Exhibit 4.6
AMENDED AND RESTATED TRUST AGREEMENT FOR THE
NOVASTAR MORTGAGE, INC.
DEFERRED COMPENSATION PLAN
THIS AGREEMENT is entered into by and between NovaStar Mortgage, Inc., a
corporation having its principal office and place of business in Kansas City,
Missouri ("NMI") and Comerica Bank & Trust, N.A., a trust organization
established under the laws of the United States of America and having its
principal office and place of business in Detroit, Michigan, as trustee (the
"Trustee").
RECITALS
WHEREAS, NMI has adopted the NovaStar Mortgage, Inc. Deferred Compensation
Plan (the "Plan") which is an unfunded executive benefit plan providing deferred
compensation benefits to a select group of management or highly compensated
employees pursuant to Title I of the Employee Retirement Income Security Act of
1974, as amended; and
WHEREAS, the Plan contemplates that employees of NMI, NovaStar Financial,
Inc. ("NFI") and certain of their affiliates (collectively referred to as the
"Company" unless indicated otherwise) may become participants in the Plan; and
WHEREAS, the Company has incurred or expects to incur liability under the
terms of the Plan with respect to the employees who participate in the Plan (the
"Participants"); and
WHEREAS, NMI and the Trustee have heretofore entered into a Trust Agreement
for the purpose of providing the Company with a source of funds (the "Trust") to
assist it in the meeting of its liabilities under the Plan; and
WHEREAS, NMI and the Trustee now desire to amend and restate the original
Trust Agreement in its entirety as hereinafter set forth.
NOW, THEREFORE, the original Trust Agreement is amended and restated in its
entirety as follows:
Section 1. ESTABLISHMENT OF TRUST
(a) The assets of the Trust shall be held, administered and disposed of by
the Trustee as provided in this Trust Agreement. The Company shall have the
right to make additional deposits from time to time in its sole discretion.
(b) The Trust hereby established shall be irrevocable.
(c) The Trust is intended to be a grantor trust, of which the Company is
the grantor, within the meaning of Subpart E, part I, subchapter J, chapter I,
subtitle A of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), and shall be construed accordingly.
(d) The Participants and their beneficiaries shall have no preferred claim
on, or any beneficial ownership interest in, any assets of the Trust. Any rights
created under the Plan and this Trust Agreement shall be mere unsecured
contractual rights of the Participants and their beneficiaries against their
Employer. Any assets held by the Trust will be subject to the claims of the
Company's general creditors under federal and state law in the event of
Insolvency, as defined in Section 3(a) herein.
(e) The Trustee agrees to accept additional deposits made by the Company
pursuant to Section 1 (a) hereof, and contributions that are paid to it by the
Company in accordance with the terms of this Trust Agreement. Such additional
deposits and contributions shall be in cash or in such other form that may be
acceptable to the Trustee, including but not limited to policies of life
insurance. The Trustee shall have no duty to determine or collect contributions
under the Plan and shall have no responsibility for any property until it is
received and accepted by the Trustee. The Company shall have the sole duty and
responsibility for the determination of the accuracy and sufficiency of the
deposits and contributions to be made under the Plan, the transmittal of the
same to the Trustee and compliance with any statute, regulation or rule
applicable to contributions.
Section 2. PAYMENTS TO PARTICIPANTS AND THEIR BENEFICIARIES
(a) From time to time, the Company may deliver to the Trustee a schedule
(the "Payment Schedule") that indicates the amounts payable in respect of each
Participant (and his or her beneficiaries), that provides a formula or other
instructions for determining the amounts payable, the form in which such amounts
are to be paid (as provided for or available under the Plan), and the time of
commencement for payment of such amounts. Except as otherwise provided herein,
the Trustee shall make payments to the Participants and their beneficiaries in
accordance with such Payment Schedule. The Trustee shall make provision for the
reporting and withholding of any federal, state or local taxes that may be
required to be withheld with respect to the payment of benefits pursuant to the
terms of the Payment Schedule and shall pay amounts withheld to the appropriate
taxing authorities or determine that such amount have been reported, withheld
and paid by the Company. If the principal of the Trust, and any earnings
thereon, are not sufficient to make payments of benefits in accordance with the
terms of the Payment Schedule, the Company shall make the balance of each such
payment as it
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falls due. The Trustee shall notify the Company where principal and earnings are
not sufficient to make payments according to the Payment Schedule.
(b) Upon the receipt by the Trustee of (i) a written notice from the
Company, indicating that the Plan has been completely terminated and (ii) a
Payment Schedule, indicating how payments shall be made as a result of the
termination of the Plan, the Trustee shall pay to each Participant his or her
account balance under the Plan in accordance with the terms of such Payment
Schedule. Notwithstanding the foregoing, upon the termination of the Plan the
Company shall be entitled to make payment of benefits directly to the
Participant or their beneficiaries in accordance with Section 2(e) below.
(c) The Company hereby agrees that the Authorized Party (as defined below)
shall have the exclusive responsibility, and the Trustee shall not have any
responsibility or duty under this Trust Agreement for determining that the
Payment Schedule is in accordance with the terms of the Plan and applicable law,
including without limitation, the amount, timing or method of payment and the
identity of each person to whom such payments shall be made. The Trustee shall
have no responsibility or duty to determine the tax effect of any payment or to
see to the application of any payment.
(d) The entitlement of a Participant or his or her beneficiaries to the
benefits under the Plan shall be determined by the Company or such party as it
shall designate under the Plan, and any claim for such benefits shall be
considered and reviewed under the procedures set out in the Plan.
(e) The Company may make payment of benefits directly to the Participants
or their beneficiaries as they become due under the terms of the Plan. The
Company shall notify the Trustee of its decision to make payment of benefits
directly to Participants or their beneficiaries. If the Company makes payments
according to this subsection the Company shall make provision for the reporting
and withholding of any federal, state or local taxes that may be required to be
withheld with respect to the payment of benefits pursuant to the terms of the
Plan and shall pay amounts withheld to the appropriate taxing authorities.
(f) The Company shall furnish the Trustee with a written list of the names,
signatures and extent of authority of all persons authorized to direct Trustee
and otherwise act on behalf of the Company and the Participants under the terms
of this Trust Agreement ("Authorized Party"). The Trustee shall be entitled to
rely on and shall be fully protected in acting upon direction from an Authorized
Party until notified in writing by the Company, as appropriate, of a change of
the identity of an Authorized Party.
(g) In accordance with the procedures mutually acceptable to the Company
and Trustee, all directions and instructions to the Trustee from an Authorized
Party, including but not limited to the Payment Schedule, shall be in writing,
transmitted by mail or by facsimile or shall be an electronic transmission,
provided the Trustee may, in its discretion, accept oral directions and
instructions and may require confirmation in writing ("Authorized
Instructions").
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Section 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENT TO TRUST BENEFICIARY WHEN
COMPANY IS INSOLVENT
(a) The Trustee shall cease payment of benefits to the Participants who are
current or former employees of the Company and their beneficiaries if it
receives notice that the Company is Insolvent. The Company shall be considered
"Insolvent" for purposes of this Trust Agreement if (i) the Company is unable to
pay its debts as they become due, or (ii) the Company is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust, as provided in
Section 1(d) hereof, the principal and income of the Trust shall be subject to
claims of general creditors of the Company under federal and state law as set
forth below.
(1) The Board of Directors and the Chief Executive Officer of the
Company shall have the duty to inform the Trustee in writing of the Company's
Insolvency. If a person claiming to be a creditor of the Company alleges in
writing to the Trustee that the Company has become Insolvent, the Trustee shall
determine whether the Company is Insolvent and, pending such determination, the
Trustee may discontinue payment of benefits to the Participants or their
beneficiaries.
(2) Unless the Trustee has actual knowledge of the Company's
Insolvency, or has received notice from the Company or a person claiming to be a
creditor alleging that the Company is Insolvent, the Trustee shall have no duty
to inquire whether the Company is Insolvent. The Trustee may in all events rely
on such evidence concerning the Company's solvency as may be furnished to the
Trustee and that provides the Trustee with a reasonable basis for making a
determination concerning the Company's solvency.
(3) If at any time the Trustee has determined that the Company is
Insolvent, the Trustee shall discontinue payments of benefits to the
Participants and their beneficiaries and shall hold the assets of the Trust for
the benefit of the Company's general creditors. Nothing in this Trust Agreement
shall in any way diminish any rights of the Participants or their beneficiaries
to pursue their rights as general creditors of the Company with respect to
benefits due under the Plan or otherwise.
(4) The Trustee shall resume the payment of benefits to the
Participants or their beneficiaries in accordance with Section 2 of this Trust
Agreement only after the Trustee has determined that the Company is not
Insolvent (or is no longer Insolvent). The Trustee may rely on evidence
concerning Insolvency as may be furnished to the Trustee and that provides the
Trustee with a reasonable basis for making a determination concerning
Insolvency. If there is a dispute about Insolvency, the Trustee shall have the
right to require the Company to employ and pay for the services of an
independent expert to render a written opinion to the Trustee addressing the
question of Insolvency.
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(c) Provided that there are sufficient assets, if the Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3(a) and (b) hereof
and subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to the
Participants or their beneficiaries according to the terms of the Plan for the
period of such discontinuance, less the aggregate amount of any payments made to
Participants or their beneficiaries by the Company in lieu of the payments
provided for hereunder during any such period of discontinuance. The Trustee may
require a new Payment Schedule from the Company in such event.
Section 4. PAYMENTS TO COMPANY
(a) Except as provided in Sections 3 and in this Section 4 (b), because the
Trust is irrevocable, in accordance with Section 1(b) hereof, the Company shall
not have the right or the power to direct the Trustee to return to the Company
or to divert to others any of the Trust assets before all payment of benefits
have been made to Participants or their beneficiaries pursuant to the terms of
the Plan.
(b) In the event the Company makes payment of benefits directly pursuant to
Section 1 (e) hereof, the Company may file proof of such payment with the
Trustee and request to be reimbursed for said payment. The Trustee shall
reimburse the Company for amounts not exceeding the Company's costs of making
Plan payments. The Trustee shall not be obligated to verify the amount of
payment beyond receipt of reasonable proof (e.g. cancelled check).
Section 5. INVESTMENT AUTHORITY
(a) The Trustee shall invest and reinvest the principal and income of the
Trust as directed by Company or its properly designated agent which directions
may be changed from time to time. To the maximum extent permitted by law, the
Trustee shall have no duty or responsibility (i) to advise with respect to, or
inquire as to the propriety of, any such investment direction or (ii) for any
investment decisions made with respect to the Trust by the Company. In the
absence of investment direction, the Trustee shall have no obligation to invest
Trust assets, but may invest Trust assets in any manner permitted under Section
5(d).
(b) The Trustee may invest in securities (including stock or rights to
acquire stock) or obligations issued by the Company. All rights associated with
assets of the Trust shall be exercised by the Trustee and shall in no event be
exercised by or rest with Plan participants, except that voting rights with
respect to Trust assets will be exercised by the Company, unless an investment
adviser has been appointed pursuant to Section 5(a) and voting authority has
been delegated to such investment adviser.
(c) The Company shall have the right at any time, and from time to time in
its sole discretion, to substitute assets of equal fair market value, for any
asset held by the Trust. This right is exercisable by the Company in a
non-fiduciary capacity without the approval or consent of any person in a
fiduciary capacity.
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(d) In administering the Trust and carrying out the instructions of the
Company in accordance with Section 5(a) above, the Trustee shall be specifically
authorized to:
(1) To invest and reinvest the Trust assets, together with the income
therefrom, in common stock, preferred stock, convertible preferred stock, bonds,
debentures, convertible debentures and bonds, mortgages, notes, commercial paper
and other evidences of indebtedness (including those issued by the Trustee),
shares of mutual funds, guaranteed investment contracts, bank investment
contracts, other securities, policies of life insurance, other insurance
contracts, annuity contracts, options, options to buy or sell securities or
other assets, and all other property of any type (personal, real or mixed, and
tangible or intangible);
(2) To deposit or invest all or any part of the assets of the Trust in
savings accounts or certificates of deposit or other deposits in a bank or
savings and loan association or other depository institution, provided such
deposits bear a reasonable interest rate;
(3) To submit or cause to be submitted to the Company, all information
received by the Trustee regarding ownership rights pertaining to property held
in the Trust;
(4) To hold, manage, improve, repair and control all property, real or
personal, forming part of the Trust; to sell, convey, transfer, exchange,
partition, lease for any term, even extending beyond the duration of this Trust,
and otherwise dispose of the same from time to time;
(5) To make, execute and deliver any and all documents, agreements or
other instruments in writing as are necessary or desirable for the
accomplishment of any of the powers and duties set forth in this Trust
Agreement;
(6) To hold in cash, without liability for interest, such portion of
the Trust as is pending investment, or payment of expenses, or the distribution
of benefits;
(7) To take such actions as may be necessary or desirable to protect
the Trust from loss due to the default on mortgages held in the Trust including
with the consent of an Authorized Party the appointment of agents or trustees in
such other jurisdictions as may seem desirable, the transfer of property to such
agents or trustees as is necessary, or the grant to such agents such powers as
are necessary or desirable to protect the Trust.
