{"id":40996,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/credit-and-security-agreement-edison-receivables-co-llc-and.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"credit-and-security-agreement-edison-receivables-co-llc-and","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/finance\/credit-and-security-agreement-edison-receivables-co-llc-and.html","title":{"rendered":"Credit and Security Agreement – Edison Receivables Co. LLC and Merrill Lynch Mortgage Capital Inc."},"content":{"rendered":"\n================================================================================\n\n $35,000,000\n\n CREDIT AND SECURITY AGREEMENT\n\n dated as of October 31, 2001\n\n between\n\n EDISON RECEIVABLES COMPANY LLC,\n as Borrower\n\n and\n\n MERRILL LYNCH MORTGAGE CAPITAL INC.,\n as Lender\n\n================================================================================\n\n\n CREDIT AND SECURITY AGREEMENT, dated as of October 31, 2001 (as\nmodified, supplemented or amended from time to time, the \"Agreement\"), between\nEDISON RECEIVABLES COMPANY LLC, a Delaware limited liability company (together\nwith its successors, the \"Borrower\") and MERRILL LYNCH MORTGAGE CAPITAL INC., a\nDelaware corporation (together with its successors and any Assignees, the\n\"Lender\").\n\n The Borrower has requested that the Lender make a loan to it in an\naggregate amount not to exceed $35,000,000 at any time outstanding, and the\nLender is prepared to make such a loan upon the terms and subject to the\nconditions hereof. Accordingly, the parties hereto agree as follows:\n\nSECTION 1. INTERPRETATION OF AGREEMENT AND NOTES.\n\n 1.1 Definitions. Except as the context shall otherwise require, the\nfollowing terms shall have the following meanings for all purposes of this\nAgreement:\n\n \"Administrative Services Agreement\" shall mean the Administrative\nServices Agreement, dated as of October 26, 2001, between Edison and the\nBorrower, as modified, supplemented or amended from time to time.\n\n \"Advance Rate\" shall mean at any time (i) if at such time the\naverage of the Dilution Ratios for the most recent three consecutive Monthly\nPeriods is less than or equal to 10%, 75% and (y) if at such time the average of\nthe Dilution Ratios for the most recent three consecutive Monthly Periods\nexceeds 10%, 75% minus the actual number of percentage points by which such\naverage of the Dilution Ratios exceeds 10%.\n\n \"Affiliate\" shall mean, with respect to a Person, any other Person,\nwhich directly or indirectly controls, is controlled by or is under common\ncontrol with, such Person. The term \"control\" means the possession, directly or\nindirectly, of the power to direct or cause the direction of the management and\npolicies of a Person, whether through the ownership of voting securities, by\ncontract or otherwise.\n\n \"Agreement\" shall have the meaning set forth in the first paragraph\nhereof.\n\n \"Arrangement Fee\" shall mean the fee shall mean the product of (i)\n2.00% and (ii) the Commitment in effect on the Initial Closing Date.\n\n \"Assignee\" shall have the meaning set forth in Section 7.1(b).\n\n \"Borrower\" shall have the meaning set forth in the first paragraph\nof this Agreement.\n\n \"Borrowing\" shall mean each increase in the principal amount of the\nLoan (including the initial funding thereof) in accordance with Sections 2.1 and\n2.2 hereof.\n\n \"Borrowing Base\" shall mean, as of any date of determination, an\namount equal to the sum of (i) the product of (x) the Advance Rate on such date\nand (y) the aggregate Outstanding Balance of all Eligible Receivables (as\nreduced by the Total Excess Concentration\n\n\nAmount) on such date and (ii) the amount on deposit in the Cash Collateral\nAccount on such date.\n\n \"Borrowing Base Report\" shall mean a report substantially in the\napplicable form of Exhibit D hereto.\n\n \"Borrowing Notice\" shall have the meaning set forth in Section\n2.2(a) hereof.\n\n \"Business Day\" shall mean any day other than a Saturday, Sunday,\npublic holiday under the Laws of the State of New York or any other day on which\nbanking institutions are authorized or obligated to close in the State of New\nYork.\n\n \"Cash Collateral Account\" shall mean the account established\npursuant to Section 6A hereof.\n\n \"Change of Control\" shall mean, with respect to Edison, (i) H.\nChristopher Whittle shall at any time cease to be the beneficial owner (within\nRule 13d-3 promulgated by the Securities and Exchange Commission under the\nExchange Act) of at least 45% of the issued and outstanding Class B common stock\nof Edison, (ii) any Person or group of Persons (within the meaning of Section 13\nor 14 of the Exchange Act) shall at any time be the \"beneficial owners\" (as\ndefined above) of more of the issued and outstanding Class B common stock of\nEdison than is beneficially owned by H. Christopher Whittle at such time, (iii)\nno Class B common stock of Edison is outstanding, or (iv) during any period of\n36 consecutive calendar months, individuals who were directors of Edison on the\nfirst day of such period (the applicable \"Incumbent Board\") shall cease to\nconstitute a majority of the board of directors of Edison for any reason other\nthan death or disability, provided that, for purposes of this clause (iv), any\nindividual becoming a director during any such period subsequent to the first\nday thereof whose election, or nomination for election, was approved by a vote\nof at least a majority of the directors then comprising the Incumbent Board for\nsuch period shall be considered as though such individual was a member of the\nIncumbent Board for such period.\n\n \"Closing Date\" shall have the meaning set forth in Section 2.2\nhereof.\n\n \"Code\" shall mean the Internal Revenue Code of 1986, as amended from\ntime to time and any successor thereto, and the regulations promulgated and\nrulings issued thereunder.\n\n \"Collateral\" shall have the meaning set forth in Section 12.1(a)\nhereof.\n\n \"Collections\" shall mean, for any Receivable as of any date, (i) the\nsum of all amounts, whether in the form of wire transfer, cash, checks, drafts,\nor other instruments, received by the Servicer or the Borrower or in a Permitted\nLockbox or Lockbox Account in payment of, or applied to, any amount owed by any\nObligor on account of such Receivable (including but not limited to all amounts\nreceived on account of any Defaulted Receivable) on or before such date,\nincluding, without limitation, all amounts received on account of such\nReceivable and all other fees and charges, (ii) cash Proceeds of Related\nSecurity with respect to such Receivable and (iii) all Deemed Collections.\n\n\n 2\n\n\n \"Commitment\" shall mean the obligation of the Lender to make the\nLoan in an aggregate amount at any one time outstanding up to but not exceeding\n$35,000,000.\n\n \"Commitment Fee\" shall mean the fee payable on the unused portion of\nthe Commitment pursuant to Section 2.6 hereof.\n\n \"Contract\" shall mean a binding agreement between Edison and an\nObligor entered into in the ordinary course of Edison's business in a form\nconsistent with past practices (with such changes as business circumstances and\nprudent business judgment dictate), and\/or any and all instruments, agreements,\ninvoices or other writings, which, in either case, give rise to an account\nreceivable arising from the provision of services in the ordinary course of\nEdison's business.\n\n \"Corporate Base Rate\" shall mean, for any portion of the Loan funded\nby reference to the Corporate Base Rate, a rate per annum equal to the higher of\n(i) the prime rate published from time to time in the Wall Street Journal as in\neffect plus 1.00% and (ii) (x) the rate equal to the weighted average of the\nrates on overnight Federal funds transactions with members of the Federal\nReserve System arranged by Federal funds brokers, as published for such day (or,\nif such day is not a Business Day, for the next preceding Business Day) by the\nFederal Reserve Bank of New York, or, if such rate is not so published for any\nday that is a Business Day, the average of the quotations for such day for such\ntransactions received by the Lender from three Federal funds brokers of\nrecognized standing selected by it, plus (y) 1.50%; each change in the Corporate\nBase Rate being effective from and including the date such change is published.\n\n \"Credit and Collection Policy\" shall mean the Servicer's credit,\ncollection, enforcement and other policies and practices relating to the\nContracts and Receivables existing on the date hereof and as set forth on\nExhibit D the Purchase Agreement, as the same may be modified from time to time\nin compliance with Section 9.12 hereof.\n\n \"Debt\" of a Person shall mean, without duplication, such Person's\n(i) indebtedness for borrowed money or for the deferred purchase price of\nproperty or services, (ii) obligations as lessee under leases which shall have\nbeen or should be, in accordance with GAAP, recorded as capital leases, (iii)\nobligations, whether or not assumed, which are secured by Liens or payable out\nof the proceeds or production from property now or hereafter acquired by such\nPerson, (iv) obligations which are evidenced by notes, acceptances or other\ninstruments, (v) contingent or non-contingent obligations to make loans or\nadvances to any other Person or to reimburse any Person in respect of amounts\npaid or to be paid under a letter of credit or similar instrument, (vi)\nGuarantees of Debt of others, and (vii) liabilities in respect of unfunded\nvested benefits under plans covered by Title IV of ERISA.\n\n \"Deemed Collection\" with respect to any Receivable shall mean, on\nany day, without duplication, (i) the amount of any Dilution with respect\nthereto and (ii) the Outstanding Balance thereof if such Receivable was\nidentified as an \"Eligible Receivable\" and is not on such day, an Eligible\nReceivable, and (iii) the Outstanding Balance thereof if repurchased by the\nOriginator pursuant to the Purchase Agreement.\n\n\n 3\n\n\n \"Default\" shall mean any event or condition that would become an\nEvent of Default after notice or passage of time or both.\n\n \"Default Rate\" shall mean, at any time, the Corporate Base Rate at\nsuch time plus 2% per annum or the Eurodollar Rate at such time at such time\nplus 2% per annum, as applicable.\n\n \"Default Ratio\" shall mean, for any Monthly Period (as calculated in\nthe Monthly Report required to be delivered in the month following such Monthly\nPeriod), the ratio (expressed as a percentage) calculated as of the last day of\nsuch Monthly Period of (i) the aggregate Outstanding Balance of all Defaulted\nReceivables as of the last day of such Monthly Period to (ii) the aggregate\nOutstanding Balance of all Receivables as of the last day of such Monthly\nPeriod.\n\n \"Defaulted Receivable\" shall mean a Receivable (i) in respect of\nwhich the Obligor is not entitled to any further extensions of credit, by reason\nof any default or nonperformance by such Obligor, under the terms of the Credit\nand Collection Policy, (ii) which is identified as uncollectible by the Servicer\nor which, in accordance with the Credit and Collection Policy, should be written\noff the Borrower's books as uncollectible, (iii) in respect of which an Event of\nBankruptcy has occurred and is continuing with respect to the related Obligor or\n(iv) that is outstanding more than 120 days from its due date.\n\n \"Dilution\" shall mean any credit allowance, cancellation, cash\ndiscount, deduction, claim, offset, set-off, rebate, charge back, and any other\nallowance, adjustment, forgiveness, or deduction (including, without limitation,\nany special or other discounts or any reconciliation) that is given to an\nObligor in accordance with the Credit and Collection Policy.\n\n \"Dilution Ratio\" shall mean, for any Monthly Period (as calculated\nin the Monthly Report required to be delivered in the month following such\nMonthly Period), the ratio (expressed as a percentage) of (i) the aggregate\nDilution of all Receivables for such Monthly Period to (ii) the aggregate\nOutstanding Balance of all Receivables as of the first day of such Monthly\nPeriod.\n\n \"Dollars\" or \"$\" shall mean the lawful currency of the United States\nof America.\n\n \"Edison\" shall mean Edison Schools, Inc., a Delaware corporation,\nand its successors and assigns.\n\n \"Eligible Receivable\" shall mean, at any time, any Receivable:\n\n (a) which complies with all applicable Laws and other legal\nrequirements, whether federal, state or local;\n\n (b) which constitutes an \"account\" or \"general intangible\" as\ndefined in the UCC as in effect in the State of New York and the jurisdiction\nwhose Law governs the perfection of the Lender's security interest therein, and\nis not evidenced by an \"instrument\", as defined in the UCC as so in effect;\n\n\n 4\n\n\n (c) which was originated in connection with the rendering of\nservices by Edison in the ordinary course of Edison's business to an Obligor who\nwas approved by Edison in accordance with its Credit and Collection Policy, and\nwhich Obligor is not an Affiliate of Edison or the Lender;\n\n (d) which (i) is assignable under the terms of the applicable\nContract or otherwise, without any consent of or notice to the related Obligor\nor any other Person and (ii) arises from a Contract that does not contain any\nprovision that restricts the ability of the Lender to exercise its rights under\nthis Agreement, including, without limitation, its right to review the Contract;\n\n (e) which is genuine (i.e., is not fraudulent) and constitutes a\nlegal, valid and binding payment obligation of the related Obligor, enforceable\nin accordance with its terms and which arises under a Contract;\n\n (f) which provides for payment in Dollars by the related Obligor;\n\n (g) which directs payment thereof to be sent to a Permitted Lockbox\nor a Lockbox Account;\n\n (h) which is not a Defaulted Receivable;\n\n (i) which was not originated in or subject to the Laws of a\njurisdiction whose Laws would make such Receivable, the related Contract or the\npledge of such Receivable to Lender hereunder unlawful, invalid or\nunenforceable;\n\n (j) which is owned solely by the Borrower free and clear of all\nLiens, except for Liens of the type described in clauses (a) and (b) of the\ndefinition of Permitted Liens, and in which the Lender will have a valid first\npriority perfected security interest;\n\n (k) which has been invoiced and by its terms requires payment in\nfull in respect thereof to be made no later than 30 days after the date of the\noriginal invoice with respect thereto, except in the case of a Quarterly Bill\nReceivable, in which case the terms of such Quarterly Bill Receivable require\npayment in full in respect thereof to be made no later than 30 days after the\nend of the applicable three month billing period specified in the related\nContract;\n\n (l) which has an Obligor which is domiciled in a state (including\nthe District of Columbia) of the United States of America;\n\n (m) which has an Obligor who is not in default in any material\nrespect under the terms of the Contract, if any, from which such Receivable\narose;\n\n (n) which is not a note receivable;\n\n (o) which is not an obligation of the United States government or\nany agency, instrumentality or political subdivision thereof;\n\n\n 5\n\n\n (p) which has terms which have not been modified, extended or\nrenegotiated since the provision of service to an Obligor in any way not\nprovided for in this Agreement or in the Credit and Collection Policy;\n\n (q) the payment of which (or of any portion of which) has not been\nsubordinated or deferred in accordance with the terms of the related Management\nContract; provided that the unexercised right in any Management Contract between\nEdison and a charter school Obligor to subordinate or defer the payment of\nEdison's management fee thereunder to the payment of certain agreed upon costs\nof such Obligor under such Contract and to certain operating expenses of Edison\nunder such Contract shall not, by itself, cause such Receivable to fail to\nqualify as an Eligible Receivable;\n\n (r) the payment of which (or of any portion of which) has not been\nsubordinated or deferred in accordance with the terms of any related Contract\n(other than the related Management Contract which is the subject of preceding\nclause (q)); provided that the unexercised right in any such Contract to cause\nthe subordination or deferral of any such payment shall not, by itself, cause\nsuch Receivable to fail to qualify as an Eligible Receivable;\n\n (s) which arises under a Contract under which the related Obligor is\nin compliance in all respects with all applicable insurance requirements set\nforth in such Contract;\n\n (t) which arises under a Contract with respect to which neither\nEdison nor the Obligor thereunder has delivered a written notice of its intent\nto terminate such Contract or a notice of a material breach or default under\nsuch Contract; and\n\n (u) which has not been disqualified by the Lender for reasonable\ncause, as evidenced by prior written notice thereof to the Borrower and the\nServicer; it being understood and agreed that reasonable cause shall include,\nwithout limitation, a determination by the Lender, in the exercise of its\nreasonable judgment, that the Contract under which such Receivable arose\nadversely affects the Lender's ability to collect such Receivable or adversely\naffects the Lender's ability to determine the collectibility of such Receivable\nor the timing of any payment with respect thereto or the Outstanding Balance\nthereof.\n\n \"ERISA\" shall mean the Employee Retirement Income Security Act of\n1974, as amended from time to time, and any successor thereto, and the\nregulations promulgated and rulings issued thereunder.\n\n \"ERISA Affiliate\" shall mean, with respect to any Person, any Person\nwhich is a member of any group of organizations (i) described in Section 414(b)\nor (c) of the Code of which such Person is a member, or (ii) solely for purposes\nof potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11)\nof the Code and the Lien created under Section 302(f) of ERISA and Section\n412(n) of the Code, described in Section 414(m) or (o) of the Code of which such\nPerson is a member.\n\n \"Eurocurrency Liabilities\" shall have the meaning assigned to that\nterm in Regulation D of the Board of Governors of the Federal Reserve System, as\nin effect from time to time.\n\n\n 6\n\n\n \"Eurodollar Rate\" shall mean, with respect to any Tranche funded by\nreference to the Eurodollar Rate and the related LIBOR Period, a rate per annum\ndetermined by the Lender equal to the sum of (a) 3.50% and (b) the quotient\n(expressed as a percentage and rounded upwards, if necessary, to the nearest\n1\/16 of 1%) obtained by dividing (i) LIBOR for such LIBOR Period by (ii) 100%\nminus the LIBOR Reserve Percentage, if any, for such LIBOR Period.