EXHIBIT 10.02
EXECUTION COPY
================================================================================
$35,000,000
CREDIT AND SECURITY AGREEMENT
dated as of October 31, 2001
between
EDISON RECEIVABLES COMPANY LLC,
as Borrower
and
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE CAPITAL INC.,
as Lender
================================================================================
CREDIT AND SECURITY AGREEMENT, dated as of October 31, 2001 (as
modified, supplemented or amended from time to time, the "Agreement"), between
EDISON RECEIVABLES COMPANY LLC, a Delaware limited liability company (together
with its successors, the "Borrower") and ▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE CAPITAL INC., a
Delaware corporation (together with its successors and any Assignees, the
"Lender").
The Borrower has requested that the Lender make a loan to it in an
aggregate amount not to exceed $35,000,000 at any time outstanding, and the
Lender is prepared to make such a loan upon the terms and subject to the
conditions hereof. Accordingly, the parties hereto agree as follows:
SECTION 1. INTERPRETATION OF AGREEMENT AND NOTES.
1.1 Definitions. Except as the context shall otherwise require, the
following terms shall have the following meanings for all purposes of this
Agreement:
"Administrative Services Agreement" shall mean the Administrative
Services Agreement, dated as of October 26, 2001, between Edison and the
Borrower, as modified, supplemented or amended from time to time.
"Advance Rate" shall mean at any time (i) if at such time the
average of the Dilution Ratios for the most recent three consecutive Monthly
Periods is less than or equal to 10%, 75% and (y) if at such time the average of
the Dilution Ratios for the most recent three consecutive Monthly Periods
exceeds 10%, 75% minus the actual number of percentage points by which such
average of the Dilution Ratios exceeds 10%.
"Affiliate" shall mean, with respect to a Person, any other Person,
which directly or indirectly controls, is controlled by or is under common
control with, such Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Agreement" shall have the meaning set forth in the first paragraph
hereof.
"Arrangement Fee" shall mean the fee shall mean the product of (i)
2.00% and (ii) the Commitment in effect on the Initial Closing Date.
"Assignee" shall have the meaning set forth in Section 7.1(b).
"Borrower" shall have the meaning set forth in the first paragraph
of this Agreement.
"Borrowing" shall mean each increase in the principal amount of the
Loan (including the initial funding thereof) in accordance with Sections 2.1 and
2.2 hereof.
"Borrowing Base" shall mean, as of any date of determination, an
amount equal to the sum of (i) the product of (x) the Advance Rate on such date
and (y) the aggregate Outstanding Balance of all Eligible Receivables (as
reduced by the Total Excess Concentration
Amount) on such date and (ii) the amount on deposit in the Cash Collateral
Account on such date.
"Borrowing Base Report" shall mean a report substantially in the
applicable form of Exhibit D hereto.
"Borrowing Notice" shall have the meaning set forth in Section
2.2(a) hereof.
"Business Day" shall mean any day other than a Saturday, Sunday,
public holiday under the Laws of the State of New York or any other day on which
banking institutions are authorized or obligated to close in the State of New
York.
"Cash Collateral Account" shall mean the account established
pursuant to Section 6A hereof.
"Change of Control" shall mean, with respect to Edison, (i) H.
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall at any time cease to be the beneficial owner (within
Rule 13d-3 promulgated by the Securities and Exchange Commission under the
Exchange Act) of at least 45% of the issued and outstanding Class B common stock
of Edison, (ii) any Person or group of Persons (within the meaning of Section 13
or 14 of the Exchange Act) shall at any time be the "beneficial owners" (as
defined above) of more of the issued and outstanding Class B common stock of
Edison than is beneficially owned by H. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ at such time, (iii)
no Class B common stock of Edison is outstanding, or (iv) during any period of
36 consecutive calendar months, individuals who were directors of Edison on the
first day of such period (the applicable "Incumbent Board") shall cease to
constitute a majority of the board of directors of Edison for any reason other
than death or disability, provided that, for purposes of this clause (iv), any
individual becoming a director during any such period subsequent to the first
day thereof whose election, or nomination for election, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board for
such period shall be considered as though such individual was a member of the
Incumbent Board for such period.
"Closing Date" shall have the meaning set forth in Section 2.2
hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and any successor thereto, and the regulations promulgated and
rulings issued thereunder.
"Collateral" shall have the meaning set forth in Section 12.1(a)
hereof.
"Collections" shall mean, for any Receivable as of any date, (i) the
sum of all amounts, whether in the form of wire transfer, cash, checks, drafts,
or other instruments, received by the Servicer or the Borrower or in a Permitted
Lockbox or Lockbox Account in payment of, or applied to, any amount owed by any
Obligor on account of such Receivable (including but not limited to all amounts
received on account of any Defaulted Receivable) on or before such date,
including, without limitation, all amounts received on account of such
Receivable and all other fees and charges, (ii) cash Proceeds of Related
Security with respect to such Receivable and (iii) all Deemed Collections.
2
"Commitment" shall mean the obligation of the Lender to make the
Loan in an aggregate amount at any one time outstanding up to but not exceeding
$35,000,000.
"Commitment Fee" shall mean the fee payable on the unused portion of
the Commitment pursuant to Section 2.6 hereof.
"Contract" shall mean a binding agreement between Edison and an
Obligor entered into in the ordinary course of Edison's business in a form
consistent with past practices (with such changes as business circumstances and
prudent business judgment dictate), and/or any and all instruments, agreements,
invoices or other writings, which, in either case, give rise to an account
receivable arising from the provision of services in the ordinary course of
Edison's business.
"Corporate Base Rate" shall mean, for any portion of the Loan funded
by reference to the Corporate Base Rate, a rate per annum equal to the higher of
(i) the prime rate published from time to time in the Wall Street Journal as in
effect plus 1.00% and (ii) (x) the rate equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day for such
transactions received by the Lender from three Federal funds brokers of
recognized standing selected by it, plus (y) 1.50%; each change in the Corporate
Base Rate being effective from and including the date such change is published.
"Credit and Collection Policy" shall mean the Servicer's credit,
collection, enforcement and other policies and practices relating to the
Contracts and Receivables existing on the date hereof and as set forth on
Exhibit D the Purchase Agreement, as the same may be modified from time to time
in compliance with Section 9.12 hereof.
"Debt" of a Person shall mean, without duplication, such Person's
(i) indebtedness for borrowed money or for the deferred purchase price of
property or services, (ii) obligations as lessee under leases which shall have
been or should be, in accordance with GAAP, recorded as capital leases, (iii)
obligations, whether or not assumed, which are secured by Liens or payable out
of the proceeds or production from property now or hereafter acquired by such
Person, (iv) obligations which are evidenced by notes, acceptances or other
instruments, (v) contingent or non-contingent obligations to make loans or
advances to any other Person or to reimburse any Person in respect of amounts
paid or to be paid under a letter of credit or similar instrument, (vi)
Guarantees of Debt of others, and (vii) liabilities in respect of unfunded
vested benefits under plans covered by Title IV of ERISA.
"Deemed Collection" with respect to any Receivable shall mean, on
any day, without duplication, (i) the amount of any Dilution with respect
thereto and (ii) the Outstanding Balance thereof if such Receivable was
identified as an "Eligible Receivable" and is not on such day, an Eligible
Receivable, and (iii) the Outstanding Balance thereof if repurchased by the
Originator pursuant to the Purchase Agreement.
3
"Default" shall mean any event or condition that would become an
Event of Default after notice or passage of time or both.
"Default Rate" shall mean, at any time, the Corporate Base Rate at
such time plus 2% per annum or the Eurodollar Rate at such time at such time
plus 2% per annum, as applicable.
"Default Ratio" shall mean, for any Monthly Period (as calculated in
the Monthly Report required to be delivered in the month following such Monthly
Period), the ratio (expressed as a percentage) calculated as of the last day of
such Monthly Period of (i) the aggregate Outstanding Balance of all Defaulted
Receivables as of the last day of such Monthly Period to (ii) the aggregate
Outstanding Balance of all Receivables as of the last day of such Monthly
Period.
"Defaulted Receivable" shall mean a Receivable (i) in respect of
which the Obligor is not entitled to any further extensions of credit, by reason
of any default or nonperformance by such Obligor, under the terms of the Credit
and Collection Policy, (ii) which is identified as uncollectible by the Servicer
or which, in accordance with the Credit and Collection Policy, should be written
off the Borrower's books as uncollectible, (iii) in respect of which an Event of
Bankruptcy has occurred and is continuing with respect to the related Obligor or
(iv) that is outstanding more than 120 days from its due date.
"Dilution" shall mean any credit allowance, cancellation, cash
discount, deduction, claim, offset, set-off, rebate, charge back, and any other
allowance, adjustment, forgiveness, or deduction (including, without limitation,
any special or other discounts or any reconciliation) that is given to an
Obligor in accordance with the Credit and Collection Policy.
"Dilution Ratio" shall mean, for any Monthly Period (as calculated
in the Monthly Report required to be delivered in the month following such
Monthly Period), the ratio (expressed as a percentage) of (i) the aggregate
Dilution of all Receivables for such Monthly Period to (ii) the aggregate
Outstanding Balance of all Receivables as of the first day of such Monthly
Period.
"Dollars" or "$" shall mean the lawful currency of the United States
of America.
"Edison" shall mean Edison Schools, Inc., a Delaware corporation,
and its successors and assigns.
"Eligible Receivable" shall mean, at any time, any Receivable:
(a) which complies with all applicable Laws and other legal
requirements, whether federal, state or local;
(b) which constitutes an "account" or "general intangible" as
defined in the UCC as in effect in the State of New York and the jurisdiction
whose Law governs the perfection of the Lender's security interest therein, and
is not evidenced by an "instrument", as defined in the UCC as so in effect;
4
(c) which was originated in connection with the rendering of
services by Edison in the ordinary course of Edison's business to an Obligor who
was approved by Edison in accordance with its Credit and Collection Policy, and
which Obligor is not an Affiliate of Edison or the Lender;
(d) which (i) is assignable under the terms of the applicable
Contract or otherwise, without any consent of or notice to the related Obligor
or any other Person and (ii) arises from a Contract that does not contain any
provision that restricts the ability of the Lender to exercise its rights under
this Agreement, including, without limitation, its right to review the Contract;
(e) which is genuine (i.e., is not fraudulent) and constitutes a
legal, valid and binding payment obligation of the related Obligor, enforceable
in accordance with its terms and which arises under a Contract;
(f) which provides for payment in Dollars by the related Obligor;
(g) which directs payment thereof to be sent to a Permitted Lockbox
or a Lockbox Account;
(h) which is not a Defaulted Receivable;
(i) which was not originated in or subject to the Laws of a
jurisdiction whose Laws would make such Receivable, the related Contract or the
pledge of such Receivable to Lender hereunder unlawful, invalid or
unenforceable;
(j) which is owned solely by the Borrower free and clear of all
Liens, except for Liens of the type described in clauses (a) and (b) of the
definition of Permitted Liens, and in which the Lender will have a valid first
priority perfected security interest;
(k) which has been invoiced and by its terms requires payment in
full in respect thereof to be made no later than 30 days after the date of the
original invoice with respect thereto, except in the case of a Quarterly ▇▇▇▇
Receivable, in which case the terms of such Quarterly ▇▇▇▇ Receivable require
payment in full in respect thereof to be made no later than 30 days after the
end of the applicable three month billing period specified in the related
Contract;
(l) which has an Obligor which is domiciled in a state (including
the District of Columbia) of the United States of America;
(m) which has an Obligor who is not in default in any material
respect under the terms of the Contract, if any, from which such Receivable
arose;
(n) which is not a note receivable;
(o) which is not an obligation of the United States government or
any agency, instrumentality or political subdivision thereof;
5
(p) which has terms which have not been modified, extended or
renegotiated since the provision of service to an Obligor in any way not
provided for in this Agreement or in the Credit and Collection Policy;
(q) the payment of which (or of any portion of which) has not been
subordinated or deferred in accordance with the terms of the related Management
Contract; provided that the unexercised right in any Management Contract between
Edison and a charter school Obligor to subordinate or defer the payment of
Edison's management fee thereunder to the payment of certain agreed upon costs
of such Obligor under such Contract and to certain operating expenses of Edison
under such Contract shall not, by itself, cause such Receivable to fail to
qualify as an Eligible Receivable;
(r) the payment of which (or of any portion of which) has not been
subordinated or deferred in accordance with the terms of any related Contract
(other than the related Management Contract which is the subject of preceding
clause (q)); provided that the unexercised right in any such Contract to cause
the subordination or deferral of any such payment shall not, by itself, cause
such Receivable to fail to qualify as an Eligible Receivable;
(s) which arises under a Contract under which the related Obligor is
in compliance in all respects with all applicable insurance requirements set
forth in such Contract;
(t) which arises under a Contract with respect to which neither
Edison nor the Obligor thereunder has delivered a written notice of its intent
to terminate such Contract or a notice of a material breach or default under
such Contract; and
(u) which has not been disqualified by the Lender for reasonable
cause, as evidenced by prior written notice thereof to the Borrower and the
Servicer; it being understood and agreed that reasonable cause shall include,
without limitation, a determination by the Lender, in the exercise of its
reasonable judgment, that the Contract under which such Receivable arose
adversely affects the Lender's ability to collect such Receivable or adversely
affects the Lender's ability to determine the collectibility of such Receivable
or the timing of any payment with respect thereto or the Outstanding Balance
thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor thereto, and the
regulations promulgated and rulings issued thereunder.
"ERISA Affiliate" shall mean, with respect to any Person, any Person
which is a member of any group of organizations (i) described in Section 414(b)
or (c) of the Code of which such Person is a member, or (ii) solely for purposes
of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11)
of the Code and the Lien created under Section 302(f) of ERISA and Section
412(n) of the Code, described in Section 414(m) or (o) of the Code of which such
Person is a member.
"Eurocurrency Liabilities" shall have the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.
6
"Eurodollar Rate" shall mean, with respect to any Tranche funded by
reference to the Eurodollar Rate and the related LIBOR Period, a rate per annum
determined by the Lender equal to the sum of (a) 3.50% and (b) the quotient
(expressed as a percentage and rounded upwards, if necessary, to the nearest
1/16 of 1%) obtained by dividing (i) LIBOR for such LIBOR Period by (ii) 100%
minus the LIBOR Reserve Percentage, if any, for such LIBOR Period.
"Event of Bankruptcy" shall mean, for any Person:
(a) that such Person shall fail generally to, or admit in writing
its inability to, pay its debts as they become due; or
(b) a proceeding shall have been instituted and remains unstayed or
undismissed for a period of 60 days in a court having jurisdiction in the
premises seeking a decree or order for relief in respect of such Person in an
involuntary case under any applicable bankruptcy, insolvency or other similar
Law now or hereafter in effect, or for the appointment of a receiver,
liquidator, assignee, trustee, custodian, sequestrator, conservator or other
similar official of such Person or for any substantial part of its property, or
for the winding-up or liquidation of its affairs; or
(c) the commencement by such Person of a voluntary case under any
applicable bankruptcy, insolvency or other similar Law now or hereafter in
effect, or such Person's consent to the entry of an order for relief in an
involuntary case under any such Law, or consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator, conservator or other similar official of such Person or for any
substantial part of its property, or any general assignment for the benefit of
creditors; or
(d) such Person or any Subsidiary of such Person shall take any
corporate action in furtherance of any of the actions set forth in the preceding
clause (a), (b) or (c).
"Event of Default" shall have the meaning assigned thereto in
Section 10.1 hereof.