(8) To vote in person or by general or limited proxy, as directed by
an Authorized Party, any securities in which the Trust is invested and similarly
to exercise, personally or by general or limited power of attorney, as directed
by an Authorized Party, any right appurtenant to any authorized investment held
in the Trust.
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(9) To maintain accounts at, execute transactions through, and lend on
an adequately secured basis stocks, bonds or other securities to, any brokerage
or other firm, including any firm which is an affiliate of Trustee;
(10) To exercise all of the further rights, powers, options and
privileges granted, provided for, or vested in trustees generally under the laws
of the state in which the Trustee has its principal place of business so that
the powers conferred upon the Trustee herein shall not be in limitation of any
authority conferred by law, but shall be in addition thereto.
(e) The Trustee may exercise the powers described in this Section 5(d) with
or without Authorized Instructions, but where the Trustee acts on Authorized
Instructions, the Trustee shall be fully protected as described in Section 9.
Section 6. ADDITIONAL POWERS OF TRUSTEE
(a) To the extent necessary or which it deems appropriate to implement its
powers under Section 5 or otherwise to fulfill any of its duties and
responsibilities as Trustee of the Trust, the Trustee shall have the following
additional powers and authority:
(1) To register securities, or any other property, in its name or in
the name of any nominee, including the name of any affiliate or the nominee name
designated by any affiliate, with or without indication of the capacity in which
property shall be held, or to hold securities in bearer form and to deposit any
securities or other property in a depository or clearing corporation;
(2) Upon receiving the consent of an Authorized Party, to designate
and engage the services of, and to delegate powers and responsibilities to, such
agents, representatives, advisers, counsel and accountants as the Trustee
considers necessary or appropriate and, as part of its expenses under this Trust
Agreement, to pay their reasonable expenses and compensation;
(3) To make, execute and deliver, as Trustee, any and all deeds,
leases, mortgages, conveyances, waivers, releases or other instruments in
writing necessary or appropriate for the accomplishment of any of the powers
listed in this Trust Agreement; and
(4) Generally to do all other acts which the Trustee deems necessary
or appropriate for the protection of the Trust.
(5) The Trustee at the direction of the Company may appoint a
Custodian, acceptable to the Company, to safeguard the assets of the Trust. The
Company hereby authorizes and directs the Trustee to enter into such agreements
with the Custodian as may be necessary to establish an account with the
Custodian. For administrative purposes, contributions deposited to the appointed
Custodian shall be deemed as contributions deposited with the Trustee on behalf
of the Trust.
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Section 7. DISPOSITION OF INCOME
During the term of this Trust, all income received by the Trust, net of
expenses and taxes, shall be accumulated and reinvested.
Section 8. ACCOUNTING BY TRUSTEE
(a) The Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions required to be
made, including such specific records as shall be agreed upon in writing between
the Company and the Trustee. Within 90 days following the close of each calendar
quarter, or at such other additional times as may be reasonably requested by the
Company, and within 90 days after removal or resignation of the Trustee, the
Trustee shall deliver to the Company a written account of its administration of
the Trust during such year or during the period from the close of the last
preceding year to the date of such removal or resignation, setting forth all
investments, receipts, disbursements and other transactions effected by it,
including a description of all securities and investments purchased and sold
with the cost or net proceeds of such purchases or sales (accrued interest paid
or receivable being shown separately), and showing all cash, securities and
other property held in the Trust at the end of such year or as of the date of
such removal or resignation, as the case may be. If the Company fails to file
with the Trustee written objection to any such account within ninety (90) days
of its receipt, the Company shall be deemed to have approved the account; and in
such case, or upon the written approval of the Company, the Trustee shall be
released, relieved and discharged with respect to all matters set forth in such
account as though the same had been judicially settled.
(b) The Trustee shall be entitled to rely on the Recordkeeper (the provider
of recordkeeping services for the Plan Administrator) or the Custodial Agent
(the custodian of investments), if any other than Trustee, for the maintenance
and provision of all records specified in this Section 8.
(c) The Trustee utilizes various standard industry pricing services and
brokerage contacts to provide current pricing information for active publicly
traded securities. The Trustee shall attempt to provide a reasonably accurate
current market value for assets not publicly traded. Many fixed income
securities are priced on a matrix system, resulting in a mathematical
approximation of price derived by computer. Although the Trustee will make
reasonable and good faith efforts to provide accurate pricing, in some instances
prices may not reflect the most accurate pricing readily available or the true
value of the asset. The Trustee shall have no liability for such an occurrence.
