Exhibit 4.1
EXECUTION COPY
SECOND TERMS SUPPLEMENT
TO THE
INDENTURE
DATED AS OF MARCH 21, 1997
between
CLASSNOTES TRUST 1997-I
and
BANKERS TRUST COMPANY
Indenture Trustee
Dated as of December 24, 1997
Securing
$265,000,000
ASSET-BACKED NOTES
SERIES 1997-2
TABLE OF CONTENTS
PAGE
ARTICLE I.
DEFINITIONS
ARTICLE II
AUTHORIZATION, TERMS AND ISSUANCE
Section 2.1. Authorization of Series 1997-2 Notes................14
Section 2.2. Purposes............................................15
Section 2.3. Terms of Series 1997-2 Notes Generally..............15
Section 2.4. Series 1997-2 Notes.................................16
Section 2.5. Class Interest Rate.................................21
Section 2.6. Additional Provisions Regarding the Class Interest
Rates on the Series 1997-2 Notes....................40
Section 2.7. Qualifications of Market Agent......................41
ARTICLE III
DISTRIBUTIONS
Section 3.1. Distributions of Interest and Principal.............42
Section 3.2. Selection of Notes to Receive Payments of
Principal...........................................42
ARTICLE IV
MISCELLANEOUS
Section 4.1. Issuer for This Second Terms Supplement.............43
Section 4.2. Counterparts........................................43
Section 4.3. Indenture Constitutes a Security Agreement..........43
Section 4.4. Governing Law.......................................44
Section 4.5. Ratification of Master Indenture....................44
EXHIBIT A-1 Form of LIBOR Notes
EXHIBIT A-2 Form of Series 1997-2 Auction Rate Notes
EXHIBIT B Form of Notice of Payment Default
EXHIBIT C Form of Notice of Cure of Payment Default
EXHIBIT D Notice of Proposed Auction Period Adjustment
EXHIBIT E Notice Establishing Auction Period Adjustment
EXHIBIT F Notice of Change in Auction Date
SECOND TERMS SUPPLEMENT, dated as of December 24, 1997, between
CLASSNOTES TRUST 1997-I, a Pennsylvania business trust, (the "Issuer") acting
through THE YORK BANK AND TRUST COMPANY, a Pennsylvania bank and trust company,
not in its individual capacity but solely as eligible lender trustee (the
"Eligible Lender Trustee"), and BANKERS TRUST COMPANY, a New York banking
corporation duly established, existing and authorized to accept and execute
trusts of the character herein set out under and by virtue of the laws of the
State of New York, with its principal corporate trust office in New York, New
York, (the "Indenture Trustee"), as Indenture Trustee under a Master Indenture
dated as of March 21, 1997 (the "Master Indenture").
PRELIMINARY STATEMENT
Section 2.3 of the Master Indenture provides, among other things, that
the Issuer, as provided in the Trust Agreement, and the Indenture Trustee may
enter into an indenture supplemental to the Master Indenture for the purpose of
authorizing a Series of Notes and to specify certain terms of such Series of
Notes. The Issuer has duly authorized the creation of a Series of Notes in an
aggregate principal amount not to exceed $265,000,000 to be known as the
Issuer's Asset Backed Notes, Series 1997-2 (the "Series 1997-2 Notes"), and the
Issuer and the Indenture Trustee are executing and delivering this Second Terms
Supplement in order to provide for the Series 1997-2 Notes. Except as otherwise
specified herein, or as the context may require, capitalized terms used but not
defined herein are defined in Appendix A to the First Supplemental Sale and
Servicing Agreement dated as of December 24, 1997 (the "Sale and Servicing
Agreement") among the Issuer, Trans-World Insurance Company (the
"Administrator"), ClassNotes, Inc., the Eligible Lender Trustee and The Money
Store Inc. ("TMSI"), which Appendix A also contains rules as to usage that shall
be applicable herein.
GRANTING CLAUSES
The Issuer hereby Grants to the Indenture Trustee, for the exclusive
benefit of the Holders of the Series 1997-2 Notes and the other parties entitled
to the benefits of the lien of the Indenture, and (other than with respect to
clause (d) below) any Series of Notes issued previously and any Series of Notes
that may be issued hereafter, all of the Issuer's right, title and interest in
and to (a) the Financed Student Loans listed in Schedule A-1 and Schedule A-2 to
the Sale and Servicing Agreement (as such Schedules may be amended from time to
time including, but not limited to, by the purchase by the Trust during the
Funding Period of any Additional Financed Student Loans) and all obligations of
the Obligors thereunder, and all written communications received by each Seller
with respect thereto (including borrower correspondence, notices of death,
disability or bankruptcy and requests for deferrals or forbearance), on and
after December 15, 1997 (the "Cut-Off Date") (or, with respect to the Additional
Financed Student Loans, the applicable Subsequent Cut-Off Date), (b) all funds
on deposit from time to time in the Trust Accounts (other than the Certificate
Distribution Account) and in all investments and proceeds thereof (including all
income thereon), (c) all proceeds of the foregoing, including without
limitation, proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquid property and (d) the Note Surety Bond
relating to the Series 1997-2 Notes. Such Grants are made, however, in trust, to
secure the Series 1997-2 Notes, any Series of Notes issued previously and any
Series of Notes issued hereafter, equally and ratably without prejudice,
priority or distinction, between any Note and any other Note by reason of
difference in time of issuance or otherwise except to the extent otherwise
described herein, and to secure (i) the payment of all amounts due on the Series
1997-2 Notes, any Series of Notes issued previously and any Series of Notes
issued hereafter, as such amounts become due in accordance with their terms,
(ii) the payment of all other sums payable under the Master Indenture or this
Second Terms Supplement with respect to the Series 1997-2 Notes, any Series of
Notes issued previously and any Series of Notes issued hereafter, and (iii)
compliance with the provisions of the Master Indenture and this Second Terms
Supplement with respect to the Series 1997-2 Notes, any Series of Notes issued
previously and any Series of Notes issued hereafter, all as provided in the
Master Indenture and this Second Terms Supplement.
The Indenture Trustee acknowledges such Grants, accepts the trusts
hereunder in accordance with the provisions hereof and of the Master Indenture
and agrees to perform the duties herein or therein required to the best of its
ability to the end that the interests of the Holders of the Series 1997-2 Notes,
any Series of Notes issued previously by the Issuer and any Series of Notes
issued by the Issuer hereafter may be adequately and effectively protected.
ARTICLE I.
DEFINITIONS
"ADMINISTRATOR" means Trans-World Insurance Company d/b/a Educaid, an
Arizona insurance company, and its successors and assigns.
"ALL HOLD RATE" means ninety percent (90%) of One-Month LIBOR.
"AUCTION" means the implementation of the Auction Procedures on an
Auction Date.
"AUCTION AGENT" means the Initial Auction Agent under the Initial
Auction Agent Agreement unless and until a Substitute Auction Agent Agreement
becomes effective, after which "Auction Agent" shall mean the Substitute Auction
Agent.
"AUCTION AGENT AGREEMENT" means the Initial Auction Agent Agreement
unless and until a Substitute Auction Agent Agreement is entered into, after
which "Auction Agent Agreement" shall mean such Substitute Auction Agent
Agreement.
"AUCTION AGENT FEE" has the meaning set forth in the Auction Agent
Agreement.
"AUCTION AGENT FEE RATE" has the meaning set forth in the Auction
Agent Agreement.
"AUCTION DATE" means, initially, with respect to the Class A-5 Notes,
January 13, 1998 and with respect to the Class A-6 Notes, January 20, 1998; and
thereafter, the Business Day immediately preceding the first day of each Auction
Period for each respective Class, other than:
(a) each Auction Period commencing after the ownership of such
Class of Series 1997-2 Notes is no longer maintained in
Book-Entry Form by the Securities Depository;
(b) each Auction Period commencing after and during the
continuance of an Event of Default; or
(c) each Auction Period commencing less than two Business Days
after the cure or waiver of an Event of Default.
Notwithstanding the foregoing, the Auction Date for one or more Auction Periods
may be changed pursuant to Section 2.5.8 of this Terms Supplement.
"AUCTION PERIOD" means, with respect to each Class of Series 1997-2
Auction Rate Notes, the Interest Period applicable to such Class of Notes during
which time the related Class Interest Rate is determined pursuant to Section
2.5.1 hereof, which Auction Period (after the Initial Period for such Class) for
each Class of Series 1997-2 Auction Rate Notes initially shall consist generally
of 28 days, as the same may be adjusted pursuant to Section 2.5.7 hereof.
"AUCTION PERIOD ADJUSTMENT" means an adjustment to the Auction Period
as provided in Section 2.5.7 hereof.
"AUCTION PROCEDURES" means the procedures set forth in Section 2.5.1
hereof by which the Auction Rate is determined.
"AUCTION RATE" means the rate of interest per annum that results from
implementation of the Auction Procedures and is determined as described in
Section 2.5.1(c)(ii) hereof.
"AUTHORIZED DENOMINATIONS" means, with respect to (i) the Class A-4
Notes, $50,000 and integral multiples of $1,000 in excess thereof and (ii) the
Class A-5 and Class A-6 Notes, $50,000 and integral multiples of $50,000 in
excess thereof.
"AVAILABLE SERIES 1997-2 NOTES" has the meaning set forth in Section
2.5.1(c)(i)(A) hereof.
"BID" has the meaning set forth in Section 2.5.1(a)(i) hereof.
"BID AUCTION RATE" has the meaning set forth in Section 2.5.1(c)(i)
hereof.
"BIDDER" has the meaning set forth in Section 2.5.1(a)(i) hereof.
"BOND EQUIVALENT YIELD - 91-DAY T-BILL" means, in respect of any
security with a maturity of six months or less the rate for which is quoted in
THE WALL STREET JOURNAL (Eastern Edition) on a bank discount basis, a yield
(expressed as a percentage) calculated in accordance with the following formula
and rounded up to the nearest one one-hundredth of one percent:
Bond Equivalent Yield = Q X N x 100
---------------
360 - (91 x Q)
where "Q" refers to the per annum rate for the security quoted on a bank
discount basis and expressed as a decimal, and "N" refers to 365 or 366 (days),
as the case may be.
"BOOK-ENTRY FORM" or "BOOK-ENTRY SYSTEM" means a form or system under
which (i) the beneficial right to principal and interest may be transferred only
through a book entry, (ii) physical securities in registered form are issued
only to a Securities Depository or its nominee as registered owner, with the
securities "immobilized" to the custody of the Securities Depository, and (iii)
the book entry is the record that identifies the owners of beneficial interests
in that principal and interest.
"BROKER-DEALER" means Smith Barney Inc. or any other broker or dealer
(each as defined in the Securities Exchange Act of 1934, as amended), commercial
bank or other entity permitted by law to perform the functions required of a
Broker-Dealer set forth in the Auction Procedures that (a) is a Participant (or
an affiliate of a Participant), (b) has been appointed as such by the Trust
pursuant to Section 2.5.6 hereof or the Administrator on behalf of the Eligible
Lender Trustee pursuant to the Trust Agreement and (c) has entered into a
Broker-Dealer Agreement that is in effect on the date of reference.
"BROKER-DEALER AGREEMENT" means each agreement between the Auction
Agent and a Broker-Dealer, and approved by the Administrator on behalf of the
Issuer, pursuant to which the Broker-Dealer agrees to participate in Auctions as
set forth in the Auction Procedures, as from time to time amended or
supplemented. Each Broker-Dealer Agreement shall be in substantially the form of
the Broker-Dealer Agreement dated as of December 24, 1997 between Bankers Trust
Company, as Auction Agent, and Smith Barney Inc., as Broker-Dealer.
"BROKER-DEALER FEE" has the meaning set forth in the Auction Agent
Agreement.
"BROKER-DEALER FEE RATE" has the meaning set forth in the Auction
Agent Agreement.
"BUSINESS DAY" means any day on which the New York Stock Exchange is
open for trading and any day other than a Saturday, a Sunday or a day on which
banking institutions or trust companies in New York, California, New Jersey or
Pennsylvania are authorized or obligated by law, regulation or executive order
to remain closed.
"CLASS A-4 NOTES," "CLASS A-5 NOTES," and "CLASS A-6 NOTES" have the
meanings set forth in Section 2.1 herein.
"CLASS INITIAL PERIOD" means, as to a Class of the Series 1997-2
Notes, the period commencing on the Closing Date and continuing through the day
immediately preceding the Class Initial Rate Adjustment Date for such Class.
"CLASS INITIAL RATE" means % per annum for the Class A-4 Notes, 5.96%
per annum for the Class A-5 Notes, 5.96% per annum for the Class A-6 Notes.
"CLASS INITIAL RATE ADJUSTMENT DATE" means (i) with respect to the
Class A-4 Notes, January 15, 1998, (ii) with respect to the Class A-5 Notes,
January 14, 1998, (iii) with respect to the Class A-6 Notes, January 21, 1998.
"CLASS INTEREST PERIOD" means, with respect to a Class of Series
1997-2 Notes, the applicable Class Initial Period and each period commencing on
a Class Rate Adjustment Date for such Class and ending on the day before (i) the
next Class Rate Adjustment Date for such Class or (ii) the Final Maturity Date
of such Class, as applicable.
"CLASS INTEREST RATE" means each variable rate of interest per annum
borne by a Class of the Series 1997-2 Notes for each Class Interest Period and
determined in accordance with the provisions of Sections 2.4 and 2.5 hereof;
provided, however, that in the event of an Event of Default, the Class Interest
Rate shall equal the Non-Payment Rate; provided, further, however that such
Class Interest Rate shall in no event exceed the Class Interest Rate Limitation.
"CLASS INTEREST RATE LIMITATION" means, with respect to (1) the Class
A-4 Notes, a rate equal to 18.0% per annum and (ii) the Class A-5 and Class A-6
Notes, a rate equal to 16.0% per annum.
