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Student Loan Corp – ‘DEFM14A’ on 11/1/10

On:  Monday, 11/1/10, at 5:17pm ET   ·   Effective:  11/1/10   ·   Accession #:  1193125-10-242785   ·   File #:  1-11616

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

11/01/10  Student Loan Corp                 DEFM14A    11/01/10    1:6.0M                                   Donnelley … Solutions/FA

Document/Exhibit                   Description                      Pages   Size 

 1: DEFM14A     Definitive Proxy Statement                          HTML   5.08M 

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant x

Filed by a Party other than the Registrant ¨

Check the appropriate box:

THE STUDENT LOAN CORPORATION

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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THE STUDENT LOAN CORPORATION

750 Washington Boulevard

Stamford, Connecticut 06901

November 2, 2010

Dear Stockholder:

We invite you to attend a special meeting of stockholders of The Student Loan Corporation, to be held at 399 Park Avenue, 12th Floor Auditorium, New York, New York 10022, on December 2, 2010 at 8:30 a.m., Eastern Time.

At the special meeting, we will ask you to vote on two related proposals.

First, we will ask you to adopt a resolution authorizing the transactions contemplated by the asset purchase agreement, which we refer to as the SLM Transaction Agreement in this proxy statement, that we entered into on September 17, 2010, under which the company will sell and transfer to Bull Run 1 LLC, a wholly owned subsidiary of SLM Education Credit Finance Corporation, (i) its ownership interest in certain specified trust certificates evidencing the residual interest in certain securitized portfolios of Federal Family Education Loan Program (which we refer to as FFELP in this proxy statement) loans and (ii) its limited liability company interest in SLC Conduit I LLC and related assets. We refer to the transactions contemplated by the SLM Transaction Agreement as the SLM Transaction in this proxy statement.

Second, we will ask you to adopt the agreement and plan of merger, which we refer to as the DFS Merger Agreement in this proxy statement, that we entered into on September 17, 2010, and approve the merger of Academy Acquisition Corp., a wholly owned subsidiary of Discover Bank, with and into the company, with the company continuing as the surviving corporation and as a wholly owned subsidiary of Discover Bank. We refer to the transactions contemplated by the DFS Merger Agreement as the DFS Merger in this proxy statement.

The transactions contemplated by the two proposals that you will be asked to vote on are, among other conditions described in the accompanying proxy statement, conditioned on each other and, therefore, both proposals must be approved in order for the SLM Transaction and the DFS Merger to be completed.

At the time we entered into the SLM Transaction Agreement and the DFS Merger Agreement, we also entered into the asset purchase agreement, which we refer to as the CBNA Transaction Agreement in this proxy statement, under which Citibank, N.A., which we refer to as CBNA in this proxy statement, or an affiliate of CBNA, will acquire from the company certain assets that neither SLM Corporation nor Discover Bank will be purchasing, including approximately $5 billion of unsecuritized FFELP loans and private student loans, ownership interests in and servicing rights for one securitization trust holding approximately $2 billion of private education loans and a second securitization trust holding approximately $800 million of FFELP loans, and certain other assets and liabilities, including the shares of SLC Student Loan Receivables I, Inc., the depositor for the securitization trusts. We refer to the transactions contemplated by the CBNA Transaction Agreement as the CBNA Transaction in this proxy statement. You are not being asked to vote on the CBNA Transaction Agreement; however, the consummation of CBNA Transaction, the SLM Transaction and the DFS Merger are each conditioned upon one another being consummated. Accordingly, we are including in this proxy statement a detailed description of the CBNA Transaction. We refer to the SLM Transaction, the DFS Merger and the CBNA Transaction, collectively, as the Transactions in this proxy statement.

If we complete the Transactions, you will receive $30.00, in cash, without interest, for each share of the company’s common stock you own, and the company will become a 100% owned subsidiary of Discover Bank.

Certain directors of the company may have interests with respect to the Transactions that are different from, or in addition to, those of the company’s stockholders generally. In particular, five out of nine directors of the company, namely Vikram A. Atal, Gina Doynow, Richard Garside, Laurie A. Hesslein and Michael J. Reardon,

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are officers of Citigroup Inc. or one or more of its subsidiaries. As such, the board of directors of the company appointed a special committee of independent directors of the company to review and evaluate the Transactions and to make a recommendation to the entire board of directors of the company. The company’s board of directors, after its independent evaluation and acting upon the unanimous recommendation of the special committee, unanimously approved the Transactions, and determined the advisability of entering into the SLM Transaction Agreement, the DFS Merger Agreement and the CBNA Transaction Agreement.

THE BOARD OF DIRECTORS OF THE STUDENT LOAN CORPORATION, UPON THE RECOMMENDATION OF A SPECIAL COMMITTEE, COMPRISED OF THE FOUR INDEPENDENT MEMBERS OF THE NINE-MEMBER BOARD, UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” BOTH (I) THE AUTHORIZATION OF THE SLM TRANSACTION AND (II) THE ADOPTION OF THE DFS MERGER AGREEMENT AND THE APPROVAL OF THE DFS MERGER.

Only holders of record of our stock at the close of business on November 1, 2010 are entitled to notice of, and to vote at, the special meeting or at any adjournments or postponements of the special meeting. CBNA, which holds 80% of the voting power of the company, has entered into an agreement with SLM Corporation and Discover Bank pursuant to which and subject to the conditions thereof, CBNA will vote its shares of company common stock in favor of the authorization of the SLM Transaction, the adoption of the DFS Merger Agreement and the approval of the DFS Merger. CBNA’s shares represent more than the number of votes necessary to approve the authorization of the SLM Transaction, the adoption of the DFS Merger Agreement and the approval of the DFS Merger at the special meeting.

Whether or not you plan to attend the special meeting, you are requested to complete, date, sign and return the proxy card. If you hold your shares in “street name,” you should instruct your broker how to vote in accordance with your voting instruction form.

The accompanying proxy statement explains the Transactions and provides specific information concerning the special meeting. Please read these materials carefully.

Sincerely,

Chairman, Chief Executive Officer and President

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these Transactions or passed upon the merits or fairness of these Transactions or the adequacy or accuracy of the disclosure in the enclosed proxy statement. Any representation to the contrary is a criminal offense.

The accompanying proxy statement is dated November 1, 2010 and is first being mailed to stockholders on or about November 2, 2010.

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THE STUDENT LOAN CORPORATION

750 Washington Boulevard

Stamford, Connecticut 06901

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To the Stockholders of The Student Loan Corporation:

A special meeting of stockholders of The Student Loan Corporation will be held on December 2, 2010, at 399 Park Avenue 12^TH Floor Auditorium, New York, New York 10022, at 8:30 a.m. Eastern Time, for the purposes of considering and voting upon the following proposals:

PROPOSAL NUMBER 1. To adopt, by holders of a majority of the company’s outstanding shares of common stock entitled to vote, voting together as a single class, a resolution authorizing the transactions contemplated by the Asset Purchase Agreement, dated as of September 17, 2010, by and among the company and certain of its affiliates, Citibank, N.A. and SLM Corporation and certain of its affiliates, pursuant to which the company will sell to Bull Run 1 LLC, a wholly owned subsidiary of SLM Education Credit Finance Corporation, (i) its ownership interest in certain specified trust certificates evidencing the residual interest in certain securitized portfolios of FFELP loans and (ii) its limited liability company interest in SLC Conduit I LLC and related assets; and

PROPOSAL NUMBER 2. To adopt, by holders of a majority of the company’s outstanding shares of common stock entitled to vote, voting together as a single class, the Agreement and Plan of Merger, dated as of September 17, 2010, by and among the company, Discover Bank and Academy Acquisition Corp., a wholly owned subsidiary of Discover Bank, and to approve the merger of Academy Acquisition Corp. with and into the company, with the company continuing as the surviving corporation and as a wholly owned subsidiary of Discover Bank.

The transactions contemplated by the two proposals are, among other conditions described in the accompanying proxy statement, conditioned on each other and, therefore, both proposals must be approved for the SLM Transaction and the DFS Merger to be completed.

No other matters may be brought before the special meeting.

The board of directors of the company has fixed the close of business on November 1, 2010 as the record date for determining stockholders entitled to notice of, and to vote at, the special meeting and any adjournment or postponement of the meeting. A list of these stockholders will be available for inspection for 10 days preceding the special meeting at 425 Park Avenue, Second Floor, New York, New York 10022, and will also be available for inspection at the special meeting itself.

THE BOARD OF DIRECTORS OF THE STUDENT LOAN CORPORATION, UPON THE RECOMMENDATION OF A SPECIAL COMMITTEE, COMPRISED OF THE FOUR INDEPENDENT MEMBERS OF THE NINE-MEMBER BOARD, UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” BOTH (I) THE AUTHORIZATION OF THE SLM TRANSACTION AND (II) THE ADOPTION OF THE DFS MERGER AGREEMENT AND THE APPROVAL OF THE DFS MERGER.

WHETHER OR NOT YOU EXPECT TO ATTEND THE STUDENT LOAN CORPORATION SPECIAL MEETING IN PERSON, WE URGE YOU TO SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE (I) THROUGH THE INTERNET BY FOLLOWING THE INSTRUCTIONS INCLUDED ON YOUR PROXY CARD, (II) BY TELEPHONE BY FOLLOWING THE INSTRUCTIONS INCLUDED ON YOUR PROXY CARD OR (III) BY MARKING, SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE POSTAGE-PAID ENVELOPE PROVIDED. You may revoke your proxy or change your vote at any time before the special meeting. If your shares are held in the name of a bank, broker or other fiduciary, please follow the instructions on the voting instruction card furnished to you by such record holder.

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You are urged to read the accompanying proxy statement and its annexes carefully and in their entirety. If you have any questions concerning the proposed transactions, the special meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement or need help voting your shares of the company’s common stock, please contact Investor Relations at:

THE STUDENT LOAN CORPORATION

750 Washington Boulevard

Stamford, Connecticut 06901

203-975-6320

PLEASE DO NOT SEND YOUR STOCK CERTIFICATES AT THIS TIME.

By Order of the Board of Directors,

Chairman, Chief Executive Officer and President

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QUESTIONS AND ANSWERS ABOUT THE TRANSACTIONS AND THE SPECIAL MEETING

The following are some questions that you, as a stockholder of the company, may have regarding the SLM Transaction Agreement, the SLM Transaction, the DFS Merger Agreement, the DFS Merger, the CBNA Transaction Agreement, the CBNA Transaction and the special meeting, and brief answers to those questions. You are urged to read this proxy statement and the other documents referred to in this proxy statement carefully and in their entirety because this section may not provide all of the information that is important to you with respect to the Transactions and the special meeting. Additional important information is contained in the annexes to this proxy statement.

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Once a quorum has been established, the affirmative vote of holders of a majority of the shares of the company’s common stock outstanding and entitled to vote on the proposals is required to approve each proposal. Abstentions, broker non-votes and unvoted shares will have the same effect as votes “AGAINST” adoption of each proposal.

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Brokers do not have discretionary authority to vote on the proposals to authorize the SLM Transaction or to adopt the DFS Merger Agreement and to approve the DFS Merger. Your broker may still register your shares of the company’s common stock as being present at the special meeting for purposes of determining a quorum but, without your specific authorization, your shares of the company’s common stock will not be voted in favor of the authorization of the SLM Transaction, the adoption of the DFS Merger Agreement or the approval of the DFS Merger. This is called a broker non-vote. A broker non-vote will have the same effect as a vote “AGAINST” the authorization of the SLM Transaction and “AGAINST” the adoption of the DFS Merger Agreement and the approval of the DFS Merger.

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If you hold your shares of the company’s common stock through a broker or other nominee, you must contact your broker or other nominee to change your vote or obtain a “legal proxy” to vote your shares if you wish to cast your vote in person at the meeting.

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Please see “THE TRANSACTIONS — Certain U.S. Federal Income Tax Consequences of the DFS Merger” beginning on page 60 of this proxy statement for more information on the U.S. federal income tax consequences of the DFS Merger. We urge you to consult your tax advisor as to the particular U.S. federal, state, local, foreign and any other tax consequences of the DFS Merger to you.

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If you hold your shares of the company’s common stock through a broker or other nominee, please instruct your broker or nominee to vote your shares by following the instructions that the broker or nominee provides to you with these materials.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement contains “forward looking statements” that are intended to be covered by the safe harbor provided by the Private Securities Litigation Reform Act of 1995. Representatives of the company may also make forward-looking statements. Forward-looking statements are statements that are not historical facts, and are identified by words such as “expect,” “believe,” “predict,” “anticipate,” “contemplate,” “will,” “may,” “might,” “continue,” “plan,” “estimate,” “objective,” “intend,” “project,” “budget,” “forecast,” “can,” “could,” “should,” “would,” “likely,” “potential” and similar expressions. These statements include, but are not limited to, statements about the expected costs and benefits of the SLM Transaction, the DFS Merger and the CBNA Transaction, the authorization of the SLM Transaction, the adoption of the DFS Merger Agreement and approval of the DFS Merger by the company’s stockholders, the satisfaction of the closing conditions to the SLM Transaction, the DFS Merger and the CBNA Transaction, the timing of the completion of the SLM Transaction, the DFS Merger, and the CBNA Transaction and the company’s plans, objectives and expectations after the completion of the transactions. Forward-looking statements are not guarantees of performance. These statements are based upon the current beliefs and expectations of management of the company and are subject to numerous risks and uncertainties that could cause actual outcomes and results to be materially different from those projected or anticipated. The following factors, among others, could cause such differences:

You are cautioned not to place undue reliance on the forward-looking statements made in this proxy statement or by representatives of the company. These statements speak only as of the date hereof, or, in the case of statements made by representatives of the company, on the date those statements were made. All subsequent written and oral forward-looking statements concerning the transactions or any other matter addressed in this proxy statement and attributable to the company or any person acting on behalf of the company are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. The company expressly disclaims any obligation to update or publish revised forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of any unanticipated events.

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SPECIAL MEETING

The company is providing this proxy statement in connection with a special meeting of stockholders that the company has called for the purpose of holding a vote to authorize the SLM Transaction, as well as to adopt the DFS Merger Agreement and approve the DFS Merger. This proxy statement is first being mailed to the company’s stockholders on or about November 2, 2010 and provides the company’s stockholders with the information they need to know to be able to vote or instruct their vote to be cast at the special meeting of the company’s stockholders.

Date, Time and Place

The special meeting will be held at 399 Park Avenue, 12^th Floor Auditorium, New York, New York 10022 on December 2, 2010, at 8:30 a.m., Eastern Time.

Purpose

At the special meeting, the company’s stockholders will be asked to vote solely on the following proposals:

PROPOSAL NUMBER 1. To adopt, by holders of a majority of the company’s outstanding shares of common stock entitled to vote, voting together as a single class, a resolution authorizing the SLM Transaction; and

PROPOSAL NUMBER 2. To adopt, by holders of a majority of the company’s outstanding shares of common stock entitled to vote, voting together as a single class, the DFS Merger Agreement, and to approve the DFS Merger.

Record Date; Outstanding Shares; Shares Entitled to Vote

The record date for the company’s special meeting is November 1, 2010. Only the company’s stockholders of record at the close of business on November 1, 2010 will be entitled to receive notice of and to vote at the special meeting or any adjournment of the special meeting. Shares of the company’s common stock held by the company as treasury shares will not be entitled to vote. As of the close of business on the record date, there were 20,000,000 shares of the company’s common stock outstanding and entitled to vote at the special meeting. Each holder of the company’s common stock is entitled to one vote for each share of the company’s common stock owned as of the record date.

A complete list of the company’s stockholders entitled to vote at the company’s special meeting will be available for inspection at 425 Park Avenue, Second Floor, New York, New York 10022 during regular business hours for a period of no less than 10 days before the special meeting, as well as at the place of the company’s special meeting during the special meeting.

Quorum

A quorum of stockholders is required for the company’s stockholders to authorize the SLM Transaction, to adopt the DFS Merger Agreement and to approve the DFS Merger at the special meeting. The presence at the special meeting, in person or by proxy, of the holders of a majority of the outstanding shares of the company’s common stock entitled to vote on the record date will constitute a quorum. Proxies received but marked as abstentions, if any, will be included in the calculation of the number of shares considered to be present at the meeting for quorum purposes. With respect to broker non-votes (as defined below), the authorization of the SLM Transaction, the adoption of the DFS Merger Agreement and the approval of the DFS Merger are not considered routine matters. Therefore, your broker will not be permitted to vote on the authorization of the SLM Transaction, the adoption of the DFS Merger Agreement and the approval of the DFS Merger without instruction

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from you as the beneficial owner of the shares of the company’s common stock. Broker non-votes will, however, be counted for purposes of determining whether a quorum is present at the special meeting. Pursuant to the voting and support agreement that CBNA has entered into with SLM Corporation and Discover Bank, CBNA has agreed, subject to certain conditions, to be present in person or by proxy at the meeting. Therefore, the company expects that there will be a quorum at the special meeting.

