<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 6, 1998
REGISTRATION NO. 333-31925
----------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
TAMARACK LENDERS CORPORATION
(Exact name of registrant as specified in charter)
TEXAS 6159 75-2716949
(state of (primary sic (I.R.S. employer
incorporation) code number) identification no.)
801 EAST CAMPBELL ROAD, SUITE 310
RICHARDSON, TEXAS 75081
972-994-9363
(address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------
GARRY P. ISAACS
801 EAST CAMPBELL ROAD, SUITE 310
RICHARDSON, TEXAS 75081
972-994-9363
(name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
WITH A COPY TO:
WARREN M. S. ERNST, ESQ.
DONOHOE, JAMESON & CARROLL, P.C.
3400 RENAISSANCE TOWER
DALLAS, TEXAS 75270
------------------------
<PAGE>
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement as determined by
market conditions.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
PROPOSED PROPOSED AMOUNT
MAXIMUM MAXIMUM OF
TITLE OF AMOUNT OFFERING AGGREGATE REGISTR-
EACH CLASS OF TO BE PRICE PER OFFERING ATION
SECURITIES (a) REGISTERED UNIT (b) PRICE (b) FEE
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A-1 Notes $ 4,000,000 100% $ 4,000,000 $1212.12
Class A-2 Notes $16,000,000 100% $16,000,000 $4848.49
Total $20,000,000 $20,000,000 $6060.61(c)
- ---------------------------------------------------------------------------
</TABLE>
(a) Class A-1 Notes bear interest at 9.5% per annum and have a one year
maturity. Class A-2 Notes bear interest at 12% per annum and have a five year
maturity.
(b) Estimated solely for purposes of calculating the registration fee.
(c) Previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933
<PAGE>
OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS
THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
TAMARACK LENDERS CORPORATION
Cross Reference Sheet Pursuant to Item 501(b) of Regulation S-K
between Items in Part I of the Registration
Statement (Form S-1) and the Prospectus
ITEM CAPTION OR
NO. ITEM LOCATION IN PROSPECTUS
- ---- ---- ----------------------
1. Forepart of the Registration
Statement and Outside Cover
Page of Prospectus. . . . . . . . . . . . . . . . Facing Page and Front
Cover Page
2. Inside Front and Outside Back
Cover Pages of the
Prospectus. . . . . . . . . . . . . . . . . . .Inside Front and Outside
Back Cover Pages
3. Summary Information, Risk Factors
and Ratio of Earnings to
Fixed Charges . . . . . . . . . . . . . . . . . . .Summary; The Issuer;
Risk Factors
4. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . Use of Proceeds
5. Determination of Offering Price. . . . . . . . . . . . . . . .Not Applicable
6. Dilution . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
7. Selling Security Holders . . . . . . . . . . . . . . . . . . .Not Applicable
8. Plan of Distribution . . . . . . . . . . . . . . . . . .Plan of Distribution
9. Description of the Securities
to be Registered. . . . . . . . . . . . . . . .The Notes; The Indenture
10. Interest of Named Experts and Counsel. . . . . . . . . . . . None -- Omitted
11. Information with Respect to the Registrant
(a) Description of Business . . . . . . . . . . . . . . Summary; The Issuer
(b) Description of Property . . . . . . . . . . . . . . . . None -- Omitted
(c) Legal Proceedings . . . . . . . . . . . . . . . . . . . . . .The Issuer
(d) Market Price of and Dividends
on the Registrant's Common
Equity and Related Stockholder
Matters. . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(e) Financial Statements. . . . . . . . . . . Index to Financial Statements
(f) Selected Financial Data . . . . . . . . . . . . . . . . .Not Applicable
(g) Supplementary Financial Information . . . . . . . . . . .Not Applicable
(h) Management's Discussion and
Analysis of Financial
Condition and Results
of Operations. . . . . . . . . . . . . . . . . . . .Not Applicable
(i) Changes in and Disagreements with
Accountants and Financial
Disclosure . . . . . . . . . . . . . . . . . . . . .Not Applicable
(j) Directors and Executive Officers. . . . . . . . . . . . . . .Management
(k) Executive Compensation. . . . . . . . . . . . . . . . . . . .Management
(l) Security Ownership of Certain
Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . .Security Ownership
(m) Certain Relationships and
Related Transactions . . . . . . . . . . . . . . . . . .Management
12. Disclosure of Commission Position
on Indemnification for
Securities Act Liabilities. . . . . . . . . . . . . . . .Not Applicable
<PAGE>
(Subject to Completion -- Dated March 5, 1998)
PROSPECTUS
$20,000,000 (MAXIMUM) $100,000 (MINIMUM)
TAMARACK LENDERS CORPORATION
9 1/2% AUTO RECEIVABLES BACKED NOTES
12% AUTO RECEIVABLES BACKED NOTES
------------------
The Auto Receivables Backed Notes (the "NOTES") will consist of two classes
of Notes (respectively, the "Class A-1 Notes" and the "Class A-2 Notes"). The
Class A-1 Notes bear interest at 9 1/2%, mature one year from the date of
issuance, and are offered in a maximum amount of $4,000,000. The Class A-2
Notes bear interest at 12%, mature five years from the date of issuance, and
are offered in a maximum amount of $16,000,000. Principal of each Note will
be payable upon maturity, but may be prepaid without penalty, and interest on
each Note at the rates specified above will be distributed monthly to the
Noteholders. The Notes will be unsecured obligations issued by Tamarack
Lenders Corporation (the "ISSUER"), a newly-formed special purpose Texas
corporation that has not commenced operations as of the date of this
Prospectus. The property of the Issuer, to be purchased with the proceeds of
the issuance of the Notes, will consist of a pool of retail installment sale
contracts secured by used automobiles and light trucks (the "RECEIVABLES"),
certain monies due or received thereunder and security interests in the
vehicles financed thereby. The Receivables will be originated by independent
motor vehicle dealers and purchased on behalf of the Issuer by Tamarack
Funding Corporation, a Texas corporation and the parent of the Issuer
("TFC"), which will serve as the administrator of the business of the Issuer.
THE NOTES WILL NOT BE GUARANTEED, NOR WILL THEY BE RATED BY ANY INDEPENDENT
RATING AGENCY.
The Notes will be issued pursuant to an Indenture (the "INDENTURE") between
the Issuer and the Indenture Trustee (the "INDENTURE TRUSTEE"). The various
auto dealerships from which the Receivables are purchased will be the
servicers (the "Servicers") of the Receivables.
The offering will terminate on [one year], 1999, unless sooner terminated by
the Issuer.
-------------------------
PROCEEDS OF THE ASSETS OF THE ISSUER ARE THE SOLE SOURCES OF PAYMENTS ON THE
NOTES. THE NOTES WILL NOT REPRESENT AN INTEREST IN OR OBLIGATION OF, AND ARE
NOT GUARANTEED BY, TAMARACK FINANCIAL, INC., TAMARACK FUNDING CORPORATION,
TAMARACK CAPITAL MANAGEMENT CORPORATION, OR ANY OF THEIR RESPECTIVE
AFFILIATES.
-------------------------
1
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
NO PUBLIC MARKET IS EXPECTED TO DEVELOP FOR THESE SECURITIES. INVESTORS
SHOULD EXPECT TO RETAIN OWNERSHIP OF THE NOTES AND BEAR THE ECONOMIC RISKS OF
THEIR INVESTMENT FOR THE ENTIRE TERM OF THE NOTES.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" IN THIS PROSPECTUS AT PAGE 8. DEBT SECURITIES OFFERED WITH HIGH
INTEREST OR YIELD GENERALLY INVOLVE MORE RISK THAN MANY OTHER MEDIUM TERM
DEBT INSTRUMENTS WITH LOWER INTEREST OR YIELD. In addition, the Receivables
on which the Issuer will rely to meet its obligations under the Notes are
"sub-prime," representing obligations of less creditworthy individuals, with
resultant increased risks.
<TABLE>
PRICE TO BROKERS' PROCEEDS TO
PUBLIC COMMISSION COMPANY (1)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note 100% 6% 94%
Total Minimum $100,000 $6,000 $94,000
Total Maximum $20,000,000 $1,200,000 $18,800,000
- -------------------------------------------------------------------------------
</TABLE>
(1) Before deduction of up to 5% of the offering proceeds for the payment of
offering and organizational expenses incurred by the Issuer. See "The Issuer -
General".
The Notes will be sold on a best-efforts basis by Tamarack Financial, Inc., a
licensed broker-dealer affiliated with the Issuer. All subscriptions are
subject to the right of the issuer to reject any subscription in whole or in
part. Investor funds will be held in an escrow account at __________ Bank
until a minimum of $100,000 in principal amount of the Notes, regardless of
which class, are sold. In the event the minimum amount of Notes is not
subscribed on or before ________, 1998, 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. Upon the subscription by
investors for the minimum amount of Notes, the escrowed funds (less interest
thereon which will be paid to investors) will be released to the Issuer.
Interest will not accrue on the Notes
2
<PAGE>
until the escrowed funds are released to the Issuer. Any subsequent sales
proceeds from Notes will be immediately available for use by the Issuer.
The date of this Prospectus is _________________, 1998.
3
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
ISSUER, THE UNDERWRITER OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO OR
SOLICITATION OF ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO
MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION SET FORTH HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
REPORTS TO NOTEHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
MINIMUM INVESTOR SUITABILITY STANDARDS . . . . . . . . . . . . . . . . . . . 5
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
THE RECEIVABLES POOL . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
THE NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
THE INDENTURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
THE PURCHASE AND SERVICING AGREEMENTS. . . . . . . . . . . . . . . . . . . . 19
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES . . . . . . . . . . . . . . . . . . 22
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4
<PAGE>
SECURITY OWNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
FEDERAL INCOME TAX CONSEQUENCES. . . . . . . . . . . . . . . . . . . . . . . 29
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
INDEX OF DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
INDEX TO FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . 34
AVAILABLE INFORMATION
Tamarack Lenders Corporation, as Issuer, has filed with the Securities and
Exchange Commission (the "COMMISSION") a Registration Statement (together
with all amendments and exhibits thereto, referred to herein as the
"REGISTRATION STATEMENT") under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), with respect to the Notes offered pursuant to this
Prospectus. This Prospectus, which forms part of the Registration Statement,
does not contain all of the information contained in the Registration
Statement and exhibits. The Registration Statement is available for
inspection without charge at the public reference facilities of the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the regional offices of the Commission at 7 World Trade Center, 13th
Floor, New York, New York 10048 and the Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such information
can be obtained from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington D.C. 20549, at prescribed rates. The
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file
electronically with the Commission at http://www.sec.gov. Statements made in
this Prospectus as to the contents of any agreement or other document
referred to herein are not necessarily complete and reference is made to the
copy of such agreement or other documents filed as an exhibit or schedule to
the Registration Statement and to the exhibits and schedules filed therewith,
each such statement being qualified in all respects by such reference.
REPORTS TO NOTEHOLDERS
The Issuer will furnish quarterly unaudited summary information regarding the
Receivables and annual reports containing audited financial statements of the
Issuer and information concerning the Receivables to Noteholders. An IRS Form
1099 will be mailed to each Noteholder promptly after the end of each
calendar year for interest paid during the prior year. In addition, the
Issuer
5
<PAGE>
will file periodic reports with the Commission as required by the Securities
Exchange Act of 1934, as amended.
MINIMUM INVESTOR SUITABILITY STANDARDS
Minimum investor suitability requirements have been established for purchase
of the Notes. Subscribers must represent that they have either (a) an annual
gross income of at least $45,000 and a net worth of at least $45,000
exclusive of the subscriber's principal residence and its furnishings and
personal use automobiles; or (b) a net worth of at least $150,000, exclusive
of the subscriber's principal residence and its furnishings and personal use
automobiles. In the case of sales to a subscriber which is a fiduciary
account, the foregoing standards must be met by the beneficiary, the
fiduciary account, or by the donor or grantor who directly or indirectly
supplies the funds to purchase the securities if the donor or grantor is the
fiduciary.
PROSPECTUS SUMMARY
This Prospectus Summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. An index of
definitions is provided at page 33 for capitalized terms used in this
Prospectus.
The Notes will be issued by the Issuer, a newly-formed special purpose Texas
corporation that has not commenced operations as of the date of this
Prospectus. The property of the Issuer, to be purchased with the proceeds of
the issuance of the Notes, will consist of a pool of Receivables (retail
installment sale contracts secured by used automobiles and light trucks),
certain monies due or received thereunder and security interests in the
vehicles financed thereby. The Receivables will be originated by motor
vehicle dealers unaffiliated with the Issuer, and will be purchased on behalf
of the Issuer by TFC, which will serve as the administrator of the business
of the Issuer. No dealers have been selected, nor will they be selected prior
to the effective date. THE NOTES WILL NOT BE GUARANTEED, NOR WILL THEY BE
RATED BY ANY INDEPENDENT RATING AGENCY.
The Issuer will purchase Receivables at a discount, generally 80% (but in no
event more than 90%) of principal plus accrued interest. Dealers typically
sell receivables at a discount in order to meet their capital needs. See "The
Receivables Pool--Receivables Purchase Criteria." The principal and interest
from the Receivables are collected by the auto dealerships as servicers and
remitted to the Issuer as the owner of the Receivables, in the form of
weekly, biweekly and/or monthly installments. The Issuer reinvests periodic
proceeds in excess of Noteholders' principal and interest payments, into
additional Receivables of the same type. The Issuer holds title to the
Receivables until the Receivables are paid in full. Dealers, as Servicers,
are obligated to collect payments and submit them to the Issuer in full. The
Issuer will seek to enter into agreements with the Dealers in which the
dealers agree to replace any Receivable that is in default, although the
terms of any such requirement for any particular dealer or group of
6
<PAGE>
Receivables purchased will be determined by the Issuer and such Dealer. Any
such agreement could provide additional protection to the Issuer, to the
extent a dealer fulfills that obligation.
TFC's management has recognized the need for stable relationships with
automobile dealers as dealers are adjusting to new trends in pre-owned car
sales techniques. The recent introduction of the "automobile super store" has
been strong competition for traditional established preowned car dealers,
creating an important trend among established preowned car dealers toward
stronger high quality customer relationships. TFC has designed the Issuer's
dealer relationship criteria with a focus on traditional established dealers,
so that dealers can establish better and more dependable customer relations
which build loyalty and a stronger determination in the customer to meet
contractual obligations and to return to the dealer's store to trade up
and/or to purchase another car. The Issuer's strategic plan is based upon
encouraging and supporting the dealerships in developing and maintaining a
regular personal relationship with their customers by appointing the
dealerships as Servicers. The dealerships often are willing to sell the
Receivables with an obligation to replace a Receivable in default, in order
to maintain those relationships. The dealers' obligation, in turn, could
give the Issuer a measure of protection in the event the customer defaults.
Funding experience in years prior to the formation of the Issuer led the
Issuer's management to decide to focus on risk management first and
secondarily on growth. In the business of purchasing car receivables, risk is
proportionate to benefit. The greater the risk, the bigger the discount and
the higher the interest charged. In order to achieve higher benefit and less
risk, the strategic plan of the Issuer is to buy receivables only from
pre-qualified dealers, and to seek to obtain the dealers' agreement to
replace defaulting Receivables. The Issuer thereby will limit its risk, and
reduce its overhead costs as well, by requiring that dealers collect and
service the Receivables and by providing the dealer financial incentives for
doing so in the form of a back-end servicing fee paid only upon final payment
on the Receivable. This practice benefits the car dealer by allowing it to
keep long term and repeat customer relationships.
Tamarack Funding Tamarack Funding Corporation, or TFC, is a Texas corporation
whose business purpose is the acquisition and collection of
automobile sales contracts or receivables. TFC will
administer and manage the ongoing operations of the Issuer,
monitor the servicing of originating auto dealers, and
administer payments, communications and reports to
Noteholders. TFC will arrange for the purchase of
Receivables on behalf of the Issuer pursuant to a Master
Contract Purchase Agreement (the "PURCHASE AGREEMENT").
Issuer Tamarack Lenders Corporation, a newly-formed special purpose
Texas corporation, wholly-owned by TFC, that has not
commenced business as of the date of this Prospectus.
Servicers Various auto dealerships, pursuant to Servicing Agreements
with the Issuer (the "SERVICING AGREEMENTS").
7
<PAGE>
Indenture Trustee Sterling Trust Company, Waco, Texas.
The Notes Notes will be available for purchase in denominations of
$1,000 and integral multiples thereof with a minimum of
$10,000. The Class A-1 Notes will have a final maturity
date one year following issuance. The Class A-2 Notes will
have a final maturity date five years following issuance.
The Notes will be unsecured general obligations of the
Issuer.
Interest Payments Each Class A-1 Note will bear interest at 9 1/2% per annum
on its outstanding principal and each Class A-2 Note will
bear interest at 12% per annum on its outstanding principal
(with respect to each class of Notes, the "INTEREST RATE").
Interest will not accrue on the Notes, nor will the Notes be
issued, until release of escrowed subscription funds to the
Issuer, which will not occur until the minimum of $100,000
of the Notes, regardless of which class, is sold. Investors
in this offering will receive an IRS Form 1099 following
the end of each calendar year which will state the amount
of interest on which to calculate income taxes.
The Issuer's
Assets The assets of the Issuer will consist of the Receivables and
the proceeds thereof, including security interests in the
vehicles financed thereby and any proceeds from claims on
certain insurance policies covering the vehicles.
Purchase and
Servicing of
Receivables TFC will purchase Receivables from various auto dealerships
(the "DEALERS") on behalf of the Issuer, and the Dealers
will agree to serve as Servicers of the Receivables they
sell to the Issuer. The Servicers will agree to be
responsible for servicing, managing and making collections
on Receivables. TFC will be entitled to be reimbursed for
expenses incurred by it on behalf of the Issuer up to a
maximum of 5% of the total principal amount of Notes sold.
Any such reimbursement will be payable by the Issuer only
out of revenues, and only after current obligations on the
Notes are met.
Servicing Fees Servicers will receive a back-end servicing fee of 5% of the
price paid by the Issuer for a Receivable, payable only
when the Receivable has been paid in full by the obligor.
Federal
Income Tax
Consequences The Issuer has been advised by its tax counsel that for
federal income tax purposes the Notes will constitute
indebtedness. See "Federal Income Tax
8
<PAGE>
Consequences" for additional information concerning the
application of federal laws.
No Ratings The Notes will not be rated by any rating agency. The Issuer
has not sought, and is not required by the Indenture or any
other document, to obtain a rating of the Notes by a rating
agency.
Risk Factors An investment in the Notes entails certain risks, including
the following:
- The Notes have not been rated by any rating agency.
- The Notes are unsecured general obligations of the Issuer.
- No public market for the Notes presently exists and none
is expected to result from this offering.
- Obligors under the Receivables are anticipated to be
somewhat less creditworthy than typical purchasers of
automobiles from new car dealers.
- The Issuer anticipates that a portion of the Receivables
will become delinquent and require repossession and resale
of the related vehicle. The Issuer will be dependent upon
the Servicers' ability to take the necessary steps in the
event of a delinquency.
- The Issuer will not have any significant assets other
than the Receivables and the proceeds thereof.
- The Issuer will have numerous competitors engaged in the
business of buying new and used motor vehicle retail
installment contracts and notes at a discount, including
companies with greater financial resources than the Issuer.
For a more complete discussion of the risks involved, see
"Risk Factors."
Offering
Termination Date [One year], 1999, unless sooner terminated by the Issuer.
RISK FACTORS
9
<PAGE>
General. The Notes are dependent upon the performance of the Receivables
selected for the Receivables Pool by TFC and the ability of the obligors on
those Receivables to perform their obligations. TFC was organized in June
1995 and has no long term operating history. TFC has a limited history of
owning auto receivables of the type to be purchased by the Issuer. Further,
the Indenture Trustee may be left to administer and collect the Receivables
on behalf of Noteholders in the event of the failure of the Servicers, and
thereafter TFC and its affiliates, to perform. The Issuer does not have, and
is not expected to have, any significant assets other than the Receivables
and the proceeds thereof. No other party, including TFC, will insure or
guarantee the Notes or be obligated at any time to make capital contributions
at any time for the purpose of paying any delinquencies on the Notes. See
"The Notes-General," "The Indenture" and "Certain Information Regarding the
Notes."
Ratings; Effect on Liquidity. The Notes will not be rated by any rating
agency. The Issuer has not sought, and is not required by the Indenture or
any other document, to obtain a rating of the Notes by a rating agency. This
will have the effect of making the Notes highly illiquid; accordingly, the
Notes should only be purchased by persons who have no need for liquidity in
their investment.
Unsecured Nature of Notes. The Notes are unsecured obligations of the Issuer.
Upon occurrence of an Event of Default with respect to the Notes, the Trustee
will not have rights of a secured creditor with respect to the Issuer's
assets, but must obtain a judgment against the Issuer before proceeding
against the Issuer's assets. This may have the effect of reducing the
amounts recoverable by the Trustee on behalf of the Noteholders, and delaying
any recovery.
Nature of Receivables to be Purchased. A subscriber for the Notes must rely
primarily on the business judgment of TFC's management for selection of
Receivables. No Receivables have been identified for purchase prior to the
Offering. Further, the risk in the collection of Receivables is that the
Receivables may fail to perform, whereupon the Dealer will have to collect or
enforce the Receivables by repossession and resale of the Financed Vehicles.
If the Dealer fails to perform its obligation under its Servicing Agreement,
the Issuer must engage either TFC or another entity to act as successor
servicer. The Noteholders' only source of repayment on the Notes will be the
Receivables and the proceeds thereof. The Receivables represent "sub-prime"
obligations of less creditworthy individuals, with resultant increased risks
of default. If the Receivables experience greater than anticipated defaults,
the assets of the Issuer may be less than the amounts owed by the Issuer on
the Notes. See "Certain Legal Aspects of the Receivables."
Lack of Market for Notes. No public market for the Notes presently exists and
none is expected to result from this offering. Noteholders have no right to
require advance redemption of the Notes and may not be able to liquidate
their investment in the Notes in the event of an emergency or for any other
reason, and the Notes may not be readily accepted as collateral for loans.
Accordingly, the Notes should be purchased only by persons who have no need
for liquidity in their investment.
