[EXECUTION COPY]
SALE AND SERVICING AGREEMENT
among
CLASSNOTES TRUST 1997-I
as Issuer,
TRANS-WORLD INSURANCE COMPANY D/B/A EDUCAID
as Seller, Master Servicer and Administrator,
CLASSNOTES, INC.
as Seller and Master Servicer,
THE YORK BANK AND TRUST COMPANY
not in its individual capacity but solely
as Eligible Lender Trustee,
and
THE MONEY STORE INC.,
Dated as of February 28, 1997
ARTICLE I
Definitions and Usage ....................................................2
ARTICLE II
Conveyance of Financed Student Loans
SECTION 2.1. Conveyance of Initial Financed Student Loans...................2
SECTION 2.2. Conveyance of Additional Financed Student
Loans...............................................3
SECTION 2.3. Conveyance of Certain Financed Student Loans
by the Eligible Lender Trustee to the
Sellers.............................................5
SECTION 2.4. Security Agreement..............................................6
ARTICLE III
The Financed Student Loans
SECTION 3.1. Representations and Warranties of Sellers
with Respect to the Financed Student Loans.........6
SECTION 3.2. Repurchase upon Breach; Reimbursement..........................11
SECTION 3.3. Custody of Financed Student Loan Files.........................12
SECTION 3.4. Duties of Master Servicers as Custodian........................13
SECTION 3.5. Instructions; Authority to Act.................................14
SECTION 3.6. Custodian's Indemnification....................................14
SECTION 3.7. Effective Period and Termination...............................15
SECTION 3.8. Appointment of Subcustodian....................................15
ARTICLE IV
Administration and Servicing of Financed Student Loans
SECTION 4.1. Duties of the Master Servicers.................................16
SECTION 4.2. Collection of Financed Student Loan Payments..................17
SECTION 4.3. Realization upon Financed Student Loans........................19
SECTION 4.4. No Impairment..................................................20
SECTION 4.5. Purchase of Financed Student Loans;
Reimbursement......................................20
SECTION 4.6. Servicing Fee; Servicing Fee Carryover.........................21
SECTION 4.7. Administrator's Certificate....................................22
SECTION 4.8. Annual Statement as to Compliance; Notice of
Default............................................23
SECTION 4.9. Annual Independent Certified Public
Accountants' Report................................24
SECTION 4.10. Access to Certain Documentation and
Information Regarding Financed Student Loans......24
SECTION 4.11. Master Servicer and Administrator Expenses...................25
SECTION 4.12. Appointment of Subservicer....................................25
ARTICLE V
Distributions; Reserve Account
SECTION 5.1. Establishment of Trust Accounts................................25
SECTION 5.2. Collections ...................................................28
SECTION 5.3. Application of Collections.....................................29
SECTION 5.4. Additional Deposits............................................29
SECTION 5.5. Distributions..................................................30
SECTION 5.6. Reserve Account................................................34
SECTION 5.7. Statements to Certificateholders and
Noteholders........................................36
SECTION 5.8. Pre-Funding Account............................................38
SECTION 5.9. Capitalized Pre-Funding Account................................38
SECTION 5.10. Capitalized Interest Account..................................39
SECTION 5.11. Expense Account...............................................39
SECTION 5.12. Note Distribution Account and Certificate
Distribution Account...............................39
SECTION 5.13. Monthly Advances..............................................39
ARTICLE VI
The Sellers and the Master Servicers
SECTION 6.1. Representations of the Sellers and the
Master Servicers...................................40
SECTION 6.2. Existence ...................................................42
SECTION 6.3. Liability and Indemnities......................................42
SECTION 6.4. [Reserved] ...................................................44
SECTION 6.5. Merger or Consolidation of, or Assumption of
the Obligations of, the Sellers, the
Administrator or the Master Servicers..............44
SECTION 6.6. Limitation on Liability of Seller, Master
Servicer and Others................................45
SECTION 6.7. Seller May Own Certificate or Notes............................46
SECTION 6.8. Master Servicer Not to Resign..................................46
ARTICLE VII
The Administrator
SECTION 7.1. Representations of the Administrator...........................47
SECTION 7.2. Liability and Indemnities......................................48
SECTION 7.3. Administrator Not to Resign....................................49
ARTICLE VIII
Default
SECTION 8.1. Master Servicer Default; Administrator
Default............................................50
SECTION 8.2. Appointment of Successor.......................................53
SECTION 8.3. Notification to Noteholders and
Certificateholders.................................54
SECTION 8.4. Waiver of Past Defaults........................................55
ARTICLE IX
Termination
SECTION 9.1. Termination ...................................................55
ARTICLE X
Surety Bonds
SECTION 10.1. Note Surety Bonds..............................................58
SECTION 10.2. Further Assurances; Surety Provider Default;
etc................................................59
ARTICLE XI
Miscellaneous
SECTION 11.1. Amendment ...................................................60
SECTION 11.2. Protection of Interests in Trust..............................61
SECTION 11.3. Notices ...................................................64
SECTION 11.4. Assignment ...................................................64
SECTION 11.5. Limitations on Rights of Others...............................65
SECTION 11.6. Severability..................................................65
SECTION 11.7. Separate Counterparts.........................................65
SECTION 11.8. Headings ...................................................65
SECTION 11.9. Governing Law.................................................65
SECTION 11.10. Assignment to Indenture Trustee...............................65
SECTION 11.11. Nonpetition Covenants.........................................65
SECTION 11.12. Limitation of Liability of Eligible Lender
Trustee and Indenture Trustee.....................66
SECTION 11.13. Rights of Surety Provider.....................................66
APPENDIX A Definitions and Usage
SCHEDULE A Schedule of Financed Student Loans
SCHEDULE B Location of Financed Student Loans
EXHIBIT A Form of Report to Noteholders
EXHIBIT B Form of Report to Certificateholders
EXHIBIT C Form of Administrator's Certificate
EXHIBIT D Form of Assignment of Initial Financed
Student Loans
EXHIBIT E Form of Assignment and Bill of Sale for
Additional Financed Student Loans
SALE AND SERVICING AGREEMENT (the "Agreement") dated as of February 28,
1997, among CLASSNOTES TRUST 1997-I, a Pennsylvania business trust (the
"Issuer"), TRANS-WORLD INSURANCE COMPANY D/B/A EDUCAID, an Arizona corporation
("TWIC," a "Seller," a "Master Servicer" or the "Administrator"), CLASSNOTES,
INC., a Delaware corporation ("ClassNotes," a "Seller" or a "Master Servicer"
and, together with TWIC, the "Sellers" or the "Master Servicers"), THE YORK BANK
AND TRUST COMPANY, a Pennsylvania bank and trust company, solely as eligible
lender trustee and not in its individual capacity (the "Eligible Lender
Trustee"), and THE MONEY STORE INC., a New Jersey corporation ("TMSI").
WHEREAS the Issuer desires to purchase student loans originated or acquired
by the Sellers in the ordinary course of business;
WHEREAS TMSI is willing to assist its wholly-owned subsidiaries, the
Sellers, to sell such student loans so as to provide a source of funding for the
Sellers' respective student loan businesses, and the Sellers are willing to sell
such student loans to the Issuer;
WHEREAS the Eligible Lender Trustee is willing to hold legal title to, and
serve as eligible lender trustee with respect to, such student loans on behalf
of the Issuer; and
WHEREAS the Master Servicers and the Administrator are willing to service
such student loans and undertake certain administrative functions with respect
thereto; and
WHEREAS, the parties hereto expect to enter into additional sale and
servicing agreements substantially identical to this Agreement from time to time
in connection with the issuance of additional series of debt instruments by the
Issuer.
WHEREAS the Issuer is authorizing on the date hereof for issuance its
Auction Rate Asset Backed Certificates, Class 1 (the "Certificates") and its
Series 1997-1 Asset Backed Notes, Class A-1, Class A-2 and Class A-3 (the
"Series 1997-1 Notes");
WHEREAS the parties hereto are entering into this Sale and Servicing
Agreement in connection with the Certificates and the Series 1997-1 Notes.
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
Capitalized terms used but not defined herein are defined in Appendix A
hereto, which also contains rules as to usage and construction that shall be
applicable herein.
ARTICLE II
CONVEYANCE OF FINANCED STUDENT LOANS
SECTION 2.1. CONVEYANCE OF INITIAL FINANCED STUDENT LOANS. (a) In
consideration of the Issuer's delivery to or upon the order of TWIC on the
Closing Date of $239,134,328.76 and the other amounts to be distributed from
time to time to the Sellers in accordance with the terms of this Agreement, each
of the Sellers agrees to, and the Sellers do hereby, as evidenced by a duly
executed written assignment and bill of sale in the form of Exhibit D, sell,
transfer, assign, set over and otherwise convey to the Eligible Lender Trustee
on behalf of the Issuer, without recourse (subject to the obligations herein):
(i) all right, title and interest in and to the Financed
Student Loans owned by TWIC (other than the Additional Financed Student
Loans) (the "Initial Financed Student Loans") listed on Schedule A to
this Agreement and all obligations of the Obligors thereunder,
including all moneys paid thereunder, and all written communications
received by TWIC with respect thereto (including borrower
correspondence, notices of death, disability or bankruptcy and requests
for deferrals or forbearance), on or after the
Initial Cut-off Date;
(ii) all right, title and interest in all funds on deposit
from time to time in the Trust Accounts and in all investments and
proceeds thereof (including all income thereon);
(iii) the proceeds of any and all of the foregoing;
and
(iv) the amounts specified in Sections 5.8, 5.9 and
5.10 hereof.
(b) In connection with the sale and assignment of Financed Student Loans to
the Eligible Lender Trustee on behalf of the Issuer, on or prior to the Closing
Date, the Sellers shall cause the Surety Provider to deliver (i) the Certificate
Surety Bond to the Eligible Lender Trustee on behalf of the Certificateholders
and (ii) the Note Surety Bond to the Eligible Lender Trustee on behalf of the
related Noteholders.
(c) On the Closing Date, the Sellers shall have delivered (A) to the Rating
Agencies and the Surety Provider an Opinion of Counsel with respect to the
transfer of the Initial Financed Student Loans and the Additional Financed
Student Loans to be transferred on each Transfer Date, and (B) to the Eligible
Lender Trustee, the Surety Provider and the Indenture Trustee the Opinion of
Counsel required by Section 11.2(i)(1).
(d) In connection with the sale of the Initial Financed Student Loans, on
the Closing Date relating to the Series 1997-1 Notes each Seller and the Issuer
shall execute a cross-receipt, which will evidence receipt by such Seller of the
purchase price for its Initial Financed Student Loans, and receipt by the Issuer
of such Initial Financed Student Loans.
SECTION 2.2. CONVEYANCE OF ADDITIONAL FINANCED STUDENT LOANS. (a) Subject
to the conditions set forth in paragraph (b) below, in consideration of the
Issuer's delivery on the related Transfer Date to or upon the order of a Seller
of the amount described in Section 5.8(a) to be delivered to such Seller, such
Seller does hereby, sell, transfer, assign, set over and otherwise convey to the
Eligible Lender Trustee on behalf of the Issuer, without recourse (subject to
the obligations herein) all right, title and interest of such Seller in and to
each Additional Financed Student Loan, and all moneys received thereon, and all
written communications received by such Seller with respect thereto (including
borrower correspondence, notices of death, disability or bankruptcy and requests
for deferrals or forbearances), on and after the related Subsequent Cut-off
Date, made from time to time during the Funding Period relating to the Series
1997-1 Notes.
(b) A Seller shall transfer to the Issuer the Additional Financed Student
Loans for a given Transfer Date and the other property and rights related
thereto described in paragraph (a) above only upon the satisfaction of each of
the following conditions on or prior to such Transfer Date:
(i) such Seller shall have delivered to the Eligible Lender
Trustee and the Indenture Trustee, with a copy to the Surety Provider,
a duly executed written assignment and bill of sale in substantially
the form of Exhibit E (each, a "Transfer Agreement"), which shall
include supplements to Schedule A hereto, listing such Additional
Financed Student Loans;
(ii) such Seller shall have delivered, at least 2 Business
Days prior to such Transfer Date, notice of such transfer to the
Eligible Lender Trustee and the Indenture Trustee, with a copy to the
Surety Provider, including a listing of the type and the aggregate
principal balance of such Additional Financed Student Loans;
(iii) such Seller shall, to the extent required by Section 5.2
of this Agreement, have deposited in the Collection Account all
collections in respect of the Additional Financed Student Loans on and
after each applicable Subsequent Cut-off Date;
(iv) as of each Transfer Date, such Seller was not insolvent
nor will it have been made insolvent by such transfer nor is it aware
of any pending insolvency;
(v) as of each Transfer Date, such Seller was in
compliance with all applicable provisions of the Insurance
Agreement and no default, or event which with notice or the
passage of time, or both, would constitute a default,
thereunder has occurred;
(vi) such addition will not result in a material
adverse Federal or Pennsylvania tax consequence to the
Issuer, the Noteholders or the Certificateholders;
(vii) the Funding Period relating to the Series
1997- 1 Notes shall not have terminated;
(viii) such Seller shall have taken any action
required to maintain the first perfected ownership interest
of the Issuer in the Trust Estate and the first perfected
security interest of the Indenture Trustee in the Indenture
Trust Estate; and
(ix) no selection procedures believed by such Seller to be
adverse to the interests of the Certificateholders, the Noteholders or
the Surety Provider shall have been utilized in selecting the
Additional
Financed Student Loans.
(c) In addition to Additional Financed Student Loans
originated by a Seller, with the prior consent of the Surety Provider, such
Seller may direct the Eligible Lender Trustee to acquire one or more portfolios
of specified student loans as Additional Financed Student Loans hereunder
subject to satisfaction of the conditions specified in Section 2.2(b); PROVIDED,
HOWEVER, that the Transfer Agreement delivered by such
Seller may be modified to reflect the sale to the Issuer by such Seller of its
rights to acquire such Additional Financed Student Loans.
SECTION 2.3. CONVEYANCE OF CERTAIN FINANCED STUDENT LOANS BY THE ELIGIBLE
LENDER TRUSTEE TO THE SELLERS. (a) Upon receipt of written notice (or telephonic
or facsimile notice followed by written notice) from a Seller (or from the
applicable Master Servicer on behalf of such Seller) by the Eligible Lender
Trustee and the Indenture Trustee, a copy of such notice to be concurrently
delivered to the Surety Provider, the Eligible Lender Trustee will convey to
such Seller the Financed Student Loans identified in such notice, which are to
be repaid with proceeds of the Consolidation Loans to be made by or on behalf of
such Seller. Simultaneously with each such conveyance by the Eligible Lender
Trustee and the making by a Seller of each such Consolidation Loan, such Seller
shall deposit into the Collection Account an amount equal to the aggregate
Purchase Amount of such Financed Student Loans, as payment for such conveyance.
(b) Upon receipt of written notice (or telephonic or facsimile notice
followed by written notice) from a Seller (or from the applicable Master
Servicer on behalf of such Seller) by the Eligible Lender Trustee and the
Indenture Trustee, that a Financed Student Loan that is a Serial Loan is to be
conveyed to the holder of one or more student loans to which such Financed
Student Loan is serial, a copy of such notice to be concurrently delivered to
the Surety Provider, the Eligible Lender Trustee shall convey to the order of
such Seller's designee the Financed Student Loan(s) identified in such notice.
Within 75 days of each such conveyance by the Eligible Lender Trustee, a Seller
shall either (i) cause the transferee of such Financed Student Loan(s) to pay
into the Collection Account an amount at least equal to the aggregate Purchase
Amount of such Financed Student Loan(s) in consideration for such conveyance or
(ii) reconvey to the Eligible Lender Trustee such Financed Student Loan(s).
Until such time, if any, as the amount set forth in clause (i) above is
deposited into the Collection Account, all payments received on or with respect
to such Financed Student Loan shall remain an asset of the Trust.
(c) Upon receipt of written notice (or telephonic or facsimile notice
followed by written notice) from a Master Servicer by the Eligible Lender
Trustee and the Indenture Trustee, a copy of such notice to be concurrently
delivered to the Surety Provider, the Eligible Lender Trustee will convey to
such Master Servicer the Financed Student Loans identified in such notice, which
are to be transferred to a Guarantor in consideration of a related Guarantee
Payment. Within one Business Day of its receipt of the related Guarantee
Payment, a Master Servicer shall deposit, or cause to be deposited, into the
Collection Account an amount equal to such Guarantee Payment, as payment of such
conveyance.
(d) Upon receipt of written notice (or telephonic or facsimile notice
followed by written notice) from the Administrator by the Eligible Lender
Trustee and the Indenture Trustee, a copy of such notice to be concurrently
delivered to the Surety Provider, the Eligible Lender Trustee shall convey to
the order of the Administrator or the Administrator's designee the Financed
Student Loans identified in such notice. Simul taneously with each such
conveyance by the Eligible Lender Trustee, the Administrator shall deposit, or
cause to be deposited, into the Collection Account an amount at least equal to
the aggregate Purchase Amount of such Financed Student Loans as payment for such
conveyance. Notwithstanding the foregoing, any such conveyance of a Financed
Student Loan pursuant to this Section 2.3(d) shall conform to the applicable
requirements of the Insurance Agreement.
SECTION 2.4. SECURITY AGREEMENT. Although it is the intent of the parties
to this Agreement that the conveyance of the Sellers' right, title and interest
in and to the Financed Student Loans pursuant to this Agreement shall constitute
a purchase and sale and not a loan, in the event that such conveyance is deemed
to be a loan, it is the intent of the parties to this Agreement that the Sellers
shall be deemed to have granted to the Eligible Lender Trustee, on behalf of the
Issuer, a first priority perfected security interest in all of the Sellers'
right, title and interest in, to and under the Financed Student Loans and the
proceeds thereof, and that this Agreement shall constitute a security agreement
under applicable law.
ARTICLE III
THE FINANCED STUDENT LOANS
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF SELLERS WITH RESPECT TO THE
FINANCED STUDENT LOANS. TMSI and the applicable Seller, as the case may be,
jointly and severally, make the following representations and warranties as to
the Financed Student Loans being transferred to the Eligible Lender Trustee by
such Seller on the Closing Date relating to the Series 1997-1 Notes and the
Financed Student Loans to be transferred to the Eligible Lender Trustee by such
Seller during the Funding Period for the Series 1997-1 Notes, on which the
Issuer is deemed to have relied in acquiring (through the Eligible Lender
Trustee) such Financed Student Loans. Such representations and warranties speak
as of the execution and delivery of this Agreement and as of the Closing Date
relating to the Series 1997-1 Notes, in the case of the Initial Financed Student
Loans, and as of the applicable Transfer Date, in the case of the Additional
Financed Student Loans, but shall survive the sale, transfer and assignment of
such Financed Student Loans to the Eligible Lender Trustee on behalf of the
Issuer and the pledge thereof to the Indenture Trustee pursuant to the
Indenture. As used in this Article III, unless otherwise indicated the term
"Financed Student Loans" shall include only the Financed Student Loans being
transferred to the Eligible Lender Trustee on the Closing Date for the Series
1997-1 Notes and the Financed Student Loans to be transferred to the Eligible
Lender Trustee during the Funding Period for the Series 1997-1 Notes.
(i) CHARACTERISTICS OF FINANCED STUDENT LOANS. Each Financed
Student Loan (A) was originated in the United States of America, its
territories, its possessions or other areas subject to its
jurisdiction to an eligible borrower under applicable law and
agreements and was fully and properly executed by the parties thereto,
(B) was originated or acquired by such Seller in the ordinary course
of its business, (C) has been serviced since the date of its
origination in accordance with all applicable requirements of the
applicable Guarantor and the Higher Education Act and (D) provides or,
when the payment schedule with respect thereto is determined, will
provide for payments on a periodic basis that fully amortize the
principal amount of such Financed Student Loan by its maturity and
yields interest at the rate applicable thereto, as such maturity may
be modified in accordance with any applicable deferral or forbearance
periods granted in accordance with applicable laws and restrictions,
including those of the Higher Education Act or any Guarantee
Agreement. Each Financed Student Loan that is a Stafford Loan
qualifies the holder thereof to receive Interest Subsidy Payments and
Special Allowance Payments from the Department. Each Financed Student
Loan that is a Consolidation Loan qualifies the holder thereof to
receive Interest Subsidy Payments and Special Allowance Payments from
the Department to the extent applicable. Each Financed Student Loan
that is a PLUS Loan, a SLS Loan or an Unsubsidized Stafford Loan
qualifies the holder thereof to receive Special Allowance Payments
from the Department to the extent applicable. Each Financed Student
Loan qualifies the holder thereof to receive Guarantee Payments from
the applicable Guarantor.
(ii) SCHEDULE OF FINANCED STUDENT LOANS. The information
concerning the Initial Financed Student Loans set forth in Schedule A
to this Agreement and Schedule A to the related Transfer Agreement is
true and correct in all material respects as of the opening of
business on the Initial Cut-off Date or each applicable Subsequent
Cut-off Date, as applicable, and no selection procedures believed to
be adverse to the Noteholders, the Certificateholders or the Surety
Provider were utilized in selecting the Initial Financed Student Loans
or the Additional Financed Student Loans, as applicable. The computer
tape or electronic data transmission regarding the Initial Financed
Student Loans made available to the Issuer and its assigns and the
Surety Provider is true and correct in all respects as of the Initial
Cut-off Date.
(iii) COMPLIANCE WITH LAW. Each Financed Student Loan complied
at the time it was originated or made and at the execution of this
Agreement or the applicable Transfer Agreement, as the case may be,
complies, and such Seller and its agents, with respect to each such
Financed Student Loan, have at all times complied, in all material
respects with all requirements of applicable Federal, State and local
laws and regulations thereunder, including the Higher Education Act,
the Equal Credit Opportunity Act, the Federal Reserve Board's
Regulation B and other applicable consumer credit laws and equal credit
opportunity laws.
(iv) BINDING OBLIGATION. Each Financed Student Loan represents
the genuine, legal, valid and binding payment obligation in writing of
the related Obligor, enforceable by or on behalf of the holder thereof
against the related Obligor in accordance with its terms, and no
Financed Student Loan has been satisfied, subordinated or rescinded.
(v) NO DEFENSES. No right of rescission, setoff, counterclaim
or defense has been asserted or threatened with respect to any Financed
Student Loan. No counterclaim, offset, defense or right of rescission
exists with respect to any Financed Student Loan which could be
asserted and maintained, or which, with notice, lapse of time, or the
occurrence or failure to occur of any act or event, could be asserted
and maintained by the borrower against the Eligible Lender Trustee as a
result of any act or omission to act on the part of such Seller, the
applicable Master Servicer, the Servicer, the Administrator, the
Eligible Lender Trustee, the Indenture Trustee or any of their
respective agents, employees or other designees.
(vi) NO DEFAULT. No Financed Student Loan has a payment that is
more than 90 days overdue as of the Initial Cut-off Date or the
applicable Subsequent Cut-off Date, as the case may be, and, except as
permitted in this paragraph, no default, breach, violation or event
permitting acceleration under the terms of any Financed Student Loan
has occurred; and, except for payment defaults continuing for a period
of not more than 90 days, no continuing condition that with notice or
the lapse of time or both would constitute a default, breach,
violation or event permitting acceleration under the terms of any
Financed Student Loan has arisen; and such Seller has not waived and
shall not waive any of the foregoing other than as permitted by the
Basic Documents.
(vii) TITLE. The transfer and assignment herein contemplated
constitutes a sale of the Financed Student Loans from such Seller to
the Eligible Lender Trustee on behalf of the Issuer and the beneficial
interest in and title to such Financed Student Loans shall not be part
of the debtor's estate in the event of the appointment of a receiver
with respect to such Seller. No Financed Student Loan has been sold,
transferred, assigned or pledged by such Seller to any Person other
than the Eligible Lender Trustee on behalf of the Issuer or any such
assignment or pledge has been released. Immediately prior to the
transfer and assignment herein contemplated, such Seller had good
title to each Financed Student Loan, free and clear of all Liens and,
immediately upon the transfer thereof, the Eligible Lender Trustee on
behalf of the Issuer shall have good title to each such Financed
Student Loan, free and clear of all Liens, and the transfer to the
Indenture Trustee, shall have been perfected under the UCC.
(viii) LAWFUL ASSIGNMENT. No Financed Student Loan has been
originated in, or is subject to the laws of, any jurisdiction under
which the sale, transfer and assignment of such Financed Student Loan
or any Financed Student Loan under this Agreement, each Transfer
Agreement or the Indenture is unlawful, void or voidable.
(ix) ALL FILINGS MADE. All filings (including UCC filings)
necessary in any jurisdiction to give the Issuer a first perfected
ownership interest in the Financed Student Loans, and to give the
Indenture Trustee a first perfected security interest therein, shall
have been made.
(x) ONE ORIGINAL. There is only one original executed copy of
each promissory note evidencing a Financed Student Loan.
(xi) PRINCIPAL BALANCE. The aggregate principal balance of the
Initial Financed Student Loans transferred by TWIC to the Eligible
Lender Trustee on the Closing Date, plus accrued interest to be
capitalized with respect thereto, as of the Initial Cut-off Date is
$227,934,328.76.
(xii) [Reserved]
(xiii) INTEREST ACCRUING. Each Financed Student Loan is accruing
interest (whether or not such interest is being paid currently, by the
Obligor or by the Department, or is being capitalized), except as
otherwise expressly permitted by the Basic Documents.
(xiv) SELLERS' REPRESENTATIONS. The representations and
warranties of the Sellers contained in Section 6.1 are true and
correct.
(xv) COMPLIANCE WITH REQUIREMENTS OF GUARANTORS. Each Financed
Student Loan will be maintained and serviced in all material respects
in compliance with all applicable requirements of the applicable
Guarantor and the Department and is or will be represented by one or
more promissory notes or other written agreements that adequately
document such Financed Student Loans.
(xvi) NO ADVERSE EFFECTS. The sale and assignment of Financed
Student Loans to the Eligible Lender Trustee by such Seller pursuant
to this Agreement or the applicable Transfer Agreement will not, by
reason thereof, have any adverse effect upon the validity, legality or
enforceability of the Financed Student Loans.
(xvii) GUARANTEES IN EFFECT. On the dates of making thereof and
of transfer thereof to the Eligible Lender Trustee, each Financed
Student Loan will be guaranteed by a Guarantor and, except for Private
Loans, covered by a federal reimbursement contract between such
Guarantor and the Department and each such guarantee and federal
reimbursement contract will be in full force and effect. All guarantee
fees and origination fees with respect to each Financed Student Loan
shall have been timely paid or will be timely paid. The guarantee with
respect to each Financed Student Loan will be freely transferable as
an incident to the sale of each Student Loan to the Eligible Lender
Trustee, and the Eligible Lender Trustee will be entitled to the
benefits of such guarantee, and none of the Financed Student Loans
will at any time prior to its transfer to the Eligible Lender Trustee
have been tendered to either the Department, the Secretary of
Education or the applicable Guarantor for payment.
(xviii) GUARANTEE AGREEMENTS. The Eligible Lender Trustee is
party to a valid and binding Guarantee Agreement with each Guarantee
Agency guaranteeing a Financed Student Loan.
(xix) INTEREST ON CONSOLIDATION LOANS. No Financed Student Loan
that is a Consolidation Loan shall bear a rate of interest below that
provided for in the Higher Education Act.
SECTION 3.2. REPURCHASE UPON BREACH; REIMBURSEMENT. The applicable Seller,
TMSI, the Master Servicer or the Eligible Lender Trustee, as the case may be,
shall inform the other parties to this Agreement, the Indenture Trustee and the
Surety Provider promptly, in writing, upon the discovery of any breach of the
representations and warranties made pursuant to Section 3.1. Unless any such
breach shall have been cured within 60 days following the discovery thereof by
such Seller or TMSI or receipt by such Seller or TMSI of written notice from the
Eligible Lender Trustee, the Surety Provider, TMSI or the applicable Master
Servicer of such breach, such Seller shall repurchase any Financed Student Loan
in which the interests of the Noteholders, the Certificateholders or the Surety
Provider are materially and adversely affected by any such breach as of the
first day succeeding the end of such 60-day period that is the last day of a
Collection Period; provided that it is understood that any such breach that does
not affect any Guarantor's obligation to guarantee payment of such Financed
Student Loan to the Eligible Lender Trustee will not be considered to have a
material adverse effect for this purpose. In consideration of and simultaneously
with the repurchase of the Financed Student Loan, such Seller shall remit the
Purchase Amount, in the manner specified in Section 5.4, and the Issuer shall
execute such assignments and other documents reasonably requested by such Seller
in order to effect such transfer. If such Seller fails to repurchase within the
time period provided hereby any Financed Student Loan it is required to
repurchase hereunder, TMSI shall remit, or cause to be remitted, no later than
the date such Seller would be required to remit such amount, the Purchase Amount
for such Financed Student Loan, in the manner specified in Section 5.4, and the
Issuer shall execute such assignments and other documents reasonably requested
by TMSI or its designee in order to effect such transfer; provided, however,
that if a designee of TMSI purchases any Financed Student Loans, such designee
shall not have any pre-existing debt with respect to such purchase, and any
transfer of a Financed Student Loan pursuant to this Section shall be made
contemporaneously with repayment or the incurrence of the repayment obligation.
Upon any such transfer of a Financed Student Loan, legal title to, and
beneficial ownership and control of, the related Financed Student Loan File will
thereafter belong to such Seller or TMSI's designee, as the case may be. In
addition, if any such breach does not trigger such a repurchase obligation but
does result in the refusal by a Guarantor to guarantee the applicable portion of
the accrued interest, or the loss of (including any obligation of the Issuer to
repay to the Department) certain Interest Subsidy Payments and Special Allowance
Payments, with respect to a Financed Student Loan, then, unless such breach, if
curable, is cured within 60 days, such Seller shall, at its option, either
repurchase such Financed Student Loan at the applicable Purchase Amount or
reimburse the Issuer by remitting an amount equal to the sum of all amounts that
would have been payable if not for such breach in the manner specified in
Section 5.4 not later than the last day of the Collection Period in which such
60th day occurs. If such Seller fails to repurchase such Financed Student Loan
or reimburse the Issuer such amount, TMSI shall reimburse the Issuer such amount
in the manner specified in Section 5.4 no later than the date such Seller would
be required to remit such amount. Subject to the provisions of Section 5.6 and
Section 6.3 and the Insurance Agreement, the sole remedy of the Issuer, the
Eligible Lender Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders or the Surety Provider with respect to a breach of
representations and warranties pursuant to Section 3.1 and the agreement
contained in this Section 3.2 shall be to require the applicable Seller, TMSI or
TMSI's designee, as the case may be, to repurchase Financed Student Loans or to
reimburse the Issuer as provided above pursuant to this Section 3.2, subject to
the conditions contained herein.
SECTION 3.3. CUSTODY OF FINANCED STUDENT LOAN FILES. To assure uniform
quality in servicing the Financed Student Loans and to reduce administrative
costs, the Issuer hereby revocably appoints each Master Servicer, and each
Master Servicer hereby accepts such appointment, to act for the benefit of the
Issuer and the Indenture Trustee as custodian of the following documents or
instruments which are hereby constructively delivered to the Indenture Trustee,
as pledgee of the Issuer (or, in the case of the Additional Financed Student
Loans, will as of the applicable Transfer Date be constructively delivered to
the Indenture Trustee, as pledgee of the Issuer) with respect to each Financed
Student Loan sold by such Master Servicer, as Seller, to the Trust (such
documents are referred to collectively as the "Financed Student Loan File").
(a) the original fully executed copy of the note evidencing the
Financed Student Loan (which may be included in the application) unless such
note is in the custody of a Guarantor;
(b) to the extent such Seller has retained it on hard copy, the
original loan application fully executed by the Obligor (which may be included
in the note evidencing a Financed Student Loan);
(c) the notice of guarantee; and
(d) any and all other documents and computerized records that
any of such Master Servicer, the Administrator or such Seller shall keep on
file, in accordance with its customary procedures, relating to such Financed
Student Loan or any Obligor with respect thereto.
Notwithstanding the foregoing, such Master Servicer shall transfer possession of
the Financed Student Loan Files in accordance with Section 2.02(r) of the
Insurance Agreement. Moreover, notwithstanding the foregoing, if set forth in a
supplement to this Agreement approved by the Surety Provider, with respect to
Financed Student Loans originated by third parties and subsequently purchased by
such Seller, the originators of such Financed Student Loans or another party may
act as custodian of the Financed Student Loan Files for such Financed Student
Loans.
SECTION 3.4. DUTIES OF MASTER SERVICERS AS Custodian. (a) SAFEKEEPING.
Either a Master Servicer, as custodian, or a subcustodian appointed pursuant to
Section 3.8, shall hold the Financed Student Loan Files with respect to each
Financed Student Loan sold by such Master Servicer, as Seller, to the Trust for
the benefit of the Issuer and maintain such accurate and complete accounts,
records and computer systems pertaining to each such Financed Student Loan File
as shall enable the Issuer to comply with this Agreement and the other Basic
Documents. In performing its duties as custodian, each Master Servicer shall act
with reasonable care, using that degree of skill and attention that such Master
Servicer exercises with respect to the student loan files relating to all
comparable student loans that such Master Servicer services for itself or others
and shall ensure that it complies fully and completely with all applicable
Federal and State laws, including the Higher Education Act, with respect
thereto. Each Master Servicer shall cause to be conducted periodic audits of the
Financed Student Loan Files held by it under this Agreement and of the related
accounts, records and computer systems, in such a manner as shall enable the
Issuer or the Indenture Trustee to verify the accuracy of such Master Servicer's
record keeping. A Master Servicer shall promptly report to the Issuer, the
Indenture Trustee and the Surety Provider any failure on its part to hold the
Financed Student Loan Files and maintain its accounts, records and computer
systems as herein provided and promptly take appropriate action to remedy any
such failure. Nothing herein shall be deemed to require an initial review (other
than as specified in the Insurance Agreement) or any periodic review by the
Issuer, the Eligible Lender Trustee or the Indenture Trustee of the Financed
Student Loan Files.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. Each of the Master Servicers
shall maintain each Financed Student Loan File held by it under this Agreement
at its office located at 3301 C Street, Suite 100-A, Sacramento, California
95816 or at such other office as shall be specified by written notice to the
Issuer, the Surety Provider and the Indenture Trustee not later than 30 days
prior to any change in location. The Financed Student Loan Files relating to all
Financed Student Loans subject to the Lien of the Indenture in the custody of a
Master Servicer shall be segregated by such Master Servicer from other
comparable files, by maintaining such Files in file cabinets that are physically
segregated from such other comparable files and are clearly marked to indicate
that the files contained therein have been sold to the Issuer and that a
security interest has been granted in favor of the Indenture Trustee and either
(i) each original note evidencing a Financed Student Loan shall be stamped with
a signed endorsement of the note in blank or (ii) Financed Student Loans not
originated by the applicable Seller and not indorsed pursuant to (i) above will,
with the consent of the Surety Provider, be endorsed utilizing a blanket
endorsement. Upon reasonable prior notice, each Master Servicer shall make
available to the Issuer, the Surety Provider and the Indenture Trustee or their
respective duly authorized representatives, attorneys or auditors the Financed
Student Loan Files and the related accounts, records and computer systems
maintained by such Master Servicer at such times during normal business hours as
the Issuer, the Surety Provider or the Indenture Trustee shall instruct.
SECTION 3.5. INSTRUCTIONS; AUTHORITY TO ACT. Each Master Servicer shall be
deemed to have received proper instructions with respect to the Financed Student
Loan Files held by it under this Agreement upon its receipt of written
instructions signed by a Responsible Officer of the Indenture Trustee.
SECTION 3.6. CUSTODIAN'S INDEMNIFICATION. Each Master Servicer, as
custodian, shall pay from its own funds for any loss, liability or expense,
including reasonable attorneys' fees, that may be imposed on, incurred by or
asserted against the Issuer, the Eligible Lender Trustee, the Surety Provider or
the Indenture Trustee or any of their officers, directors, employees and agents
as the result of any improper act or omission in any way relating to the
maintenance and custody by such Master Servicer as custodian of the Financed
Student Loan Files held by it under this Agreement where the final determination
that any such improper act or omission by such Master Servicer resulted in such
loss, liability or expense is established by a court of law, by an arbitrator or
by way of settlement agreed to by such Master Servicer; PROVIDED, however, that
such Master Servicer shall not be liable to the Eligible Lender Trustee for any
portion of any such amount resulting from the willful misfeasance, bad faith or
negligence of the Eligible Lender Trustee and such Master Servicer shall not be
liable to the Indenture Trustee or the Surety Provider, as the case may be, for
any portion of any such amount resulting from the willful misfeasance, bad faith
or negligence of the Indenture Trustee or the Surety Provider, as the case may
be. This provision shall not be construed to limit a Master Servicer's or any
other party's rights, obligations, liabilities, claims or defenses which arise
as a matter of law or pursuant to any other provision of this Agreement.
SECTION 3.7. EFFECTIVE PERIOD AND TERMINATION. Each Master Servicer's
appointment as custodian of the Financed Student Loans being conveyed hereunder
by such Master Servicer as Seller shall become effective as of the Closing Date
relating to the Series 1997-1 Notes and shall continue in full force and effect
for so long as such Master Servicer shall remain a Master Servicer hereunder. If
a Master Servicer or any successor Master Servicer shall resign as a Master
Servicer in accordance with the provisions of this Agreement or if all the
rights and obligations of such Master Servicer or any such successor Master
Servicer shall have been terminated under Section 8.1 of this Agreement, the
appointment of such Master Servicer or such successor Master Servicer as
custodian shall be terminated simultaneously with the effectiveness of such
termination. As soon as practicable on or after any termination of such
appointment (and in any event within (i) 10 Business Days, with respect to that
portion of the Financed Student Loan Files consisting of electronic records and
information, and (ii) 30 Business Days, with respect to the remaining portion of
the Financed Student Loan Files), such Master Servicer shall deliver the
Financed Student Loan Files held by it under this Agreement to the Indenture
Trustee or the Indenture Trustee's agent at such place or places as the
Indenture Trustee may reasonably designate.
SECTION 3.8. APPOINTMENT OF SUBCUSTODIAN. With the consent of the Surety
Provider, a Master Servicer may, at any time or, at the request of the Surety
Provider pursuant to the terms of Section 2.02(r) of the Insurance Agreement, a
Master Servicer, shall appoint a subcustodian to perform all or any portion of
its obligations as custodian hereunder; PROVIDED, HOWEVER, that such Master
Servicer shall remain obligated and be liable to the Issuer, the Eligible Lender
Trustee, the Indenture Trustee, the Certificateholders, the Noteholders and the
Surety Provider for the custodial services with respect to the Financed Student
Loan Files in accordance with the provisions hereof without diminution of such
obligation and liability by virtue of the appointment of such subcustodian and
to the same extent and under the same terms and conditions as if such Master
Servicer alone were performing the custodial services. The fees and expenses of
the subcustodian shall be as agreed between the Master Servicer and its
subcustodian from time to time and none of the Issuer, the Eligible Lender
Trustee, the Indenture Trustee, the Certificateholders, the Noteholders or the
Surety Provider shall have any responsibility therefor.
ARTICLE IV
ADMINISTRATION AND SERVICING OF FINANCED STUDENT LOANS
SECTION 4.1. DUTIES OF THE MASTER SERVICERS. Each Master Servicer, for the
benefit of the Issuer (to the extent provided herein), shall manage, service,
administer and make collections on the Financed Student Loans held by it under
this Agreement with reasonable care, using that degree of skill and attention
that such Master Servicer exercises with respect to all comparable student loans
that it services for itself and others. Without limiting the generality of the
foregoing or of any other provision set forth in this Agreement and
notwithstanding any other provision to the contrary set forth herein, each
Master Servicer shall manage, service, administer and make collections with
respect to the Financed Student Loans held by it under this Agreement including,
if applicable, collection of any Interest Subsidy Payments and Special Allowance
Payments in accordance with all applicable Federal and State laws, including all
applicable standards, guidelines and requirements of the Higher Education Act
and any Guarantee Agreement, the failure to comply with which would adversely
affect the eligibility of one or more of the Financed Student Loans for Interest
Subsidy Payments, Special Allowance Payments or Guarantee Payments or would have
an adverse effect on the Certificateholders, the Noteholders or the Surety
Provider. Each Master Servicer also hereby acknowledges that its obligation to
service the Financed Student Loans includes those Additional Financed Student
Loans conveyed by it as Seller to the Eligible Lender Trustee on behalf of the
Issuer pursuant to Section 2.2 and the related Transfer Agreement, a copy of
which (if a Master Servicer is not the Seller) shall be delivered to such Master
Servicer by the applicable Seller promptly upon execution thereof; PROVIDED that
any failure by a Seller to so deliver a Transfer Agreement shall not affect such
Master Servicer's obligations hereunder to service such Financed Student Loans.
Each Master Servicer's duties shall include collection and posting of all
payments, responding to inquiries of borrowers on the Financed Student Loans
held by it hereunder, monitoring borrowers' status, making required disclosures
to borrowers, investigating delinquencies, sending bills or payment coupons to
borrowers and otherwise establishing repayment terms, reporting tax information
to borrowers, if applicable, accounting for collections and furnishing monthly
and annual statements with respect thereto to the Administrator. Subject to the
provisions of Section 4.2, each Master Servicer shall follow its customary
standards, policies and procedures in performing its duties as Master Servicer.
Without limiting the generality of the foregoing, each Master Servicer is
authorized and empowered to execute and deliver, on behalf of itself, the
Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders, the Noteholders and the Surety Provider or any of them,
instruments of satisfaction or cancellation, or partial or full release or
discharge, and all other comparable instruments, with respect to the Financed
Student Loans held by it hereunder; PROVIDED, HOWEVER, that each Master Servicer
agrees that it will not (a) permit any rescission or cancellation of a Financed
Student Loan except as ordered by a court of competent jurisdiction or
governmental authority or as otherwise consented to in writing by the Eligible
Lender Trustee, the Surety Provider and the Indenture Trustee or (b) reschedule,
revise, defer or otherwise compromise with respect to payments due on any
Financed Student Loan except pursuant to any applicable deferral or forbearance
periods or otherwise in accordance with all applicable standards, guidelines and
requirements with respect to the servicing of the Financed Student Loans
(notwithstanding the foregoing, a Master Servicer may, in its sole discretion,
without having to obtain the consent or approval of any other party, waive
amounts owing under a Financed Student Loan up to and including $50.00);
PROVIDED FURTHER, HOWEVER, that a Master Servicer shall not agree to any
decrease of the interest rate on (other than as provided in a Master Servicer's
Reduced Interest Rate Program), or the principal amount payable with respect to,
any Financed Student Loan. Each Master Servicer also shall be responsible for
maintaining each Guarantee Agreement, including advising the Eligible Lender
Trustee and the Indenture Trustee of any action required to be taken to maintain
each such Guarantee Agreement. The Eligible Lender Trustee on behalf of the
Issuer hereby grants a power of attorney and all necessary authorization to each
Master Servicer to sign endorsements of the notes relating to the Financed
Student Loans held by it hereunder on behalf of the Eligible Lender Trustee in
connection with conveyances pursuant to Section 2.3 hereof and to maintain any
and all collection procedures with respect to such Financed Student Loans,
including filing, pursuing and recovering claims against the Guarantors for
Guarantee Payments and taking any steps to enforce such Financed Student Loan
such as commencing a legal proceeding to enforce a Financed Student Loan in the
name of the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders, the Noteholders or the Surety Provider. The Eligible Lender
Trustee or the Indenture Trustee shall upon the written request of a Master
Servicer or the Administrator furnish such Master Servicer or the Administrator
with any other powers of attorney and other documents reasonably necessary or
appropriate to enable such Master Servicer or the Administrator to carry out its
servicing and administrative duties hereunder.
SECTION 4.2. COLLECTION OF FINANCED STUDENT LOAN PAYMENTS. (a) Each Master
Servicer shall make reasonable efforts (including all efforts that may be
specified under the Higher Education Act or any Guarantee Agreement, as
applicable) to collect all payments called for under the terms and provisions of
the Financed Student Loans serviced by it hereunder as and when the same shall
become due and shall follow such collection procedures as it follows with
respect to all comparable student loans that it services for itself and others.
A Master Servicer may in its discretion waive any late payment charge or any
other fees that may be collected in the ordinary course of servicing a Financed
Student Loan.
(b) Each Master Servicer shall make reasonable efforts to claim, pursue and
collect all Guarantee Payments from the Guarantors pursuant to the Guarantee
Agreements with respect to any of the Financed Student Loans serviced by it
hereunder as and when the same shall become due and payable, shall comply with
all applicable laws and agreements with respect to claiming, pursuing and
collecting such payments and shall follow such practices and procedures as it
follows with respect to all comparable guarantee agreements and student loans
that it services for itself and others. In connection therewith, such Master
Servicer is hereby authorized and empowered to convey to any Guarantor the note
and the related Financed Student Loan File representing any Financed Student
Loan in connection with submitting a claim to such Guarantor for a Guarantee
Payment in accordance with the terms of the applicable Guarantee Agreement
whereupon the Lien of the Indenture Trustee relating to such Financed Student
Loan shall be released.
(c) Each Master Servicer shall, on behalf of the Issuer, make reasonable
efforts to claim, pursue and collect all Interest Subsidy Payments and Special
Allowance Payments from the Department with respect to any of the Financed
Student Loans serviced by it hereunder as and when the same shall become due and
payable, shall comply with all applicable laws and agreements with respect to
claiming, pursuing and collecting such payments and shall follow such practices
and procedures as such Master Servicer follows with respect to its own student
loans. All amounts so collected by the Eligible Lender Trustee shall constitute
Available Funds for the applicable Collection Period and shall be deposited into
the Collection Account in accordance with Section 5.4. In connection therewith,
such Master Servicer shall prepare and file with the Department on a timely
basis all claims, forms and other documents and filings necessary or appropriate
in connection with the claiming of Interest Subsidy Payments and Special
Allowance Payments on behalf of the Eligible Lender Trustee and shall otherwise
assist the Eligible Lender Trustee in pursuing and collecting such Interest
Subsidy Payments and Special Allowance Payments from the Department. The
Eligible Lender Trustee shall, upon the written request of a Master Servicer,
furnish such Master Servicer with any power of attorney and other documents
reasonably necessary or appropriate to enable such Master Servicer to prepare
and file such claims, forms and other documents and filings.
The Eligible Lender Trustee may permit trusts, other than the Trust,
established by the Sellers to securitize student loans, to use the Department
lender identification number applicable to the Trust. In such event, the
Eligible Lender Trustee may claim and collect Interest Subsidy Payments and
Special Allowance Payments with respect to Financed Student Loans in the Trust
and student loans in such other trusts using such common lender identification
number. Notwithstanding anything herein or in the Basic Documents to the
contrary, any amounts assessed against payments (including, but not limited to,
Interest Subsidy Payments and Special Allowance Payments) due from the
Department or any Guarantor to any such other trust using such common lender
identification number as a result of amounts (including, but not limited to,
Consolidation Fees) owing to the Department or any Guarantor from the Trust will
be deemed for all purposes hereof and of the Basic Documents (including for
purposes of determining amounts paid by the Department or any Guarantor with
respect to the student loans in the Trust and such other trust) to have been
assessed against the Trust and shall be deducted by the Eligible Lender Trustee
or the Servicer and paid to such other trust from any collections made by them
which would otherwise have been payable to the Collection Account for the Trust.
If so specified in the servicing agreement applicable to any such other trust,
any amounts assessed against payments due from the Department or any Guarantor
to the Trust as a result of amounts owing to the Department or any Guarantor
from such other trust using such common lender identification number will be
deemed to have been assessed against such other trust and will be deducted by
the Eligible Lender Trustee or the Servicer from any collections made by them
which would otherwise be payable to the collection account for such other trust
and paid to the Trust. Immediately upon receipt from the Department or a
Guarantor of any such payments, the Eligible Lender Trustee shall deposit such
amounts in a trust account held by the Eligible Lender Trustee, as trustee for
the holders of the notes (including the Notes) and certificates (including the
Certificates) relating to the Trust and such other trusts. As soon as
practicable (but not more than 10 days) thereafter, the Eligible Lender Trustee
shall deposit the amount of any such payments that relate to the Trust in the
Collection Account for the Trust.
SECTION 4.3. REALIZATION UPON FINANCED STUDENT Loans. For the benefit of
the Issuer, each Master Servicer shall use reasonable efforts consistent with
its customary servicing practices and procedures and including all efforts that
may be specified under the Higher Education Act or any Guarantee Agreement in
its servicing of any delinquent Financed Student Loans.
SECTION 4.4. NO IMPAIRMENT. Neither Master Servicer shall impair the rights
of the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders, the Noteholders or the Surety Provider in the Financed
Student Loans.
SECTION 4.5. PURCHASE OF FINANCED STUDENT LOANS; REIMBURSEMENT. TMSI, each
Master Servicer or the Eligible Lender Trustee, as the case maybe, shall inform
the other parties to this Agreement, the Indenture Trustee and the Surety
Provider promptly, in writing, upon the discovery of any breach of an obligation
under Section 4.1, 4.2, 4.3 or 4.4 hereof. Unless any such breach shall have
been cured within 60 days following the discovery thereof by such Master
Servicer or TMSI or receipt by such Master Servicer or TMSI of written notice
from the Eligible Lender Trustee, TMSI, such Master Servicer or the Surety
Provider of such breach (or, at such Master Servicer's election, the last day of
the first month following such discovery), such Master Servicer shall purchase
any Financed Student Loan in which the interests of the Noteholders, the
Certificateholders or the Surety Provider are materially and adversely affected
by such breach as of the first day succeeding the end of such 60-day period that
is the last day of a Collection Period; provided that it is understood that any
such breach that does not affect any Guarantor's obligation to guarantee payment
of such Financed Student Loan to the Eligible Lender Trustee will not be
considered to have a material adverse effect for this purpose. If a Master
Servicer takes any action or fails to take any action during any Collection
Period pursuant to the sections referred to above that impairs the rights of the
Issuer, the Indenture Trustee, the Eligible Lender Trustee, the
Certificateholders, the Noteholders or the Surety Provider in any Financed
Student Loan or otherwise than as provided in such sections, such Master
Servicer shall purchase such Financed Student Loan as of the last day of such
Collection Period. In consideration of and simultaneously with the purchase of
any such Financed Student Loan pursuant to either of the two preceding
sentences, such Master Servicer shall remit the Purchase Amount in the manner
specified in Section 5.4, and the Issuer shall execute such assignments and
other documents reasonably requested by such Master Servicer in order to effect
such transfer. If such Master Servicer fails to purchase within the time period
provided hereby any Financed Student Loan it is required to purchase hereunder,
TMSI shall remit, or cause to be remitted, no later than the date such Master
Servicer would be required to remit such amount, the Purchase Amount for such
Financed Student Loan, in the manner specified in Section 5.4, and the Issuer
shall execute such assignments and other documents reasonably requested by TMSI
or its designee in order to effect such transfer; provided, however, that if a
designee of TMSI repurchases any Financed Student Loans, such designee shall not
have any pre-existing debt with respect to such purchase, and any transfer of a
Financed Student Loan pursuant to this Section shall be made contemporaneously
with the repurchase or the incurrence of the repurchase obligation. Upon any
such transfer of a Financed Student Loan, legal title to, and beneficial
ownership and control of, the related Financed Student Loan File will thereafter
belong to such Master Servicer or TMSI's designee, as the case may be. In
addition, if any such breach by a Master Servicer does not trigger such a
purchase obligation but does result in the refusal by a Guarantor to guarantee
the applicable portion of the accrued interest, or the loss of (including any
obligation of the Issuer to repay to the Department) certain Interest Subsidy
Payments and Special Allowance Payments, with respect to a Financed Student
Loan, then, unless such breach, if curable, is cured within 60 days, such Master
Servicer shall, at its option, either purchase such Financed Student Loan at the
applicable Purchase Amount or reimburse the Issuer by remitting an amount equal
to the sum of all amounts that would have been payable if not for such breach in
the manner specified in Section 5.4. If such Master Servicer fails to repurchase
such Financed Student Loan or reimburse the Issuer such amount, TMSI shall
reimburse the Issuer such amount in the manner specified in Section 5.4 not
later than the last day of the Collection Period in which such 60th day occurs.
Subject to the provisions of Sections 5.6 and 6.3 and the Insurance Agreement,
the sole remedy of the Issuer, the Eligible Lender Trustee, the Indenture
Trustee, the Certificateholders, the Noteholders or the Surety Provider with
respect to a breach pursuant to Section 4.1, 4.2, 4.3 or 4.4 and the agreement
contained in this Section 4.5 shall be to require a Master Servicer, TMSI or
TMSI's designee, as the case may be, to purchase Financed Student Loans or to
reimburse the Issuer as provided above pursuant to this Section 4.5, subject to
the conditions contained herein. The Eligible Lender Trustee shall have no duty
to conduct any affirmative investigation as to the occurrence of any condition
requiring the purchase of any Financed Student Loan or the reimbursement for any
interest penalty pursuant to this Section 4.5.
Notwithstanding anything contained in this Section 4.5 to the contrary,
with respect to any purchase obligation arising as a result of a Guarantor
denying a Guarantee Payment on a Financed Student Loan, neither the Master
Servicer servicing such Financed Student Loan hereunder, nor TMSI, nor TMSI's
designee shall be required to purchase such Financed Student Loan pursuant to
this Section 4.5 until the last day of the Collection Period occurring seven
months after the date a claim is rejected.
SECTION 4.6. SERVICING FEE; SERVICING FEE CARRYOVER. For its services
hereunder, each Master Servicer shall be entitled to receive the Servicing Fee
and any Servicing Fee Carryover in the manner set forth in Section 5.5.
Notwithstanding anything to the contrary contained herein or in any other Basic
Document, each Master Servicer shall only be entitled to receive any Servicing
Fee Carryover on any applicable Note Distribution Date or Certificate
Distribution Date if and to the extent that sufficient funds are available
pursuant to Section 5.5(e)(iii), 5.6(b)(A) or 5.6(c).
SECTION 4.7. ADMINISTRATOR'S CERTIFICATE. (a) On each Determination Date,
the Administrator will advise the Indenture Trustee in writing of the applicable
Noteholders' Interest Distribution Amount or Certificateholders' Interest
Distribution Amount. Additionally, no later than 16 days prior to each Note
Distribution Date for the Class of Notes then entitled to receive payments of
principal (or, after all Notes have been paid in full, no later than 16 days
prior to each Certificate Distribution Date) the Administrator will advise the
Indenture Trustee in writing of the applicable Noteholders' Principal
Distribution Amount (or, after all the Notes have been paid in full, for the
Class of Certificates with the earliest Final Maturity Date, the
Certificateholders' Principal Distribution Amount). Further, on the
Determination Date relating to the first Certificate Distribution Date occurring
each month (or for each month in which a Note Distribution Date occurs earlier
than the Certificate Distribution Date, on the Determination Date relating to
such earlier Note Distribution Date), the Administrator will advise the
Indenture Trustee in writing of Transaction Fees (separately and in the
aggregate) for the preceding month.
(b) On each Determination Date, the Administrator also shall deliver to the
Eligible Lender Trustee, the Indenture Trustee and a Seller (if such Seller is
not also the Administrator), with a copy to the Surety Provider and to the
Rating Agencies, an Administrator's Certificate containing all information
necessary to make the distributions pursuant to Sections 5.5, 5.6 and 5.8(b), if
applicable, for the upcoming Note Distribution Date or Certificate Distribution
Date. Such Administrator's Certificate also shall include the amount, if any, of
Note Surety Bond Payments or Certificate Surety Bond Payments required to be
made on the upcoming Note Distribution Date or Certificate Distribution Date.
Financed Student Loans to be repurchased by a Seller (whether pursuant to
Section 2.3 or 3.2), purchased by a Master Servicer, TMSI or TMSI's designee or
acquired by any Guarantor shall be identified by the Administrator by type of
loan and borrower social security number with respect to such Financed Student
Loan (as specified in Schedule A).
(c) On or before the 15th day of each month, the Administrator shall
deliver to the Eligible Lender Trustee, the Indenture Trustee and a Seller (if
such Seller is not also the Administrator), with a copy to the Surety Provider
and the Rating Agencies, a report setting forth by component the Available Funds
for the immediately preceding Collection Period.
SECTION 4.8. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT. (a) Each
of the Master Servicers and the Administrator shall deliver to the Sellers, the
Eligible Lender Trustee and the Indenture Trustee, on or before April 30 of each
year beginning April 30, 1997, an Officer's Certificate of such Master Servicer
or the Administrator, as the case may be, dated as of December 31 of the
preceding year, stating that (i) a review of the activities of such Master
Servicer or the Administrator, as the case may be, during the preceding 12-month
period (or, in the case of the first such certificate, during the period from
the Closing Date to December 31, 1997) and of its performance under this
Agreement and any other Supplemental Sale and Servicing Agreements has been made
under such officers' supervision and (ii) to the best of such officers'
knowledge, based on such review, such Master Servicer or the Administrator, as
the case may be, has fulfilled all its obligations under such Agreements, or
under such Agreements and the Administration Agreement, respectively, throughout
such year or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof. Pursuant to the Indenture, the Indenture Trustee shall send
a copy of each such Officers' Certificate and each report referred to in Section
4.9 to the Rating Agencies, and the Eligible Lender Trustee shall send a copy of
each such Officers' Certificate and each such report to the Surety Provider. A
copy of each such Officers' Certificate and each report referred to in Section
4.9 may be obtained by any Certificateholder, Certificate Owner, Noteholder or
Note Owner by a request in writing to the Eligible Lender Trustee addressed to
its Corporate Trust Office, together with evidence satisfactory to the Eligible
Lender Trustee that such Person is one of the foregoing parties. Pursuant to the
Indenture, upon the telephone request of the Eligible Lender Trustee, the
Indenture Trustee will promptly furnish the Eligible Lender Trustee a list of
Noteholders as of the date specified by the Eligible Lender Trustee.
(b) Each Master Servicer shall deliver to the Eligible Lender Trustee, the
Indenture Trustee, the Sellers, the Surety Provider and the Rating Agencies,
promptly after having obtained knowledge thereof, but in no event later than
five Business Days thereafter, written notice in an Officer's Certificate of
such Master Servicer of any event which with the giving of notice or lapse of
time, or both, would become a Master Servicer Default under Section 8.1(a).
(c) The Administrator shall deliver to the Eligible Lender Trustee, the
Indenture Trustee, the Master Servicers, the Surety Provider and the Rating
Agencies, promptly after having obtained knowledge thereof, but in no event
later than five Business Days thereafter, written notice in an Officer's
Certificate of the Administrator of any event which with the giving of notice or
lapse of time, or both, would become an Administrator Default under Section
8.1(b)(1), (2) or (3).
SECTION 4.9. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT. Each
of the Master Servicers and the Administrator shall cause Deloitte & Touche,
KPMG Peat Marwick, or any other firm of independent certified public accountants
approved by the Surety Provider, to deliver to the Sellers, the Eligible Lender
Trustee, the Indenture Trustee and the Surety Provider on or before April 30 of
each year beginning April 30, 1997, a report addressed to the Master Servicers
and to the Sellers, the Eligible Lender Trustee, the Surety Provider and the
Indenture Trustee, to the effect that such firm has examined certain documents
and records relating to the servicing of the Financed Student Loans, for the
administration of the Financed Student Loans and of the Trust, as the case may
be, during the preceding calendar year (or, in the case of the first such
report, during the period from the Closing Date to December 31, 1997) and that,
on the basis of the accounting and auditing procedures considered appropriate
under the circumstances, such firm is of the opinion that such servicing or
administration was conducted in compliance with the terms of this Agreement, all
Supplemental Sale and Servicing Agreements, or with the terms of such Agreements
and the Administration Agreement, as the case may be, except for (i) such
exceptions as such firm shall believe to be immaterial and (ii) such other
exceptions as shall be set forth in such report.
Such report will also indicate that the firm is independent of the Master
Servicers within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 4.10. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
FINANCED STUDENT LOANS. Upon reasonable prior notice, the Master Servicers shall
provide access to the Financed Student Loan Files (i) to the Surety Provider and
the Eligible Lender Trustee and (ii) to the Certificateholders or the
Noteholders in such cases where the Certificateholders or the Noteholders shall
be required by applicable statutes or regulations to review such documentation,
as demonstrated by evidence satisfactory to the Master Servicers in their
reasonable judgment. Access shall be afforded without charge, but only upon
reasonable request and during the normal business hours at the respective
offices of the Master Servicers.
SECTION 4.11. MASTER SERVICER AND ADMINISTRATOR EXPENSES. Each Master
Servicer and the Administrator shall be severally required to pay all expenses
incurred by them in connection with their respective activities hereunder and
under any Supplemental Sale and Servicing Agreements, including fees and
disbursements of independent accountants, taxes imposed on such Master Servicer
or the Administrator, as the case may be, and expenses incurred in connection
with distributions and reports to the Administrator or to the
Certificateholders, the Noteholders, the Eligible Lender Trustee and the Surety
Provider, as the case may be.
SECTION 4.12. APPOINTMENT OF SUBSERVICER. Each Master Servicer may at any
time, upon the written consent of the Surety Provider and with notice to the
Rating Agencies, appoint a subservicer to perform all or any portion of its
obligations as Master Servicer hereunder and under any Supplemental Sale and
Servicing Agreement; PROVIDED, HOWEVER, that such Master Servicer shall remain
obligated and be liable to the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Certificateholders, the Noteholders and the Surety
Provider for the servicing and administering of the Financed Student Loans in
accordance with the provisions hereof and of any Supplemental Sale and Servicing
Agreements without diminution of such obligation and liability by virtue of the
appointment of such subservicer and to the same extent and under the same terms
and conditions as if such Master Servicer alone were servicing and administering
the Financed Student Loans. The Surety Provider may, pursuant to and in
accordance with Section 4.08 of the Insurance Agreement, direct such Master
Servicer, which shall act in accordance with such direction within a reasonable
period of time after receipt thereof, to remove any subservicer. The fees and
expenses of the subservicer shall be as agreed between such Master Servicer and
its subservicer from time to time and none of the Issuer, the Eligible Lender
Trustee, the Indenture Trustee, the Certificateholders, the Noteholders or the
Surety Provider shall have any responsibility therefor.
ARTICLE V
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 5.1. ESTABLISHMENT OF TRUST ACCOUNTS. (a) The Indenture Trustee,
for the benefit of the Noteholders, shall establish and maintain in the name of
the Indenture Trustee each of the Collection Account, the Note Distribution
Account, the Reserve Account, the Pre-Funding Account, the Capitalized Interest
Account, the Capitalized Pre-Funding Account, the Expense Account and the
Monthly Advance Account. The Eligible Lender Trustee, for the benefit of the
Certificateholders, shall establish and maintain in the name of the Eligible
Lender Trustee the Certificate Distribution Account and the Certificate Monthly
Advance Account. The foregoing accounts are referred to collectively as the
"Trust Accounts". Each such Trust Account shall be an Eligible Deposit Account
and, except for the Certificate Distribution Account and the Certificate Monthly
Advance Account, shall be entitled as follows: "[Name of Account] for the
benefit of ClassNotes Trust 1997-I and Bankers Trust Company, as Indenture
Trustee, as their interests may appear." The Certificate Distribution Account
and the Certificate Monthly Advance Account shall be entitled as follows:
"ClassNotes Trust 1997-I [Certificate Distribution Account] [Certificate Monthly
Advance Account]."
(b) Funds on deposit in the Trust Accounts shall be invested by the
Indenture Trustee and, in the case of the Certificate Distribution Account and
the Certificate Monthly Advance Account, the Eligible Lender Trustee in Eligible
Investments pursuant to written instructions from the Administrator, on behalf
of the Issuer; PROVIDED, HOWEVER, that Certificateholders representing not less
than 66-2/3% of the Outstanding Amount of the Certificates may, by written
instructions to the Administrator, direct how such funds are invested in such
Eligible Investments; PROVIDED, FURTHER, it is understood and agreed that the
Indenture Trustee and the Eligible Lender Trustee shall not be liable for any
loss arising from such investment in Eligible Investments. All such Eligible
Investments shall be held by the Indenture Trustee and the Eligible Lender
Trustee for the benefit of the Issuer; provided that all interest and other
investment income (net of losses and investment expenses) on funds on deposit
therein shall be deposited into the Collection Account and shall be deemed to
constitute a portion of the Available Funds for the related Note Distribution
Date or Certificate Distribution Date. Funds on deposit in the Trust Accounts
shall be invested in Eligible Investments that will mature so that such funds
will be available at the close of business on the Business Day preceding the day
on which funds in the applicable Trust Account may be required to be withdrawn;
PROVIDED, HOWEVER, that funds on deposit in such Trust Accounts may be invested
in Eligible Investments of the Indenture Trustee or of the Eligible Lender
Trustee in the case of the Certificate Distribution Account which may mature so
that such funds will be available on the following Business Day. Funds deposited
in a Trust Account on a Business Day which immediately precedes a Note
Distribution Date or Certificate Distribution Date upon the maturity of any
Eligible Investments are not required to be invested overnight.
(c) (i) The Indenture Trustee (or the Eligible Lender Trustee
with respect to the Certificate Distribution Account and the
Certificate Monthly Advance Account) shall possess all right, title and
interest in all funds on deposit from time to time in the Trust
Accounts and in all proceeds thereof (including all income thereon) and
all such funds, investments, proceeds and income shall be part of the
Trust Estate. The Trust Accounts shall be under the sole dominion and
control of the Indenture Trustee (or the Eligible Lender Trustee with
respect to the Certificate Distribution Account and the Certificate
Monthly Advance Account) for the benefit of the Issuer. If, at any
time, any of the Trust Accounts ceases to be an Eligible Deposit
Account, the Administrator, on behalf of the Issuer, agrees that it
shall within 10 Business Days (or such longer period, not to exceed 30
calendar days, as to which the Surety Provider may consent) establish a
new Trust Account as an Eligible Deposit Account and shall transfer any
cash and/or any investments to such new Trust Account. In connection
with the foregoing, the Administrator, on behalf of the Issuer, agrees
that, in the event that any of the Trust Accounts are not accounts with
the Indenture Trustee (or the Eligible Lender Trustee with respect to
the Certificate Distribution Account and the Certificate Monthly
Advance Account), the Administrator shall notify the Indenture Trustee
and the Eligible Lender Trustee in writing promptly upon any of such
Trust Accounts ceasing to be an Eligible Deposit Account.
(ii) With respect to the Trust Account Property,
the Indenture Trustee agrees (or, with respect to the Certificate
Distribution Account and the Certificate Monthly Advance Account, the
Eligible Lender Trustee agrees), by its acceptance thereof, that:
(A) any Trust Account Property that is held in
deposit accounts shall be held solely in Eligible Deposit
Accounts, subject to the last sentence of Section 5.1(c)(i);
and each such Eligible Deposit Account shall be subject to the
exclusive custody and control of the Indenture Trustee (or the
Eligible Lender Trustee with respect to the Certificate
Distribution Account and the Certificate Monthly Advance
Account), and the Indenture Trustee (or the Eligible Lender
Trustee with respect to the Certificate Distribution Account
and the Certificate Monthly Advance Account) shall have sole
signature authority with respect thereto;
(B) any Trust Account Property that constitutes
Physical Property shall be Delivered to the Indenture Trustee
in accordance with paragraph (a) of the definition of
"Delivery" and shall be held, pending maturity or disposition,
solely by the Indenture Trustee or a financial intermediary
(as such term is defined in Section 8-313(4) of the UCC)
acting solely for the Indenture Trustee;
(C) any Trust Account Property that is a book-
entry security held through the Federal Reserve System
pursuant to Federal book-entry regulation shall be Delivered
in accordance with paragraph (b) of the definition of
"Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition, through continued book-entry
registration of such Trust Account Property as described in
such paragraph; and
(D) any Trust Account Property that is an
"uncertificated security" under Article VIII of the UCC and
that is not governed by clause (C) above shall be Delivered to
the Indenture Trustee in accordance with paragraph (c) of the
definition of "Delivery" and shall be maintained by the
Indenture Trustee, pending maturity or disposition, through
continued registration of the Indenture Trustee's (or its
nominee's) ownership of such security.
(iii) The Administrator shall have the power, revocable for
cause or upon the occurrence and during the continuance of an
Administrator Default by the Indenture Trustee or by the Eligible
Lender Trustee with the consent of the Indenture Trustee, to
instruct the Indenture Trustee to make withdrawals and payments
from the Trust Accounts (or the Eligible Lender Trustee with
respect to the Certificate Distribution Account and the
Certificate Monthly Advance Account) for the purpose of
permitting the Master Servicers, the Administrator or the
Eligible Lender Trustee to carry out its respective duties
hereunder or under the Trust Agreement or permitting the
Indenture Trustee to carry out its duties under the Indenture.
SECTION 5.2. COLLECTIONS. Each Master Servicer shall remit to the
Collection Account all payments by or on behalf of the Obligors with respect to
the Financed Student Loans for which it, rather than a subservicer, is acting as
Primary Servicer (other than Purchased Student Loans), (i) within one Business
Day after it has received an aggregate of $30,000 during any Collection Period
and (ii) on the last Business Day of each Collection Period, all other
collections received during such Collection Period. Each Master Servicer shall
cause each other Servicer to remit to the Collection Account, within one
Business Day of receipt thereof, all payments by or on behalf of the Obligors
with respect to the Financed Student Loans for which it is acting as Primary
Servicer. For purposes of this Article V, the phrase "payments by or on behalf
of Obligors" shall mean payments made with respect to the Financed Student Loans
by or on behalf of borrowers thereof and the Guarantors.
SECTION 5.3. APPLICATION OF COLLECTIONS. With respect to each Financed
Student Loan, all collections (including all Guarantee Payments) with respect
thereto shall be applied in accordance with regulations of the Department, if
applicable, and the applicable Guarantor.
SECTION 5.4. ADDITIONAL DEPOSITS. Within two Business Days after receipt
thereof, the Eligible Lender Trustee (or a Master Servicer on its behalf) shall
deposit in the Collection Account the aggregate amount of Interest Subsidy
Payments and Special Allowance Payments received by it with respect to the
Financed Student Loans, and each Seller shall deposit in the Collection Account
any amount owed pursuant to Section 3.2 no later than the last day of the
Collection Period during which any such amount is owed. The Master Servicers or
TMSI shall deposit or cause to be deposited in the Collection Account the
aggregate Purchase Amount with respect to Purchased Student Loans and all other
amounts to be paid by the Master Servicers or TMSI under Section 4.5 when such
amounts are due, and the Sellers or TMSI shall deposit or cause to be deposited
therein the aggregate Purchase Amount with respect to Purchased Student Loans
and all other amounts to be paid by the Sellers or TMSI under Sections 3.2 or
the Sellers under Section 9.1 when such amounts are due. The Sellers, the Master
Servicers and the Administrator also shall deposit in the Collection Account all
amounts required to be deposited therein pursuant to, and within the time
periods provided by, Section 2.3. Notwithstanding the foregoing, the Master
Servicers shall deposit, or cause to be deposited, directly into the Reserve
Account any payments of or with respect to principal relating to a Financed
Student Loan for which a Realized Loss was previously allocated (but only up to
the amount of such Realized Loss), and shall deposit, or cause to be deposited,
directly into the Collection Account any payments of or with respect to interest
relating to a Financed Student Loan for which a Realized Loss was previously
allocated.
TMSI also shall, in its sole discretion, deposit into the Monthly Advance
Account the amount of any Monthly Advances determined to be made by TMSI
pursuant to Section 5.13 no later than the Determination Date relating to the
Note Distribution Date or Certificate Distribution Date, as the case may be,
when such amounts are to be applied as a payment of interest. On each related
Certificate Distribution Date, the Indenture Trustee will transfer from the
Monthly Advance Account to the Eligible Lender Trustee, by wire transfer no
later than 11:00 a.m. New York time, for deposit into the Certificate Monthly
Advance Account the Monthly Advance for such Certificate Distribution Date.
Pursuant to Section 5.13, if after a Monthly Advance is made, a Master Servicer
receives the Guarantee Payment, Special Allowance Payment or Interest Subsidy
Payment for which such Monthly Advance was made, such Master Servicer may
reimburse TMSI, immediately upon demand, from such Guarantee Payment, Special
Allowance Payment or Interest Subsidy Payment, as the case may be, on deposit in
the Collection Account up to the amount of the related Monthly Advance.
SECTION 5.5. DISTRIBUTIONS. (a) On each Note Distribution Date relating to
the Series 1997-1 Notes, pursuant to the Administrator's instructions, the
Indenture Trustee will transfer from the Collection Account to the Note
Distribution Account, from payments received on or with respect to the Financed
Student Loans during the Collection Period immediately preceding the month of
such Note Distribution Date (or for such other Collection Periods as may be set
forth in a Terms Supplement), an amount up to the related Noteholders' Interest
Distribution Amount. If a Class of Series 1997-1 Notes has the earliest Final
Maturity Date of all Classes of Notes then Outstanding, for the Class of Series
1997-1 Notes with the earliest Final Maturity Date, on the first Note
Distribution Date for such Class occurring in each month, commencing May 1997,
after making the transfer set forth in the prior sentence, the Indenture Trustee
will transfer from the Collection Account to the Note Distribution Account from
payments received on or with respect to the Financed Student Loans during the
Collection Period immediately preceding the month prior to the month of such
Note Distribution Date (or for such other Collection Periods as may be set forth
in a Terms Supplement), an amount up to the Noteholders' Principal Distribution
Amount; provided, however, that for each month in which the first Note
Distribution Date for any Series of Notes occurs prior to the Certificate
Distribution Date in such month, prior to transferring amounts to the Note
Distribution Account, the Indenture Trustee will transfer to the Expense
Account, from payments received on or with respect to the Financed Student Loans
during the immediately preceding Collection Period, an amount up to the
Transaction Fees for the month preceding such Note Distribution Date and all
overdue Transaction Fees from prior months.
(b) On each Certificate Distribution Date, pursuant to information
contained in the Administrator's Certificate delivered in accordance with
Section 4.7, the Indenture Trustee will transfer from the Collection Account,
from payments received on or with respect to the Financed Student Loans during
the immediately preceding Collection Period, (i) to the Expense Account, an
amount up to the excess, if any, of the Transaction Fees for the month preceding
such Certificate Distribution Date and all overdue Transaction Fees from prior
months over the amount, if any, previously transferred to the Expense Account
during the month of such Certificate Distribution Date and (ii) to the Eligible
Lender Trustee, by wire transfer no later than 11:00 a.m. New York time, for
deposit in the Certificate Distribution Account, an amount up to the related
Certificateholders' Interest Distribution Amount. Additionally, after each Class
of Notes has been paid in full, on the first Certificate Distribution Date
occurring in each month relating to the Class of Certificates with the earliest
Final Maturity Date, the Indenture Trustee will transfer from the Collection
Account to the Eligible Lender Trustee, by wire transfer no later than 11:00
a.m. New York time, for deposit in the Certificate Distribution Account, from
payments received on or with respect to the Financed Student Loans during the
Collection Period immediately preceding the month prior to such Certificate
Distribution Date, an amount up to the applicable Certificateholders' Principal
Distribution Amount.
(c) On the first Note Distribution Date for any Series of Notes occurring
in March, June, September and December, or in the case of clause (iii) below on
the first Note Distribution Date occurring in each month (or if in any such
month a Certificate Distribution Date occurs prior to such first Note
Distribution Date, on such Certificate Distribution Date), the Indenture
Trustee, pursuant to information contained in the Administrator's Certificate
delivered in accordance with Section 4.7, will distribute from the Expense
Account (in addition to any amounts transferred from the Reserve Account
pursuant to Section 5.6) the following amounts in the following order of
priority: (i) to each Master Servicer, the Servicing Fee and all overdue
Servicing Fees payable to such Master Servicer, (ii) to the Administrator, the
Administration Fee and all overdue Administration Fees, (iii) to the Auction
Agent, the Auction Agent Fee and all overdue Auction Agent Fees, (iv) to the
Indenture Trustee, the Indenture Trustee Fee and all overdue Indenture Trustee
Fees, (v) to the Eligible Lender Trustee, the Eligible Lender Trustee Fee and
all overdue Eligible Lender Trustee Fees and (vi) to the Surety Provider, the
Surety Provider Fee and all overdue Surety Provider Fees.
(d) On each Note Distribution Date, the Indenture Trustee will distribute
to the Noteholders of the applicable Class as of the related Record Date all
amounts transferred to the Note Distribution Account as set forth above (in
addition to any amounts transferred from the Capitalized Interest Account, the
Capitalized Pre-Funding Account, the Pre-Funding Account and the Reserve
Account, each as set forth below in this Article V, any amounts received under
the applicable Note Surety Bond pursuant to Section 10.1(a) and any Monthly
Advances deposited into the Monthly Advance Account pursuant to Section 5.4). On
each Certificate Distribution Date, the Eligible Lender Trustee will distribute
to the Certificateholders as of the related Record Date all amounts transferred
to the Certificate Distribution Account as set forth above (in addition to any
amounts transferred from the Capitalized Interest Account and the Reserve
Account, each as set forth below in this Article V, any amounts received under
the applicable Certificate Surety Bond pursuant to Section 10.1(b) and any
Monthly Advances deposited into the Certificate Monthly Advance Account pursuant
to Section 5.4).
(e) On the last Note Distribution Date occurring in January, April, July
and October (or if in any such month a Certificate Distribution Date occurs
after such last Note Distribution Date, on such Certificate Distribution Date),
after making all required transfers to the Note Distribution Account and, if
applicable, the Certificate Distribution Account and the Expense Account, the
Indenture Trustee, pursuant to information contained in the Administrator's
Certificate delivered in accordance with Section 4.7, will transfer any amounts
remaining in the Collection Account (other than amounts representing payments
received during such month or payments of or with respect to principal received
in the immediately preceding month) in the following order of priority: (i) to
the Surety Provider, the amount, if any, necessary to reimburse the Surety
Provider for prior Note and Certificate Surety Bond Payments, together with
interest thereon at the rate set forth in the Insurance Agreement, (ii) to the
Reserve Account, the amount, if any, necessary to increase the balance thereof
to the Specified Reserve Account Balance, (iii) to each Master Servicer, the
aggregate unpaid amount of the Servicing Fee Carryover payable to such Master
Servicer, if any, (iv) to the Note Distribution Account, the aggregate unpaid
amount of Noteholders' Interest Carryover, if any, and (v) to the Certificate
Distribution Account, the aggregate unpaid amount of Certificateholders'
Interest Carryover, if any. Any amounts remaining in the Collection Account
after such transfers (other than amounts representing payments received during
such month or payments of or with respect to principal received in the
immediately preceding month) will be transferred to the Reserve Account. Amounts
transferred to the Note Distribution Account or the Certificate Distribution
Account pursuant to clauses (iv) and (v) above, respectively, will be paid to
the applicable Class of Notes or Certificates on the next Note Distribution Date
or Certificate Distribution Date relating to such Class of Notes or
Certificates. Notwithstanding the foregoing, if the amount on deposit in the
Reserve Account, after giving effect to all distributions otherwise required to
be made on such date, equals the greater of (i) 1% of the then outstanding
principal balance of the Notes and the Certificates and (ii) $1,500,000 (but in
no event greater than the then outstanding principal balance of the Notes and
the Certificates), amounts otherwise required to be deposited into the Reserve
Account pursuant to clause (ii) above may, instead, be applied as an Additional
Principal Payment on the next applicable Note Distribution Date for which a
payment of principal is to be made on the Class of Notes with the earliest Final
Maturity Date (or, after all the Notes have been paid in full, on the next
Certificate Distribution Date).
(f) Notwithstanding the foregoing, if there has been an Event of Default
with respect to payment of the Notes, the Certificateholders will not be
entitled to any payments of principal or interest until each outstanding Class
of Notes has been paid in full.
(g) Notwithstanding the foregoing, if during a Collection Period a Serial
Loan was transferred by the Trust to a Seller's designee pursuant to Section
2.3(b), Student Holdings, in its capacity as a holder of a 1% interest in the
Certificates, shall receive on the Note Distribution Date or Certificate
Distribution Date, as the case may be, when the related Purchase Amount is
distributed to Noteholders or Certificateholders, as applicable, any proceeds
received by the Trust in excess of the Purchase Amount of the transferred
Financed Student Loan.
(h) Distributions on a Note Distribution Date or Certificate Distribution
Date shall be initiated by 11:00 a.m. (New York City time) on such Note
Distribution Date or Certificate Distribution Date; provided, however, that any
distributions from the Certificate Distribution Account shall be made at the
times set forth in Section 5.1 of the Trust Agreement.
Notwithstanding the foregoing, principal payments will be made to each
Class of Notes and Certificates only in amounts equal to $50,000 and integral
multiples in excess thereof. If the amount in the Note Distribution Account or
the Certificate Distribution Account otherwise required to be applied as a
payment of principal either (i) is less than $50,000 or (ii) exceeds an even
multiple of $50,000, then, in the case of (i), such entire amount or, in the
case of (ii), such excess amount, will not be paid as principal on the upcoming
Note Distribution Date or Certificate Distribution Date, as the case may be, but
will be retained in the Note Distribution Account or the Certificate
Distribution Account, as the case may be, until the amount therein available for
payment of principal (including any amounts transferred from the Reserve
Account) equals $50,000 or any integral multiple thereof.
SECTION 5.6. RESERVE ACCOUNT. (a) On the Closing Date relating to the
Series 1997-1 Notes, the Sellers shall deposit the Reserve Account Initial
Deposit, if any, into the Reserve Account.