Required Vote

Each of the authorization of the SLM Transaction and the adoption of the DFS Merger Agreement and the approval of the DFS Merger, will require the affirmative vote of the holders of a majority of the shares of the company’s common stock outstanding and entitled to vote on the proposals. Because approval of the proposals is based on the affirmative vote of a majority of the outstanding shares of the company’s common stock, a stockholder’s failure to submit a proxy card or to vote in person at the special meeting or an abstention from voting, or the failure of a stockholder who holds his or her shares of the company’s common stock in “street name” through a broker or other nominee to give voting instructions to such broker or other nominee, will have the same effect as a vote “AGAINST” the authorization of the SLM Transaction and “AGAINST” the adoption of the DFS Merger Agreement and the approval of the DFS Merger.

If there are not shares of the company’s common stock representing votes sufficient to authorize the SLM Transaction and adopt the DFS Merger Agreement and approve the DFS Merger present in person or by proxy at the time of the special meeting, the holders of a majority of the shares of the company’s common stock present in person or by proxy (whether or not a quorum is present) may adjourn the meeting to another time and place in order to solicit additional proxies. Shares of the company’s common stock not in attendance at the special meeting will have no effect on the outcome of any vote to adjourn the special meeting.

The Voting and Support Agreement

The following is a summary of the material provisions of the voting and support agreement, a copy of which is attached as Exhibit B to Annex B to this proxy statement. You should refer to the full text of the voting and support agreement for the complete details, terms and conditions of the agreement.

Voting

On September 17, 2010, concurrently with the entry into the DFS Merger Agreement and the SLM Transaction Agreement, CBNA, SLM Corporation and Discover Bank entered into a voting and support agreement pursuant to which and subject to the terms thereof, among other things, CBNA agreed to vote all of its shares of the company’s common stock (i) in favor of the authorization of the SLM Transaction, (ii) in favor of the adoption of the DFS Merger Agreement and the approval of the DFS Merger and (iii) against certain proposals, actions or transactions involving the company or any of its subsidiaries, including those which would reasonably be expected to in any manner impede, frustrate, prevent or nullify the SLM Transaction Agreement, the DFS Merger Agreement, any of the ancillary agreements or any of the related transaction agreements or any of the transactions. However, if the company’s board of directors has effected a Permitted Change of Recommendation with respect to either the DFS Merger Agreement or SLM Transaction Agreement in response to an Alternate Superior Proposal (as each such term is defined in the DFS Merger Agreement or SLM Transaction Agreement), then CBNA’s obligation to vote in favor of the authorization of the SLM Transaction and the adoption of the DFS Merger Agreement and the approval of the DFS Merger, as applicable, only applies to the number of shares of the company’s common stock that is equal to exactly 40% of the total number of shares of the company’s common stock outstanding. In such a circumstance, CBNA would be permitted to vote the balance of the shares of company common stock owned by it in its discretion.

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Termination

With respect to Discover Bank, the voting and support agreement terminates, other than with respect to the provisions relating to the payment of fees by CBNA, upon the earlier of (i) the closing under the DFS Merger Agreement, (ii) the termination of the SLM Transaction Agreement or the DFS Merger Agreement and (iii) written notice by CBNA following any amendment to the DFS Merger Agreement that reduces or changes the form of the merger consideration or amends the article of the DFS Merger Agreement relating to closing conditions in a manner that adversely affects CBNA.

With respect to SLM Corporation, the voting and support agreement terminates, other than with respect to the provisions relating to the payment of fees by CBNA, upon the earlier of the closing under the SLM Transaction Agreement and any termination of the SLM Transaction Agreement.

Other

CBNA has agreed not to (i) transfer or pledge its shares of the company’s common stock, except in connection with the actions contemplated by the voting and support agreement, and except to wholly owned subsidiaries, or (ii) knowingly take any action that is reasonably likely to delay, prevent or have an adverse effect on its ability to satisfy its obligations under the voting and support agreement or the DFS Merger Agreement, SLM Transaction Agreement or CBNA Transaction Agreement.

CBNA has also agreed to restrictions on solicitations of competing proposals similar to those of the company contained in the DFS Merger Agreement and SLM Transaction Agreement. In addition, in the event the DFS Merger Agreement or SLM Transaction Agreement is terminated under certain circumstances and the company enters into an alternative transaction within certain time periods, CBNA would share up to 50% of its profit from the alternative transaction with Discover Bank and/or SLM Corporation, as applicable. See “THE SLM TRANSACTION AGREEMENT — Termination” and “THE DFS MERGER AGREEMENT — Termination,” beginning on pages 75 and 88 of this proxy statement, respectively.

CBNA and SLM Corporation have each agreed not to acquire or to seek to acquire any of the assets to be acquired by Discover Bank pursuant to the DFS Merger Agreement. Discover Bank has agreed not to acquire or seek to acquire any of the assets to be acquired by SLM Corporation and its affiliates pursuant to the SLM Transaction Agreement.

Voting your Shares

By Internet or Telephone

If you hold shares of the company’s common stock directly in your name as a stockholder of record, you may vote electronically via the Internet at www.envisionreports.com/STU or telephonically by calling 1-800-652-8683. Votes submitted telephonically or via the Internet must be received by 11:59 p.m. (Eastern Time) on December 1, 2010. If you hold the company’s shares in street name through a broker or other nominee, you may vote electronically via the Internet by following the instructions provided by your broker or other nominee. If you wish to vote by telephone you will need to request paper copies of the materials from your broker or other nominee in order to obtain a Voting Instruction Form which contains a specific telephone number for your broker or other nominee. Votes submitted telephonically or via the Internet must be received by 11:59 p.m. (Eastern Time) on December 1, 2010.

In Person

If you hold shares of the company’s common stock directly in your name as a stockholder of record, you may vote in person at the special meeting. Stockholders of record also may be represented by another person at the special meeting by executing a proper proxy designating that person.

If you hold shares of the company’s common stock in street name through a broker or other nominee, you must obtain a legal proxy from that institution and present it to the inspector of elections with your ballot to be able to vote in person at the special meeting.

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By Mail

If you hold shares of the company’s common stock directly in your name as a stockholder of record, you will need to mark, sign and date your proxy card and return it using the postage-paid return envelope provided. The company must receive your proxy card no later than close of business on December 1, 2010.

If you hold shares of the company’s common stock in street name through a broker or other nominee, to vote by mail you must request paper copies of the proxy materials from your broker or other nominee. Once you receive your paper copies, you will need to mark, sign and date the Voting Instruction Form and return it in the pre-paid return envelope provided. Your Voting Instruction Form must be received no later than the close of business on December 1, 2010.

When a stockholder submits a proxy by telephone or through the Internet, his or her proxy is recorded immediately. The company encourages its stockholders to submit their proxies using these methods whenever possible. If you submit a proxy by telephone or via the Internet, please do not return your proxy card by mail. If you attend the meeting, you may also submit your vote in person. Any votes that you previously submitted — whether via the Internet, by telephone or by mail — will be superseded by the vote that you cast at the meeting. All shares represented by each properly executed and valid proxy received before the special meeting will be voted in accordance with the instructions given on the proxy. If a stockholder executes a proxy card without giving instructions, the shares of the company’s common stock represented by that proxy card will be voted “FOR” approval of the proposals to authorize the SLM Transaction, and to adopt the DFS Merger Agreement and to approve the DFS Merger.

Your vote is important. Accordingly, please submit your proxy by telephone, through the Internet or by mail, whether or not you plan to attend the meeting in person.

Voting of Shares Held in Street Name

If your shares of the company’s common stock are held in an account at a broker or through another nominee, you must instruct the broker or other nominee on how to vote your shares of the company’s common stock. If you do not provide voting instructions to your broker, your shares of the company’s common stock will not be voted on any proposal on which your broker does not have discretionary authority to vote. This is referred to in this proxy statement and in general as a “broker non-vote.” In these cases, the broker or other nominee can register your shares as being present at the special meeting for purposes of determining a quorum, but will not be able to vote your shares of the company’s common stock on those matters for which specific authorization is required. Brokers do not have discretionary authority to vote on the proposals to authorize the SLM Transaction, or to adopt the DFS Merger Agreement and to approve the DFS Merger. Therefore, a broker non-vote will have the same effect as a vote “AGAINST” authorization of the SLM Transaction, adoption of the DFS Merger Agreement and approval of the DFS Merger.

Revocability of Proxies; Changing Your Vote

You may revoke your proxy and/or change your vote at any time before your shares of the company’s common stock are voted at the special meeting. If you are a stockholder of record, you can do this by:

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If you hold your shares of the company’s common stock through a broker or other nominee, you must contact your broker or other nominee to change your vote or obtain a “legal proxy” to vote your shares of the company’s common stock if you wish to cast your vote in person at the meeting.

Solicitation of Proxies

This proxy statement is furnished in connection with the solicitation of proxies by the company to be voted at the special meeting. The company will bear all costs and expenses in connection with the solicitation of proxies, including the charges of brokerage houses and other custodians, nominees or fiduciaries for forwarding documents to stockholders. Proxies may also be solicited by certain of the company’s directors, officers and employees by telephone, electronic mail, letter, facsimile or in person, but no additional compensation will be paid to them.

Stockholders should not send stock certificates with their proxies. A letter of transmittal and instructions for the surrender of common stock certificates of the company will be mailed to the company’s stockholders shortly after the completion of the DFS Merger, if approved.

Stockholders Sharing an Address

Consistent with notices sent to stockholders of record sharing a single address, the company is sending only one copy of this proxy statement to that address unless the company received contrary instructions from any stockholder at that address. This “householding” practice reduces the volume of duplicate information received at your household and helps the company reduce costs. Stockholders may request to discontinue householding, or may request a separate copy of this proxy statement by one of the following methods:

No Other Business

Under the company’s bylaws, as amended, the business to be conducted at the special meeting will be limited to the purposes stated in the notice to the company’s stockholders provided with this proxy statement.

Adjournments

Adjournments may be made for the purpose of, among other things, soliciting additional proxies. Whether or not a quorum is present, a majority of the shares of common stock present in person or by proxy may adjourn the meeting to another time and place. The company is not required to notify stockholders of any adjournment of 30 days or less if the time and place of the adjourned meeting are announced at the meeting at which the adjournment is taken, unless after the adjournment a new record date is fixed for the adjourned meeting. At any adjourned meeting, the company may transact any business that it might have transacted at the original meeting, provided that a quorum is present at such adjourned meeting. Proxies submitted by the company’s stockholders for use at the special meeting will be used at any adjournment or postponement of the meeting. References to the company’s special meeting in this proxy statement are to such special meeting as adjourned or postponed.

Assistance

If you need assistance in completing your proxy card or have questions regarding the special meeting, please contact The Student Loan Corporation, 750 Washington Boulevard, Stamford, Connecticut 06901, Attention: Investor Relations, telephone number 203-975-6320.

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THE PARTIES

The Student Loan Corporation

The company is one of the nation’s leading originators and holders of student loans providing a full range of education financing products and services to meet the needs of students, parents, schools and lenders. The company was incorporated in 1992 under the laws of the State of Delaware. The principal executive offices of the company are located at 750 Washington Boulevard, Stamford, Connecticut 06901. The telephone number for the company is 203-975-6320.

Citibank, N.A.

Citibank, N.A., which we refer to as CBNA in this proxy statement, is a national banking association and an indirect wholly owned subsidiary of Citigroup Inc. CBNA owns 80% of the company’s outstanding common stock. The principal executive offices of CBNA are located at 399 Park Avenue, New York, New York 10022. The telephone number for CBNA is 212-559-1000.

Citibank (South Dakota) National Association

Citibank (South Dakota) National Association, which we refer to as CSD in this proxy statement, is a credit card and lending only institution and a wholly owned subsidiary of Citigroup Inc. The principal executive offices of CSD are located at 701 East 60th Street, North, Mail Code 1251, Sioux Falls, South Dakota 57104. The telephone number for CSD is 605-331-2626.

SLM Corporation

SLM Corporation, more commonly known as Sallie Mae, is one of the nation’s leading saving, planning and paying for education companies. SLM Corporation is a holding company that operates through a number of subsidiaries. The company was formed in 1972 as the Student Loan Marketing Association, a federally chartered government sponsored enterprise and was privatized on December 29, 2004. The principal executive offices of SLM Corporation are located at 12061 Bluemont Way, Reston, Virginia 20190-5684. The telephone number for SLM Corporation is 703-810-3000.

Bull Run 1 LLC

Bull Run 1 LLC is a newly formed Delaware limited liability company and a wholly owned subsidiary of SLM Education Credit Finance Corporation. Bull Run 1 LLC was organized solely for the purpose of entering into the SLM Transaction Agreement with the company and the term loan agreement with CBNA to finance the SLM Transaction. The principal executive offices of Bull Run 1 LLC are located at 12061 Bluemont Way, V3419, Reston, Virginia 20190-5684. The telephone number for Bull Run 1 LLC is 703-984-6419.

SLM Education Credit Finance Corporation

SLM Education Credit Finance Corporation is a Delaware corporation and a wholly owned subsidiary of SLM Corporation. SLM Education Credit Finance Corporation is a holder of FFELP and private student loans. The principal executive offices of SLM Education Credit Finance Corporation are located at 12061 Bluemont Way, Reston, Virginia 20190-5684. The telephone number for SLM Education Credit Finance Corporation is 703-810-3000.

Sallie Mae, Inc.

Sallie Mae, Inc. is a Delaware corporation and a wholly owned subsidiary of SLM Corporation. Sallie Mae, Inc. services and administers student loans for the family of Sallie Mae companies, their securitization vehicles and for third parties. The principal executive offices of Sallie Mae, Inc. are located at 12061 Bluemont Way, Reston, Virginia 20190-5684. The telephone number for Sallie Mae, Inc. is 703-810-3000.

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Discover Bank

Discover Bank is a wholly owned subsidiary of Discover Financial Services. Discover Financial Services, which is a leading credit card issuer in the United States and an electronic payment services company, acquired Discover Bank in January 1985. Discover Bank was chartered as a banking corporation under the laws of the State of Delaware in 1911, and its deposits are insured by the FDIC. The principal executive offices of Discover Bank are located at 12 Read’s Way, New Castle, Delaware 19720. The telephone number for Discover Bank is 302-323-7315.

Academy Acquisition Corp.

Academy Acquisition Corp. is a newly formed Delaware corporation and is a wholly owned subsidiary of Discover Bank. Academy Acquisition Corp. was organized solely for the purposes of entering into the DFS Merger Agreement with the company. The principal executive offices of Academy Acquisition Corp. are located at 2500 Lake Cook Road, Riverwoods, Illinois 60015. The telephone number for Academy Acquisition Corp. is 224-405-0900.

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THE TRANSACTIONS

Background of the Transactions

The following is a summary of the meetings, negotiations, material contacts and discussions that preceded the execution of the SLM Transaction Agreement, the DFS Merger Agreement and the CBNA Transaction Agreement.

Prior to December 22, 1992, the company operated as a division of a predecessor of Citigroup Inc., which we refer to as Citi in this proxy statement. In December 1992, the company was reorganized as a stand-alone company and shares of the company’s common stock were sold in an initial public offering. Following the offering, CBNA, an indirect wholly owned subsidiary of Citi, continued to hold 80% of the company’s outstanding common stock.

Over the past several years, Citi and its subsidiaries and the company have from time to time held discussions concerning possible strategic alternatives for the company. In early 2009, in response to the dramatic and profound changes in the market environment that had become increasingly apparent by the end of 2008, Citi decided to focus on its core businesses and realigned into two distinct businesses for management reporting purposes: Citicorp, which is composed of Citi’s core businesses, and Citi Holdings, which is composed of non-core businesses. As disclosed in the company’s filings with the Securities and Exchange Commission, Citi included the company in the Citi Holdings business segment, together with other non-core businesses intended for business divestitures, portfolio run-off and asset sales. The company believes that the decision to include the company in Citi Holdings was motivated in part by certain legislative changes that, among other things, threatened to eliminate a significant portion of the company’s business (certain of these changes were implemented on March 30, 2010 with the enactment of H.R. 4872, the Health Care and Education Reconciliation Act of 2010, which included a provision eliminating the private origination of FFELP student loans effective July 1, 2010). The company also believes that Citi’s decision was informed by the significant dislocation in the credit markets that was occurring at that time, which increased funding costs and limited the availability of third party financing for the company.

In the summer of 2009, representatives of Citi management contacted members of company management to discuss the process for opening a dialogue between Citi and the company regarding strategic alternatives. On June 16, 2009, representatives of the company met at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, which we refer to as Skadden in this proxy statement, counsel to Citi, with representatives of Citi, Citigroup Global Markets Inc., financial advisor to Citi, which we refer to as CGMI in this proxy statement, and representatives of Skadden. The group discussed the company’s financial situation, including the status of various company initiatives that were underway to obtain additional financing and financing sources. The group also discussed the potential for a process to explore strategic alternatives, but acknowledged that further resolution of the company’s financing initiatives (including the Original Omnibus Agreement (as defined below), which was to expire by its terms at the end of 2009) and pending legislative matters was needed before any definitive steps could be taken.

