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EXECUTION COPY
NOVASTAR MORTGAGE FUNDING TRUST,
SERIES 2000-2
ASSET BACKED CERTIFICATES
SERIES 2000-2
UNDERWRITING AGREEMENT
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UNDERWRITING AGREEMENT
First Union Securities, Inc.
301 South College Street
Charlotte, North Carolina 28202-6001
September 20, 2000
Dear Sirs:
Residential Asset Funding Corporation (the "Depositor")
proposes, subject to the terms and conditions stated herein and in the attached
Underwriting Agreement Standard Provisions, dated September 20, 2000 (the
"Standard Provisions"), between the Depositor and First Union Securities, Inc.
("First Union") to issue and sell to you (the "Underwriter") the securities
specified in Schedule I hereto (the "Offered Securities") in the amounts set
forth in Schedule I hereto. The Depositor agrees that each of the provisions of
the Standard Provisions is incorporated herein by reference in its entirety, and
shall be deemed to be a part of this Agreement to the same extent as if such
provisions had been set forth in full herein; and each of the representations
and warranties set forth therein shall be deemed to have been made at and as of
the date of this Underwriting Agreement. Each reference to the "Representative"
herein and in the provisions of the Standard Provisions so incorporated by
reference shall be deemed to refer to you. Unless otherwise defined herein,
terms defined in the Standard Provisions are used herein as therein defined. The
Prospectus Supplement and the accompanying Prospectus relating to the Offered
Securities (together, the "Prospectus") are incorporated by reference herein.
Subject to the terms and conditions set forth herein and in
the Standard Provisions incorporated herein by reference, the Depositor agrees
to cause the Trustee to issue and sell to the Underwriter, and the Underwriter
agrees to purchase from the Depositor, at the time and place and at the purchase
price to the Underwriter and in the manner set forth in Schedule I hereto, the
original principal balance of the Offered Securities.
[Remainder of Page Intentionally Left Blank]
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If the foregoing is in accordance with your understanding,
please sign and return to us two counterparts hereof, and upon acceptance hereof
by you, this letter and such acceptance hereof, including the provisions of the
Standard Provisions incorporated herein by reference, shall constitute a binding
agreement between the Underwriter and the Depositor.
Yours truly,
RESIDENTIAL ASSET FUNDING CORPORATION
By: /s/ Eric Caplan
------------------------------
Name: Eric Caplan
Title: Vice President
Accepted as of the date hereof:
FIRST UNION SECURITIES, INC.
By: /s/ Eric Caplan
-----------------------------
Name: Eric Caplan
Title: Vice President
[Signature Page to Underwriting Agreement]
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SCHEDULE I
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<S> <C>
Trust: NovaStar Mortgage Funding
Trust, Series 2000-2.
Title of Offered Securities: NovaStar Mortgage Funding
Trust, Series 2000-2, Home
Equity Loan Asset Backed
Certificates, Series 2000-1,
Class A-1, Class M-1, Class
M-2 and Class M-3.
Terms of Offered Securities: The Offered Securities shall
have the terms set forth in
the Prospectus and shall
conform in all material
respects to the descriptions
thereof contained therein,
and shall be issued pursuant
to a Pooling and Servicing
Agreement to be dated as of
September 1, 2000 among the
Trustee, First Union
National Bank, as
Certificate Administrator,
The Chase Manhattan Bank, as
Trustee and NovaStar
Mortgage, Inc., as servicer.
Purchase Commitment: First Union Securities,
Inc.: $___________
Purchase Price: The purchase price for the
Offered Securities shall be
100% of the aggregate
principal balance of the
Class A-1 Certificates,
Class M-1 Certificates,
Class M-2 Certificates and
the Class M-3 Certificates
as of the Closing Date.
Specified funds for payment
of Purchase Price: Federal Funds (immediately
available funds).
Required Ratings: Ratings
-------
Class Moody's S&P
----- ------- ---
A-1 Aaa AAA
M-1 Aa2 AA
M-2 Aa3 A
M-3 Baa BBB
Closing Date: On or about September 28, at
10:00 A.M. eastern standard
time or at such other time
as the Depositor and the
Underwriter shall agree.
Closing Location: Offices of Dewey Ballantine
LLP, 333 S. Hope Street Los
Angeles, California 90072
Representative: First Union Securities, Inc.
</TABLE>
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<TABLE>
<S> <C>
Address for Notices, etc.: First Union Securities, Inc.
One First Union Center
301 South College Street
Charlotte, North Carolina 28202-6001
Attn: General Counsel
</TABLE>
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STANDARD PROVISIONS TO UNDERWRITING AGREEMENT
September 20, 2000
From time to time, Residential Asset Funding Corporation, a
North Carolina corporation (the "Depositor") may enter into one or more
underwriting agreements (each, an "Underwriting Agreement") that provide for the
sale of designated securities to the several underwriters named therein (such
underwriters constituting the "Underwriter" with respect to such Underwriting
Agreement and the securities specified therein). The several underwriters named
in an Underwriting Agreement will be represented by one or more representatives
as named in such Underwriting Agreement (collectively, the "Representative").
The term "Representative" also refers to a single firm acting as sole
Underwriter. The standard provisions set forth herein (the "Standard
Provisions") may be incorporated by reference in any Underwriting Agreement.