"Excess Concentration Amount Credit" shall mean, as of any date of
determination, the sum of all amounts determined as follows with respect to each
of the Four Largest Obligors, if any, whose Outstanding Balance of Eligible
Receivables on such date exceeds the amount described in clause (ii) of the
definition of Single Obligor Excess Concentration Amount on such date, the
product of (i) the Group Excess Concentration Amount on such date and (ii) a
fraction, the numerator of which is the aggregate Outstanding Balance of
Eligible Receivables for such Obligor on such date and the denominator of which
is the aggregate Outstanding Balance of all Eligible Receivables for the Four
Largest Obligors on such date.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Expiration Date" shall mean the earliest of (i) October 30, 2002,
unless extended from time to time, by an agreement in writing between the
Borrower and the Lender and (ii) the
7
date on which the Lender delivers a Notice of Termination pursuant to Section
10.1 hereof or an Event of Default described in Section 10.1(h) hereof occurs.
"Facility Documents" shall mean this Agreement, the Purchase
Agreement, the Note(s), the Lockbox Agreement(s) and all other agreements,
documents and instruments delivered pursuant hereto or thereto or in connection
therewith or herewith.
"Four Largest Obligors" shall mean, as of any date of determination,
the four Obligors with the highest Outstanding Balances of Eligible Receivables
on such date.
"Funding Loss" shall have the meaning set forth in Section 11.2
hereof.
"GAAP" shall mean generally accepted accounting principles in the
United States of America, applied on a consistent basis and applied to both
classification of items and amounts, and shall include, without limitation, the
official interpretations thereof by the Financial Accounting Standards Board,
its predecessors and successors.
"Group Excess Concentration Amount" shall mean, as of any date of
determination, the amount, if any, by which (i) the aggregate Outstanding
Balance of all Eligible Receivables for the Four Largest Obligors on such date
exceeds (ii) the product of (x) 25% and (y) the aggregate Outstanding Balance of
all Eligible Receivables on such date.
"Guarantee" of or by any Person (the "guarantor") shall mean any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Debt or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such Debt or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such Debt or
other obligation of the payment thereof, (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Debt or other obligation
or (d) as an account party in respect of any letter of credit or letter of
guaranty issued to support such Debt or obligation; provided, that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business.
"Indemnified Parties" shall have the meaning set forth in Section
2.5(a)(i) hereof.
"Initial Closing Date" shall have the meaning set forth in Section
2.2 hereof.
"Interest" shall mean, for each Interest Period, an amount equal to
the sum of the following amounts calculated for each day during such Interest
Period (or portion thereof):
IR x LA x 1
---
360
Where:
IR = the applicable Interest Rate; and
8
LA = the principal amount of the Loan, or if the Loan is allocated
among more than one Tranche, the principal amount of each such
Tranche
"Interest Period" shall mean, (i) with respect to any Monthly
Payment Date, the period from and including the preceding Monthly Payment Date
to but excluding such Monthly Payment Date provided that in the case of the
initial Monthly Payment Date, the Interest Period shall mean the period from and
including the Initial Closing Date to but excluding such Monthly Payment Date
and (ii) with respect to any portion of the Loan repaid or prepaid on a Payment
Date other than a Monthly Payment Date, the period from and including the
Monthly Payment Date immediately preceding such Payment Date to but excluding
such Payment Date.
"Interest Rate" shall mean the Corporate Base Rate or the Eurodollar
Rate, as applicable, provided that if an Event of Default shall have occurred
and be continuing, the Interest Rate shall, in the discretion of the Lender, be
the Default Rate.
"Investment" in any Person shall mean any loan or advance to such
Person, any purchase or other acquisition or any capital stock or other
ownership or profit interest, warrants, rights, options, obligations or other
securities of such Person, any capital contribution to such Person or any other
investment in such Person
"Law" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or
award of any Official Body.
"Lender" shall have the meaning set forth in the first paragraph of
this Agreement.
"LIBOR" shall mean, with respect to any LIBOR Period, the rate per
annum equal to the rate appearing at page 8695 of ▇▇▇▇▇▇-▇▇▇▇▇▇ as LIBOR for the
term of such LIBOR Period as of 8:00 a.m., New York City Time, on the date two
Business Days prior to the first day of such LIBOR Period, and if such rate
shall not be so quoted, the average rate per annum at which three mutually
acceptable banks are offered Dollar deposits at or about 10:00 a.m., New York
City time, on the date two Business Days prior to the first day of such LIBOR
Period by prime banks in the interbank eurodollar market where the eurodollar
and foreign currency exchange operations in respect of the Loan are then being
conducted for delivery on such day for a period of thirty (30) days and in an
amount comparable to the amount of the Loan to be funded on the first day of
such LIBOR Period or such other rate as agreed upon in writing by the Lender and
the Borrower.
"LIBOR Business Day" shall mean any Business Day on which commercial
banks are open for settlements in Dollar deposits in New York and London.
"LIBOR Period" shall mean, with respect to each Tranche funded by
reference to the Eurodollar Rate, a 30-day, 60-day or 90-day period, as
applicable, commencing on a Monthly Payment Date or the date on which such
Tranche is funded, as applicable; provided that the initial LIBOR Period for a
Tranche funded on a day other than a Monthly Payment Date shall end on the next
succeeding Monthly Payment Date and, for purposes of determining LIBOR for such
LIBOR Period, shall be deemed to be a 30-day period.
9
"LIBOR Reserve Percentage" shall mean, for any LIBOR Period relating
to a Eurodollar Loan, the maximum reserve percentage, if any, applicable to the
Lender under Regulation D during such LIBOR Period (or if more than one
percentage shall be applicable, the daily average of such percentages for those
days in such LIBOR Period during which any such percentage shall be applicable)
for determining the Lender's reserve requirement (including any marginal,
supplemental or emergency reserves) with respect to liabilities or assets having
a term comparable to such interest period consisting or included in the
computation of Eurocurrency Liabilities (as defined in Regulation D of the Board
of Governors of the Federal Reserve System). Without limiting the effect of the
foregoing, but without duplicating the provisions of Section 2.5, the LIBOR
Reserve Percentage shall reflect any other reserves required to be maintained by
the Lender by reason of any change in any Law against (a) any category of
liabilities which includes deposits by reference to which LIBOR is to be
determined or (b) any category of extensions of credit or other assets which
include LIBOR-based credits or assets.
"Lien", in respect of the property of any Person, shall mean any
ownership interest of any other Person, any mortgage, deed of trust,
hypothecation, pledge, lien, security interest, filing of any financing
statement, charge or other encumbrance or security arrangement of any nature
whatsoever, including, without limitation, any conditional sale or title
retention arrangement, and any assignment, deposit arrangement, consignment or
lease intended as, or having the effect of, security.
"Limited Liability Company Agreement" shall mean the Amended and
Restated Limited Liability Company Agreement of the Borrower dated as of October
24, 2001, as modified, supplemented or amended from time to time.
"Loan" shall mean the loan made by the Lender to the Borrower
pursuant to Section 2.1 and/or 2.2 hereof.
"Lockbox Account" shall mean a demand deposit account identified on
Exhibit F hereto maintained with a Permitted Lockbox Bank pursuant to a Lockbox
Agreement for the purpose of depositing payments made by the Obligors or such
other account as the Borrower, the Servicer and the Lender may agree upon from
time to time.
"Lockbox Agreement" shall mean the agreement that governs the
operation of a Permitted Lockbox and related Lockbox Account which is in
compliance with Sections 8.19 and 9.11 hereof and which is substantially in the
form of Exhibit G hereto or otherwise in form and substance satisfactory to the
Lender.
"Management Contract" shall mean the principal Contract (together
with all annexes, schedules and exhibits thereto) governing the provision of
services by Edison to the related Obligor.
"Maturity Date" shall mean April 30, 2003 (unless extended from time
to time, by an agreement in writing between the Borrower and the Lender).
"Monthly Payment Date" shall mean the 15th day of each month
beginning in November 2001, provided that if any such 15th day is not a Business
Day, then the next succeeding Business Day.
10
"Monthly Period" shall mean a calendar month.
"Monthly Report" shall have the meaning specified in Section 2.9
hereof.
"Monthly Report Date" shall mean the Business Day immediately
preceding each Monthly Payment Date.
"Multiemployer Plan" shall mean, with respect to any Person, a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA which is or was
at any time during the current year or the immediately preceding five years
contributed to by such Person or any ERISA Affiliate on behalf of its employees
and which is covered by Title IV of ERISA.
"Note(s)" shall have the meaning set forth in Section 2.2(c) hereof
and shall include any subdivision of the Note issued in accordance with Section
2.2(d).
"Notice of Termination" shall have the meaning specified in Section
10.1 hereof.
"Obligor" shall mean, for any Receivable, each and every Person,
charter school, district school, state or local government or any agency or
instrumentality thereof who purchased services on credit under a Contract and
who is obligated to make payments to the Borrower or the Originator pursuant to
such Contract.
"Office Lease" shall mean the Agreement of Sublease, dated as of
October 3, 2001, between Edison, as landlord and the Borrower, as tenant, as
modified, supplemented or amended from time to time.
"Official Body" shall mean any government or political subdivision
or any agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"Originator" shall mean Edison in its capacity as seller under the
Purchase Agreement, and its successors and assigns in such capacity.
"Outstanding Balance" of any Receivable shall mean, at any time, the
then outstanding amount thereof (excluding, however, any and all amounts which
the Borrower or the Originator knows or has reason to believe will not be paid
by the related Obligor directly to the Borrower or the Originator). The
outstanding amount of any Receivable shall be reduced by all related Collections
on the date received or deemed received.
"Payment Date" shall mean each Monthly Payment Date and any other
date on which principal of the Loan is repaid or prepaid.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" shall mean:
(a) Liens created under this Agreement;
11
(b) Liens securing taxes, assessments, governmental charges or
levies not yet delinquent or the payment of which is being contested in
good faith by appropriate proceedings diligently conducted and with
respect to which adequate reserves have been established in accordance
with GAAP and which do not, singly or in the aggregate, adversely affect
in any material respect the Collateral or the Lender's interest therein;
and
(c) Liens arising by operation of law securing any amount not yet
delinquent or the payment of which is being contested in good faith by
appropriate proceedings diligently conducted and with respect to which
adequate reserves have been established in accordance with GAAP and which
do not, singly or the aggregate, adversely affect in any material respect
the Collateral or the Lender's interest therein.
"Permitted Lockbox" shall mean a post office box or other mailing
location identified on Exhibit F hereto maintained by a Permitted Lockbox Bank
pursuant to a Lockbox Agreement for the purpose of receiving payments made by
the Obligors for subsequent deposit into a related Lockbox Account, or such
other post office box or mailing location as the Lender, the Borrower and the
Servicer may agree upon from time to time.
"Permitted Lockbox Bank" shall mean a bank identified on Exhibit F
hereto or such other bank as the Servicer, the Borrower and the Lender may agree
upon from time to time.
"Person" shall mean an individual, corporation, limited liability
company, partnership (general or limited), trust, business trust, unincorporated
association, joint venture, joint-stock company, Official Body or any other
entity of whatever nature.
"Plan" shall mean, with respect to any Person, any employee benefit
or other plan which is or was at any time during the current year or immediately
preceding five years established or maintained by such Person or any ERISA
Affiliate and which is covered by Title IV of ERISA, other than a Multiemployer
Plan.
"Proceeds" shall mean "proceeds" as defined in Section 9-102(a)(64)
of the UCC as in effect in the State of New York and in the jurisdiction whose
law governs the perfection of the Lender's interests therein.
"Purchase Agreement" shall mean the Purchase and Contribution
Agreement, dated as of October 31, 2001, among the Originator, the Borrower and
the Servicer, as modified, supplemented or amended from time to time.
"Quarterly ▇▇▇▇ Receivable" shall mean any Receivable which arises
under a Contract (in effect on the Initial Closing Date) which, as of the
Initial Closing Date, contemplates the rendering of an invoice with respect to
such Receivable on or about the last day of a successive three month period
specified in such Contract (and not at any other time during such three month
period) and payment thereof by the related Obligor within 30 days thereafter.
"Receivable" shall mean all indebtedness owed to the Originator by
an Obligor (before giving effect to the sale thereof by the Originator to the
Borrower pursuant to the Purchase Agreement) under a Contract for which
indebtedness an invoice has been rendered, whether or not constituting an
account or a general intangible and whether or not evidenced by
12
an instrument, whether now existing or hereafter arising, solely in connection
with the rendering of services by the Originator to an Obligor in the ordinary
course of the Originator's business, all monies due or to become due under such
Contracts, and including the right to payment of any other obligations of such
Obligor with respect thereto.
"Records" shall mean correspondence, memoranda, computer programs,
tapes, discs, papers, books or other documents or transcribed information of any
type, whether expressed in ordinary or machine-readable language.
"Related Security" shall mean with respect to any Receivable:
(a) all of the Borrower's rights in, to and under the Contracts with
respect to such Receivable;
(b) all security interests or liens and property subject thereto
from time to time, if any, purporting to secure payment of such Receivable,
whether pursuant to the Contract related to such Receivable or otherwise,
together with any and all financing statements signed by an Obligor describing
any collateral securing such Receivable;
(c) all guarantees, indemnities, letters of credit, insurance or
other agreements or arrangements of any kind, if any, from time to time
supporting or securing payment of such Receivable, whether pursuant to the
Contract related to such Receivable or otherwise;
(d) all Records relating to the Receivables or the related Contract
or Obligor;
(e) all of the Borrower's rights in, to and under the Purchase
Agreement; and
(f) all Proceeds of the foregoing.
"Responsible Officer," with respect to a Person, shall mean the
Chief Executive Officer, the President, the Treasurer, any Assistant Treasurer,
any Vice President, Secretary or other authorized officer of such Person (but
only if the Lender has received prior written notice of the identity or title of
such other authorized officer).
"Secured Obligations" shall mean all obligations of the Borrower
secured under this Agreement including, without limitation, (a) all principal of
and interest (including, without limitation, any interest which accrues after
the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency or reorganization of the Borrower) on the Loan under, or
any Note issued pursuant to, this Agreement, (b) all other fees and amounts
payable by the Borrower hereunder or in connection herewith and (c) the Servicer
Fee.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Security Interest" shall mean the security interest and rights
created pursuant to Section 12 hereof in the Collateral in favor of the Lender.
13
"Servicer" shall mean Edison in its capacity as servicer under the
Purchase Agreement, and its successors and assigns in such capacity.
"Servicer Default" shall have the specified in Section 6.06 of the
Purchase Agreement.
"Servicer Fee" shall mean, as of any Monthly Payment Date, the
product of (i) 1/12 (ii) 1.00% per annum and (iii) the aggregate Outstanding
Balance of Receivables pledged by the Borrower hereunder as of the last day of
the preceding Monthly Period.
"Single-Employer Plan" shall mean a single-employer plan as defined
in Section 4001(a)(15) of ERISA which is subject to the provisions of Title IV
of ERISA.
"Single Obligor Excess Concentration Amount" shall mean, as of any
date of determination, the sum of all amounts determined as follows for each
Obligor, the amount, if any, by which (i) the aggregate Outstanding Balance of
Eligible Receivables for such Obligor on such date exceeds (ii) the product of
(x) 12.5% and (y) the aggregate Outstanding Balance of all Eligible Receivables
on such date minus the Group Excess Concentration Amount on such date; provided
that, with respect to any of the Four Largest Obligors whose aggregate
Outstanding Balance of Eligible Receivables exceeds the amount described in
preceding clause (ii), the aggregate Outstanding Balance of Eligible Receivables
for such Obligor shall, for purposes of preceding clause (i), be reduced by the
Excess Concentration Amount Credit for such Obligor.
