MASTER REPURCHASE AGREEMENT (2007 SERVICING RIGHTS)
Dated as of April 25, 2007
AMONG:
Wachovia Bank, N.A. ("Buyer", which term shall include any "Principal" as
defined and provided for in Annex I), as buyer, and Wachovia Capital Markets,
LLC, as agent pursuant hereto ("Agent"); and
NovaStar Mortgage, Inc. ("NMI") (the "Seller").
1. APPLICABILITY
Buyer shall, from time to time, upon the terms and conditions set forth
herein, agree to enter into transactions in which the Seller transfers to
Buyer Eligible Assets against the transfer of funds by Buyer, with a
simultaneous agreement by Buyer to transfer to the Seller such Purchased
Assets at a date certain, against the transfer of funds by the Seller. Each
such transaction shall be referred to herein as a "Transaction", and,
unless otherwise agreed in writing, shall be governed by this Agreement.
2. DEFINITIONS AND INTERPRETATION
a. Defined Terms.
"2006 Dividend" shall mean the dividend distribution to be made by NFI to
comply with U.S. federal income tax law requirements for REITs to distribute at
least 90% of their REIT taxable income.
"Adjusted Tangible Net Worth" shall mean at any date:
(a) Book Net Worth plus the notional amount of any Trust Preferred
Securities, minus
(b) The sum of (1) all assets which would be classified as intangible
assets of NFI and its consolidated Subsidiaries under GAAP (except
purchased and capitalized value of servicing rights), including, without
limitation, goodwill (whether representing the excess cost over book value
of assets acquired or otherwise), patents, trademarks, trade names,
copyrights, franchises and deferred charges (including, without limitation,
unamortized debt discount and expense, organization costs and research and
product development costs) plus (2) all receivables from directors,
officers and shareholders of NFI and its consolidated Subsidiaries, minus
(c) The amount of unrealized gains on debt securities (as defined in
FASB 115) of NFI and any Subsidiaries of NFI Holding, plus
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(d) The amount of unrealized losses on debt securities (as defined in
FASB 115) of NFI and any Subsidiaries of NFI Holding.
Provided that in all cases such amounts shall be determined by combining
the relevant figures for NFI and its consolidated Subsidiaries and its
Affiliates, as accounted for under the equity method.
"Affiliate" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting equity, by contract or otherwise.
"Agency Contract" means any contract or agreement for the sale and/or
servicing of Mortgage Loans entered into between Seller and an Agency, and all
amendments thereto.
"Agency" shall mean ▇▇▇▇▇▇▇ Mac, ▇▇▇▇▇▇ ▇▇▇ or ▇▇▇▇▇▇ ▇▇▇, as applicable.
"Agent" means Wachovia Capital Markets, LLC or any successor.
"Agreement" means this Master Repurchase Agreement (2007 Servicing Rights),
as it may be amended, supplemented or otherwise modified from time to time.
"Ancillary Income" shall mean all income derived from the Serviced Loans
related to Servicing Rights sold hereunder, excluding Servicing Fees and any
Prepayment Charges that may be attributable thereto, including but not limited
to interest received on funds deposited in the custodial account or any escrow
account, late charges, fees received with respect to checks or bank drafts
returned by the related bank for non-sufficient funds, assumption fees, optional
insurance administrative fees or insurance premium fees and all other incidental
fees and charges that may be referred to as "ancillary income" in the Servicing
Agreements, with respect to which the right to receive or collect such income is
owned by Seller as Servicer.
"Book Net Worth" shall mean the excess of total assets of NFI and its
consolidated Subsidiaries over Total Liabilities of NFI and its consolidated
Subsidiaries determined in accordance with GAAP (or such non-GAAP principles as
may be disclosed to and approved by Buyer from time to time).
"Breakage Costs" shall have the meaning assigned thereto in Section 3(c)
herein.
"Business Day" means any day other than (i) a Saturday or Sunday or (ii) a
day upon which the New York Stock Exchange or the Federal Reserve Bank of New
York is obligated by law or executive order to be closed.
"Buyer's Margin Amount" means, with respect to any Transaction as of any
date of determination, the amount obtained by application of Buyer's Margin
Percentage to the Repurchase Price for such Transaction as of such date.
"Buyer's Margin Percentage" shall have the meaning assigned thereto in the
Side Letter.
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"Call Rights" means all rights of Seller under any Eligible Servicing
Agreements, if any, to purchase the remaining mortgage loans and all other
related assets under the optional termination or any similar provision contained
in any Eligible Servicing Agreement.
"Call Rights Assignment" shall mean, with respect to each Purchased Asset,
an assignment of all right, title and interest of the holder of the Call Rights
in the related Call Rights to Buyer, substantially in the form attached hereto
as Exhibit I.
"Call Rights Assignment Notice" shall mean, with respect to any Purchased
Asset, a notice to the applicable Trustee of the assignment of the related Call
Rights to Buyer hereunder, substantially in the form of Exhibit J.
"Capital Stock" shall mean any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all similar ownership interests in a Person (other than a corporation) and
any and all warrants or options to purchase any of the foregoing.
"Change of Control" shall mean any person or group of persons (other than
(i) any subsidiary of NFI or (ii) any employee or director benefit plan or stock
plan of NFI or any subsidiary of NFI or any trustee or fiduciary with respect to
any such plan when acting in that capacity or any trust related to any such
plan) shall have acquired beneficial ownership of shares representing more than
50% of the combined voting power represented by the outstanding common stock of
NFI (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act
of 1934, as amended, and the applicable rules and regulations thereunder).
"Change in Law" means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
the date of this Agreement or (c) compliance by Buyer (or any Affiliate of
Buyer) with any request, guideline or directive (whether or not having the force
of law) of any Governmental Authority made or issued after the date of this
Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall have the meaning assigned thereto in Section 8 hereof.
"Collateral Security, Setoff and Netting Agreement" means the Collateral
Security, Setoff and Netting Agreement dated as of April 18, 2007 among Buyer
and certain Affiliates and NFI, NMI and certain Affiliates as it may be further
amended from time to time
"Combined Market Value" means the aggregate Market Value of the Purchased
Assets and the market value of the residual securities and other assets, if any,
that are purchased pursuant to the Master Repurchase Agreement (2007 Residual
Securities).
"Combined Maximum Aggregate Purchase Price" shall have the meaning assigned
thereto in the Side Letter.
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"Combined Purchase Price" means the aggregate Purchase Price of the
Purchased Assets and the purchase price of the residual securities and other
assets, if any that are purchased pursuant to the Master Repurchase Agreement
(2007 Residual Securities).
"Commitment Letter" means the commitment letter, dated as of April 11,
2007, among the Buyer, the Agent, Wachovia Investment Holdings, LLC, the Seller
and NFI.
"Confirmation" shall have the meaning assigned thereto in Section 4(b)
hereof.
"Default" means any event, that, with the giving of notice or the passage
of time or both, would constitute an Event of Default.
"Default Rate" means, as of any date of determination, the lesser of (i)
the Prime Rate plus 4% and (ii) the maximum rate permitted by applicable law.
"Dividend Securities" shall mean notes, bonds, debentures or common or
preferred stock of NFI or its subsidiaries that qualify as property and will be
treated as a deductible dividend to NFI shareholders under the Code, and are
reasonably acceptable to the Buyer.
"Effective Date" shall mean the date set forth on the top of the first page
of this Agreement.
"Eligible Assets" shall mean Eligible Servicing Rights.
"Eligible Servicing Agreement" shall mean a Servicing Agreement in respect
of which the following eligibility requirements have been satisfied:
(a) such Servicing Agreement is in form and substance satisfactory
to, and has been reviewed and approved by, the Buyer in its sole
discretion, and such Servicing Agreement contains servicing and
assignment of servicing rights provisions acceptable to the Buyer
and with respect to the Servicing Agreements identified in
Sections (a) and (b) of Schedule 1, Buyer shall have received the
Resignation Letter and the Trustee Side Letter. The Buyer shall
hold the Resignation Letter and Trustee Side Letter in escrow
until the earliest of: (i) the resignation of the Seller as
Servicer or (ii) the occurrence of an Event of Default.
(b) such Servicing Agreement is in full force and effect, and is in
all respects genuine as appearing on its face or as represented
in the books and records of the Seller, and no event of default,
early amortization event, termination event, or other event
giving any party thereto (including with notice or lapse of time
or both) the right to terminate the Seller as servicer thereunder
for cause has occurred and is continuing;
(c) the Servicing Rights arising thereunder are free and clear of
liens in favor of any Person, except as provided hereunder, and
are not subject to any dispute or other adverse claim,
counterclaim, defense or right of set-off, exclusive of
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any ordinary course of business disputes or claims with related
mortgagors/borrowers;
(d) the Seller has not resigned or been terminated as servicer under
such Servicing Agreement and has no actual knowledge of any
pending or threatened action to terminate the Seller, as servicer
(whether for cause or without cause); and
(e) the whole loan owner or the securitization trustee under the
Servicing Agreements identified in Sections (a) and (b) of
Schedule 1, has acknowledged and agreed to the form and substance
of the Trustee Side Letter and Resignation Letter.
"Eligible Servicing Rights" shall mean Servicing Rights in respect of which
the following eligibility requirements have been satisfied:
(a) such Servicing Rights constitute a "general intangible" within
the meaning of Section 9-102(a)(42) (or the corresponding
provision of the applicable jurisdiction) of the UCC of all
applicable jurisdictions;
(b) such Servicing Right arises under and is attributable to an
Eligible Servicing Agreement;
(c) the sale and grant of a security interest by the Seller to the
Buyer on such Servicing Rights under the related Eligible
Servicing Agreement, as collateral for the Obligations, does not
and will not violate any Requirement of Law, the effect of which
violation is to render void or voidable such assignment, or to
permit the termination of the Servicing Rights of the Seller
under such Eligible Servicing Agreement;
(d) the Seller is the sole owner of such Servicing Rights, unless
otherwise approved in writing by the Buyer;
(e) the servicing obligations under the related Eligible Servicing
Agreement are being performed, and will be performed, directly by
the Servicer or the Subservicer, and not by any other person; and
(f) the representations and warranties contained on Exhibit C hereto
are true and correct at all times.
(g) the Serviced Loans serviced under the related Eligible Servicing
Agreement do not constitute open-ended home equity lines of
credit, unless otherwise approved in writing by the Buyer.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" shall mean any corporation or trade or business that is a
member of any group of organizations (i) described in Section 414(b) or (c) of
the Code of which Seller is a member
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and (ii) solely for purposes of potential liability under Section 302(c)(11) of
ERISA and Section 412(c)(11) of the Code and the lien created under Section
302(f) of ERISA and Section 412(n) of the Code, described in Section 414(m) or
(o) of the Code of which Seller is a member.
"Event of Default" shall have the meaning assigned thereto in Section 18
hereof.
"Existing Agreements" shall include the agreements and facilities regarding
the transactions set forth on Schedule 4 attached hereto.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority" shall mean any nation or government, any state or
other political subdivision thereof, or any entity exercising executive,
legislative, judicial, regulatory or administrative functions over Seller.
"Guarantee" means, as to any Person, any obligation of such Person directly
or indirectly guaranteeing any Indebtedness of any other Person or in any manner
providing for the payment of any Indebtedness of any other Person.
"Guaranty and Pledge Agreement" shall mean the guaranty and pledge
agreement in substantially the form attached hereto as Exhibit E governing the
pledge by NFI Holding of Pledged Stock to Buyer and the guaranty of the
Guarantors in favor of Buyer.
"Guarantors" means NFI, NFI Holding Corporation, NMI, and Homeview Lending,
Inc.
"Hedge Instrument" means, any interest rate cap agreement, interest rate
floor agreement, interest rate swap agreement or other interest rate hedging
agreement or instrument entered into by Seller with respect to the Servicing
Rights and/or Transactions.
"Income" means, with respect to any Purchased Asset at any time, all
Servicing Fees, Ancillary Income, and any and all other income that may be
related thereto that is received or retained by Seller as Servicer, net of any
amounts required to be paid by Servicer (including, but not limited to any
Subservicing Fees) to any other Person, but only to the extent not otherwise
pledged to investors in a pass-through transfer with respect to the related
Serviced Loans.
"Indebtedness" shall mean, for any Person: (a) all obligations for borrowed
money; (b) obligations of such Person to pay the deferred purchase or
acquisition price of Property or services, other than trade accounts payable
(other than for borrowed money) arising, and accrued expenses incurred, in the
ordinary course of business so long as such trade accounts payable are payable
and paid within ninety (90) days of the date the respective goods are delivered
or the respective services are rendered; (c) indebtedness of others secured by a
lien on the Property of such Person, whether or not the respective indebtedness
so secured has been assumed by such Person; (d) obligations (contingent or
otherwise) of such Person in respect of letters of credit or similar instruments
issued for account of such Person; (e) capital lease obligations of such Person;
(f) obligations of such Person under repurchase agreements or like arrangements
financially equivalent to obligations for borrowed money; (g) indebtedness of
others guaranteed on a recourse basis by such Person; (h) all obligations of
such Person incurred in connection with the acquisition or carrying of fixed
assets by
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such Person; (i) indebtedness of general partnerships of which such Person is a
general partner; and (j) any other contingent liabilities of such Person for the
liabilities or obligations of any other Person.
"Investment Company Act" means the Investment Company Act of 1940, as
amended, including all rules and regulations promulgated thereunder.
"LIBOR" shall mean, for each day of a Transaction, a rate based on the
offered rates of the Reference Banks for one-month U.S. dollar deposits, as
determined by Buyer for the related Purchase Date.
"Lien" shall mean, any mortgage, lien, pledge, charge, security interest,
option or claim or similar encumbrance.
"Margin Call" shall have the meaning assigned thereto in Section 6(a)
hereof.
"Margin Deficit" shall have the meaning assigned thereto in Section 6(a)
hereof.
"Market Value" means (i) with respect to any Purchased Asset that is an
Eligible Asset, as of any date of determination, the value ascribed to such
asset by Buyer in its sole discretion, and (ii) with respect to a Purchased
Asset that is not an Eligible Asset, zero.
"Master Repurchase Agreement (2007 Residual Securities)" means that certain
master repurchase agreement (2007 Residual Securities), dated as of April 18,
2007, among Wachovia Investment Holdings, LLC, Wachovia Capital Markets, LLC,
NovaStar Mortgage, Inc., NovaStar Certificates Financing Corporation and
NovaStar Assets Corp., as amended from time to time.
"Material Adverse Change" means any material adverse change in the
business, financial performance, assets, operations or condition (financial or
otherwise) of NFI and its consolidated subsidiaries taken as a whole of such
Person.
"Material Adverse Effect" means (a) a Material Adverse Change with respect
to a Guarantor or a Guarantor and its Affiliates that are party to any Program
Document taken as a whole; (b) a material impairment of the ability of a
Guarantor or any Affiliate that is a party to any Program Document to perform
under any Program Document and to avoid any Event of Default or (c) a material
adverse effect upon the legality, validity, binding effect or enforceability of
any Program Document against a Guarantor or any Affiliate that is a party to any
Program Document.
"Maximum Aggregate Purchase Price" shall have the meaning assigned thereto
in the Side Letter.
"MBS" shall mean collateralized mortgage obligations and other
mortgage-backed securities.
"Mortgage" shall mean with respect to a Mortgage Loan, the mortgage, deed
of trust or other instrument, which creates a lien on the fee simple or a
leasehold estate in such real property, which secures the Mortgage Note.