At the meeting, representatives of CGMI also outlined the steps that would be involved in a sale process (including, among other things, the preparation of an offering memorandum for interested parties and the collection of materials for a due diligence virtual datasite). During these initial discussions, representatives of Citi and the company also agreed that, prior to any specific action in respect of a strategic alternatives process, the board of directors of the company should establish a special committee of independent directors and engage independent financial and legal advisors in light of Citi’s 80% ownership interest in the company and the fact that five out of nine directors of the company are officers of Citi or its subsidiaries.

On July 2, 2009, representatives of Citi and the company met in Stamford, Connecticut to continue discussions with respect to a possible strategic alternatives process for the company and initial steps involved in such a process.

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At the July 2009 meeting of the board of directors of the company, Mr. Reardon briefed the board of directors of the company regarding the June 16, 2009 meeting with Citi, including Citi’s potential interest in exploring strategic alternatives involving the company.

During the course of the summer and early fall 2009, representatives of Citi and the company continued discussions with respect to a possible strategic alternatives process for the company. On October 2, 2009, representatives of Citi contacted Mr. Reardon to notify the company that Citi was prepared to initiate steps for a strategic alternatives process and to suggest that such process be coordinated with the board of directors of the company and a special committee thereof.

On October 29, 2009, the board of directors of the company held a meeting in New York City and, following discussion with the company’s outside advisors, took action to establish a special committee of independent directors. The special committee was authorized to review, investigate, analyze, study, negotiate and, at the special committee’s discretion, approve or disapprove certain potential strategic alternatives, except that, in the case of a merger or sale of all or substantially all of the company’s assets with respect to which the delegation of the authority of the board of directors of the company is prohibited by Section 141 of the Delaware General Corporation Law, the special committee was not authorized to approve or disapprove of such transaction, but instead had the power to make a recommendation to the board of directors of the company as to whether the company should proceed with such transaction, in which case, the board of directors of the company could not approve such transaction unless recommended by the special committee. The special committee consisted of James L. Bailey, Rodman L. Drake, Glenda B. Glover and Evelyn E. Handler, all of whom were directors of the company and were neither employees of the company nor current or former employees or directors of Citi or CBNA (other than Mr. Bailey, who was previously an employee of Citi). Mr. Drake was appointed Chairman of the special committee. The board of directors of the company later adopted amended and restated resolutions that further clarified the authority of the special committee.

The special committee interviewed several law firms and, on December 9, 2009, retained Proskauer Rose LLP, which we refer to as Proskauer in this proxy statement, as its legal counsel. The special committee, together with its legal counsel, interviewed several financial advisory firms and, on December 16, 2009, retained Moelis & Company LLC, which we refer to as Moelis in this proxy statement, as its financial advisor. In addition, on August 27, 2010, the special committee retained Gleacher & Company Securities, Inc., which we refer to as Gleacher in this proxy statement, to render a second fairness opinion regarding the consideration to be paid to the company in the CBNA Transaction.

During the latter part of 2009, the company and CBNA also held discussions to negotiate the terms of a replacement to the Omnibus Credit Agreement, dated November 30, 2000, between the company and CBNA, which we refer to as the Original Omnibus Agreement in this proxy statement, which by its terms was to expire on December 31, 2009. Since the company’s inception, the company had received a significant portion of its funding from borrowing arrangements with CBNA and, between November 30, 2000 and December 31, 2009, the company had borrowed these funds from CBNA on an unsecured basis pursuant to the Original Omnibus Agreement. On December 22, 2009, the company announced that it had entered into an amendment to the Original Omnibus Agreement, which we refer to as the Extension Agreement in this proxy statement, with CBNA that, among other things, extended the expiration date under the Original Omnibus Agreement through January 31, 2010, pending continuing negotiations for a replacement facility. An Amended and Restated Omnibus Credit Agreement, which we refer to as the Omnibus Agreement in this proxy statement, was entered into on January 29, 2010, providing for up to $6.6 billion in aggregate credit for new borrowings. The terms of the Omnibus Agreement are significantly less favorable than those of the Original Omnibus Agreement and provide the Company with funding at a significantly higher cost. The Omnibus Agreement expires on December 30, 2010, which will require the company to either negotiate an extension to the Omnibus Agreement or identify alternative funding arrangements to maintain adequate liquidity in 2011. The terms and conditions of the Extension Agreement and the Omnibus Agreement were reviewed and approved by the Audit Committee of the board of directors of the company, which is comprised of the four independent directors serving on the special committee.

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On January 27, 2010, members of the special committee and representatives of Moelis, Proskauer, Citi, CGMI and Skadden met at the offices of Citi in New York City to discuss a potential process to solicit indications of interest from parties that may be interested in acquiring the company. After discussion, the special committee and Citi agreed that an auction process would be the most effective means of identifying such parties, and Citi indicated that Citi and CGMI would take the lead in contacting potential buyers and would coordinate with and report on these efforts to the special committee and its advisors. Representatives of the special committee also informed the other parties that any acceptable result of the process must deliver value to the public stockholders and that such value must be a per share amount at least equal to the consideration received by Citi.

On February 17, 2010, representatives of Moelis, Proskauer, Citi, CGMI and Skadden met with members of the special committee to continue discussions regarding the proposed auction process and to identify potential buyers that would be contacted. Each of CGMI and Moelis suggested potential strategic and financial buyer candidates that might be approached as part of the process. Citi and the special committee determined to have CGMI contact eight identified potential buyers. During the meeting, Citi also reported on certain preliminary discussions it had previously had with certain potentially interested parties regarding Citi’s 80% interest in the company.

During the weeks that followed, representatives of the company, the special committee and Citi, with the assistance of their respective advisors, worked to finalize a confidential offering memorandum, which we refer to as the Offering Memorandum in this proxy statement, for the company that could be sent to potential buyers. Representatives of CGMI also continued to work with the company and its advisors to populate a virtual datasite that would be open to potential buyers.

Beginning in late February 2010, CGMI contacted the eight potential buyers that had been identified during the February 17th meeting. Four of these parties eventually executed confidentiality agreements with the company, including SLM Corporation (confidentiality agreement dated March 11, 2010) and Discover Financial Services, the parent company of Discover Bank, which we refer to as Discover in this proxy statement (confidentiality agreement dated April 27, 2010). In addition, two other potentially interested strategic buyers, which we refer to as “Bidder X” and “Bidder Y” in this proxy statement, executed similar confidentiality agreements with the company. Following execution of the confidentiality agreements, the interested parties received a copy of the Offering Memorandum and access to the company’s virtual datasite. In addition, during February and March 2010, representatives of Citi and CGMI had a number of conversations with certain other parties regarding potential interest in the company during the course of general discussions regarding assets included in Citi Holdings; however, these parties determined not to proceed with further discussions or due diligence in respect of the company.

Beginning in March and April 2010, SLM Corporation, Bidder Y and Discover conducted due diligence reviews, including a review of the Offering Memorandum and materials made available in the company’s virtual datasite. In addition, these potential buyers had discussions with company management, CBNA and Moelis during this time. Also during this time, the Skadden, Citi, company and Proskauer teams worked to prepare a draft merger agreement to be distributed to bidders, providing for the sale of the entire company by way of a merger.

In April 2010, SLM Corporation and Bidder Y, having substantially completed their initial diligence review of the company, indicated that they remained interested in pursuing a potential transaction involving the company. In addition, at this time, Bidder X communicated an oral offer to the company to acquire certain FFELP assets of the company; however, after discussions among the special committee, Citi and their respective advisors, the special committee and Citi determined that the price contemplated by the Bidder X offer was too low to warrant further discussions.

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On April 24, 2010, CGMI (following review and comment by the special committee, Citi and their respective advisors) delivered a letter to each of SLM Corporation and Bidder Y with instructions to provide written indications of interest for a potential transaction no later than Monday, May 10, 2010 (which deadline was later extended upon the request of the bidders). The letter included the draft merger agreement as an exhibit and requested that the indication of interest include a marked copy of the draft merger agreement showing the changes the buyer would require.

On April 27 and April 28, 2010, Citi hosted presentations by company management to Bidder Y and SLM Corporation in New York City.

During discussions among the parties in May 2010, Discover indicated that it required additional time to conduct further diligence prior to pursuing a transaction involving the company.

On May 24, 2010, SLM Corporation delivered a non-binding bid letter proposing a transaction in which SLM Corporation would (i) acquire the company’s FFELP student loan portfolio, other than FFELP loans anticipated to be sold to the Department of Education under its put and participation facility and approximately $1.86 billion of unencumbered FFELP loans (with the FFELP student loan portfolio to be acquired representing approximately $1.009 billion of net tangible assets, with a principal balance of approximately $27.392 billion as of March 31, 2010) for $1.2 billion (representing an approximately 19% premium to the net tangible assets of the FFELP portfolio) or, alternatively, (ii) acquire the servicing rights to all of the FFELP and private student loan assets of the company (other than with respect to approximately $4.24 billion of loans expected to be sold to the Department of Education as described above) for $105 million. SLM Corporation indicated in its bid that it had reviewed the possibility of purchasing the entire company, but that based on its review to date, its evaluation resulted in a whole company valuation representing a significant discount to the company’s market capitalization. SLM Corporation also indicated in its bid that the proposed transaction assumed that CBNA would provide 100% of the financing for the transaction to SLM Corporation through a subordinated unsecured term loan with a proposed interest rate that the company believes was lower than the rate that SLM Corporation would have been able to obtain in the open market. The bid did not include a markup of the draft merger agreement.

