Exhibit 99.4
SUB-SERVICING AGREEMENT
This SUB-SERVICING AGREEMENT (this "Agreement") is entered into as of ____ _,
2002, by and between [Name of Sub-Servicer], a [State] corporation (the
"Sub-Servicer") and The Student Loan Corporation, a Delaware corporation (the
"Servicer").
WITNESSETH:
WHEREAS, the Servicer provides servicing functions for SLC Student Loan
Trust-I (the "Issuer") that include servicing and holding student loans which
are guaranteed under a guarantee program established pursuant to the
requirements of the Higher Education Act of 1965, as amended (the "Student
Loans"); and
WHEREAS, such services are provided by the Servicer to the Issuer pursuant
to a Servicing Agreement, dated as of _____ _, 2002, (the "Servicing Agreement")
between the Issuer and the Servicer, a copy of which has been provided to the
Sub-Servicer; and
WHEREAS, the Sub-Servicer is engaged in the business of providing, among
other things, loan servicing services for Student Loans; and
WHEREAS, the Servicer wishes to retain the Sub-Servicer to service certain
Student Loans owned by the Issuer as beneficial owner and by Bankers Trust
Company as Eligible Lender Trustee which are required to be serviced by the
Servicer under the Servicing Agreement (such Student Loans subject to this
Agreement are the Student Loans referenced from time to time in Exhibit A (the
Loan Transfer Addendum) to the Loan Sale and Contribution Agreement, dated as of
___ _, 2002, by and between the Depositor and the Issuer, as designated therein
as being serviced by the Sub-Servicer, referred to herein as the "Subserviced
Student Loans"), and the Sub-Servicer wishes to undertake the obligation to
service all such Subserviced Student Loans in accordance with the requirements
of the Higher Education Act of 1965, as amended, regulations promulgated
thereunder by the U.S. Department of Education and requirements issued by any
applicable guarantor (collectively, the "Higher Education Act") and under the
terms hereinafter set forth.
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, the Servicer and the Sub-Servicer agree as follows:
1. Definitions. Capitalized terms which are not otherwise defined in this
Agreement shall have the meanings ascribed thereto in that certain
Indenture of Trust, dated as of ____ _, 2002, by and between the Issuer
and Bankers Trust Company, as Indenture Trustee (the "Indenture").
2. Servicing Requirement and Engagement of Sub-Servicer
The Servicer hereby authorizes and appoints the Sub-Servicer to act as its agent
for the limited purpose of servicing the Subserviced Student Loans. The
Sub-Servicer agrees to perform such functions in compliance with all
requirements of the Higher Education Act and all other applicable laws and
regulations, and in accordance with the terms and conditions of this Agreement.
The authorization granted by this Agreement includes, but is not limited to,
correspondence and communication with any Guaranty Agency or the U.S. Department
of Education regarding the Subserviced Student Loans, the assignment of claims
to any guarantor or insurer, communication with borrowers and any other
communication, correspondence, signature or other act required to service the
Subserviced Student Loans in accordance with requirements of the Higher
Education Act or regulations promulgated by any Guaranty Agency.
3. Sub-Servicer Compensation.
a. The Servicer shall pay compensation to the Sub-Servicer for its
services hereunder as may be reasonably agreed to from time to time
between the Servicer and the Sub-Servicer.
b. The Sub-Servicer shall submit an invoice monthly to the Servicer,
and the Servicer shall remit payment for services performed as shown
on that invoice.
c. Payment is due within [thirty (30)] days after receipt of the
billing package. The billing package shall consist of an
invoice, and supporting documentation.
d. The Sub-Servicer acknowledges that the Issuer shall be entitled
to receive all payments of principal, interest and late charges
received with respect to the Subserviced Student Loans and that
the Sub-Servicer shall have no right to retain such amounts as
payment of any fees due the Sub-Servicer from the Servicer under
the terms of this Agreement. The Servicer hereby authorizes the
Sub-Servicer to assess, collect and retain any charges which the
Servicer or the Issuer is permitted by law or regulation to
assess with respect to not sufficient fund ("NSF") processing or
other collection costs.
e. If costs beyond the control of the Sub-Servicer shall increase,
including, without limitation, postal rates, or the imposition of
any tax or assessment not currently being charged against the
fees of the Sub-Servicer, then the Sub-Servicer shall provide the
Servicer with ninety (90) days prior written notice (and
including supporting documentation) of such proposed increased
costs and expenses. If the Servicer accepts such increased costs
and expenses, the increased costs and expenses will go into
effect at the end of such ninety (90) day period. If the
Servicer objects to such fee increase and the Sub-Servicer fails
to agree to reduce or eliminate the increase in a manner
satisfactory to the Servicer, then the Servicer may cause an
early termination to occur and the Subserviced Student Loans will
be deconverted at cost within one hundred and eighty (180) days
of receipt of said notice.
f. If the Sub-Servicer's costs and expenses are increased due to
changes in the manner of servicing the Subserviced Student Loans
as a result of changes in the Higher Education Act or the
interpretation thereof or due to changes in Guaranty Agency
requirements, then ninety (90) days after delivery of written
notice to the Servicer the Sub-Servicer may increase servicing
fees payable hereunder to reasonably reflect such costs and
expenses. However, no such increase shall take effect until the
Sub-Servicer provides supporting documentation to the Servicer
that justifies such increase. In the event the parties do not
agree on the interpretation of the changes to the Higher
Education Act, then either party may terminate this Agreement
upon ninety (90) days written notice to the other party;
provided, however, that the Sub-Servicer shall not terminate this
Agreement unless and until the Servicer shall have entered into
another agreement similar to this with the Sub-Servicer or
another sub-servicer.
If the Servicer believes the cost for services under this Agreement
is lowered by changes in regulations, law or processing, the
Servicer will submit a proposed fee schedule to the Sub-Servicer. If
the Sub-Servicer does not reject the schedule, the fees will go into
effect ninety (90) days thereafter. In the event that the parties do
not agree to the fee schedule, the Servicer may terminate this
Agreement upon ninety (90) days written notice to the Sub-servicer.
4. Subserviced Student Loan Subservicing
The Sub-Servicer covenants and agrees to service each Subserviced Student Loan
in compliance with all requirements of the Higher Education Act, the Guarantee
Agreements and all other applicable laws and regulations, to perform all
services and duties customary to the servicing of Student Loans, including all
collection practices and to do so in the same manner as the Sub-Servicer has
serviced Student Loans for parties other than the Servicer. Without limiting the
foregoing, in fulfillment of its obligations hereunder, the Sub-Servicer shall:
a. Maintain a complete and separate file for the Subserviced Student
Loans of each borrower, which file shall include all documentation
and correspondence related to the Subserviced Student Loans.
b. Investigate Subserviced Student Loans that became delinquent and
establish and maintain systems for sending out statements, payment
coupons and charging and collecting late payment fees in accordance
with provisions of the Higher Education Act and all other applicable
laws and regulations.
c. Perform the actions necessary to maintain the guarantee and/or
insurance on each Subserviced Student Loan at all times.
d. Exercise "due diligence" as that term is defined in the Higher
Education Act and in Section 5 hereof.
e. Prepare and maintain accounting records with respect to the
Subserviced Student Loans; process refunds and other adjustments;
process address changes and maintain address records.
f. Collect all payments with respect to the Subserviced Student
Loans and deposit all such payments into the Revenue Fund
established under the Indenture, including without limitation
guarantee payments, Interest Subsidy Payments and Special
Allowance Payments with respect to the Subserviced Student Loans.
The Sub-Servicer shall remit collected funds by automated
clearing house within one business day of receipt to the
Indenture Trustee. The Sub-Servicer shall also prepare reports
and submit the same to the Servicer and Issuer or its designee
within fifteen (15) days after the end of each quarter as
required to assure payment by the Secretary of Education of
Interest Subsidy and Special Allowance Payments.
g. Retain summary records of contacts, follow-ups and collection
efforts, and records of written correspondence relating to the
Subserviced Student Loans of each borrower sufficient to ensure
claim payment.
h. Process adjustments including NSF checks, status changes,
forbearances, deferments and Subserviced Student Loans paid in full.
i. Prepare and transmit to the Servicer or its designee reports,
including but not limited to ED Form 799, required by the U. S.
Department of Education or any Guaranty Agency regulations.
j. In the case of delinquent and defaulted Subserviced Student Loans,
promptly take the actions necessary to investigate, file and prove a
claim for any loss with the Guaranty Agency as required, and assume
responsibility for communication and contact with the Guaranty
Agency to accomplish recovery on such defaulted Subserviced Student
Loans.
k. At all times identify the Issuer and the Issuer's eligible lender
trustee as the owners of the Student Loan and identify the Indenture
Trustee as a party which maintains a security interest in the
Subserviced Student Loan.
l. Maintain a duplicate or copy of the file (which may be in the form
of computer tape, microfilm or other electronic image) for each
borrower at an off-site location.
m. Maintain the original file in fireproof cabinets or in other
fireproof storage sufficient to protect the contents from a
temperature of 1600 degrees Fahrenheit for one hour.
n. (i) Prepare and furnish to the Servicer, Issuer and the Indenture
Trustee, by the 10th business day of each month, reports with
respect to the Subserviced Student Loans substantially in the form
attached hereto as Exhibit A-1; and (ii) prepare and furnish to the
Servicer, Issuer and the Indenture Trustee by [___ _] of each year,
reports with respect to the Subserviced Student Loans substantially
in the form attached hereto as Exhibit A-2.
o. Obtain and maintain or cause to be obtained and maintained in force
(i) a fidelity bond in an amount of at least $1,000,000 upon all
personnel of the Sub-Servicer insuring against any loss or damage
which the Servicer, Issuer or the Sub-Servicer might suffer as a
consequence of any fraudulent or dishonest act of such personnel;
and (ii) errors and omissions insurance coverage in an amount equal
to at least $2,000,000 for all its customers.
p. Immediately respond to any communication received which is in the
nature of a complaint. Promptly answer all inquiries from
borrowers or the Servicer or Issuer pertaining to the Subserviced
Student Loans, disbursements, refunds or school status. Such
inquiries may, if necessary, be referred to the educational
institution the student attended or is attending. The
Sub-Servicer shall have no responsibility with respect to any
dispute between the student and the educational institution
regarding tuition, fees or refunds.
q. Establish and maintain a method for charging and collecting late
payment fees in accordance with provisions of the Higher Education
Act and all other applicable laws and regulations.
r. The Sub-Servicer shall act as custodian and bailee with respect
to all original documents and shall hold them subject to the lien
of the Indenture in favor of the Indenture Trustee and pursuant
to the Custody Agreement substantially in the form of Exhibit B
hereto. The Sub-Servicer agrees to enter into any reasonable
custodian, bailment or similar agreement reasonably required by
the Servicer with respect to perfecting and protecting the
security interests of any secured party.
s. If any Subserviced Student Loan has lost its guarantee and/or
insurance due to the actions of any prior servicer, or
sub-servicer, or holder of the Subserviced Student Loan, the
Sub-Servicer will, at the written request of the Servicer, use
its best efforts to reinstate such guarantee or insurance;
provided, however, that the Sub-Servicer makes no representation
that such reinstatement will occur. Such services shall be
provided at the cost agreed upon by the Servicer and the
Sub-Servicer.
t. If requested by the Servicer, the Sub-Servicer shall remit
monthly rebate fees to the U.S. Department of Education with
respect to the Subserviced Student Loans. Upon receipt of
satisfactory documentation, the Servicer shall promptly wire or
cause the Issuer to wire transfer to the Sub-Servicer, from
amounts held under the Indenture, the amount of funds required to
pay such fees. The Sub-Servicer shall provide the Servicer and
Issuer, on a monthly basis, with information needed to determine
the monthly rebate fees.
5. Due Diligence
The Sub-Servicer covenants and agrees that in discharging its obligations
hereunder it shall:
a. Exercise due diligence in the servicing and collection of all
Subserviced Student Loans as the term "due diligence" is used in the
Higher Education Act and further defined in the regulations of the
applicable guarantor.
b. Exercise reasonable care and diligence in the administration and
collection of all Subserviced Student Loans utilizing collection
practices in accordance with applicable Federal and State collection
practices, laws and regulations promulgated thereunder.
c. Administer and collect the Subserviced Student Loans in a competent,
diligent and orderly fashion, and in accordance with the
requirements of the Higher Education Act.
d. Exercise reasonable care and diligence in those aspects of the
administration of the Subserviced Student Loan program which are
within its area of responsibility.
6. Right of Inspection; Audits
The Servicer, the Issuer, the Indenture Trustee or any governmental agency
having jurisdiction over any of the same shall have the right from time to time
during normal business hours to examine and audit any of the Sub-Servicer's
records pertaining to any Subserviced Student Loan being serviced, provided,
however, that such activities shall not unreasonably disrupt the Sub-Servicer's
normal business operation.
7. Compliance Report.
The Sub-Servicer agrees that it shall permit, not more than once per year, the
Servicer, the Issuer, the Indenture Trustee or its designee to conduct or have
conducted a procedural audit regarding the Sub-Servicer's compliance with the
requirements of the Higher Education Act or the terms of this Agreement. Such
audits shall be at the expense of the Servicer.(1)
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(1) Should Sub-Servicer be required to provide an annual servicing audit?
8. Representations, Warranties, and Covenants of Sub-Servicer
The Sub-Servicer makes the following representations, warranties and covenants
to the Servicer on the date of this Agreement. The Sub-Servicer shall be deemed
to have repeated the representations and warranties in clauses (a), (b), (g),
(h), (i), (j) and (m) on each date on which a new series of Notes is issued
under the Indenture.:
a. The Sub-Servicer (i) is duly incorporated, validly existing, and
in good standing under the laws of the jurisdiction in which it
is incorporated; (ii) is duly qualified to transact business and
is in good standing as a foreign corporation in each jurisdiction
where the nature and extent of its business and properties
require due qualification and good standing; (iii) possesses all
requisite authority, permits and power to conduct its business as
is contemplated by this Agreement including, without limitation,
eligibility as a third-party servicer under the Higher Education
Act; and (iv) is in compliance with all applicable laws and
regulations.
b. The execution and delivery by the Sub-Servicer of this Agreement
and the performance of its obligations hereunder (i) are within
its corporate power, (ii) have been duly authorized by all
necessary corporate action, (iii) require no action by or filing
with any governmental agency, except for any action or filing
that has been taken or made on or before the date of this
Agreement, and (iv) do not violate any provision of its articles
of in corporation or bylaws.
c. The Sub-Servicer will satisfy all of its obligations relating to the
Subserviced Student Loans, maintain in effect all qualifications
required in order to service the Subserviced Student Loans and
comply in all material respects with all requirements of law if a
failure to comply would have a materially adverse effect on the
interest of the Issuer.
d. The Sub-Servicer will not permit any rescission or cancellation of a
Subserviced Student Loan except as ordered by a court or other
government authority or as consented to by the Eligible Lender
Trustee and the Indenture Trustee, except that it may write off any
delinquent loan if the remaining balance of the borrower's account
is less than $50.
e. The Sub-Servicer will do nothing to impair the rights granted to the
Noteholders under the Indenture, except for such actions as may be
required by the Higher Education Act or other applicable law.
f. The Sub-Servicer will not reschedule, revise, defer or otherwise
compromise payments due on any Subserviced Student Loan except
during any applicable interest only, deferral or forbearance periods
or otherwise in accordance with all applicable standards and
requirements for servicing of the Subserviced Student Loans.
g. All Sub-Servicer financial statements delivered to the Servicer
were prepared according to U.S. generally accepted accounting
principles ("GAAP") consistently applied and present fairly, in
all material respects, the financial condition, results of
operations and cash flows of the Sub-Servicer as of, and for the
portion of the fiscal year ending on their date or dates
(subject, in the case of financial statements other than annual
ones, only to normal year-end adjustments). No event which could
cause a material adverse effect on the Sub-Servicer's financial
condition has occurred, and if such event shall occur, the
Sub-Servicer shall promptly give the Servicer notice thereof.
h. No event which could cause a material adverse effect on the
Sub-Servicer's financial condition has occurred, and if such event
shall occur, the Sub-Servicer shall promptly give the Servicer and
Issuer notice thereof.
i. The Sub-Servicer is not subject to, or aware of the threat of,
any litigation that is reasonably likely to be determined
adversely to it and that, if so adversely determined, would have
a material adverse effect on its financial condition or its
ability to meet its obligations under this Agreement and no
outstanding or unpaid judgments against the Sub-Servicer exist,
and if such event shall occur, the Sub-Servicer shall promptly
give the Servicer notice thereof.
j. The Sub-Servicer's examination process did not disclose or create
any basis upon which to believe that each Subserviced Student
Loan for which a certificate has been delivered under the Custody
Agreement, except as indicated in such certificate, (i) is not in
compliance in all material respects with all laws and rules and
regulations with respect to the guaranty thereof, and (ii) does
not conform to the applicable requirements of eligibility for
guaranty.
k. The Sub-Servicer agrees to maintain it's servicing system so that it
will continue to provide all services required under this Agreement.
l. Until all Subserviced Student Loans serviced hereunder have been
repaid in full, or paid as a claim by a guarantor, or transferred to
another sub-servicer, the Sub-Servicer agrees as follows:
(i) The Sub-Servicer shall cause to be furnished to the
Servicer such financial statements as the Servicer may
reasonably request, including quarterly unaudited financial
statements within thirty (30) days after the conclusion of
each fiscal quarter, and annual financial statements within
sixty (60) days after the end of each fiscal year audited
by nationally recognized independent certified public
accounts and such other information with respect to its
business affairs, assets, and liabilities as the Servicer
may reasonably request.
(ii) The Sub-Servicer shall maintain books, records and accounts
necessary to prepare financial statements according to GAAP
and maintain adequate internal financial controls.
(iii) The Sub-Servicer shall maintain all licenses, permits, and
franchises necessary for its business.
m. This Agreement will, upon execution and delivery by all parties
thereto, constitute a legal and binding obligation of the
Sub-Servicer, enforceable against the Sub-Servicer according to its
terms.
9. Representations and Warranties of Servicer
The Servicer represents and warrants to the Sub-Servicer on the date of this
Agreement:
a. The Servicer (i) is duly organized, validly existing, and in good
standing under the laws of the jurisdiction in which it is formed;
(ii) is duly qualified to transact business as a Delaware
corporation; and (iii) possesses all requisite authority, permits
and power to conduct its business as is contemplated by this
Agreement.
b. The execution and delivery by the Servicer of this Agreement and
the performance of its obligations hereunder (i) are within its
organizational power; (ii) have been duly authorized by all
necessary action; (iii) require no action by or filing with any
governmental agency, except for any action or filing that has
been taken or made on or before the date of this Agreement; and
(iv) do not violate any provision of its certificate of
incorporation or by-laws.
c. This Agreement will, upon execution and delivery by all parties
thereto, constitute a legal and binding obligation of the Servicer,
enforceable against the Servicer according to its terms.
d. The Servicer is not subject to, or aware of the threat of, any
litigation that is reasonably likely to be determined adversely to
it and that, if so adversely determined, would have a material
adverse effect on its financial condition relevant to this
Agreement.
10. Sub-Servicer Default.
Each of the following constitute a "Sub-Servicer Default" hereunder:
a. any failure by the Sub-Servicer to deliver to the Indenture
Trustee for deposit in any of the Trust Accounts any payment
required by the Basic Documents, which failure continues
unremedied for one business day after written notice of such
failure is received by the Sub-Servicer from the Servicer, the
Eligible Lender Trustee, the Indenture Trustee or the
Administrator or after discovery of such failure by an officer of
the Sub-Servicer; or
b. any breach of a representation or warranty of the Sub-Servicer
contained in Section 8 of this Agreement or failure by the
Sub-Servicer duly to observe or to perform in any material
respect any term, covenant or agreement set forth in this
Agreement, which breach or failure shall (i) materially and
adversely affect the rights of Noteholders or any Derivative
Product Counterparties and (ii) continue unremedied for a period
of sixty (60) days after the date of discovery of such failure by
an officer of the Sub-Servicer or on which written notice of such
failure, requiring the same to be remedied, shall have been given
to the Sub-Servicer, by the Indenture Trustee, the Eligible
Lender Trustee or the Administrator; or
c. an Event of Bankruptcy occurs with respect to the Sub-Servicer; or
d. any failure by the Sub-Servicer to comply with any requirements
under the Higher Education Act resulting in a loss of its
eligibility as a third-party servicer.
Sub-Servicer Default does not include any failure of the Sub-Servicer to service
a Subserviced Student Loan in accordance with the Higher Education Act, so long
as the Sub-Servicer is in compliance with its obligations under this Agreement
and as long as the Sub-Servicer has deposited the amount of any payments lost as
a result of the Sub-Servicer's actions in the Revenue Fund.
11. Rights Upon Sub-Servicer Default.
In each and every case, so long as the Sub-Servicer Default shall not have been
remedied, the Servicer, by notice in writing to the Sub-Servicer may terminate
all the rights and obligations (other than the obligations set forth in Section
19 hereof) of the Sub-Servicer under this Agreement.
As of the effective date of termination of the Sub-Servicer, all authority and
power of the Sub-Servicer under this Agreement, whether with respect to the
Notes or the Subserviced Student Loans or otherwise, shall, without further
action, pass to and be vested in the Servicer or the Indenture Trustee or such
successor sub-servicer as may be appointed, and all files shall be disposed of
pursuant to the procedures proscribed by Section 14 hereof.
The Sub-Servicer shall cooperate with the successor sub-servicer, the Servicer,
the Indenture Trustee and the Eligible Lender Trustee in effecting the
termination of the responsibilities and rights of the Sub-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 Sub-Servicer for
deposit, or shall thereafter be received by it with respect to a Subserviced
Student Loan. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with transferring the Subserviced Student Loan files to
the successor servicer and amending this Agreement and any other Basic Documents
to reflect such succession of servicer pursuant to this Section 11 shall be paid
by the Sub-Servicer (other than the Indenture Trustee acting as the servicer
under this Section 11) upon presentation of reasonable documentation of such
costs and expenses.
12. [Reserved]
13. Termination.
This Agreement will terminate upon the occurrence of the earlier of (i) the
termination of the Indenture; (ii) termination of the Servicing Agreement; (iii)
early termination pursuant to Section 3(e) hereof; (iv) payment in full of all
of the Subserviced Student Loans being serviced hereunder; and (v) the date
specified in a notice of termination from the Servicer to the Sub-Servicer given
not less than thirty (30) days prior to such specified date.
In the event of termination of this Agreement, the Servicer shall remain liable
for all fees due hereunder. Termination shall be made without prejudice to any
other rights or remedies either party may have at law or in equity. The
obligations of the Sub-Servicer under Section 4 hereof, the representations and
warranties in Section 8 hereof, shall survive any termination of this Agreement
and shall remain in effect for all Subserviced Student Loans while such
Subserviced Student Loans are serviced by the Sub-Servicer. The rights and
obligations of the Sub-Servicer contained in Section 19 hereof shall survive
termination of this Agreement. In the event that servicing on any Subserviced
Student Loan is transferred to a successor sub-servicer, such successor
sub-servicer shall be required by the Servicer to engage in reasonable good
faith efforts to obtain payment on any claim initially rejected by a guarantor
for payment including, without limitation, involving the Sub-Servicer in such
effort, where the reason for claim denial relates to the period during which the
Sub-Servicer serviced such Subserviced Student Loan hereunder. However, if the
cause for claim denial is reasonably attributable to the Sub-Servicer actions or
inactions, the Sub-Servicer shall be responsible therefore.
14. Disposition of Files on Termination
Upon termination of this Agreement, all files (physical and electronic) held by
the Sub-Servicer with respect to Subserviced Student Loans shall be promptly
transferred to the Servicer or its designee in such form as the Servicer
reasonably requests. The Servicer shall be responsible for payment of reasonable
expenses related to the transfer of the records unless the Servicer is removing
the Subserviced Student Loans because of a breach by the Sub-Servicer. In such
instance, the Sub-Servicer shall bear the cost of deconverting and transferring
the Subserviced Student Loan documentation.
15. Independent Contractor
The Sub-Servicer is an independent contractor and is not, and shall not hold
itself out to be, the agent of the Servicer except for the limited specific
purposes set forth in this Agreement.
16. Correspondence; Disclosure
The parties hereto acknowledge and agree that the Sub-Servicer will handle all
communication with borrowers necessary to provide its services hereunder. Data
regarding Subserviced Student Loans shall be disclosed only to the Servicer, the
Issuer, the Indenture Trustee, the Administrator or the respective borrower,
unless otherwise required by law or certain financing covenants.
17. Cooperation
Each party covenants and agrees to cooperate fully with the other to facilitate
the transactions contemplated by this Agreement.
18. Amendments
This Agreement may be amended, supplemented or modified only by written
instrument duly executed by the Servicer and the Sub-Servicer.
19. Indemnification and Liability
a. If the Sub-Servicer is required to appear in, or is made a
defendant in any legal action or proceeding commenced by any
party other than Servicer with respect to any matter arising
hereunder, the Servicer shall indemnify and hold the Sub-Servicer
harmless from all loss, liability, or expense (including
reasonable attorney's fees) except for any loss, liability or
expense arising out of or relating to the Sub-Servicer's willful
misconduct or negligence with regard to the performance of
services hereunder or breach of its obligations hereunder or
under the Custody Agreement. Subject to the limitations set
forth in paragraph 19(b) hereof, the Sub-Servicer shall indemnify
and hold the Servicer harmless from all loss, liability and
expense (including reasonable attorney's fees) arising out of or
relating to the Sub-Servicer's willful misconduct or negligence
with regard to performance of services hereunder or breach of its
obligations hereunder or under the Custody Agreement, provided
that in no event shall the Sub-Servicer be responsible or liable
for any incidental, special or consequential damages with respect
to any matter whatsoever arising out of this Agreement.
b. If a Subserviced Student Loan is denied the guarantee by the
Guaranty Agency or the loss of federal interest, special
allowance, and/or insurance benefits, the Sub-Servicer shall have
the right to take any action not prohibited by law or regulation
to reduce its losses, if any, hereunder, including but not
limited to curing, at its own expense, any due diligence or other
servicing violation. If any lost guarantee is not reinstated
within nine (9) months of the date the Sub-Servicer learns of the
loss of the guarantee on a Subserviced Student Loan, the
Sub-Servicer shall take actions which make the Servicer and the
Issuer whole with respect to the Subserviced Student Loan while
maintaining the eligibility for future reinstatement of the
guarantee; provided, however, the Sub-Servicer may delay taking
such actions by giving written notice to the Servicer not less
often than each ninety (90) days that the Sub-Servicer has reason
to believe that the guarantee will be reinstated within time
frames permitted by regulations. If the Sub-Servicer gives
notice of such delay, the Sub-Servicer agrees to pay any accrued
interest on the Subserviced Student Loan that may be uninsured.
The Servicer agrees to use its best efforts to cause the
repurchase, at par plus insured interest and benefits thereon, of
any Subserviced Student Loan which is cured and is reinsured
subsequent to its sale by the Servicer pursuant to actions taken
by the Sub-Servicer to make the Servicer and the Issuer whole and
if the sale was to an eligible lender, to the extent the Servicer
makes available, funds therefor.
c. The Sub-Servicer shall have no responsibility for any error or
omission (including due diligence violations) which occurred
prior to the date the Sub-Servicer assumed responsibility for
servicing the Subserviced Student Loan, nor shall the
Sub-Servicer be responsible for losses, damages or expenses
arising from any change in law or regulation which retroactively
imposes additional requirements for documentation or servicing
actions, provided that the Sub-Servicer has made best efforts to
comply with retroactive additional requirements.
20. Confidentiality
The contents of this Agreement, together with all supporting documents,
exhibits, schedules, and any amendments thereto which form the basis of the
business relationship between the Servicer and the Sub-Servicer, insofar as the
same relate to the fees charged by the Sub-Servicer, shall be held in confidence
by both parties and shall not be disclosed or otherwise discussed with any third
party (unless required by law or regulation) except outside counsel or
independent accounts or in connection with the offer and sale of securities
issued or to be issued under the Indenture, without the prior written consent of
the other party.
21. Sale or Transfer of Loans; Limitations
The Servicer agrees that if any Subserviced Student Loans are sold under
conditions that result in the Subserviced Student Loans being transferred to
another sub-servicer, whether immediately or at some future date, the Servicer
will pay or cause to be paid, at the time such Subserviced Student Loans are
transferred, any applicable deconversion fees.
22. Miscellaneous
a. Any material written communication received at any time by the
Servicer with respect to a Subserviced Student Loan or a borrower
shall be promptly transmitted by the Servicer to the Sub-Servicer.
Such communications include but are not limited to letters, notices
of death or disability, adjudication of bankruptcy and like
documents, and forms requesting deferment of repayment or loan
cancellations.
b. This Agreement shall be governed by the laws of the State of New
York.
c. All covenants contained herein and the benefits, rights and
obligations of the Servicer hereunder, shall be binding upon and
inure to the benefit of the legal representatives, successors and
assigns of the Servicer, including but not limited to, any successor
entity acquiring or succeeding to the assets of the Servicer.
d. The Sub-Servicer may not assign its rights or obligations hereunder
and this Agreement shall terminate upon notice from Servicer in the
event of any person or entity succeeds the Sub-Servicer or its
assets.
e. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original and all of which shall be deemed
to constitute but one and the same instrument.
f. If any provisions of this Agreement shall be held, or deemed to
be, or shall in fact be inoperative or unenforceable as applied
in any particular situation, such circumstance shall not have the
effect of rendering any other provision or provisions herein
contained invalid, inoperative or unenforceable to any extent
whatsoever. The invalidity of any one or more phrases, sentences,
clauses or paragraphs herein contained shall have no effect on
the remaining portions of this Agreement or any part hereof.
g. All notices, requests, demands or other instruments which may or
are required to be given by either party to the other, shall be
in writing and each shall be deemed to have been properly given
when delivered personally on an officer of the party to whom such
notice is to be given, upon receipt thereof when mailed postage
prepaid by registered or certified mail, requesting return
receipt, or upon confirmed facsimile transmission, addressed as
follows:
If intended for the Servicer:
The Student Loan Corporation
000 Xxxxxxxxxx Xxxxxxxxx
0xx Xxxxx
Xxxxxxxx, XX 00000
Attn: ____________
Fax No.: ____________
If intended for the Sub-Servicer:
[Sub-Servicer contact information]
Either party may change the address to which subsequent notices are
to be sent to it by written notice to the other given as aforesaid,
but any such notice of change, shall not be effective until the
second business day after it is mailed.
h. This Agreement may not be terminated by any party hereto except
in the manner and with the effect herein provided.
i. When the context of this Agreement so requires or implies,
references to the Servicer include any applicable trustee.
j. If either party cannot fulfill its obligations (other than the
payment of money), in part or in whole, due to a force or event
outside its control, such obligations of that party shall be
suspended and such party shall not be liable to the other party for
any failure to perform hereunder as a result.
k. The parties hereto agree to execute or cause to be executed the
Limited Power of Attorney, attached hereto as Exhibit C.
l. The Sub-Servicer has and agrees to maintain a disaster recovery plan
which, in its reasonable opinion, will permit it to continue
operations without undue interruption in the event of fire,
disaster, labor disruption, or Act of God.
m. EACH PARTY TO THIS AGREEMENT WAIVES ITS RIGHT TO A JURY TRIAL.
IN WITNESS WHEREOF, the parties have hereunto set their hands by their duly
authorized officers as of the day and year first above written.
[Name of Sub-Servicer],
as Sub-Servicer,
By:_____________________________________
Name:
Title:
THE STUDENT LOAN CORPORATION, as
Servicer
By:_____________________________________
Name:
Title:
EXHIBIT A-1
MONTHLY REPORTS
[TO COME]
EXHIBIT A-2
ANNUAL REPORTS
[TO COME]
EXHIBIT B
CUSTODY AGREEMENT
[attached hereto]
EXHIBIT C
LIMITED POWER OF ATTORNEY
WITNESSETH:
WHEREAS, The Student Loan Corporation, a Delaware corporation (the
"Servicer") and [Name of Sub-Servicer], a [State] corporation ("Sub-Servicer"),
are parties to the SUB-SERVICING AGREEMENT, dated as of ________ _, 2002 (the
"Sub-Servicing Agreement"); and
WHEREAS, pursuant to the Sub-Servicing Agreement, Sub-Servicer will
perform substantially all of the obligations and duties with regard to servicing
of certain education loans (the "Subserviced Student Loans")as provided therein;
and
WHEREAS, in order to carry out its obligations under the Sub-Servicing
Agreement with respect to the Subserviced Student Loans, Sub-Servicer requires
the power to perform certain acts, including but not limited to execution of
promissory notes, assignment of notes to guarantors and filing of responses to
bankruptcy notices, in the name of Bankers Trust Company, as Eligible Lender
Trustee for SLC Student Loan Trust-I.
NOW THEREFORE, the Sub-Servicer, Issuer and Eligible Lender Trustee agree:
1. That each of the Issuer and Eligible Lender Trustee do hereby make and
appoint Sub-Servicer as its true and lawful attorney-in-fact to do all things
necessary to carry out Sub-Servicer's obligations under the Sub-Servicing
Agreement with respect to the Subserviced Student Loans, including but not
limited to the filing of proof of claim with bankruptcy courts. This
instrument shall be construed and interpreted as a limited power of attorney
(the "Limited Power of Attorney") and is not to be construed as granting any
powers to Sub-Servicer other than those necessary to carry out its
obligations under the Sub-Servicing Agreement with respect to the Subserviced
Student Loans.
2. That this Limited Power of Attorney is effective as of ______ _, 2002 and
shall remain in force and effect until revoked in writing by the Issuer or
Eligible Lender Trustee or until the Sub-Servicing Agreement is terminated.
This instrument shall supplement but not replace the powers previously
granted to Sub-Servicer in the Sub-Servicing Agreement.
The undersigned, being duly authorized, has executed this Limited Power of
Attorney s of _____ _, 2002.
SLC STUDENT Loan TRUSTI,
as Issuer
By: THE STUDENT LOAN CORPORATION,
as Issuer's Administrator
By: ____________________________________
Name:
Title:
BANKERS TRUST COMPANY, as Eligible
Lender Trustee
By: ____________________________________
Name:
Title:
The undersigned, being duly authorized, accepts the foregoing Limited
Power of Attorney for and on behalf of Sub-Servicer, as of ___________________,
2002.
[Name of Sub-Servicer],
as Sub-Servicer
By: ____________________________________
Name:
Title:
