EXHIBIT 99.3
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SERVICING AGREEMENT
among
THE STUDENT LOAN CORPORATION,
as Servicer and Administrator,
and
SLC STUDENT LOAN TRUST 2004-1,
as Issuer
Dated as of November 23, 2004
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TABLE OF CONTENTS
Page
Article I
Section 1.1 Definitions and Usage.......................................................1
Article II
Section 2.1 Custody of Trust Student Loan Files.........................................1
Section 2.2 Duties of Servicer as Custodian.............................................2
Section 2.3 Maintenance of and Access to Records........................................2
Section 2.4 Release of Documents........................................................2
Section 2.5 Instructions; Authority to Act..............................................3
Section 2.6 Effective Period and Termination............................................3
Article III
Section 3.1 Duties of Servicer..........................................................3
Section 3.2 Collection of Trust Student Loan Payments...................................4
Section 3.3 Realization upon Trust Student Loans........................................5
Section 3.4 No Impairment...............................................................5
Section 3.5 Purchase of Trust Student Loans; Reimbursement..............................5
Section 3.6 Primary Servicing Fee; Carryover Servicing Fee..............................8
Section 3.7 Access to Certain Documentation and Information Regarding Trust
Student Loans..............................................................8
Section 3.8 Servicer Expenses...........................................................8
Section 3.9 Appointment of Subservicer..................................................8
Section 3.10 Reports.....................................................................9
Section 3.11 Securities and Exchange Commission Filings..................................9
Section 3.12 Covenants and Agreements of the Issuer, Administrator, Owner Trustee,
the Eligible Lender Trustee and Servicer..................................11
Section 3.13 Special Programs...........................................................11
Section 3.14 Financial Statements.......................................................12
Section 3.15 Insurance..................................................................12
Section 3.16 Administration Agreement...................................................12
Section 3.17 Lender Identification Number...............................................12
Article IV
Section 4.1 Representations of Servicer................................................12
Section 4.2 Indemnities of Servicer....................................................14
Section 4.3 Merger or Consolidation of, or Assumption of the Obligations of,
Servicer..................................................................14
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Section 4.4 Limitation on Liability of Servicer........................................15
Section 4.5 SLC Not to Resign as Servicer..............................................15
Article V
Section 5.1 Servicer Default...........................................................16
Section 5.2 Appointment of Successor...................................................17
Section 5.3 Notification to Noteholders................................................18
Section 5.4 Waiver of Past Defaults....................................................18
Article VI
Section 6.1 Amendment..................................................................18
Section 6.2 Notices....................................................................19
Section 6.3 Counterparts...............................................................20
Section 6.4 Entire Agreement; Severability.............................................20
Section 6.5 Governing Law..............................................................20
Section 6.6 Relationship of Parties....................................................20
Section 6.7 Captions...................................................................20
Section 6.8 Nonliability of Directors, Officers and Employees of Servicer, the
Owner Trustee, the Indenture Administrator, the Indenture Trustee
and the Administrator.....................................................20
Section 6.9 Assignment.................................................................20
Section 6.10 Limitation of Liability of Owner Trustee, Indenture Administrator and
Indenture Trustee.........................................................20
Attachment A Schedule of Fees
Attachment B Servicer Locations
Attachment C Reports
Attachment D Form of Certification
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SERVICING AGREEMENT
The Student Loan Corporation ("SLC" and, in its capacity as servicer, the
"Servicer"), a Delaware corporation, hereby agrees with (i) SLC Student Loan
Trust 2004-1 (the "Issuer"), and (ii) SLC, not in its individual capacity but
solely in its capacity as administrator (in such capacity, the "Administrator")
under the Administration Agreement, dated as of November 23, 2004 (the
"Administration Agreement"), among the Issuer, the Administrator and the
Servicer as follows:
WHEREAS, the Issuer will acquire certain education loans to be held
in the trust formed pursuant to the Trust Agreement;
WHEREAS, the Issuer will issue notes (the "Notes") pursuant to the
Indenture, dated as of November 23, 2004 (the "Indenture"), among the Issuer,
Wachovia Bank, National Association, as indenture trustee (the "Indenture
Trustee"), and Citibank, N.A., as indenture administrator (in such capacity, the
"Indenture Administrator") and as eligible lender trustee (in such capacity, the
"Eligible Lender Trustee"), which Notes are payable from the assets of the
Issuer; and
WHEREAS, the Issuer and the Administrator desire the Servicer to
service the education loans on behalf of the Issuer, and the Servicer is willing
to service those education loans for the Issuer and the Administrator.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto agree as follows:
Article I
Section 1.1 Definitions and Usage. Capitalized terms used herein and not defined
herein shall have the meanings assigned to such terms in Appendix A to the
Indenture, which also contains rules of usage and construction that shall be
applicable herein.
Article II
Section 2.1 Custody of Trust Student Loan Files. To assure uniform quality in
servicing the Trust Student Loans and to reduce administrative costs, the Issuer
hereby revocably appoints the Servicer, and the Servicer hereby accepts such
appointment, to act for the benefit of the Issuer as custodian of the following
documents or instruments (collectively the "Trust Student Loan Files"):
(a) the original fully executed copy of the note (or all electronic
records evidencing the same) evidencing the Trust Student Loan; and
(b) any and all other documents and computerized records that the
Servicer shall keep on file, in accordance with its customary
procedures, relating to such Trust Student Loan or any obligor with
respect thereto.
Section 2.2 Duties of Servicer as Custodian. The Servicer shall hold the Trust
Student Loan Files for the benefit of the Issuer and maintain such accurate and
complete accounts, records and computer systems pertaining to each Trust Student
Loan File as shall enable the Issuer to comply with this Agreement. In
performing its duties as custodian the Servicer shall act with reasonable care,
using that degree of skill and attention that the Servicer exercises with
respect to the student loan files relating to similar student loans that the
Servicer services on behalf of SLC and shall ensure that it fully complies with
all applicable Federal and state laws, including the Higher Education Act, with
respect thereto. The Servicer shall take all actions necessary with respect to
the Trust Student Loan Files held by it under this Agreement and of the related
accounts, records and computer systems, in order to enable the Issuer to verify
the accuracy of the Servicer's record keeping with respect to the Servicer's
obligations as custodian hereunder. The Servicer shall promptly report to the
Issuer, the Administrator, the Indenture Trustee and the Indenture Administrator
any material failure on its part to hold the Trust Student Loan Files and
maintain its accounts, records and computer systems as herein provided and
promptly take appropriate action to remedy any such failure. Nothing herein
shall be deemed to require an initial review or any periodic review by the
Issuer, the Owner Trustee, the Indenture Trustee or the Indenture Administrator
of the Trust Student Loan Files. If in the reasonable judgment of the Owner
Trustee it is necessary to preserve the interests of the Noteholders and the
Trust in the Trust Student Loans or at the request of the Administrator, the
Servicer shall transfer physical possession of the notes evidencing the Trust
Student Loans to the Owner Trustee, the Indenture Administrator, the Indenture
Trustee or any other custodian for any of them designated by the Owner Trustee.
Section 2.3 Maintenance of and Access to Records. The Servicer shall maintain
each Trust Student Loan File at one of its offices specified in Attachment B to
this Agreement or at such other office as shall be consented to by the Issuer
upon written notice to the Issuer. Upon reasonable prior notice, the Servicer
shall make available to the Issuer or its respective duly authorized
representatives, attorneys or auditors a list of locations of the Trust Student
Loan Files and the related accounts, records and computer systems maintained by
the Servicer at such times during normal business hours as the Issuer shall
instruct.
