Document:

exhibit101.htm

EXECUTION COPY

 

_____________________________________________

 

 

 

AGREEMENT AND PLAN OF MERGER

by and among

DISCOVER BANK,

ACADEMY ACQUISITION CORP.

and

THE STUDENT LOAN CORPORATION

Dated as of September 17, 2010

 

_____________________________________________

 

 

  

  

  

 

TABLE OF CONTENTS

 

Page

	
 

Article I

 

	
 

DEFINITIONS

 

	  
	
Section 1.1

	
Definitions

	
3

	
 

Article II

 

	
 

THE MERGER

 

	  
	
Section 2.1

	
The Merger

	
19

	
Section 2.2

	
Closing

	
20

	
Section 2.3

	
Effective Time; Effect

	
20

	
Section 2.4

	
Certificate of Incorporation and By-Laws

	
20

	
Section 2.5

	
Board of Directors

	
20

	
Section 2.6

	
Officers

	
20

	
 

Article III

 

	
 

EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES

 

	  
	
Section 3.1

	
Effect on Securities

	
21

	
Section 3.2

	
Exchange of Certificates

	
21

	
Section 3.3

	
Lost Certificates

	
24

	
Section 3.4

	
Dissenting Shares

	
24

	
Section 3.5

	
Transfers; No Further Ownership Rights

	
24

	
Section 3.6

	
Withholding

	
24

	
 

Article IV

 

	
 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

	  
	
Section 4.1

	
Organization and Qualification

	
25

	
Section 4.2

	
Certificate of Incorporation and By-Laws

	
25

	
Section 4.3

	
Capitalization; Subsidiaries

	
25

	
Section 4.4

	
Authority Relative to Agreement

	
26

	
Section 4.5

	
No Conflict; Required Filings and Consents

	
27

	
Section 4.6

	
Compliance with Laws

	
28

	
Section 4.7

	
Company SEC Documents; Undisclosed Liabilities

	
29

	
Section 4.8

	
Controls and Procedures

	
30

	
Section 4.9

	
Absence of Certain Changes or Events

	
30

	
Section 4.10

	
Absence of Litigation

	
31

	
Section 4.11

	
Employee Benefit Plans

	
31

	
Section 4.12

	
Labor Matters

	
33

	
Section 4.13

	
Trademarks, Patents and Copyrights

	
34

	
Section 4.14

	
Taxes

	
36

	
Section 4.15

	
Properties; Assets

	
38

	
Section 4.16

	
Material Contracts

	
38

	
Section 4.17

	
Insurance Policies

	
40

	
Section 4.18

	
Transactions with Related Parties

	
41

	
Section 4.19

	
Post-Sale Company Assets and Liabilities

	
41

	
Section 4.20

	
Opinion of Financial Advisors

	
42

	
Section 4.21

	
Anti-Takeover Statutes

	
42

	
Section 4.22

	
Vote Required

	
42

	
Section 4.23

	
Brokers

	
42

	
Section 4.24

	
Trust Certificates

	
42

	
Section 4.25

	
Securitization Trusts.

	
42

	
Section 4.26

	
Other Securitization Basic Documents

	
43

	
Section 4.27

	
Trust Student Loans

	
45

	
Section 4.28

	
Related Transaction Agreements

	
46

	
Section 4.29

	
No Other Representations or Warranties

	
46

	
 

Article V

 

	
 

REPRESENTATIONS AND WARRANTIES OF BUYER AND ACQUISITION SUB

 

	  
	
Section 5.1

	
Organization and Qualification

	
47

	
Section 5.2

	
Certificate of Incorporation and By-Laws

	
47

	
Section 5.3

	
Authority Relative to Agreement

	
47

	
Section 5.4

	
No Conflict; Required Filings and Consents

	
47

	
Section 5.5

	
Absence of Litigation

	
48

	
Section 5.6

	
Available Funds

	
49

	
Section 5.7

	
Brokers

	
49

	
Section 5.8

	
Agreements with Other Parties

	
49

	
Section 5.9

	
Capitalization and Operations of Acquisition Sub

	
49

	
Section 5.10

	
Disclaimer of Other Representations and Warranties

	
49

	
 

Article VI

 

	
 

COVENANTS AND AGREEMENTS

 

	  
	
Section 6.1

	
Conduct of Business Pending the Merger

	
50

	
Section 6.2

	
Proxy Statement

	
53

	
Section 6.3

	
Stockholders’ Meeting

	
55

	
Section 6.4

	
Appropriate Action; Consents; Filings

	
55

	
Section 6.5

	
Access to Information; Confidentiality

	
57

	
Section 6.6

	
No Solicitation of Competing Proposal

	
58

	
Section 6.7

	
Notification of Certain Matters

	
64

	
Section 6.8

	
Public Announcements

	
64

	
Section 6.9

	
Employee Matters

	
64

	
Section 6.10

	
Acquisition Sub

	
67

	
Section 6.11

	
Related Transaction Agreements

	
67

	
Section 6.12

	
Certain Ancillary Agreements

	
67

	
Section 6.13

	
Agreements with Other Parties

	
68

	
Section 6.14

	
FIRPTA Certificate

	
68

	
 

Article VII

 

	
 

CONDITIONS TO THE MERGER

 

	  
	
Section 7.1

	
Conditions to the Obligations of Each Party

	
68

	
Section 7.2

	
Conditions to the Obligations of Buyer

	
69

	
Section 7.3

	
Conditions to the Obligations of the Company

	
70

	
 

Article VIII

 

	
 

TERMINATION, AMENDMENT AND WAIVER

 

	  
	
Section 8.1

	
Termination

	
71

	
Section 8.2

	
Effect of Termination

	
72

	
Section 8.3

	
Fees and Expenses

	
72

	
Section 8.4

	
Amendment

	
74

	
Section 8.5

	
Waiver

	
74

	
 

Article IX

 

	
 

GENERAL PROVISIONS

 

	  
	
Section 9.1

	
Notices

	
75

	
Section 9.2

	
Interpretation; Certain Definitions

	
77

	
Section 9.3

	
Severability

	
77

	
Section 9.4

	
Assignment

	
77

	
Section 9.5

	
Entire Agreement; No Third Party Beneficiaries

	
77

	
Section 9.6

	
Governing Law

	
78

	
Section 9.7

	
Consent to Jurisdiction

	
78

	
Section 9.8

	
Counterparts

	
78

	
Section 9.9

	
WAIVER OF JURY TRIAL

	
78

	
Section 9.10

	
Specific Performance

	
78

  

  

  

Exhibits

Exhibit A                      Indemnification Agreement

Exhibit B                      Voting and Support Agreement

Exhibit C                      Purchase Price Adjustment Agreement

Exhibit D                      Form of Subservicing Letter Agreement

Exhibit E                      Form of Makewhole Agreement

Exhibit F                      Term Sheet for Transition Agreements

Appendix

Appendix A                      Company Representations and Warranties with Respect to Trust Student Loans

  

  

  

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of September 17, 2010 (this “Agreement”), by and among Discover Bank, a Delaware banking corporation (“Buyer”), Academy Acquisition Corp., a Delaware corporation and a wholly-owned Subsidiary of Buyer (“Acquisition Sub”), and The Student Loan Corporation, a Delaware corporation (the “Company”).

W I T N E S S E T H

 

WHEREAS, concurrently with the execution of this Agreement, the Company is entering into an Asset Purchase Agreement, dated as of the date of this Agreement, by and among the Company, Citibank (South Dakota) National Association (“CSD”), SLC Student Loan Receivables I, Inc. (the “Depositor”) and Citibank, N.A., (“CBNA”) (the “CBNA Transaction Agreement”, and the transactions contemplated by the CBNA Transaction Agreement, the “CBNA Transaction”), pursuant to which, immediately prior to the Effective Time, (i) the Company will sell to CBNA the Acquired Assets (as defined in the CBNA Transaction Agreement and defined herein as the “CBNA Purchased Assets”), and (ii) CBNA will assume the Other Business Liabilities;

 

WHEREAS, concurrently with the execution of this Agreement, the Company is entering into an Asset Purchase Agreement, dated as of the date of this Agreement (the “FFELP Transaction Agreement”, and the transactions contemplated by the FFELP Transaction Agreement, the “FFELP Transaction”), by and among the Company, CBNA, CSD, SLM Corporation (“FFELP Buyer Parent”), Depositor, Bull Run 1 LLC, SLM Education Credit Finance Corporation and Sallie Mae, Inc., pursuant to which, immediately prior to the Effective Time and immediately following the consummation of the CBNA Transaction, (i) the Company will sell to Subsidiaries of FFELP Buyer Parent, the Acquired Assets (as defined in the FFELP Transaction Agreement and defined herein as the “FFELP Purchased Assets”), (ii) the Company and its Affiliates will assign to FFELP Buyer Parent and its Affiliates certain administrative and loan servicing duties and obligations with respect to the interests in the FFELP trust certificates and FFELP loans and (iii) FFELP Buyer Parent will assume the Liabilities to be assumed by the FFELP Buyer Parent and its Affiliates, pursuant to the FFELP Transaction Agreement (collectively, the “FFELP Assumed Liabilities”);

 

WHEREAS, as of the Effective Time, and immediately after giving effect to the FFELP Transaction and the CBNA Transaction, (i) the Acquired Assets will be the only assets of the Company and its Subsidiaries and (ii) the Retained Liabilities and Excluded Liabilities will be the only Liabilities of the Company and its Subsidiaries;

 

WHEREAS, the Board of Directors of the Company (upon the recommendation of the Special Committee of the Board of Directors of the Company (the “Special Committee”)) has determined that the Transactions are fair, from a financial point of view, to the stockholders of the Company (other than Citigroup Inc. and its Affiliates);

 

WHEREAS, in connection with its approval of the Transactions, the Board of Directors of the Company (upon the recommendation of the Special Committee) has (i) determined that the transactions contemplated by this Agreement, the Ancillary Agreements and the Related Transaction Agreements are fair to, and in the best interests of, the stockholders of the Company, (ii) approved and declared advisable the execution, delivery and performance of this Agreement, the Ancillary Agreements and the Related Transaction Agreements and the transactions contemplated hereby and thereby, including the merger of Acquisition Sub with and into the Company (the “Merger”), with the Company continuing as the Surviving Corporation in the Merger, upon the terms and subject to the conditions and limitations set forth herein and in accordance with the General Corporation Law of the State of Delaware (“DGCL”), and (iii) resolved to recommend that the Company’s stockholders adopt this Agreement and approve the Merger and the FFELP Transaction;

 

WHEREAS, the Boards of Directors of Buyer and Acquisition Sub each have approved and declared advisable this Agreement and the Merger, upon the terms and subject to the conditions and limitations set forth herein and in accordance with the DGCL;

 

WHEREAS, pursuant to the Merger, each share of common stock, par value $0.01 per share (the “Company Common Stock”), of the Company issued and outstanding immediately prior to the Effective Time (other than shares cancelled pursuant to Section 3.1(a) hereof and the Dissenting Shares) will be converted into the right to receive $30.00 in cash, without interest (the “Merger Consideration”);

 

WHEREAS, concurrently with the execution of this Agreement, and as a condition to the willingness of Buyer to enter into this Agreement, CBNA is entering into (i) an Indemnification Agreement with Buyer and the Company, a copy of which is attached as Exhibit A hereto (the “Indemnification Agreement”), and (ii) a Voting and Support Agreement with Buyer and FFELP Buyer Parent, a copy of which is attached as Exhibit B hereto (the “Voting and Support Agreement”);

 

WHEREAS, concurrently with the execution of this Agreement, CBNA, the Company and Buyer are entering into (i) a Separation Agreement (the “Separation Agreement”) and (ii) a Purchase Price Adjustment Agreement, a copy of which is attached as Exhibit C hereto (the “Purchase Price Adjustment Agreement”);

 

WHEREAS, upon the Closing of the Transactions, CBNA, the Company, Buyer and their applicable Affiliates will enter into (i) a Subservicing Letter Agreement substantially in the form attached as Exhibit D hereto (the “Subservicing Letter Agreement”), relating to certain servicing matters following the Closing, providing, among other things, that Buyer and the Company shall not permit the transfer of the servicing of any Student Loan subject to certain insurance policies without the consent of CBNA, unless certain conditions precedent have been satisfied, including the consent of the applicable insurer under the applicable insurance policy and (ii) a Makewhole Agreement substantially in the form attached as Exhibit E hereto (the “Makewhole Agreement”), pursuant to which CBNA will either purchase Student Loans or compensate the Company for specified losses with respect to Student Loans that were in breach of certain representations or warranties made by the Company when such Student Loans were sold to a Securitization Trust, or that are required to be purchased by the Company because of breaches of servicing obligations under the related servicing agreements; and

 

WHEREAS, upon the Closing of the Transactions, CBNA, the Company and Buyer will enter into a Transition Services Agreement and a Trademark License Agreement containing the terms set forth in Exhibit F attached hereto (collectively, the “Transition Agreements”), relating to certain services (a) to be provided by CBNA and its Affiliates to the Company, Buyer and their Affiliates and (b) to be provided by the Company to CBNA and its Affiliates, in each case, for a specified period of time following the Closing.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants and subject to the conditions herein contained and intending to be legally bound hereby, the parties hereto hereby agree as follows:

 

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1                      Definitions.  Defined terms used in this Agreement have the meanings ascribed to them as follows:

 

“2006-A Trust” shall mean SLC Private Student Loan Trust 2006-A, a Delaware statutory trust.

 

“2010-A Trust” shall mean SLC Private Student Loan Trust 2010-A, a Delaware statutory trust.

 

“2010-B Trust” shall mean SLC Private Student Loan Trust 2010-B, a Delaware statutory trust.

 

“Acquired Assets” shall mean all of the properties and assets of the Company and its Subsidiaries as the same shall exist on the Closing Date, immediately prior to giving effect to the FFELP Transaction Closing and the CBNA Transaction Closing, other than the CBNA Purchased Assets and the FFELP Purchased Assets, including all of the following:

 

	
  

	
(i)

	
the Trust Certificates;

 

	
  

	
(ii)

	
the Securitization Restricted Cash;

 

	
  

	
(iii)

	
the LIBOR/Prime basis swap between the 2006-A Trust and Goldman Mitsui Marine;

 

	
  

	
(iv)

	
the accrued interest receivable of the Trust Student Loans;

 

	
  

	
(v)

	
the Student Loan Origination Platform;

 

	
  

	
(vi)

	
all insurance policies of the Company and its Subsidiaries, including the Student Loan Insurance Policies, the Commercial Insurance Policies and the other insurance policies set forth in Section 1(a) of the Company Disclosure Schedule;

 

	
  

	
(vii)

	
all of the assets and properties of the Company and its Subsidiaries relating to underwriting, servicing and administering the Trust Student Loans, including all data, information, books and records required to service and administer the Trust Student Loans;

 

	
  

	
(viii)

	
all of the data and information included in the Schedule of Trust Student Loans;

 

	
  

	
(ix)

	
all employment records, personnel files and other information relating to the Company Employees;

 

	
  

	
(x)

	
all goodwill of the Company and its Subsidiaries;

 

	
  

	
(xi)

	
all equipment, systems, furniture and personal property of the Company and its Subsidiaries;

 

	
  

	
(xii)

	
the minute books and organizational documents (including the Securitization Basic Documents) of the Company and the Post-Sale Subsidiaries;

 

	
  

	
(xiii)

	
all of the Company Permits, including the Company Permits listed in Section 4.6(a) of the Company Disclosure Schedule;

 

	
  

	
(xiv)

	
all Copyrights, Patent Rights and Trademarks (and all goodwill associated therewith) of the Company and its Subsidiaries, including (A) those listed or required to be listed in Section 4.13(a) of the Company Disclosure Schedule and (B) the name “The Student Loan Corporation”;

 

	
  

	
(xv)

	
all Software of the Company and its Subsidiaries, including the Software listed or required to be listed in Section 4.13(b) of the Company Disclosure Schedule;

 

	
  

	
(xvi)

	
all Trade Secrets and other confidential information, including customer data;

 

	
  

	
(xvii)

	
all rights, claims or causes of action against third parties relating to the Acquired Assets or the Post-Sale Business; and

 

	
  

	
(xviii)

	
all Contracts of the Company and its Subsidiaries, including the Company Material Contracts listed in Section 4.16(a) of the Company Disclosure Schedule.

 

“Acquisition Sub” shall have the meaning set forth in the Preamble.

 

“Affiliate” of a specified person, shall mean a person who, directly or indirectly, through one or more intermediaries controls, is controlled by, or is under common control with, such specified person.

 

“Aggregate Merger Consideration” shall have the meaning set forth in Section 3.2(a).

 

“Agreement” shall have the meaning set forth in the Preamble.

 

“Alternate Superior Proposal” shall have the meaning set forth in Section 6.6(i)(iv).

 

“Ancillary Agreements” shall mean (i) the Indemnification Agreement, the Voting and Support Agreement, the Purchase Price Adjustment Agreement, the Subservicing Letter Agreement, the Makewhole Agreement, the Transition Agreements and the Separation Agreement, (ii) the Sub-Administration Agreements, the Replacement Subservicing Agreements, the Services Agreements, the Amended and Restated Student Loan Purchase Agreement, the Amended and Restated Funding Note Purchase Agreement, the Conduit Replacement Servicing Agreement, the Conduit Replacement Subservicing Agreement, the Depositor Agreement (each as defined in the FFELP Transaction Agreement) and that certain Amended and Restated Confidentiality Agreement, dated as of the date hereof, between the Company and FFELP Buyer Parent and each other closing document to which the Company is or will be a party as set forth in Section 9.4 of the FFELP Transaction Agreement, (iii) the Master Servicing Agreement and the Sub-Administration Agreement (each as defined in the CBNA Transaction Agreement) and each other closing document to which the Company is or will be a party as set forth in Section 7.4 of the CBNA Transaction Agreement and (iv) all other agreements, instruments and documents being or to be executed and delivered by the Company, any Subsidiary of the Company, Buyer or any Affiliate of Buyer under the aforementioned agreements or in connection therewith.

 

“Approved School” shall mean colleges eligible under title IV, Part B of the Higher Education Act of 1965 and universities that have been approved by the Company’s credit department.

 

“Benefit Plans” shall have the meaning set forth in Section 4.11(a).

 

“Bill of Sale” means, with respect to each Securitization Trust, the Bill of Sale entered into between the Company and the Depositor pursuant to which Student Loans are sold from the Company to the Depositor, in accordance with Securitization Master Terms Purchase Agreement for that Securitization Trust.

 

“Blue Sky Laws” shall mean state securities or “blue sky” laws.

 

“Book-Entry Shares” shall have the meaning set forth in Section 3.1(b).

 

“Borrower” means the obligor on a Trust Student Loan.

 

“Business Day” shall mean any day other than Saturday, Sunday or a day on which banking institutions in New York, New York or Chicago, Illinois are authorized or obligated to be closed.

 

“Buyer” shall have the meaning set forth in the Preamble.

 

“Buyer Disclosure Schedule” shall have the meaning set forth in Article V.

 

“Buyer FSA” shall have the meaning set forth in Section 6.9(f).

 

“CBNA” shall have the meaning set forth in the Recitals.

 

“CBNA FSA” shall have the meaning set forth in Section 6.9(f).

 

“CBNA Purchased Assets” shall have the meaning set forth in the Recitals.

 

“CBNA Transaction” shall have the meaning set forth in the Recitals.

 

“CBNA Transaction Agreement” shall have the meaning set forth in the Recitals.

 

“CBNA Transaction Closing” shall mean the purchase and sale of the CBNA Purchased Assets and the assumption by CBNA of the Excluded Liabilities pursuant to the CBNA Transaction Agreement.

 

“Certificate of Merger” shall have the meaning set forth in Section 2.3(a).

 

“Certificates” shall have the meaning set forth in Section 3.1(b).

 

“Change of Recommendation” shall have the meaning set forth in Section 6.6(d).

 

“Closing” shall have the meaning set forth in Section 2.2.

 

“Closing Date” shall have the meaning set forth in Section 2.2.

 

“Closing Related Transaction Agreements” shall mean the Related Transaction Agreements, other than the FFELP Transaction Agreement and the CBNA Transaction Agreement.

 

“Code” shall mean the Internal Revenue Code of 1986.

 

“Commercial Insurance Policy” shall have the meaning set forth in Section 4.17(a).

 

“Company” shall have the meaning set forth in the Preamble.

 

“Company Benefit Plans” shall have the meaning set forth in Section 4.11(a).

 

“Company Charter” shall have the meaning set forth in Section 2.4.

 

“Company Common Stock” shall have the meaning set forth in the Recitals.

 

“Company Contract” shall mean any Contract to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any of their respective assets or properties are bound.

 

“Company Disclosure Schedule” shall have the meaning set forth in Article IV.

 

“Company Employees” shall have the meaning set forth in Section 6.9(b).

 

“Company Intervening Event” shall have the meaning set forth in Section 6.6(i).

 

“Company Material Adverse Effect” shall mean any event, change, effect, development, state of facts, condition, circumstance or occurrence that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the business, assets, operations, results of operations or financial condition of the Post-Sale Company, taken as a whole, other than any event, change, effect, development, state of facts, condition, or circumstance or occurrence resulting from or arising out of:  (i) changes in general economic or political conditions or the financial, securities or credit markets in general (but only to the extent the Post-Sale Company is not adversely affected in a disproportionate manner relative to other participants in the student loan industry); (ii) any events, circumstances, changes or effects that affect the student loan industry (but only to the extent the Post-Sale Company is not adversely affected in a disproportionate manner relative to other participants in the student loan industry); (iii) any changes, after the date hereof, in Laws applicable to the Post-Sale Company or any of its properties or assets; (iv) any changes, after the date hereof, in GAAP; (v) any outbreak or escalation of hostilities or war (whether or not declared) or any act of terrorism, or any earthquakes, hurricanes, tornados or other natural disasters (but only to the extent the Post-Sale Company is not adversely affected in a disproportionate manner relative to other participants in the student loan industry); (vi) the announcement of this Agreement, the Ancillary Agreements, the Related Transaction Agreements and the Transactions; (vii) any change in the trading price of Company Common Stock or the failure by the Company or its Subsidiaries to meet any internal or published projections, forecasts or estimates for any period (it being understood that the event, change, effect, development, state of facts, condition, circumstance or occurrence underlying such change or failure that is not otherwise excluded from the definition of Company Material Adverse Effect may be taken into account in determining whether there has been or would reasonably be expected to be a Company Material Adverse Effect); and (viii) any action taken as required by this Agreement, provided that, when used (A) to qualify any representation or warranty of the Company set forth in Article IV (other than Section 4.9) and (B) in the conditions to the obligations of Buyer set forth in Section 7.2(a)(i) – (iii), “Company Material Adverse Effect” shall be read without giving effect to this clause (viii) to the extent that (x) the required action relates to the obligation of the Company under Section 6.1 or (y) the action would result in a breach of the representations set forth in Section 4.5 or Section 4.17(c).

 

“Company Material Contracts” shall have the meaning set forth in Section 4.16(a).

 

“Company Permits” shall have the meaning set forth in the Section 4.6(a).

 

“Company Preferred Stock” shall have the meaning set forth in Section 4.3(a).

 

“Company Recommendation” shall have the meaning set forth in Section 6.3.

 

“Company SEC Documents” shall have the meaning set forth in Section 4.7(a).

 

“Company Termination Fee” shall mean any fee payable by the Company to Buyer pursuant to Section 8.3(a), 8.3(b), 8.3(c), 8.3(d) or 8.3(e).

 

“Competing Proposal” shall have the meaning set forth in Section 6.6(i).

 

“Confidentiality Agreement” shall mean the confidentiality agreement dated April 27, 2010, between Buyer and the Company.

 

“Contract” shall mean any contract, indenture, deed of trust, note, bond, mortgage, guarantee, lease, sublease, license, sublicense, commitment, obligation, understanding, arrangement, instrument or other agreement (whether written or oral).

 

“control” (including the terms “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise.

 

“Copyrights” shall mean United States and non-U.S. copyrights and mask works (as defined in 17 U.S.C. §901), whether registered or unregistered, and pending applications to register the same.

 

“CSD” shall have the meaning set forth in the Recitals.

 

“Cut-Off Date” shall mean the last day of the month immediately preceding the month in which the Closing takes place.

 

“Delinquent” means, for any Student Loan, the period in which any payment of principal or interest due on such Student Loan is overdue (after giving effect to all grace, forbearance and deferment periods).

 

“Depositor” shall have the meaning set forth in the Recitals.

 

“DGCL” shall have the meaning set forth in the Recitals.

 

“Dissenting Shares” shall have the meaning set forth in Section 3.4.

 

“Effective Time” shall have the meaning set forth in Section 2.3(a).

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974.

 

“ERISA Affiliate” shall have the meaning set forth in Section 4.11(c).

 

“Evaluation Material” shall have the meaning set forth in Section 6.5(b).

 

“Exchange Act” shall mean the Securities Exchange Act of 1934.

 

“Exchange Fund” shall have the meaning set forth in Section 3.2(a).

 

“Excluded Liabilities” shall mean all Liabilities of the Company and its Subsidiaries, other than the Retained Liabilities.

 

“FFELP” shall mean the U.S. Federal Family Education Loan Program.

 

“FFELP Assumed Liabilities” shall have the meaning set forth in the Recitals.

 

“FFELP Buyer Parent” shall have the meaning set forth in the Recitals.

 

“FFELP Purchased Assets” shall have the meaning set forth in the Recitals.

 

“FFELP Transaction” shall have the meaning set forth in the Recitals.

 

“FFELP Transaction Agreement” shall have the meaning set forth in the Recitals.

 

“FFELP Transaction Closing” shall mean the purchase and sale of the FFELP Purchased Assets and the assumption of the FFELP Assumed Liabilities by FFELP Buyer Parent pursuant to the FFELP Transaction Agreement.

 

“Funding Note Issuer” shall mean SLC Conduit I LLC, a Delaware limited liability company.

 

“GAAP” shall mean the United States generally accepted accounting principles.

 

“Governmental Authority” shall mean any United States (federal, state or local) or foreign government, or governmental, regulatory, judicial or administrative authority, agency or commission or self-regulatory organization.

 

“HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

 

“Indebtedness” shall mean:  (i) any indebtedness for borrowed money; (ii) any obligations evidenced by bonds, debentures, notes or other similar instruments or letters of credit; (iii) any obligations to pay the deferred purchase price of property or services (other than trade accounts payable incurred in the ordinary course of business); (iv) any obligations as lessee under capitalized leases; (v) any indebtedness created or arising under any conditional sale or other title retention agreement with respect to acquired property; (vi) any reimbursement, payment or similar obligations, contingent or otherwise, under acceptance credit, letters of credit or similar facilities; (vii) any obligations under interest rate swap, hedging or similar agreements; and (viii) all indebtedness and other obligations referred to in clauses (i) through (vii) above secured by any Lien upon or in property of the Post-Sale Company, or which is guaranteed by the Post-Sale Company or for which the Post-Sale Company is contingently liable.

 

“Indemnification Agreement” shall have the meaning set forth in the Recitals.

 

“Intellectual Property” shall mean Copyrights, Patent Rights, Trademarks and Trade Secrets.

 

“IRS” shall mean the Internal Revenue Service.

 

“IT Assets” shall mean the computers, servers, workstations, routers, hubs, switches, data communications lines and all other tangible information technology equipment and Software owned by the Company and its Subsidiaries and used in connection with the business of the Company and its Subsidiaries.

 

“knowledge” shall mean the actual knowledge after reasonable investigation of the employees of the Company and Buyer set forth on Section 1(b) of the Company Disclosure Schedule and Section 1 of the Buyer Disclosure Schedule, respectively.

 

“Law” shall mean any and all domestic (federal, state or local) or foreign laws, statutes, rules, regulations, codes, ordinances, requirements or Orders issued or imposed by any Governmental Authority or common law.

 

“Leased Real Property” shall have the meaning set forth in Section 4.15(a).

 

“Liability” shall mean any debt, liability, commitment or obligation of any kind or nature (whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, direct or indirect, primary or secondary, liquidated or unliquidated or due or to become due), including any liability for Taxes.

 

“Lien” shall mean liens, claims, adverse claims, judgments, mortgages, hypothecations, pledges, security interests, charges, equitable interests, easements, conditional sale or other title retention agreements, rights of first refusal, options, restrictions (including any restrictions on use, voting, transfer, alienation, receipt of income or exercise of any other attribute of ownership) or other encumbrances of any kind.

 

“Loan File” means, with respect to a Student Loan, the file containing all current, relevant information pertaining to such Student Loan.

 

“Loan Transmittal Summary Form” means the form attached to a bill of sale with respect to a Securitization Master Terms Purchase Agreement or Securitization Master Terms Sale Agreement, which lists, by Borrower, each Student Loan sold pursuant to such bill of sale.

 

“Makewhole Agreement” shall have the meaning set forth in the Recitals.

 

“Merger” shall have the meaning set forth in the Recitals.

 

“Merger Consideration” shall have the meaning set forth in the Recitals.

 

“Note” shall mean a note evidencing a Student Loan.

 

“Notice of a Proposed Change of Recommendation” shall have the meaning set forth in Section 6.6(e).

 

“Notice of Superior Proposal” shall have the meaning set forth in Section 6.6(e).

 

“NYSE” shall mean the New York Stock Exchange.

 

“Omnibus Credit Agreement” shall mean the Amended & Restated Omnibus Credit Agreement, dated as of January 29, 2010, by and among the Company, CBNA and the other parties thereto.

 

“Order” shall mean any decree, order, writ, judgment, stipulation, award, injunction, temporary restraining order or other order by any Governmental Authority, and shall include any code of conduct or other requirement with which a person voluntarily agrees with a Governmental Authority to comply.

 

“Other Business Liabilities” shall have the meaning set forth in the CBNA Transaction Agreement.

 

“Other Securitization Basic Documents” shall mean, with respect to each Other Securitization Trust, the applicable Basic Documents (as defined under the Other Securitization Indenture related to such Other Securitization Trust) and all other documents, agreements, instruments and certificates executed or delivered in connection with the establishment of such Other Securitization Trust or any securitization or other transaction to which it is a party, as the same may be amended or otherwise modified from time to time in accordance with the terms thereof.

 

“Other Securitization Indenture” shall mean, with respect to each Other Securitization Trust, the indenture or funding note purchase agreement pursuant to which the Other Securitization Trust has issued notes, as amended or supplemented from time to time.

 

“Other Securitization Trusts” shall mean all issuers of student loan asset-backed notes (including the Funding Note Issuer, the 2004-1 Trust, the 2005-1 Trust, the 2005-2 Trust, the 2005-3 Trust, the 2006-1 Trust, the 2006-2 Trust, the 2007-1 Trust, the 2007-2 Trust, the 2008-1 Trust, the 2008-2 Trust, the 2009-1 Trust, the 2009-2 Trust, the 2009-3 Trust, the 2010-1 Trust and the 2009-A Trust) affiliated with the Company prior to giving effect to the Related Transactions, but excluding the Securitization Trusts.

 

“Owned Software” shall have the meaning set forth in Section 4.13(g).

 

“Patent Rights” shall mean the United States and non-U.S. patents, provisional patent applications, patent applications, continuations, continuations-in-part, divisions, reissues, patent disclosures, industrial designs, inventions (whether or not patentable or reduced to practice) and improvements thereto.

 

“Paying Agent” shall have the meaning set forth in Section 3.2(a).

 

“Payment Cutoff Date” shall mean, with respect to a Securitization Trust, a “Payment Cutoff Date” as defined in the related Securitization Master Terms Purchase Agreement.

 

“Permitted Change of Recommendation” shall have the meaning set forth in Section 6.6(e).

 

“Permitted Lien” shall mean any (i) Lien for Taxes not yet due, that is being contested in good faith or for which adequate accruals or reserves have been established in accordance with GAAP, (ii) such non-monetary Liens or other imperfections of title on real property, if any, that do not, individually or in the aggregate, materially adversely affect title to, materially detract from the value of, or materially impair the existing use of, the property affected by such Lien or imperfection, (iii) Liens imposed or promulgated by Laws with respect to real property and improvements, including zoning regulations, (iv) Liens disclosed on existing title reports or existing surveys (in either case copies of which title reports and surveys have been delivered or made available to Buyer prior to the date hereof) and (v) mechanics’, carriers’, workmen’s, repairmen’s and similar Liens, incurred in the ordinary course of business for sums not yet due and payable.

 

“person” shall mean an individual, corporation, limited liability company, partnership, association, trust or other entity or organization, including a Governmental Authority or a Rating Agency.

 

“Post-Sale Business” shall mean the business of (i) servicing and administering the Trust Student Loans, (ii) serving as master servicer and master administrator under the Other Securitization Basic Documents relating to the FFELP Purchased Assets and the CBNA Purchased Assets, (iii) marketing, underwriting, originating, owning, selling, servicing, administering and collecting Student Loans, (iv) providing services pursuant to any of the Ancillary Agreements and (v) engaging in ancillary activities relating thereto.

 

“Post-Sale Company” shall mean the Company and its Subsidiaries after giving effect to (i) the CBNA Transaction, including the purchase and sale of the CBNA Purchased Assets and the assumption of the Excluded Liabilities by CBNA pursuant to the CBNA Transaction Agreement and (ii) the FFELP Transaction, including the purchase and sale of the FFELP Purchased Assets and the assumption of the FFELP Assumed Liabilities by FFELP Buyer Parent pursuant to the FFELP Transaction Agreement.

 

“Post-Sale Subsidiary” shall mean any Subsidiary of the Company that will be a Subsidiary of the Post-Sale Company.

 

“Principal Balance” shall mean, with respect to a Student Loan, the outstanding principal balance of such student loan, plus accrued interest expected to be capitalized (if any), as of a specified date.

 

“Proceeding” shall have the meaning set forth in Section 4.10.

 

“Proxy Materials” shall have the meaning set forth in Section 6.3.

 

“Proxy Statement” shall have the meaning set forth in Section 6.2(a).

 

“Purchase Agreement” means, with respect to a Securitization Trust, the Purchase Agreement entered into between the Company and the Depositor pursuant to which Student Loans are sold from the Company to the Depositor, in accordance with the Securitization Master Terms Purchase Agreement for that Securitization Trust.

 

“Purchase Price Adjustment Agreement” shall have the meaning set forth in the Recitals.

 

“Qualifying Transaction” shall mean any transaction contemplated by a Competing Proposal, except that the reference to “15%” in each of clause (A), (B) and (C) of the definition of “Competing Proposal” shall be deemed to be a reference to “50%.”  For the avoidance of doubt, neither the purchase and sale of the FFELP Purchased Assets by the FFELP Buyer Parent pursuant to the terms of the FFELP Transaction Agreement nor the purchase and sale of the CBNA Purchased Assets by CBNA pursuant to the terms of the CBNA Transaction Agreement shall be deemed a Competing Proposal so long as neither of such transactions includes any of the Acquired Assets or the capital stock of the Company.

 

“Rating Agency” shall mean a nationally recognized statistical rating organization or other comparable person rating the Securitization Notes in accordance with the applicable Securitization Indentures.

 

“Related Party” shall have the meaning set forth in Section 4.18.

 

“Related Transaction Agreements” shall mean, collectively, (i) the FFELP Transaction Agreement, the Trust Certificates Bill of Sale, the Sub-Servicing agreements, the Securitization Eligible Lender Trust Agreement, the Participation Agreement, the Conduit Bill of Sale, the Conduit Replacement Servicing Agreement, the Amended and Restated Funding Note Purchase Agreement and the Conduit Eligible Lender Trust Agreement (each as defined in the FFELP Transaction Agreement) and each other closing document to which the Company is or will be a party as set forth in Section 9.4 of the FFELP Transaction Agreement, (ii) the CBNA Transaction Agreement and each other closing document to which the Company is or will be a party as set forth in Section 7.4 of the CBNA Transaction Agreement and (iii) all other agreements, instruments and documents being or to be executed and delivered by the Company, any Subsidiary of the Company, FFELP Buyer Parent, any Subsidiary of FFELP Buyer Parent, CBNA or any Subsidiary of CBNA under the aforementioned agreements or in connection therewith.

 

“Related Transactions” shall mean, collectively, the transactions contemplated by the Related Transaction Agreements.

 

“Representatives” shall have the meaning set forth in Section 6.5(a).

 

“Requisite Stockholder Approval” shall mean the affirmative vote of the holders of at least a majority of the outstanding shares of Company Common Stock entitled to vote at the Stockholders’ Meeting adopting this Agreement and approving the Merger and the FFELP Transaction.

 

“Retained Liabilities” shall mean the following Liabilities of the Company and the Post-Sale Subsidiaries:  (a) Liabilities related to the Acquired Assets, the conduct of the Post-Sale Business or the ownership and operation of the assets and properties of the Post-Sale Company or any of its Affiliates, in each case arising after the Effective Time; (b) Liabilities in respect of the Company Employees arising from any incident, event, fact or circumstance occurring after the Effective Time; (c) the Company’s obligations under this Agreement, the Ancillary Agreements, Section 10.6 of the FFELP Transaction Agreement and Section 8.3 of the CBNA Transaction Agreement, in each case arising after the Effective Time; and (d) all Liabilities and obligations of the Company and the Post-Sale Subsidiaries arising under or to be performed under the Securitization Basic Documents, in each case arising after the Effective Time; provided, however, that in no event shall the Retained Liabilities include:

 

	
  

	
(i)

	
the FFELP Assumed Liabilities, the Other Business Liabilities or any Liabilities of the Company and its Subsidiaries relating to the CBNA Purchased Assets or the FFELP Purchased Assets;

 

	
  

	
(ii)

	
any Liabilities of the Company and its Subsidiaries relating to, arising out of or resulting from (A) the conduct of the business of the Company or any of its Affiliates or the ownership and operation of the assets and properties of the Company or any of its Affiliates prior to the Effective Time or (B) incidents, events, facts or circumstances existing or occurring on or prior to the Closing Date, including any Liabilities in respect of the Proceedings set forth in Section 4.14 of the Company Disclosure Schedule;

 

	
  

	
(iii)

	
any Liabilities of the Company and its Subsidiaries relating to or arising out of any breach of, or default under, any Company Contract by the Company or any of its Subsidiaries or Affiliates occurring on or prior to the Closing Date;

 

	
  

	
(iv)

	
any Liabilities of the Company and its Subsidiaries relating to, arising out of or resulting from any violation of Law occurring, or relating to or resulting from incidents, events, facts or circumstances existing or occurring, on or prior to the Closing Date;

 

	
  

	
(v)

	
any Liabilities for Taxes of the Company and its Subsidiaries, other than any Taxes for which Buyer is liable pursuant to the Indemnification Agreement;

 

	
  

	
(vi)

	
any Liabilities of the Company and its Subsidiaries relating to, resulting from or arising out of claims of infringement or other misappropriation of the Intellectual Property rights of third parties occurring, or relating to or resulting from incidents, events, facts or circumstances existing or occurring, on or prior to the Closing Date;

 

	
  

	
(vii)

	
any Indebtedness of the Company or any of its Subsidiaries and any Liabilities with respect thereto (other than the Securitization Notes);

 

	
  

	
(viii)

	
any Liabilities relating to any Company Benefit Plan to extent relating to, resulting from or arising out of any incident, event, fact or circumstance existing or occurring on or prior to the Effective Time, including all Liabilities related to the transaction awards payable under the Company Benefit Plans; or

 

	
  

	
(ix)

	
except as set forth in Article VII of the Separation Agreement, any Liabilities relating to any current or former employee, director or other service provider of the Company or any of its Affiliates to the extent relating to, resulting from or arising out of any incident, event, fact or circumstance existing or occurring at or prior to the Effective Time, including (A) all Liabilities arising out of or relating to the failure of the Company or any of its Affiliates to file timely any required notice under the WARN Act with respect to employee terminations effected by the Company or any of its Affiliates at or prior to the Effective Time, (B) all Liabilities arising out of or relating to any right, interest or claim of any current or former employees, directors or other service providers of the Company or any of its Affiliates, including any employment, severance, retention or termination Contract (other than any Liabilities to the extent relating to, resulting from or arising out of any incident, event, fact or circumstance occurring following the Effective Time), (C) all Liabilities arising out of or relating to the employment classification practices and policies of the Company or any of its Affiliates prior to the Effective Time, (D) all Liabilities with respect to compensation (including earned base salary, bonuses or other compensation and commissions owed to any current or former officers, directors, employees or consultants of the Company or any of its Affiliates for all services performed up to and including the Closing Date and (E) all Liabilities with respect to any earned, unused planned time-off days earned by, and credited to, Company Employees as of the Closing Date to the extent used by Company Employees.

 

“Sarbanes-Oxley Act” shall mean the Sarbanes-Oxley Act of 2002.

 

“Schedule of Trust Student Loans” shall mean the schedule(s), file(s) or data storage disk(s) or tape(s) produced by the Company from its management information system identifying all of the Trust Student Loans and containing data related to such Trust Student Loans, including with respect to each Trust Student Loan, the loan identification number, current loan rate of interest, maturity date, original Principal Balance and Principal Balance and accrued interest as of a specified date and all other information included in the data tape(s), dated March 31, 2010 and dated June 30, 2010, previously delivered to Buyer.

 

“SEC” shall mean the Securities and Exchange Commission.

 

“Secretary of State” shall have the meaning set forth in Section 2.3(a).

 

“Securities Act” shall mean the Securities Act of 1933.

 

“Securitization Basic Documents” shall mean, with respect to each Securitization Trust, the applicable Basic Documents (as defined under the Securitization Indenture), as the same may be amended or otherwise modified from time to time in accordance with the terms thereof.

 

“Securitization Closing Date” shall mean, with respect to each Securitization Trust, the applicable closing date under the Securitization Indenture.

 

“Securitization Cutoff Date” shall mean, with respect to each Securitization Trust, the applicable cutoff date under the Securitization Indenture.

 

“Securitization Eligible Loan” shall mean a Student Loan offered for sale by the Depositor under the applicable Purchase Agreement, dated as of the Securitization Closing Date, or substituted by the Depositor under any other Purchase Agreement entered into after the Securitization Closing Date, which, as of the Securitization Cutoff Date, or in the case of a Purchase Agreement entered into after the Securitization Closing Date, as of the related purchase date, is current or no more delinquent than permitted under such Purchase Agreement and which meets the other criteria for an “Eligible Loan” under and as defined in the applicable Securitization Master Terms Purchase Agreement as of the applicable Securitization Cutoff Date, or in the case of any Student Loan substituted pursuant to this Securitization Master Terms Purchase Agreement after the Securitization Closing Date, as of the applicable cutoff date by the Depositor.

 

“Securitization Indenture” shall mean, with respect to each Securitization Trust, the indenture pursuant to which the Securitization Trust has issued Securitization Notes, as amended or supplemented from time to time.

 

“Securitization Master Terms Purchase Agreement” shall mean, with respect to each Securitization Trust, the purchase agreement entered into by and between the Company and the Depositor pursuant to which the Student Loans to be deposited into the Securitization Trust are sold from the Company to the Depositor, as the same may be amended or otherwise modified from time to time in accordance with the terms thereof.

 

“Securitization Master Terms Sale Agreement” shall mean, with respect to each Securitization Trust, the Master Terms Sale Agreement entered into by and between the Depositor and the Securitization Trust pursuant to which Student Loans are sold by the Depositor to the Securitization Trust, as the same may be amended or otherwise modified from time to time in accordance with the terms thereof.

 

“Securitization Note” shall mean a note issued by the related Securitization Trust.

 

“Securitization Restricted Cash” shall mean, with respect to each Securitization Trust, all cash and investments held from time to time in any Trust Account (as defined in the applicable Administration Agreement (as defined in the applicable Securitization Indenture)) whether in the form of deposit accounts, physical property, book-entry securities, uncertificated securities or otherwise.

 

“Securitization Trust” shall mean the 2006-A Trust, the 2010-A Trust or the 2010-B Trust, as the context requires.

 

“Securitization Trust SEC Documents” shall have the meaning set forth in Section 4.25(e).

 

“Separation Agreement” shall have the meaning set forth in the Recitals.

 

“Servicer” shall mean the Company in its capacity as Servicer under each Securitization Servicing Agreement (as defined in the FFELP Transaction Agreement) or under the Conduit Servicing Agreement and the Conduit Supplemental Servicing Agreement (each as defined in the FFELP Transaction Agreement) or under the servicing agreement with respect to the 2009-A Trust, as the context requires, and its permitted successors and assigns in such capacity.

 

“Services Agreements” means, collectively, with respect to each of the Other Securitization Trusts, each Services Agreement and Administration Services Agreement, effective as of the Closing Date, by and among the Company and CBNA, as service providers, and CSD, as the same may be amended or otherwise modified from time to time in accordance with the terms thereof.

 

“Signing Related Transaction Agreements” shall mean the FFELP Transaction Agreement and the CBNA Transaction Agreement.

 

“Software” shall mean computer software programs and software systems, including firmware, middleware, databases, compilations, tool sets, compilers, higher level or “proprietary” languages and related documentation, whether in source code, object code or human readable form.

 

“Special Committee” shall have the meaning set forth in the Recitals.

 

“Stockholders’ Meeting” shall have the meaning set forth in Section 6.2(a).

 

“Student Loan” shall mean private education loans to students and parents of students that are not guaranteed or reinsured under the FFELP or any other federal student aid programs.

 

“Student Loan Insurance Policies”  shall have the meaning set forth in Section 4.17(a).

 

“Student Loan Origination Platform” shall mean the Company’s and its Subsidiaries’ right, title and interest in and to the Software, IT Assets, systems and other materials directly used in connection with the acquisition and servicing of students loans with respect to the Post-Sale Business, including the following:

 

	
  

	
(i)

	
the implementation of the third party application commonly known as Diploma and related code used solely by the Company or any of its Subsidiaries;

 

	
  

	
(ii)

	
the implementation of the third party application commonly known as Appworks and related code used solely by the Company or any of its Subsidiaries in connecting systems that are specific to the Appworks interface;

 

	
  

	
(iii)

	
the application commonly known as CSRAgent and code used solely by the Company or any of its Subsidiaries in related systems that are specific to the CSRAgent interface;

 

	
  

	
(iv)

	
the Internet domain names StudentLoan.com, FAAOnline.com, and EducationalLoanCenter.com, content thereon (excluding any Trademarks owned by an Affiliate of the Company), and underlying code specific to the Company or any of its Subsidiaries for the foregoing websites and related systems that are specific to the foregoing websites’ interfaces;

 

	
  

	
(v)

	
training materials, policies, procedures, marketing materials, templates, and other materials specific to the Company or any of its Subsidiaries and used in connection with the acquisition, disbursement and servicing of students loans with respect to the Post-Sale Business;

 

	
  

	
(vi)

	
spreadsheets, databases, documents, reports and other materials specific to the Company or any of its Subsidiaries and used in connection with the acquisition, disbursement and servicing of students loans with respect to the Post-Sale Business; and

 

	
  

	
(vii)

	
the algorithms, processes and business logic specific to the Company or any of its Subsidiaries.

 

“Subservicer” shall mean CSD, in its capacity as the subservicer under each Securitization Subservicing Agreement or the Conduit Subservicing Agreement (each as defined in the FFELP Transaction Agreement) or under the subservicing agreement with respect to the 2009-A Trust, as the context requires, and its successors and assigns in such capacity.

 

“Subservicing Letter Agreement” shall have the meaning set forth in the Recitals.

 

“Subsidiary” of any person, shall mean any corporation, partnership, joint venture or other legal entity of which such person owns, directly or indirectly, more than 50% of the stock or other equity interests, the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity, including, in the case of the Company, the Securitization Trusts.

 

“Superior Proposal” shall have the meaning set forth in Section 6.6(i).

 

“Superior Proposal Agreement” shall have the meaning set forth in Section 6.6(g).

 

“Surviving Corporation” shall have the meaning set forth in Section 2.1.

 

“Tax” or “Taxes” shall mean any federal, state, local or foreign net income, gross income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or add-on minimum, ad valorem, value-added, transfer, stamp, or environmental tax (including taxes under Code Section 59A), or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or penalty, addition to tax or additional amount imposed by any Governmental Authority.

 

“Tax Returns” shall mean returns, reports and information statements with respect to Taxes required to be filed with any other taxing authority, domestic or foreign, including consolidated, combined and unitary tax returns.

 

“Termination Date” shall have the meaning set forth in Section 8.1(b).

 

“Trademarks” shall mean United States, state and non-U.S. trademarks, service marks, trade names, assumed names, Internet domain names, designs, logos, slogans and general intangibles of like nature, whether registered or unregistered, and pending registrations and applications to register the foregoing.

 

“Trade Secrets” shall mean trade secrets and confidential ideas, know-how, concepts, methods, processes, formulae, technology, algorithms, models, reports, data, customer lists, supplier lists, mailing lists, business plans and other proprietary information, in each case which derive economic value, actual or potential, from being maintained in confidence.

 

“Transaction Expenses” shall mean all documented out-of-pocket fees and expenses incurred or paid by or on behalf of Buyer or any Affiliate of Buyer in connection with the Merger or the other transactions contemplated hereby or related to the authorization, preparation, negotiation, execution and performance of this Agreement or the Ancillary Agreements, including all fees and expenses of counsel, investment banking firms, financing sources, accountants, experts and consultants.

 

“Transactions” shall mean, collectively, (i) the FFELP Transaction, (ii) the CBNA Transaction and (iii) the transactions, including the Merger, contemplated by this Agreement or any of the Ancillary Agreements.

 

“Transition Agreements” shall have the meaning set forth in the Recitals.

 

“Trust Certificate” shall mean, with respect to each Securitization Trust, a certificate evidencing a 100% beneficial interest in such Securitization Trust.

 

“Trust Student Loan” shall mean a Student Loan that has been sold or permissibly transferred to a Securitization Trust by the Depositor, the Servicer or a Subservicer and the beneficial ownership of which is still held by such Securitization Trust on the date specified.

 

“Voting and Support Agreement” shall have the meaning set forth in the Recitals.

 

“WARN Act” means, collectively, the Workers Adjustment and Retraining Notification Act and any and all comparable state, local and other Laws.

 

 

ARTICLE II

 

 

 

 

THE MERGER

 

Section 2.1                      The Merger.  Upon the terms and subject to the conditions of this Agreement, and in accordance with the DGCL, at the Effective Time, Acquisition Sub shall be merged with and into the Company, whereupon the separate existence of Acquisition Sub shall cease, and the Company shall continue under the name “The Student Loan Corporation” as the surviving corporation (the “Surviving Corporation”), shall become a wholly-owned subsidiary of Buyer and shall continue to be governed by the laws of the State of Delaware.

 

Section 2.2                      Closing.  Subject to the satisfaction or, if permissible, waiver of the conditions set forth in Article VII hereof, the closing of the Merger (the “Closing”) will take place at 10:00 a.m., New York time, on the third Business Day after the day on which the last of the conditions required to be satisfied or waived pursuant to Article VII hereof is either satisfied or waived (other than conditions that, by their nature, are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions) at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New York, 10036, unless another time, date or place is agreed to in writing by the parties hereto (such date on which the Closing occurs being the “Closing Date”).  Subject to the terms and conditions of this Agreement, including Section 6.12, the parties will cooperate to cause the Closing to occur immediately following the closings of each of the FFELP Transaction and the CBNA Transaction.  Notwithstanding the foregoing, unless CBNA or one of its Affiliates (other than the Company and its Subsidiaries) confirms to Buyer in writing on or prior to November 15, 2010 that it will provide the human resources services and employee benefit plans and programs contemplated under Article VII of the Separation Agreement, in no event shall the Closing Date occur prior to December 31, 2010.

 

Section 2.3                      Effective Time; Effect.

 

(a)           Concurrently with the Closing, the Company, Buyer and Acquisition Sub shall cause a certificate of merger (the “Certificate of Merger”) with respect to the Merger to be executed and filed with the Secretary of State of the State of Delaware (the “Secretary of State”) as provided under the DGCL.  The Merger shall become effective on the date and time at which the Certificate of Merger has been duly filed with the Secretary of State or at such other date and time as is agreed by the parties and specified in the Certificate of Merger, and such date and time is hereinafter referred to as the “Effective Time.”

 

(b)           The Merger shall have the effects specified herein and in the DGCL.

 

Section 2.4                      Certificate of Incorporation and By-Laws.  At the Effective Time, the Restated Certificate of Incorporation of the Company, as in effect immediately prior to the Effective Time (the “Company Charter”), shall be amended so that Article FOURTH thereof reads in its entirety as follows:  “The total number of shares of capital stock that the Corporation is authorized to issue is 1,000 shares of Common Stock, $0.01 par value.”  As so amended, the Company Charter shall be the Certificate of Incorporation of the Surviving Corporation until thereafter amended in accordance with applicable Law or the provisions of the Certificate of Incorporation of the Surviving Corporation.  At the Effective Time, the by-laws of Acquisition Sub, as in effect immediately prior to the Effective Time, shall become the by-laws of the Surviving Corporation until thereafter amended in accordance with applicable Law or the provisions of the Certificate of Incorporation and by-laws of the Surviving Corporation.

