Exhibit 99.7
AUCTION AGENCY AGREEMENT
This Auction Agency Agreement (the "Agreement"), dated as of ________ __,
2003, among PHEAA Student Loan Trust I, a Delaware statutory trust (the
"Issuer"), Manufacturers and Traders Trust Company, a New York corporation (the
"Trustee") solely in its capacity as Trustee under an Indenture of Trust, dated
as of ________ __, 2003, by and between the Issuer and the Trustee (the
"Indenture"), and ______________, a ____________ corporation (together with its
successors and assigns, the "Auction Agent"), acting not in its individual
capacity, but solely as agent for the Issuer.
Background
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The Issuer proposes to issue $___________ aggregate principal amount of its
Student Loan Asset-Backed Notes, Series ____________, Class ______ and Class
______ (the "Offered Notes"). The Offered Notes will be issued pursuant to the
Indenture and a First Supplemental Indenture, dated as of ________ __, 2003, by
and between the Issuer and the Trustee (the "First Supplemental Indenture"). The
interest rate on the Offered Notes will be determined pursuant to the Auction
Procedures attached as Appendix A to the Indenture (the "Auction Procedures")
(the Indenture, the First Supplemental Indenture and the Auction Procedures are
collectively referred to herein as the "Indenture").
Pursuant to Section 2.02(e) of the Auction Procedures, the Auction Agent
has been appointed to act in the capacities set forth in this Agreement. The
Trustee is entering into this Agreement upon the direction of the Issuer and
pursuant to the terms of the Indenture.
Now, Therefore, in consideration of the premises and the mutual covenants
contained herein, the adequacy and sufficiency of which are hereby acknowledged
,and intending to be legally bound hereby, the Issuer, the Trustee and the
Auction Agent agree as follows:
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 respective meanings specified in
the Indenture, including the Auction Procedures.
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:
(a) "AUCTION" shall have the meaning specified in Section 2.1 hereof.
(b) "AUCTION AGENT FEE" shall have the meaning specified in Section
3.5(a) hereof.
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(c) "AUCTION PROCEDURES" shall mean the Auction Procedures that are
set forth in Appendix A to the First Supplemental Indenture.
(d) "AUTHORIZED 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 _______________, and every other officer or employee of the
Auction Agent designated as an "Authorized Officer" for purposes hereof in a
communication to the Trustee.
(e) "AUTHORIZED TRUSTEE REPRESENTATIVE" shall mean each Senior Vice
President, Vice President, and Assistant Vice President of the Trustee and every
other officer or employee of the Trustee designated as an "Authorized Trustee
Representative" for purposes hereof in a communication to the Auction Agent.
(f) "BROKER-DEALER AGREEMENT" shall mean each agreement between the
Auction Agent and a Broker-Dealer substantially in the form of the Broker-Dealer
Agreement, dated as of ________ _, 2003, between ___________________, as Auction
Agent, and _______________, as Broker-Dealer.
(g) "BROKER-DEALER FEE" shall have the meaning specified in Section
3.6(a) hereof.
(h) "DTC PARTICIPANT" or "PARTICIPANT" of any person shall mean the
member of, or participant in, the Depository that will act on behalf of an
Existing Owner or Potential Owner.
(i) "EXISTING OWNER REGISTRY" shall mean the register of Existing
Owners maintained by the Auction Agent pursuant to Section 2.2(b)(i) hereof.
(j) "OWNER" shall be the beneficial owner of any Offered Notes.
(k) "LETTER OF REPRESENTATION" shall mean the letter of
representations from the Issuer and the Trustee to The Depository Trust Company
("Depository") of even date herewith relating to the Offered Notes.
(l) "SETTLEMENT PROCEDURES" shall mean the Settlement Procedures
attached to the Broker-Dealer Agreement as Exhibit A thereto.
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 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 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 Agreement as a whole;
(d) all references herein to a particular time of day shall be to New
York City time;
(e) in case of any conflict between the provisions of this Agreement
and provisions of the Auction Procedures, the Auction Procedures shall control;
and
(f) the rights and duties of the Trustee, the Auction Agent and the
Issuer under this Agreement shall apply to each class of the Offered Notes, but
separately in each case.
2. THE AUCTION.
2.1 Purpose; Incorporation by Reference of Auction Procedures and
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Settlement Procedures.
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(a) The Indenture provides that the interest rate on Offered Notes for each
Auction Period after the Initial Interest Period, except as otherwise provided
in the Auction Procedures, shall be, subject to certain exceptions, equal to the
Auction Rate that the Auction Agent advises has resulted on the Auction Date
from the implementation of the Auction Procedures. The Issuer hereby appoints
____________________ as Auction Agent to perform all duties and obligations of
the Auction Agent set forth herein. ___________________ hereby accepts such
appointment as Auction Agent and agrees it will perform such duties and
obligations, including, without limitation, on each Auction Date, the procedures
set forth in this Section 2 and the Auction Procedures for the purpose of, among
other things, determining the applicable Auction Rate for each Auction Rate
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 for Each Auction; Maintenance of Registry of Existing
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Owners.
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(a) A list of Broker-Dealers is attached as Exhibit B to this 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 Issuer will notify the Auction
Agent and the Trustee in writing of such change. 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 Trustee 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, at the
request of the Auction Agent the Issuer, not later than two days prior to any
Auction Date, shall enter into an additional Broker-Dealer Agreement or
agreements to be used in connection with such forthcoming Auction Date.
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(b) 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 maintain a current registry of Broker-Dealers,
compiled as described below, that are Owners of Offered Notes for the purpose of
dealing with the Auction Agent inn 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 each Auction. The Issuer shall provide to the Auction Agent only
on the Issue Date a list of the initial Existing Owners of Offered Notes and the
aggregate principal amount of Offered Notes held by such Existing Owners.
Thereafter, the Auction Agent shall indicate in the Existing Owner Registry the
aggregate principal amount of Offered Notes held by each initial Existing Owner
and the identity of the respective Broker-Dealer of each Existing Owner, if any,
on whose behalf such Broker-Dealer submitted the most recent Order in any
Auction which resulted in such Existing Owner continuing to hold or purchasing
the Offered Notes. The Auction Agent may conclusively rely upon, as evidence of
the identities of the Existing Owners, (A) such Registry, (B) the results of
each Auction, (C) notices from any Existing Owner, the Participant of any
Existing Owner or the Broker-Dealer of any Existing Owner as described in the
first sentence of Section 2.2(b)(iii) hereof and (D) the selection by the
Securities Depository of the Existing Owners whose Offered Notes are to be
tendered for purchase and any notices from Broker-Dealers in connection
therewith.
(i) The Trustee shall notify the Auction Agent when any notice of
redemption of the Offered Notes is sent by the Trustee to the Securities
Depository as Registered Owner of Offered Notes not later than 11:00 A.M. on the
date such notice is sent. In the event the Auction Agent receives from the
Trustee written notice of any partial redemption of any Offered Notes, the
Auction Agent shall, at least two Business Days prior to the Redemption Date,
with respect to such Offered Notes, request the Securities Depository to notify
the Auction Agent of the identities of the Participants (and the respective
principal amounts) from the accounts of which Offered Notes have been called for
redemption and the person or department at such Participant to contact regarding
such redemption and, at least one Business Day prior to the Redemption Date with
respect to Offered Notes being partially redeemed, the Auction Agent shall
request each Participant so identified to disclose to the Auction Agent (upon
selection by such Participant of the Existing Owners whose Offered Notes are to
be redeemed) the aggregate principal amount of such Offered Notes of each such
Existing Owner, if any, to be redeemed by the Issuer and the respective
Broker-Dealer through which said Existing Owner purchased such Offered Notes;
provided the Auction Agent has been furnished with the name and 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 an
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
aggregate principal amount of Offered Notes shown in the Existing Owner
Registry. By the close of business on the day the Auction Agent receives any
notice pursuant to this paragraph (ii), the Auction Agent shall forward the
contents of such notice to the related Broker-Dealer in writing.
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(ii) The Auction Agent shall register in the Existing Owner Registry a
transfer of Offered 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) if such transfer is made other than pursuant to
an Auction, the Auction Agent has been notified in writing in a notice
substantially in the form of Exhibit C to the Broker-Dealer Agreement by the
Existing Owner that is the transferor, the Participant of such Existing Owner or
the Broker-Dealer of such Existing Owner, of such transfer. The Auction Agent
shall rescind a transfer made on the Existing Owner Registry if the Auction
Agent has been notified in writing in a notice substantially in the form of
Exhibit C to the Broker-Dealer Agreement by the Broker-Dealer of any person that
(i) purchased any Offered Notes and the seller failed to deliver such Offered
Notes or (ii) sold any Offered Notes and the purchaser failed to make payment to
such person upon delivery to the purchaser of such Offered Notes. The Auction
Agent is not required to accept any notice of transfer or any notice of a
failure to deliver 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.
(d) The Auction Agent may request that the Broker-Dealers, as set forth in
the Broker-Dealer Agreements, provide the Auction Agent with a list of their
respective customers that such Broker-Dealers believe are Existing Owners of
Offered Notes and the aggregate principal amount of Offered Notes beneficially
owned by each such customer for purposes of the Existing Owner Registry. Except
as permitted by Section 2.10 hereof, the Auction Agent shall treat such
information as it treats its own confidential information and shall not
authorize disclosure of 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
subject the Auction Agent to liability for which it has not received indemnity
satisfactory to it.
(e) 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 referred to in
clause (vi) 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 9:15 A.M. on the earlier of the new
Auction Date or the old Auction Date.
2.3 All Hold Rate, Maximum Auction Rate and Applicable LIBOR Rate.
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(a) On the date hereof the Applicable LIBOR Rate for the Series _____ Notes
is ____%. In determining the Maximum Auction Rate on any Auction Date as set
forth in Section 2.3(b)(i) hereof, the Auction Agent shall be entitled to
conclusively rely on the Applicable LIBOR Rate of which it has most recently
received notice (or, in the absence of such notice, the Applicable LIBOR Rate
set forth in the first sentence of this paragraph (a)).
(b) (i) On each Auction Date, the Auction Agent shall determine the
Carry-over Amount and any interest thereon, the Maximum Auction Rate, the
Maximum Rate, the Maximum Interest Rate, the All Hold Rate, One-Month LIBOR and
the
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Applicable LIBOR Rate. Not later than 10:30 A.M. on each Auction Date the
Auction Agent shall notify the Trustee and the Broker-Dealers of such rates. On
the Closing Date, the Issuer shall give written notice to the Auction Agent of
the initial ratings on the Offered Notes by each Rating Agency. Thereafter, if
there is a change in any of such ratings, the Issuer shall give written notice
to the Auction Agent 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 is received by the
Auction Agent no later than the close of business on such Business Day.
(ii) If the ownership of the Offered Notes is no longer maintained in
book-entry form by the Depository, no further Auctions will be held and the
interest rate on the Offered Notes for each subsequent Auction Period will equal
the Maximum Rate as determined by the Auction Agent on the Business Day
immediately preceding the first day of such Auction Period as provided in the
Indenture.
(c) Upon receipt of notice from the applicable Broker-Dealer of a change in
the length of one or more Auction Periods described in the Indenture, and
provided that no certificate was received from such Broker-Dealer pursuant to
the terms of the Indenture, then the interest rate on the Offered Notes for the
next Auction Period shall be determined pursuant to the Auction Procedures. If a
certificate from a Broker-Dealer is received by the Auction Agent pursuant to
the terms of the Indenture but Sufficient Clearing Bids do not exist on the
Auction Date for such first Auction Period then the interest rate on the Offered
Notes for the Auction Period shall be the Maximum Rate as provided in the
Indenture.