Section 2.4 Release of Documents. Upon written instruction from the Indenture
Administrator or the Indenture Trustee, the Servicer shall release any Trust
Student Loan File to the Indenture Administrator, the Indenture Administrator's
agent or the Indenture Administrator's designee, as the case may be, at such
place or places as the Indenture Administrator may reasonably designate, as soon
as practicable. The Indenture Administrator shall cooperate with the Servicer to
provide the Servicer with access to the Trust Student Loan Files in order for
the Servicer to continue to service the Trust Student Loans after the release of
the Trust Student Loan Files. In the event the Servicer is not provided access
to the Trust Student Loan Files, the Servicer shall not be deemed to have
breached its obligations pursuant to Section 3.1, 3.2, 3.3 or 3.4 if it is
unable to perform such obligations due to its inability to have access to the
Trust Student Loans Files. The Servicer shall not be liable for any losses with
respect to the servicing of such Trust Student Loans arising after the release
of the related Trust
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Student Loan Files to the extent the losses are attributable to the Servicer's
inability to have access to the related Trust Student Loan Files.
Section 2.5 Instructions; Authority to Act. The Servicer shall be deemed to have
received proper instructions with respect to the Trust Student Loan Files upon
its receipt of written instructions signed by a Responsible Officer of the Owner
Trustee.
Section 2.6 Effective Period and Termination. SLC's appointment as custodian
shall become effective as of the Closing Date and shall continue in full force
and effect for so long as SLC shall remain the Servicer hereunder. If SLC or any
successor servicer shall resign as Servicer in accordance with the provisions of
this Agreement or if all the rights and obligations of SLC or any such successor
servicer shall have been terminated under Section 5.1, the appointment of SLC or
such successor servicer as custodian shall be terminated simultaneously with the
effectiveness of such resignation or termination. On or prior to the effective
date of any resignation or termination of such appointment, the Servicer shall
deliver the Trust Student Loan Files to the successor servicer. In establishing
an effective date for the termination of the Servicer as custodian of the Trust
Student Loan Files, the parties shall provide for a reasonable period for the
Servicer to deliver the Trust Student Loan Files to its designated successor.
Article III
Section 3.1 Duties of Servicer. The Servicer, for the benefit of the Issuer (to
the extent provided herein), shall manage, service, administer and make
collections on the Trust Student Loans with reasonable care, using that degree
of skill and attention that the Servicer exercises with respect to similar
student loans that it services on behalf of SLC, beginning on the Closing Date
until the Trust 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
Servicer shall manage, service, administer and make collections with respect to
the Trust 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
Trust Student Loans for Federal reinsurance or Interest Subsidy Payments or
Special Allowance Payments or one or more of the Trust Student Loans for receipt
of Guarantee Payments.
The Servicer's duties shall include, but shall not be limited to,
collection and posting of all payments, responding to inquiries of borrowers on
such Trust Student Loans (the "Borrowers"), monitoring Borrowers' status, making
required disclosures to Borrowers, performing due diligence with respect to
Borrower delinquencies, sending payment coupons to Borrowers and otherwise
establishing repayment terms, reporting tax information to Borrowers, if
applicable, accounting for collections and furnishing monthly statements with
respect thereto to the Administrator and the Issuer. The Servicer shall follow
its customary standards, policies and procedures in performing its duties as
Servicer. Without limiting the generality of the foregoing, the Servicer is
authorized and empowered to execute and deliver, on behalf of itself, the
Issuer, the Owner Trustee, the Indenture Trustee, the Indenture Administrator,
and the
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Noteholders or any of them, instruments of satisfaction or cancellation, or
partial or full release or discharge, and all other comparable instruments, with
respect to such Trust Student Loans; provided, however, that the Servicer agrees
that it will not (a) permit any rescission or cancellation of a Trust Student
Loan except as ordered by a court of competent jurisdiction or governmental
authority or as otherwise consented to in writing by the Indenture Trustee, the
Indenture Administrator and the Owner Trustee provided, however, that the
Servicer may write off any delinquent Trust Student Loan if the remaining
balance of the Borrower's account is less than $50 or (b) reschedule, revise,
defer or otherwise compromise with respect to payments due on any Trust Student
Loan except pursuant to any applicable interest only, deferral or forbearance
periods or otherwise in accordance with all applicable standards, guidelines and
requirements with respect to the servicing of Student Loans; provided further,
however, that the Servicer shall not agree to any reduction of yield with
respect to any Trust Student Loan (either by reducing Borrower payments or
reducing principal balance) except as permitted in accordance with Section 3.13.
The Owner Trustee, on behalf of the Issuer, hereby grants a power of attorney
and all necessary authorization to the Servicer to maintain any and all
collection procedures with respect to the Trust Student Loans, including filing,
pursuing and recovering claims with the Guarantors for Guarantee Payments and
with the Department for Interest Subsidy Payments and Special Allowance Payments
and taking any steps to enforce such Trust Student Loans such as commencing a
legal proceeding to enforce a Trust Student Loan in the name of the Issuer. The
Owner Trustee shall upon the written request of the Servicer furnish the
Servicer with any other powers of attorney and other documents reasonably
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
Section 3.2 Collection of Trust Student Loan Payments.
A. The Servicer shall make reasonable efforts (including all efforts that
may be specified under the Higher Education Act or any Guarantee Agreement) to
collect all payments called for under the terms and provisions of the Trust
Student Loans as and when the same shall become due and shall follow such
collection procedures as it follows with respect to similar student loans that
it services on behalf of SLC. The Servicer shall allocate collections with
respect to the Trust Student Loans between principal, interest and fees in
accordance with Section 2.5 of the Administration Agreement. The Servicer may in
its discretion waive any late payment charge or any other fees that may be
collected in the ordinary course of servicing a Trust Student Loan. The Servicer
may, at its option, retain any late payment charges that it collects.
B. The Servicer shall make reasonable efforts to claim, pursue and collect
all Guarantee Payments from the Guarantors pursuant to the Guarantee Agreements
with respect to any of the Trust Student Loans as and when the same shall become
due and payable, shall comply with all applicable laws and agreements with
respect to claiming, pursuing and collecting such payments and shall follow such
practices and procedures as it follows with respect to comparable guarantee
agreements and student loans that it services on behalf of SLC. In connection
therewith, the Servicer is hereby authorized and empowered to convey to any
Guarantor the note and the related Trust Student Loan File representing any
Trust Student Loan in connection with submitting a claim to such Guarantor for a
Guarantee Payment in accordance with the terms of the applicable Guarantee
Agreement. All amounts so collected by the Servicer shall constitute Available
Funds for the applicable Collection Period and shall be deposited into the
Collection Account or transferred to the Administrator in accordance with
Section 2.4 of the Administration
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Agreement. The Owner Trustee shall, upon the written request of the Servicer,
furnish the Servicer with any power of attorney and other documents necessary or
appropriate to enable the Servicer to convey such documents to any Guarantor and
to make such claims.
C. The Servicer on behalf of the Owner Trustee shall, on behalf of the
Issuer, make reasonable efforts to claim, pursue and collect all Interest
Subsidy Payments and Special Allowance Payments from the Department with respect
to any of the Trust Student Loans as and when the same shall become due and
payable, shall comply with all applicable laws and agreements with respect to
claiming, pursuing and collecting such payments and shall follow such practices
and procedures as the Servicer follows with respect to similar student loans
that it services on behalf of SLC. All amounts so collected by the Servicer
shall constitute Available Funds for the applicable Collection Period and shall
be deposited into the Collection Account or transferred to the Administrator in
accordance with Section 2.4 of the Administration Agreement. In connection
therewith, the Servicer shall prepare and file with the Department on a timely
basis all claims forms and other documents and filings necessary or appropriate
in connection with the claiming of Interest Subsidy Payments and Special
Allowance Payments on behalf of the Owner Trustee and shall otherwise assist the
Owner Trustee in pursuing and collecting such Interest Subsidy Payments and
Special Allowance Payments from the Department. The Owner Trustee shall upon the
written request of the Servicer furnish the Servicer with any power of attorney
and other documents reasonably necessary or appropriate to enable the Servicer
to prepare and file such claims forms and other documents and filings.
Section 3.3 Realization upon Trust Student Loans. For the benefit of the Issuer,
the Servicer shall use reasonable efforts consistent with its servicing
practices and procedures that it utilizes with respect to comparable student
loans that it services on behalf of SLC and including all efforts that may be
specified under the Higher Education Act or Guarantee Agreement in its servicing
of any delinquent Trust Student Loans.
Section 3.4 No Impairment. The Servicer shall not impair the rights of the
Issuer, the Eligible Lender Trustee, the Owner Trustee, the Indenture
Administrator, the Indenture Trustee or Noteholders in such Trust Student Loans.
Section 3.5 Purchase of Trust Student Loans; Reimbursement.
A. The Servicer, the Administrator, the Owner Trustee, the Indenture
Administrator and the Indenture Trustee shall give notice to the other parties
promptly, in writing, upon the discovery of any breach of the provisions of
Section 3.1, 3.2, 3.3 or 3.4 which has a material adverse effect on the interest
of the Issuer. In the event of such a material breach which is not curable by
reinstatement of the Guarantor's guarantee of such Trust Student Loan, the
Servicer shall purchase the affected Trust Student Loan not later than 210 days
following the earlier of the date of discovery of such material breach and the
date of receipt of the Guarantor reject transmittal form with respect to such
Trust Student Loan. In the event of a material breach with respect to such Trust
Student Loan which is curable by reinstatement of the Guarantor's guarantee of
such Trust Student Loan, unless the material breach shall have been cured within
360 days following the earlier of the date of discovery of such material breach
and the date of receipt of the Guarantor reject transmittal form with respect to
such Trust Student Loan, the Servicer shall purchase such Trust Student Loan not
later than the sixtieth day following the end
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of such 360-day period. The purchase price hereunder will be the unpaid
principal amount of such Trust Student Loan plus accrued and unpaid interest
(calculated using the applicable percentage that would have been insured
pursuant to Section 428(b)(1)(G) of the Higher Education Act) plus an amount
equal to all forfeited Interest Subsidy Payments and Special Allowance Payments
with respect to such Trust Student Loan. In consideration of the purchase of any
such Trust Student Loan pursuant to this Section 3.5, the Servicer shall remit
the Purchase Amount to the Administrator in the manner and at the time specified
in Section 2.6 of the Administration Agreement. Any breach that relates to
compliance with the requirements of the Higher Education Act or of the
applicable Guarantor but that does not affect such Guarantor's obligation to
guarantee payments of a Trust Student Loan will not be considered to have a
material adverse effect for purposes of this Section 3.5A.
B. In addition, if any breach of Section 3.1, 3.2, 3.3 or 3.4 by the
Servicer does not trigger such purchase obligation but does result in the
refusal by a Guarantor to guarantee all or a portion of the accrued interest (or
any obligation of the Issuer to repay such interest to a Guarantor), or the loss
(including any obligation of the Issuer to repay to the Department) of Interest
Subsidy Payments and Special Allowance Payments, with respect to any Trust
Student Loan affected by such breach, then the Servicer shall reimburse the
Issuer in an amount equal to the sum of all such nonguaranteed interest amounts
that would have been owed to the Issuer by the Guarantor but for such breach by
the Servicer and such forfeited Interest Subsidy Payments or Special Allowance
Payments by netting such sum against the Servicing Fee payable to the Servicer
for such period and remitting any additional amounts owed in the manner
specified in Section 2.6 of the Administration Agreement not later than (i) the
last day of the next Collection Period ending not less than 60 days from the
date of the Guarantor's refusal to guarantee all or a portion of accrued
interest or loss of Interest Subsidy Payments or Special Allowance Payments, or
(ii) in the case where the Servicer reasonably believes such amounts are likely
to be collected, not later than the last day of the next Collection Period
ending not less than 360 days from the date of the Guarantor's refusal to
guarantee all or a portion of accrued interest or loss of Interest Subsidy
Payments or Special Allowance Payments. At the time such payment is made, the
Servicer shall not be required to reimburse the Issuer for interest that is then
capitalized, however, such amounts shall be reimbursed if the Borrower
subsequently defaults and such capitalized interest is not paid by the
Guarantor.
C. Anything in this Section 3.5 to the contrary notwithstanding, if as of
the last Business Day of any month the aggregate outstanding principal amount of
Trust Student Loans with respect to which claims have been filed with and
rejected by a Guarantor or with respect to which the Servicer determines that
claims cannot be filed pursuant to the Higher Education Act as a result of a
breach by the Servicer or the Depositor, exceeds 1% of the Pool Balance, the
Servicer or the Seller, as appropriate, shall purchase, within 30 days of a
written request of the Owner Trustee, the Indenture Trustee or the Indenture
Administrator, such affected Trust Student Loans in an aggregate principal
amount such that after such purchase the aggregate principal amount of such
affected Trust Student Loans is less than 1% of the Pool Balance. The Trust
Student Loans to be purchased by the Servicer or the Depositor pursuant to the
preceding sentence shall be based on the date of claim rejection (or date of
notice referred to in the first sentence of this Section 3.5) with the Trust
Student Loans with the earliest such date to be purchased first.
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D. In lieu of repurchasing Trust Student Loans pursuant to this Section
3.5, the Servicer may, at its option, with the prior consent of the
Administrator, arrange for the substitution of Student Loans which are
substantially similar as of the date of substitution on an aggregate basis to
the Trust Student Loans for which they are being substituted with respect to the
following characteristics:
(1) status (i.e., in-school, grace, deferment, forbearance or
repayment),
(2) program type (i.e., unsubsidized or subsidized ▇▇▇▇▇▇▇▇ (pre-1993
vs. (post-1993), PLUS or SLS),
(3) school type,
(4) total return,
(5) principal balance, and
(6) remaining term to maturity.
In addition, each substituted Student Loan shall comply, as of the date of
substitution, with the representations and warranties made by the Depositor in
the Sale Agreement. In choosing Student Loans to be substituted pursuant to this
subsection D, the Servicer shall make a reasonable determination that the
Student Loans to be substituted will not have a material adverse effect on the
Noteholders.
In the event the Servicer elects to substitute Student Loans pursuant to
this Section 3.5 and the Administrator consents to such substitution, the
Servicer will remit to the Administrator the amount of any shortfall between the
Purchase Amount of the substituted Student Loans and the Purchase Amount of the
Trust Student Loans for which they are being substituted. The Servicer shall
also remit to the Administrator an amount equal to all nonguaranteed interest
amounts that would have been owed to the Issuer by the Guarantor but for the
breach of the Servicer and forfeited Interest Subsidy Payments and Special
Allowance Payments with respect to the Trust Student Loans in the manner
provided in Section 2.6 of the Administration Agreement.
E. The sole remedy of the Issuer, the Owner Trustee, the Indenture
Administrator, the Indenture Trustee and the Noteholders with respect to a
breach pursuant to Section 3.1, 3.2, 3.3 or 3.4 shall be to require the Servicer
to purchase Trust Student Loans, to reimburse the Issuer as provided above or to
substitute Student Loans pursuant to this Section.
F. Neither the Owner Trustee, the Indenture Trustee, the Indenture
Administrator nor the Eligible Lender Trustee shall have any duty to conduct any
affirmative investigation as to the occurrence of any condition requiring the
purchase of any Trust Student Loan or the reimbursement for any interest penalty
pursuant to this Section 3.5.
G. The Servicer shall not be deemed to have breached its obligations
pursuant to Section 3.1, 3.2, 3.3 or 3.4 if it is rendered unable to perform
such obligations, in whole or in part, by a force outside the control of the
parties hereto (including acts of God, acts of war, fires, earthquakes,
hurricanes, floods and other disasters). The Servicer shall diligently perform
its duties under this Agreement as soon as practicable following the termination
of such interruption of business.
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H. None of the Eligible Lender Trustee, the Indenture Administrator or the
Indenture Trustee shall have any responsibility for reviewing any Student Trust
Loan or any documents in connection therewith to determine if a Student Trust
Loan is an Eligible Loan or to determine whether any document is valid and
binding, any assignments or endorsements are in proper form or to inspect,
review or examine any documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, or appropriate for the represented
purpose.
Section 3.6 Primary Servicing Fee; Carryover Servicing Fee. The Primary
Servicing Fee for each calendar month and any Carryover Servicing Fees payable
on any Distribution Date in arrears by the Issuer shall be equal to the amounts
determined by reference to the schedule of fees attached hereto as Attachment A.
Notwithstanding anything to the contrary contained herein or in any other Basic
Document, the Servicer shall be entitled to receive any Carryover Servicing Fee
on any Distribution Date only if and to the extent that sufficient funds are
available pursuant to Section 2.8(h) of the Administration Agreement.
Section 3.7 Access to Certain Documentation and Information Regarding Trust
Student Loans. Upon reasonable prior notice, the Servicer shall provide to the
Administrator and its agents access to the Trust Student Loan Files and shall
permit the Administrator to examine and make copies of, and abstracts from, the
records and books of account of the Servicer relating to the Trust Student Loans
and shall permit the Administrator to undertake periodic site reviews of the
Servicer's operations relating to the servicing of the Trust Student Loans
(including on the premises of any agent of the Servicer). Reasonable access
shall be afforded to the Administrator without charge, but only upon reasonable
request and during the normal business hours at the respective offices of the
Servicer. Nothing in this Section shall affect the obligation of the Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Obligors and the failure of the Servicer to provide access to information as a
result of such obligation shall not constitute a breach of this Section.
Section 3.8 Servicer Expenses. The Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder, including
fees and disbursements of independent accountants, taxes imposed on the Servicer
and expenses incurred in connection with distributions and reports to the
Administrator, provided, however, the Carryover Servicing Fee will be subject to
increase agreed to by the Administrator, the Owner Trustee and the Servicer to
the extent that a demonstrable and significant increase occurs in the costs
incurred by the Servicer in providing the services to be provided hereunder,
whether due to changes in applicable governmental regulations, Guarantor program
requirements or regulations or postal rates. Notwithstanding anything to the
contrary contained herein, the Servicer may, at its option, collect fees from
the Borrowers in connection with sending payment histories and amortization
schedules to Borrowers, faxing documents to Borrowers, providing credit
reference letters to Borrowers, providing a "speed pay" payment option to
Borrowers and for other similar optional services requested by a Borrower and
may retain such fees. The Servicer may also, at its option, collect fees from
Borrowers for returned check processing or other insufficient fund transactions
and may assess such fees from the Borrower's Trust Student Loan payment and
retain such fees.
Section 3.9 Appointment of Subservicer. The Servicer may at any time, upon the
written consent of the Administrator, appoint a subservicer to perform all or
any portion of its obligations as Servicer hereunder; provided, however, that
any applicable Rating Agency
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Condition shall have been satisfied in connection therewith; provided, further,
that the Servicer shall remain obligated and be liable to the Issuer, the Owner
Trustee, the Indenture Administrator, the Indenture Trustee and the Noteholders
for the servicing and administering of the Trust Student Loans in accordance
with the provisions hereof without diminution of such obligation and liability
by virtue of the appointment of such subservicer and to the same extent and
under the same terms and conditions as if the Servicer alone were servicing and
administering the Trust Student Loans. The fees and expenses of the subservicer
shall be as agreed between the Servicer and its subservicer from time to time
and none of the Issuer, the Owner Trustee, the Indenture Administrator, the
Indenture Trustee or the Noteholders shall have any responsibility therefor.
With respect to satisfying the Rating Agency Condition referred to above, the
term "subservicer" shall be deemed not to include systems providers, systems
developers or systems maintenance contractors, collection agencies, credit
bureaus, lock box providers, mail service providers and other similar types of
service providers.
Section 3.10 Reports. With respect to Trust Student Loans, the Servicer shall
prepare reports and data and furnish the following information to the Issuer,
the Administrator, the Indenture Administrator and the Owner Trustee, unless
otherwise noted, at the specified times:
(a) The reports and data listed in Attachment C, at the times indicated
in the attachment;
(b) Within 30 days following the end of each calendar quarter, to the
Department, owner's request for interest and Special Allowance
Payments (ED 799);
(c) To credit bureaus selected by Servicer, credit bureau reporting in
accordance with the Higher Education Act;
(d) At any time the Owner Trustee, the Indenture Trustee or the
Indenture Administrator shall have reasonable grounds to believe
that such request would be necessary in connection with its
performance of its duties under related documents, and within five
(5) Business Days of receipt of a request therefor, the Servicer
shall furnish to the Owner Trustee, the Indenture Trustee or the
Indenture Administrator a list of all Trust Student Loans (by
borrower loan identification number, type and outstanding principal
balance) and any additional information requested relating to the
Trust Student Loans; and
(e) From time to time as may be reasonably requested, reports and data
providing additional information on the Trust Student Loans.
Section 3.11 Securities and Exchange Commission Filings.
A. The Servicer shall reasonably cooperate with the Depositor in
connection with the Issuer satisfying the reporting requirements under the
Exchange Act. At the request of the Depositor, the Servicer shall prepare on
behalf of the Issuer any Forms 8-K and 10-K customary for similar securities as
required by the Exchange Act and the Rules and Regulations of the
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United States Securities and Exchange Commission (the "SEC") thereunder, and the
Servicer shall sign and file (via the SEC's Electronic Data Gathering and
Retrieval System) such Forms on behalf of the Depositor. The Depositor hereby
grants to the Servicer a limited power of attorney to execute and file each such
documents on behalf of the Depositor. Such power of attorney shall continue
until the earlier of either (i) receipt by the Servicer from the Depositor of
written termination of such power of attorney and (ii) the termination of the
Issuer. Notwithstanding the foregoing, in the event that the SEC does not accept
a certification signed by the Depositor where the related Form 10-K is signed by
the Servicer on behalf of the Depositor, the Servicer should prepare such Form
10-K to be signed by the Depositor and the Depositor shall sign such form.
B. Each Form 8-K shall be filed by the Servicer within 15 days after each
Distribution Date. Prior to March 30th of each year (or such earlier date as may
be required by the Exchange Act and the Rules and Regulations of the SEC), if
requested by the Depositor, the Servicer shall file a Form 10-K, in substance as
required by applicable law or applicable SEC staff's interpretations. Such Form
10-K shall include as exhibits the Servicer's annual statement of compliance
described under Section 3.2(a) of the Administration Agreement and the
accountant's report described under Section 3.3 of the Administration Agreement,
in each case to the extent they have been timely delivered to the Servicer. If
they are not so timely delivered, the Servicer shall file an amended Form 10-K
including such documents as exhibits reasonably promptly after they are
delivered to the Servicer. The Servicer shall have no liability with respect to
any failure to properly prepare or file such periodic reports resulting from or
relating to the Servicer's inability or failure to obtain any information not
resulting from its own negligence, willful misconduct or bad faith.
C. The Servicer shall sign a certification (in the form attached hereto as
Attachment D or in such other form as may be appropriate or necessary and as may
be agreed upon by the Servicer and the Depositor as a result of changes
promulgated by the SEC in the Certification required to be filed with the Form
10-K, which are applicable to the Issuer), for the benefit of the Depositor and
its officers, directors and Affiliates by March 15th of each year (or if not a
Business Day, the immediately preceding Business Day). In addition, (i) the
Servicer shall indemnify and hold harmless the Depositor and its officers,
directors and Affiliates from and against any losses, damages, penalties, fines,
forfeitures, reasonable and necessary legal fees and related costs, judgments
and other costs and expenses arising out of or based upon a breach of the
Servicer's obligations under this Section 3.11C or the Servicer's negligence,
bad faith or willful misconduct in connection therewith, and (ii) the Servicer
shall indemnify and hold harmless the Depositor and its officers, directors and
Affiliates from and against any losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments and other costs
and expenses arising out of or based upon a breach of the Servicer's obligations
under this Section 3.11C or the negligence, bad faith or willful misconduct of
the Servicer in connection therewith. If the indemnification provided for herein
is unavailable or insufficient to hold harmless the Depositor, then the Servicer
agrees that it shall contribute to the amount paid or payable to the Depositor
as a result of the losses, claims, damages or liabilities of the Depositor in
such proportion as is appropriate to reflect the relative fault of the Depositor
on the one hand and the Servicer on the other in connection with a breach of the
Servicer's obligations under this Section 3.11C or the Servicer's negligence,
bad faith or willful misconduct in connection therewith.
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D. Upon any filing with the SEC pursuant to this Section 3.11, the
Servicer shall promptly deliver to the Depositor a copy of any such executed
report, statement or information.
Section 3.12 Covenants and Agreements of the Issuer, Administrator, Owner
Trustee, the Eligible Lender Trustee and Servicer. The Issuer, the
Administrator, the Servicer, the Eligible Lender Trustee and the Owner Trustee
each agree that:
A. Any payment and any communications received at any time by the Issuer,
Administrator and the Owner Trustee with respect to a Trust Student Loan shall
be immediately transmitted to the Servicer. Such communications shall include,
but not be limited to, requests or notices of loan cancellation, notices of
borrower disqualification, letters, changes in address or status, notices of
death or disability, notices of bankruptcy and forms requesting deferment of
repayment or forbearance.
B. The Servicer may change any part or all of its equipment, data
processing programs and any procedures and forms in connection with the services
performed hereunder so long as the Servicer continues to service the Trust
Student Loans in conformance with the requirements herein. The Servicer shall
not make any material change in its servicing system and operations with respect
to the Trust Student Loans without the prior written consent of the
Administrator, which consent will not be unreasonably withheld. Each written
request for consent by the Servicer shall be acted upon promptly by the
Administrator. Anything in this paragraph B to the contrary notwithstanding, the
Servicer will not be required to request the consent of the Administrator with
respect to any changes in the Servicer's servicing system and operations which
the Servicer reasonably determines are required due to changes in the Higher
Education Act or Guarantor program requirements.
C. The Eligible Lender Trustee will furnish the Servicer with a copy of
any and all Guarantee Agreements relating to the Trust Student Loans serviced
hereunder.
D. The Servicer may and, at the direction of the Administrator, shall
include marketing or informational material generally provided to borrowers of
loans owned by SLC with communications sent to a Borrower.
E. The Servicer may, in its discretion, if requested by a Borrower of a
Trust Student Loan, arrange for the sale of such Trust Student Loan to another
lender which holds another student loan of such Borrower at a price not less
than the Purchase Amount.
F. The Servicer shall arrange for the sale of a Trust Student Loan to SLC
upon receipt by the Servicer of an executed consolidation loan application from
the Borrower of the related Trust Student Loan or a request from the Borrower to
add additional loans to such Trust Student Loan as permitted under the Higher
Education Act. The sale price for such Trust Student Loan shall equal the
Purchase Amount.
Section 3.13 Special Programs. The Servicer shall offer Borrowers of the Trust
Student Loans all special programs, whether or not in existence as of the date
of this Agreement, generally offered to the obligors of similar loans owned by
SLC and serviced by the Servicer; provided, however, that to the extent any such
program is not required by the Higher Education Act and is in effect for the
Trust Student Loans on any Distribution Date after the February 2007
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Distribution Date when the Outstanding Amount of the Notes exceeds the Adjusted
Pool Balance, such special program shall be applied to the Trust Student Loans
only if and to the extent the Issuer receives payment from SLC in an amount
equal to the interest that would have otherwise been paid on such Trust Student
Loans in the absence of such special program.
Section 3.14 Financial Statements. The Servicer shall provide to the Indenture
Trustee, Indenture Administrator and the Administrator at any time that the
Servicer is not an Affiliate of the Administrator (a) as soon as possible, and
in no event more than 120 days after the end of each fiscal year of the
Servicer, audited financials as at the end of and for such year and (b) as soon
as possible, and in no event more than 30 days after the end of each quarterly
accounting period of the Servicer, unaudited financials as at the end of and for
such period.
Section 3.15 Insurance. The Servicer shall maintain or cause to be maintained
insurance with respect to its property and business against such casualties and
contingencies and of such types and in such amounts as is customary in the case
of institutions of the same type and size.
Section 3.16 Administration Agreement. The Servicer agrees to perform all duties
required of the Servicer under the Administration Agreement using that degree of
skill and attention that the Servicer exercises with respect to its comparable
business activities.
Section 3.17 Lender Identification Number. The Owner Trustee may permit trusts,
other than the Issuer, established by the Depositor to securitize student loans,
to use the Department lender identification number applicable to the Issuer if
the servicing agreements with respect to such other trusts include provisions
substantially similar to this paragraph. In such event, the Servicer may claim
and collect Interest Subsidy Payments and Special Allowance Payments with
respect to Trust Student Loans and student loans in such other trusts using such
common lender identification number. Notwithstanding anything herein or in the
Basic Documents to the contrary, any amounts assessed against payments
(including, but not limited to, Interest Subsidy Payments and Special Allowance
Payments) due from the Department to any such other trust using such common
lender identification number as a result of amounts owing to the Department from
the Issuer will be deemed for all purposes hereof and of the Basic Documents
(including for purposes of determining amounts paid by the Department with
respect to the student loans in the Trust and such other trust) to have been
assessed against the Issuer and shall be deducted by the Administrator or the
Servicer and paid to such other trust from any collections made by them which
would otherwise have been payable to the Collection Account for the Issuer. Any
amounts assessed against payments due from the Department to the Issuer as a
result of amounts owing to the Department from such other trust using such
common lender identification number will be deemed to have been assessed against
such other trust and will be deducted by the Administrator or the Servicer from
any collections made by them which would otherwise be payable to the collection
account for such other trust and paid to the Issuer.
Article IV
Section 4.1 Representations of Servicer. The Servicer makes the following
representations on which the Issuer is deemed to have relied in acquiring
(through the Owner Trustee) the Trust Student Loans and appointing the Servicer
as servicer hereunder. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, but shall survive the
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sale, transfer and assignment of the Trust Student Loans to the Owner Trustee on
behalf of the Issuer and the pledge thereof to the Indenture Trustee and the
Indenture Administrator pursuant to the Indenture.
A. Organization and Good Standing. 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, and had at all
relevant times, and has, the power, authority and legal right to service the
Trust Student Loans and to hold the Trust Student Loan Files as custodian.
B. Due Qualification. The Servicer is duly qualified to do business and
has obtained all necessary licenses and approvals in all jurisdictions in which
the ownership or lease of property or the conduct of its business (including the
servicing of the Trust Student Loans as required by this Agreement) shall
require such qualifications.
C. Power and Authority. The Servicer has the power and authority to
execute and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement have been duly authorized
by the Servicer by all necessary action. No registration with or approval of any
governmental agency is required for the due execution and delivery by, and
enforceability against, the Servicer of this Agreement.
D. Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Servicer enforceable in accordance with its terms
subject to bankruptcy, insolvency and other similar laws affecting creditors'
rights generally and subject to equitable principles.
E. No Violation. The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof will not conflict with, result
in any breach of any of the terms and provisions of, nor constitute (with or
without notice or lapse of time or both) a default under, the 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.
F. No Proceedings. There are no proceedings or investigations pending, or,
to the Servicer's best knowledge, threatened, before any court, regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Servicer or its properties: (i) asserting the invalidity of this
Agreement or any of the other Basic Documents to which the Servicer is a party,
(ii) seeking to prevent the consummation of any of the transactions contemplated
by this Agreement or any of the other Basic Documents to which the Servicer is a
party, (iii) seeking any determination or ruling that could reasonably be
expected to have a material and adverse effect on the performance by the
Servicer of its obligations under, or the validity or enforceability of, this
Agreement or any of the other Basic Documents to which the
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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.
Section 4.2 Indemnities of Servicer. The Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically undertaken by the
Servicer under this Agreement.
The Servicer shall pay for any loss, liability, claim or expense
(including, without limitation, costs and expenses of litigation and of
investigation counsel fees, damages, judgments and amounts paid in settlement)
that may be imposed on, incurred by or asserted against the Issuer, the Owner
Trustee or the Eligible Lender Trustee by the Department pursuant to the Higher
Education Act, to the extent that such loss, liability or expense arose out of,
or was imposed upon the Issuer, the Owner Trustee or the Eligible Lender Trustee
through, the negligence, willful misfeasance or bad faith of the Servicer in the
performance of its obligations and duties under this Agreement or by reason of
the reckless disregard of its obligations and duties under this Agreement, where
the final determination that any such loss, liability or expense arose out of,
or was imposed upon the Issuer, the Owner Trustee or the Eligible Lender Trustee
through, any such negligence, willful misfeasance, bad faith or recklessness on
the part of the Servicer is established by a court of law, by an arbitrator or
by way of settlement agreed to by the Servicer. Notwithstanding the foregoing,
if the Servicer is rendered unable, in whole or in part, by a force outside the
control of the parties hereto (including acts of God, acts of war, fires,
earthquakes, hurricanes, floods and other disasters) to satisfy its obligations
under this Agreement, the Servicer shall not be deemed to have breached any such
obligation upon delivery of written notice of such event to the other parties
hereto, for so long as the Servicer remains unable to perform such obligation as
a result of such event.
For purposes of this Section, in the event of the termination of the
rights and obligations of SLC (or any successor thereto pursuant to Section 4.3)
as Servicer pursuant to Section 5.1, or a resignation by such Servicer pursuant
to this Agreement, such Servicer shall be deemed to be the Servicer pending
appointment of a successor servicer pursuant to Section 5.2.
Liability of the Servicer under this Section shall survive the resignation
or removal of the Owner Trustee, the Indenture Trustee, the Indenture
Administrator or the Eligible Lender Trustee or the termination of this
Agreement. If the Servicer shall have made any payments pursuant to this Section
and the Person to or on behalf of whom such payments are made thereafter
collects any of such amounts from others, such Person shall promptly repay such
amounts to the Servicer, without interest.
Section 4.3 Merger or Consolidation of, or Assumption of the Obligations of,
Servicer. The Servicer hereby agrees that, upon (a) any merger or consolidation
of the Servicer into another Person, (b) any merger or consolidation to which
the Servicer shall be a party resulting in the creation of another Person or (c)
any Person succeeding to the properties and assets of the Servicer substantially
as a whole, the Servicer shall (i) cause such Person (if other than the
Servicer) to execute an agreement which states expressly that such Person
assumes every obligation of the Servicer hereunder, (ii) deliver to the Owner
Trustee, the Indenture Trustee or the Indenture Administrator an Officers'
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
and that all conditions precedent provided for in this Agreement relating to
such
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transaction have been complied with, (iii) cause the Rating Agency Condition to
have been satisfied with respect to such transaction and (iv) cure any existing
Servicer Default or any continuing event which, after notice or lapse of time or
both, would become a Servicer Default. Upon compliance with the foregoing
requirements, such Person shall be the successor servicer under this Agreement
without further act on the part of any of the parties to this Agreement.
Section 4.4 Limitation on Liability of Servicer. The Servicer shall not be under
any liability to the Issuer, the Noteholders, the Administrator, the Eligible
Lender Trustee, 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; provided, however, that this
provision shall not protect the Servicer against its obligation to purchase
Student Loans from the Trust pursuant to Section 3.5 hereof or to pay to the
Trust amounts required pursuant to Section 3.5 hereof or against any liability
that would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Servicer may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
person respecting any matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action where it is not
named as a party; provided, however, that the Servicer may undertake any
reasonable action that it may deem necessary or desirable in respect of this
Agreement and the other Basic Documents and the rights and duties of the parties
to this Agreement and the other Basic Documents and the interests of the
Noteholders. To the extent that the Servicer is required to appear in or is made
a defendant in any legal action or other proceeding relating to the servicing of
the Trust Student Loans, the Issuer shall indemnify and hold the Servicer
harmless from all cost, liability or expense of the Servicer not arising out of
or relating to the failure of the Servicer to comply with the terms of this
Agreement.
Section 4.5 SLC Not to Resign as Servicer. Subject to the provisions of Section
4.3, SLC shall not resign from the obligations and duties hereby imposed on it
as Servicer under this Agreement except upon determination that the performance
of its duties under this Agreement are no longer permissible under applicable
law. Notice of any such determination permitting the resignation of SLC shall be
communicated to the Owner Trustee, the Indenture Trustee and the Indenture
Administrator at the earliest practicable time (and, if such communication is
not in writing, shall be confirmed in writing at the earliest practicable time)
and any such determination shall be evidenced by an Opinion of Counsel to such
effect delivered to the Owner Trustee, the Indenture Trustee and the Indenture
Administrator concurrently with or promptly after such notice. No such
resignation shall become effective until the Indenture Administrator or a
successor servicer shall have assumed the responsibilities and obligations of
SLC in accordance with Section 5.2.
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Article V
Section 5.1 Servicer Default. If any one of the following events (a "Servicer
Default") shall occur and be continuing:
(1) any failure by the Servicer (i) to deliver to the Indenture Trustee
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 Servicer from 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
Servicer; or
(2) any failure by the Servicer duly to observe or to perform in any
material respect any other term, covenant or agreement of the
Servicer set forth in this Agreement or any other Basic Document to
which the Servicer is a signatory, which failure shall (i)
materially and adversely affect the rights of the Indenture Trustee,
on behalf of the Noteholders, or the Noteholders and (ii) continues
unremedied for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall
have been given (A) to the Servicer by the Indenture Trustee, the
Indenture Administrator, the Eligible Lender Trustee or the
Administrator or (B) to the Servicer, and to the Indenture Trustee,
the Indenture Administrator and the Eligible Lender Trustee by the
Noteholders representing at least a majority of the Outstanding
Amount of the Notes; provided, however, that any breach of Sections
3.1, 3.2, 3.3 or 3.4 shall not be deemed a Servicer Default so long
as the Servicer is in compliance with its repurchase and
reimbursement obligations under Section 3.5; or
(3) an Insolvency Event occurs with respect to the Servicer; or
(4) any failure by the Servicer to comply with any requirements under
the Higher Education Act resulting in a loss of its eligibility as a
third-party servicer;
then, and in each and every case, so long as the Servicer Default shall not have
been remedied, either the Indenture Trustee or the Indenture Administrator, or
the Noteholders of Notes evidencing at least a majority of the Outstanding
Amount of the Notes, by notice then given in writing to the Servicer (and to the
Indenture Trustee, the Indenture Administrator and the Owner Trustee if given by
the Noteholders) may terminate all the rights and obligations (other than the
obligations set forth in Section 3.5 and Section 4.2) of the Servicer under this
Agreement. As of the effective date of termination of the Servicer, all
authority and power of the Servicer under this Agreement, whether with respect
to the Notes or the Trust Student Loans or otherwise, shall,
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without further action, pass to and be vested in the Indenture Administrator or
such successor servicer as may be appointed under Section 5.2. The predecessor
Servicer shall cooperate with the successor servicer, the Indenture
Administrator and the Owner Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement,
including the transfer to the successor servicer for administration by it of all
cash amounts that shall at the time be held by the predecessor Servicer for
deposit, or shall thereafter be received by it with respect to a Trust Student
Loan. All reasonable costs and expenses, including, without limitation, any
costs or expenses associated with the complete transfer of all servicing data
and the completion, correction or manipulation of such servicing data as may be
required by the successor servicer to correct any errors or insufficiencies in
the servicing data or otherwise to enable the successor servicer to service the
Trust Student Loans properly and effectively, costs reasonably allocable to
specific employees and overhead, legal fees and expenses, accounting and
financial consulting fees and expenses, costs or expenses associated with the
transfer of all servicing files and costs of amending the Agreement, if
necessary, incurred in connection with transferring the Trust Student Loan Files
to the successor servicer and amending this Agreement and any other Basic
Documents to reflect such succession as Servicer pursuant to this Section shall
be paid by the predecessor Servicer (other than the Indenture Administrator
acting as the Servicer under this Section 5.1) upon presentation of reasonable
documentation of such costs and expenses. If the predecessor Servicer (other
than the Indenture Administrator) does not pay such reimbursement within thirty
(30) days of its receipt of an invoice therefor, such reimbursement shall be an
expense of the Issuer and the successor servicer shall be entitled to receive
such reimbursement from amounts on deposit in the Collection Account. Upon
receipt of notice of the occurrence of a Servicer Default, the Owner Trustee
shall give notice thereof to the Rating Agencies.
Section 5.2 Appointment of Successor.
A. Upon receipt by the Servicer of notice of termination pursuant to
Section 5.1, or the resignation by the Servicer in accordance with the terms of
this Agreement, the predecessor Servicer shall continue to perform its functions
as Servicer under this Agreement, in the case of termination, only until the
date specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
resignation, until the Indenture Administrator or a successor servicer shall
have assumed the responsibilities and duties of SLC. In the event of the
termination hereunder of the Servicer, the Issuer shall appoint a successor
servicer acceptable to the Indenture Administrator, and the successor servicer
shall accept its appointment by a written assumption in form acceptable to the
Indenture Administrator. In the event that a successor servicer has not been
appointed at the time when the predecessor Servicer has ceased to act as
Servicer in accordance with this Section, the Indenture Administrator without
further action shall automatically be appointed the successor servicer and the
Indenture Administrator shall be entitled to the Servicing Fee and any Carryover
Servicing Fees. Notwithstanding the above, the Indenture Administrator shall, if
it shall be unwilling or legally unable so to act, appoint or petition a court
of competent jurisdiction to appoint any established institution whose regular
business shall include the servicing of student loans, as the successor servicer
under this Agreement; provided, however, that such right to appoint or to
petition for the appointment of any such successor servicer shall in no event
relieve the Indenture Administrator from any obligations otherwise imposed on it
under the Basic Documents until such successor has in fact assumed such
appointment.
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B. Upon appointment, the successor to the Servicer (including the
Indenture Administrator acting as successor to the Servicer) shall be the
successor in all respects to the predecessor Servicer and shall be subject to
all the responsibilities, duties and liabilities placed on the predecessor
Servicer that arise thereafter or are related thereto and shall be entitled to
an amount agreed to by such successor servicer (which shall not exceed the
Servicing Fee unless the Rating Agency Condition is satisfied with respect to
such compensation arrangements) and all the rights granted to the predecessor
Servicer by the terms and provisions of this Agreement; provided, that the
successor servicer shall assume no liability or responsibility for any acts,
representations, obligations and covenants of any predecessor Servicer prior to
the date that the successor servicer becomes Servicer hereunder.
C. Notwithstanding the foregoing or anything to the contrary herein or in
the other Basic Documents, the Indenture Administrator, to the extent it is
acting as successor servicer pursuant hereto and thereto, shall be entitled to
resign to the extent a qualified successor servicer has been appointed and has
assumed all the obligations of the Servicer in accordance with the terms of this
Agreement and the other Basic Documents.
Section 5.3 Notification to Noteholders. Upon any termination of, or appointment
of a successor to, the Servicer pursuant to this Article V, the Indenture
Administrator shall give prompt written notice thereof to Noteholders and the
Rating Agencies (which, in the case of any such appointment of a successor,
shall consist of prior written notice thereof to the Rating Agencies).
Section 5.4 Waiver of Past Defaults. The Indenture Trustee acting at the
direction of Noteholders of Notes evidencing at least a majority of the
Outstanding Amount of the Notes 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 and the Administration Agreement. No such waiver shall extend to
any subsequent or other default or impair any right consequent thereto.
Article VI
Section 6.1 Amendment.
A. This Agreement may be amended by the Servicer, the Issuer, the
Administrator or the Owner Trustee, without the consent of any of the
Noteholders, to comply with any change in any applicable federal or state law,
to cure any ambiguity, to correct or supplement any provisions in this Agreement
or for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel delivered to the
Owner Trustee, adversely affect in any material respect the interests of any
Noteholder.
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B. This Agreement may also be amended from time to time by the Servicer,
the Issuer, the Administrator and the Owner Trustee, with the consent of the
Noteholders of Notes evidencing at least a majority of the Outstanding Amount of
the Notes, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders; provided, however, that no such amendment
shall (a) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments with respect to Trust Student Loans or
distributions that shall be required to be made for the benefit of the
Noteholders or (b) reduce the aforesaid percentage of the Outstanding Amount of
the Notes, the Noteholders of which are required to consent to any such
amendment, without the consent of all outstanding Noteholders.
It shall not be necessary for the consent of Noteholders pursuant to this
clause B, to approve the particular form of any proposed amendment or consent,
but it shall be sufficient if such consent shall approve the substance thereof.
Promptly after the execution of any amendment to this Agreement (or, in
the case of the Rating Agencies, fifteen days prior thereto), the Owner Trustee
shall furnish written notification of the substance of such amendment to each of
the Rating Agencies.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee, the Indenture Administrator and the Indenture Trustee shall be entitled
to receive and rely upon an Opinion of Counsel stating that the execution of
such amendment is authorized or permitted by this Agreement. The Owner Trustee,
the Indenture Administrator and the Indenture Trustee may, but shall not be
obligated to, execute and deliver such amendment which affects its rights,
powers, duties or immunities hereunder.
Section 6.2 Notices. All notices hereunder shall be given by United States
certified or registered mail, by 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 to the Servicer or Administrator, to:
The Student Loan Corporation
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Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
If to the Issuer, to:
SLC Student Loan Trust 2004-1
c/o Wilmington Trust Company
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Attn: Corporate Trust Administration
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Section 6.3 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, and such counterparts shall
constitute one and the same instrument.
Section 6.4 Entire Agreement; Severability. This Agreement constitutes the
entire agreement among the Issuer, the Administrator, the Owner Trustee and the
Servicer. All prior representations, statements, negotiations and undertakings
with regard to the subject matter hereof are superseded hereby.