(b) If the amount on deposit in the Reserve Account on the last Note
Distribution Date occurring in January, April, July and October (or if in any
such month a Certificate Distribution Date occurs after such last Note
Distribution Date, on such Certificate Distribution Date) (after giving effect
to all deposits or withdrawals therefrom on such Note Distribution Date or
Certificate Distribution Date) is greater than the then applicable Specified
Reserve Account Balance, the Administrator shall instruct the Indenture Trustee
(A) to pay to the Master Servicers out of such excess an amount equal to the
amount described in Section 5.5(e)(iii) for such Note Distribution Date or
Certificate Distribution Date (to the extent not otherwise paid to the Master
Servicers on such Note Distribution Date or Certificate Distribution Date), (B)
to pay to the Note Distribution Account out of such remaining excess an amount
equal to the amount described in Section 5.5(e)(iv) for such Note Distribution
Date or Certificate Distribution Date (to the extent not otherwise paid to the
Note Distribution Account on such Note Distribution Date or Certificate
Distribution Date), (C) to pay to the Certificate Distribution Account out of
such remaining excess an amount equal to the amount described in Section
5.5(e)(v) for such Distribution Date (to the extent not otherwise paid to the
Certificate Distribution Account on such Distribution Date), (D) to pay to the
Surety Provider any amounts remaining unpaid and owing pursuant to Section
2.02(p) of the Insurance Agreement, (E) to pay to the Collection Account any
amounts required to be paid by a Sellers, a Master Servicer or TMSI pursuant to
Sections 3.2 or 4.5 as a result of breaches of representations and warranties
made in Section 3.1, 4.1, 4.2, 4.3 or 4.4 to the extent such Seller or TMSI has
not made such payments within the required time period, and (F) to distribute
the remaining amount of such excess to TMS Student Holdings, Inc. as holder of a
1% interest in the Certificates, or its permitted successors or assigns
("Student Holdings"). Amounts properly distributed pursuant to this paragraph
(b) shall be deemed released from the Trust Estate and the security interest
therein granted to the Indenture Trustee, and Student Holdings shall in no event
thereafter be required to refund any such distributed amounts. Notwithstanding
the foregoing, if set forth in a supplement to this Agreement or a Trust
Supplement, holders of Originators' Interests may receive amounts otherwise
distributed to TMS Student Holdings, Inc. pursuant to subclause (F) above.
(c) Following the payment in full of the aggregate outstanding principal
amount of the Notes and the Certificates and of all other amounts owing or to be
distributed hereunder or under the Indenture or the Trust Agreement to
Noteholders, Certificateholders, the Master Servicers, the Administrator or the
Surety Provider and the termination of the Trust (including any Servicing Fee
Carryovers, Noteholders' Interest Carryover and Certificateholders' Interest
Carryover), any amount remaining on deposit in the Reserve Account shall be
distributed to Student Holdings. Student Holdings shall in no event be required
to refund any amounts properly distributed pursuant to this Section 5.6(c).
(d) (i) In the event that on the first Note Distribution Date for any
Series of Notes occurring in March, June, September and December, or with
respect to Section 5.5(c)(iii) on the first Note Distribution Date occurring in
each month (or if in any such month a Certificate Distribution Date occurs prior
to such first Note Distribution Date, on such Certificate Distribution Date),
any amounts to be distributed as calculated pursuant to Section 5.5(c)(i)-(vi)
exceed the amount on deposit in the Expense Account available for such purposes,
the Administrator shall instruct the Indenture Trustee to withdraw from the
Reserve Account the lesser of such excess and the amount on deposit in the
Reserve Account (after giving effect to each withdrawal in the order specified
in Section 5.5(c)(i)- (vi)) and deposit such withdrawn amount in the Expense
Account for distribution as provided in Section 5.5; PROVIDED, HOWEVER, that,
except as provided in Sections 5.6(b)(A) and 5.6(c), amounts on deposit in the
Reserve Account will not be available to cover any unpaid Servicing Fee
Carryover to the Master Servicers.
(ii) In the event that the Noteholders' Distribution Amount
for a Note Distribution Date exceeds the amount in the Note
Distribution Account for such Note Distribution Date available
for such purposes, the Administrator shall instruct the Indenture
Trustee to withdraw from the Reserve Account an amount equal to
the lesser of such excess (after giving effect to any transfers
from the Capitalized Interest Account and the Capitalized
Pre-Funding Account on such Note Distribution Date) and the
amount on deposit in the Reserve Account, (after giving effect to
paragraph (d)(i) above), and deposit such withdrawn amount in the
Note Distribution Account for distribution as provided in Section
5.5.
(iii) In the event that the Certificateholders' Distribution
Amount for a Certificate Distribution Date exceeds the amount for
such Certificate Distribution Date available for such purposes,
the Administrator shall instruct the Indenture Trustee on such
Distribution Date to withdraw from the Reserve Account an amount
equal to the lesser of such excess (after giving effect to any
transfers from the Capitalized Interest Account on such
Certificate Distribution Date), and the amount on deposit in the
Reserve Account (after giving effect to paragraphs (d)(i) through
(d)(ii) above), and to deposit such withdrawn amount in the
Certificate Distribution Account for distribution as provided in
Section 5.5.
SECTION 5.7. STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS. On each
Determination Date preceding a Note Distribution Date and a Certificate
Distribution Date, the Master Servicers or the Administrator shall provide to
the Indenture Trustee (with a copy to the Surety Provider and to the Rating
Agencies) for the Indenture Trustee to forward on such succeeding Note
Distribution Date to each Noteholder of the applicable Class of record and to
the Eligible Lender Trustee for the Eligible Lender Trustee to forward on such
succeeding Certificate Distribution Date to each Certificateholder of the
applicable Class of record, a statement substantially in the form of Exhibits A
and B, respectively, setting forth at least the following information with
respect to such Note Distribution Date and Certificate Distribution Date or the
preceding Collection Period, to the extent applicable (provided, however, that
with respect to each Note Distribution Date other than the first Note
Distribution Date occurring in each month, such statement need only contain the
information set forth in clauses (ii), (iii), (v), (vi) and (xii) below):
(i) the amount of such distribution allocable to principal;
(ii) the amount of the distribution allocable to interest;
(iii) the amount, if any, of the distribution allocable to
any Noteholders' Auction Rate Interest Carryover, any
Noteholders' LIBOR Rate Interest Carryover, any
Certificateholders' Auction Rate Interest Carryover and any
Certificateholders' LIBOR Rate Interest Carryover, together with
any remaining outstanding amount of each thereof;
(iv) the Pool Balance as of the close of business on the
last day of the preceding Collection Period;
(v) the aggregate outstanding principal amount of the Notes
of each Class and the Certificates of each Class as of such Note
Distribution Date or Certificate Distribution Date, after giving
effect to payments allocated to principal reported under clause
(i) above;
(vi) the Class Interest Rate for the applicable Class of
Notes and the Certificate Rate for the applicable Class of
Certificates with respect to each distribution referred to in
clause (ii) above, indicating whether such interest rate is
calculated based on the Net Loan Rate or based on the applicable
Auction Rate or LIBOR Rate, as the case may be, and specifying
what each such interest would have been using the alternate basis
for such calculation;
(vii) the amount of the Servicing Fee and any Servicing Fee
Carryover allocated to the Master Servicers with respect to the
related Collection Period, and the amount, if any, of the
Servicing Fee Carryover remaining unpaid after giving effect to
any such allocation;
(viii) the amount of the Administration Fee, the Auction
Agent Fee, the Indenture Trustee Fee, the Eligible Lender Trustee
Fee and the Surety Provider Fee allocated in respect of the
preceding Collection Period;
(ix) the amount of payment to the Surety Provider in
reimbursement of prior draws under any Note Surety Bond or any
Certificate Surety Bond, including interest thereon;
(x) the amount of the aggregate Realized Losses, if any, for
such Collection Period and any recoveries of principal and
interest received during such Collection Period relating to
Financed Student Loans for which a Realized Loss was previously
allocated;
(xi) the balance of the Reserve Account on such Distribution
Date, after giving effect to changes therein on such Note
Distribution Date or Certificate Distribution Date;
(xii) the amount of any draw required to be made under the
applicable Note Surety Bond or the applicable Certificate Surety
Bond;
(xiii) for Note Distribution Dates during the Funding
Period, the remaining Pre-Funded Amount;
(xiv) for the first Note Distribution Date on or immediately
following the end of the Funding Period, the amount of any
remaining Pre-Funded Amount that has not been used to make
Additional Fundings and is being paid out to Noteholders; and
(xv) the Parity Percentage, including the numerator and
denominator used in determining such Parity Percentage.
Each amount set forth pursuant to paragraph (i), (ii), (vii), and (viii) above
shall be expressed as a dollar amount per $50,000 of original principal balance
of a Certificate or Note, as applicable.
A copy of the statements referred to above may be obtained by any Certificate
Owner or Note Owner by a written request to the Eligible Lender Trustee or the
Indenture Trustee, respectively, addressed to the respective Corporate Trust
Office.
The statements referred to above will not be provided to holders of
Originators' Interests. Any Trust Supplement authorizing the issuance of one or
more Originators' Interests also will set forth the information respecting such
Originators' Interests to be provided by the Master Servicers to the Eligible
Lender Trustee for the Eligible Lender Trustee to forward to the holders of such
Originators' Interests.
SECTION 5.8. PRE-FUNDING ACCOUNT. (a) On the Closing Date, the Issuer will
deposit in the Pre-Funding Account $59,865,671.24 from the net proceeds of the
sale of the Series 1997-1 Notes. On each Transfer Date, the Administrator shall
instruct the Indenture Trustee to withdraw from the Pre-Funding Account an
amount equal to 100% of the principal balance of, plus accrued interest from the
Subsequent Cut-off Date to the Transfer Date on, the Additional Financed Student
Loans transferred to the Eligible Lender Trustee on behalf of the Issuer on such
Transfer Date and to distribute such amount to or upon the order of the Sellers
of such Additional Financed Student Loans upon satisfaction of the conditions
set forth in Section 2.2 with respect to such transfer.
(b) If (x) the Pre-Funded Amount has not been reduced to zero on the last
day of the Funding Period relating to the Series 1997-1 Notes (or, if such
Funding Period ends prior to such Note Distribution Date, on the first Note
Distribution Date for the Class of Notes with the earliest Final Maturity Date
following the end of the Funding Period) or (y) the Pre-Funded Amount has been
reduced to $200,000 or less on any Note Distribution Date, in either case after
giving effect to any reductions in the Pre-Funded Amount on such Distribution
Date pursuant to paragraph (a) above, the Administrator shall instruct the
Indenture Trustee pursuant to Section 4.7(b) to withdraw from the Pre-Funding
Account on the next Note Distribution Date relating to the Class of Notes with
the earliest Final Maturity Date an amount equal to the Pre-Funded Amount and to
distribute such amount to Noteholders of the Class of Notes with the earliest
Final Maturity Date as a payment of principal in the same manner as the
Noteholders' Principal Distribution Amount is distributed.
SECTION 5.9. CAPITALIZED PRE-FUNDING ACCOUNT. [Reserved].
SECTION 5.10. CAPITALIZED INTEREST ACCOUNT. On the Closing Date relating to
the Series 1997-1 Notes, the Sellers shall deposit $11,200,000 in the
Capitalized Interest Account. On each Note Distribution Date, for so long as
funds remain therein, the Indenture Trustee shall withdraw from the Capitalized
Interest Account for deposit into the Note Distribution Account an amount up to
the excess, if any, of the Noteholders' Interest Distribution Amount for such
Note Distribution Date over the sum of the amounts transferred to the Note
Distribution Account pursuant to Sections 5.5(a) and 5.9. Also, on each
Certificate Distribution Date, for so long as funds remain therein, the
Indenture Trustee shall withdraw from the Capitalized Interest Account and
transfer to the Eligible Lender Trustee, by wire transfer no later than 11:00
a.m. New York time, for deposit in the Certificate Distribution Account an
amount up to the excess, if any, of the Certificateholders' Interest
Distribution Amount for such Certificate Distribution Date over the amount
transferred to the Certificate Distribution Account pursuant to Section 5.5(b).
On the last Note Distribution Date occurring in November 1998 for any Series of
Notes (after giving effect to all withdrawals from the Capitalized Interest
Account and the Certificate Monthly Advance Account), the Administrator shall
instruct the Indenture Trustee to withdraw any amounts remaining in the
Capitalized Interest Account and transfer such amounts to the Reserve Account
or, with the consent of the Surety Provider, apply such amounts as Additional
Principal Payments.
SECTION 5.11. EXPENSE ACCOUNT. The Administrator shall instruct the
Indenture Trustee to deposit funds into, and withdraw funds from, the Expense
Account as set forth in Sections 5.5 and 5.6. Any funds remaining in the Expense
Account upon termination of the Trust shall be distributed to TWIC on behalf of
the Master Servicers as additional servicing compensation.
SECTION 5.12. NOTE DISTRIBUTION ACCOUNT AND CERTIFICATE DISTRIBUTION
ACCOUNT. The Administrator shall instruct the Indenture Trustee to deposit funds
into, and withdraw funds from, the Note Distribution Account and the Certificate
Distribution Account as set forth in Sections 5.5, 5.6, 5.8, 5.9, 5.10 and 10.1.
SECTION 5.13. MONTHLY ADVANCES. If a Master Servicer has applied for a
Guarantee Payment from a Guarantor or an Interest Subsidy Payment or a Special
Allowance Payment from the Department, and such Master Servicer has not received
the related payment prior to the end of the Collection Period immediately
preceding the Note Distribution Date or Certificate Distribution Date on which
such amount would be required to be distributed as a payment of interest, TMSI
may, no later than the Determination Date relating to such Note Distribution
Date or Certificate Distribution Date, as the case may be, in its sole
discretion, deposit into the Monthly Advance Account an amount up to the amount
of such payments applied for but not received (such deposits by TMSI are
referred to herein as "Monthly Advances"). Such Monthly Advances are recoverable
by TMSI from the Guarantee Payment, Interest Subsidy Payment or Special
Allowance Payment, as the case may be, for which such Monthly Advance was made.
TMSI shall have no obligation, legal or otherwise, to make any Monthly Advance,
and the making of or decision to make a particular Monthly Advance shall not
create any obligation on TMSI, legal or otherwise, to make any future Monthly
Advances.
ARTICLE VI
THE SELLERS AND THE MASTER SERVICERS
SECTION 6.1. REPRESENTATIONS OF THE SELLERS AND THE MASTER SERVICERS. Each
of the Sellers and the Master Servicers, with respect to itself, make the
following representations on which the Issuer is deemed to have relied in
acquiring (through the Eligible Lender Trustee) the Financed Student Loans being
conveyed pursuant to this Agreement. The representations speak as of the
execution and delivery of this Agreement in the case of the Initial Financed
Student Loans, and as of the applicable Transfer Date, in the case of the
Additional Financed Student Loans, but shall survive the sale, transfer and
assignment of the Financed Student Loans to the Eligible Lender Trustee on
behalf of the Issuer and the pledge thereof to the Indenture Trustee pursuant to
the Indenture.
(a) ORGANIZATION AND GOOD STANDING. Each of the Sellers, TMSI and the
Master Servicers is duly incorporated and validly existing as a corporation in
good standing under the laws of the state of its incorporation, with the power
and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted, and had
at all relevant times, and has, the power, authority and legal right, in the
case of the Sellers, to originate, acquire and own the Financed Student Loans,
and in the case of the Master Servicers, to service the Financed Student Loans
and hold the Financed Student Loan Files as custodian.
(b) DUE QUALIFICATION. Each Master Servicer is duly qualified to do
business and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership and lease of property or the conduct of its
business (including the servicing of the Financed Student Loans as required by
this Agreement) shall require such qualifications.
(c) POWER AND AUTHORITY. Each of the Sellers, the Master Servicers and TMSI
has the corporate power and authority to execute and deliver this Agreement and
to carry out its terms; each of the Sellers has full corporate power and
authority to sell and assign the property to be sold and assigned to and
deposited with the Issuer (or with the Eligible Lender Trustee on behalf of the
Issuer) and each of the Sellers has duly authorized such sale and assignment to
the Issuer (or to the Eligible Lender Trustee on behalf of the Issuer) by all
necessary corporate action; and the execution, delivery and performance of this
Agreement have been duly authorized by the Sellers, the Master Servicers and
TMSI by all necessary corporate action.
(d) BINDING OBLIGATION. This Agreement constitutes a legal, valid and
binding obligation of the Sellers, TMSI and the Master Servicers, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization and similar laws relating to creditors' rights generally or and
subject to general principles of equity.
(e) NO VIOLATION. The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof or thereof do not conflict
with, result in any breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time or both) a default under, the articles
of incorporation or by-laws of the Sellers, TMSI or the Master Servicers, or any
indenture, agreement or other instrument to which the Sellers, TMSI or the
Master Servicers is a party or by which it shall be bound; nor result in the
creation or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument (other than pursuant
to the Basic Documents); nor violate any law or, to the knowledge of the
Sellers, TMSI or the Master Servicers, any order, rule or regulation applicable
to it of any court or of any Federal or State regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Sellers, TMSI or the Master Servicer or its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending
against the Sellers, the Master Servicers or TMSI or, to its best knowledge,
threatened against the Sellers, the Master Servicers or TMSI, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over it or its properties: (i) asserting the invalidity of
this Agreement, the Indenture or any of the other Basic Documents, the Notes or
the Certificates, (ii) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions contemplated by this
Agreement, the Indenture or any of the other Basic Documents, (iii) seeking any
determination or ruling that could reasonably be expected to have a material and
adverse effect on the performance by the Sellers, the Master Servicers or TMSI
of its obligations under, or the validity or enforceability of, this Agreement,
the Indenture, any of the other Basic Documents, the Notes or the Certificates
or (iv) seeking to affect adversely the Federal or State income tax attributes
of the Issuer, the Notes or the Certificates.
(g) ALL CONSENTS. All authorizations, consents, orders or approvals of or
registrations or declarations with any court, regulatory body, administrative
agency or other government instrumentality required to be obtained, effected or
given by the Sellers, TMSI or the Master Servicers in connection with the
execution and delivery by the Sellers, TMSI or the Master Servicers of this
Agreement and the performance by the Sellers, TMSI or the Master Servicers of
the transactions contemplated by this Agreement, have been duly obtained,
effected or given and are in full force and effect.
(h) NO AMENDMENT OR WAIVER. No provision of a Financed Student Loan has
been waived, altered or modified in any respect, except pursuant to a document,
instrument or writing included in the Financed Student Loan File, and no such
amendment, waiver, alteration or modification causes such Financed Student Loan
not to conform to the other warranties contained in this Section or those of the
Sellers contained in Section 3.1.
(i) LOCATION OF FINANCED STUDENT LOAN FILES. The Financed Student Loan
Files are kept in the office of the applicable Master Servicer specified in, or
in accordance with, Section 3.4(b).
SECTION 6.2. EXISTENCE. Except as permitted by Section 6.5,during the term
of this Agreement, each of the Sellers, the Master Servicers and TMSI will keep
in full force and effect its existence, rights and franchises as a corporation
under the laws of the jurisdiction of its organization.
SECTION 6.3. LIABILITY AND INDEMNITIES. (a) Each of the Sellers, the Master
Servicers and TMSI shall be liable in accordance herewith only to the extent of
the obligations specifically undertaken by the Sellers, the Master Servicers or
TMSI, as the case may be, under this Agreement.
(b) Each of the Sellers, individually, and TMSI shall jointly and severally
indemnify, defend and hold harmless the Issuer, the Eligible Lender Trustee and
the Indenture Trustee and their officers, directors, employees and agents from
and against any taxes that may at any time be asserted against any such Person
with respect to the transactions contemplated herein (except any such income
taxes arising out of fees paid to the Eligible Lender Trustee or the Indenture
Trustee), including any sales, gross receipts, general corporation, tangible
personal property, privilege or license taxes and costs and expenses in
defending against the same.
(c) Each of the Sellers, individually, and TMSI shall jointly and severally
indemnify, defend and hold harmless the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Certificateholders, the Noteholders and the Surety
Provider and the officers, directors, employees and agents of the Issuer, the
Eligible Lender Trustee, the Indenture Trustee and the Surety Provider from and
against any and all costs, expenses, losses, claims, damages and liabilities
arising out of, or imposed upon such Person through, (i) such Seller's willful
misfeasance, bad faith or negligence in the performance of their duties under
this Agreement, or by reason of reckless disregard of its obligations and duties
under this Agreement and (ii) such Seller's, the Issuer's or the Eligible Lender
Trustee's violation of Federal or state securities laws in connection with the
offering and sale of the Notes and the Certificates.
(d) The Sellers and TMSI shall be liable as primary obligors for, and shall
indemnify, defend and hold harmless the Eligible Lender Trustee and its
officers, directors, employees and agents from and against, all costs, expenses,
losses, claims, damages, obligations and liabilities arising out of, incurred in
connection with or relating to the Trust Agreement, the other Basic Documents,
the Trust Estate, the acceptance or performance of the trusts and duties set
forth herein and in the Trust Agreement or the action or the inaction of the
Eligible Lender Trustee hereunder and under the Trust Agreement, except to the
extent that such cost, expense, loss, claim, damage, obligation or liability:
(i) shall be due to the willful misfeasance, bad faith or negligence (except for
errors in judgment) of the Eligible Lender Trustee, (ii) shall arise from any
breach by the Eligible Lender Trustee of its covenants under any of the Basic
Documents; or (iii) shall arise from the breach by the Eligible Lender Trustee
of any of its representations or warranties set forth in Section 7.3 of the
Trust Agreement. In the event of any claim, action or proceeding for which
indemnity will be sought pursuant to this paragraph, the Eligible Lender
Trustee's choice of legal counsel shall be subject to the approval of the
Sellers, which approval shall not be unreasonably withheld.
