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.
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/ Xxxx X. Xxxxx
/s/ Xxx X. Xxxx Name:Xxxx X. Xxxxx
Name: Xxx X. Xxxx Title: Vice President
Title:Assistant Secretary
TRANS-WORLD INSURANCE COMPANY,
d/b/a Educaid
By: /s/ Xxxxxx Dear
Name: Xxxxxx Dear
Title: Executive Vice president
CONSENTED TO:
AMBAC INDEMNITY CORPORATION, as
Surety Provider
By:/s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title:First Vice President
EXHIBIT A
TO THE THIRD TRUST SUPPLEMENT
FORM OF SERIES 1996-2 CERTIFICATES
[THIS SERIES 1996-2 CERTIFICATE IS NONTRANSFERABLE]1
NUMBER
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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.
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1 To be included on the Series 1996-2 Certificate issued to TMS Student
Holdings, Inc.
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.
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
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Authorized Signatory
Date:
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
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Authorized Representative
Date:
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
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(Please print or type name and address, including postal zip
code, of assignee)
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the within Trust Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
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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.
