Exhibit 99.4
Draft of 2/2/98
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CONTRIBUTION AGREEMENT
by and among
EDUCATION LOANS INCORPORATED,
a South Dakota not-for-profit corporation,
STUDENT LOAN FINANCE CORPORATION
and
EDUCATION LOANS INCORPORATED,
a Delaware corporation
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February __, 1998
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TABLE OF CONTENTS
ARTICLE I
CONTRIBUTION OF ASSETS BY ORIGINAL ISSUER TO SLFC AND
ASSUMPTION OF LIABILITIES BY SLFC............................................ 2
1.01 Contribution of Assets........................................ 2
1.02 Liabilities Transferred....................................... 2
ARTICLE II
CONTRIBUTION CONSIDERATION................................................... 2
2.01 Contribution Consideration.................................... 2
ARTICLE III
CONTRIBUTION OF ASSETS BY SLFC TO EDLINC AND ASSUMPTION OF SLFC
LIABILITIES BY EDLINC........................................................ 2
3.01 Contribution of Assets........................................ 2
3.02 Liabilities Transferred....................................... 3
ARTICLE IV
CONTRIBUTION CONSIDERATION FOR EDLINC ASSETS................................. 3
4.01 Contribution Consideration.................................... 3
ARTICLE V
CLOSING...................................................................... 3
5.01 Closing....................................................... 3
5.02 General Procedure............................................. 3
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF ORIGINAL ISSUER............................ 4
6.01 Incorporation and Corporate Power............................. 5
6.02 Subsidiaries.................................................. 5
6.03 Execution, Delivery; Valid and Binding Agreement.............. 5
6.04 Authority; No Breach.......................................... 5
6.05 SLFC Assets "AS IS, WHERE IS"................................. 5
6.06 Brokerage..................................................... 6
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF SLFC...................................... 7
7.01 Incorporation and Corporate Power............................ 7
7.02 Subsidiaries................................................. 7
7.03 Execution, Delivery; Valid and Binding Agreement............. 7
7.04 Authority; No Breach......................................... 7
7.05 EdLinc Assets "AS IS, WHERE IS".............................. 7
7.06 Brokerage.................................................... 8
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF EDLINC.................................... 8
8.01 Incorporation and Corporate Power............................ 8
8.03 Execution, Delivery; Valid and Binding Agreement............. 8
8.04 Authority; No Breach......................................... 8
ARTICLE IX
COVENANTS OF ORIGINAL ISSUER................................................ 9
9.01 Conduct of the Business...................................... 9
9.02 Cooperation.................................................. 9
9.03 Conditions................................................... 9
9.04 On-Going Covenants........................................... 9
9.05 Nonpetition Covenant......................................... 10
9.06 Valuation of SLFC Assets..................................... 10
9.07 Transfer of SLFC Stock....................................... 10
ARTICLE X
COVENANTS OF SLFC........................................................... 11
10.01 Conditions................................................... 11
10.02 On-Going Covenants........................................... 11
10.03 Nonpetition Covenant......................................... 12
10.04 Transfer of EdLinc Stock..................................... 12
ARTICLE XI
COVENANTS OF EDLINC......................................................... 12
11.01 Conditions................................................... 12
11.02 On-Going Covenants........................................... 12
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ARTICLE XII
CONDITIONS TO CLOSING.............................................. 13
12.02 Conditions to Original Issuer's Obligations.......... 14
12.03 Conditions to EdLinc's Obligations................... 15
ARTICLE XIII
TERMINATION........................................................ 16
13.01 Termination.......................................... 16
13.02 Effect of Termination................................ 17
ARTICLE XIV
SURVIVAL; INDEMNIFICATION.......................................... 17
14.01 Survival.............................................. 17
14.02 Indemnification of SLFC and EdLinc.................... 17
14.03 Indemnification of Original Issuer.................... 17
14.04 Legal Proceedings..................................... 17
ARTICLE XV
MISCELLANEOUS...................................................... 18
15.01 Expenses............................................. 18
15.02 Further Assurances................................... 18
15.03 Amendment and Waiver................................. 18
15.04 Notices.............................................. 18
15.05 Assignment........................................... 20
15.06 Severability......................................... 20
15.07 Complete Agreement................................... 20
15.08 Counterparts......................................... 20
15.09 Governing Law........................................ 20
SCHEDULE 1.01...................................................... 22
EXHIBIT A.......................................................... A-1
EXHIBIT B.......................................................... B-1
EXHIBIT C.......................................................... C-1
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CONTRIBUTION AGREEMENT
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This CONTRIBUTION AGREEMENT (this "Agreement"), dated as of February
________, 1998, is made and entered into by and among EDUCATION LOANS
INCORPORATED, a South Dakota not-for-profit corporation (the "Original Issuer"),
STUDENT LOAN FINANCE CORPORATION, a South Dakota corporation ("SLFC") and a
wholly-owned subsidiary of the Original Issuer, and EDUCATION LOANS
INCORPORATED, a Delaware corporation ("EdLinc") and a wholly-owned subsidiary of
SLFC.
WHEREAS, the Board of Directors of the Original Issuer has determined that
it is in the Original Issuer's best interests to transfer substantially all its
assets to a for-profit corporation that will assume substantially all its
liabilities or otherwise provide for their payment; and
WHEREAS, the Original Issuer has created a new South Dakota for-profit
corporation, SLFC, to which it can transfer substantially all of its assets in
exchange for senior stock of SLFC and the assumption by SLFC of its liabilities,
in accordance with Section 150(d)(3) of the Internal Revenue Code of 1986, as
amended (the "Code"); and
WHEREAS, the Original Issuer desires to contribute to SLFC, and SLFC
desires to accept from the Original Issuer, on the terms and subject to the
conditions set forth in this Agreement, all of the assets of the Original
Issuer, except such assets as are identified as Excluded Assets in Article I of
this Agreement; and
WHEREAS, SLFC has created a wholly-owned subsidiary and Delaware
bankruptcy-remote corporation, EdLinc, to hold assets contributed to it by SLFC;
and
WHEREAS, SLFC desires to contribute to EdLinc, and EdLinc desires to accept
from SLFC, on the terms and subject to the conditions set forth in this
Agreement, the assets of SLFC identified in Article III of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements and the conditions set forth in this Agreement, the
Original Issuer, SLFC and EdLinc hereby agree as follows;
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ARTICLE I
CONTRIBUTION OF ASSETS BY ORIGINAL ISSUER TO SLFC AND ASSUMPTION OF LIABILITIES
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BY SLFC
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1.01 Contribution of Assets. On the terms and subject to the conditions set
forth in this Agreement, the Original Issuer shall, at the Closing (as defined
in Section 5.01 hereof), contribute to SLFC, and SLFC shall accept and acquire
from the Original Issuer, all of the Original Issuer's right, title and
interest, as of the Closing Date (as defined in Section 6.01 hereof), in and to
all of the assets of the Original Issuer, except "Excluded Assets" consisting
of cash and investments in an aggregate amount equal to
_____________________________________ dollars ($_________________________) and
certain other assets, all as more particularly set forth on Schedule 1.01 hereto
(such assets, exclusive of the Excluded Assets, being collectively referred to
herein as the "SLFC Assets").
1.02 Liabilities Transferred. The Original Issuer shall transfer and SLFC
shall accept and assume all liabilities, obligations and undertakings of the
Original Issuer of any nature whatsoever, whether accrued, absolute, fixed or
contingent, known or unknown, due or to become due, unliquidated or otherwise,
except "Excluded Liabilities" consisting of such liabilities, obligations and
undertakings of the Original Issuer as are set forth in this Agreement (such
liabilities, obligations and undertakings, exclusive of the Excluded
Liabilities, being collectively referred to herein as the "SLFC Liabilities").
ARTICLE II
CONTRIBUTION CONSIDERATION FOR SLFC ASSETS
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2.01 Contribution Consideration. The contribution consideration to be
given by SLFC to the Original Issuer for the SLFC Assets shall be the ownership
by the Original Issuer on the Closing Date of _______ ______________ shares
of Class A Common Stock of SLFC (the "Class A Common Stock"), representing all
of the outstanding capital stock of SLFC having an aggregate value of
____________________Dollars ($______________________), as well as the
assumption of the SLFC Liabilities in accordance with Section 1.02 hereof.
ARTICLE III
CONTRIBUTION OF ASSETS BY SLFC TO EDLINC AND ASSUMPTION OF SLFC
LIABILITIES BY EDLINC
3.01 Contribution of Assets. On the terms and subject to the conditions
set forth in this Agreement, SLFC shall, at the Closing, contribute to EdLinc,
and EdLinc
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shall accept and acquire from SLFC, all of SLFC's right, title and interest, as
of the Closing Date, in and to the Trust Estate established under the Indenture
of Trust, dated as of February 1, 1998 (the "Series 1998 Indenture"), between
the Original Issuer and First Bank National Association, as trustee (the
"Trustee")(the "EdLinc Assets").
3.02 Liabilities Transferred. SLFC shall transfer and EdLinc shall accept
and assume all liabilities, obligations or undertakings of SLFC of any nature
whatsoever, whether accrued, absolute, fixed or contingent, known or unknown,
due or to become due, unliquidated or otherwise, under the Series ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
and all other agreements included in the EdLinc Assets (the "EdLinc
Liabilities"); provided that such acceptance and assumption shall not affect
SLFC's liabilities, obligations or undertakings under the Servicing Agreement,
dated as of February 1, 1998 (the "Servicing Agreement"), among the EdLinc, the
Trustee and SLFC, as servicer, each of which will continue to be the liability,
obligation or undertaking solely of SLFC and do not constitute EdLinc
Liabilities.
ARTICLE IV
CONTRIBUTION CONSIDERATION FOR EDLINC ASSETS
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4.01 Contribution Consideration. The contribution consideration to be given
by EdLinc to SLFC for the EdLinc Assets shall be the ownership by SLFC on the
Closing Date of ____ _________ shares of Common Stock of EdLinc (the "EdLinc
Common Stock"), representing all of the outstanding capital stock of EdLinc and
having an aggregate value of ______________________________________ Dollars
($______________________), as well as the assumption of the EdLinc Liabilities
in accordance with Section 3.02 hereof.
ARTICLE V
CLOSING
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5.01 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at _________________ p.m. on the date
of issuance and delivery of the initial series of notes to be issued under the
Series 1998 Indenture (the "Series 1998 Notes"), or at such other place and on
such other date as is mutually agreeable to the Original Issuer, SLFC and
EdLinc. The date on which the Closing occurs is referred to herein as the
"Closing Date," and the Closing shall be deemed effective as of _________ p.m.,
New York time, on the Closing Date.
5.02 General Procedure. At the Closing, each party shall deliver to the
party entitled to receipt thereof the documents required to be delivered
pursuant to Article XII hereof and such other documents, instruments and
materials (or
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complete and accurate copies thereof, where appropriate) as may be reasonably
required in order to effectuate the intent and provisions of this Agreement, and
all such documents, instruments and materials shall be satisfactory in form and
substance to counsel for the receiving party.
(a) The conveyance, transfer, assignment and delivery of the SLFC
Assets to SLFC shall be effected by the Original Issuer's execution and
delivery to SLFC of (i) as to that portion of the SLFC Assets consisting of
the EdLinc Assets, an Assignment and Assumption Agreement, substantially in
the form attached hereto as Exhibit A (the "Assignment and Assumption
Agreement"), among the Original Issuer, SLFC, EdLinc and the Trustee, and
(ii) as to the remainder of the SLFC Assets, a ▇▇▇▇ of sale substantially
in the form attached hereto as Exhibit B (the "SLFC ▇▇▇▇ of Sale"), and
such other instruments of conveyance, transfer, assignment and delivery as
SLFC shall reasonably request to cause the Original Issuer to transfer,
convey, assign and deliver the SLFC Assets to SLFC.
(b) The conveyance, transfer, assignment and delivery of the EdLinc
Assets to EdLinc shall be effected by SLFC's execution and delivery to
EdLinc of the Assignment and Assumption Agreement and such other
instruments of conveyance, transfer, assignment and delivery as EdLinc
shall reasonably request to cause SLFC to transfer, convey, assign and
deliver the EdLinc Assets to EdLinc.
(c) The transfer by the Original Issuer and assumption by SLFC of the
SLFC Liabilities (other than that portion thereof consisting of the EdLinc
Liabilities) shall be evidenced by an assumption agreement substantially in
the form attached hereto as Exhibit C (the "SLFC Liabilities Assumption
Agreement") between the Original Issuer and SLFC.
(d) The transfer by the Original Issuer and assumption by SLFC, and
the transfer by SLFC and the assumption by EdLinc, of the EdLinc
Liabilities shall be evidenced by the Assignment and Assumption Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF ORIGINAL ISSUER
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The Original Issuer hereby represents and warrants to SLFC and EdLinc that,
except as set forth in the Disclosure Schedule delivered by the Original Issuer
to SLFC on the date hereof (the "Disclosure Schedule") (which Disclosure
Schedule sets forth the exceptions to the representations and warranties
contained in this Article VI):
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6.01 Incorporation and Corporate Power. The Original Issuer is a not-for-
profit corporation duly incorporated, validly existing and in good standing
under the laws of the State of South Dakota and has all requisite corporate
power and authority to enter into this Agreement and perform its obligations
hereunder.
6.02 Subsidiaries. The SLFC Assets do not include any stock, partnership
interest, joint venture interest or any other equity or ownership interest
issued by any other corporation, organization or entity.
6.03 Execution, Delivery; Valid and Binding Agreement. The execution,
delivery and performance of this Agreement by the Original Issuer and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all requisite corporate action, and no other proceedings on its
part are necessary to authorize the execution, delivery and performance of this
Agreement. This Agreement has been duly executed and delivered by the Original
Issuer and, assuming that this Agreement is the valid and binding agreement of
SLFC and EdLinc, constitutes the valid and binding obligation of the Original
Issuer, enforceable in accordance with its terms, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights or
by general principles of equity.
6.04 Authority; No Breach. The Original Issuer has the requisite corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution, delivery and performance of this
Agreement by the Original Issuer and the consummation of the transactions
contemplated hereby do not conflict with or result in any breach of any of the
provisions of, or constitute a default under, result in a violation of, result
in the creation of a right of termination or acceleration or any lien, security
interest, charge or encumbrance upon any assets of the Original Issuer, or
require any authorization, consent, approval, exemption or other action by or
notice to any court or other governmental body, under the provisions of the
Articles of Incorporation or Bylaws of the Original Issuer or under any
indenture, mortgage, lease, loan agreement or other agreement or instrument by
which the Original Issuer or the SLFC Assets are bound or affected (other than
consents required under Section 12.01(c) hereof, which the Original Issuer
undertakes to obtain prior to the Closing Date), or any law, statute, rule or
regulation or order, judgment or decree to which the Original Issuer or the SLFC
Assets are subject.
6.05 SLFC Assets "AS IS, WHERE IS". (a) Except as otherwise set forth in
clause (b) below, each of the SLFC Assets being transferred by the Original
Issuer to SLFC pursuant to this Agreement shall be transferred "AS IS" and
"WHERE IS" without any warranty whatsoever.
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(b) Notwithstanding clause (a) above, the Original Issuer hereby represents
and warrants that:
(1) the Original Issuer's Plan has been duly adopted by the Original
Issuer and the Original Issuer's Plan and the Plan Approval are each
in full force and effect;
(2) the Original Issuer's Plan complies with the requirements of the
Higher Education Act of 1965, as amended, and the regulations
promulgated thereunder (the "Higher Education Act");
(3) the Original Issuer has complied with, and is now in compliance with,
each of the provisions of the Original Issuer's Plan; and
(4) no student loan included in the SLFC Assets is ineligible to have
special allowance payments paid with respect thereto because of any
failure of the Original Issuer's Plan to comply with the Higher
Education Act or any failure of the Original Issuer to comply with the
Original Issuer's Plan.
