GUARANTY
THIS GUARANTY,
dated as of April 18, 2007, (this
"Guaranty"),
is made by
NovaStar Financial,
Inc., NFI Holding
Corporation,
Novastar Mortgage Inc. and
Homeview
Lending,
Inc.
(collectively,
the "Guarantors") in favor of Wachovia
Investment Holdings,
LLC, (the "Buyer",
which term shall include any buyer for
whom
Buyer acts as agent as
provided
herein
and
provided
for in the Master
Repurchase Agreement referred to below).
RECITALS
A. Pursuant to that certain
Master
Repurchase
Agreement
(2007
Residual
Securities),
dated as of April 18, 2007, among NovaStar Mortgage, Inc. ("NMI"),
NovaStar Certificates
Financing LLC ("NCFL"),
NovaStar Certificates
Financing
Corporation
("NCFC" and
collectively
with NCFL and NMI, jointly and severally
the
"Sellers"),
the Buyer and
Wachovia
Capital
Markets,
LLC, as agent (the
"Master
Repurchase
Agreement"),
the Buyer
has
agreed
to
purchase
certain
securities (the "Purchased Assets") from the Sellers and the
Sellers have agreed
to repurchase such Purchased Assets upon the terms and subject to
the conditions
set forth therein.
B. It is a condition
precedent to the
obligation of the Buyer to purchase
the
Purchased
Assets from the Sellers
under the
Program
Documents
that the
Guarantors shall have executed and delivered this Guaranty to the
Buyer.
NOW, THEREFORE,
for good and valuable
consideration,
receipt of which by
the parties
hereto is hereby
acknowledged,
the parties hereto hereby agree as
follows:
1.
Defined Terms
. (a) Unless otherwise defined herein, terms defined in the
Master
Repurchase
Agreement
and used herein shall have the meanings
given to
them in the Master Repurchase Agreement.
(b) "
Obligations
" shall mean the obligations and liabilities of the Sellers
and the Guarantors to the Buyer, including,
without limitation, the obligations
whether direct or indirect, absolute or contingent, due or to
become due, or now
existing
or
hereafter
incurred,
which
may
arise
under,
or
out
of or in
connection
with the
Master
Repurchase
Agreement,
this
Guaranty,
any other
Program Documents and any other document made,
delivered or given in connection
therewith
or
herewith,
whether on account of
covenants,
Repurchase
Prices,
reimbursement
obligations,
fees,
indemnities,
costs,
expenses
(including,
without limitation,
all fees and disbursements of counsel to the Buyer that are
required
to be
paid
by the
Sellers
pursuant
to the
terms
of the
Program
Documents) or otherwise.
(d) The words
"hereof",
"herein"
and
"hereunder"
and words of
similar
import when used in this
Guaranty
shall refer to this
Guaranty as a whole and
not to any
particular
provision of this
Guaranty,
and section and
paragraph
references are to this Guaranty unless otherwise specified.
(e) The meanings given to terms defined herein shall be equally
applicable
to both the singular and plural forms of such terms.
2.
Guaranty
.
(a) The Guarantors hereby,
unconditionally
and irrevocably,
guarantee to the Buyer and its
successors,
endorsees,
transferees and assigns
the prompt and complete payment and performance by the Sellers when
due (whether
at the stated maturity, by acceleration or otherwise) of the
Obligations.
(b) The
Guarantors
further agree to pay any and all expenses
(including,
without limitation,
all reasonable fees and disbursements of counsel) which may
be paid or incurred
by the Buyer in
enforcing
any rights with
respect to, or
collecting,
any or all of the
Obligations
and/or
enforcing
any rights
with
respect to, or collecting
against,
the Guarantors
under this
Guaranty.
This
Guaranty shall remain in full force and effect until the
Obligations are paid in
full,
notwithstanding
that from time to time prior
thereto any or all Sellers
may be free from any Obligations.
(c) No payment or payments made by the Sellers,
the Guarantors,
any other
guarantor
or any other
Person or received or
collected
by the Buyer from the
Sellers,
the
Guarantors,
any other guarantor or any other Person by virtue of
any action or proceeding or any set-off or
appropriation
or application at any
time or from time to time in reduction of or in payment of the
Obligations shall
be deemed to modify,
reduce,
release or otherwise
affect the liability of the
Guarantors
hereunder which shall,
notwithstanding any such payment or payments
other than payments
made by the
Guarantors
in respect of the
Obligations
or
payments
received
or
collected
from
the
Guarantors
in
respect
of
the
Obligations, remain liable for the Obligations until the
Obligations are paid in
full and the Master Repurchase Agreement is terminated.