 

Section 2.5                      Board of Directors.  Subject to applicable Law, each of the parties hereto shall take all necessary action to ensure that the Board of Directors of the Surviving Corporation effective as of, and immediately following, the Effective Time shall consist of the members of the Board of Directors of Acquisition Sub immediately prior to the Effective Time.

 

Section 2.6                      Officers.  From and after the Effective Time, the officers of the Acquisition Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation, until their respective successors are duly elected or appointed and qualified in accordance with applicable Law.

 

 

ARTICLE III

 

EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES

 

Section 3.1                      Effect on Securities.  At the Effective Time, by virtue of the Merger and without any action on the part of the Company, Acquisition Sub or the holders of any securities of the Company or Acquisition Sub:

 

(a)           Cancellation of Company Securities.  Each share of Company Common Stock held by the Company as treasury stock or held by Buyer or Acquisition Sub immediately prior to the Effective Time shall automatically be cancelled, retired and shall cease to exist, and no consideration or payment shall be delivered in exchange therefor or in respect thereof.

 

(b)           Conversion of Company Securities.  Except as otherwise provided in this Agreement, each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than shares cancelled pursuant to Section 3.1(a) hereof and the Dissenting Shares) shall be converted into the right to receive the Merger Consideration.  Each share of Company Common Stock to be converted into the right to receive the Merger Consideration as provided in this Section 3.1(b) shall, by virtue of the Merger and without any action on the part of the holders thereof, be automatically cancelled and shall cease to exist and the holders of certificates (the “Certificates”) or book-entry shares (“Book-Entry Shares”) which immediately prior to the Effective Time represented such shares of Company Common Stock shall cease to have any rights with respect to such shares of Company Common Stock other than the right to receive, upon surrender of such Certificates (or affidavits of loss in lieu thereof and in compliance with Section 3.3) or Book-Entry Shares in accordance with Section 3.2 of this Agreement, the Merger Consideration, without interest thereon.

 

(c)           Conversion of Acquisition Sub Capital Stock.  At the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, each share of common stock, par value of $0.01 per share, of Acquisition Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one (1) fully paid share of common stock, par value $0.01 per share, of the Surviving Corporation and shall constitute the only outstanding shares of capital stock of the Surviving Corporation.

 

(d)           Adjustments.  Without limiting the other provisions of this Agreement, if at any time during the period between the date of this Agreement and the Effective Time, any change in the number of outstanding shares of Company Common Stock shall occur as a result of a reclassification, recapitalization, stock split (including a reverse stock split), or combination, subdivision, exchange or readjustment of shares, or any stock dividend or stock distribution with a record date during such period, the Merger Consideration shall be equitably adjusted to reflect such change.

 

Section 3.2                      Exchange of Certificates.

 

(a)           Designation of Paying Agent; Deposit of Exchange Fund.  Prior to the Effective Time, Buyer shall designate a paying agent (the “Paying Agent”) reasonably acceptable to the Company for the payment of the Merger Consideration as provided in Section 3.1(b).  At or immediately following the Effective Time, Buyer shall deposit, or cause to be deposited, with the Paying Agent, for the benefit of holders of shares of Company Common Stock, cash constituting an amount equal to the aggregate Merger Consideration (the “Aggregate Merger Consideration,” and such Aggregate Merger Consideration as deposited with the Paying Agent, the “Exchange Fund”).  In the event the Exchange Fund shall be insufficient to make the payments contemplated by Section 3.1(b), Buyer shall promptly deposit, or cause to be deposited, additional funds with the Paying Agent in an amount which is equal to the deficiency in the amount required to make such payment.  The Paying Agent shall cause the Exchange Fund to be (i) held for the benefit of the holders of Company Common Stock and (ii) applied promptly to making the payments pursuant to Section 3.2(c) hereof.  The Exchange Fund shall not be used for any purpose that is not expressly provided for in this Agreement.

 

(b)           As promptly as practicable following the Effective Time, the Surviving Corporation shall cause the Paying Agent to mail to each holder of record of a Certificate or Book-Entry Share, which immediately prior to the Effective Time represented outstanding shares of Company Common Stock (x) a letter of transmittal, which shall specify that delivery shall be effected, and risk of loss and title to the Certificates or Book-Entry Shares, as applicable, shall pass, only upon proper delivery of the Certificates (or affidavits of loss in lieu thereof and in compliance with Section 3.3) or Book-Entry Shares to the Paying Agent and which shall be in the form and have such other provisions as Buyer and the Surviving Corporation may reasonably specify and (y) instructions for use in effecting the surrender of the Certificates or Book-Entry Shares in exchange for the Merger Consideration into which the number of shares of Company Common Stock previously represented by such Certificate or Book-Entry Shares shall have been converted pursuant to this Agreement (which instructions shall provide that at the election of the surrendering holder, Certificates or Book-Entry Shares may be surrendered, and the Merger Consideration in exchange therefor collected, by hand delivery).  Until surrendered as contemplated by this Section 3.2, each Certificate or Book-Entry Share shall be deemed at any time after the Effective Time to represent only the right to receive upon surrender the applicable portion of the Aggregate Merger Consideration in cash as contemplated by this Section 3.2, without interest thereon.

 

(c)           Upon surrender of a Certificate (or affidavit of loss in lieu thereof and in compliance with Section 3.3) or Book-Entry Share for cancellation to the Paying Agent, together with a letter of transmittal duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such Certificate or Book-Entry Share shall be entitled to receive in exchange therefor the Merger Consideration for each share of Company Common Stock formerly represented by such Certificate or Book-Entry Share, to be promptly mailed following the later to occur of (x) the Effective Time or (y) the Paying Agent’s receipt of such Certificate (or affidavit of loss in lieu thereof and in compliance with Section 3.3) or Book-Entry Share, and the Certificate (or affidavit of loss in lieu thereof and in compliance with Section 3.3) or Book-Entry Share so surrendered shall be forthwith cancelled.  If the payment of the applicable portion of the Aggregate Merger Consideration is made to a person other than the person in whose name the surrendered Certificate is registered, it shall be a condition of payment that (A) the Certificate so surrendered shall be properly endorsed or shall otherwise be in proper form for transfer and (B) the person requesting such payment shall have paid any transfer and other Taxes required by reason of the payment of the applicable portion of the Aggregate Merger Consideration to a person other than the registered holder of such Certificate surrendered or shall have established to the reasonable satisfaction of the Surviving Corporation that such Tax either has been paid or is not applicable.  The Paying Agent shall accept such Certificates (or affidavits of loss in lieu thereof) or Book-Entry Shares upon compliance with such reasonable terms and conditions as the Paying Agent may impose to effect an orderly exchange thereof in accordance with normal exchange practices.  No interest shall be paid or accrued for the benefit of holders of the Certificates or Book-Entry Shares on the Merger Consideration payable upon the surrender of the Certificates or Book-Entry Shares.

 

(d)           Termination of Exchange Fund.  Any portion of the Exchange Fund which remains undistributed to the holders of the Certificates or Book-Entry Shares for twelve (12) months after the Effective Time shall be delivered to the Surviving Corporation, upon demand, and any such holders of shares of Company Common Stock prior to the Merger who have not theretofore complied with this Article III shall thereafter look only to the Surviving Corporation, as general creditors thereof for payment of their claim for Merger Consideration, without interest, to which such holders may be entitled.

 

(e)           No Liability.  None of Buyer, Acquisition Sub, the Company, the Surviving Corporation or the Paying Agent shall be liable to any person in respect of any cash held in the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.  If any Certificates or Book-Entry Shares shall not have been surrendered prior to one (1) year after the Effective Time (or immediately prior to such earlier date on which any cash in respect of such Certificate or Book-Entry Share would otherwise escheat to, or become the property of, any Governmental Authority), any such cash in respect of such Certificate or Book-Entry Share shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any person previously entitled thereto.

 

(f)           Investment of Exchange Fund.  The Paying Agent shall, if directed by Buyer or, after the Effective Time, the Surviving Corporation, invest any cash included in the Exchange Fund as so directed; provided that (i) no such investment shall relieve Buyer or the Paying Agent from making the payments required by this Article III, and following any losses that result in the amount of cash in the Exchange Fund to be insufficient to make the remaining payments contemplated to be paid by the Paying Agent from the Exchange Fund pursuant to this Agreement, Buyer shall promptly provide additional funds to the Paying Agent for the benefit of the holders of Company Common Stock in the amount of such deficiency, and (ii) such investments shall be in (A) short-term obligations of the United States of America with maturities of no more than thirty (30) days or guaranteed by the United States of America and backed by the full faith and credit of the United States of America, (B) commercial paper obligations rated A-1 or P-1 or better by Moody’s Investor Service, Inc. or Standard & Poor’s, respectively or (C) money market funds substantially all the assets of which are comprised of investments in the obligations described in clauses (A) and (B).  Any interest or income produced by such investments shall be payable to the Surviving Corporation.

 

Section 3.3                      Lost Certificates.  If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Corporation, the posting by such person of a bond, in such reasonable amount as the Surviving Corporation may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent shall pay in exchange for such lost, stolen or destroyed Certificate, the Merger Consideration to which the holder thereof is entitled pursuant to this Article III.

 

Section 3.4                      Dissenting Shares.  Notwithstanding anything herein to the contrary, to the extent that holders of Company Common Stock are entitled to appraisal rights under Section 262 of the DGCL, shares of Company Common Stock issued and outstanding immediately prior to the Effective Time and held by a holder who has properly exercised and perfected his or her demand for appraisal rights under Section 262 of the DGCL (the “Dissenting Shares”), shall not be converted into the right to receive the Merger Consideration, but the holders of such Dissenting Shares shall be entitled to receive such consideration as shall be determined pursuant to Section 262 of the DGCL; provided, however, that if any such holder shall have failed to timely perfect or shall have effectively withdrawn or lost his or her right to appraisal under the DGCL, such holder’s shares of Company Common Stock shall thereupon be deemed to have been converted as of the Effective Time into the right to receive the Merger Consideration, without any interest thereon, and such shares shall not be deemed to be Dissenting Shares.  At the Effective Time, any holder of Dissenting Shares shall cease to have any rights with respect thereto, except the rights provided in Section 262 of the DGCL and as provided in this Section 3.4.  The Company shall give Buyer and Acquisition Sub prompt notice of any demands received by the Company for appraisal of shares of Company Common Stock, and Buyer and Acquisition Sub shall have the right to participate in all negotiations and proceedings with respect to such demands except as required by applicable Law.  The Company shall not, except with the prior written consent of Buyer, make any payment with respect to any demands for fair value for Dissenting Shares or offer to settle, settle or negotiate in respect of any such demands.

 

Section 3.5                      Transfers; No Further Ownership Rights.  After the Effective Time, the stock transfer books of the Company or the Surviving Corporation will be closed, and there shall be no registration of transfers on the stock transfer books of the Company or the Surviving Corporation of shares of Company Common Stock that were outstanding immediately prior to the Effective Time.  If Certificates or Book-Entry Shares are presented to the Surviving Corporation for transfer following the Effective Time, they shall be cancelled against delivery of the Merger Consideration, as provided for in Section 3.1(c) hereof, for each share of Company Common Stock formerly represented by such Certificates or Book-Entry Shares.

 

Section 3.6                      Withholding.  Each of the Paying Agent, the Company, Buyer and the Surviving Corporation shall be entitled to deduct and withhold from the payments otherwise payable pursuant to this Agreement to any holder of Company Common Stock such amounts as it is respectively required to deduct and withhold with respect to the making of such payment under the Code and the rules and regulations promulgated thereunder, or any provision of state, local or foreign Tax Law.  To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Company Common Stock in respect of which such deduction and withholding was made.

 

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except:  (i) as disclosed in any Company SEC Document filed prior to the date hereof (excluding (A) risk factor disclosures contained under the heading “Risk Factors” (other than any historical information included therein), (B) any disclosure of risks included in any “Forward-looking statements” disclaimers and (C) any other statements included in such Company SEC Documents to the extent that such disclosures are predictive or forward-looking in nature); provided, however, that any disclosures in the Company SEC Documents that are the subject of this clause (i) shall be deemed to qualify a representation or warranty only if the relevance of such disclosure to such representation or warranty is reasonably apparent on the face of such disclosure; provided, further, that the disclosures in the Company SEC Documents shall not be deemed to qualify any representations or warranties made in Section 4.3; or (ii) as disclosed in any section of the separate disclosure schedule which has been delivered by the Company to Buyer immediately prior to the execution of this Agreement (the “Company Disclosure Schedule”), which Company Disclosure Schedule shall be arranged in numbered and lettered sections corresponding to the numbered and lettered sections contained in this Article IV (it being agreed that the disclosure of any item in any section of the Company Disclosure Schedule shall also be deemed to be disclosed with respect to any other section of the Company Disclosure Schedule to which the relevance of such item is reasonably apparent on the face of such disclosure), the Company hereby represents and warrants to Buyer and Acquisition Sub as follows:

Section 4.1                      Organization and Qualification.  Each of the Company and its Subsidiaries is a corporation or other legal entity duly organized or formed, validly existing and in good standing under the laws of its jurisdiction of organization or formation and has the requisite corporate or other legal entity power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted.  Each of the Company and its Subsidiaries is duly qualified or licensed as a foreign corporation or other legal entity to do business, and is in good standing, in each jurisdiction in which the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for such failures to be so qualified or licensed and in good standing as would not have, individually or in the aggregate, a Company Material Adverse Effect.

 

Section 4.2                      Certificate of Incorporation and By-Laws.  The Company has made available to Buyer a complete and correct copy of the Company Charter and the by-laws of the Company, and the comparable organizational documents of each Subsidiary of the Company, in each case as amended to date.

 

Section 4.3                      Capitalization; Subsidiaries.

 

(a)           The authorized capital stock of the Company consists of 50,000,000 shares of Company Common Stock and 10,000,000 shares of the Company’s preferred stock, par value $0.01 per share (the “Company Preferred Stock”).  Twenty million shares of Company Common Stock are issued and outstanding and no shares of Company Preferred Stock are issued and outstanding.  No shares of Company Common Stock are held by the Company in its treasury.  All outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and non-assessable and not subject to, and were not issued in violation of, any preemptive rights.

 

(b)           Section 4.3(b) of the Company Disclosure Schedule sets forth a complete and correct list of each Subsidiary of the Company, together with the jurisdiction of organization and percentage of outstanding equity or voting interests owned by the Company.  All outstanding shares of capital stock of the Subsidiaries of the Company are duly authorized, validly issued, fully paid and non-assessable and not subject to, and were not issued in violation of, any preemptive rights and are owned of record and beneficially by the Company free and clear of any Liens.

 

(c)           Except as set forth in Section 4.3(c) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries owns any shares of capital stock or other equity or voting interests in (including any securities exercisable or exchangeable for or convertible into capital stock or other equity or voting interests in) any other person (other than equity or debt securities held as investments in the ordinary course of business which are not, individually or in the aggregate, material to the Company and its Subsidiaries, taken as a whole).

 

(d)           There are no outstanding subscriptions, options, warrants, calls, convertible securities, phantom stock rights, stock appreciation rights, stock-based performance units or other similar rights, agreements, commitments or Contracts of any kind to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound obligating the Company or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock of, or other equity or voting interests in, or securities convertible into, or exchangeable or exercisable for, shares of capital stock of, or other equity or voting interests in, the Company or any of its Subsidiaries or obligating the Company or any of its Subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, unit, agreement, commitment or Contract.

 

Section 4.4                      Authority Relative to Agreement.

 

(a)           The Company has all necessary corporate power and authority to execute and deliver this Agreement, the Ancillary Agreements and the Related Transaction Agreements, to perform its obligations hereunder and thereunder and to consummate the Merger, the Related Transactions and the other transactions contemplated by this Agreement, the Ancillary Agreements and the Related Transaction Agreements, subject in the case of the Merger and the FFELP Transaction to receipt of the Requisite Stockholder Approval.  The execution and delivery of this Agreement, the Ancillary Agreements and the Related Transaction Agreements by the Company and the consummation by the Company of the Merger, the Related Transactions and the other transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action of the Company, and no other corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement, the Ancillary Agreements and the Related Transaction Agreements or to consummate the Merger, the Related Transactions and the other transactions contemplated hereby and thereby (other than, with respect to the Merger and the FFELP Transaction, the receipt of the Requisite Stockholder Approval, and with respect to the Merger, the filing of the Certificate of Merger with the Secretary of State).  This Agreement, the Ancillary Agreements and the Related Transaction Agreements have been (or at the time of the Closing, will be) duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Buyer and Acquisition Sub, this Agreement and the Ancillary Agreements constitute (or, at the time of Closing, will constitute), and, assuming the due authorization, execution and delivery by each of the other parties thereto, the Related Transaction Agreements constitute (or, at the time of Closing, will constitute), legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms (except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general applicability relating to or affecting creditor’s rights, and to general equitable principles).

 

(b)           In connection with its approval of the Transactions, the Board of Directors of the Company (upon the recommendation of the Special Committee), at a meeting duly called and held, has unanimously (i) approved and adopted this Agreement, the Ancillary Agreements and the Related Transaction Agreements and approved the Merger, the Related Transactions and the other transactions contemplated hereby and thereby, (ii) determined that the Merger and the Related Transactions are advisable and fair to and in the best interests of, the stockholders of the Company and (iii) resolved to submit this Agreement and the FFELP Transaction Agreement to the stockholders of the Company for approval, file the Proxy Statement with the SEC and, subject to Section 6.6 hereof, make the Company Recommendation.

 

Section 4.5                      No Conflict; Required Filings and Consents.

 

(a)           The execution and delivery of this Agreement, the Ancillary Agreements and the Related Transaction Agreements by the Company do not and will not, the performance of this Agreement, the Ancillary Agreements and the Related Transaction Agreements by the Company will not, and the consummation by the Company of the Merger, the Related Transactions and the other transactions contemplated by this Agreement, the Ancillary Agreements and the Related Transaction Agreements will not, with or without notice or lapse of time, or both, (i) conflict with or violate the restated certificate of incorporation or by-laws (or equivalent organizational documents) of the Company or any of its Subsidiaries, (ii) conflict with or violate any Law applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected, (iii) result in any breach of, or constitute a default (with or without notice or lapse of time, or both) under, or give rise to any right of consent, termination, amendment, modification, acceleration, cancellation of, or any right of acceleration or cancellation or modification of any benefit or obligation under, or right to challenge (A) any Securitization Basic Document or Other Securitization Basic Document or (B) any other Company Contract or (iv) result in the creation of a Lien, other than any Permitted Lien, on any property or asset of the Company or any of its Subsidiaries, other than, in the case of clauses (ii), (iii) and (iv) hereof, any such conflict, violation, breach, default, termination, amendment, acceleration, cancellation or Lien that has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect or that would not reasonably be expected to materially impair the ability of the Company or any of its Subsidiaries to perform any of their obligations under this Agreement, the Ancillary Agreements or the Related Transaction Agreements or prevent or unreasonably delay the consummation of the Transactions.

 

(b)           The execution and delivery of this Agreement, the Ancillary Agreements and the Related Transaction Agreements by the Company do not, and at the time of the Closing, will not, the performance of this Agreement, the Ancillary Agreements and the Related Transaction Agreements by the Company will not, and the consummation by the Company of the Merger, the Related Transactions and the other transactions contemplated by this Agreement, the Ancillary Agreements and the Related Transaction Agreements will not, require any consent, approval, authorization, waiver or permit of, or filing or registration with or notification to, any Governmental Authority or any other person, including any trustee, any holder of, or holder of a beneficial interest in, note issued under a Securitization Indenture or any Rating Agency, except for applicable requirements of the Exchange Act, Blue Sky Laws, the HSR Act, any applicable non-U.S. competition, antitrust or investment Laws, filing and recordation of appropriate merger documents as required by the DGCL and except where failure to obtain such consents, approvals, authorizations, waivers or permits, or to make such filings or notifications, has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect or would not reasonably be expected to materially impair the ability of the Company or any of its Subsidiaries to perform any of their obligations under this Agreement, the Ancillary Agreements or the Related Transaction Agreements or prevent or unreasonably delay the consummation of the Transactions.

 

Section 4.6                      Compliance with Laws.

 

(a)           The Post-Sale Company and the Post-Sale Subsidiaries are in possession of all authorizations, licenses, permits, franchises, exemptions, orders, approvals and certificates necessary for the Post-Sale Company and the Post-Sale Subsidiaries to own, lease or operate their properties and assets and to carry on their businesses as they are now being conducted (the “Company Permits”), and no suspension or cancellation of any of the Company Permits is pending or, to the knowledge of the Company, threatened, except where the failure to be in possession of, or the suspension or cancellation of, any of the Company Permits has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect.  Section 4.6(a) of the Company Disclosure Schedule sets forth a true and complete list of the material Company Permits.  None of the Post-Sale Company or any of the Post-Sale Subsidiaries is or has been in default or violation of (i) any Laws applicable to the Post-Sale Company or any of the Post-Sale Subsidiaries or by which any property or asset of the Post-Sale Company or any of the Post-Sale Subsidiaries is bound or affected or (ii) the Company Permits, except, in each case, for any such defaults or violations that have not had and would not have, individually or in the aggregate, a Company Material Adverse Effect.  Except as would not have, individually or in the aggregate, a Company Material Adverse Effect, none of the Company Permits will be subject to revocation, withdrawal, suspension, termination, non-renewal or modification as a result of the execution and delivery of this Agreement, the Ancillary Agreements or the Related Transaction Agreements or the consummation of the Transactions.

 

(b)           With respect to each state or jurisdiction therein in which the Company or any of its Affiliates undertakes origination activities of Student Loans, the Company or such Affiliate is and has been in compliance in all material respects with such state’s or jurisdiction’s (as applicable) Laws, settlement agreements and other standards and procedures, including those promulgated by agencies or officers thereof, applicable to it and pertaining to the conduct of participants in the student loan industry, including any applicable voluntary code of conduct, to the extent the Company or any such Affiliate has assented thereto.

 

(c)           Neither the Company nor any of its Subsidiaries, nor any of their respective agents, officers or employees, is or has been in violation in any respect of any Laws or Orders applicable to the Trust Student Loans, including all Laws applicable to the marketing, origination, ownership, sale, servicing and collection of the Trust Student Loans and the Company’s business, except for such violation that has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect.  The servicing and collection practices used by the Company and its Subsidiaries with respect to the Trust Student Loans are and have been compliant with applicable Law and have met customary standards and practices utilized by similar student lenders in their servicing businesses, except for such non-compliance that has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect.

 

Section 4.7                      Company SEC Documents; Undisclosed Liabilities.

 

(a)           The Company has filed with the SEC all forms, documents, reports, schedules and statements required to be filed or furnished with the SEC since December 31, 2009, together with any amendments, restatements or supplements thereto (the “Company SEC Documents”).  As of their respective dates, or, if amended or restated, as of the date of the last such amendment or applicable subsequent filing prior to the date of this Agreement, each of the Company SEC Documents complied, and each of the Company SEC Documents to be filed subsequent to the date hereof will comply, in all material respects with the requirements of the Exchange Act or the Securities Act, as the case may be, and the applicable rules and regulations promulgated thereunder, and none of the Company SEC Documents at the time they were filed, or will be filed, as the case may be, or, if amended or restated, as of the date of the last such amendment or applicable subsequent filing prior to the date of this Agreement, contained, or will contain, any untrue statement of a material fact or omitted, or will omit, to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, or are to be made, not misleading.

 

(b)           The consolidated financial statements (giving effect to any amendments, restatements or supplements thereto filed prior to the date of this Agreement, and including all related notes and schedules) of the Company included in the Company SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as at the respective dates thereof and their consolidated results of operations and consolidated cash flows for the respective periods then ended (subject, in the case of the unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein including the notes thereto) in conformity with GAAP (except, in the case of the unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto).  The books and records of the Company and its Subsidiaries are true and complete, have been maintained in accordance with sound business practices and accurately present and reflect in all material respects all of the transactions and actions therein described.

 

(c)           The Company and its Subsidiaries do not have any Liabilities that would have, individually or in the aggregate, a Company Material Adverse Effect, except (i) as disclosed, reflected or reserved against in the most recent audited balance sheet or the notes thereto included in the Company SEC Documents filed prior to the date hereof, (ii) for Liabilities incurred in the ordinary course of business since the date of the most recent audited balance sheet included in the Company SEC Documents and not in violation hereof, (iii) Liabilities incurred in connection with the obligations of the Post-Sale Company for ongoing performance under any Company Contract set forth in the Company Disclosure Schedule that are not related to any breach or default thereunder and (iv) for Liabilities which were incurred in connection with the negotiation of this Agreement, any Ancillary Agreement or any of the Related Transaction Agreements.

 

Section 4.8                      Controls and Procedures.  The Company has established and maintains disclosure controls and procedures and internal control over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act.  The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed in the Company’s reports filed or furnished under the Exchange Act is recorded, processed, summarized and reported within the required time periods and that all such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act.  The Company’s management has completed an assessment of the effectiveness of the Company’s disclosure controls and procedures and, as of their respective filing dates or, if amended, as of the date of the last amendment prior to the date hereof, to the extent required by applicable Law, has presented in any applicable Company SEC Document that is a report on Form 10-K or Form 10-Q or any amendment thereto its conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by such report or amendment based on such evaluation.  The Company’s management has completed an assessment of the effectiveness of the Company’s internal control over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act for the year ended December 31, 2009, and a description of such assessment is set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed prior to the date hereof.  The Company has disclosed, based on its most recent evaluation of internal control over financial reporting, to the Company’s outside auditors and the audit committee of the Company’s Board of Directors (i) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial data and (ii) to the knowledge of the Company, any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

 

Section 4.9                      Absence of Certain Changes or Events.

 

(a)           Since December 31, 2009, (i) the businesses of the Company and its Subsidiaries have been conducted in the ordinary course of business consistent with past practice, and (ii) there has not been any event, change, effect, development, state of facts, condition, circumstance or occurrence that has had or would have, individually or in the aggregate, a Company Material Adverse Effect.

 

(b)           Since December 31, 2009 through the date of this Agreement, neither the Company nor any of its Subsidiaries has taken any action that, if taken after the date hereof, would constitute a breach of or require a consent under Section 6.1(a)(iii), 6.1(a)(vi), 6.1(a)(viii) or 6.1(a)(xv).

 

Section 4.10                      Absence of Litigation.

 

(a)           There is no claim, action, suit, proceeding, investigation, arbitration, audit or hearing (each, a “Proceeding”) pending or, to the knowledge of the Company, threatened against the Company, any of its Subsidiaries or any present or former officer, director or employee (in their capacity as such) of the Company or any of its Subsidiaries by or before any arbitrator or Governmental Authority, in each case as would have, individually or in the aggregate, a Company Material Adverse Effect. There are no Orders outstanding against the Company, any of its Subsidiaries or any present or former officer, director or employee (in their capacities as such) that would be material to the Post-Sale Company and as of the date hereof, there is no Proceeding pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries that seeks to prevent, hinder, modify, delay or challenge any of the Transactions.

 

(b)           (i) As of the date hereof and (ii) after the date hereof, none of the Company, the Depositor, any Securitization Trust or any Other Securitization Trust has received any notice or other communication from any Governmental Authority, any party to a Securitization Basic Document or Other Securitization Basic Document, any holder of, or holder of a beneficial interest in, any note issued under a Securitization Indenture or in connection with the Other Securitization Basic Documents, any issuer of a Student Loan Insurance Policy or any Rating Agency in connection with this Agreement, the Related Transaction Agreements or the Transactions, or from any person alleging that the consent of such person is or may be required in connection herewith or therewith and there are no material Proceedings commenced or, to the knowledge of the Company, threatened against or involving such person or any of its Subsidiaries, other than, in the case of clause (ii), any such alleged consent that, if not obtained, or Proceeding that has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect.

 

Section 4.11                      Employee Benefit Plans.

 

(a)           Section 4.11(a) of the Company Disclosure Schedule contains a true and complete list of each material Benefit Plan.  All “employee benefit plans” within the meaning of Section 3(3) of ERISA, and all stock purchase, stock option, severance, employment, consulting, change-in-control, fringe benefit, welfare benefit, bonus, incentive, retention, tax gross up, deferred compensation, pension benefit, educational assistance and all other employee benefit plans, agreements, programs, policies, commitments or arrangements, whether or not subject to ERISA, in each case in which any Company Employee participates, or has any present or future right to benefits, or to which any Company Employee is a party are collectively referred to as the “Benefit Plans.”  Any Benefit Plan sponsored by the Company or any of its Subsidiaries are collectively referred to as the “Company Benefit Plans.”

 

(b)           Buyer has received, with respect to each Company Benefit Plan, to the extent applicable, complete copies of (i) all plan documents and agreements and related trust agreements or other funding vehicles, (ii) the most recent summary plan descriptions, (iii) summaries of any Company Benefit Plans for which there is not a plan documents and (iv) the most recent determination or opinion letter issued by the IRS with respect to each Company Benefit Plan that is intended to be a “qualified plan” under Section 401 of the Code.

 

(c)           No Liability under Title IV, Section 302 of ERISA or Section 412 of the Code has been incurred by the Company or any entity, whether or not incorporated, that together with the Company would be deemed a “single employer” within the meaning of Section 414 of the Code or Section 4001(b) of ERISA (an “ERISA Affiliate”) that has not been satisfied in full, and no condition exists that presents a material risk to the Company or any ERISA Affiliate of the Company of incurring any such Liability, other than Liability for premiums due the Pension Benefit Guaranty Corporation (which premiums have been paid when due).  The Pension Benefit Guaranty Corporation has not instituted Proceedings to terminate any Benefit Plan, and no condition exists that would reasonably be expected to result in such Proceedings being instituted.  Neither the Company nor any of its ERISA Affiliates have ever contributed, or been obligated to contribute, to a “multiemployer plan” (within in the meaning of Section 3(37) of ERISA) at any time.

 

(d)           Each Company Benefit Plan has been operated in material compliance with its terms and the requirements of applicable Law, including ERISA and the Code.  Each Benefit Plan which is intended to qualify under Code Section 401(a) has been maintained in a manner intended to remain so qualified and nothing has occurred with respect to the operation of each such Benefit Plan which would result in the loss of such qualification.

 

(e)           There are no Proceedings, other than routine claims for benefits, or Liens pending or, to the knowledge of the Company, threatened with respect to any Benefit Plan as to which the Company or any of its Subsidiaries has or could reasonably be expected to have any material Liability.

 

(f)           Except as set forth on Section 4.11(f) of the Company Disclosure Schedule, neither the execution and delivery of this Agreement, the Ancillary Agreements or any of the Related Transaction Agreements, nor the consummation of the transactions contemplated hereby or thereby, will (i) result in any payment becoming due to any Company Employee, (ii) increase any benefits otherwise payable to any Company Employee under any Benefit Plan or (iii) result in the acceleration of the time of payment or vesting of any such benefits to any Company Employee under any such plan, in all such events, which would otherwise not have been due, increased or accelerated had this Agreement, the Ancillary Agreements and the Related Transaction Agreements not been executed.

 

(g)           Except as set forth on Section 4.11(g) of the Company Disclosure Schedule, no Benefit Plan entitles any Company Employee or beneficiary thereof to any retiree medical or other retiree welfare benefits, except as specifically required by the continuation requirements of Part 6 of Title I of ERISA.

 

(h)           Except as set forth on Section 4.11(h)(i) of the Company Disclosure Schedule, there are no Company Benefit Plans.  Except as set forth on Section 4.11(h)(ii) of the Company Disclosure Schedule, following the Effective Time, the Company and its Subsidiaries shall not have any Liability with respect to any (A) Benefit Plan that is not a Company Benefit Plan or (B) employee benefits or employee benefit or compensation plan, program, agreement or arrangement maintained or sponsored or otherwise contributed to by CBNA of any Affiliate of CBNA that would be a Benefit Plan but for the fact that no Company Employee is a party to, participates in or is entitled to present or future benefits from, such plan, program, agreement or arrangement.

 

(i)           Each Benefit Plan that is a nonqualified deferred compensation plan within the meaning of Section 409A of the Code has been administered, operated and maintained with respect to the Company Employees according to the requirements of Section 409A of the Code, and, as applied to the Company Employees, the terms of the written plan document of each such Benefit Plan comply in all respects with Section 409A of the Code, except, in each case, where any such failure would not reasonably be expected to result in material liability to the Company or the Company Employee.  Neither the Company nor any of its Subsidiaries has been required to withhold or pay any Taxes as a result of a failure to comply with Section 409A of the Code.  No person is entitled to receive any additional payment from the Company or any of its Subsidiaries as a result of the imposition of a Tax under Section 409A of the Code.

 

Section 4.12                      Labor Matters.

 

(a)           There is no Proceeding pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries under, nor any Order to which the Company or any of its Subsidiaries are subject that concerns, the Fair Labor Standards Act of 1938 (or under any state or local wage and hour Law) that affects the Company Employees, nor is there any basis for any of the same, in each case as has had or would have, individually or in the aggregate, a Company Material Adverse Effect.

 

(b)           With respect to the Company Employees, (i) none of the Company or any of its Subsidiaries is or has been a party to or bound by any collective bargaining agreement with a labor union or organization, (ii) no labor union, labor organization or group of employees has made a demand for recognition or certification and (iii) none of the Company or any of its Subsidiaries is or has been a party to, affected by, or, to the knowledge of the Company, threatened, with any labor strike, work stoppage, slowdown, walkout or lockout or any dispute or controversy with a union or with respect to unionization or collective bargaining.

 

(c)           The Company and its Subsidiaries are and have been in compliance in all material respects with all Laws and Orders relating to wage payments and the collection and payment of withholding Taxes, social security Taxes and other similar Taxes, except as has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect.

 

(d)           All Company Employees working in the United States are authorized to work in the United States and a Form I-9 has been properly completed and retained with respect to each Company Employee and former employee of the Company or any of its Subsidiaries as required by applicable Law, except as has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect.

 

(e)           All Company Employees working in countries outside of the United States are authorized to work in such countries and the necessary immigration approvals have been obtained with respect to each such Company Employee and former employee of the Company or any of its Subsidiaries as required by applicable Law, except as has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect.

 

(f)           The Company and its Subsidiaries are and have been in material compliance in all material respects with the requirements of the WARN Act and have no Liabilities or unfulfilled notice obligations pursuant to the WARN Act.  Neither the Company nor any of its Subsidiaries has taken any action that would cause any of them to have any Liability thereunder, except as has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect.

 

Section 4.13                      Trademarks, Patents and Copyrights.

 

(a)         Section 4.13(a) of the Company Disclosure Schedule contains a list and description (showing in each case the registered or other owner, expiration date and registration or application number, if any) of all applications or registrations for Copyrights, Patent Rights and Trademarks owned by the Company or any of its Subsidiaries, in each case, as of the date listed on Section 4.13(a) of the Company Disclosure Schedule.

 

(b)         Section 4.13(b) of the Company Disclosure Schedule contains a list of all material Software owned or directly used by the Company or any of its Subsidiaries and that is used in connection with the Post-Sale Business, provided that Section 4.13(b) of the Company Disclosure Schedule need not list mass market Software licensed to the Company or any of its Subsidiaries that is commercially available and subject to “shrink wrap” or “click through” license agreements.

 

(c)         Section 4.13(c) of the Company Disclosure Schedule contains a list of all (i) material Contracts to which the Company or any of its Subsidiaries is a party that relate to Software and/or Intellectual Property owned by a third party and used in connection with the Post-Sale Business, and (ii) material Contracts pursuant to which the Company or any of its Subsidiaries grants to a third party a right to use any Trade Secrets or any of the Intellectual Property or Software required to be identified in Section 4.13(a) or Section 4.13(b) of the Company Disclosure Schedule.

 

(d)         Except as disclosed in Section 4.13(d) of the Company Disclosure Schedule, the Company or a Subsidiary of the Company either:  (i) owns the entire right, title and interest in and to the Intellectual Property and Software used by the Company or such Subsidiary, free and clear of any Lien (other than Permitted Liens); or (ii) has the valid and enforceable right to use the same as the same is necessary to be used by the Company and its Subsidiaries in connection with the Post-Sale Business.  Except as set forth in Section 4.13(d) of the Company Disclosure Schedule, the Company or a Subsidiary of the Company is listed in the records of the appropriate United States, state or non-U.S. registry as the sole current owner of record for each application or registration required to be identified in Section 4.13(a) of the Company Disclosure Schedule as being owned by the Company or any of its Subsidiaries.

 

(e)         Except as disclosed in Section 4.13(e) of the Company Disclosure Schedule:  (i) all registrations for Copyrights, Patent Rights and Trademarks required to be identified in Section 4.13(a) of the Company Disclosure Schedule as being owned by the Company or any of its Subsidiaries are valid and in force, and all applications to register any unregistered Copyrights, Patent Rights and Trademarks so identified are pending and in good standing, all without challenge of any kind with respect to the applicable registration process; (ii) the material Intellectual Property owned by the Company and its Subsidiaries and used in connection with the Post-Sale Business has not been cancelled or abandoned and is, to the Company’s knowledge, valid and enforceable; (iii) the Company or one of its Subsidiaries has the sole and exclusive right to bring actions for infringement, misappropriation, dilution, violation or unauthorized use of the Intellectual Property and Software owned by the Company or any of its Subsidiaries, and to the knowledge of the Company, there is no basis for any such action; (iv) the Company and its Subsidiaries have taken all commercially reasonable actions to protect the Intellectual Property owned by the Company or any of its Subsidiaries; and (v) neither the Company nor any of its Subsidiaries is in material breach of any agreement with respect to the Intellectual Property licensed by the Company or any of its Subsidiaries and has not taken any action that would impair or otherwise adversely affect its rights in such licensed Intellectual Property.

 

(f)         Except as has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect, or as disclosed in Section 4.13(f) of the Company Disclosure Schedule:  (i) the conduct of the business of the Company and its Subsidiaries does not infringe upon, misappropriate or otherwise violate any Intellectual Property of another person; (ii) no claim of any infringement, misappropriation, violation or dilution of any Intellectual Property of any other person has been made or asserted in writing in respect of the operations of the Company or any of its Subsidiaries (that has not been settled or otherwise fully resolved without material ongoing obligations or restrictions); (iii) no claim of invalidity of any Intellectual Property owned by the Company or any of its Subsidiaries has been made in writing by any other person (that has not been settled or otherwise fully resolved without material ongoing obligations or restrictions); (iv) no proceedings are pending or, to the knowledge of the Company, threatened that challenge the validity, ownership or use of any Intellectual Property owned by the Company or any of its Subsidiaries; and (v) neither the Company nor any of its Subsidiaries has had written notice of or, knowledge of any basis for, a claim against the Company or any of its Subsidiaries that the operations, activities, products, Software, equipment, machinery or processes used by the Company or any of its Subsidiaries infringe, misappropriate, violate or dilute any Intellectual Property of any other person.

 

(g)         Except as disclosed in Section 4.13(g) of the Company Disclosure Schedule:  (i) the Company and its Subsidiaries have maintained and protected the Software that each owns (the “Owned Software”) and such Owned Software operates in all material respects in accordance with and conforms in all material respects to any relevant specifications, manuals, guides, descriptions and other similar documentation, in written or electronic form; (ii) the Owned Software does not incorporate any Software that is licensed pursuant to a so called “open source” license in a manner that would require disclosure and licensing to third parties of the Company’s proprietary components of such Owned Software; (iii) the Company or one of its Subsidiaries has complete and exclusive right, title and interest in and to the Owned Software; and (iv) the Owned Software complies with all applicable Laws relating to the export or re-export of the same.

 

(h)         Except as disclosed in Section 4.13(h) of the Company Disclosure Schedule, to the knowledge of the Company, all employees, agents, consultants or contractors who have contributed to or participated in the creation or development of any material Intellectual Property or material Software on behalf of the Company, any Subsidiary of the Company or any predecessor in interest thereto either:  (i) created such materials in the scope of his or her employment; (ii) is a party to a “work-for-hire” agreement under which the Company or such Subsidiary is deemed to be the owner of all right, title and interest therein; or (iii) has executed an assignment in favor, as applicable, of the Company or such Subsidiary (or such predecessor in interest, as applicable) of all right, title and interest in such material.

 

(i)         Except as disclosed in Section 4.13(i) of the Company Disclosure Schedule:  (i) the Company and each Subsidiary of the Company has taken commercially reasonable steps to prevent the unauthorized disclosure or use of Trade Secrets of the Company and its Subsidiaries (except with respect to disclosure to one another, where applicable); (ii) the Company’s and its Subsidiaries’ employee handbook requires that Trade Secrets of the Company and its Subsidiaries be kept confidential, and such employee handbook further requires each individual to provide a signed acknowledgment of his or her receipt of such handbook; (iii) there is no material breach by the Company or any of its Subsidiaries under, and to the knowledge of the Company, no material breach by any other party to, any non-disclosure agreement pertaining to any such material Trade Secret; and (iv) to the knowledge of the Company, there has been no unauthorized material disclosure or use by employees, consultants, officers, directors, or agents of Trade Secrets of the Company and its Subsidiaries.

 

(j)         Except as disclosed in Section 4.13(j) of the Company Disclosure Schedule:  (i) the IT Assets owned by the Company operate and perform in all material respects in accordance with their documentation and functional specifications and otherwise as required by the Company and its Subsidiaries in connection with their respective businesses; (ii) to the knowledge of the Company, no person has gained unauthorized access to the IT Assets; (iii) the Company has implemented reasonable backup and disaster recovery technology consistent with industry practices; (iv) the Company takes commercially reasonable measures, directly or indirectly, to ensure the confidentiality, privacy and security of customer, employee and other confidential information; and (v) to the knowledge of the Company, the Company has complied in all material respects with (A) all applicable Laws regarding data protection and the privacy and security of personal information and (B) its privacy policy or commitment to customers and consumers.

 

Section 4.14                      Taxes.  Except as otherwise disclosed on Section 4.14 of the Company Disclosure Schedule:

 

(a)           all material Tax Returns required to be filed by or with respect to the Company or its Subsidiaries have been prepared and timely filed (taking into account any extension of time within which to file properly obtained), and, except as set forth in Section 4.14(a) of the Company Disclosure Schedule, all such Tax Returns (taking into account all amendments thereto) are complete and accurate insofar as they relate solely to the Company or its Subsidiaries;

 

(b)           all Taxes (whether or not shown on any Tax Return) payable by or with respect to the Company or any of its Subsidiaries have been paid, except to the extent being contested in good faith, and Schedule 4.14(a) of the Company Disclosure Schedule lists any such Taxes being contested to the extent the resolution of such contest could result in the Company having a direct Liability for Taxes after the Closing Date and includes the amount for which the Company could be liable as a result of such contest;

 

(c)           none of the Company, any of its Subsidiaries, or any Affiliate thereof has received written notice of any pending Proceedings, and there are presently no Proceedings, in each case, other than Proceedings that relate to the consolidated, combined, affiliated or unitary group of which the Company and CBNA are members, in respect of any Taxes of the Company or any of its Subsidiaries;

 

(d)           to the knowledge of the Company, no claim has ever been made in writing by a Governmental Authority in a jurisdiction where the Company or any of its Subsidiaries has never paid Taxes or filed Tax Returns asserting that the Company or such Subsidiary is or may be subject to material Taxes assessed by such jurisdiction;

 

(e)           all deficiencies asserted or assessments made as a result of any examination of the Tax Returns referred to in Section 4.14(a), to the extent relating to Taxes for which the Company could have direct Liability after the Closing Date, have been paid in full or are disclosed in Section 4.14(b) of the Company Disclosure Schedule;

 

(f)           there are no Tax rulings, requests for rulings, or closing agreements relating to the Company or any of its Subsidiaries that could materially affect the Company’s or any of its Subsidiaries’ Liability for Taxes for any taxable period ending after the Closing Date;

 

(g)           the Tax Agreement, dated as of December 22, 1992 between CBNA and the Company, is the only Tax sharing agreement or Tax indemnity arrangement relating to the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries is a party (other than this Agreement and the Indemnification Agreement);

 

(h)           all Taxes which the Company or any of its Subsidiaries are required by law to withhold or to collect for payment have been duly withheld and collected and have been paid to the appropriate Governmental Authority;

 

(i)           neither the Company nor any of its Subsidiaries has been a member of any affiliated, consolidated, unitary or combined group other than each such group which it is a member as of the date hereof;

 

(j)           neither the Company nor any of its Subsidiaries has any Liability for Taxes of another Person under Treasury Regulation § 1.1502-6 (or any similar provision of state, local or foreign Law), other than as a result of being a member of such a group of which it is a member as of the date hereof or as transferee or successor;

 

(k)           neither the Company nor any of its Subsidiaries has participated in a “listed transaction” within the meaning of Treasury Regulation § 1.6011-4(b)(2) requiring disclosure to the IRS;

 

(l)           during the last three years, neither the Company nor any of its Subsidiaries has been a party to any transaction treated by the parties thereto as one to which Section 355 of the Code (or any similar provision of state, local or foreign Law) applied; and

 

(m)           there are no Liens (other than Permitted Liens) for Taxes on any of the assets of the Company or any of its Subsidiaries.

 

Section 4.15                      Properties; Assets.

 

(a)           None of the Company or any of its Subsidiaries owns any real property. With respect to the real property leased or subleased by the Company or its Subsidiaries (the “Leased Real Property”), except as has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect, (i) all of the leases and subleases under which the Company or any of its Subsidiaries is a tenant are in full force and effect, and the Company has delivered or otherwise made available to Buyer prior to the date hereof true and correct copies of such leases and subleases (including all amendments, supplements and modifications thereto), (ii) the Company or one of its Subsidiaries has a valid leasehold interest in the Leased Real Property and (iii) none of the Company, its applicable Subsidiaries or, to the knowledge of the Company, any other party to such leases is in breach or violation or default under any lease or sublease relating to the Leased Real Property.

 

(b)           Except as has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect, the Company or one of its Subsidiaries has good and marketable title to, or a valid leasehold interest in, all of the Company’s and its Subsidiaries’ personal property and tangible assets (except personal property sold or otherwise disposed of since the date thereof in the ordinary course of business), free and clear of all Liens (other than Permitted Liens).

 

(c)           Without limiting Section 4.15(a) and Section 4.15(b), the Post-Sale Company or one of its Post-Sale Subsidiaries has, and immediately following the Closing will have, good and marketable title to, or a valid leasehold interest in, all of the Acquired Assets, free and clear of all Liens (other than Permitted Liens).

 

Section 4.16                      Material Contracts.

 

(a)           Section 4.16(a) of the Company Disclosure Schedule sets forth a list, as of the date hereof, of each of the following Contracts to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or any of their assets or businesses are bound (and any amendments, supplements and modifications thereto), in each case, relating to the Post-Sale Company or to which the Post-Sale Company will be subject or bound (the “Company Material Contracts”):

 

(i)           any Contract that is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the Exchange Act;

 

(ii)           any employment Contract;

 

(iii)           any collective bargaining agreement or other Contract with any labor organization, union or association;

 

(iv)           any risk-sharing Contract with any school;

 

(v)           any Contract that limits in any material respect the ability of the Company or any of its Subsidiaries (or, following the consummation of the Transactions, would limit in any material respect the ability of Buyer or any of its Subsidiaries, including the Surviving Corporation) to compete in any line of business or with any person or in any geographic area;

 

(vi)           any Contract with a Related Party or that would be required to be disclosed pursuant to Item 404 of Regulation S-K of the Exchange Act;

 

(vii)           any Contract for the lease of real property by the Company or any of its Subsidiaries that by its terms calls for aggregate annual rent payments of more than $250,000 by the Company and its Subsidiaries;

 

(viii)           any Contract or series of related Contracts relating to Indebtedness, other than the Omnibus Credit Agreement;

 

(ix)           any Contract for any joint venture, partnership or similar arrangement, or any Contract involving a sharing of revenues, profits, losses, costs, or Liabilities by the Company or any of its Subsidiaries with any other person;

 

(x)           any Contract that (A) grants any exclusive rights to make, sell or distribute the Company’s or any of its Affiliates (including Buyer and its Affiliates after Closing) products or services, (B) grants “most favored nation” status or equivalent preferential pricing terms to any other person, (C) contains “requirements” provisions or other provisions obligating the Company or any of its Subsidiaries to purchase or obtain a minimum or specified amount of any product or service from any person in excess of $500,000 in any fiscal year, (D) contains minimum sales or volume provisions in excess of $500,000 in any fiscal year or (E) involves the obligation or potential obligation of the Company or any Company Subsidiary to make any “earn-out” or similar payments to any person; or

 

(xi)           any other Contract not otherwise required to be disclosed pursuant to this Section 4.16(a) that has an aggregate payment obligation to any person in excess of $500,000 and is not terminable by the Company or any of its Subsidiaries by notice of not more than 60 days.

 

(b)           The Company or the applicable Subsidiary of the Company has performed all obligations required to be performed by it under the Company Material Contracts, and neither the Company nor any Subsidiary of the Company is in breach of or default under the terms of any Company Material Contract, except where such failure to perform or such breach or default has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect.  Neither the Company nor any Subsidiary has received any written notice from any counterparty to any Company Material Contract that such counterparty intends to terminate such Company Material Contract where such termination would have a Company Material Adverse Effect.  To the Company’s knowledge, each other party to the Company Material Contracts has performed all obligations required to be performed by it under the Company Material Contracts, and no other party to any Company Material Contract is in breach of or default under the terms of any Company Material Contract, except where such failure to perform or such breach or default has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect.  Each Company Material Contract is a valid and binding obligation of the Company or its Subsidiaries, enforceable in accordance with its terms, and, to the knowledge of the Company, is in full force and effect, except as has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect or except as may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general applicability relating to or affecting creditors’ rights, and to general equitable principles.  True and complete copies of all Company Material Contracts, together with all amendments, supplements and modifications thereto, have been made available to Buyer prior to the date hereof.

 

Section 4.17                      Insurance Policies.

 

(a)           Section 4.17(a) of the Company Disclosure Schedule sets forth a true and complete list of (i) each insurance policy, in force as of the date hereof, issued by a third party insurance company to the Company to provide insurance coverage for the Trust Student Loans owned by the Securitization Trusts, including any supplements, program manuals, underwriting manuals, endorsements, declarations, riders and commitment letters in connection therewith (the “Student Loan Insurance Policies”) and (ii) each other material insurance policy to which the Company or any of its Subsidiaries is a party (the “Commercial Insurance Policies”).

 

(b)           All premiums due and payable related to the Student Loan Insurance Policies have been paid.  All premiums due and payable related to the Commercial Insurance Policies have been paid, other than where any non-payment has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect.  Neither the Company nor any of its Subsidiaries (i) has any claims under review, in dispute or unpaid by any issuer of any Student Loan Insurance Policy or Commercial Insurance Policy with respect to such Student Loan Insurance Policy or Commercial Insurance Policy, as the case may be, (ii) has received written notice of any cancellation, termination or revocation or other written notice that any such Student Loan Insurance Policy or Commercial Insurance Policy is no longer in full force or effect or that the issuer of any Student Loan Insurance Policy or Commercial Insurance Policy is not willing or able to perform its obligations thereunder or (iii) is in breach of or default under the terms of any Student Loan Insurance Policy or Commercial Insurance Policy, in each case, except as has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect.  True and complete copies of all Student Loan Insurance Policies and Commercial Insurance Policies, together with all amendments, supplements and modifications thereto, have been made available to Buyer prior to the date hereof.

 

(c)           The execution and delivery of this Agreement, the Ancillary Agreements and the Related Transaction Agreements by the Company do not and will not, the performance of this Agreement, the Ancillary Agreements and the Related Transaction Agreements by the Company will not, and the consummation by the Company of the Transactions will not, (i) require any consent, approval, authorization, waiver or permit of, or filing or registration with or notification to any issuer of any Student Loan Insurance Policy or Commercial Insurance Policy, (ii) result in any breach of, or constitute a default (with or without notice or lapse of time or both) under, any Student Loan Insurance Policy or Commercial Insurance Policy, (iii) give the issuer of any Student Loan Insurance Policy or Commercial Insurance Policy the right to cancel, terminate or revoke such Student Loan Insurance Policy or Commercial Insurance Policy, reduce the coverage provided thereunder, or otherwise provide such issuer with a right or defense to deny payment of any claim or performance of any obligation under or in connection therewith, (iv) cause any Student Loan Insurance Policy or Commercial Insurance Policy to cease to be in full force and effect or (v) entitle the issuer of any Student Loan Insurance Policy or Commercial Insurance Policy to charge additional premiums or other amounts in respect thereof.

 

(d)           Except as set forth in Section 4.17(d) of the Company Disclosure Schedule, any Trust Student Loan that is purported to be insured under a Student Loan Insurance Policy was underwritten and has been serviced and otherwise managed in all material respects in accordance with the requirements of the applicable Student Loan Insurance Policy, including any applicable program or underwriting manual.

 

Section 4.18                      Transactions with Related Parties.  Except as set forth in Section 4.18 of the Company Disclosure Schedule and except for any Related Transaction Agreements and Ancillary Agreements, no Related Party (i) has borrowed money from or loaned money to the Company or any of its Subsidiaries that will be outstanding after the Effective Time, (ii) has any ownership interest in any property or asset necessary for or primarily used by the Post-Sale Company or any Post-Sale Subsidiary in the conduct of its business or (iii) is a party to any Contract under which the Post-Sale Company will have any Liabilities.  For purposes of this Agreement, “Related Party” means any director, officer or Affiliate of the Company or any of its Subsidiaries, and if any such person is a natural person, any member of the immediate family of any such natural person.

 

Section 4.19                      Post-Sale Company Assets and Liabilities.  As of the Closing Date, after giving effect to the FFELP Transaction and the CBNA Transaction, the Company and its Subsidiaries will have no assets other than the Acquired Assets and no Liabilities other than the Retained Liabilities and the Excluded Liabilities.  As of the Closing Date, the Acquired Assets will, together with the services to be provided under the Subservicing Letter Agreement and the Transition Agreements (other than any services that would be captured under the headings “Citibank Excluded Services” and “Additional Services” in the term sheet attached as Exhibit F hereto), constitute all of the assets, properties and services necessary for the conduct of the Post-Sale Business in substantially the same manner as conducted immediately prior to the Closing.

 

Section 4.20                      Opinion of Financial Advisors.  The Special Committee has received the written opinion of Moelis & Company LLC on or prior to the date of this Agreement, to the effect that, as of the date of such opinion, the Merger Consideration to be received by the holders of Company Common Stock pursuant to this Agreement is fair from a financial point of view to such holders (other than Citigroup Inc. and its Affiliates).

 

Section 4.21                      Anti-Takeover Statutes.  The Company has taken all action necessary to exempt the Merger, this Agreement, the Voting and Support Agreement, the Related Transaction Agreements and the transactions contemplated hereby and thereby from the provisions of Section 203 of the DGCL, and such action remains in effect.  No other state takeover, “moratorium,” “fair price,” “business combination” or similar statute or regulation under any applicable Law is applicable to the Merger, any of the other transactions contemplated by this Agreement, the Voting and Support Agreement or any of the Related Transactions.

 

Section 4.22                      Vote Required.  The Requisite Stockholder Approval is the only vote of holders of securities of the Company that is necessary to approve this Agreement, the FFELP Transaction Agreement and the transactions contemplated by this Agreement and the FFELP Transaction Agreement.

 

Section 4.23                      Brokers.  No broker, finder or investment banker (other than Moelis & Company LLC) is entitled to any brokerage, finder’s or other fee or commission in connection with this Agreement, the Ancillary Agreements, the Related Transaction Agreements or the Transactions based upon arrangements made by or on behalf of the Company.

 

Section 4.24                      Trust Certificates.  The Company has, and immediately following the Closing will have, good and marketable title to the Trust Certificate with respect to each Securitization Trust, free and clear of all Liens (other than Liens granted under the Omnibus Credit Agreement that shall be released on the Closing Date) and no right of rescission, offsets, defenses or counterclaims have been asserted or threatened with respect to such Trust Certificates.

 

Section 4.25                      Securitization Trusts.

 

(a)           Section 4.25(a) of the Company Disclosure Schedule is a true, correct and complete list of all existing Securitization Basic Documents with respect to each Securitization Trust.  True, correct and complete copies of all such Securitization Basic Documents have been made available to Buyer prior to the date hereof.

 

(b)           Each Securitization Basic Document to which the Company, the Depositor, any Securitization Trust or any of their Affiliates is a party is a legal, valid and binding obligation of such person and, to the knowledge of the Company, each other party to such Securitization Basic Document, and is enforceable against the Company, the Depositor, such Securitization Trust and such Affiliate and, to the knowledge of the Company, each such other party in accordance with its terms (except in each case as may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general applicability relating to or affecting creditors’ rights, and to general equitable principles), and none of the Company, the Depositor, any Securitization Trust or any of their Affiliates or, to the knowledge of the Company, any other party to a Securitization Basic Document, is in default or breach or has failed to perform any obligation under a Securitization Basic Document, and to the knowledge of the Company, there does not exist any event, condition or omission that would constitute such a breach or default (whether by lapse of time or notice or both).

 

(c)           Neither the Company or any of its Affiliates has received any notice or communication from any person asserting that any provision of a Securitization Basic Document (i) is not effective or is not a legally valid, binding and enforceable obligation of any party thereto or (ii) that any party to a Securitization Basic Documents is in default or breach or has failed to perform any obligation under a Securitization Basic Document.

 

(d)           The execution and delivery of this Agreement, the Ancillary Agreements and the Related Transaction Agreements by the Company do not and will not, the performance of this Agreement, the Ancillary Agreements and the Related Transaction Agreements by the Company will not, and the consummation by the Company of the Merger, the Related Transactions and the other transactions contemplated by this Agreement, the Ancillary Agreements and the Related Transaction Agreements will not, (i) require any consent, approval, authorization, waiver or permit of, or filing with or notification to any party to a Securitization Basic Document, any holder of, or holder of a beneficial interest in, any note issued under a Securitization Indenture or any Rating Agency for the purpose of rating any Securitization Notes, (ii) result in any breach of, or constitute a default (with or without notice or lapse of time, or both) under, or give rise to any right of termination, amendment, modification, acceleration, cancellation of, or any right of acceleration or cancellation or modification of any benefit or obligation under, any Securitization Basic Document or (iii) cause any provision of any Securitization Basic Document to cease to be in full force and effect.

 

(e)           The Company and the Securitization Trusts have filed with the SEC all forms, documents, reports, schedules and statements required to be filed or furnished with the SEC for each Securitization Trust, together with any amendments, restatements or supplements thereto (the “Securitization Trust SEC Documents”).  As of their respective dates, or, if amended or restated, as of the date of the last such amendment or applicable subsequent filing prior to the date of this Agreement, each of the Securitization Trust SEC Documents complied, and each of the Securitization Trust SEC Documents to be filed subsequent to the date hereof will comply, in all material respects with the requirements of the Exchange Act or the Securities Act, as the case may be, and the applicable rules and regulations promulgated thereunder, and none of the Securitization Trust SEC Documents at the time they were filed, or will be filed, as the case may be, or, if amended or restated, as of the date of the last such amendment or applicable subsequent filing prior to the date of this Agreement, contained, or will contain, any untrue statement of a material fact or omitted, or will omit, to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, or are to be made, not misleading.  The Company has not received any notification regarding the continued effectiveness of the Depositor’s existing shelf registration statement and, as holder of the Trust Certificates, it has not directed or assigned any right to distributions from the related Securitization Trust to a third person.

 

Section 4.26                      Other Securitization Basic Documents.

 

(a)           Section 4.26(a) of the Company Disclosure Schedule sets forth a true, correct and complete list of all existing Other Securitization Basic Documents with respect to each Other Securitization Trust.  True, correct and complete copies of all such Other Securitization Basic Documents have been made available to Buyer prior to the date hereof.

 

(b)           Section 4.26(b) of the Company Disclosure Schedule sets forth a true, correct and complete list of all existing Other Securitization Basic Documents to which the Company shall remain a party immediately after the Effective Time with respect to each Other Securitization Trust.

 

(c)           Each Other Securitization Basic Document to which the Company, the Depositor, any Other Securitization Trust or any of their Affiliates is a party is a legal, valid and binding obligation of such person and, to the knowledge of the Company, each other party to such Other Securitization Basic Document, and is enforceable against the Company, the Depositor, such Other Securitization Trust and such Affiliate and, to the knowledge of the Company, each such other party in accordance with its terms (except in each case as may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general applicability relating to or affecting creditors’ rights, and to general equitable principles), and none of the Company, the Depositor, any Other Securitization Trust or any of their Affiliates or, to the knowledge of the Company, any other party to an Other Securitization Basic Document, is in default or breach or has failed to perform any obligation under an Other Securitization Basic Document, and, to the knowledge of the Company, there does not exist any event, condition or omission that would constitute such a breach or default (whether by lapse of time or notice or both).

 

(d)           Neither the Company nor any of its Affiliates has received any notice or communication from any person asserting that any provision of an Other Securitization Basic Document (i) is not effective or is not a legally valid, binding and enforceable obligation of any party thereto or (ii) that any party to an Other Securitization Basic Document is in default or breach or has failed to perform any obligation under an Other Securitization Basic Document.

 

(e)           The execution and delivery of this Agreement, the Ancillary Agreements and the Related Transaction Agreements by the Company do not and will not, the performance of this Agreement, the Ancillary Agreements and the Related Transaction Agreements by the Company will not, and the consummation by the Company of the Merger, the Related Transactions and the other transactions contemplated by this Agreement, the Ancillary Agreements and the Related Transaction Agreements will not, (i) require any consent, approval, authorization, waiver or permit of, or filing with or notification to any party to a Other Securitization Basic Document, any holder of, or holder of a beneficial interest in, any note issued under an Other Securitization Indenture or any Rating Agency rating any Other Securitization Trust (except for those set forth on Section 4.26(e) of the Company Disclosure Schedule which have been or will be obtained on or prior to the Closing Date), (ii) result in any breach of, or constitute a default (with or without notice or lapse of time, or both) under, or give rise to any right of termination, amendment, modification, acceleration, cancellation of, or any right of acceleration or cancellation or modification of any benefit or obligation under, any Other Securitization Basic Document or (iii) cause any provision of any Other Securitization Basic Document to cease to be in full force and effect.

 

Section 4.27                      Trust Student Loans.

 

(a)           Each Schedule of Trust Student Loans, dated March 31, 2010 and dated June 30, 2010, previously delivered to Buyer sets forth the Principal Balances of each of the Trust Student Loans as of March 31, 2010 and June 30, 2010, respectively, which balances, together with all of the other data and information contained in such Schedule of Trust Student Loans as of such date, were true and correct in all material respects as of such date.  Section 4.27(a) of the Company Disclosure Schedule accurately sets out a description of the meanings of the codes that are used in the Schedule of Trust Student Loans.  Each Schedule of Trust Student Loans includes all loans included in the Trust Student Loans with respect to each Securitization Trust as of the date thereof.

 

(b)           The Schedule of Trust Student Loans as of the Cut-Off Date will set forth the Principal Balances of the Trust Student Loans as of such date, which balances, taken together as a whole with all of the other data and information contained in the Schedule of Trust Student Loans as of the Cut-Off Date, will be true and correct in all material respects as of such date.

 

(c)           The Company affirms each of its representations and warranties set forth in Appendix A as of the date such representations and warranties were made with respect to the applicable Securitization Trust and Trust Student Loan.

 

(d)           Each Trust Student Loan (including all interest, fees and all other charges payable with respect to each Trust Student Loan) complies in all material respects with all applicable Laws, including usury, truth-in-lending, equal credit opportunity, foreign entity qualification or disclosure laws, and the Company and its Subsidiaries have complied in all material respects with such Laws to the extent applicable.

 

(e)           None of the Company, any of its Subsidiaries or any other person acting for or on behalf of the Company or any of its Subsidiaries has (i) made any modification, agreement or waiver, or reached any understanding with the borrower under any Trust Student Loan for any variation or modification of the interest rate, amortization schedule, principal amount thereof, or of any other term or condition of such Trust Student Loan other than in compliance with applicable Laws, or (ii) made any advance, extension or other accommodation to such borrower for purposes of changing or beneficially affecting the delinquency status of such Trust Student Loan or which otherwise materially impairs or adversely affects such Trust Student Loan other than in compliance with applicable Law.  There are no disbursement or funding obligations remaining under any Trust Student Loan.

 

(f)           Except as set forth in Section 4.27(f) of the Company Disclosure Schedule, no Student Loan has, prior to the date hereof, been purchased, repurchased or substituted by the Company or any of its Subsidiaries as a result of a breach of any representation, warranty or covenant contained in (i) any Securitization Basic Document or any Other Securitization Basic Document, (ii) a securitization transaction sponsored by a third party as to which the Company or any of its Subsidiaries has sold Student Loans or as to which the Company or any of its Subsidiaries is servicing or administering Student Loans or (iii) the sale of any Student Loans by the Company or any of its Subsidiaries to a third party.  For Student Loans that have been purchased, repurchased or substituted as a result of such breaches, Section 4.27(f) of the Company Disclosure Schedule sets forth the number and aggregate Principal Balance of the Student Loans affected thereby, and a statement indicating that such purchase, repurchase or substitution satisfied the Company’s or such Subsidiary’s obligation under the applicable agreement in full.  Neither the Company nor any of its Subsidiaries has received a request since January 1, 2007 through the date of this Agreement to purchase, repurchase or substitute any Student Loans as a result of a breach of any representation, warranty or covenant contained in any Securitization Basic Document or document relating to private student loan securitization as applicable that has not been satisfied, waived or withdrawn.

 

(g)           To the extent any Trust Student Loan is evidenced by an electronic promissory note, the Company complied (and has caused each Securitization Trust, the Depositor, any originator each servicer or sub-subservicer of such Trust Student Loan to comply) with all regulations and other requirements under applicable Law or adopted by the applicable issuer of a Student Loan Insurance Policy relating to the validity and enforceability of such promissory note.

 

Section 4.28                      Related Transaction Agreements.  True, correct and complete copies of all Related Transaction Agreements have been delivered to Buyer on or prior to the date hereof.  Each of the Signing Related Transaction Agreements, in the form so delivered, is in full force and effect and is a legal, valid and binding obligation of the parties thereto.  Each of the Closing Related Transaction Agreements, in the form so delivered, will be as of the Closing in full force and effect and a legal, valid and binding obligation of the parties thereto.  To the knowledge of the Company, as of the date hereof, no event has occurred which, with or without notice, lapse of time or both, could reasonably be expected to result in the failure of a condition to one of the Related Transaction Agreements to be satisfied.

 

Section 4.29                      No Other Representations or Warranties.  Except for the representations and warranties contained in this Article IV and in the Ancillary Agreements, neither the Company nor any other person on behalf of the Company or any of its Subsidiaries makes any express or implied representation or warranty with respect to the Company or any of its Subsidiaries or with respect to any other information provided to Buyer or Acquisition Sub in connection with the transactions contemplated hereby.

 

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF BUYER AND ACQUISITION SUB

 

Except as disclosed in the separate disclosure schedule which has been delivered by Buyer to the Company immediately prior to the execution of this Agreement (the “Buyer Disclosure Schedule”), which Buyer Disclosure Schedule shall be arranged in numbered and lettered sections corresponding to the numbered and lettered sections contained in this Article V (it being agreed that the disclosure of any item in any section of the Buyer Disclosure Schedule shall also be deemed to be disclosed with respect to any other section of the Buyer Disclosure Schedule to which the relevance of such item is reasonably apparent on the face of such disclosure), Buyer and Acquisition Sub hereby jointly and severally represent and warrant to the Company as follows:

 

Section 5.1                      Organization and Qualification.  Each of Buyer, Acquisition Sub and each of Buyer’s Subsidiaries is a corporation or other legal entity duly organized or formed, validly existing and in good standing under the laws of its jurisdiction of organization or formation and has the requisite corporate or other legal entity power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted.  Each of Buyer and its Subsidiaries is duly qualified or licensed as a foreign corporation or other legal entity to do business, and is in good standing, in each jurisdiction in which the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for such failures to be so qualified or licensed and in good standing as would not, individually or in the aggregate, reasonably be expected to prevent or materially delay or materially impair the ability of Buyer or any of its Subsidiaries to consummate the Merger and the other transactions contemplated by this Agreement.

 

Section 5.2                      Certificate of Incorporation and By-Laws.  Buyer has made available to the Company a complete and correct copy of the certificate of incorporation and the by-laws (or equivalent organizational documents), each as amended to date, of Buyer and Acquisition Sub.

 

Section 5.3                      Authority Relative to Agreement.  Each of Buyer and Acquisition Sub has all necessary corporate power and authority to execute and deliver this Agreement and the Ancillary Agreements to which it is a party, to perform its obligations hereunder and thereunder and to consummate the Merger and the other transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and the Ancillary Agreements by Buyer and Acquisition Sub, as applicable, and the consummation by Buyer and Acquisition Sub of the Merger and the other transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action of Buyer and Acquisition Sub (and, with respect to Acquisition Sub, by its sole stockholder), and no other corporate proceedings on the part of Buyer or Acquisition Sub are necessary to authorize the execution and delivery of this Agreement and the Ancillary Agreements to which it is a party or to consummate the Merger and the other transactions contemplated hereby and thereby (other than, with respect to the Merger, the filing of the Certificate of Merger with the Secretary of State).  This Agreement and the Ancillary Agreements have been (or at the time of the Closing, will be) duly and validly executed and delivered by Buyer and Acquisition Sub, as applicable, and, assuming the due authorization, execution and delivery by the Company, this Agreement and the Ancillary Agreements constitute (or, at the time of the Closing, will constitute) legal, valid and binding obligations of Buyer and Acquisition Sub, enforceable against Buyer and Acquisition Sub in accordance with their terms (except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar laws of general applicability relating to or affecting creditor’s rights, and to general equitable principles).

 

Section 5.4                      No Conflict; Required Filings and Consents.

 

(a)           The execution and delivery of this Agreement and the Ancillary Agreements by Buyer and Acquisition Sub do not and will not, and the performance of this Agreement and the Ancillary Agreements by Buyer and Acquisition Sub will not, and the consummation by Buyer and Acquisition Sub of the Merger and the other transactions contemplated by this Agreement and the Ancillary Agreements will not, (i) conflict with or violate the certificate of incorporation or by-laws (or equivalent organizational documents) of Buyer or Acquisition Sub, (ii) conflict with or violate any Law applicable to Buyer, Acquisition Sub or any of Buyer’s Subsidiaries or by which any property or asset of Buyer, Acquisition Sub or any of Buyer’s Subsidiaries is bound or affected, (iii) result in any breach of, or constitute a default (with or without notice or lapse of time, or both) under, or give rise to any right of consent, termination, amendment, modification, acceleration, cancellation or modification of any benefit or obligation under, or right to challenge any material note, bond, mortgage, indenture or credit agreement, or any other contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Buyer, Acquisition Sub, or any of Buyer’s Subsidiaries is a party or by which Buyer, Acquisition Sub or any of Buyer’s Subsidiaries or any property or asset of Buyer, Acquisition Sub, or any of Buyer’s Subsidiaries is bound or affected or (iv) result in the creation of a Lien, other than any Permitted Lien, on any property or asset of Buyer, Acquisition Sub, or any of Buyer’s Subsidiaries, other than, in the case of clauses (ii), (iii) and (iv) hereof, any such conflict, violation, breach, default, termination, amendment, acceleration, cancellation or Lien that would not, individually or in the aggregate, reasonably be expected to materially impair the ability of Buyer or any of its Subsidiaries to perform any of their obligations under this Agreement and the Ancillary Agreements or prevent or unreasonably delay the consummation of the Merger and the other transactions contemplated by this Agreement and the Ancillary Agreements.

 

(b)           The execution and delivery of this Agreement and the Ancillary Agreements by Buyer and Acquisition Sub do not (and at the time of the Closing, will not), the performance of this Agreement and the Ancillary Agreements by Buyer and Acquisition Sub will not, and the consummation by Buyer and Acquisition Sub of the Merger and the other transactions contemplated by this Agreement and the Ancillary Agreements will not, require any consent, approval, authorization, waiver or permit of, or filing with or notification to, any Governmental Authority or any other person, except for applicable requirements of the Exchange Act, Blue Sky Laws, the HSR Act, any applicable non-U.S. competition, antitrust or investment Laws, filing and recordation of appropriate merger documents as required by the DGCL, and except where failure to obtain such consents, approvals, authorizations, waivers or permits, or to make such filings or notifications, would not, individually or in the aggregate, reasonably be expected to materially impair the ability of Buyer or any of its Subsidiaries to perform any of their obligations under this Agreement and the Ancillary Agreements or prevent or unreasonably delay the consummation of the Merger and the other transactions contemplated by this Agreement and the Ancillary Agreements.

 

Section 5.5                      Absence of Litigation.  There is no Proceeding pending or, to the knowledge of Buyer, threatened against Buyer, Acquisition Sub or any of Buyer’s Subsidiaries or any present or former officer, director or employee (in their capacity as such) of Buyer, Acquisition Sub or any of Buyer’s Subsidiaries by or before any arbitrator or Governmental Authority, in each case as would, individually or in the aggregate, reasonably be expected to materially impair the ability of Buyer or any of its Subsidiaries to perform any of their obligations under this Agreement and the Ancillary Agreements or prevent or unreasonably delay the consummation of the Merger and the other transactions contemplated by this Agreement and the Ancillary Agreements.  There are no Orders outstanding against Buyer, Acquisition Sub, any of Buyer’s Subsidiaries or any present or former officer, director or employee (in their capacities as such) and there is no Proceeding pending or, to the knowledge of Buyer, threatened against Buyer, Acquisition Sub or any of Buyer’s Subsidiaries that seeks to prevent, hinder, modify, delay or challenge any of the Transactions.

 

Section 5.6               Available Funds.  Buyer’s and Acquisition Sub’s obligations hereunder are not subject to any conditions regarding Buyer’s, Acquisition Sub’s or any other person’s ability to obtain financing for the consummation of the Merger and the other transactions contemplated by this Agreement and the Ancillary Agreements.  Buyer and Acquisition Sub have, and as of the Closing will have, cash on hand sufficient to (i) enable Buyer and Acquisition Sub to perform each of their respective obligations hereunder, (ii) consummate the Merger and the other transactions contemplated by this Agreement and the Ancillary Agreements and (iii) pay all costs and expenses incurred by Buyer and Acquisition Sub in connection with this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby, including (x) the Aggregate Merger Consideration and (y) any other payments or obligations of Buyer and Acquisition Sub pursuant to this Agreement and the Ancillary Agreements.

 

Section 5.7                      Brokers.  No broker, finder or investment banker (other than Barclays Capital Inc.) is entitled to any brokerage, finder’s or other fee or commission in connection with this Agreement or the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Buyer or Acquisition Sub.

 

Section 5.8                      Agreements with Other Parties.  As of the date hereof, there are no agreements, arrangements or understandings (other than as provided in this Agreement, the Ancillary Agreements and the Related Transaction Agreements) between Buyer or its Affiliates and either (i) FFELP Buyer Parent or its Affiliates with respect to the Transactions or (ii) CBNA or its Affiliates with respect to the Transactions that would have the effect of providing additional consideration in excess of the Merger Consideration provided to CBNA pursuant to this Agreement.

 

Section 5.9                      Capitalization and Operations of Acquisition Sub.  All of the issued and outstanding share capital of Acquisition Sub is, and at the Effective Time will be, owned by a wholly-owned Subsidiary of Buyer.  Acquisition Sub was formed solely for the purpose of engaging in the transactions contemplated hereby, and it has not conducted any business prior to the date hereof and has no, and prior to the Effective Time will have no, assets, Liabilities or obligations of any nature other than those incident to its formation and pursuant to this Agreement and the Merger and the other transactions contemplated by this Agreement.

 

Section 5.10                      Disclaimer of Other Representations and Warranties.  Buyer and Acquisition Sub each acknowledges and agrees that, except for the representations and warranties expressly set forth in this Agreement and the Ancillary Agreements, (a) none of the Company or any of its Subsidiaries or any director, officer or employee of any of the foregoing, makes, or has made, any representations or warranties relating to itself or the businesses of the foregoing or otherwise in connection with the Merger, (b) no person has been authorized by the Company or any of its Subsidiaries or Affiliates to make any representation or warranty relating to itself or its business or otherwise in connection with the Merger and (c) any estimates, projections, predictions, data, financial information, memoranda, presentations or any other materials or information provided or otherwise made available to Buyer, Acquisition Sub or any of their Representatives are not and shall not be deemed to be or include representations or warranties unless any such materials or information is the subject of any express representation or warranty set forth in Article IV of this Agreement or in any Ancillary Agreement.

 

 

ARTICLE VI

 

COVENANTS AND AGREEMENTS

 

Section 6.1                      Conduct of Business Pending the Merger.

 

(a)           The Company covenants and agrees that, between the date of this Agreement and the Effective Time or the date, if any, on which this Agreement is terminated pursuant to Section 8.1, except (1) as required by Law or any Governmental Authority, (2) as agreed in writing by Buyer (which consent shall not be unreasonably withheld, delayed or conditioned), (3) as expressly required under this Agreement, the Ancillary Agreements or the Related Transaction Agreements or (4) as set forth in Section 6.1(a) of the Company Disclosure Schedule, the business of the Post-Sale Company and the Post-Sale Subsidiaries shall be conducted only in the ordinary course of business and in a manner consistent with past practice in all material respects; and the Company shall use its reasonable best efforts to preserve intact the Post-Sale Company’s and the Post-Sale Subsidiaries’ business organizations, preserve intact the Post-Sale Company’s and the Post-Sale Subsidiaries’ goodwill and ongoing business relationships with borrowers, schools, insurers, service providers and others having business dealings with them and to keep available the services of their present officers, employees and consultants.  Without limiting the generality of the foregoing, the Company agrees with Buyer that, except (A) as required by Law or any Governmental Authority, (B) as agreed in writing by Buyer (which consent shall not be unreasonably withheld, delayed or conditioned), (C) as required under this Agreement, the Ancillary Agreements or the Related Transaction Agreements or (D) as set forth in Section 6.1(a) of the Company Disclosure Schedule, the Company shall not, and shall not permit any of its Subsidiaries to, to the extent relating to the Post-Sale Company and the Post-Sale Subsidiaries:

 

(i)           amend, modify or otherwise change the Company Charter or the by-laws of the Company or such equivalent organizational documents of any of its Subsidiaries, including the Securitization Basic Documents;

 

(ii)           issue, sell, pledge, dispose, encumber or grant any shares of its or its Subsidiaries’ capital stock, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of its or its Subsidiaries’ capital stock;

 

(iii)           (A) declare, authorize, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to the Company’s or any of its Subsidiaries’ capital stock, other than (1) dividends paid by any Subsidiary of the Company to the Company or any wholly owned Subsidiary of the Post-Sale Company, (2) the payment referred to in Section 6.1(e)(vii) of the Indemnification Agreement, and (3) the payment of ordinary dividends of the Company declared prior to the date hereof and set forth on Section 6.1(a) of the Company Disclosure Schedule, (B) split, combine or reclassify the Company’s or any of its Subsidiaries’ capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its or its Subsidiaries’ capital stock, or (C) purchase, redeem or otherwise acquire any shares of the Company’s or any of its Subsidiaries’ capital stock or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities;

 

(iv)           establish or create any employee benefit plan or arrangement for the benefit of any Company Employee, amend or modify in any material respect any Benefit Plan with respect to a Company Employee, or materially change the compensation of any Company Employee, except to the extent undertaken (A) in connection with any such actions by CBNA or any of its Affiliates (other than the Company or its Subsidiaries) and not targeted to the Company Employees or (B) in connection with any such actions related to the filling of any position existing as of the date hereof that becomes vacant prior to the Closing Date; provided, that such actions are consistent with the Company’s usual and customary past practices;

 

(v)           merge or consolidate with any other person, acquire any corporation, partnership, limited liability company, other business organization or any division thereof, or, other than in the ordinary course of business, any material amount of assets in connection with acquisitions or investments with a purchase price in excess of $1,000,000 individually or $5,000,000 in the aggregate, provided that there is no ongoing obligation of the Post-Sale Company and the acquisition is unrelated to the Post-Sale Company;

 

(vi)           (A) incur any Indebtedness or guarantee any such Indebtedness for any person except for any (1) Indebtedness for borrowed money incurred in the ordinary course of business consistent with past practice under the Omnibus Credit Agreement or (2) renewals or refinancings of existing Indebtedness, so long as the principal amount of the Indebtedness issued in such renewal or refinancing (x) does not exceed the principal amount of such existing Indebtedness, (y) has a final maturity date later than the final maturity date of such existing Indebtedness and (z) does not contain any change of control or similar provision, does not subject any assets or properties of the Company or any of its Affiliates (including Buyer and its Affiliates after the Closing) to any Lien, and does not contain any provision that would be violated or breached in connection with the Transactions or (B) make any loans, advances or capital contributions to any other person;

 

(vii)           except as may be permitted by Section 6.1(a)(vi), (A) modify, amend, terminate, cancel, extend or grant any consent or waiver under any Company Material Contract or (B) enter into any Contract that would have been required to be set forth in Section 4.16(a) of the Company Disclosure Schedule if it were in effect on the date hereof, other than renewals or replacements, on commercially reasonable terms, of such Contracts terminated in accordance with their terms prior to the Effective Time;

 

(viii)           make any material change to its methods of accounting in effect at December 31, 2009, except as required by GAAP or Regulation S-X of the Exchange Act or as required by a quasi-Governmental Authority (including the Financial Accounting Standards Board or any similar organization);

 

(ix)           sell, lease, license, transfer, exchange or swap, mortgage, pledge or otherwise encumber, or subject to any Lien (other than Permitted Liens), or otherwise dispose of any material portion of its properties or assets, other than in the ordinary course of business consistent with past practice and except (A) pursuant to existing agreements in effect prior to the execution of this Agreement and set forth on Section 4.16(a) of the Company Disclosure Schedule or (B) FFELP Purchased Assets and CBNA Purchased Assets in compliance with the terms of the FFELP Transaction Agreement and the CBNA Transaction Agreement;

 

(x)           make or agree to make any new capital expenditures other than capital expenditures that (A) are not in excess of $1,000,000 individually or $5,000,000 in the aggregate or (B) as contemplated by the Company’s existing budget and business plan previously delivered to Buyer;

 

(xi)           commence any Proceeding (other than in the ordinary course of business or as a result of a Proceeding commenced against the Company or any of its Subsidiaries), or compromise, settle or agree to settle any Proceeding resulting in any post-Closing obligations for the Post-Sale Company or any modification to any Contract of the Post-Sale Company (including any Proceeding relating to this Agreement, the Related Transaction Agreements or the Transactions) other than compromises, settlements or agreements entered into in the ordinary course of business or addressed in Section 6.1(a)(xii)(A) below;

 

(xii)           (A) settle or compromise any material Liability for non-income Taxes for an amount in excess of $50,000 in any particular instance or (B) except in the ordinary course of business consistent with past practice, (I) make any material non-income Tax election, (II) file any amended material non-income Tax Return or (III) change in any material respect any method of accounting for non-income Tax purposes, in each case in this clause (B) to the extent such action could reasonably be expected to have a material adverse effect on the Tax liability of the Company or any of its Subsidiaries for any taxable periods ending after the Closing Date;

 

(xiii)           waive, extend, renew or enter into any non-compete, exclusivity, non-solicitation or similar Contract that would restrict or limit, in any material respect, the operations of Buyer or the Company, as the case may be, or any of their respective Subsidiaries;

 

(xiv)           enter into (including via any acquisition) any new line of business which represents a material change in its operations, or make any material change to the Company’s or its Subsidiaries’ businesses;

 

(xv)           make any material change in internal accounting controls;

 

(xvi)           cancel any Student Loan Insurance Policies or any material Commercial Insurance Policies, or fail to renew any such insurance policies upon expiration on substantially the same terms as those in place on the date of this Agreement to the extent commercially available;

 

(xvii)           knowingly violate or knowingly fail to perform any obligation or duty imposed on the Company or any of its Subsidiaries by applicable Law;

 

(xviii)           enter into any transaction, arrangement or understanding, or amend or modify the terms of any existing transaction, arrangement or understanding, with any Related Party which would constitute an Acquired Asset or a Retained Liability;

 

(xix)           hire any new employee or engage any new independent contractor  to provide services (including any person employed by any Affiliate of the Company), other than in the ordinary course of business consistent with past practice;

 

(xx)           enter into any agreement that grants any right to severance or termination pay to any Company Employee or independent contractor;

 

(xxi)           take any action that could result in any Liability or notice or other obligation for the Company or any of its Subsidiaries under the WARN Act;

 

(xxii)           enter into any compromise or settlement of any material Proceeding by any Governmental Authority relating to any Company Employee; or

 

(xxiii)           authorize or enter into any written agreement or otherwise make any binding commitment to do any of the foregoing.

 

Other than the right to consent or withhold consent with respect to the foregoing matters, nothing contained in this Agreement shall give to Buyer, directly or indirectly, any right to control or direct the operation of the business or operations of the Company or its Subsidiaries prior to the Closing.  Subject to the foregoing and the other terms and conditions of this Agreement, prior to the Effective Time, the Company and its Subsidiaries shall exercise complete control over their business and operations.

 

(b)           The Company covenants and agrees that, between the date of this Agreement and the Effective Time or the date, if any, on which this Agreement is terminated pursuant to Section 8.1, it shall, and shall cause each of the Depositor, the Securitization Trusts, the Other Securitization Trusts and each of its other Affiliates to, comply with the terms and conditions of the Securitization Basic Documents and the Other Securitization Basic Documents.

 

Section 6.2                      Proxy Statement.

 

(a)           Covenants of the Company with Respect to the Proxy Statement.  As promptly as reasonably practicable following the date of this Agreement, the Company shall prepare and shall cause to be filed with the SEC a proxy statement (together with any amendments thereof or supplements thereto, the “Proxy Statement”) for use in connection with the meeting of the Company’s stockholders to be held for the purpose of voting upon (i) the adoption of this Agreement and approval of the Merger and (ii) the approval of the FFELP Transaction (the “Stockholders’ Meeting”).  The Company shall include in the Proxy Statement, unless the Board of Directors of the Company has made a Permitted Change of Recommendation in compliance with Section 6.6, the Company Recommendation.  The Company shall use all reasonable best efforts to respond to any comments by the SEC staff in respect of the Proxy Statement and to have the Proxy Statement cleared by the SEC as promptly as practicable after its filing with the SEC.  The Company covenants and agrees that none of the information to be included in the Proxy Statement (other than the information supplied by  Buyer for use in the Proxy Statement) will, at the time of (A) the mailing of the Proxy Statement or any amendments or supplements thereto and (B) the Stockholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  The Company shall ensure that the Proxy Statement will comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations promulgated thereunder.

 

(b)           Covenants of Buyer with Respect to the Proxy Statement.  Buyer shall use all reasonable best efforts to cooperate with the Company to respond to any comments by the SEC staff in respect of the Proxy Statement.  Buyer covenants and agrees that none of the information with respect to Buyer or its Subsidiaries to be included in the Proxy Statement will, at the time of (A) the mailing of the Proxy Statement or any amendments or supplements thereto and (B) the Stockholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(c)           Cooperation.  The Company, Buyer and Acquisition Sub shall reasonably cooperate and consult with each other in the preparation of the Proxy Statement and the Company will provide Buyer a reasonable opportunity for review and comment on the draft proxy statement (including each amendment or supplement thereto), and shall consider in good faith all comments made by Buyer with respect thereto.  Without limiting the generality of the foregoing, each of Buyer and Acquisition Sub will furnish to the Company the information relating to it required by the Exchange Act and the rules and regulations promulgated thereunder to be set forth in the Proxy Statement.  Each of the Company and Buyer (as applicable) shall promptly (i) notify the other of the receipt of any comments from the SEC with respect to the Proxy Statement and of any request by the SEC for amendments of, or supplements to, the Proxy Statement, and (ii) provide the other party with copies of all filings made with the SEC and all correspondence between the Company and the SEC with respect to the Proxy Statement.  The Company and Buyer shall make all necessary filings with respect to the Merger and the transactions contemplated hereby under the Exchange Act and the applicable Blue Sky Laws and the rules and regulations promulgated thereunder.  The Company will provide Buyer a reasonable opportunity for review and comment on any correspondence filed with or delivered to the SEC with respect to the Proxy Statement, and shall consider in good faith all comments made by Buyer with respect thereto.

 

(d)           Mailing of Proxy Statement; Amendments.  As promptly as reasonably practicable after the Proxy Statement has been cleared by the SEC, the Company shall mail the Proxy Statement to the holders of Company Common Stock as of the record date established for the Stockholders’ Meeting and, unless the Board of Directors of the Company has made a Permitted Change of Recommendation in compliance with Section 6.6, shall use reasonable best efforts to solicit proxies and votes in favor of the adoption of this Agreement and the approval of the Merger and the FFELP Transaction, and shall take all other action necessary or advisable to secure the adoption of Agreement and the approval of the Merger and the FFELP Transaction.  If, at any time prior to the Effective Time, any event or circumstance relating to the Company or Buyer or any of their respective Subsidiaries, or their respective officers or directors should be discovered by the Company or Buyer, respectively, which, pursuant to the Exchange Act, should be set forth in an amendment or a supplement to the Proxy Statement, such party shall promptly inform the other (in which case the parties shall cooperate to effect the applicable amendment or supplement).  Prior to the Stockholders’ Meeting, each of Buyer, Acquisition Sub and the Company agrees to correct any information provided by it for use in the Proxy Statement which shall have become false or misleading.

 

Section 6.3                      Stockholders’ Meeting.  The Company shall, as promptly as reasonably practicable following the date of this Agreement, establish a record date for, duly call, give notice of, convene and hold the Stockholders’ Meeting.  At such Stockholders’ Meeting, unless the Board of Directors of the Company has made a Permitted Change of Recommendation in compliance with Section 6.6, the Company shall recommend to its stockholders the adoption of this Agreement and approval of the Merger and the Related Transactions (the “Company Recommendation”).  Notwithstanding anything to the contrary contained in this Agreement, prior to the termination of this Agreement, the obligation of the Company to call, give notice of, convene and hold the Stockholders’ Meeting and to hold a vote of the Company’s stockholders on the adoption of this Agreement and the approval of the Merger and the FFELP Transaction at the Stockholders’ Meeting shall not be limited or otherwise affected by the commencement, disclosure, announcement or submission to it of any Competing Proposal (whether or not a Superior Proposal), or by a Change of Recommendation.  In any case in which the Company makes a Change of Recommendation, (a) the Company shall nevertheless submit this Agreement, the Merger and the FFELP Transaction to a vote of its stockholders and (b) the Proxy Statement and any and all accompanying materials (including the proxy card, the “Proxy Materials”) shall be identical in form and content to Proxy Materials that would have been prepared by the Company had no Change of Recommendation been made, except for appropriate changes to the disclosure in the Proxy Statement stating that such Change of Recommendation has been made and, if applicable, describing matters relating to the Superior Proposal or other event giving rise to the Change of Recommendation to the extent required by applicable Law.  The Company agrees that, prior to the termination of this Agreement, it shall not submit to the vote of its stockholders any Competing Proposal (whether or not a Superior Proposal) or propose to do so.

 

Section 6.4                      Appropriate Action; Consents; Filings.

 

(a)           Subject to the terms and conditions hereof, the parties hereto will use their respective reasonable best efforts to consummate and make effective the transactions contemplated by this Agreement and to cause the conditions to the Merger set forth in Article VII to be satisfied including:

 

(i)           the obtaining of all necessary actions or nonactions, consents, terminations or expirations of waiting periods and approvals from Governmental Authorities or other persons necessary in connection with the consummation of the transactions contemplated by this Agreement and the making of all necessary registrations and filings (including filings with Governmental Authorities, if any) and the taking of all steps as may be necessary to obtain an approval from, or to avoid an action or proceeding by, any Governmental Authority or other persons necessary in connection with the consummation of the transactions contemplated by this Agreement (provided that, notwithstanding anything in this Agreement, in no event shall any party be required to make any payment to any such other persons to obtain such approval);

 

(ii)           the defending of any Proceedings, whether judicial or administrative, challenging this Agreement or the performance or consummation of the transactions contemplated by this Agreement (including the Merger) in accordance with the terms of this Agreement, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Authority vacated or reversed; and

 

(iii)           the execution and delivery of any additional instruments necessary to consummate the Merger and other transactions to be performed or consummated by such party in accordance with the terms of this Agreement and to fully carry out the purposes of this Agreement.

 

Without limiting the foregoing, each of the parties hereto shall, to the extent required by applicable Law, promptly (in no event later than fifteen (15) Business Days following the date that this Agreement is executed) make its respective filings, and thereafter make any other required submissions, under the HSR Act with respect to the transactions contemplated hereby.  The Company, Buyer and Acquisition Sub shall cooperate (A) in promptly determining whether any filings are required to be or should be made or whether any consents, approvals, permits or authorizations are required to be or should be obtained under any other federal, state or non-U.S. Law or regulation or whether any consents, approvals or waivers are required to be or should be obtained from other parties to loan agreements or other contracts or instruments material to the Company’s business in connection with the consummation of the transactions contemplated by this Agreement and (B) in promptly making any such filings, furnishing information required in connection therewith and seeking to obtain timely any such consents, permits, authorizations, approvals or waivers.

 

(b)           If filings are required to be made under the HSR Act as contemplated by Section 6.4(a), in furtherance and not in limitation of the covenants of the parties contained in Section 6.4(a), each of the parties hereto shall use its reasonable best efforts to resolve such objections, if any, as may be asserted with respect to the Merger or any of the other transactions contemplated by this Agreement by or under the HSR Act, the Federal Trade Commission or Department of Justice, including taking all reasonable actions to obtain clearance; provided, however, that notwithstanding anything herein to the contrary, neither Buyer nor any of its Subsidiaries shall be required to (and the Company shall not unless directed to by Buyer) (i) contest any final action or decision taken by the Federal Trade Commission, Department of Justice or other Governmental Authority challenging the consummation of the transactions contemplated by this Agreement, (ii) agree to any “hold separate” agreement, contractual undertakings or asset divestiture or restriction on its or its Subsidiaries’ business operations, properties or assets or (iii) terminate existing relationships, contractual rights or obligations.

 

(c)           Each of Buyer and the Company shall give (or shall cause its respective Subsidiaries to give) any notices to third parties, and Buyer and, subject to the restrictions set forth in Section 6.1(a)(vii), the Company, shall use, and cause each of its Subsidiaries to use, its reasonable best efforts to obtain any third party consents not covered by Section 6.4(a) and Section 6.4(b) above, necessary, proper or advisable to consummate the Merger.  Notwithstanding anything in this Agreement to the contrary, in no event shall Buyer, the Company or any of their respective Subsidiaries be required to pay any fee, penalty or other consideration, modify any Contract or make any other concession to any third party for any consent or approval required for the consummation of the Transactions under any Company Contract to which the Post-Sale Company will be a party or by which the Post-Sale Company or any of its assets or properties will be subject to or bound; provided, however, that the Company shall not, and shall not permit its Subsidiaries to, unless directed by Buyer, modify any Contract included in or relating to the Acquired Assets or make any other concession that would adversely affect the Post-Sale Company.

 

(d)           In connection with the matters that are the subject of this Section 6.4, each party shall without limitation, subject to applicable Law:  (i) promptly notify the other of, and if in writing, furnish the other with copies of (or, in the case of oral communications, advise the other of) any communications from or with any Governmental Authority with respect to the transactions contemplated by this Agreement; (ii) use its reasonable best efforts to permit the other to review and discuss in advance, and consider in good faith the views of the other in connection with, any proposed written or any oral communication with any such Governmental Authority with respect to the transactions contemplated by this Agreement; (iii) use its reasonable best efforts not to participate in any meeting or have any communication with any such Governmental Authority with respect to the transactions contemplated by this Agreement, unless it has given the other an opportunity to consult with it in advance and, to the extent permitted by such Governmental Authority, gives the other the opportunity to attend and participate therein; and (iv) furnish the other with such necessary information and reasonable assistance as the other may reasonably request in connection with its preparation of necessary filings or submissions of information to any such Governmental Authority with respect to the transactions contemplated by this Agreement.  Such materials and the information contained therein that is competitively sensitive shall be given only to the outside legal counsel of the other party and will not be disclosed by such outside counsel to employees, officers or directors of their respective client unless express permission is obtained in advance from the disclosing party or its legal counsel.

 

(e)           The Company agrees to, and to cause its Affiliates to use its and their respective reasonable best efforts to, consummate and make effective the Related Transactions as promptly as practicable and to cause the conditions to the closing of the FFELP Transaction and the CBNA Transaction set forth in Article IX of the FFELP Transaction Agreement and Article VII of the CBNA Transaction Agreement, respectively, to be satisfied, including the obtaining of all necessary actions, consents, terminations or expirations of waiting periods and approvals from Governmental Authorities or other persons necessary in connection with the consummation of the FFELP Transaction and the CBNA Transaction to the extent required to do so under such Related Transaction Agreements.

 

Section 6.5                      Access to Information; Confidentiality.

 

(a)           From the date hereof to the Effective Time, or the date, if any, on which this Agreement is terminated pursuant to Section 8.1, to the extent permitted by applicable Law, the Company shall (i) provide to Buyer (and its officers, directors, employees, accountants, consultants, legal counsel, agents and other representatives, collectively, “Representatives”) reasonable access during normal business hours and, following reasonable notice from Buyer, to the Post-Sale Company’s employees, properties, books, contracts and records and other information as Buyer may reasonably request regarding the business, assets, Liabilities, employees and other aspects of the Company and its Subsidiaries, and (ii) furnish promptly to Buyer such information concerning the same as Buyer or its Representatives may reasonably request; provided, however, that the Company shall not be required to provide access to any information or documents which would, in the reasonable judgment of the Company, (x) breach any agreement with any third party if the Company shall have used its reasonable best efforts to obtain the consent of such third party to such access or disclosure, (y) constitute a waiver of the attorney-client or other privilege held by the Company or (z) otherwise violate any applicable Laws.  If any material is withheld by the Company pursuant to the proviso of the preceding sentence, the Company shall inform Buyer as to the general nature of what is being withheld.

 

(b)           No investigation pursuant to this Section 6.5 shall affect any representation or warranty in this Agreement of any party hereto or any condition to the obligations of the parties hereto.  The parties shall comply with, and shall cause their respective Representatives to comply with, all of their respective obligations under the Confidentiality Agreement with respect to the information provided pursuant to Section 6.5(a) (which shall be deemed “Evaluation Material” for purposes thereof).

 

Section 6.6                      No Solicitation of Competing Proposal.

 

(a)           From and after the date of this Agreement until the earlier of the Effective Time or the date, if any, on which this Agreement is terminated pursuant to Section 8.1, the Company agrees that neither it nor any Subsidiary of the Company shall, and that it shall cause its and their respective Representatives not to, directly or indirectly:  (i) solicit, initiate, assist or knowingly facilitate or encourage the making of any Competing Proposal or any inquiry, offer or proposal that could reasonably be expected to lead to any Competing Proposal; (ii) enter into, engage or participate in, or continue any negotiations regarding any Competing Proposal or any inquiry, proposal or offer that could reasonably be expected to lead to, any Competing Proposal; (iii) other than in the ordinary course of business consistent with past practice and not in connection with any Competing Proposal, furnish to any person or group (other than Buyer and its Affiliates) any non-public information relating to the Company or any of its Subsidiaries (provided that the Company may furnish information with respect to the FFELP Transaction to the FFELP Buyer Parent and may furnish information with respect to the CBNA Transaction to CBNA); (iv) engage or participate in discussions with any person with respect to any Competing Proposal or any proposal, inquiry or offer that could reasonably be expected to lead to any Competing Proposal; (v) approve, endorse or recommend or propose publicly to approve, endorse or recommend any Competing Proposal or any proposal, inquiry or offer that could reasonably be expected to lead to any Competing Proposal; or (vi) approve, endorse or recommend or publicly announce an intention to approve, endorse or recommend, or enter into any letter of intent or similar document or any agreement, commitment or other Contract relating to any Competing Proposal or any inquiry, offer or proposal that could reasonably be expected to lead to, any Competing Proposal (other than as contemplated by the Related Transactions).  The Company agrees that any breach of this Section 6.6(a) by any Subsidiary or Affiliate of the Company or any of its or their respective Representatives shall constitute a breach of this Section 6.6(a) by the Company.

 

(b)           The Company shall, and shall cause its Subsidiaries and its and their respective Representatives to, immediately cease any existing solicitations, discussions or negotiations with any person (other than the parties hereto) with respect to any Competing Proposal (other than as contemplated by the Related Transactions).

 

(c)           Notwithstanding any limitations set forth in this Agreement, if after the date hereof and prior to the receipt of the Requisite Stockholder Approval, the Company receives an unsolicited, bona fide written Competing Proposal that (i) did not result from a violation of Section 6.6 and (ii) the Board of Directors of the Company (upon the recommendation of the Special Committee) determines in good faith after consultation with the Company’s outside legal and financial advisors that such Competing Proposal constitutes or would reasonably be expected to result, after the taking of any of the actions referred to in any of clause (x), (y) or (z) below, in a Superior Proposal or an Alternate Superior Proposal, then the Company may, at any time prior to the receipt of the Requisite Stockholder Approval, take the following actions:  (x) furnish non-public information with respect to the Company and its Subsidiaries to the third party making such Competing Proposal, if, and only if, such information has been previously or is contemporaneously provided to Buyer and prior to so furnishing such information, the Company receives from the third party an executed confidentiality agreement with terms no less favorable in the aggregate to the third party than the Confidentiality Agreement is to Buyer; (y) engage or participate in discussions or negotiations with such third party with respect to the Competing Proposal; and (z) in the case of a Competing Proposal that constitutes or would reasonably be expected to result in an Alternate Superior Proposal, engage in discussions or negotiations with CBNA and FFELP Buyer Parent with respect to the Competing Proposal; provided, however, that as promptly as reasonably practicable following the Company taking such actions as described in clauses (x), (y) or (z) above (and in any event within 24 hours), the Company shall provide written notice to Buyer of such determination as provided for in clause (ii) above, the identity of the third party making such Competing Proposal and the terms and conditions of the Competing Proposal.  The Company shall keep Buyer informed on a current basis of the status of any such discussions or negotiations, including any discussions or negotiations with CBNA and FFELP Buyer Parent.  Buyer shall be permitted to engage in discussions and negotiations with CBNA and FFELP Buyer Parent in connection with any Competing Proposal.

 

(d)           Neither the Board of Directors of the Company nor any committee thereof shall (i) change, qualify, withdraw or modify, or publicly propose to change, qualify, withdraw or modify the Company Recommendation (a “Change of Recommendation”), (ii) approve or recommend, or publicly propose to approve or recommend, any Competing Proposal or (iii) exempt any person from any state takeover law, except as provided or permitted by this Section 6.6.

 

(e)           If prior to the receipt of the Requisite Stockholder Approval, either:

 

(i)           the Company receives an unsolicited Superior Proposal or an unsolicited Alternate Superior Proposal and the Company has complied with its obligations under this Section 6.6, or

 

(ii)           other than in connection with a Competing Proposal, the Board of Directors of the Company (upon the recommendation of the Special Committee) determines in good faith, in response to the occurrence of a Company Intervening Event and after consultation with outside legal and financial advisors, that the failure of the Board of Directors of the Company to effect a Change of Recommendation would be inconsistent with the fiduciary duties of the Board of Directors of the Company to the Company’s stockholders under applicable Law,

 

then, prior to the receipt of the Requisite Stockholder Approval, the Board of Directors of the Company may effect a Change of Recommendation (a “Permitted Change of Recommendation”); provided, that with respect to clause (i), (x) the Company shall have first (A) provided seven (7) Business Days’ prior written notice (a “Notice of Superior Proposal”) to Buyer that it is prepared to effect a Permitted Change of Recommendation in response to a Superior Proposal or an Alternate Superior Proposal and specifying the reasons therefor, including the terms and conditions of the Superior Proposal or Alternate Superior Proposal that are the basis of such proposed Permitted Change of Recommendation, copies of the agreements proposed to effect such Superior Proposal or Alternate Superior Proposal as well as all material correspondence relating to such Superior Proposal or Alternate Superior Proposal and the identity of the person making such proposed Superior Proposal or Alternate Superior Proposal (it being understood and agreed that any amendment to the financial terms or any material amendment of any such Superior Proposal or Alternate Superior Proposal shall require a new Notice of Superior Proposal and a new seven (7) Business Day period), and (B) during such seven (7) Business Day period, if requested by Buyer, engaged in good faith negotiations with Buyer (and the parties to the Related Transactions, if applicable) to amend this Agreement, the Ancillary Agreements, and/or the Related Transaction Agreements in such a manner that any Competing Proposal which was determined to be a Superior Proposal or an Alternate Superior Proposal, as the case may be, would no longer constitute a Superior Proposal or an Alternate Superior Proposal, as the case may be, and (y) at the end of such seven (7) Business Day period (or at such earlier time following receipt of a Notice of Superior Proposal that Buyer notifies the Company that it is not interested in pursuing further negotiations to amend this Agreement), such Competing Proposal has not been withdrawn and continues to constitute a Superior Proposal or an Alternate Superior Proposal (taking into account any changes, which have not been withdrawn, to the terms of this Agreement proposed by Buyer and/or, in the case of a Superior Proposal only, any changes to the Related Transaction Agreements or the Ancillary Agreements proposed by the parties thereto following a Notice of Superior Proposal, as a result of the negotiations required by sub-clause (B) or otherwise) and in the case of clause (ii), the Company shall have first provided seven (7) Business Days’ prior written notice (“Notice of a Proposed Change of Recommendation”) to Buyer that it is prepared to effect a Permitted Change of Recommendation in response to a Company Intervening Event and describing such Company Intervening Event and during such seven (7) Business Day period, if requested by Buyer, engaged in, and caused its Representatives and Affiliates to have engaged in, good faith negotiations with Buyer and its Representatives (and the parties to the Related Transaction Agreements and their Representatives) to amend this Agreement, the Ancillary Agreements and/or the Related Transaction Agreements and at the end of such seven (7) Business Day period, the Board of Directors of the Company (upon the recommendation of the Special Committee) after taking into account all changes, which have not been withdrawn, to the terms of this Agreement, the Ancillary Agreements and/or the Related Transaction Agreements proposed by Buyer or the parties thereto following such Notice of a Proposed Change of Recommendation, again determines in good faith that the failure to effect a Change of Recommendation would be inconsistent with the fiduciary duties of the Board of Directors of the Company to the Company’s stockholders under applicable Law.

 

(f)           The Company shall advise Buyer promptly (and in any event within 24 hours) of (i) any Competing Proposal or indication, inquiry, proposal or offer with respect to or that could reasonably be expected to lead to any Competing Proposal, (ii) any request for non-public information relating to the Company, or (iii) any inquiry or request for discussion or negotiation regarding a Competing Proposal, including in each case the identity of the person making any such Competing Proposal or indication, inquiry, offer or proposal, the material terms of any such Competing Proposal or indication, inquiry, offer or proposal and any material correspondence relating thereto.  The Company shall keep Buyer informed on a current basis of any material changes to the terms of any such Competing Proposal or indication or inquiry.

 

(g)           Notwithstanding the limitations set forth in this Section 6.6, and in accordance with Section 6.6(e), if the Board of Directors of the Company has effected a Permitted Change of Recommendation in compliance with the requirements of Section 6.6(e)(i) in response to a Superior Proposal (but not an Alternate Superior Proposal) and is not in breach of Section 6.6, then, prior to receipt of the Requisite Stockholder Approval, the Board of Directors of the Company (upon the recommendation of the Special Committee) may cause the Company to enter into a binding written agreement (a “Superior Proposal Agreement”) to effect such Superior Proposal and terminate this Agreement in accordance with Section 8.1(g).

 

(h)           Nothing contained in this Agreement shall prohibit the Company or the Board of Directors of the Company from (i) disclosing to the Company’s stockholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or (ii) making any disclosure to its stockholders if the Board of Directors of the Company (or a committee thereof, as applicable) has reasonably determined in good faith, after consultation with outside legal and financial advisors, that the failure to do so would be inconsistent with any applicable Law; provided, however, that (A) any disclosure of a position contemplated by Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act other than a “stop, look and listen”, an express rejection of any applicable Competing Proposal or an express reaffirmation of the Company Recommendation shall be deemed to be a Change of Recommendation and (B) neither the Company nor the Company’s Board of Directors (nor any committee thereof) shall make any Change of Recommendation except in accordance with the other provisions of this Section 6.6.

 

(i)           As used in this Agreement:

 

(i)           “Competing Proposal” shall mean any proposal or offer from any person or group other than Buyer and its Affiliates to effect:  (A) any direct or indirect acquisition or purchase, in any single transaction or series of related transactions, by any such person or group of persons, of 15% or more of the fair market value of the assets of the Post-Sale Company; (B) any direct or indirect acquisition or purchase by any person or group of persons of 15% or more of the total outstanding voting securities of the Company or any of its Subsidiaries; (C) any tender offer or exchange offer (including through the filing with the SEC of a Schedule TO), as defined pursuant to the Exchange Act, that if consummated, would result in any person or group beneficially owning 15% or more of the Company Common Stock or (D) any merger, consolidation, business combination, recapitalization, issuance of or amendment to the terms of outstanding stock or other securities, liquidation, dissolution or other similar transaction involving the Company as a result of which any person or group acting in concert would acquire assets or securities described in clause (A), (B) or (C) above;

 

(ii)           “Company Intervening Event” means an event or circumstance material to the Company and its Subsidiaries, taken as a whole (other than any event or circumstance resulting from a breach of this Agreement by the Company or its Subsidiaries or any breach of any of the Related Transaction Agreements), that was unknown to the Board of Directors of the Company on the date hereof, which event or circumstance becomes known to the Board of Directors of the Company prior to the Requisite Stockholder Approval; provided, however, that (A) in no event shall the receipt, existence or terms of a Competing Proposal (or any proposal or inquiry to acquire any of the FFELP Purchased Assets or the CBNA Purchased Assets), or any inquiry or matter relating thereto or consequence thereof, constitute a Company Intervening Event, (B) in no event shall events or circumstances arising from the announcement or the existence of, or any action taken by either party pursuant to and in compliance with the terms of, this Agreement or the Related Transaction Agreements constitute a Company Intervening Event and (C) in no event shall any increase in the market price of the Company Common Stock, in and of itself, constitute a Company Intervening Event (provided that the event or circumstance underlying such increase in the market price of the Company Common Stock shall not be excluded, and may be taken into account, in determining whether there is a Company Intervening Event);

 

(iii)           “Superior Proposal” shall mean any unsolicited, bona fide written Competing Proposal (except the references in clauses (A), (B) and (C) thereof to “15%” shall be replaced by “80%” and the reference in clause (A) thereof to the “Post-Sale Company” shall be replaced by the “Company”) that (A) is on terms that the Board of Directors of the Company (upon the recommendation of the Special Committee) determines in good faith, after consultation with outside financial and legal advisors and consideration of all relevant factors, would, if consummated, result in a transaction that is more favorable from a financial point of view to the holders of the Company Common Stock than the Transactions (taking into account any binding proposal to amend the terms of this Agreement, the Ancillary Agreements and/or any of the Related Transaction Agreements) and (B) is reasonably capable of being completed on the terms set forth in the proposal within a reasonable period of time, taking into account all financial, legal, regulatory and other aspects thereof.  For the avoidance of doubt, references to the “Company” in this definition mean the Company, including the FFELP Purchased Assets, the CBNA Purchased Assets and the Acquired Assets; and

 

(iv)           “Alternate Superior Proposal” shall mean any unsolicited, bona fide written Competing Proposal (except the references in clauses (A), (B) and (C) thereof to “15%” shall be replaced by “100%”) that (A) is on terms that the Board of Directors of the Company (upon the recommendation of the Special Committee) determines in good faith, after consultation with outside financial and legal advisors and consideration of all relevant factors, would, if consummated, result in a transaction that is more favorable from a financial point of view to the holders of the Company Common Stock than the Transactions (taking into account any binding proposal to amend the terms of this Agreement, the Ancillary Agreements and/or any of the Related Transaction Agreements), (B) is reasonably capable of being completed on the terms set forth in the proposal within a reasonable period of time, taking into account all financial, legal, regulatory and other aspects thereof and (C) would, if consummated, not result in (I) any person other than CBNA acquiring the CBNA Purchased Assets in accordance with the terms and conditions of the CBNA Transaction Agreement (as in effect immediately prior to the announcement of or the Company’s receipt of such Competing Proposal) and the Transaction Documents (as defined in the CBNA Transaction Agreement) and (II) any person other than FFELP Buyer Parent (and its Affiliates) acquiring the FFELP Purchased Assets in accordance with the terms and conditions of the FFELP Transaction Agreement (as in effect immediately prior to the Company’s receipt of such Competing Proposal) and the Transaction Documents (as defined in the FFELP Transaction Agreement).

 

(j)           During the period from the date of this Agreement through the earlier of the Effective Time and the date of termination of this Agreement, the Company shall not terminate, amend, modify or waive any provision of any confidentiality agreement relating to a Competing Proposal or standstill agreement to which the Company or any of the Company Subsidiaries is a party (other than any involving Buyer).  During such period, the Company agrees to enforce, to the fullest extent permitted under applicable Law, the provisions of any such agreements, including obtaining injunctions to prevent any breaches of such agreements and to enforce specifically the terms and provisions thereof in any court of the United States or any state thereof having jurisdiction.  Notwithstanding the foregoing, the Company may waive any such standstill if the Board of Directors of the Company, after consultation with outside legal counsel, determines that the failure to do so would be inconsistent with the fiduciary duties of the Board of Directors of the Company to the Company’s stockholders under applicable Law.

 

(k)           From and after the date of this Agreement until the earlier of the Effective Time or the date, if any, on which this Agreement is terminated pursuant to Section 8.1, the Company agrees that it will comply with all agreements and covenants to be performed by it under Section 10.4 of the FFELP Transaction Agreement.

 

(l)           Buyer agrees that neither it nor its Affiliates shall make any Competing Proposal (as defined in the FFELP Transaction Agreement) without the prior written consent of the Company or except as otherwise permitted through the FFELP Transaction Agreement.

 

Section 6.7                      Notification of Certain Matters.  The Company shall give prompt notice to Buyer, and Buyer shall give prompt notice to the Company, (a) of any event or matter that has caused any of its representations, warranties, covenants or agreements in this Agreement or in any Ancillary Agreement to be inaccurate in any material respect (provided, that the failure to provide such notice shall not in and of itself result in the failure of a closing condition, it being understood and agreed that the underlying inaccuracy may result in the failure of a closing condition), (b) of receipt of any notice or other communication received by such party (or, in the case of the Company, by the Depositor, any Securitization Trust or any Other Securitization Trust) from any Governmental Authority, any party to a Securitization Basic Document or an Other Securitization Basic Document, any holder of, or holder of a beneficial interest in, any note issued under a Securitization Indenture or an Other Securitization Indenture, any issuer of a Student Loan Insurance Policy or any Rating Agency in connection with this Agreement, the Related Transaction Agreements or the Transactions, or from any person alleging that the consent of such person is or may be required in connection herewith or therewith, and (c) upon becoming aware of any Proceedings commenced or, to such party’s knowledge, threatened against or involving such party or any of its Subsidiaries which relate thereto.  Without limiting the foregoing, the Company shall give prompt notice to Buyer, upon becoming aware of (i) any default or breach or failure to perform any obligation by any party to a Securitization Basic Document or Other Securitization Basic Document or (ii) receipt by it or by the Depositor, any Securitization Trust or any Other Securitization Trust of any written notice or communication from any person asserting the same.

 

Section 6.8                      Public Announcements.  The initial press releases with respect to the Transactions shall be press releases mutually agreed upon by Buyer, the Company, CBNA and FFELP Buyer Parent.  Buyer and the Company shall consult with each other before issuing any other press release or otherwise making any public statements with respect to this Agreement or the Merger (and none of Buyer or its Affiliates shall issue or make any other press release with respect to the Related Transactions) and shall not issue any such press release without the prior consent of the other (which consent shall not be unreasonably withheld, delayed or conditioned), except as may be required by Law or any listing agreement with the NYSE to which Buyer or the Company is a party.

 

Section 6.9                      Employee Matters.

 

(a)           On or before the Closing, but effective as of the Closing Date (or January 1, 2011 in the event the Closing Date occurs prior to December 31, 2010), the Company shall take, or shall use reasonable efforts to cause its Affiliates, as applicable, to take, all actions necessary, if any, to cause the Company and its Subsidiaries to cease to be adopting or participating employers under all Benefit Plans that are not Company Benefit Plans and each Company Employee shall cease to accrue benefits under the Benefit Plans that are not Company Benefit Plans.

 

(b)           The employment of each person employed by the Company and its Subsidiaries as of the Closing Date (for the avoidance of doubt, after giving effect to the Related Transactions and Section 6.1) (the “Company Employees”) shall automatically be continued on the Closing Date.

 

(c)           Except as otherwise provided in the Separation Agreement with respect to severance benefits and transition services with respect to human resources and employee benefit plans and programs, for the period commencing on the Closing Date and ending on the first anniversary of the Closing Date, Buyer shall, or shall cause one of its Affiliates to, provide Company Employees with compensation and employee benefit plans, programs, policies and arrangements that are no less favorable, in the aggregate, than the compensation and employee benefit plans, programs, policies and arrangements provided to similarly situated employees of Buyer and its Affiliates.  In addition, for the period commencing on the Closing Date and ending on the first anniversary of the Closing Date, unless agreed upon by such Company Employee, Buyer shall not, and shall cause each of its Affiliates not to, increase any Company Employee’s commute as of immediately prior to the Closing Date by thirty (30) or more miles one way.

 

(d)           For the period commencing on the Closing Date and ending six (6) months following the Closing Date, Buyer shall, or shall cause its Affiliates to, provide to each Company Employee base wages or salaries, as applicable, that are no less favorable than the base wages or salaries provided to each such Company Employee by the Company and its Subsidiaries immediately prior to the Closing Date.  In addition, on and following the Closing Date (or January 1, 2011 in the event the Closing Date occurs prior to December 31, 2010), Buyer shall, or shall cause its Affiliates to, cause each compensation or employee benefit plan, program, or arrangement maintained or contributed to by Buyer or any of its Affiliates and in which any Company Employee becomes eligible to participate, to treat the prior service of such Company Employee with the Company or any of its Affiliates, as the case may be, as service rendered to Buyer or its Affiliates, as the case may be, for all purposes (including vesting, eligibility, level of benefit (including for purposes of severance and vacation/paid time off benefits) and benefit accrual purposes); provided, however, that the foregoing shall not apply with respect to benefit accruals under any defined benefit plan; and provided, further, that the Company Employees’ years of service with the Company and its Affiliates and their respective predecessors before the Closing Date shall be not included for purposes of determining whether a Company Employee is eligible for subsidized retiree medical benefits.

 

(e)           Buyer shall, or shall cause its Affiliates to, (i) waive any limitation on health and welfare coverage of any Company Employee due to pre-existing conditions and/or waiting periods, active employment requirements, and requirements to show evidence of good health under the applicable health and welfare plan of Buyer or any Affiliate of Buyer to the extent such Company Employee is currently covered under a health and welfare benefit plan of the Company or any of its Affiliates (as the case may be) and (ii) in the event the Closing Date occurs after January 1, 2011, credit each Company Employee with all deductible payments, co-payments and co-insurance paid by such employee and covered dependents under the group health plan of the Company or any of its Affiliates (as the case may be) prior to the Closing Date during the year in which the Closing Date occurs for the purpose of determining the extent to which any such employee and his or her dependents have satisfied their deductible and whether they have reached the out-of-pocket maximum under any medical plan of Buyer or any Affiliate of Buyer for such year.

 

(f)           Effective as of the Closing Date (if the Closing Date occurs after December 31, 2010), Buyer shall (i) permit, or shall cause its Affiliates to permit, Company Employees to participate in flexible spending reimbursement accounts under a cafeteria plan qualifying under Section 125 of the Code (the “Buyer FSA”) to the extent coverage under such Buyer FSA replaces coverage under a comparable Benefit Plan in which such Company Employee participated immediately prior to the Closing Date (the “CBNA FSA”), (ii) credit Company Employees under the Buyer FSA immediately following the Closing Date with amounts available for reimbursement equal to such amounts as were credited under the CBNA FSA with respect to such person immediately prior to the Closing Date, and (iii) give effect under the Buyer FSA to any elections made by such Company Employees with respect to the CBNA FSA for the plan year in which the Closing Date falls.

 

(g)           In the event that a Company Employee makes a voluntary election pursuant to Section 401(a)(31) of the Code to roll over his or her account balance in the Citigroup 401(k) Plan to a tax-qualified defined contribution plan sponsored by Buyer, Buyer agrees to cause such tax-qualified defined contribution plan to accept such rollover, subject to the terms of the Buyer’s tax-qualified defined contribution plan.

 

(h)           Effective as of January 1, 2011 (if the Closing Date occurs prior to December 31, 2010) or effective as of the Closing Date (if the Closing Date occurs on or after January 1, 2011), Buyer shall credit each Company Employee with the number of unused planned time off days earned by and credited to such Company Employee as of immediately prior to the Closing Date in accordance with the policy of the Company immediately prior to the Closing Date.  For the period commencing on the Closing Date and ending on the first anniversary of the Closing Date, Buyer shall provide Company Employees with planned and unplanned time-off policies that are no less favorable than the planned and unplanned time-off policies provided to similarly situated employees of Buyer and its Affiliates; provided, however, that the number of unused planned time-off days that may be carried over from 2010 to 2011 shall be limited by the time-off policies as in effect with respect to the Company Employees immediately prior to the Closing Date; provided further that any unused planned time-off days that are carried over from 2010 to 2011 must be used before any planned time-off days earned in 2011 may be used.  For the avoidance of doubt, the number of unused planned time-off days and unplanned time-off days that may be carried over from 2011 to 2012 shall be limited by the planned and unplanned time-off policies of similarly situated employees of the Buyer and its Affiliates.

 

(i)           Without limiting the generality of Section 9.5, the provisions of this Section 6.9 are for the sole benefit of the parties to this Agreement and nothing herein, expressed or implied, is intended or shall be construed to confer upon or give to any person (including, for the avoidance of doubt, any Company Employee or former employee of the Company or any of its Subsidiaries), other than the parties hereto and their respective permitted successors and assigns, any legal or equitable or other rights or remedies (with respect to the matters provided for in this Section 6.9) under or by reason of any provision of this Agreement.  Nothing in this Section 6.9 shall amend, or be deemed to amend (or prevent the amendment or termination of) any Benefit Plan or any compensation or benefit plan of the Company or its Affiliates.  Nothing in this Section 6.9 shall create any obligation on the part of Buyer (or the Company, as applicable) to continue the employment of a Company Employee or any employee of the Company or its Subsidiaries for any definite period of time following the Effective Time.

 

Section 6.10                      Acquisition Sub.  Buyer will take all actions necessary to (a) cause Acquisition Sub to perform its obligations under this Agreement and to consummate the Merger on the terms and conditions set forth in this Agreement and (b) ensure that, prior to the Effective Time, Acquisition Sub shall not conduct any business or make any investments other than in connection with the transactions contemplated by this Agreement, or incur or guarantee any indebtedness.

 

Section 6.11                      Related Transaction Agreements.

 

(a)           Without the prior written consent of Buyer, the Company shall not (i) amend, modify or waive any provision of the Related Transaction Agreements or the Ancillary Agreements (or the forms thereof or term sheets relating thereto) in a manner that would reasonably be expected to adversely affect Buyer’s, the Company’s or any of their respective Subsidiaries’ rights and obligations under, or materially impair the ability of Buyer, the Company or any of their respective Subsidiaries to perform any of their obligations under, this Agreement, the Ancillary Agreements or the Related Transaction Agreements or materially delay the Closing Date or (ii) terminate the FFELP Transaction Agreement pursuant to Section 11.1(a) of such agreement or the CBNA Transaction Agreement pursuant to Section 9.1(a) of such agreement.  Subject to the foregoing, the Company shall deliver promptly (and in any event not later than five Business Days prior to the proposed effective date thereof) to Buyer copies of all proposed amendments, modifications and waivers to any Related Transaction Agreement or Ancillary Agreement.  The Company shall comply in all material respects with all agreements and covenants required to be performed by it under the Related Transaction Agreements and the Ancillary Agreements on or prior to the Closing Date.  The Company agrees to use reasonable best efforts to enforce, to the fullest extent permitted under applicable Law, the provisions of each Related Transaction Agreement and Ancillary Agreement, including obtaining injunctions to enforce specifically the terms and provisions thereof in any court of the United States or any state thereof having jurisdiction.

 

(b)           The Company shall keep Buyer informed on a reasonably current basis of any material changes in or developments with respect to the Related Transactions, including delivering to Buyer copies of all notices the Company receives under the Related Transaction Agreements, and, subject to applicable Laws, shall furnish promptly to Buyer such information concerning the status of and the progress towards closing the Related Transactions as Buyer or its Representatives may reasonably request.  Without limiting the foregoing, the Company shall give prompt notice to Buyer of any event or matter that it becomes aware of that would be reasonably likely to result in the failure of any condition in any Related Transaction Agreement to be satisfied.

 

Section 6.12                      Certain Ancillary Agreements.

 

(a)           Each of the Company and Buyer agree that it will, and cause its Affiliates and Subsidiaries to, negotiate in good faith definitive versions of the Transition Agreements in a manner consistent with, and containing the terms set forth in, the term sheet attached hereto as Exhibits G and on other customary terms to which the parties may agree, for execution by the Company and Buyer, their respective Affiliates or Subsidiaries on the Closing Date.

 

(b)           At the Closing, each of the Company and Buyer shall, and shall cause their applicable Affiliates to, execute and deliver the Subservicing Letter Agreement, the Transition Agreements and each other Ancillary Agreement to be executed and delivered by such party or its Affiliates.

 

Section 6.13                      Agreements with Other Parties.  Without the prior written consent of the Company (upon the recommendation of the Special Committee), between the date of this Agreement and the Closing Date, Buyer shall not, and shall not permit any of its Affiliates to, enter into any agreements, arrangements or understandings (other than as provided in this Agreement, the Ancillary Agreements and the Related Transaction Agreements) between Buyer or its Affiliates and either (i) FFELP Buyer Parent or its Affiliates with respect to the Transactions or (ii) CBNA or its Affiliates with respect to the Transactions that would have the effect of providing additional consideration in excess of the Merger Consideration provided to CBNA pursuant to this Agreement.

 

 

Section 6.14                      FIRPTA Certificate. The Company shall deliver to Buyer at Closing a duly executed certificate that the Company does not constitute a “United States real property holding corporation” (as defined in section 897 of the Code and the Treasury Regulations promulgated thereunder) in the form and manner required under section 1.1445-2(c)(3) of the Treasury Regulations; provided, however, if the Company fails to deliver such a certificate or Buyer has actual knowledge that such statement is false (or has received a notice that the statement is false) pursuant to Treasury Regulation Section 1.1445-4, Buyer shall be entitled to withhold pursuant to Section 1445 of the Code from amounts payable under this Agreement.

 

 

ARTICLE VII

 

CONDITIONS TO THE MERGER

 

Section 7.1                      Conditions to the Obligations of Each Party.  The obligations of the Company, Buyer and Acquisition Sub to consummate the Merger are subject to the satisfaction or waiver (by mutual agreement of the Company (upon the recommendation of the Special Committee) and Buyer, to the extent permitted by applicable Law) of the following conditions:

 

(a)           the Requisite Stockholder Approval shall have been obtained;

 

(b)           any applicable waiting period (or extension thereof) under the HSR Act relating to the Merger shall have expired or been terminated;

 

(c)           no Governmental Authority shall have commenced, enacted, issued, promulgated, enforced or entered into any Proceeding, Order or Law which is then in effect and has the effect of making the Merger illegal or otherwise prohibiting the consummation of the Merger;

 

(d)           the FFELP Transaction Closing shall have occurred; and

 

(e)           the CBNA Transaction Closing shall have occurred.

 

Section 7.2                      Conditions to the Obligations of Buyer.  The obligations of Buyer and Acquisition Sub to consummate the Merger are subject to the satisfaction or waiver by Buyer of the following further conditions:

 

(a)           (i) the representations and warranties of the Company contained in this Agreement shall be true and correct as of the date hereof and at and as of the Effective Time (without giving effect to any limitation as to materiality or Company Material Adverse Effect set forth therein) with the same force and effect as if made at and as of the Effective Time (other than (A) the representations and warranties set forth in the second and last sentences in Section 4.3(a), the second sentence in Section 4.3(b), Section 4.3(c), Section 4.3(d), Section 4.7(c), Section 4.9, Section 4.15(c), Section 4.17(c), Section 4.19, Section 4.24, Section 4.25, Section 4.26, Section 4.27 and Section 4.28, which are addressed in clauses (ii) and (iii) below, and (B) those representations and warranties that address matters only as of a particular date or only with respect to a specific period of time, which need only be true and correct as of such date or with respect to such period), except where the failure of such representations and warranties to be true and correct has not had and would not have, individually or in the aggregate, a Company Material Adverse Effect or materially impair the ability of the Company to perform its obligations under this Agreement, the Ancillary Agreements or the Related Transaction Agreements; (ii) the representations and warranties of the Company set forth in the second and last sentences in Section 4.3(a), the second sentence in Section 4.3(b), Section 4.3(c), Section 4.3(d), Section 4.15(c), Section 4.17(c), Section 4.19, Section 4.24, Section 4.25, Section 4.26 and Section 4.27 shall be true and correct in all material respects as of the date hereof and at and as of the Effective Time with the same force and effect as if made at and as of the Effective Time (other than those representations and warranties that address matters only as of a particular date or only with respect to a specific period of time, which need only be true and correct as of such date or with respect to such period); and (iii) the representations and warranties of the Company set forth in Section 4.7(c), Section 4.9 and  Section 4.28 shall be true and correct as of the date hereof and at and as of the Effective Time with the same force and effect as if made at and as of the Effective Time;

 

(b)           the Company shall have performed and complied in all material respects with all material agreements and covenants required by this Agreement and the Separation Agreement to be performed or complied with by it at or prior to the Effective Time, other than the covenant set forth in Section 6.14;

 

(c)           the Omnibus Credit Agreement shall have been terminated, all obligations of the Company and its Subsidiaries thereunder shall have been discharged in full, all Liens thereunder shall have been terminated and released and all property and assets held as collateral thereunder shall have been released, and Buyer shall have received reasonably satisfactory evidence thereof;

 

(d)           since the date hereof, there shall not have been any receiver or conservator appointed for CBNA or for all or any substantial part of its property;

 

(e)           there shall have been no amendment or modification to, or waiver of, any provision or condition of the Related Transaction Agreements or the Ancillary Agreements (or the forms thereof or term sheets relating thereto) in a manner that would reasonably be expected to adversely affect Buyer’s, the Company’s or any of their respective Subsidiaries’ rights and obligations under this Agreement, the Ancillary Agreements or the Related Transaction Agreements effected without the prior written consent of Buyer;

 

(f)           all of the Ancillary Agreements and all of the Related Transaction Agreements shall have been duly executed and delivered by each party thereto, each such agreement shall be in full force and effect, and no event shall have occurred and no condition or state of facts shall exist that has caused or would reasonably be expected to cause any such agreement not to be in full force and effect or that has materially impaired or would reasonably be expected to materially impair the ability of any party to perform its obligations thereunder; and

 

(g)           the Company shall have delivered to Buyer a certificate, dated the Effective Time and signed by an executive officer of the Company, certifying to the effect that the conditions set forth in Sections 7.2(a) through 7.2(f) have been satisfied.

 

Section 7.3                      Conditions to the Obligations of the Company.  The obligations of the Company to consummate the Merger are subject to the satisfaction or waiver by the Company (upon the recommendation of the Special Committee) of the following further conditions:

 

(a)           the representations and warranties of Buyer and Acquisition Sub contained in this Agreement shall be true and correct (without giving effect to any limitation as to materiality set forth therein) at and as of the Effective Time with the same force and effect as if made at and as of the Effective Time (other than those representations and warranties that address matters only as of a particular date or only with respect to a specific period of time, which need only be true and correct as of such date or with respect to such period), except where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, reasonably be expected to prevent or materially delay or materially impair the ability of Buyer or any of its Subsidiaries to consummate any of the Transactions;

 

(b)           Buyer and Acquisition Sub shall have performed and complied in all material respects with all material agreements and covenants required by this Agreement and the Separation Agreement to be performed or complied with by them at or prior to the Effective Time; and

 

(c)           Buyer shall have delivered to the Company a certificate, dated the Effective Time and signed by an executive officer of Buyer, certifying to the effect that the conditions set forth in Section 7.3(a) and Section 7.3(b) have been satisfied.

 

 

ARTICLE VIII

 

TERMINATION, AMENDMENT AND WAIVER

 

Section 8.1                      Termination.  Notwithstanding anything contained in this Agreement to the contrary, this Agreement may be terminated and the Merger may be abandoned, at any time prior to the Effective Time, whether before or after the Requisite Stockholder Approval, as follows:

 

(a)           by mutual written consent of each of Buyer and the Company;

 

(b)           by written notice of either Buyer or the Company, if (i) the Merger has not been consummated on or before March 31, 2011 (the “Termination Date”); and (ii) the party seeking to terminate this Agreement pursuant to this Section 8.1(b) shall not have breached in any material respect its obligations under this Agreement in any manner that shall have proximately caused the failure to consummate the Merger on or before such date; provided that, if as of the Termination Date, (A) all of the conditions to this Agreement (other than those that are to be satisfied by action taken at the Closing) shall have been satisfied or waived other than the conditions set forth in (x) Section 7.1(b) or Section 7.1(c), or (y) Section 7.1(d) or Section 7.1(e) (to the extent resulting from the failure to obtain regulatory approvals), or (B) the “Termination Date” (as defined in the FFELP Transaction Agreement or the CBNA Transaction Agreement, as applicable) has been extended, then the Termination Date shall be automatically extended to April 30, 2011 or such date as the Termination Date (as defined in the FFELP Transaction Agreement or the CBNA Transaction Agreement) has been extended;

 

(c)           by written notice of either Buyer or the Company, if any Governmental Authority of competent jurisdiction shall have issued an Order or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such Order or other action shall have become final and nonappealable; provided that the party seeking to terminate this agreement pursuant to this Section 8.1(c) shall have complied in all material respects with its obligations under Section 6.4 hereof;

 

(d)           by written notice of either Buyer or the Company, if the Requisite Stockholder Approval shall not have been obtained at a duly held Stockholders’ Meeting (including any adjournment or postponement thereof at which a quorum is present and the votes to adopt this Agreement and approve the Merger are taken);

 

(e)           by written notice from the Company to Buyer, if Buyer shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements set forth in this Agreement, which breach or failure to perform (1) would result in a failure of a condition set forth in Section 7.3(a) or Section 7.3(b) and (2) cannot be cured by the Termination Date; provided that the Company shall have given Buyer written notice, delivered at least forty-five (45) days prior to such termination, stating the Company’s intention to terminate this Agreement pursuant to this Section 8.1(e) and the basis for such termination;

 

(f)           by written notice from Buyer to the Company, if the Company shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements set forth in this Agreement, which breach or failure to perform (1) would result in a failure of a condition set forth in Section 7.2(a) or Section 7.2(b) and (2) cannot be cured by the Termination Date; provided that Buyer shall have given the Company written notice, delivered at least forty-five (45) days prior to such termination, stating Buyer’s intention to terminate this Agreement pursuant to this Section 8.1(f) and the basis for such termination;

 

(g)           by written notice from the Company (upon the recommendation of the Special Committee) to Buyer, simultaneously with the Company or its Subsidiaries entering into a Superior Proposal Agreement in accordance with Section 6.6(g);

 

(h)           by written notice from either Buyer or the Company, if either the FFELP Transaction Agreement or the CBNA Transaction Agreement has been terminated; or

 

(i)           by written notice from Buyer if the Company effects a Change of Recommendation in response to a Superior Proposal.

 

Section 8.2                      Effect of Termination.  If this Agreement is terminated pursuant to Section 8.1, this Agreement shall become void and of no effect without liability of any party (or any stockholder, director, officer, employee, agent, consultant or representative of such party) to the other party hereto; provided, however, no party to this Agreement shall be relieved or released from any liabilities or damages arising out of its knowing and intentional breach of its obligations under this Agreement.  For purposes of this Agreement, “knowing and intentional breach” means an act or failure to act which constitutes a breach of this Agreement with respect to which the breaching party has knowledge (actual or constructive) that such act or failure to act would or would reasonably be expected to breach its obligations under this Agreement.  Notwithstanding the foregoing, the provisions of this Article VIII, Article IX, and the Confidentiality Agreement referred to in Section 6.5 shall survive any termination hereof pursuant to Section 8.1.

 

Section 8.3                      Fees and Expenses.

 

(a)           If (i) prior to the termination of this Agreement, a Qualifying Transaction is proposed or publicly disclosed, (ii) this Agreement is terminated by Buyer or the Company pursuant to Section 8.1(b) and (iii) concurrently with, or within twelve (12) months after any such termination, any Qualifying Transaction is consummated or the Company or any of its Affiliates enters into any letter of intent, agreement in principle or Contract with respect to a Qualifying Transaction, then the Company shall pay to Buyer a fee of $24,000,000 in cash, such payment to be made upon the earlier of entry into the letter of intent, agreement in principle or Contract with respect to such Qualifying Transaction or the consummation of such Qualifying Transaction; provided, that if at the time of such payment the FFELP Buyer Parent is entitled to a payment from the Company pursuant to Section 11.3(a) of the FFELP Transaction Agreement, then the Company shall pay to Buyer a fee of $12,000,000 in cash.

 

(b)           If (i) prior to the termination of this Agreement, an Alternate Superior Proposal is proposed or publicly disclosed and (ii) this Agreement is terminated by Buyer or the Company pursuant to Section 8.1(b) or Section 8.1(d), then the Company shall pay to Buyer a fee of $24,000,000 in cash, such payment to be made promptly upon termination of this Agreement and in any event within two (2) Business Days after the termination of this Agreement.

 

(c)           If this Agreement is terminated by the Company pursuant to Section 8.1(g), then the Company shall pay to Buyer a fee of $12,000,000 in cash, such payment to be made concurrently with such termination.

 

(d)           If this Agreement is terminated by Buyer pursuant to Section 8.1(i), then the Company shall pay to Buyer a fee of $12,000,000 in cash, such payment to be made promptly upon termination of this Agreement and in any event within two (2) Business Days after the termination of this Agreement.

 

(e)           If this Agreement is terminated by the Company or Buyer (i) pursuant to Section 8.1(h) and, prior thereto, the FFELP Transaction Agreement was terminated by the FFELP Buyer Parent pursuant to Section 11.1(e) or Section 11.1(g) of the FFELP Transaction Agreement or (ii) pursuant to Section 8.1(b) and there had previously occurred a willful breach by the Company of the FFELP Transaction Agreement, then the Company shall pay Buyer a fee of $24,000,000 in cash, such payment to be made no later than two (2) Business Days after the date of termination of this Agreement.  In the event that Buyer receives the Company Termination Fee pursuant to this Section 8.3(e), the receipt of such fee shall be deemed to be liquidated damages for any and all losses or damages suffered or incurred by Buyer or Acquisition Sub in connection with this Agreement (and the termination hereof); provided, that nothing in this Section 8.3(e) shall prohibit any payment required to be made pursuant to Section 8.3(f).

 

(f)           Unless a Company Termination Fee is payable under Section 8.3(e), if this Agreement is terminated by the Company or Buyer pursuant to (i) Section 8.1(b) and at the time of such termination the only conditions that were not satisfied were Section 7.1(d), Section 7.1(e), Section 7.2(c) and any other conditions that by their nature can only be satisfied at the Closing or (ii) Section 8.1(h), then the Company shall reimburse Buyer upon demand by wire transfer of immediately available funds to an account specified in writing by Buyer for an amount equal to 120% of the aggregate amount of Transaction Expenses of Buyer; provided, however, that the Company shall not be obligated to make a payment pursuant to this Section 8.3(f) in excess of $4,000,000 in the aggregate.

 

(g)           Notwithstanding anything in this Agreement to the contrary, in no event shall the Company be required to pay a Company Termination Fee pursuant to Section 8.3(a), 8.3(b), 8.3(c), 8.3(d) or 8.3(e) on more than one occasion.  Any such payment shall be reduced by any amounts as may be required to be deducted or withheld therefrom under applicable Tax Law, provided, however, that prior to or on the date of the Company making any such withholding, (i) the Company shall notify Buyer as soon as reasonably practicable after notice of termination of this Agreement or entry into a Superior Proposal Agreement, as applicable, that such withholding is required, (ii) the Company and Buyer shall use reasonable efforts to minimize any withholding Taxes and (iii) Buyer may deliver to the Company such properly completed and executed documentation prescribed by applicable Law as would permit such payment to be made without withholding or at a reduced rate of withholding.  Buyer and the Company each acknowledge that under current Law, no U.S. federal withholding Tax would be required with respect to the Company Termination Fee.

 

(h)           Each of the parties hereto acknowledges that the Company Termination Fee and the other provisions of this Section 8.3 are an integral part of the transactions contemplated by this Agreement and that, without the Company Transaction Fee and such other provisions, Buyer would not enter into this Agreement; accordingly, if the Company fails to promptly pay the amounts due pursuant to Section 8.3(a), 8.3(b), 8.3(c), 8.3(d), 8.3(e) or 8.3(f) and, in order to obtain such payment Buyer commences a suit which results in a judgment against the Company for any of the amounts set forth in Section 8.3(a), 8.3(b), 8.3(c), 8.3(d), 8.3(e) or 8.3(f), then the Company shall pay to Buyer its costs and expenses (including attorneys’ fees) in connection with such suit, together with interest on all amounts due pursuant to Section 8.3(a), 8.3(b), 8.3(c), 8.3(d), 8.3(e) or 8.3(f) at the prime rate of Citibank, N.A. in effect on the date plus 2% per annum from the date such amounts were required to be paid until the date actually received by Buyer.

 

(i)           Subject to the foregoing, all expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party incurring such expenses, except that the Company shall pay, whether or not the Merger or any other transaction is consummated, all expenses incurred in connection with (i) printing, filing and mailing the Proxy Statement and all SEC and other regulatory filing fees incurred in connection with the Proxy Statement, (ii) any filing with antitrust authorities and (iii) the Paying Agent.  Any Company Termination Fee required to be paid pursuant hereto shall be paid by wire transfer of immediately available funds to an account specified in writing by Buyer.

 

Section 8.4                      Amendment.  This Agreement may be amended by mutual agreement of the parties hereto at any time prior to the Effective Time (in the case of the Company, by the Board of Directors (upon the recommendation of the Special Committee)); provided, however, that, after the adoption of this Agreement and approval of the Merger by stockholders of the Company, there shall not be any amendment that by Law or in accordance with the rules of the NYSE requires further approval by the stockholders of the Company without such further approval of such stockholders nor any amendment or change not permitted under applicable Law.  This Agreement may not be amended except by an instrument in writing signed by the parties hereto.

 

Section 8.5                      Waiver.  At any time prior to the Effective Time, subject to applicable Law, any party (in the case of the Company, by the Board of Directors (upon the recommendation of the Special Committee)) hereto may (a) extend the time for the performance of any obligation or other act of any other party hereto, (b) waive any inaccuracy in the representations and warranties of the other party contained herein or in any document delivered pursuant hereto and (c) subject to the proviso of Section 8.4, waive compliance with any agreement or condition contained herein.  Any such extension or waiver shall only be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby.  Notwithstanding the foregoing, no failure or delay by the Company, Buyer or Acquisition Sub in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder.

 

 

ARTICLE IX

 

GENERAL PROVISIONS

 

Section 9.1                      Notices.  Any notice required to be given hereunder shall be sufficient if in writing, and sent by facsimile transmission (provided that any notice received by facsimile transmission or otherwise at the addressee’s location on any Business Day after 5:00 p.m. (addressee’s local time) shall be deemed to have been received at 9:00 a.m. (addressee’s local time) on the next Business Day), by reliable overnight delivery service (with proof of service), hand delivery or certified or registered mail (return receipt requested and first-class postage prepaid), addressed as follows (or at such other address for a party as shall be specified in a notice given in accordance with this Section 9.1):

 

if to Buyer:

Discover Bank

12 Read’s Way

New Castle, Delaware 19720

Fax: 302-323-7393

Attention: Mike Rickert

 

with copies to (which shall not constitute notice):

Discover Financial Services

2500 Lake Cook Road

Riverwoods, IL 60015

Fax: 224-405-4957

Attention: Carlos Minetti

 

and:

Discover Financial Services

2500 Lake Cook Road

Riverwoods, IL 60015

Fax: 224-405-4584

Attention: Kelly McNamara Corley

 

and:

Sidley Austin LLP

1 South Dearborn Street

Chicago, IL 60603

Fax: 312-853-7036

Attention: Paul L. Choi

     Willis R. Buck, Jr.

     Scott R. Williams

 

if to the Company:

The Student Loan Corporation

750 Washington Blvd.

Stamford, Connecticut 06901

Fax: 203-975-6724

Attention:  Chief Executive Officer

 

with copies to (which shall not constitute notice):

CID Management

850 Third Ave, 18th Floor

New York, NY 10022

Fax: 212-207-3950

Attention: Rodman L. Drake, Chairman of the Special Committee

and with further copies to (which shall not constitute notice):

 

Proskauer Rose LLP

1585 Broadway

New York, NY 10036-8299

Fax:  212-969-2900

Attention:           Julie Allen

                             Arnold Jacobs

 

and:

 

McDermott, Will & Emery LLP

340 Madison Avenue

New York, New York 10173-1922

Fax: 212-547-5444

Attention:         Peter J. Rooney

 

 

and:

 

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, NY 10036

Fax:  212-735-2000

Attention:      William S. Rubenstein

                         Sean C. Doyle

 

Section 9.2                      Interpretation; Certain Definitions.  When a reference is made in this Agreement to an Article, Section or Exhibit, such reference shall be to an Article or Section of, or an Exhibit to, this Agreement, unless otherwise indicated.  The table of contents and headings for this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”  The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein.  The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term.  Any statute defined or referred to herein or in any agreement or instrument that is referred to herein means such statute as from time to time amended, modified or supplemented, including (in the case of statutes) by succession of comparable successor statutes, and any rules, regulations or guidelines issued or promulgated thereunder.  Other than in Section 9.4, references to a person are also to its permitted successors and assigns.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement.

 

Section 9.3                      Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Merger is not affected in any manner materially adverse to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the Merger be consummated as originally contemplated to the fullest extent possible.

 

Section 9.4                      Assignment.  Neither this Agreement nor any rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of Law or otherwise) without the prior written consent of the other parties hereto.

 

Section 9.5                      Entire Agreement; No Third Party Beneficiaries.  This Agreement (including the exhibits and schedules hereto), the Confidentiality Agreement and the Ancillary Agreements constitute the entire agreement, and supersede all other prior agreements and understandings, both written and oral, between the parties, or any of them, with respect to the subject matter hereof and thereof.  This Agreement shall be binding upon and inure solely to the benefit of each party hereto and their respective successors and permitted assigns, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement; provided that, from and after the Effective Time, the Company’s stockholders shall be third party beneficiaries of the right to receive the Merger Consideration pursuant to Article III.

 

Section 9.6                      Governing Law.  This Agreement, and all claims or causes of action (whether in contract or tort) that may be based upon, arise out or relate to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement) shall be governed by, and construed in accordance with the Laws of the State of Delaware, without giving effect to any otherwise applicable choice or conflict of laws provision or rule.

 

Section 9.7                      Consent to Jurisdiction.

 

(a)           Each of Buyer, Acquisition Sub and the Company hereby irrevocably submits to the exclusive jurisdiction of the Delaware Chancery Court, or if such court shall not have jurisdiction, any federal or other state court of the State of Delaware, for the purpose of any action or proceeding arising out of or relating to this Agreement and each of the parties hereto hereby irrevocably agrees that all claims in respect to such action or proceeding may be heard and determined exclusively in any such court.  Each of Buyer, Acquisition Sub and the Company agrees that a final judgment in any action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.

 

(b)           Each of Buyer, Acquisition Sub and the Company irrevocably consents to the service of the summons and complaint and any other process in any other action or proceeding relating to the transactions contemplated by this Agreement, on behalf of itself or its property, by personal delivery of copies of such process to such party. Nothing in this Section 9.7 shall affect the right of any party to serve legal process in any other manner permitted by Law.

 

Section 9.8                      Counterparts.  This Agreement may be executed and delivered (including by facsimile transmission) in two (2) or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

 

Section 9.9                      WAIVER OF JURY TRIAL.  EACH OF BUYER, ACQUISITION SUB AND THE COMPANY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE MERGER, THE OTHER TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF BUYER OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.

 

Section 9.10                      Specific Performance.  The parties hereby expressly acknowledge and agree that immediate, extensive and irreparable damage would result, no adequate remedy at law would exist and damages would be difficult to determine in the event that any provision of this Agreement is not performed in accordance with its specific terms or otherwise breached.  Therefore, in addition to, and not in limitation of, any other remedy available to any party, an aggrieved party under this Agreement would be entitled to specific performance of the terms hereof and immediate injunctive relief, without the necessity of proving the inadequacy of money damages as a remedy.  Such remedies, and any and all other remedies provided for in this Agreement, shall, however, be cumulative in nature and not exclusive and shall be in addition to any other remedies whatsoever which any party may otherwise have.  Each of the parties hereby acknowledges and agrees that it may be difficult to prove damages with reasonable certainty, that it may be difficult to procure suitable substitute performance, and that injunctive relief and/or specific performance will not cause an undue hardship to the parties. Each of the parties hereby further acknowledges that the existence of any other remedy contemplated by this Agreement does not diminish the availability of specific performance of the obligations hereunder or any other injunctive relief.

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

  

  

  

IN WITNESS WHEREOF, Buyer, Acquisition Sub and the Company have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

 

DISCOVER BANK

 

By:           /s/ Michael S. Rickert

Name: Michael S. Rickert

Title: Vice President, Chief Financial Officer and Treasurer

 

 

ACADEMY ACQUISITION CORP.

 

By:           /s/ Carlos Minetti

Name:  Carlos Minetti

Title:  President

 

 

THE STUDENT LOAN CORPORATION

 

By:          /s/ Michael J. Reardon

Name: Michael J. Reardon

Title: Chief Executive Officer

 

  

  

  

 

Appendix A

 

 

 

 

COMPANY REPRESENTATIONS AND WARRANTIES

 

 

WITH RESPECT TO TRUST STUDENT LOANS

 

Except for Student Loans that have been purchased or substituted by the Company or the Depositor in accordance with the terms of the Securitization Master Terms Sale Agreements or the Securitization Master Terms Purchase Agreements, the Company represents and warrants as to the Trust Student Loans purchased by the Depositor or substituted by the Company under the related Purchase Agreement and each Bill of Sale executed pursuant to the Securitization Master Terms Purchase Agreements as of the date of the related Purchase Agreement, or as of the date otherwise noted:

(a)           The Company, had good and marketable title to, and was the sole owner of, the Trust Student Loans, free and clear of all security interests, liens, charges, claims, offsets, defenses, counterclaims or encumbrances of any nature and no right of rescission, offsets, defenses or counterclaims had been asserted or threatened with respect to such Trust Student Loans;

 

(b)           Each Securitization Master Terms Purchase Agreement created a valid and continuing security interest (as defined in the applicable Uniform Commercial Code) in the Trust Student Loans sold thereunder in favor of the Depositor, which security interest was prior to all other security interests, liens, charges, claims, offsets, defenses, counterclaims or encumbrances, and was enforceable as such as against creditors of and purchasers from the Company;

 

(c)           The Trust Student Loans constituted either “Payment Intangibles” or “Instruments” within the meaning of the applicable Uniform Commercial Code;

 

(d)           The Trust Student Loans were Securitization Eligible Loans and the description of the Trust Student Loans set forth in the related Purchase Agreement and the related Loan Transmittal Summary Form were true and correct;

 

(e)           The Company was authorized to sell, assign, transfer, substitute and repurchase the Trust Student Loans; and the sale, assignment and transfer of such Trust Student Loans was or, in the case of a Student Loan repurchase or substitution by the Company, was made pursuant to and consistent with the laws and regulations under which the Company operated, and did not violate any decree, judgment or order of any court or agency, or conflict with or result in a breach of any of the terms, conditions or provisions of any agreement or instrument to which the Company was a party or by which the Company or its property was bound, or constituted a default (or an event which could constitute a default with the passage of time or notice or both) thereunder;

 

(f)           The Trust Student Loans were each in full force and effect in accordance with their terms and were legal, valid and binding obligations of the respective Borrowers thereunder subject to no defenses (except the defense of infancy);

 

(g)           No consents and approvals were required by the terms of the Trust Student Loans for the consummation of the sale of such Trust Student Loans under the related Purchase Agreement to the Depositor;

 

(h)           The information with respect to the applicable Trust Student Loans as of the Securitization Cutoff Date or, in the case of any substituted Trust Student Loans, the related Payment Cutoff Date, as stated on the related Loan Transmittal Summary Form was materially true and correct;

 

(i)           Due diligence and reasonable care have been exercised in the making, administering, servicing and collecting on the Trust Student Loans;

 

(j)           Each Trust Student Loan had been duly made and serviced in accordance with the provisions of the related program under which such Trust Student Loan was originated and all applicable federal and state laws;

 

(k)           No Trust Student Loan was more than the number of days Delinquent permitted under the terms of the  related Securitization Master Terms Purchase Agreement and no default, breach, violation or event permitting acceleration under the terms of any Trust Student Loan had arisen; and neither the Company nor any predecessor holder of any Trust Student Loan had waived any of the foregoing other than as permitted by the Securitization Basic Documents;

 

(l)           Except for Trust Student Loans executed electronically, there was only one original executed copy of the Note evidencing each Trust Student Loan.  For Trust Student Loans that were executed electronically, either (i) the Servicer had possession of the electronic records evidencing the Note or (ii) the Company had agreements with the previous holders or servicers of such Note under which the relevant holder or servicer agreed to hold and maintain the electronic records evidencing the Note, in each case as may have been necessary to enforce the Note or as may have been required by applicable laws regarding electronic chattel paper, including without limitation, any applicable e-sign loans.

 

(m)           The Notes that constitute or evidence the Trust Student Loans did not have any marks or notations indicating that they had been pledged, assigned or otherwise conveyed to any person other than the Depositor.  All financing statements filed against the Company in favor of the Depositor in connection with the applicable Purchase Agreement describing the Trust Student Loans contain a statement to the following effect: “A purchase of or security interest in any collateral described in this financing statement will violate the rights of the [secured party]”;

 

(n)           Other than the security interest granted to the Depositor pursuant to the applicable Securitization Master Terms Purchase Agreement, the Company had not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Trust Student Loans.  The Company had not authorized the filing of and was not aware of any financing statements against the Company that included a description of collateral covering the Trust Student Loans other than any financing statement relating to the security interest granted to the Company thereunder or any other security interest that had been terminated.  The Company was not aware of any judgment or Tax lien filings against the Company;

 

(o)           No Borrower of a Trust Student Loan as of the applicable Securitization Cutoff Date or, in the case of any substitution following the Securitization Closing Date, as of the date of the related Purchase Agreement, was noted in the related Loan File as being then involved in a bankruptcy proceeding;

 

(p)           The transfer and assignment under the related Purchase Agreement and each Securitization Master Terms Purchase Agreement constituted a valid sale of the Trust Student Loans from the Company to the Depositor and the beneficial interest in and title to such Trust Student Loans would not be part of the Company’s estate in the event of the bankruptcy of the Company or the appointment of a receiver with respect to the Company.  The Company caused the timely filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect a first priority security interest in the related Trust Student Loans and other collateral granted under the Securitization Basic Documents; and

 

(q)           With respect to Trust Student Loans in the 2006-A Trust, the Company has the right to assign to the Depositor its rights under the applicable Insurance Agreements covering Trust Student Loans that are subject to Student Loan Insurance Policies.exhibit102.htm

EXECUTION COPY

 

ASSET PURCHASE AGREEMENT

 

by and among

 

THE STUDENT LOAN CORPORATION,

as Seller, Servicer, SPV Administrator and Sponsor,

 

CITIBANK, N.A.,

in its individual capacity and as Depositor Eligible Lender Trustee, Conduit Eligible Lender Trustee, Securitization Eligible Lender Trustee, Omnibus Lender and Indenture Administrator,

 

CITIBANK (SOUTH DAKOTA) NATIONAL ASSOCIATION,

as Subservicer, Sub-Subservicer, Custodian and SPV Sub-Administrator,

 

SLC STUDENT LOAN RECEIVABLES I, INC.,

as Depositor,

 

____________________

 

SLM CORPORATION,

in its individual capacity,

 

BULL RUN 1 LLC,

as Securitization Buyer and Conduit Buyer,

 

SLM EDUCATION CREDIT FINANCE CORPORATION,

as successor Sponsor,

 

and

 

SALLIE MAE, INC.,

as successor Subservicer, successor Sub-Administrator and successor SPV Administrator

 

 

Dated as of September 17, 2010

 

  

  

  

TABLE OF CONTENTS

	  	  	
Page

	
ARTICLE I

 

	
DEFINITIONS, ACCOUNTING TERMS AND INTERPRETATION

 

	
2

	
Section 1.1

	
Defined Terms

	
2

	
Section 1.2

	
Computation of Time Periods

	
3

	
Section 1.3

	
Accounting Terms and Principles

	
3

	
Section 1.4

	
Certain Terms

	
3

	
Section 1.5

 

	
Disclosure Schedule

 

	
4

	
ARTICLE II

 

	
PURCHASE OF TRUST CERTIFICATES

 

	
4

	
Section 2.1

	
Purchase and Sale

	
4

	
Section 2.2

	
Accession Agreement

	
6

	
Section 2.3

	
Opinions

	
7

	
Section 2.4

	
Rating Agencies

	
7

	
Section 2.5

	
Partial Release of Security Interest

	
7

	
Section 2.6

 

	
Intent and Characterization

 

	
7

	
ARTICLE III

 

	
ASSUMPTION OF SECURITIZATION DUTIES

 

	
8

	
Section 3.1

	
Duties of Indenture Administrator

	
8

	
Section 3.2

	
Securitization Eligible Lender Trustee

	
8

	
Section 3.3

	
Appointment of Sub-Administrator

	
8

	
Section 3.4

	
Assumption of Duties of Subservicer

	
9

	
Section 3.5

	
Assumption of Obligations of the Seller under the Securitization Master Terms Purchase Agreements

	
10

	
Section 3.6

	
Makewhole and Participation Agreement

	
10

	
Section 3.7

 

	
Costs and Expenses

 

	
10

	
ARTICLE IV

 

	
PURCHASE OF FUNDING NOTE ISSUER

 

	
11

	
Section 4.1

	
Purchase and Sale

	
11

	
Section 4.2

	
No Dividends, Repayments or Returns of Capital Contributions; Excess Cash

	
12

	
Section 4.3

	
Opinions

	
13

	
Section 4.4

	
Assignment and Assumption

	
13

	
Section 4.5

	
Consents

	
13

	
Section 4.6

	
Release

	
13

	
Section 4.7

 

	
Intent and Characterization

 

	
14

	
ARTICLE V

 

	
ASSUMPTION OF CONDUIT DUTIES

 

	
14

	
Section 5.1

	
Department Agreements

	
14

	
Section 5.2

	
Conduit Subservicing

	
14

	
Section 5.3

	
Conduit Administration

	
14

	
Section 5.4

	
Termination of Subordinated Credit Agreement

	
15

	
Section 5.5

	
Conduit Eligible Lender Trustee

	
15

	
Section 5.6

 

	
Consents; Costs and Expenses

 

	
15

	
ARTICLE VI

 

	
DEPOSITOR AGREEMENT

 

	
16

	
ARTICLE VII

 

	
REPRESENTATIONS AND WARRANTIES

 

	
16

	
Section 7.1

	
Representations and Warranties of each Party

	
16

	
Section 7.2

	
Additional Representations and Warranties of the Seller

	
18

	
Section 7.3

	
Additional Representations and Warranties of each Buyer

	
25

	
Section 7.4

 

	
Additional Representations and Warranties of Buyer Parent

 

	
26

	
ARTICLE VIII

 

	
CLOSING

 

	
27

	
Section 8.1

 

	
Closing

 

	
27

	
ARTICLE IX

 

	
CONDITIONS PRECEDENT

 

	
27

	
Section 9.1

	
Conditions to the Obligations of the Parties

	
27

	
Section 9.2

	
Conditions to the Obligations of the Buyer Parties

	
28

	
Section 9.3

	
Conditions to the Obligations of the Seller Parties

	
29

	
Section 9.4

 

	
Closing Documents

 

	
30

	
ARTICLE X

 

	
COVENANTS

 

	
31

	
Section 10.1

	
No Public Announcements

	
31

	
Section 10.2

	
Proxy Statement

	
32

	
Section 10.3

	
Stockholders’ Meeting

	
33

	
Section 10.4

	
No Solicitation of Competing Proposal

	
33

	
Section 10.5

	
Appropriate Action; Consents; Filings

	
38

	
Section 10.6

	
Access to Information; Confidentiality

	
40

	
Section 10.7

	
Non-Solicit

	
41

	
Section 10.8

	
Related Transaction Documents

	
42

	
Section 10.9

	
Agreements with Other Parties

	
42

	
Section 10.10

	
Conduct of Business by the Seller Pending the Closing

	
42

	
Section 10.11

 

	
Merger Transaction Restructuring

 

	
44

	
ARTICLE XI

 

	
TERMINATION, AMENDMENT AND WAIVER

 

	
45

	
Section 11.1

	
Termination

	
45

	
Section 11.2

	
Effect of Termination

	
47

	
Section 11.3

	
Termination Fee

	
47

	
Section 11.4

	
Amendment

	
49

	
Section 11.5

 

	
Waiver

 

	
49

	
ARTICLE XII

 

	
CERTAIN LIABILITY MATTERS

 

	
49

	
Section 12.1

	
No Assumption of Liability

	
49

	
Section 12.2

 

	
Release

 

	
50

	
ARTICLE XIII

 

	
MISCELLANEOUS

 

	
50

	
Section 13.1

	
Assignments

	
50

	
Section 13.2

	
Costs and Expenses

	
50

	
Section 13.3

	
Use of Proceeds

	
50

	
Section 13.4

	
Relationship of Parties

	
50

	
Section 13.5

	
Non-Petition Covenants

	
50

	
Section 13.6

	
Notices, Etc

	
51

	
Section 13.7

	
Entire Agreement; No Third Party Beneficiaries

	
51

	
Section 13.8

	
Governing Law

	
51

	
Section 13.9

	
Submission to Jurisdiction; Service of Process

	
52

	
Section 13.10

	
Waiver of Jury Trial

	
52

	
Section 13.11

	
Further Assurances

	
53

	
Section 13.12

	
Severability

	
53

	
Section 13.13

	
Section Titles

	
53

	
Section 13.14

	
Execution in Counterparts

	
53

	
Section 13.15

	
Specific Performance

	
53

  

  

  

 

APPENDICES

 

	
Appendix A

	
-

	
Definitions

	
Appendix B

	
-

	
List of Trust Certificates

	
Appendix C

	
-

	
Intentionally Omitted

	
Appendix D

	
-

	
Notices

	
Appendix E

	
-

	
Seller Representations and Warranties with Respect to Trust Student Loans

	
Appendix F

	
-

	
Seller Representations and Warranties with Respect to Financed Student Loans

 

EXHIBITS

 

	
Ancillary Agreements

	  	  	  
	
Exhibit A

	
-

	
Voting Agreement

	
Exhibit B

	
-

	
Indemnification Agreement

	  	  	  
	
Securitization

	  	  
	  	  	  
	
Exhibit 2.1

	
-

	
Form of Trust Certificates Bill of Sale

	
Exhibit 2.1(a)

	
-

	
Model Purchase Price Calculation

	
Exhibit 2.2

	
-

	
Form of Accession Agreement for Trust Certificates

	
Exhibit 2.5

	
-

	
Form of Partial Release of Security Interest

	
Exhibit 3.3(a)(i)

	
-

	
Form of Sub-Administration Agreement

	
Exhibit 3.3(a)(ii)

	
-

	
Form of Sub-Sub-Administration Agreement

	
Exhibit 3.3(a)(iii)

	
-

	
Form of Administration Services Agreement

	
Exhibit 3.4(a)(i)

	
-

	
Form of Replacement Subservicing Agreement

	
Exhibit 3.4(a)(ii)

	
-

	
Form of Sub-Subservicing Agreement

	
Exhibit 3.4(a)(iii)

	
-

	
Form of Servicing Services Agreement

	
Exhibit 3.5

	
-

	
Form of Assumption of Obligations of the Seller under Master Terms Purchase Agreements

	
Exhibit 3.6

	
-

	
Form of Makewhole and Participation Agreement

	  	  	  
	
Conduit

	  	  
	  	  	  
	
Exhibit 4.4

	
-

	
Form of Conduit Bill of Sale

	
Exhibit 4.6

	
-

	
Form of Conduit Mutual Release

	
Exhibit 5(a)

	
-

	
List of Conduit Documents

	
Exhibit 5.1

	
-

	
Department Form Agreements

	
Exhibit 5.2(i)

	
-

	
Forms of Conduit Replacement Subservicing Agreement

	
Exhibit 5.2(ii)

	
-

	
Form of Conduit Servicing Services Agreement

	
Exhibit 5.3(b)

	
-

	
Form of SPV Sub-Administration Agreement

	
Exhibit 5.3(c)

	
-

	
Form of Conduit Services Agreement

	  	  	  
	
Depositor

	  	  
	
Exhibit 6

	
-

	
Form of Depositor Agreement

	  
	
Closing

	  	  
	  	  	  
	
Exhibit 9.2

	
-

	
Form of Seller Satisfaction Certificate

	
Exhibit 9.3

	
-

	
Form of Buyer Satisfaction Certificate

	  	  	  
	
General

	  	  	  
	
Exhibit 10.6(b)

	
-

	
Form of Amended and Restated Confidentiality Agreement

	
Exhibit 12.2

	
-

	
Form of Buyer/Seller Release

	  	  	  

  

  

  

 

ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT (as the same may be amended or otherwise modified from time to time in accordance with the terms hereof, this “Agreement”), dated as of September 17, 2010 (the “Commitment Date”) is entered into by and among (i) The Student Loan Corporation, a Delaware corporation, as Seller, Servicer, SPV Administrator and Sponsor; (ii) Citibank, N.A., a national banking association, in its individual capacity and as Depositor Eligible Lender Trustee, Conduit Eligible Lender Trustee, Securitization Eligible Lender Trustee, Omnibus Lender and Indenture Administrator (“CBNA”); (iii) Citibank (South Dakota) National Association, a national banking association, as Subservicer, Sub-Subservicer, Custodian and SPV Sub-Administrator (“CSD”); (iv) SLC Student Loan Receivables I, Inc., a Delaware corporation, as Depositor, (v) SLM Corporation, a Delaware corporation, in its individual capacity (“Buyer Parent”); (vi) Bull Run 1 LLC, a Delaware limited liability company, as Securitization Buyer and Conduit Buyer; (vii) SLM Education Credit Finance Corporation, a Delaware corporation, as successor Sponsor (“Buyer Entity”); and (viii) Sallie Mae, Inc., a Delaware corporation, as successor Subservicer, successor Sub-Administrator and successor SPV Administrator (the “Buyer Subsidiary”).

 

 

W I T N E S S E T H:

 

WHEREAS, concurrently with the execution of this Agreement, The Student Loan Corporation is entering into an Asset Purchase Agreement, dated as of the date of this Agreement, by and among The Student Loan Corporation, CBNA, and CSD (as the same may be amended or otherwise modified from time to time in accordance with the terms thereof, the “CBNA Transaction Agreement”, and the transactions contemplated by the CBNA Transaction Agreement, the “CBNA Transaction”), pursuant to which, subject to the terms and conditions of the CBNA Transaction Agreement, immediately prior to the Closing, The Student Loan Corporation will sell to CBNA certain assets of The Student Loan Corporation, and CBNA will assume all the liabilities of The Student Loan Corporation and its Subsidiaries (other than the liabilities to be assumed by Buyer Parent pursuant to the Transactions and retained liabilities to remain with the Seller pursuant to the Merger Transaction);

 

WHEREAS, concurrently with the execution of this Agreement and the CBNA Transaction Agreement, The Student Loan Corporation is entering into an Agreement and Plan of Merger, dated as of the date of this Agreement (as the same may be amended or otherwise modified from time to time in accordance with the terms thereof, the “Merger Transaction Agreement”, and the transactions contemplated by the Merger Transaction Agreement, the “Merger Transaction”), by and among Discover Bank, a Delaware banking corporation (“Merger Buyer”), Academy Acquisition Corp, a Delaware corporation and The Student Loan Corporation, pursuant to which, subject to the terms and conditions of the Merger Transaction Agreement, immediately following the Closing, Academy Acquisition Corp. will merge with and into The Student Loan Corporation, with The Student Loan Corporation continuing as the surviving corporation, and the outstanding shares of common stock of The Student Loan Corporation (other than as specified in the Merger Transaction Agreement) will be converted into the right to receive the Merger Consideration (as defined in the Merger Transaction Agreement);

 

WHEREAS, the Seller is the owner of Trust Certificates, each evidencing 100% of the beneficial interest in a Securitization Trust securitizing a portfolio of FFELP Loans, which were sold by the Seller to the Depositor and by the Depositor to such Securitization Trust;

 

WHEREAS, the Trust Certificates are pledged to CBNA under the terms of the Omnibus Credit Agreement;

 

WHEREAS, the Seller has sold beneficial interests in FFELP Loans to SLC Conduit I LLC, a Delaware limited liability company (the “Funding Note Issuer”), a wholly-owned Subsidiary of the Seller, that finances such FFELP Loans through advances that are provided by Straight-A Funding, LLC, a conduit program, and that are secured by such FFELP Loans;

 

WHEREAS, the Seller, either directly or through Affiliates, provides loan servicing and other administrative services with respect to the Securitization Trusts and the Funding Note Issuer;

 

WHEREAS, the Seller and its Subsidiaries desire to sell, and Buyer Parent and certain of its Affiliates desire to purchase, the Seller’s interest in the Trust Certificates and the Seller’s entire Membership Interest in the Funding Note Issuer;

 

WHEREAS, CBNA will acquire a trust certificate evidencing the 100% beneficial interest in the 2010-1 Trust and the Depositor in the CBNA Transaction;

 

WHEREAS, the Seller and its Affiliates desire to assign or delegate certain of their administrative and loan servicing duties and obligations with respect to the Securitization Trusts and the 2010-1 Trust and the Funding Note Issuer, and Buyer Parent and certain of its Affiliates desire to assume, pay, perform and otherwise accept or discharge such duties and obligations; and

 

WHEREAS, concurrently with the execution of this Agreement, and as a condition to the willingness of the Buyer Parties to enter into this Agreement, CBNA is entering into (i) a Voting Agreement by and between Buyer Parent and Merger Buyer, a copy of which is attached as Exhibit A hereto (the “Voting Agreement”) and (ii) an Indemnification Agreement with Buyer Parent, a copy of which is attached as Exhibit B hereto (the “Indemnification Agreement”).

 

NOW, THEREFORE, in consideration of the foregoing, and of the representations, warranties, covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereto intending to be legally bound hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS, ACCOUNTING TERMS AND INTERPRETATION

 

Section 1.1                      Defined Terms

 

Capitalized terms used but not otherwise defined herein shall have the meanings set forth in Appendix A of this Agreement (such meanings to be equally applicable to both singular and plural forms of the terms defined).  Appendix A and the other appendices, exhibits and schedules to this Agreement shall constitute a part of this Agreement.

 

Section 1.2                      Computation of Time Periods

 

In this Agreement, in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding” and the word “through” means “to and including.”

 

Section 1.3                      Accounting Terms and Principles

 

All accounting terms not specifically defined herein shall be construed in accordance with GAAP and all accounting determinations required to be made pursuant hereto shall, unless expressly otherwise provided herein, be made in accordance with GAAP.

 

Section 1.4                      Certain Terms

 

(a)           The terms “herein,” “hereof,” “hereto” and “hereunder” and similar terms refer to this Agreement as a whole and not to any particular Article, Section, subsection or clause in this Agreement.

 

(b)           Unless otherwise expressly indicated herein, (i) references in this Agreement to an Appendix, Exhibit, Schedule, Article, Section, clause or sub-clause refer to the appropriate Appendix, Exhibit or Schedule to, or Article, Section, clause or sub-clause in this Agreement and (ii) the words “above” and “below,” when following a reference to a clause or a sub-clause of any Transaction Document, refer to a clause or sub-clause within, respectively, the same Section or clause of such Transaction Document.

 

(c)           The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such term.

 

(d)           References in this Agreement to any statute shall be to such statute as amended or modified from time to time and to any successor legislation thereto, in each case as in effect at the time any such reference is operative.

 

(e)           The term “including” when used in any Transaction Document means “including without limitation” except when used in the computation of time periods.

 

(f)           The terms “Seller” and “Buyers” include their respective permitted successors and assigns hereunder.

 

(g)           References in this Agreement (including in Appendix A) to another agreement or instrument shall mean such agreement or instrument as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, except if pursuant to the terms of this Agreement any such agreement or instrument may only be amended, supplemented or otherwise modified with the consent of a party hereto, and then only if such consent is obtained.  In addition, if pursuant to the terms of this Agreement any agreement or instrument is required to be amended, modified, restated or supplemented pursuant to this Agreement, any reference in this Agreement (including in Appendix A) to such agreement or instrument shall, unless otherwise separately defined herein, include such agreement or instrument as it has been amended, modified, restated or supplemented as required pursuant to this Agreement.

 

(h)           In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

 

(i)           The Seller will have been deemed to have “made available” or “furnished” to Buyer Parent any documents referred to in this Agreement if the Seller has posted (or has caused to have been posted) true, correct and complete copies of such documents to the Data Room prior to the date of this Agreement.

 

Section 1.5                      Disclosure Schedule

 

The Buyers and the Seller hereby acknowledge and agree that the disclosure of any item in any section of the Buyer Disclosure Schedule or the Seller Disclosure Schedule shall also be deemed to be disclosed with respect to any other section of the Buyer Disclosure Schedule or the Seller Disclosure Schedule, respectively, to which the relevance of such item is readily apparent on its face.

 

ARTICLE II

 

PURCHASE OF TRUST CERTIFICATES

 

Section 2.1                      Purchase and Sale

 

(a)           On the terms and subject to the satisfaction of the conditions set forth in this Agreement, including the conditions precedent set forth in ARTICLE IX and in reliance on the representations, warranties, covenants and agreements set forth in this Agreement, on the Closing Date, (i) the Seller hereby agrees to sell, transfer, assign and grant to the Securitization Buyer, without recourse to the Seller and without representations or warranties (except as specifically set forth herein), and the Securitization Buyer agrees to purchase from the Seller, the Seller’s right, title and interest in, to and under each of the Trust Certificates listed in Appendix B at its respective Certificate Purchase Price, in consideration of the payment of the aggregate Estimated Certificate Purchase Price to the Seller in the manner provided in Section 2.1(b) and subsequently adjusted pursuant to Section 2.1(e) and the agreement by the Securitization Buyer to assume, pay, perform and otherwise accept or discharge certain obligations and liabilities of a holder of such Trust Certificates, and (ii) the Securitization Buyer hereby agrees to assume, pay, perform and accept or otherwise discharge all such obligations and liabilities related to such Trust Certificates and the Securitization Trusts from and after the Closing.  The aggregate Estimated Certificate Purchase Price will be based upon the Schedule of Trust Student Loans determined as of the Applicable Measuring Date (or, if the information is not available, as of the most recent month end for which information is available) (the “Initial Cutoff Date”), will be prepared on a basis consistent with the Model Purchase Price Calculation attached hereto as Exhibit ‎2.1(a) (the “Model Purchase Price Calculation”) and will be further adjusted after the Closing Date pursuant to Section 2.1(e) based upon the Schedule of Trust Student Loans determined as of the Applicable Measuring Date.

 

(b)           Delivery or transfer of the Trust Certificates shall be made on the Closing Date at the time and in the manner agreed upon by the Seller and the Securitization Buyer, but in any event prior to the consummation of the Merger Transaction.  On the Closing Date, the Securitization Buyer shall pay or cause to be paid to CBNA, as designee of the Seller, the Estimated Certificate Purchase Price for each Trust Certificate by wire transfer of immediately available funds in U.S. dollars to the account specified by CBNA to the Securitization Buyer by written notice at least two Business Days prior to the Closing Date.  Upon receipt of evidence of the payment of the aggregate Estimated Certificate Purchase Price and receipt of a fully executed Accession Agreement, the Seller shall cause the Trust Certificates, accompanied by a written instrument of transfer and such signature guarantees and evidence of authority of the Persons signing the instrument of transfer as the Owner Trustee may require in accordance with the Securitization Trust Agreements, to be delivered along with the Accession Agreement and the Opinions of Counsel described in Section 2.3 to the Owner Trustee for transfer and for issuance of new Trust Certificates in the name of the Securitization Buyer or its designee.

 

(c)           The sale and purchase of the Trust Certificates on the Closing Date shall be consummated upon (i) the execution and delivery by the Seller and the Securitization Buyer of the Trust Certificates Bill of Sale (which will include a Schedule of Trust Student Loans determined as of the Initial Cutoff Date), (ii) the payment by the Securitization Buyer to CBNA, as designee of the Seller, of the aggregate Estimated Certificate Purchase Price in the manner provided in Section 2.1(b), (iii) the assignment to the Securitization Buyer of the Trust Certificates in accordance with the applicable requirements under the related Securitization Trust Agreements, (iv) the Seller’s receipt of an executed Buyer Satisfaction Certificate and (v) the Securitization Buyer’s receipt of an executed Seller Satisfaction Certificate.  Upon the satisfaction of such conditions, such sale and purchase shall be effective as of the Closing Date, prior to the consummation of the Merger Transaction.

 

(d)           If the Owner Trustee requires the payment of a sum sufficient to cover the payment of any Taxes or other government charges required to be paid in connection with the sale and purchase of the Trust Certificates pursuant to Section 2.1(b), such sum shall be paid by the Buyer Parent and CBNA as provided in the Indemnification Agreement.

 

(e)           Seller shall timely provide any information reasonably requested by the Buyer Parent to prepare an adjusted Schedule of Trust Student Loans, so that within fifteen (15) Business Days after the Closing Date, the Buyer Parent shall provide the Seller and CBNA with an adjusted Schedule of Trust Student Loans determined as of the Applicable Measuring Date and shall recalculate the Certificate Purchase Price for each Trust Certificate based upon such schedule to determine the aggregate Closing Certificate Purchase Price, with such calculation to be prepared on a basis consistent with the Model Purchase Price Calculation.  CBNA shall have ten (10) Business Days to review and comment on the adjusted Schedule of Trust Student Loans and the adjusted Certificate Purchase Prices, including the aggregate Closing Certificate Purchase Price.  During this period the Seller and Buyer Parent (to the extent available to it) will provide information relating to the adjusted Schedule of Trust Student Loans and adjusted Certificate Purchase Prices as reasonably requested by CBNA and Buyer Parent, and Buyer Parent will meet with CBNA to discuss this information and the calculations.  CBNA and Buyer Parent will reimburse Seller for its reasonable expenses incurred in connection with performing its obligations under this Section 2.1. If during this ten (10) Business Day period CBNA notifies the Buyer Parent that CBNA disagrees with these calculations, Buyer Parent and CBNA will meet to attempt to resolve any differences.  If they are unable to agree on the adjustments within the next thirty (30) days, then the Buyer Parent and CBNA will be free to pursue an additional review by jointly selecting an independent accounting firm to review the calculations and make a determination as to the Closing Certificate Purchase Price.  If CBNA and the Buyer Parent are unable to agree on an accounting firm, then they will apply to the American Arbitration Association to make the selection.  (The independent accounting firm selected pursuant to this Section 2.1(e) is referred to herein as the “Arbitration Firm”).  The Arbitration Firm will be instructed to complete its review within twenty (20) days and to calculate the Closing Certificate Purchase Price in accordance with this Section 2.1 and the Model Purchase Price Calculation.  The decision of the Arbitration Firm will be final and binding on the Buyer Parent and CBNA.

 

(f)           If the aggregate Closing Certificate Purchase Price exceeds the aggregate Estimated Certificate Purchase Price (as finally determined pursuant to Section 2.1(e)), then the Securitization Buyer shall pay CBNA the amount of such excess no later than ten (10) Business Days after the Closing Date by wire transfer of immediately available funds in U.S. dollars to the account specified by CBNA to the Securitization Buyer by written notice at least two Business Days prior to such payment.  If the aggregate Closing Certificate Purchase Price is less than the aggregate Estimated Certificate Purchase Price, then CBNA on behalf of the Seller shall refund the Securitization Buyer the amount of such difference within ten (10) Business Days after the Closing Date by wire transfer of immediately available funds in U.S. dollars to the account specified by the Securitization Buyer to CBNA by written notice at least two Business Days prior to such payment.  The Securitization Buyer acknowledges and agrees that the Seller shall have no responsibility for, or liability with respect to, the making of any payment required pursuant to the preceding sentence.  The Seller and the Securitization Buyer shall each amend the Trust Certificates Bill of Sale to reflect the adjusted Schedule of Trust Student Loans determined as of the Closing Date and the aggregate Closing Certificate Purchase Price.  If the aggregate Closing Certificate Purchase Price is less than the aggregate Estimated Certificate Purchase Price then CBNA on behalf of the Seller shall refund the Securitization Buyer the amount of such difference no later than ten (10) Business Days after the Closing Date by wire transfer of immediately available funds in U.S. dollars to the account specified by the Securitization Buyer to CBNA by written notice at least (2) two Business Days prior to such payment.  The Securitization Buyer acknowledges and agrees that the Seller shall have no responsibility for, or liability with respect to, the making of any payment required pursuant to the preceding sentence.  The Seller and the Trust Buyer shall amend the Trust Bill of Sale to reflect the Schedule of Trust Student Loans determined as of the Applicable Measuring Date and the Closing Certificate Purchase Price.

 

Section 2.2                      Accession Agreement

 

On or prior to the Closing Date, the Securitization Buyer will provide the Seller with an executed Accession Agreement for Trust Certificates (the “Accession Agreement”) in substantially the form attached as Exhibit 2.2 or such other form as is acceptable to the Owner Trustee and is in accordance with the terms of the Securitization Trust Agreements.

 

Section 2.3                      Opinions

 

On the Closing Date, pursuant to the terms of the Securitization Trust Agreements, the Seller will provide the Owner Trustee with Opinions of Counsel that (i) the transfer of the Trust Certificates will not cause any Securitization Trust to be treated for U.S. federal income tax purposes as an association (or publicly-traded partnership) taxable as a corporation and will not adversely affect the federal income tax treatment of the Noteholders in any material respect and (ii) the transfer of the Trust Certificates is exempt from registration under the 1933 Act and any applicable state securities Law.

 

Section 2.4                      Rating Agencies

 

Prior to the Closing Date, the Seller shall deliver written notice to the applicable Rating Agencies of the sale of the Trust Certificates to the Securitization Buyer.

 

Section 2.5                      Partial Release of Security Interest

 

On or prior to the Closing Date, CBNA, as the Omnibus Lender under the Omnibus Credit Agreement, shall release its security interest in the Trust Certificates concurrently with the sale of the Trust Certificates and the receipt of the proceeds of the aggregate Estimated Certificate Purchase Price (which will be applied to repay the Omnibus Loans) by executing a partial release substantially in the form attached as Exhibit 2.5, and the Omnibus Lender shall deliver the Trust Certificates held in its possession as collateral for the Omnibus Loans to the Owner Trustee for transfer to the Securitization Buyer in the manner provided in the Securitization Trust Agreements.

 

Section 2.6                      Intent and Characterization

 

The Seller and the Securitization Buyer intend that the sale of the Trust Certificates pursuant to this Agreement and the Trust Certificates Bill of Sale constitute a valid sale of the Trust Certificates from the Seller to the Securitization Buyer, conveying good title to the Trust Certificates free and clear of any Lien, and that the beneficial interest in and title to the Trust Certificates shall not be part of the Seller’s estate in the event of the bankruptcy of the Seller or the appointment of a receiver with respect to the Seller.  The Seller and the Securitization Buyer intend and agree to treat the transfer and assignment of the Trust Certificates as an absolute sale for Tax, financial and accounting purposes, and as an absolute and complete conveyance of title for property Law purposes.

 

ARTICLE III

 

ASSUMPTION OF SECURITIZATION DUTIES

 

Section 3.1                      Duties of Indenture Administrator

 

CBNA in its role as Indenture Administrator agrees to remain in such capacity under the related Securitization Indenture for each Securitization Trust following the Closing Date (unless and until it is no longer qualified to serve in such capacity); provided, that at any time upon receipt of a written request from Buyer Parent, CBNA will agree to resign its position as Indenture Administrator pursuant to the terms of each related Securitization Indenture; provided, further, that CBNA may resign as Indenture Administrator at any time after the 18-month anniversary of the Closing Date subject to the terms of the Securitization Indenture for the applicable Securitization Trust; in either case, CBNA shall cooperate with and assist Buyer Parent, and the entity designated by Buyer Parent as the successor Indenture Administrator in all matters required to effect such replacement, including, but not limited to, the execution and delivery of all required documentation to evidence such resignation and replacement, the transfer of all applicable property, responsibilities and obligations to such successor, providing all required notices to each applicable Rating Agency and each related Securitization Indenture Trustee, and obtaining the consent of each related Owner Trustee.

 

Section 3.2                      Securitization Eligible Lender Trustee

 

CBNA in its role as Securitization Eligible Lender Trustee agrees to remain in such capacity under the related Securitization Eligible Lender Trust Agreement following the Closing Date (unless and until it is no longer qualified to serve in such capacity); provided, that at any time upon receipt of a written request from Buyer Parent, CBNA will agree to resign its position as Securitization Eligible Lender Trustee pursuant to the terms of the Securitization Eligible Lender Trust Agreement; provided, further, that CBNA may resign as Securitization Eligible Lender Trustee at any time after the 18-month anniversary of the Closing Date subject to the terms of the Securitization Eligible Lender Trust Agreement; in either case, CBNA shall cooperate with and assist Buyer Parent, and the entity designated by Buyer Parent as the successor Securitization Eligible Lender Trustee in all matters required to effect such replacement, including, but not limited to, the execution and delivery of all required documentation to evidence such resignation and replacement, the transfer of all applicable property, responsibilities and obligations to such successor, and providing all required notices, if any, as well as any required documentation to facilitate the transfer of ownership of the applicable Department Lender Identification Numbers and related state agency guarantee agreements.

 

Section 3.3                      Appointment of Sub-Administrator

 

(a)           Buyer Subsidiary wishes to act as Sub-Administrator to the Administrator for each Securitization Trust and the 2010-1 Trust, and the Seller, as Administrator, wishes to assign such administration responsibilities to Buyer Subsidiary.  On the Closing Date,

 

(i)           the Seller will enter into sub-administration agreements with Buyer Subsidiary, as sub-administrator (in such capacity, the “Sub-Administrator”) substantially in the form attached as Exhibit 3.3(a)(i) or such other form as mutually agreed upon by the Seller and Buyer Subsidiary (the “Sub-Administration Agreements”);

 

(ii)           the Sub-Administrator and CSD (in such capacity, the “Sub-Sub-Administrator”) will enter into an agreement for each Securitization Trust and the 2010-1 Trust substantially in the form of Exhibit 3.3(a)(ii) or such other form as agreed upon between the Sub-Administrator and the Sub-Sub-Administrator (the “Sub-Sub-Administration Agreement”); and

 

(iii)           the Sub-Sub-Administrator, the Seller and CBNA will enter into a service agreement for each Securitization Trust and the 2010-1 Trust substantially in the form of Exhibit 3.3(a)(iii) or such other form as agreed upon among the Sub-Sub-Administrator, the Seller and CBNA (the “Administration Services Agreement”).

 

(b)           To the extent required pursuant to the related Securitization Administration Agreements, prior to the Closing Date, the Seller, as Administrator, shall use reasonable best efforts to obtain the consent of the Owner Trustee to the appointment of Buyer Subsidiary as Sub-Administrator.  The Seller (with the reasonable cooperation of Buyer Subsidiary) will use reasonable best efforts to timely notify the applicable Rating Agencies of their intention to enter into the Sub-Administration Agreements as and if required pursuant to such related Securitization Administration Agreements, and if required thereby, to obtain confirmation from the applicable Rating Agencies of the rating of the Securitization Notes issued by the related Securitization Trust or 2010-1 Trust after giving effect to the Sub-Administration Agreements and Sub-Sub-Administration Agreements.  The Seller and Buyer Subsidiary will use reasonable best efforts and cooperation to effect the appointment of Buyer Subsidiary as the successor Administrator if the Administrator is terminated pursuant to an administrator default (provided a sub-administrator default has not occurred under the terms of the Sub-Administration Agreement).

 

Section 3.4                      Assumption of Duties of Subservicer

 

(a)           Buyer Subsidiary wishes to act as Subservicer to the Servicer for the Trust Student Loans, and the Seller, as Servicer, wishes to assign such subservicing responsibilities to Buyer Subsidiary.  On the Closing Date,

 

(i)           the Seller will terminate the existing Securitization Subservicing Agreements with CSD and will enter into subservicing agreements with Buyer Subsidiary as the replacement subservicer substantially in the form of Exhibit 3.4(a)(i) or such other form as mutually agreed upon by the Servicer and Buyer Subsidiary (the “Replacement Subservicing Agreements”);

 

(ii)           the Subservicer and CSD (in such capacity, the “Sub-Subservicer”) will enter into an agreement for each Securitization Trust and the 2010-1 Trust substantially in the form of Exhibit 3.4(a)(ii) or such other form as agreed upon among the Subservicer and the Sub-Subservicer (the “Sub-Subservicing Agreement”), and

 

(iii)           the Sub-Subservicer, the Seller and CBNA will enter into a services agreement for each Securitization Trust substantially in the form of Exhibit 3.4(a)(iii) or such other form as agreed upon among the Sub-Subservicer, the Seller and CBNA (the “Servicing Services Agreement”).

 

(b)           Pursuant to Section 3.19 of each Securitization Servicing Agreement, prior to the Closing Date, the Seller, as Servicer shall appoint Buyer Subsidiary as Subservicer.  The Seller (with the reasonable cooperation of Buyer Subsidiary) will use reasonable best efforts to timely notify the applicable Rating Agencies as and if required, and if required, to obtain confirmation from the applicable Rating Agencies of the rating of the Securitization Notes issued by the related Securitization Trust after giving effect to the Replacement Subservicing Agreements and Sub-Subservicing Agreements.  The Seller (with the reasonable cooperation of Buyer Subsidiary) will use reasonable best efforts to obtain the written agreement of the Owner Trustee to the appointment of Buyer Subsidiary as the successor servicer if the Servicer is terminated pursuant to a servicer default (provided a Subservicer default has not occurred under the terms of the Replacement Subservicing Agreement).

 

Section 3.5                      Assumption of Obligations of the Seller under the Securitization Master Terms Purchase Agreements

 

Effective as of the Closing Date, Buyer Entity shall assume, pay, perform and otherwise accept or discharge the repurchase, indemnity and other ongoing obligations of the Seller pursuant to each of the Securitization Master Terms Purchase Agreements, and Buyer Entity and Seller shall execute an assignment and assumption agreement substantially in the form of Exhibit 3.5 or in such other form as Buyer Parent and the Seller may agree to (the “Assumption of Obligations of the Seller under Master Terms Purchase Agreements”).

 

Section 3.6                      Makewhole and Participation Agreement

 

Effective as of the Closing Date, CBNA and Buyer Entity shall enter into a purchased loan makewhole and participation agreement, substantially in the form of Exhibit 3.6 or such other form as CBNA and Buyer Entity may agree to (the “Makewhole and Participation Agreement”).

 

Section 3.7                      Costs and Expenses

 

All third party costs and expenses associated with effecting the transfer of the ownership of the Trust Certificates and the transfer of various obligations from The Student Loan Corporation and its affiliates and CBNA and its Affiliates, on the one hand, to Buyer Parent and its Affiliates, on the other hand, that are incurred on or prior to the Closing Date, including, without limitation, the sending of all notices, the obtaining of all consents, and the payment of the fees, cost and expenses (including attorneys fees and expenses) of all rating agencies and trustees, but excluding the costs of the attorneys for the Buyer Parties, shall be shared equally between Buyer Parent and CBNA until such costs and expenses of the Buyer Parties exceed $1,000,000; then CBNA shall pay all such costs and expenses of Buyer Parties in excess of $1,000,000.

 

ARTICLE IV

 

PURCHASE OF FUNDING NOTE ISSUER

 

Section 4.1                      Purchase and Sale

 

(a)           On the terms and subject to the satisfaction of the conditions set forth in this Agreement, including the conditions precedent set forth in ARTICLE IX and in reliance on the representations, warranties, covenants and agreements set forth in this Agreement, the Seller hereby agrees to sell and assign all of its Membership Interests in the Funding Note Issuer, without recourse to the Seller and without representations or warranties (except as specifically set forth herein), to the Conduit Buyer, and the Conduit Buyer hereby agrees to purchase the entire Membership Interests in the Funding Note Issuer from the Seller and to assume, pay, perform and otherwise accept or discharge all Buyer Assumed Obligations of the sole member of the Funding Note Issuer.  Such Membership Interest will be purchased from the Seller and the Estimated Conduit Purchase Price will be based upon the Schedule of Financed Student Loans determined as of the Initial Cutoff Date, and the Estimated Conduit Purchase Price will be calculated on a basis consistent with the Model Purchase Price Calculation and will be further adjusted pursuant to this Section 4.1 after the Closing based upon an adjusted Schedule of Financed Student Loans determined as of the Applicable Measuring Date.  The Financed Student Loans will be identified on the Closing Date in the Conduit Bill of Sale.  As further described in Section 5.2, on the Closing Date, the Conduit Buyer shall pay or cause to be paid all outstanding Subordinated Loans of the Funding Note Issuer, together with accrued interest thereon, up to and including the Closing Date.

 

(b)           Delivery or transfer of the Membership Interest shall be made on the Closing Date at the time and in the manner agreed upon by the Seller and the Conduit Buyer, but in any event prior to the consummation of the Merger Transaction.  On the Closing Date, the Conduit Buyer shall pay or cause to be paid to CBNA, as designee of the Seller, the Estimated Conduit Purchase Price by wire transfer of immediately available funds in U.S. dollars to the account specified by CBNA to the Conduit Buyer by written notice at least two (2) Business Days prior to the Closing Date at the time and in the manner mutually agreed upon by CBNA and the Conduit Buyer.

 

(c)           The sale and purchase of the Membership Interests on the Closing Date shall be consummated upon (i) execution and delivery by the Seller and the Conduit Buyer of a Conduit Bill of Sale (which will include a Schedule of Financed Student Loans determined as of the Initial Cutoff Date and the assignment and assumption referred to in Section 4.4) with respect to the Membership Interests, (ii) the payment by or on behalf of the Conduit Buyer of the Estimated Conduit Purchase Price in the manner provided in Section 4.1(b), (iii) receipt of written consent of the Conduit Manager and the Conduit Lender described in Section 4.5, (iv) delivery of the opinions described in Section 4.3, (v) the Seller’s receipt of an executed Buyer Satisfaction Certificate and (vi) the Conduit Buyer’s receipt of an executed Seller Satisfaction Certificate.  Upon the satisfaction of such conditions, such sale and purchase shall be effective as of the Closing Date, prior to the consummation of the Merger Transaction.

 

(d)           Seller shall timely provide any information reasonably requested by the Conduit Buyer to prepare an adjusted Schedule of Financed Student Loans, so that within fifteen (15) Business Days after the Closing Date, the Conduit Buyer shall provide the Seller and CBNA with a Schedule of Financed Student Loans determined as of the Applicable Measuring Date and shall calculate the Conduit Purchase Price based upon such schedule to determine the Closing Conduit Purchase Price, with such calculation to be prepared on a basis consistent with the Model Purchase Price Calculation.  CBNA shall have ten (10) Business Days to review and comment on the Schedule of Financed Student Loans and the Closing Conduit Purchase Price.  During this period the Seller and Buyer Parent (to the extent available to it) will provide information relating to the adjusted Schedule of Financed Student Loans and adjusted Closing Conduit Purchase Prices as reasonably requested by CBNA and Conduit Buyer, and Conduit Buyer will meet with CBNA to discuss this information and the calculations.  CBNA and Buyer Parent will reimburse Seller for its reasonable expenses incurred in connection with performing its obligations under this Section 4.1(d).  If during this ten (10) Business Day period CBNA notifies the Conduit Buyer that CBNA disagrees with these calculations, Conduit Buyer and CBNA will meet to attempt to resolve any differences.  If they are unable to agree on the adjustments within the next thirty days, then the Conduit Buyer and CBNA will be free to pursue an additional review by jointly selecting a third party independent accounting firm to review the calculations and make a determination as to the Closing Conduit Purchase Price.  If CBNA and the Conduit Buyer are unable to agree on a third party accounting firm, then they will apply to the American Arbitration Association to make the selection.  The independent accounting firm selected pursuant to this Section 4.1(d) is referred to herein as the (“Conduit Arbitration Firm”).  The Conduit Arbitration Firm will be instructed to complete its review within 20 days and to calculate the Closing Conduit Purchase Price in accordance with this Section 4.1 and the Model Purchase Price Calculation.  The decision of the Conduit Arbitration Firm will be final and binding on the Buyer Parent and CBNA.

 

(e)           If the Closing Conduit Purchase Price exceeds the Estimated Conduit Purchase Price (as finally determined pursuant to Section 4.1(d)), then the Conduit Buyer shall pay CBNA the amount of such excess no later than ten (10) Business Days after the Closing Date by wire transfer of immediately available funds in U.S. dollars to the account specified by CBNA to the Conduit Buyer by written notice at least two Business Days prior to such payment.  If the Closing Conduit Purchase Price is less than the Estimated Conduit Purchase Price, then CBNA on behalf of the Seller shall refund the Conduit Buyer the amount of such difference no later than ten (10) Business Days after the Closing Date by wire transfer of immediately available funds in U.S. dollars to the account specified by the Conduit Buyer to CBNA by written notice at least two Business Days prior to such payment.  The Conduit Buyer acknowledges and agrees that the Seller shall have no responsibility for, or liability with respect to, the making of any payment required pursuant to the preceding sentence.  The Seller and the Conduit Buyer shall amend the Conduit Bill of Sale to reflect the Schedule of Financed Student Loans determined as of the Applicable Measuring Date and the Closing Conduit Purchase Price.

 

Section 4.2                      No Dividends, Repayments or Returns of Capital Contributions; Excess Cash

 

(a)           The Seller agrees that from and including the Commitment Date to and including the Closing Date, without the prior written consent of the Conduit Buyer, (i) it will cause the Funding Note Issuer not to declare any dividends, repay any subordinated loans (other than pursuant to the Subordinated Credit Agreement) or return any capital contributions of its Member or (ii) except as required under the terms of the Conduit Program, sell or distribute any asset or incur any new obligation not required under the Funding Note Purchase Agreement.

 

(b)           In the event that as of the Closing Date the Funding Note Issuer has cash on hand that exceeds its accrued expenses as of the Applicable Measuring Date, in each case to the extent that such cash and liabilities are not reflected in the Schedule of Financed Student Loans and related materials prepared pursuant to Section 4.1 (as finally adjusted pursuant to Section 4.1), either the Funding Note Issuer will distribute the amount of such extra cash to the Seller or the Buyer Parent will pay such amount to the Seller, in each case within five (5) Business Days after completion of the purchase price adjustment process contemplated by Section 4.1.

 

Section 4.3                      Opinions

 

On the Closing Date, pursuant to Section 13.1(a) of the limited liability company agreement of the Funding Note Issuer, the Conduit Buyer shall deliver to the Funding Note Issuer Opinions of Counsel that the proposed transfer of the Membership Interests to the Conduit Buyer will not cause the Funding Note Issuer (i) to be treated as a publicly traded partnership for U.S. federal income tax purposes or (ii) to be an investment company subject to registration under the Investment Company Act.

 

Section 4.4                      Assignment and Assumption

 

Subject and in addition to the other conditions in this ARTICLE IV, in accordance with Section 13.1(b) of the limited liability company agreement of the Funding Note Issuer, the Seller agrees to admit the Conduit Buyer as the sole member of the Funding Note Issuer if the Conduit Buyer executes the Conduit Bill of Sale substantially in the form of Exhibit 4.4 containing the terms of assignment and assumption agreement or in such other form as may be mutually acceptable to the Seller and the Conduit Buyer.

 

Section 4.5                      Consents

 

Prior to the Closing Date and pursuant to Section 13.1(a) of the limited liability company agreement of the Funding Note Issuer, the Seller shall use its reasonable best efforts to obtain the prior written consent of the Conduit Manager and the Conduit Lender to transfer the Membership Interest to the Conduit Buyer, and to the extent required, the Department of Education.

 

Section 4.6                      Release

 

Unless otherwise prohibited by the Department of Education, the Seller and the Funding Note Issuer will deliver a mutual release at the Closing substantially in the form of Exhibit 4.6 hereto (the “Conduit Mutual Release”).

 

Section 4.7                      Intent and Characterization

 

The Seller and the Conduit Buyer intend that the sale of the Membership Interest in the Funding Note Issuer pursuant to this Agreement and the Conduit Bill of Sale constitute a valid sale of such Membership Interest from the Seller to the Conduit Buyer, conveying good title to such Membership Interest free and clear of any Lien), and that the beneficial interest in and title to such Membership Interest shall not be part of the Seller’s estate in the event of the bankruptcy of the Seller or the appointment of a receiver with respect to the Seller.  The Seller and the Conduit Buyer intend and agree to treat the transfer and assignment of such Membership Interest as an absolute sale for Tax, financial and accounting purposes, and as an absolute and complete conveyance of title for property Law purposes.

 

ARTICLE V

 

ASSUMPTION OF CONDUIT DUTIES

 

Section 5.1                      Department Agreements

 

The applicable Parties will enter into the agreements set forth on Exhibit 5.1, (collectively the “Department Form Agreements”) in a form which is acceptable to the Department, pursuant to which, effective as of the Closing Date, the applicable Buyer Parties will assume all of the duties and obligations of the Seller in its various capacities under the Conduit Program.

 

Section 5.2                      Conduit Subservicing

 

On the Closing Date,

 

(i)           Buyer Subsidiary, as successor master servicer, and CSD will enter into a subservicing agreement and a related supplemental subservicing agreement in the forms of Exhibit 5.2(i) or such other forms as mutually agreed upon by such parties and which are acceptable to the Department (the “Conduit Replacement Subservicing Agreement”);

 

(ii)           the Seller, CSD and CBNA will enter into a services agreement for the Funding Note Issuer substantially in the form of Exhibit 5.2(ii) or such other form as agreed upon among the Seller, CSD and CBNA (the “Conduit Servicing Services Agreement”).

 

Section 5.3                      Conduit Administration

 

On the Closing Date,

 

(a)           Buyer Subsidiary will be appointed as SPV Administrator for the Funding Note Issuer;

 

(b)           CSD will enter into an SPV Sub-Administration Agreement substantially in the form of Exhibit 5.3(b) or such other form as agreed upon by the Buyer Subsidiary and CSD; and

 

(c)           CSD, the Seller and CBNA will enter into a services agreement for the Funding Note Issuer substantially in the form of Exhibit 5.3(c) or such other form as agreed upon among CSD, the Seller and CBNA (the “Conduit Services Agreement”).

 

Section 5.4                      Termination of Subordinated Credit Agreement

 

On the Closing Date, Buyer Parent shall pay or cause to be paid all outstanding Subordinated Loans of the Funding Note Issuer, together with accrued interest thereon, up to and including the Closing Date.  Upon receipt of such payment amounts, the Seller, as Subordinated Note Lender, and the Funding Note Issuer, as borrower, shall be deemed to have designated the Closing Date as the maturity date for all such Subordinated Loans, the Subordinated Promissory Note shall be cancelled and the Subordinated Credit Agreement shall be terminated.  Buyer Parent shall be responsible for arranging for another subordinated credit agreement for the Funding Note Issuer as may be required pursuant to the terms of the Conduit Program.

 

Section 5.5                      Conduit Eligible Lender Trustee

 

(a)           CBNA in its role as Conduit Eligible Lender Trustee agrees to remain in such capacity under the related Conduit Eligible Lender Trust Agreement following the Closing Date (unless and until it is no longer qualified to serve in such capacity); provided, that at any time upon receipt of written requested from Buyer Parent, CBNA will agree to resign its position as Conduit Eligible Lender Trustee pursuant to the terms of the Conduit Eligible Lender Trust Agreement; provided, further, that CBNA may resign as Conduit Eligible Lender Trustee at any time after the 18 month anniversary of the Closing Date subject to the terms of the Conduit Eligible Lender Trust Agreement; in either case, CBNA shall cooperate with and assist Buyer Parent, and the entity designated by Buyer Parent as the successor Conduit Eligible Lender Trustee in all matters required to effect such replacement, including, but not limited to, the execution and delivery of all required documentation to evidence such resignation and replacement, the transfer of all applicable property, responsibilities and obligations to such successor, providing all required notices, if any, and obtaining the consent of all required parties including without limitation the Conduit Manager on behalf of the Conduit Lender.

 

(b)           CBNA will provide reasonable cooperation with any successor Conduit Eligible Lender Trustee and agrees to execute and deliver any required documentation to facilitate the transfer of the ownership of the applicable Department Lender Identification Numbers and related state agency guarantee agreements.

 

Section 5.6                      Consents; Costs and Expenses

 

(a)           Prior to the Closing Date, Seller and Buyer Subsidiary shall notify and shall use their reasonable best efforts to obtain the consent of the Department of Education, the Conduit Administrator and the Conduit Manager to the execution and delivery of the Conduit Replacement Servicing Agreement and the Conduit Replacement Subservicing Agreement, and to the extent required, the Amended and Restated Funding Note Purchase Agreement and the Amended and Restated Conduit Student Loan Purchase Agreement.

 

(b)           All third party costs and expenses associated with effecting the transfer of the ownership of the Funding Note Issuer, that are incurred on or prior to the Closing Date, including, without limitation, the sending of all notices, the obtaining of all consents, and the payment of the fees, cost and expenses (including attorneys fees and expenses, including, without limitation, attorneys for the Conduit Administrator and the Department of Education) of all rating agencies and conduit related parties, but excluding the costs of attorneys for the Buyer Parties and Seller Parties, shall be shared equally between Buyer Parent and CBNA until such costs and expenses of the Buyer Parties exceed $1,000,000; then CBNA shall pay all such costs and expenses of Buyer Parties in excess of $1,000,000.

 

ARTICLE VI

 

DEPOSITOR AGREEMENT

 

On the Closing Date, the Seller, the Depositor, the Securitization Sub-Administrator, the Servicer and each subservicer to the Depositor’s public and private securitization trusts shall enter into a depositor agreement substantially in the form of Exhibit 6 (the “Depositor Agreement”) or such other form as agreed upon among the parties thereto.

 

ARTICLE VII

 

REPRESENTATIONS AND WARRANTIES

 

Section 7.1                      Representations and Warranties of each Party

 

Each party to this Agreement represents and warrants to each of the other parties to this Agreement, for their benefit and for the benefit of each of their respective successors and permitted assigns, as of the Commitment Date and as of the Closing Date, that:

 

(a)           Organization; Power

 

Such party is duly organized or formed, validly existing and in good standing under the Laws of the jurisdiction of its organization or formation, has all requisite corporate or similar power and authority to carry on its business as now conducted and to perform its obligations under the Transaction Documents to which it is a party and, except where the failure individually or in the aggregate would not have a material adverse effect on its ability to timely perform its material obligations under such Transaction Documents, is duly qualified, has obtained all licenses and approvals to do business and is in good standing in each jurisdiction where such qualification or licensing is required.

 

(b)           Authorization; Enforceability; Due Execution and Delivery

 

Such party has all necessary corporate or similar power and authority to execute and deliver the Transaction Documents to which it is a party, to perform its obligations thereunder and to consummate the Transactions contemplated thereby.  The execution and delivery by such party of the Transaction Documents to which it is a party and the consummation by such party of the Transactions contemplated thereby have been duly and validly authorized by all necessary corporate or similar action of such party, and no other proceedings on the part of such party are necessary to authorize the execution and delivery of the Transaction Documents or to consummate the Transactions contemplated thereby (other than, with respect to the Seller, the receipt of the Seller Stockholder Approval).  The Transaction Documents to which such party is a party have been (or at the time of the Closing, will be) duly and validly executed and delivered by such party and, assuming the due authorization, execution and delivery of each other party, the Transaction Documents to which such party is a party constitute a legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms (except as such enforceability may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other similar Laws of general applicability relating to or affecting creditor’s rights, and to general equitable principles, regardless of whether considered in a proceeding in equity or at law).

 

(c)           Government and Third Party Approvals; No Conflicts

 

Except as would not reasonably be expected to have a material adverse effect on such party’s ability to timely perform its material obligations under the Transaction Documents to which such party is a party and except as set forth in Section 7.1(c) of the Seller Disclosure Schedule or Section 7.1(c) of the Buyer Disclosure Schedule, as applicable, the execution and delivery of the Transaction Documents to which such party is a party by such party and the consummation of the Transactions contemplated thereby do not and will not (i) require any consent, approval, registration or filing with any Governmental Authority or any other third party by such party except for (A) those that have been obtained and are in full force and effect and (B) the applicable requirements of the Exchange Act, (ii) violate any Law, the certificate of incorporation or by-laws or other organizational documents of such party or its Subsidiaries or any Order applicable to such party, (iii) violate, conflict with or result in a default under any indenture, agreement or other instrument binding upon such party or its Subsidiaries or assets or give rise to a right thereunder to require any payment by such party or its Subsidiaries or (iv) result in any Lien on any assets of such party or its Subsidiaries.

 

(d)           Litigation

 

There is no investigation, claim, action or proceeding by or before any arbitrator or Governmental Authority pending or, to the knowledge of such party, threatened, against such party or its Subsidiaries, and there is no Order, before any arbitrator or Governmental Authority, in each case, as would reasonably be expected to have, individually or in the aggregate, a Buyer Material Adverse Effect or a Seller Material Adverse Effect, as applicable.  As of the Commitment Date, there is no action, investigation or proceeding pending or, to the knowledge of such party, threatened against or affecting, such party that challenges or seeks to prevent, enjoin, alter or materially delay the Transactions.

