Exhibit 10.2
As of December 18, 2001
Mr. H. Xxxxxxxxxxx Xxxxxxx
Edison Schools Inc.
11th Floor
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Xxxxx:
This letter agreement ("Agreement") amends and restates the terms of
your employment with Edison Schools Inc. ("Edison" or the "Company") as approved
by Edison's Board of Directors (the "Board"). This Agreement supercedes and
replaces any prior written or oral understandings between the Company and you
with respect to the subject matter of the Agreement. You are entering into this
Agreement for good and valuable consideration, including the consideration set
forth below under "Stock Options," the receipt and sufficiency of which are
hereby acknowledged by you.
Position/Responsibilities. You will continue to be employed as Edison's
President and Chief Executive Officer ("CEO"), working out of the Company's
headquarters in New York City. Your responsibilities are set forth on Exhibit A
attached hereto.
Term. The term of your employment commences as of the date hereof and
ends on June 30, 2004, unless terminated earlier by you or by the Company as
provided below.
Base Salary. You will be paid at an annual base salary rate of $1
retroactive to July 1, 2001. Unless otherwise provided by the Board, you shall
not be paid a bonus.
Stock Options. Simultaneous with the execution of this Agreement, (i)
the parties hereto shall execute the Stock Option Agreement attached hereto as
Exhibit B (the "2001 Option") and (ii) the options represented by the Stock
Option Agreements attached hereto as Exhibits C, D and E shall accelerate and be
vested in full.
Benefits. You will be entitled to the standard Company benefits for
executives at your level as in effect from time to time, a current schedule of
which is attached as Exhibit F. The Company will further maintain for your
benefit supplemental long-term disability insurance and supplemental term life
insurance such that your total life insurance coverage through the Company is
$800,000, provided that such supplemental coverage can be obtained at a premium
that is customary for a man of your age in good physical condition. You will
receive four weeks of vacation annually in addition to the official Company
holidays. Except as otherwise provided herein, you agree to abide by the rules,
regulations, instructions, personnel practices and policies of the Company and
any changes therein which may be adopted from time to time by the Company.
Expense Reimbursements. You will be reimbursed for 75% of reasonable
expenses incurred on the Company's behalf that are commensurate with your
position, upon submission of adequate documentation for such expenses.
Termination/Severance Pay. (i) Either you or Edison may terminate your
employment at any time without cause by giving written notice to that effect.
The termination of employment shall be effective on the date specified in such
notice.
(ii) If Edison terminates your employment without cause or if you
terminate your employment for "good reason," any unvested portion of any
outstanding option award will be immediately vested. For purposes of this
Agreement, "good reason" shall mean (a) the assignment to you of duties and
responsibilities which results in your having materially less significant duties
and responsibilities or exercising materially less significant power and
authority than you had, or duties and responsibilities or power and authority
not in all material respects comparable to that of the level and nature which
you had, immediately prior to any such assignment; (b) your removal, or the
failure to re-appoint you to your then current position with Edison; and (c)
Edison's failure to perform in a timely manner its material obligations under
this Agreement, which failure is not remedied by the Company within 10 days
following written notice from you to the Company notifying it of such failure,
other than in the case of each of (a), (b) and (c), (A) with your express
written consent or (B) in connection with any termination of your employment by
Edison as the result of your disability or "for cause."
(iii) As used in this Agreement, the term "disability" shall mean your
inability, due to a physical or mental disability, for a period of 90
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days, whether or not consecutive, during any 360-day period to perform the
services contemplated under this Agreement, with or without reasonable
accommodation as that term is defined under state or federal law. A
determination of disability shall be made by a physician satisfactory to both
you and the Company, provided that if you and the Company do not agree on a
physician, you and the Company shall each select a physician and these two
together shall select a third physician, whose determination as to disability
shall be binding on all parties.
(iv) If you terminate your employment without good reason prior to July
1, 2002 and (a) you or WSI Inc. have outstanding borrowings from the Company in
conjunction with the exercise of your March 1, 1997 option to purchase 600,000
shares of Series A Common Stock of the Company and your December 15, 1997 option
to purchase 850,000 shares of Series A Common Stock of the Company and (b) the
stock of the Company at the time of termination is not publicly traded, you
agree to pay the Company within thirty (30) days of such termination a penalty
fee in the amount of $1 million.
(v) In consideration of and in exchange for the severance benefit
provided for in (ii) above, you agree to execute and deliver to Edison following
the effective date of the termination of your employment a Separation and
Release in the form customarily being used by Edison at such time.
(vi) Edison shall have the right to terminate your employment for cause
by giving you written notice to that effect. The termination of employment shall
be effective on the date specified in such notice. However, "for cause" is
restricted to (a) commission of a willful act of dishonesty, gross negligence or
misconduct in the course of your duties with Edison which significantly injures
Edison; (b) conviction of a crime of moral turpitude or of a felony; (c)
frequent intoxication during the conduct of your official duties or drug abuse;
or (d) your failure to perform your responsibilities as set forth on Exhibit A
attached hereto following written notice from the Company to you notifying you
of such failure and your failure to remedy such failure with 10 days. If you are
terminated for cause, Edison will pay your unpaid base salary through the
effective date of termination.
Death. If you die during your employment hereunder, this Agreement
shall terminate upon the date of your death. Edison's obligations under this
Agreement (other than obligations then due and owing hereunder) will terminate
upon Edison's payment to the personal representative of your estate (i) your
unpaid base salary through the date
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of your death and (ii) any expenses properly reimbursable under this Agreement
and not yet reimbursed.
Exclusivity. In return for the compensation payments and stock option
benefits set forth in this Agreement, you agree to devote 100% of your
professional time and energies to Edison and not engage in any other business
activities without prior approval of the Board except for your activities on
behalf of WSI Inc. and its affiliates, which activities may not be in the nature
of a "competing" business (as defined below).
Confidentiality. It is understood that in order to perform your duties
at Edison, it will be necessary for Edison to divulge to you its proprietary
information, including, but not limited to, information and data relating to or
concerned with Edison's business, finances, development projects and other
affairs. You agree that you will not (i) divulge such proprietary information to
anyone outside Edison at any time whether or not you are in the employ of
Edison, except as may otherwise be necessary and appropriate in connection with
the business and affairs of Edison, or (ii) use such proprietary information
other than in performance of your duties to the Company. Your obligation not to
disclose or to use proprietary information described above also extends to
proprietary information of customers of the Company or suppliers to the Company
or other third parties who may have disclosed or entrusted the same to the
Company or to you. You shall deliver to the Company all materials representing
any such proprietary information in your custody or possession upon the earlier
of (i) a request by the Company or (ii) the termination of your employment. You
also agree that any developments, discoveries or inventions made by you alone or
with others (other than for or on behalf of a business which is not a
"competing" business as defined below) during the term of your employment with
Edison and directly applicable to the type of businesses or development projects
engaged in by Edison during such period shall be the sole property of Edison.
You hereby assign to the Company all your right, title and interest in and to
all such developments, discoveries and inventions and all related patents,
patent applications, copyrights and copyright applications. You agree to
cooperate fully with the Company, both during and after your employment with the
Company, with respect to the procurement, maintenance and enforcement of
copyrights, patents and other intellectual property rights relating to any such
developments, discoveries and inventions.
Non-competition and Non-solicitation. You further agree that during
your employment with Edison and for one year after the termination of such
employment for any reason, you will not at any time engage in or participate as
an executive officer, employee, director, agent,
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consultant, representative, stockholder, or partner, or have any financial
interest, in any business which "competes" with Edison or any subsidiary of
Edison. For the purposes hereof, a "competing" business shall mean any business
which directly competes with any of the businesses of Edison as such shall exist
or are planned to be developed during your employment with Edison (for example,
without limitation, the business of managing public and/or private schools for
profit or the sale of school management or student assessment systems such as
"The Edison Common"). Ownership by you of publicly traded stock of any
corporation conducting any such business shall not be deemed a violation of the
preceding two sentences provided you do not own more than three percent (3%) of
the stock of any such corporation. You further agree that for a period of one
year after termination of your employment with Edison for any reason, you will
not, directly or indirectly, solicit the employment or other services of any
executive employee of Edison. For the purposes of the foregoing, any executive
employee of Edison who within twelve (12) months of terminating his employment
with Edison becomes employed by any entity of which you are an officer or
director or owner of more than an aggregate of 3% of the outstanding stock or
equity interest therein shall be deemed, prima facie, to have been so solicited.
If any restriction set forth in this paragraph is found by any court of
competent jurisdiction to be unenforceable because it extends for too long a
period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.
Equitable Remedies. The restrictions contained in the paragraphs above
entitled "Confidentiality" and "Non-competition and Non-solicitation" are
necessary for the protection of the business and goodwill of the Company and are
considered by you to be reasonable for such purposes. You agree that any breach
of either such paragraph is likely to cause the Company substantial and
irrevocable damage that is difficult to measure. Therefore, in the event of any
such breach or threatened breach, you agree that the Company, in addition to
such other remedies which may be available, shall have the right to obtain an
injunction from a court restraining such a breach or threatened breach and the
right to specific performance of the provisions of either such paragraph, and
you hereby waive the adequacy of a remedy at law as a defense to such relief.
Entire Agreement. Together with the attached exhibits, this Agreement
constitutes the entire understanding of the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, written or
oral, among the parties with respect to such
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subject matter. This Agreement may be amended or modified only by a written
instrument executed by both you and the Company. This Agreement is governed by
the substantive laws of the State of New York. Any action, suit or other legal
proceeding arising under or relating to any provision of this Agreement shall be
commenced only in a state or federal court located within the State of New York,
and the Company and you each consent to the jurisdiction of such a court.
Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of both parties and their respective successors and assigns,
including any corporation with which, or into which, the Company may be merged
or which may succeed to the Company's assets or business, provided, however,
that your obligations are personal and shall not be assigned by you.
Waivers. No delay or omission by the Company in exercising any right
under this Agreement shall operate as a waiver of that or any other right. A
waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
Severability. In case any provision of this Agreement shall be invalid,
illegal or otherwise unenforceable, the validity, legality and enforceability of
the remaining provisions shall in no way be affected or impaired thereby.
Duplicate originals of this Agreement are being provided to you. Please
sign below to evidence your agreement to the foregoing, and return one original
to me for our records.
Sincerely,
EDISON SCHOOLS INC.
By: /s/ Xxxxx X. Xxxxxxx, Xx.
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Xxxxx X. Xxxxxxx, Xx.
ACCEPTED AND AGREED:
/s/ H. Xxxxxxxxxxx Xxxxxxx
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H. Xxxxxxxxxxx Xxxxxxx
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