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EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
NOVASTAR FINANCIAL, INC.
Dated December 9, 1996
REGISTRATION RIGHTS AGREEMENT
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(NovaStar Financial, Inc.)
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of December 9, 1996, by and between NOVASTAR FINANCIAL, INC.,
a Maryland corporation (the "Company"), and XXXXXX, XXXXXXXX & COMPANY,
INCORPORATED (the "Placement Agent"), as a matter of convenience for the Holders
of the Registrable Securities (each as defined herein).
In consideration of the mutual agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto, intending to be legally bound hereby,
agree as follows:
SECTION 1
DEFINITIONS
1.1 As used in this Agreement, the following capitalized terms shall
have the following meanings:
"Affiliate" of a specified Person shall mean any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
when used with respect to any Person, means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Business Model" shall mean the financial projections and related
assumptions contained in a memorandum furnished upon request to prospective
purchasers in the placement.
"Common Stock" shall mean the Company's Common Stock, par value $0.01
per share.
"Company" shall mean NovaStar Financial, Inc., a Maryland
corporation, and any successor thereto.
"Document Supplement" shall mean the package furnished to each
purchaser of Units in the Placement containing the Articles of Incorporation of
the Company, including the Articles Supplementary for the Preferred Stock, the
form of Warrant Agreement between the Company, as issuer, and the Warrant Agent,
dated as of the date of this Agreement, the form of Warrant, the form of
Purchase Terms Agreement and the form of this Agreement.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Five Percent Purchaser" shall mean a Purchaser of 5% or more of the
Units sold by the Company in the Placement.
"Founders" shall mean W. Xxxxx Xxxxxxxx and Xxxxx X. Xxxxxxx.
"Holders" shall have the meaning provided in Section 2.2 hereof.
"Initial Purchaser" shall mean a purchaser of Units directly from the
Company including the Founders.
"NASD" means National Association of Securities Dealers, Inc.
"NASDAQ/NMS" shall mean the Nasdaq National Market.
"Person" shall mean an individual, trustee, corporation, partnership,
limited liability company, joint stock company, trust, unincorporated
association, union, business association, firm or other entity.
"Piggyback Notice" shall have the meaning provided in Section 4
hereof.
"Piggyback Underwritten Offering" shall have the meaning provided in
Section 4 hereof.
"Placement" shall mean the placement of the Units pursuant to the
Private Placement Memorandum and the Purchase Terms Agreement.
"Placement Agent" shall mean Xxxxxx, Xxxxxxxx & Company, Incorporated.
"Preferred Stock" shall mean the Company's Class A Convertible
Preferred Stock, par value $0.01 per share.
"Private Placement Memorandum" shall mean the Private Placement
Memorandum, dated October 15, 1996, the Business Model, the Document Supplement
and all other amendments and supplements thereto, pursuant to which the Company
is offering for sale up to 3,333,333 Units.
"Proceeding" shall mean an action, claim, suit or proceeding
(including, without limitation, an investigation or partial proceeding, such
as a deposition), whether commenced or threatened.
"Prospectus" shall mean the Prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information
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previously omitted from a prospectus filed as part of an effective Registration
Statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
"Purchase Terms Agreement" means the Purchase Terms Agreement, dated
as of December 6, 1996, by and between the Company and the Placement Agent.
"Qualified Public Offering" shall mean the initial sale to the public
of the Company's Common Stock pursuant to a registration statement on Form S-11
or any similar form which raises in the aggregate at least $20 million of gross
proceeds for the Company at a minimum price of $15 per share or such lesser
amount of proceeds and/or price per share as may be approved by the holders of
two-thirds of the voting power of the Preferred Stock.
"Registrable Common Stock" shall mean Common Stock constituting
Registrable Securities or Common Stock issued upon exercise or conversion of
Registrable Securities.
"Registrable Securities" shall mean (i) the Preferred Stock purchased
by the Initial Purchasers as the components of the Units, (ii) the Warrants and
the Common Stock issuable pursuant to the exercise of the Warrants, and (iii)
the Common Stock issuable upon conversion of shares of the Preferred Stock
purchased as part of the Units; provided, however, that following a Qualified
Public Offering the term "Registrable Securities" shall apply only to the
securities described in subparagraphs (ii) and (iii).
"Registration Statement" shall mean any registration statement of the
Company that covers any of the Registrable Securities pursuant to the provisions
of this Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference or deemed to be incorporated by reference
in such Registration Statement.
"Rule 144" shall mean Rule 144 under the Securities Act, as such rule
may be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated by the SEC thereunder.
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"Shelf Registration Statement" shall have the meaning provided in
Section 3.1 hereof.
"Supplemental Shelf Registration Statement" shall have the meaning
provided in Section 3.3 hereof.
"Underwriter" shall mean any underwriter, placement agent, selling
broker, dealer manager, qualified independent underwriter or similar securities
industry professional.
"Underwritten Registration or Underwritten Offering" shall mean a
registration in which securities of the Company are sold to one or more
Underwriters for reoffering to the public.
"Units" shall mean the 3,333,333 units consisting of one share of
Preferred Stock and one Warrant to be sold in the Placement and the Units being
purchased by the Founders in exchange for promissory notes as described in the
Private Placement Memorandum.
"Warrants" shall mean the warrants issued pursuant to the Warrant
Agreement dated as of the date of this Agreement between the Company as issuer,
and the Holders of the Warrants acting through the Company, as the initial
warrant agent.
SECTION 2
SECURITIES SUBJECT TO THIS AGREEMENT
2.1 The securities entitled to the benefits of this Agreement are the
Registrable Securities.
2.2 A Person is deemed to be a Holder of Registrable Securities
(each, a "Holder") whenever such Person owns Registrable Securities, whether or
not such Person was an Initial Purchaser.
SECTION 3
SHELF REGISTRATION; DEMAND REGISTRATION
3.1 The Company shall cause to be filed with the SEC within six (6)
months following the Qualified Public Offering (or the end of the twentieth
(20th) month after the last sale of Units in the Offering, if the Qualified
Public Offering has not occurred within such 20-month period), a shelf
Registration Statement pursuant to Rule 415 under the Securities Act (the "Shelf
Registration Statement") on Form S-11 (or other appropriate form, e.g., Form S-3
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after having established eligibility therefor) to cover sales of the Registrable
Securities. In connection with the Shelf Registration Statement, the Company
shall also register the offer and sale of the Common Stock issuable upon
exercise of the Warrants as a primary registration. The Company shall use its
best
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efforts to cause such Shelf Registration Statement to be declared effective by
the SEC as soon as practicable thereafter. The Company shall use its best
efforts to keep such Shelf Registration Statement continuously effective until
the earlier to occur of three (3) years following the last sale of Units in the
Offering or such time as, in the written opinion of counsel to the Company, such
registration is not required for the unrestricted resale of Registrable
Securities entitled to registration rights under this Agreement. Notwithstanding
the foregoing, with respect to the Common Stock issuable upon exercise of the
Warrants, the Company shall use its best efforts to keep such Registration
Statement continuously effective until the earlier to occur of three (3) years
following the date the Warrants may first be exercised or such time as, in the
written opinion of counsel to the Company, such registration is not required for
the unrestricted resale of such securities. The Company further agrees to use
its best efforts to prevent the happening of any event that would cause the
Shelf Registration Statement to contain a material misstatement or omission or
to be not effective and usable for resale of the Registrable Securities during
the period that such Shelf Registration Statement is required to be effective
and usable.
Upon the occurrence of any event that would cause the Shelf
Registration Statement (i) to contain a material misstatement or omission,
or (ii) to be not effective and usable for resale of Registrable Securities
during the period that such Shelf Registration Statement is required to be
effective and usable, the Company shall as promptly as reasonably practicable
file an amendment to the Shelf Registration Statement, in the case of clause (i)
immediately above, correcting any such misstatement or omission, and in the case
of either clause (i) or (ii) immediately above, use its best efforts to cause
such amendment to be declared effective and such Shelf Registration Statement to
become usable as soon as reasonably practicable thereafter.
3.2 If the Holders of a majority of the Registrable Securities to be
registered for resale in the Shelf Registration Statement, or any Five Percent
Purchasers so elect, an offering of Registrable Securities pursuant to the Shelf
Registration Statement may be effected in the form of an Underwritten Offering.
Upon the receipt of a notice of election by a majority of the Registrable
Securities or any Five Percent Holder to effect an Underwritten Offering, the
Company will notify in writing all Holders whose names are not included in such
notice and such non-electing Holders may, within five (5) business days of
receipt of such notice, elect to be included with, and treated as, an electing
Holder. If the managing Underwriter advises the Company and the Holders of such
Registrable Securities and additional securities in writing that in their
opinion the amount of Registrable Securities and additional securities proposed
to be sold in such offering exceeds the amount of Registrable Securities and
additional securities which can be sold in such offering, there shall be
included in such Underwritten Offering the amount of such Registrable Securities
which in the opinion of such Underwriters can be sold with such additional
securities, and such amount or number of shares of such Registrable Securities
and additional securities shall be allocated pro rata among the Holders
electing to participate in such Underwritten Offering. The Holders of the
Registrable Securities to be registered shall pay all
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underwriting discounts and commissions of such Underwriters with respect to the
sales of such Registrable Securities. If requested by any Five Percent Purchaser
selling its shares pursuant to an Underwritten Offering as provided in this
Section 3.2, the Company's management shall cooperate in a commercially
reasonable manner in roadshow presentations to assist such Five Percent
Purchaser in selling its shares.
3.3 In addition to the registration rights provided in Section 3.1,
each Five Percent Purchaser shall also have two (2) demand registration rights
following the expiration of the Shelf Registration Statement to cause all or a
portion of the Registrable Securities held by such Five Percent Purchaser to be
registered under the Securities Act (the "Supplemental Shelf Registration
Statement") on Form S-11 (or other appropriate form) to cover sales of
Registrable Securities held by such Five Percent Purchaser, unless, in the
written opinion of counsel to the Company (which opinion is reasonably
acceptable to such Five Percent Purchaser), such registration is not necessary
for such Five Percent Purchaser to sell its shares in the manner contemplated in
compliance with applicable securities laws. The Supplemental Shelf Registration
Statement shall be governed by the provisions of Section 3.1.
3.4 No Holder of Registrable Securities may include any of its
Registrable Securities in any Shelf Registration Statement or Underwritten
Offering pursuant to this Agreement unless such Holder furnishes to the Company
in writing, within ten (10) business days after receipt of a written request
therefor, such information as the Company may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein.