This Agreement shall not be construed as an obligation of the Depositor to sell
any securities or as an obligation of any of the Underwriters to purchase such
securities. The obligation of the Depositor to sell any securities and the
obligation of any of the Underwriters to purchase any of the securities shall be
evidenced by the Underwriting Agreement with respect to the securities specified
therein. An Underwriting Agreement shall be in the form of an executed writing
(which may be in counterparts), and may be evidenced by an exchange of
telegraphic communications or any other rapid transmission device designed to
produce a written record of the communications transmitted. The obligations of
the Underwriters under this Agreement and each Underwriting Agreement shall be
several and not joint. Unless otherwise defined herein, the terms defined in the
Underwriting Agreement are used herein as defined in the Prospectus referred to
below.
SECTION 1. THE OFFERED SECURITIES. The Depositor proposes to
cause the Trustee to sell, pursuant to the Underwriting Agreement to the
Underwriter or Underwriters named therein, asset backed certificates (the
"Offered Securities") representing undivided ownership interests in a pool of
mortgage loans (the "Mortgage Loans") and certain related property. The Offered
Securities will be issued pursuant to a pooling and servicing agreement (the
"Pooling and Servicing Agreement") dated as of September 1, 2000 among the
Trustee, First Union National Bank, as Certificate administrator (the
"Certificate Administrator") and The Chase Manhattan Bank, a New York banking
corporation, as trustee (the "Trustee") and NovaStar Mortgage, Inc., as servicer
(the "Servicer"). The underlying loans were originated or acquired by NovaStar
Mortgage, Inc. ("NMI", in its capacity as seller, the "Seller", and in its
capacity as servicer, the "Servicer"). The Seller has conveyed its interest in
the Mortgage Loans to NovaStar Mortgage Funding Corporation III, a special
purpose corporation and a wholly-owned subsidiary of the Seller (the
"Transferor"). The Transferor, in turn, will convey the Mortgage Loans to the
Depositor pursuant to a purchase agreement (the "Purchase Agreement") which will
in turn convey the Mortgage Loans to the Trustee pursuant to the Pooling and
Servicing Agreement. The Mortgage Loans are to be serviced pursuant to the
Pooling and Servicing Agreement.
The Depositor has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-81721), including a prospectus relating to the Offered Securities under the
Securities Act of 1933, as amended (the "1933 Act"). The term "Registration
Statement" means such registration statement as amended
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to the date of the Underwriting Agreement. The term "Base Prospectus" means the
prospectus included in the Registration Statement. The term "Prospectus" means
the Base Prospectus together with the prospectus supplement specifically
relating to the Offered Securities, as first filed with the Commission pursuant
to Rule 424.
SECTION 2. OFFERING BY THE UNDERWRITER. Upon the execution of
the Underwriting Agreement with respect to any Offered Securities and the
authorization by the Representative of the release of such Offered Securities,
the several Underwriters propose to offer for sale to the public the Offered
Securities at the prices and upon the terms set forth in the Prospectus.
SECTION 3. PURCHASE, SALE AND DELIVERY OF THE OFFERED
SECURITIES. Unless otherwise specified in the Underwriting Agreement, payment
for the Offered Securities shall be made by wire transfer of immediately
available funds to or at the direction of the Depositor at the time and place
set forth in the Underwriting Agreement, upon delivery to the Representative for
the respective accounts of the several Underwriters of the Offered Securities
registered in definitive form and in such names and in such denominations as the
Representative shall request in writing not less than five full business days
prior to the date of delivery. The time and date of such payment and delivery
with respect to the Offered Securities are herein referred to as the "Closing
Date."
SECTION 4. CONDITIONS OF THE UNDERWRITER' OBLIGATIONS. The
respective obligations of the several Underwriters pursuant to the Underwriting
Agreement shall be subject, in the discretion of the Representative, to the
accuracy in all material respects of the representations and warranties of the
Depositor contained herein as of the date of the Underwriting Agreement and as
of the Closing Date as if made on and as of the Closing Date, to the accuracy in
all material respects of the statements of the officers of the Depositor and NMI
made in any certificates delivered pursuant to the provisions hereof and of the
Underwriting Agreement, to the performance by the Depositor of its covenants and
agreements contained herein and to the following additional conditions
precedent:
(a) All actions required to be taken and all filings required
to be made by or on behalf of the Depositor under the 1933 Act and the
Securities Exchange Act of 1934, as amended (the "1934 Act") prior to the sale
of the Offered Securities shall have been duly taken or made;
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall be in effect; (ii) no proceedings for such purpose
shall be pending before or threatened by the Commission, or by any authority
administering any state securities or "Blue Sky" laws; (iii) any requests for
additional information on the part of the Commission shall have been complied
with to the Representative's reasonable satisfaction; (iv) since the respective
dates as of which information is given in the Registration Statement and the
Prospectus except as otherwise stated therein, there shall have been no material
adverse change in the condition, financial or otherwise, earnings, affairs,
regulatory situation or business prospects of the Depositor; (v) there are no
material actions, suits or proceedings pending before any court or governmental
agency, authority or body or threatened, affecting the Depositor or the
transactions contemplated by the Underwriting Agreement; (vi) the Depositor is
not in violation of its charter
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or its by-laws or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which it is a party or by
which it or its properties may be bound, which violations or defaults separately
or in the aggregate would have a material adverse effect on the Depositor; and
(vii) the Representative shall have received, on the Closing Date a certificate,
dated the Closing Date and signed by an executive officer of the Depositor, to
the foregoing effect;
(c) Subsequent to the execution of the Underwriting Agreement,
there shall not have occurred any of the following: (i) if at or prior to the
Closing Date, trading in securities on the New York Stock Exchange shall have
been suspended or any material limitation in trading in securities generally
shall have been established on such exchange; (ii) if at or prior to the Closing
Date, there shall have been an outbreak or escalation of hostilities between the
United States and any foreign power, or of any other insurrection or armed
conflict involving the United States which results in the declaration of a
national emergency or war, and, in the reasonable opinion of the Representative,
makes it impracticable or inadvisable to offer or sell the Offered Securities;
or (iii) if at or prior to the Closing Date, a general moratorium on commercial
banking activities in New York shall have been declared by either federal or New
York State authorities;
(d) The Representative shall not have discovered and disclosed
to the Depositor on or prior to the Closing Date that the Registration Statement
or the Prospectus or any amendment or supplement thereto contains an untrue
statement of a fact or omits to state a fact which, in the opinion of Dewey
Ballantine LLP, counsel for the Representative, is material and is required to
be stated therein or is necessary to make the statements therein not misleading.
(e) All corporate proceedings and other legal matters relating
to the authorization, form and validity of the Pooling and Servicing Agreement,
the Purchase Agreement, the Certificates, the Registration Statement and the
Prospectus, and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be satisfactory in all respects to the
Representative and its counsel, and the Depositor shall have furnished to such
counsel all documents and information that they may reasonably request to enable
them to pass upon such matters.
(f) The Representative shall have received, on the Closing
Date, a copy of the letter from each nationally recognized statistical rating
organization (as that term is defined by the Commission for purposes of Rule
436(g)(2) under the 1933 Act) that rated the Offered Securities confirming that,
unless otherwise specified in the Underwriting Agreement, the Offered Securities
have been rated in the highest rating categories by each such organization and
that each such rating has not been rescinded since the date of the applicable
letter;
(g) The Representative shall have received, on the Closing
Date, an opinion of Dewey Ballantine LLP, special counsel for the Depositor,
dated the Closing Date, in form and substance satisfactory to the Representative
and containing opinions substantially to the effect set forth in Exhibit A
hereto;
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(h) The Representative shall have received, on the Closing
Date, an opinion of Stinson, Mag & Fizzell, P.C., counsel for NMI and the
Transferor, dated the Closing Date, in form and substance reasonably
satisfactory to the Representative and counsel for the Underwriter;
(i) The Representative shall have received, on the Closing
Date, an opinion of counsel for the Trustee, dated the Closing Date, in form and
substance satisfactory to the Representative and counsel for the Underwriter and
containing opinions substantially to the effect set forth in Exhibit B hereto;
(j) The Representative shall have received, on the Closing
Date, an opinion of counsel for the Trust Administrator, dated the Closing Date,
in form and substance satisfactory to the Representative and counsel for the
Underwriter and containing opinions substantially to the effect set forth in
Exhibit B hereto;
(k) The Representative shall have received, on the Closing
Date, an opinion of Dewey Ballantine LLP, counsel for the Underwriter, dated the
Closing Date, with respect to the incorporation of the Depositor, the validity
of the Offered Securities, the Registration Statement, the Prospectus and other
related matters as the Underwriter may reasonably require, and the Depositor
shall have furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters;
(l) The Representative shall have received, on the Closing
Date, such other opinions of counsel in form and substance satisfactory to the
Representative and counsel to the Underwriter as the Representative shall
request;
(m) The Representative shall have received, on or prior to the
date of first use of the Prospectus Supplement relating to the Offered
Securities, and on the Closing Date if requested by the Representative, letters
of independent accountants of the Depositor in the form and reflecting the
performance of the procedures previously requested by the Representative;
(n) The Representative shall have received, on the Closing
Date, a copy of the indemnification side letter agreement (the "Indemnification
Side Letter") duly executed by the Depositor, the Seller and NovaStar Financial,
Inc., a Maryland corporation ("NFI") at or prior to the Closing Date;
(o) The Depositor shall have furnished or caused to be
furnished to the Representative on the Closing Date a certificate of an
executive officer of the Depositor satisfactory to the Representative as to the
accuracy of the representations and warranties of the Depositor herein at and as
of such Closing Date as if made as of such date, as to the performance by the
Depositor of all of its obligations hereunder to be performed at or prior to
such Closing Date, and as to such other matters as the Representative may
reasonably request;
(p) NMI shall have furnished or caused to be furnished to the
Representative on the Closing Date a certificate of officers of NMI in form and
substance reasonably satisfactory to the Representative;
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(q) The Representative shall have been furnished such further
information, certificates, documents and opinions as the Representative may
reasonably request.
SECTION 5. COVENANTS OF THE DEPOSITOR. In further
consideration of the agreements of the Underwriter contained in the Underwriting
Agreement, the Depositor covenants as follows:
(a) To furnish the Representative, without charge, copies of
the Registration Statement and any amendments thereto including exhibits and as
many copies of the Prospectus and any supplements and amendments thereto as the
Representative may from time to time reasonably request.
(b) Immediately following the execution of the Underwriting
Agreement, the Depositor will prepare a prospectus supplement setting forth the
principal amount, notional amount or stated amount, as applicable, of Offered
Securities covered thereby, the price at which the Offered Securities are to be
purchased by the Underwriter from the Depositor, either the initial public
offering price or prices or the method by which the price or prices at which the
Offered Securities are to be sold will be determined, the selling concessions
and reallowances, if any, any delayed delivery arrangements, and such other
information as the Representative and the Depositor deem appropriate in
connection with the offering of the Offered Securities, but the Depositor will
not file any amendment to the Registration Statement or any supplement to the
Prospectus of which the Representative shall not previously have been advised
and furnished with a copy a reasonable time prior to the proposed filing or to
which the Representative shall have reasonably objected. The Depositor will use
its best efforts to cause any amendment to the Registration Statement to become
effective as promptly as possible. During the time when a Prospectus is required
to be delivered under the 1933 Act, the Depositor will comply so far as it is
able with all requirements imposed upon it by the 1933 Act and the rules and
regulations thereunder to the extent necessary to permit the continuance of
sales or of dealings in the Offered Securities in accordance with the provisions
hereof and of the Prospectus, and the Depositor will prepare and file with the
Commission, promptly upon request by the Representative, any amendments to the
Registration Statement or supplements to the Prospectus which may be necessary
or advisable in connection with the distribution of the Offered Securities by
the Underwriter, and will use its best efforts to cause the same to become
effective as promptly as possible. The Depositor will advise the Representative,
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement or any amended Registration Statement has become
effective or any supplement to the Prospectus or any amended Prospectus has been
filed. The Depositor will advise the Representative, promptly after it receives
notice or obtains knowledge thereof, of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or any
order preventing or suspending the use of the Prospectus, or the suspension of
the qualification of the Offered Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceeding for any such
purpose, or of any request made by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus or for additional
information, and the Depositor will use its best efforts to prevent the issuance
of any such stop order or any order suspending any such qualification, and if
any such order is issued, to obtain the lifting thereof as promptly as possible.
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(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the 1933 Act, any event occurs as a
result of which the Prospectus as then amended or supplemented would include any
untrue statement of a material fact, or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it is
necessary for any other reason to amend or supplement the Prospectus to comply
with the 1933 Act, to promptly notify the Representative thereof and upon their
request to prepare and file with the Commission, at the Depositor's own expense,
an amendment or supplement which will correct such statement or omission or any
amendment which will effect such compliance.
(d) During the period when a prospectus is required by law to
be delivered in connection with the sale of the Offered Securities pursuant to
the Underwriting Agreement, the Depositor will file, on a timely and complete
basis, all documents that are required to be filed by the Depositor with the
Commission pursuant to Sections 13, 14, or 15(d) of the 1934 Act.
(e) To qualify the Offered Securities for offer and sale under
the securities or "Blue Sky" laws of such jurisdictions as the Representative
shall reasonably request and to pay all expenses (including fees and
disbursements of counsel) in connection with such qualification of the
eligibility of the Offered Securities for investment under the laws of such
jurisdictions as the Representative may designate provided that in connection
therewith the Depositor shall not be required to qualify to do business or to
file a general consent to service of process in any jurisdiction.
(f) To make generally available to the Depositor's security
holders, as soon as practicable, but in any event not later than eighteen months
after the date on which the filing of the Prospectus, as amended or
supplemented, pursuant to Rule 424 under the 1933 Act first occurs, an earnings
statement of the Depositor covering a twelve-month period beginning after the
date of the Underwriting Agreement, which shall satisfy the provisions of
Section 11(a) of the 1933 Act and the applicable rules and regulations of the
Commission thereunder (including, at the option of the Depositor, Rule 158).
(g) For so long as any of the Offered Securities remain
outstanding, to furnish to the Representative upon request in writing copies of
such financial statements and other periodic and special reports as the
Depositor may from time to time distribute generally to its creditors or the
holders of the Offered Securities and to furnish to the Representative copies of
each annual or other report the Depositor shall be required to file with the
Commission.
(h) For so long as any of the Offered Securities remain
outstanding, the Depositor will, or will cause the Servicer to, furnish to the
Representative, as soon as available, a copy of (i) the annual statement of
compliance delivered by the Servicer to the Trustee under the Pooling and
Servicing Agreement, (ii) the annual independent public accountants' servicing
report furnished to the Trustee pursuant to the Pooling and Servicing Agreement,
(iii) each report regarding the Offered Securities mailed to the holders
thereof, and (iv) from time to time, such other information concerning such
securities as the Representative may reasonably request.
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SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor represents and warrants to, and agrees with, each Underwriter, as
of the date of the Underwriting Agreement, as follows:
(a) The Registration Statement including a prospectus relating
to the mortgage backed securities and the offering thereof from time to time in
accordance with Rule 415 under the 1933 Act has been filed with the Commission
and such Registration Statement, as amended to the date of the Underwriting
Agreement, has become effective. No stop order suspending the effectiveness of
such Registration Statement has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission. A prospectus supplement
specifically relating to the Offered Securities will be filed with the
Commission pursuant to Rule 424 under the 1933 Act; provided, however, that a
supplement to the Prospectus prepared pursuant to Section 5(b) hereof shall be
deemed to have supplemented the Base Prospectus only with respect to the Offered
Securities to which it relates. The conditions to the use of a registration
statement on Form S-3 under the 1933 Act, as set forth in the General
Instructions on Form S-3, and the conditions of Rule 415 under the 1933 Act,
have been satisfied with respect to the Depositor and the Registration
Statement. There are no contracts or documents of the Depositor that are
required to be filed as exhibits to the Registration Statement pursuant to the
1933 Act or the rules and regulations thereunder that have not been so filed.
(b) On the effective date of the Registration Statement, the
Registration Statement and the Base Prospectus conformed in all material
respects to the requirements of the 1933 Act and the rules and regulations
thereunder, and did not include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading; on the date of the Underwriting Agreement
and as of the Closing Date, the Registration Statement and the Prospectus
conform, and as amended or supplemented, if applicable, will conform in all
material respects to the requirements of the 1933 Act and the rules and
regulations thereunder, and on the date of the Underwriting Agreement and as of
the Closing Date, neither of such documents, any Computational Materials nor any
ABS Term Sheets includes any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, and neither of such documents as amended or
supplemented, if applicable, will include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; provided, however, that
the foregoing does not apply to statements or omissions in any of such documents
based upon written information furnished to the Depositor by any Underwriter
specifically for use therein. "Computational Materials" shall mean those
materials delivered within the meaning of the no-action letter dated May 20,
1994 issued by the Division of Corporation Finance of the Commission to Kidder,
Peabody Acceptance Corporation I, Kidder, Peabody & Co., Incorporated, and
Kidder Structured Asset Corporation and the no-action letter dated May 27, 1994
issued by the Division of Corporation Finance of the Commission to the Public
Securities Association for which the filing of such material is a condition of
the relief granted in such letters. "ABS Term Sheet" shall mean those materials
delivered in the form of "Structural Term Sheets" or "Collateral Term Sheets,"
in each case within the meaning of the no-action letter dated February 13, 1995
issued by the Division of Corporation Finance of the Commission to the Public
Securities Association for which the filing of such material is a condition of
the relief granted in such letter.
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(c) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, there has been no material adverse change in the condition,
financial or otherwise, earnings, affairs, regulatory situation or business
prospects of the Depositor, whether or not arising in the ordinary course of the
business of the Depositor.
(d) The Depositor has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of North
Carolina.
(e) The Depositor has all requisite power and authority
(corporate and other) and all requisite authorizations, approvals, orders,
licenses, certificates and permits of and from all government or regulatory
officials and bodies to own its properties, to conduct its business as described
in the Registration Statement and the Prospectus and to execute, deliver and
perform this Agreement, the Pooling and Servicing Agreement, dated September 1,
2000, the Purchase Agreement, dated as of September 1, 2000, between the
Depositor and the Trustee (the "Purchase Agreement"), and the Indemnification
Side Letter, except such as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution by the Underwriter of the
Offered Securities; all such authorizations, approvals, orders, licenses, and
certificates are in full force and effect; and, except as set forth or
contemplated in the Registration Statement or the Prospectus, there are no legal
or governmental proceedings pending or, to the best knowledge of the Depositor,
threatened that would result in a material modification, suspension or
revocation thereof.
(f) The Offered Securities have been duly authorized, and when
the Offered Securities are issued and delivered pursuant to the Underwriting
Agreement, the Offered Securities will have been duly executed, issued and
delivered and will be entitled to the benefits provided by the Pooling and
Servicing Agreement, subject, as to the enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium and other laws affecting the
rights of creditors generally, and to general principles of equity (regardless
of whether the entitlement to such benefits is considered in a proceeding in
equity or at law), and will conform in substance to the description thereof
contained in the Registration Statement and the Prospectus, and will in all
material respects be in the form contemplated by the Indenture.
(g) The execution and delivery by the Depositor of this
Agreement, the Underwriting Agreement, the Pooling and Servicing Agreement, the
Purchase Agreement, and the Indemnification Side Letter (collectively, the
"Depositor Agreements") are within the corporate power of the Depositor and
neither the execution and delivery by the Depositor of the Depositor Agreements,
nor the consummation by the Depositor of the transactions therein contemplated,
nor the compliance by the Depositor with the provisions thereof, will conflict
with or result in a breach of, or constitute a default under, the charter or the
by-laws of the Depositor or any of the provisions of any law, governmental rule,
regulation, judgment, decree or order binding on the Depositor or its
properties, or any of the provisions of any indenture, mortgage, contract or
other instrument to which the Depositor is a party or by which it is bound, or
will result in the creation or imposition of a lien, charge or encumbrance upon
any of its property pursuant to the terms of any such indenture, mortgage,
contract or other instrument, except such as have been obtained under the 1933
Act and such consents, approvals, authorizations,
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registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Offered
Securities by the Underwriter.
(h) The Underwriting Agreement has been, and at the Closing
Date the Pooling and Servicing Agreement, the Purchase Agreement, and the
Indemnification Side Letter will have been, duly authorized, executed and
delivered by the Depositor.
(i) At the Closing Date, each of the Depositor Agreements will
constitute a legal, valid and binding obligation of the Depositor, enforceable
against the Depositor, in accordance with its terms, subject, as to the
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting the rights of creditors generally, and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law).
(j) No filing or registration with, notice to, or consent,
approval, non-disapproval, authorization or order or other action of, any court
or governmental authority or agency is required for the consummation by the
Depositor of the transactions contemplated by the Depositor Agreements, except
such as have been obtained and except such as may be required under the 1933
Act, the rules and regulations thereunder, or state securities or "Blue Sky"
laws, in connection with the purchase and distribution of the Offered Securities
by the Underwriter.
(k) The Depositor owns or possesses or has obtained all
material governmental licenses, permits, consents, orders, approvals and other
authorizations necessary to lease, own or license, as the case may be, and to
operate, its properties and to carry on its business as presently conducted and
has received no notice of proceedings relating to the revocation of any such
license, permit, consent, order or approval, which singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would materially
adversely affect the conduct of the business, results of operations, net worth
or condition (financial or otherwise) of the Depositor.
(l) Other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending to which the Depositor is
a party or of which any property of the Depositor is the subject which, if
determined adversely to the Depositor would individually or in the aggregate
have a material adverse effect on the condition (financial or otherwise),
earnings, affairs, or business or business prospects of the Depositor and, to
the best of the Depositor's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
(m) Each of the Offered Securities will, when issued, be a
"mortgage related security" as such term is defined in Section 3(a)(41) of the
1934 Act.
(n) The Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended, and the Depositor is not required to be
registered under the Investment Company Act of 1940, as amended.
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(o) Any taxes, fees and other governmental charges in
connection with the execution and delivery of the Depositor Agreements, and
issuance of the Offered Securities have been or will be paid at or prior to the
Closing Date.
SECTION 7. INDEMNIFICATION AND CONTRIBUTION. The Depositor
agrees to indemnify and hold harmless each Underwriter (including First Union
Securities, Inc., acting in its capacity as Representative and as one of the
Underwriters), and each person, if any, who controls any Underwriter within the
meaning of the 1933 Act, against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter or such controlling person may
become subject under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus, any Computational
Materials, any ABS Term Sheets, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter and each such
controlling person for any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Depositor will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, the Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with (1) written information
furnished to the Depositor by any Underwriter through the Representative
specifically for use therein or (2) information regarding NovaStar Mortgage,
Inc., or the Mortgage Loans, except to the extent that the Depositor has been
indemnified by NovaStar Mortgage, Inc.. This indemnity agreement will be in
addition to any liability which the Depositor may otherwise have.
(a) Each Underwriter will indemnify and hold harmless the
Depositor, each of the Depositor's directors, each of the Depositor's officers
who signed the Registration Statement and each person, if any, who controls the
Depositor, within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities to which the Depositor, or any such director, officer or
controlling person may become subject, under the 1933 Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, the Prospectus,
any Computational Materials, any ABS Term Sheets or any amendment or supplement
thereto, or any other prospectus relating to the Offered Securities, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statements or alleged untrue statements or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Depositor by any Underwriter through the Representative
specifically for use therein; and each Underwriter will reimburse any legal or
other expenses reasonably incurred by the Depositor or any such director,
officer or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action. This indemnity agreement will be
in addition to any liability which such Underwriter may otherwise have. The
Depositor acknowledges that the statements set forth under the caption
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"Underwriting" in the Prospectus Supplement constitute the only information
furnished to the Depositor by or on behalf of any Underwriter for use in the
Registration Statement, the Prospectus, and each of the several Underwriters
represents and warrants that such statements are correct as to it.
(b) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the preceding
parts of this Section 7 is for any reason held to be unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such losses, claims, damages or liabilities (or actions in respect thereof);
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. In
determining the amount of contribution to which the respective parties are
entitled, there shall be considered the relative benefits received by the
Depositor on the one hand, and the Underwriter on the other, from the offering
of the Offered Securities (taking into account the portion of the proceeds of
the offering realized by each), the Depositor's and the Underwriter's relative
knowledge and access to information concerning the matter with respect to which
the claim was asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate in the
circumstances. The Depositor and the Underwriter agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation (even if the Underwriter were treated as one entity for such
purpose). No Underwriter or person controlling such Underwriter shall be
obligated to make contribution hereunder which in the aggregate exceeds the
total underwriting fee of the Offered Securities purchased by such Underwriter
under the Underwriting Agreement, less the aggregate amount of any damages which
such Underwriter and its controlling persons have otherwise been required to pay
in respect of the same or any substantially similar claim. The Underwriter's
obligation to contribute hereunder are several in proportion to their respective
underwriting obligations and not joint. For purposes of this Section 7, each
person, if any, who controls an Underwriter within the meaning of Section 15 of
the 1933 Act shall have the same rights to contribution as such Underwriter, and
each director of the Depositor, each officer of the Depositor who signed the
Registration Statement, and each person, if any, who controls the Depositor
within the meaning of Section 15 of the 1933 Act, shall have the same rights to
contribution as the Depositor.
SECTION 8. SURVIVAL OF CERTAIN REPRESENTATIONS AND
OBLIGATIONS. The respective representations, warranties, agreements, covenants,
indemnities and other statements of the Depositor, its officers and the several
Underwriters set forth in, or made pursuant to, the Underwriting Agreement shall
remain in full force and effect, regardless of any investigation, or statement
as to the result thereof, made by or on behalf of any Underwriter, the
Depositor, or any of the officers or directors or any controlling person of any
of the foregoing, and shall survive the delivery of and payment for the Offered
Securities.
SECTION 9. TERMINATION. The Underwriting Agreement may be
terminated by the Depositor by notice to the Representative in the event that a
stop order suspending the effectiveness of the Registration Statement shall have
been issued or proceedings for that purpose shall have been instituted or
threatened.
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(a) The Underwriting Agreement may be terminated by the
Representative by notice to the Depositor in the event that the Depositor shall
have failed, refused or been unable to perform all obligations and satisfy all
conditions to be performed or satisfied hereunder by the Depositor at or prior
to the Closing Date.
(b) Termination of the Underwriting Agreement pursuant to this
Section 9 shall be without liability of any party to any other party other than
as provided in Sections 7 and 11 hereof.
SECTION 10. DEFAULT OF UNDERWRITER. If any Underwriter or
Underwriter defaults or default in their obligation to purchase Offered
Securities which it or they have agreed to purchase under the Underwriting
Agreement and the aggregate principal amount of the Offered Securities which
such defaulting Underwriter or Underwriters agreed but failed to purchase is ten
percent or less of the aggregate principal amount, notional amount or stated
amount, as applicable, of the Offered Securities to be sold under the
Underwriting Agreement, as the case may be, the other Underwriters shall be
obligated severally in proportion to their respective commitments under the
Underwriting Agreement to purchase the Offered Securities which such defaulting
Underwriter or Underwriters agreed but failed to purchase. If any Underwriter or
Underwriters so defaults or default and the aggregate principal amount of the
Offered Securities with respect to which such default or defaults occurs or
occur is more than ten percent of the aggregate principal amount, notional
amount or stated amount, as applicable, of Offered Securities to be sold under
the Underwriting Agreement, as the case may be, and arrangements satisfactory to
the Representative and the Depositor for the purchase of such Offered Securities
by other persons (who may include one or more of the non-defaulting Underwriters
including the Representative) are not made within 36 hours after any such
default, the Underwriting Agreement will terminate without liability on the part
of any non-defaulting Underwriter or the Depositor except for the expenses to be
paid or reimbursed by the Depositor pursuant to Section 11 hereof. As used in
the Underwriting Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10. Nothing herein shall
relieve a defaulting Underwriter from liability for its default.
SECTION 11. EXPENSES. The Depositor agrees with the several
Underwriters that:
(a) whether or not the transactions contemplated in the
Underwriting Agreement are consummated or the Underwriting Agreement is
terminated, the Depositor will pay all fees and expenses incident to the
performance of its obligations under the Underwriting Agreement, including, but
not limited to, (i) the Commission's registration fee, (ii) the expenses of
printing and distributing the Underwriting Agreement and any related
underwriting documents, the Registration Statement, the Prospectus, any
amendments or supplements to the Registration Statement or the Prospectus, and
any Blue Sky memorandum or legal investment survey and any supplements thereto,
(iii) fees and expenses of rating agencies, accountants and counsel for the
Depositor, (iv) the expenses referred to in Section 5(e) hereof, and (v) all
miscellaneous expenses referred to in Item 30 of the Registration Statement;
(b) all out-of-pocket expenses, including counsel fees,
disbursements and expenses, reasonably incurred by the Underwriter in connection
with investigating, preparing to
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market and marketing the Offered Securities and proposing to purchase and
purchasing the Offered Securities under the Underwriting Agreement will be borne
and paid by the Depositor if the Underwriting Agreement is terminated by the
Depositor pursuant to Section 9(a) hereof or by the Representative on account of
the failure, refusal or inability on the part of the Depositor to perform all
obligations and satisfy all conditions on the part of the Depositor to be
performed or satisfied hereunder; and
(c) the Depositor will pay the cost of preparing the
certificates for the Offered Securities.
Except as otherwise provided in this Section 11, the
Underwriters agree to pay all of their expenses in connection with
investigating, preparing to market and marketing the Offered Securities and
proposing to purchase and purchasing the Offered Securities under the
Underwriting Agreement, including the fees and expenses of their counsel and any
advertising expenses incurred by them in making offers and sales of the Offered
Securities.
SECTION 12. NOTICES. All communications under the Underwriting
Agreement shall be in writing and, if sent to the Underwriter, shall be mailed,
delivered or telegraphed and confirmed to the Representative at the address and
to the attention of the person specified in the Underwriting Agreement, and, if
sent to the Depositor, shall be mailed, delivered or telegraphed and confirmed
to Residential Asset Funding Corporation, One First Union Center, 301 South
College Street, Charlotte, North Carolina 28202-6001, Attention: Managing
Director - Asset Finance Group; provided, however, that any notice to any
Underwriter pursuant to the Underwriting Agreement shall be mailed, delivered or
telegraphed and confirmed to such Underwriter at the address furnished by it.
SECTION 13. REPRESENTATIVE OF UNDERWRITER. Any Representative
identified in the Underwriting Agreement will act for the Underwriters of the
Offered Securities and any action taken by the Representative under the
Underwriting Agreement will be binding upon all of such Underwriters.
SECTION 14. SUCCESSORS. The Underwriting Agreement shall inure
to the benefit of and shall be binding upon the several Underwriters and the
Depositor and their respective successors and legal representatives, and nothing
expressed or mentioned herein or in the Underwriting Agreement is intended or
shall be construed to give any other person any legal or equitable right, remedy
or claim under or in respect of the Underwriting Agreement, or any provisions
herein contained, the Underwriting Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the
representations and warranties of the Depositor contained herein or in the
Underwriting Agreement shall also be for the benefit of any person or persons
who controls or control any Underwriter within the meaning of Section 15 of the
1933 Act, and (ii) the indemnities by the several Underwriters shall also be for
the benefit of the directors of the Depositor, the officers of the Depositor who
have signed the Registration Statement and any person or persons who control the
Depositor within the meaning of Section 15 of the 1933 Act. No purchaser of the
Offered Securities from any Underwriter shall be deemed a successor because of
such purchase. This Agreement and each Underwriting Agreement may be
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executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
SECTION 15. TIME OF THE ESSENCE. Time shall be of the essence
in each Underwriting Agreement.
SECTION 16. GOVERNING LAW. This Agreement and each
Underwriting Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
[Signature Page Follows]
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If the foregoing is in accordance with your understanding,
please sign and return two counterparts hereof.
Yours truly,
RESIDENTIAL ASSET FUNDING
CORPORATION
By: /s/ Eric Caplan
--------------------------------
Name: Eric Caplan
Title: Vice President
Accepted as of the date hereof:
FIRST UNION SECURITIES, INC.
By: /s/ Eric Caplan
------------------------------
Name: Eric Caplan
Title: Vice President
[Signature Page to Underwriting Agreement Standard Provisions]
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Exhibit A
Opinions of Dewey Ballantine LLP,
special counsel for the Depositor
(1) Each of the Depositor Documents constitutes the valid,
legal and binding agreement of the Depositor, and is enforceable against the
Depositor in accordance with its terms.
(2) The Certificates, assuming the due execution by the
Trustee and due authentication by the Trustee and payment therefor pursuant to
the Underwriting Agreement, are validly issued and outstanding and are entitled
to the benefits of the Pooling and Servicing Agreement.
(3) No consent, approval, authorization or order of,
registration or filing with, or notice to, any governmental authority or court
is required under federal laws or the laws of the State of New York for the
execution, delivery and performance of the Depositor Documents or the offer,
issuance, sale or delivery of the Certificates or the consummation of any other
transaction contemplated thereby by the Depositor, except such which have been
obtained.
(4) The Registration Statement and the Prospectus (other than
the financial and statistical data included therein, as to which we are not
called upon to express any opinion), at the time the Registration Statement
became effective, as of the date of execution of the Underwriting Agreement and
as of the date hereof comply as to form in all material respects with the
requirements of the 1933 Act and the rules and regulations thereunder, and the
1934 Act and the rules and regulations thereunder, and we do not know of any
amendment to the Registration Statement required to be filed, or of any
contracts, indentures or other documents of a character required to be filed as
an exhibit to the Registration Statement or required to be described in the
Registration Statement or the Prospectus, which has not been filed or described
as required.
(5) It is not necessary to qualify the Pooling and Servicing
Agreement under the Trust Indenture Act of 1939, as amended and the Depositor is
not required to be registered under the Investment Company Act of 1940.
(6) The statements in the Prospectus Supplement set forth
under the caption "Description of the Certificates," to the extent such
statements purport to summarize certain provisions of the Certificates or of the
Pooling and Servicing Agreement, are fair and accurate in all material respects.
(7) Neither the Depositor nor the Trustee is an "investment
company" or under the "control" of an "investment company" as such terms are
defined in the 1940 Act.
(8) For federal income tax purposes, the Certificates will be
treated as a "Real Estate Mortgage Investment Conduit."
A-1
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Such counsel shall also have furnished to the Representative a
written statement, addressed to the Representative and dated the Closing Date,
in form and substance satisfactory to the Representative to the effect that no
facts have come to the attention of such counsel which lead them to believe
that: (a) the Registration Statement, at the time such Registration Statement
became effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading (except as to financial or statistical data
contained in the Registration Statement); (b) the Prospectus, as of its date and
as of the Closing Date, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (c) any document
incorporated by reference in the Prospectus or any further amendment or
supplement to any such incorporated document made by the Depositor prior to the
Closing Date contained, as of the time it became effective or was filed with the
Commission, as the case may be, an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
A-2
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Exhibit B
Opinions of Counsel to
the Trustee
----------------------
(1) The Trustee is a banking corporation duly organized,
validly existing and in good standing under the laws of the State of New York
and has the power and authority to enter into and to take all actions required
of it under the Pooling and Servicing Agreement.
(2) The Pooling and Servicing Agreement has been duly
authorized, executed and delivered by the Trustee and the Pooling and Servicing
Agreement constitutes the legal, valid and binding obligation of the Trustee,
enforceable against the Trustee in accordance with its terms, except as
enforceability thereof may be limited by (A) bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally, as such laws would apply in the event of a bankruptcy,
insolvency or reorganization or similar occurrence affecting the Trustee, and
(B) general principles of equity regardless of whether such enforcement is
sought in a proceeding at law or in equity.
(3) No consent, approval, authorization or other action by any
governmental agency or body or other tribunal is required on the part of the
Trustee in connection with its execution and delivery of the Pooling and
Servicing Agreement or the performance of its obligations thereunder.
(4) The Certificates have been duly executed, authenticated
and delivered by the Trustee.
(5) The execution and delivery of, and performance by the
Trustee of its obligations under, the Pooling and Servicing Agreement do not
conflict with or result in a violation of any statute or regulation applicable
to the Trustee, or the charter or bylaws of the Trustee, or to the best
knowledge of such counsel, any governmental authority having jurisdiction over
the Trustee or the terms of any indenture or other agreement or instrument to
which the Trustee is a party or by which it is bound.
B-1
