Exhibit 10.35
EXECUTION COPY
AMENDED AND RESTATED
PURCHASE AND CONTRIBUTION AGREEMENT
between
EDISON SCHOOLS INC.
as Seller and Servicer,
and
EDISON RECEIVABLES COMPANY LLC,
as Buyer
Dated as of July 31, 2002
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS ............................................................. 1
Section 1.01. Certain Defined Terms ................................................... 1
Section 1.02. Interpretation and Construction ......................................... 13
Section 1.03. Amendment and Restatement ............................................... 13
ARTICLE II SALES AND TRANSFERS; SETTLEMENTS ........................................ 14
Section 2.01. General Terms ........................................................... 14
Section 2.02. Purchase and Sale; Purchase Price; Contributions ........................ 14
Section 2.03. Transfers and Assignments ............................................... 15
Section 2.04. Protection of Ownership of the Transferred Assets ....................... 16
Section 2.05. Mandatory Repurchase or Purchase Under Certain Circumstances;
Mandatory Payments by Seller under Certain Circumstances ................ 16
Section 2.06. Transfers by Buyer ...................................................... 17
Section 2.07. Payment of Collections and Deemed Collections ........................... 18
ARTICLE III REPRESENTATIONS AND WARRANTIES .......................................... 18
Section 3.01. Representations and Warranties of Edison ................................ 18
Section 3.02. Representations and Warranties of the Seller With
Respect to Each Sale of Receivables ..................................... 22
ARTICLE IV CONDITIONS PRECEDENT .................................................... 23
Section 4.01. Conditions to the Initial Purchase Date or Initial Contribution Date .... 23
Section 4.01A Conditions to the Restatement Effective Date ............................ 24
Section 4.02. Conditions to All Purchases ............................................. 26
ARTICLE V COVENANTS ............................................................... 27
Section 5.01. Covenants of Edison ..................................................... 27
Section 5.02. Negative Covenants of Edison ............................................ 32
ARTICLE VI ADMINISTRATION AND COLLECTION ........................................... 33
Section 6.01. Designation of Servicer ................................................. 33
Section 6.02. Responsibilities of the Servicer ........................................ 34
Section 6.03. Servicing Compensation .................................................. 34
Section 6.04. Further Actions Evidencing Purchases .................................... 34
Section 6.05. Lockboxes ............................................................... 35
Section 6.06. Servicer Defaults ....................................................... 35
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TABLE OF CONTENTS
(continued)
PAGE
Section 6.07. Servicer Indemnification of Indemnified Parties ......................... 37
Section 6.08. Servicer not to Resign .................................................. 38
Section 6.09. Back-Up Servicer ........................................................ 38
ARTICLE VII TERMINATION ............................................................. 38
Section 7.01. Term .................................................................... 38
Section 7.02. Effect of Termination ................................................... 39
ARTICLE VIII INDEMNIFICATION ......................................................... 39
Section 8.01. Expenses ................................................................ 39
Section 8.02. Indemnity for Taxes, Reserves and Expenses .............................. 40
Section 8.03. Indemnity ............................................................... 40
Section 8.04. Payments Made Without Duplication ....................................... 43
ARTICLE IX MISCELLANEOUS ........................................................... 43
Section 9.01. Survival ................................................................ 43
Section 9.02. Waivers; Amendments ..................................................... 43
Section 9.03. Notices ................................................................. 43
Section 9.04. Governing Law; Submission to Jurisdiction; Waiver of
Trial by Jury ........................................................... 43
Section 9.05. Records ................................................................. 44
Section 9.06. No Implied Waiver; Cumulative Remedies .................................. 44
Section 9.07. No Discharge ............................................................ 44
Section 9.08. Integration; Prior Understandings ....................................... 44
Section 9.09. Successors and Assigns .................................................. 44
Section 9.10. No Petition ............................................................. 45
Section 9.11. Severability; Counterparts, Waiver of Setoff ............................ 45
Section 9.12. Confidentiality ......................................................... 45
Section 9.13. Pledge Agreement ........................................................ 46
Section 9.14. Third Party Beneficiary ................................................. 46
Section 9.15. Agent's Authority to Act ................................................ 46
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Exhibits
Exhibit A Location of Lockboxes
Exhibit B Form of Lockbox Agreement
Exhibit C Information Regarding Location of Records; Name Changes; Etc.
Exhibit D Credit and Collection Policy
Exhibit E-1 Form of Missouri Summer School Invoice for 2001 Summer School
Contracts
Exhibit E-2 Form of Missouri Summer School Invoice for Missouri Summer School
Contracts other than 2001 Summer School Contracts
Schedule I List of Receivables
Schedule II Insurance Requirements
Schedule III Excluded Receivables
Schedule IV New York Management Contracts
Schedule V Missouri Summer School Contracts
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AMENDED AND RESTATED
PURCHASE AND CONTRIBUTION AGREEMENT
This AMENDED AND RESTATED PURCHASE AND CONTRIBUTION AGREEMENT, dated as of July
31, 2002 (as amended, supplemented or otherwise modified and in effect from time
to time, this "Agreement"), made by and between EDISON RECEIVABLES COMPANY LLC,
a Delaware limited liability company, as buyer (the "Buyer") and EDISON SCHOOLS
INC., a Delaware corporation ("Edison"), as seller (the "Seller") and as
servicer (in such capacity, the "Servicer").
RECITALS:
WHEREAS, the Seller in the ordinary course of its business generates
or acquires certain accounts receivable, notes receivable and related rights and
interests.
WHEREAS, on the Effective Date, the Buyer, the Seller and the
Servicer entered into a Purchase and Contribution Agreement, dated as of October
31, 2001 (as in effect on the date hereof, the "Original Purchase and
Contribution Agreement"), pursuant to which (i) from time to time, the Seller
sold or contributed to the Buyer certain Receivables (as defined therein) and
(ii) Edison agreed to act as Servicer in accordance with the terms thereof;
WHEREAS, on the Restatement Effective Date (as defined below), the
parties hereto desire to enter into this Agreement, pursuant to which (i) the
Original Purchase and Contribution Agreement shall be (and hereby is) amended
and restated in its entirety, (ii) subject to the terms and conditions of this
Agreement, the Seller shall continue to sell or contribute from time to time,
and the Buyer shall purchase from the Seller, or accept as a contribution to its
capital, certain Receivables (as defined below) and (iii) Edison shall continue
to service all Receivables (whether sold or contributed on, prior to or after
the Restatement Effective Date) in accordance with the terms of this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein, and for good and sufficient consideration, the
parties hereto, intending to be legally bound, do hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. As used in this
Agreement, the following capitalized terms shall have the following meanings:
"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.
"Agent" shall mean Xxxxxxx Xxxxx Mortgage Capital, Inc. (and its
successors and assigns), acting in its capacity as Agent under the Credit
Agreement.
"Assignment" shall mean the Assignment, dated as of July 31, 2002,
made by the Seller to the Buyer.
"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.
"Buyer" shall have the meaning specified in the preamble hereto.
"Cash Collection Ratio" shall mean, for any Monthly Period (as
calculated in the Monthly Report required to be delivered pursuant to Section
2.9 of the Credit Agreement in the month following such Monthly Period), the
ratio (expressed as a percentage) of (i) all payments on Receivables (other than
Receivables arising under Summer School Contracts) made by Obligors during such
Monthly Period to (ii) the average of the aggregate Outstanding Balance of all
Receivables (other than Receivables arising under Summer School Contracts) as of
the last day of the most recently ended three consecutive Monthly Periods
(including such Monthly Period).
"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.
"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 Buyer, the Servicer, the Agent or any
Lender 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 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.
"Consolidated Debt" shall mean, at any time, the Debt of Edison and
its Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" shall mean, for any period, the net income
of Edison and its Subsidiaries determined on a consolidated basis in accordance
with GAAP.
"Consolidated Tangible Net Worth" shall mean, at any time, the
common shareholders' equity of Edison and its Subsidiaries determined on a
consolidated basis in accordance with GAAP, less the sum of (i) all amounts
owing to Edison or any Subsidiary by any Affiliate of Edison or such Subsidiary
or by any officer, director or employee of Edison, any Subsidiary of Edison or
any of their respective Affiliates and (ii) the carrying value of all intangible
assets of Edison and its Subsidiaries.
"Contract" shall mean a binding agreement between the Seller and an
Obligor entered into in the ordinary course of the Seller's business and/or any
and all instruments, agreements, invoices or other writings, which, in either
case, give rise to Receivables arising from the provision of services in the
ordinary course of the Seller's business, including the provision of extended
learning or summer school services.
"Contributed Assets" shall have the meaning specified in Section
2.02(e) hereof.
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"Contributed Receivables" shall have the meaning specified in
Section 2.02(e) hereof.
"Contribution Date" shall mean each day on which the Seller makes a
capital contribution of Receivables to the Buyer pursuant to Section 2.02(e)
hereof.
"Credit and Collection Policy" shall mean Edison's credit,
collection, enforcement and other policies and practices relating to the
Contracts and Receivables existing on the Effective Date and as set forth on
Exhibit D hereto, as the same may be modified from time to time in compliance
with Section 5.02(f) hereof.
"Credit Agreement" shall mean the Amended and Restated Credit and
Security Agreement dated as of July 31, 2002 by and between the Buyer, as
borrower, the Lenders party thereto from time to time and the Agent, as the same
may be from time to time amended, modified or supplemented.
"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 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, the amount received or deemed received by the Buyer from the Seller
pursuant to Section 2.05 hereof.
"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 Buyer'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.
"Dollars" or "$" shall mean the lawful currency of the United States
of America.
"Edison" shall have the meaning specified in the preamble hereto.
"Effective Date" shall mean October 31, 2001, the date as of which
the Buyer and the Seller have initially executed and delivered this Agreement.
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"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 Buyer's security interest therein, and
is not evidenced by an "instrument", as defined in the UCC as so in effect;
(c) which was originated in connection with the rendering of
services by the Seller in the ordinary course of the Seller's business to an
Obligor who was approved by the Seller in accordance with its Credit and
Collection Policy, and which Obligor is not an Affiliate of the Seller, the
Agent or any 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 Buyer or the Agent (on behalf of the
Lenders) to exercise its rights under this Agreement or the Credit 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
sale or pledge of such Receivable hereunder or under the Credit Agreement
unlawful, invalid or unenforceable;
(j) which is owned solely by the Seller 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 Buyer will have a valid and binding
undivided ownership interest or a 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 (i) a Quarterly
Xxxx Receivable, in which case the terms of such Quarterly Xxxx 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 or (ii) each Missouri Summer School Receivable (each of which
shall be evidenced by a Missouri Summer School Invoice), in which case the
Missouri Summer School Invoice for such Receivable requires payment
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at or before the time specified in the Missouri Summer School Contract (as in
effect on the Restatement Effective Date) governing such Receivable;
(l) with respect to which all services have been rendered in full
and as to which the state and local governments having jurisdiction over the
related Obligor have already made appropriations for public education for the
school year to which such Receivable relates in amounts sufficient to pay such
Receivable in full;
(m) with respect to which, if such Receivable is a Missouri Summer
School Receivable, the related Missouri Summer School Contract has not been
modified, amended or otherwise changed in any way which extends (or has the
effect of extending) any of the payment terms set forth in such Contract as in
effect on the Restatement Effective Date;
(n) which has an Obligor which is domiciled in a state
(including the District of Columbia) of the United States of America;
(o) 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;
(p) which is not a note receivable and which does not arise under a
Summer School Contract (other than a Missouri Summer School Contract);
(q) which is not an obligation of the United States government
or any agency, instrumentality or political subdivision thereof;
(r) 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;
(s) the payment of which (or any portion of which) has not been
subordinated or deferred under the related Management Contract; provided that
the unexercised right in any Management Contract between the Seller and a
charter school Obligor to subordinate or defer the payment of Edison's
management fee thereunder to certain agreed upon expenses of such Obligor under
such Contract and to certain operating expenses of the Seller under such
Contract shall not by, itself, cause such Receivable to fail to qualify as an
Eligible Receivable;
(t) 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 (s)); 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;
(u) 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;
(v) 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;
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(w) which arises under a Contract the standardized provisions of
which are consistent with past practices (with such changes as prudent business
judgment may dictate or as may be required by applicable law);
(x) which has not been disqualified by the Agent 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 Agent, in the exercise of its
reasonable judgment, that the Contract under which such Receivable arose
adversely affects the Lenders' ability to collect such Receivable or adversely
affects the Lenders' ability to determine the collectibility of such Receivable
or the timing of any payment with respect thereto or the Outstanding Balance
thereof; and
(y) with respect to which, if such Receivable arises under a
Management Contract between the Seller and an Obligor located in the
Commonwealth of Pennsylvania, the Lenders have received a legal opinion (in form
and substance reasonably satisfactory to the Required Lenders) from a law firm
qualified to practice in the Commonwealth of Pennsylvania (and otherwise
reasonably acceptable to the Required Lenders) to the effect that, for purposes
of Section 9406 of the Pennsylvania Uniform Commercial Code, such Obligor is not
the Commonwealth of Pennsylvania; provided that this clause (y) shall not apply
to any Receivable originated on or prior to the Restatement Effective Date.
"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.
