Exhibit
10.6
ISDA ®
International Swaps and Derivatives
Association, Inc.
NOVATION AGREEMENT
dated as of February 28, 2007
among:
DEUTSCHE BANK AG, NEW YORK BRANCH (the "
Remaining Party "),
NOVASTAR MORTGAGE, INC. (the "
Transferor ")
AND
NOVASTAR MORTGAGE SUPPLEMENTAL
INTEREST TRUST, SERIES 2007-1 (the " Transferee
").
The Remaining
Party and NovaStar Financial, Inc. are parties to a 1992 Master
dated as of November 30, 2004 (the “ NFI/DB Master
Agreement ”). The Remaining Party and NovaStar
Financial, Inc. originally entered into certain transactions (each
an " Old Transaction ") under the NFI/DB Master
Agreement, each evidenced by a Confirmation (an " Old
Confirmation ") attached hereto as Exhibit I. The Old
Transactions were transferred by novation to the Transferor
pursuant to the Novation Agreement dated July 19, 2006, among
NovaStar Finanacial, Inc., the Remaining Party and the Transferor,
and made subject to a 1992 ISDA Master Agreement dated as of July
19, 2006, between the Remaining Party and the Transferor (the "
Old Agreement ").
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 ”) relative to the New Transactions
(defined below).
With effect
from and including February 28, 2007 (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 will enter into
a new transaction (each a " New Transaction " and,
collectively, the “ New Transactions
”) between them having terms identical to those of each
applicable 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 each of 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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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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on the Novation
Date, subject to Section 2(d) of this Novation Agreement, the
Transferor hereby transfers all of its rights, liabilities, duties
and obligations, with the exception of the Excluded Rights and
Obligations, relative to, and in connection with the Old
Transaction to the Transferee.
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subject to
Section 2(d) of this Novation Agreement, the Remaining Party and
the Transferor are each hereby 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 Transaction;
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in respect of
each New Transaction, the Remaining Party and the Transferee each
hereby 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 Transfero
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