================================================================================
SERVICING AGREEMENT
among
XXXXXX XXX SERVICING CORPORATION,
STUDENT LOAN MARKETING ASSOCIATION,
as Administrator
SLM STUDENT LOAN TRUST 1997-1,
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
not in its individual capacity
but solely as Eligible Lender Trustee
and
BANKERS TRUST COMPANY
not in its individual capacity
but solely as Indenture Trustee
Dated as of March 20, 1997
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I
Section 1.1 Definitions and Usage ....................................... 1
ARTICLE II
Section 2.1 Custody of Trust Student Loan Files ......................... 2
Section 2.2 Duties of Servicer as Custodian ............................. 2
Section 2.3 Maintenance of and Access to Records ........................ 3
Section 2.4 Release of Documents ........................................ 3
Section 2.5 Instructions; Authority To Act .............................. 3
Section 2.6 [RESERVED] .................................................. 3
Section 2.7 Effective Period and Termination ............................ 3
ARTICLE III
Section 3.1 Duties of Servicer .......................................... 4
Section 3.2 Collection of Trust Student Loan Payments ................... 6
Section 3.3 Realization upon Trust Student Loans ........................ 7
Section 3.4 No Impairment ............................................... 7
Section 3.5 Purchase of Trust Student Loans; Reimbursement .............. 7
Section 3.6 Primary Servicing Fee; Carryover Servicing Fee .............. 10
Section 3.7 Access to Certain Documentation and
Information Regarding Trust Student Loans ................. 10
Section 3.8 Servicer Expenses ........................................... 11
Section 3.9 Appointment of Subservicer .................................. 11
Section 3.10 Reports ..................................................... 11
Section 3.11 Covenants and Agreements of the Issuer,
Administrator, Eligible Lender Trustee
and Servicer .............................................. 12
Section 3.12 Special Programs ............................................ 13
Section 3.13 Financial Statements ........................................ 14
Section 3.14 Insurance ................................................... 14
Section 3.15 Administration Agreement .................................... 14
Section 3.16 Lender Identification Number ................................ 14
ARTICLE IV
Section 4.1 Representations of Servicer ................................. 15
Section 4.2 Indemnities of Servicer ..................................... 16
Section 4.3 Merger or Consolidation of, or Assumption of
the Obligations of, Servicer .............................. 17
Section 4.4 Limitation on Liability of Servicer ......................... 17
Section 4.5 Xxxxxx Xxx Servicing Corporation Not to Resign
as Servicer ............................................... 18
i
ARTICLE V
Section 5.1 Servicer Default ............................................ 19
Section 5.2 Appointment of Successor .................................... 20
Section 5.3 Notification to Noteholders and
Certificateholders ........................................ 21
Section 5.4 Waiver of Past Defaults ..................................... 21
ARTICLE VI
Section 6.1 Amendment ................................................... 22
Section 6.2 Notices ..................................................... 23
Section 6.3 Counterparts ................................................ 24
Section 6.4 Entire Agreement; Severability .............................. 24
Section 6.5 Governing Law ............................................... 24
Section 6.6 Relationship of Parties ..................................... 24
Section 6.7 Captions .................................................... 24
Section 6.8 Nonliability of Directors, Officers and
Employees of Servicer, the Eligible Lender
Trustee, the Indenture Trustee and the
Administrator ............................................. 24
Section 6.9 Assignment .................................................. 25
Section 6.10 Limitation of Liability of Eligible Lender
Trustee and Indenture Trustee ............................. 25
Attachment A Schedule of Fees
Attachment B Servicer Locations
Attachment C Reports
Appendix A
ii
SERVICING AGREEMENT
Xxxxxx Mae Servicing Corporation ("Servicer"), a corporation organized
under the laws of the State of Delaware, hereby agrees with SLM Student Loan
Trust 0000-0 (xxx "Xxxxxx"), Xxxxx Xxxxxxxxx Bank USA, National Association, not
in its individual capacity but in its capacity as trustee under a trust
agreement dated March 1, 1997 between SLM Funding Corporation and Chase
Manhattan Bank USA, National Association ("Eligible Lender Trustee"), the
Student Loan Marketing Association, a federally chartered corporation
("Administrator") and Bankers Trust Company, a New York banking corporation, not
in its individual capacity but in its capacity as Indenture Trustee under an
Indenture dated March 1, 1997 between SLM Student Loan Trust 1997-1 and Bankers
Trust Company (the "Indenture Trustee"), as follows:
WHEREAS, Eligible Lender Trustee will acquire certain education loans to
be held in the Trust formed pursuant to a trust agreement (the "Trust
Agreement"), dated as of March 1, 1997, between SLM Funding Corporation and
Eligible Lender Trustee;
WHEREAS, the Issuer will issue notes (the "Notes") pursuant to an
indenture (the "Indenture"), dated as of March 1, 1997, between the Issuer and
the Indenture Trustee and trust certificates (the "Certificates") pursuant to
the Trust Agreement, which Notes and Certificates are payable from the assets of
the Issuer;
WHEREAS, the Issuer, the Administrator and the Eligible Lender Trustee
desire Servicer to service said education loans held by the Eligible Lender
Trustee on behalf of the Issuer, and Servicer is willing to service said
education loans for the Issuer, the Administrator, the Eligible Lender Trustee
and the Indenture Trustee;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
Article I
Section 1.1 Definitions and Usage. Except as otherwise specified herein or as
the context may otherwise require, capitalized terms used but not otherwise
defined herein are defined in Appendix A hereto, which also contains rules as to
usage that shall be applicable herein.
Article II
Section 2.1 Custody of Trust Student Loan Files. To assure uniform quality in
servicing the Trust Student Loans and to reduce administrative costs, the Issuer
hereby revocably appoints the Servicer, and the Servicer hereby accepts such
appointment, to act for the benefit of the Issuer and the Indenture Trustee as
custodian of the following documents or instruments (collectively the "Trust
Student Loan Files") which are hereby constructively delivered to the Indenture
Trustee, as pledgee of the Issuer with respect to each Trust Student Loan:
(a) the original fully executed copy of the note evidencing the Trust
Student Loan; and
(b) any and all other documents and computerized records that the Servicer
shall keep on file, in accordance with its customary procedures,
relating to such Trust Student Loan or any obligor with respect
thereto.
Section 2.2 Duties of Servicer as Custodian. The Servicer shall hold the Trust
Student Loan Files for the benefit of the Issuer and the Indenture Trustee and
maintain such accurate and complete accounts, records and computer systems
pertaining to each Trust Student Loan File as shall enable the Issuer to comply
with this Agreement. In performing its duties as custodian the Servicer shall
act with reasonable care, using that degree of skill and attention that the
Servicer exercises with respect to the student loan files relating to comparable
student loans that the Servicer services on behalf of the Student Loan Marketing
Association and shall ensure that it fully complies with all applicable Federal
and state laws, including the Higher Education Act, with respect thereto. The
Servicer shall take all actions necessary with respect to the Trust Student Loan
Files held by it under this Agreement and of the related accounts, records and
computer systems, in order to enable the Issuer or the Indenture Trustee to
verify the accuracy of the Servicer's record keeping with respect to the
Servicer's obligations as custodian hereunder. The Servicer shall promptly
report to the Issuer, the Administrator and the Indenture Trustee any material
failure on its part to hold the Trust Student Loan Files and maintain its
accounts, records and computer systems as herein provided and promptly take
appropriate action to remedy any such failure. Nothing herein shall be deemed to
require an initial review or any periodic review by the Issuer, the Eligible
Lender Trustee or the Indenture Trustee of the Trust Student Loan Files. If in
the reasonable judgment of the Eligible Lender Trustee it is necessary to
preserve the interests of the Noteholders, Certificateholders and the Trust in
the Trust Student Loans or at the request of the Administrator, the Servicer
shall transfer physical possession of the notes evidencing the Trust Student
Loans to the Eligible Lender Trustee, the Indenture Trustee or
2
any other custodian for either of them designated by the Eligible Lender
Trustee.
