first three fiscal quarters, deliver to Lender its unaudited
company-prepared financial statements as of the end of such fiscal quarter,
prepared in accordance with GAAP, and (ii) promptly upon preparation, but in no
event later than 90 days following the end of its fourth fiscal quarter, deliver
to Lender its audited and certified financial statements, prepared in accordance
with GAAP, as of the end of and for the most recently ended fiscal year, which
audits and certification shall be prepared by a nationally recognized
independent accounting firm or by a regionally recognized independent accounting
firm with the prior written consent of Lender, which consent shall not be
unreasonably withheld. In all cases, financial statements shall include, without
limitation, a balance sheet, a profit and loss statement and a statement of cash
flows. In conjunction with the delivery of each of the financial statements to
be delivered by the Guarantor pursuant to this Paragraph 10, the Guarantor shall
deliver to the Lender an officer's certificate of the Guarantor certifying that,
as of the date of delivery of such financial statements, the Guarantor is in
compliance with all the terms of this Guaranty including, without limitation,
each of the covenants set forth in Paragraph 9.
11. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAWS RULES THEREOF. This Guaranty may not be modified, altered or
amended except by a writing signed by both the Guarantor and the Lender.
12. THE GUARANTOR IRREVOCABLY SUBMITS TO THE 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, IN ANY ACTION, SUIT OR PROCEEDING
BROUGHT AGAINST IT WHICH IS RELATED TO ANY MATTER CONTAINED IN THIS GUARANTY,
AND THE GUARANTOR HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION,
DEFENSE OR OTHERWISE, IN ANY SUCH ACTION, SUIT OR PROCEEDING, THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT PROVIDED THAT SERVICE
OF PROCESS IS MADE BY ANY LAWFUL MEANS, THAT ANY SUCH COURT IS AN INCONVENIENT
FORUM OR THAT VENUE IN ANY SUCH COURT IS IMPROPER. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE GUARANTOR IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS
GUARANTY OR ANY MATTER ARISING HEREUNDER.
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IN WITNESS WHEREOF, the Guarantor has executed this Guaranty
as of the day and year first above written.
AMERICAN BUSINESS FINANCIAL SERVICES, INC.
By:______________________________________
Name:
Title:
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