Exhibit 10.2
ISDA ®
International Swaps and Derivatives Association,
Inc.
NOVATION AGREEMENT
dated as of November 30, 2006
among:
THE ROYAL BANK OF SCOTLAND PLC. (the
“ Remaining Party ”),
NOVASTAR MORTGAGE, INC. (the “
Transferor ”)
AND
NOVASTAR MORTGAGE SUPPLEMENTAL
INTEREST TRUST, SERIES 2006-6 (the “ Transferee
”).
The Remaining Party and NovaStar
Financial, Inc. (“ NFI ”) are parties to a 1992
ISDA Master dated as of June 30, 2005 (the “ NFI/RBS
Master Agreement ”). The Remaining Party and NFI
originally entered into certain transactions (each an “
Old Transaction ”) under the NFI/RBS Master Agreement,
each evidenced by a Confirmation (an “ Old
Confirmation ”) with reference number IRG16076279,
IRG16078815, IRG16078817, IRG16082235, IRG16089258, IRG16089272,
respectively, attached hereto as Exhibit I. The Old Transactions
were transferred by novation to the Transferor from NFI pursuant to
the Novation Agreement dated July 19, 2006, among NFI, the
Remaining Party and the Transferor, made subject to a 1992 ISDA
Master Agreement dated as of July 19, 2006, between the Remaining
Party and the Transferor (the “ Old Agreement ”)
and assigned the following internal reference number IRG16076279,
IRG16078815, IRG16078817,IRG16082235, IRG16089258,
IRG16089272.
The Remaining Party and the
Transferee are simultaneously entering into a 1992 ISDA Master
Agreement dated as of the date hereof in the form attached hereto
as Exhibit II (the “ New Agreement
”).
With effect from and including
November 30, 2006 (the “ Novation Date ”) the
Transferor wishes to transfer by novation to the Transferee, and
the Transferee wishes to accept the transfer by novation of, all
the rights, liabilities, duties and obligations of the Transferor
under and in respect of each Old Transaction, with the exception of
the Excluded Rights and Obligations referred to below, with the
effect that the Remaining Party and the Transferee enter into a new
transaction (each a “ New Transaction ”) between
them having terms identical to those of each Old Transaction,
subject to the same exceptions and as more particularly described
below.
The Remaining Party wishes to accept
the Transferee as its sole counterparty with respect to the New
Transactions.
The Transferor and the Remaining
Party wish to have released and discharged, as a result and to the
extent of the transfer described above, their respective
obligations under and in respect of the Old
Transactions.
Accordingly, the parties agree as
follows: —
Terms defined in the ISDA Master
Agreement (Multicurrency-Cross Border) as published in 1992 by the
International Swaps and Derivatives Association, Inc. (the “
1992 ISDA Master Agreement ”) are used herein as so
defined, unless otherwise provided herein. For purposes of this
Novation Agreement, “ Excluded Rights and
Obligations ” means all obligations of each of the
Transferor and the Remaining Party to Transfer (as defined in the
Credit Support Annex to the Old Agreement) Eligible Collateral (as
so defined) in respect of the Old Transactions and all related
rights of the Remaining Party and the Transferor under the Old
Agreement.
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2.
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Transfer,
Release, Discharge and Undertakings.
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Subject to the execution and
delivery of the New Agreement by each of the parties thereto to the
other, with effect from and including the Novation Date and in
consideration of the mutual representations, warranties and
covenants contained in this Novation Agreement and other good and
valuable consideration (the receipt and sufficiency of which are
hereby acknowledged by each of the parties):
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(a)
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subject to
Section 2(d) of this Novation Agreement, the Remaining Party and
the Transferor are each released and discharged from further
obligations to each other with respect to each Old Transaction and
their respective rights against each other thereunder are
cancelled, provided that such release and discharge shall not
affect any rights, liabilities or obligations of the Remaining
Party or the Transferor with respect to payments or other
obligations due and payable or due to be performed prior to the
Novation Date, and all such payments and obligations shall be paid
or performed by the Remaining Party or the Transferor in accordance
with the terms of the Old Transactions;
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(b)
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in respect of
each New Transaction, the Remaining Party and the Transferee each
undertake liabilities and obligations towards the other and acquire
rights against each other identical in their terms to each
corresponding Old Transaction (and, for the avoidance of doubt, as
if the Transferee were the Transferor and with the Remaining Party
remaining the Remaining Party, save for the Excluded Rights and
Obligations and any other rights, liabilities or obligations of the
Remaining Party or the Transferor with respect to payments or other
obligations due and payable or due to be performed prior to the
Novation Date). For the sake of clarity, all references to
Independent Amounts shall be deemed deleted from the Confirmations
for each New Transaction;
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(c)
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each New
Transaction shall be governed by, form part of, and be subject to
the New Agreement and the relevant Old Confirmation (which, in
conjunction and as deemed modified to be consistent with this
Novation Agreement, shall be deemed to be a Confirmation between
the Remaining Party and the Transferee), and the offices of the
Remaining Party and the Transferee for purposes of each New
Transaction shall be their offices at their addresses for notices
provided for in the New Agreement; and
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(d)
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on the Novation
Date, the Remaining Party shall transfer all of the Posted
Collateral (as defined in the Credit Support Annex to the Old
Agreement) held by it in respect of the Old Transactions to the
account or accounts of the Transferor identified by it by notice
given to the Remaining Party as provided in the Old Agreement, and
the Transferor shall transfer all Posted Collateral held by it in
respect of the Old Transactions to the account or accounts of the
Remaining Party identified by it by notice given to the Transferor
as provided in the Old Agreement, in each case together with all
Interest Amount and Distributions thereon (as so defined). The
Remaining Party’s or the Transferor’s failure to effect
these transfers will continue to constitute Potential Events of
Default and may constitute Events of Default under the Old
Agreement notwithstanding the transfer by novation contemplated
herein.
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3.
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Representations and Warranties.
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(a)
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On the date of
this Novation Agreement:
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(i)
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Each of the
parties makes to each of the other parties those representations
and warranties set forth in Section 3(a) of the 1992 ISDA Master
Agreement with references in such Section to “this
Agreement” or “any Credit Support Document” being
deemed references to this Novation Agreement alone.
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2
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(ii)
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The Remaining
Party and the Transferor each makes to the other, and the Remaining
Party and the Transferee each makes to the other, the
representation set forth in Section 3(b) of the 1992 ISDA Master
Agreement, in each case with respect to the Old Agreement or the
New Agreement, as the case may be, and taking into account the
parties entering into and performing their obligations under this
Novation Agreement.
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(iii)
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Each of the
Transferor and the Remaining Party represents and warrants to each
other and to the Transferee that:
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(A)
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it has made no
prior transfer (whether by way of security or otherwise) of the Old
Agreement or any interest or obligation in or under the Old
Agreement or in respect of any Old Transaction; and
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(B)
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without
prejudice to the obligations of the Remaining Party and the
Transferor referred to in Section 2(d) of this Novation Agreement,
as of the Novation Date, all obligations of the Transferor and the
Remaining Party under each Old Transaction required to be performed
before the Novation Date have been fulfilled.
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(iv)
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Each party
represents to each of the other parties: —
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(A)
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Non-Reliance.
Transferor and the Remaining Party is each acting for its own
account, and with respect to the Transferee, Deutsche Bank National
Trust Company is executing as Trustee for the Transferee. Each has
made its own independent decisions to enter into this Novation
Agreement and as to whether this Novation Agreement is appropriate
or proper for it based upon its own judgment and upon advice from
such advisers as it has deemed necessary. It is not relying on any
communication (written or oral) of the other parties as investment
advice or as a recommendation to enter into this Novation
Agreement; it being understood that information and explanations
related to the terms and conditions of this Novation Agreement
shall not be considered investment advice or a recommendation to
enter into this Novation Agreement. No communication (written or
oral) received from any of the other parties shall be deemed to be
an assurance or guarantee as to the expected results of this
Novation Agreement;
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(B)
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Assessment and
Understanding. It is capable of assessing the merits of and
understanding (on its own behalf or through independent
professional advice), and understands and accepts, the terms,
conditions and risks of this Novation Agreement. It is also capable
of assuming, and assumes, the risks of this Novation Agreement;
and
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(C)
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Status of
Parties. None of the other parties is acting as a fiduciary for or
an adviser to it in respect of this Novation Agreement.
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(b)
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The Transferor
makes no representation or warranty and does not assume any
responsibility with respect to the legality, validity,
effectiveness, adequacy or enforceability of any New Transaction or
the New Agreement or any documents relating thereto and assumes no
responsibility for the condition, financial or otherwise, of the
Remaining Party, the Transferee or any other person or for the
performance and observance by the Remaining Party, the Transferee
or any other person of any of its obligations under any New
Transaction or the New Agreement or any document relating thereto
and any and all such conditions and warranties, whether express or
implied by law or otherwise, are hereby excluded.
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3
This Novation Agreement (and each
amendment, modification and waiver in respect of it) may be
executed and delivered in counterparts (including by facsimile
transmission), each of which will be deemed an original.
The parties will each pay their own
costs and expenses (including legal fees) incurred in connection
with this Novation Agreement and as a result of the negotiation,
preparation and execution of this Novation Agreement.
No amendment, modification or waiver
in respect of this Novation Agreement will be effective unless in
writing (including a writing evidenced by a facsimile transmission)
and executed by each of the parties or confirmed by an exchange of
telexes or electronic messages on an electronic messaging system
and subject to the Rating Agency Condition (as defined in the New
Agreement).
This Novation Agreement will be
governed by and construed in accordance with the laws of the State
of New York without reference to the conflict of laws provisions
thereof.
The terms of Section 13(b) of the
1992 ISDA Master Agreement shall apply to this Novation Agreement
with references in such Section to “this Agreement”
being deemed references to this Novation Agreement
alone.
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(c)
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Not Acting
in Individual Capacity.
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Deutsche Bank National Trust Company
is signing this Novation Agreement solely in its capacity as
Trustee of the Transferee under the Pooling and Servicing Agreement
among NovaStar Mortgage Funding Corporation, NovaStar Mortgage,
Inc., U.S. Bank National Association, and Deutsche Bank National
Trust Company dated as of November 1, 2006 (the “ Pooling
and Servicing Agreement ”) and in the exercise of the
powers and authority conferred and vested in it thereunder and not
in its individual capacity. It is expressly understood and agreed
by the parties hereto that (i) each of the representations,
undertakings and agreements herein stated to be those of Transferee
is made and intended for the purpose of binding only the
Transferee, (ii) nothing herein contained shall be construed as
creating any liability for Deutsche Bank National Trust Company,
individually or personally, to perform any covenant (either express
or implied) contained herein stated to be those of Transferee, and
all such liability, if any, is hereby expressly waived by the
parties hereto, and such waiver shall bind any third party making a
claim by or through one of the parties hereto, and (iii) under no
circumstances shall Deutsche Bank National Trust Company be liable
for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken by the Transferee under
this Novation Agreement. All persons having any claim against the
Trustee reason of the Transactions contemplated by this Novation
Agreement shall look only to the assets of NovaStar Mortgage
Supplemental Interest Trust, Series 2006-6 (subject to the
availability of funds therefor in accordance with the Flow of Funds
as set forth in Article IV of the Pooling and Servicing Agreement)
for payment or satisfaction thereof.
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The foregoing may not be construed
to give to Majority Certificateholders any rights under this
Novation Agreement.
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(d)
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Pooling and
Servicing Agreement.
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Capitalized terms used in this
Novation Agreement that are not defined herein and are defined in
the Pooling and Servicing Agreement shall have the respective
meanings assigned to them in the Pooling and Servicing
Agreement.
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(e)
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Agency Role
of Greenwich Capital Markets, Inc. In connection with this Novation Agreement,
Greenwich Capital Markets, Inc. has acted as agent on behalf of the
Remaining Party. Greenwich Capital Markets, Inc. has not guaranteed
and is not otherwise responsible for the obligations of the
Remaining Party under this Agreement.
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Promptly after each Reset Date, but
in no event later than three New York Business Days prior to each
related Distribution Date, the Calculation Agent shall deliver the
reset notice in writing via mail or facsimile to the Trustee at the
address provided in the notices portion of the New
Agreement.
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Remaining Party:
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The Royal Bank
of Scotland
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Bank: JPMorgan
Chase Bank
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ABA No.:
021000021
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Account No.:
400930153
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Attention:
Financial Markets Fixed Income and Interest Rate Derivative
Operations, London
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SWIFT Code:
SWIFT RBOSGB2RTCM with JPMorgan Chase Bank, New York
CHASUS33
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Transferee:
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Deutsche Bank
National Trust Company
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ABA #
021001033
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Acct #
01419663
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Acct Name NYLTD
Funds Control - Stars West
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Ref: Trust
Administration - Novastar 2006-6, Hedge confirm # [
]
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5
IN WITNESS WHEREOF the parties have executed
this Novation Agreement on the respective dates specified below
with effect from and including the Novation Date.
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THE ROYAL BANK
OF SCOTLAND PLC
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NOVASTAR
MORTGAGE, INC.
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By: Greenwich
Capital Markets, Inc., its agent
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By:
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By:
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Name:
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Deborah
Pfeifer
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Name:
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David L.
Farris
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Title:
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Vice
President
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Title:
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Vice
President
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NOVASTAR
MORTGAGE SUPPLEMENTAL INTEREST TRUST, SERIES 2006-6
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By: Deutsche
Bank National Trust Company, as Trustee under the Pooling and
Servicing Agreement, acting not in its individual capacity, but
solely in its capacity as Trustee to NovaStar Mortgage Supplemental
Interest Trust, Series 2006-6
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By:
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/s/ Melissa Wilman
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Name:
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Melissa
Wilman
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Title:
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Vice
President
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6
Exhibit I
[Old Hedge Confirmations attached
behind this page]
Our Reference:IRG16076279
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Global Banking & Markets
280 Bishopsgate
London EC2M 4RB
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11 September 2006
Novastar Mortgage
Inc.
Kansas City
Attn: Dave Farris
Dear Sirs,
AMENDMENT
THIS CONFIRMATION AMENDS AND
RESTATES IN ITS ENTIRETY THE ORIGINAL
CONFIRMATION FOR THIS
TRANSACTION
Our Reference:
IRG16076279
Re: USD 20,000,000.00 Interest
Rate Cap
The purpose of this document is to
set forth the terms and conditions of the transaction entered into
between The Royal Bank of Scotland plc and yourselves on the Trade
Date specified below (the “Transaction”). This document
constitutes a “Confirmation”