(e) The Sellers shall pay any and all taxes levied or assessed upon all or
any part of the Trust Estate (other than those taxes expressly excluded from the
Sellers' responsibilities pursuant to the parentheticals in paragraph (a)
above).
(f) Pursuant to Section 6.7 of the Indenture, and subject to the
limitations therein, the Sellers and TMSI shall pay reasonable compensation to
the Indenture Trustee and shall reimburse the Indenture Trustee for all
reasonable expenses, disbursements and advances, and indemnify, defend and hold
harmless the Indenture Trustee and its officers, directors, employees and agents
from and against all costs, expenses, losses, claims, damages and liabilities,
to the extent and in the manner provided in the Indenture.
(g) Each of the Master Servicers, individually, and TMSI shall indemnify,
defend and hold harmless the Issuer, the Eligible Lender Trustee, the Indenture
Trustee, the Certificateholders, the Noteholders and the Surety Provider and the
officers, directors, employees and agents of the Issuer, the Eligible Lender
Trustee, the Indenture Trustee and the Surety Provider from and against any and
all costs, expenses, losses, claims, damages and liabilities arising out of, or
imposed upon such Person through, such Master Servicer's or TMSI's willful
misfeasance, bad faith or negligence in the performance of its duties under this
Agreement. Notwithstanding the foregoing, if a Master Servicer or TMSI is
rendered unable, in whole or part, by a force outside the control of the parties
hereto (including acts of God, acts of war, fires, earthquakes and other
disasters) to satisfy its obligations under this Agreement, such Master Servicer
and TMSI shall not be deemed to have breached any such obligation upon delivery
of written notice of such event to the other parties hereto, for so long as such
Master Servicer or TMSI remains unable to perform such obligation as a result of
such event.
(h) Indemnification under this Section shall survive the resignation or
removal of the Eligible Lender Trustee or the Indenture Trustee and the
termination of this Agreement or the Indenture or the Trust Agreement, as
applicable, and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Sellers, TMSI or the Master Servicers, as the
case may be, shall have made any indemnity payments pursuant to this Section and
the Person to or on behalf of whom such payments are made thereafter shall
collect any of such amounts from others, such Person shall promptly repay such
amounts to the Sellers, TMSI or the Master Servicers, as the case may be without
interest.
SECTION 6.4. [Reserved]
SECTION 6.5. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, THE SELLERS, THE ADMINISTRATOR OR THE MASTER SERVICERS. Any Person (a) into
which a Seller, the Administrator or a Master Servicer, as the case may be, may
be merged or consolidated, (b) which may result from any merger or consolidation
to which a Seller, the Administrator or a Master Servicer, as the case may be,
shall be a party or (c) which may succeed to the properties and assets of a
Seller, the Administrator or a Master Servicer, as the case may be,
substantially as a whole, shall be the successor to such Seller, the
Administrator or such Master Servicer, as the case may be, without the execution
or filing of any document or any further act by any of the parties to this
Agreement or the Administration Agreement; PROVIDED, HOWEVER, that each of the
Sellers, the Administrator and the Master Servicers hereby covenants that it
will not consummate any of the foregoing transactions except upon satisfaction
of the following: (i) the surviving Seller, Administrator or Master Servicer, as
the case may be, if other than TWIC or ClassNotes, executes an agreement of
assumption to perform every obligation of such Seller, the Administrator or such
Master Servicer, as the case may be, under this Agreement and the Administration
Agreement, (ii) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 3.1 or 6.1 shall have been
breached, (iii) such Seller, the Administrator or such Master Servicer, as the
case may be, shall have delivered to the Eligible Lender Trustee, the Surety
Provider and the Indenture Trustee an Officer's Certificate and an Opinion of
Counsel each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section and that all conditions
precedent, if any, provided for in this Agreement relating to such transaction
have been complied with, and that the Rating Agency Condition shall have been
satisfied with respect to such transaction, (iv) the surviving Seller,
Administrator or Master Servicer, as the case may be, shall have a consolidated
net worth at least equal to that of the predecessor Seller, Administrator or
Master Servicer as of the date hereof, as the case may be, (v) such transaction
will not result in a material adverse Federal or state tax consequence to the
Issuer, the Noteholders or the Certificateholders and (vi) unless TWIC or
ClassNotes is the surviving entity, such Seller, the Administrator or such
Master Servicer, as the case may be, shall have delivered to the Eligible Lender
Trustee, the Surety Provider and the Indenture Trustee an Opinion of Counsel
either (A) stating that, in the opinion of such counsel, all financing
statements and continuation statements and amendments thereto have been executed
and filed that are necessary fully to preserve and protect the interest of the
Eligible Lender Trustee and Indenture Trustee, respectively, in the Financed
Student Loans and reciting the details of such filings, or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve and
protect such interests.
SECTION 6.6. LIMITATION ON LIABILITY OF THE SELLERS, THE MASTER SERVICERS
AND OTHERS. (a) The Sellers, the Master Servicers and any director or officer or
employee or agent of either may rely in good faith on the advice of counsel or
on any document of any kind, prima facie properly executed and submitted by any
Person respecting any matters arising hereunder.
(b) Neither the Sellers, the Master Servicers nor any of their directors,
officers, employees or agents shall be under any liability to the Issuer, the
Surety Provider, the Noteholders or the Certificateholders, the Indenture
Trustee or the Eligible Lender Trustee except as provided under this Agreement
or the Administration Agreement for any action taken or for refraining from the
taking of any action pursuant to this Agreement or for errors in judgment;
PROVIDED, HOWEVER, that this provision shall not protect the Sellers or the
Master Servicers or any such person against any liability that would otherwise
be imposed by reason of willful misfeasance, bad faith or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties under this Agreement or the Administration Agreement.
Except as provided in this Agreement, the Sellers and the Master Servicers
shall not be under any obligation to appear in, prosecute or defend any legal
action that shall not be incidental to their duties in accordance with this
Agreement, and that in its opinion may involve it in any expense or liability;
PROVIDED, HOWEVER, that the Sellers or the Masters Servicer may undertake any
reasonable action that they may deem necessary or desirable in respect of this
Agreement and the other Basic Documents and the rights and duties of the parties
to this Agreement and the other Basic Documents and the interests of the
Certificateholders and the Surety Provider under this Agreement and the
Noteholders under the Indenture.
SECTION 6.7. SELLERS MAY OWN CERTIFICATE OR NOTES. Each Seller and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Certificates or Notes with the same rights as would have if it
were not the Seller or an Affiliate thereof, except as expressly provided herein
or in any other Basic Document.
SECTION 6.8. MASTER SERVICERS NOT TO RESIGN. Subject to the provisions of
Section 6.5, neither TWIC nor ClassNotes shall resign from the obligations and
duties imposed on it as Master Servicer under this Agreement except upon
determination that the performance of its duties under this Agreement shall no
longer be permissible under applicable law or shall violate any final order of a
court or administrative agency with jurisdiction over it or its properties.
Notice of any such determination permitting resignation shall be communicated to
the Eligible Lender Trustee, the Indenture Trustee and the Surety Provider at
the earliest practicable time (and, if such communication is not in writing,
shall be confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Eligible Lender Trustee, the Indenture Trustee and the Surety
Provider concurrently with or promptly after such notice. No such resignation
shall become effective until the Indenture Trustee or a successor Master
Servicer shall have assumed the responsibilities and obligations of TWIC or
ClassNotes, as the case may be, in accordance with Section 8.2.
ARTICLE VII
THE ADMINISTRATOR
SECTION 7.1. REPRESENTATIONS OF THE ADMINISTRATOR. The Administrator makes
the following representations on which the Issuer is deemed to have relied in
acquiring (through the Eligible Lender Trustee) the Financed Student Loans being
conveyed pursuant to this Agreement. The representations speak as of the
execution and delivery of this Agreement in the case of the Initial Financed
Student Loans, and as of the applicable Transfer Date, in the case of the
Additional Financed Student Loans, but shall survive the sale, transfer and
assignment of the Financed Student Loans to the Eligible Lender Trustee on
behalf of the Issuer and the pledge thereof to the Indenture Trustee pursuant to
the Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Administrator is
duly incorporated and validly existing as a corporation in good
standing under the laws of the state of its incorporation, with
the power and authority to own its properties and to conduct its
business as such properties are currently owned and such business
is presently conducted, and had at all relevant times, and has,
the power, authority and legal right, to administer the Financed
Student Loans.
(b) POWER AND AUTHORITY OF THE ADMINISTRATOR. The
Administrator has the corporate power and authority to execute
and deliver this Agreement and the Administration Agreement and
to carry out their respective terms; and the execution, delivery
and performance of this Agreement and the Administration
Agreement have been duly authorized by the Administrator by all
necessary corporate action.
(c) BINDING OBLIGATION. This Agreement and the
Administration Agreement each constitutes a legal, valid and
binding obligation of the Administrator, enforceable in
accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization and similar laws relating to
creditors' rights generally or and subject to general principles
of equity.
(d) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the Administration Agreement
and the fulfillment of the terms hereof or thereof do not
conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice of lapse of
time or both) a default under, the articles of incorporation or
by-laws of the Administrator, or any indenture, agreement or
other instrument to which the Administrator is a party or by
which it shall be bound; nor result in the creation or imposition
of any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents); nor violate any law or, to the
knowledge of the Administrator, any order, rule or regulation
applicable to it of any court or of any Federal or State
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Administrator or its
properties.
(e) NO PROCEEDINGS. There are no proceedings or
investigations pending against the Administrator or, to its best
knowledge, threatened against the Administrator, before any
court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over it or its
properties: (i) asserting the invalidity of this Agreement or the
Administration Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by this
Agreement or the Administration Agreement or (iii) seeking any
determination or ruling that could reasonably be expected to have
a material and adverse effect on the performance by the
Administrator of its obligations under, or the validity or
enforceability of, this Agreement or the Administration
Agreement.
(f) ALL CONSENTS. All authorizations, consents, orders or
approvals of or registrations or declarations with any court,
regulatory body, administrative agency or other government
instrumentality required to be obtained, effected or given by the
Administrator in connection with the execution and delivery by
the Administrator of this Agreement or the Administration
Agreement and the performance by the Administrator of the
transactions contemplated by this Agreement or the Administration
Agreement, have been duly obtained, effected or given and are in
full force and effect.
SECTION 7.2. LIABILITY AND INDEMNITIES. (a) The Administrator shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Administrator under this Agreement or the Administration
Agreement.
(b) The Administrator and TMSI shall indemnify, defend and hold harmless
from their respective funds, the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Master Servicers, the Certificateholders, the Noteholders
and the Surety Provider and the officers, directors, employees and agents of the
Issuer, the Eligible Lender Trustee, the Indenture Trustee and the Surety
Provider from and against any and all costs, expenses, losses, claims, damages
and liabilities arising out of, or imposed upon such Person through, the
Administrator's willful misfeasance, bad faith or negligence in the performance
of its duties under this Agreement or the Administration Agreement, or by reason
of reckless disregard of its obligations and duties under this Agreement or the
Administration Agreement.
(c) Indemnification under this Section shall survive the resignation or
removal of the Eligible Lender Trustee or the Indenture Trustee and the
termination of this Agreement or the Indenture or the Trust Agreement, as
applicable, and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Administrator shall have made any indemnity
payments pursuant to this Section and the Person to or on behalf of whom such
payments are made thereafter shall collect any of such amounts from others, such
Person shall promptly repay such amounts to the Administrator without interest.
SECTION 7.3. ADMINISTRATOR NOT TO RESIGN. Subject to the provisions of
Section 6.5, Trans-World Insurance Company shall not resign from the obligations
and duties imposed on it as Administrator under this Agreement except upon
determination that the performance of its duties under this Agreement shall no
longer be permissible under applicable law or shall violate any final order of a
court or administrative agency with jurisdiction over it or its properties.
Notice of any such determination permitting resignation shall be communicated to
the Eligible Lender Trustee, the Indenture Trustee and the Surety Provider at
the earliest practicable time (and, if such communication is not in writing,
shall be confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Eligible Lender Trustee, the Indenture Trustee and the Surety
Provider concurrently with or promptly after such notice. No such resignation
shall become effective until the Indenture Trustee or a successor Administrator
shall have assumed the responsibilities and obligations of TWIC in accordance
with Section 8.2.
ARTICLE VIII
DEFAULT
SECTION 8.1. MASTER SERVICER DEFAULT; ADMINISTRATOR DEFAULT. (a) If any one
of the following events (a "Master Servicer Default") shall occur and be
continuing:
(1) any failure by a Master Servicer (i) to deliver to the
Indenture Trustee for deposit in any of the Trust Accounts any payment
required by the Basic Documents or (ii) in the event that daily
deposits into the Collection Account are not required, to deliver to
the Administrator any payment, required by the Basic Documents, which
failure in case of either clause (i) or (ii) continues unremedied for
two Business Days after written notice of such failure is received by
such Master Servicer from the Eligible Lender Trustee, the Indenture
Trustee, the Surety Provider or the Administrator or after discovery of
such failure by an officer of such Master Servicer; or
(2) any failure by a Master Servicer or TMSI duly to observe
or to perform in any material respect any other covenants or agreements
of such Master Servicer or TMSI set
forth in this Agreement or any other Basic Document, which
failure shall (i) materially and adversely affect the
rights of Noteholders, Certificateholders or the Surety Provider and
(ii) continues unremedied for a period of 60 days after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given (A) to such Master Servicer or TMSI, as
the case may be, by the Indenture Trustee, the Eligible Lender Trustee,
the Surety Provider or the Administrator or (B) to such Master Servicer
or TMSI, as the case may be, and to the Indenture Trustee and the
Eligible Lender Trustee by the Noteholders or Certificateholders, as
applicable, representing not less than 25% of the Outstanding Amount of
the Notes or 25% of the outstanding Certificate Balance; or
(3) an Insolvency Event occurs with respect to a
Master Servicer;
then, and in each and every case, so long as a Master Servicer Default
shall not have been remedied, either the Surety Provider or, with the written
consent of the Surety Provider, the Indenture Trustee or the Noteholders of
Notes evidencing not less than 25% of the Outstanding Amount of the Notes, by
notice then given in writing to such Master Servicer (and to the Indenture
Trustee and the Eligible Lender Trustee if given by the Noteholders or the
Surety Provider) may terminate all the rights and obligations (other than the
obligations set forth in Section 6.3 hereof) of such Master Servicer under this
Agreement. On or after the receipt by such Master Servicer of such written
notice, all authority and power of such Master Servicer under this Agreement,
whether with respect to the Notes, the Certificates or the Financed Student
Loans or otherwise, shall, without further action, pass to and be vested in the
Indenture Trustee or such successor Master Servicer as may be appointed under
Section 8.2, and, without limitation, the Indenture Trustee and the Eligible
Lender Trustee are hereby authorized and empowered to execute and deliver, for
the benefit of the predecessor Master Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement of the
Financed Student Loans and related documents, or otherwise. The predecessor
Master Servicer shall cooperate with the successor Master Servicer, the
Indenture Trustee and the Eligible Lender Trustee in effecting the termination
of the responsibilities and rights of the predecessor Master Servicer under this
Agreement, including the transfer to the successor Master Servicer for
administration by it of all cash amounts that shall at the time be held by the
predecessor Master Servicer for deposit, or shall thereafter be received by it
with respect to a Financed Student Loan. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with transferring the
Financed Student Loan Files from a current Master Servicer to the successor
Master Servicer and amending this Agreement and any other Basic Documents to
reflect such succession as Master Servicer pursuant to this Section shall be
paid by the predecessor Master Servicer upon presentation of reasonable
documentation of such costs and expenses. Upon receipt of notice of the
occurrence of a Master Servicer Default, the Eligible Lender Trustee shall give
notice thereof to the Surety Provider and the Rating Agencies.
(b) ADMINISTRATOR DEFAULT. If any one of the following events (an
"Administrator Default") shall occur and be continuing:
(1) any failure by the Administrator to direct the Indenture
Trustee or the Eligible Lender Trustee, as applicable, to make any
required distributions from any of the Trust Accounts, which failure
continues unremedied for two Business Days after written notice of such
failure is received by the Administrator from the Indenture Trustee,
the Eligible Lender Trustee or the Surety Provider or after
discovery of such failure by an officer of the
Administrator; or
(2) any failure by the Administrator duly to observe or to
perform in any material respect any other covenants or agreements of
the Administrator set forth in this Agreement, the Administration
Agreement or any other Basic Document, which failure shall (i)
materially and adversely affect the rights of Noteholders,
Certificateholders, or the Surety Provider and (ii) continues
unremedied for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given (A) to the Administrator by the Surety Provider, the
Indenture Trustee or the Eligible Lender Trustee or (B) to the
Administrator and to the Indenture Trustee and the Eligible Lender
Trustee by the Noteholders or Certificateholders, as applicable,
representing not less than 25% of the Outstanding Amount of the Notes
or 25% of the outstanding Certificate Balance; or
(3) an Insolvency Event occurs with respect to the
Administrator;
then, and in each and every case, so long as the Administrator Default
shall not have been remedied, either the Surety Provider or, with the written
consent of the Surety Provider, the Indenture Trustee or the Noteholders
evidencing not less than 25% of the Outstanding Amount of the Notes, by notice
then given in writing to the Administrator (and to the Indenture Trustee and the
Eligible Lender Trustee if given by the Noteholders or the Surety Provider) may
terminate all the rights and obligations (other than the obligations set forth
in Sections 6.3 and 7.2 hereof) of the Administrator under this Agreement and
the Administration Agreement. On or after the receipt by the Administrator of
such written notice, all authority and power of the Administrator under this
Agreement and the Administration Agreement, whether with respect to the Notes,
the Certificates or the Financed Student Loans or otherwise, shall, without
further action, pass to and be vested in the Indenture Trustee or such successor
Administrator as may be appointed under Section 8.2; and, without limitation,
the Indenture Trustee and the Eligible Lender Trustee are hereby authorized and
empowered to execute and deliver, for the benefit of the predecessor
Administrator, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination. The
predecessor Administrator shall cooperate with the successor Administrator, the
Indenture Trustee and the Eligible Lender Trustee in effecting the termination
of the responsibilities and rights of the predecessor Administrator under this
Agreement and the Administration Agreement. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with amending this Agreement
and the Administration Agreement to reflect such succession as Administrator
pursuant to this Section shall be paid by the predecessor Administrator upon
presentation of reasonable documentation of such costs and expenses. Upon
receipt of notice of the occurrence of a Administrator Default, the Eligible
Lender Trustee shall give notice thereof to the Surety Provider and the Rating
Agencies.
SECTION 8.2. APPOINTMENT OF SUCCESSOR. (a) Upon receipt by a Master
Servicer or the Administrator, as the case may be, of notice of termination
pursuant to Section 8.1, or the resignation by a Master Servicer or the
Administrator, as the case may be, in accordance with the terms of this
Agreement, the predecessor Master Servicer or the Administrator, as the case may
be, shall continue to perform its functions as Master Servicer or Administrator,
as the case may be, under this Agreement in the case of termination, only until
the date specified in such termination notice or, if no such date is specified
in a notice of termination, until receipt of such notice and, in the case of
resignation, until the later of (x) the date 120 days from the delivery to the
Eligible Lender Trustee and the Indenture Trustee of written notice of such
resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (y) the date upon which the predecessor Master
Servicer or Administrator, as the case may be, shall become unable to act as
Master Servicer or Administrator, as the case may be, as specified in the notice
of resignation and accompanying Opinion of Counsel. In the event of the
termination hereunder of a Master Servicer or the Administrator, as the case may
be, the Issuer shall appoint a successor Master Servicer or Administrator, as
the case may be, acceptable to the Indenture Trustee and reasonably acceptable
to the Surety Provider, and the successor Master Servicer or Administrator, as
the case may be, shall accept its appointment by a written assumption in form
acceptable to the Indenture Trustee and the Surety Provider. In the event that a
successor Master Servicer or Administrator, as the case may be, has not been
appointed at the time when the predecessor Master Servicer or Administrator, as
the case may be, has ceased to act as Master Servicer or Administrator, as the
case may be, in accordance with this Section, the Indenture Trustee without
further action shall automatically be appointed the successor Master Servicer or
Administrator, as the case may be, and the Indenture Trustee shall be entitled
to the Master Servicing Fee and any Servicing Fee Carryover or the
Administration Fee, as the case may be in accordance with the provisions of the
Basic Documents. Notwithstanding the above, the Indenture Trustee shall, if it
shall be unwilling or legally unable so to act, appoint or petition a court of
competent jurisdiction to appoint, any established institution whose regular
business shall include the servicing of student loans, as the successor to the
departing Master Servicer or Administrator, as the case may be, under this
Agreement; PROVIDED, HOWEVER, that such right to appoint or to petition for the
appointment of any such successor servicer shall in no event relieve the
Indenture Trustee from any obligations otherwise imposed on it under the Basic
Documents until such successor has in fact assumed such appointment.
(b) Upon appointment, the successor Master Servicer or Administrator, as
the case may be, (including the Indenture Trustee acting as successor Master
Servicer or Administrator as the case may be), shall be the successor in all
respects to the predecessor Master Servicer or Administrator, as the case may
be, and shall be subject to all the responsibilities, duties and liabilities
arising thereafter relating thereto placed on the predecessor Master Servicer or
Administrator, as the case may be, and shall be entitled to an amount agreed to
by such successor Master Servicer or Administrator as the case may be, in
accordance with the provisions of the Basic Documents (which shall not exceed
the Master Servicing Fee and any Servicing Fee Carryover or Administration Fee,
as the case may be, unless such compensation arrangements are approved in
writing by the Surety Provider and will not result in a downgrading of the Notes
or the Certificates by any Rating Agency) and all the rights granted to the
predecessor Master Servicer or Administrator, as the case may be, by the terms
and provisions of this Agreement.
(c) Neither a Master Servicer nor the Administrator may resign unless it is
prohibited from serving as such by law as evidenced by an Opinion of Counsel to
such effect delivered to the Indenture Trustee, the Eligible Lender Trustee and
the Surety Provider. Notwithstanding the foregoing or anything to the contrary
herein or in the other Basic Documents, the Indenture Trustee, to the extent it
is acting as successor Master Servicer or Administrator, as the case may be,
pursuant hereto shall be entitled to resign to the extent a qualified successor
Master Servicer or Administrator, as the case may be, has been appointed and has
assumed all the obligations of the departing Master Servicer or Administrator,
as the case may be, in accordance with the terms of this Agreement and the other
Basic Documents.
(d) Any successor Master Servicer shall assume all the obligations and
responsibilities of the departing Master Servicer under each sub-servicing
agreement with a Servicer and shall only be able to modify or terminate such
sub-servicing agreements pursuant to the provisions thereof.
SECTION 8.3. NOTIFICATION TO NOTEHOLDERS AND CERTIFICATEHOLDERS. Upon any
termination of, or appointment of a successor to, a Master Servicer or
Administrator, as the case may be, pursuant to this Article VIII, the Eligible
Lender Trustee shall give prompt written notice thereof to Certificateholders
and the Indenture Trustee shall give prompt written notice thereof to
Noteholders, the Surety Provider and the Rating Agencies (which, in the case of
any such appointment of a successor, shall consist of prior written notice
thereof to the Surety Provider and the Rating Agencies).
SECTION 8.4. WAIVER OF PAST DEFAULTS. The Surety Provider may or, with the
prior written consent of the Surety Provider, the Noteholders of Notes
evidencing not less than a majority of the Outstanding Amount of the Notes (or
the Certificateholders of Certificates evidencing not less than a majority of
the outstanding Certificate Balance, in the case of any default which does not
adversely affect the Indenture Trustee or the Noteholders) may, on behalf of all
Noteholders and Certificateholders, waive in writing any default by a Master
Servicer or Administrator, as the case may be, in the performance of its
obligations hereunder and any consequences thereof, except a default in making
any required deposits to or payments from any of the Trust Accounts (or giving
instructions regarding the same) in accordance with this Agreement. Upon any
such waiver of a past default, such default shall cease to exist, and any Master
Servicer Default or Administrator Default, as the case may be, arising therefrom
shall be deemed to have been remedied for every purpose of this Agreement. No
such waiver shall extend to any subsequent or other default or impair any right
consequent thereto.
ARTICLE IX
TERMINATION
SECTION 9.1. TERMINATION. (a) OPTIONAL PURCHASE OF ALL FINANCED STUDENT
LOANS. As of the last day of any Collection Period immediately preceding a Note
Distribution Date or, if the Notes are no longer Outstanding, a Certificate
Distribution Date as of which the then outstanding Pool Balance is 10% or less
of the Aggregate Pool Balance, each of the Sellers shall have the option, with
the prior written consent of the Surety Provider, to purchase the Indenture
Trust Estate, other than the Trust Accounts; PROVIDED, HOWEVER, that, unless
Moody's agrees otherwise, a Seller may not effect any such purchase so long as
the rating on its long-term debt obligations is less than Baa3 by Moody's,
unless the Eligible Lender Trustee and the Indenture Trustee shall have received
an Opinion of Counsel to the effect that such purchase would not constitute a
fraudulent conveyance. To exercise such option, a Seller shall deposit pursuant
to Section 5.4 in the Collection Account an amount equal to the aggregate
Purchase Amount for the Financed Student Loans and the related rights with
respect thereto, plus the appraised value of any such other property held by the
Trust, such value to be determined by an appraiser mutually agreed upon by such
Seller, the Eligible Lender Trustee and the Indenture Trustee, and shall succeed
to all interests in and to the Trust; PROVIDED, HOWEVER, that such Seller may
not effect such purchase if the aggregate Purchase Amount to be so deposited in
the Collection Account does not equal or exceed an amount equal to the sum of
(x) the unpaid principal balance of the Notes plus accrued and unpaid interest
thereon at the related Class Interest Rate to the last day of the Collection
Period during which such purchase occurs and the amount of unpaid Noteholders'
Interest Carryover with respect thereto, (y) the unpaid Certificate Balance,
plus accrued and unpaid interest thereon at the related Certificate Rate to the
last day of the Collection Period during which such purchase occurs and the
amount of unpaid Certificateholders' Interest Carryover with respect thereto,
and (z) the unpaid Transaction Fees, if any.
(b) INSOLVENCY OF TMS STUDENT HOLDINGS, INC. Upon any sale of the assets of
the Trust pursuant to Section 9.2 of the Trust Agreement, the Master Servicers
shall instruct the Indenture Trustee to deposit the net proceeds from such sale
after all payments and reserves therefrom (including the expenses of such sale)
have been made (the "Insolvency Proceeds") in the Collection Account. On the
applicable Note Distribution Date or Certificate Distribution Date, or, if such
proceeds are not so deposited on a Note Distribution Date or Certificate
Distribution Date, on the first applicable Note Distribution Date or Certificate
Distribution Date following the date on which the Insolvency Proceeds are
deposited in the Collection Account, the Master Servicers shall instruct the
Indenture Trustee to make the following distributions (after the application on
such Note Distribution Date or Certificate Distribution Date of the amount of
Available Funds and amounts on deposit in the Reserve Account pursuant to
Sections 5.5 and 5.6) from the Insolvency Proceeds and any funds remaining on
deposit in the Reserve Account (including the proceeds of any sale of
investments therein as described in the following sentence):
(i) to the Noteholders, any portion of the
Noteholders' Interest Distribution Amount not otherwise
distributed to the Noteholders on such Note Distribution
Date;
(ii) to the Noteholders, the outstanding principal amount of the
Notes (after giving effect to the reduction in the outstanding
principal amount of the Notes to result from the distributions to
Noteholders on such Note Distribution Date and on prior Note
Distribution Dates);
(iii) to the Certificateholders, any portion of the
Certificateholders' Interest Distribution Amount not
otherwise distributed to the Certificateholders on such
Certificate Distribution Date;
(iv) to the Certificateholders, the Certificate Balance (after
giving effect to the reduction in the Certificate Balance to result
from the distributions to Certificateholders on such Certificate
Distribution Date);
(v) to the Indenture Trustee, any unpaid Indenture Trustee Fees
and other amounts owed the Indenture Trustee hereunder or under any
other Transaction Document and not otherwise paid on such Note
Distribution Date or Certificate Distribution Date;
(vi) to the Surety Provider, an amount equal to all unreimbursed
Certificate Surety Bond Payments and Note Surety Bond Payments made on
prior Note Distribution Dates and Certificate Distribution Dates not
otherwise reimbursed
on such Note Distribution Date or Certificate Distribution
Date, together with accrued interest thereon at the rate
set forth in the Insurance Agreement and unpaid premiums;
(vii) to the Master Servicers, any unpaid Servicing Fee Carryovers
not otherwise paid on such Note Distribution Date or Certificate
Distribution Date;
(viii) to the Noteholders, any unpaid Noteholders' Auction Rate
Interest Carryover or Noteholders' LIBOR Rate Interest Carryover not
otherwise distributed to the Noteholders on such Note Distribution
Date; and
(ix) to the Certificateholders, any unpaid Certificateholders'
Auction Rate Interest Carryover or Certificateholders' LIBOR Rate
Interest Carryover not otherwise distributed to the Certificateholders
on such Certificate Distribution Date.
Any investments on deposit in the Reserve Account which will not mature on
or before the Note Distribution Date or Certificate Distribution Date when
needed shall be sold by the Indenture Trustee at such time as will result in the
Indenture Trustee receiving the proceeds from such sale not later than the
Business Day preceding such Note Distribution Date or Certificate Distribution
Date. Any Insolvency Proceeds remaining after the deposits described above shall
be paid (i) first, to the holders of Originators' Interests any unpaid amounts
due to them pursuant to the terms of the related Trust Supplement and (ii) then
to the Seller.
(c) NOTICE. As described in Article IX of the Trust Agreement, notice of
any termination of the Trust shall be given by the Administrator to the Master
Servicers, the Eligible Lender Trustee, the Indenture Trustee and the Surety
Provider as soon as practicable after the Administrator has received notice
thereof.
(d) SUCCESSION. Following the satisfaction and discharge of the Indenture
and the payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder other
than Section 5.6(b) and the Eligible Lender Trustee will succeed to the rights
of, and assume the obligations of, the Indenture Trustee pursuant to this
Agreement and any other Basic Documents. Following the payment in full of the
principal of and interest on the Certificates by the Surety Provider pursuant to
the Surety Bond, the Surety Provider (or its assignee) will succeed to the
rights of the Certificateholders.
ARTICLE X
SURETY BONDS
SECTION 10.1. NOTE SURETY BONDS. (a) If for any Note Distribution Date for
a Class of Notes, a Note Surety Bond Payment is required to be made under the
terms of the related Note Surety Bond, the Indenture Trustee shall submit the
notice in the form of Attachment I to the applicable Note Surety Bond in
accordance with the terms and conditions of such Note Surety Bond in the amount
of such Note Surety Bond Payment to the Surety Provider and, if one has been
designated, to the fiscal agent for the Surety Provider no later than 12:00
noon, New York City time, on the Business Day prior to such Note Distribution
Date. Upon receipt of payment from the Surety Provider in accordance with the
terms of the applicable Note Surety Bond, the Indenture Trustee shall deposit
such amount into the Note Distribution Account for distribution solely to
Noteholders of the applicable Class.
(b) If for any Certificate Distribution Date for a Class of Certificates, a
Certificate Surety Bond Payment is required to be made under the terms of the
related Certificate Surety Bond, the Eligible Lender Trustee shall submit the
notice in the form of Attachment I to the applicable Certificate Surety Bond in
accordance with the terms and conditions of such Certificate Surety Bond in the
amount of such Certificate Surety Bond Payment to the Surety Provider and, if
one has been designated, to the fiscal agent for the Surety Provider no later
than 12:00 noon, New York City time, on the Business Day prior to such
Certificate Distribution Date. Upon receipt of payment from the Surety Provider
in accordance with the terms of the applicable Certificate Surety Bond, the
Eligible Lender Trustee shall deposit such amount into the Certificate
Distribution Account for distribution solely to Certificateholders of the
applicable Class.
SECTION 10.2. FURTHER ASSURANCES; SURETY PROVIDER DEFAULT; ETC. (a) The
Eligible Lender Trustee, the Sellers and the Master Servicers acknowledge, and
each Certificateholder by its acceptance of a Certificate and each Noteholder by
its acceptance of a Note agrees, anything herein to the contrary
notwithstanding, that any payment with respect to principal of or interest on
the Certificates which is made with moneys received pursuant to the terms of a
Certificate Surety Bond, and any payment with respect to principal of or
interest on the Notes which is made with moneys received pursuant to the terms
of a Note Surety Bond, shall not be considered payment of the Certificates, or
the Notes, as the case may be, from the Trust Estate and the Surety Provider
shall be paid such principal and interest but only from the sources and in the
manner provided herein and in the Insurance Agreement for the reimbursement to
the Surety Provider of such principal and interest.
(b) Each of the Eligible Lender Trustee, the Sellers and the Master
Servicers shall cooperate in all respects with any reasonable request by the
Surety Provider for action to preserve or enforce the Surety Provider's rights
and interests under this Agreement. In addition, each such party agrees to
forward to the Master Servicers, who shall deliver to the Surety Provider, a
copy of all written communications received by each such party from the Eligible
Lender Trustee, from 25% or more of the Certificateholders or from either Rating
Agency.
(c) Notwithstanding anything to the contrary contained in this Agreement,
if a Surety Provider Default exists, the provisions of this Agreement which (i)
permit the Surety Provider to exercise rights of the Certificateholders or the
Noteholders, (ii) restrict the ability of the Certificateholders, the
Noteholders, the Master Servicers, the Indenture Trustee or the Eligible Lender
Trustee to act without the consent or approval of the Surety Provider, (iii)
provide that a particular act or thing must be acceptable to the Surety
Provider, (iv) permit the Surety Provider to direct (or otherwise require) the
actions of the Eligible Lender Trustee, the Indenture Trustee, the Master
Servicers, the Noteholders or the Certificateholders, (v) provide that any
action or omission taken with the consent, approval or authorization of the
Surety Provider shall be authorized hereunder or shall not subject the party
taking or omitting to take such action to any liability hereunder or (vi) which
have a similar effect shall be of no further force and effect, and the Eligible
Lender Trustee, the Indenture Trustee and the Administrator shall administer the
Issuer and perform its obligations hereunder solely for the benefit of the
Noteholders and the Certificateholders. Nothing in the foregoing sentence, nor
any action taken pursuant thereto or in compliance therewith, shall be deemed to
have released the Surety Provider from any obligation or liability it may have
to any party or to the Noteholders or the Certificateholders hereunder, under
any other agreement, instrument or document (including the Surety Bonds) or
under applicable law.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. AMENDMENT. (a) This Agreement may be amended by the Sellers,
the Master Servicers and the Eligible Lender Trustee, with the consent of the
Indenture Trustee and the Surety Provider (which consent shall not be
unreasonably withheld), but without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement or
of modifying in any manner the rights of the Noteholders, the Certificateholders
or the Surety Provider; PROVIDED, HOWEVER, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Eligible Lender Trustee, the
Surety Provider and the Indenture Trustee, adversely affect in any material
respect the interests of any Noteholder, Certificateholder or the Surety
Provider.
(b) This Agreement may also be amended from time to time by the Sellers,
the Master Servicers and the Eligible Lender Trustee, with the consent of the
Indenture Trustee and the Surety Provider, the consent of the Noteholders of
Notes evidencing not less than a majority of the Outstanding Amount of the Notes
and the consent of the Certificateholders of Certificates evidencing not less
than a majority of the Certificate Balance, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; PROVIDED, HOWEVER, that no such amendment shall (a)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments with respect to Financed Student Loans or
distributions that shall be required to be made for the benefit of the
Noteholders or the Certificateholders or (b) reduce the aforesaid percentage of
the Outstanding Amount of the Notes and the Certificate Balance, the Noteholders
or the Certificateholders of which are required to consent to any such
amendment, without the consent of all outstanding Noteholders and
Certificateholders.
(c) Promptly after the execution of any amendment pursuant to clause (b)
above (or, in the case of the Rating Agencies, five Business Days prior
thereto), the Eligible Lender Trustee shall furnish written notification of the
substance of such amendment or consent to each Certificateholder, the Indenture
Trustee, the Surety Provider and each of the Rating Agencies.
(d) It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
(e) Prior to the execution of any amendment to this Agreement, the Eligible
Lender Trustee and the Indenture Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and the Opinion of Counsel referred to
in Section 11.2(i)(1). The Eligible Lender Trustee and the Indenture Trustee
may, but shall not be obligated to, enter into any such amendment which affects
the Eligible Lender Trustee's or the Indenture Trustee's, as applicable, own
rights, duties or immunities under this Agreement or otherwise.
SECTION 11.2. PROTECTION OF INTERESTS IN TRUST. (a) The Sellers shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain, and protect the interest of the
Issuer, the Eligible Lender Trustee and the Indenture Trustee in the Financed
Student Loans and in the proceeds thereof. The Sellers shall deliver (or cause
to be delivered) to the Eligible Lender Trustee and the Indenture Trustee
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) Neither of the Sellers nor the Master Servicers shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of ss. 9-402(7) of
the UCC, unless it shall have given the Eligible Lender Trustee and the
Indenture Trustee at least five days' prior written notice thereof and shall
have promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c) Each of the Sellers and the Master Servicers shall have an obligation
to give the Eligible Lender Trustee and the Indenture Trustee at least 60 days'
prior written notice of any relocation of its principal executive office if, as
a result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any such
amendment. Each of the Master Servicers shall at all times maintain each office
from which it shall service Financed Student Loans, and its principal executive
office, within the United States of America.
(d) Each of the Master Servicer shall maintain accounts and records as to
each Financed Student Loan it is servicing (or provide access to such accounts
and records being serviced by a subservicer) accurately and in sufficient detail
to permit (i) the reader thereof to know at any time the status of such Financed
Student Loan, including payments and recoveries made and payments owing (and the
nature of each) and (ii) reconciliation between payments or recoveries on (or
with respect to) each Financed Student Loan and the amounts from time to time
deposited in the Collection Account in respect of such Financed Student Loan.
(e) Each of the Master Servicer shall maintain its computer systems so
that, from and after the time of sale under this Agreement of the Financed
Student Loans, such Master Servicer's master computer records (including any
backup archives) that refer to a Financed Student Loan shall indicate clearly
the interest of the Issuer and the Indenture Trustee in such Financed Student
Loan and that such Financed Student Loan is owned by the Issuer and has been
pledged to the Indenture Trustee. Indication of the Issuer's and the Indenture
Trustee's interest in a Financed Student Loan shall be deleted from or modified
on such Master Servicer's computer systems when, and only when, the related
Financed Student Loan shall have been paid in full or repurchased.
(f) If at any time a Seller shall propose to sell, grant a security
interest in, or otherwise transfer any interest in Financed Student Loans to any
prospective purchaser, lender or other transferee, the applicable Master
Servicer shall give notice to such prospective purchaser, lender or other
transferee that such Financed Student Loan has been sold and is owned by the
Issuer and has been pledged to the Indenture Trustee.
(g) Upon reasonable notice, each of the Master Servicers shall permit the
Indenture Trustee and its agents at any time during normal business hours to
inspect, audit and make copies of and abstracts from such Master Servicer's
records regarding any Financed Student Loan; it being understood that unless a
Surety Provider Default shall have occurred and be continuing, the Surety
Provider shall be entitled to direct the Indenture Trustee to make any such
inspection or audit on behalf of the Surety Provider.
(h) Upon request at any time the Eligible Lender Trustee or the Indenture
Trustee shall have reasonable grounds to believe that such request would be
necessary in connection with its performance of its duties under the Basic
Documents, a Master Servicer shall furnish to the Eligible Lender Trustee or to
the Indenture Trustee, within twenty Business Days, a list of all Financed
Student Loans (by borrower social security number, type of loan and date of
issuance) then held as part of the Trust, and a comparison of such list to the
list of the Initial Financed Student Loans set forth in Schedule A as of the
Closing Date, and, for each Financed Student Loan that has been added to or
removed from the pool of loans held by the Eligible Lender Trustee on behalf of
the Issuer, information as to the date as of which and circumstances under which
each such Financed Student Loan was so added or removed.
(i) The Sellers shall deliver to the Eligible Lender Trustee,
the Surety Provider and the Indenture Trustee:
(1) promptly after the execution and delivery of this
Agreement and of each amendment thereto an Opinion of
Counsel either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the interest of
the Eligible Lender Trustee and the Indenture Trustee in the Financed
Student Loans, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B)
stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest; and
(2) within 120 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cut-off Date, an
Opinion of Counsel, dated as of a date during such 120-day period,
either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Eligible Lender Trustee and the Indenture Trustee in
the Financed Student Loans, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given,
or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest; PROVIDED that
a single Opinion of Counsel may be delivered in satisfaction of the
foregoing requirement and that of Section 3.6(b) of the Indenture.
Each Opinion of Counsel referred to in clause (1) or (2) above
shall specify (as of the date of such opinion and given all applicable laws as
in effect on such date) any action necessary to be taken in the following year
to preserve and protect such interest.
(j) The Administrator shall file all reports with respect to
the Notes and the Certificates as may be required by the Commission or state
securities authorities.
SECTION 11.3. NOTICES. All demands, notices and communications upon or to
the Sellers, the Master Servicers, the Administrator, the Eligible Lender
Trustee, the Indenture Trustee, the Surety Provider or the Rating Agencies under
this Agreement shall be in writing, personally delivered or mailed by certified
mail, return receipt requested (or in the form of telex or facsimile notice,
followed by written notice delivered as aforesaid) and shall be deemed to have
been duly given upon receipt (a) in the case of the Sellers, the Master
Servicers, TMSI or Administrator, two copies, one to Trans-World Insurance
Company or ClassNotes, Inc., as applicable, 3301 C Street, Suite 100-A,
Sacramento, CA 95816 Attention: President (telephone: (916) 446-1626; facsimile:
(916) 441-0291) and the other to Trans-World Insurance Company or ClassNotes,
Inc., as applicable, c/o the Money Store Inc., Attention: Chief Financial
Officer, 2480 Morris Avenue, Union, New Jersey 07083 (telephone: (908) 686-2000;
facsimile: (908) 688-3846) (b) in the case of the Issuer or the Eligible Lender
Trustee, at the Corporate Trust Office of the Eligible Lender Trustee, (c) in
the case of the Indenture Trustee, at its Corporate Trust Office, (d) in the
case of the Eligible Lender Trustee, to The York Bank and Trust Company, c/o
Dauphin Deposit Bank and Trust Company, Attention: Corporate Trust Services, 213
Market Street, Harrisburg, Pennsylvania 17101, (e) in the case of the Surety
Provider, to AMBAC Indemnity Corporation, One State Street Plaza, New York, New
York 10004, Attention: Structured Finance/Student Loan Department (telephone:
(212) 668-0340; facsimile: (212) 363- 1459), (f) in the case of Moody's to
Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007,
Attention: Structured Finance Department/Student Loans (telephone: (212)
553-0300; facsimile: (212) 553-4792), and (g) in the case of Standard & Poor's,
to Standard & Poor's Corporation, 25 Broadway (20th Floor), New York, New York
10004, Attention: Asset Backed Surveillance Department (telephone: (212)
208-8000; facsimile: (212) 412-0225); or, as to each of the foregoing, at such
other address as shall be designated by written notice to the other parties.
SECTION 11.4. ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Section 6.5 and as provided in the
provisions of this Agreement concerning the resignation of a Master Servicer,
this Agreement may not be assigned by the Sellers or the Master Servicers. This
Agreement may only be assigned by the Eligible Lender Trustee to its permitted
successor pursuant to the Trust Agreement.
SECTION 11.5. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the Sellers, the Master Servicers, the
Issuer and the Eligible Lender Trustee and for the benefit of the
Certificateholders, the Indenture Trustee, the Noteholders and the Surety
Provider, as third party beneficiaries, and nothing in this Agreement, whether
express or implied, shall be construed to give to any other Person any legal or
equitable right, remedy or claim in the Trust Estate or under or in respect of
this Agreement or any covenants, conditions or provisions contained herein.
SECTION 11.6. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.7. SEPARATE COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.8. HEADINGS. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 11.9. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 11.10. ASSIGNMENT TO INDENTURE TRUSTEE. The Seller hereby
acknowledges and consents to any mortgage, pledge, assignment and grant by the
Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of the
Noteholders of a security interest in all right, title and interest of the
Issuer in, to and under the Financed Student Loans and/or the assignment of any
or all of the Issuer's rights and obligations hereunder to the Indenture
Trustee.
SECTION 11.11. NONPETITION COVENANTS. Notwithstanding any prior termination
of this Agreement, the Master Servicers, the Administrator and the Sellers shall
not acquiesce, petition or otherwise invoke or cause the Issuer to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Issuer under any Federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer.
SECTION 11.12. LIMITATION OF LIABILITY OF ELIGIBLE LENDER TRUSTEE AND
INDENTURE TRUSTEE. (a) Notwithstanding anything contained herein to the
contrary, this Agreement has been signed by The York Bank and Trust Company not
in its individual capacity but solely in its capacity as Eligible Lender Trustee
of the Issuer and in no event shall The York Bank and Trust Company in its
individual capacity or as beneficial owner of the Issuer have any liability for
the representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto as to all of which recourse shall be had solely to the
assets of the Issuer.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by Bankers Trust Company not in its individual
capacity but solely as Indenture Trustee and in no event shall Bankers Trust
Company have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
SECTION 11.13. RIGHTS OF SURETY PROVIDER. The Surety Provider is a
third-party beneficiary of this Sale and Servicing Agreement. Any right
conferred to the Surety Provider shall be suspended during any period in which
the Surety Provider is in default in its payment obligations under the Insurance
Agreement. During any period of suspension the Surety Provider's rights
hereunder shall vest in the Noteholders and Certificateholders and shall be
exercisable by the Holders of a majority of the aggregate principal amount of
Notes and Certificates then Outstanding. At such time as the Notes and
Certificates are no longer Outstanding and the Surety Provider has been
reimbursed for all Required Surety Payments to which it is entitled under the
Basic Documents and has been paid all Premium Amounts due and owing in respect
of the Surety Bonds, the Surety Provider's rights hereunder shall terminate.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.
CLASSNOTES TRUST 1997-I,
by THE YORK BANK AND TRUST COMPANY,
not in its individual
capacity but solely as
Eligible Lender Trustee on
behalf of the Trust,
BY:_____________________________
Name:
Title:
TRANS-WORLD INSURANCE COMPANY d/b/a
EDUCAID, Seller, Master Servicer
and Administrator
BY:______________________________
Name: Morton Dear
Title: Executive Vice President
CLASSNOTES, INC., Seller and Master
Servicer
BY:______________________________
Name: Morton Dear
Title: Executive Vice President
THE MONEY STORE INC.
BY:_______________________________
Name: Morton Dear
Title: Executive Vice President
Acknowledged and accepted as of the day and year first above written:
BANKERS TRUST COMPANY, not
in its individual capacity
but solely as Indenture Trustee,
by
-----------------------
Name:
Title:
SCHEDULE A
TO THE
SALE AND SERVICING AGREEMENT
SCHEDULE OF FINANCED STUDENT LOANS
[To be supplied by the Sellers at Closing.]
SCHEDULE B
TO THE
SALE AND SERVICING AGREEMENT
LOCATION OF FINANCED STUDENT LOAN FILES
Documents relating to the Financed Student Loans in the custody of the
Master Servicers (including original notes) are stored at Trans-World Insurance
Company's or ClassNotes, Inc.'s offices, as applicable, located at 3301 C
Street, Suite 100-A, Sacramento, California 95816.
EXHIBIT A
TO THE
SALE AND SERVICING AGREEMENT
Form of Noteholders' Statement pursuant to Section 5.7(a) of Sale and
Servicing Agreement (capitalized terms used HEREIN ARE DEFINED IN APPENDIX A
THERETO)
Note Distribution Date:_____________________
(i) Amount of principal being paid or distributed:
Class ___ Notes:_________($_______ per $50,000
original principal
amount of Class ___
Notes)
(ii) Amount of interest being paid or distributed:
Class ___ Notes:_________($_______ per $50,000
original principal
amount of Class ___
Notes)
(iii) Amount of Noteholders' [Auction] [LIBOR] Rate Interest
Carryover being paid or distributed (if any) and
amount remaining (if any):
(a) Class ___ Notes:
(1) Distributed:___________ ($________per
$50,000 original
principal amount of
Class ___ Notes)
(2) Balance:___________ ($________per
$50,000 original
principal amount of
Class ___ Notes)
(b) Class ___ Notes:
(1) Distributed:___________ ($________per
$50,000 original
principal amount of
Class ___ Notes)
(2) Balance:___________ ($________per
$50,000 original
principal amount of
Class ___ Notes)
(iv) Pool Balance at end of preceding Collection
Period:________
(v) After giving effect to distributions on this Note
Distribution Date:
(a) (1) outstanding principal amount of Class ___
Notes:_______________
(b) (1) outstanding principal amount of Class ___
Notes:_______________
(c) (1) Certificate Balance:_______________
(vi) Applicable Interest Rate:
(a) In general:
(1) [Auction] [LIBOR] Rate for each of the
applicable Interest Periods since the last
Note Distribution Date for such Class of
Notes was ______%, _______% and _______%;
and
(2) the Net Loan Rate was ____, ____% and ____%.
(b) Class ___ Rate:_______% (based on [Auction Rate]
[LIBOR Rate] [Net Loan
Rate])
(c) Class ___ Rate:_______% (based on [Auction Rate]
[LIBOR Rate] [Net Loan
Rate])
(d) Amount of interest that would have been paid on such
Note Distribution Date if interest instead was
calculated based on the [Auction Rate] [LIBOR
Rate] [Net Loan Rate] was $________.
(vii) (a) Amount of Servicing Fee
for related Collection
Period:_________________ ($__________ per $50,000
original principal
amount of Notes)
(b) Amount of Servicing Fee Carryover being
distributed and remaining balance (if any):
(1) Distributed: ______________ ($__________ per
$50,000 original
principal amount
of Notes)
(2) Balance: _____________ ($___________ per
$50,000 original
principal amount of
Notes)
(viii) Amount of Administration Fee, Auction Agent Fee,
Indenture Trustee Fee, Eligible Lender Trustee Fee and
Surety Provider Fee for related Collection Period
(each stated separately):____________ ($_________ per
$50,000
original
principal amount
of Notes)
(ix) Amount of payments to the Surety Provider in
reimbursement of prior draws under any Note Surety
Bond or any Certificate Surety Bond:_______________1
(x) Aggregate amount of Realized Losses (if any) for the
related Collection Period:______________
(xi) Aggregate Amount (if any) received (stated separately for
principal and interest) with respect to Financed Student Loans
for which Realized Losses were allocated
previously:____________________
(xii) Amount in the Reserve Account:______________2
[(xiii) Amount in the Pre-Funding Account:_____________]2
(xiv) Amount of any draw required to be made under a Note
Surety Bond (together with any other information
required to make such draw): __________________
[(xv) Amount in the Pre-Funding Account at the end of the
Funding Period to be distributed as a payment of
principal in respect of:
(a) Class ___ Notes:____________
(b) Class ___ Notes (only if Class ___ Notes have
been paid in full):_____________]3
(xvi) Parity Percentage, including the numerator and
denominator in determining such Parity Percentage:
(xvii) Excess, if any, of amounts deposited into
Collection Account with respect to the sale by the Trust of
Serial Loans over the aggregate Purchase Amount of such
loans (such excess to be distributed to Student
Holdings):______________
(xviii) Amount of Additional Principal Payments, if any, made
on such Distribution Date.
- --------
1 To be included in the first Note Distribution
Date of each March, June, September or December.
2 To be included for each Note Distribution Date during the
Funding Period.
3 To be included for the first Note
Distribution Date on or immediately
following the end of the Funding Period.
EXHIBIT B
TO THE
SALE AND SERVICING AGREEMENT
Form of Certificateholders' Statement pursuant to Section 5.7(a) of Sale and
Servicing Agreement (capitalized terms used herein ARE DEFINED IN APPENDIX A
THERETO)
Certificateholders' Distribution Date:__________________
(i) Amount of principal being paid or distributed in
respect of the Class __ Certificates:___________
($_________ per
$50,000 original
principal amount of
the Certificates)
(ii) Amount of interest being paid or distributed in
respect of the Class __ Certificates:__________
($_________ per
$50,000 original
principal amount of
Certificates)
(iii) Amount of Certificateholders' [Auction] [LIBOR] Rate Interest
Carryover being paid or distributed (if any) and amount
remaining (if any):
(1) Distributed: ________________ ($_________ per
$50,000 original
principal amount of
Certificates)
(2) Balance: _______________ ($__________ per $50,000
original principal
amount of Certificates)
(iv) Pool Balance at end of preceding Collection
Period:_____________
(v) After giving effect to distributions on this
Certificate Distribution Date:
(a) (1) outstanding principal amount of Class ___
Notes:_____________
(b) (1) outstanding principal amount of Class ___
Notes:_____________
(c) outstanding principal amount of Class ___
Certificates:_____________
(d) (1) Certificate Balance:_______________
(vi) Applicable Interest Rate:
(a) In general:
(1) [Auction] [LIBOR] Rate for the prior
Interest Period was _____%; and (2) the Net
Loan Rate was _____%.
(b) Certificate Rate:_____% (based on [Auction Rate]
[LIBOR Rate] [Net Loan Rate])
(c) Amount of interest that would have been paid on such
Certificate Distribution Date if interest instead was
calculated based on the [Auction Rate] [LIBOR Rate]
[Net Loan Rate]
(vii) (a) Amount of Servicing Fee
for related Collection
Period:_____________ ($__________ per $50,000
original principal amount of
Certificates)
(b) Amount of Servicing Fee Carryover being
distributed and remaining balance (if any):
(1) Distributed: ____________ ($__________ per
$50,000 original
principal amount
of Certificates)
(2) Balance: ______________ ($___________ per
$50,000 original
principal amount
of Certificates)
(viii) Amount of Administration Fee, Auction Agent Fee,
Indenture Trustee Fee and Surety Provider Fee for
related Collection Period (each stated
separately):_________ ($_________ per $50,000 original
principal amount of Certificates)
(ix) Amount of payments to the Surety Provider in
reimbursement of prior draws under any Note Surety
Bond or any Certificate Surety Bond:______________
(x) Aggregate amount of Realized Losses (if any) for the
related Collection Period:_____________
(xi) Aggregate amount (if any) received (stated separately for
principal and interest) with respect to Financed Student Loans
for which Realized Losses were allocated
previously:________________
(xii) Amount in the Reserve Account:____________
(xiii) Amount of any draw required to be made under a Certificate
Surety Bond (together with any other information required to
make such draw):
-------------------
[(xiv) Amount in the Pre-Funding Account:___________]5
(xiv) Parity Percentage, including the numerator and
denominator in determining such Parity Percentage:
(xv) Excess, if any, of amounts deposited into Collection Account
with respect to the sale by the Trust of Serial Loans over the
aggregate Purchase Amount of such loans (such excess to be
distributed to Student Holdings):_______________
(xvi) Amount of Additional Principal Payments, if any, made
on such Distribution Date.
- --------
4 Only after the Notes have been paid in full.
5 To be included for each Distribution Date during the
Funding Period.
EXHIBIT C
TO THE
SALE AND SERVICING AGREEMENT
FORM OF ADMINISTRATOR'S CERTIFICATE
[To be provided by the Administrator pursuant to
Section 4.7 of the Sale and
Servicing Agreement]
EXHIBIT D
TO THE
SALE AND SERVICING AGREEMENT
ASSIGNMENT AND BILL OF SALE FOR
INITIAL FINANCED STUDENT LOANS
For value received, in accordance with the Sale and Servicing Agreement
(the "Sale and Servicing Agreement") dated as of February 28, 1997, among
Trans-World Insurance Company d/b/a Educaid, as seller (a "Seller"), as master
servicer (a "Master Servicer") and as administrator (the "Administrator"),
ClassNotes, Inc., as seller (a "Seller") and as master servicer (a "Master
Servicer"), ClassNotes Trust 1997-I (the "Trust"), and The York Bank and Trust
Company, not in its individual capacity but solely as Eligible Lender Trustee
(the "Eligible Lender Trustee"), the undersigned do hereby sell, assign,
transfer and otherwise convey unto the Eligible Lender Trustee on behalf of the
Trust, without recourse (subject to the obligations set forth in the Sale and
Servicing Agreement), all right, title and interest of the undersigned in and to
(i) the Initial Financed Student Loans and all obligations of the Obligors
thereunder, including all monies paid or payable thereunder on or after the
Initial Cut-off Date with respect to the Initial Financed Student Loans,
including the right to enforce such Loans in the same manner and to the same
extent as the Sellers would have the power to do but for the execution and
delivery of this Agreement, (ii) the Assigned Rights, (iii) all funds on deposit
from time to time in the Trust Accounts, including the Reserve Account Initial
Deposit, the Capitalized Interest Account, the Capitalized Pre- Funding Account
and the Pre-Funded Amount, and in all investments and proceeds thereof
(including all income thereon) and (iv) the proceeds of any and all of the
foregoing (including proceeds derived from the voluntary or involuntary
conversion of any of the Initial Financed Student Loans into cash or other
liquidated property, such as proceeds from the applicable Guarantee Agreement).
The foregoing sale does not constitute and is not intended to result in any
assumption by the Eligible Lender Trustee or the Trust of any obligation of the
Seller to the borrowers of Initial Financed Student Loans or any other person in
connection with the Initial Financed Student Loans or any agreement or
instrument relating to any of them.
In addition, the undersigned, by execution of this instrument, represent
and warrant that the promissory notes evidencing each Initial Financed Student
Loan described in Schedule A to the Sale and Servicing Agreement have been
endorsed in the manner set forth in the Sale and Servicing Agreement.
This Bill of Sale is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the Sale
and Servicing Agreement and is to be governed by the Sale and Servicing
Agreement.
Capitalized terms used but not defined herein shall have the meaning
assigned to them in Appendix A to the Sale and Servicing Agreement, which also
contains rules as to usage that shall be applicable herein.
IN WITNESS WHEREOF, the undersigned have caused this Assignment to be duly
executed as of March __, 1997.
TRANS-WORLD INSURANCE CORPORATION
D/B/A/ EDUCAID, as Seller
BY:_______________________________
Name: Morton Dear
Title: Executive Vice President
CLASSNOTES, INC., as Seller
BY:_______________________________
Name: Morton Dear
Title: Executive Vice President
EXHIBIT E
TO THE SALE AND SERVICING AGREEMENT
ASSIGNMENT AND BILL OF SALE FOR
ADDITIONAL FINANCED STUDENT LOANS
For value received, in accordance with the Sale and Servicing Agreement
(the "Sale and Servicing Agreement") dated as of February 28, 1997, among the
undersigned, as seller (the "Seller"), as master servicer (the "Master
Servicer") [and as administrator (the "Administrator")], [Trans-world Insurance
Company d/b/a/ Educaid ("TWIC"), as seller, master servicer and
administrator][ClassNotes, Inc. ("ClassNotes"), as seller and master servicer],
ClassNotes Trust 1997-I (the "Trust"), and The York Bank and Trust Company, not
in its individual capacity but solely as Eligible Lender Trustee (the "Eligible
Lender Trustee"), the undersigned does hereby sell, assign, transfer and
otherwise convey unto the Eligible Lender Trustee on behalf of the Trust,
without recourse (subject to the obligations set forth in the Sale and Servicing
Agreement), all right, title and interest of the undersigned in and to (i) the
Additional Financed Student Loans listed on Schedule A hereto and all monies
received thereon or payable, on and after ______ (the "Subsequent Cut-off Date")
with respect to the Additional Financed Student Loans, including the right to
enforce such Loans in the same manner and to the extent as the Seller would have
the power to do but for the execution and delivery of this Agreement and (ii)
the proceeds of any and all of the foregoing (including but not limited to
proceeds derived from the voluntary or involuntary conversion of any of the
Additional Financed Student Loans into cash or other liquidated property, such
as proceeds from the applicable Guarantee Agreement (as such term is defined in
the Sale and Servicing Agreement)). The foregoing sale does not constitute and
is not intended to result in any assumption by the Eligible Lender Trustee or
the Trust of any obligation of the Seller to the borrowers of such Additional
Financed Student Loans or any other person in connection with the Additional
Financed Student Loans or any agreement or instrument relating to any of them.
In addition, the undersigned, by execution of this instrument, represents
and warrants that the promissory notes evidencing each Additional Student Loan
described in Schedule A hereto have been endorsed in the manner set forth in the
Sale and Servicing Agreement.
This Bill of Sale is made pursuant to and upon the representations,
warranties and conditions precedent on the part of the undersigned contained in
the Sale and Servicing Agreement and the Insurance and Indemnity Agreement dated
as of March 21, 1997 (as amended from time to time, the "Insurance Agreement")
among The Money Store Inc., the Seller, [ClassNotes][TWIC], Bankers Trust
Company, as Indenture Trustee, the Eligible Lender Trustee and AMBAC Indemnity
Corporation, and is to be governed by the Sale and Servicing Agreement and the
Insurance Agreement. Each sale of an Additional Financed Student Loan by the
Seller to the Eligible Lender Trustee shall be deemed a certification by the
Seller that all applicable representations and warranties contained in the Sale
and Servicing Agreement and the Insurance Agreement concerning such Additional
Financed Student Loan are true and correct as of the related Subsequent Cut-off
Date with the same force and effect as if made on such date, and that all
conditions precedent to selling such Additional Financed Student Loan set forth
in the Sale and Servicing Agreement and the Insurance Agreement have been
satisfied.
Capitalized terms used but not defined herein shall have the meaning
assigned to them in the Sale and Servicing Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed as of ________________, 199__.
[TRANS-WORLD INSURANCE CORPORATION,
D/B/A EDUCAID, as Seller
By:_____________________________
Name:
Title:]
CLASSNOTES, INC., as Seller
By:_____________________________
Name:
Title:
SCHEDULE A
TO THE
THE BILL OF SALE
[List of Additional Financed Student Loans
and their related Subsequent Cut-off Dates]