EXHIBIT 99.3
EXECUTION COPY
SERVICING AGREEMENT
This SERVICING AGREEMENT (this "Agreement") is entered into as of March 27,
2002, by and between The Student Loan Corporation, a Delaware corporation (the
"Servicer") and SLC Student Loan Trust-I, a Delaware business trust (the
"Issuer").
WITNESSETH:
WHEREAS, the Issuer acquires and holds 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, pursuant to this Agreement the Servicer will agree to provide, or
cause there to be provided, loan servicing services for the Student Loans; and
WHEREAS, the Issuer wishes to retain the Servicer to service the Student
Loans acquired pursuant to the Loan Sale and Contribution Agreement, dated March
27, 2002, by and between the Depositor and the Issuer, (the "Financed Student
Loans"), and owned by the Issuer as beneficial owner and by Bankers Trust
Company as Eligible Lender Trustee and the Servicer wishes to undertake the
obligation to service or cause to be serviced all such Financed 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 Issuer and the Servicer agree as follows:
1. Definitions. Capitalized terms which are not otherwise defined in this
Agreement shall have the meanings ascribed thereto in Appendix A to that
certain Indenture of Trust, dated as of March 27, 2002, by and between SLC
Student Loan Trust-I and Bankers Trust Company, as Indenture Trustee (the
"Indenture").
2. Servicing Requirement and Engagement of Servicer
The Issuer hereby authorizes and appoints the Servicer to act as its agent for
the limited purpose of servicing the Financed Student Loans. The 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 Financed 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
Financed Student Loans in accordance with requirements of the Higher Education
Act or regulations promulgated by any Guaranty Agency.
The Issuer hereby authorizes the Servicer to enter into subservicing contracts
with an entity acting as a subservicer pursuant to such contracts, such entity
is herein referred to as a "Subservicer", to provide the services required of
the Servicer hereunder and to meet any obligations of the Issuer hereunder, so
long as such contracts are permitted by the Indenture. In the event Servicer
commences serving of any Financed Student Loans which were previously serviced
by a Subservicer, the Servicer shall give prompt written notice of such event to
each Rating Agency.
3. Servicer Compensation
a. Initially fees shall be charged in accordance with the schedule
attached hereto as Exhibit A. The Servicer may increase the fees,
charges and expenses from those set forth in Exhibit A hereto by
giving at least one hundred and twenty (120) days notice, provided
that a Rating Confirmation has been received with respect thereto.
b. The Servicer shall submit an invoice monthly to the Issuer, and the
Issuer 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 Servicer acknowledges that the Issuer shall be entitled to
receive all payments of principal, interest and late charges
received with respect to the Financed Student Loans and that the
Servicer shall have no right to retain such amounts as payment of
any fees due to the Servicer from the Issuer under the terms of this
Agreement. The Issuer hereby authorizes the Servicer to assess,
collect and retain any charges which the Issuer is permitted by law
or regulation to assess with respect to not sufficient fund ("NSF")
processing or other collection costs.
e. If other costs beyond the control of the 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 Servicer, then the Servicer shall provide the Issuer with
ninety (90) days prior written notice (and including supporting
documentation) of such proposed increased costs and expenses. If the
Issuer 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 Issuer objects to such fee increase and the
Servicer fails to agree to reduce or eliminate the increase in a
manner satisfactory to the Issuer, then an early termination will
occur and the Financed Student Loans will be deconverted at cost
within one hundred and eighty (180) days of receipt of said notice.
No such early termination shall occur unless and until the Issuer
shall have entered into another agreement similar to this Agreement
with the Servicer or another servicer and a Rating Confirmation has
been received with respect thereto.
f. If the Servicer's costs and expenses are increased due to changes in
the manner of servicing the Financed Student Loans as a result of
changes in the Higher Education Act or the interpretation thereof or
due to changes in Guarantee Agency requirements, then ninety (90)
days after delivery of written notice to the Issuer the Servicer may
increase servicing fees payable hereunder to reasonably reflect such
costs and expenses. However, no such increase shall take effect
until the Servicer provides supporting documentation to the Issuer
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 this
Agreement shall not be so terminated by the Issuer unless and until
the Issuer shall have entered into another agreement similar to this
with the Servicer or another servicer and a Rating Confirmation has
been received with respect thereto.
g. If the Issuer believes the cost for services under this Agreement is
lowered by changes in regulations, law or processing, the Issuer
will submit a proposed fee schedule to the Servicer. If the Servicer
does not reject the schedule, the fees will go into effect ninety
(90) days thereafter.