"CLASS RATE ADJUSTMENT DATE" means the date on which an Interest Rate
is effective, and means (i) with respect to the Series 1997-2 Auction Rate
Notes, the date of commencement of each related Auction Period and (ii) with
respect to the Series 1997-2 LIBOR Rate Notes, the 15th day of each calendar
month.
"CLASS RATE DETERMINATION DATE" means, (i) with respect to any Class
of Series 1997-2 Auction Rate Notes, the related Auction Date, or if no Auction
Date is applicable to such Series 1997-2 Auction Rate Notes, the Business Day
immediately preceding the date of commencement of the related Auction Period and
(ii) with respect to any Class of Series 1997-2 LIBOR Rate Notes, the LIBOR
Determination Date immediately preceding the date of commencement of an Interest
Period for the Series 1997-2 LIBOR Rate Notes.
"CLOSING DATE" means with respect to the Series 1997-2 Notes, December
24, 1997, the date of initial issuance and delivery of the Series 1997-2 Notes
hereunder.
"CUT-OFF DATE" means, with respect to the Series 1997-2 Notes,
December 15, 1997.
"EFFECTIVE INTEREST RATE" means, for any Financed Student Loan and any
Collection Period, the per annum rate at which such Financed Student Loan
accrues interest during such Collection Period, and in the case of a Federal
Loan, after giving effect to all applicable Interest Subsidy Payments and
Special Allowance Payments due with respect to such Federal Loan.
"EVENT OF DEFAULT" means, with respect to the Series 1997-2 Notes, (i)
a default in the due and punctual payment of any installment of interest or
principal on any Class of Series 1997-2 Notes, or (ii) a default in the due and
punctual payment of any interest on and principal of any Class of Series 1997-2
Notes at their respective Final Maturity Date.
"EXISTING NOTEHOLDER" means (i) with respect to and for the purpose of
dealing with the Auction Agent in connection with an Auction, a Person who is a
Broker-Dealer listed in the Existing Noteholder Registry at the close of
business on the Business Day immediately preceding such Auction and (ii) with
respect to and for the purpose of dealing with the Broker-Dealer in connection
with an Auction, a Person who is a beneficial owner of any Class of Series
1997-2 Auction Date Notes.
"EXISTING NOTEHOLDER REGISTRY" means the registry of Persons who are
owners of the Series 1997-2 Notes, maintained by the Auction Agent as provided
in the Auction Agent Agreement.
"FEDERAL FUNDS RATE" means, for any date of determination, the Federal
funds (effective) rate as published on page 118 of the Dow Jones Telerate
Service (or such other page as may replace that page on that service for the
purpose of displaying comparable rates or prices) on the immediately preceding
Business Day. If no such rate is published on such page on such day, "Federal
Funds Rate" shall mean for any date of determination, the Federal funds
(effective) rate as published by the Federal Reserve Board in the most recent
edition of Federal Reserve Statistical Release No. H.15 (519) that is available
on the Business Day immediately preceding such date.
"FINAL MATURITY DATE" means January 1, 2004, with respect to the Class
A-4 Notes April 1, 2019 with respect to the Class A-5 Notes; and April 1, 2020,
with respect to the Class A-6 Notes.
"FUNDING PERIOD" means, with respect to the Series 1997-2 Notes, the
period beginning on the Closing Date and ending on the first to occur of (a) the
Note Distribution Date on which the amount on deposit in the Pre-Funding Account
(after giving effect to any transfers therefrom in connection with any
Additional Fundings on or prior to such Note Distribution Date) is less than
$200,000, (b) the date on which an Event of Default, a Master Servicer Default
or an Administrator Default occurs, (c) the date on which an Insolvency Event
occurs with respect to any Seller and (d) the close of business on March 24,
1998 or such later date as may be agreed to by the Surety Provider.
"HOLD ORDER" has the meaning set forth in Section 2.5.1(a)(i) hereof.
"INITIAL AUCTION AGENT" means Bankers Trust Company, a New York
banking corporation, its successors and assigns.
"INITIAL AUCTION AGENT AGREEMENT" means the Auction Agent Agreement
dated as of December 24, 1997, by and among the Issuer, the Indenture Trustee
and the Initial Auction Agent, including any amendment thereof or supplement
thereto.
"INTEREST PERIOD" means, with respect to any Class of Series 1997-2
Notes, the respective Class Interest Period.
"INTEREST RATE" means, with respect to a Class of the Series 1997-2
Notes, the rate of interest per annum borne by such Class as of the time
referred to, including, without limitation, the related Class Initial Rate and
the related Class Interest Rate.
"LIBOR BUSINESS DAY" means a day which is both a Business Day and a
London Banking Day.
"LIBOR DETERMINATION DATE" means, with respect to a Class of the
Series 1997-2 Notes, the second LIBOR Business Day prior to the commencement of
each related Interest Period.
"LIBOR RATE" means, with respect to the Series 1997-2 LIBOR Rate Notes
and any date of determination, the then applicable One-Month LIBOR plus the
applicable Margin.
"LONDON BANKING DAY" means any Business Day on which dealings in
deposits in United States dollars are transacted in the London interbank market.
"MARGIN" means, with respect to the Series 1997-2 LIBOR Rate Notes,
0.17% per annum.
"MARKET AGENT" means Smith Barney Inc., New York, New York, in such
capacity hereunder, or any successor to it in such capacity hereunder.
"MASTER INDENTURE" means the Master Indenture dated as of March 21,
1997, as amended from time to time, between the Issuer and the Indenture
Trustee.
"MAXIMUM AUCTION RATE" means, with respect to the Series 1997-2 Notes,
(i) for Auction Periods of 34 days or less, either (A) the greater of (1)
One-Month LIBOR plus 0.60 or (2) the Federal Funds Rate plus 0.60% (if both
ratings assigned by the Rating Agencies to the Series 1997-2 Notes or the
Certificates, as applicable, are "Aa3" or "AA-" or better) or (B) One-Month
LIBOR plus 1.50% (if any one of the ratings assigned by the Rating Agencies to
the Series 1997-2 Notes or the Certificates, as applicable, is less than "Aa3"
or "AA-") or (ii) for Auction Periods of greater than or equal to 35 days,
either (A) the greater of One-Month LIBOR or Three-Month LIBOR, plus in either
case, 0.60% (if both of the ratings assigned by the Rating Agencies to the
Series 1997-2 Notes or the Certificates, as applicable, are "Aa3" or "AA-" or
better) or (B) the greater of One-Month LIBOR or Three-Month LIBOR, plus in
either case, 1.50% (if any one of the ratings assigned by the Rating Agencies to
the Series 1997-2 Notes or the Certificates, as applicable, is less than "Aa3"
or "AA-"). For purposes of the Auction Agent and the Auction Procedures, the
ratings referred to in this definition shall be the last ratings of which the
Auction Agent has been given notice pursuant to the Auction Agent Agreement.
"NET LOAN RATE" means, for any Interest Period, the weighted average
Effective Interest Rate for the Collection Period immediately preceding such
Interest Period less 1.60%.
"NINETY-ONE DAY UNITED STATES TREASURY BILL RATE" means that rate of
interest per annum equal to the Bond Equivalent Yield - 91-Day T-Bill on the
91-Day United States Treasury Bills sold at the last auction thereof that
immediately precedes the Class Rate Adjustment Date for the Class of Series
1997-2 Notes to which the Net Loan Rate applies.
"NON-PAYMENT RATE" means, with respect to the Series 1997-2 Auction
Rate Notes, One-Month LIBOR plus 1.50%.
"NOTEHOLDERS' INTEREST CARRYOVER" means, as to any Class of Series
1997-2 Notes, with respect to any Interest Period for which the Class Interest
Rate for such Interest Period is based on the Net Loan Rate, the amount equal to
the excess, if any, of (a) the amount of interest on such Class of Notes that
would have accrued in respect of the related Interest Period had interest been
calculated based on the applicable One-Month LIBOR or the Auction Rate, as the
case may be, over (b) the amount of interest on such Class of Notes actually
accrued in respect of such Interest Period based on the Net Loan Rate, together
with the unpaid portion of any such excess from prior Interest Periods (and
interest accrued thereon, to the extent permitted by law, at the applicable rate
calculated based on One-Month LIBOR); PROVIDED, HOWEVER, that, with respect to
any Class of Series 1997-2 Notes, on the related Final Maturity Date, the
portion of the Noteholders' Interest Carryover allocable to such Class of Notes
will be equal to the lesser of (i) the portion allocable to such Class of Notes
of the Noteholders' Interest Carryover on such date determined as described
above and (ii) the amount of funds, if any, required and available to be
distributed to such Class of Notes on such date pursuant to Sections 5.5(e)(iv)
and 5.6(b)(B) of the Sale and Servicing Agreement.
"NOTE DISTRIBUTION DATE" means, (x) with respect to the Series 1997-2
LIBOR Rate Notes, the 15th day of each month (or, if such day is not a Business
Day, the next succeeding Business Day), commencing January 1998 and (y) with
respect to each Class of Series 1997-2 Auction Rate Notes, (A) with respect to
distributions of interest, the first Business Day following the expiration of
each Interest Period for such Class of Series 1997- 2 Auction Rate Notes,
commencing (i) January 14, 1998 with respect to the Class A-5 Notes and (ii)
January 21, 1998 with respect to the Class A-6 Notes and (B) with respect to
distributions of principal, the first Business Day following the expiration of
the first Interest Period for such Class of Series 1997-2 Notes ending in each
month.
"NOTE SURETY BOND" means each surety bond issued by the Surety
Provider in favor of the Eligible Lender Trustee for the benefit of the holders
of the related Class of Series 1997-2 Notes.
"NOTICE OF FEE RATE CHANGE" means a notice of a change in the Auction
Agent Fee Rate or the Broker-Dealer Fee Rate substantially in the form of
Exhibit E to the Auction Agent Agreement. "ONE-MONTH LIBOR" means the London
interbank offered rate for deposits in U.S. dollars having a maturity of one
month commencing on the related LIBOR Determination Date (the "Index Maturity")
which appears on Telerate Page 3750 as of 11:00 a.m., London time, on such LIBOR
Determination Date. If such rate does not appear on Telerate Page 3750, the rate
for that day will be determined on the basis of the rates at which deposits in
U.S. dollars, having the Index Maturity and in a principal amount of not less
than U.S. $1,000,000, are offered at approximately 11:00 a.m., London time, on
such LIBOR Determination Date to prime banks in the London interbank market by
the Reference Banks. The Auction Agent will request the principal London office
of each of such Reference Banks to provide a quotation of its rate. If at least
two such quotations are provided, the rate for that day will be the arithmetic
mean of the quotations. If fewer than two quotations are provided, the rate for
that day will be the arithmetic mean of the rates quoted by major banks in New
York City, selected by the Auction Agent, at approximately 11:00 a.m., New York
City time, on such LIBOR Determination Date for loans in U.S. dollars to leading
European banks having the Index Maturity and in a principal amount equal to an
amount of not less than U.S. $1,000,000; provided that if the banks selected as
aforesaid are not quoting as mentioned in this sentence, One-Month LIBOR in
effect for the applicable Interest Period will be One-Month LIBOR in effect for
the previous Interest Period.
"ORDER" has the meaning set forth in Section 2.5.1(a)(i) hereof.
"PAYMENT DEFAULT" means, with respect to any Class of Series 1997-2
Notes, a default in the due and punctual payment of any Noteholders' Interest
Distribution Amount or Noteholders' Principal Distribution Amount on the related
Note Distribution Date or Final Maturity Date, as applicable.
"PERCENTAGE INTEREST" means, with respect to a Class of Series 1997-2
LIBOR Rate Notes, the portion of such Class held by a Note Owner, expressed as a
percentage, the numerator of which is the original denomination represented by
such Note and the denominator of which is the original aggregate principal
amount of such Class of Series 1997-2 LIBOR Rate Notes as set forth in Section
2.1 hereof.
"POTENTIAL NOTEHOLDER" means any Person (including an Existing
Noteholder that is (i) a Broker-Dealer when dealing with the Auction Agent and
(ii) a potential beneficial owner when dealing with a Broker-Dealer) who may be
interested in acquiring Series 1997-2 Auction Rate Notes (or, in the case of an
Existing Noteholder thereof, an additional principal amount of Series 1997-2
Auction Rate Notes).
"PREMIUM" means, (i) with respect to any Initial Financed Student Loan
conveyed on the Closing Date relating to the Issuer's Series 1997-2 Notes, an
amount equal to 106.25% of the par amount of such Initial Financed Student Loan
as of the Initial Cut-off Date and (ii) with respect to any Additional Financed
Student Loan conveyed during the Funding Period relating to the Series 1997-2
Notes, an amount equal to 100% of the par amount of such Financed Student Loan
as of the related Subsequent Cut-off Date, as the case may be.
"RECORD DATE" means, with respect to a Class of the Series 1997-2
Notes, the close of business on the second Business Day immediately preceding
the related Note Distribution Date.
"REMARKETING AGENT" means a remarketing agent designated under a
Remarketing Agreement.
"REMARKETING AGREEMENT" means any remarketing agreement hereafter
entered into by the Issuer and a remarketing agent with respect to the Series
1997-2 Auction Rate Notes, as originally executed and as from time to time
amended or supplemented in accordance with the terms thereof.
"SECOND TERMS SUPPLEMENT" means this second terms supplement, as from
time to time amended or supplemented.
"SELL ORDER" has the meaning set forth in Section 2.5.1(a)(i) hereof.
"SERIES 1997-2 AUCTION RATE NOTES" means the Class A-5 Notes and the
Class A-6 Notes.
"SERIES 1997-2 LIBOR RATE NOTES" means the Class A-4 Notes.
"SUBMISSION DEADLINE" means 12:30 p.m., eastern time, on any Auction
Date or such other time on any Auction Date by which Broker-Dealers are required
to submit Orders to the Auction Agent as specified by the Auction Agent from
time to time.
"SUBMITTED BID" has the meaning set forth in Section 2.5.1(c)(i)
hereof.