"ERISA Event" shall mean, with respect to any Person, (i) with
respect to any Plan, a reportable event, as defined in Section 4043 of ERISA, as
to which the PBGC has not by regulation waived the requirement of Section
4043(a) of ERISA that it be notified within 30 days of the occurrence of such
event, or (ii) the withdrawal of such Person or any ERISA Affiliate from a
multiple employer Plan during a plan year in which it is a "substantial
employer", as defined in Section 4001(a)(2) of ERISA, or (iii) the failure by
such Person or any ERISA Affiliate to meet the minimum funding standard of
Section 412 of the Code or Section 302 of ERISA with respect to any Plan,
including, without limitation, the failure to make on or before its due date a
required installment under Section 412(m) of the Code or Section 302(e) of
ERISA, or (iv) the distribution under Section 4041 of ERISA of a notice of
intent to terminate any Plan or any action taken by such Person or any ERISA
Affiliate to terminate any Plan, or (v) the adoption of an amendment to any Plan
that pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA would
result in the loss of tax-exempt status of the trust of which such Plan is a
part if such Person or an ERISA Affiliate fails to timely provide security to
the Plan in accordance with the provisions of said Sections, or (vi) the
institution by the PBGC of proceedings under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or
(vii) the receipt by such
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Person or any ERISA Affiliate of a notice from a Multiemployer Plan that action
of the type described in the previous clause (vi) has been taken by the PBGC
with respect to such Multiemployer Plan, or (viii) any event or circumstance
exists which may reasonably be expected to constitute grounds for such Person or
any ERISA Affiliate to incur liability under Title IV of ERISA or under Sections
412(c)(11) or 412(n) of the Code with respect to any Plan.
"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 is not dismissed for
a period of more than 60 days in a court having jurisdiction over such Person
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 shall take any corporate action in furtherance of
any of the actions set forth in the preceding clause (a), (b) or (c).
"Excluded Receivable" shall have the meaning specified in Schedule
III hereto, as such Schedule may be amended from time to time by an agreement in
writing signed by the Buyer, the Seller and the Agent; provided that the Seller
may, by written notice to the Buyer and each Lender, unilaterally amend Schedule
III hereto to include additional Contracts under which the related Obligor is
located in a state or jurisdiction of the United States that has a law, statute,
rule or regulation that prohibits, restricts or impairs the ability of the
Seller to assign or grant a security interest in the Receivables, Related
Security and Collections thereunder, which law, statute, rule or regulation has
not been made ineffective, either by the adoption of Sections 9-406(f) and
9-408(c) of the UCC or otherwise.
"Facility Documents" shall mean collectively, this Agreement, the
Assignment, the Credit Agreement, the Pledge Agreement, the Lockbox Agreements
and all other agreements, documents and instruments delivered pursuant hereto or
thereto or in connection herewith or therewith.
"Finance Charges" shall mean all interest, Funding Losses and
transaction fees and expenses payable by the Buyer from time to time under or in
connection with the Credit Agreement.
"Fiscal Year" shall mean each year which is the fiscal year of the
Seller for accounting purposes.
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"Fixed Rate Missouri Summer School Contract" shall mean each
Missouri Summer School Contract identified as such in part A. of Schedule V
hereto.
"Funding Loss" shall have the meaning specified in the Credit
Agreement.
"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.
"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.
"Harlem LLC" shall mean 110th and 5th Associates, LLC, a New York
limited liability company.
"Indemnified Parties" shall mean the Buyer and its officers,
directors, employees, successors and assigns (and any agent acting on their
behalf).
"Initial Lender" shall mean Xxxxxxx Xxxxx Mortgage Capital, Inc.
in its capacity as "Lender" under the Original Credit Agreement.
"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(s)" shall have the meaning specified in the Credit
Agreement.
"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.
"Lockbox Account" shall mean a demand deposit account identified on
Exhibit A 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 Buyer, the Servicer and the Agent may agree upon from time
to time.
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"Lockbox Agreement" shall mean the agreement that governs the
operation of a Permitted Lockbox and related Lockbox Account which is in
compliance with Section 6.05 and which is substantially in the form of Exhibit B
hereto or otherwise in form and substance satisfactory to the Agent.
"Management Contract" shall mean the principal Contract (together
with all annexes, schedules and exhibits thereto) governing the provision of
services by the Seller to the related Obligor.
"Missouri Summer School Contracts" shall mean each of the Summer
School Contracts specified in Schedule V hereto.
"Missouri Summer School Invoice" shall mean, with respect to each
Missouri Summer School Receivable (i) arising under a 2001 Summer School
Contract, a duly completed invoice in substantially the form Exhibit E-1 hereto
and (ii) arising under a Missouri Summer School Contract other than a 2001
Summer School Contract, a duly completed invoice in substantially the form of
Exhibit E-2 hereto.
"Missouri Summer School Receivable" shall mean each Receivable
arising under or in connection with a Missouri Summer School Contract.
"Multiemployer Plan" shall mean with respect to any Person, a
"multi-employer plan" as defined in Section 4001(a)(3) of ERISA is or was at any
time during the current year or 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.
"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 Seller or the Buyer pursuant to such
Contract.
"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.
"Original Purchase and Contribution Agreement" shall have the
meaning specified in the second WHEREAS clause of this Agreement.
"Outstanding Balance" of any Receivable shall mean, at any time, the
then outstanding amount thereof (excluding, however, any and all amounts which
the Seller knows or has reason to believe will not be paid by the related
Obligor directly to the Seller or the Buyer). The outstanding amount of any
Receivable shall be reduced by all related Collections on the date received or
deemed received.
"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:
9
(a) Liens created under this Agreement or the Credit Agreement;
(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
Transferred Assets or the Buyer's ownership 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 Transferred
Assets or the Buyer's ownership interest therein.
"Permitted Lockbox" shall mean a post office box or other mailing
location identified on Exhibit A 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 Agent, the Buyer and the
Servicer may agree upon from time to time.
"Permitted Lockbox Bank" shall mean a bank identified on Exhibit A
hereto or such other bank as the Buyer, the Servicer and the Agent 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
plan or other plan which is or was 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.
"Pledge Agreement" shall mean the Pledge Agreement, dated as of July
31, 2002, made by Edison in favor of the Buyer, relating to the Pledge Agreement
Collateral, as the same may be from time to time amended, modified or
supplemented.
"Pledge Agreement Collateral" shall mean:
A. (i) all of Edison's membership interest in the Harlem LLC, (ii)
any and all additional interests and/or membership interests issued from time to
time in respect thereof, (iii) all certificates, instruments, or other writings
representing or evidencing any of the foregoing or any portion thereof, (iv) any
other claims which Edison now has or may acquire in its capacity as a member of
the Harlem LLC and (v) any and all proceeds of the foregoing; and
B. (i) all of Edison's right, title and interest under, in and to
all of the loans evidenced by the Promissory Notes, (ii) any and all additional
interests and/or promissory notes issued from time to time in respect thereof,
(iii) all notes, instruments, or other writings representing or evidencing the
foregoing or any portion thereof, (iv) any other claims which Edison now has or
10
may acquire in its capacity as lender and/or holder with respect to such
promissory notes and (v) any and all proceeds of the foregoing.
"Proceeds" shall mean "proceeds" as defined in Section 9-102(a)(64)
of the UCC as in effect in the jurisdiction whose law governs the perfection of
the Buyer's interests therein and the UCC as in effect in the state of New York.
"Promissory Notes" shall mean the promissory notes listed on
Schedule I attached to the Pledge Agreement.
"Purchase" shall mean a purchase by the Buyer of Receivables
hereunder, together with the Related Security and Collections with respect
thereto.
"Purchase Date" shall mean each day on which a Purchase occurs
hereunder.
"Purchase Price" shall have the meaning specified in Section 2.02(c)
hereof.
"Purchased Assets" shall mean, at any time, an undivided ownership
interest in (i) each Receivable sold hereunder, (ii) all Related Security with
respect to each such Receivable, (iii) all Collections with respect thereto, and
(iv) all cash and non-cash Proceeds of the foregoing.
"Quarterly Xxxx Receivable" shall mean any Receivable which arises
under a Contract (in effect on the earlier of the initial Purchase Date and the
initial Contribution Date) which, as of the earlier of the initial Purchase Date
and the initial Contribution 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.
"Real Estate Loan Agreement" shall mean the Credit and Security
Agreement, dated as of July 31, 2002 among Edison Schools Inc., the Harlem LLC,
Xxxxxx Xxxxxx Charter School, LLC and School Services LLC, as the same may be
from time to time amended, modified or supplemented.
"Receivable" shall mean all indebtedness owed to the Seller by an
Obligor (without giving effect to any purchase by the Buyer at any time
hereunder) under a Contract, whether or not constituting an account or a general
intangible, whether or not evidenced by an instrument or an invoice and whether
or not due or payable, for services rendered by the Seller to an Obligor in the
ordinary course of the Seller's business, and, together with such indebtedness,
all other monies due (whether or not payable) under such Contract, and including
the right to payment of any other obligations of such Obligor with respect
thereto; provided, that the term "Receivable" shall not include any Excluded
Receivable.
"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:
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(a) all of the Seller's rights in, to and under a Contract (other
than any such rights which constitute non-Payment Intangible, General
Intangibles (as "Payment Intangible" and "General Intangible" are defined in the
UCC));
(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; and
(e) all Proceeds of the foregoing.
"Required Lenders" shall have the meaning specified in the Credit
Agreement.
"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 Buyer and the Lenders have received prior written notice of the identity
or title of such other authorized officer).
"Restatement Effective Date" shall mean July 31, 2002.
"Seller" shall have the meaning specified in the preamble hereto.
"Servicer" shall mean Edison in its capacity as servicer hereunder,
and its successors and assigns in such capacity.
"Servicer Default" shall have the meaning specified in Section 6.06
hereof.
"Servicer Fee" shall have the meaning specified in the Credit
Agreement.
"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.
"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.
"Summer School Contract" shall mean any Contract under which the
Seller's primary obligation is to provide a summer school extended learning
program.
"Termination Event" shall have the meaning specified in Section 7.01
hereof.
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"Transferred Assets" shall mean the Purchased Assets and the
Contributed Assets.
"2001 Summer School Contract" shall mean each Missouri Summer
School Contract identified as such in part C. of Schedule V hereto.
"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.
"Unmatured Termination Event" shall mean any event or condition
that, with the passage of time or the giving of notice, or both, would
constitute a Termination Event.
"Variable Rate Missouri Summer School Contract" shall mean each
Missouri Summer School Contract identified as such in part B. of Schedule V
hereto.
Section 1.02. 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 Buyer shall be conclusive absent manifest
error and include good faith estimates by the Buyer (in the case of quantitative
determinations), and the good faith belief by the Buyer (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 Delaware 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. All other capitalized terms used herein and not otherwise defined
shall have the meanings specified in the Credit Agreement.
Section 1.03. Amendment and Restatement. The parties hereto have
chosen for administrative convenience to amend and restate the Original Purchase
and Contribution Agreement. This Agreement does not constitute a novation of the
Original Purchase and Contribution Agreement. Therefore, this amendment and
restatement does not alter the rights and obligations of the parties to the
Original Purchase and Contribution Agreement (all of which remain in full force
and effect) except as and to the extent expressly altered by the terms of this
Agreement. From and after the Restatement Effective Date, all references to the
"Purchase and Contribution Agreement" in any other Facility Document or any
document, instrument or agreement delivered in connection therewith shall mean
and be a reference to this Agreement.
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ARTICLE II
SALES AND TRANSFERS; SETTLEMENTS
Section 2.01. General Terms. On the terms and conditions hereinafter
set forth, commencing initially on the date the conditions precedent in Section
4.01 are satisfied to the date of the first Termination Event, the Seller shall,
at its option, either sell or contribute to the Buyer on each Business Day,
without recourse, except as specifically set forth herein, all right, title and
interest of the Seller in, to and under the Transferred Assets existing on such
day (not theretofore sold or contributed to the Buyer), and the Buyer agrees, on
each Business Day, to purchase or accept as a capital contribution, as the case
may be, such Transferred Assets from the Seller.
Section 2.02. Purchase and Sale; Purchase Price; Contributions.
(a) On the initial Purchase Date, the Seller hereby irrevocably
sells, sets over, assigns, transfers and conveys to the Buyer and its successors
and assigns, without recourse, except as specifically set forth herein, and the
Buyer hereby accepts, purchases and receives, all of the Seller's right, title,
and interest in and to the Purchased Assets owned by the Seller as of the close
of business on the Business Day immediately preceding such Purchase Date.
Thereafter, on each Business Day, the Seller shall (except as provided in
Section 2.02(e)) irrevocably sell, set over, assign, transfer and convey to the
Buyer and its successors and assigns, without recourse, except as specifically
set forth herein, and the Buyer shall, on each such Business Day, accept,
purchase and receive, all of the Seller's right, title, and interest in and to
the Purchased Assets owned by the Seller as of the close of business on the
Business Day immediately preceding such Business Day.
(b) Each Purchase shall be made on a Purchase Date, provided that
all conditions to purchase specified in Section 4.01, 4.01A or Section 4.02, as
applicable, are satisfied.
(c) The Purchase Price for the Purchased Assets payable on any
Purchase Date shall be in an amount equal to 100% of the aggregate Outstanding
Balance of the Receivables conveyed on such date, adjusted to reflect such
commercially reasonable factors as the Seller and the Buyer mutually agree will
result in a Purchase Price determined to be not less than the fair market value
of such Receivables. Subject to paragraph (d) below, the Purchase Price for the
Purchased Assets sold by the Seller on any Purchase Date shall be payable in
full in immediately available funds by the Buyer, and on each such Purchase
Date. The Buyer shall, upon satisfaction of the applicable conditions set forth
in Article IV, make available to the Seller the cash portion of the Purchase
Price in immediately available funds.