4. Financed Student Loan Servicing
The Servicer covenants and agrees to service or cause to be serviced each
Financed 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 Servicer has serviced Student Loans for parties other than the
Issuer. Without limiting the foregoing, in fulfillment of its obligations
hereunder, the Servicer shall (or its Subservicer shall):
a. Maintain a complete and separate file for the Financed Student Loans
of each borrower, which file shall include all documentation and
correspondence related to the Financed Student Loans.
b. Investigate Financed 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 Financed 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 Financed
Student Loans; process refunds and other adjustments; process
address changes and maintain address records.
f. Collect all payments with respect to the Financed 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 Financed Student Loans. The Servicer shall remit
collected funds by automated clearing house within three (3)
business days of receipt to the Indenture Trustee. The Servicer
shall also prepare reports and submit the same to the Issuer or its
designee within fifteen (15) business 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
Financed Student Loans of each borrower sufficient to ensure claim
payment.
h. Process adjustments including NSF checks, status changes,
forbearances, deferments and Financed Student Loans paid in full.
i. Prepare and transmit to the Issuer 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 defaulted Financed Student Loans, promptly take the
actions necessary to file and prove a claim for loss with the
Guarantee Agency as required, and assume responsibility for
communication and contact with the Guarantee Agency to accomplish
recovery on such defaulted Financed Student Loans.
k. At all times identify the Issuer and the Issuer's eligible lender
trustee as the owners of the Financed Student Loan and identify the
Indenture Trustee as a party which maintains a security interest in
the Financed 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 Issuer and the Indenture Trustee
Servicer Reports with respect to the Financed Student Loans in the
form attached hereto as Exhibit B-1; and (ii) prepare and furnish to
the Issuer and the Indenture Trustee by March 31 of each year,
commencing March 31, 2003, reports with respect to the Financed
Student Loans in the form attached hereto as Exhibit B-2.
o. Ensure the timely payment of taxes, accounting fees, outside auditor
fees, data processing costs and other costs incurred in servicing
the Financed Student Loans.
p. 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 Servicer insuring against any loss or damage which
the Issuer or the 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.
q. Immediately respond to any communication received which is in the
nature of a complaint. Promptly answer all inquiries from borrowers
or the Issuer pertaining to the Financed 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 Servicer shall have no responsibility
with respect to any dispute between the student and the educational
institution regarding tuition, fees or refunds.
r. 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.
s. 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 in
substantially the form of Exhibit C hereto. The Servicer agrees to
enter into any reasonable custodian, bailment or similar agreement
reasonably required by the Issuer with respect to perfecting and
protecting the security interests of any secured party.
t. If any Financed Student Loan has lost its guarantee and/or insurance
due to the actions of any prior issuer, servicer or holder of the
Financed Student Loan, the Servicer will, at the written request of
the Issuer, use its best efforts to reinstate such guarantee or
insurance; provided, however, that the Servicer makes no
representation that such reinstatement will occur. Such services
shall be provided at the cost agreed upon by the Issuer and the
Servicer as defined in Exhibit A under cure services.
u. If requested by the Issuer, remit monthly rebate fees to the U.S.
Department of Education with respect to the Financed Student Loans.
Upon receipt of satisfactory documentation, the Issuer shall
promptly wire transfer to the Servicer or its designee, from amounts
held under the Indenture, the amount of funds required to pay such
fees. The Servicer shall provide, or cause to be provided to the
Issuer, on a monthly basis, information needed to determine the
monthly rebate fees.
5. Due Diligence
The Servicer covenants and agrees that in discharging its obligations hereunder
it shall:
a. Exercise due diligence in the servicing and collection of all
Financed 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 Financed Student Loans utilizing collection
practices in accordance with applicable Federal and State collection
practices, laws and regulations promulgated thereunder.
c. Administer and collect the Financed 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 Financed Student Loan program which are within
its area of responsibility.
6. Right of Inspection; Audit
The Issuer, the Indenture Trustee or any governmental agency having jurisdiction
over any of the same shall have the right from time to time upon reasonable
prior notice and during normal business hours to examine and audit any of the
Servicer's or Subservicer's records pertaining to any Financed Student Loan
being serviced, provided, however, that such activities shall not unreasonably
disrupt the Servicer's normal business operation.
7. Compliance Report.
The Servicer agrees that it shall permit, not more than once per year, the
Issuer, the Indenture Trustee or its designee to conduct or have conducted a
procedural audit regarding the Servicer's or Subservicer'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 Issuer.
8. Representations, Warranties, and Covenants of Servicer.
The Servicer makes the following representations, warranties and covenants to
the Issuer on the date of this Agreement. The 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 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 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 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 Servicer will satisfy all of its obligations relating to the
Financed Student Loans, maintain in effect all qualifications
required in order to service the Financed 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 Servicer will not permit any rescission or cancellation of a
Financed 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 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 Servicer will not reschedule, revise, defer or otherwise
compromise payments due on any Financed 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 Financed Student Loans.
g. All Servicer financial statements delivered to the Issuer 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 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).
h. No event which could cause a material adverse effect on the
Servicer's financial condition has occurred, and if such event shall
occur, the Servicer shall promptly give the Issuer notice thereof.
i. 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 or its ability to meet its
obligations under this Agreement and no outstanding or unpaid
judgments against the Servicer exist, and if such event shall occur,
the Servicer shall promptly give the Issuer notice thereof.
j. The Servicer's examination process did not disclose or create any
basis upon which to believe that each Financed 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 Servicer further agrees to maintain it's servicing system so
that it will continue to provide all services required under this
Agreement to the extent such services are not provided by one or
more eligible third-party subservicers under the Higher Education
Act with adequate systems to perform such services.
l. Until all Financed Student Loans serviced hereunder have been repaid
in full, or paid as a claim by a guarantor, or transferred to
another servicer, the Servicer agrees as follows:
(i) The Servicer shall cause to be furnished to the Issuer its
financial statements as the Issuer may reasonably request,
including quarterly unaudited financial statements within
thirty (30) days after the conclusion of each fiscal quarter,
and annual financial statements within ninety (90) days after
the end of each fiscal year audited by nationally recognized
independent certified public accountants and such other
information with respect to its business affairs, assets, and
liabilities as the Issuer may reasonably request.
(ii) The Servicer shall maintain books, records and accounts
necessary to prepare financial statements according to GAAP
and maintain adequate internal financial controls.
(iii) The 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 Servicer,
enforceable against the Servicer according to its terms.
Upon the discovery of a breach of certain covenants that have a materially
adverse effect on the Student Loans, the Servicer will be obligated to purchase
or substitute the adversely affected Student Loan unless the breach is cured
within the time period prescribe in Section 13 hereof. Any breach that relates
to compliance with the requirements of the Higher Education Act or the
applicable guarantor but that does not affect that guarantor's obligation to
guarantee payment of a student loan will not be considered to have a material
adverse effect.
The purchase or substitution and reimbursement obligations of the Servicer
will constitute the sole remedy available to the Issuer for any uncured breach.
The Servicer's purchase or substitution and reimbursement obligations are
contractual obligations that the Issuer may enforce, but the breach of these
obligations will not constitute an event of default under the Indenture.
9. Representations and Warranties of Issuer
The Issuer represents and warrants to the Servicer on the date of this
Agreement:
a. The Issuer (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 business
trust; and (iii) possesses all requisite authority, permits and
power to conduct its business as contemplated by this Agreement.
b. The execution and delivery by the Issuer 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 trust.
c. This Agreement will, upon execution and delivery by all parties
thereto, constitute a legal and binding obligation of the Issuer,
enforceable against the Issuer according to its terms.
d. The Issuer 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. Servicer Default.
