EXHIBIT 99.6
EXECUTION COPY
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AUCTION AGENT AGREEMENT
by and among
EDUCATION FUNDING CAPITAL TRUST-III
as Issuer,
FIFTH THIRD BANK
as Indenture Trustee,
and
DEUTSCHE BANK TRUST COMPANY AMERICAS
as Auction Agent
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Dated as of October 1, 2003
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Relating to
Education Funding Capital Trust-III
$485,000,000 Education Loan Backed Notes
consisting of
Education Loan Backed Notes, Series A-4
Education Loan Backed Notes, Series A-5
Education Loan Backed Notes, Series A-6
Education Loan Backed Notes, Series A-7
Education Loan Backed Notes, Series A-8
Education Loan Backed Notes, Series B-1
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Auction Agent Agreement
TABLE OF CONTENTS
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Page
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SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION.............................. 1
1.1 Terms Defined by Reference to Indenture............................. 1
1.2 Terms Defined Herein................................................ 1
1.3 Rules of Construction............................................... 3
SECTION 2. THE AUCTION........................................................ 3
2.1 Interest Rate on Auction Rate Notes; Incorporation by
Reference of Auction Procedures and Settlement Procedures........... 3
2.2 Preparation of Each Auction; Maintenance of
Existing Owner Registry............................................. 4
2.3 All Hold Rate, Maximum Rate, Net Loan Rate,
Applicable LIBOR Rate............................................... 6
2.4 Auction Schedule.................................................... 7
2.5 Changes in Auction Periods or Auction Date.......................... 8
2.6 Notice of Fee Rate Change........................................... 9
2.7 Notices to Existing Owners.......................................... 9
2.8 Payment Default..................................................... 9
2.9 Broker-Dealers...................................................... 9
2.10 Access to and Maintenance of Auction Records........................ 9
SECTION 3. TERM OF AGREEMENT................................................. 11
SECTION 4. INDENTURE TRUSTEE................................................. 11
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE INDENTURE TRUSTEE........... 12
SECTION 6. THE AUCTION AGENT................................................. 12
6.1 Duties and Responsibilities........................................ 12
6.2 Rights of the Auction Agent........................................ 13
6.3 Auction Agent's Disclaimer......................................... 13
6.4 Compensation, Remedies and Indemnification......................... 13
6.5 Compensation of the Broker-Dealers................................. 14
SECTION 7. MISCELLANEOUS..................................................... 15
7.1 Governing Law...................................................... 15
7.2 Communications..................................................... 15
7.3 Entire Agreement................................................... 16
7.4 Benefits........................................................... 16
7.5 Amendment; Waiver.................................................. 17
7.6 Successors and Assigns............................................. 17
7.7 Severability....................................................... 17
7.8 Execution in Counterparts.......................................... 17
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Auction Agent Agreement
Exhibits
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Exhibit A -- List of Initial Broker-Dealers
Exhibit B -- Notice of Ratings
Exhibit C -- Notice of Notes Outstanding
Exhibit D -- Notice of Fee Rate Change
Exhibit E -- Notice of a Payment Default
Exhibit F -- Settlement Procedures
Exhibit G -- Notice of Continuation of Auction Period
Exhibit H -- Notice of Interest Rate
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AUCTION AGENT AGREEMENT
THIS AUCTION AGENT AGREEMENT, dated as of October 1, 2003 (this "Auction
Agent Agreement"), is being entered into by and among EDUCATION FUNDING CAPITAL
TRUST-III, a Delaware statutory trust (together with any successors or assigns,
the "Issuer"), FIFTH THIRD BANK, an Ohio banking corporation, as Indenture
Trustee (together with any successors or assigns, the "Indenture Trustee") under
a certain Indenture of Trust, as hereinafter defined and described, and DEUTSCHE
BANK TRUST COMPANY AMERICAS, a New York banking corporation (together with its
successors and assigns, the "Auction Agent"), acting not in its individual
capacity but solely as agent for the Issuer.
W I T N E S S E T H:
WHEREAS, the Issuer proposes to cause the Indenture Trustee to authenticate
and deliver $485,000,000 aggregate principal amount of its Education Loan Backed
Notes, in six series designated Education Loan Backed Notes, Series A-4 (the
"Series A-4 Notes"), Education Loan Backed Notes, Series A-5 (the "Series A-5
Notes"), Education Loan Backed Notes, Series A-6 (the "Series A-6 Notes"),
Education Loan Backed Notes, Series A-7 (the "Series A-7 Notes"), Education Loan
Backed Notes, Series A-8 (the "Series A-8 Notes"), and Education Loan Backed
Notes, Series B-1 (the "Series B-1 Notes")(the "Series B-1 Notes" and, together
with the Series A-4 Notes, the Series A-5 Notes, the Series A-6 Notes, the
Series A-7 Notes and the Series A-8 Notes, the "Auction Rate Notes"). The
Auction Rate Notes are being issued under an Indenture of Trust dated as of
October 1, 2003 (the "Indenture"); and
WHEREAS, pursuant to Appendix B to the Indenture, the Auction Agent has
been appointed to act in the capacities set forth in this Auction Agent
Agreement; and
WHEREAS, the Indenture Trustee is entering into this Auction Agent
Agreement at the direction of the Issuer pursuant to the terms of the Indenture;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Issuer, the Indenture Trustee and the Auction Agent agree
as follows:
Section 1. Definitions and Rules of Construction.
1.1 Terms Defined by Reference to Indenture. Capitalized terms used
herein and not otherwise defined herein shall have the meanings given such terms
in the Indenture.
1.2 Terms Defined Herein. As used herein and in the Settlement
Procedures (as defined below), the following terms shall have the following
meanings, unless the context otherwise requires:
"Auction" shall have the meaning specified in Section 2.1 hereof.
"Auction Agent Fee" shall have meaning specified in Section 6.4(a)
hereof.
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Auction Agent Agreement
"Auction Procedures" shall mean the provisions that are set forth in
Section 2.02 of Appendix B to the Indenture.
"Authorized Auction Agent Officer" shall mean, with respect to the
Auction Agent, each Director, Vice President, Assistant Vice President and
Associate of the Auction Agent and every other officer of the Auction Agent
assigned to its Corporate Trust and Agency Group and every other officer or
employee of the Auction Agent designated as an "Authorized Auction Agent
Officer" for purposes hereof in a communication to the Indenture Trustee and the
Issuer.
"Authorized Issuer Officer" shall mean, with respect to the Issuer,
means any vice president, trust officer or other officer of the Co-Owner Trustee
authorized to sign the document or take the action in question and every other
officer or employee of the Issuer designated as an "Authorized Issuer Officer"
for purposes hereof in a communication to the Indenture Trustee and the Auction
Agent.
"Authorized Trustee Representative" shall mean each vice president,
assistant vice president or trust officer in the corporate trust department of
the Indenture Trustee and every other officer or employee of the Indenture
Trustee designated as an "Authorized Trustee Representative" for purposes hereof
in a written communication to the Auction Agent and the Issuer.
"Broker-Dealer" shall mean, with respect to each Series of Auction
Rate Notes, a Person listed as a Broker-Dealer for such Series on Exhibit A
hereto, as such Exhibit A may be amended from time to time.
"Broker-Dealer Agreements" shall mean each agreement between the
Auction Agent and a Broker-Dealer substantially in the form of the Broker-Dealer
Agreements dated as of October 1, 2003 between the Auction Agent and each of
Citigroup Global Markets Inc. and Xxxxxxx X. Xxxxx & Co.
"Broker-Dealer Fee" shall have the meaning specified in Section 6.5(a)
hereof.
"Broker-Dealer Fee Rate" shall have the meaning specified in Section
6.5(b) hereof.
"Existing Owner Registry" shall mean the register maintained by the
Auction Agent pursuant to Section 2.2 hereof.
"Notice of Failure to Deliver or Make Payment" shall mean a notice
substantially in the form of Exhibit D to the Broker-Dealer Agreement.
"Notice of Fee Rate Change" shall mean a notice substantially in the
form of Exhibit D hereof.
"Notice of Payment Default" shall mean a notice substantially in the
form of Exhibit E hereto.
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"Notice of Ratings" shall mean a notice substantially in the form of
Exhibit B hereto.
"Notice of Notes Outstanding" shall mean a notice substantially in the
form of Exhibit C hereto.
"Notice of Transfer" shall mean a notice substantially in the form of
Exhibit C to the Broker-Dealer Agreement.
"Participant" shall mean a member of, or participant in, the
Securities Depository.
"Settlement Procedures" shall mean the Settlement Procedures attached
as Exhibit F hereto.
1.3 Rules of Construction. Unless the context or use indicates
another or different meaning or intent, the following rules shall apply to the
construction of this Auction Agent Agreement:
(a) Words importing the singular number shall include the plural
number and vice versa.
(b) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Auction Agent Agreement
nor shall they affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto" and other words of
similar import refer to this Auction Agent Agreement as a whole.
(d) All references herein to a particular time of day shall be to
New York City time.
(e) The rights and duties of the Indenture Trustee, the Auction
Agent and the Issuer under this Auction Agent Agreement shall apply to each
Series of the Auction Rate Notes, but separately in each case. References
to "Auction Rate Notes" shall, unless the context clearly contemplates a
reference to all the Auction Rate Notes, be deemed to refer only to a
particular Series of Auction Rate Notes.
Section 2. The Auction.
2.1 Interest Rate on Auction Rate Notes; Incorporation by Reference
of Auction Procedures and Settlement Procedures.
(a) During the Initial Period, each Series of the Auction Rate Notes
shall bear interest at the Initial Rate for such Series. Thereafter, the
Auction Rate Notes shall bear interest at the Auction Note Interest Rate
based on an Interest Period that shall be an Auction Period. The Auction
Note Interest Rate on each Series of the Auction Rate Notes for each
Auction Period shall be the least of (i) the Net Loan Rate, (ii) the
Auction
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Auction Agent Agreement
Rate determined in accordance with the Auction Procedures, and (iii) the
Maximum Rate. Pursuant to Section 2.02(e) of Appendix B to the Indenture,
the Issuer has duly appointed Deutsche Bank Trust Company Americas as
Auction Agent for purposes of the Auction Procedures and to perform such
other obligations and duties as are herein set forth. Deutsche Bank Trust
Company Americas hereby accepts such appointment and agrees that, on each
Auction Date, it shall follow the procedures set forth in this Section 2
and the Auction Procedures for the purpose of, among other things,
determining the Auction Rate, and ultimately the Auction Note Interest Rate
for each Series of the Auction Rate Notes for each Auction Period other
than the Initial Period. Each periodic operation of such procedures is
hereinafter referred to as an "Auction."
(b) All of the provisions contained in the Auction Procedures and
the Settlement Procedures are incorporated herein by reference in their
entirety and shall be deemed to be a part hereof to the same extent as if
such provisions were fully set forth herein.
2.2 Preparation of Each Auction; Maintenance of Existing Owner
Registry.
(a) A list of Broker-Dealers (showing Xxxxxxx X. Xxxxx & Co. as the
initial Broker-Dealer for the Series A-4 Notes and Citigroup Global Markets
Inc. as the initial Broker-Dealer for the Series A-5 Notes, Series A-6
Notes, Series A-7 Notes, Series A-8 Notes and Series B-1 Notes) is attached
as Exhibit A to this Auction Agent Agreement. Not later than seven days
prior to any Auction Date for which any change in such list of
Broker-Dealers is to be effective, the Indenture Trustee, at the direction
of an Authorized Issuer Officer, will notify the Auction Agent in writing
of such change and, if any such change is the addition of a Broker-Dealer
to such list, shall cause to be delivered to the Auction Agent for
execution by the Auction Agent a Broker-Dealer Agreement manually signed by
such Broker-Dealer. 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) In the event that any day that is scheduled to be an Auction
Date shall be changed after the Auction Agent shall have given the notice
of such Auction Date pursuant to clause (vii) of paragraph (a) of the
Settlement Procedures, the Auction Agent, by such means as the Auction
Agent deems practicable, shall give notice of such change to the
Broker-Dealers not later than the earlier of 9:15 a.m. on the new Auction
Date and 9:15 a.m. on the old Auction Date.
(c) (i) The Auction Agent shall maintain a current registry of
Persons that are Broker-Dealers, compiled initially on the Closing
Date as described below, and that hold Auction Rate Notes, for
purposes of dealing with the Auction Agent in connection with an
Auction (such registry being herein called the "Existing Owner
Registry"). Such Persons shall constitute the "Existing Owners" for
purposes of dealing with the Auction Agent in connection with an
Auction. The Auction Agent shall indicate in the Existing Owner
Registry for each Existing Owner the identity of the Broker-Dealer
that submitted the most recent Order in
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any Auction that resulted in such Existing Owner continuing to hold or
purchasing the Auction Rate Notes. Pursuant to the Broker-Dealer
Agreements, Citigroup Global Markets Inc. and Xxxxxxx X. Xxxxx & Co.
as the initial Broker-Dealers, have agreed to provide to the Auction
Agent on the Closing Date the names and addresses of the Persons who
are to be initially listed on the Existing Owner Registry as
constituting the initial Existing Owners of Auction Rate Notes of the
applicable Series for purposes of dealing with the Auction Agent in
connection with an Auction. The Auction Agent may rely upon, as
evidence of the identities of the Existing Owners, such lists, the
results of each Auction and notices from any Existing Owner,
Participant of any Existing Owner or Broker-Dealer of any Existing
Owner as described in Section 2.2(c)(iii) hereof.
(ii) The Indenture Trustee shall notify the Auction Agent in
writing when any notice of redemption of Auction Rate Notes is sent to
the Securities Depository as the Holder of Auction Rate Notes not
later than 11:00 a.m. on the date such notice is sent. Such notice
with respect to a redemption shall be substantially in the form of
Exhibit C hereto. In the event the Auction Agent receives from the
Indenture Trustee written notice of any partial redemption of any
Auction Rate Notes, the Auction Agent shall request the Securities
Depository to notify the Auction Agent of the Participants whose
Auction Rate Notes have been called for redemption and the person or
department at such Participant to contact regarding such redemption
and, within two Business Days after the receipt by the Auction Agent
of such information, the Auction Agent shall request each Participant
to disclose to the Auction Agent (upon selection by such Participant
of the Existing Owners whose Auction Rate Notes are to be redeemed)
the aggregate principal amount of such Auction Rate Notes of each such
Existing Owner, if any, that are to be redeemed. In the absence of
receiving any such information with respect to any Existing Owner from
such Existing Owner's Participant or otherwise, the Auction Agent may
continue to treat such Existing Owner as the beneficial owner of the
principal amount of Auction Rate Notes shown in the Existing Owner
Registry.
(iii) The Auction Agent shall be required to register in the
Existing Owner Registry a transfer of Auction Rate Notes from an
Existing Owner to another Person only if such transfer is made to a
Person through a Broker-Dealer and if (A) such transfer is pursuant to
an Auction or (B) the Auction Agent has been notified in writing (1)
in a notice substantially in the form of a Notice of Transfer by such
Existing Owner, by the Participant of such Existing Owner or by the
Broker-Dealer of such Existing Owner of such transfer, or (2) in a
notice substantially in the form of a Notice of Failure to Deliver or
Make Payment by the Broker-Dealer of any Person that purchased or sold
Auction Rate Notes in an Auction of the failure of such Auction Rate
Notes to be transferred as a result of the Auction. The Auction Agent
is not required to accept any Notice of Transfer or Notice of Failure
to Deliver or Make Payment delivered prior to an Auction unless it is
received by the Auction Agent by 3:00 p.m. on the Business Day next
preceding the applicable Auction Date.
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Auction Agent Agreement
(d) The Auction Agent may request that the Broker-Dealers, as set
forth in the Broker-Dealer Agreements, provide the Auction Agent with the
aggregate principal amount of Auction Rate Notes held by such
Broker-Dealers for purposes of the Existing Owner Registry. Except as
permitted by Section 2.10 hereof, the Auction Agent shall keep confidential
any such information and shall not disclose any such information so
provided to any Person other than the relevant Broker-Dealer, the Issuer
and the Indenture Trustee, provided that the Auction Agent reserves the
right to disclose any such information if it is advised by its counsel that
its failure to do so would be unlawful or if failure to do so would expose
the Auction Agent to loss, liability, claim or damages for which the
Auction Agent shall not previously have been adequately indemnified.
(e) The Auction Agent shall send by telecopy or other means a copy
of any Notice of Notes Outstanding received from the Indenture Trustee to
each Broker-Dealer in accordance with Section 4.3 of the applicable
Broker-Dealer Agreement.
2.3 All Hold Rate, Maximum Rate, Net Loan Rate, Applicable LIBOR
Rate.
(a) On each Auction Date, the Auction Agent shall determine the All
Hold Rate, the Maximum Rate and the Applicable LIBOR Rate. The components
of the Net Loan Rate with respect to each Auction Date shall be determined
by the Administrator and communicated in writing to the Auction Agent in
accordance with the Indenture. Not later than 9:30 a.m. on each Auction
Date, the Auction Agent shall notify the Indenture Trustee and the
Broker-Dealers of the All Hold Rate, the Maximum Rate, the Net Loan Rate
and the Applicable LIBOR Rate so determined. On the Closing Date, the
Issuer shall give written notice to the Auction Agent of the initial
ratings on the Auction Rate Notes by each Rating Agency substantially in
the form of the Notice of Ratings. Thereafter, if there is a change in any
of such ratings, the Issuer shall give written notice to the Auction Agent
substantially in the form of the Notice of Ratings within three Business
Days of its receipt of notice of such change, but not later than the close
of business on the Business Day immediately preceding an Auction Date if
the Issuer has received written notice of such change in a rating or
ratings prior to 12:00 noon on such Business Day, and the Auction Agent
shall take into account such change in rating or ratings for purposes
hereof and any Auction so long as such Notice of Ratings is received by the
Auction Agent no later than the close of business on such Business Day. In
determining the Maximum Rate and All-Hold Rate on any Auction Date, the
Auction Agent shall be entitled to rely on the Applicable LIBOR Rate of
which it has most recently received notice.
(b) (i) If, on any Auction Date for an Auction Period, an Auction
is not held for any reason, then the Auction Note Interest Rate for
the next succeeding Auction Period shall be the lesser of the Net Loan
Rate and the Maximum Rate.
(ii) If the ownership of the Auction Rate Notes is no longer
maintained in Book-entry Form by the Securities Depository, no further
Auctions shall be held and the Auction Note Interest Rate for each
Interest Period commencing after the delivery of certificated Notes
pursuant to Section 1.01(g) of the Indenture
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shall equal the lesser of (A) the applicable Maximum Rate and (B) the
Net Loan Rate in effect for such Interest Period as determined by the
Indenture Trustee on the Business Day immediately preceding the first
day of such subsequent Interest Period.
(iii) If a Payment Default shall have occurred with respect to
a Series of Auction Rate Notes, the Auction Note Interest Rate with
respect to such Series for each Interest Period commencing on or
immediately after the occurrence of such Payment Default, and for each
Interest Period thereafter, to and including the Interest Period, if
any, during which, or commencing less than two Business Days after,
such Payment Default is cured, shall equal the Non-Payment Rate, as
determined by the Indenture Trustee on the first day of such Interest
Period as provided in Appendix B to the Indenture. The Interest Rate
for each Interest Period commencing at least two Business Days after
any cure or waiver of a Payment Default shall be determined through
implementation of the Auction Procedures.
2.4 Auction Schedule. The Auction Agent shall conduct Auctions for
the Auction Rate Notes on the Auction Date in accordance with the schedule set
forth below. Such schedule may be changed by the Auction Agent with the consent
of the Indenture Trustee and the Market Agent, which consents are not to be
unreasonably withheld or delayed. Notice of such a change must be given prior to
the close of business on the Business Day preceding the first Auction Date on
which such change shall be effective.
Time Event
By 9:30 a.m. Auction Agent advises the Indenture
Trustee and the Broker-Dealers of the
Maximum Rate, the Net Loan Rate, the All
Hold Rate, and the Applicable LIBOR Rate
to be used in determining the Auction
Rate under the Auction Procedures and
the Auction Agent Agreement.
9:30 a.m.-1:00 p.m. Auction Agent assembles information
communicated to it by Broker-Dealers as
provided in the Auction Procedures.
Submission Deadline is 1:00 p.m.
Not earlier than 1:00 p.m. Auction Agent makes determinations
pursuant to Section 2.02(a)(iii) of
Appendix B to the Indenture.
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Auction Agent Agreement
Not later than 3:00 p.m. Auction Agent advises the Indenture
Trustee and the Broker-Dealers of the
results of the Auction as provided in
Section 2.02(a)(iii)(B) and (C) of
Appendix B to the Indenture. Submitted
Bids and Submitted Sell Orders are
accepted and rejected in whole or in
part and principal amounts of Auction
Rate Notes are allocated as provided in
the Auction Procedures. Auction Agent
gives notice of Auction results as set
forth in Section 2.4(a) of the
Broker-Dealer Agreement.
The Auction Agent shall follow the notification procedures set forth in
paragraph (a) of the Settlement Procedures.
2.5 Changes in Auction Periods or Auction Date.
(a) Changes in Auction Period or Periods.
(i) The Auction Agent shall deliver any notice delivered to it
pursuant to Section 2.02(g)(i) of Appendix B to the Indenture to the
Existing Owners within two Business Days of its receipt thereof.
(ii) The Auction Agent shall deliver any Issuer Certificate
delivered to it pursuant to Section 2.02(g)(iii) of Appendix B to the
Indenture to the Broker-Dealers not later than 3:00 p.m. on the last
Business Day preceding the next Auction Date by telecopy or similar
means.
(iii) If, after delivery to the Auction Agent of the notice
referred to in Section 2.02(g)(i) of Appendix B to the Indenture, the
Auction Agent fails to receive the Issuer Certificate and the Market
Agent consent referred to in Section 2.02(g)(iii) of Appendix B to the
Indenture by 11:00 a.m. on the last Business Day preceding the next
Auction Date, the Auction Agent shall deliver a notice of such failure
in substantially the form of Exhibit G hereto to the Broker-Dealers
not later than 3:00 p.m. on such Business Day by telecopy or other
similar means.
(iv) If, after delivery to the Auction Agent of the notice
referred to in the Section 2.02(g)(i) of Appendix B to the Indenture
and the certificate referred to in Section 2.02(g)(iii) of Appendix B
to the Indenture, Sufficient Bids are not received by the Auction
Agent by the Submission Deadline, the Auction Agent shall notify the
Broker-Dealers not later than 3:00 p.m. on such Auction Date by
telephone confirmed in writing in substantially the form of Exhibit H
hereto the next Business Day.
(b) Changes in Auction Date. The Auction Agent shall deliver any
notice delivered to it pursuant to Section 2.02(h) of Appendix B to the
Indenture to the Broker-Dealers within three Business Days of its receipt
thereof.
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2.6 Notice of Fee Rate Change. If the Broker-Dealer Fee Rate is
changed pursuant to the provisions of Section 6.5(b) hereof, the Auction Agent
shall deliver a Notice of Fee Rate Change (i) to the Indenture Trustee with
respect to a change in the Broker-Dealer Fee Rate and (ii) to the Broker-Dealers
with respect to a change in the Broker-Dealer Fee Rate, in each case within two
Business Days of such change.
2.7 Notices to Existing Owners. The Auction Agent shall be entitled
to rely upon the address of each Broker-Dealer as provided in Section 4.3 of the
applicable Broker-Dealer Agreement in connection with any notice to each
Broker-Dealer, as an Existing Owner, required to be given by the Auction Agent.
2.8 Payment Default.
(a) After delivery by the Indenture Trustee to the Auction Agent of
a notice that a Payment Default shall have occurred, the Auction Agent
shall, on the Business Day following its receipt of the same, deliver a
Notice of Payment Default to the Broker-Dealers by telecopy or other
similar means.
(b) The Auction Agent shall deliver a copy of any notice received by
it from the Indenture Trustee to the effect that a Payment Default has been
cured to the Broker-Dealers on the Business Day following its receipt of
the same by telecopy or other similar means.
2.9 Broker-Dealers.
(a) If the Auction Agent is provided with a copy of a Broker-Dealer
Agreement, which has been manually signed, with any Person listed on
Exhibit A hereto to which the Indenture Trustee, at the direction of an
Authorized Issuer Officer, shall have consented, it shall enter into such
Broker-Dealer Agreement with such Person. The Issuer hereby directs the
Indenture Trustee to consent to Citigroup Global Markets Inc. and Xxxxxxx
X. Xxxxx & Co. as the initial Broker-Dealers.
(b) The Auction Agent may, at the written direction of an Authorized
Issuer Officer and with the approval of Citigroup Global Markets Inc. and
Xxxxxxx X. Xxxxx & Co., so long as Citigroup Global Markets Inc. and
Xxxxxxx X. Xxxxx & Co. are acting as Broker-Dealers, enter into a
Broker-Dealer Agreement with any other Person who requests to be selected
to act as a Broker-Dealer. 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.
(c) The Auction Agent shall terminate any Broker-Dealer Agreement as
set forth therein at the direction of an Authorized Issuer Officer.
2.10 Access to and Maintenance of Auction Records. The Auction Agent
shall afford to the Indenture Trustee, the Issuer and their respective agents,
independent public accountants and counsel access, at reasonable times during
normal business hours, to review and make extracts or copies (at no cost to the
Auction Agent) of all books, records, documents and
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other information concerning the conduct and results of Auctions, provided that
any such agent, accountant or counsel shall furnish the Auction Agent with a
letter from the Indenture Trustee or the Issuer requesting that the Auction
Agent afford such Person access. For purposes of this Section 2.10, the
Broker-Dealers shall not be considered to be agents of the Indenture Trustee or
the Issuer. The Auction Agent shall maintain records relating to any Auction for
a period of two years after such Auction (or for such longer period requested in
writing by the Indenture Trustee or the Issuer, not to exceed four years after
each Auction), and such records shall, in reasonable detail, accurately and
fairly reflect the actions taken by the Auction Agent hereunder. At the end of
such period, the Auction Agent shall deliver such records to the Indenture
Trustee, if so requested in writing. The Indenture Trustee and the Issuer agree
to keep any information regarding the conduct and results of the Auctions,
including, without limitation, information regarding customers of any
Broker-Dealer, received from the Auction Agent in connection with this Auction
Agent Agreement confidential and shall not disclose such information or permit
the disclosure of such information without the prior written consent of the
applicable Broker-Dealer to anyone except such agent, accountant or counsel
engaged to audit or review the results of Auctions as permitted by this Section
2.10. Any such agent, accountant or counsel, before having access to such
information, shall agree to keep such information confidential and not to
disclose such information or permit disclosure of such information without the
prior written consent of the applicable Broker-Dealer, except as may otherwise
be required by law.
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Section 3. Term of Agreement.
(a) This Auction Agent Agreement shall terminate on the earlier to
occur of (i) the satisfaction and discharge of the Indenture with respect
to the Auction Rate Notes or this Auction Agent Agreement and (ii) the date
on which this Auction Agent Agreement is terminated in accordance with this
Section 3. The Indenture Trustee may terminate this Auction Agent Agreement
in accordance with Section 2.02(e)(i) of Appendix B to the Indenture. The
Auction Agent may terminate this Auction Agent Agreement upon written
notice to the Indenture Trustee, the Issuer and each Broker-Dealer on the
date specified in such notice, which date shall be no earlier than 90 days
after the date of delivery of such notice. Notwithstanding the foregoing,
the provisions of Section 2 hereof shall terminate upon the delivery of
certificates representing Auction Rate Notes pursuant to the Indenture.
Notwithstanding the foregoing, the Auction Agent may terminate this
Agreement without further notice if, within 25 days after notifying in
writing the Indenture Trustee, the Issuer and each Broker-Dealer that it
has not received payment of any Auction Agent Fee due it in accordance with
the terms hereof, the Auction Agent does not receive such payment. Any
resignation of the Auction Agent or termination of this Auction Agent
Agreement, other than as described in the preceding sentence of this
paragraph, shall not become effective until a successor Auction Agent has
been appointed and acceptance of such appointment by such successor Auction
Agent. The Issuer and the Indenture Trustee agree to diligently proceed to
appoint a successor Auction Agent. However, if a successor Auction Agent
shall not have been appointed within 60 days from the date of such notice
of resignation, the resigning Auction Agent may petition any court of
competent jurisdiction for the appointment of a successor Auction Agent.
(b) Except as otherwise provided in this Section 3(b), the
respective rights and duties of the Indenture Trustee, the Issuer and the
Auction Agent under this Auction Agent Agreement shall cease upon
termination of this Auction Agent Agreement. The Indenture Trustee's
representations and warranties to the Auction Agent under Section 5 hereof,
the Issuer's obligations to the Auction Agent under Section 6.4 hereof and
to the Broker-Dealers under Section 6.5 hereof, and the Auction Agent's
obligations under Section 2.10 hereof shall survive the termination of this
Auction Agent Agreement subject to Section 4 hereof. Upon termination of
this Auction Agent Agreement, the Auction Agent shall, upon written
request, promptly deliver to the Indenture Trustee copies of all books and
records maintained by it with respect to Auction Rate Notes in connection
with its duties hereunder.
Section 4. Indenture Trustee. All privileges, rights and immunities given
to the Indenture Trustee in the Indenture are hereby extended to and applicable
to the Indenture Trustee's obligations hereunder.
11
Auction Agent Agreement
Section 5. Representations and Warranties of the Indenture Trustee. The
Indenture Trustee hereby represents and warrants to the Auction Agent and the
Issuer as follows:
5.1 The Indenture Trustee (i) has been duly incorporated and is
validly existing and in good standing as a banking corporation under the laws of
Ohio, and (ii) has all necessary authority, approvals, consents (whether from
the Issuer or otherwise) to enter into and perform its obligations under this
Auction Agent Agreement. This Auction Agent Agreement has been duly and validly
authorized, executed and delivered by the Indenture Trustee and constitutes the
legal, valid, binding and enforceable obligation of the Indenture Trustee.
5.2 Neither the execution, delivery and performance of this Auction
Agent Agreement, the consummation of the transactions contemplated hereby nor
the fulfillment of or compliance with the terms and conditions of this Auction
Agent Agreement will conflict with, violate or result in a breach of, the terms,
conditions or provisions of, or constitute a default under, any law or
regulation, any order or decree of any court or public authority having
jurisdiction over the Indenture Trustee, or any mortgage, indenture, contract,
agreement or undertaking to which the Indenture Trustee is a party or by which
it is bound, or the organizational documents pursuant to which the Indenture
Trustee has been created and under which it is operating.
5.3 All approvals, consents and orders of any governmental
authority, legislative body, board, agency or commission having jurisdiction
over the Indenture Trustee that would constitute a condition precedent to or the
absence of which would materially adversely affect the due performance by the
Indenture Trustee of its obligations under this Auction Agent Agreement have
been obtained.
Section 6. The Auction Agent.
6.1 Duties and Responsibilities.
(a) The Auction Agent is acting solely as agent of the Issuer and
owes no fiduciary duties to any Person by reason of this Auction Agent
Agreement. The Auction Agent undertakes to perform such duties and only
such duties as are specifically set forth in this Auction Agent Agreement,
and no implied covenants or obligations shall be read into this Auction
Agent Agreement by means of the provisions of the Indenture or otherwise
against the Auction Agent.
(b) 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
or for any error of judgment made by it in the performance of its duties
under this 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.
(c) The Auction Agent shall not agree to any amendment to a
Broker-Dealer Agreement without the prior written consent of the Issuer,
which consent shall not be unreasonably withheld.
12
Auction Agent Agreement
6.2 Rights of the Auction Agent.
(a) The Auction Agent may rely and shall be protected in acting or
refraining from acting upon any communication authorized hereby and upon
any written instruction, notice, request, direction, consent, report,
certificate, form of note certificate or other instrument, paper or
document believed by it to be genuine. The Auction Agent shall not be
liable for acting upon any telephone communication authorized hereby that
the Auction Agent believes in good faith to have been given by the Issuer,
the Indenture Trustee or by a Broker-Dealer. The Auction Agent may record
telephone communications with the Issuer, the Indenture Trustee or with
Broker-Dealers or with any of the foregoing.
(b) The Auction Agent may consult with counsel of its choice, and
the advice or opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.
(c) The Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial
liability in the performance of its duties hereunder.
(d) The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents, attorneys, nominees or
custodians and shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed by it with due care hereunder.
6.3 Auction Agent's Disclaimer. The Auction Agent makes no
representation as to the correctness of the recitals in this Auction Agent
Agreement or the Broker-Dealer Agreement with respect to other parties thereto
or the validity or adequacy of the Auction Rate Notes.
6.4 Compensation, Remedies and Indemnification.
(a) With respect to each Series of the Auction Rate Notes, not later
than 12:00 noon on each Monthly Expense Payment Date, the Issuer shall
direct the Indenture Trustee pay to the Auction Agent, pursuant to the
Indenture and solely from moneys available therefor in the Distribution
Account or Collection Account, a fee (the "Auction Agent Fee") in cash
equal to the product of (i) 0.01% times (ii) a fraction, the numerator of
which is the number of days since the later of the Closing Date or the date
the Auction Agent Fee was last paid and the denominator of which is 360,
times (iii) the aggregate principal amount of Auction Rate Notes of such
Series outstanding since the later of the Closing Date or the date the
Auction Agent Fee was last paid. The Auction Agent shall advise the Issuer
of the amount referred to in the preceding sentence not later than 4:00
p.m. at least two Business Days preceding such Monthly Expense Payment
Date.
(b) The Indenture Trustee shall reimburse the Auction Agent upon its
request for all reasonable expenses, disbursements and advances incurred or
made by the Auction
13
Auction Agent Agreement
Agent in accordance with any provision of this Auction Agent Agreement or
the Broker-Dealer Agreements (including the reasonable compensation and
expenses and disbursements of its agents and counsel) from amounts
available therefor in the Distribution Account or Collection Account. To
the extent permitted by law and limited to amounts in the Trust Estate
created by the Indenture, the Issuer shall indemnify and hold harmless the
Auction Agent for and against any loss, liability or expense incurred
without negligence or willful misconduct on the Auction Agent's part,
arising out of or in connection with the acceptance or administration of
its agency under this Auction Agent Agreement and the Broker-Dealer
Agreements, including the reasonable costs and expenses (including the
reasonable fees and expenses of its counsel) of defending itself against
any such claim or liability in connection with its exercise or performance
of any of its duties hereunder and thereunder and of enforcing this
indemnification provision; provided that the Issuer shall not indemnify the
Auction Agent pursuant to this Section 6.4(b) for any fees and expenses
incurred by the Auction Agent in the normal course of performing its duties
hereunder and under the Broker-Dealer Agreements, such fees and expenses
being payable as provided in Section 6.4(a) above.
(c) The provisions of Sections 6.4(a) shall be subject to fee
arrangements between the parties in effect from time to time.
6.5 Compensation of the Broker-Dealers.
(a) With respect to each Series of the Auction Rate Notes, not later
than 12:00 noon on each Monthly Expense Payment Date, the Issuer shall
direct the Indenture Trustee pay to the Auction Agent, pursuant to the
Indenture and solely from moneys available therefor in the Distribution
Account or Collection Account, a fee (the "Broker-Dealer Fee") in cash
equal to the product of (i) the Broker-Dealer Fee Rate times (ii) a
fraction, the numerator of which is the number of days since the later of
the Closing Date or the date the Broker-Dealer Fee was last paid and the
denominator of which is 360, times (iii) the aggregate principal amount of
Auction Rate Notes of such Series outstanding since the later of the
Closing Date or the date the Broker-Dealer Fee was last paid. The Auction
Agent shall advise the Issuer of the amount referred to in the preceding
sentence not later than 4:00 p.m. at least two Business Days preceding such
Monthly Expense Payment Date. The Auction Agent shall apply such monies as
set forth in Section 2.5 of the Broker-Dealer Agreements.
(b) After retaining an amount equal to the Auction Agent Fee as
provided in Section 6.4 above, the Auction Agent shall pay the
Broker-Dealer Fee as provided in Section 6.5(a) above solely out of amounts
received by the Auction Agent pursuant to Appendix B to the Indenture. The
Auction Agent shall advise the Issuer at least annually, at the request of
an Authorized Issuer Officer, of the prevailing rate. The Broker-Dealer Fee
Rate may be adjusted from time to time with the approval of an Authorized
Issuer Officer upon a written request of the Auction Agent or a
Broker-Dealer, delivered to the Indenture Trustee and the Issuer. The
initial Broker-Dealer Fee Rate shall be 0.25% per annum. If the
Broker-Dealer Fee Rate is changed pursuant to the terms hereof, the Auction
Agent shall notify the Indenture Trustee thereof as provided in Section 2.6
14
Auction Agent Agreement
hereof. Any changes in the Broker-Dealer Fee Rate shall be effective on the
Auction Date next succeeding such change.
Section 7. Miscellaneous.
7.1 Governing Law. This Auction Agent Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in such state.
7.2 Communications. Except for (i) communications authorized to be
made by telephone pursuant to this Auction Agent Agreement or the Auction
Procedures and (ii) communications in connection with Auctions (other than those
expressly required to be in writing), all notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
or similar writing) and shall be given to such party addressed to it at its
address, or facsimile number set below:
If to the Market Agent: Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Student Loan Group
Telephone Number: 000.000.0000
Facsimile Number: 212.816.0598
If to the Auction Agent: Deutsche Bank Trust Company Americas
Corporate Trust & Agency Services
00 Xxxx Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Auction Rate Securities
Telephone Number: 000.000.0000
Facsimile Number: 212.797.8600
If to the initial Broker-Dealers: Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx, 0/xx/ Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Short Term Trading
Telephone Number: 000.000.0000
Facsimile Number: 212.723.8809
Xxxxxxx X. Xxxxx & Co.
000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Syndicate Desk
Telephone Number: 000.000.0000
Facsimile Number: 727.502.3625
15
Auction Agent Agreement
If to the Indenture Trustee: Fifth Third Bank
MD 10AT60
00 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Corporate Trust Administration
Telephone: 000.000.0000
Facsimile: 513.534.3115
If to the Issuer: Education Funding Capital Trust-III
c/o Fifth Third Bank
MD 10AT60
00 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Corporate Trust Administration
Telephone: 000.000.0000
Facsimile: 513.534.3115
with a copy to: Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Administration
Telephone: 000.000.0000
Facsimile: 203.975.6299
or such other address, telephone or facsimile number as such party may hereafter
specify for such purpose by notice in writing to the other parties. Each such
notice, request or communication shall be effective when delivered at the
address specified herein. Communications shall be given on behalf of the
Indenture Trustee by an Authorized Trustee Representative, on behalf of the
Auction Agent by an Authorized Auction Agent Officer and on behalf of the Issuer
by an Authorized Issuer Officer.
7.3 Entire Agreement. This Auction Agent Agreement contains the
entire agreement between the parties relating to the subject matter hereof, and
there are no other representations, endorsements, promises, agreements or
understandings, oral, written or inferred, between the parties relating to the
subject matter hereof.
7.4 Benefits. Nothing herein, express or implied, shall give to any
Person, other than the Indenture Trustee, acting on behalf of the beneficial
owners of the Auction Rate Notes, the Auction Agent, the Issuer and their
respective successors and assigns, any benefit of any legal or equitable right,
remedy or claim hereunder.
16
Auction Agent Agreement
7.5 Amendment; Waiver.
(a) This Auction Agent Agreement shall not be deemed or construed to
be modified, amended, rescinded, canceled or waived, in whole or in part,
except by a written instrument signed by duly authorized representatives of
the parties hereto.
(b) The Indenture Trustee and the Issuer shall not enter into or
approve any amendment of or supplement to the Indenture that materially
affects the Auction Agent's duties or obligations under the Indenture
without obtaining the prior written consent of the Auction Agent. The
Indenture Trustee shall promptly notify the Auction Agent of any amendment
of or supplement to the Indenture, and shall provide a copy thereof to the
Auction Agent upon request.
(c) Failure of a party hereto to exercise any right or remedy
hereunder in the event of a breach hereof by any other party shall not
constitute a waiver of any such right or remedy with respect to any
subsequent breach.
7.6 Successors and Assigns. This Auction Agent Agreement shall be
binding upon, inure to the benefit of and be enforceable by the respective
successors and assigns of each of the Indenture Trustee, the Issuer and the
Auction Agent. This Auction Agent Agreement may not be assigned by any party
hereto absent the prior written consent of the other parties hereto, which
consents shall not be unreasonably withheld.
7.7 Severability. If any clause, provision or section hereof shall
be ruled invalid or unenforceable by any court of competent jurisdiction, the
invalidity or unenforceability of such clause, provision or section shall not
affect any of the remaining clauses, provisions or sections hereof.
7.8 Execution in Counterparts. This Auction Agent Agreement may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
[remainder of this page intentionally left blank; signatures begin on next page]
17
Auction Agent Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Auction Agent
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the date first written above.
EDUCATION FUNDING CAPITAL TRUST-III,
as Issuer, by Fifth Third Bank, not in
its individual capacity, but solely as
Co-Owner Trustee on behalf of the
Issuer
By: /s/ Xxxxxx X. Xxxxxxx-XxXxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx-XxXxxxx
Title: Assistant Vice President and
Senior Trust Officer
FIFTH THIRD BANK, as Indenture Trustee
By: /s/ Xxxxxx X. Xxxxxxx-XxXxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxx-XxXxxxx
Title: Assistant Vice President and
Senior Trust Officer
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Auction Agent
By: /s/ Xxxxx Xxxxx
-------------------------------------
Name: Xxxxx Xxxxx
Title: Vice President
Auction Agent Agreement
EXHIBIT A
TO AUCTION AGENT AGREEMENT
--------------------------
LIST OF INITIAL BROKER-DEALERS
------------------------------
Notes: Broker-Dealers:
---------- -----------------------------
Series A-4 Xxxxxxx X. Xxxxx & Co.
Series A-5 Citigroup Global Markets Inc.
Series A-6 Citigroup Global Markets Inc.
Series A-7 Citigroup Global Markets Inc.
Series A-8 Citigroup Global Markets Inc.
Series B-1 Citigroup Global Markets Inc.
A-1
Auction Agent Agreement
EXHIBIT B
TO AUCTION AGENT AGREEMENT
--------------------------
NOTICE OF RATINGS
-----------------
Education Funding Capital Trust-III
$485,000,000 Education Loan Backed Notes consisting of Education Loan
Backed Notes Series X-0, Xxxxxx X-0, Xxxxxx X-0, Series A-7, and 2003
A-8 (the "Series A Notes") and Education Loan Backed Notes Series B-1
(the "Series B Notes")
NOTICE IS HEREBY GIVEN by Education Funding Capital Trust-III (the
"Issuer") to Deutsche Bank Trust Company Americas, as the auction agent (the
"Auction Agent") pursuant to Section 2.3(a) of the Auction Agent Agreement, that
as of the date of this Notice:
1. The rating by Fitch Ratings on the captioned Series __ Notes is
______ [and such rating is ["AAA" or higher/lower than AAA]]*;
2. The rating by Xxxxx'x Investors Services, Inc. on the captioned
Series __ Notes is ______ [and such rating is ["Aaa" or
higher/lower than Aaa]]*;
3. The rating by Standard & Poor's on the captioned Series __ Notes
is ______ [and such rating is ["AAA" or higher/lower than
AAA]]*;
4. The rating by Fitch Ratings on the captioned Series __ Notes is
______ ["A" or higher/lower than A]] *.
5. The rating by Xxxxx'x Investors Service, Inc. on the captioned
Series __ Notes is ______ ["A3" or higher/lower than A3]]*; and
6. The rating by Standard & Poor's on the captioned Series __ Notes
is ______ ["A" or higher/lower than A]] *.
----------
* The information in the outer brackets will be used as applicable whenever
(i) the Fitch rating is not equal to "AAA" on the Series A Notes and/or "A" on
the Series B Notes, (ii) the Xxxxx'x rating is not equal to "Aaa" on the Series
A Notes and/or "A3" on the Series B Notes, and/or (iii) the S&P rating is not
equal to "AAA" on the Series A Notes and/or "A" on the Series B Notes.
B-1
Auction Agent Agreement
The Auction Agent may rely on such ratings for all purposes of the Indenture (as
defined in the Auction Agent Agreement), including determination of the Maximum
Rate thereunder, from the date hereof until further notice from the undersigned.
EDUCATION FUNDING CAPITAL TRUST-III
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Date:
-----------------------------------
B-2
Auction Agent Agreement
EXHIBIT C
TO AUCTION AGENT AGREEMENT
--------------------------
NOTICE OF NOTES OUTSTANDING
---------------------------
EDUCATION FUNDING CAPITAL TRUST-III
EDUCATION LOAN BACKED NOTES
SERIES [A][B]-[__]
NOTICE IS HEREBY GIVEN that $___________ aggregate principal amount of
Series [A][B]-[__] Notes were outstanding at the close of business on the
immediately preceding Regular Record Date. Such aggregate principal amount of
Series [A][B]-[__] Notes, less $___________ aggregate principal amount of Series
[A][B]-[__] Notes to be redeemed by the Issuer pursuant to the Indenture, for a
net aggregate principal amount of Series [A][B]-[__] Notes of $___________, will
be available on the next Auction scheduled to be held on ________________.
Terms used herein have the meanings set forth in the Indenture
relating to the above-referenced issue.
FIFTH THIRD BANK, as Indenture Trustee
By:
-------------------------------------
Title:
----------------------------------
Date:
-----------------------------------
C-1
Auction Agent Agreement
EXHIBIT D
TO AUCTION AGENT AGREEMENT
--------------------------
NOTICE OF FEE RATE CHANGE
-------------------------
EDUCATION FUNDING CAPITAL TRUST-III
EDUCATION LOAN BACKED NOTES
SERIES X-0, X-0, X-0, X-0, X-0 and B-1
NOTICE IS HEREBY GIVEN that the Broker-Dealer Fee Rate has been
changed in accordance with Section 6.5(b) of the Auction Agent Agreement. The
new Broker-Dealer Fee Rate shall be ______% per annum.
Terms used herein have the meanings set forth in the Indenture
relating to the above-referenced issue.
DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Auction Agent
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Date:
----------------------------------
APPROVED:
EDUCATION FUNDING CAPITAL TRUST-III
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Date:
-----------------------------------
D-1
Auction Agent Agreement
EXHIBIT E
TO AUCTION AGENT AGREEMENT
--------------------------
NOTICE OF A PAYMENT DEFAULT
---------------------------
EDUCATION FUNDING CAPITAL TRUST-III
EDUCATION LOAN BACKED NOTES
SERIES X-0, X-0, X-0, X-0, X-0 and B-1
NOTICE IS HEREBY GIVEN that a Payment Default has occurred and not
been cured with respect to the Series [A][B]-___ Notes. Determination of the
Auction Note Interest Rate on the Auction Rate Notes pursuant to the Auction
Procedures will be suspended. The Auction Note Interest Rate on such Series of
the Auction Rate Notes for the Interest Period commencing on or immediately
after such Payment Default, and for each Interest Period thereafter, to and
including the Interest Period, if any, during which, or commencing less than two
Business Days after, such Payment Default is cured, will equal the Non-Payment
Rate, as it is determined by the Indenture Trustee on the first day of such
Interest Period.
Terms used herein have the meanings set forth in the Indenture
relating to the above-referenced issue.
DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Auction Agent
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Date:
-----------------------------------
E-1
Auction Agent Agreement
EXHIBIT F
TO AUCTION AGENT AGREEMENT
--------------------------
SETTLEMENT PROCEDURES
---------------------
If not otherwise defined below, capitalized terms used herein shall have
the meanings given such terms in Appendix B to the Indenture. These Settlement
Procedures apply separately to each Series of Auction Rate Notes.
(a) On each Auction Date, not later than 3:00 p.m., the Auction Agent shall
notify by telephone each Broker-Dealer that participated in the Auction held on
such Auction Date and submitted an Order on behalf of an Existing Owner or
Potential Owner of:
(i) the Auction Note Interest Rate fixed for the next Interest
Period;
(ii) whether there were Sufficient Bids in such Auction;
(iii) if such Broker-Dealer (a "Seller's Broker-Dealer")
submitted Bids or Sell Orders on behalf of an Existing Owner, whether such Bid
or Sell Order was accepted or rejected, in whole or in part, and the principal
amount of Auction Rate Notes, if any, to be purchased or sold by such Existing
Owner;
(iv) if such Broker-Dealer (a "Buyer's Broker-Dealer") submitted
a Bid on behalf of a Potential Owner, whether such Bid was accepted or rejected,
in whole or in part, and the principal amount of Auction Rate Notes, if any, to
be purchased by such Potential Owner;
(v) if the aggregate amount of Auction Rate Notes to be sold by
all Existing Owners on whose behalf such Seller's Broker-Dealer submitted Bids
or Sell Orders exceeds the aggregate principal amount of Auction Rate Notes to
be purchased by all Potential Owners on whose behalf such Buyer's Broker-Dealer
submitted a Bid, the name or names of one or more Buyer's Broker-Dealers (and
the name of the Participant, if any, of each such Buyer's Broker-Dealer) acting
for one or more purchasers of such excess principal amount of Auction Rate Notes
and the principal amount of Auction Rate Notes to be purchased from one or more
Existing Owners on whose behalf such Seller's Broker-Dealer acted by one or more
Potential Owners on whose behalf each of such Buyer's Broker-Dealers acted;
(vi) if the principal amount of Auction Rate Notes to be
purchased by all Potential Owners on whose behalf such Buyer's Broker-Dealer
submitted a Bid exceeds the amount of Auction Rate Notes to be sold by all
Existing Owners on whose behalf such Seller's Broker-Dealer submitted a Bid or a
Sell Order, the name or names of one or more Seller's Broker-Dealers (and the
name of the Participant, if any, of each such Seller's Broker-Dealer) acting for
one or more sellers of such excess principal amount of Auction Rate Notes and
the principal amount of Auction Rate Notes to be sold to one or more Potential
Owners on whose behalf such Buyer's Broker-Dealer acted by one or more Existing
Owners on whose behalf each of such Seller's Broker-Dealers acted;
F-1
Auction Agent Agreement
(vii) the Auction Date for the next succeeding Auction.
(b) On each Auction Date, each Broker-Dealer that submitted an Order on
behalf of any Existing Owner or Potential Owner shall:
(i) advise each Existing Owner and Potential Owner on whose
behalf such Broker-Dealer submitted a Bid or Sell Order in the Auction on such
Auction Date whether such Bid or Sell Order was accepted or rejected, in whole
or in part;
(ii) in the case of a Broker-Dealer that is a Buyer's
Broker-Dealer, advise each Potential Owner on whose behalf such Buyer's
Broker-Dealer submitted a Bid that was accepted, in whole or in part, to
instruct such Potential Owner's Participant to pay to such Buyer's Broker-Dealer
(or its Participant) through the Securities Depository the amount necessary to
purchase the principal amount of Auction Rate Notes to be purchased pursuant to
such Bid against receipt of such Auction Rate Notes;
(iii) in the case of a Broker-Dealer that is a Seller's
Broker-Dealer, instruct each Existing Owner on whose behalf such Seller's
Broker-Dealer submitted a Sell Order that was accepted, in whole or in part, or
a Bid that was accepted, in whole or in part, to instruct such Existing Owner's
Participant to deliver to such Seller's Broker-Dealer (or its Participant)
through the Securities Depository the principal amount of Auction Rate Notes to
be sold pursuant to such Order against payment therefor;
(iv) advise each Existing Owner on whose behalf such
Broker-Dealer submitted an Order and each Potential Owner on whose behalf such
Broker-Dealer submitted a Bid of the Auction Note Interest Rate for the next
Interest Period;
(v) advise each Existing Owner on whose behalf such Broker-
Dealer submitted an Order of the next Auction Date; and
(vi) advise each Potential Owner on whose behalf such
Broker-Dealer submitted a Bid that was accepted, in whole or in part, of the
next Auction Date.
(c) On the basis of the information provided to it pursuant to
paragraph (a) above, each Broker-Dealer that submitted a Bid or Sell Order in an
Auction is required to allocate any funds received by it in connection with such
Auction pursuant to paragraph (b)(ii) above, and any Auction Rate Notes received
by it in connection with such Auction pursuant to paragraph (b)(iii) above among
the Potential Owners, if any, on whose behalf such Broker-Dealer submitted Bids,
the Existing Owners, if any, on whose behalf such Broker-Dealer submitted Bids
or Sell Orders in such Auction, and any Broker-Dealers identified to it by the
Auction Agent following such Auction pursuant to paragraph (a)(v) or (a)(vi)
above.
(d) On each Auction Date:
F-2
Auction Agent Agreement
(i) each Potential Owner and Existing Owner with an Order in
the Auction on such Auction Date shall instruct its Participant as provided in
(b)(ii) or (b)(iii) above, as the case may be;
(ii) each Seller's Broker-Dealer that is not a Participant of
the Securities Depository shall instruct its Participant (A) pay through the
Securities Depository to the Participant of the Existing Holder delivering
Auction Rate Notes to such Broker-Dealer following such Auction pursuant to
paragraph (b)(ii) above the amount necessary to purchase such Auction Rate Notes
against receipt of such Auction Rate Notes and (B) deliver such Auction Rate
Notes through the Securities Depository to a Buyer's Broker-Dealer (or its
Participant) identified to such Seller's Broker-Dealer pursuant to (a)(v) above
against payment therefor; and
(iii) each Buyer's Broker-Dealer that is not a Participant of the
Securities Depository shall instruct its Participant to pay through the
Securities Depository to a Seller's Broker-Dealer (or its Participant)
identified following such Auction pursuant to (a)(vi) above the amount necessary
to purchase Auction Rate Notes to be purchased pursuant to (b)(ii) above against
receipt of such Auction Rate Notes.
(e) On the Business Day following each Auction Date:
(i) each Participant for a Bidder in the Auction on such
Auction Date referred to in (d)(i) above shall instruct the Securities
Depository to execute the transactions described under (b)(ii) or (b)(iii) above
for such Auction, and the Securities Depository shall execute such transactions;
(ii) each Seller's Broker-Dealer or its Participant shall
instruct the Securities Depository to execute the transactions described in
(d)(ii) above for such Auction, and the Securities Depository shall execute such
transactions; and
(iii) each Buyer's Broker-Dealer or its Participant shall
instruct the Securities Depository to execute the transactions described in
(d)(iii) above for such Auction, and the Securities Depository shall execute
such transactions.
(f) If an Existing Owner selling Auction Rate Notes in an Auction fails to
deliver such Auction Rate Notes (by authorized book-entry), a Broker-Dealer may
deliver to the Potential Owner on behalf of which it submitted a Bid that was
accepted a principal amount of Auction Rate Notes that is less than the
principal amount of Auction Rate Notes that otherwise was to be purchased by
such Potential Owner. In such event, the principal amount of Auction Rate Notes
to be so delivered shall be determined solely by such Broker-Dealer. Delivery of
such lesser principal amount of Auction Rate Notes shall constitute good
delivery. Notwithstanding the foregoing terms of this paragraph (f), any
delivery or nondelivery of Auction Rate Notes that shall represent any departure
from the results of an Auction, as determined by the Auction Agent, shall be of
no effect unless and until the Auction Agent shall have been notified of such
delivery or nondelivery in accordance with the provisions of the Auction Agent
Agreement and the Broker-Dealer Agreements. Neither the Indenture Trustee
F-3
Auction Agent Agreement
nor the Auction Agent shall have any responsibility or liability with respect to
the failure of a Potential Owner, Existing Owner or their respective
Broker-Dealer or Participant to take delivery of or deliver, as the case may be,
the principal amount of Auction Rate Notes or to pay for the Auction Rate Notes
purchased or sold pursuant to an Auction or otherwise.
F-4
Auction Agent Agreement
EXHIBIT G
TO AUCTION AGENT AGREEMENT
--------------------------
NOTICE OF CONTINUATION OF AUCTION PERIOD
----------------------------------------
EDUCATION FUNDING CAPITAL TRUST-III
EDUCATION LOAN BACKED NOTES
SERIES X-0, X-0, X-0, X-0, X-0 and B-1
NOTICE IS HEREBY GIVEN that a condition for the establishment of a
change in the length of one or more Auction Periods for the captioned Notes has
not been met. An Auction will therefor be held on the next Auction Date
(__________________) and the length of such Auction Period shall remain an
Auction Period of _______ days.
DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Auction Agent
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Date:
-----------------------------------
G-1
Auction Agent Agreement
EXHIBIT H
TO AUCTION AGENT AGREEMENT
--------------------------
NOTICE OF INTEREST RATE
-----------------------
EDUCATION FUNDING CAPITAL TRUST-III
EDUCATION LOAN BACKED NOTES
SERIES X-0, X-0, X-0, X-0, X-0 and B-1
NOTICE IS HEREBY GIVEN that Sufficient Bids necessary for the
establishment of a change in the length of one or more Auction Periods for the
captioned Notes have not been received. The Auction Note Interest Rate for the
Auction Period commencing on _______________ shall be the least of the Auction
Rate, the Net Loan Rate and the Maximum Rate, and such Auction Period shall
remain an Auction Period of _____ days.
DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Auction Agent
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
Date:
-----------------------------------
H-1
Auction Agent Agreement
