EXHIBIT 10.22
ADDENDUM TO
MASTER REPURCHASE AGREEMENT
This Addendum Agreement, dated as of February 12, 1999 is made by and
between NovaStar REMIC Financing Corporation, acting as seller ("Seller") and
First Union Corporation acting as buyer ("Buyer"). Capitalized terms used
herein but not otherwise defined shall have the meanings ascribed thereto in the
Master Repurchase Agreement (as defined below).
RECITALS:
WHEREAS, Buyer and Seller have entered into a Master Repurchase Agreement
dated as of February 12, 1999 (the "Master Repurchase Agreement"); and
WHEREAS, Buyer and Seller desire to supplement and amend the Master
Repurchase Agreement to enter into Transactions involving Assets (as defined
below).
NOW, THEREFORE, the parties hereto agree as follows:
1. (a) The first sentence of Section 1 of the Master Repurchase Agreement
shall be amended in its entirety to read as follows:
"From time to time in Buyer's sole and absolute discretion
exercised in Good Faith, the parties hereto may enter into
transactions in which one party ("Seller") agrees to transfer to the
other ("Buyer") Assets deemed to be Eligible Asset-Backed Securities
by the Buyer against the transfer of funds by Buyer, with a
simultaneous agreement by Buyer to transfer to Seller such Assets at a
date certain or on demand, against the transfer of funds by Seller."
(b) Section 1 is hereby further amended by adding the following at the
end thereof:
"Without limiting any rights of Buyer under this Master
Repurchase Agreement, Buyer shall not be obligated to enter into more
than one (1) Transaction per month and no Transaction shall be for a
Purchase Price of less than $1,000,000 or an integral multiple of
$500,000 thereafter".
(c) Every reference in the Master Repurchase Agreement to "Securities"
shall be replaced by "Assets" other than any terms specifically defined in this
Addendum include "Securities" within such term or definition.
2. Subparagraph 2(a) of the Master Repurchase Agreement is amended by
adding the following after the word "any" and before the word "bankruptcy" in
the second line thereof:
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"conservatorship or receivership (within the meaning of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989),".
3. Subparagraphs 2(j) and 2 (p) of the Master Repurchase Agreement are
amended to read as follows:
(i) "Market Value" with respect to any Assets as of any date, shall
mean the price at which the Purchased Assets could readily be sold as
determined by Buyer in its sole and absolute discretion provided, however,
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in the absence of a generally recognized source for prices or bid or offer
quotations for any Assets, Buyer may establish the source therefor in its
sole and absolute discretion. Without limiting the foregoing, Seller
acknowledges that the Market Value of all or any portion of a Purchased
Asset may be reduced to zero if there exists a breach of a representation,
warranty or covenant made by Seller in this Master Repurchase Agreement
with respect to such Purchased Asset.
(p) "Purchased Assets" the Assets transferred by Seller to Buyer in a
Transaction hereunder and any Assets substituted therefor in accordance
with Paragraph 9 hereof. The term "Purchased Assets" with respect to any
Transaction at any time also shall include Additional Assets delivered
pursuant to Paragraph 4(b) hereof.
4. The following definitions are hereby added to Section 2 of the Master
Repurchase Agreement:
"Applicable Additional Percentage" means (a) five percent (5.0%) so long as
no Event of Default has occurred and is then continuing and (b) nine percent
(9.0%) any time following the occurrence and during the continuance of an Event
of Default.
"Asset-Backed Security" shall mean either (i) a certificate issued under a
Trust Agreement representing 100% ownership of a Delaware business trust that
has issued bonds secured by a pool of Mortgage Assets originated in accordance
with the Underwriting Standards of the applicable affiliate of Seller or (ii) a
subordinated bond issued by a Delaware business trust that has issued bonds
under an Indenture secured by a pool of Mortgage Assets originated in accordance
with the Underwriting Standards of the applicable affiliate of Seller.
"Assets" means Eligible Asset-Backed Securities and other assets, in each
case agreed to from time to time by Buyer and Seller and delivered to Buyer
hereunder from time to time, or a participating or pro rata interest therein.
"Change of Control" means the occurrence of any event (whether in one or
more transactions) which results in a transfer of power, direct or indirect (x)
to vote 50% or more of the securities having ordinary voting power for the
election of the directions of Seller or any Guarantor (other than NFI) or (y) to
direct or cause the direction of the management and policies of Seller or any
Guarantor (other than NFI) by contract or otherwise.
"Current Margin" shall mean, with respect to any date, the difference
between (i) the aggregate Market Value of all Purchased Assets held by Buyer on
such date and (ii) the aggregate Purchase Price paid by Buyer for all Purchased
Assets held by Buyer on such date.
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"Eligible Asset-Backed Security" shall mean each Asset-Backed Security
deemed to be eligible by Buyer in its sole and absolute discretion with respect
to which each of the representations and warranties set forth on Exhibit C
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hereto is accurate and complete as of the date of the related Confirmation (and
Seller by including any such Asset-Backed Security in any such Transaction shall
be deemed to make such representations and warranties to Buyer at and as of the
date of such Transaction).
"First Union" shall mean Buyer or any of its non-bank affiliates or
subsidiaries.
"Good Faith" as used in this Master Repurchase Agreement shall mean honesty
in fact in the conduct or transaction concerned.
"Guarantor" shall mean individually and collectively, NFI Holding
Corporation, a Delaware corporation, NovaStar Mortgage, Inc., a Virginia
corporation and NFI.
"Indentures" shall mean (a) each indenture listed on Exhibit G hereto as in
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existence on the date hereof and (b) any Indenture pursuant to which an Asset-
Backed Security has been issued.
"Maximum Purchase Amount" at any date shall mean $20,000,000 less the
aggregate amount of Repurchase Prices owed to Buyer under and pursuant to the
NCFC Repurchase Agreement at such date.
"Mortgage Assets" shall mean home equity loans or mortgage loans originated
by an affiliate of Seller.
"NCFC" shall mean NovaStar Certificates Financing Corporation, a Delaware
corporation.
"NCFC Repurchase Agreement" means the Master Repurchase Agreement dated as
of the date hereof between NCFC and Buyer.
"NCI" shall mean NovaStar Capital, Inc., a Delaware corporation.
"NFI" shall mean NovaStar Financial, Inc., a Maryland corporation.
"NMI" shall mean NovaStar Mortgage, Inc., a Virginia corporation.
"Related Documents" means the Master Repurchase Agreement, the Servicing
Agreements and the Collection Account Agreement.
"Related Facilities" means (i) the Master Repurchase Agreement dated as of
the date hereof among NFI, NMI, NCI and First Union or First Union National Bank
("FUNB") and the Addendum thereto, (ii) the NCFC Repurchase Agreement, (iii) any
other Master Repurchase Agreement by and among Seller, NMI, NCFC and/or any
affiliate of either Seller or NMI and First Union or FUNB and the Addendum
thereto, (iv) any Mortgage Loan Warehousing Agreement by and among Seller, NMI
and/or any affiliate of either Seller or NMI and First
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Union or FUNB and (v) any other document, agreement or instrument pursuant to
which Seller, NMI, NCFC and/or any affiliate of either Seller or NMI is
obligated to Buyer.
"Required Documents" shall mean the following documents with respect to any
Eligible Asset-Backed Security:
(i) an executed assignment of such Eligible Asset-Backed Security, in
form and substance satisfactory to Buyer in its sole and absolute
discretion, from the Seller to Buyer, and
(ii) executed documents, certificates, notices, consents, opinions and
other transfer documentation as is required to register the Eligible Asset-
Backed Security in the name of Buyer under the applicable Trust Agreement
or Indenture.
"Required Margin" shall mean, with respect to any Transaction, a fixed
percentage of the Market Value of Purchased Assets as specified in the
Confirmation for such Transaction but shall in no event be less than 50%.
"Servicer" shall mean the designated servicer under each Servicing
Agreement.
"Servicing Agreements" means those certain servicing agreements or
servicing arrangements (a) listed on Exhibit E hereto as in existence on the
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date hereof which have been approved by Buyer and (b) any Servicing Agreements
pursuant to which any Mortgage Assets are serviced.
"Term" shall mean three hundred and sixty-four (364) days from the date of
execution of this Master Repurchase Agreement.
"Trust Agreements" shall mean each of the Trust Agreements (a) listed on
Exhibit H hereto as in existence on the date hereof and (b) pursuant to which an
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Asset-Backed Security has been issued.
"Trustee" shall mean, as applicable, the entity designated as such pursuant
to each Trust Agreement.
"Underwriting Standards" shall mean the underwriting policies of affiliates
of the Seller that were applied to the Mortgage Assets included in any
securitization by an affiliate of the Seller, as set forth in the Prospectus
Supplement for such securitization.
5. Subparagraph 3(b) of the Master Repurchase Agreement is amended by
adding at the end of the first sentence of Paragraph 3(b):
"In the case of Transactions involving Assets that are Eligible Asset-
Backed Securities, the Required Documents and the Eligible Asset-Backed
Securities shall have been delivered to and held by Buyer, (b) the Repurchase
Date for each Transaction shall be the earlier of (i) thirty (30) days following
the applicable Purchase Date or, if such date is not a business day, the next
succeeding business day, (ii) the date set forth in the applicable Confirmation
and
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(iii) the date determined by application of Paragraph 11 of the Master
Repurchase Agreement and (c) the Pricing Rate for each Transaction shall be a
per annum rate equal to the sum of (i) the London interbank offered rate for one
month deposits of U.S. dollars as determined by reference to the Bloomberg
Telerate Service page 3720, as of 11:00 a.m., London time, by Buyer on the
Purchase Date, plus, (ii) the Applicable Additional Percentage."
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6. Subparagraph 3(c) of the Master Repurchase Agreement is amended by
adding the following at the end of the first sentence of Paragraph 3(c):
"In the case of Transactions involving Assets that are Eligible Asset-
Backed Securities, such demand by Seller shall be for a repurchase of all
Purchased Assets subject to the related Transaction and shall be made no
later than 2:00 p.m. New York City time on the business day immediately
preceding the day on which such termination will be effective, which
termination shall also be on a business day. Upon receipt of the
Repurchase Price in immediately available funds, Buyer shall promptly
deliver the Purchased Assets for such Transaction to Seller for further
disposition."
7. Subparagraph 4 of the Master Repurchase Agreement is amended in its
entirety to read as follows:
(a) Daily until the expiration of the Term (or less frequently if the
Buyer, in its sole and absolute discretion, so elects), Buyer will determine (i)
the aggregate Market Value of all Purchased Assets held by Buyer and (ii) the
Current Margin as of such date. Without limiting the foregoing, Seller shall
promptly deliver to Buyer, at any time and from time to time, information with
respect to the Purchased Assets to assist Buyer in ascertaining the Market Value
of such Purchased Assets including, without limitation, any information with
respect to the Purchased Assets which has been expressly requested by Buyer.
(b) If, on any date, the Current Margin is less than the Required
Margin for such date by an amount in excess of $150,000 (a "Margin Deficit"),
Buyer may, in its sole and absolute discretion, by notice to Seller (a "Margin
Call"), require Seller to transfer cash or additional Assets reasonably
acceptable to Buyer ("Additional Assets") so that the Current Margin for such
date then equals or exceeds the Required Margin for such date Seller shall
provide Buyer, no later than the close of business on the date of any Margin
Call, a detailed description, in form and substance satisfactory to Buyer, of
the Additional Assets Seller will use to satisfy such Margin Call.
(c) Seller shall transfer the Additional Assets no later than the
close of business on the third business day immediately following the date on
which a Margin Call is given. Any cash transferred to Buyer pursuant hereto
shall be held by Buyer until the Repurchase Date and shall be applied against
the Repurchase Price on the Repurchase Date.
(d) Buyer's election, in its sole and absolute discretion, not to make
a Margin Call at any time there is a Margin Deficit shall not in any way limit
or impair its right to make a Margin Call at any time a Margin Deficit exists.
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(e) If, on any date, one or more Margin Calls are outstanding, the
Buyer shall be under no obligation to enter into any new Transactions.
8. Paragraph 5 of the Master Repurchase Agreement is amended by added the
following at the end of the last sentence thereof:
"Notwithstanding the foregoing and except as provided in Paragraph 11
of this Master Repurchase Agreement, Seller shall hold, for the benefit of, and
in trust for, Buyer all Income received by or on behalf of Seller with respect
to any Purchased Assets or any Eligible Asset-Backed Securities on and after the
applicable Purchase Date; provided, however, so long as no Event of Default
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shall have occurred and be continuing, Seller shall be permitted to use the
Income received by Seller in the ordinary course of its business. Immediately
upon the occurrence and during the continuation of an Event of Default, Seller
shall deposit such Income in a deposit account (the title of which shall
indicate that the funds therein are being held in trust for Buyer) (the
"Collection Account") with a financial institution acceptable to Buyer and
subject to a collection account agreement or alternative written agreement
which, in each case, is in form and substance satisfactory to Buyer ("Collection
Account Agreement"). All such Income shall be held in trust for Buyer, shall
constitute property of the Buyer, and shall not be commingled with other
property of Seller or any affiliate of Seller except as expressly permitted
above. All funds on deposit in the Collection Account shall be immediately
remitted to Buyer. Buyer may, in its sole and absolute discretion, apply all
Income received by Buyer to the repurchase obligations and/or other monetary
obligations owing by Seller to Buyer under this Master Repurchase Agreement, or
under any other document, instrument, agreement between Seller and Buyer in such
order as Buyer determines in the exercise of its sole and absolute discretion.
To the extent, if any, that Seller's consent is required, Seller shall
not consent to any transfer of any servicing rights under any Servicing
Agreement or otherwise with respect to any Mortgage Assets, without the prior
written consent of Buyer.