(d) The Purchase Price to be paid by the Buyer on each Purchase Date
shall be paid (i) in cash, (ii) with the consent of the Seller, by delivery of
(or an increase in the amount outstanding under) a subordinated promissory note
(the form and substance of which must be reasonably satisfactory to the Agent),
or (iii) any combination of the foregoing methods.
(e) The Seller may elect on any Business Day, in its sole
discretion, not to sell, set over, assign, transfer or convey Purchased Assets
to the Buyer, in which case the Seller shall, on such Business Day, contribute
to the Buyer's capital all right, title and interest in and to the Receivables
which the Seller elected not to sell on such Business Day (collectively, the
"Contributed Receivables"), together with all Related Security and Collections
with respect thereto. On the date
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of each such contribution and after giving effect thereto, the Buyer shall own
all right, title and interest in and to the Contributed Receivables and all
Related Security and Collections with respect thereto (collectively, the
"Contributed Assets"). On each Contribution Date, the Seller shall document or
report to the Buyer which, if any, of the Contributed Receivables contributed on
such Contribution Date constitute Eligible Receivables.
Section 2.03. Transfers and Assignments.
(a) It is the intention of the parties hereto that each Purchase
made hereunder shall constitute a sale and assignment as such terms are used in
Article 9 of the UCC, which sales and assignments are absolute, irrevocable and
without recourse except as specifically provided herein and shall provide the
Buyer with the full benefits of ownership of the Receivables and the other
related Purchased Assets. In addition, it is the intention of the Seller that
each contribution of Contributed Assets hereunder shall transfer to the Buyer
all right, title and interest in and to the Contributed Receivables and other
related Contributed Assets. In the event that such Purchases or contributions
are deemed to constitute a pledge rather than sales and assignments or absolute
contributions of the aforementioned property, and for the purpose of
effectuating the transfer of all right, title and interest in and to the
aforementioned Contributed Assets, the Seller does hereby grant to the Buyer, in
order to secure all the obligations of the Seller to the Buyer hereunder, a
first priority perfected security interest in and to, and lien on, all accounts,
contract rights, general intangibles, chattel paper, instruments, money, deposit
accounts, investment property and financial assets arising from, related or
credited to or consisting of the Transferred Assets, whether now owned or
existing or hereafter acquired or arising and regardless of where located. The
sales and conveyances hereunder of the Purchased Assets and the contribution of
the Contributed Assets do not constitute an assumption by the Buyer or its
successors and assigns of any obligations of the Seller to any Obligor or to any
other Person in connection with Receivables, the Related Security or under any
other agreement or instrument relating to the Receivables.
(b) In connection with the sales and transfers under Section 2.02(a)
and the contributions under Section 2.02(e), the Seller agrees to authenticate
and file, at its own expense, financing statements with respect to the
Transferred Assets 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 sale, transfer, assignment and/or contribution of the Transferred Assets to
the Buyer, and to deliver a file-stamped copy of such financing statements or
other evidence of such filing satisfactory to the Buyer as soon as possible
after the date hereof. In addition to, and without limiting the foregoing, the
Seller shall, upon the request of the Buyer, in order to accurately reflect this
transaction, authenticate and file such financing or continuation statements or
amendments thereto or assignments thereof (as permitted pursuant to Section 9.09
hereof) as may be reasonably requested by the Buyer.
(c) The Seller shall maintain its books and records, including but
not limited to any computer files and master data processing records, so that
such records that refer to Receivables sold or contributed hereunder shall
indicate clearly that the Seller's right, title and interest in such Receivables
has been sold or contributed to the Buyer and that such interest in such
Receivables has been pledged by the Buyer to the Agent (for the benefit of the
Lenders) as collateral security for the Buyer's obligations under the Credit
Agreement. Indication of the Buyer's ownership of Receivables shall be deleted
from or modified on the Seller's records when, and only when, the Receivables
shall
15
have been paid in full or the Buyer's ownership of such Receivables shall
have been repurchased (or purchased) by the Seller from the Buyer. The Seller
agrees to deliver to the Buyer on the earlier of the first Purchase Date or the
first Contribution Date and on the Restatement Effective Date a list, which may
be a computer file, disk or microfiche list, containing a true and complete
schedule of all Receivables constituting Transferred Assets. Such file, disk or
list shall be marked as the "Receivables Schedule" and as Schedule I to this
Agreement, shall be delivered to the Buyer as confidential and proprietary, and
is hereby incorporated into and made a part of this Agreement.
Section 2.04. Protection of Ownership of the Transferred Assets.
(a) The Seller 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 Buyer may reasonably request
in order to perfect the interests of the Buyer in and to, or to protect, the
Transferred Assets or to enable the Buyer to exercise or enforce any of its
rights hereunder. To the fullest extent permitted by applicable Law, the Buyer
shall be permitted, and the Seller hereby authorizes the Buyer, to file
continuation statements and amendments thereto 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.
(b) The Buyer shall have the right to do all such acts and things as
it may deem reasonably necessary to protect its interests hereunder, including,
without limitation, confirmation and verification of the existence, amount and
status of the Receivables.
(c) In order to enable the Buyer (and its assigns) to realize the
full rights, benefits, powers and privileges intended to be afforded by this
Agreement and the Transferred Assets, the Seller hereby irrevocably appoints the
Buyer its true and lawful attorney, with full power of substitution, in the name
of the Seller, or otherwise, for the sole use and benefit of the Buyer (and its
assigns), but at the Seller's expense, to the extent permitted by Law to
exercise, at any time and from time to time all or any of the following powers
with respect to all or any of the Transferred Assets:
(i) to enforce all rights, remedies, powers and privileges
included in, to and under the Transferred Assets;
(ii) to use or assign the Transferred Assets, including any related
information or materials furnished to the Seller in the transactions giving rise
to the Transferred Assets (to the extent such information or materials are
included in the Transferred Assets); and
(iii) to use, assign, possess or have access to any trade secrets or
confidential information of any Obligor (to the extent such trade secrets are
included in the Transferred Assets).
Section 2.05. Mandatory Repurchase or Purchase Under Certain
Circumstances; Mandatory Payments by Seller under Certain Circumstances.
(a) The Seller shall repurchase (or purchase) from the Buyer (or its
assignee) (i) any Receivable constituting a Transferred Asset if at any time the
Buyer or its assignee shall fail to have a perfected ownership interest or first
priority perfected security interest in such Receivable, free and clear of any
Lien (other than Permitted Liens) within three Business Days of notice thereof
16
by the Buyer (or its assignee), unless such failure has been fully cured within
such three Business Day period, (ii) any Receivable identified as an Eligible
Receivable on the date of Purchase or contribution hereunder if at any time it
is discovered that such Receivable was not an "Eligible Receivable" on the date
of Purchase or contribution hereunder, such repurchase (or purchase) to occur
within three Business Days of such discovery, (iii) each Missouri Summer School
Receivable as to which the related Missouri Summer School Contract is at any
time modified or amended on or after the applicable Purchase Date or
Contribution Date in any way which extends (or has the effect of extending) any
of the payment terms in such Contract as in effect on the Restatement Effective
Date such repurchase (or purchase) to occur within three Business Days of such
modification, amendment or change; provided that nothing in this clause (iii)
shall require (or be deemed to require) the Buyer to repurchase any Missouri
Summer School Receivable otherwise subject to this clause (iii) if the sole
reason for extending the payment terms of the applicable Missouri Summer School
Contract is the bankruptcy, insolvency or financial inability to pay of the
related Obligor, (iv) each Missouri Summer School Receivable as to which (1) the
Seller fails in any respect to comply with the covenant set forth in Section
5.01 (u) or (2) the payment terms included in the applicable acknowledgment
required by Section 5.01(u) are longer than the payment terms specified in the
applicable Missouri Summer School Invoice, such repurchase (or purchase) to
occur within three Business Days of the event giving rise to such repurchase (or
purchase) obligation and (v) all Receivables originated on or prior to the
Restatement Effective Date under a Management Contract between the Seller and an
Obligor located in the Commonwealth of Pennsylvania if, on or before August 31,
2002, the Seller fails to deliver a legal opinion which complies in all respects
with Section 5.01(v), such repurchase (or purchase) to occur within three
Business Days of the event giving rise to such repurchase (or purchase)
obligation. In the case of any repurchase (or purchase) pursuant to this Section
2.05(a), the repurchase (or purchase) price to be paid on any date shall be (i)
if less than all Receivables are required to be repurchased (or purchased) on
such date, an amount equal to the Outstanding Balance of the Receivables
required to be repurchased (or purchased) on such date and (ii) if all
Receivables are required to be repurchased (or purchased) on such date, an
amount equal to the Outstanding Balance of all Receivables plus, without
duplication, all Finance Charges accrued through the date of such repurchase (or
purchase).
(b) If on any day there occurs any Dilution with respect to any
Receivable (including as Dilution for this purpose, (i) any discrepancy (i.e.,
shortfall) between the Outstanding Balance of a Missouri Summer School
Receivable as confirmed by the related Obligor in the acknowledgment required by
Section 5.01(u) and the Outstanding Balance thereof as reflected in the
applicable Missouri Summer School Invoice and (ii) any Dilution claimed by an
Obligor with respect to a Missouri Summer School Receivable as reflected in the
applicable acknowledgment required by Section 5.01(u)), the Seller shall, within
one Business Day of the occurrence of such Dilution, be deemed to have received
a collection with respect to such Receivable and shall make a payment to the
Buyer in the amount of such Dilution.
(c) All payments pursuant to this Section 2.05 shall be without
duplication of any amount payable pursuant to Article VIII hereof.
Section 2.06. Transfers by Buyer. The Seller acknowledges and agrees
that (a) the Buyer may from time to time, pursuant to the Credit Agreement,
pledge and assign as collateral security its rights in, to and under (i) the
Transferred Assets and this Agreement and (ii) the Pledge Agreement Collateral
and the Pledge Agreement, in each case, to the Agent (for the benefit of the
Lenders) and (b) the representations, warranties and covenants contained in this
Agreement and the
17
Pledge Agreement and the rights of the Buyer under this Agreement and the Pledge
Agreement, including the rights of the Buyer to enforce the provisions hereof
and thereof against the Seller and the Servicer, are intended to benefit the
Agent and the Lenders. The Seller and the Servicer hereby consent to all such
pledges and assignments and to the enforcement by the Agent of the Buyer's
rights under this Agreement and the Pledge Agreement, whether or not a
Termination Event or an Unmatured Termination Event has occurred and is
continuing. No consent by the Buyer under or with respect to this Agreement or
the Pledge Agreement shall be effective without the prior written consent of the
Agent.
Section 2.07. Payment of Collections and Deemed Collections. If the
Seller shall receive (or be deemed to receive) any Collections with respect to
Receivables which have been sold or contributed to the Buyer pursuant to this
Agreement, the Seller shall hold such Collections in trust for the Buyer and
shall pay such amounts to the Servicer as soon as practicable, but in no event
more than one Business Day after receipt thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of Edison. Edison, in
its capacities as both Seller and Servicer (unless the context requires
otherwise), in addition to the other representations and warranties contained
herein or made pursuant hereto, hereby represents and warrants to the Buyer on
and as of the Effective Date, the Restatement Effective Date and on as of each
Purchase Date and each Contribution Date that:
(a) Corporate Existence and Power. Edison is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and has all corporate 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.
(b) Corporate and Governmental Authorization; No Contravention. The
execution, delivery and performance by Edison of this Agreement and the other
Facility Documents to which it is a party are within Edison's corporate powers,
have been duly authorized by all necessary corporate 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 incorporation or by-laws
of Edison or of any material agreement, judgment, injunction, order, decree or
other instrument binding upon Edison or result in the creation or imposition of
any Lien on any asset of Edison or any of its Subsidiaries (except Permitted
Liens).
(c) Binding Effect. This Agreement is, and the other Facility
Documents to which Edison is or will be a party when executed and delivered will
be, the valid and binding obligations of Edison, and will vest absolutely and
unconditionally in the Buyer, a valid ownership or security interest in the
Transferred Assets purported to be assigned thereby, subject to no Liens
whatsoever (except Permitted Liens). Upon the filing of the necessary financing
statements under the UCC as in effect in the jurisdiction whose Law governs the
perfection of the Buyer's ownership or security interests in the Transferred
Assets, the Buyer's ownership or security interests in the
18
Receivables will be perfected under Article Nine of such UCC, prior to and
enforceable against all creditors of and purchasers from Edison and all other
Persons whatsoever (other than the Buyer and its successors and assigns).
(d) Litigation. There is no action, suit or proceeding pending
against, or to the knowledge of Edison, threatened against or affecting Edison
before any court or arbitrator or any 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
operation of Edison, the ability of Edison to fulfill its obligations under this
Agreement or any other Facility Document to which it is a party or which in any
manner draws into question the validity of this Agreement or any other Facility
Document.
(e) Not an Investment Company. Edison is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(f) Bulk Sales Act. No transaction contemplated hereby requires
compliance with any applicable bulk sales act or similar law.
(g) Margin Regulations. The use of all funds acquired by Edison
under this Agreement will not conflict with or contravene any of Regulations T,
U and X of the Board of Governors of the Federal Reserve System, as the same may
from time to time be amended, supplemented or otherwise modified.