Section 2.3 Maintenance of and Access to Records. The Servicer shall maintain
each Trust Student Loan File at one of its offices specified in Attachment B to
this Agreement or at such other office as shall be consented to by the Issuer
and the Indenture Trustee upon written notice to the Issuer and the Indenture
Trustee. Upon reasonable prior notice, the Servicer shall make available to the
Issuer and the Indenture Trustee or their respective duly authorized
representatives, attorneys or auditors a list of locations of the Trust Student
Loan Files and the related accounts, records and computer systems maintained by
the Servicer at such times during normal business hours as the Issuer or the
Indenture Trustee shall instruct.
Section 2.4 Release of Documents. Upon written instruction from the Indenture
Trustee, the Servicer shall release any Trust Student Loan File to the Indenture
Trustee, the Indenture Trustee's agent, or the Indenture Trustee's designee, as
the case may be, at such place or places as the Indenture Trustee may reasonably
designate, as soon as practicable. The Indenture Trustee shall cooperate with
the Servicer to provide the Servicer with access to the Trust Student Loan Files
in order for the Servicer to continue to service the Trust Student Loans after
the release of the Trust Student Loan Files. In the event the Servicer is not
provided access to the Trust Student Loan Files, the Servicer shall not be
deemed to have breached its obligations pursuant to Section 3.1, 3.2, 3.3 or 3.4
if it is unable to perform such obligations due to its inability to have access
to the Trust Student Loans Files. The Servicer shall not be liable for any
losses with respect to the servicing of such Trust Student Loans arising after
the release of the related Trust Student Loan Files to the extent the losses are
attributable to the Servicer's inability to have access to the related Trust
Student Loan Files.
Section 2.5 Instructions; Authority To Act. The Servicer shall be deemed to have
received proper instructions with respect to the Trust Student Loan Files upon
its receipt of written instructions signed by a Responsible Officer of the
Indenture Trustee.
Section 2.6 [RESERVED].
Section 2.7 Effective Period and Termination. Xxxxxx Xxx Servicing Corporation's
appointment as custodian shall become effective as of the Closing Date and shall
continue in full force and effect for so long as Xxxxxx Mae Servicing
Corporation shall remain the Servicer hereunder. If Xxxxxx Xxx Servicing
3
Corporation or any successor Servicer shall resign as Servicer in accordance
with the provisions of this Agreement or if all the rights and obligations of
Xxxxxx Mae Servicing Corporation or any such successor Servicer shall have been
terminated under Section 5.1, the appointment of Xxxxxx Xxx Servicing
Corporation or such successor Servicer as custodian shall be terminated
simultaneously with the effectiveness of such resignation or termination. On or
prior to the effective date of any resignation or termination of such
appointment, the Servicer shall deliver the Trust Student Loan Files to the
successor Servicer, the Indenture Trustee or the Indenture Trustee's agent, at
the direction of the Indenture Trustee, at such place or places as the Indenture
Trustee may reasonably designate. In establishing an effective date for the
termination of the Servicer as custodian of the Trust Student Loan Files, the
parties shall provide for a reasonable period for the Servicer to deliver the
Trust Student Loan Files to its designated successor.
Article III
Section 3.1 Duties of Servicer. The Servicer, for the benefit of the Issuer (to
the extent provided herein), shall manage, service, administer and make
collections on the Trust Student Loans with reasonable care, using that degree
of skill and attention that the Servicer exercises with respect to comparable
student loans that it services on behalf of the Student Loan Marketing
Association from the Closing Date (or with respect to Trust Student Loans which
are sold to the Issuer following the Closing Date, such later date as the Trust
Student Loans are delivered to Servicer for servicing hereunder) until the Trust
Student Loans are paid in full. At any time that substantially all remaining
Trust Student Loans are repurchased by SLM Funding Corporation from the Issuer
pursuant to Section 6.1 of the Administration Agreement, the Servicer agrees to
execute, at the request of SLM Funding Corporation, a new servicing agreement
which agreement shall include terms and conditions substantially the same as the
terms and conditions of this Agreement; provided, however, the Servicer shall
not be required to so execute a new servicing agreement until it has received
all Servicing Fees then due and payable hereunder. Without limiting the
generality of the foregoing or of any other provision set forth in this
Agreement and notwithstanding any other provision to the contrary set forth
herein, the Servicer shall manage, service, administer and make collections with
respect to the Trust Student Loans (including collection of any Interest Subsidy
Payments and Special Allowance Payments on behalf of the Eligible Lender
Trustee) in accordance with, and otherwise comply with, all applicable Federal
and state laws, including all applicable rules, regulations and other
requirements of the Higher Education Act and the applicable Guarantee Agreement,
the failure to comply with which would adversely affect the eligibility of one
or more of the Trust Student Loans for Federal reinsurance or
4
Interest Subsidy Payments or Special Allowance Payments or one or more of the
Trust Student Loans for receipt of Guarantee Payments.
The Servicer's duties shall include, but shall not be limited to,
collection and posting of all payments, responding to inquiries of borrowers on
such Trust Student Loans, monitoring borrowers' status, making required
disclosures to borrowers, performing due diligence with respect to borrower
delinquencies, sending payment coupons to borrowers and otherwise establishing
repayment terms, reporting tax information to borrowers, if applicable,
accounting for collections and furnishing monthly statements with respect
thereto to the Administrator. The Servicer shall follow its customary standards,
policies and procedures in performing its duties as Servicer. Without limiting
the generality of the foregoing, the Servicer is authorized and empowered to
execute and deliver, on behalf of itself, the Issuer, the Eligible Lender
Trustee, the Indenture Trustee, the Certificateholders and the Noteholders or
any of them, instruments of satisfaction or cancellation, or partial or full
release or discharge, and all other comparable instruments, with respect to such
Trust Student Loans; provided, however, that the Servicer agrees that it will
not (a) permit any rescission or cancellation of a Trust Student Loan except as
ordered by a court of competent jurisdiction or governmental authority or as
otherwise consented to in writing by the Eligible Lender Trustee and the
Indenture Trustee provided, however, that the Servicer may write off any
delinquent Trust Student Loan if the remaining balance of the borrower's account
is less than $50 or (b) reschedule, revise, defer or otherwise compromise with
respect to payments due on any Trust Student Loan except pursuant to any
applicable interest only, deferral or forbearance periods or otherwise in
accordance with all applicable standards, guidelines and requirements with
respect to the servicing of Student Loans; provided further, however, that the
Servicer shall not agree to any reduction of yield with respect to any Trust
Student Loan (either by reducing borrower payments or reducing principal
balance) except as permitted in accordance with Section 3.12 or otherwise if,
and to the extent, the Servicer or the Administrator reimburses the Issuer in an
amount sufficient to offset any such effective yield reduction made by the
Servicer consistent with such customary servicing procedures as it follows with
respect to comparable Student Loans which it services on behalf of the Student
Loan Marketing Association. The Eligible Lender Trustee on behalf of the Issuer
hereby grants a power of attorney and all necessary authorization to the
Servicer to maintain any and all collection procedures with respect to the Trust
Student Loans, including filing, pursuing and recovering claims with the
Guarantors for Guarantee Payments and with the Department for Interest Benefit
Payments and Special Allowance Payments and taking any steps to enforce such
Trust Student Loans such as commencing a legal proceeding to enforce a Trust
Student
5
Loan in the names of the Issuer, the Eligible Lender Trustee, the Indenture
Trustee, the Certificateholders and the Noteholders. The Eligible Lender Trustee
shall upon the written request of the Servicer furnish the Servicer with any
other powers of attorney and other documents reasonably necessary or appropriate
to enable the Servicer to carry out its servicing and administrative duties
hereunder.
Section 3.2 Collection of Trust Student Loan Payments.
A. The Servicer shall make reasonable efforts (including all efforts that
may be specified under the Higher Education Act or any Guarantee Agreement) to
collect all payments called for under the terms and provisions of the Trust
Student Loans as and when the same shall become due and shall follow such
collection procedures as it follows with respect to comparable student loans
that it services on behalf of the Student Loan Marketing Association. The
Servicer shall allocate collections with respect to the Trust Student Loans
between principal and interest in accordance with Section 2.5 of the
Administration Agreement. The Servicer may in its discretion waive any late
payment charge or any other fees that may be collected in the ordinary course of
servicing a Trust Student Loan.
B. The Servicer shall make reasonable efforts to claim, pursue and collect
all Guarantee Payments from the Guarantors pursuant to the Guarantee Agreements
with respect to any of the Trust Student Loans as and when the same shall become
due and payable, shall comply with all applicable laws and agreements with
respect to claiming, pursuing and collecting such payments and shall follow such
practices and procedures as it follows with respect to comparable guarantee
agreements and student loans that it services on behalf of the Student Loan
Marketing Association. In connection therewith, the Servicer is hereby
authorized and empowered to convey to any Guarantor the note and the related
Trust Student Loan File representing any Trust Student Loan in connection with
submitting a claim to such Guarantor for a Guarantee Payment in accordance with
the terms of the applicable Guarantee Agreement. All amounts so collected by the
Servicer shall constitute Available Funds for the applicable Collection Period
and shall be deposited into the Collection Account or transferred to the
Administrator in accordance with Section 2.4 of the Administration Agreement.
The Eligible Lender Trustee shall, upon the written request of the Servicer,
furnish the Servicer with any power of attorney and other documents necessary or
appropriate to enable the Servicer to convey such documents to any Guarantor and
to make such claims.
C. The Servicer on behalf of the Eligible Lender Trustee shall, on behalf
of the Issuer, make reasonable efforts to claim, pursue and collect all Interest
Subsidy Payments and Special Allowance Payments from the Department with respect
to any of the
6
Trust Student Loans as and when the same shall become due and payable, shall
comply with all applicable laws and agreements with respect to claiming,
pursuing and collecting such payments and shall follow such practices and
procedures as the Servicer follows with respect to comparable student loans that
it services on behalf of the Student Loan Marketing Association. All amounts so
collected by the Servicer shall constitute Available Funds for the applicable
Collection Period and shall be deposited into the Collection Account or
transferred to the Administrator in accordance with Section 2.4 of the
Administration Agreement. In connection therewith, the Servicer shall prepare
and file with the Department on a timely basis all claims forms and other
documents and filings necessary or appropriate in connection with the claiming
of Interest Subsidy Payments and Special Allowance Payments on behalf of the
Eligible Lender Trustee and shall otherwise assist the Eligible Lender Trustee
in pursuing and collecting such Interest Subsidy Payments and Special Allowance
Payments from the Department. The Eligible Lender Trustee shall upon the written
request of the Servicer furnish the Servicer with any power of attorney and
other documents reasonably necessary or appropriate to enable the Servicer to
prepare and file such claims forms and other documents and filings.
Section 3.3 Realization upon Trust Student Loans. For the benefit of the Issuer,
the Servicer shall use reasonable efforts consistent with its servicing
practices and procedures that it utilizes with respect to comparable student
loans that it services on behalf of the Student Loan Marketing Association and
including all efforts that may be specified under the Higher Education Act or
any Guarantee Agreement in its servicing of any delinquent Trust Student Loans.
Section 3.4 No Impairment. The Servicer shall not impair the rights of the
Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders or Noteholders in such Trust Student Loans.
Section 3.5 Purchase of Trust Student Loans; Reimbursement.
A. The Servicer, the Administrator, the Eligible Lender Trustee and the
Indenture Trustee shall give notice to the other parties promptly, in writing,
upon the discovery of any breach of the provisions of Section 3.1, 3.2, 3.3 or
3.4 which has a materially adverse effect on the interest of the Issuer. In the
event of such a material breach which is not curable by reinstatement of the
Guarantor's guarantee of such Trust Student Loan, the Servicer shall purchase
the affected Trust Student Loan not later than 120 days following the earlier of
the date of discovery of such material breach and the date of receipt of the
Guarantor reject transmittal form with respect to such Trust Student Loan. In
the event of a material breach with respect to such Trust Student Loan which is
curable by reinstatement of the
7
Guarantor's guarantee of such Trust Student Loan, unless the material breach
shall have been cured within 360 days following the earlier of the date of
discovery of such material breach and the date of receipt of the Guarantor
reject transmittal form with respect to such Trust Student Loan, the Servicer
shall purchase such Trust Student Loan not later than the sixtieth day following
the end of such 360-day period. The purchase price hereunder will be the unpaid
principal amount of such Trust Student Loan plus accrued interest (calculated
using the applicable percentage that would have been insured pursuant to Section
428(b)(1)(G) of the Higher Education Act) plus an amount equal to all forfeited
Interest Subsidy Payments and Special Allowance Payments with respect to such
Trust Student Loan. The Servicer shall remit the purchase price to the
Administrator as provided in Section 2.6 of the Administration Agreement on the
date of purchase of any Trust Student Loan pursuant to this Section 3.5. In
consideration of the purchase of any such Trust Student Loan pursuant to this
Section 3.5, the Servicer shall remit the Purchase Amount in the manner
specified in Section 2.6 of the Administration Agreement. Any breach that
relates to compliance with the requirements of the Higher Education Act or of
the applicable Guarantor but that does not affect such Guarantor's obligation to
guarantee payments of a Trust Student Loan will not be considered to have a
material adverse effect for purposes of this Section 3.5A.
B. In addition, if any breach of Section 3.1, 3.2, 3.3 or 3.4 by the
Servicer does not trigger such purchase obligation but does result in the
refusal by a Guarantor to guarantee all or a portion of the accrued interest (or
any obligation of the Issuer to repay such interest to a Guarantor), or the loss
(including any obligation of the Issuer to repay to the Department) of Interest
Subsidy Payments and Special Allowance Payments, with respect to any Trust
Student Loan affected by such breach, then the Servicer shall reimburse the
Issuer in an amount equal to the sum of all such nonguaranteed interest amounts
that would have been owed to the Issuer by the Guarantor but for such breach by
the Servicer and such forfeited Interest Subsidy Payments or Special Allowance
Payments by netting such sum against the Servicing Fee payable to the Servicer
for such period and remitting any additional amounts owed in the manner
specified in Section 2.6 of the Administration Agreement not later than (i) the
last day of the next Collection Period ending not less than 60 days from the
date of the Guarantor's refusal to guarantee all or a portion of accrued
interest or loss of Interest Subsidy Payments or Special Allowance Payments, or
(ii) in the case where the Servicer reasonably believes such amounts are likely
to be collected, not later than the last day of the next Collection Period
ending not less than 360 days from the date of the Guarantor's refusal to
guarantee all or a portion of accrued interest or loss of Interest Subsidy
Payments or Special Allowance Payments. At the time such payment is made, the
Servicer shall not be required to reimburse the Issuer for
8
interest that is then capitalized, however, such amounts shall be reimbursed if
the borrower subsequently defaults and such capitalized interest is not paid by
the Guarantor.
C. Anything in this Section 3.5 to the contrary notwithstanding, if as of
the last Business Day of any month the aggregate outstanding principal amount of
Trust Student Loans with respect to which claims have been filed with and
rejected by a Guarantor or with respect to which the Servicer determines that
claims cannot be filed pursuant to the Higher Education Act as a result of a
breach by the Servicer or the Seller, exceeds 1% of the Pool Balance, the
Servicer or the Seller, as appropriate, shall purchase, within 30 days of a
written request of the Eligible Lender Trustee or Indenture Trustee, such
affected Trust Student Loans in an aggregate principal amount such that after
such purchase the aggregate principal amount of such affected Trust Student
Loans is less than 1% of the Pool Balance. The Trust Student Loans to be
purchased by the Servicer or the Seller pursuant to the preceding sentence shall
be based on the date of claim rejection (or date of notice referred to in the
first sentence of this Section 3.5) with the Trust Student Loans with the
earliest such date to be purchased first.