On or before 2:00 p.m. (New York time) ten (10) business days prior to
any Transaction, Seller will provide Buyer with (a) notice of such Transaction
and (b) all information deemed necessary by Buyer, in its sole and absolute
discretion, to ascertain the Market Value of the Asset to be purchased by Buyer
pursuant to such Transaction. In addition, on or before 2:00 p.m. (New York
time) one (1) business day prior to any Transaction, Seller will provide written
notice to Buyer that such Transaction will close the following business day."
9. Paragraph 6 of the Master Repurchase Agreement is amended by deleting
the words "all of the Purchased Securities with respect to the Transactions
hereunder" in the fourth line thereof and inserting the following therefor:
"all of the Seller's Assets, Seller's right (including the power to convey
title thereto), title and interest in and to".
10. Paragraph 6 of the Master Repurchase Agreement is amended by adding
the following after the words "title and interest in and to" in the fourth line
thereof:
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"the contractual right to receive payments, including the right to
payments of principal and interest and the right to enforce such payments,
arising from or under any of the Purchased Assets, the contractual right to
service or arrange for the servicing of each Mortgage Asset to the extent,
if any, Seller has such rights, any servicing agreements with respect to
each Mortgage Asset and all documents and instruments relating to each
Purchased Asset and/or Additional Assets,".
11. Paragraph 6 of the Master Repurchase Agreement is amended by adding
the following after the word "other" and before the word "proceeds" in the fifth
line thereof:
"income, payments, products and".
12. Paragraph 6 of the Master Repurchase Agreement is amended by adding
the following after the word "thereof" and before the period in the fifth line
thereof:
"including the rights, if any, of Seller under any Servicing
Agreements to the extent such rights under the Servicing Agreements are
assignable by Seller (the "Collateral")." .
13. Paragraph 6 of the Master Repurchase Agreement is amended by adding
the following at the end of the last sentence of Paragraph 6:
"In such event, the parties hereto intend to create for the benefit of
Buyer, as secured party, a legally valid and enforceable first priority
perfected security interest in the Collateral, and Seller hereby grants
Buyer a first priority security interest in the Collateral. On or prior to
the initial Purchase Date and/or at the request of Buyer at any time,
Seller shall immediately cause to be filed in the appropriate filing
offices of the jurisdiction in which Seller maintains its place of
business, or its chief executive office if Seller has more than one place
of business, in accordance with applicable law, Uniform Commercial Code
financing statements naming Seller as debtor, Buyer as secured party, and
the Collateral as collateral and in form and substance reasonably
acceptable to Buyer."
14. Paragraph 7 of the Master Repurchase Agreement is amended by adding
the following at the end of the last sentence of Paragraph 7:
"In the case of Transactions involving Eligible Asset-Backed
Securities, the transfer of such Eligible Asset-Backed Securities for the
purposes of this Paragraph 7 shall include the delivery to the Buyer or its
designee of the Eligible Asset-Backed Security and the Required Documents."
15. Paragraph 8 of the Master Repurchase Agreement is amended by deleting
the last sentence of Paragraph 8 and substituting the following:
"Title to all Purchased Assets shall pass to Buyer. Nothing in this
Master Repurchase Agreement shall preclude Buyer from engaging in repurchase
transactions with the Purchased Assets or otherwise pledging or hypothecating
the Purchased Assets without the prior
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consent of Seller, but no such transaction or provision hereof shall relieve
Buyer of its obligations to transfer Purchased Assets to Seller pursuant and
subject to Paragraphs 3, 4 or 11 hereof. Upon termination of any Transactions as
set forth in Paragraph 3(c) of this Master Repurchase Agreement, Buyer agrees to
execute promptly all Required Documents, endorsements, assignments of the Assets
and UCC-3 assignments, releases or terminations related to such Transactions, to
the extent that such documents are prepared by Seller for Buyer's execution, are
delivered to Buyer by Seller and are necessary and appropriate, as reasonably
determined by Seller, to reconvey, without recourse, to Seller and perfect title
of like tenor to that conveyed to Buyer to the related Assets. Buyer shall
provide reasonable cooperation in assisting and directing the Seller to
facilitate such preparation (without material expense to Buyer)".
16. Subparagraph 9(b) of the Master Repurchase Agreement is amended by
adding the following after the word "substituted" and before the period in the
fifth line thereof:
"; provided, further, that, the retention by Seller of custody of any
document relating to any Asset shall be held by Seller in trust for Buyer
and shall not be deemed to constitute Seller's retention of custody of the
Purchased Assets for purposes of this subparagraph".
17. Paragraph 9 of the Master Repurchase Agreement is further amended by
adding at the end of the Paragraph the following subparagraphs (c) and (d):
(c) In the case of any Transaction for which the Repurchase Date is
other than the business day immediately following the Purchase Date and
with respect to which Seller does not have any existing right to substitute
substantially the same Assets for the Purchased Assets, Seller shall have
the right, subject to the proviso to this sentence, upon notice to Buyer,
which notice shall be given at or prior to 2:00 p.m. (New York time) at
least ten (10) business days prior to the date of such substitution, to
substitute substantially the same Assets for any Purchased Assets;
provided, however, that Buyer, in its sole and absolute discretion, may
elect, by the close of business on the business day next following the
business day on which notice is received, not to accept such substitution.
In the event such substitution is accepted by Buyer, such substitution
shall be made by Seller's transfer to Buyer of additional Assets (including
the applicable Required Documents and the issuance to the Buyer of the
Confirmation) and Buyer's transfer to Seller of such Assets, and after
substitution, the substituted additional Assets shall be deemed to be
Purchased Assets. In the event Buyer elects not to accept such
substitution, Buyer shall offer the Seller the right to terminate the
Transaction. If the Seller elects to terminate such Transaction (which
election shall be made in writing within five (5) business days of Buyer's
offer to Seller of the right to terminate the transaction), the date of
termination will be determined in accordance with Paragraph 3(c).
(d) In the event Seller exercises its right to substitute or terminate
pursuant to subparagraph (c), Seller shall be obligated to pay to Buyer, by
the close of the business day of such substitution or termination, as the
case may be, an amount equal to (A) Buyer's actual cost (including all
fees, expenses and commissions) of (i) entering into replacement
transactions; and (ii) entering into or terminating hedge transactions, (B)
to
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the extent Buyer determines not to enter into replacement transactions,
the loss incurred by Buyer directly arising or resulting from such
substitution or termination and (C) in the case of the termination of any
Transaction, the related Repurchase Price for such Purchased Assets. The
foregoing amounts shall be determined and calculated in Good Faith solely
by Buyer."
18. Paragraph 10 of the Master Repurchase Agreement is amended by adding
the following clauses at the end of the first sentence of Paragraph 10 after the
word "affected" and before the period:
", and (vi) Seller and Buyer have entered into a Transaction described
in each Confirmation contemporaneously with the sale of the Purchased
Assets by Seller to Buyer and the transfer of the Purchase Price by Buyer
to Seller, or, in the event that any Transaction is deemed to constitute a
loan, contemporaneously with the grant of the security interest in the
Collateral by Seller to Buyer pursuant to Paragraph 6 hereof and the
transfer of the consideration therefor, consisting of the extension of the
Purchase Price, which represents the loan proceeds, by Buyer to Seller".