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"Mortgage Loan" shall mean any first or second lien, one-to-four-family
residential mortgage loan relating to Servicing Rights, which includes, without
limitation, (i) a Mortgage Note, the related Mortgage and all other related
documents and (ii) all right, title and interest of the Mortgagee in and to the
Mortgaged Property covered by the related Mortgage.
"Mortgage Note" shall mean the original executed promissory note or other
evidence of the indebtedness of a mortgagor/borrower with respect to a Mortgage
Loan.
"Mortgaged Property" means the real property (including all improvements,
buildings, fixtures, building equipment and personal property thereon and all
additions, alterations and replacements made at any time with respect to the
foregoing) and all other collateral securing repayment of the debt evidenced by
a Mortgage Note.
"Non-Seller Affiliate" means an Affiliate of Seller or Guarantor that is
not, itself, a Seller or Guarantor.
"Notice Date" shall have the meaning assigned thereto in Section 4 hereof.
"NFI" means NovaStar Financial, Inc. and its permitted successors and
assigns.
"NFI Holding" means NFI Holding Corporation and its permitted successors
and assigns.
"Obligations" means (a) all of Seller's and Guarantors' obligation to pay
the Repurchase Price on the Repurchase Date, and other obligations and
liabilities of Seller and Guarantors, to Buyer or its Affiliates arising under,
or in connection with, the Program Documents or otherwise, whether now existing
or hereafter arising; (b) any and all sums paid by Buyer or on behalf of Buyer
pursuant to the Program Documents in order to preserve any Purchased Asset or
its interest therein; (c) in the event of any proceeding for the collection or
enforcement of any of Seller's or Guarantors' indebtedness, obligations or
liabilities referred to in clause (a), the reasonable expenses of retaking,
holding, collecting, preparing for sale, selling or otherwise disposing of or
realizing on any Purchased Asset, or of any exercise by Buyer or such Affiliate
of its rights under the related agreements, including without limitation,
reasonable attorneys' fees and disbursements and court costs; and (d) all of
Seller's and Guarantors' obligations to Buyer or any other Person pursuant to
the Program Documents.
"Person" shall mean any legal person, including any individual,
corporation, partnership, association, joint-stock company, trust, limited
liability company, unincorporated organization, governmental entity or other
entity of similar nature.
"Plan" shall mean an employee benefit or other plan established or
maintained by Seller or any ERISA Affiliate and covered by Title IV of ERISA,
other than a Multiemployer Plan.
"Prepayment Charges" means, with respect to any Serviced Loan related to
any Servicing Rights sold hereunder, the charges or premiums, if any, due in
connection with a full or partial prepayment of such Serviced Loan in accordance
with the terms thereof, as to which the right to receive such charges and
premiums may be owned by the Seller as Servicer under the Servicing
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Agreements.
"Pledged Stock" shall mean all of the shares of Capital Stock of Seller,
together with all stock certificates, options or rights of any nature whatsoever
which may be issued or granted by Seller while this Agreement is in effect.
"Price Differential" means, with respect to each Transaction as of any
date, the aggregate amount obtained by daily application of the Pricing Rate for
such Transaction to the Purchase Price on a 360-day-per-year basis for the
actual number of days during the period commencing on (and including) the
Purchase Date and ending on (but excluding) the date of determination (reduced
by any amount of such Price Differential in respect of such period previously
paid by the Seller to Buyer) with respect to such Transaction.
"Pricing Rate" shall have the meaning assigned thereto in the Side Letter.
"Prime Rate" means the daily prime loan rate as reported in The Wall Street
Journal or if more than one rate is published, the highest of such rates.
"Principal" shall have the meaning given to it in Annex I.
"Program Documents" means this Agreement, the Collateral Security, Setoff
and Netting Agreement, the Pledge Agreement, the Commitment Letter, the Master
Repurchase Agreement (2007 Residual Securities), the Side Letter, the
Resignation Letter, the Trustee Side Letter, and any other agreement entered
into by any of the Seller and/or a Guarantor, on the one hand, and Buyer or one
of its Affiliates on the other, in connection herewith or therewith.
"Property" means any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or intangible.
"Purchase Date" means the date on which Purchased Assets are to be
transferred by the Seller to Buyer.
"Purchase Price" means the price at which Purchased Assets are transferred
by Seller to Buyer in a Transaction, which shall (unless otherwise agreed) be
equal to the Purchase Price Percentage times the Market Value of the related
Purchased Assets.
"Purchase Price Percentage" shall have the meaning assigned thereto in the
Side Letter.
"Purchased Assets" shall mean any of the following assets sold by Seller to
Buyer pursuant to and subject to any Transaction: the Eligible Assets, together
with the related Records and Servicing Rights, such other property, rights,
titles or interest as are specified on a related Transaction Notice, and all
instruments, chattel paper, and general intangibles comprising or relating to
all of the foregoing. The term "Purchased Asset" with respect to any Transaction
at any time shall also include Substitute Assets delivered pursuant to Section
16 hereof.
"Qualified Originator" shall mean (a) Seller and (b) any other originator
of Servicing Rights
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approved by Seller pursuant to the guidelines and procedures approved by Buyer
in writing from time to time, which approval may not be unreasonably withheld.
For purposes of this Agreement, the originators under the Servicing Agreement
entitled Series 2006-MTA are hereby approved.
"Qualified Successor Servicer" shall mean any servicer acceptable to Buyer
and that satisfies the eligibility criteria for successor servicers as set forth
in the relevant Servicing Agreements.
"Rating Agency" means each of ▇▇▇▇▇'▇ Investors Service, Inc., Standard &
Poor's, a division of The McGraw Hill Companies, Inc. or Fitch Ratings.
"Records" means all files, data tapes, loan schedules, material documents,
instruments, surveys (if available), certificates, correspondence, appraisals,
computer records, computer storage media, accounting records and other books and
records with respect to any Purchased Asset and any other instruments necessary
to document or service a Purchased Asset.
"Recourse Servicing Agreement" shall mean a Servicing Agreement with
respect to which the Servicer is obligated to repurchase or indemnify the holder
for the related Mortgage Loans in respect of defaults on such Mortgage Loans.
"Reference Banks" mean any leading banks selected by the Agent which are
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market with an established place of business in London.
"Resignation Letter" shall mean that certain letter of resignation in
substantially the form attached hereto as Exhibit G, regarding the resignation
of Servicer to Trustee under the related Servicing Agreement. The Resignation
Letter with respect to any Servicing Agreement shall be held in escrow by the
Buyer until such time as is necessary for Buyer to deliver the Resignation
Letter to the Trustee, as set forth in clause (a) of the definition of Eligible
Servicing Agreement.
"REIT" shall mean a real estate investment trust, as defined in Section 856
of the Code.
"Related Security" shall mean with respect to any Servicing Rights, (a) all
security interests or Liens and property subject thereto from time to time, if
any, purporting to secure payment of such Servicing Rights, whether pursuant to
the related Servicing Agreement or otherwise, together with all financing
statements covering any collateral securing such Servicing Rights; (b) all
guarantees, indemnities, letters of credit, insurance or other agreements or
arrangements of any kind from time to time supporting or securing the payment of
such Servicing Rights whether pursuant to the related Servicing Agreement or
otherwise; (c) the rights to payment in respect of such Servicing Rights under
the related Servicing Agreement, and all records relating to, and any other
contracts associated with, such Servicing Rights, and (d) any and all proceeds
of the foregoing.
"REMIC" means a "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"Repurchase Date" shall have the meaning assigned thereto in Section 3(b)
and shall also include the date determined by application of Section 19.
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"Repurchase Price" means the price at which Purchased Assets are to be
transferred from Buyer to the Seller upon the Repurchase Date for a Transaction,
which will be determined in each case (including Transactions terminable upon
demand) as the sum of the Purchase Price and the Price Differential as of the
date of such determination.
"Required Equity" shall mean, with respect to NFI (and its consolidated
Subsidiaries) (together, the "Companies"), the sum of the dollar amounts
calculated after multiplying the amount determined by combining the relevant
figures for NFI and its consolidated Subsidiaries for each asset class set forth
in the table below (or if such asset class is owned by NFI or a consolidated
Subsidiary but cannot be determined by combining the relevant figures for NFI
and its consolidated Subsidiaries, the fair market value thereof as calculated
by the Companies subject, however, to the approval of Buyer which will not be
unreasonably withheld) by the Percentage Multipliers set forth opposite such
asset class in the table below: Percentage Asset Class Multiplier
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Percentage
Asset Class Multiplier
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Cash 0%
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Mortgage Loans held-for-sale including accrued interest 5%
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Mortgage Loans held-in-portfolio including accrued interest 5%
(securitized in an owners trust)
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Mortgage Loans held-in-portfolio including accrued interest
(securitized in a REMIC trust) 1.75%
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AAA-Rated I/O and Prepay (P) Certificates booked on-B/S 25%
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BBB NIM Certificates 25%
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Residuals from whole loan securitizations 35%
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Residuals from NIM/CAPS 100%
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Non-rated subordinate bonds (excluding residuals) 100%
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A-Rated Mortgage-Backed Securities not in CDO 20%
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BBB-Rated Mortgage-Backed Securities not in CDO 25%
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BB-Rated Mortgage-Backed Securities not in CDO 50%
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Mortgage-Backed Securities in CDO 5%
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CDO Equity Sub Notes 100%
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CDO BBB Bonds 5%
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Agency Securities 3%
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Servicing Agreements (Mortgage Servicing Rights) 35%
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Servicing Advances 15%
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REO + Non-performing (90+ & foreclosures from bond collateral 35%
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---------------------------------------------------------------------------
Percentage
Asset Class Multiplier
---------------------------------------------------------------------------
calls)
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Other assets
- Hedging Agreements (Value of reserves that are not reflected 100%
in Marks to Market that impact equity)
- All Other Assets (all else remaining - including Other
Receivables & PP&E) 35%
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Intangible Assets 100%
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provided that the Required Equity shall be reduced by any Dividend
Securities with a maturity date of more than one year issued in connection with
the 2006 Dividend.
"SEC" shall mean the Securities and Exchange Commission.
"Serviced Loan" shall mean a Mortgage Loan serviced or required to be
serviced by Servicer under any Servicing Agreement, regardless of whether the
actual servicing is done by a subservicer retained by Servicer.
"Servicer" shall mean, with respect to a Serviced Loan related to Servicing
Rights, the Seller, or any successor or permitted assigns or any other Person
approved by Buyer in writing..
"Servicing Agreements" shall mean, collectively, those servicing agreements
that are not Recourse Servicing Agreements and all related agreements, under
which the Seller is the Servicer of Serviced Loans relating to Servicing Rights,
and are set forth on Schedule 1 hereto and which, (a) is with a holder or
custodian for a holder of the Serviced Loans who is acceptable to the Buyer, (b)
is not a subservicing arrangement, (c) is owned by the Seller free and clear of
all Liens (other than the Buyer's Lien granted hereunder) and (d) has been
reviewed and approved by Buyer for purposes of financing the Seller's
acquisition or retention of Eligible Servicing Rights hereunder. Schedule 1 may
be amended to provide for additional securitizations for which the related
additional Servicing Agreement contains the required servicing provisions as set
forth on Exhibit F and otherwise complies with terms and conditions set for
herein.
"Servicing Fee" shall mean, with respect to any Servicing Rights pledged
hereunder, the servicing fee specified on the related Servicing Rights Schedule
that is payable to Seller as Servicer of the related Serviced Loan.
"Servicing Rights" shall mean the Seller's rights and interests under any
Servicing Agreement, including (i) the rights to service the Serviced Loans
identified on the related Servicing Rights Schedule that are the subject matter
of such Servicing Agreement in the manner set forth in such Servicing Agreement;
(ii) the right to receive compensation (whether direct or indirect) for such
servicing, including the right to receive and retain the Servicing Fee and all
other Income with respect to such Serviced Loans; (iii) all rights, powers and
privileges incidental to the foregoing, together with all Records relating
thereto; (iv) any related Call Rights with respect any Servicing Agreement
relates to and (v) the nonexclusive right to use (in common with the Seller any
other
12
secured party that has a valid and enforceable security interest therein and
that agrees that its security interest is similarly nonexclusive) the Seller's
operating systems to manage and administer the Servicing Rights and any of the
data and information related thereto, or that otherwise relates to the Servicing
Rights, together with the media on which the same are stored to the extent
stored with material information or data that relates to property other than the
Servicing Rights, and the Seller's rights to access the same, whether exclusive
or nonexclusive, to the extent that such access rights may lawfully be
transferred or used by the Seller's permittees, and any computer programs that
are owned by the Seller (or licensed to the Seller under licenses that may
lawfully be transferred or used by the Seller's permittees) and that are used or
useful to access, organize, input, read, print or otherwise output and otherwise
handle or use such information and data.
"Servicing Rights File" shall mean, with respect to any Servicing Rights
pledged hereunder, the documents and materials retained by the Servicer that
includes without limitation, (i) the mortgage loan documents pertaining to the
related Serviced Loan(s), (ii) the credit documentation relating to the
origination of such Serviced Loan(s), (iii) copies of all documents,
correspondence, notes and all other materials of any kind held by the Servicer,
and (iv) all other information or materials necessary or required to board such
Serviced Loans onto the Servicer's servicing system.
"Servicing Rights Schedule" means the list of Servicing Rights delivered by
Seller to Buyer together with each Transaction Notice. Each Servicing Rights
Schedule (which may be provided in the form of an electronic data file) shall
set forth the following information with respect to the Servicing Rights
proposed to be sold on any Purchase Date: (i) the number of the related Serviced
Loan, (ii) the related Mortgagor's name, (iii) the original principal amount of
the related Serviced Loan, (iv) the current principal balance of the related
Serviced Loans, (v) a listing and description of any defaults that are
continuing under the related Serviced Loan, (vi) the name of each Servicing
Agreement, (vii) the amount of the related Servicing Fee, (viii) the amount of
the related Subservicing Fee, if any; (ix) whether Seller as Servicer is
entitled to receive or collect Ancillary Income and/or Prepayment Charges, (x) a
description of the Ancillary Income, if applicable, (xi) the amount of the
Prepayment Charges, if applicable, and (xii) any other information required by
Buyer.
"Side Letter" means the Pricing Side Letter, dated as of April 25, 2007,
among the Seller, Guarantors and Buyer.
"Structuring Fee" shall have the meaning assigned thereto in the Side
Letter.
"Subsidiary" means, with respect to any Person, any corporation,
partnership or other entity of which at least a majority of the securities or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions of such corporation, partnership or other entity (irrespective of
whether or not at the time securities or other ownership interests of any other
class or classes of such corporation, partnership or other entity shall have or
might have voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or more
Subsidiaries of such Person or by such Person and one or more Subsidiaries of
such Person; provided, however, that for purposes of Section 18 hereof,
"Subsidiary" shall not include any of the entities listed on Exhibit D hereto,
which may be revised by Seller from time to time upon consent of Buyer.
13
"Substitute Assets" has the meaning assigned thereto in Section 16(a).
"Termination Date" has the meaning assigned thereto in Section 27.
"Total Liabilities" shall mean total liabilities of NFI and its
consolidated Subsidiaries determined in accordance with GAAP (or with such
non-GAAP principles as may be disclosed to and approved by Buyer from time to
time); provided; for purposes of this Agreement, such term shall not include any
Trust Preferred Securities.
"Transaction" has the meaning assigned thereto in Section 1.
"Transaction Notice" means a written request of the Seller to enter into a
Transaction, in the form attached hereto as Exhibit B which is delivered to
Buyer.