SECTION 4
PIGGYBACK REGISTRATION
4.1 Subject to Section 4.2, if the Company proposes to file a
Registration Statement under the Securities Act with respect to a public
offering of Common Stock during the period in which a Holder of Registrable
Securities has registration rights granted pursuant to this Agreement, including
the Qualified Public Offering (other than a Registration Statement (i) on Form
X-0, Xxxx X-0 or any successor forms thereto or (ii) filed solely in connection
with an exchange offer or any employee benefit or dividend reinvestment plan),
whether or not for its own account, then the Company shall give written notice
of such proposed filing to the Five Percent Purchasers who still own Registrable
Securities at least fifteen (15) business days before the anticipated filing
date (the "Piggyback Notice"). The Piggyback Notice shall offer such Five
Percent Purchasers the opportunity to include in such Offering such amount of
Registrable Securities as each such Five Percent Purchaser may request (a
"Piggyback Offering"). Subject to Sections 4.2 and 6.2 hereof, the Company shall
include in each such Piggyback Offering all Registrable Securities held by such
Five Percent Purchasers with respect to which the Company has received written
requests for inclusion therein within ten (10) days after written notice has
been given to the Five Percent Purchasers (which written request shall specify
the intended method of distribution). The Five
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Percent Purchases shall be permitted to withdraw all or part of the Registrable
Securities from a Piggyback Offering at any time prior to the effective date of
such Piggyback Offering. The Five Percent Purchasers shall pay all underwriting
discounts and commissions of such Underwriters with respect to the sales of any
of their Registrable Securities.
4.2 If, in connection with an Underwritten Offering, the managing
Underwriter or Underwriters of an Underwritten Offering have informed the
Company in writing that it is their opinion that the total amount of Common
Stock that such Five Percent Purchasers, the Company and any other Persons
having rights to participate in such Underwritten Offering, intend to include in
such Underwritten Offering is such as to materially and adversely affect the
success of such Underwritten Offering, then the amount of Common Stock to be
offered in the Underwritten Offering shall be the amount recommended by such
managing Underwriter or Underwriters and the Common Stock to be included in such
Underwritten Offering shall be included in the following order of priority: (i)
for the account of the Company; provided however, for the first two Underwritten
Offerings of the Company any amounts in excess of Fifty Million Dollars
($50,000,000) in gross proceeds shall be allocated between the Five Percent
Purchasers electing to participate in such Piggyback Offering pro rata according
to the number of securities proposed to be sold, (ii) for the account of the
Five Percent Purchasers, allocated pro rata among the Five Percent Purchasers
electing to participate in such Piggyback Offering, pro rata according to the
number of securities proposed to be sold, and (iii) for the account of the
remaining Holders, allocated pro rata among such Holders electing to participate
in such Piggyback Offering pro rata according to the number of securities
proposed to be sold.
4.3 In addition to the Piggyback Registration Rights of the Holders
of Registrable Securities, the Founders receiving Common Stock in the Company
shall have similar registration rights pursuant to a separate agreement as
provided in this Section 4, as well as the right to include all or portion of
their Common Stock in any demand registration of any Holder of Registrable
Securities as provided in Section 3.3; provided, however, (i) any reduction in
the number of securities being sold pursuant to the recommendation of any
managing Underwriter as provided in Section 3.2 or 4.2 shall first be applied to
the Founders, and (ii) the rights and obligations of the Holders of Registrable
Securities shall otherwise apply to the Founders, including, without limitation,
the hold-back provisions of Section 5.
SECTION 5
HOLD-BACK AGREEMENTS
5.1 Each Holder of Registrable Securities agrees, in connection with
the Company's Qualified Public Offering and any other underwritten public
offering during the period in which such Holder of Registrable Securities has
registration rights granted pursuant to this Agreement, if requested (pursuant
to a timely written notice) by the Company or the managing Underwriter or
Underwriters in an Underwritten Offering,
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not to effect any public sale or distribution of any of its Registrable
Securities, including a sale pursuant to Rule 144 (expect as part of such
Underwritten Offering), during the period beginning five (5) days prior to, and
ending ninety (90) days after, the closing date of such underwritten Public
Offering made by the Company, unless a shorter time period is agreed to by the
managing Underwriter or Underwriters. The foregoing provisions shall not apply
to any Holder of Registrable Securities if such Holder is prevented by
applicable statute or regulation from entering into any such agreement;
provided, however, that any such Holder shall undertake upon written request to
participate in any such Underwritten Offering not to effect any public sale or
distribution of the class of securities covered by such Registration Statement
(except as part of such Underwritten Offering) during such period unless it has
provided forty-five (45) days' prior written notice of such sale or distribution
to the managing Underwriter or Underwriters.
5.2 The Company agrees that without the written consent of the
managing Underwriter or Underwriters in an Underwritten Offering of
Registrable Securities as described in Sections 3 or 4 hereof, it will not
effect any public or private sale or distribution of its equity securities,
including a sale pursuant to Regulation D under the Securities Act, during the
five (5) day period prior to, and the ninety (90) day period beginning on, the
closing date of each such Underwritten Offering, unless a shorter time period is
agreed upon by the managing Underwriter or Underwriters (except (i) as part of
such Underwritten Offering, (ii) pursuant to registrations on Form S-4 or Form
S-8 or any successor form to such forms, pursuant to any dividend reinvestment
and optional purchase plan of the Company or pursuant to any unregistered
offering to the Company's employees or directors, or to employees of its
subsidiaries, pursuant to any employee benefit plan (as defined in Rule 405
under the Securities Act), (iii) in connection with an exchange offer, or (iv)
in connection with the acquisition of assets by the Company or its
subsidiaries).
SECTION 6
REGISTRATION PROCEDURES
6.1 In connection with the Company's registration obligations
pursuant to Sections 3 or 4 of this Agreement, the Company shall effect such
registration(s) to permit the sale of such Registrable Securities in accordance
with the intended method or methods of disposition thereof, and pursuant thereto
the Company shall as expeditiously as possible:
(a) Prepare and file with the SEC, as soon as practicable, a
Registration Statement or Registration Statements on such form which shall be
available for the sale of the Registrable Securities by the Holders thereof in
accordance with the intended method or methods of distribution thereof, and use
its best efforts to cause such Registration Statement to become effective and to
remain effective as provided herein; provided, however, that before filing a
Registration Statement or Prospectus or any amendments or supplements thereto
(including documents that would be
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incorporated or deemed to be incorporated therein by reference), the Company
shall notify the Holders of the Registrable Securities covered by such
Registration Statement, their counsel and the managing Underwriters, if any, of
its intention to file such documents, and upon written request shall furnish to
such parties so requesting copies of all such documents proposed to be filed,
which documents will be subject to the review of such Holders, their counsel and
such Underwriters, if any; provided, further, that the Company shall not be
required to deliver to such Holders a copy of any such document that has not
been materially changed from a copy of such document that was previously
delivered to such Holders.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration Statement continuously effective during the period
provided in this Agreement with respect to the disposition of all securities
covered by such Registration Statement, and cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act.
(c) Notify the selling Holders of the Registrable Securities,
their counsel and the managing Underwriters, if any, promptly, and (if requested
in writing by any such Person), confirm such notice in writing: (i) when a
Registration Statement or any amendment thereto has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the SEC or any other Federal
or state governmental authority for amendments or supplements to a Registration
Statement or related Prospectus or for additional information (provided, that
the Company shall not be required to notify the Holders or their counsel of all
"comment letters" received by the Company from the SEC or to deliver copies of
such comment letters or the Company's responses thereto to the Holders or their
counsel unless such letters request information from or about the Holders),
(iii) of the issuance by the SEC of any stop order suspending the effectiveness
of a Registration Statement or the initiation of any proceedings for that
purpose, (iv) if at any time the representations and warranties of the Company
contained in any agreement (including any underwriting agreement) contemplated
by Section 6.1(n) below cease to be true and correct, (v) of the receipt by the
Company of any modification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any proceeding for such
purpose, and (vi) of the happening of any event that makes any statement made in
such Registration Statement or related Prospectus or any document incorporated
or deemed to be incorporated therein by reference untrue in any material respect
or that requires the making of any changes to such Registration Statement,
Prospectus or documents so that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, not misleading, and that in the case of the Prospectus, it will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make
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the statements therein, in light of the circumstances under which they were
made, not misleading.
(d) Use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement, or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction.
(e) If requested by the managing Underwriters, if any, or the
Holders of a majority of the then outstanding Registrable Securities being sold
in connection with an Underwritten Offering, promptly include in a Prospectus
supplement or post-effective amendment such information as the managing
Underwriters, if any, and such Holders may reasonably request in order to permit
the intended method of distribution of such securities and make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received such request; provided, however,
that the Company shall not be required to take any actions under this Section
6.1(e) that are not, in the opinion of counsel for the Company, in compliance
with applicable law.
(f) Furnish to a selling Holder of Registrable Securities, their
counsel and each managing Underwriter, if any, without charge, at least one
conformed copy of the Registration Statement and each post-effective amendment
thereto, including financial statements (but excluding schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all
exhibits, unless requested in writing by such Holder, counsel or Underwriter).
(g) Deliver to each selling Holder, their counsel, and the
Underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request in connection with the
distribution of the Registrable Securities; and the Company hereby consents to
the use of such Prospectus and each amendment or supplement thereto by each of
the selling Holders of Registrable Securities and the Underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any such amendment or supplement thereto.
(h) Use its best efforts to register or qualify, or obtain an
exemption therefrom (or cooperate with selling Holders of Registrable
Securities, the Underwriters, if any, and their respective counsel in connection
with the registration or qualification (or exemption from such registration or
qualification)) of such Registrable Securities for offer and sale under the
securities or "Blue Sky" laws of such jurisdictions within the United States as
any seller (or Underwriter) reasonably requests in writing and to keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective; provided,
however, that the Company will not be required to (1) qualify generally to do
business in
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any jurisdiction where it is not then so qualified, or (2) take any action that
would subject it to general service of process or to taxation in any
jurisdiction where it is not then so subject.
(i) Cooperate with the selling Holders of Registrable Securities
and the managing Underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold, which
certificates shall be in a form eligible for deposit with The Depository Trust
Company; and enable such Registrable Securities to be in such denominations and
registered in such names as the managing Underwriters, if any, or Holders may
request in writing at least two (2) business days prior to any sale of
Registrable Securities in a firm commitment public offering, or in any other
such sale within ten (10) business days.