19. The first paragraph of Paragraph 11 is amended by deleting the word
"or" immediately preceding clause (vii) and by adding at the end of such clause,
immediately preceding the parenthesis, the following:
"(viii) Subject to Paragraph 6, the Master Repurchase Agreement shall
for any reason cease to create a valid, first priority
security interest in any of the Purchased Assets purported to
be covered thereby;
(ix) Any (a) termination by Seller of any Servicer or subservicer
of the Mortgage Assets without the prior written consent of
Buyer to the extent Seller's consent is required for such
termination or (b) amendment of any Servicing Agreement
without the prior written consent of Buyer to the extent
Seller's consent is required for such occurrences, (c)
failure by Seller (if it is the Servicer) or any Servicer to
service the Mortgage Assets in accordance with (i) industry
standards for similar loans with third parties or (ii) the
standards set forth in the Servicing Agreement;
(x) Any other default by Seller of its obligations hereunder
which is not cured within two (2) days following Seller's
receipt of written notice from Buyer specifying such default;
(xi) An event of default has occurred with respect to indebtedness
of Seller or any Guarantor in excess of $100,000 in the
aggregate which has not been cured within any applicable
grace period;
(xii) Any Change of Control shall occur;
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(xiii) In Buyer's sole judgment exercised in Good Faith, any
material adverse change shall have occurred in the business,
operations, properties, prospects or financial condition of
Seller or any Guarantor;
(xiv) Any event of default has occurred under any Servicing
Agreement, any Indenture, any Trust Agreement, the guaranty
or any Related Facility; or
(xv) any termination or breach of any guaranty by any Guarantor or
similar agreement executed and delivered to Buyer in
connection with the obligations of Seller under this Master
Repurchase Agreement, or if any Guarantor attempts to
terminate, challenges the validity of, or its liability
under, any such guaranty or similar agreement
20. Subparagraph 11(d)(i) of the Master Repurchase Agreement is amended in
its entirety to provide as follows by:
"as to Transactions in which the defaulting party is acting as Seller,
so long as the applicable Event of Default occurred three (3) business days
prior to the date of any such sale, Buyer may, (A) immediately sell in a
recognized market (or otherwise in a commercially reasonable manner) at
such price or prices as the nondefaulting party may reasonably deem
satisfactory, any or all Purchased Assets or any Eligible Asset-Backed
Security subject to such Transactions and apply the proceeds thereof to the
aggregate unpaid Repurchase Prices and any other amounts owing by the
defaulting party hereunder or (B) in its sole discretion elect, in lieu of
selling all or a portion of such Purchased Assets or Eligible Asset-Backed
Security, as the case may be, to give the defaulting party credit for such
Purchased Assets or Eligible Asset-Backed Security, as the case may be, in
an amount equal to the price therefor on such date, obtained from a
generally recognized source or the most recent closing bid quotation from
such a source, against the aggregate unpaid Repurchase Prices and any other
amounts owing by the defaulting party hereunder and in either case upon the
receipt and crediting by Buyer, in a manner deemed final and complete by
Buyer in its sole and absolute discretion, of the aggregate unpaid
Repurchase Prices and any other amounts owing by the defaulting party,
including, without limitation, (x) any unpaid fees and expenses, (y)
amounts due and owing by Seller to Buyer and (z) other amounts which are
otherwise due and owing by Seller to Buyer, Buyer shall transfer the
portion of the Purchased Assets and all income, payments, products and
proceeds thereof held by Buyer following such receipt and crediting to
Seller.
21. Paragraph 11 of the Master Repurchase Agreement is amended by adding
new subparagraphs (j) and (k) following Subparagraph (i) as follows:
"(j) As to Transactions in which the defaulting party is acting as
Seller, Buyer may, in its sole and absolute discretion, to the extent, if any,
Seller has the right to do so, (i) terminate any Servicing Agreements without
any liability to Seller (including, without limitation, without liability for
the payment of fees or other sums due and owing to Seller in its capacity as
Servicer) and, to the extent permitted under any Servicing Agreement, terminate
any Servicing Agreements without any liability to the applicable Servicer
(including, without limitation,
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without liability for the payment of fees or other sums due to owing to such
Servicer) and (ii) transfer servicing responsibility for any Mortgage Assets to
any third party servicer Buyer selects.
(k) The parties hereto recognize that Seller's obligations to Buyer
under this Master Repurchase Agreement are special, unique and of extraordinary
character. If an Event of Default occurs hereunder, Seller agrees that Buyer
may enforce this Master Repurchase Agreement by a proceeding for specific
performance or other equitable remedy including, without limitation, a
proceeding in which replevin or injunction is sought by Buyer. Seller hereby
waives to the fullest extent permitted by law any and all rights it may have by
statute, constitution or otherwise, to (a) assert the defense of adequacy of a
remedy at law that might be asserted as a bar to any such proceeding, (b) the
fixing, imposition or posting of a bond or other security by Buyer as a
condition to obtaining any equitable relief sought by Buyer. Seller further
agrees that the rights and remedies hereunder are cumulative, and are not
exclusive of any rights, powers, privileges, or remedies, now or hereafter
existing, at law, or in equity or otherwise."
22. Paragraph 13 of the Master Repurchase Agreement is amended by deleting
the text thereof and replacing it with the following:
"Any notice or communication in respect of this Master Repurchase
Agreement will be sufficiently given to a party if in writing and delivered
in person, sent by certified or registered mail, return receipt requested,
or by overnight courier or given by facsimile transfer at the following
address or facsimile number:
If to Buyer: First Union Corporation
One First Union Center TW-9
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxx Xxxxxxxxxx
Facsimile No.: (000) 000-0000
with copies to: Xxxx & Hessen LLP
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Seller: NovaStar REMIC Financing Corporation.
0000 Xxxx 00xx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxx 00000
Attention: Xxxx Xxxxxxx
Facsimile No. (000) 000-0000
A notice or communication will be effective:
(iv) if delivered by hand or sent by overnight courier, on the day and
time it is delivered;
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(v) If sent by facsimile transfer on a machine that provides for
automatic confirmation of receipt, on the day and time such
confirmation is received; or
(vi) if sent by certified or registered mail, return receipt
requested, three days after dispatch.
Either party may by written notice to the other change the address or
facsimile number at which notices or communications are to be given to
it."
23. The first sentence of Paragraph 15(a) of the Master Repurchase
Agreement is amended by inserting the following after the words "null and void"
on the third line thereof: ", provided however, that Buyer may sell, transfer
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and assign its rights under this Master Repurchase Agreement or under any
Transaction to any affiliate of Buyer, without the prior consent of Seller.
