VOTING AGREEMENT
Exhibit (d)(1)
This Voting Agreement (“Agreement”), dated as of December 10, 2010 is by and between
Xxxxxx Xxxxxx, Xxxxx Xxxxxxxx and NovaStar Financial, Inc., a Maryland corporation
(“NovaStar”). Xx. Xxxxxx and Xx. Xxxxxxxx herein are the “Shareholders”.
WHEREAS, as of the close of business on the date of this Agreement, NovaStar has issued and
outstanding 2,990,000 shares of 8.90% Series C Cumulative Redeemable Preferred Stock, par value
$0.01 per share (the “Series C Preferred”);
WHEREAS, based on information previously provided by Xx. Xxxxxx, Xx. Xxxxxx owns or controls,
directly or indirectly, 218,766 shares of the Series C Preferred, representing 7.32% of all shares
of the Series C Preferred;
WHEREAS, based on information previously provided by Xx. Xxxxxxxx, Xx. Xxxxxxxx owns or
controls, directly or indirectly, 307,774 shares of the Series C Preferred, representing 10.30% of
all shares of the Series C Preferred;
WHEREAS, NovaStar is contemplating making an offer (the “Offer”) to acquire or
exchange all the share of the Series C Preferred;
WHEREAS, under the terms of the Offer, each holder of the Series C Preferred will be offered,
for each share of Series C Preferred, the right to receive either (a) $2.00 and three (3) shares of
Common Stock (as defined below), up to a maximum amount of $1,623,000 to be distributed pro rata
among the Series C Preferred holders that tender in the Offer, or (b) 19 shares of Common Stock up
to a maximum that, when added to the number to be issued pursuant to clause (a) of this recital,
will equal 43,823,732.
WHEREAS, upon completion of the transactions contemplated in the Offer, NovaStar’s board of
directors will consist of six (6) individuals, two (2) of whom will be Xxxxxx Xxxxxx and Xxxxx
Xxxxxxxx, which Xx. Xxxxxx and Xx. Xxxxxxxx currently serve on the board of directors at the
election of the holders of the Series C Preferred voting as a separate class.
WHEREAS, during the time that the Common Stock owned by Jefferies and Mass Mutual is subject
to a lock-up restricting the transfer of such shares, each of Jefferies and Mass Mutual will have
the right to designate one (1) representative to attend and observe meetings of the board of
directors, subject to the right of Jefferies and Mass Mutual to replace its respective board
observer in the event of vacancy.
WHEREAS, each of the Shareholders and NovaStar has determined that entering into this
Agreement will facilitate the Offer.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained
in this Agreement, the parties hereby agree as follows:
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ARTICLE I
DEFINITIONS
DEFINITIONS
Section 1.1 General. As used in this Agreement, the following terms shall have the
following meanings:
“Agreement” shall have the meaning set forth in the preamble.
“Closing Date” shall mean the date occurring after the Offer has closed and
falling on the date the exchange of shares contemplated by the Offer is completed.
“Common Stock” shall have the mean NovaStar’s common stock, par value $0.01.
“Frustrating Transactions” shall have the meaning set forth in Section 2.1(a).
“Law” shall mean any federal, state, local or foreign law (including common
law), statute, ordinance, rule, regulation, judgment, code, order, injunction, decree,
arbitration award, agency requirement, license or permit of any Governmental Authority.
“Lock-Up Period” shall have the meaning set forth in Section 2.2.
“NovaStar” shall have the meaning set forth in the preamble.
“NovaStar Shareholder Meeting” shall mean a special meeting of the holders of
NovaStar’s Common Stock, Series C Preferred, or the Series D Preferred.
“Offer” shall have the meaning set forth in the recitals.
“Person” shall mean any natural person, corporation, partnership, limited
liability company, business trust, joint venture, association, company, other entity or
government, or any agency or political subdivision thereof.
“SEC” shall mean the U.S. Securities and Exchange Commission.
“Series C Preferred” shall have the meaning set forth in the recitals.
“Series D Preferred” shall mean the shares of Novastar’s 9.00% Series D1
Mandatory Convertible Preferred Stock, par value $0.01.
“Shareholders” shall have the meaning set forth in the recitals.
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ARTICLE II
VOTING AND TRANSFERS
VOTING AND TRANSFERS
Section 2.1 Voting of Series C Preferred.
(a) From the date of this Agreement until the earlier of Closing Date or the termination of
this Agreement in accordance with its terms, the Shareholders agree that each shall be present, in
person or by proxy, at each and every shareholders meeting of NovaStar, and otherwise to cause all
shares of Series C Preferred held by each to be counted as present for purposes of establishing a
quorum at any such meeting, and to vote or consent, or cause to be voted or consented, all shares
of Series C Preferred owned or controlled directly or indirectly by the Shareholders in favor of
any proposal that receives the recommendation of NovaStar’s board of directors which is presented
at any NovaStar Shareholder Meeting or any such other meeting and against any proposal, action or
transaction involving or affecting NovaStar that would reasonably be expected to prevent, impede or
delay the consummation of the Offer (collectively, “Frustrating Transactions”);
provided that NovaStar shall send written notice to the Shareholders of any proposal that
NovaStar considers to be a Frustrating Transaction at least 10 Business Days prior to
the vote on any such Frustrating Transaction. Moreover, the Shareholders agree to tender for
exchange all shares of Series C Preferred held by each exclusively in favor of Common Stock
(defined as the “Stock-Only Option” in the Company’s Registration Statement on Form S-4 filed on or
about the same date as this Agreement).
(b) Each of the Shareholders shall grant an irrevocable proxy, which shall be deemed coupled
with an interest, sufficient in law to support an irrevocable proxy to NovaStar or its designees to
vote any shares of Series C Preferred owned or controlled directly or indirectly by the
Shareholders at any NovaStar Shareholder Meeting until such time as this Agreement shall terminate
or the Closing Date.
(c) Each of the Shareholders agrees to perform such further acts and execute such further
instruments as may be reasonably necessary to vest in NovaStar the power to carry out and give
effect to the provisions of this Section.
Section 2.2 Lock-Up Period. During the period commencing on the date of this
Agreement and ending on the earlier of (i) termination of this Agreement in accordance with its
terms or (ii) completion of the Offer and the occurrence of the Closing Date (such period, the
“Lock-Up Period”), except as otherwise contemplated or permitted by this Agreement, the
Shareholders shall not during the Lock-Up Period, without the prior written consent of NovaStar,
directly or indirectly (x) offer, pledge, transfers, announce the intention to sell, sell,
contract to sell, sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any shares of Common Stock, Series C Preferred or Series D Preferred, or (y) enter into any swap or
other agreement that transfers, in whole or in part, any of the economic consequences of ownership
of shares of Common Stock, Series C Preferred or Series D Preferred.
Section 2.3 Transitional Series C Representation. On the Closing Date, or as soon
thereafter as reasonably practicable, NovaStar shall use its reasonable best efforts to expand
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its board of directors by two positions and appoint Xxxxxx Xxxxxx and Xxxxx Xxxxxxxx to fill
the newly created positions. At the next annual meeting of shareholders of NovaStar occurring
after the Closing Date, NovaStar shall use its reasonable best efforts to nominate the Shareholders
to three year terms as a director of NovaStar’s board of directors, and the Shareholders shall
accept such nomination, to stand for election as a director of NovaStar’s board of directors.
Section 2.4 Public Announcements. The Shareholders shall not issue any public
release, announcement or other public disclosure concerning this Agreement or the transactions
contemplated herein without the prior written consent of NovaStar, except as such release or
announcement may be required by law. NovaStar or its designees and agents shall have the right to
announce publicly or privately, issue press releases, or make filings with the SEC, this Agreement
and its content, and the transactions contemplated herein, as NovaStar may determine in its sole
discretion.
Section 2.5 Accredited and Sophisticated Investor. Each Shareholder individually
represents and warrants to NovaStar that he qualifies as an “accredited investor” as that term is
defined in Rule 501 of Regulation D under the Securities Act of 1933, as amended and has such
knowledge and experience in financial and business matters so as to be capable of evaluating the
relative merits and risks of an investment in the NovaStar’s securities.
Section 2.6 Further Assurances. Each of the parties agrees that, from time to time,
whether before, at or after the Closing Date, each of them will execute and deliver such further
instruments of conveyance and transfer and take such other action as may be necessary to carry out
the purposes and intents of this Agreement.
ARTICLE III
TERMINATION
TERMINATION
Section 3.1 Termination. This Agreement may be terminated:
(a) by mutual written consent of each of the Shareholders and NovaStar; or
(b) by either of the Shareholders or NovaStar if Closing Date has not occurred on or prior to
June 30, 2011 (the “Termination Date”); provided, however, that the right
to terminate this Agreement under this Section shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been a significant cause of, or resulted in, the
Closing Date not occurring on or prior to the Termination Date).
Section 3.2 Effect of Termination. In the event of the termination of this Agreement
as provided in Section 3.1, written notice of such termination shall be given to the other party
or parties, specifying the provision of this Agreement pursuant to which such termination is made,
and this Agreement shall forthwith become null and void (other than Article IV, which shall
survive termination of this Agreement in accordance with its terms).
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ARTICLE IV
MISCELLANEOUS
MISCELLANEOUS
Section 4.1 Entire Agreement. This Agreement shall constitute the entire agreement
between the parties with respect to the subject matter hereof and shall supersede all prior
agreements and understandings, both written and oral, between the parties with respect to the
subject matter of this Agreement.
Section 4.2 Counterparts. This Agreement may be executed and delivered (including by
facsimile transmission) in multiple counterparts, and by the different parties in separate
counterparts, each of which when executed and delivered shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement. Copies of executed
counterparts transmitted by telecopy, telefax or electronic transmission shall be considered
original executed counterparts for purposes of this Section 4.2; provided that receipt of
copies of such counterparts is confirmed.
