November 10, 2012 Uses in Conditions of Exercise Clause

Conditions of Exercise from Employee Non Qualified Stock Option Agreement

THIS SECOND AMENDED AND RESTATED EMPLOYEE NON-QUALIFIED STOCK OPTION AGREEMENT ("Agreement"), dated as of March 2, 2015, hereby amends and restates in its entirety the Amended and Restated Employee Non-Qualified Stock Option Agreement dated May 7, 2013 (the "Existing Option Agreement") by and between Novation Companies, Inc. (f/k/a NovaStar Financial, Inc.), a Maryland corporation (the "Company") and Matthew Lautz (the "Optionee").

Conditions of Exercise. This Option may be exercised, in whole or in part at any time, or from time to time, up to ten (10) years from the Date of Grant, but only during the period in which such Option remains exercisable as herein provided. The Option Shares shall vest as follows: Eighteen Thousand Seven Hundred Fifty (18,750) shares on November 10, 2012; Eighteen Thousand Seven Hundred Fifty (18,750) shares on November 10, 2013; Eighteen Thousand Seven Hundred Fifty (18,750) shares on November 10, 2014; and Eighteen Thousand Seven Hundred Fifty (18,750) shares on November 10, 2015.

Conditions of Exercise 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").

Conditions of Exercise. This Option may be exercised, in whole or in part at any time, or from time to time, up to ten (10) years from the Date of Grant, but only during the period in which such Option remains exercisable as herein provided. The Option Shares shall vest as follows: Thirty-Seven Thousand Five Hundred (37,500) shares on November 10, 2010, adjusted after the Recapitalization to Three Hundred Sixty-One Thousand Six Hundred Eighty-Two and One-Half (361,682.50) shares; Thirty-Seven Thousand Five Hundred (37,500) shares on November 10, 2011, adjusted after the Recapitalization to Three Hundred Sixty-One Thousand Six Hundred Eighty-Two and One-Half (361,682.50) shares; Thirty-Seven Thousand Five Hundred (37,500) shares on November 10, 2012, adjusted after the Recapitalization to Three Hundred Sixty-One Thousand Six Hundred Eighty-Two and One-Half (361,682.50) shares; and Thirty-Seven Thousand Five Hundred (37,500) on November 10, 2013, adjusted after the Recapitalization to Three Hundred Sixty-One Thousand Six Hundred Eighty-Two and One-Half (361,682.50) shares.