SLM » Topics » SETTLEMENT AGREEMENT AND RELEASE

These excerpts taken from the SLM 10-Q filed May 9, 2005.

SETTLEMENT AGREEMENT AND RELEASE

 

THIS Settlement Agreement and Release (“Settlement Agreement”), dated as of July 30, 2004, by and among (i) Education One Group, Inc. (“EOG”), (ii) Sallie Mae, Inc., (iii) Secondary Market Services, LLC (“SMS”), (iv) SLM Education Credit Finance Corporation (“ECFC”) (collectively, “Sallie Mae” or the “Sallie Mae Parties”), (v) Bank One, National Association (“Bank One”), (vi) solely with respect to the provisions of Section 5, the final sentence of Section 6.A, the final sentence of Section 7.G, and Section 11 hereof, JPMorgan Chase & Co. (“JPMorgan”), (vii) Banc One Education Finance Corp, (viii) solely with respect to the provisions of Section 5 and Section 11, the Student Loan Marketing Association, and (ix) solely with respect to the provisions of Section 5 and Section 11, SLM Corporation.

 

WHEREAS, Bank One and EOG entered into that certain Marketing and Liquidity Services Agreement effective as of December 31, 1999 (as amended, the “Marketing Agreement”) and that certain Asset Purchase Agreement effective as of December 31, 1999 (the “Asset Purchase Agreement”);

 

WHEREAS, JPMorgan and EOG are parties to that certain License Agreement effective as of December 31, 1999 (the “License Agreement”) and that certain Employee Lease Agreement effective as of December 31, 1999 (the “Employee Lease Agreement”);

 

WHEREAS, the Marketing Agreement, the Asset Purchase Agreement, the License Agreement, and the Employee Lease Agreement are sometimes referred to herein as the “Material Agreements”;

 

WHEREAS, ECFC, Sallie Mae, Inc., and Bank One are parties to that certain Amended and Restated ExportSS® Agreement dated as of January 1, 2000 (as amended, the “ExportSS Agreement”);

 

WHEREAS, Bank One and J.P. Morgan Trust Company, N.A. (“Trustee”), acting as trustee and agent for SMS, are parties to a Loan Purchase Agreement dated as of October 1, 1999 (as amended, the “USA LPA”);

 

WHEREAS, Bank One and Trustee are parties to a Commitment for FFELP Loan Sale Transactions dated as of October 1, 1999 (as amended, the “Commitment”);

 

WHEREAS, Bank One provided notice on July 1, 2004 to EOG of Bank One’s election to terminate the Material Agreements pursuant to Section 3.4(I)(ii)(d) of the Marketing Agreement;

 

WHEREAS, Bank One remitted the maximum termination fee provided by Section 3.4(I)(ii)(d) of the Marketing Agreement, $14,000,000, to EOG by wire transfer on July 9, 2004, with reservation of the right to recover such portion thereof that exceeded the termination fee based upon the actual Number of Applications for the Contract Year Immediately Prior to Termination;

 

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WHEREAS, EOG has placed the $14,000,000 payment into an escrow account;

 

WHEREAS, EOG has asserted that the termination is ineffective and that the Marketing Agreement remains in full force and effect and Bank One maintains that the termination is effective and that the Marketing Agreement is terminated;

 

WHEREAS, on July 1, 2004, EOG invoked the dispute resolution process specified in Section 12.1 of the Marketing Agreement, and the Parties have attempted to resolve their disputes;

 

WHEREAS, having engaged in the dispute resolution process, the Parties wish to resolve all disputes concerning the termination of the Material Agreements, and without any admission of liability by EOG or Bank One.

 

NOW THEREFORE, in consideration of the above premises, and the mutual promises and covenants contained herein, the receipt and sufficiency of which is hereby acknowledged by execution of this Settlement Agreement, the Parties agree as follows:

 

SETTLEMENT AGREEMENT AND RELEASE

 

THIS SECOND AMENDMENT TO SETTLEMENT AGREEMENT AND RELEASE (“Second Amendment”) is made as of March 21, 2005 (the “Effective Date”), by and among Education One Group, Inc. (“EOG”), Sallie Mae, Inc. , in its own capacity and as successor to Student Loan Marketing Association with respect to membership interests in the Marketing LLC and the Finance LLC (as hereinafter defined)  and as successor to Sallie Mae Servicing Corporation (“SLMC”), Sallie Mae Servicing, L.P., and USA Group Loan Services, Inc.   (“SMI”), Secondary Market Services, LLC (“SMS”), SLM Education Credit Finance Corporation (“ECFC”), and SLM Corporation in its own capacity and as successor to Student Loan Marketing Association (“SLM”) , (collectively, “Sallie Mae” or the “Sallie Mae Parties”); and  JPMorgan Chase & Co. (“JPMorgan”), JPMorgan Chase Bank, N.A. in its own capacity (“Chase Bank”) and in its capacity as trustee with respect to the Chase/Sallie Mae Education Loan Trust (the “Trustee”), Chase Bank USA, National Association (“Chase Bank USA”); Bank One Education Finance Corporation (“Bank One”), TCB Education First Marketing Corporation (“TCB”), and Chase Education Holdings, Inc. (“Chase Education Holdings”)  (collectively, “Chase” or the “Chase Parties”); and Chase Education First LLC (“the Marketing LLC”), and Education First Finance LLC (the “Finance LLC”) (collectively, the “Joint Venture”).

 

WHEREAS, EOG, SMI, SMS, ECFC, Bank One, National Association (“Bank One Bank”), JPMorgan, and SLM, along with the Student Loan Marketing Association, were parties to that certain Settlement Agreement and Release dated as of July 30, 2004 (as amended by the  First Amendment thereto, the “Settlement Agreement”);

 

WHEREAS, Bank One Bank has merged with Chase Bank, and Chase Bank is the successor to Bank One Bank;

 

WHEREAS, as of December 31, 2004, Student Loan Marketing Association was dissolved, with its non-debt related liabilities having been assumed by SLM and its assets having been distributed to subsidiaries of SLM listed above in the preamble;

 

WHEREAS, the Settlement Agreement was amended by that certain First Amendment to Settlement Agreement and Release dated as of March 21, 2005 (the “First Amendment”);

 

WHEREAS, TCB and SMI are the members in that certain Delaware Limited Liability Company known as “Chase Education First LLC”, which was formed by that certain Limited Liability Company Agreement of Education First Marketing dated September 9, 1996 (the “Marketing LLC Agreement”);

 

WHEREAS, Chase Education Holdings and SMI are the members in that certain Delaware Limited Liability Company known as “Education First Finance LLC”, which was

 

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formed by that certain Limited Liability Company Agreement of Education First Finance dated September 9, 1996 (the “Finance LLC Agreement”) (The Marketing LLC and the Finance LLC are hereafter referred to together as the “Joint Venture,” and the Marketing LLC Agreement and the Finance LLC Agreement are hereafter referred to together as the “LLC Agreements.”);

 

WHEREAS, several of the Chase Parties and several of the Sallie Mae Parties are parties as signatories or as successors to certain agreements, listed on Schedule I hereto (the “Joint Venture Related Agreements”);

 

WHEREAS, TCB and Chase Education Holdings have filed suit against SMI and (solely as nominal defendants) the Joint Venture in the New Castle County Court of Chancery of the State of Delaware seeking, inter alia, the dissolution of the Joint Venture (the “Dissolution Action”);

 

WHEREAS, ECFC, SMI, and Bank One are parties to that certain Amended and Restated ExportSS® Agreement dated as of January 1, 2000 (as amended by various amendments, including, without limitation, the Settlement Agreement, the “ExportSS Agreement”);

 

WHEREAS, the parties have reached an amicable settlement relating to (i) the dismissal of the Dissolution Action, (ii) the Dissolution of the Joint Venture, (iii) the termination of the Joint Venture Related Agreements, (iv) the extension of the Commitment Period under the ExportSS Agreement, and (v) a restructuring of the business relationship among the parties, and have agreed to enter into this Second Amendment to memorialize the terms of such settlement.

 

NOW, THEREFORE, in consideration of the above premises, and the mutual promises and covenants contained herein, the receipt and sufficiency of which is hereby acknowledged, by execution of this Second Amendment, the Parties agree as follows:

 

EXCERPTS ON THIS PAGE:

10-Q (2 sections)
May 9, 2005

RELATED TOPICS for SLM:

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