As used in this Agreement: "Original Issuer's Plan" means the Original Issuer's
Plan for Doing Business, dated February 6, 1981, as amended on September 16,
1983, November 18, 1983, April 22, 1985, January 12, 1987, July 26, 1988,
June 6, 1991, June 22, 1993, May 23, 1996 and February 1, 1998, as required by
Section 438 of the Higher Education Act (which term shall include the Original
Issuer's Justifications for the issuance of tax-exempt obligations submitted to
the Department of Education in connection with the Original Issuer's Series D
Student Loan Revenue Bonds and Series E Student Loan Revenue Bonds); and "Plan
Approval" means the approval of the Original Issuer's Plan by the Governor of
the State of South Dakota, dated February _____, 1998 (together with prior such
approvals by the Governor of the State of South Dakota and by the United States
Secretary of Education).
(c) The Original Issuer's obligations under Section 14.02 shall apply to
the inaccuracy of any representation or warranty in clause (b) above.
6.06 Brokerage. No third party shall be entitled to receive any brokerage
commissions, finder's fees, fees for financial advisory services or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement made by or on behalf of the Original
Issuer [other than the fees and expenses of __________________, which fees and
expenses will be paid by the Original Issuer].
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF SLFC
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SLFC hereby represents and warrants to the Original Issuer and EdLinc that:
7.01 Incorporation and Corporate Power. SLFC is a business corporation
duly incorporated, validly existing and in good standing under the laws of the
State of South Dakota, with the requisite corporate power and authority to enter
into this Agreement and perform its obligations hereunder.
7.02 Subsidiaries. The EdLinc Assets do not include any stock, partnership
interest, joint venture interest or any other equity or ownership interest
issued by any other corporation, organization or entity.
7.03 Execution, Delivery; Valid and Binding Agreement. The execution,
delivery and performance of this Agreement by SLFC and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
requisite corporate action, and no other corporate proceedings on its part are
necessary to authorize the execution, delivery or performance of this Agreement.
This Agreement has been duly executed and delivered by SLFC and, assuming that
this Agreement is the valid and binding agreement of the Original Issuer and
EdLinc, constitutes the valid and binding obligation of SLFC, enforceable in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting enforcement of creditors' rights or by general
principles of equity.
7.04 Authority; No Breach. SLFC has the requisite corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement by SLFC and
the consummation by SLFC of the transactions contemplated hereby do not conflict
with or result in any breach of any of the provisions of, constitute a default
under, result in a violation of, result in the creation of a right of
termination or acceleration or any lien, security interest, charge or
encumbrance upon any assets of SLFC, or require any authorization, consent,
approval, exemption or other action by or notice to any court or other
governmental body, under the provisions of the Articles of Incorporation or
Bylaws of SLFC or any indenture, mortgage, lease, loan agreement or other
agreement or instrument by which SLFC is bound or affected, or any law, statute,
rule or regulation or order, judgment or decree to which SLFC or EdLinc Assets
are bound or affected.
7.05 EdLinc Assets "AS IS, WHERE IS". Each of the EdLinc Assets being
transferred by SLFC to EdLinc pursuant to this Agreement shall, except to the
extent
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of the representations, warranties and obligations of the Original Issuer
pursuant to Sections 6.05(b) and 14.02 hereof (which shall run with the EdLinc
Assets), be transferred "AS IS" and "WHERE IS" without any warranty whatsoever.
7.06 Brokerage. No third party shall be entitled to receive any brokerage
commissions, finder's fees, fees for financial advisory services or similar
compensation in connection with the transactions contemplated by this Agreement
based on any arrangement or agreement made by or on behalf of SLFC [other than
the fees and expenses of _________________________, which fees and expenses will
be paid by the Original Issuer.]
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES OF EDLINC
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EdLinc hereby represents and warrants to the Original Issuer and SLFC that:
8.01 Incorporation and Corporate Power. EdLinc is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to enter into
this Agreement and perform its obligations hereunder.
8.02 Subsidiary of EdLinc. EdLinc is a wholly-owned subsidiary of SLFC,
and EdLinc does not own any equity interest in any other corporation,
partnership or other entity.
8.03 Execution, Delivery; Valid and Binding Agreement. The execution,
delivery and performance of this Agreement by EdLinc and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
requisite corporate action, and no other corporate proceedings on its part are
necessary to authorize the execution, delivery and performance of this
Agreement. This Agreement has been duly executed and delivered by EdLinc and,
assuming that this Agreement is the valid and binding agreement of the Original
Issuer and SLFC, constitutes the valid and binding obligation of EdLinc,
enforceable in accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights or
by general principles of equity.
8.04 Authority; No Breach. EdLinc has the requisite corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement by EdLinc
and the consummation of the transactions contemplated hereby do not conflict
with or result in any breach of any of the provisions of, or constitute a
default under,
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result in a violation of, result in the creation of a right of termination or
acceleration or any lien, security interest, charge or encumbrance upon any
assets of EdLinc, or require any authorization, consent, approval, exemption or
other action by or notice to any court or other governmental body, under the
provisions of the Certificate of Incorporation or Bylaws of EdLinc or under any
indenture, mortgage, lease, loan agreement or other agreement or instrument by
which EdLinc is bound or affected, or any law, statute, rule or regulation or
order, judgment or decree to which EdLinc or the EdLinc Assets are subject.
ARTICLE IX
COVENANTS OF ORIGINAL ISSUER
----------------------------
9.01 Conduct of the Business. The Original Issuer agrees from the date
hereof until the Closing Date, unless otherwise consented to by SLFC in writing,
the Original Issuer shall not, directly or indirectly, sell, pledge, dispose of
or encumber any of the SLFC Assets, except in the ordinary course of business.
9.02 Cooperation. The Original Issuer shall take all commercially
reasonable actions to cause the transfer documents and such other documents
which shall cause the SLFC Assets to be transferred to SLFC to be duly executed
by the appropriate officers of the Original Issuer.
9.03 Conditions. The Original Issuer shall take all commercially
reasonable actions necessary to cause the conditions set forth in Section 12.01
to be satisfied and to consummate the transactions contemplated herein as soon
as reasonably possible after the satisfaction thereof.
9.04 On-Going Covenants. The Original Issuer will at all times, whether
before or after the Closing:
(a) comply with restrictions (whether characterized as expectations,
prohibitions or otherwise) contained in the Certificate as to No Arbitrage
delivered in connection with the issuance of the Series 1998 Notes on the
investment of any of its moneys (including the Excluded Assets and any
moneys pledged under indentures (in addition to the Series 1998 Indenture)
relating to its outstanding bonds, notes or other indebtedness) not
transferred pursuant to this Agreement;
(b) take all such action, and refrain from taking such action, as is
necessary to comply with the provisions of Section 150(d)(3) of the Code
(including, without limitation, ensuring that the Original Issuer continues
to be described in Section 501(c)(3) of the Code, ceases to be described in
Section
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150(d)(2)(A) and (B) of the Code and maintains at least eighty percent
(80%) of its board of directors as "independent" within the meaning of
Section 150(d)(3)(C)(iii) of the Code) in effecting the transfers and
assumptions provided for in this Agreement; and
(c) take all such action (including, without limitation, the
preparation and filing of any amendments to the Original Issuer's Plan),
and refrain from taking such action, as is necessary to comply with the
provisions of the Original Issuer's Plan and as is necessary to comply with
the requirements of the Higher Education Act relating to plans for doing
business, so that the receipt by the Trustee of special allowance payments
with respect to student loans included in the SLFC Assets and the Edlinc
Assets will not be adversely affected.
For purposes of complying with the foregoing clause (b), the Original Issuer
agrees that no compensation will be paid to directors of the Original Issuer who
are also directors or officers of SLFC or EdLinc, or both, for any period after
the Closing Date unless the Original Issuer has first obtained a study or report
prepared by an independent firm of accountants or other qualified organization
to the effect that any compensation proposed to be so paid is reasonable for the
services rendered solely to the Original Issuer (excluding, for this purpose,
any services such directors may render to SLFC or EdLinc, for which such
directors will not be entitled to compensation). A copy of any such report or
study shall be delivered to the Original Issuer, SLFC, EdLinc and ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP.
9.05 Nonpetition Covenant. The Original Issuer shall not petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against EdLinc under any federal or
state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of EdLinc or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of EdLinc.
9.06 Valuation of SLFC Assets. The Original Issuer shall, within thirty
days after the Closing, deliver to SLFC and ▇▇▇▇▇▇ & Whitney LLP a valuation by
▇▇▇▇▇ ▇▇▇▇▇▇ Inc. or such other qualified entity as the Original Issuer shall
designate and SLFC shall reasonably find acceptable, of the fair market value of
the SLFC Assets (as reduced by the SLFC Liabilities) as of the Closing. Such
valuation shall be made in accordance with, and shall be used in determining the
redemption price of the Class A Common Stock pursuant to, Section
150(d)(3)(D)(ii)(II) of the Code.
9.07 Transfer of SLFC Stock. So long as any of the Series 1998 Notes, or
any other outstanding bonds, notes or other indebtedness of the Original Issuer,
are outstanding, the Original Issuer shall not transfer any portion or all of
the Class A
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Common Stock of SLFC unless it has received an opinion from nationally-
recognized bond counsel that such transfer will not adversely affect the
exclusion from gross income for federal income tax purposes of interest on such
Series 1998 Notes or other outstanding bonds, notes or other indebtedness of the
Original Issuer.
ARTICLE X
COVENANTS OF SLFC
-----------------
SLFC covenants and agrees with the Original Issuer as follows:
10.01 Conditions. SLFC shall take all commercially reasonable actions
necessary to cause the conditions set forth in Section 12.02 to be satisfied and
to consummate the transactions contemplated herein as soon as reasonably
possible after the satisfaction thereof.