 

(e)           Compliance with Law

 

Such party and each of its Subsidiaries is in compliance with all applicable Laws, except where the failure to be in compliance would not reasonably be expected to have a material adverse effect on such party’s ability to timely perform its material obligations under any Transaction Documents to which it is a party or would not reasonably be expected to have a Seller Material Adverse Effect or Buyer Material Adverse Effect, as the case may be.

 

(f)           Brokers

 

No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transaction Documents or the Transactions based upon arrangements made by such party (other than, in the case of the Seller, Moelis & Company LLC and, in the case of Buyer Parent, Goldman, Sachs & Co.).

 

Section 7.2                      Additional Representations and Warranties of the Seller

 

The Seller represents and warrants to each of the other parties to this Agreement, for their benefit and for the benefit of each of their respective successors and permitted assigns, as of the Commitment Date and as of the Closing Date, that:

 

(a)           Seller Recommendation

 

In connection with its approval of the Transactions and the Related Transactions, the Board of Directors of the Seller (upon the recommendation of the Special Committee), at a meeting duly called and held, has (i) approved the Transaction Documents and the Transactions, (ii) determined that the Transactions are advisable and fair to and in the best interests of, the stockholders of the Seller, and (iii) resolved to submit this Agreement to the stockholders of the Seller for approval, file the Proxy Statement with the SEC and, subject to Section 10.4, make the Seller Recommendation.

 

(b)           Investment Company Act Status

 

None of the Seller, the Funding Note Issuer, the Depositor, or any Securitization Trust is an investment company as defined in the Investment Company Act.

 

(c)           Solvency

 

The Seller is Solvent as of the Commitment Date and as of the Closing Date.

 

(d)           Title and Security

 

(i)           The Seller holds good and marketable title to the Trust Certificates, the Membership Interest and in the Funding Note free and clear of all Liens other than Liens granted under the Omnibus Credit Agreement that shall be released on or prior to the Closing Date.  The Funding Note Issuer holds good and marketable title to the Financed Student Loans free and clear of all Liens other than the security interest of the Conduit Lender under the Funding Note Purchase Agreement and provided that the Conduit Eligible Lender Trustee holds legal title to the Financed Student Loans.

 

(ii)           At the Closing the Seller will transfer good and marketable title to the Acquired Assets free and clear of all Liens.

 

(e)           Compliance with Laws with respect to Origination of Student Loans

 

With respect to each state or jurisdiction therein in which the Seller or any of its Affiliates undertakes origination activities, the Seller or such Affiliate is in compliance and has complied in all material respects with such state’s or jurisdiction’s (as applicable) Laws, settlement agreements and other standards and procedures, including those promulgated by agencies or officers thereof, applicable to it and pertaining to the conduct of participants in the student loan industry to the extent the Seller or any such Affiliate has assented to such voluntary code of conduct.

 

(f)           Compliance with FFELP

 

The Seller has administered, operated and maintained its federal family education loan program in such manner as to ensure that such program and the Trust Student Loans and Financed Student Loans will benefit, in all material respects, from FFELP, the Guarantee Agreements related thereto and the federal program of reimbursement for FFELP student loans pursuant to the Higher Education Act.  The Seller has been and is currently in good standing with the Department of Education and has timely submitted all annual audit and other reports required by the Higher Education Act.

 

(g)           Compliance with Law

 

All automated data processing systems used by the Seller or its Subsidiaries comply and have complied in all material respects with all applicable Laws governing guaranty or loan originator or servicing, including, the Gramm-Leach-Bliley Act of 1999 restrictions, information reporting requirements of the Internal Revenue Service and credit bureau report format requirements of the Consumer Data Industry Association and applicable state Law restrictions on the use of Social Security numbers in correspondence related to the Acquired Assets.

 

(h)           Compliance with Securitizations

 

Neither the Seller nor any of its Subsidiaries is in default under, or in material breach of, any provision of any agreement relating to (i) a Securitization Trust, (ii) the Financed Student Loans or (iii) any private loans owned or at one time owned by a Private Securitization Trust.  The Depositor is not in default under, or in material breach of, any provision of any agreement relating to a Private Securitization Trust.  The Seller does not have any obligations as a holder of the Trust Certificates except pursuant to the agreements and instruments listed on Section 7.2(h) of the Seller Disclosure Schedule.

 

(i)           Servicing Agreements

 

Section 7.2(i) of the Seller Disclosure Schedule is a true and complete list of all existing agreements of the Seller and its Subsidiaries relating to the servicing or administering of FFELP Loans held by any of the Securitization Trusts or any of the Financed Student Loans (collectively, the “Applicable Loans”).

 

(j)           Loan Repurchases

 

Section 7.2(j) of the Seller Disclosure Schedule sets forth the dollar amounts of any FFELP Loan or private student loan that has been purchased, repurchased or substituted by the Seller or any of its Subsidiaries as a result of a breach of any representation, warranty or covenant contained in any agreement relating to (i) a Securitization Transaction, (ii) a securitization transaction sponsored by a third party as to which the Seller or any of its Subsidiaries has sold FFELP Loans or private student loans or as to which the Seller or any of its Subsidiaries is servicing or administering FFELP Loans or private student loans or (iii) the sale of any FFELP Loans or private student loans by the Seller or any of its Subsidiaries to a third party.  Neither the Seller nor any of its Subsidiaries has received a request since January 1, 2007 to purchase, repurchase or substitute any FFELP loans or private student loans as a result of a breach of any representation, warranty or covenant contained in any Securitization Basic Document or document relating to private student loan securitization as applicable that has not been satisfied, waived or withdrawn.

 

(k)           Agreements with Regulators

 

Except as set forth in Section 7.2(k) of the Seller Disclosure Schedule, neither the Seller nor any of its Subsidiaries is subject to any material cease-and-desist or other material order or enforcement action issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has been since January 1, 2007 a recipient of any supervisory letter from, or has been ordered to pay any material civil money penalty by, relating to the conduct of its business relating to the Applicable Loans, or since January 1, 2007 has adopted any related policies, procedures or resolutions of the board of directors or any committee thereof at the request or suggestion of, any Governmental Authority relating to the Applicable Loans and addressed specifically to the Seller and not the industry in general.

 

(l)           Securitization Transactions

 

Except as would not be reasonably expected to have, individually or in the aggregate, a Seller Material Adverse Effect:

 

(i)           Section 7.2(l)(i) of the Seller Disclosure Schedule sets forth, as of the date of this Agreement, a list of all Securitization Trusts and Private Securitization Trusts and other types of securitizations (including warehouse, reverse repurchase and asset-backed commercial paper programs) or similar transactions (each a “Securitization Transaction”) effected by the Seller or any of its Subsidiaries since January 1, 2007 and relating to FFELP Loans or private education loans.  The Seller has made available to Buyer true and correct copies of the documentation creating or governing each Securitization Transaction.

 

(ii)           Except as set forth in Section 7.2(l)(ii) of the Seller Disclosure Schedule, neither the Seller nor any of its Subsidiaries nor, to the Knowledge of the Seller, the Depositor Eligible Lender Trustee, the Securitization Eligible Lender Trustee, the Conduit Eligible Lender Trustee, the Indenture Administrator, any indenture trustee, master servicer, subservicer, Securitization Trust, or Private Securitization Trust with respect to any Securitization Transaction, has taken or failed to take any action which would reasonably be expected to adversely affect the intended tax characterization or tax treatment for federal, state or local income or franchise tax purposes of the related Securitization Trust or Private Securitization Trust, as applicable or any securities issued in any such Securitization Transaction.  Except as set forth in Section 7.2(l)(ii) of the Seller Disclosure Schedule, to the Knowledge of the Seller, (i) all federal, state and local income or franchise tax and information returns and reports required to be filed by the Seller, the Depositor Eligible Lender Trustee, the Securitization Eligible Lender Trustee, the Conduit Eligible Lender Trustee, any indenture trustee, master servicer, subservicer, Securitization Trust or Private Securitization Trust relating to any Securitization Transaction, and (ii) all tax elections required to be made in connection therewith, have been properly filed or made.

 

(m)           Affiliate Transactions

 

Section 7.2(m) of the Seller Disclosure Schedule sets forth each material contract, arrangement, commitment or understanding, in effect as of the Commitment Date hereof and related to the Acquired Assets or Applicable Loans, between (x) the Seller and its Subsidiaries, on the one hand, and (y) CBNA, any of its Affiliates (other than the Seller and its Subsidiaries), or any officer or director of the Seller or any of its Subsidiaries, on the other hand.  Section 7.2(m) of the Seller Disclosure Schedule sets forth each material contract, arrangement, commitment or understanding, in effect as of the Commitment Date but not related to the Acquired Assets or Applicable Loans, between the Depositor on the one hand, and Seller or any of its Affiliates, on the other hand, including any Private Securitization Basic Documents.  The Seller has delivered or made available true and correct copies of all contracts listed in Section 7.2(m) of the Seller Disclosure Schedule.

 

(n)           Data Tape

 

The Data Tape prepared as of June 30, 2010 previously delivered to Buyer is true and correct, contains all of the information it purports to contain and fairly presents, in all material respects, the information contained therein.  Section 7.2(n) of the Seller Disclosure Schedule accurately sets out a description of the meanings of the codes that are used on the Data Tape, which descriptions shall be supplemented by the Seller from time to time upon the reasonable request of the Buyer in connection with the Buyer’s review of the Date Tape.  The Data Tape includes all loans included in the Applicable Loans as of the date thereof.  For purposes of this Agreement, “Data Tape” means, as of the relevant date, a data storage disk produced by the Seller from its management information system setting forth the applicable information for each loan in the Acquired Assets in the form of the June 30, 2010 Data Tape previously delivered to Buyer.

 

(o)           Additional Seller Representations and Warranties regarding the Trust Student Loans and Financed Student Loans

 

(i)           The Seller affirms each of its representations and warranties set forth in Appendix E and Appendix F and as of the Closing Date affirms the accuracy of the information provided in each Bill of Sale.

 

(ii)           In addition, the Seller hereby confirms that as of the Commitment Date and as of the Closing Date:  (A) all required reports on Forms 10-K, 10-D and 8-K have been timely filed with the SEC for each Securitization Trust; (B) it has not received any notification regarding the continued effectiveness of the Depositor’s existing shelf registration statement; (C) as holder of the Trust Certificates, it has not directed or assigned any right to distributions from the related Securitization Trust to a third person; and (D) it has timely delivered all annual audited financial statements of the Funding Note Issuer and the Seller, certified by an independent public accounting firm, as required under the Funding Note Purchase Agreement (copies of which have been previously furnished to the Buyer Parent).

 

(p)           Delivery of Transaction Agreements

 

Seller has delivered to Buyer Parent true, correct and complete copies of each of the CBNA Transaction Agreement, the Merger Transaction Agreement and any Related Transaction Documents in effect as of the date hereof, and all exhibits and disclosure schedules related to the foregoing.

 

(q)           Vote Required

 

(i)           Except for the Seller Stockholder Approval, there is no vote of holders of securities of the Seller that is necessary to approve and adopt this Agreement and the transactions contemplated hereby.

 

(ii)           The affirmative vote of Seller’s stockholders holding a majority of the Seller’s outstanding stock entitled to vote at the Seller’s stockholders meeting approving the Merger Transaction Agreement and the transaction contemplated thereby is the only vote of Seller’s stockholders required to approve the Merger Transaction Agreement and the transactions contemplated thereby.

 

(r)           Anti-Takeover Statutes, etc.

 

Seller has taken all such action necessary to exempt this Agreement and the transactions contemplated hereby from the provisions of Section 203 of the DGCL, and assuming the accuracy of the representations in Section 7.3(e), no other state takeover, “moratorium,” “fair price,” “business combination” or similar statute or regulation under any applicable Law is applicable to the transactions contemplated by this Agreement.  The Seller does not have in effect any stockholder rights plan, “poison pill” or similar plan or arrangements.

 

(s)           Eligible Servicer

 

The Seller is now and has always been, an “eligible servicer” under the provisions of the FFELP program and has at times caused the Trust Student Loans and Financed Student Loans to be serviced by an “eligible servicer.”

 

(t)           Funding Note Issuer; Compliance with LLC Agreement

 

(i)           The Seller is the sole member of the Funding Note Issuer.  There are no options, warrants or other rights to convert or exchange into or otherwise acquire any equity interest in the Funding Note Issuer.  The Seller has provided true and correct copies of the Funding Note Issuer’s organizational documents and any minute book or other compilation of official actions of the sole member of any manager or management committee of the Funding Note Issuer.

 

(ii)           The Funding Note Issuer has no obligations of any nature other than obligations under the agreements and instruments listed in Section 7.2(t)(ii) of the Seller Disclosure Schedule.  The Seller has made available true and correct copies of all agreements and instruments to which the Funding Note Issuer is a party or by which its assets are bound, including any commitment to lend made to the Department of Education or any third party.  The Funding Note Issuer has not breached in any material respect and is currently in compliance in all material respects with all agreements and instruments to which it is a party or by which any of its assets are bound.

 

(iii)           The Funding Note Issuer is not obligated as borrower or guarantor or otherwise with respect to any indebtedness, except indebtedness issued in connection with the Conduit Program.  The Funding Note Issuer’s assets are not subject to any Liens of any nature except Liens in connection with the Conduit Program.

 

(iv)           The Funding Note Issuer is in compliance with the provisions of its limited liability company agreement and the Seller is in compliance with all of its obligations as a member under the Funding Note Issuer’s limited liability company agreement.  The Funding Note Issuer is in compliance with all assumptions of fact relating to the Funding Note Issuer or the transfer of its assets contained in any true sale or nonconsolidation opinion delivered in connection with the Conduit Program.

 

(v)           Except as set forth in Section 7.2(t)(v) of the Seller Disclosure Schedule, or except as would not reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect, neither the Seller nor any of its Affiliates has taken or failed to take any action which would reasonably be expected to adversely affect the intended tax characterization or tax treatment for federal, state or local income or franchise tax purposes of the Funding Note Issuer or any securities issued by the Funding Note Issuer.  Except as set forth in Section 7.2(t)(v) of the Seller Disclosure Schedule, or except as would not reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect, to the Knowledge of the Seller, (i) all federal, state and local income or franchise tax and information returns and reports required to be filed by the Seller or its Affiliates relating in whole or in part to the Funding Note Issuer, and (ii) all tax elections required to be made in connection therewith, have been properly filed or made.

 

(u)           Depositor

 

(i)           The Seller has made available to the Buyer Parent true and correct copies of the Depositor’s Certificate of Incorporation and By-Laws, and the minute book of the Depositor made available to the Buyer Parent contains all minutes of meetings and written consents of the Board of Directors of the Depositor and any committee thereof and the stockholders of the Depositor.

 

(ii)           The Depositor has no obligations of any nature except pursuant to the agreements and instruments identified in Section 7.2(u)(ii) of the Seller Disclosure Schedule. The Seller has made available true and correct copies of all agreements and instruments to which the Depositor is a party or by which its assets are bound.  The Depositor has not breached in any material respect and is in compliance in all material respects with all agreements and instruments to which it is a party or by which any of its assets are bound.

 

(iii)           The Depositor is not obligated as borrower or guarantor or otherwise with respect to any indebtedness for borrowed money.  The Depositor’s assets are not subject to any Liens of any nature (provided, however, that the Depositor has granted security interests in the Trust Student Loans pursuant to Section 3(D) of the Securitization Master Terms Sale Agreements in the event that the sale and transfer of the related Trust Student Loans to the Securitization Trust is ever deemed to be re-characterized as a pledge of assets to secure a financing and not as a sale).

 

(iv)           The Depositor is in all respects in compliance with its permitted purposes and activities clause and in all material respects in compliance with the other provisions of its Certificate of Incorporation and By-laws.  The Depositor is in compliance with all material assumptions of fact relating to the Depositor or the transfer of its assets contained in any true sale or nonconsolidation opinion delivered in connection with any Securitization Transactions.

 

(v)           The Depositor has timely filed all reports, schedules, forms, statements and other documents (including exhibits and other information incorporated therein) with the SEC required under the applicable requirements of the 1933 Act and the Exchange Act including reports on Form 10-D and Form 10-K (such documents, together with any documents filed during such period with the SEC on a voluntary basis on Current Reports on Form 8-K, the “Depositor SEC Reports”).  As of the time it was filed with the SEC, each of the Depositor SEC Reports filed by the Depositor with the SEC was true and correct as of its applicable date, and contained all information that was required to be set forth therein.

 

(vi)           No registration statement, prospectus, private placement memorandum or other offering documents, or any amendments or supplements to any of the foregoing, utilized in connection with the offering of securities in any Securitization Transaction, true and correct copies of which have been made available to Buyer, as of its effective date (in the case of a registration statement) or as of its issue date (in the case of any other such document), contained any untrue statement of any material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, with the foregoing representation regarding untrue statements or omissions provided from the perspective of a purchaser of a security offered thereby.

 

(v)           Electronic Promissory Notes

 

To the extent any Trust Student Loan or Financed Student Loan is evidenced by an electronic promissory note, the Seller complied (and has caused each Securitization Trust, the Depositor, the Funding Note Issuer, any originator and each Servicer or Sub-Subservicer of such Trust Student Loan or Financed Student Loan to comply) with all regulations and other requirements adopted by the applicable Guarantor or the Department relating to the validity and enforceability of such promissory note.  In addition, the Seller, the Servicer and the Subservicer each hereby covenants, and agrees to cause any applicable Affiliate, to provide Buyer Subsidiary, as replacement Subservicer, with all documentation, materials or testimony necessary to satisfy the requirements of 34 CFR § 682.414(a)(6) of the Higher Education Act as part of a claims process under the related Guarantee Agreement with respect to such Trust Student Loan or Financed Student Loan.

 

(w)           Special Programs

 

The Seller has not offered any borrower incentive programs to any Borrower in respect of any Trust Student Loan or Financed Student Loan since the Data Tape prepared as of June 30, 2010, was delivered to Buyer Parent in connection with the Transactions (the “Disclosure Date”), except as required by the Higher Education Act or to the extent such incentive program was already in effect with respect to the related Trust Student Loans or Financed Student Loans on or before the Disclosure Date.

 

(x)           No Other Representations and Warranties

 

Except for the representations and warranties contained in Sections 7.1 and 7.2, in Appendix E and Appendix F and in any other Transaction Documents and the information provided in each Bill of Sale, neither the Seller nor any other Person on behalf of the Seller or any of its Subsidiaries or Affiliates makes any express or implied representation or warranty with respect to the Seller or any of its Subsidiaries or Affiliates or with respect to the Acquired Assets or any other information provided to the Buyer Parties in connection with the Transactions.

 

Section 7.3                      Additional Representations and Warranties of each Buyer

 

Each Buyer (unless only one such Buyer is specified, in which case only the specified Buyer) represents and warrants, solely as to itself, to each of the other parties to this Agreement, for their benefit, and for the benefit of each of their respective successors and permitted assigns, as of the Commitment Date and as of the Closing Date that:

 

(a)           Investment Company Act Status

 

Neither the Buyer nor the portfolio of student loans held by the Buyer is an investment company as defined in, or subject to regulation under, the Investment Company Act.

 

(b)           Solvency

 

The Buyer is Solvent as of the Commitment Date and as of the Closing Date.

 

(c)           Accession Agreement

 

The Securitization Buyer affirms each of the representations and warranties to be made by it in the Accession Agreement.

 

(d)           No Other Representations and Warranties

 

Except for the representations and warranties contained in Section 7.1 and this Section 7.3 and in the Transaction Documents, no Buyer nor any other Person on behalf of such Buyer or any of its Subsidiaries or Affiliates makes any express or implied representation or warranty with respect to such Buyer or any of its Subsidiaries or Affiliates or with respect to the Acquired Assets or any other information provided to the Seller Parties in connection with the Transactions.

 

(e)           Section 4.1(d) Ownership

 

Neither Buyer nor any of its Affiliates owns any shares of Capital Stock or other equity or voting interest (including any securities exercisable or exchangeable for or convertible into Capital Stock or other equity or voting interest) in the Seller.

 

Section 7.4                      Additional Representations and Warranties of Buyer Parent

 

Buyer Parent represents and warrants to each of the other parties to this Agreement, for their benefit and for the benefit of each of their respective successors and permitted assigns, as of the Commitment Date and as of the Closing Date that:

 

(a)           Investment Company Act Status

 

The Buyer is not an investment company as defined in, or subject to regulation under, the Investment Company Act.

 

(b)           Solvency

 

Buyer Parent is Solvent as of the Commitment Date and as of the Closing Date.

 

(c)           Agreements with Other Parties

 

As of the date hereof, there are no agreements, arrangements or understandings (other than as provided in the Transaction Documents and the Related Transaction Documents) between Buyer Parent or its Affiliates and either (i) Merger Buyer or its Affiliates with respect to any of the Transactions or the Related Transactions or (ii) CBNA or its Affiliates, with respect to any of the Transactions or the Related Transactions that would have the effect of providing additional consideration in excess of the Merger Consideration (as defined in the Merger Transaction Agreement) provided to CBNA pursuant to the Merger Transaction Agreement.

 

(d)           No Other Representations and Warranties

 

Except for the representations and warranties contained in Sections 7.1, 7.3, and this Section 7.4 and in the applicable Transaction Documents, neither Buyer Parent nor any other Person on behalf of Buyer Parent or any of its Subsidiaries or Affiliates makes any express or implied representation or warranty with respect to the Buyer Parent or any of its Subsidiaries or Affiliates or with respect to the Acquired Assets or any other information provided to the Seller Parties in connection with the Transactions.

 

ARTICLE VIII

 

CLOSING

 

Section 8.1                      Closing

 

(a)           Subject to the satisfaction or, if permissible, waiver of the conditions set forth in ARTICLE IX, the closing of the Transactions (the “Closing”) will take place at 10:00 a.m., New York time, on the third Business Day after the date on which the last of the conditions required to be satisfied or waived pursuant to ARTICLE IX hereof is either satisfied or waived (other than conditions that, by their nature, are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions), but no earlier than December 1, 2010 at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New York 10036, unless another time, date or place is agreed to in writing by the parties hereto (such date on which the Closing occurs, the “Closing Date”).  The parties will cooperate to cause the Closing to occur immediately following or concurrently with the closing of the CBNA Transaction and prior to the closing of the Merger Transaction.

 

(b)           Each condition precedent to the Closing will be deemed to have been satisfied or waived for the purposes of ARTICLE IX, and each of the Transactions will be deemed to have been consummated, upon the execution and delivery by the Seller of the Seller Satisfaction Certificate and the execution and delivery by Buyer Parent of the Buyer Satisfaction Certificate.  The execution and delivery of a Buyer Satisfaction Certificate or Seller Satisfaction Certificate is not intended to affect any party’s rights under any Merger Transaction Agreement, CBNA Transaction Agreement or Transaction Agreement after the Closing, including any right to claim that a breach of any representation, warranty or covenant in this Agreement has occurred at any time prior to the Closing.

 

ARTICLE IX

 

CONDITIONS PRECEDENT

 

Section 9.1                      Conditions to the Obligations of the Parties

 

The obligation of each party to this Agreement to consummate the Transactions is subject to the satisfaction or waiver (by mutual agreement of the parties, to the extent permitted by applicable Law) of the following conditions:

 

(a)           the Seller Stockholder Approval shall have been obtained;

 

(b)           if applicable, any waiting period (or extension thereof) under the HSR Act relating to the Transactions shall have expired or been terminated; and

 

(c)           no Governmental Authority shall have commenced, enacted, issued, promulgated, enforced or entered any suit, proceeding, Order or Law which is then in effect and has the effect of making the Transactions illegal or otherwise prohibiting the consummation of the Transactions.

 

Section 9.2                      Conditions to the Obligations of the Buyer Parties

 

The obligation of the Buyer Parties to consummate the Transactions is subject to the satisfaction or waiver by the Buyer Parent of the following further conditions:

 

(a)           the representations and warranties of each Seller Party contained in the Transaction Documents to which it is a party shall be true and correct (without giving effect to any limitation as to materiality or material adverse effect or similar qualifiers set forth therein) at and as of the Closing Date with the same force and effect as if made at and as of the Closing Date (other than those representations and warranties that address matters only as of a particular date or only with respect to a specific period of time, which need only be true and correct as of such date or with respect to such period), except where the failure of such representations and warranties to be true and correct would not reasonably be expected to have a Seller Material Adverse Effect;

 

(b)           the Seller Parties shall have performed and complied in all material respects with all agreements and covenants required by the Transaction Documents to be performed or complied with by the Seller Parties at or prior to the Closing;

 

(c)           the Seller shall have delivered to the Buyer Parent a certificate, substantially in the form of Exhibit 9.2, dated the Closing Date and signed by an executive officer of the Seller, certifying to the effect that the conditions set forth in Sections 9.2(a) and 9.2(b) have been satisfied;

 

(d)           the Seller shall have delivered to the Buyer Parent the Seller Satisfaction Certificate, dated the Closing Date and signed by an executive officer of the Seller;

 

(e)           since the Commitment Date, there shall not have been:

 

(i)           an event whereby Seller is no longer eligible to act or has been terminated as Servicer for the Trust Student Loans;

 

(ii)           “gross claim rejects” as set forth in the Seller’s Report of Operations (as would be calculated on the Commitment Date), in excess of 30 basis points in the last full quarter prior to the Closing; or

 

(iii)           any receiver or conservator appointed for CBNA or for all or any substantial part of its property;

 

(f)           all documents, certificates and opinions specified in Section 9.4 to be delivered by the other parties to the Transaction Documents on the Closing Date shall be duly executed and delivered by all signatories as required pursuant to the respective terms thereof;

 

(g)           the receipt of all third party consents and Rating Agency confirmations, and the satisfaction or waiver of all applicable notice conditions, if required in connection with the Transactions, as set forth in Section 9.2(g) of the Buyer Disclosure Schedule; and

 

(h)           CBNA as the lender under the Term Loan Agreement shall have confirmed in writing to the Buyer Parent, that all conditions to its obligations to fund under the Term Loan Agreement (other than the Closing under this Agreement) have been satisfied or waived, and CBNA will fund the loans under the Term Loan Agreement.

 

Section 9.3                      Conditions to the Obligations of the Seller Parties

 

The obligation of the Seller Parties to consummate the Transactions is subject to the satisfaction or waiver by the Seller of the following further conditions:

 

(a)           the representations and warranties of each Buyer Party contained in each Transaction Document to which it is a party shall be true and correct (without giving effect to any limitation as to materiality or material adverse effect or similar qualifiers set forth therein) at and as of the Closing Date with the same force and effect as if made at and as of the Closing Date (other than those representations and warranties that address matters only as of a particular date or only with respect to a specific period of time, which need only be true and correct as of such date or with respect to such period), except where the failure of such representations and warranties to be true and correct would not reasonably be expected to have a Buyer Material Adverse Effect;

 

(b)           the Buyer Parties shall have performed and complied in all material respects with all material agreements and covenants required by the Transaction Documents to be performed or complied with by the Buyer Parties at or prior to the Closing Date;

 

(c)           Buyer Parent shall have delivered to the Seller a certificate, substantially in the form of Exhibit 9.3, dated the Closing Date and signed by an executive officer of the Buyer, certifying to the effect that the conditions set forth in Sections 9.3(a) and 9.3(b) have been satisfied;

 

(d)           Buyer Parent shall have delivered to the Seller the Buyer Satisfaction Certificate, dated the Closing Date and signed by an executive officer of the Buyer Parent;

 

(e)           all documents, certificates and opinions specified in Section 9.4 to be delivered by the other parties to this Agreement or the other Transaction Documents on the Closing Date shall be duly executed and delivered by all signatories as required pursuant to the respective terms thereof;

 

(f)           the closing of the CBNA Transaction shall have occurred or will occur concurrently with the Closing;

 

(g)           the parties to the Merger Transaction Agreement shall be in a position to close the Merger Transaction immediately following the Closing and shall have notified the parties hereto in writing of their intent to do so; and

 

(h)           the receipt of all third party consents and Rating Agency confirmations, and the satisfaction or waiver of all applicable notice conditions, if required in connection with the Transactions, as set forth in Section 9.3(h) of the Seller Disclosure Schedule.

 

Section 9.4                      Closing Documents

 

On the Closing Date, each of the parties hereto shall deliver or cause to be delivered duly executed copies of the following documents to which they are a party or for which they are otherwise responsible as set forth below:

 

(a)           the Trust Certificates Bill of Sale;

 

(b)           the Accession Agreement;

 

(c)           the Partial Release of Security Interest;

 

(d)           the Sub-Administration Agreement for each Securitization Trust;

 

(e)           the Sub-Sub-Administration Agreement for each Securitization Trust,

 

(f)           the Administration Services Agreement for each Securitization Trust,

 

(g)           the Conduit Replacement Servicing Agreement;

 

(h)           the Replacement Subservicing Agreement for each Securitization Trust;

 

(i)           the Sub-Subservicing Agreement for each Securitization Trust;

 

(j)           the Servicing Services Agreement for each Securitization Trust;

 

(k)           the Assumption of Obligations of the Seller under Master Terms Purchase Agreements for each Trust;

 

(l)           the Makewhole and Participation Agreement;

 

(m)           the Conduit Bill of Sale;

 

(n)           the Conduit Mutual Release;

 

(o)           the Department Form Agreements;

 

(p)           the Conduit Replacement Subservicing Agreement;

 

(q)           the Conduit Services Agreement;

 

(r)           the Sub-Sub-Administration Agreement;

 

(s)           the Depositor Agreement;

 

(t)           the Amended and Restated Confidentiality Agreement;

 

(u)           the Buyer/Seller Release;

 

(v)           the Buyer Satisfaction Certificate;

 

(w)           the Seller Satisfaction Certificate;

 

(x)           certificates of good standing of each of the parties to this Agreement dated as of a date within five (5) Business Days prior to the Closing Date to be delivered by the Buyer and the Seller, respectively;

 

(y)           a certificate of the Secretary of each of the Buyer and the Seller attaching their respective organizational documents, board resolutions and incumbency certificate;

 

(z)           evidence of the receipt of all third party consents and Rating Agency confirmations required in connection with the Transactions as to be delivered by the Seller pursuant to Sections 9.3(g) and 9.3(h);

 

(aa)           all Opinions of Counsel required to be delivered pursuant to this Agreement and the Transaction Documents;

 

(bb)           all government filings required in connection with the Transactions to be delivered by the Seller; and

 

(cc)           all UCC-3 financing statements required to release the security interest of the Omnibus Lender under the Omnibus Credit Agreement in respect of the Trust Certificates to be delivered by the Seller on behalf of the Omnibus Lender for filing within three (3) Business Days following the Closing Date.

 

ARTICLE X

 

COVENANTS

 

Section 10.1                      No Public Announcements

 

The initial press releases with respect to the Transactions and the Related Transactions shall be press releases mutually agreed upon by Buyer Parent, the Seller, CBNA and Merger Buyer.  The Seller, CBNA and Buyer Parent shall also consult with each other before issuing any other press release with respect to the Transaction Documents or the Transactions (and none of Buyer Parent or its Affiliates shall issue or make any other press release with respect to the Related Transactions) and shall not issue any such press release without the prior consent of the other (which consent shall not be unreasonably withheld, delayed or conditioned), except as may be required by Law or any listing agreement with the New York Stock Exchange to which the Seller or Buyer Parent is a party.

 

Section 10.2                      Proxy Statement

 

(a)           Covenants of the Seller with Respect to the Proxy Statement.  As promptly as reasonably practicable following the date of this Agreement, the Seller shall prepare and shall cause to be filed with the SEC a proxy statement (together with any amendments thereof or supplements thereto, the “Proxy Statement”) relating to the meeting of the Seller’s stockholders to be held for the purpose of voting upon (i) the approval of this Agreement and the Transactions and (ii) the adoption of the Merger Transaction Agreement and the approval of the Merger Transaction (the “Stockholders’ Meeting”).  The Seller shall include in the Proxy Statement, except to the extent permitted by Section 10.4, the Seller Recommendation.  Seller shall use all reasonable efforts to respond to any comments by the SEC staff in respect of the Proxy Statement.  The Seller covenants and agrees that none of the information with respect to the Seller or its Subsidiaries to be included in the Proxy Statement will, at the time of the mailing of the Proxy Statement or any amendments or supplements thereto, and at the time of the Stockholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  The Seller shall use its reasonable best efforts to ensure that the Proxy Statement will comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations promulgated thereunder.

 

(b)           Covenants of Buyer Parent with Respect to the Proxy Statement.  Buyer shall use all reasonable efforts to cooperate with the Seller to respond to any comments by the SEC staff in respect of the Proxy Statement.  Buyer Parent covenants and agrees that none of the information with respect to Buyer Parent or its Subsidiaries furnished by Buyer Parent, its Affiliates or their respective representatives for the purpose of inclusion in the Proxy Statement will, at the time of the mailing of the Proxy Statement or any amendments or supplements thereto, and at the time of the Stockholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(c)           Cooperation.  The Seller and Buyer Parent shall cooperate and consult with each other in the preparation of the Proxy Statement and the Seller will provide Buyer Parent a reasonable opportunity for review and comment on the draft Proxy Statement (including each amendment or supplement thereto).  Without limiting the generality of the foregoing, Buyer Parent will furnish to the Seller the information relating to it required by the Exchange Act and the rules and regulations promulgated thereunder to be set forth in the Proxy Statement.  Each of the Seller and Buyer Parent shall promptly (i) notify the other of the receipt of any comments from the SEC with respect to the Proxy Statement and of any request by the SEC for amendments of, or supplements to, the Proxy Statement, and (ii) provide the other party with copies of all filings made with the SEC and all correspondence between the Seller and the SEC with respect to the Proxy Statement.  Each of the Seller and Buyer Parent shall use its reasonable best efforts to resolve all comments from the SEC with respect to the Proxy Statement as promptly as practicable.

 

(d)           Mailing of Proxy Statement; Amendments.  As promptly as reasonably practicable after the Proxy Statement has been cleared by the SEC, the Seller shall mail the Proxy Statement to the holders of the Seller Common Stock as of the record date established for the Stockholders’ Meeting and, unless the Seller has effected a Change of Recommendation, shall use reasonable best efforts to solicit proxies and votes in favor of the approval of this Agreement and the Transactions.  If at any time prior to the Closing Date any event or circumstance relating to the Seller or Buyer Parent or any of their respective Subsidiaries, or their respective officers or directors, should be discovered by the Seller or Buyer Parent, respectively, which, pursuant to the Exchange Act, should be set forth in an amendment or a supplement to the Proxy Statement, such party shall promptly inform the other (in which case the parties shall cooperate to effect the applicable amendment or supplement).  Prior to the Stockholders’ Meeting, each of Buyer Parent and the Seller agrees to correct any information provided by it for use in the Proxy Statement which shall have become false or misleading.

 

Section 10.3                      Stockholders’ Meeting

 

The Seller shall, as promptly as reasonably practicable following the date of this Agreement, establish a record date for, duly call, give notice of, convene and hold the Stockholders’ Meeting, whether or not the Board of Directors of the Seller has made a Permitted Change of Recommendation.  At such Stockholders’ Meeting, the Seller shall recommend to its stockholders the approval of the Transactions (the “Seller Recommendation”), except for a Permitted Change of Recommendation effected pursuant to Section 10.4(e).

 

Section 10.4                      No Solicitation of Competing Proposal

 

(a)           From and after the date of this Agreement until the earlier of the Closing Date or the date, if any, on which this Agreement is terminated pursuant to Section 11.1, and except as otherwise provided for in Sections 10.4 or 10.11, the Seller agrees that neither it nor any Subsidiary of the Seller shall, and that it shall cause its and their respective officers, directors, employees, managers, accountants, consultants, legal counsel, financial advisors, agents and other advisors and representatives (collectively, the “Representatives”) not to directly or indirectly: (i) solicit, initiate, assist or knowingly facilitate or encourage the making of, any Competing Proposal or any inquiry offer or proposal that could reasonably be expected to lead to any Competing Proposal, (ii) enter into, engage or participate in, or continue any negotiations regarding any Competing Proposal or any inquiry proposal or offer that could reasonably be expected to lead to, any Competing Proposal, (iii) other than in the ordinary course of business consistent with past practice and not in connection with any Competing Proposal, furnish to any person or group (other than Buyer Parent and its Affiliates) any non-public information relating to the Seller or any of its Subsidiaries (provided that the Seller may furnish information with respect to the Merger Transaction to the Merger Buyer and may furnish information with respect to the CBNA Transaction to CBNA), (iv) engage or participate in discussions with any Person with respect to any Competing Proposal or any proposal, inquiry or offer that could reasonably be expected to lead to any Competing Proposal, (v) approve, endorse or recommend or propose publicly to approve, endorse or recommend any Competing Proposal or any proposal, inquiry or offer that could reasonably be expected to lead to any Competing Proposal; or (vi) approve, endorse or recommend or publicly announce an intention to approve, endorse or recommend, or enter into any letter of intent or similar document or any agreement, commitment or other contract or agreement relating to any Competing Proposal or any inquiry, offer or proposal that could reasonably be expected to lead to, any Competing Proposal (other than as contemplated by the Related Transactions).  The Seller agrees that any breach of this Section 10.4(a) by any Subsidiary or Affiliate of the Seller or any of its or their respective Representatives shall constitute a breach of this Section 10.4(a) by the Seller.

 

(b)           The Seller shall, and shall cause its Subsidiaries and its and their respective Representatives to, immediately cease any existing solicitations, discussions or negotiations with any Person (other than the parties hereto) with respect to any Competing Proposal (other than as contemplated by the Related Transactions).

 

(c)           Notwithstanding any limitations set forth in this Agreement, if after the date hereof and prior to the receipt of the Seller Stockholder Approval, the Seller receives an unsolicited bona fide written Competing Proposal that (i) did not result from a violation of Section 10.4 and (ii) the Board of Directors of the Seller (upon the recommendation of the Special Committee) determines in good faith after consultation with the Seller’s outside legal and financial advisors that such Competing Proposal constitutes or would reasonably be expected to result, after the taking of any of the actions referred to in any of clause (x), (y) or (z) below, in a Superior Proposal or an Alternate Superior Proposal, then, the Seller may, at any time prior to the receipt of the Seller Stockholder Approval, take the following actions: (x) furnish non-public information with respect to the Seller and its Subsidiaries to the third party making such Competing Proposal, if, and only if, such information has been previously or is contemporaneously provided to Buyer Parent and prior to so furnishing such information, the Seller receives from the third party an executed confidentiality agreement with terms no less favorable in the aggregate to the third party than the Confidentiality Agreement is to Buyer Parent, (y) engage or participate in discussions or negotiations with such third party with respect to the Competing Proposal, and (z) in the case of a Competing Proposal that constitutes or would reasonably be expected to result in an Alternate Superior Proposal, engage in discussions or negotiations with CBNA and Merger Buyer, with respect to the Competing Proposal; provided, however, that as promptly as reasonably practicable following the Seller taking such actions as described in clauses (x), (y) or (z) above (and in any event within 24 hours), the Seller shall provide written notice to Buyer Parent of such determination as provided for in clause (ii) above, the identity of the third party making such Competing Proposal and the terms and conditions of the Competing Proposal.  The Seller shall keep Buyer Parent informed on a current basis of the status of any such discussions or negotiations, including any discussions or negotiations with CBNA and Merger Buyer.  Buyer Parent shall be permitted to engage in discussions and negotiations with CBNA and Merger Buyer in connection with any Competing Proposal.

 

(d)           Neither the Board of Directors of the Seller nor any committee thereof shall:  (i) change, qualify, withdraw or modify, or publicly propose to change, qualify, withdraw or modify the Seller Recommendation (a “Change of Recommendation”); (ii) approve or recommend, or publicly propose to approve or recommend any Competing Proposal; or (iii) exempt any person from any state takeover law, except as provided or permitted by this Section 10.4.

 

(e)           If prior to the receipt of the Seller Stockholder Approval either:

 

(i)           the Seller receives an unsolicited Superior Proposal or an unsolicited Alternate Superior Proposal and the Seller has complied with its obligations under this Section 10.4, or

 

(ii)           other than in connection with a Competing Proposal, the Board of Directors of the Seller (upon the recommendation of the Special Committee) determines in good faith in response to the occurrence of a Seller Intervening Event, after consultation with outside legal and financial advisors that, the failure of the Board of Directors of the Seller to effect a Change of Recommendation would be inconsistent with the fiduciary duties of the Board of Directors of the Seller to the Seller’s stockholders under applicable Law,

 

then, prior to the receipt of the Seller Stockholder Approval, the Board of Directors of the Seller may effect a Change of Recommendation (a “Permitted Change of Recommendation”); provided, that with respect to clause (i), (x) the Seller shall have first (A) provided seven (7) Business Days’ prior written notice (a “Notice of Superior Proposal”) to Buyer Parent that it is prepared to effect a Permitted Change of Recommendation in response to a Superior Proposal or an Alternate Superior Proposal and specifying the reasons therefor, including the terms and conditions of the Superior Proposal or the Alternate Superior Proposal that are the basis of such proposed Permitted Change of Recommendation, copies of the agreements proposed to effect such Superior Proposal or Alternate Superior Proposal, as well as all material correspondence relating to such Superior Proposal or Alternate Superior Proposal and the identity of the Person making such proposed Superior Proposal or Alternate Superior Proposal (it being understood and agreed that any amendment to the financial terms or any material amendment of any such Superior Proposal or Alternate Superior Proposal shall require a new Notice of Superior Proposal and a new seven (7) Business Day period), and (B) during such seven (7) Business Day period, if requested by Buyer Parent, engaged in good faith negotiations with Buyer Parent (and the parties to the Related Transactions, if applicable) to amend this Agreement, the Transaction Documents (and/or the Related Transaction Documents) in such a manner that any Competing Proposal which was determined to be a Superior Proposal or an Alternate Superior Proposal, as the case may be, would no longer constitute a Superior Proposal or Alternate Superior Proposal, as the case may be, and (y) at the end of such seven (7) Business Day period (or at such earlier time following receipt of a Notice of Superior Proposal that Buyer Parent notifies the Seller that it is not interested in pursuing further negotiations to amend this Agreement), such Competing Proposal has not been withdrawn and continues to constitute a Superior Proposal or an Alternate Superior Proposal taking into account any changes, which have not been withdrawn, to the terms of this Agreement proposed by Buyer Parent and/or, in the case of a Superior Proposal only, any changes to the Transaction Documents or Related Transaction Documents proposed by the parties thereto following a Notice of Superior Proposal, as a result of the negotiations required by sub-clause (B) or otherwise) and in the case of clause (ii), the Seller shall have first provided seven (7) Business Days’ prior written notice (“Notice of a Proposed Change of Recommendation”) to Buyer Parent that it is prepared to effect a Permitted Change of Recommendation in response to a Seller Intervening Event and describing such Seller Intervening Event and during such seven (7) Business Day period, if requested by Buyer Parent, engaged in, and caused its Representatives and Affiliates to have engaged in, good faith negotiations with Buyer Parent and its Representatives (and the parties to the Related Transaction Documents and their Representatives) to amend this Agreement, the Transaction Documents and/or the Related Transaction Documents and at the end of such seven (7) Business Day period, the Board of Directors of the Seller (upon the recommendation of the Special Committee) after taking into account all changes, which have not been withdrawn, to the terms of this Agreement, the Transaction Documents and/or the Related Transaction Documents proposed by Buyer Parent or the parties thereto following such Notice of a Proposed Change of Recommendation, again determines in good faith that the failure to effect a Change of Recommendation would be inconsistent with the fiduciary duties of the Board of Directors of the Seller to the Seller’s stockholders under applicable Law.

 

(f)           The Seller shall advise Buyer Parent promptly (and in any event within 24 hours) of: (i) any Competing Proposal or indication, inquiry proposal or offer with respect to or that could reasonably be expected to lead to any Competing Proposal; (ii) any request for non-public information relating to the Seller; and (iii) any inquiry or request for discussion or negotiation regarding a Competing Proposal, including in each case the identity of the Person making any such Competing Proposal or indication, inquiry offer or proposal the material terms of any such Competing Proposal or indication, inquiry offer or proposal and any material correspondence relating thereto.  The Seller shall keep Buyer Parent informed on a current basis of any material changes to the terms of any such Competing Proposal or indication or inquiry.

 

(g)           Notwithstanding the limitations set forth in this Section 10.4, and in accordance with Section 10.4(e), if the Board of Directors of the Seller has effected a Permitted Change of Recommendation in compliance with the requirements of Section 10.4(e)(i) and in response to a Superior Proposal (but not an Alternate Superior Proposal) and is not in breach of Section 10.4, then prior to receipt of the Seller Stockholder Approval, the Board of Directors of the Seller (upon the recommendation of the Special Committee) may cause the Seller to enter into a binding written agreement (a “Superior Proposal Agreement”) to effect a Superior Proposal and terminate this Agreement in accordance with Section 11.1(h).

 

(h)           Nothing contained in this Agreement shall prohibit the Seller or the Board of Directors of the Seller from (i) disclosing to the Seller’s stockholders a position contemplated by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act or (ii) making any disclosure to its stockholders if the Board of Directors of the Seller (or a committee thereof, as applicable) has reasonably determined in good faith, after consultation with outside legal and financial advisors, that the failure to do so would be inconsistent with any applicable Law; provided, however, that (A) any disclosure of a position contemplated by Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act other than a “stop, look and listen”, an express rejection of any applicable Competing Proposal or an express reaffirmation of the Seller Recommendation shall be deemed to be a Change of Recommendation and (B) neither the Seller nor the Seller’s Board of Directors (nor any committee thereof) shall make any Change of Recommendation except in accordance with the other provisions of this Section 10.4.

 

(i)           As used in this Agreement, “Competing Proposal” shall mean any proposal or offer from any Person or group of Persons other than Buyer Parent and its Affiliates to effect: (A) any direct or indirect acquisition or purchase, in any single transaction or series of related transactions, by any such Person or group, of 15% or more of the fair market value of the Acquired Assets; (B) any direct or indirect acquisition or purchase by any person or group of persons of 15% or more of the total outstanding voting securities of the Seller or any of its Subsidiaries; (C) any tender offer or exchange offer (including through the filing with the SEC of a Schedule TO), as defined pursuant to the Exchange Act, that if consummated, would result in any Person or group beneficially owning 15% or more of the Seller Common Stock or (D) any merger, consolidation, business combination, recapitalization, issuance of or amendment to the terms of outstanding stock or other securities, liquidation, dissolution or other similar transaction involving the Seller as a result of which any Person or group acting in concert would acquire assets or securities or interests described in clause (A), (B) or (C) above.

 

(j)           As used in this Agreement, “Seller Intervening Event” means an event or circumstance material to the Seller and its Subsidiaries, taken as a whole (other than any event or circumstance resulting from a breach of this Agreement by the Seller or its Subsidiaries or any breach of any of the Related Transaction Documents), that was unknown to the Board of Directors of the Seller on the date hereof, which event or circumstance becomes known to the Board of Directors of the Seller prior to the Seller Stockholder Approval; provided, however, that (A) in no event shall the receipt, existence or terms of a Competing Proposal (or any proposal or inquiry to acquire any of the assets purchased under the CBNA Transaction or the Seller assets that remain in the Seller after the closing under the Merger Transaction Agreement), or any inquiry or matter relating thereto or consequence thereof, constitute a Seller Intervening Event, (B) in no event shall events or circumstances arising from the announcement or the existence of, or any action taken by either party pursuant to and in compliance with the terms of, this Agreement or the Related Transaction Documents constitute a Seller Intervening Event and (C) in no event shall any increase in the market price of the Seller Common Stock, in and of itself, constitute a Seller Intervening Event (provided that the event or circumstance underlying such increase in the market price of the Seller Common Stock shall not be excluded, and may be taken into account, in determining whether there is a Seller Intervening Event).

 

(k)           As used in this Agreement, “Superior Proposal” shall mean any unsolicited, bona fide written Competing Proposal (except the references in clauses (A), (B) and (C) thereof to “15%” shall be replaced by “80%” and the reference in clause (A) thereof to Acquired Assets shall be replaced by “all assets of the Seller”) that (A) is on terms that the Board of Directors of the Seller (upon the recommendation of the Special Committee) determines in good faith, after consultation with outside financial and legal advisors and consideration of all relevant factors, would, if consummated, result in a transaction that is more favorable from a financial point of view to the holders of the Seller Common Stock than the Transactions (taking into account any binding proposal to amend the terms of this Agreement, the Transaction Documents and/or any of the Related Transaction Documents), and (B) is reasonably capable of being completed on the terms set forth in the proposal within a reasonable period of time, taking into account all financial, legal, regulatory and other aspects thereof.

 

(l)           As used in this Agreement, “Alternate Superior Proposal” shall mean any unsolicited, bona fide written Competing Proposal of the type set forth in clause (A) of the definition of “Competing Proposal” (except the references in clause (A) thereof to “15%” shall be replaced by “100%”) that (A) is on terms that the Board of Directors of the Seller (upon the recommendation of the Special Committee) determines in good faith, after consultation with outside financial and legal advisors and consideration of all relevant factors, would, if consummated, result in a transaction that is more favorable from a financial point of view to the holders of the Seller Common Stock than the Transactions (taking into account any binding proposal to amend the terms of this Agreement, the Transaction Documents and/or any of the Related Transaction Documents), (B) is reasonably capable of being completed on the terms set forth in the proposal within a reasonable period of time, taking into account all financial, legal, regulatory and other aspects thereof, and (C) would, if consummated, not result (I) in any person other than CBNA acquiring the assets being sold in the CBNA Transaction Agreement in accordance with the terms and conditions of the CBNA Transaction Agreement (as in effect immediately prior to the announcement of or the Seller’s receipt of such Competing Proposal) and the Transaction Documents (as defined in the CBNA Transaction Agreement) and (II) in any person other than Merger Buyer (and its Affiliates) consummating the Merger Transaction in accordance with the terms and conditions of the Merger Transaction Agreement (as in effect immediately prior to the Seller’s receipt of such Competing Proposal) and the Transaction Documents (as defined in the CBNA Transaction Agreement).

 

(m)           During the period from the date of this Agreement through the earlier of the Closing Date and the date of termination of this Agreement, the Seller shall not terminate, amend, modify or waive any provision of any confidentiality agreement relating to a Competing Proposal or standstill agreement to which the Seller or any of the Seller’s Subsidiaries is a party (other than any involving Buyer Parent).  During such period, the Seller agrees to enforce, to the fullest extent permitted under applicable Law, the provisions of any such agreements, including obtaining injunctions to prevent any breaches of such agreements and to enforce specifically the terms and provisions thereof in any court of the U.S. or any state thereof having jurisdiction.  Notwithstanding the foregoing, the Seller may waive any such standstill if the Board of Directors of the Seller, after consultation with outside legal counsel, determines that the failure to do so would be inconsistent with the fiduciary duties of the Board of Directors of the Seller to the Seller’s stockholders under applicable Law.

 

(n)           From and after the date of this Agreement until the earlier of the Closing Date or the date, if any, on which this Agreement is terminated pursuant to Section 11.1, the Seller agrees that it will comply with all agreements and covenants to be performed by it under Section 6.6 of the Merger Transaction Agreement.

 

(o)           Buyer Parent agrees that neither it nor any of its Affiliates shall make any Competing Proposal (as defined in the Merger Transaction Agreement) without the prior written consent of Seller or except as otherwise permitted through the Merger Transaction Agreement.

 

Section 10.5                      Appropriate Action; Consents; Filings

 

(a)           Subject to the terms and conditions hereof, the parties hereto will use their respective reasonable best efforts to consummate and make effective the Transactions and the Related Transactions and to cause the conditions to the Transactions set forth in ARTICLE IX to be satisfied, including:

 

(i)           the obtaining of all necessary actions or nonactions, consents, terminations or expirations of waiting periods and approvals from Governmental Authorities or other Persons necessary in connection with the consummation of the Transactions and the making of all necessary registrations and filings (including filings with Governmental Authorities, if any) and the taking of all steps as may be necessary to obtain an approval from, or to avoid an action or proceeding by, any Governmental Authority or other Persons necessary in connection with the consummation of the Transactions (provided that, notwithstanding anything in this Agreement, in no event shall any party be required to make any payment to any such other Persons to obtain such approval);

 

(ii)           the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the performance or consummation of the Transactions in accordance with the terms of this Agreement, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Authority vacated or reversed; and

 

(iii)           the execution and delivery of any additional instruments necessary to consummate the transactions to be performed or consummated by such party in accordance with the terms of this Agreement and to fully carry out the purposes of this Agreement.

 

Without limiting the foregoing, although Seller and Buyer Parent each acknowledge that they do not anticipate filings under the HSR Act are required, in the event any filing or submission is required under the HSR Act, each of the parties hereto shall promptly make its respective filings, and thereafter make any other required submissions, under the HSR Act with respect to the Transactions.  The Seller and Buyer Parent shall cooperate (A) in promptly determining whether any filings are required to be or should be made or whether any consents, approvals, permits or authorizations are required to be or should be obtained under any other federal, state or non-U.S. Law or regulation or whether any consents, approvals or waivers are required to be or should be obtained from other parties to loan agreements or other contracts or instruments material to the Seller’s business in connection with the consummation of the Transactions and (B) in promptly making any such filings, furnishing information required in connection therewith and seeking to obtain timely any such consents, permits, authorizations, approvals or waivers.

 

(b)           In furtherance and not in limitation of the covenants of the parties contained in Section 10.5(a), each of the parties hereto shall use its reasonable best efforts to resolve such objections, if any, as may be asserted with respect to the Transactions by or under the HSR Act, the Federal Trade Commission or Department of Justice, including taking all reasonable actions to obtain clearance, or if such clearance cannot be obtained, to reach an agreement, settlement or consent with the Governmental Authority investigating the Transactions; provided, however, that the foregoing shall not require any party to agree to any asset divestiture or restriction on its or its Subsidiaries’ business operations.  In connection with the foregoing, if any administrative or judicial action or proceeding, including any proceeding by a private person, is instituted (or threatened to be instituted) challenging any of the Transactions as violative of the HSR Act or any other antitrust or other Law in any jurisdiction, Buyer Parent shall use its reasonable best efforts to contest and resist any such action or proceeding and to have vacated, lifted, reversed or overturned any judgment or other order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts the consummation of the Transactions, including defending through litigation on the merits any claim asserted in any such action or proceeding by any Person (and the Seller shall cooperate with Buyer Parent with respect to such matters).

 

(c)           Each of Buyer Parent and the Seller shall give (or shall cause its respective Subsidiaries to give) any notices to third parties, and Buyer Parent and the Seller shall use, and cause each of its Subsidiaries to use, its reasonable best efforts to obtain any third party consents not covered by Sections 10.5(a) and 10.5(b), necessary, proper or advisable to consummate the Transactions.  Each party shall without limitation:  (1) promptly notify the other of, and if in writing, furnish the other with copies of (or, in the case of oral communications, advise the other of) any communications from or with any Governmental Authority with respect to the Transactions, (2) use its reasonable best efforts to permit the other to review and discuss in advance, and consider in good faith the views of the other in connection with, any proposed written or any oral communication with any such Governmental Authority with respect to the Transactions, (3) use its reasonable best efforts not to participate in any meeting or have any communication with any such Governmental Authority with respect to the Transactions, unless it has given the other an opportunity to consult with it in advance and, to the extent permitted by such Governmental Authority, gives the other the opportunity to attend and participate therein, and (4) furnish the other with such necessary information and reasonable assistance as the other may reasonably request in connection with its preparation of necessary filings or submissions of information to any such Governmental Authority with respect to the Transactions. Such materials and the information contained therein that is competitively sensitive shall be given only to the outside legal counsel of the other party and will not be disclosed by such outside counsel to employees, officers, or directors of their respective client unless express permission is obtained in advance from the disclosing party or its legal counsel.

 

(d)           Seller will keep Buyer reasonably informed of the status of any approvals of a Governmental Authority or third party consents required with respect to the transactions contemplated by the Related Transaction Documents.

 

Section 10.6                      Access to Information; Confidentiality

 

(a)           From the date hereof to the Closing Date, or the date, if any, on which this Agreement is terminated pursuant to Section 11.1, to the extent permitted by applicable Law, the Seller shall (i) provide to Buyer Parent and its Representatives (A) complete and full access to the Data Room as it relates to the Acquired Assets including the ability of Buyer Parent and its Representatives to print copies of all documents contained therein and (B) reasonable access during normal business hours and, following reasonable notice from Buyer Parent, to the Seller’s and its Subsidiaries’ properties, books, contracts and records and other information as Buyer Parent may reasonably request regarding the Acquired Assets or as may otherwise be reasonably required in connection with the Transactions, and (ii) furnish promptly to Buyer Parent such information concerning the same as Buyer Parent or its Representatives may reasonably request; provided, however, that the Seller shall not be required to provide access to any information or documents which would, in the reasonable judgment of the Seller, (x) breach any agreement with any third party, (y) constitute a waiver of the attorney-client or other privilege held by the Seller or (z) otherwise violate any applicable Laws.

 

(b)           The Buyer Parent shall use the information provided pursuant to Section 10.6(a) solely for the purposes of effecting the Transactions, and the parties shall comply with, and shall cause their respective Representatives to comply with, all of their respective obligations under the Confidentiality Agreement, dated March 11, 2010 (the “Confidentiality Agreement”) with respect to such information (which shall be deemed “Evaluation Material” (as defined therein) for purposes thereof).  The Confidentiality Agreement shall be amended and restated at the Commitment Date substantially in the form of Exhibit 10.6(b).

 

(c)           Following the Closing, the Seller and the Buyer Parent shall use reasonable best efforts to make available to each other, upon written request, (i) their respective Representatives for fact finding, consultation and interviews and as witnesses or other participants to the extent that any such Person may reasonably be requested in connection with any action, suit, proceeding, claim, arbitration, investigation or litigation, whether civil or criminal, at law or in equity, in which the requesting party may from time to time be involved relating to the business of the Seller as such business was conducted prior to the Closing (and the Seller and the Buyer Parent will cause such Representatives to cooperate with the requesting party to produce, subject to and in accordance with this Section 10.6(c), such books and records as are reasonably required in connection with such matters) and (ii) reasonable access during normal business hours to, or copies of, the Seller’s and its Subsidiaries’ books and records and other information as Buyer Parent may reasonably request regarding the Acquired Assets; provided, however, that the Seller shall not be required to provide access to any information or documents which would, in the reasonable judgment of the Seller, (x) breach any agreement with any third party, (y) constitute a waiver of the attorney-client or other privilege held by the Seller or (z) otherwise violate any applicable Laws.  Except as otherwise agreed, the Seller and the Buyer Parent hereby agree to reimburse each other for Expenses incurred by the other in connection with providing individuals, witnesses and/or books and records pursuant to this Section 10.6(c).

 

Section 10.7                      Non-Solicit

 

From the date hereof until the 18 month anniversary of the Closing Date, neither the Buyer Parent, nor any of its Affiliates, shall, without the prior written consent of the Seller, directly or indirectly solicit for employment any employee of the Seller that the Buyer Parent or its Subsidiaries either met in person in connection with the Buyer Parent’s due diligence investigation or negotiation and execution of this Agreement or work with directly after the Closing in connection with servicing Student Loans.  In addition, until the sixth month anniversary of the Closing Date neither the Buyer Parent nor any of its Affiliates will conduct any recruitment events such as job fairs that are targeted at groups of employees of the Seller.  However, nothing in this Section 10.7 shall prevent the Buyer Parent, or any of its Affiliates, from (i) hiring persons who are referred by search firms or employment agencies or similar entities (so long as such entities have not been instructed to solicit the employees of the Seller) or persons who respond to a general solicitation or advertisement that is not specifically directed to the employees of the Seller (and nothing shall prohibit the use of such search firm or employment agency or similar entity or the making of any such solicitation or advertisement) or (ii) soliciting or hiring any person who, at the time of such solicitation or hiring, is not an employee of the Seller.

 

Section 10.8                      Related Transaction Documents

 

Without the prior written consent of the Buyer, the Seller shall not (i) amend, modify or waive any provision of the Related Transaction Documents in a manner that would reasonably be expected to materially adversely affect Buyer’s rights or obligations or materially delay the Closing Date or (ii) terminate the Merger Transaction Agreement pursuant to Section 8.1(a) or the CBNA Transaction Agreement pursuant to Section 8.1(a) by the mutual written agreement of the Seller and the applicable counterparty.  Subject to the foregoing, the Seller shall deliver promptly to Buyer copies of all material amendments, modifications and waivers to any Related Transaction Document.

 

Section 10.9                      Agreements with Other Parties

 

Without the prior written consent of the Seller (upon the recommendation of the Special Committee), between the date of this Agreement and the Closing Date, Buyer Parent shall not, and shall not permit any of its Affiliates to, enter into any agreements, arrangements or understandings (other than as provided in the Transaction Documents and the Related Transaction Documents) between Buyer Parent or its Affiliates and either (i) Merger Buyer or its Affiliates with respect to any of the Transaction or the Related Transactions or (ii) CBNA or its Affiliates, with respect to any of the Transactions or the Related Transactions that would have the effect of providing additional consideration in excess of the Merger Consideration (as defined in the Merger Transaction Agreement) provided to CBNA pursuant to the Merger Transaction Agreement.  This Section 10.9 shall not prohibit the Buyer Parent or Merger Buyer from making a proposal pursuant to Section 10.4(e).

 

Section 10.10                    Conduct of Business by the Seller Pending the Closing

 

The Seller covenants and agrees that, between the Commitment Date and the Closing or the date, if any, on which this Agreement is terminated pursuant to Section 11.1:

 

(a)           Except (i) as may be required by Law or any Governmental Authority, (ii) as may be consented in writing by Buyer Parent (which consent shall not be unreasonably delayed, conditioned or withheld), (iii) as may be contemplated by or required under, the Transaction Documents or as may be required under the Related Transaction Documents, (iv) as set forth in Section 10.10 of the Seller Disclosure Schedule or (v) as would not reasonably be expected to have any adverse effect on the Acquired Assets or the Applicable Loans or the ability of the Seller and its Affiliates to perform their obligations under the Transaction Documents, the business of the Seller and its Subsidiaries to the extent relating to Acquired Assets shall be conducted only in, and such entities shall not take any action except in, the ordinary course of business and in a manner consistent with past practice in all material respects; provided, however, that no action by the Seller or its Affiliates with respect to the matters specifically addressed by any provision of Section 10.10(b) below shall be deemed a breach of this sentence unless such action would also itself constitute a breach of such specific provision.

 

(b)           Without limiting the generality of the foregoing, the Seller agrees with Buyer Parent that, except (i) as may be required by Law or any Governmental Authority, (ii) as may be consented to in writing by Buyer Parent (which consent shall not be unreasonably delayed, conditioned or withheld in the case of Section 10.10(b)(iii) below), (iii) as may be contemplated by or required under the Transaction Documents or as may be required under the Related Transaction Documents or (iv) as set forth in Section 10.10 of the Seller Disclosure Schedule, it shall not, and shall not permit its Subsidiaries to:

 

(i)           effect a new Securitization Transaction, or amend, modify or waive in any material respect any term of any outstanding Securitization Transaction or any Securitization Basic Document or any contract, arrangement, commitment or understanding relating to the Conduit Program to the extent relating to the Acquired Assets or the Applicable Loans or the Depositor;

 

(ii)           sell or dispose of any loans to the extent relating to the Acquired Assets or the Applicable Loans except pursuant to existing commitments identified in Section 10.10 of the Seller Disclosure Schedule;

 

(iii)           modify or amend in any material respect any provisions of any contract, commitment, arrangement or understanding set forth in Section 10.10(b)(iii) of the Seller Disclosure Schedule, or amend, waive, modify or consent to the early termination of any material rights thereunder;

 

(iv)           terminate any trustee, servicer, subservicer or administrator or similar party under any contract to the extent relating to any of the Acquired Assets or the Applicable Loans except to the extent required under the terms of any of the Securitization Basic Documents; or

 

(v)           offer Borrowers of Trust Student Loans or Financed Student Loans any borrower incentive programs not (A) required by the Higher Education Act or (B) in effect with respect to the related Trust Student Loans or Financed Student Loans on or before the Disclosure Date.

 

(c)           With respect to the Depositor, the Seller shall cause the Depositor to:

 

(i)           comply in all respects with its permitted purposes and activities clause and in all material respects with all other provisions of its Certificate of Incorporation or By-Laws and not amend its Certificate of Incorporation or By-Laws;

 

(ii)           not act as a depositor with respect to any new securitization vehicle, or except as provided herein, enter into any new agreements or amend any of its existing agreements;

 

(iii)           comply in all material respects with all agreements to which it is currently a party;

 

(iv)           timely file all required reports under the Exchange Act; and

 

(v)           remain a wholly owned subsidiary of the Seller.

 

(d)           With respect to the Funding Note Issuer, the Seller shall cause the Funding Note Issuer to:

 

(i)           comply in all respects with its permitted purposes and activities clause and in all material respects with all other provisions of its Certificate of Incorporation or By-Laws and not amend its Certificate of Incorporation or By-Laws;

 

(ii)           not act as a funding note issuer with respect to any new securitization vehicle, or except as provided herein, enter into any new agreements or amend any of its existing agreements, except as required by the Department;

 

(iii)           comply in all material respect with all agreements to which it is currently a party; and

 

(iv)           remain a wholly owned subsidiary of the Seller.

 

(e)           Promptly upon acquiring Knowledge thereof, the Seller will provide prompt written notice to the Buyer Parent of:

 

(i)           any inquiries or claim or threatened claim of any material litigation or material proceeding of a Governmental Authority in each case, related to the Acquired Assets, the Depositor, the Funding Note Issuer, each Securitization Trust and each Private Securitization Trust or any written assertion by any investor of a material misstatement or omission in any prospectus or offering document in each case, related to the Acquired Assets, the Depositor, the Funding Note Issuer, each Securitization Trust and each Private Securitization Trust;

 

(ii)           any dispute related to the obligations to repurchase any student loans under any of the Securitization Basic Documents and all similar agreements relating to each Private Securitization Trust; and

 

(iii)           the repurchase of any material Student Loan or private education loan pursuant to any of the Securitization Basic Documents and all similar agreements relating to each Private Securitization Trust.

 

Other than the right to consent or withhold consent with respect to the foregoing matters, nothing contained in this Agreement shall give to Buyer Parent, directly or indirectly, any right to control or direct the operation of the business or operations of the Seller or its Subsidiaries prior to the Closing.  Subject to the foregoing and the other terms and conditions of this Agreement, prior to the Closing, the Seller and its Subsidiaries shall exercise complete control over their business and operations.

 

Section 10.11                    Merger Transaction Restructuring

 

(a)           Notwithstanding anything contained herein to the contrary but subject to paragraph (b) below, in the event the Merger Transaction Agreement is terminated (i) the Seller shall be permitted to discuss with CBNA the possibility of entering into a transaction pursuant to which CBNA would acquire the Acquired Assets (as defined in the Merger Transaction Agreement) in a transaction that delivers value directly to the Seller’s stockholders (a “Substitute Merger Transaction”) and (ii) in the event that the Seller and CBNA desire to revise the existing CBNA Transaction Agreement or enter into a different agreement to provide for a Substitute Merger Transaction, each of the parties shall use their reasonable best efforts to cooperate in good faith to revise this Agreement and any Transaction Document to provide for the consummation of a Substitute Merger Transaction and shall use their reasonable best efforts to cause the transactions contemplated by such agreements to be consummated as promptly as reasonably practicable, including filing such amendments, supplements to the Proxy Statement and making such other filings with Governmental Authorities as may be reasonably necessary to consummate the transactions contemplated hereby and by the agreement related to such Substitute Merger Transaction.

 

(b)           In connection with any proposed Substitute Merger Transaction, the Buyer Parent will not be required to enter into any amendments or modifications to this Agreement or any Transaction Document, unless such amendment or modification would not reasonably be expected to adversely affect Buyer’s rights thereunder.  The Seller and CBNA agree that any costs and expenses incurred by the Buyer Parent in connection with such proposed Substitute Merger Transaction, other than those that would not have been incurred under this Agreement in the absence of a proposed Substitute Merger Transaction, will be borne by Seller and CBNA.

 

ARTICLE XI

 

TERMINATION, AMENDMENT AND WAIVER

 

Section 11.1                      Termination

 

Notwithstanding anything contained in this Agreement to the contrary, this Agreement may be terminated and the Transactions may be abandoned, at any time prior to the Closing Date, whether before or after the Seller Stockholder Approval, as follows:

 

(a)           by mutual written consent of each of Buyer Parent and the Seller;

 

(b)           by written notice of either Buyer Parent or the Seller, if (i) the purchase and sale of the Acquired Assets contemplated hereby has not been consummated on or before March 31, 2011 (the “Termination Date”); and (ii) the party seeking to terminate this Agreement pursuant to this Section 11.1 shall not have breached in any material respect its obligations under this Agreement, in any manner that shall have proximately caused the failure to consummate the Transactions on or before such date; provided, that if as of the Termination Date, (A) all of the conditions to this Agreement (other than those that are to be satisfied by action taken at the Closing) shall have been satisfied or waived other than the conditions set forth in (x) Sections 9.1(b), 9.1(c), (y) Section 9.2(g) or (z) Sections 9.3(f) or 9.3(g) (to the extent resulting from the failure to obtain regulatory approvals), or (B) the “Termination Date” (as defined in the CBNA Transaction Agreement or the Merger Transaction Agreement, as applicable) has been extended, then the Termination Date shall be automatically extended to April 30, 2011 or such date as the Termination Date (as defined in the CBNA Transaction Agreement or the Merger Transaction Agreement) has been extended; provided, further, if the Seller and CBNA enter into a definitive agreement relating to a Substitute Merger Transaction, then, in any event, the Termination Date shall be the later of (1) March 31, 2011 or (2) the date which is four months following the date of such definitive agreement.  Notwithstanding anything contained herein to the contrary, in no event may the Termination Date be extended past April 30, 2011;

 

(c)           by written notice of either Buyer Parent or the Seller, if any Governmental Authority of competent jurisdiction shall have issued an Order or taken any other action permanently restraining, enjoining or otherwise prohibiting the Transactions, and such Order or other action shall have become final and nonappealable; provided, that the party seeking to terminate this Agreement pursuant to this Section 11.1(c) shall have complied in all material respects with its obligations under Section 10.5;

 

(d)           by written notice of either Buyer Parent or the Seller if the Seller Stockholder Approval shall not have been obtained at a duly held Stockholders’ Meeting (including any adjournment or postponement thereof at which a quorum is present and the votes to approve this Agreement and the Transactions are taken);

 

(e)           by written notice from Buyer Parent to the Seller, if any Seller Party shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements set forth in this Agreement, which breach or failure to perform (1) would result in a failure of a condition set forth in Sections 9.2(a) or 9.2(b) and (2) cannot be cured by the Termination Date; provided, that Buyer Parent shall have given the Seller written notice, delivered at least forty-five (45) days prior to such termination, stating Buyer Parent’s intention to terminate this Agreement pursuant to this Section 11.1(e) and the basis for such termination and; provided, further, that in no event will the delivery of such notice result in an extension of the Termination Date;

 

(f)           by written notice from the Seller to Buyer Parent, if any Buyer Party shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements set forth in this Agreement, which breach or failure to perform (1) would result in a failure of a condition set forth in Sections 9.3(a) or 9.3(b) and (2) cannot be cured by the Termination Date; provided, that the Seller shall have given Buyer Parent written notice, delivered at least forty-five (45) days prior to such termination, stating the Seller’s intention to terminate this Agreement pursuant to this Section 11.1(f) and the basis for such termination and; provided, further, that in no event will the delivery of such notice result in an extension of the Termination Date;

 

(g)           by written notice from Buyer Parent to Seller, if any Seller Party shall have breached Section 10.4 and such breach is not cured within five (5) Business Days after such notice;

 

(h)           by written notice from the Seller (upon the recommendation of the Special Committee) to Buyer Parent simultaneously with the Seller or its Subsidiaries entering into a Superior Proposal Agreement in accordance with Section 10.4(g), with the effectiveness of such notice of termination to be contingent on Seller’s payment of the Seller Termination Fee; or

 

(i)           by written notice of either Buyer Parent or the Seller, if either (x) the CBNA Transaction Agreement has been terminated or (y) the Merger Transaction Agreement has been terminated and CBNA and the Seller have not entered into a definitive agreement relating to a Substitute Merger Transaction within 45 days of the termination of the Merger Transaction Agreement.

 

(j)           by written notice from Buyer Parent if the Seller effects a Change of Recommendation in response to a Superior Proposal.

 

Section 11.2                      Effect of Termination

 

If this Agreement is terminated pursuant to Section 11.1, this Agreement shall become void and of no effect without liability of any party (or any stockholder, director, officer, employee, agent, legal counsel, accountant, consultant, representative or Affiliate of such party) to the other party hereto; provided, however, no party to this Agreement shall be relieved or released from any liabilities or damages arising out of its knowing and intentional breach of its obligations under this Agreement.  For purposes of this Agreement, “knowing and intentional breach” means an act or failure to act which constitutes a material breach of this Agreement with respect to which the breaching party has knowledge (actual or constructive) that such act or failure to act would or would reasonably be expected to breach its obligations under this Agreement.  The provisions of this ARTICLE XI, Section 12.1, ARTICLE XIII and the Confidentiality Agreement referred to in Section 10.6(b) shall survive any termination hereof pursuant to Section 11.1.

 

Section 11.3                      Termination Fee

 

(a)           If (i) prior to the termination of this Agreement, a Qualifying Transaction is proposed or publicly disclosed, (ii) this Agreement is terminated by Buyer Parent or the Seller pursuant to Section 11.1(b) and (iii) concurrently with, or within twelve (12) months after any such termination, any Qualifying Transaction is consummated or the Seller or any of its Affiliates enters into any letter of intent, agreement in principle or contract with respect to a Qualifying Transaction, then the Seller shall pay to Buyer Parent a fee of $24,000,000 in cash, such payment to be made upon the earlier of entry into the letter of intent, agreement in principle or contract or agreement with respect to such Qualifying Transaction or the consummation of such Qualifying Transaction; provided, that if at the time of such payment the Merger Buyer is entitled to a payment from the Seller pursuant to Section 8.3(a) of the Merger Transaction Agreement, then the Seller shall pay to Buyer Parent a fee of $12,000,000 in cash.

 

(b)           If (i) prior to the termination of this Agreement, an Alternate Superior Proposal is proposed or publicly disclosed and (ii) this Agreement is terminated by Buyer Parent or the Seller pursuant to Sections 11.1(b) or 11.1(d), then the Seller shall pay to Buyer Parent a fee of $24,000,000 in cash, such payment to be made promptly upon termination of this Agreement and in any event within two (2) Business Days after the termination of this Agreement.

 

(c)           If this Agreement is terminated by the Seller pursuant Section 11.1(h), then the Seller shall pay to Buyer Parent a fee of $12,000,000 in cash, such payment to be made concurrently with such termination.

 

(d)           If this Agreement is terminated by Buyer Parent pursuant to Section 11.1(j), then the Seller shall pay to Buyer Parent a fee of $12,000,000 in cash, such payment to be made promptly upon termination of this Agreement and in any event within two (2) Business Days after the termination of this Agreement.

 

(e)           If this Agreement is terminated by the Seller or Buyer Parent (i) pursuant to Section 11.1(i) and, prior thereto, the Merger Transaction Agreement was terminated by the Merger Buyer pursuant to Section 8.1(f) of the Merger Transaction Agreement or (ii) pursuant to Section 11.1(b) and there had previously occurred a willful breach by the Seller of the Merger Transaction Agreement, then the Seller shall pay Buyer Parent a fee of $24,000,000 in cash, such payment to be made no later than two (2) Business Days after the date of termination of this Agreement.  In the event that Buyer Parent receives the Seller Termination Fee pursuant to this Section 11.3(e) the receipt of such fee shall be deemed to be liquidated damages for any and all losses or damages suffered or incurred by Buyer Parent in connection with this Agreement (and the termination hereof); provided, that nothing in this Section 11.3(e) shall prohibit any payment required to be made pursuant to Section 11.3(f).

 

(f)           Unless a Seller Termination Fee is payable under Section 11.3(e), if this Agreement is terminated by the Seller or Buyer Parent pursuant to (i) Section 11.1(b) and at the time of such termination the only conditions that were not satisfied were Sections 9.3(f) or 9.3(g), and any other conditions that by their nature can only be satisfied at the Closing or (ii) Section 11.1(i), then the Seller shall reimburse Buyer Parent upon demand by wire transfer of immediately available funds to an account specified in writing by Buyer Parent for an amount equal to 120% of the aggregate amount of the Expenses of Buyer Parent; provided, however, that the Seller shall not be obligated to make a payment pursuant to this Section 11.3(f) in excess of $4,000,000 in the aggregate.

 

(g)           Notwithstanding anything in this Agreement to the contrary, in no event shall the Seller be required to pay a Seller Termination Fee pursuant to Sections 11.3(a), 11.3(b), 11.3(c), 11.3(d) or 11.3(e), on more than one occasion.  Any such payment shall be reduced by any amounts as may be required to be deducted or withheld therefrom under the applicable Tax Law; provided, however, that prior to or on the date any such withholding is required, (A) Seller shall notify Buyer Parent as soon as reasonably practicable after notice of termination or entry into a Superior Proposal, as applicable, prior to the date withholding is required, (B) Seller and Buyer Parent shall use reasonable efforts to minimize any withholding Taxes, and (C) Buyer Parent may deliver properly completed and executed documentation prescribed by applicable Law as would permit such payment to be made without withholding or at a reduced rate of withholding.  Buyer Parent and Seller each acknowledge that under current Law, no U.S. federal withholding Tax would be required with respect to the Termination Fee.

 

(h)           Each of the parties hereto acknowledges that the Seller Termination Fee and the other provisions of this Section 11.3 are an integral part of the transactions contemplated by this Agreement and that, without the Seller Termination Fee and such other provisions, Buyer Parent would not enter into this Agreement; accordingly, if the Seller fails to promptly pay the amounts due pursuant to Sections 11.3(a), 11.3(b), 11.3(c), 11.3(d), 11.3(e) or 11.3(f) and, in order to obtain such payment Buyer Parent commences a suit which results in a judgment against the Seller for any of the amounts set forth in Sections 11.3(a), 11.3(b), 11.3(c), 11.3(d), 11.3(e) or 11.3(f), then the Seller shall pay to Buyer Parent its costs and expenses (including attorneys’ fees) in connection with such suit, together with interest on all amounts due pursuant to Sections 11.3(a), 11.3(b), 11.3(c), 11.3(d), 11.3(e) or 11.3(f) at the prime rate of CBNA in effect on the date plus 2% per annum from the date such amounts were required to be paid until the date actually received by Buyer Parent.

 

Section 11.4                      Amendment

 

This Agreement may be amended by mutual agreement of the parties hereto at any time prior to the Closing Date (in the case of the Seller, by the Board of Directors (upon the recommendation of the Special Committee)); provided, however, that, after the approval of this Agreement and the Transactions by stockholders of the Seller, there shall not be any amendment that by Law or in accordance with the rules of any stock exchange requires further approval by the stockholders of the Seller without such further approval of such stockholders nor any amendment or change not permitted under applicable Law.  This Agreement may not be amended except by an instrument in writing signed by the parties hereto.

 

Section 11.5                      Waiver

 

At any time prior to the Closing Date, subject to applicable Law, any party (in the case of the Seller, by the Board of Directors (upon the recommendation of the Special Committee)) hereto may (a) extend the time for the performance of any obligation or other act of any other party hereto, (b) waive any inaccuracy in the representations and warranties of the other party contained herein or in any document delivered pursuant hereto and (c) subject to the proviso of Section 11.4, waive compliance with any agreement or condition contained herein.  Any such extension or waiver shall only be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby.  Notwithstanding the foregoing, no failure or delay by the Seller or Buyer Parent in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder.

 

ARTICLE XII

 

CERTAIN LIABILITY MATTERS

 

Section 12.1                      No Assumption of Liability

 

Except as contemplated by the Transaction Documents, none of Buyer Parent, Conduit Buyer, Securitization Buyer or Buyer Subsidiary is assuming any liability or obligation of Seller, CBNA, CSD, Funding Note Issuer, the Depositor or their Affiliates of any nature, known or unknown or contingent or liquidated.

 

Section 12.2                      Release

 

(a)           At or prior to the Closing, the Buyer and Seller will deliver a partial release in the form of Exhibit 12.2 or such other form as mutually agreed upon by such parties (the “Buyer/Seller Release”).

 

(b)           Each party to this Agreement acknowledges and agrees that the execution and delivery of the Buyer/Seller Release will not modify, waive or otherwise affect such party’s obligations under this Agreement and the other Transaction Documents, including the Indemnification Agreement.

 

ARTICLE XIII

 

MISCELLANEOUS

 

Section 13.1                      Assignments

 

The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby.  The obligations and liabilities assumed in this Agreement by the parties hereto shall be binding upon their respective successors and assigns, which shall include successors by operation of Law, such as by merger.  No party may assign or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent of the Seller, CBNA and Buyer Parent.

 

Section 13.2                      Costs and Expenses

 

Except as expressly provided otherwise in this Agreement, each party shall each bear its own costs and expenses (including all legal, accounting, audit, due diligence and other out-of-pocket expenses) incurred in connection with the consummation of the Transactions and the other Transaction Documents to which they are a party.

 

Section 13.3                      Use of Proceeds

 

The Seller shall treat the proceeds of the Estimated Certificate Purchase Price and the Estimated Conduit Purchase Price as proceeds of Collateral (as such term is defined in the Omnibus Credit Agreement) and will apply such proceeds in accordance with Section 5.2(b) of the Omnibus Credit Agreement.

 

Section 13.4                      Relationship of Parties

 

Nothing contained in the Transaction Documents shall establish any fiduciary, partnership, joint venture or similar relationship between or among the parties hereto except to the extent otherwise expressly stated herein or therein.

 

Section 13.5                      Non-Petition Covenants

 

Each party to this Agreement, by entering into this Agreement, hereby covenants and agrees that it shall not at any time institute against the Depositor, the Funding Note Issuer or any Securitization Trust, or join in any institution against the Depositor, the Funding Note Issuer or any Securitization Trust or Private Securitization Trust, of, any bankruptcy, reorganization, arrangement, insolvency, receivership or liquidation proceedings, or other proceedings under any United States federal or state bankruptcy or similar Law in connection with any obligations relating to this Agreement or any other Transaction Document.

 

Section 13.6                      Notices, Etc.

 

(a)           Addresses for Notices.  All notices, demands, requests, consents and other communications provided for, or required to be given, in this Agreement shall be given in writing, or by any telecommunication device capable of creating a written record (including electronic mail) and addressed to the party to be notified at their respective addresses set forth in Appendix D.  The parties hereto may change their respective addresses for notices from time to time by written notice to the other party hereto subject to written acknowledgment of receipt by the other party hereto.

 

(b)           Effectiveness of Notices.  All notices, demands, requests, consents and other communications described in Section 13.6(a) above shall be effective (i) if delivered by hand, including any overnight courier service, upon personal delivery, (ii) if delivered by mail, when received in the mails and (iii) if delivered by electronic mail or any other telecommunications device, when transmitted to an electronic mail address (or by another means of electronic delivery) as provided in Section 13.6(a) above.

 

Section 13.7                      Entire Agreement; No Third Party Beneficiaries

 

This Agreement (including the exhibits and schedules hereto) and the Transaction Documents constitute the entire agreement, and supersede all other prior agreements and understandings, both written and oral, between the parties, or any of them, with respect to the subject matter hereof and thereof.  Nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement (other than to the extent a party assumes a capacity under the Securitization Basic Documents or under any Conduit Program agreement, and such Securitization Basic Documents or Conduit Program agreements confer rights in respect thereof to any other Person (such as a Noteholder).

 

Section 13.8                      Governing Law

 

This Agreement, and all claims or causes of action (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement) shall be governed by, and construed in accordance with the Laws of the State of Delaware, without giving effect to any otherwise applicable choice or conflict of laws provision or rule.

 

Section 13.9                      Submission to Jurisdiction; Service of Process

 

(a)           Each of the parties hereto hereby irrevocably submits to the co-exclusive jurisdiction of the Delaware Chancery Court, or if such court shall not have jurisdiction, any federal or other state court of the State of Delaware and any federal or state court of the State of New York, for the purpose of any action or proceeding arising out of or relating to this Agreement and each of the parties hereto hereby irrevocably agrees that all claims in respect to such action or proceeding may be heard and determined exclusively in any such court.  Each of the parties hereto agrees that a final judgment in any action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law.

 

(b)           Each party to this Agreement irrevocably consents to the service of the summons and complaint and any other process in any other action or proceeding relating to the Transactions, on behalf of itself or its property, by personal delivery of copies of such process to such party.  Nothing in this Section 13.9 shall affect the right of any party to serve legal process in any other manner permitted by Law.

 

Section 13.10                                Waiver of Jury Trial

 

EACH OF THE PARTIES HERETO HEREBY EXPRESSLY AND IRREVOCABLY RELEASES, WAIVES AND RELINQUISHES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY CLAIM, DEMAND, ACTION, SUIT, PROCEEDING OR CAUSE OF ACTION IN WHICH ANY OF THEM ARE PARTIES, WHICH IN ANY WAY (DIRECTLY OR INDIRECTLY) ARISES OUT OF, RESULTS FROM OR RELATES TO ANY OF THE FOLLOWING, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER BASED ON CONTRACT OR TORT OR ANY OTHER LEGAL BASIS:  (I) THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY; (II) ANY PAST, PRESENT OR FUTURE ACT, OMISSION, CONDUCT OR ACTIVITY WITH RESPECT TO THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY; (III) ANY TRANSACTION, EVENT OR OCCURRENCE CONTEMPLATED BY THIS AGREEMENT; (IV) THE PERFORMANCE OF ANY OBLIGATION OR THE EXERCISE OF ANY RIGHT UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY; AND (V) THE ENFORCEMENT OF THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY.  EACH OF THE PARTIES HERETO HEREBY FURTHER AGREES THAT THIS AGREEMENT CONSTITUTES ITS WRITTEN CONSENT THAT TRIAL BY JURY SHALL BE WAIVED IN ANY SUCH CLAIM, DEMAND, ACTION, SUIT, PROCEEDING OR OTHER CAUSE OF ACTION AND AGREES THAT EACH OF THEM SHALL HAVE THE RIGHT AT ANY TIME TO FILE THIS AGREEMENT WITH THE CLERK OR JUDGE OF ANY COURT IN WHICH ANY SUCH CLAIM, DEMAND, ACTION, SUIT, PROCEEDING OR OTHER CAUSE OF ACTION MAY BE PENDING AS WRITTEN CONSENT TO WAIVER OF TRIAL BY JURY.

 

Section 13.11                                Further Assurances

 

The parties to this Agreement agree to cooperate and to execute and deliver such instruments and take such further actions as any other party to this Agreement may, from time to time, reasonably request in order to effectuate the purposes and to carry out the terms of this Agreement, the other Transaction Documents and the Related Transactions.

 

Section 13.12                                Severability

 

The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.  If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

 

Section 13.13                                Section Titles

 

The section titles contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto, except when used to reference a section.  Any reference to the number of a clause, sub-clause or subsection hereof immediately followed by a reference in parenthesis to the title of the Section containing such clause, sub-clause or subsection is a reference to such clause, sub-clause or subsection and not to the entire Section; provided, however, that, in case of direct conflict between the reference to the title and the reference to the number of such Section, the reference to the title shall govern absent manifest error.

 

Section 13.14                                Execution in Counterparts

 

This Agreement may be executed in any number of counterparts and by different parties in separate counterparts (including by facsimile, electronic mail or other means of electronic communication), each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

 

Section 13.15                                Specific Performance

 

The parties hereby expressly acknowledge and agree that immediate, extensive and irreparable damage would result, no adequate remedy at law would exist and damages would be difficult to determine in the event that any provision of this Agreement is not performed in accordance with its specific terms or otherwise breached.  Therefore, in addition to, and not in limitation of, any other remedy available to any party, an aggrieved party under this Agreement would be entitled to specific performance of the terms hereof and immediate injunctive relief, without the necessity of proving the inadequacy of money damages as a remedy.  Such remedies, and any and all other remedies provided for in this Agreement, shall, however, be cumulative in nature and not exclusive and shall be in addition to any other remedies whatsoever which any party may otherwise have.  Each of the parties hereby acknowledges and agrees that it may be difficult to prove damages with reasonable certainty, that it may be difficult to procure suitable substitute performance, and that injunctive relief and/or specific performance will not cause an undue hardship to the parties. Each of the parties hereby further acknowledges that the existence of any other remedy contemplated by this Agreement does not diminish the availability of specific performance of the obligations hereunder or any other injunctive relief.  Each party hereby further agrees that in the event of any action by the other party for specific performance or injunctive relief, it will not assert that a remedy at law or other remedy would be adequate or that specific performance or injunctive relief in respect of such breach or violation should not be available on the grounds that money damages are adequate or any other grounds.

 

 

[Signature Pages to Follow]

 

  

  

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

 

 

THE STUDENT LOAN CORPORATION, as the Seller, Servicer, SPV Administrator and Sponsor

 

By:  /s/ Michael J. Reardon                                                    

Name: Michael J. Reardon

Title: Chief Executive Officer

  

  

  

 

CITIBANK, N.A., in its individual capacity and as Conduit Eligible Lender Trustee, Depositor Eligible Lender Trustee, Securitization Eligible Lender Trustee, Omnibus Lender and Indenture Administrator

 

By:  /s/ Douglas Peterson                                                    

Name: Douglas Peterson

Title: Chief Operating Officer

  

  

  

 

CITIBANK (SOUTH DAKOTA) National Association Subservicer, Sub-Subservicer, Custodian and

SPV Sub-Administrator

 

By:    /s/ Kendall E. Stork                                                   

Name: Kendall E. Stork

Title: President 

 

Kendall E. Stork

Citibank (South Dakota), N.A.

President

GEID #0000074271

Sioux Falls, SD

(605) 331-1887

  

  

  

 

SLC STUDENT LOAN RECEIVABLES I, INC., as Depositor

 

By:      /s/ Michael J. Reardon                                               

Name: Michael J. Reardon

Title: Chief Executive Officer

  

  

  

 

SLM CORPORATION, in its individual capacity

 

By:    /s/ Paul Mayer                                                  

Name: Paul Mayer

Title: Senior Vice President

  

  

  

 

BULL RUN 1 LLC, as Securitization Buyer and Conduit Buyer

 

By:    /s/ Leo Subler                                                  

Name: Leo Subler

Title: Vice President

  

  

  

 

SLM EDUCATION CREDIT FINANCE CORPORATION, as successor Sponsor

 

By:    /s/ Stephen J. O’Connell                                                  

Name: Stephen J. O’Connell

Title: Vice President

  

  

  

 

SALLIE MAE, INC., as successor Subservicer, successor Sub-Administrator and successor SPV Administrator

 

By:    /s/ Paul Mayer                                                  

Name: Paul Mayer

Title: Senior Vice President

  

  

  

 

Appendix A

 

DEFINITIONS

 

 

“1933 Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“2004-1 Trust” means SLC Student Loan Trust 2004-1, a Delaware statutory trust.

 

“2005-1 Trust” means SLC Student Loan Trust 2005-1, a Delaware statutory trust.

 

“2005-2 Trust” means SLC Student Loan Trust 2005-2, a Delaware statutory trust.

 

“2005-3 Trust” means SLC Student Loan Trust 2005-3, a Delaware statutory trust.

 

“2006-1 Trust” means SLC Student Loan Trust 2006-1, a Delaware statutory trust.

 

“2006-2 Trust” means SLC Student Loan Trust 2006-2, a Delaware statutory trust.

 

“2007-1 Trust” means SLC Student Loan Trust 2007-1, a Delaware statutory trust.

 

“2007-2 Trust” means SLC Student Loan Trust 2007-2, a Delaware statutory trust.

 

“2008-1 Trust” means SLC Student Loan Trust 2008-1, a Delaware statutory trust.

 

“2008-2 Trust” means SLC Student Loan Trust 2008-2, a Delaware statutory trust.

 

“2009-1 Trust” means SLC Student Loan Trust 2009-1, a Delaware statutory trust.

 

“2009-2 Trust” means SLC Student Loan Trust 2009-2, a Delaware statutory trust.

 

“2009-3 Trust” means SLC Student Loan Trust 2009-3, a Delaware statutory trust.

 

“2010-1 Trust” means SLC Student Loan Trust 2010-1, a Delaware statutory trust.

 

“Accession Agreement” has the meaning given to such term in Section 2.2 of this Agreement.

 

“Acquired Assets” means the Trust Certificates, the membership interest in the Funding Note Issuer and all contracts that are to be assigned to the applicable Buyer or its Affiliates at Closing pursuant to the terms of this Agreement as listed in Schedule C.

 

“Administration Services Agreement” has the meaning given to such term in Schedule 3.3(a)(iii) of this Agreement.

 

“Administrator” means the Seller in its capacity as Administrator under the Securitization Administration Agreement and its permitted successors and assigns in such capacity.

 

“Affiliate” means, with respect to a Person, a person who, directly or indirectly, through one or more intermediaries Controls, is Controlled by, or is under common Control with, such specified person.

 

“Agreement” has the meaning set forth in the Preamble of this Agreement.

 

“Alternate Superior Proposal” has the meaning set forth in Section 10.4(l) of this Agreement.

 

“Applicable Float” means:

 

(i)           if the Closing occurs on or before December 31, 2010, $0;

 

(ii)           if the Closing occurs on or after January 1, 2011 and before April 1, 2011, an amount equal to the interest on the Unadjusted Purchase Price for the period from and including January 1, 2011 to the day prior to the Closing Date, calculated at the Float Amount Rate; and

 

(iii)           if the Closing occurs on or after April 1, 2011, an amount equal to the interest on the Unadjusted Purchase Price for the period from and including April 1, 2011 to the day prior to the Closing Date, calculated at the Float Amount Rate.

 

“Applicable Loans” has the meaning given to such term in Section 7.2(i) of this Agreement.

 

“Applicable Measuring Date” means:

 

(i)           if the Closing occurs on or prior to December 31, 2010:  November 30, 2010 for purposes of the calculation of the Estimated Certificate Purchase Price pursuant to Section 2.1(a) and the Estimated Conduit Purchase Price pursuant to Section 4.1(a); and December 31, 2010 for purposes of the calculation of the Closing Certificate Purchase Price pursuant to Section 2.1(e) and Closing Conduit Purchase Price pursuant to Section 4.1(d);

 

(ii)           if the Closing occurs on or after January 1, 2011 and before April 1, 2011:  December 31, 2010; and

 

(iii)           if the Closing occurs on or after April 1, 2011:  March 31, 2011;

 

provided, that for purposes of the Estimated Certificate Purchase Price calculated pursuant to Section 2.1(a) or the Estimated Conduit Purchase Price calculated pursuant to Section 4.1(a), the “Applicable Measuring Date” may instead refer to the preceding month end under the circumstances set forth in those Sections.

 

“Applicable Negative Float” means if the Closing occurs on or before December 31, 2010, an amount equal to the interest on the Unadjusted Purchase Price for the period from and including the Closing Date to and including December 31, 2010, calculated at the Float Amount Rate.

 

“Arbitration Firm” has the meaning given to such term in Section 2.1(e) of this Agreement.

 

“Assigned Contracts” means the contracts set forth on Schedule C.

 

“Assumption of Obligations of the Seller under Master Terms Purchase Agreements” has the meaning given to such term in Section 3.5 of this Agreement.

 

“Bill of Sale” means a Securitization Bill of Sale or a Conduit Bill of Sale.

 

“Board of Directors of the Seller” means the board of directors of the Seller.

 

“Borrower” means the obligor on a Student Loan or Financed Student Loan.

 

“Business Day” means any day other than a Saturday, a Sunday or a day on which banking institutions or trust companies in the State of New York are authorized or obligated to be closed.

 

“Buyer” means each of the Securitization Buyer, the Conduit Buyer and Buyer Parent.

 

“Buyer Assumed Obligations” means payment obligations under the Funding Note with respect to amounts due after the Closing and all other obligations required to be performed after the Closing by the Funding Note Issuer under the documents set forth on Exhibit 5(a), but excluding) any failure to perform any obligations prior to Closing and any obligations relating to breaches of these agreements occurring or resulting from events originating pre-Closing.

 

“Buyer Disclosure Schedule” means the Buyer Disclosure Schedule attached as Schedule A to this Agreement.

 

“Buyer Entity” has the meaning set forth in the Preamble of this Agreement.

 

“Buyer Material Adverse Effect” means any event, change, effect, development, state of facts, condition, circumstance or occurrence, that, individually or in the aggregate, has had or would reasonably be expected to prevent or materially delay or materially impair the ability of Buyer or any of its Subsidiaries to consummate any of the Transactions or to perform any of their obligations under any of the Transaction Documents, other than any event, change, effect, development, state of facts, condition or circumstance proximately relating to, resulting from or arising out of any action required by the Transaction Documents, or at the direction of Seller.

 

“Buyer Parent” has the meaning given to such term in the Preamble.

 

“Buyer Party” means each of SLM Corporation, Bull Run I LLC, as Securitization Buyer and Conduit Buyer, SLM Education Credit Finance Corporation, as successor Sponsor, and Sallie Mae, Inc., as successor Subservicer, successor Sub-Administrator and successor SPV Administrator.

 

“Buyer Satisfaction Certificate” means a certificate executed and delivered by Buyer Parent, substantially in the form attached as Exhibit 9.3 to this Agreement.

 

“Buyer/Seller Release” has the meaning given to such term in Section 12.2 of this Agreement.

 

“Buyer Subsidiary” has the meaning set forth in the Preamble of this Agreement.

 

“Capital Lease” means, with respect to any Person, any lease of, or other arrangement conveying the right to use, property by such Person as lessee that would be accounted for as a capital lease on a balance sheet of such Person prepared in accordance with GAAP.

 

“Capital Stock” means any and all shares of capital stock (whether denominated as common stock or preferred stock), beneficial, partnership or membership interests, participations, preferred interests, equity interests of or in a corporation, partnership, limited liability company or other legal entity, whether voting or non-voting.

 

“CBNA” has the meaning set forth in the Preamble of this Agreement.

 

“CBNA Transaction” has the meaning given to such term in the Recitals of this Agreement.

 

“CBNA Transaction Agreement” has the meaning given to such term in the Recitals of this Agreement.

 

“Certificate Distribution Amount” means:

 

(i)           if the Closing occurs on or before December 31, 2010, $0;

 

(ii)           if the Closing occurs on or after January 1, 2011 and before April 1, 2011, for purposes of Section 2.1, the total amount of distributions to holders of the Trust Certificates acquired by the Securitization Buyer on or after January 1, 2011 and prior to the Closing Date; and

 

(iii)           if the Closing occurs on or after April 1, 2011, for purposes of Section 2.1, the total amount of distributions to holders of the Trust Certificates acquired by the Securitization Buyer on or after April 1, 2011 and prior to the Closing Date.

 

“Certificate Purchase Price” means, with respect to the Trust Certificates and as of a specified date, the sum of:

 

(i)           the Net Trust Assets Acquired for such Trust Certificates as of the Applicable Measuring Date times 119%;

 

(ii)           if the Closing occurs on or after January 1, 2011, minus the Certificate Distribution Amount;

 

(iii)           if the Closing occurs on or after January 1, 2011, plus the Applicable Float; and

 

(iv)           if the Closing occurs on or before December 31, 2010, minus the Applicable Negative Float.

 

For purposes of the foregoing definition:  (i) “Net Trust Assets Acquired” means for the Trust Certificates the sum of the aggregate gross Principal Balance of the Trust Student Loans (disregarding any unamortized premium and loan loss reserves) plus the aggregate accrued interest receivable of the Trust Student Loans plus the aggregate Designated Trust Cash Items minus the following items: the aggregate outstanding Principal Amount of the Securitization Notes and accrued and unpaid interest thereon, any liabilities with respect to any foreign currency hedging agreements, any accrued servicing fees payable by the Securitization Trusts to the Seller or its Affiliates, accrued interest on B-notes and the accrued borrower benefit principal reduction and Department of Education fees due to the Seller or its Affiliates, and any other liabilities of the Trust that, in accordance with GAAP would be required to be reflected on a balance sheet of the applicable Securitization Trust as of the Applicable Measuring Date, in each case calculated as of the Applicable Measuring Date on a basis consistent with the Model Purchase Price Calculation; and (ii) “Designated Trust Cash Items” means with respect to the Trust Certificates, the sum of Securitization Restricted Cash of the Securitization Trusts (including the collection, reserve and capitalized interest accounts), the aggregate accrued cash applied but not yet received by the Securitization Trusts from the Seller and its Affiliates and the aggregate fees due from Guarantors or the Department of Education for cancelled loans and the total prepaid expenses of the Securitization Trusts, in each case calculated as of the Applicable Measuring Date on a basis consistent with the Model Purchase Price Calculation.

 

“Change of Recommendation” has the meaning given to such term in Section 10.4(d) of this Agreement.

 

“Closing” has the meaning given to such term in Section 8.1(a) of this Agreement.

 

“Closing Certificate Purchase Price” means the final Certificate Purchase Price based upon the Schedule of Trust Student Loans determined as of the Applicable Measuring Date, pursuant to Section 2.1(a).

 

“Closing Conduit Purchase Price” means the final Conduit Purchase Price based upon the Schedule of Financed Student Loans determined as of the Applicable Measuring Date, pursuant to Section 4.1(d).

 

“Closing Date” has the meaning given to such term in Section 8.1(a) of this Agreement.

 

“Commitment Date” has the meaning set forth in the Preamble.

 

“Competing Proposal” has the meaning given to such term in Section 10.4(i) of this Agreement.

 

“Conduit Administrator” means The Bank of New York Mellon, a New York banking corporation, in its capacity as administrator to the Conduit Program.

 

“Conduit Arbitration Firm” has the meaning given to such term in Section 4.1(d) of this Agreement.

 

“Conduit Bill of Sale” means a bill of sale between the Seller and the Conduit Buyer, substantially in the form of Exhibit 4.4 to this Agreement or such other form as is acceptable to such parties, pursuant to which the Seller will sell the entire Membership Interest in the Funding Note Issuer in consideration for the Conduit Purchase Price.

 

“Conduit Buyer” means Bull Run 1 LLC a Delaware limited liability company.

 

“Conduit Distribution Amount” means:

 

(i)           if the Closing occurs on or before December 31, 2010, $0;

 

(ii)           if the Closing occurs on or after January 1, 2011 and before April 1, 2011, for purposes of Section 4.1 the total amount of distributions by the Funding Note Issuer on or after January 1, 2011 and prior to the Closing Date; and

 

(iii)           if the Closing occurs on or after April 1, 2011, for purposes of Section 4.1 the total amount of distributions by the Funding Note Issuer on or after April 1, 2011 and prior to the Closing Date.

 

“Conduit Eligible Lender Trust Agreement” means the Eligible Lender Trust Agreement, dated as of May 14, 2009 between Funding Note Issuer as the Funding Note Issuer, and CBNA, not in its individual capacity but solely as the Eligible Lender Trustee on behalf, and for the benefit, of the Funding Note Issuer.

 

“Conduit Eligible Lender Trustee” means CBNA, in its capacity as eligible lender trustee for the benefit of the Funding Note Issuer, pursuant to the Conduit Eligible Lender Trust Agreement.

 

“Conduit Lender” means Straight-A Funding, LLC, a limited liability company organized under the laws of the State of Delaware.

 

“Conduit Manager” means BMO Capital Markets Corp. and its successor and assigns, in its capacity as Manager pursuant to the Funding Note Purchase Agreement.

 

“Conduit Mutual Release” has the meaning given to such term in the Recitals of this Agreement.

 

“Conduit Program” means the loan facility provided by the Conduit Lender to the Funding Note Issuer and to other borrowers.

 

“Conduit Purchase Price” means the purchase price for the sale to the Conduit Buyer of the entire Membership Interest in the Funding Note Issuer pursuant to this Agreement and the Conduit Bill of Sale, which shall be equal to the sum of:

 

(i)           the Net Conduit Assets Acquired as of the Applicable Measuring Date times 119%;

 

(ii)           minus the total amount of principal and interest outstanding at Closing under the Subordinated Credit Agreement;

 

(iii)           if the Closing occurs on or after January 1, 2011, plus the Applicable Float; and

 

(iv)           if the Closing occurs on or before December 31, 2010, minus the Applicable Negative Float.

 

For purposes of this definition:  (i) “Net Conduit Assets Acquired” means the sum of the aggregate gross Principal Balance of the Financed Student Loans (disregarding any unamortized premium and loss reserves), plus the aggregate accrued interest receivable of the Financed Student Loans, plus the aggregate Designated Conduit Cash Items, minus the following items: the outstanding principal of the Funding Note, (excluding unamortized bond discount balances), the outstanding Ratable Financing Costs, any accrued servicing fee payable by the Funding Note Issuer to the Seller or its Affiliates, accrued borrower benefit principal reduction and Department of Education fees due to the Seller or its Affiliates and any other liabilities of the Funding Note Issuer that in accordance with GAAP would be required to be reflected on a balance sheet of the Funding Note Issuer prepared as of the Applicable Measuring Date, in each case calculated as of the Applicable Measuring Date on a basis consistent with the Model Purchase Price Calculation; and (ii) “Designated Conduit Cash Items” means with respect to the Funding Note Issuer, the sum of Conduit Restricted Cash (including the collection, reserve and capitalized interest accounts), the aggregate cash applied but not received from the Seller or its Affiliates, the aggregate fees due to the Funding Note Issuer from Guarantors or the Department of Education for cancelled loans and any prepaid expenses of the Funding Note Issuer, in each case calculated as of the Applicable Measuring Date on a basis consistent with the Model Purchase Price Calculation.

 

“Conduit Replacement Subservicing Agreement” has the meaning given to such term in Section 5.2 of this Agreement.

 

“Conduit Restricted Cash” means all cash and investments held from time to time in any Trust Account (as defined in the Funding Note Purchase Agreement) whether in the form of deposit accounts, physical property, book-entry securities, uncertificated securities or otherwise.

 

“Conduit Servicing Agreement” means the Servicing Agreement, dated as of May 14, 2009, by and among the Funding Note Issuer, CBNA, as the Eligible Lender Trustee, the Conduit Administrator, the Conduit Lender and the Seller, as Master Servicer, together with the Supplemental Servicing Agreement thereto dated as of May 14, 2009 by and among the Seller, as the Master Servicer, the Funding Note Issuer, CBNA, as the Eligible Lender Trustee and the SPV Administrator.

 

“Conduit Student Loan Purchase Agreement” means the Student Loan Purchase Agreement, dated as of May 14, 2009, among The Student Loan Corporation, as seller, the Seller Eligible Lender Trustee, the Funding Note Issuer and CBNA, not in its individual capacity but solely as the Eligible Lender Trustee for the benefit of the Funding Note Issuer and its assigns.

 

“Conduit Subservicing Agreement” means the Servicing Agreement dated as of May 14, 2009 by and among the Funding Note Issuer, CSD, as subservicer and the Seller as Master Servicer, together with the Conduit Replacement Servicing Agreement incorporated therein.

 

“Confidentiality Agreement” has the meaning given to such term in Section 10.6(b) of this Agreement.

 

“Consolidation Loan” means a loan made pursuant to and in full compliance with Section 428C of the Higher Education Act.

 

“Control” (including the terms “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise.

 

“CSD” has the meaning set forth in the Preamble of this Agreement.

 

“Custodian” means CSD either (i) as custodian under the Securitization Custody Agreements or (ii) as subcustodian on behalf of the Servicer pursuant to the Conduit Servicing Agreement and the Conduit Subservicing Agreement, as applicable.

 

“Data Room” means the electronic online data room maintained by IntraLinks, Inc. for purposes of the Transaction under the name “Project Lesson”.

 

“Data Tape” has the meaning given to such term in Section 7.2(n) of this Agreement.

 

“Delinquent” means, for any Student Loan, the period in which any payment of principal or interest due on such Student Loan is overdue (after giving effect to all grace, forbearance and deferment periods).

 

“Department Form Agreements” has the meaning given to such term in Section 5.1 of this Agreement.

 

“Department of Education” or “Department” means the United States Department of Education, or, solely for purposes of the Funding Note Purchase Agreement, any official of the Department of Education duly authorized to perform any function with respect to the transactions under the Department Put Agreement or the other transaction documents under the Conduit Program.

 

“Depositor” means, with respect to the Securitization Trusts and the Private Securitization Trust, SLC Student Loan Receivables I, Inc., a Delaware corporation.

 

“Depositor Agreement” has the meaning given to such term in ARTICLE VI of this Agreement.

 

“Depositor Eligible Lender Trustee” means CBNA, in its capacity as eligible lender trustee for the benefit of the Depositor, pursuant to the Depositor Eligible Lender Trust Agreement.

 

“Depositor Eligible Lender Trust Agreement” means, with respect to each Securitization Transaction, the eligible lender trust agreement between the Depositor and the Depositor Eligible Lender Trustee, as amended or modified from time to time.

 

“Depositor SEC Reports” has the meaning given to such term in Section 7.2(u)(v) of this Agreement.

 

“DGCL” means the General Corporation Law of the State of Delaware.

 

“Disclosure Date” has the meaning given to such term in Section 7.2(w) of this Agreement.

 

“Eligible Lender Trust Agreement” means the Trust Agreement, dated as of August 30, 2003, between SLC, as the grantor thereunder, and CBNA, not in its individual capacity but solely in its capacity as the trustee thereunder, relating to FFELP Loans, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

 

“Eligible Lender Trustee” means a corporation or banking association qualifying as an “eligible lender” as such term is defined in Section 435(d) of the Higher Education Act for purposes of holding legal title to Student Loans, which meets all other requirements for an Eligible Lender Trustee under the terms of the applicable Transaction Document and which is authorized to execute corporate trust powers and hold legal title to Student Loans.

 

“Estimated Certificate Purchase Price” means the estimated Certificate Purchase Price based upon the Schedule of Trust Student Loans and related calculations determined as of the Applicable Measuring Date pursuant to Section 2.1(a).

 

“Estimated Conduit Purchase Price” means the estimated Conduit Purchase Price based upon the Schedule of Financed Student Loans and related calculations determined as of the Applicable Measuring Date, pursuant to Section 4.1(a).

 

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“Expenses” means, with respect to any Person, all reasonable and documented out-of-pocket fees and expenses (including all fees and expenses of counsel, accountants, financial advisors and investment bankers of such Person and its Affiliates), incurred by such Person or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement and any transactions related thereto, any litigation with respect thereto, the preparation, printing, filing and mailing of the Proxy Statement, the filing of any required notices under Laws, or in connection with regulatory approvals, and all other matters related to the Transaction Documents and other transactions contemplated hereby.

 

“FFELP” means the U.S. Federal Family Education Loan Program.

 

“FFELP Loan” means a U.S. federally-insured student loan that has been authorized to be made or held by the Seller as the beneficiary of a student loan trust as part of the FFELP and authorized by the Higher Education Act of 1965, as amended, or the Health Education Assistance Loan Program, as amended, including a Stafford, PLUS, Consolidation or HEAL student loan.

 

“Financed Student Loan” means a Student Loan sold to the Funding Note Issuer.

 

“Float Amount Rate” equals the per annum rate of 1%.

 

“Funding Note” means the note evidencing the loans made by the Conduit Lender to the Funding Note Issuer.

 

“Funding Note Issuer” has the meaning given to such term in the Recitals of this Agreement.

 

“Funding Note Purchase Agreement” means the Funding Note Purchase Agreement, by and among Straight-A Funding, LLC, as the Conduit Lender, Funding Note Issuer, as the Funding Note Issuer, CBNA, as the Conduit Eligible Lender Trustee, The Bank of New York Mellon, as the Conduit Administrator, the Securities Intermediary and the Conduit Lender Eligible Lender Trustee, The Student Loan Corporation , as the SPV Administrator, the Sponsor and the Master Servicer and the Conduit Manager, dated as of May 14, 2009.

 

“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board, or in such other statements by such other entity as may be in general use by significant segments of the accounting profession, that are applicable to the circumstances as of the date of determination.

 

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

 

“Guarantee Agreement” means any agreement between any Guarantor and the Student Loan Corporation Eligible Lender Trustee on behalf of either a Securitization Trust, the Depositor, The Student Loan Corporation, or the Funding Note Issuer providing for the payment by the Guarantor of amounts authorized to be paid pursuant to the Higher Education Act to holders of qualifying Student Loans guaranteed in accordance with the Higher Education Act by such Guarantor.

 

“Guarantor” means any FFELP guaranty agency with which the applicable The Student Loan Corporation, Eligible Lender Trustee or the Funding Note Issuer has in place a Guarantee Agreement, and which guarantor is reinsured by the Department of Education for a percentage of claims paid for a given federal fiscal year.

 

“Higher Education Act” means the Higher Education Act of 1965, 20 U.S.C. Section 1001 et seq., as amended or supplemented from time to time, and all regulations and guidelines promulgated thereunder.

 

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

 

“Indemnification Agreement” has the meaning given to such term in the Recitals of this Agreement.

 

“Indenture Administrator” means the “Indenture Administrator” under the Securitization Indentures.

 

“Initial Cutoff Date” has the meaning given to such term in Section 2.1(a) of this Agreement.

 

“Investment Company Act” means the United States Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder.

 

“Knowledge” means, with respect to the Seller, the actual knowledge of Michael J. Reardon, Joe Guage, Irene Hendricks, Patty Morris, John Vidovich, Janice Stiles, Anupam Agarwal, Christine Homer, Beth Reitzel and Janis Turner.

 

“Law” means any and all domestic (federal, state or local) or foreign laws, statutes, rules, regulations, requirements or Orders promulgated by any Governmental Authority.

 

“Lien” means any mortgage, deed of trust, pledge, hypothecation, collateral assignment, charge, deposit, arrangement, encumbrance, lien (statutory or other), security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever intended to assure payment of any indebtedness or the performance of any other obligation, including any conditional sale or other title retention agreement, the interest of a lessor under a Capital Lease and any financing lease having substantially the same economic effect as any of the foregoing.

 

“Loan File” means, with respect to a FFELP Loan, the file containing all current, relevant information pertaining to such FFELP Loan.

 

“Loan Transmittal Summary Form” means the form attached to a bill of sale with respect to a Securitization Master Terms Purchase Agreement or Securitization Master Terms Sale Agreement, which lists, by Borrower, each Student Loan sold pursuant to such bill of sale.

 

“Makewhole and Participation Agreement” has the meaning given to such term in Section 3.6 of this Agreement.

 

“Member” means the sole member of the Funding Note Issuer under the limited liability company agreement of the Funding Note Issuer.

 

“Membership Interest” means the entire limited liability company interest of the Seller as member in Funding Note Issuer, including the Seller’s right to any and all benefits to which it is entitled as provided in the limited liability company agreement of Funding Note Issuer, together with the obligations of the Seller as member to comply with all the terms and provisions of such limited liability company agreement.

 

“Merger Buyer” has the meaning set forth in the Recitals of this Agreement.

 

“Merger Transaction” has the meaning given to such term in the Recitals of this Agreement.

 

“Merger Transaction Agreement” has the meaning given to such term in the Recitals of this Agreement.

 

“Model Purchase Price Calculation” has the meaning given to such term in Section 2.1(a).

 

“Note” means a note evidencing a Student Loan.

 

“Noteholder” means the holder of a Securitization Note.

 

“Notice of a Proposed Change of Recommendation” has the meaning set forth in Section 10.4(e) of this Agreement.

 

“Notice of Superior Proposal” has the meaning set forth in Section 10.4(e) of this Agreement.

 

“Omnibus Credit Agreement” means the Amended & Restated Omnibus Credit Agreement, dated as of January 29, 2010, as amended by the Amendment No. 1 thereto, dated as of February 11, 2010 by and among (i) the Seller, as borrower, (ii) CBNA, as lender, (iii) CBNA, in its separate capacity as the trustee under the trust agreement identified therein and (iv) the non-securitization Subsidiaries of the Seller that may become parties thereto from time to time, as the same may be further amended or otherwise modified from time to time in accordance with the terms thereof.

 

“Omnibus Lender” means CBNA, in its capacity as the lender under the Omnibus Credit Agreement and its permitted successors and assigns in such capacity.

 

“Omnibus Loan” means a loan to the Seller that is subject to the terms and conditions of the Omnibus Credit Agreement.

 

“Opinion of Counsel” means a written opinion of counsel meeting the requirements specified in the related Transaction Document.

 

“Order” means any decree, order, writ, judgment, stipulation, award, injunction, temporary restraining order or other order in any suit or proceeding by any Governmental Authority.

 

“Owner Trustee” means Wilmington Trust Company, a Delaware banking corporation, not in its individual capacity but solely as owner trustee under the Securitization Trust Agreements, and its permitted successors and assigns in such capacity.

 

“Partial Release of Security Interest” means the agreement substantially in the form set forth in Exhibit 2.5 of this Agreement.

 

“Payment Cutoff Date” means, with respect to a Securitization Trust, a “Payment Cutoff Date,” as defined in the Securitization Master Terms Purchase Agreement.

 

“Permitted Change of Recommendation” has the meaning given to such term in Section 10.4(e) of this Agreement.

 

“Person” means an individual, partnership, corporation (including a business trust), joint stock company, estate, trust, limited liability company, association unincorporated association, joint venture or other entity or a Governmental Authority.

 

“Portfolio” means, with respect to a Securitization Trust, the Trust Student Loans reinsured under Title IV of the Higher Education Act and made to persons for post-secondary education at eligible institutions acquired from time to time by the Securitization Eligible Lender Trustee on behalf of the Securitization Trust.

 

“Principal Amount” means, with respect to a Securitization Note, the outstanding principal balance of such Securitization Note (excluding unamortized bond discount balances).

 

“Principal Balance” means, with respect to a Student Loan, the outstanding principal balance of such student loan (disregarding any unauthorized premium and loan loss reserves), plus accrued interest expected to be capitalized (if any) but excluding any amounts already included in the aggregate accrued interest receivable balance of the Trust Student Loans.

 

“Private Securitization Basic Document” means any document that is a “Basic Document” as defined in the indenture pursuant to which any Private Securitization Trust has issued securitization notes.

 

“Private Securitization Servicing Agreement” means, with respect to each Private Securitization Trust, the servicing agreement entered into between the Seller, as the Servicer and as the Administrator, and the Private Securitization Trust, as the same may be amended from time to time.

 

“Private Securitization Trust” means each of SLC Private Student Loan Trust 2006-A, SLC Private Student Loan Trust 2009-A, SLC Private Student Loan Trust 2010-A or SLC Private Student Loan Trust 2010-B.

 

“Proxy Statement” has the meaning given to such term in Section 10.2(a) of this Agreement.

 

“Purchase Agreement” means, with respect to a Securitization Trust, the Purchase Agreement entered into between the Seller and the Depositor pursuant to which Student Loans are sold from the Seller to the Depositor, in accordance with the Securitization Master Terms Purchase Agreement for that Securitization Trust.

 

“Qualifying Transaction” means any transaction contemplated by a Competing Proposal, except the references therein to “15%” in each of clause (A), (B) and (C) of the definition of Competing Proposal shall be replaced by “50%” and the reference in clause (i) thereof to the “Acquired Assets” shall be replaced by the phrase “all assets of the Seller”; provided, however, that the Related Transactions shall not constitute Qualifying Transactions.

 

“Ratable Financing Costs” has the meaning given to such term in the Funding Note Purchase Agreement.

 

“Rating Agencies” means a nationally recognized statistical rating organization or other comparable Person rating the Securitization Notes in accordance with the applicable Securitization Indentures.

 

“Related Transaction Documents” mean, collectively, (i) the CBNA Transaction Agreement, (ii) the Merger Transaction Agreement and (iii) in each case, ancillary agreements attached thereto or delivered thereunder or in connection therewith.

 

“Related Transactions” means, together, the CBNA Transaction and the Merger Transaction.

 

“Replacement Subservicing Agreements” has the meaning given to such term in Section 3.4(a) of this Agreement.

 

“Representatives” has the meaning given to such term in Section 10.4(a) of this Agreement.

 

“Schedule of Financed Student Loans” means the schedule or file identifying the Financed Student Loans and containing data related to such Financed Student Loans.

 

“Schedule of Trust Student Loans” means the schedule or file identifying the Trust Student Loans and containing data related to such Trust Student Loans.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Secretary” means the Secretary of Education, and includes any official of the Department duly authorized to perform any function with respect to the transactions under the Conduit Program.

 

“Securitization Administration Agreement” means, with respect to each Securitization Trust, the Administration Agreement entered into between a Securitization Trust, the Depositor, and the Seller, in its capacity as Administrator, and, if applicable, the Seller, in its capacity as Servicer, as the same may be amended or otherwise modified from time to time in accordance with the terms thereof.

 

“Securitization Basic Documents” means, with respect to each Securitization Trust, the applicable Basic Documents as defined under the Securitization Indenture, as the same may be amended or otherwise modified from time to time in accordance with the terms thereof.

 

“Securitization Buyer” means Bull Run 1 LLC, a Delaware limited liability company.

 

“Securitization Closing Date” means, with respect to each Securitization Trust, the applicable closing date under the Securitization Indenture.

 

“Securitization Custody Agreement” means a Custody Agreement entered into between each Securitization Trust, the Securitization Eligible Lender Trustee, the Securitization Indenture Trustee, the Seller, as the Servicer, and CSD, as custodian, for a Securitization Trust, as the same may be amended or otherwise modified from time to time in accordance with the terms thereof.

 

“Securitization Cutoff Date” means, with respect to each Securitization Trust, the applicable cutoff date under the Securitization Indenture.

 

“Securitization Eligible Lender Trust Agreement” means, with respect to each Securitization Transaction, the eligible lender trust agreement between the related Securitization Trust and the Securitization Eligible Lender Trustee, as amended or modified form time to time.

 

“Securitization Eligible Lender Trustee” means CBNA, in its capacity as eligible lender trustee on behalf of each Securitization Trust pursuant to the applicable Securitization Eligible Lender Trust Agreement.

 

“Securitization Eligible Loan” means a Student Loan that was sold by the Seller to the Depositor and sold by the Depositor to a Securitization Trust, which as of the applicable Securitization Cutoff Date, or for a Student Loan that was substituted by the Seller and the Depositor after the Securitization Closing Date, which as of the applicable cutoff date, or in the case of a Purchase Agreement entered into after the applicable Securitization Closing Date, which as of the related purchase date by the Depositor, was current or no more Delinquent than permitted under such Securitization Master Terms Purchase Agreement in payment of principal or interest and which met the following criteria as of the Securitization Cutoff Date, or in the case of any Student Loan substituted after the applicable Securitization Closing Date, as of the applicable cutoff date by the Depositor:

 

(a)           (i)   with respect to the 2008-2 Trust and the 2009-1 Trust, was a Stafford Loan or a Plus Loan, and not a Consolidation Loan, (ii) with respect to the 2010-1 Trust, was a Consolidation Loan, Stafford Loan, PLUS Loan or SLS Loan and (iii) with respect to each other Securitization Trust not described in clauses (i) and (ii), was a Consolidation Loan;

 

(b)           was owned by the Seller, and was fully disbursed;

 

(c)           was guaranteed as to principal and interest by the applicable Guarantor to the maximum extent permitted by the Higher Education Act for such Student Loan, and such Guarantor was, in turn, reinsured by the Department of Education in accordance with the Higher Education Act;

 

(d)           bore interest at a stated rate of not more than the maximum rate permitted under the Higher Education Act for such Loan;

 

(e)           was eligible for the payment of the quarterly special allowance at the three month financial commercial paper rate or the 91-day treasury bill rate, as applicable;

 

(f)           if not in repayment status, was eligible for the payment of interest benefits by the Secretary or, if not so eligible, was a Student Loan for which interest either was billed quarterly to Borrower or deferred until commencement of the repayment period, in which case such accrued interest would be subject to capitalization to the full extent permitted by the applicable Guarantor;

 

(g)           contained terms in accordance with those required by FFELP, the applicable Guarantee Agreement and other applicable requirements, and, with respect to the 2004-1 Trust, 2005-1 Trust, 2005-2 Trust, 2005-3 Trust and 2006-1 Trust, was more than 180 days past the final disbursement;

 

(h)           did not have a borrower who was noted in the related records of the Servicer as being currently involved in a bankruptcy proceeding, and, with respect to the 2007-2 Trust, 2008-1 Trust, 2008-2 Trust and 2009-1 Trust, had a date of first disbursement prior to October 1, 2007;

 

(i)           was supported by the following documentation:

 

 

	
  

	
(1)

	
a loan application, and any supplement thereto,

 

 

	
  

	
(2)

	
an original promissory note and any addendum thereto (or a certified copy thereof if more than one loan was represented by a single promissory note and all loans so represented were not being sold) or the electronic records evidencing the same,

 

 

	
  

	
(3)

	
evidence of guarantee,

 

 

	
  

	
(4)

	
any other document and/or record which the Seller may have been required to retain pursuant to the Higher Education Act,

 

 

	
  

	
(5)

	
if applicable, payment history (or similar document) including (i) an indication of the Principal Balance and the date through which interest had been paid, each as of the applicable Securitization Cutoff Date, or, in the case of any Loan substituted after the applicable Securitization Closing Date, as of the related Purchase Date (as defined therein) and (ii) an accounting of the allocation of all payments by the Borrower or on the Borrower’s behalf to principal and interest on the Student Loan,

 

 

	
  

	
(6)

	
if applicable, documentation which supported periods of current or past deferment or past forbearance,

 

 

	
  

	
(7)

	
if applicable, a collection history, if the Loan was ever in a delinquent status, including detailed summaries of contacts and including the addresses or telephone numbers used in contacting or attempting to contact Borrower and any endorser and, if required by the Guarantor, copies of all letters and other correspondence relating to due diligence processing,

 

 

	
  

	
(8)

	
if applicable, evidence of all requests for skip-tracing assistance and current address of Borrower, if located,

 

 

	
  

	
(9)

	
if applicable, evidence of requests for pre-claims assistance, and evidence that the Borrower’s school(s) had been notified, and

 

 

	
  

	
(10)

	
if applicable, a record of any event resulting in a change to or confirmation of any data in the Loan File.

 

 

“Securitization Indenture” means, with respect to each Securitization Trust, the indenture pursuant to which the Securitization Trust has issued Securitization Notes, as amended or supplemented from time to time.

 

“Securitization Indenture Trustee” means U.S. Bank National Association, a national banking association, in its capacity as the indenture trustee under each Securitization Indenture, and its permitted successors and assigns in such capacity.

 

“Securitization Master Terms Purchase Agreement” means, with respect to each Securitization Trust, the purchase agreement entered into by and among the Seller, the Depositor and an Eligible Lender Trustee pursuant to which the Student Loans to be deposited into the Securitization Trust are sold from the Seller to the Depositor, as the same may be amended or otherwise modified from time to time in accordance with the terms thereof.

 

“Securitization Master Terms Sale Agreement” means, with respect to each Securitization Trust, the Master Terms Sale Agreement entered into by and among the Depositor, the Securitization Trust and an Eligible Lender Trustee pursuant to which Student Loans are sold by the Depositor to the Securitization Trust, as the same may be amended or otherwise modified from time to time in accordance with the terms thereof.

 

“Securitization Note” means a note issued by the related Securitization Trust.

 

“Securitization Restricted Cash” means, with respect to each Securitization Trust, all cash and investments held from time to time in any Trust Account (as defined in the applicable Securitization Administration Agreement) whether in the form of deposit accounts, physical property, book-entry securities, uncertificated securities or otherwise.

 

“Securitization Servicing Agreement” means, with respect to each Securitization Trust, the servicing agreement entered into between the Seller, as the Servicer and as the Administrator, and the Securitization Trust, as the same may be amended or otherwise modified from time to time in accordance with the terms thereof.

 

“Securitization Subservicing Agreement” means, with respect to each Securitization Trust, the Subservicing Agreement entered into between the Seller, as the Servicer, and CSD, as the same may be amended or otherwise modified from time to time in accordance with the terms thereof.

 

“Securitization Transaction” has the meaning given to such term in Section 7.2(l)(i) of this Agreement.

 

“Securitization Trust” means the 2004-1 Trust, the 2005-1 Trust, the 2005-2 Trust, the 2005-3 Trust, the 2006-1 Trust, the 2006-2 Trust, the 2007-1 Trust, the 2007-2 Trust, the 2008-1 Trust, the 2008-2 Trust, the 2009-1 Trust, the 2009-2 Trust or the 2009-3 Trust as the context requires.

 

“Securitization Trust Agreement” means, with respect to each Securitization Trust, the Trust Agreement entered into by and between the Depositor and the Owner Trustee, as the same may be amended or otherwise modified from time to time in accordance with the terms thereof.

 

“Seller” means The Student Loan Corporation, a Delaware corporation, in its capacity as the seller under this Agreement.

 

“Seller Common Stock” means the common stock, par value $0.01 per share, of the Seller.

 

“Seller Disclosure Schedule” means the Seller Disclosure Schedule attached as Schedule B to this Agreement.

 

“Seller Eligible Lender Trust Agreement” means the Trust Agreement, dated as of August 30, 2003, between The Student Loan Corporation, as the grantor thereunder, and CBNA, not in its individual capacity but solely in its capacity as the trustee thereunder, relating to FFELP Loans, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

 

“Seller Eligible Lender Trustee” means CBNA, in its capacity as eligible lender trustee for the benefit of The Student Loan Corporation pursuant to the Seller Eligible Lender Trust Agreement.

 

“Seller Intervening Event” has the meaning set forth in Section 10.4(j) of this Agreement.

 

“Seller Material Adverse Effect” means any event, change, effect, development, state of facts, condition, circumstance or occurrence that, individually or in the aggregate, (i) has had or would reasonably be expected to have a material adverse effect on the business, operations, results of operations or financial condition of the Acquired Assets and Applicable Loans, taken as a whole, or (ii) would reasonably be expected to prevent or materially delay or materially impair the ability of the Seller or any of its Subsidiaries to consummate any of the Transactions or to perform any of their obligations under any of the Transaction Documents, other than any event, change, effect, development, state of facts, condition, or circumstance proximately relating to, resulting from or arising out of (A) changes in general economic or political conditions or the financial, securities or credit markets in general; (B) any events, circumstances, changes or effects that affect the general student loan industry; (C) any changes in Laws (or interpretations thereof) applicable to the Seller or any of the Seller’s Subsidiaries or any of their respective properties or assets (including, for the avoidance of doubt, the Health Care and Education Reconciliation Act of 2010 and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010); (D) any changes, after the date hereof, in GAAP (or interpretations thereof); (E) any outbreak or escalation of hostilities or war (whether or not declared) or any act of terrorism, or any earthquakes, hurricanes, tornados or other natural disasters; (F) the negotiation, execution, announcement, consummation or existence of, this Agreement, the Transaction Documents, the Transactions, the Related Transaction Documents or the Related Transactions, including any action or suit arising therefrom or in connection therewith; (G) any change in the trading price of the Seller Common Stock or the failure by the Seller or its Subsidiaries to meet any internal or published projections, forecasts or estimates for any period (it being understood that the events, changes, effects, developments, state of facts, condition, circumstance or occurrence underlying such change or failure that are not otherwise excluded from the definition of Seller Material Adverse Effect may be taken into account in determining whether there has been or would reasonably be expected to be a Seller Material Adverse Effect); or (H) any action taken as required by the Transaction Documents or at the direction of Buyer; provided, however, that any change, effect, event or occurrence referred to in the immediately preceding clauses (A), (B), (C), (D) and (E) shall be taken into account for purposes of determining whether a Seller Material Adverse Effect has occurred only to the extent such change, effect, event or occurrence adversely affects the Seller and its Subsidiaries, taken as a whole, in a materially disproportionate manner relative to other companies operating in the industries in which the Seller and its Subsidiaries compete (and then only to the extent of the materially disproportionate portion of such effect).

 

“Seller Party” means each of The Student Loan Corporation, as Seller, Servicer SPV Administrator and Sponsor, CBNA in its individual capacity and as The Student Loan Corporation Eligible Lender Trustee. Omnibus Lender, lender under the Term Loan Agreement and Indenture Administrator, CSD, as subservicer, Sub-Subservicer and Custodian, the Depositor and the Funding Note Issuer.

 

“Seller Recommendation” has the meaning given to such term in Section 10.3 of this Agreement.

 

“Seller Satisfaction Certificate” means a certificate executed and delivered by the Seller, substantially in the form of Exhibit 9.2 to this Agreement.

 

“Seller Stockholder Approval” means the affirmative vote of the holders of at least a majority of the outstanding shares of Seller Common Stock entitled to vote at the Stockholders’ Meeting.

 

“Seller Termination Fee” means any fee payable by the Seller to Buyer Parent pursuant to Sections 11.3(a), 11.3(b), 11.3(c), 11.3(d) or 11.3(e).

 

“Servicer” means the Seller in its capacity as Servicer under each Securitization Servicing Agreement, Private Securitization Servicing Agreement or under the Conduit Servicing Agreement, as the context requires, and their respective permitted successors and assigns in such capacity.

 

“Solvent” means, with respect to any Person as of any date of determination, that, as of such date, (a) the value of the assets of such Person is greater than the total amount of liabilities (including contingent and unliquidated liabilities) of such Person as determined in accordance with GAAP, (b) such Person is able to pay all liabilities of such Person as such liabilities mature and (c) such Person does not have unreasonably small capital.  In computing the amount of contingent or unliquidated liabilities at any time, such liabilities shall be computed at the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

“Special Committee” means the Special Committee of the Board of Directors of the Seller.

 

“Sponsor” means the Seller and its successor and assigns in its capacity as the Sponsor under the Funding Note Purchase Agreement.

 

“SPV Administrator” means the Seller and its successors and assigns in its capacity as the SPV Administrator of the Funding Note Issuer under the Funding Note Purchase Agreement.

 

“Stockholders’ Meeting” has the meaning given to such term in Section 10.2(a) of this Agreement.

 

“Student Loan” means an education loan to students and parents of students under the FFELP.

 

“Sub-Administration Agreements” has the meaning given to such term in Section 3.3(a) of this Agreement.

 

“Sub-Administrator” has the meaning given to such term in Section 3.3(a)(i) of this Agreement.

 

“Sub-Sub-Administrator” has the meaning given to such term in Section 3.3(a)(ii) of this Agreement.

 

“Sub-Subservicer” has the meaning given to such term in Section 3.4(a)(ii) of this Agreement.

 

“Sub-Subservicing Agreement” has the meaning given to such term in Section 3.4(a)(ii) of this Agreement.

 

“Subordinated Credit Agreement” means the Subordinated Credit Agreement, dated as of May 14, 2009, together with all amendments and other modifications, if any, between Funding Note Issuer and the Seller, as Lender.

 

“Subordinated Loan” means a subordinated loan issued under the Subordinated Credit Agreement.

 

“Subordinated Note Lender” means the Seller in its capacity as lender under the Subordinated Credit Agreement.

 

“Subordinated Promissory Note” means the note evidencing the Subordinated Loans.

 

“Subservicer” means CSD, in its capacity as the subservicer under each Securitization Subservicing Agreement, and its successors and assigns in such capacity.

 

“Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company or other business entity of which an aggregate of more than 50% of the outstanding voting stock is, at the time, directly or indirectly, owned or controlled by such Person or one or more Subsidiaries of such Person.

 

“Substitute Merger Transaction” has the meaning given to such term in Section 10.11(a) of this Agreement.

 

“Superior Proposal” has the meaning given to such term in Section 10.4(g) of this Agreement.

 

“Superior Proposal Agreement” has the meaning given to such term in Section 10.4(g) of this Agreement.

 

“Tax” means all taxes, including income, gross receipts, ad valorem, VAT, excise, real property, personal property, sales, use, transfer, withholding, employment, unemployment, insurance, social security, business license, business organization, environmental, worker’s compensation, profits, license, lease, service, service use, severance, stamp, occupation, windfall profits, customs, duties, franchise and other taxes imposed by any Governmental Authority, and any interest, penalties, assessments or additions to tax resulting from, attributable to or incurred in connection with any tax or any contest or dispute thereof.

 

“Tax Return” means any report, return, declaration, statement or other information required to be supplied to a Governmental Authority in connection with Taxes.

 

“Term Loan Agreement” means the Term Loan Agreement dated as of the date hereof by and among Bull Run 1 LLC, as Borrower, Buyer Parent, as Guarantor, CBNA, as the Administrative Agent, the Syndicate Agent, the Collateral Agent, and a Lender, and additional lenders that may become a party thereto.

 

“Termination Date” has the meaning given to such term in Section 11.1(b) of this Agreement.

 

“Transaction Documents” means this Agreement, the Voting Agreement, the Indemnification Agreement, the Trust Certificates Bill of Sale, the Accession Agreement for Trust Certificates, the Partial Release of Security Interest, the Sub-Administration Agreement, the Sub-Sub-Administration Agreement, the Administration Services Agreement, the Replacement Subservicing Agreement, the Sub-Subservicing Agreement, the Servicing Services Agreement, the Assumption of Obligations of the Seller under Master Terms Purchase Agreements, the Makewhole and Participation Agreement, the Conduit Bill of Sale, the Conduit Mutual Release, the Department Form Agreements, the Conduit Replacement Subservicing Agreement, the Conduit Servicing Services Agreement, the SPV Sub-Administration Agreement, the Conduit Services Agreement, the Depositor Agreement, the Seller Satisfaction Certificate, the Buyer Satisfaction Certificate, the Amended and Restated Confidentiality Agreement, the Buyer/Seller Release and such other documents as may be identified as “Transaction Documents” for purposes of the Agreement by the Seller and the Buyer from time to time and all other agreements and other documents entered into or delivered in connection with such agreements and other documents.

 

“Transactions” means each of the transactions contemplated by the Transaction Documents.

 

“Trust Certificate” means, with respect to each Securitization Trust, a certificate evidencing a 100% beneficial interest in such Securitization Trust.

 

“Trust Certificates Bill of Sale” means a bill of sale between the Seller and the Securitization Buyer, substantially in the form attached as Exhibit 2.1 to this Agreement or such other form as is acceptable to such parties, pursuant to which the Seller will sell the Trust Certificates to the Securitization Buyer in consideration for the Certificate Purchase Price, and which shall reasonably identify the Trust Student Loans.

 

“Trustee” means CBNA not in its individual capacity, but solely in its capacity as the trustee under the Eligible Lender Trust Agreement and its successors and assigns in such capacity.

 

“Trust Student Loan” means a Student Loan that has been sold or permissibly transferred to the Securitization Trust by the Depositor or the Servicer and the beneficial ownership of which is still held by such Securitization Trust on the date specified.

 

“Unadjusted Purchase Price” means either:

 

(i)           in the case of any calculation pursuant to Section 2.1, the Net Trust Assets Acquired times 119%, less the Certificate Distribution Amount; or

 

(ii)           in the case of any calculation pursuant to Section 4.1, the Net Conduit Assets Acquired times 119%, less the Conduit Distribution Amount.

 

“Voting Agreement” has the meaning given to such term in the Recitals of this Agreement.

  

  

  

 

Appendix B

List of Trust Certificates

 

	

Trust Certificate

	

Ownership Percentage

	
SLC Student Loan Trust 2004-1

	
100%

	
SLC Student Loan Trust 2005-1

	
100%

	
SLC Student Loan Trust 2005-2

	
100%

	
SLC Student Loan Trust 2005-3

	
100%

	
SLC Student Loan Trust 2006-1

	
100%

	
SLC Student Loan Trust 2006-2

	
100%

	
SLC Student Loan Trust 2007-1

	
100%

	
SLC Student Loan Trust 2007-2

	
100%

	
SLC Student Loan Trust 2008-1

	
100%

	
SLC Student Loan Trust 2008-2

	
100%

	
SLC Student Loan Trust 2009-1

	
100%

	
SLC Student Loan Trust 2009-2

	
100%

	
SLC Student Loan Trust 2009-3

	
100%

	  	  

  

  

  

 

Appendix D

Notices

 

 

The address for notices for the Seller is as follows:

 

The Student Loan Corporation

750 Washington Blvd.

Stamford, Connecticut 06901

Fax: 203-975-6724

Attention:  Chief Executive Officer

 

with a copy to (which shall not constitute notice):

 

CID Management

 

850 Third Ave, 18th Floor

New York, NY 10022

Fax: 212-207-3950

Attention: Rodman L. Drake, Chairman of the Special Committee

 

and

 

The Student Loan Corporation

750 Washington Blvd.

Stamford, Connecticut 06901

Fax: 203-975-6724

Attention:  General Counsel

 

with further copies to (which shall not constitute notice):

 

Proskauer Rose LLP

1585 Broadway

New York, NY 10036-8299

Fax:  212-969-2900

Attention:        Julie Allen

                          Arnold Jacobs

 

and

 

McDermott, Will & Emery LLP

340 Madison Avenue

New York, New York 10173-1922

Fax: 212-547-5444

Attention:       Peter J. Rooney

                         Todd Finger

 

with a further copy to (which shall not constitute notice):

 

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, NY 10036

Fax:  212 -735-2000

Attention:       William S. Rubenstein

                          Sean C. Doyle

 

The address for notices for CBNA, Depositor Eligible Lender Trustee, Conduit Eligible Lender Trustee, Securitization Eligible Lender Trustee, Omnibus Lender and Indenture Administrator is as follows:

 

 

Citigroup Inc.

399 Park Avenue

New York, NY  10022

Fax:     212.559.0615

Attention:      Michael S. Zuckert

 

with a copy to (which shall not constitute notice):

 

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, NY 10036

Fax:  212 -735-2000

Attention:       William S. Rubenstein

                          Sean C. Doyle

 

The address for notices for the Buyer Parent and Buyer is as follows:

 

 

if to Buyer Parent:

 

SLM Corporation

12061 Bluemont Way

Reston, VA  20190-5684

Fax:  703-984-6586

Attention:      Mark L. Heleen, Executive Vice President

                        and General Counsel

 

with copies to (which shall not constitute notice):

 

Bingham McCutchen LLP

399 Park Avenue

New York, NY  10022-4689

Fax:  212-752-5378

Attention:      Reed D. Auerbach

 

and

 

Bingham McCutchen LLP

One Federal Street

Boston, MA  02110

Fax:  617-951-8736

Attention:        John R. Utzschneider

 

if to Buyer:

 

Bull Run 1 LLC

12061 Bluemont Way

Reston, VA  20190-5684

Fax:  703-984-6586

Attention:          Mark L. Heleen, Executive Vice President

                            and General Counsel

 

with copies to (which shall not constitute notice):

 

Bingham McCutchen LLP

399 Park Avenue

New York, NY  10022-4689

Fax:  212-752-5378

Attention:         Reed D. Auerbach

 

and

 

Bingham McCutchen LLP

One Federal Street

Boston, MA  02110

Fax:  617-951-8736

Attention:           John R. Utzschneider

  

  

  

 

Appendix E

 

Seller Representations and Warranties with Respect to Trust Student Loans

 

 

Except for Student Loans that have been purchased or substituted by the Seller or the Depositor in accordance with the terms of the Securitization Master Terms Sale Agreements or the Securitization Master Terms Purchase Agreements, the Seller represents and warrants as to the Trust Student Loans purchased by the Depositor or substituted by the Seller under the related Purchase Agreement and each Bill of Sale executed pursuant to the Securitization Master Terms Purchase Agreements as of the date of the related Purchase Agreement, or as of the date otherwise noted:

 

(a)           The Seller, with respect to beneficial ownership, and the Seller Eligible Lender Trustee, for the benefit of the Seller, with respect to record ownership, had good and marketable title to, and was the sole owner of, the Student Loans, free and clear of all security interests, liens, charges, claims, offsets, defenses, counterclaims or encumbrances of any nature and no right of rescission, offsets, defenses or counterclaims had been asserted or threatened with respect to such Trust Student Loans;

 

(b)           Each Securitization Master Terms Purchase Agreement created a valid and continuing security interest (as defined in the applicable UCC) in the Trust Student Loans sold thereunder in favor of the Depositor Eligible Lender Trustee for the benefit of the Depositor, which security interest was prior to all other security interests, liens, charges, claims, offsets, defenses, counterclaims or encumbrances, and was enforceable as such as against creditors of and purchasers from the Seller;

 

(c)           Either the Trust Student Loans constituted either “Payment Intangibles” or “Instruments” within the meaning of the applicable UCC, or with respect to the 2004-1 Trust, 2005-1 Trust, 2005-2 Trust, 2005-3 Trust, 2006-1 Trust and 2006-2 Trust, the Trust Student Loans constituted “Accounts” within the meaning of the applicable UCC and were within the coverage of Sections 432(m)(1)(E) and 439(d)(3) of the Higher Education Act;

 

(d)           The Trust Student Loans were Securitization Eligible Loans and the description of the Trust Student Loans set forth in the related Purchase Agreement and the related Loan Transmittal Summary Form were true and correct;

 

(e)           The Seller was authorized to sell, assign, transfer, substitute and repurchase the Trust Student Loans; and the sale, assignment and transfer of such Trust Student Loans was or, in the case of a Student Loan repurchase or substitution by the Seller, was made pursuant to and consistent with the laws and regulations under which the Seller operated, and did not violate any decree, judgment or order of any court or agency, or conflict with or result in a breach of any of the terms, conditions or provisions of any agreement or instrument to which the Seller was a party or by which the Seller or its property was bound, or constituted a default (or an event which could constitute a default with the passage of time or notice or both) thereunder;

 

(f)           The Trust Student Loans were each in full force and effect in accordance with their terms and were legal, valid and binding obligations of the respective Borrowers thereunder subject to no defenses (except the defense of infancy);

 

(g)           No consents and approvals were required by the terms of the Trust Student Loans for the consummation of the sale of such Trust Student Loans under the related Purchase Agreement to the Depositor Eligible Lender Trustee for the benefit of the Depositor other than those which were obtained;

 

(h)           As of the applicable Securitization Cutoff Date, or, in the case of any purchase following the applicable Securitization Closing Date, as of the date of the related Purchase Agreement, each Trust Student Loan had been duly made and serviced in accordance with the provisions of the Federal Family Education Loan Program established under the Higher Education Act, and had been duly insured by a Guarantor; as of the Securitization Cutoff Date or, in the case of any purchase following the Securitization Closing Date, as of the date of the related Purchase Agreement, such guarantee was in full force and effect and was freely transferable to the Depositor Eligible Lender Trustee on behalf of the Depositor as an incident to the purchase of each Trust Student Loan; and all premiums due and payable to such Guarantor had been paid in full as of the date of the related Securitization Bill of Sale;

 

(i)           Any payments on the Trust Student Loans received by the Seller that had been allocated to the reduction of principal and interest on such Trust Student Loans had been allocated on a simple interest basis; the information with respect to the applicable Trust Student Loans as of the Securitization Cutoff Date or, in the case of any substituted Trust Student Loans, the related Payment Cutoff Date, as stated on the related Loan Transmittal Summary Form was materially true and correct;

 

(j)           Due diligence and reasonable care have been exercised in the making, administering, servicing and collecting on the Trust Student Loans and, with respect to any Trust Student Loan for which repayment terms had been established, all disclosures of information required to be made pursuant to the Higher Education Act had been made;

 

(k)           All origination fees authorized to be collected pursuant to Section 438 of the Higher Education Act had been paid to the Secretary;

 

(l)           Each Trust Student Loan had been duly made and serviced in accordance with the provisions of the related program under which such Trust Student Loan was originated and all applicable federal and state laws;

 

(m)           No Trust Student Loan was more than the number of days Delinquent permitted under the terms of the related Securitization Master Terms Purchase Agreement and no default, breach, violation or event permitting acceleration under the terms of any Trust Student Loan had arisen; and neither the Seller nor any predecessor holder of any Trust Student Loan had waived any of the foregoing other than as permitted by the Securitization Basic Documents;

 

(n)           Except for Trust Student Loans executed electronically, there was only one original executed copy of the Note evidencing each Trust Student Loan. For Trust Student Loans that were executed electronically, either (i) the Servicer had possession of the electronic records evidencing the Note or (ii) the Seller had agreements with the previous holders or servicers of such Note under which the relevant holder or servicer agreed to hold and maintain the electronic records evidencing the Note, in each case as may have been necessary to enforce the Note or as may have been required by applicable laws regarding electronic chattel paper, including without limitation, any applicable e-sign loans;

 

(o)           The Notes that constitute or evidence the Trust Student Loans did not have any marks or notations indicating that they had been pledged, assigned or otherwise conveyed to any Person other than the Seller Eligible Lender Trustee on behalf of the Depositor. All financing statements filed against the Seller in favor of the Depositor in connection with the applicable Purchase Agreement describing the Trust Student Loans contain a statement to the following effect: “A purchase of or security interest in any collateral described in this financing statement will violate the rights of the [Eligible Lender Trustee][secured party]”;

 

(p)           Other than the security interest granted to the Depositor pursuant to the applicable Securitization Master Terms Purchase Agreement, the Seller had not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Trust Student Loans. The Seller had not authorized the filing of and was not aware of any financing statements against the Seller that included a description of collateral covering the Trust Student Loans other than any financing statement relating to the security interest granted to the Seller Eligible Lender Trustee thereunder or any other security interest that had been terminated. The Seller was not aware of any judgment or Tax lien filings against the Seller;

 

(q)           No Borrower of a Trust Student Loan as of the applicable Securitization Cutoff Date or, in the case of any substitution following the Securitization Closing Date, as of the date of the related Purchase Agreement, was noted in the related Loan File as being then involved in a bankruptcy proceeding;

 

(r)           CBNA serves as Eligible Lender Trustee for each Securitization Trust and in that capacity holds legal title to, and is the sole record owner of, each Trust Student Loan, free and clear of all Liens (except those Liens created pursuant to the related Securitization Indenture); and

 

(s)           The transfer and assignment under the related Purchase Agreement and each Securitization Master Terms Purchase Agreement constituted a valid sale of the Trust Student Loans from the Seller and the Seller Eligible Lender Trustee to the Depositor Eligible Lender Trustee for the benefit of the Depositor and the beneficial interest in and title to such Trust Student Loans would not be part of the Seller’s estate in the event of the bankruptcy of the Seller or the appointment of a receiver with respect to the Seller.  The Seller caused the timely filing of all appropriate financing statements in the proper filing office in the appropriate jurisdictions under applicable law in order to perfect a first priority security interest in the related Trust Student Loans and other collateral granted under the Securitization Basic Documents.

 

  

  

  

 

Appendix F

 

Seller Representations and Warranties with Respect to Financed Student Loans

 

 

Except for Financed Student Loans that have been repurchased by the Seller pursuant to Section 6 of the Conduit Student Loan Purchase Agreement or purchased by the Servicer pursuant to the Conduit Servicing Agreement, with respect to each Financed Student Loan as of the related date on which such Financed Student Loan was sold by the Seller to the Funding Note Issuer pursuant to the Conduit Student Loan Purchase Agreement (the “Grant Date”):

 

(a)           The Seller, with respect to beneficial ownership, and the Seller Eligible Lender Trustee, for the benefit of the Seller, with respect to record ownership, had good and marketable title to, and were the sole owners of, such Financed Student Loan, free and clear of any security interest or lien (other than an interest or lien that was released simultaneously with the transfer of such Financed Student Loan to the Funding Note Issuer (the “Transfer”) pursuant to a Security Release Certification, as defined in the Conduit Student Loan Purchase Agreement), charges, claims, offsets, defenses, counterclaims or encumbrances of any nature (including any circumstances that could have impaired transfer of title to the Student Loans free and clear of the claim of any party) and no right of rescission, offsets, defenses or counterclaims had been asserted or threatened with respect to such Financed Student Loan.  The Transfer of such Financed Student Loan constituted the absolute transfer of all right, title and interests of the Seller with respect to beneficial ownership, and the Seller Eligible Lender Trustee, with respect to record ownership in such Financed Student Loan to the purchaser parties free and clear of any lien or adverse claim.

 

(b)           Such Financed Student Loan met the requirements under the Conduit Program to be an “Eligible Loan” (as defined in the Funding Note Purchase Agreement), and the description of and information regarding such Financed Student Loan set forth in the related bill of sale, loan transmittal summary form and any loan schedule prepared or delivered in connection with the transfer thereof was true, complete and correct as of the date of the applicable loan schedule.

 

(c)           The Seller (with respect to beneficial ownership) and the Seller Eligible Lender Trustee (with respect to record ownership) was authorized to Transfer and, to the extent required under the Conduit Student Loan Purchase Agreement, reacquire such Financed Student Loan; and the Transfer of such Financed Student Loan was or, in the case of a reacquisition by the Seller (with respect to beneficial ownership) and the Seller Eligible Lender Trustee (with respect to record ownership), was made pursuant to and consistent with the laws and regulations under which each of the Seller and the Seller Eligible Lender Trustee operated, and did not violate any decree, judgment or order of any court or agency, or conflict with or result in a breach of any of the terms, conditions or provisions of any agreement or instrument to which it was a party or by which it or its property was bound, or constitute a default (or an event which could constitute a default with the passage of time or notice or both) thereunder.

 

(d)           Such Financed Student Loan was in full force and effect in accordance with its terms and was the legal, valid and binding obligation of the respective Borrower thereunder subject to no defenses.

 

(e)           Such Financed Student Loan had been duly made and serviced in accordance with the provisions of FFELP and had been duly guaranteed by a Guarantor; the Guarantee Agreement was in full force and effect, and all premiums due and payable to such Guarantor as of the related Grant Date had been paid in full.

 

(f)           Such Financed Student Loan provided or, when the payment schedule with respect thereto was determined, provided for payments on a periodic basis that fully amortized the Principal Balance thereof by its maturity, as such maturity may have been modified in accordance with any applicable deferral or forbearance periods granted in accordance with applicable laws, including, those of the Higher Education Act or any applicable Guarantee Agreement, as applicable.

 

(g)           Any payments on such Financed Student Loan received by the Seller that were allocated to the reduction of principal and interest on such Financed Student Loan were, in all material respects, allocated on a simple interest basis.

 

(h)           Such Financed Student Loan had been duly made and serviced in accordance with all applicable federal, state and local laws.

 

(i)           Due diligence and reasonable care was exercised in the making, administering, servicing and collecting on such Financed Student Loan and, all disclosures of information required to be made pursuant to the Higher Education Act prior to the related Grant Date had been made.

 

(j)           The related Borrower was an eligible borrower under the terms of Section 428, 428B or 428H of the Higher Education Act, as applicable.

 

(k)           All borrower origination and loan fees required by Section 438 of the Higher Education Act had been paid to the Secretary or appropriately reserved by the Seller or Seller Eligible Lender Trustee for payment to the Secretary.

 

(l)           Such Financed Student Loan was denominated and payable only in United States dollars.

 

(m)           The transfer and assignment contemplated in the Conduit Student Loan Purchase Agreement constituted a valid transfer of such Financed Student Loan from the Seller with respect to beneficial ownership, and the Seller Eligible Lender Trustee, with respect to record ownership to the purchaser parties, and the beneficial interest in and title to such Financed Student Loan shall not be part of the Seller’s estate in the event of its bankruptcy or the appointment of a receiver with respect to the Seller or Seller Eligible Lender Trustee.

 

(n)           With respect to the master promissory note related to each Financed Student Loan (the “Promissory Note”), there was only one originally executed Promissory Note evidencing such Financed Student Loan, and such original Promissory Note (or a true and correct copy thereof) was delivered to the designee of the Funding Note Issuer. If a true and exact copy of an original electronic Promissory Note was delivered to the Funding Note Issuer or its designee, the Seller of such Financed Student Loan (or its designee) had possession of such electronic Promissory Note. The related Promissory Note that constituted or evidenced such Financed Student Loan did not have any marks or notations indicating that it had been further pledged, assigned or otherwise conveyed to any Person other than the Funding Note Issuer, the Seller Eligible Lender Trustee on behalf of the Funding Note Issuer or their designee (other than an interest or lien that will be released simultaneously with the purchase of the Financed Student Loans under the Conduit Student Loan Purchase Agreement).

 

(o)           To the extent such Financed Student Loan was evidenced by an electronic Promissory Note, the Seller complied (and caused any originator or servicer of such Financed Student Loan to comply) with all regulations and other requirements adopted by the applicable Guarantor or the Department relating to the validity and enforceability of such Promissory Note.

 

(p)           Neither the Seller nor the Seller Eligible Lender Trustee had pledged, assigned, sold, granted a security interest in, or otherwise conveyed such Financed Student Loan (other than an interest or lien released simultaneously with the Transfer of such Loan under the Conduit Student Loan Purchase Agreement pursuant to a Security Release Certification (as defined in the Funding Note Purchase Agreement)). Neither the Seller nor the Seller Eligible Lender Trustee had authorized the filing of or was aware of any financing statements against it that include a description of collateral covering such Financed Student Loan (whether or not any additional collateral is covered by such financing statements) or any other security interest that had not been terminated with respect to such Financed Student Loans, or that was not terminated with respect to the such Financed Student Loan upon Transfer to the Funding Note Issuer or the Conduit Eligible Lender Trustee. Neither the Seller nor the Seller Eligible Lender Trustee was aware of any judgment or tax lien filings against it.

 

(q)           The related Borrower of such Financed Student Loan as of the related Grant Date was not noted in any Loan File prepared in connection therewith, including the related loan transmittal summary form as having been then involved in a bankruptcy proceeding.

 

(r)           Such Financed Student Loan satisfied all of the terms and conditions of the Transaction Documents (as defined in the Conduit Student Loan Purchase Agreement).

 

(s)           Such Financed Student Loan was not delinquent for 210 days or more or at such time subject to a claim filed with the applicable Guarantor.

 

(t)           Such Financed Student Loan had not been previously pledged to secure the Funding Note.

 

(u)           Either (i) such Loan was not subject to any Excluded Borrower Benefits (as defined in the Funding Note Purchase Agreement) or (ii) with respect to any Loan subject to Excluded Borrower Benefits, the amount required to be deposited into the Excluded Borrower Benefit Account (as defined in the Funding Note Purchase Agreement) was deposited.

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