Exhibit 99.1
DIRECTOR’S
INDEMNIFICATION AGREEMENT
This Director’s
Indemnification Agreement (“Agreement”) is made as of
October , 2005 (the “Effective Date”)
by and between SLM Corporation, a Delaware corporation (the “
Company ”), and
who serves as a Director of the Company (“ Indemnitee
”).
RECITALS
WHEREAS, highly competent persons
have become more reluctant to serve corporations as Directors
unless they are provided with adequate protection through insurance
and/or indemnification against the risks of claims being asserted
against them arising out of their service to and activities on
behalf of such corporations; and
WHEREAS, the Board of Directors of
the Company (the “ Board ”) has determined that
the increased difficulty in attracting and retaining such persons
is detrimental to the best interests of the Company’s
investors and that the Company should act to assure such persons
that there will be increased certainty of such protection in the
future; and
WHEREAS, the Board has determined
that, in order to help attract and retain qualified individuals as
Directors, the best interests of the Company and its investors will
be served by attempting to maintain, on an ongoing basis, at the
Company’s sole expense, insurance to protect persons serving
the Company as directors and in other capacities from certain
liabilities. Although the furnishing of such insurance has
been a customary and widespread practice among United States-based
corporations and other business enterprises for many years, the
Company believes that, given current market conditions and trends,
such insurance may be available to it in the future only at higher
premiums and with more exclusions. At the same time,
directors, in service to corporations or business enterprises are
being increasingly subjected to expensive and time-consuming
litigation; and
WHEREAS, the Board has determined
that, in order to help attract and retain qualified individuals as
directors and in other capacities, the best interests of the
Company and its investors will be served by assuring such
individuals that the Company will indemnify them to the maximum
extent permitted by law; and
WHEREAS, Article VIII of the Amended
and Restated By-Laws effective May 19, 2005 (the “
By-Laws ”) of the Company require indemnification of
the officers and directors of the Company, and Indemnitee may also
be entitled to indemnification pursuant to Section 145 of the
Delaware General Corporation Law (“ DGCL ”);
and
WHEREAS, the Certificate of
Incorporation, the By-Laws and the DGCL expressly provide that the
indemnification provisions set forth therein are not exclusive, and
thereby contemplate that contracts may be entered into between the
Company and
members of the Board with respect to
indemnification and the advancement of defense costs;
and
WHEREAS, it therefore is reasonable,
prudent and necessary for the Company contractually to obligate
itself to indemnify, and to advance defense costs on behalf of,
such persons to the fullest extent permitted by applicable law so
that they will serve or continue to serve the Company free from
undue concern that they will not be so indemnified; and
WHEREAS, this Agreement is a
supplement to and in furtherance of the Certificate of
Incorporation, By-Laws and any resolutions adopted pursuant
thereto, and shall not be deemed a substitute therefor, nor shall
it be deemed to diminish or abrogate any rights of Indemnitee
thereunder; and
WHEREAS, the Board recognizes that
the Indemnitee does not regard the protection available under the
Company’s Certificate of Incorporation, the By-Laws and
insurance program as adequate in the present circumstances, and may
not be willing to serve or continue to serve as a director and/or
in such other capacity as the Company may request without adequate
protection, and the Company desires Indemnitee to serve in such
capacity; and
WHEREAS, Indemnitee is willing to
serve, and continue to serve, as a member of the Board of Directors
of the Company, on the condition that he or she be indemnified as
provided for herein.
NOW, THEREFORE, in consideration of
the premises and the covenants contained herein, the Company and
Indemnitee do hereby covenant and agree as follows:
1.
Services to the
Company.
Indemnitee will serve or continue to serve as a Director of the
Company for so long as Indemnitee is duly elected or appointed or
until Indemnitee tenders his or her resignation. This
Agreement shall not serve as a binding commitment on the part of
Indemnitee to continue to serve in such capacity, or on the part of
the Company to cause him to be nominated to successive terms as a
Director or to not otherwise be removed for cause as permitted
under law.
2.
Definitions.
As used in this
Agreement:
(a)
A “ Change in Control
” shall be deemed to occur upon the earliest to occur after
the date of this Agreement of any of the following
events:
(i)
Any Person (excluding any employee
benefit plan of the Company or any subsidiary of the Company) is or
becomes the Beneficial Owner, directly or indirectly, of securities
of the Company representing fifty percent (50%) or more of the
combined voting power of the Company’s outstanding securities
then entitled ordinarily to vote for the election of Directors;
or
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(ii)
During any period of two (2)
consecutive years commencing on or after the Effective Date, the
individuals who at the beginning of such period constitute the
Board or any individuals who would be Continuing Directors (as
defined below) cease for any reason to constitute at least a
majority thereof; or
(iii)
The Board shall approve a sale of
all or substantially all of the assets of the Company;
or
(iv)
The Board shall approve any merger,
consolidation, or like business combination or reorganization of
the Company, the consummation of which would result in the
occurrence of any event described in clause (a) or (b),
above.
(b)
“ Continuing Directors
” shall mean the directors of the Company in office on the
Effective Date and any successor to any such director and any
additional director who after the Effective Date (i) was
nominated or selected by a majority of the Continuing Directors in
office at the time of his or her nomination or selection and
(ii) who is not an “affiliate” or
“associate” (as defined in Regulation 12B under the
Exchange Act) of any person who is the beneficial owner, directly
or indirectly, of securities representing ten percent (10%) or more
of the combined voting power of the Company’s outstanding
securities then entitled ordinarily to vote for the election of
directors.
(c)
“ Exchange Act ”
shall mean the Securities Exchange Act of 1934, as
amended.
(d)
“ Person ” shall
have the meaning set forth in Sections 13(d) and 14(d) of the
Exchange Act; provided, however, that Person shall exclude (i) the
Company and (ii) any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or a subsidiary of
the Company.
(e)
“ Beneficial Owner
” shall have the meaning given to such term in Rule 13d-3
issued under the Exchange Act; provided, however, that Beneficial
Owner shall exclude any Person becoming a Beneficial Owner by
reason of the stockholders of the Company approving a merger of the
Company with another entity.
(f)
“ Corporate Status
” shall describe the status of a person who is or was a
director, officer, trustee, partner, member, fiduciary, employee or
agent of the Company or of any other Enterprise (as defined below),
which such person is or was serving at the request of the
Company.
(g)
“ Disinterested
Director ” shall mean a director of the Company who is
not and was not a party to the Proceeding (as defined below) in
respect of which indemnification is sought by
Indemnitee.
(h)
“ Enterprise ”
shall mean any corporation, limited liability company, partnership,
joint venture, trust, employee benefit plan or other enterprise of
which
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Indemnitee is or was serving at the request of
the Company as a director, officer, trustee, administrator,
partner, member, fiduciary, employee or agent.
(i)
“ Expenses ”
shall include all reasonable attorneys’ fees, retainers,
court costs, transcript costs, fees of experts and accountants,
witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees,
and all other disbursements or expenses of the types and amounts
customarily incurred in connection with prosecuting, defending,
preparing to prosecute or defend, investigating, being or preparing
to be a witness in, or otherwise participating in, a Proceeding (as
defined below). Expenses also shall include costs incurred in
connection with any appeal resulting from any Proceeding (as
defined below), including, without limitation, the premium,
security for, and other costs relating to any bond, supersedeas
bond, or other appeal bond or its equivalent. Expenses,
however, shall not include amounts paid in settlement by Indemnitee
or the amount of judgments or fines against Indemnitee.
(j)
References to “ fines
” shall include any excise tax assessed on a person with
respect to any employee benefit plan pursuant to applicable
law.
(k)
References to “ serving at
the request of the Company ” shall include any service
provided at the request of the Company as a director, officer,
trustee, administrator, partner, member, fiduciary, employee or
agent of the Company which imposes duties on, or involves services
by, such director, officer, trustee, administrator, partner,
member, fiduciary, employee or agent with respect to an employee
benefit plan, its participants or beneficiaries.
(l)
Any action taken or omitted to be
taken by a person for a purpose which he or she reasonably believed
to be in the interests of the participants and beneficiaries of an
employee benefit plan shall be deemed to have been taken in “
good faith ” and for a purpose which is “ not
opposed to the best interests of the Company” , as such
terms are referred to in this Agreement and used in the
DGCL.
(m)
The term “ Proceeding
” shall include any threatened, pending or completed action,
suit, arbitration, alternate dispute resolution mechanism,
investigation, inquiry, administrative hearing or any other actual,
threatened or completed proceeding, whether brought in the right of
the Company or otherwise and whether of a civil, criminal,
administrative or investigative nature, including any related
appeal, in which Indemnitee was, is or will be involved as a party
or witness or otherwise by reason of the fact that Indemnitee is or
was a director, officer, trustee, administrator, partner, member,
fiduciary, employee or agent of the Company, by reason of any
action taken or not taken by him or her while acting as director,
officer, trustee, administrator, partner, member, fiduciary,
employee or agent of the Company, or by reason of the fact that he
or she is or was serving at the request of the Company as a
director, officer, trustee, administrator, partner, member,
fiduciary, employee or agent of any other Enterprise, in each case
whether or not serving in such capacity at the time any liability
or expense is incurred for
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which indemnification, reimbursement, or
advancement of expenses can be provided under this
Agreement.
(n)
“ Independent Counsel
” means a law firm, or a member of a law firm, that is
experienced in matters of corporation law and neither presently is,
nor in the past five (5) years has been, retained to represent: (i)
the Company or Indemnitee in any matter material to either such
party (other than with respect to matters concerning the Indemnitee
under this Agreement, or other indemnitees under similar
indemnification agreements), or (ii) any other party to the
Proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term
“Independent Counsel” shall not include any person who,
under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing
either the Company or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement.
3.
Indemnity in Third-Party
Proceedings. The
Company shall indemnify Indemnitee in accordance with the
provisions of this Section 3 if Indemnitee is made, or is
threatened to be made, a party to or a participant in (as a witness
or otherwise) any Proceeding, other than a Proceeding by or in the
right of the Company to procure a judgment in its favor.
Pursuant to this Section 3, Indemnitee shall be indemnified against
all judgments, fines, penalties, amounts paid in settlement (if
such settlement is approved in writing in advance by the Company,
which approval shall not be unreasonably withheld) (including,
without limitation, all interest, assessments and other charges
paid or payable in connection with or in respect of any of the
foregoing) (collectively, “ Losses ”) and
Expenses actually and reasonably incurred by Indemnitee or on his
or her behalf in connection with such Proceeding or any action,
discovery event, claim, issue or matter therein or related thereto,
if Indemnitee acted in good faith, for a purpose which he or she
reasonably believed to be in or not opposed to the best interests
of the Company and, in the case of a criminal Proceeding, in
addition, had no reasonable cause to believe that his or her
conduct was unlawful.
4.
Indemnity in Proceedings by or in
the Right of the Company. The Company shall indemnify Indemnitee in
accordance with the provisions of this Section 4 if Indemnitee is
made, or is threatened to be made, a party to or a participant in
(as a witness or otherwise) any Proceeding by or in the right of
the Company to procure a judgment in its favor. Pursuant to
this Section 4, Indemnitee shall be indemnified against all
Expenses actually and reasonably incurred by him or her or on his
or her behalf in connection with the defense or settlement of such
Proceeding or any action, discovery event, claim, issue or matter
therein or related thereto, if Indemnitee acted in good faith, for
a purpose which he or she reasonably believed to be in or not
opposed to the best interests of the Company. No
indemnification, however, shall be made under this Section 4
in respect of any claim, issue or matter as to which Indemnitee
shall have been adjudged to be liable to the Company, unless and
only to the extent that the court in which the Proceeding was
brought or, if no Proceeding was brought in a court, any court of
competent jurisdiction, determines upon application that, in view
of all the
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circumstances of the case, Indemnitee fairly and
reasonably is entitled to indemnification for such portion of the
Expenses as the court deems proper.
5.
Indemnification for Expenses
Where Indemnitee is Wholly or Partly Successful.
Notwithstanding and in addition to
any other provisions of this Agreement, to the extent that
Indemnitee is a party to a Proceeding and is successful, on the
merits or otherwise, in the defense of any claim, issue or matter
therein, the Company shall indemnify Indemnitee against all
Expenses actually and reasonably incurred by him or her or on his
or her behalf in connection with such successful defense. For
the avoidance of doubt, if Indemnitee is not wholly successful in
such Proceeding but is successful, on the merits or otherwise, as
to one or more but less than all claims, issues or matters in such
Proceeding, the Company shall indemnify Indemnitee against all
Expenses actually and reasonably incurred by him or her or on his
or her behalf in connection with each successfully resolved claim,
issue or matter. For purposes of this Section 5 and, without
limitation, the termination of any claim, issue or matter in such a
Proceeding by withdrawal or dismissal, with or without prejudice,
shall be deemed to be a successful result as to such claim, issue
or matter.
