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Exhibit 10.13
EXECUTION COPY
OPTION AGREEMENT
This Option Agreement (the "Agreement"), dated as of March 14,
1995, between Xxxxxx, Read & Co. Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 ("Holder") and The Edison Project L.P., formerly Xxxxxxx Schools L.P. (the
"Partnership") is entered into pursuant to the Letter Agreement between Holder
and the Partnership dated as of March 14, 1995. Capitalized terms used but not
defined herein are used as defined in the Partnership's Amended and Restated
Agreement of Limited Partnership dated as of March 14, 1995, among WSI Inc., a
Delaware corporation ("WSI"), and Sprout Edison Project, Inc., a Delaware
corporation, as general partners, and the persons listed on Schedule 1 thereto,
as limited partners, as amended from time to time (as so amended, the
"Partnership Agreement").
Holder and the Partnership hereby agree as follows:
1. Issuance. The Partnership hereby grants to Holder the
option (the "Option") to purchase the Interest (defined below) from the
Partnership. The Option is exercisable in whole or in part in accordance with
this Agreement.
2. Exercise. Except as provided below, Holder may exercise the
Option in whole at any time or in part from time to time, on or before July 2,
2002 following at least 5 Business Days written notice to the Partnership
specifying the portion of the Option to be exercised and the date of exercise,
by transfer, on the day specified in such notice, of immediately available funds
in the amount of the Exercise Price (defined below) or portion thereof related
to the portion of the Option to be exercised, to account number 5000245941 at
First American National Bank, Nashville, Tennessee (for further transfer to the
Knoxville office), ABA # 064-000017, or such other account as the Partnership
may designate by written notice to Holder, failing which the Option shall expire
unexercised and the Partnership shall have no further obligation hereunder. Upon
the exercise of any portion of the Option, the books and records of the
Partnership shall be appropriately amended to reflect Holder's acquisition of
the Interest.
3. Definitions.
(a) "Interest" means a limited partnership interest in the
Partnership having a 1.574803% Percentage Interest on March 14, 1995 (assuming
all other options granted or reserved by the Partnership to be granted have not
been exercised and subject to dilution and other adjustment and amendment as
provided in paragraph 4 below). In the event of any transaction in which the
Partnership and/or the Partnership's business is reorganized as a corporation,
Holder shall upon the exercise of the Option be entitled to receive common
voting stock of such corporation in an amount equal to the amount of such stock
Holder would have received had the Option been exercised immediately prior to
the occurrence of such reorganization as determined by the Partnership's Board
of Directors in accordance with the Partnership Agreement. Such stock shall be
the "Interest" for all purposes of this Agreement and be subject to further
dilution, adjustment or amendment following such event as provided in paragraph
4 below.
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(b) "Exercise Price" means $50,000.00.
4. Dilution, Adjustment and Amendment. The Percentage Interest
and other attributes of the Interest are subject to dilution and other
adjustment and amendment from time to time in the same manner as the Partnership
Interest in the Partnership purchased by WSI on March 14, 1995. The Partnership
will notify Holder at least 10 Business Days prior to the closing of any
material capital transaction or reorganization of the Partnership or the
Partnership's business and will provide Holder with information describing the
transaction (including valuation information) and copies of any amendments to
the Partnership Agreement not previously provided to Holder. Nothing herein
shall limit the power and authority of the General Partners of the Partnership
to amend the Partnership Agreement.
5. Redemption.
(a) IPO. Upon the closing of an initial public offering
("IPO") by the Partnership (or successor corporation), the Partnership may
redeem the Option, if not previously exercised, if in connection with such IPO
the Partnership (or its successor) is redeeming all of the other options (or
similar rights) to purchase an interest in the Partnership (or its successor)
then outstanding. In the event of an IPO by the Partnership (or successor
corporation) where the Partnership is not entitled to or does not exercise this
redemption right, Holder shall agree to such "lock-up" restrictions, if any,
requested by the underwriters of the IPO, which restriction is also agreed to by
the officers, directors and principal owners of the Partnership.
(b) Merger or Consolidation. Upon the closing of a merger or
consolidation of the Partnership (or a successor corporation) with or into
another entity when the Partnership (or its successor) is not the surviving
entity, the Partnership (or its successor) may redeem the Option, if not
previously exercised, if in connection with such merger or consolidation the
Partnership (or its successor) is redeeming all of the other options (or similar
rights) to purchase an interest in the Partnership (or its successor) then
outstanding. If the Partnership is not entitled to or does not exercise this
redemption right, Holder shall upon the exercise of the option following the
closing of such transaction, in accordance with the terms and conditions of this
Agreement and in lieu of the Interest then acquirable and receivable upon the
exercise of the Option, be entitled to receive such shares of stock, securities
or other property as Holder would have received had Holder exercised the Option
immediately before the closing of such transaction and subject to further
dilution, adjustment or amendment following such transaction as provided in
paragraph 4 above and the other terms and conditions of this Agreement.
(c) Prior to any redemption under (a) or (b) above, the
Partnership (or its successor) shall give Holder no less than 10 Business Days
prior written notice of its intent to redeem the Option. Such notice shall
contain information with respect to the event giving rise to such redemption,
the redemption date and the redemption price. The redemption price shall be the
difference between the exercise price hereunder and in the case of (a) an
initial public offering, the public offering price for the number of shares of
stock Holder would then be entitled to purchase hereunder or (b) any merger or
consolidation in connection with which redemption is permitted hereunder, the
price that is being paid for all Partnership Interests multiplied by the
Percentage Interest Holder is then entitled to purchase hereunder (or in the
event the Partnership has converted to a corporation, the number of shares of
stock Holder is then entitled to purchase)
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as determined by the Partnership's Board of Directors in accordance with the
Partnership Agreement.
(d) Sale of Assets. Upon the closing of a sale of all or
substantially all of the Partnership's assets, the Partnership (or its
successor) shall redeem the Option for a redemption price equal to the
difference between the exercise price hereunder and the amount that would have
been paid to Holder on the liquidation of the Partnership (or its successor) had
the Option been exercised immediately before the closing of such transaction.
6. No Rights as a Limited Partner or Shareholder. This Option
Agreement does not entitle Holder to any voting rights or other rights as a
Limited Partner of the Partnership or as a shareholder of any successor entity
to the Partnership's business prior to the exercise of Holder's rights to
purchase the Interest or any shares of a successor.
7. Representations, Warranties and Covenants of the
Partnership. The Partnership represents and warrants to Holder as follows:
(a) Organization. The Partnership is a limited partnership
duly organized, validly existing and in good standing under the laws of Delaware
and has all requisite power and authority to carry on its business as presently
being conducted and proposed to be conducted, to execute and deliver this
Agreement, to perform its obligations hereunder, and to consummate the
transactions contemplated hereby. The Partnership has delivered to Holder a
true, complete and correct copy of the Partnership Agreement and such Agreement
is in full force and effect.
(b) Qualification; Good Standing. The Partnership is duly
qualified or authorized to do business and in good standing as a foreign limited
partnership in any jurisdiction where the failure to be so authorized or
qualified would have a material adverse affect on the Partnership or its
business.
(c) Authorization. The Partnership has taken all partnership
action necessary to authorize the execution and delivery of this Agreement,
performance of its obligations hereunder and consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Partnership and, assuming due execution and delivery by Holder, constitutes a
valid and binding obligation of the Partnership, enforceable against the
Partnership in accordance with its terms (subject to applicable bankruptcy and
similar laws).
(d) No Conflict. The execution and delivery by the Partnership
of this Agreement, its consummation of the transactions contemplated hereby and
compliance with the provisions hereof, will not (i) violate or conflict with the
Partnership Agreement, (ii) violate, conflict with, or give rise to any right of
termination, cancellation, or acceleration under any agreement or other
instrument to which the Partnership is a party or to which it or any of its
assets is subject, (iii) violate or conflict with any Laws, or (iv) require any
consent, approval or other action of, notice to, or filing with any entity or
person (governmental or private), except those, if any, that have been obtained
or made. "Laws" means all laws, rules, regulations, ordinances, orders,
judgments, injunctions, decrees and other legislative, administrative or
judicial restrictions.
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8. Representations, Warranties and Covenants of Holder. Holder
represents, warrants and covenants to the Partnership that:
(a) Holder has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of the
Option and the Interest and has the ability to bear the economic risks
associated therewith. Holder has carefully reviewed this Agreement and the
Partnership Agreement and any other information provided by the Partnership to
Holder in connection with the Option or the Partnership's business. Holder has
had a reasonable opportunity to ask questions of and receive answers from the
Partnership, or a person or persons acting on its behalf, concerning the terms
and conditions of the Option, and to obtain additional information, to the
extent possessed by the Partnership or obtainable by it without unreasonable
effort or expense. All such questions have been answered to the full
satisfaction of the Holder. No oral or written representations or warranties
have been made or oral or written information furnished or oral or written
promises made to Holder in connection with the Partnership, the Option or the
Interest which were in any way inconsistent with this Agreement or the
Partnership Agreement.
(b) Holder understands that an investment in the Partnership
involves a high degree of risk and that the Option and the Interest may prove to
be valueless.
(c) Holder acknowledges that upon exercise of the Option in
exchange for a Partnership Interest, Holder will be a Limited Partner of the
Partnership and will thereafter be subject to the Partnership Agreement.
(d) Holder understands that (i) the Interest is transferable
only in accordance with the restrictions in the Partnership Agreement and
applicable law (it being understood that the foregoing prohibitions on transfer
apply to any transfer by way of pledge, assignment, sale or any other means of
disposition), (ii) the issuance of the Option to Holder has not been, and the
issuance of the Interest will not be, registered under the Securities Act of
1933, as amended (the "1933 Act"), nor has or will either of such issuance been
or be registered or qualified under any state securities or "Blue Sky" law,
(iii) the issuance of the Option has not been, and the issuance of the
Partnership Interest will not be, reviewed, approved or otherwise passed upon by
the U.S. Securities and Exchange Commission, any state securities administrator,
the National Association of Securities Dealers, Inc., any securities or
commodities exchange, or any other governmental agency or self-regulatory
authority on the ground that the issuance contemplated by this Option Agreement
will be exempt from the registration and qualification requirements thereof, and
the Partnership's reliance on such exemption is predicated on the
representations set forth in this paragraph 7, and (iv) the Partnership is under
no obligation to register the Option or the Interest or to assist Holder in
complying with any exemption from registration.
(e) Holder is validly existing and in good standing under the
laws of its jurisdiction of organization, has its principal place of business in
the state set forth on the first page of this Agreement, has no present
intention to relocate to any other state or jurisdiction, is authorized to enter
into this Agreement, and the person executing this Agreement is authorized to do
so on behalf of Holder.
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(f) Holder is acquiring the Option solely for Holder's own
account for investment purposes only and not for the account of any other person
and not with a view to or for, in whole or in part, distribution, assignment or
resale to others of the Option or the Interest, and no other person has or will
have a direct or indirect beneficial interest in the Option or the Interest.
(g) Holder will notify the Partnership at least 10 business
days prior to any transfer, pledge, assignment or other disposition of the
Option. In no event xxxx Xxxxxx make a disposition of the Option or securities
issuable upon exercise of the Option unless and until (i) Holder shall have
notified the Partnership of the proposed disposition, and (ii) if requested by
the Partnership, Holder shall have furnished the Partnership with an opinion of
counsel satisfactory to the Partnership and its counsel to the effect that an
exemption from the registration requirements of the 1933 Act and any applicable
state law is available.
9. Confidentiality. To the extent Holder acquires non-public
information with respect to the Partnership, including, without limitation,
technical, financial, competitive, marketing, sales, and business information,
documents and tangible items (collectively, the "Information"), Holder shall
keep such Information strictly confidential and not any time hereafter disclose
or divulge such Information to any person, firm or corporation or otherwise use
such Information for any purpose without the prior written consent of the
Partnership, provided that Holder may disclose such information to Holder's
advisors, including its counsel, for the purpose of advising Holder in
connection with this Agreement, provided such advisors shall agree to keep such
Information confidential as provided herein. "Information" shall not include
information which (a) becomes generally available to the public or (b) Holder is
legally compelled to disclose (by deposition, interrogatories, requests for
information or documents in legal proceedings, subpoena, civil investigative
demand or other similar process).
10. Indemnification. Holder agrees to indemnify and hold
harmless the Partnership and its respective officers, directors and affiliates
from and against all damages, losses, costs and expenses (including reasonable
attorneys' fees and expenses) which they may incur by reason of Holder's failure
to fulfill any of the terms or conditions of this Agreement, or by reason of any
breach of the representations and warranties made by Holder herein or in any
document provided by Holder to the Partnership. The Partnership agrees to
indemnify and hold harmless Holder and its respective officers, directors and
affiliates from and against all damages, losses, costs and expenses (including
reasonable attorneys' fees and expenses) which they may incur by reason of any
breach of the representations and warranties made by the Partnership herein.
11. Satisfaction of Letter Agreement. Holder hereby
acknowledges that (i) the issuance of the Option satisfies the obligation of the
Partnership under the letter agreement dated as of March 14, 1995 between the
Holder and the Partnership to grant to Holder an option to purchase a limited
Partnership Interest in the Partnership, and (ii) Holder has no right to acquire
any equity interest in the Partnership (or any successor) other than the Option.
12. Governing Law. This Option Agreement is governed by the
substantive laws of the State of New York, without regard to the choice of law
principles thereof.
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13. Miscellaneous. (a) All notices, demands, elections,
requests or other communications which any party to this Option Agreement may
desire or be required to give hereunder shall be in writing and shall be given
by personal delivery, recognized overnight delivery service, telecopy or by
mailing (by registered or certified first class mail, postage prepaid, return
receipt requested) addressed as follows:
if to the Partnership, at:
The Edison Project L.P.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: 000-000-0000
with a copy to:
Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Telecopy: 000-000-0000
Attention: Xxxx X. Xxxxxx, Esq.
if to Holder, at the address first shown above,
with a copy to:
Xxxxxx, Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx, Esq.
or at such other address or telecopy number as may be designated by one party by
notice given as provided herein to the other party. A notice shall be deemed to
have been given (i) if delivered personally, on the date so delivered (or, if
not a Business Day, on the next following Business Day), (ii) if sent by
recognized overnight delivery service, on the Business Day following the date
sent, (iii) if sent by telecopy, upon electronic confirmation of receipt, or
(iv) if sent by registered or certified first class mail, postage prepaid,
return receipt requested, five Business Days following the date sent.
(b) This Agreement may not be changed orally, but only by an
agreement in writing signed by the Partnership and Holder.
(c) This Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof.
(d) Within five days after receipt of a written request from
the Partnership, Holder agrees to provide such information and to execute and
deliver such documents as
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reasonably may be necessary to comply with any and all laws, rules, regulations
and ordinances to which the Partnership is subject.
(e) The representations and warranties of Holder and the
Partnership set forth herein shall survive the exercise of the Option and
purchase of the Interest provided for in this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Option Agreement as of the date set forth above.
THE EDISON PROJECT L.P.
BY WSI INC.,
as General Partner
By /s/ H. Xxxxxxxxxxx Xxxxxxx
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BY SPROUT EDISON PROJECT, INC.,
as General Partner
By /s/ Xxxxx X. Xxxxxx
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XXXXXX, READ & CO. INC.
By /s/ Xxxx X. Bri (sp)
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Name: Xxxx X. Bri (sp)
Title:Managing Director
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