GUARANTY
THIS GUARANTY, dated as of May 31, 2007, (this "Guaranty"), is made by and
among NovaStar Financial, Inc. ("NFI"), NFI Holding Corporation ("NFIHC") (NFI
and NFIHC, each a "Guarantor" and together, jointly and severally, the
"Guarantors") and Wachovia Bank, N.A.(the "Buyer", which term shall include any
buyer for whom Buyer acts as Agent as defined and provided for in the Master
Repurchase Agreement referred to below);
RECITALS
A. Pursuant to the Master Repurchase Agreement (2007 Investment Grade
Securities), dated as of May 31, 2007 (as amended, supplemented or otherwise
modified from time to time, the "Master Repurchase Agreement"), by and among
NovaStar Mortgage, Inc. ("NMI"), as a seller, NovaStar Certificates Financing
LLC ("NCFLLC"), as a seller and NovaStar Certificates Financing Corporation
("NCFC"), as a seller (NMI, NCFLLC and NCFC, each a Seller and jointly and
severally, collectively the "Sellers"), the Guarantors and the Buyer, the Buyer
has agreed to purchase certain assets (the "Purchased Assets") from the Sellers
and the Sellers have agreed to repurchase such Assets upon the terms and subject
to the conditions set forth therein.
B. It is a condition precedent to the obligation of the Buyer to purchase
the Purchased Assets from the Sellers under the Master Repurchase Agreement that
the Guarantors shall have executed and delivered this Guaranty to the Buyer.
NOW, THEREFORE, for good and valuable consideration, receipt of which by
the parties hereto is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms defined in the
Master Repurchase Agreement and used herein shall have the meanings given to
them in the Master Repurchase Agreement.
(b) "Obligations" shall mean the obligations and liabilities of the Sellers
and the Guarantors to the Buyer, including, without limitation, the obligations
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, or out of or in
connection with the Master Repurchase Agreement, this Guaranty, any other
Program Documents and any other document made, delivered or given in connection
therewith or herewith, whether on account of covenants, Repurchase Prices,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all fees and disbursements of counsel to the Buyer that are
required to be paid by the Sellers pursuant to the terms of the Program
Documents) or otherwise.
(c) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Guaranty shall refer to this Guaranty as a whole and
not to any particular provision of this Guaranty, and section and paragraph
references are to this Guaranty unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
2. Guaranty. (a) The Guarantors hereby, unconditionally and irrevocably,
guarantee to the Buyer and its successors, indorsees, transferees and assigns
the prompt and complete payment and performance by the Sellers when due (whether
at the stated maturity, by acceleration or otherwise) of the Obligations.
(b) The Guarantors further agree to pay any and all expenses (including,
without limitation, all reasonable fees and disbursements of counsel) which may
be paid or incurred by the Buyer in enforcing any rights with respect to, or
collecting, any or all of the Obligations and/or enforcing any rights with
respect to, or collecting against, the Guarantors under this Guaranty. This
Guaranty shall remain in full force and effect until the Obligations are paid in
full, notwithstanding that from time to time prior thereto any or all Sellers
may be free from any Obligations.
(c) No payment or payments made by the Sellers, the Guarantors, any other
guarantor or any other Person or received or collected by the Buyer from the
Sellers, the Guarantors, any other guarantor or any other Person by virtue of
any action or proceeding or any set-off or appropriation or application at any
time or from time to time in reduction of or in payment of the Obligations shall
be deemed to modify, reduce, release or otherwise affect the liability of the
Guarantors hereunder which shall, notwithstanding any such payment or payments
other than payments made by the Guarantors in respect of the Obligations or
payments received or collected from the Guarantors in respect of the
Obligations, remain liable for the Obligations until the Obligations are paid in
full and the Master Repurchase Agreement is terminated.
(d) Each Guarantor agrees that whenever, at any time, or from time to time,
it shall make any payment to the Buyer on account of its liability hereunder, it
will notify the Buyer in writing that such payment is made under this Guaranty
for such purpose.
(e) Each Guarantor shall be jointly and severally liable with the other
Guarantors to the Buyer for all obligations of the Guarantors hereunder.
