EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 1st day of
October, 2002 by and between Edison Schools Inc., a Delaware corporation with
offices located at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (referred to
hereinafter as the "Employer" or "Company") and Xxxxxxx X. Xxxxxxx, an
individual residing at Xxx Xxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxx 00000 (referred to
hereinafter as the "Executive").
W I T N E S S E T H :
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WHEREAS, the Employer desires to employ the Executive, and the
Executive desires to be employed by the Employer, upon the terms and conditions
hereof;
NOW THEREFORE, in consideration of the foregoing promises and of the
covenants and agreements hereinafter contained, the parties hereto agree as
follows:
1. EMPLOYMENT. The Employer hereby employs the Executive, and the
Executive hereby accepts employment with the Employer, upon the terms and
conditions set forth in this Agreement.
2. TERM. The employment of the Executive hereunder shall commence on
the date hereof and shall continue through June 30, 2004 unless earlier
terminated by either party pursuant to the provisions of Section 10 hereof (the
actual term of employment of the Executive hereunder being hereinafter referred
to as the "Employment Period").
3. TITLES; DUTIES; REPORTING.
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(a) During the Employment Period, the Executive shall render services
as the Vice Chairman, Business and Finance, of the Employer. He shall perform
duties consistent with such title and such other related duties, not
inconsistent with such titles, as the Employer otherwise shall request. In
addition, he shall serve as a member of the Company's Office of the Chief
Executive Officer ("Office of the CEO"). The Office of the CEO shall be made up
of the Executive, the Chief Executive Officer and the President and Chief
Operating Officer. The obligations and responsibilities of the Office of the CEO
shall be more fully described in Appendix A. Without limiting the foregoing, the
Executive's roles and responsibilities shall include (i) implementing a
continuous re-engineering process which shall result in increasing the EBITDA of
the Company and the return on investment of its products; (ii) responsibility
for negotiating and approving all financings of any type, including debt and
equity that the Company should enter into; (iii) developing an annual budget and
managing the budget preparation review process; (iv) developing the Company's
36-month financial plan in coordination with the other members of the Office of
the CEO; (v) develop and implement employee reports that record the
responsibilities and results of various
employee goals; (vi) develop, install and track operating and financial results
and operating standards of the Company in cooperation with the other members of
the Office of the CEO; (vii) chair the Capital Investment Committee and be
responsible for organizing policies and procedures in relation to commitment and
disbursement of all capital fundings by the Company; (viii) develop and assist
in the delivery of a new investor relations strategy; (ix) ensure that any/all
products that the Company develops and offers to customers are based on a model
that delivers an acceptable return on investment and profitability and recommend
to the Office of the CEO changes to current products and practices that are
necessary to achieve these ends; (x) ensure that the Company is meeting its
annual budget and profitability targets and recommend actions to the Office of
the CEO that would result in improvements on any shortcomings which the
Executive believes need to be addressed; (xi) assume senior management
responsibility for the Company's financial department.
(b) The Executive shall report directly to the Chief Executive
Officer of the Company.
(c) During the Employment Period, Executive shall not engage in
any other business activity that shall interfere with the Executive's ability to
devote the business time, attention, skill and best efforts to the his duties
hereunder and the business and affairs of the Employer and its affiliates.
(d) The Company will nominate the Executive on the management
slate of candidates to the Company's Board of Directors for the entire duration
of this Agreement.
4. COMPENSATION.
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(a) Salary. For all services rendered by the Executive under
this Agreement (including, without limitation, services as an executive, officer
or member of any committee of the Employer or any of its affiliates), the
Employer shall pay the Executive a base salary at the rate of $5673.08 per week
(if annualized, $295,000.00) per annum, payable in substantially equal
installments in accordance with the Employer's usual payroll practices. This
salary shall go into effect October 1, 2002, and the first payment shall reflect
both the payment of a signing bonus of $73,750 and any retroactive pay as may be
due under this agreement. The Company shall, on an annual basis, review the
Executive's base salary to determine in its discretion whether, and if so to
what extent, the Executive's base salary under this Agreement should be
increased. Any increased base salary shall be deemed thereafter to be the base
salary required by this Agreement, and in no event shall the Executive's base
salary under this Agreement be lowered without the mutual written consent of
both the Company and the Executive.