(j) Use its best efforts to cause the Registrable Securities
covered by such Registration Statement to be registered with or approved by such
other governmental agencies or authorities within the United States, except as
may be required solely as a consequence of the nature of such selling Holder's
business, in which case the Company will cooperate with the filing of such
Registration Statement and the granting of such approvals as may be necessary to
enable the seller or sellers thereof or the Underwriters, if any, to consummate
the deposition of such Registrable Securities.
(k) Upon the occurrence of any event contemplated by Section
6.1(c)(vi) above, prepare a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Securities being sold thereunder, such Prospectus will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(l) Prior to the effective date of the Registration Statement
relating to the Registrable Securities, provide a CUSIP number for the
Registrable Securities.
(m) Use its best efforts to cause all Registrable Securities
covered by such Registration Statement to be authorized to be quoted on the
NASDAQ/NMS or listed on a national securities exchange.
(n) Enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in Underwritten
Offerings) and take all such other actions reasonably requested by the Holders
of a majority of the Registrable Securities being sold in connection
therewith (including those reasonably requested by the managing Underwriters, if
any) in order to expedite or facilitate the disposition of such Registrable
Securities, and in such connection, whether or not an
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underwriting agreement is entered into and whether or not the registration is an
Underwritten Offering, (i) make such representations and warranties to the
Holders of such Registrable Securities and the Underwriters, if any, with
respect to the business of the Company and its subsidiaries, and the
Registration Statement, Prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, in each case, in form, substance
and scope as are customarily made by issuers to Underwriters in Underwritten
Offerings, and, if true, confirm the same if and when requested in writing to do
so, (ii) use its reasonable efforts to obtain opinions of counsel to the Company
and updates thereof (wich counsel and opinions [in form, scope and substance]
shall be reasonably satisfactory to the managing Underwriters, if any, and
counsel to the Holders of Registrable Securities being sold), addressed to each
selling Holder and each of the Underwriters, if any, covering the matters
customarily covered in opinions requested in Underwritten Offerings and such
other matters as may be reasonably requested in writing by such counsel and
Underwriters, (iii) use its reasonable efforts to obtain "cold comfort" letters
and updates thereof from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public accountants
of any subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each selling Holder
(unless such accountants shall be prohibited from so addressing such letters by
applicable standards of the accounting profession) and each of the Underwriters,
if any, such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with Underwritten
Offerings, (iv) if an underwriting agreement is entered into, the same shall
contain indemnification provisions and procedures substantially to the effect
set forth in Section 8 hereof with respect to all parties to be indemnified
pursuant to Section 8 and (v) deliver such additional documents and certificates
as may be reasonably requested by the Holders of a majority of the Registrable
Securities being sold, their counsel and the managing Underwriters, if any, to
evidence the continued validity of the representations and warranties made
pursuant to Section 6.1(n)(i) above and to evidence compliance with any
customary conditions contained in the underwriting agreement or other agreement
entered into by the Company. The above shall be done at each closing under such
underwriting or similar agreement, or as and to the extent required thereunder.
(o) Make available for inspection by a representative of the
Holders of registrable Securities being sold, any Underwriter participating in
any such disposition of Registrable Securities, if any, and any attorney or
accountant retained by such selling Holder or Underwriter, at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the officers, directors and employees of the Company and
its subsidiaries to supply all information reasonably requested by any such
representative, Underwriter, attorney or accountant in connection with such
Registration Statement; provided, however, that any information that is
designated by the Company in writing as confidential at the time of delivery of
such information shall be kept confidential by such Persons unless (i)
disclosure of such
12
information is required by court or administrative order, (ii) disclosure of
such information, in the opinion of counsel to such Person, is required by law,
or (iii) such information becomes generally available to the public other than
as a result of a disclosure or failure to safeguard by such Person. Without
limiting the foregoing, no such information shall be used by such Person as the
basis for any market transactions in securities of the Company or its
subsidiaries in violation of law.
(p) Comply with all applicable rules and regulations of the SEC
and make generally available to its security Holders earning statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder, or any similar rule promulgated under the Securities Act, no later
than forty-five (45) days after the end of any twelve (12) month period (or
ninety (90) days after the end of any twelve (12) month period if such period is
a fiscal year) (i) commencing at the end of any fiscal quarter in which
Registrable Securities are sold to Underwriters in a firm commitment or best
efforts Underwritten Offering, and (ii) if not sold Underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the Company
after the effective date of a Registration Statement, which statements shall
cover such twelve (12) month periods.
(q) Make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Shelf Registration Statement at the
earliest possible moment.
(r) Cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
Underwriter (including and "qualified independent Underwriter" that is required
to be retained in accordance with the rules and regulations of the NASD).
6.2 The Company may require each seller of Registrable Securities as
to which any registration is being effected to furnish to the Company such
information regarding such seller and the distribution of such Registrable
Securities as the Company may, from time to time, reasonably request in writing
and the Company may exclude from such registration the Registrable Securities of
any seller who unreasonably fails to furnish such information within a
reasonable time after receiving such request.
6.3 Each Holder agrees by acquisition of such Registrable Securities
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in any of Sections 6.1(c)(ii), 6.1(c)(iii), 6.1(c)(v) or
6.1(c)(vi) hereof, such Holder will forthwith discontinue disposition of such
Registrable Securities covered by such Registration Statement or Prospectus
until such Holder's receipt of the copies of the supplemental or amended
Prospectus contemplated by Section 6.1(k) hereof, or until such Holder is
advised in writing by the Company that the use of the applicable Prospectus may
be resumed and such Holder has received copies of any additional or supplemental
filings that are incorporated or deemed to be incorporated by reference in such
Prospectus.
