AUCTION AGENT AGREEMENT

Exhibit 4.3

 

AUCTION AGENT AGREEMENT

 

by and among

 

EDUCATION LOANS INCORPORATED,

as Issuer,

 

U.S. BANK NATIONAL ASSOCIATION,

as Trustee,

 

and

 

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Auction Agent

 

 

Dated as of August 1, 2004

 

 

Relating to

 

$431,500,000

EDUCATION LOANS INCORPORATED

STUDENT LOAN ASSET-BACKED NOTES

SENIOR SERIES 2004-C1, C2, C3, C4 and C5

SUBORDINATE SERIES 2004-D

 

TABLE OF CONTENTS

 

 

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THIS AUCTION AGENT AGREEMENT, dated as of August 1, 2004 (this “Auction Agent Agreement”), is being entered into by and among EDUCATION LOANS INCORPORATED, a Delaware corporation (together with any successors or assigns, the “Issuer”), U.S. BANK NATIONAL ASSOCIATION, Minneapolis, Minnesota, a national banking association duly established and existing under the laws of the United States of America, as Trustee (together with any successors or assigns, the “Trustee”) under a certain First Supplemental 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 Trustee to authenticate and deliver $431,500,000 aggregate principal amount of its Student Loan Asset-Backed Notes, Senior Series 2004-C and Subordinate Series 2004-D, consisting of six series designated Student Loan Asset-Backed Notes, Senior Series 2004-C1 (the “Series 2004-C1 Notes”), Student Loan Asset-Backed Notes, Senior Series 2004-C2 (the “Series 2004-C2 Notes”), Student Loan Asset-Backed Notes, Senior Series 2004-C3 (the “Series 2004-C3 Notes”), Student Loan Asset-Backed Notes, Senior Series 2004-C4 (the “Series 2004-C4 Notes”), Student Loan Asset-Backed Notes, Senior Series 2004-C5 (the “Series 2004-C5 Notes”), and Student Loan Asset-Backed Notes, Subordinate Series 2004-D (the “Series 2004-D Notes” and, together with the Series 2004-C1 Notes, the Series 2004-C2 Notes, the Series 2004-C3 Notes, the Series 2004-C4 Notes and the Series 2004-C5 Notes, the “Series 2004-C/D Notes”). The Series 2004-C/D Notes are being issued under the First Supplemental Indenture of Trust, dated as of August 1, 2004 (the “First Supplemental Indenture”), by and between the Issuer and the Trustee and executed pursuant to an Indenture of Trust, dated as of August 1, 2004 (as amended and supplemented, the “Original Indenture”), by and between the Trustee and the Issuer; and

 

WHEREAS, pursuant to Section 8 of the First Supplemental Indenture, the Auction Agent has been appointed to act in the capacities set forth in this Auction Agent Agreement; and

 

WHEREAS, the Trustee is entering into this Auction Agent Agreement at the direction of the Issuer pursuant to the terms of the First Supplemental Indenture;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Issuer, the Trustee and the Auction Agent agree as follows:

 

Section 1. Definitions and Rules of Construction .

 

1.1 Terms Defined by Reference to First Supplemental Indenture . Capitalized terms used herein and not otherwise defined herein shall have the meanings given such terms in the First Supplemental 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(b) hereof.

 

“Auction Agent Fee Payment Date” shall mean each July 1, October 1, January 1 and March 1, commencing October 1, 2004.

 

“Auction Agent Fee Rate” shall mean the rate per annum determined pursuant to Section 6.4(b) hereof, as the same may be changed from time to time in accordance with Section 6.4(b) hereof, at which the fee to be paid to the Auction Agent for services rendered by it hereunder and under the Broker-Dealer Agreements accrues pursuant to Section 6.4(b) hereof.

 

“Auction Procedures” shall mean the provisions that are set forth in Sections 4 through 11, inclusive, of the First Supplemental Indenture.

 

“Authorized Auction Agent Officer” shall mean, with respect to the Auction Agent, each Managing Director, Vice President, Assistant Vice President and Associate of the Auction Agent and every other officer of the Auction Agent assigned to its Trust & Securities Services 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 Trustee and the Issuer.

 

“Authorized Issuer Officer” shall mean, with respect to the Issuer, the Chairman of the Board of Directors, the President, any Vice President or the Secretary of the Issuer or any other person designated in writing by the Board of Directors of the Issuer to the Auction Agent from time to time, which writing may limit the functions which such other person may undertake as an Authorized Issuer Officer hereunder.

 

“Authorized Trustee Representative” shall mean each Vice President, Assistant Vice President or Trust Officer in the Corporate Trust Department of the Trustee and every other officer or employee of the 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 a Person listed on Exhibit A hereto, as such Exhibit A may be amended from time to time.

 

“Broker-Dealer Agreement” shall mean each agreement between the Auction Agent and a Broker-Dealer substantially in the form attached hereto as Exhibit B.

 

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“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.

 

“Business Day” shall mean a day of the year on which (i) banks located in the city in which the Principal Office of the Trustee is located are not required or authorized to remain closed, (ii) banks located in the city in which the Principal Office of the Auction Agent, as set forth in Section 7.2 hereof, is located are not required or authorized to remain closed, (iii) banks located in the city in which the Principal Office of each Broker-Dealer, as set forth in and for purposes of the applicable Broker-Dealer Agreement, is located are not required or authorized to remain closed and (iv) The New York Stock Exchange is not closed.

 

“Existing Holder 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 E hereof.

 

“Notice of Payment Default” shall mean a notice substantially in the form of Exhibit F hereto.

 

“Notice of Ratings” shall mean a notice substantially in the form of Exhibit C hereto.

 

“Notice of Series 2004-C/D Notes Outstanding” shall mean a notice substantially in the form of Exhibit D 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 G 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.

 

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(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 Trustee, the Auction Agent and the Issuer under this Auction Agent Agreement shall apply to the Series 2004-C1 Notes, the Series 2004-C2 Notes, the Series 2004-C3 Notes, the Series 2004-C4 Notes, the Series 2004-C5 Notes and the Series 2004-D Notes, but separately in each case. References to “Series 2004-C/DNotes” shall, unless the context clearly contemplates a reference to all the Series 2004-C/D Notes, be deemed to refer only to a particular series of Series 2004-C/D Notes.

 

Section 2. The Auction .

 

2.1 Interest Rate on Series 2004-C/D Notes; Incorporation by Reference of Auction Procedures and Settlement Procedures .

 

(a) During the Initial Interest Period, each of the Series 2004-C1 Notes, the Series 2004-C2 Notes, the Series 2004-C3 Notes, the Series 2004-C4 Notes, the Series 2004-C5 Notes and the Series 2004-D Notes shall bear interest at the Series 2004-C/D Note Initial Interest Rate for such series. Thereafter, the Series 2004-C/D Notes shall bear interest at the Series 2004-C/D Note Interest Rate based on an Interest Period that shall be an Auction Period. The Series 2004-C/D Note Auction Rate on each series of the Series 2004-C/D Notes for each Auction Period shall be the lesser of (i) the Net Loan Rate and (ii) the Auction Rate determined in accordance with Sections 3 through 12 of the First Supplemental Indenture (not to exceed 18% per annum). Pursuant to Section 8 of the First Supplemental 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 Series 2004-C/D Note Auction Rate for each series of the Series 2004-C/D Notes for each Auction Period other than the Initial Interest 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 Holder Registry .

 

(a) A list of Broker-Dealers with respect to the Series 2004-C/D Notes (showing RBC Dain Rauscher Inc. as the sole initial Broker-Dealer) is attached as Exhibit A to this Auction Agent Agreement. Not later than seven days prior to any

 

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Auction Date for which any change in such list of Broker-Dealers is to be effective, the 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., New York City time, on the new Auction Date and 9:15 a.m., New York City time, 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 Series 2004-C/D Notes, for purposes of dealing with the Auction Agent in connection with an Auction (such registry being herein called the “Existing Holder Registry”). Such Persons shall constitute the “Existing Holders” for purposes of dealing with the Auction Agent in connection with an Auction. The Auction Agent shall indicate in the Existing Holder Registry for each Existing Holder the identity of the Broker-Dealer which submitted the most recent Order in any Auction which resulted in such Existing Holder continuing to hold or purchasing the Series 2004-C/D Notes. Pursuant to its Broker-Dealer Agreement, RBC Dain Rauscher Inc., as the sole initial Broker-Dealer with respect to the Series 2004-C/D Notes, has 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 Holder Registry as constituting the initial Existing Holders of Series 2004-C/D Notes 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 Holders, such list, the results of each Auction and notices from any Existing Holder, Participant of any Existing Holder or Broker-Dealer of any Existing Holder as described in Section 2.2(c)(iii) hereof.

 

(ii) The Trustee shall notify the Auction Agent when any notice of redemption is sent to the Securities Depository as the Holder of Series 2004-C/D Notes not later than 11:00 a.m., New York City time, on the date such notice is sent. Such notice with respect to a redemption shall be substantially in the form of Exhibit D hereto, Notice of Series 2004-C/D Notes Outstanding. In the event the Auction Agent receives from the Trustee written notice of any partial redemption of any Series 2004-C/D Notes, the Auction Agent shall, at least two Business Days prior to the next Auction, request each Participant to disclose to the Auction Agent (upon selection by such Participant of the Existing Holders whose Series 2004-C/D Notes are to be redeemed) the aggregate principal amount of such Series 2004-C/D Notes of each such Existing Holder, if any, which are to be redeemed; provided the Auction Agent has been furnished with the name and

 

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telephone number of a person or department at such Participant from which it is to request such information. In the absence of receiving any such information with respect to any Existing Holder, from such Existing Holder’s Participant or otherwise, the Auction Agent may continue to treat such Existing Holder as the beneficial owner of the principal amount of Series 2004-C/D Notes shown in the Existing Holder Registry.

 

(iii) The Auction Agent shall be required to register in the Existing Holder Registry a transfer of Series 2004-C/D Notes from an Existing Holder 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 Holder, by the Participant of such Existing Holder or by the Broker-Dealer of such Existing Holder 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 Series 2004-C/D Notes in an Auction of the failure of such Series 2004-C/D 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., New York City time, on the Business Day next preceding the applicable Auction Date.

 

(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 Series 2004-C/D Notes held by such Broker-Dealers for purposes of the Existing Holder Registry, as well as with a list of their respective customers that such Broker-Dealers believe are Existing Holders of the Series 2004-C/D Notes and the aggregate principal amount of Series 2004-C/D Notes beneficially owned by each such customer. 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 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 would expose the Auction Agent to liability, claim or damage for which the Auction Agent has not previously received indemnity reasonably satisfactory to it. The Auction Agent shall notify the Issuer, the Trustee and each Broker-Dealer promptly upon receipt of any request or demand to disclose such information and shall cooperate with any party seeking a protective order or similar relief.

 

(e) The Auction Agent shall send by telecopy or other means a copy of any Notice of Series 2004-C/D Notes Outstanding received from the Trustee to each Broker-Dealer in accordance with Section 4.3 of the applicable Broker-Dealer Agreement.

 

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2.3 All Hold Rates, Maximum Auction Rates, Net Loan Rate, One-Month LIBOR and Three-Month LIBOR .

 

(a) On each Auction Date, the Auction Agent shall determine the All Hold Rate, the Maximum Auction Rate and One-Month LIBOR or Three-Month LIBOR, as the case may be. The Net Loan Rate with respect to each Auction Date shall be determined and written notice thereof given to the Auction Agent in accordance with Section 6 of the First Supplemental Indenture. Not later than 9:30 a.m., New York City time, on each Auction Date, the Auction Agent shall notify the Trustee and the Broker-Dealers of the All Hold Rate, the Maximum Auction Rate, the Net Loan Rate and One-Month LIBOR or Three-Month LIBOR, as the case may be, so determined. On or within three Business Days after the Closing Date, the Issuer shall give written notice to the Auction Agent of the initial ratings on the Series 2004-C/D Notes by Moody’s and Fitch substantially in the form of the Notice of Ratings. Thereafter, if there is a change in one or both 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, New York City time, 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.

 

(b) (i) If, on any Auction Date for an Auction Period, an Auction is not held for any reason, then the Series 2004-C/D Note Auction Rate for the next succeeding Auction Period shall be the Net Loan Rate.

 

(ii) If the ownership of the Series 2004-C/D Notes is no longer maintained in Book-Entry Form by the Securities Depository, no further Auctions shall be held and the Series 2004-C/D Note Auction Rate for each Interest Period commencing after the delivery of certificated Series 2004-C/D Notes pursuant to Section 17 of the First Supplemental Indenture shall equal the lesser of the Net Loan Rate and the Maximum Auction Rate as determined by the Trustee on the Business Day immediately preceding the first day of such subsequent Interest Period as provided in Section 3 of the First Supplemental Indenture.

 

(iii) If a Payment Default shall have occurred with respect to a series of Series 2004-C/D Notes, the Series 2004-C/D Note Auction 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 Trustee on the first day of such Interest Period as provided in Section 3 of the First Supplemental Indenture. The Series 2004-C/D Note Auction Rate for each Interest Period commencing at least two Business Days after any cure of a Payment Default shall be determined through implementation of the Auction Procedures.

 

2.4 Auction Schedule . The Auction Agent shall conduct Auctions on the Auction Date in accordance with the schedule set forth below. Such schedule may be changed by the

 

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Auction Agent with the consent of the Trustee and the Market Agent, which consent shall not be unreasonably withheld or delayed. The Auction Agent shall give notice pursuant to Section 4.3 of the applicable Broker-Dealer Agreement of any such change to each Broker-Dealer. Such notice shall be given prior to the first Auction Date on which any such change shall be effective.

 

1/	If the Series 2004-C/D Note Auction Rate is the Auction Rate.

 

2/	If the Series 2004-C/D Note Auction Rate is the Net Loan Rate.

 

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 10(a) of the First Supplemental Indenture to the Existing Holders within two Business Days of its receipt thereof.

 

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(ii) The Auction Agent shall deliver any certificate delivered to it pursuant to Section 10(c) of the First Supplemental Indenture to the Broker-Dealers not later than 3:00 p.m., New York City time, 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 10(a) of the First Supplemental Indenture, the Auction Agent fails to receive the certificate r