$0.97 Uses in Number of Shares and Option Price Clause

Number of Shares and Option Price from Employee Non Qualified Stock Option Agreement

THIS AMENDED AND RESTATED EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT ("Agreement"), dated as of March 2, 2015, hereby amends and restates in its entirety the Employee Non-Qualified Stock Option Agreement dated November 10, 2009 (the "Existing Option Agreement"), by and between Novation Companies, Inc., a Maryland corporation (formerly known as NovaStar Financial, Inc., the "Company") and Rodney E. Schwatken (the "Optionee").

Number of Shares and Option Price. Pursuant to the action of the Committee, which action was effective on November 10, 2009 (the "Date of Grant"), the Optionee was granted a non-qualified stock option (the "Option") to purchase one hundred fifty thousand (150,000) shares of the Company's common stock, par value $0.01 per share (the "Option Shares"), at the purchase price of Ninety-Seven Cents ($0.97) per share (the "Option Price"). The Option Price is equal to the price at which the Company's common stock was last sold in the principal United States marked for such stock on the Date of Grant. As a result of the Company's recapitalization in 2011, wherein the Company completed the exchange of its outstanding shares of preferred stock for 80,985,600 shares of newly-issued common stock and cash (the "Recapitalization"), the number of Option Shares has increased to 1,446,730, as reflected in board resolutions dated March 1, 2012.