\n\n \"Event of Bankruptcy\" shall mean, for any Person:\n\n (a) that such Person shall fail generally to, or admit in writing\nits inability to, pay its debts as they become due; or\n\n (b) a proceeding shall have been instituted and remains unstayed or\nundismissed for a period of 60 days in a court having jurisdiction in the\npremises seeking a decree or order for relief in respect of such Person in an\ninvoluntary case under any applicable bankruptcy, insolvency or other similar\nLaw now or hereafter in effect, or for the appointment of a receiver,\nliquidator, assignee, trustee, custodian, sequestrator, conservator or other\nsimilar official of such Person or for any substantial part of its property, or\nfor the winding-up or liquidation of its affairs; or\n\n (c) the commencement by such Person of a voluntary case under any\napplicable bankruptcy, insolvency or other similar Law now or hereafter in\neffect, or such Person's consent to the entry of an order for relief in an\ninvoluntary case under any such Law, or consent to the appointment of or taking\npossession by a receiver, liquidator, assignee, trustee, custodian,\nsequestrator, conservator or other similar official of such Person or for any\nsubstantial part of its property, or any general assignment for the benefit of\ncreditors; or\n\n (d) such Person or any Subsidiary of such Person shall take any\ncorporate action in furtherance of any of the actions set forth in the preceding\nclause (a), (b) or (c).\n\n \"Event of Default\" shall have the meaning assigned thereto in\nSection 10.1 hereof.\n\n \"Excess Concentration Amount Credit\" shall mean, as of any date of\ndetermination, the sum of all amounts determined as follows with respect to each\nof the Four Largest Obligors, if any, whose Outstanding Balance of Eligible\nReceivables on such date exceeds the amount described in clause (ii) of the\ndefinition of Single Obligor Excess Concentration Amount on such date, the\nproduct of (i) the Group Excess Concentration Amount on such date and (ii) a\nfraction, the numerator of which is the aggregate Outstanding Balance of\nEligible Receivables for such Obligor on such date and the denominator of which\nis the aggregate Outstanding Balance of all Eligible Receivables for the Four\nLargest Obligors on such date.\n\n \"Exchange Act\" shall mean the Securities Exchange Act of 1934, as\namended from time to time.\n\n \"Expiration Date\" shall mean the earliest of (i) October 30, 2002,\nunless extended from time to time, by an agreement in writing between the\nBorrower and the Lender and (ii) the\n\n\n 7\n\n\ndate on which the Lender delivers a Notice of Termination pursuant to Section\n10.1 hereof or an Event of Default described in Section 10.1(h) hereof occurs.\n\n \"Facility Documents\" shall mean this Agreement, the Purchase\nAgreement, the Note(s), the Lockbox Agreement(s) and all other agreements,\ndocuments and instruments delivered pursuant hereto or thereto or in connection\ntherewith or herewith.\n\n \"Four Largest Obligors\" shall mean, as of any date of determination,\nthe four Obligors with the highest Outstanding Balances of Eligible Receivables\non such date.\n\n \"Funding Loss\" shall have the meaning set forth in Section 11.2\nhereof.\n\n \"GAAP\" shall mean generally accepted accounting principles in the\nUnited States of America, applied on a consistent basis and applied to both\nclassification of items and amounts, and shall include, without limitation, the\nofficial interpretations thereof by the Financial Accounting Standards Board,\nits predecessors and successors.\n\n \"Group Excess Concentration Amount\" shall mean, as of any date of\ndetermination, the amount, if any, by which (i) the aggregate Outstanding\nBalance of all Eligible Receivables for the Four Largest Obligors on such date\nexceeds (ii) the product of (x) 25% and (y) the aggregate Outstanding Balance of\nall Eligible Receivables on such date.\n\n \"Guarantee\" of or by any Person (the \"guarantor\") shall mean any\nobligation, contingent or otherwise, of the guarantor guaranteeing or having the\neconomic effect of guaranteeing any Debt or other obligation of any other Person\n(the \"primary obligor\") in any manner, whether directly or indirectly, and\nincluding any obligation of the guarantor, direct or indirect, (a) to purchase\nor pay (or advance or supply funds for the purchase or payment of) such Debt or\nother obligation or to purchase (or to advance or supply funds for the purchase\nof) any security for the payment thereof, (b) to purchase or lease property,\nsecurities or services for the purpose of assuring the owner of such Debt or\nother obligation of the payment thereof, (c) to maintain working capital, equity\ncapital or any other financial statement condition or liquidity of the primary\nobligor so as to enable the primary obligor to pay such Debt or other obligation\nor (d) as an account party in respect of any letter of credit or letter of\nguaranty issued to support such Debt or obligation; provided, that the term\nGuarantee shall not include endorsements for collection or deposit in the\nordinary course of business.\n\n \"Indemnified Parties\" shall have the meaning set forth in Section\n2.5(a)(i) hereof.\n\n \"Initial Closing Date\" shall have the meaning set forth in Section\n2.2 hereof.\n\n \"Interest\" shall mean, for each Interest Period, an amount equal to\nthe sum of the following amounts calculated for each day during such Interest\nPeriod (or portion thereof):\n\n IR x LA x 1\n ---\n 360\n\nWhere:\n\nIR = the applicable Interest Rate; and\n\n\n 8\n\n\nLA = the principal amount of the Loan, or if the Loan is allocated\n among more than one Tranche, the principal amount of each such\n Tranche\n\n \"Interest Period\" shall mean, (i) with respect to any Monthly\nPayment Date, the period from and including the preceding Monthly Payment Date\nto but excluding such Monthly Payment Date provided that in the case of the\ninitial Monthly Payment Date, the Interest Period shall mean the period from and\nincluding the Initial Closing Date to but excluding such Monthly Payment Date\nand (ii) with respect to any portion of the Loan repaid or prepaid on a Payment\nDate other than a Monthly Payment Date, the period from and including the\nMonthly Payment Date immediately preceding such Payment Date to but excluding\nsuch Payment Date.\n\n \"Interest Rate\" shall mean the Corporate Base Rate or the Eurodollar\nRate, as applicable, provided that if an Event of Default shall have occurred\nand be continuing, the Interest Rate shall, in the discretion of the Lender, be\nthe Default Rate.\n\n \"Investment\" in any Person shall mean any loan or advance to such\nPerson, any purchase or other acquisition or any capital stock or other\nownership or profit interest, warrants, rights, options, obligations or other\nsecurities of such Person, any capital contribution to such Person or any other\ninvestment in such Person\n\n \"Law\" shall mean any law (including common law), constitution,\nstatute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or\naward of any Official Body.\n\n \"Lender\" shall have the meaning set forth in the first paragraph of\nthis Agreement.\n\n \"LIBOR\" shall mean, with respect to any LIBOR Period, the rate per\nannum equal to the rate appearing at page 8695 of Knight-Ridder as LIBOR for the\nterm of such LIBOR Period as of 8:00 a.m., New York City Time, on the date two\nBusiness Days prior to the first day of such LIBOR Period, and if such rate\nshall not be so quoted, the average rate per annum at which three mutually\nacceptable banks are offered Dollar deposits at or about 10:00 a.m., New York\nCity time, on the date two Business Days prior to the first day of such LIBOR\nPeriod by prime banks in the interbank eurodollar market where the eurodollar\nand foreign currency exchange operations in respect of the Loan are then being\nconducted for delivery on such day for a period of thirty (30) days and in an\namount comparable to the amount of the Loan to be funded on the first day of\nsuch LIBOR Period or such other rate as agreed upon in writing by the Lender and\nthe Borrower.\n\n \"LIBOR Business Day\" shall mean any Business Day on which commercial\nbanks are open for settlements in Dollar deposits in New York and London.\n\n \"LIBOR Period\" shall mean, with respect to each Tranche funded by\nreference to the Eurodollar Rate, a 30-day, 60-day or 90-day period, as\napplicable, commencing on a Monthly Payment Date or the date on which such\nTranche is funded, as applicable; provided that the initial LIBOR Period for a\nTranche funded on a day other than a Monthly Payment Date shall end on the next\nsucceeding Monthly Payment Date and, for purposes of determining LIBOR for such\nLIBOR Period, shall be deemed to be a 30-day period.\n\n\n 9\n\n\n \"LIBOR Reserve Percentage\" shall mean, for any LIBOR Period relating\nto a Eurodollar Loan, the maximum reserve percentage, if any, applicable to the\nLender under Regulation D during such LIBOR Period (or if more than one\npercentage shall be applicable, the daily average of such percentages for those\ndays in such LIBOR Period during which any such percentage shall be applicable)\nfor determining the Lender's reserve requirement (including any marginal,\nsupplemental or emergency reserves) with respect to liabilities or assets having\na term comparable to such interest period consisting or included in the\ncomputation of Eurocurrency Liabilities (as defined in Regulation D of the Board\nof Governors of the Federal Reserve System). Without limiting the effect of the\nforegoing, but without duplicating the provisions of Section 2.5, the LIBOR\nReserve Percentage shall reflect any other reserves required to be maintained by\nthe Lender by reason of any change in any Law against (a) any category of\nliabilities which includes deposits by reference to which LIBOR is to be\ndetermined or (b) any category of extensions of credit or other assets which\ninclude LIBOR-based credits or assets.\n\n \"Lien\", in respect of the property of any Person, shall mean any\nownership interest of any other Person, any mortgage, deed of trust,\nhypothecation, pledge, lien, security interest, filing of any financing\nstatement, charge or other encumbrance or security arrangement of any nature\nwhatsoever, including, without limitation, any conditional sale or title\nretention arrangement, and any assignment, deposit arrangement, consignment or\nlease intended as, or having the effect of, security.\n\n \"Limited Liability Company Agreement\" shall mean the Amended and\nRestated Limited Liability Company Agreement of the Borrower dated as of October\n24, 2001, as modified, supplemented or amended from time to time.\n\n \"Loan\" shall mean the loan made by the Lender to the Borrower\npursuant to Section 2.1 and\/or 2.2 hereof.\n\n \"Lockbox Account\" shall mean a demand deposit account identified on\nExhibit F hereto maintained with a Permitted Lockbox Bank pursuant to a Lockbox\nAgreement for the purpose of depositing payments made by the Obligors or such\nother account as the Borrower, the Servicer and the Lender may agree upon from\ntime to time.\n\n \"Lockbox Agreement\" shall mean the agreement that governs the\noperation of a Permitted Lockbox and related Lockbox Account which is in\ncompliance with Sections 8.19 and 9.11 hereof and which is substantially in the\nform of Exhibit G hereto or otherwise in form and substance satisfactory to the\nLender.\n\n \"Management Contract\" shall mean the principal Contract (together\nwith all annexes, schedules and exhibits thereto) governing the provision of\nservices by Edison to the related Obligor.\n\n \"Maturity Date\" shall mean April 30, 2003 (unless extended from time\nto time, by an agreement in writing between the Borrower and the Lender).\n\n \"Monthly Payment Date\" shall mean the 15th day of each month\nbeginning in November 2001, provided that if any such 15th day is not a Business\nDay, then the next succeeding Business Day.\n\n\n 10\n\n\n \"Monthly Period\" shall mean a calendar month.\n\n \"Monthly Report\" shall have the meaning specified in Section 2.9\nhereof.\n\n \"Monthly Report Date\" shall mean the Business Day immediately\npreceding each Monthly Payment Date.\n\n \"Multiemployer Plan\" shall mean, with respect to any Person, a\n\"multiemployer plan\" as defined in Section 4001(a)(3) of ERISA which is or was\nat any time during the current year or the immediately preceding five years\ncontributed to by such Person or any ERISA Affiliate on behalf of its employees\nand which is covered by Title IV of ERISA.\n\n \"Note(s)\" shall have the meaning set forth in Section 2.2(c) hereof\nand shall include any subdivision of the Note issued in accordance with Section\n2.2(d).\n\n \"Notice of Termination\" shall have the meaning specified in Section\n10.1 hereof.\n\n \"Obligor\" shall mean, for any Receivable, each and every Person,\ncharter school, district school, state or local government or any agency or\ninstrumentality thereof who purchased services on credit under a Contract and\nwho is obligated to make payments to the Borrower or the Originator pursuant to\nsuch Contract.\n\n \"Office Lease\" shall mean the Agreement of Sublease, dated as of\nOctober 3, 2001, between Edison, as landlord and the Borrower, as tenant, as\nmodified, supplemented or amended from time to time.\n\n \"Official Body\" shall mean any government or political subdivision\nor any agency, authority, bureau, central bank, commission, department or\ninstrumentality of either, or any court, tribunal, grand jury or arbitrator, in\neach case whether foreign or domestic.\n\n \"Originator\" shall mean Edison in its capacity as seller under the\nPurchase Agreement, and its successors and assigns in such capacity.\n\n \"Outstanding Balance\" of any Receivable shall mean, at any time, the\nthen outstanding amount thereof (excluding, however, any and all amounts which\nthe Borrower or the Originator knows or has reason to believe will not be paid\nby the related Obligor directly to the Borrower or the Originator). The\noutstanding amount of any Receivable shall be reduced by all related Collections\non the date received or deemed received.\n\n \"Payment Date\" shall mean each Monthly Payment Date and any other\ndate on which principal of the Loan is repaid or prepaid.\n\n \"PBGC\" shall mean the Pension Benefit Guaranty Corporation and any\nentity succeeding to any or all of its functions under ERISA.\n\n \"Permitted Liens\" shall mean:\n\n (a) Liens created under this Agreement;\n\n\n 11\n\n\n (b) Liens securing taxes, assessments, governmental charges or\n levies not yet delinquent or the payment of which is being contested in\n good faith by appropriate proceedings diligently conducted and with\n respect to which adequate reserves have been established in accordance\n with GAAP and which do not, singly or in the aggregate, adversely affect\n in any material respect the Collateral or the Lender's interest therein;\n and\n\n (c) Liens arising by operation of law securing any amount not yet\n delinquent or the payment of which is being contested in good faith by\n appropriate proceedings diligently conducted and with respect to which\n adequate reserves have been established in accordance with GAAP and which\n do not, singly or the aggregate, adversely affect in any material respect\n the Collateral or the Lender's interest therein.\n\n \"Permitted Lockbox\" shall mean a post office box or other mailing\nlocation identified on Exhibit F hereto maintained by a Permitted Lockbox Bank\npursuant to a Lockbox Agreement for the purpose of receiving payments made by\nthe Obligors for subsequent deposit into a related Lockbox Account, or such\nother post office box or mailing location as the Lender, the Borrower and the\nServicer may agree upon from time to time.\n\n \"Permitted Lockbox Bank\" shall mean a bank identified on Exhibit F\nhereto or such other bank as the Servicer, the Borrower and the Lender may agree\nupon from time to time.\n\n \"Person\" shall mean an individual, corporation, limited liability\ncompany, partnership (general or limited), trust, business trust, unincorporated\nassociation, joint venture, joint-stock company, Official Body or any other\nentity of whatever nature.\n\n \"Plan\" shall mean, with respect to any Person, any employee benefit\nor other plan which is or was at any time during the current year or immediately\npreceding five years established or maintained by such Person or any ERISA\nAffiliate and which is covered by Title IV of ERISA, other than a Multiemployer\nPlan.\n\n \"Proceeds\" shall mean \"proceeds\" as defined in Section 9-102(a)(64)\nof the UCC as in effect in the State of New York and in the jurisdiction whose\nlaw governs the perfection of the Lender's interests therein.\n\n \"Purchase Agreement\" shall mean the Purchase and Contribution\nAgreement, dated as of October 31, 2001, among the Originator, the Borrower and\nthe Servicer, as modified, supplemented or amended from time to time.\n\n \"Quarterly Bill Receivable\" shall mean any Receivable which arises\nunder a Contract (in effect on the Initial Closing Date) which, as of the\nInitial Closing Date, contemplates the rendering of an invoice with respect to\nsuch Receivable on or about the last day of a successive three month period\nspecified in such Contract (and not at any other time during such three month\nperiod) and payment thereof by the related Obligor within 30 days thereafter.\n\n \"Receivable\" shall mean all indebtedness owed to the Originator by\nan Obligor (before giving effect to the sale thereof by the Originator to the\nBorrower pursuant to the Purchase Agreement) under a Contract for which\nindebtedness an invoice has been rendered, whether or not constituting an\naccount or a general intangible and whether or not evidenced by\n\n\n 12\n\n\nan instrument, whether now existing or hereafter arising, solely in connection\nwith the rendering of services by the Originator to an Obligor in the ordinary\ncourse of the Originator's business, all monies due or to become due under such\nContracts, and including the right to payment of any other obligations of such\nObligor with respect thereto.\n\n \"Records\" shall mean correspondence, memoranda, computer programs,\ntapes, discs, papers, books or other documents or transcribed information of any\ntype, whether expressed in ordinary or machine-readable language.\n\n \"Related Security\" shall mean with respect to any Receivable:\n\n (a) all of the Borrower's rights in, to and under the Contracts with\nrespect to such Receivable;\n\n (b) all security interests or liens and property subject thereto\nfrom time to time, if any, purporting to secure payment of such Receivable,\nwhether pursuant to the Contract related to such Receivable or otherwise,\ntogether with any and all financing statements signed by an Obligor describing\nany collateral securing such Receivable;\n\n (c) all guarantees, indemnities, letters of credit, insurance or\nother agreements or arrangements of any kind, if any, from time to time\nsupporting or securing payment of such Receivable, whether pursuant to the\nContract related to such Receivable or otherwise;\n\n (d) all Records relating to the Receivables or the related Contract\nor Obligor;\n\n (e) all of the Borrower's rights in, to and under the Purchase\nAgreement; and\n\n (f) all Proceeds of the foregoing.\n\n \"Responsible Officer,\" with respect to a Person, shall mean the\nChief Executive Officer, the President, the Treasurer, any Assistant Treasurer,\nany Vice President, Secretary or other authorized officer of such Person (but\nonly if the Lender has received prior written notice of the identity or title of\nsuch other authorized officer).\n\n \"Secured Obligations\" shall mean all obligations of the Borrower\nsecured under this Agreement including, without limitation, (a) all principal of\nand interest (including, without limitation, any interest which accrues after\nthe commencement of any case, proceeding or other action relating to the\nbankruptcy, insolvency or reorganization of the Borrower) on the Loan under, or\nany Note issued pursuant to, this Agreement, (b) all other fees and amounts\npayable by the Borrower hereunder or in connection herewith and (c) the Servicer\nFee.\n\n \"Securities Act\" shall mean the Securities Act of 1933, as amended\nfrom time to time.\n\n \"Security Interest\" shall mean the security interest and rights\ncreated pursuant to Section 12 hereof in the Collateral in favor of the Lender.\n\n\n 13\n\n\n \"Servicer\" shall mean Edison in its capacity as servicer under the\nPurchase Agreement, and its successors and assigns in such capacity.\n\n \"Servicer Default\" shall have the specified in Section 6.06 of the\nPurchase Agreement.\n\n \"Servicer Fee\" shall mean, as of any Monthly Payment Date, the\nproduct of (i) 1\/12 (ii) 1.00% per annum and (iii) the aggregate Outstanding\nBalance of Receivables pledged by the Borrower hereunder as of the last day of\nthe preceding Monthly Period.\n\n \"Single-Employer Plan\" shall mean a single-employer plan as defined\nin Section 4001(a)(15) of ERISA which is subject to the provisions of Title IV\nof ERISA.\n\n \"Single Obligor Excess Concentration Amount\" shall mean, as of any\ndate of determination, the sum of all amounts determined as follows for each\nObligor, the amount, if any, by which (i) the aggregate Outstanding Balance of\nEligible Receivables for such Obligor on such date exceeds (ii) the product of\n(x) 12.5% and (y) the aggregate Outstanding Balance of all Eligible Receivables\non such date minus the Group Excess Concentration Amount on such date; provided\nthat, with respect to any of the Four Largest Obligors whose aggregate\nOutstanding Balance of Eligible Receivables exceeds the amount described in\npreceding clause (ii), the aggregate Outstanding Balance of Eligible Receivables\nfor such Obligor shall, for purposes of preceding clause (i), be reduced by the\nExcess Concentration Amount Credit for such Obligor.\n\n \"Subsequent Closing Date\" shall have the meaning set forth in\nSection 2.2 hereof.\n\n \"Subsidiary\" shall mean, with respect to any Person, any\ncorporation, limited liability company or other entity of which securities or\nother ownership interests having ordinary voting power to elect a majority of\nthe board of directors or other persons performing similar functions are at the\ntime directly or indirectly owned by such Person; provided, that no entity shall\nbe considered a Subsidiary of Edison if Edison obtains such voting power solely\nby reason of exercising its rights as a secured party in collateral that\nconsists of such entity's voting stock.\n\n \"Total Excess Concentration Amount\" shall mean, as of any date of\ndetermination, the sum of (i) the Single Obligor Excess Concentration Amount on\nsuch date and (ii) the Group Excess Concentration Amount on such date.\n\n \"Tranche\" shall have the meaning specified in Section 2.3 hereof.\n\n \"Tranche Selection Notice\" shall have the meaning specified in\nSection 2.3 hereof.\n\n \"UCC\" shall mean, with respect to any jurisdiction, the Uniform\nCommercial Code, or any successor statute, or any comparable law, as the same\nmay from time to time be amended, supplemented or otherwise modified and in\neffect in such jurisdiction.\n\n 1.2 Interpretation and Construction. Unless the context of this Agreement\notherwise clearly requires, references to the plural include the singular, the\nsingular the plural and the part the whole. References in this Agreement to\n\"determination\" by the Lender shall be conclusive\n\n\n 14\n\n\nabsent manifest error and include good faith estimates by the Lender (in the\ncase of quantitative determinations), and the good faith belief by the Lender\n(in the case of qualitative determinations). The words \"hereof\", \"herein\",\n\"hereunder\" and similar terms in this Agreement refer to this Agreement as a\nwhole and not to any particular provision of this Agreement. Unless otherwise\nstated in this Agreement, in the computation of a period of time from a\nspecified date to a later specified date, the word \"from\" means \"from and\nincluding\" and the words \"to\" and \"until\" each means \"to but excluding.\" The\nsection and other headings contained in this Agreement are for reference\npurposes only and shall not control or affect the construction of this Agreement\nor the interpretation hereof in any respect. Section, subsection, exhibit and\nschedule references are to this Agreement unless otherwise specified. As used in\nthis Agreement, the masculine, feminine or neuter gender shall each be deemed to\ninclude the others whenever the context so indicates. All accounting terms not\nspecifically defined herein shall be construed in accordance with GAAP. Terms\nnot otherwise defined herein which are defined in the UCC as in effect in the\nState of New York shall have the respective meanings ascribed to such terms\ntherein unless the context otherwise clearly requires. Any provision in this\nAgreement referring to action to be taken by any Person, or that such Person is\nprohibited from taking, shall be applicable whether such action is taken\ndirectly or indirectly by such Person. All references to Laws, agreements and\nother documents shall refer to such Laws, agreements and documents as the same\nshall have been amended from time to time.\n\n 1.3 Governing Law; Submission to Jurisdiction. THIS AGREEMENT AND THE\nNOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE\nOF NEW YORK.\n\nSECTION 2. COMMITMENT.\n\n 2.1 The Loan. (a) The Lender agrees, on the terms of this Agreement, to\nmake and maintain a loan to the Borrower, the principal balance of which may be\nincreased and decreased in accordance with the terms hereof, during the period\nfrom and including the Initial Closing Date to and excluding the Expiration\nDate, but not to exceed at any time the lesser of (x) the Commitment at such\ntime and (y) the Borrowing Base at such time. The Loan shall (unless prepaid or\naccelerated) (i) mature on the Maturity Date and (ii) accrue Interest payable on\neach Payment Date. In addition, if any Funding Loss is incurred by the Lender\nbecause the Loan (or any portion thereof) is repaid on a date other than a\nMonthly Payment Date, the Borrower shall be obligated to pay such Funding Loss\nin accordance with Section 11.2. The first payment of interest with respect to\nthe Loan shall be made on the Monthly Payment Date after the date on which the\nLoan was made. The Loan shall be subject to mandatory prepayment as set forth in\nSection 6.2 hereof and voluntary prepayment as set forth in Section 6.3 hereof.\nAll sums payable by the Borrower under this Agreement and the Loan shall be paid\nwithout counterclaim, set-off, deduction or defense and without abatement,\nsuspension, deferment, diminution or reduction.\n\n\n 15\n\n\n (b) Payments of interest on and principal of the Loan may be\nsatisfied on each Payment Date from Collections. Notwithstanding the foregoing,\nthe Borrower shall be unconditionally and irrevocably obligated to make any\npayments due on the Loan in the event that Collections (if any) are insufficient\nto pay same in full when due.\n\n (c) Upon the occurrence and continuation of an Event of Default, the\nLender may, in its sole discretion, at any time or from time to time (including\nfollowing the Maturity Date), by written notice to the Borrower, declare the\nInterest Rates applicable to the Loan to be equal to the Default Rate.\n\n 2.2 Borrowings; Closings. (a) The initial Borrowing will occur on the date\non which each of the conditions precedent set forth in Sections 4 and 5 has been\nsatisfied (the \"Initial Closing Date\"). The Borrower will give notice to the\nLender substantially in the form of Exhibit B hereto of each requested Borrowing\n(including the initial Borrowing) (a \"Borrowing Notice\"), which notice shall be\nirrevocable and effective only upon receipt by the Lender, and which shall\nspecify the amount of such Borrowing, which amount, unless otherwise agreed to\nby the Lender, shall not be less than $1,000,000. Additional Borrowings may\noccur on each date thereafter specified in the applicable Borrowing Notice so\nlong as on such date each of the conditions precedent in Section 5 is satisfied,\nbut, in no event shall the Borrower deliver more than one (1) Borrowing Notice\nin any week (each such subsequent date on which a Borrowing occurs, a\n\"Subsequent Closing Date;\" the Subsequent Closing Dates, together with the\nInitial Closing Date, the \"Closing Dates;\" and, either the Initial Closing Date\nor a Subsequent Closing Date, a \"Closing Date\").\n\n (b) The Borrower shall deliver to the Lender a Borrowing Notice not\nlater than 10:00 A.M. (New York City time) (x) at least one Business Day before\neach Borrowing if such Borrowing is to be funded based on the Corporate Base\nRate and (y) at least three LIBOR Business Days before each Borrowing if such\nBorrowing or any portion thereof is to be funded based on a Eurodollar Rate,\nspecifying:\n\n (i) the date of such Borrowing;\n\n (ii) the principal amount of such Borrowing; and\n\n (iii) the requested Tranches and LIBOR Periods, if applicable.\n\n (c) The Loan shall be evidenced by a single promissory note (the\n\"Note\") of the Borrower in substantially the form of Exhibit A hereto, dated the\ndate of the delivery of such Note to the Lender under this Agreement, payable to\nthe Lender in a maximum principal amount equal to the amount of the Commitment\nand otherwise duly completed. The date and amount of each increase in the\nprincipal amount of the Loan and each payment made on account of the principal\nthereof, shall be recorded by the Lender on its books and, prior to any transfer\nof the Note, endorsed by the Lender on the schedule attached to the Note or any\ncontinuation thereof.\n\n (d) The Lender shall be entitled to have the Note subdivided, by\nexchange for Notes of lesser denominations or otherwise in connection with an\nassignment of all or any portion of the Loan and the Note pursuant to the terms\nof this Agreement; provided that in no event may the Note be subdivided into\ndenominations of less than $5,000,000.\n\n\n 16\n\n\n (e) The proceeds of each Borrowing shall be sent by wire transfer of\nimmediately available funds to the Borrower in accordance with the following\nwire instructions:\n\n Bank: Comerica Bank, Detroit, Michigan\n ABA No.: 072-000-096\n Account No.: 185-132-3103\n Ref.: MLMCI Loan Proceeds\n\n 2.3 Selection of LIBOR Periods; Interest Rates. (a) Prior to the\noccurrence of the Expiration Date, the Borrower may, in consultation with the\nLender, request (i) that a portion of the Loan be funded based on a Eurodollar\nRate or Rates or the Corporate Base Rate, and (ii) to the extent any portion of\nthe Loan is funded based on a Eurodollar Rate, that a specified portion or\nportions of the Loan be allocated to a selected LIBOR Period or Periods. Each\nportion of the Loan allocated to a different basis for funding and a different\nLIBOR Period shall be herein called a \"Tranche\". The portion of the Loan, if\nany, funded at any time based on the Corporate Base Rate shall, in the\naggregate, constitute a single Tranche. Each Tranche shall be in an amount of at\nleast $1,000,000 and no more than five (5) Tranches may be outstanding at any\ntime.\n\n (b) The Borrower shall give notice of a requested LIBOR Period or\nPeriods and Tranche or Tranches based on the Eurodollar Rate at least three\nLIBOR Business Days prior to the expiration of any then existing LIBOR Period\n(or prior to converting a portion of the Loan then funded based on the Corporate\nBase Rate into a Tranche funded based on the Eurodollar Rate) (each such notice\nshall be in the form of Exhibit C hereto, and shall be referred to as a \"Tranche\nSelection Notice\"); provided, however, that the Lender may select, in its sole\ndiscretion, any such LIBOR Period if (i) the Borrower fails to provide such\nnotice on a timely basis or (ii) the Lender determines, in its sole discretion,\nthat the LIBOR Period requested by the Borrower is unavailable, uneconomical or\nimpracticable; and provided further, that the Lender may determine, its sole\ndiscretion, to fund the Loan or any portion thereof, on the basis of the\nCorporate Base Rate if it determines, in its sole discretion, that (A) the\nEurodollar Rate cannot be determined for any reason, including the\nunavailability of rate bids or of the London interbank market for U.S. Dollar\nborrowings, (B) it shall become unlawful for the Lender to obtain funds in the\nLondon interbank market to fund or maintain the Loan or any portion thereof or\n(C) the Lender advises the Borrower that the Eurodollar Rate will not adequately\nand fairly reflect the cost to the Lender of funding such Loan or portion\nthereof.\n\n (c) The Lender shall determine the Interest Rate (i) for each\nTranche to be funded based on the Eurodollar Rate on the second LIBOR Business\nDay before the first day of the related LIBOR Period and (ii) for the portion of\nthe Loan funded based on the Corporate Base Rate, on each Business Day. The\nLender shall promptly notify the Borrower and the Servicer of the Interest Rates\ndetermined for each Tranche funded based on the Eurodollar Rate.\n\n (d) No later than the fourth Business Day before each Monthly\nPayment Date, the Lender will provide the Borrower and the Servicer with an\ninvoice showing the Interest, the Commitment Fee and the other Secured\nObligations due (or estimated to the due) pursuant to this Agreement on the next\nMonthly Payment Date.\n\n\n 17\n\n\n 2.4 Security Interests. The Loan (and all other Secured Obligations) are\nsecured pursuant to this Agreement (including Section 12 hereof).\n\n 2.5 Indemnity for Taxes, Reserves and Expenses.\n\n (a) If after the date hereof, the adoption of any Law or bank\nregulatory guideline or any amendment or change in the interpretation of any\nexisting or future Law or bank regulatory guideline by any Official Body charged\nwith the administration, interpretation or application thereof, or the\ncompliance with any directive of any Official Body (in the case of any bank\nregulatory guideline, whether or not having the force of Law):\n\n (i) shall subject the Lendor or any permitted assigns (collectively,\n the \"Indemnified Parties\") to any tax of any kind whatsoever with respect\n to the Facility Documents, the Collateral or payments of amounts due\n hereunder (excluding income taxes) or change the basis of taxation of\n payments to any Indemnified Party in respect thereof (excluding income\n taxes);\n\n (ii) shall impose, modify or hold applicable any reserve, special\n deposit, compulsory loan or similar requirement against assets held by,\n deposits or other liabilities in or for the account of, advances, or other\n extensions of credit by, or any other acquisition of funds by, any office\n of any Indemnified Party which is not otherwise included in the\n determination of the Eurodollar Rate hereunder;\n\n (iii) shall impose on any Indemnified Party any other condition;\n\nand the result of any of the foregoing is to increase the cost to such\nIndemnified Party, by an amount which such Indemnified Party deems to be\nmaterial, of entering, continuing or maintaining any Facility Document, the\nCollateral or the Loan or to reduce any amount due or owing hereunder in respect\nthereof, such Indemnified Party shall notify the Borrower. The Borrower shall\npromptly pay such Indemnified Party such additional amount or amounts as\ncalculated by such Indemnified Party in good faith as will compensate such\nIndemnified Party for such increased cost or reduced amount receivable; provided\nthat such compensation will be limited to (A) the period commencing not more\nthan 120 days prior to the date of such notification or (B) any longer period of\nretroactive effect of any such adoption, change or requirement for compliance if\nsuch notification is given 120 days or less after such adoption, change or\nrequirement for compliance.\n\n (b) If any Indemnified Party shall have determined that, after the\ndate hereof, the adoption of any applicable Law or bank regulatory guideline\nregarding capital adequacy, or any change therein, or any change in the\ninterpretation thereof by any Official Body, or any directive regarding capital\nadequacy (in the case of any bank regulatory guideline, whether or not having\nthe force of Law) of any such Official Body, shall have the effect of reducing\nthe rate of return on capital of such Indemnified Party (or its parent\ncorporation) as a consequence of its obligations hereunder to a level below that\nwhich such Indemnified Party or such corporation could have achieved but for\nsuch adoption, change or compliance (taking into consideration such Indemnified\nParty's or such corporation's policies with respect to capital adequacy) by an\namount deemed by such Indemnified Party or such corporation to be material, then\nfrom time to\n\n\n 18\n\n\ntime, the Borrower shall promptly pay to such Indemnified Party or such\ncorporation such additional amount or amounts as will compensate for such\nreduction; provided that such compensation will be limited to (A) the period\ncommencing not more than 120 days prior to the date of notice to the Borrower or\n(B) any longer period of retroactive effect of any such adoption, change or\nrequirement for compliance if such notice is given 120 days or less after such\nadoption, change or requirement for compliance.\n\n (c) If any Indemnified Party becomes entitled to claim any\nadditional amounts pursuant to this Section, it shall promptly notify the\nBorrower of the event by reason of which it has become so entitled. A\ncertificate as to any additional amounts payable pursuant to this Section\nsubmitted by such Indemnified Party to the Borrower shall be conclusive in the\nabsence of manifest error.\n\n 2.6 Commitment Fee. The Borrower agrees to pay a monthly fee in arrears on\neach Monthly Payment Date and on the Maturity Date or final Payment Date equal\nto (a) the average daily unused Commitment during the related Interest Period\n(or portion thereof) times (b) 1\/12 of .50%.\n\n 2.7 [Reserved].\n\n 2.8 Termination of Commitment. The Lender's commitment to fund additional\nBorrowings hereunder shall terminate on the Expiration Date.\n\n 2.9 Reports. (a) On or prior to the Monthly Report Date in each month, the\nBorrower shall prepare and forward, or cause the Servicer to prepare and\nforward, to the Lender a report in substantially the form of Exhibit E hereto\n(the \"Monthly Report\"), containing, among other things, (i) information relating\nto the Receivables (including portfolio performance ratios) as of the close of\nbusiness on the last day of the immediately preceding Monthly Period and (ii)\ninformation similar to that contained in the applicable Borrowing Base Report,\nas of the second Business Day before such Monthly Report Date. The Borrower\nshall also prepare and forward, to the Lender the applicable Borrowing Base\nReport at the time specified in Section 5.2 and at any other time as the Lender\nmay reasonably request.\n\n (b) As long as any portion of the Loan is unpaid, on or before the\nthird Business Day in each month, the Borrower shall prepare and forward, or\ncause the Servicer to prepare and forward, to the Lender the applicable\nBorrowing Base Report as of the last day of the immediately preceding Monthly\nPeriod.\n\n (c) The Borrower shall, or shall cause the Servicer to, furnish to\nthe Lender at any time and from time to time such other or further information\nin respect of the Receivables or the Obligors as the Lender may reasonably\nrequest.\n\nSECTION 3. GENERAL REPRESENTATIONS AND WARRANTIES OF THE BORROWER.\n\n The Borrower represents and warrants to the Lender on and as of each\nClosing Date and on and as of the date of delivery of each Tranche Selection\nNotice as follows:\n\n\n 19\n\n\n 3.1 Existence and Power. The Borrower is a limited liability company duly\norganized, validly existing and in good standing under the laws of the State of\nDelaware, and has all limited liability company powers and all material\ngovernmental licenses, authorizations, consents and approvals required to carry\non its business as now conducted and to fulfill its obligations under this\nAgreement and the other Facility Documents to which it is a party.\n\n 3.2 Corporate and Governmental Authorization; No Contravention. The\nexecution, delivery and performance by the Borrower of this Agreement and the\nother Facility Documents to which it is a party are within the Borrower's\npowers, have been duly authorized by all necessary limited liability company\naction, require no action by or in respect of, or filing with, any governmental\nbody, agency or official and do not contravene, or constitute a default under,\nany provision of applicable law or regulation or of the certificate of formation\nor Limited Liability Company Agreement of the Borrower or of any agreement,\njudgment, injunction, order, decree or other instrument binding upon the\nBorrower or result in the creation or imposition of any Lien on any asset of the\nBorrower or any of its Subsidiaries (except Permitted Liens).\n\n 3.3 Binding Effect. This Agreement and each of the other Facility\nDocuments to which it is a party constitutes a valid and binding agreement of\nthe Borrower. This Agreement will vest absolutely and unconditionally in the\nLender a valid security interest in the Receivables purported to be assigned\nhereby, subject to no Liens whatsoever (except as provided pursuant to the\nFacility Documents). Upon the filing of the necessary financing statements under\nthe UCC as in effect in the jurisdiction whose Law governs the perfection of the\nLender's security interests in the Receivables, the Lender's security interest\nin the Receivables will be perfected under Article Nine of such UCC, prior to\nand enforceable against all creditors of and purchasers from the Borrower and\nall other Persons whatsoever (other than the Lender and its successors and\nassigns).\n\n 3.4 Litigation. There is no action, suit or proceeding pending against, or\nto the knowledge of the Borrower, threatened against or affecting the Borrower\nbefore any Official Body in which there is a material likelihood of an adverse\ndecision which would reasonably be expected to materially adversely affect the\nbusiness, financial position or results of operations of the Borrower, the\nability of the Borrower to fulfill it obligations under this Agreement or any\nother Facility Document to which its is a party or which in any manner draws\ninto question the validity of this Agreement or any other Facility Document to\nwhich the Borrower is a party.\n\n 3.5 Investment Company. The Borrower is not an \"investment company\" within\nthe meaning of the Investment Company Act of 1940, as amended.\n\n 3.6 Events of Default or Default. No event has occurred, and no condition\nexists, that constitutes a Default or an Event of Default.\n\n 3.7 Use of Proceeds. The proceeds of each Borrowing have been used by the\nBorrower to acquire Receivables from the Originator pursuant to the Purchase\nAgreement and no proceeds of any Borrowing have been used, directly or\nindirectly, for the purpose, whether immediate, incidental or ultimate, of\nbuying or carrying any \"margin stock\" within the meaning of Regulation U of the\nBoard of Governors of the Federal Reserve System.\n\n\n 20\n\n\n 3.8 Accurate and Complete Disclosure. All information, exhibits, financial\nstatements, or other reports or documents furnished or to be furnished at any\ntime by or on behalf of the Borrower to the Lender in connection with this\nAgreement or any other Facility Document is and will be accurate in all material\nrespects as of the date so furnished, and no such report or document contains,\nor will contain, as of the date so furnished, any untrue statement of a material\nfact or omits to state, or will omit to state, as of the date so furnished, a\nmaterial fact necessary in order to make the statements contained therein, in\nthe light of the circumstances under which they were made, not misleading.\n\n 3.9 Taxes. The Borrower has filed, or caused to be filed, all federal and\nstate, and to the best of its knowledge, all local and foreign, tax reports and\nreturns, if any, required to be filed by it and paid, or caused to be paid, all\namounts of taxes, including interest and penalties, required to be paid by it,\nexcept for such taxes (i) as are being contested in good faith by proper\nproceedings and (ii) against which adequate reserves shall have been established\nin accordance with and to the extent required by GAAP, but only so long as the\nproceedings referred to in clause (i) above could not subject the Borrower or\nthe Lender to any civil or criminal penalty or liability or involve any material\nrisk of the loss, sale or forfeiture of any property, rights or interests\ncovered hereunder or under the Purchase Agreement.\n\n 3.10 Books and Records. The Borrower has indicated on its books and\nrecords (including any computer files) that the Receivables have been pledged by\nthe Borrower hereunder to the Lender. The Borrower maintains at, or shall cause\nthe Servicer to maintain at, one or more of its respective offices listed in\nExhibit H hereto all material Records for the Receivables.\n\n 3.11 Financial Condition. The Borrower is not insolvent or the subject of\nany Event of Bankruptcy and the pledge of the Receivables on such day is not\nbeing made in contemplation of the occurrence thereof.\n\n 3.12 No Debt. Since the date of its formation, the Borrower has not\nengaged in any activity other than that contemplated by the Facility Documents\nor entered into any commitment or incurred any Debt other than pursuant to, or\nas permitted under, the Facility Documents.\n\n 3.13 ERISA. The Borrower has not maintained, contributed to or incurred or\nassumed any obligation with respect to any Plan, any Multiemployer Plan or any\n\"Welfare Plan\" defined in Section 3(1) of ERISA.\n\n SECTION 3A. REPRESENTATIONS AND WARRANTIES OF THE BORROWER RELATING\nTO COLLATERAL.\n\n The Borrower represents and warrants to the Lender on and as of each\nClosing Date and on and as of the date of delivery of each Tranche Selection\nNotice:\n\n 3A.1 Place of Business; Records Location; Etc. The address of the\nchief executive office of the Borrower is or, if the Borrower relocates its\nchief executive office in accordance with Section 8.9 hereof, such other address\nas the Borrower shall have notified the Lender in accordance with such Section.\nThe Borrower keeps all of its Records at its chief executive office. The\nBorrower is a \"registered organization\" (as defined in Section 9-\n\n\n 21\n\n\n102(a)(70) of the UCC) formed in the State of Delaware and, for purposes of\nArticle 9 of the UCC, the Borrower is located in the State of Delaware. The\nBorrower's name is \"Edison Receivables Company LLC\" and the Borrower has not\nchanged its name, merged or consolidated with any other Person, except that the\nBorrower changed its name from \"Edison Finance Company, LLC\" on or about October\n24, 2001.\n\n 3A.2 No Liens. Each Receivable, together with any related rights\nunder the related Contract, is owned by the Borrower free and clear of any Lien\n(except Permitted Liens). The Lender has a first priority perfected security\ninterest in the Collateral free and clear of any Lien (except Permitted Liens).\nThe Borrower has not and will not sell, pledge, assign, transfer or subject to a\nLien any of the Receivables, the Related Security or the Collections, other than\nin accordance with the terms of this Agreement.\n\n 3A.3 No Adverse Actions. The Borrower has not performed any acts\nwhich would prevent the Lender from enforcing any of the terms of this Agreement\nor which would limit the Lender in any such enforcement. Other than financing\nstatements or other similar or equivalent documents or instruments with respect\nto the Security Interests and Permitted Liens, no financing statement, mortgage,\nsecurity agreement or similar or equivalent document or instrument covering all\nor any part of the Collateral is on file or of record in any jurisdiction in\nwhich such filing or recording would be effective to perfect a Lien on such\nCollateral.\n\n 3A.4 Filings. The Security Interests constitute valid security\ninterests under the UCC securing the Secured Obligations. On or before the\ninitial Closing Date, all UCC financing statements and other documents required\nto be recorded or filed in order to perfect and protect the Security Interests\nagainst all creditors of and purchasers from the Borrower and all other Persons\nwhatsoever shall have been duly filed (or shall have been delivered to the\nLender for filing) in each filing office necessary for such purpose and all\nfiling fees and taxes, if any, payable in connection with such filings shall\nhave been paid.\n\n 3A.5 Eligible Receivables. Each Receivable included in the Borrowing\nBase is an Eligible Receivable.\n\n 3A.6 Notice. In the case of a Closing Date, all information set\nforth on the related Borrowing Notice and Borrowing Base Report is true and\ncorrect in all material respects as of such Closing Date.\n\n 3A.7 Assignment. This Agreement constitutes a valid pledge by the\nBorrower, in favor of the Lender, of the Collateral, enforceable against all\ncreditors of and purchasers from the Borrower.\n\n 3A.8 Permitted Lockbox Banks and Lockbox Accounts. The names and\naddresses of all Permitted Lockbox Banks, together with the numbers of all\nLockbox Accounts at such Permitted Lockbox Banks and the addresses of all\nrelated Permitted Lockboxes, are specified in Exhibit F (or such other Permitted\nLockbox Banks, Lockbox Accounts and\/or Permitted Lockboxes as have been notified\nby the Borrower to the Lender and have been consented to by the Lender in\naccordance with Section 9.11). Under each Lockbox Agreement,\n\n\n 22\n\n\nthe Borrower has granted to the Lender the right to take dominion and control\nover the related Lockbox Account in its sole discretion.\n\n 3A.9 Consideration. With respect to the transfer to it of the\nReceivables, the Borrower has either (i) purchased the Receivables from Edison\nin exchange for payment (made by the Borrower to Edison in accordance with the\nprovisions of the Purchase Agreement) in an amount which constitutes fair\nconsideration and approximates fair market value for the Receivables and in a\nsale the terms and conditions of which (including, without limitation, the\npurchase price thereof) reasonably approximate an arm's-length transaction\nbetween unaffiliated parties or (ii) acquired the Receivables from Edison as a\ncapital contribution in accordance with the provisions of the Purchase\nAgreement. No such sale, and no such contribution, has been made for or on\naccount of an antecedent debt owed by Edison to the Borrower and no such sale or\ncontribution (or, if such sale is deemed to be a pledge rather than a sale, no\ngrant of a security interest) is or may be voidable or subject to avoidance\nunder any section of the U.S. Bankruptcy Code.\n\n 3A.10 New York Management Contracts. As of the Initial Closing Date,\nSchedule II hereto sets forth a true, correct and complete list of all\nManagement Contracts between Edison and each Obligor located in the State of New\nYork.\n\nSECTION 4. CONDITIONS TO LENDER'S OBLIGATION TO FUND THE BORROWING REQUEST ON\nTHE INITIAL CLOSING DATE.\n\n The Lender's obligation to fund the Borrowing request hereunder on\nthe Initial Closing Date shall be subject to the satisfaction, prior to funding\nsuch Borrowing request, of the conditions set forth in Section 5 hereof, as well\nas the following conditions:\n\n 4.1 Certified Resolutions. Receipt by the Lender of a copy of (i) the\nresolutions of the Board of Directors or Board of Managers of the Borrower and\n(ii) resolutions of the Board of Directors of Edison, in each case, certified as\nof the Initial Closing Date by such Person's secretary, an assistant secretary\nor other Responsible Officer authorizing the execution, delivery and performance\nof this Agreement, if applicable, and the other Facility Documents to be\ndelivered by such Person and approving the transactions contemplated hereby and\nthereby.\n\n 4.2 Articles of Incorporation; Certificate of Formation. Receipt by the\nLender of the articles of incorporation of Edison and the Certificate of\nFormation of the Borrower certified as of a date reasonably near the Initial\nClosing Date by the Secretary of State or other similar official of such\nPerson's jurisdiction of incorporation or formation.\n\n 4.3 Good Standing Certificates; Etc. Receipt by the Lender of a good\nstanding certificate for each of the Borrower and Edison dated a date reasonably\nnear the Initial Closing Date issued by the Secretary of State or other similar\nofficial of such Person's jurisdiction of incorporation or formation.\n\n 4.4 Incumbency; Specimen Signatures; By-Laws; Etc.. Receipt by the Lender\nof a certificate of the secretary of each of the Borrower and Edison dated the\nInitial Closing Date and certifying (i) the names and signatures of the officers\nauthorized on such Person's behalf to execute, and the officers and other\nemployees authorized to perform, this Agreement, if\n\n\n 23\n\n\napplicable, and the other Facility Documents to be delivered by such Person (on\nwhich certificate the Lender may conclusively rely until such time as the Lender\nshall receive from such Person a revised certificate meeting the requirements of\nthis Section 4.4), (ii) a copy of such Person's By-laws or limited liability\noperating agreement, as applicable and (iii) a copy of the Administrative\nServices Agreement and the Office Lease.\n\n 4.5 Financing Statements. Receipt by the Lender of copies of (A) proper\nfinancing statements naming (i) the Borrower as the debtor and the Lender, as\nthe secured party and (ii) the Originator, as debtor, the Borrower, as \"assignor\nsecured party\" and the Lender, as secured party or, in each case, other similar\ninstruments or documents as may be necessary or, in the opinion of the Lender,\ndesirable under the UCC of all appropriate jurisdictions to evidence or perfect\nthe Lender's security interests in all Collateral and (B) proper financing\nstatements (Form UCC-3) necessary under the laws of all appropriate\njurisdictions necessary to release all security interests or other rights of any\nPerson in the Collateral previously granted by the Borrower or the Originator.\n\n 4.6 Lien Searches. Receipt by the Lender of certified copies of requests\nfor information or copies (Form UCC-11) (or a similar search report certified by\nparties acceptable to the Buyer) dated a date reasonably near the Initial\nClosing Date listing all effective financing statements or other liens which\nname the Borrower or the Originator as debtor (under its current name or any\nprevious name) and which are filed in appropriate jurisdictions, together with\ncopies of such financing statements (none of which shall cover any of the\nCollateral).\n\n 4.7 Legal Opinions. Receipt by the Lender of favorable opinions of (i)\nDavid Graff, Esq., general counsel for the Borrower and the Originator, dated on\nor about the Initial Closing Date, relating to corporate matters, no litigation,\nno conflicts and other matters and (ii) Coudert Brothers, special counsel to the\nBorrower and the Originator, dated on or about the Initial Closing Date,\nrelating to legality, validity and enforceability of each Facility Document to\nwhich the Borrower or the Originator, as applicable, is a party, perfection and\npriority of the Lender's Security Interest and bankruptcy (true sale and\nnon-consolidation) matters, in each case, in form and substance acceptable to\nthe Lender.\n\n 4.8 Other Documents. Receipt by the Lender of executed copies of the Note\nand the Purchase Agreement, each of which shall be in full force and effect.\n\n 4.9 Fees. Receipt by the Lender of the Arrangement Fee and the Lender's\nlegal fees and expenses, which condition may be satisfied by payment of such\nLender's fees with a portion of the proceeds of the Loan on the Initial Closing\nDate.\n\n 4.10 Lockboxes. Receipt by the Lender of copies of duly executed Lockbox\nAgreements.\n\n 4.11 Officer's Certificates. Receipt by the Lender of an officer's\ncertificate of each of the Borrower and Edison, dated the Initial Closing Date,\nexecuted by a Responsible Officer of each such Person, in form and substance\nsatisfactory to the Lender.\n\n 4.12 Contracts. Receipt by the Lender of representative forms of\nContracts.\n\n\n 24\n\n\n 4.13 Receivables List. Receipt by the Lender of a computer file or tape\ncontaining a true and complete list of all Receivables, identified by account\nnumber, account name and by the Outstanding Balance of each Receivable.\n\n 4.14 Agreed-Upon Procedures Letter. Receipt by the Lender of an\nagreed-upon procedures letter prepared by PricewaterhouseCoopers LLC, in form\nand substance acceptable to the Lender.\n\n 4.15 Cash Collateral Account. The Cash Collateral Account shall have been\nestablished in accordance with Section 6A.\n\n Within 30 days of the Initial Closing Date, the Borrower shall deliver to\nthe Lender (i) evidence reasonably satisfactory to the Lender of filing of the\nfinancing statements described in Section 4.5 and (ii) bring down search reports\nof the type described in Section 4.6 listing financing statements filed through\nthe Initial Closing Date.\n\nSECTION 5. CONDITIONS TO LENDER'S OBLIGATION TO FUND BORROWING REQUESTS\n (INCLUDING THE INITIAL BORROWING REQUEST) AND TO MAINTAIN THE LOAN.\n\n The Lender's obligation to fund any Borrowing request hereunder\n(including the initial Borrowing request) and to maintain the Loan in connection\nwith a Tranche Selection Notice shall be subject to the satisfaction, prior to\nthe funding of such Borrowing or maintenance of the Loan, of the following\nconditions:\n\n 5.1 Representations True; No Default or Event of Default. The\nrepresentations and warranties of the Borrower contained in Sections 3 and 3A\nshall be true on and as of such Closing Date or the date of delivery of such\nTranche Selection Notice, as applicable, with the same effect as though such\nrepresentations and warranties had been made on and as of such Closing Date or\nthe date of delivery of such Tranche Selection Notice, as applicable. There\nshall exist on such Closing Date or the date of delivery of such Tranche\nSelection Notice, as applicable, no Default or Event of Default (both before and\nafter giving effect to the Borrowing requested on such Closing Date or the\nmaintenance of the Loan in connection with such Tranche Selection Notice, as\napplicable).\n\n 5.2 Borrowing Base. In the case of a Closing Date, after giving effect to\nthe Borrowing on such Closing Date, the repayment (if any) of the Loan on such\nClosing Date, the inclusion of additional Eligible Receivables in the Borrowing\nBase on such Closing Date and the exclusion from the Borrowing Base of\nReceivables (if any) which no longer constitute Eligible Receivables (or as to\nwhich there have been Collections) on such Closing Date, the aggregate principal\nbalance of the Loan shall not exceed the lesser of (x) the Commitment on such\nClosing Date and (y) the Borrowing Base on such Closing Date. Such calculation\nshall be evidenced by the applicable Borrowing Base Report delivered to the\nLender on the third Business Day preceding such Closing Date calculated as of\nthe close of business on the Business day immediately preceding the date of\ndelivery.\n\n\n 25\n\n\n 5.3 Borrowing Notice; Tranche Selection Notice. Receipt by the Lender of a\nBorrowing Notice in accordance with Section 2.2 hereof or a Tranche Selection\nNotice in accordance with Section 2.3 hereof, as applicable.\n\n 5.4 Other Matters. Receipt by the Lender of all such approvals, opinions\nor other documents or information as the Lender shall have reasonably requested.\n\nSECTION 6. LOAN MATURITY; LOAN PREPAYMENTS.\n\n 6.1 Loan Maturity. On the Maturity Date (or, if different, the Expiration\nDate), the full principal amount of the Loan, together with accrued Interest\nthereon and any other amounts due hereunder, shall be due and payable in full.\n\n 6.2 Mandatory Prepayments. Unless an Event of Default shall have occurred\nand be continuing, the Borrower, shall, without notice, immediately prepay the\nLoan, without premium (but subject to Section 11.2), together with Interest\naccrued on the amount to be prepaid to the date of prepayment, on any date on\nwhich the aggregate principal balance of the Loan on such date exceeds the\nBorrowing Base on such date, such prepayment to be in an aggregate principal\namount equal to such excess. Upon the occurrence and continuance of an Event of\nDefault, the Borrower will make payments on the Loan in accordance with Sections\n10 and 12 hereof.\n\n 6.3 Voluntary Prepayments. The Borrower may at any time voluntarily prepay\nall or a portion of the Loan in accordance with this Section 6.3. Any prepayment\nof the Loan pursuant to this Section 6.3 shall be in a principal amount equal to\none hundred percent (100%) of the aggregate outstanding principal amount of the\nTranche or Tranches so prepaid, together with accrued and unpaid Interest as of\nthe date set for prepayment and any amounts due in accordance with Section 11.2\nhereof.\n\n 6.4 Allocation of Prepayments. The aggregate principal amount of any\nprepayment of the Loan pursuant to Section 6.2 or 6.3 shall be allocated, first,\nto the portion of the Loan funded by reference to the Corporate Base Rate and,\nsecond (if necessary), to the portions of the Loan funded by reference to the\nEurodollar Rate in direct order of those Tranches with the shortest remaining\nLIBOR Periods.\n\n 6.5 Prepayment Notice. The Borrower shall provide written notice to the\nLender of any voluntary prepayment as early as practicable prior to the date for\nsuch prepayment, but in no event later than three (3) Business Days prior to the\ndate for such prepayment.\n\n 6.6 Payment Instructions; Etc. All payments or prepayments required or\npermitted to be made on the Loan, the Note or otherwise under or in connection\nwith this Agreement (including, without limitation, pursuant to Section 2 or\nthis Section 6) shall be made by wire transfer of immediately available funds to\nthe Lender's account designated on the signature page hereto and, in the case of\nany such mandatory payments or prepayments, such payments or prepayments shall\nbe due by 1:00 p.m. (New York City time).\n\nSECTION 6A. CASH COLLATERAL ACCOUNT.\n\n 6A.1 Establishing the Cash Collateral Account. An account shall be\nestablished with\n\n\n 26\n\n\nthe Lender (or an Affiliate of the Lender) to be known as the \"Cash Collateral\nAccount.\" The Cash Collateral Account shall be established and maintained in the\nname (and under the exclusive control) of the Lender and shall be used only for\nthe purposes described herein. The Lender will use reasonable efforts to invest\nmoney (if any) in the Cash Collateral Account in obligations that are rated at\nleast \"A-1+\" by Standard & Poor's Ratings Services and at least \"P-1\" by Moody's\nInvestors Services. Earnings on such investments (after deducting any losses),\nif any, shall be credited to the Cash Collateral Account.\n\n 6A.2 Deposits into the Cash Collateral Account. If, on any day, the\naggregate principal balance of the Loan exceeds the Borrowing Base, the Borrower\nmay deposit into the Cash Collateral Account an amount sufficient to cause the\nBorrowing Base to equal or exceed the principal balance of the Loan.\n\n 6A.3 Withdrawals from the Cash Collateral Account. Subject to the\nfollowing sentence, on any day prior to the Expiration Date (or the Maturity\nDate), as long as no Default or Event of Default has occurred and is continuing\n(or would result therefrom), the Borrower may on such day request that the\nLender withdraw, and the Lender shall withdraw, from the Cash Collateral Account\nand deliver to the Borrower all or a portion of the amount on deposit in the\nCash Collateral Account, but only to the extent that, after giving effect to any\nsuch withdrawal and delivery (and any other transactions occurring hereunder on\nsuch day), the aggregate principal balance of the Loan would not exceed the\nBorrowing Base. As a condition to any withdrawal from the Cash Collateral\nAccount, the Borrower shall, on the proposed date of such withdrawal, deliver to\nthe Lender the applicable Borrowing Base Report (as of the close of business on\nthe immediately preceding Business Day) which demonstrates that, after giving\neffect to such withdrawal (and any other transactions occurring hereunder on\nsuch day), the aggregate principal balance of the Loan would not exceed the\nBorrowing Base.\n\nSECTION 7. ASSIGNMENTS AND PARTICIPATIONS.\n\n 7.1 Assignments. (a) The Borrower may not assign its rights or obligations\nhereunder or under the Note.\n\n (b) The Lender may (subject in all events to the confidentiality\nprovisions of Section 13.8) assign all or any portion of the Commitment and the\nLoan (i) to any of its Affiliates, without the Borrower's consent and (ii) to\nany other bank or other institution (each such Affiliate, bank or other\ninstitution, an \"Assignee\") with, so long as no Event of Default has occurred\nand is continuing, the prior written consent of the Borrower; provided that any\nassignment of a portion of the Loan or the Notes shall be in an amount not less\nthan $10,000,000. The Assignee shall have, to the extent of such assignment\n(unless otherwise provided in such assignment), the obligations, rights and\nbenefits of the Lender hereunder with respect to the portion of the Loan\nassigned to it. For all purposes of this Agreement, the Assignee shall, so long\nas the portion of the Loan assigned to such Assignee remain unpaid, be entitled\nto the rights and benefits of this Agreement with respect to the portion of the\nLoan assigned to it as if (and, the Borrower shall be directly obligated to such\nAssignee under this Agreement as if) such Assignee were the \"Lender\" for\npurposes of this Agreement. Accordingly, unless otherwise provided, whenever any\naction, waiver, notice or consent is to be provided to or by the Lender as\nherein specified, such action, waiver, notice or consent shall (unless otherwise\nexpressly\n\n\n 27\n\n\nspecified herein) also be provided to or by each Assignee. If the Loan and Note\nare assigned in their entirety, the Assignee shall become the Lender hereunder\nand the Borrower shall have no further obligation to the assigning Lender.\n\n (c) Notwithstanding the provisions of this Section 7.1, no\nassignment of an interest in the Loan to an entity outside the United States of\nAmerica shall be effective unless the prospective Assignee thereof certifies to\nthe Borrower that payments to it in respect of the Loan will not be subject to\nwithholding taxes imposed by any Official Body in the United States of America\nor any political subdivision or taxing authority thereof or therein or that if\nit is subject to such withholding taxes it will not seek reimbursement or\ngross-up from the Borrower.\n\n (d) If Merrill Lynch Mortgage Capital Inc. (\"Merrill Lynch\"), the\ninitial Lender, assigns a portion of the Commitment or its rights in the Loan or\nNote to multiple Lenders, then the Borrower agrees to cooperate with Merrill\nLynch in amending this Agreement so as to provide that Merrill Lynch will act as\nagent for all of the Lenders.\n\n 7.2 Participations. Subject in all events to the confidentiality\nprovisions of Section 13.8, and subject to the following sentence, the Lender\nmay sell or agree to sell to one or more other Persons a participation in all or\nany part of the Lender's Commitment and\/or any portion of the Loan held by it or\nto be made by it. If the Lender sells any such participation, the Lender shall\nremain responsible for the performance of its obligations hereunder and the\nBorrower shall continue to deal solely and directly with the Lender in\nconnection with the Lender's rights and obligations hereunder. All amounts\npayable by the Borrower to the Lender under this Agreement (including, without\nlimitation, pursuant to Sections 2.5 and 11.2 hereof) shall be determined as if\nthe Lender had not sold or agreed to sell any participations in any portion of\nthe Loan and as if the Lender were funding all of the Loan in the same way that\nit is funding the portion of the Loan in which no participations have been sold.\nThe participant's rights against the Lender in respect of such participation\nshall be set forth in the agreement executed by the Lender and the participant.\n\nSECTION 8. CERTAIN COVENANTS OF THE BORROWER.\n\n The Borrower covenants and agrees that so long as the Loan shall\nremain unpaid or the Commitment has not been terminated:\n\n 8.1 Notice of Default or Event of Default. Promptly upon becoming aware of\nany Default or Event of Default, the Borrower shall give the Lender notice\nthereof, together with a written statement of a Responsible Officer setting\nforth the material details thereof and any action with respect thereto taken or\ncontemplated to be taken by the Borrower.\n\n 8.2 Notice of Material Adverse Change. Promptly upon becoming aware\nthereof, the Borrower shall give the Lender notice of any material adverse\nchange in the business, operations or financial condition of the Borrower.\n\n 8.3 Purchase Agreement Notices. Promptly following receipt thereof, the\nBorrower shall give the Lender a copy of each notice or report (including,\nwithout limitation, financial statements of the Servicer) received by the\nBorrower under or in connection with the Purchase Agreement.\n\n\n 28\n\n\n 8.4 Preservation of Existence. The Borrower shall preserve and maintain\nits existence, rights, franchises and privileges in the jurisdiction of its\nformation, and qualify and remain qualified in good standing as a foreign\nlimited liability company in each jurisdiction where the failure to preserve and\nmaintain such existence, rights, franchises, privileges and qualification would\nmaterially adversely affect (i) the interests of the Lender hereunder or (ii)\nthe ability of the Borrower to perform its obligations hereunder.\n\n 8.5 Compliance with Laws. The Borrower shall comply in all material\nrespects with all Laws applicable to the Borrower, its business and properties\nand all Collateral.\n\n 8.6 Enforceability of Obligations. The Borrower shall take such actions as\nare commercially reasonable and within its power, if any, to ensure that, with\nrespect to each Receivable, the obligation of any related Obligor to pay the\nunpaid balance of such Receivable in accordance with the terms thereof remains\nlegal, valid, binding and enforceable against such Obligor.\n\n 8.7 Books and Records. The Borrower will keep proper books of record and\naccount in which full, true and correct entries shall be made of all dealings\nand transactions in relation to its business and activities.\n\n 8.8 Fulfillment of Obligations. The Borrower will duly observe and perform\nall material obligations and undertakings on its part to be observed and\nperformed under or in connection with the Receivables, will duly observe and\nperform all material provisions, covenants and other agreements required to be\nobserved by it under the Contracts to the extent related to the Receivables,\nwill do nothing to impair the rights, title and interest of the Lender in and to\nthe Collateral and will pay when due any taxes, including without limitation any\nsales tax, excise tax or other similar tax or charge, payable in connection with\nsuch Receivables and their creation and satisfaction or will properly contest\nthe payment of any such tax in good faith and before a court or administrative\nbody of appropriate jurisdiction.\n\n 8.9 Maintenance of Office; Notice of Relocation. The Borrower will\nmaintain at its chief executive office an office where notices, presentations\nand demands in respect of this Agreement and the Note may be given to and made\nupon it. The Borrower shall give the Lender 15 days' prior written notice of any\nrelocation of its chief executive office or jurisdiction of organization.\n\n 8.10 Compliance with Opinion Assumptions and Limited Liability Company\nAgreement. The Borrower shall maintain in place all policies and procedures, and\ntake and continue to take all actions, described in the assumptions as to facts\nset forth in, and forming the basis of, the true sale opinion delivered to the\nLender pursuant to Section 4.7(ii) hereof, and the Borrower shall comply with\nthe provisions of the Limited Liability Company Agreement, as the same may, from\ntime to time, be amended, supplemented or otherwise modified with the prior\nwritten consent of the Lender (which consent shall not be unreasonably withheld\nor delayed).\n\n 8.11 [Reserved].\n\n 8.12 Litigation. As soon as possible, and in any event within ten Business\nDays of the Borrower's knowledge thereof, the Borrower shall give the Lender\nnotice of (i) any litigation,\n\n\n 29\n\n\ninvestigation or proceeding against the Borrower which may exist at any time\nwhich, in the reasonable judgment of the Borrower, could reasonably be expected\nto have a material adverse effect on the financial condition or results of\noperations of the Borrower or impair the ability of the Borrower to perform its\nobligations under this Agreement, or materially adversely affect the\ncollectibility of the Receivables as a whole, and (ii) any material adverse\ndevelopment in any such previously disclosed litigation.\n\n 8.13 Fees, Taxes and Expenses. The Borrower shall pay all filing fees,\nstamp taxes and other similar documentary or excise taxes and expenses,\nincluding the fees and expenses set forth this Agreement, if any, which may be\nincurred on account of or arise out of this Agreement and the documents and\ntransactions entered into pursuant to this Agreement.\n\n 8.14 Compliance with the Purchase Agreement. At its own expense, the\nBorrower shall timely and fully perform and comply in all material respects with\nall provisions, covenants and other promises required to be observed by it under\nthe Purchase Agreement, maintain the Purchase Agreement in full force and\neffect, enforce the Purchase Agreement in accordance with its terms, take all\nsuch action to such end as may be from time to time reasonably requested by the\nLender, and make to any party to the Purchase Agreement such demands and\nrequests for information and reports or for action as the Borrower is entitled\nto make thereunder and as may be from time to time reasonably requested by the\nLender.\n\n 8.15 Information. The Borrower shall, furnish the following to the Lender:\n\n (i) as soon as available and in any event within 45 days after\n the end of each of the first three quarters of each fiscal year of the\n Borrower, a balance sheet of the Borrower as of the end of such quarter\n and statements of income and retained earnings and of cash flows of the\n Borrower for the period commencing at the end of the previous fiscal year\n and ending with the end of such quarter, in each case, prepared in\n accordance with GAAP, certified by the chief financial officer or the\n chief accounting officer of the Borrower;\n\n (ii) as soon as available and in any event within 90 days\n after the end of each fiscal year of the Borrower, a copy of the\n Borrower's financial statements for such year prepared in accordance with\n GAAP, certified by the chief financial officer or the chief accounting\n officer of the Borrower; and\n\n (iii) such other information, documents, records or reports\n respecting the Receivables and the Related Security or the condition or\n operations, financial or otherwise, of the Borrower as the Lender may from\n time to time reasonably request.\n\n 8.16 Maintenance of Separate Existence. The Borrower shall do all things\nnecessary to maintain its legal existence separate and apart from Edison and all\nother Affiliates of the Borrower, including, without limitation,\n\n (i) maintaining proper company records and books of account\n and deposit accounts separate from those of such Affiliates (it being\n understood that the Borrower is consolidated with Edison for accounting\n purposes);\n\n\n 30\n\n\n (ii) maintaining its assets, funds and transactions separate\n from those of such Affiliates, reflecting such assets, funds and\n transactions in financial statements prepared in accordance with GAAP\n separate and distinct from those of such Affiliates (it being understood\n that the Borrower is consolidated with Edison for accounting purposes) and\n evidencing such assets, funds and transactions by appropriate entries in\n the records and books referred to in clause (i) above, and providing for\n its own operating expenses and liabilities from its own assets and funds\n other than certain expenses and liabilities relating to basic company\n overhead which shall be allocated fairly between the Borrower and such\n Affiliates;\n\n (iii) holding such appropriate meetings or obtaining such\n appropriate consents of its Management Committee (or other governing body)\n as are necessary to authorize all the Borrower's company actions required\n by Law to be authorized by the Management Committee (or other governing\n body), keeping minutes of such meetings and of meetings of its members,\n and observing all other customary limited liability company formalities;\n\n (iv) at all times entering into its contracts and otherwise\n holding itself out to the public under the Borrower's own name as a legal\n entity separate and distinct from such Affiliates;\n\n (v) to the extent the Borrower jointly contracts with any\n Affiliate to do business with vendors or service providers, allocating\n fairly among the Borrower and such Affiliates the costs incurred in so\n doing, and conducting all transactions and dealings between the Borrower\n and such Affiliates on an arm's-length basis;\n\n (vi) maintaining an office separate from that of such\n Affiliates (which office may be sublet from an Affiliate), including\n having stationery and other business forms, a post office box, and a\n telephone number separate from that of such Affiliates;\n\n (vii) ensuring that at all times it is adequately capitalized\n to engage in the transactions and activities contemplated in its\n certificate of formation, its Limited Liability Company Agreement, the\n Purchase Agreement and this Agreement;\n\n (viii) ensuring that at least one manager of the Borrower\n shall be an \"Independent Manager\" (as defined in the Limited Liability\n Company Agreement) and causing its Limited Liability Company Agreement to\n provide that (x) at least one manager of the Borrower shall be an\n Independent Manager, (y) the managers of the Borrower shall not approve,\n or take any other action to cause the filing of, a voluntary bankruptcy\n petition with respect to the Borrower unless a unanimous vote of all of\n the Borrower's managers (which vote shall include the affirmative vote of\n each Independent Manager) shall approve the taking of such action in\n writing prior to the taking of such action and (z) the provisions\n requiring an Independent Manager and the provisions described in clauses\n (x) and (y) of this paragraph (viii) cannot be amended without the prior\n written consent of each Independent Manager;\n\n\n 31\n\n\n (ix) taking such actions as are necessary to ensure that no\n Independent Manager shall at any time serve as a trustee in bankruptcy for\n the Borrower or any Affiliate thereof; \n\n (x) taking such actions as are necessary to ensure that any\n financial statements of Edison or any Affiliate thereof which are\n consolidated to include the Borrower will contain detailed notes clearly\n stating that (A) all of the Borrower's assets are owned by the Borrower,\n and (b) the Borrower is a separate limited liability company with its own\n separate creditors that will be entitled to be satisfied out of the\n Borrower's assets prior to any value in the Borrower becoming available to\n the Borrower's equity holders; and the accounting records and the\n published financial statements of Edison will clearly show that, for\n accounting purposes, the Receivables and Related Security have been sold\n or contributed to the Borrower;\n\n (xi) taking such actions as are necessary to ensure that no\n Affiliate of the Borrower shall, directly or indirectly, name the Borrower\n or enter into any agreement to name the Borrower a direct or contingent\n beneficiary or loss payee of any insurance policy covering the property of\n any such Affiliate;\n\n (xii) taking no action to assume or guarantee any liability of\n Edison or any Affiliate thereof; and\n\n (xiii) taking such actions as are necessary to ensure that no\n Affiliate of the Borrower will be, nor will hold itself out to be,\n responsible for the debts of the Borrower or the decisions or actions in\n respect of the daily business and affairs of the Borrower, immediately\n correcting any known misrepresentation with respect to the foregoing, and\n not operating or purporting to operate as an integrated single economic\n unit with respect to each other or in their dealings with any other\n entity.\n\n 8.17 Nature of Business and Permitted Transactions. The Borrower shall\nengage solely in the following businesses and transactions, directly or\nindirectly: purchasing Receivables and Related Security from Edison and\nobtaining the Loan hereunder secured by such Receivables and Related Security as\nprovided hereunder and the other transactions permitted or contemplated by the\nFacility Documents.\n\n 8.18 Due Diligence. (i) From time to time during regular business hours as\nrequested by the Lender upon at least five (5) days' prior notice, the Borrower\nshall permit the Lender or its agents or representatives, (A) to examine and\nmake copies of and abstracts from all Records in the possession or under the\ncontrol of the Borrower or its agents relating to Receivables and the Related\nSecurity, including, without limitation, any related Contracts, and (B) to visit\nthe offices and properties of the Borrower or its agents, for the purpose of\nexamining such materials described in clause (A) above, and to discuss matters\nrelating to Receivables and the Related Security or the Borrower's performance\nhereunder with any of the officers or employees of the Borrower having knowledge\nof such matters or with the Borrower's independent public accountants, and (ii)\nwithin 90 days after the end of each fiscal year of the Borrower commencing with\nthe Fiscal Year of the Borrower ending on June 30, 2002, the Borrower shall\ncause its independent public accountants to prepare and deliver to the Lender a\nwritten report of\n\n\n 32\n\n\nsuch accountants with respect to the Receivables, the Credit and Collection\nPolicy, Lockbox Account activity, and the Borrower's performance of its\nobligations under (or with respect to) this Agreement and the Receivables, all\nin scope and in a form reasonably requested by the Lender; provided, however,\nthat after the occurrence and during the continuance of a Default or a Event of\nDefault, the Lender shall be permitted to take the actions described in\npreceding clause (i) without being subject to the amount of prior notice given\nand may request the Borrower to cause its independent public accounts to prepare\nthe report contemplated in preceding clause (ii) as often as the Lender deems\nnecessary or desirable. The Borrower shall reimburse the Lender for all\nreasonable fees, costs and expenses incurred by any of them in connection with\nthe foregoing actions promptly upon receipt of a written invoice therefor;\nprovided that prior to the occurrence and continuation of a Default or Event of\nDefault, such fees, costs and expenses shall not exceed $5,000 during any year\nof this Agreement.\n\n 8.19 Lockbox and Lockbox Accounts. The Borrower shall (i) establish, or\ncause to be established, in the name of the Borrower, each Lockbox Account and\nthe funds deposited therein from time to time shall consist exclusively of\nCollections, which Collections shall not be commingled with any other funds of\nthe Borrower or any Affiliate thereof (ii) maintain each Lockbox Account with a\nPermitted Lockbox Bank; (iii) cause each Lockbox Account to be insured by the\nFederal Deposit Insurance Corporation to the full extent permitted by Law; and\n(iv) cause all Collections on account of the Receivables to be mailed or wired\ndirectly to a Permitted Lockbox or a Lockbox Account and, if the Servicer, the\nOriginator or the Borrower should receive any Collections, forward such\nCollections to a Permitted Lockbox or a Lockbox Account within one Business Day\nof receipt.\n\nSECTION 9. NEGATIVE COVENANTS OF THE BORROWER. The Borrower covenants that it\nwill not, without the prior written consent of the Lender:\n\n 9.1 No Rescissions or Modifications. Rescind or cancel any Receivable or\nrelated Contract or modify any terms or provisions thereof or grant any Dilution\nto an Obligor, except in accordance with the Credit and Collection Policy.\n\n 9.2 No Liens. Except as otherwise provided herein, sell, assign (by\noperation of Law or otherwise) or otherwise dispose of, or grant any option with\nrespect to, or create or suffer to exist any Lien upon or with respect to, (i)\nany Receivable or Related Security or Collections in respect thereof, or (ii)\nany deposit account to which any Collections of any Receivable are sent\n(including, without limitation, any Lockbox Account), or assign any right to\nreceive income in respect thereof, other than Liens created under the Facility\nDocuments.\n\n 9.3 No Changes. (i) Make any change in the character of its business,\nwhich change would materially impair the collectibility of the Receivables, (ii)\nchange its name, identity or organizational structure in any manner which would\nmake any financing statement or continuation statement filed in connection with\nthis Agreement or the transactions contemplated hereby seriously misleading\nwithin the meaning of Section 9-506, 9-507 or 9-508 of the UCC of any applicable\njurisdiction or other applicable Laws unless it shall have given the Lender at\nleast 30 days' prior written notice thereof and unless prior thereto it shall\nhave caused such financing statement or continuation statement to be amended or\na new financing statement to be filed such that such financing statement or\ncontinuation statement would not be seriously misleading, (iii)\n\n\n 33\n\n\namend, restate or otherwise change its certificate of formation or Limited\nLiability Company Agreement, except to the extent necessary to reflect a change\nin the address of its registered office in the State of Delaware or to correct\ntypographical errors or (iv) amend, restate or otherwise change the\nAdministrative Services Agreement or the Office Lease, except to correct\ntypographical errors.\n\n 9.4 Capitalization; Distributions. Issue any membership interests (other\nthan any non-economic \"special membership\" interests) except to Edison. The\nBorrower shall not pay any distributions to any of its members if such payment\nwould be prohibited under the Delaware Limited Liability Company Act or if at\nthe time of, or as a result of, such payment a Default or an Event of Default\nhas occurred and is continuing or would result therefrom.\n\n 9.5 No Indebtedness. Create, incur, assume or suffer to exist any Debt in\nexcess of $10,000, except Debt incurred pursuant to the Facility Documents.\n\n 9.6 Consolidations, Mergers and Sales of Assets. Consolidate or merge with\nor into any other Person or sell, lease or otherwise transfer all or\nsubstantially all of its assets to any other Person other than pursuant to the\nFacility Documents.\n\n 9.7 ERISA. Adopt, maintain, contribute to or incur or assume any\nobligation with respect to any Plan, Multiemployer Plan or Welfare Plan.\n\n 9.8 Investments in Other Persons. Except as otherwise provided herein or\nin the Purchase Agreement, make or hold any Investment in any Person.\n\n 9.9 Transactions with Affiliate. Engage in any transaction with Edison or\nany other Affiliate of the Borrower except pursuant to, or as contemplated by,\nthe Facility Documents, the Administrative Services Agreement or the Office\nLease.\n\n 9.10 Purchase Agreement. (i) Cancel or terminate the Purchase Agreement or\nconsent to or accept any cancellation or termination thereof, (ii) amend,\nsupplement or otherwise modify any term or condition of the Purchase Agreement\nor give any consent, waiver or approval thereunder, (iii) waive any default\nunder or breach of the Purchase Agreement or (iv) take any other action under\nthe Purchase Agreement not required by the terms thereof that could impair the\nvalue of any rights or interests of the Borrower or the Lender thereunder.\n\n 9.11 Lockboxes. (i) Direct that payments on the Contracts be made to any\naddress or person other than a Permitted Lockbox; (ii) suffer or permit any\nfunds other than Collections to be mailed to Permitted Lockboxes or deposited\ninto the related Lockbox Accounts; and (iii) amend or modify any term of any\nLockbox Agreement.\n\n 9.12 Credit and Collection Policy. Consent to any change in the Credit and\nCollection Policy if such change could reasonably be expected to materially and\nadversely affect the collectibility or enforceability of the Receivables or the\nability of the Servicer to perform its obligations under the Purchase Agreement.\n\n\n 34\n\n\nSECTION 10. DEFAULTS, REMEDIES AND TERMINATION.\n\n 10.1 Events of Default . If one or more of the following events (\"Events\nof Default\") shall occur and be continuing:\n\n (a) the Borrower shall fail to pay when due any Interest on the\nLoan, or any fees or other amount payable hereunder, and such failure shall\ncontinue for one (l) Business Day; or\n\n (b) the Borrower shall fail to make any payment or prepayment of\nprincipal when due; or\n\n (c) the Borrower shall fail to observe or perform any covenant\ncontained in Section 8.16 for 10 days after the earlier to occur of (i) written\nnotice thereof to the Borrower by the Lender and (ii) knowledge thereof by the\nBorrower or the Servicer; or\n\n (d) except as otherwise provided in this Section 10.1, the Borrower\nshall fail to observe or perform any covenant or agreement contained in this\nAgreement for 30 days after the earlier to occur of (i) written notice thereof\nto the Borrower by the Lender and (ii) knowledge thereof by the Borrower or the\nServicer; or\n\n (e) any representation, warranty, certification or statement made by\nthe Borrower in this Agreement or in any certificate, financial statement or\nother document delivered pursuant to this Agreement shall prove to have been\nincorrect in any material respect when made (or deemed made) for 30 days after\nthe earlier to occur of (i) written notice thereof to the Borrower by the Lender\nand (ii) knowledge thereof by the Borrower or the Servicer; or\n\n (f) (i) a judgment or order for the payment of money in excess of\n$10,000 shall be rendered against the Borrower, or (ii) a judgment or order for\nthe payment of money in excess of $5,000,000 shall be rendered against Edison\nand, in either case, such judgment or order shall continue unsatisfied and\nunstayed for a period of 30 days; or\n\n (g) the first priority perfected security interest of the Lender in\nand to the Collateral is revoked or invalidated, or otherwise ceases to be a\nfirst priority perfected security interest in favor of the Lender in and to the\nCollateral for the earlier of (i) one Business Day after actual knowledge\nthereof by the Borrower and (ii) one Business Day after written notice thereof\nhas been given to the Borrower by the Lender or, in either case, such longer\nperiod (not to exceed five Business Days as determined in consultation with, and\nwith the consent of, the Lender) as the Borrower, acting in good faith and with\nall due diligence, requires to re-establish the first priority perfected\nsecurity interest of the Lender in and to the Collateral; or\n\n (h) an Event of Bankruptcy shall occur with respect to the Borrower\nor Edison; or\n\n (i) (x) the Borrower shall fail to pay any Debt of at least $10,000\nwhen due and such failure shall continue beyond the applicable grace period, or\nthe Borrower shall otherwise default under any agreement or instrument and such\ndefault shall continue beyond the applicable grace period and the effect of such\ndefault is to accelerate or to permit the acceleration\n\n\n 35\n\n\nof the Debt or other obligation thereunder; or (y) Edison shall fail to pay any\nprincipal of, or interest on, any Debt that is outstanding in a principal amount\nof at least $5,000,000 when due and such failure shall continue beyond the\napplicable grace period; or Edison shall otherwise default under any agreement\nor instrument in a principal amount of at least $5,000,000 and such default\nshall continue beyond the applicable grace period and the effect of such default\nis to accelerate the Debt governed by such agreement or instrument; or\n\n (j) a Servicer Default shall have occurred and be continuing and the\nLender, in its sole discretion, shall have declared an Event of Default\nhereunder; or\n\n (k) the average of the Default Ratios for any three (3) consecutive\nMonthly Periods shall exceed 25%; or the average of the Dilution Ratios for any\nthree (3) consecutive Monthly Periods shall exceed 20%; or\n\n (l) a Change of Control of Edison shall have occurred or Edison\nshall cease to own 100% of the membership interests (other than non-economic\n\"special membership\" interests) of the Borrower; or\n\n (m) the occurrence of a \"Termination Event\" under and as defined in\nthe Purchase Agreement; or\n\n (n) the Borrower's capital shall at any time be less than 9% of the\nOutstanding Balance of all Receivables and shall continue to be less that 9% of\nsuch balance for (5) Business days; or\n\n (o) there shall be pending any litigation, investigation or\nproceeding, or any material adverse development in any such litigation shall\nhave occurred, which the Borrower is required to disclose pursuant to Section\n8.12, which in the reasonable opinion of the Lender is likely to materially\nadversely impair the ability of the Borrower to perform its obligations under\nthis Agreement; or\n\n (p) any provision (except any provision that shall be immaterial to\nthe Lender) of any Facility Document shall for any reason cease to be a legal,\nvalid and binding obligation of the Borrower or Edison, as applicable, or the\nBorrower or Edison, as applicable, shall so state in writing; or\n\n (q) the Limited Liability Company Agreement, the certificate of\nformation of the Borrower or the Administrative Services Agreement shall be\namended, supplemented or otherwise modified without the consent of the Lender\n(except as expressly permitted hereunder); or\n\n (r) the occurrence of any event which materially adversely affects\n(i) the collectibility of a material portion of the Receivables or (ii) the\nability of the Servicer to collect the Receivables or perform its obligations\nunder the Purchase Agreement; or\n\n (s) Edison shall fail to maintain at least the types of insurance\nset forth in Schedule I hereto in at least the minimum amounts set forth in\nSchedule I hereto (and such additional types of insurance in such greater\namounts as may be required from time to time under\n\n\n 36\n\n\nany Contract) or any such insurance shall be issued by an insurance company or\ncompanies not licensed to do business in the applicable state(s) or not rated\n\"A\" or better by A.M. Best Company and, in any such case, such failure or\ncondition shall continue or exist for 30 days after the earlier to occur of (i)\nwritten notice thereof to the Borrower by the Lender and (ii) knowledge thereof\nby the Borrower or the Servicer;\n\nthen, and in every such event and so long as such Event of Default shall be\ncontinuing, the Lender may, (i) by notice to the Borrower and the Servicer (such\nnotice, a \"Notice of Termination\") (x) terminate the Commitment and\/or (y)\ndeclare the Notes (together with accrued interest thereon) to be, and the Notes\nshall thereupon become, immediately due and payable without presentment, demand,\nprotest or other notice of any kind, all of which are hereby waived by the\nBorrower; provided that in the event of an actual or deemed entry of an order\nfor relief with respect to the Borrower under the Federal Bankruptcy Code, or\nany other Event of Default specified in clause (h) above which has the effect of\nstaying actions against the Borrower, without any notice to the Borrower or any\nother act by the Lender, the Commitment shall thereupon terminate and the Note\n(together with accrued interest thereon) shall become immediately due and\npayable without presentment, demand, protest or other notice of any kind, all of\nwhich are hereby waived by the Borrower and (ii) exercise any or all of the\nrights and remedies set forth in this Agreement and under applicable law.\n\n 10.2 Default Remedies. In addition to (and without limiting the Lender's\nremedies under) Section 12.4, if an Event of Default shall have occurred and be\ncontinuing, the Lender may exercise any right, power or remedy permitted to it\nby law, either by suit in equity or by action at law, or both, whether for\nspecific performance of any covenant or agreement contained in the Facility\nDocuments or for an injunction against a violation of any of the terms of the\nFacility Documents or in aid of any exercise of any power granted to the Lender\nin the Facility Documents, or may proceed to enforce payment of the Loan or to\nenforce any other legal or equitable right of the Lender. No remedy herein\n(including, without limitation, in Section 12 hereof) conferred upon the Lender\nis intended to be exclusive of any other remedy and each and every remedy shall\nbe cumulative and shall be in addition to every other remedy given hereunder or\nnow or hereafter existing at law, in equity, by statute or otherwise. No course\nof dealing on the part of the Lender, or any delay or failure on the part of the\nLender to exercise any right or power, shall operate as a waiver of such right\nor power or otherwise prejudice the rights, powers and remedies of the Lender.\nNo failure to insist upon strict compliance with any covenant, term, condition\nor other provision of the Facility Documents or the Note shall constitute a\nwaiver by the Lender of any such covenant, term, condition or other provision or\nof any Default or Event of Default in connection therewith. To the extent\neffective under applicable Law, the Borrower hereby agrees to waive, and does\nhereby absolutely and irrevocably waive and relinquish, the benefit and\nadvantage of any valuation, stay, appraisement, extension or redemption laws now\nexisting or that may hereafter exist that, but for this provision, might be\napplicable to any sale made under any judgment, order or decree of any court, or\notherwise, based on the Loan or on any claim for interest in respect of the\nLoan. If an Event of Default shall occur and be continuing, the Borrower will\npay to the Lender, to the extent not prohibited by applicable Law and not paid\nin accordance with Section 12.4 hereof, such further amount as shall be\nsufficient to cover the reasonable costs and expenses of collection and of the\ntaking of remedial actions and the maintenance of enforcement proceedings,\nincluding, without limitation, reasonable attorneys' fees and disbursements.\n\n\n 37\n\n\nSECTION 11. INDEMNIFICATION; FUNDING LOSSES; EXPENSES.\n\n 11.1 Indemnification. (a) The Borrower agrees to indemnify and hold\nharmless the Lender, the directors, officers, employees, agents and Affiliates\nof the Lender and each Person who controls the Lender within the meaning of the\nSecurities Act or the Exchange Act from and against any and all claims, damages,\nlosses, liabilities, costs or expenses (including reasonable attorneys' fees and\nany and all reasonable expenses whatsoever incurred in investigating, preparing\nor defending against any litigation, commenced or threatened, whether or not the\nLender is a party thereto, or any claim whatsoever, and any and all amounts paid\nin settlement of any claim or litigation), joint or several, to which any of\nthem may become subject to the extent that any such claims, damages, losses,\nliabilities, costs or expenses arise under, in connection with or otherwise\nrelate to the transactions contemplated herein, including, without limitation,\nany litigation relating to the proposed or actual use of the proceeds of any\nBorrowing, or under the Securities Act, the Exchange Act or other federal or\nstate statutory law or regulation, at common law or otherwise; provided, that\nthe Borrower shall not be liable to the Lender for any (i) losses incurred by\nthe Lender as a result of the fraudulent actions, gross negligence or willful\nmisconduct of the Lender or (ii) losses, claims, damages, liabilities and\nexpenses arising out of the imposition by any taxing authority of any federal\nincome, state or local income or franchise taxes, or any other taxes imposed on\nor measured by gross or net income, gross or net receipts, capital, doing\nbusiness taxes, net worth and similar items (including any interest, penalties\nor additions with respect thereto) upon the Lender (including any liabilities,\ncosts or expenses with respect thereto) or any other tax or similar charge which\nis excluded from indemnification pursuant to the express terms of this\nAgreement. The foregoing is in addition to any rights (including without\nlimitation rights to indemnity) to which the Lender may otherwise be entitled;\nprovided that this provision shall not entitle the Lender to be paid hereunder\ntwice for the same loss.\n\n (b) The obligations of the Borrower under this Section 11.1 shall be\nin addition to any liability which it may otherwise have and shall extend, upon\nthe same terms and conditions, to each Person, if any, who controls the Lender\nwithin the meaning of the Securities Act and to each director of the Lender.\n\n (c) Promptly upon receipt by the Lender under this Section 11.1 of\nnotice of the commencement of any suit, action, claim, proceeding or\ngovernmental investigation against the Lender, the Lender shall, if a claim in\nrespect thereof is to be made against the Borrower hereunder, notify the\nBorrower in writing of the commencement thereof. The Borrower may participate in\nand assume the defense of any such suit, action, claim, proceeding or\ninvestigation at its expense. No settlement of any suit, action, claim\nproceeding or investigation (regardless of which party is controlling the\ndefense) shall be made without the approval of the Borrower and the Lender, such\napproval not to be unreasonably withheld, delayed or conditioned. After notice\nfrom the Borrower to the Lender of its intention to assume the defense thereof\nwith counsel reasonably satisfactory to the Lender and so long as the Borrower\nso assumes, and diligently proceeds with, the defense thereof in a manner\nreasonably satisfactory to the Lender, the Borrower shall not be liable for any\nlegal expenses of separate counsel for the Lender unless there shall be a\nconflict between the interests of the Borrower and the Lender, in which case the\nLender shall have the right to employ one separate counsel to represent it (at\nthe Borrower's expense). If the Borrower assumes the defense of any suit, the\nBorrower shall use all reasonable\n\n\n 38\n\n\nefforts to (i) consult, from time to time, with the Lender about the strategy\nbeing pursued, (ii) promptly inform the Lender of any material developments in\nsuch suit, and (iii) forward to the Lender promptly after receipt thereof copies\nof any notices, filings, requests or other written materials relating to such\nsuit, and if the Lender reasonably determines that the defense being carried out\nby the Borrower materially adversely affects the interests of the Lender, the\nLender shall notify the Borrower of such effect and the Borrower and the Lender\nshall use reasonable efforts to agree on a defense strategy that is acceptable\nto both parties and, failing such agreement within 20 days of the aforesaid\nnotice, the Borrower shall pay the reasonable expenses of separate counsel\nretained by the Lender.\n\n (d) The Lender shall use its good faith efforts to mitigate, reduce\nor eliminate any losses, expenses or claims for indemnification; provided, that\nthe Lender shall not be obligated to take any action which would subject the\nLender to any unreimbursed cost or expense or which would otherwise be\ndisadvantageous to the Lender.\n\n (e) The agreement, indemnities and other statements of the Borrower\nin or made pursuant to this Section 11.1 will remain in full force and effect,\nregardless of any investigation, or statement as to the results thereof, made by\nor on behalf of the Lender or any of the officers, directors or controlling\npersons referred to in this Section 11.1. The provisions of this Section 11.1\nshall survive the termination or cancellation of this Agreement.\n\n 11.2 Funding Losses. If the Borrower makes, or the Lender otherwise\nreceives, any payment in respect of principal of the Loan other than on a\nMonthly Payment Date, the Borrower shall indemnify the Lender for any loss, cost\nor expense (\"Funding Loss\") incurred by the Lender as a result thereof,\nincluding without limitation any loss, cost or expense from employing, obtaining\nor liquidating deposits from third parties. The amount of any Funding Loss shall\nbe determined in good faith by the Lender, and in the absence of manifest error\nor bad faith, the Lender's determination shall be conclusive and binding;\nprovided that the Lender shall have delivered to the Borrower a certificate\nsetting forth, in reasonable detail, the calculation employed by the Lender to\ndetermine the amount of the Funding Loss claimed.\n\n 11.3 Expenses. The Borrower agrees, promptly upon receipt of a written\ninvoice, to pay or cause to be paid, and to save the Lender harmless against\nliability for the payment of, all reasonable out-of-pocket expenses (including,\nwithout limitation, reasonable attorneys' fees (up to $75,000), accountant's and\nother third parties' fees and expenses and any filing fees and expenses incurred\nby the Lender, but excluding salaries and overhead costs of the Lender) incurred\nby or on behalf of the Lender (i) in connection with the negotiation, execution,\ndelivery and preparation of the Facility Documents and the transactions\ncontemplated by or undertaken pursuant to or in connection herewith or therewith\n(including, without limitation, the perfection or protection of the Lender's\nsecurity interest in the Collateral) and (ii) from time to time (a) relating to\nany requested amendments, waivers or consents under the Facility Documents, (b)\narising in connection with the Lender's enforcement or preservation of its\nrights (including, without limitation, the perfection and protection of its\ninterest in the Collateral) under the Facility Documents, or (c) arising in\nconnection with any audit, dispute, disagreement, litigation or preparation for\nlitigation involving the Facility Documents.\n\n\n 39\n\n\nSECTION 12. SECURITY INTEREST.\n\n 12.1 Grant of Security Interests. (a) In order to secure the full and\npunctual payment of the Secured Obligations in accordance with the terms\nthereof, and to secure the performance of all of the obligations of the Borrower\nhereunder, the Borrower hereby grants to the Lender a continuing security\ninterest in and to all of the Borrower's right, title and interest, whether now\nowned or existing or hereafter acquired or arising and regardless of where\nlocated, in and to (a) all accounts, contract rights, general intangibles,\nchattel paper, money, deposit accounts, investment property or financial assets\narising from, related or credited to or consisting of (i) the Receivables, (ii)\nthe Related Security with respect to such Receivables, (iii) all Collections,\nincluding all cash collections and other cash proceeds of the Receivables and\n(iv) any Lockbox Account and the Cash Collateral Account (and all amounts from\ntime to time on deposit therein), (b) the Purchase Agreement (including (1) all\nmoneys due or to become due to the Borrower from Edison under or in connection\nwith the Purchase Agreement and (2) all rights, remedies, powers, claims and\nprivileges under the Purchase Agreement and\/or of the Borrower against Edison or\nthe Servicer under or in connection with the Purchase Agreement), and (c) all\ncash and non-cash Proceeds of any of the foregoing (all being collectively\nreferred to as the \"Collateral\"):\n\n (b) The Security Interests are granted as security only and shall\nnot subject the Lender to, or transfer or in any way affect or modify, any\nobligation or liability of the Borrower or the Servicer with respect to any of\nthe Collateral or any transaction in connection therewith.\n\n 12.2 Further Assurances; Protection of Lender's Security Interest. (a) In\nconnection with the grant under Section 12.1, the Borrower agrees to record and\nfile, at its own expense, financing statements with respect to the Collateral,\nwhether now existing and hereafter created or acquired, suitable to reflect the\ntransfer of accounts, general intangibles and chattel paper (each as defined in\nArticle 9 of the UCC) and meeting the requirements of applicable state law in\nsuch manner and in such jurisdictions as are necessary to perfect the pledge of\nthe Collateral to the Lender.\n\n (b) The Borrower shall maintain its books and records so that such\nrecords shall indicate clearly that the Borrower's right, title and interest in\nthe Collateral has been collaterally assigned by the Borrower to the Lender.\n\n (c) The Borrower agrees that from time to time, at its sole expense,\nit shall promptly authenticate and deliver all additional instruments and\ndocuments and take all additional actions that the Lender may reasonably request\nin order to perfect the interests of the Lender in and to, or to protect, the\nCollateral or to enable the Lender to exercise or enforce any of its rights\nthereunder and hereunder. To the fullest extent permitted by applicable Law, the\nLender shall be permitted, and the Borrower hereby authorizes the Lender, to\nfile amendments to financing statements and assignments thereof consistent with\nthe terms of this Agreement (including any amendment hereto or other\nmodification hereof). Carbon, photographic or other reproductions of this\nAgreement or any financing statement shall be sufficient as a financing\nstatement.\n\n 12.3 General Authority. The Borrower hereby irrevocably appoints the\nLender its true and lawful attorney, with full power of substitution, in the\nname of the Borrower, or otherwise,\n\n\n 40\n\n\nfor the sole use and benefit of the Lender, but at the Borrower's expense, to\nthe extent permitted by Law to exercise, at any time and from time to time while\nan Event of Default has occurred and is continuing, all or any of the following\npowers with respect to all or any of the Collateral:\n\n (i) to demand, sue for, collect, receive and give acquittance\nfor any and all monies due or to become due thereon or by virtue thereof,\n\n (ii) to settle, compromise, compound, prosecute or defend any\naction or proceeding with respect thereto,\n\n (iii) to sell, transfer, assign or otherwise deal in or with\nthe Collateral or the proceeds or avails thereof, as fully and effectually as if\nthe Lender were the absolute owner thereof, and\n\n (iv) to extend the time of payment of any or all thereof and\nto make any allowance and other adjustments with reference thereto;\n\nprovided that the Lender shall give the Borrower 10 days prior written notice of\nthe time and place of any sale or other intended disposition of any of the\nCollateral. The Borrower agrees that such notice constitutes \"reasonable\nauthenticated notification of disposition\" within the meaning of Section 9-611\nof the UCC.\n\n 12.4 Remedies upon Event of Default. (a) If any Event of Default has\noccurred and is continuing, the Lender may exercise all rights of a secured\nparty under the applicable UCC and, in addition, the Lender may, without being\nrequired to give any notice, except as herein provided or as may be required by\nmandatory provisions of Law, (i) apply all amounts on deposit in the Cash\nCollateral Account in accordance with Section 12.5, (ii) succeed to the\nBorrower's rights with respect to servicing under the Purchase Agreement, (iii)\nexercise its rights and remedies under any Lockbox Agreement and (iv) sell the\nCollateral or any part thereof in any commercially reasonable manner at public\nor private sale, for cash, upon credit or for future delivery, and at such price\nor prices as the Lender may deem satisfactory. The Borrower will execute and\ndeliver such documents and take such other action as the Lender reasonably deems\nnecessary or advisable in order that any such sale may be made in compliance\nwith Law. Upon any such sale, the Lender shall have the right to deliver, assign\nand transfer to the purchaser thereof the Collateral so sold. Each purchaser at\nany such sale shall hold the Collateral so sold to it absolutely and free from\nany claim or right of whatsoever kind, including any equity or right of\nredemption of the Borrower which may be waived, and the Borrower, to the extent\npermitted by Law, hereby specifically waives all rights of redemption, stay or\nappraisal which it has or may have under any Law now existing or hereafter\nadopted. The Lender, instead of exercising the power of sale herein conferred\nupon it, may proceed by a suit or suits at law or in equity to foreclose the\nSecurity Interests and sell the Collateral, or any portion thereof, under a\njudgment or decree of a court or courts of competent jurisdiction.\n\n (b) For the purpose of enforcing any and all rights and remedies\nunder this Agreement, the Lender shall have access to and may use the Borrower's\nbooks and records relating to the Collateral and the Borrower shall (i) deliver\nto the Lender such information relating to the Collateral as the Lender may\nreasonably request and (ii) deliver to the Lender all\n\n\n 41\n\n\nRecords required to the be maintained pursuant to this Agreement relating to the\nCollateral and take all such other actions as are necessary to enable to the\nLender to protect and enforce its rights in the Collateral.\n\n 12.5 Application of Proceeds. Upon the occurrence and during the\ncontinuance of an Event of Default, the proceeds of any realization upon, or\nsale of, the Collateral shall be applied by the Lender in the following order of\npriorities:\n\n first, to payment of the expenses of such realization or sale,\nincluding reasonable compensation to agents and counsel for the Lender, and all\nreasonable expenses, liabilities and advances incurred or made by the Lender in\nconnection therewith, and any other unreimbursed expenses for which the Lender\nis to be reimbursed pursuant to Section 11 of this Agreement and unpaid fees\nowing to the Lender under this Agreement;\n\n second, to the payment of accrued but unpaid interest on the Secured\nObligations in accordance with this Agreement;\n\n third, to the payment of unpaid principal of the Secured\nObligations;\n\n fourth, to the ratable payment of all other Secured Obligations,\nuntil all Secured Obligations shall have been paid in full; and\n\n finally, to payment to the Borrower or its successors or assigns, or\nas a court of competent jurisdiction may direct or as required by applicable\nlaw.\n\n 12.6 Termination of Security Interests; Release of Collateral. Upon the\nrepayment in full of all Secured Obligations and the termination of the\nCommitment under this Agreement, the Security Interests shall terminate and all\nrights to the Collateral shall revert to the Borrower. Upon any such termination\nof the Security Interests, the Lender will, at the expense of the Borrower,\nexecute and deliver to the Borrower such documents as the Borrower shall\nreasonably request to evidence the termination of the Security Interests.\n\nSECTION 13. MISCELLANEOUS.\n\n 13.1 Notices. (a) All communications under this Agreement or the Note\nshall be in writing and shall be delivered or mailed or sent by facsimile\ntransmission or electronic transmission and confirmed in writing (i) if to the\nLender, at the following address:\n\n Merrill Lynch Mortgage Capital Inc.\n 4 World Financial Center\n 22nd Floor\n New York, New York 10080\n Attention: Richard A. Burke\n Telephone No: (212) 449-2860\n Telecopier No: (212) 449-1219\n E-mail: riburke@exchange.ml.com\n\nand (ii) if to the Borrower, at the following address:\n\n\n 42\n\n\n Edison Receivables Company LLC\n 529 Fifth Avenue, 11th Floor\n New York, New York 10017\n Attention: Christopher J. Scarlata\n Telephone No: (212) 599-2655\n Telecopier No: (212) 599-2652\n\nwith a copy to the Servicer, at the following address:\n\n Edison Schools Inc.\n 521 Fifth Avenue, 11th Floor\n New York, New York 10175\n Attention: Adam T. Feild\n Telephone No.: (212) 419-1600\n Telecopier No.: (212) 419-1705\n E-mail: afeild@edisonschools.com\n\nor at such other address or facsimile number as the parties shall have furnished\nin writing to each other.\n\n (b) Any written communication so addressed and mailed by certified\nor registered mail, return receipt requested, shall be deemed to have been given\nwhen so mailed. All other written communications shall be deemed to have been\ngiven upon receipt thereof.\n\n 13.2 Survival. All representations, warranties and covenants made by the\nBorrower herein or by the Borrower in any certificate or other instrument\ndelivered under or in connection with this Agreement shall be considered to have\nbeen relied upon by the Lender and shall survive regardless of any investigation\nmade by the Lender or on the Lender's behalf.\n\n 13.3 Successors and Assigns. This Agreement shall be binding upon the\nparties hereto and their respective successors and assigns, and shall inure to\nthe benefit of and be enforceable by the parties hereto and their respective\nsuccessors and assigns permitted hereunder. Whether or not expressly so stated,\nthe provisions of Sections 11.1 and 11.3 hereof shall be for the benefit of, and\nshall be enforceable by, any Person who shall no longer be a Lender hereunder\nbut who shall have incurred any expense or been subjected to any liability\nreferred to therein while, or on the basis of being, a Lender.\n\n 13.4 Amendment and Waiver. This Agreement and the Notes may be amended or\nsupplemented, and the observance of any term hereof or thereof may be waived,\nwith the written consent of the Borrower and the Lender (or, if multiple\nLenders, Lenders with respect to at least 66 2\/3% in aggregate unpaid principal\namount of the Loan), provided, however, that no such amendment, supplement or\nwaiver shall, without the written consent of all Lenders, (a) change, with\nrespect to the Loan, the amount or time of any required prepayment or payment of\nprincipal or premium or the rate or time of payment of interest, or change the\nfunds in which any prepayment or payment on the Loan is required to be made; (b)\nreduce the Borrowing Base, (c) reduce the percentage of the aggregate principal\namount of Loan required for any amendment,\n\n\n 43\n\n\nconsent or waiver hereunder; or (d) release any material Lien on any of the\nCollateral or affect the priority thereof.\n\n 13.5 Counterparts. This Agreement may be executed and delivered\nsimultaneously in two (2) or more counterparts, each of which shall be deemed an\noriginal, but all such counterparts shall together constitute but one and the\nsame instrument.\n\n 13.6 Reproduction of Documents. This Agreement and all documents relating\nhereto (other than the Note), including, without limitation, (a) consents,\nwaivers and modifications that may hereafter be executed, (b) documents received\nby the Lender or the Borrower, as the case may be, on any Closing Date, and (c)\ncertificates and other non-proprietary information heretofore or hereafter\nfurnished to the Lender or the Borrower may be reproduced by the receiving party\nby any photographic or other similar process and such receiving party may\ndestroy any original document so reproduced; provided, however, that, subject to\ncompliance with Section 13.8 hereof, there shall be no restriction on the\nLender's or the Borrower's ability to reproduce this Agreement and related\ndocuments for use by the Lender, the Borrower, or any Affiliate thereof. The\nLender agrees not to use Borrower's trademarks without written permission or to\nuse same in a way that imperils Borrower's use of such trademarks. The Lender\nand the Borrower each stipulate that, to the extent permitted by applicable law\nand court or agency rules, any such reproduction shall be admissible in evidence\nas the original itself in any judicial or administrative proceeding (whether or\nnot the original is in existence and whether or not such reproduction was made\nby the Lender or the Borrower, as the case may be, in the regular course of\nbusiness) and that any enlargement, facsimile or further reproduction of such\nreproduction shall be admissible in evidence to the same extent.\n\n 13.7 GOVERNING LAW; Consent to Jurisdiction and Venue. THIS AGREEMENT\nSHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF\nDELAWARE. Each of the Lender and the Borrower hereby irrevocably (i) agrees that\nany suit, action or other legal proceeding arising out of or relating to the\nFacility Documents or any Note may be brought in any court of record in the\nState of New York or in the courts of the United States of America located in\nsuch State, (ii) consents to the nonexclusive jurisdiction of each such court in\nany such suit, action or proceeding, and (iii) waives any objection which it may\nhave to the laying of venue of any such claim that any such suit, action or\nproceeding has been brought in an inconvenient forum and covenants that it will\nnot seek to challenge the jurisdiction of any such court or seek to oust the\njurisdiction of any such court, whether on the basis of inconvenient forum or\notherwise. Each of the Lender and the Borrower irrevocably consents to the\nservice of any and all process in any such suit, action or proceeding by mailing\ncopies of such process to the Lender or the Borrower, as the case may be, at its\naddress for notices provided in Section 13.1 hereof. Each of the Lender and the\nBorrower agrees that a final, non-appealable judgment in any such action or\nproceeding shall be conclusive and may be enforced in other jurisdictions by\nsuit on the judgment or in any other manner provided by law. All mailings under\nthis Section 13.7 shall be by registered or certified mail, return receipt\nrequested. Nothing in this Section 13.7 shall affect the Lender's or the\nBorrower's right to serve legal process in any other manner permitted by law or\naffect either party's right to bring any suit, action or proceeding against the\nother party or any of its properties in the courts of any other jurisdiction.\n\n\n 44\n\n\n 13.8 Confidentiality. The Borrower and the Lender (each, a \"Recipient\")\nshall hold all non-public information obtained pursuant to this Agreement and\nthe transactions contemplated hereby or effected in connection herewith\n(\"Transactions\") in accordance with customary procedures for handling\nconfidential information of this nature and will not disclose such information\nto outside parties, but may make disclosure (a) to their respective directors,\nofficers, employees, agents, counsel, auditors and other representatives\n(collectively, \"Representatives\") who need to know such non-public information\nfor purposes of evaluating the Transactions, who are informed of the\nconfidential nature of such non-public information and who agree to be bound by\nthe terms of this Section 13.8, (b) as reasonably required by a bona fide\ntransferee (or prospective transferee which agrees in writing to comply with\nthis Section 13.8), (c) as necessary in order to obtain any consents, approvals,\nwaivers or other arrangements required to permit the execution, delivery and\nperformance of this Agreement and (d) as required or requested by any Official\nBody or pursuant to legal process or as required by applicable Law; provided,\nthat that non-public information shall not include information which (i) is or\nbecomes generally available to the public other than as a result of a disclosure\nby a Recipient or its Representatives, (ii) was available to a Recipient on a\nnonconfidential basis prior to its disclosure to such Recipient by the other\nparty or such other party's Representative or (iii) becomes available to a\nRecipient on a non-confidential basis from a source other than the other party\nor such other party's Representatives, who is not known by such Recipient to be\nbound by a confidentiality agreement with the Recipient or otherwise prohibited\nfrom transmitting the information to such Recipient. In the event that the\nBorrower or the Lender (as applicable, the \"disclosing party\") is so required or\nrequested to make any disclosure pursuant to clause (d) above, it is agreed that\nthe disclosing party shall use reasonable efforts to give prompt notice of such\nrequirement or request so that such other party may seek an appropriate\nprotective order. As determined on any date, the obligations under this Section\n13.8 shall terminate one year following the then current Expiration Date\ndescribed in clause (i) of the definition thereof but in no event shall such\nobligations terminate more than two years following such determination date.\n\n 13.9 Waiver of Jury Trial. EACH PARTY HERETO HEREBY KNOWINGLY,\nVOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT\nPERMITTED BY LAW, ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE\nARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE\nRELATIONSHIP BETWEEN THEM ESTABLISHED BY THIS AGREEMENT, ANY NOTE OR ANY OTHER\nCONTRACT, INSTRUMENT, DOCUMENT, OR AGREEMENT ENTERED INTO IN CONNECTION WITH\nTHIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR ANY COURSE OF CONDUCT,\nCOURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF ANY OTHER\nPERSON.\n\n 13.10 No Implied Waiver; Cumulative Remedies. No course of dealing and no\ndelay or failure of Lender in exercising any right, power or privilege under the\nFacility Documents shall affect any other or future exercise thereof or the\nexercise of any other right, power or privilege; nor shall any single or partial\nexercise of any such right, power or privilege or any abandonment or\ndiscontinuance of steps to enforce such a right, power or privilege preclude any\nfurther exercise thereof or of any other right, power or privilege. The rights\nand remedies of the Lender under the Facility Documents are cumulative and not\nexclusive of any rights or remedies which the Lender would otherwise have.\n\n\n 45\n\n\n 13.11 No Discharge. The obligations of the Borrower under the Facility\nDocuments shall be absolute and unconditional and shall remain in full force and\neffect without regard to, and shall not be released, discharged or in any way\naffected by (a) any exercise or nonexercise of any right, remedy, power or\nprivilege under or in respect of the Facility Documents or applicable Law,\nincluding, without limitation, any failure to set-off or release in whole or in\npart by the Lender of any balance of any deposit account or credit on its books\nin favor of the Borrower, or any waiver, consent, extension, indulgence or other\naction or inaction in respect of any thereof, or (b) any other act or thing or\nomission or delay to do any other act or thing which could operate as a\ndischarge of the Borrower as a matter of Law.\n\n 13.12 Severability. The provisions of this Agreement are intended to be\nseverable. If any provision of this Agreement shall be held invalid or\nunenforceable in whole or in part in any jurisdiction, such provision shall, as\nto such jurisdiction, be ineffective to the extent of such invalidity or\nunenforceability without in any manner affecting the validity or enforceability\nof such provision in any other jurisdiction or the remaining provisions hereof\nin any jurisdiction.\n\n 13.13 Prior Understandings. This Agreement sets forth the entire\nunderstanding of the parties relating to the subject matter hereof, and\nsupersedes all prior understandings and agreements, whether written or oral.\n\n 13.14 Set-Off. In addition any rights and remedies of the Lender hereunder\nand by Law, the Lender shall have the right, without prior notice to the\nBorrower, any such notice being expressly waived by the Borrower to the extent\npermitted by applicable Law, upon any amount becoming due and payable by the\nBorrower hereunder (whether at the stated maturity, by acceleration or\notherwise) to set-off and appropriate and apply against such amount any and all\ndeposits (general or special, time or demand, provisional or final), in any\ncurrency, in each case whether direct or indirect, absolute or contingent,\nmatured or unmatured, at any time held or owing by the Lender or any Affiliate\nthereof to or for the credit or the account of the Borrower or any Affiliate\nthereof. The Lender agrees promptly to notify the Borrower after any such\nset-off and application made by the Lender; provided that the failure to give\nsuch notice shall not affect the validity of such set-off and application.\n\n\n 46\n\n\n IN WITNESS WHEREOF, the parties hereto have cause this Agreement to\nbe duly executed as of the day and year first above written.\n\n EDISON RECEIVABLES COMPANY LLC,\n as Borrower\n\n By: \/s\/ Christopher J. Scarlata\n ---------------------------------\n Name: Christopher J. Scarlata\n Title: President\n\n\n MERRILL LYNCH MORTGAGE CAPITAL INC.,\n as Lender\n\n By: \/s\/ Richard Burke\n ---------------------------------\n Name: Richard Burke\n Title: Director\n\n [SIGNATURE PAGE TO EDISON CREDIT AGREEMENT]\n\n\n TABLE OF CONTENTS\n\n<\/pre>\n
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\nSECTION 1. INTERPRETATION OF AGREEMENT AND NOTES ………………………….. 1<\/p>\n 1.1 Definitions …………………………………………… 1<\/p>\n
1.2 Interpretation and Construction …………………………. 14<\/p>\n
1.3 Governing Law; Submission to Jurisdiction ………………… 15<\/p>\n
SECTION 2. COMMITMENT ………………………………………………….. 15<\/p>\n
2.1 The Loan ……………………………………………… 15<\/p>\n
2.2 Borrowings; Closings …………………………………… 16<\/p>\n
2.3 Selection of LIBOR Periods; Interest Rates ……………….. 17<\/p>\n
2.4 Security Interests …………………………………….. 18<\/p>\n
2.5 Indemnity for Taxes, Reserves and Expenses ……………….. 18<\/p>\n
2.6 Commitment Fee ………………………………………… 19<\/p>\n
2.7 [Reserved] ……………………………………………. 19<\/p>\n
2.8 Termination of Commitment ………………………………. 19<\/p>\n
2.9 Reports ………………………………………………. 19<\/p>\n
SECTION 3. GENERAL REPRESENTATIONS AND WARRANTIES OF THE
\n BORROWER ……………………………………………………. 19<\/p>\n
3.1 Existence and Power ……………………………………. 20<\/p>\n
3.2 Corporate and Governmental Authorization; No Contravention …. 20<\/p>\n
3.3 Binding Effect ………………………………………… 20<\/p>\n
3.4 Litigation ……………………………………………. 20<\/p>\n
3.5 Investment Company …………………………………….. 20<\/p>\n
3.6 Events of Default or Default ……………………………. 20<\/p>\n
3.7 Use of Proceeds ……………………………………….. 20<\/p>\n
3.8 Accurate and Complete Disclosure ………………………… 21<\/p>\n
3.9 Taxes ………………………………………………… 21<\/p>\n
3.10 Books and Records ……………………………………… 21<\/p>\n
3.11 Financial Condition ……………………………………. 21<\/p>\n
3.12 No Debt ………………………………………………. 21<\/p>\n
3.13 ERISA ………………………………………………… 21<\/p>\n
SECTION 3A. REPRESENTATIONS AND WARRANTIES OF THE BORROWER
\n RELATING TO COLLATERAL ……………………………………….. 21
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\n 3A.1 Place of Business; Records Location; Etc …………………. 21<\/p>\n 3A.2 No Liens ……………………………………………… 22<\/p>\n
3A.3 No Adverse Actions …………………………………….. 22<\/p>\n
3A.4 Filings ………………………………………………. 22<\/p>\n
3A.5 Eligible Receivables …………………………………… 22<\/p>\n
3A.6 Notice ……………………………………………….. 22<\/p>\n
3A.7 Assignment ……………………………………………. 22<\/p>\n
3A.8 Permitted Lockbox Banks and Lockbox Accounts ……………… 22<\/p>\n
3A.9 Consideration …………………………………………. 23<\/p>\n
3A.10 New York Management Contracts …………………………… 23<\/p>\n
SECTION 4. CONDITIONS TO LENDER’S OBLIGATION TO FUND THE
\n BORROWING REQUEST ON THE INITIAL CLOSING DATE …………………… 23<\/p>\n
4.1 Certified Resolutions ………………………………….. 23<\/p>\n
4.2 Articles of Incorporation; Certificate of Formation ……….. 23<\/p>\n
4.3 Good Standing Certificates; Etc …………………………. 23<\/p>\n
4.4 Incumbency; Specimen Signatures; By-Laws; Etc …………….. 23<\/p>\n
4.5 Financing Statements …………………………………… 24<\/p>\n
4.6 Lien Searches …………………………………………. 24<\/p>\n
4.7 Legal Opinions ………………………………………… 24<\/p>\n
4.8 Other Documents ……………………………………….. 24<\/p>\n
4.9 Fees …………………………………………………. 24<\/p>\n
4.10 Lockboxes …………………………………………….. 24<\/p>\n
4.11 Officer’s Certificates …………………………………. 24<\/p>\n
4.12 Contracts …………………………………………….. 24<\/p>\n
4.13 Receivables List ………………………………………. 25<\/p>\n
4.14 Agreed-Upon Procedures Letter …………………………… 25<\/p>\n
4.15 Cash Collateral Account ………………………………… 25<\/p>\n
SECTION 5. CONDITIONS TO LENDER’S OBLIGATION TO FUND
\n BORROWING REQUESTS (INCLUDING THE INITIAL
\n BORROWING REQUEST) AND TO MAINTAIN THE LOAN …………………….. 25<\/p>\n
5.1 Representations True; No Default or Event of Default ………. 25<\/p>\n
5.2 Borrowing Base ………………………………………… 25<\/p>\n
5.3 Borrowing Notice; Tranche Selection Notice ……………….. 26<\/p>\n
5.4 Other Matters …………………………………………. 26
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\nSECTION 6. LOAN MATURITY; LOAN PREPAYMENTS ……………………………….. 26<\/p>\n 6.1 Loan Maturity …………………………………………. 26<\/p>\n
6.2 Mandatory Prepayments ………………………………….. 26<\/p>\n
6.3 Voluntary Prepayments ………………………………….. 26<\/p>\n
6.4 Allocation of Prepayments ………………………………. 26<\/p>\n
6.5 Prepayment Notice ……………………………………… 26<\/p>\n
6.6 Payment Instructions; Etc ………………………………. 26<\/p>\n
SECTION 6A. CASH COLLATERAL ACCOUNT ………………………………………. 26<\/p>\n
6A.1 Establishing the Cash Collateral Account …………………. 26<\/p>\n
6A.2 Deposits into the Cash Collateral Account ………………… 27<\/p>\n
6A.3 Withdrawals from the Cash Collateral Account ……………… 27<\/p>\n
SECTION 7. ASSIGNMENTS AND PARTICIPATIONS ………………………………… 27<\/p>\n
7.1 Assignments …………………………………………… 27<\/p>\n
7.2 Participations ………………………………………… 28<\/p>\n
SECTION 8. CERTAIN COVENANTS OF THE BORROWER ……………………………… 28<\/p>\n
8.1 Notice of Default or Event of Default ……………………. 28<\/p>\n
8.2 Notice of Material Adverse Change ……………………….. 28<\/p>\n
8.3 Purchase Agreement Notices ……………………………… 28<\/p>\n
8.4 Preservation of Existence ………………………………. 29<\/p>\n
8.5 Compliance with Laws …………………………………… 29<\/p>\n
8.6 Enforceability of Obligations …………………………… 29<\/p>\n
8.7 Books and Records ……………………………………… 29<\/p>\n
8.8 Fulfillment of Obligations ……………………………… 29<\/p>\n
8.9 Maintenance of Office; Notice of Relocation ………………. 29<\/p>\n
8.10 Compliance with Opinion Assumptions and Limited Liability
\n Company Agreement ……………………………………… 29<\/p>\n
8.11 [Reserved] ……………………………………………. 29<\/p>\n
8.12 Litigation ……………………………………………. 29<\/p>\n
8.13 Fees, Taxes and Expenses ……………………………….. 30<\/p>\n
8.14 Compliance with the Purchase Agreement …………………… 30<\/p>\n
8.15 Information …………………………………………… 30<\/p>\n
8.16 Maintenance of Separate Existence ……………………….. 30<\/p>\n
8.17 Nature of Business and Permitted Transactions …………….. 32
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\n 8.18 Due Diligence …………………………………………. 32<\/p>\n 8.19 Lockbox and Lockbox Accounts ……………………………. 33<\/p>\n
SECTION 9. NEGATIVE COVENANTS OF THE BORROWER …………………………….. 33<\/p>\n
9.1 No Rescissions or Modifications …………………………. 33<\/p>\n
9.2 No Liens ……………………………………………… 33<\/p>\n
9.3 No Changes ……………………………………………. 33<\/p>\n
9.4 Capitalization; Distributions …………………………… 34<\/p>\n
9.5 No Indebtedness ……………………………………….. 34<\/p>\n
9.6 Consolidations, Mergers and Sales of Assets ………………. 34<\/p>\n
9.7 ERISA ………………………………………………… 34<\/p>\n
9.8 Investments in Other Persons ……………………………. 34<\/p>\n
9.9 Transactions with Affiliate …………………………….. 34<\/p>\n
9.10 Purchase Agreement …………………………………….. 34<\/p>\n
9.11 Lockboxes …………………………………………….. 34<\/p>\n
9.12 Credit and Collection Policy ……………………………. 34<\/p>\n
SECTION 10. DEFAULTS, REMEDIES AND TERMINATION …………………………….. 35<\/p>\n
10.1 Events of Default ……………………………………… 35<\/p>\n
10.2 Default Remedies ………………………………………. 37<\/p>\n
SECTION 11. INDEMNIFICATION; FUNDING LOSSES; EXPENSES ………………………. 38<\/p>\n
11.1 Indemnification ……………………………………….. 38<\/p>\n
11.2 Funding Losses ………………………………………… 39<\/p>\n
11.3 Expenses ……………………………………………… 39<\/p>\n
SECTION 12. SECURITY INTEREST ……………………………………………. 40<\/p>\n
12.1 Grant of Security Interests …………………………….. 40<\/p>\n
12.2 Further Assurances; Protection of Lender’s Security Interest .. 40<\/p>\n
12.3 General Authority ……………………………………… 40<\/p>\n
12.4 Remedies upon Event of Default ………………………….. 41<\/p>\n
12.5 Application of Proceeds ………………………………… 42<\/p>\n
12.6 Termination of Security Interests; Release of Collateral …… 42<\/p>\n
SECTION 13. MISCELLANEOUS ……………………………………………….. 42<\/p>\n
13.1 Notices ………………………………………………. 42<\/p>\n
13.2 Survival ……………………………………………… 43<\/p>\n
13.3 Successors and Assigns …………………………………. 43
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\n 13.4 Amendment and Waiver …………………………………… 43<\/p>\n 13.5 Counterparts ………………………………………….. 44<\/p>\n
13.6 Reproduction of Documents ………………………………. 44<\/p>\n
13.7 GOVERNING LAW; Consent to Jurisdiction and Venue ………….. 44<\/p>\n
13.8 Confidentiality ……………………………………….. 45<\/p>\n
13.9 Waiver of Jury Trial …………………………………… 45<\/p>\n
13.10 No Implied Waiver; Cumulative Remedies …………………… 45<\/p>\n
13.11 No Discharge ………………………………………….. 46<\/p>\n
13.12 Severability ………………………………………….. 46<\/p>\n
13.13 Prior Understandings …………………………………… 46<\/p>\n
13.14 Set-Off ………………………………………………. 46
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