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[EXECUTION COPY]
EXHIBIT 10.4
MASTER FINANCING AGREEMENT
Dated as of September 4, 1997
Between:
BEAR ▇▇▇▇▇▇▇ MORTGAGE CAPITAL CORPORATION
and
CITYSCAPE CORP.
1. APPLICABILITY
From time to time the parties hereto may enter into transactions in
which Cityscape Corp. ("Borrower") agrees to pledge to Bear ▇▇▇▇▇▇▇ Mortgage
Capital Corporation ("Lender") Mortgage Loans (as defined herein) against the
transfer of funds by Lender, with a simultaneous agreement by Lender to release
to Borrower such Mortgage Loans at a date certain or on demand, against the
transfer of funds by Borrower. Each such transaction shall be referred to herein
as a "Transaction" and shall be governed by this Agreement, as the same shall be
amended from time to time.
2. DEFINITIONS
(a) "A Quality Mortgage Loan", a Mortgage Loan that in Lender's
reasonable business judgment would be considered to be of "A quality" as
contemplated by the Borrower's Underwriting Guidelines;
(b) "Act of Insolvency", with respect to either Lender or Borrower, (i)
the commencement by such party as debtor of any case or proceeding under any
bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law,
or such party seeking the appointment of a receiver, trustee, custodian or
similar official for such party or any substantial part of its property, or (ii)
the commencement of any such case or proceeding against such party, or another
seeking such an appointment, or the filing against a party of an application for
a protective
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decree under the provisions of the Securities Investor Protection Act of 1970,
which (A) is consented to or not timely contested by such party, (B) results in
the entry of an order for relief, such an appointment, the issuance of such a
protective decree or the entry of an order having a similar effect, or (C) is
not dismissed within 15 days, (iii) the making by a party of a general
assignment for the benefit of creditors, or (iv) the admission in writing by a
party of such party's inability to pay such party's debts as they become due;
(c) "Additional Financed Mortgage Loans", Mortgage Loans pledged by
Borrower to Lender pursuant to Paragraph 4(a) hereof;
(d) "Advance Amount", (i) on any Advance Date, the amount advanced by
Lender to Borrower with respect to Financed Mortgage Loans that are pledged by
Borrower to Lender hereunder on such Advance Date (which in no event shall be
greater than par), and (ii) thereafter, such amount decreased by the amount of
any cash transferred by Borrower to Lender pursuant to Paragraph 4(a) hereof;
(e) "Advance Date", the date with respect to each Transaction on which
Financed Mortgage Loans are pledged by Borrower to Lender hereunder;
(f) "B Quality Mortgage Loan", a Mortgage Loan that in Lender's
reasonable business judgment would be considered to be of "B quality" as
contemplated by the Borrower's Underwriting Guidelines;
(g) "Borrower's Underwriting Guidelines", the underwriting guidelines
of Borrower for Mortgage Loans in the form most recently approved in writing by
Lender.
(h) "Business Day", any day other than a Saturday, Sunday and any day
on which banks located in the State of New York are authorized or required to
close for business;
(i) "C Quality Mortgage Loan", a Mortgage Loan that in Lender's
reasonable business judgment would be considered to be of "C quality" as
contemplated by the Borrower's Underwriting Guidelines;
(j) "Conventional Mortgage Loan", a Mortgage Loan which is not a Title
I Mortgage Loan;
(k) "Custodian", the custodian named in the Custody Agreement and any
permitted successor thereto;
(l) "Custody Agreement", the Custody Agreement among
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Lender, Borrower and the Custodian providing for the custody of records relating
to the Financed Mortgage Loans;
(m) "FHA", The Federal Housing Administration of HUD and any successor
thereto;
(n) "FHA Insurance", with respect to the Title I Mortgage Loans, the
mortgage insurance provided by the FHA pursuant to Title I of the National
Housing Act of 1934, as amended;
(o) "FHA Regulations", the rules, regulations and procedures
promulgated by HUD under the National Housing Act of 1934, as amended, relating
to Title I property improvement loans and loans pertaining to manufactured homes
and related real property, currently found at 24 C.F.R. Parts 201 and 202,
together with the "TI Letters" and HUD Handbook 4700.2, as the same may be
amended or supplemented from time to time; provided that with respect to the
origination or servicing of a Title I Mortgage Loan, such rules and regulations
that were in effect at the time the relevant origination or servicing actions
occurred;
(p) "Financed Mortgage Loans", the Mortgage Loans pledged by Borrower
to Lender in a Transaction hereunder, and any Mortgage Loans substituted
therefor in accordance with Paragraph 9 hereof, which, in each case, have not
been redeemed by Borrower. The term "Financed Mortgage Loans" with respect to
any Transaction at any time also shall include Additional Financed Mortgage
Loans delivered pursuant to Paragraph 4(a);
(q) "Financing Rate", the per annum percentage rate for determination
of the Interest, which rate shall be 125 basis points in excess of the overnight
LIBOR as posted on page 4833 of Telerate as of 9:00 am New York City time (or
such other source as is mutually agreeable to the parties), adjusted on each
date such rate is published;
(r) "FNMA", the Federal National Mortgage Association;
(s) "Greenwich Facility", a loan agreement (whether oral or written)
between Greenwich Capital Markets, Inc., or any affiliate thereof, and Borrower
providing for the extension of credit by Greenwich Capital Markets, Inc., or any
such affiliate, to Borrower in such form as may be agreed upon by such parties
from time to time;
(t) "HEL", a home equity loan consisting of a Mortgage Note secured by
a Mortgage;
(u) "HIL", a home improvement loan consisting of a Mortgage Note
secured by a Mortgage;
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(v) "HUD", the Department of Housing and Urban Development;
(w) "Income", with respect to any Mortgage Loan at any time, any
principal thereof then due and payable and all payments of interest and other
distributions thereon or proceeds thereof then due and payable;
(x) "Interest", with respect to any Transaction hereunder as of any
date, the aggregate amount obtained by daily application of the Financing Rate
for such Transaction to the Advance Amount for such Transaction on a 360 day per
year basis for the actual number of days during the period commencing on (and
including) the Advance Date for such Transaction and ending on (but excluding)
the date of determination (reduced by any amount of such Interest previously
paid by Borrower to Lender with respect to such Transaction);
(y) "Lender's Margin Amount", with respect to any Transaction as of any
date, the amount obtained by application of a percentage, agreed to by Lender
and Borrower prior to entering into the Transaction and specified in the related
Request/Confirmation as the "Minimum Required Margin Percentage", to the Payoff
Amount for such Transaction as of such date;
(z) "LIBOR", the London Interbank Offered Rate quotation for Eurodollar
deposits;
(aa) "Loan Schedule", a schedule of Mortgage Loans identifying each
Mortgage Loan by Borrower's loan number, Mortgagor's name and address (including
the state and zip code) of the mortgaged property, whether such Mortgage Loan is
secured by a first or junior lien (specifying the priority of such junior lien)
on the related Mortgaged Property, the loan-to-value ratio if such Mortgage Loan
is a HEL, the outstanding principal amount as of a specified date, the initial
interest rate borne by such Mortgage Loan, the original principal balance
thereof, the current scheduled monthly payment of principal and interest, the
maturity of the related Mortgage Note, the property type, the occupancy status,
the appraised value if such Mortgage Loan is a HEL having an original principal
balance in excess of $10,000, the original term to maturity, whether the
Mortgage Loan is a HEL or a HIL, whether the Mortgage Loan is an A Quality
Mortgage Loan, a B Quality Mortgage Loan or a C Quality Mortgage Loan, whether
the Mortgage Loan is a Title I Mortgage Loan or a Conventional Mortgage Loan and
whether or not the Mortgage Loan (including the related Mortgage Note) has been
modified; provided, however, that the items of information set forth on the Loan
Schedule may be expanded or contracted by mutual agreement of Lender and
Borrower; and provided further, however, that the
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appraised value for any HEL may be determined from a real estate broker's price
opinion or a drive-by appraisal;
(bb) "Margin Deficit", the meaning specified in Paragraph 4(a) hereof;
(cc) "Market Value", with respect to any Mortgage Loans as of any date,
the fair market value of such Mortgage Loans on such date as reasonably
determined in good faith by Lender in accordance with its current practices for
determining the fair market value of similar residential loans from time to time
and at such times as it may elect in its sole discretion; provided, however,
that a Market Value of zero shall be assigned to (i) any Mortgage Loan that has
been delinquent for at least eighty-nine (89) days, (ii) any Mortgage Loan that
has been subject to this Agreement for more than one hundred and eighty (180)
days in aggregate or (iii) any Mortgage Loan with respect to which there is an
