Secured Promissory Note - Edison Schools Inc. and H. Christopher Whittle
SECURED PROMISSORY NOTE
April 13, 2000
$1,248,450 New York, New York
FOR VALUE RECEIVED, H. Christopher Whittle (the "Maker") promises to pay to
Edison Schools Inc., a Delaware corporation (the "Company"), or order, at the
offices of the Company or at such other place as the holder of this Note may
designate, the principal sum of One Million Two Hundred Forty-Eight Thousand and
Fifty Dollars ($1,248,450), together with interest on the unpaid principal
balance of this Note from time to time outstanding equal to the higher at any
time of the prime rate in effect from time to time or the highest rate actually
paid by the Company on the Company's outstanding line of credit, bank financing,
debentures or similar debt (excluding debt incurred through equipment
financing), if any, from time to time. The term "prime rate" at any time shall
mean the rate of interest then most recently announced by Chase Manhattan Bank
as its prime rate. Principal and accrued interest shall be due and payable in
full on April 12, 2005.
Interest on this Note shall be computed on the basis of a year of 365 days for
the actual number of days elapsed. All payments by the Maker under this Note
shall be in immediately available funds.
Payment of this Note is secured by a security interest in certain property of
the Maker pursuant to a pledge agreement dated as of November 15, 1999, as
amended on the date hereof, between the Maker and the Company (the "Pledge
The Maker's obligations under this Note shall be recourse solely to the Maker's
interest in the Collateral (as defined in the Pledge Agreement).
This Note shall become immediately due and payable without notice or demand upon
the occurrence at any time of any of the following events of default
(individually, "an Event of Default" and collectively, "Events of Default"):
(1) the institution against the Maker or any indorser or guarantor of
this Note of any proceedings under the United States Bankruptcy Code
or any other federal or state bankruptcy, reorganization,
receivership, insolvency or other similar law affecting the rights
of creditors generally, which proceeding is not dismissed within
thirty (30) days of filing;
(2) the institution by the Maker or any indorser or guarantor of this
Note of any proceedings under the United States Bankruptcy Code or
any other federal or state bankruptcy, reorganization, receivership,
insolvency or other similar law affecting the rights of creditors
generally or the making by the Maker or any indorser or guarantor of
this Note of a composition or an assignment or trust mortgage for
the benefit of creditors;
(3) the occurrence of any event of default under the Pledge Agreement;
(4) if the Maker dies or becomes incapacitated, or if a conservator or
guardian of the Maker is appointed, or if the Maker suffers any
other legal disability.
Upon the occurrence of an Event of Default, the holder shall have then, or at
any time thereafter, all of the rights and remedies afforded by the Uniform
Commercial Code as from time to time in effect in the State of New York or
afforded by other applicable law.
Every amount overdue under this Note shall bear interest from and after the date
on which such amount first became overdue at an annual rate which is two (2)
percentage points above the rate per year specified in the first paragraph of
this Note. Such interest on overdue amounts under this Note shall be payable on
demand and shall accrue and be compounded monthly until the obligation of the
Maker with respect to the payment of such interest has been discharged (whether
before or after judgment).
In no event shall any interest charged, collected or reserved under this Note
exceed the maximum rate then permitted by applicable law and if any such payment
is paid by the Maker, then such excess sum shall be credited by the holder as a
payment of principal.
All payments by the maker under this Note shall be made without set-off or
counterclaim and be free and clear and without any deduction or withholding for
any taxes or fees of any nature whatever, unless the obligation to make such
deduction or withholding is imposed by law. The Maker shall pay and save the
holder harmless from all liabilities with respect to or resulting from any delay
or omission to make any such deduction or withholding required by law.
Whenever any amount is paid under this Note, all or part of the amount paid may
be applied to principal, premium or interest in such order and manner as shall
be determined by the holder in its discretion.
No reference in this Note to the Pledge Agreement or any guaranty or other
document shall impair the obligation of the Maker to pay all amounts under this
Note strictly in accordance with the terms of this Note.
The Maker agrees to pay on demand all costs of collection, including reasonable
attorney's fees, incurred by the holder in enforcing the obligations of the
Maker under this Note.
No delay or omission on the part of the holder in exercising any right under
this Note or the Pledge Agreement shall operate as a waiver of such right or of
any other right of such holder, nor shall any delay, omission or waiver on any
one occasion be deemed a bar to or waiver of the same or any other right on any
future occasion. The Maker and every indorser or guarantor of this Note
regardless of the time, order or place of signing waives presentment, demand,
protest and notices of every kind and assents to any extension or postponement
of the time of payment or any other indulgence, to any substitution,
exchange or release of collateral, and to the addition or release of any other
party or person primarily or secondarily liable.
This Note may be prepaid in whole or in part at any time or from time to time by
the Maker. Any such prepayment shall be without premium or penalty.
None of the terms or provisions of this Note may be excluded, modified or
amended except by a written instrument duly executed on behalf of the holder
expressly referring to this Note and setting forth the provision so excluded,
modified or amended.
All rights and obligations hereunder shall be governed by the laws of the State
of New York and this Note is executed as an instrument under seal.
IN WITNESS WHEREOF, this Note has been executed by an authorized representative
of the undersigned as of the date first written above.
/s/ H. Christopher Whittle
H. Christopher Whittle