24. Buyer is hereby appointed the attorney-in-fact of Seller for the sole
and limited purpose of executing or endorsing any instruments that Buyer may
deem necessary to accomplish the sale, transfer and assignment of the Purchased
Assets and/or Collateral to Buyer, including, without limitation, completing or
correcting any endorsement or assignment, which appointment as attorney-in-fact
is irrevocable and coupled with an interest. In this connection, Buyer shall
have the right and power to receive, endorse and collect all checks made payable
to the order of Seller representing any payment on account of the principal of
or interest on any Purchased Asset or Collateral and to give full discharge for
the same.
25. Seller shall promptly pay as and when payment is due all, and Buyer
shall not be liable for any expenses, fees and charges incurred by Buyer or
Seller arising out of or related in any way to this Master Repurchase Agreement
(including the reasonable fees and disbursements of counsel to Buyer in
negotiation of the Master Repurchase Agreement) and the enforcement of this
Master Repurchase Agreement, or any of the Servicing Agreements , including,
without limitation, legal expenses of counsel to Buyer, the fees and expenses of
any custodian, recording and filing fees and any costs associated with
reconveyance of the Purchased Assets ("Costs") and, in the event that any Costs
are incurred by Buyer, Seller shall reimburse Buyer on demand of Buyer
accompanied by a statement describing in reasonable detail the circumstances and
the nature of the Cost by wire transfer of immediately available federal funds
no later than one (1) business day following such demand.
26. (a) Each party represents and warrants, and shall on and as of the
Purchase Date of any Transaction and on and as of each date thereafter through
the related Repurchase Date be deemed to represent and warrant, as follows:
(i) The execution, delivery and performance of this Master
Repurchase Agreement and the performance of each Transaction
do not and will not result in or require the creation of any
lien, security interest or other charge or encumbrance
(other than pursuant hereto) upon or with respect to any of
its properties; and
12
(ii) This Master Repurchase Agreement is, and each Transaction
when entered into under this Master Repurchase Agreement will
be, a legal, valid and binding obligation of it enforceable
against it in accordance with the terms of this Master
Repurchase Agreement; and
(iii) Seller's principal place of business and chief executive
office is located in Westwood, Kansas.
(b) Seller hereby makes, on and as of the Purchase Date of any Transaction
and on and as of each date thereafter through the related Repurchase Date shall
be deemed to have made, the representations and warranties to Buyer set forth in
Exhibit C hereto. The representations and warranties set forth herein shall
---------
survive transfer of the Purchased Assets to the Buyer and shall continue until
the related Transaction has terminated.
(c) Seller hereby further represents and warrants that, as of the Purchase
Date of each Transaction:
(i) No Event of Default, event of default or default has
occurred or is continuing under this Master Repurchase
Agreement, any Servicing Agreement, any Trust Agreement or
any Related Facility.
(ii) Seller has no actual knowledge of any pending or threatened
litigation or any basis therefor against Seller or any
Guarantor before any court, governmental agency or authority
or arbitration panel, which, if determined adversely to
Seller or such Guarantor, would have a materially adverse
effect on Seller's or such Guarantor's ability to perform
its obligations under the Related Documents or the guaranty
issued by such Guarantor to Buyer.
(iii) If Seller is servicing any Purchased Assets, it is doing
so in accordance with the industry standards.
(iv) Since the date of the most recent balance sheet of Seller or
any Guarantor and/or the most recent financial statement of
Seller or any Guarantor delivered to Buyer hereunder, there
has been no material adverse change in its financial
condition or results of operations.
(v) The information set forth in the schedule to each
Confirmation is true and correct in all material respects.
(vi) Each Purchased Asset is an Eligible Asset-Backed Security.
13
(d) Upon discovery by the Seller of a breach of any of the
representations, warranties or covenants set forth herein or in Exhibit C
---------
hereto, Seller shall give prompt written notice thereof to the Buyer.
(e) Seller hereby indemnifies and holds Buyer harmless for any loss,
liability, expense (including attorney fees) or damage suffered or incurred by
Buyer arising from or in any way related to a breach by Seller of any
representation or warranty of Seller in this Master Repurchase Agreement.
(f) Seller shall take all action, as Buyer may reasonably request to
ensure that Buyer will have a first priority security interest in the Purchased
Assets, including among other things, delivering the Purchased Assets to Buyer
registered or, with properly endorsed instruments of transfer to be registered,
in Buyer's name or in the name of Buyer's nominee and filing such UCC financing
statements regarding the Purchased Assets as Buyer may reasonably request.
Notwithstanding the foregoing, the parties hereto agree and confirm that the
Transactions are intended to constitute a sale and purchase of assets, rather
than a loan
27. On and as of the date of this Master Repurchase Agreement and each
Purchase Date and until this Master Repurchase Agreement is no longer in force
with respect to any Transaction, Seller covenants that:
(a) it will not take any action which would directly or indirectly
cause the Buyer's interest in or the value of the Purchased Assets to be
adversely affected thereby; and
(b) it will not pledge, assign, convey, grant, bargain, sell, set
over, deliver or otherwise transfer any interest in the Purchased Assets to any
person not a party to this Master Repurchase Agreement nor will Seller create,
incur or permit to exist any lien, encumbrance or security interest in or on the
Purchased Assets other than that created hereunder without the prior express
written consent of Buyer.
(c) it shall have no beneficial, legal or equitable interest in the
Purchased Assets provided, however, nothing contained herein shall limit or
impair any contractual rights Seller may have under this Master Repurchase
Agreement. To the extent, if any, Seller has the right to control the servicing
of the Mortgage Assets under any Servicing Agreement or otherwise, Seller shall
and shall direct the applicable Servicer to follow all instructions of Buyer
with respect to the servicing of the Mortgage Assets and upon Buyer's request
Seller will make available and/or turn over and deliver to Buyer all Required
Documents in good and usable order wherever Buyer shall request such documents
be produced and/or delivered.
(d) Seller shall promptly furnish to the Buyer:
(i) Within 90 days after the last day of each fiscal year, a
balance sheet and statements of income and cash flows for
NFI for such year on a consolidated basis as of the end of
such year presented fairly in all material respects in
accordance with GAAP and accompanied by an unqualified
report of a firm of independent
14
certified public accountants of nationally recognized
standing and including therewith a copy of any management
letter from such certified public accountant; and
(ii) Within 45 days after the last day of each fiscal quarter,
(A) an unaudited balance sheet and statements of income and
cash flows for NFI for such quarter and (B) a certificate of
an officer of NFI, whose position is vice president or
higher, stating that such financial statements are presented
fairly in all material respects and in accordance with GAAP,
subject to year-end audit adjustments, and further
certifying that neither Seller nor any affiliate thereof is
in default under the terms and conditions of this Master
Repurchase Agreement or under any agreement evidencing or
securing any indebtedness of such entity.
