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EXHIBIT 10.8
NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). NO
SALE, TRANSFER OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE
EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR (ii)
AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED, EXCEPT THAT NO SUCH OPINION SHALL BE
REQUIRED IF SUCH SALE IS PURSUANT TO RULE 144 PROMULGATED UNDER THE ACT.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
THIS CERTIFIES THAT, for value received PHOENIX LEASING INCORPORATED, a
California corporation ("Warrantholder") is entitled to subscribe for and
purchase up to Twenty-Five Thousand One Hundred Twenty-Five (25,125) shares (as
adjusted pursuant to provisions hereof, the "Shares") of the fully paid and
non-assessable Series A Common Stock (the "Common Stock") of The Edison Project
Inc., a Delaware corporation with its principal place of business at 000 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000 (the "Company"), at the per share price
of Three Dollars Ninety-Eight Cents ($3.98) (such price and such other price as
shall result, from time to time, from adjustments specified herein is herein
referred to as the "Warrant Price") subject to the provisions and upon the terms
and conditions hereinafter set forth. The Warrant Price and the Shares
purchasable hereunder are subject to adjustment in certain events, all as more
fully set forth under Sections 4 and 5 herein. As used herein, the term "Grant
Date" shall mean January 15, 1998.
1. Term. The purchase rights represented by this Warrant are
exercisable, in whole or in part, at any time and from time to time from and
after the Grant Date and on or prior to the later of (i) five (5) years after
the Borrower's initial public offering or (ii) ten (10) years from the date of
the final loan made to the Company by Warrantholder under the Senior Loan and
Security Agreement dated as of June 30, 1997, between Phoenix Leasing
Incorporated and the Company (the "Loan Agreement").
2. Method of Exercise; Net Issue Exercise.
2.1 Method of Exercise; Payment Issuance of New Warrant. The
purchase rights represented by this Warrant may be exercised by Warrantholder,
in whole or in part and from time to time, by the surrender of this Warrant
(with the notice of exercise form attached hereto as Annex A duly executed) at
the principal office of the Company and by the payment to the Company, by wire
transfer or cashier's check, of an amount equal to the then applicable Warrant
Price per share multiplied by the number of Shares then being purchased.
Warrantholder may make any exercise of this Warrant contingent upon the
consummation of a public offering
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of the Company's Common Stock under the Securities Act of 1933, as amended (the
"Act"). The Warrantholder shall be deemed to have become the holder of record
of, and shall be treated for all purposes as the record holder of, the Shares
represented thereby (and such Shares shall be deemed to have been issued)
immediately prior to the close of business on the date or dates upon which this
Warrant is exercised. In the event of any exercise of the rights represented by
this Warrant, certificates for the Shares so purchased shall be delivered to the
Warrantholder as soon as possible (and in any event within five business days of
receipt of such notice) and, unless this Warrant has been fully exercised or
expired, a new Warrant representing the portion of the Shares, if any, with
respect to which this Warrant shall not then have been exercised shall also be
issued to the Warrantholder as soon as possible (and in any event within such
five business day period).
2.2 Non-Cash Exercise.
(a) In lieu of payment in cash, the rights represented by this
Warrant may also be exercised by a written notice of exercise in the form of
Annex A attached hereto specifying that Warrantholder wishes to convert all or
any portion of this Warrant (the "Conversion Right") into a number of Shares
equal to the quotient obtained by dividing (x) the value of the Shares subject
to the portion of this Warrant being exercised (determined by subtracting the
aggregate Warrant Price for such Shares in effect immediately prior to the
exercise of the Conversion Right from the aggregate Fair Market Value of the
Shares issuable upon exercise of such portion of this Warrant immediately prior
to the exercise of the Conversion Right) by (y) the Fair Market Value of one
share of Common Stock immediately prior to the exercise of the Conversion Right.
(b) For purposes of this Section 2.2, the "Fair Market Value" of
the Company's Common Stock shall be equal to the number of shares of Common
Stock multiplied by (i) if the exercise of this Warrant occurs in connection
with an initial public offering of the Company, the "initial price to public"
specified in the final prospectus with respect to the initial public offering or
(ii) if the exercise of this warrant occurs after or not in connection with an
initial public offering of the Company, the average of the closing bid and asked
prices of the Company's Common Stock quoted in the Over-The-Counter Market
Summary on the Nasdaq National Market or the dosing price quoted on any exchange
on which the Common Stock is listed, whichever if applicable, as published in
The Wall Street Journal for the fifteen trading days prior to the date of
determination of Fair Market Value. If the Common Stock is not traded
Over-The-Counter or on an exchange, the Fair Market Value shall be determined in
good faith by the Company. Notwithstanding the foregoing two sentences, if the
Company is party to a merger or sale of all or substantially all of the
Company's assets, "Fair Market Value" shall mean the value that would have been
received in respect of a Warrant Share had this Warrant been exercised prior to
such merger or sale.
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3. Stock Fully Paid; Reservation of Shares. All Shares that may be
issued upon the exercise of the rights represented by this Warrant will, upon
issuance, be validly issued, fully paid and non-assessable, issued in compliance
with all applicable federal and state securities laws, and free from all taxes,
liens and charges with respect to the issue thereof. During the period within
which the rights represented by this Warrant may be exercised, the Company will
at all times have authorized and reserved for the purpose of issuance upon
exercise of the purchase rights evidenced by this Warrant, a sufficient number
of shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant.
4. Adjustment of Warrant Price and Number of Shares. The number of
Shares purchasable upon the exercise of this Warrant and the Warrant Price shall
be subject to adjustment from time to time upon the occurrence of certain
events, as follows:
(a) Reclassification or Merger, etc.. In case of any
reclassification, change or conversion of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), or in case of any consolidation or merger of the Company with
or into another corporation or entity (other than a merger with another
corporation or entity in which the Company is the Surviving corporation and
which does not result in any reclassification or change of outstanding
securities issuable upon exercise of this Warrant), or in case of any sale of
all or substantially all of the assets of the Company, the Company, or such
successor or purchasing corporation, as the case may be, shall execute a new
Warrant (in form and substance satisfactory to Warrantholder) providing that
Warrantholder shall have the right to exercise such new Warrant and upon such
exercise to receive, in lieu of each share of Common Stock theretofore issuable
upon exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification, change,
consolidation, sale of all or substantially all of the Company's assets or
merger by a holder of one share of Common Stock. Such new Warrant shall provide
for adjustments that shall be as nearly equivalent as may be practicable to the
adjustment provided for in this Section 4. The provisions of this section (a)
shall similarly apply to successive reclassifications, changes, consolidations,
mergers, sales of assets and transfers.
(b) Subdivisions or Combination of Shares; Stock Dividends. In the
event that the Company shall at any time subdivide the outstanding shares of
Common Stock, or shall issue a stock dividend on its outstanding shares of
Common Stock, the number of Shares issuable upon exercise of this Warrant
immediately prior to such subdivision or immediately prior to the issuance of
such stock dividend shall be proportionately increased, and the Warrant Price
shall be proportionately
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decreased, and in the event that the Company shall at any time combine the
outstanding shares of Common Stock, the number of Shares issuable upon exercise
of this Warrant immediately prior to such combination shall be proportionately
decreased, and the Warrant Price shall be proportionately increased, effective
at the dose of business on the date of such subdivision, stock dividend or
combination, as the case may be.
(c) No Impairment. The Company will not, by amendment of its Amended
and Restated Certificate of Incorporation or through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith assist in the
carrying out of all the provisions of this Section 4 and in the taking of all
such action as may be reasonably requested by the Warrantholder in order to
protect the rights of Warrantholder against impairment.
(d) Notices of Record Date. In case at any time: (i) the Company
shall declare any dividend upon its Common Stock payable in cash or stock or
make any other distribution to the holders of its Common Stock; (ii) the Company
shall offer for subscription pro rata to the holders of its Common Stock any
additional shares of stock of any class, or other rights; (iii) there shall be
any capital reorganization or reclassification of the capital stock of the
Company, or a consolidation or merger of the Company with or into, or a sale of
all or substantially all its assets to another entity or entities; or (iv) there
shall be a voluntary or involuntary dissolution, liquidation or winding up of
the Company; then, in any one or more of said cases, the Company shall give, by
first class mail, postage prepaid, or by telex or telecopier, addressed to
Warrantholder at the address of such holder as shown on the books of the
Company, (A) at least ten (10) days' prior written notice of the date on which
the books of the Company shall dose 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, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up, and (B) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, at least ten (10) 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 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 Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up, as the case may be.
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5. Adjustment of Warrant Price and Shares Purchasable.
(a) Adjustment of Warrant Price. If the Company issues any
Additional Stock for no consideration or a consideration per share less than the
Warrant Price in effect immediately prior to the time of such issuance, then the
Warrant Price shall be reduced to the price determined by dividing:
(i) an amount equal to the sum of (A) the number of shares of
Common Stock Outstanding immediately prior to such issue or sale multiplied by
the then existing Warrant Price, and (B) an amount equal to the aggregate
"consideration actually received" by the Company upon such issue or sale, by
(ii) the sum of the number of shares of Common Stock Outstanding
immediately after such issue or sale.
For purposes of this subsection (a):
(A) In the case of an issue or sale for cash of shares of Common
Stock, the "consideration actually received" by the Company therefor shall be
deemed to be the amount of cash received, before deducting therefrom any
commissions or expenses paid by the Company.
(B) In case of the issuance (other than upon conversion or exchange
of obligations or shares of stock of the Company) of additional shares of Common
Stock for a consideration other than cash or a consideration partly other than
cash, the amount of the consideration other than cash received by the Company
for such shares shall be deemed to be the fair market value of such
consideration as determined in good faith by the Company's Board of Directors.
(C) In case of the issuance by the Company in any manner of any
Options, all shares of Common Stock or Convertible Securities to which the
holders of such Options shall be entitled to subscribe for or purchase pursuant
to such Options shall be deemed issued as of the date of the offering of such
Options, and the minimum aggregate consideration named in such Options for the
shares of Common Stock or Convertible Securities covered thereby, plus the
consideration, if any, received by the Company for such Options, shall be deemed
to be the "consideration actually received" by the Company (as of the date of
the granting of such Options) for the issuance of such Options.
(D) In case of the issuance or issuances by the Company in any
manner of any Convertible Securities, all shares of Common Stock issuable upon
the conversion or exchange of such Convertible Securities shall be deemed issued
as of the date such Convertible Securities are issued, and the amount of the
"consideration
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actually received" by the Company for such Convertible Securities shall be
deemed to be the total of (x) the amount of consideration received by the
Company upon the issuance of such Convertible Securities, plus (y) the minimum
aggregate consideration, if any, other than such Convertible Securities,
receivable by the Company upon conversion or exchange of such Convertible
Securities, except in adjustment of dividends.
(E) The amount of the "consideration actually received" by the
Company upon the issuance of any Options referred to in subparagraph (C) above
or upon the issuance of any Convertible Securities as described in subparagraph
(D) above, and the amount of the consideration, if any, other than such
Convertible Securities, receivable by the Company upon the exercise, conversion
or exchange thereof shall be determined in the same manner provided in
subparagraphs (A) and (B) above with respect to the consideration received by
the Company in case of the issuance of additional shares of Common Stock;
provided, however, that if such Convertible Securities are issued in payment or
satisfaction of any dividend upon any stock of the Company other than Common
Stock, the amount of the "consideration actually received" by the Company upon
the original issuance of such Convertible Securities shall be deemed to be the
value of such obligations or shares of stock, as of the date of the adoption of
the resolution declaring such dividend, as determined by the Company's Board of
Directors at or as of that date.
(F) On the expiration of any Options referred to in subparagraph
(C), or the termination of any right of conversion with respect to Convertible
Securities referred to in subparagraph (D), or any damage in the number of
shares of Common Stock deliverable upon exercise of such Options or upon
conversion of or exchange of such Convertible Securities, the Exercise Price
then in effect shall forthwith be readjusted to such Exercise Price as would
have obtained had the adjustments made upon the issuance of such Options or
Convertible Securities been made upon the basis of the delivery of only the
adjusted number of shares of Common Stock actually delivered or to be delivered
upon the exercise of such Options or upon the conversion or exchange of such
Convertible Securities.
(G) Anything herein to the contrary notwithstanding, the Company
shall not be required to make any adjustment of the Exercise Price in the case
of issuances of any shares of Common Stock or any Options or any Convertible
Securities to officers, directors, employees or consultants of the Company and
its subsidiaries pursuant to stock options or stock purchase plans or
agreements, whether "qualified" for tax purposes or not, issued on or after the
Grant Date.
(H) "Additional Stock" means (i) Common Stock issued by the Company
after the Grant Date, (ii) Common Stock issuable upon conversion of Convertible
Securities issued by the Company after the Grant Date, and (iii) Common Stock
issuable upon exercise of Options issued by the Company after the Grant Date
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(for purposes of this clause (iii), if the Option is to acquire Convertible
Securities, the Common Stock issuable upon conversion of such Convertible
Securities shall be deemed issued).
(I) "Common Stock" means, for purposes of this Section 5, any series
of the Company's Common Stock.
(J) "Common Stock Outstanding" means at any time all shares of
Common Stock that are then outstanding, plus all shares of Common Stock issuable
upon conversion of the Convertible Securities and all shares of Common Stock
issuable upon exercise of the Options (assuming for this purpose that the
securities acquirable upon exercise of the Options are converted into Common
Stock).
(K) "Convertible Securities" means evidences of indebtedness, shares
of stock or other securities which are convertible into or exchange able for,
with or without payment of additional consideration, shares of Common Stock,
either immediately or upon the arrival of a specified date or the happening of a
specified event or both.
(L) "Option" means any right, warrant or option to subscribe for or
purchase shares of Common Stock or Convertible Securities.
(b) Adjustment of Number of Shares Purchasable. Upon any
adjustment of the Warrant Price under subsection (a) of this Section 5, the
number of shares of Common Stock issuable upon exercise of this Warrant shall
equal the number of shares determined by dividing (i) the aggregate Warrant
Price payable for the purchase of all shares issuable upon exercise of this
Warrant immediately prior to such adjustment by (ii) the Warrant Price per share
in effect immediately after such adjustment.
6. Notice of Adjustments. Whenever the Warrant Price shall be adjusted
pursuant to the provisions hereof, the Company shall within ten (10) business
days of such adjustment deliver a certificate signed by its chief financial
officer to Warrantholder setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the Warrant Price after giving effect to such
adjustment.
7. Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder, but in lieu of such fractional
shares the Company shall make a cash payment therefor upon the basis of the
Warrant Price then in effect.
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8. Compliance with Securities Act; Disposition of Warrant or Shares of
Common Stock.
(a) Compliance with Securities Act. Warrantholder, by acceptance
hereof, agrees that this Warrant, and the Common Stock to be issued upon
exercise hereof are being acquired for investment purposes only and that such
holder will not offer, sell or otherwise dispose of this Warrant or any shares
of Common Stock to be issued upon exercise hereof except under circumstances
which will not result in a violation of the Act and as permitted by subsection
(b) of this section. This Warrant and all shares of Common Stock issued upon
exercise of this Warrant (unless registered under the Act) shall be stamped or
imprinted with a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). NO SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
(i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR (ii) AN
OPINION OF COUNSEL FOR THE HOLDER, REASONABLY SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED, EXCEPT THAT NO SUCH
OPINION SHALL BE REQUIRED IF SUCH SALE IS PURSUANT TO RULE 144
PROMULGATED UNDER THE ACT, AND THE TRANSFER OF THIS SECURITY IS SUBJECT
TO THE CONDITIONS SPECIFIED IN THE WARRANT TO PURCHASE SHARES OF COMMON
STOCK, DATED AS OF JUNE 30, 1997, BETWEEN PHOENIX LEASING INCORPORATED
AND THE EDISON PROJECT INC.
(b) Disposition of Warrant and Shares. With respect to any
offer, sale or other disposition of this Warrant or any shares of Common Stock
acquired pursuant to the exercise of this Warrant prior to registration of such
shares, the Warrantholder and each subsequent holder of this Warrant agrees to
give written notice to the Company prior thereto, describing briefly the manner
thereof, together with a written opinion of such holder's counsel, if reasonably
requested by the Company, to the effect that such offer, sale or other
disposition may be effected without registration or qualification (under the Act
as then in effect) of this Warrant or such shares of Common Stock and indicating
whether or not under the Act certificates for this Warrant or such shares of
Common Stock to be sold or otherwise disposed of require any restrictive legend
as to applicable restrictions on transferability in order to insure compliance
with the Act. Each certificate representing this Warrant or the shares of Common
Stock thus transferred (except a transfer pursuant to Rule 144) shall bear a
legend as to the applicable restrictions on transferability in order to insure
compliance with the Act, unless in the aforesaid opinion of counsel for the
Warrantholder, such legend is not required in order to insure compliance with
the Act. Nothing herein shall restrict the transfer of this Warrant or any
portion hereof by the initial Warrantholder or any successor holder to
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any affiliate of such holder, to any partnership affiliated with such holder, or
to any partner of any such partnership, provided such transfer may be made in
compliance with applicable federal and state securities laws and provided,
further, that any other transfer will require the Company's prior written
consent, which consent shall not be unreasonably withheld. The Company may issue
stop transfer instructions to its transfer agent in connection with the
foregoing restrictions.
9. Rights as Shareholders. No holder of this Warrant, as such, shall
be entitled to vote or receive dividends or be deemed the holder of Common
Stock, or otherwise be entitled to any voting or other rights as a shareholder
of the Company, until this Warrant shall have been exercised and the Shares
purchasable upon the exercise hereof shall have become deliverable, as provided
herein; provided that the Company shall deliver to the Warrantholder prior
written notice of any of the foregoing in accordance with the provisions of
Section 4(d) above.
10. Information Rights. The Company shall deliver to the Warrantholder:
(a) within thirty (30) days after the end of each calendar month,
an unaudited balance sheet of the Company as of the end of such month, cash flow
statements and an unaudited statement of operations of the Company for the
portion of the Fiscal Year ended with such month prepared and certified by the
chief financial officer of the Company, subject, however, to the exclusion of
footnotes and to normal year-end audit adjustments;
(b) as soon as practicable after the end of each Fiscal Year, a
copy of its audited financial statements accompanied by a report thereon by a
from of independent certified public accountants selected by the Company, which
report shall state that such financial statements fairly present the Company's
financial position at the end of such Fiscal Year;
(c) promptly upon their becoming available, one copy of each report
or proxy statement sent by the Company to its shareholders generally and of each
regular or periodic report or registration statement, prospectus or written
communication (other than transmittal letters) filed by the Company with the
Securities and Exchange Commission or any securities exchange on which shares of
Common Stock are listed; and
(d) with reasonable promptness, such other information as from time
to time may be reasonably requested by the Warrantholder.
11. Issuance Tax. The issuance of certificates for shares of Common
Stock upon exercise of this Warrant shall be made without charge to the
Warrantholder for any issuance tax in respect hereof, provided that the Company
shall not be required
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to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of
Warrantholder.
12. Modification and Waiver. This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the Company and the Warrantholder.
13. Notices. Any notice, request or other document required or
permitted to be given or delivered to the Warrantholder or the Company shall be
delivered, or shall be sent by certified or registered mail, postage prepaid, to
such holder at its address as shown on the books of the Company or to the
Company at the address indicated therefore on the signature page of this
Warrant.
14. Binding Effect on Successors. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets. The Company will, at the
time of the exercise of this Warrant, in whole or in part, upon request of the
Warrantholder but at the Company's expense, acknowledge in writing its
continuing obligation to the Warrantholder in respect of any rights (including,
without limitation, any right to registration of the shares of Registrable
Shares) to which the Warrantholder shall continue to be entitled after such
exercise in accordance with this Warrant; provided that the failure of the
Warrantholder to make any such request shall not affect the continuing
obligation of the Company to the Warrantholder in respect of such rights.
15. Lost Warrants or Stock Certificates. The Company covenants to the
Warrantholder that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, or like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
16. Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
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17. Governing Law. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS OF
THE STATE OF NEW YORK.
The Edison Project Inc.
By: /s/ Xxxxx Xxxxxxxx
------------------------------------------
Name: Xxxxx Xxxxxxxx
Its: President
Address: 000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Date: January 15, 1998
Phoenix Leasing Incorporated
By: /s/ N. H. Xxxxxx
------------------------------------------
Name: N. H. Xxxxxx
Its: Vice President
Address: 0000 Xxxxxx Xxxxxxxxx
Xxx Xxxxxx, XX 00000
Date: January 15, 1998
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