Exhibit 1.1
EXECUTION COPY
CLASSNOTES TRUST 1997-I
$281,000,000 ASSET BACKED NOTES
SERIES 1997-1
UNDERWRITING AGREEMENT
March 19, 1997
XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Trans-World Insurance Company, an Arizona corporation doing business as
Educaid ("TWIC") and ClassNotes, Inc. ("ClassNotes" and, together with TWIC, the
"Companies"), each a wholly owned subsidiary of The Money Store Inc., a New
Jersey corporation ("The Money Store"), have formed a trust known as ClassNotes
Trust 1997-I (the "Trust") under the laws of the Commonwealth of Pennsylvania
and the Companies propose to cause the Trust to sell to Xxxxx Xxxxxx Inc. (the
"Underwriter"), pursuant to the terms of this Underwriting Agreement,
$281,000,000 of Asset Backed Notes, Series 1997-1, Class A-1, Class A-2 and
Class A-3 (the "Notes"). The York Bank and Trust Company, a Pennsylvania bank
and trust company, will act as eligible lender trustee (the "Eligible Lender
Trustee") of the Trust. The Notes will be issued under an indenture (the "Master
Indenture") between the Trust and Bankers Trust Company, as indenture trustee
("Indenture Trustee"), as supplemented by a related First Terms Supplement (the
"First Terms Supplement" and collectively with the Master Indenture, the
"Indenture"). Upon issuance, the Notes will be secured by, among other things,
Financed Student Loans (as defined in the Sale and Servicing Agreement referred
to below) pledged to the Indenture Trustee and described in the Prospectus (as
defined in Section 3 below). This Agreement, the Sale and Servicing Agreement,
the Indenture and the Indemnification Agreement dated March 21, 1997, among
AMBAC Indemnity Corporation, The Money Store and the Underwriter shall
collectively hereinafter be referred to as the "Basic Documents." Capitalized
terms used herein without definition shall have the meanings ascribed to them in
the Sale and Servicing Agreement dated as of February 28, 1997, the ("Sale and
Servicing Agreement") among the Trust, the Companies, the Eligible Lender
Trustee and The Money Store or the Prospectus.
The Companies propose, upon the terms and conditions set forth herein, to
cause the Trust to enter into an agreement (the "Terms Agreement") providing for
the sale of the Notes to the Underwriter. The Terms Agreement shall specify,
among other matters, the principal amount of the Notes to be sold, the class
designations, the interest rate for each such class and, if variable, the
initial interest rate and the interest rate adjustment dates, any terms not
otherwise specified in the Master Indenture, the price at which the Notes are to
be purchased by the Underwriter or the method by which the price at which the
Notes are to be purchased will be determined. The Terms Agreement, which shall
be substantially in the form of Exhibit A hereto, may take the form of an
exchange of any standard form of written telecommunication among the
Underwriter, the Companies, the Trust and The Money Store.
The Companies, the Trust and The Money Store wish to confirm as follows
this agreement with the Underwriter in connection with the purchase and resale
of the Notes.
1. Agreements to Sell, Purchase and Resell. (a) The Trust hereby agrees,
subject to all the terms and conditions set forth herein and in the Terms
Agreement, to sell to the Underwriter and, upon the basis of the
representations, warranties and agreements of the Companies and The Money Store
herein contained and subject to all the terms and conditions set forth herein
and in the Terms Agreement, the Underwriter agrees to purchase from the Trust
all of the Notes at such respective purchase prices as may be described in the
Terms Agreement executed by the Companies, the Trust, The Money Store and the
Underwriter pursuant to the terms hereof.
(b) It is understood that the Underwriter proposes to offer the Notes for
sale to the public (which may include selected dealers) as set forth in the
Prospectus.
2. Delivery of the Notes and Payment Therefor. Delivery to the Underwriter
of and payment for the Notes to be sold pursuant to the Terms Agreement shall be
made at the office of Stroock & Stroock & Xxxxx LLP, 000 Xxxxxx Xxxx, Xxx Xxxx,
Xxx Xxxx, XX 00000, at 10:00 A.M., New York City time, on March 21, 1997 (the
"Closing Date"). The place of such closing and the Closing Date may be varied by
agreement among the Underwriter, the Trust and the Companies.
The Notes will be delivered to the Underwriter against payment of the
purchase price therefor to the Trust in Federal Funds, by wire, or such other
form of payment as to which the parties may agree. Each Class of Notes will be
evidenced by a single global security in definitive form and/or by additional
definitive securities, and will be registered, in the case of the global Classes
of Notes, in the name of Cede & Co. as nominee of The Depository Trust Company
("DTC"), and in the other cases, in such names and in such denominations as the
Underwriter shall request prior to 1:00 p.m., New York City time, no later than
the business day preceding the Closing Date. The Notes to be delivered to the
Underwriter shall be made available to the Underwriter in New York City for
inspection and packaging not later than 9:30 a.m., New York City time, on the
business day next preceding the Closing Date.