10.02 On-Going Covenants. SLFC will at all times, whether before or after
Closing:
(a) comply with the restrictions (whether characterized as
expectations, prohibitions or otherwise) contained in the Certificate as to
No Arbitrage delivered in connection with the issuance of the Series 1998
Notes on the investment of any of its moneys not transferred to EdLinc as
part of the EdLinc Assets;
(b) take all such action, and refrain from taking such action, as is
necessary to comply with Section 150(d)(3) of the Code (including, without
limitation, ensuring that the Original Issuer maintains at least eighty
percent (80%) of its board of directors as "independent" within the meaning
of Section 150(d)(3)(C)(iii) of the Code) in effecting the transfers and
assumptions provided for in this Agreement; and
(c) take all such action (including, without limitation, performance
of its obligations under Section 23 of the Servicing Agreement), and
refrain from taking such action, as is necessary to comply with the
provisions of the Original Issuer's Plan and as is necessary to comply with
the requirements of the Higher Education Act relating to plans for doing
business, so that the receipt by the Trustee of special allowance payments
with respect to student loans included in the SLFC Assets and the Edlinc
Assets will not be adversely affected.
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For purposes of complying with the foregoing clause (b), SLFC agrees that no
compensation will be paid, directly or indirectly, to any director of the
Original Issuer for any services performed in connection with SLFC or any
services as a member of the board of directors or as an officer of SLFC.
10.03 Nonpetition Covenant. SLFC shall not petition or otherwise
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against EdLinc under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of EdLinc
or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of EdLinc.
10.04 Transfer of EdLinc Stock. So long as any of the Series 1998 Notes,
or any other outstanding bonds, notes or other indebtedness of the Original
Issuer, are outstanding, SLFC shall not transfer any portion or all of the stock
of EdLinc unless it has received an opinion from nationally-recognized bond
counsel that such transfer will not adversely affect the exclusion from gross
income for federal income tax purposes of interest on such Series 1998 Notes or
other outstanding bonds, notes or other indebtedness of the Original Issuer.
ARTICLE XI
COVENANTS OF EDLINC
-------------------
EdLinc covenants and agrees with the Original Issuer as follows:
11.01 Conditions. EdLinc shall take all commercially reasonable actions
necessary to cause the conditions set forth in Section 12.03 to be satisfied and
to consummate the transactions contemplated herein as soon as reasonably
possible after the satisfaction thereof.
11.02 On-Going Covenants. EdLinc will at all times, whether before or
after Closing:
(a) comply with the restrictions (whether characterized as
expectations, prohibitions or otherwise) contained in the Certificate as to
No Arbitrage delivered in connection with the issuance of the Series 1998
Notes;
(b) take all such action, and refrain from taking such action, as is
necessary to comply with Section 150(d)(3) of the Code (including, without
limitation, ensuring that the Original Issuer maintains at least eighty
percent (80%) of its board of directors as "independent" within the meaning
of Section 150(d)(3)(C)(iii) of the Code) in effecting the transfers and
assumptions provided for in this Agreement; and
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(c) take all such action, and refrain from taking such action, as is
necessary to comply with the provisions of the Original Issuer's Plan and
as is necessary to comply with the requirements of the Higher Education Act
relating to plans for doing business, so that the receipt by the Trustee of
special allowance payments with respect to student loans included in the
SLFC Assets and the Edlinc Assets will not be adversely affected.
For purposes of complying with the foregoing clause (b), EdLinc agrees that no
compensation will be paid, directly or indirectly, to any director of the
Original Issuer for any services performed in connection with EdLinc or any
services as a member of the board of directors or as an officer of EdLinc.
ARTICLE XII
CONDITIONS TO CLOSING
---------------------
12.01 Conditions to SLFC's Obligations. The obligation of SLFC to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties set forth in Articles VI and
VIII hereof shall be true and correct in all material respects at and as of
the Closing Date as though then made, except that any such representation
or warranty made as of a specified date (other than the date hereof) shall
only need to have been true on and as of such date;
(b) The Original Issuer and EdLinc shall have performed in all
material respects all of the covenants and agreements required to be
performed and complied with by them under this Agreement prior to the
Closing;
(c) The Original Issuer shall have obtained, or caused to be
obtained, each consent and approval required in order to complete the
transactions contemplated hereby;
(d) EdLinc shall have obtained, or caused to be obtained, each
consent and approval required in order to complete the transactions
contemplated hereby;
(e) There shall not be threatened, instituted or pending any action
or proceeding, before any court or governmental authority or agency,
domestic or foreign, challenging or seeking to make illegal, or to delay or
otherwise directly or indirectly restrain or prohibit, the consummation of
the
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transactions contemplated hereby or seeking to obtain material damages in
connection with such transactions;
(f) On the Closing Date, the Original Issuer shall have delivered to
SLFC the following:
(i) the Assignment and Assumption Agreement, the SLFC ▇▇▇▇ of
Sale and such other instruments of conveyance, transfer, assignment
and delivery as SLFC shall have reasonably requested pursuant to
Section 5.02 hereof, and
(ii) a certificate of an appropriate officer of the Original
Issuer, dated the Closing Date, stating that the conditions set forth
in subsections 12.01(a), (b) and (c) above to be satisfied by the
Original Issuer have been satisfied;
(g) On the Closing Date, EdLinc shall have delivered to SLFC the
following:
(i) the Assignment and Assumption Agreement, and
(ii) a certificate of an appropriate officer of EdLinc, dated
the Closing Date, stating that the conditions set forth in subsections
12.01(a), (b) and (d) to be satisfied by EdLinc have been satisfied.
