Exhibit 4.2
EXECUTION COPY
SECOND TRUST SUPPLEMENT
SECOND TRUST SUPPLEMENT, dated as of December 23, 1997, by and among
TRANS-WORLD INSURANCE COMPANY d/b/a EDUCAID, an Arizona insurance company
("TWIC" or a "Depositor"), CLASSNOTES, INC., a Delaware corporation
("ClassNotes" or a "Depositor"), and 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") under a Trust
Agreement dated as of March 21, 1997 (as amended and supplemented from time to
time, the "Trust Agreement") relating to ClassNotes Trust 1997-I, a Pennsylvania
business trust (the "Trust").
PRELIMINARY STATEMENT
Section 11.1(d) of the Trust Agreement provides, among other things,
that without the consent of any Certificateholders but with prior notice to the
Rating Agencies and the prior written consent of the Surety Provider, the
Depositors and the Eligible Lender Trustee may enter into a Trust Supplement to
set forth the terms of an additional Class of Trust Certificates. The Trust has
duly authorized the creation of a series of Trust Certificates to be known as
the Trust's Class 2 Certificates (the "Class 2 Certificates"), the Depositors
have delivered the required notice to the Rating Agencies and the Depositors and
the Eligible Lender Trustee are executing and delivering this Second Trust
Supplement in order to provide for the Class 2 Certificates. The Class 2
Certificates shall be Auction Date Certificates (as defined in Appendix A to the
Trust Agreement). Appendix A to the Trust Agreement contains general Definitions
and usage and provides that certain definitions that are to apply to a specific
Class of Certificates be set forth in the related Trust Supplement. Appendix B
to the Trust Agreement contains general Certificate Auction Procedures that
apply to all Classes of Auction Date Certificates and provides that certain
definitions that are to apply to a specific Class of Auction Date Certificate be
set forth in the related Trust supplement. Therefore, this Second Trust
Supplement is setting forth certain definitions and Certificate Auction
Procedures for the Class 2 Certificates. Except as otherwise specified herein,
or as the context may require, capitalized terms used but not defined herein are
defined in Appendix A or Appendix B to the Trust Agreement, which Appendix A
also contains rules as to usage that shall be applicable herein.
ARTICLE I.
DEFINITIONS
"AUCTION DATE" means, initially, January 13, 1998 and thereafter, the
Business Day immediately preceding the first day of each Auction Period for each
Class of Certificates, other than:
(i) each Auction Period commencing after the ownership of
Certificates is no longer maintained in Book-Entry Form by
the Securities Depository;
(ii) each Auction Period commencing after and during the
continuance of an Event of Default; or
(iii) 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 2.2.2 of Appendix B to the Trust Agreement.
"AUTHORIZED DENOMINATIONS" means $1,000,000 and integral multiples of
$50,000 in excess thereof.
"CERTIFICATE INITIAL RATE" means 5.96% per annum.
"CERTIFICATE INITIAL RATE ADJUSTMENT DATE" means January 14, 1998.
"CERTIFICATE DATE" means the Certificate Initial Rate for the First
Interest period and, with respect to any other Interest Period, the interest
rate per annum (computed on the basis of the actual number of days elapsed in
such Interest Period over a year of 360 days) equal to the rate determined
pursuant to the Auction procedures set forth in the Trust Agreement.
"CERTIFICATE SURETY BOND" means the surety bond dated December 24,
1997 issued by the Surety Provider in favor of the Eligible Lender Trustee on
behalf of the Certificateholders of the Class 2 Certificates.
"CLOSING DATE" means December 24, 1997.
"FINAL MATURITY DATE" means April 1, 2026.
"AUTHORIZED DENOMINATIONS" means, with respect to the Series 1997-2
Certificates, $1,000,000 and integral multiples of $50,000 in excess thereof.
"CLOSING DATE" means, December 24, 1997, or such other date as the
Depositors may determine.
"FIRST SUPPLEMENTAL SALE AND SERVICING AGREEMENT" means the First
Supplemental Sale and Servicing Agreement dated as of December 24, 1997 among
the Issuer, the Depositors, the Eligible Lender Trustee and the Master
Servicers, as amended
"INITIAL CERTIFICATE BALANCE" means $15,000,000.
"INITIAL CERTIFICATE RATE" means 5.96% per annum.
"INITIAL CERTIFICATE RATE ADJUSTMENT DATE" means January 14, 1998.
"INTEREST PERIOD" means (i) initially, the period from and including
the Closing Date through January 13, 1998 and (ii) thereafter, each period
commencing on a Certificate Rate Adjustment Date and ending on the day before
(a) the next Certificate Rate Adjustment Date for the Class 2 Certificates or
9b) the Final Maturity Date for the Class 2 Certificates.
"SECOND TRUST SUPPLEMENT" means this Second Trust Supplement, as from
time to time amended or supplemented.
"SERIES 1997-2 NOTES" means the $265,000,000 aggregate principal
amount of the Trust's Asset Backed Notes, Series 1997- 2.
"TERMS AGREEMENT" means Terms Agreement dated as of December 19, 1997
among Smith Barney Inc., the Trust, the Depositors and the Money Store Inc.
ARTICLE II.
ATHENTICATION AND TERMS
SECTION 2.1. AUTHENTICATION OF TRUST CERTIFICATES. Concurrently with
the contribution of Financed Student Loans to the Trust pursuant to the First
Supplemental Sale and Servicing Agreement and the issuance of the Series 1997-2
Notes, the Eligible Lender Trustee shall cause Trust Certificates in an
aggregate principal amount of $15,000,000 to be executed on behalf of the Trust,
authenticated and delivered to or upon the written order of the Depositors,
signed by their chairman of the board, their president or any vice president,
without further action by the Depositors, in Authorized Denominations. Such
Trust Certificates shall be designated as the Class 2 Certificates.
SECTION 2.2 TERMS OF THE CLASS 2 CERTIFICATES. Except as otherwise set
forth herein, the terms of the Class 2 Certificates shall be as set forth in the
Trust Agreement, including Appendix A and Appendix B thereto.
ARTICLE III
MISCELLANEOUS
SECTION 3.1. AUTHORITY FOR THIS SECOND TRUST SUPPLEMENT. This Second
Trust Supplement is adopted pursuant to the provisions of the Trust Agreement.
SECTION 3.2. PURCHASER'S LETTER. Notwithstanding anything set forth in
the Trust Agreement to the contrary, the Initial Purchaser (as defined in the
Purchase Agreement) shall not be required to execute and deliver a Purchaser's
Letter pursuant to Section 3.5(b) of the Trust Agreement in connection with its
acquisition of the Class 2 Trust Certificates.
SECTION 3.3. COUNTERPARTS. This Second Trust Supplement may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
SECTION 3.4. GOVERNING LAW. This Second Trust Supplement shall be
governed by and construed in accordance with the internal laws of the
Commonwealth of Pennsylvania, without giving effect to principles of conflict of
laws.
SECTION 3.4. RATIFICATION OF TRUST AGREEMENT. As supplemented by this
Second Trust Supplement, the Trust Agreement is in all respects ratified and
confirmed, and the Trust Agreement as so supplemented by this Second Trust
Supplement shall be read, taken and construed as one and the same instrument.
Each addition to and amendment of the Trust Agreement contained herein is solely
for purposes of the Class 2 Certificates, and shall have no effect on any other
Certificates issued pursuant to the Trust Agreement. If any term of this Second
Trust Supplement conflicts with any term of the Trust Agreement, this Second
Trust Supplement shall control for purposes of the Class 2 Certificates.
SECTION 3.5. PLACE OF EXECUTION. This Second Trust Supplement shall be
deemed for all purposes executed and delivered at the Eligible Lender Trustee's
corporate trust office in York County, Pennsylvania.
SECTION 3.6. EFFECTIVENESS. This Second Trust Supplement shall become
effective upon filing with the Pennsylvania Department of State.
IN WITNESS WHEREOF, the parties hereto have caused this Second Trust
Supplement to be duly executed as of the day and year first above written.
THE YORK DEPOSIT BANK AND TRUST COMPANY
BY:/s/ Donald M. Whistler
Name: Donald M. Whistler
Title: Vice President and Senior Trust
Officer
TRANS-WORLD INSURANCE COMPANY,
d/b/a Educaid
BY:/s/ Michael Benoff
Name: Michael Benoff
Title: Senior Vice President
CONSENTED TO:
AMBAC ASSURANCE CORPORATION, CLASSNOTES, INC.
as Surety Provider
By:/s/ Michael Benoff
Name: Michael Benoff
Title: Senior Vice President
By:/s/ Richard Marsh
Name: Richard Marsh
Title: First Vice President