EXHIBIT 99.2
COMPANY'S SUBSEQUENT TRANSFER INSTRUMENT
Pursuant to this Company's Subsequent Transfer
Instrument (the "Company's Instrument"), dated as of October 21,
1998, between NovaStar Mortgage Funding Corporation, as company
(the "Company"), and the NovaStar Mortgage Funding Trust, Series
1998-2, as issuer (the "Issuer"), and pursuant to the Mortgage
Loan Purchase Agreement, dated as of August 1, 1998 (the
"Mortgage Loan Purchase Agreement"), among NovaStar Financial,
Inc., as seller (the "Seller"), the Company, the Issuer, and
First Union National Bank, as indenture trustee (the "Indenture
Trustee"), the Company and the Issuer agree to the sale by the
Company and the purchase by the Issuer of the subsequent Mortgage
Loans listed on the attached Mortgage Loan Schedule (the
"Subsequent Mortgage Loans") and the related PMI Policies, and
the pledge of the Subsequent Mortgage Loans by the Issuer to the
Indenture Trustee.
Capitalized terms used and not defined herein have
their respective meanings as set forth in the definitions
contained in Appendix A to the Indenture, dated as of August 1,
1998 (the "Indenture"), between the Issuer and the Indenture
Trustee, which definitions are incorporated by reference herein.
All other capitalized terms used herein shall have the meanings
specified herein.
Section 1. Conveyance of Subsequent Mortgage Loans.
(a) The Company does hereby sell, transfer, assign,
set over and convey to the Issuer, without recourse, (i) all of
its right, title and interest in and to the Subsequent Mortgage
Loans and the related PMI Policies, all scheduled payments of
principal and interest on the Subsequent Mortgage Loans due after
the Subsequent Cut-off Date, and all other payments of principal
and interest on the Subsequent Mortgage Loans collected after the
Subsequent Cut-off Date (minus that portion of any such payment
which is allocable to the period prior to the Subsequent Cut-off
Date); provided, however, that no scheduled payments of principal
and interest due on or before the Subsequent Cut-off Date and
collected after the Subsequent Cut-off Date shall belong to the
Issuer pursuant to the terms of this Company's Instrument and
(ii) all of its right, title and interest in and to the Seller's
Subsequent Transfer Instrument, dated as of October 21, 1998 (the
"Seller's Instrument"), between the Seller and the Company. The
Company, contemporaneously with the delivery of this Company's
Instrument, has delivered or caused to be delivered to the
Indenture Trustee each item set forth in Section 2.1(b) of the
Mortgage Loan Purchase Agreement with respect to such Subsequent
Mortgage Loans. The transfer to the Issuer by the Company of the
Subsequent Mortgage Loans identified on the attached Mortgage
Loan Schedule and the related PMI Policies shall be absolute and
is intended by the Company, the Issuer, the Indenture Trustee and
the Bondholders to constitute and to be treated as a sale by the
Company.
The parties hereto intend that the transactions set
forth herein constitute a sale by the Company to the Issuer on
the Subsequent Transfer Date of all the Company's right, title
and interest in and to the Subsequent Mortgage Loans and the
related PMI Policies, and other property as and to the extent
described above. In the event the transactions set forth herein
shall be deemed not to be a sale, the Company hereby grants to
the Issuer as of the Subsequent Transfer Date a security interest
in all of the Company's right, title and interest in, to and
under the Subsequent Mortgage Loans, and such other property, to
secure all of the Company's obligations hereunder, and this
Company's Instrument shall constitute a security agreement under
applicable law, and in such event, the parties hereto acknowledge
that the Indenture Trustee, in addition to holding the Subsequent
Mortgage Loans and the related PMI Policies for the benefit of
the Bondholders and the Bond Insurer, holds the Subsequent
Mortgage Loans and the related PMI Policies as designee and agent
of the Issuer. The Company agrees to take or cause to be taken
such actions and to execute such documents, including without
limitation the filing of all necessary UCC-1 financing statements
filed in the State of Delaware and the State of Kansas (which
shall be submitted for filing as of the Subsequent Transfer
Date), any continuation statements with respect thereto and any
amendments thereto required to reflect a change in the name or
corporate structure of the Company or the filing of any
additional UCC-1 financing statements due to the change in the
principal office of the Company, as are necessary to perfect and
protect the interests of the Issuer and its assignees in each
Subsequent Mortgage Loan, the related PMI Policies and the
proceeds thereof.
