GUARANTY AND PLEDGE AGREEMENT
THIS GUARANTY AND PLEDGE AGREEMENT ("Agreement") is entered into as of
April 25, 2007, among NovaStar Financial, Inc. ("NovaStar Financial"), NovaStar
Mortgage, Inc. ("NovaStar Mortgage"), NFI Holding Corporation ("NFI Holding" as
"Pledgor" and as a Guarantor hereunder); and Homeview Lending Inc. ("Homeview"
and jointly and severally with NovaStar Financial, NovaStar Mortgage and NFI
Holding, each a Guarantor and collectively the "Guarantors") and Wachovia Bank,
N.A. (the "Buyer", which term shall include any buyer for whom Buyer acts as
Agent as defined and provided for in the Master Repurchase Agreement referred to
below).
RECITALS
A. Pursuant to the Master Repurchase Agreement (2007 Servicing Rights),
dated as of April 25, 2007, (the "Master Repurchase Agreement"), by and among
NovaStar Mortgage and Buyer, the Buyer has agreed to purchase Servicing Rights
from the Seller and the Seller has agreed to repurchase such Servicing Rights
upon the terms and subject to the conditions set forth therein.
B. As of the date hereof, NFI Holding holds all of the outstanding shares
of NovaStar Mortgage and NovaStar Mortgage is a subsidiary of NFI Holding
Corporation, which is a subsidiary of NovaStar Financial, Inc. and Homeview
Lending, Inc. is a subsidiary of NFI Holding. NovaStar Financial and NovaStar
Mortgage will derive a benefit from the Buyer's purchase and sale of Servicing
Rights from and to the Seller pursuant to the Master Repurchase Agreement. To
induce the Buyer to enter into the Master Repurchase Agreement and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Guarantors have agreed to guaranty the Seller's obligations
with respect to the Master Repurchase Agreement, and the Pledgor has agreed to
pledge and grant a security interest in the Pledged Collateral (as defined
herein) as security for such guaranty.
C. It is a condition precedent to the obligation of the Buyer to purchase
the Servicing Rights from the Seller under the Master Repurchase Agreement that
the Guarantors and Pledgor shall have executed and delivered this Agreement to
the Buyer.
NOW, THEREFORE, for good and valuable consideration, receipt of which by
the parties hereto is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms defined in the
Master Repurchase Agreement and used herein shall have the meanings given to
them in the Master Repurchase Agreement.
(b) "Expiration Date" shall have the meaning set forth in Section 2(c)
herein.
(c) "Pledged Collateral" shall have the meaning assigned thereto in Section
3.01 hereof.
(d) "Obligations" shall mean the obligations and liabilities of the Seller
and the Guarantors to the Buyer, including, without limitation, the obligations
whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, or out of or in connection with the
Master Repurchase Agreement, this Guaranty, any other Program Documents and any
other document made, delivered or given in connection therewith or herewith,
whether on account of covenants, Repurchase Prices, reimbursement obligations,
fees, indemnities, costs, expenses (including, without limitation, all fees and
disbursements of counsel to the Buyer that are required to be paid by the Seller
pursuant to the terms of the Program Documents) or otherwise.
(e) "Pledged Collateral" shall have the meaning assigned thereto in Section
3.01 hereof.
(f) "Pledged Shares" shall mean all of the common stock of NovaStar
Mortgage owned by or acquired by NFI Holding from time to time.
(g) "UCC" shall mean the Uniform Commercial Code as in effect in the State
of New York at any time; provided, that if, by reason of mandatory provisions of
law, the validity or perfection of the Buyer's security interest in any item of
Pledged Collateral is governed by the UCC as in effect in a jurisdiction other
than New York, "UCC" shall mean the UCC as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such validity or perfection.
(h) The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Guaranty shall refer to this Guaranty as a whole and
not to any particular provision of this Guaranty, and section and paragraph
references are to this Guaranty unless otherwise specified.
(i) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
2. Guaranty. (a) The Guarantors hereby, unconditionally and irrevocably,
guarantee to the Buyer and its successors, endorsees, transferees and assigns
the prompt and complete payment and performance by the Sellers when due (whether
at the stated maturity, by acceleration or otherwise) of the Obligations.
(b) The Guarantors further agree to pay any and all expenses (including,
without limitation, all reasonable fees and disbursements of counsel) which may
be paid or incurred by the Buyer in enforcing any rights with respect to, or
collecting, any or all of the Obligations and/or enforcing any rights with
respect to, or collecting against, the Guarantors under this Guaranty. This
Guaranty shall remain in full force and effect until the Obligations are paid in
full, notwithstanding that from time to time prior thereto any or all Sellers
may be free from any Obligations.