12.02 Conditions to Original Issuer's Obligations. The obligations of the
Original Issuer to consummate the transactions contemplated by this Agreement
are subject to the satisfaction of the following conditions on or before the
Closing Date:
(a) The representations and warranties set forth in Articles VII and
VIII hereof will be true and correct in all material respects at and as of
the Closing as though then made;
(b) SLFC and EdLinc shall have performed in all material respects all
the covenants and agreements required to be performed by them under this
Agreement prior to the Closing;
(c) SLFC shall have obtained, or caused to be obtained, each
consent and approval required in order to complete the transactions
contemplated hereby;
(d) EdLinc shall have obtained, or caused to be obtained, each consent
and approval required in order to complete the transactions contemplated
hereby;
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(e) There shall not be threatened, instituted or pending any action
or proceeding, before any court or governmental authority or agency,
domestic or foreign, challenging or seeking to make illegal, or to delay or
otherwise directly or indirectly restrain or prohibit, the consummation of
the transactions contemplated hereby or seeking to obtain material damages
in connection with such transactions;
(f) On the Closing Date, SLFC and EdLinc shall have delivered to the
Original Issuer the Assignment and Assumption Agreement;
(g) On the Closing Date, SLFC shall have delivered to the Original
Issuer the following:
(i) the SLFC Liabilities Assumption Agreement, and
(ii) a certificate of an appropriate officer of SLFC dated the
Closing Date, stating that the conditions set forth in subsections
12.02(a), (b) and (c) above to be satisfied by SLFC have been
satisfied; and
(h) On the Closing Date, EdLinc shall have delivered to the Original
Issuer a certificate of an appropriate officer of EdLinc, dated the Closing
Date, stating that the conditions set forth in subsections 12.02(a), (b)
and (d) above to be satisfied by EdLinc have been satisfied.
12.03 Conditions to EdLinc's Obligations. The obligations of EdLinc to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties set forth in Articles VI and
VII hereof shall be true and correct in all material respects at and as of
the Closing Date as though then made, except that any such representation
or warranty made as of a specified date (other than the date hereof) shall
only need to have been true on and as of such date;
(b) The Original Issuer and SLFC shall have performed in all material
respects all of the covenants and agreements required to be performed and
complied with by them under this Agreement prior to the Closing;
(c) The Original Issuer shall have obtained, or caused to be
obtained, each consent and approval required in order to complete the
transactions contemplated hereby;
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(d) SLFC shall have obtained, or caused to be obtained, each consent
and approval required in order to complete the transactions contemplated
hereby;
(e) There shall not be threatened, instituted or pending any action
or proceeding, before any court or governmental authority or agency,
domestic or foreign, challenging or seeking to make illegal, or to delay or
otherwise directly or indirectly restrain or prohibit, the consummation of
the transactions contemplated hereby or seeking to obtain material damages
in connection with such transactions;
(f) On the Closing Date, the Original Issuer and SLFC shall have
delivered to EdLinc the Assignment and Assumption Agreement and such other
instruments of conveyance, transfer, assignment and delivery as EdLinc
shall have reasonably requested pursuant to Section 5.02 hereof;
(g) On the Closing Date, the Original Issuer shall have delivered to
EdLinc a certificate of an appropriate officer of the Original Issuer,
dated the Closing Date, stating that the conditions set forth in subsection
12.03(a), (b) and (c) above to be satisfied by the Original Issuer have
been satisfied; and
(h) On the Closing Date, SLFC shall have delivered to EdLinc a
certificate of an appropriate officer of SLFC, dated the Closing Date,
stating that the conditions set forth in subsection 12.03(a), (b) and (d)
above to be satisfied by SLFC have been satisfied.
ARTICLE XIII
TERMINATION
-----------
13.01 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by the mutual consent of SLFC and the Original Issuer;
(b) by either SLFC or the Original Issuer if (i) there has been a
material misrepresentation, breach of warranty or breach of covenant on the
part of the other (including, for SLFC, on the part of EdLinc) in the
representations, warranties and covenants set forth in this Agreement, or
(ii) the tax consequences expected by either party are threatened to be
changed by any future or pending legislation, Treasury Regulations,
administrative interpretations or Court decisions; or
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(c) by either SLFC or the Original Issuer if the transactions
contemplated hereby have not been consummated by ______________________;
provided that neither SLFC nor the Original Issuer will be entitled to
terminate this Agreement pursuant to this Section 13.01(c) if such party's
(including, for SLFC, EdLinc's) willful breach of this Agreement has
prevented the consummation of the transactions contemplated hereby.
13.02 Effect of Termination. In the event of termination of this Agreement
by either SLFC or the Original Issuer as provided in Section 14.01, this
Agreement shall become void and there shall be no liability on the part of any
of SLFC, EdLinc or the Original Issuer, or their respective stockholders,
officers, or directors, except that Sections 15.01 and 15.09 hereof shall
survive indefinitely, and except with respect to willful breaches of this
Agreement prior to the time of such termination.
ARTICLE XIV
SURVIVAL; INDEMNIFICATION
-------------------------
14.01. Survival. The covenants contained in this Agreement shall survive
the Closing.
14.02. Indemnification of SLFC and EdLinc. The Original Issuer agrees to
indemnify SLFC and EdLinc with respect to, and hold SLFC and EdLinc harmless
from, any loss, liability or expense (including, but not limited to, reasonable
legal fees) which SLFC or EdLinc may directly or indirectly incur or suffer by
reason of, or which results, arises out of or is based upon (a) the inaccuracy
of any representation or warranty made by the Original Issuer in Section
6.05(b), or (b) the failure of the Original Issuer to comply with any covenants
or other commitments made by the Original Issuer in this Agreement.