SECTION 7
REGISTRATION EXPENSES
7.1 All expenses incident to the Company's performance of or
compliance with this Agreement will be borne by the Company, regardless to
whether a Registration Statement filed pursuant to Sections 3 or 4 hereof
becomes effective, including without limitation:
(a) all registration and filing fees and expenses associated
therewith;
(b) fees and expenses of compliance with federal securities or
state Blue Sky laws (including fees and disbursements of counsel for the
Underwriters or selling Holders in connection with Blue Sky qualifications of
the Registrable Securities pursuant to Section 6.1(h) hereof);
(c) expenses of printing (including, without limitation,
expenses of printing or engraving certificates for the Registrable Securities in
a form eligible for deposit with The Depositary Trust Company and of printing
Prospectuses), messenger and delivery services and telephone;
(d) reasonable fees and disbursements of counsel for the Company
and for the Holders of Registrable Securities (subject to the provisions of
Section 7.2 hereof);
(e) fees and disbursements of all independent certified public
accountants of the Company (including the expenses of any special audit and
"cold comfort" letters required by or incident to such performance);
(f) fees and expenses associated with any NASD filing required
to be made in connection with a Registration Statement, including, if
applicable, the fees and expenses of any "qualified independent Underwriter"
(and its counsel) that is required to be retained in accordance with the rules
and regulations of the NASD; and
(g) fees and expenses of listing the Registrable Securities on
any securities exchange or quotation system in accordance with Section 6.1(m)
hereof. All such expenses being herein called "Registration Expenses."
The Company will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit, rating
agency fees and the fees and expenses of any Person, including special experts,
retained by the Company. The Holders of Registrable Securities shall bear the
expense of any broker's commission or Underwriters' discount or commission.
4
7.2 In connection with the Registration Statement, the Company will
reimburse the Holders of Registrable Securities being registered pursuant to
such Registration Statement for the fees and disbursements of not more than one
counsel chosen by a majority of the Holders of the Registrable Securities to be
included in the Registration Statement; provided, however, that in the case of
an Underwritten Offering which includes shares of Common Stock, such counsel
shall be chosen by the Holders of a majority of the shares of Commons Stock to
be included in such Underwritten Offering. Notwithstanding the provisions of
this Section 7, each Holder shall pay all registration expenses to the extent
required by applicable law.
SECTION 8
INDEMNIFICATION
8.1 The Company agrees to indemnify and hold harmless each Holder
(each such Holder an "Indemnified Holder") and in the case of an Underwritten
Offering, each Underwriter participating in the distribution (each such
Underwriter an "Indemnified Underwriter") and each person that controls each
Indemnification Holder or Indemnified Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, and agents,
employees, officers and directors of such Indemnified Holder or Indemnified
Underwriter or of any such controlling person of any Indemnified Holder or
Indemnified Underwriter from and against any and all losses, claims, damages,
judgments, liabilities and expenses (including the reasonable fees and expenses
of counsel and other expenses in connection with investigating, defending or
settling any such action or claim) as they are incurred arising out of or based
upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary Prospectus or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except (i) the Company shall not be liable to any Indemnified Holder or
Indemnified Underwriter in any such case insofar as such losses, claims,
damages, judgments, liabilities or expenses arise out of, or are based upon, any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to such Indemnified Holder or Indemnified Underwriter
furnished in writing by such Indemnified Holder or Indemnified Underwriter to
the Company expressly for use therein, and (ii) the Company shall not be liable
to any Indemnified Holder or Indemnifed Underwriter in this Section 8.1 with
respect to any preliminary Prospectus to the extent that any such loss, claim,
damage, judgment, liability or expense results sole from the fact that any
Indemnified Holder or Indemnified Underwriter sold Registrable Securities to a
person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus as then amended or
supplemented provided the Company previously furnished sufficient copies thereof
to the Indemnified Holder or Indemnified Underwriter.
15
8.2 If any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted against any
Indemnified Holder or Indemnified Underwriter with respect to which indemnity
may be sought against the Company pursuant to Section 8.1, such Indemnified
Holder or Indemnified Underwriter shall promptly notify the Company in writing,
and the Company shall have the right to assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Holder or
Indemnified Underwriter and the Company shall be responsible for the payment of
all fees and expenses; provided, however, that the omission so to notify the
Company shall not relieve the Company from any liability that it may have to any
Indemnified Holder or Indemnified Underwriter (except to the extent that the
Company is materially prejudiced or otherwise forfeits substantive rights or
defenses by reason of such failure). An Indemnified Holder or Indemnified
Underwriter shall have the right to employ separate counsel in any such action
or proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Holder or
Indemnified Underwriter unless (i) the Company agrees in writing to pay such
fees and expenses, (ii) the Company has failed promptly to assume the defense
and employ counsel satisfactory to the Indemnified Holder or Indemnified
Underwriter or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both the Indemnified Holder or
Indemnified Underwriter and the Company and such Indemnified Holder or
Indemnified Underwriter shall have been advised in writing by its counsel that
representation of them and the Company by the same counsel would be
inappropriate under applicable standards of professional conduct (whether or not
such representation has been proposed) due to actual or potential differing
interests between them (in which case the Company shall not have the right to
assume the defense of such action on behalf of such Indemnified Holder or
Indemnified Underwriter). It is understood that the Company shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) at any time
for such Indemnified Holders or Indemnified Underwriters, which firm shall be
designated in writing by the majority of the Holders of the Registrable
Securities on behalf of the Holders of all of the Registrable Securities, and
that all such fees and expenses shall be reimbursed as they are incurred. The
Company shall not be liable for any settlement of any such action effected
without the written consent of the Company (which shall not be unreasonably
withheld), but if settled with the written consent of the Company, or if there
is a final judgment with respect thereto, the Company agrees to indemnify and
hold harmless each Indemnified Holder or Indemnified Underwriter from and
against any loss or liability by reason of such settlement or judgment. The
Company shall not, without the prior written consent of each Indemnified Holder
or Indemnified Underwriter affected thereby, effect any settlement of any
pending or threatened proceeding in which such Indemnified Holder or Indemnified
Underwriter has sought indemnity hereunder, unless such settlement includes an
unconditional release of such Indemnified Holder or Indemnified Underwriter from
all liability arising out of such action, claim , litigation or proceeding.
