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PURCHASE AND CONTRIBUTION AGREEMENT
between
EDISON SCHOOLS INC.
as Seller and Servicer,
and
EDISON RECEIVABLES COMPANY LLC,
as Buyer
Dated as of October 31, 2001
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PURCHASE AND CONTRIBUTION AGREEMENT
This PURCHASE AND CONTRIBUTION AGREEMENT, dated as of October 31,
2001 (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 and related rights and interests.
WHEREAS, subject to the terms and conditions of this Agreement, the
Seller desires to sell from time to time to the Buyer, and the Buyer desires to
purchase from time to time from the Seller, certain Receivables (as defined
below), subject to the terms and conditions of this Agreement.
WHEREAS, the Seller may also wish to contribute Receivables from
time to time to the capital of the Buyer on the terms set forth herein.
WHEREAS, the Buyer has determined that the Receivables would be most
effectively serviced by the Servicer and the Servicer is willing to service the
Receivables.
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.
"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.
"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 or the 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 in a form
consistent with past practices (with such changes as business circumstances and
prudent business judgment dictate), and/or any and all instruments, agreements,
invoices or other writings, which, in either case, give rise to an account
receivable arising from the provision of services in the ordinary course of the
Seller's business.
"Contributed Assets" shall have the meaning specified in Section
2.02(e) hereof.
"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 date hereof 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 Credit and Security Agreement
dated as of October 31, 2001 by and between the Buyer, as borrower and Merrill
Lynch Mortgage Capital Inc., as Lender, as the same may be from time to time
amended, modified or supplemented.
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"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 executed and delivered this Agreement.
"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 or the
Lender;
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(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 Lender 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 a Quarterly Bill
Receivable, in which case the terms of such Quarterly Bill Receivable require
payment in full in respect thereof to be made no later than 30 days after the
end of the applicable three month billing period specified in the related
Contract;
(l) which has an Obligor which is domiciled in a state (including
the District of Columbia) of the United States of America;
(m) which has an Obligor who is not in default in any material
respect under the terms of the Contract, if any, from which such Receivable
arose;
(n) which is not a note receivable;
(o) which is not an obligation of the United States government or
any agency, instrumentality or political subdivision thereof;
(p) which has terms which have not been modified, extended or
renegotiated since the provision of service to an Obligor in any way not
provided for in this Agreement or in the Credit and Collection Policy;
(q) the payment of which (or any portion of which) has not been
subordinated or deferred under the related Management Contract; provided that
the unexercised right in any
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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;
(r) the payment of which (or of any portion of which) has not been
subordinated or deferred in accordance with the terms of any related Contract
(other than the related Management Contract which is the subject of preceding
clause (q)); provided that the unexercised right in any such Contract to cause
the subordination or deferral of any such payment shall not, by itself, cause
such Receivable to fail to qualify as an Eligible Receivable;
(s) which arises under a Contract under which the related Obligor is
in compliance in all respects with all applicable insurance requirements set
forth in such Contract;
(t) which arises under a Contract with respect to which neither
Edison nor the Obligor thereunder has delivered a written notice of its intent
to terminate such Contract or a notice of a material breach or default under
such Contract; and
(u) which has not been disqualified by the Lender for reasonable
cause, as evidenced by prior written notice thereof to the Borrower and the
Servicer; it being understood and agreed that reasonable cause shall include,
without limitation, a determination by the Lender, in the exercise of its
reasonable judgment, that the Contract under which such Receivable arose
adversely affects the Lender's ability to collect such Receivable or adversely
affects the Lender's ability to determine the collectibility of such Receivable
or the timing of any payment with respect thereto or the Outstanding Balance
thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time and any successor thereto, and the
regulations promulgated and rulings issued thereunder.
"ERISA Affiliate" shall mean, with respect to any Person, any Person
which is a member of any group of organizations (i) described in Section 414(b)
or (c) of the Code of which such Person is a member, or (ii) solely for purposes
of potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11)
of the Code and the Lien created under Section 302(f) of ERISA and Section
412(n) of the Code, described in Section 414(m) or (o) of the Code of which such
Person is a member.
"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
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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 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 remains unstayed or
undismissed for a period of 60 days in a court having jurisdiction in the
premises seeking a decree or order for relief in respect of such Person in an
involuntary case under any applicable bankruptcy, insolvency or other similar
Law now or hereafter in effect, or for the appointment of a receiver,
liquidator, assignee, trustee, custodian, sequestrator, conservator or other
similar official of such Person or for any substantial part of its property, or
for the winding-up or liquidation of its affairs; or
(c) the commencement by such Person of a voluntary case under any
applicable bankruptcy, insolvency or other similar Law now or hereafter in
effect, or such Person's consent to the entry of an order for relief in an
involuntary case under any such Law, or consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator, conservator or other similar official of such Person or for any
substantial part of its property, or any general assignment for the benefit of
creditors; or
(d) such Person 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 Lender; provided that the Seller
may, by written notice to the Buyer and the 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
Credit Agreement, the Lockbox Agreements and all other agreements, documents and
instruments delivered pursuant hereto or thereto or in connection herewith or
therewith.
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"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.
"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.
"Indemnified Parties" shall mean the Buyer and its officers,
directors, employees, successors or assigns.
"Law" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or
award of any Official Body.
"Lender" shall mean Merrill Lynch Mortgage Capital Inc., together
with its successors and assigns, or such other Person as provided 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 Lender 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 Lender.
"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.
"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.
"Outstanding Balance" of any Receivable shall mean, at any time, the
then outstanding amount thereof. 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:
(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
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a related Lockbox Account, or such other post office box or mailing location as
the Lender, 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 Lender may agree
upon from time to time.
"Person" shall mean an individual, corporation, limited liability
company, partnership (general or limited), trust, business trust, unincorporated
association, joint venture, joint-stock company, Official Body or any other
entity of whatever nature.
"Plan" shall mean, with respect to any Person, any employee benefit
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.
"Proceeds" shall mean "proceeds" as defined in Section 9-102(a)(64)
of the UCC as in effect in the State of New York and in the jurisdiction whose
law governs the perfection of the Buyer's interests therein.
"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 Bill 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.
"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 for which indebtedness an invoice has been rendered,
whether or not constituting an account or a general intangible and whether or
not evidenced by an instrument, whether now existing or hereafter arising,
solely in connection with the rendering of services by the Seller to an Obligor
in the ordinary course of the Seller's business, all monies due or to become due
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.
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"Related Security" shall mean with respect to any Receivable:
(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.
"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 Lender have received prior written notice of the identity
or title of such other authorized officer).
"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.
"Termination Event" shall have the meaning specified in Section 7.01
hereof.
"Transferred Assets" shall mean the Purchased Assets and the
Contributed Assets.
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"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.
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 New York shall
have the respective meanings ascribed to such terms therein unless the context
otherwise clearly requires. Any provision in this Agreement referring to action
to be taken by any Person, or that such Person is prohibited from taking, shall
be applicable whether such action is taken directly or indirectly by such
Person. All references to Laws, agreements and other documents shall refer to
such Laws, agreements and documents as the same shall have been amended from
time to time. All other capitalized terms used herein and not otherwise defined
shall have the meanings specified in the Credit Agreement.
ARTICLE II
SALES AND TRANSFERS; SETTLEMENTS
Section 2.01. General Terms. On the terms and conditions hereinafter
set forth, commencing 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 Purchase Date or
Contribution Date, as the case may be, without recourse, except as specifically
set forth herein, all right, title and interest of the Seller in, to and under
the Transferred Assets, and the Buyer agrees 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
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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 Purchase Date, the Seller will
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 will 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 Purchase
Date.
(b) Each Purchase shall be made on a Purchase Date, provided that
all conditions to purchase specified in Section 4.01 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 approximate 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 Lender),
or (iii) any combination of the foregoing methods.
(e) The Seller may, on any date and in its sole discretion,
contribute Receivables to the Buyer (collectively, the "Contributed
Receivables") as additional capital of the Buyer. On the date of each such
contribution and after giving effect thereto, the Buyer shall own in fee simple
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
fee simple ownership interest in 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 fee simple ownership in 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, the Transferred
Assets. The sales and conveyances
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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 Lender 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 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 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.
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(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 by the
Buyer (or its assignee), unless such failure has been fully cured within such
three Business Day period or (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. 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, 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 the
Transferred Assets and this Agreement to the Lender and (b)
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the representations, warranties and covenants contained in this Agreement and
the rights of the Buyer under this Agreement, including the rights of the Buyer
to enforce the provisions hereof against the Seller and the Servicer, are
intended to benefit the Lender. The Seller and the Servicer hereby consent to
all such pledges and assignments.
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 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 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).
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(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 or the Lender in connection
with this Agreement or any other Facility Document is and will be accurate in
all material respects as of the date so furnished, and no such report or
document contains, or will contain, as of the date so furnished, any untrue
statement of a material fact or omits to state, or will omit to state, as of the
date so furnished, a material fact necessary in order to make the statements
contained therein, in the light of the circumstances under which they were made,
not misleading.
(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 or the Lender to any civil or criminal penalty or liability or involve any
material risk of the loss, sale or forfeiture of any property, rights or
interests covered hereunder or under the 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 Lender 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.
(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.
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(l) Financial Condition. (i) Edison is not insolvent or the subject
of any Event of Bankruptcy and the sale of Receivables on such day is not being
made in contemplation of the occurrence thereof. Since June 30, 2001, 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 in reliance on the Buyer's identity
as a separate legal entity from Edison and each of its Affiliates, and
acknowledges that the Buyer and the Lender are similarly entering into the
transactions contemplated by the other Facility Documents 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.
(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
18
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 date on which Edison
accepted its duties as Servicer hereunder, 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).
(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
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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 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 an ownership
interest in 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
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 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
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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 Lender in accordance with
the Credit Agreement).
(g) New York Management Contracts. As of the earlier of the initial
Purchase Date and the initial Contribution 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.
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 Lender may conclusively rely until such time
as the Buyer and the 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;
(e) (i) Proper financing statements (Form UCC-l) naming Edison as
the debtor of the Receivables, the 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;
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(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 David Graff, 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, 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 4.02. 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 a perfected first priority ownership or
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. Promptly upon becoming aware of any Default, Event of
Default or Servicer Default and 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, 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 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.
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(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) 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 Lender (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.
(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
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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. 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 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;
(iii) 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;
(iv) 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.
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(q) Due Diligence. (i) From time to time, during regular business
hours as requested by the Buyer or the Lender, as the case may be, upon five (5)
days' prior notice, Edison shall permit the Buyer or the Lender, 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; 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 or the Lender, 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 and the Lender shall be permitted
to take the actions described in preceding clause (i) without being subject to
the amount of prior notice given and may request Edison to cause its independent
public accounts to prepare the report contemplated in preceding clause (ii) as
often as the Buyer or the Lender, as applicable, deems necessary or desirable.
Edison shall reimburse the Buyer and the Lender for all reasonable fees costs
and expenses incurred by either of them in connection with the 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 (it being understood that the
Buyer is consolidated with Edison 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 the Buyer is consolidated with Edison for
accounting purposes), and evidencing such assets, funds and transactions by
appropriate entries in the records and books referred to in clause (i) above;
(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;
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(v) taking such actions as are necessary to ensure that any
financial statements of Edison or any Affiliate thereof which are consolidated
to include the Buyer will contain detailed notes clearly stating that (A) all of
the Buyer's assets are owned 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.
(t) Notice to Obligors. Edison shall cause each invoice arising or
created after the date hereof (other than invoices related to Excluded
Receivables) to instruct the Obligor thereon to remit payments to the Buyer and
to include a statement at the bottom of each such invoice to the effect that the
Buyer is the assignee of Edison.
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 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.
(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 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
27
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 Lender 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) Together with the financial statements delivered pursuant to
Section 5.01(ii) and (iii), 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 and the
Lender the duties and 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
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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.
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 Lender's first priority perfected security interest 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 its own
expense, in its own name or in the name of the Buyer or the Lender (provided
that, if the Servicer is acting in the name of the Lender, it has obtained
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 and the Lender 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 further
instruments and documents, and take all further commercially reasonable action,
that may be necessary, or that the Buyer or the Lender 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
29
foregoing, the Seller or the Servicer, as applicable, will, upon the request of
the Buyer or the Lender, (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 Lender 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) mark its master data processing
records evidencing such Receivables with such legend.
Section 6.05. Lockboxes.
(a) Lockbox Accounts. The Servicer hereby agree 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
Lender; (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 Lender, to such location as directed by the
Lender; (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 Lender.
(b) Control of Permitted Lockboxes, Lockbox Accounts and
Concentration Account. The Lender 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 Lender 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 Lender 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:
(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
contained in Section 5.01(n) or Section 5.02(d) or (g); or
30
(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 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 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 and such failure shall continue beyond the applicable grace period; or the
Servicer shall otherwise default under any agreement or instrument in a
principal amount of at least $5,000,000 and such default shall continue beyond
the applicable grace period and the effect of such default is to accelerate the
Debt governed by such agreement or instrument; or
(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 Lender 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 Lender may, 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 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 Lender 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
31
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 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 Lender and delivered to the Buyer and the Lender. No such
resignation shall become effective until the Buyer, the Lender or a successor
Servicer shall have assumed the responsibilities and obligations of such
Servicer in writing.
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ARTICLE VII
TERMINATION
Section 7.01. Term. The Buyer's obligation to purchase 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;
(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 Buyer's obligation to
purchase 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 Buyer's obligation to purchase Receivables. Neither Edison
nor the Buyer will extend the Buyer's obligation to purchase 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 the executory obligations of 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
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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 Lender under the Credit
Agreement).
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
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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:
(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 dispute or defense (other than discharge
in bankruptcy of an Obligor or arising from the financial inability of such
Obligor to pay) of an Obligor to the payment of any Receivable or any other
claim resulting from the provision of services related to such Receivable or the
furnishing or failure to furnish such services;
(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 the Lender 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;
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(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
(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 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 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 Lender.
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 telexed, 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
telex, 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
529 Fifth Avenue, 11th Floor
New York, New York 10017
Telephone: (212) 599-2655
Telecopy: (212) 599-2652
Attention: Christopher J. Scarlata
If to the Seller:
Edison Schools Inc.
521 Fifth Avenue, 11th Floor
New York, New York 10175
Telephone: (212) 419-1600
Telecopy: (212) 419-1705
E-mail: afeild@edisonschools.com
Attention: Adam T. Feild
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
37
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 or the 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 and the Lender under the
Facility Documents are cumulative and not exclusive of any rights or remedies
which the Buyer or the Lender 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 sets
forth the entire understanding of the parties relating to the subject matter
hereof, and supersedes all prior understandings and agreements, whether written
or oral.
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 Lender. No provision of this Agreement shall in any manner restrict the
ability of the Buyer to assign, participate, grant security interests in, or
otherwise transfer any portion of the Transferred Assets owned by the Buyer to
the Lender. The Seller hereby agrees and consents to the
38
complete assignment by the Buyer of all of its rights under, interest in, title
to and obligations under this Agreement to the Lender.
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 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.
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Section 9.13. Third Party Beneficiary. The parties hereto agree that
the Lender shall be the third-party beneficiary of this Agreement and shall have
full right, power and authority to enforce the Buyer's rights and the Seller's
obligations under this Agreement.
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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 date first above set forth.
EDISON RECEIVABLES COMPANY LLC,
as Buyer
By: /s/ Christopher J. Scarlata
--------------------------------
Name: Christopher J. Scarlata
Title: President
EDISON SCHOOLS INC.,
as Seller and as Servicer
By: /s/ Adam Feild
--------------------------------
Name: Adam Feild
Title: Executive Vice President and
Chief Financial Officer
[SIGNATURE PAGE TO THE PURCHASE AND CONTRIBUTION AGREEMENT]
TABLE OF CONTENTS
Purchase and Contribution Agreement - Edison Schools Inc. and Edison Receivables Co. LLC
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