Each of the following constitute a "Servicer Default" hereunder:
a. any failure by the 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 three (3)
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 after discovery of such failure by an
officer of the Servicer; or
b. any breach of a representation or warranty of the Servicer contained
in Section 8 of this Agreement or failure by the Servicer duly to
observe or to perform in any material respect any term, covenant or
agreement set forth in this Agreement or in any other Basic
Document, 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 Servicer or on which written notice of such breach or
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, the Indenture
Trustee or the Eligible Lender Trustee by Noteholders representing
not less than 25% of the Outstanding Amount of the Notes; or
c. an Event of Bankruptcy occurs with respect to the Servicer; or
d. 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.
Servicer Default does not include any failure of the Servicer to service a
Financed Student Loan in accordance with the Higher Education Act, so long as
the Servicer is in compliance with its obligations under this Agreement and as
long as the Servicer has deposited the amount of any payments lost as a result
of the Servicer's actions in the Revenue Fund.
11. Rights Upon Servicer Default.
In each and every case, so long as the Servicer Default shall not have been
remedied, either the Indenture Trustee, or the holders of Notes evidencing not
less than 25% of the Outstanding Amount of the Notes, by notice then given in
writing 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 rights and obligations set forth in Section 19
hereof) of the Servicer under this Agreement. Only the Indenture Trustee or the
Noteholders, and not the Eligible Lender Trustee, will have the ability to
remove the Servicer if a Servicer Default occurs while the Notes are
Outstanding.
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 or the
Financed 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, and all files shall be disposed of pursuant to the procedures
proscribed by Section 14 hereof. The successor servicer will succeed to all the
responsibilities, duties and liabilities of the Servicer under this Agreement
and will be entitled to similar compensation arrangements.
The 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 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 Servicer for deposit, or shall thereafter
be received by it with respect to a Financed Student Loan. All reasonable costs
and expenses (including attorneys' fees) incurred in connection with
transferring the Financed 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 Servicer (other
than the Indenture Trustee acting as the servicer under this Section 11) upon
presentation of reasonable documentation of such costs and expenses. Upon
receipt of notice of the occurrence of a Servicer Default, the Issuer shall give
notice thereof to the Rating Agencies.
If the Indenture Trustee is unwilling or unable to act, it may appoint, or
petition a court for the appointment of, a successor whose regular business
includes the servicing of student loans. If, however, a bankruptcy trustee or
similar official has been appointed for the Servicer, and no Servicer Default
other than that appointment has occurred, the trustee may have the power to
prevent the Indenture Trustee or the Noteholders from effecting the transfer.
12. Waiver of Past Servicer Defaults.
The Noteholders evidencing a majority of the Outstanding Amount of the Notes, in
the case of any Servicer Default which does not adversely affect the Indenture
Trustee or the Noteholders, may, on behalf of all Noteholders, 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 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. No
such waiver shall extend to any subsequent or other default or impair any right
consequent thereto.
The Issuer may designate another servicer with respect to its student loans. Any
servicer, other than The Student Loan Corporation, may be appointed, provided
that a Rating Confirmation has been received with respect thereto.
13. Termination.
This Agreement will terminate upon the occurrence of the earlier of (i) the
termination of the Indenture; (ii) early termination pursuant to Sections 3(e)
or 11 hereof; and (iii) payment in full of all of the Financed Student Loans
being serviced hereunder.
The Servicer may not resign from its obligations and duties as Servicer
hereunder, except upon determination that the Servicer's performance of its
duties is no longer permissible under applicable law. No resignation will become
effective until the Indenture Trustee or a successor servicer has assumed the
Servicer's servicing obligations and duties under this Agreement.
In the event of termination of this Agreement, the Issuer shall remain liable
for all fees due and payable 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 Servicer under Section 4 hereof, and the
representations and warranties in Section 8 shall survive any termination of
this Agreement and shall remain in effect for all Financed Student Loans while
such Financed Student Loans are serviced by the Servicer. The rights and
obligations of the Servicer contained in Section 19 hereof shall survive
termination of this Agreement. In the event that servicing on any Financed
Student Loan is transferred to a successor servicer, such successor servicer
shall be required by the Issuer 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 Servicer in such effort, where the
reason for claim denial relates to the period during which the Servicer serviced
such Financed Student Loan hereunder. However, if the cause for claim denial is
reasonably attributable to the Servicer actions or inactions, the Servicer shall
be responsible therefore. Servicer acknowledges that Issuer will assign this
Agreement to the Indenture Trustee on behalf of the Noteholders and that the
Indenture Trustee will be entitled to enforce this Agreement against Servicer.
