EXHIBIT (d)(9)
XXXXX XXXXXXX
Founder and Chief Executive Officer
July 31, 2003
Xx. Xxxxxxx X. Xxxxxxx
Edison Schools Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Dear Chip:
On October 1, 2002, Edison Schools Inc. (the "Company") and you entered into an
employment agreement (the Employment Agreement"). This letter agreement (the
"First Amendment to Employment Agreement") sets forth an amendment to the
Employment Agreement.
For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and you, intending to be legally bound, hereby
agree as follows:
1. The text under the heading Section 4(b)(ii) is hereby deleted in its
entirety and the following text inserted in lieu thereof:
"Fiscal Year 2004. Executive shall, subject to his continued
employment hereunder and Board approval, be eligible to
receive a bonus of $450,000 for fiscal year 2004, ending June
30, 2004. Any bonus due shall be approved by the Board based
upon the Board's evaluation of the following four factors: 1)
the Company's successful refinancing of its $55 million
accounts receivable facility; 2) the Company's successful
completion of $10 million in Gross Proceeds of Charter School
Notes from the list attached hereto as Exhibit A; 3) the
Company's achievement of an EBITDA for fiscal year 2004 that
is 15% higher than EBITDA for fiscal year 2003; and 4) the
Executive's provision of other services as specifically
requested by written resolution of the Board. In the Board's
evaluation, each of the first three factors will represent 30%
of the total bonus potential, and the fourth factor will
represent 10% of the total bonus potential. The bonus as
determined by the Board will be paid within 60 days of the end
of fiscal year 2004. For the purposes of the above clause,
EBITDA and Gross Proceeds of Charter School Notes are defined
in Section 7.
2. Section 4(b)(iii) shall be deleted.
3. The text in Section 4(c)(ii) is hereby deleted in its entirety and the
following text substituted in lieu thereof.
Fiscal Year 2004. Executive shall receive an additional grant
of one million shares of restricted stock for employment
services to be rendered between July 1, 2003 and June 30,
2004. This grant shall be effective as of July 8, 2003,
contingent upon the Executive's signing of this agreement. For
the purposes of determining the Executive's compensation with
respect to such grant, the grant shall be priced at the
closing trade price on July 8, 2003. Of the one million
shares, 440,000 shares will vest ratably over twelve months,
with the first monthly vesting to occur on July 31, 2003 and
the last monthly vesting to occur June 30, 2004, so long as
the Executive remains
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employed by the Company. The remaining 560,000 shares will
vest upon the Board's determination of the Executive's bonus
with respect to fiscal year 2004 and to the same extent as the
percentage of bonus so awarded under Section 4(b)(ii). Any
unvested shares of restricted stock remaining after
application of this Section shall be forfeited.
4. The introduction to "Section 10. Termination" is hereby amended to
delete the words "prior to June 30, 2004.
5. Section 10(a)(ii) is hereby deleted in its entirety, and the following
text substituted in lieu thereof:
"Fiscal Year 2004. Notwithstanding any other term or provision
of this Agreement, the Employer may terminate this Agreement
effective on or after October 31, 2003 and prior to a change
in control (as defined in Section 7(a)(ix) above, so long as
Executive has been given at least thirty days advance notice.
In the event of such termination, the Board shall as of the
termination date evaluate Executive's performance under the
bonus factors enumerated in Section 4(b)(ii) and determine (A)
what portion, if any, of the bonus for fiscal year 2004 to
award Executive and (B) what portion, if any, of the 560,000
shares of restricted stock with vesting based on the Board's
assessment of Executive's performance on the bonus factors to
vest. Vesting of the time-vested portion of Executive's
restricted stock grant shall cease as of the termination date.
Any bonus payment to Executive shall be made, at Employer's
option, in either a lump sum payment within thirty days of
termination or in substantially equal installments in
accordance with Employer's usual payroll practices over the
pay periods remaining in fiscal year 2004. Any unvested shares
of restricted stock remaining after application of this
Section shall be forfeited.
6. Section 10(f) is hereby amended to add the words "prior to June 30,
2003" in the section heading.
7. A new Section 10(g) is added as follows:
"(g) Change in Control During Fiscal Year 2004. If a change in
control (as defined in Section 7(a)(ix) above) occurs during
fiscal year 2004, then this Agreement shall terminate
automatically unless extended in writing by mutual agreement.
In conjunction with such termination, Employer shall (A)
accelerate the vesting of (i) 50% of the as yet unvested
portion of the 440,000 shares of restricted stock that were to
vest monthly during fiscal year 2004, (ii) a pro rata portion,
based solely on the passage of time, of the 560,000 shares of
restricted stock that otherwise were to vest with respect to
fiscal year 2004 based on the Board's assessment of the
factors in 4(b)(ii) and (iii) 50% of the unvested portion of
the 560,000 shares of restricted stock remaining after vesting
of the pro rata portion as determined in (ii) above, (B) pay
to Executive, at Employer's option, in either a lump sum
payment within thirty days of termination or in substantially
equal installments in accordance with Employer's usual payroll
practices over the pay periods remaining in fiscal year 2004,
the sum of (i) 50% of Executive's remaining salary for fiscal
year 2004 and (ii) the total of (A) a pro rata portion, based
solely on the passage of time, of the Executive's bonus
potential for fiscal year 2004, and (B) 50% of Executive's
bonus potential remaining after calculation of the pro rata
bonus portion. Any unvested shares of restricted stock
remaining after application of this Section shall be
forfeited.
8. Clause (b) of Section 11 is hereby deleted and replaced with the
following:
(b) any payment owing to the Executive under Section 10(a)(i),
10(a)(ii), or 10(g), as the case may be,
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9. The Employment Agreement, as amended by this First Amendment to the
Employment Agreement, is hereby confirmed to be in full force and
effect.
10. This First Amendment to the Employment Agreement constitutes the entire
understanding of the parties with respect to the subject matter hereof.
Please sign below to evidence your agreement to the foregoing.
Sincerely,
Edison Schools Inc.
By: /s/ X. Xxxxxxxxxxx Xxxxxxx
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X. Xxxxxxxxxxx Xxxxxxx
ACCEPTED AND AGREED:
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