14.03. Indemnification of Original Issuer. SLFC agrees to indemnify the
Original Issuer with respect to, and hold the Original Issuer harmless from, any
loss, liability or expense (including, but not limited to, reasonable legal
fees) which the Original Issuer may directly or indirectly incur or suffer by
reason of, or which results, arises out of or is based upon (a) the inaccuracy
of any representation or warranty made by SLFC or EdLinc in this Agreement, (b)
the failure of SLFC to comply with any covenants made by SLFC in this Agreement,
or (c) the failure of EdLinc to comply with any covenants made by EdLinc in this
Agreement.
14.04. Legal Proceedings. In the event SLFC, EdLinc or the Original Issuer
becomes involved in any legal, governmental or administrative proceeding which
may result in indemnification claims hereunder, such party shall promptly notify
the other party against whom indemnity may be sought (the "Indemnifying Party")
in writing and in full detail of the filing, and of the nature of such
proceeding. The
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Indemnifying Party may, at its option and expense, defend any such proceeding if
the proceeding could give rise to an indemnification obligation hereunder. If
the Indemnifying Party elects to defend any proceeding, it shall have full
control over the conduct of such proceeding, although each party being
indemnified shall have the right to retain legal counsel at its own expense and
shall have the right to approve any settlement of any dispute giving rise to
such proceeding, provided that such approval may not be withheld unreasonably by
the party being indemnified. The party being indemnified shall reasonably
cooperate with the Indemnifying Party in such proceeding.
ARTICLE XV
MISCELLANEOUS
-------------
15.01 Expenses. Except as otherwise expressly provided for herein, the
Original Issuer will pay all of the expenses incurred by the parties hereto
(including attorneys' and accountants' fees) in connection with the negotiation
of this Agreement, the performance of their respective obligations hereunder and
the consummation of the transactions contemplated by this Agreement (whether
consummated or not).
15.02 Further Assurances. The Original Issuer, SLFC and EdLinc each agrees
that, on and after the Closing Date, it shall take all appropriate action (with
any out-of-pocket expenses to be paid by the Original Issuer) and execute any
documents, instruments or conveyances of any kind which may be reasonably
necessary or advisable to carry out the transfers of assets and assumptions of
liabilities provided for herein.
15.03 Amendment and Waiver. This Agreement may not be amended or waived
except in a writing executed by the party against which such amendment or waiver
is sought to be enforced. No such amendment or waiver shall be effective unless
all parties to this Agreement have received an opinion from nationally-
recognized bond counsel that such amendment or waiver will not adversely affect
the exclusion from gross income for federal income tax purposes of interest on
any of the Series 1998 Notes or any other outstanding bonds, notes or other
indebtedness of the Original Issuer. No course of dealing between or among any
persons having any interest in this Agreement will be deemed effective to modify
or amend any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.
15.04 Notices. All notices, demands and other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or three
business days after being mailed by first class U.S. mail, return receipt
requested, or when receipt is acknowledged, if sent by facsimile, telecopy or
other electronic
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transmission device. Notices, demands and communications to the parties will,
unless another address is specified in writing, be sent to the address indicated
below:
Notices to EdLinc: Education Loans Incorporated
----------------- ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
--------------
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Notices to SLFC: Student Loan Finance Corporation
--------------- ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
--------------
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Notices to Original Issuer: Education Loans Incorporated
-------------------------- ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
Telecopy: (605) ___________________
with copies to:
--------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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▇▇▇▇▇▇ & Whitney LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Copies of any such notices will also be sent to ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. at the
following address, but failure to do so shall not affect the effectiveness of
any notice otherwise given in accordance with the foregoing provisions of this
Section:
Notices to ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.: ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
----------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Student Loan Finance Group
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
15.05 Assignment. This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, except that neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by any party
hereto without the prior written consent of the other parties hereto.
15.06 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
15.07 Complete Agreement. This Agreement and the Schedules and Exhibits
hereto, the Disclosure Schedule and the other documents referred to herein
contain the complete agreement between the parties and supersede any prior
understandings, agreements or representations by or between the parties, written
or oral, which may have related to the subject matter hereof in any way.
15.08 Counterparts. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
instrument.
15.09 Governing Law. The internal law, without regard to conflicts of laws
principles, of the State of South Dakota will govern all questions concerning
the
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construction, validity and interpretation of this Agreement and
the performance of the obligations imposed by this Agreement.
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the day and year first above written.
EDUCATION LOANS INCORPORATED,
a South Dakota not-for-profit corporation
By ___________________________________
Its ______________________________
STUDENT LOAN FINANCE
CORPORATION
By____________________________________
Its ______________________________
EDUCATION LOANS INCORPORATED,
a Delaware corporation
By_____________________________________
Its _______________________________
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SCHEDULE 1.01
[List of Cash, Investments and other Excluded Assets
Retained by Original Issuer]
Cash
Investments
Other Assets
-22-
EXHIBIT A
[Assignment and Assumption Agreement]
A-1
EXHIBIT B
[SLFC ▇▇▇▇ of Sale]
B-1
EXHIBIT C
[SLFC Liabilities Assumption Agreement]
C-1