On May 28, 2010, Bidder Y delivered a non-binding bid letter proposing a transaction in which Bidder Y would acquire the company’s existing portfolio of private student loans that are not pledged or otherwise encumbered by the company’s asset-backed financing transactions, which we refer to as the Unencumbered Portfolio in this proxy statement, with a face value of $3.99 billion as of March 31, 2010, and all assets associated with the company’s private loan origination and fulfillment platform, including all company-owned technology or other intellectual property related to such operations, which we refer to as the Platform in this proxy statement. Bidder Y proposed to acquire the Unencumbered Portfolio and the Platform for total consideration of 91.5% to 94% of the par value of the Unencumbered Portfolio (including accrued interest). The bid did not include a markup of the draft merger agreement.

Beginning in June 2010, the special committee met regularly (typically weekly) to receive updates on the process from its advisors. During the first week of June, the special committee, Citi and their respective advisors analyzed and discussed the bids from SLM Corporation and Bidder Y and considered the structure, value and implications of the transactions contemplated thereby, including the fact that a significant amount of encumbered private loans, unencumbered FFELP loans and other assets would remain with the company after giving effect to the SLM Corporation and Bidder Y transactions as proposed. Citi and its advisors also continued to explore potential transaction structures that would deliver value to the public stockholders, as required by the special committee, notwithstanding that the bids received did not contemplate such a sale.

On June 11, 2010, the special committee and its advisors met separately with representatives of SLM Corporation and Bidder Y to discuss their respective proposals. During the meetings, each of the potential buyers conveyed to the special committee the benefits of their respective transactions on a standalone basis, and the special committee and its advisors emphasized the committee’s desire for increases in the purchase prices being offered by such parties.

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On June 17, 2010, the special committee and Citi met in New York City to discuss the strategic review process and the bids that had been received from SLM Corporation and Bidder Y. Representatives from Moelis, Proskauer, CGMI and Skadden were also in attendance. The CGMI and Moelis teams presented their preliminary financial analyses of the SLM Corporation and Bidder Y bids, including a review of the assets selected for purchase by each of SLM Corporation and Bidder Y and the composition and value of the “excluded” assets that neither bidder had selected for purchase. The special committee and Citi discussed, among other things, their disappointment in the failure of the process to yield any bids for the entire company and the implications for the company’s stockholders of the SLM Corporation and Bidder Y transactions as proposed on a standalone basis. The special committee also reiterated its desire to achieve a transaction that would deliver maximum value to the company’s stockholders.

Following these discussions, the Citi and CGMI teams then presented, in concept, a possible structure for a “combined transaction” intended to deliver maximum value to the company’s stockholders through a whole-company transaction incorporating the SLM Corporation and Bidder Y proposals. The structure contemplated a combined transaction whereby (i) the company would continue to pursue the transactions contemplated by the SLM Corporation and Bidder Y proposals and (ii) Citi would acquire the assets that were “excluded” from the SLM Corporation and Bidder Y proposals. Under this structure, Bidder Y would acquire the company via merger and SLM Corporation and Citi would acquire the applicable assets from the company immediately prior to the merger such that, as of the effective time of such merger, the company would hold only those assets and liabilities proposed to be acquired by Bidder Y. The parties also discussed certain advantages of the proposed structure, including Bidder Y’s desire to retain coverage under certain insurance policies held by the company (which policies would remain in effect following the merger under the proposed structure). Citi did not propose a purchase price for its acquisition of the excluded assets, but indicated that Citi would be prepared to deliver a value to the company that would, in the aggregate, facilitate a sale of the entire company at a price per share for the company’s stockholders that would approach or result in a premium to the company’s then current stock price. At the end of the meeting, the parties agreed that the special committee and its advisors would further evaluate the Citi proposal, that CGMI would continue to negotiate with SLM Corporation and Bidder Y in an effort to increase the value and scope of their respective bids, and that CGMI would continue to pursue any other potential buyers that had not yet submitted a proposal.

On June 21, 2010, Discover delivered a non-binding bid letter proposing an asset purchase transaction in which Discover would acquire the company’s existing $10 billion portfolio of private student loans (including $6 billion in encumbered private loans financed with existing securitization debt and $4 billion in unencumbered private loans that would require new financing) for a purchase price equal to 75% of the book value of the private loans. The special committee and Citi, after consultation with Moelis and CGMI, respectively, reached a collective view that the Discover bid was significantly below the desired range of values. CGMI then notified Discover that Discover’s bid price may not meet the company’s threshold, and encouraged Discover to continue its due diligence review.

On July 7, 2010, representatives of Moelis, Citi and CGMI met with representatives of Bidder Y to discuss the proposal for the combined transaction that the company and Citi discussed at the June 17, 2010 special committee meeting. Representatives of Proskauer and Skadden attended by phone. Representatives of Citi outlined the proposal for the Bidder Y team, including arrangements whereby CBNA would indemnify Bidder Y for “incremental” liabilities it may incur as a result of the proposed merger transaction (when compared with Bidder Y’s proposal to only acquire certain assets of the company). Representatives of Bidder Y indicated that they would further consider the proposed structure and would revert to the working group.

Beginning July 7, 2010, Citi and its advisors began to deliver drafts of the applicable transaction agreements to the special committee and its advisors for comment, with a view to distributing these drafts to SLM Corporation and Bidder Y on an expedited basis. The company also engaged McDermott, Will & Emery, which we refer to as McDermott in this proxy statement, as outside corporate counsel to advise the company in connection with the transaction, including the applicable transaction agreements. Over the next several weeks,

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Citi, the company, the special committee and their respective legal and financial advisors had a number of discussions regarding structural matters, pricing mechanics, due diligence issues and drafting points to further refine the drafts of the applicable transaction documents (including the various ancillary agreements) prior to delivery of such drafts to SLM Corporation and Bidder Y. With respect to SLM Corporation, the draft transaction documents included, among others: (i) an asset purchase agreement covering the assets identified in the SLM Corporation bid; (ii) a voting agreement between CBNA and SLM Corporation pursuant to which CBNA would agree to vote in favor of the transaction, subject to certain conditions; (iii) an indemnification agreement between CBNA and SLM Corporation pursuant to which CBNA would indemnify SLM Corporation for certain losses in connection with the structure of the transactions and certain matters related to loan servicing, and SLM Corporation would indemnify CBNA for certain losses caused by SLM Corporation with respect to certain matters related to loan servicing; (iv) servicing and administration agreements among the company, CBNA, SLM Corporation and their respective affiliates; (v) a term loan agreement governing the financing to be provided by CBNA to SLM Corporation as contemplated by SLM Corporation’s non-binding bid letter and (vi) certificates and ancillary documents. For Bidder Y, the transaction documents included, among others: (a) a merger agreement between the company and Bidder Y; (b) a voting agreement between CBNA and Bidder Y pursuant to which CBNA would agree to vote in favor of the merger, subject to certain conditions; (c) an indemnification agreement between CBNA and Bidder Y pursuant to which CBNA would indemnify Bidder Y for certain losses arising from the structure of the transactions (as compared with Bidder Y’s proposed asset acquisition) and certain matters related to loan servicing, and Bidder Y would indemnify CBNA for any losses caused by Bidder Y with respect to certain matters related to loan servicing; (d) a separation agreement between the company and CBNA relating to the treatment of certain agreements among the company and CBNA pursuant to the proposed merger; and (e) certificates and ancillary documents. Citi and its advisors also prepared a draft of the asset purchase agreement (and related ancillary documents) governing the proposed sale of the excluded assets to Citi.

On July 12, 2010, representatives of Bidder Y contacted representatives of Citi to confirm Bidder Y’s interest in proceeding with the transaction that was discussed at the July 7, 2010 meeting.

On July 13, 2010, representatives of Moelis, Citi and CGMI met with representatives of SLM Corporation in New York City to discuss certain matters relating to transaction structure and the terms of the financing that SLM Corporation had proposed would be provided to SLM Corporation by CBNA.

During this time, CBNA, the company, Bidder Y, SLM Corporation, Discover and their advisors continued various discussions regarding certain outstanding due diligence matters.

