Exhibit 10.4
EXECUTION COPY
AMENDMENT NUMBER ONE
to the
MASTER REPURCHASE AGREEMENT (RESIDUAL SECURITIES)
Dated as of April 18, 2007
among
WACHOVIA INVESTMENT HOLDINGS, LLC.
WACHOVIA CAPITAL MARKETS, LLC
NOVASTAR MORTGAGE, INC.
NOVASTAR CERTIFICATES FINANCING LLC
and
NOVASTAR CERTIFICATES FINANCING CORPORATION
AMENDMENT NUMBER ONE ("Amendment Number One"), dated as of May 10,
2007, by and among Wachovia Investment Holdings, LLC, as buyer ("Buyer"),
Wachovia Capital Markets, LLC, as agent ("Agent"), NovaStar Mortgage,
Inc., as a seller and as a guarantor ("NMI"), NovaStar Certificates
Financing LLC, as a seller ("NCFLLC"), NovaStar Certificates Financing
Corporation, as a seller ("NCFC" and collectively with NMI and NCFLLC,
the "Sellers"), NovaStar Financial, Inc., as a guarantor ("NFI"),
NFI Holding Corporation, as a guarantor ("NFI Holding") and Homeview
Lending, Inc., as a guarantor ("Homeview" and collectively with NFI, NFI
Holding and NMI, the "Guarantors") to the Master Repurchase Agreement
(Residual Securities), dated as of April 18, 2007 (the "Agreement"), by
and among the Buyer, the Agent, the Sellers and the Guarantors.
RECITALS
WHEREAS, the Buyer, the Sellers, the Guarantors and the Agent have agreed
to amend the Agreement pursuant to the terms and conditions set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Defined Terms. Any terms capitalized but not otherwise defined
herein shall have the respective meanings set forth in the Agreement.
SECTION 2. Amendments. Effective as of the date hereof, the Agreement is
hereby amended as follows:
(a) The Exhibits to the Agreement are hereby amended by adding Exhibit
A attached hereto as Schedule 4 to the Agreement.
(b) Schedule 1 of the Agreement is hereby amended in its entirety by
replacing it with Exhibit B attached hereto.
(c) Section 2(a) of the Agreement is hereby amended by adding the
following definition:
"Liquidity" means cash, cash equivalents and the aggregate unused
borrowing capacity under the Existing Agreements and Other Facilities
that could be drawn against (taking into account required haircuts).
(d) Section 2(a) of the Agreement is hereby amended by adding the
following definition:
"Other Facilities" means the repurchase or financing facilities
identified on Schedule 4 attached hereto.
(e) Section 6 of the Agreement is hereby amended in its entirety as by
adding subsection (c) thereto as follows:
(c) If the Sellers fail to satisfy a Margin Deficit in accordance with
Section 6(a) and Section 6(b) hereof, then Buyer may, in its sole
discretion, satisfy a Margin Deficit, by netting the purchase price
under any Existing Agreement by the amount of such Margin Deficit.
Upon such netting, the purchase price under such Existing Agreement
shall be increased on a dollar for dollar basis by the amount of such
Margin Deficit regardless of whether the maximum aggregate purchase
price had already been reached under any such Existing Agreement.
(f) The first sentence in Section 9(a)(vi) of the Agreement is hereby
amended by deleting "$400,000,000" and replacing it with "$517,000,000."
(g) Section 13(r) of the Agreement is hereby amended in its entirety
and replaced with the following:
Maintenance of Liquidity. At all times NFI, on a consolidated basis,
shall maintain Liquidity in an amount of not less than $30,000,000. In
the event that NFI's Liquidity falls below $45,000,000 at any time or
NFI's management believes such event is reasonably likely, Sellers
shall provide notice of such event or likelihood of event to the
Agent.
(h) Section 13(s) of the Agreement is hereby amended by deleting
"$400,000,000" and replacing it with "$517,000,000."
(i) Section 13(t) of the Agreement is hereby amended by deleting the
section in its entirety and replacing it with the following:
Payment of Dividends. No Guarantor, Seller or Subsidiary of any of the
foregoing shall pay dividends (other than dividends paid in stock)
without the prior consent of Buyer, exclusive of (i) dividends paid,
directly or indirectly through one or more other Subsidiaries, to a
Seller or to a Guarantor and (ii) subject to the further provisions of
this clause (t), NFI's 2006 Dividend to its shareholders and (iii)
dividends paid on NFI's 8.90% Series C Cumulative Redeemable Preferred
Stock and dividends paid on the Trust Preferred Securities; provided
that after giving effect to the payment of the dividends described in
this clause (iii), NFI will have at least $30,000,000 of Liquidity;
provided that, notwithstanding the generality of the foregoing, after
payment of the above, NFI shall be in compliance with all
representations, warranties and covenants set forth in the Existing
Agreements. No dividend other than the 2006 Dividend, to the extent
permitted by this clause (t), shall be paid in cash without the prior
consent of Buyer.
As of the date hereof, NFI's best estimate of the maximum amount of
the 2006 Dividend is $175,000,000.
Buyer acknowledges that the 2006 Dividend must be paid in order for
NFI to continue to maintain its status as a REIT, and that such
dividend may be paid in cash or Dividend Securities. Buyer further
acknowledges that U.S. income tax laws require that any Dividend
Securities be valued at their fair market value at the time of
issuance (which, in the case of debt-like securities, may be less than
the face amount thereof) for purposes of determining compliance with
the REIT distribution test.
Unless Buyer otherwise consents, the 2006 Dividend shall be paid in
the form of Dividend Securities, provided that if, in the joint
determination of NFI and Buyer, either excess cash is available or it
is financially impractical for NFI to satisfy the requirement to pay
the 2006 Dividend entirely by means of Dividend Securities, then all
or a portion of the 2006 Dividend may be paid in cash, provided
further that (i) Buyer will permit all or a portion of the 2006
Dividend to be paid in cash if, following payment in cash of such 2006
Dividend, NFI's Liquidity shall be greater than $125,000,000 and (ii)
NFI will neither pay nor declare the 2006 Dividend earlier than
fifteen (15) days before
payment or declaration of such dividend is required by applicable law.
NFI may issue Dividend Securities, provided that, after giving effect
to such issuance, NFI shall be in compliance with all representations,
warranties and covenants set forth in the Existing Agreements.
(j) Section 13(v) of the Agreement is hereby amended by deleting the
section in its entirety and replacing it with the following:
Margin Calls. If at any time after the date hereof Sellers or any of
their Affiliates receive margin calls under any repurchase or
financing facilities in excess of $5,000,000 in the aggregate, Sellers
shall provide notice to Buyer and Buyer shall cause the Sellers to
repurchase the assets subject to such margin calls and include such
assets under this Agreement or the Existing Agreements (provided there
is additional capacity) on mutually acceptable terms to Buyer and
Sellers.
(k) Section 18(q) of the Agreement is hereby amended by deleting
"$400,000,000" and replacing it with "$517,000,000."
(l) Section 18(w) of the Agreement is hereby amended by deleting the
section in its entirety and replacing it with the following:
failure of the Sellers to provide same day notification as soon as
practicable to Buyer of any margin call under any repurchase or
financing facility; or
(m) Clause (ii) of Exhibit A-2 to the Agreement is hereby amended by
deleting "$400,000,000" and replacing it with "$517,000,000."
SECTION 3. Conditions Precedent. This Amendment Number One shall
become effective on the date on which this Amendment Number One is executed
and delivered by duly authorized officers of each of the Buyer, the Sellers
and the Agent.
SECTION 4. Governing Law. THIS AMENDMENT NUMBER ONE SHALL BE CONSTRUED
IN ACCORDANCE WITH, AND GOVERNED BY, THE LAW OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
SECTION 5. Counterparts. This Amendment Number One may be executed by
each of the parties hereto on any number of separate counterparts, each of
which shall be an original and all of which taken together shall constitute
one and the same instrument.
0
SECTION 6. Limited Effect. Except as amended hereby, the Agreement
shall continue in full force and effect in accordance with its respective
terms. Reference to this Amendment Number One need not be made in the
Agreement or any other instrument or document executed in connection
therewith, or in any certificate, letter or communication issued or made
pursuant to, or with respect to, the Agreement, any reference therein to
the Agreement, being sufficient to refer to the Agreement, as amended
thereby. Sellers shall be responsible for all costs associated with this
Amendment Number One.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each of the Sellers, Buyer, Agent and Guarantors
have caused their names to be signed to this Amendment Number One by their
respective officers thereunto duly authorized as of the date first above
written.
NOVASTAR MORTGAGE, INC., as Seller
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President, Treasurer & Controller
NOVASTAR CERTIFICATES FINANCING LLC, as Seller
By: NOVASTAR MORTGAGE FUNDING CORPORATION, its Managing
Member
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President, Treasurer & Controller
NOVASTAR CERTIFICATES FINANCING CORPORATION, as Seller
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President, Treasurer & Controller
WACHOVIA INVESTMENT HOLDINGS, LLC, as Buyer
By: /s/ Xxxxxx Xxxxxx
-----------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
WACHOVIA CAPITAL MARKETS, LLC, as Agent
By: /s/ Xxxxx Xxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
Acknowledged and Agreed:
NFI HOLDING CORPORATION, as Guarantor
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President, Treasurer & Controller
NOVASTAR FINANCIAL, INC., as Guarantor
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President, Treasurer & Controller
NOVASTAR MORTGAGE, INC., as Guarantor
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President, Treasurer & Controller
HOMEVIEW LENDING INC., as Guarantor
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: Vice President
EXHIBIT A
SCHEDULE 4
Other Repurchase or Financing Facilities
EXHIBIT B
SCHEDULE 1
Existing Agreements
1. Master Repurchase Agreement (New York) dated May 14, 2004 between
NovaStar Mortgage, Inc. and Wachovia Bank, National Association as
amended.
2. Master Repurchase Agreement (2007 Servicing Rights) dated as of April
25, 2007 among Wachovia Bank, National Association and NovaStar
Mortgage, Inc., as amended from time to time.
3. Master Repurchase Agreement (2007 Investment Grade) among Variable
Funding Capital Corp., Wachovia Capital Markets LLC, NovaStar Mortgage,
Inc., NovaStar Certificates Financing LLC, and NovaStar Certificates
Financing Corp., to be negotiated among the parties.
4. Master Repurchase Agreement (2007 Non-investment Grade) among Wachovia
Investment Holdings, LLC, Wachovia Capital Markets LLC, NovaStar
Mortgage, Inc., NovaStar Certificates Financing LLC, and NovaStar
Certificates Financing Corp., to be negotiated among the parties.
5. Master Repurchase Agreement (2007 Servicing Advances) between Wachovia
Bank, National Association and NovaStar Mortgage, Inc., to be
negotiated among the parties.