"SUBMITTED HOLD ORDER" has the meaning set forth in Section
2.5.1(c)(i) hereof.
"SUBMITTED ORDER" has the meaning set forth in Section 2.5.1(c)(i)
hereof.
"SUBMITTED SELL ORDER" has the meaning set forth in Section
2.5.1(c)(i) hereof.
"SUBSTITUTE AUCTION AGENT" means the Person with whom the Indenture
Trustee enters into a Substitute Auction Agent Agreement.
"SUBSTITUTE AUCTION AGENT AGREEMENT" means an auction agent agreement
containing terms substantially similar to the terms of the Initial Auction Agent
Agreement, whereby a Person having the qualifications required by Section 2.5.5
of this Second Terms Supplement agrees with the Indenture Trustee and the Issuer
to perform the duties of the Auction Agent under this Second Terms Supplement.
"SUFFICIENT BIDS" has the meaning set forth in Section 2.5.1(c)(i)
hereof.
"TELERATE PAGE 3750" means the display page so designated on the Dow
Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
"THREE-MONTH LIBOR" means the London interbank offered rate for
deposits in U.S. dollars having a maturity of three months commencing on the
related LIBOR Determination Date (the "Three-Month Index Maturity") which
appears on Telerate Page 3750 as of 11:00 a.m., London time, on such LIBOR
Determination Date. If such rate does not appear on Telerate Page 3750, the rate
for that day will be determined on the basis of the rates at which deposits in
U.S. dollars, having the Three Month Index Maturity and in a principal amount of
not less than U.S. $1,000,000, are offered at approximately 11:00 a.m., London
time, on such LIBOR Determination Date to prime banks in the London interbank
market by the Reference Banks. The Auction Agent will request the principal
London office of each of such Reference Banks to provide a quotation of its
rate. If at least two such quotations are provided, the rate for that day will
be the arithmetic mean of the quotations. If fewer than two quotations are
provided, the rate for that day will be the arithmetic mean of the rates quoted
by major banks in New York City, selected by the Auction Agent, at approximately
11:00 a.m., New York City time, on such LIBOR Determination Date for loans in
U.S. dollars to leading European banks having the Three Month Index Maturity and
in a principal amount equal to an amount of not less than U.S. $1,000,000;
provided that if the banks selected as aforesaid are not quoting as mentioned in
this sentence, Three-Month LIBOR in effect for the applicable Interest Period
will be Three-Month LIBOR in effect for the previous Interest Period.
ARTICLE II.
AUTHORIZATION, TERMS AND ISSUANCE
SECTION 2.1. AUTHORIZATION OF SERIES 1997-2 NOTES. There is hereby
authorized the borrowing of funds, and to evidence such borrowing there are
hereby authorized three Classes of Series 1997-2 Notes (collectively, the
"Series 1997-2 Notes"), designated (i) the "ClassNotes Trust 1997-I Asset-Backed
Notes, Series 1997-2, Class A-4" (the "Class A-4 Notes") in the aggregate
principal amount of $150,000,000, (ii) the "ClassNotes Trust 1997-I Asset-Backed
Notes, Series 1997-2, Class A-5" (the "Class A-5 Notes") in the aggregate
principal amount of $57,500,000 and (iii) the "ClassNotes Trust 1997-I
Asset-Backed Notes, Series 1997-2, Class A-6" (the "Class A-6 Notes") in the
aggregate principal amount of $57,500,000.
SECTION 2.2. PURPOSES. The Series 1997-2 Notes are authorized to
finance the acquisition by the Issuer of Financed Student Loans, and to make
deposits to the Trust Accounts required hereby.
SECTION 2.3. TERMS OF SERIES 1997-2 NOTES GENERALLY. The Series 1997-2
Notes shall be issued in fully registered form, in substantially the form set
forth in Exhibit A-1, in the case of the Series 1997-2 LIBOR Rate Notes, and
Exhibit A-2, in the case of the Series 1997-2 Auction Rate Notes, in each case
with such variations, omissions and insertions as may be required by the
circumstances, as may be required or permitted by the Master Indenture and this
Second Terms Supplement, or be consistent with the Master Indenture and this
Second Terms Supplement and necessary or appropriate to conform to the rules and
requirements of any governmental authority or any usage or requirement of law
with respect thereto.
The Series 1997-2 Notes may be issued only in Authorized
Denominations. The Series 1997-2 Notes shall be dated as of the Closing Date.
Each Class of Notes shall mature on its Final Maturity Date. Each Class of
Series 1997-2 Notes shall be numbered consecutively from 1 upwards with the
prefix A-[Class Designation]- preceding each number. The Series 1997-2 Notes
shall be issued to a Securities Depository for use in a Book- Entry System in
accordance with the provisions of Section 2.13 of the Indenture.
Interest on each Series 1997-2 Note shall accrue on the Outstanding
Amount of such Series 1997-2 Note until such Series 1997-2 Note has been paid in
full or payment has been duly provided for, as the case may be, and shall accrue
from the later of the initial date thereof or the most recent Note Distribution
Date to which interest has been paid or duly provided for. Each Series 1997-2
Note shall bear interest at an interest rate determined in accordance with the
provisions and subject to the limitations set forth herein, and interest on a
Class of the Series 1997-2 Notes shall be paid for the related Class Initial
Period and each Class Interest Period for such Class thereafter on each Note
Distribution Date for such Class and on each date of payment of principal
thereof to the extent of interest accrued on the principal then being paid.
Principal will be paid to the then Outstanding Class of Series 1997-2
Notes with the earliest Final Maturity Date on the first Note Distribution Date
for such Class occurring in each month in an amount equal to the Noteholder's
Principal Distribution Amount on such Note Distribution Date; provided, however,
that if any Class of a Series of Notes issued previously or hereafter has an
earlier Final Maturity Date than any Class of Series 1997-2 Notes, principal
will be paid to each such Class of previously or subsequently issued Notes with
an earlier Final Maturity Date prior to the Class or Classes of Series 1997-2
Notes with a later Final Maturity Date.
SECTION 2.4. SERIES 1997-2 NOTES. The Initial Rate Adjustment Date for
each Class of Notes shall be the Class Initial Rate Adjustment Date.
During the related Class Initial Period, each Class of Series 1997-2
Notes shall bear interest at the Class Initial Rate for such Class. Thereafter,
(i) the Class A-4 Notes shall bear interest during the applicable Interest
Period at a Class Interest Rate equal to the lesser of (x) the Net Loan Rate and
(y) One-Month LIBOR plus the applicable Margin, and (ii) except with respect to
an Auction Period Adjustment, the Class A-5 and Class A-6 Notes shall bear
interest at a Class Interest Rate based on a 28-day Auction Period, as
determined pursuant to this Section 2.4 and Section 2.5 hereof.
For each Class of Series 1997-2, Notes during the Class Initial Period
for such Class and each Interest Period thereafter, interest at the Class
Interest Rate shall accrue daily and shall be computed for the actual number of
days elapsed on the basis of a year consisting of 360 days.
The Class Interest Rate to be borne by each Class of Series 1997-2
Auction Rate Notes after such Class Initial Period for each Auction Period until
an Auction Period Adjustment, if any, shall be determined as herein described.
Each such Auction Period shall commence on and include the first Business Day
following the expiration of the immediately preceding Auction Period and
terminate on and include the second Business Day of the fourth following week,
subject to adjustment as described below. The Class Interest Rate on each Class
of Series 1997-2 Auction Rate Notes for each Auction Period shall be the lesser
of the (i) Net Loan Rate in effect for such Auction Period and (ii) the Auction
Rate in effect for such Auction Period as determined in accordance with Section
2.5.1 hereof; provided that if, on any Class Rate Determination Date relating to
a Class of Series 1997- 2 Auction Rate Notes, an Auction is not held for any
reason, then the Class Interest Rate on such Class of Series 1997-2 Auction Rate
Notes for the next succeeding Auction Period shall be the Net Loan Rate.
Notwithstanding the foregoing:
(a) if the ownership of a Class of Series 1997-2 Auction Rate Notes is
no longer maintained in Book-Entry Form, the Class Interest Rate on such Class
of Series 1997-2 Auction Rate Notes for any Class Interest Period commencing
after the delivery of certificates representing the Notes of such Class pursuant
to Section 2.15 of the Master Indenture shall equal the lesser of (i) the
Maximum Auction Rate and (ii) the Net Loan Rate on the Business Day immediately
preceding the first day of such subsequent Class Interest Period; or
(b) if an Event of Default shall have occurred, the Class Interest
Rate on each Class of the Series 1997-2 Auction Rate Notes for the Class
Interest Period for such Class commencing on or immediately after such Event of
Default, and for each Class Interest Period thereafter, to and including the
Class Interest Period, if any, during which, or commencing less than two
Business Days after, such Event of Default is cured in accordance with this
Second Terms Supplement, shall equal the Non-Payment Rate on the first day of
each such Class Interest Period.
In accordance with Section 2.5.1(c)(ii) hereof, the Auction Agent
shall promptly give written notice to the Indenture Trustee, the Eligible Lender
Trustee and the Surety Provider of each Class Interest Rate (unless the Class
Interest Rate is the Non-Payment Rate) and either the Auction Rate or the Net
Loan Rate, as the case may be, when such rate is not the Class Interest Rate,
applicable to each Class of Series 1997-2 Auction Rate Notes. The Indenture
Trustee shall notify the related Noteholders of the Class Interest Rate
applicable to such Class of Notes for each Auction Period on the second Business
Day of such Auction Period.
In the event that the day on which an Auction Period for a Class of
Series 1997-2 Auction Rate Notes would otherwise be scheduled to expire is not a
Business Day, the expiration date and Note Distribution Date for such Auction
Period then in effect, if applicable, and the Class Rate Determination Date and
commencement date for the immediately following Class Interest Period for such
Class of Series 1997-2 Auction Rate Notes shall be the next succeeding Business
Day.
Notwithstanding any other provision of the Series 1997-2 Notes or
this Second Terms Supplement and except for the occurrence of an Event of
Default, interest payable on each Class of Series 1997-2 Auction Rate Notes for
an Auction Period shall never exceed for such Auction Period the amount of
interest payable at the Net Loan Rate (subject to the Class Interest Rate
Limitation) in effect for such Auction Period.
If the Auction Rate for a Class of Series 1997-2 Auction Rate Notes or the
LIBOR Rate for a Class of LIBOR Rate Notes is greater than the Net Loan
Rate, then the Class Interest Rate applicable to such Class of Series
1997-2 Notes for that Class Interest Period will be the Net Loan Rate. If
the Class Interest Rate applicable to such Class of Series 1997-2 Notes for
any Class Interest Period is the Net Loan Rate, the Indenture Trustee shall
determine the Noteholders' Interest Carryover, if any, with respect to such
Class of Series 1997-2 Notes for such Class Interest Period. Such
determination of the Noteholders' Interest Carryover shall be made
separately for each Class of Series 1997-2 Notes. Such Noteholders'
Interest Carryover shall bear interest calculated at a rate equal to
One-Month LIBOR (as determined by the Auction Agent, provided the Indenture
Trustee has received notice of One-Month LIBOR from the Auction Agent, and
if the Indenture Trustee shall not have received such notice from the
Auction Agent, then as determined by the Indenture Trustee) from the Note
Distribution Date for the Class Interest Period with respect to which such
Noteholders' Interest Carryover was calculated, until paid. For purposes of
this Second Terms Supplement, any reference to "principal" or "interest"
herein shall not include within the meaning of such words Noteholders'
Interest Carryover or any interest accrued on any such Noteholders'
Interest Carryover. Such Noteholders' Interest Carryover shall be
separately calculated for each Series 1997-2 Note of such Class by the
Indenture Trustee during such Class Interest Period in sufficient time for
the Indenture Trustee to give notice to each Noteholder of such
Noteholders' Interest Carryover as required in the next succeeding
sentence. On the Note Distribution Date for a Class Interest Period with
respect to which such Noteholders' Interest Carryover for a Class of Series
1997-2 Notes has been calculated by the Indenture Trustee, the Indenture
Trustee shall give written notice to each Noteholder of the applicable
Class of the Noteholders' Interest Carryover applicable to each
Noteholder's Note of such Class, which written notice may be included in
any other written statement sent by the Indenture Trustee to such
Noteholders, and shall be mailed on such Note Distribution Date by
first-class mail, postage prepaid, to each such Noteholder at such
Noteholder's address as it appears on the registration books maintained by
the Note Registrar. Such notice shall state, in addition to such
Noteholders' Interest Carryover, that, unless and until the Final Maturity
Date for such Class of Series 1997-2 Note has occurred (after which all
accrued Noteholders Interest Carryover (and all accrued interest thereon)
that remains unpaid shall be cancelled and no Noteholders' Interest
Carryover (and interest accrued thereon) shall be paid with respect to a
Series 1997-2 Note of such Class), (i) the Noteholders' Interest Carryover
(and interest accrued thereon calculated at a rate equal to One-Month
LIBOR) shall be paid by the Indenture Trustee on a Series 1997-2 Note of
such Class on the first occurring Note Distribution Date for such Class for
a subsequent Class Interest Period if and to the extent that (1) during
such Class Interest Period no additional Noteholders' Interest Carryover is
accruing on such Class of Series 1997-2 Notes and (2) moneys are available
pursuant to the terms of this Second Terms Supplement in an amount
sufficient to pay all or a portion of such Noteholders' Interest Carryover
and (ii) interest shall accrue on the Noteholders' Interest Carryover at a
rate equal to One-Month LIBOR until such Noteholders' Interest Carryover is
paid in full or the related Final Maturity Date occurs.
