EXHIBIT 1.1
NOVASTAR FINANCIAL, INC.
a Maryland corporation
AND
NOVASTAR MORTGAGE FUNDING CORPORATION
a Delaware corporation
AND
[NAME OF UNDERWRITER]
UNDERWRITING AGREEMENT
$______________________________
NovaStar Mortgage Funding Trust
Collateralized Mortgage Obligation
Bonds, Series ______________________
[DATE]
Table of Contents
1. Representations and Warranties.................................... 2
(a) Representations and Warranties by the Seller and the Company. 2
(i) Compliance with Registration Requirements............. 2
(ii) Incorporated Documents................................ 3
(iii) No Material Adverse Change in Business................ 3
(iv) Good Standing of the Seller and Company............... 4
(v) Authorization of Agreement............................ 4
(vi) Authorization of Other Agreements..................... 4
(vii) Description of the Transaction Documents.............. 4
(viii) Description of the Bonds.............................. 4
(ix) Absence of Defaults and Conflicts..................... 5
(x) Absence of Proceedings................................ 5
(xi) Absence of Further Requirements....................... 6
(xii) Possession of Licenses and Permits.................... 6
(xiii) Tax Returns........................................... 6
(xiv) No Business with Cuba................................. 6
(xv) Investment Company Act................................ 6
(b) Officer's Certificates....................................... 7
2. Sale and Delivery to the Underwriter; Closing..................... 7
(a) Bonds........................................................ 7
(b) Payment...................................................... 7
3. Covenants of the Company.......................................... 7
(a) Compliance with Securities Regulations and Commission
Requests..................................................... 7
(b) Filing of Amendments......................................... 8
(c) Delivery of Registration Statements.......................... 8
(d) Delivery of Prospectuses..................................... 8
(e) Continued Compliance with Securities Laws.................... 8
(f) Blue Sky Qualifications...................................... 9
(g) Reporting Requirements....................................... 9
(h) Rating of Bonds.............................................. 9
(i) DTC.......................................................... 9
(j) Restriction on Sale of Securities............................ 9
4. Payment of Expenses............................................... 9
(a) Expenses..................................................... 9
(b) Termination of Agreement..................................... 10
5. Conditions of Underwriter's Obligations........................... 10
(a) Effectiveness of Registration Statement...................... 10
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(b) Opinions of Counsel for NovaStar Entities.................... 10
(c) Opinion of Counsel for Underwriter........................... 10
(d) Officers' Certificates of NovaStar Entities.................. 11
(e) Accountant's Comfort Letter.................................. 11
(f) Bring-down Comfort Letter.................................... 11
(g) Accountant's Consent Letter.................................. 11
(h) Maintenance of Rating........................................ 11
(i) Opinion of Counsel for Indenture Trustee..................... 11
(j) Opinion of Counsel for Owner Trustee......................... 11
(k) Bond Insurance Policy........................................ 12
(l) Additional Documents......................................... 12
(m) Termination of Agreement..................................... 12
6. Indemnification................................................... 12
(a) Indemnification of Underwriter............................... 12
(b) Indemnification of the Seller, the Company, their Directors
and Officers................................................. 13
(c) Actions against Parties; Notification........................ 14
(d) Settlement without Consent if Failure to Reimburse........... 15
7. Contribution...................................................... 15
8. Representations, Warranties and Agreements to Survive Delivery.... 16
9. Termination of Agreement.......................................... 16
(a) Termination; General......................................... 16
(b) Liabilities.................................................. 17
10. Notices........................................................... 17
11. Parties........................................................... 17
12. Governing Law and Time............................................ 17
13. Effect of Headings................................................ 17
SCHEDULE A............................................................. Sch A-1
SCHEDULE B............................................................. Sch B-1
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$_____________
NOVASTAR FINANCIAL, INC.
