ISDA® International Swaps and Derivatives Association, Inc. NOVATION AGREEMENT dated as of June 1, 2007 among:
Exhibit
10.6
International
Swaps and Derivatives Association, Inc.
dated
as
of June 1, 2007 among:
DEUTSCHE
BANK AG, NEW YORK BRANCH (the "Remaining
Party"),
NOVASTAR
MORTGAGE, INC. (the "Transferor")
AND
NOVASTAR
MORTGAGE SUPPLEMENTAL INTEREST TRUST, SERIES 2007-2
(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 June 1, 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:
1. Definitions.
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.
2. Transfer,
Release, Discharge and Undertakings.
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):
| (a) |
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.
|
| (b) |
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;
|
| (c) |
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 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);
|
| (d) |
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
|
| (e) |
on
the Novation Date, the Remaining Party shall transfer any and 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.
|
2
3. Representations
and Warranties.
| (a) |
On
the date of this Novation
Agreement:
|
| (i) |
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.
|
| (ii) |
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.
|
| (iii) |
Each
of the Transferor and the Remaining Party represents and warrants
to each
other and to the Transferee that:
|
| (A) |
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
|
| (B) |
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.
|
| (iv) |
Each
party represents to each of the other parties:
|
| (A) |
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;
|
| (B) |
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
|
| (C) |
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.
|
3
| (b) |
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; provided,
however,
that nothing in the foregoing shall be construed to relieve the Transferor
from any liability it may have for any of its representations, warranties
or obligations as the servicer or otherwise under the Pooling and
Servicing Agreement among NovaStar
Pooling
Mortgage Funding, Inc., U.S. Bank, National Association, and Deutsche
Bank
National Trust Company dated as of August 1, 2006 (the “Pooling
and Servicing Agreement”).
|
4. Counterparts.
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.
5. Costs
and Expenses.
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.
6.
Amendments.
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.
|
7.
|
(a)
|
Governing
Law.
|
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 (other than Section 5-1401 of the New York General Obligations
Law).
|
(b)
|
Jurisdiction.
|
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.
|
(c)
|
Not
Acting in Individual Capacity.
|
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
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 Party B 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 Party B, 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 be liable for the breach or failure
of any obligation, representation, warranty or covenant made or undertaken
by
the Transferee. All persons having any claim against the Trustee by reason
of
the Transactions contemplated by shall look only to the assets of NovaStar
Mortgage Supplemental Interest Trust, Series 2007-2 (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.
4
The
foregoing may not be construed to give to Majority Certificateholders any rights
under this Novation Agreement.
|
(d)
|
Pooling
and Servicing Agreement.
|
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.
|
(e)
|
Calculation
|
Not
later
than each Reset Date, the Calculation Agent shall deliver in writing to the
Trustee the results of any calculations made on such reset date to the Indenture
Trustee address as provided in the notices portion of the New Agreement.
|
(f)
|
Account
Details
|
Remaining
Party
Transferee
Deutsche
Bank National Trust Company
ABA
#
▇▇▇▇▇▇▇▇▇
Acct
#
01419663
Acct
Name
NYLTD Funds Control-Star West
Ref:
Trust Administration- NS0702
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.
| DEUTSCHE BANK AG, NEW YORK BRANCH | NOVASTAR MORTGAGE, INC. | ||
| By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇ | By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||
|
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇ |
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ |
||
|
Title:
Vice
President
|
Title:
Vice
President
|
|
NOVASTAR
MORTGAGE SUPPLEMENTAL INTEREST TRUST, SERIES 2007-2
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 2007-2
|
| By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ | |||
|
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇ |
|||
|
Title:
Vice President
|
6
Exhibit
I
[Old
Hedge Confirmations attached behind this page]
7