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(b) Bonus.
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(i) Current Year Bonus. Executive shall, subject to his
continued employment hereunder and quarterly Board approval, be eligible to
receive a bonus of up to $450,000 for fiscal year 2003, ending June 30, 2003.
This bonus shall be paid in four quarterly installments, with such payment to be
made to the Executive in the first regularly scheduled paycheck following Board
approval and within thirty days following October 1, 2002, December 30, 2002,
March 30, 2003 and June 30, 2003. The Board will evaluate the Executive's
eligibility for the quarterly payment as follows:
(A) For the first three quarters of fiscal
year 2003, the Board shall review the following factors to determine the
Executive's eligibility for the quarterly bonus payment: 1) is the Company on
target to achieve $15 million in EBITDA; 2) is the Company on target to
refinance $30 million in the aggregate of Charter School Notes at any time
between July 1, 2002 and June 30, 2003; and 3) is the Company on target to
continue to operate without the need for securing additional outside equity
financing between the date hereof and June 30, 2003. If at the end of each
quarter the Board finds that the Executive has made reasonable progress toward
achieving these goals, then it must award the Executive $112,500 as a quarterly
bonus payment. If the Board finds that reasonable progress toward these goals
has not been made, then no payment shall be made for that quarter.
(B) On June 30, 2003 the Executive shall be
eligible to receive up to the remainder of his potential bonus amount as stated
above in Section 4(b)(i) above ($450,000 less any payments made to the Executive
under Section 4(b)(i)(A) above) if the Board determines that the Company has 1)
achieved $15 million in EBITDA; 2) refinanced $30 million of gross proceeds from
Charter School Notes; and 3) the Company has not to date issued substantial
incremental equity other than for executive compensation or similar programs.
(C) For the purposes of the above clauses,
EBITDA and Gross Proceeds of Charter School Notes are defined in Section 7
below.
(ii) Subsequent Year. The terms and conditions
relating to Executive's bonuses for the subsequent year shall be negotiated
between the Employer and the Executive on an annual basis. Nevertheless, it is
the good faith intention of the parties that the potential bonus to be paid to
the Executive in the subsequent year shall be no less than $450,000.
(iii) Continued Employment. Notwithstanding any of the
foregoing, Executive shall not be entitled to receive any of the bonus payments
referred to above unless he shall, at end of each quarter, continue to be
employed hereunder. In the event that, as of any such bonus eligibility date,
his employment
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hereunder shall have terminated for any reason whatsoever, he shall not be
entitled to receive any bonus amount for the present quarter unless otherwise
provided in Section 10 below but would be entitled to receive monies for the
previous quarter.
(c) Restricted Stock.
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(i) Current Year. The Board has approved a grant to
the Executive of one million shares of restricted stock for services rendered
from the date hereof until June 30, 2003. For the purposes of determining the
Executive's compensation with respect to such grant, the grant shall be priced
at the closing trade price on the day of Board approval, which was September 27,
2002. 800,000 of the shares will time vest quarterly in equal parts with
twenty-five percent vesting at the execution of this Agreement and 25% vesting
on each of December 30, 3003, March 31, 2003 and June 30, 2003 so long as the
Executive remains employed by the Company. The remaining 200,000 shares will
vest quarterly subject to Board approval. The Board shall determine whether or
not any of the shares vest based on the same quarterly criteria as the current
year bonus as stated above in Section 4(b)(i). If the Company should terminate
the Executive's employment with cause (as defined in Section 10), or if the
Executive should terminate his employment for any reason, prior to June 30,
2003, then all shares remaining unvested at the time of such termination would
be cancelled immediately, except as otherwise provided for in Section 10 below.
(ii) Fiscal Year 2004. Unless the Executive gives
notice of termination pursuant to Section 10(e) below, he will be eligible to
receive an additional one million shares of restricted stock subject to Board
approval for the employment services retained herein to be rendered between July
1, 2003 and June 30, 2004. The Board will be asked to approve this grant of
restricted stock at the last regularly scheduled Board meeting prior to June 30,
2003. For the purposes of determining the Executive's compensation with respect
to such grant, the grant shall be priced at the closing trade price on the day
of approval. Assuming Board approval is given, 440,000 shares will time vest in
twelve equal parts with one-twelfth vesting at the end of each month with such
vesting beginning July 1, 2003 and continuing through June 30, 2004 so long as
the Executive remains employed by the Company. The remaining 560,000 will vest
at such time, and in accordance with such performance qualifications, as
determined by the Board at the meeting approving the grant of the shares.
(d) Benefit Plans. Executive shall also be entitled to such
benefits, and to participate in such benefit plans, as other members of the
Office of the CEO are entitled to (and subject in any event to the participation
standards and other terms and conditions of any such benefits or plans).
(e) Withholding. All amounts paid to the Executive hereunder
shall be subject to such withholdings as may be required by applicable law.
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5. EXPENSES. The Employer shall reimburse the Executive for such
expenses as may be reasonably incurred by the Executive in furtherance of the
Executive's performance of the Executive's duties hereunder, subject to and in
accordance with the Employer's policies concerning reimbursement of such
expenses. The Company and the Executive shall execute a travel and expense
policy to be mutually agreed upon within thirty days following the execution of
this Agreement.
6. CONFIDENTIAL AND PROPRIETARY INFORMATION.
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(a) Definition of Proprietary Information. For purposes of this
Agreement, the term "Proprietary Information" shall mean any sensitive or
otherwise confidential or proprietary materials or information related to the
business or activities of the Employer or its affiliates (including but not
limited to Edison Affiliates), whether or not reduced to writing or other
tangible form of expression and whether or not patentable or protectable by
copyright, which the Executive currently has or receives, has access to,
conceives or develops, in whole or in part, as a direct or indirect result of
his employment with the Employer or any affiliate, in the course of employment
with the Employer or any affiliate (in any capacity) or through the use of the
Employer's or any affiliate's facilities or resources. Proprietary Information
also includes third party information provided to the Employer or any affiliate
under an obligation of confidentiality. By way of illustration but not
limitation, Proprietary Information includes administrative procedures and
policies, internal administrative memoranda and forms, techniques, designs,
processes, formulae, data, plans for research and market development, course
development and marketing, business plans and budgets, unpublished financial
statements, license arrangements, prices and cost of supplies and products.
(b) Non-Disclosure. Except to the extent otherwise authorized in
writing by the CEO or necessary in the ordinary course of performing the
Executive's duties hereunder, at all times during the Employment Period and
thereafter, the Executive shall (i) hold all Proprietary Information in the
strictest confidence, (ii) not use Proprietary Information for any purpose which
is detrimental to the Company and (iii) not disclose any Proprietary Information
to any person or entity, by publication or otherwise.
(c) Return of Information. All notes, data, tapes, reference
materials, memoranda and other documents, materials or other tangible matter
constituting or containing Proprietary Information shall (as between the
Employer or the relevant affiliate, on the one hand, and the Executive, on the
other hand) belong exclusively to the Employer or the relevant affiliate. At any
time upon request of the Employer, or upon termination of Executive's employment
with the Employer, the Executive shall return to the Employer all such
documents, materials and tangible matter together with all copies thereof in the
Executive's possession or control.
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(d) Ownership of Information. All Proprietary Information
shall (as between the Employer or the relevant affiliate, on the one hand, and
the Executive, on the other hand) be and remain the sole property of Employer or
the relevant affiliate. The Executive hereby assigns to Employer or the relevant
affiliate all of Executive's right, title and interest in any idea or concept,
invention, work of authorship or other information or material (whether or not
patentable or protectable by copyright) conceived or developed in whole or in
part by Executive, or in which the Executive may have aided the development,
while employed by the Employer or the relevant affiliate, including, without
limitation, any Proprietary Information that relates to the business of the
Employer or the Education industry. If any such works of authorship are deemed
in any way to fall within the definition of "work for hire", as such term is
defined in 00 X.X.X 000, such works shall be considered "works made for hire",
the copyright of which shall be owned solely, completely and exclusively by
Employer or the relevant affiliate. If any such works are determined not to be
"works for hire", such works are hereby automatically owned by and assigned and
transferred completely and exclusively to the Employer or the relevant
affiliate. The Executive agrees to execute, acknowledge and deliver any
instruments or documents and to do all other things reasonably requested by the
Employer or the relevant affiliate (both during and after the Executive's
employment with the Employer) in order to completely vest in the Employer or the
relevant affiliate all ownership rights in such ideas, concepts, inventions,
works, information and materials. The Executive further agrees to disclose
immediately to the Employer all Proprietary Information conceived or developed
in whole or in part by the Executive at any time while employed by the Employer.
7. CERTAIN COVENANTS.
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(a) Certain Terms. For purposes of this Agreement:
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(i) the term "directly or indirectly" shall include,
without limitation, a reference to any business or entity: (A) which Executive
engages in, consults for, manages, operates, controls or supervises or in which
Executive participates in the management, operation, control or supervision of;
or (B) in which Executive has any direct or indirect ownership or financial
interest, other than the passive ownership by Executive of less than three
percent (3%) of the voting capital stock of a publicly held corporation;
(ii) the term "Determination Date" shall mean the
date, within the Restricted Period, with respect to which a determination as to
the application of Section 7(b) is being made;
(iii) the term "Person" shall mean any individual,
corporation, partnership, trust or other entity;
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(iv) the term "Restricted Period" shall mean the
period commencing on the date hereof and ending on the date falling one year
after the date of termination of the Executive's employment with the Employer;
(v) the term "Restricted Business" shall refer to any
business that directly competes with Edison Schools Inc. in the for-profit K-12
sector. This sector includes businesses that provide directly or indirectly
whole school K-12 management or any education related business that Edison shall
be engaged in at the time of separation. A competing business shall not include
traditional non-profit education;
(vi) the term "Restricted Territory" shall mean all
states in which any aspect of the Restricted Business is, or was (as the case
may be), being conducted by the Employer or any affiliate as of the earlier of
(A) the Determination Date and (B) the date on which the Executive's employment
with the Employer shall have terminated.
(vii) the term "EBITDA" shall mean earnings before
interest, income tax expense, depreciation and amortization and stock based
capital charges and other onetime or specific event related charges including
but not limited gains or disposals on assets, charges related to closings pf
school, charges relating to losses on charter or other loans, extra ordinary
items and write-downs of investments and intangibles.
(viii) the term Gross Proceeds of Charter School Notes
shall mean the gross amount of funds received on a refinancing of charter school
loans before any deductions commissions or deal fees without deduction of monies
to be repaid to existing lenders.
(ix) For purposes of this Section 10, the term
"Change in Control" shall mean (A) the acquisition by any person or group of
persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, as amended), directly or
indirectly, through a purchase, merger or other acquisition transaction or
series of transactions, of securities of the Employer entitling such person or
group to exercise 50% or more of the combined voting power or beneficial
ownership of the Employer's securities, (B) the transfer, whether by sale or
merger, of all or substantially all of the business and assets of the Employer
to any person or group or persons acting in concert, or (C) the adoption of a
plan of liquidation or dissolution of the Employer, other than any such
acquisition by or transfer to (x) the Employer or an affiliate of the Employer,
(y) a trustee or other fiduciary acting on behalf of any employee benefit plan
maintained by the Employer or by a member of the Employer's control group
(within the meaning of the Employee Retirement Income Security Act of 1974, as
amended), or (z) any person who currently owns at least 25% of the combined
voting power of the Employer's securities (on a fully diluted basis).
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For purposes of this subsection (ii) the term "affiliate" shall mean, with
respect to any person, any other person that, directly or indirectly through one
or more intermediaries, controls, is controlled by or is under common control
with such first person, and the term "control" shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of an entity (other than a natural person), whether
through ownership of voting capital stock, by contract or otherwise.
(b) Non-Competition and Non-Solicitation. As a material
inducement to the Company to employ Executive and to pay the compensation
provided for hereunder, and without limiting any other obligation the Executive
may have under applicable law as an officer or executive of the Employer, during
the Restricted Period, the Executive shall not, directly or indirectly, anywhere
within the Restricted Territory, (i) engage in any aspect of the Restricted
Business or assist, advise, represent or consult for any other Person in
connection with such Person engaging in any aspect of the Restricted Business or
(ii) induce, or attempt to induce, any employee of the Employer or any
subsidiary to leave such employ, or to accept any other position or employment,
or assist any other Person in hiring any such employee, unless that person is
such an individual the Executive recruited to join the Company during the
employment period.
(c) Covenant to Cooperate. Executive agrees that during the
Employment Period and thereafter to cooperate with Employer in its defense or
settlement of any and all claims brought against the Employer that arose during
Executive's employment.
8. CERTAIN ACKNOWLEDGEMENTS; SEVERABILITY.
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(a) Acknowledgment of Reasonableness. The Executive has
carefully read and understood Sections 6 and 7 of this Agreement (collectively,
the "Restrictive Covenants") and agrees that they are fair and reasonable and
reasonably required for the protection of the business and the interest of the
Employer and its affiliates.
(b) Specific Performance. The Executive agrees that damages
cannot reasonably compensate the Employer or any affiliate in the event of a
violation of the Restrictive Covenants and that it would be difficult to
ascertain the damages, which would be suffered by them. Accordingly, the
Executive hereby agrees and consents that in the event of any actual or
threatened such breach or violation, the Employer and/or the relevant affiliate
shall be entitled to and may obtain injunctive relief in order to prevent a
violation, or a continued violation, of the terms of this Agreement and/or may
otherwise specifically enforce the applicable covenants and restrictions. The
foregoing shall not limit the Employer or any affiliate in the pursuit of any
other rights or remedies it may have hereunder or at law or in equity, including
damages.
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(c) Severability. The parties intend that the Restrictive
Covenants be enforced to the fullest extent permissible under applicable law. If
any particular term or provision thereof is adjudicated or determined, in any
jurisdiction and to any extent, to be invalid or unenforceable (including,
without limitation, as to duration, substantive scope or geographic area), such
term or provision shall be ineffective only as to such jurisdiction and only to
the extent of such invalidity or unenforceability, without invalidating or
rendering unenforceable any other term or provision of this Agreement. To that
end, the court shall be entitled to reformulate any term or provision deemed by
it to be ineffective or unenforceable, so as to render the covenants and
restrictions contained herein enforceable to the fullest extent permitted by
applicable law.
9. COMPLIANCE WITH OTHER AGREEMENTS. The Executive represents and
warrants that the execution of this Agreement and Executive's performance
hereunder will not, with or without the giving of notice or the passage of time,
or both, conflict with, result in the breach of or the termination of, or
constitute a default under any agreement to which the Executive is or may be
bound. Executive represents and warrants that (other than this Agreement) the
Executive is not bound by any oral or written agreements which prohibit or
restrict the Executive from: (a) competing with, or in any way participating in
a business which competes with, any former employer or business of the
Executive; (b) soliciting personnel of the former employer or business to leave
such former employer's employment or to leave such business; or (c) soliciting
customers of the former employer or business or another business.
10. TERMINATION. The following provisions set forth the only
circumstances under which this Agreement, and therefore the employment of
Executive hereunder, may be terminated prior to June 30, 2004:
(a) Without Cause.
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(i) Fiscal Year 2003. Notwithstanding any other term
or provision of this Agreement, the Employer may terminate this Agreement at any
time upon at least 5 days' notice to the Executive on or before June 30, 2003.
Should such a termination occur, in consideration for executing a Separation and
Release Agreement in the form customarily used by the Employer at the time of
termination, the Employer shall (A) accelerate the vesting of all the then
unvested shares of restricted stock that were granted to the Executive pursuant
to this Agreement prior to the date on which notice of termination was given,
(B) shall owe to the Executive a sum equal to the amount of base salary which
(at the then-current rate) would otherwise have been paid to the Executive
during the period from the date of termination through the end of the fiscal
year, and (C) owe the Executive $450,000 less sums already paid for bonus
payments according to the terms of Section 2(b)(i). The aforesaid sums described
in (B) and (C) above, will be paid to Executive in the first regularly scheduled
paycheck
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following the effective date of the termination, if such payment is not made, or
if the vesting of the stock is not accelerated, the Company must continue to pay
the Executive his daily rate of pay until such action is not taken regardless of
whether or not future employment services continue to be rendered. Executive
acknowledges that the acceleration and payments pursuant to this Section 10(a)
is in substitution for, and not in addition to, any severance policy or similar
policy or program followed by the Employer or any Affiliate, and Executive
hereby waives any such rights to receive any payments under any such other
policies and programs.
(ii) Fiscal Year 2004. Notwithstanding any other term
or provision of this Agreement, the Employer may terminate this Agreement at any
time upon at least 5 days' notice to the Executive after June 30, 2003. In the
event of any such termination neither party shall have any further obligations
to the other, financial or otherwise following the effective date of the
termination.
(b) For Cause. This Agreement may be terminated immediately
by the Employer (by written notice to the Executive) for cause. For purposes of
this Agreement, "Cause" shall mean:
(i) the Executive's breach, in any material respect,
of this Agreement (including the Executive's refusal or other failure, other
than by reason of mental or physical disability, to perform any of the
Executive's duties hereunder), the Executive shall have five days to remedy and
cure such breach following the receipt of written notice of the same;
(ii) the Executive's commission of any material act
of fraud, or moral turpitude in connection with his employment;
(iii) the Executive's commission of any willful or
intentional act having the effect of injuring, in any material respect, the
reputation, business or business relationships of the Employer or any of its
affiliates;
(iv) the entering by the Executive of a plea of
guilty or nolo contendere to, or the conviction of the Executive for, a felony
or crime which carries a potential penalty of imprisonment for more than ninety
(90);
(v) the Executive's habitual abuse of alcohol or
prescription drugs or abuse of controlled substances;
(c) Death or Disability. This Agreement shall terminate
automatically upon the occurrence of Executive's death. In addition, the
Employer shall have the right, at any time after the Executive shall have become
disabled, to terminate this Agreement immediately. For purposes of this
Agreement, the Executive shall be deemed to have become disabled when, by reason
of physical or mental illness, incapacity or disability, the Executive shall
fail to perform the Executive's duties
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hereunder for one continuous period of ninety (90) days or more, or shorter
periods aggregating one hundred twenty (120) days or more, within any period of
twelve (12) consecutive months; provided, however, that any days of disability
separated by ten (10) or fewer days shall be considered continuous. During any
period when the Executive implicitly or explicitly purports to be unable to
perform the Executive's duties hereunder by reason of physical or mental
illness, incapacity or disability, the Executive, at the request and expense of
Employer, shall submit to one or more examinations by a physician of the
Employer's choice.
(d) Termination by the Executive for Good Reason. The
Executive may terminate this Agreement at any time upon at least 5 days' written
notice to the Company if the Company breaches any of the material terms of this
Agreement, including but not limited to the failure of the Office of the CEO to
operate in accordance with the terms set forth in Appendix A attached hereto.
(i) If the Executive gives notice of termination as
provided above, the Company shall have 5 days to cure such breach. If the breach
is cured, (A) the Executive has the option to elect to keep this Agreement in
full force and effect or (B) if despite the Company's curing during the allowed
time period, the Executive still wishes to terminate this Agreement, he may do
so, provided however that the Company shall have no further obligations to him
and the provisions of Section 10(d)(ii) shall not come into effect.
(ii) If the Executive gives notice of his intent to
terminate this Agreement due to the failure of the Office of the CEO to comply
with the terms of Appendix A prior to June 30, 2003, and the Company fails to
cure as described above, then on the effective date of termination (defined as
the 6th day after the notice was served on the Company) and in consideration for
executing a Separation and Release Agreement in the form customarily used by the
Employer ( a form of which will be mutually agreed upon within 30 days of the
execution of this agreement and attached here to as Exhibit B) at the time of
termination, the Employer shall (A) accelerate the vesting of all the then
unvested shares of restricted stock that were granted to the Executive pursuant
to this Agreement prior to the date on which notice of termination was given,
(B) shall owe to the Executive a sum equal to the amount of base salary which
(at the then-current rate) would otherwise have been paid to the Executive
during the period from the date of termination through June 30, 2003, and (C)
owe the Executive $450,000 less sums already paid for bonus payments according
to the terms of Section 2(b)(i). The aforesaid sums described in (B) and (C)
above, of shall be payable to Executive in substantially equal and successive
installments, all of which shall be paid on or about the same dates on which
payments of salary are made to other Executives of the Employer. Executive
acknowledges that the acceleration pursuant to this Section 10(d) is in
substitution for, and not in addition to, any severance policy or similar policy
or program followed by the Employer or any Affiliate, and Executive hereby
waives any such rights to receive any payments under any such other policies
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and programs. If the Executive terminates this Agreement after June 30, 2003,
the Company shall have no further obligations to the Executive except to pay any
compensation owed to the Executive for the previous quarter or year.
(e) Termination by Either Party For Year Two. Either party may
terminate this Agreement effective June 30, 2003 for any reason or no reason by
giving the other written notice of such intent by May 1, 2003. If such notice is
provided, all terms and conditions of this Agreement shall remain in full force
and effect through June 30, 2003 and thereafter this Agreement shall be
terminated with our further obligation of either party to the other except as to
monies and shares owed to the Executive pursuant to the terms of the this
Agreement.
(f) Change in Control. If there is a change in control prior
to June 30, 2003 as defined in Section 7(a)(ix) above, then the Employer shall
(A) accelerate the vesting of all the then unvested shares of restricted stock
that were granted to the Executive pursuant to this Agreement prior to the date
on which notice of termination was given, and (B) owe the Executive $450,000
less sums already paid for bonus payments according to the terms of Section
2(b)(i).
11. OBLIGATIONS OF EMPLOYER UPON TERMINATION. Upon the termination of
this Agreement, regardless of the reason therefore, the Employer shall be under
no further obligation to the Executive except to pay the Executive (a) any
salary owing to the Executive under Section 4(a) for services rendered up to and
including the last day of the Employment Period (the "Termination Date"), (b)
any payment owing to the Executive under Section 10(a)(i) or 10(d)(ii) in the
event of a termination by the Employer without cause or failure by the Office of
the CEO to comply with the terms of Appendix A (which failure is not cured), as
the case may be, (c) any reimbursement for expenses incurred by the Executive
pursuant to Section 5 up to and including the Termination Date, and (d) any
compensation or other sums otherwise owed to the Executive as of the Termination
Date in connection with his bonus arrangements with the Employer or any benefit
plan of the Employer. Benefits payable to the Executive pursuant to any benefit
plan of the Employer shall be subject to and payable in accordance with the
terms of such plan.
12. MISCELLANEOUS.
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(a) Assignment; Binding Effect. This Agreement is personal in
nature and neither of the parties hereto shall, without the consent of the
other, assign or transfer this Agreement or any rights or obligations hereunder;
provided, however, that the Employer shall have the right to assign and/or
delegate any or all of its rights and obligations hereunder to (i) any person or
entity who shall acquire (whether by sale of assets, merger or otherwise) all or
substantially all of its assets (excluding, for purposes of each such
determination, cash, cash equivalents and any real property or interests
therein) or (ii) any affiliate of the Employer and that the Executive shall have
the right to assign
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the proceeds hereof to a family trust or charitable trust controlled by him or
his family. Any assignment or delegation by either party in violation of this
Agreement shall be null and void ab initio. Subject to the foregoing two
sentences, this Agreement and all of the provisions hereof shall be binding
upon, and inure to the benefit of, the parties hereto, and their successors,
assigns, executors, administrators, personal and legal representatives, heirs
and distributes.
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York (without
regard to principles of conflicts of law). Each party to this Agreement
expressly and irrevocably (a) consents that any legal action or proceeding
against him, her or it under, arising out of or in any manner relating to, this
Agreement may be brought in any court of the State of New York located within
the Southern District of New York or in the United Xxxxxx Xxxxxxxx Xxxxx xxx xxx
Xxxxxxxx Xxxxxxxx xx Xxx Xxxx, (x) consents and submits to the personal
jurisdiction of any of such courts in any such action or proceeding, (c)
consents to the service of any complaint, summons, notice or other process
relating to any such action or proceeding by delivery thereof to him, her or it
by hand or by any other manner provided for in Section 12(d), (d) waives any
claim or defense in any such action or proceeding based on any alleged lack of
personal jurisdiction, improper venue or forum non conveniens or any similar
basis, and (e) waives all rights, if any, to trial by jury with respect to any
such action or proceeding. Nothing in this Section shall affect or impair in any
manner or to any extent the right of any party to commence legal proceedings or
otherwise proceed against any other party in any jurisdiction or to serve
process in any manner permitted by law.
(c) Counterparts. This Agreement may be executed in one or
more counterparts each of which shall be deemed an original for all purposes.
(d) Notices. All notices, requests, demands and other
communications provided for or permitted under this Agreement shall be in
writing and shall be either personally delivered (including delivery by express
couriers such as Federal Express) or sent by prepaid certified mail, return
receipt requested, addressed to the party to which notice is to be given at the
address set forth below for such party, or to such other address as such party
may have fixed by notice given in accordance with the terms hereof:
If to the Executive:
Xxxxxxx X. Xxxxxxx
Xxx Xxxxxx Xx.
Xxxxxx, Xxxxxxxxxxx 00000
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If to the Employer:
Edison Schools Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
with a copy to:
Edison Schools Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Any notice sent as aforesaid shall be deemed given and effective upon the
earlier of (i) delivery to the address for the receiving party provided for
herein and (ii) the date falling three days after notice of attempted delivery
has been left at the address to which a notice to the receiving party is to be
sent hereunder.
(e) Continuation. In the event that this Agreement shall
expire and Executive shall nevertheless continue to be employed by the Employer,
the parties acknowledge that the terms of this Agreement, absent a supplemental
written agreement between the parties to the contrary (and except for the
provisions of Sections 6, 7, 8 and, to the extent relevant to the preceding
three sections, 12), shall not be deemed to apply to such post-expiration
employment, any such employment being (and without limiting the foregoing) on an
at-will basis.
(f) Survival. Notwithstanding Section 10, the provisions of
Sections 6, 7, 8, 11 and 12 shall survive the termination hereof, regardless of
the reason therefore.
(g) Entire Agreement; Modification and Waiver. This Agreement
constitutes the entire agreement between the parties hereto, and expressly
supersedes or replaces any and all prior agreements between the parties, oral or
written, with the respect to the subject matter hereof. None of the terms or
provisions hereof shall be modified or waived, and this Agreement may not be
amended or terminated, except by a written instrument signed by a party against
which modification, waiver, amendment or termination is to be enforced. No
waiver of any one provision shall be construed as a waiver of any other
provision and the fact that an obligation is waived for a period of time shall
not be considered to be a continuous waiver. Without limiting the foregoing, no
waiver of any breach or violation hereof shall be implied from forbearance or
failure by the Employer to take action.
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----------------------------------------------------
15
IN WITNESS WHEREOF, this Agreement has been entered
into as of the date first set forth above.
EMPLOYER:
EDISON SCHOOLS INC.
/s/ H. Xxxxxxxxxxx Xxxxxxx
----------------------------------------
By: Xxxxx Xxxxxxx
Title: Chief Executive Officer
EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------------
XXXXXXX X. XXXXXXX
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APPENDIX A
----------
The Office of Chief Executive Officer
-------------------------------------
1. The Office of the CEO shall be made up of three members: i) the Chief
Executive Office; ii) the Vice Chairman, Business and
Finance and iii) the President and Chief Operating Officer.
2. The members of the Office of the CEO must meet not less than twice a
month with each meeting lasting for no less than two consecutive hours.
The members shall set a schedule of meetings at the beginning of each
quarter.
3. All decisions regarding capital investment in any school, product or a
contractual commitment of capital must be approved unanimously in
writing by all members of the Office of the CEO.
4. All decisions regarding employee compensation, for existing central
staff members or new hires (i.e. employees whose primary workplace is
not in the schools), including promotions, raises and bonuses, stipends
or other form of compensation, must be presented in writing to the
Office of the Executive and approved by two thirds of the members.
Issues of compensation must be addressed by the Office of the Executive
at least once a month.
5. Approval of all annual budgets for both central and sites must be
unanimously approved in writing by all members of the Office of the
Executive. Increasing the expenses a department or division of the
Company in the aggregate must also be unanimously approved in writing
by all members of the Office of the Executive.
6. A decision not to discipline an employee in accordance with the
policies regarding disciplinary actions to be taken for violations of
the Business Code of Conduct must be reviewed by the Office of the CEO
as well as the Chief Financial Officer and must be approved in writing
by three out of four individuals.
7. All debt or equity issuances other than to employees must be approved
unanimously in writing by all members of the Office of the CEO.
APPENDIX B
Separation Agreement and General Release
TO BE ADDED WITHIN 30 DAYS OF EXECUTION