Section 9. RESPONSIBILITY AND INDEMNITY OF THE TRUSTEE.
(a) The Trustee shall act with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent person acting in like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, provided, however, that the
Trustee shall incur no liability to any person for
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any action taken pursuant to a direction, request or approval given by the
Company which is contemplated by, and in conformity with, the terms of the
Plan(s) and this Trust and is given in writing by the Company or in such other
manner prescribed by the Trustee. In the absence of direction, request or
approval from the Company, the Trustee shall also incur no liability to any
person for any failure to perform an act not contemplated by or in conformity
with, the terms of this Trust. In the event of a dispute between the Company and
a party, the Trustee may apply to a court of competent jurisdiction to resolve
the dispute.
(b) The Company hereby indemnifies the Trustee and each of its affiliates
(collectively, the "Indemnified Parties") against, and shall hold them harmless
from, any and all loss, claims, liability, and expense, including reasonable
attorneys' fees, imposed upon or incurred by any Indemnified Party as a result
of any acts taken, or any failure to act, in accordance with the directions from
the Company or any designee of the Company, or by reason of the Indemnified
Party's good faith execution of its duties with respect to the Trust, including,
but not limited to, its holding of assets of the Trust. The Company's
obligations in the foregoing regard shall be satisfied promptly by the Company,
provided that in the event the loss, claim, liability or expense involved is
determined by a no longer appealable final judgment entered in a lawsuit or
proceeding to have resulted from the negligence or gross misconduct of the
Trustee, the Trustee shall promptly on request thereafter return to the Company
any amount previously received by the Trustee under this Section 9(b) with
respect to such loss, claim, liability or expense. If the Company does not pay
such costs, expenses and liabilities in a reasonably timely manner, the Trustee
may obtain payment from the Trust without direction from the Company.
(c) The Trustee shall incur no liability to anyone for any action that it
or the Custodian as its delegate takes pursuant to a direction, request or
approval given by the Company, Participants, the Investment Committee, the
Administrator or by any other party (including, without limitation, the
Recordkeeper and any of its agents) to whom authority to give such directions,
requests or approvals is delegated under the powers conferred upon the Company,
Participants, the Investment Committee, the Administrator or such other party
under this Agreement.
(d) The Trustee, upon receipt of the consent of an Authorized Party, at the
expense of the Trust or the Company, may consult with legal counsel (who may
also be counsel for Company generally) with respect to any of its duties or
obligations hereunder.
(e) The Trustee, upon receipt of the consent of an Authorized Party, may
hire agents, accountants, actuaries, investment advisers, financial consultants
or other professionals to assist it in performing any of its duties or
obligations hereunder.
(f) The Trustee shall have, without exclusion, all powers conferred on the
Trustee by applicable law, unless expressly provided herein, provided, however,
that if an insurance policy is held as an asset of the Trust, the Trustee shall
not have the power to name a beneficiary of the policy other than the Trust, to
assign the policy (as distinct
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from conversion of the policy to a different form) other than to a successor
trustee, or to loan to any person the proceeds of any borrowing against such
policy.
(g) Notwithstanding any powers granted to the Trustee pursuant to this
Trust Agreement or applicable law, the Trustee shall not have any power that
could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal Revenue Code.
(h) The Trustee shall not be liable for any expense, loss, claim or damage
(including counsel fees) suffered by the Participants arising out of or caused
by any delay in, or failure of, performance by the Trustee, in whole or in part,
arising out of, or caused by, circumstances beyond the Trustee's control,
including without limitation: acts of God, interruption, delay in, or loss
(partial or complete) of electrical power or external computer (hardware or
software) or communication services (including access to book-entry securities
systems maintained by Federal Reserve Bank of New York and/or any clearing
corporation); act of civil or military authority; sabotage; natural emergency;
epidemic; war or other government actions; terrorist activity; civil
disturbance; flood, earthquake, fire, other catastrophe; strike or other labor
disturbance by employees of nonaffiliates; governmental, judicial, or self
regulatory organization order, rule or regulation; riot; energy or natural
resource difficulty or shortage; and inability to obtain materials, equipment or
transportation.