On July 16, 2010, a draft merger agreement was sent by Skadden to Bidder Y and, on July 18, 2010, a draft asset purchase agreement was sent by CGMI to SLM Corporation.

On July 20, 2010, company management made a presentation to Discover in New York City. During discussions following the presentation, Discover communicated that it would continue its due diligence review.

On July 21, 2010, Skadden delivered to the special committee and its advisors a draft asset purchase agreement governing the proposed sale of the excluded assets to Citi.

During the week of July 26, 2010, representatives of Citi communicated to Discover that Citi would like Discover to consider a merger transaction whereby Discover would acquire all of the equity of the company after the company sells its FFELP student loans, as opposed to an asset purchase whereby Discover would purchase only the private student loan assets of the company (as previously proposed by Discover). Representatives of Citi communicated to Discover that a merger transaction would preserve the value of the insurance covering certain private student loans, and that CBNA would provide a broad indemnification of Discover with respect to any additional liabilities that would accompany the merger transaction. Discover communicated that it would consider the merger structure as it continued its due diligence process.

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On July 28, 2010, representatives of the special committee, the company, Citi and each of their respective legal advisors held a telephonic meeting with SLM Corporation and Bingham McCutchen LLP, which we refer to as Bingham in this proxy statement, legal counsel to SLM Corporation, to discuss initial issues and questions in respect of the draft agreements that had been delivered to SLM Corporation.

On July 29, 2010, Skadden delivered a draft of the term loan agreement to SLM Corporation and its advisors.

On August 3, 2010, SLM Corporation delivered revised non-binding bid letters to Moelis. The bid had been updated to take into account the company’s recent securitization of approximately $800 million in FFELP assets, and also to provide a bid for the remaining $1.0 billion in unencumbered FFELP assets held by the company. The revised bid letter relating to the encumbered FFELP loans retained SLM Corporation’s proposal that Citi provide the funding described in SLM Corporation’s initial bid letter and did not revise SLM Corporation’s initially proposed pricing. The bid letter relating to the unencumbered FFELP loans proposed a purchase price of 96.5% of the principal amount, based on obtaining a three-year credit facility from CBNA on the terms described in the bid letter.

On August 10, 2010, Bingham (on behalf of SLM Corporation) delivered a revised draft asset purchase agreement to the company and CBNA.

On August 11, 2010, representatives of Citi and Moelis were notified by representatives of Bidder Y that Bidder Y was terminating discussions with respect to the Bidder Y merger transaction due to certain unrelated Bidder Y transactions requiring Bidder Y’s attention and resources. In response to this development, the special committee and Citi discussed the possibility of accelerating the SLM Corporation transaction on a standalone basis. In addition, the special committee and Citi agreed to contact Discover to determine whether Discover had sufficiently completed its due diligence review and whether Discover was able to deliver a revised proposal to the company and Citi. In the days that followed, representatives of Citi, Moelis and Skadden had various discussions with Discover, Barclays Capital Inc., financial advisor to Discover, and Sidley Austin LLP, counsel to Discover, which we refer to as Sidley in this proxy statement, to outline the combined transaction structure and to assess Discover’s interest in a potential role in the transaction.

On August 13, 2010, at the request of the special committee and Citi, Skadden delivered a draft merger agreement (together with the applicable ancillary agreements) to Discover.

On August 16, 2010, representatives of Barclays Capital Inc. contacted representatives of Citi and CGMI to discuss a proposal by Discover to acquire approximately $10 billion of the company’s private loan portfolio (including $6 billion in encumbered private loans financed with existing securitization debt and $4 billion in unencumbered private loans that would require new financing) at a purchase price in the “mid-eighties” as a percentage of the book value of the private loans in a merger transaction, thereby preserving the insurance covering the private loans. On August 17, 2010, CGMI discussed the proposal with Moelis. CGMI and Moelis determined that the Discover proposal was not within the range of values that had previously been indicated as acceptable to the special committee. This determination was subsequently communicated to Discover, which was encouraged to continue its consideration of the merger transaction, and also to consider reassessing the parameters of its bid, including the mix of loans involved in the transaction, in order to increase the value of its proposal.

On August 20, 2010, Skadden sent a revised draft asset purchase agreement to SLM Corporation.

On August 24, 2010, Discover submitted a revised non-binding bid letter proposing a transaction pursuant to which Discover would acquire all of the equity of the company in a cash merger transaction, whereby at closing the company would hold only certain encumbered private student loans (financed with existing securitization debt) and would have the benefit of the insurance covering the private student loans. Discover would also be indemnified by CBNA for liabilities arising out of or related to the merger transaction structure. Specifically,

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pursuant to the August 24^th proposal, as of the closing of the merger (and after giving effect to separate pre-closing asset sale transactions whereby the company would sell all of its student loans other than those identified by Discover in its bid letter), the company would hold only the following assets and liabilities: (i) the residual interests in three securitized private education loan trusts holding approximately $4 billion of private education loans (financed with approximately $3.3 billion of associated securitization debt); (ii) cash reserves held in the securitization trusts; and (iii) certain fixed assets, including all or a portion of the company’s platform, systems and intellectual property. Discover’s August 24^th proposal provided for a purchase price equal to (i) 92% of the sum of (a) the book value at closing of the encumbered private loans included in the securitization trusts and (b) the cash reserves held in the securitization trusts (the sum of (a) and (b) is referred to as the Discover Asset Value in this proxy statement), less (ii) the principal amount of, and accrued but unpaid interest on, the securitization notes associated with the loans.

On August 25, 2010, advisors to the special committee, Citi, SLM Corporation and their respective legal counsel held a meeting at Skadden’s offices in New York City to discuss the SLM Corporation asset purchase agreement and the related ancillary documents (including the servicing agreements, the indemnification agreement and the voting agreement), as well as the term loan agreement covering the financing to be provided to SLM Corporation by Citi.

On August 26, 2010, Citi delivered a preliminary non-binding bid letter to the company to acquire those assets and assume those liabilities that were not included in either of the SLM Corporation or Discover bids, which we refer to as the Excluded Assets and Liabilities in this proxy statement. Based on the assets and liabilities not selected for acquisition or assumption by SLM Corporation or Discover, the Excluded Assets and Liabilities were to include: (i) the unencumbered federally insured loan portfolio (book value as of June 30, 2010 of $1.0 billion); (ii) the portion of the encumbered private loan portfolio that Discover had not selected for acquisition (book value as of June 30, 2010 of $2.0 billion); (iii) the unencumbered private loan portfolio (book value as of June 30, 2010 of $4.1 billion); (iv) any and all non-loan assets to the extent not otherwise included in the assets to be acquired pursuant to the SLM Corporation or Discover bids (aggregate book value as of June 30, 2010 of $0.8 billion); and (v) the assumption by Citi of any and all liabilities of the company, other than those to be assumed by SLM Corporation or to be retained by the company pursuant to the Discover bid (book value as of June 30, 2010 of $1.8 billion).

Pursuant to the August 26^th Citi proposal, Citi would pay a purchase price for the Excluded Assets and Liabilities equal to 96.8% of the aggregate book value of the total gross Excluded Assets and Liabilities, which purchase price would, in conjunction with the transactions contemplated by the SLM Corporation and Discover proposals, result in (i) the company being delivered free of indebtedness (other than trade debt) to Discover (after giving effect to the SLM Transaction and CBNA Transaction) and (ii) the company’s stockholders receiving an aggregate of $480 million in cash (or $24.00 per share of company common stock). The proposed $24.00 price per share of company common stock represented a per share premium of 20.1% over the closing trading price of the company common stock as of August 25, 2010. In addition, Citi’s proposal provided that any fees payable (estimated to be approximately $161 million as of August 17, 2010) by the company to CBNA upon early termination of the Omnibus Agreement would be waived by CBNA as part of the transactions. Citi’s bid also indicated that Citi was prepared to provide indemnification with respect to certain matters to be mutually agreed between CBNA and each of SLM Corporation and Discover, without requiring that the company’s minority stockholders establish a reserve to cover any associated costs. In addition, Citi would agree to provide SLM Corporation with the requested seller financing.

On August 27, 2010, Skadden delivered revised drafts of a merger agreement and certain ancillary agreements to Discover reflecting the terms contemplated by the Discover August 24^th proposal. Also on August 27, 2010, Bingham (on behalf of SLM Corporation) sent a further revised draft asset purchase agreement to Skadden.

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In the ensuing days, representatives of the company, Citi, CGMI, Moelis, Skadden and Proskauer held calls with representatives of SLM Corporation and calls with representatives of Discover to discuss outstanding diligence matters.