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<PAGE>
Dependence on Management. Purchasing receivables associated with pre-owned
automobiles has certain and particular risks and requires specialized business
acumen in order to minimize the risks involved. Management of such risks is
essential for the success of the servicing company. Repayment of the Notes
requires reliance upon the success of management of TFC in selecting Dealers and
in selecting Receivables, as well as the Dealers in their roles as Servicers.
TFC has a limited history owning auto receivables. To date, __% of those
receivables have defaulted, but in every case to date the respective auto dealer
has been subject to a contractual obligation to repurchase defaulted
receivables, and has done so. There can be no assurance, however, that dealers
will agree to such a contractual obligation as to the Receivables purchased by
the Issuer, or whether dealers will comply with such obligation if entered into.
Further, no assurance can be given that management will be successful in
achieving its goals with respect to the business of the Issuer, or that chosen
business methods will produce desired results. The success of the Issuer will
depend largely upon the efforts of its principal executive officers, who will
each devote full time to the Issuer's and TFC's affairs. See "Management."
Conflicts of Interest. TFC invests its capital into the same types of
receivables as it will acquire for the Noteholders. This activity has the
potential to create a conflict of interest; however, the Board of Directors of
TFC has adopted the policy to acquire Receivables as they become available on
behalf of TFC and the Issuer based upon availability of funds, with no
preferences.
Delay in Purchasing Receivables. To maximize its investment yields, the Issuer
expects to purchase Receivables using the net proceeds from the sale of Notes as
soon as practicable following receipt of such proceeds. However, the timing of
expenditure of the net proceeds will be based partly on availability of
Receivables purchases, and cannot be predicted with certainty. In addition, it
is expected that the Issuer will purchase Receivables on a volume basis, thereby
potentially further delaying expenditures of the net proceeds. If unforeseen
delays occur in the investment of the net proceeds from the sale of Notes in the
purchase of Receivables, the Issuer's overall profitability and ability to repay
the Notes could be adversely affected because the yields of its short-term
investment alternatives for such funds, as permitted under the Indenture, are
expected to be less than the yields anticipated to be received by the Issuer
from the Receivables.
Future Purchase of Receivables; Terms, Interest Rates and Defaults. The Issuer
will use additional cash flow that it receives in the form of principal payments
on the Receivables to purchase additional Receivables. There is the risk that
those Receivables will bear lower interest rates, or will experience higher
default rates, such that the future ability of the Issuer to meet its
obligations on the Notes is impaired. There can be no assurance that management
will be able to successfully manage the Issuer's acquisition of Receivables in
light of future market or credit conditions.
Competition. The Issuer will have numerous competitors engaged in the business
of buying new and used motor vehicle retail installment contracts and notes at a
discount, including companies with greater financial resources than the Issuer.
As a result, the Issuer may have to pay a higher price for Receivables than
anticipated or may have to purchase Receivables bearing a greater risk of
default.
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Sale of Small Amount of Notes. The offering may be consummated by the Issuer
with the sale of as little as $100,000 in principal amount of the Notes. In the
event the Issuer sells only a small portion of the Notes, fewer individual
Receivables will be purchased by the Issuer, and the performance of the smaller
pool of Receivables will be affected more by the performance of each individual
Receivable. This in turn, will have a greater effect on the ability of the
Issuer to meet its obligations under the Notes than if a large portion of the
Notes are sold in the offering.
THE ISSUER
TFC has incorporated as its wholly-owned subsidiary Tamarack Lenders
Corporation, a single purpose Texas corporation, to be Issuer of the Notes. The
Property of the Issuer will consist of (i) a pool (a "RECEIVABLES POOL") of
retail installment sales contracts for used automobiles and light trucks (the
Receivables), all scheduled payments due thereunder and all payments received
thereunder, and (ii) security interests in vehicles financed by the Receivables
(the "FINANCED VEHICLES") and, to the extent permitted by law, any accessions
thereto.
The activities of the Issuer will be limited to (i) acquiring, managing and
holding the related Receivables, and (ii) issuing the related Notes and making
payments and distributions thereon.
The Servicers will continue to service the Receivables held by the Issuer.
Servicers will receive a back-end fee, payable when the Receivable has been paid
in full, equal to 5% of the amount paid by the Issuer for such Receivable. See
"The Transfer and Servicing Agreements-Servicing Compensation and Payment of
Expenses." Following the purchase of Receivables, the certificates of title to
the Financed Vehicles will be amended to reflect the Issuer as the lienholder.
The Dealers will be responsible for the legality, validity or enforceability of
any security interest in any Financed Vehicle financed by Receivables they sell
to the Issuer. See "Certain Legal Aspects of the Receivables" and "The Transfer
and Servicing Agreements-Sale and Assignment of Receivables."
The Issuer will have no paid employees. The Issuer will be required to
reimburse TFC and its affiliates for certain expenses incurred on its behalf,
pursuant to the Administration Agreement, for ongoing administrative
services. Such reimbursement will be from cash flow in excess of amounts
required to service the Notes, and only to the extent that the Issuer retains
cash on hand plus an Aggregate Principal Balance of Receivables at least
equal to the then-outstanding principal balance on the Notes. Further, the
maximum amount of expenses incurred by TFC that can be reimbursed by the
Issuer, including organizational and offering expenses, is 5% of the amount
of Notes issued. See "The Transfer and Servicing Agreements."
The principal offices of the Issuer are at 801 East Campbell Road, Suite 310,
Richardson, Texas 75081, telephone 972-994-9353. The Issuer is not party to any
litigation.
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THE RECEIVABLES POOL
The Receivables in the Receivables Pool will be acquired by the Issuer from
automobile and light truck dealers pursuant to agreements with the Issuer. The
Receivables will be acquired in accordance with the Issuer's underwriting
standards in the ordinary course of its business from dealers that have met the
Issuer's dealer criteria. No Receivables have been identified for purchase as of
the date of this Prospectus.
Receivables Purchase Criteria--
The Issuer has designated certain criteria for the Receivables and the Financed
Vehicles to qualify for purchase by the Issuer. The Issuer believes that the
most significant of these criteria, in general, are as follows:
a) The purchase price for each Receivable must involve an initial payment to
the Dealer (i) of no more than 90% of principal plus accrued interest (pay-off
balance) of such Receivable at the time of purchase, and (ii) which does not
exceed the average trade-in price (wholesale value) for the related Financed
Vehicle plus tax, title, license and warranty.
b) The Receivables generally will have original terms that are 36 months or
less, although 48 month terms will be permitted where the Financed Vehicle is a
recent model, or where lower depreciation or stronger credit history justifies a
48 month term. The Receivables will equally amortize their principal balance
over their respective terms.
c) The age of each Financed Vehicle will generally be seven years or less for
automobiles or eight years or less for trucks, although the Issuer may purchase
Receivables secured by Financed Vehicles which are older, if in its judgement
the economics justify such a purchase.
d) The mileage of each Financed Vehicle may not generally exceed 100,000 miles
for automobiles or 125,000 miles for trucks, regardless of the year model. The
mileage limit will be less for later year models.
e) The obligors on the Receivables are generally required to make a down
payment in cash plus net trade-in allowance of at least approximately 10% of the
Dealers' costs (excluding sale preparation expenses) in the Financed Vehicles,
although there are no express minimum ratios of unpaid installments under the
Receivables at the time of their origination by the Dealers to the retail sale
price or the wholesale value of the Financed Vehicles.
f) The interest rate on the Receivables must not violate any applicable usury
laws.
g) The obligors on the Receivables must have supplied certain credit
information, and credit verification procedures must have been performed by the
Dealer in a manner commensurate with standard industry practice.
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The Issuer's standards generally also require physical damage insurance to be
maintained by the obligor on each Financed Vehicle. Receivables may be purchased
which do not meet the criteria specified in (a) through (e) above if in the
Issuer's good faith judgment, purchasing such Receivables would be in the best
interests of the Issuer. Generally, the "creditworthiness grade" of the obligors
on the Receivables will be "C", meaning that the obligors generally could not
obtain financing from a local financial institution and may have had credit
problems in the past.
The Issuer may purchase Receivables from dealers subject to the requirement that
the selling Dealer repurchase any Receivables that become delinquent, although
the terms of any such requirement for any particular dealer or group of
Receivables purchased will be determined by the Issuer and such dealer.
Issuer's Dealer Criteria--
Receivables will generally be purchased from dealers who meet the following
criteria:
* A net worth, exclusive of goodwill or other intangible values, of at least
$100,000, or a parent, affiliate or predecessor which meets the net worth
criterion;
* A minimum of three years of successful operation as an automobile dealer, as
evidenced by financial statements or prior tax returns;
* A minimum of three years of experience as a servicer of automobile
receivables;
* Experienced contract loss rates during the immediately preceding year
acceptable to the Issuer; and
* Verifiable banking references.
The Issuer will not specifically limit the number of Receivables originated by
any one dealer that may be included in the Receivables inventory at any one
time.
The "AMOUNT FINANCED" with respect to a Receivable will equal the aggregate
amount advanced toward the purchase price of the Financed Vehicle, including
accessories, insurance premiums, service and warranty contracts and other items
customarily financed as part of retail automobile installment sale contracts and
related costs.
The "AGGREGATE PRINCIPAL BALANCE," as of any date, means the sum of the
Principal Balances of all outstanding Receivables (other than Liquidating
Receivables) held by the Issuer on such date. The "PRINCIPAL BALANCE," as of any
date with respect to any Receivable, is equal to the Amount Financed minus that
portion of all scheduled payments due on or prior to such date allocable to
principal, and any prepayment applied to reduce the Principal Balance of such
Receivable.
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The Issuer will purchase additional Receivables from time to time as it receives
proceeds from the Receivables Pool in excess of amounts required to service the
Notes and for working capital. The Receivables Pool will at all times have an
Aggregate Principal Balance so that, with cash retained by the Issuer, the
Issuer will have assets at least equal to the principal amount of Notes
outstanding.
USE OF PROCEEDS
Once the minimum amount of Notes has been sold, and escrow is released, the net
proceeds to be received by the Issuer from the sale of the Notes will be applied
as those proceeds are received from time to time as follows:
<TABLE>
Minimum Offering Maximum Offering
---------------- ----------------
<S> <C> <C>
Proceeds of Offering $100,000 $20,000,000
Organizational and Offering
Expenses, Administration
Expenses Reimbursed (a) -0- -0-
Commissions to Broker-Dealer (b) $ 6,000 $ 1,200,000
Amount available to Issuer for
Purchase of Receivables $ 94,000 $18,800,000
</TABLE>
_______________
(a) All fees and expenses relating to the organization of the Issuer, legal and
accounting fees and printing costs, will be paid by TFC prior to escrow being
released, which will in turn be reimbursed by the Issuer, up to a maximum amount
equal to 5% of the total amount of Notes sold, out of revenues only, and only
after current obligations on the Notes are met. See "Transfer and Servicing
Agreements" and "Plan of Distribution."
(b) The gross proceeds from the issuance and sale of the Notes will be subject
to commissions of up to 6.00% payable to Tamarack Financial, Inc., an affiliate
of the Issuer and TFC.
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<PAGE>
TAMARACK FUNDING
Tamarack Funding Corporation, or TFC, was incorporated in the State of Texas in
June 1995. TFC is organized for the limited purposes of purchasing receivables,
transferring such receivables to third parties, forming trusts and engaging in
related activities. TFC is not party to any litigation. The principal
executive offices of TFC are located at 801 East Campbell Road, Suite 310,
Richardson, Texas 75081 (telephone (972) 994-9363).
CAPITALIZATION
The Issuer has not commenced operations as of the date of this Prospectus.
The following table sets forth the capitalization of the Issuer as of December
31, 1997, as adjusted to reflect the sale of Notes offered hereby.
<TABLE>
As of December 31, 1997
As Adjusted
---------------------------
Minimum Maximum
-------- -----------
<S> <C> <C>
Liabilities $100,023 $20,000,023
Shareholders' Equity
Common Stock, $0.01 par value,
10,000 shares authorized, 1,000
shares outstanding 10 10
Additional paid-in capital 51,090 51,090
Retained Earnings 129 129
-------- -----------
Total Shareholders' Equity $ 51,229 $ 51,229
-------- -----------
Total Liabilities and Shareholders' Equity $151,252 $20,051,252
-------- -----------
-------- -----------
</TABLE>
The Issuer's only significant assets will be the Receivables and the proceeds
thereof. The costs of the Issuer's ongoing operations will be borne by TFC and
certain affiliates. They will be reimbursed (i) through TFC's equity interest
in the Issuer, to be realized if and after all of the Issuer's obligations under
the Notes have been satisfied, and (ii) for expenses incurred by them on behalf
of the Issuer, but any such reimbursement will be subordinate to the rights of
the Noteholders, and will only be payable by the Issuer to the extent that it
has cash flow in excess of the amounts required to service the Notes and to the
extent that it continues to hold Receivables with an Aggregate Principal Balance
at least equal to the then-outstanding principal amount of the Notes.
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<PAGE>
THE NOTES
General. Two classes of Notes will be issued pursuant to the terms of an
Indenture, a form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The following discussion is a
summary of material provisions of the Notes; it does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all of the
provisions of the Notes and the Indenture. Where particular provisions or terms
used in the Indenture are referred to, the actual provisions (including
definitions of terms) are incorporated by reference as part of this summary.
Notes will be available for purchase in denominations of $1,000 and integral
multiples thereof, with a minimum purchase of $10,000. The Notes are general
unsecured obligations of the Issuer and the holders of the Notes will have
recourse against the assets of the Issuer for payment of the Notes.
Substantially all of the Issuer's assets will be the Receivables. The Issuer
has not sought, and is not required by the Indenture or any other document to
obtain a rating of the Notes by a rating agency. No person or entity will
guarantee payment of the Notes, and the holders of the Notes will have no
contractual recourse against TFC for payment of the Notes.
PRINCIPAL AND INTEREST ON THE NOTES. Principal of each Note will be payable upon
maturity, but may be prepaid without penalty. Interest on each Note will be
distributed monthly to the Noteholders. The Class A-1 Notes will have a final
maturity date one year following issuance and will bear interest at 9 1/2% per
annum. The Class A-2 Notes will have a final maturity date five years following
issuance and will bear interest at 12% per annum. Interest will be payable
monthly on the 15th day of each month during the term of a Note, for interest
accruing through such date. Payments to Noteholders of all classes in respect of
interest will have the same priority.
DISTRIBUTIONS; TRANSFERS. Distributions of principal of, and interest on, the
Notes will be made in accordance with the procedures set forth in the Indenture
directly to holders of Notes in whose names the Notes were registered at the
close of business on the last day of the preceding Monthly Period. Such
distributions will be made by check mailed to the address of such holder as it
appears on the register maintained by the Indenture Trustee. The final payment
on any Note, however, will be made only upon presentation and surrender of such
Note at the office or agency specified in the notice of final distribution to
the holders of such class.
Notes will be transferable and exchangeable at the offices of the Indenture
Trustee or of a registrar named in a notice delivered to Noteholders. No
service charge will be imposed for any registration of transfer or exchange, but
the Indenture Trustee may require payment of a sum sufficient to cover any tax
or other governmental charge imposed in connection therewith.
REPORTS TO NOTE HOLDERS. The Issuer will furnish quarterly unaudited summary
information regarding the Receivables and annual reports containing audited
financial statements of the Issuer and information concerning the Receivables to
Noteholders. Within the prescribed period of time for tax reporting purposes
after the end of each calendar year during which any
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<PAGE>
Notes remain outstanding, the Indenture Trustee will mail to each holder of a
class of Notes who at any time during such calendar year has been a
Noteholder, and received any payment thereon, a statement containing certain
information for the purposes of such Noteholder's preparation of federal
income tax returns. See "Federal Income Tax Consequences."
THE INDENTURE
A form of Indenture has been filed as an exhibit to the Registration Statement
of which this Prospectus forms a part. TFC will provide a copy of the Indenture
(without exhibits) upon request of a Noteholder. The following discussion is a
summary of material provisions of the Indenture; it does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all of the provisions of the Indenture. Where particular provisions or terms
used in the Indenture are referred to, the actual provisions (including
definitions of terms) are incorporated by reference as part of this summary.
MODIFICATION OF INDENTURE. With the consent of the holders of at least a
majority of the aggregate principal amount of the outstanding Notes, the Trustee
and the Issuer may amend or supplement the Indenture or the Notes, except as
provided below. Notice of any such amendment of the Indenture or the Notes will
be mailed to all holders of the Notes by the Issuer promptly after the
effectiveness thereof. Without the additional consent of the holder of each
Outstanding Note affected, however, no supplemental indenture will, among other
things, (a) reduce the amount of Notes whose holders must consent to an
amendment, supplement or waiver, (b) reduce the rate of or extend the time for
payment of interest on any Note, (c) reduce or extend the maturity of the
principal of any Note, or (d) make any Note payable in money other than that
stated in the Note. For the purpose of consents of Noteholders, the term
"Outstanding" excludes Notes held by the Issuer or its Affiliates.
The Issuer and the Trustee may also amend or supplement the Indenture or the
Notes, without obtaining the consent of Noteholders, to cure ambiguities or make
minor corrections and, among other things, to make any change that does not
materially adversely affect the interests of the Noteholders.
EVENTS OF DEFAULT. An event of default ("EVENT OF DEFAULT") with respect to the
Notes is defined in the Indenture as being:
(a) a failure by the Issuer to make any interest payment on the Notes within 30
days after it becomes due; (b) a failure by the Issuer to make any principal
payment on the Notes at maturity or otherwise within 30 days after it becomes
due; (c) the impairment of the validity or effectiveness of the Indenture, the
improper amendment or termination of the Indenture, or the failure of the Issuer
to comply with any of the covenants of the Issuer in the Indenture, and the
continuance of any such default for a period of 30 days after notice to the
Issuer by the Trustee or to the Issuer and the Trustee by the registered holders
of Notes representing at least 40% of the aggregate principal amount of the
outstanding Notes; (d) the incorrectness in any material
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<PAGE>
respect of a representation or warranty of the Issuer in the Indenture
(exclusive of representations and warranties as to individual Receivables
that the Servicer is obligated to, and does, repurchase from the Issuer) and
the failure to cure such circumstances or condition within 30 days of notice
thereof to the Issuer by the Trustee or the registered holders of Notes
representing at least 40% of the aggregate principal amount of the
outstanding Notes; or (e) certain events of bankruptcy of the Issuer.
RIGHTS UPON EVENT OF DEFAULT. In case an Event of Default should occur and be
continuing, the Trustee may, or at the direction of the registered holders of
Notes representing a majority of the principal amount of the outstanding Notes
will, declare the Notes due and payable. Upon such declaration, the Notes will
immediately become due and payable in an amount equal to their remaining
principal amount plus accrued interest at such time. Such declaration may under
certain circumstances be rescinded by the registered holders of a majority of
the aggregate principal amount of the outstanding Notes.
If, following an Event of Default, the Notes have been declared due and payable,
the Trustee may exercise one or more of its remedies including, in its
discretion, the right to make demand and institute judicial proceedings in
equity or law for the collection of all amounts then payable on the Notes, or
under the Indenture, whether by declaration or otherwise, enforce all judgments
obtained, and collect from the Issuer moneys adjudged due.
The registered holders of a majority of the aggregate principal amount of the
outstanding Notes will have the right to direct the time, method, and place of
conducting any proceedings for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee. The Trustee may refuse, however, to
follow any such direction that conflicts with law or the Indenture, that is
unduly prejudicial to the rights of Noteholders not joining in such direction or
that would involve the Trustee in personal liability. The registered holders of
a majority of the aggregate principal amount of the outstanding Notes may also
waive any default, except a default in respect of a covenant or provision of the
Indenture which cannot be modified without the waiver or consent of each holder
of Notes affected.
No holder of Notes will have the right to pursue any remedy with respect to the
Indenture or the Notes, unless (a) such holder gives to the Trustee written
notice of a continuing Event of Default, (b) the registered holders of a
majority of the aggregate principal amount of the outstanding Notes have made a
written request to the Trustee to pursue such remedy, and have offered the
Trustee indemnity satisfactory to the Trustee against loss, liability or
expense, (c) the Trustee does not comply with the request within 60 days, and
(d) the Trustee has received no contrary direction during such 60-day period
from the registered holders of Notes representing a majority of the principal
amount of the outstanding Notes.
RESTRICTIONS ON BUSINESS ACTIVITIES AND ADDITIONAL INDEBTEDNESS. The Issuer has
made certain covenants in the Indenture that restrict its business activities
and prohibit certain transactions by the Issuer. The Issuer has agreed, among
other things, that, without the consent of the registered holders of a majority
of the aggregate principal amount of the Notes
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<PAGE>
then outstanding, it will not create, incur, assume or in any manner become
liable in respect of any indebtedness other than the Notes, any expenses in
the ordinary course and any other amounts incurred in the ordinary course of
the Issuer's business. The Issuer is prohibited from purchasing assets from
TFC, selling assets to TFC, commingling assets with TFC or engaging in
transactions with affiliates, except as described in this prospectus.
Further, the Issuer has agreed to invest its operating funds only in
"Eligible Investments," defined in the Indenture, generally, as high-quality
short-term obligations. In addition, the Issuer has agreed not to dissolve or
liquidate in whole or in part or to merge or to consolidate with any
corporation, partnership or other entity other than another direct or
indirect wholly-owned subsidiary of an affiliate of the Issuer whose business
is restricted in the same manner as the Issuer's business.
COMPLIANCE STATEMENTS AND ANNUAL ACCOUNTANTS' REPORTS. The Issuer will be
required to file annually with the Trustee a report of a firm of independent
public accountants as to their examination of the financial statements of the
Issuer. The annual report will also be sent to Noteholders.
TRUSTEE'S ANNUAL REPORT. The Trust Indenture Act of 1939 requires the Trustee to
mail annually to all holders of Notes a brief report if any of certain events
occur. These events include any change in the Trustee's eligibility and
qualifications to continue as the Trustee under the Indenture, any amounts
advanced by it under the Indenture, the amount, interest rate and maturity date
of certain indebtedness, if any, owing by the Issuer to the Trustee in its
individual capacity, and any action taken by it which materially affects the
Notes and which has not been previously reported.
DUTIES OF TRUSTEE. If an Event of Default has occurred and is continuing, the
Trustee is obligated, under the Indenture, to exercise such of its rights and
powers and to use the same degree of care and skill in the exercise of such
rights and powers as a prudent man would exercise or use under the circumstances
in his own affairs. Except during an Event of Default known to the Trustee, the
Trustee may rely, in the absence of bad faith, on certificates and opinions
furnished to it. Generally, the Trustee is not relieved from liability for its
own negligence or willful misconduct except that it is not liable (i) if it
acted in good faith in accordance with a direction from the Holders of not less
than a majority in principal amount of the Notes, or (ii) for any error in
judgment made in good faith and without negligence in ascertaining the pertinent
facts. The Trustee may refuse to perform any duty or exercise any right or power
unless it receives indemnity satisfactory to it against any loss, liability or
expense. The Trustee may refuse to exercise any right or power at the request or
direction of the holders of Notes, unless such holders offer to the Trustee
reasonable security or indemnity against the costs, expenses or liabilities that
might be incurred by it in compliance with such request or direction.
SATISFACTION AND DISCHARGE OF INDENTURE. The Indenture will be discharged with
respect to the related Notes upon the delivery of all such Notes to the
Indenture Trustee for cancellation or, with certain limitations, upon deposit
with the Indenture Trustee of funds sufficient for the payment in full of all of
such Notes.
20
<PAGE>
THE PURCHASE AND SERVICING AGREEMENTS
The following summary describes the material terms of (i) the Purchase
Agreement pursuant to which TFC will acquire Receivables from Dealers on
behalf of the Issuer, and (ii) the Servicing Agreement pursuant to which
Dealers from whom the Receivables will be purchased will agree to service
such Receivables (collectively, the "PURCHASE AND SERVICING AGREEMENTS").
Forms of the Purchase and Servicing Agreements have been filed as exhibits to
the Registration Statement of which this Prospectus forms a part. The Issuer
will provide a copy of the Purchase and Servicing Agreements (without
exhibits) upon request to a holder of Notes. This summary does not purport
to be complete and is subject to, and qualified in its entirety by reference
to, all of the provisions of the Purchase and Servicing Agreements. Where
particular provisions or terms used in the Purchase and Servicing Agreements
are referred to, the actual provisions (including definitions of terms) are
incorporated by reference as part of such summary.
SALE AND ASSIGNMENT OF RECEIVABLES. Various auto dealerships will sell and
assign to the Issuer their entire interest in the related Receivables,
including security interests in the Financed Vehicles, pursuant to a transfer
agreement to be entered into between such dealers and Issuer. Each Receivable
will be identified in a schedule which will be on file at the locations set
forth in an exhibit to the such transfer agreement.
In each transfer agreement, the Issuer will require the applicable Dealer to
represent and warrant to the Issuer, among other things, that: (i) the
Receivable documents will represent a genuine obligation of the named obligor
thereon, will be valid and binding in accordance with their terms, will be
enforceable by the Issuer and its assigns, and will be subject to no legal or
equitable defenses, set-offs or counterclaims; (ii) the obligor of each of
the Receivables will be of legal age and capacity at the time of the
execution thereof; (iii) the Receivables will have arisen out of the sale or
lease of the property described in the Receivable documents on the terms
described therein; (iv) the Dealer will have complied with and the Receivable
documents will be in compliance with all applicable federal and state laws,
rules and regulations including, but not limited to, the Truth-In-Lending
Act, the Equal Credit Opportunity Act, and all Federal and State Laws
relating to consumer credit transactions; (v) the Receivables will not be
usurious under applicable laws; (vi) the Issuer, as owner of the Receivables,
will have a valid first priority lien and security interest in the collateral
described in the Receivable documents and will be entitled to enforce its
rights in such collateral as provided in the Receivable documents; (vii) the
Dealer is the sole owner of the Receivables and has the authority to sell,
transfer and assign the same; (viii) the Receivable documents will represent
the entire agreement between the Dealer and the obligor with respect thereto,
and the Receivable documents will not have been
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modified, superseded or waived by any act or omission of the Dealer; (ix) the
Dealer will receive appropriate documentation to evidence the existence of
all physical damage insurance (if any) pursuant to the Receivable documents
and furnish such documentation to the Issuer; and (x) the Dealer will not
accept side notes and/or post-dated checks as any part of the sale.
Following the discovery by the Issuer of a breach of any representation or
warranty of a Dealer that materially and adversely affects the interests of
the Noteholders in any Receivable, the Issuer, unless the breach is cured in
all material respects, will enforce the obligation of the applicable
dealership under the transfer agreement to repurchase such Receivable from
the Issuer at a price equal to the Amount Financed minus that portion of all
payments received on or prior to the last day of the prior month allocable to
principal. The applicable Dealer will also agree that the transfer of the
Receivable documents to the Issuer is a true sale of such documents.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES. Dealers, as Servicers, will
be entitled to a back-end fee on each Receivable when such Receivable has
been paid in full. Such fee (the "SERVICING FEE") will equal 5% of the
amount for which such Receivable was purchased by the Issuer.
The Servicing Fees are intended to compensate the Servicers for performing
the functions of a third-party servicer of Receivables as an agent for their
owner, including collecting and posting all payments, responding to inquiries
of obligors on the Receivables, investigating delinquencies, sending payment
coupons to obligors, reporting tax information to obligors and monitoring the
collateral.
SERVICING PROCEDURES. The Servicers will be required under the Servicing
Agreements to make reasonable efforts to collect all payments due with
respect to the Receivables and will, consistent with the related Servicing
Agreement, follow such collection procedures as they follow with respect to
comparable automobile receivables that they service for themselves or others.
See "Certain Legal Aspects of the Receivables."
If a Servicer determines that eventual payment in full of a Receivable is
unlikely, the Servicer will follow its normal practices and procedures to
realize upon the Receivable, including the repossession and disposition of
the Financed Vehicle securing the Receivable at a public or private sale, or
the taking of any other action permitted by applicable law.
COLLECTIONS. Each Servicer will deposit all payments on the related
Receivables received from obligors and all proceeds of Receivables collected
into the Issuer's lock-box account, an account established in the Issuer's
name, immediately upon receipt. In the event checks are made payable to the
dealer, it will be required to endorse the check to the Issuer and deposit
the check
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in the lock-box account. Pending deposit into the collection account,
collections may not be used by the Servicer for its own benefit.
EVIDENCE AS TO COMPLIANCE. In the Purchase Agreement, TFC will agree to give
the Indenture Trustee and the Issuer notice of any event which with the
giving of notice or the lapse of time, or both, would become a default by a
Servicer under a Servicing Agreement. In the event a Dealer fails to fulfill
its servicing obligations and is terminated as a Servicer, either TFC will
act as the successor servicer for the same servicing fee or the Issuer will
engage the services of another servicing company, in which event there would
be no assurance that a qualified servicer could be located or what such
servicer would charge the Issuer for its services.
CERTAIN MATTERS REGARDING THE SERVICERS. The Servicing Agreement will provide
that the applicable dealership may not resign from its obligations and duties
as a Servicer thereunder, except upon determination that the applicable
dealership's performance of such duties is no longer permissible under
applicable law. No such resignation will become effective until TFC or a
successor Servicer has assumed the applicable dealership's servicing
obligations and duties under the related Purchase and Servicing Agreements.
CERTAIN MATTERS REGARDING TFC. The Purchase Agreement will further provide
that, except as specifically provided otherwise, neither TFC nor any of its
directors, officers, employees and agents will have any liability to the
Issuer or the related Noteholders for taking any action or for refraining
from taking any action pursuant to the related Purchase and Servicing
Agreements or the Indenture or for errors in judgment; except that neither
TFC nor any such person will be protected against any liability that would
otherwise be imposed by reason of wilful misfeasance, bad faith or negligence
(except errors in judgment) in the performance of TFC duties thereunder or by
reason of reckless disregard of its obligations and duties thereunder. TFC
may, however, undertake any reasonable action that it may deem necessary or
desirable in respect of the related Purchase and Servicing Agreements and the
rights and duties of the parties thereto and the interests of the Noteholders
thereunder. In such event, the legal expenses and costs of such action and
any liability resulting therefrom will be expenses, costs and liabilities of
the Issuer, and TFC will be entitled to be reimbursed therefor. Any such
indemnification or reimbursement will reduce the amount otherwise available
for distribution to the Noteholders.
TFC and its affiliates will be entitled to be reimbursed for expenses
incurred by them on behalf of the Issuer, up to a cumulative maximum of 5% of
the total amount of Notes sold, but any such reimbursement will only be
payable by the Issuer out of revenues, and only to the extent that current
obligations on the Notes have been met. Reimbursable expenses are: direct
costs of accounting for collections, making distributions to Noteholders,
furnishing statements to the Indenture Trustee with respect to distributions,
and generating federal income tax information for the Noteholders, and
advances of the fees of the Indenture Trustee, accounting fees, outside
auditor fees, data processing costs and other costs incurred in connection
with administering the Receivables Pool.
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TERMINATION. The Issuer will be dissolved and its remaining assets, net of
liabilities, will be distributed to TFC as its sole shareholder, following
the final distributions by the Indenture Trustee and the Issuer of all monies
and other property of the Issuer in accordance with the terms of the
Indenture, the Purchase Agreement and the Administration Agreement. Upon
dissolution of the Issuer and payment of all amounts to be paid to the
related Noteholders, any remaining assets of the Issuer will be distributed
to TFC. In order to avoid excessive administrative expense, TFC, or its
successor, will have the option to purchase from the Issuer, if the then
outstanding Aggregate Principal Balance of the Receivables held by the Issuer
is 10% or less of the Aggregate Amount Financed, all remaining Receivables at
a price equal to the aggregate Purchase Payments for such Receivables plus
the appraised value of any other property held as part by the Issuer less
liquidation expenses. Any related outstanding Notes will be redeemed
concurrently therewith. The Indenture Trustee will give written notice of
redemption to each related Noteholder of record. The final distribution to
any Noteholder will be made only upon surrender and cancellation of such
Noteholder's Note at an office or agency of the Indenture Trustee specified
in the notice of redemption.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
SECURITY INTEREST IN VEHICLES. In all states in which the Receivables are
originated, retail installment sale contracts such as the Receivables
evidence the credit sale of automobiles and light trucks by dealers to
purchasers. The Receivables also constitute personal property security
agreements and include grants of security interests in the vehicles under the
UCC. Perfection of security interests in the vehicles is generally governed
by the motor vehicle registration laws of the state in which the vehicle is
located. In all states in which the Receivables have been originated, a
security interest in a vehicle is perfected by notation of the secured
party's lien on the vehicle's certificate of title.
Pursuant to the transfer agreements to be entered into with each Dealer, the
applicable Dealers will assign their security interest in the Financed
Vehicles securing the related Receivables to the Issuer. The certificate of
title will be amended to identify the Issuer as the new secured party
relating to a Financed Vehicle. See "The Purchase and Servicing
Agreements-Sale and Assignment of Receivables."
In most states the notation of a particular dealership's lien on the
certificates of title will be sufficient to protect the Issuer against the
rights of subsequent purchasers of a Financed Vehicle from an obligor or
subsequent lenders to an obligor who take a security interest in a Financed
Vehicle. If there are any Financed Vehicles as to which a particular
dealership failed to obtain a perfected security interest, its security
interest would be subordinate to, among others, subsequent purchasers of the
Financed Vehicles and holders of perfected security interests. Such a
failure, however, would constitute a breach of the warranties of a particular
dealership under the related transfer agreement and, if the interests of the
Noteholders in the related Receivable are materially and adversely affected,
would create an obligation of the dealership to repurchase such Receivable
unless the breach is cured.
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Under the laws of most states, the perfected security interest in a vehicle
continues for four months after a vehicle is moved to a state other than the
state in which it is initially registered and thereafter until the vehicle
owner re-registers the vehicle in the new state. A majority of states
generally require surrender of a certificate of title to re-register a
vehicle. Accordingly, a secured party must surrender possession if it holds
the certificate of title to the vehicle or, in the case of vehicles
registered in states providing for the notation of a lien on the certificate
of title but not possession by the secured party, the secured party would
receive notice of surrender if the security interest is noted on the
certificate of title. Thus, the secured party would receive notice of
surrender if the security interest is noted on the certificate of title.
Thus, the secured party would have the opportunity to re-perfect its security
interest in the vehicles in the state of relocation. In states that do not
require surrender of a certificate of title for registration of a motor
vehicle, re-registration could defeat perfection. In the ordinary course of
servicing receivables, the Servicer takes steps to effect re-perfection upon
receipt of notice of re-registration or information from the obligors as to
relocation. Similarly, when an obligor sells a vehicle, the Servicer must
surrender possession of the certificate of title or will receive notice as a
result of its lien noted thereon and accordingly will have an opportunity to
require satisfaction of the related Receivables before release of the lien.
Under each Servicing Agreement, the Servicer is obligated to take appropriate
steps, at the Servicer's expense, to maintain perfection of security
interests in the Financed Vehicles.
Under the laws of most states, liens for repairs performed on a motor vehicle
and liens for unpaid taxes take priority over even a perfected security
interest in a financed vehicle. The UCC also grants priority to certain
federal tax liens over the lien of a secured party. The laws of certain
states and federal law permit the confiscation of motor vehicles by
governmental authorities under certain circumstances if used in unlawful
activities, which may result in the loss of a secured party's perfected
security interest in the confiscated motor vehicle.
REPOSSESSION. In the event of default by vehicle purchasers, the lienholder
of the retail installment sale contract has all the remedies of a secured
party under the UCC, as enacted in each particular state. Among the UCC
remedies, the secured party has the right to self-help repossession unless
such act would constitute a breach of the peace. Self-help is the method that
will be employed in most cases and is accomplished by retaking possession of
the financed vehicle. A secured party may be held responsible for damages
caused by a wrongful repossession of a vehicle.
NOTICE OF SALE; REDEMPTION RIGHTS. The UCC and other state laws require the
secured party to provide the obligor with reasonable notice of the date, time
and place of any public sale and/or the date after which any private sale of
the collateral may be held. The obligor has the right to redeem the
collateral prior to actual sale by paying the secured party the unpaid
principal balance of the obligation plus reasonable expenses for
repossessing, holding and preparing the collateral for disposition and
arranging for its sale, plus, in some jurisdictions, reasonable attorneys'
fees, or, in some states, by payment of delinquent installments or the unpaid
balance.
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DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS. The proceeds of resale of the
Financed Vehicles generally will be applied first to the expenses of resale
and repossession and then to the satisfaction of the indebtedness. In many
instances, the remaining principal amount of such indebtedness will exceed
such proceeds. While some states impose prohibitions or limitations on
deficiency judgments if the net proceeds from resale do not cover the full
amount of the indebtedness, a deficiency judgment can be sought in those
states that do not prohibit or limit such judgments. However, the deficiency
judgment would be a personal judgment against the obligor for the shortfall,
and a defaulting obligor can be expected to have very little capital or
sources of income available following repossession. Therefore, in many cases,
it may not be useful to seek a deficiency judgment or, if one is obtained, it
may be settled at a significant discount.
Occasionally, after resale of a vehicle and payment of all expenses and all
indebtedness, there is a surplus of funds. In that case, the UCC requires the
creditor to remit the surplus to any holder of a lien with respect to the
vehicle or if no such lienholder exists or there are remaining funds, the UCC
requires the creditor to remit the surplus to the former owner of the vehicle.
CONSUMER PROTECTION LAWS. Numerous federal and state consumer protection
laws and related regulations impose substantial requirements upon lenders and
servicers involved in consumer finance. These laws include the
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Federal Trade
Commission Act, the Fair Credit Reporting Act, the Fair Debt Collection
Procedures Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Soldiers' and Sailors' Civil Relief Act of 1940, the
Texas Consumer Credit Code, state adoptions of the National Consumer Act and
of the Uniform Consumer Credit Code (the "UCCC") and state sales finance and
other similar laws. Also, state laws impose finance charge ceilings and other
restrictions on consumer transactions and require contract disclosures in
addition to those required under federal law. These requirements impose
specific statutory liabilities upon creditors who fail to comply with their
provisions. In some cases, this liability could affect an assignee's ability
to enforce consumer finance contracts such as the Receivables.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade Commission
(the "FTC RULE"), the provisions of which are generally duplicated by the
UCC, other state statutes or the common law, has the effect of subjecting a
seller in a consumer credit transaction (and certain related creditors and
their assignees) to all claims and defenses which the obligor in the
transaction could assert against the seller. Liability under the FTC Rule is
limited to the amounts paid by the obligor under the contract and the holder
of the contract may also be unable to collect any balance remaining due
thereunder from the obligor.
Most of the Receivables will be subject to the requirements of the FTC Rule.
Accordingly, the Issuer, as holder of the related Receivables, will be
subject to any claims or defenses that the purchaser of the Financed Vehicle
may assert against the seller of the Financed Vehicle. Such claims are
limited to a maximum liability equal to the amounts paid by the obligor on
the Receivable. If an obligor were successful in asserting any such claim or
defense, such claim or defense would constitute a breach of the dealership
warranties under the related Transfer
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Agreement and may create an obligation of the dealership to repurchase the
Receivable unless the breach is cured in all material respects. See "The
Purchase and Servicing Agreements-Sale and Assignment of Receivables."
Courts have imposed general equitable principles upon secured parties
pursuing repossession and litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the
United States. Courts have generally upheld the notice provisions of the UCC
and related laws as reasonable or have found that the repossession and resale
by the creditor do not involve sufficient state action to afford
constitutional protection to consumers.
Under each Transfer Agreement, the particular dealership will represent to
the Issuer that each Receivable complies with all requirements of law in all
material respects. Accordingly, if an obligor has a claim against the Issuer
for violation of any law and such claim materially and adversely affects the
Issuer's interest in a Receivable, such violation may create an obligation of
the dealership to repurchase the Receivable unless the breach is cured in all
material respects. See "The Purchase and Servicing Agreements-Sale and
Assignment of the Receivables."
OTHER LIMITATIONS. In addition to laws limiting or prohibiting deficiency
judgments, numerous other statutory provisions, including federal bankruptcy
laws and related state laws, may interfere with or affect the ability of a
secured party to realize upon collateral or to enforce a deficiency judgment.
For example, in a Chapter 13 proceeding under the federal bankruptcy law, a
court may prevent a creditor from repossessing the Financed Vehicle, and, as
part of the rehabilitation plan, reduce the amount of the secured
indebtedness to the market value of the Financed Vehicle at the time of
bankruptcy, leaving the creditor as a general unsecured creditor for the
remainder of the indebtedness. A bankruptcy court may also reduce the monthly
payments due under a contract or change the rate of finance charge and time
of repayment of the indebtedness.
TRANSFER OF VEHICLES. The Receivables prohibit the sale or transfer of a
Financed Vehicle without the Issuer's consent and permit the Issuer to
accelerate the maturity of the Receivable upon a sale or transfer without the
Issuer's consent. The Issuer will not consent to a sale or transfer and will
require prepayment of the Receivable. Although the Issuer may enter into a
transfer of equity agreement with a secondary purchaser for the purpose of
effecting the transfer of the vehicle, the new obligation will not be
included in the related Receivables Pool.
SALE OF RECEIVABLES BY THE DEALERSHIPS. As described herein, the transactions
in which the Receivables are sold by the dealerships to the Issuer have been
structured as, and will be treated by the parties as, sales. The United
States Court of Appeals for the Tenth Circuit recently held that accounts
sold prior to a bankruptcy should be treated as property of the bankruptcy
estate. In the event that a dealership were a debtor in a bankruptcy
proceeding, and
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the bankruptcy court applied a similar analysis, delays or reductions in
receipt of collections on the Receivables to the Issuer and distributions on
the related Notes to Noteholders could occur.
MANAGEMENT
Each member of the management team of the Issuer has prior experience in
industries either the same as or similar to the business of the Issuer. The
following sets forth certain information concerning the Issuer's and TFC's
directors and executive officers. Each of the Issuer's and the TFC's
directors holds office for a one year term and until the annual meeting of
the stockholders. The Issuer does not have any audit, compensation or
nominating committees. The management team profiles are as follows:
NAME POSITION
---- --------
GARRY P. ISAACS President/Chief Executive Officer, Secretary, Director of
the Issuer and TFC
GREG MCBEE Vice President, General Manager/Chief Operations Officer
of the Issuer and TFC
MR. ISAACS, age 56, is the founder of Tamarack Funding Corporation. Since
1993, he has been a business consultant engaged in organizational planning,
start up, capital acquisition, market development, offshore transactions and
trust organization. Mr. Isaacs has developed and sold companies involved with
business and market development of chemical, mechanical, and thermodynamic
products and auto financing. From 1986 until December 1993 he was CEO of
Procom Environmental, Inc., Couer d'Alene, Idaho. He has operated companies
engaged in lumber manufacturing, well drilling, and international financial
counseling and trust management.
Mr. Isaacs has instructed professionals and businessmen in both domestic and
foreign related business organization and has created successful
corporations, trusts and trust companies. Although he no longer solicits
business in these areas, he has served, and still serves as trustee for the
management of trust funds for some clients.
Mr. Isaacs developed Greenline Corporation, a successful Dallas-based funding
company in 1994 which, somewhat like the business plan of the Issuer,
purchases car financing contracts. He performed dealer relations and contract
acquisitions for that company until May, 1995, at which time he sold his
interests to the other shareholders and left to develop the risk management
methods employed by TFC. Since that time he has been actively engaged in the
establishment of Tamarack Funding Corporation, including developing criteria
for relationships with auto dealers, acquiring auto finance receivables and
managing the servicing of those receivables.
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MR. MCBEE, age 33, is employed with TFC as the Operations Manager. Mr. McBee
holds a Bachelors Degree in Business from Tarleton State University. He has 9
years of experience in finance and credit management, with four years of
experience in the acquisition and management of auto receivables. His career in
the management of accounts receivable for three different companies has included
collections credit management in personal financing, real estate receivables and
automobile financing. From 1994 to 1995, Mr. McBee was a Branch Manager for
Western Funding, Inc., a large automobile contract funding firm, much like the
Company. His responsibilities were automobile dealer relations, with emphasis in
the purchase and management of automobile receivables. From 1993 to 1994, he was
employed by Security Pacific Finance, a subsidiary of Bank of America. From
1989 to 1993, he was employed by Allied Finance Company. Mr. McBee has hired
and managed staff and personnel required to support these activities. He has
worked closely with Mr. Isaacs in developing TFC's risk management program.
Remuneration. None of the executive officers of the Issuer will receive
compensation from the Issuer. The Issuer will have no paid employees.
Members of the Board of Directors of TFC at present receive no remuneration for
services as Directors or attendance at meetings of the Board and will receive no
remuneration from the Issuer. TFC may, however, reimburse the Directors for any
expenses incurred by them as directors or in connection with attendance at board
meetings.