3. Representations and Warranties of the Guarantors. Each Guarantor hereby
represents and warrants that:
(a) It is duly organized and validly existing in good standing under the
laws of the jurisdiction under which it is organized and is duly qualified to do
business and is in good standing in every other jurisdiction as to which the
nature of the business conducted by it makes such qualification necessary.
(b) It has the full power, authority and legal right to execute, deliver
and perform its obligations under this Guaranty. This Guaranty has been duly
executed and delivered by it, has not been amended or otherwise modified, is in
full force and effect and is the legal, valid and binding obligation of each
Guarantor, enforceable against it in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the rights of creditors generally and to the
application of general principles of equity (regardless of whether considered in
a proceeding in equity or at law).
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(c) Neither the execution and delivery of this Guaranty nor the
consummation of the transactions contemplated herein will conflict with or
result in a breach of, or require any consent under, any applicable law or
regulation, or any order, writ, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument to which each
Guarantor is a party or by which each Guarantor or its property is bound or to
which each Guarantor is subject, or constitute a default under any such
agreement or instrument, or (except for the liens created pursuant hereto)
result in the creation or imposition of any lien or encumbrance upon the
Guarantors' revenues or assets pursuant to the terms of any such agreement or
instrument.
(d) Each Guarantor has received and reviewed copies of the Master
Repurchase Agreement.
(e) This Guaranty is the legal, valid and binding obligation of each
Guarantor, enforceable against each Guarantor, in accordance with its terms,
subject to bankruptcy, insolvency and similar laws and to the availability of
equitable remedies.
(f) There is no action, suit or proceeding at law or in equity by or before
any governmental authority, arbitral tribunal or other body now pending, or to
the best of each Guarantor's knowledge, threatened against or affecting each
Guarantor or any of its property that is reasonably likely to have a material
adverse effect on each Guarantor's condition, financial or otherwise.
(g) No authorizations, approvals or consents of, and no filings or
registrations with, any governmental authority are necessary for the execution,
delivery or performance by the Guarantors of this Guaranty.
4. Right of Set-off. Upon the occurrence of any Event of Default, the
Guarantors hereby irrevocably authorize the Buyer or any of its Affiliates at
any time and from time to time without notice to the Guarantors, any such notice
being expressly waived by the Guarantors, to set-off and appropriate and apply
any and all deposits (general or special, time or demand, provisional or final),
in any currency, and any other credits, indebtedness or claims, in any currency,
in each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Buyer or any of its Affiliates to or
for the credit or the account of the Guarantors, or any part thereof in such
amounts as the Buyer may elect, against and on account of the obligations and
liabilities of the Guarantors to the Buyer hereunder and claims of every nature
and description of the Buyer or any of its Affiliates against the Guarantors, in
any currency, whether arising hereunder, under the Master Repurchase Agreement
as the Buyer may elect, whether or not the Buyer has made any demand for payment
and although such obligations, liabilities and claims may be contingent or
unmatured. The Buyer shall notify the Guarantors promptly of any such set-off
and the application made by the Buyer, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of the Buyer and its Affiliates under this Section are in addition to other
rights and remedies (including without limitation, other rights of set-off)
which the Buyer and its Affiliates may have.
5. No Subrogation. Notwithstanding any payment or payments made by the
Guarantors hereunder or any set-off or application of funds of the Guarantors by
the Buyer or
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any of its Affiliates, the Guarantors shall not be entitled to be subrogated to
any of the rights of the Buyer against any Seller or any other guarantor or any
collateral security or guarantee or right of offset held by the Buyer for the
payment of the Obligations, nor shall the Guarantors seek or be entitled to seek
any contribution or reimbursement from any Seller or any other guarantor in
respect of payments made by the Guarantors hereunder, until all amounts owing to
the Buyer by the Sellers on account of the Obligations are paid in full and the
Master Repurchase Agreement is terminated. If any amount shall be paid to the
Guarantors on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall be held by the
Guarantors in trust for the Buyer, segregated from other funds of each
Guarantor, and shall, forthwith upon receipt by the Guarantors, be turned over
to the Buyer in the exact form received by the Guarantors (duly indorsed by the
Guarantors to the Buyer, if required), to be applied against the Obligations,
whether matured or unmatured, in such order as the Buyer may determine.
6. Amendments, Etc. with Respect to the Obligations. The Guarantors shall
remain obligated hereunder notwithstanding that, without any reservation of
rights against the Guarantors and without notice to or further assent by the
Guarantors, any demand for payment of any of the Obligations made by the Buyer
may be rescinded by the Buyer and any of the Obligations continued, and the
Obligations, or the liability of any other party upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Buyer, and the Master Repurchase Agreement and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Buyer may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by the Buyer for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. The Buyer shall not have any obligation to protect,
secure, perfect or insure any lien at any time held by it as security for the
Obligations or for this Guaranty or any property subject thereto. When making
any demand hereunder against any Guarantor, the Buyer may, but shall be under no
obligation to, make a similar demand on the Sellers or the other Guarantors, and
any failure by the Buyer to make any such demand or to collect any payments from
the Sellers or the other Guarantors or any release of the Sellers or such other
Guarantors shall not relieve the Guarantors of their obligations or liabilities
hereunder, and shall not impair or affect the rights and remedies, express or
implied, or as a matter of law, of the Buyer against the Guarantors. For the
purposes hereof "demand" shall include the commencement and continuance of any
legal proceedings.
7. Waiver of Rights. The Guarantors waive any and all notice of the
creation, renewal, extension or accrual of any of the Obligations, and notice of
or proof of reliance by the Buyer upon this Guaranty or acceptance of this
Guaranty; the Obligations, and any of them, shall conclusively be deemed to have
been created, contracted or incurred, or renewed, extended, amended or waived,
in reliance upon this Guaranty; and all dealings between the Sellers and the
Guarantors, on the one hand, and the Buyer, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon this
Guaranty. The Guarantors waive diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Sellers or the
Guarantors with respect to the Obligations.
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8. Guaranty Absolute and Unconditional. The Guarantors understand and agree
that this Guaranty shall be construed as a continuing, absolute and
unconditional guarantee of the full and punctual payment and performance by the
Sellers of the Obligations and not of their collectibility only, and is in no
way conditioned upon any requirement that the Buyer first attempt to collect any
of the obligations from the Sellers, without regard to (a) the validity,
regularity or enforceability of the Master Repurchase Agreement, any of the
Obligations or any other collateral security therefor or guarantee or right of
offset with respect thereto at any time or from time to time held by the Buyer
(b) any defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by a Seller
against the Buyer, or (c) any other circumstance whatsoever (with or without
notice to or knowledge of the Sellers or the Guarantors) which constitutes, or
might be construed to constitute, an equitable or legal discharge of a Seller
from the Obligations, or of the Guarantors from this Guaranty, in bankruptcy or
in any other instance. When pursuing its rights and remedies hereunder against
the Guarantors, the Buyer may, but shall be under no obligation to, pursue such
rights and remedies as it may have against a Seller or any other Person or any
collateral security or guarantee for the Obligations or any right of offset with
respect thereto, and any failure by the Buyer to pursue such other rights or
remedies or to collect any payments from a Seller or any such other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of a Seller or any such other Person or any such
collateral security, guarantee or right of offset, shall not relieve the
Guarantors of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of the
Buyer against the Guarantors. This Guaranty shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon the
Guarantors and the successors and assigns thereof, and shall inure to the
benefit of the Buyer, and its successors, indorsees, transferees and assigns,
until all the Obligations and the obligations of the Guarantors under this
Guaranty shall have been satisfied by payment in full and the Master Repurchase
Agreement shall be terminated, notwithstanding that from time to time during the
term of the Master Repurchase Agreement the Sellers may be free from any
Obligations.
9. Reinstatement. This Guaranty shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
the Buyer upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of any Seller or any of the Guarantors, or upon or as a result of
the appointment of a receiver, intervenor or conservator of, or trustee or
similar officer for, any Seller or any of the Guarantors or any substantial part
of its property, or otherwise, all as though such payments had not been made.
10. Payments. The Guarantors hereby guarantee that payments hereunder will
be paid to the Buyer without set-off or counterclaim in U.S. Dollars in
accordance with the wiring instructions of the Buyer.
11. Notices. All notices, requests and other communications provided for
herein (including without limitation any modifications of, or waivers, requests
or consents under, this Guaranty) shall be given or made in writing (including
without limitation by telex or telecopy) and delivered to the intended recipient
at the "Address for Notices" specified on the signature page hereto; or, as to
any party, at such other address as shall be designated by such party in a
written notice to each other party. All such communications shall be deemed to
have
been duly given when transmitted by telex or telecopy or personally delivered
or, in the case of a mailed notice, upon receipt, in each case given or
addressed as aforesaid.
12. Severability. Any provision of this Guaranty which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
13. Integration. This Guaranty and the Program Documents represent the
agreement of the Guarantors with respect to the subject matter hereof and
thereof and there are no promises or representations by the Buyer relative to
the subject matter hereof or thereof not reflected herein or therein.
14. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None of the
terms or provisions of this Guaranty may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Guarantors and
the Buyer, provided that any provision of this Guaranty may be waived by the
Buyer.
(b) The Buyer shall not by any act (except by a written instrument pursuant
to Section 14(a) hereof), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any Default
or Event of Default or in any breach of any of the terms and conditions hereof.
No failure to exercise, nor any delay in exercising, on the part of the Buyer,
any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Buyer of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Buyer would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
15. Section Headings. The section headings used in this Guaranty are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
16. Successors and Assigns. This Guaranty shall be binding upon the
successors and assigns of the Guarantors and shall inure to the benefit of the
Buyer and its successors and assigns. This Guaranty may not be assigned by any
of the Guarantors without the express written consent of the Buyer.
17. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY NEW YORK LAW WITHOUT
REFERENCE TO CHOICE OF LAW DOCTRINE.
18. SUBMISSION TO JURISDICTION; WAIVERS. EACH GUARANTOR HEREBY WAIVES TRIAL
BY JURY. EACH GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY
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COURT OF THE STATE OF NEW YORK, OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, ARISING OUT OF OR RELATING TO THE PROGRAM
DOCUMENTS IN ANY ACTION OR PROCEEDING. EACH GUARANTOR HEREBY SUBMITS TO, AND
WAIVES ANY OBJECTION EACH GUARANTOR MAY HAVE TO, NON-EXCLUSIVE PERSONAL
JURISDICTION AND VENUE IN XXX XXXXXX XX XXX XXXXX XX XXX XXXX AND THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT TO ANY
DISPUTES ARISING OUT OF OR RELATING TO THE PROGRAM DOCUMENTS.
19. Other Liens. Notwithstanding anything to the contrary contained herein,
liens previously granted by the Guarantors in favor of the Buyer or future liens
that are granted by the Guarantors in favor of the Buyer will not constitute a
breach of this Guaranty.
20. Agents. The Buyer may employ agents and attorneys-in-fact in connection
herewith and shall not be responsible for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it in good faith.
21. Counterparts. This Guaranty may be executed in any number of
counterparts, all of which when taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Guaranty by signing
any such counterpart.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Guaranty to be duly
executed and delivered as of the day and year first above written.
WACHOVIA BANK, N.A. Address for Notices:
000 Xxxxx Xxxxxxx Xxxxxx
By: /s/ Xxxxxx X. Xxxxx Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
-----------------------------------------
Name: Xxxxxx X. Xxxxx Attention: Xxxxxx X. Xxxxx
Title: Director Telephone: (000) 000-0000
Facsimile: (000) 000-0000
NOVASTAR FINANCIAL, INC., Address for Notices with respect
jointly and severally as a Guarantor to each of the Guarantors:
0000 Xxxx Xxxxxxx, Xxxxx 000
By: /s/ Xxxx X. Xxxxxxxx Xxxxxx Xxxx, Xxxxxxxx 00000
-----------------------------------------
Name: Xxxx X. Xxxxxxxx Attention: Xxxx Xxxxxxxx
Title: Vice President, Treasurer & Telephone: (000) 000-0000
Controller Facsimile: (000) 000-0000
E-mail: xxxx.xxxxxxxx@xxxxxxxx0.xxx
NFI HOLDING CORPORATION,
jointly and severally as a Guarantor
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President, Treasurer &
Controller