On August 31, 2010, at the request of Discover, the company and CBNA entered into an Exclusivity Letter Agreement with Discover with respect to the assets and related liabilities described in Discover’s revised August 24^th bid letter. Pursuant to the Exclusivity Letter Agreement, the company and CBNA agreed to exclusively negotiate with Discover with respect to the Discover transaction until the earlier of (i) the execution of definitive agreements to effect the Discover merger transaction and (ii) September 15, 2010 (Discover had initially requested an exclusivity period of 30 days, but Citi and the special committee required that the period be shortened to 15 days).

On September 1, 2010, representatives of Moelis, at the direction of the special committee, contacted representatives of Citi to discuss Citi’s August 26^th bid letter. The Moelis representatives communicated to representatives of Citi that the special committee would require a purchase price for the Excluded Assets and Liabilities that implied a value significantly greater than $24.00 per share for the company’s stockholders in the proposed transactions.

On September 2, 2010, the company, SLM Corporation and Discover agreed to certain confidentiality and related provisions to permit the company to share each party’s transaction documents with the other party (such that each of SLM Corporation and Discover would be permitted to review and comment on the Discover and SLM Corporation transaction documents, respectively) without violating the terms of the existing confidentiality agreements with SLM Corporation and Discover.

Between September 2, 2010 and September 5, 2010, the parties continued to exchange and negotiate drafts of the transaction agreements and related documents.

On September 7 and 8, 2010, representatives of SLM Corporation, and, on September 8, 2010, representatives of Discover, met with representatives of Moelis, Proskauer, Citi, CBNA and Skadden at Skadden’s offices in New York City to negotiate the transaction agreements and the related ancillary documents.

On September 9, 2010, Citi submitted a revised non-binding bid letter to the special committee that increased the aggregate purchase price for the Excluded Assets and Liabilities to a price that implied an increase in the aggregate consideration deliverable to the company’s stockholders from $480 million to $540 million, or $27.00 per share of company common stock (a 12.5% increase from Citi’s initial proposal and a premium of 44% over the $18.77 closing trading price of company common stock as of September 8, 2010). The September 9^th bid letter also reiterated Citi’s views as to certain advantages of the Citi proposal, including Citi’s agreement to (i) waive approximately $161 million of fees due to CBNA resulting from the early termination of the Omnibus Agreement, (ii) have CBNA provide indemnification with respect to certain matters relating to the purchase agreements between the company and each of Discover and SLM Corporation (without a requirement of the company’s other stockholders to cover their pro rata share of such costs) and (iii) provide certain transition and other post-closing services to Discover and SLM Corporation.

Also on September 9, 2010, Skadden circulated a revised draft of the Discover merger agreement reflecting the September 7^th and 8^th discussions and incorporating comments of Skadden, Proskauer and McDermott on behalf of Citi, the special committee and the company.

On September 10, 2010, representatives of Moelis, at the direction of the special committee, communicated to representatives of Citi that the special committee would require a purchase price that implied a value significantly greater than the $27.00 per share proposed by Citi on September 9th.

On September 10, 2010, a draft of the asset purchase agreement governing Citi’s purchase of the excluded assets was shared with SLM Corporation and Discover.

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Between September 10, 2010 and September 16, 2010, the parties continued to negotiate and exchange drafts of the transaction agreements, ancillary documents and disclosure schedules.

On September 13, 2010, representatives of Citi contacted representatives of the special committee to propose an increased purchase price for the Excluded Assets and Liabilities that would imply a price per share of company common stock of $29.00. In response, representatives of Moelis, at the direction of the special committee, communicated to the Citi representatives that this price was not acceptable to the special committee and that a price in the $30s would be required.

On September 14, 2010, representatives of Citi contacted representatives of the special committee to propose a further increase to the purchase price to be paid by Citi for the Excluded Assets and Liabilities to a level that would result in each stockholder receiving $30.00 per share of company common stock and also indicated that Citi was unwilling to further increase its purchase price.

On the morning of September 15, 2010, the special committee held a meeting at the offices of Moelis. The special committee received a presentation from representatives of Proskauer describing the then-current status of the negotiations among the parties to the transactions, the legal structure of the proposed transactions and the material terms of the then-current drafts of the transaction agreements, and reviewing their fiduciary duties under applicable Delaware law. Representatives of Gleacher then made a presentation of their preliminary financial analyses of the proposed CBNA Transaction. Representatives of Moelis then made a presentation of their preliminary financial analyses of the proposed Discover merger transaction and the CBNA Transaction.

On the afternoon of September 15, 2010, the board of directors of the company held a meeting at the offices of Moelis. The board of directors of the company received a presentation by attorneys from McDermott describing the legal structure of the proposed transactions, reviewing with the board of directors of the company the directors’ fiduciary duties under applicable Delaware law and describing for the directors the actions the board of directors of the company would need to take should it decide to approve the transactions. The board of directors of the company also received a presentation from the special committee discussing the process the special committee undertook in connection with the proposed transactions, and an overview of its negotiations with Discover, SLM Corporation and Citi and the then-current status of the special committee’s negotiations with such parties. Finally, a representative of Proskauer discussed the proposed transactions, including a description of the transactions generally and the conditions, covenants, closing conditions, indemnification obligations, voting agreement, deal protection provisions, consents required and ancillary documents.

On the evening of September 15, 2010, the board of directors of the company held a telephonic meeting. The board of directors of the company received an update from the special committee and Proskauer on the progress of negotiations regarding the transactions.

Later in the evening on September 15, 2010, during the course of discussions relating to the SLM Transaction, the principals determined to exclude from the assets to be acquired by SLM Corporation the company’s interests in the SLC Student Loan Trust 2010-1 and such trust was included in the excluded assets to be purchased by CBNA.

On September 16, 2010, representatives of Citi, Discover, SLM Corporation, their respective legal and financial advisors and Proskauer (on behalf of the special committee) held a series of telephonic meetings to further negotiate and finalize the transaction agreements. Over the course of the day, drafts of the various agreements were circulated to the parties reflecting revisions made in response to the negotiations. Negotiations continued through the night, and early during the morning of September 17, 2010, transaction documents reflecting final agreement among the parties were submitted to the special committee for its review.

During the morning and afternoon of September 16, 2010, the board of directors of the company held two telephonic meetings. At each meeting, the board of directors of the company received an update from the special committee and Proskauer on the progress of negotiations regarding the transactions.

On the afternoon of September 16, 2010, the special committee held a telephonic meeting with its advisors to discuss the progress of the transactions.

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During the evening of September 16, 2010, representatives of Discover advised representatives of Citi and the special committee that, based on its ongoing due diligence investigation, Discover was reducing the purchase price contemplated by Discover’s August 24^th bid letter from a price based on 92% of the Discover Asset Value to a price based on 91.5% of the Discover Asset Value. As a result of the reduction in the Discover purchase price, the purchase price to be paid by Citi for the Excluded Assets and Liabilities was increased to approximately 99.85% of the book value thereof so as to maintain the $30.00 per share price implied by Citi’s proposal.

During the early morning hours of September 17, 2010, the special committee held a telephonic meeting to review the transaction agreements. At that meeting, after reviewing their financial analysis, representatives of Gleacher delivered Gleacher’s oral opinion, which was subsequently confirmed in writing, that, subject to the limitations and qualifications set forth in the written opinion, the consideration to be paid to the company in the CBNA Transaction is fair to the company from a financial point of view. After reviewing their financial analyses, representatives of Moelis delivered Moelis’ oral opinions, which were subsequently confirmed in writing, that, based upon and subject to the limitations and qualifications set forth in the written opinions, as of September 17, 2010, the consideration to be received by the stockholders of the company (other than Citi and its affiliates) pursuant to the DFS Merger Agreement was fair, from a financial point of view, to such stockholders and that the consideration to be received by the company pursuant to the CBNA Transaction Agreement and the purchase price adjustment agreement was fair to the company from a financial point of view. The special committee unanimously determined that the transaction agreements and the proposed transactions were in the best interest of the stockholders of the company and recommended that the transaction agreements and the proposed transactions be approved by the board of directors of the company.

Shortly after the special committee meeting on the morning of September 17, 2010, the board of directors of the company held a telephonic meeting. The special committee updated the board of directors of the company on its discussions with the various parties to the transactions and discussed the process undertaken by the special committee to evaluate the proposed transactions, the financial analyses and opinions of the financial advisors to the special committee with respect to the DFS Merger and the CBNA Transaction, valuation of the company, the historical and current value of the company’s outstanding securities, the expected future performance of the company, the alternatives available to the company and the consequences of the proposed transactions for the company’s stockholders. The special committee then unanimously recommended to the board of directors of the company that it approve the proposed transactions. The board of directors of the company, upon the special committee’s recommendation, then unanimously approved the transaction agreements, the merger and the proposed transactions.