[EXECUTION COPY]
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FIRST TERMS SUPPLEMENT
TO THE
INDENTURE
DATED AS OF MARCH 21, 1997
between
CLASSNOTES TRUST 1997-I
and
BANKERS TRUST COMPANY
Indenture Trustee
Dated as of March 21, 1997
Securing
$281,000,000
ASSET-BACKED NOTES
SERIES 1997-1
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions....................................................2
ARTICLE II
AUTHORIZATION, TERMS AND ISSUANCE
SECTION 2.1. Authorization of Series 1997-1 Notes...........................13
SECTION 2.2. Purposes.......................................................13
SECTION 2.3. Terms of Series 1997-1 Notes Generally.........................13
SECTION 2.4. Series 1997-1 Notes............................................14
SECTION 2.5. Class Interest Rate............................................19
SECTION 2.6. Additional Provisions Regarding the Interest
Rates on the Series 1997-1 Notes...............................36
SECTION 2.7. Qualifications of Market Agent.................................37
ARTICLE III
DISTRIBUTIONS
SECTION 3.1. Distribution of Interest and Principal.........................38
SECTION 3.2. Selection of Notes to Receive Payments
of Principal...................................................38
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. Issuer for This First Terms Supplement.........................39
SECTION 4.2. Counterparts...................................................39
SECTION 4.3. Indenture Constitutes a Security Agreement.....................39
SECTION 4.4. Governing Law..................................................39
SECTION 4.5. Ratification of Master Indenture...............................39
EXHIBIT A Form of Series 1997-1 Notes
EXHIBIT B Form of Notice of Payment Default
EXHIBIT C Form of Notice of Cure of Payment Default
EXHIBIT D Notice of Proposed Auction Period Adjustment
EXHIBIT E Notice Establishing Auction Period Adjustment
EXHIBIT F Notice of Change in Auction Date
FIRST TERMS SUPPLEMENT, dated as of March 21, 1997, between CLASSNOTES
TRUST 1997-I, a Pennsylvania business trust, (the "Issuer") acting through THE
YORK BANK AND TRUST COMPANY, a Pennsylvania bank and trust company, not in its
individual capacity but solely as eligible lender trustee (the "Eligible Lender
Trustee"), and BANKERS TRUST COMPANY, a New York banking corporation duly
established, existing and authorized to accept and execute trusts of the
character herein set out under and by virtue of the laws of the State of New
York, with its principal corporate trust office in New York, New York, (the
"Indenture Trustee"), as Indenture Trustee under a Master Indenture dated as of
March 21, 1997 (the "Master Indenture").
PRELIMINARY STATEMENT
Section 2.3 of the Master Indenture provides, among other things, that the
Issuer, as provided in the Trust Agreement, and the Indenture Trustee may enter
into an indenture supplemental to the Master Indenture for the purpose of
authorizing a Series of Notes and to specify certain terms of such Series of
Notes. The Issuer has duly authorized the creation of a Series of Notes in an
aggregate principal amount not to exceed $281,000,000 to be known as the
Issuer's Asset Backed Notes, Series 1997-1 (the "Series 1997-1 Notes"), and the
Issuer and the Indenture Trustee are executing and delivering this First Terms
Supplement in order to provide for the Series 1997-1 Notes. Except as otherwise
specified herein, or as the context may require, capitalized terms used but not
defined herein are defined in Appendix A to the Sale and Servicing Agreement
dated as of February 28, 1997 (the "Sale and Servicing Agreement") among the
Issuer, Trans- World Insurance Company (the "Administrator"), ClassNotes, Inc.,
the Eligible Lender Trustee and The Money Store Inc. ("TMSI"), which Appendix A
also contains rules as to usage that shall be applicable herein.
GRANTING CLAUSES
The Issuer hereby Grants to the Indenture Trustee, for the exclusive
benefit of the Holders of the Series 1997-1 Notes, and (other than with respect
to clause (d) below) any Series of Notes issued previously and any Series of
Notes that may be issued hereafter, all of the Issuer's right, title and
interest in and to (a) the Financed Student Loans listed in Schedule A to the
Sale and Servicing Agreement (as such Schedule may be amended from time to time
including, but not limited to, by the purchase by the Trust during the Funding
Period of any Additional Financed Student Loans) and all obligations of the
Obligors thereunder, and all written communications received by the Seller with
respect thereto (including borrower correspondence, notices of death, disability
or bankruptcy and requests for deferrals or forbearance), on and after February
28, 1997 (the "Cut-Off Date") (or, with respect to the Additional Financed
Student Loans, the applicable Subsequent Cut-Off Date), (b) all funds on deposit
from time to time in the Trust Accounts (other than the Certificate Distribution
Account) and in all investments and proceeds thereof (including all income
thereon), (c) all proceeds of the foregoing, including without limitation,
proceeds of the conversion, voluntary or involuntary, of any of the foregoing
into cash or other liquid property and (d) the Note Surety Bond relating to the
Series 1997-1 Notes. Such Grants are made, however, in trust, to secure the
Series 1997-1 Notes, any Series of Notes issued previously and any Series of
Notes issued hereafter, equally and ratably without prejudice, priority or
distinction, between any Note and any other Note by reason of difference in time
of issuance or otherwise except to the extent otherwise described herein, and to
secure (i) the payment of all amounts due on the Series 1997-1 Notes, any Series
of Notes issued previously and any Series of Notes issued hereafter, as such
amounts become due in accordance with their terms, (ii) the payment of all other
sums payable under the Master Indenture or this First Terms Supplement with
respect to the Series 1997-1 Notes, any Series of Notes issued previously and
any Series of Notes issued hereafter, and (iii) compliance with the provisions
of the Master Indenture and this First Terms Supplement with respect to the
Series 1997-1 Notes, any Series of Notes issued previously and any Series of
Notes issued hereafter, all as provided in the Master Indenture and this First
Terms Supplement.
The Indenture Trustee acknowledges such Grants, accepts the trusts
hereunder in accordance with the provisions hereof and
of the Master Indenture and agrees to perform the duties herein or therein
required to the best of its ability to the end that the interests of the Holders
of the Series 1997-1 Notes, any Series of Notes issued previously by the Issuer
and any Series of Notes issued by the Issuer hereafter may be adequately and
effectively protected.
ARTICLE I.
DEFINITIONS
"ADMINISTRATOR" means Trans-World Insurance Company d/b/a Educaid, an
Arizona insurance company, and its successors and assigns.
"ALL HOLD RATE" means ninety percent (90%) of One-Month LIBOR.
"AUCTION" means the implementation of the Auction Procedures on an Auction
Date.
"AUCTION AGENT" means the Initial Auction Agent under the Initial Auction
Agent Agreement unless and until a Substitute Auction Agent Agreement becomes
effective, after which "Auction Agent" shall mean the Substitute Auction Agent.
"AUCTION AGENT AGREEMENT" means the Initial Auction Agent Agreement unless
and until a Substitute Auction Agent Agreement is entered into, after which
"Auction Agent Agreement" shall mean such Substitute Auction Agent Agreement.
"AUCTION AGENT FEE" has the meaning set forth in the Auction Agent
Agreement.
"AUCTION AGENT FEE RATE" has the meaning set forth in the Auction Agent
Agreement.
"AUCTION DATE" means, initially, with respect to the Class A-1 Notes, March
26, 1997 for the initial Auction Period and April 4, 1997 for the second Auction
Period; with respect to the Class A-2 Notes, March 26, 1997 for the initial
Auction Period and April 22 for the second Auction Period; with respect to the
Class A-3 Notes, April 1, 1997; and thereafter, the Business Day immediately
preceding the first day of each Auction Period for each respective Class, other
than:
(a) each Auction Period commencing after the
ownership of such Class of Series 1997-1
Notes is no longer maintained in Book-Entry
Form by the Securities Depository;
(b) each Auction Period commencing after and
during the continuance of an Event of
Default; or
(c) each Auction Period commencing less than two
Business Days after the cure or waiver of
an Event of Default.
Notwithstanding the foregoing, the Auction Date for one or more Auction
Periods may be changed pursuant to Section 2.5.8 of this Terms Supplement.
"AUCTION PERIOD" means, with respect to each Class of Series 1997-1 Notes,
the Interest Period applicable to such Class of Notes during which time the
related Class Interest Rate is determined pursuant to Section 2.5.1 hereof,
which Auction Period (after the Initial Period for such Class) initially shall
consist generally of 7 days with respect to the Class A-1 Notes and 28 days with
respect to the Class A-2 and Class A-3 Notes, as the same may be adjusted
pursuant to Section 2.5.7 hereof.
"AUCTION PERIOD ADJUSTMENT" means an adjustment to the Auction Period as
provided in Section 2.5.7 hereof.
"AUCTION PROCEDURES" means the procedures set forth in Section 2.5.1 hereof
by which the Auction Rate is determined.
"AUCTION RATE" means the rate of interest per annum that results from
implementation of the Auction Procedures and is determined as described in
Section 2.5.1(c)(ii) hereof.
"AUTHORIZED DENOMINATIONS" means, with respect to any Class of Notes,
$50,000 and integral multiples of $50,000 in excess thereof.
"AVAILABLE SERIES 1997-1 NOTES" has the meaning set forth in Section
2.5.1(c)(i)(A) hereof.
"BID" has the meaning set forth in Section 2.5.1(a)(i) hereof.
"BID AUCTION RATE" has the meaning set forth in Section 2.5.1(c)(i) hereof.
"BIDDER" has the meaning set forth in Section 2.5.1(a)(i) hereof.
"BOND EQUIVALENT YIELD - 91-DAY T-XXXX" means, in respect of any security
with a maturity of six months or less the rate for which is quoted in THE WALL
STREET JOURNAL (Eastern Edition) on a bank discount basis, a yield (expressed as
a percentage) calculated in accordance with the following formula and rounded up
to the nearest one one-hundredth of one percent:
Bond Equivalent Yield = Q X N x 100
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360 - (91 x Q)
where "Q" refers to the per annum rate for the security quoted on a bank
discount basis and expressed as a decimal, and "N" refers to 365 or 366 (days),
as the case may be.
"BOOK-ENTRY FORM" or "BOOK-ENTRY SYSTEM" means a form or system under which
(i) the beneficial right to principal and interest may be transferred only
through a book entry, (ii) physical securities in registered form are issued
only to a Securities Depository or its nominee as registered owner, with the
securities "immobilized" to the custody of the Securities Depository, and (iii)
the book entry is the record that identifies the owners of beneficial interests
in that principal and interest.
"BROKER-DEALER" means Xxxxx Xxxxxx Inc. or any other broker or dealer (each
as defined in the Securities Exchange Act of 1934, as amended), commercial bank
or other entity permitted by law to perform the functions required of a
Broker-Dealer set forth in the Auction Procedures that (a) is a Participant (or
an affiliate of a Participant), (b) has been appointed as such by the Trust
pursuant to Section 2.5.6 hereof or the Administrator on behalf of the Eligible
Lender Trustee pursuant to the Trust Agreement and (c) has entered into a
Broker-Dealer Agreement that is in effect on the date of reference.
"BROKER-DEALER AGREEMENT" means each agreement between the Auction Agent
and a Broker-Dealer, and approved by the Administrator on behalf of the Issuer,
pursuant to which the Broker-Dealer agrees to participate in Auctions as set
forth in the Auction Procedures, as from time to time amended or supplemented.
Each Broker-Dealer Agreement shall be in substantially the form of the
Broker-Dealer Agreement dated as of March 21, 1997 between Bankers Trust
Company, as Auction Agent, and Xxxxx Xxxxxx Inc., as Broker-Dealer.
"BROKER-DEALER FEE" has the meaning set forth in the Auction Agent
Agreement.
"BROKER-DEALER FEE RATE" has the meaning set forth in the Auction Agent
Agreement.
"BUSINESS DAY" means any day on which the New York Stock Exchange is open
for trading and any day other than a Saturday, a Sunday or a day on which
banking institutions or trust companies in New York, California, New Jersey or
Pennsylvania are authorized or obligated by law, regulation or executive order
to remain closed.
"CLASS A-1 NOTES", "CLASS A-2 NOTES" and "CLASS A-3 NOTES" have the
meanings set forth in Section 2.1 herein.
"CLASS INITIAL PERIOD" means, as to a Class of the Series 1997-1 Notes, the
period commencing on the Closing Date and continuing through the day immediately
preceding the Class Initial Rate Adjustment Date for such Class.
"CLASS INITIAL RATE" means 5.40% per annum for the Class A-1 Notes, 5.40%
per annum for the Class A-2 Notes, and 5.50% per annum for the Class A-3 Notes.
"CLASS INITIAL RATE ADJUSTMENT DATE" means (i) with respect to the Class
X-0 Xxxxx, Xxxxx 00, 0000, (xx) with respect to the Class A-2 Notes, March 27,
1997, and (iii) with respect to the Class A-3 Notes, April 2, 1997.
"CLASS INTEREST PERIOD" means, with respect to a Class of Series 1997-1
Notes, the applicable Class Initial Period and each period commencing on a Class
Rate Adjustment Date for such Class and ending on the day before (i) the next
Class Rate Adjustment Date for such Class or (ii) the Final Maturity Date of
such Class, as applicable.
"CLASS INTEREST RATE" means each variable rate of interest per annum borne
by a Class of the Series 1997-1 Notes for each Class Interest Period and
determined in accordance with the provisions of Sections 2.4 and 2.5 hereof;
provided, however, that in the event of an Event of Default, the Class Interest
Rate shall equal the Non-Payment Rate; provided, further, however that such
Class Interest Rate shall in no event exceed the Class Interest Rate Limitation.
"CLASS INTEREST RATE LIMITATION" means, with respect to each Class of
Series 1997-1 Notes, a rate equal to 16.0% per annum.
"CLASS RATE ADJUSTMENT DATE" means the date on which an Interest Rate is
effective, and means the date of commencement of each related Auction Period.
"CLASS RATE DETERMINATION DATE" means, with respect to any Class of Series
1997-1 Notes, the related Auction Date, or if no Auction Date is applicable to
such Series 1997-1 Notes, the Business Day immediately preceding the date of
commencement of the related Auction Period.
"CLOSING DATE" means with respect to the Series 1997-1 Notes, March 21,
1997, the date of initial issuance and delivery of the Series 1997-1 Notes
hereunder.
"CUT-OFF DATE" means, with respect to the Series 1997-1 Notes, February 28,
1997.
"EFFECTIVE INTEREST RATE" means, for any Financed Student Loan and any
Collection Period, the per annum rate at which such Financed Student Loan
accrues interest during such Collection Period, and in the case of a Federal
Loan, after giving effect to all applicable Interest Subsidy Payments and
Special Allowance Payments due with respect to such Federal Loan.
"EVENT OF DEFAULT" means, with respect to the Series 1997-1 Notes, (i) a
default in the due and punctual payment of any installment of interest or
principal on any Class of Series 1997-1 Notes, or (ii) a default in the due and
punctual payment of any interest on and principal of any Class of Series 1997-1
Notes at their respective Final Maturity Date.
"EXISTING NOTEHOLDER" means (i) with respect to and for the purpose of
dealing with the Auction Agent in connection with an Auction, a Person who is a
Broker-Dealer listed in the Existing Noteholder Registry at the close of
business on the Business Day immediately preceding such Auction and (ii) with
respect to and for the purpose of dealing with the Broker-Dealer in connection
with an Auction, a Person who is a beneficial owner of any Class of Series
1997-1 Notes.
"EXISTING NOTEHOLDER REGISTRY" means the registry of Persons who are owners
of the Series 1997-1 Notes, maintained by the Auction Agent as provided in the
Auction Agent Agreement.
"FEDERAL FUNDS RATE" means, for any date of determination, the Federal
funds (effective) rate as published on page 118 of the Dow Xxxxx Telerate
Service (or such other page as may replace that page on that service for the
purpose of displaying comparable rates or prices) on the immediately preceding
Business Day. If no such rate is published on such page on such day, "Federal
Funds Rate" shall mean for any date of determination, the Federal funds
(effective) rate as published by the Federal Reserve Board in the most recent
edition of Federal Reserve Statistical Release No. H.15 (519) that is available
on the Business Day immediately preceding such date.
"FINAL MATURITY DATE" means April 1, 2016 with respect to the Class A-1
Notes; April 1, 2017 with respect to the Class A-2 Notes; and April 1, 2018 with
respect to the Class A-3 Notes.
"FIRST TERMS SUPPLEMENT" means this First Terms Supplement, as from time to
time amended or supplemented.
"FUNDING PERIOD" means, with respect to the Series 1997-1 Notes, the period
beginning on the Closing Date and ending on the first to occur of (a) the Note
Distribution Date on which the amount on deposit in the Pre-Funding Account
(after giving effect to any transfers therefrom in connection with any
Additional Fundings on or prior to such Note Distribution Date) is less than
$200,000, (b) the date on which an Event of Default, a Master Servicer Default
or an Administrator Default occurs, (c) the date on which an Insolvency Event
occurs with respect to any Seller and (d) the close of business on September 30,
1997.
"HOLD ORDER" has the meaning set forth in Section 2.5.1(a)(i) hereof.
"INITIAL AUCTION AGENT" means Bankers Trust Company, a New York banking
corporation, its successors and assigns.
"INITIAL AUCTION AGENT AGREEMENT" means the Auction Agent Agreement dated
as of March 21, 1997, by and among the Issuer, the Indenture Trustee and the
Initial Auction Agent, including any amendment thereof or supplement thereto.
"INTEREST PERIOD" means, with respect to any Class of Series 1997-1 Notes,
the respective Class Interest Period.
"INTEREST RATE" means, with respect to a Class of the Series 1997-1 Notes,
the rate of interest per annum borne by such Class as of the time referred to,
including, without limitation, the related Class Initial Rate and the related
Class Interest Rate.
"LIBOR DETERMINATION DATE" means, with respect to a Class of the Series
1997-1 Notes, the date which is both a Business Day and a London Banking Day
prior to the commencement of each related Interest Period.
"LONDON BANKING DAY" means any Business Day on which dealings in deposits
in United States dollars are transacted in the London interbank market.
"MARKET AGENT" means Xxxxx Xxxxxx Inc., New York, New York, in such
capacity hereunder, or any successor to it in such capacity hereunder.
"MASTER INDENTURE" means the Master Indenture dated as of March 21, 1997,
as amended from time to time, between the Issuer and the Indenture Trustee.
"MAXIMUM AUCTION RATE" means, with respect to the Series 1997-1 Notes, (i)
for Auction Periods of 34 days or less, either (A) the greater of (1) One-Month
LIBOR plus 0.60% or (2) the Federal Funds Rate plus 0.60% (if both ratings
assigned by the Rating Agencies to the Series 1997-1 Notes or the Certificates,
as applicable, are "Aa3" or "AA-" or better) or (B) One-Month LIBOR plus 1.50%
(if any one of the ratings assigned by the Rating Agencies to the Series 1997-1
Notes or the Certificates, as applicable, is less than "Aa3" or "AA-") or (ii)
for Auction Periods of greater than or equal to 35 days, either (A) the greater
of One-Month LIBOR or Three-Month LIBOR, plus in either case, 0.60% (if both of
the ratings assigned by the Rating Agencies to the Series 1997-1 Notes or the
Certificates, as applicable, are "Aa3" or "AA-" or better) or (B) the greater of
One-Month LIBOR or Three-Month LIBOR, plus in either case, 1.50% (if any one of
the ratings assigned by the Rating Agencies to the Series 1997-1 Notes or the
Certificates, as applicable, is less than "Aa3" or "AA-"). For purposes of the
Auction Agent and the Auction Procedures, the ratings referred to in this
definition shall be the last ratings of which the Auction Agent has been given
notice pursuant to the Auction Agent Agreement.
"NET LOAN RATE" means, for any Interest Period, the weighted average
Effective Interest Rate for the Collection Period immediately preceding such
Interest Period less 1.60%.
"NINETY-ONE DAY UNITED STATES TREASURY XXXX RATE" means that rate of
interest per annum equal to the Bond Equivalent Yield - 91-Day T-Xxxx on the
91-Day United States Treasury Bills sold at the last auction thereof that
immediately precedes the Class Rate Adjustment Date for the Class of Series
1997-1 Notes to which the Net Loan Rate applies.
"NON-PAYMENT RATE" means One-Month LIBOR plus 1.50%.
"NOTEHOLDERS' AUCTION RATE INTEREST CARRYOVER" means, as to any Class of
Series 1997-1 Notes, with respect to any Interest Period for which the Class
Interest Rate for such Interest Period is based on the Net Loan Rate, the amount
equal to the excess, if any, of (a) the amount of interest on such Class of
Notes that would have accrued in respect of the related Interest Period had
interest been calculated based on the applicable Auction Rate over (b) the
amount of interest on such Class of Notes actually accrued in respect of such
Interest Period based on the Net Loan Rate, together with the unpaid portion of
any such excess from prior Interest Periods (and interest accrued thereon, to
the extent permitted by law, at the applicable rate calculated based on
One-Month LIBOR); PROVIDED, HOWEVER, that, with respect to any Class of Series
1997-1 Notes, on the related Final Maturity Date, the portion of the
Noteholders' Auction Rate Interest Carryover allocable to such Class of Notes
will be equal to the lesser of (i) the portion allocable to such Class of Notes
of the Noteholders' Auction Rate Interest Carryover on such date determined as
described above and (ii) the amount of funds, if any, required and available to
be distributed to such Class of Notes on such date pursuant to Sections
5.5(e)(iv) and 5.6(b)(B) of the Sale and Servicing Agreement.
"NOTEHOLDERS' INTEREST CARRYOVER" means, as to any Class of Series 1997-1
Notes, the related Noteholders' Auction Rate Interest Carryover.
"NOTE DISTRIBUTION DATE" means, with respect to each Class of Series 1997-1
Notes, (A) with respect to distributions of interest, the first Business Day
following the expiration of each Interest Period for such Class of Series 1997-1
Notes, commencing (i) March 27, 1997, with respect to the Class A-1 Notes, (ii)
March 27, 1997, with respect to the Class A-2 Notes and (iii) April 2, 1997,
with respect to the Class A-3 Notes and (B) with respect to distributions of
principal, the first Business Day following the expiration of the first Interest
Period for such Class of Series 1997-1 Notes ending in each month, commencing
April 1997.
"NOTE SURETY BOND" means each surety bond issued by the Surety Provider in
favor of the Eligible Lender Trustee for the benefit of the holders of the
related Class of Series 1997-1 Notes.
"NOTICE OF FEE RATE CHANGE" means a notice of a change in the Auction Agent
Fee Rate or the Broker-Dealer Fee Rate substantially in the form of Exhibit E to
the Auction Agent Agreement.
"ONE-MONTH LIBOR" means the London interbank offered rate for deposits in
U.S. dollars having a maturity of one month commencing on the related LIBOR
Determination Date (the "Index Maturity") which appears on Telerate Page 3750 as
of 11:00 a.m., London time, on such LIBOR Determination Date. If such rate does
not appear on Telerate Page 3750, the rate for that day will be determined on
the basis of the rates at which deposits in U.S. dollars, having the Index
Maturity and in a principal amount of not less than U.S. $1,000,000, are offered
at approximately 11:00 a.m., London time, on such LIBOR Determination Date to
prime banks in the London interbank market by the Reference Banks. The Auction
Agent will request the principal London office of each of such Reference Banks
to provide a quotation of its rate. If at least two such quotations are
provided, the rate for that day will be the arithmetic mean of the quotations.
If fewer than two quotations are provided, the rate for that day will be the
arithmetic mean of the rates quoted by major banks in New York City, selected by
the Auction Agent, at approximately 11:00 a.m., New York City time, on such
LIBOR Determination Date for loans in U.S. dollars to leading European banks
having the Index Maturity and in a principal amount equal to an amount of not
less than U.S. $1,000,000; provided that if the banks selected as aforesaid are
not quoting as mentioned in this sentence, One-Month LIBOR in effect for the
applicable Interest Period will be One-Month LIBOR in effect for the previous
Interest Period.
"ORDER" has the meaning set forth in Section 2.5.1(a)(i) hereof.
"PAYMENT DEFAULT" means, with respect to any Class of Series 1997-1 Notes,
a default in the due and punctual payment of any Noteholders' Interest
Distribution Amount or Noteholders' Principal Distribution Amount on the related
Note Distribution Date or Final Maturity Date, as applicable.
"POTENTIAL NOTEHOLDER" means any Person (including an Existing Noteholder
that is (i) a Broker-Dealer when dealing with the Auction Agent and (ii) a
potential beneficial owner when dealing with a Broker-Dealer) who may be
interested in acquiring Series 1997-1 Notes (or, in the case of an Existing
Noteholder thereof, an additional principal amount of Series 1997-1 Notes).
"RECORD DATE" means, with respect to a Class of the Series 1997-1 Notes,
the close of business on the second Business Day immediately preceding the
related Note Distribution Date.
"REMARKETING AGENT" means a remarketing agent designated under a
Remarketing Agreement.
"REMARKETING AGREEMENT" means any remarketing agreement hereafter entered
into by the Issuer and a remarketing agent with respect to the Series 1997-1
Notes, as originally executed and as from time to time amended or supplemented
in accordance with the terms thereof.
"SELL ORDER" has the meaning set forth in Section 2.5.1(a)(i) hereof.
"SUBMISSION DEADLINE" means 12:30 p.m., eastern time, on any Auction Date
or such other time on any Auction Date by which Broker-Dealers are required to
submit Orders to the Auction Agent as specified by the Auction Agent from time
to time.
"SUBMITTED BID" has the meaning set forth in Section 2.5.1(c)(i) hereof.
"SUBMITTED HOLD ORDER" has the meaning set forth in Section 2.5.1(c)(i)
hereof.
"SUBMITTED ORDER" has the meaning set forth in Section 2.5.1(c)(i) hereof.
"SUBMITTED SELL ORDER" has the meaning set forth in Section 2.5.1(c)(i)
hereof.
"SUBSTITUTE AUCTION AGENT" means the Person with whom the Indenture Trustee
enters into a Substitute Auction Agent Agreement.
"SUBSTITUTE AUCTION AGENT AGREEMENT" means an auction agent agreement
containing terms substantially similar to the terms of the Initial Auction Agent
Agreement, whereby a Person having the qualifications required by Section 2.5.5
of this First Terms Supplement agrees with the Indenture Trustee and the Issuer
to perform the duties of the Auction Agent under this First Terms Supplement.
"SUFFICIENT BIDS" has the meaning set forth in Section 2.5.1(c)(i) hereof.
"TELERATE PAGE 3750" means the display page so designated on the Dow Xxxxx
Telerate Service (or such other page as may replace that page on that service
for the purpose of displaying comparable rates or prices).
"THREE-MONTH LIBOR" means the London interbank offered rate for deposits in
U.S. dollars having a maturity of three months commencing on the related LIBOR
Determination Date (the "Three-Month Index Maturity") which appears on Telerate
Page 3750 as of 11:00 a.m., London time, on such LIBOR Determination Date. If
such rate does not appear on Telerate Page 3750, the rate for that day will be
determined on the basis of the rates at which deposits in U.S. dollars, having
the Three Month Index Maturity and in a principal amount of not less than U.S.
$1,000,000, are offered at approximately 11:00 a.m., London time, on such LIBOR
Determination Date to prime banks in the London interbank market by the
Reference Banks. The Auction Agent will request the principal London office of
each of such Reference Banks to provide a quotation of its rate. If at least two
such quotations are provided, the rate for that day will be the arithmetic mean
of the quotations. If fewer than two quotations are provided, the rate for that
day will be the arithmetic mean of the rates quoted by major banks in New York
City, selected by the Auction Agent, at approximately 11:00 a.m., New York City
time, on such LIBOR Determination Date for loans in U.S. dollars to leading
European banks having the Three Month Index Maturity and in a principal amount
equal to an amount of not less than U.S. $1,000,000; provided that if the banks
selected as aforesaid are not quoting as mentioned in this sentence, Three-Month
LIBOR in effect for the applicable Interest Period will be Three-Month LIBOR in
effect for the previous Interest Period.
ARTICLE II.
AUTHORIZATION, TERMS AND ISSUANCE
SECTION 2.1. AUTHORIZATION OF SERIES 1997-1 NOTES. There is hereby
authorized the borrowing of funds, and to evidence such borrowing there are
hereby authorized three Classes of Series 1997-1 Notes (collectively, the
"Series 1997-1 Notes"), designated (i) the "ClassNotes Trust 1997-I Asset-Backed
Notes, Series 1997-1, Class A-1" (the "Class A-1 Notes") in the aggregate
principal amount of $93,000,000, (ii) the "ClassNotes Trust 1997-I Asset-Backed
Notes, Series 1997-1, Class A-2" (the "Class A-2 Notes") in the aggregate
principal amount of $93,000,000, and (iii) the "ClassNotes Trust 1997-I
Asset-Backed Notes, Series 1997-1, Class A-3" (the "Class A-3 Notes") in the
aggregate principal amount of $95,000,000.
SECTION 2.2. PURPOSES. The Series 1997-1 Notes are authorized to finance
the acquisition by the Issuer of Financed Student Loans, and to make deposits to
the Trust Accounts required hereby.
SECTION 2.3. TERMS OF SERIES 1997-1 NOTES GENERALLY. The Series 1997-1
Notes shall be issued in fully registered form, in substantially the form set
forth in Exhibit A hereof, in each case with such variations, omissions and
insertions as may be required by the circumstances, as may be required or
permitted by the Master Indenture and this First Terms Supplement, or be
consistent with the Master Indenture and this First Terms Supplement and
necessary or appropriate to conform to the rules and requirements of any
governmental authority or any usage or requirement of law with respect thereto.
The Series 1997-1 Notes may be issued only in Authorized Denominations. The
Series 1997-1 Notes shall be dated as of the Closing Date. Each Class of Notes
shall mature on its Final Maturity Date. Each Class of Series 1997-1 Notes shall
be numbered consecutively from 1 upwards with the prefix A-[Class Designation]-
preceding each number. The Series 1997-1 Notes shall be issued to a Securities
Depository for use in a Book- Entry System in accordance with the provisions of
Section 2.13 of the Indenture.
Interest on each Series 1997-1 Note shall accrue on the Outstanding Amount
of such Series 1997-1 Note until such Series 1997-1 Note has been paid in full
or payment has been duly provided for, as the case may be, and shall accrue from
the later of the initial date thereof or the most recent Note Distribution Date
to which interest has been paid or duly provided for. Each Series 1997-1 Note
shall bear interest at an interest rate determined in accordance with the
provisions and subject to the limitations set forth herein, and interest on a
Class of the Series 1997-1 Notes shall be paid for the related Class Initial
Period and each Class Interest Period for such Class thereafter on each Note
Distribution Date for such Class and on each date of payment of principal
thereof to the extent of interest accrued on the principal then being paid.
Principal will be paid to the then Outstanding Class of Series 1997-1 Notes
with the earliest Final Maturity Date on the first Note Distribution Date
occurring in each month, beginning April 1997, for such Class in an amount equal
to the Noteholder's Principal Distribution Amount on such Note Distribution
Date; provided, however, that if any Class of a Series of Notes issued hereafter
has an earlier Final Maturity Date than any Class of Series 1997-1 Notes,
principal will be paid to each such Class of subsequently issued Notes with an
earlier Final Maturity Date prior to the Class or Classes of Series 1997-1 Notes
with a later Final Maturity Date.
SECTION 2.4. SERIES 1997-1 NOTES. The Initial Rate Adjustment Date for each
Class of Notes shall be the Class Initial Rate Adjustment Date.
During the related Class Initial Period, each Class of Series 1997-1 Notes
shall bear interest at the Class Initial Rate for such Class. Thereafter, (i)
except with respect to an Auction Period Adjustment, the Class A-1 Notes shall
bear interest at a Class Interest Rate based on a 7-day Auction Period, as
determined pursuant to this Section 2.4 and Section 2.5 hereof, and (i) except
with respect to an Auction Period Adjustment, the Class A-2 and Class A-3 Notes
shall bear interest at a Class Interest Rate based on a 28-day Auction Period,
as determined pursuant to this Section 2.4 and Section 2.5 hereof.
For each Class of the Series 1997-1 Notes during the Class Initial Period
for such Class and each Interest Period thereafter, interest at the Class
Interest Rate shall accrue daily and shall be computed for the actual number of
days elapsed on the basis of a year consisting of 360 days.
The Class Interest Rate to be borne by each Class of Series 1997-1 Notes
after such Class Initial Period for each Auction Period until an Auction Period
Adjustment, if any, shall be determined as herein described. Each such Auction
Period shall commence on and include the first Business Day following the
expiration of the immediately preceding Auction Period and terminate on and
include (i) with respect to the Class A-1 Notes, the Tuesday of the following
week, subject to adjustment as described below in the event that any such
Tuesday is not a Business Day, (ii) with respect to the Class A-2 Notes, the
second Business Day of the fourth following week, and (iii) with respect to the
Class A-3 Notes, the second Business Day of the fourth following week; provided,
however, that in the case of the Auction Period that immediately follows the
Class Initial Period for a Class of Series 1997-1 Notes, such Auction Period
shall commence on the Class Initial Rate Adjustment Date for such Class. The
Class Interest Rate on each Class of Series 1997-1 Notes for each Auction Period
shall be the lesser of the (i) Net Loan Rate in effect for such Auction Period
and (ii) the Auction Rate in effect for such Auction Period as determined in
accordance with Section 2.5.1 hereof; provided that if, on any Class Rate
Determination Date relating to a Class of Series 1997- 1 Notes, an Auction is
not held for any reason, then the Class Interest Rate on such Class of Series
1997-1 Notes for the next succeeding Auction Period shall be the Net Loan Rate.
Notwithstanding the foregoing:
(a) if the ownership of a Class of Series 1997-1 Notes is no longer
maintained in Book-Entry Form, the Class Interest Rate on such Class of Series
1997-1 Notes for any Class Interest Period commencing after the delivery of
certificates representing the Notes of such Class pursuant to Section 2.15 of
the Master Indenture shall equal the lesser of (i) the Maximum Auction Rate and
(ii) the Net Loan Rate on the Business Day immediately preceding the first day
of such subsequent Class Interest Period; or
(b) if an Event of Default shall have occurred, the Class Interest Rate on
each Class of the Series 1997-1 Notes for the Class Interest Period for such
Class commencing on or immediately after such Event of Default, and for each
Class Interest Period thereafter, to and including the Class Interest Period, if
any, during which, or commencing less than two Business Days after, such Event
of Default is cured in accordance with this First Terms Supplement, shall equal
the Non-Payment Rate on the first day of each such Class Interest Period.
In accordance with Section 2.5.1(c)(ii) hereof, the Auction Agent shall
promptly give written notice to the Indenture Trustee, the Eligible Lender
Trustee and the Surety Provider of each Class Interest Rate (unless the Class
Interest Rate is the Non-Payment Rate) and either the Auction Rate or the Net
Loan Rate, as the case may be, when such rate is not the Class Interest Rate,
applicable to each Class of Series 1997-1 Notes. The Indenture Trustee shall
notify the related Noteholders of the Class Interest Rate applicable to such
Class of Notes for each Auction Period on the second Business Day of such
Auction Period.
In the event that the day on which an Auction Period for a Class of Series
1997-1 Notes would otherwise be scheduled to expire is not a Business Day, the
expiration date and Note Distribution Date for such Auction Period then in
effect, if applicable, and the Class Rate Determination Date and commencement
date for the immediately following Class Interest Period for such Class of
Series 1997-1 Notes shall be the next succeeding Business Day.
Notwithstanding any other provision of the Series 1997- 1 Notes or this
First Terms Supplement and except for the occurrence of an Event of Default,
interest payable on each Class of Series 1997-1 Notes for an Auction Period
shall never exceed for such Auction Period the amount of interest payable at the
Net Loan Rate (subject to the Class Interest Rate Limitation) in effect for such
Auction Period.
If the Auction Rate for a Class of Series 1997-1 Notes is greater than the
Net Loan Rate, then the Class Interest Rate applicable to such Class of Series
1997-1 Notes for that Class Interest Period will be the Net Loan Rate. If the
Class Interest Rate applicable to such Class of Series 1997-1 Notes for any
Class Interest Period is the Net Loan Rate, the Indenture Trustee shall
determine the Noteholders' Interest Carryover, if any, with respect to such
Class of Series 1997-1 Notes for such Class Interest Period. Such determination
of the Noteholders' Interest Carryover shall be made separately for each Class
of Series 1997- 1 Notes. Such Noteholders' Interest Carryover shall bear
interest calculated at a rate equal to One-Month LIBOR (as determined by the
Auction Agent, provided the Indenture Trustee has received notice of One-Month
LIBOR from the Auction Agent, and if the Indenture Trustee shall not have
received such notice from the Auction Agent, then as determined by the Indenture
Trustee) from the Note Distribution Date for the Class Interest Period with
respect to which such Noteholders' Interest Carryover was calculated, until
paid. For purposes of this First Terms Supplement, any reference to "principal"
or "interest" herein shall not include within the meaning of such words
Noteholders' Interest Carryover or any interest accrued on any such Noteholders'
Interest Carryover. Such Noteholders' Interest Carryover shall be separately
calculated for each Series 1997-1 Note of such Class by the Indenture Trustee
during such Class Interest Period in sufficient time for the Indenture Trustee
to give notice to each Noteholder of such Noteholders' Interest Carryover as
required in the next succeeding sentence. On the Note Distribution Date for a
Class Interest Period with respect to which such Noteholders' Interest Carryover
for a Class of Series 1997-1 Notes has been calculated by the Indenture Trustee,
the Indenture Trustee shall give written notice to each Noteholder of the
applicable Class of the Noteholders' Interest Carryover applicable to each
Noteholder's Series 1997-1 Note of such Class, which written notice may be
included in any other written statement sent by the Indenture Trustee to such
Noteholders, and shall be mailed on such Note Distribution Date by first-class
mail, postage prepaid, to each such Noteholder at such Noteholder's address as
it appears on the registration books maintained by the Note Registrar. Such
notice shall state, in addition to such Noteholders' Interest Carryover, that,
unless and until the Final Maturity Date for such Class of Series 1997-1 Note
has occurred (after which all accrued Noteholders Interest Carryover (and all
accrued interest thereon) that remains unpaid shall be cancelled and no
Noteholders' Interest Carryover (and interest accrued thereon) shall be paid
with respect to a Series 1997-1 Note of such Class), (i) the Noteholders'
Interest Carryover (and interest accrued thereon calculated at a rate equal to
One-Month LIBOR) shall be paid by the Indenture Trustee on a Series 1997-1 Note
of such Class on the first occurring Note Distribution Date for such Class for a
subsequent Class Interest Period if and to the extent that (1) during such Class
Interest Period no additional Noteholders' Interest Carryover is accruing on
such Class of Series 1997-1 Notes and (2) moneys are available pursuant to the
terms of this First Terms Supplement in an amount sufficient to pay all or a
portion of such Noteholders' Interest Carryover and (ii) interest shall accrue
on the Noteholders' Interest Carryover at a rate equal to One-Month LIBOR until
such Noteholders' Interest Carryover is paid in full or the related Final
Maturity Date occurs.
The Noteholders' Interest Carryover for a Class of Series 1997-1 Notes
shall be paid by the Indenture Trustee on Outstanding Series 1997-1 Notes of
such Class on the Note Distribution Date for such Class following the first
occurring Note Distribution Date for a subsequent Class Interest Period if and
to the extent that (i) during such Class Interest Period no additional
Noteholders' Interest Carryover is accruing on such Class of Series 1997-1 Notes
and (ii) moneys are available pursuant to the terms of this First Terms
Supplement in an amount sufficient to pay all or a portion of such Noteholders'
Interest Carryover. Any Noteholders' Interest Carryover (and any interest
accrued thereon) on any Series 1997-1 Note which is due and payable on the
related Final Maturity Date shall be paid to the Noteholder thereof on said
Final Maturity Date to the extent that moneys are available therefor in
accordance with the provisions of this First Terms Supplement; provided,
however, that any Noteholders' Interest Carryover (and any interest accrued
thereon) which is not yet due and payable on said Final Maturity Date shall be
cancelled with respect to said Series 1997-1 Note on said Final Maturity Date.
To the extent that any portion of the Noteholders' Interest Carryover for a
Class of Series 1997-1 Notes remains unpaid after payment of a portion thereof,
such unpaid portion of the Noteholders' Interest Carryover shall be paid in
whole or in part as required hereunder until fully paid by the Indenture Trustee
on the next occurring Note Distribution Date or Dates, as necessary, for a
subsequent Class Interest Period or Periods for such Class, if and to the extent
that the conditions in the second preceding sentence are satisfied. On any Note
Distribution Date on which the Indenture Trustee pays only a portion of the
Noteholders' Interest Carryover on a Series 1997-1 Note of such Class, the
Indenture Trustee shall give written notice in the manner set forth in the
immediately preceding paragraph to the Noteholder of such Series 1997-1 Note
receiving such partial payment of the Noteholders' Interest Carryover remaining
unpaid on such Series 1997-1 Note.
The Note Distribution Date in such subsequent Class Interest Period on
which such Noteholders' Interest Carryover for a Class of Series 1997-1 Notes
shall be paid shall be determined by the Indenture Trustee in accordance with
the provisions of the immediately preceding paragraph, and the Indenture Trustee
shall make payment of the Noteholders' Interest Carryover in the same manner as,
and from the same Account from which, it pays interest on the Series 1997-1
Notes on a Note Distribution Date.
In the event that the Auction Agent no longer determines, or fails to
determine, when required, the Class Interest Rate with respect to a Class of
Series 1997-1 Notes, or, if for any reason such manner of determination shall be
held to be invalid or unenforceable by a court of competent jurisdiction, the
Class Interest Rate for the next succeeding Class Interest Period for such Class
of Series 1997-1 Notes shall be the Net Loan Rate as determined by the
Administrator (which is responsible for notifying the Auction Agent of such Net
Loan Rate), for such next succeeding Interest Period.
SECTION 2.5. CLASS INTEREST RATE.
SECTION 2.5.1. DETERMINING THE CLASS INTEREST RATE FOR SERIES 1997-1 NOTES.
By purchasing Series 1997-1 Notes, whether in an Auction or otherwise, each
purchaser of the Series 1997-1 Notes, or its Broker-Dealer, must agree and shall
be deemed by such purchase to have agreed (i) to participate in Auctions on the
terms described herein, (ii) to have its beneficial ownership of the Series
1997-1 Notes maintained at all times in Book-Entry Form for the account of its
Participant, which in turn will maintain records of such beneficial ownership
and (iii) to authorize such Participant to disclose to the Auction Agent such
information with respect to such beneficial ownership as the Auction Agent may
request.
So long as the ownership of a Class of Series 1997-1 Notes is maintained in
Book-Entry Form, an Existing Noteholder may sell, transfer or otherwise dispose
of Series 1997-1 Notes only pursuant to a Bid or Sell Order placed in an Auction
or otherwise sell, transfer or dispose of Series 1997-1 Notes through a
Broker-Dealer, provided that, in the case of all transfers other than pursuant
to Auctions, such Existing Noteholder, its Broker-Dealer or its Participant
advises the Auction Agent of such transfer. Auctions shall be conducted on each
Auction Date, if there is an Auction Agent on such Auction Date, in the
following manner:
(a) (i) Prior to the Submission Deadline on each Auction Date relating to a
Class of the Series 1997-1 Notes:
(A) each Existing Noteholder of the applicable Class of Series 1997-1 Notes
may submit to a Broker-Dealer by telephone or otherwise any information as to:
(1) the principal amount of Outstanding Series 1997-1 Notes of such Class,
if any, owned by such Existing Noteholder which such Existing Noteholder desires
to continue to own without regard to the Class Interest Rate for the next
succeeding Auction Period;
(2) the principal amount of Outstanding Series 1997-1 Notes of such Class,
if any, which such Existing Noteholder offers to sell if the Class Interest Rate
for the next succeeding Auction Period shall be less than the rate per annum
specified by such Existing Noteholder; and/or
(3) the principal amount of Outstanding Series 1997-1 Notes of such Class,
if any, owned by such Existing Noteholder which such Existing Noteholder offers
to sell without regard to the Class Interest Rate for the next succeeding
Auction Period;
and
(B) one or more Broker-Dealers may contact Potential Noteholders to
determine the principal amount of Series 1997-1 Notes of such Class which each
Potential Noteholder offers to purchase, if the Class Interest Rate for the next
succeeding Auction Period shall not be less than the rate per annum specified by
such Potential Noteholder.
The statement of an Existing Noteholder or a Potential Noteholder referred
to in (A) or (B) of this paragraph (i) is herein referred to as an "Order," and
each Existing Noteholder and each Potential Noteholder placing an Order is
herein referred to as a "Bidder"; an Order described in clause (A)(1) is herein
referred to as a "Hold Order"; an Order described in clauses (A)(2) and (B) is
herein referred to as a "Bid"; and an Order described in clause (A)(3) is herein
referred to as a "Sell Order."
(ii) (A) Subject to the provisions of Section 2.5.1(b) hereof, a Bid by an
Existing Noteholder shall constitute an irrevocable offer to sell:
(1) the principal amount of Outstanding Series 1997-1 Notes specified in
such Bid if the Class Interest Rate determined as provided in this Section 2.5.1
shall be less than the rate specified therein; or
(2) such principal amount, or a lesser principal amount of Outstanding
Series 1997-1 Notes to be determined as set forth in Section 2.5. 1(d)(i)(D)
hereof, if the Class Interest Rate determined as provided in this Section 2.5.1
shall be equal to the rate specified therein; or
(3) such principal amount, or a lesser principal amount of Outstanding
Series 1997-1 Notes to be determined as set forth in Section 2.5.1(d)(ii)(C)
hereof, if the rate specified therein shall be higher than the Class Interest
Rate and Sufficient Bids have not been made.
(B) Subject to the provisions of Section 2.5.1(b) hereof, a Sell Order by
an Existing Noteholder shall constitute an irrevocable offer to sell:
(1) the principal amount of Outstanding Series 1997-1 Notes specified in
such Sell Order; or
(2) such principal amount, or a lesser principal amount of Outstanding
Series 1997-1 Notes set forth in Section 2.5.1(d)(ii)(C) hereof, if Sufficient
Bids have not been made.
(C) Subject to the provisions of Section 2.5.1(b) hereof, a Bid by a
Potential Noteholder shall constitute an irrevocable offer to purchase:
(1) the principal amount of Outstanding Series 1997-1 Notes specified in
such Bid if the Class Interest Rate determined as provided in this Section 2.5.1
shall be higher than the rate specified in such Bid; or
(2) such principal amount, or a lesser principal amount of Outstanding
Series 1997-1 Notes set forth in Section 2.5.1(d)(i)(E) hereof, if the Class
Interest Rate determined as provided in this Section 2.5.1 shall be equal to the
rate specified in such Bid.
(b) (i) Each Broker-Dealer shall submit in writing to the Auction Agent
prior to the Submission Deadline on each Auction Date all Orders obtained by
such Broker-Dealer and shall specify with respect to each such Order:
(A) the name of the Bidder placing such Order;
(B) the aggregate principal amount and Class of Series 1997-1 Notes that
are the subject of such Order;
(C) to the extent that such Bidder is an Existing Noteholder:
(1) the principal amount and Class of Series 1997-1 Notes, if any, subject
to any Hold Order placed by such Existing Noteholder;
(2) the principal amount and Class of Series 1997-1 Notes, if any, subject
to any Bid placed by such Existing Noteholder and the rate specified in such
Bid; and
(3) the principal amount and Class of Series 1997-1 Notes, if any, subject
to any Sell Order placed by such Existing Noteholder; and
(D) to the extent such Bidder is a Potential Noteholder, the rate specified
in such Potential Noteholder's Bid.
(ii) If any rate specified in any Bid contains more than three figures to
the right of the decimal point, the Auction Agent shall round such rate up to
the next higher one thousandth (.001) of one percent.
(iii) If an Order or Orders covering all Outstanding Series 1997-1 Notes of
the applicable Class owned by an Existing Noteholder is not submitted to the
Auction Agent prior to the Submission Deadline, the Auction Agent shall deem a
Hold Order to have been submitted on behalf of such Existing Noteholder covering
the principal amount of Outstanding Series 1997-1 Notes of such Class owned by
such Existing Noteholder and not subject to an Order submitted to the Auction
Agent.
(iv) Neither the Issuer, the Indenture Trustee nor the Auction Agent shall
be responsible for any failure of a Broker-Dealer to submit an Order to the
Auction Agent on behalf of any Existing Noteholder or Potential Noteholder.
(v) If any Existing Noteholder submits through a Broker-Dealer to the
Auction Agent one or more Orders covering in the aggregate more than the
principal amount of the Class of Outstanding Series 1997-1 Notes owned by such
Existing Noteholder, such Orders shall be considered valid as follows and in the
following order of priority:
(A) All Hold Orders shall be considered valid, but only up to the aggregate
principal amount of the Class of Outstanding Series 1997-1 Notes owned by such
Existing Noteholder, and if the aggregate principal amount of the Class of
Series 1997-1 Notes subject to such Hold Orders exceeds the aggregate principal
amount of the Class of Series 1997-1 Notes owned by such Existing Noteholder,
the aggregate principal amount of the Class of Series 1997-1 Notes subject to
each such Hold Order shall be reduced pro rata so that the aggregate principal
amount of the Class of Series 1997-1 Notes subject to such Hold Order equals the
aggregate principal amount of the Class of Outstanding Series 1997-1 Notes owned
by such Existing Noteholder.
(B) (1) any Bid shall be considered valid up to an amount equal to the
excess of the principal amount of the Class of Outstanding Series 1997-1 Notes
owned by such Existing Noteholder over the aggregate principal amount of the
Class of Series 1997-1 Notes subject to any Hold Order referred to in clause (A)
of this paragraph (v);
(2) subject to subclause (1) of this clause (B), if more than one Bid with
the same rate is submitted on behalf of such Existing Noteholder and the
aggregate principal amount of the Class of Outstanding Series 1997-1 Notes
subject to such Bids is greater than such excess, such Bids shall be considered
valid up to an amount equal to such excess;
(3) subject to subclauses (1) and (2) of this clause (B), if more than one
Bid with different rates are submitted on behalf of such Existing Noteholder,
such Bids shall be considered valid first in the ascending order of their
respective rates until the highest rate is reached at which such excess exists
and then at such rate up to the amount of such excess; and
(4) in any such event, the amount of the Class of Outstanding Series 1997-1
Notes, if any, subject to Bids not valid under this clause (B) shall be treated
as the subject of a Bid by a Potential Noteholder at the rate therein specified;
and
(C) All Sell Orders shall be considered valid up to an amount equal to the
excess of the principal amount of the Class of Outstanding Series 1997-1 Notes
owned by such Existing Noteholder over the aggregate principal amount of the
Class of Series 1997-1 Notes subject to Hold Orders referred to in clause (A) of
this paragraph (v) and valid Bids referred to in clause (B) of this paragraph
(v).
(vi) If more than one Bid for a Class of Series 1997-1 Notes is submitted
on behalf of any Potential Noteholder, each Bid submitted shall be a separate
Bid with the rate and principal amount therein specified.
(vii) An Existing Noteholder of a Class of Series 1997-1 Notes that offers
to purchase additional Series 1997-1 Notes is, for purposes of such offer,
treated as a Potential Noteholder.
(viii) Any Bid or Sell Order submitted by an Existing Noteholder covering
an aggregate principal amount of a Class of Series 1997-1 Notes not equal to an
Authorized Denomination shall be rejected and shall be deemed a Hold Order. Any
Bid submitted by a Potential Noteholder covering an aggregate principal amount
of a Class of Series 1997-1 Notes not equal to an Authorized Denomination shall
be rejected.
(ix) Any Bid specifying a rate higher than the Maximum Auction Rate will
(a) be treated as a Sell Order if submitted by an Existing Noteholder and (b)
not be accepted if submitted by a Potential Noteholder.
(x) Any Order submitted in an Auction by a Broker-Dealer to the Auction
Agent at the Submission Deadline on any Auction Date shall be irrevocable.
(c) (i) Not earlier than the Submission Deadline on each Auction Date, the
Auction Agent shall assemble all valid Orders submitted or deemed submitted to
it by the Broker-Dealers (each such Order as submitted or deemed submitted by a
Broker-Dealer being herein referred to individually as a "Submitted Hold Order,"
a "Submitted Bid" or a "Submitted Sell Order," as the case may be, or as a
"Submitted Order," and collectively as "Submitted Hold Orders," "Submitted Bids"
or "Submitted Sell Orders," as the case may be, or as "Submitted Orders") and
shall determine for the applicable Class of Series 1997-1 Notes:
(A) the excess of the total principal amount of Outstanding Series 1997-1
Notes of such Class over the sum of the aggregate principal amount of
Outstanding Series 1997-1 Notes of such Class subject to Submitted Hold Orders
(such excess being herein referred to as the "Available Series 1997-1 Notes" of
such Class), and
(B) from the Submitted Orders whether: (1) the aggregate principal amount
of Outstanding Series 1997-1 Notes of such Class subject to Submitted Bids by
Potential Noteholders specifying one or more rates equal to or lower than the
Maximum Auction Rate; exceeds or is equal to the sum of:
(2) the aggregate principal amount of Outstanding Series 1997-1 Notes of
such Class subject to Submitted Bids by Existing Noteholders specifying one or
more rates higher than the Maximum Auction Rate; and
(3) the aggregate principal amount of Outstanding Series 1997-1 Notes of
such Class subject to submitted Sell Orders; (in the event such excess or such
equality exists, other than because all of the Outstanding Series 1997-1 Notes
of such Class are subject to Submitted Hold Orders, such Submitted Bids
described in subclause (1) above shall be referred to collectively as
"Sufficient Bids"); and
(C) if Sufficient Bids exist, the "Bid Auction Rate", which shall be the
lowest rate specified in such Submitted Bids such that if:
(1) (x) each Submitted Bid from
Existing Noteholders specifying such lowest
rate and (y) all other Submitted Bids from
Existing Noteholders specifying lower rates
were rejected, thus entitling such Existing
Noteholders to continue to own the principal
amount of Series 1997-1 Notes of such Class
subject to such Submitted Bids; and
(2) (x) each such Submitted Bid from
Potential Noteholders specifying such lowest
rate and (y) all other Submitted Bids from
Potential Noteholders specifying lower rates
were accepted;
the result would be that such Existing Noteholders described in subclause
(1) above would continue to own an aggregate principal amount of Outstanding
Series 1997-1 Notes of the applicable Class which, when added to the aggregate
principal amount of Outstanding Series 1997-1 Notes of such Class to be
purchased by such Potential Noteholders described in subclause (2) above, would
equal not less than the Available Series 1997-1 Notes of such Class.
(ii) Promptly after the Auction Agent has made the determinations pursuant
to Section 2.5.1(c)(i) hereof, the Auction Agent shall advise the Indenture
Trustee of the Net Loan Rate, the Maximum Auction Rate and the All Hold Rate and
the components thereof on the Auction Date and, based on such determinations,
the Auction Rate for the next succeeding Class Interest Period for such Class of
Series 1997-1 Notes as follows:
(A) if Sufficient Bids exist, that the Auction Rate for the next succeeding
Class Interest Period for such Class shall be equal to the Bid Auction Rate so
determined;
(B) if Sufficient Bids do not exist (other than because all of the
Outstanding Series 1997-1 Notes of such Class are subject to Submitted Hold
Orders), that the Auction Rate for the next succeeding Class Interest Period
shall be equal to the Maximum Auction Rate; or
(C) if all Outstanding Series 1997-1 Notes of such Class are subject to
Submitted Hold Orders, that the Auction Rate for the next succeeding Class
Interest Period shall be equal to the All Hold Rate.
(iii) Promptly after the Auction Agent has determined the Auction Rate, the
Auction Agent shall determine and advise the Indenture Trustee of the applicable
Class Interest Rate, which rate shall be the lesser of (a) the Auction Rate and
(b) the Net Loan Rate; provided, however, that in no event shall the Class
Interest Rate exceed the Class Interest Rate Limitation.
(d) Existing Noteholders shall continue to own the principal amount of
Series 1997-1 Notes of such Class that are subject to Submitted Hold Orders. If
the Net Loan Rate is equal to or greater than the Bid Auction Rate and if
Sufficient Bids have been received by the Auction Agent, the Bid Auction Rate
will be the Class Interest Rate, and Submitted Bids and Submitted Sell Orders
will be accepted or rejected and the Auction Agent will take such other action
as described below in subparagraph (i).
If the Net Loan Rate is less than the Auction Rate, the Net Loan Rate will
be the Class Interest Rate. If the Auction Rate and the Net Loan Rate are both
greater than the Class Interest Rate Limitation, the Class Interest Rate shall
be equal to the Class Interest Rate Limitation. If the Auction Agent has not
received Sufficient Bids (other than because all of the Outstanding Series
1997-1 Notes of such Class are subject to Submitted Hold Orders), the Class
Interest Rate will be the lesser of the Maximum Auction Rate and the Net Loan
Rate. In any of the cases described above, Submitted Orders will be accepted or
rejected and the Auction Agent will take such other action as described below in
subparagraph (ii).
(i) if Sufficient Bids have been made and the Net Loan Rate is equal to or
greater than the Bid Auction Rate (in which case the Class Interest Rate shall
be the Bid Auction Rate), all Submitted Sell Orders shall be accepted and,
subject to the provisions of paragraphs (iv) and (v) of this Section 2.5.1(d),
Submitted Bids shall be accepted or rejected as follows in the following order
of priority, and all other Submitted Bids shall be rejected:
(A) Existing Noteholders' Submitted Bids specifying any rate that is higher
than the Class Interest Rate shall be accepted, thus requiring each such
Existing Noteholder to sell the aggregate principal amount of Series 1997-1
Notes subject to such Submitted Bids;
(B) Existing Noteholders' Submitted Bids specifying any rate that is lower
than the Class Interest Rate shall be rejected, thus entitling each such
Existing Noteholder to continue to own the aggregate principal amount of Series
1997-1 Notes subject to such Submitted Bids;
(C) Potential Noteholders' Submitted Bids specifying any rate that is lower
than the Class Interest Rate shall be accepted;
(D) Each Existing Noteholders' Submitted Bid specifying a rate that is
equal to the Class Interest Rate shall be rejected, thus entitling such Existing
Noteholder to continue to own the aggregate principal amount of Series 1997-1
Notes subject to such Submitted Bid, unless the aggregate principal amount of
Outstanding Series 1997-1 Notes subject to all such Submitted Bids shall be
greater than the principal amount of Series 1997-1 Notes of the applicable Class
(the "remaining principal amount") equal to the excess of the Available Series
1997-1 Notes of such Class over the aggregate principal amount of Series 1997-1
Notes of such Class subject to Submitted Bids described in clauses (B) and (C)
of this Section 2.5.1(d)(i), in which event such Submitted Bid of such Existing
Noteholder shall be rejected in part, and such Existing Noteholder shall be
entitled to continue to own the principal amount of such Class of Series 1997-1
Notes subject to such Submitted Bid, but only in an amount equal to the
aggregate principal amount of Series 1997-1 Notes of such Class obtained by
multiplying the remaining principal amount by a fraction, the numerator of which
shall be the principal amount of Outstanding Series 1997-1 Notes of such Class
owned by such Existing Noteholder subject to such Submitted Bid and the
denominator of which shall be the sum of the principal amount of Outstanding
Series 1997-1 Notes of such Class subject to such Submitted Bids made by all
such Existing Noteholders that specified a rate equal to the Class Interest
Rate; and
(E) Each Potential Noteholder's Submitted Bid specifying a rate that is
equal to the Class Interest Rate shall be accepted, but only in an amount equal
to the principal amount of Series 1997-1 Notes of the applicable Class obtained
by multiplying the excess of the aggregate principal amount of Available Series
1997-1 Notes of such Class over the aggregate principal amount of Series 1997-1
Notes of such Class subject to Submitted Bids described in clauses (B), (C) and
(D) of this Section 2.5.1(d)(i) by a fraction the numerator of which shall be
the aggregate principal amount of Outstanding Series 1997-1 Notes of such Class
subject to such Submitted Bid and the denominator of which shall be the sum of
the principal amount of Outstanding Series 1997-1 Notes of such Class subject to
Submitted Bids made by all such Potential Noteholders that specified a rate
equal to the Class Interest Rate.
(ii) If Sufficient Bids have not been made (other than because all of the
Outstanding Series 1997-1 Notes of the applicable Class are subject to submitted
Hold Orders), or if the Net Loan Rate is less than the Bid Auction Rate (in
which case the Class Interest Rate shall be the Net Loan Rate), or if the Class
Interest Rate Limitation applies, subject to the provisions of Section
2.5.1(d)(iv) hereof, Submitted Orders shall be accepted or rejected as follows
in the following order of priority and all other Submitted Bids shall be
rejected:
(A) Existing Noteholders' Submitted Bids specifying any rate that is equal
to or lower than the Class Interest Rate shall be rejected, thus entitling such
Existing Noteholders to continue to own the aggregate principal amount of Series
1997-1 Notes subject to such Submitted Bids;
(B) Potential Noteholders' Submitted Bids specifying (1) any rate that is
equal to or lower than the Class Interest Rate shall be accepted and (2) any
rate that is higher than the Class Interest Rate shall be rejected; and
(C) each Existing Noteholder's Submitted Bid specifying any rate that is
higher than the Class Interest Rate and the Submitted Sell Order of each
Existing Noteholder shall be accepted, thus entitling each Existing Noteholder
that submitted any such Submitted Bid or Submitted Sell Order to sell the Series
1997-1 Notes subject to such Submitted Bid or Submitted Sell Order, but in both
cases only in an amount equal to the aggregate principal amount of Series 1997-1
Notes of the applicable Class obtained by multiplying the aggregate principal
amount of Series 1997-1 Notes subject to Submitted Bids described in clause (B)
of this Section 2.5.1(d)(ii) by a fraction the numerator of which shall be the
aggregate principal amount of Outstanding Series 1997-1 Notes of such Class
owned by such Existing Noteholder subject to such submitted Bid or Submitted
Sell Order and the denominator of which shall be the aggregate principal amount
of Outstanding Series 1997-1 Notes of such Class subject to all such Submitted
Bids and Submitted Sell Orders.
(iii) If all Outstanding Series 1997-1 Notes of such Class are subject to
Submitted Hold Orders, all Submitted Bids shall be rejected.
(iv) If, as a result of the procedures described in paragraph (i) or (ii)
of this Section 2.5.1(d), any Existing Noteholder would be entitled or required
to sell, or any Potential Noteholder would be entitled or required to purchase,
a principal amount of Series 1997-1 Notes of the applicable Class that is not
equal to an Authorized Denomination, the Auction Agent shall, in such manner as
in its sole discretion it shall determine, round up or down the principal amount
of Series 1997-1 Notes to be purchased or sold by any Existing Noteholder or
Potential Noteholder so that the principal amount of Series 1997-1 Notes
purchased or sold by each Existing Noteholder or Potential Noteholder shall be
equal to an Authorized Denomination or an integral multiple of $50,000 in excess
thereof.
(v) If, as a result of the procedures described in paragraph (ii) of this
Section 2.5.1(d), any Potential Noteholder would be entitled or required to
purchase less than an Authorized Denomination of Series 1997-1 Notes of the
applicable Class, the Auction Agent shall, in such manner as in its sole
discretion it shall determine, allocate Series 1997-1 Notes of such Class for
purchase among Potential Noteholders so that only Series 1997-1 Notes of such
Class in Authorized Denominations or integral multiples of $50,000 in excess
thereof are purchased by any Potential Noteholder, even if such allocation
results in one or more of such Potential Noteholders not purchasing any Series
1997-1 Notes of such Class.
(e) Based on the result of each Auction, the Auction Agent shall determine
the aggregate principal amount of Series 1997-1 Notes of the applicable Class to
be purchased and the aggregate principal amount of Series 1997-1 Notes of the
applicable Class to be sold by Potential Noteholders and Existing Noteholders on
whose behalf each Broker-Dealer submitted Bids or Sell Orders and, with respect
to each Broker-Dealer, to the extent that such aggregate principal amount of
Series 1997-1 Notes of the applicable Class to be sold differs from such
aggregate principal amount of Series 1997-1 Notes of the applicable Class to be
purchased, determine to which other Broker-Dealer or Broker-Dealers acting for
one or more purchasers such Broker-Dealer shall deliver, or from which other
Broker-Dealer or Broker-Dealers acting for one or more sellers such
Broker-Dealer shall receive, as the case may be, Series 1997-1 Notes of the
applicable Class.
(f) On each Class Rate Determination Date relating to the LIBOR Rate Notes,
the Indenture Trustee (or the Auction Agent on its behalf) shall determine
One-Month LIBOR and the applicable Class Interest Rate and shall promptly give
written notice thereof to the Issuer.
(g) Any calculation by the Auction Agent, the Master Servicer or the
Indenture Trustee, as applicable, of the Class Interest Rate, One-Month LIBOR,
Three-Month LIBOR, the Maximum Auction Rate, the All Hold Rate, the Net Loan
Rate and the Non-Payment Rate shall, in the absence of manifest error, be
binding on all other parties.
SECTION 2.5.2. PAYMENT DEFAULTS; AUCTION AGENT FEES AND EXPENSES.
(a) The Indenture Trustee shall determine not later than 2:00 p.m., eastern
time, on the Business Day next succeeding a Note Distribution Date, whether a
Payment Default has occurred. If a Payment Default has occurred, the Indenture
Trustee shall, not later than 2:15 p.m., eastern time, on such Business Day,
send a notice thereof in substantially the form of Exhibit B attached hereto to
the Auction Agent, the Eligible Lender Trustee and the Surety Provider by
telecopy or similar means and, if such Payment Default is cured, the Indenture
Trustee shall immediately send a notice in substantially the form of Exhibit C
attached hereto to the Auction Agent, the Eligible Lender Trustee and the Surety
Provider by telecopy or similar means.
(b) Not later than 2:00 p.m., eastern time, on the first Note Distribution
Date for any Class of Notes occurring in each month, the Indenture Trustee shall
pay to the Auction Agent, in immediately available funds out of amounts in the
Expense Account an amount equal to the Auction Agent Fee (which shall include
the Broker-Dealer Fee) as calculated in the Auction Agent Agreement. TMSI shall
from time to time at the request of the Auction Agent reimburse the Auction
Agent for its reasonable expenses as provided in the Auction Agent Agreement.
SECTION 2.5.3. CALCULATION OF MAXIMUM AUCTION RATE, ALL HOLD RATE, NET LOAN
RATE, ONE-MONTH LIBOR, THREE-MONTH LIBOR AND NON-PAYMENT RATE. The Administrator
shall calculate the Net Loan Rate and inform the Auction Agent thereof in
writing no later than the Business Day preceding each Auction Date. The Auction
Agent shall calculate the Maximum Auction Rate, the All Hold Rate and One-Month
LIBOR or Three-Month LIBOR, as the case may be, on each Auction Date and shall
notify the Indenture Trustee, the Eligible Lender Trustee and the Broker-Dealers
of the Net Loan Rate, the Maximum Auction Rate, the All Hold Rate and One-Month
LIBOR or Three-Month LIBOR, as the case may be, as provided in the Auction Agent
Agreement. If the ownership of the Series 1997-1 Notes is no longer maintained
in Book-Entry Form by the Securities Depository, the Indenture Trustee shall
calculate the Maximum Auction Rate, and the Administrator will report to the
Indenture Trustee in writing the Net Loan Rate, on the Business Day immediately
preceding the first day of each Class Interest period commencing after the
delivery of certificates representing the Series 1997-1 Notes pursuant to
Section 2.15 of the Master Indenture. If a Payment Default shall have occurred,
the Indenture Trustee shall calculate the Non-Payment Rate on the Class Rate
Determination Date for (i) each Class Interest Period commencing after the
occurrence and during the continuance of such Payment Default and (ii) any Class
Interest Period commencing less than two Business Days after the cure of any
Payment Default. The Auction Agent shall determine One-Month LIBOR or
Three-Month LIBOR, as applicable, for each Class Interest Period other than the
first Class Interest Period; provided, that if the ownership of the Series
1997-1 Notes is no longer maintained in Book-Entry Form, or if a Payment Default
has occurred, then the Indenture Trustee shall determine One-Month LIBOR or
Three-Month LIBOR, as applicable, for each such Class Interest Period. The
determination by the Indenture Trustee or the Auction Agent, as the case may be,
of One-Month LIBOR or Three-Month LIBOR, as applicable, shall (in the absence of
manifest error) be final and binding upon all parties. If calculated or
determined by the Auction Agent, the Auction Agent shall promptly advise the
Indenture Trustee and the Eligible Lender Trustee of One-Month LIBOR or
Three-Month LIBOR, as applicable.
SECTION 2.5.4. NOTIFICATION OF RATES, AMOUNTS AND NOTE DISTRIBUTION DATES.
(a) [Reserved]
(b) Promptly after the Closing Date and after the beginning of each
subsequent Class Interest Period relating to each Class of Series 1997-1 Notes,
and in any event at least 10 days prior to any Note Distribution Date relating
to a Class of Series 1997-1 Notes, the Indenture Trustee shall confirm with the
Auction Agent, so long as no Payment Default has occurred and is continuing and
the ownership of the Series 1997-1 Notes is maintained in Book-Entry Form by the
Securities Depository, (1) the date of such next Note Distribution Date relating
to a Class of Series 1997-1 Notes and (2) the amount payable to the Auction
Agent on the Auction Date pursuant to Section 2.5.2(b) hereof.
If any day scheduled to be a Note Distribution Date shall be changed after
the Indenture Trustee shall have given the notice or confirmation referred to in
the preceding sentence, the Indenture Trustee shall, not later than 9:15 a.m.,
eastern time, on the Business Day next preceding the earlier of the new Note
Distribution Date or the old Note Distribution Date, by such means as the
Indenture Trustee deems practicable, give notice of such change to the Auction
Agent, so long as no Payment Default has occurred and is continuing and the
ownership of the Series 1997-1 Notes is maintained in Book-Entry Form by the
Securities Depository.
SECTION 2.5.5. AUCTION AGENT.
(a) Bankers Trust Company is hereby appointed as Initial Auction Agent to
serve as agent for the Issuer in connection with Auctions. The Indenture Trustee
and the Issuer will, and the Indenture Trustee is hereby directed to, enter into
the Initial Auction Agent Agreement with Bankers Trust Company, as the Initial
Auction Agent. Any Substitute Auction Agent shall be (i) a bank, national
banking association or trust company duly organized under the laws of the United
States of America or any state or territory thereof having its principal place
of business in the Borough of Manhattan, New York, or such other location as
approved by the Indenture Trustee and the Market Agent in writing and having a
combined capital stock or surplus of at least $50,000,000, or (ii) a member of
the National Association of Securities Dealers, Inc., having a capitalization of
at least $50,000,000, and, in either case, authorized by law to perform all the
duties imposed upon it hereunder and under the Auction Agent Agreement. The
Auction Agent may at any time resign and be discharged of the duties and
obligations created by this First Terms Supplement by giving at least 90 days'
notice to the Indenture Trustee, the Issuer, the Surety Provider and the Market
Agent. The Auction Agent may be removed at any time by the Indenture Trustee
upon the written direction of the Surety Provider, or with the consent of the
Surety Provider, the Noteholders of 66-2/3% of the aggregate principal amount of
the Series 1997-1 Notes then Outstanding, and if by such Noteholders, by an
instrument signed by the Surety Provider or such Noteholders or their attorneys
and filed with the Auction Agent, the Issuer, the Market Agent and the Indenture
Trustee upon at least 90 days' notice. Neither resignation nor removal of the
Auction Agent pursuant to the preceding two sentences shall be effective until
and unless a Substitute Auction Agent has been appointed and has accepted such
appointment. If required by the Issuer or the Market Agent, with the Trust's
consent, a Substitute Auction Agent Agreement shall be entered into with a
Substitute Auction Agent. Notwithstanding the foregoing, the Auction Agent may
terminate the Auction Agent Agreement if, within 25 days after notifying the
Indenture Trustee, the Issuer, the Surety Provider and the Market Agent in
writing that it has not received payment of any Auction Agent Fee due it in
accordance with the terms of the Auction Agent Agreement, the Auction Agent does
not receive such payment.
(b) If the Auction Agent shall resign or be removed or be dissolved, or if
the property or affairs of the Auction Agent shall be taken under the control of
any state or federal court or administrative body because of bankruptcy or
insolvency, or for any other reason, the Indenture Trustee, at the direction of
the Trust (after receipt of a certificate from the Market Agent confirming that
any proposed Substitute Auction Agent meets the requirements described in the
immediately preceding paragraph), shall use its best efforts to appoint a
Substitute Auction Agent.
(d) In the event of a change in the Auction Agent Fee Rate pursuant to
Section 6.4(b) of the Auction Agent Agreement, the Auction Agent shall give a
Notice of Fee Rate Change to the Indenture Trustee, the Surety Provider and the
Eligible Lender Trustee in accordance with the Auction Agent Agreement.
SECTION 2.5.6. BROKER-DEALERS.
(a) The Auction Agent will enter into a Broker-Dealer Agreement with Xxxxx
Xxxxxx Inc., as the initial Broker-Dealer. An Authorized Officer of the
Administrator may, from time to time, approve one or more additional persons to
serve as Broker-Dealers under Broker-Dealer Agreements and shall be responsible
for providing such Broker-Dealer Agreements to the Indenture Trustee, the Surety
Provider and the Auction Agent, provided, however that while Xxxxx Xxxxxx Inc.
is serving as a Broker-Dealer, Xxxxx Xxxxxx Inc. shall have the right to consent
to the approval of any additional Broker-Dealers, which consent will not be
unreasonably withheld. The Auction Agent shall have entered into a Broker-Dealer
Agreement with each Broker-Dealer prior to the participation of any such
Broker-Dealer in any Auction.
(b) Any Broker-Dealer may be removed at any time, at the request of an
Authorized Officer of the Administrator, but there shall, at all times, be at
least one Broker-Dealer appointed and acting as such.
SECTION 2.5.7. CHANGES IN AUCTION PERIOD OR PERIODS.
(a) While any of the Series 1997-1 Notes are Outstanding, the Issuer may,
from time to time, convert the length of one or more Auction Periods (an
"Auction Period Adjustment"), in order to conform with then current market
practice with respect to similar securities or to accommodate economic and
financial factors that may affect or be relevant to the length of the Auction
Period and the Class Interest Rate borne by the Series 1997-1 Notes. The Issuer
shall not initiate an Auction Period Adjustment unless the Issuer shall have
received the written consent of the Market Agent and the Surety Provider, which
consents shall not be unreasonably withheld, not less than three days nor more
than 20 days prior to the effective date of an Auction Period Adjustment. The
Issuer shall initiate the Auction Period Adjustment by giving written notice by
Issuer Order to the Indenture Trustee, the Auction Agent, the Market Agent, the
Surety Provider, the Rating Agencies and the Securities Depository in
substantially the form of, or containing substantially the information contained
in, Exhibit D to this First Terms Supplement at least 5 days prior to the
Auction Date for such Auction Period.
(b) Any such adjusted Auction Period shall not be less than 7 days nor more
than 91 days. If any such adjusted Auction Period will be less than the number
of days in the then current Auction Period, the notice described above will be
effective only if it is accompanied by a written statement of the Indenture
Trustee, the Eligible Lender Trustee, the Auction Agent and the Securities
Depository to the effect that they are capable of performing their duties, if
any, under this First Terms Supplement, the Auction Agent Agreement and any
Broker-Dealer Agreement with respect to such changed Auction Period.
(c) An Auction Period Adjustment shall take effect only if (A) the
Indenture Trustee and the Auction Agent receive, by 11:00 a.m., Eastern time, on
the Business Day before the Auction Date for the first such Auction Period, an
Issuer Certificate in substantially the form attached as, or containing
substantially the same information contained in, Exhibit E to this First Terms
Supplement, authorizing the Auction Period Adjustment specified in such
certificate along with a copy of the certificate of the Market Agent described
above in subparagraph (a) above and, if applicable, the written statement of the
Indenture Trustee, the Eligible Lender Trustee, the Auction Agent and the
Securities Depository described in subparagraph (b) above and (B) Sufficient
Bids exist as of the Auction on the Auction Date for such first Auction Period.
If the condition referred to in (A) above is not met, the Class Interest Rate
for the applicable Class of Series 1997-1 Notes for the next Auction Period
shall be determined pursuant to the above provisions of this Section 2.5 and the
Auction Period shall be the Auction Period determined without reference to the
proposed change. If the condition referred to in (A) is met but the condition
referred to in (B) above is not met, the Class Interest Rate for the applicable
Class of Series 1997-1 Notes for the next Auction Period shall be the lesser of
the Maximum Auction Rate and the Net Loan Rate and the Auction Period shall be
the Auction Period determined without reference to the proposed change.
In connection with any Auction Period Adjustment, the Auction Agent shall
provide such further notice to such parties as is specified in Section 2.5 of
the Auction Agent Agreement.
SECTION 2.5.8. CHANGES IN THE AUCTION DATE. The Market Agent, with the
written consent of an Authorized Officer of the Administrator, may specify an
earlier or later Auction Date (but in no event more than five Business Days
earlier or later) than the Auction Date that would otherwise be determined in
accordance with the definition of "Auction Date" in Section 1.1 of this First
Terms Supplement with respect to one or more specified Auction Periods in order
to conform with then current market practice with respect to similar securities
or to accommodate economic and financial factors that may affect or be relevant
to the day of the week constituting an Auction Date and the Class Interest Rate
borne on a Class of Series 1997-1 Notes. The Market Agent shall deliver a
written request for consent to such change in the length of the Auction Date to
the Issuer not less than three days nor more than 20 days prior to the effective
date of such change together with a certificate demonstrating the need for
change in reliance on such factors. Notwithstanding any adjustments to Auction
Periods that have been initiated or effected pursuant to Section 2.5.7 hereof,
the Market Agent shall specify Auction Periods such that a Note Distribution
Date for each Class of Series 1997-1 Notes shall occur in the months of January,
April, July and October, commencing July 1997. The Market Agent shall provide
notice of its determination to specify an earlier Auction Date for one or more
Auction Periods by means of a written notice delivered at least 10 days prior to
the proposed changed Auction Date to the Indenture Trustee, the Auction Agent,
the Issuer, the Rating Agencies and the Securities Depository. Such notice shall
be substantially in the form of, or contain substantially the information
contained in, Exhibit F to this First Terms Supplement.
In connection with any change described in this Section 2.5.8, the Auction
Agent shall provide such further notice to such parties as is specified in
Section 2.5 of the Auction Agent Agreement.
SECTION 2.6. ADDITIONAL PROVISIONS REGARDING THE CLASS INTEREST RATES ON
THE SERIES 1997-1 NOTES. The determination of a Class Interest Rate by the
Auction Agent, the Indenture Trustee or any other Person pursuant to the
provisions of the applicable Section of this Article II shall be conclusive and
binding on the Noteholders of the Class of Series 1997-1 Notes to which such
Class Interest Rate applies, and the Issuer and the Indenture Trustee may rely
thereon for all purposes.
In no event shall the cumulative amount of interest paid or payable on a
Class of Series 1997-1 Notes (including interest calculated as provided herein,
plus any other amounts that constitute interest on the Series 1997-1 Notes of
such Class under applicable law, which are contracted for, charged, reserved,
taken or received pursuant to the Series 1997- 1 Notes of such Class or related
documents) calculated from the date of issuance of the Series 1997-1 Notes of
such Class through any subsequent day during the term of the Series 1997-1 Notes
of such Class or otherwise prior to payment in full of the Series 1997-1 Notes
of such Class exceed the amount permitted by applicable law. If the applicable
law is ever judicially interpreted so as to render usurious any amount called
for under the Series 1997-1 Notes of such Class or related documents or
otherwise contracted for, charged, reserved, taken or received in connection
with the Series 1997-1 Notes of such Class, or if the acceleration of the
maturity of the Series 1997-1 Notes of such Class results in payment to or
receipt by the Noteholder or any former Noteholder of the Series 1997-1 Notes of
such Class of any interest in excess of that permitted by applicable law, then,
notwithstanding any provision of the Series 1997-1 Notes of such Class or
related documents to the contrary, all excess amounts theretofore paid or
received with respect to the Series 1997-1 Notes of such Class shall be credited
on the principal balance of the Series 1997-1 Notes of such Class (or, if the
Series 1997-1 Notes of such Class have been paid or would thereby be paid in
full, refunded by the recipient thereof), and the provisions of the Series
1997-1 Notes of such Class and related documents shall automatically and
immediately be deemed reformed and the amounts thereafter collectible hereunder
and thereunder reduced, without the necessity of the execution of any new
document, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for under the Series 1997- 1
Notes of such Class and under the related documents.
SECTION 2.7. QUALIFICATIONS OF MARKET AGENT. The Market Agent shall be a
member of the National Association of Securities Dealers, Inc., have a
capitalization of at least $50,000,000 and be authorized by law to perform all
the duties imposed upon it by this First Terms Supplement. The Market Agent may
resign and be discharged of the duties and obligations created by this First
Terms Supplement by giving at least 30 days' notice to the Issuer and the
Indenture Trustee, provided that such resignation shall not be effective until
the appointment of a successor market agent by the Issuer and the acceptance of
such appointment by such successor market agent. The Market Agent may be
replaced at the direction of the Issuer, by an instrument signed by an
Authorized Officer, filed with the Market Agent and the Indenture Trustee at
least 30 days before the effective date of such replacement, provided that such
replacement shall not be effective until the appointment of a successor market
agent by the Issuer and the acceptance of such appointment by such successor
market agent.
In the event that the Market Agent shall be removed or be dissolved, or if
the property or affairs of the Market Agent shall be taken under the control of
any state or federal court or administrative body because of bankruptcy or
insolvency, or for any other reason, and there is no Market Agent and the Issuer
shall not have appointed its successor as Market Agent, the Indenture Trustee,
notwithstanding the provisions of the first paragraph of this Section, shall be
deemed to be the Market Agent for all purposes of this First Terms Supplement
until the appointment by the Issuer of the successor Market Agent. Nothing in
this Section shall be construed as conferring on the Indenture Trustee
additional duties other than as set forth herein.
ARTICLE III
DISTRIBUTIONS
Section 3.1 DISTRIBUTIONS OF INTEREST AND PRINCIPAL. The Indenture Trustee
shall make distributions from and to the several Trust Accounts in the manner
provided for in Section 5.5 of the Sale and Servicing Agreement, as such Section
may be amended from time to time.
Section 3.2 SELECTION OF NOTES TO RECEIVE PAYMENTS OF PRINCIPAL. With
respect to the Class of Notes entitled to receive payments of principal the
actual Notes of such Class that will receive payments of principal on each
applicable Note Distribution Date will be selected no later than 15 days prior
to the related Note Distribution Date by the Securities Depository, pursuant to
the Note Depository Agreement entered into with respect to the Series 1997-1
Notes, by lot in such manner as the Securities Depository in its discretion may
determine and which may provide for the selection for payment of principal in
minimum denominations of $50,000, and integral multiples in excess thereof.
Notice of the specific Notes to receive payments of principal is to be
given by the Indenture Trustee by first-class mail, postage prepaid, mailed not
less than 15 days but no more than 30 days before the applicable Note
Distribution Date at the address of the applicable Noteholder appearing on the
registration books. Any defect in or failure to give such mailed notice shall
not affect the validity of proceedings for the payment of any other Notes not
affected by such failure or defect. All notices of payment are to state: (i) the
applicable Note Distribution Date; (ii) the amount of principal to be paid, and
(iii) the Class of the Notes to be paid.
The Indenture Trustee shall notify in writing, substantially in the form of
Exhibit D to the Auction Agent Agreement, the Auction Agent when any notice of
principal payment of Notes is sent to the Securities Depository not later than
11:00 a.m., on the date such notice is sent.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. ISSUER FOR THIS FIRST TERMS SUPPLEMENT. This First Terms
Supplement is adopted pursuant to the provisions of the Master Indenture.
SECTION 4.2. COUNTERPARTS. This First Terms Supplement may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
SECTION 4.3. INDENTURE CONSTITUTES A SECURITY AGREEMENT. This First Terms
Supplement constitutes a security agreement for the purposes of the Uniform
Commercial Code.
SECTION 4.4. GOVERNING LAW. This First Terms Supplement shall be governed
by and construed in accordance with the laws of the State of New York.
SECTION 4.5. RATIFICATION OF MASTER INDENTURE. As supplemented by this
First Terms Supplement and each previously executed Terms Supplement, the Master
Indenture is in all respects ratified and confirmed, and the Master Indenture as
so supplemented by this First Terms Supplement and each previously executed
Terms Supplement shall be read, taken and construed as one and the same
instrument. Each addition to and amendment of the Master Indenture contained
herein is solely for purposes of the Series 1997-1 Notes, and shall have no
effect on any other Series of Notes issued pursuant to the Master Indenture. If
any term of this First Terms Supplement conflicts with any term of the Master
Indenture or any previously executed Terms Supplement, this First Terms
Supplement shall control for purposes of the Series 1997-1 Notes.
IN WITNESS WHEREOF, the parties hereto have caused this First Terms
Supplement to be duly executed 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
BY: -------------------------------
Name: Xxxxxxx Xxxx
Title: Vice President
BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Indenture Trustee,
BY: ------------------------------
Name:
Title:
STATE OF NEW YORK, )
) ss.:
COUNTY OF NEW YORK, )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared Xxxxxxx Xxxx, known to me to
be the person and officer whose name is subscribed to the foregoing instrument
and acknowledged to me that the same was the act of the said Vice President of
The York Bank and Trust Company, not in its individual capacity but solely as
Eligible Lender Trustee of CLASSNOTES TRUST 1997-I, a Pennsylvania trust, and
that he executed the same as the act of said trust for the purpose and
consideration therein expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of ,
1997.
-----------------------------
Notary Public in and for
the State of New York.
[SEAL]
My commission expires:
----------------------
STATE OF NEW YORK, )
) ss.:
COUNTY OF NEW YORK, )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared , known to me to be the person
and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said BANKERS TRUST COMPANY,
a New York banking corporation, and that she executed the same as the act of
said corporation for the purpose and consideration therein expressed, and in the
capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the day of
, 1997.
-----------------------------
Notary Public in and for
the State of New York.
[SEAL]
My commission expires:
----------------------
EXHIBIT A
[FORM OF SERIES 1997-1 NOTES]
CLASSNOTES TRUST 1997-I
AUCTION RATE ASSET BACKED NOTES
SERIES 1997-1
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER (AS
DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE IS NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL
AGENCY.
No. A-_-_ $______
FINAL
MATURITY DATED INTEREST
CLASS DATE DATE RATE CUSIP
auction rate
as
herein
provided
REGISTERED NOTEHOLDER:
PRINCIPAL AMOUNT: -----------------------------------
CLASSNOTES TRUST 1997-I, a Pennsylvania business trust (the "Issuer"), for
value received, promises to pay, from the sources herein described, to the
Registered Noteholder identified above, or registered assigns, upon presentation
and surrender hereof at the Corporate Trust Office of Bankers Trust Company, as
Paying Agent, or at the principal office of any successor or additional Paying
Agent, the Principal Amount identified above on the Final Maturity Date
identified above, and to pay to the registered owner hereof, interest and
principal hereon in lawful money of the United States of America at the Class
Interest Rate on the dates as provided herein. Unless otherwise defined in this
Series 1997-1 Note, capitalized terms used in this Series 1997-1 Note shall have
the respective meanings given to such terms in the Master Indenture dated as of
March 21, 1997 (the "Master Indenture"), as supplemented by the First Terms
Supplement dated as of March 21, 1997 (the "First Terms Supplement" and,
together with the Master Indenture, the "Indenture"), between the Issuer and
Bankers Trust Company, as Indenture Trustee.
This Series 1997-1 Note is one of a duly authorized issue of notes of the
Issuer designated as "Classnotes Trust 1997-I Asset-Backed Notes, Series 1997-1"
(herein referred to by specific Class as the "Series 1997-1, Class A-_ Notes"
and collectively as the "Series 1997-1 Notes"), in the aggregate principal
amount of $281,000,000 issued under the Indenture. The Series 1997-1 Notes are
issued to finance the acquisition and consolidation of Financed Student Loans,
and to make certain deposits to the Pledged Accounts.
The Master Indenture provides for the issuance, from time to time, under
the conditions, limitations and restrictions set forth therein, of additional
notes on a parity with all Series of obligations issued or to be issued under
the Indenture, for the purpose of providing additional funds for the acquisition
and consolidation of Financed Student Loans (said additional notes, together
with Series 1997-1 Notes, being collectively referred to herein as the "Notes").
The Notes are secured under the Indenture which, together with certain
other documents, assigns to the Indenture Trustee for the benefit of the
Noteholders all the rights and remedies of the Issuer under certain Financed
Student Loans and rights under various contracts providing for the issuance,
guarantee and servicing of such Financed Student Loans. Reference is hereby made
to the Indenture for the provisions, among others, with respect to the custody
and application of the proceeds of the Notes, definitions of certain capitalized
terms used in this Series 1997-1 Note, the nature and the extent of the liens
and security of the Indenture, the collection and disposition of revenues, the
funds charged with and pledged to the payment of the principal of and the
interest on the Notes, the terms and conditions under which additional Notes may
be issued, the rights, duties and immunities of the Indenture Trustee, the
rights of the registered owners of the Notes, and the rights and obligations of
the Issuer. By the acceptance of this Series 1997-1 Note, the registered owner
hereof assents to all of the provisions of the Indenture.
The unpaid principal amount hereof from time to time outstanding shall bear
interest at a Class Interest Rate, as described below, payable on each
applicable Note Distribution Date to the extent of interest accrued on the
principal then outstanding, such interest to accrue from the later of the date
hereof or the date through which interest has been paid or duly provided for.
Interest at a Class Interest Rate established pursuant to the First Terms
Supplement shall be computed for the actual number of days elapsed on the basis
of a year consisting of 360 days.
During the Class Initial Period, this Series 1997-1 Note shall bear
interest at the Class Initial Rate for the Series 1997-1 Notes of this Class.
Thereafter until an Auction Period Adjustment, if any, this Series 1997-1 Note
shall bear interest at a Class Interest Rate based on an Auction Period that
shall, until adjusted pursuant to the First Terms Supplement, generally consist
of __ days, all as determined in the First Terms Supplement.
The Class Interest Rate to be borne by this Series 1997-1 Note after the
Class Initial Period for each Auction Period, if any, or an Auction Period
Adjustment, if any, shall be the lesser of (i) the Net Loan Rate in effect for
such Auction Period and (ii) the Auction Rate determined in accordance with the
applicable provisions of the First Terms Supplement.
In no event shall the Class Interest Rate on this Series 1997-1 Note exceed
16.0% per annum.
The Class Interest Period, including, without limitation, an Auction
Period, the applicable Class Interest Rate, the method of determining the
applicable Class Interest Rate on each of the Series 1997-1 Notes and the
Auction Procedures related thereto, including, without limitation, required
notices thereof to the Noteholders or Existing Noteholders of the Series 1997-1
Notes, an Auction Period Adjustment, a change in the Auction Date and the Note
Distribution Dates will be determined in accordance with the terms, conditions
and provisions of the First Terms Supplement and the Auction Agent Agreement, to
which terms, conditions and provisions specific reference is hereby made, and
all of which terms, conditions and provisions are hereby specifically
incorporated herein by reference.
If the Auction Rate for the Series 1997-1 Notes is greater than the Net
Loan Rate, then the Class Interest Rate applicable to the Series 1997-1 Notes
for that Class Interest Period will be the Net Loan Rate. If the Class Interest
Rate applicable to the Series 1997-1 Notes for any Class Interest Period is the
Net Loan Rate, the Indenture Trustee shall determine the Noteholders' Auction
Rate Interest Carryover, if any, with respect to the Series 1997-1 Notes for
such Class Interest Period. Such Noteholders' Auction Rate Interest Carryover
shall bear interest calculated at a rate equal to One-Month LIBOR from the Note
Distribution Date for each Class Interest Period with respect to which such
Noteholders' Auction Rate Interest Carryover was calculated until paid. For
purposes of this Series 1997-1 Note, any reference to "principal" or "interest"
herein shall not include within the meaning of such words Noteholders' Auction
Rate Interest Carryover or any interest accrued on any such Noteholders' Auction
Rate Interest Carryover. Such Noteholders' Auction Rate Interest Carryover shall
be separately calculated for each Series 1997-1 Note by the Indenture Trustee
during such Class Interest Period in sufficient time for the Indenture Trustee
to give notice to each Noteholder of such Noteholders' Auction Rate Interest
Carryover as required in the next succeeding sentence. On the Note Distribution
Date for a Class Interest Period with respect to which such Noteholders' Auction
Rate Interest Carryover has been calculated by the Indenture Trustee, the
Indenture Trustee shall give written notice to each Noteholder of the
Noteholders' Auction Rate Interest Carryover applicable to each Noteholder's
Series 1997-1 Note, which written notice may accompany the payment of interest
by check made to each such Noteholder on such Note Distribution Date or
otherwise shall be mailed on such Note Distribution Date by first class mall,
postage prepaid, to each such Noteholder at such Noteholder's address as it
appears on the registration books maintained by the Registrar. Such notice shall
state, in addition to such Noteholders' Auction Rate Interest Carryover, that,
unless and until the Final Maturity Date for such Class of Series 1997-1 Note
has occurred (after which no Noteholders' Auction Rate Interest Carryover (and
all accrued interest thereon) shall be paid with respect to a Series 1997-1
Note), (i) the Noteholders' Auction Rate Interest Carryover (and interest
accrued thereon calculated on the basis of One-Month LIBOR) shall be paid by the
Indenture Trustee on a Series 1997-1 Note on the first occurring Note
Distribution Date for a subsequent Class Interest Period if and to the extent
that (1) during such Class Interest Period no additional Noteholders' Auction
Rate Interest Carryover is accruing on the Series 1997-1 Notes and (2) moneys
are available on such Note Distribution Date pursuant to the terms of the First
Terms Supplement in an amount sufficient to pay all or a portion of such
Noteholders' Auction Rate Interest Carryover and (ii) interest shall accrue on
the Noteholders' Auction Rate Interest Carryover at a rate equal to One-Month
LIBOR until such Noteholders' Auction Rate Interest Carryover is paid in full or
is the related Final Maturity Date occurs.
The Noteholders' Auction Rate Interest Carryover for the Series 1997-1
Notes shall be paid by the Indenture Trustee on Outstanding Series 1997-1 Notes
on the first occurring Note Distribution Date for a subsequent Class Interest
Period if and to the extent that (i) during such Class Interest Period, no
additional Noteholders' Auction Rate Interest Carryover is accruing on the
Series 1997-1 Notes and (ii) on such Note Distribution Date there are sufficient
moneys available pursuant to the terms of the First Terms Supplement to pay all
or a portion of the Noteholders' Auction Rate Interest Carryover due on the
Series 1997-1 Notes on such Note Distribution Date. Any Noteholders' Auction
Rate Interest Carryover (and any interest accrued thereon) on any Series 1997-1
Note which is due and payable on the related Final Maturity Date, shall be paid
to the Noteholder thereof on said Final Maturity Date to the extent that moneys
are available therefor in accordance with the First Terms Supplement; provided,
however, that any Noteholders' Auction Rate Interest Carryover (and any interest
accrued thereon) which is not yet due and payable on said Final Maturity Date
shall be cancelled with respect to said Series 1997-1 Note on said Final
Maturity Date. To the extent that any portion of the Noteholders' Auction Rate
Interest Carryover remains unpaid after payment of a portion thereof, such
unpaid portion of the Noteholders' Auction Rate Interest Carryover shall be paid
in whole or in part until fully paid by the Indenture Trustee on the next
occurring Note Distribution Date or Dates, as necessary, for a subsequent Class
Interest Period or Periods, if and to the extent that the conditions in the
immediately preceding sentence are satisfied.
The Note Distribution Date in such subsequent Class Interest Period on
which such Noteholders' Auction Rate Interest Carryover for the Series 1997-1
Notes shall be paid shall be determined by the Indenture Trustee in accordance
with the provisions of the immediately preceding paragraph, and the Indenture
Trustee shall make payment of the Noteholders' Auction Rate Interest Carryover
in the same manner as, and from the same account from which, it pays interest on
the Series 1997-1 Notes on an Note Distribution Date.
The principal of and interest on the Series 1997-1 Notes and Noteholders'
Auction Rate Interest Carryover on the Series 1997-1 Notes (and interest accrued
thereon), if any, are special limited obligations of the Issuer, payable solely
from certain revenues derived by the Issuer from certain assets of the Issuer,
including certain notes evidencing Financed Student Loans. The Series 1997-1
Notes are not an indebtedness, a debt or a liability of Trans-World Insurance
Company, ClassNotes, Inc., The Money Store Inc. or Xxxxx Xxxxxx Inc.
Distributions of principal will made to the Class of Notes with the
earliest Final Maturity Date on the first Note Distribution Date for such Class
occurring each month, commencing [April 1997], in the manner described in the
Sale and Servicing Agreement. With respect to the Class of Notes entitled to
receive payments of principal, the actual Notes of such Class that will receive
payments of principal on each applicable Note Distribution Date will be selected
no later than 15 days prior to the related Note Distribution Date by the
Indenture Trustee by lot in such manner as the Indenture Trustee in its
discretion may determine and which may provide for the selection for payment of
principal in minimum denominations of $50,000, and integral multiples in excess
thereof.
If an Event of Default as defined in the Indenture occurs, the principal of
and interest on all Notes issued under the Indenture may be declared due and
payable upon the conditions and in the manner and with the effect provided in
the Indenture. The Indenture and the rights and obligations of the Issuer, the
Indenture Trustee and the Noteholder hereof may be modified or amended in the
manner and subject to the conditions set forth in the Indenture.
The Noteholder of this Series 1997-1 Note shall have no right to enforce
the provisions of the Indenture or to institute action to enforce the covenants
therein, or to take any action with respect to any Event of Default under the
Indenture, or to institute, appear in or defend any suit or other proceeding
with respect thereto, except as provided in the Indenture.
The transfer of this Series 1997-1 Note may be registered only upon
surrender hereof to the Indenture Trustee together with an assignment duly
executed by the registered owner or its attorney or legal representative in such
form as shall be satisfactory to the Indenture Trustee. Upon any such
registration of transfer of this Series 1997-1 Note and subject to the payment
of any fees and charges as provided by the Indenture, the Issuer shall execute
and the Indenture Trustee shall authenticate and deliver in exchange for this
Series 1997-1 Note a new Series 1997-1 Note or Notes registered in the name of
the transferee, in any denomination or denominations authorized by the
Indenture, of the same maturity and in an aggregate principal amount equal to
the unredeemed principal amount of this Series 1997-1 Note and bearing the same
interest as this Series 1997-1 Note.
In any case where the date fixed for the payment of principal of or
interest on this Series 1997-1 Note shall not be a Business Day, then payment of
such principal or interest need not be made on such date but may be made on the
next succeeding Business Day with the same force and effect as if made on the
date fixed for the payment thereof.
It is hereby certified, recited and declared that all acts, conditions and
things required to have happened, to exist and to have been performed precedent
to and in the execution and delivery of the Indenture and issuance of this
Series 1997-1 Note have happened, do exist and have been performed in due time,
form and manner as required by law.
This Series 1997-1 Note shall not be valid or become obligatory for any
purpose or be entitled to any security or benefit under the Indenture until the
certificate of authentication hereon shall have been manually signed by the
Indenture Trustee.
IN WITNESS WHEREOF, the Issuer has caused this Series 1997-1 Note to be
executed in its name by the manual or facsimile signature of an Authorized
Officer.
CLASSNOTES TRUST 1997-I
By: THE YORK BANK AND TRUST
COMPANY,
not in its individual capacity but
solely as Eligible Lender Trustee
By:
--------------------------------
CERTIFICATE OF AUTHENTICATION
This Note is one of the Series 1997-1 Notes designated in and issued under
the provisions of the within mentioned Indenture.
BANKERS TRUST COMPANY
New York, New York, as
Indenture Trustee
By:
-----------------------------
Authorized Representative
Date of Authentication:
----------------------------------
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
, the within Note and irrevocably appoints , attorney-in-fact, to transfer the
within Note on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:
----------------------------- ----------------------------
NOTICE: The signature to Signature Guaranteed:
this assignment must
correspond with the name as ----------------------------
it appears upon the face of
the within Note in every par-
ticular, without any alter-
ation whatsoever.
Name and Address:
-------------------------------
Tax Identification Number or
Social Security Number(s):
------------------------------
[END OF FORM OF SERIES 1997-1 NOTE]
EXHIBIT B
CLASSNOTES TRUST 1997-I
ASSET BACKED NOTES, SERIES 1997-1, CLASS A-_
NOTICE OF PAYMENT DEFAULT
NOTICE IS HEREBY GIVEN that an Event of Default has occurred and is
continuing with respect to the Notes identified above. The next Auction for the
Series 1997-1, Class A-_ Notes will not be held. The Auction Rate for the Series
1997-1, Class A-_ Notes for the next succeeding Interest Period shall be the
Non-Payment Rate.
BANKERS TRUST COMPANY,
as Indenture Trustee
Dated: By:
-------------------------------
Name:
Title:
EXHIBIT C
CLASSNOTES TRUST 1997-I
ASSET BACKED NOTES, SERIES 1997-1, CLASS A-_
NOTICE OF CURE OF PAYMENT DEFAULT
NOTICE IS HEREBY GIVEN that an Event of Default with respect to the Notes
identified above has been waived or cured. The next Note Distribution Payment
Date is and the next Auction Date is .
BANKERS TRUST COMPANY,
as Indenture Trustee
Dated: By:
---------------------------
Name:
Title:
EXHIBIT D
CLASSNOTES TRUST 1997-I
ASSET BACKED NOTES, SERIES 1997-1, CLASS A-_
NOTICE OF PROPOSED AUCTION PERIOD ADJUSTMENT
Notice is hereby given that the Issuer proposes to change the length of one
or more Auction Periods pursuant to the First Terms Supplement as follows:
1. The change shall take effect on the Note Distribution Date for the
current Auction Period and the date of commencement of the next Auction Period
(the "Effective Date").
2. The Auction Period Adjustment in Paragraph 1 shall take place only if
(A) the Indenture Trustee and the Auction Agent receive, by 11:00 a.m., eastern
time, on the Business Day before the Auction Date for the Auction Period
commencing on the Effective Date, a certificate from the Market Agent, as
required by the First Terms Supplement authorizing the change in length of one
or more Auction Periods and (B) Sufficient Bids exist on the Auction Date for
the Auction Period commencing on the Effective Date.
3. If the condition referred to in (A) above is not met, the Auction Rate
for the Auction Period commencing on the Effective Date will be determined
pursuant to the Auction Procedures and the Auction Period shall be the Auction
Period determined without reference to the proposed change. If the condition
referred to in (A) is met but the condition referred to in (B) above is not met,
the Auction Rate for the Auction Period commencing on the Effective Date shall
be the Maximum Auction Rate and the Auction Period shall be the Auction Period
determined without reference to the proposed change.
4. It is hereby represented, upon advice of the Auction Agent for the Notes
described herein, that there were Sufficient Bids for such Notes at the Auction
immediately preceding the date of this Notice.
5. Terms not defined in this Notice shall have the meanings set forth in
the First Terms Supplement entered into in connection with the captioned Notes.
CLASSNOTES TRUST 1997-I
By: THE YORK BANK AND TRUST COMPANY,
not in its individual capacity
but solely as Eligible Lender
Trustee
By:
----------------------------
Name:
Title:
Dated:
EXHIBIT E
CLASSNOTES TRUST 1997-I
ASSET BACKED NOTES, SERIES 1997-1, CLASS A-_
NOTICE ESTABLISHING AUCTION PERIOD ADJUSTMENT
Notice is hereby given that the Issuer hereby establishes new lengths for
one or more Auction Periods pursuant to the First Terms Supplement:
l. The change shall take effect on ___________, the Note Distribution Date
for the current Auction Period and the date of commencement of the next Auction
Period (the "Effective Date").
2. For the Auction Period commencing on the Effective Date, the Note
Distribution Date shall be _____________________, or the next succeeding
Business Day if such date is not a Business Day.
3. For Auction Periods occurring after the Auction Period the Note
Distribution Dates shall be [___________________ (date) and every _____________
(number) _______________ (day of week) thereafter] [every _______________
(number) _______________ (day of week) after the date set forth in paragraph 2
above], or the next Business Day if any such day is not a Business Day;
provided, however, that the length of subsequent Auction Periods shall be
subject to further change hereafter as provided in Section 2.5.7 of the First
Terms Supplement.
4. The changes described in paragraphs 2 and 3 above shall take place only
upon delivery of this Notice and the satisfaction of other conditions set forth
in the First Terms Supplement and our prior notice dated ______________
regarding the proposed change.
5. Terms not defined in this Notice shall have the meanings set forth in
the First Terms Supplement relating to the captioned Notes.
CLASSNOTES TRUST 1997-I
By: THE YORK BANK AND TRUST COMPANY,
not in its individual capacity
but solely as Eligible Lender
Trustee
By:
--------------------------------------
Name:
Title:
Dated:
EXHIBIT F
CLASSNOTES TRUST 1997-I
ASSET BACKED NOTES, SERIES 1997-1, CLASS A-_
NOTICE OF CHANGE IN AUCTION DATE
Notice is hereby given by XXXXX XXXXXX INC., as Market Agent for the
captioned Notes, that with respect to the captioned Notes, the Auction Date is
hereby changed as follows:
l. With respect to the captioned Notes, the definition of "Auction Date"
shall be deemed amended by substituting "_________________ (number) Business
Day" in the second line thereof.
2. This change shall take effect on ______________ which shall be the
Auction Date for the Auction Period commencing on ______________.
3. The Auction Date for the captioned Notes shall be subject to further
change hereafter as provided in the First Terms Supplement.
4. Terms not defined in this Notice shall have the meanings set forth in
the First Terms Supplement relating to the captioned Notes.
XXXXX XXXXXX INC., as Market Agent
Dated: By:
Name:
Title:
