Exhibit 99.2
EXECUTION COPY
BROKER-DEALER AGREEMENT
between
BANKERS TRUST COMPANY,
as Auction Agent
and
SMITH BARNEY INC.,
as Broker-Dealer
Dated as of December 24, 1997
Relating to
CLASSNOTES TRUST 1997-I
ASSET BACKED NOTES
SERIES 1997-2
AND
AUCTION RATE ASSET BACKED CERTIFICATES, CLASS 2
BROKER-DEALER AGREEMENT
This BROKER-DEALER AGREEMENT (the "Broker-Dealer Agreement"), dated as
of December 24, 1997, is by and between Bankers Trust Company, a New York
banking corporation (together with its successors and assigns, the Auction
Agent"), pursuant to authority granted to it in the Auction Agent Agreement,
defined below, acting not in its individual capacity, but solely as agent for
ClassNotes Trust l997-I, a Pennsylvania business trust (the "Issuer") and SMITH
BARNEY INC. (together with its successors and assigns, the "Broker-Dealer").
RECITALS
The Issuer proposes to cause the Trustee (defined below) to
authenticate and deliver $265,000,000 aggregate principal amount of its Asset
Backed Notes, Series 1997-2, Class A-4 (the "Class A-4 Notes"), Class A-5 (the
"Class A-5 Notes") and Class A-6 (the "Class A-6 Notes" and, together with the
Class A-4 Notes and the Class A-5 Notes, the "Series 1997-2 Notes"). The Series
1997-2 Notes are being issued under the Second Terms Supplement dated as of
December 24, 1997 (herein, the "Second Terms Supplement") executed in accordance
with the Indenture dated as of March 21, 1997 (as amended and supplemented from
time to time, the "Master Indenture"), between the Issuer and Bankers Trust
Company (the "Indenture Trustee"). The Class A-5 Notes and the Class A-6 Notes
(collectively, the "Notes") are being issued as auction rate securities.
In connection with issuing the Series 1997-2 Notes, the Issuer
proposes to issue $15,000,000 aggregate principal amount of its Auction Rate
Asset Backed Certificates, Class 2 (the "Certificates"). The Certificates are
being issued under the Second Trust Supplement, dated as of December 23, 1997
(herein, the "Trust Supplement") executed in accordance with the Trust Agreement
dated as of March 21, 1997 (as amended or supplemented from time to time, the
"Trust Agreement"), Trans-World Insurance Company d/b/a Educaid, an Arizona
corporation, and ClassNotes, Inc., a Delaware corporation, as Depositors, and
The York Bank and Trust Company, a Pennsylvania bank and trust company, not in
its individual capacity but solely as Eligible Lender Trustee (the "Eligible
Lender Trustee"). The Certificates are being issued as auction rate securities.
The Second Terms Supplement provides that the Class Interest Rate for
each Class of Notes for each applicable Interest Period after the Initial Period
shall equal the lesser of the Net Loan Rate and the Auction Rate, but in no
event shall exceed the applicable Class Interest Rate Limitation.
The Trust Supplement provides that the Certificate Rate for each
applicable Interest Period after the Initial Period shall equal the lesser of
the Net Loan Rate and the Auction Rate, but in no event shall exceed the
Certificate Rate Limitation.
Pursuant to Section 2.9 (a) of the Auction Agent Agreement dated as of
December 24, 1997 among the Indenture Trustee, the Auction Agent and the Issuer
(the "Auction Agent Agreement"), the Indenture Trustee has directed the Auction
Agent to execute and deliver this Broker-Dealer Agreement.
The Auction Procedures require the participation of one or more
Broker-Dealers.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Auction Agent, as agent of the Issuer, and the
Broker-Dealer agree as follows:
Section 1. DEFINITIONS AND RULES OF CONSTRUCTION
1.1. TERMS DEFINED BY REFERENCE TO THE MASTER INDENTURE, SECOND TERMS
SUPPLEMENT, TRUST SUPPLEMENT OR TRUST AGREEMENT. Capitalized terms used herein
and not otherwise defined herein shall have the meanings given such terms in the
Master Indenture, Second Terms Supplement, Trust Supplement or Trust Agreement.
1.2. TERMS DEFINED HEREIN. As used herein and in the Settlement
Procedures, defined below, the following terms shall have the following
meanings, unless the context otherwise requires:
APPLICABLE INTEREST RATE" shall mean (i) with respect to the Notes,
the applicable Class Interest Rate for each Class of Notes, as determined
pursuant to the Second Terms Supplement and (ii) with respect to the
Certificates, the applicable Certificate Rate, as determined pursuant to the
Trust Agreement.
"AUTHORIZED OFFICER" shall mean, with respect to the Auction Agent,
each Managing Director, Vice President, Assistant Vice President, and Assistant
Treasurer of the Auction Agent and every other officer of the Auction Agent
assigned to its Corporate Trust Group and every other officer or employee of
Auction Agent designated as an "Authorized Officer" for purposes of this
Agreement in a communication to the Broker-Dealer.
"BENEFICIAL OWNER" shall mean a beneficial owner of any of the Notes
or the Certificates.
"BROKER-DEALER OFFICER" shall mean each officer or employee of the
Broker-Dealer designated as a "Broker-Dealer Officer for purposes of this
Broker-Dealer Agreement in a communication to the Auction Agent.
"NOTICE OF FAILURE TO DELIVER OR MAKE PAYMENT" shall mean a notice
substantially in the form of Exhibit D hereto.
"NOTICE OF TRANSFER" shall mean a notice substantially in the form of
Exhibit C hereto.
"ORDER FORM" shall mean the form to be submitted by any Broker-Dealer
on or prior to any Auction Date substantially in the form of Exhibits B-1 and
B-2 hereto.
"SETTLEMENT PROCEDURES" shall mean the Settlement Procedures attached
hereto as Exhibit A.
1.3. RULES OF CONSTRUCTION. Unless the context or use indicate another
or different meaning or intent, the following rules shall apply to the
construction of this Agreement;
(a) Words importing the singular number shall include the plural
number and vice versa.
(b) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto," and other words of similar
import refer to this Broker-Dealer Agreement as a whole.
(d) All references herein to a particular time of day shall be to New
York City time.
Section 2. THE AUCTION
2.1. INCORPORATION BY REFERENCE OF AUCTION PROCEDURES AND SETTLEMENT
PROCEDURES.
(a) On each Auction Date, the provisions of the Auction Procedures
will be followed by the Auction Agent for the purpose of determining the
Applicable Interest Rate for each Auction Period after the Initial Period. Each
periodic operation of such procedures is hereinafter referred to as an
"Auction."
(b) All of the provisions contained in the Auction Procedures and the
Settlement Procedures are incorporated herein by reference in their entirety and
shall be deemed to be a part of this Broker-Dealer Agreement to the same extent
as if such provisions were fully set forth herein.
(c) The Broker-Dealer and other Broker-Dealers may participate in
Auctions for their own accounts.
2.2. PREPARATION FOR EACH AUCTION.
(a) Not later than 9:30 A.M. on each Auction Date for a Class of the
Notes or the Certificates, the Auction Agent shall advise the Broker-Dealer by
telephone of the All Hold Rate, the Maximum Auction Rate, the Net Loan Rate
(based upon information provided by the Administrator), the One-Month LIBOR and
the Three-Month LIBOR.
(b) In the event the Auction Date for any Auction shall be changed
after the Auction Agent has given notice of such Auction Date pursuant to clause
(vii) of paragraph (a) of the Settlement Procedures, the Auction Agent, by
telephone (confirmed in writing), telecopy or such other means as the Auction
Agent deems practicable, shall give notice of such change to the Broker-Dealer
not later than the earlier of 9:15 A.M. on the new Auction Date and 9:15 A.M. on
the old Auction Date. Thereafter, the Broker-Dealer shall use its best efforts
to promptly notify its customers who are Existing Noteholders or Existing
Certificateholders, as the case may be, of such change in the Auction Date.
(c) From time to time upon request of the Auction Agent, the
Broker-Dealer shall provide the Auction Agent with a statement of the aggregate
amount of Notes held by the Broker- Dealer as an Existing Noteholder, or the
aggregate amount of Certificates held by the Broker-Dealer as an Existing
Certificateholder, in either case for its own account or otherwise.
(d) The Auction Agent shall send by telecopy or other means a copy of
any Notice of Notes Outstanding or Notice of Certificates Outstanding, as the
case may be, received from the Indenture Trustee or the Eligible Lender Trustee
to the Broker- Dealer in accordance with Section 4.3 hereof.
2.3. AUCTION SCHEDULE: METHOD OF SUBMISSION OF ORDERS.
(a) The Auction Agent shall conduct Auctions for the Notes and the
Certificates in accordance with the schedule set forth below. Such schedule may
be changed by the Auction Agent with the consent of the Indenture Trustee and
the Market Agent, which consent shall not be unreasonably withheld or delayed.
The Auction Agent shall give written notice of any such change to the
Broker-Dealer and the Eligible Lender Trustee. Such notice shall be given prior
to the close of business on the Business Day next preceding the first Auction
Date on which any such change shall be effective.
By 9:30 A.M. The Auction Agent advises the Indenture
Trustee and the Broker-Dealers of the Maximum
Auction Rate, the All Hold Rate, the Net Loan
Rate (as provided by the Administrator) and
One-Month LIBOR or Three-Month LIBOR, as
applicable, to be used in determining the
Auction Rate under the Auction Procedures,
the Second Terms Supplement, the Trust
Agreement and the Auction Agent Agreement.
9:30 A.M. - Auction Agent assembles information
12:30 P.M. communicated to it by Broker-Dealers as
provided in Section 2.5.1(c)(i) of the Second
Terms Supplement or 2.2.1(c)(i) of Appendix B
of the Trust Agreement. The Submission
Deadline is 12:30 P.M.
Not earlier The Auction Agent makes determinations
than 12:30 P.M. pursuant to Section 2.5.1(c)(i) of the
Second Terms Supplement or 2.2.1(c)(i) of
Appendix B of the Trust Agreement.
By approximately The Auction Agent advises the
3:00 P.M.* or 4:00 P.M.** Indenture Trustee of the results of
the Auction as provided in Section
2.5.1(c)(ii) of the Second Terms Supplement
or the Eligible Lender Trustee of the results
of the Auction as provided in Section
2.2.1(c)(ii) of Appendix B of the Trust
Agreement. Submitted Bids and Submitted Sell
Orders are accepted and rejected in whole or
in part and (x) Notes allocated as provided
in Section 2.5.1(d) of the Second Terms
Supplement or (y) Certificates allocated as
provided in 2.2.1(d) of Appendix B of the
Trust Agreement, as the case may be. The
Auction Agent gives notice of Auction results
as set forth in Section 2.4(a) hereof.
(b) The Broker-Dealer agrees to maintain a list of Potential
Noteholders and Potential Certificateholders and to contact the Potential
Noteholders and Potential Certificateholders on such list on or prior to each
applicable Auction Date for the purposes of participating in the Auction on such
Auction Date.
(c) The Broker-Dealer shall submit Orders to the Auction Agent in
writing by delivering an Order Form. The Broker-Dealer shall submit separate
Orders to the Auction Agent for each Potential Noteholder or Potential
Certificateholder, as the case may be, or Existing Noteholder or Existing
Certificateholder, as the case may be, on whose behalf the Broker-Dealer is
submitting an Order and shall not net or aggregate the Orders of different
Potential Noteholders or Potential Certificateholders or Existing Noteholders or
Existing Certificateholders on whose behalf the Broker-Dealer is submitting
Orders.
(d) The Broker-Dealer shall deliver to the Auction Agent (i) a Notice
of Transfer with respect to any transfer of Notes or Certificates made through
the Broker-Dealer by an Existing Noteholder or Existing Certificateholder, as
the case may be, to another person other than pursuant to an Auction, and (ii) a
Notice of Failure to Deliver or Make Payment with respect to the failure of any
Notes or Certificates to be transferred to or payment to be made by any person
that purchased or sold Notes or Certificates, as the case may be, through the
Broker-Dealer pursuant to a prior Auction. The Auction Agent is not required to
accept any notice delivered pursuant to clauses (i) or (ii) of this subparagraph
(d) with respect to an Auction unless it is received by the Auction Agent by
3:00 P.M. on the Business Day next preceding such Auction Date.
____________________
* If the Class Interest Rate or the Certificate Rate, as the case may be, is
the Auction Rate.
** If the Class Interest Rate or the Certificate Rate, as the case may be, is
the Net Loan Rate.
(e) The Broker-Dealer agrees to handle its customers' Orders in
accordance with its duties under applicable securities laws and rules.
2.4. NOTICES. (a) On each Auction Date, the Auction Agent shall notify
the Broker-Dealer and the Administrator by telephone of the results of the
Auction as set forth in paragraph (a) of the Settlement Procedures. The Auction
Agent shall by 10:30 A.M. on the Business Day next succeeding such Auction Date
if previously requested by the Broker-Dealer notify the Broker- Dealer in
writing of the disposition of all Orders submitted by the Broker-Dealer in the
Auction held on such Auction Date.
(b) The Broker-Dealer shall notify each Existing Noteholder or
Existing Certificateholder or Potential Noteholder or Potential
Certificateholder on whose behalf the Broker-Dealer has submitted an Order as
set forth in paragraph (b) of the Settlement Procedures and take such other
action as is required by the Broker-Dealer pursuant to the Settlement
Procedures.
(c) The Auction Agent shall deliver to the Broker- Dealer all notices
and certificates that the Auction Agent is required to deliver to the
Broker-Dealer pursuant to Section 2 of the Auction Agent Agreement at the times
and in the manner set forth in the Auction Agent Agreement.
2.5. SERVICE CHARGE TO BE PAID TO THE BROKER-DEALER. (a) For each
Interest Period, commencing on the Closing Date, the Broker-Dealer shall be
entitled to a fee, in an amount equal to the product of (i) a fraction, the
numerator of which is the number of days in the Interest Period related to the
Auction by which the applicable Class Interest Rate or Certificate Rate was
determined and the denominator of which is 360 times (ii) the Broker-Dealer Fee
Rate times (iii) the sum of (A) the aggregate principal amount of Notes or
Certificates, as the case may be, placed by the Broker-Dealer in such Auction
that were (x) the subject of Submitted Bids of Existing Noteholders or Existing
Certificateholders submitted by the Broker-Dealer and continued to be held as a
result of such submission and (y) the subject of Submitted Bids of Potential
Noteholders or Potential Certificateholders submitted by the Broker-Dealer and
purchased as a result of such submission, plus (B) the aggregate principal
amount of Notes or Certificates, as the case may be, subject to valid Hold
Orders submitted to the Auction Agent by the Broker- Dealer plus (C) the
aggregate principal amount of Notes or Certificates, as the case may be, that
were covered by Hold Orders deemed to have been submitted by Existing
Noteholders or Existing Certificateholders that were acquired by such Existing
Noteholders or Existing Certificateholders through the Broker- Dealer. For
purposes of subclause (iii)(C) above, if any Existing Noteholders or Existing
Certificateholders who acquired Notes or Certificates, as the case may be,
through the Broker- Dealer transfers those Notes or Certificates, as the case
may be, to another person other than pursuant to an Auction, then the
Broker-Dealer shall continue to be the Broker-Dealer through which the Notes or
Certificates, as the case may be, so transferred were acquired; provided,
however, that if the transfer was effected by, or if the transferee is a
Broker-Dealer other than the Broker-Dealer, then such other Broker-Dealer shall
be the Broker-Dealer through which such Notes or Certificates, as the case may
be, were acquired.
(b) The fee payable to the Broker-Dealer pursuant to Section 2.5(a)
above shall be calculated monthly and paid monthly, in arrears, by the Auction
Agent on the First Note Distribution Date for all Classes of Notes issued by the
Issuer occurring in each month (or if in any such month a Certificate
Distribution Date occurs prior to such first Note Distribution Date, on such
Certificate Distribution Date), commencing January 1998. Such fee shall be paid
by the Auction Agent out of the Auction Agent Fee received by the Auction Agent
on each such date pursuant to the Sale and Servicing Agreement.
2.6. SETTLEMENT. (a) If any Existing Noteholders or Existing
Certificateholders on whose behalf the Broker-Dealer has submitted a Bid or Sell
Order for Notes or Certificates, as the case may be, that was accepted in whole
or in part fails to instruct its Participant to deliver the Notes or
Certificates, as the case may be, subject to such Bid or Sell Order against
payment therefor, the Broker-Dealer shall instruct such Participant to deliver
such Notes or Certificates, as the case may be, against payment therefor and the
Broker-Dealer may deliver to the Potential Noteholder or Potential
Certificateholder on whose behalf the Broker-Dealer submitted a Bid that was
accepted in whole or in part, a principal amount of the Notes or Certificates,
as the case may be, that is less than the principal amount of the Notes or
Certificates, as the case may be, specified in such Bid to be purchased by such
Potential Noteholder or Potential Certificateholder. Notwithstanding the
foregoing terms of this Section, any delivery or nondelivery of Notes or
Certificates, as the case may be, that represents any departure from the results
of an Auction, as determined by the Auction Agent, shall be of no effect unless
and until the Auction Agent shall have been notified of such delivery or
non-delivery in accordance with the terms of Section 2.3(d) hereof. The Auction
Agent shall have no duty or liability with respect to enforcement of this
Section 2.6(a).
(b) Neither the Auction Agent, the Indenture Trustee, nor the Issuer
shall have any responsibility or liability with respect to the failure of an
Existing Noteholder, an Existing Certificateholder, a Potential Noteholder, a
Potential Certificateholder or its respective Participant to deliver Notes or
Certificates, as the case may be, or to pay for Notes or Certificates, as the
case may be, sold or purchased pursuant to the Auction Procedures or otherwise.
The Auction Agent shall have no responsibility for any adjustment to the fees
paid pursuant to Section 2.5 hereof as a result of any failure described in this
Section 2.6(b).
Section 3. THE AUCTION AGENT.
3.1. DUTIES AND RESPONSIBILITIES. (a) The Auction Agent is acting
hereunder solely as agent for the Issuer and owes no fiduciary duties to any
person by reason of this Broker-Dealer Agreement.
(b) The Auction Agent undertakes to perform such duties and only such
duties as are specifically set forth in this Broker-Dealer Agreement, and no
implied covenants or obligations shall be read into this Broker-Dealer Agreement
against the Auction Agent.
(c) In the absence of bad faith or negligence on its part, the Auction
Agent shall not be liable for any action taken, suffered, or omitted or for any
error of judgment made by it in the performance of its duties under this
Broker-Dealer Agreement. The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been negligent
in ascertaining (or failing to ascertain) the pertinent facts.
3.2. RIGHTS OF THE AUCTION AGENT. (a) The Auction Agent may rely and
shall be protected in acting or refraining from acting upon any communication
authorized by this Broker- Dealer Agreement and upon any written instruction,
notice request, direction, consent report, certificate, share certificate or
other instrument, paper or document reasonably believed by it to be genuine. The
Auction Agent shall not be liable for acting upon any telephone communication
authorized by this Broker-Dealer Agreement which the Auction Agent believes in
good faith to have been given by the Indenture Trustee, a Broker- Dealer, the
Administrator or the Issuer. The Auction Agent may record telephone
communications with the Broker-Dealers.
(b) The Auction Agent may consult with counsel of its own choice, and
the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.
(c) The Auction Agent shall not be required to advance, expend or risk
its own funds or otherwise incur or become exposed to financial liability in the
performance of its duties hereunder.
(d) The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys and shall not be
responsible for any willful misconduct or negligence on the part of any agent or
attorney appointed by it with due care hereunder.
3.3. THE AUCTION AQENT'S DISCLAIMER. The Auction Agent makes no
representation as to the validity, adequacy or accuracy of the recitals in this
Broker-Dealer Agreement, the Auction Agent Agreement or the validity, adequacy
or accuracy of the Notes or the Certificates.
Section 4. MISCELLANEOUS.
4.1. TERMINATION. Any party may terminate this Broker-Dealer Agreement
at any time upon five days' prior notice to the other party; provided, however,
that if the Broker-Dealer is Smith Barney Inc., neither the Broker-Dealer nor
the Auction Agent may terminate this Broker-Dealer Agreement without first
obtaining the prior written consent of the Trustee, the Surety Provider and the
Issuer to such termination, which consent shall not be unreasonably withheld or
delayed. For so long as the Auction Agent Agreement is effective and Smith
Barney Inc. is the sole Broker-Dealer, any termination of this Broker-Dealer
Agreement shall not be effective unless and until a successor, or substitute
Broker-Dealer Agreement becomes effective. This Broker-Dealer Agreement shall
automatically terminate (i) with respect to the Notes, upon the delivery of
certificates representing the Notes pursuant to Section 2.13 of the Master
Indenture, (ii) with respect to the Certificates, upon the delivery of
certificates representing the Certificates pursuant to Section 3.14 of the Trust
Agreement or (iii) with respect to the Notes and the Certificates, upon
termination of the Auction Agent Agreement.
4.2. PARTICIPANT. The Broker-Dealer is, and shall remain for the term
of this Broker-Dealer Agreement, a member of, or Participant in, the Depository
(or an affiliate of such a member or Participant).
4.3. COMMUNICATIONS. Except for (i) communications authorized to be
made by telephone pursuant to this Broker-Dealer Agreement or the Auction
Procedures and (ii) communications in connection with the Auctions (other than
those expressly required to be in writing), all notices, request and other
communications to any party hereunder shall be in writing (including facsimile
or similar writing) and shall be given to such party, addressed to it, or its
address or facsimile number set forth below:
If to the Broker-Dealer,
addressed: SMITH BARNEY INC.
390 Greenwich Street
5th Floor
New York, New York 10013
Attention: Manager, Auction Rate
Products Group
Telephone: (212) 723-7082
Facsimile: (212) 723-8809
If to the Auction Agent,
addressed: BANKERS TRUST COMPANY
4 Albany Street
New York, New York 10006
Attention: Corporate Trust and Agency Group
Telephone: (212) 250-6850
Facsimile: (212) 250-6215
If to the Indenture
Trustee,
addressed: BANKERS TRUST COMPANY
4 Albany Street
New York, New York 10006
Attention: Corporate Trust and Agency Group
Telephone: (212) 250-6533
Facsimile: (212) 250-6439
If to the Issuer,
addressed: THE YORK BANK AND TRUST COMPANY,
c/o DAUPHIN DEPOSIT BANK AND TRUST COMPANY
213 Market Street
Harrisburg, Pennsylvania 17101
Attention: Corporate Trust Services
Telephone: (717) 255-2387
Facsimile: (717) 231-2615
With a copy to
the Administrator: c/o The Money Store Inc.
2840 Morris Avenue
Union, New Jersey 07083
Attention: Chief Financial Officer
Telephone: (908) 686-2000
Facsimile: (908) 688-3846
If to the Surety
Provider,
addressed: Ambac Assurance Corporation
One State Street Plaza
New York, New York 10004
Attention: Structured Finance
Department/Student Loans
Telephone: (212) 668-0340
Facsimile: (212) 509-9190
or such other address or facsimile number as such party may hereafter specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of the Broker-Dealer by a Broker-Dealer
Officer and on behalf of the Auction Agent by an Authorized Officer of the
Auction Agent. The Broker-Dealer may record telephone communications with the
Auction Agent.
4.4. ENTIRE AGREEMENT. This Broker-Dealer Agreement contains the
entire agreement between the parties relating to the subject matter hereof, and
there are no other representations, endorsements, promises, agreements or
understandings, oral, written or inferred, between the parties relating to the
subject matter hereof.
4.5. BENEFITS. Nothing in this Broker-Dealer Agreement, express or
implied, shall give to any person, other than the Auction Agent, the Issuer, the
Broker-Dealer and their respective successors and assigns, any benefit of any
legal or equitable right, remedy or claim under this Broker-Dealer Agreement.
4.6. AMENDMENT; WAIVER. (a) This Broker-Dealer Agreement shall not be
deemed or construed to be modified, amended, rescinded, canceled or waived, in
whole or in part, except by a written instrument signed by a duly authorized
representative of the parties hereto. This Broker-Dealer Agreement may not be
amended without first obtaining the prior written consent of the Issuer;
provided that no amendment that changes any right of consent or any notice to
the Surety Provider shall become effective without the written consent of the
Surety Provider.
(b) Failure of either party to this Broker-Dealer Agreement to
exercise any right or remedy hereunder in the event of a breach of this
Broker-Dealer Agreement by the other party shall not constitute a waiver of any
such right or remedy with respect to any subsequent breach.
4.7. SUCCESSORS AND ASSIGNS. This Broker-Dealer Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors and assigns.
4.8. SEVERABILITY. If any clause, provision or section of this
Broker-Dealer Agreement shall be ruled invalid or unenforceable by any court of
competent jurisdiction, the invalidity or unenforceability of such clause,
provision or section shall not affect any remaining clause, provision or
sections hereof.
4.9. EXECUTION IN COUNTERPARTS. This Broker-Dealer Agreement may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
4.10. GOVERNING LAW. This Broker-Dealer Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Broker-Dealer
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
BANKERS TRUST COMPANY,
as Auction Agent
By:/s/ Melissa Reynolds
Name: Melissa Reynolds
Title: Assistant Vice President
SMITH BARNEY INC.,
as Broker-Dealer
By:/s/ John Hupalo
Name: John Hupalo
Title: Director
Pursuant to and in accordance
with Section 2.9 of the
Auction Agent Agreement
(defined above), the
undersigned consents to the
execution of the above
Broker-Dealer Agreement.
BANKERS TRUST COMPANY,
as Indenture Trustee
By:/s/ Alfia Monastra
Name Alfia Monastra
Title: Assistant Vice President
EXHIBIT A TO BROKER-DEALER AGREEMENT
SETTLEMENT PROCEDURES
If not otherwise defined below, capitalized terms used herein shall
have the meanings given such terms in the Second Terms Supplement and the Trust
Agreement.
(a) Not later than (1) 3:00 P.M. if the Class Interest Rate or
Certificate Rate, as the case may be, is the Auction Rate or (2) 4:00 P.M. if
the Class Interest Rate or Certificate Rate, as the case may be, is the Net Loan
Rate on each Auction Date, the Auction Agent shall notify by telephone each
Broker-Dealer that participated in the Auction held on such Auction Date and
submitted an Order on behalf of an Existing Noteholder or Existing
Certificateholder or Potential Noteholder or Potential Certificateholder of:
(i) the Class Interest Rate or Certificate Rate fixed for the next
Interest Period;
(ii) whether there were Sufficient Bids in such Auction;
(iii) if such Broker-Dealer (a "Seller's Broker Dealer") submitted
Bids or Sell Orders on behalf of an Existing Noteholder or Existing
Certificateholder, whether such Bid or Sell Order was accepted or rejected,
in whole or in part, and the principal amount of Notes or Certificates, if
any, to be sold by such Existing Noteholder or Existing Certificateholder;
(iv) if such Broker-Dealer (a "Buyer's Broker Dealer") submitted a Bid
on behalf of a Potential Noteholder or Potential Certificateholder, whether
such Bid was accepted or rejected, in whole or in part, and the principal
amount of Notes or Certificates, if any, to be purchased by such Potential
Noteholder or Potential Certificateholder;
(v) if the aggregate amount of Notes to be sold by all Existing
Noteholders, or Certificates to be sold by all Existing Certificateholders,
on whose behalf such Seller's Broker-Dealer submitted Bids or Sell Orders
exceeds the aggregate principal amount of Notes or Certificates, as the
case may be, to be purchased by all Potential Noteholders or Potential
Certificateholders on whose behalf such Buyer's Broker-Dealer submitted a
Bid, the name or names of one or more Buyer's Broker-Dealers (and the name
of the Participant, if any, of each such Buyer's Broker-Dealer) acting for
one or more purchasers of such excess principal amount of Notes or
Certificates and the principal amount of Notes or Certificates to be
purchased from one or more Existing Noteholders or Existing
Certificateholders on whose behalf such Seller's Broker-Dealer acted by one
or more Potential Noteholders or Potential Certificateholders on whose
behalf each of such Buyer's Broker-Dealers acted;
(vi) if the principal amount of Notes or Certificates to be purchased
by all Potential Noteholders or Potential Certificateholders on whose
behalf such Buyer's Broker- Dealer submitted a Bid exceeds the amount of
Notes or Certificates to be sold by all Existing Noteholders or Existing
Certificateholders on whose behalf such Sellers' Broker-Dealer submitted a
Bid or a Sell Order, the name or names of one or more Sellers'
Broker-Dealers (and the name of the Participant, if any, of each such
Seller's Broker- Dealer) acting for one or more sellers of such excess
principal amount of Notes or Certificates and the principal amount of Notes
or Certificates to be sold to one or more Potential Noteholders or
Potential Certificateholders on whose behalf such Buyer's Broker-Dealer
acted by one or more Existing Noteholders or Existing Certificateholders on
whose behalf each of such Seller's Broker-Dealers acted; and
(vii) the Auction Date for the next succeeding Auction.
(b) On each Auction Date, each Broker-Dealer that submitted an Order
on behalf of any Existing Noteholder or Existing Certificateholder or Potential
Noteholder or Potential Certificateholder shall:
(i) advise each Existing Noteholder or Existing Certificateholder and
Potential Noteholder or Potential Certificateholder on whose behalf such
Broker-Dealer submitted a Bid or Sell Order in the Auction on such Auction
Date whether such Bid or Sell Order was accepted or rejected, in whole or
in part;
(ii) in the case of a Broker-Dealer that is a Buyer's Broker-Dealer,
advise each Potential Noteholder or Potential Certificateholder on whose
behalf such Buyer's Broker-Dealer submitted a Bid that was accepted, in
whole or in part, to instruct such Potential Owner's Participant to pay
such Buyer's Broker-Dealer (or its Participant) through the Securities
Depository the amount necessary to purchase the principal amount of Notes
or Certificates to be purchased pursuant to such Bid against receipt of
such Notes or Certificates, together with accrued interest;
(iii) in the case of a Broker-Dealer that is a Seller's Broker-Dealer,
instruct each Existing Noteholder or Existing Certificateholder on whose
behalf such Seller's Broker-Dealer submitted a Sell Order that was
accepted, in whole or in part, or a Bid that was accepted, in whole or in
part, to instruct such Existing Noteholder's or Existing
Certificateholder's Participant to deliver to such Seller's Broker-Dealer
(or its Participant) through the Securities Depository the principal amount
of Notes or Certificates to be sold pursuant to such Order against payment
therefore;
(iv) advise each Existing Noteholder or Existing Certificateholder on
whose behalf such Broker-Dealer submitted an Order and each Potential
Noteholder or Potential Certificateholder on whose behalf such Broker-
Dealer submitted a Bid of the Auction Rate for the next Interest Period;
(v) advise each Existing Noteholder or Existing Certificateholder on
whose behalf such Broker-Dealer submitted an Order of the next Auction
Date; and
(vi) advise each Potential Noteholder or Potential Certificateholders
on whose behalf such Broker-Dealer submitted a Bid that was accepted, in
whole or in part, of the next Auction Date.
(c) On the basis of the information provided to it pursuant to
paragraph (a) above, each Broker-Dealer that submitted a Bid or Sell Order in an
Auction is required to allocate any funds received by it in connection with such
Auction pursuant to paragraph (b)(ii) above, and any Notes or Certificates
received by it in connection with such Auction pursuant to paragraph (b)(iii)
above among the Potential Noteholders or Potential Certificateholders, if any,
on whose behalf such Broker-Dealer submitted Bids, the Existing Noteholders or
Existing Certificateholders, if any, on whose behalf such Broker-Dealer
submitted Bids or Sell Orders in such Auction, and any Broker-Dealers identified
to it by the Auction Agent following such Auction pursuant to paragraph (a)(v)
or (a)(vi) above.
(d) On each Auction Date:
(i) each Potential Noteholder or Potential Certificateholder and
Existing Noteholder or Existing, Certificateholder with an Order in the
Auction on such Auction Date shall instruct its Participant as provided in
(b)(ii) or (b)(iii) above, as the case may be;
(ii) each Seller's Broker-Dealer that is not a Participant of the
Securities Depository shall instruct its Participant to deliver such Notes
or Certificates through the Securities Depository to a Buyer's
Broker-Dealer (or its Participant) identified to such Seller's
Broker-Dealer pursuant to (a)(v) above against payment therefor; and
(iii) each Buyer's Broker-Dealer that is not a Participant in the
Securities Depository shall instruct its Participant to pay through the
Securities Depository to Seller's Broker-Dealer (or its Participant)
identified following such Auction pursuant to (a)(vi) above in the amount
necessary to purchase Notes or Certificates to be purchased pursuant to
(b)(ii) above against receipt of such Notes or Certificates.
(e) On the Business Date following each Auction Date:
(i) each Participant for a Bidder in the Auction on such Auction Date
referred to in (d)(i) above shall instruct the Securities Depository to
execute the transactions described under (b)(ii) or (b)(iii) above for such
Auction, and the Securities Depository shall execute such transactions;
(ii) each Seller's Broker-Dealer or its Participant shall instruct the
Securities Depository to execute the transactions described in (d)(ii)
above for such Auction, and the Securities Depository shall execute such
transactions; and
(iii) each Buyer's Broker-Dealer or its Participant shall instruct the
Securities Depository to execute the transactions described in (d)(iii)
above for such Auction, and the Securities Depository shall execute such
transactions.
(f) If an Existing Noteholder selling Notes or an Existing
Certificateholder selling Certificates in an Auction fails to deliver such Notes
or Certificates (by authorized book-entry), a Broker-Dealer may deliver to the
Potential Noteholder or Potential Certificateholder on behalf of which it
submitted a Bid that was accepted a principal amount of Notes or Certificates
that is less than the principal amount of Notes or Certificates that otherwise
was to be purchased by such Potential Noteholder or Potential Certificateholder.
In such event, the principal amount of Notes or Certificates to be so delivered
shall be determined solely by such Broker-Dealer (but only in Authorized
Denominations). Delivery of such lesser principal amount of Notes or
Certificates shall constitute good delivery. Notwithstanding the foregoing terms
of this paragraph (f), any delivery or nondelivery of Notes or Certificates
which shall represent any departure from the results of an Auction, as
determined by the Auction Agent, shall be of no effect unless and until the
Auction Agent shall have been notified of such delivery or nondelivery in
accordance with the provisions of the Auction Agent Agreement and the
Broker-Dealer Agreements. Neither the Indenture Trustee nor the Auction Agent
will have any responsibility or liability with respect to the failure of a
Potential Noteholder or Potential Certificateholder, Existing Noteholder or
Existing Certificateholder or their respective Broker-Dealer or Participant to
take delivery of or deliver, as the case may be, the principal amount of Notes
or Certificates purchased or sold pursuant to an Auction or otherwise.
EXHIBIT B-1 TO BROKER-DEALER AGREEMENT
CLASSNOTES TRUST 1997-I
ASSET-BACKED NOTES, SERIES 1997-2
ORDER FORM
AUCTION DATE________________
ISSUE_______________________
SERIES______________________
The undersigned Broker-Dealer submits the following orders on behalf
of the Bidder(s) indicated below:
BIDS BY EXISTING OWNERS
PRINCIPAL AMOUNT OF
EXISTING NOTES (AUTHORIZED
NOTEHOLDER DENOMINATIONS ONLY) BID RATE
---------- -------------------- ---------
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
* Existing Noteholders may be described by name or other reference as determined
in the sole discretion of the Broker-Dealer.
EXHIBIT B-2 TO BROKER-DEALER AGREEMENT
CLASSNOTES TRUST 1997-I
AUCTION RATE ASSET BACKED CERTIFICATES
ORDER FORM
AUCTION DATE________________
ISSUE_______________________
SERIES______________________
The undersigned Broker-Dealer submits the following orders on behalf
of the Bidder(s) indicated below:
BIDS BY EXISTING OWNERS
PRINCIPAL AMOUNT
OF CERTICATES
EXISTING (AUTHORIZED
NOTEHOLDER DENOMINATIONS ONLY) BID RATE
---------- ------------------ ---------
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
* Existing Certificateholders may be described by name or other reference as
determined in the sole discretion of the Broker-Dealer.
CLASSNOTES TRUST 1997-I
ASSET-BACKED NOTES, SERIES 1997-2
AUCTION RATE ASSET-BACKED CERTIFICATES
BIDS BY POTENTIAL NOTEHOLDERS AND POTENTIAL CERTIFICATEHOLDERS
EXISTING PRINCIPAL AMOUNT OF
NOTEHOLDER OR NOTES/CERTIFICATES
EXISTING (AUTHORIZED
CERTIFICATEHOLDER DENOMINATIONS ONLY) BID RATE
----------------- -------------------- --------
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
===============================================================================
NOTES:
1. If one or more Orders covering in the aggregate more than the outstanding
principal amount of Notes or Certificates held by any Existing Noteholder
or Existing Certificateholder, respectively, are submitted, such Orders
shall be considered valid in the order of priority set forth in the Auction
Procedures.
2. A Hold or Sell Order may be placed only by an Existing Noteholder or
Existing Certificateholder covering a principal account of Notes or
Certificates, as the case may be, not greater than the principal amount
currently held by such Existing Noteholder or Existing Certificateholder.
3. Potential Noteholders or Potential Certificateholder may only make Bids,
each of which must specify a rate. If more than one Bid is submitted on
behalf of any Potential Noteholders or Potential Certificateholders, each
Bid submitted shall be a separate Bid with the rate specified herein.
4. Bids may contain no more than three figures to the right of the decimal
point (.001 of 1%):
5. An order must be submitted in principal amounts of $50,000 or integral
multiples thereof.
* Potential Noteholders or Potential Certificateholders may be described by name
or other reference as determined in the sole discretion of the Broker-Dealer.
NAME OF BROKER-DEALER:_______________________
AUTHORIZED SIGNATURE:_________________________
TOTAL NUMBER OF ORDERS ON THIS ORDER FORM:____
Submit to:_________________
Telephone: (___) ____________
Telecopier:(___) ____________
EXHIBIT C TO BROKER-DEALER AGREEMENT
CLASSNOTES TRUST 1997-I
ASSET-BACKED NOTES, SERIES 1997-2
AUCTION RATE ASSET-BACKED CERTIFICATES
NOTICE OF TRANSFER
(To be used only for transfers made other
than pursuant to an Auction)
We are (check one)
___________ the Existing Noteholder/Existing
Certificateholder indicated below*; or
___________ the Broker-Dealer for such Existing
Noteholder/Existing Certificateholder; or
___________ the Participant for such Existing
Noteholder/Existing Certificateholder.
We hereby notify you that such Existing Noteholder/Existing Certificateholder
has transferred $_________ (must be in units of $50,000) of Notes/Certificates
to _________________
-------------------------
(Existing Noteholder/
Existing Certificateholder)
-------------------------
(Name of Broker-Dealer)
-------------------------
(Name of Participant)
By: _____________________
Printed Name: ___________
Title:___________________
* Existing Noteholders/Existing Certificateholders may be described by name or
other reference as determined in the sole discretion of the Broker-Dealer.
EXHIBIT D TO BROKER-DEALER AGREEMENT
CLASSNOTES 1997-I
ASSET-BACKED NOTES, SERIES 1997-2
AUCTION RATE ASSET-BACKED CERTIFICATES
NOTICE OF A FAILURE TO DELIVER OR MAKE PAYMENT
COMPLETE EITHER I OR II.
I. We are a Broker-Dealer for Noteholder*/ Certificateholder*
___________ (the "Purchaser"), which purchased $___________ (must be in
units of Authorized Denominators) of the Notes/Certificates in the Auction
held on ___________ from the seller of such Notes/Certificates.
II. We are a Broker-Dealer for Noteholder*/ Certificateholder*
_________ (the "Seller"), which sold $________ (must be in units of
Authorized Denominators) of the Notes/Certificates in the Auction held on
___________ to the purchaser of such Notes/Certificates.
We hereby notify you that (check one)
__________________ the Seller failed to deliver such
Notes/Certificates to the Purchaser.
__________________ the Purchaser failed to make payment
to the Seller upon delivery of such
Notes/Certificates.
--------------------------
(Name of Broker-Dealer)
By:_______________________
Name:_____________________
Title:____________________
* Noteholders/certificateholders may be described by name or other reference as
determined in the sole discretion of the Broker-Dealer.