Document:

Amendment No. 1 to the Master Repurchase Agreement (Securities)

 Exhibit 10.56.1 
 AMENDMENT NUMBER ONE 
 to the 
 MASTER REPURCHASE AGREEMENT (SECURITIES) 
 dated as of April 14, 2006 
 among 
 WACHOVIA INVESTMENT HOLDINGS, LLC,

 NOVASTAR MORTGAGE, INC. 
 NOVASTAR CERTIFICATES FINANCIING LLC 
 NOVASTAR CERTIFICATES FINANCING CORPORATION 
 and 
 NOVASTAR FINANCIAL, INC 
 AMENDMENT NUMBER ONE (“Amendment Number One”), dated as of November __, 2006, by and among Wachovia Investment Holdings, LLC, as
buyer (the “Buyer”), Novastar Mortgage, Inc., Novastar Certificates Financing LLC and Novastar Certificates Financing Corporation (each a “Seller”, and collectively, jointly and severally, the
“Sellers”) and Novastar Financial, Inc. (the “Guarantor”), to the Master Repurchase Agreement (Securities), dated as of April 14, 2006, by and among the Buyer, the Sellers and the Guarantor (the
“Agreement”). 
 RECITALS 
 WHEREAS, the Buyer, the Sellers and the Guarantor have agreed to amend the Agreement, pursuant to the term and conditions set forth herein. 
 NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and of the mutual covenants herein
contained, the parties hereto hereby agree as follows: 
 SECTION 1. Defined Terms. Any terms capitalized but not otherwise defined
herein shall have the respective meanings set forth in the Agreement. 
 SECTION 2. Amendments. Effective as of the date hereof, the
Agreement is hereby amending as follows: 
 (a) Section 3(d) of the Agreement is amended by deleting the two occurrences of the words
“25th day” therein and replacing them, in each case, with the words “26th day”. 
 (b) Section 9(b) of the Agreement
is amended by deleting clause (xii) thereof in its entirety and replacing it with the following (underlined text indicates a change from the original language): 
 (xii) Seller shall have paid to Buyer a fee equal to 1.00% of the initial Purchase Price of each Eligible Asset (as
communicated in writing by the Buyer to the Seller), payable on the first Purchase Date for such Eligible Asset. 

 (c) Section 19(k) of the Agreement is amended by deleting clause (i) therein in its entirety
and replacing it with the following (underlined text indicates a change from the original language): 
 i. The term
“Maximum Recourse Amount” means an aggregate amount equal to the greater of (A) $5,000,000 or (B) 10% of the Purchase Price of all Purchased Assets subject to outstanding Transactions under this Agreement as of the
occurrence of an Event of Default or Early Termination Date, as applicable, minus the aggregate amount of all Margin Calls with respect to such Transactions that has previously been paid by Sellers and Guarantor; provided, however, that the Maximum
Recourse Amount will be equal to the amount of any actual deficiency (only if such deficiency is greater than the Maximum Recourse Amount determined above) to the extent resulting from: (A) failure of any representation and warranties set forth
in this Agreement to be materially true and correct with regard to a particular Purchased Asset on the initial Purchase Date for such Purchased Asset; (B) Seller’s failure to notify Buyer, on or prior to any Purchase Date, of any failure
of any representation and warranty set forth in this Agreement hereto to be materially true and correct, to the extent such failure of such representation and warranty to continue to be materially true and correct is actually known to Seller; or
(C) Buyer’s failure to receive an interest in the Purchased Assets as contemplated by this Agreement upon payment by Buyer of the Purchase Price for such Purchased Assets. 
 SECTION 3. Conditions Precedent. This Amendment Number One shall become effective on the date on which the Buyer shall have received the
following: 
 (a) this Amendment Number One, executed and delivered by duly authorized officers of each of the Sellers, the Guarantor and the
Buyer; and 
 (b) such other documents as the Buyer or counsel to the Buyer may reasonably request. 
 SECTION 4. Representations. In order to induce the Buyer to execute and deliver this Amendment Number One, the Sellers and the Guarantor hereby
represent and warrant to the Buyer that (i) no Default or Event of Default has occurred prior to the date hereof and is continuing on the date hereof and (ii) as of the date hereof, after giving effect to this Amendment Number One, the
Guarantor and each Seller are in full compliance with all of the representations and warranties, covenants and any other terms and conditions of the Program Documents. In addition, the Sellers and the Guarantor hereby represent that no event has
occurred that constitutes or should reasonably be expected to constitute a Material Adverse Change. 
 SECTION 5. Governing Law. THIS
AMENDMENT NUMBER ONE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS
DOCTRINE APPLIED IN SUCH STATE (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW WHICH SHALL GOVERN). 
  

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 SECTION 6. Counterparts. This Amendment Number One may be executed by each of the parties hereto
on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument. 
 SECTION 7. Costs. Sellers and Guarantor shall promptly reimburse Buyer for all out-of-pocket costs and expenses of Buyer in connection with the preparation, execution and delivery of this Amendment (including,
without limitation, the fees and expenses of counsel for Buyer). 
 SECTION 8. Limited Effect. Except as amended hereby, the Agreement
shall continue in full force and effect in accordance with its respective terms. Reference to this Amendment Number One need not be made in the Agreement or any other instrument or document executed in connection therewith, or in any certificate,
letter or communication issued or made pursuant to, or with respect to, the Agreement, any reference therein to the Agreement, being sufficient to refer to the Agreement, as amended hereby. 
 [SIGNATURE PAGE FOLLOWS] 
  

 3 

 IN WITNESS WHEREOF, each of Sellers, Guarantor and Buyer have caused this Amendment Number One to be
executed and delivered by their duly authorized officers as of the day and year first above written. 
  

			
	 NOVASTAR MORTGAGE, INC., as Seller

		
	By:	 	 /s/ Todd Phillips

	Name:	 	Todd Phillips
	Title:	 	Vice President, Treasurer and Controller
	
	 NOVASTAR CERTIFICATES FINANCING LLC,
 as
Seller

		
	By:	 	 /s/ Todd Phillips

	Name:	 	Todd Phillips
	Title:	 	Vice President, Treasurer and Controller
	
	 NOVASTAR CERTIFICATES FINANCING
 CORPORATION,
as Seller

		
	By:	 	 /s/ Todd Phillips

	Name:	 	Todd Phillips
	Title:	 	Vice President, Treasurer and Controller
	
	 WACHOVIA INVESTMENT HOLDINGS, LLC
 as Buyer
and Agent, as applicable

		
	By:	 	 /s/ Andrew W. Riebe

	Name:	 	Andrew W. Riebe
	Title:	 	Vice President

  

			
	 Acknowledged and Agreed:

	
	NOVASTAR FINANCIAL, INC., as Guarantor
		
	By:	 	 /s/ Todd Phillips

	Name:	 	Todd Phillips
	Title:	 	Vice President, Treasurer and Controller

  

 4Amendment No. 2 to the Master Repurchase Agreement (Securities)

 Exhibit 10.56.2 
 AMENDMENT NUMBER TWO 
 to the 
 MASTER REPURCHASE AGREEMENT (SECURITIES) 
 dated as of April 14, 2006 
 among 
 WACHOVIA INVESTMENT HOLDINGS, LLC,

 NOVASTAR MORTGAGE, INC. 
 NOVASTAR CERTIFICATES FINANCIING LLC 
 NOVASTAR CERTIFICATES FINANCING CORPORATION 
 and 
 NOVASTAR FINANCIAL, INC 
 AMENDMENT NUMBER TWO (“Amendment Number Two”), dated as of March 29, 2007, by and among Wachovia Investment Holdings, LLC, as buyer
(the “Buyer”), Novastar Mortgage, Inc., Novastar Certificates Financing LLC and Novastar Certificates Financing Corporation (each a “Seller”, and collectively, jointly and severally, the “Sellers”)
and Novastar Financial, Inc. (the “Guarantor”), to the Master Repurchase Agreement (Securities), dated as of April 14, 2006, by and among the Buyer, the Sellers and the Guarantor (the “Agreement”). 