"Subsequent Closing Date" shall have the meaning set forth in
Section 2.2 hereof.
"Subsidiary" shall mean, with respect to any Person, any
corporation, limited liability company or other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by such Person; provided, that no entity shall
be considered a Subsidiary of Edison if Edison obtains such voting power solely
by reason of exercising its rights as a secured party in collateral that
consists of such entity's voting stock.
"Total Excess Concentration Amount" shall mean, as of any date of
determination, the sum of (i) the Single Obligor Excess Concentration Amount on
such date and (ii) the Group Excess Concentration Amount on such date.
"Tranche" shall have the meaning specified in Section 2.3 hereof.
"Tranche Selection Notice" shall have the meaning specified in
Section 2.3 hereof.
"UCC" shall mean, with respect to any jurisdiction, the Uniform
Commercial Code, or any successor statute, or any comparable law, as the same
may from time to time be amended, supplemented or otherwise modified and in
effect in such jurisdiction.
1.2 Interpretation and Construction. Unless the context of this Agreement
otherwise clearly requires, references to the plural include the singular, the
singular the plural and the part the whole. References in this Agreement to
"determination" by the Lender shall be conclusive
14
absent manifest error and include good faith estimates by the Lender (in the
case of quantitative determinations), and the good faith belief by the Lender
(in the case of qualitative determinations). The words "hereof", "herein",
"hereunder" and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding." The
section and other headings contained in this Agreement are for reference
purposes only and shall not control or affect the construction of this Agreement
or the interpretation hereof in any respect. Section, subsection, exhibit and
schedule references are to this Agreement unless otherwise specified. As used in
this Agreement, the masculine, feminine or neuter gender shall each be deemed to
include the others whenever the context so indicates. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. Terms
not otherwise defined herein which are defined in the UCC as in effect in the
State of New York shall have the respective meanings ascribed to such terms
therein unless the context otherwise clearly requires. Any provision in this
Agreement referring to action to be taken by any Person, or that such Person is
prohibited from taking, shall be applicable whether such action is taken
directly or indirectly by such Person. All references to Laws, agreements and
other documents shall refer to such Laws, agreements and documents as the same
shall have been amended from time to time.
1.3 Governing Law; Submission to Jurisdiction. THIS AGREEMENT AND THE
NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
OF NEW YORK.
SECTION 2. COMMITMENT.
2.1 The Loan. (a) The Lender agrees, on the terms of this Agreement, to
make and maintain a loan to the Borrower, the principal balance of which may be
increased and decreased in accordance with the terms hereof, during the period
from and including the Initial Closing Date to and excluding the Expiration
Date, but not to exceed at any time the lesser of (x) the Commitment at such
time and (y) the Borrowing Base at such time. The Loan shall (unless prepaid or
accelerated) (i) mature on the Maturity Date and (ii) accrue Interest payable on
each Payment Date. In addition, if any Funding Loss is incurred by the Lender
because the Loan (or any portion thereof) is repaid on a date other than a
Monthly Payment Date, the Borrower shall be obligated to pay such Funding Loss
in accordance with Section 11.2. The first payment of interest with respect to
the Loan shall be made on the Monthly Payment Date after the date on which the
Loan was made. The Loan shall be subject to mandatory prepayment as set forth in
Section 6.2 hereof and voluntary prepayment as set forth in Section 6.3 hereof.
All sums payable by the Borrower under this Agreement and the Loan shall be paid
without counterclaim, set-off, deduction or defense and without abatement,
suspension, deferment, diminution or reduction.
15
(b) Payments of interest on and principal of the Loan may be
satisfied on each Payment Date from Collections. Notwithstanding the foregoing,
the Borrower shall be unconditionally and irrevocably obligated to make any
payments due on the Loan in the event that Collections (if any) are insufficient
to pay same in full when due.
(c) Upon the occurrence and continuation of an Event of Default, the
Lender may, in its sole discretion, at any time or from time to time (including
following the Maturity Date), by written notice to the Borrower, declare the
Interest Rates applicable to the Loan to be equal to the Default Rate.
2.2 Borrowings; Closings. (a) The initial Borrowing will occur on the date
on which each of the conditions precedent set forth in Sections 4 and 5 has been
satisfied (the "Initial Closing Date"). The Borrower will give notice to the
Lender substantially in the form of Exhibit B hereto of each requested Borrowing
(including the initial Borrowing) (a "Borrowing Notice"), which notice shall be
irrevocable and effective only upon receipt by the Lender, and which shall
specify the amount of such Borrowing, which amount, unless otherwise agreed to
by the Lender, shall not be less than $1,000,000. Additional Borrowings may
occur on each date thereafter specified in the applicable Borrowing Notice so
long as on such date each of the conditions precedent in Section 5 is satisfied,
but, in no event shall the Borrower deliver more than one (1) Borrowing Notice
in any week (each such subsequent date on which a Borrowing occurs, a
"Subsequent Closing Date;" the Subsequent Closing Dates, together with the
Initial Closing Date, the "Closing Dates;" and, either the Initial Closing Date
or a Subsequent Closing Date, a "Closing Date").
(b) The Borrower shall deliver to the Lender a Borrowing Notice not
later than 10:00 A.M. (New York City time) (x) at least one Business Day before
each Borrowing if such Borrowing is to be funded based on the Corporate Base
Rate and (y) at least three LIBOR Business Days before each Borrowing if such
Borrowing or any portion thereof is to be funded based on a Eurodollar Rate,
specifying:
(i) the date of such Borrowing;
(ii) the principal amount of such Borrowing; and
(iii) the requested Tranches and LIBOR Periods, if applicable.
(c) The Loan shall be evidenced by a single promissory note (the
"Note") of the Borrower in substantially the form of Exhibit A hereto, dated the
date of the delivery of such Note to the Lender under this Agreement, payable to
the Lender in a maximum principal amount equal to the amount of the Commitment
and otherwise duly completed. The date and amount of each increase in the
principal amount of the Loan and each payment made on account of the principal
thereof, shall be recorded by the Lender on its books and, prior to any transfer
of the Note, endorsed by the Lender on the schedule attached to the Note or any
continuation thereof.
(d) The Lender shall be entitled to have the Note subdivided, by
exchange for Notes of lesser denominations or otherwise in connection with an
assignment of all or any portion of the Loan and the Note pursuant to the terms
of this Agreement; provided that in no event may the Note be subdivided into
denominations of less than $5,000,000.
16
(e) The proceeds of each Borrowing shall be sent by wire transfer of
immediately available funds to the Borrower in accordance with the following
wire instructions:
Bank: Comerica Bank, Detroit, Michigan
ABA No.: ▇▇▇-▇▇▇-▇▇▇
Account No.: 185-132-3103
Ref.: MLMCI Loan Proceeds
2.3 Selection of LIBOR Periods; Interest Rates. (a) Prior to the
occurrence of the Expiration Date, the Borrower may, in consultation with the
Lender, request (i) that a portion of the Loan be funded based on a Eurodollar
Rate or Rates or the Corporate Base Rate, and (ii) to the extent any portion of
the Loan is funded based on a Eurodollar Rate, that a specified portion or
portions of the Loan be allocated to a selected LIBOR Period or Periods. Each
portion of the Loan allocated to a different basis for funding and a different
LIBOR Period shall be herein called a "Tranche". The portion of the Loan, if
any, funded at any time based on the Corporate Base Rate shall, in the
aggregate, constitute a single Tranche. Each Tranche shall be in an amount of at
least $1,000,000 and no more than five (5) Tranches may be outstanding at any
time.
(b) The Borrower shall give notice of a requested LIBOR Period or
Periods and Tranche or Tranches based on the Eurodollar Rate at least three
LIBOR Business Days prior to the expiration of any then existing LIBOR Period
(or prior to converting a portion of the Loan then funded based on the Corporate
Base Rate into a Tranche funded based on the Eurodollar Rate) (each such notice
shall be in the form of Exhibit C hereto, and shall be referred to as a "Tranche
Selection Notice"); provided, however, that the Lender may select, in its sole
discretion, any such LIBOR Period if (i) the Borrower fails to provide such
notice on a timely basis or (ii) the Lender determines, in its sole discretion,
that the LIBOR Period requested by the Borrower is unavailable, uneconomical or
impracticable; and provided further, that the Lender may determine, its sole
discretion, to fund the Loan or any portion thereof, on the basis of the
Corporate Base Rate if it determines, in its sole discretion, that (A) the
Eurodollar Rate cannot be determined for any reason, including the
unavailability of rate bids or of the London interbank market for U.S. Dollar
borrowings, (B) it shall become unlawful for the Lender to obtain funds in the
London interbank market to fund or maintain the Loan or any portion thereof or
(C) the Lender advises the Borrower that the Eurodollar Rate will not adequately
and fairly reflect the cost to the Lender of funding such Loan or portion
thereof.
(c) The Lender shall determine the Interest Rate (i) for each
Tranche to be funded based on the Eurodollar Rate on the second LIBOR Business
Day before the first day of the related LIBOR Period and (ii) for the portion of
the Loan funded based on the Corporate Base Rate, on each Business Day. The
Lender shall promptly notify the Borrower and the Servicer of the Interest Rates
determined for each Tranche funded based on the Eurodollar Rate.
(d) No later than the fourth Business Day before each Monthly
Payment Date, the Lender will provide the Borrower and the Servicer with an
invoice showing the Interest, the Commitment Fee and the other Secured
Obligations due (or estimated to the due) pursuant to this Agreement on the next
Monthly Payment Date.
17
2.4 Security Interests. The Loan (and all other Secured Obligations) are
secured pursuant to this Agreement (including Section 12 hereof).
2.5 Indemnity for Taxes, Reserves and Expenses.
(a) If after the date hereof, the adoption of any Law or bank
regulatory guideline or any amendment or change in the interpretation of any
existing or future Law or bank regulatory guideline by any Official Body charged
with the administration, interpretation or application thereof, or the
compliance with any directive of any Official Body (in the case of any bank
regulatory guideline, whether or not having the force of Law):
(i) shall subject the Lendor or any permitted assigns (collectively,
the "Indemnified Parties") to any tax of any kind whatsoever with respect
to the Facility Documents, the Collateral or payments of amounts due
hereunder (excluding income taxes) or change the basis of taxation of
payments to any Indemnified Party in respect thereof (excluding income
taxes);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, or other
extensions of credit by, or any other acquisition of funds by, any office
of any Indemnified Party which is not otherwise included in the
determination of the Eurodollar Rate hereunder;
(iii) shall impose on any Indemnified Party any other condition;
and the result of any of the foregoing is to increase the cost to such
Indemnified Party, by an amount which such Indemnified Party deems to be
material, of entering, continuing or maintaining any Facility Document, the
Collateral or the Loan or to reduce any amount due or owing hereunder in respect
thereof, such Indemnified Party shall notify the Borrower. The Borrower shall
promptly pay such Indemnified Party such additional amount or amounts as
calculated by such Indemnified Party in good faith as will compensate such
Indemnified Party for such increased cost or reduced amount receivable; provided
that such compensation will be limited to (A) the period commencing not more
than 120 days prior to the date of such notification or (B) any longer period of
retroactive effect of any such adoption, change or requirement for compliance if
such notification is given 120 days or less after such adoption, change or
requirement for compliance.
(b) If any Indemnified Party shall have determined that, after the
date hereof, the adoption of any applicable Law or bank regulatory guideline
regarding capital adequacy, or any change therein, or any change in the
interpretation thereof by any Official Body, or any directive regarding capital
adequacy (in the case of any bank regulatory guideline, whether or not having
the force of Law) of any such Official Body, shall have the effect of reducing
the rate of return on capital of such Indemnified Party (or its parent
corporation) as a consequence of its obligations hereunder to a level below that
which such Indemnified Party or such corporation could have achieved but for
such adoption, change or compliance (taking into consideration such Indemnified
Party's or such corporation's policies with respect to capital adequacy) by an
amount deemed by such Indemnified Party or such corporation to be material, then
from time to
18
time, the Borrower shall promptly pay to such Indemnified Party or such
corporation such additional amount or amounts as will compensate for such
reduction; provided that such compensation will be limited to (A) the period
commencing not more than 120 days prior to the date of notice to the Borrower or
(B) any longer period of retroactive effect of any such adoption, change or
requirement for compliance if such notice is given 120 days or less after such
adoption, change or requirement for compliance.
(c) If any Indemnified Party becomes entitled to claim any
additional amounts pursuant to this Section, it shall promptly notify the
Borrower of the event by reason of which it has become so entitled. A
certificate as to any additional amounts payable pursuant to this Section
submitted by such Indemnified Party to the Borrower shall be conclusive in the
absence of manifest error.
2.6 Commitment Fee. The Borrower agrees to pay a monthly fee in arrears on
each Monthly Payment Date and on the Maturity Date or final Payment Date equal
to (a) the average daily unused Commitment during the related Interest Period
(or portion thereof) times (b) 1/12 of .50%.
2.7 [Reserved].
2.8 Termination of Commitment. The Lender's commitment to fund additional
Borrowings hereunder shall terminate on the Expiration Date.
2.9 Reports. (a) On or prior to the Monthly Report Date in each month, the
Borrower shall prepare and forward, or cause the Servicer to prepare and
forward, to the Lender a report in substantially the form of Exhibit E hereto
(the "Monthly Report"), containing, among other things, (i) information relating
to the Receivables (including portfolio performance ratios) as of the close of
business on the last day of the immediately preceding Monthly Period and (ii)
information similar to that contained in the applicable Borrowing Base Report,
as of the second Business Day before such Monthly Report Date. The Borrower
shall also prepare and forward, to the Lender the applicable Borrowing Base
Report at the time specified in Section 5.2 and at any other time as the Lender
may reasonably request.
(b) As long as any portion of the Loan is unpaid, on or before the
third Business Day in each month, the Borrower shall prepare and forward, or
cause the Servicer to prepare and forward, to the Lender the applicable
Borrowing Base Report as of the last day of the immediately preceding Monthly
Period.
(c) The Borrower shall, or shall cause the Servicer to, furnish to
the Lender at any time and from time to time such other or further information
in respect of the Receivables or the Obligors as the Lender may reasonably
request.
SECTION 3. GENERAL REPRESENTATIONS AND WARRANTIES OF THE BORROWER.
The Borrower represents and warrants to the Lender on and as of each
Closing Date and on and as of the date of delivery of each Tranche Selection
Notice as follows:
19
3.1 Existence and Power. The Borrower is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all limited liability company powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted and to fulfill its obligations under this
Agreement and the other Facility Documents to which it is a party.
3.2 Corporate and Governmental Authorization; No Contravention. The
execution, delivery and performance by the Borrower of this Agreement and the
other Facility Documents to which it is a party are within the Borrower's
powers, have been duly authorized by all necessary limited liability company
action, require no action by or in respect of, or filing with, any governmental
body, agency or official and do not contravene, or constitute a default under,
any provision of applicable law or regulation or of the certificate of formation
or Limited Liability Company Agreement of the Borrower or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Borrower or result in the creation or imposition of any Lien on any asset of the
Borrower or any of its Subsidiaries (except Permitted Liens).
