EXHIBIT (d)(16)
THIS OPTION (OR THE SHARES OF STOCK ISSUABLE UPON EXERCISE OF THIS OPTION) HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS
OPTION OR SUCH SHARES MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SUCH ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.
No. [_______] Option to subscribe
Issue Date: [________] for [_______] Shares
THE EDISON PROJECT INC. A STOCK OPTION
THIS CERTIFIES that, for value received, [_______] ("Holder"),
is entitled to subscribe for and purchase from The Edison Project Inc., a
Delaware corporation (the "Company"), at a price of $10.00 per share (the
"Exercise Price"), the number of shares of the Company's Series A Common Stock
first shown above (as adjusted pursuant to the provisions hereof, the "Option
Shares"). This Option is issued pursuant to the Subscription Agreement, dated as
of December 30, 1997, by and among the Company, X.X. Xxxxxx Investment
Corporation, Sixty Wall Street SBIC Fund, L.P., Investor Investments AB and
certain Other Investors (as defined therein).
This Option is subject to the following provisions, terms and
conditions:
1. Vesting; Term; Exercise.
(a) The rights of Holder to exercise this Option shall
vest as follows: With respect to (i) 70% of the Option Shares, on the date
hereof and (ii) the remaining 30% of the Option Shares, 10% per year on the last
day of each of the next three succeeding fiscal years of the Company, beginning
on June 30, 1998, the last day of the Company's 1998 fiscal year. In the event
that this Option is issued on or after the last day of any fiscal year described
in the preceding sentence, the Options Shares scheduled to vest on such day
shall be vested upon the issuance of this Option.
(b) The rights of Holder to exercise this Option shall
expire as follows: With respect to (i) the Option Shares vested on the date
hereof, (A) 50% at 5:00 p.m. E.S.T. on the first business day of 2003 and (B)
the remaining 20%, 10% on the first business day of each of the Company's 2004
and 2005 fiscal years, (ii) the Option Shares that vest in the Company's 1998
fiscal year, on the business day following the seventh anniversary of the
vesting of such Option Shares and (iii) the Option Shares that vest in the
Company's 1999 and 2000 fiscal years, on the business day following the fifth
anniversary of the vesting of such Option Shares. Any date specified in the
preceding sentence shall be, an "Expiration Date" hereunder.
(c) Subject to the preceding paragraphs 1(a) and (b),
Holder may exercise this Option, in whole or in part from time to time (but not
as to a fractional share of the Company's Series A Common Stock), as of the
first business day of any fiscal year of the Company (or at such other times as
may be permitted by the Company's Board of Directors) by on or before such day
(i) giving written notice to the Company in the form attached hereto and (ii)
transferring to the account designated by the Company immediately available
funds in an amount equal to aggregate Exercise Price of the Option Shares in
respect of which this Option is then being exercised along with any amounts
required to be withheld by the Company and remitted to any taxing authority by
reason of the exercise of the Option in respect of such Option Shares.
(d) Upon the exercise of any portion of this Option, the
books and records of the Company shall be appropriately amended to reflect
Holder's acquisition of the Options Shares then purchased, and certificates
representing such Option Shares shall be delivered to Holder (or its
designee(s)) as promptly as practicable after such date.
2. Shares to be Fully Paid; Reservation of Shares. The
Company covenants and agrees that (a) all Option Shares will, upon issuance, be
validly issued, fully paid, nonassessable, (b) at all times during the period
during which this Option may be exercised, the Company shall have
-2-
authorized and reserved for the purpose of issue upon the exercise of this
Option, a sufficient number of shares of Series A Common Stock, free from any
pre-emptive rights, to provide for the exercise of this Option in full, (c) the
Company shall take all action necessary to assure that such shares of Series A
Common Stock may be so issued without violation of any applicable law or
regulation, or any requirements of any securities exchange upon which the Series
A Common Stock may be listed, provided, however, that the Company shall not be
required to register the sale of any shares of Series A Common Stock with the
United States Securities and Exchange Commission (the "SEC") except as
specifically provided herein.
3. Adjustment to the Number of Option Shares.
(a) Upon any capital transaction, business combination,
or reorganization (a "Reorganization") of the Company or the Company's business,
the number of Option Shares which may be purchased hereunder and the Exercise
Price per share shall be adjusted so that Holder shall thereafter be entitled to
receive, upon the exercise of the Option, the number of shares or other equity
interest or entitlement that Holder would have been entitled to receive upon the
occurrence of such event had Holder exercised the Option immediately prior to
the occurrence of such event, with the number of Option Shares and the Exercise
Price per share as so revised to be subject to (i) adjustment appropriately to
reflect stock splits, stock dividends, combinations and sales of all or
substantially all the assets of the Company and (ii) dilution in the same manner
as the Series A Common Stock outstanding immediately following such event.
(b) The Company may redeem this Option or any portion
thereof in connection with a financing transaction or capital restructuring
pursuant to which the Company is redeeming options or equity issued under the
Company's Management Option Plan, as in effect from time to time, provided,
that, the Company shall redeem the Option or any portion thereof on the same
relative terms as the Company redeems such management options.
-3-
(c) Upon any adjustment required by this Section 3, the
Company shall give written notice thereof, by first class mail, postage prepaid,
addressed to Holder at the address shown on the books of the Company, which
notice shall state the increase or decrease, if any, in the number of Option
Shares issuable upon the exercise of this Option, setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is
based.
(d) If at any time: (i) the Company shall declare any
dividend of cash, stock or property upon, or make any other distribution in
respect of the Series A Common Stock, (ii) the Company shall offer for
subscription pro rata to the holders of Series A Common Stock any additional
shares of stock of any class or other securities or rights, (iii) there shall be
any Reorganization, or (iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company (collectively,
"Dissolution"), then the Company shall give, by first class mail, postage
prepaid, addressed to the Holder at the address shown on the books of the
Company (A) at least 20 days' prior written notice of the date on which the
books of the Company shall close or a record shall be taken for such dividend,
distribution or subscription rights or for determining rights to vote in respect
of any such Reorganization or Dissolution, and (B) in the case of any such
Reorganization or Dissolution, at least 20 days' prior written notice of the
date when the same shall take place. Such notice in accordance with the
foregoing clause (A) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Series A
Common Stock shall be entitled thereto, and such notice in accordance with the
foregoing clause (B) shall also specify the date on which the holders of Series
A Common Stock shall be entitled to exchange their Series A Common Stock for
securities or other property deliverable upon such Reorganization or
Dissolution, as the case may be.
(e) If any event occurs as to which, in the good faith
opinion of the Board of Directors, the other provisions of this paragraph 3 are
not strictly applicable, then the Board of Directors shall make an adjustment in
the application of such provisions, in accordance with the essential intent
-4-
and principles of this paragraph 3, so as to protect such purchase rights, but
in no event shall any such adjustment have the effect of increasing the Exercise
Price.
4. Registration. Any registration rights which accrue to
Holder (or its permitted assignee(s)) with respect to any equity interests in
the Company (or its successor) shall apply to any equity obtained by Holder (or
its permitted assignee(s)) upon the exercise in whole or in part of this Option.
5. Closing of Books. The Company will at no time close
its transfer books against the transfer of the Option or any Option Shares
issued or issuable upon the exercise of the Option in any manner that interferes
with the timely exercise of this Option, unless the Company is advised by its
counsel that such closing is required by applicable law or the rules of any
exchange upon which such shares of Series A Common Stock are listed, and then
only for so long as required by such law or rules.
6. Mutilated or Missing Option Certificates. If this
Option is mutilated when surrendered to the Company, or the Company receives
evidence to its reasonable satisfaction of the destruction, loss or theft of
this Option, the Company shall issue, without charge, a replacement Option. If
requested by the Company, Xxxxxx shall supply an indemnity on customary terms to
protect the Company from any loss that it may suffer upon the replacement of
this Option.
7. No Voting Rights. This Option shall not entitle
Holder, as long as this Option is not exercised, to any voting rights or other
rights as a stockholder of the Company.
8. Parties in Interest; Assignability. Neither Holder or
the Company may assign its rights or obligations under this Option, provided,
however that the rights and obligations of the Company may be assigned, upon
notice to Holder, to any entity to which the Company's business is transferred
and further provided, however, that the rights and obligations of the Company
under this Option shall be binding upon and inure to the benefit of the
successors and assigns of the Company and their affiliates
-5-
including any transferee of all or substantially all of the business of the
Company and further provided, that, Holder may (a) at any time grant to any
third party a security interest in all or any part of the Option or transfer the
Option to an Affiliate (as defined in the Company's Shareholders' Agreement
dated December 30, 1997, as amended from time to time) and (b) by written notice
to the Company in the form attached hereto, sell, assign, transfer or otherwise
dispose of any vested portion of the Option at any time following the fourth
anniversary of the vesting of the portion of the Option to be sold, assigned,
transferred or otherwise disposed of.
9. Governing Law. This Option governed by and construed
in accordance with the laws of the State of New York, without regard to the
conflicts of laws provisions thereof.
IN WITNESS WHEREOF, the Company has duly executed and
delivered this Option to Holder as of the date first set forth above.
THE EDISON PROJECT INC.
By: __________________________
Name: Xxxxx Xxxxxxxx
Title: President
-6-
FORM OF NOTICE OF EXERCISE
____________________, 199__
To: THE EDISON PROJECT INC.
The undersigned, pursuant to the provisions set forth in the
Option issued to the undersigned on _______________, hereby subscribes for and
agrees to purchase _____ shares of the Series A Common Stock covered by such
Option, and makes payment herewith in full therefor at the price per share
provided by such Option.
Dated: _______________, ______
Name of Holder:_______________________
By:________________________
Name:
Title:
Address:______________________________
______________________________
FORM OF ASSIGNMENT
FOR VALUE RECEIVED ______________________________ hereby
sells, assigns and transfers all of the rights of the undersigned under the
Option, with respect to the number of shares of the Series A Common Stock
covered thereby set forth herein below unto:
Name of Assignee Address Number of Shares
---------------- ------- ----------------
Dated: _______________, ______
Name of Holder:_______________________
By:________________________
Name:
Title:
Address:______________________________
______________________________
