SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) December 27, 1996
Trans-World Insurance Company d/b/a Educaid (as
Seller) on behalf of ClassNotes Trust 1995-I
(f/k/a Education Loan Alliance 1995-I).
Trans-World Insurance Company d/b/a Educaid, as Seller
(Exact name of registrant as specified in its charter)
Arizona 33-89200 86-0255348
(State or other (Commission (IRS Employer
jurisdiction of incorporation) File Number) ID Number)
3301 C Street, Suite 100-M, Sacramento, California 95816
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number,
including area code: (916) 446-5000
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits
Exhibit No.
4.11 Fourth Terms Supplement, dated as of
December 27, 1996, between Dauphin Deposit
Bank and Trust Company, as Eligible Lender
Trustee, and Bankers Trust Company, as
Indenture Trustee.
4.12 Third Trust Supplement, dated as of December
26, 1996, between Trans-World Insurance Company
d/b/a Educaid and Dauphin Deposit Bank and Trust
Company, as Eligible Lender Trustee.
99.17 Third Supplemental Sale and Servicing Agreement,
dated as of December 27, 1996, among Dauphin
Deposit Bank and Trust Company, as Eligible
Lender Trustee, Trans-World Insurance Company
d/b/a Educaid, as Seller, Master Servicer and
Administrator, and The Money Store Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CLASSNOTES TRUST 1995-I
(f/k/a EDUCATION LOAN ALLIANCE 1995-I)
By:
TRANS-WORLD INSURANCE COMPANY, Seller
By:/s/ Morton Dear
Name: Morton Dear
Title: Executive Vice President
of Trans-World Insurance Company
d/b/a Educaid
Dated: January 8, 1997
<PAGE>
EXHIBIT INDEX
Exhibit Description of Exhibit Page No.
4.11 Fourth Terms Supplement, dated as of
December 27, 1996, between Dauphin Deposit
Bank and Trust Company, as Eligible Lender
Trustee, and Bankers Trust Company, as Indenture
Trustee. . . . . . . . . . . . . . . . . . . .
4.12 Third Trust Supplement, dated as of
December 26, 1996, between Trans-World Insurance
Company d/b/a Educaid and Dauphin Deposit
Bank and Trust Company, as Eligible
Lender Trustee. . . . . . . . . . . . . . . . .
99.17 Third Supplemental Sale and Servicing
Agreement, dated as of December 27, 1996,
among Dauphin Deposit Bank and Trust
Company, as Eligible Lender Trustee,
Trans-World Insurance Company d/b/a
Educaid, as Seller, Master Servicer
and Administrator, and The Money Store Inc. . .
EXECUTION COPY
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FOURTH TERMS SUPPLEMENT
TO THE
INDENTURE
DATED AS OF MARCH 28, 1995
between
CLASSNOTES TRUST 1995-I
(f/k/a Education Loan Alliance 1995-I)
and
BANKERS TRUST COMPANY
Indenture Trustee
---------------
Dated as of December 27, 1996
----------------------
Securing
$140,000,000
ASSET-BACKED NOTES
SERIES 1996-2
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<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions...........................................2
ARTICLE II
AUTHORIZATION, TERMS AND ISSUANCE
SECTION 2.1. Authorization of Series 1996-2 Notes..................6
SECTION 2.2. Purposes..............................................7
SECTION 2.3. Terms of Series 1996-2 Notes Generally................7
SECTION 2.4. Series 1996-2 Notes...................................8
SECTION 2.5. Class Interest Rate..................................10
SECTION 2.6. Additional Provisions Regarding the Interest
Rates on the Series 1996-2 Notes.....................11
ARTICLE III
DISTRIBUTIONS
SECTION 3.1. Distribution of Interest and Principal...............12
SECTION 3.2. Selection of Notes to Receive Payments
of Principal.........................................12
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. Issuer for This Fourth Terms Supplement.............12
SECTION 4.2. Counterparts........................................12
SECTION 4.3. Indenture Constitutes a Security Agreement..........12
SECTION 4.4. Governing Law.......................................12
SECTION 4.5. Ratification of Master Indenture....................13
EXHIBIT A Form of LIBOR Rate Notes
EXHIBIT B Form of Notice of Payment Default
EXHIBIT C Form of Notice of Cure of Payment Default
<PAGE>
FOURTH TERMS SUPPLEMENT, dated as of December 27, 1996, between CLASSNOTES
TRUST 1995-I (formerly known as Education Loan Alliance 1995-I), a Pennsylvania
business trust, (the "Issuer") acting through DAUPHIN DEPOSIT 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"), and
BANKERS TRUST COMPANY, a New York banking corporation duly established, existing
and authorized to accept and execute trusts of the character herein set out
under and by virtue of the laws of the State of New York, with its principal
corporate trust office in New York, New York, (the "Indenture Trustee"), as
Indenture Trustee under a Master Indenture dated as of March 28, 1995 (the
"Master Indenture").
PRELIMINARY STATEMENT
Section 2.3 of the Master Indenture provides, among other things, that the
Issuer, as provided in the Trust Agreement, and the Indenture Trustee may enter
into an indenture supplemental to the Master Indenture for the purpose of
authorizing a Series of Notes and to specify certain terms of such Series of
Notes. The Issuer has duly authorized the creation of a Series of Notes in an
aggregate principal amount not to exceed $140,000,000 to be known as the
Issuer's Asset Backed Notes, Series 1996-2 (the "Series 1996-2 Notes"), and the
Issuer and the Indenture Trustee are executing and delivering this Fourth Terms
Supplement in order to provide for the Series 1996-2 Notes. Except as otherwise
specified herein, or as the context may require, capitalized terms used but not
defined herein are defined in Appendix A to the Third Supplemental Sale and
Servicing Agreement dated as of December 27, 1996 (the "Third Supplemental Sale
and Servicing Agreement") among the Issuer, Trans-World Insurance Company (the
"Administrator"), the Eligible Lender Trustee and The Money Store Inc. ("TMSI"),
which Appendix A also contains rules as to usage that shall be applicable
herein.
GRANTING CLAUSES
The Issuer hereby Grants to the Indenture Trustee, for the exclusive
benefit of the Holders of the Series 1996-2 Notes, and (other than with respect
to clause (d) below) any Series of Notes issued previously and any Series of
Notes that may be issued hereafter, all of the Issuer's right, title and
interest in and to (a) the Financed Student Loans listed in Schedule A to the
Third Supplemental Sale and Servicing Agreement (as such Schedule may be amended
from time to time including, but not limited to, by the purchase by the Trust
during the Funding Period of any Additional Financed Student Loans) and all
obligations of the Obligors thereunder, and all written communications received
by the Seller with respect thereto (including borrower correspondence, notices
of death, disability or bankruptcy and requests for deferrals or forbearance),
on and after the applicable Cut-off Date (or, with respect to the Additional
Financed Student Loans, the applicable Subsequent Cut-off Date), (b) all funds
on deposit from time to time in the Trust Accounts (other than the Certificate
Distribution Account) and in all investments and proceeds thereof (including all
income thereon), (c) all proceeds of the foregoing, including without
limitation, proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquid property and (d) the Note Surety Bond
relating to the Series 1996-2 Notes. Such Grants are made, however, in trust, to
secure the Series 1996-2 Notes and, other than with respect to clause (d) above,
any Series of Notes issued previously and any Series of Notes issued hereafter,
equally and ratably without prejudice, priority or distinction, between any Note
and any other Note by reason of difference in time of issuance or otherwise
except to the extent otherwise described herein, and to secure (i) the payment
of all amounts due on the Series 1996-2 Notes, any Series of Notes issued
previously and any Series of Notes issued hereafter, as such amounts become due
in accordance with their terms, (ii) the payment of all other sums payable under
the Master Indenture or this Fourth Terms Supplement with respect to the Series
1996-2 Notes, any Series of Notes issued previously and any Series of Notes
issued hereafter, and (iii) compliance with the provisions of the Master
Indenture and this Fourth Terms Supplement with respect to the Series 1996-2
Notes, any Series of Notes issued previously and any Series of Notes issued
hereafter, all as provided in the Master Indenture and this Fourth Terms
Supplement.
The Indenture Trustee acknowledges such Grants, accepts the trusts
hereunder in accordance with the provisions hereof and of the Master Indenture
and agrees to perform the duties herein or therein required to the best of its
ability to the end that the interests of the Holders of the Series 1996-2 Notes,
any Series of Notes issued previously by the Issuer and any Series of Notes
issued by the Issuer hereafter may be adequately and effectively protected.
ARTICLE I.
DEFINITIONS
SECTION 1.1. DEFINITIONS.
"ADMINISTRATOR" means Trans-World Insurance Company
d/b/a Educaid, an Arizona insurance company, and its successors and assigns.
"AUTHORIZED DENOMINATIONS" means, with respect to the
Series 1996-2 Notes, $50,000 and integral multiples of $1,000 in excess thereof.
"BOOK-ENTRY FORM" or "BOOK-ENTRY SYSTEM" means a form or
system under which (i) the beneficial right to principal and interest may be
transferred only through a book entry, (ii) physical securities in registered
form are issued only to a Securities Depository or its nominee as registered
owner, with the securities "immobilized" to the custody of the Securities
Depository, and (iii) the book entry is the record that identifies the owners of
beneficial interests in that principal and interest.
"BUSINESS DAY" means any day on which the New York Stock
Exchange is open for trading and any day other than a Saturday, a Sunday or a
day on which banking institutions or trust companies in New York, California,
New Jersey or Pennsylvania are authorized or obligated by law, regulation or
executive order to remain closed.
"CLASS A-9 NOTES", has the meaning set forth in
Section 2.1 herein.
"CLASS INITIAL PERIOD" means, as to the Class A-9 Notes, the
period commencing on the Closing Date and continuing through the day immediately
preceding the Class Initial Rate Adjustment Date for the Class A-9 Notes.
"CLASS INITIAL RATE" means 5.74406% per annum for the Class
A-9 Notes.
"CLASS INITIAL RATE ADJUSTMENT DATE" means with respect to
the Class A-9 Notes, January 15, 1997.
"CLASS INTEREST PERIOD" means, with respect to the Class A-9
Notes, the Class Initial Period and each period commencing on a Class Rate
Adjustment Date for such Class and ending on the day before (i) the next Class
Rate Adjustment Date for such Class or (ii) the Final Maturity Date of such
Class, as applicable.
"CLASS INTEREST RATE" means each variable rate of interest per
annum borne by the Class A-9 Notes for each Class Interest Period and determined
in accordance with the provisions of Sections 2.4 and 2.5 hereof; provided,
however, that in the event of an Event of Default, the Class Interest Rate shall
equal the Non-Payment Rate.
"CLASS RATE ADJUSTMENT DATE" means the date on which an
Interest Rate is effective with respect to the Class A-9 Notes, which is the
15th day of each calendar month.
"CLASS RATE DETERMINATION DATE" means, with respect to the
Class A-9 Notes, the date which is both a Business Day and a London Banking Day
immediately preceding the date of commencement of an Interest Period for the
Class A-9 Notes.
"CLOSING DATE" means with respect to the Series 1996-2 Notes,
December 27, 1996, the date of initial issuance and delivery of the Series
1996-2 Notes hereunder.
"CUT-OFF DATE" means, (i) with respect to the Financed
Student Loans already pledged to the Indenture Trustee on the Closing Date,
November 30, 1996 and (ii) with respect to the Financed Student Loans pledged to
the Indenture Trustee on the Closing Date, December 26, 1996.
"EFFECTIVE INTEREST RATE" means, for any Financed Student
Loan and any Collection Period, the per annum rate at which such Financed
Student Loan accrues interest during such Collection Period, and in the case of
a Federal Loan, after giving effect to all applicable Interest Subsidy Payments
and Special Allowance Payments due with respect to such Federal Loan.
"EVENT OF DEFAULT" means, with respect to the Series 1996-2
Notes, (i) a default in the due and punctual payment of any installment of
interest or principal on the Class A-9 Notes, or (ii) a default in the due and
punctual payment of any interest on and principal of the Class A-9 Notes at
their Final Maturity Date.
"FINAL MATURITY DATE" means April 15, 2002 with respect to
the Class A-9 Notes.
"FOURTH TERMS SUPPLEMENT" means this Fourth Terms Supplement,
as from time to time amended or supplemented.
"FUNDING PERIOD" means, with respect to the Series 1996-2
Notes, the period beginning on the Closing Date and ending on the first to occur
of (a) the Note Distribution Date on which the amount on deposit in the
Pre-Funding Account (after giving effect to any transfers therefrom in
connection with any Additional Fundings on or prior to such Note Distribution
Date) is less than $200,000, (b) the date on which an Event of Default, a Master
Servicer Default or an Administrator Default occurs, (c) the date on which an
Insolvency Event occurs with respect to the Seller and (d) the close of business
on April 1, 1997, or such later date as may be agreed to by the Surety Provider.
"INTEREST PERIOD" means, with respect to any Class of Series
1996-2 Notes, the respective Class Interest Period.
"INTEREST RATE" means, with respect to the Series 1996-2
Notes, the rate of interest per annum borne by such Class as of the time
referred to, including, without limitation, the related Class Initial Rate and
the related Class Interest Rate.
"LIBOR DETERMINATION DATE" means, with respect to the Class
A-9 Notes, the date which is both a Business Day and a London Banking Day prior
to the commencement of each related Interest Period.
"LIBOR RATE NOTES" means the Class A-9 Notes.
"LONDON BANKING DAY" means any Business Day on which dealings
in deposits in United States dollars are transacted in the London interbank
market.
"MASTER INDENTURE" means the Master Indenture dated as of
March 28, 1995, as amended from time to time, between the Issuer and the
Indenture Trustee.
"NET LOAN RATE" means for any Interest Period, the weighted
average Effective Interest Rate for the Collection Period immediately preceding
such Interest Period less 1.60%.
"NON-PAYMENT RATE" means One-Month LIBOR plus 1.50%.
"NOTEHOLDERS' INTEREST CARRYOVER" means, with respect to any
Interest Period for which the Class Interest Rate for such Interest Period is
based on the Net Loan Rate, the amount equal to the excess, if any, of (a) the
amount of interest on such Class of Notes that would have accrued in respect of
the related Interest Period had interest been calculated based on the applicable
One-Month LIBOR over (b) the amount of interest on such Class of Notes actually
accrued in respect of such Interest Period based on the Net Loan Rate, together
with the unpaid portion of any such excess from prior Interest Periods (and
interest accrued thereon, to the extent permitted by law, at the applicable rate
calculated based on One-Month LIBOR); provided, however, that, with respect to
any Class of LIBOR Rate Notes, on the related Final Maturity Date, the portion
of the Noteholders' Interest Carryover allocable to such Class of Notes will be
equal to the lesser of (i) the Noteholders' Interest Carryover on such date
determined as described above and (ii) the amount of funds, if any, required and
available to be distributed to such Class of Notes on such date pursuant to
Sections 5.5(e)(iv) and 5.6(b)(B) of the Third Supplemental Sale and Servicing
Agreement.
"NOTE DISTRIBUTION DATE" means with respect to the Class A-9
Notes, the 15th day of each month (or if such day is not a Business Day, the
next succeeding Business Day), commencing January 1997.
"NOTE SURETY BOND" means each surety bond issued by the
Surety Provider in favor of the Eligible Lender Trustee for the benefit of the
holders of the Class A-9 Notes.
"ONE-MONTH LIBOR" means the London interbank offered rate for
deposits in U.S. dollars having a maturity of one month commencing on the
related LIBOR Determination Date (the "Index Maturity") which appears on
Telerate Page 3750 as of 11:00 a.m., London time, on such LIBOR Determination
Date. If such rate does not appear on Telerate Page 3750, the rate for that day
will be determined on the basis of the rates at which deposits in U.S. dollars,
having the Index Maturity and in a principal amount of not less than U.S.
$1,000,000, are offered at approximately 11:00 a.m., London time, on such LIBOR
Determination Date to prime banks in the London interbank market by the
Reference Banks. The Indenture Trustee will request the principal London office
of each of such Reference Banks to provide a quotation of its rate. If at least
two such quotations are provided, the rate for that day will be the arithmetic
mean of the quotations. If fewer than two quotations are provided, the rate for
that day will be the arithmetic mean of the rates quoted by major banks in New
York City, selected by the Indenture Trustee, at approximately 11:00 a.m., New
York City time, on such LIBOR Determination Date for loans in U.S. dollars to
leading European banks having the Index Maturity and in a principal amount equal
to an amount of not less than U.S. $1,000,000; provided that if the banks
selected as aforesaid are not quoting as mentioned in this sentence, One-Month
LIBOR in effect for the applicable Interest Period will be One-Month LIBOR in
effect for the previous Interest Period.
"PAYMENT DEFAULT" means, with respect to the Class A-9 Notes,
a default in the due and punctual payment of any Noteholders' Interest
Distribution Amount or Noteholders' Principal Distribution Amount on the related
Note Distribution Date or Final Maturity Date, as applicable.
"RECORD DATE" means, with respect to the Class A-9 Notes, the
close of business on the second Business Day immediately preceding the related
Note Distribution Date.
"REFERENCE BANK" means a lending bank (i) engaged in
transactions in Eurodollar deposits in the international Eurocurrency market,
(ii) not controlling, controlled by or under common control with the
Administrator or The Money Store Inc. and (iii) having an established place of
business in London.
"TELERATE PAGE 3750" means the display page so designated on
the Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
ARTICLE II.
AUTHORIZATION, TERMS AND ISSUANCE
SECTION 2.1. AUTHORIZATION OF SERIES 1996-2 NOTES. There is
hereby authorized the borrowing of funds, and to evidence such borrowing there
is hereby authorized one Class of Series 1996-2 Notes (the "Series 1996-2
Notes"), designated the "ClassNotes Trust 1995-I Asset-Backed Notes, Series
1996-2, Class A-9" (the "Class A-9 Notes") in the aggregate principal amount of
$140,000,000.
SECTION 2.2. PURPOSES. The Series 1996-2 Notes are authorized
to finance the acquisition by the Issuer of Financed Student Loans and to make
deposits to the Trust Accounts required hereby.
SECTION 2.3. TERMS OF SERIES 1996-2 NOTES GENERALLY. The
Series 1996-2 Notes shall be issued in fully registered form, in substantially
the form set forth in Exhibit A hereof, with such variations, omissions and
insertions as may be required by the circumstances, as may be required or
permitted by the Master Indenture and this Fourth Terms Supplement, or be
consistent with the Master Indenture and this Fourth Terms Supplement and
necessary or appropriate to conform to the rules and requirements of any
governmental authority or any usage or requirement of law with respect thereto.
The Series 1996-2 Notes may be issued only in Authorized
Denominations. The Series 1996-2 Notes shall be dated as of the Closing Date.
The Class A-9 Notes shall mature on its Final Maturity Date. The Class A-9 Notes
shall be numbered consecutively from 1 upwards with the prefix A-9 - preceding
each number. The Series 1996-2 Notes shall be issued to a Securities Depository
for use in a Book-Entry System in accordance with the provisions of Section 2.13
of the Indenture.
Interest on each Series 1996-2 Note shall accrue on the
Outstanding Amount of such Series 1996-2 Note until such Series 1996-2 Note has
been paid in full or payment has been duly provided for, as the case may be, and
shall accrue from the later of the initial date thereof or the most recent Note
Distribution Date to which interest has been paid or duly provided for. Each
Series 1996-2 Note shall bear interest at an interest rate determined in
accordance with the provisions and subject to the limitations set forth herein,
and interest on the Class A-9 Notes shall be paid for the related Class Initial
Period and each Class Interest Period for such Class thereafter on each Note
Distribution Date for such Class and on each date of payment of principal
thereof to the extent of interest accrued on the principal then being paid.
Principal will be paid to the Class A-9 Notes on each Note
Distribution Date for such Class in an amount equal to the Noteholder's
Principal Distribution Amount on such Note Distribution Date; provided, however,
that if any Class of a Series of Notes issued previously or hereafter has an
earlier Final Maturity Date than the Class A-9 Notes, principal will be paid to
each such Class of previously or subsequently issued Notes with an earlier Final
Maturity Date prior to the Class A-9.
SECTION 2.4. SERIES 1996-2 NOTES. The initial Rate Adjustment
Date for the Class A-9 Notes shall be the Class Initial Rate Adjustment Date.
During the Class Initial Period, the Class A-9 Notes shall
bear interest at the Class Initial Rate for such Class. Thereafter, the Class
A-9 Notes shall bear interest during each applicable Interest Period at a Class
Interest Rate equal to (i) the lesser of One-Month LIBOR plus 0.08% and (ii) the
Net Loan Rate.
During the Class Initial Period for the Class A-9 Notes and
each Interest Period thereafter, interest at the Class Interest Rate shall
accrue daily and shall be computed for the actual number of days elapsed on the
basis of a year consisting of 360 days.
Notwithstanding the foregoing,
(a) if an Event of Default shall have occurred, the Class
Interest Rate on the Class A-9 Notes for the Class Interest Period for such
Class commencing on or immediately after such Event of Default, and for each
Class Interest Period thereafter, to and including the Class Interest Period, if
any, during which, or commencing less than two Business Days after, such Event
of Default is cured in accordance with the Master Indenture and this Fourth
Terms Supplement, shall equal the Non-Payment Rate on the first day of each
such Class Interest Period.
(b) If the LIBOR Rate for a Class of LIBOR Rate Notes is
greater than the Net Loan Rate, then the Class Interest Rate applicable to such
Class of Series 1996-2 Notes for that Class Interest Period will be the Net Loan
Rate. If the Class Interest Rate applicable to such Class of Series 1996-2 Notes
for any Class Interest Period is the Net Loan Rate, the Indenture Trustee shall
determine the Noteholders' Interest Carryover, if any, with respect to such
Class of Series 1996-2 Notes for such Class Interest Period. Such Noteholders'
Interest Carryover shall bear interest calculated at a rate equal to One-Month
LIBOR (as determined by the Indenture Trustee) from the Note Distribution Date
for the Class Interest Period with respect to which such Noteholders' Interest
Carryover was calculated, until paid. For purposes of this Fourth Terms
Supplement, any reference to "principal" or "interest" herein shall not include
within the meaning of such words Noteholders' Interest Carryover or any interest
accrued on any such Noteholders' Interest Carryover. Such Noteholders' Interest
Carryover shall be separately calculated for each Series 1996-2 Note of such
Class by the Indenture Trustee during such Class Interest Period in sufficient
time for the Indenture Trustee to give notice to each Noteholder of such
Noteholders' Interest Carryover as required in the next succeeding sentence. On
the Note Distribution Date for a Class Interest Period with respect to which
such Noteholders' Interest Carryover for a Class of Series 1996-2 Notes has been
calculated by the Indenture Trustee, the Indenture Trustee shall give written
notice to each Noteholder of the applicable Class of the Noteholders' Interest
Carryover applicable to each Noteholder's Series 1996-2 Note of such Class,
which written notice may be included in any other written statement sent by the
Indenture Trustee to such Noteholders, and shall be mailed on such Note
Distribution Date by first-class mail, postage prepaid, to each such Noteholder
at such Noteholder's address as it appears on the registration books maintained
by the Note Registrar. Such notice shall state, in addition to such Noteholders'
Interest Carryover, that, unless and until the Final Maturity Date for such
Class of Series 1996-2 Notes has occurred (after which all accrued Noteholders'
Interest Carryover (and all accrued interest thereon) that remains unpaid shall
be canceled and no Noteholders' Interest Carryover (and interest accrued
thereon) shall be paid with respect to a Series 1996-2 Note of such Class), (i)
the Noteholders' Interest Carryover (and interest accrued thereon calculated at
a rate equal to One-Month LIBOR) shall be paid by the Indenture Trustee on a
Series 1996-2 Note of such Class on the first occurring Note Distribution Date
for such Class for a subsequent Class Interest Period if and to the extent that
(1) during such Class Interest Period no additional Noteholders' Interest
Carryover is accruing on such Class of Series 1996-2 Notes and (2) moneys are
available pursuant to the terms of this Fourth Terms Supplement and the
applicable Sale and Servicing Agreement in an amount sufficient to pay all or a
portion of such Noteholders' Interest Carryover and (ii) interest shall accrue
on the Noteholders' Interest Carryover at a rate equal to One-Month LIBOR until
such Noteholders' Interest Carryover is paid in full or the related Final
Maturity Date occurs.
The Noteholders' Interest Carryover for a Class of Series
1996-2 Notes shall be paid by the Indenture Trustee on Outstanding Series 1996-2
Notes of such Class on the Note Distribution Date for such Class following the
first occurring Note Distribution Date for a subsequent Class Interest Period if
and to the extent that during such Class Interest Period no additional
Noteholders' Interest Carryover is accruing on such Class of Series 1996-2
Notes. Any Noteholders' Interest Carryover (and any interest accrued thereon) on
any Series 1996- 2 Note which is due and payable on the related Final Maturity
Date shall be paid to the Noteholder thereof on said Final Maturity Date to the
extent that moneys are available therefor in accordance with the provisions of
this Fourth Terms Supplement and the applicable Sale and Servicing Agreement;
provided, however, that any Noteholders' Interest Carryover (and any interest
accrued thereon) which is not yet due and payable on said Final Maturity Date
shall be canceled with respect to said Series 1996-2 Notes on said Final
Maturity Date. To the extent that any portion of the Noteholders' Interest
Carryover for a Class of Series 1996-2 Notes remains unpaid after payment of a
portion thereof, such unpaid portion of the Noteholders' Interest Carryover
shall be paid in whole or in part as required hereunder until fully paid by the
Indenture Trustee on the next occurring Note Distribution Date or Dates, as
necessary, for a subsequent Class Interest Period or Periods for such Class, if
and to the extent that the conditions in the second preceding sentence are
satisfied. On any Note Distribution Date on which the Indenture Trustee pays
only a portion of the Noteholders' Interest Carryover on an Series 1996-2 Note
of such Class, the Indenture Trustee shall give written notice in the manner set
forth in the immediately preceding paragraph to the Noteholder of such Series
1996-2 Note receiving such partial payment of the Noteholders' Interest
Carryover remaining unpaid on such Series 1996-2 Note.
The Note Distribution Date in such subsequent Class Interest
Period on which such Noteholders' Interest Carryover for a Class of Series
1996-2 Notes shall be paid shall be determined by the Indenture Trustee in
accordance with the provisions of the immediately preceding paragraph, and the
Indenture Trustee shall make payment of the Noteholders' Interest Carryover in
the same manner as, and from the same Account from which, it pays interest on
the Series 1996-2 Notes on a Note Distribution Date.
(c) In the event that the Indenture Trustee no longer
determines, or fails to determine, when required, the Class Interest Rate with
respect to the Series 1996-2 Notes, or, if for any reason such manner of
determination shall be held to be invalid or unenforceable by a court of
competent jurisdiction, the Class Interest Rate for the next succeeding Class
Interest Period for the Series 1996-2 Notes shall be the Net Loan Rate as
determined by the Administrator (which is responsible for notifying the
Indenture Trustee of such Net Loan Rate), for such next succeeding Interest
Period.
SECTION 2.5. CLASS INTEREST RATE.
SECTION 2.5.1. PAYMENT DEFAULTS. The Indenture Trustee shall
determine not later than 2:00 p.m., eastern time, on the Business Day next
succeeding a Note Distribution Date, whether a Payment Default has occurred. If
a Payment Default has occurred, the Indenture Trustee shall, not later than 2:15
p.m., eastern time, on such Business Day, send a notice thereof in substantially
the form of Exhibit B attached hereto to the Eligible Lender Trustee and the
Surety Provider by telecopy or similar means and, if such Payment Default is
cured, the Indenture Trustee shall immediately send a notice in substantially
the form of Exhibit C attached hereto to the Eligible Lender Trustee and the
Surety Provider by telecopy or similar means.
SECTION 2.5.2. CALCULATION OF ONE-MONTH LIBOR AND NON-PAYMENT
RATE. The Indenture Trustee shall calculate One-Month LIBOR on each Class Rate
Determination Date and shall notify the Eligible Lender Trustee of One-Month
LIBOR. If a Payment Default shall have occurred, the Indenture Trustee shall
calculate the Non-Payment Rate on the Class Rate Determination Date for (i) each
Class Interest Period commencing after the occurrence and during the continuance
of such Payment Default and (ii) any Class Interest Period commencing less than
two Business Days after the cure of any Payment Default. The determination by
the Indenture Trustee of One-Month LIBOR shall (in the absence of manifest
error) be final and binding upon all parties.
SECTION 2.6. ADDITIONAL PROVISIONS REGARDING THE CLASS
INTEREST RATES ON THE SERIES 1996-2 NOTES. The determination of a Class Interest
Rate by the Indenture Trustee or any other Person pursuant to the provisions of
the applicable Section of this Article II shall be conclusive and binding on the
Noteholders of the Class of Series 1996-2 Notes to which such Class Interest
Rate applies, and the Issuer and the Indenture Trustee may rely thereon for all
purposes.
In no event shall the cumulative amount of interest paid or
payable on a Class of Series 1996-2 Notes (including interest calculated as
provided herein, plus any other amounts that constitute interest on the Series
1996-2 Notes of such Class under applicable law, which are contracted for,
charged, reserved, taken or received pursuant to the Series 1996-2 Notes of such
Class or related documents) calculated from the date of issuance of the Series
1996-2 Notes of such Class through any subsequent day during the term of the
Series 1996-2 Notes of such Class or otherwise prior to payment in full of the
Series 1996-2 Notes of such Class exceed the amount permitted by applicable law.
If the applicable law is ever judicially interpreted so as to render usurious
any amount called for under the Series 1996-2 Notes of such Class or related
documents or otherwise contracted for, charged, reserved, taken or received in
connection with the Series 1996-2 Notes of such Class, or if the acceleration of
the maturity of the Series 1996-2 Notes of such Class results in payment to or
receipt by the Noteholder or any former Noteholder of the Series 1996-2 Notes of
such Class of any interest in excess of that permitted by applicable law, then,
notwithstanding any provision of the Series 1996-2 Notes of such Class or
related documents to the contrary, all excess amounts theretofore paid or
received with respect to the Series 1996-2 Notes of such Class shall be credited
on the principal balance of the Series 1996-2 Notes of such Class (or, if the
Series 1996-2 Notes of such Class have been paid or would thereby be paid in
full, refunded by the recipient thereof), and the provisions of the Series
1996-2 Notes of such Class and related documents shall automatically and
immediately be deemed reformed and the amounts thereafter collectible hereunder
and thereunder reduced, without the necessity of the execution of any new
document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for under the Series 1996-2
Notes of such Class and under the related documents.
ARTICLE III
DISTRIBUTIONS
Section 3.1 DISTRIBUTIONS OF INTEREST AND PRINCIPAL. The
Indenture Trustee shall make distributions from and to the several Trust
Accounts in the manner provided for in Section 5.5 of the Third Supplemental
Sale and Servicing Agreement, as such Section may be amended from time to time.
Section 3.2 SELECTION OF NOTES TO RECEIVE PAYMENTS OF
PRINCIPAL. On each Note Distribution Date for which the Class A-9 Notes are
receiving a payment of principal, such principal will be distributed pro rata
among all owners of the Class A-9 Notes as of the related Record Date based on
the amount of Class A-9 Notes so owned, and such distributions may be made in
amounts less than $50,000.
Notice of the specific Notes to receive payments of principal
is to be given by the Indenture Trustee by first-class mail, postage prepaid,
mailed not less than 15 days but no more than 30 days before the applicable Note
Distribution Date at the address of the applicable Noteholder appearing on the
registration books. Any defect in or failure to give such mailed notice shall
not affect the validity of proceedings for the payment of any other Notes not
affected by such failure or defect. All notices of payment are to state: (i) the
applicable Note Distribution Date; (ii) the amount of principal to be paid, and
(iii) the Class of the Notes to be paid.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. ISSUER FOR THIS FOURTH TERMS SUPPLEMENT. This
Fourth Terms Supplement is adopted pursuant to the provisions of the Master
Indenture.
SECTION 4.2. COUNTERPARTS. This Fourth Terms Supplement may
be simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
SECTION 4.3. INDENTURE CONSTITUTES A SECURITY AGREEMENT. This
Fourth Terms Supplement constitutes a security agreement for the purposes of the
Uniform Commercial Code.
SECTION 4.4. GOVERNING LAW. This Fourth Terms Supplement
shall be governed by and construed in accordance with the laws of the State of
New York.
SECTION 4.5. RATIFICATION OF MASTER INDENTURE. As
supplemented by this Fourth Terms Supplement and each previously executed Terms
Supplement, the Master Indenture is in all respects ratified and confirmed, and
the Master Indenture as so supplemented by this Fourth Terms Supplement and each
previously executed Terms Supplement shall be read, taken and construed as one
and the same instrument. Each addition to and amendment of the Master Indenture
contained herein is solely for purposes of the Series 1996-2 Notes, and shall
have no effect on any other Series of Notes issued pursuant to the Master
Indenture. If any term of this Fourth Terms Supplement conflicts with any term
of the Master Indenture or any previously executed Terms Supplement, this Fourth
Terms Supplement shall control for purposes of the Series 1996-2 Notes.
Notwithstanding the foregoing, the percentage set forth in clause (ii) of the
definition of Specified Reserve Account Balance relating to each Series of Notes
shall be 102.25%, or such other percentage as may be agreed to in writing by the
Administrator and the Surety Provider. It is the express intention of the
parties hereto that the Specified Reserve Account Balance shall be determined by
reference to the aggregate outstanding principal balances of each Series of
Notes and Certificates. Notice of any change to the definition of Specified
Reserve Account Balance shall be given by the Administrator to the Rating
Agencies.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Fourth Terms Supplement to be duly executed as of the day and year first above
written.
CLASSNOTES TRUST 1995-I
By: DAUPHIN DEPOSIT BANK AND
TRUST COMPANY, not in its
individual capacity
Attest: but solely as Eligible
Lender Trustee
By:/S/ Rex F. Hood By:/s/ John A. Hayes
Name: Rex F. Hood Name:John A. Hayes
Title: Assistant Secretary Title: Vice President
Attest: BANKERS TRUST COMPANY, not in its
individual capacity but solely
as Indenture Trustee,
By:/s/ Nicole M. Taylor
Name: Nicole M. Taylor
Title:Assistant Treasurer
CONSENTED TO:
AMBAC INDEMNITY CORPORATION
By: /s/ Richard Marsh
Name: Richard Marsh
Title:First Vice President
TRANS-WORLD INSURANCE COMPANY
D/B/A EDUCAID
By: /s/ Harry Puglisi
Name: Harry Puglisi
Title:Treasurer
<PAGE>
STATE OF NEW YORK, )
) ss.:
COUNTY OF NEW YORK, )
BEFORE ME, the undersigned authority, a Notary Public in and
for said county and state, on this day personally appeared John A. Hayes, known
to me to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of the said Vice
President of Dauphin Deposit Bank and Trust Company, not in its individual
capacity but solely as Eligible Lender Trustee of CLASSNOTES TRUST 1995-I, a
Pennsylvania trust, and that he executed the same as the act of said trust for
the purpose and consideration therein expressed, and in the capacities therein
stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 27th day of
December, 1996.
/s/ Moshe Heching
Notary Public in and for
the State of New York.
[SEAL]
My commission expires:
December 4, 1997
<PAGE>
STATE OF NEW YORK, )
) ss.:
COUNTY OF NEW YORK, )
BEFORE ME, the undersigned authority, a Notary Public in and
for said county and state, on this day personally appeared Nicole M. Taylor,
known to me to be the person and officer whose name is subscribed to the
foregoing instrument and acknowledged to me that the same was the act of the
said Assistant Treasurer of BANKERS TRUST COMPANY, a New York banking
corporation, and that she executed the same as the act of said corporation for
the purpose and consideration therein expressed, and in the capacities therein
stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the 27th day of
December, 1996.
/s/ Moshe Heching
Notary Public in and for
the State of New York.
[SEAL]
My commission expires:
December 4, 1997
<PAGE>
EXHIBIT A
[FORM OF LIBOR RATE NOTES]
CLASSNOTES TRUST 1995-I
(f/k/a EDUCATION LOAN ALLIANCE 1995-I)
ASSET BACKED NOTES
SERIES 1996-2
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER (AS DEFINED BELOW)
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE IS NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL
AGENCY.
No. A-9-_ $__________
FINAL CLASS
MATURITY DATED INTEREST
CLASS DATE DATE RATE CUSIP
_____ _______ ______ ________ ______
A-9 LIBOR + ____%
as herein
provided
REGISTERED NOTEHOLDER: CEDE & CO.
__________________
PRINCIPAL AMOUNT: __________________
<PAGE>
CLASSNOTES TRUST 1995-I (formerly known as Education Loan
Alliance 1995-I), a Pennsylvania business trust (the "Issuer"), for value
received, promises to pay, from the sources herein described, to the Registered
Noteholder identified above, or registered assigns, upon presentation and
surrender hereof at the Corporate Trust Office of Bankers Trust Company, as
Paying Agent, or at the principal office of any successor or additional Paying
Agent, the Principal Amount identified above on the Final Maturity Date
identified above, and to pay to the registered owner hereof, interest and
principal hereon in lawful money of the United States of America at the Class
Interest Rate on the dates as provided herein. Unless otherwise defined in this
Series 1996-2 Note, capitalized terms used in this Series 1996-2 Note shall have
the respective meanings given to such terms in the Master Indenture dated as of
March 28, 1995 (the "Master Indenture"), as supplemented by the Fourth Terms
Supplement dated as of December 27, 1996, (the "Fourth Terms Supplement" and,
together with the Master Indenture, the "Indenture") between the Issuer and
Bankers Trust Company, as Indenture Trustee.
This Series 1996-2 Note is one of a duly authorized issue of
notes of the Issuer designated as "ClassNotes Trust 1995-I Asset-Backed Notes,
Series 1996-2" (herein referred to collectively as the "Series 1996-2 Notes"),
in the aggregate principal amount of $140,000,000 issued under the Indenture.
The Series 1996-2 Notes are issued to finance the acquisition and consolidation
of Financed Student Loans, and to make certain deposits to the Pledged Accounts.
The Master Indenture provides for the issuance, from time to
time, under the conditions, limitations and restrictions set forth therein, of
additional notes on a parity with all Series of obligations issued or to be
issued under the Indenture, for the purpose of providing additional funds for
the acquisition and consolidation of Financed Student Loans (said additional
notes, together with Series 1996-2 Notes, being collectively referred to herein
as the "Notes").
The Notes are secured under the Indenture which, together
with certain other documents, assigns to the Indenture Trustee for the benefit
of the Noteholders all the rights and remedies of the Issuer under certain
Financed Student Loans and rights under various contracts providing for the
issuance, guarantee and servicing of such Financed Student Loans. Reference is
hereby made to the Indenture for the provisions, among others, with respect to
the custody and application of the proceeds of the Notes, definitions of certain
capitalized terms used in this Series 1996-2 Note, the nature and the extent of
the liens and security of the Indenture, the collection and disposition of
revenues, the funds charged with and pledged to the payment of the principal of
and the interest on the Notes, the terms and conditions under which additional
Notes may be issued, the rights, duties and immunities of the Indenture Trustee,
the rights of the registered owners of the Notes, and the rights and obligations
of the Issuer. By the acceptance of this Series 1996-2 Note, the registered
owner hereof assents to all of the provisions of the Indenture.
The unpaid principal amount hereof from time to time
outstanding shall bear interest at a Class Interest Rate, as described below,
payable on each applicable Note Distribution Date to the extent of interest
accrued on the principal then outstanding, such interest to accrue from the
later of the date hereof or the date through which interest has been paid or
duly provided for. Interest at a Class Interest Rate established pursuant to the
Fourth Terms Supplement shall be computed for the actual number of days elapsed
on the basis of a year consisting of 360 days.
During the Initial Period, this Series 1996-2 Note shall bear
interest at the Class Initial Rate equal to the rate set forth in the Fourth
Terms Supplement. Thereafter, this Series 1996-2 Note generally shall bear
interest at a Class Interest Rate equal to One-Month LIBOR plus the margin set
forth in the Fourth Terms Supplement.
If the LIBOR Rate for the Series 1996-2 Notes is greater than
the Net Loan Rate, then the Class Interest Rate applicable to the Series 1996-2
Notes for that Interest Period will be the Net Loan Rate. If the Class Interest
Rate applicable to the Series 1996-2 Notes for any Interest Period is the Net
Loan Rate, the Indenture Trustee shall determine the Noteholders' Interest
Carryover, if any, with respect to the Series 1996-2 Notes for such Interest
Period. Such Noteholders' Interest Carryover shall bear interest calculated at a
rate equal to One-Month LIBOR from the Note Distribution Date for each Interest
Period with respect to which such Noteholders' Carryover was calculated until
paid. For purposes of this Series 1996-2 Note, any reference to "principal" or
"interest" herein shall not include within the meaning of such words
Noteholders' Interest Carryover or any interest accrued on any such Noteholders'
Interest Carryover. Such Noteholders' Interest Carryover shall be calculated by
the Indenture Trustee during such Interest Period in sufficient time for the
Indenture Trustee to give notice to each Noteholder of such Noteholders'
Interest Carryover as required in the next succeeding sentence. On the Note
Distribution Date for an Interest Period with respect to which such Noteholders'
Interest Carryover has been calculated by the Indenture Trustee, the Indenture
Trustee shall give written notice to each Noteholder of the Noteholders'
Interest Carryover applicable to each Noteholder's Series 1996-2 Notes, which
written notice may accompany the payment of interest by check made to each such
Noteholder on such Note Distribution Date or otherwise shall be mailed on such
Note Distribution Date by first class mail, postage prepaid, to each such
Noteholder at such Noteholder's address as it appears on the registration books
maintained by the Registrar. Such notice shall state, in addition to such
Noteholders' Interest Carryover, that, unless and until the Final Maturity Date
for such Series 1996-2 (after which no Noteholders' Interest Carryover (and all
accrued interest thereon) shall be paid with respect to a Series 1996-2 Note),
(i) the Noteholders' Interest Carryover (and interest accrued thereon calculated
on the basis of One-Month LIBOR) shall be paid by the Indenture Trustee on a
Series 1996-2 Note on the first occurring Note Distribution Date for a
subsequent Interest Period if and to the extent that (1) during such Interest
Period no additional Noteholders' Interest Carryover is accruing on the Series
1996-2 Notes and (2) moneys are available on such Note Distribution Date
pursuant to the terms of the Fourth Terms Supplement in an amount sufficient to
pay all or a portion of such Noteholders' Interest Carryover and (ii) interest
shall accrue on the Noteholders' Interest Carryover at a rate equal to One-Month
LIBOR until such Noteholders' Interest Carryover is paid in full or is
cancelled.
The Noteholders' Interest Carryover for the Series 1996-2
Notes shall be paid by the Indenture Trustee on Outstanding Series 1996-2 Notes
on the first occurring Note Distribution Date for a subsequent Interest Period
if and to the extent that (i) during such Interest Period, no additional
Noteholders' Interest Carryover is accruing on the Series 1996-2 Notes and (ii)
on such Note Distribution Date there are sufficient moneys available pursuant to
the terms of the Fourth Terms Supplement to pay all or a portion of the
Noteholders' Interest Carryover due on the Series 1996-2 Notes on such Note
Distribution Date. Any Noteholders' Interest Carryover (and any interest accrued
thereon) on any Series 1996-2 Note which is due and payable on the related Final
Maturity Date, shall be paid to the Noteholder thereof on said Final Maturity
Date to the extent that moneys are available therefor in accordance with the
Fourth Terms Supplement; provided, however, that any Noteholders' Interest
Carryover (and any interest accrued thereon) which is not yet due and payable on
said Final Maturity Date shall be cancelled with respect to said Series 1996-2
Note on said Final Maturity Date. To the extent that any portion of the
Noteholders' Interest Carryover remains unpaid after payment of a portion
thereof, such unpaid portion of the Noteholders' Interest Carryover shall be
paid in whole or in part until fully paid by the Indenture Trustee on the next
occurring Note Distribution Date or Dates, as necessary, for a subsequent
Interest Period or Periods, if and to the extent that the conditions in the
immediately preceding sentence are satisfied.
The Note Distribution Date in such subsequent Interest Period
on which such Noteholders' Interest Carryover for the Series 1996-2 Notes shall
be paid shall be determined by the Indenture Trustee in accordance with the
provisions of the immediately preceding paragraph, and the Indenture Trustee
shall make payment of the Noteholders' Interest Carryover in the same manner as,
and from the same account from which, it pays interest on the Series 1996-2
Notes on a Note Distribution Date.
Distributions of principal will made on each Note
Distribution Date to the Class of Notes with the earliest Final Maturity Date in
the manner described in the Third Supplemental Sale and Servicing Agreement. On
each Note Distribution Date for which the Class A-9 Notes are receiving a
payment of principal, such principal will be distributed pro rata among all
owners of the Class A-9 Notes as of the related Record Date based on the amount
of Class A-9 Notes so owned, and such distributions may be made in amounts less
than $50,000.
If an Event of Default as defined in the Indenture occurs,
the principal of and interest on all Notes issued under the Indenture may be
declared due and payable upon the conditions and in the manner and with the
effect provided in the Indenture. The Indenture and the rights and obligations
of the Issuer, the Indenture Trustee and the Noteholder hereof may be modified
or amended in the manner and subject to the conditions set forth in the
Indenture.
The Noteholder of this Series 1996-2 Note shall have no right
to enforce the provisions of the Indenture or to institute action to enforce the
covenants therein, or to take any action with respect to any Event of Default
under the Indenture, or to institute, appear in or defend any suit or other
proceeding with respect thereto, except as provided in the Indenture.
The transfer of this Series 1996-2 Note may be registered
only upon surrender hereof to the Indenture Trustee together with an assignment
duly executed by the registered owner or its attorney or legal representative in
such form as shall be satisfactory to the Indenture Trustee. Upon any such
registration of transfer of this Series 1996-2 Note and subject to the payment
of any fees and charges as provided by the Indenture, the Issuer shall execute
and the Indenture Trustee shall authenticate and deliver in exchange for this
Series 1996- 2 Note a new Series 1996-2 Note or Notes registered in the name of
the transferee, in any denomination or denominations authorized by the
Indenture, of the same maturity and in an aggregate principal amount equal to
the unredeemed principal amount of this Series 1996-2 Note and bearing the same
interest as this Series 1996-2 Note.
In any case where the date fixed for the payment of principal
of or interest on this Series 1996-2 Note shall not be a Business Day, then
payment of such principal or interest need not be made on such date but may be
made on the next succeeding Business Day with the same force and effect as if
made on the date fixed for the payment thereof.
It is hereby certified, recited and declared that all acts,
conditions and things required to have happened, to exist and to have been
performed precedent to and in the execution and delivery of the Indenture and
issuance of this Series 1996-2 Note have happened, do exist and have been
performed in due time, form and manner as required by law.
This Series 1996-2 Note shall not be valid or become
obligatory for any purpose or be entitled to any security or benefit under the
Indenture until the certificate of authentication hereon shall have been
manually signed by the Indenture Trustee.
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Series 1996-2
Note to be executed in its name by the manual or facsimile signature of an
Authorized Officer and the manual or facsimile signature of an Assistant
Secretary, and has caused its corporate seal or a facsimile thereof to be hereto
affixed.
CLASSNOTES TRUST 1995-I
By: DAUPHIN DEPOSIT BANK AND TRUST COMPANY,
not in its individual capacity but
solely as Eligible Lender Trustee
By:__________________________________________
(SEAL)
Attest:
__________________________
Name:
Title:
<PAGE>
CERTIFICATE OF AUTHENTICATION
This Note is one of the Series 1996-2 Notes designated in and
issued under the provisions of the within mentioned Indenture.
BANKERS TRUST COMPANY
New York, New York, as
Indenture Trustee
By:__________________________________
Authorized Representative
Date of Authentication:
- -----------------------
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells,
assigns and transfers unto , the
within Note and irrevocably appoints ,
attorney-in-fact, to transfer the within Note on the books kept for
registration thereof, with full power of substitution in the premises.
Dated: ___________ ___________________________
NOTICE: The signature to Signature Guaranteed:
this assignment must
correspond with the name as ___________________________
it appears upon the face of
the within Note in every par-
ticular, without any alter-
ation whatsoever.
Name and Address:__________________________
Tax Identification Number or
Social Security Number(s):___________________________
[END OF FORM OF LIBOR RATE NOTES]
<PAGE>
EXHIBIT B
CLASSNOTES TRUST 1995-I
ASSET BACKED NOTES, SERIES 1996-2, CLASS A-9
NOTICE OF PAYMENT DEFAULT
NOTICE IS HEREBY GIVEN that an Event of Default has occurred
and is continuing with respect to the Notes identified above. The Class Interest
Rate for the Series 1996- 2, Class A-9 Notes for the next succeeding Interest
Period shall be the Non-Payment Rate.
BANKERS TRUST COMPANY,
as Indenture Trustee
Dated: By:______________________________
Name:
Title:
<PAGE>
EXHIBIT C
CLASSNOTES TRUST 1995-I
ASSET BACKED NOTES, SERIES 1996-2, CLASS A-9
NOTICE OF CURE OF PAYMENT DEFAULT
NOTICE IS HEREBY GIVEN that an Event of Default with respect
to the Notes identified above has been waived or cured. The next Note
Distribution Date is ______________________________.
BANKERS TRUST COMPANY,
as Indenture Trustee
Dated: By:_________________________
Name:
Title:
THIRD TRUST SUPPLEMENT
THIRD TRUST SUPPLEMENT, dated as of December 26, 1996, by and between
TRANS-WORLD INSURANCE COMPANY d/b/a EDUCAID, an Arizona insurance company (the
"Depositor") and DAUPHIN DEPOSIT 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") under a Trust Agreement dated as of
March 27, 1995 (as amended and supplemented from time to time, the "Trust
Agreement") relating to ClassNotes Trust 1995-I, a Pennsylvania business trust
formerly known as Education Loan Alliance 1995-I (the "Trust").
PRELIMINARY STATEMENT
Section 11.1(d) of the Trust Agreement provides, among other things, that
without the consent of any Certificateholders but with prior notice to the
Rating Agencies and the prior written consent of the Surety Provider, the
Depositor and the Eligible Lender Trustee may enter into a Trust Supplement to
set forth the terms of an additional Class of Trust Certificates. The Trust has
duly authorized the creation of a series of Trust Certificates to be known as
the Trust's Series 1996-2 Certificates (the "Series 1996-2 Certificates"), the
Depositor has delivered the required notice to the Rating Agencies and the
Depositor and the Eligible Lender Trustee are executing and delivering this
Third Trust Supplement in order to provide for the Series 1996-2 Certificates.
Except as otherwise specified herein, or as the context may require, capitalized
terms used but not defined herein are defined in Appendix A to the Trust
Agreement, which Appendix A also contains rules as to usage that shall be
applicable herein.
ARTICLE I.
DEFINITIONS
"CLOSING DATE" means, December 27, 1996, or such other date as the
Depositor may determine.
"FAIR MARKET VALUE" means, (i) as to any Series 1996-2 Financed Student
Loan contributed by the Depositor to the Trust on the Closing Date, 103.70% of
the principal balance of, plus accrued interest from the Series 1996-2 Cut-off
Date to the Closing Date on, such Series 1996-2 Financed Student Loan and (ii)
as to any Series 1996-2 Financed Student Loan contributed by the Depositor to
the Trust during the Funding Period, 103.70% of the principal balance of, plus
accrued interest from the related Subsequent Cut-off Date to the related
Transfer Date on, such Series 1996-2 Financed Student Loan.
"FUNDING PERIOD" means, with respect to the Series 1996-2 Certificates, the
period beginning on the Closing Date and ending on the first to occur of (a) the
Note Distribution Date on which the amount on deposit in the Pre-Funding Account
(after giving effect to any transfers therefrom in connection with any
Additional Fundings on or prior to such Note Distribution Date) is less than
$200,000, (b) the date on which an Event of Default or a Pledgor Default occurs,
(c) the date on which an Insolvency Event occurs with respect to the Issuer and
(d) the close of business on April 1, 1997, or such later date as may be agreed
to by the Surety Provider.
"GAIN" means, as to any Series 1996-2 Financed Student Loan, the sum of (i)
the difference, if any, between (A) the proceeds received by the Trust upon the
sale of such Series 1996-2 Financed Student Loan pursuant to Section 2.3 of the
Third Supplemental Sale and Servicing Agreement and (B) the Purchase Amount of
such Series 1996-2 Financed Student Loan at the time of such sale and (ii)
amounts, if any, relating to such Series 1996-2 Financed Student Loan that are
released from the Reserve Account and available for distribution to the
Certificateholders.
"THIRD SUPPLEMENTAL SALE AND SERVICING AGREEMENT" means the Third
Supplemental Sale and Servicing Agreement dated as of December 27, 1996 among
the Issuer, the Depositor, the Administrator, the Eligible Lender Trustee and
the Master Servicer, as amended from time to time.
"THIRD TRUST SUPPLEMENT" means this Third Trust Supplement, as from time to
time amended or supplemented.
"SERIES 1996-2 CUT-OFF DATE" means December 26, 1996, or such other date as
the Depositor may determine.
"SERIES 1996-2 FINANCED STUDENT LOAN" means a Financed Student Loans
contributed by the Depositor to the Trust on either the Closing Date or during
the Funding Period.
ARTICLE II.
AUTHORIZATION, TERMS AND ISSUANCE
SECTION 2.1. AUTHORIZATION OF SERIES 1996-2 CERTIFICATES. In consideration
of the contribution by the Depositor of the Series 1996-2 Financed Student
Loans, there is hereby authorized by the Trust, a single class of Series 1996-2
Certificates, designated as the ClassNotes Trust 1995-I, Series 1996-2
Certificates (the "Series 1996-2 Certificates") in the aggregate principal
amount of $140,000,000.
SECTION 2.2. PURPOSE. The Series 1996-2 Financed Student Loans contributed
by the Depositor will be pledged by the Trust to the Indenture Trustee pursuant
to the terms of the Indenture.
SECTION 2.3. TERMS OF SERIES 1996-2 CERTIFICATES GENERALLY. The Series
1996-2 Certificates shall be issued in certificated, fully registered form, in
substantially the form set forth in Exhibit A hereto, with such variations,
omissions and insertions as may be required by the circumstances, as may be
required or permitted by the Trust Agreement, or be consistent with the Trust
Agreement and necessary or appropriate to conform to the rules and requirements
of any governmental authority or any usage or requirement of law with respect
thereto.
There shall only be one Series 1996-2 Certificate outstanding at any time.
The Series 1996-2 Certificates shall be dated as of the Closing Date.
SECTION 2.4. RESTRICTIONS ON TRANSFER. On the Closing Date, the Trust shall
issue the Series 1996-2 Certificates to the Depositor in exchange for the
Depositor's contribution of the Series 1996-2 Financed Student Loans.
Immediately thereafter, the Depositor shall sell the Series 1996-2 Certificates
to TMS Student Holdings, Inc. ("Holdings") pursuant to the terms of a purchase
agreement to be entered into between the Depositor and Holdings. Any attempted
transfer by Holdings of the Series 1996-2 Certificates shall be void. The Series
1996-2 Certificates issued to Holdings shall contain a legend stating "THIS
CERTIFICATE IS NONTRANSFERABLE."
SECTION 2.5. VOTING RIGHTS. The holder of the Series 1996-2 Certificates,
in its capacity as such, shall have no voting rights where any provision of the
Trust Agreement or any other Basic Document permits or authorizes holders of
Certificates holding a specified percentage or amount of the Certificate Balance
to take any action or grant any approval, and for this purpose the Series 1996-2
Certificates shall be deemed to have a Certificate Balance equal to $0.
ARTICLE III
DISTRIBUTIONS
SECTION 3.1. DISTRIBUTIONS IN GENERAL. Notwithstanding anything contained
in the Trust Agreement, the Third Supplemental Sale and Servicing Agreement or
any other Basic Document to the contrary, (i) on the Closing Date, the Trust
shall distribute to Holdings, as holder of the Series 1996-2 Certificates, an
amount equal to the aggregate Fair Market Value of all Series 1996-2 Financed
Student Loans contributed to the Trust on the Closing Date, (ii) during the
Funding Period, on each Transfer Date the Trust shall distribute to Holdings, as
holder of the Series 1996-2 Certificates, an amount equal to the aggregate Fair
Market Value of all Series 1996-2 Financed Student Loans contributed to the
Trust on such Transfer Date, (iii) all amounts distributable to Holdings, as
holder of the Series 1996-2 Certificates, with respect to clause (i) of the
definition of Gain shall be distributed as set forth in Section 2.3 of the Third
Supplemental Sale and Servicing Agreement and (iv) all amounts distributable to
Holdings, as holder of the Series 1996-2 Certificates, with respect to clause
(ii) of the definition of Gain shall be distribution as set forth in Section
5.6(b)(F) of the Third Supplemental Sale and Servicing Agreement.
The foregoing paragraph sets forth the exclusive means for determining
amounts required to be distributed to the holder of the Series 1996-2
Certificates. If the aggregate amount of such distributions is less than the
principal amount of the Series 1996-2 Certificates, the holder of the Series
1996-2 Certificates shall have no recourse against the Trust or otherwise.
Section 3.2. NO STATEMENT REQUIRED. Notwithstanding anything contained in
the Trust Agreement, the Third Supplemental Sale and Servicing Agreement or any
other Basic Document to the contrary, neither the Administrator, the Eligible
Lender Trustee, the Indenture Trustee, nor any other Person, shall be required
to distribute to the holder of the Series 1996-2 Certificates the statement
required by Section 5.7 of the Third Supplemental Sale and Servicing Agreement.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. AUTHORITY FOR THIS THIRD TRUST SUPPLEMENT. This Third Trust
Supplement is adopted pursuant to the provisions of the Trust Agreement.
SECTION 4.2. COUNTERPARTS. This Third Trust Supplement may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
SECTION 4.3. PURCHASER'S LETTER. Notwithstanding anything set forth in the
Trust Agreement to the contrary, the Depositor shall not be required to execute
and deliver a Purchaser's Letter pursuant to Section 3.5(b) of the Trust
Agreement in connection with its acquisition of the Series 1996-2 Trust
Certificates.
SECTION 4.4. GOVERNING LAW. This Third Trust Supplement shall be governed
by and construed in accordance with the internal laws of the Commonwealth of
Pennsylvania, without giving effect to principles of conflict of laws.
SECTION 4.5. RATIFICATION OF TRUST AGREEMENT. As supplemented by this Third
Trust Supplement, the Trust Agreement is in all respects ratified and confirmed,
and the Trust Agreement as so supplemented by this Third Trust Supplement shall
be read, taken and construed as one and the same instrument. Each addition to
and amendment of the Trust Agreement contained herein is solely for purposes of
the Series 1996-2 Certificates, and shall have no effect on any other
Certificates issued pursuant to the Trust Agreement. If any term of this Third
Trust Supplement conflicts with any term of the Trust Agreement, this Third
Trust Supplement shall control for purposes of the Series 1996-2 Certificates.
SECTION 4.6. PLACE OF EXECUTION. This Third Trust Supplement shall be
deemed for all purposes executed and delivered at the Eligible Lender Trustee's
corporate trust office in Carlisle, Cumberland County, Pennsylvania.
SECTION 4.7. EFFECTIVENESS. This Third Trust Supplement shall become
effective upon filing with the Pennsylvania Department of State.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Third Trust
Supplement to be duly executed as of the day and year first above written.
DAUPHIN DEPOSIT BANK AND
ATTEST: TRUST COMPANY
By: /s/ John A. Hayes
/s/ Rex F. Hood Name:John A. Hayes
Name: Rex F. Hood Title: Vice President
Title:Assistant Secretary
TRANS-WORLD INSURANCE COMPANY,
d/b/a Educaid
By: /s/ Morton Dear
Name: Morton Dear
Title: Executive Vice president
CONSENTED TO:
AMBAC INDEMNITY CORPORATION, as
Surety Provider
By:/s/ Richard Marsh
Name: Richard Marsh
Title:First Vice President
<PAGE>
EXHIBIT A
TO THE THIRD TRUST SUPPLEMENT
FORM OF SERIES 1996-2 CERTIFICATES
[THIS SERIES 1996-2 CERTIFICATE IS NONTRANSFERABLE]1
NUMBER
- --- $
--------------------------
CLASSNOTES TRUST 1995-I
SERIES 1996-2 CERTIFICATES
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of student loans
contributed to the Trust by Trans-World Insurance Company, d/b/a
Educaid.
(This Trust Certificate does not represent an interest in or obligation
of the Depositor (as defined below), the Master Servicer (as defined
below), the Eligible Lender Trustee (as defined below) or any of their
respective affiliates, except to the extent described below.)
THIS CERTIFIES THAT is the registered
owner of dollars non-assessable, fully-paid,
fractional undivided interest in ClassNotes Trust 1995-I, formerly known as
Education Loan Alliance 1995-I (the "Trust"), a trust formed under the laws
of the Commonwealth of Pennsylvania by Trans-World Insurance Company, d/b/a
Educaid (the "Depositor"). The Trust was created pursuant to a Trust Agreement
dated as of March 27, 1995 (as amended and supplemented from time to time, the
"Trust Agreement") between the Depositor and Dauphin Deposit Bank and Trust
Company, a Pennsylvania bank and trust company, not in its individual capacity
but solely as eligible lender trustee on behalf of the Trust (the "Eligible
Lender Trustee"), a summary of certain of the pertinent provisions of which is
set forth below. To the extent not otherwise defined herein, the capitalized
terms used herein have the meanings assigned to them in Appendix A to the Trust
Agreement; such Appendix A also contains rules as to usage that shall be
applicable herein.
This Certificate is one of the duly authorized Certificates designated as
"Series 1996-2 Certificates" (herein called the "Series 1996-2 Certificates" or
the "Trust Certificates"). This Series 1996-2 Certificate is issued under and is
subject to the terms, provisions and conditions of the Trust Agreement and a
related Third Trust Supplement dated as of December 26, 1996 (the "Third Trust
Supplement"), to which Trust Agreement and Third Trust Supplement the holder of
this Series 1996-2 Certificate by virtue of the acceptance hereof assents and by
which such holder is bound. The property of the Trust includes a pool of student
loans (the "Financed Student Loans"), all moneys paid thereunder on or after
March 17, 1995 (or, in the case of Financed Student Loans that constitute
Additional Student Loans, on or after the respective Subsequent Cut-off Dates),
certain bank accounts and the proceeds thereof and certain other rights under
the Trust Agreement and the Sale and Servicing Agreement and all proceeds of the
foregoing.
- ---------
1 To be included on the Series 1996-2 Certificate issued to TMS Student
Holdings, Inc.
<PAGE>
Distributions will be made on the Series 1996-2 Certificates in the manner
set forth in the Second Trust Supplement.
It is the intent of the Depositor, the Master Servicer, the Administrator
and the Certificateholders that, solely for federal income tax purposes, the
Trust will be treated as a partnership and the Certificateholders (including TMS
Student Holdings, Inc. in its capacity as recipient of distributions from the
Reserve Account) will be treated as partners in that partnership. TMS Student
Holdings, Inc. and the other Certificateholders by acceptance of a Trust
Certificate (and the Certificate Owners by acceptance of a beneficial interest
in a Trust Certificate) or an Originators' Interest, agree to treat, and to take
no action inconsistent with the treatment of, the Trust Certificates for such
federal income tax purposes as partnership interests in the Trust.
Each Certificateholder or Certificate Owner, by its acceptance of a Trust
Certificate or, in the case of a Certificate Owner, a beneficial interest in a
Trust Certificate, covenants and agrees that such Certificateholder or
Certificate Owner, as the case may be, will not at any time institute against
the Seller or the Trust, or join in any institution against the Seller or the
Trust, any bankruptcy, reorganization, arrangement, insolvency, receivership or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Trust Certificates, the Notes, the Trust Agreement or any of the other Basic
Documents.
Unless the certificate of authentication hereon shall have been executed by
an authorized representative of the Eligible Lender Trustee or its
authenticating agent, by manual signature, this Trust Certificate shall not
entitle the holder hereof to any benefit under the Trust Agreement, the Second
Trust Supplement or the Sale and Servicing Agreement or be valid for any
purpose.
<PAGE>
IN WITNESS WHEREOF, the Eligible Lender Trustee on behalf of the Trust and
not in its individual capacity has caused this Series 1996-2 Certificate to be
duly executed as of the date set forth below.
CLASSNOTES TRUST 1995-I
by DAUPHIN DEPOSIT BANK AND
TRUST COMPANY,
not in its individual
capacity but solely as
Eligible Lender Trustee,
ATTEST: by
- --------------------- -----------------------------
Authorized Signatory
Date:
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the within-mentioned
Trust Agreement.
DAUPHIN DEPOSIT BANK AND
TRUST COMPANY, not in its
individual capacity but
solely as Eligible Lender
Trustee,
by
-----------------------------
Authorized Representative
Date:
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- ----------------------------------------------------------------
(Please print or type name and address, including postal zip
code, of assignee)
- ----------------------------------------------------------------
the within Trust Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
- -------------------------------------------------------
Attorney to transfer said Trust Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
________________________________*
* NOTICE: The signature to this assignment must correspond with the name as
it appears upon the face of the within Trust Certificate in every particular,
without alteration, enlargement or any change whatever.
EXECUTION COPY
THIRD SUPPLEMENTAL
SALE AND SERVICING AGREEMENT
Dated as of December 27, 1996
among
CLASSNOTES TRUST 1995-I
(formerly known as Education Loan Alliance 1995-I)
as Issuer,
TRANS-WORLD INSURANCE COMPANY D/B/A EDUCAID
as Seller, Master Servicer and Administrator,
DAUPHIN DEPOSIT BANK AND TRUST COMPANY
not in its individual capacity but solely
as Eligible Lender Trustee,
and
THE MONEY STORE INC.,
to
SALE AND SERVICING AGREEMENT
Dated as of March 17, 1995
<PAGE>
TABLE OF CONTENTS
ARTICLE I.
Definitions and Usage......................................................2
ARTICLE II.
CONVEYANCE OF FINANCED STUDENT LOANS
SECTION 2.1. Conveyance of Initial Financed Student Loans..............2
SECTION 2.2. Conveyance of Additional Financed Student
Loans.....................................................3
SECTION 2.3. Conveyance of Certain Financed Student Loans
by the Eligible Lender Trustee to the Seller..............5
SECTION 2.4. Security Agreement.........................................6
ARTICLE III.
THE FINANCED STUDENT LOANS
SECTION 3.1. Representations and Warranties of TMSI and
the Seller with Respect to the Financed
Student Loans..............................................6
SECTION 3.2. Purchase upon Breach; Reimbursement.......................11
SECTION 3.3. Custody of Financed Student Loan Files....................12
SECTION 3.4. Duties of Master Servicer as Custodian....................13
SECTION 3.5. Instructions; Authority to Act............................14
SECTION 3.6. Custodian's Indemnification...............................14
SECTION 3.7. Effective Period and Termination..........................15
SECTION 3.8. Appointment of Subcustodian.............................. 15
ARTICLE IV.
ADMINISTRATION AND SERVICING OF FINANCED STUDENT LOANS
SECTION 4.1. Duties of Master Servicer................................16
SECTION 4.2. Collection of Financed Student Loan Payments............17
SECTION 4.3. Realization upon Financed Student Loans.................19
SECTION 4.4. No Impairment............................................19
SECTION 4.5. Purchase of Financed Student Loans;
Reimbursement............................................19
SECTION 4.6. Servicing Fee; Servicing Fee Carryover...................21
SECTION 4.7. Administrator's Certificate..............................21
SECTION 4.8. Annual Statement as to Compliance; Notice of
Default..................................................22
SECTION 4.9. Annual Independent Certified Public
Accountants' Report......................................23
SECTION 4.10. Access to Certain Documentation and
Information Regarding Financed Student Loans.............23
SECTION 4.11. Master Servicer and Administrator Expenses..............24
SECTION 4.12. Appointment of Subservicer...............................24
ARTICLE V.
Distributions; Reserve Account;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 5.1. Establishment of Trust Accounts..........................25
SECTION 5.2. Collections..............................................27
SECTION 5.3. Application of Collections...............................28
SECTION 5.4. Additional Deposits......................................28
SECTION 5.5. Distributions............................................29
SECTION 5.6. Reserve Account..........................................33
SECTION 5.7. Statements to Certificateholders and
Noteholders.............................................35
SECTION 5.8. Pre-Funding Account......................................38
SECTION 5.9. Capitalized Pre-Funding Account..........................39
SECTION 5.10. Capitalized Interest Account.............................39
SECTION 5.11. Expense Account..........................................39
SECTION 5.12. Note Distribution Account and Certificate
Distribution Account.....................................39
SECTION 5.13. Monthly Advances.........................................40
ARTICLE VI.
THE SELLER AND THE MASTER SERVICER
SECTION 6.1. Representations of Seller and Master
Servicer.................................................40
SECTION 6.2. Existence................................................42
SECTION 6.3. Liability and Indemnities................................43
SECTION 6.4. [Reserved]...............................................45
SECTION 6.5. Merger or Consolidation of, or Assumption of
the Obligations of, the Seller, the
Administrator or the Master Servicer.....................45
SECTION 6.6. Limitation on Liability of Seller, Master
Servicer and Others......................................46
SECTION 6.7. Seller May Own Certificate or Notes......................47
SECTION 6.8 Master Servicer Not to Resign............................48
ARTICLE VII.
The Administrator
SECTION 7.1. Representations of the Administrator.....................47
SECTION 7.2. Liabilities and Indemnities..............................49
SECTION 7.3. Administrator Not to Resign..............................49
ARTICLE VIII.
Default
SECTION 8.1. Master Servicer Default; Administrator
Default..................................................50
SECTION 8.2. Appointment of Successor.................................53
SECTION 8.3. Notification to Noteholders and
Certificateholders.......................................55
SECTION 8.4. Waiver of Past Defaults..................................55
ARTICLE IX
Termination
SECTION 9.1. Termination..............................................55
ARTICLE X.
Surety Bonds
SECTION 10.1. Surety Bonds.............................................58
SECTION 10.2. Further Assurances; Surety Provider Default;
etc......................................................59
ARTICLE XI.
Miscellaneous
SECTION 11.1. Amendment................................................60
SECTION 11.2. Protection of Interests in Trust.........................61
SECTION 11.3. Notices..................................................64
SECTION 11.4. Assignment...............................................65
SECTION 11.5. Limitations on Rights of Others..........................65
SECTION 11.6. Severability.............................................65
SECTION 11.7. Separate Counterparts....................................65
SECTION 11.8. Headings.................................................65
SECTION 11.9. Governing Law............................................66
SECTION 11.10. Assignment to Indenture Trustee..........................66
SECTION 11.11. Nonpetition Covenants....................................66
SECTION 11.12. Limitation of Liability of Eligible Lender
Trustee and Indenture Trustee............................66
SECTION 11.13. Rights of Surety Provider................................67
SECTION 11.14. Conflicts with Other Documents...........................67
APPENDIX A Definitions and Usage
SCHEDULE A Schedule of Financed Student Loans
SCHEDULE B Location of Financed Student Loan Files
EXHIBIT A Form of Report to Noteholders
EXHIBIT B Form of Report to Certificateholders
EXHIBIT C Form of Administrator's Certificate
EXHIBIT D Form of Assignment for Initial Financed
Student Loans
EXHIBIT E Form of Assignment for Additional Financed
Student Loans
<PAGE>
THIRD SUPPLEMENTAL SALE AND SERVICING
AGREEMENT (the "Agreement") dated as of December 27,
1996, among CLASSNOTES TRUST 1995-I, a Pennsylvania
business trust formerly known as Education Loan
Alliance 1995-I (the "Issuer"), TRANS-WORLD INSURANCE
COMPANY, D/B/A EDUCAID, an Arizona corporation (the
"Seller," the "Master Servicer" or the
"Administrator"), DAUPHIN DEPOSIT
BANK AND TRUST COMPANY, a Pennsylvania bank and trust
company, solely as eligible lender trustee and not in
its individual capacity (the "Eligible Lender
Trustee"), and THE MONEY STORE INC., a New Jersey
corporation ("TMSI").
WHEREAS the parties hereto entered into a Sale and Servicing
Agreement dated as of March 17, 1995 in connection with the issuance by the
Issuer of its Auction Rate Asset Backed Certificates (the "Certificates") and
its Series 1995-1 Auction Rate Asset Backed Notes, Class A-1, Class A-2 and
Class A-3 (the "Series 1995-1 Notes"); and
WHEREAS the parties hereto entered into a First Supplemental
Sale and Servicing Agreement dated as of December 27, 1995 in connection with
the issuance by the Issuer of its Series 1995-2 Asset Backed Notes, Class A-4,
Class A-5 and Class A-6 (the "Series 1995-2 Notes"); and
WHEREAS the parties hereto entered into a Second Supplemental
Sale and Servicing Agreement dated as of March 27, 1996 (together with the Sale
and Servicing Agreement and as amended and supplemented from time to time, the
"Sale and Servicing Agreement") in connection with the issuance by the Issuer of
its Series 1996-1 Asset Backed Notes, Class A-7 and Class A-8 (the "Series
1996-1 Notes"); and
WHEREAS the Issuer is authorizing on the date hereof for
issuance its Series 1996-2 Asset Backed Notes, Class A-9 (the "Series 1996-2
Notes"); and
WHEREAS the Issuer also has authorized for issuance
certificates designated as the Issuer's Series 1996-2 Certificates (the "Series
1996-2 Certificates") pursuant to a Third Trust Supplement between Trans-World
Insurance Company d/b/a Educaid and the Eligible Lender Trustee; and
WHEREAS the parties hereto are entering into this Third
Supplemental Sale and Servicing Agreement in connection with the Series 1996-2
Notes.
NOW THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS AND USAGE
Capitalized terms used but not defined herein are defined in
Appendix A hereto, which also contains rules as to usage and construction that
shall be applicable herein.
ARTICLE II.
CONVEYANCE OF FINANCED STUDENT LOANS
SECTION 2.1 CONVEYANCE OF INITIAL FINANCED STUDENT Loans. (a)
In consideration of the Issuer's delivery to or upon the order of the Seller of
the Series 1996-2 Certificates, the Seller agrees to, and the Seller does
hereby, as evidenced by a duly executed written assignment and bill of sale in
the form of Exhibit D, contribute, transfer, assign, set over and otherwise
convey to the Eligible Lender Trustee on behalf of the Issuer, without recourse
(subject to the obligations herein):
(i) all right, title and interest in and to the Financed
Student Loans (other than the Additional Financed Student Loans) (the "Initial
Financed Student Loans") listed on Schedule A to this Agreement and all
obligations of the Obligors thereunder, including all moneys paid thereunder,
and all written communications received by the Seller with respect thereto
(including borrower correspondence, notices of death, disability or bankruptcy
and requests for deferrals or forbearance), on or after the Cut-off Date
relating to the Series 1996-2 Notes;
(ii) all right, title and interest in all funds on deposit
from time to time in the Trust Accounts and in all investments and proceeds
thereof (including all income thereon);
(iii) the proceeds of any and all of the foregoing; and
(iv) the amounts specified in Sections 5.8, 5.9 and 5.10
hereof.
(b) In connection with the contribution and assignment of
Financed Student Loans to the Eligible Lender Trustee on behalf of the Issuer,
on or prior to the Closing Date relating to the Series 1996-2 Notes, the Seller
shall cause the Surety Provider to deliver the Note Surety Bond relating to the
Series 1996-2 Notes to the Eligible Lender Trustee on behalf of the related
Noteholders.
(c) On the Closing Date relating to the sale of the Series
1996-2 Notes, the Seller shall have delivered (A) to the Rating Agencies and the
Surety Provider an Opinion of Counsel with respect to the transfer of the
Initial Financed Student Loans and the Additional Financed Student Loans to be
transferred on each Transfer Date, and (B) to the Eligible Lender Trustee, the
Surety Provider and the Indenture Trustee the Opinion of Counsel required by
Section 11.2(i)(1).
(d) In connection with the contribution of the Initial
Financed Student Loans, on the Closing Date relating to the Series 1996-2 Notes
the Seller and the Issuer shall execute a cross-receipt, which will evidence
receipt by the Seller of the Series 1996-2 Certificates, and receipt by the
Issuer of the Initial Financed Student Loans.
SECTION 2.2 CONVEYANCE OF ADDITIONAL FINANCED STUDENT LOANS.
(a) Subject to the conditions set forth in paragraph (b) below, in consideration
of the Issuer's delivery on the related Transfer Date to or upon the order of
the holder of the Series 1996-2 Certificates of the amount described in Section
5.8(a) to be delivered on such Transfer Date, the Seller does hereby,
contribute, transfer, assign, set over and otherwise convey to the Eligible
Lender Trustee on behalf of the Issuer, without recourse (subject to the
obligations herein) all right, title and interest of the Seller in and to each
Additional Financed Student Loan, and all moneys received thereon, and all
written communications received by the Seller with respect thereto (including
borrower correspondence, notices of death, disability or bankruptcy and requests
for deferrals or forbearances), on and after the related Subsequent Cut-off
Date, made from time to time during the Funding Period relating to the Series
1996-2 Notes.
(b) The Seller shall transfer to the Issuer the Additional
Financed Student Loans for a given Transfer Date and the other property and
rights related thereto described in paragraph (a) above only upon the
satisfaction of each of the following conditions on or prior to such Transfer
Date:
(i) the Seller shall have delivered to the Eligible Lender
Trustee and the Indenture Trustee, with a copy to the Surety Provider, a
duly executed written assignment in substantially the form of Exhibit E
(each, a "Transfer Agreement"), which shall include supplements to
Schedule A hereto, listing such Additional Financed Student Loans;
(ii) the Seller shall have delivered, at least 2 Business
Days prior to such Transfer Date, notice of such transfer to the Eligible
Lender Trustee and the Indenture Trustee, with a copy to the Surety
Provider, including a listing of the type and the aggregate principal
balance of such Additional Financed Student Loans;
(iii) the Seller shall, to the extent required by Section 5.2
of this Agreement and the Sale and Servicing Agreement, have deposited in
the Collection Account all collections in respect of the Additional
Financed Student Loans on and after each applicable Subsequent Cut-off
Date;
(iv) as of each Transfer Date, the Seller was not insolvent
nor will it have been made insolvent by such transfer nor is it aware of
any pending insolvency;
(v) as of each Transfer Date, the Seller was in compliance
with all applicable provisions of the Insurance Agreement and no default,
or event which with notice or the passage of time, or both, would
constitute a default, thereunder has occurred;
(vi) such addition will not result in a material adverse
Federal or Pennsylvania tax consequence to the Issuer, the Noteholders or
the Certificateholders;
(vii) the Funding Period relating to the Series 1996-2 Notes
shall not have terminated;
(viii) the Seller shall have taken any action required to
maintain the first perfected ownership interest of the Issuer in the Trust
Estate and the first perfected security interest of the Indenture Trustee
in the Indenture Trust Estate; and
(ix) no selection procedures believed by the Seller to be
adverse to the interests of the Certificateholders, the Noteholders or the
Surety Provider shall have been utilized in selecting the Additional
Financed Student Loans.
(c) In addition to Additional Financed Student Loans
originated by the Seller, with the prior consent of the Surety Provider, the
Seller may direct the Eligible Lender Trustee to acquire one or more portfolios
of specified student loans as Additional Financed Student Loans hereunder
subject to satisfaction of the conditions specified in Section 2.2(b); PROVIDED,
HOWEVER, that the Transfer Agreement delivered by the Seller may be modified to
reflect the contribution to the Issuer by the Seller of its rights to acquire
such Additional Financed Student Loans.
SECTION 2.3 CONVEYANCE OF CERTAIN FINANCED STUDENT LOANS BY
THE ELIGIBLE LENDER TRUSTEE TO THE SELLER. (a) Upon receipt of written notice
(or telephonic or facsimile notice followed by written notice) from the Seller
(or from the Master Servicer on behalf of the Seller) by the Eligible Lender
Trustee and the Indenture Trustee, a copy of such notice to be concurrently
delivered to the Surety Provider, the Eligible Lender Trustee will convey to the
Seller the Financed Student Loans identified in such notice, which are to be
repaid with proceeds of the Consolidation Loans to be made by or on behalf of
the Seller. Simultaneously with each such conveyance by the Eligible Lender
Trustee and the making by the Seller of each such Consolidation Loan, the Seller
shall deposit into the Collection Account an amount equal to the aggregate
Purchase Amount of such Financed Student Loans, as payment for such conveyance.
(b) Upon receipt of written notice (or telephonic or
facsimile notice followed by written notice) from the Seller (or from the Master
Servicer on behalf of the Seller) by the Eligible Lender Trustee and the
Indenture Trustee, that a Financed Student Loan that is a Serial Loan is to be
conveyed to the holder of one or more student loans to which such Financed
Student Loan is serial, a copy of such notice to be concurrently delivered to
the Surety Provider, the Eligible Lender Trustee shall convey to the order of
the Seller's designee the Financed Student Loan(s) identified in such notice.
Within 75 days of each such conveyance by the Eligible Lender Trustee, the
Seller shall either (i) cause the transferee of such Financed Student Loan(s) to
pay into the Collection Account an amount at least equal to the aggregate
Purchase Amount of such Financed Student Loan(s) in consideration for such
conveyance or (ii) reconvey to the Eligible Lender Trustee such Financed Student
Loan(s). Until such time, if any, as the amount set forth in clause (i) above is
deposited into the Collection Account, all payments received on or with respect
to such Financed Student Loan shall remain an asset of the Trust. The Seller, on
behalf of the Trust, shall cause to be remitted to TMS Student Holdings, Inc.,
in its capacity as holder of a 1% interest in the Certificates and holder of the
Series 1996-2 Certificates, any amount paid by the transferee of such Financed
Student Loan(s) in excess of the aggregate Purchase Amount.
(c) Upon receipt of written notice (or telephonic or
facsimile notice followed by written notice) from the Master Servicer by the
Eligible Lender Trustee and the Indenture Trustee, a copy of such notice to be
concurrently delivered to the Surety Provider, the Eligible Lender Trustee will
convey to the Master Servicer the Financed Student Loans identified in such
notice, which are to be transferred to a Guarantor in consideration of a related
Guarantee Payment. Within one Business Day of its receipt of the related
Guarantee Payment, the Master Servicer shall deposit, or cause to be deposited,
into the Collection Account an amount equal to such Guarantee Payment, as
payment of such conveyance.
SECTION 2.4 SECURITY AGREEMENT. Although it is the intent of
the parties to this Agreement that the conveyance of the Seller's right, title
and interest in and to the Financed Student Loans pursuant to this Agreement
shall constitute a contribution and assignment and not a loan, in the event that
such conveyance is deemed to be a loan, it is the intent of the parties to this
Agreement that the Seller shall be deemed to have granted to the Eligible Lender
Trustee, on behalf of the Issuer, a first priority perfected security interest
in all of the Seller's right, title and interest in, to and under the Financed
Student Loans and the proceeds thereof, and that this Agreement shall constitute
a security agreement under applicable law.
ARTICLE III.
THE FINANCED STUDENT LOANS
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF TMSI AND THE
SELLER WITH RESPECT TO THE FINANCED STUDENT LOANS. TMSI and the Seller, jointly
and severally, make the following representations and warranties as to the
Financed Student Loans being transferred to the Eligible Lender Trustee on the
Closing Date relating to the Series 1996-2 Notes and the Financed Student Loans
to be transferred to the Eligible Lender Trustee during the Funding Period for
the Series 1996-2 Notes, on which the Issuer is deemed to have relied in
acquiring (through the Eligible Lender Trustee) such Financed Student Loans.
Such representations and warranties speak as of the execution and delivery of
this Agreement and as of the Closing Date relating to the Series 1996-2 Notes,
in the case of the Initial Financed Student Loans, and as of the applicable
Transfer Date, in the case of the Additional Financed Student Loans, but shall
survive the sale, transfer and assignment of such Financed Student Loans to the
Eligible Lender Trustee on behalf of the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture. As used in this Article III, unless
otherwise indicated the term "Financed Student Loans" shall include only the
Financed Student Loans being transferred to the Eligible Lender Trustee on the
Closing Date for the Series 1996-2 Notes and the Financed Student Loans to be
transferred to the Eligible Lender Trustee during the Funding Period for the
Series 1996-2 Notes. Accordingly, unless otherwise indicated, the term "Financed
Student Loan" shall not be deemed to include Financed Student Loans transferred
to the Eligible Lender Trustee prior to the Closing Date for the Series 1996-2
Notes.
(i) CHARACTERISTICS OF FINANCED STUDENT LOANS. Each Financed
Student Loan (A) was originated in the United States of America, its
territories, its possessions or other areas subject to its
jurisdiction to an eligible borrower under applicable law and
agreements and was fully and properly executed by the parties thereto,
(B) was originated or acquired by the Seller in the ordinary course of
its business, (C) has been serviced since the date of its origination
in accordance with all applicable requirements of the applicable
Guarantor and the Higher Education Act and (D) provides or, when the
payment schedule with respect thereto is determined, will provide for
payments on a periodic basis that fully amortize the principal amount
of such Financed Student Loan by its maturity and yields interest at
the rate applicable thereto, as such maturity may be modified in
accordance with any applicable deferral or forbearance periods granted
in accordance with applicable laws and restrictions, including those
of the Higher Education Act or any Guarantee Agreement. Each Financed
Student Loan that is a Stafford Loan qualifies the holder thereof to
receive Interest Subsidy Payments and Special Allowance Payments from
the Department. Each Financed Student Loan that is a Consolidation
Loan qualifies the holder thereof to receive Interest Subsidy Payments
and Special Allowance Payments from the Department to the extent
applicable. Each Financed Student Loan that is a PLUS Loan, a SLS Loan
or an Unsubsidized Stafford Loan qualifies the holder thereof to
receive Special Allowance Payments from the Department to the extent
applicable. Each Financed Student Loan qualifies the holder thereof to
receive Guarantee Payments from the applicable Guarantor.
(ii) SCHEDULE OF FINANCED STUDENT LOANS. The information
concerning the Initial Financed Student Loans set forth in Schedule A
to this Agreement and Schedule A to the related Transfer Agreement is
true and correct in all material respects as of the opening of
business on the Cutoff Date relating to the Series 1996-2 Notes or
each applicable Subsequent Cut-off Date, as applicable, and no
selection procedures believed to be adverse to the Noteholders, the
Certificateholders or the Surety Provider were utilized in selecting
the Initial Financed Student Loans or the Additional Financed Student
Loans, as applicable. The computer tape or electronic data
transmission regarding the Initial Financed Student Loans made
available to the Issuer and its assigns and the Surety Provider is
true and correct in all respects as of the Cut- off Date relating to
the Series 1996-2 Notes.
(iii) COMPLIANCE WITH LAW. Each Financed Student Loan
complied at the time it was originated or made and at the execution of
this Agreement or the applicable Transfer Agreement, as the case may
be, complies, and the Seller and its agents, with respect to each such
Financed Student Loan, have at all times complied, in all material
respects with all requirements of applicable Federal, State and local
laws and regulations thereunder, including the Higher Education Act,
the Equal Credit Opportunity Act, the Federal Reserve Board's
Regulation B and other applicable consumer credit laws and equal
credit opportunity laws.
(iv) BINDING OBLIGATION. Each Financed Student Loan
represents the genuine, legal, valid and binding payment obligation in
writing of the related Obligor, enforceable by or on behalf of the
holder thereof against the related Obligor in accordance with its
terms, and no Financed Student Loan has been satisfied, subordinated
or rescinded.
(v) NO DEFENSES. No right of rescission, setoff, counterclaim
or defense has been asserted or threatened with respect to any
Financed Student Loan. No counterclaim, offset, defense or right of
rescission exists with respect to any Financed Student Loan which
could be asserted and maintained, or which, with notice, lapse of
time, or the occurrence or failure to occur of any act or event, could
be asserted and maintained by the borrower against the Eligible Lender
Trustee as a result of any act or omission to act on the part of the
Seller, the Master Servicer, the Servicer, the Administrator, the
Eligible Lender Trustee, the Indenture Trustee or any of their
respective agents, employees or other designees.
(vi) NO DEFAULT. No Financed Student Loan has a payment that
is more than 90 days overdue as of the Cut-off Date relating to the
Series 1996-2 Notes or the applicable Subsequent Cut-off Date, as the
case may be, and, except as permitted in this paragraph, no default,
breach, violation or event permitting acceleration under the terms of
any Financed Student Loan has occurred; and, except for payment
defaults continuing for a period of not more than 90 days, no
continuing condition that with notice or the lapse of time or both
would constitute a default, breach, violation or event permitting
acceleration under the terms of any Financed Student Loan has arisen;
and the Seller has not waived and shall not waive any of the foregoing
other than as permitted by the Basic Documents.
(vii) TITLE. The transfer and assignment herein contemplated
constitutes a sale of the Financed Student Loans from the Seller to
the Eligible Lender Trustee on behalf of the Issuer and the beneficial
interest in and title to such Financed Student Loans shall not be part
of the debtor's estate in the event of the appointment of a receiver
with respect to the Seller. No Financed Student Loan has been sold,
transferred, assigned or pledged by the Seller to any Person other
than the Eligible Lender Trustee on behalf of the Issuer or any such
assignment or pledge has been released. Immediately prior to the
transfer and assignment herein contemplated, the Seller had good title
to each Financed Student Loan, free and clear of all Liens and,
immediately upon the transfer thereof, the Eligible Lender Trustee on
behalf of the Issuer shall have good title to each such Financed
Student Loan, free and clear of all Liens, and the transfer to the
Indenture Trustee, shall have been perfected under the UCC.
(viii) LAWFUL ASSIGNMENT. No Financed Student Loan has been
originated in, or is subject to the laws of, any jurisdiction under
which the sale, transfer and assignment of such Financed Student Loan
or any Financed Student Loan under this Agreement, each Transfer
Agreement or the Indenture is unlawful, void or voidable.
(ix) ALL FILINGS MADE. All filings (including UCC filings)
necessary in any jurisdiction to give the Issuer a first perfected
ownership interest in the Financed Student Loans, and to give the
Indenture Trustee a first perfected security interest therein, shall
have been made.
(x) ONE ORIGINAL. There is only one original executed copy
(which may be in counterparts) of each promissory note evidencing a
Financed Student Loan.
(xi) PRINCIPAL BALANCE. The aggregate principal balance of
the Initial Financed Student Loans, plus accrued interest to be
capitalized with respect thereto, as of the Cut-off Date relating to
the Series 1996-2 Notes is $625,664,328.
(xii) [Reserved]
(xiii) INTEREST ACCRUING. Each Financed Student Loan is
accruing interest (whether or not such interest is being paid
currently, by the Obligor or by the Department, or is being
capitalized), except as otherwise expressly permitted by the Basic
Documents.
(xiv) SELLER'S REPRESENTATIONS. The representations and
warranties of the Seller contained in Section 6.1 are true and
correct.
(xv) COMPLIANCE WITH REQUIREMENTS OF GUARANTORS. Each
Financed Student Loan will be maintained and serviced in all material
respects in compliance with all applicable requirements of the
applicable Guarantor and the Department and is or will be represented
by one or more promissory notes or other written agreements that
adequately document such Financed Student Loans.
(xvi) NO ADVERSE EFFECTS. The sale and assignment of Financed
Student Loans to the Eligible Lender Trustee by the Seller pursuant to
this Agreement or the applicable Transfer Agreement will not, by
reason thereof, have any adverse effect upon the validity, legality or
enforceability of the Financed Student Loans.
(xvii) GUARANTEES IN EFFECT. On the dates of making thereof
and of transfer thereof to the Eligible Lender Trustee, each Financed
Student Loan will be guaranteed by a Guarantor and covered by a
federal reimbursement contract between such Guarantor and the
Department and each such guarantee and federal reimbursement contract
will be in full force and effect. All guarantee fees and origination
fees with respect to each Financed Student Loan shall have been timely
paid or will be timely paid. The guarantee with respect to each
Financed Student Loan will be freely transferable as an incident to
the sale of each Student Loan to the Eligible Lender Trustee, and the
Eligible Lender Trustee will be entitled to the benefits of such
guarantee, and none of the Financed Student Loans will at any time
prior to its transfer to the Eligible Lender Trustee have been
tendered to either the Department, the Secretary of Education or the
applicable Guarantor for payment.
(xviii) GUARANTEE AGREEMENTS. The Eligible Lender Trustee is
party to a valid and binding Guarantee Agreement with each Guarantee
Agency guaranteeing a Financed Student Loan.
(xix) INTEREST ON CONSOLIDATION LOANS. No Financed Student
Loan that is a Consolidation Loan shall bear a rate of interest below
that provided for in the Higher Education Act.
SECTION 3.2 PURCHASE UPON BREACH; REIMBURSEMENT. The Seller,
TMSI, the Master Servicer or the Eligible Lender Trustee, as the case may be,
shall inform the other parties to this Agreement, the Indenture Trustee and the
Surety Provider promptly, in writing, upon the discovery of any breach of the
representations and warranties made pursuant to Section 3.1. Unless any such
breach shall have been cured within 60 days following the discovery thereof by
the Seller or TMSI or receipt by the Seller or TMSI of written notice from the
Eligible Lender Trustee, the Surety Provider, TMSI or the Master Servicer of
such breach, the Seller shall purchase any Financed Student Loan in which the
interests of the Noteholders, the Certificateholders or the Surety Provider are
materially and adversely affected by any such breach as of the first day
succeeding the end of such 60-day period that is the last day of a Collection
Period; provided that it is understood that any such breach that does not affect
any Guarantor's obligation to guarantee payment of such Financed Student Loan to
the Eligible Lender Trustee will not be considered to have a material adverse
effect for this purpose. In consideration of and simultaneously with the
purchase of the Financed Student Loan, the Seller shall remit the Purchase
Amount, in the manner specified in Section 5.4, and the Issuer shall execute
such assignments and other documents reasonably requested by the Seller in order
to effect such transfer. If the Seller fails to purchase within the time period
provided hereby any Financed Student Loan it is required to purchase hereunder,
TMSI shall remit, or cause to be remitted, no later than the date the Seller
would be required to remit such amount, the Purchase Amount for such Financed
Student Loan, in the manner specified in Section 5.4, and the Issuer shall
execute such assignments and other documents reasonably requested by TMSI or its
designee in order to effect such transfer; provided, however, that if a designee
of TMSI purchases any Financed Student Loans, such designee shall not have any
pre-existing debt with respect to such purchase, and any transfer of a Financed
Student Loan pursuant to this Section shall be made contemporaneously with
repayment or the incurrence of the repayment obligation. Upon any such transfer
of a Financed Student Loan, legal title to, and beneficial ownership and control
of, the related Financed Student Loan File will thereafter belong to the Seller
or TMSI's designee, as the case may be. In addition, if any such breach does not
trigger such a purchase obligation but does result in the refusal by a Guarantor
to guarantee the applicable portion of the accrued interest, or the loss of
(including any obligation of the Issuer to repay to the Department) certain
Interest Subsidy Payments and Special Allowance Payments, with respect to a
Financed Student Loan, then, unless such breach, if curable, is cured within 60
days, the Seller shall, at its option, either purchase such Financed Student
Loan at the applicable Purchase Amount or reimburse the Issuer by remitting an
amount equal to the sum of all amounts that would have been payable if not for
such breach in the manner specified in Section 5.4 not later than the last day
of the Collection Period in which such 60th day occurs. If the Seller fails to
purchase such Financed Student Loan or reimburse the Issuer such amount, TMSI
shall reimburse the Issuer such amount in the manner specified in Section 5.4 no
later than the date the Seller would be required to remit such amount. Subject
to the provisions of Section 5.6 and Section 6.3 and the Insurance Agreement,
the sole remedy of the Issuer, the Eligible Lender Trustee, the Indenture
Trustee, the Noteholders, the Certificateholders or the Surety Provider with
respect to a breach of representations and warranties pursuant to Section 3.1
and the agreement contained in this Section 3.2 shall be to require the Seller,
TMSI or TMSI's designee, as the case may be, to purchase Financed Student Loans
or to reimburse the Issuer as provided above pursuant to this Section 3.2,
subject to the conditions contained herein.
SECTION 3.3 CUSTODY OF FINANCED STUDENT LOAN FILES. To assure
uniform quality in servicing the Financed Student Loans and to reduce
administrative costs, the Issuer hereby revocably appoints the Master Servicer,
and the Master Servicer hereby accepts such appointment, to act for the benefit
of the Issuer and the Indenture Trustee, as custodian of the following documents
or instruments which are hereby constructively delivered to the Indenture
Trustee, as pledgee of the Issuer (or, in the case of the Additional Financed
Student Loans, will as of the applicable Transfer Date be constructively
delivered to the Indenture Trustee, as pledgee of the Issuer) with respect to
each Financed Student Loan (such documents are referred to collectively as the
"Financed Student Loan File").
(a) the original fully executed copy of the note evidencing
the Financed Student Loan (which may be included in the application)
unless such note is in the custody of a Guarantor;
(b) to the extent the Seller has retained it on hard copy,
the original loan application fully executed by the Obligor (which may
be included in the note evidencing a Financed Student Loan);
(c) the notice of guarantee; and
(d) any and all other documents and computerized records that
any of the Master Servicer, the Administrator or the Seller shall keep
on file, in accordance with its customary procedures, relating to such
Financed Student Loan or any Obligor with respect thereto.
Notwithstanding the foregoing, the Master Servicer shall transfer possession of
the Financed Student Loan Files in accordance with Section 2.02(r) of the
Insurance Agreement. Moreover, notwithstanding the foregoing, if set forth in a
supplement to this Agreement approved by the Surety Provider, with respect to
Financed Student Loans originated by third parties and subsequently purchased by
the Seller, the originators of such Financed Student Loans or another party may
act as custodian of the Financed Student Loan Files for such Financed Student
Loans.
SECTION 3.4. DUTIES OF MASTER SERVICER AS CUSTODIAN.
(a) SAFEKEEPING. Either the Master Servicer, as custodian, or
a subcustodian appointed pursuant to Section 3.8, shall hold the Financed
Student Loan Files for the benefit of the Issuer and maintain such accurate and
complete accounts, records and computer systems pertaining to each Financed
Student Loan File as shall enable the Issuer to comply with this Agreement and
the other Basic Documents. In performing its duties as custodian, the Master
Servicer shall act with reasonable care, using that degree of skill and
attention that the Master Servicer exercises with respect to the student loan
files relating to all comparable student loans that the Master Servicer services
for itself or others and shall ensure that it complies fully and completely with
all applicable Federal and State laws, including the Higher Education Act, with
respect thereto. The Master Servicer shall cause to be conducted periodic audits
of the Financed Student Loan Files held by it under this Agreement and of the
related accounts, records and computer systems, in such a manner as shall enable
the Issuer or the Indenture Trustee to verify the accuracy of the Master
Servicer's record keeping. The Master Servicer shall promptly report to the
Issuer, the Indenture Trustee, the Rating Agencies and the Surety Provider any
failure on its part to hold the Financed Student Loan Files and maintain its
accounts, records and computer systems as herein provided and promptly take
appropriate action to remedy any such failure. Nothing herein shall be deemed to
require an initial review (other than as specified in the Insurance Agreement)
or any periodic review by the Issuer, the Eligible Lender Trustee or the
Indenture Trustee of the Financed Student Loan Files.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Master Servicer
shall maintain each Financed Student Loan File at its office located at 3301 C
Street, Suite 100-A, Sacramento, California 95816 or at such other office as
shall be specified by written notice to the Issuer, the Surety Provider and the
Indenture Trustee not later than 30 days prior to any change in location. The
Financed Student Loan Files relating to all Financed Student Loans subject to
the Lien of the Indenture in the custody of the Master Servicer shall be
segregated by the Master Servicer from other comparable files, by maintaining
such Files in file cabinets that are physically segregated from such other
comparable files and are clearly marked to indicate that the files contained
therein have been sold to the Issuer and that a security interest has been
granted in favor of the Indenture Trustee and either (i) each original note
evidencing a Financed Student Loan shall be stamped with a signed endorsement of
the note in blank or (ii) Financed Student Loans not originated by the Seller
and not indorsed pursuant to (i) above will, with the consent of the Surety
Provider, be indorsed utilizing a blanket indorsement. Upon reasonable prior
notice, the Master Servicer shall make available to the Issuer, the Surety
Provider and the Indenture Trustee or their respective duly authorized
representatives, attorneys or auditors the Financed Student Loan Files and the
related accounts, records and computer systems maintained by the Master Servicer
at such times during normal business hours as the Issuer, the Surety Provider or
the Indenture Trustee shall instruct.
SECTION 3.5. INSTRUCTIONS; AUTHORITY TO ACT. The Master
Servicer shall be deemed to have received proper instructions with respect to
the Financed Student Loan Files upon its receipt of written instructions signed
by a Responsible Officer of the Indenture Trustee.
SECTION 3.6. CUSTODIAN'S INDEMNIFICATION. The Master
Servicer, as custodian, shall pay from its own funds for any loss, liability or
expense, including reasonable attorneys' fees, that may be imposed on, incurred
by or asserted against the Issuer, the Eligible Lender Trustee, the Surety
Provider or the Indenture Trustee or any of their officers, directors, employees
and agents as the result of any improper act or omission in any way relating to
the maintenance and custody by the Master Servicer as custodian of the Financed
Student Loan Files where the final determination that any such improper act or
omission by the Master Servicer resulted in such loss, liability or expense is
established by a court of law, by an arbitrator or by way of settlement agreed
to by the Master Servicer; PROVIDED, HOWEVER, that the Master Servicer shall not
be liable to the Eligible Lender Trustee for any portion of any such amount
resulting from the willful misfeasance, bad faith or negligence of the Eligible
Lender Trustee and the Master Servicer shall not be liable to the Indenture
Trustee or the Surety Provider, as the case may be, for any portion of any such
amount resulting from the willful misfeasance, bad faith or negligence of the
Indenture Trustee or the Surety Provider, as the case may be. This provision
shall not be construed to limit the Master Servicer's or any other party's
rights, obligations, liabilities, claims or defenses which arise as a matter of
law or pursuant to any other provision of this Agreement.
SECTION 3.7. EFFECTIVE PERIOD AND TERMINATION. The Master
Servicer's appointment as custodian of the Financed Student Loans being conveyed
hereunder shall become effective as of the Closing Date relating to the Series
1996-2 Notes and shall continue in full force and effect for so long as the
Master Servicer shall remain the Master Servicer hereunder and under the Sale
and Servicing Agreement. If the Master Servicer or any successor Master Servicer
shall resign as Master Servicer in accordance with the provisions of this
Agreement or the Sale and Servicing Agreement or if all the rights and
obligations of the Master Servicer or any such successor Master Servicer shall
have been terminated under Section 8.1 of this Agreement or the Sale and
Servicing Agreement, the appointment of the Master Servicer or such successor
Master Servicer as custodian shall be terminated simultaneously with the
effectiveness of such termination. As soon as practicable on or after any
termination of such appointment (and in any event within (i) 10 Business Days,
with respect to that portion of the Financed Student Loan Files consisting of
electronic records and information, and (ii) 30 Business Days, with respect to
the remaining portion of the Financed Student Loan Files), the Master Servicer
shall deliver the Financed Student Loan Files to the Indenture Trustee or the
Indenture Trustee's agent at such place or places as the Indenture Trustee may
reasonably designate.
SECTION 3.8. APPOINTMENT OF SUBCUSTODIAN. With the consent of
the Surety Provider, the Master Servicer may at any time appoint a subcustodian
to perform all or any portion of its obligations as custodian hereunder;
PROVIDED, HOWEVER, that the Master Servicer shall remain obligated and be liable
to the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders, the Noteholders and the Surety Provider for the custodial
services with respect to the Financed Student Loan Files in accordance with the
provisions hereof without diminution of such obligation and liability by virtue
of the appointment of such subcustodian and to the same extent and under the
same terms and conditions as if the Master Servicer alone were performing the
custodial services. The fees and expenses of the subcustodian shall be as agreed
between the Master Servicer and its subcustodian from time to time and none of
the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders, the Noteholders or the Surety Provider shall have any
responsibility therefor.
ARTICLE IV.
ADMINISTRATION AND SERVICING OF FINANCED STUDENT LOANS
SECTION 4.1 DUTIES OF MASTER SERVICER. The Master Servicer,
for the benefit of the Issuer (to the extent provided herein), shall manage,
service, administer and make collections on the Financed Student Loans with
reasonable care, using that degree of skill and attention that the Master
Servicer exercises with respect to all comparable student loans that it services
for itself and others. Without limiting the generality of the foregoing or of
any other provision set forth in this Agreement and notwithstanding any other
provision to the contrary set forth herein, the Master Servicer shall manage,
service, administer and make collections with respect to the Financed Student
Loans including collection of any Interest Subsidy Payments and Special
Allowance Payments in accordance with all applicable Federal and State laws,
including all applicable standards, guidelines and requirements of the Higher
Education Act and any Guarantee Agreement, the failure to comply with which
would adversely affect the eligibility of one or more of the Financed Student
Loans for Interest Subsidy Payments, Special Allowance Payments or Guarantee
Payments or would have an adverse effect on the Certificateholders, the
Noteholders or the Surety Provider. The Master Servicer also hereby acknowledges
that its obligation to service the Financed Student Loans includes those
Additional Financed Student Loans conveyed by the Seller to the Eligible Lender
Trustee on behalf of the Issuer pursuant to Section 2.2 and the related Transfer
Agreement, a copy of which (if the Master Servicer is not the Seller) shall be
delivered to the Master Servicer by the Seller promptly upon execution thereof;
PROVIDED that any failure by the Seller to so deliver a Transfer Agreement shall
not affect the Master Servicer's obligations hereunder to service all the
Financed Student Loans.
The Master Servicer's duties shall include collection and
posting of all payments, responding to inquiries of borrowers on such Financed
Student Loans, monitoring borrowers' status, making required disclosures to
borrowers, investigating delinquencies, sending bills or payment coupons to
borrowers and otherwise establishing repayment terms, reporting tax information
to borrowers, if applicable, accounting for collections and furnishing monthly
and annual statements with respect thereto to the Administrator. Subject to the
provisions of Section 4.2, the Master Servicer shall follow its customary
standards, policies and procedures in performing its duties as Master Servicer.
Without limiting the generality of the foregoing, the Master Servicer is
authorized and empowered to execute and deliver, on behalf of itself, the
Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders, the Noteholders and the Surety Provider or any of them,
instruments of satisfaction or cancellation, or partial or full release or
discharge, and all other comparable instruments, with respect to such Financed
Student Loans; PROVIDED, HOWEVER, that the Master Servicer agrees that it will
not (a) permit any rescission or cancellation of a Financed Student Loan except
as ordered by a court of competent jurisdiction or governmental authority or as
otherwise consented to in writing by the Eligible Lender Trustee, the Surety
Provider and the Indenture Trustee or (b) reschedule, revise, defer or otherwise
compromise with respect to payments due on any Financed Student Loan except
pursuant to any applicable deferral or forbearance periods or otherwise in
accordance with all applicable standards, guidelines and requirements with
respect to the servicing of the Financed Student Loans (notwithstanding the
foregoing, the Master Servicer may, in its sole discretion, without having to
obtain the consent or approval of any other party, waive amounts owing under a
Financed Student Loan up to and including $50.00); PROVIDED FURTHER, HOWEVER,
that the Master Servicer shall not agree to any decrease of the interest rate on
(other than as provided in the Master Servicer's Reduced Interest Rate Program),
or the principal amount payable with respect to, any Financed Student Loan. The
Master Servicer also shall be responsible for maintaining each Guarantee
Agreement, including advising the Eligible Lender Trustee and the Indenture
Trustee of any action required to be taken to maintain each such Guarantee
Agreement. The Eligible Lender Trustee on behalf of the Issuer hereby grants a
power of attorney and all necessary authorization to the Master Servicer to sign
endorsements of the notes relating to the Financed Student Loans on behalf of
the Eligible Lender Trustee in connection with conveyances pursuant to Section
2.3 hereof and to maintain any and all collection procedures with respect to the
Financed Student Loans, including filing, pursuing and recovering claims against
the Guarantors for Guarantee Payments and taking any steps to enforce such
Financed Student Loan such as commencing a legal proceeding to enforce a
Financed Student Loan in the name of the Issuer, the Eligible Lender Trustee,
the Indenture Trustee, the Certificateholders, the Noteholders or the Surety
Provider. The Eligible Lender Trustee or the Indenture Trustee shall upon the
written request of the Master Servicer or the Administrator furnish the Master
Servicer or the Administrator with any other powers of attorney and other
documents reasonably necessary or appropriate to enable the Master Servicer or
the Administrator to carry out its servicing and administrative duties
hereunder.
SECTION 4.2 COLLECTION OF FINANCED STUDENT LOAN Payments. (a)
The Master Servicer shall make reasonable efforts (including all efforts that
may be specified under the Higher Education Act or any Guarantee Agreement) to
collect all payments called for under the terms and provisions of the Financed
Student Loans as and when the same shall become due and shall follow such
collection procedures as it follows with respect to all comparable student loans
that it services for itself and others. The Master Servicer may in its
discretion waive any late payment charge or any other fees that may be collected
in the ordinary course of servicing a Financed Student Loan.
(b) The Master Servicer shall make reasonable efforts to
claim, pursue and collect all Guarantee Payments from the Guarantors pursuant to
the Guarantee Agreements with respect to any of the Financed Student Loans as
and when the same shall become due and payable, shall comply with all applicable
laws and agreements with respect to claiming, pursuing and collecting such
payments and shall follow such practices and procedures as it follows with
respect to all comparable guarantee agreements and student loans that it
services for itself and others. In connection therewith, the Master Servicer is
hereby authorized and empowered to convey to any Guarantor the note and the
related Financed Student Loan File representing any Financed Student Loan in
connection with submitting a claim to such Guarantor for a Guarantee Payment in
accordance with the terms of the applicable Guarantee Agreement whereupon the
Lien of the Indenture Trustee relating to such Financed Student Loan shall be
released.
(c) The Master Servicer shall, on behalf of the Issuer, make
reasonable efforts to claim, pursue and collect all Interest Subsidy Payments
and Special Allowance Payments from the Department with respect to any of the
Financed Student Loans as and when the same shall become due and payable, shall
comply with all applicable laws and agreements with respect to claiming,
pursuing and collecting such payments and shall follow such practices and
procedures as the Master Servicer follows with respect to its own student loans.
All amounts so collected by the Eligible Lender Trustee shall constitute
Available Funds for the applicable Collection Period and shall be deposited into
the Collection Account in accordance with Section 5.4. In connection therewith,
the Master Servicer shall prepare and file with the Department on a timely basis
all claims, forms and other documents and filings necessary or appropriate in
connection with the claiming of Interest Subsidy Payments and Special Allowance
Payments on behalf of the Eligible Lender Trustee and shall otherwise assist the
Eligible Lender Trustee in pursuing and collecting such Interest Subsidy
Payments and Special Allowance Payments from the Department. The Eligible Lender
Trustee shall, upon the written request of the Master Servicer, furnish the
Master Servicer with any power of attorney and other documents reasonably
necessary or appropriate to enable the Master Servicer to prepare and file such
claims, forms and other documents and filings.
SECTION 4.3. REALIZATION UPON FINANCED STUDENT LOANS. For the
benefit of the Issuer, the Master Servicer shall use reasonable efforts
consistent with its customary servicing practices and procedures and including
all efforts that may be specified under the Higher Education Act or any
Guarantee Agreement in its servicing of any delinquent Financed Student Loans.
SECTION 4.4. NO IMPAIRMENT. The Master Servicer shall not
impair the rights of the Issuer, the Eligible Lender Trustee, the Indenture
Trustee, the Certificateholders, the Noteholders or the Surety Provider in the
Financed Student Loans.
SECTION 4.5. PURCHASE OF FINANCED STUDENT LOANS;
REIMBURSEMENT. TMSI, the Master Servicer or the Eligible Lender Trustee, as the
case maybe, shall inform the other parties to this Agreement, the Indenture
Trustee and the Surety Provider promptly, in writing, upon the discovery of any
breach of an obligation under Section 4.1, 4.2, 4.3 or 4.4 hereof. Unless any
such breach shall have been cured within 60 days following the discovery thereof
by the Master Servicer or TMSI or receipt by the Master Servicer or TMSI of
written notice from the Eligible Lender Trustee, TMSI, the Master Servicer or
the Surety Provider of such breach (or, at the Master Servicer's election, the
last day of the first month following such discovery), the Master Servicer shall
purchase any Financed Student Loan in which the interests of the Noteholders,
the Certificateholders or the Surety Provider are materially and adversely
affected by such breach as of the first day succeeding the end of such 60-day
period that is the last day of a Collection Period; provided that it is
understood that any such breach that does not affect any Guarantor's obligation
to guarantee payment of such Financed Student Loan to the Eligible Lender
Trustee will not be considered to have a material adverse effect for this
purpose. If the Master Servicer takes any action or fails to take any action
during any Collection Period pursuant to the sections referred to above that
impairs the rights of the Issuer, the Indenture Trustee, the Eligible Lender
Trustee, the Certificateholders, the Noteholders or the Surety Provider in any
Financed Student Loan or otherwise than as provided in such sections, the Master
Servicer shall purchase such Financed Student Loan as of the last day of such
Collection Period. In consideration of and simultaneously with the purchase of
any such Financed Student Loan pursuant to either of the two preceding
sentences, the Master Servicer shall remit the Purchase Amount in the manner
specified in Section 5.4, and the Issuer shall execute such assignments and
other documents reasonably requested by the Master Servicer in order to effect
such transfer. If the Master Servicer fails to purchase within the time period
provided hereby any Financed Student Loan it is required to purchase hereunder,
TMSI shall remit, or cause to be remitted, no later than the date the Master
Servicer would be required to remit such amount, the Purchase Amount for such
Financed Student Loan, in the manner specified in Section 5.4, and the Issuer
shall execute such assignments and other documents reasonably requested by TMSI
or its designee in order to effect such transfer; provided, however, that if a
designee of TMSI repurchases any Financed Student Loans, such designee shall not
have any pre-existing debt with respect to such purchase, and any transfer of a
Financed Student Loan pursuant to this Section shall be made contemporaneously
with the repurchase or the incurrence of the repurchase obligation. Upon any
such transfer of a Financed Student Loan, legal title to, and beneficial
ownership and control of, the related Financed Student Loan File will thereafter
belong to the Master Servicer or TMSI's designee, as the case may be. In
addition, if any such breach by the Master Servicer does not trigger such a
purchase obligation but does result in the refusal by a Guarantor to guarantee
the applicable portion of the accrued interest, or the loss of (including any
obligation of the Issuer to repay to the Department) certain Interest Subsidy
Payments and Special Allowance Payments, with respect to a Financed Student
Loan, then, unless such breach, if curable, is cured within 60 days, the Master
Servicer shall, at its option, either purchase such Financed Student Loan at the
applicable Purchase Amount or reimburse the Issuer by remitting an amount equal
to the sum of all amounts that would have been payable if not for such breach in
the manner specified in Section 5.4. If the Master Servicer fails to repurchase
such Financed Student Loan or reimburse the Issuer such amount, TMSI shall
reimburse the Issuer such amount in the manner specified in Section 5.4 not
later than the last day of the Collection Period in which such 60th day occurs.
Subject to the provisions of Sections 5.6 and 6.3 and the Insurance Agreement,
the sole remedy of the Issuer, the Eligible Lender Trustee, the Indenture
Trustee, the Certificateholders, the Noteholders or the Surety Provider with
respect to a breach pursuant to Section 4.1, 4.2, 4.3 or 4.4 and the agreement
contained in this Section 4.5 shall be to require the Master Servicer, TMSI or
TMSI's designee, as the case may be, to purchase Financed Student Loans or to
reimburse the Issuer as provided above pursuant to this Section 4.5, subject to
the conditions contained herein. The Eligible Lender Trustee shall have no duty
to conduct any affirmative investigation as to the occurrence of any condition
requiring the purchase of any Financed Student Loan or the reimbursement for any
interest penalty pursuant to this Section 4.5.
Notwithstanding anything contained in this Section 4.5 to the
contrary, with respect to any purchase obligation arising as a result of a
Guarantor denying a Guarantee Payment on a Financed Student Loan, neither the
Master Servicer, nor TMSI, nor TMSI's designee shall be required to purchase
such Financed Student Loan pursuant to this Section 4.5 until the last day of
the Collection Period occurring seven months after the date a claim is rejected.
SECTION 4.6. SERVICING FEE; SERVICING FEE CARRYOVER. For its
services hereunder, the Master Servicer shall be entitled to receive the
Servicing Fee and any Servicing Fee Carryover in the manner set forth in Section
5.5. Notwithstanding anything to the contrary contained herein or in any other
Basic Document, the Master Servicer shall only be entitled to receive any
Servicing Fee Carryover on any applicable Note Distribution Date or Certificate
Distribution Date if and to the extent that sufficient funds are available
pursuant to Section 5.5(e)(iii), 5.6(b)(A) or 5.6(c).
SECTION 4.7. ADMINISTRATOR'S CERTIFICATE. (a) On each
Determination Date, the Administrator will advise the Indenture Trustee in
writing of the applicable Noteholders' Interest Distribution Amount or
Certificateholders' Interest Distribution Amount. Additionally, no later than 16
days prior to each Note Distribution Date for the Class of Notes then entitled
to receive payments of principal (or, after all Notes have been paid in full, no
later than 16 days prior to each Certificate Distribution Date) the
Administrator will advise the Indenture Trustee in writing of the applicable
Noteholders' Principal Distribution Amount (or, after all the Notes have been
paid in full, for the Class of Certificates with the earliest Final Maturity
Date, the Certificateholders' Principal Distribution Amount). Further, on the
Determination Date relating to the first Certificate Distribution Date occurring
each month (or for each month in which a Note Distribution Date occurs earlier
than the Certificate Distribution Date, on the Determination Date relating to
such earlier Note Distribution Date), the Administrator will advise the
Indenture Trustee in writing of Transaction Fees (separately and in the
aggregate) for the preceding month.
(b) On each Determination Date, the Administrator also shall
deliver to the Eligible Lender Trustee, the Indenture Trustee and the Seller (if
the Seller is not also the Administrator), with a copy to the Surety Provider
and to the Rating Agencies, an Administrator's Certificate containing all
information necessary to make the distributions pursuant to Sections 5.5, 5.6
and 5.8(b), if applicable, for the upcoming Note Distribution Date or
Certificate Distribution Date. Such Administrator's Certificate also shall
include the amount, if any, of Note Surety Bond Payments or Certificate Surety
Bond Payments required to be made on the upcoming Note Distribution Date or
Certificate Distribution Date. Financed Student Loans to be repurchased by the
Seller (whether pursuant to Section 2.3 or 3.2), purchased by the Master
Servicer, TMSI or TMSI's designee or acquired by any Guarantor shall be
identified by the Administrator by type of loan and borrower social security
number with respect to such Financed Student Loan (as specified in Schedule A).
(c) On or before the 15th day of each month, the
Administrator shall deliver to the Eligible Lender Trustee, the Indenture
Trustee and the Seller (if the Seller is not also the Administrator), with a
copy to the Surety Provider and the Rating Agencies, a report setting forth by
component the Available Funds for the immediately preceding Collection Period.
SECTION 4.8 ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF
DEFAULT. (a) Each of the Master Servicer and the Administrator shall deliver to
the Seller, the Eligible Lender Trustee and the Indenture Trustee, on or before
April 30 of each year beginning April 30, 1997, an Officer's Certificate of the
Master Servicer or the Administrator, as the case may be, dated as of December
31 of the preceding year, stating that (i) a review of the activities of the
Master Servicer or the Administrator, as the case may be, during the preceding
12-month period and of its performance under this Agreement, the Sale and
Servicing Agreement and any other Supplemental Sale and Servicing Agreements has
been made under such officers' supervision and (ii) to the best of such
officers' knowledge, based on such review, the Master Servicer or the
Administrator, as the case may be, has fulfilled all its obligations under such
Agreements, or under such Agreements and the Administration Agreement,
respectively, throughout such year or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof. Pursuant to the Indenture, the
Indenture Trustee shall send a copy of each such Officers' Certificate and each
report referred to in Section 4.9 to the Rating Agencies, and the Eligible
Lender Trustee shall send a copy of each such Officers' Certificate and each
such report to the Surety Provider. A copy of each such Officers' Certificate
and each report referred to in Section 4.9 may be obtained by any
Certificateholder, Certificate Owner, Noteholder or Note Owner by a request in
writing to the Eligible Lender Trustee addressed to its Corporate Trust Office,
together with evidence satisfactory to the Eligible Lender Trustee that such
Person is one of the foregoing parties. Pursuant to the Indenture, upon the
telephone request of the Eligible Lender Trustee, the Indenture Trustee will
promptly furnish the Eligible Lender Trustee a list of Noteholders as of the
date specified by the Eligible Lender Trustee.
(b) The Master Servicer shall deliver to the Eligible Lender
Trustee, the Indenture Trustee, the Seller, the Surety Provider and the Rating
Agencies, promptly after having obtained knowledge thereof, but in no event
later than five Business Days thereafter, written notice in an Officer's
Certificate of the Master Servicer of any event which with the giving of notice
or lapse of time, or both, would become a Master Servicer Default under Section
8.1(a).
(c) The Administrator shall deliver to the Eligible Lender
Trustee, the Indenture Trustee, the Master Servicer, the Surety Provider and the
Rating Agencies, promptly after having obtained knowledge thereof, but in no
event later than five Business Days thereafter, written notice in an Officer's
Certificate of the Administrator of any event which with the giving of notice or
lapse of time, or both, would become an Administrator Default under Section
8.1(b)(1), (2) or (3).
SECTION 4.9. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
REPORT. Each of the Master Servicer and the Administrator shall cause Deloitte &
Touche, KPMG Peat Marwick, or any other firm of independent certified public
accountants approved by the Surety Provider, to deliver to the Seller, the
Eligible Lender Trustee, the Indenture Trustee and the Surety Provider on or
before April 30 of each year beginning April 30, 1997, a report addressed to the
Master Servicer and to the Seller, the Eligible Lender Trustee and the Indenture
Trustee, to the effect that such firm has examined certain documents and records
relating to the servicing of the Financed Student Loans, for the administration
of the Financed Student Loans and of the Trust, as the case may be, during the
preceding calendar year and that, on the basis of the accounting and auditing
procedures considered appropriate under the circumstances, such firm is of the
opinion that such servicing or administration was conducted in compliance with
the terms of this Agreement, the Sale and Servicing Agreement, any other
Supplemental Sale and Servicing Agreements, or with the terms of such Agreements
and the Administration Agreement, as the case may be, except for (i) such
exceptions as such firm shall believe to be immaterial and (ii) such other
exceptions as shall be set forth in such report.
Such report will also indicate that the firm is independent
of the Master Servicer within the meaning of the Code of Professional Ethics of
the American Institute of Certified Public Accountants.
SECTION 4.10 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING FINANCED STUDENT LOANS. Upon reasonable prior notice, the Master
Servicer shall provide access to the Financed Student Loan Files (i) to the
Surety Provider and the Eligible Lender Trustee and (ii) to the
Certificateholders or the Noteholders in such cases where the Certificateholders
or the Noteholders shall be required by applicable statutes or regulations to
review such documentation, as demonstrated by evidence satisfactory to the
Master Servicer in its reasonable judgment. Access shall be afforded without
charge, but only upon reasonable request and during the normal business hours at
the respective offices of the Master Servicer.
SECTION 4.11. MASTER SERVICER AND ADMINISTRATOR Expenses. The
Master Servicer and the Administrator shall be severally required to pay all
expenses incurred by them in connection with their respective activities
hereunder and under the Sale and Servicing Agreement and all other Supplemental
Sale and Servicing Agreements, including fees and disbursements of independent
accountants, taxes imposed on the Master Servicer or the Administrator, as the
case may be, and expenses incurred in connection with distributions and reports
to the Administrator or to the Certificateholders, the Noteholders, the Eligible
Lender Trustee and the Surety Provider, as the case may be.
SECTION 4.12 APPOINTMENT OF SUBSERVICER. The Master Servicer
may at any time, upon the written consent of the Surety Provider, appoint a
subservicer to perform all or any portion of its obligations as Master Servicer
hereunder and under the Sale and Servicing Agreement and any other Supplemental
Sale and Servicing Agreements; PROVIDED, HOWEVER, that the Rating Agency
Condition shall have been satisfied in connection therewith; PROVIDED FURTHER
that the Master Servicer shall remain obligated and be liable to the Issuer, the
Eligible Lender Trustee, the Indenture Trustee, the Certificateholders, the
Noteholders and the Surety Provider for the servicing and administering of the
Financed Student Loans in accordance with the provisions hereof and of the Sale
and Servicing Agreement and any other Supplemental Sale and Servicing Agreements
without diminution of such obligation and liability by virtue of the appointment
of such subservicer and to the same extent and under the same terms and
conditions as if the Master Servicer alone were servicing and administering the
Financed Student Loans. The Surety Provider may, pursuant to and in accordance
with Section 4.08 of the Insurance Agreement, direct the Master Servicer, which
shall act in accordance with such direction within a reasonable period of time
after receipt thereof, to remove any subservicer. The fees and expenses of the
subservicer shall be as agreed between the Master Servicer and its subservicer
from time to time and none of the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Certificateholders, the Noteholders or the Surety
Provider shall have any responsibility therefor.
ARTICLE V.
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO
CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 5.1. ESTABLISHMENT OF TRUST ACCOUNTS. (a) Pursuant to the Sale
and Servicing Agreement, the Indenture Trustee, for the benefit of the
Noteholders, has established and maintains in the name of the Indenture Trustee
each of the Collection Account, the Note Distribution Account, the Reserve
Account, the Pre-Funding Account, the Capitalized Interest Account, the
Capitalized Pre-Funding Account, the Expense Account and the Monthly Advance
Account. The Eligible Lender Trustee, for the benefit of the Certificateholders,
has established and maintains in the name of the Eligible Lender Trustee the
Certificate Distribution Account and the Certificate Monthly Advance Account.
The foregoing accounts are referred to collectively as the "Trust Accounts".
Each such Trust Account shall be an Eligible Deposit Account and, except for the
Certificate Distribution Account and the Certificate Monthly Advance Account,
shall be entitled as follows: "[Name of Account] for the benefit of ClassNotes
Trust 1995-I and Bankers Trust Company, as Indenture Trustee, as their interests
may appear." The Certificate Distribution Account and the Certificate Monthly
Advance Account shall be entitled as follows: "ClassNotes Trust 1995-I
[Certificate Distribution Account][Certificate Monthly Advance Account]."
(b) Funds on deposit in the Trust Accounts shall be invested by the
Indenture Trustee and, in the case of the Certificate Distribution Account and
the Certificate Monthly Advance Account, the Eligible Lender Trustee in Eligible
Investments pursuant to written instructions from the Administrator, on behalf
of the Issuer; PROVIDED, HOWEVER, it is understood and agreed that the Indenture
Trustee and the Eligible Lender Trustee shall not be liable for any loss arising
from such investment in Eligible Investments. All such Eligible Investments
shall be held by the Indenture Trustee and the Eligible Lender Trustee for the
benefit of the Issuer; provided that all interest and other investment income
(net of losses and investment expenses) on funds on deposit therein shall be
deposited into the Collection Account and shall be deemed to constitute a
portion of the Available Funds for the related Note Distribution Date or
Certificate Distribution Date. Funds on deposit in the Trust Accounts shall be
invested in Eligible Investments that will mature so that such funds will be
available at the close of business on the Business Day preceding the day on
which funds in the applicable Trust Account may be required to be withdrawn;
PROVIDED, HOWEVER, that funds on deposit in such Trust Accounts may be invested
in Eligible Investments of the Indenture Trustee or of the Eligible Lender
Trustee, in the case of the Certificate Distribution Account and Certificate
Monthly Advance Account, which may mature so that such funds will be available
on the following Business Day. Funds deposited in a Trust Account on a Business
Day which immediately precedes a Note Distribution Date or Certificate
Distribution Date upon the maturity of any Eligible Investments are not required
to be invested overnight.
(c) (i) The Indenture Trustee (or the Eligible Lender Trustee
with respect to the Certificate Distribution Account and the
Certificate Monthly Advance Account) shall possess all right, title
and interest in all funds on deposit from time to time in the Trust
Accounts and in all proceeds thereof (including all income thereon)
and all such funds, investments, proceeds and income shall be part of
the Trust Estate. The Trust Accounts shall be under the sole dominion
and control of the Indenture Trustee (or the Eligible Lender Trustee
with respect to the Certificate Distribution Account and Certificate
Monthly Advance Account) for the benefit of the Issuer. If, at any
time, any of the Trust Accounts ceases to be an Eligible Deposit
Account, the Administrator, on behalf of the Issuer, agrees that it
shall within 10 Business Days (or such longer period, not to exceed 30
calendar days, as to which the Surety Provider may consent) establish
a new Trust Account as an Eligible Deposit Account and shall transfer
any cash and/or any investments to such new Trust Account. In
connection with the foregoing, the Administrator, on behalf of the
Issuer, agrees that, in the event that any of the Trust Accounts are
not accounts with the Indenture Trustee (or the Eligible Lender
Trustee with respect to the Certificate Distribution Account and the
Certificate Monthly Advance Account), the Administrator shall notify
the Indenture Trustee and the Eligible Lender Trustee in writing
promptly upon any of such Trust Accounts ceasing to be an Eligible
Deposit Account.
(ii) With respect to the Trust Account Property, the
Indenture Trustee agrees (or, with respect to the Certificate
Distribution Account and the Certificate Monthly Advance Account, the
Eligible Lender Trustee agrees), by its acceptance thereof, that:
(A) any Trust Account Property that is held in
deposit accounts shall be held solely in Eligible Deposit
Accounts, subject to the last sentence of Section 5.1(c)(i);
and each such Eligible Deposit Account shall be subject to the
exclusive custody and control of the Indenture Trustee (or the
Eligible Lender Trustee with respect to the Certificate
Distribution Account and the Certificate Monthly Advance
Account), and the Indenture Trustee (or the Eligible Lender
Trustee with respect to the Certificate Distribution Account
and the Certificate Monthly Advance Account) shall have sole
signature authority with respect thereto;
(B) any Trust Account Property that constitutes
Physical Property shall be Delivered to the Indenture Trustee
in accordance with paragraph (a) of the definition of
"Delivery" and shall be held, pending maturity or disposition,
solely by the Indenture Trustee or a financial intermediary
(as such term is defined in Section 8-313(4) of the UCC)
acting solely for the Indenture Trustee;
(C) any Trust Account Property that is a book-entry
security held through the Federal Reserve System
pursuant to Federal book-entry regulation shall be Delivered
in accordance with paragraph (b) of the definition of
"Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition, through continued book-entry
registration of such Trust Account Property as described in
such paragraph; and
(D) any Trust Account Property that is an
"uncertificated security" under Article VIII of the UCC
and that is not governed by clause (C) above shall be
Delivered to the Indenture Trustee in accordance with
paragraph (c) of the definition of "Delivery" and
shall be maintained by the Indenture Trustee, pending
maturity or disposition, through continued
registration of the Indenture Trustee's (or its
nominee's) ownership of such security.
(iii) The Administrator shall have the power, revocable for
cause or upon the occurrence and during the continuance of an
Administrator Default by the Indenture Trustee or by the Eligible
Lender Trustee with the consent of the Indenture Trustee, to instruct
the Indenture Trustee to make withdrawals and payments from the Trust
Accounts (or the Eligible Lender Trustee with respect to the
Certificate Distribution Account and the Certificate Monthly Advance
Account) for the purpose of permitting the Master Servicer, the
Administrator or the Eligible Lender Trustee to carry out its
respective duties hereunder or under the Trust Agreement or permitting
the Indenture Trustee to carry out its duties under the Indenture.
SECTION 5.2. COLLECTIONS. The Master Servicer shall remit to the
Collection Account all payments by or on behalf of the Obligors with respect to
the Financed Student Loans for which it, rather than a subservicer, is acting as
Primary Servicer (other than Purchased Student Loans), (i) within one Business
Day after it has received an aggregate of $30,000 during any Collection Period
and (ii) on the last Business Day of each Collection Period, all other
collections received during such Collection Period. The Master Servicer shall
cause each other Servicer to remit to the Collection Account, within one
Business Day of receipt thereof, all payments by or on behalf of the Obligors
with respect to the Financed Student Loans for which such other Servicer is
acting as Primary Servicer. For purposes of this Article V, the phrase "payments
by or on behalf of Obligors" shall mean payments made with respect to the
Financed Student Loans by or on behalf of borrowers thereof and the Guarantors.
SECTION 5.3. APPLICATION OF COLLECTIONS. With respect to each Financed
Student Loan, all collections (including all Guarantee Payments) with respect
thereto shall be applied in accordance with regulations of the Department and
the applicable Guarantor.
SECTION 5.4. ADDITIONAL DEPOSITS. Within two Business Days after
receipt thereof, the Eligible Lender Trustee (or the Master Servicer on its
behalf) shall deposit in the Collection Account the aggregate amount of Interest
Subsidy Payments and Special Allowance Payments received by it with respect to
the Financed Student Loans, and the Seller shall deposit in the Collection
Account any amount owed pursuant to Section 3.2 no later than the last day of
the Collection Period during which any such amount is owed. The Master Servicer
or TMSI shall deposit or cause to be deposited in the Collection Account the
aggregate Purchase Amount with respect to Purchased Student Loans and all other
amounts to be paid by the Master Servicer or TMSI under Section 4.5 when such
amounts are due, and the Seller or TMSI shall deposit or cause to be deposited
therein the aggregate Purchase Amount with respect to Purchased Student Loans
and all other amounts to be paid by the Seller or TMSI under Sections 3.2 or the
Seller under Section 9.1 when such amounts are due. The Seller, the Master
Servicer and the Administrator also shall deposit in the Collection Account all
amounts required to be deposited therein pursuant to, and within the time
periods provided by, Section 2.3. Notwithstanding the foregoing, the Master
Servicer shall deposit, or cause to be deposited, directly into the Reserve
Account any payments of or with respect to principal relating to a Financed
Student Loan for which a Realized Loss was previously allocated (but only up to
the amount of such Realized Loss), and shall deposit, or cause to be deposited,
directly into the Collection Account any payments of or with respect to interest
relating to a Financed Student Loan for which a Realized Loss was previously
allocated.
TMSI also shall, in its sole discretion, deposit into the Monthly
Advance Account the amount of any Monthly Advances determined to be made by TMSI
pursuant to Section 5.13 no later than the Determination Date relating to the
Note Distribution Date or Certificate Distribution Date, as the case may be,
when such amounts are to be applied as a payment of interest. On each related
Certificate Distribution Date, the Indenture Trustee will transfer from the
Monthly Advance Account to the Eligible Lender Trustee, by wire transfer no
later than 11:00 a.m. New York time, for deposit into the Certificate Monthly
Advance Account the Monthly Advance for such Certificate Distribution Date.
Pursuant to Section 5.13, if after making a Monthly Advance the Master Servicer
receives the Guarantee Payment, Special Allowance Payment or Interest Subsidy
Payment for which such Monthly Advance was made, the Master Servicer may
reimburse TMSI, immediately upon demand, from such Guarantee Payment, Special
Allowance Payment or Interest Subsidy Payment, as the case may be, on deposit in
the Collection Account up to the amount of the related Monthly Advance.
SECTION 5.5. DISTRIBUTIONS. (a) On each Note Distribution Date
relating to the Series 1996-2 Notes, pursuant to the Administrator's
instructions, the Indenture Trustee will transfer from the Collection Account to
the Note Distribution Account, from payments received on or with respect to the
Financed Student Loans during the Collection Period immediately preceding the
month of such Note Distribution Date (or, for such Collection Periods as may be
set forth in a Terms Supplement), an amount up to the related Noteholders'
Interest Distribution Amount. If a Class of Series 1996-2 Notes has the earliest
Final Maturity Date of all Classes of Notes then Outstanding, for the Class of
Series 1996-2 Notes with the earliest Final Maturity Date, on the first Note
Distribution Date for such Class occurring in each month, commencing January
1997, after making the transfer set forth in the prior sentence, the Indenture
Trustee will transfer from the Collection Account to the Note Distribution
Account from payments received on or with respect to the Financed Student Loans
during the Collection Period immediately preceding the month prior to the month
of such Note Distribution Date (or for such other Collection Periods as may be
set forth in a Terms Supplement), an amount up to the Noteholders' Principal
Distribution Amount; provided, however, that for each month in which the first
Note Distribution Date for any Series of Notes occurs prior to the Certificate
Distribution Date in such month, prior to transferring amounts to the Note
Distribution Account, the Indenture Trustee will transfer to the Expense
Account, from payments received on or with respect to the Financed Student Loans
during the immediately preceding Collection Period, an amount up to the
Transaction Fees for the month preceding such Note Distribution Date and all
overdue Transaction Fees from prior months.
(b) On each Certificate Distribution Date, pursuant to information
contained in the Administrator's Certificate delivered in accordance with
Section 4.7, the Indenture Trustee will transfer from the Collection Account,
from payments received on or with respect to the Financed Student Loans during
the immediately preceding Collection Period, (i) to the Expense Account, an
amount up to the excess, if any, of the Transaction Fees for the month preceding
such Certificate Distribution Date and all overdue Transaction Fees from prior
months over the amount, if any, previously transferred to the Expense Account
during the month of such Certificate Distribution Date and (ii) to the Eligible
Lender Trustee, by wire transfer no later than 11:00 a.m. New York time, for
deposit in the Certificate Distribution Account, an amount up to the related
Certificateholders' Interest Distribution Amount. Additionally, after each Class
of Notes has been paid in full, on each Certificate Distribution Date relating
to the Class of Certificates with the earliest Final Maturity Date, the
Indenture Trustee will transfer from the Collection Account to the Eligible
Lender Trustee, by wire transfer no later than 11:00 a.m. New York time, for
deposit in the Certificate Distribution Account, from payments received on or
with respect to the Financed Student Loans during the Collection Period
immediately preceding the month prior to such Certificate Distribution Date, an
amount up to the applicable Certificateholders' Principal Distribution Amount.
(c) On the first Note Distribution Date for any Series of Notes
occurring in March, June, September and December, or in the case of clause (iii)
below on the first Note Distribution Date 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), the Indenture
Trustee, pursuant to information contained in the Administrator's Certificate
delivered in accordance with Section 4.7, will distribute from the Expense
Account (in addition to any amounts transferred from the Reserve Account
pursuant to Section 5.6) the following amounts in the following order of
priority: (i) to the Master Servicer, the Servicing Fee and all overdue
Servicing Fees, (ii) to the Administrator, the Administration Fee and all
overdue Administration Fees, (iii) to the Auction Agent, the Auction Agent Fee
and all overdue Auction Agent Fees, (iv) to the Indenture Trustee, the Indenture
Trustee Fee and all overdue Indenture Trustee Fees, (v) to the Eligible Lender
Trustee, the Eligible Lender Trustee Fee and all overdue Eligible Lender Trustee
Fees and (vi) to the Surety Provider, the Surety Provider Fee and all overdue
Surety Provider Fees.
(d) On each Note Distribution Date, the Indenture Trustee will
distribute to the Noteholders of the applicable Class as of the related Record
Date all amounts transferred to the Note Distribution Account as set forth above
(in addition to any amounts transferred from the Capitalized Interest Account,
the Capitalized Pre-Funding Account, the Pre-Funding Account and the Reserve
Account, each as set forth below in this Article V, any amounts received under
the applicable Note Surety Bond pursuant to Section 10.1(a) and any Monthly
Advances deposited into the Monthly Advance Account pursuant to Section 5.4). On
each Certificate Distribution Date, the Eligible Lender Trustee will distribute
to the Certificateholders as of the related Record Date all amounts transferred
to the Certificate Distribution Account as set forth above (in addition to any
amounts transferred from the Capitalized Interest Account and the Reserve
Account, each as set forth below in this Article V, any amounts received under
the Certificate Surety Bond pursuant to Section 10.1(b) and any Monthly Advances
deposited into the Certificate Monthly Advance Account pursuant to Section 5.4).
(e) On the last Note Distribution Date occurring in January, April,
July and October (or if in any such month a Certificate Distribution Date occurs
after such last Note Distribution Date, on such Certificate Distribution Date),
after making all required transfers to the Note Distribution Account and, if
applicable, the Certificate Distribution Account and the Expense Account, the
Indenture Trustee, pursuant to information contained in the Administrator's
Certificate delivered in accordance with Section 4.7, will transfer any amounts
remaining in the Collection Account (other than amounts representing payments
received during such month or payments of or with respect to principal received
in the immediately preceding month) in the following order of priority: (i) to
the Surety Provider, the amount, if any, necessary to reimburse the Surety
Provider for prior Note and Certificate Surety Bond Payments, together with
interest thereon at the rate set forth in the Insurance Agreement, (ii) to the
Reserve Account, the amount, if any, necessary to increase the balance thereof
to the Specified Reserve Account Balance, (iii) to the Master Servicer, the
aggregate unpaid amount of the Servicing Fee Carryover, if any, (iv) to the Note
Distribution Account, the aggregate unpaid amount of Noteholders' Interest
Carryover, if any, and (v) to the Certificate Distribution Account, the
aggregate unpaid amount of Certificateholders' Interest Carryover, if any. Any
amounts remaining in the Collection Account after such transfers (other than
amounts representing payments received during such month or payments of or with
respect to principal received in the immediately preceding month) will be
transferred to the Reserve Account. Amounts transferred to the Note Distribution
Account or the Certificate Distribution Account pursuant to clauses (iv) and (v)
above, respectively, will be paid to the applicable Class of Notes or
Certificates on the next Note Distribution Date or Certificate Distribution Date
relating to such Class of Notes or Certificates. Notwithstanding the foregoing,
if the amount on deposit in the Reserve Account, after giving effect to all
distributions otherwise required to be made on such date, equals the greater of
(i) 1% of the then outstanding principal balance of the Notes and the
Certificates and (ii) $1,500,000 (but in no event greater than the then
outstanding principal balance of the Notes and the Certificates), amounts
otherwise required to be deposited into the Reserve Account pursuant to clause
(ii) above may, instead, be applied as an Additional Principal Payment on the
next applicable Note Distribution Date for which a payment of principal is to be
made on the Class of Notes with the earliest Final Maturity Date (or, after all
the Notes have been paid in full, on the next Certificate Distribution Date).
(f) Notwithstanding the foregoing, if there has been an Event of
Default with respect to payment of the Notes, the Certificateholders will not be
entitled to any payments of principal or interest until each outstanding Class
of Notes has been paid in full.
(g) Notwithstanding the foregoing, if during a Collection Period a
Serial Loan was transferred by the Trust to the Seller's designee pursuant to
Section 2.3(b), Student Holdings, in its capacity as a holder of a 1% interest
in the Certificates, shall receive on the Note Distribution Date or Certificate
Distribution Date, as the case may be, when the related Purchase Amount is
distributed to Noteholders or Certificateholders, as applicable, any proceeds
received by the Trust in excess of the Purchase Amount of the transferred
Financed Student Loan.
(h) Distributions on a Note Distribution Date or Certificate
Distribution Date shall be initiated by 11:00 a.m. (New York City time) on such
Note Distribution Date or Certificate Distribution Date; provided, however, that
any distributions from the Certificate Distribution Account shall be made at the
times set forth in Section 5.1 of the Trust Agreement.
Notwithstanding the foregoing, principal payments will be made to each
Class of Notes (other than the Class A-7 and Class A-9 Notes) and the
Certificates only in amounts equal to $50,000 and integral multiples in excess
thereof. If the amount in the Note Distribution Account or the Certificate
Distribution Account otherwise required to be applied as a payment of principal
to a Class of Notes (other than the Class A-7 and Class A-9 Notes) or the
Certificates either (i) is less than $50,000 or (ii) exceeds an even multiple of
$50,000, then, in the case of (i), such entire amount or, in the case of (ii),
such excess amount, will not be paid as principal on the upcoming Note
Distribution Date or Certificate Distribution Date, as the case may be, but will
be retained in the Note Distribution Account or the Certificate Distribution
Account, as the case may be, until the amount therein available for payment of
principal (including any amounts transferred from the Reserve Account) equals
$50,000 or any integral multiple thereof. On each Note Distribution Date for
which the Class A-7 or Class A-9 Notes are receiving a payment of principal,
such principal will be distributed pro rata among all Note Owners of each
respective Class of Notes as of the related Record Date based on the Outstanding
Amount of such Class of Notes owned, and such distributions may be made in
amounts less than $50,000.
SECTION 5.6. RESERVE ACCOUNT. (a) On the Closing Date relating to the
Series 1996-2 Notes, the Seller shall deposit the Reserve Account Initial
Deposit, if any, into the Reserve Account.
(b) If the amount on deposit in the Reserve Account on the last Note
Distribution Date occurring in January, April, July and October (or if in any
such month a Certificate Distribution Date occurs after such last Note
Distribution Date, on such Certificate Distribution Date) (after giving effect
to all deposits or withdrawals therefrom on such Note Distribution Date or
Certificate Distribution Date) is greater than the then applicable Specified
Reserve Account Balance, the Administrator shall instruct the Indenture Trustee
(A) to pay to the Master Servicer out of such excess an amount equal to the
amount described in Section 5.5(e)(iii) for such Note Distribution Date or
Certificate Distribution Date (to the extent not otherwise paid to the Master
Servicer on such Note Distribution Date or Certificate Distribution Date), (B)
to pay to the Note Distribution Account out of such remaining excess an amount
equal to the amount described in Section 5.5(e)(iv) for such Note Distribution
Date or Certificate Distribution Date (to the extent not otherwise paid to the
Note Distribution Account on such Note Distribution Date or Certificate
Distribution Date), (C) to pay to the Certificate Distribution Account out of
such remaining excess an amount equal to the amount described in Section
5.5(e)(v) for such Distribution Date (to the extent not otherwise paid to the
Certificate Distribution Account on such Distribution Date), (D) to pay to the
Surety Provider any amounts remaining unpaid and owing pursuant to Section
2.02(p) of the Insurance Agreement, (E) to pay to the Collection Account any
amounts required to be paid by the Seller, the Master Servicer or TMSI pursuant
to Sections 3.2 or 4.5 as a result of breaches of representations and warranties
made in Section 3.1, 4.1, 4.2, 4.3 or 4.4 to the extent the Seller or TMSI has
not made such payments within the required time period, and (F) to distribute
the remaining amount of such excess to TMS Student Holdings, Inc. as holder of a
1% interest in the Certificates and holder of the Series 1996-2 Certificates, or
its permitted successors or assigns ("Student Holdings"). Amounts properly
distributed pursuant to this paragraph (b) shall be deemed released from the
Trust Estate and the security interest therein granted to the Indenture Trustee,
and Student Holdings shall in no event thereafter be required to refund any such
distributed amounts. Notwithstanding the foregoing, if set forth in a supplement
to this Agreement or a Trust Supplement, holders of Originators' Interests may
receive amounts otherwise distributed to TMS Student Holdings, Inc. pursuant to
subclause (F) above.
(c) Following the payment in full of the aggregate outstanding
principal amount of the Notes and the Certificates and of all other amounts
owing or to be distributed hereunder or under the Indenture or the Trust
Agreement to Noteholders, Certificateholders, the Master Servicer, the
Administrator or the Surety Provider and the termination of the Trust (including
any Servicing Fee Carryovers, Noteholders' Interest Carryover and
Certificateholders' Interest Carryover), any amount remaining on deposit in the
Reserve Account shall be distributed to Student Holdings. Student Holdings shall
in no event be required to refund any amounts properly distributed pursuant to
this Section 5.6(c).
(d) (i) In the event that on the first Note Distribution Date
for any Series of Notes occurring in March, June, September and
December, or with respect to Section 5.5(c)(iii) on the first Note
Distribution Date 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), any amounts
to be distributed as calculated pursuant
to Section 5.5(c)(i)-(vi) exceed the amount on deposit in the Expense
Account available for such purposes, the Administrator shall instruct
the Indenture Trustee to withdraw from the Reserve Account the lesser
of such excess and the amount on deposit in the Reserve Account
(after giving effect to each withdrawal in the order specified in
Section 5.5(c)(i)-(vi)) and deposit such withdrawn amount in the
Expense Account for distribution as provided in Section 5.5; PROVIDED,
HOWEVER, that, except as provided in Sections 5.6(b)(A) and 5.6(c),
amounts on deposit in the Reserve Account will not be available to
cover any unpaid Servicing Fee Carryover to the Master Servicer.
(ii) In the event that the Noteholders' Distribution Amount
for a Note Distribution Date exceeds the amount in the Note
Distribution Account for such Note Distribution Date available for such
purposes, the Administrator shall instruct the Indenture Trustee to
withdraw from the Reserve Account an amount equal to the lesser of
such excess (after giving effect to any transfers from the Capitalized
Interest Account and the Capitalized Pre-Funding Account on such Note
Distribution Date) and the amount on deposit in the Reserve Account,
(after giving effect to paragraph (d)(i) above), and deposit such
withdrawn amount in the Note Distribution Account for distribution as
provided in Section 5.5.
(iii) In the event that the Certificateholders' Distribution
Amount for a Certificate Distribution Date exceeds the amount for such
Certificate Distribution Date available for such purposes, the
Administrator shall instruct the Indenture Trustee on such Distribution
Date to withdraw from the Reserve Account an amount equal to the
lesser of such excess (after giving effect to any transfers
from the Capitalized Interest Account on such Certificate Distribution
Date), and the amount on deposit in the Reserve Account (after giving
effect to paragraphs (d)(i) through (d)(ii) above), and to deposit such
withdrawn amount in the Certificate Distribution Account for
distribution as provided in Section 5.5.
SECTION 5.7. STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS. On each
Determination Date preceding a Note Distribution Date and a Certificate
Distribution Date, the Master Servicer or the Administrator shall provide to the
Indenture Trustee (with a copy to the Surety Provider and to the Rating
Agencies) for the Indenture Trustee to forward on such succeeding Note
Distribution Date to each Noteholder of the applicable Class of record and to
the Eligible Lender Trustee for the Eligible Lender Trustee to forward on such
succeeding Certificate Distribution Date to each Certificateholder of the
applicable Class of record, a statement substantially in the form of Exhibits A
and B, respectively, setting forth at least the following information with
respect to such Note Distribution Date and Certificate Distribution Date or the
preceding Collection Period, to the extent applicable (provided, however, that
with respect to each Note Distribution Date other than the first Note
Distribution Date occurring in each month, such statement need only contain the
information set forth in clauses (ii), (iii), (v), (vi) and (xii) below):
(i) the amount of such distribution allocable to principal;
(ii) the amount of the distribution allocable to interest;
(iii) the amount, if any, of the distribution allocable to any
Noteholders' Auction Rate Interest Carryover, any Noteholders' LIBOR
Rate Interest Carryover, any Certificateholders' Auction Rate Interest
Carryover and any Certificateholders' LIBOR Rate Interest Carryover,
together with any remaining outstanding amount of each thereof;
(iv) the Pool Balance as of the close of business on the last
day of the preceding Collection Period;
(v) the aggregate outstanding principal amount of the Notes of
each Class and the Certificates of each Class as of such Note
Distribution Date or Certificate Distribution Date, after giving
effect to payments allocated to principal reported under clause (i)
above;
(vi) the Class Interest Rate for the applicable Class of
Notes and the Certificate Rate for the applicable Class of
Certificates with respect to each distribution referred to in clause
(ii) above, indicating whether such interest rate is calculated based
on the Net Loan Rate or based on the applicable Auction Rate or LIBOR
Rate, as the case may be, and specifying what each such interest would
have been using the alternate basis for such calculation;
(vii) the amount of the Servicing Fee and any Servicing Fee
Carryover allocated to the Master Servicer with respect to the related
Collection Period, and the amount, if any, of the Servicing Fee
Carryover remaining unpaid after giving effect to any such allocation;
(viii) the amount of the Administration Fee, the Auction Agent
Fee, the Indenture Trustee Fee, the Eligible Lender Trustee Fee and
the Surety Provider Fee allocated in respect of the preceding
Collection Period;
(ix) the amount of payment to the Surety Provider in
reimbursement of prior draws under any Note Surety Bond or the
Certificate Surety Bond including interest thereon;
(x) the amount of the aggregate Realized Losses, if any, for
such Collection Period and any recoveries of principal and interest
received during such Collection Period relating to Financed Student
Loans for which a Realized Loss was previously allocated;
(xi) the amount of the distribution attributable to amounts in
the Reserve Account, the amount of any other withdrawals from the
Reserve Account for such Note Distribution Date or Certificate
Distribution Date and the balance of the Reserve Account on such
Distribution Date, after giving effect to changes therein on such Note
Distribution Date or Certificate Distribution Date;
(xii) the amount of any draw required to be made under the
applicable Note Surety Bond or the applicable Certificate Surety Bond;
(xiii) for Note Distribution Dates during the Funding Period,
the portion, if any, of the distribution attributable to amounts on
deposit in the Pre-Funding Account and the Capitalized Pre-Funding
Account and the remaining Pre-Funded Amount;
(xiv) for Note Distribution Dates during the Funding Period,
the aggregate amount, if any, paid by the Eligible Lender Trustee on
behalf of the Trust for Additional Financed Student Loans during the
preceding Collection Period;
(xv) for the first Note Distribution Date on or immediately
following the end of the Funding Period, the amount of any remaining
Pre-Funded Amount that has not been used to make Additional Fundings
and is being paid out to Noteholders;
(xvi) the aggregate amount, if any, paid for Financed Student
Loans purchased from the Trust during the preceding Collection Period;
(xvii) the number and principal amount of Financed Student
Loans, as of the end of the preceding Collection Period, that are (i)
30 to 60 days delinquent, (ii) 61 to 90 days delinquent, (iii) 91 to
120 days delinquent, (iv) more than 120 days delinquent and (v) for
which claims have been filed with the appropriate Guarantor and which
are awaiting payment; and
(xviii) the Parity Percentage, including the numerator and
denominator used in determining such Parity Percentage.
Each amount set forth pursuant to paragraph (i), (ii), (vii), and (viii) above
shall be expressed as a dollar amount per $50,000 of original principal balance
of a Certificate or Note, as applicable. A copy of the statements referred to
above may be obtained by any Certificate Owner or Note Owner by a written
request to the Eligible Lender Trustee or the Indenture Trustee, respectively,
addressed to the respective Corporate Trust Office.
The statements referred to above will not be provided to holders
of Originators' Interests. Any Trust Supplement authorizing the issuance of one
or more Originators' Interests also will set forth the information respecting
such Originators' Interests to be provided by the Master Servicer to the
Eligible Lender Trustee for the Eligible Lender Trustee to forward to the
holders of such Originators' Interests. So long as any Note or Certificate is a
"restricted security" within the meaning of Rule 144(a)(3) under the Securities
Act, the Master Servicer shall provide, upon request of a Holder of any such
Note or Certificate and a prospective purchaser designated by such Holder, the
information which is required to be delivered under Rule 144A(d)(4) under the
Securities Act, if at the time of the request the Issuer is not a reporting
company under Section 13 or Section 15(d) of the Securities Exchange Act of
1934, as amended.
SECTION 5.8. PRE-FUNDING ACCOUNT. (a) On the Closing Date relating to
the Series 1996-2 Notes, the Issuer will deposit in the Pre-Funding Account
$29,861,799.80 from the net proceeds of the sale of the Series 1996-2 Notes. On
each Transfer Date, the Administrator shall instruct the Indenture Trustee to
withdraw from the Pre-Funding Account an amount equal to 103.70% of the
principal balance of, plus accrued interest from the Subsequent Cut-off Date to
the Transfer Date on, the Additional Financed Student Loans transferred to the
Eligible Lender Trustee on behalf of the Issuer on such Transfer Date and to
distribute such amount to or upon the order of the holder of the Series 1996-2
Certificates, upon satisfaction of the conditions set forth in Section 2.2 with
respect to such transfer.
(b) If (x) the Pre-Funded Amount has not been reduced to zero on the
last day of the Funding Period relating to the Series 1996-2 Notes (or, if such
Funding Period ends prior to such Note Distribution Date, on the first Note
Distribution Date for the Class of Notes with the earliest Final Maturity Date
following the end of the Funding Period) or (y) the Pre-Funded Amount has been
reduced to $200,000 or less on any Note Distribution Date, in either case after
giving effect to any reductions in the Pre-Funded Amount on such Distribution
Date pursuant to paragraph (a) above, the Administrator shall instruct the
Indenture Trustee pursuant to Section 4.7(b) to withdraw from the Pre-Funding
Account on the next Note Distribution Date relating to the Class of Notes with
the earliest Final Maturity Date an amount equal to the Pre-Funded Amount and to
distribute such amount to Noteholders of the Class of Notes with the earliest
Final Maturity Date as a payment of principal in the same manner as the
Noteholders' Principal Distribution Amount is distributed.
SECTION 5.9. CAPITALIZED PRE-FUNDING ACCOUNT. On the Closing Date
relating to the Series 1996-2 Notes, the Administrator shall instruct the
Indenture Trustee to withdraw all amounts, if any, on deposit in the Capitalized
Pre-Funding Account and transfer such amounts to the Capitalized Interest
Account.
SECTION 5.10. CAPITALIZED INTEREST ACCOUNT. On each Note Distribution
Date, for so long as funds remain therein, the Indenture Trustee shall withdraw
from the Capitalized Interest Account for deposit into the Note Distribution
Account an amount up to the excess, if any, of the Noteholders' Interest
Distribution Amount for such Note Distribution Date over the sum of the amounts
transferred to the Note Distribution Account pursuant to Sections 5.5(a) and
5.9. Also, on each Certificate Distribution Date, for so long as funds remain
therein, the Indenture Trustee shall withdraw from the Capitalized Interest
Account and transfer to the Eligible Lender Trustee, by wire transfer no later
than 11:00 a.m. New York time, for deposit in the Certificate Distribution
Account an amount up to the excess, if any, of the Certificateholders' Interest
Distribution Amount for such Certificate Distribution Date over the amount
transferred to the Certificate Distribution Account pursuant to Section 5.5(b).
On the last Note Distribution Date occurring in March 1997 for any Series of
Notes (after giving effect to all withdrawals from the Capitalized Interest
Account and the Certificate Monthly Advance Account), the Administrator shall
instruct the Indenture Trustee to withdraw any amounts remaining in the
Capitalized Interest Account and transfer such amounts to the Reserve Account
or, with the consent of the Surety Provider, apply such amounts as Additional
Principal Payments.
SECTION 5.11 EXPENSE ACCOUNT. The Administrator shall instruct the
Indenture Trustee to deposit funds into, and withdraw funds from, the Expense
Account as set forth in Sections 5.5 and 5.6. Any funds remaining in the Expense
Account upon termination of the Trust shall be distributed to the Master
Servicer as additional servicing compensation.
SECTION 5.12. NOTE DISTRIBUTION ACCOUNT AND CERTIFICATE DISTRIBUTION
ACCOUNT. The Administrator shall instruct the Indenture Trustee to deposit funds
into, and withdraw funds from, the Note Distribution Account and the Certificate
Distribution Account as set forth in Sections 5.5, 5.6, 5.8, 5.9, 5.10 and 10.1.
SECTION 5.13. MONTHLY ADVANCES. If the Master Servicer has applied for
a Guarantee Payment from a Guarantor or an Interest Subsidy Payment or a Special
Allowance Payment from the Department, and the Master Servicer has not received
the related payment prior to the end of the Collection Period immediately
preceding the Note Distribution Date or Certificate Distribution Date on which
such amount would be required to be distributed as a payment of interest, TMSI
may, no later than the Determination Date relating to such Note Distribution
Date or Certificate Distribution Date, as the case may be, in its sole
discretion, deposit into the Monthly Advance Account an amount up to the amount
of such payments applied for but not received (such deposits by the Master
Servicer are referred to herein as "Monthly Advances"). Such Monthly Advances
are recoverable by the TMSI from the Guarantee Payment, Interest Subsidy Payment
or Special Allowance Payment, as the case may be, for which such Monthly Advance
was made. TMSI shall have no obligation, legal or otherwise, to make any Monthly
Advance, and the making of or decision to make a particular Monthly Advance
shall not create any obligation on TMSI, legal or otherwise, to make any future
Monthly Advances.
ARTICLE VI.
THE SELLER AND THE MASTER SERVICER
SECTION 6.1. REPRESENTATIONS OF SELLER AND MASTER SERVICER. The Seller
and Master Servicer make the following representations on which the Issuer is
deemed to have relied in acquiring (through the Eligible Lender Trustee) the
Financed Student Loans being conveyed pursuant to this Agreement. The
representations speak as of the execution and delivery of this Agreement in the
case of the Initial Financed Student Loans, and as of the applicable Transfer
Date, in the case of the Additional Financed Student Loans, but shall survive
the sale, transfer and assignment of the Financed Student Loans to the Eligible
Lender Trustee on behalf of the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture.
(a) ORGANIZATION AND GOOD STANDING. Each of the Seller, TMSI and the
Master Servicer is duly incorporated and validly existing as a corporation in
good standing under the laws of the state of its incorporation, with the power
and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted, and had
at all relevant times, and has, the power, authority and legal right, in the
case of the Seller, to originate, acquire and own the Financed Student Loans,
and in the case of the Master Servicer, to service the Financed Student Loans
and hold the Financed Student Loan Files as custodian.
(b) DUE QUALIFICATION. The Master Servicer is duly qualified to do
business and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership and lease of property or the conduct of its
business (including the servicing of the Financed Student Loans as required by
this Agreement) shall require such qualifications.
(c) POWER AND AUTHORITY. Each of the Seller, the Master Servicer and
TMSI has the corporate power and authority to execute and deliver this Agreement
and to carry out its terms; the Seller has full corporate power and authority to
contribute and assign the property to be sold and assigned to and deposited with
the Issuer (or with the Eligible Lender Trustee on behalf of the Issuer) and the
Seller has duly authorized such contribution and assignment to the Issuer (or to
the Eligible Lender Trustee on behalf of the Issuer) by all necessary corporate
action; and the execution, delivery and performance of this Agreement have been
duly authorized by the Seller, the Master Servicer and TMSI by all necessary
corporate action.
(d) BINDING OBLIGATION. This Agreement constitutes a legal, valid and
binding obligation of the Seller, TMSI and the Master Servicer, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization and similar laws relating to creditors' rights generally or and
subject to general principles of equity.
(e) NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof or thereof do not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time or both) a default under,
the articles of incorporation or by-laws of the Seller, TMSI or the Master
Servicer, or any indenture, agreement or other instrument to which the Seller,
TMSI or the Master Servicer is a party or by which it shall be bound; nor result
in the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents); nor violate any law or, to the knowledge of
either the Seller, TMSI or the Master Servicer, any order, rule or regulation
applicable to it of any court or of any Federal or State regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Seller, TMSI or the Master Servicer or its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending
against the Seller, the Master Servicer or TMSI or, to its best knowledge,
threatened against the Seller, the Master Servicer or TMSI, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over it or its properties: (i) asserting the invalidity of
this Agreement, the Indenture or any of the other Basic Documents, the Notes or
the Certificates, (ii) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions contemplated by this
Agreement, the Indenture or any of the other Basic Documents, (iii) seeking any
determination or ruling that could reasonably be expected to have a material and
adverse effect on the performance by either the Seller, the Master Servicer or
TMSI of its obligations under, or the validity or enforceability of, this
Agreement, the Indenture, any of the other Basic Documents, the Notes or the
Certificates or (iv) seeking to affect adversely the Federal or State income tax
attributes of the Issuer, the Notes or the Certificates.
(g) ALL CONSENTS. All authorizations, consents, orders or approvals of
or registrations or declarations with any court, regulatory body, administrative
agency or other government instrumentality required to be obtained, effected or
given by either the Seller, TMSI or the Master Servicer in connection with the
execution and delivery by either the Seller, TMSI or the Master Servicer of this
Agreement and the performance by either the Seller, TMSI or the Master Servicer
of the transactions contemplated by this Agreement, have been duly obtained,
effected or given and are in full force and effect.
(h) NO AMENDMENT OR WAIVER. No provision of a Financed Student Loan
has been waived, altered or modified in any respect, except pursuant to a
document, instrument or writing included in the Financed Student Loan File, and
no such amendment, waiver, alteration or modification causes such Financed
Student Loan not to conform to the other warranties contained in this Section or
those of the Seller contained in Section 3.1.
(i) Location of Financed Student Loan Files. The Financed Student Loan
Files are kept in the office of the Master Servicer specified in, or in
accordance with, Section 3.4(b).
SECTION 6.2. EXISTENCE. During the term of this Agreement, each of the
Seller, the Master Servicer and TMSI will keep in full force and effect its
existence, rights and franchises as a corporation under the laws of the
jurisdiction of its organization.
SECTION 6.3. LIABILITY AND INDEMNITIES. (a) Each of the Seller, the
Master Servicer and TMSI shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Seller, the Master
Servicer or TMSI, as the case may be, under this Agreement.
(b) The Seller and TMSI shall jointly and severally indemnify, defend
and hold harmless the Issuer, the Eligible Lender Trustee and the Indenture
Trustee and their officers, directors, employees and agents from and against any
taxes that may at any time be asserted against any such Person with respect to
the transactions contemplated herein (except any such income taxes arising out
of fees paid to the Eligible Lender Trustee or the Indenture Trustee), including
any sales, gross receipts, general corporation, tangible personal property,
privilege or license taxes and costs and expenses in defending against the same.
(c) The Seller and TMSI shall jointly and severally indemnify, defend
and hold harmless the Issuer, the Eligible Lender Trustee, the Indenture
Trustee, the Certificateholders, the Noteholders and the Surety Provider and the
officers, directors, employees and agents of the Issuer, the Eligible Lender
Trustee, the Indenture Trustee and the Surety Provider from and against any and
all costs, expenses, losses, claims, damages and liabilities arising out of, or
imposed upon such Person through, (i) the Seller's willful misfeasance, bad
faith or negligence in the performance of its duties under this Agreement, or by
reason of reckless disregard of its obligations and duties under this Agreement
and (ii) the Seller's, the Issuer's or the Eligible Lender Trustee's violation
of Federal or state securities laws in connection with the offering and sale of
the Notes and the Certificates.
(d) The Seller and TMSI shall be liable as primary obligors for, and
shall indemnify, defend and hold harmless the Eligible Lender Trustee and its
officers, directors, employees and agents from and against, all costs, expenses,
losses, claims, damages, obligations and liabilities arising out of, incurred in
connection with or relating to the Trust Agreement, the other Basic Documents,
the Trust Estate, the acceptance or performance of the trusts and duties set
forth herein and in the Trust Agreement or the action or the inaction of the
Eligible Lender Trustee hereunder and under the Trust Agreement, except to the
extent that such cost, expense, loss, claim, damage, obligation or liability:
(i) shall be due to the willful misfeasance, bad faith or negligence (except for
errors in judgment) of the Eligible Lender Trustee, (ii) shall arise from any
breach by the Eligible Lender Trustee of its covenants under any of the Basic
Documents; or (iii) shall arise from the breach by the Eligible Lender Trustee
of any of its representations or warranties set forth in Section 7.3 of the
Trust Agreement. In the event of any claim, action or proceeding for which
indemnity will be sought pursuant to this paragraph, the Eligible Lender
Trustee's choice of legal counsel shall be subject to the approval of the
Seller, which approval shall not be unreasonably withheld.
(e) The Seller shall pay any and all taxes levied or assessed upon all
or any part of the Trust Estate (other than those taxes expressly excluded from
the Seller's responsibilities pursuant to the parentheticals in paragraph (a)
above).
(f) Pursuant to Section 6.7 of the Indenture, and subject to the
limitations therein, the Seller and TMSI shall pay reasonable compensation to
the Indenture Trustee and shall reimburse the Indenture Trustee for all
reasonable expenses, disbursements and advances, and indemnify, defend and hold
harmless the Indenture Trustee and its officers, directors, employees and agents
from and against all costs, expenses, losses, claims, damages and liabilities,
to the extent and in the manner provided in the Indenture.
(g) The Master Servicer and TMSI shall indemnify, defend and hold
harmless the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders, the Noteholders and the Surety Provider and the officers,
directors, employees and agents of the Issuer, the Eligible Lender Trustee, the
Indenture Trustee and the Surety Provider from and against any and all costs,
expenses, losses, claims, damages and liabilities arising out of, or imposed
upon such Person through, the Master Servicer's or TMSI's willful misfeasance,
bad faith or negligence in the performance of its duties under this Agreement.
Notwithstanding the foregoing, if the Master Servicer or TMSI is rendered
unable, in whole or part, by a force outside the control of the parties hereto
(including acts of God, acts of war, fires, earthquakes and other disasters) to
satisfy its obligations under this Agreement, the Master Servicer and TMSI shall
not be deemed to have breached any such obligation upon delivery of written
notice of such event to the other parties hereto, for so long as the Master
Servicer or TMSI remains unable to perform such obligation as a result of such
event.
(h) Indemnification under this Section shall survive the resignation
or removal of the Eligible Lender Trustee or the Indenture Trustee and the
termination of this Agreement or the Indenture or the Trust Agreement, as
applicable, and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Seller, TMSI or the Master Servicer, as the case
may be, shall have made any indemnity payments pursuant to this Section and the
Person to or on behalf of whom such payments are made thereafter shall collect
any of such amounts from others, such Person shall promptly repay such amounts
to the Seller, TMSI or the Master Servicer, as the case may be without interest.
SECTION 6.4. [Reserved]
SECTION 6.5. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE SELLER, THE ADMINISTRATOR OR THE MASTER SERVICER. Any Person
(a) into which the Seller, the Administrator or the Master Servicer, as the case
may be, may be merged or consolidated, (b) which may result from any merger or
consolidation to which the Seller, the Administrator or the Master Servicer, as
the case may be, shall be a party or (c) which may succeed to the properties and
assets of the Seller, the Administrator or the Master Servicer, as the case may
be, substantially as a whole, shall be the successor to the Seller, the
Administrator or the Master Servicer, as the case may be, without the execution
or filing of any document or any further act by any of the parties to this
Agreement; PROVIDED, HOWEVER, that each of the Seller, the Administrator and the
Master Servicer hereby covenants that it will not consummate any of the
foregoing transactions except upon satisfaction of the following: (i) the
surviving Seller, Administrator or Master Servicer, as the case may be, if other
than Trans-World Insurance Company, executes an agreement of assumption to
perform every obligation of the Seller, the Administrator or the Master
Servicer, as the case may be, under this Agreement, (ii) immediately after
giving effect to such transaction, no representation or warranty made pursuant
to Section 3.1 or 6.1 shall have been breached, (iii) the Seller, the
Administrator or the Master Servicer, as the case may be, shall have delivered
to the Eligible Lender Trustee, the Surety Provider and the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section and that all conditions precedent, if any, provided for in this
Agreement relating to such transaction have been complied with, and that the
Rating Agency Condition shall have been satisfied with respect to such
transaction, (iv) the surviving Seller, Administrator or Master Servicer, as the
case may be, shall have a consolidated net worth at least equal to that of the
predecessor Seller, Administrator or Master Servicer as of the date hereof, as
the case may be, (v) such transaction will not result in a material adverse
Federal or state tax consequence to the Issuer, the Noteholders or the
Certificateholders and (vi) unless Trans-World Insurance Company is the
surviving entity, the Seller, the Administrator or the Master Servicer, as the
case may be, shall have delivered to the Eligible Lender Trustee, the Surety
Provider and the Indenture Trustee an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary fully to preserve and protect the interest of the Eligible Lender
Trustee and Indenture Trustee, respectively, in the Financed Student Loans and
reciting the details of such filings, or (B) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect such
interests.
SECTION 6.6 LIMITATION ON LIABILITY OF SELLER, MASTER SERVICER AND
OTHERS. (a) The Seller, the Master Servicer and any director or officer or
employee or agent of either may rely in good faith on the advice of counsel or
on any document of any kind, prima facie properly executed and submitted by any
Person respecting any matters arising hereunder.
(b) Neither the Seller, the Master Servicer nor any of its directors,
officers, employees or agents shall be under any liability to the Issuer, the
Surety Provider, the Noteholders or the Certificateholders, the Indenture
Trustee or the Eligible Lender Trustee except as provided under this Agreement
for any action taken or for refraining from the taking of any action pursuant to
this Agreement or for errors in judgment; PROVIDED, HOWEVER, that this provision
shall not protect the Seller or Master Servicer or any such person against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties under this Agreement.
Except as provided in this Agreement, the Seller and the Master
Servicer shall not be under any obligation to appear in, prosecute or defend any
legal action that shall not be incidental to its duties in accordance with this
Agreement, and that in its opinion may involve it in any expense or liability;
PROVIDED, HOWEVER, that the Seller or the Master Servicer may undertake any
reasonable action that it may deem necessary or desirable in respect of this
Agreement and the other Basic Documents and the rights and duties of the parties
to this Agreement and the other Basic Documents and the interests of the
Certificateholders and the Surety Provider under this Agreement and the
Noteholders under the Indenture.
SECTION 6.7. SELLER MAY OWN CERTIFICATE OR NOTES. The Seller and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Certificates or Notes with the same rights as it would have if it
were not the Seller or an Affiliate thereof, except as expressly provided herein
or in any other Basic Document.
SECTION 6.8. MASTER SERVICER NOT TO RESIGN. Subject to the provisions
of Section 6.5, Trans-World Insurance Company shall not resign from the
obligations and duties imposed on it as Master Servicer under this Agreement
except upon determination that the performance of its duties under this
Agreement shall no longer be permissible under applicable law or shall violate
any final order of a court or administrative agency with jurisdiction over it or
its properties. Notice of any such determination permitting resignation shall be
communicated to the Eligible Lender Trustee, the Indenture Trustee and the
Surety Provider at the earliest practicable time (and, if such communication is
not in writing, shall be confirmed in writing at the earliest practicable time)
and any such determination shall be evidenced by an Opinion of Counsel to such
effect delivered to the Eligible Lender Trustee, the Indenture Trustee and the
Surety Provider concurrently with or promptly after such notice. No such
resignation shall become effective until the Indenture Trustee or a successor
Master Servicer shall have assumed the responsibilities and obligations of
Trans-World Insurance Company in accordance with Section 8.2.
ARTICLE VII.
THE ADMINISTRATOR
SECTION 7.1. REPRESENTATIONS OF THE ADMINISTRATOR. The Administrator
makes the following representations on which the Issuer is deemed to have relied
in acquiring (through the Eligible Lender Trustee) the Financed Student Loans
being conveyed pursuant to this Agreement. The representations speak as of the
execution and delivery of this Agreement in the case of the Initial Financed
Student Loans, and as of the applicable Transfer Date, in the case of the
Additional Financed Student Loans, but shall survive the sale, transfer and
assignment of the Financed Student Loans to the Eligible Lender Trustee on
behalf of the Issuer and the pledge thereof to the Indenture Trustee pursuant to
the Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Administrator is duly
incorporated and validly existing as a corporation in good standing under the
laws of the state of its incorporation, with the power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, and had at all relevant times, and
has, the power, authority and legal right, to administer the Financed Student
Loans.
(b) POWER AND AUTHORITY OF THE ADMINISTRATOR. The Administrator has
the corporate power and authority to execute and deliver this Agreement and the
Administration Agreement and to carry out their respective terms; and the
execution, delivery and performance of this Agreement and the Administration
Agreement have been duly authorized by the Administrator by all necessary
corporate action.
(c) BINDING OBLIGATION. This Agreement and the Administration
Agreement each constitutes a legal, valid and binding obligation of the
Administrator, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization and similar laws relating to creditors'
rights generally or and subject to general principles of equity.
(d) NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the Administration Agreement and the fulfillment of the terms
hereof or thereof do not conflict with, result in any breach of any of the terms
and provisions of, nor constitute (with or without notice of lapse of time or
both) a default under, the articles of incorporation or by-laws of the
Administrator, or any indenture, agreement or other instrument to which the
Administrator is a party or by which it shall be bound; nor result in the
creation or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument (other than pursuant
to the Basic Documents); nor violate any law or, to the knowledge of the
Administrator, any order, rule or regulation applicable to it of any court or of
any Federal or State regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Administrator or its
properties.
(e) NO PROCEEDINGS. There are no proceedings or investigations pending
against the Administrator or, to its best knowledge, threatened against the
Administrator, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over it or its properties: (i)
asserting the invalidity of this Agreement or the Administration Agreement, (ii)
seeking to prevent the consummation of any of the transactions contemplated by
this Agreement or the Administration Agreement or (iii) seeking any
determination or ruling that could reasonably be expected to have a material and
adverse effect on the performance by the Administrator of its obligations under,
or the validity or enforceability of, this Agreement or the Administration
Agreement.
(f) ALL CONSENTS. All authorizations, consents, orders or approvals of
or registrations or declarations with any court, regulatory body, administrative
agency or other government instrumentality required to be obtained, effected or
given by the Administrator in connection with the execution and delivery by the
Administrator of this Agreement or the Administration Agreement and the
performance by the Administrator of the transactions contemplated by this
Agreement or the Administration Agreement, have been duly obtained, effected or
given and are in full force and effect.
SECTION 7.2 LIABILITY AND INDEMNITIES. (a) The Administrator shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Administrator under this Agreement or the Administration
Agreement.
(b) The Administrator and TMSI shall indemnify, defend and hold
harmless from their respective funds, the Issuer, the Eligible Lender Trustee,
the Indenture Trustee, the Master Servicer, the Certificateholders, the
Noteholders and the Surety Provider and the officers, directors, employees and
agents of the Issuer, the Eligible Lender Trustee, the Indenture Trustee and the
Surety Provider from and against any and all costs, expenses, losses, claims,
damages and liabilities arising out of, or imposed upon such Person through, the
Administrator's willful misfeasance, bad faith or negligence in the performance
of its duties under this Agreement or the Administration Agreement, or by reason
of reckless disregard of its obligations and duties under this Agreement or the
Administration Agreement.
(c) Indemnification under this Section shall survive the resignation
or removal of the Eligible Lender Trustee or the Indenture Trustee and the
termination of this Agreement or the Indenture or the Trust Agreement, as
applicable, and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Administrator shall have made any indemnity
payments pursuant to this Section and the Person to or on behalf of whom such
payments are made thereafter shall collect any of such amounts from others, such
Person shall promptly repay such amounts to the Administrator without interest.
SECTION 7.3. ADMINISTRATOR NOT TO RESIGN. Subject to the provisions of
Section 6.5, Trans-World Insurance Company shall not resign from the obligations
and duties imposed on it as Administrator under this Agreement except upon
determination that the performance of its duties under this Agreement shall no
longer be permissible under applicable law or shall violate any final order of a
court or administrative agency with jurisdiction over it or its properties.
Notice of any such determination permitting resignation shall be communicated to
the Eligible Lender Trustee, the Indenture Trustee and the Surety Provider at
the earliest practicable time (and, if such communication is not in writing,
shall be confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Eligible Lender Trustee, the Indenture Trustee and the Surety
Provider concurrently with or promptly after such notice. No such resignation
shall become effective until the Indenture Trustee or a successor Administrator
shall have assumed the responsibilities and obligations of Trans-World Insurance
Company in accordance with Section 8.2.
ARTICLE VIII.
DEFAULT
SECTION 8.1. MASTER SERVICER DEFAULT; ADMINISTRATOR DEFAULT. (a) If
any one of the following events (a "Master Servicer Default") shall occur and be
continuing:
(1) any failure by the Master Servicer (i) to deliver
to the Indenture Trustee for deposit in any of the Trust
Accounts any payment required by the Basic Documents or (ii) in the
event that daily deposits into the Collection Account are not required,
to deliver to the Administrator any payment, required by the Basic
Documents, which failure in case of either clause (i) or (ii) continues
unremedied for two Business Days after written notice of such failure
is received by the Master Servicer from the Eligible Lender Trustee,
the Indenture Trustee, the Surety Provider or the Administrator or
after discovery of such failure by an officer of the Master Servicer;
or
(2) any failure by the Master Servicer or TMSI duly
to observe or to perform in any material respect any other
covenants or agreements of the Master Servicer or TMSI set forth in
this Agreement or any other Basic Document, which failure shall (i)
materially and adversely affect the rights of Noteholders,
Certificateholders or the Surety Provider and
(ii) continues unremedied for a period of 60 days after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given (A) to the Master Servicer or TMSI, as
the case may be, by the Indenture Trustee, the Eligible Lender Trustee,
the Surety Provider or the Administrator or (B) to the Master Servicer
or TMSI, as the case may be, and to the Indenture Trustee and the
Eligible Lender Trustee by the Noteholders or Certificateholders, as
applicable, representing not less than 25% of the Outstanding Amount of
the Notes or 25% of the outstanding Certificate Balance; or
(3) an Insolvency Event occurs with respect to the
Master Servicer;
then, and in each and every case, so long as the Master Servicer
Default shall not have been remedied, either the Surety Provider or, with the
written consent of the Surety Provider, the Indenture Trustee or the Noteholders
of Notes evidencing not less than 25% of the Outstanding Amount of the Notes, by
notice then given in writing to the Master Servicer (and to the Indenture
Trustee and the Eligible Lender Trustee if given by the Noteholders or the
Surety Provider) may terminate all the rights and obligations (other than the
obligations set forth in Section 6.3 hereof) of the Master Servicer under this
Agreement. On or after the receipt by the Master Servicer of such written
notice, all authority and power of the Master Servicer under this Agreement,
whether with respect to the Notes, the Certificates or the Financed Student
Loans or otherwise, shall, without further action, pass to and be vested in the
Indenture Trustee or such successor Master Servicer as may be appointed under
Section 8.2, and, without limitation, the Indenture Trustee and the Eligible
Lender Trustee are hereby authorized, obligated and empowered to execute and
deliver, for the benefit of the predecessor Master Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Financed Student Loans and related documents, or otherwise.
The predecessor Master Servicer shall cooperate with the successor Master
Servicer, the Indenture Trustee and the Eligible Lender Trustee in effecting the
termination of the responsibilities and rights of the predecessor Master
Servicer under this Agreement, including the transfer to the successor Master
Servicer for administration by it of all cash amounts that shall at the time be
held by the predecessor Master Servicer for deposit, or shall thereafter be
received by it with respect to a Financed Student Loan. All reasonable costs and
expenses (including attorneys' fees) incurred in connection with transferring
the Financed Student Loan Files from a current Master Servicer to the successor
Master Servicer and amending this Agreement and any other Basic Documents to
reflect such succession as Master Servicer pursuant to this Section shall be
paid by the predecessor Master Servicer upon presentation of reasonable
documentation of such costs and expenses. Upon receipt of notice of the
occurrence of a Master Servicer Default, the Eligible Lender Trustee shall give
notice thereof to the Surety Provider and the Rating Agencies.
(b) ADMINISTRATOR DEFAULT. If any one of the following events (an
"Administrator Default") shall occur and be continuing:
(1) any failure by the Administrator to direct the Indenture
Trustee or the Eligible Lender Trustee, as applicable, to make any
required distributions from any of the Trust Accounts, which failure
continues unremedied for two Business Days after written notice of such
failure is received by the Administrator from the Indenture Trustee,
the Eligible Lender Trustee or the Surety Provider or after
discovery of such failure by an officer of the
Administrator; or
(2) any failure by the Administrator duly to observe or to
perform in any material respect any other covenants or agreements of
the Administrator set forth in this Agreement, the Administration
Agreement or any other Basic Document, which failure shall (i)
materially and adversely affect the rights of Noteholders,
Certificateholders, or the Surety Provider and (ii) continues
unremedied for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given (A) to the Administrator by the Surety Provider, the
Indenture Trustee or the Eligible Lender Trustee or (B) to the
Administrator and to the Indenture Trustee and the Eligible Lender
Trustee by the Noteholders or Certificateholders, as applicable,
representing not less than 25% of the Outstanding Amount of the Notes
or 25% of the outstanding Certificate Balance; or
(3) an Insolvency Event occurs with respect to the
Administrator;
then, and in each and every case, so long as the Administrator Default
shall not have been remedied, either the Surety Provider or, with the written
consent of the Surety Provider, the Indenture Trustee or the Noteholders
evidencing not less than 25% of the Outstanding Amount of the Notes, by notice
then given in writing to the Administrator (and to the Indenture Trustee and the
Eligible Lender Trustee if given by the Noteholders or the Surety Provider) may
terminate all the rights and obligations (other than the obligations set forth
in Sections 6.3 and 7.2 hereof) of the Administrator under this Agreement and
the Administration Agreement. On or after the receipt by the Administrator of
such written notice, all authority and power of the Administrator under this
Agreement and the Administration Agreement, whether with respect to the Notes,
the Certificates or the Financed Student Loans or otherwise, shall, without
further action, pass to and be vested in the Indenture Trustee or such successor
Administrator as may be appointed under Section 8.2; and, without limitation,
the Indenture Trustee and the Eligible Lender Trustee are hereby authorized and
empowered to execute and deliver, for the benefit of the predecessor
Administrator, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination. The
predecessor Administrator shall cooperate with the successor Administrator, the
Indenture Trustee and the Eligible Lender Trustee in effecting the termination
of the responsibilities and rights of the predecessor Administrator under this
Agreement and the Administration Agreement. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with amending this Agreement
and the Administration Agreement to reflect such succession as Administrator
pursuant to this Section shall be paid by the predecessor Administrator upon
presentation of reasonable documentation of such costs and expenses. Upon
receipt of notice of the occurrence of a Administrator Default, the Eligible
Lender Trustee shall give notice thereof to the Surety Provider and the Rating
Agencies.
SECTION 8.2 APPOINTMENT OF SUCCESSOR. (a) Upon receipt by the Master
Servicer or the Administrator, as the case may be, of notice of termination
pursuant to Section 8.1, or the resignation by the Master Servicer or the
Administrator, as the case may be, in accordance with the terms of this
Agreement, the predecessor Master Servicer or the Administrator, as the case may
be, shall continue to perform its functions as Master Servicer or Administrator,
as the case may be, under this Agreement in the case of termination, only until
the date specified in such termination notice or, if no such date is specified
in a notice of termination, until receipt of such notice and, in the case of
resignation, until the later of (x) the date 120 days from the delivery to the
Eligible Lender Trustee and the Indenture Trustee of written notice of such
resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (y) the date upon which the predecessor Master
Servicer or Administrator, as the case may be, shall become unable to act as
Master Servicer or Administrator, as the case may be, as specified in the notice
of resignation and accompanying Opinion of Counsel. In the event of the
termination hereunder of the Master Servicer or the Administrator, as the case
may be, the Issuer shall appoint a successor Master Servicer or Administrator,
as the case may be, acceptable to the Indenture Trustee and reasonably
acceptable to the Surety Provider, and the successor Master Servicer or
Administrator, as the case may be, shall accept its appointment by a written
assumption in form acceptable to the Indenture Trustee and the Surety Provider.
In the event that a successor Master Servicer or Administrator, as the case may
be, has not been appointed at the time when the predecessor Master Servicer or
Administrator, as the case may be, has ceased to act as Master Servicer or
Administrator, as the case may be, in accordance with this Section, the
Indenture Trustee without further action shall automatically be appointed the
successor Master Servicer or Administrator, as the case may be, and the
Indenture Trustee shall be entitled to the Master Servicing Fee and any
Servicing Fee Carryover or the Administration Fee, as the case may be in
accordance with the provisions of the Basic Documents. Notwithstanding the
above, the Indenture Trustee shall, if it shall be unwilling or legally unable
so to act, appoint or petition a court of competent jurisdiction to appoint, any
established institution whose regular business shall include the servicing of
student loans, as the successor to the Master Servicer or Administrator, as the
case may be, under this Agreement; PROVIDED, HOWEVER, that such right to appoint
or to petition for the appointment of any such successor servicer shall in no
event relieve the Indenture Trustee from any obligations otherwise imposed on it
under the Basic Documents until such successor has in fact assumed such
appointment.
(b) Upon appointment, the successor Master Servicer or Administrator,
as the case may be, (including the Indenture Trustee acting as successor Master
Servicer or Administrator as the case may be), shall be the successor in all
respects to the predecessor Master Servicer or Administrator, as the case may
be, and shall be subject to all the responsibilities, duties and liabilities
arising thereafter relating thereto placed on the predecessor Master Servicer or
Administrator, as the case may be, and shall be entitled to an amount agreed to
by such successor Master Servicer or Administrator as the case may be, in
accordance with the provisions of the Basic Documents (which shall not exceed
the Master Servicing Fee and any Servicing Fee Carryover or Administration Fee,
as the case may be, unless such compensation arrangements are approved in
writing by the Surety Provider and will not result in a downgrading of the Notes
or the Certificates by any Rating Agency) and all the rights granted to the
predecessor Master Servicer or Administrator, as the case may be, by the terms
and provisions of this Agreement.
(c) Neither the Master Servicer nor the Administrator may resign
unless it is prohibited from serving as such by law as evidenced by an Opinion
of Counsel to such effect delivered to the Indenture Trustee, the Eligible
Lender Trustee and the Surety Provider. Notwithstanding the foregoing or
anything to the contrary herein or in the other Basic Documents, the Indenture
Trustee, to the extent it is acting as successor Master Servicer or
Administrator, as the case may be, pursuant hereto shall be entitled to resign
to the extent a qualified successor Master Servicer or Administrator, as the
case may be, has been appointed and has assumed all the obligations of the
Master Servicer or Administrator, as the case may be, in accordance with the
terms of this Agreement and the other Basic Documents.
(d) Any successor Master Servicer shall assume all the obligations and
responsibilities of the Master Servicer under each sub-servicing agreement with
a Servicer and shall only be able to modify or terminate such sub-servicing
agreements pursuant to the provisions thereof.
SECTION 8.3 NOTIFICATION TO NOTEHOLDERS AND CERTIFICATEHOLDERS. Upon
any termination of, or appointment of a successor to, the Master Servicer or
Administrator, as the case may be, pursuant to this Article VIII, the Eligible
Lender Trustee shall give prompt written notice thereof to Certificateholders
and the Indenture Trustee shall give prompt written notice thereof to
Noteholders, the Surety Provider and the Rating Agencies (which, in the case of
any such appointment of a successor, shall consist of prior written notice
thereof to the Surety Provider and the Rating Agencies).
SECTION 8.4. WAIVER OF PAST DEFAULTS. The Surety Provider may or, with
the prior written consent of the Surety Provider, the Noteholders of Notes
evidencing not less than a majority of the Outstanding Amount of the Notes (or
the Certificateholders of Certificates evidencing not less than a majority of
the outstanding Certificate Balance, in the case of any default which does not
adversely affect the Indenture Trustee or the Noteholders) may, on behalf of all
Noteholders and Certificateholders, waive in writing any default by the Master
Servicer or Administrator, as the case may be, in the performance of its
obligations hereunder and any consequences thereof, except a default in making
any required deposits to or payments from any of the Trust Accounts (or giving
instructions regarding the same) in accordance with this Agreement. Upon any
such waiver of a past default, such default shall cease to exist, and any Master
Servicer Default or Administrator Default, as the case may be, arising therefrom
shall be deemed to have been remedied for every purpose of this Agreement. No
such waiver shall extend to any subsequent or other default or impair any right
consequent thereto.
ARTICLE IX.
TERMINATION
SECTION 9.1 TERMINATION. (a) OPTIONAL PURCHASE OF ALL FINANCED STUDENT
LOANS. As of the last day of any Collection Period immediately preceding a Note
Distribution Date or, if the Notes are no longer Outstanding, a Certificate
Distribution Date as of which the then outstanding Pool Balance is 10% or less
of the Aggregate Pool Balance, the Seller shall have the option, with the prior
written consent of the Surety Provider, to purchase the Indenture Trust Estate,
other than the Trust Accounts; PROVIDED, HOWEVER, that, unless Moody's agrees
otherwise, the Seller may not effect any such purchase so long as the rating on
its long-term debt obligations is less than Baa3 by Moody's, unless the Eligible
Lender Trustee and the Indenture Trustee shall have received an Opinion of
Counsel to the effect that such purchase would not constitute a fraudulent
conveyance. To exercise such option, the Seller shall deposit pursuant to
Section 5.4 in the Collection Account an amount equal to the aggregate Purchase
Amount for the Financed Student Loans and the related rights with respect
thereto, plus the appraised value of any such other property held by the Trust,
such value to be determined by an appraiser mutually agreed upon by the Seller,
the Eligible Lender Trustee and the Indenture Trustee, and shall succeed to all
interests in and to the Trust; PROVIDED, HOWEVER, that the Seller may not effect
such purchase if the aggregate Purchase Amount to be so deposited in the
Collection Account does not equal or exceed an amount equal to the sum of (x)
the unpaid principal balance of the Notes plus accrued and unpaid interest
thereon at the related Class Interest Rate to the last day of the Collection
Period during which such purchase occurs and the amount of unpaid Noteholders'
Interest Carryover with respect thereto, (y) the unpaid Certificate Balance,
plus accrued and unpaid interest thereon at the related Certificate Rate to the
last day of the Collection Period during which such purchase occurs and the
amount of unpaid Certificateholders' Interest Carryover with respect thereto,
and (z) the unpaid Transaction Fees, if any.
(b) INSOLVENCY OF TMS STUDENT HOLDINGS, INC. Upon any sale of the
assets of the Trust pursuant to Section 9.2 of the Trust Agreement, the Master
Servicer shall instruct the Indenture Trustee to deposit the net proceeds from
such sale after all payments and reserves therefrom (including the expenses of
such sale) have been made (the "Insolvency Proceeds") in the Collection Account.
On the applicable Note Distribution Date or Certificate Distribution Date, or,
if such proceeds are not so deposited on a Note Distribution Date or Certificate
Distribution Date, on the first applicable Note Distribution Date or Certificate
Distribution Date following the date on which the Insolvency Proceeds are
deposited in the Collection Account, the Master Servicer shall instruct the
Indenture Trustee to make the following distributions (after the application on
such Note Distribution Date or Certificate Distribution Date of the amount of
Available Funds and amounts on deposit in the Reserve Account pursuant to
Sections 5.5 and 5.6) from the Insolvency Proceeds and any funds remaining on
deposit in the Reserve Account (including the proceeds of any sale of
investments therein as described in the following sentence):
(i) to the Noteholders, any portion of the Noteholders'
Interest Distribution Amount not otherwise distributed to the
Noteholders on such Note Distribution Date;
(ii) to the Noteholders, the outstanding principal amount
of the Notes (after giving effect to the reduction in the outstanding
principal amount of the Notes to result from the distributions to
Noteholders on such Note Distribution Date and on prior Note
Distribution Dates);
(iii) to the Certificateholders, any portion of the
Certificateholders' Interest Distribution Amount not otherwise
distributed to the Certificateholders on such Certificate Distribution
Date;
(iv) to the Certificateholders, the Certificate Balance
(after giving effect to the reduction in the Certificate Balance to
result from the distributions to Certificateholders on such
Certificate Distribution Date);
(v) to the Indenture Trustee, any unpaid Indenture Trustee
Fees and other amounts owed the Indenture Trustee hereunder or under
any other Transaction Document and not otherwise paid on such Note
Distribution Date or Certificate Distribution Date;
(vi) to the Surety Provider, an amount equal to all
unreimbursed Certificate Surety Bond Payments and Note Surety Bond
Payments made on prior Note Distribution Dates and Certificate
Distribution Dates not otherwise reimbursed on such Note Distribution
Date or Certificate Distribution Date, together with accrued interest
thereon at the rate set forth in the Insurance Agreement and unpaid
premiums;
(vii) to the Master Servicer, any unpaid Servicing Fee
Carryovers not otherwise paid on such Note Distribution Date or
Certificate Distribution Date;
(viii) to the Noteholders, any unpaid Noteholders' Auction
Rate Interest Carryover or Noteholders' LIBOR Rate Interest Carryover
not otherwise distributed to the Noteholders on such Note Distribution
Date; and
(ix) to the Certificateholders, any unpaid
Certificateholders' Auction Rate Interest Carryover or
Certificateholders' LIBOR Rate Interest Carryover not otherwise
distributed to the Certificateholders on such Certificate Distribution
Date.
Any investments on deposit in the Reserve Account which will not mature on or
before the Note Distribution Date or Certificate Distribution Date when needed
shall be sold by the Indenture Trustee at such time as will result in the
Indenture Trustee receiving the proceeds from such sale not later than the
Business Day preceding such Note Distribution Date or Certificate Distribution
Date. Any Insolvency Proceeds remaining after the deposits described above shall
be paid (i) first, to the holders of Originators' Interests any unpaid amounts
due to them pursuant to the terms of the related Trust Supplement and (ii) then
to the Seller.
(c) NOTICE. As described in Article IX of the Trust Agreement, notice
of any termination of the Trust shall be given by the Administrator to the
Master Servicer, the Eligible Lender Trustee, the Indenture Trustee and the
Surety Provider as soon as practicable after the Administrator has received
notice thereof.
(d) SUCCESSION. Following the satisfaction and discharge of the
Indenture and the payment in full of the principal of and interest on the Notes,
the Certificateholders will succeed to the rights of the Noteholders hereunder
other than Section 5.6(b) and the Eligible Lender Trustee will succeed to the
rights of, and assume the obligations of, the Indenture Trustee pursuant to this
Agreement and any other Basic Documents. Following the payment in full of the
principal of and interest on the Certificates by the Surety Provider pursuant to
the Surety Bond, the Surety Provider (or its assignee) will succeed to the
rights of the Certificateholders.
ARTICLE X.
SURETY BONDS
SECTION 10.1. SURETY BONDS. (a) If for any Note Distribution Date for
a Class of Notes, a Note Surety Bond Payment is required to be made under the
terms of the related Note Surety Bond, the Indenture Trustee shall submit the
notice in the form of Attachment I to the applicable Note Surety Bond in
accordance with the terms and conditions of such Note Surety Bond in the amount
of such Note Surety Bond Payment to the Surety Provider and, if one has been
designated, to the fiscal agent for the Surety Provider no later than 12:00
noon, New York City time, on the Business Day prior to such Note Distribution
Date. Upon receipt of payment from the Surety Provider in accordance with the
terms of the applicable Note Surety Bond, the Eligible Lender Trustee shall
deposit such amount into the Note Distribution Account for distribution solely
to Noteholders of the applicable Class.
(b) If for any Certificate Distribution Date for a Class of
Certificates, a Certificate Surety Bond Payment is required to be made under the
terms of the related Certificate Surety Bond, the Eligible Lender Trustee shall
submit the notice in the form of Attachment I to the applicable Certificate
Surety Bond in accordance with the terms and conditions of such Certificate
Surety Bond in the amount of such Certificate Surety Bond Payment to the Surety
Provider and, if one has been designated, to the fiscal agent for the Surety
Provider no later than 12:00 noon, New York City time, on the Business Day prior
to such Certificate Distribution Date. Upon receipt of payment from the Surety
Provider in accordance with the terms of the applicable Certificate Surety Bond,
the Eligible Lender Trustee shall deposit such amount into the Certificate
Distribution Account for distribution solely to Certificateholders of the
applicable Class.
SECTION 10.2. FURTHER ASSURANCES; SURETY PROVIDER DEFAULT; ETC. (a)
The Eligible Lender Trustee, the Seller and the Master Servicer acknowledge, and
each Certificateholder by its acceptance of a Certificate and each Noteholder by
its acceptance of a Note agrees, anything herein to the contrary
notwithstanding, that any payment with respect to principal of or interest on
the Certificates which is made with moneys received pursuant to the terms of a
Certificate Surety Bond, and any payment with respect to principal of or
interest on the Notes which is made with moneys received pursuant to the terms
of a Note Surety Bond, shall not be considered payment of the Certificates, or
the Notes, as the case may be, from the Trust Estate and the Surety Provider
shall be paid such principal and interest but only from the sources and in the
manner provided herein and in the Insurance Agreement for the reimbursement to
the Surety Provider of such principal and interest.
(b) Each of the Eligible Lender Trustee, the Seller and the Master
Servicer shall cooperate in all respects with any reasonable request by the
Surety Provider for action to preserve or enforce the Surety Provider's rights
and interests under this Agreement. In addition, each such party agrees to
forward to the Master Servicer, who shall deliver to the Surety Provider, a copy
of all written communications received by each such party from the Eligible
Lender Trustee, from 25% or more of the Certificateholders or from either Rating
Agency.
(c) Notwithstanding anything to the contrary contained in this
Agreement, if a Surety Provider Default exists, the provisions of this Agreement
which (i) permit the Surety Provider to exercise rights of the
Certificateholders or the Noteholders, (ii) restrict the ability of the
Certificateholders, the Noteholders, the Master Servicer, the Indenture Trustee
or the Eligible Lender Trustee to act without the consent or approval of the
Surety Provider, (iii) provide that a particular act or thing must be acceptable
to the Surety Provider, (iv) permit the Surety Provider to direct (or otherwise
require) the actions of the Eligible Lender Trustee, the Indenture Trustee, the
Master Servicer, the Noteholders or the Certificateholders, (v) provide that any
action or omission taken with the consent, approval or authorization of the
Surety Provider shall be authorized hereunder or shall not subject the party
taking or omitting to take such action to any liability hereunder or (vi) which
have a similar effect shall be of no further force and effect, and the Eligible
Lender Trustee, the Indenture Trustee and the Administrator shall administer the
Issuer and perform its obligations hereunder solely for the benefit of the
Noteholders and the Certificateholders. Nothing in the foregoing sentence, nor
any action taken pursuant thereto or in compliance therewith, shall be deemed to
have released the Surety Provider from any obligation or liability it may have
to any party or to the Noteholders or the Certificateholders hereunder, under
any other agreement, instrument or document (including the Surety Bonds) or
under applicable law.
ARTICLE XI.
MISCELLANEOUS
SECTION 11.1. AMENDMENT. (a) This Agreement may be amended by the
Seller, the Master Servicer and the Eligible Lender Trustee, with the consent of
the Indenture Trustee and the Surety Provider (which consent shall not be
unreasonably withheld), but without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement or
of modifying in any manner the rights of the Noteholders, the Certificateholders
or the Surety Provider; PROVIDED, HOWEVER, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Eligible Lender Trustee, the
Surety Provider and the Indenture Trustee, adversely affect in any material
respect the interests of any Noteholder, Certificateholder or the Surety
Provider.
(b) This Agreement may also be amended from time to time by the
Seller, the Master Servicer and the Eligible Lender Trustee, with the consent of
the Indenture Trustee and the Surety Provider, the consent of the Noteholders of
Notes evidencing not less than a majority of the Outstanding Amount of the Notes
and the consent of the Certificateholders of Certificates evidencing not less
than a majority of the Certificate Balance, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; PROVIDED, HOWEVER, that no such amendment shall (a)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments with respect to Financed Student Loans or
distributions that shall be required to be made for the benefit of the
Noteholders or the Certificateholders or (b) reduce the aforesaid percentage of
the Outstanding Amount of the Notes and the Certificate Balance, the Noteholders
or the Certificateholders of which are required to consent to any such
amendment, without the consent of all outstanding Noteholders and
Certificateholders.
(c) Promptly after the execution of any amendment pursuant to clause
(b) above (or, in the case of the Rating Agencies, five Business Days prior
thereto), the Eligible Lender Trustee shall furnish written notification of the
substance of such amendment or consent to each Certificateholder, the Indenture
Trustee, the Surety Provider and each of the Rating Agencies.
(d) It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
(e) Prior to the execution of any amendment to this Agreement, the
Eligible Lender Trustee and the Indenture Trustee shall be entitled to receive
and rely upon an Opinion of Counsel stating that the execution of such amendment
is authorized or permitted by this Agreement and the Opinion of Counsel referred
to in Section 11.2(i)(1). The Eligible Lender Trustee and the Indenture Trustee
may, but shall not be obligated to, enter into any such amendment which affects
the Eligible Lender Trustee's or the Indenture Trustee's, as applicable, own
rights, duties or immunities under this Agreement or otherwise.
SECTION 11.2. PROTECTION OF INTERESTS IN TRUST. (a) The Seller shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain, and protect the interest of the
Issuer, the Eligible Lender Trustee and the Indenture Trustee in the Financed
Student Loans and in the proceeds thereof. The Seller shall deliver (or cause to
be delivered) to the Eligible Lender Trustee and the Indenture Trustee
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) Neither the Seller nor the Master Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of Section 9-402(7)
of the UCC, unless it shall have given the Eligible Lender Trustee and the
Indenture Trustee at least five days' prior written notice thereof and shall
have promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c) Each of the Seller and the Master Servicer shall have an
obligation to give the Eligible Lender Trustee and the Indenture Trustee at
least 60 days' prior written notice of any relocation of its principal executive
office if, as a result of such relocation, the applicable provisions of the UCC
would require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement and shall promptly file
any such amendment. The Master Servicer shall at all times maintain each office
from which it shall service Financed Student Loans, and its principal executive
office, within the United States of America.
(d) The Master Servicer shall maintain accounts and records as to each
Financed Student Loan it is servicing (or provide access to such accounts and
records being serviced by a subservicer) accurately and in sufficient detail to
permit (i) the reader thereof to know at any time the status of such Financed
Student Loan, including payments and recoveries made and payments owing (and the
nature of each) and (ii) reconciliation between payments or recoveries on (or
with respect to) each Financed Student Loan and the amounts from time to time
deposited in the Collection Account in respect of such Financed Student Loan.
(e) The Master Servicer shall maintain its computer systems so that,
from and after the time of sale under this Agreement of the Financed Student
Loans, the Master Servicer's master computer records (including any backup
archives) that refer to a Financed Student Loan shall indicate clearly the
interest of the Issuer and the Indenture Trustee in such Financed Student Loan
and that such Financed Student Loan is owned by the Issuer and has been pledged
to the Indenture Trustee. Indication of the Issuer's and the Indenture Trustee's
interest in a Financed Student Loan shall be deleted from or modified on the
Master Servicer's computer systems when, and only when, the related Financed
Student Loan shall have been paid in full or repurchased.
(f) If at any time the Seller shall propose to sell, grant a security
interest in, or otherwise transfer any interest in Financed Student Loans to any
prospective purchaser, lender or other transferee, the Master Servicer shall
give notice to such prospective purchaser, lender or other transferee that such
Financed Student Loan has been sold and is owned by the Issuer and has been
pledged to the Indenture Trustee.
(g) Upon reasonable notice, the Master Servicer shall permit the
Indenture Trustee and its agents at any time during normal business hours to
inspect, audit and make copies of and abstracts from the Master Servicer's
records regarding any Financed Student Loan; it being understood that unless a
Surety Provider Default shall have occurred and be continuing, the Surety
Provider shall be entitled to direct the Indenture Trustee to make any such
inspection or audit on behalf of the Surety Provider.
(h) Upon request at any time the Eligible Lender Trustee or the
Indenture Trustee shall have reasonable grounds to believe that such request
would be necessary in connection with its performance of its duties under the
Basic Documents, the Master Servicer shall furnish to the Eligible Lender
Trustee or to the Indenture Trustee, within twenty Business Days, a list of all
Financed Student Loans (by borrower social security number, type of loan and
date of issuance) then held as part of the Trust, and a comparison of such list
to the list of the Initial Financed Student Loans set forth in Schedule A as of
the Closing Date, and, for each Financed Student Loan that has been added to or
removed from the pool of loans held by the Eligible Lender Trustee on behalf of
the Issuer, information as to the date as of which and circumstances under which
each such Financed Student Loan was so added or removed.
(i) The Seller shall deliver to the Eligible Lender Trustee, the
Surety Provider and the Indenture Trustee:
(1) promptly after the execution and delivery of this
Agreement and of each amendment thereto an Opinion of Counsel either
(A) stating that, in the opinion of such counsel, all financing
statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the
Eligible Lender Trustee and the Indenture Trustee in the Financed
Student Loans, and reciting the details of such filings or referring
to prior Opinions of Counsel in which such details are given, or (B)
stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest; and
(2) within 120 days after the beginning of each calendar
year beginning with the first calendar year beginning more than three
months after the Cut-off Date, an Opinion of Counsel, dated as of a
date during such 120-day period, either (A) stating that, in the
opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Eligible Lender Trustee and
the Indenture Trustee in the Financed Student Loans, and reciting the
details of such filings or referring to prior Opinions of Counsel in
which such details are given, or (B) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and
protect such interest; PROVIDED that a single Opinion of Counsel may
be delivered in satisfaction of the foregoing requirement and that of
Section 3.6(b) of the Indenture.
Each Opinion of Counsel referred to in clause (1) or (2) above shall
specify (as of the date of such opinion and given all applicable laws as in
effect on such date) any action necessary to be taken in the following year to
preserve and protect such interest.
(j) The Administrator shall file all reports with respect to the Notes
and the Certificates as may be required by the Commission or state securities
authorities.
SECTION 11.3. NOTICES. All demands, notices and communications upon or
to the Seller, the Master Servicer, the Administrator, the Eligible Lender
Trustee, the Indenture Trustee, the Surety Provider or the Rating Agencies under
this Agreement shall be in writing, personally delivered or mailed by certified
mail, return receipt requested (or in the form of telex or facsimile notice,
followed by written notice delivered as aforesaid) and shall be deemed to have
been duly given upon receipt (a) in the case of the Seller, the Master Servicer,
TMSI or Administrator, two copies, one to Trans-World Insurance Company, 3301 C
Street, Suite 100-A, Sacramento, CA 95816 Attention: President (telephone: (916)
446-1626; facsimile: (916) 441-0291) and the other to Trans-World Insurance
Company, c/o the Money Store Inc., Attention: Chief Financial Officer, 2480
Morris Avenue, Union, New Jersey 07083 (telephone: (908) 686-2000; facsimile:
(908) 688-3846) (b) in the case of the Issuer or the Eligible Lender Trustee, at
the Corporate Trust Office of the Eligible Lender Trustee, (c) in the case of
the Indenture Trustee, at its Corporate Trust Office, (d) in the case of the
Eligible Lender Trustee, to Dauphin Deposit Bank and Trust Company, Attention:
Corporate Trust Services, 8 West High Street, Carlisle, Cumberland County,
Pennsylvania 17013, (e) in the case of the Surety Provider, to AMBAC Indemnity
Corporation, One State Street Plaza, New York, New York 10004, Attention:
Structured Finance/Student Loan Department (telephone: (212) 668-0340;
facsimile: (212) 363-1459), (f) in the case of Moody's to Moody's Investors
Service, Inc., 99 Church Street, New York, New York 10007, Attention: Structured
Finance Department/ Student Loans (telephone: (212) 553-0300; facsimile: (212)
553-4792), and (g) in the case of Standard & Poor's, to Standard & Poor's
Ratings Group, 25 Broadway (20th Floor), New York, New York 10004, Attention:
Asset Backed Surveillance Department (telephone: (212) 208-8000; facsimile:
(212) 412-0225); or, as to each of the foregoing, at such other address as shall
be designated by written notice to the other parties.
SECTION 11.4. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Section 6.5 and as provided in the
provisions of this Agreement concerning the resignation of the Master Servicer,
this Agreement may not be assigned by the Seller or the Master Servicer. This
Agreement may only be assigned by the Eligible Lender Trustee to its permitted
successor pursuant to the Trust Agreement.
SECTION 11.5. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the Seller, the Master Servicer, the
Issuer and the Eligible Lender Trustee and for the benefit of the
Certificateholders, the Indenture Trustee, the Noteholders and the Surety
Provider, as third party beneficiaries, and nothing in this Agreement, whether
express or implied, shall be construed to give to any other Person any legal or
equitable right, remedy or claim in the Trust Estate or under or in respect of
this Agreement or any covenants, conditions or provisions contained herein.
SECTION 11.6. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.7. SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.8. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.9. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 11.10. ASSIGNMENT TO INDENTURE TRUSTEE. The Seller hereby
acknowledges and consents to any mortgage, pledge, assignment and grant by the
Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of the
Noteholders of a security interest in all right, title and interest of the
Issuer in, to and under the Financed Student Loans and/or the assignment of any
or all of the Issuer's rights and obligations hereunder to the Indenture
Trustee.
SECTION 11.11. NONPETITION COVENANTS. Notwithstanding any prior
termination of this Agreement, the Master Servicer, the Administrator and the
Seller shall not acquiesce, petition or otherwise invoke or cause the Issuer to
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Issuer under any Federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Issuer or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer.
SECTION 11.12. LIMITATION OF LIABILITY OF ELIGIBLE LENDER TRUSTEE AND
INDENTURE TRUSTEE. (a) Notwithstanding anything contained herein to the
contrary, this Agreement has been signed by Dauphin Deposit Bank and Trust
Company not in its individual capacity but solely in its capacity as Eligible
Lender Trustee of the Issuer and in no event shall Dauphin Deposit Bank and
Trust Company in its individual capacity or as beneficial owner of the Issuer
have any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder or in any of the certificates, notices
or agreements delivered pursuant hereto as to all of which recourse shall be had
solely to the assets of the Issuer.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by Bankers Trust Company not in its individual
capacity but solely as Indenture Trustee and in no event shall Bankers Trust
Company have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
SECTION 11.13. RIGHTS OF SURETY PROVIDER. The Surety Provider is a
third-party beneficiary of this Sale and Servicing Agreement. Any right
conferred to the Surety Provider shall be suspended during any period in which
the Surety Provider is in default in its payment obligations under the Insurance
Agreement. During any period of suspension the Surety Provider's rights
hereunder shall vest in the Noteholders and Certificateholders and shall be
exercisable by the Holders of a majority of the aggregate principal amount of
Notes and Certificates then Outstanding. At such time as the Notes and
Certificates are no longer Outstanding and the Surety Provider has been
reimbursed for all Required Surety Payments to which it is entitled under the
Basic Documents and has been paid all Premium Amounts due and owing in respect
of the Surety Bonds, the Surety Provider's rights hereunder shall terminate.
SECTION 11.14. CONFLICTS WITH OTHER DOCUMENTS. This Third Supplemental
Sale and Servicing Agreement is being entered into in connection with the
issuance by the Issuer of the Series 1996-2 Notes. For ease of reference, this
Agreement contains provisions set forth in the Sale and Servicing Agreement that
are applicable to all Classes of Notes and all Financed Student Loans. If any
term of this Third Supplemental Sale and Servicing Agreement conflicts with any
term of the Sale and Servicing Agreement or any other Supplemental Sale and
Servicing Agreement, this Third Supplemental Sale and Servicing Agreement shall
control for purposes of the Series 1996-2 Notes.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers as of the day and year first above
written.
CLASSNOTES TRUST 1995-I,
by DAUPHIN DEPOSIT BANK AND
TRUST COMPANY, not in its
individual capacity but
solely as Eligible Lender
Trustee on behalf of the
Trust,
ATTEST:
/s/ Rex F. Hood BY:/s/ John A. Hayes
Name: Rex F. Hood Name:John A. Hayes
Title: Assistant Secretary Title:Vice President/
Corporate Trust Officer
TRANS-WORLD INSURANCE COMPANY d/b/a
EDUCAID, Seller, Master Servicer
and Administrator
BY:/s/ Morton Dear
Name: Morton Dear
Title: Executive Vice President
THE MONEY STORE INC.,
BY:/s/ Morton Dear
Name: Morton Dear
Title: Executive Vice President
Acknowledged and accepted
as of the day and year
first above written:
BANKERS TRUST COMPANY, not
in its individual capacity
but solely as Indenture Trustee,
by /s/ Nicole M. Taylor
Name: Nicole M. Taylor
Title: Assistant Treasurer
<PAGE>
APPENDIX A
TO THE
THIRD SUPPLEMENTAL SALE AND SERVICING AGREEMENT
DEFINITIONS AND USAGE
USAGE
The following rules of construction and usage shall be
applicable to any instrument that is governed by this Appendix:
(a) All terms defined in this Appendix shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant thereto unless otherwise defined
therein.
(b) As used herein, in any instrument governed hereby and in
any certificate or other document made or delivered pursuant thereto, accounting
terms not defined in this Appendix or in any such instrument, certificate or
other document, and accounting terms partly defined in this Appendix or in any
such instrument, certificate or other document to the extent not defined, shall
have the respective meanings given to them under generally accepted accounting
principles as in effect on the date of such instrument. To the extent that the
definitions of accounting terms in this Appendix or in any such instrument,
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Appendix or in any such instrument, certificate or other document shall
control.
(c) The words "hereof", "herein", "hereunder" and words of
similar import when used in an instrument refer to such instrument as a whole
and not to any particular provision or subdivision thereof; references in an
instrument to "Article", "Section" or another subdivision or to an attachment
are, unless the context otherwise requires, to an article, section or
subdivision of or an attachment to such instrument; and the term "including"
means "including without limitation".
(d) The definitions contained in this Appendix are equally
applicable to both the singular and plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred
to below or in any agreement or instrument that is governed by this Appendix
means such agreement or instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments)
by waiver or consent and (in the case of statutes) by succession of comparable
successor statutes and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns.
DEFINITIONS
"ACCRUAL NOTES" means any Class of Notes, the terms of which
provide for interest accrued thereon to be capitalized and added to the
Outstanding Amount thereof during the related Accrual Period.
"ACCRUAL PERIOD" means, with respect to any Class of Accrual
Notes, the period of time during which interest accrued on such Notes is
capitalized and added to the Outstanding Amount thereof.
"ACT" has the meaning specified in Section 11.3(a) of the
Indenture.
"ADDITIONAL FUNDING" means, with respect to a Series of
Notes, those expenditures made on behalf of the Issuer from the Pre-Funding
Account on Transfer Dates during the applicable Funding Period, consisting of
(i) amounts paid in connection with the transfer to the Trust of Additional
Student Loans as of the applicable Transfer Dates and (ii) amounts transferred
to the Collection Account representing interest payments to Noteholders and
Certificateholders in lieu of collections of interest on certain of the Financed
Student Loans to the extent such interest is not paid currently but is
capitalized and added to the principal balance of such loans.
"ADDITIONAL FINANCED STUDENT LOANS" means the Financed
Student Loans to be transferred to the Eligible Lender Trustee during a Funding
Period pursuant to Section 2.2 of the related Sale and Servicing Agreement or
Supplemental Sale and Servicing Agreement, each of which will be listed on
Schedule A to the related Transfer Agreement.
"ADDITIONAL PRINCIPAL PAYMENTS" means, with respect to any
Distribution Date, the amount, if any, that otherwise would have been required
to be deposited into the Reserve Account that, instead, is applied as a payment
of principal on a Class of Notes or Certificates.
"ADMINISTRATION AGREEMENT" means the Administration Agreement
dated as of March 28, 1995, among the Issuer, the Indenture Trustee and the
Administrator, as amended from time to time.
"ADMINISTRATION FEE" has the meaning specified in Section 3
of the Administration Agreement.
"ADMINISTRATOR" means Trans-World Insurance Company d/b/a
Educaid, an Arizona corporation, in its capacity as administrator of the Issuer
and the Financed Student Loans, or any successor as Administrator under the
Third Supplemental Sale and Servicing Agreement.
"ADMINISTRATOR DEFAULT" has the meaning specified in Section
8.1(b) of the related Sale and Servicing Agreement or Supplemental Sale and
Servicing Agreement.
"ADMINISTRATOR'S CERTIFICATE" means an Officer's Certificate
of the Administrator delivered pursuant to Section 4.7(b) of the related Sale
and Servicing Agreement or Supplemental Sale and Servicing Agreement,
substantially in the form of Exhibit C thereto.
"AFFILIATE" means, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AFSA" means the AFSA Data Corporation, a wholly-owned
subsidiary of Fleet Holding Corporation.
"AGGREGATE POOL BALANCE" means the Pool Balance as of the
applicable Cut-off Date of each Series of Notes issued by the Trust plus the
principal balance of each Additional Financed Student Loan pledged to the
Indenture Trustee on behalf of the Issuer on each Transfer Date through the last
Funding Period.
"ALL HOLD RATE" means ninety percent (90%) of One-Month
LIBOR.
"AUCTION" means the implementation of the Auction Procedures
on an Auction Date.
"AUCTION AGENT" means the initial auction agent under the
initial Auction Agent Agreement unless and until a substitute Auction Agent
Agreement becomes effective, after which "Auction Agent" shall mean the
substitute Auction Agent.
"AUCTION AGENT AGREEMENT" means each Auction Agent Agreement
among the initial Auction Agent, the Eligible Lender Trustee and the Indenture
Trustee, as amended from time to time.
"AUCTION AGENT FEE" has the meaning set forth in Section
6.4(b) of the related Auction Agent Agreement.
"AUCTION AGENT FEE RATE" has the meaning set forth in the
related Auction Agent Agreement.
"AUCTION DATE" means, with respect to each Class of Auction
Rate Notes and Auction Rate Certificates, the date set forth in the related
Terms Supplement, Trust Agreement or Trust Supplement, as the case may be, and
thereafter, the Business Day immediately preceding the first day of each Auction
Period for each respective Class of Auction Rate Notes or Auction Rate
Certificates, other than:
(A) each Auction Period commencing after the ownership of the
Notes or the Certificates, as applicable, is no longer maintained in Book-Entry
Form by the Securities Depository;
(B) each Auction Period commencing after and during the
continuance of an Event of Default; or
(C) each Auction Period commencing less than two Business
Days after the cure or waiver of an Event of Default.
Notwithstanding the foregoing, the Auction Date for one or more Auction Periods
with respect to any Class of Auction Rate Notes or Auction Rate Certificates may
be changed pursuant to the Master Indenture and the related Terms Supplement or
the Trust Agreement and the related Trust Supplement, respectively, as described
therein.
"AUCTION PERIOD" means, with respect to each Class of Auction
Rate Notes and Auction Rate Certificates, the Interest Period applicable to such
Class during which time the applicable Class Interest Rate or Certificate Rate
is determined pursuant to the related Terms Supplement, Trust Agreement or Trust
Supplement, as applicable, as the same may be adjusted pursuant to such Terms
Supplement or the Trust Agreement, as applicable.
"AUCTION PERIOD ADJUSTMENT" means an adjustment to the
Auction Period as provided in the related Terms Supplement, Trust Agreement or
Trust Supplement, as appropriate, as described therein.
"AUCTION PROCEDURES" means, with respect to each Class of
Auction Rate Notes, the procedures set forth in the related Terms Supplement by
which the related Auction Rate for such Class of Notes is determined and, with
respect to each Class of Auction Rate Certificates, the procedures set forth in
the Trust Agreement or related Trust Supplement by which the related Auction
Rate for such Class of Certificates is determined.
"AUCTION RATE" means, with respect to any Series and Class of
Auction Rate Notes, the related Class Interest Rate that results from
implementation of the Auction Procedures and is determined as described in the
related Terms Supplement and, with respect to any Class of Auction Rate
Certificates, the related Certificate Rate that results from implementation of
the Auction Procedures and is determined as described in the Trust Agreement or
the related Trust Supplement.
"AUCTION RATE CERTIFICATES" means a Class of Certificates,
for which the related Certificate Rate is determined pursuant to Auction
Procedures.
"AUCTION RATE NOTES" means a Class of Notes for which the
related Class Interest Rate is determined pursuant to Auction Procedures.
"AUTHENTICATING AGENT" means the Person appointed by the
Indenture Trustee at the request of the Issuer as Authenticating Agent for the
Notes pursuant to Section 2.3(8) of the Indenture, and any successor
Authenticating Agent for the Notes.
"AUTHORIZED OFFICER" means (i) with respect to the Issuer,
any officer of the Eligible Lender Trustee who is authorized to act for the
Eligible Lender Trustee in matters relating to the Issuer pursuant to the Basic
Documents and who is identified on the list of Authorized Officers delivered by
the Eligible Lender Trustee to the Indenture Trustee, with a copy to the Surety
Provider, on the Closing Date relating to the initial issuance of a Series of
Notes (as such list may be modified or supplemented from time to time
thereafter), (ii) with respect to the Administrator, any officer of the
Administrator who is authorized to act for the Administrator in matters relating
to itself or to the Issuer and to be acted upon by the Administrator pursuant to
the Basic Documents and who is identified on the list of Authorized Officers
delivered by the Administrator to the Indenture Trustee, with a copy to the
Surety Provider, on the Closing Date relating to the initial issuance of a
Series of Notes (as such list may be modified or supplemented from time to time
thereafter), (iii) with respect to the Seller, any officer of the Seller who is
authorized to act for the Seller in matters relating to or to be acted upon by
the Seller pursuant to the Basic Documents and who is identified on the list of
Authorized Officers delivered by the Seller to the Indenture Trustee, with a
copy to the Surety Provider, on the Closing Date relating to the initial
issuance of a Series of Notes (as such list may be modified or supplemented from
time to time thereafter) and (iv) with respect to a Servicer, any officer of
such Servicer who is authorized to act for such Servicer in matters relating to
or to be acted upon by such Servicer pursuant to the Basic Documents and who is
identified on the list of Authorized Officers delivered by such Servicer to the
Indenture Trustee, with a copy to the Surety Provider, on the Closing Date
relating to the initial issuance of a Series of Notes (as such list may be
modified or supplemented from time to time thereafter).
"AVAILABLE FUNDS" means, with respect to a Distribution Date,
the sum of the following amounts with respect to the related Collection Period:
(i) all collections received by the Master Servicer or any Servicer on the
Financed Student Loans (including any Guarantee Payments received with respect
to the Financed Student Loans); (ii) any payments, including without limitation
Interest Subsidy Payments, Special Allowance Payments and HEAL Insurance
Payments, received by the Eligible Lender Trustee during such Collection Period
with respect to Financed Student Loans; (iii) all proceeds from any sales of
Financed Student Loans by the Trust during such Collection Period; (iv) any
payments of or with respect to interest received by the Master Servicer or a
Servicer during such Collection Period with respect to a Financed Student Loan
for which a Realized Loss was previously allocated; (v) that portion of amounts
released from the Pre-Funding Account at the end of a Funding Period to be
applied as a payment of principal pursuant to Section 5.8(b) of the related Sale
and Servicing Agreement or Supplemental Sale and Servicing Agreement; (vi)
amounts released from the Capitalized Interest Account and the Capitalized
Pre-Funding Account to cover shortfalls in interest; (vii) the aggregate
Purchase Amounts received for those Financed Students Loans repurchased by the
Seller or purchased by the Master Servicer or by or on behalf of TMSI under an
obligation which arose during the related Collection Period; (viii) the
aggregate amounts, if any, received from the Seller, TMSI or the Master
Servicer, as the case may be, as reimbursement of non-guaranteed interest
amounts, lost Interest Subsidy Payments and Special Allowance Payments or lost
HEAL Insurance Payments, with respect to the Financed Student Loans pursuant to
Section 3.2 or Section 4.5, respectively, of the related Sale and Servicing
Agreement or Supplemental Sale and Servicing Agreement and (ix) Investments
Earnings for such Collection Period; PROVIDED, HOWEVER, that Available Funds
will exclude all payments and proceeds of any Financed Student Loans the
Purchase Amount of which has been included in Available Funds for a prior
Collection Period.
"BASIC DOCUMENTS" means the Trust Agreement, the Indenture,
each Terms Supplement, each Trust Supplement, the Sale and Servicing Agreement,
each Supplemental Sale and Servicing Agreement, the Administration Agreement,
the Certificate Depository Agreement, each Note Depository Agreement, each
Certificate Surety Bond, each Note Surety Bond, the Insurance Agreement, the
Guarantee Agreements, the Auction Agent Agreement, the Underwriting Agreement,
the Purchase Agreement, each Certificate Depository Agreement, each Insurance
Agreement and other documents and certificates delivered in connection with any
thereof and all amendments and supplements thereto.
"BENEFIT PLAN" means any employee benefit plan, retirement
arrangement, individual retirement account or Keogh Plan subject to either Title
I of ERISA or Section 4975 of the Code, or any entity (including an insurance
company general account) whose underlying assets include plan assets by reason
of a plan's investment in the entity.
"BOOK-ENTRY CERTIFICATE" means a beneficial interest in the
Certificates, ownership and transfers of which shall be made through book
entries by a Securities Depository as described in Section 3.12 of the Trust
Agreement.
"BOOK-ENTRY NOTE" means a beneficial interest in the Notes,
ownership and transfers of which shall be made through book entries by a
Securities Depository as described in Section 2.13 of the Indenture.
"BROKER-DEALER" means Smith Barney Inc. or any other broker
or dealer (each as defined in the Securities Exchange Act of 1934, as amended),
commercial bank or other entity permitted by law to perform the functions
required of a Broker-Dealer set forth in the Auction Procedures that (a) is a
Participant (or an affiliate of a Participant), (b) has been appointed as such
by the Trust pursuant to the Indenture and (c) has entered into a Broker-Dealer
Agreement that is in effect on the date of reference.
"BROKER-DEALER AGREEMENT" means each agreement between the
Auction Agent and a Broker-Dealer, and approved by the Administrator on behalf
of the Issuer, pursuant to which the Broker-Dealer agrees to participate in
Auctions as set forth in the Auction Procedures, as from time to time amended or
supplemented. Each Broker-Dealer Agreement shall be in substantially the form of
the Broker-Dealer agreement dated as of March 28, 1995 between Bankers Trust
Company, as Auction Agent, and Smith Barney Inc., as Broker-Dealer.
"BROKER-DEALER FEE" has the meaning set forth in the related
Auction Agreement.
"BROKER-DEALER FEE RATE" has the meaning set forth in the
related Auction Agent Agreement.
"BUSINESS DAY" means any day on which the New York Stock
Exchange is open for trading and any day other than a Saturday, a Sunday or a
day on which banking institutions or trust companies in New York, California,
New Jersey or Pennsylvania are authorized or obligated by law, regulation or
executive order to remain closed.
"CAPITALIZED INTEREST ACCOUNT" means the account designated
as such, established and maintained pursuant to Section 5.10 of the related Sale
and Servicing Agreement or Supplemental Sale and Servicing Agreement.
"CAPITALIZED PRE-FUNDING ACCOUNT" means the account
designated as such, established and maintained pursuant to Section 5.9 of the
related Sale and Servicing Agreement or Supplemental Sale and Servicing
Agreement.
"CAPITALIZED PRE-FUNDING REQUIREMENT" means, with respect to
any Class of Notes for any Note Distribution Date, zero.
"CERTIFICATE" means a certificate (other than an Originators'
Interest) evidencing the beneficial interest of a Certificateholder in the
Trust, substantially in the form of Exhibit A to the Trust Agreement or any
Trust Supplement.
"CERTIFICATE BALANCE" equals, initially, the Initial
Certificate Balance and, thereafter, equals the Initial Certificate Balance
increased by the principal balance of each subsequent Class of Certificates
issued pursuant to a Trust Supplement and reduced by all amounts allocable to
principal previously distributed to Certificateholders. Notwithstanding the
foregoing, where any provision of this Agreement or a Trust Supplement permits
or authorizes Certificateholders holding a specified percentage or amount of the
Certificate Balance to take any action or grant any approval, the holders of the
Trust Certificates shall be deemed to have a Certificate Balance equal to 99%
and the holders of the Originators' Interests shall be deemed to have a
Certificate Balance equal to 1%.
"CERTIFICATE DEPOSITORY AGREEMENT" means, with respect to any
Class of Certificates, the agreement dated as of the Closing Date relating to
the Certificates of such Class, in each case among the Trust, the Eligible
Lender Trustee, the Administrator and The Depository Trust Company, as the
initial Securities Depository.
"CERTIFICATE DISTRIBUTION ACCOUNT" means the account
designated as such, established and maintained pursuant to Section 5.1 of the
Sale and Servicing Agreement.
"CERTIFICATE DISTRIBUTION DATE" means, (i) for each Class of
Certificates, the first Business Day following the expiration of each Interest
Period for such Class of Certificates and (ii) for each Originators' Interest,
the date set forth in the related Trust Supplement.
"CERTIFICATE FINAL MATURITY DATE" means April 1, 2020, with
respect to the Class 1 Certificates, and, with respect to any other Class of
Certificates, the date set forth in the related Trust Supplement.
"CERTIFICATE MONTHLY ADVANCE ACCOUNT" means the account
designated as such, established and maintained pursuant to Section 5.1 of the
Sale and Servicing Agreement.
"CERTIFICATE OWNER" means, with respect to a Book-Entry
Certificate, the Person who is the beneficial owner of such Book- Entry
Certificate, as reflected on the books of the Securities Depository, or on the
books of a Person maintaining an account with such Securities Depository
(directly as a Securities Depository Participant or as an indirect participant,
in each case in accordance with the rules of such Securities Depository).
"CERTIFICATE PAYING AGENT" means any paying agent or
co-paying agent appointed pursuant to Section 3.10 of the Trust Agreement, which
shall initially be the Eligible Lender Trustee.
"CERTIFICATE RATE" means, (i) with respect to the Class 1
Certificates, the Initial Certificate Rate for the first Interest Period, and,
with respect to any other Interest Period relating to the Class 1 Certificates,
the interest rate per annum (computed on the basis of the actual number of days
elapsed in such Interest Period over a year of 360 days) equal to the rate
determined pursuant to the Auction Procedures set forth in the Trust Agreement
and (ii) with respect to any other Class of Certificates, the per annum rate
determined as set forth in the related Trust Supplement.
"CERTIFICATE RECORD DATE" means, with respect to a
Certificate Distribution Date, the related Record Date.
"CERTIFICATE REGISTER" and "CERTIFICATE REGISTRAR" means the
register mentioned and the registrar appointed pursuant to Section 3.4 of the
Trust Agreement.
"CERTIFICATE SURETY BOND" means (i) with respect to the Class
1 Certificates, the surety bond dated March 28, 1995 issued by the Surety
Provider in favor of the Eligible Lender Trustee on behalf of the
Certificateholders and (ii) with respect to any other Class of Certificates, the
surety bond identified in the related Trust Supplement.
"CERTIFICATE SURETY BOND PAYMENT" means, with respect to any
Class of Certificates, (a) on each Certificate Distribution Date the amount
equal to the excess, if any, of the Certificateholders' Interest Distribution
Amount for the applicable Class of Certificates over the amount on deposit in
the Certificate Distribution Account, after taking into account the required
application of funds in the remaining Trust Accounts (but excluding any amounts
on deposit in the Monthly Advance Account if an automatic stay has been imposed
with respect to TMSI under Section 362(a) of the United States Bankruptcy Code
of 1978, as amended, 11 U.S.C. Sections 101 ET SEQ.), including but not limited
to the Reserve Account, pursuant to the Sale and Servicing Agreement, to the
payment of the Certificateholders' Interest Distribution Amount on such
Certificate Distribution Date (an "Interest Deficiency") and (b) the amount
equal to the excess, if any, of the unpaid principal balance of the Certificates
of a Class on the Final Maturity Date for such Class of Certificates over
amounts on deposit in the Certificate Distribution Account, after taking into
account the required application of funds in the remaining Trust Accounts,
including but not limited to the Reserve Account, pursuant to the Sale and
Servicing Agreement to the payment of principal of such Class of Certificates on
such Final Maturity Date (a "Principal Deficiency"); provided, however, that
"Certificate Surety Bond Payments" shall not include any Certificateholders'
Auction Rate Interest Carryover or any portion of any Interest Deficiency or
Principal Deficiency arising as a result of (i) any tax liability, including any
tax liability imposed on or assessed with respect to the Trust, the Trust
assets, any Noteholder, or any Certificateholder, or (ii) any tax withholding
requirement, including any such requirement applicable to Trust income or Trust
distributions.
"CERTIFICATEHOLDER" means a Person in whose name a
Certificate or an Originators' Interest is registered in the Certificate
Register.
"CERTIFICATEHOLDERS' AUCTION RATE INTEREST CARRYOVER" means,
as to any Class of Auction Rate Certificates, with respect to any Certificate
Distribution Date relating to such Class as to which the Certificate Rate for
such Certificate Distribution Date is based on the Net Loan Rate, the amount
equal to the excess, if any, of (a) the amount of interest on the Certificates
of such Class that would have accrued in respect of the related Interest Period
had interest been calculated based on the applicable Auction Rate over (b) the
amount of interest on the Certificates of such Class actually accrued in respect
of such Interest Period based on the Net Loan Rate, together with the unpaid
portion of any such excess from prior Interest Periods (and interest accrued
thereon, to the extent permitted by law, calculated based on One- Month LIBOR);
PROVIDED, HOWEVER, that, with respect to any Class of Auction Rate Certificates,
on the Final Maturity Date relating to such Class, the portion of the
Certificateholders' Auction Rate Interest Carryover allocable to such Class of
Certificates will be equal to the lesser of (i) the portion allocable to such
Class of Certificates of the Certificateholders' Auction Rate Interest Carryover
on such date determined as described above and (ii) the amount of funds, if any,
required and available to be distributed to Certificateholders of such Class on
such date pursuant to Sections 5.5(e)(v), 5.6(b)(C) and 5.6(c) of the Sale and
Servicing Agreement.
"CERTIFICATEHOLDERS' DISTRIBUTION AMOUNT" means, as to any
Class of Certificates, with respect to any Certificate Distribution Date
relating to such Certificates, the related Certificateholders' Interest
Distribution Amount for such Certificate Distribution Date plus, for each
Certificate Distribution Date relating to such Certificates on and after which
the Notes have been paid in full, the Certificateholders' Principal Distribution
Amount for such Certificate Distribution Date.
"CERTIFICATEHOLDERS' INTEREST CARRYOVER" means, as to any
Class of Certificates, the related Certificateholders' Auction Rate Interest
Carryover or Certificateholders' LIBOR Rate Interest Carryover, as applicable.
"CERTIFICATEHOLDERS' INTEREST CARRYOVER SHORTFALL" means as
to any Class of Certificates, with respect to any Certificate Distribution Date,
the excess, if any, of (i) the sum of the related Certificateholders' Interest
Distribution Amount on the preceding Certificate Distribution Date and any
outstanding Certificateholders' Interest Carryover Shortfall on such preceding
Certificate Distribution Date over (ii) the amount of interest actually
distributed to such Certificateholders on such preceding Certificate
Distribution Date, plus interest on the amount of such excess interest due to
such Certificateholders, to the extent permitted by law, at the related
Certificate Rate from such preceding Certificate Distribution Date to the
current Certificate Distribution Date.
"CERTIFICATEHOLDERS' INTEREST DISTRIBUTION AMOUNT" means, as
to any Class of Certificates, with respect to any Certificate Distribution Date,
the sum of (i) the amount of interest accrued at the respective Certificate Rate
for the related Interest Period on the outstanding Certificate Balance of such
Class of Certificates on the immediately preceding Certificate Distribution Date
relating to such Certificates, after giving effect to all distributions of
principal to Certificateholders of such Class on such Certificate Distribution
Date (or, in the case of the first Certificate Distribution Date for such Class,
on the related Closing Date) and (ii) the Certificateholders' Interest Carryover
Shortfall for such Class for such Certificate Distribution Date; provided,
HOWEVER, that the Certificateholders' Interest Distribution Amount will not
include any Certificateholders' Interest Carryover.
"CERTIFICATEHOLDERS' LIBOR RATE INTEREST CARRYOVER" means, as
to any Class of Certificates bearing interest based upon One-Month LIBOR, with
respect to any Certificate Distribution Date relating to such Class as to which
the Certificate Rate for such Certificate Distribution Date is based on the Net
Loan Rate, the amount equal to the excess, if any, of (a) the amount of interest
on such Class of Certificates that would have accrued in respect of the related
Interest Period had interest been calculated based on the applicable One-Month
LIBOR over (b) the amount of interest on such Class of Certificates actually
accrued in respect of such Interest Period based on the Net Loan Rate, together
with the unpaid portion of any such excess from prior Interest Periods (and
interest accrued thereon, to the extent permitted by law, at the applicable rate
calculated based on One-Month LIBOR); PROVIDED, HOWEVER, that, with respect to
any Class of LIBOR Rate Certificates, on the related Final Maturity Date, the
portion of the Certificateholder's LIBOR Rate Interest Carryover allocable to
such Class of Certificates will be equal to the lesser of (i) the portion
allocable to such Class of Certificates of the Certificateholders' LIBOR Rate
Interest Carryover on such date determined as described above and (ii) the
amount of funds, if any, required and available to be distributed to such Class
of Certificates on such date pursuant to Sections 5.5(e)(v), 5.6(b)(c) and
5.6(c) of the Sale and Servicing Agreement.
"CERTIFICATEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means,
with respect to any Class of Certificates, as of the close of any Certificate
Distribution Date on or after which the Notes have been paid in full, the excess
of (i) the sum of the Certificateholders' Principal Distribution Amount on such
Certificate Distribution Date and any outstanding Certificateholders' Principal
Carryover Shortfall for the preceding Certificate Distribution Date over (ii)
the amount of principal actually distributed to the Certificateholders on such
Certificate Distribution Date.
"CERTIFICATEHOLDERS' PRINCIPAL DISTRIBUTION AMOUNT" means, on
each Certificate Distribution Date relating to the Class of Certificates with
the earliest Final Maturity Date on and after the date when the principal
balance of each Class of Notes has been paid in full, the sum of (a) the
Principal Distribution Amount for the Collection Period in the month second
preceding such Certificate Distribution Date, (b) any Additional Monthly
Payments to be made on such Certificate Distribution Date and (c) the
Certificateholders' Principal Carryover Shortfall as of the close of the
preceding Certificate Distribution Date; PROVIDED, HOWEVER, that the
Certificateholders' Principal Distribution Amount will in no event exceed the
outstanding principal balance of such Class of Certificates. Further, on the
first Certificate Distribution Date occurring after the Note Distribution Date
on which the principal balance of the Class of Notes with the last Final
Maturity Date is paid in full, the Certificateholders' Principal Distribution
Amount also will include the excess, if any, of the amount of principal
available to be distributed on such Note Distribution Date over the amount of
principal paid on the Notes on such date. In addition, with respect to each
Class of Certificates, on the related Certificate Final Maturity Date, the
Certificateholders' Principal Distribution Amount will include the amount
required to reduce the outstanding principal balance of such Certificates to
zero.
"CLASS" means, (i) with respect to any Series of Notes, all
Notes of such Series whose final installment of principal has the same Final
Maturity Date and (ii) with respect to the Certificates, all Certificates whose
final installment of principal has the same Final Maturity Date.
"CLASS INITIAL RATE" means, with respect to any Class of
Notes, the rate identified as such in the related Terms Supplement.
"CLASS INITIAL RATE ADJUSTMENT DATE" means, with respect to
any Class of Notes, the date identified as such in the related Terms Supplement.
"CLASS INTEREST RATE" means, with respect to any Class of
Notes, the interest rate determined as set forth in the related Terms
Supplement.
"CLASS 1 CERTIFICATES" means the Class of Certificates
designated as such and issued on the initial Closing Date pursuant to the Trust
Agreement.
"CLOSING DATE" means, (i) with respect to the Class 1
Certificates, March 28, 1995, (ii) with respect to additional Trust Certificates
or the Originators' Interests, the date identified as such in the related Trust
Supplement and (iii) with respect to any Series of Notes, the date identified as
such in the related Terms Supplement.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time, and Treasury Regulations promulgated thereunder.
"COLLECTION ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 5.1 of the Sale and Servicing
Agreement.
"COLLECTION PERIOD" means, with respect to the first
Distribution Date, the period beginning March 17, 1995 and ending on March 31,
1995 and with respect to each subsequent Distribution Date thereafter, the
Collection Period means the calendar month immediately following the end of the
previous Collection Period.
"COMMISSION" means the Securities and Exchange Commission.
"CONSOLIDATION LOAN" means a Financed Student Loan designated
as such, made by the Seller to an eligible borrower that represents the
refinancing of student loans to such borrower and his or her spouse in
accordance with the applicable terms and provisions of the Higher Education Act.
"CORPORATE TRUST OFFICE" means (i) with respect to the
Indenture Trustee, the principal office of the Indenture Trustee at which at any
particular time its corporate trust business shall be administered, which office
on the initial Closing Date is located at 4 Albany Street, New York, New York
10006 Attention: Corporate Trust and Agency Group, Structured Finance Group
(telephone: (212) 250-6533; facsimile: (212) 250-6439) or at such other address
as the Indenture Trustee may designate from time to time by notice to the
Noteholders and the Seller, or the principal corporate trust office of any
successor Indenture Trustee (the address of which the successor Indenture
Trustee will notify the Noteholders and the Seller) and (ii) with respect to the
Eligible Lender Trustee, the principal corporate trust office of the Eligible
Lender Trustee located at 8 West High Street, Carlisle, Pennsylvania 17013,
Attention: Corporate Trust Services (telephone: (717) 240-6700; facsimile: (717)
249-8637; or at such other address as the Eligible Lender Trustee may designate
by notice to the Certificateholders and the Seller, or the principal corporate
trust office of any successor Eligible Lender Trustee (the address of which the
successor Eligible Lender Trustee will notify the Certificateholders and the
Seller).
"CUT-OFF DATE" means, (i) with respect to each Series of
Notes, the date identified as such in the related Terms Supplement (ii) with
respect to the Class 1 Certificates, March 17, 1995 and (iii) with respect to
any other Class of Certificates, the date set forth in the related Trust
Supplement.
"DEFAULT" means any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"DEFERRAL PHASE" means the period during which the related
borrower is in school and for certain authorized periods as described in the
Higher Education Act.
"DEFINITIVE CERTIFICATES" has the meaning specified in
Section 3.12 of the Trust Agreement.
"DEFINITIVE NOTES" has the meaning specified in Section 2.13
of the Indenture.
"DELIVERY" when used with respect to Trust Account Property
means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9- 105(1)(i) of the UCC and are
susceptible of physical delivery, transfer thereof to the Indenture Trustee or
its nominee or custodian by physical delivery to the Indenture Trustee or its
nominee or custodian endorsed to, or registered in the name of, the Indenture
Trustee or its nominee or custodian or endorsed in blank, and, with respect to a
certificated security (as defined in Section 8-102 of the UCC) transfer thereof
(i) by delivery of such certificated security endorsed to, or registered in the
name of, the Indenture Trustee or its nominee or custodian or endorsed in blank
to a financial intermediary (as defined in Section 8- 313) of the UCC) and the
making by such financial intermediary of entries on its books and records
identifying such certificated securities as belonging to the Indenture Trustee
or its nominee or custodian and the sending by such financial intermediary of a
confirmation of the purchase of such certificated security by the Indenture
Trustee or its nominee or custodian, or (ii) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102(3) of the UCC) and the making by such
clearing corporation of appropriate entries on its books reducing the
appropriate securities account of the transferor and increasing the appropriate
securities account of a financial intermediary by the amount of such
certificated security, the identification by the clearing corporation of the
certificated securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such clearing
corporation or a "custodian bank" (as defined in Section 8-102(4) of the UCC) or
the nominee of either subject to the clearing corporation's exclusive control,
the sending of a confirmation by the financial intermediary of the purchase by
the Indenture Trustee or its nominee or custodian of such securities and the
making by such financial intermediary of entries on its books and records
identifying such certificated securities as belonging to the Indenture Trustee
or its nominee or custodian (all of the foregoing, "Physical Property"), and, in
any event, any such Physical Property in registered form shall be in the name of
the Indenture Trustee or its nominee or custodian; and such additional or
alternative procedures as may hereafter become appropriate to effect the
complete transfer of ownership of any such Trust Account Property to the
Indenture Trustee or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof;
(b) with respect to any securities issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the Federal National
Mortgage Association that is a book-entry security held through the Federal
Reserve System pursuant to Federal book-entry regulations, the following
procedures, all in accordance with applicable law, including applicable Federal
regulations and Articles 8 and 9 of the UCC: book-entry registration of such
Trust Account Property to an appropriate book-entry account maintained with a
Federal Reserve Bank by a financial intermediary which is also a "depository"
pursuant to applicable Federal regulations and issuance by such financial
intermediary of a deposit advice or other written confirmation of such
book-entry registration to the Indenture Trustee or its nominee or custodian of
the purchase by the Indenture Trustee or its nominee or custodian of such
book-entry securities; the making by such financial intermediary of entries in
its books and records identifying such book-entry security held through the
Federal Reserve System pursuant to Federal book-entry regulations as belonging
to the Indenture Trustee or its nominee or custodian and indicating that such
custodian holds such Trust Account Property solely as agent for the Indenture
Trustee or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect complete transfer of
ownership of any such Trust Account Property to the Indenture Trustee or its
nominee or custodian, consistent with changes in applicable law or regulations
or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that
is an uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records of the
issuer thereof in the name of the financial intermediary, the sending of a
confirmation by the financial intermediary of the purchase by the Indenture
Trustee or its nominee or custodian of such uncertificated security, the making
by such financial intermediary of entries on its books and records identifying
such uncertificated certificates as belonging to the Indenture Trustee or its
nominee or custodian.
"DEPARTMENT" means the United States Department of Education,
an agency of the Federal government.
"DEPOSITOR" means the Seller in its capacity as Depositor
under the Trust Agreement.
"DETERMINATION DATE" means, with respect to any Note
Distribution Date or Certificate Distribution Date, the fifth Business Day
preceding such Note Distribution Date or Certificate Distribution Date, as
applicable.
"DISTRIBUTION" means, with respect to any Financed Student
Loan, the amount of the monthly remittance payable to the holder of such
Financed Student Loan in accordance with its terms.
"DISTRIBUTION DATE" means a Certificate Distribution Date or
a Note Distribution Date, as the context requires.
"EDUCATION STUDENT LOAN TRUST 1994-1 CERTIFICATE BALANCE"
means the "Certificate Balance" as that term is defined in Appendix A to the
Trust Agreement dated as of April 27, 1994 relating to Educaid Student Loan
Trust 1994-1.
"EFFECTIVE INTEREST RATE" means, for any Financed Student
Loan and any Collection Period, the per annum rate at which such Financed
Student Loan accrues interest during such Collection Period, and in the case of
a Federal Loan, after giving effect to all applicable Interest Subsidy Payments
and Special Allowance Payments due with respect to such Federal Loan.
"ELIGIBLE DEPOSIT ACCOUNT" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the laws
of the United States of America or any one of the States (or any domestic branch
of a foreign bank), having corporate trust powers and acting as trustee for
funds deposited in such account, so long as any of the securities of such
depository institution have a credit rating from each Rating Agency in one of
its generic rating categories which signifies investment grade.
"ELIGIBLE INSTITUTION" means an entity which is an
institution whose deposits are insured by the FDIC and the unsecured and
uncollateralized long-term debt obligations of which shall be rated "A" or
better by Standard & Poor's and A2 or better by Moody's, or one of the two
highest short-term ratings by Standard & Poor's and the highest short term
rating by Moody's, and which is either (i) a federal savings association duly
organized, validly existing and in good standing under the federal banking laws,
(ii) an institution duly organized, validly existing and in good standing under
the applicable banking laws of any state, (iii) a national banking association
duly organized, validly existing and in good standing under the federal banking
laws, or (iv) a principal subsidiary of a bank holding company.
"ELIGIBLE INVESTMENTS" As used herein, Eligible Investments
shall include the following:
(1) Cash (insured at all times by the Federal Deposit Insurance
Corporation);
(2) Direct obligations of (including obligations issued or
held in book entry form on the books of) the Department of the Treasury of the
United States of America;
(3) obligations of any of the following federal agencies which
obligations represent the full faith and credit of the United States of America,
including:
- Export-Import Bank
- FARM CREDIT SYSTEM FINANCIAL ASSISTANCE
---------------------------------------
- CORPORATION
-----------
- Farmers Home Administration
- General Services Administration
- U.S. Maritime Administration
- Small Business Administration
- Government National Mortgage Association (GNMA)
- U.S. Department of Housing & Urban Development
- (PHA's)
- Federal Housing Administration;
(4) senior debt obligations rated "AAA" by Standard & Poor's and "Aaa"
by Moody's issued by the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation, and senior debt of other government sponsored
agencies approved by the Surety Provider;
(5) U.S. dollar denominated deposit accounts, federal funds and
banker's acceptances with domestic commercial banks which have a rating on their
short term certificates of deposit on the date of purchase of "A-1+" or "A-1" by
Standard & Poor's and "Prime-1" by Moody's and maturing no more than 360 days
after the date of purchase (ratings on holding companies not being considered
the rating of the bank);
(6) commercial paper which is rated at the time of purchase in the
single highest classification, "A-1+" by Standard & Poor's and "Prime-1" by
Moody's and which matures not more than 270 days after the date of purchase;
(7) Investments in money market funds (including, but not limited to,
money market mutual funds) rated "AAAm" or "AAAm-G" or better by Standard &
Poor's and "Aaa" by Moody's;
(8) Pre-refunded Municipal Obligations defined as follows:
Any bonds or other obligations of any state of the United
States of America or of any agency, instrumentality or local governmental unit
of any such state which are not callable at the option of the obligor prior to
maturity or as to which irrevocable instructions have been given by the obligor
to call on the date specified in the notice; and
(A) which are rated, based on an irrevocable escrow account
or fund (the "escrow"), in the highest rating category of Standard & Poor's and
Moody's or any successors thereto; or
(B) (i) which are fully secured as to principal and interest
and redemption premium, if any, by an escrow consisting only of cash or
obligations described in paragraph (2) above, which escrow may be applied only
to the payment of such principal of and interest and redemption premium, if any,
on such bonds or other obligations on the maturity date or dates thereof or the
specified redemption date or dates pursuant to such irrevocable instructions, as
appropriate, and (ii) which escrow is sufficient, as verified by a nationally
recognized independent certified public accountant, to pay principal of and
interest and redemption premium, if any, on the bonds or other obligations
described in this paragraph on the maturity date or dates specified in the
irrevocable instructions referred to above, as appropriate;
(9) investment agreements approved in writing by the Surety Provider
with notice to Standard & Poor's and Moody's; and
(10) other forms of investments (including repurchase agreements)
approved in writing by the Surety Provider with notice to Standard & Poor's and
Moody's.
The value of the above investments shall be determined as follows:
a) as to investments the bid and asked prices of which are published
on a regular basis in THE WALL STREET JOURNAL (or, if not there, then in THE NEW
YORK TIMES): the average of the bid and asked prices for such investments so
published on or most recently prior to such time of determination;
b) as to investments the bid and asked prices of which are not
published on a regular basis in THE WALL STREET JOURNAL or THE NEW YORK TIMES:
the average bid price at such time of determination for such investments by any
two nationally recognized government securities dealers (selected by the
Indenture Trustee in its absolute discretion) at the time making a market in
such investments or the bid price published by a nationally recognized pricing
service;
c) as to certificates of deposit and bankers acceptances: the face
amount thereof, plus accrued interest; and
d) as to any investment not specified above: the value thereof
established by prior agreement between the Issuer, the Administrator, the
Indenture Trustee and the Surety Provider.
"ELIGIBLE LENDER TRUSTEE" means Dauphin Deposit Bank & Trust
Co., a Pennsylvania bank and trust company, not in its individual capacity but
solely as Eligible Lender Trustee under the Trust Agreement.
"ELIGIBLE LENDER TRUSTEE FEE" has the meaning specified in
Section 8.1 of the Trust Agreement.
"ELIGIBLE SUBSTITUTE FINANCED STUDENT LOAN" means, with
respect to one or more Financed Student Loans proposed to be Granted to secure a
Series of Notes in exchange for one or more Financed Student Loans previously
Granted to secure such Notes, one or more Financed Student Loans meeting the
standards set forth in the related Terms Supplement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EVENT OF DEFAULT" has the meaning specified in Section 5.1
of the Indenture.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXISTING CERTIFICATEHOLDER" means (i) with respect to and
for the purpose of dealing with the Auction Agent in connection with an Auction,
a Person who is a Broker-Dealer listed in the Existing Certificateholder
Registry at the close of business on the Business Day immediately preceding such
Auction and (ii) with respect to and for the purpose of dealing with the
Broker-Dealer in connection with an Auction, a Person who is a beneficial owner
of any Class of Auction Rate Certificates.
"EXISTING CERTIFICATEHOLDER REGISTRY" means the registry of
Persons who are owners of the Certificates, maintained by the Auction Agent as
provided in the Auction Agent Agreement.
"EXISTING NOTEHOLDER" means (i) with respect to and for the
purpose of dealing with the Auction Agent in connection with an Auction, a
Person who is a Broker-Dealer listed in the Existing Noteholder Registry at the
close of business on the Business Day immediately preceding such Auction and
(ii) with respect to and for the purpose of dealing with the Broker-Dealer in
connection with an Auction, a Person who is a beneficial owner of any Class of
Auction Rate Notes.
"EXISTING NOTEHOLDER REGISTRY" means the registry of Persons
who are owners of the Auction Rate Notes, maintained by the Auction Agent as
provided in the Auction Agent Agreement.
"EXPENSE ACCOUNT" means the account designated as such
pursuant to Section 5.1 of the related Sale and Servicing Agreement or
Supplemental Sale and Servicing Agreement.
"EXPENSES" means any and all liabilities, obligations,
losses, damages, taxes, claims, actions and suits, and any and all reasonable
costs, expenses and disbursements (including reasonable legal fees and expenses)
of any kind and nature whatsoever which may at any time be imposed on, incurred
by, or asserted against the Eligible Lender Trustee or any of its officers,
directors or agents in any way relating to or arising out of the Trust
Agreement, the other Basic Documents, the Trust Estate, the administration of
the Trust Estate or the action or inaction of the Eligible Lender Trustee under
the Trust Agreement or the other Basic Documents.
"EXECUTIVE OFFICER" means, with respect to any corporation,
the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, any Executive Vice President, any Senior Vice President, any Vice
President, the Secretary or the Treasurer of such corporation; and with respect
to any partnership, any general partner thereof.
"FDIC" means the Federal Deposit Insurance Corporation.
"FEDERAL FUNDS RATE" means, for any date of determination,
the Federal funds (effective) rate as published on page 118 of the Dow Jones
Telerate Service (or such other page as may replace that page on that service
for the purpose of displaying comparable rates or prices) on the immediately
preceding Business Day. If no such rate is published on such page on such day,
"Federal Funds Rate" shall mean for any date of determination, the Federal funds
(effective) rate as published by the Federal Reserve Board in the most recent
edition of Federal Reserve Statistical Release No. H.15 (519) that is available
on the Business Day immediately preceding such date.
"FEDERAL LOAN" means a Financed Student Loan which is a PLUS
Loan, SLS Loan, Consolidation Loan, Stafford Loan or Unsubsidized Stafford Loan.
"FHLMC" means Federal Home Loan Mortgage Corporation, a
corporate instrumentality of the United States created and existing under Title
III of the Emergency Home Finance Act of 1970, as amended, or any successor
thereto.
"FINAL MATURITY DATE" means, with respect to any Note or
Certificate, the date on which the entire unpaid principal amount of such Note
or Certificate becomes due and payable as provided in the related Terms
Supplement or Trust Supplement, respectively.
"FINANCED STUDENT LOAN" means any Federal Loan, HEAL Loan or
Private Loan which, from time to time, is Granted to the Indenture Trustee to
serve as collateral for the Notes. The initial Financed Student Loans subject to
the Lien of the Indenture shall be listed on the Schedule of Financed Student
Loans set forth in Schedule A to the Sale and Servicing Agreement. The Financed
Student Loans to be pledged by the Issuer to the Indenture Trustee in connection
with the issuance of each additional Series of Notes shall be listed on the
Schedule of Financed Student Loans appearing as Schedule A to the related
Supplemental Sale and Servicing Agreement. A master Schedule of Financed Student
Loans listing all Financed Student Loans then subject to the Lien of the
Indenture shall be maintained as a Schedule to the Indenture. Each Schedule of
Financed Student Loans shall be amended from time to time by the Issuer to
accurately reflect the Financed Student Loans then subject to the Lien of the
Indenture. Each Schedule of Financed Student Loans may be in the form of
microfiche.
"FINANCED STUDENT LOAN FILES" means the documents specified
in Section 3.3 of the related Sale and Servicing Agreement or Supplemental Sale
and Servicing Agreement.
"FNMA" means Federal National Mortgage Association, a
federally chartered and privately owned corporation organized and existing under
the Federal National Mortgage Association Charter Act, or any successor thereto.
"FUNDING PERIOD" means, with respect to each Series of Notes,
the period beginning on the related Closing Date and ending on the first to
occur of (a) the Note Distribution Date on which the amount on deposit in the
Pre-Funding Account (after giving effect to any transfers therefrom in
connection with any Additional Fundings on or prior to such Distribution Date)
is less than $200,000, (b) the date on which an Event of Default, a Master
Servicer Default or an Administrator Default occurs, (c) the date on which an
Insolvency Event occurs with respect to the Seller and (d) the close of business
on the date identified in the related Terms Supplement.
"GRACE PERIOD" means certain grace periods authorized by the
Higher Education Act during which the related borrower's scheduled payments are
deferred.
"GRANT" means mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, and grant a lien
upon and a security interest in and right of set-off against, deposit, set over
and confirm pursuant to the Indenture. A Grant of the Trust Estate or of any
other agreement or instrument shall include all rights, powers and options (but
none of the obligations) of the Granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give receipt
for principal and interest payments in respect of the Trust Estate and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring Proceedings in the name of the Granting party or otherwise and generally
to do and receive anything that the Granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"GUARANTEE AGREEMENTS" means each agreement entered into
between the Eligible Lender Trustee and a Guarantor pursuant to which such
Guarantor guarantees payments on Financed Student Loans.
"GUARANTEE PAYMENT" means any payment made by a Guaranty
Agency pursuant to a Guarantee Agreement in respect of a Financed Student Loan.
"GUARANTOR" means each Guaranty Agency that enters into a
Guarantee Agreement with the Eligible Lender Trustee pursuant to which such
Guaranty Agency guarantees payments on Financed Student Loans. "Guarantor"
includes the Department when it performs as a successor to an insolvent or
defunct Guarantor for purposes of making Guarantee Payments.
"GUARANTY AGENCY" means (i) with respect to Federal Loans,
any agency which has an agreement with the Department of Education to be a
guarantor of education loans and (ii) with respect to Private Loans, any bank,
insurance company, corporation or other governmental or non-governmental agency
that acts as a guarantor of a Private Loan.
"HEAL INSURANCE PAYMENTS" means insurance payments relating
to a HEAL Loan made by the Secretary pursuant to the Public Health Service Act.
"HEAL LOAN" means a Financed Student Loan made pursuant to
the provisions of the HEAL Loan program established under Section 292 of the
Public Health Service Act.
"HIGHER EDUCATION ACT" means the Higher Education Act of
1965, as amended, together with any rules, regulations and interpretations
thereunder.
"INDENTURE" means the Master Indenture and any Terms
Supplement, each as amended or supplemented from time to time, with respect to
which the Notes issued thereunder are still Outstanding.
"INDENTURE TRUST ESTATE" means all money, instruments, rights
and other property that are, from time to time, subject or intended to be
subject to the Lien and security interest of the Indenture for the benefit of
the Noteholders (including all property and interests Granted to the Indenture
Trustee), including all proceeds thereof.
"INDENTURE TRUSTEE" means Bankers Trust Company, a New York
State banking corporation, not in its individual capacity but solely as
Indenture Trustee under the Indenture.
"INDENTURE TRUSTEE FEE" has the meaning specified in Section
6.7 of the Master Indenture, as may be amended pursuant to any Terms Supplement.
"INDEPENDENT" means, when used with respect to any specified
Person, that the Person (a) is in fact independent of the Issuer, any other
obligor upon the Notes, the Seller and any Affiliate of any of the foregoing
Persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the Seller or
any Affiliate of any of the foregoing Persons and (c) is not connected with the
Issuer, any such other obligor, the Seller or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
"INDEPENDENT CERTIFICATE" means a certificate or opinion to
be delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 of the
Master Indenture, made by an Independent appraiser or other expert appointed by
an Issuer Order and approved by the Indenture Trustee in the exercise of
reasonable care, and such opinion or certificate shall state that the signer has
read the definition of "Independent" and that the signer is Independent within
the meaning thereof.
"INDIVIDUAL NOTE" means a Note of an initial principal amount
equal to $50,000. A Note of an original principal amount in excess thereof shall
be deemed to be a number of Individual Notes equal to the quotient obtained by
dividing such initial principal amount by $50,000.
"INITIAL CERTIFICATE BALANCE" means (i) with respect to the
Class 1 Certificates, $24,000,000 and (ii) with respect to any other Class of
Certificates, the amount set forth as such in the related Trust Supplement.
"INITIAL CERTIFICATE RATE" means (i) with respect to the
Class 1 Certificates, 6.125% per annum, and (ii) with respect to any other Class
of Certificates, the rate set forth as such in the related Trust Supplement.
"INITIAL CERTIFICATE RATE ADJUSTMENT DATE" means (i) with
respect to the Class 1 Certificates, April 25, 1995 and (ii) with respect to any
other Class of Certificates, the date set forth as such in the related Trust
Supplement.
"INITIAL CUT-OFF DATE" means March 17, 1995 (i) with respect
to the Class 1 Certificates, and (ii) with respect to any other Class of
Certificates, the date set forth as such in the related Trust Supplement.
"INITIAL FINANCED STUDENT LOANS" has the meaning specified in
Section 2.1 of the related Sale and Servicing Agreement or Supplemental Sale and
Servicing Agreement.
"INITIAL PERIOD" means, as to any Class of Notes and Class of
Certificates, the period commencing on the Closing Date of such Class of Notes
or Certificates, as applicable, and continuing, with respect to each Class of
Notes, through the day immediately preceding the Class Initial Rate Adjustment
Date for such Class of Notes, and, with respect to each Class of Certificates,
through the day immediately preceding the Initial Certificate Rate Adjustment
Date for such Class of Certificates.
"INITIAL POOL BALANCE" means, with respect to any Series of
Notes, the sum of the related Pool Balance as of the related Cut-off Date, plus
as of each related Subsequent Cut-off Date, the principal balance of each
Additional Financed Student Loan pledged to the Eligible Lender Trustee on
behalf of the Issuer on each Transfer Date during the related Funding Period.
"INSOLVENCY EVENT" means, with respect to a specified Person,
(a) the filing of a decree or order for relief by a court having jurisdiction in
the premises in respect of such Person or any substantial part of its property
in an involuntary case under any applicable Federal or State bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such decree
or order shall remain unstayed and in effect for a period of 60 consecutive
days; or (b) the commencement by such Person of a voluntary case under any
applicable Federal or State bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by such Person to the entry of an order for
relief in an involuntary case under any such law, or the consent by such Person
to the appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
"INSTITUTION OF HIGHER EDUCATION" means an institution of
higher education as defined under the Higher Education Act (20 U.S.C.A. ss.
1085(b)).
"INSURANCE AGREEMENT" means the Insurance and Indemnity
Agreement among TMSI, the Issuer, the Surety Provider, the Indenture Trustee and
the Seller, dated as of March 28, 1995, as amended or supplemented from time to
time.
"INTEREST PERIOD" means, (A) as to any Class of Notes, (i)
initially, the period from and including the related Closing Date through, with
respect to each Class of Notes, the date identified in the related Terms
Supplement, and (ii) thereafter, the period set forth in the related Terms
Supplement and (B) as to any Class of Certificates, (i) initially, the period
from and including the related Closing Date through, with respect to each Class
of Certificates, the date identified in the related Trust Supplement (or, in the
case of the Class 1 Certificates, the Trust Agreement), and (ii) thereafter, the
period set forth in the related Trust Supplement (or, in the case of the Class 1
Certificates, the Trust Supplement).
"INTEREST SUBSIDY PAYMENTS" means payments, designated as
such, consisting of interest subsidies by the Department in respect of the
Financed Student Loans to the Eligible Lender Trustee on behalf of the Trust in
accordance with the Higher Education Act.
"INVESTMENT EARNINGS" means, with respect to any Distribution
Date, the investment earnings (net of losses and investment expenses) on amounts
on deposit in the Trust Accounts to be deposited into the Collection Account on
or prior to such Distribution Date pursuant to Section 5.1(b) of the Sale and
Servicing Agreement.
"ISSUER" means ClassNotes Trust 1995-I (formerly known as
Education Loan Alliance 1995-I) until a successor replaces it and, thereafter,
means the successor and, for purposes of any provision contained in the
Indenture and required by the TIA, each other obligor on the Notes.
"ISSUER ORDER" and "ISSUER REQUEST" means a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Indenture Trustee.
"LIBOR DETERMINATION DATE" means, with respect to any Class
of Notes or Class of Certificates for which One-Month LIBOR is being determined,
the applicable Rate Determination Date, which must be a Business Day and London
Banking Day, for such Class.
"LIBOR RATE" means, with respect to any Class of Notes or
Class of Certificates bearing interest based upon One-Month LIBOR, the related
Class Interest Rate or Certificate Rate, as the case may be, that results from a
determination based on One- Month LIBOR and is determined as described in the
related Terms Supplement or Trust Supplement, as the case may be.
"LIBOR RATE CERTIFICATES" means a Class of Certificates for
which the related Certificate Rate is based upon One-Month LIBOR.
"LIBOR RATE NOTES" means a Class of Notes for which the
related Class Interest Rate is based upon One-Month LIBOR.
"LIEN" means a security interest, lien, charge, pledge,
equity or encumbrance of any kind, other than tax liens and any other liens, if
any, which attach to the respective Financed Student Loan by operation of law as
a result of any act or omission by the related Obligor.
"LONDON BANKING DAY" means any Business Day on which dealings
in deposits in United States dollars are transacted in the London interbank
market.
"MARKET AGENT" means initially Smith Barney Inc., New York,
New York, in such capacity under the Indenture, or any successor to it in such
capacity thereunder or such other entity as may be determined in the future.
"MASTER INDENTURE" means the Indenture dated as of March 28,
1995 between the Issuer and the Indenture Trustee, as amended or supplemented
from time to time.
"MASTER SERVICER DEFAULT" means an event specified in Section
8.1(a) of the related Sale and Servicing Agreement or Supplemental Sale and
Servicing Agreement.
"MASTER SERVICER" means Trans-World Insurance Company, d/b/a
Educaid, a wholly-owned subsidiary of The Money Store Inc., and its successors
and assigns, as Master Servicer of the Financed Student Loans under the Sale and
Servicing Agreement.
"MAXIMUM AUCTION RATE" means, with respect to a Class of
Auction Rate Notes or Auction Rate Certificates, (i) for Auction Periods of 34
days or less, either (A) the greater of (1) One-Month LIBOR plus 0.60% or (2)
the Federal Funds Rate plus 0.60% (if both ratings assigned by the Rating
Agencies to the Class of Auction Rate Notes or the Certificates, as applicable,
are "Aa3" or "AA-" or better) or (B) One-Month LIBOR plus 1.50% (if any one of
the ratings assigned by the Rating Agencies to the Class of Auction Rate Notes
or the Certificates, as applicable, is less than "Aa3" or "AA-") or (ii) for
Auction Periods of greater than 35 days or equal to, either (A) the greater of
One- Month LIBOR or Three-Month LIBOR, plus in either case, 0.60% (if both of
the ratings assigned by the Rating Agencies to the Class of Auction Rate Notes
or the Certificates, as applicable, are "Aa3" or "AA-" or better) or (B) the
greater of One-Month LIBOR or Three-Month LIBOR, plus in either case, 1.50% (if
any one of the ratings assigned by the Rating Agencies to the Class of Auction
Rate Notes or the Certificates, as applicable, is less than "Aa3" or "AA-"). For
purposes of each Auction Agent and the Auction Procedures, the ratings referred
to in this definition shall be the last ratings of which the Auction Agent has
been given notice pursuant to the related Auction Agent Agreement.
"MONTHLY ADVANCE" means the amount, if any, advanced by the
Representative pursuant to Section 5.13 of the Sale and Servicing Agreement and
any supplemental Sale and Servicing Agreement with respect to Guarantee
Payments, Interest Subsidy Payments or HEAL Insurance Payments applied for but
not received as of the end of the Collection Period immediately preceding the
date such Monthly Advance is made.
"MONTHLY ADVANCE ACCOUNT" means the account designated as
such, established and maintained pursuant to Section 5.1 of the Sale and
Servicing Agreement.
"MOODY'S" means Moody's Investors Service, Inc., or its
successor in interest.
"NET LOAN RATE" means, for any Interest Period, the weighted
average Effective Interest Rate of all the Financed Student Loans for the
Collection Period immediately preceding such Interest Period less 1.60%, or such
other amount as may be set forth in a Terms Supplement or Trust Supplement.
"NON-PAYMENT RATE" means One-Month LIBOR plus 1.50%.
"NOTE" means an Asset Backed Note issued pursuant to the
Master Indenture and a related Terms Supplement.
"NOTE DEPOSITORY AGREEMENTS" means, with respect to any
Series of Notes, the agreement dated as of the Closing Date relating to the
Notes of such Series, in each case among the Issuer, the Indenture Trustee, the
Administrator and The Depository Trust Company, as the initial Securities
Depository.
"NOTE DISTRIBUTION ACCOUNT" means the account designated as
such, established and maintained pursuant to Section 5.1 of the related Sale and
Servicing Agreement or Supplemental Sale and Servicing Agreement.
"NOTE DISTRIBUTION DATE" means, (i) with respect to the LIBOR
Rate Notes, the 15th day of each month (or if such day is not a Business Day, on
the next succeeding Business Day), commencing on the date set forth in the
related Terms Supplement and (ii) with respect to the Auction Rate Notes, unless
otherwise set forth in a Terms Supplement, (A) with respect to distributions of
interest, the first Business Day following the expiration of each Interest
Period for such Auction Rate Notes and (B) with respect to distributions of
principal, the first Business Day following the expiration of the first Interest
Period for such Auction Rate Notes ending in each month, commencing on the dates
set forth in the related Terms Supplement.
"NOTE OWNER" means, with respect to a Book-Entry Note, the
Person who is the owner of such Book-Entry Note, as reflected on the books of
the Securities Depository, or on the books of a Person maintaining an account
with such Securities Depository (directly as a Securities Depository Participant
or as an indirect participant, in each case in accordance with the rules of such
Securities Depository).
"NOTE RECORD DATE" means, with respect to a Note Distribution
Date, the related Record Date.
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective
meanings specified in Section 2.6 of the Indenture.
"NOTE SURETY BOND" means, with respect to any Class or Series
of Notes, the surety bond identified in the related Terms Supplement.
"NOTE SURETY BOND PAYMENT" means, with respect to any Class
of Notes (a) on each Note Distribution Date the amount equal to the excess, if
any, of the Noteholders' Interest Distribution Amount for the applicable Class
of Notes over the amount on deposit in the Note Distribution Account, after
taking into account the required application of funds in the remaining Trust
Accounts (but excluding any amounts on deposit in the Monthly Advance Account if
an automatic stay has been imposed with respect to TMSI under Section 362(a) of
the United States Bankruptcy Code of 1978, as amended, 11 U.S.C. Sections 101 ET
SEQ.), including but not limited to the Reserve Account, pursuant to the Sale
and Servicing Agreement, to the payment of the Noteholders' Interest
Distribution Amount on such Note Distribution Date (an "Interest Deficiency")
and (b) the amount equal to the excess, if any, of the unpaid principal balance
of the Notes of a Class on the Final Maturity Date for the Class over amounts on
deposit in the Note Distribution Account, after taking into account the required
application of funds in the remaining Trust Accounts, including but not limited
to the Reserve Account, pursuant to the Sale and Servicing Agreement, to the
payment of principal of such Class of Notes on such Final Maturity Date (a
"Principal Deficiency"); provided, however, that "Note Surety Bond Payments"
shall not include any Noteholders' Interest Carryover or any portion of any
Interest Deficiency or Principal Deficiency arising as a result of (i) any tax
liability, including any tax liability imposed on or assessed with respect to
the Trust, the Trust assets, any Noteholder, or any Certificateholder, or (ii)
any tax withholding requirement, including any such requirement applicable to
Trust income or Trust distributions.
"NOTEHOLDER" means the Person in whose name a Note is
registered in the Note Register.
"NOTEHOLDERS' AUCTION RATE INTEREST CARRYOVER" means, as to
any Class of Auction Rate Notes, with respect to any Interest Period for which
the Class Interest Rate for such Interest Period is based on the Net Loan Rate,
the amount equal to the excess, if any, of (a) the amount of interest on such
Class of Notes that would have accrued in respect of the related Interest Period
had interest been calculated based on the applicable Auction Rate over (b) the
amount of interest on such Class of Notes actually accrued in respect of such
Interest Period based on the Net Loan Rate, together with the unpaid portion of
any such excess from prior Interest Periods (and interest accrued thereon, to
the extent permitted by law, at the applicable rate calculated based on
One-Month LIBOR); PROVIDED, HOWEVER, that, with respect to any Class of Auction
Rate Notes, on the related Final Maturity Date, the portion of the Noteholders'
Auction Rate Interest Carryover allocable to such Class of Notes will be equal
to the lesser of (i) the portion allocable to such Class of Notes of the
Noteholders' Auction Rate Interest Carryover on such date determined as
described above and (ii) the amount of funds, if any, required and available to
be distributed to such Class of Notes on such date pursuant to Sections
5.5(e)(iv) and 5.6(b)(B) of the related Sale and Servicing Agreement or
Supplemental Sale and Servicing Agreement.
"NOTEHOLDERS' DISTRIBUTION AMOUNT" means, as to any Class of
Notes, with respect to any Note Distribution Date relating to such Notes, the
sum of the related Noteholders' Interest Distribution Amount and the
Noteholders' Principal Distribution Amount for such Note Distribution Date.
"NOTEHOLDERS' INTEREST CARRYOVER" means, as to any Class of
Notes, the related Noteholders' Auction Rate Interest Carryover or Noteholders'
LIBOR Rate Interest Carryover, as applicable.
"NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, as to any
Class of Notes, with respect to any Note Distribution Date, the excess of (i)
the sum of the related Noteholders' Interest Distribution Amount on the
preceding Note Distribution Date and any Noteholders' Interest Carryover
Shortfall on such preceding Note Distribution Date over (ii) the amount of
interest actually allocated to such Noteholders on such preceding Note
Distribution Date, plus interest on the amount of such excess interest due to
such Noteholders, to the extent permitted by law, at the related Class Interest
Rate from such preceding Note Distribution Date to the current Note Distribution
Date.
"NOTEHOLDERS' INTEREST DISTRIBUTION AMOUNT" means, as to any
Series and Class of Notes, with respect to any Note Distribution Date, the sum
of (i) the amount of interest accrued at the respective Class Interest Rate for
each related Interest Period since the last Note Distribution Date relating to
such Notes (or in the case of the first Note Distribution Date following the
issuance of a Class of Notes, the applicable Closing Date) on the outstanding
principal balance of such Class of Notes on the immediately preceding Note
Distribution Date relating to such Notes after giving effect to all principal
distributions to holders of Notes of such Class on such date (or, in the case of
the first Note Distribution Date for such Class, on the related Closing Date)
and (ii) the Noteholders' Interest Carryover Shortfall for such Class for such
Note Distribution Date; PROVIDED, HOWEVER, that the Noteholders' Interest
Distribution Amount will not include any Noteholders' Interest Carryover.
"NOTEHOLDERS' LIBOR RATE INTEREST CARRYOVER" means, as to any
Class of Notes bearing interest based upon One-Month LIBOR, with respect to any
Interest Period for which the Class Interest Rate for such Interest Period is
based on the Net Loan Rate, the amount equal to the excess, if any, of (a) the
amount of interest on such Class of Notes that would have accrued in respect of
the related Interest Period had interest been calculated based on the applicable
One-Month LIBOR over (b) the amount of interest on such Class of Notes actually
accrued in respect of such Interest Period based on the Net Loan Rate, together
with the unpaid portion of any such excess from prior Interest Periods (and
interest accrued thereon, to the extent permitted by law, at the applicable rate
calculated based on One- Month LIBOR); PROVIDED, HOWEVER, that, with respect to
any Class of LIBOR Rate Notes, on the related Final Maturity Date, the portion
of the Noteholders' LIBOR Rate Interest Carryover allocable to such Class of
Notes will be equal to the lesser of (i) the portion allocable to such Class of
Notes of the Noteholders' LIBOR Rate Interest Carryover on such date determined
as described above and (ii) the amount of funds, if any, required and available
to be distributed to such Class of Notes on such date pursuant to Sections
5.5(e)(iv) and 5.6(b)(B) of the related Sale and Servicing Agreement or
Supplemental Sale and Servicing Agreement.
"NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, with
respect to any Class of Notes, as of the close of any Note Distribution Date,
the excess of (i) the sum of the Noteholders' Principal Distribution Amount on
such Distribution Date and any outstanding Noteholders' Principal Carryover
Shortfall for the preceding Note Distribution Date over (ii) the amount of
principal actually allocated to the Noteholders on such Note Distribution Date.
"NOTEHOLDERS' PRINCIPAL DISTRIBUTION AMOUNT" means, as to the
Class of Notes with the earliest Final Maturity Date on each applicable Note
Distribution Date except as otherwise set forth in a Terms Supplement, the sum
of (i) the Principal Distribution Amount for the Collection Period immediately
preceding the month prior to the month of such Note Distribution Date, (ii) any
Additional Monthly Payments to be made on such Note Distribution Date and (iii)
the Noteholders' Principal Carryover Shortfall as of the close of the preceding
Note Distribution Date relating to such Notes; PROVIDED, HOWEVER, that the
Noteholders' Principal Distribution Amount will not exceed the outstanding
principal balance of such Class of Notes. In addition, with respect to each
Class of Notes, on the related Final Maturity Date the Noteholders' Principal
Distribution Amount will include the amount required to reduce the outstanding
principal balance of such Notes to zero.
"OBLIGOR" on a Financed Student Loan means the borrower or
co-borrowers of such Financed Student Loan and any other Person who owes
payments in respect of such Financed Student Loan, including (i) the Guaranty
Agency thereof, (ii) with respect to any Interest Subsidy Payment or Special
Allowance Payment, if any, thereon, the Department and (iii) with respect to any
HEAL Insurance Payments, the Secretary.
"OFFICER'S CERTIFICATE" means (i) in the case of the Issuer,
a certificate signed by an Authorized Officer of the Issuer, under the
circumstances described in, and otherwise complying with, the applicable
requirements of Section 11.1 of the Indenture, and delivered to the Indenture
Trustee, (ii) in the case of the Seller, the Master Servicer or the
Administrator, a certificate signed by an Authorized Officer of the Seller, the
Master Servicer or the Administrator, as appropriate and (iii) in the case of
the Servicer, a certificate signed by an Authorized Officer of the Servicer.
"ONE-MONTH LIBOR" means the London interbank offered rate for
deposits in U.S. dollars having a maturity of one month commencing on the
related LIBOR Determination Date (the "Index Maturity") which appears on
Telerate Page 3750 as of 11:00 a.m., London time, on such LIBOR Determination
Date. If such rate does not appear on Telerate Page 3750, the rate for that day
will be determined on the basis of the rates at which deposits in U.S. dollars,
having the Index Maturity and in a principal amount of not less than U.S.
$1,000,000, are offered at approximately 11:00 a.m., London time, on such LIBOR
Determination Date to prime banks in the London interbank market by the
Reference Banks. The Auction Agent will request the principal London office of
each of such Reference Banks to provide a quotation of its rate. If at least two
such quotations are provided, the rate for that day will be the arithmetic mean
of the quotations. If fewer than two quotations are provided, the rate for that
day will be the arithmetic mean of the rates quoted by major banks in New York
City, selected by the Auction Agent, at approximately 11:00 a.m., New York City
time, on such LIBOR Determination Date for loans in U.S. dollars to leading
European banks having the Index Maturity and in a principal amount equal to an
amount of not less than U.S. $1,000,000; provided that if the banks selected as
aforesaid are not quoting as mentioned in this sentence, One-Month LIBOR in
effect for the applicable Interest Period will be One-Month LIBOR in effect for
the previous Interest Period.
"OPINION OF COUNSEL" means (i) with respect to the Issuer,
one or more written opinions of counsel who may, except as otherwise expressly
provided in the Master Indenture, be employees of or counsel to the Issuer and
who shall be satisfactory to the Indenture Trustee and the Surety Provider, and
which opinion or opinions shall be addressed to the Indenture Trustee as
Indenture Trustee and the Surety Provider, shall comply with any applicable
requirements of Section 11.1 of the Master Indenture, and shall be in form and
substance satisfactory to the Indenture Trustee and the Surety Provider and (ii)
with respect to the Seller, the Administrator or the Master Servicer, one or
more written opinions of counsel who may be an employee of or counsel to the
Seller, the Administrator or the Master Servicer, which counsel shall be
acceptable to the Indenture Trustee, the Eligible Lender Trustee, the Surety
Provider and/or the Rating Agencies, as applicable.
"ORIGINATORS' INTERESTS" means any interest in the Trust
Estate issued to an entity selling Financed Student Loans to the Seller, which
interest shall have the terms set forth in a Trust Supplement.
"OUTSTANDING" means, as of the date of determination, all
Notes theretofore authenticated and delivered under the Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Indenture Trustee
or any Paying Agent in trust for the Noteholders thereof (PROVIDED, HOWEVER,
that if such Notes are to be redeemed, notice of such redemption has been duly
given pursuant to the Indenture); and
(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to the Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are held
by a bona fide purchaser;
PROVIDED that in determining whether the Noteholders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any other Basic
Document, Notes owned by the Issuer, any other obligor upon the Notes, the
Seller or any Affiliate of any of the foregoing Persons shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Indenture
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes that a
Responsible Officer of the Indenture Trustee either actually knows to be so
owned or has received written notice thereof shall be do disregarded. Notes so
owned that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Indenture Trustee the pledgee's
right so to act with respect to such Notes and that the pledgee is not the
Issuer, any other obligor upon the Notes, the Seller or any Affiliate of any of
the foregoing Persons.
"OUTSTANDING AMOUNT" means the aggregate principal amount of
all Notes, or Class of Notes or Certificates or Class of Certificates, as
applicable, Outstanding at the date of determination.
"PARITY PERCENTAGE" shall have the meaning assigned to such
term in the Insurance Agreement.
"PARTICIPANT" means a Securities Depository Participant.
"PAYING AGENT" means the Indenture Trustee or any other
Person that meets the eligibility standards for the Indenture Trustee specified
in Section 6.11 of the Master Indenture and is authorized by the Issuer to make
the payments to and distributions from the Collection Account and payments of
principal of and interest and any other amounts owing on the Notes on behalf of
the Issuer.
"PERSON" means any individual, corporation, estate,
partnership, joint venture, association, joint stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
"PHEAA" means the Pennsylvania Higher Education Assistance
Agency, an agency of the Commonwealth of Pennsylvania.
"PHYSICAL PROPERTY" has the meaning assigned to such term in
the definition of "Delivery" above.
"PLEDGED ACCOUNT OR FUND" means the Collection Account, the
Reserve Account, the Pre-Funding Account, the Capitalized Pre-Funding Account,
the Capitalized Interest Account, the Note Distribution Account and the
Certificate Distribution Account.
"PLUS LOAN" means a Financed Student Loan made pursuant to
the provisions of the PLUS program established under Section 428B of the Higher
Education Act (or predecessor provisions).
"POOL BALANCE" means, at any time, the aggregate principal
balance of the Financed Student Loans at the end of the preceding Collection
Period (including accrued interest thereon for such Collection Period to the
extent such interest will be capitalized), after giving effect to the following,
without duplication: (i) all payments in respect of principal received by the
Trust during such Collection Period from or on behalf of borrowers and
Guarantors and, with respect to certain payments on certain Financed Student
Loans, the Department or the Secretary, (ii) the principal portion of all
Purchase Amounts received by the Trust for such Collection Period from the
Seller, TMSI or the Master Servicer, and (iii) the principal portion of all
Additional Fundings made from the Pre-Funding Account with respect to such
Collection Period.
"POTENTIAL CERTIFICATEHOLDER" means any Person (including an
Existing Certificateholder that is (i) a Broker-Dealer when dealing with the
Auction Agent and (ii) a potential beneficial owner when dealing with a
Broker-Dealer) who may be interested in acquiring Auction Rate Certificates (or,
in the case of an Existing Certificateholder thereof, an additional principal
amount of Auction Rate Certificates).
"POTENTIAL NOTEHOLDER" means any Person (including an
Existing Noteholder that is (i) a Broker-Dealer when dealing with the Auction
Agent and (ii) a potential beneficial owner when dealing with a Broker-Dealer)
who may be interested in acquiring Auction Rate Notes (or, in the case of an
Existing Noteholder thereof, an additional principal amount of Auction Rate
Notes).
"PREDECESSOR NOTE" means, with respect to any particular
Note, every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.7 of the Master Indenture and
in lieu of a mutilated, lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Note.
"PRE-FUNDED AMOUNT" means, with respect to any Distribution
Date, the amount on deposit in the Pre-Funding Account.
"PRE-FUNDING ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 5.1 of the Sale and Servicing
Agreement.
"PREMIUM" means, (i) with respect to any Initial Financed
Student Loan conveyed on the initial Closing Date relating to the Issuer's
Series 1996-2 Notes, an amount equal to 3.70% of the par amount of such Initial
Financed Student Loan as of the Initial Cut-off Date, (ii) with respect to any
Additional Financed Student Loan conveyed during the Funding Period relating to
the Series 1996-2 Notes, an amount equal to 3.70% of the par amount of such
Financed Student Loan as of the related Subsequent Cut-off Date, and (iii) with
respect to any other Financed Student Loan conveyed, the amount set forth in the
related Terms Supplement or Trust Supplement, as the case may be.
"PRIMARY SERVICER" means, with respect to any Financed
Student Loan, the entity responsible for the primary servicing of such Financed
Student Loan on a day to day basis.
"PRINCIPAL DISTRIBUTION AMOUNT" means, with respect to any
Collection Period, the sum of the following amounts: (i) that portion of all
collections received by the Master Servicer or any Servicer on the Financed
Student Loans that is allocable to principal (including the portion of any
Guarantee Payments received that is allocable to principal of the Financed
Student Loans); (ii) the portion of the proceeds allocable to principal from the
sale of Financed Student Loans by the Trust during such Collection Period; (iii)
all Realized Losses incurred during the related Collection Period; (iv) to the
extent attributable to principal, the Purchase Amount received with respect to
each Financed Student Loan repurchased by the Seller or purchased by the Master
Servicer or TMSI under an obligation which arose during the related Collection
Period; and (v) amounts, if any, transferred from the Pre-Funding Account at the
end of the applicable Funding Period; PROVIDED, HOWEVER, that the Principal
Distribution Amount will exclude all payments and proceeds of any Financed
Student Loans the Purchase Amount of which has been included in Available Funds
for a prior Collection Period.
"PRIVATE LOAN" means a Financed Student Loan that is made
under programs established by banks, insurance companies, private non-profit
corporations and other non-governmental entities.
"PRIVATE LOAN PROGRAM" means a program under which a Private
Loan is originated.
"PROCEEDING" means any suit in equity, action at law or other
judicial or administrative proceeding.
"PROPRIETARY SCHOOL" means a privately-owned school offering
post-secondary education and operating on a for profit basis.
"PUBLIC HEALTH SERVICE ACT" means the Public Health Service
Act, as most recently amended by the Health Professions Education Extension
Amendments of 1992, as amended from time to time, together with any rules,
regulations and interpretations thereunder.
"PURCHASE AMOUNT" means, as to any Financed Student Loan on
any date of determination, the sum of (i) the amount required to prepay in full
the outstanding principal balance of such Financed Student Loan as of the last
day of the most recently completed Collection Period, including all accrued but
unpaid interest thereon (including interest to be capitalized) through the last
day of the Collection Period in which such Financed Student Loan is being
purchased (or, with respect to Section 2.3(b) of the related Sale and Servicing
Agreement or Supplemental Sale and Servicing Agreement, through the last day of
the Collection Period in which the related Serial Loan is transferred to the
Seller's designee) plus (ii) the related Unamortized Premium, if any; provided,
however, that with respect to any Financed Student Loan required to be purchased
pursuant to Section 4.5 of the related Sale and Servicing Agreement or
Supplemental Sale and Servicing Agreement, the Purchase Amount shall not exceed
the amount the related Guarantor would have been be obligated to pay the Trust
but for the related breach of a representation or warranty under Section 4.1,
4.2, 4.3 or 4.4 of the related Sale and Servicing Agreement or Supplemental Sale
and Servicing Agreement.
"PURCHASE AGREEMENT" means the Purchase Agreement dated March
27, 1995 among the Trust, the Eligible Lender Trustee, the Administrator, The
Money Store Inc. and Smith Barney Inc., relating to the purchase and sale of the
Certificates, including each Terms Agreement.
"PURCHASED STUDENT LOAN" means a Financed Student Loan
purchased pursuant to Section 4.5 of the related Sale and Servicing Agreement or
Supplemental Sale and Servicing Agreement or repurchased pursuant to Section 3.2
of the related Sale and Servicing Agreement or Supplemental Sale and Servicing
Agreement.
"QUALIFIED LETTER OF CREDIT" means a letter of credit
delivered or to be delivered to the Indenture Trustee in lieu of a deposit of
cash or Eligible Investments in the Reserve Account for such Class or Series,
which letter of credit shall
(a) be irrevocable and name the Indenture Trustee, in
its capacity as such, as the sole beneficiary
thereof;
(b) be issued by a bank whose credit standing is acceptable to
each of the rating agencies which are rating or have rated the
Notes of such Series and the Surety Provider;
(c) provide that if at any time the then current credit
standing of the issuing bank is such that the continued
reliance on such letter of credit for the purpose or purposes
for which it was originally delivered to the Indenture Trustee
would result in a downgrading of any rating of the Notes of
such Class or Series, the Indenture Trustee may either draw
under such letter of credit any amount up to and including the
entire amount then remaining available for drawing thereunder
or terminate such letter of credit;
(d) be transferable to any successor trustee
hereunder with respect to such Class or Series; and
(e) meet such other standards as may be specified in
the Terms Supplement for such Class or Series or
required by the Surety Provider.
"QUALIFIED INSTITUTIONAL BUYER" has the meaning ascribed to
such term in Rule 144A under the Securities Act.
"RATE ADJUSTMENT DATE" means, with respect to each Class of
Notes and each Class of Certificates, the date on which the applicable Class
Interest Rate or the Certificate Rate, as appropriate, is effective and means,
with respect to each such Class of Notes and Certificates, the date of
commencement of each related Interest Period.
"RATE DETERMINATION DATE" means, (i) with respect to any
Class of Auction Rate Notes and Auction Rate Certificates, the Auction Date, or
if no Auction Date is applicable to such Class of Notes or Certificates, the
Business Day immediately preceding the date of commencement of an Auction Period
and (ii) with respect to any Class of LIBOR Rate Notes and LIBOR Rate
Certificates, the date which is both a Business Day and a London Business Day
immediately preceding the related Rate Adjustment Date.
"RATING AGENCY" means Moody's and Standard & Poor's. If no
such organization or successor is any longer in existence, "Rating Agency" shall
be a nationally recognized statistical rating organization or other comparable
Person designated by the Seller, notice of which designation shall be given to
the Indenture Trustee, the Eligible Lender Trustee, the Servicer and the Surety
Provider.
"RATING AGENCY CONDITION" means, with respect to any action,
that each Rating Agency shall have been given 10 days' prior notice thereof and
that each of the Rating Agencies shall have notified the Seller, the Servicer,
the Eligible Lender Trustee, the Indenture Trustee and the Surety Provider in
writing that such action will not result in and of itself in a reduction or
withdrawal of the then current rating of the Notes or the Certificates.
"REALIZED LOSS" means the excess, if any, of (i) the unpaid
principal balance of such Financed Student Loan on the date it was first
submitted to a Guarantor for a Guarantee Payment over (ii) all amounts received
on or with respect to principal on such Financed Student Loan (including amounts
received pursuant to Sections 3.2 and 4.5 of the related Sale and Servicing
Agreement or Supplemental Sale and Servicing Agreement) up through the earlier
to occur of (A) the date a related Guarantee Payment is made or (B) the last day
of the Collection Period occurring 7 months after the date the claim for such
Guarantee Payment is first denied.
"RECORD DATE" means, with respect to a Note Distribution Date
or Certificate Distribution Date, the close of business on the second Business
Day preceding such Note Distribution Date or Certificate Distribution Date.
"REDUCED INTEREST RATE PROGRAM" means a program under which
Obligors who make 48 consecutive on-time payments on a Financed Student Loan are
granted a reduction in interest charges at an amount up to 2% per annum.
"REFERENCE BANK" means a leading bank (i) engaged in
transactions in Eurodollar deposits in the international Eurocurrency market,
(ii) not controlling, controlled by or under common control with the
Administrator or The Money Store Inc. and (iii) having an established place of
business in London.
"REPAYMENT PHASE" means the period during which the related
borrower is required to make payments of principal and interest on the related
Financed Student Loan.
"REQUISITE AMOUNT" means, with respect to any Series for
which a Reserve Account is required to be maintained, an amount specified in or
determined pursuant to the related Terms Supplement.
"RESERVE ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 5.1 of the related Sale and
Servicing Agreement or Supplemental Sale and Servicing Agreement.
"RESERVE ACCOUNT INITIAL DEPOSIT" means, with respect to any
Series for which a Reserve Account Initial Deposit is required to be maintained,
an amount specified in or determined pursuant to the related Terms Supplement.
"RESPONSIBLE OFFICER" means, with respect to the Indenture
Trustee, any officer within the Corporate Trust Office of the Indenture Trustee
with direct responsibility for the administration of the Indenture and the other
Basic Documents on behalf of the Indenture Trustee, including any Vice
President, Assistant Vice President, Assistant Treasurer, Assistant Secretary,
or any other officer of the Indenture Trustee customarily performing functions
similar to those performed by any of the above designated officers and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing
Agreement dated as of March 17, 1995, among the Issuer, the Seller, the
Administrator, the Eligible Lender Trustee and the Master Servicer, as amended
from time to time including, but not limited to, pursuant to the terms of a
Supplemental Sale and Servicing Agreement.
"SCHEDULE OF FINANCED STUDENT LOANS" means the listing of the
Financed Student Loans set forth in Schedule A to the related Sale and Servicing
Agreement or Supplemental Sale and Servicing Agreement and to the Indenture
(which Schedules may be in the form of microfiche, computer file, or other
electronic data form), as from time to time amended or supplemented. Each such
Schedule relating to a Sale and Servicing Agreement or Supplemental Sale and
Servicing Agreement shall list the Financed Student Loans then being conveyed
pursuant to such Agreement (along with any related Additional Financed Student
Loans to be conveyed). The Schedule relating to the Indenture shall be a master
list of all Financed Student Loans then subject to the Lien of the Indenture.
"SECRETARY" means the United States Secretary of Health and
Human Services.
"SECURITIES ACT" means the Securities Act of 1933, as
amended.
"SECURITIES DEPOSITORY" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"SECURITIES DEPOSITORY PARTICIPANT" means a broker, dealer,
bank, other financial institution or other Person for whom from time to time a
Securities Depository effects book-entry transfers and pledges of securities
deposited with the Securities Depository.
"SELLER" means Trans-World Insurance Co., d/b/a Educaid, a
wholly-owned subsidiary of The Money Store Inc.
"SERIAL LOAN" means a Financed Student Loan owned by the
Trust, the obligor on which is a borrower who has one or more Financed Student
Loans which are owned by the Student Loan Marketing Association. The definition
of Serial Loan may be changed from time to time by the Seller, with the prior
consent of the Surety Provider.
"SERIES" means a separate Series of Notes issued pursuant to
the Master Indenture, which Series may, as provided in the related Terms
Supplement, be divided into two or more Classes.
"SERVICER" means PHEAA, AFSA or another entity appointed by
the Master Servicer to service the Financed Student Loans, in its capacity as
servicer of the Financed Student Loans.
"SERVICER'S REPORT" means any report of the Master Servicer
delivered pursuant to Section 4.8(a) of the related Sale and Servicing Agreement
or Supplemental Sale and Servicing Agreement, substantially in the form
acceptable to the Administrator.
"SERVICING FEE" means, except as may otherwise be set forth
in a Terms Supplement or Trust Supplement, a monthly fee equal to the sum of (i)
0.35% per annum of the aggregate principal balance of Financed Student Loans in
the Deferral Phase as of the last day of the preceding calendar month, (ii)
1.00% per annum of the aggregate principal balance of Financed Student Loans
(other than Consolidation Loans) in the Repayment Phase as of the last day of
the preceding calendar month (iii) with respect to each Consolidation Loan, the
greater of 0.65% per annum of the principal balance of each such Consolidation
Loan as of the last day of the preceding calendar month and $3.00 per
Consolidation Loan, and (iv) a one-time fixed fee equal to $15 for each Financed
Student Loan for which a guarantee claim was filed, in each case subject to
certain adjustments, together with other administrative fees and similar
charges; PROVIDED, HOWEVER, that such fee shall not exceed 1.05% per annum of
the Pool Balance as of the last day of the preceding calendar month.
"SERVICING FEE CARRYOVER" means, with respect to any month,
any amount which would have been included in the Servicing Fee had it not been
limited to 1.05% per annum (or such other percentage as may be set forth in a
Terms Supplement or Trust Supplement) of the Pool Balance as of the last day of
the preceding calendar month, together with any such excess amounts from prior
months which remain unpaid.
"SLMA" means the Student Loan Marketing Association, a
government sponsored enterprise created pursuant to 20 U.S.C. Section 1087-2.
"SLS LOAN" means a Financed Student Loan designated as such
that is made under the Supplemental Loans for Students Program pursuant to the
Higher Education Act.
"SPECIAL ALLOWANCE PAYMENTS" means payments, designated as
such, consisting of effective interest subsidies by the Department in respect of
the Financed Student Loans to the Eligible Lender Trustee on behalf of the Trust
in accordance with the Higher Education Act.
"SPECIFIED RESERVE ACCOUNT BALANCE" means, with respect to
any Note or Certificate Distribution Date, the greatest of (i) 1.0% of the sum
of the outstanding principal balance of the Notes and the Certificates on such
Note or Certificate Distribution Date, after giving effect to all payments (or,
in the case of a Class of Accrued Notes, capitalized interest) to be made on
such date, (ii) the amount required to be in the Reserve Account so that the
then applicable Parity Percentage (as defined in the Insurance Agreement) equals
102.25% and (iii) $1,500,000; provided, however, that such balance will be
subject to adjustment with the prior written consent of the Surety Provider and
in no event will such balance exceed the sum of the aggregate outstanding
principal amount of the Notes and the Certificate Balance.
"STAFFORD LOAN" means a Financed Student Loan designated as
such that is made under Section 428 of the Higher Education Act.
"STANDARD & POOR'S" means Standard & Poor's Corporation and
its successors and assigns.
"STATE" means any one of the 50 States of the United States
of America or the District of Columbia.
"SUBSEQUENT CUT-OFF DATE" means the day as of which principal
and interest accruing with respect to an Additional Financed Student Loan are
transferred to the Eligible Lender Trustee on behalf of the Issuer pursuant to
Section 2.2 of the related Sale and Servicing Agreement or Supplemental Sale and
Servicing Agreement.
"SUCCESSOR ADMINISTRATOR" has the meaning specified in
Section 3.7(e) of the Indenture.
"SUCCESSOR MASTER SERVICER" has the meaning specified in
Section 3.7(e) of the Indenture.
"SUPPLEMENTAL SALE AND SERVICING AGREEMENT" means any
Supplemental Sale and Servicing Agreement among the Seller, the Administrator,
the Trust, the Eligible Lender Trustee, the Indenture Trustee, and the Master
Servicer entered into after March 28, 1995.
"SURETY PROVIDER" means, with respect to the Trust
Certificates and the Notes, AMBAC Indemnity Corporation, a Wisconsin-domiciled
stock insurance corporation, and its successors and assigns.
"SURETY PROVIDER DEFAULT" means the occurrence and
continuance of the failure of the Surety Provider to make a Certificate Surety
Bond Payment when due pursuant to the related Certificate Surety Bond or to make
a Note Surety Bond Payment when due pursuant to the related Note Surety Bond.
"SURETY PROVIDER FEE" means the premium as defined in the
Insurance Agreement.
"TELERATE PAGE 3750" means the display page so designated on
the Dow Jones Telerate Service (or such other page as may replace that page on
that service for the purpose of displaying comparable rates or prices).
"TERMS AGREEMENT" means, with respect to each Series of Notes
and Class of Certificates, the separate agreement forming a part of the Purchase
Agreement or Underwriting Agreement, as the case may be, that sets forth certain
of the terms of the Notes of such Series or Certificates of such Class, as the
case may be.
"TERMS SUPPLEMENT" means each indenture supplement to the
Indenture which authorizes a particular Series.
"THREE-MONTH LIBOR" means the London interbank offered rate
for deposits in U.S. dollars having a maturity of three months commencing on the
related LIBOR Determination Date (the "Three-Month Index Maturity") which
appears on Telerate Page 3750 as of 11:00 a.m., London time, on such LIBOR
Determination Date. If such rate does not appear on Telerate Page 3750, the rate
for that day will be determined on the basis of the rates at which deposits in
U.S. dollars, having the Three Month Index Maturity and in a principal amount of
not less than U.S. $1,000,000, are offered at approximately 11:00 a.m., London
time, on such LIBOR Determination Date to prime banks in the London interbank
market by the Reference Banks. The Auction Agent will request the principal
London office of each of such Reference Banks to provide a quotation of its
rate. If at least two such quotations are provided, the rate for that day will
be the arithmetic mean of the quotations. If fewer than two quotations are
provided, the rate for that day will be the arithmetic mean of the rates quoted
by major banks in New York City, selected by the Auction Agent, at approximately
11:00 a.m., New York City time, on such LIBOR Determination Date for loans in
U.S. dollars to leading European banks having the Three Month Index Maturity and
in a principal amount equal to an amount of not less than U.S. $1,000,000;
provided that if the banks selected as aforesaid are not quoting as mentioned in
this sentence, Three-Month LIBOR in effect for the applicable Interest Period
will be Three-Month LIBOR in effect for the previous Interest Period.
"TMSI" means The Money Store Inc.
"TRANSACTION FEES" means, collectively, the Servicing Fee,
the Administration Fee, Auction Agent Fee, Indenture Trustee Fee, Eligible
Lender Trustee Fee and Surety Provider Fee.
"TRANSFER AGREEMENT" has the meaning specified in Section
2.2(b) of the related Sale and Servicing Agreement or Supplemental Sale and
Servicing Agreement.
"TRANSFER DATE" means the day of any month during a Funding
Period designated by the Seller as a date on which Additional Financed Student
Loans will be conveyed to the Eligible Lender Trustee on behalf of the Trust
pursuant to Section 2.2 of the related Sale and Servicing Agreement or
Supplemental Sale and Servicing Agreement.
"TREASURY REGULATIONS" means regulations, including proposed
or temporary regulations, promulgated under the Code. References in any document
or instrument to specific provisions of proposed or temporary regulations shall
include analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"TRUST" means the Issuer, established pursuant to the Trust
Agreement.
"TRUST ACCOUNT PROPERTY" means the Trust Accounts, all
amounts and investments held from time to time in any Trust Account (whether in
the form of deposit accounts, Physical Property, book-entry securities,
uncertificated securities or otherwise), including the Reserve Account Initial
Deposit, if any, and all proceeds of the foregoing.
"TRUST ACCOUNTS" has the meaning specified in Section 5.1 of
the related Sale and Servicing Agreement or Supplemental Sale and Servicing
Agreement.
"TRUST AGREEMENT" means the Trust Agreement dated as of March
27, 1995, between the Depositor and the Eligible Lender Trustee, as amended and
supplemented from time to time.
"TRUST CERTIFICATE" means a Certificate.
"TRUST CERTIFICATEHOLDER" means a person in whose name a
Trust Certificate is registered in the Certificate Register.
"TRUST ESTATE" means all right, title and interest of the
Trust (or the Eligible Lender Trustee on behalf of the Trust) in and to the
property and rights assigned to the Trust pursuant to Article II of the Sale and
Servicing Agreement, all funds on deposit from time to time in the Trust
Accounts and all other property of the Trust from time to time, including any
rights of the Eligible Lender Trustee and the Trust pursuant to the Sale and
Servicing Agreement, any Supplemental Sale and Servicing Agreement and the
Administration Agreement.
"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act
of 1939 as in force on the date hereof, unless otherwise specifically provided.
"TRUST SUPPLEMENT" means each supplement to the Trust
Agreement which authorizes an issuance of a Class of Certificates or
Originators' Interests.
"UCC" means, unless the context otherwise requires, the
Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended
from time to time.
"UNAMORTIZED PREMIUM" means, with respect to any Financed
Student Loan, the excess, if any, of (i) the Premium for such Financed Student
Loan over (ii) the product of (x) such Premium and (y) a fraction, the numerator
of which is the number of months which have elapsed since the purchase of such
Financed Student Loan by the Trust and the denominator of which is 72.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement
dated March 27, 1995 among the Trust, the Eligible Lender Trustee, the
Administrator, the Money Store Inc. and Smith Barney Inc., relating to the
purchase and sale of the Notes, including each Terms Agreement.
"UNSUBSIDIZED STAFFORD LOAN" means a Financed Student Loan
designated as such that is made under Section 428H of the Higher Education Act.
SCHEDULE A
TO THE
THIRD SUPPLEMENTAL SALE AND SERVICING AGREEMENT
SCHEDULE OF FINANCED STUDENT LOANS
Located in the custody of Bankers Trust Company as Trustee
SCHEDULE B
TO THE
THIRD SUPPLEMENTAL SALE AND SERVICING AGREEMENT
LOCATION OF FINANCED STUDENT LOAN FILES
Documents relating to the Financed Student Loans in the custody of the
Master Servicer (including original notes) are stored at Trans-World Insurance
Company's offices located at 3301 C Street, Suite 100-A, Sacramento, California
95816.
<PAGE>
EXHIBIT A
TO THE
THIRD SUPPLEMENTAL SALE AND SERVICING AGREEMENT
Form of Noteholders' Statement
pursuant to Section 5.7(a) of Third
Supplemental Sale and Servicing
Agreement (capitalized terms used
HEREIN ARE DEFINED IN APPENDIX A THERETO)
Note Distribution Date:_____________________
(i) Amount of principal being paid or distributed:
Class ___ Notes:_________($_______ per $50,000
original principal
amount of Class ___
Notes)
(ii) Amount of interest being paid or distributed:
Class ___ Notes:_________($_______ per $50,000
original principal
amount of Class ___
Notes)
(iii) Amount of Noteholders' [Auction] [LIBOR] Rate Interest
Carryover being paid or distributed (if any) and
amount remaining (if any):
(a) Class ___ Notes:
(1) Distributed:___________ ($________per
$50,000 original
principal amount of
Class ___ Notes)
<PAGE>
(2) Balance:___________ ($________per
$50,000 original
principal amount of
Class ___ Notes)
(b) Class ___ Notes:
(1) Distributed:___________ ($________per
$50,000 original
principal amount of
Class ___ Notes)
(2) Balance:___________ ($________per
$50,000 original
principal amount of
Class ___ Notes)
(iv) Pool Balance at end of preceding Collection
Period:________
(v) After giving effect to distributions on this Note
Distribution Date:
(a) (1) outstanding principal amount of Class ___
Notes:_______________
(b) (1) outstanding principal amount of Class ___
Notes:_______________
(c) (1) Certificate Balance:_______________
(vi) Applicable Interest Rate:
(a) In general:
(1) [Auction] [LIBOR] Rate for each of the
applicable Interest Periods since the last
Note Distribution Date for such Class of
Notes was ______%, _______% and _______%;
and
(2) the Net Loan Rate was ____, ____% and ____%.
(b) Class ___ Rate:_______% (based on [Auction Rate]
[LIBOR Rate] [Net Loan
Rate])
(c) Class ___ Rate:_______% (based on [Auction Rate]
[LIBOR Rate] [Net Loan
Rate])
(d) Amount of interest that would have been paid on such
Note Distribution Date if interest instead was
calculated based on the [Auction Rate] [LIBOR
Rate] [Net Loan Rate] was $________.
(vii) (a) Amount of Servicing Fee
for related Collection
Period:_________________ ($__________ per $50,000
original principal
amount of Notes)
(b) Amount of Servicing Fee Carryover being
distributed and remaining balance (if any):
(1) Distributed: ______________ ($__________ per
$50,000 original
principal amount
of Notes)
(2) Balance: _____________ ($___________ per
$50,000 original
principal amount of
Notes)
(viii) Amount of Administration Fee, Auction Agent Fee,
Indenture Trustee Fee, Eligible Lender Trustee Fee and
Surety Provider Fee for related Collection Period
(each stated separately):____________ ($_________ per
$50,000 original
principal
amount of Notes)1
(ix) Amount of payments to the Surety Provider in
reimbursement of prior draws under any Note Surety
Bond or any Certificate Surety Bond:_______________2
(x) Aggregate amount of Realized Losses (if any) for the
related Collection Period:______________
(xi) Aggregate Amount (if any) received (stated separately for
principal and interest) with respect to Financed Student Loans
for which Realized Losses were allocated
previously:____________________
(xii) (a) Amount of the distribution attributable to
amounts in the Reserve Account:________________
(b) Amount of any other withdrawals from the Reserve
Account for such Distribution Date:______________
(c) Amount in the Reserve Account:______________3
(xiii) Amount of any draw required to be made under a Note
Surety Bond (together with any other information
required to make such draw): __________________
[(xiv) (a) Portion (if any) of the distribution attributable
to amounts on deposit in the Pre-Funding
Account:_______________
(b) Amount in the Pre-Funding Account:____________]3
(c) Amount in the Capitalized Pre-Funding
Account:___________]
(xv) Aggregate amount (if any) paid by the Eligible Lender
Trustee for Additional Financed Student Loans during
the preceding Collection Period:_______________
[(xvi) Amount in the Pre-Funding Account at the end of the
Funding Period to be distributed as a payment of
principal in respect of:
(a) Class ___ Notes:____________
(b) Class ___ Notes (only if Class ___ Notes have
been paid in full):_____________]4
(xvii) Aggregate amount (if any) paid for Financed Student
Loans during the preceding Collection
Period:______________
(xviii) As of the end of the preceding Collection Period:
(a) Number of Financed Student Loans that are 30 to
60 days delinquent:____
Principal amount:______________
(b) Number of Financed Student Loans that are 61 to
90 days delinquent:____
Principal amount:______________
(c) Number of Financed Student Loans that are 91 to
120 days delinquent:____
Principal amount:______________
(d) Number of Financed Student Loans that are more
than 120 days delinquent:____
Principal amount:______________
(e) Number of Financed Student Loans for which claims
have been filed with the appropriate Guarantor
and which are awaiting payment:____
Principal amount:______________
(xix) Parity Percentage, including the numerator and
denominator in determining such Parity Percentage:
(xx) Excess, if any, of amounts deposited into Collection Account
with respect to the sale by the Trust of Serial Loans over the
aggregate Purchase Amount of such loans (such excess to be
distributed to Student Holdings):______________
(xxi) Amount of Additional Principal Payments, if any, made
on such Distribution Date:________________
- --------
1 To be included on the last Note Distribution Date of each March, June,
September or December.
2 To be included in the first Note Distribution
Date of each March, June, September or December.
3 To be included for each Note Distribution
Date during the Funding Period.
4 To be included for the first Note Distribution Date on
or immediately following the end of the Funding Period.
<PAGE>
EXHIBIT B
TO THE
THIRD SUPPLEMENTAL SALE AND SERVICING AGREEMENT
Form of Certificateholders' Statement
pursuant to Section 5.7(a) of Third
Supplemental Sale and Servicing Agree-
ment (capitalized terms used herein
ARE DEFINED IN APPENDIX A THERETO)
Certificateholder Distribution Date:_______________________
(i) Amount of principal being paid or distributed in
respect of the Class __ Certificates:___________
($---------
per $50,000
original
principal
amount of the
Certificates)5
(ii) Amount of interest being paid or distributed in
respect of the Class __ Certificates:___________
($---------
per $50,000
original
principal
amount of
Certificates)
(iii) Amount of Certificateholders' [Auction][LIBOR] Rate
Interest Carryover being paid or distributed (if any)
and amount remaining (if any):
(1) Distributed: ________________ ($_________ per
$50,000 original
principal
amount of
Certificates)
(2) Balance: _______________ ($__________ per $50,000
original principal
amount of Certificates)
(iv) Pool Balance at end of preceding Collection
Period:_____________
(v) After giving effect to distributions on this
Certificate Distribution Date:
(a) (1) outstanding principal amount of Class ___
Notes:_____________
(b) (1) outstanding principal amount of Class ___
Notes:_____________
(c) outstanding principal amount of Class ___
Certificates
(d) (1) Certificate Balance:_______________
- -------------
5 Only after the Notes have been paid in full.
<PAGE>
(vi) Applicable Interest Rate:
(a) In general:
(1) [Auction][LIBOR] Rate for the prior Interest
Period was _____%; and
(2) the Net Loan Rate was _____%.
(b) Certificate Rate:_____% (based on [Auction Rate]
[LIBOR Rate]
[Net Loan Rate])
(c) Amount of interest that would have been paid on such
Certificate Distribution Date if interest instead was
calculated based on the [Auction Rate] [LIBOR Rate]
[Net Loan Rate]
(vii) (a) Amount of Servicing Fee
for related Collection
Period:_____________ ($__________ per $50,000
original principal amount of
Certificates)
(b) Amount of Servicing Fee Carryover being
distributed and remaining balance (if any):
(1) Distributed: ____________ ($__________ per
$50,000 original
principal amount
of Certificates)
(2) Balance: ______________ ($___________ per
$50,000 original
principal amount
of Certificates)
(viii) Amount of Administration Fee, Auction Agent Fee,
Indenture Trustee Fee and Surety Provider Fee for
related Collection Period (each stated
separately):_________ ($_________ per $50,000 original
principal amount of Certificates)
(ix) Amount of payments to the Surety Provider in
reimbursement of prior draws under any Note Surety
Bond or the Certificate Surety Bond:______________
(x) Aggregate amount of Realized Losses (if any) for the
related Collection Period:_____________
(xi) Aggregate amount (if any) received (stated separately for
principal and interest) with respect to Financed Student Loans
for which Realized Losses were allocated
previously:________________
(xii) (a) Amount of the distribution attributable to
amounts in the Reserve Account:________________
(b) Amount of any other withdrawals from the Reserve
Account for such Distribution Date:______________
(c) Amount in the Reserve Account:____________
(xiii) Amount of any draw required to be made under the Certificate
Surety Bond (together with any other information required to
make such draw):
-------------------
[(xiv) (a) Portion (if any) of the distribution attributable
to amounts on deposit in the Pre-Funding
Account:_______________
(b) Amount in the Pre-Funding Account:___________]6
(c) Amount in the Capitalized Pre-Funding
Account:_________]6
(xv) Aggregate amount (if any) paid by the Eligible
Lender Trustee for Additional Financed Student Loans
during the preceding Collection Period:_______________
(xvi) Aggregate amount (if any) paid for Financed Student
Loans during the preceding Collection
Period:______________
(xvii) As of the end of the preceding Collection Period:
(a) Number of Financed Student Loans that are 30 to
60 days delinquent:____
Principal amount:______________
(b) Number of Financed Student Loans that are 61 to
90 days delinquent:____
Principal amount:______________
(c) Number of Financed Student Loans that are 91 to
120 days delinquent:____
Principal amount:______________
(d) Number of Financed Student Loans that are more
than 120 days delinquent:____
Principal amount:______________
(e) Number of Financed Student Loans for which claims
have been filed with the appropriate Guarantor
and which are awaiting payment:____
Principal amount:______________
(xviii) Parity Percentage, including the numerator and
denominator in determining such Parity Percentage:
(xix) Excess, if any, of amounts deposited into Collection Account
with respect to the sale by the Trust of Serial Loans over the
aggregate Purchase Amount of such loans (such excess to be
distributed to Student Holdings):_______________
(xx) Amount of Additional Principal Payments, if any, made
on such Distribution Date.
- --------
6 To be included for each Distribution Date during the
Funding Period.
<PAGE>
EXHIBIT C
TO THE
THIRD SUPPLEMENTAL SALE AND SERVICING AGREEMENT
FORM OF ADMINISTRATOR'S CERTIFICATE
[To be provided by the Administrator pursuant to
Section 4.7 of the Third Supplemental Sale and
Servicing Agreement]
<PAGE>
EXHIBIT D
TO THE
THIRD SUPPLEMENTAL SALE AND SERVICING AGREEMENT
ASSIGNMENT FOR
INITIAL FINANCED STUDENT LOANS
For value received, in accordance with the Third Supplemental Sale and
Servicing Agreement (the "Third Supplemental Sale and Servicing Agreement")
dated as of December 27, 1996, among the undersigned, as seller (the "Seller"),
as master servicer (the "Master Servicer") and as administrator (the
"Administrator"), ClassNotes Trust 1995-I, formerly known as Education Loan
Alliance 1995-I (the "Trust"), and Dauphin Deposit Bank and Trust Company, not
in its individual capacity but solely as Eligible Lender Trustee (the "Eligible
Lender Trustee"), the undersigned does hereby contribute, assign, transfer and
otherwise convey unto the Eligible Lender Trustee on behalf of the Trust,
without recourse (subject to the obligations set forth in the Third Supplemental
Sale and Servicing Agreement), all right, title and interest of the undersigned
in and to (i) the Initial Financed Student Loans and all obligations of the
Obligors thereunder, including all monies paid or payable thereunder on or after
the Initial Cut-off Date with respect to the Initial Financed Student Loans,
including the right to enforce such Loans in the same manner and to the same
extent as the Seller would have the power to do but for the execution and
delivery of this Agreement, (ii) the Assigned Rights, (iii) all funds on deposit
from time to time in the Trust Accounts, including the Reserve Account Initial
Deposit, the Capitalized Interest Account, the Capitalized Pre-Funding Account
and the Pre-Funded Amount, and in all investments and proceeds thereof
(including all income thereon) and (iv) the proceeds of any and all of the
foregoing (including proceeds derived from the voluntary or involuntary
conversion of any of the Initial Financed Student Loans into cash or other
liquidated property, such as proceeds from the applicable Guarantee Agreement).
The foregoing sale does not constitute and is not intended to result in any
assumption by the Eligible Lender Trustee or the Trust of any obligation of the
Seller to the borrowers of Initial Financed Student Loans or any other person in
connection with the Initial Financed Student Loans or any agreement or
instrument relating to any of them.
In addition, the undersigned, by execution of this instrument,
represents and warrants that the promissory notes evidencing each Initial
Financed Student Loan described in Schedule A to the Third Supplemental Sale and
Servicing Agreement have been endorsed in the manner set forth in the Third
Supplemental Sale and Servicing Agreement.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the Third
Supplemental Sale and Servicing Agreement and is to be governed by the Third
Supplemental Sale and Servicing Agreement.
Capitalized terms used but not defined herein shall have the meaning
assigned to them in Appendix A to the Third Supplemental Sale and Servicing
Agreement, which also contains rules as to usage that shall be applicable
herein.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of December __, 1996.
TRANS-WORLD INSURANCE CORPORATION
D/B/A/ EDUCAID, as Seller
By:______________________________
Name: Morton Dear
Title: Executive Vice President
<PAGE>
EXHIBIT E
TO THE THIRD SUPPLEMENTAL SALE AND SERVICING AGREEMENT
ASSIGNMENT FOR
ADDITIONAL FINANCED STUDENT LOANS
For value received, in accordance with the Third Supplemental Sale and
Servicing Agreement (the "Third Supplemental Sale and Servicing Agreement")
dated as of December 27, 1996, among the undersigned, as seller (the "Seller"),
as master servicer (the "Master Servicer") and as administrator (the
"Administrator"), ClassNotes Trust 1995-I, formerly known as Education Loan
Alliance 1995-I (the "Trust"), and Dauphin Deposit Bank and Trust Company, not
in its individual capacity but solely as Eligible Lender Trustee (the "Eligible
Lender Trustee"), the undersigned does hereby contribute, assign, transfer and
otherwise convey unto the Eligible Lender Trustee on behalf of the Trust,
without recourse (subject to the obligations set forth in the Third Supplemental
Sale and Servicing Agreement), all right, title and interest of the undersigned
in and to (i) the Additional Financed Student Loans listed on Schedule A hereto
and all monies received thereon or payable, on and after ______ (the "Subsequent
Cut-off Date") with respect to the Additional Financed Student Loans, including
the right to enforce such Loans in the same manner and to the extent as the
Seller would have the power to do but for the execution and delivery of this
Agreement and (ii) the proceeds of any and all of the foregoing (including but
not limited to proceeds derived from the voluntary or involuntary conversion of
any of the Additional Financed Student Loans into cash or other liquidated
property, such as proceeds from the applicable Guarantee Agreement (as such term
is defined in the Sale and Servicing Agreement)). The foregoing sale does not
constitute and is not intended to result in any assumption by the Eligible
Lender Trustee or the Trust of any obligation of the Seller to the borrowers of
such Additional Financed Student Loans or any other person in connection with
the Additional Financed Student Loans or any agreement or instrument relating to
any of them.
In addition, the undersigned, by execution of this instrument,
represents and warrants that the promissory notes evidencing each Additional
Student Loan described in Schedule A hereto have been endorsed in the manner set
forth in the Sale and Servicing Agreement.
This Assignment is made pursuant to and upon the representations,
warranties and conditions precedent on the part of the undersigned contained in
the Third Supplemental Sale and Servicing Agreement and the Insurance and
Indemnity Agreement dated as of March 28, 1995 (as amended from time to time,
the "Insurance Agreement") among The Money Store Inc., the Seller, Bankers Trust
Company, as Indenture Trustee, the Eligible Lender Trustee and AMBAC Indemnity
Corporation, and is to be governed by the Third Supplemental Sale and Servicing
Agreement and the Insurance Agreement. Each contribution of an Additional
Financed Student Loan by the Seller to the Eligible Lender Trustee shall be
deemed a certification by the Seller that all applicable representations and
warranties contained in the Third Supplemental Sale and Servicing Agreement and
the Insurance Agreement concerning such Additional Financed Student Loan are
true and correct as of the related Subsequent Cut-off Date with the same force
and effect as if made on such date, and that all conditions precedent to
contributing such Additional Financed Student Loan set forth in the Third
Supplemental Sale and Servicing Agreement and the Insurance Agreement have been
satisfied.
Capitalized terms used but not defined herein shall have the meaning
assigned to them in the Third Supplemental Sale and Servicing Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed as of ________________, 199__.
TRANS-WORLD INSURANCE CORPORATION,
D/B/A EDUCAID, as Seller
by
-----------------------------
Title:
<PAGE>
SCHEDULE A
TO THE
BILL OF SALE
[List of Additional Financed Student Loans
and their related Subsequent Cut-off Dates]