3.3 Binding Effect. This Agreement and each of the other Facility
Documents to which it is a party constitutes a valid and binding agreement of
the Borrower. This Agreement will vest absolutely and unconditionally in the
Lender a valid security interest in the Receivables purported to be assigned
hereby, subject to no Liens whatsoever (except as provided pursuant to the
Facility Documents). Upon the filing of the necessary financing statements under
the UCC as in effect in the jurisdiction whose Law governs the perfection of the
Lender's security interests in the Receivables, the Lender's security interest
in the Receivables will be perfected under Article Nine of such UCC, prior to
and enforceable against all creditors of and purchasers from the Borrower and
all other Persons whatsoever (other than the Lender and its successors and
assigns).
3.4 Litigation. There is no action, suit or proceeding pending against, or
to the knowledge of the Borrower, threatened against or affecting the Borrower
before any Official Body in which there is a material likelihood of an adverse
decision which would reasonably be expected to materially adversely affect the
business, financial position or results of operations of the Borrower, the
ability of the Borrower to fulfill it obligations under this Agreement or any
other Facility Document to which its is a party or which in any manner draws
into question the validity of this Agreement or any other Facility Document to
which the Borrower is a party.
3.5 Investment Company. The Borrower is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
3.6 Events of Default or Default. No event has occurred, and no condition
exists, that constitutes a Default or an Event of Default.
3.7 Use of Proceeds. The proceeds of each Borrowing have been used by the
Borrower to acquire Receivables from the Originator pursuant to the Purchase
Agreement and no proceeds of any Borrowing have been used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System.
20
3.8 Accurate and Complete Disclosure. All information, exhibits, financial
statements, or other reports or documents furnished or to be furnished at any
time by or on behalf of the Borrower to the Lender in connection with this
Agreement or any other Facility Document is and will be accurate in all material
respects as of the date so furnished, and no such report or document contains,
or will contain, as of the date so furnished, any untrue statement of a material
fact or omits to state, or will omit to state, as of the date so furnished, a
material fact necessary in order to make the statements contained therein, in
the light of the circumstances under which they were made, not misleading.
3.9 Taxes. The Borrower has filed, or caused to be filed, all federal and
state, and to the best of its knowledge, all local and foreign, tax reports and
returns, if any, required to be filed by it and paid, or caused to be paid, all
amounts of taxes, including interest and penalties, required to be paid by it,
except for such taxes (i) as are being contested in good faith by proper
proceedings and (ii) against which adequate reserves shall have been established
in accordance with and to the extent required by GAAP, but only so long as the
proceedings referred to in clause (i) above could not subject the Borrower or
the Lender to any civil or criminal penalty or liability or involve any material
risk of the loss, sale or forfeiture of any property, rights or interests
covered hereunder or under the Purchase Agreement.
3.10 Books and Records. The Borrower has indicated on its books and
records (including any computer files) that the Receivables have been pledged by
the Borrower hereunder to the Lender. The Borrower maintains at, or shall cause
the Servicer to maintain at, one or more of its respective offices listed in
Exhibit H hereto all material Records for the Receivables.
3.11 Financial Condition. The Borrower is not insolvent or the subject of
any Event of Bankruptcy and the pledge of the Receivables on such day is not
being made in contemplation of the occurrence thereof.
3.12 No Debt. Since the date of its formation, the Borrower has not
engaged in any activity other than that contemplated by the Facility Documents
or entered into any commitment or incurred any Debt other than pursuant to, or
as permitted under, the Facility Documents.
3.13 ERISA. The Borrower has not maintained, contributed to or incurred or
assumed any obligation with respect to any Plan, any Multiemployer Plan or any
"Welfare Plan" defined in Section 3(1) of ERISA.
SECTION 3A. REPRESENTATIONS AND WARRANTIES OF THE BORROWER RELATING
TO COLLATERAL.
The Borrower represents and warrants to the Lender on and as of each
Closing Date and on and as of the date of delivery of each Tranche Selection
Notice:
3A.1 Place of Business; Records Location; Etc. The address of the
chief executive office of the Borrower is or, if the Borrower relocates its
chief executive office in accordance with Section 8.9 hereof, such other address
as the Borrower shall have notified the Lender in accordance with such Section.
The Borrower keeps all of its Records at its chief executive office. The
Borrower is a "registered organization" (as defined in Section 9-
21
102(a)(70) of the UCC) formed in the State of Delaware and, for purposes of
Article 9 of the UCC, the Borrower is located in the State of Delaware. The
Borrower's name is "Edison Receivables Company LLC" and the Borrower has not
changed its name, merged or consolidated with any other Person, except that the
Borrower changed its name from "Edison Finance Company, LLC" on or about October
24, 2001.
3A.2 No Liens. Each Receivable, together with any related rights
under the related Contract, is owned by the Borrower free and clear of any Lien
(except Permitted Liens). The Lender has a first priority perfected security
interest in the Collateral free and clear of any Lien (except Permitted Liens).
The Borrower has not and will not sell, pledge, assign, transfer or subject to a
Lien any of the Receivables, the Related Security or the Collections, other than
in accordance with the terms of this Agreement.
3A.3 No Adverse Actions. The Borrower has not performed any acts
which would prevent the Lender from enforcing any of the terms of this Agreement
or which would limit the Lender in any such enforcement. Other than financing
statements or other similar or equivalent documents or instruments with respect
to the Security Interests and Permitted Liens, no financing statement, mortgage,
security agreement or similar or equivalent document or instrument covering all
or any part of the Collateral is on file or of record in any jurisdiction in
which such filing or recording would be effective to perfect a Lien on such
Collateral.
3A.4 Filings. The Security Interests constitute valid security
interests under the UCC securing the Secured Obligations. On or before the
initial Closing Date, all UCC financing statements and other documents required
to be recorded or filed in order to perfect and protect the Security Interests
against all creditors of and purchasers from the Borrower and all other Persons
whatsoever shall have been duly filed (or shall have been delivered to the
Lender for filing) in each filing office necessary for such purpose and all
filing fees and taxes, if any, payable in connection with such filings shall
have been paid.
3A.5 Eligible Receivables. Each Receivable included in the Borrowing
Base is an Eligible Receivable.
3A.6 Notice. In the case of a Closing Date, all information set
forth on the related Borrowing Notice and Borrowing Base Report is true and
correct in all material respects as of such Closing Date.
3A.7 Assignment. This Agreement constitutes a valid pledge by the
Borrower, in favor of the Lender, of the Collateral, enforceable against all
creditors of and purchasers from the Borrower.
3A.8 Permitted Lockbox Banks and Lockbox Accounts. The names and
addresses of all Permitted Lockbox Banks, together with the numbers of all
Lockbox Accounts at such Permitted Lockbox Banks and the addresses of all
related Permitted Lockboxes, are specified in Exhibit F (or such other Permitted
Lockbox Banks, Lockbox Accounts and/or Permitted Lockboxes as have been notified
by the Borrower to the Lender and have been consented to by the Lender in
accordance with Section 9.11). Under each Lockbox Agreement,
22
the Borrower has granted to the Lender the right to take dominion and control
over the related Lockbox Account in its sole discretion.
3A.9 Consideration. With respect to the transfer to it of the
Receivables, the Borrower has either (i) purchased the Receivables from Edison
in exchange for payment (made by the Borrower to Edison in accordance with the
provisions of the Purchase Agreement) in an amount which constitutes fair
consideration and approximates fair market value for the Receivables and in a
sale the terms and conditions of which (including, without limitation, the
purchase price thereof) reasonably approximate an arm's-length transaction
between unaffiliated parties or (ii) acquired the Receivables from Edison as a
capital contribution in accordance with the provisions of the Purchase
Agreement. No such sale, and no such contribution, has been made for or on
account of an antecedent debt owed by Edison to the Borrower and no such sale or
contribution (or, if such sale is deemed to be a pledge rather than a sale, no
grant of a security interest) is or may be voidable or subject to avoidance
under any section of the U.S. Bankruptcy Code.
3A.10 New York Management Contracts. As of the Initial Closing Date,
Schedule II hereto sets forth a true, correct and complete list of all
Management Contracts between Edison and each Obligor located in the State of New
York.
SECTION 4. CONDITIONS TO LENDER'S OBLIGATION TO FUND THE BORROWING REQUEST ON
THE INITIAL CLOSING DATE.
The Lender's obligation to fund the Borrowing request hereunder on
the Initial Closing Date shall be subject to the satisfaction, prior to funding
such Borrowing request, of the conditions set forth in Section 5 hereof, as well
as the following conditions:
4.1 Certified Resolutions. Receipt by the Lender of a copy of (i) the
resolutions of the Board of Directors or Board of Managers of the Borrower and
(ii) resolutions of the Board of Directors of Edison, in each case, certified as
of the Initial Closing Date by such Person's secretary, an assistant secretary
or other Responsible Officer authorizing the execution, delivery and performance
of this Agreement, if applicable, and the other Facility Documents to be
delivered by such Person and approving the transactions contemplated hereby and
thereby.
4.2 Articles of Incorporation; Certificate of Formation. Receipt by the
Lender of the articles of incorporation of Edison and the Certificate of
Formation of the Borrower certified as of a date reasonably near the Initial
Closing Date by the Secretary of State or other similar official of such
Person's jurisdiction of incorporation or formation.
4.3 Good Standing Certificates; Etc. Receipt by the Lender of a good
standing certificate for each of the Borrower and Edison dated a date reasonably
near the Initial Closing Date issued by the Secretary of State or other similar
official of such Person's jurisdiction of incorporation or formation.
4.4 Incumbency; Specimen Signatures; By-Laws; Etc.. Receipt by the Lender
of a certificate of the secretary of each of the Borrower and Edison dated the
Initial Closing Date and certifying (i) the names and signatures of the officers
authorized on such Person's behalf to execute, and the officers and other
employees authorized to perform, this Agreement, if
23
applicable, and the other Facility Documents to be delivered by such Person (on
which certificate the Lender may conclusively rely until such time as the Lender
shall receive from such Person a revised certificate meeting the requirements of
this Section 4.4), (ii) a copy of such Person's By-laws or limited liability
operating agreement, as applicable and (iii) a copy of the Administrative
Services Agreement and the Office Lease.
4.5 Financing Statements. Receipt by the Lender of copies of (A) proper
financing statements naming (i) the Borrower as the debtor and the Lender, as
the secured party and (ii) the Originator, as debtor, the Borrower, as "assignor
secured party" and the Lender, as secured party or, in each case, other similar
instruments or documents as may be necessary or, in the opinion of the Lender,
desirable under the UCC of all appropriate jurisdictions to evidence or perfect
the Lender's security interests in all Collateral and (B) proper financing
statements (Form UCC-3) necessary under the laws of all appropriate
jurisdictions necessary to release all security interests or other rights of any
Person in the Collateral previously granted by the Borrower or the Originator.
4.6 Lien Searches. Receipt by the Lender of certified copies of requests
for information or copies (Form UCC-11) (or a similar search report certified by
parties acceptable to the Buyer) dated a date reasonably near the Initial
Closing Date listing all effective financing statements or other liens which
name the Borrower or the Originator as debtor (under its current name or any
previous name) and which are filed in appropriate jurisdictions, together with
copies of such financing statements (none of which shall cover any of the
Collateral).
4.7 Legal Opinions. Receipt by the Lender of favorable opinions of (i)
▇▇▇▇▇ ▇▇▇▇▇, Esq., general counsel for the Borrower and the Originator, dated on
or about the Initial Closing Date, relating to corporate matters, no litigation,
no conflicts and other matters and (ii) Coudert Brothers, special counsel to the
Borrower and the Originator, dated on or about the Initial Closing Date,
relating to legality, validity and enforceability of each Facility Document to
which the Borrower or the Originator, as applicable, is a party, perfection and
priority of the Lender's Security Interest and bankruptcy (true sale and
non-consolidation) matters, in each case, in form and substance acceptable to
the Lender.
4.8 Other Documents. Receipt by the Lender of executed copies of the Note
and the Purchase Agreement, each of which shall be in full force and effect.
4.9 Fees. Receipt by the Lender of the Arrangement Fee and the Lender's
legal fees and expenses, which condition may be satisfied by payment of such
Lender's fees with a portion of the proceeds of the Loan on the Initial Closing
Date.
4.10 Lockboxes. Receipt by the Lender of copies of duly executed Lockbox
Agreements.
4.11 Officer's Certificates. Receipt by the Lender of an officer's
certificate of each of the Borrower and Edison, dated the Initial Closing Date,
executed by a Responsible Officer of each such Person, in form and substance
satisfactory to the Lender.
4.12 Contracts. Receipt by the Lender of representative forms of
Contracts.
24
4.13 Receivables List. Receipt by the Lender of a computer file or tape
containing a true and complete list of all Receivables, identified by account
number, account name and by the Outstanding Balance of each Receivable.
4.14 Agreed-Upon Procedures Letter. Receipt by the Lender of an
agreed-upon procedures letter prepared by PricewaterhouseCoopers LLC, in form
and substance acceptable to the Lender.
4.15 Cash Collateral Account. The Cash Collateral Account shall have been
established in accordance with Section 6A.
Within 30 days of the Initial Closing Date, the Borrower shall deliver to
the Lender (i) evidence reasonably satisfactory to the Lender of filing of the
financing statements described in Section 4.5 and (ii) bring down search reports
of the type described in Section 4.6 listing financing statements filed through
the Initial Closing Date.
SECTION 5. CONDITIONS TO LENDER'S OBLIGATION TO FUND BORROWING REQUESTS
(INCLUDING THE INITIAL BORROWING REQUEST) AND TO MAINTAIN THE LOAN.
The Lender's obligation to fund any Borrowing request hereunder
(including the initial Borrowing request) and to maintain the Loan in connection
with a Tranche Selection Notice shall be subject to the satisfaction, prior to
the funding of such Borrowing or maintenance of the Loan, of the following
conditions:
5.1 Representations True; No Default or Event of Default. The
representations and warranties of the Borrower contained in Sections 3 and 3A
shall be true on and as of such Closing Date or the date of delivery of such
Tranche Selection Notice, as applicable, with the same effect as though such
representations and warranties had been made on and as of such Closing Date or
the date of delivery of such Tranche Selection Notice, as applicable. There
shall exist on such Closing Date or the date of delivery of such Tranche
Selection Notice, as applicable, no Default or Event of Default (both before and
after giving effect to the Borrowing requested on such Closing Date or the
maintenance of the Loan in connection with such Tranche Selection Notice, as
applicable).
5.2 Borrowing Base. In the case of a Closing Date, after giving effect to
the Borrowing on such Closing Date, the repayment (if any) of the Loan on such
Closing Date, the inclusion of additional Eligible Receivables in the Borrowing
Base on such Closing Date and the exclusion from the Borrowing Base of
Receivables (if any) which no longer constitute Eligible Receivables (or as to
which there have been Collections) on such Closing Date, the aggregate principal
balance of the Loan shall not exceed the lesser of (x) the Commitment on such
Closing Date and (y) the Borrowing Base on such Closing Date. Such calculation
shall be evidenced by the applicable Borrowing Base Report delivered to the
Lender on the third Business Day preceding such Closing Date calculated as of
the close of business on the Business day immediately preceding the date of
delivery.
25
5.3 Borrowing Notice; Tranche Selection Notice. Receipt by the Lender of a
Borrowing Notice in accordance with Section 2.2 hereof or a Tranche Selection
Notice in accordance with Section 2.3 hereof, as applicable.
5.4 Other Matters. Receipt by the Lender of all such approvals, opinions
or other documents or information as the Lender shall have reasonably requested.
SECTION 6. LOAN MATURITY; LOAN PREPAYMENTS.
6.1 Loan Maturity. On the Maturity Date (or, if different, the Expiration
Date), the full principal amount of the Loan, together with accrued Interest
thereon and any other amounts due hereunder, shall be due and payable in full.