(a Maryland corporation)
and
NOVASTAR MORTGAGE FUNDING CORPORATION
(a Delaware corporation)
NovaStar Mortgage Funding Trust Collateralized Mortgage
Obligation Bonds, Series _________________
UNDERWRITING AGREEMENT
----------------------
[DATE]
The Firm or Firms of Underwriters
named on the signature page hereof
Ladies and Gentlemen:
NovaStar Financial, Inc., a Maryland corporation (the "Seller") and
NovaStar Mortgage Funding Corporation, a Delaware corporation (the "Company")
confirm their agreement with __________________ (the "Underwriter"), with
respect to the issue and sale by the Company and the purchase by the Underwriter
of the principal amount set forth in Schedule A hereto of $____________
aggregate principal amount of the Company's NovaStar Mortgage Funding Trust
Collateralized Mortgage Obligation Bonds, Series __________________ (the
"Bonds"). The Bonds are to be issued pursuant to an indenture dated as of
_________________________________ (the "Indenture") between NovaStar Mortgage
Funding Trust, Series _________, as issuer (the "Issuer") and _________________,
as indenture trustee (the "Indenture Trustee"). Bonds issued in book entry form
will be issued to Cede & Co. as nominee of The Depository Trust Company ("DTC")
pursuant to a letter agreement, to be dated as of the Closing Time (as defined
in Section 2(b)) (the "DTC Agreement"), among the Issuer, the Indenture Trustee
and DTC.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File No._________________)
relating to the Bonds, and the offering thereof from time to time in accordance
with Rule 415 under the Securities Act of 1933, as amended (the "1933 Act"), and
has filed, and proposes to file, such amendments thereto as may have been
required to the date hereof and as shall be required prior to the effective date
thereof pursuant to the
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1933 Act and the rules of the Commission thereunder (the "1933 Act
Regulations"). Such registration statement, as amended at the time when each
becomes effective under the 1933 Act and at the Closing Time defined below, is
referred to herein as the "Registration Statement". The Company proposes to file
with the Commission pursuant to Rule 424(b)(5) under the 1933 Regulations a
supplement (the "Prospectus Supplement") to the form of prospectus (as may be
amended in connection with such Prospectus Supplement, the "Basic Prospectus";
the Basic Prospectus, together with the Prospectus Supplement, the
"Prospectus"). Any preliminary form of the Prospectus that has heretofore been
filed pursuant to Rule 424(b) or prior to the effective date of the Registration
Statement, pursuant to Rule 402(a) or 424(a) is hereinafter called a
"preliminary prospectus".
For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus, the Prospectus or any amendment or
supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("XXXXX").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which are incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934, as amended (the "1934
Act") which is incorporated by reference in the Registration Statement, such
preliminary prospectus or the Prospectus, as the case may be.
Capitalized terms used but not defined herein shall have the meanings given
to them in the Definitions attached to the Indenture as Appendix A.
1. Representations and Warranties.
------------------------------
(a) Representations and Warranties by the Seller and the Company. The
Seller and the Company jointly and severally represent and warrant to the
Underwriter as of the date hereof, and as of the Closing Time referred to in
Section 2(b) hereof, and agree with the Underwriter as follows:
(i) Compliance with Registration Requirements. The Company meets the
requirements for use of Form S-3 under the 1933 Act. The Registration
Statement has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement has been issued
under the 1933 Act and no proceedings for that purpose have been instituted
or are pending or, to the knowledge of the Company, are contemplated by the
Commission, and any request on the part of the Commission for additional
information has been complied with. At the time the Registration Statement
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became effective and at the Closing Time, the Registration Statement and any
amendments and supplements thereto complied and will comply in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations and
the Trust Indenture Act of 1939, as amended (the "1939 Act") and the rules and
regulations of the Commission thereunder (the "1939 Act Regulations"), and did
not and will not contain any 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 not misleading. Neither the Prospectus nor any amendments or
supplements thereto, at the time the Prospectus or any such amendment or
supplement was issued and at the Closing Time, included or will include an
untrue statement of a material fact or omitted or will omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties in this subsection shall not apply to statements in or omissions
from the Registration Statement or Prospectus (A) made in reliance upon and in
conformity with information furnished to the Company in writing by the
Underwriter expressly for use in the Registration Statement or Prospectus, and
(B) under the headings "THE BOND INSURER" and "DESCRIPTION OF THE BONDS[_]Bond
Insurance Policy" or the consolidated financial statements of the Bond Insurer
incorporated by reference in the Registration Statement or Prospectus.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the 1933 Act, complied when so filed in all
material respects with the 1933 Act Regulations and each preliminary prospectus
and the Prospectus delivered to the Underwriter for use in connection with this
offering was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T.
(ii) Incorporated Documents. The documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the Prospectus, at
the time they were or hereafter are filed with the Commission, complied and will
comply in all material respects with the requirements of the 1934 Act and the
rules and regulations of the Commission thereunder (the "1934 Act Regulations"),
and, when read together with the other information in the Prospectus, at the
time the Registration Statement became effective, at the time the Prospectus was
issued and at the Closing Time, did not and 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 not misleading. The
representations and warranties in this subsection shall not apply to the
consolidated financial statements of the Bond Insurer incorporated by reference
in the Registration Statement or Prospectus.
(iii) No Material Adverse Change in Business. Since the respective dates as
of which information is given in the Registration Statement and the Prospectus,
except as otherwise stated therein, (A) there has been no material adverse
change in the financial condition, earnings, business affairs or business
prospects of the Seller or the Company (a
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"Material Adverse Effect"), whether or not arising in the ordinary course of
business and (B) there have been no transactions entered into by the Seller or
the Company, other than those in the ordinary course of business, which are
material with respect to the Seller or the Company.
(iv) Good Standing of the Seller and Company. Each of the Seller and the
Company has been duly incorporated and is validly existing as a corporation in
good standing under the laws of its respective State of incorporation and has
corporate power and authority to own, lease and operate its respective
properties and to conduct its respective business as described in the Prospectus
and to enter into and perform its respective obligations under this Agreement;
and each of the Seller and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect.
(v) Authorization of Agreement. This Agreement has been duly authorized,
executed and delivered by the Seller and the Company.
(vi) Authorization of Other Agreements. Each of the Transaction Documents
(as defined below) to which the Seller or the Company is a party has been duly
authorized and, at the Closing Time, will have been duly executed and delivered
by the Seller or the Company and will each constitute a legal, valid and binding
instrument enforceable against the Seller or the Company in accordance with its
terms, subject (i) to applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting creditors' rights generally, (ii) as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and (iii) as to
enforceability with respect to rights of indemnity thereunder, to limitations of
public policy under applicable securities laws.
(vii) Description of the Transaction Documents. The description of the
Purchase Agreement, the Trust Agreement, the Indenture and the Servicing
Agreement (collectively, the "Transaction Documents") in the Prospectus conforms
in all material respects with the terms thereof. At the Closing Time, the
Transaction Documents will conform in all material respects to the descriptions
thereof contained in the Prospectus.
(viii) Description of the Bonds. At the Closing Time, the Bonds will have
been duly and validly authorized and executed by the Indenture Trustee, and,
assuming authentication as specified in the Indenture, will be validly issued
and outstanding and entitled to the benefits of the Indenture. The description
of the Bonds in the Prospectus conforms or will conform in all material respects
with the terms thereof and will be in substantially the respective forms filed
or incorporated by reference, as the case may be, as exhibits to the
Registration Statement.
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(ix) Absence of Defaults and Conflicts. Neither the Seller nor the Company
is in violation of its charter or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Seller or the Company is a
party or by which it or any of them may be bound, or to which any of the
property or assets of the Seller or the Company is subject (collectively,
"Agreements and Instruments") except for such defaults that would not result in
a Material Adverse Effect; and the execution, delivery and performance of this
Agreement and any other agreement or instrument entered into or issued or to be
entered into or issued by the Seller or the Company in connection with the
transactions contemplated hereby or thereby or in the Registration Statement and
the consummation of the transactions contemplated herein and in the Registration
Statement (including the issuance and sale of the Bonds) and compliance by the
Seller or the Company with its respective obligations hereunder have been duly
authorized by all necessary corporate action and do not and will not, whether
with or without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default or a Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Seller or the Company pursuant
to, the Agreements and Instruments except for such conflicts, breaches or
defaults or liens, charges or encumbrances that, singly or in the aggregate,
would not result in a Material Adverse Effect, nor will such action result in
any violation of the provisions of the charter or by-laws of the Seller or the
Company or any applicable law, statute, rule, regulation, judgment, order, writ
or decree of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Seller or the Company or any of its
respective assets or properties. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf) the
right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Seller or the Company or their affiliates.
(x) Absence of Proceedings. There is no action, suit, proceeding, inquiry
or investigation before or by any court or governmental agency or body, domestic
or foreign, now pending, or, to the knowledge of the Seller or the Company
threatened, against or affecting the Seller or the Company which would
reasonably be expected to result in a Material Adverse Effect, or which would
reasonably be expected to materially and adversely affect the respective
properties or assets of the Seller or the Company or the consummation of this
Agreement or the performance by the Seller or the Company of its respective
obligations hereunder. The aggregate of all pending legal or governmental
proceedings to which the Seller or the Company is a party or of which any of its
respective property or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation incidental to the
business, would not reasonably be expected to result in a Material Adverse
Effect.
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(xi) Absence of Further Requirements. No filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency is necessary or required for the
performance by the Seller or the Company of its respective obligations
hereunder, in connection with the offering, issuance or sale of the Bonds
hereunder or the consummation of the transactions contemplated by this
Agreement, except such as may be required under the 1933 Act, the 1939 Act
Regulations or state securities or blue sky laws and except for the
qualification of the Indenture under the 1939 Act.
(xii) Possession of Licenses and Permits. Each of the Seller and the
Company possesses such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies necessary to
conduct the respective business now operated by them; each of the Seller and the
Company is in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in the
aggregate, have a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be in full
force and effect would not have a Material Adverse Effect; and neither the
Seller nor the Company has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect.
(xiii) Tax Returns. Each of the Seller and the Company has filed all
federal, state, local and foreign tax returns that are required to be filed or
have duly requested extensions thereof and have paid all taxes required to be
paid by any of them and any related assessments, fines or penalties, except for
any such tax, assessment, fine or penalty that is being contested in good faith
and by appropriate proceedings; and adequate charges, accruals and reserves have
been provided for in respect of all federal, state, local and foreign taxes for
all periods as to which the tax liability of the Seller or the Company has not
been finally determined or remains open to examination by applicable taxing
authorities.
(xiv) No Business with Cuba. Neither the Seller nor the Company is doing
business with Cuba.
(xv) Investment Company Act. Neither the Seller nor the Company is and upon
the issuance and sale of the Bonds as herein contemplated and the application of
the net proceeds therefrom as described in the Prospectus will not be, an
"investment company" or an entity "controlled" by an "investment company" as
such terms are defined in the Investment Company Act of 1940, as amended (the
"1940 Act").
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(b) Officer's Certificates. Any certificate signed by any officer of the
Seller or the Company delivered to the Underwriter or to counsel for the
Underwriter shall be deemed a representation and warranty by the Company to the
Underwriter to the matters covered thereby.
2. Sale and Delivery to the Underwriter; Closing.
(a) Bonds. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to sell to the Underwriter, and the Underwriter agrees to purchase from
the Company, at the price set forth in Schedule B, the aggregate principal
amount of Bonds set forth in Schedule A opposite the name of the Underwriter.
(b) Payment. Payment of the purchase price for, and delivery of
certificates for, the Bonds shall be made at the office of _____________________
located at ____________________________________, or at such other place as shall
be agreed upon by the Underwriter and the Company, at 10:00 A.M. on or about
____________________________ or such other time not later than ten business days
after such date as shall be agreed upon by the Underwriter and the Company (such
time and date of payment and delivery being herein called the "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Underwriter for the account of the Underwriter of certificates for the Bonds
to be purchased by them. The certificates representing the Bonds shall be
registered in the name of Cede & Co. pursuant to the DTC Agreement and shall be
made available for examination and packaging by the Underwriter in The City of
___________________________ not later than 10:00 A.M. on the last business day
prior to the Closing Time.
3. Covenants of the Company. The Company covenants with the Underwriter
as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company will notify the Underwriter immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration Statement
shall become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Bonds for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company will promptly effect the filings necessary pursuant
to Rule 424(b) and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under Rule 424(b)
was received for filing by the Commission and, in the event that it was not, it
will promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
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(b) Filing of Amendments. The Company will give the Underwriter notice of
its intention to file or prepare any amendment to the Registration Statement or
any amendment, supplement or revision to either the Basic Prospectus or to the
Prospectus, whether pursuant to the 1933 Act, the 1934 Act or otherwise (other
than reports to be filed pursuant to the 1934 Act), will furnish the Underwriter
with copies of any such documents a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file or use any such
document to which the Underwriter or counsel for the Underwriter shall object.
(c) Delivery of Registration Statements. The Company has furnished or will
deliver to the Underwriter and counsel for the Underwriter, without charge,
signed copies of the Registration Statement as originally filed and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Underwriter without charge, a conformed
copy of the Registration Statement as originally filed and of each amendment
thereto (without exhibits) for the Underwriter. The copies of the Registration
Statement and each amendment thereto furnished to the Underwriter will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to XXXXX, except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to the
Underwriter, without charge, as many copies of each preliminary prospectus as
the Underwriter reasonably requested, and the Company hereby consents to the use
of such copies for purposes permitted by the 1933 Act. The Company will furnish
to the Underwriter, without charge, during the period when the Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, such number of
copies of the Prospectus (as amended or supplemented) as the Underwriter may
reasonably request. The Prospectus and any amendments or supplements thereto
furnished to the Underwriter will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations and the 1939 Act and the 1939 Act Regulations so as to permit the
completion of the distribution of the Bonds as contemplated in this Agreement
and in the Prospectus. If at any time when a prospectus is required by the 1933
Act to be delivered in connection with sales of the Bonds, any event shall occur
or condition shall exist as a result of which it is necessary, in the opinion of
counsel for the Underwriter or for the Company, to amend the Registration
Statement or amend or supplement the Prospectus in order that the Prospectus
will not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading
in light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at any
such time to amend the Registration Statement or amend or supplement the
Prospectus in order to comply with the requirements of the 1933 Act or the 1933
Act Regulations, the Company will promptly prepare and file with the Commission,
subject to Section
8
3(b), such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectus comply with
such requirements, and the Company will furnish to the Underwriter such number
of copies of such amendment or supplement as the Underwriter may reasonably
request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriter, to qualify the Bonds for offering and sale
under the applicable securities laws of such states and other jurisdictions as
the Underwriter may designate and to maintain such qualifications in effect for
a period of not less than one year from the effective date of the Registration
Statement; provided, however, that the Company shall not be obligated to file
any general consent to service of process or to qualify as a foreign corporation
or as a dealer in securities in any jurisdiction in which it is not so qualified
or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject. In each jurisdiction in
which the Bonds have been so qualified, the Company will file such statements
and reports as may be required by the laws of such jurisdiction to continue such
qualification in effect for a period of not less than one year from the
effective date of the Registration Statement. The Company will also supply the
Underwriter with such information as is necessary for the determination of the
legality of the Bonds for investment under the laws of such jurisdictions as the
Underwriter may request.
(g) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(h) Rating of Bonds. The Company shall take all reasonable action
necessary to enable __________________________________________ ("______"), and
______________________ ("__________") to provide their respective credit ratings
of the Bonds as described in the Prospectus.
(i) DTC. The Company will cooperate with the Underwriter and use its best
efforts to permit the Bonds to be eligible for clearance and settlement through
the facilities of DTC.
(j) Restriction on Sale of Securities. During the period from the date
hereof to the Closing Time, the Company will not, without the prior written
consent of the Underwriter, directly or indirectly, issue, sell, offer or agree
to sell, grant any option for the sale of, or otherwise dispose of, any other
mortgage-related securities of the Company or securities of the Company that are
convertible into, or exchangeable for, the Bonds or such other debt securities.
4. Payment of Expenses.
(a) Expenses. The Seller or the Company will pay all expenses incident to
the performance of their obligations under this Agreement, including (i) the
preparation, printing and any filing of the Registration Statement (including
any schedules or exhibits and any document incorporated therein by reference)
originally filed and of each amendment or supplement thereto, (ii)
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the preparation, printing and delivery to the Underwriter of this Agreement, the
Indenture and such other documents as may be required in connection with the
offering, purchase, sale and delivery of the Bonds, (iii) the preparation,
issuance and delivery of the certificates for the Bonds to the Underwriter,
including any charges of DTC in connection therewith; (iv) the fees and
disbursements of the Seller's and the Company's accountants and other advisors,
(v) the qualification of the Bonds under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the reasonable fees
and disbursements of counsel for the Underwriter in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriter of copies of each
preliminary prospectus and of the Prospectus and any amendments or supplements
thereto, (vii) the fees and expenses of the Indenture Trustee and Owner Trustee,
including the fees and disbursements of counsel for the Indenture Trustee and
Owner Trustee in connection with the Indenture, the Trust Agreement and the
Bonds and (viii) any fees payable in connection with the rating of the Bonds.
(b) Termination of Agreement. If this Agreement is terminated by the
Underwriter in accordance with the provisions of Section 5 or Section 9(a)(i)
hereof, the Seller or the Company shall reimburse the Underwriter for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriter.
5. Conditions of Underwriter's Obligations. The obligations of the
Underwriter hereunder are subject to the accuracy of the representations and
warranties of the Seller and the Company contained in Section 1 hereof or in
certificates of any officer of the Seller or the Company delivered pursuant to
the provisions hereof, to the performance by the Seller and the Company of their
respective covenants and other obligations hereunder, and to the following
further conditions:
(a) Effectiveness of Registration Statement. At the Closing Time no stop
order suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened by the
Commission, and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
counsel to the Underwriter.
(b) Opinions of Counsel for NovaStar Entities. At the Closing Time, the
Underwriter shall have received the favorable opinions, dated as of the Closing
Time, of Xxxxxxx, Mag & Fizzell, P.C., counsel for the Seller, the Company and
the Servicer (collectively, the "NovaStar Entities"), in form and substance
satisfactory to counsel for the Underwriter. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the NovaStar Entities
and certificates of public officials.
(c) Opinion of Counsel for Underwriter. At the Closing Time, the
Underwriter shall have received the favorable opinions, dated as of the Closing
Time, of ____________________, counsel for the Underwriter. Such counsel may
also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Underwriter and certificates of public officials.
10
(d) Officers' Certificates of NovaStar Entities. At the Closing Time,
there shall not have been, since the date hereof or since the respective dates
as of which information is given in the Prospectus, any material adverse change
in the financial condition, earnings, business affairs or business prospects of
the NovaStar Entities, whether or not arising in the ordinary course of
business, and the Underwriter shall have received a certificate of the President
or a Vice President of each of the Seller and the Company, dated as of the
Closing Time, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 1(a) hereof are true
and correct with the same force and effect as though expressly made at and as of
the Closing Time, (iii) each has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the Closing
Time, and (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or are contemplated by the Commission.
(e) Accountant's Comfort Letter. At or prior to the time of the execution
of this Agreement, the Underwriter shall have received from ____________________
a letter dated such date, in form and substance satisfactory to the Underwriter,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to the Underwriter with respect to certain
financial information contained in the Registration Statement and the
Prospectus.
(f) Bring-down Comfort Letter. At the Closing Time, the Underwriter shall
have received from _________________ a letter, dated as of the Closing Time, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (f) of this Section, except that the specified date
referred to shall be a date not more than three business days prior to the
Closing Time.
(g) Accountant's Consent Letter. With respect to the Bond Insurer, at or
prior to the time of the execution of this Agreement, the Underwriter shall have
received from ___________________ a letter dated such date consenting to its
inclusion in the Prospectus Supplement as an expert with respect to certain
information contained in the Registration Statement and the Prospectus.
(h) Maintenance of Rating. At the Closing Time, the Bonds shall be rated
"____" by _____________ and "____" by __________ and the Company shall have
delivered to the Underwriter a letter dated the Closing Time, from each such
rating agency, or other evidence satisfactory to the Underwriter, confirming
that the Bonds have such ratings.
(i) Opinion of Counsel for Indenture Trustee. At the Closing Time, the
Underwriter shall have received the favorable opinion, dated as of the Closing
Time, of __________________, counsel for the Indenture Trustee, in form and
substance satisfactory to counsel for the Underwriter.
(j) Opinion of Counsel for Owner Trustee. At the Closing Time, the
Underwriter shall have received the favorable opinion, dated as of the Closing
Time, of ______________________, counsel for the Owner Trustee, in form and
substance satisfactory to counsel for the Underwriter.
11
(k) Bond Insurance Policy. At the Closing Time, the Bond Insurer shall
have issued the Bond Insurance Policy in favor of the Indenture Trustee for the
benefit of the holders of the Bonds.
