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EXHIBIT 10.14
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL (WHICH
MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
WARRANT AGREEMENT
To Purchase Limited Partnership Interest in
The Edison Project L.P., a Delaware Limited Partnership
Dated as of January 1, 1996
WHEREAS, The Edison Project L.P., a Delaware Limited Partnership (the
"Partnership or the Company") has entered into a Loan Agreement and Note (the
"Loan") with Comdisco, Inc., a Delaware corporation (the "Warrantholder"); and
WHEREAS, the Partnership desires to grant to Warrantholder and
Warrantholder desires to receive, in consideration for such Loan, the right to
purchase an ownership interest in the Partnership ("Partnership Interest") and
to be admitted as a limited partner of the Partnership upon exercise of that
right;
NOW, THEREFORE, in consideration of the Warrantholder executing and
delivering such Loan and in consideration of mutual covenants and agreements
contained herein, the Partnership and Warrantholder certify and agree as
follows:
1. GRANT OF THE RIGHT TO PURCHASE UNITS.
For value received, the Partnership hereby grants to the Warrantholder,
and the Warrantholder is entitled, upon the terms and subject to the conditions
hereinafter set forth, to subscribe for and purchase from the Partnership, as a
Limited Partner, a Partnership Interest in the Partnership. Warrantholder shall
have the right to purchase a Partnership Interest constituting up to 1.08255%
percentage interest subject to dilution pursuant to the Partnership Agreement
(the "Percentage Interest") in the Partnership for an aggregate $171,000, or any
portion thereof, in $12.50 increments (the "Exercise Price"), which increments
shall be referred to herein as "Units". The initial Percentage Interest was
determined as if the Warrant Agreement was exercised on the date hereof based
upon the following assumptions: (1) no other options granted by the Partnership
have been exercised; and (2) the percentage interests of the Partners are as in
effect immediately following the Round One Closing Date (as set forth on Exhibit
1 to the Partnership Agreement). A Unit shall initially represent the right to
purchase a Partnership Interest of .00007913% (1.08255% / 13,680) and such
percentage shall be subject to dilution and other adjustments in the same manner
provided in the Amended
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and Restated Agreement of Limited Partnership of Edison Project L.P. of March
14, 1995, as amended from time to time (the "Partnership Agreement") with
respect to the Partnership Interests outstanding immediately following the Round
One Closing Date. By way of example, assuming that no other options granted by
the Partnership are exercised and no other Partnership Interests are issued
other than as set forth on Exhibits 2 and 3 to the Partnership Agreement as in
effect on March 14, 1995, the Percentage Interest will be 0.8168% after the
Round Two Closing Date and 0.5474% after the Round Three Closing Date
(including, without limitation, dilution which has occurred after March 14, 1995
and prior to the date hereof). The percentages set forth above do not reflect
the dilutive effect of the issuance of Partnership Interests between March 14,
1995 and the date hereof. Upon exercise of the Warrant Agreement, the
Warrantholder shall have no obligation to make any capital contribution to the
Partnership other than payment of the exercise price hereunder.
2. TERM OF THE WARRANT AGREEMENT.
Except as otherwise provided for herein, the term of Warrant Agreement
and the right to purchase a Partnership Interest as granted herein shall
commence on the date of execution hereof and shall be exercisable for a period
of (i) ten (10) years after the date of execution hereof, or (ii) five (5) years
from the effective date of the Partnership's initial public offering, whichever
occurs first.
Notwithstanding the term of this Warrant Agreement fixed pursuant to
this Section, the right to purchase Units as granted herein may be redeemed by
the Company, if not previously exercised immediately upon any of the following
events (collectively, "Redemption Events"):
(i) immediately upon the closing of the issuance and sale of
shares of Common Stock of the Company in the Company's first
public offering of Securities for its own account pursuant to
an effective registration statement under the Securities Act
of 1933, as amended (the "Initial Public Offering") and
provided that the underwriters request such exercise;
(ii) immediately upon the closing of a merger or consolidation of
the Company with or into another entity when the Company is
not the surviving entity, or the sale of all or substantially
all of the Company's properties and assets to any other person
(the "Merger").