6.2 Mandatory Prepayments. Unless an Event of Default shall have occurred
and be continuing, the Borrower, shall, without notice, immediately prepay the
Loan, without premium (but subject to Section 11.2), together with Interest
accrued on the amount to be prepaid to the date of prepayment, on any date on
which the aggregate principal balance of the Loan on such date exceeds the
Borrowing Base on such date, such prepayment to be in an aggregate principal
amount equal to such excess. Upon the occurrence and continuance of an Event of
Default, the Borrower will make payments on the Loan in accordance with Sections
10 and 12 hereof.
6.3 Voluntary Prepayments. The Borrower may at any time voluntarily prepay
all or a portion of the Loan in accordance with this Section 6.3. Any prepayment
of the Loan pursuant to this Section 6.3 shall be in a principal amount equal to
one hundred percent (100%) of the aggregate outstanding principal amount of the
Tranche or Tranches so prepaid, together with accrued and unpaid Interest as of
the date set for prepayment and any amounts due in accordance with Section 11.2
hereof.
6.4 Allocation of Prepayments. The aggregate principal amount of any
prepayment of the Loan pursuant to Section 6.2 or 6.3 shall be allocated, first,
to the portion of the Loan funded by reference to the Corporate Base Rate and,
second (if necessary), to the portions of the Loan funded by reference to the
Eurodollar Rate in direct order of those Tranches with the shortest remaining
LIBOR Periods.
6.5 Prepayment Notice. The Borrower shall provide written notice to the
Lender of any voluntary prepayment as early as practicable prior to the date for
such prepayment, but in no event later than three (3) Business Days prior to the
date for such prepayment.
6.6 Payment Instructions; Etc. All payments or prepayments required or
permitted to be made on the Loan, the Note or otherwise under or in connection
with this Agreement (including, without limitation, pursuant to Section 2 or
this Section 6) shall be made by wire transfer of immediately available funds to
the Lender's account designated on the signature page hereto and, in the case of
any such mandatory payments or prepayments, such payments or prepayments shall
be due by 1:00 p.m. (New York City time).
SECTION 6A. CASH COLLATERAL ACCOUNT.
6A.1 Establishing the Cash Collateral Account. An account shall be
established with
26
the Lender (or an Affiliate of the Lender) to be known as the "Cash Collateral
Account." The Cash Collateral Account shall be established and maintained in the
name (and under the exclusive control) of the Lender and shall be used only for
the purposes described herein. The Lender will use reasonable efforts to invest
money (if any) in the Cash Collateral Account in obligations that are rated at
least "A-1+" by Standard & Poor's Ratings Services and at least "P-1" by ▇▇▇▇▇'▇
Investors Services. Earnings on such investments (after deducting any losses),
if any, shall be credited to the Cash Collateral Account.
6A.2 Deposits into the Cash Collateral Account. If, on any day, the
aggregate principal balance of the Loan exceeds the Borrowing Base, the Borrower
may deposit into the Cash Collateral Account an amount sufficient to cause the
Borrowing Base to equal or exceed the principal balance of the Loan.
6A.3 Withdrawals from the Cash Collateral Account. Subject to the
following sentence, on any day prior to the Expiration Date (or the Maturity
Date), as long as no Default or Event of Default has occurred and is continuing
(or would result therefrom), the Borrower may on such day request that the
Lender withdraw, and the Lender shall withdraw, from the Cash Collateral Account
and deliver to the Borrower all or a portion of the amount on deposit in the
Cash Collateral Account, but only to the extent that, after giving effect to any
such withdrawal and delivery (and any other transactions occurring hereunder on
such day), the aggregate principal balance of the Loan would not exceed the
Borrowing Base. As a condition to any withdrawal from the Cash Collateral
Account, the Borrower shall, on the proposed date of such withdrawal, deliver to
the Lender the applicable Borrowing Base Report (as of the close of business on
the immediately preceding Business Day) which demonstrates that, after giving
effect to such withdrawal (and any other transactions occurring hereunder on
such day), the aggregate principal balance of the Loan would not exceed the
Borrowing Base.
SECTION 7. ASSIGNMENTS AND PARTICIPATIONS.
7.1 Assignments. (a) The Borrower may not assign its rights or obligations
hereunder or under the Note.
(b) The Lender may (subject in all events to the confidentiality
provisions of Section 13.8) assign all or any portion of the Commitment and the
Loan (i) to any of its Affiliates, without the Borrower's consent and (ii) to
any other bank or other institution (each such Affiliate, bank or other
institution, an "Assignee") with, so long as no Event of Default has occurred
and is continuing, the prior written consent of the Borrower; provided that any
assignment of a portion of the Loan or the Notes shall be in an amount not less
than $10,000,000. The Assignee shall have, to the extent of such assignment
(unless otherwise provided in such assignment), the obligations, rights and
benefits of the Lender hereunder with respect to the portion of the Loan
assigned to it. For all purposes of this Agreement, the Assignee shall, so long
as the portion of the Loan assigned to such Assignee remain unpaid, be entitled
to the rights and benefits of this Agreement with respect to the portion of the
Loan assigned to it as if (and, the Borrower shall be directly obligated to such
Assignee under this Agreement as if) such Assignee were the "Lender" for
purposes of this Agreement. Accordingly, unless otherwise provided, whenever any
action, waiver, notice or consent is to be provided to or by the Lender as
herein specified, such action, waiver, notice or consent shall (unless otherwise
expressly
27
specified herein) also be provided to or by each Assignee. If the Loan and Note
are assigned in their entirety, the Assignee shall become the Lender hereunder
and the Borrower shall have no further obligation to the assigning Lender.
(c) Notwithstanding the provisions of this Section 7.1, no
assignment of an interest in the Loan to an entity outside the United States of
America shall be effective unless the prospective Assignee thereof certifies to
the Borrower that payments to it in respect of the Loan will not be subject to
withholding taxes imposed by any Official Body in the United States of America
or any political subdivision or taxing authority thereof or therein or that if
it is subject to such withholding taxes it will not seek reimbursement or
gross-up from the Borrower.
(d) If ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Capital Inc. ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), the
initial Lender, assigns a portion of the Commitment or its rights in the Loan or
Note to multiple Lenders, then the Borrower agrees to cooperate with ▇▇▇▇▇▇▇
▇▇▇▇▇ in amending this Agreement so as to provide that ▇▇▇▇▇▇▇ ▇▇▇▇▇ will act as
agent for all of the Lenders.
7.2 Participations. Subject in all events to the confidentiality
provisions of Section 13.8, and subject to the following sentence, the Lender
may sell or agree to sell to one or more other Persons a participation in all or
any part of the Lender's Commitment and/or any portion of the Loan held by it or
to be made by it. If the Lender sells any such participation, the Lender shall
remain responsible for the performance of its obligations hereunder and the
Borrower shall continue to deal solely and directly with the Lender in
connection with the Lender's rights and obligations hereunder. All amounts
payable by the Borrower to the Lender under this Agreement (including, without
limitation, pursuant to Sections 2.5 and 11.2 hereof) shall be determined as if
the Lender had not sold or agreed to sell any participations in any portion of
the Loan and as if the Lender were funding all of the Loan in the same way that
it is funding the portion of the Loan in which no participations have been sold.
The participant's rights against the Lender in respect of such participation
shall be set forth in the agreement executed by the Lender and the participant.
SECTION 8. CERTAIN COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that so long as the Loan shall
remain unpaid or the Commitment has not been terminated:
8.1 Notice of Default or Event of Default. Promptly upon becoming aware of
any Default or Event of Default, the Borrower shall give the Lender notice
thereof, together with a written statement of a Responsible Officer setting
forth the material details thereof and any action with respect thereto taken or
contemplated to be taken by the Borrower.
8.2 Notice of Material Adverse Change. Promptly upon becoming aware
thereof, the Borrower shall give the Lender notice of any material adverse
change in the business, operations or financial condition of the Borrower.
8.3 Purchase Agreement Notices. Promptly following receipt thereof, the
Borrower shall give the Lender a copy of each notice or report (including,
without limitation, financial statements of the Servicer) received by the
Borrower under or in connection with the Purchase Agreement.
28
8.4 Preservation of Existence. The Borrower shall preserve and maintain
its existence, rights, franchises and privileges in the jurisdiction of its
formation, and qualify and remain qualified in good standing as a foreign
limited liability company in each jurisdiction where the failure to preserve and
maintain such existence, rights, franchises, privileges and qualification would
materially adversely affect (i) the interests of the Lender hereunder or (ii)
the ability of the Borrower to perform its obligations hereunder.
8.5 Compliance with Laws. The Borrower shall comply in all material
respects with all Laws applicable to the Borrower, its business and properties
and all Collateral.
8.6 Enforceability of Obligations. The Borrower shall take such actions as
are commercially reasonable and within its power, if any, to ensure that, with
respect to each Receivable, the obligation of any related Obligor to pay the
unpaid balance of such Receivable in accordance with the terms thereof remains
legal, valid, binding and enforceable against such Obligor.
8.7 Books and Records. The Borrower will keep proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions in relation to its business and activities.
8.8 Fulfillment of Obligations. The Borrower will duly observe and perform
all material obligations and undertakings on its part to be observed and
performed under or in connection with the Receivables, will duly observe and
perform all material provisions, covenants and other agreements required to be
observed by it under the Contracts to the extent related to the Receivables,
will do nothing to impair the rights, title and interest of the Lender in and to
the Collateral and will pay when due any taxes, including without limitation any
sales tax, excise tax or other similar tax or charge, payable in connection with
such Receivables and their creation and satisfaction or will properly contest
the payment of any such tax in good faith and before a court or administrative
body of appropriate jurisdiction.
8.9 Maintenance of Office; Notice of Relocation. The Borrower will
maintain at its chief executive office an office where notices, presentations
and demands in respect of this Agreement and the Note may be given to and made
upon it. The Borrower shall give the Lender 15 days' prior written notice of any
relocation of its chief executive office or jurisdiction of organization.
8.10 Compliance with Opinion Assumptions and Limited Liability Company
Agreement. The Borrower shall maintain in place all policies and procedures, and
take and continue to take all actions, described in the assumptions as to facts
set forth in, and forming the basis of, the true sale opinion delivered to the
Lender pursuant to Section 4.7(ii) hereof, and the Borrower shall comply with
the provisions of the Limited Liability Company Agreement, as the same may, from
time to time, be amended, supplemented or otherwise modified with the prior
written consent of the Lender (which consent shall not be unreasonably withheld
or delayed).
8.11 [Reserved].
8.12 Litigation. As soon as possible, and in any event within ten Business
Days of the Borrower's knowledge thereof, the Borrower shall give the Lender
notice of (i) any litigation,
29
investigation or proceeding against the Borrower which may exist at any time
which, in the reasonable judgment of the Borrower, could reasonably be expected
to have a material adverse effect on the financial condition or results of
operations of the Borrower or impair the ability of the Borrower to perform its
obligations under this Agreement, or materially adversely affect the
collectibility of the Receivables as a whole, and (ii) any material adverse
development in any such previously disclosed litigation.
8.13 Fees, Taxes and Expenses. The Borrower shall pay all filing fees,
stamp taxes and other similar documentary or excise taxes and expenses,
including the fees and expenses set forth this Agreement, if any, which may be
incurred on account of or arise out of this Agreement and the documents and
transactions entered into pursuant to this Agreement.
8.14 Compliance with the Purchase Agreement. At its own expense, the
Borrower shall timely and fully perform and comply in all material respects with
all provisions, covenants and other promises required to be observed by it under
the Purchase Agreement, maintain the Purchase Agreement in full force and
effect, enforce the Purchase Agreement in accordance with its terms, take all
such action to such end as may be from time to time reasonably requested by the
Lender, and make to any party to the Purchase Agreement such demands and
requests for information and reports or for action as the Borrower is entitled
to make thereunder and as may be from time to time reasonably requested by the
Lender.
8.15 Information. The Borrower shall, furnish the following to the Lender:
(i) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the
Borrower, a balance sheet of the Borrower as of the end of such quarter
and statements of income and retained earnings and of cash flows of the
Borrower for the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, in each case, prepared in
accordance with GAAP, certified by the chief financial officer or the
chief accounting officer of the Borrower;
(ii) as soon as available and in any event within 90 days
after the end of each fiscal year of the Borrower, a copy of the
Borrower's financial statements for such year prepared in accordance with
GAAP, certified by the chief financial officer or the chief accounting
officer of the Borrower; and
(iii) such other information, documents, records or reports
respecting the Receivables and the Related Security or the condition or
operations, financial or otherwise, of the Borrower as the Lender may from
time to time reasonably request.
8.16 Maintenance of Separate Existence. The Borrower shall do all things
necessary to maintain its legal existence separate and apart from Edison and all
other Affiliates of the Borrower, including, without limitation,
(i) maintaining proper company records and books of account
and deposit accounts separate from those of such Affiliates (it being
understood that the Borrower is consolidated with Edison for accounting
purposes);
30
(ii) maintaining its assets, funds and transactions separate
from those of such Affiliates, reflecting such assets, funds and
transactions in financial statements prepared in accordance with GAAP
separate and distinct from those of such Affiliates (it being understood
that the Borrower is consolidated with Edison for accounting purposes) and
evidencing such assets, funds and transactions by appropriate entries in
the records and books referred to in clause (i) above, and providing for
its own operating expenses and liabilities from its own assets and funds
other than certain expenses and liabilities relating to basic company
overhead which shall be allocated fairly between the Borrower and such
Affiliates;
(iii) holding such appropriate meetings or obtaining such
appropriate consents of its Management Committee (or other governing body)
as are necessary to authorize all the Borrower's company actions required
by Law to be authorized by the Management Committee (or other governing
body), keeping minutes of such meetings and of meetings of its members,
and observing all other customary limited liability company formalities;
(iv) at all times entering into its contracts and otherwise
holding itself out to the public under the Borrower's own name as a legal
entity separate and distinct from such Affiliates;
(v) to the extent the Borrower jointly contracts with any
Affiliate to do business with vendors or service providers, allocating
fairly among the Borrower and such Affiliates the costs incurred in so
doing, and conducting all transactions and dealings between the Borrower
and such Affiliates on an arm's-length basis;
(vi) maintaining an office separate from that of such
Affiliates (which office may be sublet from an Affiliate), including
having stationery and other business forms, a post office box, and a
telephone number separate from that of such Affiliates;
(vii) ensuring that at all times it is adequately capitalized
to engage in the transactions and activities contemplated in its
certificate of formation, its Limited Liability Company Agreement, the
Purchase Agreement and this Agreement;
(viii) ensuring that at least one manager of the Borrower
shall be an "Independent Manager" (as defined in the Limited Liability
Company Agreement) and causing its Limited Liability Company Agreement to
provide that (x) at least one manager of the Borrower shall be an
Independent Manager, (y) the managers of the Borrower shall not approve,
or take any other action to cause the filing of, a voluntary bankruptcy
petition with respect to the Borrower unless a unanimous vote of all of
the Borrower's managers (which vote shall include the affirmative vote of
each Independent Manager) shall approve the taking of such action in
writing prior to the taking of such action and (z) the provisions
requiring an Independent Manager and the provisions described in clauses
(x) and (y) of this paragraph (viii) cannot be amended without the prior
written consent of each Independent Manager;
31
(ix) taking such actions as are necessary to ensure that no
Independent Manager shall at any time serve as a trustee in bankruptcy for
the Borrower or any Affiliate thereof;
(x) taking such actions as are necessary to ensure that any
financial statements of Edison or any Affiliate thereof which are
consolidated to include the Borrower will contain detailed notes clearly
stating that (A) all of the Borrower's assets are owned by the Borrower,
and (b) the Borrower is a separate limited liability company with its own
separate creditors that will be entitled to be satisfied out of the
Borrower's assets prior to any value in the Borrower becoming available to
the Borrower's equity holders; and the accounting records and the
published financial statements of Edison will clearly show that, for
accounting purposes, the Receivables and Related Security have been sold
or contributed to the Borrower;
(xi) taking such actions as are necessary to ensure that no
Affiliate of the Borrower shall, directly or indirectly, name the Borrower
or enter into any agreement to name the Borrower a direct or contingent
beneficiary or loss payee of any insurance policy covering the property of
any such Affiliate;
(xii) taking no action to assume or guarantee any liability of
Edison or any Affiliate thereof; and
(xiii) taking such actions as are necessary to ensure that no
Affiliate of the Borrower will be, nor will hold itself out to be,
responsible for the debts of the Borrower or the decisions or actions in
respect of the daily business and affairs of the Borrower, immediately
correcting any known misrepresentation with respect to the foregoing, and
not operating or purporting to operate as an integrated single economic
unit with respect to each other or in their dealings with any other
entity.
