EXHIBIT 99.4
FORM OF
SUBSERVICING AGREEMENT
This SUBSERVICING AGREEMENT (this "Agreement") is entered into as of ___,
200_, by and between _______, a _________ (the "Subservicer") and The Student
Loan Corporation, a Delaware corporation (the "Servicer").
WITNESSETH:
WHEREAS, the Servicer provides servicing functions for SLC Student Loan
Trust 200_-_ (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 _______, 200_ (the "Servicing Agreement"),
by and between (i) the Servicer, (ii) the Issuer, and (iii) The Student Loan
Corporation, not in its individual capacity but solely in its capacity as
administrator (in such capacity, the "Administrator") under the Administration
Agreement, dated as of ________ (the "Administration Agreement"), among the
Issuer, The Student Loan Corporation, not in its individual capacity but solely
in its capacity as servicer (in such capacity, the "Servicer"); and
WHEREAS, the Issuer will issue notes (the "Notes") pursuant to the
Indenture, dated as of _____, 200_ (the "Indenture"), among the Issuer,
___________, as indenture trustee (the "Indenture Trustee"), and ____________,
as indenture administrator (the "Indenture Administrator"), which Notes are
payable from the assets of the Issuer; and
WHEREAS, the Subservicer is engaged in the business of providing, among
other things, loan servicing services for Student Loans; and
WHEREAS, the Servicer wishes to retain the Subservicer to service certain
Student Loans owned by the Issuer as beneficial owner which are required to be
serviced by the Servicer under the Servicing Agreement (the "Subserviced Student
Loans"), and the Subservicer 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 Subservicer 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 the
Servicing Agreement.
2. Servicing Requirement and Engagement of Subservicer
The Servicer hereby authorizes and appoints the Subservicer to act as its agent
for the limited purpose of servicing the Subserviced Student Loans. The
Subservicer 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. Subservicer Compensation
a. The Servicer shall pay compensation to the Subservicer for its
services hereunder as may be reasonably agreed to from time to time
between the Servicer and the Subservicer.
b. The Subservicer 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 Subservicer 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
Subservicer shall have no right to retain such amounts as payment of
any fees due the Subservicer from the Servicer under the terms of
this Agreement. The Servicer hereby authorizes the Subservicer 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 Subservicer shall increase,
including, without limitation, postal rates, or the imposition of
any tax or assessment not currently being charged against the fees
of the Subservicer, then the Subservicer 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 Subservicer fails to agree to reduce or eliminate the increase
in a manner satisfactory to the Servicer, then the Servicer
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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 Subservicer'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
Subservicer may increase servicing fees payable hereunder to
reasonably reflect such costs and expenses. However, no such
increase shall take effect until the Subservicer 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 Subservicer shall not terminate this
Agreement unless and until the Servicer shall have entered into
another agreement similar to this with the Subservicer or another
Subservicer.
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 Subservicer. If
the Subservicer 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 Subservicer.
4. Custody of Subserviced Student Loan Files
To assure uniform quality in servicing the Subserviced Student Loans and to
reduce administrative costs, the Servicer hereby revocably appoints the
Subservicer, and the Subservicer hereby accepts such appointment, to act for the
benefit of the Servicer, the Issuer, the Indenture Administrator, and the
Indenture Trustee as custodian of the following documents or instruments
(collectively the "Subserviced Student Loan Files") which are hereby
constructively delivered to the Indenture Administrator, as pledgee of the
Issuer with respect to each Subserviced Student Loan:
a. the original fully executed copy of the note (or all electronic
records evidencing the same) evidencing the Subserviced Student
Loan; and
b. any and all other documents and computerized records that the
Subservicer shall keep on file, in accordance with its customary
procedures, relating to such Subserviced Student Loan or any obligor
with respect thereto.
5. Duties of Subservicer as Custodian
The Subservicer shall hold the Subserviced Student Loan Files for the benefit of
the Servicer, the Issuer, the Indenture Administrator and the Indenture Trustee
and maintain such accurate and complete accounts, records and computer systems
pertaining to each Subserviced Student Loan File as shall enable the Servicer to
comply with the Servicing Agreement. In performing its
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duties as custodian, the Subservicer shall act with reasonable care and shall
ensure that it fully complies with all applicable Federal and state laws,
including the Higher Education Act, with respect thereto. The Subservicer shall
take all actions necessary with respect to the Subserviced Student Loan Files
held by it under this Agreement and of the related accounts, records and
computer systems, in order to enable the Servicer, the Issuer, the Indenture
Administrator or the Indenture Trustee to verify the accuracy of the
Subservicer's record keeping with respect to the Subservicer's obligations as
custodian hereunder. The Subservicer shall promptly report to the Servicer, the
Issuer, the Administrator, the Indenture Administrator and the Indenture Trustee
any material failure on its part to hold the Subserviced 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 Owner Trustee ,the Indenture Administrator or the Indenture Trustee
of the Subserviced Student Loan Files. If in the reasonable judgment of the
Servicer it is necessary to preserve the interests of the Noteholders and the
Trust in the Subserviced Student Loans or at the request of the Owner Trustee or
the Administrator, the Subservicer shall transfer physical possession of the
notes evidencing the Subserviced Student Loans to the Servicer, the Owner
Trustee, the Indenture Administrator the Indenture Trustee or any other
custodian for either of them designated by the Owner Trustee.
6. Duties of Subservicer
The Subservicer, for the benefit of the Servicer and the Issuer (to the extent
provided herein), shall manage, service, administer and make collections on the
Subserviced Student Loans with reasonable care, using that degree of skill and
attention that the Subservicer exercises with respect to similar student loans
that it services on behalf of the Servicer and the Issuer, beginning on the date
of this Agreement and continuing until the Subserviced Student Loans are paid in
full. 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 Subservicer shall manage, service, administer and
make collections with respect to the Subserviced Student Loans (including the
collection of any Interest Subsidy Payments and Special Allowance Payments on
behalf of the Owner 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
Agreements, the failure to comply with which would adversely affect the
eligibility of one or more of the Subserviced Student Loans for Federal
reinsurance or Interest Subsidy Payments or Special Allowance Payments or one or
more of the Subserviced Student Loans for receipt of Guarantee Payments.
The Subservicer's duties shall include, but shall not be limited to, collection
and posting of all payments, responding to inquiries of borrowers on such
Subserviced 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 Servicer, the Administrator and the Issuer. The Subservicer shall
follow its customary standards, policies and procedures in performing its duties
as Subservicer. Without limiting the generality of the foregoing, the
Subservicer is authorized and empowered to execute and deliver, on behalf of
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itself, the Issuer, the Owner Trustee, the Indenture Trustee, the Indenture
Administrator, 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 Subserviced Student Loans;
provided, however, that the Subservicer agrees that it will not (a) permit any
rescission or cancellation of a Subserviced Student Loan except as ordered by a
court of competent jurisdiction or governmental authority or as otherwise
consented to in writing by the Servicer, the Owner Trustee, the Indenture
Trustee and the Indenture Administrator, provided, however, that the Subservicer
may write off any delinquent Subserviced 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 Subserviced 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 Subservicer shall not agree to any reduction of yield with
respect to any Subserviced Student Loan (either by reducing borrower payments or
reducing principal balance) except as permitted otherwise if, and to the extent,
the holder of the Trust Certificate, the Depositor, the Servicer, the
Subservicer or the Administrator reimburses the Issuer in an amount sufficient
to offset any such effective yield reduction made by the Subservicer consistent
with such customary servicing procedures as it follows with respect to
comparable student loans which it services on behalf of the Servicer. The
Servicer, on behalf of the Issuer, hereby grants a power of attorney and all
necessary authorization to the Subservicer to maintain any and all collection
procedures with respect to the Subserviced Student Loans, including filing,
pursuing and recovering claims with the Guarantors for Guarantee Payments and
with the Department for Interest Subsidy Payments and Special Allowance Payments
and taking any steps to enforce such Subserviced Student Loans such as
commencing a legal proceeding to enforce a Subserviced Student Loan in the names
of the Issuer, the Owner Trustee, the Indenture Administrator, the Indenture
Trustee, the Servicer and the Noteholders. The Servicer shall upon the written
request of the Subservicer furnish the Subservicer with any other powers of
attorney and other documents reasonably necessary or appropriate to enable the
Subservicer to carry out its servicing and administrative duties hereunder.
Until all Subserviced Student Loans serviced hereunder have been repaid in full,
or paid as a claim by a guarantor, or transferred to the Servicer or another
Subservicer, the Subservicer shall (a) 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 ninety
(90) days after the end of each fiscal year audited by _______ or 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 and (b) maintain books, records and accounts necessary to
prepare financial statements according to GAAP and maintain adequate internal
financial controls.
The Subservicer 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.
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7. Collection of Subserviced Student Loan Payments.
The Subservicer 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 Subserviced
Student Loans as and when the same shall become due and shall follow such
collection procedures as it follows with respect to similar student loans that
it services on behalf of the Servicer. The Subservicer shall allocate
collections with respect to the Subserviced Student Loans between principal,
interest and fees as described in Section 2.5 of the Administration Agreement.
The Subservicer may in its discretion waive any late payment charge or any other
fees that may be collected in the ordinary course of servicing a Subserviced
Student Loan. The Subservicer may, at its option, retain any late payment
charges that it collects.
The Subservicer 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 Subserviced 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 Servicer. In
connection therewith, the Subservicer is hereby authorized and empowered to
convey to any Guarantor the note and the related Subserviced Student Loan File
representing any Subserviced 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 Subservicer
shall constitute Available Funds for the applicable Collection Period and shall
be deposited into the Collection Account or transferred to the Administrator as
described in Section 2.4 of the Administration Agreement. The Owner Trustee
shall, upon the written request of the Servicer or the Administrator, furnish
the Subservicer with any power of attorney and other documents necessary or
appropriate to enable the Subservicer to convey such documents to any Guarantor
and to make such claims.
The Subservicer on behalf of the Servicer 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 of Education with respect to
any of the Subserviced 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 Subservicer follows with respect to similar student loans
that it services on behalf of the Servicer. All amounts so collected by the
Subservicer shall constitute Available Funds for the applicable Collection
Period and shall be deposited into the Collection Account or transferred to the
Administrator as described in Section 2.4 of the Administration Agreement. In
connection therewith, the Subservicer 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 Servicer and shall otherwise assist
the Servicer in pursuing and collecting such Interest Subsidy Payments and
Special Allowance Payments from the Department. The Servicer shall upon the
written request of the Subservicer furnish the Subservicer with any power of
attorney and other documents reasonably necessary or appropriate to enable the
Subservicer to prepare and file such claims forms and other documents and
filings.
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8. Right of Inspection; Audits
Upon reasonable prior notice, the Servicer and the Administrator and their
respective agents have the right to access the Subserviced Student Loan Files
and to examine and make copies of, and abstracts from, the records and books of
account of the Subservicer relating to the Subserviced Student Loans and to
undertake periodic site reviews of the Subservicer's operations relating to the
servicing of the Subserviced Student Loans (including on the premises of any
agent of the Subservicer), provided, however, that such activities shall not
unreasonably disrupt the Subservicer's normal business operation. The
Subservicer shall afford reasonable access to the Servicer and the Administrator
and their respective agents without charge, but only upon reasonable request and
during the normal business hours at the respective offices of the Subservicer.
Nothing in this Section shall affect the obligation of the Subservicer to
observe any applicable law prohibiting disclosure of information regarding the
Obligors and the failure of the Subservicer to provide access to information as
a result of such obligation shall not constitute a breach of this Section.
9. Compliance Report
The Subservicer agrees that it shall permit, not more than once per year, the
Servicer, the Issuer, the Indenture Trustee or the Indenture Administrator, as
the Indenture Trustee's designee, to conduct or have conducted a procedural
audit regarding the 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 Servicer.
10. Representations and Warranties of Subservicer
The Subservicer makes the following representations, warranties and covenants to
the Servicer on the date of this Agreement. The Subservicer shall be deemed to
have repeated the representations and warranties on each date on which a new
series of Notes is issued under the Indenture.
a. The Subservicer is duly [formed][incorporated] and validly existing
as a [limited liability company] [corporation] under the laws of the
State of _____ and in good standing under the laws of the State of
_____, 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 Subserviced
Student Loans and to hold the Subserviced Student Loan Files as
custodian.
b. The Subservicer is duly qualified to do business and has obtained
all necessary licenses, permits, franchises and approvals in all
jurisdictions in which the ownership or lease of property or the
conduct of its business (including the servicing of the Subserviced
Student Loans as required by this Agreement) shall require such
qualifications.
c. The Subservicer has the power and authority to execute and deliver
this Agreement and to carry out its terms, including without
limitation, eligibility as a third-party servicer under the Higher
Education Act; and the execution, delivery
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and performance of this Agreement have been duly authorized by the
Subservicer 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
Subservicer of this Agreement.
d. This Agreement constitutes a legal, valid and binding obligation of
the Subservicer enforceable in accordance with its terms subject to
bankruptcy, insolvency and other similar laws affecting creditors'
rights generally and subject to equitable principles.
e. 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 [operating agreement][bylaws] of the Subservicer,
or any indenture, agreement or other instrument to which the
Subservicer is a party or by which it shall be bound; 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 Subservicer's
knowledge, any order, rule or regulation applicable to the
Subservicer of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Subservicer or its properties.
f. No outstanding or unpaid judgments against the Subservicer exist and
there are no proceedings or investigations pending, or, to the
Subservicer's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Subservicer or its
properties: (i) asserting the invalidity of this Agreement, (ii)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, (iii) seeking any determination or
ruling that could reasonably be expected to have a material and
adverse effect on the Subservicer's financial condition or the
performance by the Subservicer of its obligations under, or the
validity or enforceability of, this Agreement, or (iv) relating to
the Subservicer and which might adversely affect the Federal or
state income tax attributes of the Notes.
g. All Subservicer 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 Subservicer 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
Subservicer's financial condition has occurred, and if such event
shall occur, the Subservicer shall promptly give the Servicer and
Issuer notice thereof.
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11. Representations and Warranties of Servicer
The Servicer represents and warrants to the Subservicer on the date of this
Agreement:
a. The Servicer is duly incorporated and validly existing as a
corporation 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.
b. 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.
c. 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.
d. 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.
e. 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 bylaws of the Servicer, or any indenture,
agreement or other instrument to which the Servicer is a party or by
which it shall be bound; 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.
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12. Subservicer Default
If any one of the following events (a "Subservicer Default") shall occur and be
continuing:
a. any failure by the Subservicer (i) to deliver to the Indenture
Trustee or the Indenture Administrator, as the case may be, 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 Subservicer from the Servicer, the
Owner Trustee, the Indenture Trustee, the Indenture Administrator or
the Administrator or five Business Days after discovery of such
failure by an officer of the Subservicer; or
b. any breach of a representation or warranty of the Subservicer
contained in Section 10 of this Agreement or failure by the
Subservicer duly to observe or to perform in any material respect
any other term, covenant or agreement of the Subservicer set forth
in this Agreement, which breach or failure shall (i) materially and
adversely affect the rights of the Indenture Trustee, on behalf of
the Noteholders, or the Noteholders and (ii) continues unremedied
for a period of sixty (60) days after the date on which written
notice of such failure, requiring the same to be remedied, shall
have been given to the Subservicer by the Servicer, the Indenture
Trustee, the Indenture Administrator, the Owner Trustee or the
Administrator; or
c. an Insolvency Event occurs with respect to the Subservicer; or
d. any failure by the Subservicer 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 Subservicer Default shall
not have been remedied, the Servicer, by notice then given in writing to
the Subservicer, may terminate all the rights and obligations (other than
the obligations set forth in Section 20) of the Subservicer under this
Agreement. As of the effective date of termination of the Subservicer, all
authority and power of the Subservicer 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, the
Indenture Administrator or such successor subservicer as may be appointed
under Section 14 hereof. The predecessor Subservicer shall cooperate with
the successor subservicer, the Servicer, the Indenture Administrator and
the Owner Trustee in effecting the termination of the responsibilities and
rights of the predecessor Subservicer under this Agreement, including the
transfer to the successor subservicer for administration by it of all cash
amounts that shall at the time be held by the predecessor Subservicer 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 subservicer and amending this
Agreement and any other Basic Documents to reflect such succession as
Subservicer pursuant to this Section
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12 shall be paid by the Subservicer (other than the Indenture
Administrator acting as the servicer under this Section 12) upon
presentation of reasonable documentation of such costs and expenses.
13. Term
The term shall commence as of the date of this Agreement and shall continue for
an initial period of [three (3)] years. At the expiration of the initial term,
the term shall automatically extend for [one (1)] additional year each year
thereafter, unless either party gives [ninety (90)] days written notice prior to
the end of the initial term or any extension of the term.
14. Termination
This Agreement will terminate upon the occurrence of the earlier of (i)
termination of the Indenture; (ii) termination of the Servicing Agreement; (iii)
early termination pursuant to Sections 3(e) or 12 hereof; (iv) payment in full
of all of the Subserviced Student Loans being serviced hereunder; and (v)
termination pursuant to Section 13 hereof.
The Subservicer's appointment as custodian shall become effective as of the date
of this Agreement and shall continue in full force and effect for so long as
_______ shall remain the Subservicer hereunder. If the Subservicer shall resign
as Subservicer in accordance with the provisions of this Agreement or if all the
rights and obligations of the Subservicer shall have been terminated under
Section 12, the appointment of the Subservicer as custodian shall be terminated
simultaneously with the effectiveness of such resignation or termination.
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 Subservicer under Sections 4 and 5 hereof, and the
representations and warranties in Section 10 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
Subservicer. The rights and obligations of the Subservicer contained in Section
20 hereof shall survive termination of this Agreement. In the event of the
termination hereunder of the Subservicer, the Servicer shall appoint a successor
subservicer. In the event that servicing on any Subserviced Student Loan is
transferred to a successor subservicer, such successor subservicer 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 Subservicer in such effort, where the reason
for claim denial relates to the period during which the Subservicer serviced
such Subserviced Student Loan hereunder. However, if the cause for claim denial
is reasonably attributable to the Subservicer actions or inactions, the
Subservicer shall be responsible therefore.
15. Disposition of Files on Termination
On or prior to the effective date of any resignation or termination of such
appointment, the Subservicer shall deliver the Subserviced Student Loan Files to
the successor subservicer or to the Servicer, at the direction of the Servicer,
at such place or places as the Servicer may reasonably designate. 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
11
Loans because of a breach by the Subservicer. In such instance, the Subservicer
shall bear the cost of deconverting and transferring the Subserviced Student
Loan Files. In establishing an effective date for the termination of the
Subservicer as custodian of the Subserviced Student Loan Files, the parties
shall provide for a reasonable period for the Subservicer to deliver the
Subserviced Student Loan Files to the successor subservicer or to the Servicer.
16. Independent Contractor
The Subservicer is an independent contractor and, except for the services which
it agrees to perform hereunder, the Subservicer does not hold itself out as an
agent of any other party hereto. Nothing herein contained shall create or imply
an agency relationship between the Subservicer and the Servicer, nor shall this
Agreement be deemed to constitute a joint venture or partnership between the
parties.
17. Correspondence; Disclosure
The parties hereto acknowledge and agree that the Subservicer 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 Indenture Administrator, the Administrator or
the respective borrower, unless otherwise required by law or certain financing
covenants.
18. Cooperation
Each party covenants and agrees to cooperate fully with the other to facilitate
the transactions contemplated by this Agreement.
19. Amendments
This Agreement may be amended, supplemented or modified only by written
instrument duly executed by the Servicer and the Subservicer.
20. Indemnification and Liability
The Subservicer shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Subservicer under this Agreement.
The Subservicer shall pay for any loss, liability or expense, including
reasonable attorneys' fees, that may be imposed on, incurred by or asserted
against the Servicer, the Issuer or the Owner 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 Servicer, the Issuer or the Owner Trustee
through, the negligence, willful misfeasance or bad faith of the Subservicer 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 Servicer, the Issuer or the Owner Trustee through,
any such negligence, willful misfeasance, bad faith or recklessness on the part
of the Subservicer is established by a court of law, by an arbitrator or by way
of settlement agreed to by the Subservicer. Notwithstanding the foregoing, if
the Subservicer is
12
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 obligations under this
Agreement, the Subservicer 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 Subservicer 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 the Subservicer as Subservicer pursuant to Section 12, or a
resignation by such Subservicer pursuant to this Agreement, such Subservicer
shall be deemed to be the Subservicer pending appointment of a successor
subservicer pursuant to Section 14.
Liability of the Subservicer under this Section shall survive the resignation or
removal of the Subservicer or the Servicer or the termination of this Agreement.
If the Subservicer 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
Subservicer, without interest.
The Subservicer shall not be under any liability to the Servicer, the Issuer,
the Noteholders, the Interest Rate Cap Counterparty, the Administrator, the
Owner Trustee, the Indenture Administrator 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, 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. The Subservicer 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 Subservicer 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 Subservicer 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
Noteholders. To the extent that the Subservicer is required to appear in or is
made a defendant in any legal action or other proceeding relating to the
servicing of the Subserviced Student Loans, the Servicer shall indemnify and
hold the Subservicer harmless from all cost, liability or expense of the
Subservicer not arising out of or relating to the failure of the Subservicer to
comply with the terms of 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 Servicer and the Subservicer, insofar as the
same relate to the fees charged by the Subservicer, 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
13
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 Servicer agrees that if any Subserviced Student Loans are sold under
conditions that result in the Subserviced Student Loans being transferred to
another Subservicer, 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.
23. 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 Subservicer.
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. 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
without reference to its conflict of law provisions, and the
obligations, rights and remedies of the parties, hereunder shall be
determined in accordance with such laws.
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 Subservicer may not assign its rights or obligations hereunder
without obtaining the Servicer's prior written consent.
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 one and the same instrument.
f. Except as permitted under Section 3(a), this Agreement constitutes
the entire agreement between the Servicer and the Subservicer. All
prior representations, statements, negotiations and undertakings
with regard to the subject matter hereof are superseded hereby.
g. 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
14
paragraphs herein contained shall have no effect on the remaining
portions of this Agreement or any part hereof.
h. All notices hereunder shall be given by United States certified or
registered mail, by facsimile 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 intended for the Servicer:
The Student Loan Corporation
[Address]
Attention: ________________
Fax No.: ________________
If intended for the Subservicer:
------------------------
[Address]
Attention: _______________
Fax No.: ________________
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.
i. This Agreement may not be terminated by any party hereto except in
the manner and with the effect herein provided.
j. When the context of this Agreement so requires or implies,
references to the Servicer include any applicable trustee.
k. 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.
l. The parties hereto agree to execute or cause to be executed the
Limited Power of Attorney, attached hereto as Exhibit B.
m. The Subservicer 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.
15
n. 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.
o. No member of the board of directors or any officer, employee or
agent of the Subservicer or the Servicer (or any Affiliate of any
such party) shall be personally liable for any obligation incurred
under this Agreement.
p. EACH PARTY TO THIS AGREEMENT WAIVES ITS RIGHT TO A JURY TRIAL.
[SIGNATURE PAGE FOLLOWS]
16
IN WITNESS WHEREOF, the parties have hereunto set their hands by their duly
authorized officers as of the day and year first above written.
----------------------------,
as Subservicer,
By:
-----------------------------
Name:
Title:
THE STUDENT LOAN CORPORATION, as
Servicer
By:
-----------------------------
Name:
Title:
17
EXHIBIT A-1
SUBSERVICER REPORTS
EXHIBIT A-2
ANNUAL REPORTS
EXHIBIT B
LIMITED POWER OF ATTORNEY
WITNESSETH:
WHEREAS, The Student Loan Corporation, a Delaware corporation (the
"Servicer") and _______________, a ________________ ("Subservicer"), are parties
to the Subservicing Agreement, dated as of _____, 200_ (the "Subservicing
Agreement"); and
WHEREAS, pursuant to the Subservicing Agreement, Subservicer 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 Subservicing
Agreement with respect to the Subserviced Student Loans, Subservicer 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 ______________, as Owner trustee (the "Owner
Trustee") for SLC Student Loan Trust 200_-_ (the "Issuer").
NOW THEREFORE, the Subservicer, Issuer and Owner Trustee agree:
1. That each of the Issuer and Owner Trustee do hereby make and appoint
Subservicer as its true and lawful attorney-in-fact to do all things
necessary to carry out Subservicer's obligations under the Subservicing
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 Subservicer other than those necessary to carry out
its obligations under the Subservicing Agreement with respect to the
Subserviced Student Loans.
2. That this Limited Power of Attorney is effective as of ____, 200_ and
shall remain in force and effect until revoked in writing by the Issuer or
Owner Trustee or until the Subservicing Agreement is terminated. This
instrument shall supplement but not replace the powers previously granted
to Subservicer in the Subservicing Agreement.
B-1
The undersigned, being duly authorized, has executed this Limited Power of
Attorney of ____, 200_.
SLC STUDENT Loan TRUST 200_-_,
as Issuer
By: THE STUDENT LOAN CORPORATION,
as Administrator
By
---------------------------------------
Name:
Title:
--------------------------------------,
as Owner Trustee
By
---------------------------------------
Name:
Title:
The undersigned, being duly authorized, accepts the foregoing Limited
Power of Attorney for and on behalf of Subservicer, as of ______, 200_.
---------------------------------------,
as Subservicer
By
---------------------------------------
Name:
Title: