EXHIBIT 1.1
AMENDED AND RESTATED
BEST EFFORTS UNDERWRITING AGREEMENT
TRANSITION AUTO FINANCE IV, INC.
This AMENDED AND RESTATED BEST EFFORTS UNDERWRITING AGREEMENT made and
entered into this 14th day of November, 2001 (this "Agreement"), by and between
Transition Auto Finance IV, Inc., a Texas corporation, whose address is 0000
Xxxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000, (the "Company"), Transition
Leasing Management, Inc., a Texas corporation, ("Transition Leasing"), the
parent company of Transition Auto Finance IV, Inc., and Great Nation Investment
Corporation, a Texas corporation, whose address is 0000 X Xxxx Xxxxxx, Xxxxxxxx,
Xxxxx 00000 (the "Underwriter").
Recitals
1. The Company, Transition Leasing and the Underwriter have previously
entered into a Best Efforts Underwriting Agreement dated September 28, 2001 (the
"Original Agreement") with respect to the sale of up to $10,000,000 of the
Company's nine percent (9%) Secured Redeemable Promissory Notes to the public
through the Underwriter.
2. The Company, Transition Leasing and the Underwriter desire to have
amend and restate the Original Agreement in its entirety as set forth herein.
3. The Company desires to offer and sell up to $10,000,000 in nine
percent (9%) Secured Redeemable Promissory Notes to the public through the
Underwriter.
4. The offering and sale will be made pursuant to a registration
statement and prospectus hereinafter referred to.
5. The Underwriter is willing to assist the Company in connection with
the proposed issuance and sale of these securities on a best efforts basis on
the terms and conditions herein contained.
Amendment and Restatement of Original Agreement
The Company, Transition Leasing and the Underwriter agree that this
Agreement shall amend and restate the Original Agreement in its entirety. This
Agreement shall supersede the Original Agreement in its entirety and the
Original Agreement shall be of no further force and effect.
Agreement
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NOW, THEREFORE, in consideration of the foregoing, and of the mutual
covenants, agreements, undertakings, representations, and warranties herein
contained, the Company and the Underwriter agree as follows:
I. Representations and Warranties
The Company represents and warrants to, and agrees with the Underwriter that:
1. The Company is a corporation duly organized and validly existing as
a corporation in good standing under the laws of the State of Texas.
2. The Company shall issue consistent with the terms and conditions of
the Registration Statement (defined below) up to $10,000,000.00 in nine percent
(9%) Secured Redeemable Promissory Notes ("the Notes"). The Notes shall:
(a) Bear interest at a fixed rate of 9% per annum;
(b) Pay interest monthly in arrears on the fifteenth
(15th) day of the month of each successive calendar
month (except as provided in the prospectus); and
(c) Pay principal at maturity on _________, 200__ (the
fifth anniversary of the date of the effective date
of the Registration Statement (as defined below) and
prospectus covering the Notes).
3. The Notes will be issued pursuant to the terms and conditions of a
Trust Indenture entered into between the Company and Trust Management, Inc.,
Dallas, Texas ("Trustee"), as Indenture Trustee.
4. There will be delivered to the counsel to the Underwriter, upon
request at any time prior to the Delivery Date (defined below), certified copies
of the Articles of Incorporation and the bylaws of the Company, together with
all amendments, if any, certified copies of whatever resolutions the counsel may
request, and copies of all material contracts to which the Company is a party.
There will also be made available to the counsel for inspection minutes of all
meetings of incorporators, directors and stockholders of the Company from the
date of incorporation of the Company to the Delivery Date.
5. The Company has no subsidiaries, except as set forth in the
Prospectus (defined below).
6. A Registration Statement on the appropriate form as prescribed by
the Securities and Exchange Commission (the "Commission"), together with a
related Prospectus with respect to the Notes, has been filed with the Commission
under the Securities Act of 1933, as amended, (the "Act"). The Company will use
its best efforts to
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cause the Registration Statement and the Prospectus to become effective as soon
as possible after the filing. As used in this Agreement, the term "Registration
Statement" refers to and means the Registration Statement and any and all
amendments to the Registration Statement, including exhibits and financial
statements, when the Registration Statement becomes effective and, in the event
of any amendments after the effective date of the Registration Statement, the
Registration Statement as so amended; and the term "Prospectus" refers to and
means the related Prospectus in final form, and in the event of any amendment or
supplement to the Prospectus after the effective date of the Registration
Statement, also refers to and means the Prospectus as so amended or
supplemented.
7. The Notes shall also be registered or qualified for sale with the
state regulatory agencies of any and all states where the Securities shall be
offered.
8. All expenses of registration and qualification shall be paid by the
Company.
9. Notwithstanding the above, to the extent possible, the Effective
Date of the offering shall be at a date mutually agreed to by the Company and
the Underwriter, subject to the requirements of applicable law.
