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EXHIBIT 10.1
EXECUTION COPY
POST-PETITION LOAN AND SECURITY AGREEMENT
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DATED AS OF OCTOBER 12, 1998
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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 16
SECTION 2. LOANS AND PREPAYMENTS 16
2.01 LOANS 16
2.02 EVIDENCE OF INDEBTEDNESS 16
2.03 PROCEDURE FOR BORROWING 16
2.04 LIMITATION ON TYPES OF LOANS; ILLEGALITY 17
2.05 REPAYMENT OF LOANS; INTEREST 18
2.06 MANDATORY PREPAYMENTS OR PLEDGE 18
2.07 OPTIONAL PREPAYMENTS 19
2.08 INDEMNITY 19
2.09 REQUIREMENTS OF LAW 19
2.10 TAXES 20
2.11 EXTENSION OF TERMINATION DATE 22
2.12 ADDITIONAL FEES 22
SECTION 3 PAYMENTS; COMPUTATIONS; ETC. 22
3.01 PAYMENTS 22
3.02 COMPUTATIONS 23
SECTION 4. COLLATERAL SECURITY 23
4.01 COLLATERAL; SECURITY INTEREST 23
4.02 FURTHER DOCUMENTATION 24
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4.03 CHANGES IN LOCATIONS, NAME, ETC. 25
4.04 LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT 25
4.05 PERFORMANCE BY LENDER OF BORROWER'S OBLIGATIONS 26
4.06 PROCEEDS 26
4.07 REMEDIES 27
4.08 LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL 27
4.09 POWERS COUPLED WITH AN INTEREST 27
4.10 RELEASE OF SECURITY INTEREST 28
4.11 CERTAIN BANKRUPTCY ISSUES 28
SECTION 5. CONDITIONS PRECEDENT 28
5.01 CONDITIONS TO INTERIM FUNDING 28
5.02 CONDITIONS TO FINAL FUNDING 31
5.03 INITIAL AND SUBSEQUENT LOANS 31
SECTION 6. REPRESENTATIONS AND WARRANTIES 32
6.01 EXISTENCE 32
6.02 LITIGATION 32
6.03 NO BREACH 32
6.04 ACTION 33
6.05 APPROVALS 33
6.06 GOOD STANDING 33
6.07 COLLATERAL; COLLATERAL SECURITY 34
6.08 CHIEF EXECUTIVE OFFICE 34
6.09 INSURANCE 34
6.10 FINANCIAL STATEMENTS 34
6.11 ERISA 35
6.12 ACCURACY OF INFORMATION 35
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6.13 LOAN DOCUMENTS 35
6.14 COMPLIANCE WITH LAW, ETC 35
6.15 FRAUDULENT CONVEYANCE 35
6.16 INVESTMENT COMPANY ACT COMPLIANCE 35
6.17 TAXES 35
6.18 MARGIN REGULATIONS 35
6.19 ORDER EXPENSES 35
6.20 EFFECTIVENESS OF ORDERS 36
6.21 EXISTING OBLIGATIONS 36
6.22 EXISTING PURCHASE AGREEMENTS 36
6.23 REQUIRED CREDITOR APPROVAL 36
SECTION 7. COVENANTS OF THE BORROWER 36
7.01 FINANCIAL STATEMENTS 36
7.02 REPORTS 37
7.03 COMPLIANCE WITH LAWS 37
7.04 EXISTENCE, ETC. 37
7.05 NOTICES 37
7.06 COMPLIANCE WITH CUSTODIAL AGREEMENT 38
7.07 BORROWING BASE DEFICIENCY; MAXIMUM CREDIT EXCESS 38
7.08 INSPECTION OF BOOKS AND RECORDS 38
7.09 NO ASSIGNMENT 38
7.10 NO AMENDMENT TO CORPORATE DOCUMENTS 38
7.11 NO CHANGE OF CONTROL 39
7.12 LIMITATION ON LINES OF BUSINESS 39
7.13 LIMITATION ON DISTRIBUTIONS 39
7.14 LIMITATION ON GUARANTEES 39
7.15 LIMITATION ON LIENS 39
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7.16 FINANCIAL CONDITION COVENANTS 39
7.17 NOTICE IF MORTGAGE ASSET IS FOUND DEFECTIVE 40
7.18 PROHIBITION OF FUNDAMENTAL CHANGES 40
7.19 LIMITATION ON TRANSACTIONS WITH AFFILIATES 40
7.20 UNDERWRITING GUIDELINES 40
7.21 SERVICING TAPE 40
7.22. BORROWING BASE CERTIFICATE 40
7.23. AUTHORIZED OFFICERS 40
7.24. EXISTING OBLIGATIONS 40
7.25. CIT FACILITY 41
7.26. PURCHASED LOANS 41
7.27. SELECTION CRITERIA 41
SECTION 8. EVENTS OF DEFAULT 42
SECTION 9. REMEDIES UPON DEFAULT 44
SECTION 10. NO DUTY OF LENDER 45
SECTION 11. MISCELLANEOUS 45
11.01 WAIVER 45
11.02 NOTICES 45
11.03 INDEMNIFICATION AND EXPENSES 45
11.04 AMENDMENTS 47
11.05 SUCCESSORS AND ASSIGNS 47
11.06 SURVIVAL 47
11.07 CAPTIONS 47
11.08 COUNTERPARTS 47
11.09 LOAN AGREEMENT CONSTITUTES SECURITY AGREEMENT; GOVERNING LAW 47
11.10 WAIVER OF JURY TRIAL 47
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11.11 ACKNOWLEDGMENTS 48
11.12 HYPOTHECATION OR PLEDGE OF LOANS 48
11.13 ASSIGNMENTS, PARTICIPATIONS 48
11.14 SERVICING 49
11.15 PERIODIC DUE DILIGENCE REVIEW 50
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 Other Existing Liens
SCHEDULE 6 Existing Purchase Agreements
EXHIBIT A Form of Custodial Agreement
EXHIBIT B Form of Opinion of Counsel to Borrower
EXHIBIT C Underwriting Guidelines for Home Equity Loans
EXHIBIT D Underwriting Guidelines for High LTV Mortgage Assets
EXHIBIT E Whole Loan Agreement
EXHIBIT F Form of Borrowing Base Certificate
EXHIBIT G Document Exception Codes
EXHIBIT H Form of Request for Borrowing
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POST-PETITION LOAN AND SECURITY AGREEMENT
POST-PETITION LOAN AND SECURITY AGREEMENT, dated as of October 12,
1998, between CITYSCAPE CORP., a New York corporation and a debtor-in-possession
(the "Borrower"), and GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware
corporation (the "Lender").
RECITALS
The Borrower and the Lender are parties to a certain Master Loan and
Security Agreement, dated as of January 1, 1997 (as amended from time to time,
the "Existing Loan Agreement").
Each of the Borrower and Cityscape Financial Corp., a Delaware
corporation and a debtor-in-possession (the "Guarantor") have filed a voluntary
petition for relief under Chapter 11 of the United States Bankruptcy Code in the
United States Bankruptcy Court for the Southern District of New York, White
Plains Division (the "Bankruptcy Court") commencing cases (respectively, the
"Borrower's Case" and the "Guarantor's Case"; collectively, the "Chapter 11
Cases") on October 5, 1998 (the "Petition Date"), after having obtained
acceptances from a majority in number and at least 66.67% in dollar amount of
those creditors voting in each class of creditors entitled to vote to confirm a
joint plan of reorganization for the Borrower and the Guarantor.
The Borrower has requested that, during the pendancy of the Chapter
11 Cases, 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.
NOW, THEREFORE, 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):
"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 guaranty dated as of
the date hereof, made by the Guarantor in favor of the Lender, as amended from
time to time.
Applicable Collateral Percentage" shall mean the applicable
percentages set forth below:
Product %
------- ----
Home Equity Mortgage Assets 95%
High LTV Mortgage Assets
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Product %
------- ----
FICO < 620 0%
FICO 620-640 80%
FICO > 640 90%
"Applicable Margin" shall mean 2.75% 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.
"Approval Order" shall mean any of the Interim Order, the Final
Order and the Guarantor Order.
"Avoidance Action" shall mean any action which seeks (a) to
invalidate, avoid, subordinate or otherwise impair any claims of the Lender
under the Existing Loan Agreement or under this Loan Agreement or any liens
created by either facility, (b) to challenge the ownership by the Lender of the
Purchased Loans or (c) to recover any transfer made to the Lender by or on
behalf of the Borrower or the Guarantor.
"Avoided Payments" shall have the meaning provided in Section
2.06(g).
"Bankruptcy Code" shall mean the United States Bankruptcy Code of
1978, as amended from time to time.
"Bankruptcy Court" shall have the meaning provided in the recitals
hereto or any other court having jurisdiction over the Chapter 11 Cases.
"Borrower" shall have the meaning provided in the heading hereof.
"Borrower Carve Out Expenses" shall mean fees payable to the United
States Trustee pursuant to 28 U.S.C. Section 1930(a)(6), and the allowed Fees
and expenses of attorneys, accountants and other professionals retained by the
Borrower and any Official Committee appointed in the Borrower's Case; provided,
that Borrower Carve Out Expenses shall not include fees and expenses incurred at
any time in connection with any Avoidance Actions.
"Borrower's Case" shall have the meaning provided in the recitals
hereto.
"Borrowing Base" shall mean the aggregate Collateral Value of all
Eligible Assets.
"Borrowing Base Certificate" shall mean the certificate delivered
pursuant to Section 7.23 hereof, substantially in the form of Exhibit F 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.
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"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.
"Carve Out Expenses" shall mean the collective reference to the
Borrower Carve Out Expenses and the Guarantor Carve Out Expenses; provided, that
upon the occurrence and during the continuance of an Event of Default
(regardless of whether or not the Lender elects to exercise any remedies
hereunder), and following notice from the Lender to the Borrower, the Guarantor
and the Official Committee appointed in the Chapter 11 Cases, the maximum amount
of Carve Out Expenses that shall be entitled to priority over the DIP
Obligations shall be limited to $575,000 (the "Carve Out Cap"); provided,
further, that after the termination of the CIT Facility and (a) the payment in
full of all obligations under the CIT Facility, (b) the termination of all
commitments under the CIT Facility and (c) the release of all Liens in favor of
CIT, the Carve Out Cap shall be increased by the unused portion of the
Professional Expense Cap (as defined in the CIT Facility) under the CIT
Facility, the aggregate amount of the Carve Out Cap following any such increase
not to exceed $1,150,000.
"Case Orders" shall have the meaning provided in Section 8(n).
"Change of Control" shall mean either (i) either ▇▇▇▇▇▇ ▇▇▇▇ or
▇▇▇▇▇ ▇▇▇▇▇▇ leave the employ of Borrower or (ii) there occurs a change of
"control" of Borrower or the Guarantor, as such term is defined in the
Securities Exchange Act of 1934, as amended.
"Chapter 11 Cases" shall have the meaning provided in the
recitals hereto.
"CIT" shall mean the CIT Group/Business Credit, Inc., or an
Affiliate thereof, as lender or as agent for a syndicate of lenders.
"CIT Commitment Fee Percentage" shall mean the highest commitment
fee percentage (or other comparable fee) charged by CIT pursuant to the CIT
Facility on the unused portion of the maximum credit available under the CIT
Facility.
"CIT Facility" shall mean any financing facility between the
Borrower and CIT or the Guarantor and CIT entered into on or after the Petition
Date.
"CIT Facility Documents" shall mean all documents evidencing or
executed in connection with the CIT Facility.
"CIT Facility Fee Percentage" shall mean the highest facility fee
percentage (or other comparable fee) charged by CIT pursuant to the CIT
Facility, calculated by dividing the amount of facility fee charged under the
CIT Facility by the maximum credit available thereunder.
"CIT Mortgage Loan" shall mean any mortgage loan pledged to CIT
pursuant to, and financed by, the CIT Facility in which CIT is granted a first
priority security interest.
"CIT Mortgage Loan Collateral" shall have the meaning provided in
Section 4.01(c) hereof.
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"Collateral" shall mean the collective reference to the Primary
Collateral, the CIT Mortgage Loan Collateral and the Other Collateral; provided,
that Collateral shall not include any causes of action or proceeds of claims
pursuant to Chapter 5 of the Bankruptcy Code.
"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 aggregate Collateral Value of High LTV Mortgage Assets shall
not exceed the lesser of (A) $50,000,000 and (B) 50% of the Maximum Credit as in
effect;
(ii) the aggregate Collateral Value of Delinquent Mortgage Assets
that are Home Equity Mortgage Assets shall not exceed the lesser of (A)
$5,000,000 and (B) 5% of the Maximum Credit as in effect; and
(iii) 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),
(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) which remains pledged to the Lender hereunder later than
90 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) 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,
(6) 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,
(7) in respect of which the related Mortgaged Property is the
subject of a foreclosure proceeding,
(8) in respect of which the related Mortgagor is the subject
of a bankruptcy proceeding, or
(9) which is a Delinquent Mortgage Asset that is a High LTV
Mortgage Asset.
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"Consolidated Unsecured Indebtedness" shall mean, for any Person, as
of any date of determination, all obligations and liabilities of such Person and
its consolidated Subsidiaries which (i) in accordance with GAAP, would be
included in determining total liabilities of such Person and its Consolidated
Subsidiaries as shown on the liability side of such Person's balance sheet and
(ii) are not secured by the grant of a lien upon, or security interest in, any
interest in property. For the purpose of this determination: (x) Consolidated
Unsecured Indebtedness of the Borrower shall include all outstanding principal
and accrued and unpaid interest on Indebtedness of the Borrower to the Guarantor
and (y) the Consolidated Unsecured Indebtedness of the Guarantor shall include
all outstanding principal and accrued and unpaid interest on Indebtedness owed
by the Guarantor under the 12 -3/4% senior notes due 2004 and under the 6%
subordinated convertible debentures due 2006 issued by the Guarantor.
"Costs" shall have the meaning provided in Section 11.03(a)
hereof.
"Custodial Agreement" shall mean either (i) the First Trust
Custodial Agreement or (ii) the U.S. Bank Trust 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 U.S. Bank Trust Custodial
Agreement, U.S. Bank Trust and its successors and permitted assigns thereunder.
"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.
"DIP Obligations" shall have the meaning provided in Section
4.01(e) hereof.
"Disposition" shall mean, with respect to any Mortgage Asset, any of
the following: (i) the sale or securitization of such Mortgage Asset; (ii) the
release of such Mortgage Asset from the Lien securing the DIP Obligations in
connection with the termination of this Loan Agreement for any reason whatsoever
(including the final maturity thereof); and (iii) the release of such Mortgage
Asset from the Lien securing this Loan Agreement in connection with a full or
partial payment of the Loans outstanding under this Loan Agreement or a
substitution therefor of other Mortgage Assets.
"Disposition Date" shall mean the date on which a Disposition is
consummated.
"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 11.15 hereof with respect to
any or all of the Mortgage Assets, as desired by the Lender from time to time.
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"Eligible Asset" shall mean a Mortgage Asset secured by a first,
second or third mortgage lien on a one-to-four family residential 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.
"Existing Loan" shall mean, at any time, any then outstanding loan
made by the Lender to the Borrower pursuant to the Existing Loan Agreement.
"Existing Loan Agreement" shall have the meaning provided in the
recitals hereto.
"Existing Obligations" shall mean the obligations of the Borrower to
the Lender under the Existing Loan Agreement and all related documents and
instruments.
"Existing Pledge Agreement" shall mean the Pledge Agreement, dated
as of February 3, 1998, between the Borrower and CIT, and acknowledged by the
Lender, as it may have been amended from time to time.
"Existing Purchase Agreement" shall mean each of the agreements
listed on Schedule 6 hereto.
"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.
"Final Effective Date" shall mean the date on which the conditions
precedent set forth in Section 5.02 have been satisfied.
"Final Maximum Credit" shall mean, during the period covered by the
Final Order, the excess, if any, of $100,000,000 over the sum of (i) the
aggregate outstanding principal balance of Existing Loans (after giving effect
to any repayment of such Existing Loans which will be made in conjunction and
contemporaneously with any borrowing pursuant to this Loan Agreement) and (ii)
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without duplication, the aggregate outstanding principal amount of Purchased
Loans that have not been resold by the Lender and with respect to which the
Borrower has not yet transferred servicing rights to a successor servicer.
"Final Order" shall mean the order of the Bankruptcy Court in the
Borrower's Case granting final approval for this Loan Agreement.
"Final Period" shall mean the period of time during which the Final
Order is in effect.
"Financial Statements" shall mean those documents to be delivered
pursuant to Section 7.01 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 A-1, 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.
"Guarantor" shall have the meaning provided in the recitals
hereof.
"Guarantor Carve Out Expenses" shall mean fees payable to the United
States Trustee pursuant to 28 U.S.C. Section 1930(a)(6), and the allowed Fees
and expenses of attorneys, accountants and other professionals retained by the
Guarantor and any Official Committee appointed in the Guarantor's Case;
provided, that Guarantor Carve Out Expenses shall not include fees and expenses
incurred at any time in connection with any Avoidance Action.
"Guarantor Obligations" shall have the meaning provided in
Section 5.01(c)(ii).
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"Guarantor's Case" shall have the meaning provided in the
recitals hereof.
"Guaranty Order" shall mean an order of the Bankruptcy Court in form
and substance acceptable to the Lender that approves the Affiliate Guaranty.
"High LTV Mortgage Asset" shall mean a Mortgage Asset underwritten
in accordance with the Borrower's Sav-a-Loan underwriting guidelines attached as
Exhibit D 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 C or otherwise approved by Lender, other than a
High LTV Mortgage Asset.
"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.
"Indemnified Person" shall have the meaning provided in Section
11.03(a).
"Insured Closing Letter" shall mean a closing letter issued by the
Settlement Agent with respect to the funding of a Mortgage Asset by the
Borrower.
"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 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.
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"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.
"Interim Effective Date" shall mean the date on which the conditions
precedent set forth in Section 5.01 have been satisfied.
"Interim Maximum Credit" shall mean, during the period covered by
the Interim Order, the lesser of (i) the excess, if any, of $100,000,000 over
the sum of (A) the aggregate outstanding principal balance of Existing Loans
(after giving effect to any repayment of such Existing Loans which will be made
in conjunction and contemporaneously with any borrowing pursuant to this Loan
Agreement) and (B) without duplication, the aggregate outstanding principal
amount of Purchased Loans that have not been resold by the Lender and with
respect to which the Borrower has not yet transferred servicing rights to a
successor servicer and (ii) the amount authorized by the Interim Order.
"Interim Order" shall mean the order of the Bankruptcy Court in the
Borrower's Case granting interim approval for this Loan Agreement.
"Interim Period" shall mean the period of time during which the
Interim Order is in effect (but shall not include the Final Period).
"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 Reference Banks are 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
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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 Post-Petition Loan and Security
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time.
"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 U.S. Bank Trust Custodial Agreement,
any Note and the Affiliate Guaranty.
"Management Book" shall have the meaning provided in Section
7.02(d).
"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 Borrower's
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 G hereto.
"Maximum Credit" shall mean the Final Maximum Credit or the Interim
Maximum Credit, as the context shall require; provided, that the Maximum Credit
shall be permanently reduced by the amount of any Avoided Payments which are
repaid or disgorged by the Lender after the Interim Effective Date.
"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.
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"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 or a High
LTV Mortgage Asset which the Custodian has been instructed to hold for the
Lender hereunder pursuant to the applicable Custodial Agreement, and which
Mortgage Asset includes, without limitation, (i) a Mortgage Note and related
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 or a High LTV Mortgage 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.
"Non-Excluded Taxes" shall have the meaning provided in Section
2.10 hereof.
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"Note" shall have the meaning provided in Section 2.02 hereof.
"Official Committee" shall mean any committee appointed by the
United States Trustee pursuant to Section 1102 of the Bankruptcy Code.
"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.
"Other Collateral" shall have the meaning provided in Section
4.01(d) hereof.
"Other Existing Liens" shall mean all Liens listed on Schedule 5
hereto.
"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.
"Permitted Liens" shall mean:
(1) Liens in favor of the Lender;
(2) Liens in connection with any taxes or assessments or other
governmental charges or levies if not yet due and payable or, if due and
payable, if they are stayed by the Bankruptcy Court or the Bankruptcy
Code;
(3) Liens imposed by Law, such as mechanics' materialmen's,
landlords', warehousemen's, and carriers' Liens, and other similar Liens,
securing obligations incurred in the ordinary course of business which are
not past due for more than thirty days or, if due and payable, if they are
stayed by the Bankruptcy Court or the Bankruptcy Code;
(4) Liens under workers' compensation, unemployment insurance,
Social Security or similar legislation;
(5) Liens, deposits, or pledges to secure the performance of
bids, tenders, contracts (other than contracts for the payment of money),
leases (permitted under the terms of this Agreement), public or statutory
obligations, surety, indemnity, performance, or other similar bonds, or
other similar obligations arising in the ordinary course of business, and
the pledge of assets for the purpose of securing an appeal, stay or
discharge in the course of any legal proceedings, provided that the
aggregate amount of liabilities of the Borrower and/or the Guarantor
secured by a pledge of assets permitted under this clause, including
interest and penalties thereon, if any, shall not be in excess of $500,000
at any one time outstanding;
(6) Easements, rights-of-way, restrictions, and other similar
encumbrances which, in the aggregate, do not materially interfere with the
occupation, use, and enjoyment by
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the Borrower of the property or assets encumbered thereby in the normal
course of the Borrower's business or materially impair the value of the
property subject thereto;
(7) Purchase-money Liens on any property hereafter acquired or
the assumption of any Lien on property existing at the time of such
acquisition, (and not created in contemplation of such acquisition) or a
Lien incurred in connection with any conditional sale or other title
retention agreement or a capital lease;
(8) Liens on real estate acquired and owned as a result of
foreclosure of a mortgage held by the Borrower;
(9) Liens in favor of CIT to the extent such Liens are subject
to the terms of the Post-Petition Pledge Agreement or the Post-Petition
Intercreditor Agreement; and
(10) Other Existing Liens.
"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).
"Petition Date" shall have the meaning provided in the recitals
hereof.
"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.
"Plan Effective Date" shall mean the date on which a Plan of
Reorganization is substantially consummated within the meaning of Bankruptcy
Code Section 1101.
"Plan of Reorganization" shall mean "Cityscape Financial Corp.'s and
Cityscape Corp.'s Joint Plan of Reorganization" attached to the Solicitation and
Disclosure Statement of the Borrower and the Guarantor dated August 28, 1998, as
amended or modified in a manner reasonably acceptable to the Lender, and any
other plan of reorganization which shall (i) provide for the repayment of all
Existing Obligations, (ii) if any releases or covenants not to ▇▇▇ or
indemnities (or similar provisions) are contained therein, provide for releases
by the Borrower and the Guarantor of the Lender from any claims against the
Lender, in form and substance acceptable to the Lender, and (iii) otherwise be
reasonably acceptable to the Lender.
"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.
"Post-Petition Intercreditor Agreement" shall mean that certain
Intercreditor Agreement, dated as of October 12, 1998, between CIT and the
Lender.
"Post-Petition Pledge Agreement" shall mean that certain Pledge
Agreement, dated as of October 12, 1998, among the CIT, the Lender, the
Guarantor and the Borrower.
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"Pre-Petition Collateral" shall mean all "collateral", as such term
is used under the Existing Loan Agreement.
"Pre-Petition Intercreditor Agreement" shall mean Section 9 of the
Existing Pledge Agreement, as it may have been amended.
"Primary Collateral" shall have the meaning provided in Section
4.01(b) hereof.
"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.
"Purchased Loan" shall mean a residential mortgage loan purchased by
the Lender from the Borrower pursuant to any of the Existing Purchase
Agreements.
"Reference Bank" shall mean three major banks that are engaged in
the London interbank market, as selected by the Lender.
"Request for Borrowing" shall have the meaning provided in
Section 2.03(a) hereof.
"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; provided, that the foregoing shall not include
the organizational or governing documents of the Lender.
"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.
"Retained Yield" shall have the meaning provided in the Existing
Purchase Agreements.
"Servicer" shall mean the servicer of the Mortgage Assets pursuant
to the Servicing Agreement or any other servicing agreement.
"Servicing Agreement" shall have the meaning provided in Section
11.14(a) hereof.
"Servicing Records" shall have the meaning provided in Section
11.14(e) hereof.
"Settlement Agent" shall mean the settlement agent or closing
attorney with respect to the funding of a Mortgage Asset.
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"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.
"Tangible 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) 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, 1997; (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.
"Termination Date" shall mean either (a) the earliest to occur of
(i) the Plan Effective Date in either Chapter 11 Case that has been confirmed by
an order of the ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (▇▇) ▇▇▇▇▇ ▇, ▇▇▇▇, (▇▇▇) the thirtieth (30th)
day following the Petition Date, unless the Final Order has been entered by the
Bankruptcy Court on or prior to such day and (iv) such earlier date on which
this Loan Agreement shall terminate in accordance with the provisions hereof or
by operation of law or (b) such later date as established in accordance with
Section 2.11 hereof.
"Underwriting Guidelines" shall mean the underwriting guidelines as
in effect on the Interim Effective Date, attached as Exhibits C and D hereto,
except that with respect to Schedule 1, "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.
"United States Trustee" shall mean the trustee appointed pursuant to
the Bankruptcy Code in connection with the Chapter 11 Cases.
"U.S. Bank Trust Custodial Agreement" shall mean that certain
Custodial Agreement, dated as of the date hereof, among the Borrower, U.S. Bank
Trust and the Lender, substantially in the form of Exhibit A-2, as the same
shall be modified and supplemented and in effect from time to time.
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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, as applicable, 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 Interim Effective Date or the Final Effective Date, as applicable,
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) Unless waived by the Lender in writing, in no event shall a Loan
be made when any Default or Event of Default has occurred and is continuing.
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 (a "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 Interim Effective Date or the Final
Effective Date, as applicable, 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 H 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) include such other matters as may be specified on the form
of the Request for Borrowing or as may be reasonably requested by
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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 7.23 hereof. Each
Loan shall be in a minimum amount equal to $1,000,000. 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, provided that all conditions precedent set forth in
Section 5.01 or 5.02, as applicable, and 5.03 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.
(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. Provided
that such delivery shall have occurred and 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;
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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 and all other
DIP Obligations.
(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 greater of (i) the LIBO Rate plus the Applicable
Margin and (ii) the highest pre-default interest rate charged to the Borrower or
the Guarantor, as applicable, by CIT pursuant to the CIT Facility.
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 or under any other Loan
Document 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 on the 25th
calendar day of each month and for the last month of the Loan 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 and be payable daily.
Promptly after the determination of any interest rate provided for herein or any
change therein, the Lender shall give notice thereof to the Borrower.
(c) From the Petition Date until the repayment in full of the
Existing Obligations, the Existing Obligations shall bear interest in accordance
with Section 7.24(c) hereof.
2.06 Mandatory Prepayments or Pledge.
(a) If at any time the aggregate outstanding principal amount of
Loans exceeds the Borrowing Base (such excess, 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.
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(d) The Borrower shall apply the proceeds (net of underwriting fees)
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; provided, that any
proceeds in excess of the Loan Balance with respect to such Mortgage Assets may
be retained by the Borrower.
(e) The Borrower shall apply the proceeds (net of broker's fees) of
any sale of any Mortgage Asset (other than pursuant to Section 2.06(d) 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 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; provided, that any proceeds
in excess of the Loan Balance with respect to such Mortgage Assets may be paid
to and retained by the Borrower.
(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.
(g) If the Lender, for any reason, after the Petition Date is
required by the Bankruptcy Court or by any other court of competent jurisdiction
to repay or disgorge all or part of any repayment of Existing Loans or other
amounts owing to the Lender under the Existing Loan Agreement (collectively,
"Avoided Payments"), the amount of such Avoided Payments shall be subtracted
from the Maximum Credit then in effect. To the extent that such calculation
results in the Loans then outstanding exceeding the Maximum Credit, the Borrower
shall prepay such excess no later than one Business Day following receipt of
notice from the Lender.
(h) Amounts repaid may be reborrowed in accordance with the terms of
this Loan Agreement.
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 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.
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(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.
(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 Loan
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
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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 Loan
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 Loan 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 Loan 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 11.13 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
(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 Loan 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
11.13 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
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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 an additional
period of time, to be determined by the Lender in its sole discretion, by giving
written notice of such extension to the Borrower no later than 20 days prior to
the then current Termination Date.
2.12 Additional Fees.
(a) Facility Fee: The Borrower shall pay to the Lender a facility
fee in an amount equal to the product of (i) the greater of (A) 1.75% and (B)
the CIT Facility Fee Percentage and (ii) $100,000,000. Such facility fee shall
be payable in three installments as follows:
(x) one-third of such facility fee shall have been paid on or prior
to the execution and delivery of the commitment letter and term sheet
relating to this Loan Agreement (which amount the Lender acknowledges has
previously been paid by the Borrower);
(y) one-third of such facility fee shall be payable on or prior
to the Interim Effective Date; and
(z) one-third of such facility fee shall be payable on or prior to
the Final Effective Date.
(b) Commitment Fee: On the last day of each fiscal quarter, or if
such day is not a Business Day, the next succeeding Business Day, the Borrower
shall pay to the Lender a commitment fee in an amount equal to the product of
(i) the greater of (A) .50% and (B) the CIT Commitment Fee Percentage, and (ii)
the average daily unused portion of the Maximum Credit under this Loan Agreement
during such fiscal quarter.
(c) Exit Fee: In connection with any Disposition, on the related
Disposition Date, the Borrower shall pay to the Lender a collateral release fee
in an amount equal to the product of (i) .25% and (ii) the aggregate outstanding
principal balance of the Mortgage Asset subject to such Disposition; provided,
however, that the aggregate amount of all such collateral release fees paid
after the Petition Date (without counting any such collateral release fees which
are waived by the Lender) shall not exceed $375,000; provided, further, that
such collateral release fee shall be waived in the case of (x) a Disposition
pursuant to clause (i) of the definition of "Disposition" in which the Lender
acts as purchaser, lead underwriter or lead placement agent with respect to the
Mortgage Assets subject to the Disposition or (y) a Disposition pursuant to
clause (ii) of the definition of "Disposition" in which the Mortgage Assets
subject to the Disposition are pledged to the Lender pursuant to a replacement
revolving credit facility entered into between the Lender and the Borrower, on
terms acceptable to the Lender in its sole discretion.
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
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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 the 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 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, (including any and all such property
described in clauses (i) through (xi) below to the extent that such property was
formerly Pre-Petition Collateral in which the Lien granted under the Existing
Loan Agreement was released by virtue of payments in respect of the Existing
Obligations) whether now owned or hereafter acquired, now existing or hereafter
created and wherever located, is hereinafter referred to as the "Primary
Collateral":
(i) all Mortgage Assets which either Custodian has been instructed
to hold for the Lender hereunder 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, 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;
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(v) all Interest Rate Protection Agreements relating to such
Mortgage Assets;
(vi) any account established by either Custodian for the benefit of
the Lender hereunder 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,
other than any such collateral which is Pre-Petition Collateral, for so
long as such collateral is Pre-Petition Collateral;
(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) All of the Borrower's right, title and interest in, to and under
each of the CIT Mortgage Loans, whether now owned or hereafter acquired, now
existing or hereafter created, and wherever located (hereinafter referred to as
the "CIT Mortgage Loan Collateral").
(d) 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 (hereinafter
referred to as the "Other Collateral"):
(i) all accounts; bank accounts; chattel paper; contracts; documents
and letters of credit; equipment; general intangibles; instruments;
inventory; investment property; vehicles; (each as defined in the Uniform
Commercial Code) and any other real or personal property of the Borrower
(including without limitation, residual securities and servicing rights),
however described, including without limitation, Pre-Petition Collateral;
and
(ii) all books and records pertaining to the foregoing; and to the
extent not otherwise included, any and all replacements, substitutions,
distributions on or proceeds or products of any and all of the foregoing.
(e) 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 "DIP Obligations"); provided, that
Carve Out Expenses may be paid from the Collateral as contemplated herein. The
Borrower agrees to ▇▇▇▇ its computer records and tapes to evidence the interests
granted to the Lender hereunder.
4.02 Further Documentation. At any time and from time to time, upon
the written request of the Lender, and at the 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
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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 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
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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 DIP
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.
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 DIP Obligations (whether matured or unmatured),
except as provided in the Orders, it being understood that until the Existing
Obligations are paid in full, all proceeds relating to the Pre-Petition
Collateral shall be used to repay the Existing Obligations, such application to
be in such order as the Lender shall elect. Any balance of such proceeds
remaining after the DIP 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.
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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 DIP 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 DIP 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
Collateral are insufficient to pay the DIP Obligations and the fees and
disbursements of any attorneys employed by the Lender to collect such
deficiency.
4.08 Limitation on Duties Regarding Preservation 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.
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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 DIP 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 DIP Obligations is rescinded or must otherwise be
restored or returned by the Lender 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.
4.11 Certain Bankruptcy Issues. The DIP Obligations shall constitute
allowed administrative expenses in the Borrower's Case having priority over all
other administrative expenses of the kinds specified in Sections 503(b) or
507(b) of the Bankruptcy Code and unsecured claims, other than Borrower
Carve-Out Expenses, and, subject to the terms of the Post-Petition Pledge
Agreement and the Post-Petition Intercreditor Agreement, shall be pari passu as
to priority with the obligations of the Borrower under the CIT Facility and
shall be paid as ordinary course expenses during the Borrower's Case without
notice, hearing or court approval. The doctrine of marshaling shall not be
available or applicable with respect to the payment of any DIP Obligations or
any enforcement of remedies by the Lender.
Section 5. Conditions Precedent.
5.01 Conditions to Interim Funding. The obligation of the Lender to
make its initial Loan during the Interim Period hereunder is subject to the
satisfaction or written waiver by the Lender, prior to or concurrently with the
making of such Loan, but in any event no later than October 15, 1998, of the
following conditions precedent to the satisfaction of the Lender and its
counsel:
(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 Lender shall have received the
First Trust Custodial Agreement and the U.S. Bank 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 this
Loan Agreement;
(b) Organizational Documents. The Lender shall have received
certified copies of the charter and by-laws (or equivalent documents) of
the Borrower and of all corporate or other 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.
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(i) The Lender shall have received the Affiliate Guaranty,
duly completed and executed by a duly authorized officer of the
Guarantor and approved in a Guaranty Order; and
(ii) The obligations of the Guarantor under the Affiliate
Guaranty (the "Guarantor Obligations") shall constitute allowed
administrative expenses in the Guarantor's Case having priority over
all other administrative expenses of the kinds specified in Sections
503(b) or 507(b) of the Bankruptcy Code and unsecured claims, other
than Guarantor Carve-Out Expenses, and shall be paid as ordinary
course expenses during the Guarantor's Case without notice, hearing
or court approval. The doctrine of marshaling shall not be available
or applicable with respect to the payment of any Guarantor
Obligations or any enforcement of remedies by the Lender.
(d) Legal Opinions. The Lender shall have received:
(i) a legal opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, outside counsel to
the Borrower, covering the entry of the Interim Order; and
(ii) a legal opinion of the in-house counsel to the Borrower,
covering, general corporate matters not covered by the opinion of
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇;
which, when read together, are substantially in the form attached
hereto as Exhibit B;
(e) Mortgage Asset Schedule and Exception Report. The Lender shall
have received a Mortgage Asset Schedule and Exception Report, dated the
Interim Effective Date, from the Custodian, duly completed;
(f) Servicing Agreement(s). The Lender shall have received any
servicing agreement with a third party servicer with respect to the
Mortgage Assets, 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) Interim Order. An Interim Order, in form and substance
satisfactory to the Lender, shall be in effect and provide that no
Avoidance Action may be commenced by any person after 60 days following
the Petition Date;
(h) Fees and Expenses. The Lender shall have received all fees and
expenses due and payable to the Lender on or prior to the Interim
Effective Date;
(i) Review of Bankruptcy Filings. The Lender shall have reviewed and
approved all documents and pleadings submitted to the Bankruptcy Court
with respect to the interim and final approval of this Loan Agreement and
of the CIT Facility;
(j) Cash Budget. The Lender shall have reviewed and approved the
cash budget of the Borrower covering, on a week-by-week basis, a period of
at least thirty (30) days from the Petition Date;
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(k) Liens. The Liens in favor of the Lender shall be valid and
perfected Liens of the priority indicated in Section 6.07(e), subject to
no other Liens, except as expressly permitted hereunder;
(l) Plan of Reorganization. The Borrower and the Guarantor shall
have obtained acceptances from a majority in number and not less than
66.67% in dollar amount of those creditors voting in each class of
creditors entitled to vote to confirm the Plan of Reorganization for the
Borrower and the Guarantor, and the Plan of Reorganization shall (i)
provide for the repayment of all outstanding Existing Obligations and the
DIP Obligations on or prior to the Plan Effective Date, (ii) if any
releases or covenants not to ▇▇▇ or indemnities (or similar provisions)
are contained in the Plan of Reorganization, provide for releases by the
Borrower and the Guarantor of the Lender from any claims against the
Lender, in form and substance acceptable to the Lender, and (iii)
otherwise be reasonably acceptable to the Lender;
(m) CIT Facility. The Lender shall have received and approved all
documents evidencing the CIT Facility, and the CIT Facility shall provide
for committed financing during the Interim Period of not less than the
lesser of (A) $100,000,000 and (B) the amount approved by the Interim
Order, and otherwise on terms reasonably acceptable to the Lender (and all
conditions precedent thereto shall have been satisfied or waived by CIT);
(n) Employment Agreements. The Lender shall have received copies of
employment agreements between the Borrower and each of ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇, each in form and substance reasonably acceptable
to the Lender;
(o) No Distributions. The Borrower shall not have made any
distribution of cash or cash equivalents (excluding mortgage loans owned
by the Borrower) to the Guarantor in excess of $100,000 in the aggregate,
and the Guarantor shall not have made any distribution of cash or cash
equivalents to any equity owner of the Guarantor in excess of $100,000 in
the aggregate, in each case during the period from the date which is 90
days prior to the Interim Effective Date to and including the Interim
Effective Date;
(p) Post-Petition Pledge Agreement. The Lender shall have received
the Post-Petition Pledge Agreement, executed and delivered by a duly
authorized officer of the Borrower and CIT, which shall be in form and
substance satisfactory to the Lender and shall include, without
limitation, provisions which (i) give effect to this Loan Agreement, (ii)
provide for the Lender and CIT to have pari passu priority in the Other
Collateral, (iii) provide for a standstill agreement on the part of CIT in
form and substance acceptable to the Lender with respect to the Primary
Collateral (to the extent that CIT (as a lender or an agent) is granted a
second (or other subordinate) lien on such Primary Collateral) and (iv)
provide for a standstill agreement on the part of the Lender in form and
substance acceptable to the Lender with respect to the CIT Mortgage Loan
Collateral;
(q) Post-Petition Intercreditor Agreement. The Lender shall have
received the Post-Petition Intercreditor Agreement, executed and delivered
by a duly authorized officer of CIT, which shall be in form and substance
satisfactory to the Lender; and
(r) Other Documents. The Lender shall have received such other
documents as the Lender may reasonably request.
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5.02 Conditions to Final Funding. The obligation of the Lender to
make its initial Loan during the Final Period hereunder is subject to the
satisfaction or written waiver by the Lender, prior to or concurrently with the
making of such Loan, but in any event no later than October 31, 1998, of the
following conditions precedent to the satisfaction of the Lender and its
counsel:
(a) Interim Funding Conditions. All conditions precedent
contained in Section 5.01 hereof shall have been satisfied;
(b) Fees and Expenses. The Lender shall have received all fees and
expenses due and payable to the Lender on or prior to the Final Effective
Date;
(c) Legal Opinion. The Lender shall have received a legal opinion of
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, outside counsel to the Borrower, covering the entry of
the Final Order; substantially in the form attached hereto as Exhibit B;
(d) Orders. Neither the Interim Order nor the Guaranty Order shall
have been stayed, reversed, revoked or otherwise modified without the
consent of the Lender;
(e) Final Order. A Final Order, in form and substance
satisfactory to the Lender, shall be in effect;
(f) No Relief Motions. No motion shall be pending seeking any of the
relief described in paragraphs (m) and (n) of Section 8 hereto;
(g) CIT Facility. The Lender shall have received and approved all
documents evidencing the CIT Facility, and the CIT Facility shall provide
for committed financing during the Final Period of not less than
$100,000,000, and otherwise on terms reasonably acceptable to the Lender
(and all conditions precedent thereto shall have been satisfied or waived
by CIT); and
(h) Existing Obligations. The Existing Obligations shall have been
repaid in full (with the proceeds of the initial Loan made during the
Final Period or otherwise).
5.03 Initial and Subsequent Loans. The making of each Loan to the
Borrower (including the initial Loan during either the Interim Period or the
Final Period) 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 6.07(a) 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
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specifically include a statement that the Borrower is in compliance with
all governmental licenses and authorizations and is qualified to do
business in all required jurisdictions.
(c) the aggregate outstanding principal amount of the Loans shall
not exceed the Borrowing Base or the Maximum Credit at such time;
(d) subject to the Lender's right to perform one or more Due
Diligence Reviews pursuant to Section 11.15 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 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) 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 as of the Interim Effective Date
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 Loan 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 Loan Agreement;
6.02 Litigation. Except as disclosed to the Lender prior to the
Interim Effective Date or, in the case of actions arising after the Interim
Effective Date, 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 Loan 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 Loan 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
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instrument entered into after the Petition Date to which the Borrower is a party
or by which it may be bound or, after entry of the Interim Order and Final
Order, 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 Loan 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 entered into after the
Petition Date, or after entry of the Interim Order and Final Order, subject to
or in violation of any statute, order or regulation of any court, regulatory
body, administrative agency or 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 Loan 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, or contemplated under, this
Loan Agreement) upon any Property of the Borrower pursuant to the terms of any
such agreement or instrument;
6.04 Action. Upon entry of the Interim Order or the Final Order, as
applicable, 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 Loan Agreement and the Loan
Documents and the execution, delivery and performance of this Loan 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 Loan Agreement and the
Loan Documents, assuming the due authorization, execution and delivery thereof
by the Lender and the entry of the Interim Order or the Final Order, as
applicable, 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. After entry of the Interim Order and the Final
Order, 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 Loan 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 the Loan Documents and the CIT Facility Documents;
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
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enforceability of any Eligible Asset or the servicing of the Eligible Assets in
accordance with the terms of this Loan 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 CIT on a
subordinated basis as contemplated herein, 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. No Mortgage Asset pledged to the Lender
hereunder was acquired by the Borrower from an Affiliate of the Borrower.
(b) After entry of the Interim Order or the Final Order, as
applicable, 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.
(c) Upon entry of the Interim Order or the Final Order, as
applicable:
(i) the Lender shall have a first priority perfected security
interest with respect to the Primary Collateral;
(ii) the Lender shall have a second priority perfected
security interest with respect to the CIT Mortgage Loan Collateral,
subject only to the Lien of CIT; and
(iii) the Lender shall have a perfected security interest
which is pari passu with CIT with respect to all Other Collateral, which
shall be subject only to Permitted Liens.
6.08 Chief Executive Office. The Borrower's chief executive office
on the Interim 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 ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. Schedule 2
hereto lists the appropriate jurisdictions in which the Lender should file UCC-1
financing statements in order to make precautionary filings to perfect the
Lender's security interest in Collateral which may be perfected by filing.
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 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). Except as otherwise disclosed to the head
trader or chief credit officer of the Lender, since the date of the most recent
Financial Statements or Management Book, 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
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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.
6.11 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 during the term of
this Loan Agreement.
6.12 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 respect. There is
no fact known to Borrower, and not previously disclosed to the head trader or
chief credit officer of the Lender, which has a material possibility of causing
a Material Adverse Effect with respect to Borrower.
6.13 Loan Documents. Each of the representations and warranties
(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) of the Borrower contained in the Loan Documents is
true and correct in all material respects.
6.14 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.
6.15 Fraudulent Conveyance. The Borrower is not transferring any
Mortgage Assets with any intent to hinder, delay or defraud any of its
creditors.
6.16 Investment Company Act Compliance. The 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.
6.17 Taxes. The 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 the Borrower in connection
with the transactions contemplated hereby and the execution and delivery of the
Loan Documents have been paid.
6.18 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 T, U or X of the Board of Governors of the Federal
Reserve System.
6.19 Order Expenses.
(a) During the Interim Period, upon the entry of the Interim Order,
the DIP Obligations shall constitute allowed administrative expenses in the
Borrower's Case having priority in
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payment over all other administrative expenses and unsecured claims, other than
certain statutory fees of the United States Trustee and the Borrower's Carve Out
Expenses.
(b) During the Final Period, upon the entry of the Final Order, the
DIP Obligations shall constitute allowed administrative expenses in the
Borrower's Case having priority in payment over all other administrative
expenses and unsecured claims, other than certain statutory fees of the United
States Trustee and the Borrower's Carve Out Expenses.
6.20 Effectiveness of Orders. Each of the Interim Order, the Final
Order and the Guaranty Order, as applicable, are in full force and effect from
the time after the date on which each was entered and has not been stayed,
reversed, modified or amended without the consent of the Lender.
6.21 Existing Obligations. The Borrower is not aware of any defense
to the Existing Loan Agreement or the Existing Obligations thereunder or to the
validity, priority or perfection of the Lender's Lien on the collateral for the
Existing Loan Agreement.
6.22 Existing Purchase Agreements. The Borrower is not aware of (i)
any claim or defense to the Lender's ownership of the Purchased Loans (including
without limitation, all servicing rights relating thereto) free and clear of any
claim to any ownership or other interest in such Purchased Loans (other than the
Borrower's interest in the Retained Yield), (ii) any claim that it has or will
have as a debtor-in possession against the Lender or to the Purchased Loans
(other than the Borrower's interest in the Retained Yield), or (iii) any basis
for the avoidance in the Borrower's Case of any transfer of property from the
Borrower to the Lender.
6.23 Required Creditor Approval. The Borrower has obtained valid
acceptances from a majority in number and at least 66.67% in dollar amount of
those creditors voting in each class of creditors entitled to vote to confirm
the Plan of Reorganization, such acceptances were solicited and received in
compliance with Section 1126 of the Bankruptcy Code and such acceptances have
not been withdrawn or invalidated.
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 DIP Obligations and occurrence of the Termination Date:
7.01 Financial Statements. Until the later to occur of (i) the
discharge and payment of all of Borrower's obligations under this Loan Agreement
and (ii) the Termination Date of this Loan 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 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 Loan 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
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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 Loan Agreement.
7.02 Reports. (a) The Borrower shall, within 5 Business Days of
filing, deliver to Lender copies of all material public filings made by the
Borrower with any governmental or quasi-governmental body.
(b) The Borrower shall (i) with respect to any Mortgage Assets
serviced by the 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.
(c) The Borrower shall deliver to the Lender, concurrently with
their delivery to the Bankruptcy Court, all monthly operating reports which are
filed with the Bankruptcy Court with respect to either the Borrower or the
Guarantor.
(d) The Borrower shall deliver to the Lender, within thirty (30)
days following the end of each calendar month, a copy of the monthly management
book of the Borrower (each, a "Management Book"), which monthly management book
shall be substantially in the form previously delivered by the Borrower to the
Lender and reasonably acceptable to the Lender.
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 Loan Agreement.
7.05 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) The occurrence of a Default or Event of Default;
(B) The institution of any litigation, arbitration proceeding or
governmental proceeding which, in the opinion of counsel to Borrower,
could have a material adverse effect on Borrower or the Eligible Assets;
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(C) All legal or arbitrable proceedings affecting the Guarantor, the
Borrower or any of their respective 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;
(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;
(F) The occurrence or reasonable likelihood of any event or
circumstance which could reasonably be expected to prevent the entry of an
order confirming the Plan of Reorganization by not later than December 31,
1998,
(G) Any proposed modification or amendment to the Plan of
Reorganization; and
(H) The occurrence of (1) any "Default" or "Event of Default" (as
such term is used under the CIT Facility) under the CIT Facility, (2) the
exercise of remedies under the CIT Facility, (3) any reduction,
termination or any cessation of any commitment under the CIT Facility or
(4) any modification or proposal for modification by CIT or the Borrower
of any provision of the CIT Facility.
7.06 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.
7.07 Borrowing Base Deficiency; Maximum Credit Excess. If at any
time there exists a Borrowing Base Deficiency or the outstanding Loans exceed
the Maximum Credit, the Borrower shall cure same in accordance with Section 2.06
hereof.
7.08 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.
7.09 No Assignment. Borrower shall not assign or attempt to assign
this Loan Agreement or any rights hereunder, without first obtaining the
specific written consent of Lender.
7.10 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
Loan Agreement, without the prior written consent of Lender.
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7.11 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.
7.12 Limitation on Lines of Business. During the term of this Loan
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.
7.13 Limitation on Distributions. The Borrower shall not, except as
otherwise expressly permitted or contemplated hereby or by the Plan of
Reorganization, 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 obligations of the Company, except (unless a Default shall have occurred and
be continuing) dividends to the Guarantor only to the extent necessary to pay
administrative expenses of the Guarantor's Case.
7.14 Limitation on Guarantees. Except 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.
7.15 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 or otherwise expressly permitted
under this Loan Agreement, and the Borrower will defend the right, title and
interest of the Lender in and to any of the Collateral against the claims and
demands of all persons whomsoever, other than CIT to the extent that CIT's Liens
are permitted thereon and, in the case of Other Collateral, holders of Permitted
Liens.
7.16 Financial Condition Covenants.
(a) Maintenance of Net Worth of Borrower. The Borrower shall maintain
at all times the sum of (i) the Borrower's Tangible Shareholders' Equity plus
(ii) the Consolidated Unsecured Indebtedness of the Borrower of least
$130,000,000; and
(b) Maintenance of Liquidity. The Borrower shall maintain cash and cash
equivalents, subject to no Lien or other encumbrance other than the Liens in
favor of CIT or the Lender, of at least $15,000,000.
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7.17 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.
7.18 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.
7.19 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 (as a debtor-in-possession) 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.
7.20 Underwriting Guidelines. Without prior written consent of the
Lender, the Borrower shall not materially amend or otherwise materially modify
the Underwriting Guidelines with respect to the Mortgage Assets. In the event
that the Borrower proposes to amend the Underwriting Guidelines with respect to
the Mortgage Assets, 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.
7.21 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 third-party
servicer.
7.22 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 F attached hereto.
7.23 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.
7.24 Existing Obligations.
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(a) The obligations of the Borrower in respect of the Existing
Obligations and the validity, perfection, priority and non-avoidability of
the Lender's Lien on the collateral securing the Existing Obligations shall
be reaffirmed by the Borrower in the Interim Order and the Final Order,
including the lack of any grounds for the subordination thereof; and
(b) The Borrower shall repay the Existing Obligations on or prior to
the earlier to occur of (i) one Business Day following the effective date of
the Final Order and (ii) the date which is thirty (30) days following the
Petition Date.
(c) As adequate protection in respect of the Existing Obligations, as
more fully described in the Interim Order, (i) the Lender shall be paid the
reasonable fees and disbursements of its counsel incurred in connection with
preserving, protecting and monitoring the Existing Obligations and
Pre-Petition Collateral, (ii) be paid interest on the Existing Obligations
in the manner and at the times specified in the Existing Agreement at the
following rates: (A) from the Petition Date until the earlier to occur of
(1) the effective date of the Final Order and (2) the date which is thirty
(30) calendar days following the Petition Date, the non-default rate
specified in the Existing Loan Agreement and (B) thereafter, at the LIBO
Rate (as defined in the Existing Loan Agreement) plus 3.75% per annum and
(iii) the Existing Obligations shall be afforded, to the extent of any
diminution in the value of the Pre-Petition Collateral (except such
diminution resulting from collections or proceeds applied to repayment of
the Existing Obligations), (A) a security interest on the Collateral (other
than the Pre-Petition Collateral), subject only to the security interests on
such Collateral in favor of the Lender (in its capacity as such under this
Loan Agreement) and CIT (in the case of any similar adequate protection
security interest afforded to CIT in its capacity as pre-petition lender,
such security interests shall be pari passu) and (B) an administrative
expense priority in Borrower's Case having priority over all other
administrative expenses of the kinds specified in Section 503(b) or 507(b)
of the Bankruptcy Code, subject only to the Borrower's Carve-Out Expenses,
the DIP Obligations and the obligations under the CIT Facility (in the case
of any similar adequate protection administrative expense priority afforded
to CIT in its capacity as pre-petition lender, such administrative expense
priorities shall be pari passu).
7.25 CIT Facility.
(a) The Borrower shall not, without the prior written consent of the
Lender, materially amend or otherwise modify the CIT Facility Document in
any material respect (other than amendments not adverse to the Lender with
respect to administrative matters); and
(b) The Borrower shall not terminate the CIT Facility, nor agree to any
reduction in availability under the CIT Facility in excess of $50,000,000.
7.26 Purchased Loans. The Borrower shall not assert any claim or
defense to the Lender's ownership of the Purchased Loans (other than the
Borrower's interest in the Retained Yield).
7.27 Selection Criteria. The Mortgage Assets shall be selected from
among the outstanding one to four family residential mortgage loans in the
Borrower's portfolio which meet the eligibility criteria hereunder. Such
selection shall not be made in any manner which adversely affects the interests
of the Lender.
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Section 8. Events of Default. Each of the following events shall
constitute an event of default (an "Event of Default") hereunder:
a) Failure to Perform. Failure of Borrower to comply with Section 7.07
or Section 7.24(b) 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.
(i) 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
(ii) Failure of Borrower to observe and perform any other
covenant, condition or other agreement on its part to be
observed or performed hereunder and such default shall
continue unremedied for ten Business Days following the
Borrower's receipt of notice from the Lender; or
d) Borrower Default. A default by Borrower whether as principal,
guarantor or surety, in the payment of any principal or interest on any
post-Petition Date indebtedness or any other post-Petition Date obligation
of Borrower in the amount of $1,000,000 or more; or
e) 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 as of the Petition Date
shall occur from and after the Petition Date, in each case as determined by
the Lender in its sole and reasonable discretion, including without
limitation, (i) the exercise of remedies under the CIT Facility, (ii) the
reduction of any commitment under the CIT Facility in excess of $50,000,000
without the Lender's prior consent, or (iii) any termination of any
commitment under the CIT Facility in excess of $50,000,000; or
f) Cross-Default. The occurrence and continuance of an "event of
default" or of an "event of termination" on the part of Borrower or the
Guarantor under either (i) any material post-Petition Date agreement of
Borrower or Guarantor, or (ii) any other material post-Petition Date
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
g) Change of Control. Any Change of Control of the Borrower or the
Guarantor shall occur; or
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h) Pre-Existing Condition. (i) 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: (1) the
condition (financial or otherwise) of the Borrower, its Subsidiaries or
Affiliates; or (2) the ability of either the Borrower or the Lender to
fulfill its respective obligations under this Loan Agreement; or (ii) the
discovery by the Lender of information not previously known to the head
trader or chief credit officer of the Lender relating to the Collateral, the
Guarantor, the Borrower or the Plan of Reorganization which the Lender
reasonably believes has or could impair the value of the Collateral or have
a material adverse effect on the ability of the Borrower or the Guarantor to
comply with or obtain timely confirmation of the Plan of Reorganization or
the occurrence of the Plan Effective Date; or
i) Unsatisfied Judgment. A final judgment or judgments for the payment
of money or the granting of relief from the automatic stay allowing any
creditor to exercise rights against any property of the bankruptcy estate,
individually or in the aggregate, in excess of $1,000,000 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
j) 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 perfected Liens on the Collateral in
favor of the Lender of the priority contemplated by the Loan Agreement or
shall be Liens in favor of any Person other than the Lender, except as
contemplated by this Loan Agreement; or
k) 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, except as consented to by the Lender in writing; or
l) 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; or
m) Avoidance Actions. (i) Any Avoidance Action with respect to the
Existing Obligations or the Pre-Petition Collateral shall be commenced by
any party (including any creditors' committee) after the 60th day following
the Petition Date, or (ii) any Avoidance Action with respect to the DIP
Obligations, the Existing Obligations or any payments in respect of either
or with respect to Pre-Petition Collateral or the Collateral is commenced by
either the Borrower or the Guarantor against the Lender; or
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n) Chapter 11 Case Orders. Any order shall be entered in either Chapter
11 Case which (i) provides for the appointment of a trustee or an examiner
with expanded powers which is not reversed within thirty (30) days of the
entry thereof; (ii) dismisses such Chapter 11 Case or converts such Chapter
11 Case into a Chapter 7 case; (iii) confirms a plan of reorganization that
is not a Plan of Reorganization as defined herein; (iv) without the consent
of the Lender, revokes, reverses, stays or otherwise modifies any Approval
Order, including without limitation, any order approving the granting of any
Lien on the Collateral (other than a permitted Lien in favor of CIT) or
granting any expense a priority equal to or greater than the priority
granted to the Lender (other than the permitted priority of the CIT Facility
and the Carve Out Expenses) (any of (i) through (iv), a "Case Order"); (v)
in the reasonable judgment of the Lender, impairs or adversely affects the
Collateral, the Affiliate Guaranty, or the likelihood that the Borrower will
discharge in full its obligations to the Lender under this Loan Agreement in
a timely manner; or (vi) stays or restrains the effectiveness of any
provision of this Loan Agreement or the pledge of the Collateral hereunder;
or
o) Chapter 11 Case Motions. A motion for any Case Order shall be made
by (i) the Official Committee, which is not withdrawn within thirty (30)
days following the date on which such motion is made, (ii) the Borrower or
the Guarantor or (iii) any other Person and (x) the Official Committee shall
have consented thereto or shall have failed to contest such motion within
thirty (30) days following the date on which such motion is made or (y) the
Borrower or the Guarantor shall have consented thereto or shall have failed
to contest such motion within thirty (30) days following the date on which
such motion is made; or
p) Maintenance of Net Worth of Guarantor. The Guarantor shall cease to
maintain at all times the sum of (i) the Guarantor's Tangible Shareholders'
Equity plus (ii) the Guarantor's Consolidated Unsecured Indebtedness of
least $130,000,000.
Notwithstanding any other provision of this Section 8, any grace or
notice period provided in this Section 8 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 (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 such declaration, 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
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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. The Lender shall be authorized
to exercise its remedies hereunder without notice to any Person and without
application to or approval of the Bankruptcy Court; provided, that the
foreclosure upon or seizure of any Collateral other than the Primary Collateral
shall require three (3) Business Days prior notice to the Borrower and the
Official Committee (unless the Lender has evidence that the Borrower has engaged
in fraudulent conduct, in which case no notice shall be required).
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 telecopy)
delivered to the intended recipient at the "Address for Notices" specified below
its name on 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 and each of its directors,
officers, employees, affiliates and agents (including without limitation its
counsel) (each an "Indemnified Person") harmless from and indemnify the Lender
against all losses, claims, damages, liabilities or other expenses of any kind
which may be imposed on, incurred by or asserted against any Indemnified Person
(collectively "Costs") in any way relating to or arising out of this Loan
Agreement, the Note, any other Loan Document, the Chapter 11 Cases, 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; provided, that the foregoing shall not apply to Costs which
are found by a final decision of a
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court of competent jurisdiction to have resulted from such Indemnified Person's
gross negligence or willful misconduct. Without limiting the generality of the
foregoing, the Borrower agrees to hold each Indemnified Person harmless from and
indemnify such Indemnified Person 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 such Indemnified Party 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 such Indemnified
Person 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 each Indemnified Person as and when billed by the Lender for
all of such Indemnified Person'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 connection with
investigating, defending or participating in any legal proceeding relating to
any of the foregoing (whether or not such Indemnified Person is a party
thereto)). Should any Indemnified Person be involved (whether as a party,
witness or otherwise) in any litigation or other proceeding in connection with
the transactions contemplated hereby, the Borrower hereby agrees to compensate
such Indemnified Person in an amount equal to its customary per diem charges for
each day the such Indemnified Person is involved in preparation, discovery
proceedings or testimony pertaining to any such litigation or other proceeding.
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 the monitoring of and participation in the Chapter
11 Cases) including without limitation (i) all the reasonable fees,
disbursements and expenses of Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ and Wachtell,
Lipton, ▇▇▇▇▇ & ▇▇▇▇, counsel to the Lender (which the parties hereby agree
shall not be subject to allowance by the Bankruptcy Court under Section 330 of
the Bankruptcy Code or otherwise) 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), 11.14 and
11.15 hereof.
(c) The obligations of this Section 11.03 shall be paid as ordinary
course expenses during the Chapter 11 Cases upon request of the Lender and
without notice, hearing or court approval and shall have priority over all
administrative expenses of the kind specified in Sections 503(b) and 507(b) of
the Bankruptcy Code and unsecured claims, other than Carve Out Expenses, and
shall be reaffirmed in the Plan of Reorganization and shall not be discharged in
the Chapter 11 Cases (except by reason of payment in full in cash).
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(d) Notwithstanding anything to the contrary contained herein, from and
after the Petition Date, Costs and other amounts reimbursable hereunder shall
not include Costs and other amounts arising solely out of, or solely in
connection with, the Existing Loan Agreement, or any other agreement between the
Lender and the Borrower or the Guarantor executed prior to the Petition Date
("Pre-Petition Costs"). Such Pre-Petition Costs shall be reimbursed and
reimbursable to the extent provided under the terms of the Existing Loan
Agreement, such other agreement between the Borrower and the Lender executed
prior to the date hereof or any order of the Bankruptcy Court entered in either
of the Chapter 11 Cases.
(e) Neither the Lender nor any other Indemnified Person shall be
responsible or liable to the Borrower, the Guarantor or any of their respective
Affiliates or Subsidiaries for incidental or consequential damages which may be
alleged as a result of the Loan Documents and the transactions contemplated
thereby.
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, except as preempted by
the Bankruptcy Code, without reference to choice of law doctrine, and shall
constitute a security agreement within the meaning of the Uniform Commercial
Code.
11.10 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
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OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
11.11 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
(c) no joint venture exists between the Lender and the Borrower.
11.12 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.
11.13 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,
the Borrower 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, and the Participants shall not have any rights of
consent regarding any of the 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 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
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in writing, to which the Borrower shall be an 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.
11.14 Servicing.
(a) The Borrower, as independent contract servicer, shall service and
administer the Mortgage Assets in accordance with the terms and provisions set
forth in Articles V, VI, VII and VIII of the Whole Loan Agreement attached
hereto as Exhibit E which sections are hereby incorporated in this Loan
Agreement in their entirety (with, however, the changes and adjustments as
provided in this Loan Agreement) as if the same were contained in this Section
(such servicing provisions as incorporated and adjusted, the "Servicing
Agreement").
(b) With respect to the following provisions set forth in the Whole
Loan Agreement attached hereto as Exhibit E, 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.
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.
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.
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(c) 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.
(d) To the extent any provision or definition set forth in Exhibit H
shall conflict with any provision set forth in this Loan Agreement, the
provision or definition in this Loan Agreement shall govern.
(e) 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.
(f) 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.
(g) 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.
(h) 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.
11.15 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
Schedule and the
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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
11.15.
[SIGNATURE PAGE FOLLOWS]
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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: Executive Vice President,
Treasurer and Secretary
Address for Notices:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
LENDER
GREENWICH CAPITAL FINANCIAL
PRODUCTS, INC.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: General Counsel
Address for Notices:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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
60
(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 Mortgage 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
61
(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. 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;
(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
Schedule 1-3
62
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;
(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;
(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,
Schedule 1-4
63
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;
(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
Schedule 1-5
64
Guidelines and with Lender's written consent thereto (which consent
shall not be unreasonably withheld), may amend such Underwriting
Guidelines;
(36) Appraisal. Except with respect to certain High LTV Mortgage Assets, 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
65
Part II. Eligible Home Equity Mortgage Assets
As to each Home Equity 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:
(1) 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.
Schedule 6-7
66
SCHEDULE 2
FILING JURISDICTIONS AND OFFICES
Elmsford, New York,
State of New York
Schedule 2-1
67
SCHEDULE 3
LIST OF SETTLEMENT AGENTS
Schedule 3-1
68
SCHEDULE 4
AUTHORIZED REPRESENTATIVES OF THE BORROWER
Schedule 4-1
69
SCHEDULE 5
OTHER EXISTING LIENS
Schedule 5-1
70
SCHEDULE 6
EXISTING PURCHASE AGREEMENTS
1. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group HE-1, closing date: March 31,
1997.
2. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group HE-2, closing date: June 30,
1997.
3. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group HE-4, closing date: October 30,
1997.
4. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group HE-5, closing date: December 5,
1997.
5. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group HE-6, closing date: January 21,
1998.
6. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group HE-7, closing date: February 2,
1998.
7. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group HE-8, closing date: February
17, 1998.
8. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group HE-9, closing date: March 2,
1998.
9. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group HE-10, closing date: March 19,
1998.
10. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group HE-11, closing date: March 31,
1998.
11. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group HE-12, closing date: April 13,
1998.
12. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group SL-1, closing date: March 31,
1997.
13. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group SL-2, closing date: June 30,
1997.
14. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group SL-5, closing date: November 6,
1997.
Schedule 6-1
71
15. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group SL-6, closing date: December 5,
1997.
16. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group SL-7, closing date: December
31, 1997.
17. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group SL-8, closing date: January 21,
1998.
18. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group SL-9, closing date: February 2,
1998.
19. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group SL-10, closing date: February
17, 1998.
20. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group SL-11, closing date: March 2,
1998.
21. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group SL-12, closing date: March 19,
1998.
22. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group SL-13, closing date: March 31,
1998.
23. Seller's Warranties and Servicing Agreement, the Purchase Agreement,
and their accompanying documents, Group SL-14, closing date: April 13,
1998.
24. Retained Yield Fund Agreement, dated as of December 31, 1997.
25. Servicing Rights Purchase and Assumption Agreement, dated as of
December 31, 1997.
26. Amendment No. 1 to the Servicing Rights Purchase and Assumption
Agreement, dated as of January 21, 1998.
27. Amendment No. 2 to the Servicing Rights Purchase and Assumption
Agreement, dated as of February 2, 1998.
28. Amendment No. 3 to the Servicing Rights Purchase and Assumption
Agreement, dated as of February 17, 1998.
29. Assignment and Assumption of the Retained Rights and Amendment of the
Retained Yield Fund Agreement, dated as of February 26, 1998.
30. Assignment and Assumption of the Retained Rights and Amendment of the
Retained Yield Fund Agreement, dated as of March 10, 1998.
31. Amendment #3 to the Retained Yield Fund Agreement, dated as of
April 8, 1998.
Schedule 6-2
72
32. Amendment #4 to the Retained Yield Fund Agreement, dated as of April
30, 1998 (unsigned copy).
33. Amendment No. 1 to Pledge Agreement, dated as of April 8, 1998.
34. Amendment No. 2 to Pledge Agreement, dated as of April 30, 1998
(unsigned copy).
Schedule 6-3
73
EXHIBIT A-1/A-2
FORM OF CUSTODIAL AGREEMENT
(stored as a separate document)
74
EXHIBIT B
FORM OF OPINION OF COUNSEL TO BORROWER
[To be provided]
C-1
75
EXHIBIT C
UNDERWRITING GUIDELINES FOR HOME EQUITY LOANS
(on file with Greenwich Capital Financial Products, Inc.)
E-1
76
EXHIBIT D
UNDERWRITING GUIDELINES FOR HIGH LTV MORTGAGE ASSETS
(on file with Greenwich Capital Financial Products, Inc.)
G-1
77
EXHIBIT E
WHOLE LOAN AGREEMENT
[TO BE PROVIDED]
H-1
78
EXHIBIT F
FORM OF BORROWING BASE CERTIFICATE
[TO BE PROVIDED]
C-1
79
EXHIBIT G
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
------------------- ------------------------------------------------------------------------------ ---------------------
K-2
80
------------------- ------------------------------------------------------------------------------ ---------------------
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
------------------- ------------------------------------------------------------------------------ ---------------------
K-2
81
------------------- ------------------------------------------------------------------------------ ---------------------
DOFT DEED OF TRUST
------------------- ------------------------------------------------------------------------------ ---------------------
Exception # Description Fatal Exception
------------------- ------------------------------------------------------------------------------ ---------------------
3124 Date of first payment is missing or does not agree with schedule
------------------- ------------------------------------------------------------------------------ ---------------------
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
------------------- ------------------------------------------------------------------------------ ---------------------
K-3
82
------------------- ------------------------------------------------------------------------------ ---------------------
DOFT DEED OF TRUST
------------------- ------------------------------------------------------------------------------ ---------------------
Exception # Description Fatal Exception
------------------- ------------------------------------------------------------------------------ ---------------------
3189 PUD rider is missing borrower signature F
------------------- ------------------------------------------------------------------------------ ---------------------
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
------------------- ------------------------------------------------------------------------------ ---------------------
K-4
83
------------------- ------------------------------------------------------------------------------ ---------------------
NOTE NOTE
------------------- ------------------------------------------------------------------------------ ---------------------
Exception # Description Fatal Exception
------------------- ------------------------------------------------------------------------------ ---------------------
3716 Endorsements are missing F
------------------- ------------------------------------------------------------------------------ ---------------------
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
------------------- ------------------------------------------------------------------------------ ---------------------
K-5
84
------------------- ------------------------------------------------------------------------------ ---------------------
POFA 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
------------------- ------------------------------------------------------------------------------ ---------------------
K-6
85
------------------- ------------------------------------------------------------------------------ ---------------------
TPOL TITLE POLICY
------------------- ------------------------------------------------------------------------------ ---------------------
Exception # Description Fatal Exception
------------------- ------------------------------------------------------------------------------ ---------------------
4911 Sch A - mortgage description has incorrect recording date
------------------- ------------------------------------------------------------------------------ ---------------------
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
------------------- ------------------------------------------------------------------------------ ---------------------
K-7
86
EXHIBIT H
FORM OF REQUEST FOR BORROWING
C-1