Asset Purchase Agreement

Execution Version


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ASSET PURCHASE AGREEMENT


among


HOME AMERICAN CREDIT, INC., d/b/a UPLAND MORTGAGE,
AMERICAN BUSINESS MORTGAGE SERVICES, INC., and
AMERICAN BUSINESS CREDIT, INC.
as Sellers


and


ABFS WAREHOUSE TRUST 2003-1
as Purchaser


Dated as of October 14, 2003


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ASSET PURCHASE AGREEMENT


ASSET PURCHASE AGREEMENT, dated as of October 14, 2003 (this "Agreement"), among HOME AMERICAN CREDIT, INC., d/b/a UPLAND MORTGAGE, a Pennsylvania corporation ("HAC"); AMERICAN BUSINESS MORTGAGE SERVICES, INC., a New Jersey corporation ("ABMS"); AMERICAN BUSINESS CREDIT, INC., a Pennsylvania corporation ("ABC" collectively HAC, ABMS, and ABC are referred to herein as the "Sellers" and each individually as a "Seller"); and ABFS WAREHOUSE TRUST 2003-1, a Delaware statutory trust (the "Purchaser").


W I T N E S S E T H


WHEREAS, each Seller owns and from time to time originates and acquires certain Mortgage Loans (as defined in the Loan Agreement defined below) as described in the APA Assignment (as hereinafter defined) secured primarily by mortgages, deeds of trust and security deeds on certain Mortgaged Properties (as defined in the Loan Agreement) and the Mortgage Loan Documents (as defined in the Loan Agreement) related thereto;


WHEREAS, (a) the Mortgage Loans, (b) the related Mortgage Loan Documents together with all promissory notes, and Servicing Records and any other collateral pledged or otherwise relating to such Mortgage Loans, all files, material documents, instruments, surveys, certificates, correspondence, appraisals, computer records, computer storage media, accounting records and books and records relating thereto, (c) the related Mortgaged Properties or any interest in real property collateralizing any Mortgage Loan, (d) the related Mortgage Files, (e) the related Servicing Files, (f) all mortgage guaranties and insurance (issued by governmental agencies or otherwise) and any mortgage insurance certificate or other document evidencing such mortgage guaranties or insurance relating to any Mortgage Loans and all claims and payments thereunder, (g) all other insurance policies and insurance proceeds relating to any Mortgage Loans or the related Mortgaged Property, (h) all Interest Rate Protection Agreements (as defined in the Loan Agreement defined below), (i) all rights under the Servicing Agreement (as defined in the Loan Agreement), the Custodial Agreement (as defined in the Loan Agreement) or any other document related to Mortgage Loans or the related Mortgaged Properties, and (j) all purchase or take-out commitments relating to or constituting any or all of the related Mortgage Loans or the Mortgaged Properties; together with any other property and any other rights related thereto the foregoing assets and property described in (a) through (j) are hereinafter referred to, collectively, as the "Assets");


WHEREAS, the parties hereto desire that on each Transfer Date (as defined in the related APA Assignment) the Sellers sell all of their right, title and interest in and to certain of the Assets to Purchaser pursuant to the terms of this Agreement;


WHEREAS, the Purchaser will sell all of its rights, title and interest in and to each of the Assets and its related rights under this Agreement to ABFS Warehouse Trust 2003-2 (the "Borrower"), pursuant to the terms of that certain Asset Purchase Agreement, dated as of the date hereof (as amended, supplemented or otherwise modified and in effect from time to time, the "Subsequent Asset Purchase Agreement"), between the Purchaser and the Borrower; and


WHEREAS, the Borrower and Chrysalis Warehouse Funding, LLC (with its successors and assigns, the "Lender"), will be parties to the Master Loan and Security Agreement, dated as of the date hereof (as amended, supplemented or otherwise modified and in effect from time to time, the "Loan Agreement"), pursuant to which the Lender shall agree, subject to the terms and conditions of the Loan Agreement, to make revolving credit loans to the Borrower to finance the Borrower's acquisition of the Assets.


NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows:


ARTICLE I


DEFINITIONS; CONSTRUCTION


Section 1.01 Definitions. For purposes of this Agreement all capitalized terms used but not defined herein shall have the meanings assigned thereto in the Loan Agreement.


Section 1.02 Construction. Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the term "including" is not limiting, and the term "or" has, except where otherwise indicated, the inclusive meaning represented by the phrase "and/or." The words "hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement refer to this Agreement or such other Loan Document as a whole and not to any particular provision of this Agreement or such other Loan Document. Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified. Any reference in this Agreement or in the other Loan Documents to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein). Any reference herein to any Person shall be construed to include such Person's successors and assigns. Any requirement of a writing contained herein or in the other Loan Documents shall be satisfied by the transmission of a record and any record transmitted shall constitute a representation and warranty as to the accuracy and completeness of the information contained therein.


ARTICLE II


SALE OF ASSETS; PAYMENT OF PURCHASE PRICE


Section 2.01 Sale of Assets to Purchaser. On the terms and conditions of this Agreement:


(a) On each Transfer Date, each Seller agrees to offer for sale, and to sell, transfer, assign, set over and otherwise convey absolutely and not as collateral security, without recourse, the Assets described in the related APA Assignment substantially in the form attached hereto as Exhibit A (the "APA Assignment") to the Purchaser and to deliver, transfer, assign, set over and otherwise convey absolutely and not as collateral security, without recourse,


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all of its rights under and to the related Mortgage Loan Documents, to the Purchaser or such other Person at the Purchaser's direction, as applicable, and the Purchaser agrees to purchase such Assets offered for sale by the applicable Seller.


(b) The price paid by the Purchaser for the Assets sold on each Transfer Date (the "Sales Price") shall be the sum of the Collateral Values as of the Transfer Date with respect to the Assets conveyed on such date (determined after giving effect to all payments of principal received thereon on or prior to the Cut-off Date as set forth in the related APA Assignment).


(c) On each Transfer Date, each Seller shall sell, transfer, assign, set over and otherwise convey absolutely and not as collateral security, without recourse, to the Purchaser the Assets and the Purchaser shall pay or cause to be paid to the applicable Seller or to such other Person at the direction of such Seller the Sales Price in respect of such Assets; provided, however, that the Purchaser's obligation under this clause (c) shall be subject to the satisfaction of each of the following conditions on or prior to such Transfer Date:


(i) the applicable Seller shall have delivered to the Purchaser a
duly executed APA Assignment with respect to all of the Assets conveyed
on such Transfer Date, which shall have attached thereto an Asset
Schedule (as defined in the APA Assignment) setting forth the
appropriate information with respect to all Assets conveyed on such
Transfer Date and shall have delivered to the Lender a computer
readable transmission of such Asset Schedule;


(ii) the applicable Seller shall have provided to the Servicer
for deposit in the related Collection Account all collections received
with respect to each of the Assets relating to the period after the
applicable Cut-off Date (as set forth in the related APA Assignment);


(iii) as of such date, neither the Sellers nor the Purchaser
shall (A) be insolvent, (B) be made insolvent by its respective sale or
purchase of Assets or (C) have reason to believe that its insolvency is
imminent;


(iv) the applicable Seller shall have delivered the underlying
Mortgage Files conveyed on such Transfer Date to the Custodian in
accordance with the Custodial Agreement and the Purchaser and the
Lender shall have received a copy of the Custodian Loan Transmission
and Exception Report and a copy of the Trust Receipt;


(v) each of the representations and warranties made by each
Seller set forth in Schedules 1 and 2 shall be true and correct as of
the related Transfer Date with the same effect as if then made, and
each Seller shall have performed all obligations to be performed by it
under each of the related Mortgage Loan Documents on and prior to such
Transfer Date;


(vi) the applicable Seller shall, at its own expense, on the
Transfer Date, indicate in its computer files that the Assets
identified in the related APA Assignment have been sold to the
Purchaser pursuant to this Agreement and provide evidence of the same
to the Purchaser and Lender in form and substance satisfactory to
Lender within one Business Day of the Transfer Date;


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(vii) the applicable Seller shall have taken any action requested
by the Purchaser or the Lender required to maintain the ownership
interest of the Purchaser in the Collateral and the first priority
perfected security interest therein of the Lender; and


(viii) all conditions precedent in Sections 2.03, 5.01 and 5.02
of the Loan Agreement shall have been satisfied.


(d) Each of the conveyances contemplated hereby shall be sales from the Sellers to the Purchaser of all of the Sellers' right, title and interest in and to the Assets. Notwithstanding the foregoing, in the event the transactions set forth herein are deemed not to be sales, each Seller hereby grants to the Purchaser a security interest in all of such Seller's right, title and interest in, to and under the Assets, whether now existing or hereafter created, to secure each Seller's obligations hereunder, and this Agreement shall constitute a security agreement under applicable law, in which event Purchaser shall have all the rights and remedies of a secured party under the Uniform Commercial Code and other applicable law.


Section 2.02 Obligations of Sellers.


(a) Within ten days after the Closing Date (or such other time as may be agreed to by Lender including, as agreed in the Custodial Agreement) and on or prior to each Transfer Date, the Lender shall have received evidence satisfactory to it of (i) the completion of all recordings, registrations and filings as may be necessary or, in the opinion of the Lender, desirable to perfect or evidence the sale and assignment by the Sellers to the Purchaser of the Sellers' ownership interest in the Assets, the related property and the proceeds thereof, (ii) the completion of all recordings, registrations and filings as may be necessary or, in the opinion of the Lender, desirable to perfect or evidence the sale and assignment by the Purchaser to the Borrower of the Purchaser's ownership interest in the Assets, the related property and the proceeds thereof and the Purchaser's rights under this Agreement, and (iii) the completion of all recordings, registrations and filings as may be necessary or, in the opinion of the Lender, desirable to perfect or evidence the grant of a first priority perfected security interest in the Assets, the related property and the proceeds thereof granted by the Sellers in favor of the Purchaser (as contemplated by Section 2.01(d)). Each Seller agrees to file all necessary continuation statements and any amendments to the UCC-1 financing statements necessary to perfect the interest of the Purchaser and the Lender in and to the Assets and the Purchaser's rights under this Agreement and to take such other action as may be necessary or, in the opinion of the Purchaser or the Lender, desirable to perfect or evidence the Purchaser's and the Lender's interest in the Assets and the Purchaser's rights under this Agreement conveyed under the Loan Documents.


(b) (i) In connection with each sale of an Asset hereunder, each Seller shall deliver to and deposit with the Custodian, on behalf of the Purchaser for the benefit of Borrower and Lender, the underlying Mortgage File with respect to each Asset conveyed on such Transfer Date on or before the related Transfer Date. With respect to any Assets that are set forth as exceptions in the Custodian Loan Transmission and Exception Report, each Seller hereby agrees and covenants that it shall take all such actions and shall perform all such obligations, on behalf of the Purchaser, Borrower, and Lender necessary to cure such exceptions, repurchase such Assets or provide substitute Eligible Mortgage Loans in accordance with Section 5 of the Custodial Agreement.


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(ii) It is understood and agreed that the obligations set forth
in Section 2.02(b)(i) shall survive delivery of the Mortgage Files to
the Custodian (as the agent of the Borrower and Lender) and shall inure
to the benefit of the Purchaser, the Borrower and the Lender.


(c) In connection with each sale of an Asset hereunder, each Seller shall deliver to, and deposit with the Custodian, as the designated agent of the Borrower and the Lender, on or before the related Transfer Date, the underlying Mortgage File with respect to the Mortgage Loan conveyed on such Transfer Date.


(d) Each Seller hereby further confirms to the Purchaser that, within one Business Day of the Closing Date and each Transfer Date, it shall provide evidence to the Purchaser, the Borrower and the Lender that the portions of such Seller's electronic ledger relating to the Assets have been clearly and unambiguously marked to indicate that the Assets have been sold to the Purchaser hereunder, the Assets have been sold by the Purchaser to the Borrower under the Subsequent Asset Purchase Agreement, and the Assets have been pledged to the Lender by the Borrower.


(e) On and after each Transfer Date, the Purchaser shall own the Assets which have been identified as being sold by the applicable APA Assignment, the Borrower shall own the Assets which have been identified as being sold by the Purchaser to the Borrower under the Subsequent Asset Purchase Agreement and the Sellers shall not take any action inconsistent with such ownership and shall not claim any ownership interest in any such conveyed Asset.


Section 2.03 Dispositions.


Each Seller hereby agrees and covenants that in connection with each disposition of Assets it shall perform, on behalf of Borrower, such duties and take such actions as specified in Sections 7.17, 7.20, 7.21, 7.22, 7.28. 11.15 and 11.16 of the Loan Agreement.