(i) If (1) there is any disagreement or dispute in connection with the
Trust or the subject matter hereof, including any dispute between the Trustee,
the Company or any Participant, or between the Company, any Participant or any
person not a party to the Trust or (2) there are adverse or inconsistent claims
or demands upon, or inconsistent with instructions to the Trustee, or (3) the
Trustee in good faith is in doubt as to what action to take pursuant to the
Trust, the Trustee may at its election refuse to comply with any such claims,
demands or instructions, or refuse to take any other action pursuant to this
Trust until (i) the rights of all persons involved in the dispute have been
fully and finally adjudicated by a court of competent jurisdiction or the
Trustee has resolved any such doubts to its good faith satisfaction; or (ii) all
disputes have been resolved between the persons involved and the Trustee has
received written notice thereof satisfactory to it from all such persons.
Without limiting the generality of the foregoing, the Trustee may at its
election interplead the subject matter of this Trust Agreement with a court of
competent jurisdiction, or commence judicial proceedings for a declaratory
judgment, and the Trustee shall be entitled to recover from the Company or the
Trust, both collectively and individually, the Trustee's attorneys' fees,
expenses and costs in connection with any such interpleader or declaratory
judgment action
(j) The Trustee is not a party to, and has no duties or responsibilities
under, the Plan other than those that may be expressly contained in this Trust
Agreement. In any case in which a provision of this Trust Agreement conflicts
with any provision of the Plan, the Plan shall control. The Trustee shall have
no duties, responsibilities or liability with respect to the acts or omissions
of any prior or successor trustee.
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Section 10. COMPENSATION AND EXPENSES OF TRUSTEE
(a) The Company shall pay all administrative and Trustee's fees and
expenses under this Trust Agreement as mutually agreed and, if not so paid, such
fees and expenses may be withdrawn from the Trust by the Trustee. If the Trustee
advances cash or securities for any purpose, including the purchase or sale of
foreign exchange or of contracts for foreign exchange, or in the event that the
Trustee shall incur or be assessed taxes, interest, charges, expenses,
assessments, or other liabilities in connection with the performance of this
Trust Agreement, except such as may arise from its own negligent action,
negligent failure to act or misconduct, any property at any time held for the
Trust shall be security therefor and the Trustee shall be entitled to collect
from the Company or, if not paid, from the Trust sufficient cash for
reimbursement of such taxes, interest, charges, expenses, assessments or other
liabilities. If cash is insufficient, the Trustee may dispose of the assets of
the Trust to the extent necessary to obtain the aforesaid reimbursement. To the
extent the Trustee advances funds to the Trust for disbursements or to effect
the settlement of purchase transactions, the Trustee shall be entitled to
collect from the Company or, if not so paid, from the Trust either (i) with
respect to domestic assets, an amount equal to what would have been earned on
the sums advanced (an amount approximating the "federal funds" interest rate) or
(ii) with respect to non-domestic assets, the rate applicable to the appropriate
foreign market.
Section 11. RESIGNATION AND REMOVAL OF TRUSTEE
(a) The Trustee may resign at any time by written notice to NMI, which
shall be effective sixty (60) days after receipt of such notice unless NMI and
the Trustee agree otherwise.
(b) The Trustee may be removed by NMI on sixty (60) days written notice or
upon shorter notice accepted by the Trustee. However, upon a Change of Control
or Change in Financial Condition, as defined in Section 15 herein, the Trustee
may not be removed by NMI unless a majority of the persons who are then
Participants agree to the removal.
(c) If the Trustee resigns after a Change of Control or Change in Financial
Condition, as defined in Section 15 herein, NMI shall apply to a court of
competent jurisdiction for the appointment of a successor Trustee or for
instructions, unless a majority of the persons who are then Participants and NMI
agree to the selection of a successor trustee.
(d) Upon resignation or removal of the Trustee and appointment of a
successor trustee, all assets shall subsequently be transferred to the successor
trustee. The transfer shall be completed within one hundred twenty (120) days
after receipt of notice of resignation, removal or transfer, unless NMI extends
the time limit.
(e) If Trustee resigns or is removed, a successor shall be appointed, in
accordance with Section 12 hereof, by the effective date of resignation or
removal under paragraphs (a) or (b) of this Section. If no such appointment has
been made, the Trustee
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may apply to a court of competent jurisdiction for appointment of a successor or
for instructions. All expenses of the Trustee in connection with the proceeding
shall be allowed as administrative expenses of the Trust.