14. Disposition of Files on Termination
Upon termination of this Agreement, all files (physical and electronic) held by
the Servicer with respect to Financed Student Loans shall be promptly
transferred to the Issuer or its designee in such form as the Issuer reasonably
requests. The Issuer shall be responsible for payment of reasonable expenses
related to the transfer of the records unless the Issuer is removing the
Financed Student Loans because of a breach by the Servicer. In such instance,
the Servicer shall bear the cost of deconverting and transferring the Financed
Student Loan documentation. Exhibit A addresses expenses and fees and to the
extent there is conflict between this Section 14 and Exhibit A, the terms of
Exhibit A shall be applied.
15. Independent Contractor
The Servicer is an independent contractor and is not, and shall not hold itself
out to be, the agent of the Issuer except for the limited specific purposes set
forth in this Agreement.
16. Correspondence; Disclosure
The parties hereto acknowledge and agree that the Servicer will handle all
communication with borrowers necessary to provide its services hereunder. Data
regarding Financed Student Loans shall be disclosed only to 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 Issuer and the Servicer with the consent of the
Indenture Trustee. So long as any Notes remain Outstanding under the Indenture,
a Rating Confirmation must be obtained with respect to any such amendment,
supplement or modification.
19. Indemnification and Liability
a. The Servicer nor any of its directors, officers, employees or agents
will be under any liability to the Issuer or the Noteholders for
taking any action or for refraining from taking any action pursuant
to this Servicing Agreement, or for errors in judgment; provided,
however, that, unless otherwise limited in the related prospectus
supplement, neither the Servicer nor any person will be protected
against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of
the Servicer's duties hereunder or by reason of reckless disregard
of its obligations and duties hereunder.
b. The Servicer is under no obligation to appear in, prosecute, or
defend any legal action that is not incidental to its servicing
responsibilities under this Agreement and that, in its opinion, may
cause it to incur any expense or liability. The servicer may
undertake any reasonable action that it deems necessary or desirable
in respect of this Agreement and the interests of the Noteholders.
c. If the Servicer is required to appear in, or is made a defendant in
any legal action or proceeding commenced by any party other than the
Issuer with respect to any matter arising hereunder, the Issuer
shall indemnify and hold the 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
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 Servicer shall indemnify
and hold the Issuer harmless from all loss, liability and expense
(including reasonable attorney's fees) arising out of or relating to
the 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 Servicer be responsible or liable for any incidental,
special or consequential damages with respect to any matter
whatsoever arising out of this Agreement.
d. If a Financed Student Loan is denied the guarantee by the Guaranty
Agency or the loss of federal interest, special allowance, and/or
insurance benefits, the 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
Servicer learns of the loss of the guarantee on a Financed Student
Loan, the Servicer shall take actions which make the Issuer whole
with respect to the Financed Student Loan while maintaining the
eligibility for future reinstatement of the guarantee; provided,
however, the Servicer may delay taking such actions by giving
written notice to the Issuer not less often than each ninety (90)
days that the Servicer has reason to believe that the guarantee will
be reinstated within time frames permitted by regulations. If the
Servicer gives notice of such delay, the Servicer agrees to pay any
accrued interest on the Financed Student Loans that may be
uninsured. The Issuer agrees to use its best efforts to cause the
repurchase, at par plus insured interest and benefits thereon, of
any Financed Student Loan which is cured and is reinsured subsequent
to its sale by the Issuer pursuant to actions taken by the Servicer
to make the Issuer whole and if the sale was to an eligible lender
to the extent the Issuer has, or can make available, fund therefor.
e. The Servicer shall have no responsibility for any error or omission
(including due diligence violations) which occurred prior to the
date the Servicer assumed responsibility for servicing the Financed
Student Loan, nor shall the 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 Servicer has
made best efforts to comply with retroactive additional
requirements.
20. Merger or Consolidation of, or Assumption of the Obligations of, Servicer
Any entity into which the Servicer may be merged or consolidated, or any entity
which may result from any merger or consolidation to which the Servicer shall be
a party or any entity succeeding to the business of the Servicer, shall be the
successor to the Servicer without the execution or filing of any document or any
further act by any of the parties to this Agreement; provided, however, that the
Servicer hereby covenants that it will not consummate any of the foregoing
transactions except upon satisfaction of the following: (i) the surviving
servicer, if other than The Student Loan Corporation, executes an agreement of
assumption to perform every obligation of the Servicer under this Agreement,
(ii) immediately after giving effect to such transaction, no representation or
warranty made hereunder shall have been breached and no Servicer Default shall
have occurred and be continuing, and (iii) such consolidation, merger or
succession and such agreement of assumption comply with all the conditions
precedent, if any, provided for in this Agreement.
21. 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 Issuer and the Servicer, insofar as the same
relate to the fees charged by the Servicer which are listed in Exhibit A hereto,
shall be held in strict 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.
22. Sale or Transfer of Loans; Limitations
The Issuer agrees that if any Financed Student Loans are sold under conditions
that result in the Financed Student Loans being transferred to another servicer,
whether immediately or at some future date, the Issuer will pay or cause to be
paid, at the time such Financed Student Loans are transferred, the deconversion
fees set forth in Exhibit A hereto.
23. Miscellaneous
a. Any material written communication received at any time by the
Issuer with respect to a Financed Student Loan or a borrower shall
be promptly transmitted by the Issuer to the 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 parties hereunder, shall be binding upon and
inure to the benefit of the legal representatives, successors and
assigns of the parties hereto, including but not limited to, any
successor entity acquiring or succeeding to the assets of either
party.
d. 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.
e. 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.
f. 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, or 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 Issuer:
SLC Student Loan Trust-I
c/o Wilmington Trust Company
Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Administration
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
If intended for the Servicer:
The Student Loan Corporation
000 Xxxxxxxxxx Xxxxxxxxx
0xx Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
Fax No.: (000) 000-0000
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 received.
g. This Agreement may not be terminated by any party hereto except in
the manner and with the effect herein provided.
h. When the context of this Agreement so requires or implies,
references to the Issuer include any applicable trustee.
i. 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.
j. The parties hereto agree to execute or cause to be executed the
Limited Power of Attorney attached hereto as Exhibit D.
k. The 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.
l. Servicer may cause any of its duties or obligations hereunder to be
performed by a sub-servicer to the extent permitted by the
Indenture.
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.
SLC STUDENT Loan TRUST-I,
as Issuer
By: THE STUDENT LOAN CORPORATION,
as Administrator
By:/s/ Xxxxxx X. Xxxxx
------------------------------------
Name:Xxxxxx X. Xxxxx
Title: Chief Financial Officer
THE STUDENT LOAN CORPORATION, as
Servicer
By:/s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
EXHIBIT A
SERVICING FEES
For each month beginning with the effective date of this Agreement and ending
with the 36th month of this Agreement, or the final month of any extension
thereto, the Servicer shall receive an amount calculated as follows. After the
initial 3 year term, all fees may be increased by 2% annually.
1. Monthly Servicing Fee
$3.25 per month for each borrower.
2. Loan Consolidation Fee
Electronic receipt $12.00/borrower
In addition, the Servicer shall be entitled to reimbursement for disbursement
agent fees, fees charged by guarantors and other out-of-pocket expenses except
normal and usual postage.
3. Deconversion Fees
a. After the Agreement has been in effect at least 3 years, at the
termination of the Agreement, $10.00 per borrower plus reasonable
cost, including any costs incurred after deconversion.
b. Until the Agreement has been in place for at least 3 years, and at
any time thereafter except at the end of any extension of the
Agreement, $15.00 per borrower plus costs as described in 3(a) above
if Servicer terminates because of breach by Issuer or Issuer
terminates for no cause.
c. No deconversion fee or costs will be assessed to Issuer if Issuer
terminates for cause or if Servicer terminates for no cause.
4. Professional Services
a. If the Issuer requires any special reports, system changes,
additions or modifications not covered by other sections of this
Agreement, the hourly rate to accomplish these actions will be:
Data Entry/Clerical $10.00/hr
Non-Supervisory Staff $12.00/hr
Supervisory Staff $18.00/hr
Management Staff $50.00/hr
Data Processing:
Programmer $35.00/hr
Analyst $50.00/hr
Senior Analyst $75.00/hr
b. Other fee arrangements will be quoted for extended projects or upon
request.
c. Fees paid to outside consultants will be billed at cost.
d. No fees will be charged unless the Issuer has given prior written
approval.
5. Other Fees
a. Claim Filing - $18.00 per claim.
b. Audit Fees - Issuer shall pay its pro-rata share, based on unpaid
principal balance of loans included in the scope of the audit, of
the cost of any audit required by law or regulation. The Issuer will
pay a negotiated portion of any other audits that include Issuer's
loans in the scope of the review.
c. Cure Services - non-Servicer error, $150.00 per attempt. The cure
must be approved by the Issuer prior to beginning of cure service.
d. Credit Bureau reports as required at cost (Approximately $3.00/per
report).
e. If Issuer elects to report to any credit bureau other than those to
whom Servicer routinely reports, there will be a cost of $50.00 per
tape for creation and handling.
f. If Issuer requires on-line access to the Student Loan data base,
Servicer will provide that service at a fee which reflects its
approximate cost to support the service.
g. Any out-of-pocket expenses incurred by Servicer on behalf of, and
with prior approval of, Issuer will be billed at cost. Such expenses
include but are not limited postage on promotional or marketing
material, special forms, courier services and other miscellaneous
services which may be requested or become necessary.
EXHIBIT B-1
SERVICER REPORTS
----------------
EXHIBIT C
ANNUAL REPORTS
----------------
EXHIBIT C
CUSTODY AGREEMENT
-----------------
EXHIBIT D
LIMITED POWER OF ATTORNEY
-------------------------
WITNESSETH:
WHEREAS, The Student Loan Corporation, a Delaware corporation (the
"Servicer"), and SLC Student Loan Trust-I, a Delaware business trust (the
"Issuer"), are parties to the SERVICING AGREEMENT dated as of March 27, 2002
(the "Servicing Agreement"); and
WHEREAS, pursuant to the Servicing Agreement, the Servicer will perform
substantially all of the obligations and duties with regard to servicing of
certain education loans (the "Financed Student Loans")as provided therein; and
WHEREAS, in order to carry out its obligations under the Servicing
Agreement with respect to the Financed Student Loans, the 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 (the "Eligible Lender Trustee") for Issuer.
NOW THEREFORE, the Servicer, Issuer and Eligible Lender Trustee agree:
1. That each of the Issuer and the Eligible Lender Trustee do hereby make
and appoint the Servicer as its true and lawful attorney-in-fact to do all
things necessary to carry out the Servicer's obligations under the Servicing
Agreement with respect to the Financed 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 the Servicer
other than those necessary to carry out its obligations under the Servicing
Agreement with respect to the Financed Student Loans.
2. That this Limited Power of Attorney is effective as of March 27, 2002,
and shall remain in force and effect until revoked in writing by the Issuer and
Eligible Lender Trustee or until the Servicing Agreement is terminated. This
instrument shall supplement but not replace the powers previously granted to the
Servicer in the Servicing Agreement.
The undersigned, being duly authorized, has executed this Limited Power of
Attorney.
SLC Student Loan TRUST-I,
as Issuer
By: THE STUDENT LOAN CORPORATION,
as Issuer's Administrator
By:/s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
BANKERS TRUST COMPANY, as Eligible
Lender Trustee
By /s/ Xxxxxx Xxxxxx
---------------------------------------
Name:Xxxxxx Xxxxxx
Title: Vice President
The undersigned, being duly authorized, accepts the foregoing Limited Power of
Attorney for and on behalf of the Issuer and Eligible Lender Trustee, as of
March 27, 2002.
THE STUDENT LOAN CORPORATION, as Servicer
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Financial Officer