ARTICLE III


REPRESENTATIONS AND
WARRANTIES; REMEDIES FOR BREACH


Section 3.01 Sellers' Representations and Warranties. (a) Each Seller makes each of the representations and warranties set forth in Schedule 1 hereto to the Purchaser (i) as of the Closing Date, (ii) as of each Transfer Date with respect to the Assets conveyed on such Transfer Date, and (iii) as of each date on which an Eligible Mortgage Loan is being substituted in accordance with Section 5 of the Custodial Agreement (each, a "Substitution Date").


(b) Each Seller further makes, as of the Closing Date, as of each Transfer Date and as of each Substitution Date, each of the representations and warranties set forth in Schedule 2 hereto.


It is understood and agreed that the representations and warranties set forth in this Section 3.01 shall survive delivery of the respective Mortgage Files to the Custodian (as the agent of the Borrower and Lender) and shall inure to the benefit of the Purchaser, the Servicer, the Custodian, the Borrower and the Lender. Upon the discovery by the Servicer, the Custodian, the Borrower, the


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Sellers, the Purchaser, or the Lender of a breach of any of the representations and warranties of the Sellers set forth in Schedule 1 or 2 hereto that materially and adversely affects the value of any of the Assets, or the interests of the Lender in any Asset, with respect to which such representation or warranty is made, the Sellers shall be jointly and severally obligated to (a) promptly cure such breach in all material respects, (b) purchase such Mortgage Loan on the next succeeding Payment Date, at the Repurchase Price (as hereinafter defined), or (c) remove such Mortgage Loan from the Owner Trust Estate (as defined in the 2003-1 Trust Agreement) and substitute one or more Eligible Mortgage Loans. Repurchase Price shall mean with respect to any Mortgage Loan, the principal balance of such Mortgage Loan as of the date of re-purchase, plus all accrued and unpaid interest on such principal balance computed, as of the date of re-purchase, at the Mortgage Interest Rate, plus the amount of any unreimbursed Servicing Advances (as defined in the Servicing Agreement) made by the Servicer with respect to such Mortgage Loan, which purchase price shall be deposited in the Collection Account on the next succeeding Determination Date (as defined in the Servicing Agreement), after deducting therefrom any amounts received in respect of such repurchased Mortgage Loan or Loans and being held in the Collection Account for future payment to the extent such amounts have not yet been applied to principal or interest on such Mortgage Loan. The obligations of the Sellers set forth herein to cure such breach or substitute for or repurchase an affected Asset or, as the case may be, shall constitute the sole remedies available hereunder to the Purchaser respecting a breach of the representations and warranties contained in Section 3.01(a) and (b) hereof or Schedules 1 and 2 hereto.


Section 3.02 Reconstitution of Mortgage Loans.


(a) The Sellers acknowledge that with respect to some or all of the Mortgage Loans, such Mortgage Loans may be subject to:


(i) one or more sales as whole loan transfers by the Purchaser
(each, a "Whole Loan Transfer"); and/or


(ii) one or more sales as public or private pass-through
transfers (each, a "Pass-Through Transfer").


(b) With respect to each Whole Loan Transfer or Pass-Through Transfer, as the case may be, the Sellers agree:


(i) to cooperate with any prospective purchaser with respect to
all reasonable requests and due diligence procedures (including
participating in a reasonable number of meetings with rating agencies,
bond insurers and such other parties as Purchaser shall designate and
participating in meetings with prospective purchasers of the Mortgage
Loans or interests therein and providing information as reasonably
requested by such purchasers), and with respect to the preparation
(including, but not limited to, the endorsement, delivery, assignment,
and execution) of the Mortgage Loan documents and other related
documents, and with respect to servicing requirements reasonably
requested by the rating agencies and credit enhancers;


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(ii) to execute all reconstitution agreements reasonably required
to be executed by the Sellers in connection with such Pass-Through
Transfer or Whole Loan Transfer (including a mutually acceptable
assignment assumption and recognition agreement);


(iii) to deliver for inclusion in any prospectus or other
offering material such publicly available information regarding the
Sellers, their financial condition and their mortgage loan delinquency,
foreclosure and loss experience and any additional information
reasonably requested, and which the Sellers are capable of providing
without unreasonable effort or expense, and to deliver any similar non
public, unaudited financial information and such statements and audit
letters of reputable, certified public accountants pertaining to
information provided by the Sellers pursuant to the above as shall be
reasonably requested, and to indemnify a certain Persons for material
misstatements or omissions contained in such information;


(iv) to deliver such statements and audit letters of reputable,
certified public accountants pertaining to information pursuant to
clause (iv) above as shall be reasonably requested; and


(v) to deliver such legal documents and in-house opinions of
counsel as are customarily delivered by originators or servicers, as
the case may be in connection with Whole Loan Transfers or Pass-Through
Transfers.


(c) With respect to each Whole Loan Transfer or Pass-Through Transfer, as the case may be, the Servicer agrees to make all the representations and warranties set forth in Schedule 1 and 2, as of the date of the Whole Loan Transfer or Pass-Through Transfer (1) modified to the extent necessary to reflect the pool statistics of the Mortgage Loans as of the date of such Whole Loan Transfer or Pass-Through Transfer, (2) supplemented by additional representations and warranties that are not unreasonable under the circumstances as of the date of such Whole Loan Transfer or Pass-Through Transfer and to the extent that any events or circumstances, including changes in applicable law occurring subsequent to the related closing date(s), would render a related Mortgage Loan unmarketable to a material segment of the secondary mortgage or mortgage-backed securities market if such additional representations and warranties were not made, and (3) subject to exceptions relating to conditions or circumstances with respect to the Mortgage Loans that arose after the Transfer Date and are identified by the Servicer.


ARTICLE IV


SELLER COVENANTS


Section 4.01 No Further Sale or Transfer. Each Seller hereby covenants that except for the sales hereunder, such Seller will not sell, pledge, assign or transfer to any other Person, or grant, create, incur, assume or suffer to exist any lien on, any Asset, or any interest therein.


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Section 4.02 Defense of Right, Title and Interest. Each Seller will defend the right, title and interest of the Purchaser in, to and under the Assets against all claims of third parties claiming through or under such Seller.


Section 4.03 Separateness Covenants. Each Seller hereby covenants that it will not take any actions or fail to take any actions which would cause the Purchaser to violate the covenants set forth in Article V.


Section 4.04 Further Assurances. Whenever and so often as reasonably requested by the Purchaser, the Borrower or the Lender, each Seller shall promptly execute and deliver or cause to be executed and delivered all such other and further instruments, documents, or assurances, and promptly do or cause to be done all such other things, as may be necessary and reasonably required to vest more fully in the requesting party all rights, both directly and indirectly, interests, powers, benefits, privileges and advantages conferred or intended to be conferred upon it by this Agreement.


ARTICLE V


PURCHASER COVENANTS


The Purchaser hereby covenants that it will:


(a) maintain books and records separate from any other person or entity;


(b) maintain its bank accounts separate from any other person or entity;


(c) not commingle its assets with those of any other person or entity;


(d) conduct its own business in its own name;


(e) other than as contemplated by the Basic Documents (as defined in the 2003-1 Trust Agreement) and related documentation, pay its own liabilities and expenses only out of its own funds;


(f) observe all formalities required under the Statutory Trust Statute (as defined in the 2003-1 Trust Agreement);


(g) enter into transactions with Affiliates only if each such transaction is intrinsically fair, commercially reasonable, and on the same terms as would be available in an arm' s length transaction with a person or entity that is not an Affiliate;


(h) not guarantee or become obligated for the debts of any other entity or person;


(i) not hold out its credit as being available to satisfy the obligation of any other person or entity;


(j) not acquire the obligations or securities of its Affiliates;


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(k) other than as contemplated by the Basic Documents and related documentation, not make loans to any other person or entity or buy or hold evidence of indebtedness issued by any other person or entity;


(l) other than as contemplated by the Basic Documents and related documentation, not pledge its assets for the benefit of any other person or entity;


(m) hold itself out as a separate entity from the Sellers and the Borrower and not conduct any business in the name of the Sellers or the Borrower;


(n) correct any known misunderstanding regarding its separate identity; and


(o) not identify itself as a division of any other person or entity.


ARTICLE VI


TERMINATION


Section 6.01 Termination. The respective obligations and responsibilities of the Sellers and the Purchaser created hereby shall terminate upon payment in full of all Obligations under the Loan Agreement.


ARTICLE VII


MISCELLANEOUS PROVISIONS


Section 7.01 Amendment. This Agreement may be amended from time to time with the prior written consent of the Lender, in its sole discretion, by a written agreement signed by the Sellers and the Pur ...