Exhibit
      10.3

    (Multicurrency
      - Cross Border)

    ISDA®

    International
      Swap Dealers Association, Inc.

    MASTER
      AGREEMENT

    dated
      as
      of February 28, 2007

    


    
      	
              THE
                ROYAL BANK OF 
SCOTLAND PLC

               

            	
              and

            	
              NOVASTAR
                MORTGAGE SUPPLEMENTAL 
INTEREST TRUST, SERIES 2007-1, a New York
                
common law trust

            
	 	 	 
	
              (“Party
                A”)

            	 	
              (“Party
                B”)

            


    

    


     

    have
      entered and/or anticipate entering into one of more transactions (each a
      "Transaction") that are or will be governed by this Master Agreement, which
      includes the schedule (the "Schedule"), and the documents and other confirming
      evidence (each a "Confirmation") exchanged between the parties confirming those
      Transactions.

    Accordingly,
      the parties agree as follows: —

     

    1. Interpretation

     

    (a) Definitions. The
      terms
      defined in Section 14 and in the Schedule will have the meanings therein
      specified for the purpose of this Master Agreement.

     

    (b) Inconsistency.
      In the
      event of any inconsistency between the provisions of the Schedule and the other
      provisions of this Master Agreement, the Schedule will prevail. In the event
      of
      any inconsistency between the provisions of any Confirmation and this Master
      Agreement (including the Schedule), such Confirmation will prevail for the
      purpose of the relevant Transaction.

     

    (c) Single
      Agreement.
      All
      Transactions are entered into in reliance on the fact that this Master Agreement
      and all Confirmations form a single agreement between the parties (collectively
      referred to as this "Agreement"), and the parties would not otherwise enter
      into
      any Transactions.

     

    2. Obligations

     

    (a) General
      Conditions.

     

    (i) Each
      party will make each payment or delivery specified in each Confirmation to
      be
      made by it, subject to the other provisions of this Agreement.

     

    (ii) Payments
      under this Agreement will be made on the due date for value on that date in
      the
      place of the account specified in the relevant Confirmation or otherwise
      pursuant to this Agreement, in freely transferable funds and in the manner
      customary for payments in the required currency. Where settlement is by delivery
      (that is, other than by payment), such delivery will be made for receipt on
      the
      due date in the manner customary for the relevant obligation unless otherwise
      specified in the relevant Confirmation or elsewhere in this
      Agreement.

     

    (iii) Each
      obligation of each party under Section 2(a)(i) is subject to (1) the condition
      precedent that no Event of Default or Potential Event of Default with respect
      to
      the other party has occurred and is continuing, (2) the condition precedent
      that
      no Early Termination Date in respect of the relevant Transaction has occurred
      or
      been effectively designated and (3) each other applicable condition precedent
      specified in this Agreement.

    

      Copyright
        © 1992 by International Swap Dealers Association, Inc.

    

    
      
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          1992

         

      

      
         

        
          

        

      

      
         

      

    

     

    (b) Change
      of Account.
      Either
      party may change its account for receiving a payment or delivery by giving
      notice to the other party at least five Local Business Days prior to the
      scheduled date for the payment or delivery to which such change applies unless
      such other party gives timely notice of a reasonable objection to such
      change.

     

    (c) Netting.
      If on
      any date amounts would otherwise be payable: —

     

    (i) in
      the
      same currency; and

     

    (ii) in
      respect of the same Transaction,

     

    by
      each
      party to the other, then, on such date, each party’s obligation to make payment
      of any such amount will be automatically satisfied and discharged and, if the
      aggregate amount that would otherwise have been payable by one party exceeds
      the
      aggregate amount that would otherwise have been payable by the other party,
      replaced by an obligation upon the party by whom the larger aggregate amount
      would have been payable to pay to the other party the excess of the larger
      aggregate amount over the smaller aggregate amount.

     

    The
      parties may elect in respect of two or more Transactions that a net amount
      will
      be determined in respect of all amounts payable on the same date in the same
      currency in respect of such Transactions, regardless of whether such amounts
      are
      payable in respect of the same Transaction. The election may be made in the
      Schedule or a Confirmation by specifying that subparagraph (ii) above will
      not
      apply to the Transactions identified as being subject to the election, together
      with the starting date (in which case subparagraph (ii) above will not, or
      will
      cease to, apply to such Transactions from such date). This election may be
      made
      separately for different groups of Transactions and will apply separately to
      each pairing of Offices through which the parties make and receive payments
      or
      deliveries.

     

    (d) Deduction
      or Withholding for Tax.

     

    (i) Gross-Up.
      All
      payments under this Agreement will be made without any deduction or withholding
      for or on account of any Tax unless such deduction or withholding is required
      by
      any applicable law, as modified by the practice of any relevant governmental
      revenue authority, then in effect. If a party is so required to deduct or
      withhold, then that party (“X”) will: —

     

    (1) promptly
      notify the other party (“Y”) of such requirement;

     

    (2) pay
      to
      the relevant authorities the full amount required to be deducted or withheld
      (including the full amount required to be deducted or withheld from any
      additional amount paid by X to Y under this Section 2(d)) promptly upon the
      earlier of determining that such deduction or withholding is required or
      receiving notice that such amount has been assessed against Y;

     

    (3) promptly
      forward to Y an official receipt (or a certified copy), or other documentation
      reasonably acceptable to Y, evidencing such payment to such authorities;
      and

     

    (4) if
      such
      Tax is an Indemnifiable Tax, pay to Y, in addition to the payment to which
      Y is
      otherwise entitled under this Agreement, such additional amount as is necessary
      to ensure that the net amount actually received by Y (free and clear of
      Indemnifiable Taxes, whether assessed against X or Y) will equal the full amount
      Y would have received had no such deduction or withholding been required.
      However, X will not be required to pay any additional amount to Y to the extent
      that it would not be required to be paid but for: —

     

    (A) the
      failure by Y to comply with or perform any agreement contained in Section
      4(a)(i), 4(a)(iii) or 4(d); or

     

    (B) the
      failure of a representation made by Y pursuant to Section 3(f) to be accurate
      and true unless such failure would not have occurred but for (I) any action
      taken by a taxing authority, or brought in a court of competent jurisdiction,
      on
      or after the date on which a Transaction is entered into (regardless of whether
      such action is taken or brought with respect to a party to this Agreement)
      or
      (II) a Change in Tax Law.


    
      
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    (ii) Liability.
      If:
      —

     

    (1) X
      is
      required by any applicable law, as modified by the practice of any relevant
      governmental revenue authority, to make any deduction or withholding in respect
      of which X would not be required to pay an additional amount to Y under Section
      2(d)(i)(4);

     

    (2) X
      does
      not so deduct or withhold; and

     

    (3) a
      liability resulting from such Tax is assessed directly against X,

     

    then,
      except to the extent Y has satisfied or then satisfies the liability resulting
      from such Tax, Y will promptly pay to X the amount of such liability (including
      any related liability for interest, but including any related liability for
      penalties only if Y has failed to comply with or perform any agreement contained
      in Section 4(a)(i), 4(a)(iii) or 4(d)).

     

    (e) Default
      Interest; Other Amounts.
      Prior to
      the occurrence or effective designation of an Early Termination Date in respect
      of the relevant Transaction, a party that defaults in the performance of any
      payment obligation will, to the extent permitted by law and subject to Section
      6(c), be required to pay interest (before as well as after judgment) on the
      overdue amount to the other party on demand in the same currency as such overdue
      amount, for the period from (and including) the original due date for payment
      to
      (but excluding) the date of actual payment, at the Default Rate. Such interest
      will be calculated on the basis of daily compounding and the actual number
      of
      days elapsed. If, prior to the occurrence or effective designation of an Early
      Termination Date in respect of the relevant Transaction, a party defaults in
      the
      performance of any obligation required to be settled by delivery, it will
      compensate the other party on demand if and to the extent provided for in the
      relevant Confirmation or elsewhere in this Agreement.

     

    3. Representations

     

    Each
      party represents to the other party (which representations will be deemed to
      be
      repeated by each party on each date on which a Transaction is entered into
      and,
      in the case of the representations in Section 3(f), at all times until the
      termination of this Agreement) that: —

     

    (a) Basic
      Representations.

     

    (i) Status.
      It is
      duly organised and validly existing under the laws of the jurisdiction of its
      organisation or incorporation and, if relevant under such laws, in good
      standing;

     

    (ii) Powers.
      It has
      the power to execute this Agreement and any other documentation relating to
      this
      Agreement to which it is a party, to deliver this Agreement and any other
      documentation relating to this Agreement that it is required by this Agreement
      to deliver and to perform its obligations under this Agreement and any
      obligations it has under any Credit Support Document to which it is a party
      and
      has taken all necessary action to authorise such execution, delivery and
      performance;

     

    (iii) No
      Violation or Conflict.
      Such
      execution, delivery and performance do not violate or conflict with any law
      applicable to it, any provision of its constitutional documents, any order
      or
      judgment of any court or other agency of government applicable to it or any
      of
      its assets or any contractual restriction binding on or affecting it or any
      of
      its assets;

     

    (iv) Consents.
      All
      governmental and other consents that are required to have been obtained by
      it
      with respect to this Agreement or any Credit Support Document to which it is
      a
      party have been obtained and are in full force and effect and all conditions
      of
      any such consents have been complied with; and

     

    (v) Obligations
      Binding.
      Its
      obligations under this Agreement and any Credit Support Document to which it
      is
      a party constitute its legal, valid and binding obligations, enforceable in
      accordance with their respective terms (subject to applicable bankruptcy,
      reorganisation, insolvency, moratorium or similar laws affecting creditors’
rights generally and subject, as to enforceability, to equitable principles
      of
      general application (regardless of whether enforcement is sought in a proceeding
      in equity or at law)).

     


    
      
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    (b) Absence
      of Certain Events.
      No Event
      of Default or Potential Event of Default or, to its knowledge, Termination
      Event
      with respect to it has occurred and is continuing and no such event or
      circumstance would occur as a result of its entering into or performing its
      obligations under this Agreement or any Credit Support Document to which it
      is a
      party.

     

    (c) Absence
      of Litigation.
      There is
      not pending or, to its knowledge, threatened against it or any of its Affiliates
      any action, suit or proceeding at law or in equity or before any court,
      tribunal, governmental body, agency or official or any arbitrator that is likely
      to affect the legality, validity or enforceability against it of this Agreement
      or any Credit Support Document to which it is a party or its ability to perform
      its obligations under this Agreement or such Credit Support
      Document.

     

    (d) Accuracy
      of Specified Information.
      All
      applicable information that is furnished in writing by or on behalf of it to
      the
      other party and is identified for the purpose of this Section 3(d) in the
      Schedule is, as of the date of the information, true, accurate and complete
      in
      every material respect.

     

    (e) Payer
      Tax Representation.
      Each
      representation specified in the Schedule as being made by it for the purpose
      of
      this Section 3(e) is accurate and true.

     

    (f) Payee
      Tax Representations.
      Each
      representation specified in the Schedule as being made by it for the purpose
      of
      this Section 3(f) is accurate and true.

     

    4. Agreements

     

    Each
      party agrees with the other that, so long as either party has or may have any
      obligation under this Agreement or under any Credit Support Document to which
      it
      is a party: —

     

    (a) Furnish
      Specified Information.
      It will
      deliver to the other party or, in certain cases under subparagraph (iii) below,
      to such government or taxing authority as the other party reasonably directs:
      —

     

    (i) any
      forms, documents or certificates relating to taxation specified in the Schedule
      or any Confirmation;

     

    (ii) any
      other
      documents specified in the Schedule or any Confirmation; and

     

    (iii) upon
      reasonable demand by such other party, any form or document that may be required
      or reasonably requested in writing in order to allow such other party or its
      Credit Support Provider to make a payment under this Agreement or any applicable
      Credit Support Document without any deduction or withholding for or on account
      of any Tax or with such deduction or withholding at a reduced rate (so long
      as
      the completion, execution or submission of such form or document would not
      materially prejudice the legal or commercial position of the party in receipt
      of
      such demand), with any such form or document to be accurate and completed in
      a
      manner reasonably satisfactory to such other party and to be executed and to
      be
      delivered with any reasonably required certification,

     

    in
      each
      case by the date specified in the Schedule or such Confirmation or, if none
      is
      specified, as soon as reasonably practicable.

     

    (b) Maintain
      Authorisations.
      It will
      use all reasonable efforts to maintain in full force and effect all consents
      of
      any governmental or other authority that are required to be obtained by it
      with
      respect to this Agreement or any Credit Support Document to which it is a party
      and will use all reasonable efforts to obtain any that may become necessary
      in
      the future.

     

    (c) Comply
      with Laws.
      It will
      comply in all material respects with all applicable laws and orders to which
      it
      may be subject if failure so to comply would materially impair its ability
      to
      perform its obligations under this Agreement or any Credit Support Document
      to
      which it is a party.

     

    (d) Tax
      Agreement.
      It will
      give notice of any failure of a representation made by it under Section 3(f)
      to
      be accurate and true promptly upon learning of such failure.

     

    (e) Payment
      of Stamp Tax.
      Subject
      to Section 11, it will pay any Stamp Tax levied or imposed upon it or in respect
      of its execution or performance of this Agreement by a jurisdiction in which
      it
      is incorporated, organised, managed and controlled. or considered to have its
      seat, or in which a branch or office through which it is acting for the purpose
      of this Agreement is located (“Stamp Tax Jurisdiction”) and will indemnify the
      other party against any Stamp Tax levied or imposed upon the other party or
      in
      respect of the other party’s execution or performance of this Agreement by any
      such Stamp Tax Jurisdiction which is not also a Stamp Tax Jurisdiction with
      respect to the other party.

    
      
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    5. Events
      of Default and Termination Events

     

    (a) Events
      of Default.
      The
      occurrence at any time with respect to a party or, if applicable, any Credit
      Support Provider of such party or any Specified Entity of such party of any
      of
      the following events constitutes an event of default (an “Event of Default”)
      with respect to such party: —

     

    (i) Failure
      to Pay or Deliver.
      Failure
      by the party to make, when due, any payment under this Agreement or delivery
      under Section 2(a)(i) or 2(e) required to be made by it if such failure is
      not
      remedied on or before the third Local Business Day after notice of such failure
      is given to the party;

     

    (ii) Breach
      of Agreement.
      Failure
      by the party to comply with or perform any agreement or obligation (other than
      an obligation to make any payment under this Agreement or delivery under Section
      2(a)(i) or 2(e) or to give notice of a Termination Event or any agreement or
      obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with or
      performed by the party in accordance with this Agreement if such failure is
      not
      remedied on or before the thirtieth day after notice of such failure is given
      to
      the party;

     

    (iii) Credit
      Support Default.

     

    (1) Failure
      by the party or any Credit Support Provider of such party to comply with or
      perform any agreement or obligation to be complied with or performed by it
      in
      accordance with any Credit Support Document if such failure is continuing after
      any applicable grace period has elapsed;

     

    (2) the
      expiration or termination of such Credit Support Document or the failing or
      ceasing of such Credit Support Document to be in full force and effect for
      the
      purpose of this Agreement (in either case other than in accordance with its
      terms) prior to the satisfaction of all obligations of such party under each
      Transaction to which such Credit Support Document relates without the written
      consent of the other party; or

     

    (3) the
      party
      or such Credit Support Provider disaffirms, disclaims, repudiates or rejects,
      in
      whole or in part, or challenges the validity of, such Credit Support
      Document;

     

    (iv) Misrepresentation.
      A
      representation (other than a representation under Section 3(e) or (f)) made
      or
      repeated or deemed to have been made or repeated by the party or any Credit
      Support Provider of such party in this Agreement or any Credit Support Document
      proves to have been incorrect or misleading in any material respect when made
      or
      repeated or deemed to have been made or repeated;

     

    (v) Default
      under Specified Transaction.
      The
      party, any Credit Support Provider of such party or any applicable Specified
      Entity of such party (1) defaults under a Specified Transaction and, after
      giving effect to any applicable notice requirement or grace period, there occurs
      a liquidation of, an acceleration of obligations under, or an early termination
      of, that Specified Transaction, (2) defaults, after giving effect to any
      applicable notice requirement or grace period, in making any payment or delivery
      due on the last payment, delivery or exchange date of, or any payment on early
      termination of, a Specified Transaction (or such default continues for at least
      three Local Business Days if there is no applicable notice requirement or grace
      period) or (3) disaffirms, disclaims, repudiates or rejects, in whole or in
      part, a Specified Transaction (or such action is taken by any person or entity
      appointed or empowered to operate it or act on its behalf);

     

    (vi) Cross
      Default.
      If
“Cross Default” is specified in the Schedule as applying to the party, the
      occurrence or existence of (1) a default, event of default or other similar
      condition or event (however described) in respect of such party, any Credit
      Support Provider of such party or any applicable Specified Entity of such party
      under one or more agreements or instruments relating to Specified Indebtedness
      of any of them (individually or collectively) in an aggregate amount of not
      less
      than the applicable Threshold Amount (as specified in the Schedule) which has
      resulted in such Specified Indebtedness becoming, or becoming capable at such
      time of being declared, due and payable under such agreements or instruments,
      before it would otherwise have been due and payable or (2) a default by such
      party, such Credit Support Provider or such Specified Entity (individually
      or
      collectively) in making one or more payments on the due date thereof in an
      aggregate amount of not less than the applicable Threshold Amount under such
      agreements or instruments (after giving effect to any applicable notice
      requirement or grace period);

     


    
      
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    (vii) Bankruptcy.
      The
      party, any Credit Support Provider of such party or any applicable Specified
      Entity of such party:-

     

    (1)
      is
      dissolved (other than pursuant to a consolidation, amalgamation or merger);
      (2)
      becomes insolvent or is unable to pay its debts or fails or admits in writing
      its inability generally to pay its debts as they become due; (3) makes a general
      assignment, arrangement or composition with or for the benefit of its creditors;
      (4) institutes or has instituted against it a proceeding seeking a judgment
      of
      insolvency or bankruptcy or any other relief under any bankruptcy or insolvency
      law or other similar law affecting creditors’ rights, or a petition is presented
      for its winding-up or liquidation, and, in the case of any such proceeding
      or
      petition instituted or presented against it, such proceeding or petition (A)
      results in a judgment of insolvency or bankruptcy or the entry of an order
      for
      relief or the making of an order for its winding-up or liquidation or (B) is
      not
      dismissed, discharged, stayed or restrained in each case within 30 days of
      the
      institution or presentation thereof, (5) has a resolution passed for its
      winding-up, official management or liquidation (other than pursuant to a
      consolidation, amalgamation or merger); (6) seeks or becomes subject to the
      appointment of an administrator, provisional liquidator, conservator, receiver,
      trustee, custodian or other similar official for it or for all or substantially
      all its assets; (7) has a secured party take possession of all or substantially
      all its assets or has a distress, execution, attachment, sequestration or other
      legal process levied, enforced or sued on or against all or substantially all
      its assets and such secured party maintains possession, or any such process
      is
      not dismissed, discharged, stayed or restrained, in each case within 30 days
      thereafter; (8) causes or is subject to any event with respect to it which,
      under the applicable laws of any jurisdiction, has an analogous effect to any
      of
      the events specified in clauses (1) to (7) (inclusive); or (9) takes any action
      in furtherance of, or indicating its consent to, approval of, or acquiescence
      in, any of the foregoing acts; or

     

    (viii) Merger
      Without Assumption.
      The
      party or any Credit Support Provider of such party consolidates or amalgamates
      with, or merges with or into, or transfers all or substantially all its assets
      to, another entity and, at the time of such consolidation, amalgamation, merger
      or transfer: -

     

    (1) the
      resulting, surviving or transferee entity fails to assume all the obligations
      of
      such party or such Credit Support Provider under this Agreement or any Credit
      Support Document to which it or its predecessor was a party by operation of
      law
      or pursuant to an agreement reasonably satisfactory to the other party to this
      Agreement; or

     

    (2) the
      benefits of any Credit Support Document fail to extend (without the consent
      of
      the other party) to the performance by such resulting, surviving or transferee
      entity of its obligations under this Agreement.

     

    (b) Termination
      Events.
      The
      occurrence at any time with respect to a party or, if applicable, any Credit
      Support Provider of such party or any Specified Entity of such party of any
      event specified below constitutes an Illegality if the event is specified in
      (i)
      below, a Tax Event if the event is specified in (ii) below or a Tax Event Upon
      Merger if the event is specified in (iii) below, and, if specified to be
      applicable, a Credit Event

    
      
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    Upon
      Merger if the event is specified pursuant to (iv) below or an Additional
      Termination Event if the event is specified pursuant to (v) below:—

     

    (i) Illegality.
      Due to
      the adoption of, or any change in, any applicable law after the date on which
      a
      Transaction is entered into, or due to the promulgation of, or any change in,
      the interpretation by any court, tribunal or regulatory authority with competent
      jurisdiction of any applicable law after such date. it becomes unlawful (other
      than as a result of a breach by the party of Section 4(b)) for such party (which
      will be the Affected Party):—

     

    (1) to
      perform any absolute or contingent obligation to make a payment or delivery
      or
      to receive a payment or delivery in respect of such Transaction or to comply
      with any other material provision of this Agreement relating to such
      Transaction; or

     

    (2) to
      perform, or for any Credit Support Provider of such party to perform, any
      contingent or other obligation which the party (or such Credit Support Provider)
      has under any Credit Support Document relating to such Transaction;

     

    (ii) Tax
      Event.
      Due to
      (x) any action taken by a taxing authority, or brought in a court of competent
      jurisdiction, on or after the date on which a Transaction is entered into
      (regardless of whether such action is taken or brought with respect to a party
      to this Agreement) or (y) a Change in Tax Law, the party (which will be the
      Affected Party) will, or there is a substantial likelihood that it will, on
      the
      next succeeding Scheduled Payment Date (1) be required to pay to the other
      party
      an additional amount in respect of an Indemnifiable Tax under Section 2(d)(i)(4)
      (except in respect of interest under Section 2(e), 6(d)(ii) or 6(e)) or (2)
      receive a payment from which an amount is required to be deducted or withheld
      for or on account of a Tax (except in respect of interest under Section 2(e),
      6(d)(ii) or 6(e)) and no additional amount is required to be paid in respect
      of
      such Tax under Section 2(d)(i)(4) (other than by reason of Section 2(d)(i)(4)(A)
      or (B));

     

    (iii) Tax
      Event Upon Merger.
      The
      party (the “Burdened Party”) on the next succeeding Scheduled Payment Date will
      either (1) be required to pay an additional amount in respect of an
      Indemnifiable Tax under Section 2(d)(i)(4) (except in respect of interest under
      Section 2(e), 6(d)(ii) or 6(e)) or (2) receive a payment from which an amount
      has been deducted or withheld for or on account of any Indemnifiable Tax in
      respect of which the other party is not required to pay an additional amount
      (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either case as a
      result of a party consolidating or amalgamating with, or merging with or into,
      or transferring all or substantially all its assets to, another entity (which
      will be the Affected Party) where such action does not constitute an event
      described in Section 5(a)(viii);

     

    (iv) Credit
      Event Upon Merger.
      If
“Credit Event Upon Merger” is specified in the Schedule as applying to the
      party, such party (“X”), any Credit Support Provider of X or any applicable
      Specified Entity of X consolidates or amalgamates with, or merges with or into,
      or transfers all or substantially all its assets to, another entity and such
      action does not constitute an event described in Section 5(a)(viii) but the
      creditworthiness of the resulting, surviving or transferee entity is materially
      weaker than that of X, such Credit Support Provider or such Specified Entity,
      as
      the case may be, immediately prior to such action (and, in such event, X or
      its
      successor or transferee, as appropriate, will be the Affected Party);
      of

     

    (v) Additional
      Termination Event.
      If any
“Additional Termination Event” is specified in the Schedule or any Confirmation
      as applying, the occurrence of such event (and, in such event, the Affected
      Party or Affected Parties shall be as specified for such Additional Termination
      Event in the Schedule or such Confirmation).

     

    (c) Event
      of Default and Illegality.
      If an
      event or circumstance which would otherwise constitute or give rise to an Event
      of Default also constitutes an Illegality, it will be treated as an Illegality
      and will not constitute an Event of Default.


    
      
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    6. Early
      Termination

     

    (a) Right
      to Terminate Following Event of Default.
      If at
      any time an Event of Default with respect to a party (the “Defaulting Party”)
      has occurred and is then continuing, the other party (the “Non-defaulting
      Party”) may, by not more than 20 days notice to the Defaulting Party specifying
      the relevant Event of Default, designate a day not earlier than the day such
      notice is effective as an Early Termination Date in respect of all outstanding
      Transactions. If, however, “Automatic Early Termination” is specified in the
      Schedule as applying to a party, then an Early Termination Date in respect
      of
      all outstanding Transactions will occur immediately upon the occurrence with
      respect to such party of an Event of Default specified in Section 5(a)(vii)(1),
      (3), (5), (6) or, to the extent analogous thereto, (8), and as of the time
      immediately preceding the institution of the relevant proceeding or the
      presentation of the relevant petition upon the occurrence with respect to such
      party of an Event of Default specified in Section 5(a)(vii)(4) or, to the extent
      analogous thereto, (8).

     

    (b) Right
      to Terminate Following Termination Event.

     

    (i) Notice.
      If a
      Termination Event occurs, an Affected Party will, promptly upon becoming aware
      of it, notify the other party, specifying the nature of that Termination Event
      and each Affected Transaction and will also give such other information about
      that Termination Event as the other party may reasonably require.

     

    (ii) Transfer
      to Avoid Termination Event.
      If
      either an Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there
      is
      only one Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
      Party is the Affected Party, the Affected Party will, as a condition to its
      right to designate an Early Termination Date under Section 6(b)(iv), use all
      reasonable efforts (which will not require such party to incur a loss, excluding
      immaterial, incidental expenses) to transfer within 20 days after it gives
      notice under Section 6(b)(i) all its rights and obligations under this Agreement
      in respect of the Affected Transactions to another of its Offices or Affiliates
      so that such Termination Event ceases to exist.

     

    If
      the
      Affected Party is not able to make such a transfer it will give notice to the
      other party to that effect within such 20 day period, whereupon the other party
      may effect such a transfer within 30 days after the notice is given under
      Section 6(b)(i).

     

    Any
      such
      transfer by a party under this Section 6(b)(ii) will be subject to and
      conditional upon the prior written consent of the other party, which consent
      will not be withheld if such other party’s policies in effect at such time would
      permit it to enter into transactions with the transferee on the terms
      proposed.

     

    (iii) Two
      Affected Parties.
      If an
      Illegality under Section 5(b)(i)(1) or a Tax Event occurs and there are two
      Affected Parties, each party will use all reasonable efforts to reach agreement
      within 30 days after notice thereof is given under Section 6(b)(i) on action
      to
      avoid that Termination Event.

     

    (iv) Right
      to Terminate.
      If:—

     

    (1) a
      transfer under Section 6(b)(ii) or an agreement under Section 6(b)(iii), as
      the
      case may be, has not been effected with respect to all Affected Transactions
      within 30 days after an Affected Party gives notice under Section 6(b)(i);
      or

     

    (2) an
      Illegality under Section 5(b)(i)(2), a Credit Event Upon Merger or an Additional
      Termination Event occurs, or a Tax Event Upon Merger occurs and the Burdened
      Party is not the Affected Party,

     

    either
      party in the case of an Illegality, the Burdened Party in the case of a Tax
      Event Upon Merger, any Affected Party in the case of a Tax Event or an
      Additional Termination Event if there is more than one Affected
      Party, or the party which is not the Affected Party in the case of a Credit
      Event Upon Merger or an
      Additional Termination Event if there is only one Affected Party may, by not
      more than 20 days notice to
      the
      other party and provided that the relevant Termination Event is then continuing,
      designate a day not earlier than the day such notice is effective as an Early
      Termination Date in respect of all Affected Transactions.


    
      
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    (c) Effect
      of Designation.

     

    (i) If
      notice
      designating an Early Termination Date is given under Section 6(a) or (b), the
      Early Termination Date will occur on the date so designated, whether or not
      the
      relevant Event of Default or Termination Event is then continuing.

     

    (ii) Upon
      the
      occurrence or effective designation of an Early Termination Date, no further
      payments or deliveries under Section 2(a)(i) or 2(e) in respect of the
      Terminated Transactions will be required to be made, but without prejudice
      to
      the other provisions of this Agreement. The amount, if any, payable in respect
      of an Early Termination Date shall be determined pursuant to Section
      6(e).

     

    (d) Calculations.

     

    (i) Statement.
      On or as
      soon as reasonably practicable following the occurrence of an Early Termination
      Date, each party will make the calculations on its part, if any, contemplated
      by
      Section 6(e) and will provide to the other party a statement (1) showing, in
      reasonable detail, such calculations (including all relevant quotations and
      specifying any amount payable under Section 6(e)) and (2) giving details of
      the
      relevant account to which any amount payable to it is to be paid. In the absence
      of written confirmation from the source of a quotation obtained in determining
      a
      Market Quotation, the records of the party obtaining such quotation will be
      conclusive evidence of the existence and accuracy of such
      quotation.

     

    (ii) Payment
      Date.
      An
      amount calculated as being due in respect of any Early Termination Date under
      Section 6(e) will be payable on the day that notice of the amount payable is
      effective (in the case of an Early Termination Date which is designated or
      occurs as a result of an Event of Default) and on the day which is two Local
      Business Days after the day on which notice of the amount payable is effective
      (in the case of an Early Termination Date which is designated as a result of
      a
      Termination Event). Such amount will be paid together with (to the extent
      permitted under applicable law) interest thereon (before as well as after
      judgment) in the Termination Currency, from (and including) the relevant Early
      Termination Date to (but excluding) the date such amount is paid, at the
      Applicable Rate. Such interest will be calculated on the basis of daily
      compounding and the actual number of days elapsed.

     

    (e) Payments
      on Early Termination.
      If an
      Early Termination Date occurs, the following provisions shall apply based on
      the
      parties’ election in the Schedule of a payment measure, either “Market
      Quotation” or “Loss”, and a payment method, either the “First Method” or the
“Second Method”. If the parties fail to designate a payment measure or payment
      method in the Schedule, it will be deemed that “Market Quotation” or the “Second
      Method”, as the case may be, shall apply. The amount, if any, payable in respect
      of an Early Termination Date and determined pursuant to this Section will be
      subject to any Set-off.

     

    (i) Events
      of Default.
      If the
      Early Termination Date results from an Event of Default:—

     

    (1) First
      Method and Market Quotation.
      If the
      First Method and Market Quotation apply, the Defaulting Party will pay to the
      Non-defaulting Party the excess, if a positive number, of (A) the sum of the
      Settlement Amount (determined by the Non-defaulting Party) in respect of the
      Terminated Transactions and the Termination Currency Equivalent of the Unpaid
      Amounts owing to the Non-defaulting Party over (B) the Termination Currency
      Equivalent of the Unpaid Amounts owing to the Defaulting Party.

     

    (2) First
      Method and Loss.
      If the
      First Method and Loss apply, the Defaulting Party will pay to the Non-defaulting
      Party, if a positive number, the Non-defaulting Party’s Loss in respect of this
      Agreement.

     

    (3) Second
      Method and Market Quotation.
      If the
      Second Method and Market Quotation apply,
      an
      amount will be payable equal to (A) the sum of the Settlement Amount (determined
      by the Non-defaulting
      Party) in respect of the Terminated Transactions and the Termination Currency
      Equivalent of the Unpaid Amounts owing to the Non-defaulting Party less (B)
      the
      Termination Currency Equivalent of the Unpaid Amounts owing to the Defaulting
      Party. If that amount is a positive number, the Defaulting Party will pay it
      to
      the Non-defaulting Party; if it is a negative number, the Non-defaulting Party
      will pay the absolute value of that amount to the Defaulting
      Party.


    
      
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    (4) Second
      Method and Loss.
      If the
      Second Method and Loss apply, an amount will be payable equal to the
      Non-defaulting Party’s Loss in respect of this Agreement. If that amount is a
      positive number, the Defaulting Party will pay it to the Non-defaulting Party;
      if it is a negative number, the Non-defaulting Party will pay the absolute
      value
      of that amount to the Defaulting Party.

     

    (ii) Termination
      Events.
      If the
      Early Termination Date results from a Termination Event:—

     

    (1) One
      Affected Party.
      If there
      is one Affected Party, the amount payable will be determined in accordance
      with
      Section 6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4), if
      Loss
      applies, except that, in either case, references to the Defaulting Party and
      to
      the Non-defaulting Party will be deemed to be references to the Affected Party
      and the party which is not the Affected Party, respectively, and, if Loss
      applies and fewer than all the Transactions are being terminated, Loss shall
      be
      calculated in respect of all Terminated Transactions.

     

    (2) Two
      Affected Parties.
      If there
      are two Affected Parties:—

     

    (A) if
      Market
      Quotation applies, each party will determine a Settlement Amount in respect
      of
      the Terminated Transactions, and an amount will be payable equal to (I) the
      sum
      of (a) one-half of the difference between the Settlement Amount of the party
      with the higher Settlement Amount (“X”) and the Settlement Amount of the party
      with the lower Settlement Amount (“Y”) and (b) the Termination Currency
      Equivalent of the Unpaid Amounts owing to X less (II) the Termination Currency
      Equivalent of the Unpaid Amounts owing to Y; and

     

    (B) if
      Loss
      applies, each party will determine its Loss in respect of this Agreement (or,
      if
      fewer than all the Transactions are being terminated, in respect of all
      Terminated Transactions) and an amount will be payable equal to one-half of
      the
      difference between the Loss of the party with the higher Loss (“X”) and the Loss
      of the party with the lower Loss (“Y”).

     

    If
      the
      amount payable is a positive number, Y will pay it to X; if it is a negative
      number, X will pay the absolute value of that amount to Y.

     

    (iii) Adjustment
      for Bankruptcy.
      In
      circumstances where an Early Termination Date occurs because “Automatic Early
      Termination” applies in respect of a party, the amount determined under this
      Section 6(e) will be subject to such adjustments as are appropriate and
      permitted by law to reflect any payments or deliveries made by one party to
      the
      other under this Agreement (and retained by such other party) during the period
      from the relevant Early Termination Date to the date for payment determined
      under Section 6(d)(ii).

     

    (iv) Pre-Estimate.
      The
      parties agree that if Market Quotation applies an amount recoverable under
      this
      Section 6(e) is a reasonable pre-estimate of loss and not a penalty. Such amount
      is payable for the loss of bargain and the loss of protection against future
      risks and except as otherwise provided in this Agreement neither party will
      be
      entitled to recover any additional damages as a consequence of such
      losses.


    
      
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    7. Transfer

     

    Subject
      to Section 6(b)(ii), neither this Agreement nor any interest or obligation
      in or
      under this Agreement may be transferred (whether by way of security or
      otherwise) by either party without the prior written consent of the other party,
      except that:—

     

    (a) a
      party
      may make such a transfer of this Agreement pursuant to a consolidation or
      amalgamation with, or merger with or into, or transfer of all or substantially
      all its assets to, another entity (but without prejudice to any other right
      or
      remedy under this Agreement); and

     

    (b) a
      party
      may make such a transfer of all or any part of its interest in any amount
      payable to it from a Defaulting Party under Section 6(e).

     

    Any
      purported transfer that is not in compliance with this Section will be
      void.

     

    8. Contractual
      Currency

     

    (a) Payment
      in the Contractual Currency.
      Each
      payment under this Agreement will be made in the relevant currency specified
      in
      this Agreement for that payment (the “Contractual Currency”). To the extent
      permitted by applicable law, any obligation to make payments under this
      Agreement in the Contractual Currency will not be discharged or satisfied by
      any
      tender in any currency other than the Contractual Currency, except to the extent
      such tender results in the actual receipt by the party to which payment is
      owed,
      acting in a reasonable manner and in good faith in converting the currency
      so
      tendered into the Contractual Currency, of the full amount in the Contractual
      Currency of all amounts payable in respect of this Agreement. If for any reason
      the amount in the Contractual Currency so received falls short of the amount
      in
      the Contractual Currency payable in respect of this Agreement, the party
      required to make the payment will, to the extent permitted by applicable law,
      immediately pay such additional amount in the Contractual Currency as may be
      necessary to compensate for the shortfall. If for any reason the amount in
      the
      Contractual Currency so received exceeds the amount in the Contractual Currency
      payable in respect of this Agreement, the party receiving the payment will
      refund promptly the amount of such excess.

     

    (b) Judgments.
      To the
      extent permitted by applicable law, if any judgment or order expressed in a
      currency other than the Contractual Currency is rendered (i) for the payment
      of
      any amount owing in respect of this Agreement, (ii) for the payment of any
      amount relating to any early termination in respect of this Agreement or (iii)
      in respect of a judgment or order of another court for the payment of any amount
      described in (i) or (ii) above, the party seeking recovery, after recovery
      in
      full of the aggregate amount to which such party is entitled pursuant to the
      judgment or order, will be entitled to receive immediately from the other party
      the amount of any shortfall of the Contractual Currency received by such party
      as a consequence of sums paid in such other currency and will refund promptly
      to
      the other party any excess of the Contractual Currency received by such party
      as
      a consequence of sums paid in such other currency if such shortfall or such
      excess arises or results from any variation between the rate of exchange at
      which the Contractual Currency is converted into the currency of the judgment
      or
      order for the purposes of such judgment or order and the rate of exchange at
      which such party is able, acting in a reasonable manner and in good faith in
      converting the currency received into the Contractual Currency, to purchase
      the
      Contractual Currency with the amount of the currency of the judgment or order
      actually received by such party. The term “rate of exchange” includes, without
      limitation, any premiums and costs of exchange payable in connection with the
      purchase of or conversion into the Contractual Currency.

     

    (c) Separate
      Indemnities.
      To the
      extent permitted by applicable law, these indemnities constitute separate and
      independent obligations from the other obligations in this Agreement, will
      be
      enforceable as separate and independent causes of action, will apply
      notwithstanding any indulgence granted by the party to which any payment is
      owed
      and will not be affected by judgment being obtained or claim or proof being
      made
      for any other sums payable in respect of this Agreement.

     

    (d) Evidence
      of Loss.
      For the
      purpose of this Section 8, it will be sufficient for a party to demonstrate
      that
      it would have suffered a loss had an actual exchange or purchase been
      made.

     


    
      
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    9. Miscellaneous

     

    (a) Entire
      Agreement.
      This
      Agreement constitutes the entire agreement and understanding of the parties
      with
      respect to its subject matter and supersedes all oral communication and prior
      writings with respect thereto.

     

    (b) Amendments.
      No
      amendment, modification or waiver in respect of this 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.

     

    (c) Survival
      of Obligations.
      Without
      prejudice to Sections 2(a)(iii) and 6(c)(ii), the obligations of the parties
      under this Agreement will survive the termination of any
      Transaction.

     

    (d) Remedies
      Cumulative.
      Except
      as provided in this Agreement, the rights, powers, remedies and privileges
      provided in this Agreement are cumulative and not exclusive of any rights,
      powers, remedies and privileges provided by law.

     

    (e) Counterparts
      and Confirmations.

     

    (i) This
      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.

     

    (ii) The
      parties intend that they are legally bound by the terms of each Transaction
      from
      the moment they agree to those terms (whether orally or otherwise). A
      Confirmation shall be entered into as soon as practicable and may be executed
      and delivered in counterparts (including by facsimile transmission) or be
      created by an exchange of telexes or by an exchange of electronic messages
      on an
      electronic messaging system, which in each case will be sufficient for all
      purposes to evidence a binding supplement to this Agreement. The parties will
      specify therein or through another effective means that any such counterpart,
      telex or electronic message constitutes a Confirmation.

     

    (f) No
      Waiver of Rights.
      A
      failure or delay in exercising any right, power or privilege in respect of
      this
      Agreement will not be presumed to operate as a waiver, and a single or partial
      exercise of any right, power or privilege will not be presumed to preclude
      any
      subsequent or further exercise, of that right, power or privilege or the
      exercise of any other right, power or privilege.

     

    (g) Headings.
      The
      headings used in this Agreement are for convenience of reference only and are
      not to affect the construction of or to be taken into consideration in
      interpreting this Agreement.

     

    10. Offices;
      Multibranch Parties

     

    (a) If
      Section 10(a) is specified in the Schedule as applying, each party that enters
      into a Transaction through an Office other than its head or home office
      represents to the other party that, notwithstanding the place of booking office
      or jurisdiction of incorporation or organisation of such party, the obligations
      of such party are the same as if it had entered into the Transaction through
      its
      head or home office. This representation will be deemed to be repeated by such
      party on each date on which a Transaction is entered into.

     

    (b) Neither
      party may change the Office through which it makes and receives payments or
      deliveries for the purpose of a Transaction without the prior written consent
      of
      the other party.

     

    (c) If
      a
      party is specified as a Multibranch Party in the Schedule, such Multibranch
      Party may make and receive payments or deliveries under any Transaction through
      any Office listed in the Schedule, and the Office through which it makes and
      receives payments or deliveries with respect to a Transaction will be specified
      in the relevant Confirmation.

     

    11. Expenses

     

    A
      Defaulting Party will, on demand, indemnify and hold harmless the other party
      for and against all reasonable out-of-pocket expenses, including legal fees
      and
      Stamp Tax, incurred by such other party by reason of the enforcement and
      protection of its rights under this Agreement or any Credit Support
      Document
      to which
      the Defaulting Party is a party or by reason of the early termination of any
      Transaction, including, but not limited to, costs of collection.

     


    
      
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    12. Notices

     

    (a) Effectiveness.
      Any
      notice or other communication in respect of this Agreement may be given in
      any
      manner set forth below (except that a notice or other communication under
      Section 5 or 6 may not be given by facsimile transmission or electronic
      messaging system) to the address or number or in accordance with the electronic
      messaging system details provided (see the Schedule) and will be deemed
      effective as indicated:—

     

    (i) if
      in
      writing and delivered in person or by courier, on the date it is
      delivered;

     

    (ii) if
      sent
      by telex, on the date the recipient’s answerback is received;

     

    (iii) if
      sent
      by facsimile transmission, on the date that transmission is received by a
      responsible employee of the recipient in legible form (it being agreed that
      the
      burden of proving receipt will be on the sender and will not be met by a
      transmission report generated by the sender’s facsimile machine);

     

    (iv) if
      sent
      by certified or registered mail (airmail, if overseas) or the equivalent (return
      receipt requested), on the date that mail is delivered or its delivery is
      attempted; or

     

    (v) if
      sent
      by electronic messaging system, on the date that electronic message is
      received,

     

    unless
      the date of that delivery (or attempted delivery) or that receipt as applicable,
      is not a Local Business Day or that communication is delivered (or attempted)
      or
      received, as applicable, after the close of business on a Local Business Day,
      in
      which case that communication shall be deemed given and effective on the first
      following day that is a Local Business Day.

     

    (b) Change
      of Addresses.
      Either
      party may by notice to the other change the address, telex or facsimile number
      or electronic messaging system details at which notices or other communications
      are to be given to all

     

    13. Governing
      Law and Jurisdiction

     

    (a) Governing
      Law.
      This
      Agreement will be governed by and construed in accordance with the law specified
      in the Schedule.

     

    (b) Jurisdiction.
      With
      respect to any suit, action or proceedings relating to this Agreement
      (“Proceedings”), each party irrevocably:—

     

    (i) submits
      to the jurisdiction of the English courts, if this Agreement is expressed to
      be
      governed by English law, or to the non-exclusive jurisdiction of the courts
      of
      the State of New York and the United States District Court located in the
      Borough of Manhattan in New York City, if this Agreement is expressed to be
      governed by the laws of the State of New York; and

     

    (ii) waives
      any objection which it may have at any time to the laying of venue of any
      Proceedings brought in any such court, waives any claim that such Proceedings
      have been brought in an inconvenient forum and further waives the right to
      object, with respect to such Proceedings, that such court does not have any
      jurisdiction over such party.

     

    Nothing
      in this Agreement precludes either party from bringing Proceedings in any other
      jurisdiction (outside, if this Agreement is expressed to be governed by English
      law, the Contracting States, as defined in Section 1(3) of the Civil
      Jurisdiction and Judgments Act 1982 or any modification, extension or
      re-enactment thereof for the time being in force) nor will the bringing of
      Proceedings in any one or more jurisdictions preclude the bringing of
      Proceedings in any other jurisdiction.

     

    (c) Service
      of Process.
      Each
      party irrevocably appoints the Process Agent (if any) specified opposite its
      name in the Schedule to receive, for it and on its behalf, service of process
      in
      any Proceedings. If for any reason any party’s Process Agent is unable to act as
      such, such party will promptly notify the other party and within 30 days appoint
      a substitute process agent acceptable to the other party. The parties
      irrevocably consent to service of process given in the manner provided for
      notices in Section 12. Nothing in this Agreement will affect the right of either
      party to serve process in any other manner permitted by law.


    
      
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    (d) Waiver
      of Immunities.
      Each
      party irrevocably waives, to the fullest extent permitted by applicable law,
      with respect to itself and its revenues and assets (irrespective of their use
      or
      intended use), all immunity on the grounds of sovereignty or other similar
      grounds from (i) suit, (ii) jurisdiction of any court, (iii) relief by way
      of
      injunction, order for specific performance or for recovery of property, (iv)
      attachment of its assets (whether before or after judgment) and (v) execution
      or
      enforcement of any judgment to which it or its revenues or assets might
      otherwise be entitled in any Proceedings in the courts of any jurisdiction
      and
      irrevocably agrees, to the extent permitted by applicable law, that it will
      not
      claim any such immunity in any Proceedings.

     

    14. Definitions

     

    As
      used
      in this Agreement: —

     

    “Additional
      Termination Event”
has
      the
      meaning specified in Section 5(b).

     

    “Affected
      Party”
has
      the
      meaning specified in Section 5(b).

     

    “Affected
      Transactions”
means
      (a) with respect to any Termination Event consisting of an Illegality, Tax
      Event
      or Tax Event Upon Merger, all Transactions affected by the occurrence of such
      Termination Event and (b) with respect to any other Termination Event, all
      Transactions.

     

    “Affiliate”
means,
      subject to the Schedule, in relation to any person, any entity controlled,
      directly or indirectly, by the person, any entity that controls, directly or
      indirectly, the person or any entity directly or indirectly under common control
      with the person. For this purpose, “control” of any entity or person means
      ownership of a majority of the voting power of the entity or
      person.

     

    “Applicable
      Rate”
means:
      —

     

    (a) in
      respect of obligations payable or deliverable (or which would have been but
      for
      Section 2(a)(iii)) by a Defaulting Party, the Default Rate;

     

    (b) in
      respect of an obligation to pay an amount under Section 6(e) of either party
      from and after the date (determined in accordance with Section 6(d)(ii)) on
      which that amount is payable, the Default Rate;

     

    (c) in
      respect of all other obligations payable or deliverable (or which would have
      been but for Section 2(a)(iii)) by a Non-defaulting Party, the Non-default
      Rate;
      and

     

    (d) 
      in all
      other cases, the Termination Rate.

     

    “Burdened
      Party”
has
      the
      meaning specified in Section 5(b).

     

    “Change
      in Tax Law”
means
      the enactment, promulgation, execution or ratification of, or any change in
      or
      amendment to, any law (or in the application or official interpretation of
      any
      law) that occurs on or after the date on which the relevant Transaction is
      entered into.

     

    “consent”
      includes a consent, approval, action, authorisation, exemption, notice, filing,
      registration or exchange control consent.

     

    “Credit
      Event Upon Merger”
has
      the
      meaning specified in Section 5(b).

     

    “Credit
      Support Document”
means
      any agreement or instrument that is specified as such in this
      Agreement.

     

    “Credit
      Support Provider”
has
      the
      meaning specified in the Schedule.

     

    “Default
      Rate”
means
      a
      rate per annum equal to the cost (without proof or evidence of any actual cost)
      to the relevant payee (as certified by it) if it were to fund or of funding
      the
      relevant amount plus 1% per annum.

     


    
      
        ISDA®
          1992

         

      

      
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    “Defaulting
      Party”
has
      the
      meaning specified in Section 6(a).

     

    “Early
      Termination Date”
means
      the date determined in accordance with Section 6(a) or 6(b)(iv).

     

    “Event
      of Default”
has
      the
      meaning specified in Section 5(a) and, if applicable, in the
      Schedule.

     

    “Illegality”
has
      the
      meaning specified in Section 5(b).

     

    “Indemnifiable
      Tax”
means
      any Tax other than a Tax that would not be imposed in respect of a payment
      under
      this Agreement but for a present or former connection between the jurisdiction
      of the government or taxation authority imposing such Tax and the recipient
      of
      such payment or a person related to such recipient (including, without
      limitation, a connection arising from such recipient or related person being
      or
      having been a citizen or resident of such jurisdiction, or being or having
      been
      organised, present or engaged in a trade or business in such jurisdiction,
      or
      having or having had a permanent establishment or fixed place of business in
      such jurisdiction, but excluding a connection arising solely from such recipient
      or related person having executed, delivered, performed its obligations or
      received a payment under, or enforced, this Agreement or a Credit Support
      Document).

     

    “law”
      includes any treaty, law, rule or regulation (as modified, in the case of tax
      matters, by the practice of any relevant governmental revenue authority) and
      “lawful” and “unlawful” will be construed accordingly.

     

    “Local
      Business Day”
means,
      subject to the Schedule, a day on which commercial banks are open for business
      (including dealings in foreign exchange and foreign currency deposits) (a)
      in
      relation to any obligation under Section 2(a)(i), in the place(s) specified
      in
      the relevant Confirmation or, if not so specified, as otherwise agreed by the
      parties in writing or determined pursuant to provisions contained, or
      incorporated by reference, in this Agreement, (b) in relation to any other
      payment, in the place where the relevant account is located and, if different.
      in the principal financial centre, if any, of the currency of such payment,
      (c)
      in relation to any notice or other communication, including notice contemplated
      under Section 5(a)(i), in the city specified in the address for notice provided
      by the recipient and, in the case of a notice contemplated by Section 2(b),
      in
      the place where the relevant new account is to be located and (d) in relation
      to
      Section 5(a)(v)(2), in the relevant locations for performance with respect
      to
      such Specified Transaction.

     

    “Loss”
means,
      with respect to this Agreement or one or more Terminated Transactions, as the
      case may be, and a party, the Termination Currency Equivalent of an amount
      that
      party reasonably determines in good faith to be its total losses and costs
      (or
      gain, in which case expressed as a negative number) in connection with this
      Agreement or that Terminated Transaction or group of Terminated Transactions,
      as
      the case may be, including any loss of bargain, cost of funding or, at the
      election of such party but without duplication, loss or cost incurred as a
      result of its terminating, liquidating, obtaining or reestablishing any hedge
      or
      related trading position (or any gain resulting from any of them). Loss includes
      losses and costs (or gains) in respect of any payment or delivery required
      to
      have been made (assuming satisfaction of each applicable condition precedent)
      on
      or before the relevant Early Termination Date and not made, except, so as to
      avoid duplication, if Section 6(c)(i)(1) or (3) or 6(e)(ii)(2)(A) applies.
      Loss
      does not include a party’s legal fees and out-of-pocket expenses referred to
      under Section 11. A party will determine its Loss as of the relevant Early
      Termination Date, or, if that is not reasonably practicable, as of the earliest
      date thereafter as is reasonably practicable. A party may (but need not)
      determine its Loss by reference to quotations of relevant rates or prices from
      one or more leading dealers in the relevant markets.

     

    “Market
      Quotation”
      means,
      with respect to one or more Terminated Transactions and a party making the
      determination, an amount determined on the basis of quotations from Reference
      Market-makers. Each quotation will be for an amount, if any, that would be
      paid
      to such party (expressed as a negative number) or by such party (expressed
      as a
      positive number) in consideration of an agreement between such party (taking
      into account any existing Credit Support Document with respect to the
      obligations of such party) and the quoting Reference Market-maker to enter
      into
      a transaction (the “Replacement Transaction”) that would have the effect of
      preserving for such party the economic equivalent of any payment or delivery
      (whether the underlying obligation was absolute or contingent and assuming
      the
      satisfaction of each applicable condition precedent) by the parties under
      Section 2(a)(i) in respect of such Terminated Transaction or group of Terminated
      Transactions that would, but for the occurrence of the relevant Early
      Termination Date, have been
      required after that date. For this purpose, Unpaid Amounts in respect of the
      Terminated Transaction or group of Terminated Transactions are to be excluded
      but, without limitation, any payment or delivery that would, but for the
      relevant Early Termination Date, have been required (assuming satisfaction
      of
      each applicable condition precedent) after that Early Termination Date is to
      be
      included. The Replacement Transaction would be subject to such documentation
      as
      such party and the Reference Market-maker may, in good faith, agree. The party
      making the determination (or its agent) will request each Reference Market-maker
      to provide its quotation to the extent reasonably practicable as of the same
      day
      and time (without regard to different time zones) on or as soon as reasonably
      practicable after the relevant Early Termination Date. The day and time as
      of
      which those quotations are to be obtained will be selected in good faith by
      the
      party obliged to make a determination under Section 6(e), and, if each party
      is
      so obliged, after consultation with the other. If more than three quotations
      are
      provided, the Market Quotation will be the arithmetic mean of the quotations,
      without regard to the quotations having the highest and lowest values, If
      exactly three such quotations are provided, the Market Quotation will be the
      quotation remaining after disregarding the highest and lowest quotations. For
      this purpose, if more than one quotation has the same highest value or lowest
      value, then one of such quotations shall be disregarded. If fewer than three
      quotations are provided, it will be deemed that the Market Quotation in respect
      of such Terminated Transaction or group of Terminated Transactions cannot be
      determined.

     


    
      
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          1992

         

      

      
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    “Non-default
      Rate”
means
      a
      rate per annum equal to the cost (without proof or evidence of any actual cost)
      to the Non-defaulting Party (as certified by it) if it were to fund the relevant
      amount.

     

    “Non-defaulting
      Party”
has
      the
      meaning specified in Section 6(a).

     

    “Office”
means
      a
      branch or office of a party, which may be such party’s head or home
      office.

     

    “Potential
      Event of Default”
means
      any event which, with the giving of notice or the lapse of time or both, would
      constitute an Event of Default.

     

    “Reference
      Market-makers”
means
      four leading dealers in the relevant market selected by the party determining
      a
      Market Quotation in good faith (a) from among dealers of the highest credit
      standing which satisfy all the criteria that such party applies generally at
      the
      time in deciding whether to offer or to make an extension of credit and (b)
      to
      the extent practicable, from among such dealers having an office in the same
      city.

     

    “Relevant
      Jurisdiction”
means,
      with respect to a party, the jurisdictions (a) in which the party is
      incorporated, organised, managed and controlled or considered to have its seat,
      (b) where an Office through which the party is acting for purposes of this
      Agreement is located, (c) in which the party executes this Agreement and (d)
      in
      relation to any payment, from or through which such payment is
      made.

     

    “Scheduled
      Payment Date”
means
      a
      date on which a payment or delivery is to be made under Section 2(a)(i) with
      respect to a Transaction.

     

    “Set-off” means
      set-off, offset, combination of accounts, right of retention or withholding
      or
      similar right or requirement to which the payer of an amount under Section
      6 is
      entitled or subject (whether arising under this Agreement, another contract,
      applicable law or otherwise) that is exercised by, or imposed on, such
      payer.

     

    “Settlement
      Amount”
means,
      with respect to a party and any Early Termination Date, the sum
      of.-

     

    (a) the
      Termination Currency Equivalent of the Market Quotations (whether positive
      or
      negative) for each Terminated Transaction or group of Terminated Transactions
      for which a Market Quotation is determined; and

     

    (b) such
      party’s Loss (whether positive or negative and without reference to any Unpaid
      Amounts) for each Terminated Transaction or group of Terminated Transactions
      for
      which a Market Quotation cannot be determined or would not (in the reasonable
      belief of the party making the determination) produce a commercially reasonable
      result.

     

    “Specified
      Entity”
has
      the
      meaning specified in the Schedule.

     


    
      
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          1992

         

      

      
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    “Specified
      Indebtedness”
means,
      subject to the Schedule, any obligation (whether present or future, contingent
      or otherwise, as principal or surety or otherwise) in respect of borrowed
      money.

     

    “Specified
      Transaction”
means,
      subject to the Schedule, (a) any transaction (including an agreement with
      respect thereto) now existing or hereafter entered into between one party to
      this Agreement (or any Credit Support Provider of such party or any applicable
      Specified Entity of such party) and the other party to this Agreement (or any
      Credit Support Provider of such other party or any applicable Specified Entity
      of such other party) which is a rate swap transaction, basis swap, forward
      rate
      transaction, commodity swap, commodity option, equity or equity index swap,
      equity or equity index option, bond option, interest rate option, foreign
      exchange transaction, cap transaction, floor transaction, collar transaction,
      currency swap transaction, cross-currency rate swap transaction, currency option
      or any other similar transaction (including any option with respect to any
      of
      these transactions), (b) any combination of these transactions and (c) any
      other
      transaction identified as a Specified Transaction in this Agreement or the
      relevant confirmation.

     

    “Stamp
      Tax”
means
      any stamp, registration, documentation or similar tax.

     

    “Tax”
means
      any present or future tax, levy, impost, duty, charge, assessment or fee of
      any
      nature (including interest, penalties and additions thereto) that is imposed
      by
      any government or other taxing authority in respect of any payment under this
      Agreement other than a stamp, registration, documentation or similar
      tax.

     

    “Tax
      Event”
has
      the
      meaning specified in Section 5(b).

     

    “Tax
      Event Upon Merger”
has
      the
      meaning specified in Section 5(b).

     

    “Terminated
      Transactions”
means
      with respect to any Early Termination Date (a) if resulting from a Termination
      Event, all Affected Transactions and (b) if resulting from an Event of Default,
      all Transactions (in either case) in effect immediately before the effectiveness
      of the notice designating that Early Termination Date (or, if “Automatic Early
      Termination” applies, immediately before that Early Termination
      Date).

     

    “Termination
      Currency”
has
      the
      meaning specified in the Schedule.

     

    “Termination
      Currency Equivalent”
means,
      in respect of any amount denominated in the Termination Currency, such
      Termination Currency amount and, in respect of any amount denominated in a
      currency other than the Termination Currency (the “Other Currency”), the amount
      in the Termination Currency determined by the party making the relevant
      determination as being required to purchase such amount of such Other Currency
      as at the relevant Early Termination Date, or, if the relevant Market Quotation
      or Loss (as the case may be), is determined as of a later date, that later
      date,
      with the Termination Currency at the rate equal to the spot exchange rate of
      the
      foreign exchange agent (selected as provided below) for the purchase of such
      Other Currency with the Termination Currency at or about 11:00 a.m. (in the
      city
      in which such foreign exchange agent is located) on such date as would be
      customary for the determination of such a rate for the purchase of such Other
      Currency for value on the relevant Early Termination Date or that later date.
      The foreign exchange agent will, if only one party is obliged to make a
      determination under Section 6(e), be selected in good faith by that party and
      otherwise will be agreed by the parties

     

    “Termination
      Event”
means
      an Illegality, a Tax Event or a Tax Event Upon Merger or, if specified to be
      applicable, a Credit Event Upon Merger or an Additional Termination
      Event.

     

    “Termination
      Rate”
means
      a
      rate per annum equal to the arithmetic mean of the cost (without proof or
      evidence of any actual cost) to each party (as certified by such party) if
      it
      were to fund or of funding such amounts.

     

    “Unpaid
      Amounts”
      owing to
      any party means, with respect to an Early Termination Date, the aggregate of
      (a)
      in respect of all Terminated Transactions, the amounts that became payable
      (or
      that would have become payable but for Section 2(a)(iii)) to such party under
      Section 2(a)(i) on or prior to such Early Termination Date and which remain
      unpaid as at such Early Termination Date and (b) in respect of each Terminated
      Transaction. for each obligation under Section 2(a)(i) which was (or would
      have
      been but for Section 2(a)(iii)) required to be settled by delivery to such
      party
      on or prior to such Early Termination Date and which has not been so settled
      as
      at such Early Termination Date, an amount equal to the fair market value
      of
      that which was (or would have been) required to be delivered as of the
      originally scheduled date for delivery, in each case together with (to the
      extent permitted under applicable law) interest, in the currency of such
      amounts, from (and including) the date such amounts or obligations were or
      would
      have been required to have been paid or performed to (but excluding) such Early
      Termination Date, at the Applicable Rate. Such amounts of interest will be
      calculated on the basis of daily compounding and the actual number of days
      elapsed. The fair market value of any obligation referred to in clause (b)
      above
      shall be reasonably determined by the party obliged to make the determination
      under Section 6(e) or, if each party is so obliged, it shall be the average
      of
      the Termination Currency Equivalents of the fair market values reasonably
      determined by both parties.

     


    
      
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    IN
      WITNESS WHEREOF the parties have executed this document on the respective dates
      specified below with effect from the date specified on the first page of this
      document.

     

    


     

    
      	
              THE
                ROYAL BANK OF SCOTLAND PLC

               

              By:
                Greenwich Capital Markets, Inc., its agent

            	
              NOVASTAR
                MORTGAGE SUPPLEMENTAL INTEREST TRUST, SERIES 2007-1

               

              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 2007-1

            
	 	 
	 	 
	
              By
                /s/
                David E. Wagner                

              Name:
                David E. Wagner

              Title:
                Managing Director

              Date:
                February 28, 2007

            	
              By
                /s/
                Karlene Benvenuto            

              Name:
                Karlene Benvenuto

              Title:
                Authorized Signer 

              Date:
                February 28, 2007

            


    

    



    
      
         

      

      
         

        
          

        

      

      
         

      

    


    

      SCHEDULE

      TO
        THE

      MASTER
        AGREEMENT

      DATED
        AS OF February 28, 2007

      


      between

      


      THE
        ROYAL BANK OF SCOTLAND PLC,

      Established
        as a bank under the laws of Scotland

      ("Party
        A")

      


      and

      


      NOVASTAR
        MORTGAGE SUPPLEMENTAL INTEREST TRUST, SERIES 2007-1,

      a
        New York common law trust

      ("Party
        B")

      


      


      TERMINATION
        PROVISIONS

      


      "Specified
        Entity"
        means in relation to Party A and Party B: Not Applicable.

      


      "Specified
        Transaction"
        means, with respect to Party A, all Transactions under this Agreement and
        with
        respect to Party B, none.

      


      The
        "Cross-Default"
        provisions of Section 5(a)(vi) will not apply to Party B and will apply to
        Party
        A with a Threshold Amount equal to 3 per cent of Party A’s shareholders’ equity
        (excluding deposits). 

      


      The
        "Credit
        Event Upon Merger"
        provisions of Section 5(b)(iv) will not apply to Party A and will not apply
        to
        Party B.

      


      The
        "Automatic
        Early Termination"
        provision of Section 6(a) will not apply to Party A and will not apply to
        Party
        B.

      


      Payments
        on Early Termination.
        For the purpose of Section 6(e) of this Agreement :

      


      Market
        Quotation
        will
        apply;

      


      provided
        that, notwithstanding Section 6 of this Agreement, so long as Party A is
        (A) the
        sole Affected Party in respect of an Additional Termination Event or a Tax
        Event
        Upon Merger or (B) the Defaulting Party in respect of any Event of Default,
        paragraphs (1) to (6) below shall apply:

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      


      
        	 	
                (a)

              	
                The
                  definition of "Market Quotation" shall be deleted in its entirety
                  and
                  replaced with the following:

              


      

      


      "Market
        Quotation"
        means,
        with respect to one or more Terminated Transactions, a Firm Offer which is
        (1)
        made by a Reference Market-maker that is an Eligible Replacement, (2) for
        an
        amount that would be paid to Party B (expressed as a negative number) or
        by
        Party B (expressed as a positive number) in consideration of an agreement
        between Party B and such Reference Market-maker to enter into a transaction
        (the
        "Replacement
        Transaction")
        that
        would have the effect of preserving for such party the economic equivalent
        of
        any payment or delivery (whether the underlying obligation was absolute or
        contingent and assuming the satisfaction of each applicable condition precedent)
        by the parties under Section 2(a)(i) in respect of such Terminated Transactions
        or group of Terminated Transactions that would, but for the occurrence of
        the
        relevant Early Termination Date, have been required after that Early Termination
        Date, (3) made on the basis that Unpaid Amounts in respect of the Terminated
        Transaction or group of Transactions are to be excluded but, without limitation,
        any payment or delivery that would, but for the relevant Early Termination
        Date,
        have been required (assuming satisfaction of each applicable condition
        precedent) after that Early Termination Date is to be included and (4) made
        in
        respect of a Replacement Transaction with terms substantially the same as
        those
        of this Agreement (save for the exclusion of provisions relating to Transactions
        that are not Terminated Transactions). The party making the determination
        (or
        its agent) will request each Reference Market-maker to provide its quotation
        to
        the extent reasonably practicable as of the same day and time (without regard
        to
        different time zones) on or as soon as reasonably practicable before the
        Latest
        Settlement Amount Determination Day. The day and time as of which those
        quotations are to be obtained will be selected in good faith by the party
        obliged to make a determination under Section 6(e), and, if each party is
        so
        obliged, after consultation with the other." 

      


      The
        definition of "Settlement Amount" shall be deleted in its entirety and replaced
        with the following:

      


      "Settlement
        Amount"
        means,
        with respect to any Early Termination Date, an amount (as determined by Party
        B
        based on information provided by Reference Market-makers) equal to the
        Termination Currency Equivalent of the amount (whether positive or negative)
        of
        any Market Quotation for the relevant Terminated Transaction or group of
        Terminated Transactions that is accepted by Party B so as to become legally
        binding; provided that:

      


      (1) If,
        on
        the day falling ten Local Business Days after the day on which the Early
        Termination Date is designated or such later day as Party B may specify in
        writing to Party A (but in either case no later than the Early Termination
        Date)
        (such day, the "Latest
        Settlement Amount Determination Day"),
        no
        Market Quotation for the relevant Terminated Transaction or group of Terminated
        Transactions has been accepted by Party B so as to become legally binding
        and
        one or more Market Quotations have been made and remain capable of becoming
        legally binding upon acceptance, the Settlement Amount shall equal the
        Termination Currency Equivalent of the amount (whether positive or negative)
        of
        the lowest of such Market Quotations; or

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      


      (2) If,
        on
        the Latest Settlement Amount Determination Day, no Market Quotation for the
        relevant Terminated Transaction or group of Terminated Transactions is accepted
        by Party B so as to become legally binding and no Market Quotations have
        been
        made and remain capable of becoming legally binding upon acceptance, the
        Settlement Amount shall equal Party B’s Loss (whether positive or negative and
        without reference to any Unpaid amounts) for the relevant Terminated Transaction
        or group of Terminated Transactions.

      


      (3) `For
        the
        purpose of clause (4) of the definition of Market Quotation, Party B shall
        have
        determined (upon receipt of evidence that the Rating Agency Condition has
        been
        satisfied), whether a Firm Offer is made in respect of a Replacement Transaction
        with commercial terms substantially the same as those of this Agreement (save
        for the exclusion of provisions relating to Transactions that are not Terminated
        Transactions) ); provided,
        however,
        that
        notwithstanding the provisions of this Part 1(f)(i), nothing in this Agreement
        shall preclude Party A from obtaining Market Quotations.

      


      (4) At
        any
        time on or before the Latest Settlement Amount Determination Day at which
        two or
        more Market Quotations remain capable of becoming legally binding upon
        acceptance, Party B shall be entitled to accept only the lowest of such Market
        Quotations. 

      


      (5) If
        Party
        B requests Party A in writing to obtain Market Quotations, Party A shall
        use its
        reasonable efforts to do so before the Latest Settlement Amount Determination
        Day.

      


      (6) If
        the
        Settlement Amount is a negative number, Section 6(e)(i)(3) of this Agreement
        shall be deleted in its entirety and replaced with the following:

      


      "Second
        Method and Market Quotation.
        If
        Second Method and Market Quotation apply, subject to Part 1(j)(iv) below,(1)
        Party B shall pay to Party A an amount equal to the absolute value of the
        Settlement Amount in respect of the Terminated Transactions, (2) Party B
        shall
        pay to Party A the Termination Currency Equivalent of the Unpaid Amounts
        owing
        to Party A and (3) Party A shall pay to Party B the Termination Currency
        Equivalent of the Unpaid Amounts owing to Party B, provided that, (i) the
        amounts payable under (2) and (3) shall be subject to netting in accordance
        with
        Section 2(c) of this Agreement and (ii) notwithstanding any other provision
        of
        this Agreement, any amount payable by Party A under (3) shall not be netted-off
        against any amount payable by Party B under (1)."; 

      


      Second
        Method
        will
        apply; provided, however, that Party B shall have no obligation to make any
        payment to Party A under Section 6 as a result of any Event of Default or
        Termination Event other than an Event of Default of Party B under Section
        5(a)(i) of this Agreement or an Additional Termination Event in Part 1(j)
        (iii).
        This modification of the terms of Section 6 of this Agreement has been freely
        bargained for by the parties and will not affect the obligation, if any,
        of
        Party B with respect to Unpaid Amounts. Party A acknowledges having received
        consideration sufficient to warrant its agreement to the approach contemplated
        in this Part 1(f) provision.

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      


      "Termination
        Currency"
        means United States Dollars.

      


      Tax
        Event
        and Tax Event Upon Merger.
        Section 5(b)(ii) will apply; provided that the words "(x) any action taken
        by a
        taxing authority, or brought in a court of competent jurisdiction, on or
        after
        the date on which a Transaction is entered into (regardless of whether such
        action is taken or brought with respect to a party to this Agreement) or
        (y)"
        shall be deleted. 

      


      Section
        5(b)(iii) will apply, provided that Party A shall not be entitled to designate
        an Early Termination Date by reason of a Tax Event upon Merger in respect
        of
        which it is the Affected Party.

      


      Section
        6(b)(ii) will apply, provided that the words "or if a Tax Event Upon Merger
        occurs and the Burdened Party is the Affected Party" shall be
        deleted.

      


      Trigger
        Events.
        If Collateralization Event (as defined below) occurs with respect to Party
        A (or
        any applicable Credit Support Provider), then:

      


      Party
        A
        will promptly give notice of the circumstances to Party B (with a copy to
        the
        Trustee) and to each Rating Agency (as defined herein) and

      


      (A)
        Party
        A will at its own expense (and subject to the Rating Agency Condition), assign
        the Transactions under this Agreement to a third party within thirty (30)
        days
        of such Collateralization Event that meets or exceeds, or as to which any
        applicable credit support provider meets or exceeds, the Approved Ratings
        Thresholds (as defined below) on terms substantially similar to this Agreement
        and must obtain a release of the mutual obligations of Party A and Party
        B under
        this Agreement, subject to survival of indemnities in respect of tax matters
        (a
        "Release") and
        provided
        (x) the
        right to designate an Early Termination Date under a substitute agreement
        with
        such third party on the grounds contemplated in Section 5(a)(vii) of this
        Agreement would be enforceable against that entity (or a receiver, conservator
        or trustee for it or its property), subject, if applicable, only to such
        limitations as are provided for in the Federal Deposit Insurance Act (the
        "FDIA"), (y) Party B would, in proceedings of the kinds contemplated in that
        provision, have an enforceable right to apply any collateral posted by the
        proposed counterparty to secure its obligations under the proposed replacement
        agreement without need for leave of court or any other person (subject, if
        applicable, only to such qualifications as may be relevant under the FDIA),
        and
        (z) no withholding taxes would be applicable to payments to be made by or
        to
        Party B in respect of payments due under Section 2(a) of the proposed agreement
        or 

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      


      (B)
        Party
        A will at its own expense (and subject to the Rating Agency Condition) and
        within thirty (30) days of such Collateralization Event, deliver collateral,
        in
        the amount specified under the Credit Support Annex or 

      


      (C)
        otherwise provide, at its own expense and within thirty (30) days of such
        Collateralization Event, Alternative Credit Support, as defined below, subject
        to the Rating Agency Condition 

      


      (provided,
        however,
        that if
        Standard & Poor’s, a division of The McGraw Hill Companies, Inc. (it or its
        successor, "S&P"), or Fitch Ratings (it or its successor, "Fitch", and
        collectively with S&P, the "Rating Agencies") (A) withdraws its rating for
        the short-term unsecured and unsubordinated debt (the "Short Term Rating")
        of
        Party A (or its Credit Support Provider) or (B) reduces its Short Term Rating
        of
        Party A (or its Credit Support Provider) to a level below "BBB-" by S&P or
        "F2" by Fitch (a "Ratings Event"), Party A will no longer be eligible to
        deliver
        collateral pursuant to clause (ii)(B) or provide Alternative Credit Support
        pursuant to clause (ii)(C), but must assign the Transactions hereunder, at
        its
        own expense, to a third party within ten (10) Business Days of such Ratings
        Event that meets or exceeds, or as to which any applicable credit support
        provider meets or exceeds, the Approved Ratings Thresholds (as defined below)
        on
        terms substantially similar to this Agreement and must obtain a Release under
        this Agreement).

      


      For
        purposes of this Transaction, a "Collateralization Event" will occur with
        respect to Party A (or any applicable credit support provider), if its rating
        falls below (A) a Short Term Rating at least equal to "A-1" by S&P (or if no
        Short Term Rating exists, a rating for the long term unsecured and
        unsubordinated debt of Party A of "A+") or "F1" by Fitch such ratings being
        referred to herein as the "Approved Ratings Thresholds." For purposes of
        this
        provision, "Rating Agency Condition" means, with respect to any particular
        proposed act or omission to act hereunder that the party acting or failing
        to
        act must consult with each Rating Agency (which term for the avoidance of
        doubt
        excludes Moody’s Investors Service, Inc. (it or its successor, "Moody’s"))
        making a rating reduction or withdrawal (each such Rating Agency, a "Downgrading
        Rating Agency") and receive from each Downgrading Rating Agency (with a copy
        to
        the Trustee) a confirmation in writing that their respective ratings of the
        Certificates as in existence immediately prior to the Rating Event will be
        restored or maintained. For purposes of this Agreement, "Alternative Credit
        Support" means an absolute and unconditional guarantee, credit intermediation
        arrangement, letter of credit or other additional credit support or collateral.
        Any document governing Alternative Credit Support shall be made a Credit
        Support
        Document for Party A pursuant to an amendment to this Agreement.

      


      Additional
        Termination Events
        will apply. Each of the following will be an "Additional Termination
        Event":

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      


      A
        Collateralization Event or a Ratings Event has occurred and Party A has not
        complied with (i) above, then an Additional Termination Event will have occurred
        with respect to Party A.

      


      (ii) Moody’s
        Rating Events. 

      


      First
        Rating Trigger Collateral. Party A has failed to comply with or perform any
        obligation to be complied with or performed by Party A in accordance with
        the
        Credit Support Annex and (A) the Second Rating Trigger Requirements do not
        apply
        or (B) less than 30 Local Business Days have elapsed since the last time
        the
        Second Rating Trigger Requirements did not apply.

      


      Second
        Rating Trigger Replacement. (A) The Second Rating Trigger Requirements apply
        and
        30 or more Local Business Days have elapsed since the last time the Second
        Rating Trigger Requirements did not apply and (B) (i) at least one Eligible
        Replacement has made a Firm Offer (which remains capable of becoming legally
        binding upon acceptance) to be the transferee of a transfer to be made in
        accordance with Part 5(t)(ii) below and/or (ii) at least one entity with
        the
        First Trigger Required Ratings and/or the Second Trigger Required Ratings
        has
        made a Firm Offer (which remains capable of becoming legally binding upon
        acceptance by the offeree) to provide an Eligible Guarantee in respect of
        all of
        Party A’s present and future obligations under this Agreement. 

      


      For
        purposes of this Agreement:

      


      "Eligible
        Guarantee" means an unconditional and irrevocable guarantee that is provided
        by
        a guarantor as principal debtor rather than surety and is directly enforceable
        by Party B, where either (A) a law firm has given a legal opinion confirming
        that none of the guarantor’s payments to Party B under such guarantee will be
        subject to withholding for Tax or (B) such guarantee provides that, in the
        event
        that any of such guarantor’s payments to Party B are subject to withholding for
        Tax, such guarantor is required to pay such additional amount as is necessary
        to
        ensure that the net amount actually received by Party B (free and clear of
        any
        withholding tax) will equal the full amount Party B would have received had
        no
        such withholding been required.

      


      "Eligible
        Replacement" means an entity (A) with the First Trigger Required Ratings
        and/or
        the Second Trigger Required Ratings or (B) whose present and future obligations
        owing to Party B are guaranteed pursuant to an Eligible Guarantee provided
        by a
        guarantor with the First Trigger Required Ratings and/or the Second Trigger
        Required Ratings as evidenced by Party B's receipt of confirmation that the
        Rating Agency Condition has been satisfied..

      


      "Firm
        Offer" means an offer which, when made, is capable of becoming legally binding
        upon acceptance.

      


      "Moody’s
        Short-term Rating" means a rating assigned by Moody’s under its short-term
        rating scale in respect of an entity’s short-term, unsecured and unsubordinated
        debt obligations.

      


      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      "Relevant
        Entities" means Party A and any guarantor under an Eligible Guarantee in
        respect
        of all of Party A’s present and future obligations under this
        Agreement.

      


      An
        entity
        shall have the "First Trigger Required Ratings" (A) where such entity is
        the
        subject of a Moody’s Short-term Rating, if such rating is "Prime-1" and its
        long-term, unsecured and unsubordinated debt or counterparty obligations
        are
        rated "A2" or above by Moody’s and (B) where such entity is not the subject of a
        Moody’s Short-term Rating, if its long-term, unsecured and unsubordinated debt
        or counterparty obligations are rated "A1" or above by Moody’s.

      


      the
        "Second Rating Trigger Requirements" shall apply so long as no Relevant Entity
        has the Second Trigger Required Ratings.

      


      An
        entity
        shall have the "Second Trigger Required Ratings" (A) where such entity is
        the
        subject of a Moody’s Short-term Rating, if such rating is "Prime-2" or above and
        its long-term, unsecured and unsubordinated debt or counterparty obligations
        are
        rated "A3" or above by Moody’s and (B) where such entity is not the subject of a
        Moody’s Short-term Rating, if its long-term, unsecured and unsubordinated debt
        or counterparty obligations are rated "A3" or above by Moody’s.

      


      So
        long
        as the Second Rating Trigger Requirements apply, Party A will at its own
        cost
        use commercially reasonable efforts to, as soon as reasonably practicable,
        procure either (A) an Eligible Guarantee in respect of all of Party A’s present
        and future obligations under this Agreement to be provided by a guarantor
        with
        the First Trigger Required Ratings and/or the Second Trigger Required Ratings
        or
        (B) a
        transfer in accordance with Part 5(t)(ii) below.

      


      (iii) A
        Hedge
        Disclosure Event (as defined below) has occurred and Party A has not, within
        ten
        (10) Business Days after such Hedge Disclosure Event, complied with one of
        the
        solutions listed below.

      


      So
        long
        as Party B has reporting requirements under the Securities Exchange Act of
        1934,
        as amended, it shall be a hedge disclosure event ("Hedge Disclosure Event")
        if
        at any time after the date hereof NovaStar Mortgage, Inc. (the "Sponsor")
        shall
        notify Party A that in the reasonable discretion of the Sponsor acting in
        good
        faith, the "aggregate significance percentage" of all derivative instruments
        (as
        such term is defined in Item 1115(b)(2) of Regulation AB) provided by Party
        A
        and any of its affiliates to Party B (the "Significance Percentage") is 10%
        or
        more.

      


      Following
        a Hedge Disclosure Event, Party A shall take one of the following actions
        at its
        own expense: either (A) (1) if the Significance Percentage is 10% or more,
        but
        less than 20%, Party A shall provide the information set forth in Item
        1115(b)(1) (or, in its sole discretion, the information set forth in Item
        1115(b)(2)) of Regulation AB for Party A (or for the group of affiliated
        entities, if applicable) or (2) if the Significance Percentage is 20% or
        more,
        Party A shall provide the information set forth in Item 1115(b)(2) of Regulation
        AB for Party A (or for the group of affiliated entities, if applicable)
        (collectively, the "Additional Hedge Disclosure Information") to the Sponsor
        or
        (B) Party A shall assign all of its rights and obligations under one or more
        Transactions (such that the Significance Percentage of Party A no longer
        exceeds
        10% in the reasonable discretion of the Sponsor acting in good faith ) to
        a
        replacement counterparty that is rated at or above the Approved Ratings
        Threshold and the Second Trigger Required Ratings and subject to the Rating
        Agency Condition, pursuant to documentation substantially similar to the
        documentation then in place and subject to prior notification to the Rating
        Agencies, which counterparty is willing to provide the Additional Hedge
        Disclosure Information (with respect to itself or for its group of affiliated
        entities, if applicable) to the Sponsor, in the event that the Significance
        Percentage of Transactions to which it is a counterparty exceeds 10% in the
        reasonable discretion of the Sponsor acting in good faith. For purpose of
        clause
        (B) above, the parties agree that National Westminister Bank Plc ("NatWest")
        shall be an acceptable replacement for Party A, so long as NatWest is able
        to
        provide the required Additional Hedge Disclosure Information and the other
        conditions set forth in clause (B) above are satisfied.

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      


      "Regulation
        AB" means Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17
        C.F.R.
§§229.1100-229.1123, as such may be amended from time to time, and subject
        to
        such clarification and interpretation as have been provided by the Securities
        and Exchange Commission ("SEC") in the adopting release (Asset-Backed
        Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531
        (Jan.
        7, 2005)) or by the staff of the SEC, or as may be provided by the SEC or
        its
        staff from time to time.

      


      For
        the
        purposes of the Termination Events (i), (ii) and (iii) above, Party A shall
        be
        the sole Affected Party.

      


      (iv) Deutsche
        Bank National Trust Company, as trustee (together with its successors and
        assigns, the "Trustee") receives notice (a "Termination Notice") of an
        optional termination of the Pooling and Servicing Agreement among NovaStar
        Mortgage Funding Corporation, NovaStar Mortgage, Inc., U.S. Bank National
        Association, and Deutsche Bank National Trust Company dated as of February
        1,
        2007 (the "Pooling and Servicing Agreement") under Article XI of the Pooling
        and
        Servicing Agreement (an "Optional Termination") and there remains no more
        than 5
        Business Days prior to the proposed termination date. In the case of an Optional
        Termination, Party B shall be the Sole Affected Party, but both Party A and
        Party B shall have the right to cause a termination of this Agreement. Following
        notification from the Trustee that it has received a Termination Notice,
        Party A
        shall provide the Trustee from time to time, upon request, with good faith
        estimates of the amount that would be payable under Section 6(e)(ii) in the
        event of such Optional Termination. Any termination payment payable in respect
        of such Additional Termination Event shall be paid on the relevant termination
        date.

      


      (v) The
        Pooling and Servicing Agreement is amended or otherwise modified, without
        the
        prior written consent of Party A, if such amendment or modification would
        materially adversely affect the rights of Party A under the Pooling and
        Servicing Agreement or this Agreement, where such consent is required under
        the
        Pooling and Servicing Agreement. For the purposes of this Additional Termination
        Event, Party B shall be the sole Affected Party.

      


      Events
        of
        Default.

      


      The
        following Events of Default will not apply to Party A: Section 5(a)(ii) and
        Section 5(a)(v).

      


      The
        following Events of Default will not apply to Party B: Section 5(a)(ii),
        Section
        5(a)(iv), Section 5(a)(v), Section 5(a)(vi) and Section 5(a)(viii). In addition,
        Section 5(a)(vii) is hereby modified by deleting clauses (2), (7) and
        (9).

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      


      Section
        5(a)(vii)(4) will not apply to Party B with respect to proceedings or petitions
        instituted or presented by Party A or any Affiliate of Party A.

      


      Section
        5(a)(vii)(6) will not apply to Party B to the extent that it refers to (i)
        the
        appointment of (a) the Trustee of the Trust and the Supplemental Interest
        Trust
        under the Pooling and Servicing Agreement, (b) the Custodian under the Pooling
        and Servicing Agreement, or (c) any successor to either (a) or (b) or (ii)
        any
        appointment that Party B has not become subject to.

      


      Section
        5(a)(vii)(8) will not apply to Party B to the extent that it applies to Section
        5(a)(vii)(2),(4),(6), and (7) (except to the extent that such provisions
        are not
        disapplied with respect to Party B). 

      


      Section
        5(a)(iii) will not apply to Party B except that Section 5(a)(iii)(1) will
        apply
        in respect of Party B’s obligations under Paragraph 3(b) of the Credit Support
        Annex. 

      


      Notwithstanding
        Sections 5(a)(i) and 5(a)(iii), any failure by Party A to comply with or
        perform
        any obligation to be complied with or performed by Party A under the Credit
        Support Annex shall not be an Event of Default unless (A) (i) the Second
        Rating
        Trigger Requirements apply and at least 30 Local Business Days have elapsed
        since the last time the Second Rating Trigger Requirements did not apply
        and
        (ii) such failure is not remedied on or before the third Local Business Day
        after notice of such failure is given to Party A or (B)
        (i) a Ratings Event has occurred and at least 10 Local Business Days have
        elapsed since the date such Ratings Event occurred and (ii) such failure
        is not
        remedied on or before the third Local Business Day after notice of such failure
        is given to Party A.

      


      The
        foregoing is without prejudice to application to Party A and Party B of the
        Events of Default in Paragraph 7 of any Credit Support Annex made part of
        this
        Agreement pursuant to Part 1(h) of this Schedule and is also without prejudice
        to the further exclusion in Part 1(c) of this Schedule.

      


      


      TAX
        REPRESENTATIONS

      


      Payer
        Tax
        Representation.
        For the purpose of Section 3(e) of this Agreement, each party will make with
        respect to itself the following representation:

      


      It
        is not
        required by any applicable law, as modified by the practice of any relevant
        governmental revenue authority, of any Relevant Jurisdiction to make any
        deduction or withholding for or on account of any Tax from any payment (other
        than interest under Section 2(e), 6(d)(ii) or 6(e) of this Agreement) to
        be made
        by it to the other party under this Agreement. In making this representation,
        it
        may rely on (i) the accuracy of any representation made by the other party
        pursuant to Section 3(f) of this Agreement; (ii) the satisfaction of the
        agreement of the other party contained in Section 4(a)(i) or 4(a)(iii) of
        this
        Agreement and the accuracy and effectiveness of any document provided by
        the
        other party pursuant to Section 4(a)(i) or 4(a)(iii) of this Agreement; and
        (iii) the satisfaction of the agreement of the other party contained in Section
        4(d) of this Agreement,

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      


      provided
        that it
        shall not be a breach of this representation where reliance is placed on
        sub-clause (ii) above and the other party does not deliver a form or document
        under Section 4(a)(iii) by reason of material prejudice to its legal or
        commercial position.

      


      Payee
        Tax
        Representations.
        For the purposes of Section 3(f), each party makes the following
        representations:

      


      The
        following representation will apply to Party A:

      


      (a)
         It
        is a
        tax resident of the United Kingdom.

      


      (b)
         It
        is a
        "foreign person" within the meaning of the applicable U.S. Treasury Regulations
        concerning information reporting and backup withholding tax (as in effect
        on
        January 1, 2001), unless Party A provides written notice to Party B that
        it is
        no longer a foreign person.

      


      (c)
         In
        respect of each Transaction it enters into through an office or discretionary
        agent in the United States or which otherwise is allocated (in whole or part)
        for United States federal income tax purposes to such United States trade
        or
        business, each payment received or to be received by it under such Transaction
        (or portion thereof, if applicable) will be effectively connected with its
        conduct of a trade or business in the United States; and

      


      (d)
         In
        respect of all other Transactions or portions thereof, no such payment received
        or to be received by it in connection with this Agreement is attributable
        to a
        trade or business carried on by it through a permanent establishment in the
        United States. 

      


      If
        applicable, Party A is eligible for the benefits of the "Interest", "business
        profits" or "other income" article of the Specified Treaty, and pursuant
        to this
        benefit, any payment (other than those described in (c) above and interest
        under
        Section 2(e), 6(d)(ii) or 6(e) of this Agreement) received by Party A under
        the
        terms of this agreement is wholly exempt from any deduction or withholding
        for
        or on account of Tax. "Specified treaty" means the double tax convention
        between
        -The United States of America and the United Kingdom.

      


      The
        following representation will apply to Party B:

      


      NovaStar
        Mortgage Supplemental Interest Trust, Series 2007-1 is a New York common
        law
        trust and not a foreign trust for United States tax purposes. 

      


      


      AGREEMENT
        TO DELIVER DOCUMENTS

      


      For
        the
        purpose of Sections 4(a)(i) and (ii) of this Agreement, each party agrees
        to
        deliver the following documents, as applicable:

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

       

      
        	
                PARTY
                  

                REQUIRED
                  TO DELIVER DOCUMENT

              	 	
                FORM/DOCUMENT/CERTIFICATE

              	 	
                DATE
                  BY WHICH TO BE DELIVERED

              	 	
                COVERED
                  BY SECTION 3(d) REPRESENTATION

              
	 	 	 	 	 	 	 
	
                Party
                  A & B

              	 	
                Any
                  form or document reasonably requested by the other party to permit
                  payments without (or with minimal) withholding of Tax as specified
                  in
                  Section 4(a)(iii) of this Agreement. 

              	 	
                (i)
                  Upon execution of this Agreement and (ii) as soon as practicable
                  after
                  request.

              	 	
                No

              
	 	 	 	 	 	 	 
	
                Party
                  A & B

              	 	
                Signing
                  Authority, being evidence of authority, incumbency and specimen
                  signature
                  of each person executing any document on its behalf in connection
                  with
                  this Agreement and any Credit Support Document. 

              	 	
                Upon
                  execution of this Agreement and, if requested, any
                  Confirmation.

              	 	
                Yes

              
	 	 	 	 	 	 	 
	
                Party
                  A

              	 	
                The
                  audited annual report of such party.

              	 	
                As
                  soon as practicable after request.

              	 	
                Yes

              
	 	 	 	 	 	 	 
	
                Party
                  A

              	 	
                Agency
                  Agreement between Party A and Greenwich Capital Markets, Inc.,
                  dated as of
                  December 8, 2000, as amended from time to time.

              	 	
                Upon
                  execution of this Agreement.

              	 	
                No

              
	 	 	 	 	 	 	 
	
                Party
                  B

              	 	
                Executed
                  copies of the Pooling and Servicing Agreement (as defined below),
                  the
                  Prospectus Supplement, and such other documents as requested by
                  Party A.
                  

              	 	
                Upon
                  execution of this Agreement.

              	 	
                No

              
	 	 	 	 	 	 	 
	
                Party
                  B

              	 	
                Any
                  and all proposed and executed amendments to the Pooling and Servicing
                  Agreement (as defined below).

              	 	
                Each
                  (i) date of distribution to the Certificateholders for executed
                  amendments
                  or (ii) date of proposal by Party B, for amendments that require
                  consent
                  of Party A, as applicable.

              	 	
                No

              


      

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

       

      
        	
                Party
                  B

              	 	
                Such
                  information in connection with the Certificates or the Pooling
                  and
                  Servicing Agreement (as defined below) as Party A may reasonably
                  request.
                  

              	 	
                As
                  soon as practicable after request.

              	 	
                No

              
	 	 	 	 	 	 	 
	
                Party
                  A & Party B

              	 	
                Legal
                  opinions acceptable to the other party in the form and substance
                  to be
                  satisfactory to the other party.

              	 	
                Upon
                  execution of this Agreement.

              	 	
                No

              


      

      


      



      
        
           

        

        
          13

          
            

          

        

        
           

        

      


      MISCELLANEOUS

      


      Addresses
        For Notices.
        For the purpose of Section 12(a) of this Agreement:

      


      Notices
        or communications shall, with respect to a particular Transaction, be sent
        to
        the address, telex number or facsimile number reflected in the Confirmation
        of
        that Transaction. In addition (or in the event the Confirmation for a
        Transaction does not provide relevant addresses/information for notice),
        with
        respect to notices provided pursuant to Section 5 and 6 of this Agreement,
        notice shall be provided to:

      


      Address
        for notices or communications to Party A:

      


      
        	 	
                Address:

              	
                c/o
                  RBS Financial Markets, Level 4, 280 Bishopsgate


              


      

      London,
        EC2M 3UR 


      
        	 	
                Attention:
                  

              	
                Swaps
                  Administration

              


      

      
        	 	
                Telephone:

              	
                020
                  7085 5000

              


      

      
        	 	
                Facsimile:

              	
                020
                  7085 5050

              


      

      


      Notices
        provided pursuant to Section 5 and 6 of this Agreement shall be provided
        to:

      


      
        	 	
                Address:

              	
                c/o
                  RBS Financial Markets

              


      

      Level
        7,
        280 Bishopsgate


      London,
        EC2M 3UR


      
        	 	
                Attention:

              	
                Financial
                  Markets Legal

              


      

      
        	 	
                Telephone:

              	
                44
                  207 085 5000

              


      

      
        	 	
                Facsimile:

              	
                44
                  207 085 8411

              


      

      


      With
        a
        copy to:

      


      
        	 	
                Address:

              	
                c/o
                  Greenwich Capital Markets

              


      

      600
        Steamboat Road


      Greenwich,
        CT 06830


      
        	 	
                Attention:

              	
                Legal
                  Department - Derivatives
                  Documentation

              


      

      
        	 	
                Telephone:

              	
                203
                  618-2531/32

              


      

      
        	 	
                Facsimile:

              	
                203
                  618-2533/34

              


      

      


      Address
        for notices or communications to Party B:

      


      
        	 	
                Address:

              	
                c/o
                  NovaStar Mortgage Inc.

              


      

      8140
        Ward
        Parkway, Suite 300


      Kansas
        City, Missouri 64114


      
        	 	
                Attention:

              	
                Matt
                  Kaltenrieder

              


      

      


      
        	 	
                Facsimile
                  No.:

              	
                816-237-7515

              


      

      


      With
        a
        copy to:

      


      
        	 	
                Address:

              	
                Deutsche
                  Bank National Trust Company

              


      

      1761
        East
        St. Andrew Place


      Santa
        Ana, California 92705



      
        
           

        

        
          14

          
            

          

        

        
           

        

      


      
        	 	
                Attention:

              	
                Trust
                  Administration- NS0701

              


      

      


      
        	 	
                Facsimile
                  No.:

              	
                714-247-6478

              


      

      


      With
        a
        copy to:

      


      
        	 	
                Address:

              	
                Standard
                  & Poor's Ratings Services

              


      

      55
        Water
        Street


      New
        York,
        New York 10041-0003

      


      
        	 	
                Attention:

              	
                Residential
                  Mortgage Surveillance Group

              


      

      


      
        	 	
                Facsimile
                  No.:

              	
                212-438-2652

              


      

      


      With
        a
        copy to:

      


      
        	 	
                Address:

              	
                Moody's
                  Investors Service

              


      

      99
        Church
        Street


      New
        York,
        New York 10007

      


      
        	 	
                Attention:

              	
                RMBS
                  Monitoring Department

              


      

      


      
        	 	
                Facsimile
                  No.:

              	
                212-298
                  7139

              


      

      


      Notices.
        Section
        12(a) is amended by adding in the third line thereof after the phrase "messaging
        system" and before the ")" the words "; provided,
        however, any such notice or other communication may be given by facsimile
        transmission (it
        being agreed that the burden of proving receipt will be on the sender and
        will
        not be met by a transmission report generated by the sender’s facsimile
        machine)".

      


      Process
        Agent.
        For purposes of Section 13(c) of this Agreement:

      


      Party
        A
        appoints as its Process Agent: Not applicable 

      Party
        B
        appoints as its Process Agent: Not applicable

      


      Offices.
        The provisions of Section 10(a) will apply to this
        Agreement.

      


      Multibranch
        Party.
        For purpose of Section 10(c) of this Agreement:

      


      Party
        A
        is a Multibranch Party and may act through its Offices in London and New
        York.

      Party
        B
        is not a Multibranch Party.

      


      Calculation
        Agent.
        Party A.

      


      Credit
        Support Documents.
        Details of any Credit Support Documents:

      


      In
        the
        case of Party A means the credit support annex (the "Credit Support Annex")
        entered into between Party A and Party B in relation to this Master Agreement
        and any Eligible Guarantee.

      


      In
        the
        case of Party B, not applicable.

      


      Credit
        Support Provider
        means

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

      


      in
        relation to Party A, the guarantor under any guarantee in support of Party
        A’s
        obligations under this Agreement.

      


      In
        relation to Party B: Not applicable.

      


      Governing
        Law.
        THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
        OF
        THE STATE OF NEW YORK APPLICABLE TO CONTRACTS WHOLLY PERFORMED WITHIN NEW
        YORK,
        WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE.

      


      Single
        Agreement.
        Section 1(c) shall be amended by the addition of the words ", the credit
        support
        annex entered into between Party A and Party B in relation to this Master
        Agreement" after the words "Master Agreement".

      


      Local
        Business Day.
        The definition of Local Business Day in Section 14 of this Agreement shall
        be
        amended by the addition of the words "or any Credit Support Document" after
        "Section 2(a)(i)" and the addition of the words "or Credit Support Document"
        after "Confirmation".

      


      Netting
        of Payments.
        Sub-paragraph (ii) of Section 2(c) of this Agreement will apply to all
        Transactions hereunder, unless otherwise provided in the relevant
        Confirmation(s).

      


      "Affiliate"
        will have the meaning specified in Section 14 but will have no meaning as
        applied to Party B.

      


      


      OTHER
        PROVISIONS

      


      ISDA
        Definitions Incorporated by Reference.
        The
        definitions and provisions of the 2000 ISDA Definitions (the "ISDA Definitions")
        (as published by the International Swaps and Derivatives Association, Inc.
        --
        "ISDA") are incorporated by reference herein. Any terms used and not otherwise
        defined herein which are contained in the ISDA Definitions shall have the
        meaning set forth therein. In the event of any conflict between the ISDA
        Definitions and any other ISDA-published definitions referenced in a
        Confirmation, such Confirmation and the ISDA-published definitions referred
        to
        therein shall control for purposes of the particular Transaction. For the
        avoidance of doubt, any reference to a "Swap Transaction", if any, in the
        Definitions is deemed to be a reference to a "Transaction" for the purpose
        of
        interpreting this Agreement or any Confirmation, and any reference to a
        "Transaction" in this Agreement or any Confirmation is deemed to be a reference
        to a "Swap Transaction" for the purpose of interpreting the
        Definitions.

      


      Condition
        Precedent.
        The
        condition precedent specified in Section 2(a)(iii)(1) of this Agreement does
        not
        apply to a payment or delivery owing by a party if the other party shall
        have
        satisfied in full all of its payment and delivery obligations under Section
        2(a)(i) of this Agreement and shall at the relevant time have no future payment
        or delivery obligations, whether absolute or contingent, under Section
        2(a)(i).

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      


      Additional
        Representations.
        Section
        3 is hereby amended by adding at the end thereof the following
        subparagraph:

      


      "(g)
        No
        Agency.
        It is
        entering into this Agreement, the Credit Support Document and any other document
        relating to this Agreement and each Transaction hereunder as principal and
        not
        as agent or in any capacity, fiduciary or otherwise, and no other person
        has an
        interest herein."

      


      The
        following additional representation shall be given by Party A only:


      


      "(h)
        Pari
        Passu.
        Its
        obligations under this Agreement rank pari passu with all of its other
        unsecured, unsubordinated obligations except those obligations preferred
        by
        operation of law."

      


      Tax.
        

      


      Notwithstanding
        the definition of "Indemnifiable Tax" in Section 14 of this Agreement, in
        relation to payments by Party A, any Tax shall be an Indemnifiable Tax and
        in
        relation to Party B, no Tax shall be an Indemnifiable Tax. 

      


      Section
        2(d)(i)(4) of this Agreement shall be deleted in its entirety and replaced
        with
        the words "if such Tax is an Indemnifiable Tax, pay to Party B, in addition
        to
        the payment which Party B is otherwise entitled under this Agreement, such
        additional amount as is necessary to ensure that the net amount actually
        received by Party B (free and clear of Indemnifiable Taxes, whether against
        Party A or Party B) will equal the full amount Party B would have received
        had
        no such deduction or withholding been required."

      


      Swap
        Exemption.
        Each
        party hereto represents to the other party on and as of the date hereof and
        on
        each date on which a Transaction is entered into between them hereunder,
        that it
        is an "eligible contract participant" as defined in the Commodity Exchange
        Act,
        as amended.

      


      Relationship
        between Parties.
        In
        connection with the negotiation of, the entering into, of this Agreement,
        and
        any other documentation relating to this Agreement to which it is a party
        or
        that it is required by this Agreement to deliver, each party hereby represents
        and warrants, and, in connection with the negotiation of, the entering into,
        and
        the confirming of the execution of each Transaction, each party will be deemed
        to represent, to the other party as of the date hereof (or, in connection
        with
        any Transaction, as of the date which it enters into such Transaction) that
        (absent a written agreement between the parties that expressly imposes
        affirmative obligations to the contrary for that Transaction):

      


      Non-Reliance
        Party A
        is acting for its own account, and, with respect to Party B, Deutsche Bank
        National Trust Company is executing as Trustee for Party B. Each has made
        its
        own independent decisions to enter into that Transaction and as to whether
        that
        Transaction 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 party as investment advice or
        as a
        recommendation to enter into that Transaction; it being understood that
        information and explanations related to the terms and conditions of a
        Transaction shall not be considered investment advice or a recommendation
        to
        enter into that Transaction. No communication (written or oral) received
        from
        the other party shall be deemed to be an assurance or guarantee as to the
        expected results of that Transaction.

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

      


      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 that Transaction. It is also capable of assuming,
        and assumes, the risks of that Transaction. It has determined to its
        satisfaction whether or not the rates, prices or amounts and other economic
        terms of each Transaction and the indicative quotations (if any) provided
        by the
        other party reflect those in the relevant market for similar transactions,
        and
        all trading decisions have been the result of arm’s length negotiations between
        the parties.

      


      Status
        of Parties
        The
        other party is not acting as a fiduciary for or an adviser to it in respect
        of
        that Transaction.

      


      Related
        Transactions.
        It is
        aware that each other party to this Agreement and its Affiliates may from
        time
        to time (A) take positions in instruments that are identical or economically
        related to a Transaction or (B) have an investment banking or other commercial
        relationship with the issuer of an instrument underlying a
        Transaction.

      


      Waiver
        of Jury Trial.
        EACH
        PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
        PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
        TRANSACTION.

      


      Consent
        to Telephonic Recording.
        Each
        party hereto consents to the monitoring or recording, at any time and from
        time
        to time, by the other party of the telephone conversations of trading and
        marketing personnel of the parties and their authorized representatives in
        connection with this Agreement or any Transaction or potential Transaction;
        and
        each party, waives any further notice of such monitoring or recording and
        agree
        to give proper notice and obtain any necessary consent of such personnel
        or any
        such monitoring or recording.

      


      Agency
        Role of Greenwich Capital Markets, Inc.
        In
        connection with this Agreement, Greenwich Capital Markets, Inc. has acted
        as
        agent on behalf of Party A. Greenwich Capital Markets, Inc. has not guaranteed
        and is not otherwise responsible for the obligations of Party A under this
        Agreement.

      


      Pooling
        and Servicing Agreement. Capitalized
        terms used in this 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.

      


      Amendment
        of the Pooling and Servicing Agreement. 

      


      Party
        B
        will not amend, supplement or otherwise modify the Pooling and Servicing
        Agreement except in compliance with the provisions of Section 12.01 of
        the
        Pooling and Servicing Agreement.

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

      


      As
        provided in Section 12.01 of the Pooling and Servicing Agreement, Party A
        will
        be provided with any proposed amendment to the Pooling and Servicing Agreement
        that requires the consent of Party A, and with a copy of any executed amendment
        to the Pooling and Servicing Agreement.

      


      Assignment
        and Pledge Under the Pooling and Servicing Agreement.
        Notwithstanding Section 7 of this Agreement, Party A hereby acknowledges
        that
        Deutsche Bank National Trust Company is acting as Trustee pursuant to the
        Pooling and Servicing Agreement and consents thereto and to the transfer
        to the
        Trustee of a security interest in all rights of Party B under this Agreement.
        Deutsche Bank National Trust Company, acting as Trustee on behalf of the
        holders
        of the Certificates, shall have the right to enforce this Agreement, including
        the terms of Part 1(i), against Party A. Party A shall be entitled to rely
        on
        any notice or communication from the Trustee to that effect; provided, further,
        that any such notice or communication shall be in writing and delivered to
        Party
        A in accordance with Section 12 hereof. Party A shall be entitled to assume
        the
        authenticity of any such notice or communication and shall have no obligation
        to
        verify the accuracy of any facts asserted therein or the authority of the
        sender
        thereof. Party B hereby indemnifies and shall cause Party A to be indemnified
        against any losses, costs, claims or liabilities arising from Party A's reliance
        on any such notice or communication (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), and Party A shall be released from any
        further
        obligations to Party B to the extent that it has rendered performance of
        such
        obligations to the Trustee for the benefit of the holders of the Certificates.
        The parties acknowledge that the indemnity contained in this Part 5(k) shall
        be
        subject to the Flow of Funds set forth in Section 4.04 of
        the
        Pooling and Servicing Agreement and is only due to the extent funds are
        available for the payment thereof in accordance with the Pooling and Servicing
        Agreement.

      


      Regarding
        Party A. Party
        B
        acknowledges and agrees that Party A has had and will have no involvement
        in
        and, accordingly, Party A accepts no responsibility for: (i) the establishment,
        structure, or choice of assets of Party B; (ii) the selection of any person
        performing services for or acting on behalf of Party B; (iii) the selection
        of
        Party A as a Hedge Counterparty; (iv) the terms of the Certificates; (v)
        the
        preparation of or passing on the disclosure and other information contained
        in
        the prospectus supplement dated February 23, 2007 (other than certain
        information provided by Party A expressly for inclusion therein in the form
        attached hereto as Exhibit I), the Pooling and Servicing Agreement or any
        other
        agreements or documents used by Party B or any other party in connection
        with
        the marketing and sale of the Certificates; (vi) the ongoing operations and
        administration of Party B, including the furnishing of any information to
        Party
        B which is not specifically required under this Agreement; or (vii) any other
        aspect of Party B's existence. 

      


      No
        Petition for Bankruptcy. Party
        A,
        by entering into this Agreement, hereby covenants and agrees that in connection
        with any obligations of Party B under this Agreement, Party A will not institute
        against Party B or the Trust (as defined in the Pooling and Servicing
        Agreement), any bankruptcy, reorganization, arrangement, insolvency or
        liquidation proceeding, or other proceeding under any federal or state
        bankruptcy or similar law, for one year (or, if longer, the applicable
        preference period) and a day after the latest maturing security issued by
        Party
        B is paid; provided
        however,
        that
        nothing herein shall preclude or estop Party A prior to the expiration of
        the
        applicable preference period (i) from taking any action in (x) any case or
        proceeding voluntarily filed or commenced by or on behalf of Party B or (y)
        any
        involuntary bankruptcy, reorganization, arrangement, insolvency or liquidation
        proceedings or other proceeding under any federal or state bankruptcy or
        similar
        law filed or commenced against Party B by a person other than Party A or
        (ii)
        from commencing against Party B or any properties of Party B any legal action
        which is not a bankruptcy, reorganization, arrangement, insolvency, moratorium
        or liquidation proceeding. This provision shall survive termination of this
        Agreement for any reason whatsoever.

      
        
           

        

        
          19

          
            

          

        

        
           

        

      

      


      Representations
        of Party B. As
        an
        inducement to Party A for entering into this Agreement and each Transaction
        hereunder, Party B represents that for the purposes of the Pooling and Servicing
        Agreement:

      


      Party
        A
        is a "Hedge Counterparty";

      


      each
        Transaction entered into between Party A and Party B hereunder is a "Hedge
        Agreement".

      


      Not
        Acting in Individual Capacity.
        Deutsche Bank National Trust Company is signing this Agreement solely in
        its
        capacity as Trustee of Party B 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 Party B, (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 National Trust Company be liable for the
        breach or failure of any obligation, representation, warranty or covenant
        made
        or undertaken by Party B under this Agreement. All persons having any claim
        against the Trustee reason of the Transactions contemplated by this Agreement
        shall look only to the assets of NovaStar Mortgage Supplemental Interest
        Trust,
        Series 2007-1 (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. 

      


      Amendment
        of Provisions and Transfer of Rights and Obligations.
        Without
        limiting the provisions of Section 7(a) of this Agreement, no amendment or
        transfer of the rights or obligations under this Agreement will be effective
        without the prior written confirmation of each Rating Agency that such amendment
        or transfer will not result in the reduction or withdrawal of the then current
        ratings for any outstanding Certificates.

      


      Acknowledgement
        of Pledge of Collateral.
        Party A
        acknowledges Party B’s pledge of its assets under the Pooling and Servicing
        Agreement and understands that the proceeds of such assets will be applied,
        including to payments hereunder, only in the order set forth in the Pooling
        and
        Servicing Agreement.

      
        
           

        

        
          20

          
            

          

        

        
           

        

      

      


      Set-Off.
        Notwithstanding
        any provision of this Agreement or any other existing or future agreement,
        Party
        A hereby irrevocably waives any and all rights it may have to set-off, net,
        recoup or otherwise withhold or suspend or condition payment or performance
        of
        any obligation between it and Party B against any obligation between it and
        Party B under any other agreements; provided that nothing herein shall be
        construed as limiting the provisions contained in Section 2(c) or any other
        Section of this Agreement with respect to the netting of the parties’ respective
        obligations under this Agreement or the right of Party B to exercise any
        set-off
        right, by operation of law or otherwise. Except as stated above, the provisions
        for Set-off set forth in Section 6(e) of the Agreement shall not
        apply.