3. Representations and Warranties of the Companies and The Money Store. The
Companies and The Money Store represent and warrant to the Underwriter that:
(a) A registration statement on Form S-3 (No. 333- 18877), including a
prospectus and such amendments thereto as may have been required to the date
hereof, relating to the Notes and the offering thereof in accordance with Rule
415 under the Securities Act of 1933, as amended (the "Act"), has been filed
with the Securities and Exchange Commission (the "SEC") and such registration
statement, as amended, has become effective; such registration statement, as
amended, and the prospectus relating to the sale of the Notes offered thereby
constituting a part thereof, as amended or supplemented (including the base
prospectus and any prospectus supplement filed with the Commission pursuant to
Rule 424(b) under the Act) are respectively referred to herein as the
"Registration Statement" and the "Prospectus"; and the conditions to the use of
a registration statement on Form S-3 under the Act, as set forth in the General
Instructions to Form S-3, and the conditions of Rule 415 under the Act, have
been satisfied with respect to the Registration Statement;
(b) On the effective date of the Registration Statement, the Registration
Statement and the Prospectus conformed in all respects to the requirements of
the Act, the rules and regulations of the SEC (the "Rules and Regulations") and
the Trust Indenture Act of 1939, as amended, and the rules and regulations
thereunder (the "Trust Indenture Act"), and did not include any untrue statement
of a material fact or, in the case of the Registration Statement, omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading and, in the case of the Prospectus, omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and on the date
of this Agreement and the Terms Agreement, the Registration Statement and the
Prospectus will conform in all respects to the requirements of the Act, the
Rules and Regulations and the Trust Indenture Act, and neither of such documents
included or will include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the foregoing does
not apply to statements in or omissions from the Registration Statement or the
Prospectus based upon written information furnished to the Company by the
Underwriter specifically for use therein.
(c) The Commission has not issued and, to the best knowledge of the
Companies, is not threatening to issue any order preventing or suspending the
use of the Registration Statement.
(d) As of each Closing Date, each consent, approval, authorization or order
of, or filing with, any court or governmental agency or body which is required
to be obtained or made by the Companies or their affiliates for the consummation
of the transactions contemplated by this Agreement and the Terms Agreement shall
have been obtained, except as otherwise provided in the Basic Documents.
(e) The Master Indenture and the First Terms Supplement relating to the
Notes to be sold on the Closing Date (the "First Terms Supplement") have been
duly and validly authorized by the Trust and, upon their execution and delivery
by the Trust and assuming due authorization, execution and delivery by the
Trustee, will be valid and binding agreements of the Trust, enforceable in
accordance with their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws affecting creditors' rights
generally and conform in all material respects to the description thereof in the
Prospectus.
(f) The Notes have been duly authorized by the Trust and on the Closing
Date, when executed by the Trust and authenticated by the Trustee in accordance
with the Indenture, and delivered to the Underwriter against payment therefor in
accordance with the terms hereof, will have been validly issued and delivered,
and will constitute valid and binding obligations of the Trust entitled to the
benefits of the Indenture and enforceable in accordance with their terms, except
as enforcement thereof may be limited by bankruptcy, insolvency, moratorium,
fraudulent conveyance or other similar laws relating to or affecting creditors'
rights generally and court decisions with respect thereto, and the Notes will
conform in all material respects to the description thereof in the Prospectus.
(g) Each of TWIC, ClassNotes and The Money Store is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Arizona, the State of Delaware and the State of New Jersey, respectively, with
full corporate power and authority to own, lease and operate its properties and
to conduct its business as conducted on the date hereof, and is duly registered
and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify does not have a material adverse effect on the
condition (financial or other), business, prospects, properties, net worth or
results of operations of TWIC, ClassNotes or The Money Store, respectively. (h)
The Trust is a business trust duly formed and validly existing under the laws of
the Commonwealth of Pennsylvania with full power and authority to own and pledge
its assets and to issue the Notes as described in the Prospectus.
(i) There are no legal or governmental proceedings pending or, to the
knowledge of the Companies or The Money Store, threatened, against the
Companies, The Money Store or the Trust, or to which the Companies, The Money
Store, the Trust or any of their respective properties is subject, that are not
disclosed in the Prospectus or that will not be disclosed in any subsequent
amendment or supplement to the Prospectus and which, if adversely decided, are
reasonably likely to materially affect the issuance of the Notes or the
consummation of the transactions contemplated hereby or by the Basic Documents.
(j) Neither the offer, sale or delivery of the Notes by the Trust nor the
execution, delivery or performance of this Agreement and the Terms Agreement by
the Companies, the Trust and The Money Store nor the consummation by the
Companies, the Trust and The Money Store of the transactions contemplated hereby
or thereby (i) requires or will require any consent, approval, authorization or
other order of, or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency or official (except for
compliance with the securities or Blue Sky laws of various jurisdictions, the
qualification of the Indenture under the Trust Indenture Act and such other
consents, approvals or authorizations as shall have been obtained prior to the
Closing Date) or conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the organizational documents or
bylaws of the Companies, the Trust or The Money Store or (ii) conflicts or will
conflict with or constitutes or will constitute a breach of, or a default under,
in any material respect, any material agreement, indenture, lease or other
instrument to which the Companies, the Trust or The Money Store is a party or by
which the Companies, the Trust or The Money Store or any of their respective
properties may be bound, or violates or will violate in any material respect any
statute, law, regulation or filing or judgment, injunction, order or decree
applicable to the Companies, the Trust or The Money Store or any of their
respective properties, or will result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Companies, the Trust or
The Money Store pursuant to the terms of any agreement or instrument to which
any is a party or by which any may be bound or to which any of their respective
properties is subject other than as contemplated by the Basic Documents.
(k) The Companies, the Trust and The Money Store each have all requisite
power and authority to execute, deliver and perform its obligations under this
Agreement and the Terms Agreement; the execution and delivery of, and the
performance by each of the Companies, the Trust and The Money Store of its
respective obligations under, this Agreement have been duly and validly
authorized by the Companies, the Trust and The Money Store, respectively, (and
the execution, delivery of, and the performance by each of the Companies, the
Trust and The Money Store of its respective obligations under, the Terms
Agreement will be duly and validly authorized by the Companies, the Trust and
The Money Store, respectively) and this Agreement has been and the Terms
Agreement will be, duly executed and delivered by each of them and constitutes
or in the case of the Terms Agreement, will constitute, the valid and legally
binding agreement of each of them, enforceable against each of them in
accordance with its terms, except as the enforcement hereof may be limited by
bankruptcy, insolvency, moratorium, fraudulent conveyance or other similar laws
relating to or affecting creditors' rights generally and court decisions with
respect thereto and subject to the applicability of general principles of
equity, and except as rights to indemnity and contribution hereunder may be
limited by Federal or state securities laws or principles of public policy.
(l) Each of the Companies has, and has no reason to believe that any facts
exist which would result in the revocation or termination of, such permits,
licenses, agreements, and other approvals or authorizations of governmental or
regulatory authorities ("Permits") as are necessary under applicable law to
originate hold and otherwise deal in Financed Student Loans, except to the
extent that the failure to have such Permits would not have a material adverse
effect on the ability of such Company to provide Financed Student Loans to the
Trust.
(m) Neither the Trust nor the Company is subject to registration as an
"investment company" under the Investment Company Act of 1940, as amended (the
"1940 Act").
(n) The representations and warranties made by (i) the Trust in the
Indenture and made in any officer's certificate of the Eligible Lender Trustee
delivered pursuant to the Indenture and (ii) the Companies and The Money Store
in the Sale and Servicing Agreement and made in any Officer's Certificate of the
Companies or The Money Store will be true and correct at the time made and on
and as of the Closing Date.
4. Agreements of the Companies and The Money Store. The Companies and The
Money Store agree with the Underwriter as follows:
(a) In connection with the execution of the Terms Agreement, the Companies
will prepare a supplement to the Prospectus setting forth the amount of the
Notes covered thereby and the terms thereof not otherwise specified in the
Prospectus, the price at which the Notes are to be purchased by the Underwriter,
either the initial public offering price or the method by which the price at
which the Notes are to be sold will be determined, the selling concessions and
reallowances, if any, and such other information as the Underwriter and the
Companies deem appropriate in connection with the offering of the Notes, and the
Companies will timely file such supplement to the prospectus with the SEC
pursuant to Rule 424(b) under the Act, but the Companies will not file any
amendments to the Registration Statement as in effect with respect to the Notes
or any amendments or supplements to the Prospectus, unless it shall first have
delivered copies of such amendments or supplements to the Underwriter, or if the
Underwriter shall have reasonably objected thereto promptly after receipt
thereof; the Companies will immediately advise the Underwriter or the
Underwriter's counsel (i) when notice is received from the SEC that any post-
effective amendment to the Registration Statement has become or will become
effective and (ii) of any order or communication suspending or preventing, or
threatening to suspend or prevent, the offer and sale of the Notes or of any
proceedings or examinations that may lead to such an order or communication,
whether by or of the SEC or any authority administering any state securities or
Blue Sky Law, as soon as the Companies are advised thereof, and will use their
best efforts to prevent the issuance of any such order or communication and to
obtain as soon as possible its lifting, if issued.
(b) If, at any time when the Prospectus relating to the Notes is required
to be delivered under the Act, any event occurs as a result of which such
Prospectus as then amended or supplemented would include an untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend or supplement
the Prospectus to comply with the Act or the Rules and Regulations, the
Companies promptly will prepare and file with the SEC, an amendment or
supplement to such Prospectus that will correct such statement or omission or an
amendment that will effect such compliance.
(c) The Companies will immediately inform the Underwriter (i) of the
receipt by the Companies or the Trust of any communication from the SEC or any
state securities authority concerning the offering or sale of the Notes and (ii)
of the commencement of any lawsuit or proceeding to which either the Companies
or the Trust is a party relating to the offering or sale of the Notes.
(d) The Companies will furnish to the Underwriter, without charge, copies
of the Registration Statement (including all documents and exhibits thereto or
incorporated by reference therein), the Prospectus, and all amendments and
supplements to such documents relating to the Notes, in each case in such
quantities as the Underwriter may reasonably request.
(e) No amendment or supplement will be made to the Registration Statement
or Prospectus which the Underwriter shall not previously have been advised or to
which it shall reasonably object after being so advised.
(f) The Companies will cooperate with the Underwriter and with its counsel
in connection with the qualification of, or procurement of exemptions with
respect to, the Notes for offering and sale by the Underwriter and by dealers
under the securities or Blue Sky laws of such jurisdictions as the Underwriter
may designate and will file or cause the Trust to file such consents to service
of process or other documents necessary or appropriate in order to effect such
qualification or exemptions; provided that in no event shall either of the
Companies or the Trust be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action which would
subject it to service of process in suits, other than those arising out of the
offering or sale of the Notes, in any jurisdiction where it is not now so
subject.
(g) The Companies and the Trust consent to the use, in accordance with the
securities or Blue Sky laws of such jurisdictions in which the Notes are offered
by the Underwriter and by dealers, of the Prospectus furnished by the Company.
(h) To the extent, if any, that the rating or ratings provided with respect
to a series of Notes by the rating agency or agencies that initially rate a
series of Notes is conditional upon the furnishing of documents or the taking of
any other actions by the Companies or the Trust, the Companies shall cause to be
furnished such documents and such other actions to be taken.
(i) So long as any of the Notes are outstanding, the Companies or the Trust
will furnish to the Underwriter (i) as soon as available, a copy of each
document relating to the Trust or the Notes required to be filed with the SEC
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any order of the SEC thereunder, and (ii) such other information
concerning the Companies, The Money Store or the Trust as the Underwriter may
request from time to time.
(j) If this Agreement shall terminate or shall be terminated after
execution and delivery pursuant to any provisions hereof (otherwise than by
notice given by the Underwriter terminating this Agreement pursuant to Section 8
or Section 9 hereof) or if this Agreement shall be terminated by the Underwriter
because of any failure or refusal on the part of the Companies, the Trust or The
Money Store to comply with the terms or fulfill any of the conditions of this
Agreement, the Companies and The Money Store agree jointly and severally to
reimburse the Underwriter for all out-of-pocket expenses (including fees and
expenses of its counsel) reasonably incurred in connection herewith, but without
any further obligation on the part of the Companies or The Money Store for loss
of profits or otherwise.
(k) The net proceeds from the sale of the Notes hereunder will be applied
substantially in accordance with the description set forth in the Prospectus.
(l) Except as stated in this Agreement and in the Prospectus, neither the
Companies, the Trust nor The Money Store has taken, nor will any of them take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price of the
Notes to facilitate the sale or resale of the Notes.
5. Indemnification and Contribution. (a) The Companies and The Money Store
jointly and severally agree to indemnify and hold harmless the Underwriter and
each person, if any, who controls the Underwriter within the meaning of Section
15 of the Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages, liabilities and expenses (including reasonable costs of
investigation) arising out of or based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, the
Prospectus, or in any amendment or supplement thereto, or any preliminary
prospectus, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of or are based upon any untrue
statement or omission or alleged untrue statement or omission which has been
made therein or omitted therefrom in reliance upon and in conformity with the
information relating to the Underwriter furnished in writing to the Companies by
or on behalf of the Underwriter expressly for use in connection therewith;
PROVIDED, HOWEVER, that the indemnification contained in this paragraph (a) with
respect to any preliminary prospectus shall not inure to the benefit of the
Underwriter (or to the benefit of any person controlling the Underwriter) on
account of any such loss, claim, damage, liability or expense arising from the
sale of the Notes covered thereby by the Underwriter to any person if the untrue
statement or alleged untrue statement or omission or alleged omission of a
material fact contained in such preliminary prospectus was corrected in the
final Prospectus relating to such series of Notes and the Underwriter sold Notes
to that person without sending or giving at or prior to the written confirmation
of such sale, a copy of the final Prospectus (as then amended or supplemented)
if the Companies have previously furnished sufficient copies thereof to the
Underwriter. The foregoing indemnity agreement shall be in addition to any
liability which the Companies or The Money Store may otherwise have.
(b) If any action, suit or proceeding shall be brought against the
Underwriter or any person controlling the Underwriter in respect of which
indemnity may be sought against the Companies or The Money Store, the
Underwriter or such controlling person shall promptly notify the parties against
whom indemnification is being sought (the "indemnifying parties"), and such
indemnifying parties shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. The Underwriter or any such
controlling person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of the Underwriter or
such controlling person unless (i) the indemnifying parties have agreed in
writing to pay such fees and expenses, (ii) the indemnifying parties have failed
to assume the defense and employ counsel, or (iii) the named parties to any such
action, suit or proceeding (including any impleaded parties) include both the
Underwriter or such controlling person and the indemnifying parties and the
Underwriter or such controlling person shall have been advised by its counsel
that representation of such indemnified party and any indemnifying party by the
same counsel would be inappropriate under applicable standards of professional
conduct (whether or not such representation by the same counsel has been
proposed) due to actual or potential differing interests between them (in which
case the indemnifying party shall not have the right to assume the defense of
such action, suit or proceeding on behalf of the Underwriter or such controlling
person). It is understood, however, that the indemnifying parties shall, in
connection with any one such action, suit or proceeding or separate but
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for the Underwriter and
controlling persons not having actual or potential differing interests with the
Underwriter or among themselves, which firm shall be designated in writing by
the Underwriter, and that all such fees and expenses shall be reimbursed on a
monthly basis as provided in paragraph (a) hereof. The indemnifying parties
shall not be liable for any settlement of any such action, suit or proceeding
effected without their written consent, but if settled with such written
consent, or if there be a final judgment for the plaintiff in any such action,
suit or proceeding, the indemnifying parties agree to indemnify and hold
harmless the Underwriter, to the extent provided in paragraph (a), and any such
controlling person from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(c) The Underwriter agrees to indemnify and hold harmless the Companies,
The Money Store and their respective directors and officers, and any person who
controls the Companies or The Money Store within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act to the same extent as the indemnity
from the Companies and The Money Store to the Underwriter set forth in paragraph
(a) hereof, but only with respect to information relating to the Underwriter
furnished in writing by or on behalf of the Underwriter expressly for use in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
or any related preliminary prospectus. If any action, suit or proceeding shall
be brought against the Companies or The Money Store, any of their respective
directors or officers, or any such controlling person based on the Registration
Statement, the Prospectus, or any amendment or supplement thereto, or any
related preliminary prospectus and in respect of which indemnity may be sought
against the Underwriter pursuant to this paragraph (c), the Underwriter shall
have the rights and duties given to the Companies and The Money Store by
paragraph (b) above (except that if the Companies or The Money Store shall have
assumed the defense thereof the Underwriter shall not be required to do so, but
may employ separate counsel therein and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the Underwriter's expense),
and the Companies and The Money Store, their respective directors and officers,
and any such controlling person shall have the rights and duties given to the
Underwriter by paragraph (b) above. The foregoing indemnity agreement shall be
in addition to any liability which the Underwriter may otherwise have.
(d) If the indemnification provided for in this Section 5 is unavailable to
an indemnified party under paragraphs (a) or (c) hereof in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then an
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Companies and
The Money Store on the one hand and the Underwriter on the other hand from the
offering of the Notes, or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Companies and The Money Store on the one hand and the
Underwriter on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Companies and The Money Store on the one hand and the Underwriter on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Notes (before deducting expenses) received by the
Companies bear to the total underwriting discounts and commissions received by
the Underwriter. The relative fault of the Companies and The Money Store on the
one hand and the Underwriter on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Companies or The Money Store on the one
hand or by the Underwriter on the other hand and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
(e) The Companies and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 5 were determined by a pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities and expenses referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating any claim or defending any such action, suit or proceeding.
Notwithstanding the provisions of this Section 5, the Underwriter shall not be
required to contribute any amount in excess of the amount received by the
Underwriter over the price paid by the Underwriter for the Notes purchased by it
and distributed to the public less the amount of any damages which the
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. 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.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 5 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 5 and the
representations and warranties of the Companies, The Money Store and the
Underwriter set forth in this Agreement shall remain operative and in full force
and effect, regardless of (i) any investigation made by or on behalf of the
Underwriter, the Companies or The Money Store or any person controlling any of
them or their respective directors or officers, (ii) acceptance of any Notes and
payment therefor hereunder, and (iii) any termination of this Agreement. A
successor to the Underwriter, the Companies or The Money Store or any person
controlling any of them or their respective directors or officers, shall be
entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Section 5.
6. Conditions of the Underwriter's Obligations. The obligations of the
Underwriter to purchase the Notes hereunder are subject to the following
conditions:
(a) All actions required to be taken and all filings required to be made by
the Companies under the Act prior to the sale of the Notes shall have been duly
taken or made. At and prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the knowledge of
the Companies or the Underwriter, shall be contemplated by the Commission.