(c) No payment or payments made by the Sellers, the Guarantors, any other
guarantor or any other Person or received or collected by the Buyer from the
Sellers, the Guarantors, any other guarantor or any other Person by virtue of
any action or proceeding or any set-off or appropriation or application at any
time or from time to time in reduction of or in payment of the Obligations shall
be deemed to modify, reduce, release or otherwise affect the liability of the
Guarantors hereunder which shall, notwithstanding any such payment or payments
other than payments made by the Guarantors in respect of the Obligations or
payments
received or collected from the Guarantors in respect of the Obligations, remain
liable for the Obligations until the Obligations are paid in full and the Master
Repurchase Agreement is terminated (the "Expiration Date").
(d) Each Guarantor agrees that whenever, at any time, or from time to time,
it shall make any payment to the Buyer on account of its liability hereunder, it
will notify the Buyer in writing that such payment is made under this Guaranty
for such purpose.
(e) Each Guarantor shall be jointly and severally liable with the other
Guarantors to the Buyer for all obligations of the Guarantors hereunder.
3. Pledge of NovaStar Mortgage Stock.
3.01 Pledged Collateral. As collateral security for the prompt payment in
full when due of the Obligations and solely to secure such debt, NFI Holding
hereby pledges, collaterally assigns and hypothecates to the Buyer, and hereby
grants to the Buyer, for the benefit of both the Buyer's own account and the
account of affiliates of the Buyer for which the Buyer is acting as agent
pursuant to the Master Netting Agreement, a lien on and first priority security
interest in, all of NFI Holding's right, title and interest in, to and under the
following, whether now owned by NFI Holding or hereafter acquired and whether
now existing or hereafter coming into existence and wherever located (all being
collectively referred to herein as the "Pledged Collateral"):
(a) the Pledged Shares, including, without limitation, (i) all rights of
NFI Holding to receive moneys (including dividends) due but unpaid or to become
due under the Pledged Shares and all property received in substitution or
exchange therefore, (ii) all of NFI Holding's rights and privileges with respect
to the Pledged Shares, (iii) all rights of NFI Holding to property of NovaStar
Mortgage, (iv) all rights of NFI Holding to receive proceeds of any insurance,
bond, indemnity, warranty or guaranty with respect to NovaStar Mortgage, and (v)
all proceeds, payments, income and profits of the foregoing;
(b) the official records and ledgers of NovaStar Mortgage; and
(c) to the extent not included in the foregoing, all proceeds, products,
offspring, rents, revenues, issues, profits, royalties, income, benefits,
accessions, additions, substitutions and replacements of and to any and all of
the foregoing.
3.02 Later Acquired Shares, Stock Dividends, Options or Adjustments. Until
the Expiration Date, NFI Holding shall deliver to the Buyer any and all
additional shares of stock or any other property of any kind distributable on or
by reason of the Pledged Collateral, whether in the form of or by way of stock
dividends, warrants, total or partial liquidation, conversion, prepayments,
redemptions or otherwise, including, but not limited to, cash dividends,
allowable under applicable law, or cash interest payments, as the case may be.
If any additional shares of capital stock, instruments, or other property, a
security interest in which can only be perfected by possession by the Buyer,
which are distributable on or by reason of the Pledged Collateral, shall come
into the possession or control of NFI Holding, NFI Holding shall forthwith
transfer and deliver such property to the Buyer as Pledged Collateral hereunder.
3.03 Delivery of Share Certificates and Stock Powers. Simultaneously with
the delivery of this Guaranty, NFI Holding is delivering to the Buyer all
certificated instruments and stock certificates representing the Pledged Shares,
together with stock powers duly executed in blank by NFI Holding and if
requested by Buyer, shall deliver the registration book maintained NovaStar
Mortgage with respect to the Pledged Shares. NFI Holding shall promptly deliver
to the Buyer, or cause NovaStar Mortgage or any other entity issuing the Pledged
Collateral to deliver directly to the Buyer, (i) share certificates or other
instruments representing any Pledged Shares acquired or received by NFI Holding
after the date of this Agreement and (ii) a stock or bond power duly executed in
blank by NFI Holding. If at any time the Buyer notifies NFI Holding that it
requires additional stock powers endorsed in blank, NFI Holding shall promptly
execute in blank and deliver the requested power to the requesting party.
3.04 Power of Attorney, Irrevocable Proxy. (a) NFI Holding hereby
constitutes and irrevocably appoints the Buyer, with full power of substitution
and revocation, as NFI Holding's true and lawful attorney-in-fact, with the
power, to the full extent permitted by law, to affix to any notes and documents
representing the Pledged Collateral the stock or bond powers delivered with
respect thereto, and to transfer or cause the transfer of the Pledged
Collateral, or any part thereof, on the books of the Seller or other entity
issuing such Pledged Collateral, to the name of the Buyer or any nominee, and
thereafter to exercise with respect to such Pledged Collateral, all the rights,
powers and remedies of an owner. The power of attorney granted pursuant to this
Section and all authority hereby conferred are granted and conferred solely to
protect the Buyer's interest in the Pledged Collateral and shall not impose any
duty upon the Buyer to exercise any power. This power of attorney shall be
irrevocable as one coupled with an interest until the Expiration Date.
(b) As of the date hereof, NFI Holding hereby constitutes and irrevocably
appoints the Buyer, with full power of substitution and revocation, as NFI
Holding's true and lawful attorney-in-fact, with the power, to the full extent
permitted by law, to vote as proxy the Pledged Collateral at a meeting, or to
express consent or dissent to corporate action in writing without a meeting,
with respect to those actions described in paragraphs 3(c), 3(d) and 10 of the
Certificate of Incorporation of NovaStar Mortgage. This proxy shall be
irrevocable as one coupled with an interest and shall be valid until the
Expiration Date.
3.05 Dividends. NFI Holding agrees that it shall not cause NovaStar
Mortgage to declare or make payment of (i) any dividend or other distribution on
any shares of its capital stock, or (ii) any payment on account of the purchase,
redemption, retirement or acquisition of any option, warrant or other right to
acquire shares of its capital stock.
4. Representations and Warranties of the Guarantors.
4.01 Each Guarantor hereby represents and warrants that:
(a) It is duly organized and validly existing in good standing under the
laws of the jurisdiction under which it is organized and is duly qualified to do
business and is in good standing in every other jurisdiction as to which the
nature of the business conducted by it makes such qualification necessary.
(b) It has the full power, authority and legal right to execute, deliver
and perform its obligations under this Guaranty. This Guaranty has been duly
executed and delivered
by it, has not been amended or otherwise modified, is in full force and effect
and is the legal, valid and binding obligation of each Guarantor, enforceable
against it in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights of creditors generally and to the application of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
(c) Neither the execution and delivery of this Guaranty nor the
consummation of the transactions contemplated herein will conflict with or
result in a breach of, or require any consent under, any applicable law or
regulation, or any order, writ, injunction or decree of any court or
governmental authority or agency, or any agreement or instrument to which each
Guarantor is a party or by which each Guarantor or its property is bound or to
which each Guarantor is subject, or constitute a default under any such
agreement or instrument, or (except for the liens created pursuant hereto)
result in the creation or imposition of any lien or encumbrance upon the
Guarantors' revenues or assets pursuant to the terms of any such agreement or
instrument.
(d) Each Guarantor has received and reviewed copies of the Master
Repurchase Agreement.
(e) This Guaranty is the legal, valid and binding obligation of each
Guarantor, enforceable against each Guarantor, in accordance with its terms,
subject to bankruptcy, insolvency and similar laws and to the availability of
equitable remedies.
(f) There is no action, suit or proceeding at law or in equity by or before
any governmental authority, arbitral tribunal or other body now pending, or to
the best of each Guarantor's knowledge, threatened against or affecting each
Guarantor or any of its respective property that is reasonably likely to have a
material adverse effect on each Guarantor's condition, financial or otherwise.
(g) No authorizations, approvals or consents of, and no filings or
registrations with, any governmental authority are necessary for the execution,
delivery or performance by the Guarantors of this Guaranty.
4.02 NFI Holding as Pledgor hereby represents and warrants that:
(a) The chief place of business and chief executive office of NFI Holding
is 0000 Xxxx Xxxxxxx, Xxxxx 000, Xxxxxx Xxxx, Xxxxxxxx 00000. NFI Holding has
heretofore delivered to the Buyer a certified copy of the articles of
incorporation and by-laws of NovaStar Mortgage as in effect on the date hereof.
(b) Upon the filing of UCC-1 financing statements ("UCC-Is") in the States
of Delaware and Virginia and, to the extent that the Pledged Collateral or any
part thereof constitutes "securities" for purposes of Article 8 of the UCC,
registration of such pledge on the registration book maintained by NovaStar
Mortgage, the pledge and security interest hereunder in favor of the Buyer
constitutes a first priority pledge and security interest in and to all of the
Pledged Collateral pledged by NFI Holding hereunder.
(c) It is the sole beneficial owner of the Pledged Collateral pledged under
Section 3 hereof free and clear of all claims, mortgages, pledges, liens,
security interests and other encumbrances of any nature whatsoever (and no right
or option to acquire the same exists in favor of any other person or entity),
except for the assignment, pledge and security interest in favor of the Buyer
created or provided for herein, and NFI Holding agrees that it will not encumber
or grant any security interest in or with respect to the Pledged Collateral or
permit any of the foregoing.
(d) NFI Holding does not, in connection with pledging the Pledged
Collateral, have any actual intent to hinder, delay or defraud any entity to
which NovaStar Mortgage becomes indebted.
(e) In exchange for the pledge and guaranty hereunder, NFI Holding, as
holder of the Pledged Shares, will derive a benefit from the sale, transfer and
assignment of the Servicing Rights to the Buyer.
(f) It is solvent on the date hereof and will not become insolvent as a
result of the pledge.
(g) It does not intend to incur, or believe in respect of the pledge of the
Pledged Collateral, that it will incur, debts that would be beyond its ability
to pay such debts as such debts mature.
(h) The Pledged Shares are validly issued, fully paid for and
nonassessable. No options, warrants or other agreements with respect to the
Pledged Shares are outstanding. The Pledged Shares represent all of the shares
of capital stock in NovaStar Mortgage.
5.01 NFI Holding covenants and agrees that:
(a) It shall not create, incur, assume or permit to exist any lien upon any
of the Pledged Collateral other than the Lien of Buyer hereunder.
(b) Without the prior written consent of the Buyer, it will not (i) vote to
enable, or take any other action to permit, NovaStar Mortgage to issue any stock
or other equity securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for any stock or
other equity securities of NovaStar Mortgage or (ii) sell, assign, transfer,
exchange or otherwise dispose of, or grant any option with respect to, the
Pledged Collateral.
(c) It shall not file or cause or suffer to be filed with respect to
NovaStar Mortgage a voluntary petition in bankruptcy to seek relief for NovaStar
Mortgage under any provision of any bankruptcy, reorganization, moratorium,
delinquency, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction whether now or subsequently in effect, or
consent to the filing of any petition against NovaStar Mortgage under any such
law, or consent to the appointment of or taking possession by a custodian,
receiver, conservator, trustee, liquidator, sequestrator or similar official for
NovaStar Mortgage or of all or any part of NovaStar Mortgage's property, or make
an assignment for the benefit of NovaStar Mortgage.
(d) Delivery and Other Perfection. NFI Holding shall:
(i) if any Pledged Collateral required to be pledged by NFI Holding
herein is received by NFI Holding, forthwith either (x) transfer and
deliver to the Buyer such shares or securities so received by NFI
Holding (together with the certificates for any such shares and
securities duly endorsed in blank or accompanied by undated stock
powers duly executed in blank), all of which thereafter shall be held
by the Buyer, pursuant to the terms of this Guaranty, as part of the
Pledged Collateral or (y) take such other action as the Buyer shall
deem necessary or appropriate to record duly the lien created
hereunder in such ownership interests, shares, securities, moneys,
property or other interests in said clauses; and
(ii) give, execute, deliver, file and/or record any financing
statements, continuation statement, notice, instrument, document,
agreement or other papers that may be necessary or desirable (in the
judgment of the Buyer) to create, preserve, perfect or validate the
security interest granted pursuant hereto or to enable the Buyer to
exercise and enforce its rights hereunder with respect to such pledge
and security interest (including, without limitation, causing any or
all of the Pledged Collateral to be transferred of record into the
name of the Buyer or its nominee (and the Buyer agrees that if any
Pledged Collateral is transferred into its name or the name of its
nominee, it will thereafter promptly give to NFI Holding copies of any
notices and communications received by it with respect to the
applicable Pledged Collateral)); without limiting the generality of
the foregoing, if any Pledged Collateral shall be evidenced by a
promissory note or other instrument, NFI Holding shall deliver and
pledge to the Buyer such note or instrument duly endorsed or
accompanied by duly executed instruments of transfer or assignment,
all in form and substance satisfactory to the Buyer.
(e) Other Financing Statements and Liens. Without the prior consent of the
Buyer, NFI Holding shall not file or suffer to be on file or filed, or authorize
or permit to be filed or to be on file, in any jurisdiction, any financing
statement or like instrument with respect to the Pledged Collateral in which the
Buyer is not named as the sole secured party.