SECURITY OWNERSHIP
TFC is the sole shareholder of the Issuer.
The following table sets forth information, as of _____________, 1998, relating
to the beneficial ownership of TFC's Common Stock by any person or "group", as
that term is used in Section 13(d)(3) of the Securities and Exchange Act of 1934
(the "Exchange Act"), known to TFC to own beneficially 5% or more of the
outstanding shares of Common Stock, and known to TFC to be owned by each
director of TFC and by all officers and directors of TFC as a group. Except as
otherwise indicated, each of the persons named below is believed by TFC to
possess sole voting and investment power with respect to the shares of Common
Stock beneficially owned by such person.
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<TABLE>
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP(1)
NAME OF DIRECTOR OR NAME -------------------------------
AND ADDRESS OF BENEFICIAL NUMBER OF PERCENTAGE OF
OWNER SHARES CLASS OUTSTANDING
- ------------------------- --------- -----------------
<S> <C> <C>
Garry P. Isaacs 7,000,000 _________ %(2)
All officers and directors as a group 7,000,000 _________ %(2)
(2 persons)
</TABLE>
(1) The information as to beneficial ownership of Common Stock has been
furnished by the respective shareholders, directors and officers of TFC.
(2) Includes ______ shares of Common Stock issuable upon conversion of TFC's
Preferred Stock.
There are no family relationships among the directors and any of the executive
officers of TFC or the Issuer. None of the directors of the Issuer or TFC holds
any directorship in any company with a class of securities registered pursuant
to Section 12 of the Exchange Act or subject to the requirements of Section
15(d) of the Exchange Act or any company registered as an investment company
under the Investment Company Act of 1940.
The Issuer, TFC and Tamarack Financial, Inc. are affiliates, through their
common control by Mr. Isaacs. Mr. Isaacs and other management of TFC and its
affiliates will devote as much of their time to the business of these entities
as in their judgment is reasonably required.
The terms of the Purchase and Servicing Agreements were not negotiated at
arm's-length, but were determined unilaterally by TFC's management.
FEDERAL INCOME TAX CONSEQUENCES
GENERAL. Set forth below is a discussion of the anticipated material United
States federal income tax considerations relevant to the purchase, ownership and
disposition of the Notes. This discussion is based upon the legal opinion of
Donohoe, Jameson & Carroll, P.C., and current provisions of the Internal Revenue
Code of 1986, as amended (the "CODE"), existing and proposed Treasury
Regulations thereunder, current administrative rulings, judicial decisions and
other applicable authorities. There can be no assurance that the Internal
Revenue Service ("IRS") will not challenge the conclusions reached herein, and
no ruling from the IRS has been or will be sought on any of the issues discussed
below. Furthermore, legislative, judicial or administrative changes may occur,
perhaps with retroactive effect, which could affect the accuracy of the
statements and conclusions set forth herein as well as the tax consequences to
Noteholders.
This discussion does not purport to deal with all aspects of federal income
taxation that may be relevant to the Noteholders in light of their personal
investment circumstances nor, except for certain limited discussions of
particular topics, to certain types of holders subject to special
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treatment under the federal income tax laws (e.g., financial institutions,
broker-dealers, life insurance companies and tax-exempt organizations).
This information is directed to prospective purchasers who purchase Notes in
the initial distribution thereof, who are citizens or residents of the United
States, including domestic corporations and partnerships, and who hold the
Notes as "capital assets" within the meaning of Section 1221 of the Code.
Taxpayers and preparers of tax returns (including those filed by any
partnership or other issuer) should be aware that under applicable Treasury
Regulations a provider of advice on specific issues of law is not considered
an income tax return preparer unless the advice is (i) given with respect to
events that have occurred at the time the advice is rendered and is not given
with respect to the consequences of contemplated actions, and (ii) is
directly relevant to the determination of an entry on a tax return.
Accordingly, taxpayers should consult their own tax advisors and tax return
preparers regarding the preparation of any item on a tax return, even where
the anticipated tax treatment has been discussed herein. PROSPECTIVE
INVESTORS SHOULD CONSULT WITH THEIR TAX ADVISORS AS TO THE FEDERAL, STATE,
LOCAL, FOREIGN AND ANY OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF THE NOTES.
The following discussion addresses the tax treatment of the Notes, which the
Issuer and the Noteholders will agree to treat as indebtedness secured by the
related Receivables. For purposes of this discussion, references to a
"Noteholder" are to the beneficial owner of a Note.
CHARACTERIZATION AS DEBT. With respect to each series of Notes, tax counsel to
the Issuer has advised the Issuer to the effect that, although no specific
authority exists with respect to the characterization for federal income tax
purposes of securities having the same terms as the Notes, based on the terms of
the Notes and the transactions relating to the Receivables as set forth herein,
the Notes will be treated as debt for federal income tax purposes. The Issuer
and each Noteholder, by acquiring an interest in a Note, will agree to treat the
Notes as indebtedness for federal, state and local income and franchise tax
purposes.
TREATMENT OF STATED INTEREST. Based on the foregoing opinion, the stated
interest on the Notes will be taxable to a Noteholder as ordinary income when
received or accrued in accordance with such Noteholder's method of tax
accounting. No series of Notes will be issued with OID. A holder who purchases
a Note after the initial distribution thereof at a discount that exceeds a
statutorily defined de minimis amount will be subject to the "market discount"
rules of the Code, and a holder who purchases a Note at a premium will be
subject to the bond premium amortization rules of the Code.
DISPOSITION OF NOTES. If a Noteholder sells a Note, the holder will recognize
gain or loss in an amount equal to the difference between the amount realized on
the sale and the holder's adjusted tax basis in the Note. The adjusted tax basis
of the Note to a particular Noteholder will equal the holder's cost for the
Note, increased by any market discount and gain previously included by such
Noteholder in income with respect to the Note and decreased by any bond premium
previously amortized and any principal payments previously received by such
Noteholder with respect to such Note. Subject to the market discount rules of
the Code, any such
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gain or loss will be capital gain or loss if the Note was held as a capital
asset. The rate of tax applicable to any capital gain recognized by a
Noteholder with respect to the disposition of a Note will vary depending upon
the holding period of such Note, with lower rates applicable with respect to
Notes having longer holding periods. Any capital losses realized generally
may be used by a corporate taxpayer only to offset capital gains, and by an
individual taxpayer only to the extent of capital gains plus $3,000 of other
income.
INFORMATION REPORTING AND BACKUP WITHHOLDING. The Issuer will be required to
report annually to the IRS, and to each related Noteholder of record, the amount
of interest paid on the Notes (and the amount of interest withheld for federal
income taxes, if any) for each calendar year, except as to exempt holders
(generally, corporations, tax-exempt organizations, qualified pension and
profit-sharing trusts, individual retirement accounts, or nonresident aliens who
provide certification as to their status). Each holder (other than holders who
are not subject to the reporting requirements) will be required to provide to
the Issuer under penalties of perjury, a certificate containing the holder's
name, address, correct federal taxpayer identification number and a statement
that the holder is not subject to backup withholding. Should a nonexempt
Noteholder fail to provide the required certification, the Issuer will be
required to withhold, from interest otherwise payable to the holder, 31% of such
interest and remit the withheld amount to the IRS as a credit against the
holder's federal income tax liability.
STATE AND LOCAL TAX CONSEQUENCES. The above discussion does not address the tax
treatment of the Issuer, the Notes or Noteholders under any state or local tax
laws. The activities to be undertaken by TFC in servicing and collecting the
Receivables will take place throughout the United States and, therefore, many
different tax regimes potentially apply to different portions of these
transactions. Prospective investors are urged to consult with their tax advisors
regarding the state and local tax treatment of the Issuer as well as any state
and local tax consequences to them of purchasing, holding and disposing of
Notes.
PLAN OF DISTRIBUTION
Tamarack Financial, Inc., an affiliate of the Issuer, will sell the Notes from
time to time on a best-efforts basis for 100% of their principal amounts.
Tamarack Financial, Inc., may be allocated commissions of up to 6.00% on such
sales. Sale of the Notes will be on a "no-load" basis to the Noteholders,
however. The commissions will be paid by the Issuer, and will reduce the amount
of working capital available for purchase of Receivables, but will not reduce
the principal amount of Notes issued to a Noteholder from the amount invested.
Investor funds will be held in a subscription escrow account with ____ Bank, as
escrow agent, until a minimum of $100,000 in principal amount of the Notes,
regardless of which class, are sold. In the event that the minimum amount of
Notes is not subscribed for before ________, 1999 (or any earlier termination of
the offering), the offering will be terminated and the escrowed funds, plus any
interest thereon, will be promptly returned to the subscribing investors by the
32
<PAGE>
escrow agent. Upon the subscription of the minimum amount of Notes, the
escrowed funds will be released to the Issuer. Interest on the Notes will not
accrue until the escrowed funds are released to the Issuer. Any subsequent
sales proceeds from the sale of additional Notes will be immediately available
for use by the Issuer to purchase additional Receivables. All subscriptions are
subject to the right of the Issuer to reject any subscription in whole or in
part. Subscriptions will be accepted or rejected within four business days from
the receipt of subscriptions by the Issuer.
Although the Notes are registered under federal securities laws, and are
transferable as described in this Prospectus, neither the Issuer, TFC nor
Tamarack Financial, Inc. intends to make a market for the Notes, and no market
is likely to develop.
Minimum investors suitability requirements have been established for purchase of
the Notes. Subscribers must represent that they have either (a) an annual gross
income of at least $45,000 and a net worth of at least $45,000 exclusive of the
subscriber's principal residence and its furnishings and personal use
automobiles; or (b) a net worth of at least $150,000, exclusive of the
subscriber's principal residence and its furnishings and personal use
automobiles. In the case of sales to a subscriber which is a fiduciary
account, the foregoing standards must be met by the beneficiary, the fiduciary
account, or by the donor or grantor who directly or indirectly supplies the
funds to purchase the securities if the donor or grantor is the fiduciary.
The Issuer intends to accept in the order received properly completed
subscriptions and payments for subscription amounts from qualified investors
meeting the applicable suitability standards. The Issuer may elect to treat as
accepted subscriptions from certain otherwise qualified investors (for example,
IRA's) whose subscription funds are being paid by a trustee or other institution
which has confirmed to the Issuer that the funds will be paid.
LEGAL MATTERS
Certain legal matters relating to the Notes will be passed upon for the Issuer
by Donohoe, Jameson & Carroll, P.C., Dallas, Texas, counsel to TFC, which has
also delivered its opinion to the Issuer as to the federal income tax matters
discussed under "Federal Income Tax Consequences."
EXPERTS
The balance sheet of Tamarack Lenders Corporation as of December 31, 1997 and
the related statements of operations, changes in stockholders' equity and cash
flows for the period ended December 31, 1997, have been included herein in
reliance on the report of Cheshier & Fuller, L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
33
<PAGE>
INDEX OF DEFINITIONS
<TABLE>
<S> <C>
AGGREGATE PRINCIPAL BALANCE. . . . . . . . . . . . . . . . . . . . . . . . . . 13
AMOUNT FINANCED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Class A-1 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Class A-2 Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
COMMISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
DEALERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Eligible Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
FINANCED VEHICLES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
FTC RULE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
INDENTURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
INDENTURE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
INTEREST RATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
PRINCIPAL BALANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
PURCHASE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
PURCHASE AND SERVICING AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . 19
RECEIVABLES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECEIVABLES POOL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
REGISTRATION STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECURITIES ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SERVICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SERVICING AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SERVICING FEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
TFC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
UCCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
WARRANTY RECEIVABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
34
<PAGE>
TAMARACK LENDERS CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants. . . . . . . . . . . . . . . . . . . . . . . . A-1
Balance Sheet as of December 31, 1997. . . . . . . . . . . . . . . . . . . . . . A-2
Statement of Operations for the period from inception (July 17, 1997)
to December 31, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3
Statements of Changes in Stockholders' Equity for the period from
inception (July 17, 1997) to December 31, 1997 . . . . . . . . . . . . . . . . A-4
Statements of Cash Flows for the period from
inception (July 17, 1997) to December 31, 1997 . . . . . . . . . . . . . . . . A-5
Notes to Financial Statements for the period ended to December 31, 1997 . . . . A-6
</TABLE>
35
<PAGE>
[LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholder of
Tamarack Lenders Corporation
We have audited the accompanying balance sheet of Tamarack Lenders Corporation
(a Texas corporation and a development stage company) as of December 31, 1997,
and the related statements of operations, changes in stockholder's equity and
cash flows for the period from inception (July 17, 1997) to December 31, 1997.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Tamarack Lenders Corporation as
of December 31, 1997, and the results of its operations and its cash flows for
the period then ended in conformity with generally accepted accounting
principles.
/s/ CHESHIER & FULLER, L.L.P.
----------------------------------
CHESHIER & FULLER, L.L.P.
Dallas, Texas
February 10, 1998
A-1
<PAGE>
TAMARACK LENDERS CORPORATION
(A Development Stage Company)
Balance Sheet
ASSETS
<TABLE>
December 31,
1997
------------
<S> <C>
Cash $ 51,252
----------
TOTAL ASSETS $ 51,252
----------
----------
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Income taxes payable - current $ 23
----------
Total liabilities 23
----------
Commitments and contingencies
Stockholder's equity:
Common stock, $.01 par value, 10,000 shares
authorized, 1,000 shares issued and outstanding 10
Additional paid-in capital 51,090
Retained Earnings 129
----------
Total stockholder's equity 51,229
----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 51,252
----------
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
A-2
<PAGE>
TAMARACK LENDERS CORPORATION
(a Development Stage Company)
Statement of Operations
<TABLE>
Period from
inception
(July 17, 1997)
through
December 31, 1997
-----------------
<S> <C>
Revenues
Interest income $ 420
-----------
420
-----------
Expenses
General and administrative 268
-----------
268
-----------
Net income before provision for income taxes 152
Provision for income taxes - current 23
-----------
Net income $ 129
-----------
-----------
Weighted average common shares outstanding 1,000
-----------
-----------
Net income per share $ .13
-----------
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
A-3
<PAGE>
TAMARACK LENDERS CORPORATION
(A Development Stage Company)
Statement of Changes in Stockholder's Equity
For the period from inception (July 17, 1997)
to December 31, 1997
<TABLE>
Common Stock Additional Total
------------------- Paid-In Retained Stockholder's
Shares Amount Capital Earnings Equity
------ ------ ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Common stock issued,
July 17, 1997 1,000 $ 10 $ 990 $ -0- $ 1,000
Contribution of additional
paid-in capital,
October 30, 1997 50,000 50,000
Contribution of additional
paid-in capital,
December 2, 1997 100 100
Net income 129 129
----- ---------- ---------- ---------- ----------
Balance,
December 31, 1997 1,000 $ 10 $ 51,090 $ 129 $ 51,229
----- ---------- ---------- ---------- ----------
----- ---------- ---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
A-4
<PAGE>
TAMARACK LENDERS CORPORATION
(A Development Stage Company)
Statement of Cash Flows
<TABLE>
Period from
inception
(July 17, 1997)
through
December 31, 1997
-----------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 129
Adjustments to reconcile net income to cash
provided by operating activities:
Changes in assets and liabilities:
Income taxes payable - current 23
----------
Net cash provided by operating activities 152
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock 1,000
Contributions of additional paid-in capital 50,100
----------
Net cash provided by financing activities 51,100
----------
Net increase in cash 51,252
Cash, beginning of period --
----------
Cash, end of period $ 51,252
----------
----------
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid during the year-
Income taxes $ -0-
----------
----------
Interest $ -0-
----------
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
A-5
<PAGE>
TAMARACK LENDERS CORPORATION
(A Development Stage Company)
Notes to Financial Statements
December 31, 1997
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Tamarack Lenders Corporation (the "Issuer") was incorporated on July 17,
1997 as a single purpose Texas corporation. The Issuer is a wholly-owned
subsidiary of Tamarack Funding Corporation and is a development stage
company since it has not commenced operations as of December 31, 1997. The
future activities of the Issuer will primarily be (1) acquiring, managing
and holding receivables (retail installment contracts for used automobiles
and light trucks) and the proceeds therefrom and (2) issuing notes and
making payments and distributions thereon.
Tamarack Funding Corporation ("TFC"), an affiliate, will administer and
manage the ongoing operations of the Issuer, monitor the servicing of
originating auto dealers, and administer and manage the ongoing operations
of the Issuer. TFC will also arrange for purchase of receivables on behalf
of the Issuer. TFC will bear the cost of the ongoing operations of the
Issuer and will be reimbursed only through its equity interest after all of
the Issuer's note obligations have been satisfied.
TFC or an affiliated company, will maintain custody of the receivables and
will undertake certain administrative duties with respect to the Issuer.
TFC will be entitled to be reimbursed for organizational and offering costs
incurred by it on behalf of the Issuer prior to the minimum amount of notes
being sold, up to a cap of 5% of the total principal amount of the notes
sold. Any such reimbursements will be payable by the Issuer only out of
revenues, and only after current obligations of the notes are met.
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
2. AUTO RECEIVABLES BACKED UNSECURED NOTE OFFERING
The Issuer plans to offer, on a best-efforts basis, a minimum of $100,000
up to a maximum of $20,000,000 in principal amount of unsecured notes
backed by retail installment contracts for used automobiles and light
trucks ("receivables"). Receivables will be originated by motor vehicle
dealers and purchased by TFC on behalf of the Issuer. The notes will
consist of two classes. Class A-1 will mature
A-6
<PAGE>
TAMARACK LENDERS CORPORATION
(A Development Stage Company)
Notes to Financial Statements
December 31, 1997
2. AUTO RECEIVABLES BACKED UNSECURED NOTE OFFERING, continued
one year from date of issuance and bear interest at 9.5% per annum. Class
A-2 will mature five years from date of issuance and bear interest at 12%
per annum. The notes will be offered through Tamarack Financial, Inc.
("TFI"), an affiliate. TFI, a licensed broker/dealer in securities, will
be entitled to a commission of up to 6% of gross proceeds from note sales.
The Issuer also intends to enter into an indenture agreement with a
trustee. The Indenture Trustee will monitor the assets of the Issuer on
behalf of the interests of the noteholders, as required pursuant to Federal
securities laws and as set forth in the Indenture.
3. COMMITMENTS AND CONTINGENCIES
TFC has incurred organization costs of $2,405 and offering costs of $88,511
on behalf of Issuer. To the extent that such costs are less than 5% of the
gross proceeds of notes sold and if other conditions are met, Issuer will
be required to reimburse TFC for such costs.
A-7
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the offering of the Securities being registered
hereby are estimated as follows:
<TABLE>
<S> <C>
Registration Fee $ 6,060.61
NASD Fee $ 2,500
Printing and Engraving $10,000 **
Trustees' Fees $ *
Accounting Fees $ *
Legal Fees and Expenses $60,000
Blue Sky Fees and Expenses $15,000
Miscellaneous Fees $ *
----------
TOTAL $ *
----------
----------
</TABLE>
----------------
* To be supplied by amendment.
** Estimate
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 2.02-1.B of the Texas Business Corporations Act (the "TBCA") provides
that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any proceeding by reason of the fact that such
person is or was a director, officer or other agent of the corporation against
expenses, judgments, fines, settlements and other amounts actually incurred in
connection with such proceeding if the person: (1) acted in good faith, and (2)
(i) if acting in his official capacity, acted in a manner the person reasonably
believed to be in the best interest of the corporation or (ii) otherwise, acted
in a manner the person reasonably believed was not opposed to the corporation's
interests, and (3) and, in the case of a criminal proceeding, had no reasonable
cause to believe the conduct was unlawful.
II-1
<PAGE>
Article 2.02-1 of the TBCA requires that a director, officer or agent shall be
indemnified against expenses actually and reasonably incurred to the extent the
person has been successful, on the merits or otherwise, in the defense of a
proceeding in which he is named because he has or had such a role for the
corporation.
Indemnification under Article 2.02-1.B shall be made by the corporation only
upon a determination that indemnification is proper, by any of the following:
(i) a majority vote of a quorum consisting of directors who are not parties to
the proceeding, (ii) if such a quorum of directors is not obtainable, by a
majority vote of a committee of directors, designated to act by a majority of
the board of directors, consisting of two or more directors who are not parties
to the proceeding, (iii) special legal counsel selected by the board or a
committee of directors as set forth above, (iv) approval of the shareholders,
provided that any shares owned by the Agent may not vote thereon, or (v) the
court in which such proceeding is or was pending.
Pursuant to Article 2.02.1.K of the TBCA, the corporation may advance expenses
incurred in defending any proceeding upon receipt of a written affirmation of
the person's good faith belief that he has met the standard for indemnification
and a written undertaking by the person to repay such amount if it is ultimately
determined that he is not entitled to be indemnified.
The TBCA authorizes a corporation to purchase and maintain insurance on behalf
of a director, officer or agent for liabilities arising by reason of the
person's status, whether or not the corporation would have the power to
indemnify the person against such liability under the provisions of the TBCA.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not applicable.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
A. EXHIBITS
3.1 Articles of Incorporation of Tamarack Lenders Corporation (1)
3.2 Bylaws (1)
4.1 Form of Indenture (1)
4.2 Form of Note (included as an exhibit to Exhibit 4.1) (1)
5.1 Opinion of Donohoe, Jameson & Carroll, P.C.
8.1 Opinion of Donohoe, Jameson & Carroll, P.C. as to tax matters
(contained in Exhibit 5.1)
10.1 Form of Servicing Agreement
10.2 Form of Purchase Agreement
10.3 Form of Subscription Agreement
10.4 Form of Subscription Escrow Agreement
10.5 Form of Broker-Dealer Selling Agreement
23.1 Consents of Donohoe, Jameson & Carroll, P.C. (included as
part of Exhibit 5.1)
23.2 Consent of Cheshier & Fuller, L.L.P.
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1
(1)
- ---------------------------
(1) Previously filed.
B. FINANCIAL STATEMENT SCHEDULES
Not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes as follows:
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than payment by the Registrant
of expenses incurred or paid by a director, officer or controlling person of
such Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(b) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
II-3
<PAGE>
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(c) For purpose of determining any liability under the Act, each post-effective
amendment that contains a form of prospectus will be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time will be deemed to be the initial bona
fide offering thereof.