(b) Subsequent to the effective date of this Agreement, there shall not
have occurred (i) any change, or any development involving a prospective change,
in or affecting the condition (financial or other), business, properties, net
worth, or results of operations of the Companies, The Money Store or the Surety
Provider not contemplated by the Registration Statement, which in the opinion of
the Underwriter, would materially adversely affect the market for the Notes, or
(ii) any event or development which makes any statement made in the Registration
Statement or Prospectus untrue or which, in the opinion of the Companies and
their counsel or the Underwriter and its counsel, requires the filing of any
amendment to or change in the Registration Statement or Prospectus in order to
state a material fact required by any law to be stated therein or necessary in
order to make the statements therein not misleading, if amending or
supplementing the Registration Statement or Prospectus to reflect such event or
development would, in the opinion of the Underwriter, materially adversely
affect the market for the Notes.
(c) The Underwriter shall have received on the Closing Date opinions of
Xxxxxx, Xxxxxxx & Xxxxxxx L.L.P., special Arizona counsel for the Companies, and
Xxxx Xxxxxx & Xxxxxxxxx, special counsel for the Companies, dated the Closing
Date and addressed to the Underwriter in form and scope satisfactory to the
Underwriter and its counsel.
(d) The Underwriter shall have received on the Closing Date an opinion of
Xxxx X. Xxxxx, Esq., General Counsel of the Companies and The Money Store, dated
the Closing Date and addressed to the Underwriter in form and scope satisfactory
to the Underwriter and its counsel.
(e) The Underwriter shall have received on the Closing Date an opinion of
Xxxxxx & Xxxxx LLP, counsel for the Eligible Lender Trustee, dated the Closing
Date and addressed to the Underwriter in form and scope satisfactory to the
Underwriter and its counsel.
(f) The Underwriter shall have received on the Closing Date an opinion of
counsel for AMBAC Indemnity Corporation (the "Surety Provider"), dated the
Closing Date and addressed to the Underwriter in form and scope satisfactory to
the Underwriter and its counsel.
(g) The Underwriter shall have received on the Closing Date an opinion of
Xxxxx & Case, Esqs., counsel for the Indenture Trustee, dated the Closing Date
and addressed to the Underwriter in form and scope satisfactory to the
Underwriter and its counsel.
(h) The Underwriter shall have received on the Closing Date an opinion or
opinions of Xxxxxxx & Xxxxxxx & Xxxxx LLP, counsel for the Underwriter, dated
the Closing Date, and addressed to the Underwriter, in form and scope
satisfactory to the Underwriter.
(i) The Underwriter shall have received on the Closing Date from KPMG Peat
Marwick LLP a letter dated the Closing Date, and in form and substance
satisfactory to the Underwriter, to the effect that they have carried out
certain specified procedures, not constituting an audit, with respect to certain
information regarding the Financed Student Loans and setting forth the results
of such specified procedures.
(j) (i) There shall not have been, since the respective dates as of which
information is given in the Registration Statement (or any amendment or
supplement thereto), except as may otherwise be stated therein, any material
adverse change in the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Companies or of The Money
Store, and (ii) all the representations and warranties of the Companies and The
Money Store contained in this Agreement and the Basic Documents shall be true
and correct in all material respects on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date and the Underwriter
shall have received a certificate, dated the Closing Date and signed by an
executive officer of the Companies and The Money Store, to the effect set forth
in this Section 6(j) and in Section 6(k) hereof.
(k) Neither of the Companies nor The Money Store shall have failed at or
prior to the Closing Date to have performed or complied with any of its
respective agreements herein contained and required to be performed or complied
with by it hereunder at or prior to the Closing Date.
(l) The Underwriter shall have received by instrument dated the Closing
Date (at the option of the Underwriter), in lieu of or in addition to the
opinions referred to in clauses (c) through (h) of this Section (6), the right
to rely on opinions provided by such counsel and all other counsel under the
terms of the Basic Documents or to Xxxxx'x Investors Service, Inc. ("Moody's")
and Standard & Poor's Corporation ("Standard & Poor's").
(m) Moody's and Standard & Poor's shall have rated each class of Notes
"Aaa" and "AAA", respectively, and there shall not have been any announcement by
Moody's or Standard & Poor's that (i) it is downgrading any of its ratings
assigned to any class of Notes or (ii) it is reviewing its ratings assigned to
any class of Notes with a view to possible downgrading, or with negative
implications, or direction not determined.
(n) The Surety Provider shall have provided (i) a Note Surety Bond relating
to the Notes, (ii) a certificate dated the Closing Date and signed by an
executive officer of the Surety Provider with respect to the accuracy of the
information relating to the Surety Provider contained in the Prospectus and
(iii) a letter addressed to the Underwriter and dated the date hereof from KPMG
Peat Marwick LLP, independent certified public accountants, consenting to the
inclusion of its report on the financial statements of the Surety Provider in
the Prospectus.
(o) Deposits required by the Sale and Servicing Agreement into the
Pre-Funding Account, Capitalized Pre-Funding
Account and Capitalized Interest Account shall have been made.