(d) Each Guarantor agrees that whenever, at any time, or from time
to time,
it shall make any payment to the Buyer on account of its liability
hereunder, it
will notify the Buyer in writing that such
payment is made under this
Guaranty
for such purpose.
(e) Each
Guarantor
shall be jointly and
severally
liable with the other
Guarantors to the Buyer for all obligations of the Guarantors
hereunder.
3.
Representations and Warranties of the Guarantors
.
Each Guarantor hereby
represents and warrants that:
(a) It is duly
organized and validly
existing in good standing
under the
laws of the jurisdiction under which it is organized and is duly
qualified to do
business
and is in good
standing in every other
jurisdiction
as to which the
nature of the business conducted by it makes such qualification
necessary.
(b) It has the full power,
authority
and legal right to execute,
deliver
and perform its
obligations
under this
Guaranty.
This Guaranty has been duly
executed and delivered by it, has not been amended or otherwise
modified,
is in
full force and effect and is the legal,
valid and
binding
obligation
of each
Guarantor, enforceable against it in accordance with its terms,
except as may be
limited by bankruptcy, insolvency,
reorganization,
moratorium or other similar
laws
relating to or
affecting
the rights of
creditors
generally
and to the
application of general principles of equity (regardless of whether
considered in
a proceeding in equity or at law).
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(c)
Neither
the
execution
and
delivery
of
this
Guaranty
nor
the
consummation
of the
transactions
contemplated
herein will
conflict
with or
result in a breach of, or require
any
consent
under,
any
applicable
law or
regulation,
or
any
order,
writ,
injunction
or
decree
of
any
court
or
governmental
authority or agency,
or any agreement or instrument to which each
Guarantor
is a party or by which each
Guarantor or its property is bound or to
which
each
Guarantor
is
subject,
or
constitute
a
default
under any such
agreement
or
instrument,
or (except for the liens
created
pursuant
hereto)
result
in the
creation
or
imposition
of any
lien or
encumbrance
upon the
Guarantors'
revenues or assets
pursuant to the terms of any such
agreement or
instrument.
(d)
Each
Guarantor
has
received
and
reviewed
copies
of
the
Master
Repurchase Agreement.
(e) This
Guaranty
is the
legal,
valid and
binding
obligation
of each
Guarantor,
enforceable
against each
Guarantor,
in accordance with its terms,
subject to bankruptcy,
insolvency and similar laws and to the
availability
of
equitable remedies.
(f) There is no action, suit or proceeding at law or in equity by
or before
any governmental
authority,
arbitral tribunal or other body now pending, or to
the best of each
Guarantor's
knowledge,
threatened
against or affecting each
Guarantor or any of its property
that is
reasonably
likely to have a material
adverse effect on each Guarantor's condition, financial or
otherwise.
(g)
No
authorizations,
approvals
or
consents
of,
and no
filings
or
registrations with, any governmental
authority are necessary for the execution,
delivery or performance by the Guarantors of this Guaranty.
4.
Reserved
.
5.
Right of
Set-off
.
Upon the
occurrence
of any Event of
Default,
the
Guarantors
hereby
irrevocably
authorize the Buyer or any of its Affiliates at
any time and from time to time without notice to the Guarantors,
any such notice
being expressly
waived by the Guarantors,
to set-off and appropriate and apply
any and all deposits (general or special, time or demand,
provisional or final),
in any currency, and any other credits, indebtedness or claims, in
any currency,
in each case whether
direct or
indirect,
absolute or
contingent,
matured or
unmatured, at any time held or owing by the Buyer or any of its
Affiliates to or
for the credit or the
account of the
Guarantors,
or any part
thereof in such
amounts as the Buyer may elect,
against and on account of the
obligations
and
liabilities of the Guarantors to the Buyer
hereunder and claims of every nature
and description of the Buyer or any of its Affiliates against the
Guarantors, in
any currency,
whether arising hereunder,
under the Master Repurchase Agreement
as the Buyer may elect, whether or not the Buyer has made any
demand for payment
and although
such
obligations,
liabilities
and claims may be
contingent
or
unmatured.
The Buyer shall notify the
Guarantors
promptly of any such set-off
and the
application
made by the Buyer,
provided that the failure to give such
notice shall not affect the validity of such set-off and
application. The rights
of the Buyer and its
Affiliates
under this
Section
are in
addition to other
rights and
remedies
(including
without
limitation,
other rights of set-off)
which the Buyer and its Affiliates may have.
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