{"id":39094,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/employment-agreement-edison-schools-inc-and-benno-c-schmidt.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"employment-agreement-edison-schools-inc-and-benno-c-schmidt","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/employment-agreement-edison-schools-inc-and-benno-c-schmidt.html","title":{"rendered":"Employment Agreement &#8211; Edison Schools Inc. and Benno C. Schmidt Jr."},"content":{"rendered":"<pre>June 20, 2000\n\nMr. Benno C. Schmidt, Jr.\n121 E. 91st Street\nNew York, NY  10128\n\nDear Benno:\n\n         This letter agreement (\"Agreement\") sets forth the terms of your\nemployment with Edison Schools Inc. (\"Edison\" or the \"Company\"). This Agreement\nsupersedes and replaces the employment agreement dated March 1, 1997, as amended\nby an amendment dated as of December 15, 1997, between you and The Edison\nProject L.P. and any agreement appearing as an exhibit or attachment thereto or\nreferred to therein (the \"1997 Employment Agreement\"). Notwithstanding the\nforegoing, your obligations with respect to the following shall survive and\nshall not be modified: (i) the promissory note issued to Whittle Communications\nL.P. (which was assigned to Edison) dated June 5, 1992 in the original principal\namount of $1,600,000, as amended by those certain Letter Agreements dated March\n15, 1995, May 1, 1996, March 1, 1997 and December 15, 1997 and the Allonge to\nPromissory Note dated as of October 5, 1999, and any accrued and unpaid interest\nthereon through the date hereof (the \"Existing Loan\"); (ii) the promissory note\nissued to Edison dated January 23, 1996 in the original principal amount of\n$200,000, amended by those certain Letter Agreements dated March 1, 1997 and\nDecember 15, 1997 and the Allonge to Promissory Note dated as of October 5,\n1999, and any accrued and unpaid interest thereon through the date hereof (the\n\"Transition Loan\" and, together with the Existing Loan, the \"Loans\"); (iii) the\nrelease provided by the terms of your employment agreement with The Edison\nProject L.P. dated March 15, 1995; (iv) the assignment to Edison of benefits\nunder the $5,000,000 First Colony Life Insurance policy 1893365 (the \"Insurance\nPolicy\") as collateral for the Loans; (v) the Nonstatutory Stock Option\nAgreement between you and the Company dated as of June 30, 1999 which amended\nand restated the option originally granted on March 15, 1995 and subsequently\namended on March 1, 1997 and December 15, 1997; and (vi) the Nonstatutory Stock\nOption Agreement dated as of June 30, 1999 which amended and restated the Trance\n1 Option granted on December 15, 1997.\n\n         Position\/Responsibilities. You will be employed as Edison's Chairman,\nworking out of the Company's headquarters in New York City. Your\nresponsibilities are set forth on Exhibit A attached hereto.\n   2\n         Term. The term of your employment will commence as of the date hereof\nand end on June 30, 2003, unless terminated earlier by you or by the Company as\nprovided below.\n\n\n\n\n\n                                       2\n   3\n         Base Salary. You will be paid at an annual base salary rate of $298,080\nfrom the date hereof. Throughout the term of this Agreement, your base salary\nwill be increased or decreased at the same time and in the same amount as the\nannual base salary of the Company's Chief Executive Officer (\"CEO\").\n\n         Bonus. In addition to your base salary, you may be eligible for\nincentive bonuses at the sole discretion of the Company's Board of Directors\n(\"Board\"). Whenever the Company grants a cash incentive bonus to the Company's\nCEO, the Company will initiate a discussion with you, the CEO and the\nCompensation Committee of the Board as to whether a similar bonus will be\ngranted to you.\n\n         Stock Options. Simultaneous with the execution of this agreement, the\nparties hereto shall execute the Stock Option Agreement dated as of June 20,\n2000 and attached hereto as Exhibit B and the Stock Option Agreement dated as of\nJune 20, 2000 and attached hereto as Exhibit C.\n\n         Benefits. You will be entitled to the standard Company benefits for\nexecutives at your level as in effect from time to time. The Company will\nfurther maintain for your benefit supplemental long-term disability insurance\nand supplemental term life insurance under the Insurance Policy provided that\nyou execute, and cause any beneficiary named under the Insurance Policy to\nexecute, all documentation required or requested by Edison in connection with\nthe assignment of the Insurance Policy as collateral for the Loans, including,\nwithout limitation, the assignment (for your execution) attached hereto as\nExhibit E and the consent to assignment (for execution by each beneficiary)\nattached hereto as Exhibit F. You agree not to change the beneficiaries named\nunder the Insurance Policy without the prior written consent of Edison. You will\nreceive six weeks of vacation annually in addition to the official Company\nholidays.