EXHIBIT 1.1
NOVASTAR MORTGAGE, INC.,
as Seller and as Servicer
NOVASTAR MORTGAGE FUNDING CORPORATION,
as Company
and
______________________________________,
as Underwriter
UNDERWRITING AGREEMENT
Dated as of ____________________
relating to
NOVASTAR MORTGAGE FUNDING TRUST, SERIES _______,
NOVASTAR HOME EQUITY LOAN ASSET-BACKED BONDS, SERIES ___________
$______________
NovaStar Mortgage Funding Trust, Series ________
Home Equity Loan Asset-Backed Bonds, Series _________
UNDERWRITING AGREEMENT
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__________________
{Date}
___________________________
___________________________
___________________________
___________________________
Ladies and Gentlemen:
NovaStar Mortgage, Inc., a Virginia corporation ("NovaStar Mortgage"), and
NovaStar Mortgage Funding Corporation, a Delaware corporation (the "Company")
and each confirms its agreement with _________________________________
("_______________" or 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, Series ________, Home Equity Loan
Asset-Backed Bonds, Series _________ (collectively 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. 333-__________)
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 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.
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(a) Representations and Warranties by the Company. Each of the Company,
NovaStar Mortgage represents and warrants to the Underwriter as of the date
hereof, and as of the Closing Time referred to in Section 2(b) hereof, and
agrees with the Underwriter as follows:
(i) Compliance with Registration Requirements. The Company meets the
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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
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, 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 a 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
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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, or (B) under the headings "THE
BOND INSURER" and "DESCRIPTION OF THE BONDS--Bond Insurance Policy" or the
consolidated financial statements of the 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
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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 Insurer incorporated by reference
in the Registration Statement or Prospectus.
(iii) No Material Adverse Change in Business. Except as otherwise
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stated therein, (A) there has been no material adverse change in the
financial condition, earnings, business affairs or business prospects of
the Company, NovaStar Mortgage and its subsidiaries considered as one
enterprise (a "Material Adverse Effect"), whether or not arising in the
ordinary course of business and (B) there have been no transactions entered
into by the Company, NovaStar Mortgage or any of its subsidiaries, other
than those in the ordinary course of business, which are material with
respect to the Company, NovaStar Mortgage and its subsidiaries as one
enterprise.
(iv) Good Standing of the Company. Each of the Company and NovaStar
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Mortgage has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and
the State of Virginia, respectively, and each has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform its
obligations under this Agreement; and each of the Company and NovaStar
Mortgage 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
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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
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authorized, executed and delivered by the Company and NovaStar Mortgage.
(vi) Authorization of Other Agreements. The Trust Agreement and the
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Mortgage Loan Purchase Agreement have been duly authorized and, at the
Closing Time, will have been duly executed and delivered by the Company and
NovaStar Mortgage, as applicable, and each will constitute a legal, valid
and binding instrument enforceable against the Company or NovaStar
Mortgage, as the case may be, 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 Trust Agreement. The description of the
----------------------------------
Trust Agreement in the Prospectus conforms in all material respects with
the terms thereof. At the Closing Time, the Trust Agreement will conform
in all material respects to the description thereof contained in the
Prospectus.
(viii) Description of the Bonds. At the Closing Time, the Bonds will
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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.
(ix) Absence of Defaults and Conflicts. Neither the Company,
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NovaStar Mortgage nor any of its subsidiaries or affiliates 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 Company, NovaStar Mortgage
nor any of its subsidiaries or affiliates 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
Company, NovaStar Mortgage nor any of its subsidiaries or affiliates 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 Company or NovaStar Mortgage 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 Company and NovaStar Mortgage with each of its
obligations hereunder have been duly authorized by all necessary corporate
action and do not and
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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 Company,
NovaStar Mortgage or any of its subsidiaries 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 Company, NovaStar
Mortgage or any of its subsidiaries 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
Company, NovaStar Mortgage or any of its 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
Company, NovaStar Mortgage or any of its subsidiaries or its affiliates.
(x) Absence of Labor Dispute. No labor dispute with the employees
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of the Company, NovaStar Mortgage or any of its subsidiaries exists or, to
the knowledge of the Company, NovaStar Mortgage or any of its subsidiaries,
is imminent.
(xi) Absence of Proceedings. There is no action, suit, proceeding,
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inquiry or investigation before or by any court or governmental agency or
body, domestic or foreign, now pending, or, to the knowledge of the
Company, NovaStar Mortgage or any of its subsidiaries, threatened, against
or affecting the Company, NovaStar Mortgage or any of its subsidiaries,
which would reasonably be expected to result in a Material Adverse Effect,
or which would reasonably be expected to materially and adversely affect
the properties or assets of the Company, NovaStar Mortgage or any of its
subsidiaries or the consummation of this Agreement or the performance by
the Company or NovaStar Mortgage of its obligations hereunder. The
aggregate of all pending legal or governmental proceedings to which the
Company, NovaStar Mortgage or any of its subsidiaries is a party or of
which any of its 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.
(xii) Accuracy of Exhibits. There are no contracts or documents
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which are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required.
(xiii) Possession of Intellectual Property. The Company, NovaStar
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Mortgage and its subsidiaries own or possess, or can acquire on reasonable
terms, adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by
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it, and neither the Company, NovaStar Mortgage or any of its subsidiaries
has received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company, NovaStar Mortgage or any of its subsidiaries and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the aggregate,
would result in a Material Adverse Effect.
(xiv) Absence of Further Requirements. No filing with, or
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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 Company of its
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.
(xv) Possession of Licenses and Permits. The Company, NovaStar
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Mortgage and its subsidiaries 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 business now operated by them;
the Company, NovaStar Mortgage and its subsidiaries are 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 the Company,
NovaStar Mortgage and its subsidiaries have not 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.
(xvi) Tax Returns. The Company, NovaStar Mortgage and its
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subsidiaries have 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 Company, NovaStar Mortgage or
any of its subsidiaries has not been finally determined or remains open to
examination by applicable taxing authorities.
(xvii) Investment Company Act. The Company is not and upon the
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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
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entity "controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 Act").
(b) Officer's Certificates. Any certificate signed by any officer of the
Company, NovaStar Mortgage or any of its subsidiaries delivered to the
Underwriter or to counsel for the Underwriter shall be deemed a representation
and warranty by the Company, NovaStar Mortgage or any of its subsidiaries,
respectively, to the Underwriter to the matters covered thereby.
2. Sale and Delivery to the Underwriter; Closing.
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(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 Xxxxxxx, Mag &
Fizzell, P.C., 0000 Xxxxxx, Xxxxx 0000, Xxxxxx Xxxx, Xxxxxxxx 00000, 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 ___________
not later than 10:00 A.M. on the last business day prior to the Closing Time.
(c) Denominations; Registration. Certificates for the Bonds shall be in
such denominations and registered in such names as the Underwriter may request
in writing at least one full business day before the Closing Time.
3. Covenants of the Company. The Company covenants with the Underwriter
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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
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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.
(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). 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
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not misleading in the 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 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 later of 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 [Standard & Poor's Ratings Service, a division of McGraw
Hill, Inc. ("Standard & Poor's")], and [Xxxxx'x Investors Service, Inc.
("Moody's")] 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, CEDEL S.A. and the Euroclear System.
(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 _______________, 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.
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4. Payment of Expenses.
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(a) Expenses. The Company and/or NovaStar Mortgage will pay all expenses
incident to the performance of its 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)
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, CEDEL S.A. and the Euroclear System in connection
therewith; (iv) the fees and disbursements of the Company's and NovaStar
Mortgage'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 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
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Underwriter hereunder are subject to the accuracy of the representations and
warranties of the Company and NovaStar Mortgage contained in Section 1 hereof or
in certificates of any officer of the Company, NovaStar Mortgage and its
subsidiaries delivered pursuant to the provisions hereof, to the performance by
the Company, NovaStar Mortgage and its subsidiaries of their 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 and the Servicer. 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 Company
and NovaStar Mortgage, in form and substance satisfactory to counsel for the
Underwriter.
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(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.
(d) Officers' Certificate of the Company. 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
Company, 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 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) Officers' Certificates of NovaStar Entities and the Servicer. 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 NovaStar Mortgage and its subsidiaries considered as
one enterprise and the Servicer, 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 NovaStar Mortgage, dated as of the Closing
Time, to that effect.
(f) Accountant's Comfort Letter. At or prior to the time of the execution
of this Agreement, the Underwriter shall have received from KPMG Peat Marwick
LLP 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.
(g) [Reserved].
(h) 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.
(i) Maintenance of Rating. At the Closing Time, the Bonds shall be rated
"Aaa" by [Moody's] and "AAA" by [Standard & Poor's] 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.
11
(j) 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.
(k) 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.
(l) 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.
(m) 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 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.
(n) No Downgrade of Servicer. At the Closing Time, [Moody's] and
[Standard & Poor's] shall not have downgraded any rating assigned to NovaStar
Mortgage, Inc.
(o) 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 Company and
NovaStar Mortgage 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 Company and NovaStar Mortgage
agree, jointly and severally, 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
12
omission therefrom of a material fact necessary in order to make the
statements therein, in the 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 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 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
Company; and
(iv) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by ___________________),
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 Company or NovaStar Mortgage 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).
(b) Indemnification of the Company, NovaStar Mortgage, Directors and
Officers. The Underwriter agrees to indemnify and hold harmless the Company,
NovaStar Mortgage, and each person, if any, who controls the Company or NovaStar
Mortgage 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 Company or NovaStar
13
Mortgage 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 Terms 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.
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 Kiddcr/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 or NovaStar
Mortgage 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 or
NovaStar Mortgage 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 ____________________ and, in the
case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by 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
14
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.
(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 Company and
NovaStar Mortgage 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 Company and NovaStar Mortgage 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 Company and NovaStar Mortgage 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 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 Company and NovaStar Mortgage 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
Company
15
and/or NovaStar Mortgage, or by the Underwriter and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company, NovaStar Mortgage 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
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 Company and NovaStar Mortgage 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 Company and NovaStar Mortgage,
respectively. 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 Company and/or NovaStar Mortgage 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 Company or NovaStar Mortgage, 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 Company and NovaStar Mortgage, 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 NovaStar Mortgage,
whether or not arising in the ordinary course of business, or (ii) if there has
occurred any material adverse
16
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 NovaStar Mortgage 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 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 ________ 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 Underwriter shall be
directed to the Underwriter, at _______________________________________________,
attention of the ____________________. Notices to the Company and NovaStar
Mortgage shall be directed to it at NovaStar Mortgage, Inc., 0000 X. 00/xx/
Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxx 00000, attention of the Chief Executive
Officer.
11. Parties. This Agreement shall each inure to the benefit of and be
-------
binding upon the Underwriter, the Company, NovaStar Mortgage 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 Company, NovaStar Mortgage 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 Company, NovaStar Mortgage 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 ________. SPECIFIED TIMES
OF DAY REFER TO _____________ 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 Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement between
the Underwriter and the Company in accordance with its terms.
Very truly yours,
NOVASTAR MORTGAGE FUNDING CORPORATION,
as Company
By: ___________________________________
Name:
Title:
NOVASTAR MORTGAGE, INC.
By: ___________________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
__________________________________,
as Underwriter
By: ______________________________
Name:
Title:
18