Section 4.3 Notices. All notices, requests and other communications to any party
hereunder shall be in writing and shall be deemed given if delivered personally or sent by
overnight courier (providing proof of delivery) to the parties at the following addresses:
To Xxxxxx Xxxxxx:
00000 Xxxxxxx Xxxx., Xxx. 000
Xxxxxxxxx, XX 00000-0000
Xxxxxxxxx, XX 00000-0000
To Xxxxx Xxxxxxxx:
0000 Xxxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxxxxx, XX 00000
To NovaStar:
NovaStar Financial, Inc.
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx
0000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx
with a copy to (which shall not constitute notice):
Xxxxx Xxxx LLP
One Kansas City Place
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
One Kansas City Place
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
or such other address or facsimile number as such party may hereafter specify by like notice to the
other parties hereto. All such notices, requests and other communications shall be deemed
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received on the date of receipt by the recipient if received prior to 5 P.M., local time, in the
place of receipt and such day is a Business Day in the place of receipt. Otherwise, any such
notice, request or communication shall be deemed not to have been received until the next
succeeding Business Day in the place of receipt.
Section 4.4 Amendments. This Agreement may be amended or supplemented in any and all
respects by written agreement of the parties. No amendment to or modification of any provision of
this Agreement shall be binding upon any party unless in writing and signed by all parties.
Section 4.5 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned, in whole or in part, by any of the parties without the
prior written consent of the other party. Any purported assignment not permitted under this
Section shall be null and void.
Section 4.6 Successors and Assigns. The terms and provisions of this Agreement shall
be binding upon, inure to the benefit of and be enforceable by the parties and their respective
successors and permitted assigns.
Section 4.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
IN THE STATE OF MARYLAND, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICTS OF LAWS.
Section 4.8 Consent to Jurisdiction; Waiver of Jury Trial.
(a) All actions and proceedings arising out of or relating to this Agreement shall be heard
and determined in the Chancery Court of the State of Delaware or, in the event that such court does
not have subject matter jurisdiction over such action or proceeding, any federal court sitting in
the State of Delaware, and the parties to this Agreement irrevocably submit to the exclusive
jurisdiction of such courts (and, in the case of appeals, appropriate appellate courts therefrom)
in any such action or proceeding and irrevocably waive the defense of an inconvenient forum to the
maintenance of any such action or proceeding. The consents to jurisdiction set forth in this
paragraph shall not constitute general consents to service of process in the State of Delaware and
shall have no effect for any purpose except as provided in this paragraph and shall not be deemed
to confer rights on any Person other than the parties hereto. Each of the parties to this
Agreement consents to service being made through the notice procedures set forth herein and agrees
that service of any process, summons, notice or document by registered mail (return receipt
requested and first-class postage prepaid) to the respective addresses of the parties set forth
herein shall be effective service of process for any suit or proceeding in connection with this
Agreement or the transactions contemplated by this Agreement. The parties hereto agree that a
final judgment in any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by applicable Law.
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(b) EACH OF THE PARTIES TO THIS AGREEMENT IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY
JURY IN ANY PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT.
Section 4.9 Specific Performance. The parties agree that irreparable and
unquantifiable damage would occur in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise breached. Accordingly,
the parties agree that, if for any reason either of the Shareholders shall have failed to perform
its obligations under this Agreement, the parties hereto shall not object to the granting of
specific performance of the terms and provisions of this Agreement or other equitable relief on
the basis that there exists an adequate remedy at law, and the party seeking to enforce this
Agreement against such nonperforming party under this Agreement shall be entitled to specific
performance and injunctive and other equitable relief, and the parties further agree to waive any
requirement for the securing or posting of any bond in connection with the obtaining of any such
injunctive or other equitable relief, this being in addition to any other remedy to which they are
entitled at Law or in equity. If, notwithstanding the preceding sentence, a court shall require
that the non-breaching party prove that such non-breaching party is entitled to specific
performance, injunctive or other equitable relief for a breach or non-performance of this
Agreement by the other party, the parties agree that a party’s entitlement to such specific
performance, injunctive or other equitable relief shall be governed by the preponderance of the
evidence standard (and not the clear and convincing evidence or any other higher standard) for the
burden of persuasion with respect to a party’s entitlement to such relief.
Section 4.10 Severability. In the event any one or more of the provisions contained
in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein and therein shall not in
any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions, the effect of
which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
[Remainder of page left intentionally blank]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the day
and year first above written.
XXXXXX XXXXXX
By: /s/ Xxxxxx Xxxxxx
XXXXX XXXXXXXX
By: /s/ Xxxxx Xxxxxxxx
NOVASTAR FINANCIAL, INC.
By: /s/ W. Xxxxx Xxxxxxxx
Name: W. Xxxxx Xxxxxxxx
Title: Chairman and Chief Executive Officer
Name: W. Xxxxx Xxxxxxxx
Title: Chairman and Chief Executive Officer
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