uncured breach of a representation or warranty made by Borrower in this
Agreement or the Custody Agreement that materially adversely affects Lender's
interests hereunder;
(dd) "Maturity Date", with respect to all amounts advanced by Lender
hereunder, the earlier of (i) any date on which such amounts become due pursuant
to the terms hereof, (ii) the termination of the Greenwich Facility, (iii) one
year from the date hereof and (iv) a date specified by Lender, in its sole
discretion and without cause, occurring not earlier than thirty (30) days after
notice of such discretionary termination is provided by Lender to Borrower;
provided, however, that this Agreement and any Transaction outstanding hereunder
may be extended by mutual agreement of Lender and Borrower; and provided
further, however, that no such party shall be obligated to agree to such an
extension;
(ee) "Maximum Advance Amount", the maximum aggregate Advance Amounts
permitted to be outstanding hereunder at any time, which amount shall be
$300,000,000;
(ff) "Mortgage", the mortgage, deed of trust or other instrument
creating a first or junior lien on an estate in fee simple interest in real
property securing a Mortgage Note;
(gg) "Mortgage File", the meaning specified in the Custody Agreement;
(hh) "Mortgage Loan", a HEL or a HIL, as applicable;
(ii) "Mortgage Note", the Mortgage Note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan;
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(jj) "Mortgaged Property", the property (real, personal or mixed)
encumbered by the Mortgage which secures the Mortgage Note evidencing a secured
Mortgage Loan;
(kk) "Mortgagor", the obligor on a Mortgage Note;
(ll) "Note", the notes of the Borrower, substantially in the form of
Exhibit D hereto, evidencing its obligations to pay amounts due hereunder;
(mm) "Payoff Amount", the redemption amount at which Financed Mortgage
Loans are to be released by Lender to Borrower upon termination of a
Transaction, which will be determined in each case (including Transactions
terminable upon demand) as the sum of the Advance Amount and the Interest as of
the date of such determination, increased by any amount determined by the
application of the provisions of Paragraph 11 hereof;
(nn) "Payoff Date", with respect to any Transaction the date on which
Borrower is to redeem the Financed Mortgage Loans from Lender, including any
date determined by application of the provisions of Paragraphs 3(e) or 11
hereof;
(oo) "Prime Rate", the prime rate of U.S. money center commercial banks
as published in The Wall Street Journal;
(pp) "Replacement Mortgage Loans", the meaning specified in Paragraph
11(e)(ii) hereof;
(qq) "Request/Confirmation", the request and confirmation substantially
in the form of Exhibit A hereto delivered pursuant to Paragraph 3 hereof;
(rr) "Title I Mortgage Loan", a Mortgage Loan that has been or will be
registered by FHA for FHA Insurance under the Title I Program;
(ss) "Title I Program", the mortgage insurance program authorized
pursuant to the National Housing Act of 1934, as amended; and
(tt) "Trust Receipt", as defined in the Custody Agreement.
3. INITIATION; REQUEST/CONFIRMATION; TERMINATION; TRANSACTIONS OPTIONAL
(a) Any agreement to enter into a Transaction shall be made in writing
at the initiation of Borrower. In the event that Borrower desires to enter into
a Transaction hereunder, Borrower
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shall deliver to Lender prior to 5:00 p.m., New York City time, on the Business
Day prior to the proposed Advance Date, a Request/Confirmation complete in every
respect except for any terms to be completed by Lender and the signature of an
authorized representative of Lender. Lender shall, upon its receipt and approval
thereof, promptly execute and return the signed Request/Confirmation to
Borrower.
(b) The Request/Confirmation shall describe the Financed Mortgage Loans
in a manner reasonably satisfactory to Lender (which may be by attaching a Loan
Schedule thereto), identify Lender and Borrower and set forth (i) the Advance
Date, (ii) the Advance Amount, (iii) the Payoff Date, unless the Transaction is
to be terminable on demand, (iv) the Financing Rate or Payoff Amount applicable
to the Transaction, and (v) any additional terms or conditions of the
Transaction mutually agreeable to Lender and Borrower.
(c) Each Request/Confirmation shall be binding upon the parties hereto
unless written notice of objection is given by the objecting party to the other
party within one (1) Business Day after Lender has delivered the completed
Request/Confirmation to Borrower.
(d) In the event of any conflict between the terms of a
Request/Confirmation and this Agreement, such Request/Confirmation shall
prevail.
(e) In the case of Transactions terminable upon demand, such demand
shall be made by Lender or Borrower, no later than such time as is customary in
accordance with market practice, by telephone or otherwise on or prior to the
Business Day immediately preceding the day on which such termination will be
effective. On the date specified in such demand, or on the date fixed for
termination in the case of Transactions having a fixed term, termination of the
Transaction will be effected by redemption by Borrower or its agent from Lender
of the Financed Mortgage Loans and any Income in respect thereof received by
Lender (and not previously credited or transferred to, or applied to the
obligations of, Borrower hereunder) against the transfer of the Payoff Amount to
an account of Lender.
(f) Notwithstanding any provision of this Agreement or the Custody
Agreement to the contrary, the initiation of each Transaction is subject to the
approval of Lender in its sole discretion. Lender may, in its sole discretion,
reject any Mortgage Loan from inclusion in a Transaction hereunder for any
reason.
4. MARGIN MAINTENANCE
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(a) If at any time the aggregate Market Value of all Financed Mortgage
Loans subject to all Transactions hereunder is less than the aggregate Lender's
Margin Amount for all such Transactions (a "Margin Deficit"), then Lender may by
notice to Borrower require Borrower in such Transactions, at Borrower's option,
to transfer to Lender cash or pledge additional Mortgage Loans reasonably
acceptable to Lender ("Additional Financed Mortgage Loans"), so that the cash
and aggregate Market Value of the Financed Mortgage Loans, including any such
Additional Financed Mortgage Loans, will thereupon equal or exceed such
aggregate Lender's Margin Amount. After the date of any transfer or pledge
pursuant to the first sentence of this Paragraph 4(a), Borrower may from time to
time by notice require the Lender to return any such transferred cash or release
Additional Financed Mortgage Loans to Borrower; provided that Lender shall have
no obligation to return any such transferred cash or release Additional Financed
Mortgage Loans to the extent that a Margin Deficit would result therefrom.
(b) If the notice to be given by Lender to Borrower under subparagraph
(a) above is given at or prior to 10:00 a.m. New York city time on a Business
Day, Borrower shall transfer cash or pledge Additional Financed Mortgage Loans
to Lender prior to the close of business in New York City on the date of such
notice, and if such notice is given after 10:00 a.m. New York City time,
Borrower shall transfer cash or pledge Additional Financed Mortgage Loans prior
to the close of business in New York City on the Business Day following the date
of such notice.
(c) Any cash transferred pursuant to this Paragraph shall reduce the
Advance Amount of the related Transaction in accordance with the definition of
Advance Amount.
5. INCOME PAYMENTS
Where a particular Transaction's term extends over an Income payment
date on the Mortgage Loans subject to that Transaction, all Income, whether in
cash or in kind, made on or with respect to the Financed Mortgage Loans shall,
unless otherwise mutually agreed by Lender and Borrower and so long as an Event
of Default on the part of Borrower shall not have occurred and be continuing, be
paid directly to Borrower by the related Mortgagor. Lender shall not be
obligated to take any action pursuant to the preceding sentence to the extent
that such action would result in the creation of a Margin Deficit, unless prior
thereto or simultaneously therewith Borrower transfers to Lender, at Lender's
option, cash or pledges Additional Financed Mortgage Loans sufficient to
eliminate such Margin Deficit. All Income received by Borrower will be held in
trust for the benefit of
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Lender and upon the request of Lender, after the occurrence and during the
continuation of an Event of Default, will be paid to Lender in order to retire a
portion of the outstanding indebtedness of Borrower to Lender hereunder.
6. SECURITY INTEREST
The parties intend that all Transactions hereunder be financings and
not purchases and sales. Accordingly Borrower pledges to Lender as security for
the performance by Borrower of its obligations under each such Transaction, and
grants to Lender a security interest in, all of the Financed Mortgage Loans with
respect to all Transactions hereunder and all proceeds thereof. Borrower shall
pay all reasonable fees and expenses associated with perfecting such security
interest including, without limitation, the cost of filing financing statements
under the Uniform Commercial Code and recording assignments of mortgage as and
when required by Lender in its sole discretion.
7. PAYMENT; PLEDGE AND RELEASE
Unless otherwise mutually agreed, all transfers of funds hereunder
shall be in immediately available funds. All Mortgage Loans pledged or released
by one party hereto to the other party shall be pledged or released by notice to
the Custodian to the effect that the Custodian is now holding for the benefit of
the other party the related documents and assignment forms delivered to it under
the Custody Agreement.
8. SEGREGATION OF DOCUMENTS RELATING TO FINANCED MORTGAGE LOANS
All documents relating to Financed Mortgage Loans in the possession of
Borrower shall be segregated on its books and records from other documents and
securities in its possession and shall be identified as being subject to this
Agreement. Nothing in this Agreement shall preclude Lender from engaging in
repurchase transactions with the Financed Mortgage Loans or otherwise pledging
or hypothecating the Financed Mortgage Loans, but no such transaction shall
relieve Lender of its obligations to release Financed Mortgage Loans to Borrower
pursuant to the terms hereof and no such transaction shall have a maturity date
later than the Payoff Date unless such transaction permits the substitution of
collateral.
Lender hereby grants to Borrower the right to perform in Lender's stead
under any repurchase, reverse repurchase, loan or similar transaction in which
Lender has pledged the Mortgage Loans, in the event that Lender has defaulted on
its obligations to repurchase, redeem or accept redelivery of such Mortgage
Loans in conformity with the terms of any such transaction and so long
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as an Event of Default under this Agreement by Borrower shall not have occurred
and be continuing. Lender further acknowledges that each Mortgage Loan
identified on a Loan Schedule and included in a Transaction hereunder is unique
and identifiable on the date of the related Transaction and that an award of
money damages would be insufficient to compensate Borrower for the losses and
damages incurred by Borrower in the event of Lender's failure to pledge and
deliver the Mortgage Loans as provided in Paragraphs 3(e) or 11 hereof, and
that, in addition to all legal and equitable relief hereunder, Borrower may seek
injunctive relief relating to its rights hereunder.
9. SUBSTITUTION
Borrower may, subject to agreement with and acceptance by Lender,
substitute other Mortgage Loans for any Financed Mortgage Loans. Such
substitution shall be made by the pledge to Lender of such other Mortgage Loans
and the pledge to Borrower of such Financed Mortgage Loans. After substitution,
the substituted Mortgage Loans shall be deemed to be Financed Mortgage Loans and
the Mortgage Loans for which such Financed Mortgage Loans were substituted shall
be released by Lender to Borrower.
10. REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) Lender and Borrower each represents and warrants, and shall on and
as of the Advance Date of any Transaction be deemed to represent and warrant, to
the other that:
(i) it is duly authorized to execute and deliver this
Agreement, to enter into the Transactions contemplated hereunder and to
perform its obligations hereunder and has taken all necessary action to
authorize such execution, delivery and performance;
(ii) it will engage in such Transactions as principal (or, if
agreed in writing in advance of any Transaction by the other party
hereto, as agent for a disclosed principal);
(iii) the person signing this Agreement on its behalf is duly
authorized to do so on its behalf (or on behalf of any such disclosed
principal);
(iv) no authorization of any governmental body is required in
connection with the execution and delivery of this Agreement by it and
the performance by it of its obligations hereunder and with respect to
such Transaction, other than any such authorization (a) that has been
obtained and remains in full force and effect or (b) the failure of
which to obtain (I) would not, singly or in the aggregate,
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have a material adverse effect on its ability to perform its
obligations hereunder and with respect to each Transaction and (II)
would not give rise to liability on the part of the other party hereto;
(v) the execution, delivery and performance of this Agreement
and the Transactions hereunder will not violate any law, ordinance,
charter, by-law or rule applicable to it or any agreement by which it
is bound or by which any of its assets are affected other than any
ordinance, law or rule, the violation of which would not have a
material adverse effect on its ability to perform its obligations
hereunder and with respect to each Transaction and would not give rise
to liability on the part of the other party hereto.
(b) Borrower represents and warrants to Lender, and shall on and as of
the Advance Date of any Transaction be deemed to represent and warrant, as
follows:
(i) The documents disclosed by Borrower to Lender pursuant to
this Agreement are either original documents or genuine and true copies
thereof;
(ii) Borrower is a separate and independent corporate entity from
the Custodian, Borrower does not own a controlling interest in the
Custodian either directly or through affiliates and no director or
officer of Borrower is also a director or officer of the Custodian;
(iii) None of the Advance Amount for any Mortgage Loan will be used
either directly or indirectly to acquire any security, as that term is
defined in Regulation T of the Regulations of the Board of Governors of
the Federal Reserve System, and Borrower has not taken any action that
might cause any Transaction to violate any regulation of the Federal
Reserve Board;
(iv) Each Mortgage Loan was underwritten in accordance with the
written underwriting standards of Borrower most recently furnished by
Borrower to Lender, and no material change to such underwriting
standards has occurred since the date of the last written revision to
such standards was furnished to Lender by Borrower;
(v) Borrower shall be at the time it pledges to Lender any
Mortgage Loans for any Transaction the legal and beneficial owner of
such Mortgage Loans, free of any lien, security interest, option or
encumbrance;
(vi) Borrower used no selection procedures that
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identified the Mortgage Loans relating to a Transaction as being less
desirable or valuable than other comparable assets in Borrower's
portfolio on the related Advance Date;
(vii) Each Mortgage Loan is a B Quality Mortgage Loan or a C
Quality Mortgage Loan; and
(viii) No Mortgage Loan had a loan-to-value ratio, determined
as of the date of origination, in excess of 95%.
(c) Borrower makes the representations and warranties set forth at
Exhibit B with respect to the Mortgage Loans as of the related Advance Date.
(d) Borrower covenants with Lender, from and after the date hereof, as
follows:
(i) Borrower shall immediately notify Lender if an Event of
Default with respect to Borrower shall have occurred;
(ii) Borrower shall deliver to Lender a current Loan Schedule
with respect to all Mortgage Loans subject to this Agreement with such
frequency as Lender may reasonably require;
(iii) No Mortgage Loan shall be subject to this Agreement for
more than one hundred and eighty (180) days in aggregate;
(iv) No more than an aggregate amount equal to $75,000,000 of
the amounts ever advanced by Lender to Borrower hereunder shall be
secured by Mortgage Loans that were (1) previously subject to the
Greenwich Facility or (2) originated prior to July 31, 1997;
(v) All Mortgage Loans pledged to Lender hereunder that were
originated prior to the date of this Agreement shall either be (1)
included in the first securitization of assets sponsored by Borrower or
any of its affiliates occurring after the date of this Agreement or (2)
assigned a Market Value of zero by Lender for purposes of this
Agreement;
(vi) Except with respect to the Mortgage Loans referred to in
clause (v) above, any Mortgage Loan pledged by Borrower to Lender
hereunder shall have been originated after the date of this Agreement;
(vii) Borrower will pay and discharge or cause to be paid
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and discharged all taxes, levies, liens and other charges on its assets
and on the collateral pledged hereunder which, in each case, in any
manner would create any lien or charge upon such collateral;
(viii) Borrower will provide to Lender a true and correct copy
of the written Greenwich Facility (and each amendment and supplement
thereto from time to time during the effectiveness of this Agreement)
promptly upon the execution thereof by the parties thereto; and
(ix) All financial covenants made by Borrower under the
Greenwich Facility (as the same shall be amended or modified from time
to time) are true and correct and are made to Lender as through fully
set forth herein.
(e) Lender covenants with Borrower, from and after the date hereof, to
notify Borrower if an Event of Default with respect to Lender shall have
occurred.
11. EVENTS OF DEFAULT; EVENT OF TERMINATION
(a) The following events shall constitute events of default (each an
"Event of Default") hereunder with respect to Lender or Borrower, as applicable:
(i) Borrower fails to redeem or Lender fails to release
Financed Mortgage Loans upon the applicable Payoff Date pursuant to the
terms hereof;
(ii) Borrower or Lender fails, after one (1) Business Day's
notice, to comply with Paragraph 4 hereof;
(iii) An Act of Insolvency occurs with respect to Borrower or
Lender or any controlling entity thereof;
(iv) Any representation or warranty made by Borrower or Lender
shall have been incorrect or untrue in any material respect when made
or repeated or deemed to have been made or repeated; provided, however,
that in the case of representations and warranties made with respect to
the Financed Mortgage Loans, such circumstance shall not constitute an
Event of Default if, after determining the Market Value of the Financed
Mortgage Loans without taking into account the Financed Mortgage Loans
with respect to which such circumstance has occurred, no other Event of
Default shall have occurred and be continuing;
(v) Any covenant shall have been breached in any material
respect; provided, however, that in the case of
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covenants made with respect to the Financed Mortgage Loans, such
circumstance shall not constitute an Event of Default if, after
determining the Market Value of the Financed Mortgage Loans without
taking into account the Financed Mortgage Loans with respect to which
such circumstance has occurred, no other Event of Default shall have
occurred and be continuing;
(vi) Lender shall have reasonably determined that Borrower is
or will be unable to meet its material commitments under this
Agreement, shall have notified Borrower of such determination and
Borrower shall not have responded with appropriate information to the
contrary to the satisfaction of Lender within twenty-four (24) hours;
(vii) This Agreement shall for any reason cease to create a
valid, first priority security interest in any of the Financed Mortgage
Loans purported to be covered hereby;
(viii) A final judgment by any competent court in the United
States of America for the payment of money in an amount of at least
$1,000,000 is rendered against Borrower, and the same remains
undischarged for a period of sixty (60) days during which execution of
such judgment is not effectively stayed;
(ix) Any event of default or any event which with notice, the
passage of time or both shall constitute an event of default shall
occur and be continuing under any repurchase or other financing
agreement for borrowed funds or indenture for borrowed funds by which
Borrower is bound or affected;
(x) In the reasonable judgment of Lender a material adverse
change shall have occurred in the business, operations, properties,
prospects or condition (financial or otherwise) of Borrower;
(xi) Borrower shall be in default with respect to any normal
and customary covenants under any debt contract or agreement, any
servicing agreement or any lease to which it is a party, which default
could materially adversely affect the financial condition of Borrower
(which covenants include, but are not limited to, an Act of Insolvency
of Borrower or the failure of Borrower to make required payments under
such contract or agreement as they become due);
(xii) Borrower shall fail to promptly notify Lender of (i) the
acceleration of any debt obligation or the
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termination of any credit facility with respect to which Borrower is
the debtor and involving an amount in excess of $1,000,000 (each a
"Debt Obligation"); (ii) the amount and maturity of any such Debt
Obligation assumed after the date hereof; (iii) the filing of any class
action law suit naming Borrower as a defendant or respondent; (iv) the
filing of any law suit with an amount in controversy in excess of
$1,000,000 naming Borrower as a defendant or respondent; (v) the
occurrence adverse developments with respect to existing litigation
involving Borrower; and (vi) any other developments which might
materially and adversely affect the financial condition of Borrower; or
(xiii) Borrower shall have failed to comply in any material respect
with its obligations under the Custody Agreement.
(b) If an Event of Default shall have occurred and be continuing, then,
at the option of the nondefaulting party, exercised by written notice to the
defaulting party (which option shall be deemed to have been exercised, even if
no notice is given, immediately upon the occurrence of an Act of Insolvency),
the Payoff Date for each Transaction hereunder shall be deemed immediately to
occur.
(c) In all Transactions in which the defaulting party is Borrower, if
Lender is deemed to have exercised the option referred to in subparagraph (b) of
this Paragraph, (i) Borrower's obligations hereunder to redeem all Financed
Mortgage Loans in such Transactions shall thereupon become immediately due and
payable, (ii) to the extent permitted by applicable law, the Payoff Amount with
respect to each such Transaction shall be increased by the aggregate amount
obtained by daily application of (x) the greater of the Financing Rate for such
Transaction and the Prime Rate to (y) the Payoff Amount for such Transaction as
of the Payoff Date as determined pursuant to subparagraph (b) of this Paragraph
(decreased as of any day by (A) any amounts retained by Lender with respect to
such Payoff Amount pursuant to clause (iii) of this subparagraph, (B) any
proceeds from the sale of Financed Mortgage Loans pursuant to subparagraph
(e)(i) of this Paragraph, and (C) any amounts credited to the account of
Borrower pursuant to subparagraph (f) of this Paragraph) on a 360 day per year
basis for the actual number of days during the period from and including the
date of the Event of Default giving rise to such option to but excluding the
date of payment of the Payoff Amount as so increased, (iii) all Income paid
after such exercise or deemed exercise shall be payable to and retained by
Lender applied to the aggregate unpaid Payoff Amounts owed by Borrower, and (iv)
Borrower shall immediately deliver or cause the Custodian to deliver to Lender
any documents relating to
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Financed Mortgage Loans subject to such Transactions then in Borrower's
possession.
(d) In all Transactions in which the defaulting party is Lender, upon
tender by Borrower of payment of the aggregate Payoff Amounts for all such
Transactions, Lender's right, title and interest in all Financed Mortgage Loans
subject to such Transactions shall be released to Borrower, and Lender shall
deliver or cause the Custodian to deliver all documents relating to such
Financed Mortgage Loans to Borrower.
(e) After one (1) Business Day's notice to the defaulting party (which
notice need not be given if an Act of Insolvency shall have occurred, and which
may be the notice given under subparagraph (b) of this Paragraph or the notice
referred to in clause (ii) of the first sentence of subparagraph (a) of this
Paragraph), the nondefaulting party may:
(i) as to Transactions in which the defaulting party is
Borrower, (A) immediately sell on a servicing released or servicing
retained basis as Lender deems desirable, in a recognized market at
such price or prices as Lender may in its sole discretion deem
satisfactory, any or all Financed Mortgage Loans subject to such
Transactions and apply the proceeds thereof to the aggregate unpaid
Payoff Amounts and any other amounts owing by Borrower hereunder or (B)
in its sole discretion elect, in lieu of selling all or a portion of
such Financed Mortgage Loans, to give Borrower credit for such Financed
Mortgage Loans in an amount equal to the Market Value therefor
(determined without giving effect to the proviso in the definition
thereof) on such date against the aggregate unpaid Payoff Amounts and
any other amounts owing by Borrower hereunder; and
(ii) as to Transactions in which the defaulting party is
Lender, (A) purchase mortgage loans of substantially the same type
("Replacement Mortgage Loans") having substantially the same
outstanding principal amount, maturity and interest rate as any
Financed Mortgage Loans that are not released by Lender to Borrower as
required hereunder or (B) in its sole discretion elect, in lieu of
purchasing Replacement Mortgage Loans, to be deemed to have purchased
Replacement Mortgage Loans at the price therefor on such date,
calculated as the average of the prices obtained from three (3)
nationally recognized registered broker/dealers that buy and sell
mortgage loans of substantially the same type in the secondary market.
(f) As to Transactions in which the defaulting party is Lender, Lender
shall be liable to Borrower (i) with respect to
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Financed Mortgage Loans (other than Additional Financed Mortgage Loans), for any
excess of the price paid (or deemed paid) by Borrower for Replacement Mortgage
Loans therefor over the Payoff Amount for such Financed Mortgage Loans and (ii)
with respect to Additional Financed Mortgage Loans, for the price paid (or
deemed paid) by Borrower for the Replacement Mortgage Loans therefor. In
addition, Lender shall be liable to Borrower for interest on such remaining
liability with respect to each such purchase (or deemed purchase) of Replacement
Mortgage Loans from the date of such purchase (or deemed purchase) until paid in
full by Lender. Such interest shall be at a rate equal to the greater of the
Financing Rate for such Transaction or the Prime Rate.
(g) For purposes of this Paragraph 11, the Payoff Amount for each
Transaction hereunder in respect of which the defaulting party is Lender shall
not increase above the amount of such Payoff Amount for such Transaction
determined as of the date of the exercise or deemed exercise by Borrower of its
option under subparagraph (b) of this Paragraph.
(h) The defaulting party shall be liable to the nondefaulting party for
the amount of all reasonable legal or other expenses incurred by the
nondefaulting party in connection with or as a consequence of an Event of
Default, together with interest thereon at a rate equal to the greater of the
Financing Rate for the relevant Transaction or the Prime Rate. Expenses incurred
in connection with an Event of Default shall include without limitation those
costs and expenses incurred by the nondefaulting party as a result of the early
termination of any repurchase agreement, reverse repurchase agreement or other
financing agreement entered into by the nondefaulting party in connection with
the Transaction then in default.
(i) The nondefaulting party shall have, in addition to its rights
hereunder, any rights otherwise available to it under any other agreement or
applicable law.
(j) At the option of Lender, exercised by thirty (30) Business Days'
prior written notice to Borrower, the Payoff Date for any or all Transactions
shall be deemed to immediately occur in the event that the senior debt
obligations or short-term debt obligations of Bear ▇▇▇▇▇▇▇ & Co. Inc. shall be
rated below the four highest generic grades (without regard to any pluses or
minuses reflecting gradations within such generic grades) by any nationally
recognized statistical rating organization.
(k) The exercise by any party of remedies after the occurrence of an
Event of Default shall be conducted in a commercially reasonable manner.
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12. SERVICING OF THE FINANCED MORTGAGE LOANS
(a) The parties hereto agree and acknowledge that Borrower shall
continue to service the Financed Mortgage Loans for the benefit of Lender and,
if Lender shall exercise its rights to pledge the Financed Mortgage Loans
pursuant to this Agreement prior to the related Payoff Date, Lender's assigns;
provided, however, that the obligation of Borrower to service Financed Mortgage
Loans for the benefit of Lender as aforesaid shall cease upon the payment by or
on behalf of Borrower to Lender of the Payoff Amount therefor.
(b) Borrower shall service and administer the Financed Mortgage Loans
and shall have full power and authority, acting alone, to do any and all things
in connection with such servicing which Borrower may deem necessary or desirable
and consistent with the terms of this Agreement, and shall retain all principal
prepayments and Income received by Borrower with respect to such Financed
Mortgage Loans pursuant to the terms hereof. Borrower shall act as the
administrator of the FHA Insurance relating to the Title I Mortgage Loans and
any insurance claims made under the Title I Program. Borrower, in administering
and servicing the Financed Mortgage Loans, shall employ procedures (including
collection procedures) and exercise the same care it customarily employs and
exercises in servicing and administering the same type of mortgage loans for its
own account, in accordance with accepted residential mortgage loan servicing
practices of prudent lending institutions and giving due consideration to
Lender's reliance on Borrower. Borrower will provide Lender with monthly
reports, in a form substantially similar to FNMA's standard form of remittance
report and reasonably acceptable to Lender, with respect to all Financed
Mortgage Loans then involved in any Transaction hereunder.
(c) Lender may, in its sole discretion if an Event of Default shall
have occurred and be continuing, without payment of any termination fee or any
other amount to Borrower, (i) sell the Mortgage Loans on a servicing released
basis or (ii) terminate Borrower as the servicer of the Financed Mortgage Loans
with or without cause.
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13. DELIVERY OF NOTES AND SCHEDULES
(a) Advances by Lender hereunder shall be evidenced by up to but not
exceeding twelve (12) Notes of Borrower, each in the form attached hereto as
Exhibit D and each representing the amounts borrowed thereunder (which amounts
shall not in the aggregate exceed $25,000,000) as noted on the schedule attached
thereto. The original of each Note shall be delivered to Lender or its designee
prior to Lender's disbursement of any Advance Amount relating thereto.
(b) Each Note shall relate to one or more Trust Receipts, each of which
Trust Receipts shall have appended thereto the related Loan Schedule, which
schedule shall be modified or replaced to reflect prepayments, substitutions and
releases of collateral.
14. MAXIMUM ADVANCE AMOUNT; DISBURSEMENT OF FUNDS; REPAYMENT
OF ADVANCES AND INTEREST
(a) The aggregate Advance Amount outstanding hereunder at any time
shall not exceed $300,000,000.
(b) The Advance Amount with respect to any Mortgage Loan shall not
exceed the par amount of such Mortgage Loan.
(c) Not more than an aggregate amount equal to $75,000,000 of the
amounts ever advanced by Lender to Borrower hereunder shall be secured by
Mortgage Loans that were (1) previously subject to the Greenwich Facility or (2)
originated prior to July 31, 1997.
(d) The maximum amount to be advanced hereunder with respect to any
Mortgage Loan shall not exceed the par amount of such Mortgage Loan.
(e) Borrower may request disbursement of amounts borrowed hereunder
upon not less than one (1) Business Days' written notice to Lender.
(f) A completed Trust Receipt with Loan Schedule attached must be
delivered by the Custodian to the Lender (by facsimile transmission with the
original to follow by overnight courier for next day delivery) prior to the
disbursement by Lender to Borrower of any amounts hereunder. Lender will
disburse amounts to Borrower in accordance with this Agreement (i) on the date
of such facsimile transmission if such facsimile transmission is received by
Lender prior to 1:00 p.m. New York City time and (ii) otherwise on the following
Business Day.
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(g) Advance Amounts hereunder shall be in minimum amounts of
$1,000,000.
(h) Interest on each Advance Amount shall be payable on the date
described in the related Request/Confirmation.
(i) The principal portion of each Advance Amount shall be due and
payable not later than the Maturity Date.
15. NOTICES AND OTHER COMMUNICATIONS
Except as otherwise expressly provided herein, all such notices or
communications shall be in writing (including, without limitation, telegraphic,
facsimile or telex communication) or confirmed in writing and such notices and
other communications shall, when mailed, telegraphed, communicated by facsimile
transmission or telexed, be effective when received at the address for notices
for the party to whom such notice or communications is to be given as follows:
if to Borrower:
Cityscape Corp.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy at the same address to:
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
if to Lender:
Bear ▇▇▇▇▇▇▇ Mortgage Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Notwithstanding the foregoing, however, any notice sent by facsimile
transmission shall be deemed to be received when transmitted so long as the
transmitting machine has provided an electronic confirmation of such
transmission, and provided further, however, that all financial statements
delivered shall be hand-delivered or sent by first-class mail. Either party may
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revise any information relating to it by notice in writing to the other party,
which notice shall be effective on the fifth business day following receipt
thereof.
16. SINGLE AGREEMENT
Lender and Borrower acknowledge that, and have entered hereinto and
will enter into each Transaction hereunder in consideration of and in reliance
upon the fact that, all Transactions hereunder constitute a single business and
contractual relationship and have been made in consideration of each other.
Accordingly, each of Lender and Borrower agrees (i) to perform all of its
obligations in respect of each Transaction hereunder, and that a default in the
performance of any such obligations shall constitute a default by it in respect
of all Transactions hereunder, (ii) that each of them shall be entitled to set
off claims and apply property held by them in respect of any Transaction against
obligations owing to them in respect of any other Transactions hereunder and
(iii) that payments, deliveries and other transfers made by either of them in
respect of any Transaction shall be deemed to have been made in consideration of
payments, deliveries and other transfers in respect of any other Transactions
hereunder, and the obligations to make any such payments, deliveries and other
transfers may be applied against each other and netted.
17. PAYMENT OF EXPENSES
Borrower shall pay on demand all reasonable fees and expenses
(including, without limitation, the reasonable fees and expenses for legal
services) incurred by Lender or the Custodian in connection with this Agreement
and the Custody Agreement and the transactions contemplated hereby and thereby,
whether or not any Transactions are entered into hereunder, including, by way of
illustration and not by way of limitation, the fees and expenses incurred in
connection with (i) the preparation, reproduction and distribution of this
Agreement and the Custody Agreement and any opinions of counsel, certificates of
officers or other documents contemplated by the aforementioned agreements and
(ii) any Transaction under this Agreement; provided, however, that Borrower
shall not be required to pay the fees and expenses of Lender incurred as a
result of Lender's default under this Agreement. The obligation of Borrower to
pay such fees and expenses incurred prior to or in connection with the
termination of this Agreement shall survive the termination of this Agreement.
18. OPINIONS OF COUNSEL
Borrower shall, on the Advance Date of the first Transaction
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hereunder and, upon the request of Lender, on the Advance Date of any subsequent
Transaction, cause to be delivered to Lender a favorable opinion of counsel with
respect to the matters set forth in Exhibit C hereto (which opinion may be
subject to customary assumptions and exclusions), in form and substance
acceptable to Lender and its counsel.
19. FURTHER ASSURANCES; ADDITIONAL INFORMATION
(a) Borrower shall promptly provide such further assurances or
agreements as Lender may reasonably request in order to effect the purposes of
this Agreement.
(b) At any reasonable time, Borrower shall permit Lender, its agents or
attorneys, to inspect and copy any and all documents and data in its possession
pertaining to each Financed Mortgage Loan that is the subject of such
Transaction. Such inspection shall occur upon the request of Lender at a
mutually agreeable location during regular business hours and on a date not more
than two (2) Business Days after the date of such request.