The Noteholders' Interest Carryover for a Class of Series 1997-2 Notes
shall be paid by the Indenture Trustee on Outstanding Series 1997-2 Notes of
such Class on the Note Distribution Date for such Class following the first
occurring Note Distribution Date for a subsequent Class Interest Period if and
to the extent that (i) during such Class Interest Period no additional
Noteholders' Interest Carryover is accruing on such Class of Series 1997-2 Notes
and (ii) moneys are available pursuant to the terms of this Second Terms
Supplement in an amount sufficient to pay all or a portion of such Noteholders'
Interest Carryover. Any Noteholders' Interest Carryover (and any interest
accrued thereon) on any Series 1997-2 Note which is due and payable on the
related Final Maturity Date shall be paid to the Noteholder thereof on said
Final Maturity Date to the extent that moneys are available therefor in
accordance with the provisions of this Second Terms Supplement; provided,
however, that any Noteholders' Interest Carryover (and any interest accrued
thereon) which is not yet due and payable on said Final Maturity Date shall be
cancelled with respect to said Series 1997-2 Note on said Final Maturity Date.
To the extent that any portion of the Noteholders' Interest Carryover for a
Class of Series 1997-2 Notes remains unpaid after payment of a portion thereof,
such unpaid portion of the Noteholders' Interest Carryover shall be paid in
whole or in part as required hereunder until fully paid by the Indenture Trustee
on the next occurring Note Distribution Date or Dates, as necessary, for a
subsequent Class Interest Period or Periods for such Class, if and to the extent
that the conditions in the second preceding sentence are satisfied. On any Note
Distribution Date on which the Indenture Trustee pays only a portion of the
Noteholders' Interest Carryover on a Series 1997-2 Note of such Class, the
Indenture Trustee shall give written notice in the manner set forth in the
immediately preceding paragraph to the Noteholder of such Series 1997-2 Note
receiving such partial payment of the Noteholders' Interest Carryover remaining
unpaid on such Series 1997-2 Note.
The Note Distribution Date in such subsequent Class Interest Period on
which such Noteholders' Interest Carryover for a Class of Series 1997-2 Notes
shall be paid shall be determined by the Indenture Trustee in accordance with
the provisions of the immediately preceding paragraph, and the Indenture Trustee
shall make payment of the Noteholders' Interest Carryover in the same manner as,
and from the same Account from which, it pays interest on the Series 1997-2
Notes on a Note Distribution Date.
In the event that the Auction Agent no longer determines, or fails to
determine, when required, the Class Interest Rate with respect to a Class of
Series 1997-2 Auction Rate Notes, or, if for any reason such manner of
determination shall be held to be invalid or unenforceable by a court of
competent jurisdiction, the Class Interest Rate for the next succeeding Class
Interest Period for such Class of Series 1997-2 Auction Rate Notes shall be the
Net Loan Rate as determined by the Administrator (which is responsible for
notifying the Auction Agent of such Net Loan Rate), for such next succeeding
Interest Period.
SECTION 2.5. CLASS INTEREST RATE.
SECTION 2.5.1. DETERMINING THE CLASS INTEREST RATE FOR SERIES 1997-2
AUCTION RATE NOTES.
By purchasing Series 1997-2 Auction Rate Notes, whether in an Auction
or otherwise, each purchaser of the Series 1997-2 Auction Rate Notes, or its
Broker-Dealer, must agree and shall be deemed by such purchase to have agreed
(i) to participate in Auctions on the terms described herein, (ii) to have its
beneficial ownership of the Series 1997-2 Auction Rate Notes maintained at all
times in Book-Entry Form for the account of its Participant, which in turn will
maintain records of such beneficial ownership and (iii) to authorize such
Participant to disclose to the Auction Agent such information with respect to
such beneficial ownership as the Auction Agent may request.
So long as the ownership of a Class of Series 1997-2 Auction Rate
Notes is maintained in Book-Entry Form, an Existing Noteholder may sell,
transfer or otherwise dispose of Series 1997-2 Auction Rate Notes only pursuant
to a Bid or Sell Order placed in an Auction or otherwise sell, transfer or
dispose of Series 1997-2 Auction Rate Notes through a Broker-Dealer, provided
that, in the case of all transfers other than pursuant to Auctions, such
Existing Noteholder, its Broker-Dealer or its Participant advises the Auction
Agent of such transfer. Auctions shall be conducted on each Auction Date, if
there is an Auction Agent on such Auction Date, in the following manner:
(a) (i) Prior to the Submission Deadline on each Auction Date
relating to a Class of the Series 1997-2 Auction Rate Notes:
(A) each Existing Noteholder of the applicable Class of
Series 1997-2 Auction Rate Notes may submit to a Broker-Dealer by telephone or
otherwise any information as to:
(1) the principal amount of Outstanding Series 1997-2
Auction Rate Notes of such Class, if any, owned by such Existing
Noteholder which such Existing Noteholder desires to continue to own
without regard to the Class Interest Rate for the next succeeding
Auction Period;
(2) the principal amount of Outstanding Series 1997-2
Auction Rate Notes of such Class, if any, which such Existing
Noteholder offers to sell if the Class Interest Rate for the next
succeeding Auction Period shall be less than the rate per annum
specified by such Existing Noteholder; and/or
(3) the principal amount of Outstanding Series 1997-2
Auction Rate Notes of such Class, if any, owned by such Existing
Noteholder which such Existing Noteholder offers to sell without
regard to the Class Interest Rate for the next succeeding Auction
Period;
and
(B) one or more Broker-Dealers may contact Potential
Noteholders to determine the principal amount of Series 1997-2 Auction
Rate Notes of such Class which each Potential Noteholder offers to
purchase, if the Class Interest Rate for the next succeeding Auction
Period shall not be less than the rate per annum specified by such
Potential Noteholder.
The statement of an Existing Noteholder or a Potential
Noteholder referred to in (A) or (B) of this paragraph (i) is herein
referred to as an "Order," and each Existing Noteholder and each
Potential Noteholder placing an Order is herein referred to as a
"Bidder"; an Order described in clause (A)(1) is herein referred to as
a "Hold Order"; an Order described in clauses (A)(2) and (B) is herein
referred to as a "Bid"; and an Order described in clause (A)(3) is
herein referred to as a "Sell Order."
(ii) (A) Subject to the provisions of Section 2.5.1(b)
hereof, a Bid by an Existing Noteholder shall constitute an
irrevocable offer to sell:
(1) the principal amount of Outstanding Series
1997-2 Auction Rate Notes specified in such Bid if the Class Interest
Rate determined as provided in this Section 2.5.1 shall be less than
the rate specified therein; or
(2) such principal amount, or a lesser principal
amount of Outstanding Series 1997-2 Auction Rate Notes to be
determined as set forth in Section 2.5. 1(d)(i)(D) hereof, if the
Class Interest Rate determined as provided in this Section 2.5.1 shall
be equal to the rate specified therein; or
(3) such principal amount, or a lesser principal
amount of Outstanding Series 1997-2 Auction Rate Notes to be
determined as set forth in Section 2.5.1(d)(ii)(C) hereof, if the rate
specified therein shall be higher than the Class Interest Rate and
Sufficient Bids have not been made.
(B) Subject to the provisions of Section 2.5.1(b)
hereof, a Sell Order by an Existing Noteholder shall constitute an
irrevocable offer to sell:
(1) the principal amount of Outstanding Series
1997-2 Auction Rate Notes specified in such Sell Order; or
(2) such principal amount, or a lesser principal
amount of Outstanding Series 1997-2 Notes set forth in Section
2.5.1(d)(ii)(C) hereof, if Sufficient Bids have not been made.
(C) Subject to the provisions of Section 2.5.1(b)
hereof, a Bid by a Potential Noteholder shall constitute an
irrevocable offer to purchase:
(1) the principal amount of Outstanding Series
1997-2 Auction Rate Notes specified in such Bid if the Class Interest
Rate determined as provided in this Section 2.5.1 shall be higher than
the rate specified in such Bid; or
(2) such principal amount, or a lesser principal
amount of Outstanding Series 1997-2 Notes set forth in Section
2.5.1(d)(i)(E) hereof, if the Class Interest Rate determined as
provided in this Section 2.5.1 shall be equal to the rate specified in
such Bid.
(b) (i) Each Broker-Dealer shall submit in writing to the Auction
Agent prior to the Submission Deadline on each Auction Date all Orders obtained
by such Broker-Dealer and shall specify with respect to each such Order:
(A) the name of the Bidder placing such Order;
(B) the aggregate principal amount and Class of Series
1997-2 Auction Rate Notes that are the subject of such Order;
(C) to the extent that such Bidder is an Existing
Noteholder:
(1) the principal amount and Class of Series
1997-2 Auction Rate Notes, if any, subject to any Hold Order
placed by such Existing Noteholder;
(2) the principal amount and Class of Series
1997-2 Auction Rate Notes, if any, subject to any Bid placed
by such Existing Noteholder and the rate specified in such
Bid; and
(3) the principal amount and Class of Series
1997-2 Auction Rate Notes, if any, subject to any Sell Order
placed by such Existing Noteholder;
and
(D) to the extent such Bidder is a Potential Noteholder, the
rate specified in such Potential Noteholder's Bid.
(ii) If any rate specified in any Bid contains more than
three figures to the right of the decimal point, the Auction Agent shall
round such rate up to the next higher one thousandth (.001) of one percent.
(iii) If an Order or Orders covering all Outstanding Series
1997-2 Auction Rate Notes of the applicable Class owned by an Existing
Noteholder is not submitted to the Auction Agent prior to the Submission
Deadline, the Auction Agent shall deem a Hold Order to have been submitted
on behalf of such Existing Noteholder covering the principal amount of
Outstanding Series 1997-2 Auction Rate Notes of such Class owned by such
Existing Noteholder and not subject to an Order submitted to the Auction
Agent.
(iv) Neither the Issuer, the Indenture Trustee nor the
Auction Agent shall be responsible for any failure of a Broker-Dealer to
submit an Order to the Auction Agent on behalf of any Existing Noteholder
or Potential Noteholder.
(v) If any Existing Noteholder submits through a
Broker-Dealer to the Auction Agent one or more Orders covering in the
aggregate more than the principal amount of the Class of Outstanding Series
1997-2 Auction Rate Notes owned by such Existing Noteholder, such Orders
shall be considered valid as follows and in the following order of
priority:
(A) All Hold Orders shall be considered valid, but only up
to the aggregate principal amount of the Class of Outstanding Series 1997-2
Auction Rate Notes owned by such Existing Noteholder, and if the aggregate
principal amount of the Class of Series 1997-2 Auction Rate Notes subject
to such Hold Orders exceeds the aggregate principal amount of the Class of
Series 1997-2 Auction Rate Notes owned by such Existing Noteholder, the
aggregate principal amount of the Class of Series 1997-2 Auction Rate Notes
subject to each such Hold Order shall be reduced pro rata so that the
aggregate principal amount of the Class of Series 1997-2 Auction Rate Notes
subject to such Hold Order equals the aggregate principal amount of the
Class of Outstanding Series 1997-2 Auction Rate Notes owned by such
Existing Noteholder.
(B) (1) any Bid shall be considered valid up to an amount
equal to the excess of the principal amount of the Class of
Outstanding Series 1997-2 Auction Rate Notes owned by such
Existing Noteholder over the aggregate principal amount of
the Class of Series 1997-2 Auction Rate Notes subject to
any Hold Order referred to in clause (A) of this paragraph
(v);
(2) subject to subclause (1) of this clause (B), if
more than one Bid with the same rate is submitted on behalf
of such Existing Noteholder and the aggregate principal
amount of the Class of Outstanding Series 1997-2 Auction
Rate Notes subject to such Bids is greater than such excess,
such Bids shall be considered valid up to an amount equal to
such excess;
(3) subject to subclauses (1) and (2) of this clause
(B), if more than one Bid with different rates are submitted
on behalf of such Existing Noteholder, such Bids shall be
considered valid first in the ascending order of their
respective rates until the highest rate is reached at which
such excess exists and then at such rate up to the amount of
such excess; and
(4) in any such event, the amount of the Class of
Outstanding Series 1997-2 Auction Rate Notes, if any,
subject to Bids not valid under this clause (B) shall be
treated as the subject of a Bid by a Potential Noteholder at
the rate therein specified; and
(C) All Sell Orders shall be considered valid up to an
amount equal to the excess of the principal amount of the Class of
Outstanding Series 1997-2 Auction Rate Notes owned by such Existing
Noteholder over the aggregate principal amount of the Class of Series
1997-2 Auction Rate Notes subject to Hold Orders referred to in clause (A)
of this paragraph (v) and valid Bids referred to in clause (B) of this
paragraph (v).
(vi) If more than one Bid for a Class of Series 1997-2
Auction Rate Notes is submitted on behalf of any Potential Noteholder,
each Bid submitted shall be a separate Bid with the rate and principal
amount therein specified.
(vii) An Existing Noteholder of a Class of Series
1997-2 Auction Rate Notes that offers to purchase additional Series
1997-2 Auction Rate Notes is, for purposes of such offer, treated as a
Potential Noteholder.
(viii) Any Bid or Sell Order submitted by an Existing
Noteholder covering an aggregate principal amount of a Class of Series
1997-2 Auction Rate Notes not equal to an Authorized Denomination
shall be rejected and shall be deemed a Hold Order. Any Bid submitted
by a Potential Noteholder covering an aggregate principal amount of a
Class of Series 1997-2 Auction Rate Notes not equal to an Authorized
Denomination shall be rejected.
(ix) Any Bid specifying a rate higher than the Maximum
Auction Rate will (a) be treated as a Sell Order if submitted by an
Existing Noteholder and (b) not be accepted if submitted by a
Potential Noteholder.
(x) Any Order submitted in an Auction by a
Broker-Dealer to the Auction Agent at the Submission Deadline on any
Auction Date shall be irrevocable.