6.
Indemnification for Expenses of a
Witness. Notwithstanding and in addition to any other
provision of this Agreement, to the extent that Indemnitee is, by
reason of his or her Corporate Status, a witness in or otherwise
incurs Expenses in connection with any Proceeding to which
Indemnitee is not a party, he or she shall be indemnified by the
Company against all Expenses actually and reasonably incurred by
him or her or on his or her behalf in connection
therewith.
7.
Additional
Indemnification.
(a)
Notwithstanding any limitation in
Sections 3, 4, or 5 hereof or in Section 145 of the DGCL or other
applicable statutory provision, the Company shall indemnify
Indemnitee to the fullest extent permitted by law if Indemnitee is
made, or is threatened to be made, a party to any Proceeding
(including a Proceeding by or in the right of the Company to
procure a judgment in its favor) against all Losses and Expenses
actually and reasonably incurred by Indemnitee in connection with
the Proceeding. No indemnification shall be made under this
Section 7(a) on account of Indemnitee’s conduct which
constitutes a breach of Indemnitee’s duty of loyalty to the
Company or its investors or is an act or omission not in good faith
or which involves intentional misconduct or a knowing violation of
the law.
(b)
For purposes of Sections 7(a), the
meaning of the phrase “ to the fullest extent permitted by
law ” shall include, but not be limited to:
i.
to the fullest extent authorized or
permitted by the then-applicable provisions of the DGCL or other
applicable statutory provision, that authorize or contemplate
indemnification by agreement, or the corresponding provision of any
amendment to or replacement of the DGCL or other applicable
statutory provision, and
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ii.
to the fullest extent authorized or
permitted by any amendments to or replacements of the DGCL or other
applicable statutory provision, adopted after the date of this
Agreement that increase the extent to which a corporation limited
liability company or partnership, as applicable may indemnify its
officers, directors or persons holding similar fiduciary
responsibilities.
(c)
Indemnitee shall be entitled to the
prompt payment of all Expenses reasonably incurred in enforcing
successfully (fully or partially) this Agreement.
8.
Exclusions.
Notwithstanding any provision in
this Agreement, the Company shall not be obligated under this
Agreement to make any indemnity in connection with any claim made
against Indemnitee:
(a)
for which payment actually has been
received by or on behalf of Indemnitee under any insurance policy
or other indemnity provision, except with respect to any excess
beyond the amount actually received under such insurance policy or
other indemnity provision; or
(b)
for an accounting of profits made
from the purchase and sale (or sale and purchase) by Indemnitee of
securities of the Company or any subsidiary of the Company within
the meaning of Section 16(b) of the Exchange Act, as amended, or
similar provisions of state blue sky law, state statutory law or
common law; or
(c)
prior to a Change in Control, in
connection with any Proceeding (or any part of any Proceeding)
initiated by Indemnitee, including any Proceeding (or any part of
any Proceeding) initiated by Indemnitee against the Company (other
than any Proceeding referred to in Sections 13(d) or (e) below or
any other Proceeding commenced to recover any Expenses referred to
in Section 7(c) above) or its directors, officers, employees or
other indemnitees, unless (i) the Board authorized the Proceeding
(or any part of any Proceeding) prior to its initiation or (ii) the
Company provides the indemnification, in its sole discretion,
pursuant to the powers vested in the Company under applicable law;
or
(d)
if the funds at issue were paid
pursuant to a settlement approved by a court and indemnification
would be inconsistent with any condition with respect to
indemnification expressly imposed by the court in approving the
settlement.
9.
Advances of Expenses; Defense of
Claim.
(a)
Notwithstanding any provision of
this Agreement to the contrary, the Indemnitee shall be entitled to
advances of Expenses incurred by him or her or on his or her behalf
in connection with a Proceeding that Indemnitee claims is covered
by Sections 3 and 4 hereof, prior to a final determination of
eligibility for indemnification and prior to the final disposition
of the Proceeding, upon the execution and delivery to the Company
of an undertaking by or on behalf of the Indemnitee providing that
the Indemnitee will repay such advances
