AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 29, 2001
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
USA EDUCATION, INC.
(formerly SLM Holding Corporation)
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 52-2013874
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1160 SALLIE MAE DRIVE
RESTON, VIRGINIA 20193
(Address of Principal Executive Offices) (Zip Code)
SALLIE MAE DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES
(Full Title of the Plan)
MARIANNE M. KELER
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
USA EDUCATION, INC.
11600 SALLIE MAE DRIVE
RESTON, VIRGINIA 20193
(Name and Address of Agent for Service)
(703) 810-3000
(Telephone Number, Including Area Code, of Agent for Service)
Copy to:
THOMAS D. WASHBURNE, JR., ESQ.
MICHAEL W. CONRON, ESQ.
VENABLE, BAETJER AND HOWARD, LLP
SUITE 1800, 2 HOPKINS PLAZA
BALTIMORE, MD 21201-2978
(410) 244-7400
CALCULATION OF REGISTRATION FEE
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Amount to be Proposed maximum Proposed maximum Amount of
Title of Securities to be registered registered offering price per share aggregate offering price Registration fee
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USA Education, Inc. Deferred $50,000,000 100% $50,000,000 $10,600(2)
Compensation Plan Obligations (1)
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USA Education, Inc., Common Stock par 388,756 shares $81.90 (4) $31,839,116 $-0- (5)
value $0.20 per share (3)
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USA Education, Inc., Common Stock par 221,745 shares $81.90 (4) $18,160,916.50 $4,541
value $0.20 per share (6)
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(1) The Sallie Mae Deferred Compensation Plan Obligations ("Obligations")
are unsecured obligations of USA Education, Inc. to pay deferred
compensation in the future in accordance with the terms of the Sallie
Mae Deferred Compensation Plan for Key Employees.
(2) Registration Statement No. 333-80921 has been terminated with respect
to $6,839,157 of Obligations. A registration fee of $1900 was
previously paid with respect to such Obligations and, pursuant to Rule
457(p), will partially offset the registration fee that would otherwise
be payable of 12,500 for this Form S-8.
(3) Represents shares issuable to certain Plan participants that elect to
have Obligations track USA Education, Inc. Common Stock for all
distributions upon or following termination of employment with USA
Education, Inc.
(4) Pursuant to Rule 457(c), the price of the Common Stock is based on the
average of the high and low prices for USA Education, Inc. Common Stock
of $81.90 as reported by the New York Stock Exchange on August 23,
2001.
(5) No filing fee is payable pursuant to Rule 457(h)(2).
(6) Represents shares issuable to certain Plan participants that elect to
have their Obligations, that were previously registered on Form S-8
(Registration Statement No. 333-80921), track USA Education, Inc.
Common Stock for all distributions upon or following termination of
employment with USA Education, Inc.
INTRODUCTION
This Registration Statement on Form S-8 is filed by USA
Education, Inc. (formerly SLM Holding Corporation), a Delaware corporation (the
"Company" or the "Registrant"), relating to the issuance in accordance with the
terms of the Sallie Mae Deferred Compensation Plan for Key Employees (the
"Plan") of up to:
- - $50,000,000 of unsecured obligations of the Company to pay deferred
compensation in the future (the "Obligations");
- - shares of USA Education, Inc. Common Stock, par value $0.20 per
share,(the "Common Stock") issuable to certain Plan participants that
elect to have Obligations that are being registered on this Form S-8
track shares of Common Stock in connection with all distributions under
the Plan upon or following termination of employment with the Company.
- - shares of Common Stock issuable to Plan participants that elect to have
their Obligations, that were previously registered on Form S-8
(Registration Statement No. 333-80921), track shares of Common Stock in
connection with all distributions under the Plan upon or following
termination of employment with the Company.
PART I
INFORMATION REQUIRED IN SECTION 10(a) PROSPECTUS
Item 1. PLAN INFORMATION
Omitted from this Registration Statement in accordance with
the Note to Part I of Form S-8.
Item 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
Omitted from this Registration Statement in accordance with
the Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents, which the Company previously filed
with the Securities and Exchange Commission (the "Commission"), are incorporated
in this Registration Statement by reference and made a part of this Registration
Statement:
(a) The Company's latest Annual Report on Form 10-K for
the fiscal year ended December 31, 2000; and
(b) All other reports filed pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") since the end of the fiscal year
covered by the Annual report referred to in (a)
above; and
(c) the description of the Common Stock set forth under
the caption "Description of Registrant's Securities
to be Registered" in the Registrant's Registration
Statement on Form 8-A dated August 7, 1997, together
with any amendment or report filed with the
Commission for the purpose of updating such
description.
All reports and other documents filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Registration Statement and prior to the filing of a post-effective
amendment hereto, which indicates that all securities offered hereunder have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such documents.
For purposes of this Registration Statement, any document or
any statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded to the extent
that a subsequently filed document or a statement contained herein or in any
other subsequently filed document which also is or is deemed to be incorporated
herein by reference modifies or supersedes such document or such statement in
such document. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. DESCRIPTION OF SECURITIES
A. Obligations
$50,000,000 of Obligations are being registered under this
Registration Statement to be offered to certain eligible employees of the
Company pursuant to Plan. The Obligations are general unsecured obligations of
the Company to pay deferred compensation in the future in accordance with the
terms of Plan from the general assets of the Company, and rank equally with
other unsecured and unsubordinated indebtednesss of the Company from time to
time outstanding.
Under the Plan, the Company will provide eligible employees
the opportunity to enter into agreements for the deferral of a specified
percentage of their compensation. The Sallie Mae Deferred Compensation Plan
Committee of the Board of Directors (the "Committee") may select from management
and other highly compensated employees who may participate in the Plan (each a
"Participant"). The Committee will administer the Plan and will establish rules
and regulations governing the Plan and Participants.
A Participant's interest in a deferred compensation account,
and thus the Participant's right to the Obligations, generally cannot be
transferred, alienated or assigned, nor are they subject to attachment,
execution, garnishment or other such equitable legal process, except in the case
of certain qualified domestic relations orders.
A Participant is permitted to defer up to 85% of his or her
base salary, 100% of his or her bonus earned under the Company's Management
Incentive Plan (after required payroll withholdings and deductions) and cash
severance payments.
A Participant may make two elections during each year. One
election will relate to base salary (which may, at the Participant's elections,
include other income that may be treated as ordinary income, including cash
severance payment). Each Participant will have the opportunity to make this
election annually on a date determined by the Committee to defer salary to be
earned in the following year. The second election will relate to bonus amounts.
The election with respect to a bonus earned in one year and paid in the next
succeeding year must be filed by June 30 of the year in which such bonus is
earned. The third election will relate to any cash severance payments you might
receive. If you first become a Participant after the start of a year, you might
make an election no later than 30 days after you become a Participant to defer a
cash severance payment that might be paid to you after the date of your
election.
Deferrals will be credited to a hypothetical account
established for each Participant. Earnings and losses will be based upon the
hypothetical investment options elected by the Participant. There are currently
32 investment options, including an option to invest in Common Stock.
Participants may direct the manner in which their deferrals are deemed invested
from among these investment options, and may change their investment directions
from time to time in accordance with procedures established by the Committee. A
Participant may make a separate investment election with respect to his or her
salary deferrals and bonus.
An election by an Insider (a participant in the Plan who, as
of February 1, 2001, is considered by the Company to be subject to Section 16(b)
of the Securities Exchange Act of 1934, as amended) to have his hypothetical
account deemed to be invested in Common Stock may not be changed. Further, any
portion of an Insider's hypothetical account deemed to be invested in Common
Stock shall be distributed in a lump sum, in the form of Common Stock within 60
days of separation from service to the Company.
Deferrals of compensation are credited, at the election of the
Participant, to two different accounts: (a) the Retirement Distribution Account
and (b) the In-Service Distribution Account. Each year, the Participant may make
an election with respect to how much of his or her deferrals will be credited to
each account. Once amounts are deferred into a particular account, those amounts
and the earnings thereon, cannot be moved to the other account. The election
with respect to the allocation of deferrals between the two accounts cannot be
changed during the year. Account balances are not segregated from the Company's
general assets. The right of each Participant to receive payments is that of a
general, unsecured creditor of the Company.
B. Common Stock
Not required.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article VIII of the Registrant's By-Laws provides for
indemnification of the officers and directors of USA Education, Inc. to the
fullest extent permitted by applicable law. Section 145 of the Delaware General
Corporation Law provides, in relevant part, that a corporation organized under
the laws of Delaware shall have the power, and in certain cases the obligation,
to indemnify any person who was or is a party or is threatened to be made a
party to any suit or proceeding because such person is or was a director,
officer, employee or agent of the corporation or is or was serving, at the
request of the corporation, as a director, officer, employee or agent of another
corporation, against all costs actually and reasonably incurred by him in
connection with such suit or proceeding if he or she acted in good faith and in
a manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal proceeding, he or
she had no reason to believe his or her conduct was unlawful. Similar indemnity
is permitted to be provided to such persons in connection with an action or suit
by or in right of the corporation, provided such person acted in good faith and
in a manner he or she believed to be in or not opposed to the best interests of
the corporation, and provided further (unless a court of competent jurisdiction
otherwise determines) that such person shall not have been adjudged liable to
the corporation.
The directors and officers of the Registrant and its
subsidiaries are covered by a policy of insurance under which they will be
insured, within the limits and subject to certain limitations, against certain
expenses in connection with the defense of actions, suits or proceedings, and
certain liabilities that might be imposed as a result of such actions, suits or
proceedings in which they are parties by reason of being or having been
directors or officers.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
Item 8. EXHIBITS.
4.1 Sallie Mae Deferred Compensation Plan for Key Employees, as amended.
5.1 Opinion of Marianne M. Keler, Esq.
23.1 Consent of Marianne M. Keler, Esq. (contained in Exhibit 5.1).
23.2 Consent of Independent Public Accountants.
24 Power of Attorney (contained on signature page hereto).
Item 9. UNDERTAKINGS.
(1) The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
(b) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(2) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial BONA FIDE offering thereof.
(3) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Corporation certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Reston, Commonwealth of Virginia, on this 27th
day of August 2001.
USA EDUCATION, INC.
By: /s/ ALBERT L. LORD
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Albert L. Lord
Each person whose signature appears below constitutes and appoints
Marianne M. Keler and Mary F. Eure, and each of them, his or her true and lawful
attorneys-in-fact and agents, each with full power of substitution and
resubstitution, severally, for him or her and in his or her name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
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/s/ ALBERT L. LORD Chief Executive Officer August 27, 2001
- --------------------------------- (Principal Executive Officer)
Albert L. Lord
/s/ JOHN F. REMONDI Chief Financial Officer August 27, 2001
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John F. Remondi Accounting Officer)
/s/ EDWARD A. FOX Chairman of the Board of Directors August 27, 2001
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Edward A. Fox
/s/ CHARLES L. DALEY Director August 27, 2001
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Charles L. Daley
/s/ WILLIAM M. DIEFENDERFER, III Director August 27, 2001
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William M. Diefenderfer, III
/s/ THOMAS J. FITZPATRICK Director August 27, 2001
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Thomas J. Fitzpatrick
/s/ DIANE SUITT GILLELAND Director August 27, 2001
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Diane Suitt Gilleland
/s/ EARL A. GOODE Director August 27, 2001
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Earl A. Goode
/s/ ANN TORRE GRANT Director August 27, 2001
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Ann Torre Grant
/s/ RONALD F. HUNT Director August 27, 2001
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Ronald F. Hunt
/s/ BENJAMIN J. LAMBERT, III Director August 27, 2001
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Benjamin J. Lambert, III
/s/ JAMES C. LITZENICH Director August 27, 2001
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James C. Litzenich
/s/ BARRY A. MUNITZ Director August 27, 2001
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Barry A. Munitz
/s/ A. ALEXANDER PORTER, JR Director August 27, 2001
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A. Alexander Porter, Jr.
/s/ WOLFGANG SCHOELLKOPF Director August 27, 2001
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Wolfgang Schoellkopf
/s/ STEVEN L. SHAPIRO Director August 27, 2001
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Steven L. Shapiro
/s/ BARRY L. WILLIAMS Director August 27, 2001
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Barry L. Williams
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGE
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4.1 Sallie Mae Deferred Compensation Plan for Key Employees, as amended.
5.1 Opinion of Marianne M. Keler, Esq.
23.1 Consent of Marianne M. Keler, Esq. (contained in Exhibit 5.1)
23.2 Consent of Independent Public Accounts
24 Power of Attorney (contained on signature page hereto).
EXHIBIT 4.1
USA EDUCATION, INC.
DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES
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ARTICLE 1. PURPOSE
SECTION 1.1. In recognition of the services provided by certain key
employees and to make additional retirement benefits available to such
employees, on a tax-favored basis, USA Education, Inc. hereby adopts a
deferred compensation plan (the "Plan"), effective December 8. 1998.
ARTICLE 2. DEFINITIONS
SECTION 2.1 The following words and phrases shall have the following
meanings unless a different meaning is plainly required by the context:
AFFILIATE. "Affiliate" means any firm, partnership, or corporation that
directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with the Company, provided
such Affiliate is designated as such by the Committee. "Affiliate" also
includes any other organization similarly related to the Company that
is designated as such by the Committee.
BENEFICIARY. "Beneficiary" means the person or persons designated as
such in accordance with Section 12.3.
BOARD. "Board" means the Board of Directors of USA Education, Inc.
BONUS. "Bonus" means any bonus earned pursuant to the Management
Incentive Plan and any other bonus designated by the Committee as
eligible to be deferred pursuant hereto.
BONUS DEFERRAL. "Bonus Deferral" means that portion of Bonus as to
which a Participant has made an election to defer receipt of pursuant
to the terms of this Plan.
CODE. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
COMMITTEE. "Committee" means the Sallie Mae Deferred Compensation Plan
Committee, as appointed by the Board to administer the Plan.
COMPANY. "Company" means USA Education, Inc. and any Affiliate, unless
the Affiliate has made an affirmative election not to adopt the Plan. A
Company may revoke its participation in the Plan at any time, but until
such revocation, all the provisions of the Plan and amendments thereto
shall apply to the Eligible Employees of the Company. In the event a
Company revokes its participation in the Plan, the Plan shall be deemed
terminated only with respect to such Company.
DISABLED. "Disabled" means a mental or physical condition which
qualifies a Participant for a disability retirement benefit under the
Retirement Plan.
DISTRIBUTION OPTION. "Distribution Option" means one of the two
distribution options which are available under the Plan, consisting of
the Retirement Distribution Option and the In-Service Distribution
Option, both described in Section 7.
DISTRIBUTION OPTION ACCOUNT. "Distribution Option Account" or "Account"
means the account established on behalf of a Participant, on the books
of the Company, pursuant to Section 5.1, which shall be comprised of a
Retirement Distribution Account and/or one or more In-Service
Distribution Accounts.
DISTRIBUTION OPTION PERIOD. "Distribution Option Period" means, with
respect to the In-Service Distribution Account only, a period of five
Plan Years for which an Eligible Employee elects, in the Enrollment
Agreement for the first such Plan Year, the time and manner of payment
of amounts
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Page 1
USA EDUCATION, INC.
DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES
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credited to the Eligible Employee's In-Service Distribution Option
Account for all Plan Years in the Distribution Option Period.
EARNINGS CREDITING OPTIONS. "Earnings Crediting Options" means the
deemed investment options selected by the Participant from time to time
pursuant to which deemed earnings are credited to the Participant's
Distribution Option Account.
EFFECTIVE DATE. "Effective Date" means the effective date of the Plan
which is December 8, 1998.
ELIGIBLE EMPLOYEE. "Eligible Employee" means an Employee who is a
member of the group of selected management and/or highly compensated
Employees of the Company and who is designated by the Committee as
eligible to participate in the Plan.
EMPLOYEE. "Employee" means any individual employed by the Company, in
accordance with the personnel policies and practices of the Company,
including citizens of the United States employed outside of their home
country and resident aliens employed in the United States; provided,
however, that to qualify as an "Employee" for purposes of the Plan, the
individual must be a member of a group of "key management or other
highly compensated employees" within the meaning of Sections 201, 301,
and 401 of the Employee Retirement Income Security Act of 1974, as
amended.
END TERMINATION DATE. "End Termination Date" means the date of
termination of a Participant's Service with the Company and its
Affiliates and shall be determined without reference to any
compensation continuation arrangement or severance benefit arrangement
that may be applicable.
ENROLLMENT AGREEMENT. "Enrollment Agreement" means the authorization
form, in form and substance, satisfactory to the Committee, which an
Eligible Employee files with the Committee in order to participate in
the Plan.
IN-SERVICE DISTRIBUTION ACCOUNT. "In-Service Distribution Account"
means the account maintained on behalf of a Participant for each
Distribution Option Period to which Salary and/or Bonus Deferrals are
credited, pursuant to the In-Service Distribution Option.
IN-SERVICE DISTRIBUTION OPTION. "In-Service Distribution Option" means
the Distribution Option, pursuant to which benefits are payable in
accordance with Section 7.2.
MANAGEMENT INCENTIVE PLAN. "Management Incentive Plan" means the plan
adopted by the Company, including any amendments thereto and any plan
adopted in substitution or replacement thereof, pursuant to which
bonuses will be determined for certain management employees.
PARTICIPANT. "Participant" means an Eligible Employee who has filed a
complete Enrollment Agreement with the Committee or its designee, in
accordance with the provisions of Section 4, and who is making Salary
and/or Bonus Deferrals into the Plan. In the event that the Participant
becomes incompetent, the term shall mean his personal representative or
guardian, who shall have the rights of a Participant, except the right
to change the form and timing of the commencement of benefits elected
by the Participant on the Enrollment Agreement. In the event of the
death of a Participant, the term shall mean his Beneficiary, who shall
have the rights of a Participant, except the right to change the form
and timing of the commencement of benefits elected by the Participant
on the Enrollment Agreement. An individual shall remain a Participant
until that individual has received full distribution of any amount
credited to the Participant's Account.
PLAN. "Plan" means this plan, called the Sallie Mae Deferred
Compensation Plan for Key Employees, as amended from time to time.
PLAN YEAR. "Plan Year" means the 12-month period beginning on each
January 1 and ending on the following December 31.
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Page 2
USA EDUCATION, INC.
DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES
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RETIREMENT. "Retirement" means the termination of the Participant's
Service with the Company (for reasons other than death) at or after
attaining Normal Retirement Age, as that term is defined in the
Retirement Plan.
RETIREMENT DISTRIBUTION ACCOUNT. "Retirement Distribution Account"
means the account maintained on behalf of a Participant to which Salary
and/or Bonus Deferrals and Supplemental Company Contributions are
credited, pursuant to the Retirement Distribution Option.
RETIREMENT DISTRIBUTION OPTION. "Retirement Distribution Option" means
the Distribution Option, pursuant to which benefits are payable in
accordance with Section 7.1.
RETIREMENT PLAN. "Retirement Plan" means the Sallie Mae pension plan,
as it may be amended from time to time.
SALARY. "Salary" means the total amount of cash remuneration paid by
the Company to an Eligible Employee for any calendar year of employment
as base salary and/or severance payments, including the Participant's
contributions of Salary under this Plan, any elective deferrals, as
defined in section 402(g) of the Code, and any compensation contributed
on behalf of an Eligible Employee to any cafeteria plan, as defined in
section 125 of the Code, maintained by the Company or an Affiliate, but
not taking into account any Company contributions to a defined benefit
plan or supplemental defined benefit plan, any fringe benefits, moving
and relocation expenses and other forms of welfare benefits.
SALARY DEFERRAL. "Salary Deferral" means that portion of Salary as to
which a Participant has made an annual election to defer receipt of,
pursuant to the terms of this Plan.
SALLIE MAE. "Sallie Mae" means USA Education, Inc.
SERVICE. "Service" means the period of time during which an employment
relationship exists between an Employee and the Company, including any
period during which the Employee is on an approved leave of absence,
whether paid or unpaid. "Service" also includes employment with an
Affiliate if an Employee transfers directly between the Company and the
Affiliate.
SUPPLEMENTAL COMPANY CONTRIBUTIONS. "Supplemental Company
Contributions" means those contributions made by the Company and
credited to the Retirement Distribution Account of certain
Participants, pursuant to Section 4.4.
VALUATION DATE. "Valuation Date" means the last day of any Plan Year
and any other date selected by the Committee.
ARTICLE 3. ADMINISTRATION OF THE PLAN AND DISCRETION
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SECTION 3.1. The Committee shall have full power and authority to
interpret the Plan, to prescribe, amend and rescind any rules, forms
and procedures as it deems necessary or appropriate for the proper
administration of the Plan, and to make any other determinations and to
take any other actions as it deems necessary or advisable in carrying
out its duties under the Plan. All action taken by the Committee
arising out of, or in connection with, the administration of the Plan
or any rules adopted thereunder, shall, in each case lie within its
sole discretion, and shall be final, conclusive and binding upon any
Company, the Board, all Employees, all Beneficiaries of Employees and
all persons and entities having an interest therein. Notwithstanding
any provision in this Plan to the contrary, the Committee shall have no
authority to take any action or make any decision which impacts solely
on the Plan benefits of the members of the Committee. In addition, no
member of the Committee shall have authority to take action or make any
decision which impacts solely on the Plan benefits of the member of the
Committee.
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Page 3
USA EDUCATION, INC.
DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES
- --------------------------------------------------------------------------------
SECTION 3.2. Members of the Committee shall serve without compensation
for their services unless otherwise determined by the Board. All
expenses of administering the Plan shall be paid by the Company.
SECTION 3.3. Sallie Mae shall indemnify and hold harmless each member
of the Committee from any and all claims, losses, damages, expenses
(including counsel fees) and liability (including any amounts paid in
settlement of any claim or any other matter with the consent of the
Board) arising from any act or omission of such member, except when the
same is due to gross negligence or willful misconduct.
SECTION 3.4. Any decisions, actions or interpretations to be made under
the Plan by the Committee shall be made in its respective sole
discretion, not as a fiduciary, and need not be uniformly applied to
similarly situated individuals and shall be final, binding and
conclusive on all persons interested in the Plan.
ARTICLE 4. PARTICIPATION
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SECTION 4.1. ELECTION TO PARTICIPATE: SALARY DEFERRALS. Annually, all
Eligible Employees will be offered the opportunity to defer Salary to
be earned in the following Plan Year. Any Eligible Employee may enroll
in the Plan, effective as of the first day of a Plan Year, by filing a
complete and fully executed Enrollment Agreement with the Committee by
a date established by the Committee, but in no event later than the
last day of the preceding Plan Year. Pursuant to said Enrollment
Agreement, the Eligible Employee shall elect (a) the percentage of
Salary to be deferred (pursuant to payroll reduction, and after
required payroll taxes have been deducted), such percentage to be
stated as a whole number, and (b) the Distribution Option applicable to
such Salary Deferrals. A Participant shall allocate his or her Salary
Deferrals between the Distribution Options in increments of ten
percent, provided, however, that 100 percent of such deferrals may be
allocated to one or the other of the Distribution Options.
The Committee may establish minimum or maximum amounts that
may be deferred under this Section and may change such standards from
time to time. Any such limits shall be communicated by the Committee to
the Eligible Employees prior to the commencement of a Plan Year.
Once a Participant files an Enrollment Agreement with respect
to Salary to be earned in the subsequent Plan Year, he may not change
the percentage of Salary to be deferred or the allocation of such
deferrals between the Distribution Options, except that he may file an
election to suspend Salary Deferrals. Any such election to suspend
Salary Deferrals shall be effective with respect to the first pay
period that begins at least 30 days following the date on which such
request to suspend Salary Deferrals is received by the Committee. Any
suspension shall be effective for the remainder of the Plan Year.
SECTION 4.2. ELECTION TO PARTICIPATE: BONUS DEFERRALS. Annually, all
Eligible Employees will be offered the opportunity to defer Bonus
earned in such Plan Year and payable in the following Plan Year. An
Enrollment Agreement to make such Bonus Deferrals must be filed by such
date established by the Committee, but in no event later than the last
day of the second quarter of the Plan Year in which such Bonus is
earned, except for the bonus earned for 1998, which may be deferred by
special election on or before December 31, 1998. Pursuant to said
Enrollment Agreement, the Eligible Employee shall elect (a) the
percentage of Bonus to be deferred (pursuant to payroll reduction, and
after required payroll taxes have been deducted), such percentage to be
stated as a whole number, and (b) the Distribution Option applicable to
such Bonus Deferrals. A Participant shall allocate his or her Bonus
Deferrals between the Distribution Options in increments of ten
percent, provided, however, that 100 percent of such deferrals may be
allocated to one or the other of the Distribution Options.
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The Committee may establish minimum or maximum amounts that
may be deferred under this Section and may change such standards from
time to time. Any such limits shall be communicated by the Committee to
the Eligible Employees prior to the commencement of a Plan Year.
Once a Participant files an Enrollment Agreement with respect
to Bonus earned in the Plan Year, he may not change the percentage of
Bonus to be deferred or the allocation of such deferrals between the
Distribution Options.
SECTION 4.3. NEWLY ELIGIBLE EMPLOYEES. The Committee may, in its
discretion, permit Employees who first become Eligible Employees after
the beginning of a Plan Year to enroll in the Plan for that Plan Year
by filing a complete and fully executed Enrollment Agreement, in
accordance with Sections 4.1 and 4.2, as soon as practicable following
the date the Employee becomes an Eligible Employee but, in no event
later than 30 days after such date. Any election by an Eligible
Employee, pursuant to this Section, to defer Salary shall apply only to
such amounts as are earned by the Eligible Employee after the date on
which such Enrollment Agreement is filed. Notwithstanding anything in
this Section to the contrary, a newly Eligible Employee shall not be
eligible to elect to defer any Bonus earned in the Plan Year in which
he first becomes an Eligible Employee, if he becomes an Eligible
Employee after June 30 of the Plan Year.
SECTION 4.4. SUPPLEMENTAL COMPANY CONTRIBUTIONS. The Company may make a
Supplemental Company Contribution, if necessary, to make up for any
contributions under the Sallie Mae 401(k) Savings Plan and the
Retirement Plan that a Participant would have received in such plans if
he had not elected to make Salary Deferrals or Bonus Deferrals pursuant
to the terms of this Plan. Any Supplemental Company Contribution shall
be credited to the Retirement Distribution Account.
SECTION 4.5. TRANSFERS FROM OTHER PLANS OF DEFERRED COMPENSATION. The
Company may credit an Eligible Employee with an amount under this Plan
equal to the amount credited under a prior plan of deferred
compensation maintained by the Company or its predecessor on behalf of
a selected group of management and highly compensated employees. Any
such amount shall be credited to the Retirement Distribution Account.
ARTICLE 5. DISTRIBUTION OPTION ACCOUNTS
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SECTION 5.1. DISTRIBUTION OPTION ACCOUNTS. The Committee shall
establish on its books a hypothetical account for a Participant. This
account shall be referred to as the Distribution Option Account. Each
Distribution Option Account shall be comprised of one or more
sub-accounts. One sub-account shall be referred to as the Retirement
Distribution Account. Generally, the distribution of amounts credited
to the Retirement Distribution Account shall be subject to Section 7.1.
The other sub-accounts shall be referred to as In-Service Distribution
Accounts. One In-Service Distribution Account shall be established for
each five-year Distribution Option Period. Supplemental Company
Contributions, when credited, are credited only to the Retirement
Distribution Account.
SECTION 5.2. EARNINGS ON DISTRIBUTION OPTION ACCOUNTS. A Participant's
Distribution Option Account shall be credited with earnings in
accordance with the Earnings Crediting Options, elected by the
Participant from time to time, until such Account is fully distributed.
Participants may allocate their Retirement Distribution Account and/or
each of their In-Service Distribution Accounts among the Earnings
Crediting Options available under the Plan only in accordance with
rules and procedures adopted by the Committee. The deemed rate of
return, positive or negative, credited under each Earnings Crediting
Option is based upon the actual investment performance of such Earnings
Crediting Option, and shall equal the total return of such Earnings
Crediting Option, net of asset based charges, including, without
limitation, money management fees, fund expenses and mortality and
expense risk insurance contract charges. The Company reserves the
right, on a prospective basis, to add or delete Earnings Crediting
Options.
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SECTION 5.3. EARNINGS CREDITING OPTIONS. Notwithstanding that the rates
of return credited to Participants' Distribution Option Accounts under
the Earnings Crediting Options are based upon the actual performance of
the Earnings Crediting Options, the Company shall not be obligated to
invest any Salary or Bonus Deferrals, Supplemental Company
Contributions, or any other amounts, in such Earnings Crediting
Options.
SECTION 5.4. CHANGES IN EARNINGS CREDITING OPTIONS. A Participant may
change the Earnings Crediting Options to which his Distribution Option
Account is deemed to be allocated with whatever frequency is determined
by the Committee, which shall not be less than four times per Plan
Year; provided however, that changes in Earnings Crediting Options
based on the investment performance of Sallie Mae common stock that
would affect the time and manner of payment of a Retirement
Distribution Account will be effective only if it is filed at least six
months prior to Retirement and in the Plan Year preceding the Plan Year
in which the Participant's Retirement occurs. Each such change may
include (a) reallocation of the Participant's existing Retirement
Distribution Account and In-Service Distribution Accounts among the
Earnings Crediting Options, and/or (b) reallocation of Earnings
Crediting Options with respect to amounts to be credited to the
Participant's Account in the future, as the Participant may elect. Any
such change must be in accordance with the rules and procedures adopted
by the Committee.
SECTION 5.5. VALUATION OF ACCOUNTS. The value of a Participant's
Distribution Option Account as of any Valuation Date shall equal the
amounts theretofore credited to such Account, including any earnings
(positive or negative) deemed to be earned on such Account in
accordance with Section 5.2 through the Valuation Date preceding such
date, less the amounts therefore deducted from such Account.
SECTION 5.6. STATEMENT OF ACCOUNTS. The Committee shall provide to each
Participant, not less frequently than annually, a statement in such
form as the Committee deems desirable setting forth the balance
standing to the credit of each Participant in each of his Distribution
Option Account.
SECTION 5.7. DISTRIBUTION FROM ACCOUNTS. The Participant's Distribution
Option Account shall be reduced by the amount of payments made by the
Company to the Participant or the Participant's Beneficiary pursuant to
this Plan. Any distribution made to or on behalf of a Participant from
his Distribution Option Account in an amount which is less than the
entire balance of any such Account shall be made pro rata from each of
the Earnings Crediting Options to which such Account is then allocated.
ARTICLE 6. DISTRIBUTION OPTIONS
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SECTION 6.1. ELECTION OF DISTRIBUTION OPTION. In the first Enrollment
Agreement filed with the Committee, an Eligible Employee shall elect
the time and manner of payment pursuant to which the Eligible
Employee's Distribution Option Account will be paid. The Eligible
Employee may elect that deferrals be paid either in accordance with the
Retirement Distribution Option, or the In-Service Distribution Option.
Any deferrals to be paid in accordance with the Retirement Distribution
Option shall be maintained in the Retirement Distribution Account. Any
deferrals to be paid in accordance with the In-Service Distribution
Option shall be maintained in an In-Service Distribution Account, one
such In-Service Distribution Option being established for each
Distribution Option Period.
SECTION 6.2. RETIREMENT DISTRIBUTION OPTION. An election as to the time
and manner of payment of a Retirement Distribution Account shall be
applicable to all amounts in the Retirement Distribution Account;
except that an election as to the time and manner of payment of amounts
deemed to be allocated to SALLIE MAE stock as an Earnings Crediting
Option may be different from an election as to the remainder of the
Retirement Distribution Account. Elections may be changed at any time
prior to Retirement by filing a new election with the Committee; except
that any such election change will only be effective if it is filed at
least six months prior to Retirement and in the Plan Year
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preceding the Plan Year in which the Participant's Retirement occurs.
Once a Participant terminates Services on account of Retirement, he may
not change his election with respect to the timing and manner of
payment of his Retirement Distribution Account.
SECTION 6.3. IN-SERVICE DISTRIBUTION OPTION. The time and manner of
payment elected with respect to an In-Service Distribution Account must
be elected on the Enrollment Agreement at the time Salary or Bonus
Deferrals are first directed into the In-Service Distribution Account.
The election of the time and manner of payment will be applicable to
all amounts in the In-Service Distribution Account and cannot be
changed until the Distribution Option Period has terminated and a new
Distribution Option Period has begun, at which time, a new In-Service
Distribution Account shall he established for future deferrals.
Amounts credited to the In-Service Distribution Account must
be deferred for at least two years. Therefore, if a Participant selects
a commencement date that is not at least two years beyond the last day
of the Distribution Option Period, then any deferrals that would be
made within two years of the elected commencement date shall
automatically be credited to the Retirement Distribution Account.
Amounts credited to the In-Service Distribution Account must
remain in the In-Service Distribution Account for at least two years.
In the event a Participant's In-Service Distribution Account includes
amounts deferred within two years of the date on which the Participant
has elected a distribution of his In-Service Distribution Account,
deferrals in an amount equal to the deferrals made within the prior
two-year period, measured from the date of distribution, and earnings
attributable to such amounts, shall remain credited to the In-Service
Distribution Account until all such deferrals have been credited to the
Plan for two years, at which time, they shall be distributable as soon
as administratively feasible in accordance with the Participant's
election.
ARTICLE 7. DISTRIBUTION OF BENEFITS TO PARTICIPATNTS
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SECTION 7.1. BENEFITS UNDER THE RETIREMENT DISTRIBUTION OPTION.
Benefits under the Retirement Distribution Option shall be paid to a
Participant as follows:
(a) BENEFITS UPON RETIREMENT. In the case of a
Participant whose Service with the Company terminates on
account of his Retirement, the Participant's Retirement
Distribution Account shall be distributed in one of the
following methods, as elected by the Participant in accordance
with Section 6.2: (i) in a lump sum, (ii) in annual
installments, or (iii) in accordance with any formula elected
by the Participant that is mathematically derived and is
acceptable to the Committee; except that, if elected by a
Participant, amounts deemed to be allocated to SALLIE MAE
stock as an Earnings Crediting Option shall be made in a lump
sum in SALLIE MAE stock. A Participant's Retirement
Distribution Account must be distributed in full before the
end of the fortieth year following the year in which occurs
the Participant's Retirement.
The Participant's Retirement Distribution Account
shall be distributed, as elected by the Participant, no later
than January 31 of the Plan Year immediately following (1) the
Plan Year in which the Participant's Retirement occurs, or (2)
the Plan Year in which the Participant attains an age
specified in the Enrollment Agreement provide the
Participant's Retirement has occurred; except that, if elected
by a Participant, amounts deemed to be allocated to SALLIE MAE
stock as an Earnings Crediting Option shall be made within 60
days of Retirement.
A lump sum benefit shall equal the value of the
Retirement Distribution Account as of the Valuation Date
immediately preceding the date of payment. The first annual
installment payment shall equal (i) the value of such
Retirement Distribution Account as of the Valuation Date
immediately preceding the date of payment, divided by (ii) the
number of annual installment payments elected by the
Participant in the Enrollment Agreement,
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pursuant to which such Retirement Distribution Account was
established. The remaining annual installments shall equal (i)
the value of such Retirement Distribution Account as of the
Valuation Date immediately preceding Plan Year divided by (ii)
the number of installments remaining."
(b) BENEFITS UPON TERMINATION OF EMPLOYMENT. A
Participant may also elect on the Enrollment Agreement to have
his Retirement Distribution Account paid in the form of a lump
sum if he should terminate Service prior to his Retirement.
Such lump sum will be distributed as soon as administratively
feasible following the date that is 12 months from the End
Termination Date; except that, if elected by a Participant,
amounts deemed to be allocated to SALLIE MAE stock as an
Earnings Crediting Option shall be made within 60 days of his
End Termination Date.
SECTION 7.2. BENEFITS UNDER THE LN-SERVICE DISTRIBUTION OPTION.
Benefits under the In-Service Distribution Option shall be paid to a
Participant as follows:
(a) In-Service Distributions. In the case of a
Participant who continues in Service with the Company, the
Participant's In-Service Distribution Account for any
Distribution Option Period shall be paid to the Participant
commencing no later than January 31 of the Plan Year
irrevocably elected by the Participant in the Enrollment
Agreement pursuant to which such In-Service Distribution
Account was established, in one lump sum or in annual
installments payable over 2, 3, 4, or 5 years. Any lump sum
benefit payable in accordance with this paragraph shall be
paid not later than January 31 of the Plan Year elected by the
Participant in accordance with Section 6.3, in an amount equal
to the value of such In-Service Distribution Account as of the
Valuation Date immediately preceding the date of payment.
Annual installment payments, if any, shall commence not later
than January 31 of the Plan Year as elected by the Participant
in accordance with Section 6.3, in an amount equal to (i) the
value of such In-Service Distribution Account as of the
Valuation Date immediately preceding the date of payment,
divided by (ii) the number of annual installment payments
elected by the Participant in the Enrollment Agreement
pursuant to which such In-Service Distribution Account was
established. The remaining annual installments shall be paid
not later than January 31 of each succeeding year in an amount
equal to (i) the value of such In-Service Distribution Account
as of the Valuation Date immediately preceding Plan Year
divided by (ii) the number of installments remaining.
(b) A Participant may also elect on the Enrollment
Agreement to have his In-Service Distribution Account paid in
the form of a lump sum if he should terminate Service prior to
his Retirement. For Participants who are Executive Officers
for purposes of proxy disclosure, such lump sum will be
distributed in SALLIE MAE stock no later than 60 days
following termination of Service. For other Participants, such
lump sum will be distributed as soon as administratively
feasible following the date that is 12 months from the End
Termination Date and such an election shall be subject to the
provisions of Section 6.3.
ARTICLE 8. DISABILITY
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SECTION 8.1. In the event a Participant becomes Disabled, the
Participant's right to make any further deferrals under this Plan shall
terminate as of the date for which the Participant is first eligible to
receive a disability retirement benefit from the Retirement Plan. The
Participant's Retirement Distribution Account, if any, shall be
distributed to the Participant in accordance with Section 7.1 (a),
treating the day on which he first becomes eligible for a disability
benefit from the Retirement Plan as his retirement date. The
Participant's In-Service Distribution Accounts, if any, will be
distributed to the Participant in accordance with Section 7.2(a),
without regard to the fact that the Participant became Disabled.
ARTICLE 9. SURVIVOR BENEFITS
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SECTION 9.1. DEATH OF PARTICIPANT PRIOR TO THE COMMENCEMENT OF
BENEFITS. In the event of a Participant's death prior to the
commencement of benefits in accordance with Section 7, benefits shall
be paid to the Participant's Beneficiary, as determined under Section
12.3, pursuant to Section 9.2 or 9.3, whichever is applicable, in lieu
of any benefits otherwise payable under the Plan to or on behalf of
such Participant. The Participant's Beneficiary shall be treated as the
Participant for purposes of the Plan and shall have the authority to
elect the Earnings Crediting Options in the same manner as the
Participant. In addition, the Beneficiary may elect to receive an
accelerated distribution, pursuant to Section 11, or an Emergency
Benefit, pursuant to Section 10. However, the Beneficiary shall not be
entitled to change the form and timing of distribution as elected on
the Enrollment Agreement.
Notwithstanding any provisions in this Section 9 to the
contrary, in the event there is no designated Beneficiary, or the
Beneficiary has predeceased the Participant, the Participant's
Distribution Option Account shall be distributed to the Participant's
estate in the form of a lump sum as soon as administratively feasible
following the Participant's death.
SECTION 9.2. SURVIVOR BENEFITS UNDER THE RETIREMENT DISTRIBUTION
OPTION. A Participant may elect on the Enrollment Agreement the time
and manner of payment of his Retirement Distribution Account in the
event he dies prior to the commencement of distributions from such
Retirement Distribution Account pursuant to Section 7.1. The
Participant may elect that his Retirement Distribution Account be paid
to his Beneficiary (a) in a lump sum as soon as practicable following
the Participant's death, or (b) in the form, and at the time, that the
Retirement Distribution Account would have been payable to the
Participant, assuming the Participant retired at age 65. The amount of
any lump sum benefit payable in accordance with this Section shall
equal the value of such Retirement Distribution Account as of the
Valuation Date immediately preceding the date on which such benefit is
paid. The amount of any annual installment benefit payable in
accordance with this Section shall equal (a) the value of such
Retirement Distribution Account as of the Valuation Date immediately
preceding the date on which such installment is paid, divided by (b)
the number of annual installments remaining to be paid pursuant to the
election of the Participant.
SECTION 9.3. SURVIVOR BENEFITS UNDER THE IN-SERVICE DISTRIBUTION
OPTION. A Participant may elect on the Enrollment Agreement the time
and manner of payment of his In-Service Distribution Account in the
event he dies prior to the commencement of distributions from such
In-Service Distribution Account pursuant to Section 7.2. The
Participant may elect that his In-Service Distribution Account be paid
to his Beneficiary (a) in a lump sum as soon as practicable following
the Participant's death, or (b) in the form, and at the time, that the
In-Service Distribution Account would have been payable to the
Participant. The amount of any lump sum benefit payable in accordance
with this Section shall equal the value of such Retirement Distribution
Account as of the Valuation Date immediately preceding the date on
which such benefit is paid. The amount of any annual installment
benefit payable in accordance with this Section shall equal (a) the
value of such Retirement Distribution Account as of the Valuation Date
immediately preceding the date on which such installment is paid,
divided by (b) the number of annual installments remaining to be paid
pursuant to the election of the Participant.
SECTION 9.4. DEATH OF PARTICIPANT AFTER BENEFITS HAVE COMMENCED. In the
event a Participant dies after annual installments from his
Distribution Option Account have commenced, but before the entire
balance of such Account has been paid, any remaining installments shall
continue to be paid to the Participant's Beneficiary, as determined
under Section 12.3, at such times and in such amounts as they would
have been paid to the Participant had he survived.
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ARTICLE 10. EMERGENCY BENEFIT
- --------------------------------------------------------------------------------
SECTION 10.1. In the event that the Committee, upon written request of
a Participant, determines, in its sole discretion, that the Participant
has suffered an unforeseeable financial emergency, the Company shall
pay to the Participant from the vested portion of his Distribution
Option Account, as soon as practicable following such determination, an
amount necessary to meet the emergency, after deduction of any and all
taxes as may be required pursuant to Section 12.9 (the "Emergency
Benefit"). For purposes of this Plan, an unforeseeable financial
emergency is an unexpected need for cash arising from an illness,
casualty, loss, sudden financial reversal, or other such unforeseeable
occurrence. Cash needs arising from foreseeable events, such as the
purchase of a house or education expenses for children, shall not be
considered to be the result of an unforeseeable financial emergency.
Emergency Benefits shall be paid first from the Participant's
In-Service Distribution Accounts, if any, in the order in which such
Accounts would otherwise be distributed to the Participant. If the
distribution exhausts the In-Service Accounts, the Retirement
Distribution Account may be accessed. However, no Emergency Benefit may
be distributed from deferrals, and earnings attributable to such
deferrals, that have been credited to the Plan less than two years.