(e) Each of Seller and each Guarantor shall maintain its corporate
existence and obtain and maintain all rights, privileges, licenses, approvals,
franchises, properties and assets necessary or desirable in the normal conduct
of its business, including but not limited to all approvals with respect to the
SEC or the Securities Commissions of the States of Kansas, Virginia and
Delaware, and comply with all contractual obligations and requirements of law
(including, without limitation, any requirements of law under or in connection
with ERISA, the Federal Consumer Credit Protection Act, the Federal Real Estate
Settlement Procedures Act, the Federal Equal Credit Opportunity Act, the Federal
Truth-in-Lending Act, and any regulations promulgated thereunder), except where
the failure to so comply is not likely to have a material adverse effect on the
business, operations, assets or financial or other condition of the Seller or on
the Purchased Assets.
(f) The Seller shall promptly furnish such additional financial and
other information including, without limitation, financial statements of Seller
and information regarding the Purchased Assets as the Buyer may from time to
time reasonably request.
(g) The books of record and account kept by Seller shall be maintained
in accordance with GAAP.
(h) The Seller shall promptly give written notice to the Buyer of:
(i) the occurrence of a default or event of default or state of
facts which with the giving of notice or passage of time, or
both, would constitute (x) an Event of Default under this
Master Repurchase Agreement or (y) an event of default or
default any Indenture, any Trust Agreement, any Servicing
Agreement or Related Facility, known to Seller and the
proposed method cure thereof;
(ii) any litigation or proceeding affecting the Seller or any
Guarantor or the Purchased Assets known to Seller or such
Guarantor which could have a material adverse effect on the
Purchased Assets, or
15
the business, operations, property or financial or other
condition of the Seller or such Guarantor;
(iii) a material adverse change known to the Seller or any
Guarantor in the business, operations, property or financial
or other condition of the Seller or such Guarantor;
(iv) any breach of a representation or warranty set out in
Exhibit C hereto; or
---------
(v) any default or event of default by Seller or any Guarantor
under the terms of any agreement evidencing or securing any
indebtedness of Seller or such Guarantor in excess of
$100,000 in the aggregate which has not been cured within
any applicable grace period.
(i) To the extent, if any, Seller has any obligation under any
Servicing Agreement, the Seller shall comply fully with the terms of each
Servicing Agreement.
(j) The Seller shall pay or otherwise satisfy at or before maturity
or before it comes delinquent or accelerated, as the case may be, all its
indebtedness (including taxes), except indebtedness being contested in good
faith by appropriate proceedings and for which provision is made to the
satisfaction of the Buyer for the payment thereof in the event the Seller is
found to be obligated to pay such indebtedness and which indebtedness is
thereupon promptly paid by the Seller.
(k) The Seller shall permit representatives of the Buyer to (A) visit
and inspect any of its properties and examine and make abstracts from any of its
books and records (including, without limitation, books and records relating to
the Purchased Assets) at any reasonable time and as often as may reasonably be
desired by the Buyer (but, prior to the occurrence of an Event of Default, only
upon not less than three (3) business days prior notice) and Seller shall pay
all out of pocket costs and expenses incurred by Buyer in the performance of
such inspection, and (B) upon prior notice to Seller, discuss the business,
operations, properties and financial and other condition of the Seller or any
Guarantor with officers and employees of the Seller and such Guarantor and (iv)
with their independent certified public accountants; provided, however, that the
-------- -------
results of any such visit, inspection, examination, discussion or audit, to the
extent such results are proprietary and non-public, shall be maintained by the
Buyer in confidentiality except as required by law or regulation or by any
governmental agency or regulatory body having authority over the Buyer, or to
the extent such information may be communicated to the legal counsel or auditors
of the Buyer.
(l) Mortgage Assets shall be originated and acquired by Seller only in
accordance with the Underwriting Standards including, any exceptions or
deviations from the usual and customary underwriting standards to the extent
such exceptions or deviations are made in the ordinary course of the applicable
Seller's affiliate's business.
16
(m) The Seller shall comply with each and every covenant set forth on
Exhibit B hereto.
---------
(n) The Seller shall pay Buyer a quarterly repo fee calculated on the
Maximum Purchase Amount at a rate of one percent (1%) per annum, such repo fee
to be paid in advance commencing on the date of execution hereof and on each
three (3) month anniversary of the date hereof. This repo fee shall be (i)
calculated for the three (3) months succeeding the scheduled date of its payment
and (ii) be deemed earned in full upon each such scheduled date of payment and
not be subject to rebate or proration for any reason.
(o) the Seller shall furnish or cause to be furnished to the Buyer
once each month copies of, in electronic readable format all reports received
with respect to any Purchased Asset
28. (a) The Purchase Price for Purchased Assets purchased by Buyer in
any Transaction hereunder shall be 50% of the Market Value of the Purchased
Assets on the Purchase Date unless a lesser amount shall be agreed to by Buyer
and Seller.
(b) The aggregate Purchase Price for all Purchased Assets owned by
Buyer on any date shall at no time exceed the Maximum Purchase Amount.
(c) This Master Repurchase Agreement shall continue in effect until
the expiration of the Term.
29. The parties irrevocably agree to submit to the personal jurisdiction of
the United States District Court for the Southern District of New York and that
the exclusive venue for all actions and proceedings, except a proceeding for
enforcement of a judgment, shall be in the United States District Court for the
Southern District of New York, the parties irrevocably waiving any objection
thereto. If, for any reason, federal jurisdiction is not available, the parties
irrevocably agree to submit to the personal jurisdiction of the Supreme Court of
the State of New York and that the exclusive venue of all actions and
proceedings, except a proceeding for the enforcement of a judgment, shall be in
the Supreme Court of the State of New York, New York County, the parties
irrevocably waiving any objection thereto. Notwithstanding the foregoing two
sentences, at Buyer's option exercisable at any time not later than thirty (30)
days after an action or proceeding has been commenced hereunder, the parties
agree that the matter may be submitted to binding arbitration in accordance with
the commercial rules of the American Arbitration Association then in effect in
the State of New York, and judgment upon any award rendered by the arbitrator
may be entered in any court having jurisdiction thereof within the City, County
and State of New York; provided, however, that the arbitrator shall not amend,
-------- -------
supplement, or reform in any regard this Master Repurchase Agreement or the
terms of any Confirmation, the rights or obligations of any party hereunder or
thereunder, or the enforceability of any of the terms hereof or thereof. Any
arbitration shall be conducted in the City, County, and State of New York before
a single arbitrator who shall be reasonably familiar with repurchase
transactions and the secondary mortgage market.
17
EACH PARTY HERETO IRREVOCABLY WAIVES ANY RIGHT THAT IT MAY HAVE TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS MASTER REPURCHASE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
30. UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE FOR PUNITIVE DAMAGES
IN ANY WAY RELATED TO THIS MASTER REPURCHASE AGREEMENT AND EXCEPT AS PROVIDED IN
PARAGRAPH 11(g) HEREIN, UNDER NO CIRCUMSTANCES WILL EITHER PARTY, BE LIABLE FOR
ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL LOSS OR DAMAGES SUFFERED OR
INCURRED BY THE OTHER, OR ANY OTHER PARTY, IN EACH CASE ARISING UNDER THIS
MASTER REPURCHASE AGREEMENT, REGARDLESS OF WHETHER SUCH DAMAGES COULD HAVE BEEN
FORESEEN OR PREVENTED.
