{"id":39619,"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-the-edison-project-lp-and-benno-c-schmidt.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"employment-agreement-the-edison-project-lp-and-benno-c-schmidt","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/employment-agreement-the-edison-project-lp-and-benno-c-schmidt.html","title":{"rendered":"Employment Agreement &#8211; The Edison Project LP and Benno C. Schmidt Jr."},"content":{"rendered":"<pre>\nMarch 1, 1997\n\n\nMr. Benno C. Schmidt, Jr.\n222 Riverside Drive\nNew York, NY 10025\n\nDear Benno:\n\n      This letter agreement ('Agreement') sets forth the terms of your\nemployment with The Edison Project L.P. ('Edison' or the 'Company') as approved\nby the board of directors (the 'Board') of The Edison Project Inc. ('Edison\nInc.'), the sole general partner of Edison. This Agreement supersedes and\nreplaces (i) the employment agreement dated March 15, 1995 and any agreement\nappearing as an exhibit or attachment thereto or referred to therein (the 'March\n1995 Employment Agreement') between you and Edison and (ii) the letter agreement\ndated May 1, 1996 between you and Edison which served to clarify the March 1995\nEmployment Agreement (the 'May 1996 Agreement'). Notwithstanding the foregoing,\nyour obligations with respect to the following shall survive and shall not be\nmodified except for the modifications contained herein: (i) the promissory note\nissued to Whittle Communications L.P. (which was assigned to Edison) dated June\n5, 1992 with a face amount of $1,600,000 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 with a face amount of $200,000 and any\naccrued and unpaid interest thereon through the date hereof (the 'Transition\nLoan' and, together with the Existing Loan, the 'Loans'); (iii) the release\nprovided by the terms of the March 1995 Employment Agreement; and (iv) the\nassignment to Edison of benefits under the $5,000,000 First Colony Life\nInsurance policy 1893365 (the ''Insurance Policy') as collateral for the Loans.\n\n      Position\/Responsibilities. You will be employed as Edison's Chairman and\nChief Executive Officer ('CEO'), working out of the Company's headquarters in\nNew York City. Your responsibilities are set forth on Exhibit A attached hereto.\n\n      Term. The term of your employment commences as of the date hereof and ends\non December 31, 1998, unless terminated earlier by Company as provided below.\n\n      Base Salary. You will be paid at an annual base salary rate of $255,000\nfrom the date hereof. Contingent upon achievement of Edison's Board-approved\nbusiness plan for each fiscal year as determined by Edison Inc.'s Board in its\nsole discretion, your base salary at the start of the following fiscal year will\nbe increased by no less than eight percent (8%) of your then current base\nsalary.\n\n      Bonus. In addition to your base salary, you will be eligible to\nparticipate in the Management Committee incentive compensation plan as set by\nthe Board each\n\nfiscal year. Under the terms of this plan for FY 1997, you will be eligible to\nreceive a bonus of up to 33-1\/3% of your base salary (the 'Maximum Bonus'). A\nportion (the 'Award') of the Maximum Bonus equal to 20% of your base salary may\nbe earned upon achievement of certain identified results--25% of the Award will\nbe linked to the achievement of individual performance goals (as determined by\nthe Board), and 75% of the Award will be linked to the achievement of Edison's\nBoard-approved business plan for the year (as determined by the Board). For\nexceeding both personal goals and the Company business plan, your bonus may be\nincreased up to the Maximum Bonus amount in the sole discretion of the Board.\nSubsequent to FY 1997, you will be eligible to receive an annual bonus of up to\n50% of your then current base salary under a plan to be determined by the Board\nin its sole discretion.\n\n      Stock Options. Simultaneous with the execution of this agreement the\nparties hereto shall execute the Stock Option Agreement attached as Exhibit B\nwhich shall supersede and replace the Option Agreement dated as of March 15,\n1995 between you and the Company. In addition, you will be eligible to\nparticipate in the 'Performance Option Pool' for key executives described in\nExhibit C attached hereto, with your portion of the option pool set at 268,526\nshares, such number to be reduced to the extent the Board approves vesting of\nadditional Performance Segment Shares, as defined in the Stock Option Agreement,\nwith respect to Fiscal Year 1996, but in no event to be less than 250,000\nshares.\n\n      Benefits. You will be entitled to the standard Company benefits for\nexecutives at your level as in effect from time to time, a current schedule of\nwhich is attached as Exhibit D. The Company will further maintain for your\nbenefit supplemental long-term disability insurance and supplemental term life\ninsurance under the Insurance Policy provided that you execute, and cause any\nbeneficiary named under the Insurance Policy to execute, all documentation\nrequired or requested by Edison in connection with the assignment of the\nInsurance Policy as collateral for the Loans, including, without limitation, the\nassignment (for your execution) attached hereto as Exhibit E and the consent to\nassignment (for execution by each beneficiary) attached hereto as Exhibit F. You\nagree not to change the beneficiaries named under the Insurance Policy without\nthe prior written consent of Edison. You will receive six weeks of vacation\nannually in addition to the official Company holidays.\n\n      Expense Reimbursements. You will be reimbursed for all reasonable business\nexpenses you incur in fulfilling your responsibilities hereunder upon submission\nof adequate documentation for such expenses and subject to the Company's\npolicies.\n\n      Loans. Simultaneous with the execution of this Agreement, the parties\nshall amend the Existing Loan and the Transition Loan to (i) make the due date\nof each loan the earlier of February 15, 2000 or the date on which your\nemployment by Edison is terminated, (ii) make the interest rate of each Loan\n5.83% compounded annually effective as of the date hereof, and (iii) provide for\ninterest to accrue until\n\n\n                                       -2-\n\nthe Loans are paid in full with payment of the interest due on the date of\npayment of the Loans, and upon the Company's request you shall execute and\ndeliver any necessary documents, including replacement promissory notes, in\nconnection therewith.\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 terminate\nyour employment for 'good reason,' Edison will pay you as severance pay for a\nperiod beginning on the Effective Termination Date and ending twelve months from\nsuch date (the 'Severance Period') your then current base salary plus the bonus\namount you earned for the prior fiscal year (together, the 'Enhanced Base'). The\nEnhanced Base will be paid on Edison's normal payroll cycle during the Severance\nPeriod whether or not you obtain other employment. For purposes of this\nAgreement, good reason shall mean (a) the assignment to you of duties and\nresponsibilities which results in your having materially less significant duties\nand responsibilities or exercising materially less significant power and\nauthority than you had, or duties and responsibilities or power and authority\nnot in all material respects comparable to that of the level and nature which\nyou had immediately prior to any such assignment; (b) your removal, or the\nfailure to re-appoint you to your then current position with Edison; and (c)\nEdison's failure to perform in a timely manner its material obligations under\nthis Agreement, other than, in the case of each of (a), (b) and (c), (A) with\nyour express written consent or (B) in connection with any termination of your\nemployment by Edison as the result of your 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. For purposes of the severance\npay offset provisions of this paragraph, the terms 'employed' and 'employment'\nshall mean the providing of any services for compensation whether as a full-time\nor part-time employee or as a consultant. Payments made to you as reimbursement\nfor documented expenses will not constitute compensation for purposes of this\nparagraph.\n\n      (iii) Edison shall have the right to terminate your employment for cause\nby giving you written notice to that effect. The termination of employment shall\nbe effective on the date specified in such notice. However, 'for cause' is\nrestricted to\n\n\n                                       -3-\n\n(1) commission of a willful act of dishonesty in the course of your duties with\nEdison which significantly injures Edison; (2) conviction of a crime of moral\nturpitude or of a felony; or (3) chronic alcoholism or drug abuse. If you are\nterminated for cause, Edison will pay your unpaid base salary through the\neffective 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 $2.5 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      (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 shall\nterminate upon the date of your death. Edison's obligations under this Agreement\n(other than obligations then due and owing hereunder) will terminate upon\nEdison's payment to the personal representative of your estate (i) your unpaid\nbase 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 for\nany reason except your death, Edison Inc. 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 Inc. stock (the\n'Redeemed Stock') necessary to provide you with enough cash to pay an Federal,\nstate and city income taxes (the 'Required Taxes') on the Lump-Sum Severance\nPayment and the Redeemed Stock. The Required Taxes shall be deemed to be the sum\nof (A) the product of the Lump-Sum Severance Payment multiplied by the total of\nyour expected marginal tax rates for federal, state and city income taxes for\nthe year 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 Inc. 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 Inc.'s stock is\n\n\n                                       -4-\n\npublicly traded, the price per share paid by Edison for the Redeemed Stock shall\nbe the average of the bid and asked share prices for the 30-day period preceding\nthe Redemption Date. If Edison Inc.'s stock is not publicly traded, the price\nper share paid for the Redeemed Stock shall be the price paid in the most recent\ntransaction, provided however that if a third-party transaction occurs within\nthree months after the Effective Termination Date at a higher price, the\npurchase price shall be adjusted upward to reflect such difference. Edison may\noffset against the proceeds of the Redeemed Stock the total amount outstanding\nunder the Loans, including the accrued and unpaid interest through the date of\nsuch 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 at\nEdison, it will be necessary for Edison to divulge to you its proprietary\ninformation, including, but not limited to, information and data relating to or\nconcerned with Edison's business, finances, development projects and other\naffairs. You agree that you will not divulge such proprietary information to\nanyone outside Edison at any time whether or not you are in the employ of\nEdison, except as may otherwise be required in connection with the business and\naffairs of Edison. You agree to use your best efforts to prevent such disclosure\nby others. You also agree that any developments, discoveries, or inventions made\nby you alone or with others during the term of your employment with Edison and\napplicable to the type of businesses or development projects engaged in by\nEdison during such period shall be the sole and exclusive property of Edison and\nyou agree to execute all documents requested by Edison to protect Edison's\nrights thereto.\n\n      Non-competition and Non-solicitation. You further agree that during your\nemployment with Edison and for one year after the termination of such employment\nfor any reason, you will not at any time engage in or participate as an\nexecutive 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\n\n\n                                       -5-\n\nafter the termination of your employment with Edison for any reason, you will\nnot, directly or indirectly, solicit the employment or other services of any\nexecutive employee of Edison. For the purposes of the foregoing any executive\nemployee who within twelve months of terminating his employment with Edison\nbecomes employed by any entity of which you are an officer or director or owner\nof more than an aggregate of 3% of the outstanding stock or equity interest\ntherein shall be deemed, prima facie, to have been so solicited.\n\n      Entire Agreement. Except as expressly provided in the first paragraph of\nthis 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\nSincerely,\n\nTHE EDISON PROJECT L.P.\n\n      By:   The Edison Project Inc., general partner\n\n\n            By: \/s\/ Laura K. Eshbaugh\n                ----------------------------\n                Laura K. Eshbaugh, President\n\n\nACCEPTED AND AGREED:\n\n\n\/s\/ Benno C. Schmidt, Jr.\n-------------------------\nBenno C. Schmidt, Jr.\n\n\n\nApril 7, 1997\n-------------------------\nDate\n\n\n                                       -6-\n\n                                    EXHIBIT A\n\n                      RESPONSIBILITIES OF THE CHAIRMAN\/CEO\n\n\nAll of the following responsibilities are subject to the direction, authority\nand approval of Edison Inc.'s Board.\n\n-     Convene and direct Edison's Office of the Chairman and participate in all\n      strategic decisions.\n\n-     Act as co-spokesperson for the Company.\n\n-     Exercise full and usual authority of a CEO, including hiring, firing and\n      supervising Edison employees, agents, representatives, etc.\n\n-     Exercise final authority over day-to-day operations of Edison.\n\n-     Provide oversight of educational aspects of Edison's business.\n\n-     Head legislative\/ macromarketing activities.\n\n                                    EXHIBIT B\n\n                                OPTION AGREEMENT\n\n\n      Option Agreement, dated as of March 1, 1997, between Benno C. Schmidt, Jr.\n('Holder') and The Edison Project Inc. (the 'Company'). Capitalized terms used\nbut not defined herein are used herein as defined in The Edison Project Inc.\nShareholders' Agreement dated as of November 18, 1996, among the Company and the\nother shareholders named therein (the 'Shareholders' Agreement'). This Agreement\nsupersedes and replaces the Option Agreement dated as of March 15, 1995 between\nHolder and The Edison Project L.P. (the 'Partnership').\n\n      Holder and the Company hereby agree as follows:\n\n      1. Issuance: Vesting. (a) The Company hereby grants to Holder the option\n(the 'Option') to purchase 1,237,110 shares of the Company's Series A Common\nStock (the 'Shares') subject to the terms and conditions below.\n\n            (b) The Option may only be exercised with respect to the entire\nnumber of vested Shares at the time of exercise. If the Option is exercised\nbefore all the Shares are vested,, the unvested Shares will continue to vest as\nprovided herein, (it being understood that each and every exercise of the Option\nshall be a purchase of the full number of Shares which are vested at the time of\nexercise and which have not previously been purchased).\n\n            (c) The Option shall vest as follows:\n\n                  (i)   Half of the Option (the 'Time Vested Portion'), or\n                        618,555 Shares, shall vest based on the amount of time\n                        Holder is continuously employed by the Partnership\n                        according to the following schedule:\n\n                        (aa)  51.92% of the Time Vested Portion of the Option,\n                              or 321,153.75 shares, is vested as of the date\n                              hereof.\n\n                        (bb)  1.33% of the Time Vested Portion of the Option\n                              shall vest on the last day of each month\n                              commencing with the last day of March, 1997 and\n                              ending on the last day of February, 2000:\n                              provided, however, that if Holder is no longer\n                              employed by the Partnership, the balance of the\n                              Time Vested Portion shall cease vesting as of the\n                              effective date of Holder's termination of\n                              employment.\n\n                  (ii)  Half of the Option (the 'Performance Vested Portion'),\n                        or 618,555 shares, shall vest in five equal segments\n                        (each such segment, a 'Performance Segment') based upon\n                        achievement of the Partnership's business plans as\n                        approved by the Company's Board of Directors (the\n                        'Board') for the five Fiscal Years (as defined below) of\n                        the Partnership beginning with the 1996 Fiscal Year.\n                        Each Performance Segment shall vest as of the date on\n                        which the Board determines that the targets set forth in\n                        the relevant business plan have been achieved. For\n                        Fiscal Year 1996, the Board awarded holder 65% of the\n                        Performance Segment Shares, or 80,412 Shares. The Board\n                        may, but is not required to, permit Holder to be\n                        eligible to vest in a subsequent Fiscal Year in any\n                        Performance Segment which did not vest in respect of y\n                        any prior Fiscal Year due to the non-achievement of the\n                        targets in the relevant business plan to the extent said\n                        targets are achieved in a subsequent Fiscal Year up to\n                        and including the 2000 Fiscal Year. Holder shall only be\n                        eligible to vest in a Performance Segment if Holder was\n                        continuously employed by the Partnership during the\n                        Fiscal Year to which such Performance Segment relates.\n\n            2. Exercise. Holder may exercise the vested portion of the Option as\nof the first day of each Fiscal Year (or at such other times as may be permitted\nby the Board) and prior to the expiration of five years from the first day of\nthe Fiscal Year immediately following the date of vesting of such portion of the\nOption, by (a) transfer to the Account (as defined below) of immediately\navailable funds in an amount equal to the sum of (x) the number of vested Shares\nwhich have not previously been purchased times the Share Price (as defined\nbelow), and (y) the Withholding Amount (as defined below), and (b) giving\nwritten notice to the Company, failing which the Option shall expire unexercised\nand the Company shall have no further obligation hereunder. Upon exercise of the\nvested portion of the Option, the books and records of the Company shall be\nappropriately amended to reflect the Holder's acquisition of the Shares\ncorresponding to the vested portion of the Option then exercised.\n\n            3. Definitions.\n\n                  (a) 'Management Option Plan' means the management equity and\noption program of the Company, pursuant to which this Option is granted.\n\n                  (b) 'Account' means the Company's account number #5001083966\nat First American National Bank, Nashville, Tennessee (for further\n\n\n                                       -2-\n\ntransfer to the Knoxville office), ABA # 064-000017 or such other account as the\nCompany may designate by notice to Holder.\n\n                  (c) 'Fiscal Year' means with respect to the Company and the\nPartnership the twelve-month period running from July 1 of one calendar year\nthrough June 30 of the succeeding calendar year.\n\n                  (d) 'Share Price' means $1.25.\n\n                  (e) 'Withholding Amount' means the amount (which shall be\ndetermined by the Board) which the Company or the Partnership is required to\nwithhold and remit to the Internal Revenue Service and\/or any other taxing\nauthority by reason of the exercise by the Holder of the portion of the Option\nwhich is vested at the time of exercise.(1)\n\n            4. Nontransferable. Neither this Option nor the Shares may be\ntransferred, pledged, assigned, sold or otherwise disposed of, except that the\nShares may be redeemed by the Company at anytime by tender to Holder of an\namount equal to the fair market value thereof as determined (i) in good faith by\nthe Board or (ii) by a third party transaction at the time of redemption.\n\n            5. Representations and Warranties. Holder represents and warrants to\nthe Company that:\n\n                  (a)   Holder is acquiring the Option for Holder's own account\n                        for investment purposes and not with a view to, or for\n                        resale in connection with, a distribution in whole or in\n                        part of the Option or the Shares.\n\n                  (b)   Holder understands that this Option is not transferable\n                        and the Shares are transferable only to the Company (it\n                        being understood that the foregoing prohibitions on\n                        transfer apply to any transfer by way of pledge,\n                        assignment sale or any other means of disposition), and\n                        that the Shares may be legended to such effect.\n\n--------\n\n      (1) The requirement that the Holder pay a Withholding Amount arises\nbecause (i) the Holder will be treated by the relevant taxing authorities as\nreceiving compensation income upon exercise of the Option to the extent that, at\nthe time of such exercise, the fair market value of the Shares exceeds the Share\nPrice, and (ii) the Company or Partnership has a withholding obligation with\nrespect to such compensation income.\n\n\n                                       -3-\n\n                  (c)   Holder has carefully reviewed this Option Agreement, the\n                        Shareholders' Agreements, the Partnership's preliminary\n                        financial statements dated as of June 30, 1996, and the\n                        Partnership's business plan for the 1997 Fiscal Year.\n                        Holder and Holder's advisors have had a reasonable\n                        opportunity to ask questions of and receive answers from\n                        the Company and Partnership, or a person or persons\n                        acting on its behalf, concerning the terms and\n                        conditions of the offering, and to obtain additional\n                        information, to the extent possessed by the Company or\n                        Partnership or obtainable by it without unreasonable\n                        effort or expense. All such questions have been answered\n                        to the full satisfaction of Holder. No oral or written\n                        representations or warranties have been made or oral or\n                        written information furnished or oral or written\n                        promises made to Holder or Holder's advisors in\n                        connection with the Option being offered hereunder or\n                        the offering generally which were in any way\n                        inconsistent this Option Agreement\n\n                  (d)   Holder, either alone or together with Holder's advisors,\n                        has such knowledge and experience in financial, tax and\n                        business matters to enable Holder to utilize the\n                        information made available to Holder in connection with\n                        the offering, to evaluate the merits and risks of the\n                        prospective investment and to make an informed\n                        investment decision with respect thereto.\n\n                  (e)   Holder understands that an investment in the Company\n                        involves a high degree of risk and that the Option and\n                        the Shares may prove to be valueless.\n\n                  (f)   Holder understands that neither the offering nor the\n                        transfer of the Option to Holder has been registered\n                        under the Securities Act of 1933, as amended, in\n                        reliance upon an exemption therefrom for non-public\n                        offerings, nor has such offering or transfer been\n                        registered or qualified under any state securities or\n                        'Blue Sky' law in reliance upon similar exemptions.\n\n                  (g)   Holder understands that the issuance of the Option has\n                        not been, and the issuance of the Shares will not be,\n                        reviewed, approved or otherwise passed upon by the U.S.\n                        Securities and Exchange Commission, any state securities\n                        administrator, the National Association of Securities\n\n\n                                       -4-\n\n                        Dealers Inc., any securities or commodities exchange, or\n                        any other governmental agency or self-regulatory\n                        authority.\n\n            6. Indemnification. The Holder agrees to indemnify and hold harmless\nthe Company, the Partnership, and their respective officers, directors and\naffiliates from and against all damages, losses, costs and expenses (including\nreasonable attorney's fees and expenses) which they may incur by reason of any\nbreach of this Option Agreement by Holder including any breach of any of the\nrepresentations and warranties made by Holder herein.\n\n            7. Confidentiality. To the extent Holder acquires non-public\ninformation with respect to the Company or Partnership, including, without\nlimitation, technical, financial, competitive, marketing sales, and business\ninformation, documents and tangible items (collectively, the 'Information'),\nHolder shall keep such Information strictly confidential and not at any time\nhereafter disclose or divulge such Information to any person, firm or\ncorporation or otherwise use such Information for any purpose (other than for\nthe purposes of the Company or Partnership) without the prior written consent of\nthe Company or the Partnership.\n\n            8. Non-Competition and Non-Solicitation. (a) Holder agrees that\nuntil the later of one year after (i) the expiration of the Option, or (ii)\nHolder ceases to own the Shares, Holder shall not at any time engage in or\nparticipate as an executive officer, employee, director, agent, consultant,\nrepresentative, stockholder or partner, or have any financial interest, in any\nbusiness which 'competes' with the business of the Company, the Partnership or\nany subsidiary of the Company or the Partnership (the Company, the Partnership\nand their respective subsidiaries being hereby defined as 'Edison'). For the\npurposes hereof, a ''competing' business shall mean any business which directly\ncompetes with any of the businesses of Edison as such business shall exist\nduring Holder's ownership of the Option or the Shares, for example, the business\nof managing public and\/or private schools for profit, but a 'competing' business\nshall not include the traditional non-profit education business, so long as such\nactivities do not violate the confidentiality provisions of the Option\nAgreement. Ownership by Holder of publicly traded stock of any corporation\nconducting any such business shall not be deemed a violation of the preceding\ntwo sentences provided Holder does not own more than three percent (3%) of the\nstock of any such corporation.\n\n                  (b) Holder agrees that until the later of one year after (i)\nthe expiration of the Option, or (ii) the Holder ceases to own the Shares,\nHolder shall not directly or indirectly, solicit the employment, or other\nservices of any executive employee of the Partnership. For purposes of the\nforegoing, any executive employee who within twelve months of terminating his\nemployment with the Partnership becomes employed by any Person in which Holder\nis an officer or director or owner\n\n\n                                       -5-\n\nof more than an aggregate of 3% of the outstanding stock or equity interest\ntherein shall be deemed, prima facie, to have been so solicited.\n\n            9. Satisfaction of Equity Offering. Holder hereby acknowledges that\n(i) the issuance of the Option satisfies any and all obligations which the\nPartnership or any of the current or former General Partners of the Partnership,\nor its predecessor, may have to offer to Holder the opportunity to purchase an\nequity interest in the Partnership, and (ii) Holder has no right to acquire any\nequity interest in the Partnership or the Company, other than Holder's right to\nacquire the Company Shares hereunder.\n\n            10. Governing Law. This Option Agreement is governed by the laws of\nthe State of New York without giving effect to renvoi or other choice of law\ndoctrine to the extent that the application of the law of another jurisdiction\nwould be required thereby.\n\n            11. Entire Agreement. This Option Agreement contains the entire\nunderstanding of the parties with respect to the subject matter hereof and\nsupersedes all prior agreements and understandings, written or oral, between the\nparties with respect to such subject matter.\n\n            12. Miscellaneous. (a) Notices. All notices, demands, elections,\nrequests or other communications which any party to this Option Agreement may\ndesire or be required to give hereunder shall be in writing and shall be given\nby personal delivery, recognized overnight delivery service, telecopy or by\nmailing (by registered or certified first class mail, postage prepaid, return\nreceipt requested) addressed as follows:\n\n                  if the Company at:\n                  The Edison Project Inc.\n                  c\/o The Edison Project L.P.\n                  521 Fifth Avenue 16th Floor\n                  New York, New York 10175\n                  212-309-1604\n\n                  with a copy to:\n                  Cadwalader, Wickersham &amp; Taft\n                  100 Maiden Lane\n                  New York, New York 10038\n                  Telecopy: 212-504-6666\n                  Attention: John F. Fritts, Esq.\n\n\n                                       -6-\n\n                  if to Holder at:\n                  The Edison Project L.P.\n                  521 Fifth Avenue\n                  16th Floor\n                  New York, New York 10175\n                  Telecopy: 212-309-1618\n\nor at such other address or telecopy number as may be designated by one party by\nnotice given as provided herein to the other party. A notice shall be deemed to\nhave been given (i) if delivered personally, on the date so delivered (or, if\nnot a Business Day, on the next following Business Day), (ii) if sent by\nrecognized overnight delivery service, on the Business Day following the date\nsent, (iii) if sent by telecopy, upon electronic confirmation of receipt, or\n(iv) if sent by registered or certified first class mail, postage prepaid,\nreturn receipt requested, five Business Days following the date sent.\n\n                  (b) Amendments. This Option Agreement may not be changed\norally, but only by an agreement in writing signed by the Company and the\nHolder.\n\n            IN WITNESS WHEREOF, the parties hereto have executed and delivered\nthis Option Agreement as of the date set forth above.\n\n\n\n____________________________              THE EDISON PROJECT INC.\nBenno C. Schmidt, Jr.\n                                          BY:_______________________________\n                                                Laura Eshbaugh\n                                                President\n\n\n                                       -7-\n\n                                    EXHIBIT C\n\n                       PERFORMANCE OPTION POOL DESCRIPTION\n\n\n                               As of March 1, 1997\n\n\nCurrent senior management of The Edison Project L.P. (the ''Partnership') will\nbe awarded additional options to acquire shares of the Series A Common Stock of\nThe Edison Project Inc. ('Edison Inc.') under new option agreements. The options\nwill vest upon the ninth anniversary of the issuance of such options, provided\nthat the option holder has been continuously employed by the Partnership, and\nmay be exercised in whole or in part at any time after the ninth anniversary and\nprior to the tenth anniversary, on which date any portion of the option which\nhas not been exercised will expire. The price for shares covered by these option\nagreements will be $1.50.\n\nThe option agreements will include an acceleration feature providing that the\noptions will become fully vested if Edison Inc. makes an initial public offering\nprior to January 1, 2000 at a share price of at least $8. Alternatively, the\noptions will become fully vested if prior to January 1, 2000 Edison Inc. (i)\nsells all or substantially all of its assets, (ii) completes a merger or\nconsolidation where Edison Inc. is not the surviving entity, or (iii) concludes\nany other transaction in which Edison Inc. investors as of March 1, 1997 are\npermitted or required to sell at least fifty percent (50%) of their shares, in\neach of (i), (ii), or (iii) only so long as the price per share is at least $8.\n\nThe Performance Option Pool will consist of 1,250,000 shares awarded as follows:\n\n\n                                             \n                  Chris Whittle                   600,000\n                  Benno Schmidt                   250,000\n                  John Reid                       200,000\n                  Other senior executives*        200,000\n                                                ---------\n                                                1,250,000\n\n\n\n*     to be recommended by the Office of the Chairman for approval by the Edison\n      Inc. board at its April, 1997 meeting\n\n                                    EXHIBIT D\n\n                                    BENEFITS\n\nInsurance\n\nThe Company provides a medical and dental insurance plan and a long-term\ndisability plan, descriptions of which will be provided to you.\n\nLife insurance coverage furnished by the Company provides benefits of two times\nannual base salary up to a maximum benefit of $300,000.\n\nSick Leave\n\nBeginning with the third month of employment, sick leave accrues at the rate of\n1.85 hours per pay period.\n\nPersonal Leave\n\nEmployees receive two days of personal leave each year. These days are lost if\nnot taken during the year.\n\nShort-Term Disability\n\nBeginning with the seventh month of employment, short-term disability accrues at\nthe rate of 5.54 hours per pay period, up to a maximum of 400 hours.\n\nWellness Plan\n\nEmployees will be reimbursed up to $150 per year for qualified medical expenses\nthat are not covered by the Company's medical or dental insurance plan.\n\n401(k) Plan\n\nEmployees may contribute on a pre-tax basis up to the annual limit set by the\nIRS ($9,500 for 1997) and may allocate contributions among several different\ninvestment options offered by the plan. The Company matches 50% of the first\n$1,000 of employee contributions.\n\n                                                                       EXHIBIT F\n\n                              CONSENT TO ASSIGNMENT\n\n\n      Each of the undersigned beneficiaries of the First Colony Life Insurance\npolicy number 1893365 (the 'Policy') in the amount of $5,000,000 for the benefit\nof Benno C. Schmidt Jr. ('Schmidt') , hereby consents to the assignment of the\nPolicy by Schmidt to The Edison Project L.P. ('Edison') pursuant to the\nassignment attached as Annex I hereto (the 'Assignment'), and hereby relinquish\nany claims such beneficiary may have in respect of the Policy while the\nAssignment is in effect.\n\nDated:_______________\n\n\n                                            _________________________________\n                                            [BENEFICIARY]\n\n\n                                            _________________________________\n                                            [BENEFICIARY]\n\n\n                                            _________________________________\n                                            [BENEFICIARY]\n\n\n                                            _________________________________\n                                            [BENEFICIARY]\n\n As of December 15, 1997\n\nMr. Benno C. Schmidt, Jr.\n222 Riverside Drive\nNew York, NY 10025\n\nDear Benno:\n\n      This letter agreement (the 'Agreement') sets forth certain amendments to\nyour employment agreement with The Edison Project L.P. ('Edison' or the\n'Company') dated as of March 1, 1997 (the 'Initial Employment Agreement')\napproved by the Board of Directors (the 'Board') of The Edison Project Inc.\n('Edison Inc.'), the sole general partner of Edison, as of the date hereof.\nExcept as specifically provided for herein, all terms and provisions of your\nInitial Employment Agreement remain intact.\n\n      1. Position\/Responsibilities. This paragraph is revised in its entirety to\nread as follows:\n\n      You will be employed as Edison's Chairman and Chief Executive Officer\n('CEO') through June 30, 1998. On July 1, 1998 your title will become Chairman\nand Chief Education Officer. You will work out of the Company's headquarters in\nNew York City. Your responsibilities are as set out on Exhibit A to this\nAgreement.\n\n      2. Term. The end date of your employment agreement is changed from\nDecember 31, 1998 to June 30, 2000.\n\n      3. Stock Options. This entire paragraph is replaced in its entirety with\nthe following:\n\n      Stock Options. Simultaneous with the execution of this Agreement, the\n      parties hereto shall execute the amendment to the Stock Option Agreement\n      dated as of March 1, 1997 attached as Exhibit B. In addition, the parties\n      hereto shall execute the Tranche I Option Agreement attached as Exhibit C.\n\n      4. Loans. By execution of this Agreement, the parties hereby amend, as\nprovided in the Initial Employment Agreement, the Existing Loan and the\nTransition Loan.\n\n      5. Exhibit A. Exhibit A to the Initial Agreement is replaced in its\nentirety with Exhibit A as attached to this Agreement.\n\n      Entire Agreement. Together with the attached exhibits, this Agreement\nconstitutes the entire understanding of the parties with respect to the subject\nmatter hereof and supersedes all prior agreements with respect to the subject\nmatter. This agreement is governed by the substantive laws of the State of New\nYork.\n\nMr. Benno C. Schmidt, Jr.\nPage Two\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\nSincerely,\n\nTHE EDISON PROJECT L.P.\n\n\n      By:   The Edison Project Inc., general partner\n\n\n            By: \/s\/ Laura K. Eshbaugh\n                ----------------------------\n                Laura K. Eshbaugh, President\n\n\n\nACCEPTED AND AGREED:\n\n\n\n\/s\/ Benno C. Schmidt, Jr.\n-------------------------\nBenno C. Schmidt, Jr.\n\n                         EXHIBIT A: RESPONSIBILITIES\n\n\nAll of the following responsibilities are subject to the direction, authority\nand approval of Edison Inc.'s Board.\n\n*     Preside over Edison Inc.'s Board meetings\n\n*     Direct the Company's legislative and political efforts\n\n*     Co-supervise the Company's General Counsel with the Company's President\n      until June 30, 1998 and thereafter with the CEO\n\n*     Participate in all important educational decisions, with particular focus\n      on ensuring the quality of educational results\n\n*     Participate in the Company's strategic planning and educational design\n      matters\n\n*     Serve as co-spokesperson for the Company\n\n*     Support the Company's marketing efforts\n\n*     Assist in capital formation\n\n                                    EXHIBIT B\n\n                        AMENDMENT TO THE OPTION AGREEMENT\n                            DATED AS OF MARCH 1, 1997\n            BETWEEN BENNO C. SCHMIDT, JR. AND THE EDISON PROJECT INC.\n\n\n      The option agreement dated as of March 1, 1997 between Benno C. Schmidt,\nJr. ('Holder') and The Edison Project Inc. (the 'Company') (the 'Option\nAgreement') is hereby amended as described herein. Except as specifically\nprovided for herein, all terms and provisions of the Option Agreement remain\nintact.\n\n      Paragraph l(c)(ii) is amended to provide that any Performance Segment\nShares which have not been awarded as of the date hereof, which shares total\n420,598, shall henceforth vest on a time-vested basis as follows: 1) 123,711\nPerformance Segment Shares shall vest on June 30, 1998, 2) 123,711 Performance\nSegment Shares shall vest on June 30, 1999 and 3) the remaining 173,196\nPerformance Segment Shares shall vest on June 30, 2000, provided, however, that\n1) any such vesting shall cease as of the effective date of the termination of\nHolder's employment if Holder is terminated by the Company 'for cause' or if\nHolder terminates his employment without good reason and provided further that\n2) if Holder is no longer employed by the Company due to a) Holder's death, b)\nHolder's inability to perform his employment responsibilities for a period of\nninety (90) consecutive days, c) the termination of Holder's employment by the\nCompany without 'cause' or d) Holder's termination of his employment for 'good\nreason,' then upon such termination Holder shall be vested in a pro rata portion\nof the Performance Segment Shares which would otherwise vest on June 30 of the\nrelevant year (such proration based on a 365-day year), and vesting of the\nbalance of unvested Performance Segment Shares for such year and any succeeding\nyears shall cease. For purposes of the preceding sentence, 'for cause' and 'good\nreason' shall have the meanings set forth in Holder's employment agreement dated\nMarch 1, 1997 as amended as of December 15, 1997.\n\n      Entire Agreement. This agreement constitutes the entire understanding of\nthe parties with respect to the subject matter hereof and supersedes all prior\nagreements with respect to the subject matter. This agreement is governed by the\nsubstantive 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\nSincerely,\n\nTHE EDISON PROJECT L.P.\n\n      BY:   The Edison Project Inc., general partner\n\n            By: \/s\/ Laura K. Eshbaugh\n               -----------------------------\n                Laura K. Eshbaugh, President\n\nACCEPTED AND AGREED:\n\n\n\/s\/ Benno C. Schmidt, Jr.\n---------------------------\nBenno C. Schmidt, Jr.\n\nDate:\n     ----------------------\n\n                                       -2-\n\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-39619","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\/39619","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=39619"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=39619"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=39619"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=39619"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}