Benno C. Schmidt, Jr.
President and Chief Executive Officer
June 16, 1997
Mr. Christopher D. Cerf
c/o Wiley, Rein & Fielding
1776 K Street, N.W.
Washington, D.C. 20006
Dear Chris:
I am pleased to confirm herewith the details of our agreement regarding
your employment with The Edison Project L.P. ('Edison' or the 'Company'). We all
look forward to your arrival and to a long and productive working relationship.
I am extremely pleased that you are joining the Edison team.
Position/Responsibilities. You will be employed as Executive Vice
President and General Counsel effective June 16, 1997. You will report directly
to me. Your responsibilities are as set forth on Exhibit A attached hereto.
Term. You shall be employed for an initial three-year term ending on
June 16, 2000, unless terminated earlier by you or by the Company as provided
below, which term shall automatically renew for successive one year terms unless
terminated earlier by you or the Company as provided below.
Base Salary/Benefits. You shall be paid at an annual base salary rate
of $200,000. You will also 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 B. The Company will provide you supplemental life
insurance such that your total insurance benefit is no less than $800,000
provided such supplemental coverage can be obtained by the Company at standard
rates for a man of your age in good physical condition. You will receive three
weeks vacation annually in addition to the official Company holidays. You will
be considered for appropriate base salary increases annually to reflect your
performance, the Company's performance, and increases awarded to other
management executives.
Bonus. In addition to your base salary, you will be eligible to
participate in the Management Committee incentive compensation plan as set by
the Board of Directors of The Edison Project Inc. each fiscal year.
Mr. Christopher D. Cerf
June 16, 1997
Page 2
521 Fifth Avenue, New York, NY 10175 (212) 309-1600 fax (212) 309-1618
Stock Options. Simultaneous with the execution of this Agreement, the
parties hereto shall execute and deliver the Stock Option Agreement attached as
Exhibit C.
Relocation. It is understood that you will initially work out of your
current office in Washington, D.C. (or such office space as shall be approved by
me). You shall, however, travel to New York on an as needed basis and, in
addition, workout of the Company's New York offices as necessary to fulfill your
responsibilities. At such time as we mutually agree on your relocation to the
New York City area, Edison will pay you a relocation bonus of $50,000, such
amount to be paid within 30 days of the actual date of the move. Edison will
further reimburse you for the expenses associated with relocation as set forth
in Exhibit D.
Expense Reimbursements. You will be reimbursed for all reasonable
business expenses you incur in fulfilling your responsibilities hereunder upon
submission of adequate documentation for such expenses and subject to the
Company's policies. Such expenses shall, subject to periodic review, include
transportation, food and lodging expenses associated with working out of
Edison's New York offices during such period as you continue to reside in
Washington, D.C.
Termination/Severance Pay. Edison shall have the right to terminate
your employment at any time without cause by giving you written notice to that
effect. The termination of employment shall be effective on the date specified
in such notice. If Edison terminates your employment without cause, Edison will
pay you as severance pay your base salary for a period beginning on the
effective date of termination and ending twelve months from such date (the
'Severance Period'), provided that if you become employed elsewhere during the
Severance Period the amounts otherwise payable to you during the last six months
of the Severance Period (the 'Offset Period') shall be reduced by the total
amount of any compensation you earn from such employment. You shall at your
option be entitled to treat any material uncured breach of this Agreement by the
Company, as a termination without cause. Payments made to you as reimbursement
for documented expenses will not constitute compensation for purposes of this
paragraph. In consideration of such severance pay, you agree to deliver to
Edison on or promptly 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. All amounts payable under the provisions of this paragraph will be
made on the dates you would have received such amounts had your employment with
Edison not been terminated.
Mr. Christopher D. Cerf
June 16, 1997
Page 3
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 (1) commission of a willful act of dishonesty in the course of
your duties with Edison which significantly injures Edison; (2) engagement in
gross or persistent misconduct injurious to Edison, its general partners or
affiliates; (3) conviction of a crime of moral turpitude or of a felony; or (4)
chronic alcoholism or drug abuse. If you are terminated for cause, Edison will
pay your unpaid base salary through the effective date of termination.
Exclusivity. In return for the compensation payments 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 provided, however, that it is understood and agreed that you will
remain at 'WR&F' in an 'of counsel' or equivalent status and may in that
connection perform minimal duties upon the request of WR&F provided that such
duties do not in any manner interfere with the performance of your duties to
Edison.
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 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 required in connection with the business and
affairs of Edison. You also agree that any developments, discoveries, or
inventions made by you alone or with others during the term of your employment
with Edison and applicable to the type of businesses or development projects
engaged in by Edison during such period shall be the sole property of Edison,
and you agree to execute all documents requested by Edison to protect Edison's
rights thereto.
Non-compete 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, consultant, representative,
stockholder, or partner, or have any financial interest in any business which
'competes' with Edison or any subsidiary or Edison, or successor to the business
of Edison, provided that if restrictions regarding competition in the employment
agreements of any member of the Management Committee are ever less restrictive
than those contained herein, the provisions of this paragraph will be similarly
modified. For the purposes hereof, a
Mr. Christopher D. Cerf
June 16, 1997
Page 4
'competing' business shall mean any business which directly competes with any of
the businesses of Edison as such business shall exist during your employment
with Edison, for example, the business of managing public and private schools
for profit. 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
the 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 who within twelve 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.
Entire Agreement. Together with the attached exhibits, this letter
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 subject
matter. This Agreement is governed by the substantive laws of the State of New
York.
Duplicative 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,
/s/ Benno C. Schmidt
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Benno C. Schmidt
ACCEPTED AND AGREED:
/s/ Christopher D. Cerf
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Christopher D. Cerf
6/17/97
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Date
EXHIBIT A
Job Responsibilities
1. Designing and leading major charter and contracting legislative efforts
in a number of jurisdictions as well as coordinating and directing
local lobbying efforts to encourage legislation that opens new markets
for Edison.
2. Developing and managing a regulatory strategy vis a vis the Department
of Education and other federal agencies.
3. Auditing existing and potential legal risks to the Company and
developing strategies to control them.
4. Addressing proactively any proposed changes to existing favorable
legislation in current markets.
5. Conducting a review of our existing and future school contracts with
special attention to any possible labor law issues, liability issues,
revenue issues, or other legal issues.
6. Retaining, managing, and overseeing outside counsel with respect to
litigation and transaction work performed on behalf of Edison and
Edison Project Inc., Edison's general partner.
7. Raising Edison's visibility and influence on Capitol Hill.
8. Playing an important role in District of Columbia school development.
9. Developing a national union strategy.
10. Performing other management responsibilities as the CEO shall from time
to time direct.
11 Attend meetings of the Board of Directors of Edison Project Inc.,
Edison's General Partner.
EXHIBIT B
Benefits
INSURANCE
The Company provides a medical and dental insurance plan and a long-term
disability plan, descriptions of which will be provided to you.
Life insurance coverage furnished by the Company provides benefits of two times
annual base salary up to a maximum benefit of $300,000.
SICK LEAVE
Beginning with the third month of employment, sick leave accrues at the rate of
1.85 hours per pay period.
PERSONAL LEAVE
Employees receive two days of personal leave each year. These days are lost if
not taken during the year.
SHORT-TERM DISABILITY
Beginning with the seventh month of employment, short-term disability accrues at
the rate of 5.54 hours per pay period, up to a maximum of 400 hours.
WELLNESS PLAN
Employees will be reimbursed up to $150 per year for qualified medical expenses
that are not covered by the Company's medical or dental insurance plan.
401(k) PLAN
Employees may contribute on a pre-tax basis up to the annual limit set by the
IRS ($9,500 for 1997) and may allocate contributions among several different
investment options offered by the plan. The Company matches 50% of the first
$1,000 of employee contributions.
Employment Agreement - The Edison Project LP and Christopher D. Cerf
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