10. The purchase price of the Notes shall be in minimum denominations
of $1,000.00 and integral multiples thereof with an initial minimum purchase
amount of $5,000.00 (or $2,000.00 for Individual Retirement Accounts).
11. When the Registration Statement becomes effective, it and the
accompanying Prospectus will comply in all material respects with the
requirements of the Act and with the rules and regulations of the Commission
promulgated under the Act; provided, however, the Company makes no
representations or warranties as to information contained or omitted from the
Registration Statement or the Prospectus in reliance upon written information
furnished to the Company by the Underwriter specifically for inclusion in the
Registration Statement or the Prospectus.
12. The Company has the requisite corporate power and authority to
enter into this Underwriting Agreement.
13. The financial statements to be filed with the Registration
Statement will reflect all material liabilities of the Company on a consolidated
basis, contingent or otherwise, and will include adequate reserves for all
federal and state tax liabilities incurred to their respective dates.
14. All of the Notes to be sold under and pursuant to this Agreement,
when issued and delivered, will be validly issued and enforceable in accordance
with their terms and conditions and free and clear of all claims and
encumbrances, except as described in the Indenture.
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15. The certified public accountants who will certify to the financial
statements to be filed with the Commission as a part of the Registration
Statement and to the financial statements incorporated in the Prospectus, and
who, as experts, may certify or review other information of a financial or
accounting nature contained in the Registration Statement and the Prospectus,
will be independent certified public accountants as required by the Act and the
rules and regulations promulgated under the Act.
16. The Company will deliver to the Underwriter financial statements as
of October 31, 2001. The Company represents that such financial statements will
fairly present in all material respects the financial condition of the Company,
computed in accordance with generally accepted accounting principles applied on
a consistent basis and the rules and regulations of the Commission relating to
financial statements.
17. The Company will furnish the Underwriter, at least one day before
the filing of the Registration Statement, the financial statements included in
the Registration Statement and prepared in accordance with the rules and
regulations of the Commission. Such financial statements will fairly present the
position of the Company in all material respects on the dates shown and will
reflect all material liabilities of the Company, contingent or otherwise.
18. The certificate or certificates that the Company is required to
furnish to the Underwriter pursuant to the provisions of paragraphs 8, 9 and 10
of Article VIII of this Agreement will be true and correct.
19. All of the foregoing representations, warranties and agreements
shall survive delivery of, and payment for, all of the securities covered by
this Agreement.
II. Retention of the Underwriter
Based upon the foregoing representations, warranties and agreements, and
subject to the terms and conditions herein contained:
1. The Company hereby retains the Underwriter as its agent to sell for
its account the Notes. The Underwriter shall use their best efforts as agent,
promptly following the receipt of written notice of the effective date of the
Registration Statement, to sell the Notes subject to the terms, provisions and
conditions set forth below. There is no assurance that any or all of the Notes
to be offered by the Company will be sold, and the Underwriter is under no
obligation to purchase or take down any of the Notes on its own behalf or on
behalf of others.
2. Underwriter acknowledges that the Company may limit its acceptance
of subscriptions in any manner it deems prudent in order to provide for the
timely use of subscriber funds and may reject any subscriptions for any reason,
and Underwriter agrees that any such rejection of a subscription obtained by the
Underwriter or by the Underwriting
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Group shall be deemed not to be a sale made by the Underwriter or by the
Underwriting Group. Underwriter further acknowledges that (i) all subscription
funds will be held in escrow and if the minimum amount of Notes is not
subscribed on or before the Offering Termination Date (as defined in the
Prospectus), the offering will be terminated and the escrowed funds, plus any
interest earned thereon, will be promptly returned to the investors by the
escrow agent; (ii) upon the subscription of the minimum amount of the Notes, the
escrowed funds will be released to the Company. After the minimum amount of
Notes have been sold and the escrow requirement has been met and therefore the
escrow agreement fulfilled and terminated, then all Subscriber's checks shall be
made payable to the Underwriter and shall be forwarded to the Trustee in
accordance with applicable NASD regulations by noon of the next business day
after receipt by Underwriter.
3. As its compensation, the Underwriter shall receive a commission of
eight percent (8%) of the full amount of all Notes sold by the Underwriter
(including the Underwriting Group, as hereinafter defined) and for which payment
is made to the Company. Such amount is comprised of a 6% sales commission and a
2% due diligence fee.
4. The Underwriter may associate with themselves whatever other
underwriters they may desire. The Underwriter may offer the Notes through
registered securities dealers selected by them and to pay such dealers out of
the commissions received by the Underwriter whatever compensation the
Underwriter may determine. The Underwriter, such other underwriters and such
securities dealers shall be collectively referred to herein as the "Underwriting
Group". The Underwriter acknowledges that the Company may retain one or more
additional securities dealers who will serve as additional underwriters and that
any such other underwriters shall not be considered part of the "Underwriting
Group."