(f) Preservation of Rights. The Buyer shall not be required to take any
steps necessary to preserve any rights against prior parties to any of the
Pledged Collateral.
(g) Pledged Collateral.
(i) Except as provided in Section 3.04(b) above and notwithstanding
anything to the contrary herein or in the Master Repurchase Agreement
or any documents referenced therein, so long as no Event of Default
shall have occurred and be continuing, NFI Holding shall have the
right to exercise all voting and corporate rights pertaining to the
Pledged Collateral for all purposes not inconsistent with the terms of
this Agreement, the Master Repurchase Agreement or any documents
referenced therein; provided that (i) NFI Holding agrees that it will
not vote the Pledged Collateral in any manner that is inconsistent
with the terms of this Guaranty, the Master Repurchase Agreement or
any documents referenced therein and (ii) the Buyer shall execute and
deliver to NFI Holding or cause to be executed and delivered to NFI
Holding all such proxies, powers of attorney, dividend and other
orders, and all such instruments, without recourse, as NFI Holding may
reasonably request for the purpose of enabling NFI Holding to exercise
the rights and powers which it is entitled to exercise pursuant to
this Section 5.01(g).
(ii) Any provisions of the articles of incorporation or by-laws of
NovaStar Mortgage restricting the transferability of the ownership
interests in NovaStar Mortgage shall not apply to the exercise by the
Buyer of any of its rights and remedies under the Master Repurchase
Agreement or any document referenced therein or to any sale,
assignment, transfer or other disposition by the Buyer of all or any
part of any ownership interest in NovaStar Mortgage.
(iii) NFI Holding recognizes and agrees that the Buyer has an absolute
and unconditional right to liquidate the Pledged Collateral upon an
Event of Default. NFI Holding agrees not to seek any equitable or
other relief to delay or prevent the Buyer from exercising its right
to liquidate the Pledged Collateral upon an Event of Default. Further,
NFI Holding recognizes and agrees that (i) the Pledged Collateral is
not unique, (ii) NFI Holding will not be irreparably harmed if the
Pledged Collateral is liquidated by the Buyer upon an Event of
Default, and (iii) in the event NFI Holding has a claim or cause of
action against the Buyer for liquidation of the Pledged Collateral or
other actions of the Buyer, money damages will be sufficient to
satisfy such claim or cause of action.
(h) Events of Default, Etc. During the period during which an Event of
Default has occurred and be continuing:
(i) the Buyer shall have all of the rights and remedies with respect
to the Pledged Collateral of a secured party under the UCC and such
additional rights and remedies to which a secured party is entitled
under the laws in effect in any jurisdiction where any rights and
remedies hereunder may be asserted (including, without limitation, the
right, to the maximum extent permitted by law, to exercise all voting,
consensual and other powers of ownership pertaining to the Pledged
Collateral as if the Buyer were the sole and absolute owner thereof
(and NFI Holding agrees to take all such action as may be appropriate
to give effect to such right));
(ii) the Buyer may make any reasonable compromise or settlement deemed
desirable with respect to any of the Pledged Collateral and may extend
the time of payment, arrange for payment in installments, or otherwise
modify the terms of, any of the Pledged Collateral;
(iii) the Buyer may, in its name or in the name of NFI Holding or
otherwise, demand, xxx for, collect or receive any money or property
at any time payable or receivable on account of, or in exchange for,
any of the Pledged Collateral, but shall be under no obligation to do
so; and
(iv) the Buyer may, with respect to the Pledged Collateral or any part
thereof which shall then be or shall thereafter come into the
possession, custody or control of the Buyer or any of its agents,
sell, lease, assign or otherwise dispose of all or any part of such
Pledged Collateral, at such place or places as the Buyer deems best,
and for cash or for credit or for future delivery (without thereby
assuming any credit risk), at public or private sale, without demand
of performance or notice of intention to effect any such disposition
or of the time or place thereof (except such notice as is required
above or by applicable statute and cannot be waived), and any Person
may be the purchaser, lessee, assignee or recipient of any or all of
the Pledged Collateral so disposed of at any sale (or, to the extent
permitted by law, at any private sale) and thereafter hold the same
absolutely free from any claim or right of whatsoever kind, including
any right or equity of redemption (statutory or otherwise), of NFI
Holding, any such demand, notice and right or equity being hereby
expressly waived and released. The Buyer may, without notice or
publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to
which the sale may be so adjourned.
NFI Holding recognizes that, by reason of certain prohibitions contained in
the Securities Act of 1933, as amended (the "Securities Act"), and applicable
state securities laws, the Buyer may be compelled, with respect to any sale of
all or any part of the Pledged Collateral which constitutes a "security" under
the Securities Act, to limit purchasers to those who will agree, among other
things, to acquire such Pledged Collateral for their own account, for investment
and not with a view to the distribution or resale thereof. NFI Holding
acknowledges that any such private sale may be at prices and on terms less
favorable to the Buyer than those obtainable through a public sale without such
restrictions, and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner and that the Buyer shall not have any obligation to engage in public
sales and no obligation to delay the sale of any such Pledged Collateral for the
period of time necessary to permit the respective issuer thereof to register it
for public sale.
(i) Removals, Etc. Without at least thirty (30) days' prior notice to the
Buyer, NFI Holding shall not change the name under which it does business from
the name shown on the signature pages hereto.
(j) Private Sale. The Buyer shall not incur any liability as a result of
the sale of the Pledged Collateral, or any part thereof, at any private sale
pursuant to Section 5.01(h) hereof conducted in good faith. NFI Holding hereby
waives any claims against the Buyer by reason of the fact that the price at
which the Pledged Collateral may have been sold at such a private sale was less
than the price which might have been obtained at a public sale or was less than
the aggregate amount of the Obligations.
(k) Attorney-in-Fact. Upon the occurrence and during the continuance of any
Event of Default, the Buyer is hereby appointed the attorney-in-fact of NFI
Holding for the purpose of carrying out the provisions of this Section 5.01 and
taking any action and executing any instruments which the Buyer may deem
necessary or advisable to accomplish the purposes hereof, which appointment as
attorney-in-fact is irrevocable and coupled with an interest. Without limiting
the generality of the foregoing, so long as the Buyer shall be entitled under
this Section 5.01 to make collections in respect of the Pledged Collateral, the
Buyer shall have the right and power to receive, endorse and collect all checks
made payable to the order of NFI Holding representing any dividend, payment or
other distribution in respect of the Pledged Collateral or any part thereof and
to give full discharge for the same.
(l) Termination. When all of the Obligations shall have been paid in full,
this Agreement shall terminate and the Buyer shall forthwith cause to be
assigned, transferred and delivered, against receipt but without any recourse,
warranty or representation whatsoever, any remaining Pledged Collateral and
money received in respect thereof, to or on the order of NFI Holding.
(m) Expenses. NFI Holding agrees to pay, and the Obligations shall include,
all out-of-pocket expenses (including reasonable expenses for legal services of
every kind) of, or incident to the enforcement of any of the provisions of this
Section 5.01, or performance by the Buyer of any obligations of NFI Holding in
respect of the Pledged Collateral which NFI Holding has failed or refused to
perform, or any actual or attempted sale, or any exchange, enforcement,
collection, compromise or settlement in respect of any of the Pledged
Collateral, and for the care of the Pledged Collateral and defending or
asserting rights and claims of the Buyer in respect thereof, by litigation or
otherwise.
(n) Further Assurances. NFI Holding agrees to, from time to time upon the
request of the Buyer, execute and deliver such further documents and do such
other acts and things as the Buyer may reasonably request in order to effectuate
the purposes of this Guaranty.
(o) Inter-Company Loans. NovaStar Mortgage shall not loan or otherwise
transfer any funds (a "Transfer") to any Person except to a subsidiary of
NovaStar Financial and which such Transfer is in the ordinary course of business
of NovaStar Mortgage.
5.02 Right of Set-off. Upon the occurrence of any Event of Default, the
Guarantors hereby irrevocably authorize the Buyer or any of its Affiliates at
any time and from time to time without notice to the Guarantors, any such notice
being expressly waived by the Guarantors, to set-off and appropriate and apply
any and all deposits (general or special, time or demand, provisional or final),
in any currency, and any other credits, indebtedness or claims, in any currency,
in each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Buyer or any of its Affiliates to or
for the credit or the account of the Guarantors, or any part thereof in such
amounts as the Buyer may elect, against and on account of the obligations and
liabilities of the Guarantors to the Buyer hereunder and claims of every nature
and description of the Buyer or any of its Affiliates against the Guarantors, in
any currency, whether arising hereunder, under the Master Repurchase Agreement
as the Buyer may elect, whether or not the Buyer has made any demand for payment
and although such obligations, liabilities and claims may be contingent or
unmatured. The Buyer shall notify the Guarantors promptly of any such set-off
and the application made by the Buyer,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Buyer and its Affiliates under
this Section are in addition to other rights and remedies (including without
limitation, other rights of set-off) which the Buyer and its Affiliates may
have.
6. No Subrogation. Notwithstanding any payment or payments made by the
Guarantors hereunder or any set-off or application of funds of the Guarantors by
the Buyer or any of its Affiliates, the Guarantors shall not be entitled to be
subrogated to any of the rights of the Buyer against any Seller or any other
guarantor or any collateral security or guarantee or right of offset held by the
Buyer for the payment of the Obligations, nor shall the Guarantors seek or be
entitled to seek any contribution or reimbursement from any Seller or any other
guarantor in respect of payments made by the Guarantors hereunder, until all
amounts owing to the Buyer by the Sellers on account of the Obligations are paid
in full and the Master Repurchase Agreement is terminated. If any amount shall
be paid to the Guarantors on account of such subrogation rights at any time when
all of the Obligations shall not have been paid in full, such amount shall be
held by the Guarantors in trust for the Buyer, segregated from other funds of
each Guarantor, and shall, forthwith upon receipt by the Guarantors, be turned
over to the Buyer in the exact form received by the Guarantors (duly indorsed by
the Guarantors to the Buyer, if required), to be applied against the
Obligations, whether matured or unmatured, in such order as the Buyer may
determine.
7. Amendments, Etc. with Respect to the Obligations. The Guarantors shall
remain obligated hereunder notwithstanding that, without any reservation of
rights against the Guarantors and without notice to or further assent by the
Guarantors, any demand for payment of any of the Obligations made by the Buyer
may be rescinded by the Buyer and any of the Obligations continued, and the
Obligations, or the liability of any other party upon or for any part thereof,
or any collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed, extended,
amended, modified, accelerated, compromised, waived, surrendered or released by
the Buyer, and the Master Repurchase Agreement and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Buyer may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by the Buyer for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. The Buyer shall not have any obligation to protect,
secure, perfect or insure any lien at any time held by it as security for the
Obligations or for this Guaranty or any property subject thereto. When making
any demand hereunder against any Guarantor, the Buyer may, but shall be under no
obligation to, make a similar demand on the Sellers or the other Guarantors, and
any failure by the Buyer to make any such demand or to collect any payments from
the Sellers or the other Guarantors or any release of the Sellers or such other
Guarantors shall not relieve the Guarantors of their obligations or liabilities
hereunder, and shall not impair or affect the rights and remedies, express or
implied, or as a matter of law, of the Buyer against the Guarantors. For the
purposes hereof "demand" shall include the commencement and continuance of any
legal proceedings.
8. Waiver of Rights. The Guarantors waive any and all notice of the
creation, renewal, extension or accrual of any of the Obligations, and notice of
or proof of reliance by the Buyer upon this Guaranty or acceptance of this
Guaranty; the Obligations, and any of them, shall conclusively be deemed to have
been created, contracted or incurred, or renewed, extended,
amended or waived, in reliance upon this Guaranty; and all dealings between the
Sellers and the Guarantors, on the one hand, and the Buyer, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon this Guaranty. The Guarantors waive diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Sellers or the Guarantors with respect to the Obligations.
9. Guaranty Absolute and Unconditional. The Guarantors understand and agree
that this Guaranty shall be construed as a continuing, absolute and
unconditional guarantee of the full and punctual payment and performance by the
Sellers of the Obligations and not of their collectibility only, and is in no
way conditioned upon any requirement that the Buyer first attempt to collect any
of the obligations from the Sellers, without regard to (a) the validity,
regularity or enforceability of the Master Repurchase Agreement, any of the
Obligations or any other collateral security therefor or guarantee or right of
offset with respect thereto at any time or from time to time held by the Buyer
(b) any defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by a Seller
against the Buyer, or (c) any other circumstance whatsoever (with or without
notice to or knowledge of the Sellers or the Guarantors) which constitutes, or
might be construed to constitute, an equitable or legal discharge of a Seller
from the Obligations, or of the Guarantors from this Guaranty, in bankruptcy or
in any other instance. When pursuing its rights and remedies hereunder against
the Guarantors, the Buyer may, but shall be under no obligation to, pursue such
rights and remedies as it may have against a Seller or any other Person or any
collateral security or guarantee for the Obligations or any right of offset with
respect thereto, and any failure by the Buyer to pursue such other rights or
remedies or to collect any payments from a Seller or any such other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of a Seller or any such other Person or any such
collateral security, guarantee or right of offset, shall not relieve the
Guarantors of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of the
Buyer against the Guarantors. This Guaranty shall remain in full force and
effect and be binding in accordance with and to the extent of its terms upon the
Guarantors and the successors and assigns thereof, and shall inure to the
benefit of the Buyer, and its successors, endorsees, transferees and assigns,
until all the Obligations and the obligations of the Guarantors under this
Guaranty shall have been satisfied by payment in full and the Master Repurchase
Agreement shall be terminated, notwithstanding that from time to time during the
term of the Master Repurchase Agreement the Sellers may be free from any
Obligations.
10. Reinstatement. This Guaranty shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by
the Buyer upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of any Seller or any of the Guarantors, or upon or as a result of
the appointment of a receiver, intervenor or conservator of, or trustee or
similar officer for, any Seller or any of the Guarantors or any substantial part
of its property, or otherwise, all as though such payments had not been made.
11. Payments. The Guarantors hereby guarantee that payments hereunder will
be paid to the Buyer without set-off or counterclaim in U.S. Dollars in
accordance with the wiring instructions of the Buyer.
12. Notices. All notices, requests and other communications provided for
herein (including without limitation any modifications of, or waivers, requests
or consents under, this Guaranty) shall be given or made in writing (including
without limitation by telex or telecopy) and delivered to the intended recipient
at the "Address for Notices" specified on the signature page hereto; or, as to
any party, at such other address as shall be designated by such party in a
written notice to each other party. All such communications shall be deemed to
have been duly given when transmitted by telex or telecopy or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid.
13. Severability. Any provision of this Guaranty which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
14. Integration. This Guaranty and the Program Documents represent the
agreement of the Guarantors with respect to the subject matter hereof and
thereof and there are no promises or representations by the Buyer relative to
the subject matter hereof or thereof not reflected herein or therein.
15. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None of the
terms or provisions of this Guaranty may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Guarantors and
the Buyer, provided that any provision of this Guaranty may be waived by the
Buyer.
(b) The Buyer shall not by any act (except by a written instrument pursuant
to Section 15(a) hereof), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any Default
or Event of Default or in any breach of any of the terms and conditions hereof.
No failure to exercise, nor any delay in exercising, on the part of the Buyer,
any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Buyer of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Buyer would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
16. Section Headings. The section headings used in this Guaranty are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
17. Successors and Assigns. This Guaranty shall be binding upon the
successors and assigns of the Guarantors and shall inure to the benefit of the
Buyer and its successors and assigns. This Guaranty may not be assigned by any
of the Guarantors without the express written consent of the Buyer.
18. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY NEW YORK LAW WITHOUT
REFERENCE TO CHOICE OF LAW DOCTRINE.
19. SUBMISSION TO JURISDICTION; WAIVERS. EACH GUARANTOR HEREBY WAIVES TRIAL
BY JURY. EACH GUARANTOR HEREBY IRREVOCABLY CONSENTS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ARISING OUT OF OR RELATING
TO THE PROGRAM DOCUMENTS IN ANY ACTION OR PROCEEDING. EACH GUARANTOR HEREBY
SUBMITS TO, AND WAIVES ANY OBJECTION EACH GUARANTOR MAY HAVE TO, NON-EXCLUSIVE
PERSONAL JURISDICTION AND VENUE IN XXX XXXXXX XX XXX XXXXX XX XXX XXXX AND THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT
TO ANY DISPUTES ARISING OUT OF OR RELATING TO THE PROGRAM DOCUMENTS.
20. Other Liens. Notwithstanding anything to the contrary contained herein,
liens previously granted by the Guarantors in favor of the Buyer or future liens
that are granted by the Guarantors in favor of the Buyer will not constitute a
breach of this Guaranty.
21. Agents. The Buyer may employ agents and attorneys-in-fact in connection
herewith and shall not be responsible for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it in good faith.
22. Counterparts. This Guaranty may be executed in any number of
counterparts, all of which when taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Guaranty by signing
any such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Guaranty to be duly
executed and delivered as of the day and year first above written.
NOVASTAR FINANCIAL, INC.,
jointly and severally as Guarantor
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President
NFI HOLDING CORPORATION,
jointly and severally as Guarantor and as Pledgor
By: /s/ Xxxxxxx X. Xxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Senior Vice President
NOVASTAR MORTGAGE INC.,
jointly and severally as Guarantor
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President
HOMEVIEW LENDING, INC.,
jointly and severally as Guarantor
By: /s/ Xxxxxxx X. Xxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxx
Title: VP, CFO & Treasurer
Address for Notices with respect to each of the foregoing:
0000 Xxxx Xxxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
E-mail: xxxx.xxxxxxxx@xxxxxxxx0.xxx
WACHOVIA BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Director
Address for Notices:
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Email: xxxx.xxxxx@xxxxxxxx.xxx