2.4 Auction Schedule. The Auction Agent shall conduct Auctions in
accordance with the schedule set forth below. Such schedule may be changed by
the Auction Agent with the consent of the Trustee, at the direction of the
Issuer, which consent shall not be unreasonably withheld or delayed. The Auction
Agent shall give notice of any such change to each Broker-Dealer. Such notice
shall be given prior to the close of business on the Business Day next preceding
the first Auction Date on which any such change shall be effective.
Time Event
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By 9:30 A.M. Auction Agent obtains the Maximum Auction Rate,
the Maximum Rate, the Maximum Interest Rate,
the All Hold Rate, One-Month LIBOR and the
Applicable LIBOR Rate. Auction Agent notifies
the Trustee, and the Broker-Dealers of the
Maximum Auction Rate, the Maximum Rate, the
Maximum Interest Rate, the All Hold Rate, One-
Month LIBOR and the Applicable LIBOR Rate.
9:30 A.M. - 1:00 P.M. Auction Agent assembles information
communicated to it by Broker-Dealers as
provided in the Auction
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Time Event
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Procedures. Submission Deadline is 1:00 P.M.
Not earlier than 1:00 P.M. Auction Agent makes determinations pursuant to
the Auction Procedures. Submitted Bids and
Submitted Sell Orders are accepted and rejected
in whole or in part and principal amounts of
Offered 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.
Not later than 3:00 P.M. Auction Agent advises the Trustee of the
Auction Rate for the next Interest Period and
the results of the Auction as provided in the
Auction Procedures. The Auction Agent shall
follow the notification procedures set forth
in paragraph (a) of the Settlement Procedures.
2.5 Changes to the Auction Rate Period or Auction Date.
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(i) The Auction Agent shall mail any notice delivered to it pursuant to
Section 2.02(g)(i) of the Auction Procedures to the Existing Owners within two
Business Days of its receipt thereof.
(ii) The Auction Agent shall mail any certificate delivered to it pursuant
to Section 2.02(g)(iii) of the Auction Procedures to the Existing Owners within
the two Business Days of its receipt thereof.
(iii) If, after delivery to the Auction Agent of the notice referred to in
Section 2.02(g)(i) of the Auction Procedures, the Auction Agent fails to receive
the certificate referred to in Section 2.02(g)(iii) of the Auction Procedures by
11:00 A.M. on the Business Day immediately preceding the next succeeding Auction
Date, the Auction Agent shall deliver a notice of such failure 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
Section 2.02(g)(i) of the Auction Procedures and the certificate referred to in
Section 2.02(g)(iii) of the Auction Procedures, Sufficient Clearing Bids are not
received by the Auction Agent by the Submission Deadline, the Auction Agent
shall deliver a notice of such fact to the Broker-Dealers not later than 3:00
P.M. on such Auction Date by telephone confirmed in writing the next Business
Day.
2.6 Notices to Existing Owners. The Auction Agent shall be entitled to
conclusively rely upon the address of each Existing Owner as such address is
delivered by such Existing Owner or such Existing Owner's Broker-Dealer or
Participant in connection with any notice to Existing Owners required to be
given by the Auction Agent.
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2.7 Ownership by Issuer Prohibited. The Issuer may not submit any Order or
Bid, directly or indirectly, in any Auction. The Auction Agent shall have no
duty or liability with respect to monitoring compliance with or enforcing this
Section 2.7.
2.8 Payment Defaults.
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(a) The Auction Agent shall deliver a copy of any notice received by it
from the Trustee to the effect that a Payment Default has occurred to the
Broker-Dealers on the Business Day following its receipt thereof by telecopy or
other similar means.
(b) The Auction Agent shall deliver a copy of any notice received by it
from the Trustee to the effect that a Payment Default has been waived or cured
to the Broker-Dealers on the Business Day following its receipt thereof by
telecopy or other similar means.
(c) If a Payment Default shall have occurred, the Auction Agent shall
calculate the Default Rate on the first day of:
(i) each Interest Period commencing after the occurrence and during
the continuance of such Payment Default; and
(ii) any Interest Period commencing less than two Business Days after
the cure of any Payment Default.
2.9 Broker-Dealers.
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(a) If the Auction Agent is provided with a copy of a Broker-Dealer
Agreement, which has been manually signed by any person listed on Exhibit B
hereto, and to which the Issuer shall have consented, it shall enter into such
Broker-Dealer Agreement with such person. The Issuer hereby consents to the
entering into Broker-Dealer Agreements with _________ and _________.
(b) The Auction Agent may, at the written request of the Issuer, 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. The Auction Agent shall only be required
to enter into a Broker-Dealer Agreement if such Broker-Dealer Agreement is in
substantially the form of the Broker-Dealer Agreement executed and delivered on
the date hereof.
(c) The Auction Agent shall terminate any Broker-Dealer Agreement as set
forth therein if so directed in writing by the Issuer.
2.10 Access to and Maintenance of Auction Records. The Auction Agent shall
afford to the Trustee and the Issuer, its agents, independent public accountants
and counsel, access at reasonable times during normal business hours to review
and make extracts or copies (at the Issuer's sole cost and expense and at no
cost to the Auction Agent) of all books, records, documents and 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
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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 Trustee or of the Issuer. The Auction Agent shall
maintain records relating to any Auction for a period of two years after such
Auction (unless requested by the Issuer to maintain such records for such longer
period not in excess of four years, then for such longer period), 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, if requested to
do so in writing, the Auction Agent shall deliver such records to the Trustee.
The Trustee and the Issuer agree to keep any information regarding the customers
of any Broker-Dealer received from the Auction Agent in connection with this
Agreement or any Auction 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. The Auction Agent shall not be responsible or liable for any
actions of the Trustee or the Issuer or their respective agents, accountants or
counsel for disclosure of confidential information as a result of such access.
3. THE AUCTION AGENT.
3.1 Duties and Responsibilities of the Auction Agent.
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(a) The Auction Agent is acting solely as agent for the Trustee and the
Issuer hereunder and has no duties to any other person and owes no fiduciary
duties to any other person by reason of this Agreement.
(b) The Auction Agent undertakes to perform such duties and only such
duties as are specifically set forth in the Auction Procedures as they have been
incorporated herein, and in this Agreement itself, and no implied covenants or
obligations shall be read into the Auction Procedures or this Agreement or any
Broker-Dealer Agreement against the Auction Agent.
(c) 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
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
(or failing to ascertain) the pertinent facts.
3.2 Representations and Warranties of the Auction Agent.
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The Auction Agent hereby represents and warrants to the Trustee that:
(a) it has been duly incorporated and is validly existing and in good
standing as a _______________ corporation and
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(b) it has all necessary authority, approvals, consents (whether from the
Issuer or otherwise) to enter into and perform its obligations under this
Agreement; this Agreement has been duly and validly authorized, executed and
delivered by the Auction Agent and constitutes the legal, valid, binding and
enforceable obligation of the Auction Agent, except as enforcement thereof may
be limited by bankruptcy, insolvency, moratorium, reorganization or other laws
of general applicability relating to or affecting creditors' rights and subject
to general principles of equity and the exercise of judicial discretion.
(c) Neither the execution, delivery and performance of this Agreement, the
consummation of the transactions contemplated hereby nor the fulfillment of or
compliance with the terms and conditions of this 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 Auction Agent, or, to the
best of its knowledge without any independent investigation, any mortgage,
indenture, contract, agreement or undertaking to which the Auction Agent is
party or by which it is bound, or the organizational documents pursuant to which
the Auction Agent has been created and under which it is operating.
(d) All approvals, consents and orders of any governmental authority,
legislative body, board, agency or commission having jurisdiction over the
Auction Agent which would constitute a condition precedent to or the absence of
which would materially adversely affect the due performance by the Auction Agent
of its obligations under this Agreement have been obtained.
3.3 Rights of the Auction Agent.
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(a) The Auction Agent may conclusively rely and shall be fully protected in
acting or refraining from acting upon any communication authorized hereby and
upon any written instruction, notice, request, direction, consent, report,
certificate, bond certificate or other instrument, paper or document reasonably
believed by it to be genuine. The Auction Agent shall not be liable for acting
upon any telephone communication authorized hereby which the Auction Agent
believes in good faith to have been given by the Trustee, a Broker-Dealer, the
Issuer or the Securities Depository. The Auction Agent may record telephone
communications with the Trustee or with the Broker-Dealers or both.
(b) The Auction Agent may consult with counsel of its choice, and the
advice 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 or attorneys.
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(e) The Auction Agent shall have no obligation or liability in respect of
the registration or exemption therefrom of the Offered Notes under federal or
state securities laws or in respect of the sufficiency or the conformity of any
transfer of Offered Notes pursuant to the terms of this Agreement, any
Broker-Dealer Agreement, the Indenture or the Auction Procedures or any other
document contemplated therein or thereby.
3.4 Auction Agent's Disclaimer. The Auction Agent makes no representation
as to the correctness of the recitals in, or the validity or adequacy of, this
Agreement, the Broker-Dealer Agreement, the Offered Notes, any offering document
used to make offers or sales thereof or any other agreement or instrument
executed in connection with the transactions contemplated herein.
3.5 Compensation, Remedies and Indemnification Relating to the Auction
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Agent.
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(a) Subject to the terms of the Indenture, the Auction Agent shall be
entitled to receive an annual fee ("the Auction Agent Fee") for all services
rendered by it under this Agreement and the Broker-Dealer Agreement pursuant to
its fee letter with the Issuer.
(b) The Issuer shall indemnify and hold harmless the Auction Agent and its
directors, officers, employees and agents, but solely to the extent payable from
Trust Estate pursuant to the Indenture from and against any loss, liability or
expense incurred without negligence or bad faith on the Auction Agent's part,
arising out of or in connection with its agency under this 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 4.5(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 Agreement.
3.6 Compensation of the Broker-Dealers.
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(a) The Broker-Dealers shall be entitled to receive a fee for all services
rendered by them under the Broker-Dealer Agreements, as provided in the
Broker-Dealer Agreements (the "Broker-Dealer Fee"). The Broker-Dealer Fee shall
be ________% per annum.
(b) On each Interest Payment Date the Auction Agent shall pay the
Broker-Dealer Fee payable to each Broker-Dealer, as provided in Section 2.5 of
the Broker-Dealer Agreements.
3.7 Representations and Warranties of the Trustee.
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(a) The Trustee hereby represents and warrants to the Auction Agent that it
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(i) has been duly incorporated and is validly existing and in good
standing as a New York corporation, and
(ii) has all necessary authority, approvals, consents (whether from
the Issuer or otherwise) to enter into and perform its obligations under this
Agreement; this Agreement has been duly and validly authorized, executed and
delivered by the Trustee and constitutes the legal, valid, binding and
enforceable obligation of the Trustee, except as enforcement thereof may be
limited by bankruptcy, insolvency, moratorium, reorganization or other laws of
general applicability relating to or affecting creditors' rights and subject to
general principles of equity and the exercise of judicial discretion.
(b) Neither the execution, delivery and performance of this Agreement, the
consummation of the transactions contemplated hereby nor the fulfillment of or
compliance with the terms and conditions of this 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 Trustee, or any mortgage,
indenture, contract, agreement or undertaking to which the Trustee is party or
by which it is bound, or the organizational documents pursuant to which the
Trustee has been created and under which it is operating.
(c) All approvals, consents and orders of any governmental authority,
legislative body, board, agency or commission having jurisdiction over the
Trustee which would constitute a condition precedent to or the absence of which
would materially adversely affect the due performance by the Trustee of its
obligations under this Agreement have been obtained.
3.8 Qualification of Auction Agent. Each Auction Agent shall be
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(i) a bank or trust company duly organized under the laws of the United
States of America or any state or territory thereof having a place of business
in the Borough of Manhattan, in The City of New York (or such other location as
may be approved by the Issuer), and having a combined capital stock, surplus and
undivided profits of at least $50,000,000; or
(ii) a member of the National Association of Securities Dealers, Inc.,
having net capital of at least $50,000,000 and, in either case, authorized by
law to perform all the duties imposed upon it hereunder and under the Indenture.
4. MISCELLANEOUS.
4.1 Term of Agreement.
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(a) This Agreement shall terminate on the earlier of (i) the date on which
Offered Notes are no longer outstanding under the Indenture and (ii) the date on
which this Agreement is terminated in accordance with this Section 4.1. This
Agreement shall also be terminated if all of the Offered Notes are converted to
Offered Notes bearing interest at either a Fixed Rate or an Adjustable Rate. The
Auction Agent may resign and be discharged of the duties and obligations created
by the First Supplemental Indenture
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by giving at least 90 days' written notice to the Issuer, the Trustee and the
Broker-Dealers (30 days' written notice if the Auction Agent has not been paid
its fee for more than 30 days). The Auction Agent may be removed at any time by
the Trustee (if the Auction Agent is an entity other than the Trustee), acting
at the direction of:
(i) the Issuer; or
(ii) the holders of 66-2/3% of the aggregate principal amount of the
Offered Notes, by an instrument signed by the Trustee and filed with the Auction
Agent, the Issuer and the Broker-Dealers upon at least 90 days' notice; provided
that, if required by the Broker-Dealer, an agreement in substantially the form
of the Auction Agency Agreement shall be entered into with a successor Auction
Agent. If the Auction Agent and the Trustee are the same entity, the Auction
Agent may be removed as described above, with the Issuer acting in lieu of the
Trustee. Neither resignation nor removal of the Auction Agent pursuant to the
preceding two sentences shall be effective until and unless a successor Auction
Agent satisfying the requirements of Section 3.8 hereof has been appointed and
has accepted such appointment. If required by the Issuer, a replacement Auction
Agency Agreement shall be entered into with a successor Auction Agent.
Notwithstanding the foregoing, the Auction Agent may terminate this Agreement
if, within 45 days after notifying the Trustee and the Issuer in writing that it
has not received payment of any Auction Agent Fee due it in accordance with the
terms of this Agreement, the Auction Agent does not receive such payment. If the
Auction Agent shall resign or be removed or be dissolved, or if the property or
affairs of the Auction Agent shall be taken under the control of any state or
federal court or administrative body because of bankruptcy or insolvency, or for
any other reason, the Issuer shall use its best efforts to appoint a successor
Auction Agent, and the Trustee shall thereupon enter into an Auction Agency
Agreement with such successor.
(b) Except as otherwise provided in this Section 4.1(b), the respective
rights and duties of the Trustee and the Auction Agent under this Agreement
shall cease upon termination of this Agreement. The covenants and obligations of
the Issuer to the Auction Agent under Section 3.5 hereof and to the
Broker-Dealers under Section 3.6 hereof shall survive the termination of this
Agreement. Upon termination of this Agreement, to the extent requested to do so
in writing, the Auction Agent shall:
(i) promptly deliver to the Trustee copies of all books and records
maintained by it in connection with its duties hereunder; and
(ii) promptly transfer to the Trustee or any successor Auction Agent
any funds deposited by the Trustee or the Issuer with the Auction Agent pursuant
to this Agreement which have not previously been distributed by the Auction
Agent in accordance with this Agreement.
4.2 Communications. Except for:
---------------
(i) communications authorized to be made by telephone pursuant to this
Agreement or the Auction Procedures; and
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(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 forth below: If to the Trustee, addressed: Manufacturers and Traders
Trust Company, 000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, Telephone:
(000) 000-0000; Facsimile: (000) 000-0000. If to the Auction Agent, addressed:
______________________________, Telephone: __________________ Facsimile:
_______________________. If to the Issuer, addressed: PHEAA Student Loan Trust
I, One Xxxxxx Square, Suite 102, 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000
Attention: _____________________ Telephone: (302) ___-____ Facsimile: (302)
___-____. If to the Broker-Dealer, addressed: _______________, ______________,
___ Floor New York, New York 100__ Attention: ________ Telephone: (212)
_________ Facsimile: (212) ___________, or such other address or facsimile
number as such party may hereafter specify for such purpose by notice to the
other party. Each such notice, request or communication shall be effective when
delivered at the address specified herein. Communications shall be given on
behalf of the Trustee by an Authorized Trustee Representative and on behalf of
the Auction Agent by an Authorized Officer.
4.3 Entire Agreement. This 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.
4.4 Benefits. Nothing herein, express or implied, shall give to any person,
other than the Trustee, the Auction Agent, the Issuer and their respective
successors and assigns, any benefit of any legal or equitable right, remedy or
claim hereunder.
4.5 Amendment; Waiver.
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(a) This 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 a duly authorized representative of both parties hereto;
provided, however, that the provisions of this Agreement regarding Auction
Procedures may be amended from time to time to conform to such procedures to
industry or market practices solely upon the written consent of the parties
hereto and upon written notice of such amendment to the affected Owners of such
Offered Notes, and no prior written consent of any such owner shall be required
in connection with such amendment.
(b) The Trustee shall promptly notify the Auction Agent of any proposed
amendment of or supplement to the Indenture (which notice shall include a copy
thereof). In the event the Auction Agent in its discretion determines that such
amendment or supplement would materially affect the Auction Agent's duties or
obligations under either this Agreement or the Indenture, the Auction Agent may
resign from its duties under this Agreement and the Indenture, which resignation
shall be effective no later than the effective date of such amendment or
supplement subject to the terms of Section 4.1.
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(c) Failure of either party hereto to exercise any right or remedy
hereunder in the event of a breach hereof by the other party shall not
constitute a waiver of any such right or remedy with respect to any subsequent
breach.
4.6 Successors and Assigns. This Agreement shall be binding upon, inure to
the benefit of, and be enforceable by, the respective successors and permitted
assigns of each of the Issuer, the Trustee and the Auction Agent. This Agreement
may not be assigned by any party hereto absent the prior written consent of the
other party, which consent shall not be unreasonably withheld or delayed.
4.7 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.
4.8 [Reserved]
4.9 Execution in Counterparts. This Agreement may be simultaneously
executed in several counterparts, each one of which shall be an original and all
of which shall constitute but one and the same instrument.
4.10 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania.
5. OTHER.
5.1 Trust Obligations. All privileges, rights and immunities given to the
Trustee in the Indenture are hereby extended to and applied to the Trustee's
obligations hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.
MANUFACTURERS AND TRADERS TRUST COMPANY,
AS TRUSTEE
By:
----------------------------------------
Name:
---------------------------------------
Title:
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--------------------------,
AS AUCTION AGENT,
By:
----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
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PHEAA STUDENT LOAN TRUST I,
by Pennsylvania Higher Education Assistance Agency,
as Administrator
By:
----------------------------------------
Name:
---------------------------------------
Title:
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EXHIBIT A
TO AUCTION AGENCY AGREEMENT
List Of Initial Broker-Dealers
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