(h) 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 Edison to the Buyer, the Agent or any 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.
(i) Taxes. Edison 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 Seller, the
Buyer, the Agent or any 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 Credit Agreement.
(j) Books and Records. Edison has indicated on its books and records
(including any computer files), that the Transferred Assets sold or contributed
by Edison hereunder are the property of the Buyer and that they have been
pledged to the Agent (for the benefit of the Lenders) pursuant to the Credit
Agreement. Edison maintains at one or more of its offices listed in Exhibit C
hereto all material Records for the Receivables.
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(k) Creditor Approval. Edison has obtained from its creditors, if
necessary, (i) all approvals necessary to sell, assign and contribute the
Receivables and (ii) releases of any security interests in the Receivables.
(l) Financial Condition. (i) Edison is not insolvent or the subject
of any Event of Bankruptcy and the sale or contribution of Receivables on each
day is not being made in contemplation of the occurrence thereof nor will it
render Edison insolvent. Since the initial Purchase Date, except as previously
disclosed in writing by the Seller to the Buyer, there has been no material
adverse change in the business or financial position of Edison which would be
reasonably likely to have a material adverse affect on Edison's ability to
fulfill its obligations under this Agreement or any other Facility Document to
which it is a party.
(ii) (A) The most-recently available consolidated balance sheet of
Edison and its Subsidiaries as of the most recent Fiscal Year end and the
related statements of income and cash flows of Edison and its Subsidiaries for
the Fiscal Year then ended, audited by PricewaterhouseCoopers, LLC, independent
accountants, or another nationally recognized firm of independent accountants,
copies of which have been furnished to the Buyer, fairly present in all material
respects the consolidated financial position of Edison and its Subsidiaries as
of such date and the consolidated results of the operations of and changes in
consolidated cash flows of Edison and its Subsidiaries for the period ended on
such date, all in accordance with GAAP and (B) the most-recently available
unaudited consolidated balance sheet of Edison and its Subsidiaries as of the
most recent fiscal quarter end and the related unaudited statements of income
and cash flows of Edison and its Subsidiaries for the periods then ended, copies
of which have been furnished to the Buyer, fairly present in all material
respects the consolidated financial position of Edison and its Subsidiaries as
at such date and the consolidated results of the operations of and changes in
consolidated cash flows of Edison and its Subsidiaries for the periods ended on
such date subject to customary year-end adjustments, all in accordance with
GAAP.
(m) Separate Corporate Existence. Edison is entering into the
transactions contemplated by this Agreement on an arm's-length basis and in
reliance on the Buyer's identity as a separate legal entity from Edison and each
of its Affiliates, and acknowledges that the Buyer, the Agent and the Lenders
are similarly entering into the transactions contemplated by the other Facility
Documents on an arm's-length basis and in reliance on the Buyer's identity as a
separate legal entity from Edison and each such other Affiliate.
(n) No Fraudulent Conveyance. The transactions contemplated by this
Agreement and by each of the other Facility Documents are being consummated by
Edison in furtherance of Edison's ordinary business, with no contemplation of
insolvency and with no intent to hinder, delay or defraud any of its present or
future creditors. By its receipt of the Purchase Price hereunder and its
ownership of 100% of the membership interests in the Buyer, Edison shall have
received reasonably equivalent value for the Transferred Assets sold or
otherwise conveyed to the Buyer under this Agreement.
(o) No Termination Event or Servicer Default. To Edison's knowledge,
no Termination Event, Unmatured Termination Event or Servicer Default has
occurred and is continuing.
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(p) Insurance. All policies of insurance of any kind or nature owned
by Edison and its Subsidiaries are maintained with financially sound and
reputable insurers. Edison currently maintains insurance with respect to its
properties and businesses and causes its Subsidiaries to maintain insurance with
respect to their properties and business against loss or damage of the kinds
customarily insured against by corporations engaged in the same or similar
business and similarly situated, of such types and in such amounts as are
customarily carried under similar circumstances by such other corporations
including, without limitation, workers' compensation and general liability
insurance.
(q) ERISA. (i) No liability under Sections 4062, 4063, 4064 or 4069
of ERISA has been or is expected by Edison to be incurred by Edison or any ERISA
Affiliate with respect to any Plan which is a Single-Employer Plan in an amount
that could reasonably be expected to have a material adverse effect on the
business, financial condition, operations or properties of Edison and its
Subsidiaries taken as a whole.
(ii) No Plan which is a Single-Employer Plan and which is maintained
by Edison or any of its ERISA Affiliates had an accumulated funding deficiency
in an amount that could reasonably be expected to have a material adverse effect
on the business, financial condition, operations or properties of Edison and its
Subsidiaries taken as a whole, whether or not waived, as of the last day of the
most recent fiscal year of such Plan ended prior to the date hereof. Neither
Edison nor any ERISA Affiliate is (A) required to give security to any Plan
which is a Single-Employer Plan pursuant to Section 401(a)(29) of the Code or
Section 307 of ERISA, or (B) subject to a Lien in favor of such a Plan under
Section 302(f) of ERISA.
(iii) Each Plan of Edison and each of its ERISA Affiliates is in
compliance in all material respects with the applicable provisions of ERISA and
the Code, except where the failure to comply could not reasonably be expected to
result in any material adverse effect on the business, financial condition,
operations or properties of Edison and its Subsidiaries taken as a whole.
(iv) Neither Edison nor any of its Subsidiaries has incurred a tax
liability under Section 4975 of the Code or a penalty under Section 502(i) of
ERISA in respect of any Plan which has not been paid in full, except where the
incurrence of such tax or penalty could not reasonably be expected to result in
a material adverse effect on the business, financial condition, operations or
properties of Edison and its Subsidiaries taken as a whole.
(v) None of Edison, any of its Subsidiaries or any ERISA Affiliate
has incurred or reasonably expects to incur any liability under Section 4201 of
ERISA as a result of a complete or partial withdrawal from a Multiemployer Plan
which will result in liability to Edison, any of its Subsidiaries or any ERISA
Affiliate in an amount that could reasonably be expected to have a material
adverse effect on the business, financial condition, operations or properties of
Edison and its Subsidiaries taken as a whole.
(r) No Change in Ability to Service. Since the Effective Date, there
has been no material adverse change in the ability of Edison to perform its
obligations hereunder.
(s) Credit and Collection Policy. Edison has complied in all
material respects with the Credit and Collection Policy in regard to each
Receivable and related Contract and the Credit and Collection Policy has not
been changed except in compliance with Section 5.02(f).
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(t) Location of Offices, Etc. As of the date hereof: (i) Edison's
chief executive office is located at the address for notices set forth in
Section 9.03 hereof; (ii) the offices where Edison keeps all of its Records are
listed on Exhibit C hereto; and (iii) within the last five years, Edison has
operated only under the names identified in Exhibit C hereto, and has not
changed its name, merged or consolidated with any other Person except as
disclosed in Exhibit C hereto. The Seller's name is "Edison Schools Inc." The
Seller is a "registered organization" (as defined in Section 9-102(a)(70) of the
UCC) formed in the State of Delaware and, for purposes of Article 9 of the UCC,
the Seller is located in the State of Delaware.
Section 3.02. Representations and Warranties of the Seller With
Respect to Each Sale of Receivables. By selling Receivables to the Buyer on each
Purchase Date and contributing Receivables to the Buyer on each Contribution
Date, the Seller represents and warrants to the Buyer as of each such Purchase
Date or Contribution Date, as the case may be, and only as to Eligible
Receivables sold or contributed by the Seller to the Buyer hereunder on such
Purchase Date or Contribution Date, as the case may be (in addition to its other
representations and warranties contained herein or made pursuant hereto), that:
(a) Assignment. This Agreement vests in the Buyer all the right,
title and interest of the Seller in and to the Transferred Assets, and
constitutes a valid sale or capital contribution of all right, title and
interest in and to the Transferred Assets, enforceable against all creditors of
and purchasers from the Seller.
(b) No Liens. Immediately prior to the sale or contribution of each
Receivable to the Buyer, such Receivable, together with any related rights under
the related Contract, is owned by the Seller free and clear of any Lien (except
Permitted Liens). When the Buyer makes a purchase or receives a contribution of
a Receivable, it shall have acquired and shall continue to maintain ownership of
such Receivable and in the Related Security and the Collections with respect
thereto free and clear of any Lien, except Permitted Liens. The Seller has not
and will not prior to the time of the sale or contribution of any such interest
to the Buyer have sold, pledged, assigned, transferred or subjected, and will
not thereafter sell, pledge, assign, transfer or subject to a Lien any Contract
(other than a Contract governing Excluded Receivables) or any of the
Receivables, the Related Security or the Collections, other than in accordance
with the terms of this Agreement.
(c) Filings. On or prior to each Purchase Date or Contribution Date,
as the case may be, all financing statements and other documents required to be
recorded or filed in order to perfect and protect the Transferred Assets against
all creditors of and purchasers from the Seller and all other Persons whatsoever
will have been duly filed (or delivered to the Buyer 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 in full.
(d) Nature of Receivables. Each Receivable classified as an
"Eligible Receivable" by the Seller in any document or report delivered
hereunder satisfies the requirements of eligibility contained in the definition
of Eligible Receivable as of the date of such document or report.
(e) Credit and Collection Policy. The Seller has complied with the
Credit and Collection Policy in all material respects and since the date of this
Agreement there has been no
22
change in the Credit and Collection Policy, except as permitted hereunder and
under the Credit Agreement.
(f) 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 A to this Agreement (or
such other Permitted Lockbox Banks, Lockbox Accounts and/or Permitted Lockboxes
as have been notified by the Seller to the Buyer and have been consented to by
the Agent in accordance with the Credit Agreement).
(g) New York Management Contracts. As of the Restatement Effective
Date, Schedule IV hereto sets forth a true, correct and complete list of all
Management Contracts between the Seller and each Obligor located in the State of
New York.
(h) Missouri Summer School Contracts. As of the Restatement
Effective Date, Schedule V hereto sets forth a true, correct and complete list
of (including all amendments to) all Missouri Summer School Contracts.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions to the Initial Purchase Date or Initial
Contribution Date. On or prior to the earlier of the initial Purchase Date and
the initial Contribution Date, Edison shall deliver to the Buyer the following
documents and instruments, all of which shall be in form and substance
acceptable to the Buyer:
(a) A copy of the resolutions of the Board of Directors of Edison
certified as of the date hereof by Edison's secretary or an assistant secretary
authorizing the execution, delivery and performance of this Agreement and
approving the transactions contemplated hereby;
(b) The articles of incorporation of Edison certified as of a date
reasonably near the date hereof by the Secretary of State or other similar
official of such jurisdiction of incorporation;
(c) A good standing certificate for Edison issued by the Secretary
of State or other similar official of the State of Delaware and a certificate of
qualification as a foreign corporation issued by the Secretary of State of New
York, each such certificate to be dated a date reasonably near the date hereof;
(d) A certificate of the secretary of Edison dated the earlier of
the initial Purchase Date and the initial Contribution Date certifying (i) the
names and signatures of the officers authorized on Edison's behalf to execute,
and the officers and other employees authorized to perform, this Agreement, if
applicable, and any other documents to be delivered by Edison hereunder (on
which certificate the Buyer and the Initial Lender may conclusively rely until
such time as the Buyer and the Initial Lender shall receive from Edison a
revised certificate meeting the requirements of this clause (d)(i)) and (ii) a
copy of Edison's By-laws;
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(e) (i) Proper financing statements (Form UCC-l) naming Edison as
the debtor of the Receivables, the Initial Lender as the "secured party" and the
Buyer as "assignor secured party" or other similar instruments or documents as
may be necessary or, in the opinion of the Buyer, desirable under the UCC of all
appropriate jurisdictions to evidence or perfect the Buyer's ownership interests
in all Receivables, and (ii) 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 Receivables or the
Contracts previously granted by Edison;
(f) 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 earlier of the initial Purchase Date and
the initial Contribution Date listing all effective financing statements which
name Edison as debtor (under its current name or any previous name) and which
are filed in jurisdictions in which the filings were made pursuant to item (e)
above, together with copies of such financing statements (none of which shall
cover any Receivables or the Contracts);
(g) A favorable opinion of Xxxxx Xxxxx, Esq., general counsel for
Edison, dated the earlier of the initial Purchase Date and the initial
Contribution Date, relating to corporate matters, no litigation, no conflicts
and other matters, in form and substance reasonably acceptable to the Buyer;
(h) A favorable opinion of Coudert Brothers LLP, special counsel to
Edison, dated the earlier of the initial Purchase Date and the initial
Contribution Date, relating to legality, validity and enforceability of this
Agreement and the other Facility Documents to which Edison is a party,
perfection and priority of the Buyer's ownership interest in the Transferred
Assets, bankruptcy (true sale and non-consolidation) and other matters, in form
and substance reasonably acceptable to the Buyer;
(i) Fully executed copies of the Lockbox Agreements;
(j) A certificate of a Responsible Officer of Edison, dated the
earlier of the initial Purchase Date and the initial Contribution Date, in form
and substance reasonably acceptable to the Buyer; and
(k) the Schedule of Receivables described in Section 2.03(c) hereof.
In addition, the Buyer shall have received all approvals, opinions or other
documents as the Buyer shall have reasonably requested.
Within 30 days of the earlier of the initial Purchase and the
initial contribution hereunder, Edison shall deliver to the Buyer (i) evidence
reasonably satisfactory to the Buyer of filing of the financing statements
described in clause (e) above and (ii) a bring-down search report of the type
described in clause (f) above listing financing statements filed through the
earlier of the initial Purchase Date and the initial Contribution Date.
Section 4.01A Conditions to the Restatement Effective Date. On or
prior to the Restatement Effective Date, Edison shall deliver to the Buyer the
following documents and instruments, all of which shall be in form and substance
acceptable to the Buyer:
24
(a) A copy of the resolutions of the Board of Directors of Edison
certified as of the Restatement Effective Date by Edison's secretary or an
assistant secretary authorizing the execution, delivery and performance of this
Agreement and approving the transactions contemplated hereby;
(b) (i) The articles of incorporation of Edison certified as of a
date reasonably near the Restatement Effective Date by the Secretary of State or
other similar official of the State of Delaware and (ii) the articles of
organization of the Harlem LLC certified as of a date reasonably near the
Restatement Effective Date by the Secretary of State or other similar official
of the State of New York;
(c) A good standing certificate for (i) Edison issued by the
Secretary of State or other similar official of the State of Delaware and a
certificate of qualification as a foreign corporation issued by the Secretary of
State of New York, each such certificate to be dated a date reasonably near the
Restatement Effective Date and (ii) the Harlem LLC, issued by the Secretary of
State of New York or other similar official of the State of New York;
(d) A certificate of the secretary of Edison dated the Restatement
Effective Date certifying (i) the names and signatures of the officers
authorized on Edison's behalf to execute, and the officers and other employees
authorized to perform, this Agreement and any other Facility Documents to be
delivered by Edison (on which certificate the Buyer, the Agent and the Lenders
may conclusively rely until such time as the Buyer, the Agent and the Lenders
shall receive from Edison a revised certificate meeting the requirements of this
clause (d)(i)), (ii) a copy of Edison's By-laws and (iii) a copy of the amended
and restated operating agreement for the Harlem LLC;
(e) (i) Proper financing statements (Form UCC-3) amending the
financing statements (Form UCC-l) filed on or about the Effective Date naming
Edison as the debtor of the Receivables, the Agent (for the benefit of the
Lenders) as the "secured party" and the Buyer as "assignor secured party" or
other similar instruments or documents as may be necessary or, in the opinion of
the Buyer, desirable under the UCC of all appropriate jurisdictions to evidence
or perfect the Buyer's ownership interests in all Receivables, (ii) proper
financing statements (Form UCC-1) naming Edison as the Debtor, the Agent (for
the benefit of the Lenders) as the "secured party" and the Buyer as "assignor
secured party" or other similar instruments or documents as may be necessary or,
in the opinion of the Buyer, desirable under the UCC of all appropriate
jurisdictions to perfect the Buyer's security interest in the Pledge Agreement
Collateral and (iii) 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 Receivables or the Contracts
previously granted by Edison;
(f) 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 Restatement Effective Date listing all
effective financing statements which name Edison as debtor (under its current
name or any previous name) and which have been filed in New York or Delaware
since the Effective Date, together with copies of such financing statements
(none of which shall cover any Receivables or the Contracts);
25
(g) A fully executed copy of the Pledge Agreement (which agreement
shall be in full force and effect) and each of the Promissory Notes (together
with an effective endorsement in blank) and assignments in blank in recordable
form of the related mortgages;
(h) A favorable opinion of Xxxxx Xxxxx, Esq., general counsel for
Edison, dated the Restatement Effective Date, relating to corporate matters, no
litigation, no conflicts and other matters, in form and substance reasonably
acceptable to the Buyer;
(i) A favorable opinion of Coudert Brothers LLP, special counsel to
Edison, dated the Restatement Effective Date, relating to legality, validity and
enforceability of this Agreement and the other Facility Documents to which
Edison is a party, perfection and priority of the Buyer's ownership interest in
the Transferred Assets, bankruptcy (true sale and non-consolidation) and other
matters, in form and substance reasonably acceptable to the Buyer;
(j) Fully executed copies of Lockbox Agreements (if necessary);
(k) A certificate of a Responsible Officer of Edison, dated the
Restatement Effective Date, in form and substance reasonably acceptable to the
Buyer; and
(l) An executed copy of the Assignment and the Schedule of
Receivables described in Section 2.03(c) hereof.
In addition, the Buyer shall have received all approvals, opinions or other
documents as the Buyer shall have reasonably requested.
Within 30 days of the Restatement Effective Date, Edison shall
deliver to the Buyer (i) evidence reasonably satisfactory to the Buyer of filing
of the financing statements described in clause (e) above and (ii) a bring-down
search report of the type described in clause (f) above listing financing
statements filed through the Restatement Effective Date.
Section 4.02. Conditions to All Purchases. The Buyer's obligation to
make a Purchase on any Purchase Date shall be subject to satisfaction of the
following applicable conditions precedent:
(a) The representations and warranties in Sections 3.01 and 3.02
hereof shall be true and correct as of such Purchase Date, as though made on and
as of such date;
(b) The Seller shall have taken all actions necessary or reasonably
requested by the Buyer to maintain ownership or a perfected first priority
security interest of the Buyer in and to the Transferred Assets (including in
and to the Receivables purchased on such Purchase Date); and
(c) No Termination Event, Unmatured Termination Event or Servicer
Default shall exist on such date or would result from such Purchase.
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ARTICLE V
COVENANTS
Section 5.01. Covenants of Edison. At all times during the term of
this Agreement, unless the Buyer shall otherwise consent in writing:
(a) Notice of Default, Event of Default, Servicer Default or
Contract Termination; Etc. (i) Promptly upon becoming aware of any Default,
Event of Default or Servicer Default, (ii) promptly upon receipt (or delivery)
by Edison of a written notice of intent to terminate any Contract or a notice of
breach or default under a Contract, (iii) promptly upon becoming aware of any
default, event of default or any other material failure to perform under or with
respect to any instrument or document governing Debt of Edison for borrowed
money and (iv) promptly upon the amendment or waiver of, or the granting of any
consent with respect to, any instrument or document governing Debt of Edison for
borrowed money, Edison shall give the Buyer notice thereof (and, if applicable,
a copy 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 Edison.
(b) Notice of Material Adverse Change. Promptly upon becoming aware
thereof, Edison shall give the Buyer notice of any material adverse change in
the business, operations, or financial condition of Edison which reasonably
could affect adversely Edison's ability to fulfill its obligations under this
Agreement or any other Facility Document to which it is a party.
(c) Preservation of Corporate Existence. Edison shall preserve and
maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in good
standing as a foreign corporation 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 Buyer
hereunder or (ii) the ability of Edison to perform its obligations under this
Agreement.
(d) Compliance with Laws. Edison will comply in all material
respects with all applicable Laws except where the failure to comply could not
reasonably be expected to have a material adverse effect on the Buyer's rights
and interest in and with respect to the Receivables or the ability of Edison to
perform its obligations under this Agreement or the other Facility Documents to
which it is a party.
(e) Enforceability of Obligations. Edison shall take such actions as
are commercially reasonable and within its power to collect the unpaid balance
of each Receivable and to ensure that the obligation of the related Obligor to
pay the unpaid balance of such Receivable in accordance with the terms thereof
remains a legal, valid, binding and enforceable obligation of such Obligor.
(f) Systems Failure. Edison shall promptly notify the Buyer of any
total systems failure for more than one Business Day with respect to itself and
shall advise the Buyer of the estimated time required to remedy such total
systems failure. Until such a total systems failure is remedied, Edison (i) will
furnish to the Buyer such periodic status reports and other information relating
to such total systems failure as the Buyer may reasonably request and (ii) will
promptly
27
notify the Buyer if Edison believes that such total systems failure cannot be
remedied by the estimated date, which notice shall include a description of the
circumstances which gave rise to such delay and the action proposed to be taken
in response thereto. Edison shall promptly notify the Buyer when such a total
systems failure has been remedied.
(g) Books and Records. Edison 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.
(h) Fulfillment of Obligations. Edison 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 relating to any Receivable,
will do nothing to impair the rights, title and interest of the Buyer in and to
the Transferred Assets except as expressly permitted hereunder 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.
(i) Notice of Relocation. Edison shall give the Buyer 15 days' prior
written notice of any relocation of its chief executive office or jurisdiction
of incorporation. Edison will at all times maintain at its chief executive
office an office where notices, demands and presentations in respect of this
Agreement may be given to or made upon it.
(j) Compliance with Opinion Assumptions and Limited Liability
Company Agreement. Edison 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 bankruptcy opinion delivered
to the Buyer pursuant to Section 4.01(h) and Section 4.01A(i) hereof, and cause
the Buyer to comply with, the provisions of the Buyer's 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 Agent (which consent
shall not be unreasonably withheld or delayed).
(k) Administrative and Operating Procedures. Edison shall maintain
and implement commercially reasonable administrative and operating procedures
necessary for the collection of all Receivables (including, without limitation,
Records adequate to permit the identification of all Related Security and
Collections of and adjustments to each Receivable).
(l) Litigation. As soon as possible, and in any event within ten
Business Days of Edison's knowledge thereof, Edison shall give the Buyer notice
of (i) any litigation, investigation or proceeding against Edison or any of its
Affiliates which may exist at any time which, in the reasonable judgment of
Edison, could reasonably be expected to impair the ability of Edison 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.
28
(m) Fees, Taxes and Expenses. Edison 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.
(n) ERISA Events. (i) Promptly upon becoming aware of the occurrence
of any ERISA Event which together with all other ERISA Events occurring within
the prior 12 months involve, under ERISA, a payment of money by or a potential
aggregate liability of Edison or any ERISA Affiliate or any combination of such
entities in excess of $5,000,000, Edison shall give the Buyer a written notice
specifying the nature thereof, what action Edison or any ERISA Affiliate has
taken and, when known, any action taken or threatened by the Internal Revenue
Service, the Department of Labor or the PBGC with respect thereto.
(ii) Promptly upon receipt thereof, Edison shall furnish to the
Buyer copies of (i) all notices received by Edison or any ERISA Affiliate of the
PBGC's intent to terminate any Plan or to have a trustee appointed to administer
any Plan; (ii) all notices received by Edison or any ERISA Affiliate from the
sponsor of a Multiemployer Plan pursuant to Section 4202 of ERISA involving a
withdrawal liability being assessed against Edison or any ERISA Affiliate in
excess of $5,000,000; and (iii) all funding waiver requests filed by Edison or
any ERISA Affiliate with the Internal Revenue Service with respect to any Plan,
the accrued benefits of which exceed the present value of the plan assets as of
the date the waiver request is filed by more than $5,000,000, and all
communications received by Edison or any ERISA Affiliate from the Internal
Revenue Service with respect to any such funding waiver request.
(o) Information. In order to monitor the Servicer's financial
condition and the Seller's ongoing ability to perform in accordance with the
Contracts, the failure of which performance could adversely affect the
Transferred Assets, Edison shall furnish the following to the Buyer:
(i) promptly after sending or filing thereof, copies of all reports
which Edison sends to any of its public security holders, and copies of all
reports on Form 10-K, Form 10-Q and Form 8-K (unless the Form 8-K is filed
solely to file exhibits under Item 7 thereof) which Edison files with the SEC or
any national securities exchange in the United States of America;
(ii) as soon as available and in any event within 25 days after the
end of each calendar month, management reports prepared by Edison which, among
other things, shall reflect Edison's financial performance and condition at the
end of the preceding calendar month (including, without limitation, such
performance relative to the projections provided to the Buyer prior to the
Restatement Effective Date);
(iii) 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 Edison, a
consolidated balance sheet of Edison and its Subsidiaries as of the end of such
quarter and related statements of income and retained earnings and of cash flows
of Edison and its Subsidiaries 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 Edison;
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(iv) as soon as available and in any event within 90 days after the
end of each Fiscal Year of Edison, a consolidated balance sheet of Edison and
its Subsidiaries as of the end of such Fiscal Year and related statements of
income and retained earnings and cash flows of Edison and its Subsidiaries for
such Fiscal Year, audited by PricewaterhouseCoopers, LLC, independent
accountants, or another nationally recognized firm of independent accountants,
in each case, prepared in accordance with GAAP, certified by the chief financial
officer or the chief accounting officer of Edison;
(v) at the same time as provided to Edison's Board of Directors and
any committees thereof, copies of all information, documents, reports and
analyses provided to Edison's Board of Directors and all such committees; and
(vi) such other information, documents, records or reports
respecting the Receivables and the Related Security or the condition or
operations, financial or otherwise, of Edison as the Buyer may from time to time
reasonably request.
(p) Receivables Schedules; Obligor List. Edison shall at all times
maintain a current list or lists (which may be a computer file, disk or
microfiche lists) of all Receivables which constitute Transferred Assets and all
Obligors related to such Receivables, including the name, address, telephone
number and account number of each such Obligor.
(q) Due Diligence. (i) From time to time, during regular business
hours as requested by the Buyer, the Agent or any Lender, as the case may be,
upon five (5) days' prior notice, Edison shall permit the Buyer or such Person
or Persons as the Agent and/or such Lender may designate, as the case may be, or
their respective agents or representatives, (A) to examine and make copies of
and abstracts from all Records in the possession or under the control of Edison
and its Subsidiaries or the agents of Edison or its Subsidiaries relating to
Receivables and the Related Security, including, without limitation, any related
Contracts, and (B) to visit the offices and properties of Edison and its
Subsidiaries, for the purpose of examining such materials described in clause
(A) above, and to discuss matters relating to Receivables and the Related
Security or Edison's performance hereunder or under the Contracts with any of
the officers or employees of Edison having knowledge of such matters or with
Edison's independent public accountants (provided, that as long as no Default or
Event of Default has occurred and is continuing, the Agent and each Lender shall
use reasonable efforts to coordinate the foregoing activities so as not to
create an undue burden on Edison); and (ii) within 90 days after the end of each
Fiscal Year of Edison commencing with the Fiscal Year of Edison ending on June
30, 2002, Edison shall cause its independent public accountants to prepare and
deliver to the Buyer, a written report of such accountants with respect to the
Receivables, the Credit and Collection Policy, Lockbox Account activity,
Edison'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 Buyer, the Agent or the Required Lenders, as the case may be; provided,
however, that after the occurrence and during the continuance of an Event of
Default or Default under the Credit Agreement, the Buyer, the Agent and each
Lender shall be permitted to take the actions described in preceding clause (i)
without being subject to the amount of prior notice given (and without the
necessity of coordinating such activities with any other Person) and may request
Edison to cause its independent public accounts to prepare the report
contemplated in preceding clause (ii) as often as the Buyer or any Lender, as
applicable, deems necessary or desirable. Edison shall reimburse the Buyer, the
Agent and each Lender for all reasonable fees costs and expenses incurred by any
of them in connection with the
30
foregoing actions promptly upon receipt of the written invoice therefor;
provided, that prior to the occurrence of a Default or Event of Default, such
fees, costs and expenses shall not exceed $5,000 in any year of this Agreement.
(r) Separate Corporate Existence. Edison shall maintain its
legal identity separate from the Buyer including, without limitation:
(i) maintaining proper company records and books of account and
deposit accounts separate from those of the Buyer and paying its expenses from
such separate accounts (it being understood that Edison issues consolidated
financial statements which include the Buyer for accounting purposes);
(ii) maintaining its assets, funds and transactions separate from
those of the Buyer, reflecting such assets, funds and transactions in financial
statements prepared in accordance with GAAP separate and distinct from those of
the Buyer (it being understood that Edison issues consolidated financial
statements which include the Buyer for accounting purposes), and evidencing such
assets, funds and transactions by appropriate entries in the records and books
referred to in clause (i) above;
(iii) at no time entering into its contracts and otherwise holding
itself out to the public under the Buyer's name or as the same legal entity as
the Buyer;
(iv) to the extent Edison jointly contracts with the Buyer to do
business with vendors or service providers, allocating fairly among Edison and
the Buyer the costs incurred in so doing, and conducting all transactions and
dealings between Edison and the Buyer on an arm's-length basis;
(v) taking such actions as are necessary to ensure that any
financial statements of Edison or any Affiliate thereof which Edison or any such
Affiliate issues on a consolidated basis will contain detailed notes clearly
stating that (A) all right, title and interest in and to the Buyer's assets are
held by the Buyer, and (b) the Buyer is a separate limited liability company
with its own separate creditors that will be entitled to be satisfied out of the
Buyer's assets prior to any value in the Buyer becoming available to the Buyer'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 Buyer; and
(vi) taking such actions as are necessary to ensure that it will not
hold itself out to be responsible for the debts of the Buyer or the decisions or
actions in respect of the daily business and affairs of the Buyer, 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.
(s) Insurance. Edison shall maintain at least the types of insurance
set forth in Schedule II hereto in at least the minimum amounts set forth in
Schedule II hereto (and such additional types of insurance in such greater
amounts as may be required from time to time under any Contract), all such
insurance to be issued by an insurance company or companies licensed to do
business in the applicable state(s) and rated "A" or better by A.M. Best
Company.
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(t) Notice to Obligors. Edison shall cause (i) each invoice arising
or created after the Effective Date (other than invoices related to Excluded
Receivables) to instruct the Obligor thereon to remit payments to a Permitted
Lockbox or a Lockbox Account and to include a statement at the bottom of each
such invoice to the effect that the Buyer is the assignee of Edison and (ii) the
Obligor on each Promissory Note to remit payments thereon to a Permitted Lockbox
or a Lockbox Account.
(u) Missouri Summer School Receivable Confirmations. Edison shall,
with respect to each Missouri Summer School Receivable (other than a Missouri
Summer School Receivable arising under a 2001 Summer School Contract), deliver
to the Buyer, on or before the 90th day following the date of the Missouri
Summer School Invoice for such Receivable, a copy of such Missouri Summer School
Invoice signed by an appropriate representative of the related Obligor
confirming (i) the Outstanding Balance of such Receivable and (ii) the date by
which such Receivable will be paid or the schedule pursuant to which all such
Missouri Summer School Receivables under the related Missouri Summer School
Contract will be paid.
(v) Pennsylvania Legal Opinion. On or before August 31, 2002, Edison
shall deliver to the Buyer, the Agent and the Lenders a legal opinion (in form
and substance reasonably satisfactory to the Required Lenders), dated the date
of delivery thereof, from a law firm qualified to practice in the Commonwealth
of Pennsylvania (and otherwise reasonably acceptable to the Required Lenders) to
the effect that, for purposes of Section 9406 of the Pennsylvania Uniform
Commercial Code, as of the date of delivery of such opinion, the Commonwealth of
Pennsylvania is not the Obligor on any Management Contract between the Seller
and an Obligor located in the Commonwealth of Pennsylvania.
Section 5.02. Negative Covenants of Edison. During the term of this
Agreement, unless the Buyer shall otherwise consent in writing:
(a) No Rescissions or Modifications. Edison shall not (i) rescind or
cancel any Receivable or modify any terms or provisions thereof or grant any
Dilution to any Obligor, except in accordance with the Credit and Collection
Policy or (ii) rescind or cancel any Contract or modify any terms or provisions
thereof in any way that could adversely affect any Receivable.
(b) No Liens. Except as otherwise provided herein, Edison shall not
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 (except
Permitted Liens) upon or with respect to, (i) its interest in any Contract
(other than a Contract governing Excluded Receivables) or 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 rights to receive income in
respect thereof, other than Liens created under the Facility Documents.
(c) No Changes. Edison shall not (i) make any change in the
character of its business, which change would materially impair the
collectibility of the Receivables or (ii) change its name, identity or corporate
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 Buyer at least 30 days' prior written notice
thereof and unless prior thereto it shall have caused such financing statement
or
32
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.
(d) Consolidations, Mergers and Sales of Assets. (i) Edison shall
not consolidate or merge with or into any other Person or (ii) sell, lease or
otherwise transfer all or substantially all of its assets to any other Person
unless (a) no Default or Event of Default shall have occurred and be continuing
immediately before and immediately after such transaction and (b) in the case of
a consolidation or merger, Edison is the survivor of such transaction.
(e) Change in Payments or Lockboxes. Edison shall not add or
terminate any bank as a Permitted Lockbox Bank or any deposit account as a
Lockbox Account from those listed in Exhibit A, or (except as otherwise provided
in Section 6.05) make any change in the instructions to Obligors regarding
payments to be made to any Permitted Lockbox or any Lockbox Account, unless the
Buyer shall have received at least 20 days' prior written notice of such
addition, termination or change and shall have received, with respect to each
new Lockbox Account, a related Lockbox Agreement executed by the Buyer, the
Servicer (if applicable), the Agent (on behalf of the Lenders) and a Permitted
Lockbox Bank.
(f) Credit and Collection Policy. Edison shall not make, allow or
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 Edison to perform its
servicing obligations hereunder.
(g) Financial Covenants. (i) Edison shall not permit the ratio of
Consolidated Debt to Consolidated Tangible Net Worth as of the last day of any
fiscal quarter to be greater than 0.60:1.
(ii) Edison shall not permit Consolidated Tangible Net Worth as of
the last day of any fiscal quarter to be less than the sum of (x) $200,000,000,
(y) 50% of cumulative (to the extent positive) Consolidated Net Income for each
fiscal quarter ended after the Effective Date and (z) 100% of the aggregate net
proceeds, including the fair market value of property other than cash (as
determined in good faith by the Board of Directors of Edison), received by
Edison from the issuance and sale of any capital stock of Edison after the
Effective Date or in connection with the exchange or conversion of any Debt of
Edison into capital stock of Edison after the Effective Date.
(iii) Edison shall not permit the Cash Collection Ratios for any
three (3) consecutive Monthly Periods to be less than 20%.
(iv) Together with the financial statements delivered pursuant to
Section 5.01(o)(iii) and (iv), Edison shall deliver to the Buyer a certificate
signed by Edison's chief financial officer or chief accounting officer setting
forth calculations in reasonable detail demonstrating compliance (or failure to
comply) with Section 5.02(g)(i) and (ii).
ARTICLE VI
ADMINISTRATION AND COLLECTION
Section 6.01. Designation of Servicer. Edison is hereby designated
to act as, and Edison hereby agrees to perform, on behalf of the Buyer, the
Agent and the Lenders the duties and
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obligations of, the Servicer hereunder. The Servicer shall collect payments due
under the Receivables in accordance with the standards that would be employed by
a prudent institution in servicing comparable receivables for its own account
and comparable to the Receivables and in accordance with the Credit and
Collection Policy and shall have full power and authority, acting alone or
through any party properly designated by it hereunder, to do any and all things
in connection with such servicing and administration which it may deem necessary
or desirable, except as otherwise provided in this Agreement.
Section 6.02. Responsibilities of the Servicer.
(a) The Servicer shall maintain accurate books and records with
respect to the Transferred Assets, administer and assist in a commercially
reasonable manner in the collection of the Receivables and take such actions as
may be reasonably requested in connection therewith to maintain the Buyer's
ownership interest and the first priority perfected security interest of the
Agent (for the benefit of the Lenders) in the Transferred Assets. The Servicer
agrees that in performing such services with respect to the Receivables and the
other Transferred Assets, it shall carry out such responsibilities with the same
degree of skill and attention that the Servicer exercises from time to time with
respect to comparable receivables that it services for itself or others.
(b) The Servicer is hereby authorized to commence, at the Buyer's
expense, in its own name, acting solely in its capacity as Servicer on behalf of
the Buyer, the Agent and the Lenders (and not in its individual capacity), or in
the name of the Buyer, the Agent or any Lender (provided that, if the Servicer
is acting in the name of the Agent or any Lender, it has obtained the Agent's or
such Lender's consent, which consent shall not be unreasonably withheld), legal
proceedings to enforce Receivables or to commence or participate in any other
legal proceedings (including bankruptcy proceedings) relating to or involving
Receivables. If the Servicer commences or participates in such legal proceedings
in its own name, the Buyer, the Agent and the Lenders shall thereupon be deemed
to have automatically assigned such Receivables to the Servicer solely for
purposes of commencing or participating in any such proceedings as a party or
claimant, and the Servicer is authorized and empowered by the Buyer to execute
and deliver in the Servicer's name any notices, demands, claims, complaints,
responses, affidavits or other documents or instruments in connection with any
such proceedings.
(c) The Buyer shall (at the Buyer's expense) (i) furnish the
Servicer with any powers of attorney and other documents that the Servicer may
reasonably request and that the Servicer deems necessary or appropriate and (ii)
take any other steps that the Servicer may deem reasonably necessary or
appropriate to enable the Servicer to carry out its servicing duties under this
Agreement.
(d) The Servicer shall, on behalf of the Buyer, prepare and deliver
in accordance with the Credit Agreement the Monthly Reports and Borrowing Base
Reports required by the Credit Agreement.
Section 6.03. Servicing Compensation. The Servicer will be entitled
to receive a monthly Servicer Fee as provided in the Credit Agreement.
Section 6.04. Further Actions Evidencing Purchases. The Seller or
the Servicer, as applicable, agrees that from time to time, at its expense, it
will promptly authenticate and deliver all
34
further instruments and documents, and take all further commercially reasonable
action, that may be necessary, or that the Buyer or the Agent may reasonably
request, to perfect, protect or more fully evidence the sale, transfer and
assignment or contribution of the Transferred Assets by the Seller to the Buyer
hereunder and the security interest therein under the Credit Agreement, or to
enable any of them to exercise and enforce their respective rights and remedies
hereunder or under the Credit Agreement. Without limiting the foregoing, the
Seller or the Servicer, as applicable, will, upon the request of the Buyer or
the Agent, (i) authenticate and file such financing or continuation statements
or amendments thereto, and such other instruments and documents, that may be
necessary, or that the Buyer or the Agent may reasonably request, to perfect,
protect or evidence such sales, transfers, assignments and contributions, (ii)
maintain a record clearly designating the Receivables which were sold or
contributed to the Buyer and (iii) xxxx its master data processing records
evidencing such Receivables with such legend.
Section 6.05. Lockboxes.
(a) Lockbox Accounts. The Servicer hereby agrees as follows (i) each
Lockbox Account shall be established in the name of the Buyer as a segregated
account and the funds deposited therein from time to time shall not be
commingled with any other funds of the Buyer or any Affiliate thereof, (ii) each
Lockbox Account shall be maintained with a Permitted Lockbox Bank, (iii) each
Lockbox Account shall be insured by the Federal Deposit Insurance Corporation to
the full extent permitted by Law, (iv) the location of each Permitted Lockbox
and each related Lockbox Account shall not be changed without the consent of the
Agent, (v) to direct all Obligors to mail or wire directly to a Permitted
Lockbox or a Lockbox Account all Collections on account of the Receivables and,
if the Servicer or the Seller should receive any Collections, to forward such
Collections to a Permitted Lockbox or a Lockbox Account within one Business Day
of receipt, (vi) not to suffer or permit any funds other than such Collections
to be mailed to Permitted Lockboxes or deposited into related Lockbox Accounts,
(vii) to direct the Permitted Lockbox Banks to transfer all funds in the Lockbox
Accounts if so directed by the Agent, to such location as directed by the Agent,
(viii) to make the necessary bookkeeping entries to reflect such Collections on
the Records pertaining to such Receivables and (ix) not to amend or modify any
term of any Lockbox Agreement or the direction as to the disposition of
Collections or other amounts in the related Permitted Lockbox or Lockbox Account
without the prior written consent of the Agent.
(b) Control of Permitted Lockboxes, Lockbox Accounts and
Concentration Account. The Agent (for the benefit of the Lenders) shall have the
right to assume control over each Permitted Lockbox and each related Lockbox
Account, and direct the Permitted Lockbox Banks to transfer the funds in such
Lockbox Account to an account designated by the Agent at the times and in the
manner specified in Section 6.05(a)(vii) by delivering the notice required by
the Lockbox Agreement with respect thereto. Each of the Seller and the Servicer
represents that it has not given and agrees that it shall not give any
instructions to any Permitted Lockbox Bank inconsistent with any Lockbox
Agreement or this Agreement. The Seller and the Servicer shall cooperate fully
with the Agent in effecting any such transfer of control.
Section 6.06. Servicer Defaults. If one or more of the
following events (each, a "Servicer Default") shall occur and be continuing:
35
(a) the Servicer shall fail to remit any Collections required to be
remitted hereunder or to make any payments required to be made hereunder, and
either such failure shall continue for one (l) Business Day; or
(b) the Servicer shall fail to observe or perform any covenant or
agreement contained in Section 5.01(a),(b)(n),(o) (ii), (o) (v) or (q), Section
5.02(d) or (g) or Section 6.09; or
(c) the Servicer shall fail to observe or perform any covenant or
agreement contained in this Agreement (except as otherwise provided in this
Section 6.06) for 30 days after written notice thereof has been given to the
Servicer by the Agent, any Lender or the Buyer; or
(d) any representation, warranty, certification or statement made by
the Servicer 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
written notice thereof has been given to the Servicer by the Agent, any Lender
or the Buyer; or
(e) an Event of Bankruptcy shall occur with respect to the Servicer;
or
(f) the Servicer 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 (other than Debt outstanding under the Real Estate Loan Agreement) and such
failure shall continue beyond the applicable grace period; or the Servicer shall
otherwise default under any agreement or instrument (other than the Real Estate
Loan Agreement) 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 the
Servicer shall fail to pay any principal of, or interest on, any Debt
outstanding under the Real Estate Loan Agreement when due and such default shall
continue beyond any applicable grace period; or the Servicer shall otherwise
default under the Real Estate Loan Agreement and such default shall continue
beyond the applicable grace period and the effect of such default is to
accelerate the Debt outstanding under the Real Estate Loan Agreement; provided,
that no default under Section 10.28, 11.6(c), 11.11, 11.13 or 11.14 of the Real
Estate Loan Agreement shall result in a Servicer Default hereunder; or
(g) there shall be pending any litigation, investigation or
proceeding, or any material adverse development in any such litigation shall
have occurred, which the Servicer is required to disclose pursuant to Section
5.01(l) hereof, which in the reasonable opinion of the Buyer or the Agent is
likely to materially adversely impair the ability of the Servicer to perform its
obligations under this Agreement; or
(h) 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 this Agreement;
then, and in every such event and so long as such Servicer Default shall be
continuing, the Buyer, acting at the direction of the Agent (acting with the
consent, or at the direction, of the Required Lenders) shall, by notice to the
Servicer, (i) terminate the Servicer's capacity as servicer in respect of the
Receivables and may either (A) itself service, administer and collect the
Receivables in any manner it sees fit or (B) engage affiliate or unaffiliated
contractors to perform all or any part of the
36
administration, servicing and collection of the Receivables and, in either such
event retain the servicing compensation, and/or (ii) exercise any right, power
or remedy permitted to it by law, either by suit in equity or by action at law,
or both. The Servicer shall cooperate fully with the Buyer and Agent in
effecting any transfer of servicing.
Section 6.07. Servicer Indemnification of Indemnified Parties.
(a) The Servicer agrees to indemnify and hold harmless the
Indemnified Parties from and against any loss (other than any losses relating to
defaults or collectibility of the Receivables, including due to any Dilution
granted in accordance with the Credit and Collection Policy), liability,
expense, damage or injury suffered or sustained by reason of any material breach
by the Servicer of any of its representations, warranties or covenants contained
in this Agreement, or any losses resulting from the commingling of Collections
with any other funds, including any judgment, award, settlement, reasonable
attorneys fees and other costs or expenses incurred in connection with the
defense of any actual action, proceeding or claim and including any excess
servicing fees resulting from the replacement of Edison as Servicer; provided,
however, that the Servicer shall not indemnify the Indemnified Parties if such
acts or omissions were attributable to fraud, gross negligence or willful
misconduct by any such Indemnified Party or any of its Affiliates.
(b) Promptly upon receipt by any Indemnified Party under this
Section 6.07 of notice of the commencement of any suit, action, claim,
proceeding or governmental investigation against such Indemnified Party, such
Indemnified Party shall, if a claim in respect thereof is to be made against the
Servicer hereunder, notify the Servicer in writing of the commencement thereof.
The Servicer may participate in and assume the defense of any such suit, action,
claim, proceeding or investigation at its expense, and no settlement thereof
shall be made without the approval of the Servicer and the Indemnified Party.
The approval of the Servicer and the Indemnified Party will not be unreasonably
withheld, delayed or conditioned. After notice from the Servicer to the
Indemnified Party of its intention to assume the defense thereof with counsel
reasonably satisfactory to the Indemnified Party, and so long as the Servicer so
assumes, and diligently proceeds with, the defense thereof in a manner
reasonably satisfactory to the Indemnified Party, the Servicer shall not be
liable for any legal expenses of separate counsel for such Indemnified Party
unless there shall be a conflict between the interests of the Servicer and the
Indemnified Party, in which case the Indemnified Party(ies) shall have the right
to employ one separate counsel to represent it (them) (at the Servicer's
expense). If the Servicer assumes the defense of any suit, the Servicer shall
use all reasonable efforts to (i) consult, from time to time, with the
Indemnified Party about the strategy being pursued, (ii) promptly inform the
Indemnified Party of any material developments in such suit, and (iii) forward
to the Indemnified Party promptly after receipt thereof copies of any notices,
filings, requests or other written materials relating to such suit, and if the
Indemnified Party reasonably determines that the defense being carried out by
the Servicer materially adversely affects the interests of the Indemnified
Party, the Indemnified Party shall notify the Servicer of such effect and the
Servicer and the Indemnified Party 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 Servicer shall pay the reasonable
expenses of separate counsel retained by such Indemnified Party.
(c) Any indemnification pursuant to this Section 6.07 shall be had
only from the assets of the Servicer. The provisions of such indemnity shall run
directly to and be enforceable by
37
an injured party subject to the limitations hereof. The provisions of this
Section 6.07 shall survive the termination of this Agreement.
Section 6.08. Servicer not to Resign. The Servicer shall not resign
from the obligations and duties hereby imposed on it except upon determination
that (i) the performance of its duties hereunder is no longer permissible under
applicable Law, regulation or order and (ii) there is no reasonable action which
the Servicer could take to make the performance of its duties hereunder
permissible under applicable Law, regulation or order. Any such determination
permitting the resignation of the Servicer shall be evidenced by an opinion of
counsel to such effect reasonably acceptable to the Buyer and the Agent and
delivered to the Buyer, the Agent and the Lenders. No such resignation shall
become effective until the Buyer, the Agent or a successor Servicer shall have
assumed the responsibilities and obligations of such Servicer in writing.
Section 6.09. Back-Up Servicer. Notwithstanding Section 6.06 hereof,
the Agent may at any time (whether or not a Servicer Default shall have occurred
or be continuing) engage a back-up servicer to perform such services relating to
the billing, collection, administration and monitoring of the Receivables as the
Agent deems necessary or appropriate; provided that such back-up servicer (i)
shall not contact any Obligor (unless the back-up servicer becomes a successor
Servicer in accordance with Section 6.06 or Section 6.08) and (ii) shall agree
in writing to comply with Section 9.12 hereof. The Seller, the Servicer and the
Buyer hereby consent to the Agent's providing to the back-up servicer copies of
all information received by the Agent or the Lenders from time to time under or
in connection with the Facility Documents (including, without limitation,
Monthly Reports, Borrowing Base Reports, financial statements and the reports
required to be delivered pursuant to Section 5.01(q)(ii)) other than any reports
or information received pursuant to Section 5.01(o)(ii) or (v). Without limiting
the generality of the foregoing, the Servicer shall provide to the back-up
servicer such additional documents, information and reports as the back-up
servicer may reasonably request in connection with the performance of its
duties. In addition, the Servicer shall respond promptly to reasonable inquiries
of the back-up servicer and, upon the back-up servicer's reasonable request from
time to time during regular business hours, upon not less than five (5) days'
prior notice, the Servicer shall thoroughly familiarize the back-up servicer
with the Servicer's books and records and computer systems as same relate to the
billing, collection, administration and monitoring of the Receivables. The fees
and expenses of any back-up servicer shall be paid by the Buyer when due,
provided that such fees and expenses reflect market-based compensation (as
reasonably determined by the Agent) for the services rendered by such back-up
servicer. To the extent the Agent requires the cooperation of the Servicer or
the Buyer in connection with engaging or maintaining a back-up servicer, each of
the Servicer and the Buyer agrees to provide such cooperation.
ARTICLE VII
TERMINATION
Section 7.01. Term. The Seller's obligation to sell or contribute
Receivables hereunder shall commence as of the date of execution and delivery
hereof and shall continue in full force and effect until the earliest to occur
of the following (each a "Termination Event"):
(a) the termination of the Commitment under the Credit Agreement;
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(b) the Buyer or Edison shall:
(i) become insolvent or experience an Event of Bankruptcy; or
(ii) become unable for any reason to convey or reconvey
Receivables in accordance with the provisions of this Agreement;
provided, however, that (A) the termination of the Seller's obligation to sell
or contribute Receivables pursuant to this Section 7.01 shall not discharge any
Person from any obligations incurred prior to such termination, including,
without limitation, any obligations to repurchase (or purchase) pursuant to
Section 2.05(a) hereof Receivables sold or contributed prior to such termination
(even if the event giving rise to such repurchase (or purchase) obligation
occurs after such termination) or (ii) to make payments pursuant to Section
2.05(b) hereof with respect to Receivables sold or contributed prior to such
termination (even if the Dilution giving rising to such payment obligation
arises after such termination) and (B) the indemnification and payment
provisions set forth in Article VI or Article VIII hereof and the provisions and
agreement set forth in Section 9.10 hereof shall be continuing and shall survive
termination of the Seller's obligation to sell or contribute Receivables.
Neither Edison nor the Buyer will extend the Seller's obligation to sell or
contribute Receivables under this Agreement with an intent to mitigate losses on
the Receivables previously sold or contributed by the Seller to the Buyer
hereunder.
Section 7.02. Effect of Termination. No termination or rejection or
failure to assume this Agreement in the Event of Bankruptcy of Edison or the
Buyer shall be deemed to impair or affect the obligations pertaining to any
executed sale, executed contribution or executed obligations, including, without
limitation, pretermination breaches of representations and warranties by Edison
or the Buyer.
ARTICLE VIII
INDEMNIFICATION
Section 8.01. Expenses. The Seller agrees, promptly upon receipt of
a written invoice, to pay or cause to be paid, and to save the Buyer harmless
against liability for the payment of, all reasonable out-of-pocket expenses
(including, without limitation, reasonable attorneys', accountant's and other
third parties' fees and expenses and any filing fees and expenses incurred by
the Buyer, but excluding salaries and overhead costs of the Buyer) incurred by
or on behalf of the Buyer (i) in connection with the negotiation, execution,
delivery and preparation of the Facility Documents (other than the Credit
Agreement) and the transactions contemplated by or undertaken pursuant to or in
connection herewith or therewith (including, without limitation, the perfection
or protection of the Buyer's interest in the Transferred Assets) and (ii) from
time to time (a) relating to any requested amendments, waivers or consents under
the Facility Documents (other than the Credit Agreement), (b) arising in
connection with the Buyer's enforcement or preservation of its rights
(including, without limitation, the perfection and protection of its interest in
the Receivables) under the Facility Documents (other than the enforcement or
preservation by the Buyer of its rights under the Credit Agreement), or (c)
arising in connection with any audit, dispute, disagreement, litigation or
preparation for litigation involving the Facility Documents (other than any
dispute, disagreement, litigation or preparation for litigation against the
Agent or any Lender under the Credit Agreement).
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Section 8.02. Indemnity for Taxes, Reserves and Expenses.
(a) If after the date hereof, the adoption of any Law or regulatory
guideline or any amendment or change in the interpretation of any existing or
future Law or 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 regulatory guideline,
whether or not having the force of Law) shall subject any Indemnified Party to
any tax of any kind whatsoever with respect to the Facility Documents (other
than the Credit Agreement), the Transferred Assets 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); 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 or the Transferred
Assets or the funding of any purchases hereunder or to reduce any amount due or
owing hereunder in respect thereof, such Indemnified Party shall notify the
Seller. The Seller 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) [Reserved].
(c) If any Indemnified Party becomes entitled to claim any
additional amounts pursuant to this Section, it shall promptly notify the Seller
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 Seller shall be conclusive in the absence of manifest
error.
(d) Each Indemnified Party shall use good faith efforts to reduce or
eliminate any claim for indemnity pursuant to this Section 8.02; provided that
no Indemnified Party shall be obligated to take any action which would subject
such Indemnified Party to any unreimbursed cost or expense or which would
otherwise be disadvantageous to such Indemnified Party.
Section 8.03. Indemnity.
(a) The Seller agrees to indemnify, defend and save harmless each
Indemnified Party promptly upon demand, from and against any and all losses,
claims, damages, liabilities, costs and expenses (including, without limitation,
all reasonable attorneys' fees and expenses, reasonable expenses incurred by
their respective credit recovery groups (or any successors thereto) and
reasonable expenses of settlement (in accordance with clause (b) or this Section
8.03), litigation or preparation therefor) which any Indemnified Party may incur
or which may be asserted against any Indemnified Party by any Person (including,
without limitation, any Obligor or any other Person whether on its own behalf or
derivatively on behalf of the Seller) arising from or incurred in connection
with:
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(i) any Receivable identified as an Eligible Receivable not being an
Eligible Receivable on the date of its Purchase or contribution hereunder;
(ii) any representation or warranty made or deemed made by the
Seller (or any of its officers) under or in connection with this Agreement being
incorrect in any material respect when made or deemed made or delivered;
(iii) any Dilution or other claim, set-off, deduction, dispute or
defense (other than discharge in bankruptcy of an Obligor or arising from the
financial inability of such Obligor to pay) of or by an Obligor to the payment
of any Receivable in connection with or arising from the Contract related
thereto, any other Contract or Receivable, any other agreement between the
Seller and such Obligor, or any other claim resulting from the Seller's
provision of services or failure to provide or furnish such services to such
Obligor, whether or not related to such Receivable.
(iv) any failure of the Seller to perform its duties or obligations
in accordance with the provisions of this Agreement or to perform its duties or
obligations under the related Contract;
(v) any product liability, personal injury, copyright infringement,
theft of services, property damage, or other breach of contract, antitrust,
unfair trade practices or tortious claim arising out of or in connection with
subject matter of the related Contract or out of or in connection with any
transaction contemplated by this Agreement, any Facility Document or any other
instrument or document furnished pursuant hereto or the related Contract;
(vi) the commingling of Collections of Receivables at any time
with funds of any other Person;
(vii) any action or omission by the Seller reducing or impairing the
rights of the Buyer or its successors or assigns in and to any Transferred Asset
under this Agreement, the Credit Agreement, the related Contract or any other
instrument or document furnished pursuant hereto or thereto or with respect to
any Receivable;
(viii) any investigation, litigation or proceeding related to or
arising from this Agreement, any other Facility Document (other than the Credit
Agreement) or any other instrument or document furnished pursuant hereto or
thereto, or any transaction contemplated by this Agreement or the related
Contract or the use of proceeds from any Purchase or reinvestment pursuant to
this Agreement, or the ownership of, or other interest in, any Receivable or the
Related Security;
(ix) the existence of any Lien (other than Permitted Liens) against
or with respect to any Receivable or the Related Security or Collections with
respect thereto on the date of transfer thereof hereunder;
(x) any failure by the Seller to pay when due any taxes, including
without limitation sales, excise or personal property taxes, payable by the
Seller in connection with any Receivable or any Related Security with respect
thereto; or
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(xi) any claim brought by any Person other than an Indemnified Party
arising from any activity by the Seller or any Affiliate of the Seller in
servicing, administering or collecting any Receivable;
provided that nothing in this Section 8.03(a) shall be deemed to provide
indemnity to any Indemnified Party for matters covered pursuant to Section 8.02
hereof and provided further that nothing in this Section 8.03(a) shall be deemed
to be, nor is it intended to constitute, a guarantee of the collectibility or
payment of the Transferred Assets which are not collected or paid on account of
the insolvency, bankruptcy or financial inability to pay of the applicable
Obligor or to provide indemnity to any Indemnified Person to the extent that the
amounts to be paid (i) result from fraud, gross negligence or willful misconduct
on the part of the Indemnified Person or (ii) would constitute recourse (except
as otherwise specifically provided in this Agreement) for any uncollectible
Receivable.
(b) Promptly upon receipt by any Indemnified Party under this
Section 8.03 of notice of the commencement of any suit, action, claim,
proceeding or governmental investigation against such Indemnified Party, such
Indemnified Party shall, if a claim in respect thereof is to be made against the
Seller hereunder, notify the Seller in writing of the commencement thereof. The
Seller 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 Seller and
the Indemnified Party, such approval not to be unreasonably withheld, delayed or
conditioned. After notice from the Seller to the Indemnified Party of its
intention to assume the defense thereof with counsel reasonably satisfactory to
the Buyer and so long as the Seller so assumes, and diligently proceeds with,
the defense thereof in a manner reasonably satisfactory to the Indemnified
Party, the Seller shall not be liable for any legal expenses of separate counsel
for such Indemnified Party in connection with such suit, action, claim,
proceeding or investigation unless there shall be a conflict between the
interests of the Seller and the Indemnified Party, in which case the Indemnified
Party(ies) shall have the right to employ one separate counsel to represent it
(them) (at Seller's expense). If the Seller assumes the defense of any suit, the
Seller shall use all reasonable efforts to (i) consult, from time to time, with
the Indemnified Party about the strategy being pursued, (ii) promptly inform the
Indemnified Party of any material developments in such suit, and (iii) forward
to the Indemnified Party promptly after receipt thereof copies of any notices,
filings, requests or other written materials relating to such suit, and if the
Indemnified Party reasonably determines that the defense being carried out by
the Seller materially adversely affects the interests of the Indemnified Party,
the Indemnified Party shall notify the Seller of such effect and the Seller and
the Indemnified Party 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 Seller shall pay the reasonable expenses of
separate counsel retained by such Indemnified Party.
(c) Each Indemnified Party shall use its good faith efforts to
mitigate, reduce or eliminate any losses, expenses or claims for
indemnification; provided, that no Indemnified Party shall be obligated to take
any action which would subject such Indemnified Party to any unreimbursed cost
or expense or which would otherwise be disadvantageous to such Indemnified
Party.
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Section 8.04. Payments Made Without Duplication. Notwithstanding any
provision of this Article VIII, amounts payable by the Seller pursuant to this
Article VIII shall be without duplication for amounts payable pursuant to
Section 2.05 hereof.
ARTICLE IX
MISCELLANEOUS
Section 9.01. Survival. The indemnification and payment provisions
of Articles VI and VIII and of Section 2.05 shall be continuing and shall
survive any termination of this Agreement, subject to applicable statutes of
limitation.
Section 9.02. Waivers; Amendments. Any provision of this Agreement
may be waived or amended in writing by the parties hereto, with the consent of
the Required Lenders.
Section 9.03. Notices. All notices, requests, demands, directions
and other communications (collectively "notices") under the provisions of this
Agreement shall be in writing (including facsimile transmission or electronic
communication) unless otherwise expressly permitted hereunder and shall be sent,
if mailed, by first-class mail, first-class express mail, or by facsimile or
electronic communication with confirmation in writing mailed first-class mail,
in all cases with charges prepaid. Any such properly given notice shall be
effective when received. All notices shall be sent to the applicable party at
the office specified in this Section 9.03 or in accordance with the last
unrevoked written direction from such party to the other party hereto.
If to the Buyer:
Edison Receivables Company LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxxxxx
If to the Seller:
Edison Schools Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
E-mail: xxxxx@xxxxxxxxxxxxx.xxx
Attention: Xxxxxxxxxxx X. Xxxx
Section 9.04. Governing Law; Submission to Jurisdiction; Waiver of
Trial by Jury. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE. The parties hereto hereby submit to the
nonexclusive jurisdiction of the courts of the State of New York and the courts
of the United States located in the State of New York for the purpose of
adjudicating any claim or controversy arising in connection with any of the
Facility Documents or any of the transactions contemplated thereby, and
43
for such purpose, to the extent it may lawfully do so, waives any objection
which it may now or hereafter have to such jurisdiction or to venue therein and
any claim of inconvenient forum with respect thereto. Nothing in this Section
9.04 shall affect the right of the Buyer (or its assignee) to bring any action
or proceeding against the Seller in the courts of other jurisdictions. 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
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.
Section 9.05. Records. All amounts calculated or due hereunder shall
be determined from the records of the Buyer, which determinations shall be
conclusive absent manifest error.
Section 9.06. No Implied Waiver; Cumulative Remedies. No course of
dealing and no delay or failure of the Buyer, the Agent or any 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 Buyer, the Agent
and the Lenders under the Facility Documents are cumulative and not exclusive of
any rights or remedies which the Buyer, the Agent or the Lenders would otherwise
have.
Section 9.07. No Discharge. The obligations of the Seller under this
Agreement 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 this Agreement or applicable Law, including,
without limitation, any failure to set-off or release in whole or in part by the
Buyer of any balance of any deposit account or credit on its books in favor of
the Seller 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 would operate as a discharge of the
Seller as a matter of law.
Section 9.08. Integration; Prior Understandings. This Agreement and
the other Facility Documents set forth the entire understanding of the parties
relating to the subject matter hereof, and supersede all prior or
contemporaneous understandings and agreements, whether written or oral.
Section 9.09. Successors and Assigns. This Agreement shall be
binding on the parties hereto and their respective successors and assigns;
provided, however, that the Seller may not assign any of its rights or delegate
any of its duties hereunder without the prior written consent of the Buyer and
the Agent. No provision of this Agreement shall in any manner restrict the
ability of
44
the Buyer to assign, participate, grant security interests in, or otherwise
transfer any portion of the Transferred Assets owned by the Buyer to the Agent
(for the benefit of the Lenders). The Seller hereby agrees and consents to the
complete assignment by the Buyer of all of its rights under, interest in, title
to and obligations under this Agreement to the Agent (for the benefit of the
Lenders). The terms of this Section 9.09 do not in any way limit the terms of
Section 2.06 hereof.
Section 9.10. No Petition. The Seller agrees that, prior to the date
which is one year and one day after the date upon which all obligations of the
Buyer to the Seller hereunder are paid in full and all other indebtedness of the
Buyer is paid in full, it will not institute against, or join any other Person
in instituting against, the Buyer any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding or other similar proceeding under the Laws
of the United States or any state of the United States.
Section 9.11. Severability; Counterparts, Waiver of Setoff. This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and
the same Agreement. Any provisions of this Agreement which are prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable any other provision in
such jurisdiction or such provision in any other jurisdiction. The Seller hereby
waives any right of setoff which it may have or to which it may be entitled
against the Buyer and its assets.
Section 9.12. Confidentiality. The Buyer and the Seller (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 9.12, (b) as reasonably required by a bona fide
transferee (or prospective transferee which agrees in writing to comply with
this Section 9.12), (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 Buyer
or the Seller (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
9.12 shall terminate
45
one year following the then current Expiration Date described in clause (i) of
the definition thereof in the Credit Agreement but in no event shall such
obligations terminate more than two years following such determination date.
Section 9.13. Pledge Agreement. In order to secure the full and
punctual payment and performance of its obligations set forth in Sections 2.05
and 6.07 and Article VIII hereof, Edison has pursuant to the Pledge Agreement
granted to the Buyer a first, priority perfected security interest in the Pledge
Agreement Collateral. In the event that Edison (as Seller or Servicer, as the
case may be) fails to pay or perform its obligations under any of Sections 2.05
or 6.07 or Article VIII hereof in accordance with the terms thereof, the Buyer
(and its assigns) shall have all of the rights, remedies, powers, claims and
privileges under or in connection with the Pledge Agreement and/or with respect
to the Pledge Agreement Collateral. The Buyer's security interest in the Pledge
Agreement Collateral is granted as security only and shall not subject the Buyer
(or its assigns) to, or transfer or in any way affect or modify, any obligation
or liability of Edison with respect to the Pledge Agreement Collateral or any
transaction in connection therewith.
Section 9.14. Third Party Beneficiary. The parties hereto agree that
the Agent (on behalf of the Lenders) shall be the third-party beneficiary of
this Agreement and the Pledge Agreement and shall have full right, power and
authority to enforce the Buyer's rights and the Seller's obligations under this
Agreement and the Pledge Agreement.
Section 9.15. Agent's Authority to Act. To the extent that the Agent
from time to time delivers any notice, grants any consent, makes any
determination or takes any action, in each case, required or permitted to be
delivered, granted, made or taken hereunder or under the Pledge Agreement, the
Buyer, the Servicer and the Seller shall be entitled to rely conclusively
(without investigation) on the Agent's authority to deliver such notice, grant
such consent, make such determination and take such action.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the
Restatement Effective Date.
EDISON RECEIVABLES COMPANY LLC,
as Buyer
By: /s/ Xxx X. Xxxxxxxxx
----------------------------------------
Name: Xxx X. Xxxxxxxxx
Title: Treasurer
EDISON SCHOOLS INC.,
as Seller and as Servicer
By: /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx
Title: Senior Vice President and
General Counsel
