PARAGON AUTO RECEIVABLES OWNER TRUST 1999-A
$100,000,000 5.95% Asset Backed Notes, Class A
PARAGON AUTO RECEIVABLES CORPORATION
(Seller)
PARAGON ACCEPTANCE CORPORATION
(Servicer)
UNDERWRITING AGREEMENT
March 24, 1999
Credit Suisse First Boston Corporation
(the "Underwriter")
Xxxxxx Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Ladies and Gentlemen:
Paragon Auto Receivables Corporation, a Delaware corporation (the
"Seller") and a wholly owned special purpose subsidiary of Paragon
Acceptance Corporation, a Delaware corporation ("Paragon"), proposes to
sell to the Underwriter $100,000,000 aggregate principal amount of Class A
5.95% Asset Backed Notes (the "Notes"). The Notes are issued by the Paragon
Auto Receivables Owner Trust 1999-A (the "Trust"). The Trust also will
issue $2,564,102.56 aggregate principal amount of certificates (the
"Certificates"). Each Certificate will represent a fractional undivided
interest in the Trust and will be initially sold to the Seller. Each Note
will be secured by the assets of the Trust pursuant to the Indenture (as
defined below).
The assets of the Trust will include, among other things, a pool
of motor vehicle retail installment contracts sold and assigned by the
Seller to the Trust on the Closing Date (the "Receivables"), secured by new
and used automobiles, light duty trucks and sports utility vehicles (and
all accessories thereto) (the "Financed Vehicles"), and all monies due or
received thereunder or in respect thereof after February 28, 1999 (the
"Cutoff Date"). The receivables will be serviced for the Trust by Paragon
in its capacity as servicer (in such capacity, the "Servicer").
The Receivables will be sold to the Seller by Paragon pursuant to
a Receivables Purchase Agreement, to be dated as of the Closing Date
("Receivables Purchase Agreement"), between the Seller and Paragon. The
Receivables will be conveyed by the Seller to the Trust pursuant to a Sale
and Servicing Agreement, to be dated as of the Closing Date, between the
Seller, the Servicer,
Norwest Bank Minnesota, National Association, as indenture trustee (the
"Indenture Trustee"), and Wilmington Trust Company, as owner trustee (the
"Trustee") (the "Sale and Servicing Agreement"). Pursuant to an Insurance
and Indemnity Agreement (the "Insurance Agreement") among MBIA Insurance
Corporation (the "Note Insurer"), the Servicer, the Backup Servicer, the
Indenture Trustee, Paragon and the Seller, the Note Insurer has issued its
financial guaranty insurance policy (the "Policy") to the Indenture Trustee
for the benefit of the Noteholders guaranteeing timely payment of interest
on and principal of the Notes.
The Notes will be issued pursuant to an Indenture, to be dated as
of the Closing Date (the "Indenture"), between the Trust and the Indenture
Trustee. The Certificates will be issued pursuant to a Trust Agreement, to
be dated as of the Closing Date (the "Trust Agreement"), between the Seller
and the Trustee.
The Seller has prepared in conformity in all material respects
with the provisions of the Securities Act of 1933, as amended (the "Act"),
and the rules and regulations of the Commission thereunder (the "Rules and
Regulations"), and filed with the Securities and Exchange Commission (the
"Commission") a registration statement (Reg. No. 333-63697), including a
prospectus, relating to the Notes. The registration statement as amended at
the time it became effective, or, if any post-effective amendment has been
filed with respect thereto, as amended by the most recent post-effective
amendment at the time of its effectiveness, is referred to as the
"Registration Statement." The form of base prospectus included in the
Registration Statement as most recently filed with the Commission is
referred to as the "Base Prospectus." The form of the prospectus which
includes the Base Prospectus dated March 18, 1999 and a prospectus
supplement describing the Notes and the offering thereof dated March 24,
1999 (the "Prospectus Supplement"), which prospectus will be filed on or
after the date of this Agreement in accordance with Rule 424(b), is
referred to in this Agreement as the "Prospectus."
The terms which follow, when used in this Agreement, shall have
the meanings indicated. "Effective Date" shall mean the latest of the dates
that the Registration Statement or the most recent post-effective amendment
thereto became effective. "Execution Time" shall mean the date and time
that this Agreement is executed and delivered by the parties hereto. "Rule
424" refers to such rule under the Act. "Transaction Documents" shall mean
the Receivables Purchase Agreement, the Sale and Servicing Agreement, the
Indenture, the Trust Agreement, the Insurance Agreement, the Policy, this
Agreement, the Notes and each Depository Agreement. "Securityholder" means
any Noteholder and "Security Owner" means the beneficial owner of any Note.
To the extent not defined herein, capitalized terms used herein have the
meanings assigned to such terms in the Sale and Servicing Agreement.
Paragon and the Seller agree, severally and not jointly, with the
Underwriter as follows:
1. The Seller agrees to sell and deliver to the Underwriter as
hereinafter provided, and the Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees to purchase the Notes from the
Seller.
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2. The Seller understands that the Underwriter intends (i) to make
a public offering of the Notes purchased by it hereunder as soon after the
Registration Statement and this Agreement have become effective as in the
judgment of the Seller and the Underwriter is advisable and (ii) initially
to offer the Notes purchased by the Underwriter hereunder upon the terms
set forth in the Prospectus.
3. Payment for the Notes purchased by the Underwriter hereunder
shall be made to the Seller or to its order by wire transfer of same day
funds to the following account of the Seller: Nationsbank, St. Louis, MO,
ABA #000000000, Acct. No. 340179237046, Account Name: Paragon Acceptance.
The closing of the purchase hereunder shall occur at the office of Xxxxx
Xxxxx & Xxxxx, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 at 10:00
A.M., Chicago, Illinois time on March 30, 1999, or at such other time on
the same or such other date, not later than the fifth Business Day
thereafter, as the Underwriter and the Seller may agree upon in writing
(the "Closing Date"). As used herein, the term "Business Day" means any day
other than a Saturday, Sunday or other day on which commercial banking
institutions or trust companies in St. Louis, Missouri, Los Angeles,
California, New York, New York and Minneapolis, Minnesota are authorized or
obligated by law or order to be closed.
Payment for the Notes purchased by the Underwriter hereunder shall
be made against delivery to it on the Closing Date of such Notes in
definitive form registered in the name of Cede & Co., as nominee of The
Depository Trust Company, and in such denominations, as permitted by the
Transaction Documents, as the Underwriter shall request in writing not
later than a reasonable time prior to the Closing Date. The Seller shall
make such definitive certificates representing the Notes available for
inspection by the Underwriter at the office of Xxxxx, Brown & Xxxxx, 000
Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 not later than 1:00 P.M.,
Chicago, Illinois time, on the Business Day prior to the Closing Date.
4. Paragon and the Seller represent and warrant (severally and not
jointly) to, and agree with, the Underwriter that:
(a) The Registration Statement, including amendments
thereto as may have been required on or prior to the date hereof,
relating to the Notes, has been filed with the Commission and such
Registration Statement as amended has become effective. The
conditions to the use by the Seller of a Registration Statement on
Form S-3 under the Act, as set forth in the General Instructions
to Form S-3, have been satisfied with respect to the Registration
Statement.
(b) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose has been instituted or, to its knowledge, threatened by
the Commission, and (i) on the Effective Date of the Registration
Statement, the Registration Statement conformed in all material
respects to the requirements of the Act and the Rules and
Regulations, and did not include any untrue statement of a
material fact or omit to state any material fact required to be
stated therein, or necessary to make the statements therein, in
light of the circumstances under which they were made, not
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misleading, (ii) on the date of this Agreement, the Prospectus
conforms in all material respects to the requirements of the Act
and the Rules and Regulations, and does not include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein, or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading, and (iii) at the time of filing of the Prospectus
pursuant to Rule 424(b) and on the Closing Date the Registration
Statement and the Prospectus will conform in all material respects
to the requirements of the Act and the Rules and Regulations, and
neither of such documents will include any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading; provided, however, that this representation and
warranty shall not apply to written information furnished to the
Seller by the Underwriter specifically for use therein, it being
understood and agreed that the only such information furnished by
the Underwriter consists of, under the caption "Underwriting" in
the Prospectus Supplement, the second and seventh paragraphs and
the second sentence of the fourth paragraph (the "Underwriter
Information").
(c) The computer tapes with respect to the Receivables to
be sold to the Trust created as of the Cutoff Date (the "Computer
Tapes"), and made available to the Underwriter by Paragon, were
complete and accurate in all material respects as of the date
thereof.
(d) It is a corporation that is duly organized, validly
existing and in good standing under the laws of its jurisdiction
of organization, with power and authority to own its properties
and conduct its business as now conducted by it and has full power
and authority to acquire, own and sell the Receivables and the
other Trust Property. It has the power and authority to execute,
deliver and perform this Agreement and each of the other
Transaction Documents to which it is a party and to carry out
their respective terms and to sell and assign the respective
property to be sold and assigned to and deposited with the Trustee
as Trust Property.
(e) The Notes have been duly authorized, and, when issued
and delivered pursuant to the Transaction Documents and duly
executed and authenticated by the Trustee and the Indenture
Trustee, as applicable, will be duly and validly issued,
authenticated and delivered and entitled to the benefits provided
by the Transaction Documents. The execution, delivery and
performance by it of each of the Transaction Documents to which it
is a party and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by it by all
necessary corporate action. The Transaction Documents to which it
is a party have been duly executed and delivered by it and, when
executed and delivered by it and the other parties thereto, each
of such Transaction Documents will constitute a legal, valid and
binding obligation of it, enforceable against it in accordance
with its respective terms, subject, as to enforceability, to
applicable bankruptcy, insolvency, reorganization, moratorium,
conservatorship, receivership, liquidation and other similar laws
affecting enforcement of the rights of creditors generally and to
equitable limitations on the availability of specific remedies.
The Notes and the Transaction Documents conform in all
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material respects to the descriptions thereof in the Prospectus.
The Notes and the Indenture have been duly executed and delivered
by the Trust and, when the Indenture is executed and the Notes are
authenticated by the Indenture Trustee, the Indenture and the
Notes will constitute legal, valid and binding obligations of the
Trust, enforceable in accordance with their respective terms,
subject, as to enforceability, to applicable bankruptcy,
insolvency, reorganization, moratorium, conservatorship,
receivership, liquidation and other similar laws affecting
enforcement of the rights of creditors generally and to equitable
limitations on the availability of specific remedies.
(f) No consent, approval, license, authorization, or
order of, or declaration, or registration or filing with, any
court or governmental authority, is required to be made in
connection with the execution, delivery or performance by it of
any of the Transaction Documents to which it is a party or the
consummation of the transactions contemplated hereby or thereby,
except such as have been obtained and made under the Act and the
Rules and Regulations or state securities laws and any filings of
UCC financing statements.
(g) The execution, delivery and performance by it of the
Transaction Documents to which it is a party, the consummation of
the transactions contemplated hereby and thereby and the
fulfillment of the terms thereof do not (i) conflict with, result
in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time) a default under, the
certificate of incorporation or bylaws of it, or any indenture,
agreement, mortgage, deed of trust or other instrument to which it
is a party or by which it or its properties are found, (ii) result
in the creation or imposition of any lien (other than permitted
liens) upon any of its properties pursuant to the terms of any
such indenture, agreement, mortgage, deed of trust or other
instrument or (iii) to its knowledge, violate any law, order, rule
or regulation applicable to it of any governmental authority
having jurisdiction over it or any of its properties.
(h) There are no proceedings or investigations pending,
or to its knowledge, threatened against it, before any
governmental authority having jurisdiction over it or its
properties (i) asserting the invalidity of the Agreement or any of
the Transaction Documents to which it is a party, (ii) seeking to
prevent the issuance of the Notes or the consummation of any of
the transactions contemplated by any of the Transaction Documents
to which it is a party, (iii) seeking any determination or ruling
that would have a material adverse effect on the performance by it
of its obligations under, or the validity or enforceability of,
any of the Transaction Documents to which it is a party, (iv)
seeking to materially and adversely affect the federal income tax
or other federal, state or local tax attributes of the Notes or
seeking to impose any excise, franchise, transfer or similar tax
upon the Notes or the sale and assignment of the Receivables and
the other Trust Property, or (v) which, if determined adversely,
could individually or in the aggregate reasonably be expected to
materially adversely affect the interests of the holders of any of
the Notes or the marketability of any of the Notes.
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(i) There are no contracts or other documents of a
character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration
Statement or the Prospectus pursuant to the Act and the Rules and
Regulations that are not filed or described as required.
(j) The representations and warranties of Paragon
contained in Section 3.6 of the Sale and Servicing Agreement and
Section 3.1 of the Receivables Purchase Agreement and of the
Seller in Section 3.2 of the Receivables Purchase Agreement are
true and correct in all material respects as of the dates of the
respective Transaction Documents.
(k) KPMG Peat Marwick LLP are independent public
accountants with respect to Paragon and the Seller within the
meaning of the Act and the Rules and Regulations.
5. Paragon and the Seller covenant and agree, severally and not
jointly, with the Underwriter that:
(a) Prior to the termination of the offering of the
Notes, the Seller will not file or cause to be filed any amendment
of the Registration Statement or supplement to the Prospectus
without first furnishing to the Underwriter a copy of the proposed
amendment or supplement and giving the Underwriter a reasonable
opportunity to review the same. Subject to the foregoing sentence,
the Seller will cause the Prospectus, and any supplement thereto,
to be filed with the Commission pursuant to the applicable
paragraph of Rule 424(b) within the time period prescribed. The
Seller will promptly advise the Underwriter (i) when the
Prospectus, and any supplement thereto, shall have been filed with
the Commission pursuant to Rule 424(b), (ii) when any amendment to
the Registration Statement shall have become effective, (iii) of
any request by the Commission for any amendment of the
Registration Statement or supplement to the Prospectus or for any
additional information, (iv) of the receipt by the Seller of
notification with respect to the issuance by the Commission of any
stop order suspending the effectiveness of the Registration
Statement or the initiation or threatening of any proceeding for
that purpose and (v) of the receipt by the Seller of notification
with respect to the suspension of the qualification of the Notes
for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Seller will use its
reasonable efforts to prevent the issuance of any such stop order
and, if issued, to obtain as soon as possible the withdrawal
thereof.
(b) The Seller will deliver, at its expense, to the
Underwriter, two copies of the signed Registration Statement (as
originally filed) and each amendment thereto, in each case
including exhibits, and, during the period mentioned in Section
5(e), to the Underwriter as many copies of the Prospectus
(including all amendments and supplements thereto) as the
Underwriter may reasonably request.
(c) If during such period of time after the first date of
the public offering of the Notes as in the opinion of counsel for
the Underwriter a prospectus relating to the Notes is required by
law to be delivered in connection with sales by an Underwriter or
a dealer, any
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event shall occur as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein,
in the light of the circumstances when the Prospectus is delivered
to a purchaser, not materially misleading, or it is necessary to
amend or supplement the Prospectus to comply with applicable law,
the Seller will forthwith prepare and furnish, at its own expense,
to the Underwriter and to the dealers (whose names and addresses
the Underwriter will furnish to the Seller) to which Notes may
have been sold by the Underwriter, such amendments or supplements
to the Prospectus as may be necessary so that the statements in
the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to a
purchaser, be materially misleading or so that the Prospectus will
comply with applicable law. Neither the Underwriter's consent to,
nor the Underwriter's delivery of, any such amendment or
supplement shall constitute a waiver of any of the conditions set
forth in Section 7.
(d) The Seller will endeavor to qualify the Notes for
offer and sale under the Securities or Blue Sky laws of such
jurisdictions as the Underwriter shall reasonably request and will
continue such qualification in effect so long as reasonably
required for distribution of the Notes and will pay all reasonable
fees and expenses (including reasonable fees and disbursements of
counsel to the Underwriter to the extent provided in Section
6(iii)) incurred in connection with such qualification and in
connection with the determination of the eligibility of the Notes
for investment under the laws of such jurisdictions as the
Underwriter may designate; provided, however, that the Seller
shall not be obligated to qualify to do business in any
jurisdiction in which it is not currently so qualified; and
provided, further, that the Seller shall not be required to file a
general consent to service of process in any jurisdiction.
(e) For the period from the date of this Agreement until
the retirement of all of the Notes, the Servicer will furnish to
the Underwriter (i) copies of each Servicer's Certificate and the
annual statements of compliance delivered to the Trustee or the
Indenture Trustee pursuant to the Transaction Documents and the
annual independent certified public accountant's servicing reports
furnished to the Trustee or the Indenture Trustee pursuant to the
Transaction Documents, by first-class mail at the same time such
statements and reports are furnished to the Trustee or the
Indenture Trustee, (ii) copies of each amendment to any of the
Transaction Documents, and (iii) such other information concerning
the Trust, Paragon or the Seller as the Underwriter may reasonably
request.
(f) To the extent, if any, that the ratings provided with
respect to the Notes by the Rating Agencies are conditional upon
the furnishing of documents or the taking of any other action by
it, it shall furnish or cause to be furnished such documents and
use reasonable efforts to take any such other action.
6. Paragon and the Seller will pay all costs and expenses incident
to the performance of their respective obligations under this Agreement,
including, without limitation, all costs and expenses (i) incident to the
preparation, issuance, execution, authentication and delivery of the Notes,
(ii) incident to the preparation, printing (or otherwise reproducing),
filing and delivery under
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the Act of the Registration Statement, the Prospectus (including in each
case all exhibits, amendments and supplements thereto), (iii) incurred in
connection with the registration or qualification and determination of
eligibility for investment of the Notes under the laws of such
jurisdictions as the Underwriter may designate (including reasonable fees
and reasonable disbursements of counsel for the Underwriter), (iv) in
connection with the printing (including word processing and duplication
costs) and delivery of this Agreement, the other Transaction Documents and
any Blue Sky Memorandum and the furnishing to the Underwriter and dealers
of copies of the Registration Statement, and the Prospectus (including
exhibits, amendments and supplements thereto) as herein provided, (v) any
fees and expenses payable to the Rating Agencies in connection with the
rating of the Notes and (vi) any fees and expenses of the Trustee and the
Indenture Trustee.
7. The obligations of the Underwriter to purchase and pay for the
Notes will be subject to the accuracy in all material respects, as of the
date hereof and as of the Closing Date, of the representations and
warranties contained herein, to the accuracy of the statements of officers
of Paragon and the Seller made in any writing delivered at the Closing
pursuant to the provisions hereof, to the performance in all material
respects by each of Paragon and the Seller of its obligations hereunder and
to the following additional conditions precedent:
(a) KPMG shall have furnished to the Underwriter a letter
dated as of the date of the Prospectus, substantially in the form
of the draft to which the Underwriter previously agreed and
otherwise in form and substance reasonably satisfactory to the
Underwriter.
(b) The form of prospectus used to confirm sales of Notes
shall have been filed with the Commission pursuant to Rule 424(b)
within the applicable time period prescribed for such filing by
the Rules and Regulations and in accordance with Section 5(a) of
this Agreement; and no stop order suspending the effectiveness of
the Registration Statement shall be in effect, and no proceedings
for such purpose shall be pending before or, to the knowledge of
Paragon or the Seller, contemplated by the Commission. Any request
of the Commission for inclusion of additional information in the
Registration Statement or the Prospectus shall have been complied
with in all material respects.
(c) The Underwriter shall have received the Sale and
Servicing Agreement, the Receivables Purchase Agreement, the
Indenture, the Trust Agreement, the Insurance Agreement and the
Notes in form and substance, reasonably satisfactory to the
Underwriter and duly executed by the signatories required pursuant
to the respective terms thereof.
(d) The Underwriter shall have received officer's
certificates, dated the Closing Date, signed by any Vice President
or more senior officer of Paragon and the Seller, representing and
warranting that, as of the Closing Date, its representations and
warranties in this Agreement and the other Transaction Documents
are true and correct in all material respects, that it has
complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder or under the other
Transaction Documents at or prior to the Closing Date, that no
stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have
been instituted or, to the
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best of such officer's knowledge, contemplated by the Commission,
and that since the date of this Agreement there has been no
material adverse change, or any development involving a material
adverse change, in or affecting the Receivables or the business or
properties of the Trust or either Paragon or the Seller which
materially impairs the investment quality of the Notes.
(e) After the execution and delivery of this Agreement
and prior to the Closing Date, there shall not have occurred (i)
any material adverse change, or any development involving a
material adverse change, in or affecting the business, operations,
financial condition or properties of the Trust or either Paragon
or the Seller which, in the reasonable judgment of the
Underwriter, materially impairs the investment quality of the
Notes or makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the Notes, or (ii) any
downgrading in the rating of any debt Notes of Paragon or the
Seller by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the
Act), or any public announcement that any such organization has
under surveillance or review its rating of any such debt Notes
(other than an announcement with no implication of a possible
downgrading, of such rating).
(f) The Underwriter shall have received the opinion of
Xxxxx X. Xxxxxxxx, General Counsel of Paragon, dated as of the
Closing Date and reasonably satisfactory in form and substance to
the Underwriter as to certain corporate matters, including,
without limitation, as to the due authorization, execution and
delivery by, and the enforceability against, Paragon and the
Seller of each of the Transaction Documents to which it is a
party.
(g) The Underwriter shall have received from Xxxxx, Xxxxx
& Xxxxx, special counsel to Paragon and the Seller, opinions,
dated as of the Closing Date, and reasonably satisfactory in form
and substance to the Underwriter, as to certain corporate matters,
tax matters, Notes law matters and security interest matters,
including, without limitation, as to the due authorization,
execution and delivery by, and enforceability against, Paragon and
the Seller of each Transaction Document to which Paragon or the
Seller is a party.
(h) Xxxxx, Xxxxx & Xxxxx, special counsel to Paragon and
the Seller, shall have furnished opinions, dated as of the Closing
Date, with respect to (i) nonconsolidation under the Bankruptcy
Code of the assets and liabilities of the Seller on the one hand,
and those of Paragon, on the other, if Paragon were to become
subject of a case under the Bankruptcy Code, and (ii) the
characterization of the transfer of the Receivables from Paragon
to the Seller and from the Seller to the Trust and perfection of
the Trust's and the Indenture Trustee's interest in the
Receivables, satisfactory in form and substance to the
Underwriter.
(i) The Underwriter shall have received from local
counsel in each jurisdiction in which the outstanding Principal
Balance of the Receivables as of the Cutoff Date equals or exceeds
20% of the Cutoff Date Pool Balance, an opinion, dated as of the
Closing Date, and reasonably satisfactory in form and substance to
the Underwriter, as to the validity and
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perfection of Paragon's security interest in the Financed Vehicles
located in such jurisdiction and the effectiveness of the
assignment of such security interest to the Indenture Trustee.
(j) The Underwriter shall have received from counsel for
the Trustee, an opinion, dated as of the Closing Date, and
reasonably satisfactory in form and substance to the Underwriter,
as to the due authorization, execution and delivery of each
Transaction Document to which the Trustee is a party.
(k) The Underwriter shall have received from counsel for
the Indenture Trustee an opinion, dated as of the Closing Date and
reasonably satisfactory in form and substance to the Underwriter,
as to the due authorization, execution and delivery of each
Transaction Document to which the Indenture Trustee is a party;
(l) The Underwriter shall have received from counsel for
the Note Insurer an opinion, dated as of the Closing Date and
reasonably satisfactory in form and substance to the Underwriter,
as to the authorization, execution and delivery of the Insurance
Agreement and the Policy.
(m) If any Rating Agency shall have requested any legal
opinion, officer's certificate or other document not required by
this Agreement, the Underwriter also shall have received such
legal opinion, officer's certificate or other document together
with a letter from the party delivering such opinion, certificate
or document allowing the Underwriter to rely on such opinion,
certificate or document as if it were addressed to the
Underwriter.
(n) The Notes shall have been rated "AAA" or its
equivalent by at least two Rating Agencies, and the Underwriter
shall have received copies of letters to that effect dated as of
the Closing Date.
(o) The Insurance Agreement and the Indemnification
Agreement shall have been executed and delivered, in which the
Note Insurer shall represent, among other representations, that
(i) the information under the caption "Description of the Insurer"
in the Prospectus Supplement was approved by the Note Insurer and
does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading and (ii) there has been no change in the financial
condition of the Note Insurer since December 31, 1998, which would
have a material adverse effect on the Note Insurer's ability to
meet its obligations under the Policy.
(p) The Policy shall have been issued by the Note Insurer
and shall have been duly countersigned by an authorized agent of
the Note Insurer, if so required under applicable state law or
regulation.
(q) The Seller shall have made or caused to be made a
deposit in the Reserve Account in the amount of the initial
Reserve Account Required Amount.
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8. Paragon and the Seller, jointly and severally (except as
otherwise set forth at the conclusion of this Section 8), agree to
indemnify and hold harmless the Underwriter and each person, if any, who
controls the Underwriter within the meaning of either Section 15 of the Act
or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages and liabilities (including, without limitation, the legal
fees and other expenses reasonably incurred in connection with
investigating, preparing or defending any suit, action or proceeding or any
claim asserted), incurred by the Underwriter or such controlling person and
caused by any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or the Prospectus (as amended
or supplemented if the Seller shall have furnished such amendments or
supplements thereto), or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, except insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
the Underwriter Information.
The Underwriter agrees to indemnify and hold harmless Paragon and
the Seller, and each of their respective directors and officers and each
person who controls either of them within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from Paragon and the Seller to the Underwriter, but only with
reference to Underwriter Information delivered by the Underwriter.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted
against any person in respect of which indemnity may be sought pursuant to
either of the two preceding paragraphs, such person (the "Indemnified
Person") shall promptly notify the person against whom such indemnity may
be sought (the "Indemnifying Person") in writing, and the Indemnifying
Person shall retain counsel reasonably satisfactory to the Indemnified
Person to represent the Indemnified Person and any others the Indemnifying
Person may designate in such proceeding and shall pay the reasonable fees
and expenses of such counsel related to such proceeding; provided that the
failure of the Indemnified Person to give notice shall not relieve the
Indemnifying Person of its obligations under this Section 8 except to the
extent that the Indemnifying Person shall have been prejudiced thereby. In
any such proceeding, any Indemnified Person shall have the right to retain
its own counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person unless (i) the Indemnifying Person and
the Indemnified Person shall have mutually agreed to the contrary, (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named
parties in any such proceeding (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and representation
of both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
Indemnifying Person shall not, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all
Indemnified Persons, and that all such fees and expenses shall be
reimbursed as they are incurred promptly following submission of a
documented request for such reimbursement. Any such separate firm for the
Underwriter and such control persons of the Underwriter shall be designated
in writing by the Underwriter. Any such
11
separate firm for Paragon and the Seller and their directors, officers and
control persons shall be designated in writing by Paragon. The Indemnifying
Person shall not be liable for any settlement of any claim or proceeding
effected without its written consent. No Indemnifying Person shall, without
the prior written consent of the Indemnified Person, effect any settlement
of any pending or threatened proceeding in respect of which any Indemnified
Person is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on
claims that are the subject matter of such proceeding, and does not include
a statement as to, or an admission of, fault, culpability or a failure to
act by or on behalf of an indemnified part.
If the indemnification provided for in the first and second
paragraphs of this Section 8 is determined by a court to be unavailable to
an Indemnified Person in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such
paragraph, in lieu of indemnifying such Indemnified Person thereunder,
shall contribute to the amount paid or payable by such Indemnified Person
as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by
Paragon and the Seller on the one hand and the Underwriter on the other
hand from the offering of the Notes or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of Paragon and the Seller on
the one hand and the Underwriter on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by Xxxxxxx and the Seller on the one hand and
the Underwriter on the other shall be deemed to be in the same respective
proportions as the net proceeds from the offering (before deducting
expenses) received by Paragon and the Seller and the total underwriting
discounts and the commissions received by the Underwriter, in each case as
set forth in the table on the cover of the Prospectus, bear to the
aggregate public offering price of the Notes. The relative fault of Xxxxxxx
and the Seller on the one hand and the Underwriter on the other shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
Paragon and the Seller or by the Underwriter and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
Paragon and the Seller and the Underwriter agree that it would not
be just and equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in the
preceding paragraph. The amount paid or payable by an Indemnified Person as
a result of the losses, claims, damages and liabilities referred to in the
preceding paragraph shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses incurred by such Indemnified
Person in connection with investigating or defending any such action or
claim. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
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The indemnity and contribution agreements contained in this
Section 8 are in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
In no case shall the Underwriter be responsible for any amount in
excess of the underwriting discount applicable to the Notes purchased by
the Underwriter hereunder.
The Underwriter confirms that the information set forth in the
Prospectus Supplement under the caption "Underwriting" in the second and
seventh paragraphs and the second sentence of the fourth paragraph is
correct and constitutes the only information furnished in writing to
Paragon and the Seller by or on behalf of the Underwriter specifically for
inclusion in the Prospectus Supplement.
The indemnity and contribution agreements contained in this
Section 8 and the representations and warranties of Paragon and the Seller
set forth in this Agreement shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of the Underwriter or any person
controlling the Underwriter or by or on behalf of any Participating Entity
or any of their officers or directors or any other person controlling any
Participating Entity and (iii) acceptance of and payment for any of the
Notes.
9. Notwithstanding anything herein contained, this Agreement may
be terminated by the Underwriter, by written notice given to the Seller, if
after the execution and delivery of this Agreement and prior to the Closing
Date (i) any material adverse change, or any development involving a
prospective material adverse change, in or affecting particularly the
business or properties of the Trust, Paragon or the Seller which, in the
reasonable judgment of the Underwriter, materially impairs the investment
quality of the Notes or makes it impractical or inadvisable to market the
Notes; (ii) trading generally shall have been materially suspended or
materially limited on the New York Stock Exchange or there shall have been
any setting of minimum prices for trading on such exchange; (iii) trading
of any Notes of Paragon or the Seller, if any, shall have been suspended on
any exchange or in any over-the-counter market; (iv) a moratorium on
commercial banking activities in New York or Delaware shall have been
declared by either federal, New York or Delaware authorities; or (v) there
shall have occurred any outbreak or escalation of major hostilities in
which the United States is involved, any declaration of war by Congress or
any other substantial national or international calamity, or emergency in
financial markets if, in the reasonable judgment of the Underwriter, the
effect of any such outbreak, escalation, declaration, calamity or emergency
makes it impractical or inadvisable to market the Notes on the terms and in
the manner contemplated in the Prospectus. Upon such notice being given,
the parties to this Agreement shall (except for any liability arising
before or in relation to such termination) be released and discharged from
their respective obligations under this Agreement.
10. This Agreement shall become effective upon the later of (x)
execution and delivery hereof by the parties hereto and (y) release of
notification of the effectiveness of the Registration Statement (or, if
applicable, any post-effective amendment) by the Commission.
13
11. If this Agreement shall be terminated by the Underwriter
because of any failure or refusal on the part of Paragon or the Seller to
comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason Paragon or the Seller shall be unable to
perform its obligations under this Agreement or any condition of the
Underwriter's obligations cannot be fulfilled, in each case other than in
connection with a termination under Section 9(ii), (iv) or (v), Paragon and
the Seller agree to reimburse the Underwriter for all out-of-pocket
expenses (including the reasonable fees and expenses of their counsel)
reasonably incurred by the Underwriter in connection with this Agreement or
the offering contemplated thereunder.
12. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed, delivered by
hand or transmitted by any standard form of telecommunication. Notices to
the Underwriter shall be given to them at Xxxxxx Xxxxxxx Xxxxxx, Xxx Xxxx,
XX 00000-0000 (Facsimile No: (000) 000-0000), Attention: Transaction
Advisory Group. Notices to Paragon shall be given to them at 00000 Xxxxxx
Xxxx, Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, (Facsimile No.: (949)
348-8707), Attention: Xxxxxx X. Xxxxxx, with a copy to 000 Xxxxx Xxxxxx,
Xxxxx 000, Xxxxxxx, XX 00000, (Facsimile No.:(000)000-0000), Attention:
Xxxxx X. Xxxxxxxx. Notices to the Seller shall be given to them at 00000
Xxxxxx Xxxx, Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, (Facsimile No.:
(000) 000-0000), Attention: Xxxxxx X. Xxxxxx, President, with a copy to 000
Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000 (Facsimile No.:(000)000-0000),
Attention: Xxxxx X. Xxxxxxxx, General Counsel.
13. This Agreement shall inure to the benefit of and be binding
upon Paragon and the Seller, the Underwriter, any controlling persons
referred to herein and their respective successors and assigns. Nothing
expressed or mentioned in this Agreement is intended or shall be construed
to give any other person or entity, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein
contained. No purchaser of Notes from the Underwriter shall be deemed to be
a successor by reason merely of such purchase.
14. This Agreement may be signed in counterparts, each of which
shall be an original and all of which together shall constitute one and the
same instrument. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICTS OF LAWS PROVISIONS THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW).
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If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof,
whereupon it will become a binding agreement between Paragon and the Seller
and the Underwriter in accordance with its terms.
Very truly yours,
PARAGON AUTO RECEIVABLES CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
PARAGON ACCEPTANCE CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Secretary
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ Xxxxxxx x'Xxxxxx
------------------------------
Name: Xxxxxxx x'Xxxxxx
Xxxxx: Managing Director
S-1 Underwriting Agreement