(c) Borrower agrees to provide Lender or its agents, from time to time,
with such information concerning Borrower of a financial or operational nature
as Lender may reasonably request.
(d) Borrower shall provide Lender or its agents, with copies of all
filings made by or on behalf of Borrower or any entity that controls Borrower,
with the Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended, promptly upon making such filings.
20. LENDER AS ATTORNEY-IN-FACT
Lender is hereby appointed the attorney-in-fact of Borrower for the
purpose of carrying out the provisions of this Agreement and taking any action
and executing any instruments that Lender may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, Lender shall have the right and power during the occurrence and
continuation of any Event of Default to receive, endorse and collect all checks
made payable to the order of Borrower representing any payment on account of the
principal of or interest on any of the Financed Mortgage Loans and to give full
discharge for the same.
21. WIRE INSTRUCTIONS
(a) Any amounts to be transferred by Lender to Borrower
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hereunder shall be sent by wire transfer in immediately available funds to the
account of Borrower identified in the Request/Confirmation for the related
Transaction.
(b) Any amounts to be transferred by Borrower to Lender hereunder shall
be sent by wire transfer in immediately available funds to the account of Lender
at:
FNB Chicago/Bear ▇▇▇▇▇▇▇ MBS
ABA #: ▇▇▇-▇▇▇-▇▇▇
Attn.: ▇▇▇▇ ▇▇▇▇▇▇▇
Acct.: 5801230
(c) Amounts received after 3:00 p.m., New York City time, on any
Business Day shall be deemed to have been paid and received on the next
succeeding Business Day.
22. ENTIRE AGREEMENT; SEVERABILITY
This Agreement shall supersede any existing agreements between the
parties containing general terms and conditions for loan transactions. Each
provision and agreement herein shall be treated as separate and independent from
any other provision or agreement herein and shall be enforceable notwithstanding
the unenforceability of any such other provision or agreement.
23. NON-ASSIGNABILITY; TERMINATION
(a) The rights and obligations of the parties under this Agreement and
under any Transaction shall not be assigned by either party without the prior
written consent of the other party. Subject to the foregoing, this Agreement and
any Transactions shall be binding upon and shall inure to the benefit of the
parties and their respective successors and assigns.
(b) This Agreement and all Transactions outstanding hereunder shall
terminate automatically without any requirement for notice on the Maturity Date.
24. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which counterparts shall be deemed to be an original, and such counterparts
shall constitute but one and the same instrument.
25. GOVERNING LAW
(a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
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ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, THE BORROWER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS.
(c) THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF
ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE
BORROWER AT ITS ADDRESS PROVIDED PURSUANT TO SECTION 15 HEREOF.
(d) NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE LENDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE BORROWER IN ANY OTHER JURISDICTION.
(e) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THE
COURTS REFERRED TO IN CLAUSE (B) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND
AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM.
26. NO WAIVERS, ETC.
No express or implied waiver of any Event of Default by either party
shall constitute a waiver of any other Event of Default and no exercise of any
remedy hereunder by any party shall constitute a waiver of its right to exercise
any other remedy hereunder. No modification or waiver of any provision of this
Agreement and no consent by any party to a departure herefrom shall be effective
unless and until such shall be in writing and duly executed by both of the
parties hereto. Without limitation on any of the foregoing, the failure to give
a notice pursuant to subparagraph 4(a) hereof will not constitute a waiver of
any right to do so at a later date.
27. USE OF EMPLOYEE PLAN ASSETS
(a) If assets of an employee benefit plan subject to any provision of
the Employee Retirement Income Security Act of 1974 ("ERISA") are intended to be
used by either party hereto (the "Plan Party") in a Transaction, the Plan Party
shall so notify
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the other party prior to the Transaction. The Plan Party shall represent in
writing to the other party that the Transaction does not constitute a prohibited
transaction under ERISA or is otherwise exempt therefrom, and the other party
may proceed in reliance thereon but shall not be required so to proceed.
(b) Subject to the last sentence of subparagraph (a) of this Paragraph,
any such Transaction shall proceed only if Borrower furnishes or has furnished
to Lender its most recent available audited statement of its financial condition
and its most recent subsequent unaudited statement of its financial condition.
(c) By entering into a Transaction pursuant to this Paragraph, Borrower
shall be deemed (i) to represent to Lender that since the date of Borrower's
latest such financial statements, there has been no material adverse change in
Borrower's financial condition which Borrower has not disclosed to Lender, and
(ii) to agree to provide Lender with future audited and unaudited statements of
its financial condition as they are issued, so long as it is a Borrower in any
outstanding Transaction involving a Plan Party.
28. DISCLOSURE RELATING TO CERTAIN FEDERAL PROTECTIONS
The parties acknowledge that they have been advised that:
(a) in the case of Transactions in which one of the parties is
a broker or dealer registered with the Securities and Exchange
Commission ("SEC") under Section 15 of the Securities Exchange Act of
1934 ("1934 Act"), the Securities Investor Protection Corporation has
taken the position that the provisions of the Securities Investor
Protection Act of 1970 ("SAPPY") do not protect the other party with
respect to any Transaction hereunder;
(b) in the case of Transactions in which one of the parties is
a government securities broker or a government securities dealer
registered with the SEC under Section 15C of the 1934 Act, SAPPY will
not provide protection to the other party with respect to any
Transaction hereunder; and
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(c) in the case of Transactions in which one of the parties is
a financial institution, funds held by the financial institution
pursuant to a Transaction hereunder are not a deposit and therefore are
not insured by the Federal Deposit Insurance Corporation, the Federal
Savings and Loan Insurance Corporation or the National Credit Union
Share Insurance Fund, as applicable.
BEAR ▇▇▇▇▇▇▇ MORTGAGE CAPITAL CITYSCAPE CORP.
CORPORATION
By /s/▇▇▇▇ ▇▇▇▇▇▇▇▇ By /s/▇▇▇▇▇▇ ▇. ▇▇▇▇
Title Vice President Title Senior Vice President
Date 9/5/97 Date 9/5/97
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EXHIBIT A
REQUEST/CONFIRMATION
TO: Cityscape Corp.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
FROM: Bear ▇▇▇▇▇▇▇ Mortgage Capital Corporation
RE: Request/Confirmation under Master Financing Agreement, dated as of
September 4, 1997, between Bear ▇▇▇▇▇▇▇ Mortgage Capital Corporation
and Cityscape Corp.
Bear ▇▇▇▇▇▇▇ Mortgage Capital Corporation ("Lender") is pleased to confirm your
pledge of the Mortgage Loans described below and listed on the attached Loan
Schedule pursuant to the above-referenced Master Financing Agreement under the
following terms and conditions:
Additional
ORIG. PRINCIPAL AMOUNT OF MORTGAGE LOANS: ________
CURRENT PRINCIPAL AMOUNT OF MORTGAGE LOANS: ________
ADVANCE DATE: ________
PAYOFF DATE: ________
ADVANCE AMOUNT: ________
FINANCING RATE: ________
MINIMUM REQUIRED MARGIN PERCENTAGE: ________
INTEREST DUE DATE: ________
Wire transfer instructions of Borrower:
Bank Name: __________
ABA No.: ____________
Account No.: ________
Attention: __________
Reference: __________
A-1
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The Master Financing Agreement is incorporated by reference into this
Request/Confirmation and made a part hereof as if it were fully set forth
herein. All capitalized terms used herein but not otherwise defined shall have
the meanings specified in the Master Financing Agreement.
BEAR ▇▇▇▇▇▇▇ MORTGAGE CAPITAL
CORPORATION
BY: _______________________________
NAME: _____________________________
TITLE: ____________________________
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇
REPRESENTATIONS AND WARRANTIES
RELATING TO THE FINANCED MORTGAGE LOANS
(a) Mortgage Loan Information. The information with respect to each
Mortgage Loan set forth in the Loan Schedule is true and correct in all
material respects as of the date specified on such Loan Schedule.
(b) Delivery of Mortgage Loan Documents. All of the original or
certified documentation required to be delivered to the Custodian on or
prior to the related Advance Date or as otherwise provided in this
Agreement has or will be so delivered.
(c) Payments Current. No scheduled payments on the Mortgage Loans are
delinquent eighty-nine (89) days or more based on the terms under which
the related Mortgage Loans have been made. Borrower has not advanced
funds, or induced, solicited or knowingly received any advance of funds
from a party other than Lender, directly or indirectly, for the payment
of any amount required by any Mortgage Loan.