31. Prior to entering into each Transaction under this Master Repurchase
Agreement, each of the following conditions shall occur:
(a) the Assets shall have been delivered to Buyer (or its designee);
(b) Seller and each Guarantor shall have disclosed information
satisfactory to Buyer with respect to the scheduled maturities and termination
provisions of all outstanding credit facilities and debt of Seller;
(c) a favorable opinion of counsel with respect to the corporate and
perfection matters, in form and substance acceptable to Buyer, with reliance
thereon permitted as to any person or entity that purchases in accordance with
and subject to the terms of this Master Repurchase Agreement, the Assets from
Buyer in a repurchase transaction shall have been delivered to Buyer;
(d) UCC-1 Financing Statements in form suitable for filing in the
offices of the Secretary of State of the State of Kansas and Delaware and such
other jurisdictions in which Seller may maintain a principal place of business
against Seller shall have been delivered to Buyer.
(e) Seller shall have delivered to Buyer a collateral assignment in
form and substance satisfactory to Buyer of Seller's rights, if any, under each
of the Servicing Agreements to which Seller is a party with respect to the
Mortgage Assets securing any Asset-Backed Security.
(f) Seller acknowledges that the obligations of Buyer hereunder or
otherwise are not the subject of any guaranty by, or recourse to, any direct or
indirect parent or other affiliate of Buyer.
(g) Buyer shall have received all appropriate Confirmations.
(h) Buyer shall have received each Eligible Asset-Backed Security and
the Required Documents.
18
(i) Buyer shall have received executed warrants from NFI in form and
substance satisfactory to Buyer.
(j) Buyer shall have received (i) an executed guaranty from each
Guarantor and (ii) a security agreement from each Guarantor (other than NFI
Holding Corporation) in form and substance satisfactory to Buyer and such
guaranty shall be in full force and effect.
(k) Buyer shall have received executed assignments of equities with
respect to any equity or right to receive money under the master repurchase
agreement dated as of the date hereof among, NFI, NMI, NCI and First Union
National Bank to secure Seller's obligations under this Master Repurchase
Agreement and each Related Facility, each of which shall be in form and
substance satisfactory to Buyer.
32. To induce Buyer to enter into this Master Repurchase Agreement and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the Seller agrees that:
(a) During the 364 days immediately following the date of this Master
Repurchase Agreement, the Seller and all of its affiliates or subsidiaries shall
give First Union the exclusive right to act as (i) sole placement agent or sole
underwriter (as the case may be), in connection with any and all public or
private offerings of structured home equity securities which the Seller or such
affiliates or subsidiaries may attempt, and/or (ii) syndication agent or
administrative agent with respect to any credit facility the Seller or such
affiliates or subsidiaries may enter into.
(b) During the 364 days immediately following the date of this Master
Repurchase Agreement the Seller shall and cause its affiliates or subsidiaries
to solicit a proposal from First Union to act as advisor to the Seller or any
such affiliates or subsidiaries in connection with any merger or acquisition
transaction involving the Seller or any such affiliates or subsidiaries.
(c) During the 364 days immediately following the date of this Master
Repurchase Agreement, the Seller shall and cause its affiliates or subsidiaries
to (i) solicit a proposal from First Union to act as lead underwriter or sole
placement agent on any and all public or private offerings of any securities
offered by the Seller and such affiliates and subsidiaries (other than
structured home equity securities), and (ii) if First Union is not appointed
lead underwriter or placement agent, as the case may be, the Seller shall and
cause its affiliates and subsidiaries to use its best efforts to have First
Union appointed co-underwriter or co-placement agent for such transaction.
Any offer by Seller or one of its affiliates and subsidiaries to First
Union to act in any capacity described above with respect to any transaction
shall be on terms (including fees and expenses) and conditions that are usual
and customary for investment or commercial banks acting in transactions of a
similar type.
19
33. This Addendum is executed and shall be construed as an agreement
supplemental to the Master Repurchase Agreement and, as provided in the Master
Repurchase Agreement, this Addendum forms a part thereof.
34. All of the covenants, stipulations, promises and agreements in this
Addendum shall bind the successors and assigns of the parties hereto, whether
expressed or not.
35. The Master Repurchase Agreement and this Addendum may be executed in
any number of counterparts, each of which shall be an original but such
counterparts shall together constitute but one and the same instrument. Any
signature delivered by a party via facsimile transfer shall be deemed to be an
original signature thereto.
36. This Addendum shall supersede any existing annex to or modification of
the Master Repurchase Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
20
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Addendum Agreement as of the date first written above.
NOVASTAR REMIC FINANCING FIRST UNION CORPORATION, as a Buyer
CORPORATION,
as a Seller
By:________________________________________ By:_________________________________________
Name:______________________________________ Name:_______________________________________
Title:_____________________________________ Title:______________________________________
CONSENTED AND AGREED TO:
NFI HOLDING CORPORATION, as
Guarantor
By:________________________________________
Name:______________________________________
Title:_____________________________________
NOVASTAR MORTGAGE, INC., as
Guarantor
By:________________________________________
Name:______________________________________
Title:_____________________________________
NOVASTAR FINANCIAL, INC., as
Guarantor
By:________________________________________
Name:______________________________________
Title:_____________________________________
21
EXHIBIT A
INTENTIONALLY OMITTED
22
Exhibit B
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER
1. Seller represents, warrants and covenants, as of the date hereof and as
of each day during the term of the Agreement, as follows:
(a) Due Organization and Qualification. Seller is a corporation duly
----------------------------------
organized, validly existing and in good standing under the laws of the state of
its incorporation Seller is duly qualified to do business, is in good standing
and has obtained all necessary licenses, permits, charters, registrations and
approvals (together, "approvals") necessary for the conduct of its business as
---------
currently conducted and the performance of its obligations under the Related
Documents, in each jurisdiction in which the failure to be so qualified or to
obtain such approvals would have a material adverse effect upon Seller, any
Purchased Asset or any Transaction.
(b) Power and Authority. Seller has all necessary power and authority
-------------------
to conduct its business as currently conducted, to execute, deliver and perform
its obligations under the Related Documents and to consummate the Transactions.
(c) Due Authorization. The execution, delivery and performance of
-----------------
this Master Repurchase Agreement by Seller have been duly authorized by all
necessary corporate action and do not require any additional approvals or
consents or other action by or any notice to or filing with any person.