With respect to that portion of any Distribution Option Account which
is distributed to a Participant as an Emergency Benefit in accordance
with this Section, no further benefit shall be payable to the
Participant under this Plan. Notwithstanding anything in this Plan to
the contrary, a Participant who receives an Emergency Benefit in any
Plan Year shall not be entitled to make any further Salary or Bonus
Deferrals for the remainder of such Plan Year. It is intended that the
Committee's determination as to whether a Participant has suffered an
"unforeseeable financial emergency" shall be made consistent with
section 457(d)(1)(A)(iii) of the Code.
ARTICLE 11. ACCELERATED DISTRIBUTION
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SECTION 11.1. AVAILABILITY OF WITHDRAWAL PRIOR TO THE COMMENCEMENT OF
DISTRIBUTIONS. Upon the Participant's written election, the Participant
may elect to withdraw all or a portion of the Participant's
Distribution Option Account at any time prior to the time such
Distribution Option Account is otherwise payable under the Plan,
provided the conditions specified in Sections 11.3, 11.4, and 11.5 are
satisfied. However, no amount may be distributed from deferrals, and
earnings attributable to such deferrals, that have been credited to the
Plan less than two years.
SECTION 11.2. ACCELERATION OF PERIODIC DISTRIBUTIONS. Upon the
Participant's written election, the Participant or Participant's
Beneficiary who is receiving installment payments under the Plan may
elect to have all or a percentage of the remaining installments
distributed in the form of an immediately payable lump sum, provided
the condition specified in Sections 11.3, 11.4 and 11.5 are satisfied.
SECTION 11.3. FORFEITURE PENALTY. In the event of a withdrawal pursuant
to Section 11.1, or an accelerated distribution pursuant to Section
11.2, the Participant shall forfeit from the sub-account of his
Distribution Option Account from which the withdrawal is made an amount
equal to 10% of the amount of the withdrawal or accelerated
distribution, as the case may be. The forfeited amount shall be
deducted from the applicable sub-account prior to giving effect to the
requested withdrawal or acceleration. The Participant and the
Participant's Beneficiary shall not have any right or claim to the
forfeited amount, and the Company shall have no obligation whatsoever
to the Participant, the Participant's Beneficiary or any other person
with regard to the forfeited amount
SECTION 11.4. MINIMUM WITHDRAWAL. In no event shall the amount
withdrawn in accordance with Section 1 1.1 or 11.2 be less than 25% of
the amount credited to the Participant's Distribution Option Account
immediately prior to the withdrawal.
SECTION 11.5. SUSPENSION FROM DEFERRALS. In the event of a withdrawal
pursuant to Section 11.1 or 11.2, a Participant who is otherwise
eligible to make deferrals under Section 4 shall be prohibited from
making any deferrals with respect to the Plan Year immediately
following the Plan Year during
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which the withdrawal is made, and any election previously made by the
Participant with respect to deferrals for the Plan Year of the
withdrawal shall be void and of no effect with respect to subsequent
Salary and Bonus Deferrals for such Plan Year.
ARTICLE 12. EARNINGS CREDITING OPTION BASED ON COMPANY STOCK
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SECTION 12.1. INSIDERS. Effective February 1, 2001, notwithstanding any
other provision of the Plan, elections by "Insiders" (Participants who,
as of February 1, 2001, and at any time subsequent to February 1, 2001,
are considered by the Company to be subject to Section 16b of the
Securities Exchange Act of 1934) to have their Distribution Option
Account deemed to be invested in Company stock may not be changed.
Further, any portion of an Insider's Distribution Option Account deemed
to be invested in Company stock shall be distributed in a lump sum, in
the form of Company stock within 60 days of separation from service.
ARTICLE 13. MISCELLANEOUS
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SECTION 13.1. AMENDMENT AND TERMINATION. The Plan may be amended,
suspended, discontinued or terminated at any time by the Committee;
provided, however, that no such amendment, suspension, discontinuance
or termination shall reduce or in any manner adversely affect the
rights of any Participant with respect to benefits that are payable or
may become payable under the Plan based upon the balance of the
Participant's Accounts as of the effective date of such amendment,
suspension, discontinuance or termination.
SECTION 13.2. CLAIMS PROCEDURE.
-----------------
(a) Claim
A person who believes that he is being denied a benefit to
which he is entitled under the Plan (hereinafter referred to as a
"Claimant") may file a written request for such benefit with the Plan
Administrator, setting forth the claim.
(b) Claim Decision
Upon receipt of a claim, the Plan Administrator shall advise
the Claimant that a reply will be forthcoming within ninety (90) days
and shall, in fact, deliver such reply within such period. The Plan
Administrator may, however, extend the reply period for an additional
ninety (90) days for reasonable cause.
If the claim is denied in whole or in part, the Claimant shall
be provided a written opinion, using language calculated to be
understood by the Claimant, setting forth:
(1) The specific reason or reasons for such denial:
(2) The specific reference to pertinent provisions of
this Agreement on which such denial is based;
(3) A description of any additional material or
information necessary for the Claimant to perfect his
claim and an explanation why such material or such
information is necessary; and
(4) Appropriate information as to the steps to be
taken if the Claimant wishes to submit the claim for
review.
(c) Request for Review
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Within sixty (60) days after the receipt by the Claimant of
the written opinion described above, the Claimant may request in
writing that the Committee review the determination of the Plan
Administrator. The Claimant or his duly authorized representative may,
but need not, review the pertinent documents and submit issues and
comment in writing for consideration by the Committee. If the Claimant
does not request a review of the initial determination within such
sixty (60) day period, the Claimant shall be barred and estopped from
challenging the determination.
(d) Review of Decision
Within sixty (60) days after the Committee's receipt of a
request for review, it will review the initial determination. After
considering all materials presented by the Claimant, the Committee will
render a written opinion, written in a manner calculated to be
understood by the Claimant, setting forth the specific reasons for the
decision and containing specific references to the pertinent provisions
of this Agreement on which the decision is based. If special
circumstances require that the sixty (60) day time period be extended,
the Committee will so notify the Claimant and will render the decision
as soon as possible, but no later than one hundred twenty (120) days
after receipt of the request for review.
SECTION 13.3. DESIGNATION OF BENEFICIARY. Each Participant may
designate a Beneficiary or Beneficiaries (which Beneficiary may be an
entity other than a natural person) to receive any payments which may
be made following the Participant's death. Such designation may be
changed or canceled at any time without the consent of any such
Beneficiary. Any such designation, change or cancellation must be made
in a form approved by the Committee and shall not be effective until
received by the Committee, or its designee. If no Beneficiary has been
named, or the designated Beneficiary or Beneficiaries shall have
predeceased the Participant, the Beneficiary shall be the Participant's
estate. If a Participant designates more than one Beneficiary, the
interests of such Beneficiaries shall be paid in equal shares, unless
the Participant has specifically designated otherwise.
SECTION 13.4. LIMITATION OF PARTICIPANT'S RIGHT. Nothing in this Plan
shall be construed as conferring upon any Participant any right to
continue in the employment of the Company, nor shall it interfere with
the rights of the Company to terminate the employment of any
Participant and/or to take any personnel action affecting any
Participant without regard to the effect which such action may have
upon such Participant as a recipient or prospective recipient of
benefits under the Plan. Any amounts payable hereunder shall not be
deemed salary or other Salary to a Participant for the purposes of
computing benefits to which the Participant may be entitled under any
other arrangement established by the Company for the benefit of its
employees.
SECTION 13.5. NO LIMITATION ON COMPANY ACTIONS. Nothing contained in
the Plan shall be construed to prevent the Company from taking any
action which is deemed by it to be appropriate or in its best interest.
No Participant, Beneficiary, or other person shall have any claim
against the Company as a result of such action.
SECTION 13.6. OBLIGATIONS TO COMPANY. If a Participant becomes entitled
to a distribution of benefits under the Plan, and if at such time the
Participant has outstanding any debt, obligation, or other liability
representing an amount owing to the Company, then the Company may
offset such amount owed to it against the amount of benefits otherwise
distributable, to the extent permissible under State law. Such
determination shall be made by the Committee.
SECTION 13.7. NONALIENATION OF BENEFITS. Except as expressly provided
herein, no Participant or Beneficiary shall have the power or right to
transfer (otherwise than by will or the laws of descent and
distribution), alienate, or otherwise encumber the Participant's
interest under the Plan, except pursuant to a domestic relations order
that would qualify as a Qualified Domestic Relations Order under
section 414(p) of the Code. The Company's obligations under this Plan
may not be assigned or transferred except to (a) any corporation or
partnership which acquires all or substantially all of the Company's
assets or (b) any corporation or partnership into which the Company may
be merged
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Page 12
USA EDUCATION, INC.
DEFERRED COMPENSATION PLAN FOR KEY EMPLOYEES
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or consolidated. The provisions of the Plan shall inure to the benefit
of each Participant and the Participant's Beneficiaries, heirs,
executors, administrators or successors in interest.
SECTION 13.8. PROTECTIVE PROVISIONS. Each Participant shall cooperate
with the Company by furnishing any and all information requested by the
Company in order to facilitate the payment of benefits hereunder,
taking such physical examinations (for insurance purposes) as the
Company may deem necessary and taking such other relevant action as may
be requested by the Company. If a Participant refuses to cooperate, the
Company shall have no further obligation to the Participant under the
Plan, other than payment to such Participant of the then current
balance of the Participant's Distribution Option Accounts in accordance
with his prior elections.
SECTION 13.9. WITHHOLDING TAXES. The Company may make such provisions
and take such action as it may deem necessary or appropriate for the
withholding of any taxes which the Company is required by any law or
regulation of any governmental authority, whether Federal, state or
local, to withhold in connection with any benefits under the Plan,
including, but not limited to, the withholding of appropriate sums from
any amount otherwise payable to the Participant (or his Beneficiary).
Each Participant, however, shall be responsible for the payment of all
individual tax liabilities relating to any such benefits.
SECTION 13.10. UNFUNDED STATUS OF PLAN. The Plan is intended to
constitute an "unfunded" plan of deferred Salary for Participants.
Benefits payable hereunder shall be payable out of the general assets
of the Company, and no segregation of any assets whatsoever for such
benefits shall be made. Notwithstanding any segregation of assets or
transfer to a grantor trust, with respect to any payments not yet made
to a Participant, nothing contained herein shall give any such
Participant any rights to assets that are greater than those of a
general creditor of the Company.
SECTION 13.11. SEVERABILITY. If any provision of this Plan is held
unenforceable, the remainder of the Plan shall continue in full force
and effect without regard to such unenforceable provision and shall be
applied as though the unenforceable provision were not contained in the
Plan.
SECTION 13.12. GOVERNMENT LAW. The Plan shall be construed in
accordance with the laws of the Commonwealth of Virginia, without
reference to the principles of conflict of laws.
SECTION 13.13. HEADINGS. Headings are inserted in this Plan for
convenience of reference only and are to be ignored in the construction
of the provisions of the Plan.
SECTION 13.14. GENDER, SINGULAR OR PLURAL. All pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine,
or neuter, as the identity of the person or persons may require. As the
context may require, the singular may read as the plural and the plural
as the singular.
SECTION 13.15. NOTICE. Any notice or filing required or permitted to be
given to the Plan Administrator or the Committee under the Plan shall
be sufficient if in writing and hand delivered, or sent by registered
or certified mail, to the Human Resources Department, or to such other
entity as the Plan Administrator or the Committee may designate from
time to time. Such notice shall be deemed given as to the date of
delivery, or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.
This Plan restatement includes amendments made on June 30,
1999, October 1, 2000 and February 1, 2001.
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Page 13
EXHIBIT 5.1
USA Education Inc.
11600 Sallie Mae Drive
Reston, VA 20193
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
I am Executive Vice President and General Counsel of USA
Education Inc. (formerly SLM Holding Corporation), a Delaware corporation (the
"Corporation"). The Corporation is about to register with the Securities and
Exchange Commission on a registration statement on Form S-8 (the "Registration
Statement") under the Securities Act of l933, as amended, $50,000,000 of general
unsecured obligations (the "Obligations") of the Corporation to pay deferred
compensation in the future and 610,501shares of common stock, $0.20 par value
per share (the "Shares") to be issued in satisfaction of certain of the
Obligations, in accordance with the Sallie Mae Deferred Compensation Plan for
Key Employees (the "Plan").
As General Counsel for the Corporation, I am familiar with its
Certificate of Incorporation, as amended, and Bylaws. I have examined the Plan ,
the prospectus that will be distributed to participants in the Plan (the
"Prospectus") and the Registration Statement.
I have also examined and relied upon such corporate records of
the Corporation and other documents and certificates with respect to factual
matters as I have deemed necessary to render the opinion expressed herein. With
respect to the documents I have reviewed, I have assumed, without independent
verification, the genuineness of all signatures, the authenticity of all
documents submitted to me as originals, and the conformity with originals of all
documents submitted to me as copies. As to any facts material to this opinion
that I did not independently establish or verify, I have relied upon statements
and representations of other officers and representatives of the Corporation.
Based upon the foregoing, I am of the opinion that:
1. the Obligations being offered under the Plan, when issued, sold and paid for
in accordance with the terms set forth in the Prospectus, Registration Statement
and Plan (including amounts withheld from compensation pursuant to instructions
of participants in the Plan), will be valid and binding obligations of the
Corporation, enforceable in accordance with their terms as amended from time to
time, except as enforcement thereof may be limited by bankruptcy, insolvency or
other laws of general applicability relating to or affecting enforcement of
creditors' rights or by general principles of equity;
2. the shares of Common Stock to be issued in full payment of certain of the
Obligations offered under the Plan are, to the extent of the number of shares
authorized to be issued by the Corporation in its Certificate of Incorporation,
duly authorized and when issued in accordance
with the terms set forth in the Prospectus, Registration Statement and Plan,
will be validly issued, fully paid and nonassessable.
This letter expresses my opinion as to the laws of the
Commonwealth of Virginia and the provisions of the Delaware General Corporation
Law governing the authorization and issuance of stock, but does not extend to
the securities or "Blue Sky" laws of Virginia or Delaware or to federal
securities laws or to other laws.
I hereby consent to the filing of this opinion as part of the
Registration Statement. In giving this consent, I do not thereby admit that I am
within the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the Rules and Regulations of the
Securities and Exchange Commission thereunder. This opinion is intended solely
for your use in connection with the transactions described above. No other
person may rely on this opinion for any other purpose without my prior written
consent.
Very truly yours,
Marianne M. Keler
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement, of our report dated January 17, 2001
included in USA Education Inc.'s Form 10-K for the year ended December 31, 2000
and to all references to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN, LLP
Vienna, VA
August 24, 2001
