EXHIBIT 99.3
EXECUTION COPY
SECOND SUPPLEMENTAL
SALE AND SERVICING AGREEMENT
among
CLASSNOTES TRUST 1997-I
as Issuer,
TRANS-WORLD INSURANCE COMPANY D/B/A EDUCAID
as Seller, Master Servicer and Administrator,
CLASSNOTES INC.
as Seller and Master Servicer,
THE YORK 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, 1998
ARTICLE I...................................................................2
Definitions and Usage.......................................................2
ARTICLE II..................................................................2
CONVEYANCE OF FINANCED STUDENT LOANS........................................2
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 Sellers...................................................5
SECTION 2.4. Security Agreement............................................6
ARTICLE III.................................................................6
THE FINANCED STUDENT LOANS..................................................6
SECTION 3.1. Representations and Warranties of Sellers
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 Servicers as Custodian......................13
SECTION 3.5. Instructions; Authority to Act...............................14
SECTION 3.6. Custodian's Indemnification..................................15
SECTION 3.7. Effective Period and Termination.............................15
SECTION 3.8. Appointment of Subcustodian..................................16
ARTICLE IV.................................................................16
ADMINISTRATION AND SERVICING OF FINANCED STUDENT LOANS.....................16
SECTION 4.1. Duties of the Master Servicers...............................16
SECTION 4.2. Collection of Financed Student Loan
Payments.....................................................18
SECTION 4.3. Realization upon Financed Student Loans......................20
SECTION 4.4. No Impairment................................................20
SECTION 4.5. Purchase of Financed Student Loans;
Reimbursement................................................20
SECTION 4.6. Servicing Fee; Servicing Fee Carryover.......................22
SECTION 4.7. Administrator's Certificate..................................22
SECTION 4.8. Annual Statement as to Compliance; Notice
of Default...................................................23
SECTION 4.9. Annual Independent Certified Public
Accountants' Report..........................................24
SECTION 4.10. Access to Certain Documentation and
Information Regarding Financed Student
Loans.......................................................25
SECTION 4.11. Master Servicer and Administrator
Expenses....................................................25
SECTION 4.12. Appointment of Subservicer..................................25
ARTICLE V..................................................................26
DISTRIBUTIONS; RESERVE ACCOUNT;............................................26
SECTION 5.1. Establishment of Trust Accounts..............................26
SECTION 5.2. Collections .................................................29
SECTION 5.3. Application of Collections...................................29
SECTION 5.4. Additional Deposits..........................................30
SECTION 5.5. Distributions................................................31
SECTION 5.6. Reserve Account..............................................34
SECTION 5.7. Statements to Certificateholders and
Noteholders..................................................37
SECTION 5.8. Pre-Funding Account..........................................39
SECTION 5.9. Capitalized Pre-Funding Account..............................40
SECTION 5.10. Capitalized Interest Account................................40
SECTION 5.11. Expense Account.............................................40
SECTION 5.12. Note Distribution Account and
Certificate Distribution Account............................40
SECTION 5.13. Monthly Advances............................................40
SECTION 5.14. OPTIONAL DEPOSITS BY THE SURETY PROVIDER.....................41
ARTICLE VI.................................................................41
THE SELLERS AND THE MASTER SERVICERS.......................................41
SECTION 6.1. Representations of the Sellers and the
Master Servicers.............................................41
SECTION 6.2. Existence .................................................43
SECTION 6.3. Liability and Indemnities....................................44
SECTION 6.4. [Reserved] .................................................46
SECTION 6.5. Merger or Consolidation of, or Assumption
of the Obligations of, the Sellers, the
Administrator or the Master Servicers........................46
SECTION 6.6. Limitation on Liability of Seller, Master
Servicer and Others..........................................47
SECTION 6.7. Seller May Own Certificate or Notes..........................48
SECTION 6.8. Master Servicer Not to Resign................................48
ARTICLE VII................................................................48
THE ADMINISTRATOR..........................................................48
SECTION 7.1. Representations of the Administrator.........................48
SECTION 7.2. Liability and Indemnities....................................50
SECTION 7.3. Administrator Not to Resign..................................50
ARTICLE VIII...............................................................51
DEFAULT....................................................................51
SECTION 8.1. Master Servicer Default; Administrator
Default......................................................51
SECTION 8.2. Appointment of Successor.....................................54
SECTION 8.3. Notification to Noteholders and
Certificateholders...........................................56
SECTION 8.4. Waiver of Past Defaults......................................56
ARTICLE IX.................................................................57
TERMINATION................................................................57
SECTION 9.1. Termination .................................................57
ARTICLE X..................................................................59
SURETY BONDS...............................................................59
SECTION 10.1. Note Surety Bonds...........................................59
SECTION 10.2. Further Assurances; Surety Provider
Default; etc................................................60
ARTICLE XI.................................................................61
MISCELLANEOUS..............................................................61
SECTION 11.1. Amendment .................................................61
SECTION 11.2. Protection of Interests in Trust............................63
SECTION 11.3. Notices .................................................65
SECTION 11.4. Assignment .................................................66
SECTION 11.5. Limitations on Rights of Others.............................66
SECTION 11.6. Severability................................................66
SECTION 11.7. Separate Counterparts.......................................67
SECTION 11.8. Headings .................................................67
SECTION 11.9. Governing Law...............................................67
SECTION 11.10. Assignment to Indenture Trustee............................67
SECTION 11.11. Nonpetition Covenants......................................67
SECTION 11.12. Limitation of Liability of Eligible
Lender Trustee and Indenture Trustee.......................67
SECTION 11.13. Rights of Surety Provider..................................68
SECTION 11.14. Conflicts with Other Documents.............................68
APPENDIX A Definitions and Usage
SCHEDULE A Schedule of Financed Student Loans
SCHEDULE B Location of Financed Student Loans
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 of Initial Financed
Student Loans
EXHIBIT E Form of Assignment and Xxxx of Sale for
Additional Financed Student Loans
SECOND SUPPLEMENTAL (the "Agreement") dated as of March
17, 1998, among CLASSNOTES TRUST 1998- I, a Pennsylvania
business trust (the "Issuer"), TRANS-WORLD INSURANCE COMPANY