D. In lieu of repurchasing Trust Student Loans pursuant to this Section
3.5, the Servicer may, at its option, with the prior consent of the
Administrator, substitute Student Loans or arrange for the substitution of
Student Loans which are substantially similar as of the date of substitution on
an aggregate basis to the Trust Student Loans for which they are being
substituted with respect to the following characteristics:
(1) status (i.e., in-school, grace, deferment, forbearance or repayment),
(2) program type (i.e., unsubsidized Xxxxxxxx, subsidized Xxxxxxxx, PLUS
or SLS),
(3) school type,
(4) total return,
(5) principal balance, and
(6) remaining term to maturity.
In addition, each substituted Student Loan shall comply, as of the date of
substitution, with the representations and warranties made by the Seller in the
Sale Agreement. In choosing Student Loans to be substituted pursuant to this
subsection D, the Servicer shall make a reasonable determination that the
Student Loans to be substituted will not have a material adverse effect on the
Noteholders and the Certificateholders.
In the event the Servicer elects to substitute Student Loans pursuant to
this Section 3.5 and the Administrator consents to such substitution, the
Servicer will remit to the Administrator the amount of any shortfall between the
Purchase Amount of the
9
substituted Student Loans and the Purchase Amount of the Trust Student Loans for
which they are being substituted. The Servicer shall also remit to the
Administrator an amount equal to all nonguaranteed interest amounts that would
have been owed to the Issuer by the Guarantor but for the breach of the Servicer
and forfeited Interest Subsidy Payments and Special Allowance Payments with
respect to the Trust Student Loans in the manner provided in Section 2.6 of the
Administration Agreement.
E. The sole remedy of the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Certificateholders and the Noteholders with respect to a
breach pursuant to Section 3.1, 3.2, 3.3 or 3.4 shall be to require the Servicer
to purchase Trust Student Loans, to reimburse the Issuer as provided above or to
substitute Student Loans pursuant to this Section.
F. The Eligible Lender Trustee shall have no duty to conduct any
affirmative investigation as to the occurrence of any condition requiring the
purchase of any Trust Student Loan or the reimbursement for any interest penalty
pursuant to this Section 3.5.
G. The Servicer shall not be deemed to have breached its obligations
pursuant to Section 3.1, 3.2, 3.3 or 3.4 if it is rendered unable to perform
such obligations, in whole or in part, by a force outside the control of the
parties hereto (including acts of God, acts of war, fires, earthquakes,
hurricanes, floods and other disasters). The Servicer shall diligently perform
its duties under this Agreement as soon as practicable following the termination
of such interruption of business.
Section 3.6 Primary Servicing Fee; Carryover Servicing Fee. The Primary
Servicing Fee for each calendar month and any Carryover Servicing Fees payable
on any Distribution Date in arrears by the Issuer shall be equal to the amounts
determined by reference to the schedule of fees attached hereto as Attachment A.
Notwithstanding anything to the contrary contained herein or in any other Basic
Document, the Servicer shall be entitled to receive any Carryover Servicing Fee
on any Distribution Date only if and to the extent that sufficient funds are
available pursuant to Section 2.7.C of the Administration Agreement.
Section 3.7 Access to Certain Documentation and Information Regarding Trust
Student Loans. Upon reasonable prior notice, the Servicer shall provide to the
Administrator and its agents access to the Trust Student Loan Files and shall
permit the Administrator to examine and make copies of, and abstracts from, the
records and books of account of the Servicer relating to the Trust Student Loans
and shall permit the Administrator to undertake periodic site reviews of the
Servicer's operations relating to the servicing of the Trust Student Loans
(including on the premises of any agent of the Servicer). Reasonable access
10
shall be afforded to the Administrator without charge, but only upon reasonable
request and during the normal business hours at the respective offices of the
Servicer. Nothing in this Section shall affect the obligation of the Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Obligors and the failure of the Servicer to provide access to information as a
result of such obligation shall not constitute a breach of this Section.
Section 3.8 Servicer Expenses. The Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder, including
fees and disbursements of independent accountants, taxes imposed on the Servicer
and expenses incurred in connection with distributions and reports to the
Administrator provided, however, the Carryover Servicing Fee will be subject to
increase agreed to by the Administrator, the Eligible Lender Trustee and the
Servicer to the extent that a demonstrable and significant increase occurs in
the costs incurred by the Servicer in providing the services to be provided
hereunder, whether due to changes in applicable governmental regulations,
Guarantor program requirements or regulations or postal rates.
Section 3.9 Appointment of Subservicer. The Servicer may at any time, upon the
written consent of the Administrator, appoint a subservicer to perform all or
any portion of its obligations as Servicer hereunder; provided, however, that
any applicable Rating Agency Condition shall have been satisfied in connection
therewith; provided further that the Servicer shall remain obligated and be
liable to the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders and the Noteholders for the servicing and administering of
the Trust Student Loans in accordance with the provisions hereof without
diminution of such obligation and liability by virtue of the appointment of such
subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Trust Student Loans. The
fees and expenses of the subservicer shall be as agreed between the Servicer and
its subservicer from time to time and none of the Issuer, the Eligible Lender
Trustee, the Indenture Trustee, the Certificateholders or the Noteholders shall
have any responsibility therefor. With respect to satisfying the Rating Agency
Condition referred to above, the term "subservicer" shall be deemed not to
include systems providers, systems developers or systems maintenance
contractors, collection agencies, credit bureaus, lock box providers, mail
service providers and other similar types of service providers.
Section 3.10 Reports. With respect to Trust Student Loans, Servicer shall
prepare reports and data and furnish the following information to the Issuer,
the Administrator, the Eligible Lender
11
Trustee and the Indenture Trustee, unless otherwise noted, at the specified
times:
(a) The reports and data listed in Attachment C, at the times indicated in
the attachment;
(b) Within 30 days following the end of each calendar quarter, to the
Department, owner's request for interest and Special Allowance
Payments (ED 799);
(c) To credit bureaus selected by Servicer, credit bureau reporting in
accordance with the Higher Education Act;
(d) At any time the Eligible Lender Trustee or the Indenture Trustee, as
the case may be, shall have reasonable grounds to believe that such
request would be necessary in connection with its performance of its
duties under related documents, and within five (5) business days of
receipt of a request therefor, the Servicer shall furnish to the
Eligible Lender Trustee or to the Indenture Trustee a list of all
Trust Student Loans (by borrower social security number, type and
outstanding principal balance) and any additional information
requested relating to the Trust Student Loans; and
(e) From time to time as may be reasonably requested, reports and data
providing additional information on the Trust Student Loans.
Section 3.11 Covenants and Agreements of the Issuer, Administrator, Eligible
Lender Trustee and Servicer. The Issuer, the Administrator, the Servicer and
the Eligible Lender Trustee each agree that:
A. Any payment and any communications received at any time by the Issuer,
Administrator and the Eligible Lender Trustee with respect to a Trust Student
Loan shall be immediately transmitted to the Servicer. Such communications shall
include, but not be limited to, requests or notices of loan cancellation,
notices of borrower disqualification, letters, changes in address or status,
notices of death or disability, notices of bankruptcy and forms requesting
deferment of repayment or forbearance.
B. The Servicer may change any part or all of its equipment, data
processing programs and any procedures and forms in connection with the services
performed hereunder so long as Servicer continues to service the Trust Student
Loans in conformance with the requirements herein. The Servicer shall not make
any material change in its servicing system and operations with respect to the
Trust Student Loans without the prior written consent of the Administrator which
consent will not be
12
unreasonably withheld. Each written request for consent by the Servicer shall be
acted upon promptly by the Administrator. Anything in this paragraph B. to the
contrary notwithstanding, the Servicer will not be required to request the
consent of the Administrator with respect to any changes in the Servicer's
servicing system and operations which the Servicer reasonably determines are
required due to changes in the Higher Education Act or Guarantor program
requirements.
C. The Eligible Lender Trustee will furnish Servicer with a copy of any
and all Guarantee Agreements relating to the Trust Student Loans serviced
hereunder.
