[EXHIBIT 1.1]
[TRUST 190_-_]
$_____________ ASSET BACKED NOTES
(ISSUABLE IN SERIES)
UNDERWRITING AGREEMENT
_____ __, 199_
[Name and Address of Underwriter]
Dear Sirs:
Trans-World Insurance Company, an Arizona corporation doing business as
Educaid (the "Company"), and a wholly owned subsidiary of The Money Store Inc.,
a New Jersey corporation ("The Money Store"), has formed a trust known as [Trust
199_-_] (the "Trust") under the laws of _____________ and the Company proposes
to cause the Trust to sell to Smith Barney Inc. (the "Underwriter"), pursuant to
the terms of this Underwriting Agreement, up to $____________ of Asset Backed
Notes (the "Notes") in various series, and, within each series, in various
classes, in one or more offerings on terms to be determined at the time of sale.
__________, a _________ 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 __________, as
indenture trustee ("Indenture Trustee"), which will be supplemented with respect
to each series of Notes by an indenture supplement (each, an "Indenture
Supplement" and collectively with the Master Indenture, the "Indenture"). Upon
issuance, each series of 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 _________, 199_, 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 ______, 199_ (as amended from time to time,
the "Sale and Servicing Agreement") among the Trust, the Company, the Eligible
Lender Trustee and The Money Store or the Prospectus.
The Trust proposes, upon the terms and conditions set forth herein, to sell
to the Underwriter on the Initial Closing Date (as hereinafter defined)
$__________ aggregate principal amount of the Notes.
Whenever the Company determines to cause the Trust to issue and sell a
series of Notes (including on the Initial Closing Date), it proposes, upon the
terms and conditions set forth herein, to cause the Trust to enter into an
agreement (each, a "Terms Agreement") providing for the sale of such Notes to
the Underwriter. The Terms Agreement relating to each sale of Notes shall
specify, among other matters, the principal amount of Notes to be sold, the
series and 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 Company, the Trust and The Money Store.
The Company, 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 related
Terms Agreement, to sell to the Underwriter and, upon the basis of the
representations, warranties and agreements of the Company and The Money Store
herein contained and subject to all the terms and conditions set forth herein
and in the related Terms Agreement, the Underwriter agrees to purchase from the
Trust such principal amount of each series and class of Notes at such respective
purchase prices as may be described in the Terms Agreement with respect thereto
executed by the Company, 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 any series of Notes to be sold pursuant to the initial Terms
Agreement shall be made at the office of Stroock & Stroock & Lavan, 7 Hanover
Square, New York, New York, NY 10003, at 10:00 A.M., New York City time, on
_______, 199_ (the "Initial Closing Date"). The place of such closing and the
Initial Closing Date may be varied by agreement among the Underwriter, the Trust
and the Company.
Delivery to the Underwriter of and payment for any additional series of
Notes to be purchased by the Underwriter shall be made at the aforementioned
office at such time and on such dates (each, a "Subsequent Closing Date"), as
shall be specified in the related Terms Agreements. The place of such a closing
and a Subsequent Closing Date for such additional series of Notes may be varied
by agreement between the Underwriter, the Trust and the Company.
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 or any Subsequent Closing Date, as
the case may be. 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
Initial Closing Date or a Subsequent Closing Date, as the case may be.
3. Representations and Warranties of the Company and The Money Store. The
Company and The Money Store represent and warrant to the Underwriter that:
(a) A registration statement on Form S-3 (No. 33- _______), including a
prospectus and such amendments thereto as may have been required to the date
hereof, relating to the Notes and the offering thereof from time to time 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 from time to time
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 each 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
Company, 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 Company or its affiliates for the consummation of
the transactions contemplated by this Agreement and each Terms Agreement shall
have been obtained, except as otherwise provided in the Basic Documents.
(e) The Master Indenture and the Indenture Supplement relating to the Notes
to be sold on the initial Closing Date (the "Initial Indenture Supplement") have
been and each additional Indenture Supplement will be 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 the Notes to be
issued on the Initial 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 the Company and The Money Store is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Arizona 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
the Company 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 Company or The Money Store, threatened, against the Company,
The Money Store or the Trust, or to which the Company, 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 Agreements by
the Company, the Trust and The Money Store nor the consummation by the Company,
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 Initial
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 Company, 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 Company, the Trust or The Money Store is a party or by
which the Company, 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 Company, 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 Company, 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 Company, the Trust and The Money Store each have all requisite
power and authority to execute, deliver and perform its obligations under this
Agreement and each Terms Agreement; the execution and delivery of, and the
performance by each of the Company, the Trust and The Money Store of its
respective obligations under, this Agreement have been duly and validly
authorized by the Company, the Trust and The Money Store, respectively, (and the
execution, delivery of, and the performance by each of the Company, the Trust
and The Money Store of its respective obligations under, each Terms Agreement
will be duly and validly authorized by the Company, the Trust and The Money
Store, respectively) and this Agreement has been and each Terms Agreement will
be, duly executed and delivered by each of them and constitutes or in the case
of each 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) The Company 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 the Company to provide Financed Student Loans to the Trust to support
additional series of Notes as contemplated hereby.
(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 Company and The Money Store in
the Sale and Servicing Agreement and made in any Officer's Certificate of the
Company or The Money Store will be true and correct at the time made and on and
as of the applicable Closing Date.
4. Agreements of the Company and The Money Store. The Company and The Money
Store agree with the Underwriter as follows:
(a) In connection with the execution of each Terms Agreement, the Company
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
Company deem appropriate in connection with the offering of the Notes, and the
Company will timely file such supplement to the prospectus with the SEC pursuant
to Rule 424(b) under the Act, but the Company 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 Company 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 Company is advised thereof, and will use its 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 a Prospectus relating to a series of 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 Company
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 Company will immediately inform the Underwriter (i) of the receipt
by the Company 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 Company or the
Trust is a party relating to the offering or sale of the Notes.
(d) The Company 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 Company 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 the Company
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 Company 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 Company or the Trust, the Company 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 Company 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 Company, 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 Company, the Trust or The
Money Store to comply with the terms or fulfill any of the conditions of this
Agreement, the Company 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 by it in connection herewith, but
without any further obligation on the part of the Company or The Money Store for
loss of profits or otherwise. In the event any such termination occurs after the
Initial Closing Date, the out-of-pocket expenses shall relate only to those
incurred in connection with the series of Notes then contemplated to be issued
and purchased by the Underwriter.
(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
Company, 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 Company 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 Company 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 series of 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
of such series 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 Company has previously furnished sufficient
copies thereof to the Underwriter. The foregoing indemnity agreement shall be in
addition to any liability which the Company 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 Company 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
Smith Barney Inc., 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 Company, The
Money Store and their respective directors and officers, and any person who
controls the Company 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 Company 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 Company 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 Company and The Money Store by paragraph
(b) above (except that if the Company 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
Company 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 Company 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 Company 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 Company 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 Company bear
to the total underwriting discounts and commissions received by the Underwriter.
The relative fault of the Company 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 Company 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 Company 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 Company, 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 Company 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 Company 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. With respect to the Notes to be purchased on the Initial Closing Date:
(a) All actions required to be taken and all filings required to be made by
the Company 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 Company or the Underwriters, 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 Company, 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 Company and its
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 Initial Closing Date
opinions of Squire, Sanders & Dempsey, special Arizona counsel for the Company,
and Kutak, Rock, special counsel for the Company, dated the Initial 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 Initial Closing Date an
opinion of Eric R. Elwin, Esq., General Counsel of the Company and The Money
Store, dated the Initial 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 Initial Closing Date an
opinion of Rhoads & Sinon, Esqs., counsel for the Eligible Lender Trustee, dated
the Initial 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 Initial Closing Date an
opinion of counsel for AMBAC Indemnity Corporation (the "Surety Provider"),
dated the Initial 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 Initial Closing Date an
opinion of White & Case, Esqs., counsel for the Indenture Trustee, dated the
Initial 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 Stroock & Stroock & Lavan, counsel for the Underwriter, dated the
Initial Closing Date, and addressed to the Underwriter, in form and scope
satisfactory to the Underwriter.
(i) The Underwriter shall have received on the Initial Closing Date from
KPMG Peat Marwick L.L.P. a letter dated the Initial 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 Company or of The Money
Store, and (ii) all the representations and warranties of the Company 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 Initial Closing Date as if made on and as of the Initial Closing Date and
the Underwriter shall have received a certificate, dated the Initial Closing
Date and signed by an executive officer of the Company and The Money Store, to
the effect set forth in this Section 6(j) and in Section 6(k) hereof.
(k) Neither the Company nor The Money Store shall have failed at or prior
to the Initial 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 Initial Closing Date.
(l) The Underwriter shall have received by instrument dated the Initial
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 Moody's 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 Initial Series of Notes, (ii) a certificate dated the Initial 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, 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 Company 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.
B. With respect to each series of Notes to be purchased on a Subsequent
Closing Date:
The obligations of the Underwriter to purchase each additional series of
Notes hereunder are subject to the satisfaction on and as of any Subsequent
Closing Date of the conditions set forth under clause (A) of this Section 6,
except that references to the Initial Closing Date and the Prospectus shall be
to the applicable Subsequent Closing Date and the applicable Prospectus. The
Note Surety Bond, opinions and letters referred to therein shall be dated the
applicable Subsequent Closing Date and shall be revised to reflect the
applicable Subsequent Closing Date, the applicable Prospectus and the applicable
additional series of Notes and the deposits to Accounts referred to in clause
(p) shall be to such deposits as may be required by the applicable Supplemental
Sale and Servicing Agreement.
All such opinions, certificates, letters and other documents referred in
clauses (A) and (B) 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 Company or The
Money Store and delivered to the Underwriter, or to counsel for the Underwriter,
shall be deemed a representation and warranty by the Company or The Money Store,
respectively, to the Underwriter as to the statements made therein.
7. Expenses. The Company 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, each 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's 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, L.L.P., 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 Company
or The Money Store, by notifying the Underwriter, or by the Underwriter, by
notifying the Company.
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 Company, the Trust or The Money Store, by notice to the
Company, the Trust and The Money Store, if prior to the Initial Closing Date or
any Subsequent Closing Date (but then only as to series of Notes not yet
purchased by the Underwriter), as the case may be, (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 our
opinion 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 our opinion 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 applicable 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 Company or The Money Store, at 3301
C Street, Suite 700-A, Sacramento, California 95816, Attention: President and at
2840 Morris Avenue, Union, New Jersey 07083, Attention: Chief Financial Officer,
(ii) if to the Trust, at the office of the Eligible Lender Trustee,
____________, Attention: Corporate Trust Services and (iii) if to the
Underwriter, to Smith Barney Inc., 1345 Avenue of the Americas, 46th Floor, New
York, NY 10105, Attention: Manager, Securitization Group.
This Agreement has been and is made solely for the benefit of the
Underwriter, the Company, 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 the
Underwriter of any of the Notes in his status as such purchaser.
12. Applicable Law; Counterparts. This Agreement, and each 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 each Terms Agreement, may be signed in various
counterparts which together constitute one and the same instrument. If signed in
counterparts, this Agreement and each 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 Company, the Trust, The Money Store and the Underwriter.
Very truly yours,
ATTEST [TRUST 199_-_]
__________________________ By: __________________
Name: , as Eligible Lender
Title: Assistant Secretary Trustee
By: _____________________________
Name:
Title: Senior Vice President
TRANS-WORLD INSURANCE COMPANY
By: _____________________________
Name: Morton Dear
Title: Executive Vice President
THE MONEY STORE INC.
By: _____________________________
Name: Morton Dear
Title: Executive Vice President
Confirmed as of the date first above mentioned.
SMITH BARNEY INC.
By_________________________________
Name:
Title:
Exhibit A
TRANS-WORLD INSURANCE COMPANY
Auction Rate Asset Backed Notes
TERMS AGREEMENT
Dated ______, 199_
To: TRANS-WORLD INSURANCE COMPANY
Re: Underwriting Agreement dated ______, 199_
Issuer: [Trust 199_-_]
Series Designation:
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
Moody's Investors Service, Inc.
FORM OF NOTES: [Book entry] [definitive]
CLOSING DATE:
Information Provided by the Underwriter in the
Prospectus Supplement:
Additional Terms, if any, Not in Master Indenture:
SMITH BARNEY INC.
By:_____________________________
Name:
Title:
TRANS-WORLD INSURANCE COMPANY
By:_____________________________
Name: Morton Dear
Title: Executive Vice President
[TRUST199_-_] ATTEST
By: __________, as Eligible Lender
Trustee
By: _____________________________ By:_________________________
Name: Name:
Title: Senior Vice President Title: Assistant Secretary
THE MONEY STORE INC.
By: _____________________________
Name:
Title: