As of March 1, 1997
Mr. H. Christopher Whittle
The Edison Project L.P.
521 Fifth Avenue
New York, NY 10175
Dear Chris:
This letter agreement ('Agreement') sets forth the terms of your
employment with The Edison Project L.P. ('Edison' or the 'Company') as approved
by the board of directors (the 'Board') of The Edison Project Inc. ('Edison
Inc.'), the sole general partner of Edison.
Position/Responsibilities. You will be employed as Edison's Founder and
President, 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 December 31, 1998, 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
$200,000. Contingent upon achievement of Edison's Board-approved business plan
for each fiscal year as determined by Edison Inc.'s Board in its sole
discretion, your base salary will be increased at the start of the following
fiscal year by no less than eight percent (8%) of your then current base salary.
Bonuses. In addition to your base salary, you will receive a bonus of
$7,000 (a 'School Bonus') for each school to be managed by Edison (a 'Managed
School') under a school management contract (a 'Management Contract') secured by
a member of the Development staff and executed after the date hereof, including
without limitation any Management Contracts that are currently contemplated or
under review. Fifty percent (50%) of each School Bonus shall be paid within 30
days after Edison's receipt of a Management Contract covering such Managed
School, with the remaining fifty percent (50%) of each such School Bonus to be
paid within 30 days of the opening of the related Managed School. Should any
Managed School fail to open, the next succeeding School Bonus to be paid shall
be reduced by the portion of the School Bonus previously paid with respect to
such school (the 'Repayment Amount'), provided that if any part of the Repayment
Amount remains outstanding at the end of the fiscal year during which, such
school was scheduled to open, the Company may reduce any such compensation due
you by the outstanding balance of the Repayment Amount. The Edison Inc. Board
commits to consider increasing your total bonus with respect to FY 1997 if the
total of School Bonuses for schools covered under Management Contracts signed
during such year is significantly lower than the bonuses paid to Edison's
Chairman/CEO and COO
under the Management Committee incentive compensation plan for such year, with
any action taken to be in the Board's sole discretion.
Stock Options. Simultaneous with the execution of this agreement, the
parties hereto shall execute the Stock Option Agreement attached as Exhibit B.
In addition, you will be eligible to participate in the 'Performance Option
Pool' for key executives described in Exhibit C attached hereto, with your
portion of the option pool set at 600,000 shares.
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 D. 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 three weeks of vacation annually in addition to the official Company
holidays.
Expense Reimbursements. You will be reimbursed for all reasonable
expenses you incur in fulfilling your responsibilities hereunder upon submission
of adequate documentation for such expenses and subject to the Company's
policies.
WSI Management Agreement/Expenses. Simultaneous with the execution of
this agreement, the parties hereto shall execute an amendment to the Management
Agreement dated as of March 14, 1995 between Edison and WSI Inc. ('WSI')
attached hereto as Exhibit E. In recognition of the expenses incurred by WSI
from July 1, 1996 through February 28, 1997 in conjunction with your marketing
efforts on behalf of Edison, the Company will pay WSI Inc. $179,000 on or before
March 31, 1997 upon submission of adequate documentation for such expenses and
subject to the Company's policies.
Administrative Assistant. The Company agrees to employ Kristal Shipe as
your administrative assistant during the term of this agreement to work out of
the WSI office, or such other location as you and she shall agree, in Knoxville,
TN. Ms. Shipe shall be paid at an annual base salary of $49,500, with her then
current base to be increased at the beginning of each fiscal year by the average
percentage increase granted to other Edison employees at her level. Ms. Shipe
will be eligible for all employee benefits provided to other employees at her
level, including participation in Edison's Employee Option Plan. Should either
you or Ms. Shipe terminate her employment with the Company, the Company will
provide you with another administrative assistant of your choice. Upon
submission of adequate documentation, the Company will reimburse WSI for Ms.
Shipe's portion of its Knoxville office expenses, e.g. rent, parking, telephone,
copier, office supplies, maintenance, mail, overnight delivery charges, etc.
(such expenses expected to
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average less than $2,500 a month, subject to the activity level for variable
expenses such as overnight delivery charges, mail and long distance phone
usage.)
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,' Edison will pay you as severance
pay for a period beginning on the effective date of termination and ending
twelve months from such date (the 'Severance Period') your then current base
salary plus the bonus amount you earned for the prior fiscal year (together, the
'Enhanced Base'). The Enhanced Base will be paid on Edison's normal payroll
cycle during the Severance Period whether or not you obtain other employment.
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, 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) If you terminate your employment without Good Reason, Edison will
pay you as severance pay your base salary as of the date of termination for the
Severance Period, provided that if you become employed elsewhere during the
Severance Period the amounts otherwise payable to you under this sentence shall
be reduced by the total amount of any compensation you earn from such employment
during the Severance Period. For purposes of the severance pay offset provisions
of this paragraph, the terms 'employed' and 'employment' shall mean the
providing of any services for compensation whether as a full-time or part-time
employee or as a consultant. Payments made to you as reimbursement for
documented expenses will not constitute compensation for purposes of this
paragraph.
(iv) In consideration of the severance pay provided for in (ii) and
(iii) above, 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.
(v) 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
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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) conviction of a
crime of moral turpitude or of a felony; or (3) chronic alcoholism or drug
abuse. 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 of your death and (ii) any expenses properly
reimbursable under this Agreement and not yet reimbursed.
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 except for your activities on behalf of WSI and its affiliates.
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 necessary and appropriate 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 (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.
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, 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 business shall exist during your employment
with Edison (for example, 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'), but a 'competing' business shall not include the
business of developing for or marketing to or implementing in schools electronic
curriculum services or technology delivery systems for such services. Ownership
by you of publicly traded stock of any
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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 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.
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,
THE EDISON PROJECT L.P.
By: The Edison Project Inc., general partner
By: /s/ Laura K. Eshbaugh
--------------------------------
Laura K. Eshbaugh, President
ACCEPTED AND AGREED:
/s/ H. Christopher Whittle
----------------------------
H. Christopher Whittle
April 7, 1997
----------------------------
Date
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EXHIBIT A
RESPONSIBILITIES OF THE PRESIDENT
All of the following responsibilities are subject to the direction, authority
and approval of Edison Inc.'s Board.
- Member of the Office of the Chairman and involved in all strategic
decisions.
- Co-spokesperson for the Company.
- Oversees Company's marketing/development/sales activities, including
hiring, firing and supervision of all employees and consultants engaged
in such activities and preparation and management of the budget for
such activities.
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OPTION AGREEMENT
Option Agreement, dated as of March 1, 1997, between H. Christopher
Whittle ('Holder') and The Edison Project Inc. (the 'Company'). Capitalized
terms used but not defined herein are used herein as defined in The Edison
Project Inc. Shareholders' Agreement dated as of November 18, 1996, among the
Company and the other shareholders named therein (the 'Shareholders'
Agreement'.)
Holder and the Company hereby agree as follows:
1. Issuance: Vesting. (a) The Company hereby grants to Holder the
option (the 'Option') to purchase 600,000 shares of the Company's Series A
Common Stock (the 'Shares') subject to the terms and conditions below.
(b) The Option may only be exercised with respect to the entire
number of vested Shares at the time of exercise. If the Option is exercised
before all the Shares are vested, the unvested Shares will continue to vest as
provided herein, (it being understood that each and every exercise of the Option
shall be a purchase of the full number of Shares which are vested at the time of
exercise and which have not previously been purchased).
(c) The Option shall vest as follows:
(i) Half of the Option (the 'Time Vested Portion') shall vest
based on the amount of time Holder is continuously employed
by The Edison Project L.P. (the 'Partnership') according to
the following schedule, provided that if Holder is no
longer employed by the Partnership, the balance of the Time
Vested Portion shall cease vesting as of the effective date
of Holder's termination of employment unless Holder is
terminated by the Partnership without cause in which case
the Time Vested Portion shall continue to vest for 12
months following such termination.
(aa) 20% of the Time Vested Portion of the Option shall
vest ratably at the end of each month between March
1, 1997 and June 30, 1997.
(bb) 30% of the Time Vested Portion of the Option shall
vest ratably at the end of each month between July 1,
1997 and June 30, 1998.
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(cc) 30% of the Time Vested Portion of the Option shall
vest ratably at the end of each month between July 1,
1998 and June 30, 1999.
(dd) 10% of the Time Vested Portion of the Option shall
vest ratably at the end of each month between July 1,
1999 and June 30, 2000.
(ee) 10% of the Time Vested Portion of the Option shall
vest ratably at the end of each month between July 1,
2000 and June 30, 2001.
(ii) Half of the Option (the 'Performance Vested Portion') shall
vest in five equal segments (each such segment, a
'Performance Segment') based upon achievement of the
Partnership's business plans as approved by the Company's
Board of Directors (the 'Board') for the five Fiscal Years
(as defined below) of the Partnership beginning with the
1997 Fiscal Year according the schedule below. Each
Performance Segment shall vest as of the date on which the
Board determines that the targets set forth in the relevant
business plan have been achieved. The Board may, but is not
required to, permit Holder to be eligible to vest in a
subsequent Fiscal Year in any Performance Segment which did
not vest in respect of any prior Fiscal Year due to the
non-achievement of the targets in the relevant business
plan to the extent said targets are achieved in a
subsequent Fiscal Year up to and including the 2001 Fiscal
Year. Holder shall only be eligible to vest in a
Performance Segment if Holder was continuously employed by
the Partnership during the Fiscal Year to which such
Performance Segment relates, provided that if Holder's
employment is terminated either by the Partnership without
cause or by virtue of the expiration of Holder's employment
agreement, Holder shall be eligible to vest in a pro rata
portion of the Performance Segment for the Fiscal Year
during which such termination occurred, with such pro rata
portion based on the number of months or partial months
Holder was employed during such Fiscal Year.
(aa) Holder shall be eligible for a Performance Segment
equal to 20% of the Performance Vested Portion for the
Fiscal Year 1997.
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(bb) Holder shall be eligible for a Performance Segment
equal to 30% of the Performance Vested Portion for
the Fiscal Year 1998.
(cc) Holder shall be eligible for a Performance Segment
equal to 30% of the Performance Vested Portion for the
Fiscal Year 1999.
(dd) Holder shall be eligible for a Performance Segment
equal to 10% of the Performance Vested Portion for the
Fiscal Year 2000.
(ee) Holder shall be eligible for a Performance Segment
equal to 10% of the Performance Vested Portion for the
Fiscal Year 2001.
2. Exercise. Holder may exercise the vested portion of the Option as of
the first day of each Fiscal Year (or at such other times as may be permitted by
the Board) and prior to the expiration of five years from the first day of the
Fiscal Year immediately following the date of vesting of such portion of the
Option, by (a) transfer to the Account (as defined below) of immediately
available funds in an amount equal to the sum of (x) the number of vested Shares
which have not previously been purchased times the Share Price (as defined
below), and (y) the Withholding Amount (as defined below), and (b) giving
written notice to the Company, failing which the Option shall expire unexercised
and the Company shall have no further obligation hereunder. Upon exercise of the
vested portion of the Option, the books and records of the Company shall be
appropriately amended to reflect the Holder's acquisition of the Shares
corresponding to the vested portion of the Option then exercised.
3. Definitions.
(a) 'Management Option Plan' means the management equity and option
program of the Company, pursuant to which this Option is granted.
(b) 'Account' means the Company's account number #5001083966 at
First American National Bank, Nashville, Tennessee (for further transfer to the
Knoxville office), ABA # 064-000017 or such other account as the Company may
designate by notice to Holder.
(c) 'Fiscal Year' means with respect to the Company and the
Partnership the twelve-month period running from July 1 of one calendar year
through June 30 of the succeeding calendar year.
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(d) 'Share Price' means $1.50.
(e) 'Withholding Amount' means the amount (which shall be determined
by the Board) which the Company or the Partnership is required to withhold and
remit to the Internal Revenue Service and/or any other taxing authority by
reason of the exercise by the Holder of the portion of the Option which is
vested at the time of exercise.(1)
4. Nontransferable. Neither this Option nor the Shares may be
transferred, pledged, assigned, sold or otherwise disposed of, except that the
Shares may be redeemed by the Company at anytime by tender to Holder of an
amount equal to the fair market value thereof as determined (i) in good faith by
the Board or (ii) by a third party transaction at the time of redemption.
5. Representations and Warranties. Holder represents and warrants to
the Company that:
(a) Holder is acquiring the Option for Holder's own account for
investment purposes and not with a view to, or for resale in
connection with, a distribution in whole or in part of the
Option or the Shares.
(b) Holder understands that this Option is not transferable and the
Shares are transferable only to the Company (it being
understood that the foregoing prohibitions on transfer apply to
any transfer by way of pledge, assignment, sale or any other
means of disposition), and that the Shares may be legended to
such effect.
(c) Holder has carefully reviewed this Option Agreement the
Shareholders' Agreements, the Partnership's preliminary
financial statements dated as of June 30, 1996, and the
Partnership's business plan for the 1997 Fiscal Year. Holder
and Holder's advisors have had a reasonable opportunity to ask
questions of and receive answers from the Company and
Partnership, or a person or persons acting on its behalf,
concerning the terms and conditions of the offering, and to
obtain additional information, to the
----------
(1) The requirement that the Holder pay a Withholding Amount arises
because (i) the Holder will be treated by the relevant taxing authorities as
receiving compensation income upon exercise of the Option to the extent that, at
the time of such exercise, the fair market value of the Shares exceeds the Share
Price, and (ii) the Company or Partnership has a withholding obligation with
respect to such compensation income.
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extent possessed by the Company or Partnership or obtainable by
it without unreasonable effort or expense. All such questions
have been answered to the full satisfaction of Holder. No oral
or written representations or warranties have been made or
oral or written information furnished or oral or written
promises made to Holder or Holder's advisors in connection
with the Option being offered hereunder or the offering
generally which were in any way inconsistent this Option
Agreement.
(d) Holder, either alone or together with Holder's advisors, has
such knowledge and experience in financial, tax and business
matters to enable Holder to utilize the information made
available to Holder in connection with the offering, to
evaluate the merits and risks of the prospective investment and
to make an informed investment decision with respect thereto.
(e) Holder understands that an investment in the Company involves a
high degree of risk and that the Option and the Shares may
prove to be valueless.
(f) Holder understands that neither the offering nor the transfer
of the Option to Holder has been registered under the
Securities Act of 1933, as amended, in reliance upon an
exemption therefrom for non-public offerings, nor has such
offering or transfer been registered or qualified under any
state securities or 'Blue Sky' law in reliance upon similar
exemptions.
(g) Holder understands that the issuance of the Option has not
been, and the issuance of the Shares will not be, reviewed,
approved or otherwise passed upon by the U.S. Securities and
Exchange Commission, any state securities administrator, the
National Association of Securities Dealers Inc., any securities
or commodities exchange, or any other governmental agency or
self-regulatory authority.
6. Indemnification. The Holder agrees to indemnify and hold harmless
the Company, the Partnership, and their respective officers, directors and
affiliates from and against all damages, losses, costs and expenses (including
reasonable attorney's fees and expenses) which they may incur by reason of any
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breach of this Option Agreement by Holder including any breach of any of the
representations and warranties made by Holder herein.
7. Confidentiality. To the extent Holder acquires non-public
information with respect to the Company or Partnership, including, without
limitation, technical, financial, competitive, marketing, sales, and business
information, documents and tangible items (collectively, the 'Information'),
Holder shall keep such Information strictly confidential and not at any time
hereafter disclose or divulge such Information to any person, firm or
corporation or otherwise use such Information for any purpose (other than for
the purposes of the Company or Partnership) without the prior written consent of
the Company or the Partnership.
8. Non-Competition and Non-Solicitation. (a) Holder agrees that until
the later of one year after (i) the expiration of the Option, or (ii) Holder
ceases to own the Shares, Holder shall 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 the business of the Company, the Partnership or any subsidiary
of the Company or the Partnership (the Company, the Partnership and their
respective subsidiaries being hereby defined as 'Edison'). For the purposes
hereof, a 'competing' business shall mean any business which directly competes
with any of the businesses of Edison as such business shall exist during
Holder's ownership of the Option or the Shares, (for example, 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'), but a
'competing' business shall not include the business of developing for or
marketing to or implementing in schools electronic curriculum services or
technology delivery systems for such services. Ownership by Holder of publicly
traded stock of any corporation conducting any such business shall not be deemed
a violation of the preceding two sentences provided Holder does not own more
than three percent (3%) of the stock of any such corporation.
(b) Holder agrees that until the later of one year after (i) the
expiration of the Option, or (ii) the Holder ceases to own the Shares, Holder
shall not, directly or indirectly, solicit the employment, or other services of
any executive employee of the Partnership. For purposes of the foregoing any
executive employee who within twelve months of terminating his employment with
the Partnership becomes employed by any Person in which Holder is 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.
9. Governing Law. This Option Agreement is governed by the laws of the
State of New York without giving effect to renvoi or other choice of law
doctrine to the extent that the application of the law of another jurisdiction
would be required thereby.
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10. Entire Agreement. This Option Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, written or oral, between the
parties with respect to such subject matter.
11. Miscellaneous. (a) Notices. All notices, demands, elections,
requests or other communications which any party to this Option Agreement may
desire or be required to give hereunder shall be in writing and shall be given
by personal delivery, recognized overnight delivery service, telecopy or by
mailing (by registered or certified first class mail, postage prepaid, return
receipt requested) addressed as follows:
if the Company at:
The Edison Project Inc.
c/o The Edison Project L.P.
521 Fifth Avenue 16th Floor
New York, New York 10175
212-309-1604
with a copy to:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Telecopy: 212-504-6666
Attention: John F. Fritts, Esq.
if to Holder at:
Suite 366
NationsBank Center
550 Main Street
Knoxville, TN 37902
Telecopy: 423-546-1090
or at such other address or telecopy number as may be designated by one party by
notice given as provided herein to the other party. A notice shall be deemed to
have been given (i) if delivered personally, on the date so delivered (or, if
not a Business Day, on the next following Business Day), (ii) if sent by
recognized overnight delivery service, on the Business Day following the date
sent, (iii) if sent by telecopy, upon electronic confirmation of receipt, or
(iv) if sent by registered or certified first
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class mail, postage prepaid, return receipt requested, five Business Days
following the date sent.
(b) Amendments. This Option Agreement may not be changed orally,
but only by an agreement in writing signed by the Company and the Holder.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Option Agreement as of the date set forth above.
------------------------------- THE EDISON PROJECT INC.
H. Christopher Whittle
BY:
-------------------------------
Laura Eshbaugh
President
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EXHIBIT C
PERFORMANCE OPTION POOL DESCRIPTION
As of March 1, 1997
Current senior management of The Edison Project L.P. (the 'Partnership') will be
awarded additional options to acquire shares of the Series A Common Stock of The
Edison Project Inc. ('Edison Inc.') under new option agreements. The options
will vest upon the ninth anniversary of the issuance of such options, provided
that the option holder has been continuously employed by the Partnership, and
may be exercised in whole or in part at any time after the ninth anniversary and
prior to the tenth anniversary on which date any portion of the option which has
not been exercised will expire. The price for shares covered by these option
agreements will be $1.50.
The option agreements will include an acceleration feature providing that the
options will become fully vested if Edison Inc. makes an initial public offering
prior to January 1, 2000 at a share price of at least $8. Alternatively, the
options will become fully vested if prior to January 1, 2000 Edison Inc. (i)
sells an or substantially all of its assets, (ii) completes a merger or
consolidation where Edison Inc. is not the surviving entity, or (iii) concludes
any other transaction in which Edison Inc. investors as of March 1, 1997 are
permitted or required to sell at least fifty percent (50%) of their shares, in
each of (i), (ii), or (iii) only so long as the price per share is at least $8.
The Performance Option Pool will consist of 1,250,000 shares awarded as follows:
Chris Whittle 600,000
Benno Schmidt 250,000
John Reid 200,000
Other senior executives* 200,000
---------
1,250,000
* to be recommended by the Office of the Chairman for approval by the Edison
Inc. board at its April, 1997 meeting
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EXHIBIT D
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.
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EXHIBIT E
AMENDMENT TO THE MANAGEMENT AGREEMENT
DATED AS OF MARCH 14,1995
BETWEEN
THE EDISON PROJECT L.P. AND WSI INC
The Management Agreement (the 'Agreement') dated as of March 14, 1995
between The Edison Project L.P. (the 'Company') and WSI Inc. ('WSI') is hereby
amended as follows:
1. The WHEREAS clauses of the Agreement are amended to read as follows:
WHEREAS, WSI was the founding partner of the Company and its president,
H. Christopher Whittle ('Whittle'), is the 'Founder' and President of the
Company; and
WHEREAS, the Company recognizes that WSI personnel possess special
knowledge and expertise with respect to the Company's business which knowledge
and expertise is vital to the Company in connection with the growth of its
business; and
WHEREAS, the Company desires to ensure to itself the availability of
WSI personnel's knowledge and expertise; and
WHEREAS, WSI desires to provide the services described herein to the
Company on the terms and conditions provided herein.
2. Paragraph 2(a) is amended to read as follows:
During the Initial Term and any Renewal Term, WSI shall cause
its personnel to provide services to the Company in areas in
which its personnel have knowledge or expertise upon
reasonable request from the Company.
3. Paragraph 2(b) is omitted, and Paragraph 2(c), which is amended to
delete the words 'Whittle and any other' before the word 'WSL' and Paragraph
2(d) shall become Paragraphs 2(b) and 2(c).
4. Paragraph 3 is amended to read in its entirety as follows:
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Management Fees and Expenses. Mutually agreeable fees for any services
to be provided by WSI to the Company under this Agreement and any
expenses related thereto (the 'Management Fees') shall be specifically
reviewed and approved in advance by the Board of Directors of The
Edison Project Inc. as part of the Company's annual budget or a
revision thereto.
5. Paragraph 4 is amended to delete the words ', Whittle or other' before
the word 'personnel.'
6. Paragraph 5 is amended to delete the following words: ''this provision
shall not affect any of WSI's rights (or Whittle's rights as WSI's controlling
shareholder) or the Company's obligations under the Company's Amended and
Restated Agreement of Limited Partnership dated as of March 14, 1995, and,
further, provided, that'.
7. Paragraphs 6(a) and 6(b) are deleted and Paragraph 6(c), which is
amended to delete the parenthetical at the end of the paragraph and change the
word 'Fee' to 'Fees,' becomes Paragraph 6.
8. Paragraph 7(c) is hereby amended by changing the reference to
'paragraph 6(c)' to 'paragraph 6.'
9. The Edison Project Inc. hereby acknowledges that it is the corporation
referred to in Paragraph 7(a) (including, without limitation, in the last
sentence thereof) and that it will comply with the obligations therein set
forth.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of March 1, 1997.
WSI Inc.
By:
---------------------------------
H. Christopher Whittle, President
THE EDISON PROJECT L.P.
By: The Edison Project Inc., general partner
By:
---------------------------------
Laura K. Eshbaugh, President
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As of December 15, 1997
Mr. H. Christopher Whittle
The Edison Project L.P.
521 Fifth Avenue
New York, NY 10175
Dear Chris:
This letter agreement (the 'Agreement') sets forth certain amendments
to your employment agreement with The Edison Project L.P. ('Edison' or the
'Company') dated as of March 1, 1997 (the 'Initial Employment Agreement')
approved by the Board of Directors (the 'Board') of The Edison Project Inc.
('Edison Inc.'), the sole general partner of Edison, as of the date hereof
Except as specifically provided for herein, all terms and provisions of your
Initial Employment Agreement remain intact.
1. Position/Responsibilities. This paragraph is revised in its entirety
to read as follows:
You will be employed as Edison's Founder and President through June 30,
1998. On July 1, 1998 your title will become Founder and Chief
Executive Officer. You will work out of the Company's headquarters in
New York City. Your responsibilities are as set out on Exhibit A to
this Agreement.
2. Term. The end date of your employment agreement is changed from
December 31, 1998 to December 31, 2000.
3. Base Salary. Your base salary is changed from $200,000 to $276,000.
4. Bonuses. This paragraph is replaced in its entirety to read as
follows:
In addition to your base salary, beginning with FY 1998 you will
participate in the Management Committee incentive compensation plan as
set forth by the Board each fiscal year. You will be eligible to
receive an annual bonus of 50% of your then current base salary under a
plan to be determined by the Board in its sole discretion. The second
fifty percent (50%) of your FY 1997 bonus with respect to the Academy
20 Management Contract will be paid within 30 days the opening of the
Academy 20 Managed School.
5. Stock Options. The title of this paragraph is revised to read
'Options Under Edison's Management Option Plan' and the second sentence of the
paragraph is deleted.
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6. Exhibit A. Exhibit A to the Initial Agreement is replaced in its
entirety with Exhibit A as attached to this Agreement.
Further, simultaneous with the execution of this Agreement, the parties
hereto shall execute the Tranche 1 Option Agreement, the Tranche 2 Option
Agreement, the Tranche 3 Option Agreement and the Tranche 4 Option Agreement
attached to this Agreement as Exhibits B, C, D and E respectively.
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 with respect to the subject
matter. This agreement is governed by the substantive laws of the State of New
York.
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,
THE EDISON PROJECT L.P.
By: The Edison Project Inc., general partner
By: /s/ Laura K. Eshbaugh
--------------------------------
Laura K. Eshbaugh, President
ACCEPTED AND AGREED:
/s/ H. Christopher Whittle
----------------------------
H. Christopher Whittle
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EXHIBIT A: RESPONSIBILITIES
All of the following responsibilities are subject to the direction, authority
and approval of Edison Inc.'s Board.
* Full and usual authority of a CEO, including hiring, firing and supervising
Edison employees, agents, representatives, etc..
* Final authority over day-to-day operations
* Overall business leadership of the company
* Direction of the company's capital formation efforts
* Supervision of a) the COO until June 30, 1998 and thereafter the President; b)
the CFO; and c) the General Counsel, jointly with the Chairman/CEO until June
30, 1998 and thereafter with the Chairman
* Oversight responsibilities via the COO until June 30, 1998 and thereafter via
the President of development and product design activities
* Direction of new product development efforts
* Co-spokesperson for the Company
* Direction of the Company's media relations
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Employment Agreement - The Edison Project LP and H. Christopher Whittle
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