EXHIBIT (d)(14)
NEITHER 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. TRANCHE 1 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 $1.50 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, (the "Subscription Agreement") by and among the Company,
X.X. Xxxxxx Investment Corporation, Sixty Wall Street SBIC Fund, L.P., Investor
Investments AB, WSI Inc. 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: (i) on or before January 1, 2000 upon the Company's completion
of a Qualified Offering (as defined below) at a price per share (or the
equivalent) of $8.00 or more or (ii) after January 1, 2000 and on or before
January 1, 2001, upon the Company's completion of a Qualified Offering at a
price per share (or the equivalent) of $12.00 or more. If the Company shall not
have completed a Qualified Offering on the
terms discussed above on or before January 1, 2001, this Option shall expire,
and Xxxxxx shall have no further rights hereunder.
(b) A "Qualified Offering" means the closing of (i) the
sale by the Company and/or its stockholders of equity securities of the Company
to the public in a bona fide, firm commitment underwriting pursuant to a
registration statement on Form S-1 (or a successor form) under the Securities
Act of 1933, as amended (or any successor statute), which has been declared
effective by the Securities and Exchange Commission (or any successor entity) or
(ii) a private placement by the Company and/or its stockholders with aggregate
gross proceeds of at least $50,000,000 to the Company and/or its stockholders.
(c) The rights of Holder to exercise this Option shall
expire on the tenth anniversary of the vesting of the Option as provided in
paragraph 1(a) above. The date specified in the preceding sentence shall be, the
"Expiration Date" hereunder.
(d) Subject to the preceding paragraphs 1(a) and (c),
Holder may exercise this Option, in whole or in part from time to time (but not
as to a fractional share of the Series A Common Stock) 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.
(e) 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
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 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 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) Upon any adjustment required by this Section 3, the
Company shall give written notice thereof, by first class mail, postage prepaid,
addressed to Xxxxxx 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
3
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.
(c) 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.
(d) 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 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
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. The Company may
not assign its obligations under this Option except, upon written notice to
Holder, to any entity to which all or substantially all of the Company's
business or assets are transferred, 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,
including any transferee of all or substantially all of the business or assets
of the Company. Holder may (a) at any time and from time to time (i) pledge any
vested portion of this Option or (ii) transfer this Option to an Affiliate (as
defined in the Company's
5
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 this Option.
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: _______________________________________
_______________________________________