D. The Servicer may and, at the direction of the Administrator, shall
include marketing or informational material generally provided to borrowers of
loans owned by the Student Loan Marketing Association with communications sent
to a borrower.
E. The Servicer may, in its discretion, if requested by a borrower of a
Trust Student Loan, arrange for the sale of such Trust Student Loan to another
lender which holds another student loan of such borrower at a price not less
than the Purchase Amount.
F. The Servicer shall arrange for the sale of a Trust Student Loan to the
Student Loan Marketing Association upon receipt of notice from the Student Loan
Marketing Association that it has received an executed consolidation loan
application from the borrower of such Trust Student Loan. The sale price for
such Trust Student Loan shall equal the Purchase Amount.
Section 3.12 Special Programs. The Servicer shall offer borrowers of the Trust
Student Loans all special programs (e.g., Great RewardsSM, Great ReturnsSM and
Direct Repay), whether or not in existence as of the date of this Agreement,
generally offered to the obligors of comparable loans owned by the Student Loan
Marketing Association and serviced by the Servicer; provided, however, to the
extent any such program is not required by the Higher Education Act and
effectively reduces borrower interest rate or principal balances on the Trust
Student Loans, such special program shall be applied to the Trust Student Loans
only if and to the extent the Issuer receives payment from the Student Loan
Marketing Association (and the Servicer receives notice of such payment) in an
amount sufficient to offset such effective yield reductions. The Student Loan
Marketing Association shall be deemed to be a third party beneficiary of this
Section 3.12 and shall make appropriate arrangements to compensate the Servicer
for increased costs associated with material changes to existing special
programs or the implementation and support of any new special programs.
13
Section 3.13 Financial Statements. The Servicer shall provide to the
Administrator at any time that the Servicer is not an Affiliate of the
Administrator (a) as soon as possible and in no event more than 120 days after
the end of each fiscal year of the Servicer audited financials as at the end of
and for such year and (b) as soon as possible and in no event more than 30 days
after the end of each quarterly accounting period of the Servicer unaudited
financials as at the end of and for such period.
Section 3.14 Insurance. The Servicer shall maintain or cause to be maintained
insurance with respect to its property and business against such casualties and
contingencies and of such types and in such amounts as is customary in the case
of institutions of the same type and size.
Section 3.15 Administration Agreement. The Servicer agrees to perform all duties
required of the Servicer under the Administration Agreement using that degree of
skill and attention that the Servicer exercises with respect to its comparable
business activities.
Section 3.16 Lender Identification Number. The Eligible Lender Trustee may
permit trusts, other than the Issuer, established by the Seller to securitize
student loans, to use the Department lender identification number applicable to
the Issuer if the servicing agreements with respect to such other trusts include
provisions substantially similar to this paragraph. In such event, the Servicer
may claim and collect Interest Subsidy Payments and Special Allowance Payments
with respect to Trust Student Loans and student loans in such other trusts using
such common lender identification number. Notwithstanding anything herein or in
the Basic Documents to the contrary, any amounts assessed against payments
(including, but not limited to, Interest Subsidy Payments and Special Allowance
Payments) due from the Department to any such other trust using such common
lender identification number as a result of amounts owing to the Department from
the Issuer will be deemed for all purposes hereof and of the Basic Documents
(including for purposes of determining amounts paid by the Department with
respect to the student loans in the Trust and such other trust) to have been
assessed against the Issuer and shall be deducted by the Administrator or the
Servicer and paid to such other trust from any collections made by them which
would otherwise have been payable to the Collection Account for the Issuer. Any
amounts assessed against payments due from the Department to the Issuer as a
result of amounts owing to the Department from such other trust using such
common lender identification number will be deemed to have been assessed against
such other trust and will be deducted by the Administrator or the Servicer from
any collections made by them which would otherwise be payable to the collection
account for such other trust and paid to the Issuer.
14
Article IV
Section 4.1 Representations of Servicer. The Servicer makes the following
representations on which the Issuer is deemed to have relied in acquiring
(through the Eligible Lender Trustee) the Trust Student Loans and appointing the
Servicer as servicer hereunder. The representations speak as of the execution
and delivery of this Agreement and as of the Closing Date, but shall survive the
sale, transfer and assignment of the Trust Student Loans to the Eligible Lender
Trustee on behalf of the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
A. Organization and Good Standing. The Servicer is duly organized and
validly existing as a corporation chartered under the laws of the State of
Delaware and in good standing under the laws of the State of Delaware, with the
power and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted, and had
at all relevant times, and has, the power, authority and legal right to service
the Trust Student Loans and to hold the Trust Student Loan Files as custodian.
B. Due Qualification. The Servicer is duly qualified to do business
and has obtained all necessary licenses and approvals in all jurisdictions in
which the ownership or lease of property or the conduct of its business
(including the servicing of the Trust Student Loans as required by this
Agreement) shall require such qualifications.
C. Power and Authority. The Servicer has the power and authority to
execute and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement have been duly authorized
by the Servicer by all necessary action. No registration with or approval of any
governmental agency is required for the due execution and delivery by, and
enforceability against, the Servicer of this Agreement.
D. Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Servicer enforceable in accordance with its terms
subject to bankruptcy, insolvency and other similar laws affecting creditors
rights generally and subject to equitable principles.
E. No Violation. The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof will not conflict with, result
in any breach of any of the terms and provisions of, nor constitute (with or
without notice or lapse of time or both) a default under, the charter or by-laws
of the Servicer, or any indenture, agreement or other instrument to which the
Servicer is a party or by which it shall be bound;
15
nor result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than this Agreement and the other Basic Documents); nor violate any law
or, to the best of the Servicer's knowledge, any order, rule or regulation
applicable to the Servicer of any court or of any Federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Servicer or its properties.
F. No Proceedings. There are no proceedings or investigations pending, or,
to the Servicer's best knowledge, threatened, before any court, regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Servicer or its properties: (i) asserting the invalidity of this
Agreement or any of the other Basic Documents to which the Servicer is a party,
(ii) seeking to prevent the consummation of any of the transactions contemplated
by this Agreement or any of the other Basic Documents to which the Servicer is a
party, (iii) seeking any determination or ruling that could reasonably be
expected to have a material and adverse effect on the performance by the
Servicer of its obligations under, or the validity or enforceability of, this
Agreement or any of the other Basic Documents to which the Servicer is a party,
or (iv) relating to the Servicer and which might adversely affect the Federal or
state income tax attributes of the Notes or the Certificates.
Section 4.2 Indemnities of Servicer. The Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically undertaken by the
Servicer under this Agreement.
The Servicer shall pay for any loss, liability or expense, including
reasonable attorneys' fees, that may be imposed on, incurred by or asserted
against the Issuer or the Eligible Lender Trustee by the Department pursuant to
the Higher Education Act, to the extent that such loss, liability or expense
arose out of, or was imposed upon the Issuer through, the negligence, willful
misfeasance or bad faith of the Servicer in the performance of its obligations
and duties under this Agreement or by reason of the reckless disregard of its
obligations and duties under this Agreement, where the final determination that
any such loss, liability or expense arose out of, or was imposed upon the Issuer
or the Eligible Lender Trustee through, any such negligence, willful
misfeasance, bad faith or recklessness on the part of the Servicer is
established by a court of law, by an arbitrator or by way of settlement agreed
to by the Servicer. Notwithstanding the foregoing, if the Servicer is rendered
unable, in whole or in part, by a force outside the control of the parties
hereto (including acts of God, acts of war, fires, earthquakes, hurricanes,
floods and other disasters) to satisfy its
16
obligations under this Agreement, the Servicer shall not be deemed to have
breached any such obligation upon delivery of written notice of such event to
the other parties hereto, for so long as the Servicer remains unable to perform
such obligation as a result of such event.
For purposes of this Section, in the event of the termination of the
rights and obligations of Xxxxxx Xxx Servicing Corporation (or any successor
thereto pursuant to Section 4.3) as Servicer pursuant to Section 5.1, or a
resignation by such Servicer pursuant to this Agreement, such Servicer shall be
deemed to be the Servicer pending appointment of a successor Servicer pursuant
to Section 5.2.
Liability of the Servicer under this Section shall survive the resignation
or removal of the Eligible Lender Trustee or the Indenture Trustee or the
termination of this Agreement. If the Servicer shall have made any payments
pursuant to this Section and the Person to or on behalf of whom such payments
are made thereafter collects any of such amounts from others, such Person shall
promptly repay such amounts to the Servicer, without interest.
Section 4.3 Merger or Consolidation of, or Assumption of the Obligations of,
Servicer. The Servicer hereby agrees that, upon (a) any merger or consolidation
of the Servicer into another Person, (b) any merger or consolidation to which
the Servicer shall be a party resulting in the creation of another Person or (c)
any Person succeeding to the properties and assets of the Servicer substantially
as a whole, the Servicer shall (i) cause such Person (if other than the
Servicer) to execute an agreement of assumption to perform every obligation of
the Servicer hereunder, (ii) deliver to the Eligible Lender Trustee and
Indenture Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent provided
for in this Agreement relating to such transaction have been complied with,
(iii) cause the Rating Agency Condition to have been satisfied with respect to
such transaction and (iv) cure any existing Servicer Default or any continuing
event which, after notice or lapse of time or both, would become a Servicer
Default. Upon compliance with the foregoing requirements, such Person shall be
the successor to the Servicer under this Agreement without further act on the
part of any of the parties to this Agreement.
Section 4.4 Limitation on Liability of Servicer. The Servicer shall not be under
any liability to the Issuer, the Noteholders, the Certificateholders, the
Administrator, the Eligible Lender Trustee or the Indenture Trustee except as
provided under this Agreement, for any action taken or for refraining from the
taking of any action pursuant to this Agreement, for errors in judgment,
17
for any incorrect or incomplete information provided by schools, borrowers,
Guarantors and the Department, for the failure of any party to this Servicing
Agreement or any other Basic Document to comply with its respective obligations
hereunder or under any other Basic Document or for any losses attributable to
the insolvency of any Guarantor; provided, however, that this provision shall
not protect the Servicer against its obligation to purchase Student Loans from
the Trust pursuant to Section 3.5 hereof or to pay to the Trust amounts required
pursuant to Section 3.5 hereof or against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties under this Agreement. The Servicer may rely in good faith on any document
of any kind prima facie properly executed and submitted by any person respecting
any matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action where it is not
named as a party; provided, however, that the Servicer may undertake any
reasonable action that it may deem necessary or desirable in respect of this
Agreement and the other Basic Documents and the rights and duties of the parties
to this Agreement and the other Basic Documents and the interests of the
Certificateholders and the Noteholders. To the extent that the Servicer is
required to appear in or is made a defendant in any legal action or other
proceeding relating to the servicing of the Trust Student Loans, the Issuer
shall indemnify and hold the Servicer harmless from all cost, liability or
expense of the Servicer not arising out of or relating to the failure of the
Servicer to comply with the terms of this Agreement.
Section 4.5 Xxxxxx Xxx Servicing Corporation Not To Resign as Servicer. Subject
to the provisions of Section 4.3, Xxxxxx Mae Servicing Corporation shall not
resign from the obligations and duties hereby imposed on it as Servicer under
this Agreement except upon determination that the performance of its duties
under this Agreement are no longer permissible under applicable law. Notice of
any such determination permitting the resignation of Xxxxxx Xxx Servicing
Corporation shall be communicated to the Eligible Lender Trustee and the
Indenture Trustee at the earliest practicable time (and, if such communication
is not in writing, shall be confirmed in writing at the earliest practicable
time) and any such determination shall be evidenced by an Opinion of Counsel to
such effect delivered to the Eligible Lender Trustee and the Indenture Trustee
concurrently with or promptly after such notice. No such resignation shall
become effective until the Indenture Trustee or a successor Servicer shall have
assumed the responsibilities and obligations of Xxxxxx Mae Servicing Corporation
in accordance with Section 5.2.
18
Article V
Section 5.1 Servicer Default. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(1) any failure by the Servicer (i) to deliver to the Indenture Trustee
for deposit in the Trust Accounts any payment required by the Basic
Documents to which the Servicer is a signatory or (ii) in the event
that daily deposits into the Collection Account are not required, to
deliver to the Administrator any payment required by the Basic
Documents, which failure in case of either clause (i) or (ii)
continues unremedied for five Business Days after written notice of
such failure is received by the Servicer from the Eligible Lender
Trustee, the Indenture Trustee or the Administrator or five Business
Days after discovery of such failure by an officer of the Servicer; or
(2) any failure by the Servicer duly to observe or to perform in any
material respect any other covenant or agreement of the Servicer set
forth in this Agreement or any other Basic Document to which the
Servicer is a signatory, which failure shall (i) materially and
adversely affect the rights of Noteholders or Certificateholders and
(ii) continues unremedied for a period of 60 days after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given (A) to the Servicer by the Indenture
Trustee, the Eligible Lender Trustee or the Administrator or (B) to
the Servicer, and to the Indenture Trustee and the Eligible Lender
Trustee by the Noteholders or Certificateholders, as applicable,
representing not less than 25% of the Outstanding Amount of the Notes
or not less than 25% of the outstanding Certificate Balance provided,
however any breach of Sections 3.1, 3.2, 3.3 or 3.4 shall not be
deemed a Servicer Default so long as the Servicer is in compliance
with its repurchase and reimbursement obligations under Section 3.5;
or
(3) an Insolvency Event occurs with respect to the Servicer; or
(4) any failure by the Servicer to comply with any requirements under the
Higher Education Act resulting in a loss of its eligibility as a
third-party servicer;
then, and in each and every case, so long as the Servicer Default shall not have
been remedied, either the Indenture Trustee, or the Noteholders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes, by notice
then given in writing
19
to the Servicer (and to the Indenture Trustee and the Eligible Lender Trustee if
given by the Noteholders) may terminate all the rights and obligations (other
than the obligations set forth in Section 3.5 and Section 4.2) of the Servicer
under this Agreement. As of the effective date of termination of the Servicer,
all authority and power of the Servicer under this Agreement, whether with
respect to the Notes, the Certificates or the Trust Student Loans or otherwise,
shall, without further action, pass to and be vested in the Indenture Trustee or
such successor Servicer as may be appointed under Section 5.2. The predecessor
Servicer shall cooperate with the successor Servicer, the Indenture Trustee and
the Eligible Lender Trustee in effecting the termination of the responsibilities
and rights of the predecessor Servicer under this Agreement, including the
transfer to the successor Servicer for administration by it of all cash amounts
that shall at the time be held by the predecessor Servicer for deposit, or shall
thereafter be received by it with respect to a Trust Student Loan. All
reasonable costs and expenses (including attorneys' fees) incurred in connection
with transferring the Trust Student Loan Files to the successor Servicer and
amending this Agreement and any other Basic Documents to reflect such succession
as Servicer pursuant to this Section shall be paid by the predecessor Servicer
(other than the Indenture Trustee acting as the Servicer under this Section 5.1)
upon presentation of reasonable documentation of such costs and expenses. Upon
receipt of notice of the occurrence of a Servicer Default, the Eligible Lender
Trustee shall give notice thereof to the Rating Agencies.
Section 5.2 Appointment of Successor.
A. Upon receipt by the Servicer of notice of termination pursuant to
Section 5.1, or the resignation by the Servicer in accordance with the terms of
this Agreement, the predecessor Servicer shall continue to perform its functions
as Servicer under this Agreement, in the case of termination, only until the
date specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
resignation, until the Indenture Trustee or a successor Servicer shall have
assumed the responsibilities and duties of Xxxxxx Xxx Servicing Corporation. In
the event of the termination hereunder of the Servicer, the Issuer shall appoint
a successor Servicer acceptable to the Indenture Trustee, and the successor
Servicer shall accept its appointment by a written assumption in form acceptable
to the Indenture Trustee. In the event that a successor Servicer has not been
appointed at the time when the predecessor Servicer has ceased to act as
Servicer in accordance with this Section, the Indenture Trustee without further
action shall automatically be appointed the successor Servicer and the Indenture
Trustee shall be entitled to the Servicing Fee and any Carryover Servicing Fees.
Notwithstanding the above, the Indenture Trustee shall, if
20
it shall be unwilling or legally unable so to act, appoint or petition a court
of competent jurisdiction to appoint any established institution whose regular
business shall include the servicing of student loans, as the successor to the
Servicer under this Agreement; provided, however, that such right to appoint or
to petition for the appointment of any such successor Servicer shall in no event
relieve the Indenture Trustee from any obligations otherwise imposed on it under
the Basic Documents until such successor has in fact assumed such appointment.
B. Upon appointment, the successor Servicer (including the Indenture
Trustee acting as successor Servicer) shall be the successor in all respects to
the predecessor Servicer and shall be subject to all the responsibilities,
duties and liabilities placed on the predecessor Servicer that arise thereafter
or are related thereto and shall be entitled to an amount agreed to by such
successor Servicer (which shall not exceed the Servicing Fee unless the Rating
Agency Condition is satisfied with respect to such compensation arrangements)
and all the rights granted to the predecessor Servicer by the terms and
provisions of this Agreement.
C. The Servicer may not resign unless it is prohibited from serving as
such by law as evidenced by an Opinion of Counsel to such effect delivered to
the Indenture Trustee and the Eligible Lender Trustee. Notwithstanding the
foregoing or anything to the contrary herein or in the other Basic Documents,
the Indenture Trustee, to the extent it is acting as successor Servicer pursuant
hereto and thereto, shall be entitled to resign to the extent a qualified
successor Servicer has been appointed and has assumed all the obligations of the
Servicer in accordance with the terms of this Agreement and the other Basic
Documents.
Section 5.3 Notification to Noteholders and Certificateholders. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article V, the Eligible Lender Trustee shall give prompt written notice thereof
to Certificateholders and the Indenture Trustee shall give prompt written notice
thereof to Noteholders and the Rating Agencies (which, in the case of any such
appointment of a successor, shall consist of prior written notice thereof to the
Rating Agencies).
Section 5.4 Waiver of Past Defaults. The Noteholders of Notes evidencing a
majority of the Outstanding Amount of the Notes (or the Certificateholders of
Certificates evidencing not less than a majority of the outstanding Certificate
Balance, in the case of any default which does not adversely affect the
Indenture Trustee or the Noteholders) may, on behalf of all Noteholders and
Certificateholders, waive in writing any default by the Servicer in the
performance of its obligations hereunder and any consequences thereof, except a
default in making any required deposits to or payments from any of the Trust
Accounts (or giving
21
instructions regarding the same) in accordance with this Agreement. Upon any
such waiver of a past default, such default shall cease to exist, and any
Servicer Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement and the Administration Agreement. No such waiver
shall extend to any subsequent or other default or impair any right consequent
thereto.
Article VI
Section 6.1 Amendment.
A. This Agreement may be amended by the Servicer, the Issuer, the
Administrator, the Eligible Lender Trustee and the Indenture Trustee, without
the consent of any of the Noteholders or the Certificateholders, to comply with
any change in any applicable federal or state law, to cure any ambiguity, to
correct or supplement any provisions in this Agreement or for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions in this Agreement; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Eligible Lender Trustee and
the Indenture Trustee, adversely affect in any material respect the interests of
any Noteholder or Certificateholder.
B. This Agreement may also be amended from time to time by the Servicer,
the Issuer, the Administrator, the Eligible Lender Trustee and the Indenture
Trustee, with the consent of the Noteholders of Notes evidencing a majority of
the Outstanding Amount of the Notes and the consent of the Certificateholders of
Certificates (including any Certificates owned by the Seller) evidencing a
majority of the Certificate Balance, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments with respect to Trust Student Loans or distributions
that shall be required to be made for the benefit of the Noteholders or the
Certificateholders or (b) reduce the aforesaid percentage of the Outstanding
Amount of the Notes and the Certificate Balance, the Noteholders or the
Certificateholders of which are required to consent to any such amendment,
without the consent of all outstanding Noteholders and Certificateholders.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to paragraph B. to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
22
Promptly after the execution of any amendment to this Agreement (or, in
the case of the Rating Agencies, fifteen days prior thereto), the Eligible
Lender Trustee shall furnish written notification of the substance of such
amendment to each Certificateholder, the Indenture Trustee and each of the
Rating Agencies.
Prior to the execution of any amendment to this Agreement, the Eligible
Lender Trustee and the Indenture Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Indenture Trustee may, but shall
not be obligated to, execute and deliver such amendment which affects its
rights, powers, duties or immunities hereunder.
Section 6.2 Notices. All notices hereunder shall be given by United States
certified or registered mail, by telegram or by other telecommunication device
capable of creating written record of such notice and its receipt. Notices
hereunder shall be effective when received and shall be addressed to the
respective parties hereto at the addresses set forth below, or at such other
address as shall be designated by any party hereto in a written notice to each
other party pursuant to this section.
If to Servicer, to: Xxxxxx Xxx Servicing Corporation
00000 Xxxxxx Xxx Xxxxx, Xxxxxx, Xxxxxxxx 00000
Director of ABS Administration
If to Issuer, to: SLM Student Loan Trust 0000-0
x/x Xxxxx Xxxxxxxxx Xxxx XXX, National Association, 000
Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attn:
Corporate Trust Dept.
with a copy to: The Chase Manhattan Bank,
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attn: Structured Finance Services
If to the Administrator, to: Student Loan Marketing
Association, 00000 Xxxxxx Xxx Xxxxx, Xxxxxx, Xxxxxxxx 00000,
Attn: Director, Corporate Finance Operations
If to the Eligible Lender Trustee, to: Chase Manhattan Bank
USA, National Association, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000, Attn: Corporate Trust Dept.
23
with a copy to: The Chase Manhattan Bank, 000 Xxxx 00xx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn:
Structured Finance Services.
If to the Indenture Trustee, to: Bankers Trust Company,
Four Albany Street, 10th Floor, New York, New York 10006,
Attn: Corporate Trust and Agency Group, Facsimile No.:
(000) 000-0000
Section 6.3 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, and such counterparts shall
constitute one (1) and the same instrument.
Section 6.4 Entire Agreement; Severability. This Agreement constitutes the
entire agreement between the Issuer, the Administrator, the Eligible Lender
Trustee, the Indenture Trustee and Servicer. All prior representations,
statements, negotiations and undertakings with regard to the subject matter
hereof are superseded hereby.
If any term or provision of this Agreement or the application thereof to
any person or circumstance shall, to any extent, be invalid or unenforceable,
the remaining terms and provisions of this Agreement, or the application of such
terms or provisions to persons or circumstances other than those as to which it
is held invalid or unenforceable, shall not be affected thereby, and each term
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
Section 6.5 Governing Law. The terms of this Agreement shall be subject to all
applicable provisions of the Higher Education Act and shall be construed in
accordance with and governed by the laws of the State of New York.
Section 6.6 Relationship of Parties. Servicer is an independent contractor and,
except for the services which it agrees to perform hereunder, the Servicer does
not hold itself out as an agent of any other party hereto. Nothing herein
contained shall create or imply an agency relationship among Servicer and any
other party hereto, nor shall this Agreement be deemed to constitute a joint
venture or partnership between the parties.
Section 6.7 Captions. The captions used herein are for the convenience of
reference only and not part of this Agreement, and shall in no way be deemed to
define, limit, describe or modify the meanings of any provision of this
Agreement.
Section 6.8 Nonliability of Directors, Officers and Employees of Servicer, the
Eligible Lender Trustee, the Indenture Trustee and
24
the Administrator. No member of the board of directors or any officer, employee
or agent of Servicer, the Administrator, the Eligible Lender Trustee or the
Indenture Trustee (or any Affiliate of any such party) shall be personally
liable for any obligation incurred under this Agreement.
Section 6.9 Assignment. This Agreement may not be assigned by the Servicer
except as permitted under Sections 4.3, 4.5 and 5.2 hereof. This Agreement may
not be assigned by the Administrator except as permitted under Sections 4.3 and
4.6 of the Administration Agreement.
Section 6.10 Limitation of Liability of Eligible Lender Trustee and
Indenture Trustee.
A. Notwithstanding anything contained herein to the contrary, this
Agreement has been signed by Chase Manhattan Bank USA, National Association not
in its individual capacity but solely in its capacity as Eligible Lender Trustee
of the Issuer and in no event shall Chase Manhattan Bank USA, National
Association in its individual capacity or, except as expressly provided in the
Trust Agreement, as Eligible Lender Trustee have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer or the Eligible Lender Trustee hereunder or in any of the certificates,
notices or agreements delivered pursuant hereto as to all of which recourse
shall be had solely to the assets of the Issuer.
B. Notwithstanding anything contained herein to the contrary, this
Agreement has been signed by Bankers Trust Company not in its individual
capacity but solely as Indenture Trustee and in no event shall Bankers Trust
Company have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their behalf by their duly authorized officers as of March 20,
1997.
XXXXXX XXX SERVICING CORPORATION
By: /s/ Xxxxxxxx X. Xxxxx
------------------------------
Name:
-----------------------------
Title:
----------------------------
STUDENT LOAN MARKETING ASSOCIATION, as Administrator
By: /s/ Xxx Xxxxx Xxxxxxx
------------------------------
Name: Xxx Xxxxx Xxxxxxx
-----------------------------
Title: V.P., Associate General
Counsel and Corporate
Secretary
----------------------------
SLM STUDENT LOAN TRUST 1997-1 by Chase Manhattan Bank USA, National Association
not in its individual capacity but solely as Eligible Lender Trustee
By: /s/ Xxxx Xxxxxx
------------------------------
Name: Xxxx Xxxxxx
-----------------------------
Title:
----------------------------
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION not in its individual capacity
but solely as Trustee under a Trust Agreement dated March 1, 1997 between SLM
Funding Corporation and Chase Manhattan Bank USA, National Association
By: /s/ Xxxx Xxxxxx
------------------------------
Name: Xxxx Xxxxxx
-----------------------------
Title:
----------------------------
26
BANKERS TRUST COMPANY, not in its individual capacity but solely as Indenture
Trustee under an Indenture dated March 1, 1997 between SLM Student Loan Trust
1997-1 and Bankers Trust Company.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
-----------------------------
Title: Assistant Treasurer
----------------------------
27
ATTACHMENT A
SCHEDULE OF FEES
The Servicer will receive a Primary Servicing Fee and a Carryover
Servicing Fee (together, the "Servicing Fee"). The "Primary Servicing Fee" for
any month (except for the period from the Closing Date to and including March
31, 1997) is an amount equal to the lesser of (i) the Unit Amount and (ii)
1/12th of 1.15% of the outstanding principal amount of the Trust Student Loans,
in each case as of the last day of the preceding calendar month, plus any such
amounts from prior Monthly Servicing Payment Dates that remain unpaid. The "Unit
Amount" for any month is equal to $4.34 times the number of accounts in the
Trust during such month. The Primary Servicing Fee will be payable out of
Available Funds and amounts on deposit in the Reserve Account on the 25th day of
each month (or, if any such date is not a business day, on the next succeeding
business day), commencing April 25, 1997 (each, a "Monthly Servicing Payment
Date"). The "Carryover Servicing Fee" is the sum of (a) the amount, if any, as
of any Monthly Servicing Payment Date by which (i) 1/12th of 1.15% of the
outstanding principal amount of the Trust Student Loans exceeds (ii) the Unit
Amount, in each case as of the last day of the preceding calendar month, (b) the
amount of increases in the costs incurred by the Servicer which are agreed to
pursuant to Section 3.8 of the Servicing Agreement, (c) any Conversion Fees,
Transfer Fees and Removal Fees (as defined below) incurred since the last
Distribution Date and (d) any amounts described in (a), (b) and (c) above that
remain unpaid from prior Distribution Dates plus interest on such amounts for
the period from the Distribution Date on which such amounts become due to the
date such amounts are paid in full at a rate per annum for each Interest Period
(as defined below) equal to the sum of (a) the average accepted auction price
(expressed on a bond equivalent basis) for 91-day Treasury Bills sold at the
most recent 91-day Treasury Xxxx auction prior to the Interest Period as
reported by the U.S. Treasury Department and (b) 2.00%. "Interest Period" shall
mean the period from each Distribution Date through the day before the next
Distribution Date. The Carryover Servicing Fee will be payable to the Servicer
on each succeeding Distribution Date out of Available Funds after payment on
such Distribution Date of the Primary Servicing Fee, the Administration Fee, the
Noteholders' Distribution Amount, the Certificateholders' Distribution Amount,
and the amount, if any, necessary to be deposited in the Reserve Account to
reinstate the balance thereof to the Specified Reserve Account Balance. The
Servicer shall receive a pro rata portion of the Primary Servicing Fee and the
Carryover Servicing Fee for the period from the Closing Date to and including
March 31, 1997.
1
Servicer will be paid a fee ("Conversion Fee") for any Student Loan added
to the Trust Estate which Student Loan is not serviced on the Servicer's system
unless such Student Loan is being substituted into the Trust Estate by the
Servicer pursuant to Section 3.5 of this Agreement. The Conversion Fee is equal
to the greater of $17.00 per account or the Servicer's verifiable costs plus
15%.
Servicer will be paid a fee ("Transfer Fee") for any Student Loan
transferred in or out of the Trust Estate which is at the time of transfer being
serviced on the Servicer's system (regardless of the owner) unless such Student
Loans are being removed or added to the Trust in order to comply with the
Servicer's purchase/substitution obligation under Section 3.5 of this Agreement.
The Transfer Fee is equal to $4.00 per account transaction.
Servicer will be paid a fee ("Removal Fee") for performing all activities
required to remove a Trust Student Loan from the Servicer's system to another
servicer unless such Trust Student Loan is being removed due to the termination
of the Servicer pursuant to Section 5.1 of this Agreement. The Removal Fee is
equal to $10.00 per account plus any verifiable direct expenses incurred for
shipping such Trust Student Loan to the new servicer.
2
ATTACHMENT B
Loan Servicing Center/Florida
X.X. Xxx 0000
Xxxxxx Xxxx, Xxxxxxx 00000-0000
(000) 000-0000
Loan Servicing Center/Kansas
X.X. Xxx 000
Xxxxxxxx, Xxxxxx 00000
(000) 000-0000
Loan Servicing Center/New England
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
(000) 000-0000
Loan Servicing Center/Pennsylvania
000 Xxxxxx Xxxxxx
Xxxxxxx Xxxxxxxxxx Xxxxxxx
Xxxxxx-Xxxxx, Xxxxxxxxxxxx 00000
(000) 000-0000
Loan Servicing Center/Texas
000 Xxxx Xxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
(000) 000-0000
Loan Servicing Center/Washington
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
(000) 000-0000
1
ATTACHMENT C
REPORTS
1. CLASS Report 800 - Monthly activity summary report
2. CLASS Report 801 - Monthly average/ending balance report
3. CLASS Report 802 - Monthly activity detail
4. CLASS Report 803 - Monthly conversion/removal summary
5. CLASS Report 807 - Monthly delinquency aging report
6. CLASS Report 810 - Monthly characteristics summary
7. CLASS Report 866 - Monthly average/ending balance offset fee report
8. CLASS Report 882 - Great Rewards/Direct Repay Report
9. Monthly Cash Reconciliation Report
10. Quarterly ED799 billing (prepared from CLASS Reports 824, 825, 827, 828
and 829; supporting detail CLASS Reports 865, 868, 870 and 871; and the
OE799 SAS library)
11. Portfolio Characteristics, Financial Activity, Quarterly calculation of
Accrued Interest to be capitalized, Delinquency Detail and Claims
extracts.
1