(c) (i) Not earlier than the Submission Deadline on each Auction
Date, the Auction Agent shall assemble all valid Orders submitted or deemed
submitted to it by the Broker-Dealers (each such Order as submitted or
deemed submitted by a Broker-Dealer being herein referred to individually
as a "Submitted Hold Order," a "Submitted Bid" or a "Submitted Sell Order,"
as the case may be, or as a "Submitted Order," and collectively as
"Submitted Hold Orders," "Submitted Bids" or "Submitted Sell Orders," as
the case may be, or as "Submitted Orders") and shall determine for the
applicable Class of Series 1997-2 Auction Rate Notes:
(A) the excess of the total principal amount of Outstanding
Series 1997-2 Auction Rate Notes of such Class over the sum of the
aggregate principal amount of Outstanding Series 1997-2 Auction Rate Notes
of such Class subject to Submitted Hold Orders (such excess being herein
referred to as the "Available Series 1997-2 Auction Rate Notes" of such
Class), and
(B) from the Submitted Orders whether:
(1) the aggregate principal amount of Outstanding
Series 1997-2 Auction Rate Notes of such Class subject to
Submitted Bids by Potential Noteholders specifying one or
more rates equal to or lower than the Maximum Auction Rate;
exceeds or is equal to the sum of:
(2) the aggregate principal amount of Outstanding
Series 1997-2 Auction Rate Notes of such Class subject to
Submitted Bids by Existing Noteholders specifying one or
more rates higher than the Maximum Auction Rate; and
(3) the aggregate principal amount of Outstanding
Series 1997-2 Auction Rate Notes of such Class subject to
submitted Sell Orders;
(in the event such excess or such equality exists, other than because all
of the Outstanding Series 1997-2 Auction Rate Notes of such Class are
subject to Submitted Hold Orders, such Submitted Bids described in
subclause (1) above shall be referred to collectively as "Sufficient
Bids"); and
(C) if Sufficient Bids exist, the "Bid Auction Rate," which
shall be the lowest rate specified in such Submitted Bids such that if:
(1) (x) each Submitted Bid from Existing Noteholders
specifying such lowest rate and (y) all other Submitted Bids
from Existing Noteholders specifying lower rates were
rejected, thus entitling such Existing Noteholders to
continue to own the principal amount of Series 1997-2
Auction Rate Notes of such Class subject to such Submitted
Bids; and
(2) (x) each such Submitted Bid from Potential
Noteholders specifying such lowest rate and (y) all other
Submitted Bids from Potential Noteholders specifying lower
rates were accepted;
the result would be that such Existing Noteholders described in subclause
(1) above would continue to own an aggregate principal amount of
Outstanding Series 1997-2 Auction Rate Notes of the applicable Class which,
when added to the aggregate principal amount of Outstanding Series 1997-2
Auction Rate Notes of such Class to be purchased by such Potential
Noteholders described in subclause (2) above, would equal not less than the
Available Series 1997-2 Auction Rate Notes of such Class.
(ii) Promptly after the Auction Agent has made the
determinations pursuant to Section 2.5.1(c)(i) hereof, the Auction Agent
shall advise the Indenture Trustee of the Net Loan Rate, the Maximum
Auction Rate and the All Hold Rate and the components thereof on the
Auction Date and, based on such determinations, the Auction Rate for the
next succeeding Class Interest Period for such Class of Series 1997-2
Auction Rate Notes as follows:
(A) if Sufficient Bids exist, that the Auction Rate for the
next succeeding Class Interest Period for such Class shall be equal to the
Bid Auction Rate so determined;
(B) if Sufficient Bids do not exist (other than because all
of the Outstanding Series 1997-2 Auction Rate Notes of such Class are
subject to Submitted Hold Orders), that the Auction Rate for the next
succeeding Class Interest Period shall be equal to the Maximum Auction
Rate; or
(C) if all Outstanding Series 1997-2 Auction Rate Notes of
such Class are subject to Submitted Hold Orders, that the Auction Rate for
the next succeeding Class Interest Period shall be equal to the All Hold
Rate.
(iii) Promptly after the Auction Agent has determined the
Auction Rate, the Auction Agent shall determine and advise the Indenture
Trustee of the applicable Class Interest Rate, which rate shall be the
lesser of (a) the Auction Rate and (b) the Net Loan Rate; provided,
however, that in no event shall the Class Interest Rate exceed the Class
Interest Rate Limitation.
(d) Existing Noteholders shall continue to own the principal
amount of Series 1997-2 Auction Rate Notes of such Class that are subject to
Submitted Hold Orders. If the Net Loan Rate is equal to or greater than the Bid
Auction Rate and if Sufficient Bids have been received by the Auction Agent, the
Bid Auction Rate will be the Class Interest Rate, and Submitted Bids and
Submitted Sell Orders will be accepted or rejected and the Auction Agent will
take such other action as described below in subparagraph (i).
If the Net Loan Rate is less than the Auction Rate, the Net Loan
Rate will be the Class Interest Rate. If the Auction Rate and the Net Loan Rate
are both greater than the Class Interest Rate Limitation, the Class Interest
Rate shall be equal to the Class Interest Rate Limitation. If the Auction Agent
has not received Sufficient Bids (other than because all of the Outstanding
Series 1997-2 Auction Rate Notes of such Class are subject to Submitted Hold
Orders), the Class Interest Rate will be the lesser of the Maximum Auction Rate
and the Net Loan Rate. In any of the cases described above, Submitted Orders
will be accepted or rejected and the Auction Agent will take such other action
as described below in subparagraph (ii).
(i) if Sufficient Bids have been made and the Net Loan
Rate is equal to or greater than the Bid Auction Rate (in which case the
Class Interest Rate shall be the Bid Auction Rate), all Submitted Sell
Orders shall be accepted and, subject to the provisions of paragraphs (iv)
and (v) of this Section 2.5.1(d), Submitted Bids shall be accepted or
rejected as follows in the following order of priority, and all other
Submitted Bids shall be rejected:
(A) Existing Noteholders' Submitted Bids specifying any
rate that is higher than the Class Interest Rate shall be accepted, thus
requiring each such Existing Noteholder to sell the aggregate principal
amount of Series 1997-2 Auction Rate Notes subject to such Submitted Bids;
(B) Existing Noteholders' Submitted Bids specifying any
rate that is lower than the Class Interest Rate shall be rejected, thus
entitling each such Existing Noteholder to continue to own the aggregate
principal amount of Series 1997-2 Notes subject to such Submitted Bids;
(C) Potential Noteholders' Submitted Bids specifying
any rate that is lower than the Class Interest Rate shall be accepted;
(D) Each Existing Noteholders' Submitted Bid specifying
a rate that is equal to the Class Interest Rate shall be rejected, thus
entitling such Existing Noteholder to continue to own the aggregate
principal amount of Series 1997-2 Auction Rate Notes subject to such
Submitted Bid, unless the aggregate principal amount of Outstanding Series
1997-2 Auction Rate Notes subject to all such Submitted Bids shall be
greater than the principal amount of Series 1997-2 Auction Rate Notes of
the applicable Class (the "remaining principal amount") equal to the excess
of the Available Series 1997-2 Auction Rate Notes of such Class over the
aggregate principal amount of Series 1997-2 Auction Rate Notes of such
Class subject to Submitted Bids described in clauses (B) and (C) of this
Section 2.5.1(d)(i), in which event such Submitted Bid of such Existing
Noteholder shall be rejected in part, and such Existing Noteholder shall be
entitled to continue to own the principal amount of such Class of Series
1997-2 Auction Rate Notes subject to such Submitted Bid, but only in an
amount equal to the aggregate principal amount of Series 1997-2 Auction
Rate Notes of such Class obtained by multiplying the remaining principal
amount by a fraction, the numerator of which shall be the principal amount
of Outstanding Series 1997-2 Auction Rate Notes of such Class owned by such
Existing Noteholder subject to such Submitted Bid and the denominator of
which shall be the sum of the principal amount of Outstanding Series 1997-2
Auction Rate Notes of such Class subject to such Submitted Bids made by all
such Existing Noteholders that specified a rate equal to the Class Interest
Rate; and
(E) Each Potential Noteholder's Submitted Bid
specifying a rate that is equal to the Class Interest Rate shall be
accepted, but only in an amount equal to the principal amount of Series
1997-2 Auction Rate Notes of the applicable Class obtained by multiplying
the excess of the aggregate principal amount of Available Series 1997-2
Auction Rate Notes of such Class over the aggregate principal amount of
Series 1997-2 Auction Rate Notes of such Class subject to Submitted Bids
described in clauses (B), (C) and (D) of this Section 2.5.1(d)(i) by a
fraction the numerator of which shall be the aggregate principal amount of
Outstanding Series 1997-2 Auction Rate Notes of such Class subject to such
Submitted Bid and the denominator of which shall be the sum of the
principal amount of Outstanding Series 1997-2 Auction Rate Notes of such
Class subject to Submitted Bids made by all such Potential Noteholders that
specified a rate equal to the Class Interest Rate.
(ii) If Sufficient Bids have not been made (other than
because all of the Outstanding Series 1997-2 Auction Rate Notes of the
applicable Class are subject to submitted Hold Orders), or if the Net Loan
Rate is less than the Bid Auction Rate (in which case the Class Interest
Rate shall be the Net Loan Rate), or if the Class Interest Rate Limitation
applies, subject to the provisions of Section 2.5.1(d)(iv) hereof,
Submitted Orders shall be accepted or rejected as follows in the following
order of priority and all other Submitted Bids shall be rejected:
(A) Existing Noteholders' Submitted Bids specifying any
rate that is equal to or lower than the Class Interest Rate shall be
rejected, thus entitling such Existing Noteholders to continue to own the
aggregate principal amount of Series 1997-2 Auction Rate Notes subject to
such Submitted Bids;
(B) Potential Noteholders' Submitted Bids specifying
(1) any rate that is equal to or lower than the Class Interest Rate shall
be accepted and (2) any rate that is higher than the Class Interest Rate
shall be rejected; and
(C) each Existing Noteholder's Submitted Bid specifying
any rate that is higher than the Class Interest Rate and the Submitted Sell
Order of each Existing Noteholder shall be accepted, thus entitling each
Existing Noteholder that submitted any such Submitted Bid or Submitted Sell
Order to sell the Series 1997-2 Auction Rate Notes subject to such
Submitted Bid or Submitted Sell Order, but in both cases only in an amount
equal to the aggregate principal amount of Series 1997-2 Auction Rate Notes
of the applicable Class obtained by multiplying the aggregate principal
amount of Series 1997-2 Auction Rate Notes subject to Submitted Bids
described in clause (B) of this Section 2.5.1(d)(ii) by a fraction the
numerator of which shall be the aggregate principal amount of Outstanding
Series 1997-2 Auction Rate Notes of such Class owned by such Existing
Noteholder subject to such submitted Bid or Submitted Sell Order and the
denominator of which shall be the aggregate principal amount of Outstanding
Series 1997-2 Auction Rate Notes of such Class subject to all such
Submitted Bids and Submitted Sell Orders.
(iii) If all Outstanding Series 1997-2 Auction Rate
Notes of such Class are subject to Submitted Hold Orders, all Submitted
Bids shall be rejected.
(iv) If, as a result of the procedures described in
paragraph (i) or (ii) of this Section 2.5.1(d), any Existing Noteholder
would be entitled or required to sell, or any Potential Noteholder would be
entitled or required to purchase, a principal amount of Series 1997-2
Auction Rate Notes of the applicable Class that is not equal to an
Authorized Denomination, the Auction Agent shall, in such manner as in its
sole discretion it shall determine, round up or down the principal amount
of Series 1997-2 Auction Rate Notes to be purchased or sold by any Existing
Noteholder or Potential Noteholder so that the principal amount of Series
1997-2 Auction Rate Notes purchased or sold by each Existing Noteholder or
Potential Noteholder shall be equal to an Authorized Denomination or an
integral multiple of $50,000 in excess thereof.
(v) If, as a result of the procedures described in
paragraph (ii) of this Section 2.5.1(d), any Potential Noteholder would be
entitled or required to purchase less than an Authorized Denomination of
Series 1997-2 Auction Rate Notes of the applicable Class, the Auction Agent
shall, in such manner as in its sole discretion it shall determine,
allocate Series 1997-2 Auction Rate Notes of such Class for purchase among
Potential Noteholders so that only Series 1997-2 Auction Rate Notes of such
Class in Authorized Denominations or integral multiples of $50,000 in
excess thereof are purchased by any Potential Noteholder, even if such
allocation results in one or more of such Potential Noteholders not
purchasing any Series 1997-2 Auction Rate Notes of such Class.
(e) Based on the result of each Auction, the Auction Agent shall
determine the aggregate principal amount of Series 1997-2 Auction Rate Notes of
the applicable Class to be purchased and the aggregate principal amount of
Series 1997-2 Auction Rate Notes of the applicable Class to be sold by Potential
Noteholders and Existing Noteholders on whose behalf each Broker-Dealer
submitted Bids or Sell Orders and, with respect to each Broker-Dealer, to the
extent that such aggregate principal amount of Series 1997-2 Auction Rate Notes
of the applicable Class to be sold differs from such aggregate principal amount
of Series 1997-2 Auction Rate Notes of the applicable Class to be purchased,
determine to which other Broker-Dealer or Broker-Dealers acting for one or more
purchasers such Broker-Dealer shall deliver, or from which other Broker-Dealer
or Broker-Dealers acting for one or more sellers such Broker-Dealer shall
receive, as the case may be, Series 1997-2 Auction Rate Notes of the applicable
Class.
(f) On each Class Rate Determination Date relating to the Series
1997-2 LIBOR Rate Notes, the Indenture Trustee (or the Auction Agent on its
behalf) shall determine One- Month LIBOR and the applicable Class Interest Rate
and shall promptly give written notice thereof to the Issuer.
(g) Any calculation by the Auction Agent, the Master Servicer or
the Indenture Trustee, as applicable, of the Class Interest Rate, One-Month
LIBOR, Three-Month LIBOR, the Maximum Auction Rate, the All Hold Rate, the Net
Loan Rate and the Non-Payment Rate shall, in the absence of manifest error, be
binding on all other parties.