"Trust Preferred Securities" shall mean (i) the $50,000,000 of unsecured
floating rate securities issued by NovaStar Capital Trust I, a statutory trust
100 percent owned by NMI, pursuant to the indenture dated March 15, 2005,
between NMI and ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank, NA, as trustee and (ii) the $35,000,000 of
unsecured floating rate securities issued by NovaStar Capital Trust II, a
statutory trust 100 percent owned by NMI, pursuant to the indenture dated April
18, 2006, between NMI and ▇▇ ▇▇▇▇▇▇ Chase Bank, NA, as trustee.
"Trustee" shall mean (i) the Bank of New York as successor in interest to
JPMorgan Chase Bank, National Association, as trustee under the Servicing
Agreements attached hereto on Schedule 1, Section (a); (ii) the Bank of New York
as successor in interest to JPMorgan Chase Bank, National Association, as
indenture trustee under the Servicing Agreements attached hereto on Schedule 1,
Section (b) and (iii) Deutsche Bank National Trust Company, as trustee under the
Servicing Agreements attached hereto on Schedule 1, Section (c).
"Trustee Side Letter" shall mean that certain letter agreement among the
Buyer, the Seller and the Trustee regarding: (i) the resignation of Seller as
Servicer under the Servicing Agreements identified on Schedule 1, Section (a),
(ii) the appointment of Buyer or its designee as successor servicer to Servicer
under a related Servicing Agreement and (iii) the designation of Buyer as an
additional addressee for any required notices to be sent to Seller pursuant to
the Servicing Agreements, substantially in the form attached hereto as Exhibit
H.
"Uniform Commercial Code" means the Uniform Commercial Code as in effect on
the date hereof in the State of New York or the Uniform Commercial Code as in
effect in the applicable jurisdiction.
"Usage Fee" shall have the meaning assigned thereto in the Side Letter.
b. Interpretation.
Headings are for convenience only and do not affect interpretation. The
following rules of this subsection (b) apply unless the context requires
otherwise. The singular includes the plural and conversely. A gender includes
all genders. Where a word or phrase is defined, its other grammatical
14
forms have a corresponding meaning. A reference to a subsection, Section, Annex
or Exhibit is, unless otherwise specified, a reference to a Section of, or annex
or exhibit to, this Agreement. A reference to a party to this Agreement or
another agreement or document includes the party's successors and permitted
substitutes or assigns. A reference to an agreement or document is to the
agreement or document as amended, modified, novated, supplemented or replaced,
except to the extent prohibited by any Program Document. A reference to
legislation or to a provision of legislation includes a modification or
re-enactment of it, a legislative provision substituted for it and a regulation
or statutory instrument issued under it. A reference to writing includes a
facsimile transmission and any means of reproducing words in a tangible and
permanently visible form. A reference to conduct includes, without limitation,
an omission, statement or undertaking, whether or not in writing. An Event of
Default subsists until it has been waived in writing by the Buyer or has been
timely cured. The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement. The term "including" is not limiting and means "including without
limitation." In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including", the words "to"
and "until" each mean "to but excluding", and the word "through" means "to and
including." This Agreement may use several different limitations, tests or
measurements to regulate the same or similar matters. All such limitations,
tests and measurements are cumulative and shall each be performed in accordance
with their terms. Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP, consistently applied. References herein to "fiscal year" and "fiscal
quarter" refer to such fiscal periods of the Seller. Except where otherwise
provided in this Agreement any determination, statement or certificate by the
Buyer or an authorized officer of the Buyer provided for in this Agreement is
conclusive and binds the parties in the absence of manifest error. A reference
to an agreement includes a security interest, guarantee, agreement or legally
enforceable arrangement whether or not in writing. A reference to a document
includes an agreement (as so defined) in writing or a certificate, notice,
instrument or document, or any information recorded in computer disk form. Where
the Seller or a Guarantor is required to provide any document to the Buyer under
the terms of this Agreement, the relevant document shall be provided in writing
or printed form unless the Buyer requests otherwise. At the request of the
Buyer, the document shall be provided in computer disk form or both printed and
computer disk form. This Agreement is the result of negotiations among and has
been reviewed by counsel to the Buyer, Guarantors and the Seller, and is the
product of all parties. In the interpretation of this Agreement, no rule of
construction shall apply to disadvantage one party on the ground that such party
proposed or was involved in the preparation of any particular provision of this
Agreement or this Agreement itself. Except where otherwise expressly stated, the
Buyer may give or withhold, or give conditionally, approvals and consents, and
may form opinions and make determinations at their absolute discretion. Any
requirement of good faith, discretion or judgment by the Buyer shall not be
construed to require Buyer to request or await receipt of information or
documentation not immediately available from or with respect to the Seller, a
Guarantor, a servicer of the Purchased Assets, any other Person or the Purchased
Assets themselves. With respect to any information set forth on Schedules 1, 2
and 3 attached hereto, Buyer has reviewed and consented to such information on
such schedules as of the Effective Date; provided, however, that to the extent
any facts or circumstances relating to the matters disclosed on such schedules
change after the Effective Date, Buyer shall not be deemed to have consented to
any such change and such change may result in an Event of Default.
15
3. THE TRANSACTIONS
a. The Seller shall repurchase Purchased Assets from Buyer on each related
Repurchase Date. Each obligation to repurchase subsists without regard to any
prior or intervening liquidation or foreclosure with respect to each Purchased
Asset. The Seller is obligated to obtain the Purchased Assets from Buyer or its
designee at the Seller's expense on (or after) the related Repurchase Date.
b. Provided that the applicable conditions in Sections 9(a) and (b) have
been satisfied, each Purchased Asset that is repurchased by the Seller on the
26th day of each month (or, if such 26th day is not a Business Day, the
immediately following Business Day) following the related initial Purchase Date
(the day of the month so determined for each month, or any other date designated
by the Seller to Buyer for such a repurchase on at least one Business Day's
prior notice to Buyer, a "Repurchase Date", which term shall also include the
date determined by application of Section 19) shall automatically become subject
to a new Transaction unless Buyer is notified by the Seller at least one (1)
Business Day prior to any Repurchase Date, provided that if the Repurchase Date
so determined is later than the Termination Date, the Repurchase Date for such
Transaction shall automatically reset to the Termination Date, and the
provisions of this sentence as it might relate to a new Transaction shall expire
on such date for each new Transaction, unless otherwise agreed, (y) the accrued
and unpaid Price Differential shall be settled in cash on each related
Repurchase Date, and (z) the Pricing Rate shall be as set forth in the Side
Letter.
c. If the Seller repurchases Purchased Assets on any day which is not a
Repurchase Date for such Purchased Assets, the Seller shall indemnify Buyer and
hold Buyer harmless from any losses, costs and/or expenses which Buyer may
sustain or incur arising from the reemployment of funds obtained by Buyer
hereunder or from fees payable to terminate the deposits from which such funds
were obtained ("Breakage Costs"), in each case for the remainder of the
applicable 30 day period. Buyer shall deliver to the Seller a statement setting
forth the amount and basis of determination of any Breakage Costs in such detail
as determined in good faith by Buyer to be adequate, it being agreed that such
statement and the method of its calculation shall be adequate and shall be
conclusive and binding upon the Seller, absent manifest error. This Section
shall survive termination of this Agreement and the repurchase of all Purchased
Assets subject to Transactions hereunder.
4. ENTERING INTO TRANSACTIONS, TRANSACTION NOTICE CONFIRMATIONS
Under the terms and conditions of the Program Documents, Buyer hereby agrees to
enter into Transactions with a Purchase Price up to the Maximum Aggregate
Purchase Price. In no event shall Buyer be required to enter into more than one
Transaction in any day. Unless otherwise agreed, the Seller shall give Buyer
notice of any proposed Purchase Date prior to 2:00 p.m. New York City time on
the second (2nd) preceding Business Day (the date on which such notice is so
given, the "Notice Date"), provided that the initial Transaction shall only
require one (1) Business Day prior notice. On the Notice Date, the Seller or a
Guarantor shall request that Buyer enter into a Transaction by furnishing to
Buyer a Transaction Notice. On the Notice Date, the Seller or a Guarantor shall
request that Buyer enter into a Transaction by furnishing to Buyer a Transaction
Notice substantially in the form of Exhibit B with a copy to the Agent, (the
"Transaction Notice"), together with copies of any related Servicing Agreements
to Buyer and Agent. Such Transaction Notice shall (i) contain the Purchase Price
of the requested Transaction which shall in all events be at least equal to
16
$500,000 or such lesser amount as mutually agreed upon by the buyer and the
Seller, (ii) specify the requested Purchase Date, which shall not be earlier
than the second Business Day following the date of such Transaction Notice and
(iii) contain (by attachment) such other information reasonably requested by the
Buyer from time to time. In the event that the parties hereto desire to enter
into a Transaction on terms other than as set forth in this Agreement and the
Transaction Notice, Buyer shall deliver to Seller, in electronic or other
format, a "Confirmation" specifying such terms prior to entering into such
Transaction, including, without limitation, the Purchase Date, the Purchase
Price, the Pricing Rate therefore and the Repurchase Date. Any such Transaction
Notice and the related Confirmation, if any, together with this Agreement, shall
constitute conclusive evidence of the terms agreed to between Buyer and Seller
with respect to the Transaction to which the Transaction Notice and
Confirmation, if any, relates. By entering in to a Transaction with Buyer,
Seller consents to the terms set forth in any related Confirmation. In the event
of any conflict between this Agreement and a Confirmation, the terms of the
Confirmation shall control with respect to the related Transaction.
Any delivery of a Purchased Asset in accordance with this subsection, or
any other method acceptable to Buyer in its sole discretion, shall be sufficient
to cause Buyer to have a perfected, first priority security interest in the
Purchased Asset. Without the prior written consent of Buyer, Seller will not (i)
sell, assign, transfer, exchange or otherwise dispose of, or grant any option
with respect to, the Purchased Assets, or (ii) create, incur or permit to exist
any Lien or option in favor of, or any claim of any Person with respect to, any
of the Purchased Assets, or any interest therein, except for the lien provided
for by this Agreement, or (iii) enter into any agreement or undertaking (other
than pursuant to this Agreement) restricting the right or ability of the Seller
or Buyer to sell, assign or transfer any of the Purchased Assets.
5. PAYMENT AND TRANSFER
Unless otherwise agreed, all transfers of funds hereunder shall be in
immediately available funds and all Purchased Assets transferred shall be
transferred to Buyer. Any Repurchase Price or Price Differential received by
Buyer after 12:00 noon New York City time shall be applied on the next
succeeding Business Day.
6. MARGIN MAINTENANCE
a. If at any time the aggregate Market Value of all Purchased Assets
subject to all Transactions is less than the aggregate Buyer's Margin Amount for
all such Transactions (a "Margin Deficit"), then Buyer may by notice to the
Seller require the Seller in such Transactions to transfer to Buyer cash so that
the cash and aggregate Market Value of the Purchased Assets will thereupon equal
or exceed such aggregate Buyer's Margin Amount (such requirement, a "Margin
Call").
b. Notice required pursuant to Section 6(a) may be given by any means
provided in Section 35 hereof. Any notice received before 11:00 a.m. New York
time on a Business Day shall be met, and the related Margin Call satisfied, no
later than 5:00 p.m. New York time on such Business Day; notice received after
11:00 a.m. New York time on a Business Day shall be met, and the related Margin
Call satisfied, no later than 5:00 p.m. New York time on the following Business
Day. The failure of Buyer, on any one or more occasions, to exercise its rights
hereunder, shall not change or alter the terms and conditions to which this
Agreement is subject or limit the right of Buyer to do so at a later date. The
Seller, each Guarantor and the Buyer each agree that a failure or delay by
17
Buyer to exercise its rights hereunder shall not limit or waive Buyer's rights
under this Agreement or otherwise existing by law or in any way create
additional rights for the Seller or any Guarantor.
7. INCOME PAYMENTS
Prior to the occurrence of an Event of Default, where a particular term of a
Transaction extends over the date on which Income is paid in respect of any
Purchased Assets subject to that Transaction, such Income may be applied to
general corporate and business purposes of Seller. Upon the occurrence of an
Event of Default any Income which is paid in respect of any Purchased Assets
shall be deposited directly into the related collection account relating to the
underlying Servicing Agreement. Following the occurrence of such Event of
Default, the Servicer shall not retain, strip or otherwise deduct from such
Income any fees (including without limitation, the Servicing Fees or Ancillary
Income) and such Income shall be deposited directly into the related collection
account. No more than weekly, the Seller and Buyer shall reconcile the
collections made during the previous week under the related Servicing Agreement
to determine the amount of any Servicing Fees, which Seller is entitled to be
reimbursed for, and the amount of any Ancillary Income and shall allocate a
portion of such Servicing Fees to Seller as follows: the lesser of: (i) Seller's
verifiable actual cash expenses or (ii) an amount equal to three-fifths (3/5ths)
of the related Servicing Fee regarding the related Mortgage Loans (the
"Servicing Costs"), upon the presentation of an accounting of such Servicing
Costs incurred by Seller. Any excess Servicing Fees after such allocation and
any and all Ancillary Income shall be the property of the Buyer and shall be
applied to the payment of the Obligations.
8. SECURITY INTEREST
The Seller and Buyer intend that the Transactions hereunder be sales to Buyer of
the Purchased Assets and not loans from Buyer to the Seller secured by the
Purchased Assets. However, in order to preserve Buyer's rights under this
Agreement in the event that a court or other forum recharacterizes the
Transactions hereunder as other than sales, and as security for the Seller's
performance of all of its Obligations, the Seller hereby grants Buyer a fully
perfected first priority security interest in all of Seller's rights, title and
interest in and to the following property, whether now existing or hereafter
acquired: (i) all Purchased Assets identified on a Transaction Notice delivered
by the Seller to the Buyer and sold to Buyer in a Transaction; (ii) all
Servicing Agreements related to such Servicing Rights; (iii) all records,
instruments or other documentation evidencing such Servicing Rights; (iv) all
related Hedge Instruments, (v) all Income relating to such Servicing Rights;
(vi) the Call Rights (vi) all Related Security related to such Servicing Rights;
(vii) any other collateral pledged or otherwise relating to the Servicing
Rights; (viii) all "accounts", "chattel paper", "commercial tort claims",
"deposit accounts", "documents," "equivalent", "general intangibles", "goods",
"instruments", "inventory", "investment property", "letter of credit rights",
and "securities' accounts" as each of those terms is defined in the Uniform
Commercial Code and all cash and Cash Equivalents and all products and proceeds
relating to or constituting any or all of the foregoing (including, without
limitation, in the case of Servicing Rights, all of the Seller's rights, title
and interest in and under the Servicing Agreements); and (ix) any and all
replacements, substitutions, distributions on or proceeds of any or all of the
foregoing (collectively the "Collateral"). Seller acknowledges and agrees that
its rights with respect to the Collateral (including without limitation, any
security interest Seller may have in the Collateral and any other collateral
granted by Seller to Buyer pursuant to any other agreement) are and shall
continue to be at all times junior and
18
subordinate to the rights of Buyer hereunder.
9. CONDITIONS PRECEDENT
a. As conditions precedent to the initial Transaction, Buyer shall have
received on or before the day of such initial Transaction the following, in form
and substance satisfactory to Buyer and duly executed by each party thereto:
(i) Agent shall have received the Program Documents, including
collateral documents, required legal opinions and certificates,
each duly executed and in form and substance reasonably
satisfactory to the Agent;
(ii) Agent shall be satisfied that all material Liens granted to Buyer
hereunder with respect to the Collateral are valid and perfected
liens and have the priorities indicated herein;
(iii) Except as disclosed on Schedule 3 hereto, there are no actions,
suits, arbitrations, investigations (including, without
limitation, any of the foregoing which are pending or threatened)
or other legal or arbitrable proceedings affecting Seller or any
of their Subsidiaries or affecting any of the Property of any of
them before any Governmental Authority which (i) questions or
challenges the validity or enforceability of the Program
Documents or otherwise materially impairs the transactions
contemplated hereby or (ii) individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(iv) The Program Documents shall be duly executed and delivered by the
parties thereto and being in full force and effect, free of any
modification, breach or waiver;
(v) Except as disclosed on Schedule 2 attached hereto, there shall
have been no Material Adverse Change in the business, financial
performance, assets, operations or condition (financial or
otherwise) of Seller and their subsidiaries, taken as a whole
since December 31, 2006;
(vi) The Sellers shall have delivered to the Agent and the Buyer (i)
an unaudited consolidated balance sheet of NFI dated not earlier
than February 28, 2007 prior to the date hereof showing Adjusted
Tangible Net Worth of not less than $400,000,000 (which may or
may not have been prepared in accordance with GAAP), (ii) an
unaudited summary schedule of estimated consolidated financial
results of NFI and its subsidiaries for the three months ended
March 31, 2007 (which may or may not have been prepared in
accordance with GAAP) and (iii) a certificate of the Chief
Financial Officer of NFI certifying to the best of his knowledge
as to such balance sheet after reasonable inquiry and further
stating that he is not aware of any information or other matter
that
19
would make the financial information set forth therein materially
inaccurate or incomplete;
(vii) There shall not exist any violation of applicable laws and
regulations (including, without limitation, ERISA, margin
regulations and environmental laws) which could reasonably be
expected to result in a Material Adverse Change, except as
disclosed on Schedule 2 attached hereto;
(viii) [reserved];
(ix) A listing of the insurance required by Section 13(y) of this
Agreement;
(x) The representations and warranties contained herein and any
exhibit, annex, schedule or appendix hereto, shall be true and
correct in all material respects as of the date hereof.
(xi) No event shall have occurred and be continuing that would
constitute an Event of Default or a Default.
(xii) Agent shall have received a certified copy of Seller's and each
Guarantor's consents or corporate resolutions, as applicable,
approving the Program Documents and Transactions thereunder
(either specifically or by general resolution), and all documents
evidencing other necessary corporate action or governmental
approvals as may be required in connection with the Program
Documents;
(xiii) Agent shall have received an incumbency certificate of the
secretaries of Seller and each Guarantor certifying the names,
true signatures and titles of Seller's and each Guarantor's
representatives duly authorized to request Transactions hereunder
and to execute the Program Documents and the other documents to
be delivered thereunder;
(xiv) Agent shall have received an opinion of Seller's and each
Guarantor's counsel as to such matters as Buyer (including,
without limitation, a corporate opinion, a New York law
enforceability opinion, a security interest opinion, an
investment company act opinion) as Buyer may reasonably request;
(xv) The Pledge Agreement;
(xvi) All of the conditions precedent in the Pledge Agreement shall
have been satisfied;
(xvii) The Seller shall have delivered to the Buyer with respect to
each Eligible Asset: (i) an executed copy of any related
Servicing Agreement and any supplements thereto, (iii) with
respect to any Servicing Rights regarding
20
any Loans which are subject to a securitization transaction, the
related securitization offering documents, certified by the
Seller, the related trustee or the related master servicer as a
true, correct and complete copy of the original, and all
ancillary documents required to be delivered to the
certificateholders for such securitization transaction; [i.e.
offering circular, prospectus supplement, pooling agreements,
servicing agreements, indenture, assignment, assumption and
recognition agreements (if affecting servicing)]
(xviii) All of the conditions precedent in the Pledge Agreement shall
have been satisfied;
(xix) an executed copy of each related Call Rights Assignment and each
related Call Rights Assignment Notice; and
(xx) Any other documents reasonably requested by Buyer.
b. The obligation of Buyer to enter into each Transaction (including the
initial Transaction) pursuant to this Agreement is subject to the following
conditions precedent:
(i) Buyer or its designee shall have received on or before the day of
a Transaction with respect to such Purchased Assets (unless otherwise
specified in this Agreement) the following, in form and substance
satisfactory to Buyer and (if applicable) duly executed:
(A) Transaction Notice delivered pursuant to Section 4(a);
(B) each Servicing Agreement with respect to each Purchased Asset;
and
(D) such certificates, customary opinions of counsel or other
documents as Buyer may reasonably request, provided that such
opinions of counsel shall not be required in connection with each
Transaction but shall only be required from time to time as
deemed necessary by Buyer in its good faith.
(ii) No Default or Event of Default shall have occurred and be
continuing.
(iii) Buyer shall not have reasonably determined that a change in any
requirement of law or in the interpretation or administration of any
requirement of law applicable to Buyer has made it unlawful, and no
Governmental Authority shall have asserted that it is unlawful, for Buyer
to enter into Transactions with a Pricing Rate based on LIBOR, unless
Seller shall have elected pursuant to Section 15(a) hereof that the Pricing
Rate for all Transactions be based upon the Prime Rate.
(iv) All representations and warranties in the Program Documents shall
be true and correct in all material respects on the date of such
Transaction and Seller and Guarantors are in compliance with the terms and
conditions of the Program Documents.
21
(v) The then aggregate outstanding Purchase Price for all Purchased
Assets, when added to the Purchase Price for the requested Transaction,
shall not exceed the Maximum Aggregate Purchase Price.
(vi) No event or events shall have been reasonably determined by Buyer
to have occurred and be continuing resulting in the effective absence of a
whole loan or asset-backed securities market.
(vii) If requested, Buyer shall have received satisfactory information
regarding the hedging strategy, arrangements and general policy of the
Guarantors with respect to Hedge Instruments.
(viii) Satisfaction of any conditions precedent to the initial
Transaction as set forth in clause (a) of this Section 9 that were not
satisfied prior to such initial Purchase Date.
(ix) The Purchase Price for the requested Transaction shall not be
less than $500,000, or an integral multiple of $500,000 thereafter.
(x) Agent shall have determined that all actions necessary or, in the
opinion of Buyer, desirable to maintain Buyer's perfected interest in the
Purchased Assets and other Collateral have been taken, including, without
limitation, duly executed and filed Uniform Commercial Code financing
statements on Form UCC-1.
(xi) Buyer shall not be obligated to enter into more than one
Transaction per week (excluding any automatic Transaction pursuant to
Section 3(b)).
(xii) Any other documents reasonably requested by Buyer.
(xiii) Buyer shall have received from the Seller payment of the
applicable Usage Fee as set forth in the Side Letter.
10. RELEASE OF PURCHASED ASSETS
Upon timely payment in full of the Repurchase Price and all other
Obligations owing with respect to a Purchased Asset, if no Default or Event of
Default has occurred and is continuing, Buyer shall release such Purchased Asset
unless such release would give rise to or perpetuate a Margin Deficit. Except as
set forth in Sections 6(a) and 16, the Seller shall give at least three (3)
Business Days' prior written notice to Buyer if such repurchase shall occur on
other than a Repurchase Date.
If such a Margin Deficit is applicable, Buyer shall notify the Seller of
the amount thereof and the Seller may thereupon satisfy the Margin Call in the
manner specified in Section 6.
11. RELIANCE
With respect to any Transaction, Buyer may conclusively rely upon, and
shall incur no liability to the Seller or the Guarantor in acting upon, any
request or other communication that Buyer
22
reasonably believes to have been given or made by a person authorized to enter
into a Transaction on the Seller's or the Guarantor's behalf.
12. REPRESENTATIONS AND WARRANTIES
Seller and each Guarantor hereby represents and warrants, and shall on and
as of the Purchase Date for any Transaction and on and as of each date
thereafter through and including the related Repurchase Date be deemed to
represent and warrant, that:
a. Due Organization and Qualification. Seller and each Guarantor is
duly organized, validly existing and in good standing under the laws of the
jurisdiction under whose laws it is organized. Seller and each Guarantor is
duly qualified to do business, is in good standing and has obtained all
necessary licenses, permits, charters, registrations and approvals
necessary for the conduct of its business as currently conducted and the
performance of its obligations under the Program Documents, except to the
extent any failure to be so qualified and in good standing or to obtain
such a license, permit, charter, registration or approval will not cause a
Material Adverse Effect or impair the enforceability of any Purchased
Asset.
b. Power and Authority. Seller and each Guarantor has all necessary
power and authority to conduct its business as currently conducted, to
execute, deliver and perform its obligations under the Program Documents
and to consummate the Transactions.
c. Due Authorization. The execution, delivery and performance of the
Program Documents by Seller and each Guarantor have been duly authorized by
all necessary action and do not require any additional approvals or
consents or other action by or any notice to or filing with any Person
other than any that have heretofore been obtained, given or made.
d. Noncontravention. None of the execution and delivery of the Program
Documents by the Seller or the related Guarantor or the consummation of the
Transactions and transactions thereunder:
i) conflicts with, breaches or violates any provision of Seller's
charter documents, bylaws, operating agreement or any similar
agreement, any material agreement of Seller or the Guarantor or any
law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect having applicability to the
Seller or the related Guarantor or its properties, except as would not
have a Material Adverse Effect;
ii) constitutes a default by the Seller or the Guarantor under
any loan or repurchase agreement, mortgage, indenture or other
material agreement or instrument to which the Seller or the related
Guarantor is a party or by which it or any of its properties is or may
be bound or affected; or
iii) results in or requires the creation of any lien upon or in
respect of any of the assets of the Seller or the related Guarantor
except the Lien relating to the Program Documents.
23
e. Legal Proceeding. Except as disclosed on Schedule 3 attached
hereto, there is no action, proceeding or investigation by or before any
court, governmental or administrative agency or arbitrator affecting any of
the Purchased Assets, Seller, any Guarantor or any of their Affiliates,
pending or threatened, which is reasonably likely to be adversely
determined and which, if decided adversely, would have a Material Adverse
Effect.
f. Valid and Binding Obligations. Each of the Program Documents to
which Seller or any Guarantor is a party, when executed and delivered by
Seller or such Guarantor, as applicable, will constitute the legal, valid
and binding obligations of the Seller or such Guarantor, as applicable,
enforceable against the Seller or such Guarantor, as applicable, in
accordance with their respective terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and general equitable
principles.
g. Financial Statements. The financial statements and pro forma
balance sheet of Seller, copies of which have been furnished to Buyer, (i)
are, as of the dates and for the periods referred to therein, complete and
correct in all material respects, (ii) present fairly the financial
condition and results of operations of NFI as of the dates and for the
periods indicated and (iii) have been prepared in accordance with GAAP
consistently applied, except as noted therein (subject as to interim
statements to normal year-end adjustments). Since the date of the most
recent financial statements, there has been no Material Adverse Change with
respect to NFI, except as disclosed on Schedule 2 attached hereto. Except
as disclosed in such financial statements, no Guarantor is subject to any
contingent liabilities or commitments that, individually or in the
aggregate, have a material possibility of causing a Material Adverse Change
with respect to such Guarantor. Buyer hereby acknowledges that only the
annual and quarterly financial statements are prepared in accordance with
GAAP.
h. Accuracy of Information. None of the documents or information
prepared by or on behalf of Seller or any Guarantor and provided by Seller
or any Guarantor to Buyer relating to Seller's or the Guarantor's financial
condition contain any statement of a material fact with respect to Seller
or any Guarantor or the Transactions that was untrue or misleading in any
material respect when made. Since the most recent furnishing of such
documents or information, there has been no change, nor any development or
event involving a prospective change known to Seller or any Guarantor, that
would render any of such documents or information untrue or misleading in
any material respect.
i. No Consents. No consent, license, approval or authorization from,
or registration, filing or declaration with, any regulatory body,
administrative agency, or other governmental, instrumentality, nor any
consent, approval, waiver or notification of any creditor, lessor or other
non-governmental person, is required in connection with the execution,
delivery and performance by Seller or any Guarantor of this Agreement or
the consummation by Seller or any Guarantor of any other Program Document,
other than any that have heretofore been obtained, given or made.
j. Compliance With Law. Etc. No practice, procedure or policy employed
or proposed to be employed by Seller or any Guarantor in the conduct of its
businesses violates
24
any law, regulation, judgment, agreement, order or decree applicable to it
which, if enforced, would result in either a Material Adverse Change with
respect to Seller or any Guarantor or a Material Adverse Effect.
k. Solvency: Fraudulent Conveyance. Seller and each Guarantor is
solvent and will not be rendered insolvent by the Transaction and, after
giving effect to such Transaction, neither Seller nor any Guarantor will be
left with an unreasonably small amount of capital with which to engage in
its business. Neither Seller nor any Guarantor intends to incur, nor
believes that it has incurred, debts beyond its ability to pay such debts
as they mature. Neither Seller nor any Guarantor is contemplating the
commencement of insolvency, bankruptcy, liquidation or consolidation
proceedings or the appointment of a receiver, liquidator, conservator,
trustee or similar official in respect of Seller or any Guarantor or any of
their assets. The amount of consideration being received by Seller upon the
sale of the Purchased Assets to Buyer constitutes reasonably equivalent
value and fair consideration for such Purchased Assets. Seller are not
transferring any Purchased Assets with any intent to hinder, delay or
defraud any of its creditors.
l. Investment Company Act Compliance. Seller is not required to be
registered as an "investment company" as defined under the Investment
Company Act nor as an entity under the control of an "investment company"
as defined under the Investment Company Act.
m. Taxes. Seller and each Guarantor has filed all federal and state
tax returns which are required to be filed and paid all taxes, including
any assessments received by it, to the extent that such taxes have become
due (other than for taxes that are being contested in good faith or for
which it has established adequate reserves). Any taxes, fees and other
governmental charges payable by the Seller or any Guarantor in connection
with a Transaction and the execution and delivery of the Program Documents
have been paid.
n. Additional Representation. With respect to each Purchased Asset,
the Seller hereby makes all of the applicable representations and
warranties set forth in each Confirmation to which such Purchased Asset is
or has been subject, in each case as of the related Purchase Date, and the
Seller understands that if the substance of any such representation or
warranty ceases to be true because of events occurring after such date, the
Market Value could be adversely affected.
o. No Broker. Neither Seller nor any Guarantor has dealt with any
broker, investment banker, agent, or other person, except for Buyer, who
may be entitled to any commission or compensation in connection with the
sale of Purchased Assets pursuant to this Agreement; provided, that if
Seller or any Guarantor has dealt with any broker, investment banker,
agent, or other person, except for Buyer, who may be entitled to any
commission or compensation in connection with the sale of Purchased Assets
pursuant to this Agreement, such commission or compensation shall have been
paid in full by the Seller or such Guarantor, as applicable.
p. Adequate Capital. The capital of Seller and each Guarantor is
adequate for the respective business and undertakings of Seller and each
Guarantor.
25
q. [reserved].
r. Servicing Agreements. Each Servicing Agreement is in full force and
effect and has not been modified, amended or supplemented except for any
modifications, amendments and supplements approved by Buyer.
s. [reserved].
t. ERISA. Each Plan to which Seller or any of their Subsidiaries make
direct contributions, and, to the knowledge of the Seller, each other Plan
is in compliance in all material respects with, and has been administered
in all material respects in compliance with, the applicable provisions of
ERISA, the Code and any other applicable Federal or State law. As of the
date hereof and on any date prior to the Termination Date, no Plan is a
"multiemployer plan" (within the meaning of Section 4001(a)(3) of ERISA) or
a "defined benefit plan" (within the meaning of Section 3(35) of ERISA).
u. Compliance with Anti-Money Laundering Laws. Within thirty (30) days
following the issuance of regulations pursuant to the USA Patriot Act of
2001, or any similar federal, state or local anti-money laundering laws and
regulations (collectively, the "Anti-Money Laundering Laws"), Seller shall
have implemented and shall thereafter maintain a compliance program to the
extent required by law, that meets the requirements of such Anti-Money
Laundering Laws.
The representations and warranties set forth in this Agreement (including
but not limited to those representations and warranties set forth in this
Section 12 and in Exhibit C attached hereto) shall survive transfer of the
Purchased Assets to Buyer and shall continue for so long as the Purchased Assets
are subject to this Agreement.
13. COVENANTS OF SELLER AND GUARANTOR
Seller and each Guarantor, as applicable, hereby covenants with Buyer as
follows:
a. Defense of Title. Seller and each Guarantor warrants and will
defend the right, title and interest of Buyer in and to all Collateral
against all adverse claims and demands.
b. No Amendment or Compromise. Without Buyer's prior written consent,
neither Seller, any Guarantor nor those acting on Seller's or any
Guarantor's behalf shall amend or modify, or waive any term or condition
of, or settle or compromise any claim in respect of, any item of the
Purchased Assets, any related rights or any of the Program Documents.
c. No Assignment. Except as permitted herein, neither Seller nor any
Guarantor shall sell, assign, transfer or otherwise dispose of, or grant
any option with respect to, or pledge, hypothecate or grant a security
interest in or lien on or otherwise encumber (except pursuant to the
Program Documents), any of the Purchased Assets or any interest therein,
26
provided that this Section shall not prevent any transfer of Purchased
Assets in accordance with the Program Documents.
d. Servicing of Serviced Loans.
(i) Seller covenants to maintain or cause the servicing of the
Serviced Loans related to the Purchased Assets to be maintained in
conformity with the standards set forth in the applicable Servicing
Agreements;
(ii) In accordance with Section 19, Seller agrees that upon the
occurrence of an Event of Default, Buyer may terminate Seller in its
capacity as Servicer under any or all Servicing Agreements and sell, assign
and/or transfer the related Servicing Rights to a Qualified Successor
Servicer, at no cost or expense to Buyer. Seller agrees to cooperate in all
respects with Buyer in connection with any such sale, assignment and/or
transfer of any such Servicing Rights;
(iii) Seller shall permit Buyer to inspect upon reasonable prior
written notice Seller's or its Affiliate's servicing facilities, as the
case may be, for the purpose of satisfying Buyer that Seller or its
Affiliate, as the case may be, has the ability to service the Serviced
Loans related to Purchased Assets in accordance with the standards set
forth in the applicable Servicing Agreements; and
(iv) Seller shall not permit any Person other than Seller to service
the related Serviced Loans without the prior written consent of Buyer,
which consent shall not be unreasonably withheld.
e. Preservation of Collateral: Collateral Value. Seller and each
Guarantor shall do all things necessary to preserve the Collateral so that
it remains subject to a first priority perfected security interest
hereunder. Without limiting the foregoing, Seller and each Guarantor will
comply with all rules, regulations and other laws of any Governmental
Authority necessary to preserve the Collateral so that it remains subject
to a first priority perfected security interest hereunder. Neither Seller
nor any Guarantor will allow any default for which Seller or any Guarantor
is responsible to occur under any Collateral or any Program Documents and
Seller and each Guarantor shall fully perform or cause to be performed when
due all of its obligations under any Collateral or the Program Documents.
f. Maintenance of Papers, Records and Files. Seller and each Guarantor
shall acquire, and Seller shall create, maintain (or cause the related
subservicer to maintain) and have available, a complete file in accordance
with industry custom and practice for the Purchased Assets. Seller and each
Guarantor will maintain (or cause the related subservicer to maintain) all
such Servicing Rights Files in good and complete condition in accordance
with industry practices and preserve them against loss. Seller and each
Guarantor will not cause or authorize any such papers, records or files
that are an original or an only copy to leave its or in the related
subservicer's possession. For so long as Buyer has an interest in or lien
on any Purchased Assets, Seller will hold or cause to be held the related
Servicing Rights Files in trust for Buyer. Seller and each Guarantor shall
notify, or cause to be notified, every other party holding any such
Servicing Rights Files (including the related
27
subservicer) of the interests and liens granted hereby. Upon reasonable
advance notice from Buyer, Seller shall (x) make any and all such Servicing
Rights Files available to Buyer to examine any records held therein, either
by its own officers or employees, or by agents or contractors, or both, and
make copies of all or any portion thereof, (y) permit Buyer or its
authorized agents to discuss the affairs, finances and accounts of Seller
with its respective chief operating officer and chief financial officer and
to discuss the affairs, finances and accounts of Seller with its
independent certified public accountants.
g. Financial Statements: Accountants' Reports: Other Information.
Seller and each Guarantor shall keep or cause to be kept in reasonable
detail books and records of account of its assets and business and shall
clearly reflect therein the transfer of Purchased Assets to Buyer. Seller
and NFI shall furnish or cause to be furnished to Buyer the following:
i) Financial Statements. (w) As soon as available and in any
event within 90 days after the end of each fiscal year, the
consolidated and consolidating, audited balance sheets of NFI as of
the end of each fiscal year of NFI, and the audited financial
statements of income and changes in equity of NFI, and the audited
statement of cash flows of NFI, for such fiscal year, (x) as soon as
available and in any event within 45 days after the end of each
quarter, the consolidated and consolidating, unaudited balance sheets
of NFI as of the end of each quarter, and the unaudited financial
statements of income and changes in equity of NFI and the unaudited
statement of cash flows of NFI for the portion of the fiscal year then
ended, (y) within 30 days after the end of each month, monthly
consolidated and consolidating and unaudited statements (excluding
cash flow statements) and balance sheets as provided in clause (x),
and (z) within 10 days after the end of each month, NFI's monthly cash
activity report, the items in clauses (w) and (x) having been prepared
in accordance with GAAP (subject, in the case of interim statements,
to normal year-end adjustments) and certified by NFI's treasurer.
ii) Monthly Certification. Seller shall execute and deliver a
monthly certification substantially in the form of Exhibit A-1
attached hereto and NFI shall execute and deliver a monthly
certification substantially in the form of Exhibit A-2 attached hereto
within thirty (30) days following the end of each month.
iii) Additional Data. Monthly reports in form and scope
satisfactory to Buyer (such report may be provided in the form of a
data tape), setting forth data on (1) the Purchased Assets for the
immediately preceding month, including, without limitation, all
collections and recoveries related to the Purchased Assets, (2) any
other information regarding the Purchased Assets reasonably requested
by Buyer, (3) the performance of the related Serviced Loans, including
with respect to Serviced Loans (i) in default for thirty (30) days or
more and categorized by age of delinquency for thirty (30), sixty (60)
and ninety (90) or more days, (ii) in foreclosure, or (iii) in
bankruptcy, and (4) any other financial information regarding Seller
reasonably requested by Buyer.
28
h. Notice of Material Events. Seller and each Guarantor shall promptly
inform Buyer in writing of any of the following:
i) any Default, Event of Default or default or breach by Seller
or any Guarantor of any other material obligation under any Program
Document, or the occurrence or existence of any event or circumstance
that Seller or such Guarantor reasonably expects will with the passage
of time become a Default, Event of Default or such a default or breach
by Seller or any Guarantor;
ii) any material change in the insurance coverage required of
Seller or any Guarantor or any other Person pursuant to any Program
Document, with copy of evidence of same attached;
iii) any material dispute, litigation, investigation, proceeding
or suspension between Seller or any Guarantor, on the one hand, and
any Governmental Authority or any other Person;
iv) any material change in accounting policies or financial
reporting practices of Seller or any Guarantor;
v) the occurrence of any material employment dispute and a
description of the strategy for resolving it; and
vi) any event, circumstance or condition that has resulted, or
has a reasonable possibility of resulting, in either a Material
Adverse Change with respect to Seller or any Guarantor or a Material
Adverse Effect.
i. Maintenance of Licenses. Except as would not be reasonably likely
to have a Material Adverse Effect, (i) Seller and each Guarantor shall
maintain, all material licenses, permits or other approvals necessary for
Seller and each Guarantor to conduct its business and to perform its
obligations under the Program Documents, and (ii) Seller and each Guarantor
shall conduct its business in accordance with applicable law.
j. No Withholdings for Taxes. Any payments made by the Seller to Buyer
shall be free and clear of, and without deduction or withholding for, any
taxes; provided, however, that if the Seller shall be required by law to
deduct or withhold any taxes from any sums payable to Buyer, then the
Seller shall (A) make such deductions or withholdings and pay such amounts
to the relevant authority in accordance with applicable law, (B) pay to
Buyer the sum that would have been payable had such deduction or
withholding not been made, and (C) at the time the Price Differential is
paid, pay to Buyer all additional amounts as specified by Buyer to preserve
the after-tax yield Buyer would have received if such tax had not been
imposed. This provision does not apply to income taxes payable by Buyer on
its taxable income.
29
k. Change in Nature of Business. Neither Seller nor any Guarantor
shall enter into any new material lines of business except those currently
engaged in as of the date hereof.
l. Limitation on Distributions. If an Event of Default has occurred
and is occurring, neither Seller nor any Guarantor shall pay any dividends
or distributions with respect to any Capital Stock or other equity
interests in Seller or any Guarantor (except any dividends or distributions
required by law in order for such party to maintain its status as a real
estate investment trust), whether now or hereafter outstanding, or make any
other distribution in respect thereof, either directly or indirectly,
whether in cash or property or in obligations of Seller or any Guarantor,
except with respect to transfers in the form of inter-company loans made in
the ordinary course of business, as permitted by Section 5.01(o) of the
Guaranty and Pledge Agreement.
m. Merger of Guarantor. No Guarantor shall at any time, directly or
indirectly, without Buyer's prior consent (i) liquidate or dissolve or (ii)
form or enter into any partnership, joint venture, syndicate or other
combination which would have a Material Adverse Effect.
n. Insurance. Seller will obtain and maintain insurance with
responsible companies in such amounts and against such risks as are
customarily carried by business entities engaged in similar businesses
similarly situated, and will furnish Buyer on request full information as
to all such insurance, and provide within (15) days after receipt of such
request the certificates or other documents evidencing renewal of each such
policy.
o. Affiliate Transactions. Neither Seller nor any Guarantor will at
any time, directly or indirectly, sell, lease or otherwise transfer any
material property or assets to, or otherwise acquire any material property
or assets from, or otherwise engage in any material transactions with, any
of their Non-Seller Affiliates unless the terms thereof are no less
favorable to the Seller or such Guarantor, as applicable, than those that
could be obtained at the time of such transaction in an arm's length
transaction with a Person who is not an Affiliate.
p. Change of Fiscal Year. Neither Seller nor any Guarantor will at any
time, directly or indirectly, except upon thirty (30) days' prior written
notice to Buyer, change the date on which the Seller's or such Guarantor's
fiscal year begins from the Seller's or such Guarantor's current fiscal
year beginning date.
q. Exercising Call Rights.
(i) Prior to the occurrence of an Event of Default, Seller shall
exercise any Call Rights it may have under the Servicing
Agreements in the month in which such Call Rights first
become exercisable by Seller pursuant to the related
Servicing Agreement; provided that, Seller shall, at such
time, have the ability to finance the exercise of such Call
Rights and provided further that, Seller shall not have to
exercise such Call Rights if Buyer consents in writing to
such non-exercise of such Call Rights. In the event that
Buyer consents to
30
allow Seller to elect not to exercise any Call Rights in any
month in which such Call Rights are exercisable by Seller
(each an "Exercisable Month"), such consent shall only apply
to the related Exercisable Month and Seller shall exercise
such Call Rights in the next succeeding month following such
Exercisable Month unless otherwise directed by Buyer in
writing.
(ii) Following the occurrence of an Event of Default Seller shall
exercise any Call Rights it may have under the Servicing
Agreements in the month in which such Call Rights become
exercisable by Seller pursuant to the related Servicing
Agreement, provided that, that Seller shall, at such time,
have the ability to finance the exercise of such Call Rights
and provided further that, Buyer has not directed Seller
otherwise in writing. In the event that Buyer directs Seller
not to exercise any applicable Call Rights in any
Exercisable Month, Seller shall exercise such Call Rights in
the next succeeding month following such Exercisable Month
unless otherwise directed by Buyer in writing.
r. Excluded Subsidiaries. No material change in the nature of the
business including without limitation, capitalization or change in
significant investors shall occur for any Subsidiaries listed on
Exhibit D, without thirty (30) days prior written notice to the Buyer.
s. Maintenance of Liquidity. At all times NFI shall have, on a
consolidated basis, cash, Cash Equivalents and unused borrowing
capacity under committed warehouse or repurchase facilities
("Liquidity") that could be drawn against (taking into account
required haircuts) in an amount of not less than $30,000,000. In the
event that NFI's Liquidity falls below $40,000,000 at any time or
NFI's management believes such event is reasonably likely, Seller
shall provide notice of such event or likelihood of event to the
Agent.
t. Maintenance of Adjusted Tangible Net Worth. The Adjusted
Tangible Net Worth of NFI at any time shall be greater than
$400,000,000, provided however that such amount shall be reduced by
the amount of the 2006 Dividend.
u. Payment of Dividends. No Guarantor, Seller or Subsidiary of
any of the foregoing shall pay dividends (other than dividends paid in
stock) without the prior consent of Buyer, exclusive of (i) dividends
paid, directly or indirectly through one or more other Subsidiaries,
to a Seller or to a Guarantor and (ii) subject to the further
provisions of this clause (t), NFI's 2006 Dividend to its
shareholders. No dividend other than the 2006 Dividend, to the extent
permitted by this clause (t), shall be paid in cash without the prior
consent of Buyer.
As of the date hereof, NFI's best estimate of the maximum amount
of the 2006 Dividend is $175,000,000.
31
Buyer acknowledges that the 2006 Dividend must be paid in order
for NFI to continue to maintain its status as a REIT, and that such
dividend may be paid in cash or Dividend Securities. Buyer further
acknowledges that U.S. income tax laws require that any Dividend
Securities be valued at their fair market value at the time of
issuance (which, in the case of debt-like securities, may be less than
the face amount thereof) for purposes of determining compliance with
the REIT distribution test.
Unless Buyer otherwise consents, the 2006 Dividend shall be paid
in the form of Dividend Securities, provided that if, in the joint
determination of NFI and Buyer, either excess cash is available or it
is financially impractical for NFI to satisfy the requirement to pay
the 2006 Dividend entirely by means of Dividend Securites, then all or
a portion of the 2006 Dividend may be paid in cash, provided further
that (i) Buyer will permit all or a portion of the 2006 Dividend to be
paid in cash if, following payment in cash of such 2006 Dividend,
NFI's Liquidity shall be greater than $125,000,000 and (ii) NFI will
neither pay nor declare the 2006 Dividend earlier than fifteen (15)
days before payment or declaration of such dividend is required by
applicable law.
Buyer hereby waives, and will cause its Affiliates likewise to
waive, any covenant herein, in the Master Repurchase Agreement (2007
Servicing Rights), in the Existing Agreements and in any replacement
facility which covenant would prevent or restrict the issuance of any
Dividend Securities, or which would result in the occurrence of an
Event of Default hereunder or thereunder as a result of the issuance
of such Dividend Securities.
v. Backup Servicing. If the Agent reasonably believes that an
event may occur which would cause a trustee to be permitted to require
a backup servicer under a Servicing Agreement, the Agent may request
that the Seller enter into backup servicing arrangements reasonably
acceptable to the Agent within thirty (30) days. If an event occurs
that would permit the trustee to require the servicer to be replaced,
the Agent may request that the Seller replace the servicer with a
servicer acceptable to the Agent, subject to the requirements, if any,
of the Servicing Agreements.
w. Margin Calls. If at any time after the date hereof Seller or
any of their Affiliates receive margin calls under any repurchase or
financing facilities in excess of $5,000,000 in the aggregate, Seller
shall provide notice to Buyer and Buyer shall cause the Seller to
repurchase the assets subject to such margin calls and include such
assets under the Existing Agreements (provided there is additional
capacity) on mutually acceptable terms to Buyer and Seller.
x. [reserved].
y. Maintenance of Property; Insurance. Seller shall keep all
property useful and necessary in its business in good working order
and condition. Seller and Guarantor shall and shall cause all
Servicers to maintain errors and omissions insurance and/or mortgage
impairment insurance and blanket bond coverage in such amounts as are
in effect on the Effective Date (as disclosed to Buyer in writing) and
shall not reduce such coverage without the written consent of Buyer,
and shall also maintain such other insurance with financially sound
and reputable insurance companies, and with respect to property and
risks of a
32
character usually maintained by entities engaged in the same or
similar business similarly situated, against loss, damage and
liability of the kinds and in the amounts customarily maintained by
such entities.
z. Appointment of Sub-Servicer. Seller shall agree to the
appointment of any subservicer under a related Servicing Agreement
upon written direction from Buyer, on commercially reasonable terms.
aa. [reserved].
bb. Servicing Agreements. The Seller will not (a) enter into any
Servicing Agreement for the servicing of any Serviced Loans as to
which the Servicing Rights are sold hereunder that has not been
reviewed and approved in writing by the Buyer, or (b) approve or
acquiesce to the sale or transfer of servicing of any such Serviced
Loans to another servicer, or pursuant to a Servicing Agreement, that
has not been approved by the Buyer. Promptly upon the applicability of
a new Servicing Agreement to any Purchased Assets, Seller shall
provide Buyer with certified, true copies of all such Servicing
Agreements.
14. REPURCHASE DATE PAYMENTS/COLLECTIONS/HEDGING
(a) On each Repurchase Date, the Seller shall remit or shall cause to be
remitted to Buyer the Repurchase Price.
(b) Seller shall have the right to enter into one or more Hedge Instruments
to hedge any or all interest rate risk with respect to Servicing Rights subject
to this Transactions hereunder; provided that each such Hedge Instrument shall
meet the following criteria: (i) to the extent it provides for any payment
obligation on the part of Seller, it shall be without recourse to the Purchased
Assets (except to the extent of general unsecured claims in the event of the
bankruptcy of Seller and except as permitted in the Netting Agreement), and (ii)
it shall not impose any obligations on Buyer (except if the Hedge Instrument is
entered into with Buyer). Further, Seller shall use reasonable efforts to
require that each such Hedge Instrument prohibits the counterparty from setting
off or netting other obligations of Seller or its Affiliates against such
counterparty's payment obligations thereunder. Each Hedge Instrument entered
into by Seller pursuant to this Section 14 shall be assigned to Buyer; provided
that only the rights and none of the obligations under such Hedged Instruments
shall be assigned to Buyer. Upon Buyer's request, the Seller shall deliver to
the Buyer any and all information relating to any and all third party
confirmations relating to all such Hedge Instruments.
15. REPURCHASE OF PURCHASED ASSETS PURSUANT TO BREACH/CHANGE OF LAW
a. Upon discovery by Seller of a breach of any of the representations,
warranties or covenants set forth on Exhibit C hereto or in the Pricing Side
Letter, Seller shall give prompt written notice thereof to Buyer. Upon any such
discovery by Buyer, Buyer will notify Seller. It is understood and agreed that
the representations, warranties and covenants set forth on Exhibit C hereto and
in the Pricing Side Letter with respect to the Purchased Assets shall survive
delivery of the Purchased Assets to Buyer and shall inure to the benefit of
Buyer. The fact that Buyer has
33
conducted or has failed to conduct any partial or complete due diligence
investigation in connection with its purchase of any Servicing Rights shall not
affect Buyer's right to demand repurchase as provided under this Agreement.
Seller shall, within two (2) Business Days of the earlier of Seller's discovery
or receipt of notice with respect to any Purchased Assets of (i) any breach of a
representation, warranty or covenant set forth on Exhibit C or contained in the
Pricing Side Letter, or (ii) any failure to deliver any of the items required to
be delivered to Buyer pursuant to Section 9(b)(i) hereof within the time period
required for delivery, promptly cure such breach or delivery failure in all
material respects. If within two (2) Business Days after the earlier of Seller's
discovery of such breach or delivery failure or Seller's receipt of notice
thereof that such breach or delivery failure has not been remedied by Seller,
Seller shall promptly upon receipt of written instructions from Buyer, at
Buyer's option, either (i) repurchase such Purchased Assets at a purchase price
equal to the Repurchase Price with respect to such Purchased Assets by wire
transfer to the account designated by Buyer, or (ii) transfer comparable
Substitute Servicing Rights to Buyer, as provided in Section 16 hereof.
b. If Buyer determines that the introduction of, any change in, or the
interpretation or administration of any requirement of law has made it unlawful
or commercially impracticable to engage in any Transactions with a Pricing Rate
based on LIBOR, then the Seller (i) shall, upon its receipt of notice of such
fact and demand from Buyer, repurchase the Purchased Assets subject to the
Transaction on the next succeeding Business Day and, at the Seller's election,
concurrently enter into a new Transaction with Buyer with a Pricing Rate based
on the Prime Rate plus the margin set forth in the Side Letter as part of the
Pricing Rate and (ii) may elect, by giving notice to Buyer, that all new
Transactions shall have Pricing Rates based on the Prime Rate plus such margin.
c. If Buyer determines in its sole discretion that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on Buyer's capital or on the capital of any Affiliate of Buyer as a
consequence of such Change in Law on this Agreement, then from time to time the
Seller will compensate Buyer or Buyer's Affiliate, as applicable, for such
reduced rate of return suffered as a consequence of such Change in Law on terms
similar to those imposed by Buyer on its other similarly affected customers.
Buyer shall provide the Seller with prompt notice as to any Change in Law.
Notwithstanding any other provisions in this Agreement, in the event of any such
Change in Law, the Seller will have the right to terminate all Transactions then
outstanding without any prepayment penalty as of a date selected by the Seller,
which date shall be prior to the then applicable Repurchase Date and which date
shall thereafter for all purposes hereof be deemed to be the Repurchase Date.
Nothing in this Section 15 shall be deemed to limit Buyer's ability to invoke a
Margin Call pursuant to Section 6.
16. SUBSTITUTION
a. The Seller may, subject to agreement with and acceptance by Buyer,
substitute other assets which are substantially the same as the Purchased Assets
(the "Substitute Assets") for any Purchased Assets. Such substitution shall be
made by transfer to Buyer of such other Substitute Assets and transfer to the
Seller of such Purchased Assets. After substitution, the Substitute Assets shall
be deemed to be Purchased Assets.
b. In the case of any Transaction for which the Repurchase Date is other
than the Business Day immediately following the Purchase Date and with respect
to which the Seller does
34
not have any existing right to Substitute Assets for the Purchased Assets, the
Seller shall have the right, subject to the proviso to this sentence, upon
notice to Buyer, which notice shall be given at or prior to 10 a.m. (New York
City time) on the second preceding Business Day, to Substitute Assets for any
Purchased Assets; provided, however, that Buyer may elect, by the close of
business on the Business Day following which such notice is received, or by the
close of the next Business Day if notice is given after 10 a.m. (New York City
time) on such day, not to accept such substitution. In the event such
substitution is accepted by Buyer, such substitution shall be made by the
Seller's transfer to Buyer of such Substitute Assets and Buyer's transfer to the
Seller of such Purchased Assets, and after such substitution, the Substitute
Assets shall be deemed to be Purchased Assets. In the event Buyer elects not to
accept such substitution, Buyer shall offer the Seller the right to terminate
the Transaction.
c. In the event the Seller exercises its right to substitute or terminate
under subsection (b), the Seller shall be obligated to pay to Buyer, by the
close of the Business Day of such substitution, as the case may be, an amount
equal to (A) Buyer's actual cost in bona fide third party transactions
(including all fees, expenses and commissions) of (i) entering into replacement
transactions; (ii) entering into or terminating hedge transactions; and/or (iii)
terminating transactions or substituting securities in like transactions with
third parties in connection with or as a result of such substitution or
termination, and (B) to the extent Buyer determines not to enter into
replacement transactions, the Breakage Costs incurred by Buyer directly arising
or resulting from such substitution or termination. Nothing in this Section 16
shall be deemed to limit Buyer's ability to invoke a Margin Call pursuant to
Section 6.
17. REPURCHASE TRANSACTIONS
Buyer may, in its sole election, engage in repurchase transactions with the
Purchased Assets or otherwise pledge, hypothecate, assign, transfer or otherwise
convey the Purchased Assets with a counterparty of Buyer's choice, in all cases
subject to Buyer's obligation to reconvey the Purchased Assets (and not
substitutes therefor) on the Repurchase Date. In the event Buyer engages in a
repurchase transaction with any of the Purchased Assets or otherwise pledges or
hypothecates any of the Purchased Assets, Buyer shall have the right to assign
to Buyer's counterparty any of the applicable representations or warranties with
respect to the Purchased Assets hereunder and the remedies for breach thereof,
as they relate to the Purchased Assets that are subject to such repurchase
transaction.
18. EVENTS OF DEFAULT
With respect to any Transactions covered by or related to this Agreement,
the occurrence of any of the following events shall constitute an "Event of
Default":
a. Seller fails to transfer the Purchased Assets to Buyer on the applicable
Purchase Date (provided Buyer has tendered the related Purchase Price);
b. Seller either fails to repurchase the Purchased Assets on the applicable
Repurchase Date or fails to perform its obligations under Section 6;
35
c. either Seller or a Guarantor shall fail to perform, observe or comply
with any other material term, covenant or agreement contained in the Program
Documents and such failure is not cured within the time period expressly
provided or, if no such cure period is provided, within two (2) Business Days of
the earlier of (i) such party's receipt of written notice from Buyer of such
breach or (ii) the date on which such party obtains notice or knowledge of the
facts giving rise to such breach;
d. any representation or warranty made by Seller or a Guarantor (or any of
Seller's or such Guarantor's officers) in the Program Documents or in any other
document delivered in connection therewith shall have been incorrect or untrue
in any material respect when made or repeated or to have been made or repeated
if such inaccuracy would constitute Material Adverse Change with respect to any
Seller or Guarantor, except for the representations and warranties set forth in
Section 12(n) and Exhibit C hereof with respect to the Purchased Assets, which
shall be considered solely for determining whether such assets constitute
Eligible Assets and the Market Value thereof;
e. any Seller, any Guarantor, or any of Seller's or any Guarantor's
Subsidiaries shall fail to pay any of Seller's, such Guarantor's or Seller's or
such Guarantor's Subsidiaries' Indebtedness, or any interest or premium thereon
when due (whether by scheduled maturity, requirement prepayment, acceleration,
demand or otherwise), or shall fail to make any payment when due under Seller's,
such Guarantor's or Seller's or such Guarantor's Subsidiaries' Guarantee of
another person's Indebtedness for borrowed money, and such failure shall entitle
any related counterparty to declare any such Indebtedness or Guarantee to be due
and payable, or required to be prepaid (other than by a regularly scheduled
required prepayment), prior to the stated maturity thereof provided that such
Indebtedness is in excess of (i) $5,000,000 with respect to the Guarantor and
(ii) $1,000,000 with respect to all other parties referenced in this subsection
(e) and such failure is not cured within two (2) Business Days;
f. a custodian, receiver, conservator, liquidator, trustee, sequestrator or
similar official for Seller, a Guarantor or any of Seller's or a Guarantor's
Subsidiaries, or of any of Seller's, a Guarantor's or their respective Property
(as a debtor or creditor protection procedure), is appointed or takes possession
of such property; or Seller, a Guarantor or any of Seller's or a Guarantor's
Subsidiaries generally fails to pay Seller's, such Guarantor's or Seller's or
such Guarantor's Subsidiaries' debts as they become due; or Seller, a Guarantor
or any of Seller's or a Guarantor's Subsidiaries is adjudicated bankrupt or
insolvent; or an order for relief is entered under the Federal Bankruptcy Code,
or any successor or similar applicable statute, or any administrative insolvency
scheme, against Seller, a Guarantor or any of Seller's or a Guarantor's
Subsidiaries; or any of Seller's, Guarantor's or Seller's or a Guarantor's
Subsidiaries' Property is sequestered by court or administrative order; or a
petition is filed against Seller, a Guarantor or any of Seller's or a
Guarantor's Subsidiaries under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution, moratorium, delinquency or
liquidation law of any jurisdiction, whether now or subsequently in effect;
g. Seller, a Guarantor or any of Seller's or a Guarantor's Subsidiaries
files a voluntary petition in bankruptcy seeks relief under any provision of any
bankruptcy, reorganization, moratorium, delinquency, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction whether
now or subsequently in effect; or consents to the filing of any
36
petition against it under any such law; or consents to the appointment of or
taking possession by a custodian, receiver, conservator, trustee, liquidator,
sequestrator or similar official for Seller, any Guarantor or any of Seller's or
any Guarantor's Subsidiaries, or of all or any part of Seller's, any Guarantor's
or Seller's or any Guarantor's Subsidiaries' Property; or makes an assignment
for the benefit of Seller, any Guarantor or Seller's or any Guarantor's
Subsidiaries' creditors;
h. any final, nonappealable judgment or order for the payment of money in
excess of (i) $5,000,000 with respect to the Guarantor and (ii) $1,000,000 with
respect to all other parties referenced in this subsection (h), in the aggregate
(to the extent that it is, in the reasonable determination of Buyer, uninsured
and provided that any insurance or other credit posted in connection with an
appeal shall not be deemed insurance for these purposes) shall be rendered
against Seller, the Guarantor or any of Seller's or Guarantor's Affiliates and
Subsidiaries by one or more courts, administrative tribunals or other bodies
having jurisdiction over them and the same shall not be discharged (or
provisions shall not be made for such discharge), satisfied, or bonded, or a
stay of execution thereof shall not be procured, within sixty (60) days from the
date of entry thereof and Seller, the Guarantor or any of Seller's or
Guarantor's Affiliates and Subsidiaries, as applicable, shall not, within said
period of sixty (60) days, appeal therefrom and cause the execution thereof to
be stayed during such appeal;
i. any Governmental Authority or any person, agency or entity acting or
purporting to act under governmental authority shall have taken any action to
condemn, seize or appropriate, or to assume custody or control of, all or any
substantial part of the Property of Seller, any Guarantor or any of Seller's or
any Guarantor's Subsidiaries, or shall have taken any action to displace the
management of Seller, any Guarantor or any of Seller's or any Guarantor's
Subsidiaries or to materially curtail its authority in the conduct of the
business of Seller, any Guarantor or any of any Seller's or any Guarantor's
Subsidiaries, or takes any action in the nature of enforcement to remove or
materially limit or restrict the approval of Seller, any Guarantor or any of
Seller's or any Guarantor's Subsidiaries as an issuer, buyer or a
seller/servicer of the Purchased Assets or similar securities;
j. any Seller, any Guarantor or any of Seller's or any Guarantor's
Subsidiaries shall default under, or fail to perform as requested under, or
shall otherwise breach the material terms of any instrument, agreement or
contract relating to Indebtedness, and such default, failure or breach shall
entitle any counterparty to declare an amount of such Indebtedness in excess of
(i) $5,000,000 with respect to the Guarantor and (ii) $1,000,000 with respect to
all other parties referenced in this subsection (j), to be due and payable prior
to the maturity thereof;
k. in the reasonable good faith judgment of Buyer any Material Adverse
Change shall have occurred with respect to the financial condition of NFI and
its Subsidiaries taken as a whole;
l. Seller or any Guarantor shall admit in writing its inability to, or
intention not to, perform any of Seller's or such Guarantor's respective
material Obligations;
m. Seller or any Guarantor dissolves or sells, transfers, or otherwise
disposes of a material portion of Seller's or such Guarantor's (as applicable)
business or assets (other than pursuant to a securitization or similar
transaction in the ordinary course of business) unless Buyer's written consent
is given;
37
n. this Agreement shall for any reason cease to create a valid, first
priority security interest or ownership interest upon transfer in any material
portion of the Purchased Assets or Collateral purported to be covered hereby;
o. either Seller's or any Guarantor's audited annual financial statements
or the notes thereto or other opinions or conclusions stated therein shall be
qualified or limited by reference to the status of Seller or such Guarantor as a
"going concern" or a reference of similar import;
p. [reserved];
q. the ratio of NFI's Adjusted Tangible Net Worth to Required Equity on a
consolidated basis at any date is less than 1:1;
r. the Adjusted Tangible Net Worth of NFI, on a consolidated basis, is less
than or equal to $400,000,000 at any time, provided that such amount shall be
reduced by the amount of the 2006 Dividend;
s. any (a) termination by Seller of any Servicer or subservicer or the
Mortgage Assets without the prior written consent of Buyer to the extent
Seller's consent is required for such termination or (b) amendment of any
Servicing Agreement without the prior written consent of Buyer to the extent
Seller's consent is required for such occurrences.