If any term or provision of this Agreement or the application thereof to
any person or circumstance shall, to any extent, be invalid or unenforceable,
the remaining terms and provisions of this Agreement, or the application of such
terms or provisions to persons or circumstances other than those as to which it
is held invalid or unenforceable, shall not be affected thereby, and each term
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
Section 6.5 Governing Law. The terms of this Agreement shall be subject to all
applicable provisions of the Higher Education Act and shall be construed in
accordance with and governed by the laws of the State of New York 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.
Section 6.6 Relationship of Parties. The Servicer is an independent contractor
and, except for the services which it agrees to perform hereunder, the Servicer
does not hold itself out as an agent of any other party hereto. Nothing herein
contained shall create or imply an agency relationship among Servicer and any
other party hereto, nor shall this Agreement be deemed to constitute a joint
venture or partnership between the parties.
Section 6.7 Captions. The captions used herein are for the convenience of
reference only and not part of this Agreement, and shall in no way be deemed to
define, limit, describe or modify the meanings of any provision of this
Agreement.
Section 6.8 Nonliability of Directors, Officers and Employees of Servicer, the
Owner Trustee, the Indenture Administrator, the Indenture Trustee and the
Administrator. No member of the board of directors or any officer, employee or
agent of the Servicer, the Administrator, the Owner Trustee, the Indenture
Administrator or the Indenture Trustee (or any Affiliate of any such party)
shall be personally liable for any obligation incurred under this Agreement.
Section 6.9 Assignment. This Agreement may not be assigned by the Servicer
except as permitted under Sections 4.3, 4.5 and 5.2 hereof. This Agreement may
not be assigned by the Administrator except as permitted under Sections 4.3 and
4.6 of the Administration Agreement.
Section 6.10 Limitation of Liability of Owner Trustee, Indenture Administrator
and Indenture Trustee.
A. Notwithstanding anything contained herein to the contrary, this
Agreement has been signed by Wilmington Trust Company, not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer and in no
event shall Wilmington Trust Company in its individual
20
capacity or, except as expressly provided in the Trust Agreement, as Owner
Trustee have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer or the Owner Trustee hereunder or
in any of the certificates, notices or agreements delivered pursuant hereto as
to all of which recourse shall be had solely to the assets of the Issuer.
B. Notwithstanding anything contained herein to the contrary, this
Agreement has been signed by Citibank, N.A., not in its individual capacity but
solely in its capacity as Indenture Administrator of the Issuer and in no event
shall Citibank, N.A. in its individual capacity or, except as expressly provided
in the Indenture, as Indenture Administrator have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto as to all of which recourse shall be had solely to the assets of
the Issuer.
C. Notwithstanding anything contained herein to the contrary, this
Agreement has been signed by Wachovia Bank, National Association, not in its
individual capacity but solely in its capacity as Indenture Trustee of the
Issuer and in no event shall Wachovia Bank, National Association in its
individual capacity or, except as expressly provided in the Indenture, as
Indenture Trustee have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto as to all of
which recourse shall be had solely to the assets of the Issuer.
[SIGNATURE PAGE FOLLOWS]
21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their behalf by their duly authorized officers as of November
23, 2004.
THE STUDENT LOAN CORPORATION,
as Servicer and Administrator
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Treasurer
SLC STUDENT LOAN TRUST 2004-1
By: Wilmington Trust Company,
not in its individual capacity
but solely as Owner Trustee
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Financial Services Officer
AGREED TO AND ACCEPTED BY:
WACHOVIA BANK, NATIONAL ASSOCIATION,
not in its individual capacity but
solely Indenture Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
CITIBANK, N.A.,
not in its individual capacity but
solely as Indenture Administrator
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President
1
ATTACHMENT A
SCHEDULE OF FEES
The Servicer will receive a Primary Servicing Fee and a Carryover
Servicing Fee (together, the "Servicing Fee"). The "Primary Servicing Fee" for
any month is an amount equal to 1/12 of 0.50% of the outstanding principal
amount of the Trust Student Loans as of the last day of the preceding calendar
month, plus any such amounts from prior Monthly Servicing Payment Dates that
remain unpaid. The Primary Servicing Fee will be payable out of Available Funds
and amounts on deposit in the Reserve Account on the 15th day of each month (or,
if any such date is not a Business Day, on the next succeeding Business Day),
commencing on December 15, 2004 (each, a "Monthly Servicing Payment Date"). The
"Carryover Servicing Fee" will be payable out of Available Funds in accordance
with Section 2.8(h) of the Administration Agreement on each Distribution Date
and is the sum of (a) the amount of certain increases in the costs incurred by
the Servicer which are agreed to pursuant to Section 3.8 of the Servicing
Agreement and (b) any amounts described in (a) above that remain unpaid from
prior Distribution Dates plus interest on such amounts for the period from the
Distribution Date on which such amounts become due to the date such amounts are
paid in full at a rate per annum for each Interest Period (as defined below)
equal to Three-Month LIBOR as determined as of the related Distribution Date.
"Interest Period" shall mean the period from each Distribution Date
through the day before the next Distribution Date. The Carryover Servicing Fee
will be payable to the Servicer on each succeeding Distribution Date out of
Available Funds after payment on such Distribution Date of all senior amounts
payable prior to clause (h) of Section 2.8 of the Administration Agreement. On
the December Monthly Servicing Payment Date, the Servicer shall receive a pro
rata portion of the Primary Servicing Fee for the number of days in November
from, and including, the Closing Date.
A-1
ATTACHMENT B
LOCATIONS
The Student Loan Corporation
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Citibank USA, National Association
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Lot 3, Block 3
Building 02/Floor 01/Zone 38
Sioux Falls, South Dakota 57117
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FORM OF CERTIFICATION TO BE
PROVIDED TO DEPOSITOR BY SERVICER
CERTIFICATION
SLC Student Loan Trust 2004-1 (the "Issuer")
Student Loan Asset-Backed Notes (the "Notes")
I, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the Chief Financial Officer of The Student Loan
Corporation, certify to SLC Student Loan Receivables I, Inc. and its officers,
directors and affiliates, and with the knowledge and intent that they will rely
upon this certification (capitalized terms used herein without definition shall
have the meanings assigned to such terms in the Servicing Agreement, dated as of
November 23, 2004 (the "Servicing Agreement"), between The Student Loan
Corporation, as servicer and administrator, and the Issuer), that:
1. I have reviewed the servicing reports relating to the Issuer
delivered by the Servicer to the Indenture Trustee covering the
fiscal year 2004;
2. Based on my knowledge, the servicing information in these reports,
taken as a whole, does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such
statements were made, not misleading as of the last day of the
period covered by these servicing reports;
3. Based on my knowledge, the servicing information required to be
provided to the Indenture Trustee by the Servicer under the
Servicing Agreement for inclusion in the reports to be filed by the
Indenture Trustee is included in the servicing reports delivered by
the Servicer to the Indenture Trustee;
4. I am responsible for reviewing the activities performed by the
Servicer under the Servicing Agreement and based upon my knowledge
and the annual compliance review required under Section 3.2(a) of
the Administration Agreement with respect to the Servicer, and
except as disclosed in the compliance certificate delivered by the
Servicer under Section 3.2(a) of the Administration Agreement, the
Servicer has fulfilled, in all material respects, its obligations
under the Servicing Agreement; and
D-1
5. The reports disclose all significant deficiencies relating to the
Servicer's compliance with the minimum servicing standards based
upon the report provided by an independent public accountant, after
conducting a review in compliance with the attestation standards
established by the American Institute of Certified Public
Accountants, as set forth in the Administration Agreement.
Date: _________________________
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Chief Financial Officer
D-2