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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) March 24, 1999
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PARAGON AUTO RECEIVABLES CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
333-63697 33-063501
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(Commission File Number) (I.R.S. Employer Identification No.)
27405 Puerta Real, Suite 200, Mission Viejo, CA 92691
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(Address of Principal Executive Offices) (Zip Code)
(949) 348-8707
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition or Disposition of Assets.
On March 30, 1999, the Registrant caused the issuance and sale of
approximately $100,000,000 initial principal amount of Class A 5.95% Asset
Backed Notes (the "Notes") and $2,564,102.56 initial principal amount of
Asset Backed Certificates (the "Certificates").
The Registrant is filing final forms of the exhibits listed in
Item 7(c) below relating to the Notes and Certificates.
Item 7. Exhibits.
Exhibit
No. Document Description
1.1* Underwriting Agreement, dated as of March 24, 1999,
between Paragon Auto Receivables Corporation, Paragon
Acceptance Corporation and Credit Suisse First Boston
Corporation.
4.1* Indenture, dated as of March 30, 1999, between Paragon
Auto Receivables Owner Trust 1999- A and Norwest Bank
Minnesota, National Association, as Indenture Trustee.
4.2* Trust Agreement dated as of March 15, 1999, between
Paragon Acceptance Corporation, Wilmington Trust Company,
as Owner Trustee, and Paragon Auto Receivables
Corporation.
4.3* Sale and Servicing Agreement dated as of March 30, 1999,
between Paragon Acceptance Corporation, in its individual
capacity and as Servicer, Paragon Auto Receivables
Corporation, as Seller, Paragon Auto Receivables Owner
Trust 1999-A, as Purchaser, and Norwest Bank Minnesota,
National Association, as Indenture Trustee and Backup
Servicer.
4.4* Receivables Purchase Agreement dated as of March 30,
1999, between Paragon Acceptance Corporation, as Seller,
and Paragon Auto Receivables Corporation, as Purchaser.
4.5 Financial Guarantee Insurance Policy No. 28877 dated
March 30, 1999 issued by MBIA Insurance Corporation.
* Previously Filed
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
PARAGON AUTO RECEIVABLES CORPORATION
(Registrant)
Dated: April 13, 1999 By: /s/ Nancy C. Ferguson
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Name: Nancy C. Ferguson
Title: Vice President
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INDEX OF EXHIBITS
Exhibit
No. Document Description
1.1* Underwriting Agreement, dated as of March 24, 1999,
between Paragon Auto Receivables Corporation, Paragon
Acceptance Corporation and Credit Suisse First Boston
Corporation.
4.1* Indenture, dated as of March 30, 1999, between Paragon
Auto Receivables Owner Trust 1999- A and Norwest Bank
Minnesota, National Association, as Indenture Trustee.
4.2* Trust Agreement dated as of March 15, 1999, between
Paragon Acceptance Corporation, Wilmington Trust Company,
as Owner Trustee, and Paragon Auto Receivables
Corporation.
4.3* Sale and Servicing Agreement dated as of March 30, 1999,
between Paragon Acceptance Corporation, in its individual
capacity and as Servicer, Paragon Auto Receivables
Corporation, as Seller, Paragon Auto Receivables Owner
Trust 1999-A, as Purchaser, and Norwest Bank Minnesota,
National Association, as Indenture Trustee and Backup
Servicer.
4.4* Receivables Purchase Agreement dated as of March 30,
1999, between Paragon Acceptance Corporation, as Seller,
and Paragon Auto Receivables Corporation, as Purchaser.
4.5 Financial Guarantee Insurance Policy No. 28877 dated
March 30, 1999 issued by MBIA Insurance Corporation.
* Previously Filed
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MBIA INSURANCE CORPORATION
FINANCIAL GUARANTEE INSURANCE POLICY
March 30, 1999
Policy No. 28877
Re: Paragon Auto Receivables Owner Trust 1999-A (the
"Trust")
$100,000,000 5.95% Asset Backed Notes, Class A
(the "Notes");
Insured Obligation: Obligation to pay interest on and the principal of
the Notes.
Beneficiary: Norwest Bank Minnesota, National Association, as
indenture trustee (the "Indenture Trustee") under the
Indenture dated March 30, 1999 (the "Indenture") between
the Trust and the Indenture Trustee (together with any
successor indenture trustee duly appointed and qualified
under the Indenture) for the benefit of the Owners (as
defined below).
MBIA INSURANCE CORPORATION ("MBIA"), for consideration received, hereby
unconditionally and irrevocably guarantees to the Beneficiary, subject only
to the terms of this Financial Guarantee Insurance Policy (the "Policy"),
payment of the Insured Obligation. MBIA agrees to pay to the indenture
trustee, in respect of each payment date, an amount (the "Payment Amount")
equal to the sum of:
(a) on any Payment Date, the amount, if any, by which (i) the
Class A Interest Payment Amount exceeds (ii) the sum of (x)
Available Funds (excluding the Policy Claim Amount) and (y) the
amount on deposit in the Reserve Account on such Payment Date,
after giving effect to the payment of the amounts set forth in
clauses (i) and (ii) of Section 4.5(a) of the Sale and Servicing
Agreement, plus
(b) on any Payment Date other than the Final Scheduled Payment
Date, the amount, if any, by which (i) the Note Balance as of
such Payment Date (after giving effect to all other amounts
allocable and distributable to principal on such Payment Date,
including, without limitation, amounts withdrawn from the Reserve
Account) exceeds (ii) the sum of (x) the Aggregate Principal
Balance as of the end of the related Collection Period and (y)
the Pre-Funded Amount, if any, as of the end of the related
Collection Period; plus
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(c) on the Final Scheduled Payment Date, an amount equal to the
Note Balance (after giving effect to all other amounts allocable
and distributable to principal on such Payment Date, including,
without limitation, amounts withdrawn from the Reserve Account);
(the amount set forth in (a), the "Guaranteed Interest Payment
Amount") and (the sum of the amounts set forth in (b) and (c) the
"Guaranteed Principal Payment Amount").
MBIA also agrees to pay an amount equal to any Avoided Payment (as defined
below). MBIA's obligations under this Policy will be discharged to the
extent funds equal to the amounts described above are received by the
Indenture Trustee, whether or not such funds are properly applied by the
Indenture Trustee. Payments hereunder shall be made only at the time set
forth in this Policy. This Policy shall not guarantee amounts that become
due on an accelerated basis as a result of (a) a default by the Trust, (b)
the occurrence of an Indenture Event of Default under the Indenture, or (c)
any other cause. MBIA may elect, in its sole discretion, to pay in whole or
in part such principal due upon acceleration.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in the Sale and Servicing Agreement
dated as of March 30, 1999 among Paragon Auto Receivables Corporation, as
seller (the "Seller"), Paragon Acceptance Corporation, as servicer (the
"Servicer"), the Trust and Norwest Bank Minnesota, National Association, as
Indenture Trustee and Backup Servicer (the "Sale and Servicing Agreement").
As used herein the term "Owner" means each Noteholder who on the
applicable Payment Date is entitled under the terms of the related Note to
receive payments thereunder.
Payment of amounts hereunder shall be made in immediately available
funds on the later of (a) 12:00 noon, New York City time, on the related
Payment Date and (b) 12:00 noon, New York City time, on the second Business
Day following presentation to State Street Bank and Trust Company, N.A., as
Fiscal Agent for MBIA or any successor fiscal agent appointed by MBIA (the
"Fiscal Agent") (as hereinafter provided) of a notice for payment in the
form of Exhibit A hereto ("Notice for Payment"), appropriately completed
and executed by the Indenture Trustee. A Notice for Payment under this
Policy may be presented to the Fiscal Agent on any Business Day following
the Determination Date in respect of which the Notice for Payment is being
presented, by (a) delivery of the original Notice for Payment to the Fiscal
Agent at its address set forth below, or (b) facsimile transmission of the
original Notice for Payment to the Fiscal Agent at its facsimile number set
forth below. If presentation is made by facsimile transmission, the
Indenture Trustee shall (i) simultaneously confirm transmission by
telephone to the Fiscal Agent at its telephone number set forth below, and
(ii) as soon as reasonably practicable, deliver the original Notice for
Payment to the Fiscal Agent at its address set forth below. Any Notice for
Payment received by the Fiscal Agent after 12:00 noon, New York City time,
on a Business Day, or on any day that is not a Business Day, will be deemed
to be received by the Fiscal Agent on the next succeeding Business Day.
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Subject to the foregoing, if the payment of any amount previously
distributed to an Owner in respect of the Notes that is recoverable and
sought to be recovered as a voidable preference by a trustee in bankruptcy
with respect to the Trust, the Seller or Paragon pursuant to the United
States Bankruptcy Code (11 U.S.C.), as amended from time to time, in
accordance with a nonappealable order of a court having competent
jurisdiction is voided ("Avoided Payment"), MBIA will make such Avoided
Payment on behalf of the Owner to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order (as
defined below) and not to any Owner directly, unless such Owner has
previously paid such Avoided Payment to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy, in which case MBIA will make
such Avoided Payment to such Owner upon receipt by the Fiscal Agent from
the Indenture Trustee on behalf of such Noteholder (i) a certified copy of
a final, nonappealable order of a court having competent jurisdiction to
the effect that the Owner is required to return any such payment or portion
thereof prior to the Termination Date of this Policy because such payment
was voided under applicable law (the "Order") together with an opinion of
counsel satisfactory to MBIA that such Order is final and not subject to
appeal, (ii) an assignment, substantially in the form attached hereto as
Exhibit B, properly completed and executed by such Owner irrevocably
assigning to MBIA all rights and claims of such Owner relating to or
arising under such Avoided Payment, (iii) a Notice for Payment in the form
of Exhibit A hereto appropriately completed and executed by the Indenture
Trustee and (iv) appropriate instruments to effect the appointment of MBIA
as agent for such Owner in any legal proceeding relating to such Avoided
Payment.
MBIA shall make payments due in respect of Avoided Payments no
later than 12:00 noon, New York City time on the Business Day following the
Fiscal Agent's receipt of the documents required under clauses (i) through
(iv) of the preceding paragraph. Any such documents received by the Fiscal
Agent after 12:00 noon, New York City time, on any Business Day or on any
day that is not a Business Day shall be deemed to have been received by the
Fiscal Agent prior to 12:00 noon on the next succeeding Business Day. All
payments made by MBIA hereunder on account of any Avoided Payment shall be
made to the receiver or the trustee in bankruptcy named in the Order on
behalf of Owner and not to any owner directly unless such Owner has
returned such Avoided Payment to such receiver or trustee in bankruptcy, in
which case such payment will be disbursed to such Owner.
If any Notice for Payment received by the Fiscal Agent is not in
proper form or is otherwise insufficient for the purpose of making a claim
hereunder, it shall be deemed not to have been received by the Fiscal
Agent, and MBIA or the Fiscal Agent, as the case may be, shall promptly so
advise the Indenture Trustee, and the Indenture Trustee may submit an
amended Notice for Payment.
Payments due hereunder unless otherwise stated herein will be
disbursed by the Fiscal Agent to the Indenture Trustee on behalf of the
Owners by wire transfer of immediately available funds in the amount of
such payment, less, in respect of Avoided Payments, any amounts held by the
Indenture Trustee for the payment of such Avoided Payment and legally
available therefor.
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The Fiscal Agent is the agent of MBIA only, and the Fiscal Agent shall
in no event be liable to Owners for any acts of the Fiscal Agent or any
failure of MBIA to deposit or cause to be deposited sufficient funds to
make payments due under this Policy.
MBIA shall be subrogated to the rights of each Owner to receive
payments under the Notes to the extent of any payment by MBIA hereunder.
MBIA hereby waives and agrees not to assert any and all rights to
require the Indenture Trustee to make demand on or to proceed against any
person, party or security prior to the Indenture Trustee demanding payment
under this Policy.
No defenses, set-offs and counterclaims of any kind available to MBIA
so as to deny payment of any amount due in respect of this Policy will be
valid and MBIA hereby waives and agrees not to assert any and all such
defenses, set-offs and counterclaims, including, without limitation, any
such rights acquired by subrogation, assignment or otherwise. Any rights of
subrogation acquired by MBIA as a result of any payment made under this
Policy shall, in all respects, be subordinate and junior in right of
payment to the prior indefeasible payment in full of all amounts due the
Indenture Trustee on account of payments due under the Notes.
This Policy is neither transferable nor assignable, in whole or in
part, except to a successor to the Indenture Trustee pursuant to the
Indenture. All notices, presentations, transmissions, deliveries and
communications made by the Indenture Trustee to MBIA with respect to this
Policy shall specifically refer to the number of this Policy and shall be
made to MBIA at:
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management, Structured Finance
Telephone: (914) 273-4949
Facsimile: (914) 765-3163
or such other address, telephone number or facsimile number as MBIA may
designate to the Indenture Trustee in writing from time to time. Each such
notice, presentation, transmission, delivery and communication shall be
effective only upon actual receipt by MBIA.
Any notice hereunder delivered to the Fiscal Agent of MBIA may be made
at the address listed below for the Fiscal Agent of MBIA or such other
address as MBIA shall specify in writing to the Indenture Trustee.
The notice address of the Fiscal Agent is 61 Broadway, 15th Floor, New
York, New York 10006 Attention: Municipal Registrar and Paying Agency, or
such other address as the Fiscal Agent shall specify to the Indenture
Trustee in writing.
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The obligations of MBIA under this Policy are irrevocable, primary,
absolute and unconditional (except as expressly provided herein) and
neither the failure of the Trust, the Indenture Trustee, the Owner Trustee,
the Seller, the Servicer or any other person to perform any covenant or
obligation in favor of MBIA (or otherwise), nor the failure or omission to
make a demand permitted hereunder, nor the commencement of any bankruptcy,
debtor or other insolvency proceeding by or against the Trust, the
Indenture Trustee, the Owner Trustee, the Seller, the Servicer or any other
person shall in any way affect or limit MBIA's obligations under this
Policy. If a successful action or proceeding to enforce this Policy is
brought by the Indenture Trustee, the Indenture Trustee shall be entitled
to recover from MBIA costs and expenses reasonably incurred, including
without limitation reasonable fees and expenses of counsel.
This Policy and the obligations of MBIA hereunder shall terminate on
the date (the "Termination Date") that is one year and one day following
the earlier of (a) the Final Scheduled Payment Date and (b) the date on
which all amounts required to be paid to the Noteholders have been paid in
full.
All payments made hereunder by MBIA shall be made with MBIA's own
funds. The payment by MBIA to the Indenture Trustee of any amount
guaranteed by the first paragraph of this Policy, and the payment by MBIA
of any Avoided Payment shall constitute "payments" for all purposes under
this Policy. In no event shall any payment be made under this Policy on
account of (a) the failure of the Indenture Trustee to deliver the proceeds
of any such payment to any Owner or (b) the failure of any such Owner to
claim any such proceeds from the Indenture Trustee.
This Policy is not covered by the property/casualty insurance fund
specified in Article Seventy-Six of the New York State insurance law.
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This Policy sets forth in full the undertaking of MBIA, and shall not,
except with the prior written consent of the Indenture Trustee or otherwise
in accordance with the express terms hereof, be modified, altered or
affected by any other agreement or instrument, including any modification
or amendment thereto and may not be canceled or revoked by MBIA prior to
the Termination Date.
This Policy shall be returned to MBIA by the Indenture Trustee on the
Termination Date.
THIS POLICY SHALL BE CONSTRUED, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED, IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES OR THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.
IN WITNESS WHEREOF, MBIA has caused this Policy to be executed on the
date first written above.
MBIA INSURANCE CORPORATION
/s/ Thomas J. Koslovsky
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Thomas J. Koslovsky
Vice President
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Exhibit A to Financial Guarantee Insurance Policy, Number 28877
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management,
Structured Finance
NOTICE FOR PAYMENT
UNDER FINANCIAL GUARANTEE INSURANCE POLICY NUMBER 28877
Norwest Bank Minnesota, National Association, as indenture trustee
(the "Indenture Trustee"), hereby certifies to MBIA Insurance Corporation
("MBIA") with reference to that certain Financial Guarantee Insurance
Policy, Number 28877, dated March 30, 1999 (the "Policy"), issued by MBIA
in favor of the Indenture Trustee under the Indenture, dated as of March
30, 1999 between Paragon Auto Owner Trust 1999-A and the Indenture Trustee
as follows:
1. The Indenture Trustee is the Indenture Trustee under the Indenture
and the Beneficiary under the Policy.
2. The Indenture Trustee is entitled to make a demand under the Policy
[pursuant to Section 5.4 of the Sale and Servicing Agreement] [in
connection with an Avoided Payment as defined in the Policy]. [For a Notice
for Payment in respect of a Payment Date use the following paragraphs 3, 4
and 5.]
3. This notice relates to the [insert date] Payment Date. The amount
claimed under the Policy, as specified to the Indenture Trustee by the
Servicer, for such Payment Date is $_______. The amount demanded by this
notice does not exceed amounts permitted to be drawn under the Policy.
4. The Indenture Trustee demands payment of $_____, which is the Payment
Amount, as calculated pursuant to the Policy. The Payment Amount consists
of: (check as appropriate)
[the Guaranteed Interest Payment Amount] in the amount of $________
[the Guaranteed Principal Payment Amount] in the amount of $________.
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5. The amount demanded is to be paid in immediately available funds to
the Collection Account at ______________, account number _______________.
[For a Notice for Payment in respect of an Avoided Payment use the
following paragraphs 3 and 4.]
3. The Trustee hereby represents and warrants, based upon information
available to it, that (i) the amount entitled to be drawn under the Policy
on the date hereof in respect of Avoided Payments is the amount paid or to
be paid simultaneously with such draw on the Policy, by all Noteholders
[$______] (the "Avoided Payment Amount"), (ii) each Noteholder with respect to
which the drawing is being made under the Policy has paid or simultaneously
with such draw on the Policy will pay such Avoided Payment, and (iii) the
documents required by the Policy to be delivered in connection with such
Avoided Payment and Avoided Payment Amount have previously been presented
to MBIA or are attached hereto.
4. The amount demanded is to be paid in immediately available funds by
wire transfer to [_________].
[For a Notice for Payment relating to both an Avoided Payment and a
Payment Date, use the following paragraphs 3, 4, 5 and 6.]
3. This notice relates to the [insert date] Payment Date. The amount
claimed under the Policy, as specified to the Indenture Trustee by the
Servicer, for such Payment Date is $________. The amount demanded by this
notice does not exceed amounts permitted to be drawn under the Policy.
4. The Indenture Trustee demands payment of $______, which is the Payment
Amount, as calculated pursuant to the Policy. The Payment Amount consists
of: (check as appropriate)
[the Guaranteed Interest Payment Amount] in the amount of $_________
[the Guaranteed Principal Payment Amount] in the amount of $_________.
5. The Indenture Trustee hereby represents and warrants, based upon
information available to it, that (i) the amount entitled to be drawn under
the Policy on the date hereof in respect of Avoided Payments is the amount
paid or to be paid simultaneously with such draw on the Policy, by all
Noteholders [$______] (the "Avoided Payment Amount"), and (ii) the documents
required by the Policy to be delivered in connection with such Avoided
Payment and Avoided Payment Amount have previously been presented to MBIA
or are attached hereto.
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6. The amount demanded is to be paid in immediately available funds by
wire transfer to [_________].
Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to them in the Policy.
Any Person Who Knowingly And With Intent To Defraud Any Insurance
Company Or Other Person Files An Application For Insurance Or Statement Of
Claim Containing Any Materially False Information, Or Conceals For The
Purpose Of Misleading Information Concerning Any Fact Material Thereof,
Commits A Fraudulent Insurance Act, Which Is A Crime, And Shall Also Be
Subject To A Civil Penalty Not To Exceed Five Thousand Dollars And The
Stated Value Of The Claim For Each Such Violation.
IN WITNESS WHEREOF, this notice has been executed this ____ day of
____________, ____________.
Norwest Bank Minnesota, National Association
By:________________________________
Authorized Officer
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Exhibit B to Financial Guarantee Insurance Policy, Number 28877
Form of Assignment
Reference is made to the Financial Guarantee Insurance Policy No. 28877,
dated March 30, 1999, (the "Policy") issued by MBIA Insurance Corporation
("MBIA") relating to the $100,000,000 Paragon Auto Receivables Owner Trust
1999-A 5.95% Asset Backed Notes, Class A. Unless otherwise defined herein,
capitalized terms used in this Assignment shall have the meanings assigned
thereto in the Policy as incorporated by reference therein. In connection
with the Avoided Payment of [$___________] paid by the undersigned (the
"Holder") on [____________] and the payment by MBIA in respect of such
Avoided Payment pursuant to the Policy, the Holder hereby irrevocably and
unconditionally, without recourse, representation or warranty (except as
provided below), sells, assigns, transfers, conveys and delivers all of
such Holder's rights, title and interest in and to any rights or claims,
whether accrued, contingent or otherwise, which the Holder now has or may
hereafter acquire, against any person relating to, arising out of or in
connection with such Avoided Payment. The Holder represents and warrants
that such claims and rights are free and clear of any lien or encumbrance
created or incurred by such Holder
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Holder of Note.(1)
________________
(1) In the event that the terms of this form of assignment are reasonably
determined to be insufficient solely as a result of a change of law or
applicable rules after the date of the Policy to fully vest all of the
Holder's right, title and interest in such rights and claims, the Holder
and MBIA shall agree on such other form as is reasonably necessary to
effect such assignment, which assignment shall be without recourse,
representation or warranty except as provided above.
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