Exhibit
10.2
ISDA
®
International Swaps and Derivatives
Association, Inc.
NOVATION AGREEMENT
dated as of February 28, 2007
among:
THE ROYAL BANK OF SCOTLAND PLC. (the "
Remaining Party "),
NOVASTAR MORTGAGE, INC. (the "
Transferor ")
AND
NOVASTAR MORTGAGE SUPPLEMENTAL
INTEREST TRUST, SERIES 2007-1 (the " Transferee
").
The Remaining
Party and the Transferor are parties to a 1992 ISDA Master dated as
of July 19, 2006 (the “ Old Agreement
”). The Remaining Party and the Transferor originally entered
into certain transactions (each an " Old
Transaction ") under the Old Agreement, each evidenced by
a Confirmation (an " Old Confirmation ") with
reference number D16120156, D16120161, D16126990, D16126995,
D16139827, D16139828, D16141301, D16155893, D16165622, D16165623
respectively, attached hereto as Exhibit I.
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 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 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. For the avoidance of doubt, the first transaction period
being novated in each Old Transaction is the full period ending on
the Fixed Rate Payer Payment Date in March 2007.
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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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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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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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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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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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 f
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