(d) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(e) To file an application for the purpose of determining the eligibility of
the trustee to act under subsection (a) of section 310 of the Trust Indenture
Act ("Act") in accordance with the rules and regulations prescribed by the
Commission under section 305(b)(2) of the Act.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Richardson and State of
Texas, on the 5th day of March, 1998.
TAMARACK LENDERS CORPORATION
By: Garry P. Isaacs
-------------------------
Garry P. Isaacs
President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement on Form S-1 has been signed by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
Garry P. Isaacs President, Chief Executive Officer, March 5, 1998
- -------------------- Director (Principal Executive Officer,
Garry P. Isaacs Principal Financial Officer, Principal
Accounting Officer)
II-4
<PAGE>
EXHIBIT INDEX
Exhibit Number Description Page
3.1 Articles of Incorporation of Tamarack Lenders
Corporation (1)
3.2 Bylaws (1)
4.1 Form of Indenture (1)
4.2 Form of Note (included as an exhibit to Exhibit 4.1)
(1)
5.1 Opinion of Donohoe, Jameson & Carroll, P.C.
8.1 Opinion of Donohoe, Jameson & Carroll, P.C. as to
tax matters (contained in Exhibit 5.1)
10.1 Form of Servicing Agreement
10.2 Form of Purchase Agreement
10.3 Form of Subscription Agreement
10.4 Form of Subscription Escrow Agreement
10.5 Form of Broker-Dealer Selling Agreement
23.1 Consents of Donohoe, Jameson & Carroll, P.C.
(included as part of Exhibit 5.1)
23.2 Consent of Cheshier & Fuller, L.L.P.
25.1 Statement of Eligibility and Qualification of Indenture
Trustee on Form T-1 (1)
- ---------------------------
(1) Previously filed.
II-5
<PAGE>
Exhibit 5.1
DONOHOE, JAMESON & CARROLL, P.C.
Attorneys and Counselors
3400 Renaissance Tower
Dallas, Texas 75270
March 5, 1998
Tamarack Lenders Corporation
801 East Campbell Road, Suite 310
Richardson, Texas 75081
Gentlemen:
We are acting as counsel for Tamarack Lenders Corporation, a Texas
corporation (the "Company'), in connection with the registration under the
Securities Act of 1933, as amended (the "Act") of up to $20,000,000 in
aggregate principal amount of the Company's Auto Receivables Backed Notes
(the "Notes"). A Registration Statement on Form S-1 covering the sale of the
Notes, Registration No. 333-31925 (the "Registration Statement"), was filed
under the Act with the Securities and Exchange Commission on September 30,
1997.
We have examined and are familiar with originals or copies, the
authenticity of which has been established to our satisfaction, of all
documents, corporate records and other instruments, and have made such
examination of applicable law as we have deemed necessary to express the
opinion hereinafter set forth.
We are admitted to practice law in the State of Texas and we do not
express any opinion herein concerning any law other than the federal laws of
the United States of America and the laws of the State of Texas.
Based upon the foregoing, it is our opinion that:
(i) the Notes have been duly and validly authorized by the Company,
and upon execution by the Company and authentication by the Trustee and
delivery of the Notes against receipt of payment of the consideration
therefore the Notes will be validly issued, fully paid and nonassessable and
will be valid and binding obligations of the Company entitled to the benefits
of the Indenture and enforceable in accordance with their terms, except as
may be limited by bankruptcy, insolvency or equitable principals affecting
creditors' rights generally and judicial limitations on the right of specific
performance.
(ii) We hereby confirm the opinions set forth in the Prospectus under
the heading "Federal Income Tax Consequences," to the extent they constitute
matters of law or legal conclusions with respect thereto.
We hereby consent to the use of this opinion as an Exhibit to the
Registration Statement and to the use of our name in the Registration
Statement and in the related prospectus under the captions "Federal Income
Tax Consequences" and "Legal Matters." In giving such consent, we do not
admit hereby that we come within the category of persons whose consent is
required under Section 7 of the Act or the Rules and Regulations of the
Commission thereunder.
Very truly yours,
Donohoe, Jameson & Carroll, P.C.
<PAGE>
Exhibit 10.1
SERVICING AGREEMENT
This Servicing Agreement (this "Agreement"), effective as of
_________________, 1998, is entered into by and between _______________
________________, a ____________ corporation (the "Servicer"), and Tamarack
Lenders Corporation, a Texas corporation ("Buyer").
BACKGROUND STATEMENT
This Agreement shall govern the collection and servicing responsibilities
with respect to any and all of the Receivables purchased by Buyer from Servicer
pursuant to that certain Transfer Agreement (herein so called) by and between
Buyer and Servicer of even date herewith.
STATEMENT OF AGREEMENT
In consideration of the mutual covenants contained herein and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Buyer and Servicer agree as follows:
1. APPOINTMENT OF AND ACCEPTANCE BY THE SERVICER OF SERVICING
OBLIGATIONS.
(a) The Servicer, on behalf of Buyer, shall during the term of this
Agreement manage, administer and collect each of the Receivables (as defined in
the Transfer Agreement), shall exercise discretionary powers involved in such
management, administration and collection, and shall bear all costs and expenses
incurred in connection therewith that may be necessary or advisable in carrying
out this Agreement. In the management, administration and collection of the
Receivables, the Servicer shall use at least the same care and apply the same
policies that it would exercise if it owned the Receivables.
(b) The Servicer shall have full power and authority to do those
things in connection with such servicing, administration and collection
activities which it may deem necessary or desirable in order to maximize
receipts collected from Obligors or foreclosure and sale of Financed Vehicles
underlying the Receivables subject to the provisions hereof. The Servicer is not
authorized or empowered to execute and deliver, on behalf of Buyer, instruments
of satisfaction or cancellation, or of partial or full release or discharge, or
other comparable instruments, in order to evidence payments received with
respect to the Receivables or, after the delinquency of any Receivables and to
the extent permitted under and in compliance with applicable law and
regulations, to commence enforcement proceedings with respect to such
Receivables, or commence any legal action against an Obligor in the name of
Buyer without the prior written consent of the Buyer. Buyer shall, at its
discretion, furnish the Servicer with powers of attorney and other documents
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
<PAGE>
2. TERM. This Agreement shall commence as of the date first written
above and shall continue until terminated upon 30 days written notice by either
party to the other.
3. COMPENSATION. The Servicer shall be reimbursed by Buyer with respect
to each Receivable only upon satisfaction in full of the particular obligor's
obligations with respect to such Receivable. Upon such satisfaction in full,
the Servicer shall be entitled to a Servicing Fee equal to 5% of the amount paid
by the Buyer under the Transfer Agreement for such Receivable.
4. REPRESENTATIONS AND WARRANTIES OF THE SERVICER. The Servicer
represents and warrants to Buyer as follows:
(a) ORGANIZATION AND GOOD STANDING. Servicer is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, and has full corporate power, authority and legal right to own
its properties and conduct its business as such properties are presently owned
and such business is presently contemplated, and to execute, deliver and perform
its obligations under this Agreement.
(b) DUE QUALIFICATION. The Servicer is duly qualified and has
registered as a foreign corporation in each state where such qualification is
required in order to perform its obligations pursuant to this Agreement and has
obtained all necessary licenses, approvals or consents as are required under
applicable law to perform its duties hereunder.
(c) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement has been duly authorized by the Servicer by all necessary
corporate action on the part of the Servicer.
(d) BINDING OBLIGATION. This Agreement constitutes a legal, valid and
binding obligation of the Servicer, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in effect
which affect the enforcement of creditors' rights in general, and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).
(e) NO VIOLATION. The execution and delivery of this Agreement by
the Servicer, and the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof applicable to the Servicer,
will not conflict with, violate, result in any breach of any of the material
terms and provisions of, or constitute (with or without notice or lapse of time
or both) a default under, any requirement of law applicable to the Servicer or
any indenture, contract, agreement, mortgage, deed of trust or other installment
to which the Servicer is a party or by which it is bound.
5. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
warrants to Servicer as follows:
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(a) ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of Texas, and
has full corporate power, authority and legal right to own its properties and
conduct its business as such properties are presently owned and such business is
presently contemplated, and to execute, deliver and perform its obligations
under this Agreement.
(b) DUE QUALIFICATION. The Buyer is duly qualified and has
registered as a foreign corporation in each state where such qualification is
required in order to perform its obligations pursuant to this Agreement and has
obtained all necessary licenses, approvals or consents as are required under
applicable law to perform its duties hereunder.
(c) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement has been duly authorized by the Buyer by all necessary corporate
action on the part of the Buyer.
(d) BINDING OBLIGATION. This Agreement constitutes a legal, valid and
binding obligation of the Buyer, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in effect
which affect the enforcement of creditors' rights in general, and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).
(e) NO VIOLATION. The execution and delivery of this Agreement by
the Buyer, and the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof applicable to the Buyer, will
not conflict with, violate, result in any breach of any of the material terms
and provisions of, or constitute (with or without notice or lapse of time or
both) a default under, any requirement of law applicable to the Buyer or any
indenture, contract, agreement, mortgage, deed of trust or other installment to
which the Buyer is a party or by which it is bound.
6. COVENANTS. The Servicer further warrants to and covenants with Buyer
as follows:
(a) LOCK-BOX ACCOUNT. From and after the date hereof until such
time as this Agreement terminates, Servicer shall remit all collections and
payments directly to a Lock-Box Account (herein so called) in the name of the
Buyer. Servicer agrees that all cash, checks, notes, drafts or other items
which it receives attributable to the Receivables, including proceeds from
resale of repossessed Financed Vehicles and recoveries on insurance claims,
shall be deposited in the Lock-Box Account within two business days of receipt.
(b) OPERATIONS. The Servicer shall collect payments from the
Receivables in an orderly and efficient manner consistent with good business
practices and in accordance with all applicable federal, state and local laws
and regulations.
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(c) RECORDS. So long as Buyer has not given notice of termination
pursuant to Section 2, the Servicer shall, (i) keep such accounts and other
records as will enable Buyer to determine the status of the Receivables; (ii)
keep such books and records at its offices identified in Section 14 herein; and
(iii) permit Buyer and its representatives at any time to inspect, audit, check
and make abstracts from Servicer's accounts, records, correspondence and other
papers pertaining to the Receivables. Servicer shall maintain, or cause to be
maintained, its respective records with respect to the Receivables in a manner
such that the Servicer can produce a computer file containing a listing (by
Obligor) of all Receivables, together with the account balance of such accounts
and the payment history related thereto.
(d) CONTINUATION STATEMENTS. If Buyer so requests, the Servicer
shall execute and file documents which shall create a first priority security
interest in favor of Buyer in Financed Vehicles, including registration of the
Certificates of Title in the name of Buyer, and/or any other documents requested
by Buyer or which may be required by law to preserve and protect the interest of
Buyer in and to the Receivables.
(e) PRINCIPAL EXECUTIVE OFFICE. The Servicer shall not, without
providing 30 days' notice to Buyer, and without filing such amendments to any
previously filed financing statements as Buyer may require, (i) change the
county where its principal executive office, or the office where the records
relating to the Receivables are kept, is located, or (ii) change its name,
identity or corporate structure in any manner which would, could or might make
any financing statement or continuation statement filed by Buyer or the Servicer
or any provision hereof seriously misleading within the meaning of Section
9-402(g) of any applicable enactment of the Texas Uniform Commercial Code.
(f) NO IMPAIRMENT. The Servicer will duly fulfill all obligations
on its part to be fulfilled under or in connection with each Receivable and will
do nothing to materially impair the rights of Buyer in the Receivables.
(g) COMPLIANCE WITH LAW. The Servicer will comply in all material
respects with all acts, rules, regulations, orders, decrees and directions of
any governmental authority applicable to the Receivables or any part thereof.
The Servicer will comply, in all material respects, with any obligation of a
holder of a Receivable to the Obligor thereof arising under such Receivable or
under applicable law.
(h) SECURITY INTEREST. Except for the transfers of Receivables to
the Buyer under the Transfer Agreement, the Servicer will not sell, pledge,
assign or transfer to any other person, or grant, create, incur, assume or
suffer to exist any lien on any Receivables, or the books or records relating to
any Receivables, or any interest therein; the Servicer shall immediately notify
Buyer of the existence of any lien on any Receivables; the Servicer shall defend
the right, title and interest of Buyer in, to and under the Receivables, whether
now existing or hereafter transferred to Buyer, against all claims of third
parties claiming through or
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under the Servicer.
7. MAINTENANCE OF INTERNAL CONTROL AND PROCEDURES. Servicer shall, at
all times during the term of this Agreement, follow internal control procedures
consistent with loan servicing industry standards and, at the request of Buyer,
will supply same in written form for review purposes.
8. COMPUTER. Servicer shall, at all times during the term of this
Agreement, utilize in the operation of its business the industry standard
computer software and contract information maintenance system.
9. SERVICER EVENTS OF DEFAULT. The occurrence and continuation of any
one of the following events shall be a "Servicer Event of Default" under this
Agreement:
(a) Failure on the part of the Servicer to remit collections on the
Receivables to the Lock-Box Account when due in accordance with Section 6(a) and
continuance of such failure for ten business days. For purposes of this
Agreement, "business day" shall mean any day other than a Saturday, Sunday or
legal holiday; or
(b) An involuntary case is commenced or filed against the Servicer
under the federal bankruptcy laws, as now or hereafter in effect, or any other
present or future federal or state bankruptcy, insolvency or similar law, or for
the appointment of a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Servicer or of any substantial
part of its property, or for the winding up of the affairs of, liquidation,
dissolution, or reorganization of the Servicer and the continuance of such case
or filing unstayed for a period of 30 consecutive days; or
(c) An order for relief shall be entered in a case under title 11 of
the United States Code in which the Servicer is a debtor, or the commencement by
the Servicer of a voluntary case under the federal bankruptcy laws, as now or
hereafter in effect, or any other present or future federal or state bankruptcy,
insolvency or similar law, or the consent by the Servicer to the appointment of
or taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Servicer or of any substantial
part of its property or the making by the Servicer of an assignment for the
benefit of creditors.
(d) Failure by Servicer to service and collect amounts due from
Obligors under Receivables in accordance with normal business practices and the
continuance of such failure for 30 days after written notice by Buyer of such
failure.
10. REMEDIES. If a Servicer Event of Default shall have occurred and be
continuing, Buyer may, by notice given in writing to the Servicer, immediately
terminate all of the rights and obligations of the Servicer under this
Agreement. Notwithstanding any termination of the rights and obligations of the
Servicer, the Servicer shall remain responsible for any acts or
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<PAGE>
omissions to act by it as Servicer prior to such termination. In the event
of such termination:
(a) Buyer is hereby authorized and empowered (upon the failure
of the Servicer to cooperate) to execute and deliver, on behalf of the Servicer
as attorney-in-fact or otherwise, all documents and other instruments upon the
failure of the Servicer to execute or deliver such documents or instruments, and
to do and accomplish all other acts or things necessary or appropriate to effect
the purposes of a transfer of servicing rights to a successor servicer;
(b) The Servicer agrees to cooperate with Buyer and any successor
servicer in effecting the termination of the responsibilities and rights of the
Servicer to conduct servicing hereunder, including, without limitation, the
transfer to such successor servicer of all authority of the Servicer to service
the Receivables provided for under this Agreement, including, without
limitation, all authority over all collections which shall on the date of
transfer be held by the Servicer for deposit or which shall thereafter be
received with respect to the Receivables; and
(c) The Servicer shall promptly transfer its records relating to the
Receivables to a successor servicer in such form as such successor servicer may
reasonably request and shall promptly transfer to such successor servicer all
other records, correspondence and documents necessary for the continued
servicing of the Receivables in the manner and at such times as the successor
servicer shall reasonably request. To the extent that compliance with this
Section shall require the Servicer to disclose to such successor servicer
information of any kind which the Servicer reasonably deems to be confidential,
such successor servicer shall be required to enter into such customary licensing
and confidentiality agreements as the Servicer shall deem necessary to protect
its interest.
11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successor and
assigns. The Servicer may contract with others for the performance of any or
all of its obligations arising hereunder but no such contract shall relieve
Servicer from liability for its performance hereunder.
12. BUYER EVENT OF DEFAULT; SERVICER'S REMEDIES. In the event that Buyer
should fail to pay any fees or compensation due under this Agreement, within ten
business days of the date they are due or are submitted for payment, whichever
is less, or shall fail to perform any of its duties or to observe or perform any
other term, covenant, condition or agreement provided within this Agreement,
said failure shall constitute an event of default by the Buyer. In the event of
such default, Servicer shall have the option of immediately terminating this
Agreement by written notice to Buyer in addition to all remedies available in
equity or law.
13. MODIFICATIONS AND WAIVERS. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver of any right, power or privilege hereunder operate
as a waiver of any other right, power or
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privilege hereunder, nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof,
or the exercise of any other right, power or privilege hereunder. All rights
and remedies herein provided are cumulative and are not exclusive of any
rights or remedies which the parties hereto may otherwise have at law or in
equity. No waiver shall be valid in the absence of the written and signed
consent of the party against which enforcement of such is sought.
14. NOTICE. Except as otherwise specifically provided herein, any notice
hereunder shall be in writing (including telecopy communication) and, if mailed,
shall be deemed to be given when sent by registered or certified mail, postage
prepaid or if telecopied when transmitted, or otherwise when delivered in person
to the addressee and a receipt given therefor, in all such instances addressed
to the respective parties as follows:
To Servicer: As provided on signature page
To Buyer: Tamarack Lenders Corporation
801 East Campbell Road, Suite 310
Richardson, Texas 75018
Attn: Garry Isaacs, President
or at such other address as the addressee may, by written notice received by the
other party hereto, designate as the appropriate address for purposes of notice
hereunder.
15. AMENDMENT. This Agreement may be amended, supplemented or modified
only with the written consent of each of the parties hereto.
16. CHOICE OF LAW. THIS AGREEMENT AND THE VALIDITY AND ENFORCEMENT
HEREOF, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE
LAWS OF THE STATE OF TEXAS.
17. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term of this Agreement, the legality, validity and enforceability of the
remaining provisions of this Agreement shall not be affected thereby, and in
lieu of each such illegal, invalid or unenforceable provision there shall be
added automatically as a part of this Agreement a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
18. ENTIRE AGREEMENT. This instrument embodies the entire agreement
between the parties relating to the subject matter hereof and supersedes all
prior agreement and understandings, if any, relating to the subject matter
hereof.
19. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each
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of which for all purposes is to be deemed an original.
20. SURVIVAL. All covenants, agreements, undertakings, indemnities,
representations and warranties made herein shall survive both the execution and
the termination hereof and shall not be affected by any investigation made by
any party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first hereinabove written.
BUYER:
TAMARACK LENDERS CORPORATION
By:
----------------------------------
Garry P. Isaacs
President
SERVICER:
--------------------------------------
By:
----------------------------------
Name:
----------------------------
Title:
----------------------------
Address
---------------------------
---------------------------
Attention:
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Exhibit 10.2
MASTER CONTRACT PURCHASE AGREEMENT
This Master Contract Purchase Agreement (this "Agreement") effective as
of _____________________, 1998, is entered into by and between Tamarack Funding
Corporation a Texas corporation ("TFC"), and Tamarack Lenders Corporation, a
Texas corporation ("Buyer").
BACKGROUND STATEMENT
This Agreement, under which from time to time TFC will purchase on
behalf of Buyer retail installment contracts and other installment obligations
issued for the purchase of used motor vehicles and liens on such vehicles
securing the obligations, shall govern the purchase and transfer of the
obligations for the benefit of Buyer and the servicing and other incidents
thereof, and each shall be subject to the warranties, representations and
agreements herein.
STATEMENT OF AGREEMENT
In consideration of the mutual covenants contained herein and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Buyer and TFC agree as follows:
1. DEFINITIONS. The following terms shall for all purposes of this
Agreement have the meanings hereinafter specified:
(a) "Certificate of Title" shall mean a certificate of title under
the Certificate of Title Act, as amended (Article 6687-1, Vernon's Texas Civil
Statutes), or a certificate of title under a statute of another jurisdiction
under the law of which indication of a security interest on the certificate is
required as a condition of perfection.
(b) "Dealer" shall mean the TFC-approved dealer who sold a Financed
Vehicle and who originated, sold and assigned the related Receivable to the
Buyer.
(c) "Financed Vehicle" shall mean an automobile or light truck,
together with all accessories thereto, securing an Obligor's obligations under
the related Receivable.
(d) "Obligor" shall mean the purchaser or co-purchasers of the
Financed Vehicle or any other person who owes payments under the Receivable.
(e) "Purchased Receivable Pool" shall mean all Receivable pools which
Buyer determines to purchase from a Dealer in accordance with the terms and
conditions of this Agreement and the applicable Transfer Agreement.
<PAGE>
(f) "Purchased Receivables" shall mean all Receivables purchased by
Buyer from Dealers in accordance with the terms and conditions of this Agreement
and the applicable Transfer Agreement.
(g) "Receivable Documents" shall mean all documents and proof of
delivery evidencing and relating to the Purchased Receivables as Buyer may
reasonably request.
(h) "Servicing Agreements" shall mean the Servicing Agreements
between the various Dealers and the Buyer.
(i) "Receivable" shall mean a valid and enforceable motor vehicle
retail installment contract or other evidence of an installment obligation of an
Obligor which is secured by a lien on a Financed Vehicle.
(j) "Transfer Agreement" shall mean the agreements between the Buyer
and various Dealers, pursuant to which the Buyer purchases Receivables from such
Dealers.
2. PROCEDURE FOR PURCHASE. (a) At any time and from time to time
until the termination of this Agreement, the Buyer may request TFC to solicit
from Dealers Receivables and Receivable pools. TFC shall be obligated to use
reasonable efforts to solicit from Dealers Receivables and Receivable pools as
soon as practicable following any such request by the Buyer. Buyer shall
purchase Receivables pursuant to a Transfer Agreement reasonably satisfactory to
the Buyer.
(b) Payment of the purchase price by Buyer shall be made at the time
of the purchase by TFC on Buyer's behalf of each Purchased Receivable. At all
times during the term of this Agreement, Buyer shall retain the right to audit
any or all Purchased Receivables and/or Purchased Receivable Pools for adherence
to the terms and conditions of this Agreement. TFC shall cooperate in all
material respects with the audit of such Purchased Receivables and/or Purchased
Receivable Pools.
3. COMPENSATION TERM. This Agreement is one part of a transaction
pursuant to which TFC expects to receive certain benefits; therefore, TFC shall
receive no additional compensation hereunder. This Agreement shall commence as
of the date first written above and shall continue until terminated upon 30 days
written notice from either party to the other.