16
8.3 Each Holder and Underwriter agrees to indemnify and hold harmless
the Company, its directors, its officers who sign the Registration Statement
and any person controlling the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively, the "Company
Indemnified Parties") to the same extent as the foregoing indemnity from the
Company to any Indemnified Holder or Indemnified Underwriter, but only with
respect to information relating to such Holder or Underwriter furnished to the
Company in writing by each Holder or Underwriter, respectively, expressly for
use in the Registration Statement, Prospectus (or any amendment of supplement
thereto), or any preliminary Prospectus, and only to the extent of the net
proceeds received by the Holder and Underwriter, respectively. In case any
action shall be brought against any Company Indemnified Party based on the
Registration Statement, Prospectus (or any amendment of supplement thereto), or
any preliminary Prospectus and in respect of which indemnification may be
sought against each Holder and Underwriter pursuant to this Section 8.3, each
Holder and Underwriter shall have the rights and duties given to the Company by
Section 8.1 (except that if the Company shall have assumed the defense thereof,
each Holder and Underwriter may, but shall not be required to, employ separate
counsel therein and participate in the defense thereof and the fees and expenses
of such counsel shall be at the expense of the Holder or Underwriter) and the
Company Indemnified Parties shall have the rights and duties given to the
Indemnified Holders or Indemnified Underwriters by Section 8.2.
8.4 If the indemnification provided for in this Section 8 is
unavailable to any party entitled to indemnification pursuant to Section 8.1 or
8.3, then each indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, judgments, liabilities and expenses
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and each Indemnified Holder or
Indemnified Underwriter on the other from the offering of the Registrable
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and each Indemnified Holder or Indemnified
Underwriter on the other in connection with the statements or omissions which
resulted in such losses, claims, damages, judgments, liabilities or expenses, as
well as any other relevant equitable considerations, but with respect to the
Holders and the Underwriter, only to the extent of the net proceeds received by
each, respectively. The relative benefits received by the Company on the one
hand and each Indemnified Holder or Indemnified Underwriter on the other shall
be deemed to be in the same proportions as the total net proceeds from the
offering (before deducting expenses) received by the Company and each
Indemnified Holder bear to each other and to the total net discounts and
commissions received by the Indemnified Underwriter, in each case as set forth
in the table on the cover page of the Prospectus. The relative fault of the
Company on the one hand and each Indemnified Holder and Indemnified Underwriter
on the other shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to
17
information supplied by the Company on the one hand or by each Indemnified
Holder and Indemnified Underwriter on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
8.5 The Company and each Indemnified Holder and Indemnified
Underwriter agree that it would not be just and equitable if contribution
pursuant to Section 8.4 were determined by pro rata allocation or by any other
method of allocation that does not take account of the equitable considerations
referred to in Section 8.4. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages, liabilities or expenses referred to
in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. No person found guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not found guilty of such fraudulent
misrepresentation.
8.6 The indemnity and contribution agreements contained in this
Section 8 are in addition to any liability that any indemnifying party may
otherwise have to any indemnified party.
SECTION 9
RULE 144A
The Company hereby agrees with each Holder, for so long as any
Registrable Securities remain outstanding and during any period in which the
Company is not subject to Section 13 or 15(d) of the Exchange Act, to make
available to the Initial Purchasers or any beneficial owner of such Registrable
Securities in connection with any sale thereof and any prospective purchaser of
such Registrable Securities from such Initial Purchaser or beneficial owner, the
information required by Rule 144A(d)(4) under the Act in order to permit
resales of such Registrable Securities pursuant to Rule 144A.
SECTION 10
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Offering hereunder
unless such Holder (a) agrees to sell such Holder's Registrable Securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements, (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements,
hold-back agreements and other documents required under the terms of such
underwriting arrangements and (c) furnishes the Company in writing information
in accordance with Section 3.4 and agrees to indemnify and hold harmless the
Company, its directors, its officers who sign the Registration Statement and
any person controlling the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act as contemplated by Section 8.3.
18
SECTION 11
SELECTION OF UNDERWRITERS
The Holders of Registrable Securities covered by a Registration
Statement filed pursuant to Section 3 herein, who desire to do so, may sell such
Registrable Securities in an Underwritten Offering. In any such Underwritten
Offering, the Underwriter(s) that will administer the offering will be selected
by the Holders of Registrable Securities included in such offering holding a
majority in interest of the Registrable Securities included in such offering;
provided, however, that such Underwriters must be reasonably satisfactory to the
Company.
SECTION 12
MISCELLANEOUS
12.1 Remedies. Each Holder, in addition to being entitled to exercise
--------
all rights provided herein, and as provided in the Purchase Terms Agreement and
granted by law, including recovery of damages, will be entitled to specific
performance of such Holder's rights under this Agreement. The Company agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific performance that a remedy
at law would be adequate.
12.2 No Inconsistent Agreements. The Company will not on or after the
--------------------------
date of this Agreement enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The rights granted to the Holders of Registrable Securities hereunder do not in
any way conflict with and are not inconsistent with the rights granted to the
Holders of the Company's securities under any other agreements.
12.3 Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of Holders
of at least 66-2/3% of the Registrable Securities affected by such amendment,
modification, supplement, waiver or departure. Notwithstanding the foregoing, a
waiver or consent to departure from the provisions hereof that relates
exclusively to the rights of Holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and that does not directly
or indirectly affect the rights of other Holders of Registrable Securities shall
be valid only with the written consent of Holders of at least 66-2/3% of the
Registrable Securities being sold, in each case calculated in accordance with
the provisions of Section 3.2.
12.4 Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, first-class mail
19
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(a) if to a Holder, at the most current address given by such
Holder to the Company;
(b) if to the Placement Agent, to Xxxxxx, Xxxxxxxx & Company,
Incorporated, 000 Xxxxx Xxxxxxxx, Xxxxx 0000, Xx. Xxxxx, Xxxxxxxx 00000,
attention: Xxxx X. Xxxxxx, with a copy to O'Melveny & Xxxxx LLP, 000 Xxxxxxx
Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, attention: Xxxxx X. Xxxxx, Esq. and
(c) if to the Company, to NovaStar Financial, Inc., 0000 X.
00xx Xxxxx, Xxxxxxxx, Xxxxxx 00000, attention: Xx. Xxxxx X. Xxxxxxx, with a copy
to Xxxxx & Xxxxx, One Xxxxxxxxxx Street, Xxxxxxxxx Xxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, attention: Xxxxxxx X. Xxxxxxx, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery. The Placement Agent, the Company, any Holder and their respective
counsel may change their respective notice addresses from time to time by
written notice to all of the foregoing persons.
12.5 Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, Initial Purchasers and subsequent Holders of Registrable Securities;
provided, however, that this Agreement shall not inure to the benefit of or be
binding upon a successor or assign of a Holder unless and to the extent such
successor or assign acquired Registrable Securities from such Holder; and
provided further that nothing herein shall be deemed to permit any assignment,
transfer or any disposition of Registrable Securities in violation of the terms
of the Private Placement Memorandum or applicable law. If any transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by operation
of law or otherwise, such Registrable Securities shall be held subject to all of
the terms of this Agreement and by taking and holding such Registrable
Securities such person shall be conclusively seemed to have agreed to be bound
by and to perform all of the terms and provisions of this Agreement and such
Person shall be entitled to receive the benefits hereof.
12.6 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
20
12.7 Headings. The headings in this Agreement are for
--------
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
12.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE CONFLICT OF LAW RULES THEREOF.
12.9 Waiver of Trial by Jury. The Company, the Placement Agent,
-----------------------
and each of the Holders hereby irrevocably waive any right they may have to a
trial by jury in any action, suit or proceeding brought to enforce or defend any
rights or remedies arising under or in connection with this Agreement, or the
transactions contemplated hereby, whether grounded in tort, contract or
otherwise.
12.10 Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
12.11 Entire Agreement. This Agreement together with the other
----------------
Operative Documents (as defined in the Purchase Terms Agreement) is intended by
the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
in the Private Placement Memorandum or referred to herein with respect to the
registration rights granted by the Company with respect to the securities sold
pursuant to the Private Placement Memorandum. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
12.12 Benefit, Obligations and Duties. The Placement Agent has
-------------------------------
entered into this Agreement as a matter of convenience only pursuant to Section
1.4 of the Subscription Agreement and shall have no obligations or duties under
this Agreement to either the Company or any Holder. The Placement Agent
undertakes no responsibility of any kind, including any fiduciary
responsibility, on behalf of any Holder and is not acting on any Holder's
behalf. The Placement Agent does not intend to exercise any rights on behalf of
any Holder. This Agreement shall not give any Holder or the Company any rights
with regard to or claims against the Placement Agent. All of the
21
rights, duties and obligations of any Holder shall inure directly to the benefit
or detriment of such Holder.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
NOVASTAR FINANCIAL, INC.,
a Maryland corporation
By:/s/ Xxxxx X. Xxxxxxx
--------------------------
Its: Secretary
---------------------
XXXXXX, XXXXXXXX & COMPANY,
INCORPORATED
By:[SIGNATURE ILLEGIBLE]
--------------------------
Its: VP
---------------------
The undersigned sign this Agreement in their
individual capacity for the purpose of being
bound by Section 4.3 hereof.
/s/ Xxxxx X. Xxxxxxx
-------------------------------
Xxxxx X. Xxxxxxx
_______________________________
W. Xxxxx Xxxxxxxx
22