(l) Additional Documents. At the Closing Time, counsel for the Underwriter
shall have been furnished with such documents and opinions as they may require
for the purpose of enabling them to pass upon the issuance and sale of the Bonds
as herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Seller and the Company in
connection with the issuance and sale of the Bonds as herein contemplated shall
be satisfactory in form and substance to the Underwriter and counsel for the
Underwriter.
(m) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Underwriter by notice to the Seller and the
Company at any time at or prior to the Closing Time, and such termination shall
be without liability of any party to any other party except as provided in
Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such
termination and remain in full force and effect.
6. Indemnification.
(a) Indemnification of Underwriter. The Seller and the Company jointly and
severally agree to indemnify and hold harmless the Underwriter and each person,
if any, who controls the Underwriter, as the case may be, within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto), or
the omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of material fact contained in the Computational Materials,
ABS Term Sheets or Collateral Term Sheets distributed by such Underwriter,
unless such untrue statement or alleged untrue statement of a material fact
was made in reliance upon and in conformity with Derived Information
provided by such Underwriter to the Seller or the Company expressly for use
in the Registration Statement, the Prospectus, the Computational Materials,
ABS Term Sheets or Collateral Term Sheets and the untrue statement or
alleged untrue statement did not derive
12
from an inaccuracy in the Seller-Provided Information used in the
preparation of such Computational Materials, ABS Term Sheets or Collateral
Term Sheets;
(iii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of the
Seller and the Company; and
(iv) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by the Underwriter),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i), (ii)
or (iii) above;
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to
the Seller or the Company by the Underwriter or the Bond Insurer expressly
for use in the Registration Statement (or any amendment thereto), or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(b) Indemnification of the Seller, the Company, their Directors and
Officers. The Underwriter agrees to indemnify and hold harmless the Seller and
the Company and each person, if any, who controls the Seller or the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
as follows (i) against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Seller or the Company by the Underwriter expressly
for use in the Registration Statement (or any amendment thereto) or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), and (ii) against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this Section,
as incurred, but only with respect to untrue statements or alleged untrue
statements made in the Computational Materials, Collateral Term Sheets or ABS
Term Sheets to the extent that such untrue statement or alleged untrue statement
of a material fact was made in reliance upon and in conformity with Derived
Information provided by the Underwriter expressly for use in the Computational
Materials, the ABS Term Sheets or the Collateral Term Sheets and the untrue
statements or alleged untrue statements did not derive from an inaccuracy in the
Seller-Provided Information used in the preparation of such Computational
Materials, ABS Term Sheets or Collateral Term Sheets.
13
For purposes of this Agreement, "Computational Materials" shall have the
meaning given such term in the No-Action Letter of May 20, 1994 issued by the
Commission to Xxxxxx, Xxxxxxx Acceptance Corporation I, Xxxxxx, Peabody & Co.
Incorporated and Xxxxxx Structured Asset Corporation, as made applicable to
other issuers and underwriters by the Commission in response to the request of
the Public Securities Association dated May 24, 1994 (collectively, the
"Xxxxxx/PSA Letter"), and the requirement of the No-Action Letter of February
20, 1995 issued by the Commission to the Public Securities Association (the "PSA
Letter" and, together with the Xxxxxx/PSA Letter, the "No-Action Letters"), but
shall include only those Computational Materials that have been prepared or
delivered to prospective investors by the Underwriter. For purposes hereof,
"ABS Term Sheets" and "Collateral Term Sheets" shall have the meanings given
such terms in the PSA Letter but shall include only those ABS Term Sheets or
Collateral Term Sheets that have been prepared or delivered to prospective
investors, by the Underwriter. For purposes hereof, "Derived Information" means
such portion, if any, of the information delivered to the Company by the
Underwriter for filing with the Commission on Form 8-K and (i) is not contained
in the Prospectus without taking into account information incorporated therein
by reference, and (ii) does not constitute Seller-Provided Information.
"Seller-Provided Information" means any computer tape (or other information)
furnished to the Underwriter by or on behalf of the Company concerning the
assets of the Trust.
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to 6(a) above, counsel
to the indemnified parties shall be selected by the Underwriter and, in the case
of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Seller or the Company. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
14
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(iii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
7. Contribution. If the indemnification provided for in Section 6 hereof
is for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Seller and the
Company on the one hand and the Underwriter on the other hand from the offering
of the Bonds pursuant to this Agreement or (ii) if the allocation provided by
clause (i) 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 Seller and the Company on the one hand
and of the Underwriter on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Seller and the Company on the one
hand and the Underwriter on the other hand in connection with the offering of
the Bonds pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the Bonds
pursuant to this Agreement (before deducting expenses) received by the Seller or
the Company and the total underwriting discount received by the Underwriter, in
each case as set forth on the cover of the Prospectus, bear to the aggregate
initial public offering price of the Bonds as set forth on such cover. The
relative fault of the Seller and the Company on the one hand and the Underwriter
on the other hand shall be determined by reference to, among other things,
whether any such untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Seller or the Company, or by the Underwriter and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Seller, the Company and the Underwriter agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or
15
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, the Underwriter shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Bonds underwritten by the Underwriter and distributed to the
public were offered to the public exceeds the amount of any damages which the
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls the
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as the Underwriter and
each person, if any, who controls the Seller or the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Seller and the Company. The Underwriter's
obligations to contribute pursuant to this Section 7 is in proportion to the
principal amount of Bonds set forth opposite its name in Schedule A hereto.
8. Representations, Warranties and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Seller or the Company submitted pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Underwriter or controlling person, or
by or on behalf of the Seller or the Company, and shall survive delivery of the
Bonds to the Underwriter.
9. Termination of Agreement.
(a) Termination; General. The Underwriter may terminate this Agreement, by
notice to the Seller and the Company, at any time at or prior to the Closing
Time (i) if there has been, since the time of execution of this Agreement or
since the respective dates as of which information is given in the Prospectus,
any material adverse change in the financial condition, earnings, business
affairs or business prospects of the Company or the Seller, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States, any
outbreak of hostilities or escalation thereof or other calamity or crisis or any
change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Underwriter,
impracticable to market the Bonds or to enforce contracts for the sale of the
Bonds, or (iii) if trading in any securities of the Company or the Seller has
been suspended or limited by the Commission or the New York Stock Exchange, or
if trading generally on the American Stock Exchange or the New York Stock
Exchange or in the NASDAQ National Market System has been suspended or limited,
or minimum or maximum prices for trading have been fixed, or maximum
16
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority, or (iv) if a banking moratorium has
been declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
10. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Seller or the Company
shall be directed to the Company or Seller, as applicable, at 0000 Xxxx 00xx
Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxx 00000, attention: Xxxxx X. Xxx and notices to
the Underwriter shall be directed to the Underwriter at _______________________,
attention ________________________.
11. Parties. This Agreement shall each inure to the benefit of and be
binding upon the Underwriter, the Seller, the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriter, the Seller, the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriter, the Seller, the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Bonds from any
Underwriter shall be deemed to be a successor by reason merely of such purchase.
12. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES
OF DAY REFER TO NEW YORK CITY TIME.
13. Effect of Headings. The Article and Section headings herein and the
Table of Contents are for convenience only and shall not affect the construction
hereof.
17
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Seller and the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriter, the Seller and the Company in accordance with
its terms.
Very truly yours,
NOVASTAR FINANCIAL, INC.
By __________________________
Title:_______________________
NOVASTAR MORTGAGE FUNDING CORPORATION
By___________________________
Title:_______________________
CONFIRMED AND ACCEPTED,
as of the date first above written:
[UNDERWRITER]
By_______________________________
Authorized Signatory
18
SCHEDULE A
Name of Underwriter Total
------------------- Principal
Amount of
Bonds
-----
_______________________________ ..................... $______________
Sch A-1
SCHEDULE B
NOVASTAR FINANCIAL, INC.
AND
NOVASTAR MORTGAGE FUNDING CORPORATION
$______________ NovaStar Mortgage Funding Trust
Collateralized Mortgage Obligation Bonds, Series _________
1. The initial public offering price of the Bonds shall be ______% of the
principal amount thereof.
2. The purchase price to be paid by the Underwriter for the Bonds shall
be __% of the principal amount thereof.
3. The interest rate on the Bonds shall be as set forth in the Prospectus
Supplement.
Sch B-1