Exhibit 10.3
EXECUTION COPY
AMENDMENT NUMBER ONE
to the
MASTER REPURCHASE AGREEMENT (2007 SERVICING RIGHTS)
Dated as of April 25, 2007
among
WACHOVIA BANK, N.A.
WACHOVIA CAPITAL MARKETS, LLC
and
NOVASTAR MORTGAGE, INC.
AMENDMENT NUMBER ONE ("Amendment Number One"), dated as of May 10, 2007, by
and among Wachovia Bank, N.A., as buyer ("Buyer"), Wachovia Capital Markets,
LLC, as agent ("Agent") NovaStar Mortgage, Inc., as seller (the "Seller"),
NovaStar Financial, Inc., ("NFI") NovaStar Holding Corporation ("NHC") and
Homeview Lending Inc. ("Homeview", together with Seller, NFI and NHC, each a
Guarantor and collectively the "Guarantors") to the Master Repurchase Agreement
(2007 Servicing Rights), dated as of April 25, 2007 (the "Agreement"), by and
among the Buyer, the Agent, the Seller and the Guarantors.
RECITALS
WHEREAS, the Buyer, the Seller, 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 5 to the Agreement.
(b) Schedule 4 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 5 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 Seller fails 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(s) 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, Seller shall provide
notice of such event or likelihood of event to the Agent.
(h) Section 13(t) of the Agreement is hereby amended by deleting
"$400,000,000" and replacing it with "$517,000,000."
(i) Section 13(u) 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 (u), 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 (u), 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(w) 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 Seller or any of its
Affiliates receive margin calls under any repurchase or financing
facilities in excess of $5,000,000 in the aggregate, Seller shall provide
notice to Buyer and Buyer shall cause the Seller 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 Seller.
(k) Section 18(r) of the Agreement is hereby amended by deleting
"$400,000,000" and replacing it with "$517,000,000."
(l) Section 18(bb) of the Agreement is hereby amended by deleting the
section in its entirety and replacing it with the following:
failure of the Seller to provide same day notification as soon as
practicable to Buyer of any margin call under any repurchase or financing
facility; or
(m) Section 27(i) of the Agreement is hereby amended by deleting "April 24,
2008" and replacing it with "April 18, 2008".
(n) 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 Seller 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.
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. Seller shall be
responsible for all costs associated with this Amendment Number One.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Seller, 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
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Title: Vice President, Treasurer & Controller
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WACHOVIA BANK, N.A., as Buyer
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxx
---------------------------------------
Title: Director
--------------------------------------
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
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EXHIBIT A
SCHEDULE 5
Other Repurchase or Financing Facilities
EXHIBIT B
SCHEDULE 4
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 Residual Securities) dated as of
April 18, 2007 among Wachovia Bank, National Association, Wachovia
Capital Markets LLC, NovaStar Mortgage, Inc., NovaStar Certificates
Financing LLC, and NovaStar Certificates Financing Corp., 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.