(b) The expenses and costs relating to the delivery of
the Subsequent Mortgage Loans, this Company's Instrument and such
other items required under the Mortgage Loan Purchase Agreement
shall be borne by the Company.
Section 2. Representations and Warranties;
Conditions Precedent.
(a) The Company hereby affirms the representations and
warranties set forth in Section 3.2 of the Mortgage Loan Purchase
Agreement that relate to the Company as of the date hereof.
(b) The Company is solvent, is able to pay its debts
as they become due and has capital sufficient to carry on its
business and its obligations hereunder; it will not be rendered
insolvent by the execution and delivery of this Company's
Instrument or by the performance of its obligations hereunder nor
is it aware of any pending insolvency; no petition of bankruptcy
(or similar insolvency proceeding) has been filed by or against
the Company prior to the date hereof;
(c) All terms and conditions of the Mortgage Loan
Purchase Agreement are hereby ratified and confirmed; provided,
however, that in the event of any conflict the provisions of this
Company's Instrument shall control over the conflicting
provisions of the Mortgage Loan Purchase Agreement.
Section 3. Grant from Issuer to Indenture Trustee.
The Issuer hereby Grants as of the Subsequent Transfer
Date to the Indenture Trustee, as trustee of the Bondholders and
the Bond Insurer, to secure all of the Issuer's obligations under
the Indenture, all of the Issuer's right, title and interest in
and to, whether now existing or hereafter created, (a) the
Subsequent Mortgage Loans and the proceeds thereof and all rights
under the Related Documents (including the related Mortgage
Files); (b) all funds on deposit from time to time in the
Collection Account allocable to the Subsequent Mortgage Loans,
excluding any investment income from such funds; (c) all its
rights under the Seller's Instrument and this Company's
Instrument; and (d) all present and future claims, demands,
causes and choses in action in respect of any or all of the
foregoing and all payments on or under, and all proceeds of every
kind and nature whatsoever in respect of, any or all of the
foregoing and all payments on or under, and all proceeds of every
kind and nature whatsoever in the conversion thereof, voluntary
or involuntary, into cash or other liquid property, all cash
proceeds, accounts, accounts receivable, notes, drafts
acceptances, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables,
instruments and other property which at any time constitute all
or part of or are included in the proceeds of any of the
foregoing.
Section 4. Recordation of Instrument.
To the extent permitted by applicable law, this
Company's Instrument, or a memorandum thereof if permitted under
applicable law, is subject to recordation in all appropriate
public offices for real property records in all of the counties
or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any
other appropriate public recording office or elsewhere, such
recordation to be effected by the Servicer, but only when
accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of
the Bondholders or is necessary for the administration or
servicing of the Mortgage Loans.
Section 5. Governing Law.
This Company's Instrument 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 giving effect
to principles of conflicts of law.
Section 6. Counterparts.
This Company's Instrument may be executed in one or
more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to
be an original; such counterparts, together, shall constitute one
and the same instrument.
Section 7. Successors and Assigns.
This Company's Instrument shall inure to the benefit of
and be binding upon the Company and the Issuer and their
respective successors and assigns. The Bond Insurer and the
Indenture Trustee shall be express third party beneficiaries
hereto.
IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Company's Instrument as of the day and year
first written above.
NOVASTAR MORTGAGE FUNDING
CORPORATION,
as Company
By: /s/ Xxxxx X. Xxx
Name: Xxxxx X. Xxx
Title: Vice President
NOVASTAR MORTGAGE FUNDING
TRUST, SERIES 1998-2,
as Issuer
By: WILMINGTON TRUST
COMPANY, not in its
individual capacity,
but solely in its
capacity as Owner
Trustee
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Financial Services Officer
Acknowledged and Accepted:
FIRST UNION NATIONAL BANK,
as Indenture Trustee
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: Vice President