D/B/A EDUCAID, an Arizona corporation ("TWIC," a "Seller," a
"Master Servicer" or the "Administrator"), CLASSNOTES, INC.,
a Delaware corporation ("ClassNotes," a "Seller" or a
"Master Servicer" and, together with TWIC, the "Sellers" or
the "Master Servicers"), THE YORK 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 February 28, 1997 (the "Original Sale and Servicing
Agreement") in connection with the issuance by the Issuer of its Auction Rate
Asset Backed Certificates,Class 1 (the "Class 1 Certificates") and its Series
1997-1 Auction Rate Asset Backed Notes, Class A-1, Class A-2 and Class A-3 (the
"Series 1997-1 Notes"); and
WHEREAS, the parties hereto entered into a First Supplemental Sale and
Servicing Agreement to the Sale and Servicing Agreement dated as of December 24,
1997 (together with the Original Sale and Servicing Agreement and as amended
from time to time, the "Sale and Servicing Agreement") in connection with the
issuance by the Issuer of its Auction Rate Asset Backed Certificates,Class 2
(the "Class 2 Certificates" and together with the Class 1 Cetificates, the
"Certificates") and its Series 1997-2 LIBOR Rate Asset Backed Notes, Class A-4
and its Series 1997-2 Auction Rate Asset Backed Notes, Class A-5 and Class A-6
(collectively, the "Series 1997-2 Notes"); and
WHEREAS, the Issuer is authorizing on the date hereof for issuance its
Series 1998-1 Auction Rate Asset Backed Notes, Class A-7, Class A-8, Class A-9,
Class A-10 and Class A-11;
WHEREAS, the Issuer also has authorized for issuance Certificates
designated as the Issuer's Series 1998-1 Certificates (the "Series 1998-1
Certificates") pursuant to a Third Trust Supplement among the Sellers and the
Eligible Lender Trustee; and
WHEREAS, the parties hereto are entering into this Second Supplemental
Sale and Servicing Agreement in connection with the Series 1998-1 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 Sellers on
the Closing Date of the Series 1998-1 Certificates; each of the Sellers agrees
to, and the Sellers do hereby, as evidenced by a duly executed written
assignment and xxxx 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
owned by TWIC (other than the Additional Financed Student Loans) listed on
Schedule A-1 to this Agreement and the Financed Student Loans owned by
ClassNotes (other than the Additional Student Loans) listed on Schedule A-2
to this Agreement (the Financed Student Loans listed on Schedules A-1 and
A-2 collectively being, the "Initial Financed Student Loans") and all
obligations of the Obligors thereunder, including all moneys paid
thereunder, and all written communications received by TWIC or ClassNotes,
as the case may be, 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 1998-1 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
(iii) the amounts specified in Section 5.8 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 1998-1 Notes, the Sellers shall
cause the Surety Provider to deliver (i) the Certificate Surety Bond to the
Eligible Lender Trustee on behalf of the Certificateholders and (ii) the Note
Surety Bond to the Eligible Lender Trustee on behalf of the related Noteholders.
(c) On the Closing Date relating to the Series 1998-1 Notes, the
Sellers 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 1998-1 Notes each
Seller and the Issuer shall execute a cross-receipt, which will evidence receipt
by such Seller of the purchase price for its Initial Financed Student Loans, and
receipt by the Issuer of such 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 1998-1 Certificates of the amount described in Section
5.8(a) to be delivered on such Transfer Date, each of the Sellers 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 such Seller in and to each
Additional Financed Student Loan, and all moneys received thereon, and all
written communications received by such 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
1998-1 Notes.
(b) A 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) such 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 and xxxx of sale 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) such 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) such Seller shall, to the extent required by Section 5.2 of this
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, such 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, such 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 1998- 1 Notes shall
not have terminated;
(viii) such 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 such 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 a
Seller, with the prior consent of the Surety Provider, such 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 such Seller may be modified to reflect
the contribution to the Issuer by such 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 SELLERS. (a) Upon receipt of written notice (or
telephonic or facsimile notice followed by written notice) from a Seller (or
from the applicable Master Servicer on behalf of such 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 such 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 such Seller. Simultaneously with each such conveyance by the
Eligible Lender Trustee and the making by a Seller of each such Consolidation
Loan, such 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 a Seller (or from the applicable Master
Servicer on behalf of such 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
such Seller's designee the Financed Student Loan(s) identified in such notice.
Within 75 days of each such conveyance by the Eligible Lender Trustee, a 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 Sellers,
on behalf of the Trust, shall cause to be remitted to TMS Student Holdings,
Inc., in its capacity as the Series 1998-1 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 a 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
such 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, a 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 Sellers' right, title and
interest in and to the Financed Student Loans pursuant to this Agreement shall
constitute a purchase and sale 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 Sellers 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
Sellers' 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 SELLERS WITH RESPECT TO
THE FINANCED STUDENT LOANS. TMSI and the applicable Seller, as the case may be,
jointly and severally, make the following representations and warranties as to
the Financed Student Loans being transferred to the Eligible Lender Trustee by
such Seller on the Closing Date relating to the Series 1998-1 Notes and the
Financed Student Loans to be transferred to the Eligible Lender Trustee by such
Seller during the Funding Period for the Series 1998-1 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 1998-1 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 contribution, 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
1998-1 Notes and the Financed Student Loans to be transferred to the Eligible
Lender Trustee during the Funding Period for the Series 1998-1 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 such
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 Xxxxxxxx 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 Xxxxxxxx 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-1 and Schedule
A-2 to this Agreement and Schedule A-1 and Schedule A-2 to the related
Transfer Agreement is true and correct in all material respects as of the
opening of business on the Cut-off Date relating to the Series 1998-1 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
Cutoff Date relating to the Series 1998-1 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 such
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 such Seller, the applicable 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 1998-1
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 such Seller has not waived and shall not waive any of the
foregoing other than as permitted by the Basic Documents. As of the Closing
Date, no more than 20% of all Financed Student Loans (by principal balance)
then held by the Trust (including the Initial Financed Student Loans) will
be delinquent in payment.
(vii) TITLE. The transfer and assignment herein contemplated
constitutes a contribution of the Financed Student Loans from such 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 such Seller. No Financed Student Loan has been contributed,
transferred, assigned or pledged by such 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, such 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
contribution, 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 of each
promissory note evidencing a Financed Student Loan.
(xi) PRINCIPAL BALANCE. The aggregate principal balance of the
Financed Student Loans transferred by TWIC and ClassNotes to the Eligible
Lender Trustee on the Closing Date, plus accrued interest to be capitalized
with respect thereto, as of the Statistical Cut-off Date relating to the
Series 1998-1 Notes was $821,878,388.
(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) SELLERS' REPRESENTATIONS. The representations and warranties of
the Sellers 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 contribution and assignment of Financed
Student Loans to the Eligible Lender Trustee by such 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, except for Private Loans, 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 applicable
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 such Seller or TMSI or receipt by such Seller or TMSI of written notice from
the Eligible Lender Trustee, the Surety Provider, TMSI or the applicable Master
Servicer of such breach, such 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, such 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 such Seller
in order to effect such transfer. If such 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
such 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
such 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, such 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
such 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 such 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 applicable Seller, TMSI or TMSI's designee, as the case may be, to
repurchase 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 each Master Servicer, and each
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 sold by such Master Servicer, as Seller, to the Trust (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 such 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
such Master Servicer, the Administrator or such 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, such 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
such 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. Further, the Financed Student Loan Files relating to the Private Loans
shall be retained by PHEAA or such other custodian approved by the Surety
Provider.
SECTION 3.4. DUTIES OF MASTER SERVICERS AS CUSTODIAN. (a) SAFEKEEPING.
Either a Master Servicer, as custodian, or a subcustodian appointed pursuant to
Section 3.8, shall hold the Financed Student Loan Files with respect to each
Financed Student Loan contributed by such Master Servicer, as Seller, to the
Trust for the benefit of the Issuer and maintain such accurate and complete
accounts, records and computer systems pertaining to each such 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, each Master Servicer
shall act with reasonable care, using that degree of skill and attention that
such Master Servicer exercises with respect to the student loan files relating
to all comparable student loans that such 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. Each 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 such Master
Servicer's record keeping. A Master Servicer shall promptly report to the
Issuer, the Indenture Trustee 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. Each of the Master Servicers
shall maintain each Financed Student Loan File held by it under this Agreement
at its office located at 0000 X Xxxxxx, Xxxxx 000-X, Xxxxxxxxxx, Xxxxxxxxxx
00000 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 a
Master Servicer shall be segregated by such 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 applicable Seller and not endorsed pursuant to (i) above will,
with the consent of the Surety Provider, be endorsed utilizing a blanket
endorsement. Upon reasonable prior notice, each 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 such 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. Each Master Servicer
shall be deemed to have received proper instructions with respect to the
Financed Student Loan Files held by it under this Agreement upon its receipt of
written instructions signed by a Responsible Officer of the Indenture Trustee.
SECTION 3.6. CUSTODIAN'S INDEMNIFICATION. Each 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 such Master Servicer as custodian of the Financed
Student Loan Files held by it under this Agreement where the final determination
that any such improper act or omission by such 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 such Master Servicer; PROVIDED, HOWEVER, that
such 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 such 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 a 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. Each Master Servicer's
appointment as custodian of the Financed Student Loans being conveyed hereunder
by such Master Servicer as Seller shall become effective as of the Closing Date
relating to the Series 1998-1 Notes and shall continue in full force and effect
for so long as such Master Servicer shall remain a Master Servicer hereunder. If
a Master Servicer or any successor Master Servicer shall resign as a Master
Servicer in accordance with the provisions of this Agreement or if all the
rights and obligations of such Master Servicer or any such successor Master
Servicer shall have been terminated under Section 8.1 of this Agreement, the
appointment of such 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), such Master Servicer shall deliver the
Financed Student Loan Files held by it under this Agreement 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, a Master Servicer may, at any time or, at the request of the
Surety Provider pursuant to the terms of Section 2.02(r) of the Insurance
Agreement, a Master Servicer shall, appoint a subcustodian to perform all or any
portion of its obligations as custodian hereunder; PROVIDED, HOWEVER, that such
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 such 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. The parties
hereto agree that PHEAA, or such other entity approved by the Surety Provider,
shall act as custodian with respect to the Private Loans.
ARTICLE IV
ADMINISTRATION AND SERVICING OF FINANCED STUDENT LOANS
SECTION 4.1. DUTIES OF THE MASTER SERVICERS. Each 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 held by
it under this Agreement with reasonable care, using that degree of skill and
attention that such 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, each Master Servicer shall manage, service, administer and make
collections with respect to the Financed Student Loans held by it under this
Agreement including, if applicable, 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. Each Master Servicer also hereby
acknowledges that its obligation to service the Financed Student Loans includes
those Additional Financed Student Loans conveyed by it as 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 a Master Servicer is not the Seller)
shall be delivered to such Master Servicer by the applicable Seller promptly
upon execution thereof; PROVIDED that any failure by a Seller to so deliver a
Transfer Agreement shall not affect such Master Servicer's obligations hereunder
to service such Financed Student Loans.
Each Master Servicer's duties shall include collection and posting of
all payments, responding to inquiries of borrowers on the Financed Student Loans
held by it hereunder, 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, each Master Servicer shall follow its customary
standards, policies and procedures in performing its duties as Master Servicer.
Without limiting the generality of the foregoing, each 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 the Financed
Student Loans held by it hereunder; PROVIDED, HOWEVER, that each 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, a 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 a Master Servicer shall not agree to any
decrease of the interest rate on (other than as provided in a Master Servicer's
Reduced Interest Rate Program), or the principal amount payable with respect to,
any Financed Student Loan. Each 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 each
Master Servicer to sign endorsements of the notes relating to the Financed
Student Loans held by it hereunder 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 such 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 a Master
Servicer or the Administrator furnish such Master Servicer or the Administrator
with any other powers of attorney and other documents reasonably necessary or
appropriate to enable such Master Servicer or the Administrator to carry out its
servicing and administrative duties hereunder.
SECTION 4.2. COLLECTION OF FINANCED STUDENT LOAN PAYMENTS. (a) Each
Master Servicer shall make reasonable efforts (including all efforts that may be
specified under the Higher Education Act or any Guarantee Agreement, as
applicable) to collect all payments called for under the terms and provisions of
the Financed Student Loans serviced by it hereunder 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.
A 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) Each 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 serviced
by it hereunder 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, such 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) Each 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 serviced by it hereunder 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 such 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, such 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 a
Master Servicer, furnish such Master Servicer with any power of attorney and
other documents reasonably necessary or appropriate to enable such Master
Servicer to prepare and file such claims, forms and other documents and filings.
The Eligible Lender Trustee may permit trusts, other than the Trust,
established by the Sellers to securitize student loans, to use the Department
lender identification number applicable to the Trust. In such event, the
Eligible Lender Trustee may claim and collect Interest Subsidy Payments and
Special Allowance Payments with respect to Financed Student Loans in the Trust
and student loans in such other trusts using such common lender identification
number. Notwithstanding anything herein or in the Basic Documents to the
contrary, any amounts assessed against payments (including, but not limited to,
Interest Subsidy Payments and Special Allowance Payments) due from the
Department or any Guarantor to any such other trust using such common lender
identification number as a result of amounts (including, but not limited to,
Consolidation Fees) owing to the Department or any Guarantor from the Trust will
be deemed for all purposes hereof and of the Basic Documents (including for
purposes of determining amounts paid by the Department or any Guarantor with
respect to the student loans in the Trust and such other trust) to have been
assessed against the Trust and shall be deducted by the Eligible Lender Trustee
or the Servicer and paid to such other trust from any collections made by them
which would otherwise have been payable to the Collection Account for the Trust.
If so specified in the servicing agreement applicable to any such other trust,
any amounts assessed against payments due from the Department or any Guarantor
to the Trust as a result of amounts owing to the Department or any Guarantor
from such other trust using such common lender identification number will be
deemed to have been assessed against such other trust and will be deducted by
the Eligible Lender Trustee or the Servicer from any collections made by them
which would otherwise be payable to the collection account for such other trust
and paid to the Trust. Immediately upon receipt from the Department or a
Guarantor of any such payments, the Eligible Lender Trustee shall deposit such
amounts in a trust account held by the Eligible Lender Trustee, as trustee for
the holders of the notes (including the Notes) and certificates (including the
Certificates) relating to the Trust and such other trusts. As soon as
practicable (but not more than 10 days) thereafter, the Eligible Lender Trustee
shall deposit the amount of any such payments that relate to the Trust in the
Collection Account for the Trust.
SECTION 4.3. REALIZATION UPON FINANCED STUDENT LOANS. For the benefit
of the Issuer, each 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. Neither Master Servicer shall 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,
each 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 such Master
Servicer or TMSI or receipt by such Master Servicer or TMSI of written notice
from the Eligible Lender Trustee, TMSI, such Master Servicer or the Surety
Provider of such breach (or, at such Master Servicer's election, the last day of
the first month following such discovery), such 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 a 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, such 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, such 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 such Master Servicer in order to effect
such transfer. If such 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 such 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 such Master Servicer or TMSI's designee, as the case may be. In
addition, if any such breach by a 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, such 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 such 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 a 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 servicing such Financed Student Loan hereunder, 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, each 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, each 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 a Seller (if such
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 Deficiency Amount,
if any, for the upcoming Note Distribution Date or Certificate Distribution Date
and 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 a
Seller (whether pursuant to Section 2.3 or 3.2), purchased by a 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 a Seller (if
such 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 Servicers and the Administrator shall deliver to the Sellers,
the Eligible Lender Trustee and the Indenture Trustee, on or before April 30 of
each year beginning April 30, 1999, an Officer's Certificate of such 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 such Master
Servicer or the Administrator, as the case may be, during the preceding 12-month
period and of its performance under this 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, such 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) Each Master Servicer shall deliver to the Eligible Lender Trustee,
the Indenture Trustee, the Sellers, 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
such 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 Servicers, 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 Servicers 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 Sellers, the
Eligible Lender Trustee, the Indenture Trustee and the Surety Provider on or
before April 30 of each year beginning April 30, 1999, a report addressed to the
Master Servicers and to the Sellers, the Eligible Lender Trustee, the Surety
Provider 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, all 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 Servicers 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
Servicers 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 Servicers in their 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 Servicers.
SECTION 4.11. MASTER SERVICER AND ADMINISTRATOR EXPENSES. Each 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 any Supplemental Sale and Servicing Agreements, including fees and
disbursements of independent accountants, taxes imposed on such 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. Each Master Servicer may at
any time, upon the written consent of the Surety Provider and with notice to the
Rating Agencies, appoint a subservicer to perform all or any portion of its
obligations as Master Servicer hereunder and under any Supplemental Sale and
Servicing Agreement; PROVIDED, HOWEVER, that such 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 any 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 such 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 such 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 such 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 1997-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 1997-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, that Certificateholders representing not less
than 66-2/3% of the Outstanding Amount of the Certificates may, by written
instructions to the Administrator, direct how such funds are invested in such
Eligible Investments; PROVIDED, FURTHER, 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 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 the 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 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 such other Person acting solely for
the Indenture Trustee as required for Delivery; and
(C) If the Indenture Trustee, in its capacity as securities
intermediary, has or subsequently obtains by agreement, operation of
law or otherwise a security interest in the Trust Accounts or any
security entitlement credited thereto, the Indenture Trustee, in its
capacity as securities intermediary, hereby agrees that such security
interest shall be subordinate to the security interest of the
Indenture Trustee, except as otherwise provided in the Indenture and
for purposes provided for therein. The financial assets and other
items deposited to the Trust Accounts will not be subject to
deduction, set-off, banker's lien, or any other right in favor of any
person other than the Indenture Trustee (except that the Indenture
Trustee, in its capacity as securities intermediary, may set off (i)
all amounts due to it in respect of its customary fees and expenses
for the routine maintenance and operation of the Trust Accounts, and
(ii) the face amount of any checks which have been credited to the
Trust Accounts but are subsequently returned unpaid because of
uncollected or insufficient funds). Notwithstanding any provision
herein to the contrary, the securities intermediary shall have a lien
senior to that of the secured party for any amounts required for the
settlement of any purchases of financial assets.
(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 Servicers, 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. Each 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. Each 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 it 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, if
applicable, and the applicable Guarantor.
SECTION 5.4. ADDITIONAL DEPOSITS. Within two Business Days after
receipt thereof, the Eligible Lender Trustee (or a 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 each 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 Servicers
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 Servicers or TMSI under Section 4.5 when such
amounts are due, and the Sellers 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 Sellers or TMSI under Sections 3.2 or
the Sellers under Section 9.1 when such amounts are due. The Sellers, the Master
Servicers and the Administrator also shall deposit, or cause to be deposited, in
the Collection Account all amounts required to be deposited therein pursuant to,
and within the time periods provided by, Section 2.3 and all amounts remitted
pursuant to Section 5.4 (which payments shall be deemed interest payments
received on or with respect to the Financed Student Loans during the immediately
preceding Collection Period. Notwithstanding the foregoing, the Master Servicers
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 a Monthly Advance is made, a Master Servicer
receives the Guarantee Payment, Special Allowance Payment or Interest Subsidy
Payment for which such Monthly Advance was made, such 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 1998-1 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 other 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 1998-1 Notes has
the earliest Final Maturity Date of all Classes of Notes then Outstanding, for
the Class of Series 1998-1 Notes with the earliest Final Maturity Date, on the
first Note Distribution Date for such Class occurring in each month, commencing
April, 1998, 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 the first Certificate Distribution Date
occurring in each month 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 each Master Servicer, the Servicing Fee and all overdue
Servicing Fees payable to such Master Servicer, (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 applicable 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 each Master Servicer, the
aggregate unpaid amount of the Servicing Fee Carryover payable to such Master
Servicer, 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 (or
$15,000,000 for the period commencing on the Closing Date for the Series 1998-1
Notes and ending on January 15, 2000) (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 a Seller's designee pursuant to
Section 2.3(b), Student Holdings, in its capacity as a Certificateholder, 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 and Certificates only in amounts equal to $50,000 and integral
multiples of $50,000 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 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 of $50,000 in excess thereof.
SECTION 5.6. RESERVE ACCOUNT. (a) [Reserved]
(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
in writing (A) to pay to the Master Servicers 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
Servicers 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
5.5(e)(i) and under the Insurance Agreement, (E) to pay to the Collection
Account any amounts required to be paid by a Seller, a 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 such Seller
or TMSI has not made such payments within the required time period, and (F)
subject to Section 3 of the Payment Agreement to distribute the remaining amount
of such excess to TMS Student Holdings, Inc. as holder of a 1% interest in the
Class 1 Certificates, or its permitted successors, assigns or designees
("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 Servicers, 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 Servicers.
(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 Servicers 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 Servicers 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 any 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 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
remaining Pre-Funded Amount;
(xiv) 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; and
(xv) 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 Servicers to the Eligible
Lender Trustee for the Eligible Lender Trustee to forward to the holders of such
Originators' Interests.
SECTION 5.8. PRE-FUNDING ACCOUNT. (a) On the Closing Date, the Issuer
will deposit in the Pre-Funding Account $82,224,884.55 from the net proceeds of
the sale of the Series 1998-1 Notes. On each Transfer Date, the Administrator
shall instruct the Indenture Trustee in writing to withdraw from the Pre-Funding
Account an amount equal to 100% 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 Sellers of such Additional Financed Student Loans 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 1998-1 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. [Reserved].
SECTION 5.10. CAPITALIZED INTEREST ACCOUNT. On the Closing Date
relating to the Series 1998-1 Notes, the Sellers shall deposit $1,004,912 in the
Capitalized Interest Account. The Indenture Trustee also shall deposit into the
Capitalized Interest Account all amounts, if any, received pursuant to Section
5.14. 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 April 1999 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 TWIC on behalf of
the Master Servicers 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 a 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 such 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 TMSI are
referred to herein as "Monthly Advances"). Such Monthly Advances are recoverable
by 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.
SECTION 5.14. OPTIONAL DEPOSITS The Surety Provider, TMSI or any of
the Sellers shall at any time, and from time to time, with respect to a Note
Distribution Date or a Certificate Distribution Date, have the option (but shall
not be required) to deliver, or cause to be delivered, amounts to the Indenture
Trustee for deposit into the Capitalized Interest Account or, after the last
Distribution Date in July, 2000 the Collection Account.
ARTICLE VI
THE SELLERS AND THE MASTER SERVICERS
SECTION 6.1. REPRESENTATIONS OF THE SELLERS AND THE MASTER SERVICERS.
Each of the Sellers and the Master Servicers, with respect to itself, 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 Sellers, TMSI and the
Master Servicers 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 Sellers, to originate, acquire and own the Financed Student Loans,
and in the case of the Master Servicers, to service the Financed Student Loans
and hold the Financed Student Loan Files as custodian.
(b) DUE QUALIFICATION. Each 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 Sellers, the Master Servicers and
TMSI has the corporate power and authority to execute and deliver this Agreement
and to carry out its terms; each of the Sellers has full corporate power and
authority to sell 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 each of the Sellers has duly authorized such sale 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 Sellers, the Master Servicers and
TMSI by all necessary corporate action.
(d) BINDING OBLIGATION. This Agreement constitutes a legal, valid and
binding obligation of the Sellers, TMSI and the Master Servicers, 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 Sellers, TMSI or the Master
Servicers, or any indenture, agreement or other instrument to which the Sellers,
TMSI or the Master Servicers 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 Sellers, TMSI or the Master Servicers, 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 Sellers, TMSI or the Master Servicer or its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending
against the Sellers, the Master Servicers or TMSI or, to its best knowledge,
threatened against the Sellers, the Master Servicers 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 the Sellers, the Master Servicers 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 the Sellers, TMSI or the Master Servicers in connection with the
execution and delivery by the Sellers, TMSI or the Master Servicers of this
Agreement and the performance by the Sellers, TMSI or the Master Servicers 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 Sellers contained in Section 3.1.
(i) LOCATION OF FINANCED STUDENT LOAN FILES. The Financed Student Loan
Files are kept in the office of the applicable Master Servicer specified in, or
in accordance with, Section 3.4(b).
SECTION 6.2. EXISTENCE. Except as permitted by Section 6.5,during the
term of this Agreement, each of the Sellers, the Master Servicers 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 Sellers, the
Master Servicers and TMSI shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Sellers, the Master
Servicers or TMSI, as the case may be, under this Agreement.
(b) Each of the Sellers, individually, 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) Each of the Sellers, individually, 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) such Seller's willful
misfeasance, bad faith or negligence in the performance of their duties under
this Agreement, or by reason of reckless disregard of its obligations and duties
under this Agreement and (ii) such 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 Sellers 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
Sellers, which approval shall not be unreasonably withheld.
(e) The Sellers 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 Sellers' 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 Sellers 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) Each of the Master Servicers, individually, 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, such 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 a 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, such 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 such 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 Sellers, TMSI or the Master Servicers, 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 Sellers, TMSI or the Master Servicers, 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 SELLERS, THE ADMINISTRATOR OR THE MASTER SERVICERS. Any
Person (a) into which a Seller, the Administrator or a Master Servicer, as the
case may be, may be merged or consolidated, (b) which may result from any merger
or consolidation to which a Seller, the Administrator or a Master Servicer, as
the case may be, shall be a party or (c) which may succeed to the properties and
assets of a Seller, the Administrator or a Master Servicer, as the case may be,
substantially as a whole, shall be the successor to such Seller, the
Administrator or such 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 or the Administration Agreement; PROVIDED, HOWEVER, that each of the
Sellers, the Administrator and the Master Servicers 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 TWIC or ClassNotes, executes an agreement of
assumption to perform every obligation of such Seller, the Administrator or such
Master Servicer, as the case may be, under this Agreement and the Administration
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) such Seller, the Administrator or such 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 TWIC or
ClassNotes is the surviving entity, such Seller, the Administrator or such
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 THE SELLERS, THE MASTER
SERVICERS AND OTHERS. (a) The Sellers, the Master Servicers 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 Sellers, the Master Servicers nor any of their
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 or the Administration 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 Sellers
or the Master Servicers 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 or the Administration Agreement.
Except as provided in this Agreement, the Sellers and the Master
Servicers shall not be under any obligation to appear in, prosecute or defend
any legal action that shall not be incidental to their duties in accordance with
this Agreement, and that in its opinion may involve it in any expense or
liability; PROVIDED, HOWEVER, that the Sellers or the Masters Servicer may
undertake any reasonable action that they 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. SELLERS MAY OWN CERTIFICATE OR NOTES. Each 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 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 SERVICERS NOT TO RESIGN. Subject to the provisions
of Section 6.5, neither TWIC nor ClassNotes shall 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 TWIC or
ClassNotes, as the case may be, 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 Servicers, 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 TWIC 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 a 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 such 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 such
Master Servicer; or
(2) any failure by a Master Servicer or TMSI duly to observe or to
perform in any material respect any other covenants or agreements of such
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 such 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 such 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 a Master Servicer;
then, and in each and every case, so long as a 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 such 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 such Master Servicer under this Agreement. On or
after the receipt by such Master Servicer of such written notice, all authority
and power of such 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 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 a Master
Servicer or the Administrator, as the case may be, of notice of termination
pursuant to Section 8.1, or the resignation by a 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 a 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
departing 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 a 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 departing 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 departing 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, a 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 a 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, each of the Sellers 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, a 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, a 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 such Seller, the Eligible Lender Trustee and the Indenture Trustee, and shall
succeed to all interests in and to the Trust; PROVIDED, HOWEVER, that such
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
Servicers 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 Servicers 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 Servicers, 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 Servicers, 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. NOTE 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 Indenture 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 Sellers and the Master Servicers 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 Sellers and the Master
Servicers 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 Servicers, 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 Servicers, 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 Servicers, 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
Sellers, the Master Servicers 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
Sellers, the Master Servicers 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 Sellers 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 Sellers 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 of the Sellers nor the Master Servicers 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 ss. 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 Sellers and the Master Servicers 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. Each of the Master Servicers 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) Each of 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) Each of 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, such 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 such 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 a 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 applicable 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, each of the Master Servicers 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 such 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, a 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 Sellers 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 Sellers, the Master Servicers, 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 Sellers, the Master
Servicers, TMSI or Administrator, two copies, one to Trans-World Insurance
Company or ClassNotes, Inc., as applicable, 0000 X Xxxxxx, Xxxxx 000-X,
Xxxxxxxxxx, XX 00000 Attention: President (telephone: (000) 000-0000; facsimile:
(000) 000-0000) and the other to Trans-World Insurance Company or ClassNotes,
Inc., as applicable, c/o the Money Store Inc., Attention: Chief Financial
Officer, 0000 X Xxxxxx, Xxxxx 000-X, Xxxxxxxxxx, XX (telephone: (916) 000- 0000;
facsimile: (000) 000-0000)(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 The York Bank and Trust Company, c/o
Dauphin Deposit Bank and Trust Company, Attention: Corporate Trust Services, 000
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, (e) in the case of the Surety
Provider, to Ambac Assurance Corporation, Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Structured Finance/Student Loan Department (telephone:
(000) 000-0000; facsimile: (000) 000-0000), (f) in the case of Moody's to
Xxxxx'x Investors Service, Inc., 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Structured Finance Department/Student Loans (telephone: (212)
000-0000; facsimile: (000) 000-0000), and (g) in the case of Standard & Poor's,
to Standard & Poor's Corporation, 00 Xxxxxxxx (00xx Xxxxx), Xxx Xxxx, Xxx Xxxx
00000, Attention: Asset Backed Surveillance Department (telephone: (212)
000-0000; 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 a Master Servicer,
this Agreement may not be assigned by the Sellers or the Master Servicers. 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 Sellers, the Master Servicers, 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 Servicers, the Administrator and the
Sellers 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 The York 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 The York 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 Second Supplemental 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 Second
Supplemental Sale and Servicing Agreement is being entered into in connection
with the issuance by the Issuer of the Series 1998-1 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 Second Supplemental Sale and Servicing
Agreement conflicts with any term of the Sale and Servicing Agreement or any
other Supplemental Sale and Servicing Agreement, this Second Supplemental Sale
and Servicing Agreement shall control for purposes of the Series 1998-1 Notes.
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 1997-I,
by THE YORK BANK
AND TRUST
COMPANY, not in
its individual
capacity but
solely as
Eligible Lender
Trustee on
behalf of the
Trust,
BY:/s/ XXXXXXX X. XXXX
Name: Xxxxxxx X. Xxxx
Title: Vice President
TRANS-WORLD INSURANCE COMPANY d/b/a
EDUCAID, Seller, Master Servicer
and Administrator
BY:/s/ XXXXXXX XXXXXX
Name: Xxxxxxx Xxxxxx
Title: Senior Vice President
CLASSNOTES, INC., Seller and Master
Servicer
BY:/s/ XXXXXXX XXXXXX
Name: Xxxxxxx Xxxxxx
Title: Senior Vice President
THE MONEY STORE INC.
BY:/s/ XXXXXXX XXXXXX
Name: Xxxxxxx Xxxxxx
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/ XXXXX XXXXXXX
Name: Xxxxx Xxxxxxx
Title: Vice President
SCHEDULE A-1
TO THE
SECOND SUPPLEMENTAL SALE AND SERVICING AGREEMENT
SCHEDULE OF TWIC FINANCED STUDENT LOANS
[To be delivered by TWIC to the Indenture Trustee.]
SCHEDULE A-2
TO THE
SECOND SUPPLEMENTAL SALE AND SERVICING AGREEMENT
SCHEDULE OF CLASSNOTES, INC. FINANCED STUDENT LOANS
[To be delivered by ClassNotes Inc. to the Indenture Trustee.]
SCHEDULE B
TO THE
SECOND SUPPLEMENTAL SALE AND SERVICING AGREEMENT
LOCATION OF FINANCED STUDENT LOAN FILES
Documents relating to the Financed Student Loans in the custody of the
Master Servicers (including original notes) are stored at Trans-World Insurance
Company's or ClassNotes, Inc.'s offices, as applicable, located at 0000 X
Xxxxxx, Xxxxx 000-X, Xxxxxxxxxx, Xxxxxxxxxx 00000.
EXHIBIT A
TO THE
SECOND SUPPLEMENTARY SALE AND SERVICING AGREEMENT
Form of Noteholders' Statement pursuant to Section 5.7(a) of Second
Supplementary 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 $50,000
original principal
amount of Class ___
Notes)
(iii) Amount of Noteholders' Auction Rate Interest Carryover being
paid or distributed (if any) and amount remaining (if any):
(a) Class ___ Notes:
(1) Distributed:___________ ($________per
$50,000 original
principal amount of
Class ___ Notes)
(2) Balance:___________ ($________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 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
[Net Loan Rate])
(c) Class ___ Rate: _______% (based on [Auction 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] [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)
(ix) Amount of payments to the Surety Provider in reimbursement of
prior draws under any Note Surety Bond or any Certificate
Surety Bond:_______________1
(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) Amount in the Reserve Account:______________2
[(xii) Amount in the Pre-Funding Account:_____________]2
--------
1 To be included in the first Note Distribution Date of
each March, June, September or December.
2 To be included for each Note Distribution Date during the Funding
Period.
(xiv) Amount of any draw required to be made under a Note
Surety Bond (together with any other information
required to make such draw): __________________
[(xv) 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):_____________]3
(xvi) Parity Percentage, including the numerator and denominator in
determining such Parity Percentage:
(xvii) 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):______________
(xviii) Amount of Additional Principal Payments, if any, made on such
Distribution Date.
--------
3 To be included for the first Note
Distribution Date on or immediately
following the end of the Funding Period.
EXHIBIT B
TO THE
SECOND SUPPLEMENTAL SALE AND SERVICING AGREEMENT
Form of Certificateholders' Statement pursuant to Section 5.7(a) of Second
Supplemental Sale and Servicing Agreement (capitalized terms used herein ARE
DEFINED IN APPENDIX A THERETO)
Certificateholders' Distribution Date:__________________
(i) Amount of principal being paid or distributed in
respect of the Class __ Certificates:___________
($_________ per
$50,000 original
principal amount of
the Certificates)4
(ii) Amount of interest being paid or distributed in respect
of the Class __ Certificates:__________
($_________ 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 $50,000
original principal amount
of Certificates)
(iv) Pool Balance at end of preceding Collection
Period:_____________
(v) After giving effect to distributions on this
Certificate Distribution Date:
--------
4 Only after the Notes have been paid in full.
(a) (1) outstanding principal amount of Class ___
Notes:_____________
(b) (1) outstanding principal amount of Class ___
Notes:_____________
(c) outstanding principal amount of Class ___
Certificates:_____________
(d) (1) Certificate Balance:_______________
(vi) Applicable Interest Rate:
(a) In general:
(1) Auction Rate for the prior Interest Period
was _____%; and
(2) the Net Loan Rate was _____%.
(b) Certificate Rate:_____% (based on [Auction Rate] [LIBOR Rate]
[Net Loan Rate])
(c) Amount of interest that would have been paid on such
Certificate Distribution Date if interest instead was
calculated based on the [Auction Rate]
[Net Loan Rate]
(vii) (a) Amount of Servicing Fee
for related Collection
Period:_____________ ($__________ 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 any 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) Amount in the Reserve Account:____________
(xiii) Amount of any draw required to be made under a Certificate
Surety Bond (together with any other information required to
make such draw):
-------------------
[(xiv) Amount in the Pre-Funding Account:___________]5
(xiv) Parity Percentage, including the numerator and denominator in
determining such Parity Percentage:
(xv) 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):_______________
(xvi) Amount of Additional Principal Payments, if any, made on such
Distribution Date.
--------
5 To be included for each Distribution Date during the Funding Period.
EXHIBIT C
TO THE
SECOND SUPPLEMENTAL SALE AND SERVICING AGREEMENT
FORM OF ADMINISTRATOR'S CERTIFICATE
[To be provided by the Administrator pursuant to
Section 4.7 of the Second Supplemental Sale and
Servicing Agreement]
EXHIBIT D
TO THE
SECOND SUPPLEMENTAL SALE AND SERVICING AGREEMENT
ASSIGNMENT AND XXXX OF SALE FOR
INITIAL FINANCED STUDENT LOANS
For value received, in accordance with the Second Supplemental Sale
and Servicing Agreement (the " Sale and Servicing Agreement") dated as of March
17, 1998, among Trans- World Insurance Company d/b/a Educaid, as seller (a
"Seller"), as master servicer (a "Master Servicer") and as administrator (the
"Administrator"), ClassNotes, Inc., as seller (a "Seller") and as master
servicer (a "Master Servicer"), ClassNotes Trust 1997-I (the "Trust"), and The
York Bank and Trust Company, not in its individual capacity but solely as
Eligible Lender Trustee (the "Eligible Lender Trustee"), the undersigned do
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 Second 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 Sellers 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 contribution 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,
represent and warrant that the promissory notes evidencing each Initial Financed
Student Loan described in Schedule A-1 and Schedule A-2 to the Sale and
Servicing Agreement have been endorsed in the manner set forth in the Sale and
Servicing Agreement.
This Xxxx of Sale is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the Second
Supplemental Sale and Servicing Agreement and is to be governed by the Sale and
Servicing Agreement.
Capitalized terms used but not defined herein shall have the meaning
assigned to them in Appendix A to the Second Supplemental Sale and Servicing
Agreement, which also contains rules as to usage that shall be applicable
herein.
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be
duly executed as of March 17, 1997.
TRANS-WORLD INSURANCE CORPORATION
D/B/A/ EDUCAID, as Seller
By:_______________________________
Name:
Title:
CLASSNOTES, INC., as Seller
By:_______________________________
Name:
Title:
EXHIBIT E
TO THE SECOND SUPPLEMENTAL SALE AND SERVICING AGREEMENT
ASSIGNMENT AND XXXX OF SALE FOR
ADDITIONAL FINANCED STUDENT LOANS
For value received, in accordance with the Second Supplemental Sale
and Servicing Agreement (the "Second Supplemental Sale and Servicing Agreement")
dated as of March 17, 1998, among the undersigned, as seller (the "Seller"), as
master servicer (the "Master Servicer") [and as administrator (the
"Administrator")], [Trans-world Insurance Company d/b/a/ Educaid ("TWIC"), as
seller, master servicer and administrator][ClassNotes, Inc. ("ClassNotes"), as
seller and master servicer], ClassNotes Trust 1997-I (the "Trust"), and The York
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 Second 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-1][A-2] 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 Second
Supplemental Sale and Servicing Agreement)). The foregoing contribution 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- 1][A-2] hereto have been endorsed in the
manner set forth in the Sale and Servicing Agreement.
This Xxxx of Sale is made pursuant to and upon the representations,
warranties and conditions precedent on the part of the undersigned contained in
the Second Supplemental Sale and Servicing Agreement and the Insurance and
Indemnity Agreement dated as of March __, ____ (as amended from time to time,
the "Insurance Agreement") among The Money Store Inc., the Seller,
[ClassNotes][TWIC], Bankers Trust Company, as Indenture Trustee, the Eligible
Lender Trustee and AMBAC Indemnity Corporation, and is to be governed by the
Second 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 Second 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 selling such Additional Financed Student
Loan set forth in the Second 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 Second 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:_____________________________
Name:
Title:]
CLASSNOTES, INC., as Seller
By:_____________________________
Name:
Title:
SCHEDULE A
TO THE
THE XXXX OF SALE
[List of Additional Financed Student Loans
and their related Subsequent Cut-off Dates]