      


      Transfers

      


      Section
        7
        of this Agreement shall not apply to Party A and, subject to Section 6(b)(ii)
        and Part 5(t)(ii) below, Party A may not transfer (whether by way of security
        or
        otherwise) any interest or obligation in or under this Agreement without
        the
        prior written consent of Party B.

      


      Subject
        to Part 5(v) below, Party A may (at its own cost) transfer all or substantially
        all of its rights and obligations with respect to this Agreement to any other
        entity (a "Transferee")
        that
        is an Eligible Replacement, provided that Party B shall have determined which
        shall be evidenced by satisfaction of the Rating Agency Condition, whether
        or
        not a transfer relates to all or substantially all of Party A’s rights and
        obligations under this Agreement. Following such transfer, all references
        to
        Party A shall be deemed to be references to the Transferee.

      


      If
        an
        entity has made a Firm Offer (which remains capable of becoming legally binding
        upon acceptance (which shall be evidenced by Party B's receipt of confirmation
        that the Rating Agency Condition has been satisfied) to be the transferee
        of a
        transfer to be made in accordance with (ii) above, Party B shall (at Party
        A’s
        cost) at Party A’s written request, execute such documentation provided to it as
        is reasonably deemed necessary by Party A to effect such transfer.

      


      Party
        B Agent.
        Party A
        acknowledges that Party B has appointed Deutsche Bank National Trust Company
        as
        its agent under the Pooling and Servicing Agreement to carry out certain
        functions on behalf of Party B, and that Deutsche Bank National trust Company
        shall be entitled to give notices and to perform and satisfy the obligations
        of
        Party B hereunder on behalf of Party B.

      


      Rating
        Agency Notification.
        Notwithstanding any other provision of this Agreement, this Agreement shall
        not
        be amended, no Early Termination Date shall be effectively designated by
        Party
        B, and no transfer of any rights or obligations under this Agreement shall
        be
        made (other than a transfer of all of Party A’s rights and obligations with
        respect to this Agreement in accordance with Part 5(t)(ii) above) unless
        Moody’s
        has been given prior written notice of such amendment, designation or transfer.
        

      



      
        
           

        

        
          21

          
            

          

        

        
           

        

      


      IN
        WITNESS WHEREOF, Party A and Party B have caused this Schedule to be duly
        executed as of the date first written above.

      
        	
                THE
                  ROYAL BANK OF SCOTLAND PLC

                 

                By:
                  Greenwich Capital Markets, Inc., its agent

              	
                NOVASTAR
                  MORTGAGE SUPPLEMENTAL INTEREST 

                TRUST,
                  SERIES 2007-1

                 

                 

                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 2007-1

              
	 	 
	 	 
	
                By
                  /s/
                  David E. Wagner            

                Name:
                  David E. Wagner

                Title:
                  Managing Director

              	
                By
                  /s/
                  Karlene Benvenuto            

                Name:
                  Karlene Benvenuto

                Title:
                  Authorized Signer

              


      

      


      
 


      
        
           

        

        
          22

          
            

          

        

        
           

        

      



      Exhibit
        I

      


      (Party
        A disclosure for prospectus supplement)

      


      The
        Royal
        Bank of Scotland plc ("RBS") is a company limited by shares incorporated
        under
        the law of Scotland and is the principal operating subsidiary of The Royal
        Bank
        of Scotland Group plc ("RBS Group"), which, together with its subsidiaries,
        is a
        diversified financial services group engaged in a wide range of banking,
        financial and finance related activities in the United Kingdom and
        internationally. The short-term unsecured and unguaranteed debt obligations
        of
        RBS are currently rated "A-1+" by S&P, "P-1" by Moody’s and "F1+" by Fitch
        Ratings The long-term, unsecured, unsubordinated and unguaranteed debt
        obligations of RBS are currently rated "AA" by S&P, "Aa1" by Moody’s and
        "AA+" by Fitch Ratings Except for the information provided in this paragraph,
        neither RBS nor the RBS Group has been involved in the preparation of, and
        do
        not accept responsibility for, this [free writing prospectus] [prospectus
        supplement] or the accompanying prospectus. RBS is an affiliate of Greenwich
        Capital Markets, Inc., an underwriter.

      


      


      


      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

    

    Elections
      and Variables

    to
      the 1994 ISDA Credit Support Annex

     

    dated
      as of

     

    February
      28, 2007

     

    between

     

    


     

    
      	
              THE
                ROYAL BANK OF SCOTLAND PLC,

              Established
                as a bank under the laws of Scotland

            	
               

               

              and

            	
              NOVASTAR
                MORTGAGE SUPPLEMENTAL 

              INTEREST
                TRUST, SERIES 2007-1

            
	
              _______________________________________

              (“Party
                A”)

            	 	
              _________________________________________

              (“Party
                B”)

            


    

    


     

    


     

    Paragraph
      13.

     

    
      	
              (a)

            	
              Security
                Interest for
“Obligations”.

            


    

     

    The
      term “Obligations”
      as used
      in this Annex includes the following additional obligations: None.

    


    
      	
              (b)

            	
              Credit
                Support Obligations.

            


    

     

    
      	 	
              (i)

            	
              Delivery
                Amount, Return Amount and Credit Support
                Amount.

            


    

     

    
      	 	
              (A)

            	
              “Delivery
                Amount”
                has the meaning specified in Paragraph 3(a), except that the words
“upon a
                demand made by the Secured Party on or promptly following a Valuation
                Date” shall be deleted and replaced by the words “on each Valuation Date;”
                provided,
                that the Delivery Amount shall be calculated, with respect to collateral
                posting required by each Rating Agency, by using (i) such Rating
                Agency’s
                Valuation Percentages as provided below to determine Value and (ii)
                the
                Credit Support Amount related to such Rating Agency. The Delivery
                Amount
                shall be the greatest of such calculated
                amounts.

            


    

     

    
      	 	
              (B)

            	
              “Return
                Amount”
                has the meaning
                specified in Paragraph 3(b); provided,
                that the Return Amount shall be calculated, with respect to collateral
                posting required by each Rating Agency, by using (i) such Rating
                Agency’s
                Valuation Percentages as provided below to determine Value and (ii)
                the
                Credit Support Amount related to such Rating Agency. The Return Amount
                shall be the least of such calculated
                amounts.

            


    

     

    
      	 	
              (C)

            	
              “Credit
                Support Amount”
                has the meaning specified in Paragraph 13(j)(iii).
                

            


    

     

    
      	 	
              (ii)

            	
              Eligible
                Collateral.
                The Valuation
                Percentages1 
                listed below shall apply to the following Eligible Collateral:
                

            


    

    
       

      _________________

        
          1
            With
            respect to collateral types not listed below, such assets will be subject
            to
            review by each of S&P and Moody’s.


        

      

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    


    
      	
              Instrument

            	
              Valuation
                Percentages applicable with respect to calculating Moody's First
                Trigger
                Credit Support Amount

            	
              Valuation
                Percentages applicable with respect to calculating Moody's Second
                Trigger
                Credit Support Amount

            	
              Valuation
                Percentages applicable with respect to calculating S&P Credit Support
                Amount

            
	 	
              Moody’s

            	
              Moody’s

            	
              S&P

            
	
              U.S.
                Dollar Cash

            	
              100%

            	
              100%

            	
              100%

            
	
              Fixed
                Rate Treasury Debt issued by U.S. Treasury Department with Remaining
                Maturity:

            
	
              <1
                Year

            	
              100%

            	
              100%

            	
              98.9%

            
	
              1
                to 2 years

            	
              100%

            	
              99%

            	
              98.0%

            
	
              2
                to 3 years

            	
              100%

            	
              98%

            	
              97.4%

            
	
              3
                to 5 years

            	
              100%

            	
              97%

            	
              95.5%

            
	
              5
                to 7 years

            	
              100%

            	
              96%

            	
              93.7%

            
	
              7
                to 10 years

            	
              100%

            	
              94%

            	
              92.5%

            
	
              10
                to 20 years

            	
              100%

            	
              90%

            	
              91.1%

            
	
              >
                20 years

            	
              100%

            	
              88%

            	
              88.6%

            
	
              Floating-Rate
                Negotiable U.S. Dollar Denominated Treasury Debt Issued by The U.S.
                Treasury Department

            
	
              All
                Maturities

            	
              100%

            	
              99%

            	
              Not
                Eligible Collateral

            
	
              Fixed-Rate
                U.S. Dollar Denominated Treasury U.S. Agency Debentures with Remaining
                Maturity:

            
	
              <
                1 Year

            	
              100%

            	
              99%

            	
              98.5%

            
	
              1
                to 2 years

            	
              100%

            	
              99%

            	
              97.7%

            
	
              2
                to 3 years

            	
              100%

            	
              98%

            	
              97.3%

            
	
              3
                to 5 years

            	
              100%

            	
              96%

            	
              94.5%

            
	
              5
                to 7 years

            	
              100%

            	
              93%

            	
              93.1%

            
	
              7
                to 10 years

            	
              100%

            	
              93%

            	
              90.7%

            
	
              10
                to 20 years

            	
              100%

            	
              89%

            	
              87.7%

            
	
              >
                20 years

            	
              100%

            	
              87%

            	
              84.4%

            
	
              Floating-Rate
                U.S. Dollar Denominated U.S. Agency Debentures

            
	
              All
                maturities

            	
              100%

            	
              98%

            	
              Not
                Eligible Collateral

            
	
              Qualified
                Commercial Paper

            
	 	
              0%*

            	
              0%*

            	
              99% 

            


    

    


    For
      the
      purposes of the above table, “Qualified
      Commercial Paper”
means
      commercial
      

    paper
      with a rating of at least P-1 by Moody’s and A-1+ by S&P and having a
      remaining 

    maturity
      of not more than one month.

    


    *or
      such
      other percentage in respect of which Moody’s has provided a rating
      affirmation.

    


    
      	 	
              (iii)

            	
              Thresholds.

            


    

     

    
      	 	
              (A)

            	
              “Independent
                Amount” 
                means with respect to Party A: Zero

            


    

     

    “Independent
      Amount”
      means
      with respect to Party B: Zero

     

    
      	 	
              (B)

            	
              “Threshold”
                means with respect to Party A: infinity; provided
                that the Threshold with respect to Party A shall be zero for so long
                as no
                Relevant Entity has the First Trigger Required Ratings or a
                Collateralization Event is occurring and (i) no Relevant Entity has
                had
                the First Trigger Required Ratings since this Annex was executed,
                or (ii)
                at least 30 Local Business Days have elapsed since the last time
                a
                Relevant Entity had the First Trigger Required Ratings, or (iii)
                no
                Relevant Entity has met the Approved Ratings Thresholds since this
                Annex
                was executed, or (iv) at least 30 calendar days have elapsed since
                the
                last time a Collateralization Event occurred or (v) a Ratings Event
                is
                occurring.

            


    

     

    “Threshold”
      means
      with respect to Party B: infinity.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	 	
              (C)

            	
              “Minimum
                Transfer Amount”
                means
                with respect to Party A: USD $100,000; provided,
                however,
                that if S&P is rating the Certificates and the aggregate Certificate
                Principal Balances of the rated Certificates falls below $50,000,000,
                then
                the Minimum Transfer Amount shall mean USD $50,000.
                

            


    

     

    
      	
            	(D)	
              “Minimum
                Transfer Amount”
                means with respect to Party B: USD $100,000 (or
                if the Posted Collateral is less than $100,000, the aggregate Value
                of
                Posted Collateral),
                provided,
                however,
                that if S&P is rating the Certificates and the aggregate Certificate
                Principal Balances of the rated Certificates falls below $50,000,000,
                then
                the Minimum Transfer Amount shall mean USD $50,000 (or if the Posted
                Collateral is less than $50,000, the aggregate Value of Posted
                Collateral). 

            


    

     

    
      	 	
              (E)

            	
              Rounding.
                The Delivery Amount will be rounded up to the nearest integral multiple
                of
                USD $10,000. The Return Amount will be rounded down to the nearest
                integral multiple of USD $10,000.

            


    

     

    
      	 	
              (iv)

            	
              “Exposure”
                has the meaning specified in Paragraph 12, except that (1) after
                the word
                “Agreement” the words “(assuming, for this purpose only, that Part
                1(f)(i) of
                the Schedule is deleted)” shall be inserted and (2) at the end of such
                definition, the words “with terms substantially the same as those of this
                Agreement.”

            


    

     

    
      	
              (c)

            	
              Valuation
                and Timing.

            


    

     

    
      	 	
              (i)

            	
              “Valuation
                Agent”
                means Party A in all circumstances.

            


    

     

    
      	 	
              (ii)

            	
              “Valuation
                Date”
                means the each Local Business Day.

            


    

     

    
      	 	
              (iii)

            	
              “Valuation
                Time”
                means the close of business in the city of the Valuation Agent on
                the
                Local Business Day immediately preceding the Valuation Date or date
                of
                calculation, as applicable, provided that the calculations of Value
                and
                Credit Support Amount will, as far as practicable, be made as of
                approximately the same time on the same date.


            


    

     

    
      	 	
              (iv)

            	
              “Notification
                Time”
                means 9:00 a.m., New York time, on a Local Business
                Day.

            


    

     

    
      	
              (d)

            	
              Conditions
                Precedent and Secured Party’s Rights and Remedies.
                None.

            


    

     

    
      	
              (e)

            	
              Substitution.
                

            


    

     

    
      	 	
              (i)

            	
              “Substitution
                Date”
                has the meaning specified in Paragraph
                4(d)(ii).

            


    

     

    
      	 	
              (ii)

            	
              Consent.
                If specified here as applicable, then the Pledgor must obtain the
                Secured
                Party’s consent for any substitution pursuant to Paragraph 4(d):
                Inapplicable.

            


    

     

    
      	
              (f)

            	
              Dispute
                Resolution.

            


    

     

    
      	 	
              (i)

            	
              “Resolution
                Time”
                means 11:00 a.m., New York time on the Local Business Day following
                the
                date on which the notice is given that gives rise to a dispute under
                Paragraph 5.

            


    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	 	
              (ii)

            	
              Value.
                For the purpose of Paragraphs 5(i)(C) and 5(ii), the Value of Eligible
                Credit Support or Posted Credit Support as of the relevant Valuation
                Date
                or date of Transfer will be calculated as follows:
                

            


    

     

    
      	 	
              (A)

            	
              with
                respect to any Eligible Credit Support or Posted Credit Support comprising
                securities (“Securities”)
                the sum of (a)(x) the last bid price on such date for such Securities
                on
                the principal national securities exchange on which such Securities
                are
                listed, multiplied by the applicable Valuation Percentage; or (y)
                where
                any Securities are not listed on a national securities exchange,
                the bid
                price for such Securities quoted as at the close of business on such
                date
                by any principal market maker (which shall not be and shall be independent
                from the Valuation Agent) for such Securities chosen by the Valuation
                Agent, multiplied by the applicable Valuation Percentage; or (z)
                if no
                such bid price is listed or quoted for such date, the last bid price
                listed or quoted (as the case may be), as of the day next preceding
                such
                date on which such prices were available, multiplied by the applicable
                Valuation Percentage; plus (b) the accrued interest where applicable
                on
                such Securities (except to the extent that such interest shall have
                been
                paid to the Pledgor pursuant to Paragraph 5(c)(ii) or included in
                the
                applicable price) as of such date;
                and

            


    

     

    
      	 	
              (B)

            	
              with
                respect to any Cash, the face amount
                thereof.

            


    

     

    
      	 	
              (iii)

            	
              Alternative.
                The provisions of Paragraph 5 will
                apply.

            


    

     

    
      	
              (g)

            	
              Holding
                and Using Posted
                Collateral.

            


    

     

    
      	 	
              (i)

            	
              Eligibility
                to Hold Posted Collateral; Custodians:

            


    

     

    A
      Custodian will be entitled to hold Posted Collateral on behalf of Party B
      pursuant to Paragraph 6(b); provided
      that:

     

    (1) Posted
      Collateral may be held only in the following jurisdiction: United
      States.

     

    (2) Initially,
      the Custodian for Cash and Securities for Party B is: The Trustee under the
      Pooling and Servicing Agreement, or any successor trustee thereto. 

     

    (3) The
      Custodian for Party B is a party that (i) is a commercial bank or trust company
      which is unaffiliated with Party B and organized under the laws of the United
      States or state thereof, having combined
      capital and surplus of at least $25,000,000 as set forth in its most recent
      published annual report of condition, (ii) it or its parent shall have a
      long-term debt rating of "A1" or better by Moody’s, "A+" (or better) and "A-1"
      (or better) by Standard & Poor’s and "A+" or better by Fitch and
      (iii)
      shall hold all Eligible Credit Support in the Hedge Collateral Account, as
      defined in the Pooling and Servicing Agreement.

     

    
      	
            	(ii)	
              Use
                of Posted Collateral.
                The provisions of Paragraph 6(c) will not apply to Party B. The Trustee
                shall invest Cash Posted Credit Support in such overnight (or redeemable
                within two Local Business Days of demand) investments rated at least
                A-1+
                by S&P and Prime-1 by Moody’s or AAAm or AAAm-G by S&P and Aaa by
                Moody’s (or such other investments as may be affirmed in writing by
                S&P and Moody’s) as directed by Party A (unless an Event of Default or
                an Additional Termination Event has occurred with respect to which
                Party A
                is the Defaulting Party or sole Affected Party, in which case such
                funds
                shall be invested at the written direction of the Servicer, or if
                neither
                Party A nor the Servicer provides such written instructions, such
                funds
                shall be retained by the Trustee uninvested) with gains and losses
                incurred in respect of such investments to be for the account of
                Party A.
                

            


    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	
            	(iii)	
              Notice.
                If a party or its Custodian fails to meet the criteria for eligibility
                to
                hold (or, in the case of a party, to use) Posted Collateral set forth
                in
                this Paragraph 13(g), such party shall promptly notify the other
                party of
                such ineligibility.

            


    

     

    
      	
              (h)

            	
              Distributions
                and Interest Amount.

            


    

     

    
      	 	
              (i)

            	
              Interest
                Rate.
                The “Interest
                Rate”
                will be the actual rate of interest earned by Party B or the Custodian
                if
                the Cash is invested at the direction of Party A in accordance with
                Paragraph 13(g)(ii) above, otherwise the “Interest
                Rate”
                will be the federal funds overnight rate as published by the Board
                of
                Governors of the Federal Reserve System in H.15 (519) or its successor
                publication, or such other rate as the parties may agree from time
                to
                time.

            


    

     

    
      	 	
              (ii)

            	
              Transfer
                of Interest Amount.
                The transfer of the Interest Amount will be made on the second Local
                Business Day following the end of each calendar month and on any
                other
                Local Business Day on which Posted Collateral in the form of Cash
                is
                transferred to the Pledgor pursuant to Paragraph 3(b), in each case
                to the
                extent that a Delivery Amount would not be created or increased by
                that
                transfer, provided
                that Party B shall not be obliged to so transfer any Interest Amount
                unless and until it has earned and received such
                interest.

            


    

     

    
      	 	
              (iii)

            	
              Alternative
                to Interest Amount.
                The provisions of Paragraph 6(d)(ii) will apply.
                

            


    

     

    
      	
              (i)

            	
              Address
                for Transfers.

            


    

     

    Party
      A:
      To be notified to Party B by Party A at the time of the request for the
      transfer.

     

    Party
      B:
      To be notified to Party A by Party B upon request by Party A.

     

    
      	
              (j)

            	
              Other
                Provisions.

            


    

     

    


    
      	 	
              (i)

            	
              Costs
                of Transfer on
                Exchange.

            


    

     

    
      	 	
              Notwithstanding
                Paragraph 10, the Pledgor
                will be responsible for, and will reimburse the Secured Party for,
                all
                transfer and other taxes and other costs involved in the transfer
                of
                Eligible Credit Support either from the Pledgor to the Secured Party
                or
                from the Secured Party to the
                Pledgor.

            


    

    


    
      	 	
              (ii)

            	
              Cumulative
                Rights.

            


    

     

    
      	 	
              The
                rights, powers and remedies of the Secured Party under this Annex
                shall be
                in addition to all rights, powers and remedies given to the Secured
                Party
                by the Agreement or by virtue of any statute or rule of law, all
                of which
                rights, powers and remedies shall be cumulative and may be exercised
                successively or concurrently without impairing the rights of the
                Secured
                Party in the Posted
                Credit Support created pursuant to this
                Annex.

            


    

    


    
      	 	
              (iii)

            	
              Ratings
                Criteria. 

            


    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    “Credit
      Support Amount”
      shall be
      (a) the S&P Credit Support Amount, (b) the Moody’s First Trigger Credit
      Support Amount, or (c) the Moody’s Second Trigger Credit Support Amount, as
      applicable.

    


    With
      respect to Moody’s:

    


    “Moody’s
      First Trigger Credit Support Amount”
means,
      for any Valuation Date, the excess, if any, of

     

    
      	
            	(I)	
              (A) for
                any Valuation Date on which (I) a First Trigger Failure Condition
                has
                occurred and has been continuing (x) for at least 30 Local Business
                Days
                or (y) since this Annex was executed and (II) it is not the case
                that a
                Moody’s Second Trigger Event has occurred and been continuing for at least
                30 Local Business Days, an amount equal to the greater of (a) zero
                and (b)
                the sum of the Secured Party’s aggregate Exposure for all Transactions and
                the aggregate of Moody’s Additional Collateralized Amounts for all
                Transactions.

            


    

     

    
      	 	 	
              For
                the purposes of this definition, the “Moody’s
                Additional Collateralized Amount”
                with respect to any Transaction shall mean at the option of Party
                A
                either: 

            


    

    


    
      	 	 	
              (i)
                the lesser of (x) the product of the Moody’s First Trigger DV01 Multiplier
                and DV01 for such Transaction and such Valuation Date and (y) the
                product
                of Moody’s First Trigger Notional Amount Multiplier and the Notional
                Amount for such Transaction for the Calculation Period which includes
                such
                Valuation Date; or

            


    

    


    
      	 	 	
              (ii)
                the product of the applicable Moody's First Trigger Factor set forth
                in
                Table 1 attached hereto and the Notional Amount for such Transaction
                for
                the Calculation Period which includes such Valuation Date;
                or

            


    

    
      	 	 	 


    

    (B) for
      any
      other Valuation Date, zero, over

     

    
      	 	
              (II)

            	
              the
                Threshold for Party A such Valuation
                Date.

            


    

     

    “First
      Trigger Failure Condition”
means
      that no Relevant Entity has credit ratings from Moody’s at least equal to the
      Moody’s First Trigger Required Ratings.

    


    “DV01”
      means,
      with respect to a Transaction and any date of determination, the sum of the
      estimated change in the Secured Party’s Exposure with respect to such
      Transaction that would result from a one basis point change in the relevant
      swap
      curve on such date, as determined by the Valuation Agent in good faith and
      in a
      commercially reasonable manner. The Valuation Agent shall, upon request of
      Party
      B, provide to Party B a statement showing in reasonable detail such
      calculation.

    


    “Moody’s
      First Trigger DV01 Multiplier”
means
      15.

    


    “Moody’s
      First Trigger Notional Amount Multiplier”
means
      2%.

    


    “Moody’s
      Second Trigger Credit Support Amount”
means,
      for any Valuation Date, the excess, if any, of

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    
      	
            	(I)	
              (A) for
                any Valuation Date on which it is the case that a Second Trigger
                Failure
                Condition has occurred and been continuing for at least 30 Local
                Business
                Days, an amount equal to the greatest of (a) zero, (b) the aggregate
                amount of the Next Payments for all Next Payment Dates and (c) the
                sum of
                the Secured Party's aggregate Exposure and the aggregate of Moody's
                Additional Collateralized Amounts for all
                Transactions.

            


    

     

    
      	 	 	
              For
                the purposes of this definition:

            


    

    


    
      	 	 	
              “Moody’s
                Additional Collateralized Amount”
                with respect to any Transaction shall mean at the option of Party
                A
                either:

            


    

    


    
      	 	 	
              (i)
                the lesser of (x) the product of the Moody’s Second Trigger DV01
                Multiplier and DV01 for such Transaction and such Valuation Date
                and (y)
                the product of the Moody’s Second Trigger Notional Amount Multiplier and
                the Notional Amount for such Transaction for the Calculation Period
                which
                includes such Valuation Date; or

            


    

    


    
      	 	 	
              (ii)
                the product of the applicable Moody's Second Trigger Factor set forth
                in
                Table 2 attached hereto and the Notional Amount for such Transaction
                for
                the Calculation Period which includes such Valuation Date; or
                

            


    

    


    (B) for
      any
      other Valuation Date, zero, over

     

    
      	 	
              (II)

            	
              the
                Threshold for Party A for such Valuation
                Date.

            


    

     

    “Next
      Payment”
means,
      in respect of each Next Payment Date, the greater of (i) the amount of any
      payments due to be made by Party A under Section 2(a) on such Next Payment
      Date
      less any payments due to be made by Party B under Section 2(a) on such Next
      Payment Date (in each case, after giving effect to any applicable netting under
      Section 2(c)) and (ii) zero.

    


    “Next
      Payment Date”
means
      each date on which the next scheduled payment under any Transaction is due
      to be
      paid.

    


    “Second
      Trigger Failure Condition”
means
      that no Relevant Entity has credit ratings from Moody’s at least equal to the
      Moody’s Second Trigger Ratings Threshold.

    


    “Moody’s
      Second Trigger DV01 Multiplier”
means
      50.

    


    “Moody’s
      Second Trigger Notional Amount Multiplier”
means
      8%.

    


    With
      respect to S&P:

    


    “S&P
      Credit Support Amount”
means,
      for any Valuation Date, the excess, if any, of:

    


    
      	 	
              (I)

            	
              (A)
                

            	
              for
                any Valuation Date (x) on which a Collateralization Event with respect
                to
                S&P has occurred and been continuing for at least 30 calendar days
                or
                (y) on which a Ratings Event with respect to S&P has occurred and is
                continuing, an amount equal to the sum of (1) the aggregate Secured
                Party’s Exposure for such Valuation Date with respect to all Transactions
                and (2) the aggregate of the products of the Volatility Buffer for
                each
                Transaction and the Notional Amount of each Transaction for the
                Calculation Period of each such Transaction which includes such Valuation
                Date, or

            


    

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    
      	 	
              (B)

            	
              for
                any other Valuation Date, zero,
                over

            


    

    


    
      	
            	(II)	
              the
                Threshold for Party A for such Valuation
                Date.

            


    

    


    “Volatility
      Buffer”
shall
      mean the percentage set forth in the following table with respect to any
      Transaction (other than a Transaction identified in the related Confirmation
      as
      a Timing Hedge): 


    
      	 	 	 	 	 
	
              Short-term
                credit 

              rating
                of Party A’s 

              Credit
                Support 

              Provider

            	
              Remaining
                

              Weighted
                

              Average
                Life 

              Maturity
                up to 3 

              years

            	
              Remaining
                

              Weighted
                

              Average
                Life 

              Maturity
                up to 5 years

            	
              Remaining
                

              Weighted
                Average 

              Life
                Maturity up 

              to
                10 years

            	
              Remaining
                Weighted 

              Average
                Life Maturity 

              up
                to 30 years

            
	
              At
                least “A-2”

            	
              2.75

            	
              3.25

            	
              4.00

            	
              4.75

            
	
              “A-3”

            	
              3.25

            	
              4.00

            	
              5.00

            	
              6.25

            
	
              “BB+”
                or lower

            	
              3.50

            	
              4.50

            	
              6.75

            	
              7.50

            


    

    


    


    
      	 	
              (iv)

            	
              Demands
                and Notices.

            


    

     

    All
      demands, specifications and notices under this Annex will be made pursuant
      to
      the Notices Section of this Agreement, save that any demand, specification
      or
      notice:

     

    
      	 	
              (A)

            	
              shall
                be given to or made at the following
                addresses:

            


    

     

    If
      to
      Party A: 

     

    As
      set
      forth in Part 4(a) of the Schedule.

     

    If
      to
      Party B: 

     

    As
      set
      forth in Part 4(a) of the Schedule.

     

    or
      at
      such other address as the relevant party may from time to time designate by
      giving notice (in accordance with the terms of this subparagraph) to the other
      party;

     

    
      	 	
              (B)

            	
              shall
                be deemed to be effective at the time such notice is actually received
                unless such notice is received on a day which is not a Local Business
                Day
                or after the Notification Time on any Local Business Day in which
                event
                such notice shall be deemed to be effective on the next succeeding
                Local
                Business Day.

            


    

     

    


    
      	 	
              (v)

            	
              Agreement
                as to Single Secured Party and
                Pledgor

            


    

     

    
      	 	 	
              Party
                A and Party B agree that, notwithstanding anything to the contrary
                in the
                first
                sentence of this Annex, Paragraph 1(b) or Paragraph 2 or the definitions
                in Paragraph 12, except with respect to Party B’s obligations under
                Paragraph 3(b), (a) the term “Secured Party” as used in this Annex means
                only Party B, (b) the term “Pledgor” as used in this Annex means only
                Party A and (c) only Party A makes the pledge and grant in Paragraph
                2,
                the acknowledgement in the final sentence of Paragraph 8(a) and the
                representations in Paragraph 9. Party A and Party B further agree
                that,
                notwithstanding anything to the contrary in the recital to this Annex
                or
                Paragraph 7, this Annex will constitute a Credit Support Document
                only
                with respect to Party A.

            


    

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    
 

    
      	 	
              (vi)

            	
              Trustee
                Capacity. 

            


    

     

    
      	 	 	
              Deutsche
                Bank National Trust Company is signing this Credit Support Annex
                solely in
                its capacity as Trustee of Party B under the Pooling and Servicing
                Agreement among NovaStar Mortgage Funding Corporation, NovaStar Mortgage,
                Inc., U.S. Bank National Association, and Deutsche Bank National
                Trust
                Company dated as of February 1, 2007 (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 Party
                B, (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 National Trust Company
                be
                liable for the breach or failure of any obligation, representation,
                warranty or covenant made or undertaken by Party B under this Credit
                Support Annex. All persons having any claim against the Trustee reason
                of
                the Transactions contemplated by this Credit Support Annex shall
                look only
                to the assets of NovaStar Mortgage Supplemental Interest Trust, Series
                2007-1 (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.

            


    

    


    
      	 	
              (vii)

            	
              External
                Marks. 

            


    

     

    At
      such time as the long-term senior debt rating of Party A’s
      Credit
      Support Provider is BBB or lower from S&P, Party A in its capacity as
      Valuation Agent shall get external verification of its calculation of Exposure
      on a monthly basis. This verification shall be at Party A’s expense and may not
      be verified by the same entity more than four (4) times in any twelve (12)-month
      period. The external mark should reflect the higher of two (2) bids from
      counterparties that would be willing and eligible to provide the swap in the
      absence of the current provider. Such bids and any external marks received
      by
      the Valuation Agent shall be provided to S&P. The calculation of Exposure
      should be based on the greater of the internal and external marks. 

    


    
      	 	
              (viii)

            	
              Event
                of Default.

            


    

     

    Subclause
      (iii) of Paragraph 7 shall not apply to Party B.

    


     

    


     

    [Signature
      page follows]

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    



    IN
      WITNESS WHEREOF,
      the
      parties have executed this document by their duly authorized officers with
      effect from the date specified on the first page hereof.

     

    


    
      	
              THE
                ROYAL BANK OF SCOTLAND PLC,

              Established
                as a bank under the laws of Scotland

            	
              NOVASTAR
                MORTGAGE SUPPLEMENTAL 

              INTEREST
                TRUST,
                SERIES 2007-1

               

              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 2007-1

               

               

            
	
              By
                /s/
                David E.
                Wagner                                   
                

              Name:
                David E. Wagner

              Title:
                Managing Director

            	
              By
                /s/
                Karlene
                Benvenuto                                 
                

              Name:
                Karlene Benvenuto

              Title:
                Authorized Signer

            


    

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    Table
      1

     

    Moody’s
      First Trigger Factor

     

    
      	 	 
	
              Remaining

              Weighted
                Average Life 

              of
                Hedge in Years

            	
              Daily

              Collateral

              Posting

            
	
              1
                or less

            	
              0.15%

            
	
              More
                than 1 but not more than 2

            	
              0.30%

            
	
              More
                than 2 but not more than 3

            	
              0.40%

            
	
              More
                than 3 but not more than 4

            	
              0.60%

            
	
              More
                than 4 but not more than 5

            	
              0.70%

            
	
              More
                than 5 but not more than 6

            	
              0.80%

            
	
              More
                than 6 but not more than 7

            	
              1.00%

            
	
              More
                than 7 but not more than 8

            	
              1.10%

            
	
              More
                than 8 but not more than 9

            	
              1.20%

            
	
              More
                than 9 but not more than 10

            	
              1.30%

            
	
              More
                than 10 but not more than 11

            	
              1.40%

            
	
              More
                than 11 but not more than 12

            	
              1.50%

            
	
              More
                than 12 but not more than 13

            	
              1.60%

            
	
              More
                than 13 but not more than 14

            	
              1.70%

            
	
              More
                than 14 but not more than 15

            	
              1.80%

            
	
              More
                than 15 but not more than 16

            	
              1.90%

            
	
              More
                than 16 but not more than 17

            	
              2.00%

            
	
              More
                than 17 but not more than 18

            	
              2.00%

            
	
              More
                than 18 but not more than 19

            	
              2.00%

            
	
              More
                than 19 but not more than 20

            	
              2.00%

            
	
              More
                than 20 but not more than 21

            	
              2.00%

            
	
              More
                than 21 but not more than 22

            	
              2.00%

            
	
              More
                than 22 but not more than 23

            	
              2.00%

            
	
              More
                than 23 but not more than 24

            	
              2.00%

            
	
              More
                than 24 but not more than 25

            	
              2.00%

            
	
              More
                than 25 but not more than 26

            	
              2.00%

            
	
              More
                than 26 but not more than 27

            	
              2.00%

            
	
              More
                than 27 but not more than 28

            	
              2.00%

            
	
              More
                than 28 but not more than 29

            	
              2.00%

            
	
              More
                than 29

            	
              2.00%

            


    


    
      
        


        NY1
          1074255v8

         

      

      
         

        
          

        

      

      
         

      

    


    Table
      2

     

    Moody’s
      Second Trigger Factor for Interest Rate Swaps with Fixed Notional
      Amounts


     

    
      	 	 
	
              Remaining

              Weighted
                Average Life 

              of
                Hedge in Years

            	
              Daily

              Collateral

              Posting

            
	
              1
                or less

            	
              0.50%

            
	
              More
                than 1 but not more than 2

            	
              1.00%

            
	
              More
                than 2 but not more than 3

            	
              1.50%

            
	
              More
                than 3 but not more than 4

            	
              1.90%

            
	
              More
                than 4 but not more than 5

            	
              2.40%

            
	
              More
                than 5 but not more than 6

            	
              2.80%

            
	
              More
                than 6 but not more than 7

            	
              3.20%

            
	
              More
                than 7 but not more than 8

            	
              3.60%

            
	
              More
                than 8 but not more than 9

            	
              4.00%

            
	
              More
                than 9 but not more than 10

            	
              4.40%

            
	
              More
                than 10 but not more than 11

            	
              4.70%

            
	
              More
                than 11 but not more than 12

            	
              5.00%

            
	
              More
                than 12 but not more than 13

            	
              5.40%

            
	
              More
                than 13 but not more than 14

            	
              5.70%

            
	
              More
                than 14 but not more than 15

            	
              6.00%

            
	
              More
                than 15 but not more than 16

            	
              6.30%

            
	
              More
                than 16 but not more than 17

            	
              6.60%

            
	
              More
                than 17 but not more than 18

            	
              6.90%

            
	
              More
                than 18 but not more than 19

            	
              7.20%

            
	
              More
                than 19 but not more than 20

            	
              7.50%

            
	
              More
                than 20 but not more than 21

            	
              7.80%

            
	
              More
                than 21 but not more than 22

            	
              8.00%

            
	
              More
                than 22 but not more than 23

            	
              8.00%

            
	
              More
                than 23 but not more than 24

            	
              8.00%

            
	
              More
                than 24 but not more than 25

            	
              8.00%

            
	
              More
                than 25 but not more than 26

            	
              8.00%

            
	
              More
                than 26 but not more than 27

            	
              8.00%

            
	
              More
                than 27 but not more than 28

            	
              8.00%

            
	
              More
                than 28 but not more than 29

            	
              8.00%

            
	
              More
                than 29

            	
              8.00%