Subscription Agreement

EXHIBIT 10.48


Execution Copy
CITYSCAPE FINANCIAL CORP.
U.S. $125,000,000
6% Convertible Subordinated Debentures due 2006


SUBSCRIPTION AGREEMENT


April 26, 1996


NATWEST SECURITIES LIMITED BEAR STEARNS & CO. INC. CIBC WOOD GUNDY SECURITIES CORP. WASSERSTEIN PERELLA SECURITIES, INC. c/o NatWest Securities Limited
135 Bishopsgate
London EC2M 3XT
England


Ladies and Gentlemen:


Cityscape Financial Corp., a Delaware corporation (the "Company"), proposes to issue and sell to the subscribers named on Schedule I hereto (the "Managers") U.S. $125,000,000 aggregate principal amount of 6% Convertible Subordinated Debentures due 2006 (the "Firm Debentures"), which are convertible into common stock of the Company, par value $0.01 per share (the "Common Stock"), at a conversion price of U.S. $52.50 per share, subject to adjustment under certain conditions. In addition, the Company shall, at the option (the "Option") of NatWest Securities Limited, Bear Stearns & Co. Inc., CIBC Wood Gundy Securities Corp. and Wasserstein Perella Securities, Inc. (the "Lead Managers"), issue and sell to the Managers up to an additional U.S. $18,750,000 aggregate principal amount of 6% Convertible Subordinated Debentures due 2006 on the terms and conditions and for the purposes set forth in Section 1b (the "Option Debentures"). The Firm Debentures and, if purchased, the Option Debentures are hereinafter collectively referred to as the "Debentures." The issuance and sale of the Debentures is hereinafter referred to as the "Offering." The Debentures are to be issued pursuant to an Indenture (the "Indenture") to be dated as of May 7, 1996, between the Company and The Chase Manhattan Bank, N.A., as trustee (the


"Trustee"). The shares of Common Stock issuable upon conversion of the Debentures are hereinafter collectively referred to as the "Conversion Shares."


The Company hereby confirms its agreement with the several Managers as follows:


1. Agreement to Sell and Purchase.


(a) On the basis of the representations and warranties contained in, and subject to the terms and conditions of, this Agreement, (i) the Company agrees to issue and sell to the Managers the Firm Debentures and (ii) each of the Managers, jointly and severally, agrees to subscribe and pay for or procure the subscription and payment for the Firm Debentures, on the Initial Closing Date (as defined in Section 3) at a subscription price (the "Initial Subscription Price") of 100% of the principal amount of the Firm Debentures plus accrued interest, if any, from May 7, 1996, less a selling concession of 1.8% of the principal thereof and a combined management and underwriting fee of 1.2% of the principal thereof. Each Debenture will be convertible at the option of the holder, at such times as specified in the Indenture into shares of Common Stock at a conversion rate of 19.048 shares of Common Stock per $1,000 principal amount of Debentures, subject to adjustment, as specified in the Indenture.


(b) The Company hereby grants the Option to the several Managers to purchase, jointly and severally, the Option Debentures at the same price per Option Debenture as the Managers shall pay for the Firm Debentures. The Option may be exercised only to cover over-allotments in the sale of the Firm Debentures by the Managers and may be exercised once in whole or in part at any time on or before the date that is 30 days after the date hereof (or the next business day if the 30th day is not a business day) upon notice (the "Option Debentures Notice") in writing by the Lead Managers to the Company setting forth the aggregate principal amount of the Option Debentures to be purchased and the date of such purchase (such date, an "Option Closing Date"). The Initial Closing Date and Option Closing Date are sometimes herein referred to respectively as the related "Closing Dates". On the Option Closing Date, the Company will issue and sell to the Managers the principal amount of Option Debentures set forth in the related Option Debentures Notice and the Managers each jointly and severally agree to purchase such Option Debentures, and that each Manager will purchase such percentage of the related Option Debentures as is equal to the percentage of Firm Debentures that such Manager is to purchase on the Initial Closing Date, as adjusted by the Lead Managers in such manner as they may agree is advisable to avoid fractional Debentures.


(c) The Debentures are to be offered and sold to the Managers pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). Upon original issuance thereof, and until such time as the same is no longer required under the applicable requirements of the Securities Act, the Restricted Debentures (as hereinafter defined) and any Conversion Shares issued upon conversion of the Restricted Debentures, shall bear the following legend:


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"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF THE COMPANY THAT:


(I) IT HAS ACQUIRED A "RESTRICTED" SECURITY WHICH HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT;


(II) IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE
DATE WHICH IS THREE YEARS (OR SUCH SHORTER PERIOD AS SHALL BE PERMITTED AS
A RESULT OF AN AMENDMENT TO THE RULES UNDER THE SECURITIES ACT IN RESPECT
THEREOF) AFTER THE LATER OF THE DATE OF ORIGINAL ISSUANCE HEREOF AND THE
LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATED PERSON OF THE COMPANY WAS
THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) (THE
"RESALE RESTRICTION TERMINATION DATE") EXCEPT


(A) TO THE COMPANY,


(B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT,


(C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,


(D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT PURSUANT
TO AND IN COMPLIANCE WITH REGULATION S,


(E) IN A TRANSACTION ARRANGED BY A BROKER OR DEALER REGISTERED UNDER THE
UNITED STATES SECURITIES EXCHANGE ACT OF 1934, AS


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AMENDED, TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (WITHIN THE
MEANING OF SUBPARAGRAPHS (a)(1), (2), (3) OR (7) OF RULE 501 UNDER
THE SECURITIES ACT) THAT IS ACQUIRING THIS SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED
INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR


(F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE
WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY APPLICABLE JURISDICTION; AND


(III) IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THIS SECURITY OF THE RESALE RESTRICTIONS SET FORTH IN (II)
ABOVE. IF ANY RESALE OR OTHER TRANSFER OF THIS SECURITY IS PROPOSED TO BE
MADE PURSUANT TO CLAUSE II(E) ABOVE PRIOR TO THE DATE WHICH IS THREE YEARS
(OR SUCH SHORTER PERIOD AS SHALL BE PERMITTED AS A RESULT OF AN AMENDMENT
TO THE RULES UNDER THE SECURITIES ACT IN RESPECT THEREOF) AFTER THE DATE
OF ORIGINAL ISSUANCE HEREOF, THE TRANSFEROR SHALL DELIVER A LETTER FROM
THE TRANSFEREE CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING
TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY. ANY OFFER, SALE OR OTHER
DISPOSITION PURSUANT TO THE FOREGOING CLAUSES (II)(D), (E) AND (F) IS
SUBJECT TO THE RIGHT OF THE ISSUER OF THIS SECURITY AND THE TRUSTEE TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS OR OTHER
INFORMATION ACCEPTABLE TO THEM IN FORM AND SUBSTANCE. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE."


Upon original issuance thereof, and until such time as the same is no longer required under the requirements of The Depository Trust Company (the "Depository"), the Restricted Debentures issued in global form shall include the following paragraph:


Unless and until it is exchanged in whole or in part for Securities
in definitive form, this Security may not be transferred except as a whole
by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository or by
the Depository or any such nominee to a successor Depository or a nominee
of such successor Depository. Unless this


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certificate is presented by an authorized representative of The Depository
Trust Company, a New York corporation (55 Water Street, New York, New
York) (the "Depository"), to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in
the name of Cede & Co. or such other name as may be requested by an
authorized representative of the Depository (and any payment is made to
Cede & Co. or such other entity as may be requested by an authorized
representative of the Depository), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL (inasmuch as
the registered owner hereof, Cede & Co., has an interest herein).