\n\n         Expense Reimbursements. You will be reimbursed for all reasonable\nbusiness expenses you incur in fulfilling your responsibilities hereunder upon\nsubmission of adequate documentation for such expenses and subject to the\nCompany's policies.\n\n         Termination\/Severance Pay. Either you or Edison may terminate your\nemployment at any time without cause by giving written notice to that effect.\nThe termination of employment shall be effective on the date specified in such\nnotice (the \"Effective Termination Date\").\n\n         (i) If Edison terminates your employment without cause or if you\nterminate your employment for \"good reason,\" Edison will pay you as severance\npay for a period beginning on the Effective Termination Date and ending twelve\nmonths from such date (the \"Severance Period\") your then current base salary\nplus the bonus amount you earned for the prior fiscal year (together, the\n\"Enhanced Base\"). The Enhanced Base will be paid on Edison's normal payroll\ncycle during the Severance Period whether or not\n\n\n                                       3\n   4\nyou obtain other employment. For purposes of this Agreement, \"good reason\" shall\nmean (a) the assignment to you of duties and responsibilities which results in\nyour having materially less significant duties and responsibilities or\nexercising materially less significant power and authority than you had, or\nduties and responsibilities or power and authority not in all material respects\ncomparable to that of the level and nature which you had immediately prior to\nany such assignment; (b) your removal, or the failure to re-appoint you to your\nthen current position with Edison; and (c) Edison's failure to perform in a\ntimely manner its material obligations under this Agreement, other than, in the\ncase of each of (a), (b) and (c), (A) with your express written consent or (B)\nin connection with any termination of your employment by Edison as the result of\nyour disability or \"for cause.\"\n\n         (ii) If you terminate your employment without \"good reason\" as defined\nabove, Edison will pay you as severance pay your base salary as of the date of\ntermination for the Severance Period, provided that if you become employed\nelsewhere during the Severance Period the amounts otherwise payable to you under\nthis sentence shall be reduced by the total amount of any compensation you earn\nfrom such employment during the Severance Period regardless of when such\ncompensation is to be paid. You agree to report to the Company in writing the\namounts of any such compensation as soon as practicable after it is earned by\nyou. For purposes of the severance pay offset provisions of this paragraph, the\nterms \"employed\" and \"employment\" shall mean the providing of any services for\ncompensation whether as a full-time or part-time employee or as a consultant.\nPayments made to you as reimbursement for documented expenses will not\nconstitute compensation for purposes of this paragraph.\n\n         (iii) Edison shall have the right to terminate your employment for\ncause by giving you written notice to that effect. The termination of employment\nshall be effective on the date specified in such notice. However, \"for cause\" is\nrestricted to (1) commission of a willful act of dishonesty in the course of\nyour duties with Edison which significantly injures Edison; (2) conviction of a\ncrime of moral turpitude or of a felony; or (3) chronic alcoholism or drug\nabuse. If you are terminated for cause, Edison will pay your unpaid base salary\nthrough the effective date of termination.\n\n         (iv) In the event of a termination of your employment for any reason\nexcept your death, in addition to any other severance pay to which you may be\nentitled, the Company will pay you a lump sum of $3.2 million (the \"Lump-sum\nSeverance Payment\") within 30 days after the Effective Termination Date. Edison\nwill withhold from the Lump-sum Severance Payment all Federal, state and city\nemployment and income taxes related thereto that Edison is required to withhold.\nYou agree that Edison may offset against the Lump-Sum Severance Payment, as\nreduced by any applicable tax withholdings, the total amount outstanding on the\nLoans including the accrued and unpaid interest through the date of such offset.\n\n\n\n                                       4\n   5\n         (v) In consideration of the severance pay provided for in (i), (ii) and\n(iv) above, you agree to deliver to Edison on or promptly following the\neffective date of the termination of your employment a Separation and Release in\nthe form customarily being used by Edison at such time.\n\n         Death. If you die during your employment hereunder, this Agreement\nshall terminate upon the date of your death. Edison's obligations under this\nAgreement (other than obligations then due and owing hereunder) will terminate\nupon Edison's payment to the personal representative of your estate (i) your\nunpaid base salary through the date of your death and (ii) any expenses properly\nreimbursable under this Agreement and not yet reimbursed.\n\n         Stock Redemption. In the event of the termination of your employment\nfor any reason except your death, Edison agrees that upon receipt of your\nwritten request within six months after the Effective Termination Date, it will\npromptly purchase from you the minimum amount of Edison stock (the \"Redeemed\nStock\") necessary to provide you with enough cash to pay all Federal, state and\ncity income taxes (the \"Required Taxes\") on the Lump-Sum Severance Payment and\nthe Redeemed Stock. The Required Taxes shall be deemed to be the sum of (A) the\nproduct of the Lump-Sum Severance Payment multiplied by the total of your\nexpected marginal tax rates for federal, state and city income taxes for the\nyear in which such payment is made, taking into account the deductibility of\nstate and city taxes for federal purposes, plus (B) the product of the capital\ngain on the sale of the Redeemed Stock multiplied by the total of the applicable\nfederal, state and city capital gains tax rates for the year in which the stock\nis sold, taking into account the deductibility of state and city taxes for\nfederal purposes. The date on which the Redeemed Stock will be purchased (the\n\"Redemption Date\") will be determined by the Edison Board, but shall not be\nlater than the date federal income taxes are required to be paid on the Lump-Sum\nSeverance Payment. If Edison's stock is publicly traded, the price per share\npaid by Edison for the Redeemed Stock shall be the average of the bid and asked\nshare prices for the 30-day period preceding the Redemption Date. If Edison's\nstock is not publicly traded, the price per share paid for the Redeemed Stock\nshall be the price paid in the most recent transaction, provided however that if\na third-party transaction occurs within three months after the Effective\nTermination Date at a higher price, the purchase price shall be adjusted upward\nto reflect such difference. Edison may offset against the proceeds of the\nRedeemed Stock the total amount outstanding under the Loans, including the\naccrued and unpaid interest through the date of such offset.\n\n         Exclusivity. In return for the compensation payments set forth in this\nagreement, you agree to devote 100% of your professional time and energies to\nEdison and not engage in any other business activities without prior approval of\nthe Board.\n\n         Confidentiality. It is understood that in order to perform your duties\nat Edison, it will be necessary for Edison to divulge to you its proprietary\ninformation, including,\n\n\n                                       5\n   6\nbut not limited to, information and data relating to or concerned with Edison's\nbusiness, finances, development projects and other affairs. You agree that you\nwill not divulge such proprietary information to anyone outside Edison at any\ntime whether or not you are in the employ of Edison, except as may otherwise be\nrequired in connection with the business and affairs of Edison. You agree to use\nyour best efforts to prevent such disclosure by others. You also agree that any\ndevelopments, discoveries, or inventions made by you alone or with others during\nthe term of your employment with Edison and applicable to the type of businesses\nor development projects engaged in by Edison during such period shall be the\nsole and exclusive property of Edison and you agree to execute all documents\nrequested by Edison to protect Edison's rights thereto.\n\n         Non-competition and Non-solicitation. You further agree that during\nyour employment with Edison and for one year after the termination of such\nemployment for any reason, you will not at any time engage in or participate as\nan executive officer, employee, director, agent, consultant, representative,\nstockholder, or partner, or have any financial interest, in any business which\n\"competes\" with Edison or any subsidiary of Edison or successor to the business\nof Edison. For the purposes hereof, a \"competing\" business shall mean any\nbusiness which directly competes with any of the businesses of Edison as such\nbusiness shall exist during your employment with Edison (for example, the\nbusiness of managing public and\/or private schools for profit), but a\n\"competing\" business shall not include the traditional non-profit education\nbusiness so long as such activities do not violate the confidentiality\nprovisions of this agreement. Ownership by you of publicly traded stock of any\ncorporation conducting any such business shall not be deemed a violation of the\npreceding two sentences provided you do not own more than three percent (3%) of\nthe stock of any such corporation. You further agree that for a period of one\nyear after the termination of your employment with Edison for any reason, you\nwill not, directly or indirectly, solicit the employment or other services of\nany executive employee of Edison. For the purposes of the foregoing, any\nexecutive employee who within twelve months of terminating his employment with\nEdison becomes employed by any entity of which you are an officer or director or\nowner of more than an aggregate of 3% of the outstanding stock or equity\ninterest therein shall be deemed, prima facie, to have been so solicited.\n\n         Entire Agreement. Except as expressly provided in the first paragraph\nof this Agreement and together with the attached exhibits, this letter agreement\nconstitutes the entire understanding of the parties with respect to the subject\nmatter hereof and supersedes all prior agreements and understandings, written or\noral, among the parties with respect to such subject matter. This agreement is\ngoverned by the substantive laws of the State of New York.\n\n         Duplicate originals of this agreement are being provided to you. Please\nsign below to evidence your agreement to the foregoing, and return one original\nto me for our records.\n\n\n\n                                       6\n   7\nSincerely,\nEDISON SCHOOLS INC.\n\n\n   \nBy: \/s\/ H. Christopher Whittle\n   ____________________________________\n     H. Christopher Whittle\n     President and CEO\n    \n\n   \nACCEPTED AND AGREED:\n\n\/s\/ Benno C. Schmidt, Jr.\n__________________________\nBenno C. Schmidt, Jr.\n    \n\n   \nJune 20, 2000\n_________________________\nDate\n    \n\n\n                                       7\n   8\n                                    EXHIBIT A\n\n                        RESPONSIBILITIES OF THE CHAIRMAN\n\n\nAll of the following responsibilities are subject to the direction, authority\nand approval of Edison's Board of Directors.\n\n         -   Preside over Edison's Board meetings\n\n         -   Direct the Company's legislative and political efforts\n\n         -   Participate in the Company's strategic planning initiatives\n\n         -   Support the Company's marketing efforts\n\n         -   Assist in capital formation\n\n         -   Engage in philanthropic activities as directed by the Board\n\n         -   Direct the Company's headquarters development efforts\n\n\n\n\n                                       8\n   9\n                                    EXHIBIT B\n\n\n                               EDISON SCHOOLS INC.\n\n\n                            NONSTATUTORY STOCK OPTION\n                     GRANTED UNDER 1999 STOCK INCENTIVE PLAN\n\n\n1.       Grant of Option.\n\n         This agreement evidences the grant by Edison Schools Inc., a Delaware\ncorporation (the \"Company\"), on June 20, 2000 (the \"Grant Date\") to BENNO C.\nSCHMIDT, JR., an employee of the Company (the \"Participant\"), of an option (the\n\"Option\") to purchase, in whole or in part, on the terms provided herein and in\nthe Company's 1999 Stock Incentive Plan (the \"Plan\"), a total of 225,000 shares\n(the \"Shares\") of Class A Common Stock, $.01 par value per share, of the Company\n(\"Common Stock\") at $20.75 per Share. The Option is granted in consideration of\nthe performance of those services the Participant is already performing or may\nbe expected to perform as an employee of the Company. Unless earlier terminated\nas provided herein, this Option shall expire on the date 10 years from the Grant\nDate (the \"Final Exercise Date\").\n\n         It is intended that the Option evidenced by this notice shall not be an\nincentive stock option as defined in Section 422 of the Internal Revenue Code of\n1986, as amended, and any regulations promulgated thereunder (the \"Code\").\nExcept as otherwise indicated by the context, the term \"Participant,\" as used in\nthis Option, shall be deemed to include any person who acquires the right to\nexercise this Option validly under its terms.\n\n\n2.       Vesting Schedule.\n\n         (a) This Option will become exercisable (\"vest\") with respect to 75,000\nShares in equal amounts over a 60-month period, with the first monthly vesting\nto occur on the last day of June, 2000 and the last monthly vesting to occur on\nthe last day of May, 2005, provided\n\n\n                                       1\n   10\nParticipant is continuously employed over this period. If Participant ceases to\nbe an employee of the Company, vesting will cease at such time.\n\n         (b) This Option will vest with respect to 150,000 Shares on May 20,\n2010, provided that (i) vesting with respect to 25,000 Shares for each of the\nthree Fiscal Years (as defined below) of the Company beginning with the 2001\nFiscal Year and ending with the 2003 Fiscal Year shall be accelerated based upon\nassessment by the Company's compensation committee, as approved by the Company's\nBoard of Directors (the \"Board\"), of the Company's performance for the\nrespective Fiscal Year; and (ii) vesting with respect to 25,000 Shares for each\nof the three Fiscal Years of the Company beginning with the 2001 Fiscal Year and\nending with the 2003 Fiscal Year shall be accelerated based upon assessment by\nthe Company's compensation committee, as approved by the Board, of Participant's\nindividual performance for the respective Fiscal Year. \"Fiscal Year\" means with\nrespect to the Company, the twelve-month period running from July 1 of one\ncalendar year through June 30 of the succeeding calendar year\n\n         (c) The right of exercise shall be cumulative so that to the extent the\nOption is not exercised in any period to the maximum extent permissible it shall\ncontinue to be exercisable, in whole or in part, with respect to all Shares for\nwhich it is vested until the earlier of the Final Exercise Date or the\ntermination of this Option under Section 3 hereof or the Plan.\n\n\n3.       Exercise of Option.\n\n         (a) Form of Exercise. Each election to exercise this Option shall be in\nwriting, signed by the Participant, and received by the Company at its principal\noffice, accompanied by this agreement and payment in full in the manner provided\nin the Plan. The Participant may purchase\n\n\n                                       2\n   11\nless than the number of Shares covered hereby, provided that no partial exercise\nof this Option may be for any fractional share or for fewer than ten whole\nShares.\n\n         (b) Continuous Relationship with the Company Required. Except as\notherwise provided in this Section 3, this Option may not be exercised unless\nthe Participant, at the time he or she exercises this Option, is, and has been\nat all times since the Grant Date, an employee of the Company (an \"Eligible\nParticipant\").\n\n         (c) Termination of Relationship with the Company. If the Participant\nceases to be an Eligible Participant for any reason, then, except as provided in\nparagraphs (d) and (e) below, the right to exercise this Option shall terminate\ntwo years after such cessation (but in no event after the Final Exercise Date),\nprovided that this Option shall be exercisable only to the extent that the\nParticipant was entitled to exercise this Option on the date of such cessation.\nNotwithstanding the foregoing, if the Participant, prior to the Final Exercise\nDate, violates the non-competition or confidentiality provisions of any\nemployment contract, confidentiality and nondisclosure agreement or other\nagreement between the Participant and the Company, the right to exercise this\nOption shall terminate immediately upon written notice to the Participant from\nthe Company describing such violation.\n\n         (d) Exercise Period Upon Death or Disability. If the Participant dies\nor becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior\nto the Final Exercise Date while he or she is an Eligible Participant and the\nCompany has not terminated such relationship for \"cause\" as specified in\nparagraph (e) below, this Option shall be exercisable, within the period of one\nyear following the date of death or disability of the Participant, by the\nParticipant, provided that this Option shall be exercisable only to the extent\nthat this Option was exercisable\n\n\n                                       3\n   12\nby the Participant on the date of his or her death or disability, and further\nprovided that this Option shall not be exercisable after the Final Exercise\nDate.\n\n         (e) Discharge for Cause. If the Participant, prior to the Final\nExercise Date, is discharged by the Company for \"cause\" (as defined below), the\nright to exercise this Option shall terminate immediately upon the effective\ndate of such discharge. \"Cause\" shall mean willful misconduct by the Participant\nor willful failure by the Participant to perform his or her responsibilities to\nthe Company (including, without limitation, breach by the Participant of any\nprovision of any employment, consulting, advisory, nondisclosure,\nnon-competition or other similar agreement between the Participant and the\nCompany), as determined by the Company, which determination shall be conclusive.\nThe Participant shall be considered to have been discharged for Cause if the\nCompany determines, within 30 days after the Participant's resignation, that\ndischarge for cause was warranted.\n\n\n4.       Withholding.\n\n         No Shares will be issued pursuant to the exercise of this Option unless\nand until the Participant pays to the Company, or makes provision satisfactory\nto the Company for payment of, any federal, state or local withholding taxes\nrequired by law to be withheld in respect of this Option.\n\n\n5.       Nontransferability of Option.\n\n         This Option may not be sold, assigned, transferred, pledged or\notherwise encumbered by the Participant, either voluntarily or by operation of\nlaw, except by will or the laws of descent and distribution, and, during the\nlifetime of the Participant, this Option shall be exercisable only by the\nParticipant.\n\n\n                                       4\n   13\n6.       Confidentiality.\n\n         To the extent Participant acquires non-public information with respect\nto the Company, including without limitation, technical, financial, competitive,\nmarketing, sales, and business information, documents and tangible items\n(collectively, the \"Information\"), Participant shall keep such Information\nstrictly confidential and not at any time hereafter disclose or divulge such\nInformation to any person, firm or corporation or otherwise use such Information\nfor any such purpose (other than for the purposes of the Company) without the\nprior written consent of the Company.\n\n\n7.       Provisions of the Plan.\n\n         This Option is subject to the provisions of the Plan, a copy of which\nis furnished to the Participant with this Option.\n\n\n\n                                       5\n   14\n         IN WITNESS WHEREOF, the Company has caused this Option to be executed\nunder its corporate seal by its duly authorized officer. This Option shall take\neffect as a sealed instrument.\n\n                                   EDISON SCHOOLS INC.\n\n                                   By:____________________________\n\n                                       H. Christopher Whittle\n\n                                       President and Chief Executive Officer\n\nDated:____________________\n\n\n\n\n                                       6\n   15\nPARTICIPANT'S ACCEPTANCE\n\n\n         The undersigned hereby accepts the foregoing Option and agrees to the\nterms and conditions thereof. The undersigned hereby acknowledges receipt of a\ncopy of the Company's 1999 Stock Incentive Plan.\n\n                                  PARTICIPANT:\n\n                                  _______________________________\n\n\n                                  Name: Benno C. Schmidt, Jr.\n\n                                  Address: ______________________\n\n                                           ______________________\n\n\n\n\n\n\n         If the Participant resides in a community property state, it is\ndesirable to have the Participant's spouse also accept the Option by signature\nhere. The following are community property states: Arizona, California, Idaho,\nLouisiana, Nevada, New Mexico, Texas, and Washington. Although Wisconsin is not\nformally a community property state, it has laws governing the division of\nmarital property similar to community property states and it may be desirable to\nhave a Wisconsin Participant's spouse also accept the Option. In addition, if\nthe Company is granting an Option to a California Participant, it must comply\nwith California blue sky rules which, if applicable, require modification to\nthis Option.\n\n\n                                       7\n   16\n                                    EXHIBIT C\n\n\n                               EDISON SCHOOLS INC.\n\n\n                            NONSTATUTORY STOCK OPTION\n                     GRANTED UNDER 1999 STOCK INCENTIVE PLAN\n\n\n1.       Grant of Option.\n\n         This agreement evidences the grant by Edison Schools Inc., a Delaware\ncorporation (the \"Company\"), as of June 20, 2000 (the \"Grant Date\") to BENNO C.\nSCHMIDT, JR., an employee of the Company (the \"Participant\"), of an option (the\n\"Option\") to purchase, in whole or in part, on the terms provided herein and in\nthe Company's 1999 Stock Incentive Plan (the \"Plan\"), a total of 66,500 shares\n(the \"Shares\") of Class A Common Stock, $.01 par value per share, of the Company\n(\"Common Stock\") at $20.75 per Share. The Option is granted in consideration of\nthe performance of those services the Participant is already performing or may\nbe expected to perform as an employee of the Company. Unless earlier terminated\nas provided herein, this Option shall expire on the date 10 years from the Grant\nDate (the \"Final Exercise Date\").\n\n         It is intended that the Option evidenced by this notice shall not be an\nincentive stock option as defined in Section 422 of the Internal Revenue Code of\n1986, as amended, and any regulations promulgated thereunder (the \"Code\").\nExcept as otherwise indicated by the context, the term \"Participant,\" as used in\nthis Option, shall be deemed to include any person who acquires the right to\nexercise this Option validly under its terms.\n\n2.       Vesting Schedule.\n\n         (a) This Option will become exercisable (\"vest\") in equal amounts over\na 60-month period, with the first monthly vesting to occur on the last day of\nJune, 2000 and the last monthly vesting to occur on the last day of May, 2005,\nprovided Participant is continuously employed\n\n\n                                       1\n   17\nover this period. If Participant ceases to be an employee of the Company,\nvesting will cease at such time.\n\n         (b) The right of exercise shall be cumulative so that to the extent the\nOption is not exercised in any period to the maximum extent permissible it shall\ncontinue to be exercisable, in whole or in part, with respect to all Shares for\nwhich it is vested until the earlier of the Final Exercise Date or the\ntermination of this Option under Section 3 hereof or the Plan.\n\n\n3.       Exercise of Option.\n\n         (a) Form of Exercise. Each election to exercise this Option shall be in\nwriting, signed by the Participant, and received by the Company at its principal\noffice, accompanied by this agreement and payment in full in the manner provided\nin the Plan. The Participant may purchase less than the number of Shares covered\nhereby, provided that no partial exercise of this Option may be for any\nfractional share or for fewer than ten whole Shares.\n\n         (b) Continuous Relationship with the Company Required. Except as\notherwise provided in this Section 3, this Option may not be exercised unless\nthe Participant, at the time he or she exercises this Option, is, and has been\nat all times since the Grant Date, an employee of the Company (an \"Eligible\nParticipant\").\n\n         (c) Termination of Relationship with the Company. If the Participant\nceases to be an Eligible Participant for any reason, then, except as provided in\nparagraphs (d) and (e) below, the right to exercise this Option shall terminate\ntwo years after such cessation (but in no event after the Final Exercise Date),\nprovided that this Option shall be exercisable only to the extent that the\nParticipant was entitled to exercise this Option on the date of such cessation.\nNotwithstanding the foregoing, if the Participant, prior to the Final Exercise\nDate, violates the non-competition or confidentiality provisions of any\nemployment contract, confidentiality and nondisclosure\n\n\n                                       2\n   18\nagreement or other agreement between the Participant and the Company, the right\nto exercise this Option shall terminate immediately upon written notice to the\nParticipant from the Company describing such violation.\n\n         (d) Exercise Period Upon Death or Disability. If the Participant dies\nor becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior\nto the Final Exercise Date while he or she is an Eligible Participant and the\nCompany has not terminated such relationship for \"cause\" as specified in\nparagraph (e) below, this Option shall be exercisable, within the period of one\nyear following the date of death or disability of the Participant, by the\nParticipant, provided that this Option shall be exercisable only to the extent\nthat this Option was exercisable by the Participant on the date of his or her\ndeath or disability, and further provided that this Option shall not be\nexercisable after the Final Exercise Date.\n\n         (e) Discharge for Cause. If the Participant, prior to the Final\nExercise Date, is discharged by the Company for \"cause\" (as defined below), the\nright to exercise this Option shall terminate immediately upon the effective\ndate of such discharge. \"Cause\" shall mean willful misconduct by the Participant\nor willful failure by the Participant to perform his or her responsibilities to\nthe Company (including, without limitation, breach by the Participant of any\nprovision of any employment, consulting, advisory, nondisclosure,\nnon-competition or other similar agreement between the Participant and the\nCompany), as determined by the Company, which determination shall be conclusive.\nThe Participant shall be considered to have been discharged for Cause if the\nCompany determines, within 30 days after the Participant's resignation, that\ndischarge for cause was warranted.\n\n\n4.       Withholding.\n\n         No Shares will be issued pursuant to the exercise of this Option unless\nand until the\n\n\n                                       3\n   19\nParticipant pays to the Company, or makes provision satisfactory to the Company\nfor payment of, any federal, state or local withholding taxes required by law to\nbe withheld in respect of this Option.\n\n\n5.       Nontransferability of Option.\n\n         This Option may not be sold, assigned, transferred, pledged or\notherwise encumbered by the Participant, either voluntarily or by operation of\nlaw, except by will or the laws of descent and distribution, and, during the\nlifetime of the Participant, this Option shall be exercisable only by the\nParticipant.\n\n\n6.       Confidentiality.\n\n         To the extent Participant acquires non-public information with respect\nto the Company, including without limitation, technical, financial, competitive,\nmarketing, sales, and business information, documents and tangible items\n(collectively, the \"Information\"), Participant shall keep such Information\nstrictly confidential and not at any time hereafter disclose or divulge such\nInformation to any person, firm or corporation or otherwise use such Information\nfor any such purpose (other than for the purposes of the Company) without the\nprior written consent of the Company.\n\n\n7.       Provisions of the Plan.\n\n         This Option is subject to the provisions of the Plan, a copy of which\nis furnished to the Participant with this Option.\n\n\n\n                                       4\n   20\n         IN WITNESS WHEREOF, the Company has caused this Option to be executed\nunder its corporate seal by its duly authorized officer. This Option shall take\neffect as a sealed instrument.\n\n\n                                   EDISON SCHOOLS INC.\n\n                                   By:____________________________\n\n                                       H. Christopher Whittle\n\n                                       President and Chief Executive Officer\n\nDated:____________________\n\n\n\n                                       5\n   21\nPARTICIPANT'S ACCEPTANCE\n\n\n         The undersigned hereby accepts the foregoing Option and agrees to the\nterms and conditions thereof. The undersigned hereby acknowledges receipt of a\ncopy of the Company's 1999 Stock Incentive Plan.\n\n                                  PARTICIPANT:\n\n                                  _________________________________\n\n\n                                  Name: Benno C. Schmidt, Jr.\n\n                                  Address: ________________________\n\n                                           ________________________\n\n\n\n\n\n\n         If the Participant resides in a community property state, it is\ndesirable to have the Participant's spouse also accept the Option by signature\nhere. The following are community property states: Arizona, California, Idaho,\nLouisiana, Nevada, New Mexico, Texas, and Washington. Although Wisconsin is not\nformally a community property state, it has laws governing the division of\nmarital property similar to community property states and it may be desirable to\nhave a Wisconsin Participant's spouse also accept the Option. In addition, if\nthe Company is granting an Option to a California Participant, it must comply\nwith California blue sky rules which, if applicable, require modification to\nthis Option.\n\n\n\n                                       6\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7412],"corporate_contracts_industries":[],"corporate_contracts_types":[9539,9544],"class_list":["post-39094","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-edison-schools-inc","corporate_contracts_types-compensation","corporate_contracts_types-compensation__employment"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/39094","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=39094"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=39094"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=39094"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=39094"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}