RECITALS 
 WHEREAS, the Buyer, the Sellers
and the Guarantor have agreed to amend the Agreement, pursuant to the term and conditions set forth herein. 
 NOW THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and of the mutual covenants herein contained, the parties hereto hereby agree as follows: 
 SECTION 1. Defined Terms. Any terms capitalized but not otherwise defined herein shall have the respective meanings set forth in the Agreement.

 SECTION 2. Amendments. Effective as of the date hereof, Section 2(a) of the Master Repurchase Agreement is hereby amended as
follows: 
 (a) The definition of “Adjusted Tangible Net Worth” is hereby deleted in its entirety and replaced with the following:

 “Adjusted Tangible Net Worth” means shall mean at any date: 
 (a) Book Net Worth plus the notional amount of any Trust Preferred Securities, minus 
 (b)(1) all receivables from directors, officers and shareholders of NFI and its consolidated Subsidiaries and (2) the sum of all
assets which would be classified as intangible assets of NFI and its consolidated Subsidiaries under GAAP (except purchased and capitalized value of servicing rights), including, without limitation, goodwill (whether representing the excess cost
over book value of assets acquired or otherwise), patents, trademarks, trade names, copyrights, franchises and deferred charges (including, without limitation, unamortized debt discount and expense, organization costs and research and product
development costs), minus 

 (c) The amount of unrealized gains on debt securities (as defined in FASB 115) of NFI and
any Subsidiaries of NFI Holding, plus 
 (d) The amount of unrealized losses on debt securities (as defined in FASB 115) of
NFI and any Subsidiaries of NFI Holding. 
 Provided that in all cases such amounts shall be determined by combining the
relevant figures for NFI and for NFI Holding and its consolidated Subsidiaries and its Affiliates, as accounted for under the equity method. 
 (b) The definition of “Required Equity” is hereby deleted in its entirety and replaced with the following: 
 ‘“‘Required Equity” shall mean, with respect to the Guarantor (and its consolidated Subsidiaries) (together, the “Companies”), the sum of the dollar amounts calculated after multiplying the amount
determined by combining the relevant figures for the Guarantor and its consolidated Subsidiaries for each asset class set forth in the table below (or if such asset class is owned by NFI or a consolidated Subsidiary but cannot be determined by
combining the relevant figures for the Guarantor and its consolidated Subsidiaries, the fair market value thereof as calculated by the Companies subject, however, to the approval of the Buyer which will not be unreasonably withheld) by the
Percentage Multipliers set forth opposite such asset class in the table below: 
  

				
	 Asset Class
	  	Percentage
Multiplier	 
	 Cash
	  	0	%
	 Mortgage Loans held-for-sale including accrued interest and WUSA loans
	  	5	%
	 Mortgage loans held in portfolio including accrued interest (securitized in an owners trust)
	  	5	%
	 Mortgage loans held-in-portfolio including accrued interest (securitized in a REMIC trust)
	  	1.75	%
	 AAA-Rated I/O and Prepay (P) Certificates booked on-B/S
	  	25	%
	 BBB NIM Certificates
	  	25	%
	 Residuals from whole loan securitizations (including 1999-1)
	  	35	%
	 Residuals from NIM/CAPS
	  	100	%
	 Non-rated subordinate bonds (i.e. class O from 2002-2)
	  	100	%
	 A-Rated Mortgage-Backed Securities not in CDO
	  	20	%
	 BBB-Rated Mortgage-Backed Securities not in CDO
	  	25	%
	 BB-Rated Mortgage-Backed Securities in CDO
	  	50	%
	 Mortgage-Backed Securities in CDO
	  	5	%
	 CDO Equity Sub Notes
	  	100	%
	 CDO BBB Bonds
	  	5	%
	 Agency Securities
	  	3	%
	 Servicing Agreements (Mortgage Servicing Rights)
	  	35	%
	 Servicing Advances
	  	15	%
	 REO + Non-performing (90+ & foreclosures from bond collateral calls)
	  	35	%
	 Other Assets
	  		
	 - Hedging Agreements (Value of reserves that are not reflected in Marks to Market that impact equity)
	  	100	%
	 - All Other Assets (all else remaining- including Other Receivables & PP&E)
	  	35	%
	 Intangible Assets
	  	100	%

  

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 (c) The following definition of “Trust Preferred Securities” is hereby added to
Section 2(a) of the Master Repurchase Agreement: 
 “Trust Preferred Securities” shall mean securities representing the
preferred beneficial interests in the assets of a trust, whose only assets are the junior subordinated notes issued by the holder of the common securities of the trust. 
 SECTION 3. Conditions Precedent. This Amendment Number Two shall become effective on the date on which the Buyer shall have received the following: 
 (a) this Amendment Number Two, executed and delivered by duly authorized officers of each of the Sellers, the Guarantor and the Buyer; and 
 (b) such other documents as the Buyer or counsel to the Buyer may reasonably request. 
 SECTION 4. Representations. In order to induce the Buyer to execute and deliver this Amendment Number Two, the Sellers and the Guarantor hereby
represent and warrant to the Buyer that (i) no Default or Event of Default has occurred prior to the date hereof and is continuing on the date hereof and (ii) as of the date hereof, after giving effect to this Amendment Number Two, the
Guarantor and each Seller are in full compliance with all of the representations and warranties, covenants and any other terms and conditions of the Program Documents. 
 SECTION 5. Governing Law. THIS AMENDMENT NUMBER TWO SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS DOCTRINE APPLIED IN SUCH STATE (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW WHICH SHALL GOVERN). 
 SECTION 6. Counterparts. This Amendment Number Two may be executed by each of the parties hereto on any number of separate counterparts, each of
which shall be an original and all of which taken together shall constitute one and the same instrument. 
 SECTION 7. Costs. Sellers
and Guarantor shall promptly reimburse Buyer for all out-of-pocket costs and expenses of Buyer in connection with the preparation, execution and delivery of this Amendment (including, without limitation, the fees and expenses of counsel for Buyer).

 SECTION 8. Limited Effect. Except as amended hereby, the Agreement shall continue in full force and effect in accordance with its
respective terms. Reference to this Amendment Number Two need not be made in the Agreement or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to, or with
respect to, the Agreement, any reference therein to the Agreement, being sufficient to refer to the Agreement, as amended hereby. 
 [SIGNATURE PAGE FOLLOWS] 
  

 3 

 IN WITNESS WHEREOF, each of Sellers, Guarantor and Buyer have caused this Amendment Number Two to be
executed and delivered by their duly authorized officers as of the day and year first above written. 
  

			
	NOVASTAR MORTGAGE, INC., as Seller
		
	By:	 	 /s/ Todd Phillips

	Name:	 	Todd Phillips
	Title:	 	Vice President
	
	 NOVASTAR CERTIFICATES FINANCING LLC,
 as
Seller

		
	By:	 	 /s/ Todd Phillips

	Name:	 	Todd Phillips
	Title:	 	Vice President
	
	 NOVASTAR CERTIFICATES FINANCING
 CORPORATION,
as Seller

		
	By:	 	 /s/ Todd Phillips

	Name:	 	Todd Phillips
	Title:	 	Vice President
	
	 WACHOVIA INVESTMENT HOLDINGS, LLC
 as Buyer
and Agent, as applicable

		
	By:	 	 /s/ Andrew W. Riebe

	Name:	 	Andrew W. Riebe
	Title:	 	Vice President

  

			
	Acknowledged and Agreed:
	
	NOVASTAR FINANCIAL, INC., as Guarantor
		
	By:	 	 /s/ Todd Phillips

	Name:	 	Todd Phillips
	Title:	 	Vice President

  

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