2. Terms of the Offering.


(a) The Lead Managers have advised the Company that the Managers will offer (the "Exempt Resales") the Debentures purchased by them hereunder on the terms set forth in the Offering Circular (as hereinafter defined), as amended or supplemented, solely to: (i) persons (each, a "Regulation S Purchaser") who are outside the "United States" and not "U.S. Persons," as such terms are defined in Regulation S promulgated under the Securities Act ("Regulation S"), and who are not purchasing for the account or benefit of a U.S. Person pursuant to and in compliance with Regulation S, (ii) persons (each, a "Rule 144A Purchaser") whom the Managers reasonably believe to be "qualified institutional buyers" ("QIBs"), as such term is defined in Rule 144A under the Securities Act ("Rule 144A"), and (iii) a limited number of other persons whom the Managers reasonably believe to be institutional "accredited investors," as such term is defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who have made certain representations and agreements to the Company (each an "Accredited Investor") in a letter containing representations and agreements in the form attached to the Offering Circular as Appendix A. The Regulation S Purchasers, Rule 144A Purchasers and Accredited Investors are hereinafter referred to as the "Eligible Purchasers." The Managers have advised the Company that they will offer the Debentures to Eligible Purchasers initially at a price equal to 100% of the principal amount of the Debentures, together with accrued interest from May 7, 1996.


(b) The Managers have offered and will offer and sell the Debentures (i) as part of their distribution at any time and (ii) otherwise until the expiration of the 40-day period (the "restricted period") commencing on the later of the commencement of the Offering and the related Closing Date, only in accordance with Rule 903 of Regulation S. Each of the Managers, their affiliates and the persons acting on their behalf have complied and will comply with the offering restrictions and other requirements of Regulation S.


(c) Each Manager also severally agrees that, at or prior to confirmation of sales of Debentures (other than a sale by NatWest Securities Limited, acting through NatWest Securities Corporation, a registered broker-dealer affiliate of NatWest Securities Limited ("NSC")), and, with the prior approval of the Lead Managers, other Managers, acting through their registered broker-dealer affiliates, to QIBs in accordance with Rule 144A or to Accredited Investors, such Manager


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will have sent to each distributor, dealer or person receiving a selling commission, fee or other remuneration in respect of the Debentures during the restricted period a confirmation or notice to substantially the following effect:


The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act"), and may
not be offered or sold within the United States or to, or for the account
or benefit of, U.S. persons (as defined in Regulation S under the
Securities Act) (i) as part of their distribution at any time or (ii)
otherwise until the expiration of the 40-day period commencing on the
later of the commencement of the offering and the related Closing Date,
except in either case in accordance with Regulation S (or Rule 144A, if
available or another available exemption from the registration
requirements of the Securities Act; provided that in the case of such
other exemption, the Company and Trustee may require an appropriate
opinion of counsel, as required by the Indenture) under the Securities Act
and the requirements of U.S. Treasury Regulation
ss.1.163-5(c)(2)(i)(D)(1)(ii).


Terms used in this Section 2(c) have the meanings given to them by Regulation S.


(d) Notwithstanding paragraph (b) above, NatWest Securities Limited, acting through NSC, and, with the prior approval of the Lead Managers, any other Manager, acting through its registered broker-dealer affiliate, may purchase Debentures for reoffer and resale to QIBs in accordance with Rule 144A (the "Rule 144A Debentures") or to Accredited Investors in a transaction exempt from registration under the Securities Act (the "Accredited Investor Debentures" and, together with the Rule 144A Debentures, the "Restricted Debentures"), on the basis that the Restricted Debentures will be issued in registered form as defined in U.S. Treasury Regulation ss.5f.103-1(c) and delivered to NSC, or a nominee designated by it, for the account of the purchasers thereof on the related Closing Date, the Restricted Debentures are "restricted" securities which have not been registered under the Securities Act.


3. Delivery and Payment. The closing for the purchase and sale of the Firm Debentures shall occur at the offices of NatWest Securities Limited, 135 Bishopsgate, London, England EC2M 3XT, and simultaneously at the offices of Gibson, Dunn & Crutcher, special counsel for the Company, 200 Park Avenue, New York, New York 10166 at 3:00 p.m., London time, on May 7, 1996 or at such other time or on such other date as may be agreed upon by the Company and the Lead Managers (such date is hereinafter referred to as the "Initial Closing Date"). The Initial Subscription Price in respect of the Debentures sold to Regulation S Purchasers will be paid by the Lead Managers on behalf of the Managers to the Company (to such account as the Company shall, at least two business days prior thereto, have instructed the Lead Managers to make payment) on the Initial Closing Date in next day clearing house funds or, at the option of the Company, by wire transfer in same day funds less reimbursement to the Lead Managers for overnight interest at the then prevailing federal funds rate. Such payment shall be made against delivery of a temporary global certificate (the "Temporary Global Security") in respect of the Debentures sold to Regulation


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S Purchasers, in bearer form without interest coupons or conversion rights, to a common depository for Morgan Guaranty Trust Company of New York, Brussels Office, as operator (the "Euroclear Operator") of the Euroclear System ("Euroclear"), and Cedel Bank, societe anonyme ("Cedel"), and the Managers will arrange that, at their direction, the Euroclear Operator or Cedel will credit each Regulation S Purchaser with the aggregate principal amount of the Debentures allotted to it to the extent that the same have been subscribed and paid for by such Regulation S Purchaser. The Initial Subscription Price in respect of the Rule 144A Debentures and Accredited Investor Debentures will be paid by the Lead Managers on behalf of the Managers to the Company (to such account as the Company shall, at least two business days prior thereto, have instructed the Lead Managers to make payment) on the Initial Closing Date by wire transfer in same day funds. Such payment shall be made against (i) delivery to the Depository of one or more Debentures (the "Global Securities"), each in definitive form, registered in the name of Cede & Co., as nominee of the Depository, having an aggregate amount corresponding to the aggregate principal amount of Rule 144A Debentures sold to the Rule 144A Purchasers and (ii) delivery to the Managers, acting through NSC (delivery to be made to NSC, 175 Water Street, New York, NY 10038, or at such other place or places as NSC shall determine), of the Accredited Investor Debentures, each in definitive form, registered in such names and denominations as the Lead Managers may so request, having an aggregate principal amount corresponding to the aggregate principal amount of Accredited Investor Debentures sold to Accredited Investors. If the Option is exercised as to all or any portion of the Option Debentures, the closing and delivery and payment for such Option Debentures shall occur as set forth above on the Option Closing Date.


4. Representations and Warranties of the Company. The Company represents, warrants and covenants as of the date hereof and, as set forth in Section 8(c) will represent, warrant and covenant as of the Initial Closing Date and Option Closing Date, to each Manager that:


(a) The Company has prepared an offering circular to be dated the date hereof (including the appendices thereto, the "Offering Circular") relating to the Debentures and the Company. The Offering Circular will be in the form of the draft thereof previously provided to the Lead Managers, with only those changes therein as the Lead Managers shall have approved. Any reference herein to the Offering Circular or any amendment or supplement thereto shall be deemed to refer to and include the documents relating to the Company (including, without limitation, financial statements, financial statement schedules and exhibits) included as appendices, if any, thereto.


(b) The Offering Circular, as of its date, contains, and as of the date thereof, each amendment or supplement thereto, if any, contains or will contain all the information specified in Rule 144A. Neither the Offering Circular nor any amendment or supplement thereto contains or will contain, as the case may be, any untrue statement of a material fact or omits or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the foregoing representations and warranties in this Section 4(b) do not apply to any statements or omissions made in reliance on and in conformity with information relating to any Manager furnished in writing to the Company by the Lead Managers on behalf of the Managers expressly for use in the Offering Circular.


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(c) The consolidated financial statements of the Company and its subsidiaries, together with related notes, included in the Offering Circular present fairly the financial position of the Company its subsidiaries consolidated at the indicated dates and for the indicated periods. Such financial statements have been prepared in conformity with generally accepted accounting principles ("GAAP"), consistently applied throughout the periods involved, and all adjustments necessary for a fair presentation of results for such periods have been made. The summary financial and statistical data included in the Offering Circular present fairly and accurately the information shown therein. The pro forma financial statements of the Company and certain of its subsidiaries and the related notes thereto included in the Offering Circular present fairly and accurately the information shown therein at the dates and for the periods indicated, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. The financial information appearing in the Offering Circular presents fairly and accurately the information purported to be shown therein at the dates and for the periods indicated.


(d) Since the respective dates as of which information is given in the Offering Circular (or given or incorporated by reference in any amendment thereof or supplement thereto), and except as otherwise disclosed therein, there has been no material adverse change in the business or financial condition of the Company and its subsidiaries, taken as a whole, whether or not arising in the ordinary course of business, and the Company and its subsidiaries, on a consolidated basis, have not incurred any material liabilities or obligations, direct or contingent, or entered into any material transaction not in the ordinary course of business.


(e) The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware, with corporate power and authority to own its properties and conduct its business as described in the Offering Circular; each of the subsidiaries of the Company, is listed in Schedule II hereto together with the jurisdiction of its incorporation and has been duly organized and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, with corporate power and authority to own or lease its properties and conduct its business as described in the Offering Circular; also set forth on Schedule II is an "Activity List by Entity," setting forth, for the Company and each subsidiary, every jurisdiction in which the Company or each subsidiary, as the case may be, holds any license, originates or services mortgages, has employees, owns or leases property or owns or maintains any other significant asset (including bank accounts) (each, an "Activity"). Except in the state of New Jersey where the failure to be so qualified will not have a materially adverse effect on the business of the Company and the Subsidiaries taken as a whole, the Company and each of its subsidiaries, as the case may be, is duly qualified to transact business in each jurisdiction in which they conduct an Activity as identified on the Activity List by Entity, such jurisdictions being all jurisdictions in which the conduct of their respective businesses requires such qualification.


(f) The Company and its subsidiaries have good and marketable title to, or valid and enforceable leasehold estates in, all real and personal property owned by them that are material to the Company and its subsidiaries taken as a whole, in each case free and clear of all liens, claims,


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security interests, encumbrances and defects, except (i) as do not materially interfere with the use made of such properties, (ii) as referred to in the Offering Circular (including the notes to the financial statements included or incorporated by reference therein), or (iii) as could not reasonably be expected, singly or in the aggregate, to have a material adverse effect on the business or financial condition of the Company and its subsidiaries, taken as a whole.


(g) Neither the Company nor any of its subsidiaries has received any notice of conflict with, or infringement of, the asserted rights of others with respect to any patents, trademarks, trade names, service marks, copyrights, licenses and other rights necessary for the conduct of the Company's and such subsidiaries' respective businesses as described in the Offering Circular (other than conflicts or infringements that, if proven, would not have a material adverse effect on the business or financial condition of the Company and its subsidiaries, taken as a whole).


(h) Each of the Company and its subsidiaries has all requisite power and authority (corporate and other), and is duly licensed by all appropriate regulatory authorities (except where failure to be so licensed would not have a material adverse effect upon the business or financial condition of the Company and its subsidiaries, taken as a whole), to own its properties and conduct its business as it is currently being carried on and as described in the Offering Circular.


(i) The Company and its subsidiaries have filed all federal, state and foreign income tax returns which have been required to be filed and have paid all taxes indicated by said returns and all assessments received by them or any of them to the extent that such taxes have become due, other than those for fiscal years which are being contested in good faith and for which adequate reserves have been provided.


(j) The certificates issued by the trusts established under pooling and servicing agreements to which the Company or any of its subsidiaries is a party were issued and sold by the Company in compliance with all applicable securities laws of each jurisdiction in which such securities have been sold.


(k) Neither the Company nor any of its subsidiaries (i) is in violation of its respective certificate or articles of incorporation, charter or bylaws or other governing documents, (ii) is in violation or default, or would be in violation or default with notice or lapse of time, of any term of any contract, license, indenture, mortgage, deed of trust, bank loan or credit agreement, note, lease, permit, authorization or any other agreement or instrument to which the Company or any such subsidiary is a party or by which it is bound, or to which any of the property or assets of the Company or any such subsidiary is subject, whi ...