(d) Noncontravention. None of the execution and delivery of all
----------------
documents by Seller, the consummation of the transactions contemplated thereby
or the satisfaction of the terms and conditions of the Related Documents:
(i) conflicts with or results in any breach or violation of any
provision of the articles or certificate of incorporation or by-laws
of Seller or any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award currently in effect having
applicability to Seller, or any of its properties, including
regulations issued by an administrative agency or other governmental
authority having supervisory powers over Seller;
(ii) constitutes a material default by Seller under or a
material breach of any provision of any loan agreement, mortgage,
indenture or other material agreement or instrument to which Seller or
any of its affiliates is a party or by which it or any of its
properties is or may be bound or affected which would have a material
and adverse effect on Seller's ability to perform its obligations
under the Related Documents; or
23
(iii) results in or requires the creation of any lien upon or in
respect of any of the assets of Seller except as otherwise expressly
contemplated by the Related Documents.
(e) Legal Proceedings. There is no action, proceeding or
-----------------
investigation by or before any court, governmental or administrative agency or
arbitrator against or affecting all or any of the Purchased Assets, Seller or
any of its affiliates, or any properties or rights of Seller or any of its
affiliates, pending or threatened, which, in any case, if decided adversely,
would have a material adverse effect with respect to the Seller's ability to
perform its obligations under the Related Documents.
(f) Valid and Binding Obligations. Each of the Related Documents to
-----------------------------
which Seller is a party when executed and delivered by Seller will constitute
the legal, valid and binding obligations of Seller, enforceable in accordance
with their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equitable principles.
(g) No Consents. No consent, license, approval or authorization from,
-----------
or registration, filing or declaration with, any regulatory body, administrative
agency, or other governmental instrumentality, nor any consent, approval, waiver
or notification of any creditor, lessor or other nongovernmental person, is
required in connection with the execution, delivery and performance by Seller of
this Master Repurchase Agreement or of any other Related Documents, except such
as have been obtained and are in full force and effect and those as to which the
failure to so obtain does not have a material adverse effect on Seller.
(h) Notice of Material Events. Seller shall promptly inform (unless,
-------------------------
in the case of clause (i) only, prohibited by applicable law) Buyer in writing
of the occurrence of and of the following:
(i) the submission of any claim or the initiation of any legal
process, litigation or administrative or judicial
investigation (A) against Seller pertaining to the Purchased
Assets in general, (B) with respect to a material portion of
the Purchased Assets or (C) in which a request has been made
for certification as a class action (or equivalent relief)
that would involve a material portion of the Purchased
Assets; or
(ii) any change in the location of Seller's principal office or
any change in the location of Seller's books and records; or
(iii) the occurrence of any Event of Default.
(i) Special Purpose Vehicle. Certificateholder (i) engages in no
-----------------------
business activity other than the ownership of the Purchased Assets and the entry
of Seller into this Master Repurchase Agreement, (ii) has no liabilities or
creditors other than liabilities to Buyer under this Master Repurchase Agreement
and (iii) is properly capitalized given the business conducted by it.
24
EXHIBIT C
REPRESENTATIONS AND WARRANTIES
RELATING TO ELIGIBLE ASSET-BACKED SECURITIES
(a) The applicable Eligible Asset-Backed Security is a binding and valid
obligation of the obligor thereon, in full force and effect and enforceable in
accordance with its terms except as the same may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles of
equity.
(b) The Eligible Asset-Backed Security is genuine in all respects as
appearing on its face and as represented in the books and records of the Seller
and all information set forth therein is true and correct.
(c) The Eligible Asset-Backed Security is free of any default of any party
thereto counterclaims, offsets and defenses and from any rescission,
cancellation or avoidance, whether by operation of law or otherwise.
(d) The Eligible Asset-Backed Security complies in all respects with and
was issued in accordance with all applicable laws and regulations governing the
same, and all notices, disclosures and other statements or information required
by law or regulation to be given, and any other act required by law or
regulation to be performed, in connection with such Asset have been given and
performed as required.
(e) At all times the Eligible Asset-Backed Security will be free and clear
of all liens.
25
EXHIBIT D
INTENTIONALLY OMITTED
26
EXHIBIT E
SERVICING AGREEMENTS
Servicing Agreement dated as of September 1, 1997, among NovaStar Mortgage,
Inc., NovaStar Home Equity Loan Trust Series 1997-1 and First Union National
Bank, as amended.
Servicing Agreement dated as of November 1, 1997, among NovaStar Mortgage, Inc.,
NovaStar Home Equity Loan Trust Series 1997-2 and First Union National Bank, as
amended.
Servicing Agreement dated as of April 1, 1998 by and among NovaStar Mortgage,
Inc., First Union National Bank and NovaStar Mortgage Funding Trust, Series
1998-1, as amended.
Servicing Agreement dated as of August 1, 1998 by and among NovaStar Mortgage,
Inc., First Union National Bank and NovaStar Mortgage Funding Trust, Series
1998-2, as amended.
Servicing Agreement dated as of January 1, 1999 by and among NovaStar Mortgage,
Inc., Fairbanks Capital Corp., First Union National Bank, The Chase Manhattan
Bank and NovaStar Mortgage Funding Trust, Series 1999-1.
27
EXHIBIT F
INTENTIONALLY OMITTED
28
EXHIBIT G
INDENTURES
Indenture dated as of September 1, 1997, between NovaStar Home Equity Loan
Trust, Series 1997-1 and First Union National Bank.
Indenture dated as of November 1, 1997, between NovaStar Home Equity Loan Trust,
Series 1997-2 and First Union National Bank.
Indenture dated as of April 1, 1998 by and among NovaStar Mortgage Funding
Trust, Series 1998-1 and First Union National Bank.
Indenture dated as of August 1, 1998 by and among NovaStar Mortgage Trust,
Series 1998-2 and First Union National Bank.
Indenture, dated as of January 1, 1999, by and among NovaStar Mortgage Funding
Trust, Series 1999-1, First Union National Bank, and The Chase Manhattan Bank.
29
EXHIBIT H
TRUST AGREEMENTS
Amended and Restated Trust Agreement dated as of September 1, 1997 between
NovaStar Assets Corp. and Wilmington Trust Company concerning the NovaStar Home
Equity Loan Asset-Backed Certificates Series 1997-1.
Amended and Restated Trust Agreement dated as of November 1, 1997 between
Xxxxxxx Xxxxx Mortgage Investors, Inc. and Wilmington Trust Company concerning
the NovaStar Home Equity Loan Asset-Backed Certificates Series 1997-2.
Amended and Restated Trust Agreement dated as of April 1, 1998 by and among
NovaStar Mortgage Funding Corporation and Wilmington Trust Company concerning
the NovaStar Mortgage Funding Trust, Series 1998-1, Home Equity Loan Asset-
Backed Bonds.
Amended and Restated Trust Agreement dated as of August 19, 1998 by and among
NovaStar Mortgage Funding Corporation and Wilmington Trust Company concerning
the NovaStar Mortgage Funding Trust, Series 1998-2, Home Equity Loan Asset-
Backed Bonds.
Amended and Restated Trust Agreement dated January 1, 1999 by and among NovaStar
Mortgage Funding Corporation II, Residential Asset Funding Corporation and
Wilmington Trust Company concerning the NovaStar Mortgage Funding Trust, Series
1999-1, Home Equity Loan Asset-Backed Bonds.
30