8.17 Nature of Business and Permitted Transactions. The Borrower shall
engage solely in the following businesses and transactions, directly or
indirectly: purchasing Receivables and Related Security from Edison and
obtaining the Loan hereunder secured by such Receivables and Related Security as
provided hereunder and the other transactions permitted or contemplated by the
Facility Documents.
8.18 Due Diligence. (i) From time to time during regular business hours as
requested by the Lender upon at least five (5) days' prior notice, the Borrower
shall permit the Lender or its agents or representatives, (A) to examine and
make copies of and abstracts from all Records in the possession or under the
control of the Borrower or its agents relating to Receivables and the Related
Security, including, without limitation, any related Contracts, and (B) to visit
the offices and properties of the Borrower or its agents, for the purpose of
examining such materials described in clause (A) above, and to discuss matters
relating to Receivables and the Related Security or the Borrower's performance
hereunder with any of the officers or employees of the Borrower having knowledge
of such matters or with the Borrower's independent public accountants, and (ii)
within 90 days after the end of each fiscal year of the Borrower commencing with
the Fiscal Year of the Borrower ending on June 30, 2002, the Borrower shall
cause its independent public accountants to prepare and deliver to the Lender a
written report of
32
such accountants with respect to the Receivables, the Credit and Collection
Policy, Lockbox Account activity, and the Borrower's performance of its
obligations under (or with respect to) this Agreement and the Receivables, all
in scope and in a form reasonably requested by the Lender; provided, however,
that after the occurrence and during the continuance of a Default or a Event of
Default, the Lender shall be permitted to take the actions described in
preceding clause (i) without being subject to the amount of prior notice given
and may request the Borrower to cause its independent public accounts to prepare
the report contemplated in preceding clause (ii) as often as the Lender deems
necessary or desirable. The Borrower shall reimburse the Lender for all
reasonable fees, costs and expenses incurred by any of them in connection with
the foregoing actions promptly upon receipt of a written invoice therefor;
provided that prior to the occurrence and continuation of a Default or Event of
Default, such fees, costs and expenses shall not exceed $5,000 during any year
of this Agreement.
8.19 Lockbox and Lockbox Accounts. The Borrower shall (i) establish, or
cause to be established, in the name of the Borrower, each Lockbox Account and
the funds deposited therein from time to time shall consist exclusively of
Collections, which Collections shall not be commingled with any other funds of
the Borrower or any Affiliate thereof (ii) maintain each Lockbox Account with a
Permitted Lockbox Bank; (iii) cause each Lockbox Account to be insured by the
Federal Deposit Insurance Corporation to the full extent permitted by Law; and
(iv) cause all Collections on account of the Receivables to be mailed or wired
directly to a Permitted Lockbox or a Lockbox Account and, if the Servicer, the
Originator or the Borrower should receive any Collections, forward such
Collections to a Permitted Lockbox or a Lockbox Account within one Business Day
of receipt.
SECTION 9. NEGATIVE COVENANTS OF THE BORROWER. The Borrower covenants that it
will not, without the prior written consent of the Lender:
9.1 No Rescissions or Modifications. Rescind or cancel any Receivable or
related Contract or modify any terms or provisions thereof or grant any Dilution
to an Obligor, except in accordance with the Credit and Collection Policy.
9.2 No Liens. Except as otherwise provided herein, sell, assign (by
operation of Law or otherwise) or otherwise dispose of, or grant any option with
respect to, or create or suffer to exist any Lien upon or with respect to, (i)
any Receivable or Related Security or Collections in respect thereof, or (ii)
any deposit account to which any Collections of any Receivable are sent
(including, without limitation, any Lockbox Account), or assign any right to
receive income in respect thereof, other than Liens created under the Facility
Documents.
9.3 No Changes. (i) Make any change in the character of its business,
which change would materially impair the collectibility of the Receivables, (ii)
change its name, identity or organizational structure in any manner which would
make any financing statement or continuation statement filed in connection with
this Agreement or the transactions contemplated hereby seriously misleading
within the meaning of Section 9-506, 9-507 or 9-508 of the UCC of any applicable
jurisdiction or other applicable Laws unless it shall have given the Lender at
least 30 days' prior written notice thereof and unless prior thereto it shall
have caused such financing statement or continuation statement to be amended or
a new financing statement to be filed such that such financing statement or
continuation statement would not be seriously misleading, (iii)
33
amend, restate or otherwise change its certificate of formation or Limited
Liability Company Agreement, except to the extent necessary to reflect a change
in the address of its registered office in the State of Delaware or to correct
typographical errors or (iv) amend, restate or otherwise change the
Administrative Services Agreement or the Office Lease, except to correct
typographical errors.
9.4 Capitalization; Distributions. Issue any membership interests (other
than any non-economic "special membership" interests) except to Edison. The
Borrower shall not pay any distributions to any of its members if such payment
would be prohibited under the Delaware Limited Liability Company Act or if at
the time of, or as a result of, such payment a Default or an Event of Default
has occurred and is continuing or would result therefrom.
9.5 No Indebtedness. Create, incur, assume or suffer to exist any Debt in
excess of $10,000, except Debt incurred pursuant to the Facility Documents.
9.6 Consolidations, Mergers and Sales of Assets. Consolidate or merge with
or into any other Person or sell, lease or otherwise transfer all or
substantially all of its assets to any other Person other than pursuant to the
Facility Documents.
9.7 ERISA. Adopt, maintain, contribute to or incur or assume any
obligation with respect to any Plan, Multiemployer Plan or Welfare Plan.
9.8 Investments in Other Persons. Except as otherwise provided herein or
in the Purchase Agreement, make or hold any Investment in any Person.
9.9 Transactions with Affiliate. Engage in any transaction with Edison or
any other Affiliate of the Borrower except pursuant to, or as contemplated by,
the Facility Documents, the Administrative Services Agreement or the Office
Lease.
9.10 Purchase Agreement. (i) Cancel or terminate the Purchase Agreement or
consent to or accept any cancellation or termination thereof, (ii) amend,
supplement or otherwise modify any term or condition of the Purchase Agreement
or give any consent, waiver or approval thereunder, (iii) waive any default
under or breach of the Purchase Agreement or (iv) take any other action under
the Purchase Agreement not required by the terms thereof that could impair the
value of any rights or interests of the Borrower or the Lender thereunder.
9.11 Lockboxes. (i) Direct that payments on the Contracts be made to any
address or person other than a Permitted Lockbox; (ii) suffer or permit any
funds other than Collections to be mailed to Permitted Lockboxes or deposited
into the related Lockbox Accounts; and (iii) amend or modify any term of any
Lockbox Agreement.
9.12 Credit and Collection Policy. Consent to any change in the Credit and
Collection Policy if such change could reasonably be expected to materially and
adversely affect the collectibility or enforceability of the Receivables or the
ability of the Servicer to perform its obligations under the Purchase Agreement.
34
SECTION 10. DEFAULTS, REMEDIES AND TERMINATION.
10.1 Events of Default . If one or more of the following events ("Events
of Default") shall occur and be continuing:
(a) the Borrower shall fail to pay when due any Interest on the
Loan, or any fees or other amount payable hereunder, and such failure shall
continue for one (l) Business Day; or
(b) the Borrower shall fail to make any payment or prepayment of
principal when due; or
(c) the Borrower shall fail to observe or perform any covenant
contained in Section 8.16 for 10 days after the earlier to occur of (i) written
notice thereof to the Borrower by the Lender and (ii) knowledge thereof by the
Borrower or the Servicer; or
(d) except as otherwise provided in this Section 10.1, the Borrower
shall fail to observe or perform any covenant or agreement contained in this
Agreement for 30 days after the earlier to occur of (i) written notice thereof
to the Borrower by the Lender and (ii) knowledge thereof by the Borrower or the
Servicer; or
(e) any representation, warranty, certification or statement made by
the Borrower in this Agreement or in any certificate, financial statement or
other document delivered pursuant to this Agreement shall prove to have been
incorrect in any material respect when made (or deemed made) for 30 days after
the earlier to occur of (i) written notice thereof to the Borrower by the Lender
and (ii) knowledge thereof by the Borrower or the Servicer; or
(f) (i) a judgment or order for the payment of money in excess of
$10,000 shall be rendered against the Borrower, or (ii) a judgment or order for
the payment of money in excess of $5,000,000 shall be rendered against Edison
and, in either case, such judgment or order shall continue unsatisfied and
unstayed for a period of 30 days; or
(g) the first priority perfected security interest of the Lender in
and to the Collateral is revoked or invalidated, or otherwise ceases to be a
first priority perfected security interest in favor of the Lender in and to the
Collateral for the earlier of (i) one Business Day after actual knowledge
thereof by the Borrower and (ii) one Business Day after written notice thereof
has been given to the Borrower by the Lender or, in either case, such longer
period (not to exceed five Business Days as determined in consultation with, and
with the consent of, the Lender) as the Borrower, acting in good faith and with
all due diligence, requires to re-establish the first priority perfected
security interest of the Lender in and to the Collateral; or
(h) an Event of Bankruptcy shall occur with respect to the Borrower
or Edison; or
(i) (x) the Borrower shall fail to pay any Debt of at least $10,000
when due and such failure shall continue beyond the applicable grace period, or
the Borrower shall otherwise default under any agreement or instrument and such
default shall continue beyond the applicable grace period and the effect of such
default is to accelerate or to permit the acceleration
35
of the Debt or other obligation thereunder; or (y) Edison shall fail to pay any
principal of, or interest on, any Debt that is outstanding in a principal amount
of at least $5,000,000 when due and such failure shall continue beyond the
applicable grace period; or Edison shall otherwise default under any agreement
or instrument in a principal amount of at least $5,000,000 and such default
shall continue beyond the applicable grace period and the effect of such default
is to accelerate the Debt governed by such agreement or instrument; or
(j) a Servicer Default shall have occurred and be continuing and the
Lender, in its sole discretion, shall have declared an Event of Default
hereunder; or
(k) the average of the Default Ratios for any three (3) consecutive
Monthly Periods shall exceed 25%; or the average of the Dilution Ratios for any
three (3) consecutive Monthly Periods shall exceed 20%; or
(l) a Change of Control of Edison shall have occurred or Edison
shall cease to own 100% of the membership interests (other than non-economic
"special membership" interests) of the Borrower; or
(m) the occurrence of a "Termination Event" under and as defined in
the Purchase Agreement; or
(n) the Borrower's capital shall at any time be less than 9% of the
Outstanding Balance of all Receivables and shall continue to be less that 9% of
such balance for (5) Business days; or
(o) there shall be pending any litigation, investigation or
proceeding, or any material adverse development in any such litigation shall
have occurred, which the Borrower is required to disclose pursuant to Section
8.12, which in the reasonable opinion of the Lender is likely to materially
adversely impair the ability of the Borrower to perform its obligations under
this Agreement; or
(p) any provision (except any provision that shall be immaterial to
the Lender) of any Facility Document shall for any reason cease to be a legal,
valid and binding obligation of the Borrower or Edison, as applicable, or the
Borrower or Edison, as applicable, shall so state in writing; or
(q) the Limited Liability Company Agreement, the certificate of
formation of the Borrower or the Administrative Services Agreement shall be
amended, supplemented or otherwise modified without the consent of the Lender
(except as expressly permitted hereunder); or
(r) the occurrence of any event which materially adversely affects
(i) the collectibility of a material portion of the Receivables or (ii) the
ability of the Servicer to collect the Receivables or perform its obligations
under the Purchase Agreement; or
(s) Edison shall fail to maintain at least the types of insurance
set forth in Schedule I hereto in at least the minimum amounts set forth in
Schedule I hereto (and such additional types of insurance in such greater
amounts as may be required from time to time under
36
any Contract) or any such insurance shall be issued by an insurance company or
companies not licensed to do business in the applicable state(s) or not rated
"A" or better by A.M. Best Company and, in any such case, such failure or
condition shall continue or exist for 30 days after the earlier to occur of (i)
written notice thereof to the Borrower by the Lender and (ii) knowledge thereof
by the Borrower or the Servicer;
then, and in every such event and so long as such Event of Default shall be
continuing, the Lender may, (i) by notice to the Borrower and the Servicer (such
notice, a "Notice of Termination") (x) terminate the Commitment and/or (y)
declare the Notes (together with accrued interest thereon) to be, and the Notes
shall thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; provided that in the event of an actual or deemed entry of an order
for relief with respect to the Borrower under the Federal Bankruptcy Code, or
any other Event of Default specified in clause (h) above which has the effect of
staying actions against the Borrower, without any notice to the Borrower or any
other act by the Lender, the Commitment shall thereupon terminate and the Note
(together with accrued interest thereon) shall become immediately due and
payable without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Borrower and (ii) exercise any or all of the
rights and remedies set forth in this Agreement and under applicable law.
10.2 Default Remedies. In addition to (and without limiting the Lender's
remedies under) Section 12.4, if an Event of Default shall have occurred and be
continuing, the Lender may exercise any right, power or remedy permitted to it
by law, either by suit in equity or by action at law, or both, whether for
specific performance of any covenant or agreement contained in the Facility
Documents or for an injunction against a violation of any of the terms of the
Facility Documents or in aid of any exercise of any power granted to the Lender
in the Facility Documents, or may proceed to enforce payment of the Loan or to
enforce any other legal or equitable right of the Lender. No remedy herein
(including, without limitation, in Section 12 hereof) conferred upon the Lender
is intended to be exclusive of any other remedy and each and every remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law, in equity, by statute or otherwise. No course
of dealing on the part of the Lender, or any delay or failure on the part of the
Lender to exercise any right or power, shall operate as a waiver of such right
or power or otherwise prejudice the rights, powers and remedies of the Lender.
No failure to insist upon strict compliance with any covenant, term, condition
or other provision of the Facility Documents or the Note shall constitute a
waiver by the Lender of any such covenant, term, condition or other provision or
of any Default or Event of Default in connection therewith. To the extent
effective under applicable Law, the Borrower hereby agrees to waive, and does
hereby absolutely and irrevocably waive and relinquish, the benefit and
advantage of any valuation, stay, appraisement, extension or redemption laws now
existing or that may hereafter exist that, but for this provision, might be
applicable to any sale made under any judgment, order or decree of any court, or
otherwise, based on the Loan or on any claim for interest in respect of the
Loan. If an Event of Default shall occur and be continuing, the Borrower will
pay to the Lender, to the extent not prohibited by applicable Law and not paid
in accordance with Section 12.4 hereof, such further amount as shall be
sufficient to cover the reasonable costs and expenses of collection and of the
taking of remedial actions and the maintenance of enforcement proceedings,
including, without limitation, reasonable attorneys' fees and disbursements.
37
SECTION 11. INDEMNIFICATION; FUNDING LOSSES; EXPENSES.
11.1 Indemnification. (a) The Borrower agrees to indemnify and hold
harmless the Lender, the directors, officers, employees, agents and Affiliates
of the Lender and each Person who controls the Lender within the meaning of the
Securities Act or the Exchange Act from and against any and all claims, damages,
losses, liabilities, costs or expenses (including reasonable attorneys' fees and
any and all reasonable expenses whatsoever incurred in investigating, preparing
or defending against any litigation, commenced or threatened, whether or not the
Lender is a party thereto, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), joint or several, to which any of
them may become subject to the extent that any such claims, damages, losses,
liabilities, costs or expenses arise under, in connection with or otherwise
relate to the transactions contemplated herein, including, without limitation,
any litigation relating to the proposed or actual use of the proceeds of any
Borrowing, or under the Securities Act, the Exchange Act or other federal or
state statutory law or regulation, at common law or otherwise; provided, that
the Borrower shall not be liable to the Lender for any (i) losses incurred by
the Lender as a result of the fraudulent actions, gross negligence or willful
misconduct of the Lender or (ii) losses, claims, damages, liabilities and
expenses arising out of the imposition by any taxing authority of any federal
income, state or local income or franchise taxes, or any other taxes imposed on
or measured by gross or net income, gross or net receipts, capital, doing
business taxes, net worth and similar items (including any interest, penalties
or additions with respect thereto) upon the Lender (including any liabilities,
costs or expenses with respect thereto) or any other tax or similar charge which
is excluded from indemnification pursuant to the express terms of this
Agreement. The foregoing is in addition to any rights (including without
limitation rights to indemnity) to which the Lender may otherwise be entitled;
provided that this provision shall not entitle the Lender to be paid hereunder
twice for the same loss.
(b) The obligations of the Borrower under this Section 11.1 shall be
in addition to any liability which it may otherwise have and shall extend, upon
the same terms and conditions, to each Person, if any, who controls the Lender
within the meaning of the Securities Act and to each director of the Lender.
(c) Promptly upon receipt by the Lender under this Section 11.1 of
notice of the commencement of any suit, action, claim, proceeding or
governmental investigation against the Lender, the Lender shall, if a claim in
respect thereof is to be made against the Borrower hereunder, notify the
Borrower in writing of the commencement thereof. The Borrower may participate in
and assume the defense of any such suit, action, claim, proceeding or
investigation at its expense. No settlement of any suit, action, claim
proceeding or investigation (regardless of which party is controlling the
defense) shall be made without the approval of the Borrower and the Lender, such
approval not to be unreasonably withheld, delayed or conditioned. After notice
from the Borrower to the Lender of its intention to assume the defense thereof
with counsel reasonably satisfactory to the Lender and so long as the Borrower
so assumes, and diligently proceeds with, the defense thereof in a manner
reasonably satisfactory to the Lender, the Borrower shall not be liable for any
legal expenses of separate counsel for the Lender unless there shall be a
conflict between the interests of the Borrower and the Lender, in which case the
Lender shall have the right to employ one separate counsel to represent it (at
the Borrower's expense). If the Borrower assumes the defense of any suit, the
Borrower shall use all reasonable
38
efforts to (i) consult, from time to time, with the Lender about the strategy
being pursued, (ii) promptly inform the Lender of any material developments in
such suit, and (iii) forward to the Lender promptly after receipt thereof copies
of any notices, filings, requests or other written materials relating to such
suit, and if the Lender reasonably determines that the defense being carried out
by the Borrower materially adversely affects the interests of the Lender, the
Lender shall notify the Borrower of such effect and the Borrower and the Lender
shall use reasonable efforts to agree on a defense strategy that is acceptable
to both parties and, failing such agreement within 20 days of the aforesaid
notice, the Borrower shall pay the reasonable expenses of separate counsel
retained by the Lender.
(d) The Lender shall use its good faith efforts to mitigate, reduce
or eliminate any losses, expenses or claims for indemnification; provided, that
the Lender shall not be obligated to take any action which would subject the
Lender to any unreimbursed cost or expense or which would otherwise be
disadvantageous to the Lender.
(e) The agreement, indemnities and other statements of the Borrower
in or made pursuant to this Section 11.1 will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made by
or on behalf of the Lender or any of the officers, directors or controlling
persons referred to in this Section 11.1. The provisions of this Section 11.1
shall survive the termination or cancellation of this Agreement.
11.2 Funding Losses. If the Borrower makes, or the Lender otherwise
receives, any payment in respect of principal of the Loan other than on a
Monthly Payment Date, the Borrower shall indemnify the Lender for any loss, cost
or expense ("Funding Loss") incurred by the Lender as a result thereof,
including without limitation any loss, cost or expense from employing, obtaining
or liquidating deposits from third parties. The amount of any Funding Loss shall
be determined in good faith by the Lender, and in the absence of manifest error
or bad faith, the Lender's determination shall be conclusive and binding;
provided that the Lender shall have delivered to the Borrower a certificate
setting forth, in reasonable detail, the calculation employed by the Lender to
determine the amount of the Funding Loss claimed.
11.3 Expenses. The Borrower agrees, promptly upon receipt of a written
invoice, to pay or cause to be paid, and to save the Lender harmless against
liability for the payment of, all reasonable out-of-pocket expenses (including,
without limitation, reasonable attorneys' fees (up to $75,000), accountant's and
other third parties' fees and expenses and any filing fees and expenses incurred
by the Lender, but excluding salaries and overhead costs of the Lender) incurred
by or on behalf of the Lender (i) in connection with the negotiation, execution,
delivery and preparation of the Facility Documents and the transactions
contemplated by or undertaken pursuant to or in connection herewith or therewith
(including, without limitation, the perfection or protection of the Lender's
security interest in the Collateral) and (ii) from time to time (a) relating to
any requested amendments, waivers or consents under the Facility Documents, (b)
arising in connection with the Lender's enforcement or preservation of its
rights (including, without limitation, the perfection and protection of its
interest in the Collateral) under the Facility Documents, or (c) arising in
connection with any audit, dispute, disagreement, litigation or preparation for
litigation involving the Facility Documents.
39
SECTION 12. SECURITY INTEREST.
12.1 Grant of Security Interests. (a) In order to secure the full and
punctual payment of the Secured Obligations in accordance with the terms
thereof, and to secure the performance of all of the obligations of the Borrower
hereunder, the Borrower hereby grants to the Lender a continuing security
interest in and to all of the Borrower's right, title and interest, whether now
owned or existing or hereafter acquired or arising and regardless of where
located, in and to (a) all accounts, contract rights, general intangibles,
chattel paper, money, deposit accounts, investment property or financial assets
arising from, related or credited to or consisting of (i) the Receivables, (ii)
the Related Security with respect to such Receivables, (iii) all Collections,
including all cash collections and other cash proceeds of the Receivables and
(iv) any Lockbox Account and the Cash Collateral Account (and all amounts from
time to time on deposit therein), (b) the Purchase Agreement (including (1) all
moneys due or to become due to the Borrower from Edison under or in connection
with the Purchase Agreement and (2) all rights, remedies, powers, claims and
privileges under the Purchase Agreement and/or of the Borrower against Edison or
the Servicer under or in connection with the Purchase Agreement), and (c) all
cash and non-cash Proceeds of any of the foregoing (all being collectively
referred to as the "Collateral"):
(b) The Security Interests are granted as security only and shall
not subject the Lender to, or transfer or in any way affect or modify, any
obligation or liability of the Borrower or the Servicer with respect to any of
the Collateral or any transaction in connection therewith.
12.2 Further Assurances; Protection of Lender's Security Interest. (a) In
connection with the grant under Section 12.1, the Borrower agrees to record and
file, at its own expense, financing statements with respect to the Collateral,
whether now existing and hereafter created or acquired, suitable to reflect the
transfer of accounts, general intangibles and chattel paper (each as defined in
Article 9 of the UCC) and meeting the requirements of applicable state law in
such manner and in such jurisdictions as are necessary to perfect the pledge of
the Collateral to the Lender.
(b) The Borrower shall maintain its books and records so that such
records shall indicate clearly that the Borrower's right, title and interest in
the Collateral has been collaterally assigned by the Borrower to the Lender.
(c) The Borrower agrees that from time to time, at its sole expense,
it shall promptly authenticate and deliver all additional instruments and
documents and take all additional actions that the Lender may reasonably request
in order to perfect the interests of the Lender in and to, or to protect, the
Collateral or to enable the Lender to exercise or enforce any of its rights
thereunder and hereunder. To the fullest extent permitted by applicable Law, the
Lender shall be permitted, and the Borrower hereby authorizes the Lender, to
file amendments to financing statements and assignments thereof consistent with
the terms of this Agreement (including any amendment hereto or other
modification hereof). Carbon, photographic or other reproductions of this
Agreement or any financing statement shall be sufficient as a financing
statement.
12.3 General Authority. The Borrower hereby irrevocably appoints the
Lender its true and lawful attorney, with full power of substitution, in the
name of the Borrower, or otherwise,
40
for the sole use and benefit of the Lender, but at the Borrower's expense, to
the extent permitted by Law to exercise, at any time and from time to time while
an Event of Default has occurred and is continuing, all or any of the following
powers with respect to all or any of the Collateral:
(i) to demand, ▇▇▇ for, collect, receive and give acquittance
for any and all monies due or to become due thereon or by virtue thereof,
(ii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with
the Collateral or the proceeds or avails thereof, as fully and effectually as if
the Lender were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and
to make any allowance and other adjustments with reference thereto;
provided that the Lender shall give the Borrower 10 days prior written notice of
the time and place of any sale or other intended disposition of any of the
Collateral. The Borrower agrees that such notice constitutes "reasonable
authenticated notification of disposition" within the meaning of Section 9-611
of the UCC.
12.4 Remedies upon Event of Default. (a) If any Event of Default has
occurred and is continuing, the Lender may exercise all rights of a secured
party under the applicable UCC and, in addition, the Lender may, without being
required to give any notice, except as herein provided or as may be required by
mandatory provisions of Law, (i) apply all amounts on deposit in the Cash
Collateral Account in accordance with Section 12.5, (ii) succeed to the
Borrower's rights with respect to servicing under the Purchase Agreement, (iii)
exercise its rights and remedies under any Lockbox Agreement and (iv) sell the
Collateral or any part thereof in any commercially reasonable manner at public
or private sale, for cash, upon credit or for future delivery, and at such price
or prices as the Lender may deem satisfactory. The Borrower will execute and
deliver such documents and take such other action as the Lender reasonably deems
necessary or advisable in order that any such sale may be made in compliance
with Law. Upon any such sale, the Lender shall have the right to deliver, assign
and transfer to the purchaser thereof the Collateral so sold. Each purchaser at
any such sale shall hold the Collateral so sold to it absolutely and free from
any claim or right of whatsoever kind, including any equity or right of
redemption of the Borrower which may be waived, and the Borrower, to the extent
permitted by Law, hereby specifically waives all rights of redemption, stay or
appraisal which it has or may have under any Law now existing or hereafter
adopted. The Lender, instead of exercising the power of sale herein conferred
upon it, may proceed by a suit or suits at law or in equity to foreclose the
Security Interests and sell the Collateral, or any portion thereof, under a
judgment or decree of a court or courts of competent jurisdiction.
(b) For the purpose of enforcing any and all rights and remedies
under this Agreement, the Lender shall have access to and may use the Borrower's
books and records relating to the Collateral and the Borrower shall (i) deliver
to the Lender such information relating to the Collateral as the Lender may
reasonably request and (ii) deliver to the Lender all
41
Records required to the be maintained pursuant to this Agreement relating to the
Collateral and take all such other actions as are necessary to enable to the
Lender to protect and enforce its rights in the Collateral.
12.5 Application of Proceeds. Upon the occurrence and during the
continuance of an Event of Default, the proceeds of any realization upon, or
sale of, the Collateral shall be applied by the Lender in the following order of
priorities:
first, to payment of the expenses of such realization or sale,
including reasonable compensation to agents and counsel for the Lender, and all
reasonable expenses, liabilities and advances incurred or made by the Lender in
connection therewith, and any other unreimbursed expenses for which the Lender
is to be reimbursed pursuant to Section 11 of this Agreement and unpaid fees
owing to the Lender under this Agreement;
second, to the payment of accrued but unpaid interest on the Secured
Obligations in accordance with this Agreement;
third, to the payment of unpaid principal of the Secured
Obligations;
fourth, to the ratable payment of all other Secured Obligations,
until all Secured Obligations shall have been paid in full; and
finally, to payment to the Borrower or its successors or assigns, or
as a court of competent jurisdiction may direct or as required by applicable
law.
12.6 Termination of Security Interests; Release of Collateral. Upon the
repayment in full of all Secured Obligations and the termination of the
Commitment under this Agreement, the Security Interests shall terminate and all
rights to the Collateral shall revert to the Borrower. Upon any such termination
of the Security Interests, the Lender will, at the expense of the Borrower,
execute and deliver to the Borrower such documents as the Borrower shall
reasonably request to evidence the termination of the Security Interests.
SECTION 13. MISCELLANEOUS.
13.1 Notices. (a) All communications under this Agreement or the Note
shall be in writing and shall be delivered or mailed or sent by facsimile
transmission or electronic transmission and confirmed in writing (i) if to the
Lender, at the following address:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Capital Inc.
4 World ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇.▇▇▇
and (ii) if to the Borrower, at the following address:
42
Edison Receivables Company LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone No: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to the Servicer, at the following address:
Edison Schools Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
E-mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
or at such other address or facsimile number as the parties shall have furnished
in writing to each other.
(b) Any written communication so addressed and mailed by certified
or registered mail, return receipt requested, shall be deemed to have been given
when so mailed. All other written communications shall be deemed to have been
given upon receipt thereof.
13.2 Survival. All representations, warranties and covenants made by the
Borrower herein or by the Borrower in any certificate or other instrument
delivered under or in connection with this Agreement shall be considered to have
been relied upon by the Lender and shall survive regardless of any investigation
made by the Lender or on the Lender's behalf.
13.3 Successors and Assigns. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns, and shall inure to
the benefit of and be enforceable by the parties hereto and their respective
successors and assigns permitted hereunder. Whether or not expressly so stated,
the provisions of Sections 11.1 and 11.3 hereof shall be for the benefit of, and
shall be enforceable by, any Person who shall no longer be a Lender hereunder
but who shall have incurred any expense or been subjected to any liability
referred to therein while, or on the basis of being, a Lender.
13.4 Amendment and Waiver. This Agreement and the Notes may be amended or
supplemented, and the observance of any term hereof or thereof may be waived,
with the written consent of the Borrower and the Lender (or, if multiple
Lenders, Lenders with respect to at least 66 2/3% in aggregate unpaid principal
amount of the Loan), provided, however, that no such amendment, supplement or
waiver shall, without the written consent of all Lenders, (a) change, with
respect to the Loan, the amount or time of any required prepayment or payment of
principal or premium or the rate or time of payment of interest, or change the
funds in which any prepayment or payment on the Loan is required to be made; (b)
reduce the Borrowing Base, (c) reduce the percentage of the aggregate principal
amount of Loan required for any amendment,
43
consent or waiver hereunder; or (d) release any material Lien on any of the
Collateral or affect the priority thereof.
13.5 Counterparts. This Agreement may be executed and delivered
simultaneously in two (2) or more counterparts, each of which shall be deemed an
original, but all such counterparts shall together constitute but one and the
same instrument.
13.6 Reproduction of Documents. This Agreement and all documents relating
hereto (other than the Note), including, without limitation, (a) consents,
waivers and modifications that may hereafter be executed, (b) documents received
by the Lender or the Borrower, as the case may be, on any Closing Date, and (c)
certificates and other non-proprietary information heretofore or hereafter
furnished to the Lender or the Borrower may be reproduced by the receiving party
by any photographic or other similar process and such receiving party may
destroy any original document so reproduced; provided, however, that, subject to
compliance with Section 13.8 hereof, there shall be no restriction on the
Lender's or the Borrower's ability to reproduce this Agreement and related
documents for use by the Lender, the Borrower, or any Affiliate thereof. The
Lender agrees not to use Borrower's trademarks without written permission or to
use same in a way that imperils Borrower's use of such trademarks. The Lender
and the Borrower each stipulate that, to the extent permitted by applicable law
and court or agency rules, any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such reproduction was made
by the Lender or the Borrower, as the case may be, in the regular course of
business) and that any enlargement, facsimile or further reproduction of such
reproduction shall be admissible in evidence to the same extent.
13.7 GOVERNING LAW; Consent to Jurisdiction and Venue. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE. Each of the Lender and the Borrower hereby irrevocably (i) agrees that
any suit, action or other legal proceeding arising out of or relating to the
Facility Documents or any Note may be brought in any court of record in the
State of New York or in the courts of the United States of America located in
such State, (ii) consents to the nonexclusive jurisdiction of each such court in
any such suit, action or proceeding, and (iii) waives any objection which it may
have to the laying of venue of any such claim that any such suit, action or
proceeding has been brought in an inconvenient forum and covenants that it will
not seek to challenge the jurisdiction of any such court or seek to oust the
jurisdiction of any such court, whether on the basis of inconvenient forum or
otherwise. Each of the Lender and the Borrower irrevocably consents to the
service of any and all process in any such suit, action or proceeding by mailing
copies of such process to the Lender or the Borrower, as the case may be, at its
address for notices provided in Section 13.1 hereof. Each of the Lender and the
Borrower agrees that a final, non-appealable judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. All mailings under
this Section 13.7 shall be by registered or certified mail, return receipt
requested. Nothing in this Section 13.7 shall affect the Lender's or the
Borrower's right to serve legal process in any other manner permitted by law or
affect either party's right to bring any suit, action or proceeding against the
other party or any of its properties in the courts of any other jurisdiction.
44
13.8 Confidentiality. The Borrower and the Lender (each, a "Recipient")
shall hold all non-public information obtained pursuant to this Agreement and
the transactions contemplated hereby or effected in connection herewith
("Transactions") in accordance with customary procedures for handling
confidential information of this nature and will not disclose such information
to outside parties, but may make disclosure (a) to their respective directors,
officers, employees, agents, counsel, auditors and other representatives
(collectively, "Representatives") who need to know such non-public information
for purposes of evaluating the Transactions, who are informed of the
confidential nature of such non-public information and who agree to be bound by
the terms of this Section 13.8, (b) as reasonably required by a bona fide
transferee (or prospective transferee which agrees in writing to comply with
this Section 13.8), (c) as necessary in order to obtain any consents, approvals,
waivers or other arrangements required to permit the execution, delivery and
performance of this Agreement and (d) as required or requested by any Official
Body or pursuant to legal process or as required by applicable Law; provided,
that that non-public information shall not include information which (i) is or
becomes generally available to the public other than as a result of a disclosure
by a Recipient or its Representatives, (ii) was available to a Recipient on a
nonconfidential basis prior to its disclosure to such Recipient by the other
party or such other party's Representative or (iii) becomes available to a
Recipient on a non-confidential basis from a source other than the other party
or such other party's Representatives, who is not known by such Recipient to be
bound by a confidentiality agreement with the Recipient or otherwise prohibited
from transmitting the information to such Recipient. In the event that the
Borrower or the Lender (as applicable, the "disclosing party") is so required or
requested to make any disclosure pursuant to clause (d) above, it is agreed that
the disclosing party shall use reasonable efforts to give prompt notice of such
requirement or request so that such other party may seek an appropriate
protective order. As determined on any date, the obligations under this Section
13.8 shall terminate one year following the then current Expiration Date
described in clause (i) of the definition thereof but in no event shall such
obligations terminate more than two years following such determination date.
13.9 Waiver of Jury Trial. EACH PARTY HERETO HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE
ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP BETWEEN THEM ESTABLISHED BY THIS AGREEMENT, ANY NOTE OR ANY OTHER
CONTRACT, INSTRUMENT, DOCUMENT, OR AGREEMENT ENTERED INTO IN CONNECTION WITH
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF ANY OTHER
PERSON.
13.10 No Implied Waiver; Cumulative Remedies. No course of dealing and no
delay or failure of Lender in exercising any right, power or privilege under the
Facility Documents shall affect any other or future exercise thereof or the
exercise of any other right, power or privilege; nor shall any single or partial
exercise of any such right, power or privilege or any abandonment or
discontinuance of steps to enforce such a right, power or privilege preclude any
further exercise thereof or of any other right, power or privilege. The rights
and remedies of the Lender under the Facility Documents are cumulative and not
exclusive of any rights or remedies which the Lender would otherwise have.
45
13.11 No Discharge. The obligations of the Borrower under the Facility
Documents shall be absolute and unconditional and shall remain in full force and
effect without regard to, and shall not be released, discharged or in any way
affected by (a) any exercise or nonexercise of any right, remedy, power or
privilege under or in respect of the Facility Documents or applicable Law,
including, without limitation, any failure to set-off or release in whole or in
part by the Lender of any balance of any deposit account or credit on its books
in favor of the Borrower, or any waiver, consent, extension, indulgence or other
action or inaction in respect of any thereof, or (b) any other act or thing or
omission or delay to do any other act or thing which could operate as a
discharge of the Borrower as a matter of Law.
13.12 Severability. The provisions of this Agreement are intended to be
severable. If any provision of this Agreement shall be held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
of such provision in any other jurisdiction or the remaining provisions hereof
in any jurisdiction.
13.13 Prior Understandings. This Agreement sets forth the entire
understanding of the parties relating to the subject matter hereof, and
supersedes all prior understandings and agreements, whether written or oral.
13.14 Set-Off. In addition any rights and remedies of the Lender hereunder
and by Law, the Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable Law, upon any amount becoming due and payable by the
Borrower hereunder (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by the Lender or any Affiliate
thereof to or for the credit or the account of the Borrower or any Affiliate
thereof. The Lender agrees promptly to notify the Borrower after any such
set-off and application made by the Lender; provided that the failure to give
such notice shall not affect the validity of such set-off and application.
46
IN WITNESS WHEREOF, the parties hereto have cause this Agreement to
be duly executed as of the day and year first above written.
EDISON RECEIVABLES COMPANY LLC,
as Borrower
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE CAPITAL INC.,
as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Director
[SIGNATURE PAGE TO EDISON CREDIT AGREEMENT]
TABLE OF CONTENTS
Page
SECTION 1. INTERPRETATION OF AGREEMENT AND NOTES ................................ 1
1.1 Definitions ................................................... 1
1.2 Interpretation and Construction ............................... 14
1.3 Governing Law; Submission to Jurisdiction ..................... 15
SECTION 2. COMMITMENT ........................................................... 15
2.1 The Loan ...................................................... 15
2.2 Borrowings; Closings .......................................... 16
2.3 Selection of LIBOR Periods; Interest Rates .................... 17
2.4 Security Interests ............................................ 18
2.5 Indemnity for Taxes, Reserves and Expenses .................... 18
2.6 Commitment Fee ................................................ 19
2.7 [Reserved] .................................................... 19
2.8 Termination of Commitment ..................................... 19
2.9 Reports ....................................................... 19
SECTION 3. GENERAL REPRESENTATIONS AND WARRANTIES OF THE
BORROWER ............................................................. 19
3.1 Existence and Power ........................................... 20
3.2 Corporate and Governmental Authorization; No Contravention .... 20
3.3 Binding Effect ................................................ 20
3.4 Litigation .................................................... 20
3.5 Investment Company ............................................ 20
3.6 Events of Default or Default .................................. 20
3.7 Use of Proceeds ............................................... 20
3.8 Accurate and Complete Disclosure .............................. 21
3.9 Taxes ......................................................... 21
3.10 Books and Records ............................................. 21
3.11 Financial Condition ........................................... 21
3.12 No Debt ....................................................... 21
3.13 ERISA ......................................................... 21
SECTION 3A. REPRESENTATIONS AND WARRANTIES OF THE BORROWER
RELATING TO COLLATERAL ............................................... 21
I
TABLE OF CONTENTS
(continued)
Page
3A.1 Place of Business; Records Location; Etc ...................... 21
3A.2 No Liens ...................................................... 22
3A.3 No Adverse Actions ............................................ 22
3A.4 Filings ....................................................... 22
3A.5 Eligible Receivables .......................................... 22
3A.6 Notice ........................................................ 22
3A.7 Assignment .................................................... 22
3A.8 Permitted Lockbox Banks and Lockbox Accounts .................. 22
3A.9 Consideration ................................................. 23
3A.10 New York Management Contracts ................................. 23
SECTION 4. CONDITIONS TO LENDER'S OBLIGATION TO FUND THE
BORROWING REQUEST ON THE INITIAL CLOSING DATE ........................ 23
4.1 Certified Resolutions ......................................... 23
4.2 Articles of Incorporation; Certificate of Formation ........... 23
4.3 Good Standing Certificates; Etc ............................... 23
4.4 Incumbency; Specimen Signatures; By-Laws; Etc ................. 23
4.5 Financing Statements .......................................... 24
4.6 Lien Searches ................................................. 24
4.7 Legal Opinions ................................................ 24
4.8 Other Documents ............................................... 24
4.9 Fees .......................................................... 24
4.10 Lockboxes ..................................................... 24
4.11 Officer's Certificates ........................................ 24
4.12 Contracts ..................................................... 24
4.13 Receivables List .............................................. 25
4.14 Agreed-Upon Procedures Letter ................................. 25
4.15 Cash Collateral Account ....................................... 25
SECTION 5. CONDITIONS TO LENDER'S OBLIGATION TO FUND
BORROWING REQUESTS (INCLUDING THE INITIAL
BORROWING REQUEST) AND TO MAINTAIN THE LOAN .......................... 25
5.1 Representations True; No Default or Event of Default .......... 25
5.2 Borrowing Base ................................................ 25
5.3 Borrowing Notice; Tranche Selection Notice .................... 26
5.4 Other Matters ................................................. 26
II
TABLE OF CONTENTS
(continued)
Page
SECTION 6. LOAN MATURITY; LOAN PREPAYMENTS ...................................... 26
6.1 Loan Maturity ................................................. 26
6.2 Mandatory Prepayments ......................................... 26
6.3 Voluntary Prepayments ......................................... 26
6.4 Allocation of Prepayments ..................................... 26
6.5 Prepayment Notice ............................................. 26
6.6 Payment Instructions; Etc ..................................... 26
SECTION 6A. CASH COLLATERAL ACCOUNT .............................................. 26
6A.1 Establishing the Cash Collateral Account ...................... 26
6A.2 Deposits into the Cash Collateral Account ..................... 27
6A.3 Withdrawals from the Cash Collateral Account .................. 27
SECTION 7. ASSIGNMENTS AND PARTICIPATIONS ....................................... 27
7.1 Assignments ................................................... 27
7.2 Participations ................................................ 28
SECTION 8. CERTAIN COVENANTS OF THE BORROWER .................................... 28
8.1 Notice of Default or Event of Default ......................... 28
8.2 Notice of Material Adverse Change ............................. 28
8.3 Purchase Agreement Notices .................................... 28
8.4 Preservation of Existence ..................................... 29
8.5 Compliance with Laws .......................................... 29
8.6 Enforceability of Obligations ................................. 29
8.7 Books and Records ............................................. 29
8.8 Fulfillment of Obligations .................................... 29
8.9 Maintenance of Office; Notice of Relocation ................... 29
8.10 Compliance with Opinion Assumptions and Limited Liability
Company Agreement ............................................. 29
8.11 [Reserved] .................................................... 29
8.12 Litigation .................................................... 29
8.13 Fees, Taxes and Expenses ...................................... 30
8.14 Compliance with the Purchase Agreement ........................ 30
8.15 Information ................................................... 30
8.16 Maintenance of Separate Existence ............................. 30
8.17 Nature of Business and Permitted Transactions ................. 32
III
TABLE OF CONTENTS
(continued)
Page
8.18 Due Diligence ................................................. 32
8.19 Lockbox and Lockbox Accounts .................................. 33
SECTION 9. NEGATIVE COVENANTS OF THE BORROWER ................................... 33
9.1 No Rescissions or Modifications ............................... 33
9.2 No Liens ...................................................... 33
9.3 No Changes .................................................... 33
9.4 Capitalization; Distributions ................................. 34
9.5 No Indebtedness ............................................... 34
9.6 Consolidations, Mergers and Sales of Assets ................... 34
9.7 ERISA ......................................................... 34
9.8 Investments in Other Persons .................................. 34
9.9 Transactions with Affiliate ................................... 34
9.10 Purchase Agreement ............................................ 34
9.11 Lockboxes ..................................................... 34
9.12 Credit and Collection Policy .................................. 34
SECTION 10. DEFAULTS, REMEDIES AND TERMINATION ................................... 35
10.1 Events of Default ............................................. 35
10.2 Default Remedies .............................................. 37
SECTION 11. INDEMNIFICATION; FUNDING LOSSES; EXPENSES ............................ 38
11.1 Indemnification ............................................... 38
11.2 Funding Losses ................................................ 39
11.3 Expenses ...................................................... 39
SECTION 12. SECURITY INTEREST .................................................... 40
12.1 Grant of Security Interests ................................... 40
12.2 Further Assurances; Protection of Lender's Security Interest .. 40
12.3 General Authority ............................................. 40
12.4 Remedies upon Event of Default ................................ 41
12.5 Application of Proceeds ....................................... 42
12.6 Termination of Security Interests; Release of Collateral ...... 42
SECTION 13. MISCELLANEOUS ........................................................ 42
13.1 Notices ....................................................... 42
13.2 Survival ...................................................... 43
13.3 Successors and Assigns ........................................ 43
IV
TABLE OF CONTENTS
(continued)
Page
13.4 Amendment and Waiver .......................................... 43
13.5 Counterparts .................................................. 44
13.6 Reproduction of Documents ..................................... 44
13.7 GOVERNING LAW; Consent to Jurisdiction and Venue .............. 44
13.8 Confidentiality ............................................... 45
13.9 Waiver of Jury Trial .......................................... 45
13.10 No Implied Waiver; Cumulative Remedies ........................ 45
13.11 No Discharge .................................................. 46
13.12 Severability .................................................. 46
13.13 Prior Understandings .......................................... 46
13.14 Set-Off ....................................................... 46
V
An extra section break has been inserted above this paragraph. Do not delete
this section break if you plan to add text after the Table of
Contents/Authorities. Deleting this break will cause Table of
Contents/Authorities headers and footers to appear on any pages following the
Table of Contents/Authorities.