(d) No Waiver or Modification. The terms of each Mortgage Note and
Mortgage have not been impaired, waived, altered or modified in any
respect, except by written instruments reflected in the Custodian's
Mortgage Loan File and no provision of any Mortgage or Mortgage Note
has been "▇▇▇▇▇▇ out" or erased unless such modification has been
initialed by each of the parties to the related Mortgage Loan. No
instrument of waiver, alteration, modification or assumption has been
executed except for the instruments that are part of the Mortgage File
and the terms of which are reflected in the Mortgage File.
(e) No Defenses. No Mortgage Note or Mortgage is subject to any
set-off, counterclaim or defense, including the defense of usury, nor
will the operation of any of the terms of any Mortgage Note or
Mortgage, or the exercise of any right thereunder, render such Mortgage
Note or Mortgage unenforceable, in whole or in part, or subject to any
right of rescission, set-off, counterclaim or defense, including the
defense of usury, and to the best of Borrower's knowledge, no such
right of rescission, set-off, counterclaim or defense with respect to
such Mortgage Note or Mortgage has been asserted in any proceeding or
was
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asserted in any state or federal bankruptcy or insolvency proceeding at
the time the related Mortgage Loan was originated.
(f) Compliance with Laws. Any and all requirements of any material
federal, state or local law applicable to each Mortgage Loan have been
complied with including, without limitation, all material consumer,
usury, truth-in-lending, consumer credit protection, equal credit
opportunity or disclosure laws applicable to each Mortgage Loan, and
with respect to the Title I Mortgage Loans, the FHA Regulations; each
Mortgage Loan was originated in material compliance with all applicable
laws and no fraud or misrepresentation was committed by any Person in
connection therewith; any Mortgage Loan originated in the State of
Texas, was originated pursuant to Chapter 6 of the Texas Consumer
Credit Code.
(g) No Satisfaction or Release of Lien. No Mortgage has been satisfied,
canceled, subordinated or rescinded, in whole or in part. No Mortgaged
Property has been released from the lien of the related Mortgage, in
whole or in part, nor has any instrument been executed that would
effect any such release, cancellation, subordination or rescission,
other than the subordination of the lien of a Mortgage securing a
Mortgage Loan (in the case of a Title I Mortgage Loan, as permitted by
FHA Regulations), with respect to which a related superior lien was
released in connection with the refinancing of the mortgage loan
relating to such superior lien.
(h) Valid Lien. Each Mortgage Note is secured by a Mortgage and each
Mortgage is or creates a valid, subsisting and enforceable lien on the
related Mortgaged Property, including, in the case of a Mortgage
securing a property improvement loan, the land and all buildings on the
Mortgaged Property.
(i) Validity of Mortgage Loan Documents. Each Mortgage Note and each
Mortgage is genuine and each is the legal, valid and binding obligation
of the related Mortgagor, enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights in
general and by general principles of equity. All parties to each
Mortgage Note and each Mortgage had legal capacity at the time to enter
into the related Mortgage Loan and to execute and deliver such Mortgage
Note and Mortgage, and such Mortgage Note and Mortgage have been duly
and properly executed by such parties.
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(j) Full Disbursement of Proceeds. The proceeds of each Mortgage Loan
have been fully disbursed and there is no requirement for future
advances thereunder, all costs, fees and expenses incurred in making or
closing each Mortgage Loan and the recording of the Mortgage were
disbursed, the Mortgagor is not entitled to any refund of any amounts
paid or due under the Mortgage Note or any related Mortgage and any and
all requirements set forth in the related Mortgage Loan documents have
been complied with.
(k) Ownership. Immediately prior to the pledge thereof to Lender,
Borrower had good and marketable title to each Mortgage Loan, Mortgage
Note and Mortgage, was the sole owner thereof and had full right to
pledge each Mortgage Loan, Mortgage Note and Mortgage to Lender and
upon the pledge thereof by Borrower to Lender, Lender became the sole
owner of each Mortgage Loan, Mortgage Note and Mortgage free and clear
of any encumbrance, equity, lien, pledge, charge, claim or security
interest.
(l) Ownership of Mortgaged Property. The related servicer has in its
possession a title document with respect to each Mortgage Loan
reflecting that title to the related Mortgaged Property is held at
least 50% by the Mortgagor under such Mortgage Loan.
(m) No Defaults. Except with respect to any delinquent scheduled
payment which is not more than eighty-nine (89) days delinquent as of
the applicable Advance Date, there is no material default, breach,
violation or event of acceleration existing under any Mortgage or any
Mortgage Note and, to the best of Borrower's knowledge, there is no
event which, with the passage of time or with notice and/or the
expiration of any grace or cure period, would constitute such a
default, breach, violation or event of acceleration and neither
Borrower nor its predecessors have waived any such default, breach,
violation or event of acceleration, except as set forth in an
instrument of waiver, alteration, modification or assumption that is
included in the Mortgage File.
(n) No Condemnation or Damage. To the best of Borrower's knowledge, the
physical condition of each Mortgaged Property has not deteriorated
since the date of origination of the related Mortgage Loan (normal wear
and tear excepted) and there is no proceeding pending for the total or
partial condemnation of any Mortgaged Property.
(o) Mortgage Remedies Adequate. Each Mortgage contains
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customary and enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for the realization against the
related Mortgaged Property of the benefits of the security provided
thereby, including, (i) in the case of a Mortgage designated as a deed
of trust, by trustee's sale, and (ii) otherwise, by judicial
foreclosure.
(p) FHA Insurance Coverage. Each Title I Mortgage Loan is an "FHA Title
I property improvement loan" (as such term is defined in 24 C.F.R. Part
201.2) underwritten by the originator thereof in accordance with such
originator's then current underwriting guidelines and all FHA
requirements for the Title I Program as set forth in the FHA
Regulations, and has been or will be reported to and acknowledged by
the FHA for FHA Insurance under Borrower's Title I contract of
insurance. Borrower has no knowledge of any event which would
invalidate or cancel the FHA Insurance for such Title I Mortgage Loan.
(q) Underwriting of Conventional Mortgage Loans. Each Conventional
Mortgage Loan has been underwritten by the originator thereof in
accordance with such originator's then current underwriting guidelines.
(r) Terms of Mortgage Loans. Each Mortgage Loan is a fixed rate or
adjustable rate loan; each Mortgage Note has an original term to
maturity of not less than 12 months nor more than 30 years from the
date of origination; each Mortgage Note is payable in monthly
installments of principal and interest, with interest payable in
arrears, and requires a monthly payment (which need not be constant
over its term) which is sufficient to amortize the original principal
balance over the original term and to pay interest at the related
interest rate borne by the Mortgage Note; and no Mortgage Note provides
for any extension of the original term.
(s) Security. No Mortgage Note is, or has been, secured by any
collateral except the lien of the related Mortgage and certain
personalty relating thereto.
(t) Deed of Trust. If a Mortgage constitutes a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has been
properly designated and currently so serves as such and is named in the
Mortgage, or a valid substitution of trustee has been recorded or may
be recorded and no extraordinary fees or expenses are, or will become,
payable by Borrower to the trustee under the deed of trust, except in
connection with default proceedings and a trustee's sale after default
by the related Mortgagor.
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(u) Value and Title I Insurability. Except with respect to conditions
and circumstances expressly permitted pursuant to the applicable
underwriting guidelines, Borrower has no knowledge of any conditions or
circumstances (that are not reflected in the Mortgage File or in the
files of the related servicer) that could reasonably be expected to
materially and adversely affect the value of the related Mortgaged
Property with respect to any Conventional Mortgage Loan. Further,
Borrower has no knowledge of any conditions or circumstances that could
reasonably be expected to affect the FHA insurability with respect to
any Title I Mortgage Loan under the Title I Program.
(v) Origination Practices. The origination practices used by each
originator of the Mortgage Loans and the servicing and collection
practices used by Borrower with respect to each Mortgage Loan, and with
respect to each Title I Mortgage Loan the refinancing practices, if
applicable, have been in all material respects legal, proper, prudent
and customary with respect to the loan origination and servicing
business as applicable to the respective loan type, including property
improvement, home equity and/or debt consolidation loans and, in the
case of Title I Mortgage Loans, in compliance with all FHA Regulations.
(w) Servicing Practices. Each Mortgage Loan has been serviced in
accordance with all applicable laws and, to the best of Borrower's
knowledge, no fraud or misrepresentation was committed by any Person in
connection therewith.
(x) No Bulk Transfer. The assignment, pledge and grant of the Mortgage
Notes and the Mortgages by Borrower to Lender were not subject to the
bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction.
(aa) Relief Act Matters. No Mortgagor has notified Borrower, and
Borrower has no knowledge of any relief requested or allowed to an
Mortgagor under the Soldiers' and Sailors' Civil Relief Act of 1940.
(bb) Selection Criteria. The Mortgage Loans were not selected by
Borrower for pledge to Lender on any basis intended to adversely affect
Lender.
(cc) Appraised Mortgage Loan-to-Value. At origination, each Title I
Mortgage Loan in excess of $15,000 secured by a Mortgaged Property that
was not owner-occupied, had an appraised loan-to-value ratio not in
excess of 100%;
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provided that the FHA Regulations in effect at the time of such
origination required an appraisal of the Mortgaged Property.
(dd) Type of Mortgaged Properties. At the time of origination, each
Title I Mortgage Loan with a principal balance of $7,500 or greater was
secured by a lien on an owner-occupied one- to-four family dwelling.
(ee) Senior Lien Delinquencies. No lien senior to the lien created by a
Mortgage immediately after the time of origination of the related
Mortgage Loan was more than 30 days past due.
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EXHIBIT C
OPINION OF COUNSEL TO BORROWER
1. Borrower is duly organized and validly existing as a corporation in
good standing under the laws of the State of __________ and has power and
authority to enter into and perform its obligations under this Agreement and the
Custody Agreement. Borrower is duly qualified to do business and is in good
standing in each jurisdiction in which the character of the business transacted
by it requires such qualification and in which the failure so to qualify would
have a material adverse effect on the business, properties, assets or condition
(financial or other) of Borrower and its subsidiaries, considered as a whole.
2. This Agreement, the Custody Agreement and each Note have each been
duly authorized, executed and delivered by Borrower, and each constitutes a
valid and legally binding obligation of Borrower enforceable against Borrower in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights generally and to general equity principles.
3. No consent, approval, authorization or order of any state or federal
court or government agency or body is required to be obtained by Borrower for
the consummation of the transactions contemplated by this Agreement, the Custody
Agreement or any Note, other than (i) such consents, approvals, authorizations
and orders that have been obtained on or prior to the date hereof and remain in
full force and effect, and (ii) such consents, approvals, authorizations and
orders, the failure to obtain which would not adversely affect the validity or
enforceability of any of the Agreement or the Custody Agreement or the rights or
remedies of the Lender thereunder, or the ability of any of the Borrower to
perform its obligations thereunder.
4. The consummation of any of the transactions contemplated by this
Agreement, the Custody Agreement and each Note will not materially conflict
with, result in a material breach of, or constitute a material default under the
articles of incorporation or bylaws of Borrower or the terms of the instrument
under which $300,000,000 of Borrower's 12 3/4% Senior Mortgage Notes due 2004
were issued or any indenture or other agreement or instrument known to us to
which Borrower is party or bound, or any order known to such counsel to be
applicable to Borrower or any regulations applicable to Borrower, of any state
or federal court, regulatory body, administrative agency,
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governmental body or arbitrator having jurisdiction over Borrower.
5. There is no pending or, to the knowledge of such counsel, threatened
action, suit or proceeding before any court or governmental agency, authority or
body or any arbitrator involving Borrower or relating to the transaction
contemplated by this Agreement, the Custody Agreement or any Note which, if
adversely determined, would have a material adverse effect on Lender.
6. Borrower is duly registered as a finance company in each state in
which Mortgage Loans were originated, to the extent such registration is
required by applicable law.
7. Each Mortgage Loan will have been endorsed in a manner which
satisfies any requirement of endorsement in order to transfer all right, title
and interest in and to that Mortgage Loan from Borrower to Lender. Each
assignment of Mortgage related to each such Mortgage Loan is in recordable form
and is sufficient under applicable law to validly and effectively transfer all
right, title and interest of Borrower to Lender. This Agreement together with
(a) the delivery of such related Mortgage Loans to Custodian, (b) the
endorsement of such Mortgage Loans to Lender and (c) the delivery of the
assignments of Mortgages related to the Mortgage Loans to the Custodian in
recordable form assigning such Mortgages to Lender, creates a valid, perfected
security interest in such Mortgage Loans in favor of Lender. Such security
interest will have the same priority and will be subject to the same security
interests and liens as apply to such Mortgage Loans in the hands of Borrower.
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EXHIBIT D
THIS NOTE IS
NOT A NEGOTIABLE INSTRUMENT.
NO TRANSFER OR SALE OF THIS NOTE SHALL BE MADE UNLESS SUCH TRANSFER IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
AND ANY APPLICABLE STATE SECURITIES LAWS OR IS MADE IN ACCORDANCE WITH SAID ACT
AND LAWS.
NOTE
Note No. _____________
$25,000,000 New York, New York, _____ __, 199_
FOR VALUE RECEIVED, CITYSCAPE CORP. (the "Borrower") promises to pay to
BEAR ▇▇▇▇▇▇▇ MORTGAGE CAPITAL CORPORATION, and its successors and assigns (the
"Payee"), the principal sum of Twenty-Five Million Dollars ($25,000,000) (or so
much thereof as shall have been advanced here against and shall be outstanding),
in lawful money of the United States of America, in immediately available funds,
with interest on each principal sum advanced here against or the unpaid balance
thereof with such frequency and to such location as is specified in the related
Request/Confirmation (or on such other day and with such other frequency and to
such other location as may be mutually agreed upon by the Borrower and the
Payee) at said office and in said money and funds from the date of the related
advance until the repayment thereof at the rate per annum (based on a year of
360 days and actual days elapsed) set forth in such Request/Confirmation, but in
no event higher than the maximum rate permitted by law. Capitalized terms used
and not otherwise defined herein shall have the meanings assigned in the Master
Financing Agreement, dated as of September 4, 1997 (the "Master Financing
Agreement"), between Cityscape Corp. and Bear ▇▇▇▇▇▇▇ Mortgage Capital
Corporation except where the context clearly indicates otherwise.
The Payee is hereby authorized by the Borrower to endorse on the
schedule attached hereto amounts advanced here against and any principal
prepayments hereunder (as permitted by the Master
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Financing Agreement), it being understood, however, that failure to make any
such endorsement shall not affect the obligations of the Borrower hereunder in
respect of the amounts advanced hereagainst.
This Note is the Note referred to in the Master Financing Agreement
granting to the Payee a first priority perfected security interest in the
Mortgage Loans listed on the Mortgage Loan Schedule attached hereto. The holder
is entitled to the benefits of the Master Financing Agreement and may enforce
the agreements of the Borrower contained therein and exercise the remedies
provided for thereby or otherwise available in respect thereof.
This Note shall, unless the holder shall otherwise elect, be forthwith
be due and payable without notice or demand of any kind (except as expressly
provided in the Master Financing Agreement), all of which are expressly waived,
upon the occurrence of an Event of Default.
The Borrower waives diligence, presentment of any instrument, protest
and notice of non-payment or protest and any and all other notices and demands
whatsoever in connection with the delivery, acceptance, performance, default or
enforcement of this Note. This Note is not negotiable and may not be assigned or
transferred by the Payee. The Borrower will pay on demand all costs of
collection (including reasonable attorneys' fees) paid or incurred by the holder
in enforcing this Note on default.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS NOTE MAY BE BROUGHT
IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR
THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS NOTE,
THE BORROWER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.
THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE BORROWER
AT ITS ADDRESS PROVIDED PURSUANT TO SECTION 15 OF THE MASTER FINANCING
AGREEMENT.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE LENDER TO SERVE
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PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE BORROWER IN ANY OTHER JURISDICTION
THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR
PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS NOTE BROUGHT IN THE COURTS
REFERRED TO ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD
OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM.
CITYSCAPE CORP.
By: ___________________________________
Name: _____________________________
Title: ____________________________
▇-▇
▇▇
▇▇▇▇▇▇▇▇
This Note evidences advances made by the Payee to the Borrower and
the repayment of principal by the Borrower to the Payee, in the principal
amounts and on the dates set forth below as well as the total amount advanced
here against as of each such date:
DATE PRINCIPAL AMOUNT PRINCIPAL AMOUNT TOTAL RELATING TO
ADVANCED REPAID OUTSTANDING TRUST RECEIPTS NO.
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