SECTION 2.5.2. PAYMENT DEFAULTS; AUCTION AGENT FEES AND EXPENSES.
(a) The Indenture Trustee shall determine not later than 2:00
p.m., eastern time, on the Business Day next succeeding a Note Distribution
Date, whether a Payment Default has occurred. If a Payment Default has occurred,
the Indenture Trustee shall, not later than 2:15 p.m., eastern time, on such
Business Day, send a notice thereof in substantially the form of Exhibit B
attached hereto to the Auction Agent, the Eligible Lender Trustee and the Surety
Provider by telecopy or similar means and, if such Payment Default is cured, the
Indenture Trustee shall immediately send a notice in substantially the form of
Exhibit C attached hereto to the Auction Agent, the Eligible Lender Trustee and
the Surety Provider by telecopy or similar means.
(b) Not later than 2:00 p.m., eastern time, on the first Note
Distribution Date for any Class of Notes occurring in each month, the Indenture
Trustee shall pay to the Auction Agent, in immediately available funds out of
amounts in the Expense Account an amount equal to the Auction Agent Fee (which
shall include the Broker-Dealer Fee) as calculated in the Auction Agent
Agreement. TMSI shall from time to time at the request of the Auction Agent
reimburse the Auction Agent for its reasonable expenses as provided in the
Auction Agent Agreement.
SECTION 2.5.3. CALCULATION OF MAXIMUM AUCTION RATE, ALL HOLD
RATE, NET LOAN RATE, ONE-MONTH LIBOR, THREE-MONTH LIBOR AND NON-PAYMENT RATE.
The Administrator shall calculate the Net Loan Rate and inform the Auction Agent
thereof in writing no later than the Business Day preceding each Auction Date.
The Auction Agent shall calculate the Maximum Auction Rate, the All Hold Rate
and One-Month LIBOR or Three-Month LIBOR, as the case may be, on each Auction
Date and shall notify the Indenture Trustee, the Eligible Lender Trustee and the
Broker-Dealers of the Net Loan Rate, the Maximum Auction Rate, the All Hold Rate
and One-Month LIBOR or Three-Month LIBOR, as the case may be, as provided in the
Auction Agent Agreement. If the ownership of the Series 1997-2 Auction Rate
Notes is no longer maintained in Book-Entry Form by the Securities Depository,
the Indenture Trustee shall calculate the Maximum Auction Rate, and the
Administrator will report to the Indenture Trustee in writing the Net Loan Rate,
on the Business Day immediately preceding the first day of each Class Interest
period commencing after the delivery of certificates representing the Series
1997-2 Auction Rate Notes pursuant to Section 2.15 of the Master Indenture. If a
Payment Default shall have occurred, the Indenture Trustee shall calculate the
Non-Payment Rate on the Class Rate Determination Date for (i) each Class
Interest Period commencing after the occurrence and during the continuance of
such Payment Default and (ii) any Class Interest Period commencing less than two
Business Days after the cure of any Payment Default. The Auction Agent shall
determine One-Month LIBOR or Three-Month LIBOR, as applicable, for each Class
Interest Period other than the first Class Interest Period; provided, that if
the ownership of the Series 1997-2 Notes is no longer maintained in Book-Entry
Form, or if a Payment Default has occurred, then the Indenture Trustee shall
determine One-Month LIBOR or Three-Month LIBOR, as applicable, for each such
Class Interest Period. The determination by the Indenture Trustee or the Auction
Agent, as the case may be, of One-Month LIBOR or Three-Month LIBOR, as
applicable, shall (in the absence of manifest error) be final and binding upon
all parties. If calculated or determined by the Auction Agent, the Auction Agent
shall promptly advise the Indenture Trustee and the Eligible Lender Trustee of
One-Month LIBOR or Three-Month LIBOR, as applicable.
SECTION 2.5.4. NOTIFICATION OF RATES, AMOUNTS AND NOTE
DISTRIBUTION DATES.
(a) [Reserved]
(b) Promptly after the Closing Date and after the beginning of
each subsequent Class Interest Period relating to each Class of Series 1997-2
Auction Rate Notes, and in any event at least 10 days prior to any Note
Distribution Date relating to a Class of Series 1997-2 Auction Rate Notes, the
Indenture Trustee shall confirm with the Auction Agent, so long as no Payment
Default has occurred and is continuing and the ownership of the Series 1997-2
Auction Rate Notes is maintained in Book- Entry Form by the Securities
Depository, (1) the date of such next Note Distribution Date relating to a Class
of Series 1997-2 Auction Rate Notes and (2) the amount payable to the Auction
Agent on the Auction Date pursuant to Section 2.5.2(b) hereof.
If any day scheduled to be a Note Distribution Date shall be
changed after the Indenture Trustee shall have given the notice or confirmation
referred to in the preceding sentence, the Indenture Trustee shall, not later
than 9:15 a.m., eastern time, on the Business Day next preceding the earlier of
the new Note Distribution Date or the old Note Distribution Date, by such means
as the Indenture Trustee deems practicable, give notice of such change to the
Auction Agent, so long as no Payment Default has occurred and is continuing and
the ownership of the Series 1997-2 Auction Rate Notes is maintained in
Book-Entry Form by the Securities Depository.
SECTION 2.5.5. AUCTION AGENT.
(a) Bankers Trust Company is hereby appointed as Initial Auction
Agent to serve as agent for the Issuer in connection with Auctions. The
Indenture Trustee and the Issuer will, and the Indenture Trustee is hereby
directed to, enter into the Initial Auction Agent Agreement with Bankers Trust
Company, as the Initial Auction Agent. Any Substitute Auction Agent shall be (i)
a bank, national banking association or trust company duly organized under the
laws of the United States of America or any state or territory thereof having
its principal place of business in the Borough of Manhattan, New York, or such
other location as approved by the Indenture Trustee and the Market Agent in
writing and having a combined capital stock or surplus of at least $50,000,000,
or (ii) a member of the National Association of Securities Dealers, Inc., having
a capitalization of at least $50,000,000, and, in either case, authorized by law
to perform all the duties imposed upon it hereunder and under the Auction Agent
Agreement. The Auction Agent may at any time resign and be discharged of the
duties and obligations created by this Second Terms Supplement by giving at
least 90 days' notice to the Indenture Trustee, the Issuer, the Surety Provider
and the Market Agent. The Auction Agent may be removed at any time by the
Indenture Trustee upon the written direction of the Surety Provider, or with the
consent of the Surety Provider, the Noteholders of 66-2/3% of the aggregate
principal amount of the Series 1997-2 Auction Rate Notes then Outstanding, and
if by such Noteholders, by an instrument signed by the Surety Provider or such
Noteholders or their attorneys and filed with the Auction Agent, the Issuer, the
Market Agent and the Indenture Trustee upon at least 90 days' notice. Neither
resignation nor removal of the Auction Agent pursuant to the preceding two
sentences shall be effective until and unless a Substitute Auction Agent has
been appointed and has accepted such appointment. If required by the Issuer or
the Market Agent, with the Trust's consent, a Substitute Auction Agent Agreement
shall be entered into with a Substitute Auction Agent. Notwithstanding the
foregoing, the Auction Agent may terminate the Auction Agent Agreement if,
within 25 days after notifying the Indenture Trustee, the Issuer, the Surety
Provider and the Market Agent in writing that it has not received payment of any
Auction Agent Fee due it in accordance with the terms of the Auction Agent
Agreement, the Auction Agent does not receive such payment.
(b) If the Auction Agent shall resign or be removed or be
dissolved, or if the property or affairs of the Auction Agent shall be taken
under the control of any state or federal court or administrative body because
of bankruptcy or insolvency, or for any other reason, the Indenture Trustee, at
the direction of the Trust (after receipt of a certificate from the Market Agent
confirming that any proposed Substitute Auction Agent meets the requirements
described in the immediately preceding paragraph), shall use its best efforts to
appoint a Substitute Auction Agent.
(c) The Auction Agent is acting as agent for the Issuer in
connection with Auctions. In the absence of bad faith or negligence on its part,
the Auction Agent shall not be liable for any action taken, suffered or omitted
in good faith or for any error of judgment made by it in the performance of its
duties under the Auction Agent Agreement. The Auction Agent shall not be liable
for any error of judgment made in good faith unless the Auction Agent shall have
been negligent in ascertaining the pertinent facts.
(d) In the event of a change in the Auction Agent Fee Rate
pursuant to Section 6.4(b) of the Auction Agent Agreement, the Auction Agent
shall give a Notice of Fee Rate Change to the Indenture Trustee, the Surety
Provider and the Eligible Lender Trustee in accordance with the Auction Agent
Agreement.
SECTION 2.5.6. BROKER-DEALERS.
(a) The Auction Agent will enter into a Broker-Dealer Agreement
with Smith Barney Inc., as the initial Broker-Dealer. An Authorized Officer of
the Administrator may, from time to time, approve one or more additional persons
to serve as Broker-Dealers under Broker-Dealer Agreements and shall be
responsible for providing such Broker-Dealer Agreements to the Indenture
Trustee, the Surety Provider and the Auction Agent, provided, however that while
Smith Barney Inc. is serving as a Broker-Dealer, Smith Barney Inc. shall have
the right to consent to the approval of any additional Broker-Dealers, which
consent will not be unreasonably withheld. The Auction Agent shall have entered
into a Broker-Dealer Agreement with each Broker-Dealer prior to the
participation of any such Broker-Dealer in any Auction.
(b) Any Broker-Dealer may be removed at any time, at the request
of an Authorized Officer of the Administrator, but there shall, at all times, be
at least one Broker-Dealer appointed and acting as such.
SECTION 2.5.7. CHANGES IN AUCTION PERIOD OR PERIODS.
(a) While any of the Series 1997-2 Notes are Outstanding, the
Issuer may, from time to time, convert the length of one or more Auction Periods
(an "Auction Period Adjustment"), in order to conform with then current market
practice with respect to similar securities or to accommodate economic and
financial factors that may affect or be relevant to the length of the Auction
Period and the Class Interest Rate borne by the Series 1997-2 Auction Rate
Notes. The Issuer shall not initiate an Auction Period Adjustment unless the
Issuer shall have received the written consent of the Market Agent and the
Surety Provider, which consents shall not be unreasonably withheld, not less
than three days nor more than 20 days prior to the effective date of an Auction
Period Adjustment. The Issuer shall initiate the Auction Period Adjustment by
giving written notice by Issuer Order to the Indenture Trustee, the Auction
Agent, the Market Agent, the Surety Provider, the Rating Agencies and the
Securities Depository in substantially the form of, or containing substantially
the information contained in, Exhibit D to this Second Terms Supplement at least
5 days prior to the Auction Date for such Auction Period.
(b) Any such adjusted Auction Period shall not be less than 28
days nor more than 91 days. If any such adjusted Auction Period will be less
than the number of days in the then current Auction Period, the notice described
above will be effective only if it is accompanied by a written statement of the
Indenture Trustee, the Eligible Lender Trustee, the Auction Agent and the
Securities Depository to the effect that they are capable of performing their
duties, if any, under this Second Terms Supplement, the Auction Agent Agreement
and any Broker-Dealer Agreement with respect to such changed Auction Period.
(c) An Auction Period Adjustment shall take effect only if (A)
the Indenture Trustee and the Auction Agent receive, by 11:00 a.m., Eastern
time, on the Business Day before the Auction Date for the first such Auction
Period, an Issuer Certificate in substantially the form attached as, or
containing substantially the same information contained in, Exhibit E to this
Second Terms Supplement, authorizing the Auction Period Adjustment specified in
such certificate along with a copy of the certificate of the Market Agent
described above in subparagraph (a) above and, if applicable, the written
statement of the Indenture Trustee, the Eligible Lender Trustee, the Auction
Agent and the Securities Depository described in subparagraph (b) above and (B)
Sufficient Bids exist as of the Auction on the Auction Date for such first
Auction Period. If the condition referred to in (A) above is not met, the Class
Interest Rate for the applicable Class of Series 1997-2 Auction Rate Notes for
the next Auction Period shall be determined pursuant to the above provisions of
this Section 2.5 and the Auction Period shall be the Auction Period determined
without reference to the proposed change. If the condition referred to in (A) is
met but the condition referred to in (B) above is not met, the Class Interest
Rate for the applicable Class of Series 1997-2 Auction Rate Notes for the next
Auction Period shall be the lesser of the Maximum Auction Rate and the Net Loan
Rate and the Auction Period shall be the Auction Period determined without
reference to the proposed change.
In connection with any Auction Period Adjustment, the Auction
Agent shall provide such further notice to such parties as is specified in
Section 2.5 of the Auction Agent Agreement.
SECTION 2.5.8. CHANGES IN THE AUCTION DATE. The Market Agent,
with the written consent of an Authorized Officer of the Administrator, may
specify an earlier or later Auction Date (but in no event more than five
Business Days earlier or later) than the Auction Date that would otherwise be
determined in accordance with the definition of "Auction Date" in Section 1.1 of
this Second Terms Supplement with respect to one or more specified Auction
Periods in order to conform with then current market practice with respect to
similar securities or to accommodate economic and financial factors that may
affect or be relevant to the day of the week constituting an Auction Date and
the Class Interest Rate borne on a Class of Series 1997-2 Auction Rate Notes.
The Market Agent shall deliver a written request for consent to such change in
the length of the Auction Date to the Issuer not less than three days nor more
than 20 days prior to the effective date of such change together with a
certificate demonstrating the need for change in reliance on such factors.
Notwithstanding any adjustments to Auction Periods that have been initiated or
effected pursuant to Section 2.5.7 hereof, the Market Agent shall specify
Auction Periods such that a Note Distribution Date for each Class of Series
1997-2 Auction Rate Notes shall occur in the months of January, April, July and
October, commencing January 1998. The Market Agent shall provide notice of its
determination to specify an earlier Auction Date for one or more Auction Periods
by means of a written notice delivered at least 10 days prior to the proposed
changed Auction Date to the Indenture Trustee, the Auction Agent, the Issuer,
the Rating Agencies and the Securities Depository. Such notice shall be
substantially in the form of, or contain substantially the information contained
in, Exhibit F to this Second Terms Supplement.
In connection with any change described in this Section 2.5.8,
the Auction Agent shall provide such further notice to such parties as is
specified in Section 2.5 of the Auction Agent Agreement.
SECTION 2.6. ADDITIONAL PROVISIONS REGARDING THE CLASS INTEREST
RATES ON THE SERIES 1997-2 NOTES. The determination of a Class Interest Rate by
the Auction Agent, the Indenture Trustee or any other Person pursuant to the
provisions of the applicable Section of this Article II shall be conclusive and
binding on the Noteholders of the Class of Series 1997-2 Notes to which such
Class Interest Rate applies, and the Issuer and the Indenture Trustee may rely
thereon for all purposes.
In no event shall the cumulative amount of interest paid or
payable on a Class of Series 1997-2 Notes (including interest calculated as
provided herein, plus any other amounts that constitute interest on the Series
1997-2 Notes of such Class under applicable law, which are contracted for,
charged, reserved, taken or received pursuant to the Series 1997- 2 Notes of
such Class or related documents) calculated from the date of issuance of the
Series 1997-2 Notes of such Class through any subsequent day during the term of
the Series 1997-2 Notes of such Class or otherwise prior to payment in full of
the Series 1997-2 Notes of such Class exceed the amount permitted by applicable
law. If the applicable law is ever judicially interpreted so as to render
usurious any amount called for under the Series 1997-2 Notes of such Class or
related documents or otherwise contracted for, charged, reserved, taken or
received in connection with the Series 1997-2 Notes of such Class, or if the
acceleration of the maturity of the Series 1997-2 Notes of such Class results in
payment to or receipt by the Noteholder or any former Noteholder of the Series
1997-2 Notes of such Class of any interest in excess of that permitted by
applicable law, then, notwithstanding any provision of the Series 1997-2 Notes
of such Class or related documents to the contrary, all excess amounts
theretofore paid or received with respect to the Series 1997-2 Notes of such
Class shall be credited on the principal balance of the Series 1997-2 Notes of
such Class (or, if the Series 1997-2 Notes of such Class have been paid or would
thereby be paid in full, refunded by the recipient thereof), and the provisions
of the Series 1997-2 Notes of such Class and related documents shall
automatically and immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called for under the
Series 1997- 2 Notes of such Class and under the related documents.
SECTION 2.7. QUALIFICATIONS OF MARKET AGENT. The Market Agent
shall be a member of the National Association of Securities Dealers, Inc., have
a capitalization of at least $50,000,000 and be authorized by law to perform all
the duties imposed upon it by this Second Terms Supplement. The Market Agent may
resign and be discharged of the duties and obligations created by this Second
Terms Supplement by giving at least 30 days' notice to the Issuer and the
Indenture Trustee, provided that such resignation shall not be effective until
the appointment of a successor market agent by the Issuer and the acceptance of
such appointment by such successor market agent. The Market Agent may be
replaced at the direction of the Issuer, by an instrument signed by an
Authorized Officer, filed with the Market Agent and the Indenture Trustee at
least 30 days before the effective date of such replacement, provided that such
replacement shall not be effective until the appointment of a successor market
agent by the Issuer and the acceptance of such appointment by such successor
market agent.
In the event that the Market Agent shall be removed or be
dissolved, or if the property or affairs of the Market Agent shall be taken
under the control of any state or federal court or administrative body because
of bankruptcy or insolvency, or for any other reason, and there is no Market
Agent and the Issuer shall not have appointed its successor as Market Agent, the
Indenture Trustee, notwithstanding the provisions of the first paragraph of this
Section, shall be deemed to be the Market Agent for all purposes of this Second
Terms Supplement until the appointment by the Issuer of the successor Market
Agent. Nothing in this Section shall be construed as conferring on the Indenture
Trustee additional duties other than as set forth herein.
ARTICLE III
DISTRIBUTIONS
Section 3.1 DISTRIBUTIONS OF INTEREST AND PRINCIPAL. The
Indenture Trustee shall make distributions from and to the several Trust
Accounts in the manner provided for in Section 5.5 of the Sale and Servicing
Agreement, as such Section may be amended from time to time.
Section 3.2 SELECTION OF NOTES TO RECEIVE PAYMENTS OF PRINCIPAL.
With respect to the Class of Series 1997-2 Auction Rate Notes entitled to
receive payments of principal the actual Notes of such Class that will receive
payments of principal on each applicable Note Distribution Date will be selected
no later than 15 days prior to the related Note Distribution Date by the
Securities Depository, pursuant to the Note Depository Agreement entered into
with respect to the Series 1997-2 Notes, by lot in such manner as the Securities
Depository in its discretion may determine and which may provide for the
selection for payment of principal in minimum denominations of $50,000, and
integral multiples of $50,000 in excess thereof.
With respect to each Class of Series 1997-2 LIBOR Rate Notes
entitled to receive payments of principal on a Note Distribution Date, the
Noteholders' Principal Distribution Amount being distributed to such Class shall
be distributed on a pro rata basis among the Note Owners of such Class as of the
related Record Date based on the Percentage Interest represented by their
respective Series 1997-2 LIBOR Rate Notes.
Notice of the specific Notes to receive payments of principal is
to be given by the Indenture Trustee by first-class mail, postage prepaid,
mailed not less than 15 days but no more than 30 days before the applicable Note
Distribution Date at the address of the applicable Noteholder appearing on the
registration books. Any defect in or failure to give such mailed notice shall
not affect the validity of proceedings for the payment of any other Notes not
affected by such failure or defect. All notices of payment are to state: (i) the
applicable Note Distribution Date; (ii) the amount of principal to be paid, and
(iii) the Class of the Notes to be paid.
The Indenture Trustee shall notify in writing, substantially in
the form of Exhibit D to the Auction Agent Agreement, the Auction Agent when any
notice of principal payment of Auction Rate Notes is sent to the Securities
Depository not later than 11:00 a.m., on the date such notice is sent.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. ISSUER FOR THIS SECOND TERMS SUPPLEMENT. This Second
Terms Supplement is adopted pursuant to the provisions of the Master Indenture.
SECTION 4.2. COUNTERPARTS. This Second Terms Supplement may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
SECTION 4.3. INDENTURE CONSTITUTES A SECURITY AGREEMENT. This
Second Terms Supplement constitutes a security agreement for the purposes of the
Uniform Commercial Code.
SECTION 4.4. GOVERNING LAW. This Second Terms Supplement shall be
governed by and construed in accordance with the laws of the State of New York.
SECTION 4.5. RATIFICATION OF MASTER INDENTURE. As supplemented by
this Second Terms Supplement and each previously executed Terms Supplement, the
Master Indenture is in all respects ratified and confirmed, and the Master
Indenture as so supplemented by this Second Terms Supplement and each previously
executed Terms Supplement shall be read, taken and construed as one and the same
instrument. Each addition to and amendment of the Master Indenture contained
herein is solely for purposes of the Series 1997-2 Notes, and shall have no
effect on any other Series of Notes issued pursuant to the Master Indenture. If
any term of this Second Terms Supplement conflicts with any term of the Master
Indenture or any previously executed Terms Supplement, this Second Terms
Supplement shall control for purposes of the Series 1997-2 Notes.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Terms Supplement to be duly executed as of the day and year first above written.
CLASSNOTES TRUST 1997-I
By: THE YORK BANK AND TRUST
COMPANY, not in its
individual capacity but
solely as Eligible Lender Trustee
By: /s/ Richard Bass
Name: Richard Bass
Title: Vice President
BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Indenture Trustee,
By: /s/ Alfia Monastra
Name: Alfia Monastra
Title: Assistant Vice President
EXHIBIT A-1
[FORM OF SERIES 1997-2 NOTES]
CLASSNOTES TRUST 1997-I
LIBOR RATE ASSET BACKED NOTES
SERIES 1997-2
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER (AS DEFINED BELOW)
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE IS NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY.
No. A-_-_ $______
FINAL
MATURITY DATED INTEREST
CLASS DATE DATE RATE CUSIP
----- ------- ----- -------- ------
A-4 LIBOR + _____%
as herein
provided
REGISTERED NOTEHOLDER: CEDE & CO
PRINCIPAL AMOUNT:
CLASSNOTES TRUST 1997-I, a Pennsylvania business trust (the "Issuer"),
for value received, promises to pay, from the sources herein described, to the
Registered Noteholder identified above, or registered assigns, upon presentation
and surrender hereof at the Corporate Trust Office of Bankers Trust Company, as
Paying Agent, or at the principal office of any successor or additional Paying
Agent, the Principal Amount identified above on the Final Maturity Date
identified above, and to pay to the registered owner hereof, interest and
principal hereon in lawful money of the United States of America at the Class
Interest Rate on the dates as provided herein. Unless otherwise defined in this
Series 1997-2 Note, capitalized terms used in this Series 1997-2 Note shall have
the respective meanings given to such terms in the Master Indenture dated as of
March 21, 1997 (the "Master Indenture"), as supplemented by the Second Terms
Supplement dated as of December 24, 1997 (the "Second Terms Supplement" and,
together with the Master Indenture, the "Indenture"), between the Issuer and
Bankers Trust Company, as Indenture Trustee.
This Series 1997-2 Note is one of a duly authorized issue of notes of
the Issuer designated as "ClassNotes Trust 1997-I Asset-Backed Notes, Series
1997-2" (herein referred to by specific Class as the "Series 1997-2, Class A-4
Notes" and collectively as the "Series 1997-2 Notes"), in the aggregate
principal amount of $_________ issued under the Indenture. The Series 1997-2
Notes are issued to finance the acquisition and consolidation of Financed
Student Loans, and to make certain deposits to the Pledged Accounts.
The Master Indenture provides for the issuance, from time to time,
under the conditions, limitations and restrictions set forth therein, of
additional notes on a parity with all Series of obligations issued or to be
issued under the Indenture, for the purpose of providing additional funds for
the acquisition and consolidation of Financed Student Loans (said additional
notes, together with Series 1997-2 Notes, being collectively referred to herein
as the "Notes").
The Notes are secured under the Indenture which, together with certain
other documents, assigns to the Indenture Trustee for the benefit of the
Noteholders all the rights and remedies of the Issuer under certain Financed
Student Loans and rights under various contracts providing for the issuance,
guarantee and servicing of such Financed Student Loans. Reference is hereby made
to the Indenture for the provisions, among others, with respect to the custody
and application of the proceeds of the Notes, definitions of certain capitalized
terms used in this Series 1997-2 Note, the nature and the extent of the liens
and security of the Indenture, the collection and disposition of revenues, the
funds charged with and pledged to the payment of the principal of and the
interest on the Notes, the terms and conditions under which additional Notes may
be issued, the rights, duties and immunities of the Indenture Trustee, the
rights of the registered owners of the Notes, and the rights and obligations of
the Issuer. By the acceptance of this Series 1997-2 Note, the registered owner
hereof assents to all of the provisions of the Indenture.
During the Class Initial Period, this Series 1997-2 Note shall bear
interest at the Class Initial Rate for the Series 1997-2 Notes of this Class.
Thereafter, this Series 1997-2 Note shall bear interest at the Class Interest
Rate equal to (i) the lesser of the Net Loan Rate and (ii) One-Month LIBOR plus
the Margin set forth in the Second Terms Supplement, subject to the limitations
set forth therein. Interest at a Class Interest Rate established pursuant to the
Second Terms Supplement shall be computed for the actual number of days elapsed
on the basis of a year consisting of 360 days.
In no event shall the Class Interest Rate on this Series 1997-2 Note
exceed the maximum rate set forth in the Second Terms Supplement.
Distributions of principal and interest on this Series 1997-2 Note
shall be made on each month in accordance with the terms of the Second Terms
Supplement and the First Supplemental Sale and Servicing Agreement.
The Noteholder of this Series 1997-2 Note shall have no right to
enforce the provisions of the Indenture or to institute action to enforce the
covenants therein, or to take any action with respect to any Event of Default
under the Indenture, or to institute, appear in or defend any suit or other
proceeding with respect thereto, except as provided in the Indenture.
The transfer of this Series 1997-2 Note may be registered only upon
surrender hereof to the Indenture Trustee together with an assignment duly
executed by the registered owner or its attorney or legal representative in such
form as shall be satisfactory to the Indenture Trustee. Upon any such
registration of transfer of this Series 1997-2 Note and subject to the payment
of any fees and charges as provided by the Indenture, the Issuer shall execute
and the Indenture Trustee shall authenticate and deliver in exchange for this
Series 1997-2 Note a new Series 1997-2 Note or Notes registered in the name of
the transferee, in any denomination or denominations authorized by the
Indenture, of the same maturity and in an aggregate principal amount equal to
the unredeemed principal amount of this Series 1997-2 Note and bearing the same
interest as this Series 1997-2 Note.
It is hereby certified, recited and declared that all acts, conditions
and things required to have happened, to exist and to have been performed
precedent to and in the execution and delivery of the Indenture and issuance of
this Series 1997-2 Note have happened, do exist and have been performed in due
time, form and manner as required by law.
This Series 1997-2 Note shall not be valid or become obligatory for
any purpose or be entitled to any security or benefit under the Indenture until
the certificate of authentication hereon shall have been manually signed by the
Indenture Trustee.
IN WITNESS WHEREOF, the Issuer has caused this Series 1997-2 Note to
be executed in its name by the manual or facsimile signature of an Authorized
Officer.
CLASSNOTES TRUST 1997-I
By: THE YORK BANK AND TRUST COMPANY,
not in its individual capacity but
solely as Eligible Lender Trustee
By:_____________________________
CERTIFICATE OF AUTHENTICATION
This Note is one of the Series 1997-2 Notes designated in and issued
under the provisions of the within mentioned Indenture.
BANKERS TRUST COMPANY
New York, New York, as
Indenture Trustee
By:
Authorized Representative
Date of Authentication:
- ------------------------
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto _________________________________________________, the within Note and
irrevocably appoints , attorney-in-fact, to transfer the within Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated: ___________ ___________________________
NOTICE: The signature to Signature Guaranteed:
this assignment must
correspond with the name as __________________________
it appears upon the face of
the within Note in every par-
ticular, without any alter-
ation whatsoever.
Name and Address:__________________________
Tax Identification Number or
Social Security Number(s):___________________________
[END OF FORM OF SERIES 1997-2 LIBOR RATE NOTE]
EXHIBIT A-2
[FORM OF SERIES 1997-2 NOTES]
CLASSNOTES TRUST 1997-I
AUCTION RATE ASSET BACKED NOTES
SERIES 1997-2
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER (AS DEFINED BELOW)
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS NOTE IS NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY.
No. A-_-_ $______
FINAL
MATURITY DATED INTEREST
CLASS DATE DATE RATE CUSIP
----- -------- ----- -------- -----
Auction Rate as
provided in the
Second Terms
Supplement
REGISTERED NOTEHOLDER: CEDE & CO.
PRINCIPAL AMOUNT:
CLASSNOTES TRUST 1997-I, a Pennsylvania business trust (the "Issuer"),
for value received, promises to pay, from the sources herein described, to the
Registered Noteholder identified above, or registered assigns, upon presentation
and surrender hereof at the Corporate Trust Office of Bankers Trust Company, as
Paying Agent, or at the principal office of any successor or additional Paying
Agent, the Principal Amount identified above on the Final Maturity Date
identified above, and to pay to the registered owner hereof, interest and
principal hereon in lawful money of the United States of America at the Class
Interest Rate on the dates as provided herein. Unless otherwise defined in this
Series 1997-2 Note, capitalized terms used in this Series 1997-2 Note shall have
the respective meanings given to such terms in the Master Indenture dated as of
March 21, 1997 (the "Master Indenture"), as supplemented by the Second Terms
Supplement dated as of December 24, 1997 (the "Second Terms Supplement" and,
together with the Master Indenture, the "Indenture"), between the Issuer and
Bankers Trust Company, as Indenture Trustee.
This Series 1997-2 Note is one of a duly authorized issue of notes of
the Issuer designated as "ClassNotes Trust 1997-I Asset-Backed Notes, Series
1997-2" (herein referred to by specific Class as the "Series 1997-2, Class A-_
Notes" and collectively as the "Series 1997-2 Notes"), in the aggregate
principal amount of $ issued under the Indenture. The Series 1997-2 Notes are
issued to finance the acquisition and consolidation of Financed Student Loans,
and to make certain deposits to the Pledged Accounts.
The Master Indenture provides for the issuance, from time to time,
under the conditions, limitations and restrictions set forth therein, of
additional notes on a parity with all Series of obligations issued or to be
issued under the Indenture, for the purpose of providing additional funds for
the acquisition and consolidation of Financed Student Loans (said additional
notes, together with Series 1997-2 Notes, being collectively referred to herein
as the "Notes").
The Notes are secured under the Indenture which, together with certain
other documents, assigns to the Indenture Trustee for the benefit of the
Noteholders all the rights and remedies of the Issuer under certain Financed
Student Loans and rights under various contracts providing for the issuance,
guarantee and servicing of such Financed Student Loans. Reference is hereby made
to the Indenture for the provisions, among others, with respect to the custody
and application of the proceeds of the Notes, definitions of certain capitalized
terms used in this Series 1997-2 Note, the nature and the extent of the liens
and security of the Indenture, the collection and disposition of revenues, the
funds charged with and pledged to the payment of the principal of and the
interest on the Notes, the terms and conditions under which additional Notes may
be issued, the rights, duties and immunities of the Indenture Trustee, the
rights of the registered owners of the Notes, and the rights and obligations of
the Issuer. By the acceptance of this Series 1997-2 Note, the registered owner
hereof assents to all of the provisions of the Indenture.
During the Class Initial Period, this Series 1997-2 Note shall bear
interest at the Class Initial Rate for the Series 1997-2 Notes of this Class.
Thereafter until an Auction Period Adjustment, if any, this Series 1997-2 Note
shall bear interest at a Class Interest Rate based on an Auction Period that
shall, until adjusted pursuant to the Second Terms Supplement, generally consist
of 28 days, all as determined in the Second Terms Supplement. Interest at a
Class Interest Rate established pursuant to the Second Terms Supplement shall be
computed for the actual number of days elapsed on the basis of a year consisting
of 360 days.
The Class Interest Rate to be borne by this Series 1997-2 Note after
the Class Initial Period for each Auction Period, if any, or an Auction Period
Adjustment, if any, shall be the lesser of (i) the Net Loan Rate in effect for
such Auction Period and (ii) the Auction Rate determined in accordance with the
applicable provisions of the Second Terms Supplement.
In no event shall the Class Interest Rate on this Series 1997-2 Note
exceed the maximum rate set forth in the Second Terms Supplement.
The Class Interest Period, including, without limitation, an Auction
Period, the applicable Class Interest Rate, the method of determining the
applicable Class Interest Rate on each of the Series 1997-2 Notes and the
Auction Procedures related thereto, including, without limitation, required
notices thereof to the Noteholders or Existing Noteholders of the Series 1997-2
Notes, an Auction Period Adjustment, a change in the Auction Date and the Note
Distribution Dates will be determined in accordance with the terms, conditions
and provisions of the Second Terms Supplement and the Auction Agent Agreement,
to which terms, conditions and provisions specific reference is hereby made, and
all of which terms, conditions and provisions are hereby specifically
incorporated herein by reference.
Distributions of principal and interest on this Series 1997-2 Note
shall be made in accordance with the terms of the Second Term Supplement and the
First Supplemental Sale and Servicing Agreement.
The Noteholder of this Series 1997-2 Note shall have no right to
enforce the provisions of the Indenture or to institute action to enforce the
covenants therein, or to take any action with respect to any Event of Default
under the Indenture, or to institute, appear in or defend any suit or other
proceeding with respect thereto, except as provided in the Indenture.
The transfer of this Series 1997-2 Note may be registered only upon
surrender hereof to the Indenture Trustee together with an assignment duly
executed by the registered owner or its attorney or legal representative in such
form as shall be satisfactory to the Indenture Trustee. Upon any such
registration of transfer of this Series 1997-2 Note and subject to the payment
of any fees and charges as provided by the Indenture, the Issuer shall execute
and the Indenture Trustee shall authenticate and deliver in exchange for this
Series 1997-2 Note a new Auction Rate Note or Notes registered in the name of
the transferee, in any denomination or denominations authorized by the
Indenture, of the same maturity and in an aggregate principal amount equal to
the unredeemed principal amount of this Series 1997-2 Note and bearing the same
interest as this Series 1997-2 Note.
It is hereby certified, recited and declared that all acts, conditions
and things required to have happened, to exist and to have been performed
precedent to and in the execution and delivery of the Indenture and issuance of
this Series 1997-2 Note have happened, do exist and have been performed in due
time, form and manner as required by law.
This Series 1997-2 Note shall not be valid or become obligatory for
any purpose or be entitled to any security or benefit under the Indenture until
the certificate of authentication hereon shall have been manually signed by the
Indenture Trustee.
IN WITNESS WHEREOF, the Issuer has caused this Series 1997-2 Note to
be executed in its name by the manual or facsimile signature of an Authorized
Officer.
CLASSNOTES TRUST 1997-I
By: THE YORK BANK AND TRUST COMPANY,
not in its individual capacity but
solely as Eligible Lender Trustee
By:_____________________________
CERTIFICATE OF AUTHENTICATION
This Note is one of the Series 1997-2 Notes designated in and issued
under the provisions of the within mentioned Indenture.
BANKERS TRUST COMPANY
New York, New York, as
Indenture Trustee
By:
Authorized Representative
Date of Authentication:
- --------------------------
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto __________________________________________________, the within Note and
irrevocably appoints , attorney-in-fact, to transfer the within Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated: ___________ ___________________________
NOTICE: The signature to Signature Guaranteed:
this assignment must
correspond with the name as __________________________
it appears upon the face of
the within Note in every par-
ticular, without any alter-
ation whatsoever.
Name and Address:__________________________
Tax Identification Number or
Social Security Number(s):___________________________
[END OF FORM OF SERIES 1997-2 AUCTION RATE NOTE]
EXHIBIT B
CLASSNOTES TRUST 1997-I
ASSET BACKED NOTES, SERIES 1997-2, CLASS A-_
NOTICE OF PAYMENT DEFAULT
NOTICE IS HEREBY GIVEN that an Event of Default has occurred and is
continuing with respect to the Notes identified above. The next Auction for the
Series 1997-2, Class A-_ Notes will not be held. The Auction Rate for the Series
1997-2, Class A-_ Notes for the next succeeding Interest Period shall be the
Non-Payment Rate.
BANKERS TRUST COMPANY,
as Indenture Trustee
Dated: By:______________________________
Name:
Title:
EXHIBIT C
CLASSNOTES TRUST 1997-I
ASSET BACKED NOTES, SERIES 1997-2, CLASS A-_
NOTICE OF CURE OF PAYMENT DEFAULT
NOTICE IS HEREBY GIVEN that an Event of Default with respect to the
Notes identified above has been waived or cured. The next Note Distribution
Payment Date is and the next Auction Date is .
BANKERS TRUST COMPANY,
as Indenture Trustee
Dated: By:
Name:
Title:
EXHIBIT D
CLASSNOTES TRUST 1997-I
ASSET BACKED NOTES, SERIES 1997-2, CLASS A-_
NOTICE OF PROPOSED AUCTION PERIOD ADJUSTMENT
Notice is hereby given that the Issuer proposes to change the length
of one or more Auction Periods pursuant to the Second Terms Supplement as
follows:
1. The change shall take effect on the Note Distribution Date for the
current Auction Period and the date of commencement of the next Auction Period
(the "Effective Date").
2. The Auction Period Adjustment in Paragraph 1 shall take place only
if (A) the Indenture Trustee and the Auction Agent receive, by 11:00 a.m.,
eastern time, on the Business Day before the Auction Date for the Auction Period
commencing on the Effective Date, a certificate from the Market Agent, as
required by the Second Terms Supplement authorizing the change in length of one
or more Auction Periods and (B) Sufficient Bids exist on the Auction Date for
the Auction Period commencing on the Effective Date.
3. If the condition referred to in (A) above is not met, the Auction
Rate for the Auction Period commencing on the Effective Date will be determined
pursuant to the Auction Procedures and the Auction Period shall be the Auction
Period determined without reference to the proposed change. If the condition
referred to in (A) is met but the condition referred to in (B) above is not met,
the Auction Rate for the Auction Period commencing on the Effective Date shall
be the Maximum Auction Rate and the Auction Period shall be the Auction Period
determined without reference to the proposed change.
4. It is hereby represented, upon advice of the Auction Agent for the
Notes described herein, that there were Sufficient Bids for such Notes at the
Auction immediately preceding the date of this Notice.
5. Terms not defined in this Notice shall have the meanings set forth
in the Second Terms Supplement entered into in connection with the captioned
Notes.
CLASSNOTES TRUST 1997-I
By: THE YORK BANK AND TRUST COMPANY,
not in its individual capacity but
solely as Eligible Lender Trustee
By:__________________________________
Name:
Title:
Dated:
EXHIBIT E
CLASSNOTES TRUST 1997-I
ASSET BACKED NOTES, SERIES 1997-2, CLASS A-_
NOTICE ESTABLISHING AUCTION PERIOD ADJUSTMENT
Notice is hereby given that the Issuer hereby establishes new lengths
for one or more Auction Periods pursuant to the Second Terms Supplement:
l. The change shall take effect on ___________, the Note Distribution
Date for the current Auction Period and the date of commencement of the next
Auction Period (the "Effective Date").
2. For the Auction Period commencing on the Effective Date, the Note
Distribution Date shall be _____________________, or the next succeeding
Business Day if such date is not a Business Day.
3. For Auction Periods occurring after the Auction Period the Note
Distribution Dates shall be [___________________ (date) and every _____________
(number) _______________ (day of week) thereafter] [every _______________
(number) _______________ (day of week) after the date set forth in paragraph 2
above], or the next Business Day if any such day is not a Business Day;
provided, however, that the length of subsequent Auction Periods shall be
subject to further change hereafter as provided in Section 2.5.7 of the Second
Terms Supplement.
4. The changes described in paragraphs 2 and 3 above shall take place
only upon delivery of this Notice and the satisfaction of other conditions set
forth in the Second Terms Supplement and our prior notice dated ______________
regarding the proposed change.
5. Terms not defined in this Notice shall have the meanings set forth
in the Second Terms Supplement relating to the captioned Notes.
CLASSNOTES TRUST 1997-I
By: THE YORK BANK AND TRUST COMPANY,
not in its individual capacity but
solely as Eligible Lender Trustee
By:__________________________________
Name:
Title:
Dated:
EXHIBIT F
CLASSNOTES TRUST 1997-I
ASSET BACKED NOTES, SERIES 1997-2, CLASS A-_
NOTICE OF CHANGE IN AUCTION DATE
Notice is hereby given by SMITH BARNEY INC., as Market Agent for the
captioned Notes, that with respect to the captioned Notes, the Auction Date is
hereby changed as follows:
l. With respect to the captioned Notes, the definition of "Auction
Date" shall be deemed amended by substituting "_________________ (number)
Business Day" in the second line thereof.
2. This change shall take effect on ______________ which shall be the
Auction Date for the Auction Period commencing on ______________.
3. The Auction Date for the captioned Notes shall be subject to
further change hereafter as provided in the Second Terms Supplement.
4. Terms not defined in this Notice shall have the meanings set forth
in the Second Terms Supplement relating to the captioned Notes.
SMITH BARNEY INC., as Market Agent
Dated: By:
Name:
Title: