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EXHIBIT 10.20
MASTER LOAN AND SECURITY AGREEMENT
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DATED AS OF JANUARY 1, 1997
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CITYSCAPE CORP.
AS BORROWER
AND
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
AS LENDER
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TABLE OF CONTENTS
RECITALS 1
SECTION 1. DEFINITIONS AND ACCOUNTING MATTERS 1
1.01 CERTAIN DEFINED TERMS 1
1.02 ACCOUNTING TERMS AND DETERMINATIONS 12
SECTION 2. LOANS, NOTE AND PREPAYMENTS 12
2.01 LOANS 12
2.02 NOTES 13
2.03 PROCEDURE FOR BORROWING 13
2.04 LIMITATION ON TYPES OF LOANS; ILLEGALITY 14
2.05 REPAYMENT OF LOANS; INTEREST 14
2.06 MANDATORY PREPAYMENTS OR PLEDGE 15
2.07 OPTIONAL PREPAYMENTS 15
2.08 INDEMNITY 16
2.09 REQUIREMENTS OF LAW 16
2.10 TAXES 17
2.11 EXTENSION OF TERMINATION DATE 18
SECTION 3 PAYMENTS; COMPUTATIONS; ETC. 18
3.01 PAYMENTS 18
3.02 COMPUTATIONS 18
SECTION 4. COLLATERAL SECURITY 18
4.01 COLLATERAL; SECURITY INTEREST 18
4.02 FURTHER DOCUMENTATION 20
4.03 CHANGES IN LOCATIONS, NAME, ETC. 20
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4.04 LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT 20
4.05 PERFORMANCE BY LENDER OF BORROWER'S OBLIGATIONS 21
4.06 PROCEEDS 22
4.07 REMEDIES 22
4.08 LIMITATION ON DUTIES REGARDING PRESENTATION OF COLLATERAL 23
4.09 POWERS COUPLED WITH AN INTEREST 23
4.10 RELEASE OF SECURITY INTEREST 23
SECTION 5. CONDITIONS PRECEDENT 23
5.01 INITIAL LOAN 23
5.02 INITIAL AND SUBSEQUENT LOANS 24
SECTION 6. REPRESENTATIONS AND WARRANTIES 25
6.01 EXISTENCE 25
6.02 LITIGATION 25
6.03 NO BREACH 25
6.04 ACTION 26
6.05 APPROVALS 26
6.06 GOOD STANDING 26
6.07 COLLATERAL; COLLATERAL SECURITY 26
6.08 CHIEF EXECUTIVE OFFICE 27
6.09 INSURANCE 27
6.10 FHA SERVICING 27
6.11 FINANCIAL STATEMENTS 27
6.12 ERISA 27
6.13 ACCURACY OF INFORMATION 27
6.14 LOAN DOCUMENTS 28
6.15 COMPLIANCE WITH LAW, ETC 28
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6.16 SOLVENCY; FRAUDULENT CONVEYANCE 28
6.17 INVESTMENT COMPANY ACT COMPLIANCE 28
6.18 TAXES 28
6.19 LICENSES 28
6.20 MARGIN REGULATIONS 28
SECTION 7. COVENANTS OF THE BORROWER 28
7.01 FINANCIAL STATEMENTS 28
7.02 REPORTS 29
7.03 COMPLIANCE WITH LAWS 29
7.04 EXISTENCE, ETC. 29
7.05 ADEQUATE CAPITAL 29
7.06 NOTICES 29
7.07 COMPLIANCE WITH CUSTODIAL AGREEMENT 30
7.08 BORROWING BASE DEFICIENCY 30
7.09 INSPECTION OF BOOKS AND RECORDS 30
7.10 NO ASSIGNMENT 30
7.11 NO AMENDMENT TO CORPORATE DOCUMENTS 30
7.12 NO CHANGE OF CONTROL 30
7.13 LIMITATION ON LINES OF BUSINESS 30
7.14 LIMITATION ON DISTRIBUTIONS 30
7.15 LIMITATION ON GUARANTEES 31
7.16 LIMITATION ON LIENS 31
7.17 FHA APPROVED MORTGAGEE 31
7.18 FINANCIAL CONDITION COVENANTS 31
7.19 NOTICE IF MORTGAGE ASSET IS FOUND DEFECTIVE 31
7.20 PROHIBITION OF FUNDAMENTAL CHANGES 32
7.21 LIMITATION ON TRANSACTIONS WITH AFFILIATES 32
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7.22 UNDERWRITING GUIDELINES 32
7.23 SERVICING TAPE 32
7.24 BORROWING BASE CERTIFICATE 32
7.25 AUTHORIZED OFFICERS 32
7.26 PORTFOLIO PERFORMANCE 32
SECTION 8. EVENTS OF DEFAULT 32
SECTION 9. REMEDIES UPON DEFAULT 35
SECTION 10. NO DUTY OF LENDER 35
SECTION 11. MISCELLANEOUS 35
11.01 WAIVER 35
11.02 NOTICES 35
11.03 INDEMNIFICATION AND EXPENSES 36
11.04 AMENDMENTS 37
11.05 SUCCESSORS AND ASSIGNS 37
11.06 SURVIVAL 37
11.07 CAPTIONS 37
11.08 COUNTERPARTS 37
11.09 LOAN AGREEMENT CONSTITUTES SECURITY AGREEMENT; GOVERNING LAW 37
11.10 SUBMISSION TO JURISDICTION; WAIVERS 37
11.11 WAIVER OF JURY TRIAL 38
11.12 ACKNOWLEDGMENTS 38
11.13 HYPOTHECATION OR PLEDGE OF LOANS 38
11.14 ASSIGNMENTS, PARTICIPATIONS 38
11.15 SERVICING 39
11.16 PERIODIC DUE DILIGENCE REVIEW 41
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SCHEDULES
SCHEDULE 1 Representations and Warranties re: Mortgage Assets
SCHEDULE 2 Filing Jurisdictions and Offices
SCHEDULE 3 List of Settlement Agents
SCHEDULE 4 Authorized Representatives of the Borrower
SCHEDULE 5 Schedule of Non-Performing Loans
EXHIBITS
EXHIBIT A CoreStates Custodial Agreement
EXHIBIT B First Trust Custodial Agreement
EXHIBIT C Form of Opinion of Counsel
to Borrower
EXHIBIT D Form of Request for Borrowing
EXHIBIT E Underwriting Guidelines for Home Equity Loans and Home
Improvement Loans
EXHIBIT F Underwriting Guidelines for SM/MU Assets
EXHIBIT G Underwriting Guidelines for High LTV Assets
EXHIBIT H Whole Loan Agreement
EXHIBIT I Intentionally Omitted
EXHIBIT J Intentionally Omitted
EXHIBIT K Form of Borrowing Base Certificate
EXHIBIT L Document Exception Codes
ANNEXES
Annex I Non-Performing Loan Subline Terms
Annex II Wet Loan Subline Terms
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MASTER LOAN AND SECURITY AGREEMENT
MASTER LOAN AND SECURITY AGREEMENT, dated as of January 1,
1997, between CITYSCAPE CORP., a New York corporation (the "Borrower"), and
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware corporation (the
"Lender").
RECITALS
Heretofore, the Borrower and the Lender have entered into
that certain Amended and Restated Purchase and Sale Agreement, dated as of
February 2, 1996 (the "Existing Agreement"), pursuant to which the Borrower
pledged to the Lender certain Previously Pledged Mortgage Assets. The Borrower
and the Lender are entering into this Agreement, which supersedes the Existing
Agreement and is a continuation of the agreement set forth therein, as amended
and modified herein.
The Borrower has requested that the Lender from time to
time make revolving credit loans to it to finance certain Eligible Assets (as
defined below) owned by the Borrower, and the Lender is prepared to make such
loans upon the terms and conditions hereof and Annexes I and II hereto as
applicable. Accordingly, the parties hereto agree as follows:
Section 1. Definitions and Accounting Matters.
1.01 Certain Defined Terms. As used herein, the following
terms shall have the following meanings (all terms defined in this Section 1.01
or in other provisions of this Loan Agreement in the singular to have the same
meanings when used in the plural and vice versa):
"Act" shall mean the National Housing Act, as amended from
time to time.
"Affiliate" shall mean any "affiliate" of the Borrower or
Lender, as applicable, as such term is defined in the Bankruptcy Code in effect
from time to time.
"Affiliate Guaranty" shall mean that certain Affiliate
Guaranty dated as of the date hereof, made by Cityscape Financial Corp. in favor
of the Lender, as amended from time to time.
"Applicable Collateral Percentage" shall mean a percentage
to be agreed between the Lender and Borrower, which percentage shall be as set
forth below:
PRODUCT %
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Home Equity Mortgage Assets 100
High LTV Assets
FICO LESS THAN 600 (until 12/15/97) 80
FICO LESS THAN 600 (after 12/15/97) 70
FICO 600-620 90
FICO MORE THAN 620 98
SM/MU Assets 100
FHA Assets 100*
Home Improvement Assets 100*
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*Applicable to loans funded by Lender prior to the Effective Date.
"Applicable Margin" shall mean 1.50% per annum.
"Appraised Value" shall mean the value set forth in an
appraisal made in connection with the origination of the related Mortgage Asset
as the value of the Mortgaged Property.
"Attorney Bailee Letter" shall have the meaning assigned to
such term in the First Trust Custodial Agreement.
"Bankruptcy Code" shall mean the United States Bankruptcy
Code of 1978, as amended from time to time.
"Borrower" shall have the meaning provided in the heading
hereof.
"Borrowing Base" shall mean the aggregate Collateral Value
of all Eligible Assets.
"Borrowing Base Certificate" shall mean the certificate
delivered pursuant to Section 7.25 hereof, substantially in the form of Exhibit
K attached hereto.
"Borrowing Base Deficiency" shall have the meaning provided
in Section 2.06 hereof.
"Business Day" shall mean any day other than (i) a Saturday
or Sunday or (ii) a day on which the New York Stock Exchange, the Federal
Reserve Bank of New York, banking and savings and loans institutions in the
states of New York or Connecticut or the Custodian is authorized or obligated by
law or executive order to be closed.
"Capital Lease Obligations" shall mean, for any Person, all
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) Property to the extent such
obligations are required to be classified and accounted for as a capital lease
on a balance sheet of such Person under GAAP, and, for purposes of this Loan
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Change of Control" shall mean either (i) either ▇▇▇▇▇▇
Patent or ▇▇▇▇▇ ▇▇▇▇▇▇ leave the employ of Borrower or (ii) there occurs a
change of "control" of Borrower or the Guarantor, as applicable, as such term is
defined in the Securities Exchange Act of 1934, as amended.
"Collateral" shall have the meaning provided in Section
4.01(b) hereof.
"Collateral Value" shall mean, with respect to each
Mortgage Asset, the lesser of (a) the Applicable Collateral Percentage
multiplied by the outstanding principal balance of such Mortgage Asset and (b)
the Market Value of such Mortgage Asset; provided, that
(i) the Collateral Value shall be deemed to be zero with
respect to each Mortgage Asset as to which the Lender reasonably determines:
(1) in respect of which there is a
material breach of a representation and warranty set forth
on Schedule 1 (assuming each representation and warranty is
made as of the date Collateral Value is determined),
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(2) in respect of which there is a
delinquency in the payment of principal and/or interest
which continues for a period in excess of 59 days (without
regard to any applicable grace periods),
(3) subject to clause (5) below,
which remains pledged to the Lender hereunder later than
120 days after the date on which it is first included in
the Collateral,
(4) which has been released from the
possession of the Custodian under the applicable Custodial
Agreement to the Borrower for a period in excess of 14
days,
(5) which is a Previously Pledged
Mortgage Asset which remains pledged to the Lender
hereunder later than 120 days after the date on which it
was funded under the Existing Agreement, or December 31,
1997, whichever is later,
(6) which is an FHA Asset pledged to
the Lender hereunder after December 31, 1997,
(7) as to which (A) the related
Mortgage Note or the related Mortgage is not genuine or is
not the legal, valid, binding and enforceable obligation of
the maker thereof, subject to no right of rescission,
set-off, counterclaim or defense, or (B) such Mortgage, is
not a valid, subsisting, enforceable and perfected first,
second or third lien on the Mortgaged Property,
(8) in respect of which the related
Mortgage Note has been extinguished under relevant state
law in connection with a judgment of foreclosure or
foreclosure sale or otherwise,
(9) in respect of which the related
Mortgaged Property is the subject of a foreclosure
proceeding, or
(10) in respect of which the related
Mortgagor is the subject of a bankruptcy proceeding.
(ii) the aggregate Collateral Value of Mortgage Assets
which are SM/MU Assets may not exceed $50,000,000;
(iii) the aggregate Collateral Value of FHA Assets may not
exceed $10,000,000; and
(iv) the aggregate Collateral Value of Delinquent Mortgage
Assets may not exceed $15,000,000.
"Custodial Agreement" shall mean either (i) the First Trust
Custodial Agreement or (ii) the Wet Loan Custodial Agreement.
"Custodian" shall mean (i) with respect to the First Trust
Custodial Agreement, First Trust National Association and its successors and
permitted assigns thereunder and (ii) with respect to the Wet Loan Custodial
Agreement, the Wet Loan Custodian (as defined in Annex II), and its successors
and permitted assigns thereunder.
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"Default" shall mean an Event of Default or an event that
with notice or lapse of time or both would become an
Event of Default.
"Delinquent Mortgage Asset" shall mean an Eligible Asset
for which the applicable Monthly Payment is more than 29 days, but no more than
59 days delinquent and with respect to which the related Mortgaged Property is
not the subject of a foreclosure proceeding and with respect to which the
related Mortgagor is not the subject of a bankruptcy proceeding.
"Dollars" and "$" shall mean lawful money of the United
States of America.
"Due Date" means the day of the month on which the Monthly
Payment is due on a Mortgage Asset, exclusive of any days of grace.
"Due Diligence Review" shall mean the performance by the
Lender of any or all of the reviews permitted under Section 11.16 hereof with
respect to any or all of the Mortgage Assets, as desired by the Lender from time
to time.
"Effective Date" shall mean the date upon which the
conditions precedent set forth in Section 5.01 shall have
been satisfied.
"Eligible Asset" shall mean a Mortgage Asset secured by a
first, second or third mortgage lien on a one-to-four family residential
property or small multi-family residence/mixed-use property, as to which the
representations and warranties in Section 6.07 and in Schedule 1, as applicable,
hereof are correct in all material respects.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or
business that is a member of any group of organizations (i) described in Section
414(b) or (c) of the Code of which the Borrower is a member and (ii) solely for
purposes of potential liability under Section 302(c)(11) of ERISA and Section
412(c)(11) of the Code and the lien created under Section 302(f) of ERISA and
Section 412(n) of the Code, described in Section 414(m) or (o) of the Code of
which the Borrower is a member.
"Event of Default" shall have the meaning provided in
Section 8 hereof.
"Exception" shall have the meaning provided for such term
in the First Trust Custodial Agreement.
"Exception Report" shall mean the exception report prepared
by the Custodian pursuant to the applicable Custodial Agreement.
"Federal Funds Rate" shall mean, for any day, the weighted
average of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the Lender from
three federal funds brokers of recognized standing selected by it.
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"FHA" shall mean the Federal Housing Administration, an
agency within the United States Department of Housing and Urban Development, or
any successor thereto and including the Federal Housing Commissioner and the
Secretary of Housing and Urban Development where appropriate under the FHA
Regulations.
"FHA Approved Mortgagee" shall mean a corporation or
institution approved as a Title I mortgagee by HUD under the Act, and applicable
FHA Regulations, and eligible to own and service mortgage loans such as the FHA
Assets.
"FHA Asset" shall mean a Home Improvement Asset which is
the subject of FHA Mortgage Insurance.
"FHA Mortgage Insurance" shall mean mortgage insurance
authorized under Title I of the Act and provided by the FHA.
"FHA Regulations" shall mean regulations promulgated by HUD
under the National Housing Act, codified in 24 Code of Federal Regulations, and
other HUD issuances relating to FHA Assets, including the related handbooks,
circulars, notices and mortgagee letters.
"Financial Statements" shall mean those documents to be
delivered pursuant to Section 7.02 hereof.
"First Trust Custodial Agreement" shall mean that certain
Custodial Agreement, dated as of the date hereof, among the Borrower, First
Trust National Association and the Lender, substantially in the form of Exhibit
B, as the same shall be modified and supplemented and in effect from time to
time.
"Funding Date" shall mean the date on which a Loan is made
hereunder.
"GAAP" shall mean generally accepted accounting principles
as in effect from time to time in the United States.
"Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any court or arbitrator having
jurisdiction over the Borrower, any of its Subsidiaries or any of its
properties.
"Guarantee" shall mean, as to any Person, any obligation of
such Person directly or indirectly guaranteeing any Indebtedness of any other
Person or in any manner providing for the payment of any Indebtedness of any
other Person or otherwise protecting the holder of such Indebtedness against
loss (whether by virtue of partnership arrangements, by agreement to keep-well,
to purchase assets, goods, securities or services, or to take-or-pay or
otherwise); provided that the term "Guarantee" shall not include (i)
endorsements for collection or deposit in the ordinary course of business, or
(ii) obligations to make servicing advances for delinquent taxes and insurance
or other obligations in respect of a Mortgaged Property, to the extent required
by the Lender. The amount of any Guarantee of a Person shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by
such Person in good faith. The terms "Guarantee" and "Guaranteed" used as verbs
shall have correlative meanings.
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"Guarantor" shall mean Cityscape Financial Corp., its
permitted successors and assigns.
"High LTV Asset" shall mean a Mortgage Asset underwritten
in accordance with the Borrower's Sav-a-Loan underwriting guidelines attached as
Exhibit G hereto.
"Home Equity Mortgage Asset" shall mean all of Borrower's
right, title and interest in and to a mortgage loan secured by a mortgage on a
one- to four-family residence, which shall bear either fixed or adjustable rates
of interest and shall have been underwritten in accordance with the underwriting
guidelines attached as Exhibit E or otherwise approved by Lender, other than a
High LTV Asset, Home Improvement Asset or SM/MU Asset.
"Home Improvement Asset" shall mean all of Borrower's
right, title and interest in and to a conventional or Title I home improvement
loan secured by a mortgage on a one- to four-family residence which shall have
been underwritten in accordance with the underwriting guidelines attached as
Exhibit E or otherwise approved by Lender.
"HUD" shall mean the Department of Housing and Urban
Development, or any federal agency or official thereof which may from time to
time succeed to the functions thereof with regard to FHA Mortgage Insurance. The
term "HUD," for purposes of this Agreement, is also deemed to include
subdivisions thereof such as the FHA.
"Indebtedness" shall mean, for any Person: (i)(a)
obligations created, issued or incurred by such Person for borrowed money
(whether by loan, the issuance and sale of debt securities or the sale of
Property to another Person subject to an understanding or agreement, contingent
or otherwise, to repurchase such Property from such Person); (b) obligations of
such Person to pay the deferred purchase or acquisition price of Property or
services, other than trade accounts payable (other than for borrowed money)
arising, and accrued expenses incurred, in the ordinary course of business so
long as such trade accounts payable are payable within 120 days of the date the
respective goods are delivered or the respective services are rendered; (c)
Indebtedness of others secured by a Lien on the Property of such Person, whether
or not the respective Indebtedness so secured has been assumed by such Person;
(d) obligations (contingent or otherwise) of such Person in respect of letters
of credit or similar instruments issued or accepted by banks and other financial
institutions for account of such Person; (e) Capital Lease Obligations of such
Person; (f) obligations of such Person under repurchase agreements or like
arrangements; (g) Indebtedness of others Guaranteed by such Person; (h) all
obligations of such Person incurred in connection with the acquisition or
carrying of fixed assets by such Person; and (i) Indebtedness of general
partnerships of which such Person is a general partner minus (ii) securities
sold but not yet purchased.
"Interest Period" shall mean, with respect to any Loan,
each period commencing on the date such Loan is made and ending on the date one
month thereafter, except that each Interest Period that commences on the last
Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (i) no Interest Period may begin before and end
after the Termination Date; (ii) each Interest Period that would otherwise end
on a day that is not a Business Day shall end on the next succeeding Business
Day (or, if such next succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day); and (iii) notwithstanding
clause (i) above, no Interest Period for any Loan of
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one month shall have a duration of less than one month and, if the Interest
Period for any Loan would otherwise be a shorter period, such Loan shall not be
available for such period.
"Interest Rate Protection Agreement" shall mean, with
respect to any or all of the Mortgage Assets, any interest rate swap, cap or
collar agreement or similar arrangements or any other transaction including,
without limitation, the sale of United States treasury securities, providing
for, in each case, protection against fluctuations in interest rates or the
exchange of nominal interest obligations, either generally or under specific
contingencies, entered into by the Borrower with an Affiliate of the Lender or
such other Person acceptable to the Lender and reasonably acceptable to the
Lender.
"Lender" shall have the meaning provided in the heading
hereto.
"LIBO Reserve Requirements" shall mean for any Interest
Period for any Loan and for any Lender as to which LIBO Reserve Requirements are
actually required to be maintained, the aggregate (without duplication) of the
rates (expressed as a decimal fraction) of reserve requirements in effect on
such day or during such Interest Period, as applicable (including, without
limitation, basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto), dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as "Eurocurrency Liabilities" in Regulation D of such Board) maintained by a
member bank of such Governmental Authority.
"LIBO Base Rate" shall mean for any Loan, with respect to
each day during each Interest Period pertaining to such Loan, the rate per annum
equal to the rate appearing at page 3750 of the Telerate Screen as the one-month
LIBOR on the first day of such Interest Period, and if such rate shall not be so
quoted, the rate per annum at which the Lender is offered Dollar deposits at or
about 11:00 a.m., New York City time, on such date by prime banks in the
interbank eurodollar market where the eurodollar and foreign currency exchange
operations in respect of its Loans are then being conducted for delivery on such
day for a period of one month, and in an amount comparable to the amount of the
Loans to be outstanding on such day.
"LIBO Rate" shall mean with respect to each day during each
Interest Period pertaining to a Loan, a rate per annum determined by the Lender
in its sole good-faith discretion in accordance with the following formula
(rounded upwards to the nearest 1/100th of one percent), which rate as
determined by the Lender shall be conclusive absent manifest error by the Lender
equal to:
LIBO Base Rate
----------------------------------------
1.00 - LIBO Reserve Requirements
"Lien" shall mean any mortgage, lien, pledge, charge,
security interest or similar encumbrance.
"Loan" shall have the meaning provided in Section 2.01(a)
hereof.
"Loan Agreement" shall mean this Master Loan and Security
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time.
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"Loan Balance" shall mean, with respect to each Mortgage
Asset and any related Loan, the original principal balance of such Loan made in
respect of such Mortgage Asset reduced in accordance with Section 2.06 hereof.
"Loan Documents" shall mean, collectively, this Loan
Agreement, the First Trust Custodial Agreement, the Wet Loan Custodial Agreement
and the Affiliate Guaranty.
"Market Value" shall mean, as of any date in respect of an
Eligible Asset, the price at which such Eligible Asset could readily be sold as
determined in good faith by the Lender, which price may be determined to be zero
taking into account such factors as are usual and customary in the industry. The
Lender's determination of Market Value shall be conclusive upon the parties
absent manifest error on the part of the Lender.
"Material Adverse Effect" shall mean a material adverse
effect on (a) the Property, business, operations, financial condition or
prospects of the Borrower, (b) the ability of the Borrower to perform its
obligations under any of the Loan Documents to which it is a party, (c) the
validity or enforceability of any of the Loan Documents, (d) the rights and
remedies of the Lender under any of the Loan Documents, (e) the timely payment
of the principal of or interest on the Loans or other amounts payable in
connection therewith or (f) the Collateral.
"Material Exception" shall mean, with respect to any
Mortgage Loan, any Exception listed on an Exception Report consisting of the
absence from the Mortgage File, or deficiency in respect of, any of the fatal
exceptions for Mortgage Asset Documents as set forth with an "F" in the document
exception codes attached as Exhibit L hereto.
"Maximum Credit" shall mean the excess of (i) $400,000,000
over (ii) the aggregate amount of any other indebtedness of the Borrower or its
Affiliates to Lender or its Affiliates.
"Maximum Facility Borrowings" shall mean the maximum
aggregate amount of Loans which may be borrowed by the Borrower over the term of
this Agreement (without taking into account any repayments of Loans by the
Borrower) which shall equal $3,000,000,000.
"Monoline Insurance Company" shall mean Municipal Bond
Investors Assurance Corporation ("MBIA"), Financial Guaranty Insurance Company
("FGIC"), Capital Markets Assurance Corporation ("CapMAC"), Financial Security
Assurance Inc. ("FSA"), GE Mortgage Insurance Company ("GEMICO") or AMBAC
Indemnity Corporation ("AMBAC").
"Monthly Payment" means the scheduled monthly payment of
principal and interest on a Mortgage Asset as adjusted in accordance with
changes in the Mortgage Interest Rate pursuant to the provisions of the Mortgage
Note for an adjustable rate Mortgage Asset.
"Mortgage" shall mean the mortgage, deed of trust or other
instrument securing a Mortgage Note, which creates a first, second or third lien
on the fee in real property or in a leasehold interest securing the Mortgage
Note and, if applicable, the assignment of rents and leases related thereto.
"Mortgage Asset" shall mean a Home Equity Mortgage Asset, a
High LTV Asset, an FHA Asset or a SM/MU Asset, including without limitation all
Previously Pledged Mortgage Assets which the Custodian has been instructed to
hold for the Lender pursuant to the applicable Custodial Agreement, and which
Mortgage Asset includes, without limitation, (i) a Mortgage Note and related
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Mortgage and (ii) all right, title and interest of the Borrower in and to the
Mortgaged Property covered by such Mortgage.
"Mortgage Asset Documents" shall mean, with respect to a
Mortgage Asset, the documents comprising the Mortgage File for such Mortgage
Asset.
"Mortgage Asset Schedule" shall mean a schedule of Mortgage
Assets containing the following information with respect to each Mortgage Asset,
to be delivered by the Borrower to the Lender pursuant to Section 2.03(a)
hereof: (i) the Borrower's Mortgage Asset number; (ii) the Mortgagor's name and
the street address; (iii) a code indicating whether such Mortgage Asset is a
Home Equity Mortgage Asset, a High LTV Asset, an FHA Asset or an SM/MU Asset;
(iv) the current principal balance of the Mortgage Note; (v) the original
principal amount of the Mortgage Note with respect to any Mortgage Asset
originated by the Borrower and the principal amount of the Mortgage Note
purchased by the Borrower with respect to a Mortgage Asset acquired by the
Borrower subsequent to its origination; (vi) the combined loan-to-value ratio as
of the date of the origination of the related Mortgage Asset; (vii) the paid
through date; (viii) the mortgage interest rate; (ix) the final maturity date
under the Mortgage Note; (x) the Monthly Payment; (xi) the lien position of such
Mortgage Asset; (xii) a field indicating whether the Mortgage Asset is a
Delinquent Mortgage Asset; and (xiii) such other tape fields as shall be
mutually agreed upon by Borrower and Lender.
"Mortgage File" shall have the meaning assigned thereto in
the First Trust Custodial Agreement.
"Mortgage Interest Rate" means the annual rate of interest
borne on a Mortgage Note, which shall be adjusted from time to time with respect
to adjustable rate Mortgage Assets.
"Mortgage Note" shall mean the original executed promissory
note or other evidence of the indebtedness of a mortgagor/borrower with respect
to a Mortgage Asset.
"Mortgaged Property" shall mean the real property
(including all improvements, buildings, fixtures, building equipment and
personal property thereon and all additions, alterations and replacements made
at any time with respect to the foregoing) and all other collateral securing
repayment of the debt evidenced by a Mortgage Note.
"Mortgagor" shall mean the obligor on a Mortgage Note.
"Multiemployer Plan" shall mean a multiemployer plan
defined as such in Section 3(37) of ERISA to which contributions have been or
are required to be made by the Borrower or any ERISA Affiliate and that is
covered by Title IV of ERISA.
"Other Agreements" shall mean any other agreement between
Borrower and the Lender or any of its Affiliates, whether now existing or
hereafter entered into, as any such agreement may be amended, supplemented or
otherwise modified from time to time.
"Pass-Through Transfer" shall mean the sale or transfer of
some or all of the Eligible Assets to a trust to be formed as part of a publicly
or privately traded pass-through transaction, which transaction may contain
certain requirements of and be rated by one or more statistical credit rating
agencies.
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"Payoff" shall mean, with respect to any Mortgage Asset,
repayment by the applicable Mortgagor of all outstanding principal thereunder
together with all interest accrued thereon to the date of such repayment and any
penalty or premium thereon.
"Payoff Proceeds" shall mean, with respect to any Mortgage
Asset, all funds received from the applicable Mortgagor in connection with a
Payoff.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
or any entity succeeding to any or all of its functions under ERISA.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, limited liability company,
trust, unincorporated association or government (or any agency, instrumentality
or political subdivision thereof).
"Plan" shall mean an employee benefit or other plan
established or maintained by the Borrower or any ERISA Affiliate and covered by
Title IV of ERISA, other than a Multiemployer Plan.
"Post-Default Rate" shall mean, in respect of any principal
of any Loan or any other amount under this Loan Agreement or any other Loan
Document that is not paid when due to the Lender (whether at stated maturity, by
acceleration, by optional or mandatory prepayment or otherwise), a rate per
annum during the period from and including the due date to but excluding the
date on which such amount is paid in full equal to 2.5% per annum plus the Prime
Rate except that payments made one Business Day late shall bear interest at the
Federal Funds rate then in effect plus any customary margin.
"Previously Pledged Mortgage Asset" shall mean a Mortgage
Asset pledged to the Lender on or after January 1, 1997, under the Existing
Agreement, which Mortgage Asset remained pledged to the Lender immediately prior
to the Effective Date.
"Prime Rate" shall mean the prime rate announced to be in
effect from time to time, as published as the average rate in The Wall Street
Journal.
"Principal Paydowns" shall mean, with respect to any
Mortgage Asset, any payment or other recovery of principal on such Mortgage
Asset (other than Payoff Proceeds), which is received by or on behalf of the
Borrower, including any penalty or premium thereon.
"Property" shall mean any right or interest in or to
property of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible.
"Reference Bank" shall mean three major banks that are
engaged in the London interbank market, as selected by the Lender.
"Requirement of Law" shall mean as to any Person, the
certificate of incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Responsible Officer" shall mean, as to any Person, the
chief executive officer or, with respect to financial matters, the chief
financial officer of such Person.
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"SEC" shall mean the Securities and Exchange Commission and
any successor thereto.
"Secured Obligations" shall have the meaning provided in
Section 4.01(c) hereof.
"Servicer" shall have the meaning provided in Section
11.15(c) hereof.
"Servicing Agreement" shall have the meaning provided in
Section 11.15 hereof.
"Servicing Records" shall have the meaning provided in
Section 11.15(b) hereof.
"Shareholders' Equity" shall mean the sum of (i) the
aggregate "assets" of Borrower or Guarantor, as applicable, less the aggregate
"liabilities" of Borrower or Guarantor, as applicable, with the term "asset"
having the meaning ascribed to such term by GAAP and the term "liabilities"
being those obligations or liabilities of Borrower or Guarantor, as applicable,
which, in accordance with GAAP, would be included on the liability side of
Borrower's, or Guarantor's, as applicable, balance sheet plus (ii) the
Subordinated Debt of Borrower or Guarantor, as applicable, in accordance with
GAAP plus (iii), in the case of the Borrower, advances or loans from the
Guarantor, minus (a) any surplus from the write-up of assets subsequent to
December 31, 1996; (b) goodwill, including any amounts (however designated on
the balance sheet) representing the cost of acquisitions of Subsidiaries in
excess of underlying tangible assets; (c) patents, trademarks, copyrights; (d)
leasehold improvements not recoverable at the expiration of a lease; (e)
deferred charges (including, but not limited to, unamortized debt discount and
expense, organization expenses and experimental and development expenses, but
excluding prepaid expenses); and (f) advances or loans to shareholders, officers
or Affiliates (other than any Subsidiary of the Borrower) of such Person.
"SM/MU Asset" shall mean all of Borrower's right, title and
interest in and to a small residential multi-family residence or mixed-use
mortgage loan which bears a fixed rate of interest and which was underwritten in
accordance with the underwriting guidelines attached as Exhibit F or otherwise
approved by Lender, and which shall not exceed $1,000,000 in original principal
balance, unless otherwise agreed to by Lender and Borrower.
"Subordinated Debt" shall mean Indebtedness of the Borrower
or Guarantor, as applicable, which (a) is subordinated to other Indebtedness and
liabilities of the Borrower or Guarantor, (b) has a maturity of at least three
years and (c) as a percentage of total Shareholder's Equity does not exceed 50%.
"Subsidiary" shall mean, with respect to any Person, any
corporation, partnership or other entity of which at least a majority of the
securities or other ownership interests having by the terms thereof ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions of such corporation, partnership or other entity
(irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person.
"Termination Date" shall mean December 31, 1997 or such
earlier date on which this Loan Agreement shall terminate in accordance with the
provisions hereof or by operation of law or such later date established in
accordance with Section 2.11 hereof.
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"Underwriting Guidelines" shall mean the underwriting
guidelines as in effect on the Effective Date, attached as Exhibits E , F and G
hereto, except that with respect to Schedule I, "Underwriting Guidelines" shall
mean the underwriting guidelines in effect as of the date of origination of the
Mortgage Asset.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect on the date hereof in the State of New York; provided that if
by reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than New York, "Uniform Commercial Code" shall mean the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such perfection or effect of perfection or non-perfection.
"Unsecured Debt" shall mean as of any date of
determination, the dollar amount of all obligations and liabilities of Borrower
which, (i) in accordance with GAAP, would be included in determining total
liabilities as shown on the liability side of Borrower's balance sheet and (ii)
are not secured by the grant of a lien upon or security interest in, any
collateral.
"Unsecured Debt to Equity Ratio" shall mean the ratio of
total Unsecured Debt of Borrower to its Shareholders' Equity.
"Wet Loan Custodial Agreement" shall have the meaning set
forth in Annex II.
"Wet Loan Custodian" shall have the meaning set forth in
Annex II.
"Whole Loan Transfer" shall mean the sale or transfer to a
third party of some or all of the Eligible Assets in a whole loan format or a
certificated participation format.
1.02 Accounting Terms and Determinations. Except as
otherwise expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Lender hereunder shall be
prepared, in accordance with GAAP.
Section 2. Loans and Prepayments.
2.01 Loans.
(a) Subject to fulfillment of the conditions precedent set
forth in Sections 5.01 and 5.02 hereof, and provided that no Default shall have
occurred and be continuing hereunder, the Lender agrees from time to time, on
the terms and conditions of this Loan Agreement, to make loans (individually, a
"Loan"; collectively, the "Loans") to the Borrower in Dollars, from and
including the Effective Date to and including the Termination Date in an
aggregate principal amount at any one time outstanding up to but not exceeding
the Maximum Credit as in effect from time to time.
(b) Subject to the terms and conditions of this Loan
Agreement, during such period the Borrower may borrow, repay and reborrow
hereunder.
(c) In no event shall a Loan be made when any Default or
Event of Default has occurred and is continuing.
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(d) In no event shall a Loan be made if making such Loan
would cause the Maximum Facility Borrowings to be exceeded.
2.02 Evidence of Indebtedness.
The Loans made by the Lender shall be evidenced by notation
thereof by the Lender on its books and records, which notation of books and
records shall be deemed conclusive evidence of the indebtedness owed Lender by
Borrower hereunder absent manifest error. The date, amount and interest rate of
each Loan made by the Lender to the Borrower, and each payment made on account
of the principal thereof, shall be recorded by the Lender on its books; provided
that the failure of the Lender to make any such recordation shall not affect the
obligations of the Borrower to make a payment when due of any amount owing
hereunder in respect of the Loans. Upon request of the Lender, the Borrower
shall execute and deliver a promissory note evidencing the indebtedness of the
Borrower incurred hereunder. The failure of the Lender to make such a request
shall in no way impair the Lender's rights or reduce the Borrower's obligations
hereunder.
2.03 Procedure for Borrowing.
(a) The Borrower may request a borrowing hereunder, on any
Business Day during the period from and including the Effective Date to and
including the Termination Date, by delivering to the Lender, with a copy to the
Custodian, an irrevocable written request for borrowing substantially in the
form of Exhibit D hereto ("Request for Borrowing"), which Request for Borrowing
must be received by the Lender prior to 4:00 p.m., New York City time at least
one (1) Business Day prior to the requested Funding Date. Such Request for
Borrowing shall (i) attach a Mortgage Asset Schedule (in hard copy, accompanied
by a data transmission in a form agreed to by the Borrower and the Lender)
identifying the Eligible Assets that the Borrower proposes to pledge to the
Lender and to be included in the Borrowing Base in connection with such
borrowing (ii) specify the requested Funding Date, (iii) such other matters as
may be specified on the form of the Request for Borrowing or as may be
reasonably requested by Lender from time to time in accordance with the terms
hereof and (iv) shall be signed by one of the officers of the Borrower
identified in Schedule 4 hereto as it may be amended from time to time in
accordance with Section 7.26 hereof. Each Loan (A) secured by Home Equity
Mortgage Assets or High LTV Assets shall be in a minimum amount equal to
$1,000,000 and (B) secured by FHA Assets shall be in a minimum amount equal to
$500,000. Unless otherwise agreed to by Lender, no single Request for Borrowing
shall include a pledge of both (i) Home Equity Mortgage Assets, High LTV Assets
and/or FHA Assets and (ii) SM/MU Assets. Borrower shall indemnify Lender and
hold it harmless against any Losses incurred by Lender as a result of any
failure by Borrower to timely deliver the Eligible Assets subject to such
Request for Borrowing.
(b) Upon the Borrower's Request for Borrowing pursuant to
Section 2.03(a), the Lender shall, assuming all conditions precedent set forth
in Section 5.01 and 5.02 have been met and provided no Default shall have
occurred and be continuing, make a Loan to the Borrower on the requested Funding
Date, in the amount so requested.
(c) The Borrower shall deliver (or cause to be delivered)
and release to the Custodian no later than 4:00 p.m., New York City time, three
(3) Business Days prior to the requested Funding Date, the Mortgage File
pertaining to each Eligible Asset to be pledged to the Lender and included in
the Borrowing Base on such requested Funding Date, in accordance with the terms
and conditions of the applicable Custodial Agreement.
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(d) Pursuant to the First Trust Custodial Agreement, First
Trust shall deliver to the Lender and the Borrower, no later than 1:00 p.m., New
York City time, on a Funding Date, a Trust Receipt (as defined in the applicable
Custodial Agreement) in respect of all Mortgage Assets pledged to the Lender on
such Funding Date, and a Mortgage Asset Schedule and Exception Report. Subject
to Section 5 hereof, such borrowing will then be made available to the Borrower
by the Lender transferring, via wire transfer to the account designated by the
Borrower, in the aggregate amount of such borrowing in funds immediately
available to the Borrower.
(e) Upon the Borrower's request, the Lender shall deliver
to the Borrower (i) prior to the close of business on each Business Day, by fax,
a daily activity report with respect to the activity under the facility provided
for hereunder, in such form and containing such information as the Borrower and
Lender may from time to time mutually agree, and (ii) not less frequently than
weekly, by fax, a summary of the activity disclosed for such week in the daily
activity reports delivered pursuant to clause (i) of this Section 2.03(e).
2.04 Limitation on Types of Loans; Illegality. Anything
herein to the contrary notwithstanding, if, on or prior to the determination of
any LIBO Base Rate:
(a) the Lender determines, which determination shall be
conclusive, that quotations of interest rates for the relevant
deposits referred to in the definition of "LIBO Base Rate" in Section
1.01 hereof are not being provided in the relevant amounts or for the
relevant maturities for purposes of determining rates of interest for
Loans as provided herein; or
(b) the Lender determines, in good faith, which
determination shall be conclusive, that the relevant rate of interest
referred to in the definition of "LIBO Base Rate" in Section 1.01
hereof upon the basis of which the rate of interest for Loans is to
be determined is not likely adequately to cover the cost to the
Lender of making or maintaining Loans; or
(c) it becomes unlawful for the Lender to honor its
obligation to make or maintain Loans hereunder using a LIBO Rate;
then the Lender shall give the Borrower prompt notice thereof and, so long as
such condition remains in effect, the Lender shall, following discussions with
the Borrower, select in good faith an index that approximates as closely as
reasonably practicable the LIBO Base Rate.
2.05 Repayment of Loans; Interest.
(a) The Borrower hereby promises to repay in full on the
Termination Date the then aggregate outstanding principal amount of the Loans.
(b) The Borrower hereby promises to pay to the Lender
interest on the unpaid principal amount of each Loan for the period from and
including the date of such Loan to but excluding the date such Loan shall be
paid in full, at a rate per annum equal to the LIBO Rate plus the Applicable
Margin. Notwithstanding the foregoing, the Borrower hereby promises to pay to
the Lender interest at the applicable Post-Default Rate on any principal of any
Loan and on any other amount payable by the Borrower hereunder that shall not be
paid in full when due (whether at stated maturity, by acceleration or by
mandatory prepayment or otherwise) for the period from and including the due
date thereof to but excluding the date the same is paid in full. Accrued
interest on each Loan shall be payable monthly 25th calendar day of each month
and for the last month of the Loan
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Agreement on the 25th calendar day of such last month and on the Termination
Date, except that interest payable at the Post-Default Rate shall accrue daily
and shall be payable upon such accrual. Promptly after the determination of any
interest rate provided for herein or any change therein, the Lender shall give
notice thereof to the Borrower.
2.06 Mandatory Prepayments or Pledge.
(a) If at any time the aggregate outstanding principal
amount of Loans exceeds the Borrowing Base (a "Borrowing Base Deficiency"), as
determined by the Lender and notified to the Borrower on any Business Day, the
Borrower shall no later than one Business Day after receipt of such notice,
either prepay the Loans in part or in whole or pledge additional Eligible Assets
(which Collateral shall be in all respects acceptable to the Lender) to the
Lender, such that after giving effect to such prepayment or pledge the aggregate
outstanding principal amount of the Loans does not exceed the Borrowing Base.
(b) No later than two (2) Business Days following the
Borrower's receipt of any Payoff Proceeds, the Borrower shall prepay all Loans
and accrued and unpaid interest thereon in respect of the Mortgage Assets
subject to such Payoff.
(c) The Borrower shall prepay the Loans on the 25th
calendar day of each month (or if such 25th calendar day is not a Business Day,
the next succeeding Business Day), in an amount equal to all Principal Paydowns
received by the Borrower from the 19th calendar day of the preceding month
through and including the 18th calendar day of the month during which such
prepayment is due. Each Principal Paydown received with respect to a particular
Mortgage Asset shall be applied to reduce the Loan Balance with respect to such
Mortgage Asset.
(d) The Borrower shall apply the net proceeds of any
securitization of pledged Mortgage Assets to prepay the Loan Balance with
respect to such Mortgage Assets and accrued and unpaid interest thereon, on the
date of settlement of any securitization of Mortgage Assets.
(e) The Borrower shall apply the net proceeds of any whole
loan sale of any Mortgage Asset to prepay the Loan Balance with respect to such
Mortgage Asset, and accrued and unpaid interest thereon, on the date of
settlement of any such whole loan sale. The amount to be paid to the Lender
pursuant to this Section 2.06(e) shall be paid directly to the Lender by the
purchaser of such Mortgage Asset.
(f) The Borrower shall pay the Loan Balance for any
Mortgage Asset in respect of which the related Mortgage Note has been
extinguished under relevant state law in connection with a judgment of
foreclosure or foreclosure sale or otherwise, no later than one (1) Business Day
after the date such Mortgage Note is extinguished.
2.07 Optional Prepayments. The Loans are prepayable at the
end of any Interest Period without premium or penalty, in whole or in part, and
may be prepaid on any other date subject to Section 2.08 hereof. Any amounts
prepaid shall be applied to repay the outstanding principal amount of any Loans
(together with interest thereon) until paid in full. Amounts repaid may be
reborrowed in accordance with the terms of this Loan Agreement. If the Borrower
intends to prepay a Loan in whole or in part from a source other than the
proceeds of the Mortgage Assets, the Borrower shall give three (3) Business
Days' prior written notice thereof to the Lender. If such notice is given, and
the amount specified in such notice is not paid on the date specified therein,
the Borrower shall
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indemnify the Lender and hold the Lender harmless from any loss or expense which
the Lender may sustain or incur as a result of such notice to prepay.
2.08 Indemnity.
If the Borrower makes a prepayment of the Loans on any day
which is not the last day of the Interest Period with respect to such Loan, the
Borrower shall indemnify the Lender and hold the Lender harmless from any actual
loss or expense which the Lender may sustain or incur arising from the
reemployment of funds obtained by the Lender to maintain the Loans hereunder
(but excluding loss of profit) or from fees payable to terminate the deposits
from which such funds were obtained. This Section 2.08 shall survive for ninety
(90) days following termination of Loan Agreement and payment of the Note.
2.09 Requirements of Law.
(a) If any Requirement of Law or any change in the
interpretation or application thereof or compliance by the Lender with any
request or directive (whether or not having the force of law) from any central
bank or other Governmental Authority made after the date that any Lender becomes
a Lender party to this Loan Agreement:
(i) shall subject the Lender to any tax of any kind
whatsoever with respect to this Loan Agreement, the Note or any Loan
made by it (excluding net income and franchise taxes) or change the
basis of taxation of payments to the Lender in respect thereof;
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities in or for the account
of, advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of the Lender which is not
otherwise included in the determination of the LIBO Base Rate
hereunder;
(iii) shall impose on the Lender any other condition;
and the result of any of the foregoing is to increase the cost to the Lender, by
an amount which the Lender deems to be material, of making, continuing or
maintaining any Loan or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrower shall promptly pay the Lender such
additional amount or amounts as will compensate the Lender for such increased
cost or reduced amount receivable.
(b) If the Lender shall have determined that the adoption
of or any change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by the Lender or any
corporation controlling the Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made after the date that any Lender becomes a Lender party to this
Loan Agreement shall have the effect of reducing the rate of return on the
Lender's or such corporation's capital as a consequence of its obligations
hereunder to a level below that which the Lender or such corporation could have
achieved but for such adoption or change (taking into consideration the Lender's
or such corporation's policies with respect to capital adequacy) by an amount
deemed by the Lender to be material, then from time to time, the Borrower shall
promptly pay to the Lender such additional amount or amounts as will compensate
the Lender for such reduction.
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(c) If the Lender becomes entitled to claim any additional
amounts pursuant to this subsection, it shall promptly notify the Borrower of
the event by reason of which it has become so entitled. A certificate as to any
additional amounts payable pursuant to this subsection submitted by the Lender
to the Borrower shall be conclusive in the absence of manifest error.
(d) The Lender represents and warrants to the Borrower that
it is a United States Person (as defined in Section 7701(a)(30) of the Code) for
federal income tax purposes.
2.10 Taxes. (a) All payments made by the Borrower under
this Agreement and the Note shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any Governmental Authority, excluding net income taxes and franchise taxes
(imposed in lieu of net income taxes) imposed on the Lender as a result of a
present or former connection between the Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
the Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or any Note). If any such
non-excluded taxes, levies, imposts, duties, charges, fees deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to the Lender hereunder or under the Note, the amounts so payable to the
Lender shall be increased to the extent necessary to yield to the Lender (after
payment of all Non-Excluded Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement, provided,
however, that the Borrower shall not be required to increase any such amounts
payable to the Lender that is not organized under the laws of the United States
of America or a state thereof if the Lender fails to comply with the
requirements of clause (b) of this Section. Whenever any Non-Excluded Taxes are
payable by the Borrower, as promptly as possible thereafter the Borrower shall
send to the Agent for its own account or for the account of such Lender, as the
case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower fails to pay any Non-Excluded
Taxes when due to the appropriate taxing authority or fails to remit to the
Lender the required receipts or other required documentary evidence, the
Borrower shall indemnify the Lender for any incremental taxes, interest or
penalties that may become payable by the Lender as a result of any such failure.
The agreements in this Section shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.
(b) If the Lender hereunder (or an assignee or participant
that acquires an interest hereunder in accordance with Section 11.14 hereof)
that is not incorporated under the laws of the United States of America or a
state thereof shall:
(i) deliver to the Borrower (A) two duly completed copies
of United States Internal Revenue Service Form 1001 or 4224, or
successor applicable form, as the case may be, and (B) an Internal
Revenue Service Form W-8 or W-9, or successor applicable form, as the
case may be;
(ii) deliver to the Borrower two further copies of any such
form or certification on or before the date that any such form or
certification expires or becomes obsolete and after the occurrence of
any event requiring a change in the most recent form previously
delivered by it to the Borrower; and
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(iii) obtain such extensions of time for filing and
complete such forms or certifications as may reasonably be requested
by the Borrower;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower. Such Lender
shall certify (i) in the case of a Form 1001 or 4224, that it is entitled to
receive payments under this Agreement without deduction or withholding of any
United States federal income taxes and (ii) in the case of a Form W-8 or W-9,
that it is entitled to an exemption from United States backup withholding tax.
Each Person that shall become a Lender or a participant pursuant to Section
11.14 hereof shall, upon the effectiveness of the related transfer, be required
to provide all of the forms and statements required pursuant to this Section,
provided that in the case of a participant, such participant shall furnish all
such required forms and statements to the Lender from which the related
participation shall have been purchased.
2.11 Extension of Termination Date. At the request of the
Borrower, received no later than 30 days prior to the then current Termination
Date, the Lender may in its sole discretion extend the Termination Date for a
period of 364 days by giving written notice of such extension to the Borrower no
later than 20 days prior to the then current Termination Date.
Section 3. Payments; Computations; Etc.
3.01 Payments.
(a) Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the Borrower
under this Loan Agreement, shall be made in Dollars, in immediately available
funds, without deduction, set-off or counterclaim, to the Lender at the account
designated by the Lender, not later than 1:00 p.m., New York City time, on the
date on which such payment shall become due (and each such payment made after
such time on such due date shall be deemed to have been made on the next
succeeding Business Day). The Borrower acknowledges that it has no rights of
withdrawal from the foregoing account.
(b) Except to the extent otherwise expressly provided
herein, if the due date of any payment under this Loan Agreement would otherwise
fall on a day that is not a Business Day, such date shall be extended to the
next succeeding Business Day, and interest shall be payable for any principal so
extended for the period of such extension.
3.02 Computations. Interest on the Loans shall be computed
on the basis of a 360-day year for the actual days elapsed (including the first
day but excluding the last day) occurring in the period for which payable.
Section 4. Collateral Security.
4.01 Collateral; Security Interest.
(a) Pursuant to the applicable Custodial Agreement, the
Custodian shall hold the Mortgage Asset Documents as exclusive bailee and agent
for the Lender pursuant to terms of the applicable Custodial Agreement and shall
deliver to the Lender Trust Receipts (as defined in the applicable Custodial
Agreement) each to the effect that it has reviewed such Mortgage Asset
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Documents in the manner and to the extent required by the applicable Custodial
Agreement and identifying any deficiencies in such Mortgage Asset Documents as
so reviewed.
(b) All of the Borrower's right, title and interest in, to
and under each of the following items of property, whether now owned or
hereafter acquired, now existing or hereafter created and wherever located, is
hereinafter referred to as the "Collateral":
(i) all Mortgage Assets which either Custodian has been
instructed to hold for the Lender pursuant to the applicable
Custodial Agreement;
(ii) all Mortgage Asset Documents for such Mortgage Assets,
including without limitation all promissory notes, and all Servicing
Records (as defined in Section 11.15(b) below), servicing agreements
and any other collateral pledged or otherwise relating to such
Mortgage Assets, together with all files, documents, instruments,
surveys, certificates, correspondence, appraisals, computer programs,
computer storage media, accounting records and other books and
records relating thereto;
(iii) 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 such Mortgage Asset and all claims and
payments thereunder;
(iv) all other insurance policies and insurance proceeds
relating to any such Mortgage Asset or the related Mortgaged Property
including without limitation any FHA Mortgage Insurance;
(v) all Interest Rate Protection Agreements relating to
such Mortgage Assets;
(vi) any account established by either Custodian for the
benefit of the Lender pursuant to either Custodial Agreement and the
balance from time to time standing to the credit of such account and
all rights with respect thereto;
(vii) all "collateral", however defined, under any Other
Agreements;
(viii) all Insured Closing Letters and rights relating
thereto;
(ix) all rights under any errors and omissions policies of
the Settlement Agents;
(x) all "general intangibles" as defined in the Uniform
Commercial Code relating to or constituting any and all of the
foregoing; and
(xi) any and all replacements, substitutions, distributions
on or proceeds of any and all of the foregoing.
(c) The Borrower hereby assigns, pledges and grants a
security interest in all of its right, title and interest in, to and under the
Collateral to the Lender to secure the repayment of principal of and interest on
all Loans and all other amounts owing to the Lender hereunder, under the Note
and under the other Loan Documents (collectively, the "Secured Obligations").
The Borrower agrees to ▇▇▇▇ its computer records and tapes to evidence the
interests granted to the Lender hereunder.
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(d) Solely for purposes of FHA Regulations relating to FHA
Assets appearing at 24 C.F.R. Section 203.430 through 203.438, the Borrower
shall be deemed to have finally sold to the Lender each FHA Asset included from
time to time in the Borrowing Base. The Lender shall be the "purchasing
mortgagee" with respect to each such FHA Asset and shall have all rights of a
purchasing mortgagee with respect thereto; provided that the Borrower shall
remain liable to perform all obligations of the "servicing mortgagee" with
respect thereto. The Borrower shall take all actions the Lender deems necessary
or advisable to give effect to the foregoing. Upon the release by the Lender of
the Lien created by this Loan Agreement on such FHA Asset, the Lender shall be
deemed to have finally sold such FHA Asset to the party designated by the
Borrower as the "purchasing mortgagee" on behalf of the Lender pursuant to the
applicable Custodial Agreement.
4.02 Further Documentation. At any time and from time to
time, upon the written request of the Lender, and at he sole expense of the
Borrower, the Borrower will promptly and duly execute and deliver, or will
promptly cause to be executed and delivered, such further instruments and
documents and take such further action as the Lender may reasonably request for
the purpose of obtaining or preserving the full benefits of this Loan Agreement
and of the rights and powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the Uniform Commercial
Code in effect in any jurisdiction with respect to the Liens created hereby. The
Borrower also hereby authorizes the Lender to file any such financing or
continuation statement without the signature of the Borrower to the extent
permitted by applicable law. A carbon, photographic or other reproduction of
this Loan Agreement shall be sufficient as a financing statement for filing in
any jurisdiction.
4.03 Changes in Locations, Name, etc. The Borrower shall
not (i) change the location of its chief executive office/chief place of
business from that specified in Section 6 hereof or (ii) change its name,
identity or corporate structure (or the equivalent) or change the location where
it maintains its records with respect to the Collateral unless it shall have
given the Lender at least 30 days prior written notice thereof and shall have
delivered to the Lender all Uniform Commercial Code financing statements and
amendments thereto as the Lender shall request and taken all other actions
deemed necessary by the Lender to continue its perfected status in the
Collateral with the same or better priority.
4.04 Lender's Appointment as Attorney-in-Fact.
(a) The Borrower hereby irrevocably constitutes and
appoints the Lender and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Borrower and in the name of
the Borrower or in its own name, from time to time in the Lender's discretion,
for the purpose of carrying out the terms of this Loan Agreement, to take any
and all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this Loan
Agreement, and, without limiting the generality of the foregoing, the Borrower
hereby gives the Lender the power and right, on behalf of the Borrower, without
assent by, but with notice to, the Borrower, if an Event of Default shall have
occurred and be continuing, to do the following:
(i) in the name of the Borrower or its own name, or
otherwise, to take possession of and endorse and collect any checks,
drafts, notes, acceptances or other instruments for the payment of
moneys due under any mortgage insurance or with respect to any other
Collateral and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Lender for the purpose of collecting any and all
such
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moneys due under any such mortgage insurance or with respect to any
other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed
on or threatened against the Collateral; provided that if such taxes
are being contested in good faith and by appropriate proceedings, the
Lender shall consult with the Borrower before making any such
payment; and
(iii) (A) to direct any party liable for any payment under
any Collateral to make payment of any and all moneys due or to become
due thereunder directly to the Lender or as the Lender shall direct;
(B) to ask or demand for, collect, receive payment of and receipt
for, any and all moneys, claims and other amounts due or to become
due at any time in respect of or arising out of any Collateral; (C)
to sign and endorse any invoices, assignments, verifications, notices
and other documents in connection with any of the Collateral; (D) to
commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the
Collateral or any thereof and to enforce any other right in respect
of any Collateral; (E) to defend any suit, action or proceeding
brought against the Borrower with respect to any Collateral; (F) to
settle, compromise or adjust any suit, action or proceeding described
in clause (E) above and, in connection therewith, to give such
discharges or releases as the Lender may reasonably deem appropriate;
and (G) generally, to sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral as fully
and completely as though the Lender were the absolute owner thereof
for all purposes, and to do, at the Lender's option and the
Borrower's expense, at any time, and from time to time, all acts and
things which the Lender reasonably deems necessary to protect,
preserve or realize upon the Collateral and the Lender's Liens
thereon and to effect the intent of this Loan Agreement, all as fully
and effectively as the Borrower might do.
The Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) The Borrower also authorizes the Lender, at any time
and from time to time, to execute, in connection with any sale provided for in
Section 4.07 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
(c) The powers conferred on the Lender are solely to
protect the Lender's interests in the Collateral and shall not impose any duty
upon the Lender to exercise any such powers. The Lender shall be accountable
only for amounts that it actually receives as a result of the exercise of such
powers, and neither the Lender nor any of its officers, directors, or employees
shall be responsible to the Borrower for any act or failure to act hereunder,
except for its own gross negligence or willful misconduct.
4.05 Performance by Lender of Borrower's Obligations. If
the Borrower fails to perform or comply with any of its agreements contained in
the Loan Documents, the Lender may itself perform or comply, or otherwise cause
performance or compliance, with such agreement, and the expenses of the Lender
incurred in connection with such performance or compliance, together with
interest thereon at a rate per annum equal to the Post-Default Rate, shall be
payable by the Borrower to the Lender on demand and shall constitute Secured
Obligations. The Lender shall use its reasonable efforts to give the Borrower
prior notice (but in any event prompt notice) of any actions taken pursuant to
this Section 4.05.
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4.06 Proceeds. If an Event of Default shall occur and be
continuing, (a) all proceeds of Collateral received by the Borrower consisting
of cash, checks and other near-cash items shall be held by the Borrower in trust
for the Lender, segregated from other funds of the Borrower, and shall forthwith
upon receipt by the Borrower be turned over to the Lender in the exact form
received by the Borrower (duly endorsed by the Borrower to the Lender, if
required) and (b) any and all such proceeds received by the Lender (whether from
the Borrower or otherwise) may, in the sole discretion of the Lender, be held by
the Lender as collateral security for, and/or then or at any time thereafter may
be applied by the Lender against, the Secured Obligations (whether matured or
unmatured), such application to be in such order as the Lender shall elect. Any
balance of such proceeds remaining after the Secured Obligations shall have been
paid in full and this Loan Agreement shall have been terminated shall be paid
over to the Borrower or to whomsoever may be lawfully entitled to receive the
same. For purposes hereof, proceeds shall include, but not be limited to, all
principal and interest payments, all prepayments and payoffs, insurance claims,
condemnation awards, sale proceeds, real estate owned rents and any other income
and all other amounts received with respect to the Collateral.
4.07 Remedies. If an Event of Default shall occur and be
continuing, the Lender may exercise, in addition to all other rights and
remedies granted to it in this Loan Agreement and in any other instrument or
agreement securing, evidencing or relating to the Secured Obligations, all
rights and remedies of a secured party under the Uniform Commercial Code.
Without limiting the generality of the foregoing, the Lender without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Borrower or any other Person (each and all of which demands, presentments,
protests, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
an option or options to purchase, or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels or as an entirety at public or private sale or sales, at any
exchange, broker's board or office of the Lender or elsewhere upon such terms
and conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. The Lender shall have the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or equity of
redemption in the Borrower, which right or equity is hereby waived or released.
The Borrower further agrees, at the Lender's request, to assemble the Collateral
and make it available to the Lender at places which the Lender shall reasonably
select, whether at the Borrower's premises or elsewhere. The Lender shall apply
the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred therein or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the Lender
hereunder, including without limitation reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Secured Obligations, in
such order as the Lender may elect, and only after such application and after
the payment by the Lender of any other amount required or permitted by any
provision of law, including without limitation Section 9-504(1)(c) of the
Uniform Commercial Code, need the Lender account for the surplus, if any, to the
Borrower. To the extent permitted by applicable law, the Borrower waives all
claims, damages and demands it may acquire against the Lender arising out of the
exercise by the Lender of any of its rights hereunder, other than those claims,
damages and demands arising from the gross negligence or willful misconduct of
the Lender. If any notice of a proposed sale or other disposition of Collateral
shall be required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition. The Borrower shall
remain liable for any deficiency (plus accrued interest thereon as contemplated
pursuant to Section 2.05(b) hereof) if the proceeds of any sale or other
disposition of the
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Collateral are insufficient to pay the Secured Obligations and the fees and
disbursements of any attorneys employed by the Lender to collect such
deficiency.
4.08 Limitation on Duties Regarding Presentation of
Collateral. The Lender's duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Uniform Commercial Code or otherwise, shall be to deal with it in the
same manner as the Lender deals with similar property for its own account.
Neither the Lender nor any of its directors, officers or employees shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of the Borrower or
otherwise.
4.09 Powers Coupled with an Interest. All authorizations
and agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
4.10 Release of Security Interest. If no Default has
occurred and is continuing or will occur as a result of the following, the
Lender agrees to cooperate with the Borrower with respect to any sale not
prohibited by this Loan Agreement and promptly take such action and execute and
deliver such instruments and documents necessary to release the Liens and
security interests created hereby relating to any of the assets or property
affected by any such sale, including, without limitation, any necessary Uniform
Commercial Code amendment, termination or partial amendment. Upon termination of
this Loan Agreement and repayment to the Lender of all Secured Obligations and
the performance of all obligations under the Loan Documents the Lender shall
release its security interest in any remaining Collateral; provided that if any
payment, or any part thereof, of any of the Secured Obligations is rescinded or
must otherwise be restored or returned by the Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower, or upon
or as a result of the appointment of a receiver, intervenor or conservator of,
or a trustee or similar officer for, the Borrower or any substantial part of its
Property, or otherwise, this Loan Agreement, all rights hereunder and the Liens
created hereby shall continue to be effective, or be reinstated, as though such
payments had not been made.
Section 5. Conditions Precedent.
5.01 Initial Loan. The obligation of the Lender to make its
initial Loan hereunder is subject to the satisfaction, immediately prior to or
concurrently with the making of such Loan, of the condition precedent that the
Lender shall have received all of the following documents, each of which shall
be satisfactory to the Lender and its counsel in form and substance:
(a) Loan Documents.
(i) Loan Agreement. The Lender shall have received this
Loan Agreement, executed and delivered by a duly authorized officer
of the Borrower;
(ii) Custodial Agreements. The First Trust Custodial
Agreement, duly executed and delivered by the Borrower and the
applicable Custodian. In addition, the Borrower shall have taken such
other action as the Lender shall have reasonably requested in order
to perfect the security interests created pursuant to the Loan
Agreement;
(b) Organizational Documents. A good standing certificate
and certified copies of the charter and by-laws (or equivalent
documents) of the Borrower and of all corporate or other
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authority for the Borrower with respect to the execution, delivery
and performance of the Loan Documents and each other document to be
delivered by the Borrower from time to time in connection herewith
(and the Lender may conclusively rely on such certificate until it
receives notice in writing from the Borrower to the contrary);
(c) Affiliate Guaranty. The Affiliate Guaranty, duly
completed and executed.
(d) Legal Opinion. A legal opinion of counsel to the
Borrower, substantially in the form attached hereto as Exhibit C;
(e) Mortgage Asset Schedule and Exception Report. A
Mortgage Asset Schedule and Exception Report, dated the Effective
Date, from the Custodian, duly completed;
(f) Servicing Agreement(s). Any Servicing Agreement,
certified as a true, correct and complete copy of the original, with
the letter of any applicable third-party Servicer consenting to
termination of such Servicing Agreement upon the occurrence of an
Event of Default attached;
(g) Other Documents. Such other documents as the Lender may
reasonably request.
5.02 Initial and Subsequent Loans. The making of each Loan
to the Borrower (including the initial Loan) on any Business Day is subject to
the satisfaction of the following further conditions precedent, both immediately
prior to the making of such Loan and also after giving effect thereto and to the
intended use thereof:
(a) no Default or Event of Default shall have occurred and
be continuing;
(b) both immediately prior to the making of such Loan and
also after giving effect thereto and to the intended use thereof, the
representations and warranties made by the Borrower in Section 6
hereof, and elsewhere in each of the Loan Documents, shall be true
and complete on and as of the date of the making of such Loan in all
material respects (in the case of the representations and warranties
in Section 6.10 and Schedule 1, solely with respect to Mortgage
Assets included in the Borrowing Base) with the same force and effect
as if made on and as of such date (or, if any such representation or
warranty is expressly stated to have been made as of a specific date,
as of such specific date). The Lender shall have received a Request
for Borrowing, with a certification thereon, signed by a Responsible
Officer of the Borrower certifying as to the truth and accuracy of
the above, which Request for Borrowing shall specifically include a
statement that the Borrower is in compliance with all governmental
licenses and authorizations and is qualified to do business and in
good standing in all required jurisdictions.
(c) the aggregate outstanding principal amount of the Loans
shall not exceed the Borrowing Base;
(d) subject to the Lender's right to perform one or more
Due Diligence Reviews pursuant to Section 11.16 hereof, the Lender
shall have completed its due diligence review of the Mortgage Asset
Documents for each Loan and such other documents, records,
agreements, instruments, mortgaged properties or information relating
to such Loans as the Lender in its
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sole discretion deems appropriate to review and such review shall be
satisfactory to the Lender in its sole discretion;
(e) the Lender shall have received from the Custodian a
Trust Receipt with exceptions acceptable to the Lender in its sole
discretion in respect of Eligible Assets to be pledged hereunder on
such Business Day and a Mortgage Asset Schedule and Exception Report,
in each case dated such Business Day and duly completed;
(f) neither (i) the Maximum Facility Borrowings has been
exceeded nor (ii) making the requested Loan shall cause the Maximum
Facility Borrowings to be exceeded;
(g) all applicable conditions set forth in Section 2.03
hereof have been complied with.
Each borrowing by the Borrower hereunder shall constitute a certification by the
Borrower that all the conditions set forth in this Section 5 have been satisfied
as of the date of such borrowing.
Section 6. Representations and Warranties. The Borrower
represents and warrants to the Lender that from and after September 30, 1997 and
throughout the term of this Loan Agreement:
6.01 Existence. The Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and is duly authorized and qualified to transact any and all business
contemplated by this Agreement and the Loan Documents to be conducted by the
Borrower in any state in which a Mortgaged Property is located to the extent
necessary to ensure the enforceability of each Eligible Asset and the servicing
of the Eligible Asset in accordance with the terms of this Agreement;
6.02 Litigation. Except as disclosed to the Lender prior to
the Effective Date and subsequently disclosed to the Lender in writing
thereafter, there are no actions, suits, arbitrations, investigations or
proceedings pending or, to the Borrower's actual knowledge, overtly threatened
against the Borrower or any of its Affiliates or affecting its Property that are
reasonably likely to materially and adversely affect the execution, delivery or
enforceability of this Agreement or the Loan Documents or the ability of the
Borrower to service the Eligible Assets or for the Borrower to perform any of
its other obligations hereunder in accordance with the terms hereof;
6.03 No Breach. The execution and delivery of this
Agreement and the Loan Documents by the Borrower, the servicing of the Eligible
Assets by the Borrower hereunder, the consummation by the Borrower of the
transactions herein contemplated and the fulfillment by the Borrower of or
compliance by the Borrower with the terms hereof will not (A) result in a breach
of any term or provision of the charter or by-laws of the Borrower or (B)
conflict with, result in a breach, violation or acceleration of, or result in a
default under, the terms of any other material agreement or instrument to which
the Borrower is a party or by which it may be bound, or any statute, order or
regulation applicable to the Borrower of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the
Borrower, which breach, violation, default or non-compliance would have a
material adverse effect on (a) the business, operations, financial condition,
properties or assets of the Borrower or (b) the ability of the Borrower to
perform its obligations under this Agreement or the Loan Documents; and the
Borrower is not a party to, bound by, or in breach or violation of any material
indenture or other material agreement or instrument, or subject to or in
violation of any statute, order or regulation of any court, regulatory body,
administrative agency or
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32
governmental body having jurisdiction over it, which materially and adversely
affects or, to the Borrower's knowledge, would in the future reasonably be
expected to materially and adversely affect, (x) the ability of the Borrower to
perform its obligations under this Agreement or the Loan Documents or (y) the
business, operations, financial condition, properties or assets of the Borrower,
or result in the creation or imposition of any Lien (except for the Liens
created pursuant to this Loan Agreement) upon any Property of the Borrower
pursuant to the terms of any such agreement or instrument;
6.04 Action. The Borrower has the full corporate power and
authority to service each Eligible Asset, and to execute, deliver and perform,
and to enter into and consummate the transactions contemplated by this Agreement
and the Loan Documents and the execution, delivery and performance of this
Agreement and the Loan Documents by the Borrower has been duly authorized by all
necessary corporate action on the part of the Borrower; and this Agreement and
the Loan Documents, assuming the due authorization, execution and delivery
thereof by the Lender, constitutes a legal, valid and binding obligation of the
Borrower, enforceable against the Borrower in accordance with its respective
terms, except to the extent that (a) the enforceability thereof may be limited
by federal or state bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought;
6.05 Approvals. No consent, approval, authorization or
order of any court or governmental agency or body is required for the execution,
delivery and performance by the Borrower of, or compliance by the Borrower with,
this Agreement or the Loan Documents or the consummation of the transactions
contemplated hereby (except for such consents, approvals, authorizations, or
orders to be obtained following each Funding Date with respect to future
transactions to be consummated hereunder), or if any such consent, approval,
authorization or order not relating to a future transaction is required, the
Borrower has obtained the same thereof, except for (i) such consents,
applications, authorizations and orders, the failure to obtain or perform which
would not have a material adverse effect on the business, operations, condition,
properties or assets of Borrower or its Subsidiaries; and (ii) filings and
recordings in respect of the Liens created pursuant to this Loan Agreement;
6.06 Good Standing . The Borrower is in good standing and
qualified to do business in each jurisdiction where failure to be so qualified
or licensed would have a material adverse effect on (a) the business,
operations, financial condition, properties or assets of the Borrower or (b) the
enforceability of any Eligible Asset or the servicing of the Eligible Assets in
accordance with the terms of this Agreement;
6.07 Collateral; Collateral Security.
(a) No Mortgage Asset is assigned, pledged, or otherwise
conveyed or encumbered by the Borrower to any Person other than the Lender, and
immediately prior to the pledge of such Mortgage Asset to the Lender, the
Borrower was the sole owner of such Mortgage Asset and had good and marketable
title thereto, free and clear of all Liens, in each case except for Liens to be
released simultaneously with the Liens granted in favor of the Lender hereunder.
No Mortgage Asset pledged to the Lender hereunder was acquired by the Borrower
from an Affiliate of the Borrower.
(b) The provisions of this Loan Agreement are effective to
create in favor of the Lender a valid security interest in all right, title and
interest of the Borrower in, to and under the Collateral.
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(c) Upon receipt by the applicable Custodian of each
Mortgage Note endorsed in blank by a duly authorized officer of the Borrower,
the Lender shall have a fully perfected first priority security interest in such
Mortgage Note.
(d) Upon the proper filing of financing statements on Form
UCC-1 naming the Lender as "Secured Party" and the Borrower as "Debtor", and
describing the Collateral, in the jurisdictions and recording offices listed on
Schedule 2 attached hereto, the security interests granted hereunder in the
Collateral will constitute perfected first priority security interests under the
Uniform Commercial Code in all right, title and interest of the Borrower in, to
and under such Collateral which can be perfected by filing under the Uniform
Commercial Code.
6.08 Chief Executive Office. The Borrower's chief executive
office on the Effective Date is located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇. The location where the Borrower keeps its books and records, including
all computer tapes and records relating to the Collateral is either its chief
executive office or ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
6.09 Insurance. The Borrower has caused to be performed any
and all acts required to preserve the rights and remedies of the Lender in any
insurance policies of the Borrower or a Mortgagee applicable to the Eligible
Assets sold by the Borrower.
6.10 FHA Servicing. The Borrower (or its subcontractor) is
an FHA Approved Mortgagee. The Borrower has the facilities, procedures, and
experienced personnel necessary for the sound servicing of mortgage loans and
properties of the same type as the Mortgage Assets pledged hereunder. The
Borrower is in good standing to service mortgage loans for the FHA, and no event
has occurred, including but not limited to a change in insurance coverage, which
would make the Borrower unable to comply with FHA eligibility requirements or
which would require notification to the FHA.
6.11 Financial Statements. The Financial Statements of
Borrower, copies of which have been furnished to Lender, (i) are, as of the
dates and for the periods referred to therein, complete and correct in all
material respects, (ii) present fairly the financial condition and results of
operations of the Borrower as of the dates and for the periods indicated and
(iii) have been prepared in accordance with generally accepted accounting
principles consistently applied, except as noted therein (subject as to interim
statements to normal year-end adjustments). Since the date of the most recent
Financial Statements, there has been no material adverse change in such
financial condition or results of operations. Except as disclosed in the
Financial Statements, Borrower is not subject to any contingent liabilities or
commitments that, individually or in the aggregate, have a material possibility
of causing a material adverse change in the business or operations of Borrower.
6.12 ERISA. Borrower is in compliance with ERISA and has
not incurred and does not reasonably expect to incur any liabilities to the PBGC
under ERISA in connection with any Plan or Multiemployer Plan or to contribute
now or in the future in respect of any Plan or Multiemployer Plan.
6.13 Accuracy of Information. None of the documents or
information provided by Borrower to Lender in connection with the Loan Documents
or the transactions thereunder contain any statement of a material fact with
respect to Borrower or the Loans that was untrue or misleading in any material
respect when made; mortgage loan legal and servicing files shall not constitute
such documents or information for this purpose. Since the furnishing of such
documents or information, there has been no change, nor any development or event
involving a prospective change known to Borrower that would render any of such
documents or information untrue or misleading in any material
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respect. There is no fact known to Borrower which has a material possibility of
causing a Material Adverse Effect with respect to Borrower.
6.14 Loan Documents. Each of the representations and
warranties of Borrower contained in the Loan Documents is true and correct in
all material respects.
6.15 Compliance With Law, Etc. No practice, procedure or
policy employed by Borrower in the conduct of its businesses violates any law,
regulation, judgment, agreement, order or decree applicable to it, which
violation is reasonably likely to result in a Material Adverse Effect.
6.16 Solvency; Fraudulent Conveyance. Borrower is solvent
and will not be rendered insolvent by the Loan and, after giving effect to such
Loan, Borrower will not be left with an unreasonably small amount of capital
with which to engage in its business. Borrower does not intend to incur, or
believe that it has incurred, debts beyond its ability to pay such debts as they
mature. Borrower is not contemplating the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of
Borrower or any of its assets. Borrower is not transferring any Mortgage Assets
with any intent to hinder, delay or defraud any of its creditors.
6.17 Investment Company Act Compliance. Borrower is neither
required to be registered as an "investment company" as defined under the
Investment Company Act nor under the control of an "investment company" as
defined under the Investment Company Act.
6.18 Taxes. Borrower has filed all federal and state tax
returns which are required to be filed by it and paid all taxes, including any
material assessments received by it, to the extent that such taxes have become
due. Any taxes, fees and other governmental charges payable by Borrower in
connection with the transactions contemplated hereby and the execution and
delivery of the Loan Documents have been paid.
6.19 Licenses. Lender will not be required solely as a
result of taking a pledge of the Mortgage Assets to be licensed, registered or
approved or to obtain permits or otherwise qualify (i) to do business in any
state in which it currently is not so required or (ii) under any state consumer
lending, fair debt collection or other applicable state statute or regulation.
6.20 Margin Regulations. Neither the making of any Loan
hereunder, nor the use of the proceeds thereof, will violate or be inconsistent
with the provisions of Regulation G, T, U or X.
Section 7. Covenants of the Borrower. The Borrower
covenants and agrees with the Lender that, so long as any Loan is outstanding
and until payment in full of all Secured Obligations:
7.01 Financial Statements. Until the later to occur of (i)
the discharge and payment of all of Borrower's obligations under this Agreement
and (ii) the Termination Date of this Agreement, Borrower shall promptly upon
preparation, but in no event later than 60 days following the end of each such
party's first three fiscal quarters, deliver to Lender its unaudited
company-prepared financial statements as of the end of each such fiscal quarter,
prepared in accordance with GAAP. Borrower shall promptly upon preparation, but
in no event later than 90 days following the end of such party's fourth fiscal
quarter, deliver to Lender its audited and certified financial statements,
prepared in accordance with GAAP, as of the end of the most recently ended
fiscal year, which audits and certifications shall each be prepared by a
nationally recognized independent accounting firm or by a
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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. Notwithstanding
anything in this Agreement to the contrary, if the audited and certified
financial statements described in the immediately preceding sentence are (x) not
delivered within the above-specified 90 days, (y) Borrower is diligently using
its best efforts to deliver such financial statements, and (z) Borrower provides
Lender with a notice specifying the reason for the delay and a date, within a
reasonable time period (as determined by Lender), on which such financial
statements will be delivered, and they are so delivered; then failure to deliver
such financial statements within the above-specified 90 days, as the case may
be, shall not be deemed to be an Event of Default under this Agreement.
7.02 Reports. (a) Borrower shall, within 5 Business Days of
filing, deliver to Lender copies of all material public filings made by Borrower
with any governmental or quasi-governmental body.
(b) Borrower shall (i) with respect to any Mortgage Assets
serviced by Borrower or any of its Affiliates or otherwise use its best efforts
to cause to be delivered to Lender monthly, the report, if any, prepared by the
relevant trustee or servicer setting forth payment activity, defaults and
delinquencies with respect to each Eligible Asset pledged to the Lender, (ii)
prepare and deliver reports each month, detailing, with respect to all Mortgage
Assets pledged to the Lender, such information as the Lender may from time to
time reasonably request and (iii) deliver to the Lender on the fifth day of each
month a Mortgage Asset Schedule.
7.03 Compliance With Laws. The Borrower shall comply in all
material respects with all laws, rules and regulations that relate to it or to
the Eligible Assets or that materially and adversely affect the operations or
financial conditions of the Borrower.
7.04 Existence, etc. Borrower shall do all things necessary
to remain duly incorporated, validly existing and in good standing as a domestic
corporation in its jurisdiction of incorporation and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted except where failure to maintain such authority would not have a
material adverse effect on the ability of Borrower to conduct its business or to
perform its obligations under this Agreement.
7.05 Adequate Capital. At all times during this Agreement,
Borrower shall possess sufficient net capital and liquid assets (or ability to
access the same) to satisfy its obligations as they become due in the normal
course of business.
7.06 Notices. Borrower will notify Lender in writing of any
of the following promptly upon learning of the occurrence thereof, describing
the same and, as applicable, any remedial steps being taken with respect
thereto:
(A) A Default or Event of Default shall have occurred;
(B) The institution of any litigation, arbitration
proceeding or governmental proceeding which, in the opinion of
counsel to Borrower, will have a material adverse effect on Borrower
or the Eligible Assets;
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(C) All legal or arbitrable proceedings affecting the
Borrower or any of its Subsidiaries that questions or challenges the
validity or enforceability of any of the Loan Documents or as to
which there is a reasonable likelihood of adverse determination which
would result in a Material Adverse Effect.
(D) The entry of any judgment or decree against Borrower if
the aggregate amount of all judgments and decrees then outstanding
against Borrower exceeds $1,000,000 after deducting (i) the amount
with respect to which Borrower is insured and with respect to which
the insurer has assumed responsibility in writing, and (ii) the
amount for which Borrower is otherwise indemnified if the terms of
such indemnification are reasonably satisfactory to Lender; or
(E) The occurrence or reasonable likelihood of any event
which would allow the obligee under any material loan agreement to
which Borrower is bound to declare an event of default or accelerate
the obligations of Borrower thereunder.
7.07 Compliance With Custodial Agreement. With respect to
each Eligible Asset, the Borrower shall comply with all document delivery
requirements set forth in the applicable Custodial Agreement.
7.08 Borrowing Base Deficiency. If at any time there exists
a Borrowing Base Deficiency the Borrower shall cure same in accordance with
Section 2.06 hereof.
7.09 Inspection of Books and Records. Borrower shall permit
the Lender or its accountants, attorneys or other agents reasonable access to
all of their books and records relating to Eligible Assets for inspection and
copying during normal business hours at all places where Borrower conducts
business.
7.10 No Assignment. Borrower shall not assign or attempt to
assign this Agreement or any rights hereunder, without first obtaining the
specific written consent of Lender.
7.11 No Amendment to Corporate Documents. Borrower shall
not amend its Articles of Incorporation or By-laws, which amendment shall have
or is likely to have a material adverse effect upon Lender or its interests
under this Agreement, without the prior written consent of Lender.
7.12 No Change of Control. There shall be no Change of
Control, and Borrower shall not merge or consolidate with or into, any other
entity without the prior written consent of Lender, which consent shall not be
unreasonably withheld.
7.13 Limitation on Lines of Business. During the term of
this Agreement, Borrower shall not engage in any business other than the
business of the Borrower in existence as of the date hereof, except with the
prior written consent of Lender which consent shall not be unreasonably
withheld.
7.14 Limitation on Distributions. The Borrower shall not,
except as otherwise expressly permitted or contemplated hereby, declare any
dividends on any shares of any class of stock, or make any payment on account
of, or set apart assets for a sinking or other analogous fund for, the purchase,
redemption, retirement or other acquisition of any shares of any class of stock,
or any warrants or options to purchase such stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in
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obligations of the Company, except (unless a Default shall have occurred and be
continuing) dividends to the Guarantor.
7.15 Limitation on Guarantees. Except in the ordinary
course of business or to fulfill the obligations of wholly owned Subsidiaries,
or to Guarantee Indebtedness under the Indenture dated May 14, 1997, between
Cityscape Financial Corp. and Chase Manhattan Bank as trustee relating to
$300,000,000 of 12 3/4% senior notes due 2004, Borrower shall not Guarantee,
endorse or otherwise in any way become or be responsible for any obligations of
any other person, entity or Affiliate, including without limitation, whether
directly or indirectly by agreement to purchase the indebtedness of any other
person or through the purchase of goods, supplies or services, or maintenance of
working capital or other balance sheet covenants or conditions, or by way of
stock purchase, capital contribution, advance or loan for the purposes of paying
or discharging any indebtedness or obligation of such other person or otherwise;
provided, however, that nothing contained herein shall prevent Borrower from
indemnifying its officers, directors and agents pursuant to its By-laws and its
Articles of Incorporation.
7.16 Limitation on Liens. The Borrower will defend the
Collateral against, and will take such other action as is necessary to remove,
any Lien, security interest or claim on or to the Collateral, other than the
security interests created under this Loan Agreement, and the Borrower will
defend the right, title and interest of the Lenders in and to any of the
Collateral against the claims and demands of all persons whomsoever.
7.17. FHA Approved Mortgagee. The Borrower shall maintain
its status as an FHA Approved Mortgagee. The Borrower shall notify the Lender
promptly of any developments regarding its status as an FHA Approved Mortgagee
and shall send the Lender copies of all correspondence or notices received or
sent by the Borrower regarding its application.
7.18 Financial Condition Covenants.
(a) Maintenance of Ratio of Indebtedness to Shareholders'
Equity. The Borrower shall not permit the ratio of Indebtedness to Shareholders'
Equity at any time to be greater than 8:1;
(b) Maintenance of Shareholders' Equity. Borrower shall
maintain Shareholders' Equity in an amount not less than $150,000,000. As of the
beginning of each subsequent fiscal year, the minimum Shareholders' Equity less
Subordinated Debt to be maintained by the Borrower going forward shall be the
greater of (x) $150,000,000 and (y) 80% of the Shareholders' Equity less
Subordinated Debt and advances or loans from the Guarantor as of the end of the
prior fiscal year; and
(c) Maintenance of Liquidity. The Borrower shall maintain
cash and cash equivalents and undrawn committed secured financial facilities
with available eligible unpledged assets of at least $20,000,000; provided,
however, that from the Effective Date through and including December 31, 1997,
Borrower shall maintain cash and cash equivalents and undrawn committed secured
financial facilities with available eligible unpledged assets of at least
$10,000,000.
7.19 Notice if Mortgage Asset is Found Defective. Upon
discovery by the Borrower or the Lender of any breach of any representation or
warranty listed on Schedule 1 hereto applicable to any Mortgage Asset, the party
discovering such breach shall promptly give notice of such discovery to the
other.
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7.20 Prohibition of Fundamental Changes. Neither the
Borrower nor any of its Subsidiaries shall enter into any transaction of merger
or consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation, winding up or dissolution) or sell all or substantially
all of its assets, without the prior written consent of the Lender.
7.21 Limitation on Transactions with Affiliates. Neither
the Borrower nor any of its Subsidiaries shall enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate unless such transaction is
(a) not otherwise prohibited under this Loan Agreement, (b) in the ordinary
course of the Borrower's business and (c) upon fair and reasonable terms no less
favorable to the Borrower, as the case may be, than it would obtain in a
comparable arm's length transaction with a Person which is not an Affiliate.
7.22 Underwriting Guidelines. Without prior written consent
of the Lender, the Borrower shall not materially amend or otherwise materially
modify the Underwriting Guidelines. In the event that the Borrower proposes to
amend the Underwriting Guidelines, the Borrower shall submit the proposed
amendment to the Lender in writing. The Lender shall notify the Borrower whether
or not it approves such proposed amendment, which approval shall not be
unreasonably withheld. If the Borrower wishes to finance a Mortgage Asset
hereunder that does not comply in all respects with the Underwriting Guidelines,
the Borrower shall request prior approval thereof from the Lender and will
deliver to the Lender, no later than three (3) Business Days prior to the
requested Funding Date, the related underwriting file. The Lender shall notify
the Borrower promptly (i) whether or not it chooses to finance any such Mortgage
Asset and, if so, (ii) whether it chooses to treat such Mortgage Asset as an
Eligible Asset. In the case of choice (ii) of the preceding sentence, the Lender
hereby agrees to make such determination reasonably.
7.23 Servicing Tape. The Borrower shall provide to the
Lender on a monthly basis a computer readable magnetic tape containing servicing
information, including without limitation those fields specified by the Lender
from time to time, on a loan-by-loan basis and in the aggregate, with respect to
the Mortgage Assets serviced hereunder by the Borrower or any Servicer.
7.24 Borrowing Base Certificate. The Borrower shall provide
to the Lender on a monthly basis, and otherwise upon the request of the Lender,
a Borrowing Base certificate in the form of Exhibit K attached hereto.
7.25 Authorized Officers. If at any time the list of
authorized officers listed on Schedule 4 hereto becomes incomplete or incorrect,
the Borrower shall promptly deliver to the Lender an updated complete and
correct copy of Schedule 4. Until such updated copy of Schedule 4 is delivered,
the Lender shall be entitled to rely exclusively upon the most recently
delivered copy of Schedule 4. Accordingly, the Borrower's failure to deliver
such updated copy shall not constitute an Event of Default.
7.26 Portfolio Performance. The Borrower shall maintain a
delinquency ratio for its servicing portfolio (including, in determining the
delinquency ratio, Mortgage Assets with respect to which the Monthly Payments
are 30 days or more delinquent, Mortgage Assets with respect to which the
related Mortgaged Property is the subject of a foreclosure proceeding and REO
properties) of 12% or less.
Section 8. Events of Default. Each of the following events
shall constitute an event of default (an "Event of Default") hereunder:
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a) Failure to Perform. Failure of Borrower to comply with
Section 7.08 hereof; or failure of Borrower to pay when due any sums
or amount equal to or greater than $100,000 payable hereunder or
under any Loan or to pay within one Business Day of the due date any
sums or amount less than $100,000 payable hereunder or under any
Loan; or
b) Failure of Representation or Warranty. Any
representation, warranty or certification made or deemed made herein
or in any other Loan Document by the Borrower or any certificate
furnished to the Lender pursuant to the provisions hereof or thereof
shall prove to have been false or misleading in any material respect
as of the time made or furnished (other than the representations and
warranties set forth in Schedule 1, which shall be considered solely
for the purpose of determining the Collateral Value of the Mortgage
Assets; unless the Borrower shall have made any such representations
and warranties with knowledge that they were materially false or
misleading at the time made); or
c) Failure of Covenant. Failure of Borrower to observe and
perform any material non-monetary covenant, condition or other
agreement on its part to be observed or performed hereunder and such
default shall continue unremedied for five Business Days; or
d) Bankruptcy Event. (i) the Borrower, the Guarantor or any
of their respective Subsidiaries shall (A) apply for or consent to
the appointment of, or the taking of possession by, a receiver,
custodian, trustee, examiner or liquidator or the like of itself or
of all or a substantial part of its property, (B) make a general
assignment for the benefit of its creditors, (C) commence a voluntary
case under the Bankruptcy Code, (D) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement or winding-up,
or composition or readjustment of debts, or (E) take any corporate or
other action for the purpose of effecting any of the foregoing; or
(ii) a proceeding or case shall be commenced,
without the application or consent of the Borrower, Guarantor or any
of their respective Subsidiaries, in any court of competent
jurisdiction, seeking (A) its reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or
readjustment of its debts, (B) the appointment of, or the taking of
possession by, a receiver, custodian, trustee, examiner, liquidator
or the like of the Borrower, the Guarantor or any such Subsidiary or
of all or any substantial part of its property, or (C) similar relief
in respect of the Borrower, the Guarantor or any such Subsidiary
under any law relating to bankruptcy, insolvency, reorganization,
liquidation, dissolution, arrangement or winding-up, or composition
or adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering
any of the foregoing shall be entered and continue unstayed and in
effect, for a period of 60 or more days; or an order for relief
against the Borrower, the Guarantor or any such Subsidiary shall be
entered in an involuntary case under the Bankruptcy Code; or
e) Borrower Default. Default by Borrower whether as
principal, guarantor or surety, in the payment of any principal or
interest on any indebtedness or any other obligation of Borrower in
the amount of $1,000,000 or more; or
f) Material Adverse Change. Any materially adverse change
in the Property, business, financial condition or prospects of the
Borrower, the Guarantor or any of their respective Subsidiaries shall
occur, in each case as determined by the Lender in its sole
discretion.
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g) Cross-Default. The occurrence and continuance of an
"event of default" or of an "event of termination" on the part of
Borrower under either (i) any material agreement of Borrower or
Guarantor, or (ii) any other material agreement between Borrower, on
the one hand, and Lender or any of its Affiliates on the other hand,
which has not been waived by the Lender; or
h) Change of Control. Any Change of Control of the Borrower
or the Guarantor; or
i) Pre-Existing Condition. The discovery by the Lender
during its continuing due diligence of the Borrower of a condition or
event which existed at or prior to the execution hereof and which the
Lender, in its reasonable discretion, determines materially and
adversely affects: (i) the condition (financial or otherwise) of the
Borrower, its Subsidiaries or Affiliates; or (ii) the ability of
either the Borrower or the Lender to fulfill its respective
obligations under this Agreement; or
j) Inability to Pay Debts. The Borrower or the Guarantor
shall admit in writing its inability to pay its debts as such debts
become due; or
k) Unsatisfied Judgment. A final judgment or judgments for
the payment of money in excess of $1,000,000 in the aggregate after
subtracting any amounts for which an insurer or indemnitor with a
financial standing reasonably satisfactory to the Lender has assured
liability in writing for discharge thereof shall be rendered against
the Borrower or any of its Subsidiaries by one or more courts,
administrative tribunals or other bodies having jurisdiction and the
same shall not be discharged (or provision shall not be made for such
discharge) or bonded, or a stay of execution thereof shall not be
procured, within 60 days from the date of entry thereof, and the
Borrower or any such Subsidiary shall not, within said period of 60
days, or such longer period during which execution of the same shall
have been stayed or bonded, appeal therefrom and cause the execution
thereof to be stayed during such appeal; or
l) Other Liens. The Borrower shall grant, or suffer to
exist, any Lien on any Collateral except the Liens contemplated
hereby; or the Liens contemplated hereby shall cease to be first
priority perfected Liens on the Collateral in favor of the Lender or
shall be Liens in favor of any Person other than the Lender; or
m) Regarding FHA Mortgage Assets. Either: (i) the Borrower
shall fail to maintain its status as an FHA Approved Mortgagee; or
(ii) there shall have occurred any event, including without
limitation, an amendment or modification of the Act, which would
reasonably be likely to materially and adversely affect Lender's or
Borrower's rights under the FHA Mortgage Insurance program or the
Lender's ability to receive the proceeds of FHA Mortgage Insurance;
or
n) Termination of Loan Documents. The applicable Custodial
Agreement or any Loan Document shall for whatever reason be
terminated or cease to be in full force and effect, or the
enforceability thereof shall be contested by the Borrower; or
o) Failure to Answer. The Lender shall reasonably request,
specifying the reasons for such request, information, and/or written
responses to such requests, regarding the financial well-being of the
Borrower and such information and/or responses shall not have been
provided within five Business Days of such request.
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Notwithstanding any other provision of this Section 8, any
grace or notice period provided herein in respect of a notice to be given or
action to be taken by the Lender may be shortened or eliminated by the Lender
if, in its sole good faith discretion, it is reasonable to do so under the
circumstances, taking into consideration, among other things, the volatility of
the market for the Mortgage Assets or other securities involved, the extent and
nature of any Event of Default (or events which with the giving of such notice
and passage of time would constitute Events of Default) and the risks inherent
in deferring the exercise of remedies for the otherwise applicable grace or
notice period.
Section 9. Remedies Upon Default.
(a) Upon the occurrence of one or more Events of Default
other than those referred to in Section 8(d) (unless otherwise expressly waived
in writing by the Lender), the Lender may immediately declare the principal
amount of the Loans then outstanding under the Note to be immediately due and
payable, together with all interest thereon and fees and expenses accruing under
this Loan Agreement. Upon the occurrence of an Event of Default referred to in
Section 8(d), such amounts shall immediately and automatically become due and
payable without any further action by any Person. Upon such declaration or such
automatic acceleration, the balance then outstanding hereunder shall become
immediately due and payable, without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower.
(b) Upon the occurrence of one or more Events of Default
(unless otherwise expressly waived in writing by the Lender), the Lender shall
have the right to obtain physical possession of the Servicing Records and all
other files of the Borrower relating to the Collateral and all documents
relating to the Collateral which are then or may thereafter come in to the
possession of the Borrower or any third party acting for the Borrower and the
Borrower shall deliver to the Lender such assignments as the Lender shall
request. The Lender shall be entitled to specific performance of all agreements
of the Borrower contained in this Loan Agreement.
Section 10. No Duty of Lender. The powers conferred on the
Lender hereunder are solely to protect the Lender's interests in the Collateral
and shall not impose any duty upon it to exercise any such powers. The Lender
shall be accountable only for amounts that it actually receives as a result of
the exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Borrower for any act or failure
to act hereunder, except for its or their own gross negligence or willful
misconduct.
Section 11. Miscellaneous.
11.01 Waiver. No failure on the part of the Lender to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under any Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under any Loan Document preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The remedies provided
herein are cumulative and not exclusive of any remedies provided by law.
11.02 Notices. Except as otherwise expressly permitted by
this Loan Agreement, all notices, requests and other communications provided for
herein and under the applicable Custodial Agreement (including without
limitation any modifications of, or waivers, requests or consents under, this
Loan Agreement) shall be given or made in writing (including without limitation
by telex or telecopy) delivered to the intended recipient at the "Address for
Notices" specified below its name on
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the signature pages hereof or thereof; or, as to any party, at such other
address as shall be designated by such party in a written notice to each other
party. Except as otherwise provided in this Loan Agreement and except for
notices given under Section 2 (which shall be effective only on receipt), all
such communications shall be deemed to have been duly given when transmitted by
telex or telecopy or personally delivered or, in the case of a mailed notice,
upon receipt, in each case given or addressed as aforesaid.
11.03 Indemnification and Expenses.
(a) The Borrower agrees to hold the Lender harmless from
and indemnify the Lender against all liabilities, losses, damages, judgments,
and reasonable costs and expenses of any kind which may be imposed on, incurred
by or asserted against the Lender (collectively "Costs") relating to or arising
out of this Loan Agreement, the Note, any other Loan Document or any transaction
contemplated hereby or thereby, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Loan Agreement, the Note,
any other Loan Document or any transaction contemplated hereby or thereby, that,
in each case, results from anything other than the Lender's gross negligence or
willful misconduct. Without limiting the generality of the foregoing, the
Borrower agrees to hold the Lender harmless from and indemnify the Lender
against all Costs with respect to Mortgage Assets relating to or arising out of
any breach, violation or alleged breach of violation of any consumer credit
laws, including without limitation the Truth in Lending Act and/or the Real
Estate Settlement Procedures Act. In any suit, proceeding or action brought by
the Lender in connection with any Mortgage Asset for any sum owing thereunder,
or to enforce any provisions of any Mortgage Asset, the Borrower will save,
indemnify and hold the Lender harmless from and against all expense, loss or
damage suffered by reason of any defense, set-off, counterclaim, recoupment or
reduction or liability whatsoever of the account debtor or obligor thereunder,
arising out of a breach by the Borrower of any obligation thereunder or arising
out of any other agreement, indebtedness or liability at any time owing to or in
favor of such account debtor or obligor or its successors from the Borrower. The
Borrower also agrees to reimburse the Lender as and when billed by the Lender
for all the Lender's costs and expenses incurred in connection with the
enforcement or the preservation of the Lender's rights under this Loan
Agreement, any other Loan Document or any transaction contemplated hereby or
thereby, including without limitation the reasonable fees and disbursements of
its counsel (including all fees or disbursements incurred in any action or
proceeding between the Borrower and the Lender or between the Lender and any
third party). The Borrower hereby acknowledges that, notwithstanding the fact
that the Borrower's obligations hereunder are secured by the Collateral, the
obligation of the Borrower hereunder is a recourse obligation of the Borrower.
(b) The Borrower agrees to pay as and when billed by the
Lender all of the reasonable out-of-pocket costs and expenses incurred by the
Lender in connection with the preparation and execution of, and any amendment,
supplement or modification to, this Loan Agreement, the Note, any other Loan
Document or any other documents prepared in connection herewith or therewith.
The Borrower agrees to pay as and when billed by the Lender all of the
reasonable out-of-pocket costs and expenses incurred in connection with the
consummation and administration of the transactions contemplated hereby and
thereby including without limitation (i) all the reasonable fees, disbursements
and expenses of counsel to the Lender and (ii) all the due diligence,
inspection, testing and review costs and expenses incurred by the Lender with
respect to Collateral under this Loan Agreement, including, but not limited to,
those costs and expenses incurred by the Lender pursuant to Sections 11.03(a),
11.15 and 11.16 hereof.
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11.04 Amendments. Except as otherwise expressly provided in
this Loan Agreement, any provision of this Loan Agreement may be modified or
supplemented only by an instrument in writing signed by the Borrower and the
Lender and any provision of this Loan Agreement may be waived by the Lender.
11.05 Successors and Assigns . This Loan Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
11.06 Survival. The obligations of the Borrower under
Section 11.03 hereof shall survive the repayment of the Loans and the
termination of this Loan Agreement. In addition, each representation and
warranty made or deemed to be made by a request for a borrowing, herein or
pursuant hereto shall survive the making of such representation and warranty,
and the Lender shall not be deemed to have waived, by reason of making any Loan,
any Default that may arise because any such representation or warranty shall
have proved to be false or misleading, notwithstanding that the Lender may have
had notice or knowledge or reason to believe that such representation or
warranty was false or misleading at the time such Loan was made.
11.07 Captions. The table of contents and captions and
section headings appearing herein are included solely for convenience of
reference and are not intended to affect the interpretation of any provision of
this Loan Agreement.
11.08 Counterparts. This Loan Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Loan
Agreement by signing any such counterpart.
11.09 Loan Agreement Constitutes Security Agreement;
Governing Law. This Loan Agreement shall be governed by New York law without
reference to choice of law doctrine, and shall constitute a security agreement
within the meaning of the Uniform Commercial Code.
11.10 SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER
HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS LOAN AGREEMENT, THE NOTE AND THE OTHER
LOAN DOCUMENTS, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN
RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK, THE FEDERAL COURTS OF THE UNITED
STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
APPELLATE COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS AND, TO THE EXTENT PERMITTED BY LAW, WAIVES
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO
PLEAD OR CLAIM THE SAME;
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44
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
PREPAID, TO ITS ADDRESS SET FORTH UNDER ITS SIGNATURE BELOW OR AT
SUCH OTHER ADDRESS OF WHICH THE LENDER SHALL HAVE BEEN NOTIFIED; AND
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
SHALL LIMIT THE RIGHT TO ▇▇▇ IN ANY OTHER JURISDICTION.
11.11 WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE
LENDER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS LOAN AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
11.12 Acknowledgments. The Borrower hereby acknowledges
that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Loan Agreement, and the other Loan
Documents;
(b) the Lender has no fiduciary relationship to the
Borrower, and the relationship between the Borrower and the Lender is
solely that of debtor and creditor; and
(c) no joint venture exists between the Lender and the
Borrower.
11.13 Hypothecation or Pledge of Loans. The Lender shall
have free and unrestricted use of all Collateral and nothing in this Loan
Agreement shall preclude the Lender from engaging in repurchase transactions
with the Collateral or otherwise pledging, repledging, transferring,
hypothecating, or rehypothecating the Collateral. Nothing contained in this Loan
Agreement shall obligate the Lender to segregate any Collateral delivered to the
Lender by the Borrower.
11.14 Assignments; Participations.
(a) The Borrower may not assign any of its rights or
obligations hereunder without the prior consent of the Lender. The Lender may
not assign any of its rights or obligations hereunder other than to an Affiliate
without the prior consent of the Borrower.
(b) The Lender may, in accordance with applicable law, at
any time sell to one or more lenders or other entities ("Participants")
participating interests in any Loan, or any other interest of the Lender
hereunder and under the other Loan Documents. In the event of any such sale by
the Lender of participating interests to a Participant, the Lender's obligations
under this Loan Agreement to the Borrower shall remain unchanged, the Lender
shall remain solely responsible for the performance thereof, the Lender shall
remain the lender for all purposes under this Loan Agreement and the other Loan
Documents, and the Borrower and the Lender shall continue to deal solely and
directly with the Lender in connection with the Lender's rights and obligations
under this Loan Agreement and the other Loan Documents. The Borrower agrees that
if amounts outstanding under this Loan Agreement are due or unpaid, or shall
have been declared or shall have become due and payable
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45
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Loan Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this Loan
Agreement; provided, that such Participant shall only be entitled to such right
of set-off if it shall have agreed in the agreement pursuant to which it shall
have acquired its participating interest to share with the Lender the proceeds
thereof. Each Loan Party also agrees that each Participant shall be entitled to
the benefits of Sections 2.08 and 11.03 with respect to its participation in the
Loans outstanding from time to time; provided, that no Participant shall be
entitled to receive any greater amount pursuant to such Sections than the Lender
would have been entitled to receive in respect of the amount of the
participation transferred by the Lender to such Participant had no such transfer
occurred.
(c) The Lender may furnish any information concerning the
Borrower or any of its Subsidiaries in the possession of such Lender from time
to time to assignees and participants (including prospective assignees and
participants); provided that each such recipient shall have previously agreed in
writing, to which the Borrower shall be a intended third party beneficiary, to
protect the confidentiality of any confidential information concerning the
Borrower and any of its Subsidiaries received by such recipient.
(d) The Borrower agrees to cooperate with the Lender in
connection with any such assignment and/or participation, to execute and deliver
such replacement notes, and to enter into such restatements of, and amendments,
supplements and other modifications to, this Loan Agreement and the other Loan
Documents necessary solely to give effect to such assignment and/or
participation. The Borrower further agrees to furnish to any Participant
identified by the Lender to the Borrower copies of all reports and certificates
to be delivered by the Borrower to the Lender hereunder, as and when delivered
to the Lender.
11.15 Servicing.
The Borrower, as independent contract servicer, shall
service and administer the Mortgage Assets in accordance with the terms and
provisions set forth in Article V, VI, VII and VIII of the Whole Loan Agreement
attached hereto as Exhibit H which sections are hereby incorporated in this
Agreement in their entirety (with, however, the changes and adjustments as
provided in this Agreement) as if the same were contained in this Section (such
servicing provisions as incorporated and adjusted, the "Servicing Agreement").
With respect to the following provisions set forth in the
Whole Loan Agreement attached hereto as Exhibit H, the Borrower shall service
the Mortgage Assets as it is required to service "Mortgage Loans" thereunder and
be subject to all of the obligations as required by the "Seller" pursuant to the
Whole Loan Agreement and the Lender shall have all the rights as afforded the
"Certificateholder" thereunder:
5.01 Seller to Act as Servicer.
5.02 Liquidation of Mortgage Loans.
5.03 Collection of Mortgage Loan Payments.
5.04 Establishment of Certificate Accounts; Deposits
in Certificate Accounts.
5.05 Withdrawals from the Certificate Account.
5.06 Transfer of Accounts.
5.07 Maintenance of Hazard Insurance.
5.08 Fidelity Bond; Errors and Omissions Insurance.
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46
5.09 Liquidation Reports.
5.10 Notification of Adjustments (to the extent the
Mortgage Loans are Adjustable Rate Mortgage
Loans).
6.01 Distributions.
6.02 Statements to the Certificateholders.
6.03 Advances by the Seller.
6.04 Prepayment Interest Shortfalls.
7.01 Assumption Agreements.
7.02 Satisfaction of Mortgages and Release of Mortgage
Files.
7.03 Servicing Compensation.
7.04 Annual Statement as to Compliance.
7.05 Annual Independent Certified Public Accountants'
Servicing Report.
7.06 Certificateholders' Right to Examine Seller
Records.
8.01 Seller Shall Provide Access and Information as
Reasonably Required.
8.02 Financial Statements.
Any cross references in Exhibit H in the sections listed
above to other sections set forth in Exhibit H are likewise incorporated herein
and made a part hereof.
To the extent any provision or definition set forth in
Exhibit H shall conflict with any provision set forth in this Agreement, the
provision or definition in this Agreement shall govern.
In addition, with respect to FHA Assets, the Borrower shall
maintain and keep the FHA Mortgage Insurance in full force and effect throughout
the term of this Agreement and discharge its obligations arising out of FHA
Mortgage Insurance. The Borrower will service and administer the FHA Assets in
accordance with the obligations of mortgagees under the Act and the applicable
FHA Regulations thereunder and will discharge all obligations of the mortgagee
under each FHA Asset including, paying all FHA insurance premiums, fees or
charges, as required, and, subject to the right to assign the FHA Asset to the
FHA will take all action reasonably necessary to preserve the lien of such
Mortgage, including, the defense of actions to challenge or foreclose such lien.
The Borrower agrees that the Lender is the owner of all
servicing records, including but not limited to any and all servicing
agreements, files, documents, records, data bases, computer tapes, copies of
computer tapes, proof of insurance coverage, insurance policies, appraisals,
other closing documentation, payment history records, and any other records
relating to or evidencing the servicing of Mortgage Assets (the "Servicing
Records"); and the Borrower grants the Lender a security interest in all
servicing fees and rights relating to the Mortgage Assets and all Servicing
Records to secure the obligation of the Borrower or its designee to service in
conformity with this Section and any other obligation of the Borrower to the
Lender. The Borrower covenants to safeguard such Servicing Records and to
deliver them promptly to the Lender or its designee (including the Custodian) at
the Lender's request.
The Borrower hereby agrees that upon the occurrence of an
Event of Default (unless otherwise expressly waived in writing by the Lender),
the Lender may terminate the Borrower as servicer and transfer servicing to the
Lender's designee, at no cost or expense to the Lender, it being agreed that the
Borrower will pay any and all fees required to effectuate the transfer of
servicing to the designee of the Lender.
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47
After the Funding Date, until the pledge of any Mortgage
Asset is relinquished by the Custodian, the Borrower will have no right to
modify or alter the terms of such Mortgage Asset and the Borrower will have no
obligation or right to repossess such Mortgage Asset or substitute another
Mortgage Asset, except as provided in the applicable Custodial Agreement.
The Borrower shall permit the Lender to inspect the
Borrower's servicing facilities, as the case may be, for the purpose of
satisfying the Lender that the Borrower has the ability to service the Mortgage
Assets as provided in this Loan Agreement.
11.16 Periodic Due Diligence Review .
The Borrower acknowledges that the Lender has the right to
perform continuing due diligence reviews with respect to the Mortgage Assets,
for purposes of verifying compliance with the representations, warranties and
specifications made hereunder, or otherwise, and the Borrower agrees that upon
reasonable (but no less than one (1) Business Day's) prior notice to the
Borrower, the Lender or its authorized representatives will be permitted during
normal business hours to examine, inspect, and make copies and extracts of, the
Mortgage Files and any and all documents, records, agreements, instruments or
information relating to such Mortgage Assets in the possession or under the
control of the Borrower and/or the Custodian. The Borrower also shall make
available to the Lender a knowledgeable financial or accounting officer for the
purpose of answering questions respecting the Mortgage Files and the Mortgage
Assets. Without limiting the generality of the foregoing, the Borrower
acknowledges that the Lender may make Loans to the Borrower based solely upon
the information provided by the Borrower to the Lender in the Mortgage Asset
Tape and the representations, warranties and covenants contained herein, and
that the Lender, at its option, has the right at any time to conduct a partial
or complete due diligence review on some or all of the Mortgage Assets securing
such Loan, including without limitation ordering new credit reports and new
appraisals on the related Mortgaged Properties and otherwise re-generating the
information used to originate such Mortgage Asset. The Lender may underwrite
such Mortgage Assets itself or engage a mutually agreed upon third party
underwriter to perform such underwriting. The Borrower agrees to cooperate with
the Lender and any third party underwriter in connection with such underwriting,
including, but not limited to, providing the Lender and any third party
underwriter with access to any and all documents, records, agreements,
instruments or information relating to such Mortgage Assets in the possession,
or under the control, of the Borrower. The Borrower further agrees that the
Borrower shall reimburse the Lender for any and all reasonable out-of-pocket
costs and expenses incurred by the Lender in connection with the Lender's
activities pursuant to this Section 11.16.
[SIGNATURE PAGE FOLLOWS]
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48
IN WITNESS WHEREOF, the parties hereto have caused this
Loan Agreement to be duly executed and delivered as of
the day and year first above written.
BORROWER
CITYSCAPE CORP.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President
Address for Notices:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: __________________
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
LENDER
GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
Address for Notices:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Champ Meyercord
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
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SCHEDULE 1
REPRESENTATIONS AND WARRANTIES RE: MORTGAGE ASSETS
Part I. Eligible Assets
As to each Mortgage Asset included in the Borrowing Base on
a Funding Date (and the related Mortgage, Mortgage Note, Assignment of Mortgage
and Mortgaged Property), the Borrower shall be deemed to make the following
representations and warranties to the Lender as of such date and as of each date
Collateral Value is determined. With respect to any representations and
warranties made to the best of the Borrower's knowledge, in the event that it is
discovered that the circumstances with respect to the related Mortgage Asset are
not accurately reflected in such representation and warranty notwithstanding the
knowledge or lack of knowledge of the Borrower, then, notwithstanding that such
representation and warranty is made to the best of the Borrower's knowledge,
such Mortgage Asset shall be assigned a Collateral Value of zero:
(1) Mortgage Asset Schedule. The information set forth on the Mortgage
Asset Schedule with respect to such Eligible Asset is true and
correct as of the Funding Date in all material respects;
(2) Payments Current. As of the applicable Funding Date, no payment
required under the Mortgage Asset is delinquent in excess of 29 days
and thereafter no payment required under the Mortgage Asset is
delinquent in excess of 59 days;
(3) Valid Lien. Each related Mortgage is a valid and enforceable first,
second or third lien on the Mortgaged Property subject only to (a)
the lien of nondelinquent current real property taxes and
assessments, (b) covenants, conditions and restrictions, rights of
way, easements and other matters of public record as of the date of
recording of such Mortgage, such exceptions appearing of record being
acceptable to mortgage lending institutions generally or specifically
reflected in the appraisal made in connection with the origination of
such Eligible Asset, and (c) other matters to which like properties
are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by such Mortgage;
(4) No Delinquent Taxes. To the best of the Borrower's knowledge there
was no delinquent tax or assessment lien against any related
Mortgaged Property;
(5) No Defenses. To the best of the Borrower's knowledge, there is no
valid offset, defense or counterclaim to any related Mortgage Note or
Mortgage, including the obligation of the Mortgagor to pay the unpaid
principal of or interest on such Mortgage Note;
(6) No Mechanics' Liens. To the best of the Borrower's knowledge, there
are no mechanics' liens or claims for work, labor or material
affecting any related Mortgaged Property which are or may be a lien
prior to, or equal with, the lien of such Mortgage, except those
which are insured against by the title insurance policy referred to
in (11) below;
Schedule 1-1
50
(7) Mortgaged Property Undamaged. To the best of the Borrower's
knowledge, each related Mortgaged Property is free of material damage
and is in good repair;
(8) Compliance With Applicable Laws. The origination of such Eligible
Asset complied in all material respects with applicable state and
federal laws, including, without limitation, usury, equal credit
opportunity, real estate settlement procedures, truth-in-lending and
disclosure laws, relating to the origination of mortgage loans, and
consummation by the Borrower of the transactions contemplated hereby
will not involve the violation of any such laws;
(9) No Modifications. Neither the Borrower nor any prior holder of any
related Mortgage has modified such Mortgage in any material respect
(except that such an Eligible Asset may have been modified by a
written instrument which has been recorded, if necessary, to protect
the interests of the Lender and which has been delivered to the
Custodian); satisfied, canceled or subordinated such Mortgage in
whole or in part; released the related Mortgaged Property in whole or
in part from the lien of such Mortgage except for the subordination
of a Mortgage securing a Mortgage Loan, with respect to which the
related superior lien was released in connection with the refinancing
of the mortgage loan relating to such superior lien; or executed any
instrument of release, cancellation, modification or satisfaction
with respect thereto except as has been disclosed to Lender prior to
Funding Date, in which case a copy of such modification agreement
will have been delivered to the Borrower and the Custodian;
(10) Title Insurance. Except with respect to High-LTV Assets, a lender's
policy of title insurance together with a condominium endorsement, if
applicable, and extended coverage endorsement and, if applicable, an
adjustable rate mortgage endorsement in an amount at least equal to
the principal balance as of the related Funding Date of each such
Eligible Asset or a commitment (binder) to issue the same was
effective on the date of the origination of such Eligible Asset, each
such policy is valid and remains in full force and effect, and each
such policy was issued by a title insurer qualified to do business in
the jurisdiction where the related Mortgaged Property is located and
acceptable to FNMA or FHLMC and in a form acceptable to FNMA or
FHLMC, which policy insures the Borrower and successor owners of
indebtedness secured by the insured related Mortgage, as to the
first, second or third priority lien of such Mortgage; to the best of
the Borrower's knowledge, no claims have been made under such
mortgage title insurance policy and no prior holder of such Mortgage,
including the Borrower, has done, by act or omission, anything which
would impair the coverage of such mortgage title insurance policy;
(11) Origination. Such Eligible Asset was originated by the Borrower or,
if not originated by the Borrower, was purchased by the Borrower and,
in either case, was underwritten substantially in accordance with the
Underwriting Guidelines then in effect;
(12) No Encroachments. To the best of the Borrower's knowledge, all of the
improvements which were included for the purpose of determining the
Appraised Value of the related Mortgaged Property lie wholly within
the boundaries and building restriction lines of such property, and
no improvements on adjoining properties encroach upon such Mortgaged
Property unless the applicable title insurance policy for such
Mortgaged Property affirmatively insures against loss or damage by
reason of any encroachment that is disclosed or would have been
disclosed by an accurate survey;
Schedule 1-2
51
(13) Occupancy. To the best of the Borrower's knowledge, no improvement
located on or being part of related Mortgaged Property is in
violation of any applicable zoning law or regulation. To the best of
the Borrower's knowledge, all inspections, licenses and certificates
required to be made or issued with respect to all occupied portions
of such Mortgaged Property and, with respect to the use and occupancy
of the same, including but not limited to certificates of occupancy
and fire underwriting certificates, have been made or obtained from
the appropriate authorities and to the best of the Borrower's
knowledge, such Mortgaged Property was lawfully occupied under
applicable law at origination and is lawfully occupied under
applicable law;
(14) Doing Business. To the best of the Borrower's knowledge, all parties
which have had any interest in any related Mortgage, whether as
mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) (1) in
compliance with any and all applicable licensing requirements of the
laws of the state wherein the related Mortgaged Property is located,
and (2)(A) organized under the laws of such state, (B) qualified to
do business in such state, (C) federal savings and loan associations
or national banks having principal offices in such state, or (D) not
doing business in such state;
(15) Mortgage Documents Genuine. The related Mortgage Note and the related
Mortgage are genuine, and each is the legal, valid and binding
obligation of the Mortgagor, enforceable in accordance with its terms
and with applicable laws except to the extent that the enforceability
thereof may be limited by (a) federal or state bankruptcy,
insolvency, moratorium and other similar laws relating to creditors'
rights generally and (b) the availability of the remedy of specific
performance and injunctive and other forms of equitable relief and by
the discretion of the court before which any proceeding therefor may
be brought. All parties to the related Mortgage Note and the related
Mortgage had legal capacity to execute such Mortgage Note and such
Mortgage and such Mortgage Note and such Mortgage have been duly and
properly executed by such parties;
(16) Full Disbursement of Proceeds. The proceeds of such Eligible Asset
have been fully disbursed, except in certain circumstances relating
to SM/MU Assets where Borrower has held back amounts until
improvements to property have been made, such amounts so withheld
will in no case be in excess of $10,000, there is no requirement for
future advances thereunder and any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making, closing or recording
such Eligible Assets were paid;
(17) Customary Provisions. The related Mortgage contains customary and
enforceable provisions which render the rights and remedies of the
holder thereof adequate for the realization against the related
Mortgaged Property of the benefits of the security, including, (i) if
such Mortgage is designated as a deed of trust, by trustee's sale and
(ii) otherwise by judicial foreclosure;
(18) Deeds of Trust. With respect to any related Mortgage constituting a
deed of trust, a trustee, duly qualified under applicable law to
serve as such, has been properly designated and currently so serves
and is named in such Mortgage, and no fees or expenses are or will
become payable by, the Lender to the trustee under the deed of trust,
except in connection with a trustees sale after default by the
related Mortgagor;
Schedule 1-3
52
(19) Form of Documents. The related Mortgage Note and the related Mortgage
is in substantially the form attached as Exhibit I hereto with such
revisions as are necessary to comply with applicable state law;
(20) Escrow Payments. There exist no deficiencies with respect to escrow
deposits and payments, if such are required by the related Mortgage
or Mortgage Note, for which customary arrangements for repayment
thereof have not been made, and no escrow deposits or payments of
other charges or payments due the Borrower have been capitalized
under the related Mortgage or the related Mortgage Note;
(21) Collection Practices. The collection practices used by the Borrower
with respect to such Eligible Asset have been in all respects legal,
proper, prudent and customary in the mortgage lending and servicing
business with respect to mortgage loans similar to such Eligible
Asset;
(22) No Additional Collateral. The related Mortgage Note is not secured by
any collateral, pledged account or other security except for the lien
of the related Mortgage and certain personalty relating thereto or a
third party guaranty. In addition, certain financing statements may
have been filed with respect to the fixtures or furniture contained
in the property securing an SM/MU Asset;
(23) No Shared Appreciation; No Contingent Interests. Such Eligible Asset
does not have a shared appreciation feature, or other contingent
interest feature;
(24) Due on Sale. Such Eligible Asset contains a "due-on-sale" clause
unless prohibited by applicable law;
(25) Hazard Insurance. The improvements upon the related Mortgaged
Property are covered by a valid and existing hazard insurance policy
with a generally acceptable carrier that provides for fire extended
coverage and such other hazards as are customary in the area where
the Mortgaged Property is located representing coverage not less than
the lesser of (i) the minimum amount required to compensate for
damage or loss on a replacement cost basis, (ii) the outstanding
principal balance of the related Eligible Asset or (iii) the maximum
allowed. All individual insurance policies and flood policies
referred to in clause (27) below contain a standard mortgagee clause
naming the Borrower or the original mortgagee, and its successors in
interest, as mortgagee, and the Borrower has received no notice that
any premiums due and payable thereon have not been paid; the related
Mortgage obligates the related Mortgagor thereunder to maintain all
such insurance, including flood insurance, at the Mortgagor's cost
and expense, and upon the Mortgagor's failure to do so, authorizes
the holder of the Mortgage to obtain and maintain such insurance at
the Mortgagor's cost and expense and to seek reimbursement therefor
from the Mortgagor;
(26) Flood Insurance. If the related Mortgaged Property is in a Federal
Flood Hazard Zone, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Mortgaged Property
with a generally acceptable carrier in an amount representing
coverage not less than the least of (A) the original outstanding
principal balance of the Eligible Asset, (B) the minimum amount
required to compensate for damage or loss on a replacement cost basis
or (C) the maximum amount of insurance that is available under the
Flood Disaster Protection Act of 1973;
Schedule 1-4
53
(27) No Condemnation. To the best of the Borrower's knowledge, there is no
proceeding pending or threatened for the total or partial
condemnation of the related Mortgaged Property, nor is such a
proceeding currently occurring, and such property is undamaged by
waste, fire, earthquake or earth movement except for normal wear and
tear;
(28) No Defaults. As of the applicable Funding Date, the scheduled monthly
payment for the Mortgage Asset is no more than 29 days delinquent.
Except with respect to any delinquent scheduled payment which is not
more than 59 days delinquent as of the date of determination, to the
best of Borrower's knowledge, there is no material default, breach,
violation or event of acceleration existing under the related
Mortgage or the related Mortgage Note that would have a material
adverse effect on the value of the related Mortgage Asset; and, the
Borrower has not waived any default, breach, violation or event of
acceleration;
(29) Type of Mortgaged Property. The related Mortgaged Property is
improved by either (i) a one- to four-family residential dwelling,
including condominium units, dwelling units in PUDs and manufactured
housing, which, to the best of the Borrower's knowledge, does not
include cooperatives and does not constitute other than real property
or personalty related to the Mortgaged Property under state law or
(ii) a small residential multi-family residence and mixed-use
structure;
(30) Servicing. Unless otherwise specified in the related Request for
Borrowing, each Eligible Asset is being serviced by the Borrower;
(31) No Future Advances. There is no obligation on the part of the
Borrower or any other party under the terms of the related Mortgage
or related Mortgage Note to make payments in addition to those made
to the related Mortgagor;
(32) Consolidation of Future Advances. Any future advances made prior to
the related Funding Date have been consolidated with the outstanding
principal amount secured by the related Mortgage, and the secured
principal amount, as consolidated, bears a single interest rate and
single repayment term reflected on the Mortgage Asset Schedule. The
consolidated principal amount does not exceed the original principal
amount of such Eligible Asset. The related Mortgage Note does not
permit or obligate the Borrower to make future advances to the
related Mortgagor at the option of the Mortgagor;
(33) No Assessments. To the best of the Borrower's knowledge, there are no
defaults in complying with the terms of the Mortgage that would have
a Material Adverse Effect on the value of the related Mortgage Loan,
and all taxes, governmental assessments, insurance premiums, water,
sewer and municipal charges, leasehold payments or ground rents that
would have a Material Adverse Effect on the value of the related
Mortgage Loan which previously became due and owing have been paid,
or an escrow of funds has been established in an amount sufficient to
pay for every such item which remains unpaid. The Borrower has not
advanced funds, or induced, solicited or knowingly received any
advance of funds by a party other than the related Mortgagor,
directly or indirectly, for the payment of any amount required by the
related Mortgage except for (A) payments in the nature of escrow
payments, including without limitation, taxes and insurance payments,
and (B) interest accruing from the date of the related Mortgage Note
or date of disbursement of the related Mortgage proceeds, whichever
is later, to the day which precedes by one month the Due Date of the
first installment of principal and interest;
Schedule 1-5
54
(34) Application of Proceeds. All amounts received with respect to such
Eligible Assets to which the Lender is entitled have been transferred
to the Lender;
(35) Underwriting. Such Eligible Asset was underwritten in accordance with
the Borrower's underwriting guidelines no less stringent than the
Underwriting Guidelines; provided, however, that from time to time
the Borrower may propose reasonable changes to such Underwriting
Guidelines and with Lender's written consent thereto (which consent
shall not be unreasonably withheld), may amend such Underwriting
Guidelines;
(36) Appraisal. The related Mortgage File contains an appraisal of the
related Mortgaged Property signed by an appraiser which meets the
minimum FNMA or FHLMC requisite qualifications for appraisers, duly
appointed by the originator, who had no interest, direct or indirect
in the related Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or
disapproval of such Eligible Asset; the appraisal is in a form
acceptable to FNMA and FHLMC, with such riders as are acceptable to
FNMA or FHLMC, as the case may be, and satisfies the requirements of
the Financial Institutions Reform, Recovery and Enforcement Act of
1989;
(37) No Graduated Payments; No Buydowns; No Convertible Mortgage Assets.
Unless otherwise specified in the related Request for Borrowing, such
Eligible Asset is not a graduated payment mortgage loan or a growing
equity mortgage loan, nor is such Eligible Asset subject to a
temporary buydown or similar arrangement. If the Eligible Asset has
an adjustable rate, it is not convertible at the option of the
related Mortgagor to a fixed rate mortgage loan;
(38) No Subordinate Liens at Origination. With respect to such Eligible
Asset, no loan junior in lien priority to such Eligible Asset and
secured by the related Mortgaged Property was originated by the
Borrower at the time of origination of such Eligible Asset unless
specifically set forth on the Request for Borrowing and expressly
approved by the Lender;
(39) Environmental Matters. To the best of Borrower's knowledge at
origination either (i) the related Mortgaged Property was not located
within a 1 mile radius of any site with environmental or hazardous
waste of which the Borrower had actual knowledge, or (ii) as to any
related Mortgaged Property located within a 1 mile radius of any site
as to which the Borrower has actual knowledge of environmental or
hazardous waste, the related Eligible Asset was reviewed in
accordance with the Borrower's established environmental review
procedures;
(40) No Fraud. To the best of the Borrower's knowledge, no error,
omission, misrepresentation, negligence, fraud or similar action
occurred on the part of any person in connection with the origination
of any Eligible Asset; and
(41) Ownership. The Borrower is the sole owner of record and holder of the
Mortgage Asset; (ii) the Mortgage Asset is not assigned or pledged
(other than as contemplated under the Loan Agreement), and the
Borrower has good indefeasible and marketable title thereto, and has
full right to transfer and pledge the Mortgage Asset therein to the
Lender free and clear of any encumbrance, equity, participation
interest, lien, pledge, charge, claim or security interest, and has
full right and authority subject to no interest or participation of,
or agreement with, any other party, to pledge and assign each
Mortgage Asset pursuant to this Loan Agreement.
Schedule 1-6
55
Part II. Eligible Home Equity Mortgage Assets
As to each Home Equity Mortgage Asset and each Home
Improvement Asset included in the Borrowing Base on a Funding Date (and the
related Mortgage, Mortgage Note, Assignment of Mortgage and Mortgaged Property),
the Borrower shall be deemed to make the following representations and
warranties to the Lender as of such date and as of each date Collateral Value is
determined (in addition to the representations and warranties set forth in Part
I of this Schedule 1). With respect to any representations and warranties made
to the best of the Borrower's knowledge, in the event that it is discovered that
the circumstances with respect to the related Mortgage Asset are not accurately
reflected in such representation and warranty notwithstanding the knowledge or
lack of knowledge of the Borrower, then, notwithstanding that such
representation and warranty is made to the best of the Borrower's knowledge,
such Mortgage Asset shall be assigned a Collateral Value of zero:
Conformance With Underwriting Guidelines.
Borrower represents and warrants to Lender with respect to
each Home Equity Mortgage Asset consisting of an interest
in a residential property in a pool of Eligible Assets that
each such Eligible Asset shall have been originated in
conformity with and meets, as of the Funding Date,
underwriting guidelines no less stringent than those
specified in Exhibit E attached hereto; provided, however,
that from time to time the Borrower may propose reasonable
changes to such Underwriting Guidelines and with Lender's
written consent thereto (which consent shall not be
unreasonably withheld), may amend such Underwriting
Guidelines.
Non Insured Home Improvement Assets. With
respect to Each home Improvement Asset which is not an FHA
insured Mortgage Asset:
(i) Each Home Improvement Asset was originated or
acquired and underwritten by the Borrower in accordance
with the underwriting criteria established by the Borrower
for its Home Improvement Assets which are not insured by
FHA as specified in Exhibit E attached hereto;
(ii) The related Mortgage Note and, if
applicable, the related Mortgage are on forms acceptable to
the Borrower;
(iii) With respect to each Home Improvement Asset
originated by a dealer or contractor, the Borrower is in
possession of the completion certificate for the related
improvement for the Home Improvement Asset.
Schedule 1-7
56
Part III. Eligible SM/MU Mortgage Assets
As to each SM/MU Mortgage Asset included in the Borrowing
Base on a Funding Date (and the related Mortgage, Mortgage Note, Assignment of
Mortgage and Mortgaged Property), the Borrower shall be deemed to make the
following representations and warranties to the Lender as of such date and as of
each date Collateral Value is determined (in addition to the representations and
warranties set forth in Part I of this Schedule 1). With respect to any
representations and warranties made to the best of the Borrower's knowledge, in
the event that it is discovered that the circumstances with respect to the
related Mortgage Asset are not accurately reflected in such representation and
warranty notwithstanding the knowledge or lack of knowledge of the Borrower,
then, notwithstanding that such representation and warranty is made to the best
of the Borrower's knowledge, such Mortgage Asset shall be assigned a Collateral
Value of zero:
Conformance With Underwriting Guidelines. Borrower represents and
warrants to Lender with respect to each SM/MU Asset consisting of a
small multi-family residence/mixed-use property in a pool of Eligible
Assets that each such SM/MU Asset shall have been originated in
conformity with and meets underwriting guidelines no less stringent
than those specified in Exhibit E attached hereto; provided, however,
that from time to time, the Borrower may propose reasonable changes
to such Underwriting Guidelines and with Lender's written consent
thereto (which consent shall not be unreasonably withheld), as a
further condition to the pledge of SM/MU Assets.
Non Insured Home Improvement Assets. With respect to Each home
Improvement Asset which is not an FHA insured Mortgage Asset:
(i) Each Home Improvement Asset was originated or acquired
and underwritten by the Borrower in accordance with the underwriting
criteria established by the Borrower for its Home Improvement Assets
which are not insured by FHA as specified in Exhibit E attached
hereto;
(ii) The related Mortgage Note and, if applicable, the
related Mortgage are on forms acceptable to the Borrower;
(iii) With respect to each Home Improvement Asset
originated by a dealer or contractor, the Borrower is in possession
of the completion certificate for the related improvement for the
Home Improvement Asset.
Schedule 1-8
57
Part IV. Eligible FHA Assets
As to each Home Improvement Mortgage Asset insured by the
FHA included in the Borrowing Base on a Funding Date (and the related Mortgage,
Mortgage Note, Assignment of Mortgage and Mortgaged Property), the Borrower
shall be deemed to make the following representations and warranties to the
Lender as of such date and as of each date Collateral Value is determined (in
addition to the representations and warranties set forth in Part I of this
Schedule 1). With respect to any representations and warranties made to the best
of the Borrower's knowledge, in the event that it is discovered that the
circumstances with respect to the related Mortgage Asset are not accurately
reflected in such representation and warranty notwithstanding the knowledge or
lack of knowledge of the Borrower, then, notwithstanding that such
representation and warranty is made to the best of the Borrower's knowledge,
such Mortgage Asset shall be assigned a Collateral Value of zero:
(1) FHA Approved. The Borrower is an FHA Approved Mortgagee in good
standing to service mortgages and has not been suspended as a
mortgagee or servicer by the FHA.
(2) Title I Home Improvement Assets. With respect to Home improvement
Assets which are Title I Home Improvement Assets, the Borrower has
complied and shall comply with the applicable provisions of the
National Housing Act, as amended and supplemented, all rules and
regulations issued thereunder, and all administrative publications
published pursuant thereto including all FHA requirements for FHA
Title I loans.
(3) Compliance of Term. The amount and the original term to maturity of
each Home Improvement Asset comply with the FHA Regulations at the
time of origination unless the requirements with respect to such Home
Improvement Asset are specifically waived by HUD with respect to such
Home Improvement Asset;
(4) Underwriting Guidelines. Each Home Improvement Asset was originated
or acquired and underwritten by the Borrower in accordance with the
underwriting criteria established by the Borrower, the FHA and HUD
for FHA Title I loans;
(5) Meets Title I Criteria. Each Home Improvement Asset (i) is an FHA
Title I property improvement loan (as defined in 24 CFR Section
201.2(aa)) underwritten by the Borrower or an entity which at the
time of origination was a lender approved by the FHA for
participation in the programs under Title I of the National Housing
Act, in accordance with the FHA requirements for the Title I loan
program as set forth in 24 CFR Parts 201 and 202, and is the subject
of FHA insurance, (ii) was originated and underwritten in accordance
with applicable FHA requirements, and (iii) was made to provide
financing for eligible home improvements for a residential dwelling;
(6) FHA Acceptable Forms. The related Mortgage Note and, if applicable,
the related Mortgage are on forms acceptable to FHA;
(7) FHA Insured. The Home Improvement Asset was originated and has been
serviced in a manner such that the Loan will be eligible for the
maximum amount of insurance made available by the FHA pursuant to
Title I of the National Housing Act (subject to the aggregate
limitation on the amount of FHA insurance available for the
Borrower), without any right of offset, counterclaim or any other
defense by the FHA. The Borrower has reported the
Schedule 1-9
58
origination of the Mortgage Asset to the FHA and has obtained or
shall obtain a case number for the Mortgage Asset from the FHA;
(8) Completion Certificate. With respect to each Home Improvement Asset
originated by a dealer or contractor, the Borrower is in possession
of the completion certificate for the related improvement as required
by FHA for the Home Improvement Asset;
(9) FHA Insurance Reserves. Borrower has or will cause an amount of FHA
Insurance Reserves with respect to the Home Improvement Assets equal
to 10% of the outstanding principal balance of such Mortgage Assets
as of the related Funding Date to be transferred or approved for
transfer on or prior to the related Funding Date to the Lender's
account maintained by the FHA; and
(10) Insurance Premiums Paid. No FHA insurance premiums are due and
unpaid, and all such premiums for subsequent periods shall be timely
paid.
Schedule 1-10
59
SCHEDULE 2
FILING JURISDICTIONS AND OFFICES
Elmsford, New York,
State of New York
Schedule 2-1
60
SCHEDULE 3
LIST OF SETTLEMENT AGENTS
Schedule 3-1
61
SCHEDULE 4
AUTHORIZED REPRESENTATIVES OF THE BORROWER
Schedule 4-1
62
EXHIBIT B
[FORM OF CUSTODIAL AGREEMENT]
(stored as a separate document)
63
EXHIBIT C
[FORM OF OPINION OF COUNSEL TO BORROWER]
(date)
Greenwich Capital Financial Products, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
You have requested [our] [my] opinion, as counsel to
Cityscape Corp., a New York corporation (the "Borrower"), with respect to
certain matters in connection with that certain Master Loan and Security
Agreement, dated as of January 1, 1997 (the "Loan and Security Agreement"), by
and between the Borrower and Greenwich Financial Products, Inc. (the "Lender"),
being executed contemporaneously with a Promissory Note dated _____ __, 1997
from the Borrower to the Lender (the "Note"), a Custodial Agreement, dated as of
January 1, 1997 (the "Custodial Agreement"), by and among the Borrower, First
Trust National Association (the "Custodian"), and the Lender. Capitalized terms
not otherwise defined herein have the meanings set forth in the Loan and
Security Agreement.
[We] [I] have examined the following documents:
1. the Loan and Security Agreement;
2. the Note;
3. Custodial Agreement;
4. unfiled copies of the financing statements listed
on Schedule 1 (collectively, the "Financing
Statements") naming the Borrower as Debtor and
the Lender as Secured Party and describing the
Collateral (as defined in the Loan and Security
Agreement) as to which security interests may be
perfected by filing under the Uniform Commercial
Code of the States listed on Schedule 1 (the
"Filing Collateral"), which I understand will be
filed in the filing offices listed on Schedule 1
(the "Filing Offices");
5. the reports listed on Schedule 2 as to UCC
financing statements (collectively, the "UCC
Search Report"); and
6. such other documents, records and papers as we
have deemed necessary and relevant as a basis for
this opinion.
To the extent [we] [I] have deemed necessary and proper,
[we] [I] have relied upon the representations and warranties of the Borrower
contained in the Loan and Security Agreement. [We] [I] have assumed (other than
with respect to the Borrower) the authenticity of all documents submitted
C-1
64
to me as originals, the genuineness of all signatures, the legal capacity of
natural persons and the conformity to the originals of all documents.
Based upon the foregoing, it is [our] [my] opinion that:
1. The Borrower is a New York corporation duly organized,
validly existing and in good standing under the laws of New York and is
qualified to transact business in, and is in good standing under, the laws of
the state of New York.
2. The Borrower has the corporate power to engage in the
transactions contemplated by the Loan and Security Agreement, the Note, and the
Custodial Agreement and all requisite [corporate] power, authority and legal
right to execute and deliver the Loan and Security Agreement, the Note, and the
Custodial Agreement and observe the terms and conditions of such instruments.
The Borrower has all requisite corporate power to borrow under the Loan and
Security Agreement and to grant a security interest in the Collateral pursuant
to the Loan and Security Agreement.
3. The execution, delivery and performance by the Borrower
of the Loan and Security Agreement, the Note, and the Custodial Agreement, and
the borrowings by the Borrower and the pledge of the Collateral under the Loan
and Security Agreement have been duly authorized by all necessary corporate
action on the part of the Borrower. Each of the Loan and Security Agreement, the
Note and the Custodial Agreement have been executed and delivered by the
Borrower and are legal, valid and binding agreements enforceable in accordance
with their respective terms against the Borrower, subject to bankruptcy laws and
other similar laws of general application affecting rights of creditors and
subject to the application of the rules of equity, including those respecting
the availability of specific performance, none of which will materially
interfere with the realization of the benefits provided thereunder or with the
Lender's security interest in the Mortgage Assets.
4. No consent, approval, authorization or order of, and no
filing or registration with, any court or governmental agency or regulatory body
is required on the part of the Borrower for the execution, delivery or
performance by the Borrower of the Loan and Security Agreement, the Note and the
Custodial Agreement or for the borrowings by the Borrower under the Loan and
Security Agreement or the granting of a security interest to the Lender in the
Collateral, pursuant to the Loan and Security Agreement.
5. The execution, delivery and performance by the Borrower
of, and the consummation of the transactions contemplated by, the Loan and
Security Agreement, the Note and the Custodial Agreement do not and will not (a)
violate any provision of the Borrower's charter or by-laws, (b) violate any
applicable law, rule or regulation, (c) violate any order, writ, injunction or
decree of any court or governmental authority or agency or any arbitral award
applicable to the Borrower of which I have knowledge (after due inquiry) or (d)
result in a breach of, constitute a default under, require any consent under, or
result in the acceleration or required prepayment of any indebtedness pursuant
to the terms of, any agreement or instrument of which I have knowledge (after
due inquiry) to which the Borrower is a party or by which it is bound or to
which it is subject, or (except for the Liens created pursuant to the Loan and
Security Agreement) result in the creation or imposition of any Lien upon any
Property of the Borrower pursuant to the terms of any such agreement or
instrument.
6. There is no action, suit, proceeding or investigation
pending or, to the best of [our] [my] knowledge, threatened against the Borrower
which, in [our] [my] judgment, either in any one instance or in the aggregate,
would be reasonably likely to result in any material adverse change in the
properties, business or financial condition, or prospects of the Borrower or in
any material impairment of the right or ability of the Borrower to carry on its
business substantially as now conducted or in any material liability on the part
of the Borrower or which would draw into question the validity of the Loan and
Security Agreement, the Note, the Custodial Agreement or the Mortgage
C-2
65
Assets or of any action taken or to be taken in connection with the transactions
contemplated thereby, or which would be reasonably likely to impair materially
the ability of the Borrower to perform under the terms of the Loan and Security
Agreement, the Note, the Custodial Agreement or the Mortgage Assets.
7. The Loan and Security Agreement is effective to create,
in favor of the Lender, a valid security interest under the Uniform Commercial
Code in all of the right, title and interest of the Borrower in, to and under
the Collateral as collateral security for the payment of the Secured Obligations
(as defined in the Loan and Security Agreement), except that (a) such security
interests will continue in Collateral after its sale, exchange or other
disposition only to the extent provided in Section 9-306 of the Uniform
Commercial Code, (b) the security interests in Collateral in which the Borrower
acquires rights after the commencement of a case under the Bankruptcy Code in
respect of the Borrower may be limited by Section 552 of the Bankruptcy Code.
8. When the Mortgage Notes are delivered to the Custodian,
endorsed in blank by a duly authorized officer of the Borrower, the security
interest referred to in paragraph 7 above in the Mortgage Notes will constitute
a fully perfected first priority security interest in all right, title and
interest of the Borrower therein, in the Mortgage Asset evidenced thereby and in
the Borrower's interest in the related Mortgaged Property.
9. (a) Upon the filing of financing statements on Form
UCC-1 naming the Lender as "Secured Party" and the Borrower as "Debtor", and
describing the Collateral, in the jurisdictions and recording offices listed on
Schedule 1 attached hereto, the security interests referred to in paragraph 8
above will constitute fully perfected security interests under the Uniform
Commercial Code in all right, title and interest of the Borrower in, to and
under such Collateral, which can be perfected by filing under the Uniform
Commercial Code.
(b) The UCC Search Report sets forth the proper filing
offices and the proper debtors necessary to identify those Persons who have on
file in the jurisdictions listed on Schedule 1 financing statements covering the
Filing Collateral as of the dates and times specified on Schedule 2. Except for
the matters listed on Schedule 2, the UCC Search Report identifies no Person who
has filed in any Filing Office a financing statement describing the Filing
Collateral prior to the effective dates of the UCC Search Report.
10. The Assignments of Mortgage are in recordable form,
except for the insertion of the name of the assignee, and upon the name of the
assignee being inserted, are acceptable for recording under the laws of the
state where each related Mortgaged Property is located.
11. The Borrower is duly registered as a [____________] in
each state in which Mortgage Assets were originated to the extent such
registration is required by applicable law, and has obtained all other licenses
and governmental approvals in each jurisdiction to the extent that the failure
to obtain such licenses and approvals would render any Mortgage Asset
unenforceable or would materially and adversely affect the ability of the
Borrower to perform any of its obligations under, or the enforceability of, the
Loan Documents.
12. Assuming that all other elements necessary to render a
Mortgage Asset legal, valid, binding and enforceable were present in connection
with the execution, delivery and performance of each Mortgage Asset (including
completion of the entire Mortgage Asset fully, accurately and in compliance with
all applicable laws, rules and regulations) and assuming further that no action
was taken in connection with the execution, delivery and performance of each
Mortgage Asset (including in connection with the sale of the related Mortgaged
Property) that would give rise to a defense to the legality, validity, binding
effect and enforceability of such Mortgage Asset, nothing in
C-3
66
the forms of such Mortgage Assets, as attached hereto as Exhibit A, would render
such Mortgage Assets other than legal, valid, binding and enforceable.
13. Assuming their validity, binding effect and
enforceability in all other respects (including completion of the entire
Mortgage Asset fully, accurately and in compliance with all applicable laws,
rules and regulations), the forms of Mortgage Assets attached hereto as Exhibit
A are in sufficient compliance with New York law and Federal consumer protection
laws so as not to be rendered void or voidable at the election of the Mortgagor
thereunder.
Very truly yours,
C-4
67
EXHIBIT E
UNDERWRITING GUIDELINES FOR HOME EQUITY LOANS AND HOME IMPROVEMENT LOANS
(on file with Greenwich Capital Financial Products, Inc.)
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇
UNDERWRITING GUIDELINES FOR SM/MU ASSETS
(on file with Greenwich Capital Financial Products, Inc.)
F-1
69
EXHIBIT G
UNDERWRITING GUIDELINES FOR HIGH LTV ASSETS
(on file with Greenwich Capital Financial Products, Inc.)
G-1
70
EXHIBIT H
WHOLE LOAN AGREEMENT
H-1
71
EXHIBIT K
FORM OF BORROWING BASE CERTIFICATE
K-1
72
EXHIBIT L
DOCUMENT EXCEPTION CODES
ASMP ASSUMPTION AGREEMENT
Exception # Description Fatal Exception
----------- ----------- ---------------
5500 Assumption agreement is missing
5501 Assumption agreement is not recorded
5502 Copy of assumption is unrecorded
5504 Assumption is missing borrower signature
5505 Copy of recorded assumption
ASSC CORPORATE ASSIGNMENT
Exception # Description Fatal Exception
----------- ----------- ---------------
2500 Assignment is missing F
2504 Assignee is missing or incorrect
2508 Recording information is missing or does not agree with DOT
2509 Notary information is missing
2510 Name of issuer is missing or incorrect F
2513 Legal description is missing or does not agree with DOT F
2515 Authorized signature is missing F
2529 Assignment is a copy - unrecorded
2530 Original assignment - unrecorded
2531 Unexecuted copy in file - original out for signature
2534 Uncertified copy of a recorded Assignment F
L-1
73
ASSN INTERIM ASSIGNMENT
Exception # Description Fatal Exception
----------- ----------- ---------------
2600 Interim assignment is missing F
2604 Assignee is missing or does not agree with endorsement
2608 Recording information or legal description is missing or does not
agree with DOT
2609 Notary information is missing or incorrect
2610 Name of issuer is missing or incorrect F
2616 Authorized signature is missing F
2617 Interim assignment is a company certified copy
2619 Copy of recorded interim assignment
2620 Document is a copy - unrecorded F
2621 Original unrecorded interim assignment
DOFT DEED OF TRUST
Exception # Description Fatal Exception
----------- ----------- ---------------
3102 Recording information is incomplete
3103 Date does not agree with note F
3106 Beneficiary is missing or does not agree with note F
3107 County of property does not match county recorded in
3108 Legal description is missing F
3109 Loan amount is missing or does not agree with note F
3111 Deed of Trust/Mortgage is missing F
3113 Notary information is missing or incorrect
3115 Rider(s) references herein not attached F
3116 Rider does not have original signature(s)
3119 Document has "white cuts" no borrower initials F
3120 Interest rate is missing or does not agree with schedule
3122 Paid amount does not agree with note
3124 Date of first payment is missing or does not agree with schedule
▇-▇
▇▇
▇▇▇▇ DEED OF TRUST
------------------------------------------------------------------------------------------------------------
EXCEPTION # DESCRIPTION FATAL EXCEPTION
------------------------------------------------------------------------------------------------------------
3125 Date of last payment is missing or does not agree with schedule
3128 Property address does not match schedule F
3129 Rider to DOFT is not recorded
3130 Deed of Trust/Mortgage is not recorded
3131 Mortgage amount does not match schedule
3134 Mortgage amount written and numeric do not match
3135 Document missing borrower(s) signature F
3136 Copy of ARM rider is unrecorded
3138 Copy of 1-4 family rider is unrecorded
3140 Copy of CONDO rider is unrecorded
3142 Copy of PUD rider is unrecorded
3144 Copy of BALLOON rider is unrecorded
3146 Copy of recorded ARM rider F
3147 Copy of recorded 1-4 family rider F
3148 Original CONDO rider - unrecorded
3149 Copy of recorded CONDO rider F
3150 CONDO rider is missing borrower signature F
3151 Missing PUD rider F
3152 Original PUD rider - unrecorded
3153 Copy of recorded PUD rider F
3154 Copy of recorded BALLOON rider F
3181 Copy of recorded Mortgage F
3182 Missing ARM rider F
3183 Original ARM rider - unrecorded
3184 ARM rider is missing borrower signature F
3185 Missing 1-4 family rider F
3186 Original 1-4 family rider - unrecorded
3187 1-4 family rider is missing borrower signature F
3188 Missing CONDO rider F
3189 PUD rider is missing borrower signature ▇
▇-▇
▇▇
▇▇▇▇ DEED OF TRUST
Exception # Description Fatal Exception
----------- ----------- ---------------
3190 Missing BALLOON rider F
3191 Original BALLOON rider - unrecorded
3192 BALLOON rider is missing borrower signature F
3195 Deed of Trust/Mortgage is a copy F
3197 Deed of Trust/Mortgage is a cc'd copy
MOD MODIFICATION AGREEMENT
Exception # Description Fatal Exception
----------- ----------- ---------------
5800 MOD is missing F
5801 MOD is original - unrecorded
5802 MOD is a copy F
5804 MOD is missing borrower signature F
5805 Copy of recorded MOD F
NOTE NOTE
Exception # Description Fatal Exception
----------- ----------- ---------------
3700 Note is missing F
3703 Note amount is missing or does not agree with schedule F
3704 Date of last payment is missing or doesn't agree with schedule
3705 Interest rate is missing or does not agree with schedule
3706 PU is missing or does not agree with schedule
3707 Date of first payment is missing or does not agree with schedule
3708 Mortgagor name is missing or does not agree with schedule F
3709 Loan amount, alpha and numeric do not agree
3711 Interest rate, alpha and numeric do not agree
3712 PU, alpha and numeric do not agree
3716 Endorsements are missing F
L-4
76
NOTE NOTE
Exception # Description Fatal Exception
----------- ----------- ---------------
3718 Property address is missing or does not agree with schedule F
3719 Endorsements are incorrect F
3720 Note is incomplete (see text for details) F
3721 Note is a copy F
3722 Note has "white out" no borrower initials F
3723 Endorsement(s) missing authorized signature F
3724 Lost note affidavit with copy of note
3725 Incorrect note in file F
3728 Lost note affidavit - no note copy F
PACT PARTICIPATION CERTIFICATE
Exception # Description Fatal Exception
----------- ----------- ---------------
3800 Participation certificate is missing F
PMI PRIVATE MORTGAGE INSURANCE
Exception # Description Fatal Exception
----------- ----------- ---------------
4000 PMI is missing
4012 Authorized signature is missing
4014 PMI is a copy
▇-▇
▇▇
▇▇▇▇ POWER OF ATTORNEY
Exception # Description Fatal Exception
----------- ----------- ---------------
4100 Power of attorney is missing F
4104 Power of attorney is a copy F
4105 Power of attorney is original - unrecorded
4107 Recorded Power of attorney is a copy
SECA SECURITY AGREEMENT
Exception # Description Fatal Exception
----------- ----------- ---------------
4800 Security agreement is missing F
STCT STOCK CERTIFICATE
Exception # Description Fatal Exception
----------- ----------- ---------------
9030 Stock certificate is missing F
TPOL TITLE POLICY
Exception # Description Fatal Exception
----------- ----------- ---------------
4900 Title policy is missing F
4902 Amount of insurance does not match deed F
4904 Name of insured is not the beneficiary of its assigns F
4905 Vesting information does not match deed F
4906 Sch A - mortgage description has incorrect mortgage amount F
4907 Sch A - mortgage description has incorrect date of mortgage F
4908 Sch A - mortgage description has incorrect trustor
4909 Sch A - mortgage description has incorrect trustee F
4910 Sch A - mortgage description has incorrect beneficiary F
4911 Sch A - mortgage description has incorrect recording date
▇-▇
▇▇
▇▇▇▇ TITLE POLICY
Exception # Description Fatal Exception
----------- ----------- ---------------
4912 Sch A - mortgage description has incorrect recording data
4913 Sch A - mortgage description has incorrect assignment information
(if shown) F
4915 Legal description does not match deed F
4916 Schedule B parts I and II are missing F
4920 Title policy is missing authorized signature F
4921 Endorsement(s) to policy is missing signature F
4923 Schedule A is missing F
4925 Title policy is missing cover F
4926 Date of Title policy (see text for details)
4933 Title policy is missing recording information
4934 Document is a commitment/preliminary report F
4935 Title policy is a copy F
XCON EXTENSION & CONSOLIDATION & MODIFICATION
Exception # Description Fatal Exception
----------- ----------- ---------------
5600 Original extension/consolidation - unrecorded
5601 XCON is a copy F
5602 XCON is missing F
L-7
79
ANNEX I
NON-PERFORMING LOAN SUBLINE TERMS
The Borrower and the Lender agree that notwithstanding and in addition to the
terms of the Agreement, the following terms and conditions apply:
Eligible Collateral: The Mortgage Assets listed on
Schedule 5 to the Agreement.
Applicable Collateral
Percentage: 50% of the aggregate outstanding
principal balance of the Eligible
Collateral as of the Business Day
prior to the Funding Date.
Applicable Margin: 2.50% per annum.
Funding Date: November 24, 1997
Custody: Pursuant to First Trust Custodial
Agreement
Application of Obligor
Interest Payments: In addition to application
of Mortgagor principal payments to
reduction of principal balance of this
Subline in accordance with Section
2.06, interest received from
Mortgagors on the Eligible Collateral,
to the extent such interest is in
excess of the interest due on this
Subline pursuant to Section 2.05,
shall be applied to reduction of the
principal balance of this Subline.
Non-Revolving Subline: Principal amounts repaid under this
Subline may not be reborrowed.
Other Provisions: All other provisions of the Agreement
shall be applicable to this Subline to
the extent such provisions are not
inconsistent with this Annex I.
I-1
80
ANNEX II
WET LOAN SUBLINE TERMS
The Borrower and Lender agree that notwithstanding and in addition to the terms
of the Agreement, the following terms and conditions shall apply:
Eligible Collateral: Home Equity Mortgage Asset and High
LTV Assets other than purchase money
mortgage loans.
Applicable Collateral The least of (a) 85%, (b) the
Percentage: Applicable Collateral Percentage set
forth in the Agreement for the related
Mortgage Asset, and (c) with respect
to any High LTV Asset to be funded
under this Subline for which no FICO
score has been communicated by the
Borrower to the Wet Loan Custodian,
70%.
Initial To be mutually agreed upon between
Draw Date: Lender and Borrower following Lender's
due diligence of the Wet Loan
Custodian and formal approval of
Lender's Credit Department.
Wet Loan Custodian: CoreStates Bank, N.A. pursuant to the
Wet Loan Custodial Agreement.
Wet Loan Custodial
Agreement: A custodial agreement among Lender,
Borrower and CoreStates Bank, N.A.
dated as of November 24, 1997.
Funding Account: The account held by the Wet Loan
Custodian entitled CoreStates Bank,
N.A., as agent for Greenwich Capital
Financial Products, Inc. Amounts
returned to the Funding Account shall
be applied to the prepayment of the
Loans in accordance with the Wet Loan
Custodial Agreement.
Maximum Subline: $30,000,000
Procedures for Borrowing: 1. Not later than the Business Day prior
to the related Funding Date, the
Borrower will provide the Lender with
a good faith estimate of the Mortgage
Assets to be funded under this Subline
on the related Funding Date.
2. Not later than the related Funding
Date:
(a) The Borrower will deliver and
release to the Wet Loan Custodian
the original Mortgage Note and
all intervening endorsements for
all Mortgage Assets to be funded.
(b) Borrower will deliver to the
Lender the "Green Line Inventory
Report" listing the Mortgage
Assets to be funded.
II-1
81
(c) Borrower will input wire
instructions to the applicable
Settlement Agents on the Wet Loan
Custodian's cash management
system.
3. On the related Funding Date:
(a) The Wet Loan Custodian, as
Funding Agent for the Lender,
will fund the Settlement Agents
from the Funding Account (with
any amount above the Applicable
Collateral Percentage being
funded out of a Borrower account
held by the Wet Loan Custodian)
pursuant to wire instructions
input by the Borrower, provided
Procedure #2 above has been
satisfied.
(b) The Wet Loan Custodian will fax
to the Lender by 4:00 p.m., New
York City time, a "Daily
Transaction Report" listing all
Mortgage Assets to be funded on
the related Funding Date and a
Trust Receipt stating that the
Wet Loan Custodian is holding in
trust for the Lender the original
Mortgage Note and all intervening
endorsements for each such
Mortgage Asset.
4. Not later than three (3) Business Days
following the related Funding Date,
the Borrower will deliver and release
to the Wet Loan Custodian a complete
Mortgage File for each Mortgage Asset
funded on the related Funding Date (so
that each such Mortgage Asset shall
qualify as a "Dry Mortgage Asset" as
defined below) in accordance with the
terms of the Agreement.
5. Not later than four (4) Business Days
following the related Funding Date,
the custodial division of the Wet Loan
Custodian will deliver to the Lender a
Trust Receipt stating that it is
holding all Mortgage Loan Documents as
defined in the Wet Loan Custodial
Agreement together with a Mortgage
Asset Schedule and Exception Report
with respect to each Mortgage Asset
funded on the related Funding Date in
accordance with the terms and
conditions of the Wet Loan Custodial
Agreement.
Applicable Collateral In the event the Borrower has not
Percentage Reduction: delivered a complete Mortgage File for
a Mortgage Asset within four (4)
Business Days of the related Funding
Date, the Applicable Collateral
Percentage for such Mortgage Asset
will be reduced to 50%. In the event
the Borrower has not delivered a
complete Mortgage File for a Mortgage
Asset within seven (7) Business Days
of the related Funding Date, the
Applicable Collateral Percentage will
be reduced to 0%. After December 31,
1997, the Applicable Collateral
Percentage will be reduced to 0%.
Additional Representations
and Warranties: As to each Mortgage Asset included in
the Borrowing Base on a Funding Date
(and the related Mortgage, Mortgage
Note, Assignment
II-2
82
of Mortgage and Mortgaged Property), the
Borrower shall be deemed to make the
following representations and warranties to
the Lender as of such date and as of each
date Collateral Value is determined. With
respect to any representations and
warranties made to the best of the
Borrower's knowledge, in the event that it
is discovered that the circumstances with
respect to the related Mortgage Asset are
not accurately reflected in such
representation and warranty notwithstanding
the knowledge or lack of knowledge of the
Borrower, then, notwithstanding that such
representation and warranty is made to the
best of the Borrower's knowledge, such
Mortgage Asset shall be assigned a
Collateral Value of zero:
(a) The Borrower has in its possession an
effective Insured Closing Letter
covering each Settlement Agent to be
used in connection with such funding
or evidence of an errors and omissions
insurance policy acceptable to Lender
in effect with such Settlement Agent.
(b) The escrow instructions for each
Mortgage Asset to be funded under this
Subline advise the Settlement Agent
that the Settlement Agent will be
holding the funds in trust for the
Lender and will instruct the
Settlement Agent to return any funds
as a result of "defundings" to the
Funding Account.
(c) The Settlement Agent has been notified
and instructed, as part of an escrow
instruction letter delivered to such
Settlement Agent by the Borrower, as
follows (and has agreed to act in
accordance therewith):
"The funds to be used for closing this
transaction may be provided via wire
transfer from First Trust National
Association (the "Custodian") on
behalf of Greenwich Capital Financial
Products, Inc. (the "Lender"). You are
to hold the closing funds in trust for
the Custodian for the benefit of the
Lender until such time as the funds
are disbursed in accordance with the
escrow instructions.
If the mortgage loan is not funded by
the close of business on the business
day on which you receive the closing
funds, you should contact Cityscape
Corp. ("Cityscape") immediately for
instructions as to whether to hold the
funds for a rescheduled funding on the
next business day or to return the
funds to the Lender. If, by [2:00
p.m.], New York City time, on the
business day after the initial
scheduled closing date, you have not
received instructions from Cityscape
to hold the funds for a rescheduled
closing, you should return the funds
via federal funds wire transfer to the
Lender as follows: [INSERT WIRE
TRANSFER INSTRUCTIONS TO PAYDOWN
ACCOUNT].
II-3
83
If you hold the funds for a
rescheduled closing, but the mortgage
loan does not close on the rescheduled
closing date, you are to return the
closing funds via federal funds wire
transfer to the Lender to the account
specified above, no later than [12:00
noon], New York City time, on the
business day after the rescheduled
closing date.
Upon the funding of the mortgage loan,
all of the documents and files
relating to such mortgage loan shall
be subject to the security interest of
the Lender therein, and you hereby
agree to act as the Lender's agent,
custodian and bailee for such time as
you are holding the same. You are
instructed at such time to deliver the
mortgage loan documents and files to
the Custodian in accordance with the
closing instructions. These
instructions shall be irrevocable and
can only be modified with the approval
in writing of the Lender or the
Custodian, as directed by the Lender."
(d) In the case of any Wet-Ink Mortgage
Assets that are or have been
originated by a correspondent
originator in a transaction
table-funded by the Borrower with
respect to which the related Mortgage
Note is payable to the correspondent
originator and the related Mortgage
names the correspondent originator as
the mortgagee, the mortgage asset
purchase agreement (or other similar
agreement or separate instrument)
between such correspondent originator
and the Borrower contains a power of
attorney provision enabling the
Borrower, if necessary, to endorse the
related Mortgage Note and/or execute
the related Assignment of Mortgage,
all in the name of such correspondent
originator and in favor of the
Borrower, and such power of attorney
is enforceable and in full force and
effect and all filings, notices and
other actions necessary or advisable
to obtain the full benefits thereof
(including, if required by any
relevant jurisdiction, any
registration or recording thereof)
have been made or taken.
Definitions:
The following terms shall have the following
meanings:
"Dry Mortgage Asset" shall mean an
Eligible Asset with respect to
which the Mortgage File has been
received by the Custodian and
the Custodian has issued and the
Lender has received a Trust
Receipt and Exception Report
showing no Material Exceptions
in respect thereof.
"Insured Closing Letter" shall mean a
letter of indemnity from a title
insurance company addressed to
the Borrower with coverage that
is customarily acceptable to
Persons engaged in the
origination of mortgage assets
similar to the Mortgage Assets
(the Lender hereby agreeing that
for purposes of this Loan
Agreement, a letter of
II-4
84
indemnity from a title insurance
company which is in form
acceptable to the Lender shall
be acceptable as an Insured
Closing Letter).
"Settlement Agent" shall mean, with
respect to any Loan, the entity
approved by the Lender, in its
sole discretion (which may be a
title company, escrow company or
attorney in accordance with
local law and practice in the
jurisdiction where the related
Wet-Ink Mortgage Asset is being
originated) to which the
proceeds of all or a portion of
such Loan are to be distributed
by the Custodian pursuant to the
instructions of the Borrower.
Other Provisions: All other provisions of the Agreement
shall be applicable to this Subline to
the extent such provisions are not
inconsistent with this Annex II.
II-5
85
EXTENSION AGREEMENT
This EXTENSION AGREEMENT, dated as of December 31, 1997 (this
"AGREEMENT"), is made by and between Greenwich Capital Financial Products, Inc.
("GCFP") and Cityscape Corp. ("Cityscape").
Reference is made to the Mortgage Loan and Security Agreement, dated as
of January 1, 1997 (the "LOAN AGREEMENT"), by and between Cityscape, as
Borrower, and GCFP, as Lender, whereby GCFP has agreed to make certain loans to
Cityscape, which loans are secured by, among things, certain mortgage loans
owned by Cityscape, as provided in the Loan Agreement and the other agreements
entered into in connection with the execution of the Loan Agreement
(collectively, the "LOAN FACILITY"). As provided in the Loan Agreement, the term
of the Loan Facility expires on December 31, 1997. GCFP is willing, upon the
terms and conditions set forth herein, to extend the term of the Loan Facility
for the period commencing on January 1, 1998 and ending on ▇▇▇▇▇ ▇▇, ▇▇▇▇ (▇▇▇
"▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇").
NOW THEREFORE, in consideration of the mutual agreements hereinafter
set forth, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. Capitalized terms used, but not otherwise
defined, herein shall have the meaning ascribed thereto in the
Loan Agreement, including by way of reference to any other
documents or agreements.
2. Renewal. Notwithstanding anything contained in Section 1 or in
the notice provisions of Section 2.11 of the Loan Agreement,
GCFP and Cityscape hereby agree, upon the terms and conditions
set forth herein and in the Loan Facility, to extend the
Termination Date as provided in the Loan Agreement from
December 31, 1997, to March 31, 1998, which term may be
extended for an additional period or periods in the sole
discretion of GCFP upon the written request of Cityscape.
3. Eligible Asset. In addition to the terms and conditions set
forth in, and notwithstanding anything to the contrary
contained in, the Loan Agreement, including, without
limitation, the representations and warranties set forth in
Section 6.07 of, and Schedule 1 to the Loan Agreement, Home
Improvement Assets, FHA Assets, High LTV Assets with FICO
scores below 600, and SM/MU Assets will not be Eligible Assets
under the Loan Agreement; provided, that High LTV Assets with
FICO scores between 600-620 will not be Eligible Assets
following February 28, 1998.
4. Maximum Amount of Additional Loans. The definition of "Maximum
Credit" in the Loan Agreement shall hereby be amended to
86
include the following provision immediately prior to the end
of such definition: "provided, however, that on and after
January 1, 1998, "Maximum Credit" shall mean $100,000,000.00,
which amount shall be subject to review and adjustment by GCFP
at January 31, 1998."
5. Applicable Margin. On and after January 1, 1998, the
Applicable Margin shall be increased from 1.50% to 2.00% per
annum.
6. Collateral Value. The definition of "Collateral Value" in
Section 1.01 of the Loan Agreement is hereby amended by: (a)
deleting in clause (i)(5) thereof "120" and substituting
therefor "60"; and deleting in clause (iv) thereof
"$15,000,000.00" and substituting therefor "$5,000,000.00".
7. Expenses. Cityscape hereby agrees to reimburse GCFP promptly
upon request for all of GCFP's reasonable fees and expenses
incurred in connection with the negotiation and documentation
of the Loan Agreement, this Agreement and any other agreements
or amendments executed in furtherance thereof and hereof. In
connection therewith, Cityscape shall deposit with GCFP in
immediately available funds the following amounts: (a)
$100,000.00 on January 6, 1998; and (b) $100,000.00 on the
Residual Closing Date (as defined below). The foregoing
amounts may be used by GCFP to pay estimated expenses and
disbursements incurred and expected to be incurred by GCFP in
connection with the purposes described in the first sentence
of Section 7 hereof.
8. Extension Fee. In consideration for extending the term of the
Loan Facility, Cityscape shall pay to GCFP a fee of 1.50% (the
"Extension Fee") of the amount of Maximum Credit that is in
effect on January 1, 1998. The Extension Fee shall be paid in
immediately available funds in the following manner: (a)
$500,000.00 shall be due and payable on January 6, 1998; (b)
an additional $500,000.00 shall be due and payable on the
business day following the date on which the closing (the
"RESIDUAL CLOSING DATE") of any purchase of the residual
interests created in connection with Cityscape Corp. Home
Equity Loan Trust, Series 1997-B and/or Cityscape Corp. Home
Equity Loan Trust, Series 1997-C occurs; and (c) any
remaining, unpaid balance of the Extension Fee shall be due
and payable no later than February 15, 1998.
9. Cash Flow Projections. On the last Business Day of each week,
Cityscape shall provide to GCFP cash flow projections showing
weekly and monthly cash flows on a rolling four week and three
month basis.
10. Pledge of Residuals. In consideration for GCFP's agreeing to
extend the term of the Loan Facility upon the terms and
conditions
87
provided herein and as additional Collateral under the Loan
Agreement to secure the repayment of principal of and interest
on all Loans owning to GCFP thereunder and all other amounts
owing under the Loan Facility, Cityscape will, concurrent with
the execution of this Agreement, enter into a Pledge Agreement
(SPV) dated February 3, 1998 among Cityscape, GCFP and CIT
Group/Equipment Financing Inc. (the "Pledge Agreement"),
pursuant to which Cityscape will pledge and grant to or for
the benefit of GCFP and CIT a security interest in the
"Collateral" and "Additional Collateral" (as defined in, and
subject to, the provisions of the Pledge Agreement.) GCFP
hereby agrees to share a security interest in, and proceeds
of, the Collateral and Additional COLLATERAL with CIT as
described in the Pledge Agreement, and that 50% of the
proceeds from the sale of Collateral and Additional Collateral
may be applied by the Company to its obligations under the CIT
Credit Agreement (as defined in the Pledge Agreement).
11. Whole Loan Trade-Aways. GCFP shall have the right to identify
potential third-party buyers of the Mortgage Loans subject to
the Loan Facility and coordinate negotiations with such third
parties on Cityscape's behalf regarding the terms of purchase
of such Mortgage Loans by such third-parties. In connection
with any sale, securitization or any other transfer of the
Mortgage Loans to any third-party (any of the foregoing, a
"TRADE-AWAY"), regardless of whether GCFP assisted in any such
Trade-Away, Cityscape shall pay to GCFP a fee of 0.25% of the
aggregate principal balance of any such Mortgage Loans subject
to such Trade-Away on or before the date on which such
Trade-Away closes.
12. Conditions to Further Advances. GCFP's obligation to make any
additional Loans to Cityscape under the Loans Agreement, on
and after the dates specified in this section 9, shall be
subject to Cityscape having the ability, on and after February
3, 1998, to draw under a committed line of credit (the terms
of which shall be satisfactory to GCFP) of at least
$30,000,000.00 which facility shall provide a subline for
unsecured wet mortgage loan fundings of at least
$3,000,000.00.
13. Financial Condition Covenants. The covenants set forth in
Section 7.18 and 7.26 of the Loan Agreement are hereby deleted
in their entirety, and Lender hereby waives any past or
current default under those covenants; provided, however, that
Lender's agreement to each of the foregoing is expressly
conditioned upon Lender and Borrower agreeing to a mutually
agreeable substitute financial covenant for the Loan Agreement
on or prior to February 9, 1998.
14. Further Assurances. The parties hereto hereby agree to execute
and deliver such additional documents, instruments or
agreements as may
88
be reasonably necessary and appropriate to effectuate the
purposes of this Agreement.
15. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the
State of New York without regard to its conflicts of law
principles.
16. Conflicts. Unless specifically amended or revised herein, all
the terms and conditions of the Loan Agreement and the Loan
Facility shall remain in full force and effect. In the event
of a conflict of any provision hereof with any provision or
definition set forth in the Loan Agreement or any agreement
constituting the Loan Facility, the provisions and definitions
of this Agreement shall control.
17. Amendment. The provisions of this Agreement may only be
amended, revised, modified or supplemented by a written
agreement executed by the parties hereto.
18. Counterparts. This Agreement may be executed in any number of
counterparts, all of which, when taken together, shall
constitute one and the same instrument and any of the parties
hereto may execute this Agreement by signing any such
counterpart.
19. No Waiver. Unless specifically provided herein, nothing
contained in this Agreement shall be deemed to be a waiver of
any rights that GCFP might have under this Agreement, the Loan
Agreement or otherwise under the Loan Facility, or otherwise
at law or in equity.
IN WITNESS WHEREOF, GCFP and Cityscape have caused this Extension Agreement to
be duly executed and delivered by their respective authorized officers as of the
date first above written:
CITYSCAPE CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
89
FIRST RENEWAL AGREEMENT
This FIRST RENEWAL AGREEMENT, dated March 27, 1998 (this "Agreement"), is
made by and between Greenwich Capital Financial Products, Inc. ("GCFP") and
Cityscape Corp. ("Cityscape").
Reference is made to the Mortgage Loan and Security Agreement, dated as of
January 1, 1997 (the "Loan Agreement"), by and between Cityscape, as Borrower,
and GCFP, as Lender, whereby GCFP has agreed to make certain loans to Cityscape,
which loans are secured by, among other things, certain mortgage loans, owned
by Cityscape, as provided in the Loan Agreement and the other agreements
entered into in connection with the execution of the Loan Agreement
(collectively, the "Loan Facility"). As provided in the Loan Agreement, the term
of the Loan Facility expired on December 31, 1997. Pursuant to the December 31,
1997 Extension Agreement (the "Extension Agreement") GCFP and Cityscape agreed
to extend the term of the Loan Facility as modified by the Extension Agreement
for the period commencing on January 1, 1998 and ending on ▇▇▇▇▇ ▇▇, ▇▇▇▇ (▇▇▇
"▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇").
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. Capitalized terms used, but not otherwise defined, herein
shall have the meaning ascribed thereto in the Loan Agreement, including by way
of reference to any other documents or agreements.
2. Renewal. Notwithstanding anything contained in Section 1 or in the
notice provisions of Section 2.11 of the Loan Agreement, GCFP and Cityscape
hereby agree, upon the terms and conditions set forth in the Loan Facility and
the Extension Agreement, to extend the Extension Period from March 31, 1998, to
April 30, 1998, which term may be extended for an additional period or periods
in the sole discretion of GCFP upon the written request of Cityscape.
3. Amendment to Extension Agreement. Section 13, "Financial Condition
Covenants" of the Extension Agreement is hereby amended by adding a period
after the word covenants in the third line thereof and deleting the semi-colon
and the remainder of that section.
4. Further Assurances. The parties hereto hereby agree to execute and
deliver such additional documents, instruments or agreements as may be
reasonably necessary and appropriate to effectuate the purposes of this
Agreement.
5. Conflicts. Unless specifically amended or revised herein, all the
terms and conditions of the Loan Agreement, the Loan Facility and the Extension
shall remain in full force and effect. In the event of a conflict of any
provision hereof with any provision
90
or definition set forth in the Loan Agreement or the Loan Facility or the
Extension, the provisions and definitions of this Agreement shall control.
6. Amendment. The provisions of this Agreement may only be amended,
revised, modified or supplemented by a written agreement executed by the
parties hereto.
7. Governing Law. This agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York without regard
to its conflicts of law principles.
IN WITNESS WHEREOF, GCFP and Cityscape have caused this First Renewal
Agreement to be duly executed and delivered by their respective authorized
officers as of the date first above written.
CITYSCAPE CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
____________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Sr. V.P.
GREENWICH CAPITAL
FINANCIAL PRODUCTS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: ?