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INTEREST FREE LOAN AGREEMENT
This Loan Agreement, dated as of April __, 2012 (this “Agreement”) is made by and
between Citizens of the World Charter Schools, a California nonprofit public benefit corporation
(the “Lender”), and Citizens of the World Charter Schools - Los Angeles, a California nonprofit
public benefit corporation (the “Borrower”).
The Lender has agreed to make a loan of $450,000 to Borrower (the “Loan”) subject to
the terms, covenants and conditions set forth in this Agreement. Accordingly, for valuable
consideration, the receipt and sufficiency of which are acknowledged, the Lender and the
Borrower agree as follows:
1. Definitions. Certain capitalized terms used in this Agreement are defined on the attached
Schedule of Definitions.
2. The Loan.
(a) Purpose. The proceeds of the Loan shall be used in furtherance of the Borrower’s
tax-exempt educational and charitable purposes, and shall not inure to the benefit of any private
shareholder or individual within the meaning of section 501(c)(3) of the Code. Specifically, the
proceeds of the Loan shall be used for the development of, and start-up costs related to, the new
Citizens of the World school expected to open in the Silver Lake neighborhood of Los Angeles.
(b) Interest. The outstanding principal balance of the Loan shall bear no interest.
Accrued interest, if any, shall be payable in arrears on the last day of each Interest Period, and on
the Termination Date.
(c) Principal Payments. The unpaid principal balance of the Loan shall be due and
payable in full on the Termination Date.
(d) Prepayment. The Loan may be prepaid in whole or in part at any time without a
premium or penalty. Loan repayments and prepayments may not be reborrowed.
(e) Default. If an Event of Default occurs under the applicable Loan Documents, and
while such Event of Default is continuing, the interest rate on the outstanding Loan amount may
be increased by 2.00% above the rate otherwise in effect.
(f) Late Charge. The Lender may assess a late charge for any payment due under the
Loan Documents that is fifteen days or more past due in the amount of 5% of such past due
payment.
3. Conditions to Funding of the Loan. The Loan shall be fully funded within 5 Business
Days of the date of this Agreement, subject to the following conditions precedent:
(a) No Defaults. No Default shall be continuing.
(b) Representations. All representations and warranties of the Borrower contained in
this Agreement or any Loan Document shall be true and correct in all material respects.
79208.000002 EMF_US 39736866v1 1
4. Representations and Warranties. In order to induce the Lender to make the Loan to the
Borrower, the Borrower represents and warrants as follows:
(a) Legal Existence. The Borrower is a nonprofit public benefit corporation duly
formed, validly existing and in good standing under the laws of the State of California.
(b) Tax-Exempt Status. The Borrower qualifies for exemption from federal income
taxation pursuant to section 501(c)(3) of the Code. The Borrower qualifies for exemption from
California state income taxation pursuant to section 23701d of the California Revenue and
Taxation Code.
(c) Execution of Documents. The Borrower has the power and has taken all of the
necessary actions to execute, deliver and perform the terms of the Loan Documents. When
executed and delivered, the Loan Documents will be binding obligations of the Borrower,
enforceable in accordance with their terms and will not violate any provisions of law or conflict
with, result in a breach of or constitute a default under the organizational documents of the
Borrower or under any other agreement to which the Borrower is a party.
(d) Compliance with Laws. The Borrower is in compliance in all material respects
with all federal, state and local laws, regulations and ordinances, including but not limited to
environmental laws and regulations.
(e) Debt. The Borrower is not in default with respect to any debt.
5. Covenants. In consideration of the Loan, the Borrower covenants and agrees that, unless
the Lender otherwise consents in writing:
(a) Notices. The Borrower shall furnish to the Lender prompt written notice of
(1) the occurrence of each Default or an Event of Default, or (2) the institution of any material
litigation concerning the Borrower.
(b) Compliance with Laws. The Borrower shall comply with all applicable laws and
regulations (including, without limitation, environmental laws and regulations) and shall timely
pay all due and payable taxes, assessments or governmental charges lawfully levied or imposed
on or against it or any of its properties.
6. Default. Upon the occurrence of an Event of Default, any obligation of the Lender to
make the Loan shall terminate and the Lender, at its option, by written notice to the Borrower,
may declare all Indebtedness to the Lender to be immediately due and payable.
7. Miscellaneous.
(a) Notices. All notices, requests, demands or other communications provided for in
this Agreement or any other Loan Document shall be in writing and shall be delivered by hand,
sent prepaid by a recognized overnight delivery service or sent by the United States mail,
certified, postage prepaid, return receipt requested, to the Lender at 5731 Wilshire Boulevard,
Suite 210, Los Angeles, California 90036, or to the Borrower at 5731 Wilshire Boulevard, Suite
210, Los Angeles, California 90036 with a copy to Ofer Lion at Hunton & Williams LLP, 550
79208.000002 EMF_US 39736866v1 2
South Hope Street, Suite 2000, Los Angeles, California 90071-2627, or at such other address as
may be specified by a party in a written notice given to the other party.
(b) Successors and Assigns. This Agreement will be binding upon and inure to the
benefit of the Lender and the Borrower, and their respective successors and assigns, provided
that the Borrower may not assign or transfer its rights under this Agreement. The Lender may, at
any time, sell, transfer or assign the Note and any Loan Documents, and any or all servicing
rights with respect thereto.
(c) Waiver. The rights of the Lender under this Agreement and the other Loan
Documents shall be in addition to all other rights provided by law. No waiver of any provision
of this Agreement, or any other Loan Document, shall be effective unless in writing, and no
waiver shall extend beyond the particular purpose involved. No waiver in any one case shall
require the Lender to give any subsequent waivers.
(d) Third Parties; Benefit; Miscellaneous. All conditions to the Lender’s obligation
to make the Loan are imposed solely for the benefit of the Lender and its successors, assigns and
participants, and no other person shall be deemed to be a beneficiary of such conditions or be
entitled to require satisfaction of such conditions in accordance with their terms or to assume that
the Lender will require strict compliance therewith. The terms and provisions of this
commitment are for the benefit of the parties hereto and no other person shall have any right or
cause of action on account thereof.
(e) Sole Agreement. This Agreement and the other Loan Documents represent the
entire agreement between the Lender and the Borrower, and supersede all prior commitments
and may be modified only by an agreement in writing signed by both parties hereto.
(f) Survival of Agreement. All terms contained in this Agreement shall survive the
delivery of this Agreement and the other Loan Documents and the making of the Loan and shall
remain in full force and effect until the Indebtedness is fully discharged.
(g) Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY LAW,
THE LENDER AND THE BORROWER KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
BASED ON, ARISING OUT OF OR UNDER, OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT.
(h) Governing Law. This Agreement will be governed by the laws of the State of
California, without reference to conflict of laws principles.
(i) Counterparts. This Agreement may be executed in counterparts, and all such
counterparts together shall constitute one and the same Agreement.
(Signature page follows)
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In Witness Whereof, the parties have caused this Agreement to be executed as of the date first
above written.
LENDER:
CITIZENS OF THE WORLD CHARTER SCHOOLS,
a California nonprofit public benefit corporation
By:
Name:
Its:
BORROWER:
CITIZENS OF THE WORLD CHARTER SCHOOLS -
LOS ANGELES,
a California nonprofit public benefit corporation
By:
Name:
Its:
INTEREST FREE LOAN AGREEMENT
79208.000002 EMF_US 39736866v1 Signature Page
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