Section 12. APPOINTMENT OF SUCCESSOR
(a) If the Trustee resigns or is removed in accordance with Section 11(a)
or (b) hereof, subject to the requirements of Section 11, NMI may appoint any
third party, such as a bank trust department or other entity that may be granted
corporate trustee powers under state law, as a successor to replace the Trustee
upon resignation or removal. The appointment shall be effective when accepted in
writing by the new trustee, who shall have all of the rights and powers of the
former trustee, including ownership rights in the Trust assets. The former
trustee shall execute any instrument necessary or reasonably requested by NMI or
the successor trustee to evidence the transfer.
(b) The successor trustee need not examine the records and acts of any
prior trustee and may retain or dispose of existing Trust assets, subject to
Sections 8 and 9 hereof. The successor trustee shall not be responsible for and
NMI shall indemnify and defend the successor trustee from any claim or liability
resulting from any action or inaction of any prior trustee or from any other
past event, or any condition existing at the time it becomes successor trustee.
Section 13. AMENDMENT OR TERMINATION
(a) This Trust Agreement may be amended by a written instrument executed by
the Trustee and NMI. Notwithstanding the foregoing, no such amendment shall
conflict with the terms of the Plan or shall make the Trust revocable.
(b) The Trust shall not terminate until the date on which the Participants
and their beneficiaries are no longer entitled to benefits pursuant to the terms
of the Plan. Upon termination of the Trust, any assets remaining in the Trust
shall be returned to the Company; except that any assets (including employer
securities) contributed by NFI to the Trust for the benefit of Participants of
any of its affiliated entities participating in the Plan shall revert
exclusively to NFI.
(c) Upon written approval of the Participants or beneficiaries entitled to
payment of benefits pursuant to the terms of the Plan, the Company may terminate
this Trust prior to the time all benefit payments under the Plan have been made.
All assets in the Trust at termination shall be returned to the Company; except
that any assets (including employer securities) contributed by NFI to the Trust
for benefit of Participants of any of its affiliated entities shall revert
exclusively to NFI.
Section 14. MISCELLANEOUS
(a) Any provision of this Trust Agreement prohibited by law shall be
ineffective to the extent of any such prohibition, without invalidating the
remaining provisions hereof.
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(b) Benefits payable to Participants and their beneficiaries under this
Trust Agreement may not be anticipated, assigned (either at law or in equity),
alienated, pledged, encumbered or subjected to attachment, garnishment, levy,
execution or other legal equitable process.
(c) This Trust Agreement shall be governed by and construed in accordance
with the laws of the State of placeStateMichigan.
(d) Neither the Company nor the Trustee may assign this Trust Agreement
without the prior written consent of the other. This Trust Agreement shall be
binding upon, and inure to the benefit of, the Company, the Trustee and their
respective successors and permitted assigns. Any entity, which shall by merger,
consolidation, purchase, or otherwise, succeed to substantially all the trust
business of the Trustee shall, upon each succession and without any appointment
or other action by the Company, be and become successor trustee hereunder, upon
notification to Company.
(e) The provisions of this Trust Agreement are intended to benefit only the
parties hereto, their respective successors and assigns, and the Participants
and their beneficiaries under the Plan. There are no other third party
beneficiaries.
(f) NMI and the Trustee hereby each represents and warrants to the other
that it has full authority to enter into this Trust Agreement upon the terms and
conditions hereof and that the individual executing this Trust Agreement on its
behalf has the requisite authority to bind NMI or the Trustee to this Trust
Agreement.
(g) This Trust Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, and such counterparts shall
constitute but one and the same instrument and may be sufficiently evidenced by
one counterpart.
Section 15. CHANGE OF CONTROL/CHANGE IN FINANCIAL CONDITION
(a) Notwithstanding any provision in this Trust Agreement to the contrary,
upon a Change of Control or Change in Financial Condition (as each of those
terms is defined below), the Company shall as soon as administratively possible,
but in no event later than ten (10) days following such event, make an
irrevocable contribution to the Trust, in cash or other readily marketable
property acceptable to the Trustee, equal to the sum of an amount which, when
added to the fair market value of the assets then held in the Trust, shall cause
the fair market value of the assets of the Trust to equal the present value of
the accrued benefits under the Plan as of the date of such Change of Control or
Change in Financial Condition. The Trustee shall then promptly pay to the
Participant his or her entire vested account balance under the Plan in a single
lump sum payment. Notwithstanding the foregoing, the Company may elect to pay
all or a portion of the Participant's vested account balance under the Plan
directly to the Participant or his or her beneficiaries. As a condition to the
Trustee's payment of benefits following a Change in Financial Condition, the
Company will first cause an independent public accounting firm acceptable to the
Trustee to provide a certification with supporting analysis that a Change in
Financial Condition has in fact occurred.
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(b) For purposes of this Trust Agreement, a "Change of Control" shall be
deemed to have occurred upon the occurrence of one or more of the following
events with respect to NFI:
(i) any person, entity or group of persons, within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934 ("Act"), or
any comparable successor provisions, of beneficial ownership (within the
meaning of Rule l3d-3 promulgated under the Act) of 50 percent or more of
either the outstanding shares of common stock of NFI or the combined voting
power of NFI's outstanding voting securities entitled to vote generally;
(ii) the approval by the stockholders of NFI of a reorganization,
merger, or consolidation, in each case, with respect to which persons who
were stockholders of NFI immediately prior to such reorganization, merger
or consolidation do not, immediately thereafter, own more than 50 percent
of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated NFI's then outstanding
securities;
(iii) the approval by the stockholders of NFI of a complete
liquidation or dissolution of NFI or a sale of all or substantially all of
the assets of NFI; or
(iv) the following individuals cease for any reason to constitute at
least two-thirds (2/3) of the number of directors of NFI then serving:
individuals who, on the effective date of the Plan, constitute the board of
directors of NFI and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to
the election of directors of NFI, as such terms are used in Rule 14A-11 of
the Securities Exchange Act of 1934) whose appointment or election by the
board of directors of NFI or nomination of election by NFI's stockholders
was approved by a vote of at least two-thirds (2/3) of NFI's directors then
still in office who either were directors on the effective date of the
Plan, or whose appointment, election, or nomination for election was
previously approved; or (e) the adoption of a resolution by the board of
directors of NFI to the effect that any person has acquired effective
control of the business and affairs of NFI.
(c) For purposes of this Agreement, a "Change in Financial Condition" shall
be deemed to occur upon the occurrence of one or more of the following events
with respect to NFI:
(i) The Tangible Net Worth of NFI at any time is less than (i)
$125,000,000 plus (ii) an amount equal to 75% of proceeds received by NFI
from issuance of equity securities during the current fiscal year of NFI
through and including the date immediately prior to the date of
determination minus (iii) an amount equal to the purchase price paid by NFI
to reacquire any of its outstanding equity securities during the current
fiscal year of NFI through and including the date immediately prior to the
date of determination;
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(ii) The ratio of NFI's Total Indebtedness to Tangible Net Worth at
any time exceeds 8:1; or
(iii) For any period of two consecutive fiscal quarters, the Adjusted
Net Income of NFI is less than $1.00.
"Adjusted Net Income" means the net earnings (or loss) of NFI for any
fiscal period, as reflected on the financial statements of NFI prepared in
accordance with Generally Accepted Accounting Principals, but excluding income
taxes and any distributions.
"Tangible Net Worth" means a sum equal to: (i) the net book value (after
deduction related depreciation, obsolescence, amortization, and other proper
reserves) at which the tangible assets of NFI would be shown on a balance sheet
at such date in accordance with Generally Accepted Accounting Principles, less
(ii) the amount at which NFI's liabilities (other than capital stock and
surplus) would be shown on such balance sheet in accordance with Generally
Accepted Accounting Principles, and including as liabilities all reserves for
contingencies and other potential liabilities.
"Total Indebtedness" means all items which in accordance with Generally
Accepted Accounting Principles would be included in determining total
liabilities as shown on the liability side of a balance sheet of NFI as of the
date as of which such indebtedness is to be determined, including, without
limitation, any indebtedness represented by obligations under a lease that is
required to be capitalized for financial reporting purposes and all obligations
of other persons or entities guaranteed by NFI.
Section 16. EFFECTIVE DATE
The effective date of this Trust Agreement shall be September 1, 2004.
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SIGNATURES
IN WITNESS WHEREOF, the Company and the Trustee have executed this Trust
Agreement each by action of a duly authorized person effective as of the date
set forth in Section 16.
NOVASTAR MORTGAGE, INC. (NMI)
By: /s/ Xxxxxx X. Xxxxxxxxx
Name/Title: Xxxxxx X. Xxxxxxxxx/Vice President & Treasurer
Date: August 12, 2004
COMERICA BANK & TRUST, N.A. (Trustee)
By: /s/ Xxxxx Xxxxxxxx
Name/Title: Xxxxx Xxxxxxxx/Vice President
Date: August 9, 2004
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