t. [reserved].
u. any failure of NFI, on a consolidated basis, to maintain Liquidity of at
least $30,000,000 at any time or failure of NFI to notify the Agent if NFI's
Liquidity falls below $45,000,000 at any time;
v. any failure by Seller or Guarantors to pay any Price Differential,
Margin Deficit or other amount payable under this Agreement or the Existing
Agreements after any applicable grace periods.
w. any event of default under the Existing Agreements.
x. [reserved].
y. [reserved].
z. any Person shall engage in any "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code) involving any Plan, which
could reasonably be expected to have a Material Adverse Effect.
aa. [reserved].
bb. failure of the Seller to provide same day notification to Buyer of any
margin call under any repurchase or financing facility if such margin call is
made before 1:00 p.m. (NYC time);
38
otherwise, if such margin call is made after 1:00 p.m. (NYC time), failure to
provide notification to Buyer by 1:00 pm (NYC time) the following day;
dd. failure to allow Buyer to exercise its options as set forth in Section
13(w) hereof with respect to any margin calls under any repurchase or financing
facility which exceeds $5,000,000 in the aggregate; or
ee. an Event of Default (as defined in each Hedge Instrument) shall have
occurred under any Hedge Instrument, beyond the expiration of any applicable
grace period;
ff. [reserved];
gg. [reserved];
hh. Seller's rights to service Serviced Loans, in the aggregate, under one
or more Servicing Agreements, the value of which rights, in the aggregate, to
Seller (as reasonably estimated by Buyer) equals or exceeds ten percent (10%) or
more of the Servicer's portfolio of Servicing Rights, shall be terminated for
cause (i.e., on account of act(s) or omission(s) by Seller);
ii. Servicer's current servicing rating is downgraded: (i) with respect to
▇▇▇▇▇'▇, to or below SQ3-, (ii) with respect to S&P to or below "Average" and
(iii) with respect to Fitch, to or below RPS3-; or
jj. Seller shall either (i) omit to take any action required to keep all
such Servicing Agreements in full force and effect or (ii) pledge or grant a
security interest in or Lien on any existing or future Servicing Agreements held
by the Seller and relating to the Purchased Assets to a Person other than the
Buyer.
19. REMEDIES
Upon the occurrence of an Event of Default, Buyer, at its option, shall
have any or all of the following rights and remedies, which may be exercised by
Buyer in good faith:
a. The Repurchase Date for each Transaction hereunder shall be deemed
immediately to occur.
b. The Seller's obligations hereunder to repurchase all Purchased Assets at
the Repurchase Price therefor on the Repurchase Date in such Transactions shall
thereupon become immediately due and payable; all Income paid after such
exercise or deemed exercise shall be retained by Buyer and applied to the
aggregate Repurchase Prices and any other amounts owing by the Seller hereunder;
the Seller and each Guarantor shall immediately deliver to Buyer or its designee
any and all original papers, records and files relating to the Purchased Assets
subject to such Transaction then in Seller's and any Guarantor's possession
and/or control; and all right, title and interest in and entitlement to such
Purchased Assets thereon shall be deemed transferred to Buyer.
c. Buyer may (A) sell, on or following the Business Day following the date
on which the Repurchase Price became due and payable pursuant to Section 19(b)
without notice or demand of
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any kind, at a public or private sale and at such price or prices as Buyer may
reasonably deem satisfactory any or all Purchased Assets or (B) in its sole
discretion elect, in lieu of selling all or a portion of such Purchased Assets,
to give the Seller credit for such Purchased Assets in an amount equal to the
Market Value of the Purchased Assets against the aggregate unpaid Repurchase
Price and any other amounts owing by the Seller hereunder. The Seller shall
remain liable to Buyer for any amounts that remain owing to Buyer following a
sale or credit under the preceding sentence. The proceeds of any disposition of
Purchased Assets shall be applied first to the reasonable costs and expenses
incurred by the Buyer in connection with or as a result of an Event of Default;
second to Breakage Costs, costs of cover and/or related hedging transactions;
third to the aggregate Repurchase Prices; and fourth to all other Obligations.
d. The parties recognize that it may not be possible to purchase or sell
all of the Purchased Assets on a particular Business Day, or in a transaction
with the same purchaser, or in the same manner because the market for such
Purchased Assets may not be liquid. In view of the nature of the Purchased
Assets, the parties agree that liquidation of a Transaction or the underlying
Purchased Assets does not require a public purchase or sale and that a good
faith private purchase or sale shall be deemed to have been made in a
commercially reasonable manner. Accordingly, the Buyer may elect the time and
manner of liquidating any Purchased Asset and nothing contained herein shall
obligate Buyer to liquidate any Purchased Asset on the occurrence of an Event of
Default or to liquidate all Purchased Assets in the same manner or on the same
Business Day or constitute a waiver of any right or remedy of Buyer.
Notwithstanding the foregoing, the parties to this Agreement agree that the
Transactions have been entered into in consideration of and in reliance upon the
fact that all Transactions hereunder constitute a single business and
contractual obligation and that each Transaction has been entered into in
consideration of the other Transactions.
e. Buyer shall have the right to forthwith, with respect to the Servicing
Rights pledged hereunder, terminate Seller as servicer with respect to any or
all of the related Serviced Loans and sell, assign and/or transfer such
Servicing Rights to a Qualified Successor Servicer in accordance with the terms
of the Servicing Agreements.
f. Buyer shall have the right to obtain physical possession of the
Servicing Rights Files and all other files of Seller relating to the Purchased
Assets and all documents relating to the Purchased Assets which are then or may
thereafter come into the possession of Seller or any third party acting for
Seller and Seller shall deliver to Buyer such assignments as Buyer shall
request.
g. Buyer shall have the right to direct all Persons servicing the Purchased
Assets to take such action with respect to the Purchased Assets as Buyer
determines appropriate.
h. Buyer shall, without regard to the adequacy of the security for the
Obligations, be entitled to the appointment of a receiver by any court having
jurisdiction, without notice, to take possession of and protect, collect,
manage, liquidate, and sell the Purchased Assets and any other Purchased Assets
or any portion thereof, collect the payments due with respect to the Purchased
Assets and any other Purchased Assets or any portion thereof, and do anything
that Buyer is authorized hereunder to do. Seller shall pay all costs and
expenses incurred by Buyer in connection with the appointment and activities of
such receiver.
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i. In addition to its rights hereunder, Buyer shall have the right to
proceed against any of the Seller's assets which may be in the possession of
Buyer, Buyer's Affiliates or its designee, including the right to liquidate such
assets and to set-off the proceeds against monies owed by the Seller to Buyer
pursuant to this Agreement. Buyer may set off cash, the proceeds of the
liquidation of the Purchased Assets, any other Collateral or its proceeds and
all other sums or obligations owed by Buyer to the Seller hereunder against all
of the Seller's Obligations to Buyer, whether under this Agreement, under a
Transaction, or under any other agreement between the parties (including,
without limitation, the Existing Agreements), or otherwise, whether or not such
Obligations are then due, without prejudice to Buyer's right to recover any
deficiency.
j. Buyer may direct all Persons servicing the Purchased Assets to take such
action with respect to the Purchased Assets as Buyer determines appropriate.
k. The Seller shall be liable to Buyer for the amount of all expenses (plus
interest thereon at a rate equal to the Default Rate), and Breakage Costs and
all costs and expenses incurred within 30 days of the Event of Default in
connection with hedging or covering transactions related to the Purchased
Assets.
l. Seller and each Guarantor shall cause all sums received by it with
respect to the Purchased Assets to be remitted to Buyer (or such other Person as
Buyer may direct) after receipt thereof.
m. Buyer shall without regard to the adequacy of the security for the
Obligations, be entitled to the appointment of a receiver by any court having
jurisdiction, without notice, to take possession of and protect, collect,
manage, liquidate, and sell the Purchased Assets and any other Collateral or any
portion thereof, collect the payments due with respect to the Purchased Assets
and any other Collateral or any portion thereof, and do anything that the Buyer
is authorized hereunder to do. The Seller shall pay all costs and expenses
incurred by Buyer in connection with the appointment and activities of such
receiver.
n. Buyer may enforce its rights and remedies hereunder without prior
judicial process or hearing, and the Seller hereby expressly waives, to the
extent permitted by law, any right the Seller might otherwise have to require
Buyer to enforce its rights by judicial process. The Seller also waives, to the
extent permitted by law, any defense the Seller might otherwise have to the
Obligations, arising from use of nonjudicial process, enforcement and sale of
all or any portion of the Purchased Assets and any other Collateral or from any
other election of remedies. The Seller recognizes that nonjudicial remedies are
consistent with the usages of the trade, are responsive to commercial necessity
and are the result of a bargain at arm's length.
o. In addition to all the rights and remedies specifically provided herein,
Buyer shall have all other rights and remedies provided by applicable federal,
state, foreign, and local laws, whether existing at law, in equity or by
statute.
p. Upon the occurrence of an Event of Default, Buyer shall have, except as
otherwise expressly provided in this Agreement, the right to exercise any of its
rights and/or remedies without presentment, demand, protest or further notice of
any kind other than as expressly set forth herein, all of which are hereby
expressly waived by the Seller.
41
q. The Seller hereby authorizes Buyer, at the Seller's expense, to file
such financing statement or statements relating to the Purchased Assets and the
Collateral without the Seller's signature thereon as Buyer at its option may
deem appropriate, and appoints each Buyer as the Seller's attorney-in-fact to
execute any such financing statement or statements in the Seller's name and to
perform all other acts which Buyer deems appropriate to perfect and continue the
lien and security interest granted hereby and to protect, preserve and realize
upon the Purchased Assets and the Collateral, including, but not limited to, the
right to endorse notes, complete blanks in documents and execute assignments on
behalf of the Seller as its attorney-in-fact. This power of attorney is coupled
with an interest and is irrevocable without Buyer's consent.
r. Seller hereby agrees that the occurrence and continuance of an Event of
Default hereunder shall operate in Buyer's sole discretion as a resignation of
Seller as Servicer from all Servicing Agreements related to Purchased Assets
that require resignation or similar action on the part of the Servicer in order
for Buyer or its designee to succeed to Servicer's obligations thereunder, and
Seller shall immediately take all steps necessary to effectuate such resignation
and succession, including but not limited to obtaining all necessary consents,
approvals and waivers.
s. Buyer shall be entitled to charge a fee equal to the product of: (i) two
percent 2% multiplied by the (ii) Combined Maximum Aggregate Purchase Price (the
"Default Fee"); provided that such Default Fee shall not be duplicative with any
such fee payable under the Master Repurchase Agreement (2007 Residual
Securities). The Default Fee shall be paid to the Agent.
t. Upon the occurrence of an Event of Default, in addition to any other
remedy available to Buyer, Buyer may, in its sole discretion, retain all Income,
net of Servicing Costs, and apply such Income to Seller's Obligations.
20. DELAY NOT WAIVER; REMEDIES ARE CUMULATIVE
No failure on the part of Buyer to exercise, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise by Buyer of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. All rights and remedies of Buyer provided for
herein are cumulative and in addition to any and all other rights and remedies
provided by law, the Program Documents and the other instruments and agreements
contemplated hereby and thereby, and are not conditional or contingent on any
attempt by Buyer to exercise any of its rights under any other related document.
Buyer may exercise at any time after the occurrence of an Event of Default one
or more remedies, as it so desires, and may thereafter at any time and from time
to time exercise any other remedy or remedies.
21. USE OF EMPLOYEE PLAN ASSETS
No assets of an employee benefit plan subject to any provision of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") shall be
used by either party hereto in a Transaction.
22. INDEMNITY
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a. The Seller agrees to pay on demand (i) all reasonable out-of-pocket
costs and expenses of Agent and Buyer in connection with the preparation,
execution, delivery, modification and amendment of this Agreement (including,
without limitation, (A) all collateral review and UCC search and filing fees and
expenses and (B) the reasonable fees and expenses of counsel for Agent and Buyer
with respect to advising Agent and Buyer as to its rights and responsibilities,
or the perfection, protection or preservation of rights or interests, under this
Agreement, with respect to negotiations with the Seller or with other creditors
of the Seller or any of its Subsidiaries arising out of any-Default or any
events or circumstances that may arise to a Default and with respect to
presenting claims in or otherwise participating in or monitoring any bankruptcy,
insolvency or other similar proceeding involving creditors' rights generally and
any proceeding ancillary thereto); and (ii) all costs and expenses of Agent and
Buyer in connection with the enforcement of this Agreement, whether in any
action, suit or litigation, any bankruptcy, insolvency or other similar
proceeding affecting creditors' rights generally (including, without limitation,
the reasonable fees and expenses of counsel for Agent and Buyer) whether or not
the transactions contemplated hereby are consummated.
b. The Seller agrees to indemnify and hold harmless Agent and each of its
respective Affiliates and Buyer and each of its respective Affiliates and their
officers, directors, employees, agents and advisors (each, an "Indemnified
Party") from and against (and will reimburse each Indemnified Party as the same
is incurred) any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel and
allocated costs of internal counsel) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or in
connection with or by reason of (including, without limitation, in connection
with any investigation, litigation or other proceeding (whether or not such
Indemnified Party is a party thereto) relating to, resulting from or arising out
of any of the Program Documents and all other documents related thereto
(including but not limited to any claims of indemnity made by the Trustee
against Buyer pursuant to the Trustee Side Letter), any breach of a
representation or warranty of Seller or any Guarantor or Seller's or any
Guarantor's officers in this Agreement or any other Program Document, and all
actions taken pursuant thereto) (i) the Transactions, the actual or proposed use
of the proceeds of the Transactions, this Agreement or any of the transactions
contemplated thereby, including, without limitation, any acquisition or proposed
acquisition or (ii) the actual or alleged presence of hazardous materials on any
Property or any environmental action relating in any way to any Property, except
to the extent such claim, damage, class, liability or expense is found in a
final, non-appealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful misconduct or
is the result of a claim made by Seller or any Guarantor against the Indemnified
Party, and the Seller or such Guarantor is ultimately the successful party in
any resulting litigation or arbitration. The Seller also agrees not to assert
any claim against Agent or any of its Affiliates, Buyer or any of its
Affiliates, or any of their respective officers, directors, employees, attorneys
and agents, on any theory of liability, for special, indirect, consequential or
punitive damages arising out of or otherwise relating to the Program Documents,
the actual or proposed use of the proceeds of the Transactions, this Agreement
or any of the transactions contemplated thereby. THE FOREGOING INDEMNITY AND
AGREEMENT NOT TO ASSERT CLAIMS EXPRESSLY APPLIES, WITHOUT LIMITATION, TO THE
NEGLIGENCE (BUT NOT GROSS NEGLIGENCE, BAD FAITH OR WILLFUL MISCONDUCT) OF THE
INDEMNIFIED PARTIES.
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c. Without limitation on the provisions of Section 4, if any payment of the
Repurchase Price of any Transaction is made by the Seller other than on the then
scheduled Repurchase Date thereto as a result of an acceleration of the
Repurchase Date pursuant to Section 19 or for any other reason, the Seller
shall, except as otherwise provided in Sections 15 and 24, upon demand by Buyer,
pay to Buyer any Breakage Costs incurred as of a result of such payment.
d. If the Seller fails to pay when due any costs, expenses or other amounts
payable by it under this Agreement, including, without limitation, reasonable
fees and expenses of counsel and indemnities, such amount may be paid on behalf
of the Seller by Buyer, in its sole discretion.
e. Without prejudice to the survival of any other agreement of the Seller
hereunder, the easements and obligations of the Seller contained in this Section
shall survive the payment in full of the Repurchase Price and all other amounts
payable hereunder and delivery of the Purchased Assets by Buyer against full
payment therefor.
23. WAIVER OF REDEMPTION AND DEFICIENCY RIGHTS
The Seller hereby expressly waives, to the fullest extent permitted by law,
every statute of limitation on a deficiency judgment, any reduction in the
proceeds of any Purchased Assets as a result of restrictions upon Buyer
contained in the Program Documents or any other instrument delivered in
connection therewith, and any right that it may have to direct the order in
which any of the Purchased Assets shall be disposed of in the event of any
disposition pursuant hereto.
24. REIMBURSEMENT
All sums reasonably expended by Buyer in connection with the exercise of
any right or remedy provided for herein shall be and remain the Seller's
obligation. The Seller agrees to pay, with interest at the Default Rate to the
extent that an Event of Default has occurred, the reasonable out-of-pocket
expenses and reasonable attorneys' fees incurred by Buyer in connection with the
preparation, enforcement or administration of the Program Documents, the taking
of any action, including legal action, required or permitted to be taken by
Buyer (without duplication to Buyer) pursuant thereto, any "due diligence" or
loan agent reviews conducted by Buyer or on their behalf or by refinancing or
restructuring in the nature of a "workout". If Buyer determines that, due to the
introduction of, any change in, or the compliance by Buyer with (i) any
eurocurrency reserve requirement or (ii) the interpretation of any law,
regulation or any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), there shall be
an increase in the cost to Buyer in engaging in the present or any future
Transactions, then the Seller agrees to pay to Buyer, from time to time, upon
demand by Buyer the actual cost of additional amounts as specified by Buyer to
compensate Buyer for such increased costs. Notwithstanding any other provisions
in this Agreement, in the event of any such change in the eurocurrency reserve
requirement or the interpretation of any law, regulation or any guideline or
request from any central bank or other Governmental Authority, the Seller will
have the right to terminate all Transactions then outstanding as of a date
selected by the Seller, which date shall be prior to the applicable Repurchase
Date and which date shall thereafter for all purposes hereof, be deemed to be
the Repurchase Date. In addition, Buyer shall promptly notify Seller if any
events in clause (i) or (ii) of this Section 24 occur.
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25. FURTHER ASSURANCES
The Seller and each Guarantor agree to do such further acts and things and
to execute and deliver to Buyer such additional assignments, acknowledgments,
agreements, powers and instruments as are reasonably required by Buyer to carry
into effect the intent and purposes of this Agreement, to perfect the interests
of Buyer in the Purchased Assets or to better assure and confirm unto Buyer its
rights, powers and remedies hereunder.
26. ENTIRE AGREEMENT; PRODUCT OF NEGOTIATION
This Agreement supersedes and integrates all previous negotiations,
contracts, agreements and understandings between the parties relating to a sale
and repurchase of Purchased Assets thereto, and it, together with the other
Program Documents, and the other documents delivered pursuant hereto or thereto,
contains the entire final agreement of the parties. No prior negotiation,
agreement, understanding or prior contract shall have any validity therefor.
27. TERMINATION
This Agreement shall remain in effect until the earliest of the following
(the "Termination Date"): (i) April 24, 2008 (the "Maturity Date"), subject to
automatic renewal for another term of 364 days to the extent Buyer fails to
provide Seller with at least 120 days notice of Buyer's intention to terminate
this Agreement on the Maturity Date (provided that such automatic renewal shall
occur no more than once), (ii) at Buyer's option upon the occurrence of an Event
of Default, (iii) Buyer, at its option, terminates the Agreement upon the
occurrence of a Change of Control at any time within ninety (90) days following
such Change of Control or (iv) at Seller's option upon five (5) business days
notice to Buyer of Seller's intention to terminate this Agreement. However, no
such termination shall affect the Seller's outstanding obligations to Buyer at
the time of such termination. The Seller's obligations to indemnify Buyer
pursuant to this Agreement shall survive the termination hereof. Any such
termination pursuant to clauses (ii), (iii) or (iv) above shall require payment
by Seller of the Repurchase Price plus a fee equal to the amount set forth in
the Side Letter.
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28. ASSIGNMENT
The Program Documents are not assignable by the Seller. Buyer may from time
to time assign all or a portion of its rights and obligations under this
Agreement and the Program Documents without consent of the Seller; provided,
however, that Buyer shall maintain, for review by the Seller upon written
request, a register of assignees and a copy of an executed assignment and
acceptance by Buyer and assignee ("Assignment and Acceptance"), specifying the
percentage or portion of such rights and obligations assigned. Upon such
assignment, (a) such assignee shall be a party hereto and to each Program
Document to the extent of the percentage or portion set forth in the Assignment
and Acceptance, and shall succeed to the applicable rights and obligations of
Buyer hereunder, and (b) Buyer shall, to the extent that such rights and
obligations have been so assigned by it to another Person approved by the Seller
(such approval not to be unreasonably withheld) which assumes the obligations of
Buyer, be released from its obligations hereunder accruing thereafter and under
the Program Documents. Unless otherwise stated in the Assignment and Acceptance,
the Seller shall continue to take directions solely from Buyer unless otherwise
notified by Buyer in writing. Buyer may distribute to any prospective assignee
any document or other information delivered to Buyer by the Seller.
Notwithstanding any assignment by Buyer pursuant to this Section 28, Buyer shall
remain liable as to the Transactions. Buyer and Agent agree that, provided that
no Event of Default exists under this Agreement or the Master Repurchase
Agreement (2007 Residual Securities), any assignment of this Agreement will be
only done in connection with an assignment of the Master Repurchase Agreement
(2007 Residual Securities) in a single transaction.
29. AMENDMENTS, ETC.
No amendment or waiver of any provision of this Agreement nor any consent
to any failure to comply herewith or therewith shall in any event be effective
unless the same shall be in writing and signed by Seller and Buyer, and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
30. SEVERABILITY
If any provision of any Program Document is declared invalid by any court
of competent jurisdiction, such invalidity shall not affect any other provision
of the Program Documents, and each Program Document shall be enforced to the
fullest extent permitted by law.
31. BINDING EFFECT: GOVERNING LAW
This Agreement shall be binding and inure to the benefit of the parties
hereto and their respective successors and assigns, except that Seller may not
assign or transfer any of its rights or obligations under this Agreement or any
other Program Document without the prior written consent of Buyer. THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAW OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF.
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32. CONSENT TO JURISDICTION
SELLER HEREBY WAIVE TRIAL BY JURY. SELLER HEREBY IRREVOCABLY CONSENT TO THE
NON-EXCLUSIVE JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK, OR IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, ARISING OUT
OF OR RELATING TO THE PROGRAM DOCUMENTS IN ANY ACTION OR PROCEEDING. SELLER
HEREBY SUBMIT TO, AND WAIVE ANY OBJECTION SELLER MAY HAVE TO, NON-EXCLUSIVE
PERSONAL JURISDICTION AND VENUE IN ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ AND THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WITH RESPECT
TO ANY DISPUTES ARISING OUT OF OR RELATING TO THE PROGRAM DOCUMENTS.
33. SINGLE AGREEMENT
Seller, each Guarantor and Buyer acknowledge that, and have entered
hereinto and will enter into each Transaction hereunder in consideration of and
in reliance upon the fact that, all Transactions hereunder constitute a single
business and contractual relationship and have been made in consideration of
each other. Accordingly, Seller, each Guarantor and Buyer each agree (i) to
perform all of its obligations in respect of each Transaction hereunder, and
that a default in the performance of any such obligations shall constitute a
default by it in respect of all Transactions hereunder, and (ii) that payments,
deliveries and other transfers made by any of them in respect of any Transaction
shall be deemed to have been made in consideration of payments, deliveries and
other transfer in respect of any other Transaction hereunder, and the
obligations to make any such payments, deliveries and other transfers may be
applied against each other and netted.
34. INTENT
Sellers, Guarantors and Buyer recognize that each Transaction is a
"securities contract" as that term is defined in Section 741 of Title 11 of the
United States Code, as amended ("USC").
It is understood that a Buyer's right to liquidate the Purchased Assets
delivered to it in connection with the Transactions hereunder or to exercise any
other remedies pursuant to Section 19 hereof is a contractual right to liquidate
such Transaction as described in Sections 555 and 559 of Title 11 of the USC.
35. NOTICES AND OTHER COMMUNICATIONS
Except as provided herein, any notice required or permitted by this
Agreement shall be in writing and shall be effective and deemed delivered only
when received by the party to which it is sent; provided, however, that a
facsimile transmission shall be deemed to be received when transmitted so long
as the transmitting machine has provided an electronic confirmation (without
error message) of such transmission. Any such notice shall be sent to a party at
the address or facsimile transmission number set forth below:
if to Seller
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NovaStar Mortgage, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
if to Wachovia Bank, N.A.:
Wachovia Bank, N.A.
One Wachovia Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Wachovia Capital Markets, LLC
One Wachovia Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: RMC Asset-Backed Lending
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or, for Transaction Notices and related documents:
Attention: ▇▇▇▇ ▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇.▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇
as such address or number may be changed by like notice.
48
36. CONFIDENTIALITY
(a) This Agreement and its terms, provisions, supplements and amendments,
and transactions and notices hereunder, are proprietary to Buyer and Agent and
shall be held by Seller (and Seller shall cause each Guarantor to hold it) in
strict confidence and shall not be disclosed to any third party without the
consent of Buyer except for (i) disclosure to Seller's direct and indirect
parent companies, attorneys, agents or accountants, provided that such attorneys
or accountants likewise agree to be bound by this covenant of confidentiality or
(ii) upon prior written notice to Buyer, which is hereby given with respect to
the Form 8-K NFI will file in connection with entry into this Agreement,
disclosure required by law, rule, regulation or order of a court or other
regulatory body or (iii) with prior written notice to Buyer, any required
Securities and Exchange Commission or state securities' law disclosures or
filings, which shall not include the Side Letter unless otherwise agreed by
Buyer in writing. Notwithstanding anything herein to the contrary, each party
(and each employee, representative, or other agent of each party) may disclose
to any and all persons, without limitation of any kind, the tax treatment and
tax structure of the transaction and all materials of any kind (including
opinions or other tax analyses) that are provided to it relating to such tax
treatment and tax structure. For this purpose, tax treatment and tax structure
shall not include (i) the identity of any existing or future party (or any
Affiliate of such party) to this Agreement or (ii) any specific pricing
information or other commercial terms, including the amount of any fees,
expenses, rates or payments arising in connection with the transactions
contemplated by this Agreement.
(b) Buyer acknowledges that certain of the information provided to it by or
on behalf of Seller or the Guarantor in connection with this Agreement and the
transactions contemplated hereby is or may be confidential, and Buyer agrees
that, unless such Seller or the Guarantor, as applicable, shall otherwise agree
in writing (subject to subsections (c) and (d) below), Buyer will not disclose
to any other person or entity any information regarding any non-public financial
statements, reports and other information furnished by Seller or the Guarantor
to Buyer pursuant to or in connection with any Program Document, unless such
information was known to Buyer on a non-confidential basis prior to disclosure
by Seller or the Guarantor.
(c) Each party may disclose certain confidential information to (i) any of
such party's attorneys, consultants, accountants, financial advisors and
independent auditors, (ii) any actual or potential assignee or participant of
Buyer under this Agreement, (iii) any municipal, state, federal or other
regulatory body in order to comply with any law, order, regulation, request or
ruling or (iv) in the event such party is legally compelled by subpoena or other
similar process. After an Event of Default, Buyer may disclose any confidential
information in connection with the sale of the Purchased Assets.
(d) Notwithstanding anything contained herein to the contrary, Buyer shall
not disclose or otherwise take any action with respect to any information
furnished by Seller, the Guarantor or any attorney or other representative of
Seller or the Guarantor, that would cause Seller, the Guarantor or any affiliate
thereof, to be in violation of any requirement of any law, rule or regulation
prohibiting the disclosure of information regarding mortgagors.
37. [reserved]
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38. CROSS COLLATERLIZATION. The Purchased Assets subject to any Transaction
(i) hereunder, (ii) pursuant to the Repurchase Agreement (2007 Residual
Securities) or (iii) pursuant to any Existing Agreement or other repurchase
agreement or similar financing agreement among the Buyer, Seller and Guarantors
or any affiliates of Seller or Guarantors (collectively the "Wachovia Financing
Facilities") shall be cross collateralized with the Purchased Assets subject to
any purchase transaction pursuant to any of the Wachovia Financing Facilities.
[Signature Page Follows]
50
IN WITNESS WHEREOF, Seller, Guarantors and Buyer have caused their names to
be signed to this Master Repurchase Agreement by their respective officers
thereunto duly authorized as of the date first above written.
NOVASTAR MORTGAGE, INC., as Seller
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Title: Senior Vice President
--------------------------------------
WACHOVIA BANK, N.A., as Buyer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Title: Director
--------------------------------------
WACHOVIA CAPITAL MARKETS, LLC, as Agent
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Title: Vice President
--------------------------------------
1
Acknowledged and Agreed:
NFI HOLDING CORPORATION, as Guarantor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Title: Senior Vice President
--------------------------------------
NOVASTAR FINANCIAL, INC., as Guarantor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Title: Senior Vice President, CFO & Assistant Secretary
--------------------------------------
NOVASTAR MORTGAGE INC., as Guarantor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Title: SVP, CFO & Asst. Secretary
--------------------------------------
HOMEVIEW LENDING, INC., as Guarantor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
Title: VP, CFO & Treasurer
--------------------------------------
2