Execution Copy
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$140,000,000
THE MONEY STORE INC.
The Money Store SBA Loan-Backed Adjustable Rate Certificates,
Series 1996-2
UNDERWRITING AGREEMENT
December 19, 1996
Prudential Securities Incorporated
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The Money Store Inc., a New Jersey corporation (the "Company"), The
Money Store Investment Corporation, a New Jersey corporation, and The Money
Store of New York, Inc., a New York corporation ("TMSIC" and "MSNY",
respectively, each a "Seller" and together the "Sellers"), hereby confirm their
agreement with Prudential Securities Incorporated (the "Underwriter") with
respect to the delivery by the Sellers, of certificates entitled "The Money
Store SBA Loan-Backed Adjustable Rate Certificates, Series 1996-2, Class A (the
"Class A Certificates") and Class B (the "Class B Certificates," and together
with the Class A Certificates, the "Certificates"), to be issued pursuant to a
Pooling and Servicing Agreement, to be dated as of November 30, 1996 (the
"Pooling and Servicing Agreement"), among the Company, as Representative, TMSIC,
as servicer (in such capacity, the "Servicer"), MSNY and Marine Midland Bank, as
trustee ("Marine Midland" or, in its capacity as trustee under the Pooling and
Servicing Agreement, the "Trustee"). The initial aggregate principal amount of
the Class A Certificates shall be approximately $130,200,000, and the initial
aggregate principal amount of the Class B Certificates shall be approximately
$9,800,000. The Certificates represent the entire beneficial ownership interest
in a trust fund (the "Trust Fund") created by the Sellers which consists
primarily of the right to receive payments and other recoveries attributable to
certain unguaranteed interests (the "Unguaranteed Interests") in a pool of loans
(the "SBA Loans") made pursuant to Section 7(a) of the Small Business Act, as
amended, which are partially guaranteed by the U.S. Small Business
Administration (the "SBA").
As to any SBA Loan, the right to receive the guaranteed portion of the
principal balance thereof together with interest thereon at the per annum rate
in effect from time to time (less certain fees) is referred to herein as the
"Guaranteed Interest." The "Unguaranteed Interest" will equal as to any SBA
Loan, all payments and other recoveries on such SBA Loan not constituting the
Guaranteed Interest therein. The interest accruing on the guaranteed portion of
the principal balance of each SBA Loan in excess of the sum of the interest
payable to the related holder of the Guaranteed Interest net of certain fees is
hereinafter referred to as the "Excess Spread."
Prior to the delivery of the Certificates by the Sellers, and the
public offering thereof by the Underwriter, the Sellers and the Underwriter
shall enter into an agreement substantially in the form of Exhibit A hereto (the
"Pricing Agreement"). The Pricing Agreement shall be between the Sellers and the
Underwriter and shall specify such applicable information as is indicated in,
and be in substantially the form of, Exhibit A hereto. The offering of the Class
A Certificates will be governed by this Agreement, as supplemented by the
Pricing Agreement. From and after the date of the execution and delivery of the
Pricing Agreement, this Agreement shall be deemed to incorporate the Pricing
Agreement.
The Sellers, the Servicer, the Trustee and the SBA will enter into a
Multi-Party Agreement, dated November 30, 1996 (the "Multi-Party Agreement"),
which will set forth the relationship of the parties with respect to the SBA
Loans and the proceeds thereof and the consent of the SBA to the transactions
contemplated by the Pooling and Servicing Agreement.
As of November 30, 1996 (the "Cut-off Date"), the aggregate principal
amount of the Unguaranteed Interest of the SBA Loans equaled approximately
$108,321,336.47. Capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Pooling and Servicing Agreement.
The Sellers understand that the Underwriter proposes to make a public
offering of the Certificates as soon as the Underwriter deems advisable after
the Pricing Agreement has been executed and delivered.
Section 1. Representations and Warranties of the Company and the
Sellers.
(a) The Company and the Sellers represent and warrant to the
Underwriter as of the date hereof and, if the Pricing Agreement is executed on a
date other than the date hereof, as of the date of the Pricing Agreement (such
latter date being hereinafter referred to as the "Representation Date") as
follows:
(i) The Sellers have filed with the Securities
and Exchange Commission (the "Commission") a registration
statement on Form S-3 (No. 33-98734) including a prospectus, and such
amendments thereto as may have been required to the date hereof,
relating to the Certificates and the offering thereof from time to time
in accordance with Rule 415 under the Securities Act of 1933, as
amended (the "1933 Act"), and such registration statement, as amended,
has become effective. Such registration statement, as amended, and the
prospectus relating to the sale of the Certificates constituting a part
thereof as from time to time amended or supplemented (including any
prospectus supplement (the "Prospectus Supplement") filed with the
Commission pursuant to Rule 424 of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations") and any
information incorporated therein by reference) are respectively
referred to herein as the "Registration Statement" and the
"Prospectus." The conditions of Rule 415 under the 1933 Act have been
satisfied with respect to the Company and the Registration Statement.
(ii) At the time the Registration Statement became effective and
at the Representation Date, the Registration Statement complied and
will comply in all material respects with the requirements of the 1933
Act and the 1933 Act Regulations and did not and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus, at the Representation Date
(unless the term "Prospectus" refers to a prospectus which has been
provided to the Underwriter by the Company for use in connection with
the offering of the Certificates which differs from the Prospectus on
file at the Commission at the time the Registration Statement became
effective, in which case at the time it is first provided to the
Underwriter for such use) and at Closing Time referred to in Section 2
hereof, will not include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that the representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in
reliance upon and in conformity with information furnished to the
Company in writing by the Underwriter expressly for use in the
Registration Statement or Prospectus; and provided further, that
neither the Company nor the Sellers make any representations or
warranties as to any information in any Computational Materials (as
defined below) provided by the Underwriter to the Company pursuant to
Section 10. The conditions to the use by the Company of a registration
statement on Form S-3 under the 1933 Act, as set forth in the General
Instructions to Form S-3, have been satisfied with respect to the
Registration Statement and the Prospectus.
(iii) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as otherwise
stated therein, (A) there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Sellers and their subsidiaries considered
as one enterprise, whether or not arising in the ordinary course of
business, which would have a material adverse effect on the ability of
any Seller to perform its obligations under the Basic Documents (as
defined below) to which it is a party and (B) there have been no
transactions entered into by the Sellers or any of their subsidiaries,
other than those in the ordinary course of business, which would have a
material adverse effect on the ability of any Seller to perform its
obligations under this Agreement, the Pricing Agreement, the Pooling
and Servicing Agreement and, in the case of TMSIC and MSNY, the
Multi-Party Agreement (this Agreement, the Pricing Agreement, the
Pooling and Servicing Agreement, and the Multi-Party Agreement being
herein referred to, collectively, as the "Basic Documents").
(iv) Each of the Sellers has been duly organized and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation with all requisite power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its
obligations under the Basic Documents to which it is a party; and each
of the Sellers is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify would not have a material adverse effect on, (A)
the Seller's ability to perform its obligations under the Basic
Documents to which it is a party, or (B) the business, properties,
financial position, operations or results of operations of the Seller.
(v) Any person who signed this Agreement on behalf of any Seller,
was, as of the time of such signing and delivery, and is now duly
elected or appointed, qualified and acting, and the Agreement, as so
executed, is duly and validly authorized, executed, and constitutes the
valid, legal and binding agreement of the Company and each Seller,
enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights in general and by
general principles of equity regardless of whether such enforcement is
considered in a proceeding in equity or at law.
(vi) Each Basic Document has been duly and validly authorized by
each Seller that is a party thereto and, when executed and delivered by
each Seller and duly and validly authorized, executed and delivered by
the other parties thereto, will constitute, the valid and binding
agreement of each such Seller, enforceable in accordance with their
terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights in general and by general principles
of equity regardless of whether such enforcement is considered in a
proceeding in equity or at law; and such Basic Documents conform in all
material respects to the statements relating thereto contained in the
Prospectus.
(vii) The Certificates have been duly and validly authorized by
the Servicer and, when executed and delivered by the Servicer and
authenticated by the Trustee as specified in the Pooling and Servicing
Agreement and delivered to the Underwriter pursuant to this Agreement,
the Certificates will be duly and validly issued and outstanding and
entitled to the benefits of the Pooling and Servicing Agreement; and
the Certificates conform in all material respects to all statements
relating thereto contained in the Prospectus.
(viii) Neither the issuance or delivery of the Certificates, nor
the consummation of any other of the transactions herein contemplated
or in any other Basic Document, nor the execution and delivery by each
Seller of the Basic Documents to which it is a party, nor the
fulfillment of the terms of the Certificates or each such Basic
Document will result in the breach of any term or provision of the
charter or by-laws of any Seller, and no Seller is in breach or
violation of or in default (nor has an event occurred which with notice
or lapse of time or both would constitute a default) under the terms of
(A) any material obligation, agreement, covenant or condition contained
in any material contract, indenture, loan agreement, note, lease or
other material instrument to which such Seller is a party or by which
it may be bound, or to which any of the property or assets of such
Seller is subject, or (B) any law, decree, order, rule or regulation
applicable to such Seller or the SBA Loans of any court or supervisory,
regulatory, administrative or governmental agency, body or authority,
or arbitrator having jurisdiction over such Seller or their properties
or the SBA Loans, the default in or the breach or violation of which
would have a material adverse effect on such Seller or the ability of
such Seller to perform its obligations under the Basic Documents to
which it is a party; and neither the issuance or delivery of the
Certificates, nor the consummation of any other of the transactions
herein contemplated, nor the fulfillment of the terms of the
Certificates or the Basic Documents will result in such a breach,
violation or default which would have such a material adverse effect.
(ix) Except as described in the Prospectus, there is no action,
suit or proceeding against or investigation of any Seller, now pending,
or, to the knowledge of any Seller, threatened against any Seller,
before any court, governmental agency or body (A) which is required to
be disclosed in the Prospectus (other than as disclosed therein) or (B)
(1) asserting the invalidity of any Basic Document or the Certificates,
(2) seeking to prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by the Basic
Documents, (3) which would materially and adversely affect the
performance by any Seller of its obligations under the Basic Documents
to which it is a party, or the validity or enforceability of any Basic
Document or the Certificates or (4) seeking to adversely affect the
federal income tax attributes of the Certificates described in the
Prospectus; all pending legal or governmental proceedings to which any
Seller is a party or of which any of its property or assets is the
subject which are not described in the Prospectus, including ordinary
routine litigation incidental to the business, are, considered in the
aggregate, not material to such Seller's ability to perform its
obligations under the Basic Documents to which it is a party.
(x) Each Seller possesses such licenses, certificates, authorities
or permits issued by the appropriate state or federal regulatory
agencies or governmental bodies necessary to conduct the businesses now
conducted by it (except where the failure to possess any such license,
certificate, authority or permit would not materially and adversely
affect the holders of the Certificates) and no Seller has received any
notice of proceedings relating to the revocation or modification of any
such license, certificate, authority or permit which, singly or in the
aggregate, if the subject of any unfavorable decision, ruling or
finding, would materially and adversely affect the ability of such
Seller to perform its obligations under the Basic Documents.
(xi) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the
issuance or sale of the Certificates hereunder, except such as may be
required under the 1933 Act or the 1933 Act Regulations or state
securities laws.
(xii) At the time of execution and delivery of the Pooling and
Servicing Agreement by the Company, the Sellers and the Trustee, the
Trustee will have acquired good title on behalf of the Trust Fund to
the Unguaranteed Interests, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity, and, upon
delivery to the Underwriter of the Certificates, the Underwriter will
have good and marketable title to the Certificates free and
clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(xiii) The transfer of the Unguaranteed Interests to the Trust Fund
at Closing Time will be treated by the Sellers for financial accounting
and reporting purposes as a sale of assets and not as a pledge of
assets to secure debt.
(xiv) Any taxes, fees and other governmental charges that are
assessed and due in connection with the execution, delivery and
issuance of the Basic Documents and the Certificates which have become
due or will become due on or prior to Closing Time shall have been paid
at or prior to Closing Time.
(xv) The Trust Fund is not required to be registered as an
"investment company" under the Investment Company Act of 1940 (the
"1940 Act").
(b) Any certificate signed by any officer of either Seller and
delivered to the Underwriter or counsel for the Underwriter shall be deemed a
representation and warranty by such Seller as to the matters covered thereby.
Section 2. Delivery to the Underwriter; Closing.
(a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, each Seller
agrees to deliver the Certificates to the Underwriter. In the event that the
initial remittance rates and prices for each Class of Certificates have not been
agreed upon and the Pricing Agreement has not been executed and delivered by all
parties thereto by the close of business on the fourth business day following
the date of this Agreement, this Agreement shall terminate forthwith, without
liability of any party to any other party, unless otherwise agreed upon by the
Underwriter and the Sellers.
(b) Delivery of the Certificates shall be made at the offices of
Stroock & Stroock & ▇▇▇▇▇, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at
such other place as shall be agreed upon by the Underwriter and the Sellers, at
11:00 A.M., New York City time, on December 23, 1996, or such other time not
later than ten business days after such date as shall be agreed upon by the
Underwriter and the Sellers (such time and date of payment and delivery being
herein called "Closing Time").
(c) The Certificates will initially be represented as follows:
(i) The Class A Certificates will initially be represented by one
or more certificates registered in the name of Cede & Co., the nominee
of The Depository Trust Company ("DTC").
(ii) The Class B Certificates will initially be represented by
one or more certificates registered in the name of Cede & Co., the
nominee of DTC.
provided, however, that one Class B Certificate in an initial
principal amount of less than $1,000 (the "Tail Certificate") may be
issued in definitive form registered in the name of the Underwriter or
its designee.
For purposes of this Agreement, all Certificates initially represented
by one or more certificates registered in the name of Cede & Co., the nominee of
DTC, shall be referred to herein, collectively, as the "DTC Certificates."
The interests of beneficial owners of the DTC Certificates will be
represented by book entries on the records of DTC and participating members
thereof. Definitive certificates evidencing the Certificates will be available
in exchange for DTC Certificates only under the limited circumstances specified
in the Pooling and Servicing Agreement. The DTC Certificates and Tail
Certificate to be purchased by the Underwriter will be delivered by the Sellers
to the Underwriter (which delivery in the case of the DTC Certificates shall be
made through the facilities of DTC) against payment of the purchase price
therefor. The Underwriter hereby agrees, subject to the terms, conditions and
provisions hereof, to purchase from the Sellers (x) the Class A Certificates, at
a price of 99.625%, such price being equal to 100% less an underwriting discount
of 0.375%, and (y) the Class B Certificates, at the price of 99.50% equal to
100% less an underwriting discount of 0.50%. The purchase price shall be paid by
the Underwriter by a same day federal funds wire payable to the order of the
Sellers. The Certificates will be made available for examination by the
Underwriter not later than 10:00 A.M. on the last business day prior to Closing
Time.
(d) The Class A Certificates and the Class B Certificates shall be
offered to the public from time to time for sale in negotiated transactions or
otherwise, at prices determined at the time of sale.
Section 3. Covenants of the Company and the Sellers.
The Company and the Sellers covenant with the Underwriter as follows:
(a) The Sellers will promptly notify the Underwriter, and confirm
the notice in writing, (i) of any amendment to the Registration Statement;
(ii) of any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation or threatening of any proceedings for that purpose; and (iv) of
the receipt by either Seller of any notification with respect to the
suspension of the qualification of the Certificates for sale in any
jurisdiction or the initiation or threatening of any proceedings for that
purpose. The Sellers will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) The Sellers will give the Underwriter notice of their
intention to file or prepare any amendment to the Registration Statement or
any amendment or supplement to the Prospectus (including any revised
prospectus which the Sellers propose for use by the Underwriter in
connection with the offering of the Certificates which differs from the
prospectus on file at the Commission at the time the Registration Statement
becomes effective, whether or not such revised prospectus is required to be
filed pursuant to Rule 424(b) of the 1933 Act Regulations), will furnish
the Underwriter with copies of any such amendment or supplement a
reasonable amount of time prior to such proposed filing or use, as the case
may be, and, unless required by law to do so, will not file any such
amendment or supplement or use any such prospectus to which the Underwriter
or counsel for the Underwriter shall reasonably object.
(c) The Sellers will deliver to the Underwriter as many signed
and as many conformed copies of the Registration Statement as originally
filed and of each amendment thereto (in each case including exhibits filed
therewith) as the Underwriter may reasonably request.
(d) The Sellers will furnish to the Underwriter, from time to
time during the period when the Prospectus is required to be delivered
under the 1933 Act or the Securities Exchange Act of 1934, as amended (the
"1934 Act"), such number of copies of the Prospectus (as amended or
supplemented) as the Underwriter may reasonably request for the purposes
contemplated by the 1933 Act or the 1934 Act or the respective applicable
rules and regulations of the Commission thereunder.
(e) If any event shall occur as a result of which it is
necessary, in the reasonable opinion of counsel for the Underwriter, to
amend or supplement the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, the Sellers will forthwith amend or supplement
the Prospectus (in form and substance satisfactory to counsel for the
Underwriter) so that, as so amended or supplemented, the Prospectus will
not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to a
purchaser, not misleading, and the Sellers will furnish to the Underwriter
a reasonable number of copies of such amendment or supplement.
(f) The Sellers will endeavor, in cooperation with the
Underwriter, to qualify the Certificates for offering and sale under the
applicable securities laws of such states and other jurisdictions of the
United States as the Underwriter may designate; provided, however, that no
Seller shall be obligated to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified. In each jurisdiction in which
the Certificates have been so qualified, each Seller will file such
statements and reports as may be required by the laws of such jurisdiction
to continue such qualification in effect for a period of not less than one
year from the date hereof.
(g) The Sellers will file with the Commission such reports on
Form SR as may be required pursuant to Rule 463 under the 1933 Act.
(h) So long as any Certificates shall be outstanding, the Sellers
will deliver to the Underwriter, as promptly as practicable, such
information concerning the Sellers or the Certificates as the Underwriter
may reasonably request from time to time.
Section 4. Payment of Expenses. The Sellers will pay all expenses
incident to the performance of their obligations under this Agreement, including
(i) the printing (or other reproducing) and filing of the Registration Statement
as originally filed and of each amendment thereto (other than amendments
relating to the filing of Computational Materials pursuant to Section 10); (ii)
the reproducing of the Basic Documents; (iii) the preparation, printing,
issuance and delivery of the certificates for the DTC Certificates to the
Underwriter; (iv) the fees and disbursements of (A) the Underwriter's counsel,
(B) KPMG Peat Marwick, accountants for the Company and issuer of the comfort
letter, (C) the Trustee and its counsel and (D) DTC in connection with the
book-entry registration of the DTC Certificates; (v) the qualification of the
Certificates under state securities laws in accordance with the provisions of
Section 3(f) hereof, including filing fees and the fees and disbursements of
counsel for the Underwriter in connection therewith and in connection with the
preparation of the Blue Sky Survey; (vi) the printing (or other reproducing) and
delivery to the Underwriter of copies of the Registration Statement as
originally filed and of each amendment thereto, of each preliminary prospectus
and of the Prospectus and any amendments or supplements thereto; (vii) the fees
charged by each of ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's") and ▇▇▇▇ & ▇▇▇▇▇▇
Credit Rating Co. ("Duff & ▇▇▇▇▇▇") for rating the Certificates; and (viii) the
reproducing and delivery to the Underwriter of copies of the Blue Sky Survey.
If this Agreement is terminated by the Underwriter in accordance with
the provisions of Section 5 or Section 9(a)(i), the Sellers shall reimburse the
Underwriter for all of its reasonable out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriter.
Section 5. Conditions of the Underwriter's Obligations.
The obligations of the Underwriter hereunder are subject to the
accuracy of the representations and warranties of the Company and the Sellers
herein contained, to the performance by Sellers of their respective obligations
hereunder, and to the following further conditions:
(a) The Registration Statement shall have become effective
and, at Closing Time, no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission. As of the
Closing Time, the Prospectus shall have been filed with the Commission in
accordance with Rule 424 of the 1933 Act Regulations.
(b) At Closing Time, the Underwriter shall have received:
(i) The favorable opinion, dated as of Closing Time, of
Stroock & Stroock & ▇▇▇▇▇, counsel for the Underwriter, to the effect
that:
(A) The Registration Statement is effective under
the 1933 Act, and, to the best of their knowledge and
information, no stop order suspending the effectiveness of the
Registration Statement has been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission.
(B) At the time the Registration Statement became
effective and at the Representation Date, the Registration
Statement (other than the financial, numerical, statistical and
quantitative information included therein, as to which no opinion
need be rendered) complied as to form in all material respects
with the requirements of the 1933 Act and the Rules and
Regulations thereunder.
(C) The information in the Prospectus under
"Description of the Certificates" and "The Agreements" and the
information in the Prospectus Supplement under "Description of
the Agreement and the Certificates" insofar as they constitute
summaries of certain provisions of the Certificates and the
Pooling and Servicing Agreement, summarizes fairly such
provisions.
(D) The information in the Prospectus under
"Summary of Terms -- Federal Income Tax Consequences," "Summary
of Terms -- ERISA Considerations," "Federal Income Tax
Consequences," "ERISA Considerations," "Legal Aspects of the SBA
Loans," and "Risk Factors -- The Status of the SBA Loans in the
Event of Bankruptcy of an Originator" and in the Prospectus
Supplement under "Summary of Terms -- Tax Considerations,"
"Summary of Terms -- ERISA Considerations," "Federal Income Tax
Consequences," and "ERISA Considerations," to the extent that
they constitute matters of federal, New York or California law,
summaries of legal matters, documents or proceedings or legal
conclusions, has been reviewed by them and is correct in all
material respects.
(E) TMSIC and MSNY have been duly organized and
are validly existing and are in good standing under the laws of
their jurisdiction of incorporation. TMS SBA Holdings, Inc. (the
"Spread Account Depositor") has been duly organized and is
validly existing and in good standing under the laws of the State
of Delaware.
(F) Each Seller has the power to engage in the
transactions contemplated by this Agreement, the Pooling and
Servicing Agreement, the Pricing Agreement, the Certificates and,
with respect to TMSIC and MSNY, the Multi-Party Agreement, and
has all requisite power, authority and legal right to execute and
deliver this Agreement, the Pooling and Servicing Agreement, the
Pricing Agreement, the Certificates and, with respect to TMSIC
and MSNY, the Multi-Party Agreement, (and any other documents
delivered in connection therewith) and to perform and observe the
terms and conditions of such instruments.
(G) The Pooling and Servicing Agreement, the
Multi-Party Agreement, the Certificates, the Pricing Agreement
and this Agreement each have been duly authorized, executed and
delivered by each of the Sellers that is a party thereto.
Assuming due authorization, execution and delivery by the other
parties thereto, the Pooling and Servicing Agreement, the
Certificates, the Multi-Party Agreement, the Pricing Agreement
and this Agreement are legal, valid and binding agreements
enforceable in accordance with their respective terms against
each Seller that is a party thereto, as the case may be, subject
(a) to the effect of bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting creditors'
rights generally and court decisions with respect thereto, (b) to
the understanding that no opinion is expressed as to the
application of equitable principles in any proceeding, whether at
law or in equity, and (c) to limitations of public policy under
applicable securities laws as to rights of indemnity and
contribution thereunder.
(H) This Agreement and the Pooling and Servicing
Agreement have been duly authorized, executed and delivered by
the Company. Assuming due authorization, execution and delivery
by the other parties thereto, this Agreement and the Pooling and
Servicing Agreement are legal, valid and binding agreements
enforceable in accordance with their terms against the Company,
subject (a) to the effect of bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and similar
laws relating to or affecting creditors' rights generally, (b) to
the understanding that no opinion is expressed as to the
application of equitable principles in any proceeding, whether at
law or in equity, and (c) to limitations of public policy under
applicable securities laws as to rights of indemnity and
contribution thereunder.
(I) No consent, approval, authorization or order
of any court or governmental agency or body is required for the
execution, delivery and performance by any Seller of, or
compliance by any Seller with, the Pooling and Servicing
Agreement, the Pricing Agreement, this Agreement and, with
respect to TMSIC and MSNY, the Multi-Party Agreement, or the
offer, issuance, sale or delivery of the Certificates, or the
consummation of any other transactions by the Sellers
contemplated by the Pooling and Servicing Agreement, the Pricing
Agreement, this Agreement and, with respect to TMSIC and MSNY,
the Multi-Party Agreement, except as may be required under the
blue sky laws of any jurisdiction (as to which such counsel need
not opine) and such other approvals as have been obtained.
(J) Neither the transfer of the Unguaranteed
Interests to the Trust Fund, the consummation of the transactions
contemplated by, nor the fulfillment of the terms of, the Pooling
and Servicing Agreement, the Multi-Party Agreement, the Pricing
Agreement and this Agreement or the Certificates, conflicts or
will conflict with or results or will result in a breach of or
constitutes or will constitute a default under (a) the
Certificate of Incorporation or Bylaws of any Seller, (b) the
terms of any material indenture or other material agreement or
instrument of which counsel has knowledge to which any Seller is
a party or by which it is bound or to which it is subject or (c)
any statute or order, rule, regulation, writ, injunction or
decree of which counsel has knowledge of any court, governmental
authority or regulatory body to which any Seller is subject or by
which it is bound.
(K) The sale of the Certificates and the delivery
of each SBA Note and Mortgage as and in the manner contemplated
by the Underwriting Agreement and the Pooling and Servicing
Agreement is sufficient fully to transfer to the Trustee for the
benefit of the Certificateholders all right, title and interest
of the applicable Seller in and to the Unguaranteed Interest of
each SBA Loan, including, without limitation, the right to
enforce each such SBA Loan in accordance with its terms to the
extent enforceable by the related Seller at the time of such sale
and delivery and subject to the provisions of the Multi-Party
Agreement. With respect to the transfer of the SBA Loans by the
Sellers, such counsel need express no opinion as to (i) except
for transfers by MSNY, whether the laws of the State of New York
would apply to the transfer of the related SBA Loans or (ii) the
effectiveness of the transfer of the SBA Loans under the laws of
the jurisdiction in which TMSIC is located or the jurisdiction in
which the SBA Loans were originated or the right of the Trustee
to enforce such SBA Loans.
(L) The Certificates, assuming due execution by
the Sellers, due authorization by the Trustee, and delivery and
payment therefore pursuant to the Underwriting Agreement, will be
validly issued and outstanding and entitled to the benefits of
the Pooling and Servicing Agreement.
(M) Assuming compliance with all provisions of the
Pooling and Servicing Agreement, for federal income tax purposes,
the Trust Fund will be classified as a "grantor trust" and not as
an association taxable as a corporation. The "Spread" (as defined
in the Registration Statement) will be treated as "Stripped
Coupons" within the meaning of Section 1286 of the Internal
Revenue Code of 1986, as amended (the "Code"). A portion of the
interest accrued on each SBA Loan will be treated as a "Stripped
Coupon" purchased by the Class B Certificateholders. Each Class A
Certificateholder will be treated as owning its pro rata
percentage interest in the principal of, and interest payable on,
the Unguaranteed Interest of each SBA Loan (minus the portion of
the interest payable on such SBA Loan that is treated as Spread
or as a Stripped Coupon purchased by the Class B
Certificateholders) and such interest in the Unguaranteed
Interest of each SBA Loan will be treated as a "Stripped Bond"
within the meaning of Section 1286 of the Code. Each Class B
Certificateholder will be treated as owning its pro rata
percentage interest in the principal of the Unguaranteed Interest
of each SBA Loan, plus a disproportionate share of the interest
payable on each SBA Loan. Additionally, the Trust Fund will not
be subject to New York State income or franchise tax.
(N) Neither the qualification of the Pooling and
Servicing Agreement under the Trust Indenture Act of 1939, as
amended, nor the registration of the Trust Fund created by such
Agreement under the Investment Company Act of 1940, as amended,
is presently required.
In rendering such opinion, Stroock & Stroock & ▇▇▇▇▇
may rely on certificates of responsible officers of the Company, the
Sellers, the Trustee, and public officials or, as to matters of law
other than New York, California or Federal law, on opinions of other
counsel (copies of which opinions shall be delivered to you).
(ii) The favorable opinion, dated as of Closing Time,
of corporate counsel for the Sellers and the Company, in form and
substance satisfactory to counsel for the Underwriter, to the effect
that:
(A) Each of TMSIC and the Company has been duly
organized and is validly existing and is in good standing under
the laws of the State of New Jersey.
(B) Each Seller has the power to engage in the
transactions contemplated by this Agreement, the Pooling and
Servicing Agreement, the Pricing Agreement, the Certificates and,
with respect to TMSIC and MSNY, the Multi-Party Agreement, and
has all requisite power, authority and legal right to execute and
deliver this Agreement, the Pooling and Servicing Agreement, the
Pricing Agreement, the Certificates and, with respect to TMSIC
and MSNY, the Multi-Party Agreement (and any other documents
delivered in connection therewith) and to perform and observe the
terms and conditions of such instruments.
(C) This Agreement, the Pooling and Servicing
Agreement, the Multi-Party Agreement, the Pricing Agreement and
the Certificates each have been duly authorized, executed and
delivered by each of the Sellers that is a party thereto and,
assuming due authorization, execution and delivery by the other
parties thereto, are legal, valid and binding agreements of each
such Seller, as the case may be, and assuming such agreements
were governed by the laws of the State of New Jersey, would be
enforceable in accordance with their respective terms against
each such Seller, as the case may be, subject (a) to the effect
of bankruptcy, insolvency, reorganization, moratorium and similar
laws relating to or affecting creditors' rights generally and
court decisions with respect thereto, (b) to the understanding
that no opinion is expressed as to the application of equitable
principles in any proceeding, whether at law or in equity, and
(c) to limitations of public policy under applicable securities
laws as to rights of indemnity and contribution thereunder.
(D) Neither the transfer of the Unguaranteed
Interests to the Trust Fund, the consummation of the transactions
contemplated by, nor the fulfillment of the terms of, this
Agreement, the Pooling and Servicing Agreement, the Multi-Party
Agreement, the Pricing Agreement and the Certificates, (A)
conflicts or will conflict with or results or will result in a
breach of or constitutes or will constitute a default under the
Certificates of Incorporation or Bylaws of any Seller, or the
terms of any material indenture or other material agreement or
instrument of which such counsel has knowledge to which any
Seller is a party or by which it is bound or to which it is
subject, or (B) results in, or will result in the creation or
imposition of any lien or encumbrance upon the Trust Fund or upon
the related Certificates, except as otherwise contemplated by the
Pooling and Servicing Agreement, or (C) any statute or order,
rule, regulations, writ, injunction or decree of any court,
governmental authority or regulatory body to which any Seller is
subject or to which it is bound.
(E) Except as set forth in the Prospectus
Supplement, there is no action, suit, proceeding or investigation
pending or, to the best of such counsel's knowledge, threatened
against any Seller which, in such counsel's judgment, either in
any one instance or in the aggregate, may result in any material
adverse change in the business, operation, financial condition,
properties or assets of any Seller or in any material impairment
of the right or ability of any Seller to carry on its business
substantially as now conducted or result in any material
liability on the part of any Seller or which would draw into
question the validity of this Agreement, the Pricing Agreement,
the Certificates, the Pooling and Servicing Agreement or, with
respect to TMSIC and MSNY, the Multi- Party Agreement, or of any
action taken or to be taken in connection with the transactions
contemplated thereby, or which would be likely to impair
materially the ability of any Seller to perform under the terms
of this Agreement, the Pooling and Servicing Agreement, the
Pricing Agreement, the Certificates or, with respect to TMSIC and
MSNY, the Multi-Party Agreement.
(F) No consent, approval, authorization or order
of any court or governmental agency or body is required for the
execution, delivery and performance by any Seller of, or
compliance by any Seller with, this Agreement, the Pooling and
Servicing Agreement, the Pricing Agreement, the Certificates or,
with respect to TMSIC and MSNY, the Multi-Party Agreement, or the
consummation of the transactions contemplated therein, except
such as may be required under the blue sky laws of any
jurisdiction and such other approvals as have been obtained.
(G) The delivery of each SBA Loan as and in the
manner contemplated by the Pooling and Servicing Agreement is
sufficient fully to transfer to the Trustee for the benefit of
the Certificateholders all right, title and interest of the
Sellers in and to each such Unguaranteed Interest including,
without limitation, the right to enforce each such SBA Loan in
accordance with its terms to the extent enforceable by the
Sellers at the time of such delivery.
(iii) The favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., counsel for the SBA, in form
and substance satisfactory to counsel for the Underwriter, to the
effect that:
(A) the SBA has the full power and authority and
the legal right to execute, deliver and perform the Multi-Party
Agreement, and all necessary action has been taken by the SBA to
authorize the execution, delivery and performance of the
Multi-Party Agreement by the SBA. The SBA officers executing and
delivering the Multi-Party Agreement have full authority to act
on behalf of the SBA. The Multi-Party Agreement has been duly
executed and delivered on behalf of the SBA and constitutes the
legal, valid and binding obligation of the SBA, enforceable
against the SBA in accordance with its terms.
(B) The execution, delivery and performance of the
Multi-Party Agreement by the SBA will not violate any (i)
organizational or governing documents of the SBA, any law,
treaty, rule or regulation or a final binding determination of an
arbitrator or a determination of a court or other governmental
authority (whether such governmental authority is the Federal
Government of the United States or any other nation or
government, or other political subdivision thereof, or any entity
exercising executive, legislative, judicial, regulatory, or
administrative functions of or pertaining to government) in each
case applicable to or binding upon the SBA or its property or to
which the SBA or any of its property is subject or (ii) provision
of any security issued by SBA or any agreement, instrument or
undertaking to which the SBA is a party or by which the SBA or
any of its property is bound.
In rendering this opinion, such counsel may rely,
as to matters of fact, on certificates of responsible officers of
the Company, the Sellers, the Trustee, the SBA and public
officials. Such opinion may assume the due authorization,
execution and delivery of the instruments and documents referred
to therein by the parties thereto other than the SBA.
(iv) The favorable opinion, dated as of Closing
Time, of Winston & ▇▇▇▇▇▇, counsel for the Trustee, in form and
substance satisfactory to counsel for the Underwriter.
(v) The favorable opinion, dated as of Closing
Time, of ▇▇▇▇ ▇. ▇▇▇▇▇, Esq., counsel for the Company, relating
to the due organization, valid existence and good standing of the
Company, the corporate power and authority of the Company to own
its assets, conduct its business and perform its obligations
under this Agreement, the due execution and binding nature of
this Agreement and the non-contravention of this Agreement with
respect to the Company's organizational documents, law, the
Company's other agreements, all in customary form.
In giving its opinion required by subsection (b)(1) of this Section,
Stroock & Stroock & ▇▇▇▇▇ shall additionally state that nothing has come to its
attention that has caused it to believe that the Registration Statement, at the
time it became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus, at the
Representation Date (unless the term "Prospectus" refers to a prospectus which
has been provided to the Underwriter by the Company for use in connection with
the offering of the Certificates which differs from the Prospectus on file at
the Commission at the Representation Date, in which case at the time it is first
provided to the Underwriter for such use) or at Closing Time, included an untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading (other than the financial, numerical,
statistical and quantitative information contained therein as to which such
counsel need express no view).
(c) At Closing Time the Underwriter shall have received from
Stroock & Stroock & ▇▇▇▇▇, counsel for the Underwriter, a letter, dated as
of Closing Time, authorizing the Underwriter to rely upon each opinion
delivered by Stroock & Stroock & ▇▇▇▇▇ to each of ▇▇▇▇▇'▇ and Duff & ▇▇▇▇▇▇
in connection with the issuance of the Certificates as though each such
opinion was addressed to the Underwriter and attaching a copy of each such
opinion.
(d) At Closing Time there shall not have been, since the date
hereof or since the respective dates as of which information is given in
the Registration Statement and the Prospectus, any material adverse change
in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of any Seller and their subsidiaries
considered as one enterprise, whether or not arising in the ordinary course
of business, and the Underwriter shall have received a certificate signed
by one or more duly authorized officers of each Seller, dated as of Closing
Time, to the effect that (i) there has been no such material adverse
change; (ii) the representations and warranties in Section 1(a) hereof are
true and correct in all material respects with the same force and effect as
though expressly made at and as of Closing Time; (iii) each of the Sellers
has complied with all agreements and satisfied all conditions on its part
to be performed or satisfied at or prior to Closing Time; and (iv) no stop
order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been initiated or
threatened by the Commission.
(e) At or prior to the delivery of the Prospectus Supplement, the
Underwriter shall have received from KPMG Peat Marwick a letter dated as of
such 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 (i) certain amounts, percentages and
financial information relating to the Servicer's servicing portfolio which
are included in the Prospectus Supplement and which are specified by the
Underwriter, and have found such amounts, percentages and financial
information to be in agreement with the relevant accounting, financial and
other records of such Seller identified in such letter and (ii) certain
information regarding the SBA Loans and the SBA Files which are specified
by the Underwriter and contained in the Prospectus Supplement and setting
forth the results of such specified procedures.
(f) At Closing Time, the Underwriter shall have received from the
Trustee a certificate signed by one or more duly authorized officers of the
Trustee, dated as of Closing Time, as to the due acceptance of the Pooling
and Servicing Agreement by the Trustee and the due authentication of the
Certificates by the Trustee and such other matters as the Underwriter shall
request.
(g) At Closing Time, the Underwriter shall have received a
certificate signed by one or more duly authorized officers of each of the
Sellers, dated as of Closing Time to the effect that:
(i) the representations and warranties of each Seller in the
Pooling and Servicing Agreement are true and correct in all material
respects at and on the Closing Date, with the same effect as if made
on the Closing Date;
(ii) each Seller has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
in connection with the sale and delivery of the Certificates;
(iii) all statements and information contained in the
Prospectus Supplement under the captions "The Sellers," "The SBA Loan
Pool" and "The SBA Loan Program," are true and accurate in all
material respects and nothing has come to such officer's attention
that would lead him to believe that any of the specified sections
contains any untrue statement of a material fact or omits to state any
material fact necessary in order to make the statements and
information therein, in the light of the circumstances under which
they were made, not misleading;
(iv) the information set forth in the SBA Loan Schedule
required to be furnished pursuant to the Pooling and Servicing
Agreement is true and correct in all material respects;
(v) the copies of the Charter and By-laws of each Seller
attached to such certificate are true and correct and, are in full
force and effect on the date thereof;
(vi) except as may otherwise be disclosed in the Prospectus,
there are no actions, suits or proceedings pending (nor, to the best
knowledge of such officers, are any actions, suits or proceedings
threatened), against or affecting either Seller which if adversely
determined, individually or in the aggregate, would adversely affect
the Sellers' obligations under the Pooling and Servicing Agreement,
the Pricing Agreement, this Agreement or, with respect to TMSIC and
MSNY, the Multi-Party Agreement;
(vii) each person who, as an officer or representative of
any Seller signed (a) this Agreement, (b) the Pooling and Servicing
Agreement, (c) the Certificates issued thereunder, (d) the Multi-
Party Agreement (e) the Pricing Agreement or (f) any other document
delivered prior hereto or on the date hereof in connection with the
purchase described in this Agreement and the Pooling and Servicing
Agreement, was, at the respective times of such signing and delivery,
and is now duly elected or appointed, qualified and acting as such
officer or representative;
(viii) except as otherwise set forth in the Pooling and
Servicing Agreement, each of the SBA Loans referred to in the Pooling
and Servicing Agreement was originated by one of the Sellers;
(ix) a certified true copy of the resolutions of the board
of directors of each Seller with respect to the sale of the
Certificates subject to this Agreement and the Pooling and Servicing
Agreement, which resolutions have not been amended and remain in full
force and effect;
(x) all payments received with respect to the Unguaranteed
Interests after the Cut-Off Date have been deposited in the Principal
and Interest Account, and are, as of the Closing Date, in the
Principal and Interest Account;
(xi) Each Seller has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
in connection with the issuance, sale and delivery of the SBA Loans
and the Certificates;
(xii) all statements contained in the Prospectus with
respect to the Company and the Sellers are true and accurate in all
material respects and nothing has come to such officer's attention
that would lead such officer to believe that the Prospectus contains
any untrue statement of a material fact or omits to state any material
fact;
(h) At Closing Time, the Class A Certificates shall have been
rated "Aaa" by ▇▇▇▇▇'▇ and "AAA" by Duff & ▇▇▇▇▇▇ and the Class B
Certificates shall have been rated "A2" by ▇▇▇▇▇'▇ and "A" by Duff &
▇▇▇▇▇▇.
(i) At Closing Time, the Underwriter shall have received a copy
of the Spread Account Agreement, duly executed and delivered by the parties
thereto, accompanied by an opinion of counsel relating to the due
incorporation, valid existence and good standing of the Spread Account
Depositor, the corporate power and authority of the Spread Account
Depositor to own its assets, conduct its business and perform its
obligations under the Spread Account Agreement, and the due execution and
binding nature of the Spread Account Agreement with respect to the Spread
Account Depositor's organizational documents, law and the Spread Account
Depositor's other agreements, all in customary form.
(j) At Closing Time, counsel for the Underwriter shall have been
furnished with such documents and opinions as they may reasonably require
for the purpose of enabling them to pass upon the issuance and delivery of
the Certificates as herein contemplated and related proceedings, or in
order to evidence the accuracy of any of the representations or warranties,
or the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance and sale
of the Certificates as herein contemplated shall be satisfactory in form
and substance to the Underwriter and counsel for the Underwriter.
(k) On or before the Closing Time the Sellers shall have
delivered to the Trustee, to hold in trust for the benefit of the holders
of the Certificates, SBA Loans with aggregate outstanding unguaranteed
interests as of the Cut-Off Date of $108,321,336.47.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Underwriter by notice to the Sellers at any time at or
prior to Closing time, and such termination shall be without liability of
any party to any other party except as provided in Section 4 hereof.
Section 6. Indemnification.
(a) The Company and the Sellers 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 1933 Act as
follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any untrue statement or omission described in clause
(i) above, or any such alleged untrue statement or omission, if such
settlement is effected with the written consent of each Seller; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the reasonable fees and
disbursements of counsel chosen by the Underwriter), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any untrue statement or
omission described in clause (i) above, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to
any loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with the information referred to in clauses (x),
(y) and (z) of the immediately following paragraph; provided, further, such
indemnity with respect to the Prospectus or any preliminary prospectus shall not
inure to the benefit of the Underwriter (or person controlling such Underwriter)
from whom the person suffering any such loss, claim, damage or liability
purchased the Certificates which are the subject thereof if such person did not
receive a copy of the Prospectus at or prior to the confirmation of the sale of
such Certificates to such person in any case where such delivery is required by
the 1933 Act and the untrue statement or omission of a material fact contained
in the Prospectus or any preliminary prospectus was corrected in the Prospectus.
(b) The Underwriter agrees to indemnify and hold harmless the Company
and the Sellers their directors, each of the Company's and Sellers' officers who
signed the Registration Statement, and each person, if any, who controls the
Company or either Seller within the meaning of Section 15 of the 1933 Act
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, contained in (x) the second sentence of the fifth paragraph on the
second page which is located on the inside cover (discussing the risk of a lack
of secondary trading) of the Prospectus (or any amendment or supplement
thereto), (y) the second sentence under "Investment Considerations--Limited
Liquidity" of the Prospectus Supplement and (z) any Computational Materials,
except to the extent of any errors in the Computational Materials that are
caused by errors in the pool information provided by the Company to the
Underwriter.
(c) Promptly after receipt by an indemnified party under this Section
6 of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 6, notify the indemnifying party in writing of the commencement thereof;
but the omission to so notify the indemnifying party will not relieve the
indemnifying party from any liability that it may have to any indemnified party
except to the extent that it has been prejudiced in any material respect by such
failure or from any liability that it may have otherwise than under this Section
6. In case any such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party or
parties shall have reasonably concluded that there may be legal defenses
available to it or them and/or other indemnified parties that are different from
or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses other than the reasonable costs of investigation subsequently
incurred in connection with the defense thereof unless (i) the indemnified party
shall have employed separate counsel in connection with the assertion of legal
defenses in accordance with the proviso to the next preceding sentence, (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of the action or (iii) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party; and except that, if clause (i) or (iii) is
applicable, such liability shall be only in respect of the counsel referred to
in such clause (i) or (iii). After such notice from the indemnifying party to
such indemnified party, the indemnifying party will not be liable for the costs
and expenses of any settlement of such action effected by such indemnified party
without the consent of the indemnifying party.
Section 7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company and the
Sellers jointly and severally, on the one hand, and the Underwriter, on the
other hand, shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and the Sellers jointly and severally, on the one hand,
and the Underwriter, on the other hand, as incurred, in such proportions that
the Underwriter is responsible for that portion represented by the underwriting
discount on the cover page of the Prospectus bears to the initial public
offering price of the Certificates appearing thereon (or, with respect to
Computational Materials furnished by the Underwriter, the excess of the
principal amount of the Certificates over the underwriting discount allocated to
such principal amount of Certificates); and the Company and the Sellers shall be
responsible for the balance; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the ▇▇▇▇
▇▇▇) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. Notwithstanding the provisions of this
Section 7, the Underwriter shall not be required to contribute any amount in
excess of the amount by which the total price at which the Certificates
underwritten by the Underwriter and distributed to the public exceeds the amount
of any damages which the Underwriter has otherwise been required to pay in
respect of such losses, liabilities, claims, damages and expenses. For purposes
of this Section 7, each person, if any, who controls the Underwriter within the
meaning of Section 15 of the 1933 Act shall have the same rights to contribution
as the Underwriter and each respective director of the Sellers, each officer of
the Sellers who signed the Registration Statement, and each respective person,
if any, who controls the Sellers within the meaning of Section 15 of the 1933
Act shall have the same rights to contribution as the Sellers.
Section 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement and the Pricing Agreement, or contained in certificates of officers
of the Company and the Sellers submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made
by or on behalf of the Underwriter or any controlling person thereof, or by or
on behalf of the Sellers, and shall survive delivery of the Certificates to
the Underwriter.
Section 9. Termination of Agreement.
(a) The Underwriter may terminate this Agreement, by notice to the
Company and the Sellers, at any time at or prior to Closing Time (i) if there
has been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Registration Statement or
Prospectus, any change, or any development involving a prospective change, in or
affecting particularly the business or properties of the Company or the Sellers
considered as one entity which, in the Underwriter's reasonable judgment,
materially impairs the investment quality of the Certificates; (ii) if there has
occurred any suspension or limitation of trading in securities generally on the
New York Stock Exchange, or any setting of minimum prices for trading on such
exchange or by any governmental authority; (iii) if any banking moratorium has
been declared by Federal or New York authorities; or (iv) if there has occurred
any outbreak or escalation of major hostilities in which the United States of
America is involved, any declaration of war by Congress, or any other
substantial national or international calamity or emergency if, in the
Underwriter's judgment, the effects of any such outbreak, escalation,
declaration, calamity, or emergency makes it impractical or inadvisable to
proceed with completion of the sale of and payment for the Certificates.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except as
provided in Section 4 hereof.
Section 10. Computational Materials. (a) It is understood that the
Underwriter may prepare and provide to prospective investors certain
Computational Materials (as defined below) in connection with the Company's
offering of the Certificates, subject to the following conditions:
(i) The Underwriter shall comply with all applicable laws and
regulations in connection with the use of Computational Materials including the
No-Action Letter of May 20, 1994 issued by the Commission to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Acceptance Corporation I, ▇▇▇▇▇▇, Peabody & Co. Incorporated and ▇▇▇▇▇▇
Structured Asset Corporation, as made applicable to other issuers and
underwriters by the Commission in response to the request of the Public
Securities Association dated May 24, 1994, and the No-Action Letter of February
17, 1995 issued by the Commission to the Public Securities Association
(collectively, the "▇▇▇▇▇▇/PSA Letters").
(ii) As used herein, "Computational Materials" shall have the meaning
given such term and the term "ABS Term Sheets" in the ▇▇▇▇▇▇/PSA Letters, but
shall include only those Computational Materials that have been prepared or
delivered to prospective investors by or at the direction of the Underwriter.
(iii) The Underwriter shall provide the Company with representative
forms of all Computational Materials prior to their first use, to the extent
such forms have not previously been approved by the Company for use by the
Underwriter. The Underwriter shall provide to the Company, for filing on Form
8-K as provided in Section 10(b), copies of all Computational Materials that are
to be filed with the Commission pursuant to the ▇▇▇▇▇▇/PSA Letters. The
Underwriter may provide copies of the foregoing in a consolidated or aggregated
form. All Computational Materials described in this subsection (a)(iii) must be
provided to the Company not later than 10:00 a.m. New York time one business day
before filing thereof is required pursuant to the terms of this Agreement.
(iv) If the Underwriter does not provide any Computational Materials
to the Company pursuant to subsection (a)(iii) above, the Underwriter shall be
deemed to have represented, as of the Closing Date, that it did not provide any
prospective investors with any information in written or electronic form in
connection with the offering of the Certificates that is required to be filed
with the Commission in accordance with the ▇▇▇▇▇▇/PSA Letters.
(v) In the event of any delay in the delivery by the Underwriter to
the Company of all Computational Materials required to be delivered in
accordance with subsection (a)(iii) above, the Company shall have the right to
delay the release of the Prospectus to investors or to the Underwriter, to delay
the Closing Date and to take other appropriate actions in each case as necessary
in order to allow the Company to comply with is agreement set forth in Section
10(b) to file the Computational Materials by the time specified therein.
(b) The Company shall file the Computational Materials (if any)
provided to it by the Underwriter under Section 10(a)(iii) with the Commission
pursuant to a Current Report on Form 8-K no later than 10:00 a.m. on the date
required pursuant to the ▇▇▇▇▇▇/PSA Letters.
Section 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriter shall be directed to Prudential Securities Incorporated, ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇ ▇▇▇▇; and notices to the
Company or any Seller shall be directed to it at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Executive Vice President.
Section 12. Parties. This Agreement and the Pricing Agreement shall
each inure to the benefit of and be binding upon the Underwriter, the Company,
the Sellers and their respective successors. Nothing expressed or mentioned in
this Agreement or the Pricing Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriter, the Company,
the Originators and their respective successors and the controlling persons and
officers and directors referred to in Section 6 and 7 hereof and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
with respect to this Agreement or the Pricing Agreement or any provision herein
or therein contained. This Agreement and the Pricing Agreement and all
conditions and provisions hereof and thereof are intended to be for the sole and
exclusive benefit of the Underwriter, the Company, the Sellers and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Certificates from the Underwriter
shall be deemed to be a successor by reason merely of such purchase. The Company
and the Sellers shall be jointly and severally liable for all obligations
incurred under this Agreement and the Pricing Agreement.
Section 13. Governing Law and Time. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in said
State. Unless otherwise set forth herein, specified times of day refer to New
York time.
Section 14. Counterparts. This Agreement may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Sellers a counterpart
hereof, whereupon this instrument, along with all counterparts, will become a
binding agreement between the Underwriter, the Sellers and the Company in
accordance with its terms.
Very truly yours,
THE MONEY STORE INVESTMENT CORPORATION
By: /s/▇▇▇▇▇▇ Dear
Name: ▇▇▇▇▇▇ Dear
Title: Executive Vice President
THE MONEY STORE OF NEW YORK, INC.
By: /s/ ▇▇▇▇▇▇ Dear
Name: ▇▇▇▇▇▇ Dear
Title: Executive Vice President
THE MONEY STORE INC.
By: /s/ ▇▇▇▇▇▇ Dear
Name: ▇▇▇▇▇▇ Dear
Title: Executive Vice President
CONFIRMED AND ACCEPTED, as of
the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
$140,000,000
THE MONEY STORE INC.
The Money Store SBA Loan-Backed Adjustable Rate Certificates,
Series 1996-2, Class A
and Class B
PRICING AGREEMENT
December 19, 1996
Prudential Securities Incorporated
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated December 19,
1996 (the "Underwriting Agreement"), relating to approximately $140,000,000,
aggregate principal amount of The Money Store SBA Loan-Backed Adjustable Rate
Certificates, Series 1996-2, Class A and Class B (collectively, the
"Certificates"). The approximate initial principal amount of Class A and Class B
Certificates shall be $130,800,000 and $9,800,000, respectively.
Pursuant to Section 2 of the Underwriting Agreement, The Money Store
Investment Corporation and The Money Store of New York, Inc. (collectively the
"Sellers") agree with Prudential Securities Incorporated (the "Underwriter") as
follows:
1. The Initial Remittance Rates on the Class A Certificates and
Class B Certificates shall be 6.11% and 6.575%, respectively, per annum.
2. The Underwriter's discount shall be 0.50% of the
initial principal amount of the Class A and Class B Certificates.
3. The Class A Certificates shall be offered to the public at the
purchase price of 99.50% of the aggregate principal amount of the Class A
Certificates.
4. The Class B Certificates shall be offered to the public at the
purchase price of 99.50% of the aggregate principal amount of the Class B
Certificates.
5. The Certificates will be offered by the Underwriter to the
public subject to the concessions and discounts set forth in the
Prospectus.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Sellers a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriter and the Sellers in accordance with its terms.
Very truly yours,
THE MONEY STORE
INVESTMENT CORPORATION
By: /s/ ▇▇▇▇▇▇ Dear
Name: ▇▇▇▇▇▇ Dear
Title: Executive Vice President
THE MONEY STORE OF NEW YORK, INC.
By: /s/ ▇▇▇▇▇▇ Dear
Name: ▇▇▇▇▇▇ Dear
Title: Executive Vice President
CONFIRMED AND ACCEPTED, as of
the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President