Exhibit 10.38
AGREEMENT OF ISSUANCE
This Agreement of Issuance (the "Agreement") dated as of July 31,
2002 made by and between EDISON SCHOOLS INC., a Delaware corporation ("Edison"),
and EDISON RECEIVABLES COMPANY LLC, a Delaware limited liability company
("ERC").
RECITALS:
WHEREAS, Edison and ERC desire to (i) enter into the Amended and
Restated Purchase and Contribution Agreement (the "A&R Purchase Agreement"),
which amends and restates the Purchase and Contribution Agreement dated as of
October 31, 2001, pursuant to which Edison will continue the sale and
contribution to ERC of Edison's accounts receivable arising from management
contracts (including summer school contracts) in the ordinary course of business
(the "Receivables") and (ii) enter into a pledge agreement (the "Pledge
Agreement"), pursuant to which Edison will grant ERC a security interest in all
of Edison's right, title and interest in and to the membership interests in
110th and 5th Associates, LLC and certain notes receivable owned by Edison from
charter school obligors of Edison (collectively, the "Security Interests") to
secure Edison's repurchase and indemnity obligations to ERC under Sections 2.05
and 6.07, Article VIII of the A&R Purchase Agreement; and
WHEREAS, ERC, as borrower, the Lenders (as defined below) party
thereto and Xxxxxxx Xxxxx Mortgage Capital, Inc. ("MLMCI"), as agent (the
"Agent"), desire to enter into the Amended and Restated Credit and Security
Agreement (the "A&R Credit Agreement"), which amends and restates the Credit and
Security Agreement dated as of October 31, 2001, pursuant to which (i) ERC
grants to the Agent (for the benefit of the Lenders) a continuing first priority
perfected security interest in and to all of its right, title and interest in
and to the Collateral (as defined in the A&R Credit Agreement); and (ii) each
Lender, severally, agrees to make and maintain a loan to ERC in an aggregate
amount not to exceed the lesser of $55,000,000 and the Borrowing Base (as
defined in the A&R Credit Agreement), at any time outstanding which is based
certain percentages of the Eligible Receivables (as defined in the A&R Credit
Agreement); and
WHEREAS, MLMCI has informed ERC that it intends to assign a portion
of its loan outstanding under the A&R Credit Facility to School Services LLC
("School Services"), who will become a lender thereunder (School Services and
MLMC, each a "Lender," and collectively, the "Lenders"); and
WHEREAS, MLMCI and School Services have each requested a warrant (the
"Warrants") to purchase Class A Common Stock of Edison up to 2,152,959 shares
and 478,435 shares, respectively, pursuant to warrant agreements (the "Warrant
Agreements") proposed to be entered into between Edison and each of the Lenders
and
Edison is willing to issue the Warrants provided that ERC pay Edison the fair
market value thereof.
NOW, THEREFORE, for consideration contained herein, the exchange,
receipt and sufficiency of which are acknowledged, the parties agree as follows:
1. Edison shall enter into a Warrant Agreement with, and issue a Warrant to,
each of MLMCI and School Services to purchase up to 2,152,959 shares and 478,435
shares, respectively, of Edison's Class A Common Stock on terms approved by the
Board of Directors of Edison.
2. Contemporaneously with the issuance of the Warrants, ERC shall pay to Edison
the amount of $2,368,254.60 (equal to $0.90 per share subject to the Warrants)
in immediately available funds to a bank account designated by Edison.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
EDISON SCHOOLS INC. EDISON RECEIVABLES COMPANY LLC
By: /s/ Xxxxx Xxxxx By: /s/ Xxx X. Xxxxxxxxx
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Name: Xxxxx Xxxxx Name: Xxx X. Xxxxxxxxx
Title: Senior Vice President and Title: Treasurer
General Counsel