(p) The Companies shall have furnished or caused to be furnished to the
Underwriter an executed copy of each of the Basic Documents and such further
certificates and documents as the Underwriter shall have requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Underwriter and counsel for the Underwriter.
Any certificate or document signed by any officer of the Companies or The
Money Store and delivered to the Underwriter, or to counsel for the Underwriter,
shall be deemed a representation and warranty by the Companies or The Money
Store, respectively, to the Underwriter as to the statements made therein.
7. Expenses. The Companies and The Money Store agree to pay or to otherwise
cause the payment of the following costs and expenses and all other costs and
expenses incident to the performance by them and the Trust of their respective
obligations hereunder: (i) the preparation, printing or reproduction of the
Registration Statement, each Prospectus and each amendment or supplement to any
of them, this Agreement, the Terms Agreement and each other Basic Document; (ii)
the printing (or reproduction) and delivery (including postage, air freight
charges and charges for counting and packaging) of such copies of the
Registration Statement, each Prospectus and all amendments or supplements to any
of them as may be reasonably requested for use in connection with the offering
and sale of the Notes; (iii) the preparation, printing, authentication, issuance
and delivery of definitive certificates for the Notes; (iv) the printing (or
reproduction) and delivery of this Agreement, the preliminary and supplemental
Blue Sky Memoranda and all other agreements or documents printed (or reproduced)
and delivered in connection with the offering of the Notes; (v) qualification of
the Indenture under the Trust Indenture Act; (vi) the qualification of the Notes
for offer and sale under the securities or Blue Sky laws of the several states
as provided in Section 3(h) hereof (including the reasonable fees, expenses and
disbursements of counsel for the Underwriter relating to the preparation,
printing or reproduction, and delivery of the preliminary and supplemental Blue
Sky Memoranda and such qualification); (vii) the fees and disbursements of (A)
the Company's counsel, (B) the Underwriter' counsel (provided, however, that the
Underwriter shall be responsible for 50% of such fees and disbursements), (C)
the Indenture Trustee and its counsel, (D) the Surety Provider and its counsel
and accountants, (E) the Eligible Lender Trustee and its counsel, (F) the
Depository Trust Company in connection with the book- entry registration of the
Notes and (G) KPMG Peat Marwick LLP, accountants for the Company and issuer of
the Comfort Letter; and (viii) the fees charged by Moody's and Standard & Poor's
for rating the Notes.
8. Effective Date of Agreement. This Agreement shall become effective upon
the execution and delivery hereof by all the parties hereto. Until such time as
this Agreement shall have become effective, it may be terminated by the
Companies or The Money Store, by notifying the Underwriter, or by the
Underwriter, by notifying the Companies.
Any notice under this Section 8 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.
9. Termination of Agreement. This Agreement shall be subject to termination
in the absolute discretion of the Underwriter, without liability on the part of
the Underwriter to the Companies, the Trust or The Money Store, by notice to the
Company, the Trust and The Money Store, if prior to the Closing Date, (i)
trading in securities generally on the New York Stock Exchange, American Stock
Exchange or the Nasdaq National Market shall have been suspended or materially
limited, (ii) a general moratorium on commercial banking activities in New York
shall have been declared by either Federal or state authorities, (iii) there
shall have occurred any outbreak or escalation of hostilities or other
international or domestic calamity, crisis or change in political, financial or
economic conditions, the effect of which on the financial markets of the United
States is such as to make it, in the judgment of the Underwriter, impracticable
or inadvisable to commence or continue the offering of the Notes on the terms
set forth in the Prospectus, as applicable, or to enforce contracts for the
resale of the Notes by the Underwriter, (iv) legislation shall be enacted by the
Congress of the United States or a decision by a court of the United States or
the Tax Court of the United States shall be rendered, or an officially published
ruling, regulation, proposed regulation or official statement by or on behalf of
the Treasury Department of the United States, the Internal Revenue Service or
any other governmental agency shall be made, with respect to federal taxation
upon revenues or other income of the general character expected to be pledged
under the Indenture or upon interest received on securities of the general
character of the Notes, or which would have the effect of changing, directly or
indirectly, the federal income tax consequences of interest on securities of the
general character of the Notes in the hands of the holders thereof, which in the
opinion of counsel to the Underwriter materially affects the market price of the
Notes, or (v) legislation shall be enacted by the Commonwealth of Pennsylvania,
or a decision by a court of competent jurisdiction of the Commonwealth of
Pennsylvania or any administrative tribunal of the Commonwealth of Pennsylvania
or other governmental agency or department thereof shall be rendered with
respect to taxation by the Commonwealth of Pennsylvania or any of its political
subdivisions upon revenues or other income of the general character expected to
be pledged under the Indenture or upon interest received on securities of the
general character of the Notes, or which would have the effect of changing,
directly or indirectly, the tax consequences under Commonwealth of Pennsylvania
tax law of interest on securities of the general character of the Notes in the
hands of the holders thereof, which in the opinion of counsel to the Underwriter
materially affects the market price of the Notes. Notice of such termination may
be given to the Company, the Trust and The Money Store, by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.
10. Information Furnished by the Underwriter. The statements set forth
under the heading "Plan of Distribution" in the Prospectus constitute the only
information furnished by or on behalf of the Underwriter as such information is
referred to in Sections 3(b) and 5 hereof. Additional such information may be
provided in connection with the purchase of additional series of Notes by the
Underwriter for inclusion in any Prospectus Supplement and, if so, will be
identified in the Terms Agreement.
11. Miscellaneous. Except as otherwise provided in Sections 4, 8 and 9
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Companies or The Money Store, at
0000 X Xxxxxx, Xxxxx 000-X, Xxxxxxxxxx, Xxxxxxxxxx 00000, Attention: President
and at 0000 Xxxxxx Xxxxxx, Xxxxx, Xxx Xxxxxx 00000, Attention: Chief Financial
Officer, (ii) if to the Trust, to the Eligible Lender Trustee, c/o Dauphin
Deposit Bank and Trust Company, 000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx
00000, Attention: Corporate Trust Office and (iii) if to the Underwriter, to
Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Asset
Finance Group.
This Agreement has been and is made solely for the benefit of the
Underwriter, the Companies, the Trust, The Money Store, their respective
directors, officers, trustees and controlling persons referred to in Section 5
hereof and their respective successors and assigns, to the extent provided
herein, and no other person shall acquire or have any right under or by virtue
of this Agreement. Neither the term "successor" nor the term "successors and
assigns" as used in this Agreement shall include a purchaser from any
Underwriter of any of the Notes in his status as such purchaser.
12. Applicable Law; Counterparts. This Agreement, and the Terms Agreement,
shall be governed by and construed in accordance with the laws of the State of
New York applicable to contracts made and to be performed within the State of
New York without giving effect to the choice of laws or conflict of laws
principles thereof.
This Agreement, and the Terms Agreement, may be signed in various
counterparts which together constitute one and the same instrument. If signed in
counterparts, this Agreement and the Terms Agreement shall not become effective
unless at least one counterpart hereof or thereof shall have been executed and
delivered on behalf of each party hereto.
Please confirm that the foregoing correctly sets forth the agreement among
the Companies, the Trust, The Money Store and the Underwriter.
Very truly yours,
CLASSNOTES TRUST 1997-I
By: THE YORK BANK AND TRUST
COMPANY, as Eligible Lender
Trustee
By: ____________________________
Name:
Title:
TRANS-WORLD INSURANCE COMPANY
By: ___________________________
Name: Xxxxxx Dear
Title: Executive Vice President
CLASSNOTES, INC.
By: _____________________________
Name: Xxxxxx Dear
Title: Executive Vice President
THE MONEY STORE INC.
By: _____________________________
Name: Xxxxxx Dear
Title: Executive Vice President
Confirmed as of the date first above mentioned.
XXXXX XXXXXX INC.
By
Name:
Title:
Exhibit A
TRANS-WORLD INSURANCE COMPANY
CLASSNOTES, INC.
Auction Rate Asset Backed Notes
TERMS AGREEMENT
Dated ______, 199_
To: TRANS-WORLD INSURANCE COMPANY
CLASSNOTES, INC.
Re: Underwriting Agreement dated March __, 1997
Issuer: ClassNotes Trust 1997-I
Series Designation: Series 1997-1
TERMS OF THE NOTES:
Final Original
Maturity Principal Interest Price to
CLASS Date Amount Rate Underwriter(1)
---------
(1) Plus accrued interest, if any, at the applicable rate
from _______________.
COLLATERAL: The Student Loans to be included in the
Collateral are as described in Schedule A to
the [Supplemental] Sale and Servicing
Agreement.
CREDIT SUPPORT: Note Surety Bond issued by AMBAC Indemnity Corporation.
INITIAL NOTE DISTRIBUTION DATES:
NOTE RATING: "AAA" by Standard and Poor's Corporation and
"Aaa" by Xxxxx'x Investors Service, Inc.
FORM OF NOTES: [Book entry] [definitive]
CLOSING DATE: March 21, 1997
Information Provided by the Underwriter in the
Prospectus Supplement: "Underwriting"
Additional Terms, if any, Not in Master Indenture:
XXXXX XXXXXX INC.
By:_____________________________
Name:
Title:
TRANS-WORLD INSURANCE COMPANY
By:_____________________________
Name: Xxxxxx Dear
Title: Executive Vice President
CLASSNOTES, INC.
By:_____________________________
Name: Xxxxxx Dear
Title: Executive Vice President
CLASSNOTES TRUST 1997-I
By: The York Bank and Trust
Company, as Eligible Lender Trustee
By:_____________________________
Name:
Title:
THE MONEY STORE INC.
By:_____________________________
Name:
Title:
