EXHIBIT 1.1
EXECUTION COPY
CLASSNOTES TRUST 1997-I
$410,000,000 AUCTION RATE ASSET BACKED NOTES
SERIES 1998-1
UNDERWRITING AGREEMENT
March 16, 1998
XXXXX XXXXXX INC.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
FIRST UNION CAPITAL MARKETS CORP.
One First Union Center
Charlotte, North Carolina 28288
PRUDENTIAL SECURITIES INCORPORATED
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Trans-World Insurance Company, an Arizona corporation doing business
as Educaid ("TWIC"), and ClassNotes, Inc., a Delaware Corporation ("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., First Union Capital Markets Corp. and Prudential
Securities Incorporated (collectively, the "Underwriters"), pursuant to the
terms of this Underwriting Agreement, $410,000,000 Asset Backed Notes, Series
1998-1, Class A-7, Asset Backed Notes, Series 1998-1, Class A-8, Asset Backed
Notes, Series 1998-1, Class A-9 and Asset Backed Notes, Series 1997-2, Class
A-10 (collectively, 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 Third
Terms Supplement (the "Third 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
17, 1998, among Ambac Assurance Corporation, The Money Store and Xxxxx Xxxxxx
Inc. on behalf of the Underwriters 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 Second Supplemental Sale and Servicing
Agreement dated as of March 17, 1998 (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 Underwriters. 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 Underwriters 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
Underwriters, 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 Underwriters 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 Underwriters 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 Underwriters agree 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
Underwriters pursuant to the terms hereof.
(b) It is understood that the Underwriters propose 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
Underwriters 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 17, 1998 (the "Closing Date"). The place of such closing and the Closing
Date may be varied by agreement among the Underwriters, the Trust and the
Companies.
The Notes will be delivered to the Underwriters 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
Underwriters 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
Underwriters shall be made available to the Underwriters 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
Underwriters 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 Underwriters 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 Second Terms Supplement relating to
the Notes to be sold on the Closing Date (the " Second 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 Underwriters 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 Underwriters 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
Underwriters, 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
Underwriters 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
Underwriters, or if the Underwriters shall have reasonably objected thereto
promptly after receipt thereof; the Companies will immediately advise the
Underwriters or the Underwriters' 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 Underwriters (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 Underwriters, 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 Underwriters may reasonably request.
(e) No amendment or supplement will be made to the Registration
Statement or Prospectus which the Underwriters shall not previously have been
advised or to which it shall reasonably object after being so advised.
(f) The Companies will cooperate with the Underwriters 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 Underwriters and by
dealers under the securities or Blue Sky laws of such jurisdictions as the
Underwriters 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 Underwriters 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 Underwriters (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 Underwriters 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 Underwriters terminating this Agreement pursuant to Section
8 or Section 9 hereof) or if this Agreement shall be terminated by the
Underwriters 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 Underwriters 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 each
Underwriter and each person, if any, who controls such 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 any Underwriter
furnished in writing to the Companies by or on behalf of an 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 Underwriters (or to the benefit
of any person controlling any Underwriter) on account of any such loss, claim,
damage, liability or expense arising from the sale of the Notes covered thereby
by the Underwriters 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 such 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 Underwriters. 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 an
Underwriter or any person controlling such Underwriter in respect of which
indemnity may be sought against the Companies or The Money Store, an 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 Underwriters 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 such 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 an
Underwriter or such controlling person and the indemnifying parties and an
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 an 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 an Underwriter and
controlling persons not having actual or potential differing interests with such
Underwriter or among themselves, which firm shall be designated in writing by
such 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 each 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) Each Underwriter, severally and not jointly 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
Underwriters set forth in paragraph (a) hereof, but only with respect to
information relating to the Underwriters furnished in writing by or on behalf of
the Underwriters expressly for use in the Registration Statement, the
Prospectus, or any amendment or supplement thereto, or any related preliminary
prospectus (including any Computational Materials prepared by such Underwriter,
except to the extent of any errors in the Computational Materials that are
caused by errors in the pool information provided by the Companies or The Money
Store to the applicable Underwriter. The parties hereto agree that no
Underwriter shall be under any liability to the Companies, The Money Store or
any other person for Computational Materials prepared by any other Underwriter).
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 Underwriters pursuant to
this paragraph (c), the Underwriters 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
Underwriters 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 Underwriters' 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 Underwriters by paragraph
(b) above. The foregoing indemnity agreement shall be in addition to any
liability which the Underwriters 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 Underwriters 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 Underwriters 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
Underwriters 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 Underwriters. The relative fault of the Companies
and The Money Store on the one hand and the Underwriters 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 Underwriters 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 Underwriters 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 Underwriters
shall not be required to contribute any amount in excess of the amount received
by the Underwriters over the price paid by the Underwriters for the Notes
purchased by it and distributed to the public less the amount of any damages
which the Underwriters 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
Underwriters 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 Underwriters, 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 Underwriters, 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 UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters 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 Assurance 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 Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc. ("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.
(p) 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.
(q) 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 such
portion of such fees and disbursements as may be agreed upon between the
Underwriters and The Money Store), (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 Companies 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 UNDERWRITERS. The statements set
forth under the heading "Plan of Distribution" in the Prospectus constitute the
only information furnished by or on behalf of the Underwriters 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 Underwriters 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 Underwriters, to
Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Asset
Finance Group.
12. DEFAULT BY ONE OF THE UNDERWRITERS. If any of the Underwriters
shall fail on the Closing Date to purchase the Offered Notes which it is
obligated to purchase hereunder (the "Defaulted Notes"), the remaining
Underwriters (the "Non- Defaulting Underwriters") shall have the right, but not
the obligation, within one (1) Business Day thereafter, to make arrangements to
purchase all, but not less than all, of the Defaulted Notes upon the terms
herein set forth; if, however, the Non-Defaulting Underwriters shall have not
completed such arrangements within such one (1) Business Day period, then this
Agreement shall terminate without liability on the part of the Non-Defaulting
Underwriters.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Non-Defaulting Underwriters or the
Company shall have the right to postpone the Closing Date for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements.
This Agreement has been and is made solely for the benefit of the
Underwriters, 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.
13. 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 Underwriters.
Very truly yours,
CLASSNOTES TRUST 1997-I
By: THE YORK BANK AND TRUST
COMPANY, as Eligible Lender
Trustee
By: /s/ XXXXXXX X. XXXX
Name: Xxxxxxx X. Xxxx
Title: Vice President
TRANS-WORLD INSURANCE COMPANY
By: /s/ XXXXXXX XXXXXX
Name: Xxxxxxx Xxxxxx
Title: Senior Vice President
CLASSNOTES, INC.
By: /s/ XXXXXXX XXXXXX
Name: Xxxxxxx Xxxxxx
Title: Senior Vice President
THE MONEY STORE INC.
By: /s/ XXXXXXX XXXXXX
Name: Xxxxxxx Xxxxxx
Title: Executive Vice President
Confirmed as of the date first above mentioned.
XXXXX XXXXXX INC.
FIRST UNION CAPITAL MARKETS CORP.
PRUDENTIAL SECURITIES INCORPORATED
By: 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 1998-1
TERMS OF THE NOTES:
Final Original
Maturity Principal Interest Price to
CLASS DATE AMOUNT RATE UNDERWRITERS
---------
COLLATERAL: The Student Loans to be included in the Collateral are as
described in Schedule A to the First 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
TYPE OF INTEREST RATE: Auction Rate
CLOSING DATE: March 17, 1998
Information Provided by the Underwriters in the
Prospectus Supplement: "Underwriting"
XXXXX XXXXXX INC.
By:/s/ XXXX X. XXXXXX
Name: Xxxx X. Xxxxxx
Title: Director
TRANS-WORLD INSURANCE COMPANY
By:/s/ XXXXXX DEAR
Name: Xxxxxx Dear
Title: Executive Vice President
CLASSNOTES, INC.
By:/s/ XXXXXX DEAR
Name: Xxxxxx Dear
Title: Executive Vice President
CLASSNOTES TRUST 1997-I
By: The York Bank and Trust
Company, as Eligible Lender Trustee
By: /S/ XXXXXXX X. XXXX
Name: Xxxxxxx X. Xxxx
Title: Executive Vice President
THE MONEY STORE INC.
By: /s/ XXXXXX DEAR
Name: Xxxxxx Dear
Title: Executive Vice President
EXECUTION COPY
TRANS-WORLD INSURANCE COMPANY
CLASSNOTES, INC.
Auction Rate Asset Backed Notes
TERMS AGREEMENT
Dated: March 16, 1998
To: TRANS-WORLD INSURANCE COMPANY
CLASSNOTES, INC.
Re: Underwriting Agreement dated March 16, 1998
Issuer: ClassNotes Trust 1997-I
Series Designation: Series 1998-1
TERMS OF THE NOTES:
Original
Final Maturity Principal Interest Price to
CLASS DATE AMOUNT RATE UNDERWRITERS
A-7 May 1, 2020 $100,000,000 5.67% 99.75%
A-8 June 1, 2020 $100,000,000 5.67% 99.75%
A-9 July 1, 2020 $100,000,000 5.67% 99.75%
A-10 August 1, 2020 $110,000,000 5.67% 99.75%
COLLATERAL: The Student Loans to be included in the Collateral
are as described in Schedule A to the Sale and
Servicing Agreement.
CREDIT SUPPORT: Note Surety Bond issued by Ambac Assurance Corporation.
INITIAL NOTE
DISTRIBUTION DATES: April 15, 1998 for the Class A-7 Notes
April 22, 1998 for the Class A-8 Notes
April 29, 1998 for the Class A-9 Notes
May 6, 1998 for the Class A-10 Notes
NOTE RATING: "AAA" by Standard and Poor's Ratings Services, a
Division of The XxXxxx-Xxxx Companies, Inc. and
"Aaa" by Xxxxx'x Investors Service, Inc.
FORM OF NOTES: Book entry
CLOSING DATE: March 17, 1998
Information Provided by the Underwriters in the
Prospectus Supplement: The statements set forth under the heading
"Plan of Distribution."
Additional Terms, if any, Not in Master Indenture:
XXXXX XXXXXX INC.
FIRST UNION CAPITAL MARKETS CORP.
PRUDENTIAL SECURITIES INCORPORATED
By: XXXXX XXXXXX INC.
By:/s/ XXXX X. XXXXXX
Name: Xxxx X. Xxxxxx
Title: Director
TRANS-WORLD INSURANCE COMPANY
By:/s/ XXXXXXX XXXXXX
Name: Xxxxxxx Xxxxxx
Title: Senior Vice President
CLASSNOTES, INC.
By:/s/ XXXXXXX XXXXXX
Name: Xxxxxxx Xxxxxx
Title: Senior Vice President
CLASSNOTES TRUST 1997-I
By: The York Bank and Trust
Company, as Eligible Lender Trustee
By: /s/ XXXXXXX X. XXXX
Name: Xxxxxxx X. Xxxx
Title: Vice President
THE MONEY STORE INC.
By: /s/ XXXXXXX XXXXXX
Name: Xxxxxxx Xxxxxx
Title: Executive Vice President