Prior to any such redemption, the Partnership or its successor shall
give the holder of this Warrant no less than twenty (20) days prior written
notice of its intent to redeem this Warrant. Such notice shall contain
information with respect to the Redemption Event giving rise to such redemption,
the redemption date and the redemption price together with a description of the
terms of the redemption of the Management Options. The redemption price shall be
the difference between the exercise
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price hereunder and (1) in any acquisitive transaction, the price that is being
paid for a partnership interest with the same percentage interest the
Warrantholder is then entitled to purchase hereunder (or in the event the
Partnership has converted to a corporation, the number of shares of stock the
Warrantholder is then entitled to purchase), or (2) if the transaction involves
a public offering, the public offering price for the number of shares of stock
the Warrantholder is then entitled to purchase hereunder. The holder of this
Warrant shall be entitled to exercise this Warrant and receive the Units as
described in Section 1 hereof up to and including the redemption date.
3. EXERCISE OF THE PURCHASE RIGHTS.
(a) The purchase rights set forth in this Warrant Agreement are
exercisable by the Warrantholder, in whole or in part, at any time, or from time
to time, prior to the expiration of the term set forth in Section 2 above, by
tendering to the Partnership at The Edison Project L.P., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the Partnership's principal place of business), or
such other address of which Warrantholder is given notice by the Partnership, a
notice of exercise duly completed and executed in the form attached hereto as
Exhibit I (the "Notice of Exercise"), together with the Exercise Price (which
may be paid as provided in Section 3(b) below). This Warrant Agreement shall be
deemed to have been exercised immediately prior to the close of business on the
date upon which the Exercise Price is received by the Partnership as provided
herein, and the Warrantholder (or such other person as the Warrantholder shall
designate to receive the shares issuable upon exercise, but not the Partnership
Interests) shall be treated as the holder of record of the interest purchased
upon exercise of the Warrant as of the close of business on that date. If (prior
to March 31, 1996) the exercise of the Warrant, other than pursuant to a
Redemption Event, could result in a termination of the Partnership within the
meaning of Section 708 of the Internal Revenue Code of 1986, as amended from
time to time (the "Code"), the exercise shall be automatically delayed until
such time as it will not result in a termination. Within ten (10) days of
receipt of the Notice of Exercise, the Partnership shall deliver to
Warrantholder the acknowledgment of exercise duly completed and executed in the
form attached hereto as Exhibit II (the "Acknowledgment of Exercise"). Within
ten (10) days of receipt of the Exercise Price in accordance with the terms set
forth below, (i) the General Partners shall execute an amendment to the
Partnership Agreement indicating Warrantholder's Percentage Interest in the
Partnership and Warrantholder's admission to the Partnership as Limited Partner;
or, (ii) if another entity (a "Successor") has succeeded to the Partnership's
business as contemplated by Section 15 of the Partnership Agreement, the
Successor shall take such steps as are necessary and proper to issue such
interests in Successor as Warrantholder is entitled upon exercise of this
Warrant Agreement. If the Board of Directors determines pursuant to Section
15.00 of the Partnership Agreement to incorporate the Partnership, this Warrant
Agreement shall without any further action become a Warrant Agreement to
purchase that amount of equity of such corporation that would have been issued
to the holder of this Warrant if the Warrant had been exercised immediately
prior to such conversion. The Partnership shall give written notification to the
holder of this
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Warrant of such incorporation no less than twenty (20) days prior to the
effective date of such incorporation which notice shall set forth the relevant
information with respect to such incorporation. The holder of the Warrant agrees
to be bound by the terms of Section 15.00 with respect to such incorporation and
shall execute the shareholder agreement referred to therein. Promptly following
receipt of the Notice of Exercise and the payment of the Exercise Price in
accordance with the terms set forth below, and in no event later than twenty-one
(21) days after payment of the Exercise Price, the Partnership shall issue to
the Warrantholder, if Warrantholder has only partially exercised this Warrant
Agreement, a new Warrant Agreement pursuant to Section 3(d) and such other
documents evidencing ownership of the securities issuable upon exercise hereof.
(b) The Exercise Price may be paid at the Warrantholder's election
either (i) in cash, by check or by wire transfer, (ii) by cancellation by
Warrantholder of indebtedness of the Partnership under the Loan, or otherwise,
to Warrantholder, (iii) in the manner provided by Section 3(c) of this Warrant
Agreement or (iv) by any combination of (i), (ii) and (iii). In the event that
the Warrantholder elects to pay any part of the Exercise Price other than as
provided in clause (i) of the previous sentence, the date the Exercise Price
shall be deemed to have been paid to the Partnership shall be (a) in the case of
any payment made under clause (ii) above, the date the Partnership receives
evidence of the cancellation of indebtedness of the Partnership to the
Warrantholder in an amount equal to the Exercise Price, and (b) in the case of
any payment under clause (iii) above, the date the Warrantholder surrenders this
Agreement at the office of the Partnership together with a properly endorsed
Notice of Exercise.
(c) Notwithstanding anything to the contrary contained herein, if the
fair market value of one Unit is greater than $12.50 (at the date of calculation
as set forth below), in lieu of exercising this Warrant Agreement for cash, the
Warrantholder may elect to receive a Partnership Interest with a percentage
interest equal to the fair market value (as determined below) of this Warrant
Agreement (or the portion thereof being cancelled) by surrender of this Warrant
Agreement at the principal office of the Partnership together with the properly
endorsed Notice of Exercise, in which event the Partnership shall issue to the
Warrantholder Limited Partnership interests with a percentage interest equal to
the number of Units the Warrantholder is entitled to, using the following
formula:
X = Y(A-B)
------
A
Where: X = the number of Units to be used in calculating the
Warrantholder's percentage interest
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Y = the number of unexercised Units requested
to be exercised under this Warrant Agreement
or portion thereof to be cancelled
A = the fair market value of one (1) Unit (at the date of
calculation)
B = $12.50.
For purposes of the above calculation, the fair market value of a Unit
shall mean with respect to each Unit:
(i) if the exercise is in connection with an Initial Public
Offering, and if the Partnership's, or a Successor's,
Registration Statement relating to such Initial Public
Offering has been declared effective by the Securities and
Exchange Commission (the "Commission"), then the fair market
value per Unit shall be the product of (x) the "Initial Price
to Public" specified in the final prospectus with respect to
the Initial Public Offering and (y) the number of shares of
Common Stock or other security into which a Unit is
convertible, at the time of such exercise;
(ii) if this Warrant Agreement is exercised after, and not in
connection with an Initial Public Offering, and:
(A) if the Partnership's or a Successor's Common Stock or
other securities into which Units are convertible is
actively traded on a national securities exchange,
the fair market value shall be deemed to be the
product of (x) the average of the closing prices over
a twenty-one (21) day period ending three days before
the day the fair market value of the securities is
being determined and (y) the number of shares of
Common Stock or other securities into which a Unit is
convertible, at the time of such exercise;
(B) if the Partnership's or a Successor's Common Stock or
other security is actively traded over-the-counter;
the fair market value shall be deemed to be the
product of (x) the average of the closing bid and
asked prices of the traded security quoted on the
NASDAQ system (or similar system) over the twenty-one
(21) day period ending three days before the day the
fair market value of the securities is being
determined and (y) the number of shares of Common
Stock or other securities into which a Unit is
convertible, at the time of such exercise;
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(iii) if at any time the Common Stock or other security is not
listed on any securities exchange or quoted over-the-counter
or is not actively traded, the fair market value shall be the
product of (x) the fair market value of a share of Common
Stock or other security, as determined in good faith by the
General Partners, and (y) the number of shares of Common Stock
or other securities into which a Unit is convertible, at the
time of such exercise; or
(iv) notwithstanding the provisions of Section 3(c)(i), (ii) and
(iii), if the Partnership shall become subject to a merger,
consolidation or sales of all or substantially all of the
Partnership's business (other than to or with a Successor) in
which the Partnership is not the surviving party, the current
fair market value of a Unit shall be deemed to be the value
that would have been received in respect of the Partnership
Interest or other security into which the Partnership Interest
may be converted equivalent to a Unit had the Warrant
Agreement been exercised prior to the Merger.
(d) Upon partial exercise by any method, the Partnership, at its
expense, shall promptly but not more than ten (10) days after surrender of the
Warrant Agreement, issue an amended Warrant Agreement to Warrantholder
representing the remaining number of Units purchasable hereunder. All other
terms and conditions of such amended Warrant Agreement shall be identical to
those contained herein, including, but not limited to the Effective Date hereof.
4. RESERVATION OF UNITS.
If upon exercise the holder of the Warrant Agreement shall be entitled
to receive stock, the Partnership and Successor shall reserve for purposes of
exercise of the Warrant Agreement such equity interests from time to time
issuable hereunder upon exercise of the Warrantholder's rights, and, when issued
in accordance with the provisions of this Warrant Agreement, such interests will
be, upon payment of the then applicable Exercise Price, validly issued, fully
paid and non-assessable, and will be free of any taxes, liens, charges or
encumbrances of any nature whatsoever (other than taxes in respect of any
transfer occurring contemporaneously or otherwise specified herein). The
Warrantholder shall be required to pay any tax which may be payable in respect
of any transfer involved and the issuance and delivery of any certificate in a
name other than that of the Warrantholder.
5. FRACTIONAL INTERESTS, SHARES OR SCRIP.
As long as Warrantholder's rights hereunder permit Warrantholder, upon
exercise hereof, to receive a Partnership Interest, such Partnership Interest,
when expressed as a Percentage Interest shall be expressed in up to six decimal
places (e.g., 1.000001%). In the event there is a Successor to the Partnership,
the Successor shall not be required to
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issue fractional shares or scrip representing fractional shares upon the
exercise of the Warrant Agreement, but in lieu of such fractional shares the
Successor shall make a cash payment to Warrantholder therefor upon the basis of
the Exercise Price then in effect.
6. NO RIGHTS AS A LIMITED PARTNER OR SHAREHOLDER.
This Warrant Agreement does not entitle the Warrantholder to any voting
rights or other rights as a Limited Partner of the Partnership or as a
shareholder of any Successor prior to the exercise of the Warrantholder's rights
to purchase a Partnership Interest or any shares of a Successor as provided for
herein.
7. WARRANTHOLDER REGISTRY.
The Partnership shall maintain a registry showing the name and address
of the registered holder of this Warrant Agreement.
8. ADDITIONAL PROVISIONS.
The Exercise Price and the number of Units purchasable hereunder are
subject to adjustment from time to time, as follows:
(a) Preemptive Rights. Warrantholder shall be diluted in the same
manner as the Limited Partners in future financings and shall have the same
preemptive rights regarding future dilutive rounds of financing as granted to
the Limited Partners pursuant to the Partnership Agreement.
(b) Notice. In the event that: (i) the Partnership or Successor shall
declare any distribution upon its Units or such interests in Successor into
which the Units are convertible, whether in cash, property, stock or other
securities; (ii) the Partnership or Successor shall offer for subscription pro
rata to the Partners any additional interest in the Partnership or other rights;
(iii) there shall be any merger, consolidation or sale of all or substantially
all of the assets of the Partnership or Successor other than to or with
Successor (a "Merger Event"); or (iv) there shall be any voluntary or
involuntary dissolution, liquidation or winding up of the Partnership or
Successor; then, in connection with each such event, the Partnership or
Successor shall send to the Warrantholder:
(i) At least twenty (20) days' prior written notice of the date on
which the books of the Partnership or Successor shall close or
a record shall be taken for such dividend, distribution,
subscription rights (specifying the date on which the Partners
shall be entitled thereto) or for determining rights to vote
in respect of such Merger Event, dissolution, liquidation or
winding up; and
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(ii) In the case of any such Merger Event, dissolution, liquidation
or winding up, at least twenty (20) days' prior written notice
of the date when the same shall take place (and specifying the
date on which the Partners shall be entitled to exchange their
Partnership Interests or other securities for securities or
other property deliverable upon such Merger Event,
dissolution, liquidation or winding up).
Each such written notice shall set forth, in reasonable detail, (i) the
percentage into which this Warrant Agreement is exercisable together with the
calculation, and (ii) the number of Units or other securities subject to
purchase hereunder after giving effect to such adjustment, and shall be given by
first class mail, postage prepaid, addressed to the Warrantholder at the address
as shown on the books of the Partnership.
(c) Timely Notice. Failure to timely provide such notice required by
Section 8(b) above shall entitle Warrantholder to retain the benefit of the
applicable notice period notwithstanding anything to the contrary contained in
any insufficient notice received by Warrantholder. The notice period shall begin
on the date Warrantholder actually receives a written notice containing all the
information specified above.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
PARTNERSHIP.
(a) Organization. The Partnership is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has all requisite Partnership power and authority to own and operate
its properties and assets and carry on its business as now conducted and
proposed to be conducted. The Partnership is duly qualified to transact business
and is in good standing in all jurisdictions in which the failure to so qualify
would have a material adverse effect on its business, properties, prospects or
financial condition.
(b) Due Authority; Successor Bound. The execution and delivery by the
Partnership of the Loan and this Warrant Agreement and the performance of all
obligations of the Partnership hereunder and thereunder, including the grant to
Warrantholder of the right to acquire the Partnership Interest set forth in
Section 1 above (the size of which Partnership Interest may be from time to time
adjusted pursuant to the terms of Section 1 above), have been duly authorized by
all necessary action on the part of the Partnership, the General Partners and
the Loan and this Warrant Agreement are not inconsistent with the Partnership
Agreement, do not contravene in any material respect any law or governmental
rule, regulation or order applicable to it, do not and will not contravene any
provision of, or constitute a default under, any indenture, mortgage, contract
or other instrument to which it is a party or by which it is bound, and the Loan
and this Warrant Agreement constitute legal, valid and binding agreements of the
Partnership, enforceable in accordance with their respective terms and shall be
binding upon any Successor as a condition of succession to the business of the
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Partnership. The General Partners agree to execute and issue the necessary
Partnership Agreement amendment, share certificates or other documents upon the
exercise of this Warrant Agreement.
(c) Consents and Approvals. No consent or approval of, giving of notice
to, registration with, or taking of any other action in respect of any state,
federal or other governmental authority or agency is required with respect to
the execution, delivery and performance by the Partnership of its obligations
under this Warrant Agreement, and such consents of the Partners as are specified
in the Partnership Agreement, which consents will be effective by the time
required thereby.
(d) Litigation. There are no actions, suits, audits, investigations or
proceedings pending or, to the knowledge of the Partnership, threatened against
or affecting the Partnership in any court or before any governmental commission,
board or authority which, if adversely determined, will have a material adverse
effect on the ability of the Partnership to perform its obligations under the
Loan and this Warrant Agreement.
(e) Subsidiaries or Affiliates. The Partnership has no subsidiaries or
affiliated companies and does not otherwise own or control, directly or
indirectly, any other corporation, association or business entity.
(f) Financial Statements. The Partnership has delivered to the
Warrantholder the Unaudited Balance Sheet and Income Statement for the period
ending March 31, 1995; Proforma Income Statements and Cash Flow Statements
through June 1998; and Working Draft Budgets for Fiscal Year 1996.
The Partnership shall deliver to the Warrantholder any and all
financial statements to which Limited Partners are entitled pursuant to the
Partnership Agreement.
(g) Contingent and Absolute Liabilities. Except as disclosed on
Schedule A (g), the Partnership has no material liabilities or obligations,
absolute or contingent except the liabilities and obligations of the Partnership
as set forth in the Financial Statements and liabilities and obligations which
have occurred in the ordinary course of business, and which have not been
materially adverse.
(h) Insurance. The Partnership has in full force and effect insurance
policies, with extended coverage, insuring the Partnership and its property and
business against such losses and risks, and in such amounts, as are customary
for entities engaged in a similar business and similarly situated and as
otherwise may be required pursuant to the terms of any other contract or
agreement.
(i) Other Commitments to Register Securities. Except as set forth in
this Warrant Agreement and the Partnership Agreement and disclosed on Schedule A
(i), the
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Partnership is not, pursuant to the terms of any other agreement currently in
existence, under any obligation to register under the 1933 Act any of its
presently outstanding securities or any of its securities which may hereafter be
issued.
(j) Exempt Transaction. Subject to the accuracy of the Warrantholder's
representations in Section 10 hereof, the issuance of the Partnership Interest
upon exercise of the Warrantholder's right to purchase a Partnership Interest
will constitute a transaction exempt from (i) the registration requirements of
Section 5 of the 1933 Act, in reliance upon Section 4(2) thereof, and (ii) the
qualification requirements of any applicable state securities laws.
(k) Compliance with Rule 144. From and after the date that the
Partnership or its Successor shall have publicly traded securities, at the
written request of the Warrantholder, who proposes to sell its Partnership
Interest or other securities issuable upon the exercise of the Warrant Agreement
in compliance with Rule 144 promulgated by the Commission under the 1933 Act,
the Partnership or Successor shall furnish to the Warrantholder, within ten days
after receipt of such request, a written statement confirming the Partnership's
or Successor's (i) compliance with the filing requirements of the Commission as
set forth in such Rule as then in effect or (ii) filing with the Commission of a
no action letter regarding permissibility of Warrantholder "tacking" holding
period of Partnership Interest with holding period of interests in Successor.
(l) No Events of Default, Material Contracts. All material contracts,
agreements and instruments to which the Partnership is a party are in full force
and effect in all material respects, and are valid, binding and enforceable by
the Partnership in accordance with their respective terms, subject to the effect
of applicable bankruptcy and other similar laws affecting the rights of
creditors generally, and rules of law concerning equitable remedies and no event
of default.
(m) Brokers' Fees. The Partnership has not incurred, and will not
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with the Warrant
Agreement or any other transaction contemplated thereby.
(n) Taxes. The Partnership has filed all material tax returns and
reports as required by law, (ii) these returns and reports are true and correct
in all material respects, and (iii) the Partnership has withheld or collected
from each payment made to each of its employees, the amount of all taxes,
including, but not limited to, federal income taxes, Federal Insurance
Contribution Act taxes and Federal Unemployment Tax Act taxes required to be
withheld or collected therefrom, and has paid the same to the proper tax
receiving officers or authorized depositaries.
10. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.
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This Warrant Agreement has been entered into by the Partnership in
reliance upon the following representations and covenants of the Warrantholder,
which by its execution hereof the Warrantholder hereby confirms:
(a) Investment Purpose. The right to the Partnership Interest or other
securities issuable upon exercise of the Warrantholder's rights contained herein
will not be acquired with a view to the sale or distribution of any part
thereof, and the Warrantholder has no present intention of selling or engaging
in any public distribution of the same.
(b) Private Issue. The Warrantholder understands (i) that the
Partnership Interest issuable upon exercise of the Warrantholder's rights
contained herein is not registered under the 1933 Act or qualified under any
applicable state securities laws on the ground that the issuance contemplated by
this Warrant Agreement will be exempt from the registration and qualifications
requirements thereof, and (ii) that the Partnership's reliance on such exemption
is predicated on the representations set forth in this Section 10.
(c) Disposition of Warrantholder's Rights. In no event will the
Warrantholder make a disposition of any of its rights to acquire the Partnership
Interest or any securities issuable upon exercise of such rights unless and
until (i) it shall have notified the Partnership of the proposed disposition,
and (ii) if requested by the Partnership, it shall have furnished the
Partnership with an opinion of counsel (which counsel may either be inside or
outside counsel to the Warrantholder) satisfactory to the Partnership and its
counsel to the effect that (A) appropriate action necessary for compliance with
the 1933 Act has been taken, or (B) an exemption from the registration
requirements of the 1933 Act and any state law is available. Notwithstanding the
foregoing, the restrictions imposed upon the transferability of any of its
rights hereunder on the exercise of such rights do not apply to transfers from
the beneficial owner of any of the aforementioned securities to its nominee or
from such nominee to its beneficial owner, and shall terminate as to any
Securities when (1) such security shall have been effectively registered under
the 1933 Act and sold by the holder thereof in accordance with such registration
or (2) such security shall have been sold without registration in compliance
with Rule 144 under the 1933 Act, or (3) a letter shall have been issued to the
Warrantholder at its request by the staff of the Commission or a ruling shall
have been issued to the Warrantholder at its request by such Commission stating
that no action shall be recommended by such staff or taken by such Commission,
as the case may be, if such security is transferred without registration under
the 1933 Act in accordance with the conditions set forth in such letter or
ruling and such letter or ruling specifies that no subsequent restrictions on
transfer are required. Whenever the restrictions imposed hereunder shall
terminate, as hereinabove provided, the Warrantholder or holder of any
Securities issuable hereunder then outstanding as to which such restrictions
have terminate shall be entitled to receive from the Partnership or Successor,
without expense to such holder, one or more new certificates for the Warrant
Agreement or for such
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Units not bearing any restrictive legend. Prior to March 31, 1996, no transfer
shall be permitted if such transfer could result in a termination of the
Partnership within the meaning of Section 108 of the Code.
(d) Financial Risk. The Warrantholder has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment.
(e) Risk of No Registration. The Warrantholder understands that the
Partnership Interest which the Warrantholder has the right to purchase hereunder
has not been reviewed or approved by the U.S. Securities and Exchange Commission
or any similar body not registered under the Securities Exchange Act of 1934
and, as of the date of execution of this Warrant, the Partnership has no
obligation to so register such Partnership Interest (or the shares of any
corporation into which the Partnership may convert), and if the Partnership does
not register with the Commission pursuant to Section 12 or Section 15(d) of the
Securities Exchange Act of 1934 (the "1934 Act"), or file reports pursuant to
Section 13 of the 1934 Act, or if a registration statement covering the
securities under the 1933 Act is not in effect when it desires to sell (i) the
rights to purchase the Partnership Interest (or other securities) pursuant to
this Warrant Agreement, or (ii) the Partnership Interest (or other securities
into which the Units are convertible) issuable upon exercise of the right to
purchase, it may be required to hold such securities for an indefinite period.
(f) Subject to Limited Partnership Agreement. Warrantholder
acknowledges that, upon exercise of the Warrant Agreement, it will be a Limited
Partner of the Partnership and will thereafter be subject to the Partnership
Agreement
11. TRANSFERS.
(a) Generally. Subject to the terms and conditions contained in Section
10 hereof, this Warrant Agreement and all rights hereunder are transferable in
whole or in part by the Warrantholder and any successor transferee. The transfer
shall be recorded on the books of the Partnership upon receipt by the
Partnership of a notice of transfer in the form attached hereto as Exhibit III
(the "Transfer Notice"), at its principal offices and the payment to the
Partnership of all transfer taxes and other governmental charges imposed on such
transfer.
(b) Exchange of Warrant Agreement Upon a Transfer. On surrender of this
Warrant Agreement for exchange, properly endorsed and subject to the limitations
on assignments and transfers and contained in this Section 11, the Partnership
or Successor shall issue to or on the order of the Warrantholder a new Warrant
Agreement(s), in the name of the Warrantholder or as the Warrantholder may
direct, for the number of shares issuable upon exercise hereof in accordance
with the provisions of Section 3(d) hereof.
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12. REGISTRATION RIGHTS.
Upon exercise of this Warrant Agreement, the Warrantholder shall be
entitled to "piggy-back" rights similar to those granted to other equity holders
in the Partnership.
13. MISCELLANEOUS.
(a) Effective Date. The provisions of this Warrant Agreement shall be
construed and shall be given effect in all respects as if it had been executed
and delivered by the Partnership on the date hereof. This Warrant Agreement
shall be binding upon any successors or assigns of the Partnership.
(b) Attorneys' Fees. In any litigation, arbitration or court proceeding
between the Partnership and the Warrantholder relating hereto, the prevailing
party shall be entitled to attorneys' fees and expenses and all costs of
proceedings incurred in enforcing this Warrant Agreement
(c) Governing Law. This Warrant Agreement shall be governed by and
construed for all purposes under and in accordance with the laws of the State of
Illinois.
(d) Counterparts. This Warrant Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(e) Titles and Subtitles Definitions. The titles of the paragraphs and
subparagraphs of this Warrant Agreement are for convenience and are not to be
considered in construing this Agreement. Capitalized terms used herein and not
defined shall have the same meaning as in the Partnership Agreement
(f) Notices. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail, by registered or certified mail, addressed
(i) to the Warrantholder at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
attention: Venture Leasing Department, cc: Legal Department (and/or if by
facsimile: (▇▇▇) ▇▇▇-▇▇▇▇), and (ii) to the Partnership at The Edison Project,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (and/or if by facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇) or at such other address as any such party may subsequently
designate by written notice to the other party.
(g) Remedies. In the event of any default hereunder; the non-defaulting
party may proceed to protect and enforce its rights either by suit, in equity
and/or by action at law, including but not limited to an action for damages as a
result of any such default, and/or an action for specific performance for any
default where non-defaulting party will not have an adequate remedy at law and
where damages will not be readily ascertainable. The Partnership expressly
agrees that it shall not oppose an application
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by the Warrantholder or any other person entitled to the benefit of this
Agreement requiring specific performance of any or all provisions hereof or
enjoining the Partnership from continuing to commit any such breach of this
Agreement.
(h) No Impairment of Rights. The Partnership will not, by amendment of
the Partnership Agreement or through any other means, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant Agreement, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such actions as may be necessary or appropriate in order to
protect the rights of the Warrantholder against impairment.
(i) Survival. The representation, warranties, covenants and conditions
of the respective parties contained herein or made pursuant to this Warrant
Agreement shall survive the execution and delivery of this Warrant Agreement and
shall be binding upon the Partnership and Successor until the term of the
Warrant Agreement expires or is fully exercised.
(i) Severability. In the event any one or more of the provisions of
this Warrant Agreement shall for any reason be held invalid, illegal or
unenforceable, the remaining provisions of this Warrant Agreement shall be
unimpaired, and the invalid, illegal or unenforceable provision shall be
replaced by a mutually acceptable valid, legal and enforceable provision, which
comes closest to the intention of the parties underlying the invalid, illegal or
unenforceable provision.
(k) Amendments. Any provision of this Warrant Agreement may be amended
by a written instrument signed by the Partnership (in accordance with the
provisions of the Partnership Agreement) and by the Warrantholder.
(l) Additional Documents. The Partnership, upon execution of this
Warrant Agreement, shall provide the Warrantholder with certified resolutions
and an opinion from the Partnership's counsel addressed to the Warrantholder in
the form attached hereto as Exhibit 1.
(m) Business Days. In the event that the Warrantholder's rights
hereunder would otherwise terminate on a Saturday, Sunday or other day which is
a legal or bank holiday in the State of Illinois and/or the State of New York,
then the Warrantholder's rights hereunder shall continue until the next
succeeding business day.
(n) Lost, Stolen, Destroyed or Mutilated Warrants. In case this Warrant
shall be mutilated, lost, stolen or destroyed, the Company will issue a new
Warrant of like date, tenor and denomination and deliver the same in exchange
and substitution for and upon surrender and cancellation of any mutilated
Warrant, or in lieu of any Warrant lost, stolen or destroyed, upon receipt of
evidence satisfactory to the Company of the
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loss, theft or destruction of such Warrant, and upon receipt of reasonable
indemnity satisfactory to the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be executed by its officers thereunto duly authorized.
Dated:___________, 19
Partnership: THE EDISON PROJECT L.P.
by its General Partners
WSI Inc.
By: /s/ H. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Date: March 15, 1996
-------------------------------------
SPROUT EDISON PROJECT INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Date: March 15, 1996
-------------------------------------
Warrantholder: COMDISCO, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Title: President, Venture Lease Division
------------------------------------
Date:
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