5. The Company may terminate this Agreement in the event that the
Underwriting Group is unable to sell at least $250,000.00 of the Notes within 45
days of the Effective Date and at least $250,000.00 of the Notes each calendar
month after the month in which the 45th day after the Effective Date occurs.
6. Underwriter represents that it is appropriately registered as a
broker-dealer with the Commission and in all states in which it conducts or will
conduct business in connection with this offering and is a member in good
standing of the National Association of Securities Dealers, Inc. Underwriter
also agrees not to solicit subscriptions for the Notes that will result in a
violation of the securities laws of the United States, or of any state, or any
rule or regulation thereunder, or of any rules of the NASD or any securities
exchange.
7. Underwriter represents that there is not now pending or threatened
against the Underwriter any action or proceeding of which Underwriter has been
advised, either in any court of competent jurisdiction, before the Commission or
any state securities
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commission concerning activities as a broker or dealer, nor has the Underwriter
been named as a "cause" in any such action or proceeding.
8. In the event any action or proceeding of the type referred to in
paragraph 7 above shall be instituted or threatened against the Underwriter at
any time, or in the event there shall be filed by or against the Underwriter in
any court pursuant to any federal, state, local or municipal statute a petition
in bankruptcy or insolvency or for reorganization or for the appointment of a
receiver or trustee of assets, or the Underwriter makes an assignment for the
benefit of creditors, the Company shall have the right to terminate this
Agreement.
9. Upon request, the Company will inform the Underwriter as to the
states in which the Company has been advised by counsel that the Notes have been
qualified for sale under the respective state securities laws, but the Company
does not assume any responsibility or obligation as to the Underwriter's right
to sell the Notes in any state. Underwriter understands and agrees that under no
circumstances will Underwriter engage in any activities hereunder in any
jurisdiction (a) in which the company has not informed the Underwriter that the
Notes are qualified for sale under the applicable securities laws, or (b) in
which the Underwriter may not lawfully so engage.
10. Underwriter confirms that its commitment to use its best efforts to
solicit subscriptions for the Notes will not result in a violation of the
securities laws of the United States, including but not limited to the Act or
any rule or regulation thereunder, or the securities laws of any state in which
the Underwriter will conduct business and the rules and regulations thereunder,
or of any rules of any securities exchange to which the Underwriter is subject
or of any restriction imposed upon the Underwriter by the NASD or any such
exchange or governmental authority and agrees to indemnify the Company, its
shareholders, directors, officers, employees or agents for any and all damages,
liabilities and costs (including reasonable attorneys' fees and expenses)
resulting from the same.
11. Underwriter represents that in connection with the offering:
A. Underwriter will comply in all respect with the
provisions of this Agreement.
B. Underwriter shall use its best efforts to obtain the
approval of the NASD pursuant to Rule 2710 of the
Conduct Rules of the NASD with respect to the
compensation arrangements set forth herein.
C. Underwriter will comply with any applicable
limitations on the manner of offering as required by
the Act, applicable state securities laws, and the
NASD;
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D. Prior to making any sale, Underwriter will have
reasonable grounds to believe, after making
reasonable inquiry, that each subscriber meets the
requirements of the Act, the NASD and applicable
state securities laws as to the suitability of the
investment for such subscriber.
E. Except as otherwise disclosed to the Company, no
owner, partner, director or officer of Underwriter
has within the last five years been subject to any of
the following administrative or judicial actions (by
the commission or any state securities commission):
1. Registration Stop Order (Issuance of
Securities);
2. Securities related felony conviction;
3. Securities related administrative order;
4. Any administrative order involving fraud or
deceit;
5. Securities related injunction;
F. Underwriter has no current effective administrative
order revoking a securities exemption; and
G. Underwriter has not been suspended, censured or
expelled by the NASD.
Underwriter agrees to indemnify and hold the Company, its shareholders,
officers, directors, employees, and agent harmless from any liabilities and
costs (including reasonable attorneys' fees and expenses) associated with claims
arising or alleged to arise out of a breach of the foregoing representations.
12. Underwriter and any members of the Underwriting Group do hereby
undertake to comply with Rules 2730, 2740, 2420 and 2750 of the Conduct Rules of
the NASD. Furthermore, any and all Selling Group Agreements or Selected Dealer
Agreements shall provide that any member of the Underwriting Group shall agree
to comply with said Conduct Rules.
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III. Further Agreements of the Company
The Company agrees, at its expense and without expense to the Underwriter,
as follows:
1. To give and to continue to give and supply whatever financial
statements and other information that may be required by the Commission or the
proper public bodies in the states in which the Notes may be qualified.
2. As soon as the Company is informed, to advise the Underwriter and to
confirm the advice in writing:
(a) When the Registration Statement becomes effective;
(b) When any amendment to the Registration Statement
filed subsequent to the effective date of the
Registration Statement becomes effective;
(c) Of any request of the Commission for amendments to
the Registration Statement or the related Prospectus,
or for additional information;
(d) Of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration
Statement or of the initiation of any proceeding for
that purpose;
(e) Of any material adverse change in its financial
position or operating condition and of any
development materially affecting the Company or
rendering untrue or misleading any material statement
in the Registration Statement or the Prospectus.
3. To make every reasonable effort to prevent the issuance of any stop
order suspending the effectiveness of the Registration Statement, and, if a stop
order is entered at any time, to use its best efforts to obtain withdrawal of
the order at the earliest possible moment.
4. To deliver to the Underwriter, without charge, (a) prior to the
effective date of the Registration Statement, copies of each preliminary
prospectus filed with the Commission bearing in red ink the statement required
by the rules of the Commission, (b) on and from time to time after the effective
date of the Registration Statement, copies of the Prospectus and of any amended
or supplemented Prospectus, and (c) as soon as they are available and from time
to time after they are available, copies of each Prospectus prepared for the
purpose of permitting compliance with Section 10 of the Act and of any amended
or supplemented Prospectus. The number of copies to be delivered in each case
shall be the number the Underwriter may reasonably request.
5. To furnish, without cost, to the Underwriter one executed copy of
the Registration Statement, including all exhibits and amendments, and a
reasonable number of copies of the Registration Statement and amendments.
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6. For the period after the effective date of the Registration
Statement during which the Prospectus is required by law to be used, but not
after the Delivery Date, except in accordance with Article XII hereof, if any
change occurs so that the Prospectus includes an untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
in the Prospectus, in the light of the circumstances under which they are made,
not misleading, forthwith to prepare and furnish to the Underwriter, without
cost, supplements to the Prospectus or an amended Prospectus correcting the
untrue statement or supplying the omission.
7. If revision of the Prospectus pursuant to the provisions of Section
10 of the Act becomes necessary, to review the Prospectus, to file copies of the
Prospectus with the Commission, and to furnish copies of the revised Prospectus
to the Underwriter in whatever reasonable quantity they request.
8. To use its best efforts to cause the Notes to be qualified for sale
on terms consistent with those stated in the effective Registration Statement
under the Blue Sky laws in whatever states may be agreed upon.
9. Until the Delivery Date hereunder or the earlier termination hereof,
except with the approval of the Underwriter, not to:
(a) Undertake or authorize any change in its capital
structure or authorize or issue or permit any public
offering of any shares of capital stock or additional
Notes, except as provided in this Agreement;
(b) Authorize, create, issue, or sell any funded
obligations, notes or other evidences of
indebtedness, except in the ordinary course of
business and maturing not more than nine months from
the date of this Agreement and except as provided in
this Agreement; or
(c) Consolidate or merge with or into any other
corporation or create any mortgage or lien upon any
of its properties or assets except in the ordinary
course of its business and except as provided in this
Agreement.
10. To provide to Underwriter any reasonable additional information or
documentation deemed by the Underwriter to be necessary in the performance of
the Underwriter's due diligence.
11. To provide Underwriter:
(i) at least twenty-four (24) hours prior to
dissemination to Noteholders, a facsimile of any
letter, notice or other similar communication,
provided that the foregoing in no way obligates the
Company to await
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Great Nation approval of such letter, notice or
similar communication prior to dissemination, and
(ii) from time to time, access to review operations and
such other public information concerning the Company
as Underwriter may reasonably request.
IV. Indemnity Provisions
1. The Company shall indemnify, defend and hold the Underwriter
(including any underwriter, dealer or securities dealer associated with the
Underwriter), and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the Act, free and harmless from and against any and all
losses, claims, demands, liabilities, and expenses (including reasonable legal
or other expense incurred by each Underwriter and controlling person in
connection with defending any claims or liabilities, whether or not resulting in
any liability to the Underwriter (or to any controlling person), which the
Underwriter or controlling person may incur under the Act or at common law or
otherwise, but only to the extent that the losses, claims, demands, liabilities,
and expenses arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
in the Prospectus, or in any amendment or amendments to the Registration
Statement or the Prospectus, or in any application or other papers executed by
any underwriter or dealer with the written approval of the Company for filing in
any state or states in order to qualify the securities covered by this Agreement
under the securities laws of those state (the "Blue Sky Application"), or arise
out of or are based upon any omission or alleged omission to state in these
documents a material fact required to be stated in them or necessary to make the
statements in them not misleading, provided, however, that this indemnity
agreement shall not apply to any losses, claims, demands, liabilities, or
expenses arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus or in any amendment or amendments to them or in any Blue Sky
Application, or arising out of or based upon the omission or alleged omission to
state in these documents a material fact required to be stated in them or
necessary to make the statements in them not misleading, which statement or
omission was made in reliance upon information furnished to the Company by the
Underwriter in writing expressly for use in the Registration Statement or the
Prospectus or in any amendment or amendments to them, or was made by the
Underwriter in a Blue Sky Application not in reliance upon information furnished
by the Company.
2. The foregoing indemnity of the Company in favor of the Underwriter
shall not be deemed to protect the Underwriter against any liability to the
Company or its noteholders to which the Underwriter would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of their duties, or by reason of their reckless disregard of their
obligations and duties under this Agreement.
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3. The Underwriter shall give the Company an opportunity to participate
in the defense or preparation of the defense of any action brought against the
Underwriter or controlling person of the Underwriter to enforce any claim or
liability, and the Company may so participate. The Company's agreement under the
foregoing indemnity is expressly conditioned upon notice of any action being
sent by the Underwriter or controlling person, as the case may be, to the
Company, by letter or facsimile (addressed as provided herein), promptly after
the commencement of the action against the Underwriter or controlling person.
Such notice must either be accompanied by copies of papers served or filed in
connection with the action or by a statement of the nature of the action to the
extent known to the Underwriter. Failure to notify the Company within a
reasonable time of an action shall relieve the Company of its respective
liabilities under the foregoing indemnity, but failure to notify the Company
shall not relieve the Company from any liability that the Company may have to
the Underwriter or controlling person other than on account of the indemnity
agreement contained in this Article IV.
4. The Underwriter likewise shall indemnify, defend and hold harmless
the Company against any and all losses, claims, expenses, and liabilities to
which it may become subject arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus, or in any amendment or amendments to the
Registration Statement or the Prospectus, or in any Blue Sky Application, or
arising out of or based upon the omission or alleged omission to state in these
documents a material fact required to be stated in them or necessary to make the
statements in them not misleading, resulting from the use of written information
furnished to the Company by the Underwriter expressly for use in the preparation
of the Registration Statement or the Prospectus, or in any amendment or
amendments to the Registration Statement or the Prospectus, or in any Blue Sky
Application.
5. The Company shall give the Underwriter an opportunity to participate
in the defense or preparation of the defense of any action brought against the
Company to enforce any claim or liability, and the Underwriter shall have the
right so to participate. The agreement of the Underwriter under the foregoing
indemnity is expressly conditioned upon notice of any action being sent by the
Company to the Underwriter, by letter or by facsimile (addressed as provided in
this Agreement), promptly after the commencement of the action against the
Company. The notice must either be accompanied by copies of papers served or
filed in connection with the action or by a statement of the nature of the
action to the extent known to the Company. Failure to notify the Underwriter of
any action shall relieve the Underwriter of its liability under the foregoing
indemnity, but failure to notify the Underwriter shall not relieve the
Underwriter from any liability which the Underwriter may have to the Company or
its stockholders otherwise than on account of the indemnity agreement contained
in this Article IV.
6. The provisions of this Article IV shall not in any way prejudice any
right or rights that the Underwriter may have against the Company, or that the
Company may have against the Underwriter, under any statute other than the Act,
at common law or otherwise.
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7. The indemnity agreements contained in this Article IV shall survive
the Delivery Date and shall inure to the benefit of successors of the Company
and successors of the Underwriter, and shall be valid irrespective of any
investigation made by or on behalf of the Underwriter or the Company.
V. Payment of Expenses
The Company shall, at its own expense and without expense to the
Underwriter, pay all costs and expenses incident to this Agreement, including,
but without limitation, all expenses in connection with the preparation,
printing and filing of the Registration Statement and the Prospectus as well as
all amendments to them together with all exhibits; pay all filing fees and
costs, original issue taxes, trustee's fees, charges, or disbursements connected
with the issue and delivery of the Notes; and pay all reasonable expenses
incurred in connection with the qualification of the Notes under the securities
or blue sky laws of the states previously referred to.
VI. Public Offering
1. The Underwriter shall make a public offering on a best efforts basis
of the Notes covered hereby as soon after the effective date of the Registration
Statement as is advisable in accordance with and as set forth in the
Registration Statement. The public offering may be made either in the open
market or through securities dealers (acting as principals) selected by the
Underwriter, or partly in each manner, as determined by the Underwriter in their
sole discretion. The Underwriter may pay these dealers out of the commissions
received by the Underwriter for the Notes sold by the dealers whatever
compensation the Underwriter and such dealers may determine.
VII. Payments on Default
If any of the conditions, representations or warranties set forth in
Article VIII of this Agreement are not fulfilled in any material respect, or if
for any reason the Company fails to comply with the terms of this Agreement in
any material respect (other than in connection with a breach of the Agreement by
the Underwriter), and if the Underwriter elects to terminate this Agreement
pursuant to Article XI hereto, then, in addition to paying the Company's own
expenses as provided in Article V hereof, the Company shall reimburse the
Underwriter for its actual accountable out-of-pocket expenses.
VIII. Conditions Precedent to Underwriter's Obligations
The obligations hereunder of the Underwriter are conditioned upon:
1. The approval of counsel for the Underwriter of the form and content
of the Registration Statement and the Prospectus, of the organization and
present legal status
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of the Company or Transition Leasing, and of the legality and validity of the
Notes to be offered hereunder, which approval shall not be unreasonably
withheld.
2. The Company's performance in all material respects of all the
obligations required by it to be performed hereunder and the truth, completeness
and accuracy of all statements and representations in all material respects
contained herein or of any financial statements furnished hereunder.
3. From the date hereof until the Delivery Date, and during the term
hereof, no material adverse change occurring in the properties and assets of the
Company or Transition Leasing, other than changes occurring in the ordinary
course of business.
4. No claim being made or legal action being instituted against the
Company or Transition Leasing, which if adversely determined would have a
material adverse effect on the financial condition of Transition Leasing and the
Company, taken as a whole, and no reasonable basis for a claim or an action of
this nature being discovered.
5. The Registration Statement becoming effective no later than January
1, 2001, or whatever later date that may be agreed upon, and no amendment to the
Registration Statement being filed to which the Underwriter reasonably have
objected after having received reasonable notice; and no stop order suspending
the effectiveness of the Registration Statement being issued and no proceedings
for that purpose being threatened or instituted.
6. Prior to the Delivery Date, the Company not sustaining any loss on
account of fire, flood, accident, or calamity of a character that materially
adversely affects its business or property, regardless of whether the loss is
insured; no litigation being instituted or threatened against the Company or
Transition Leasing of a character required to be disclosed in the Registration
Statement that is not disclosed and that shall materially adversely affect the
Company, its business or its property; and no substantial adverse change
occurring in the operations or financial condition or credit of the Company or
Transition Leasing or in any conditions affecting the prospects of the business
of the Company.
7. The Company having furnished to the Underwriter on the Delivery Date
an opinion or opinions of Xxxxxxxx & Xxxxxx L.L.P., counsel to the Company,
dated the Delivery Date and stating in effect that:
(a) The Company and its parent, Transition Leasing, have
been duly incorporated and, on the Delivery Date, are
validly existing corporation in good standing under
the laws of the State of Texas with an authorized and
issued capital stock as set forth in the Registration
Statement, and the shares of the Company shown in the
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Registration Statement to be issued and outstanding
have been duly and validly issued and are
outstanding;
(b) The Company and Transition Leasing are duly
registered and qualified to conduct its business and
is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of
its business requires such registration and
qualification, except where the failure so to
register and qualify does not have material adverse
effect on the financial condition of the Company.
(c) The Notes conform in all material respects to the
description of the Notes contained in the
Registration Statement and the Prospectus, subject to
the qualifications set forth in those documents, and
the holders of the Notes shall be entitled to the
rights and preferences set forth in the certificates
for the Notes;
(d) The Company and Transition Leasing have the requisite
corporate power and authority to enter into and
perform their respective obligations under the
Agreement. The Agreement has been duly authorized,
executed and delivered by the Company and Transition
Leasing and is a valid and binding agreement of the
Company and Transition Leasing and is enforceable
against the Company and Transition Leasing in
accordance with its terms, subject to the Underwriter
obtaining the approval of the National Association of
Securities Dealers, Inc. to the compensation and
other arrangements set forth therein, except to the
extent that the rights to indemnification thereunder
may be limited by federal or state securities laws
and policies embodied therein, or to the extent that
such obligations are subject to or affected or
limited by (i) applicable liquidation,
conservatorship, bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or
other laws affecting creditors' rights or in the
collection of debtors obligations generally from time
to time in effect or (ii) general principles of
equity (whether enforceability is considered in a
proceeding in equity or at law), including the
qualification that the availability of the remedy of
specific performance or injunctive relief or other
equitable remedies is subject to the discretion of
the court before which any such preceding therefor
may be brought and including standards of good faith,
fair dealing and reasonableness that may be applied
by a court to the exercise or certain rights and
remedies;
(e) The Registration Statement and the Prospectus comply
as to form in all material respects with the
requirements of the Act and the rules and regulations
of the Commission under the Act (except that no
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opinion need be expressed as to financial statements
and financial data). In addition, the opinion shall
state, or counsel shall advise the Underwriter by
separate letter, that, although such counsel has not
passed upon and does not assume any responsibility
for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or
the Prospectus (except as expressly provided herein),
from the facts within its actual knowledge, nothing
has come to such counsel's attention that would cause
counsel to believe that either the Registration
Statement or the Prospectus at the time such
Registration Statement becomes effective contained an
untrue statement of a material fact or omitted to
state a material fact required to be stated therein
in order to make the statements stated therein not
misleading; and that counsel is familiar with all
contracts referred to in the Registration Statement
or the Prospectus, such contracts that are required
to be filed as exhibits to the Registration Statement
have been filed as exhibits to the Registration
Statement, the description of such contracts is
correct in all material respects, and counsel does
not know of any contracts required to be summarized
or disclosed or filed that have not been summarized
or disclosed or filed; and
(f) That counsel has no knowledge or information
concerning pending or threatened litigation or any
unasserted claims or assessments by any third party,
or parties, against the Company or Transition Leasing
that is not disclosed in the Registration Statement
that are required to be disclosed in the Registration
Statement.
8. The Company having furnished to the Underwriter on the Delivery Date
a certificate or certificates verified by the President or a Vice President and
by the Treasurer of the Company, certifying that:
(a) The respective signers of the certificate or
certificates have examined the answers to each item
of the Registration Statement and the information
contained in the Prospectus, and, to the best of
their knowledge, information and belief, those
answers and that information, as of the effective
date of the Registration Statement, were true and
correct and did not omit to state any material fact
required to be stated or necessary in order to make
the statements not misleading; and since the
effective date of the Registration Statement no event
has occurred that should have been set forth in an
amendment to the Registration Statement or in a
supplement or amendment to the Prospectus that has
not been so set forth in an amendment or supplement;
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(b) The respective signers of the certificate or
certificates do not know of any litigation or
proceeding instituted or threatened against the
Company of a character required to be disclosed in
the Registration Statement that is not disclosed in
the Registration Statement;
(c) The respective signers of the certificate or
certificates do not know of any contract or
arrangement that is required to be summarized or
disclosed in the Registration Statement or filed as
an exhibit to the Registration Statement that has not
been summarized or disclosed or filed;
(d) To the best of their knowledge, information and
belief, the respective signers know of no substantial
adverse change in the general affairs of the Company,
or in the financial position of the Company during
the period from the date of the latest financial
statements contained in the Registration Statement to
the Delivery Date, except for the changes disclosed
or indicated in the Registration Statement; and
(e) To the best of their knowledge, information and
belief (i) the representations and warranties
contained in Article I of this Agreement are true and
correct at the Delivery Date; (ii) no stop order
suspending the effectiveness of the Registration
Statement has been issued prior to the Delivery Date
and no proceedings for that purpose, prior to that
date, has been initiated or threatened by the
Commission; (iii) every reasonable request by the
Commission for additional information to be included
in the Registration Statement or the Prospectus or
otherwise has or will be complied with; (iv) prior to
the Delivery Date, the Company has not sustained a
loss on account of fire, flood, accident, or calamity
of a character that materially adversely affects its
property or business.
9. The Company having furnished to the Underwriter copies of the
Articles of Incorporation and of each amendment to the Articles of
Incorporation, if any, of the Company, which are officially certified by a
proper state official; one copy of the bylaws of the Company certified by the
Secretary or an Assistant Secretary of the Company as being currently in effect;
and a certificate of good standing issued by the proper state official or
officials of each state in which the Company transacts business.
10. The Underwriter, on the Delivery Date, having received a
certificate or letter from the Company's accountants addressed to the Company,
dated not more than three days prior to the Delivery Date, confirming that the
accountants are independent certified public accountants within the meaning of
the Act, and the rules and regulations of the Commission, and certifying to the
effect that the financial statements audited by them and included in the
Registration Statement comply as to form in all material respects with the
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applicable accounting requirements of the Act and the related published rules
and regulations of the Commission, and that, in their opinion, on the basis of
the representations from certain officials of the Company who have
responsibility for financial and accounting matters, nothing has come to their
attention that caused them to believe that there was any substantial adverse
changes in the capitalization of the Company or the financial position or net
worth of the Company, except as disclosed or indicated in the Registration
Statement, and decreases in the capital stock and surplus accounts of the
Company from that shown in the Registration Statement or the Prospectus.
11. The Company having furnished to the Underwriter whatever
certificates, in addition to those specifically mentioned in this Agreement,
that the Underwriter may request as to the accuracy, on the Date of Delivery, of
the representations and warranties of the Company in this Agreement, as to the
performance by the Company of its obligations under this Agreement, and as to
the other concurrent or precedent conditions to the obligations of the
Underwriter under this Agreement.
All of the opinions, letters, evidence, and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in full compliance
with the provisions hereof only if they are in form satisfactory to counsel to
the Underwriter.
In the event of the failure of any of the above conditions in any
material respect, the Underwriter may be relieved of any and all obligations
hereunder or may waive this right and demand full performance hereunder.
IX. Delivery Date
The Delivery Date, as referred to in this Agreement, shall be a date
agreed upon by the Company and the Underwriter and failing agreement, then the
Delivery Date shall be the Effective Date of the offering of the Notes.
1. The representations and warranties in this Agreement shall survive
the Delivery Date and shall continue in full force and effect regardless of any
investigation made by the party relying upon any representation or warranty.
2. This Agreement shall inure to the benefit of, and be binding upon,
the Company and the Underwriter (including specifically any dealer that the
Underwriter associates with pursuant hereto), and their successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person other than the persons mentioned in the preceding sentence any
legal or equitable right, remedy or claim under or with respect hereto, or any
provisions contained herein. This agreement and all of its conditions and
provisions are for the sole and exclusive benefit of the foregoing persons and
for the benefit of no other person, except that the warranties, indemnities and
agreements of the Company contained herein also shall be for the benefit of any
persons, if any, who control the Underwriter within the meaning of Section 15 of
the Act, and except
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that the indemnification by the Underwriter shall be for the benefit of the
directors of the Company and the officers of the Company who have signed the
Registration Statement.
3. This Agreement sets forth the entire agreement between the parties
hereto, and no representation, warranty, understanding, or agreement not
specifically set forth herein shall be implied from this Agreement.
4. The proceeds received by the Underwriter from the sale of the Notes
shall be remitted to the Trustee(s) not later than noon of the following
business day, less the selling commission payable by the Company to the
Underwriter.
5. The Underwriter shall comply with all of the rules and regulations
of the Commission and the state regulatory agencies where the Notes shall be
offered. If at any time during the term of this Agreement, the Underwriter
should, for any reason, be disqualified or precluded from offering to the public
these Notes, then the Company shall have the option to terminate this Agreement
upon three (3) days written notice to the Underwriter, in which event this
Agreement shall be void and of no further force and effect, except that the
Underwriter shall be entitled to the commissions earned and to their accountable
out-of-pocket expenses.
6. This Agreement, unless sooner terminated as herein provided, shall
continue until all Notes registered under the Registration Statement are either
sold or withdrawn by the Company from registration, whichever event first
occurs.
X. Underwriter's Right to Terminate
Notwithstanding any of the terms and provisions hereof, this Agreement may
be terminated by the Underwriter based on a material breach of this Agreement by
the Company. Underwriter shall give fifteen (15) days prior written notice to
the Company of such breach, and the Company shall have the opportunity to cure
such breach. In the event of such termination, the Underwriter shall be entitled
to any commissions to which it was entitled as of the date of termination as
well as any and all accountable out-of-pocket expenses. In the event that the
Underwriter reasonably determines that the Notes are not marketable,
notwithstanding its best efforts to sell the Notes, the Underwriter may
terminate this Agreement with thirty (30) days prior written notice.
XI. Post-Effective Amendments
1. The Company shall prepare and file under the Act any required
post-effective amendments to the Registration Statement and related Prospectus
or new Registration Statements and new related Prospectuses.
2. If any post-effective amendments or new Registration Statements
become effective, the Company shall furnish to the Underwriter opinions by the
same counsel and
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to the same effect as those required by Article VIII of this Agreement, except
that such opinions shall relate to the post-effective amendments and new
Prospectuses or to the new Registration Statements and new Prospectuses and to
the Notes that are being offered. The Company further agrees with respect to
these post-effective amendments and new Prospectuses and with respect to these
new Registration Statements and new Prospectuses to observe all of the terms and
conditions of this Agreement as set forth in Article III, subdivisions 1, 2, 3,
4, 5, 6, and 7 and Article IV.
XII. Notice
Any notice required or permitted to be given under or pursuant to this
Agreement may be given in writing by depositing the notice in the United States
mail, postage prepaid, by hand-delivery or by courier, or by facsimile,
addressed as follows:
To the Underwriter:
Great Nation Investment Corporation
0000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxx 00000
FAX - (000) 000-0000
To the Company:
Transition Auto Finance IV, Inc.
0000 Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
FAX - (000) 000-0000
Attention: Xxx Xxxx, President
To Transition Leasing:
Transition Leasing Management, Inc.
0000 Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
FAX - (000) 000-0000
Attention: Xxx Xxxx, President
Copy to:
Xxxxxxxx & Knight L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
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Notice shall be deemed given to a party hereunder when actually
received by such party.
XIII. Miscellaneous
1. This Agreement may be modified only by writing signed by the parties
hereto.
2. This Agreement shall be governed and construed in accordance with
the laws of the state of Texas.
3. This Agreement may be signed in various counterparts, which together
shall constitute one and the same instrument.
4. For purposes of any lawsuit or other proceeding in respect to this
Agreement, the undersigned hereby submits and consents to the jurisdiction of
any court of competent jurisdiction sitting in the State of Texas, Dallas
County.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day, month and year first written above.
Transition Auto Finance IV, Inc.
By: /s/ XXX XXXX
--------------------------------------
Xxx Xxxx, Its President
Great Nation Investment Corporation
By: /s/ XXX TREAT
--------------------------------------
Xxx Treat, Its President
Transition Leasing Management, Inc.
By: /s/ XXX XXXX
--------------------------------------
Xxx Xxxx, Its President
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