4. OTHER DOCUMENTS. TFC or Buyer shall execute and deliver any and all
other documents, opinions, certificates, and evidence of the Purchased
Receivables as may be reasonably requested by Buyer in connection with the
transactions contemplated by this Agreement.
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<PAGE>
5. REPRESENTATIONS AND WARRANTIES OF TFC. TFC represents and warrants to
Buyer as follows:
(a) ORGANIZATION AND GOOD STANDING. TFC is a corporation duly
organized, validly existing and in good standing under the laws of Texas, and
has full corporate power, authority and legal right to own its properties and
conduct its business as such properties are presently owned and such business is
presently contemplated, and to execute, deliver and perform its obligations
under this Agreement.
(b) DUE QUALIFICATION. TFC is duly qualified and has registered as a
foreign corporation in each state where such qualification is required in order
to perform its obligations pursuant to this Agreement and has obtained all
necessary licenses, approvals or consents as are required under applicable law
to perform its duties hereunder.
(c) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement has been duly authorized by TFC by all necessary corporate action
on the part of TFC.
(d) BINDING OBLIGATION. This Agreement constitutes a legal, valid
and binding obligation of TFC, enforceable in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in effect
which affect the enforcement of creditors' rights in general, and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).
(e) NO VIOLATION. The execution and delivery of this Agreement by
TFC, and the performance of the transactions contemplated by this Agreement and
the fulfillment of the terms hereof applicable to TFC, will not conflict with,
violate, result in any breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default under,
any requirement of law applicable to TFC or any indenture, contract, agreement,
mortgage, deed of trust or other installment to which TFC is a party or by which
it is bound.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF TFC REGARDING
RECEIVABLES. TFC further represents and warrants to, and covenants with Buyer
as follows:
(a) Each Purchased Receivable will conform with, and in acting with
respect to the Receivable, TFC will have complied in all material respects with,
all applicable federal, state and local laws, regulations and official rulings.
(b) Each Purchased Receivable (i) shall have been originated in the
United States of America by a Dealer for the retail sale of a Financed Vehicle
in the ordinary course
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<PAGE>
of such Dealer's business, shall have been fully and properly executed by the
parties thereto and shall have been validly assigned by such Dealer to Buyer
in accordance with its terms, (ii) shall have created or shall create a
valid, subsisting, and enforceable first priority security interest in the
Financed Vehicle in favor of the owner of the Purchased Receivable, (iii)
shall contain customary and enforceable provisions such that the rights and
remedies of the holder thereof shall be adequate for realization against the
collateral and of the benefits of the security, (iv) shall provide for, in
the event that such Purchased Receivable is prepaid, a prepayment that fully
pays the principal balance, and (v) shall meet at the time of its purchase
from the originating Dealer in all material respects all purchasing criteria
set forth by Buyer from time to time.
(c) TFC shall require each Dealer from which a Purchased Receivable
is purchased (i) to represent and warrant that such Purchased Receivable and the
sale of the related Financed Vehicle complied, at the time the Receivable was
originated or made, in all material respects with all requirements of applicable
federal, state and local laws, and regulations thereunder, including, without
limitation, usury laws, the Federal Truth-In-Lending Act, the Equal Credit
Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act, the Federal Trade Commission Act, the Federal Reserve Board's
Regulations B and Z, state adaptations of the National Consumer Act and of the
Uniform Consumer Credit code, and other consumer laws and equal credit
opportunity and disclosure laws, and (ii) to agree that any Purchased Receivable
has been purchased from the Dealer with recourse.
(d) Each Purchased Receivable shall represent the genuine, legal,
valid and binding payment obligation in writing of the Obligor, enforceable by
the holder thereof in accordance with its terms subject to the effect of
bankruptcy, insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights generally.
(e) (i) The Certificate of Title for such Financed Vehicle shows (or
if a new or replacement Certificate of Title is applied for with respect to such
Financed Vehicle, the official receipt from the responsible state or local
governmental authority shall indicate that an application has been made and that
the Certificate of Title, when issued, will show within 120 days) the Buyer as
the holder of a first priority security interest in such Financed Vehicle, (ii)
within 120 days after the Purchase Date for the Receivable relating to the
Financed Vehicle, the Certificate of Title for such Financed Vehicle will show
the Buyer as the holder of a first priority security interest in such Financed
Vehicle, and (iii) the Buyer, upon delivery of the transfer to it, will have a
valid and enforceable security interest in the Financed Vehicle to the same
extent as the security interest of the person or entity named as the original
secured party under the related Receivable.
(f) At the time of its purchase for the Buyer, no provision of a
Purchased Receivable shall have been waived, without the express written consent
of the Buyer.
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<PAGE>
(g) At the time of its purchase by the Buyer, no right of rescission,
setoff, counterclaim, or defense shall have been asserted or threatened with
respect to any Receivable.
(h) It is the intention of TFC that the transfer and assignment
herein contemplated constitute a sale of the Purchased Receivable or Purchased
Receivable Pool to Buyer and that the beneficial interest in and title to the
Purchased Receivables and Purchased Receivable Pools not be part of TFC's estate
in the event of the filing of a bankruptcy petition by or against TFC under
applicable bankruptcy law. Immediately prior to the transfer and assignment to
Buyer herein contemplated, Dealer had good and marketable title to each
Purchased Receivable free and clear of all liens, encumbrances, security
interests, and rights of others and, immediately upon the transfer thereof,
Buyer shall have good and marketable title to each Purchased Receivable, free
and clear of all liens, encumbrances, security interests, and rights of others.
7. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
warrants to TFC as follows:
(a) ORGANIZATION AND GOOD STANDING. The Buyer is a corporation
duly organized, validly existing and in good standing under the laws of Texas,
and has full corporate power, authority and legal right to own its properties
and conduct its business as such properties are presently owned and such
business is presently contemplated, and to execute, deliver and perform its
obligations under this Agreement.
(b) DUE QUALIFICATION. The Buyer is duly qualified and has
registered as a foreign corporation in each state where such qualification is
required in order to perform its obligations pursuant to this Agreement and has
obtained all necessary licenses, approvals or consents as are required under
applicable law to perform its duties hereunder.
(c) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement has been duly authorized by the Buyer by all necessary corporate
action on the part of the Buyer.
(d) BINDING OBLIGATION. This Agreement constitutes a legal, valid
and binding obligation of the Buyer, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in effect
which affect the enforcement of creditors' rights in general, and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).
(e) NO VIOLATION. The execution and delivery of this Agreement by
the Buyer, and the performance of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof applicable to the Buyer, will
not conflict with, violate, result in
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<PAGE>
any breach of any of the material terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under, any
requirement of law applicable to the Buyer or any indenture, contract,
agreement, mortgage, deed of trust or other installment to which the Buyer is
a party or by which it is bound.
8. SERVICING AGREEMENTS; COLLECTION OF PURCHASED RECEIVABLES. From time
to time during the term of this Agreement, various Dealers and the Buyer shall
enter into Servicing Agreements whereby each such Dealer, as an independent
contractor, will collect, in accordance with the terms and conditions set forth
therein, for the account of the Buyer, payments under all Purchased Receivables
and Purchased Receivable Pools.
9. NO ASSUMPTION. TFC does not, and shall not be deemed to, assume any
obligations of the Buyer relating to the transactions contemplated herein.
Buyer does not, and shall not be deemed to assume any obligations of TFC
relating to the Purchased Receivables or the transactions giving rise to the
Purchased Receivables. TFC hereby indemnifies and holds harmless Buyer, its
successors and assigns, and their respective officers, directors, agents and
attorneys against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against Buyer, its successors and assigns, or their respective
officers, directors, agents and attorneys due to (i) any breach by TFC of its
representations, warranties or covenants provided for in this Agreement, or (ii)
any action or inaction of TFC in any way relating to, or arising out of this
Agreement or any of the transactions contemplated herein. The indemnities
contained in this Section shall survive any termination of this Agreement.
10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. TFC may contract with others for the performance of any or all of its
obligations hereunder. Any such contract, however, shall not relieve TFC from
liability for its obligations hereunder.
11. MODIFICATIONS AND WAIVERS. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver of any right, power or privilege hereunder operate
as a waiver of any other right, power or privilege hereunder, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof, or the exercise of any other right, power
or privilege hereunder. All rights and remedies herein provided are cumulative
and are not exclusive of any rights or remedies which the parties hereto may
otherwise have at law or in equity. No waiver shall be valid in the absence of
the written and signed consent of the party against which enforcement of such is
sought.
12. NOTICE. Except as otherwise specifically provided herein, any notice
hereunder shall be in writing (including telecopy communication) and, if mailed,
shall be deemed to be
Page 6 of 8
<PAGE>
given when sent by registered or certified mail, postage prepaid, or if
telecopied when transmitted, or otherwise when delivered in person to the
addressee and a receipt given therefor, in all such instances addressed to
the respective parties as follows:
To TFC: Tamarack Funding Corporation
801 East Campbell Road, Suite 310
Richardson, Tx. 75081
Attn: Mr. Garry P. Isaacs, President
To Buyer: Tamarack Lenders Corporation
801 East Campbell Road, Suite 310
Richardson, Tx. 75081
Attn: Mr. Garry P. Isaacs, President
or at such other address as the addressee may, by written notice received by the
other party hereto, designate as the appropriate address for purposes of notice
hereunder.
13. AMENDMENT. This Agreement may be amended, supplemented or modified
only with the written consent of each of the parties hereto.
14. CHOICE OR LAW. THIS AGREEMENT AND THE VALIDITY AND ENFORCEMENT HEREOF
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF
THE STATE OF TEXAS.
15. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term of this Agreement, the legality, validity and enforceability of the
remaining provisions of this Agreement shall not be affected thereby, and in
lieu of each such illegal, invalid or unenforceable provision there shall be
added automatically as a part of this Agreement a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
16. ENTIRE AGREEMENT. This instrument embodies the entire agreement
between the patties relating to the subject matter hereof and supersedes all
prior agreements and understandings, if any, relating to the subject matter
hereof.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which for all purposes is to be deemed an original.
18. SURVIVAL. All covenants, agreements, undertakings, indemnities,
representations and warranties made herein shall survive both the execution and
the termination hereof and shall not be affected by any investigation made by
any party.
Page 7 of 8
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first hereinabove written.
TFC:
TAMARACK FUNDING CORPORATION
By:
-----------------------------------
Garry P. Isaacs, President
BUYER:
TAMARACK LENDERS CORPORATION
By:
------------------------------------
Garry P. Isaacs, President
Page 8 of 8
<PAGE>
SUBSCRIPTION AGREEMENT
The investor signatory hereto ("Subscriber") represents, warrants,
acknowledges and agrees as follows:
1. Subscriber hereby subscribes for the principal amount of Notes (the
"Note") issued by Tamarack Lenders Corporation ("Issuer"), as specified on
the reverse side hereof, encloses and hereby tenders the amount set forth on
the reverse side hereof ($10,000 minimum), as full payment for the Note for
which he is subscribing, and hereby agrees, subject to the Issuer's
acceptance of his subscription, to become a Noteholder in an amount equal to
the amount tendered. Subscriber agrees that he may not revoke, cancel,
terminate or withdraw his subscription or this Subscription Agreement without
the prior written consent of the Issuer, and acknowledges that the Issuer may
reject his subscription for any reason whatsoever.
2. Subscriber hereby acknowledges receipt of a copy of the current
prospectus for the offering and sale of the Notes ("Prospectus") and
understands that the Note being acquired will be governed by the terms of the
Indenture referenced in such Prospectus and such other documents as may be
referenced therein. Subscriber further understands and agrees that, following
Issuer's acceptance of his subscription, he shall receive a Note which shall
evidence his status as a Noteholder of Issuer, such Note to be in the form
specified in the Indenture. The information set forth on the reverse side
hereof is true and accurate and Subscriber has proper authority to execute
this Subscription Agreement and make this investment.
3. Subscriber hereby represents that this purchase is made for the
Subscriber's own account and not with a view toward distribution. Subscriber
understands that it is not anticipated that an active market will ever
develop for the Notes, and that accordingly it may be impossible for
Subscriber to liquidate his investment in the Note, even in the event of an
emergency. Any transfer of the Note must comply with the requirements of the
Prospectus, the Note and with any additional requirements imposed by law or
by any governmental authorities.
4. TAX REPRESENTATIONS: Under penalties of perjury, I certify that (i) the
number shown on this form is my correct taxpayer identification number, and
(ii) that I am not subject to backup withholding because (A) I have not been
notified that I am subject to backup withholding as a result of a failure to
report all interest or dividends or (B) the Internal Revenue Service has
notified me that I am no longer subject to backup withholding. Under
penalties of perjury, I certify that I am not a non-resident alien
individual, a foreign partnership, a foreign corporation, or a foreign estate
or trust, which would be a foreign person within the meaning of Sections
1441, 1446 and 7701(a) of the Internal Revenue Code of 1986, as amended, and
that I will notify the Issuer before a change in my foreign status.
<PAGE>
5. SUITABILITY. The subscriber represents that he/she/it has either (a) an
annual gross income of at least $45,000 and a net worth of at least $45,000
exclusive of the subscriber's principal residence and its furnishings and
personal use automobiles; or (b) a net worth of at least $150,000, exclusive
of the subscriber's principal residence and its furnishings and personal use
automobiles. If a subscriber is a fiduciary account, the subscriber
represents that the foregoing standards are met by the beneficiary, the
fiduciary account, or by the donor or grantor who directly or indirectly
supplies the funds to purchase the securities if the donor or grantor is the
fiduciary.
The capitalized terms used have the meanings assigned to them in the
Prospectus unless the context otherwise requires.
SUBSCRIPTION INSTRUCTIONS
1. Complete all items and sign and date this Subscription Agreement in the
places indicated. Subscribers should use full names (not initials). If you
have previously subscribed for a Note in this offering and wish to subscribe
for an additional Note, please check the appropriate box and complete the
entire Subscription Agreement. NO SUBSCRIPTION AGREEMENT WILL BE PROCESSED
UNLESS FULLY COMPLETED AND ACCOMPANIED BY THE APPROPRIATE PAYMENT.
2. Make your subscription check payable to "_______________ Bank, as Escrow
Agent," for the amount entered under "Amount Enclosed" in the Subscription
Agreement. After the Minimum Offering has been achieved, subscription checks
should be made payable to "Sovereign Credit Finance II, Inc." NO SUBSCRIPTION
AGREEMENT WILL BE PROCESSED UNLESS FULLY COMPLETED AND ACCOMPANIED BY THE
APPROPRIATE PAYMENT.
3. Mail or deliver your signed Subscription Agreement and your check to
your Registered Representative.
4. Registered Representatives: Please forward signed Subscription
Agreements and checks to Tamarack Lenders Corporation, 801 East Campbell
Road, Suite 310, Richardson, Texas 75081.
The following signature and other documentation requirements have been
established for the following forms of ownership of the Notes:
JOINT TENANTS AND TENANTS IN COMMON: The signatures of all joint
tenants and tenants in common investors are required unless a separate
document, signed by all parties and designating one as the agent of the
other(s) for purposes of signing the Subscription Agreement, accompanies the
Subscription Agreement.
CORPORATION: The signature(s) of an officer(s) authorized to sign on
behalf of the corporation is(are ) required.
<PAGE>
PARTNERSHIP: Specify whether the subscriber is a general or limited
partnership. If it is a general partnership, the signatures of all partners are
required. If it is a limited partnership, the signatures of all general
partners are required.
TRUST: The Subscription Agreement must be signed by the trustee.
UNIFORM GIFTS TO MINORS ACT: The required signature is that of the
custodian, not of the parent (unless the parent has been designated as the
custodian). Only one child is permitted in each investment under the Uniform
Gifts to Minors Act. Different requirements may apply in your state. Please
consult your attorney for information regarding these requirements.
<PAGE>
SUBSCRIPTION AGREEMENT & NEW ACCOUNT APPROVAL
TAMARACK LENDERS CORPORATION
Tamarack Funding Corporation Account Number:_____________
1000 East Campbell Rd. #110 R/R:________________________
Richardson, TX 75081
9-1/2% AUTO RECEIVABLE NOTES
12% AUTO RECEIVABLE NOTES
BY COMPLETING AND EXECUTING THIS SUBSCRIPTION AGREEMENT, THE INVESTOR HEREBY
ACKNOWLEDGES READING AND UNDERSTANDING THE MATERIAL BELOW, AND REPRESENTS AND
WARRANTS, ACKNOWLEDGES AND AGREES TO ALL PROVISIONS SET FORTH BELOW.
Amount Subscribed and Class of Notes
$10,000 Minimum
9-1/2 % notes, 1 year maturity _________ Check here if subscriber has previously
Subscribed to THIS offering.
12 % notes, 5 year maturity _________ Yes ____ No ____
PLEASE PRINT OR TYPE EXCEPT FOR SIGNATURES
1. INVESTOR 2. SPOUSE
Full Name: ___________________________ ________________________________
Address: _____________________________ ________________________________
City: _____________________________ ________________________________
State/Zip:___ _______ Phone: _________ State/Zip:___ ______ Phone: _________
SS# _________ Date of Birth __________ SS# _________ Date of Birth __________
Employer: ___________________________ __________________________________
Address: ____________________________ __________________________________
State/Zip:___ _______ Phone: _________ State/Zip:___ _______ Phone: _________
Position: ________ Control Person? Y N _______________ Control Person? Y N
US Citizen? Y N Country: __________ US Citizen? Y N Country: __________
Persons who reside in foreign countries, including U.S. citizens and
non-resident aliens, are not
<PAGE>
permitted to invest in notes.
Marital Status? S M D W
Highest Level of Education ____ / ____ Highest Level of Education ____ /____
& Degree(s) & Degrees(s)
3. I have personally invested in excess of $__________ over the past five
years, including investments during such period in excess of $__________ in
non-liquid investments.
4. Listed below are the types of investments I have made in the past five
years, with particular attention to investments in non-marketable or
non-liquid investments.
_________________________________________________________
_________________________________________________________
_________________________________________________________
5. I will ____ will not ____ (check one) have an attorney, accountant,
investment advisor or other consultant review this investment. If yes,
please indicate name and business address: [A Purchaser Representative
Questionnaire will need to be completed by your Advisor.]
Name:______________________________ Telephone:______________
Firm:_______________________________________________________
Address:____________________________________________________
My investment objectives are: (check your objective)
____ Income
____ Long term growth and safety
7. Tax Bracket ___15% ___28% ___31% ___36% ___39.6%
The current market value of my liquid assets is $___________.
<PAGE>
8. Nature of account: (check one)
____(a) Employee of firm
____(b) Employee of an Insurance company, Bank, Fund, or another
Broker/Dealer
____(c) Relative of (a) Relationship? ___________________
____(d) None
Credit references:
Bank:
Branch & Type ___________________________
Broker:
Branch & Type ___________________________
10. Investment Experience:
(i) The frequency of my investment in marketable securities is:
( ) often ( ) occasionally ( ) seldom ( ) never
(ii) The frequency of my investment in commodities futures is:
( ) often ( ) occasionally ( ) seldom ( ) never
(iii) The frequency of my investment in options if:
( ) often ( ) occasionally ( ) seldom ( ) never
(iv) The frequency of my investment in securities purchased on margin is:
( ) often ( ) occasionally ( ) seldom ( ) never
(v) The frequency of my investment in unmarketable securities is:
( ) often ( ) occasionally ( ) seldom ( ) never
(vi) The frequency of my investment is securities sold in reliance on the
private offering exemption from registration under the Securities Act of 1933
is:
( ) often ( )occasionally ( ) seldom ( ) never
<PAGE>
11. Indicated in the space provided below is additional information which I
think may be helpful in enabling the Company to determine whether my knowledge
and experience in financial and business matters is sufficient to enable me to
evaluate the merits and risks of my prospective investment:
_________________________________________________________
_________________________________________________________
_________________________________________________________
ONLY PARTNERSHIPS AND CORPORATIONS NEED TO ANSWER QUESTION 12
12. If the investment will be in the name of a partnership or corporation,
answer the following:
Type of Entity:________________ Date of Formation:________________
IRS Employer Identification Number:________________
Number of Shareholders or Partners:______ Net Worth: $__________
Net Income For: Last fiscal year: $__________ Current fiscal year
(anticipated): $__________
NOTE: IF A CORPORATION, THE OFFICER OF THE CORPORATION WHO WILL BE
RESPONSIBLE FOR MAKING THE DECISION TO PURCHASE A UNIT MUST COMPLETE A
PROSPECTIVE PURCHASER QUESTIONNAIRE.
NOTE: IF A PARTNERSHIP, THE PARTNER WHO WILL BE RESPONSIBLE FOR MAKING
THE DECISION TO PURCHASE A UNIT MUST COMPLETE A PROSPECTIVE PURCHASER
QUESTIONNAIRE.
13. This section is only for Trusts, Pension or Profit Sharing Plans, or IRA
or KEOGH Investments.
If the Investor is a Trust, a Pension or Profit Sharing Plan or if the
investment is intended to be placed in an IRA or KEOGH account, please answer
the questions below:
<PAGE>
(a) Are you a Trustee of the Trust, Pension or Profit Sharing Plan?
Yes ( ) No ( )
1) If YES, set forth the type of Plan or Trust proposing to invest:
__________________
2) If YES, set forth the state of residency of all Beneficiaries of
the Plan or Trust: _________________
3) If YES, set forth the state of residency of all Trustees of the
Plan or Trust: _________________
b) Please identify the person(s) with investment control over the Plan
or Trust assets, and such person's(s') state of residence: _____________________
c) Please identify the person(s) responsible for the ministerial or
custodial duties of administering the Plan or Trust and such person(s) state
of residence: _____________________
d) If your investment is intended to be placed in an IRA or KEOGH
account, please identify the person(s) with investment control over the
account's assets and such person(s) state of residence: ____________________
e) If the investment is intended to be placed in an IRA or KEOGH account,
please identify the person(s) with ministerial or custodial duties over the
account and such person(s) state of residence: _____________________
f) Number of Beneficiaries: ___________________
g) Net worth: $__________ Gross Income: $__________
Ownership - Check One: (Refer to the signature requirements and instructions
below)
_____ Individual _____Trust
_____ Joint Tenant with right of survivorship _____ IRA
_____ Tenants in common _____ Keogh Plan
_____ Custodian-Uniform Gifts To Minors _____ Pension or Profit
_____ Corporation _____ Other __________________
_____ General Partnership
_____ Limited Partnership
<PAGE>
REPRESENTATIONS AND WARRANTIES; COVENANTS; SIGNATURES
I understand that the Corporation will be relying on the accuracy and
completeness of my response to the foregoing questions, and I represent and
warrant to the Corporation that (i) the answers to the above questions are
complete and correct and may be relied upon by the Corporation in determining
compliance with the Act and (ii) I am able to bear the economic risk of the
investment, and at the present time and under reasonable foreseeable
circumstances, I could afford a complete loss of such investment.
I agree to provide further documentation and provide additional
information to supplement and explain the subject matter hereof as requested
from time to time by Corporation. Further, I agree to update the information
provided by me herein as requested from time to time by the Corporation.
15. REQUIRED SIGNATURES
Signature must be identical to subscriber name. Subscribers must sign the
Subscription Agreement; Purchaser Representatives and investment advisors
may not sign on behalf of subscriber.
INDIVIDUAL INVESTOR: Date: _______________
___________________________________ ___________________________________
Signature of Investor Printed Name of Investor
___________________________________ ___________________________________
Signature of Co-Investor Printed Name of Co-Investor
ENTITY INVESTOR: ___________________________ Date: _______________
Printed Name of Entity
___________________________________ _______________________________________
Signature of Authorized Person Printed Name and Title of
Authorized Person
<PAGE>
BROKER / DEALER: Date:____________
REGISTERED REPRESENTATIVE STATEMENT - I hereby represent on recommending the
purchase of Tamarack Lenders Corporation Automobile Receivables Backed Notes
that I, the Registered Representative, have responsible grounds to believe
that the investment is suitable for the subscriber based upon the information
available to me as conveyed by the subscriber or his/her agent.
___________________________________ _____________________________________
Signature of Registered Print Name of Registered
Representative Representative
___________________________________ ______________________________________
Signature of Designated Officer Print Name of Designated Officer
<PAGE>
FORM OF SUBSCRIPTION ESCROW AGREEMENT
THIS AGREEMENT made effective on _________________________, 1998 by and
between Tamarack Lenders Corporation, a Texas corporation (the "Company") and
__________ Bank ("Agent").
WHEREAS, the Company is offering for subscription, up to $20,000,000 in
principal amount of its Auto Receivables Backed Notes (the "Notes") on the
terms and conditions set forth in the Prospectus (the "Prospectus") filed
with the Securities and Exchange Commission in connection with the Company's
Form S-1 Registration Statement, File No. 333-31925; and
WHEREAS, the Company appoints the Agent to perform the services of
depository and escrow agent pursuant to the terms and conditions of this
Agreement with respect to subscriptions to the Company made by prospective
purchasers of the Notes (the "Investors");
NOW, THEREFORE, the parties hereto agree as follows:
1. Investor checks shall be delivered and made payable to Agent until
the earlier of (i) the date that Agent receives Investor checks aggregating
at least $100,000 (the "Minimum Subscription"), or (ii) __________________,
1998 (the "Subscription Cut-off Date"). Participating Broker/Dealers shall
transmit Investor checks and subscription agreements to the Company by noon
of the next business day following receipt by the Broker/Dealer. The Company
will then promptly forward to Agent the Investor check together with a
statement identifying such Investor by name, address and Federal tax
identification number, and Agent shall deposit all subscription checks and
other payments for the Notes by Investors which it receives into an escrow
account maintained by Agent (the "Escrow Fund").
2. The Company reserves the right to reject any subscription. The
Company shall promptly refund the subscription amount which has been rejected
to the Investor unless the subscription amount is on deposit with Agent, in
which case Agent, upon written direction of the Company, shall make such
refund with interest, if any, as soon as Agent has collected funds on such
Investor's check.
3. Prior to the close of business on the Subscription Cut-Off Date,
Agent shall verify with the Company whether or not subscriptions for the
Minimum Subscription have been received.
4. If the Minimum Subscription has been received by Agent prior to the
close of business on the Subscription Cut-Off Date, the Company shall advise
Agent in writing that the subscription was successful. Agent shall then and
thereafter remit collected funds together with any interest earned thereon to
the Company at the Company's request and in the Company's sole discretion.
Amounts received by Agent in forms other than cash shall be available for
transfer to the Company or to the Investor, as the case may be, once Agent
has collected funds.
<PAGE>
5. If Agent has not received (i) Investor checks or other payments
evidencing the subscription of at least the Minimum Subscription prior to the
close of business on the Subscription Cut-Off Date, AND (ii) within a
reasonable time after the Subscription Cut-Off Date, written advice from the
Company as required by Paragraph 4 above concerning the success of the
subscription, all subscriptions and amounts paid in respect thereto shall be
promptly returned to the Investors together with any interest which has been
earned thereon.
6. Agent shall have no authority or obligation to exercise discretion
as to the investment of the Escrow Fund, but will invest and reinvest the
Escrow Fund in short term debt obligations issued or guaranteed by, and
bearing the full faith and credit as to the repayment of full principal and
interest of, the United States of America, or will deposit the Escrow Fund in
any time or savings deposit of the Agent, not to exceed $100,000 at any one
institution, of any federally insured bank chartered and supervised by the
United States of America and holding FDIC (or its successor) insurance. The
subscription payments will be invested three business days after presentation
of such payments to the Agent.
7. Agent shall be under no duty or responsibility to enforce
collection of any checks delivered to Agent hereunder. Agent shall promptly
notify and return to the Company any check or instrument received from the
Company or Investor upon which payment is refused, together with the related
documents which were delivered to Agent. If any check or instrument
delivered to Agent under this Agreement is uncollectible, Agent shall notify
the Company and shall deliver the returned check or instrument to the Company.
8. Agent shall provide all administrative and reporting services
contemplated by this Agreement to effect the purpose stated herein.
9. Agent is not a party to, nor is it bound by, any agreement out of
which this Agreement may arise including, but not limited to, the Prospectus.
Agent is not charged with notice of the existence of any agreement out of
which this Agreement may arise other than the Prospectus.
10. The Agent may resign, for any reason, upon ten (10) days written
notice to the parties to this Agreement. Upon expiration of such ten (10)
days notice period (or as soon as practicable with respect to funds that are
not collected funds at the expiration of such period), the Agent shall
deliver all cash or property in its possession under this Agreement to any
successor Agent appointed by the Company, or if no successor Agent has been
appointed, to any court of competent jurisdiction in Dallas County, Texas.
Upon either such delivery, Agent shall be released from any and all liability
under this Agreement.
11. Agent may act upon any notice, request, certificate, approval,
consent or other paper believed by it to be genuine and to be signed by the
proper party or parties. Agent shall not be required to take any action (or
refrain from taking any action) if, in the reasonable opinion of Agent, such
action (or inaction) could expose Agent to a risk of incurring costs,
expenses or liabilities against which Agent has not, in its reasonable
opinion, received adequate
2
<PAGE>
indemnity and security.
12. The Agent shall be entitled to compensation from the Company for
acting hereunder in accordance with the fee schedule attached as EXHIBIT A
hereto. Agent fees will be paid by the Company to the Agent in accordance
with the attached fee schedule. The Agent shall also be entitled to
reimbursement of out-of-pocket expenses incurred in connection with the
performance of its services as Agent, including reasonable fees and
disbursements of legal counsel. The Agent shall be entitled to payment of
its fees and reimbursement of its expenses out of the Escrow Fund and the
rights of Investors and Company shall be subordinate to the right of Agent to
receive such payments hereunder in the event that the funds in the Escrow
Fund are insufficient to satisfy such payments to the Agent.
13. Agent and its affiliates shall not be liable, responsible, or
accountable for damages or otherwise to the Company or any Broker/Dealer for
any act or omission under the provisions of this Agreement, unless such act
or omission constitutes gross negligence, willful misconduct, or fraud on
behalf of the Agent.
14. The Agent, its affiliates, and each of its officers, directors,
employees, agents and attorneys (collectively, the "Indemnified Parties")
shall be indemnified against and be held harmless by the Company from any and
all losses, costs, damages, expenses, claims and attorney's fees suffered or
incurred by the Indemnified Parties as a result of, in connection with or
arising from, or out of, but not limited to, the acts or omissions of any
Indemnified Party in performance of or pursuant to this Agreement, except
such acts or omissions as may result from such Indemnified Party's willful
misconduct, gross negligence or fraud.
15. The Agent shall not be responsible for the sufficiency or accuracy,
or the form, execution, validity or genuineness, of documents or securities
now or hereafter deposited or received hereunder, or of any endorsement
thereon, or for any lack of endorsement thereon, or for any description
therein, nor shall it be responsible or liable in any respect on account of
the identity, authority or rights of any person executing, depositing or
delivering or purporting to execute, deposit or deliver any such document,
security or endorsement or this Agreement, or on account of or by reason of
forgeries, false representations, or the exercise of its discretion in any
particular manner, nor shall the Agent be liable for any mistake of fact or
of law or any error of judgment, or for any act or omission, except as a
result of its gross negligence or willful malfeasance. The Agent's liability
for any grossly negligent performance or non-performance shall not exceed its
fees and charges in connection with the services provided hereunder. Under
no circumstances shall Agent be liable for any general or consequential
damages or damages caused, in whole or in part, by the action or inaction of
the Company or any of its agents or employees. Agent shall not be liable for
any damage, loss, liability or delay caused by accidents, strikes, fire,
flood, war, riot, equipment breakdown, electrical or mechanical failure, acts
of God or any cause which is reasonably unavailable or beyond its reasonable
control.
16. In the event of any disagreement involving a party to this
Agreement resulting in
3
<PAGE>
adverse claims or demands being made in connection with the subject matter of
this Agreement, or in the event that the Agent is in doubt as to what action
it should take hereunder, the Agent may, at its option, refuse to comply with
any claims or demands on it, or refuse to take any other action hereunder so
long as such disagreement continues or such doubt exists, and in any such
event, the Agent shall not be or become liable in any way or to any person
for its failure or refusal to act, and the Agent shall be entitled to
continue to refrain from acting until (i) the rights of all parties have been
fully and finally adjudicated by a court of competent jurisdiction or (ii)
all differences shall have been adjudged and all doubt resolved by agreement
among all of the interested persons, and the Agent shall have been notified
thereof in writing signed by all such persons. In addition to the foregoing
remedies, the Agent is hereby authorized in the event of any doubt as to the
course of action it should take under this Agreement, to petition the
District Court of Dallas County, Texas, for instructions or to interplead the
funds or assets so held into such court. The parties agree to the
jurisdiction of said court over their persons as well as all amounts on
deposit in the Escrow Fund. In the event of any dispute and/or any
litigation concerning the subject matter of the Agreement (including any
litigation incident to the resignation of Agent), Agent shall be entitled to
retain counsel of its choice and Company shall indemnify, defend and hold
harmless Agent of and from any and all costs, loss, damage and exposure
associated with such dispute and/or litigation, including all reasonable and
necessary attorney's fees of Agent incurred in connection with such dispute
and/or litigation. Parties hereto agree that Agent shall be entitled to
recover such cost, loss, damages or expense (including attorney fees)
directly from the funds on deposit with Agent or interplead with a court (as
permitted under this Agreement) without prejudice to Agent's further right of
recovery against any party hereto in the event such funds shall be
insufficient to fully reimburse Agent. This provision shall survive the
resignation of Agent.
17. Each party to this Agreement shall be deemed conclusively to have
given and delivered any notice, request or instruction required to be given
or delivered hereunder if the same is in writing, signed by such party and
mailed by first class mail, postage prepaid, addressed to the other party
hereto, at the address set forth below; provided, however, that the
verification required of Agent by Paragraph 3 above, shall be given orally
(by telephone or in person) by contacting the officer of the Company
executing this Agreement on behalf of the Company at (214) 960-0196, and then
confirmed in writing if the Company so requests. Any written notices
required by this Agreement shall be addressed as follows:
If to Agent: _______________ Bank
Attention: Trust Division
Dallas, Texas
If to Company: Tamarack Lenders Corporation
801 East Campbell Road
Suite 310
Richardson, TX 75081
Garry Isaacs, President
4
<PAGE>
18. This Agreement expressly and exclusively sets forth the duties of
Agent with respect to any and all matters pertinent hereto and no implied
duties or obligations shall be read into this Agreement against Agent.
19. Unless and until the Escrow Fund is delivered to the Company under
Paragraph 4, it is specifically recognized and agreed that the Company shall
not have any right, title or interest in such funds; it being the intention
of the parties hereto that the Escrow Fund shall not be subject to claims
against the Company or any of its affiliates unless and until the Minimum
Subscriptions are achieved and delivery of the funds thereof is made, as
aforesaid, and the escrow account hereunder is ended.
20. THIS ESCROW AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT THAT THE PORTIONS OF
THE TEXAS TRUST CODE, SECTION 111.001, ET SEQ. OF THE PROPERTY CODE, V.A.T.S.
CONCERNING FIDUCIARY DUTIES AND LIABILITIES OF TRUSTEE SHALL NOT APPLY TO
THIS AGREEMENT. THE PARTIES EXPRESSLY WAIVE SUCH DUTIES AND LIABILITIES, IT
BEING THEIR INTENT TO CREATE SOLELY AN AGENCY RELATIONSHIP AND HOLD AGENT
LIABLE ONLY IN THE EVENT OF ITS GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR IN
ORDER TO OBTAIN THE LOWER FEE SCHEDULE RATES AS SPECIFICALLY NEGOTIATED WITH
AGENT. ANY LITIGATION CONCERNING THE SUBJECT MATTER OF THIS AGREEMENT SHALL
BE EXCLUSIVELY PROSECUTED IN THE COURTS OF DALLAS COUNTY, TEXAS, AND ALL
PARTIES CONSENT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THOSE COURTS.
This Agreement shall inure to and be binding upon the parties hereto, their
successors and assigns. The terms of this Agreement shall commence with the
date hereof and shall continue until the offering of the Minimum
Subscriptions is achieved or fails to be achieved by the Subscription Cut-Off
Date, and the Escrow Fund is disposed of under Paragraphs 4 or 5. All
protections and indemnities benefitting Agent (and any other Indemnified
Party) are cumulative of any other rights it (or they) may have by law or
otherwise, and shall survive the termination of this Agreement or the
resignation or removal of the Agent.
21. Except as otherwise required by law, neither Agent nor any
successor Agent shall be required to obtain or post a bond or any other
security in connection with the performance of its services hereunder.
22. No amendment to this Agreement shall be binding unless such
amendment is in writing and signed by the Agent or any successor Agent and
the Company.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by duly authorized representatives as of the date
first above written.
COMPANY:
TAMARACK LENDERS CORPORATION
By:
---------------------------------
Garry Isaacs, President
AGENT:
BANK
- -------------------
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
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EXHIBIT A
FEE SCHEDULE
ACCEPTANCE FEE. All legal instruments will be reviewed by counsel for the
_______________ Bank prior to account acceptance. All legal expenses
incurred in this review and during the period of escrow will be borne by the
parties in interest.
SUBSCRIPTION ESCROW. Receiving deposits from two or more investors or
subscribers, providing investor record keeping, investment of funds as
directed, and disbursement of funds on initial closing; there is a [$5,000]
minimum per year or for any portion of a year.
Up to $10,000,000 in aggregate deposits
Next $20,000,000 in aggregate deposits
Next $20,000,000 in aggregate deposits
Next $20,000,000 in aggregate deposits
Balance of deposits
Minimum annual fee: _____________ for any portion of the year
IN CASE OF RETURN OF SUBSCRIPTION FUNDS TO INVESTORS:
Allocation of interest, disbursements, 1099
reporting relating to return of
subscription funds $________ per participant
TRANSACTION CHARGES. Normal transactions including book entries, cash
receipts and disbursements, and wire transfers will be done at no charge.
Foreign securities will be assessed transaction fees as incurred.
EXTRAORDINARY SERVICES AND OUT-OF-POCKET EXPENSES. For services which cannot
be presently anticipated but which may be necessary or desirable, a
reasonable fee will be charged based on nature of the work, time involved,
and responsibility involved.
<PAGE>
$20,000,000
TAMARACK LENDERS CORPORATION
9 1/2% AUTO RECEIVABLES BACKED NOTES
12% AUTO RECEIVABLES BACKED NOTES
--------------------
Broker-Dealer Selling Agreement
--------------------
Tamarack Financial, Inc.
801 East Campbell Road, Suite 311
Richardson, TX 75081
Dear Sirs:
Tamarack Lenders Corporation, a Texas corporation (the "Company"),
has duly authorized the issuance of $20,000,000 aggregate principal amount of
its 91/2% Auto Receivables Backed Notes and 12% Auto Receivables Backed Notes
(the "Notes"). The Notes are to be issued pursuant to an Indenture (the
"Indenture") dated as of ______________________, between the Company and
Sterling Trust Company, as Trustee (the "Trustee"). A pool of used motor
vehicle retail installment sale contracts secured by the vehicles financed
thereby (the "Receivables") will be purchased with the net proceeds from
sales of the Notes and collections on Receivables. The Receivables will be
purchased by the Company and will be serviced on behalf of the Company by
Tamarack Funding Corporation ("TFC") pursuant to the Servicing Agreement
dated as of ___________________________ (the "Servicing Agreement") by and
between the Company and TFC.
The Company has prepared a Registration Statement (as defined
below) with respect to the Notes and intends to sell the Notes to certain
investors (each, a "Purchaser") pursuant to subscription agreements to be
executed and delivered by each such investor, substantially in the form set
forth in EXHIBIT 10.5 to the Registration Statement (each, a "Subscription
Agreement").
The Company has requested that you assist the Company as a
broker-dealer in the public offering of the Notes, and you have indicated
your willingness to do so, subject to the terms and conditions set forth
below.
1. APPOINTMENT OF BROKER-DEALER; SALE OF NOTES
<PAGE>
(a) The Company hereby appoints you (the "Broker-Dealer") as a
broker-dealer in connection with the public offering of the Notes for the
period (the "Offering Period") commencing on the date hereof and terminating
on the Offering Termination Date (as defined below), unless sooner terminated
pursuant to the terms hereof. Subject to the performance by the Company of
its obligations to be performed hereunder, and to the completeness and
accuracy of all of the representations and warranties of the Company
contained or incorporated herein, you hereby accept such appointment and
agree on the terms and conditions herein set forth to use your best efforts
during the Offering Period to identify Purchasers of the Notes. By
acceptance of such appointment, you also agree to comply with the provisions
of Section 24 of Article III of the Rules of Fair Practice of the NASD.
(b) To be effective and binding on the Company, any Subscription
Agreement submitted by a Purchaser must be accepted by the Company. The
Subscription Agreement may be executed on the Purchaser's behalf by the
Purchaser's registered representative, in which event the registered
representative must confirm the accuracy, completeness and binding effect of
the information, representations, warranties and agreements set forth in the
Subscription Agreement with respect to the Purchaser. The Company reserves
the right to reject subscriptions from any Purchasers for any reason;
PROVIDED, HOWEVER, the Company shall have no right to reject subscriptions
and later accept new subscriptions directly from the same Purchasers in order
to circumvent any payment of fee to the Broker-Dealer. With respect to any
outstanding, unaccepted Subscription Agreements on or about the Offering
Termination Date, the Company may limit the principal amount of the Notes to
be purchased under such Subscription Agreements to the extent necessary to
limit the aggregate principal amount of the Notes to be sold by the Company
in the offering to $20,000,000. The Company shall also have the right to
limit the dollar amount of Subscription Agreements that it is willing to
accept during any month of the Offering in the manner set forth in the
Prospectus under the caption "Plan of Distribution".
(c) Except as otherwise provided herein, your appointment
hereunder shall terminate at the close of business on the earlier of (i)
_____________, 1999 (unless sooner terminated by the Company in accordance
with and for any of the reasons set forth in the Prospectus under the caption
Plan of Distribution) or (ii) the day that the Company has received
subscriptions in an amount necessary to satisfy the sale of $20,000,000 in
aggregate principal amount of the Notes. The date on which such appointment
is terminated is herein referred to as the "Offering Termination Date".
(d) The Broker-Dealer shall not, in fulfilling its obligations
hereunder, act as underwriter for the Notes and in no way is obligated,
directly or indirectly, to advance its own funds to purchase any Notes.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with the Broker-Dealer as follows:
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<PAGE>
(a) A registration statement on Form S-1 (No. 333-31925) under the
Securities Act of 1933, as amended (the Act"), with respect to the Notes,
including a form of prospectus subject to completion, has been prepared by
the Company in conformity with the requirements of the Act and the rules and
regulations of the Securities and Exchange Commission (the "SEC") thereunder
(the "Rules and Regulations"). Such registration statement has been filed
with the SEC under the Act, and one or more amendments to such registration
statement may also have been so filed. As used in this Agreement, the term
"Registration Statement" means such registration statement, as amended at the
time when it was or is declared effective, including all financial schedules
and exhibits thereto; the Registration Statement shall be deemed to include
any information omitted therefrom pursuant to Rule 430A under the Act and
included in the Prospectus (as hereinafter defined); the term "Preliminary
Prospectus" means each prospectus subject to completion contained in such
registration statement or any amendment thereto (including the prospectus
subject to completion, if any, included in the Registration Statement or any
amendment thereto or filed pursuant to Rule 424(a) under the Act at the time
it was or is declared effective); and the term "Prospectus" means the
prospectus first filed with the SEC pursuant to Rule 424(b) under the Act or,
if no prospectus is required to be filed pursuant to said Rule 424(b), such
term means the prospectus included in the Registration Statement. Reference
made herein to any Preliminary Prospectus or the Prospectus shall be deemed
to include all documents and information incorporated by reference therein.
(b) The SEC has not issued any order preventing or suspending the
use of any Preliminary Prospectus and has not instituted or threatened to
institute any proceedings with respect to such an order. When any
Preliminary Prospectus was filed with the SEC it (A) complied in all material
respects with the requirements of the Act and the Rules and Regulations and
(B) did not include any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. When
the Registration Statement or any amendment thereto was or is declared
effective, it (A) complied or will comply in all material respects with the
requirements of the Act and the Rules and Regulations and (B) did not or will
not include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading. When
the Prospectus and when any amendment or supplement thereto is filed with the
SEC pursuant to Rule 424(b) (or, if the Prospectus or such amendment or
supplement is not required to be so filed, when the Registration Statement
and when any amendment thereto containing such amendment or supplement to the
Prospectus was or is declared effective) and at all times subsequent thereto
up to and including the Offering Termination Date, the Prospectus, as amended
or supplemented at any such time, (A) complied or will comply in all material
respects with the requirements of the Act and the Rules and Regulations and
(B) did not or will not include any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The foregoing provisions of this paragraph shall not apply to
statements or omissions made in any Preliminary Prospectus, the Registration
Statement or any amendment thereto or the Prospectus or any amendment or
supplement thereto in reliance upon, and in conformity with, information
furnished in writing to the Company by the Broker-Dealer expressly for use
therein.
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<PAGE>
(c) The Company is a duly incorporated and validly existing
corporation in good standing under the laws of its jurisdiction of
incorporation, with full power and authority (corporate and other) to
execute, deliver and perform its obligations under each of the Basic
Documents to which it is a party. "Basic Documents" means, collectively,
this Agreement, the Servicing Agreement, the Indenture, the Notes, and the
Subscription Escrow Agreement dated as of ______________, 1998 (the "Escrow
Agreement") by and between the Company and ________________ Bank.
(d) This Agreement has been duly and validly authorized, executed
and delivered by the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equity principles and to the proviso that rights to
indemnification and contribution under this Agreement may be limited by
public policy under federal or state securities laws; and each of the Basic
Documents other than this Agreement to which the Company is a party, when
duly executed and delivered by the parties thereto, will constitute its
legal, valid and binding obligation, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and general equity principles.
(e) None of the Company's execution or delivery of the Basic
Documents to which it is or will be a party, its performance thereunder, or
its consummation of the transactions contemplated therein, conflicts or will
conflict with or results or will result in any breach or violation of any of
the terms or provisions of, or constitutes or will constitute a default
under, causes or will cause (or permits or will permit) the maturation or
acceleration of any liability or obligation or the termination of any right
under, or result in the creation or imposition of any lien, charge, or
encumbrance upon, any of its properties or assets pursuant to the terms of
(A) its charter or by-laws, (B) any indenture, mortgage, deed of trust,
voting trust agreement, shareholders' agreement, note agreement or other
agreement or instrument to which it is a party or by which it is or may be
bound or to which its property is or may be subject or (C) any statute,
judgment, decree, order, rule or regulation applicable to it of any
government, arbitrator, court, regulatory body or administrative agency or
other governmental agency or body, domestic or foreign, having jurisdiction
over it or any of its activities or properties.
(f) Except as disclosed in the Registration Statement, there has
not been any material adverse change, or any development involving a
prospective material adverse change, in or affecting the financial position,
stockholder's equity or results of operations of the Company.
(g) The Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
4
<PAGE>
(h) The financial statements and the related notes thereto
included in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus)
fairly present the financial condition of the Company at the dates and for
the periods specified therein. Such financial statements and the related
notes thereto have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved
(except as otherwise noted therein) and such financial statements as are
audited have been examined by Cheshier & Fuller, LLP, who are independent
public accountants within the meaning of the Act and the Rules and
Regulations, as indicated in their reports filed therewith.
(i) The Indenture has been duly qualified under the Trust
Indenture Act of 1939, as amended.
(j) The Notes have been duly authorized, and when the Indenture
has been duly executed and delivered by the Company and the Trustee, and the
Notes have been duly executed by the Company and authenticated by the Trustee
and the purchase price paid therefor, (i) the Notes will constitute valid and
legally binding obligations of the Company enforceable against the Company in
accordance with their terms and (ii) the Notes will conform to the
description thereof contained in the Prospectus.
(k) Neither the Company nor any of its director, officers or
controlling persons has taken, directly or indirectly, any action intended,
or which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Notes.
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants
and agrees with the Broker-Dealer as follows:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of this
Agreement, and any amendments thereto, to become effective as promptly as
practicable. If required, the Company will file the Prospectus and any
amendment or supplement thereto with the SEC in the manner and within the
time period required by Rule 424(b) under the Act. During any time when a
prospectus relating to the Notes is required to be delivered under the Act,
the Company will comply with all requirements imposed upon it by the Act and
the Rules and Regulations to the extent necessary to permit the continuance
of sales of or dealings in the Notes in accordance with the provisions hereof
and of the Prospectus, as then amended or supplemented.
(b) As soon as the Company is advised or obtains knowledge
thereof, the Company will advise the Broker-Dealer (A) when the Registration
Statement, as amended, has become effective; if the provisions of Rule 430A
promulgated under the Act will be relied upon, when the Prospectus has been
filed in accordance with said Rule 430A and when any post-effective amendment
to the Registration Statement becomes effective; (B) of any request made
5
<PAGE>
by the SEC for amending the Registration Statement, for supplementing any
Preliminary Prospectus or the Prospectus or for additional information; or
(C) of the issuance by the SEC of any stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereto or any
order preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto or the institution or
threat of any investigation or proceeding for that purpose, and will use its
best efforts to prevent the issuance of any such order and, if issued, to
obtain the lifting thereof as soon as possible.
(c) The Company will (A) take or cause to be taken all such
actions and furnish all such information as may be reasonably required in
order to qualify, where practicable, the Notes for offer and sale under the
state securities or blue sky laws of such jurisdictions as the Company may
agree, (B) continue such qualifications in effect for as long as may be
necessary to complete the distribution of the Notes, (C) cause its counsel
to provide a blue sky memorandum and regular supplements thereto ("Blue Sky
Memorandum"), and (D) make such applications, file such documents and furnish
such information as may be required for the purposes set forth in clauses (A)
and (B); provided, however, that the Company shall not be required to qualify
as a foreign corporation or file a general or unlimited consent to service of
process in any such jurisdiction. The Broker-Dealer acknowledges and agrees
that the Company may impose special minimum suitability standards on
Purchasers in some jurisdictions in order to obtain qualifications therein
and that Broker-Dealer must comply therewith in soliciting subscriptions from
Purchasers. The Company agrees to promptly notify the Broker-Dealer of any
such special standards.
(d) The Company consents to the use of the Prospectus (and any
amendment or supplement thereto) by the Broker-Dealer, in connection with the
offering or sale of the Notes and for such period of time thereafter as the
Prospectus is required by law to be delivered in connection therewith. If,
at any time when a prospectus relating to the Notes is required to be
delivered under the Act, any event occurs as a result of which the
Prospectus, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein not misleading, or if it becomes necessary at any
time to amend or supplement the Prospectus to comply with the Act or the
Rules and Regulations, the Company promptly will so notify the Broker-Dealer
and, subject to Section 3(a) hereof, will prepare and file with the SEC an
amendment to the Registration Statement or an amendment or supplement to the
Prospectus which will correct such statement or omission or effect such
compliance.
(e) The Company will furnish, without charge, to the Broker-Dealer
or on such Broker-Dealer's order, at such places as such Broker-Dealer may
designate, copies of each Preliminary Prospectus, the Registration Statement
and any pre-effective or post-effective amendments thereto and the
Prospectus, and all amendments and supplements thereto, in each case as soon
as available and in such quantities as the Broker-Dealer may reasonably
request.
(f) Neither the Company nor any of its officers or directors, nor
its affiliates (within the meaning of the Rules and Regulations), will take,
directly or indirectly, any action
6
<PAGE>
designed to, or which might in the future reasonably be expected to cause or
result in, stabilization or manipulation of the price of any securities of
the Company.
(g) The Company shall furnish, or cause to be furnished, or make
available, or cause to be made available, to the Broker-Dealer during the
Offering Period such additional documents and information regarding the
Company and its affairs as the Broker-Dealer may from time to time reasonably
request, including any and all documentation reasonably requested regarding
information in the Registration Statement and the Prospectus and in order to
evidence the accuracy or completeness of any of the conditions contained in
this Agreement.
4. COMPENSATION: PAYMENT OF EXPENSES.
(a) The Company hereby agrees to pay to the Broker-Dealer a fee
(the "Sales Fee") in an amount equal to 6.0% of the principal amount of each
Note sold by the Company during the Offering Period to a Purchaser who has
executed a Subscription Agreement furnished to it by or on behalf of the
Broker-Dealer or who has otherwise been identified to the Company by or on
behalf of the Broker-Dealer (each, an "Identified Purchaser"). The Sales Fee
with respect to any Note shall be payable to the Broker-Dealer within five
(5) days after the date such Note is sold to an Identified Purchaser.
Payment by the Company of the Sales Fee shall be made in good funds to an
account previously designated by the Broker-Dealer, or as otherwise agreed by
the Broker-Dealer and the Company. For purposes of this Section 4(a), a
"sale" shall be deemed to occur, initially, on the date that subscriptions
for the minimum amount of the offering of the Notes set forth on the cover
page of the Prospectus are released from escrow to the Company in accordance
with the terms of the Escrow Agreement (the "Escrow Release Date") and,
thereafter, on each date that the Company receives available funds from
subscriptions for Notes. Notwithstanding the foregoing, the Broker-Dealer
acknowledges that the Company may enter into agreements with broker-dealers
other than the Broker-Dealer with respect to the payment by the Company of a
Sales Fee in connection with the sale of the Notes by such broker-dealers and
that the Company shall only be obligated to pay one Sales Fee to a single
broker-dealer with respect to the sale of any Note.
(b) The Company will pay or cause to be paid all fees and expenses
incident to the performance of the obligations of the Company under this
Agreement, including without limitation: (i) the fees, disbursement and
expenses of the Company's counsel and accountants and all other expenses in
connection with the preparation, duplication, printing, filing, delivery and
shipping of copies of the Registration Statement and any pre-effective or
post-effective amendments thereto, any Prospectus and any amendments or
supplements thereto; (ii) the Company's cost of printing, producing or
reproducing each of the Basic Documents and any other documents in connection
with the offering, purchase, sale and delivery of the Notes; (iii) all fees
and expenses in connection with the qualification of the Notes for offering
and sale under state securities and blue sky laws, including the cost of
preparing and mailing the blue sky memorandum and all supplement thereto and
filing fees and disbursements and fees of the Company's counsel and other
related expenses, if any, in connection therewith; (iv) filing fees of the
SEC and the National Association of Securities Dealers, Inc.; (v) all legal
and other costs
7
<PAGE>
in connection with the preparation of all filings with the National
Association of Securities Dealers, Inc.; (vi) the fees and expenses of the
Trustee and any agent of the Trustee in connection with the Indenture and the
Notes; and (vii) all other costs and expenses of the Company incident to the
performance of the Company's obligations under the Basic Documents which are
not otherwise specifically provided for in this Section 4 except to the
extent provided in this Section 4 and in Section 5. In no event shall the
Broker-Dealer have any obligation with respect to any of the fees or expenses
of the Company or the Trustee.
(c) The Broker-Dealer agrees to bear the cost of its own expenses
incurred in the performance of its obligations under this Agreement.
5. UNAUTHORIZED INFORMATION AND REPRESENTATIONS. Neither you nor any
other person is authorized by the Company to give any information or make any
representations in connection with the public offering of the Notes other
than those contained in the Prospectus (on or after the effective date of the
Registration Statement) or any Preliminary Prospectus (before the effective
date of the Registration Statement) and other authorized solicitation
material furnished by the Company. Without limiting the generality of the
foregoing, you agree not to publish, circulate or otherwise use any other
advertisement or solicitation material without the prior approval of the
Company. In soliciting purchases of the Notes, you agree to comply with any
applicable requirements of the Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the rules and regulations under both such Acts, and
all applicable state laws, rules and regulations.
6. BLUE SKY AND SECURITIES LAWS. In effecting offers or sales of the
Notes in any jurisdiction, you will comply with all special conditions and
limitations imposed by (a) such jurisdiction in connection with the Offering
and (b) any Blue Sky Memorandum furnished by the Company to you. Under no
circumstances will you engage in any activities in connection with the public
offering of the Notes in any jurisdiction in which you may not lawfully so
engage.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless the
Broker-Dealer, its affiliates and each person (if any) who controls the
Broker-Dealer within the meaning of Section 15 of the Act or Section 20(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), against
any losses, liabilities, claims, damages and expenses (including but not
limited to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, and any and all amounts paid in
settlement of any claim or litigation), to which the Broker-Dealer or any
such control person may become subject, under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses
(or actions in respect thereof) arise out of or are based upon (i) any of the
transactions contemplated by the Registration Statement or the Prospectus or
any Preliminary Prospectus, or any amendment or supplement thereto, or any
blue sky application or other document executed by the Company specially for
the purpose of qualifying, or based upon written information furnished by the
8
<PAGE>
Company filed in any state or other jurisdiction in order to qualify any or
all of the Notes under the Securities or blue sky laws thereof (any such
application, document or information being hereinafter called a "Blue Sky
Application") or any act or omission by the Broker-Dealer in connection with
its acceptance or performance or non-performance of its obligations
hereunder; or (ii) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus or
any Preliminary Prospectus, or any amendment or supplement thereto, or any
Blue Sky Application, or arising out of or based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; PROVIDED, HOWEVER,
that (A) the Company will not be liable for any indemnification obligation
pursuant to clause (i) of this Section 7(a) to the extent but only to the
extent that any portion of such loss, liability, claim, damage or expense is
found in a final judgment by a court of competent jurisdiction from which no
appeal can be or is taken to have resulted solely from the gross negligence
or willful misconduct of the Broker-Dealer (it being understood, however,
that the Broker-Dealer shall be responsible for and shall pay any attorneys'
fees and any expenses incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever
resulting from or based upon the gross negligence or willful conduct of the
Broker-Dealer) and (B) the Company will not be liable for any indemnification
obligation pursuant to clause (ii) of this Section 7(a) to the extent but
only to the extent that any such loss, liability, claim, damage or expense
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement
or the Prospectus or any Preliminary Prospectus, or any such amendment or
supplement thereto, or any Blue Sky Application, in reliance upon and in
conformity with written information furnished to the Company by the
Broker-Dealer expressly for use therein and such indemnity with respect to
any Preliminary Prospectus shall not inure to the benefit of the
Broker-Dealer or any person controlling the Broker-Dealer from whom the
person asserting any such loss, claim, damage or liability purchased the
Notes which are the subject thereof if such person did not receive a copy of
the Prospectus (or, in the event it is amended or supplemented, such
Prospectus as amended or supplemented) at or prior to the confirmation of the
sale of such Note to such person and the untrue statement or omission of a
material fact contained in any Preliminary Prospectus was corrected in the
Prospectus (or the Prospectus as amended or supplemented). This indemnity
will be in addition to any liability which the Company may otherwise have,
including under this Agreement.
(b) If a registered representative of the Broker-Dealer executed
a Subscription Agreement on behalf of a purchaser, the Broker-Dealer agrees
to indemnify and hold harmless the Company and each person (if any) who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act against any loses, liabilities, claims, damages or
expenses (including but not limited to reasonable attorneys' fees and any and
all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), to which
the Company or any such control person may become subject, under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are based
upon (i) the failure or alleged failure by Broker-Dealer to perform fully and
to act in compliance with, or the inaccuracy of
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any statements or representations of Broker-Dealer contained in, the
provisions of this Agreement; (ii) an untrue statement or alleged untrue
statement of a material fact in connection with the public offering of the
Notes or the omission or alleged omission to state in connection with the
public offering of the Notes a material fact required to be stated or
necessary to make the statements otherwise made not misleading where such
untrue statement or alleged untrue statement, or such omission or alleged
omission, resulted from facts or information furnished or omitted, as the
case may be, by Broker-Dealer; or (iii) any misrepresentation or untrue
statement contained in the Subscription Agreement with respect to the
identity, address or other information furnished for the Purchaser, the
Purchaser's satisfaction of the applicable minimum suitability standards, or
any representations, warranties, acknowledgments or agreements made on behalf
of the Purchaser.
(c) Promptly after receipt by an indemnified party under
subsections (a) or (b) above of notice of the commencement of any action or
the assertion of any claim, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party under such
subsection, notify the indemnifying party in writing of the commencement
thereof (but the failure so to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 7 except
to the extent that it has been prejudiced in any material respect by such
failure or from any liability which it may have otherwise). In case any such
action shall be brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate therein and, to the extent that it may elect by
written notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the defense
thereof, with counsel satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have
the right to employ its or their own counsel in any such case, but the fees
and expenses of such counsel shall be at the expense of such indemnified
party or parties unless (i) the employment of such counsel shall have been
authorized in writing by one of the indemnifying parties in connection with
the defense of such action, (ii) the indemnifying parties shall not have
employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may
be defense available to it or them which are different from or additional to
those available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. Anything
in this subsection to the contrary notwithstanding, an indemnifying party
shall not be liable for any settlement of any claim or action effected
without its written consent; PROVIDED, HOWEVER, that such consent was not
unreasonably withheld.
(d) In order to provide for contribution in circumstances in
which the indemnification provided for in Section 7(a) hereof is for any
reason held to be unavailable from the Company in a final judgment by a court
of competent jurisdiction from which no appeal can be or is taken, the
Company, on the one hand, and the Broker-Dealer, on the other hand, shall
contribute to the aggregate losses, claims, damages, liabilities and expenses
of the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred
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in connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company any
contribution received by the Company from persons, other than the
Broker-Dealer, who may also be liable for contribution) in such proportions
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Broker-Dealer on the other from the offering of the
Notes. The relative benefits received by the Company on the one hand and the
Broker-Dealer on the other shall be deemed to be in the same proportion as
(x) the total proceeds from the offering (before deducting expenses) received
by the Company and (y) the fees received by the Broker-Dealer pursuant to
Section 4(a) hereof. The Company and the Broker-Dealer agree that it would
not be just and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation or by any other method of allocation which
does not take account the equitable considerations referred to above.
Notwithstanding the provisions of this Section 7(d), 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. For purposes of this Section 7(d), each
affiliate of the Broker-Dealer and each person, if any, who controls the
Broker-Dealer within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act shall have the same rights to contribution as the
Broker-Dealer, and each person, if any, who controls the Company, within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, shall
have the same rights to contribution, subject in each case to this Section
7(d). Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party
in respect of which a claim for contribution may be made against another
party or parties under this Section 7(d), notify such party or parties from
whom contribution may be sought, but the omission to so notify such party or
parties shall not relieve the party or parties from whom contribution may be
sought from any obligation it or they may have under this Section 7(d) or
otherwise. No party shall be liable for contribution with respect to any
action or claim settled without its consent; PROVIDED, HOWEVER, that such
consent was not unreasonably withheld.
8. TERMINATION BY PARTIES.
(a) Notwithstanding anything herein to the contrary, the
Broker-Dealer may terminate this Agreement and all of its obligations
hereunder for any reason upon giving ten (10) days' prior notice thereof to
the Company; PROVIDED, HOWEVER, that, in the event the Company does not
perform any obligation under this Agreement or any representation and
warranty hereunder is incomplete or inaccurate, the Broker-Dealer may
immediately terminate all of its obligations hereunder by notice thereof to
the Company. Any termination of this Agreement or of the Broker-Dealer's
obligations hereunder shall be without liability of the Broker-Dealer to any
other party.
(b) Notwithstanding anything herein to the contrary, the Company
may terminate this Agreement by giving five (5) days prior written notice to
the Broker-Dealer, in which event the Company shall be relieved of all
obligations hereunder.
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(c) The obligations the Company under Section 4 for Notes sold by
the Company pursuant to Subscription Agreements received prior to the date of
termination and the obligations of each of the parties hereto under Section
7, shall survive any termination of the Agreement pursuant to this Section 8.
9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained or incorporated in
this Agreement shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of the Broker-Dealer or
any controlling person, or by or on behalf of the Company or any controlling
person, director or officer of the Company, and shall survive delivery of the
Notes to the Purchasers.
10. SUBSCRIPTION ESCROW. Until the minimum subscription amount (as
specified in the Prospectus) is reached, Purchasers' checks shall be made
payable to the Company's escrow agent, _______________ Bank (the "Escrow
Agent"), and shall be transmitted directly to the Escrow Agent by noon of the
business day following their receipt by the Broker-Dealer. After reaching
the minimum subscription amount, Purchaser monies thereafter received shall
be transmitted together with the Subscription Agreement directly to the
Company. The Company shall be responsible for depositing Purchaser funds
received by it by noon of the business day following its receipt thereof.
11. NOTICES. All statement, requests, notices and agreements hereunder
shall be in writing, and if to the Broker-Dealer shall be delivered or sent
by mail, telex or facsimile transmission to Tamarack Financial, Inc. at its
address at 801 East Campbell Road, Suite 310, Richardson, Texas 75081,
Attention: Garry Isaacs and if to the Company it shall be delivered or sent
by mail, telex or facsimile transmission to the Company at 801 East Campbell
Road, Suite 310, Richardson, Texas 75081, Attention: Garry Isaacs, President.
Any such statements, requests, notices or agreements shall take effect upon
receipt thereof.
12. SUCCESSORS. This Agreement shall inure to the benefit of and be
binding upon the Broker-Dealer, the Company and their respective successors
and legal representatives. Nothing expressed or mentioned in this Agreement
is intended or shall be construed to give any person other than the persons
referred to in the preceding sentence any legal or equitable right, remedy or
claim under or in respect of this Agreement. This Agreement and all
conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the parties hereto and their respective successors and
for the benefit of no other person. No Purchaser of Notes from the Company
shall be deemed to be a successor by reason merely of such purchase.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding of the parties hereto with respect to the matters and
transactions contemplated hereby and supersedes all prior agreements and
understandings whatsoever relating to such matters and transactions.
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14. AMENDMENT. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against whom enforcement of the change,
waiver, discharge or termination is sought.
15. HEADINGS. The headings in this Agreement are for the purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
16. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall constitute an original, but all of which shall together
constitute one instrument.
17. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without regard to the conflict
of laws or provisions thereof.
If the foregoing is in accordance with your understanding, kindly sign
and return to us in the enclosed duplicate hereof, whereupon it will become a
binding agreement between the undersigned in accordance with its terms.
Very truly yours,
TAMARACK LENDERS CORPORATION
By:
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Accepted as of the date first above written:
TAMARACK FINANCIAL, INC.
By:
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Name:
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(please print)
Title:
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[LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Tamarack Lenders
Corporation on Form S-1 of our report dated February 10, 1998 appearing in the
Prospectus, which is part of this Registration Statement. We also consent to
the reference to us under the heading "Experts" in such Prospectus.
/s/ Cheshier & Fuller, L.L.P.
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CHESHIER & FULLER, L.L.P.
Dallas, Texas
March 5, 1998
