Exhibit 10.1

 

EXECUTION VERSION

 

SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Between
K12 INC. and NATHANIEL A. DAVIS

 

THIS AGREEMENT is entered into as of January 27, 2016, (the “Execution Date”),
by and between K12 Inc., a Delaware corporation having a place of business at
2300 Corporate Park Drive, Herndon, Virginia 20171 (alternatively, “K12” or the
“Corporation”) and Nathaniel A. Davis (“EMPLOYEE”) a resident of the
Commonwealth of Virginia (K12 and EMPLOYEE are referred to collectively herein
as the “Parties”).  This Agreement will become effective upon and subject to the
occurrence of the Effective Date (as defined below).

 

WHEREAS, K12 is engaged in the business of providing children access to
exceptional curriculum and books that enable them to maximize success in life
regardless of geography, financial, or demographic circumstances;

 

WHEREAS, EMPLOYEE serves as the Chairman of the Board of Directors of K12 (the
“Board”) and its Chief Executive Officer;

 

WHEREAS, effective as of January 7, 2013 (the “Original Effective Date”), K12
and EMPLOYEE previously entered into that certain Employment Agreement (as
amended, the “Initial Agreement”), pursuant to which EMPLOYEE served as K12’s
Executive Chairman;

 

WHEREAS, effective as of January 1, 2014, EMPLOYEE was appointed to the position
of Chief Executive Officer of K12 and has served in such position pursuant to an
Amended and Restated Employment Agreement between EMPLOYEE and K12, dated as of
March 10, 2014 (the “Prior Agreement”), which Prior Agreement superseded the
Initial Agreement;

 

WHEREAS, with the participation and consent of the EMPLOYEE, the Board has
identified a new Chief Executive Officer (the “New CEO”) who will commence
employment with K12 in such capacity on the Effective Date (as defined below);
and

 

WHEREAS, K12 and EMPLOYEE desire that EMPLOYEE continue to serve as an employee
of K12 in the position of Executive Chairman and are entering into this
Agreement to set forth the terms and conditions of EMPLOYEE’s employment with
K12 and to supersede and replace, as of the Effective Date, the Prior Agreement
in all respects;

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements of the Parties contained herein, the Parties hereby
agree as follows:

 

ARTICLE I.
DEFINITIONS

 

For purposes of this Agreement, the terms defined in this Article 1 shall have
the respective meanings set forth below:

 

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1.1                               “Affiliate” shall mean any corporation,
partnership or other entity controlling, controlled by, or under common control
with K12; provided, however, that no entity that holds capital stock of K12
and/or with board representation rights incidental to such holdings shall, as a
result of such holding of capital stock or board representation rights, be
deemed to be an Affiliate of K12 for purposes of this Agreement. For purposes of
this definition, “control” (including the terms “controlling” and “controlled”)
means the right to direct or cause the direction of the management and policies
of an entity, whether through the ownership of securities, by contract, or
otherwise.

 

1.2                               “Confidential Information” shall mean all
information relating to the business of K12 known to EMPLOYEE or learned by
EMPLOYEE in connection with and during the term of his employment or any prior
service with K12 and its Affiliates which is not generally known to the public,
including any and all general and specific knowledge, experience, information
and data, technical or non-technical, and whether or not patentable, including
without limitation, processes, skills, information, know-how, trade secrets,
data, designs, formulae, algorithms, specifications, samples, methods,
techniques, compilations, computer programs, devices, concepts, inventions,
developments, discoveries, improvements, and commercial or financial
information, in any form, including without limitation, oral, written, graphic,
demonstrative, machine recognizable, specimen or sample form.

 

1.3                               “Conflicting Product or Service” shall mean
any product or service of any person or organization other than K12, in
existence or under development, which resembles or competes with a product or
service of K12.

 

1.4                               “Conflicting Organization” shall mean any
person or organization engaged in research on or development, production,
marketing, or selling of a “Conflicting Product or Service.”

 

1.5                               “Effective Date” shall mean the date of
commencement of employment of the New CEO with K12, which date is expected to be
not later than February 15, 2016.

 

ARTICLE II.
TERM OF AGREEMENT — EMPLOYMENT

 

2.1                               Term. Subject to the provisions of
Section 2.3(b) and Article 4 hereof, this Agreement shall be in effect for a
term commencing on Effective Date and ending on the two (2) year anniversary of
the Effective Date (the “Initial Term”), subject to earlier termination as
provided in Section 4.  This Agreement shall automatically renew for additional
twelve (12) month periods unless no later than sixty (60) days prior to the end
of the Initial Term or any applicable 12- month renewal period, either party
gives written notice of non-renewal (“Notice of Non-Renewal”) to the other, in
which case EMPLOYEE’s employment shall terminate at the end of the Initial Term
or 12-month renewal period, as applicable, subject to earlier termination as
provided in Section 4.  The period during which EMPLOYEE remains in employment
with K12 pursuant to the terms of this Agreement is referred to herein as the
“Term.”

 

2.2                               Employment. As of the Effective Date, K12
shall employ EMPLOYEE as its Executive Chairman (and EMPLOYEE will no longer
serve as K12’s Chief Executive Officer) and EMPLOYEE shall accept such
employment by K12, on and subject to the terms and

 

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conditions set forth herein. EMPLOYEE represents and warrants that neither the
execution and delivery nor performance by him of this Agreement will violate any
agreement, order, judgment or decree to which he is a party or by which he is
bound. In accepting the position of Executive Chairman, this Agreement
specifically contemplates that EMPLOYEE shall not resign as a member of the
current Board, but shall remain a member thereof, so long as he remains willing
and able to serve on the Board and the requisite majority of the Corporation’s
stockholders re-elect him to serve in that capacity as provided under the
Corporation’s Certificate of Incorporation and By-Laws as then in effect.

 

2.3                               Duties.

 

(a)                                 During the Term, as Executive Chairman of
K12, EMPLOYEE shall have duties and responsibilities related to leadership of
the Board, building relations with shareholders, customers, industry policy
makers, and other corporate constituencies, building corporate strategy, and
achieving the financial and academic performance targets and other corporate
objectives approved by the Board. While acting as Executive Chairman, EMPLOYEE
shall continue to serve as Chairman of the Board.

 

(b)                                 EMPLOYEE’s employment with K12 shall be
full-time and exclusive. During the Term, excepting only those personal services
EMPLOYEE performs as a member of the Board, EMPLOYEE shall devote the whole of
EMPLOYEE’s business time, attention, skill, and ability to the faithful and
diligent fulfillment of EMPLOYEE’s duties hereunder. EMPLOYEE acknowledges and
agrees that EMPLOYEE may be required, without additional compensation, to
perform services for any Affiliates, and to accept such office or position with
any Affiliate as the Board may require, including, but not limited to, service
as an officer or director thereof, provided however, that such services, and
such office or position, shall be consistent with EMPLOYEE’s position as
Executive Chairman of K12. So long as EMPLOYEE serves as an employee of K12
covered by this Agreement, EMPLOYEE shall comply with all applicable policies of
K12 and all policies of Affiliates that are consistent therewith.

 

(c)                                  During the term of employment, it shall not
be a violation of Section 2.3(a) or 2.3(b) of this Agreement for EMPLOYEE to, in
all cases subject to Articles 5 and 6 hereof, (i) serve as an outside director
on the board of directors of no more than three companies; (ii) serve as an
officer or director of a cooperative housing, or civic or charitable
organization or committee; (iii) deliver lectures, fulfill speaking engagements,
or teach at university level or equivalent educational institutions; or
(iv) manage personal passive investments, so long as such activities
(individually or collectively) do not conflict or materially interfere with the
performance of EMPLOYEE’s duties hereunder.

 

2.4                               Indemnification. During and after the term of
this Agreement, K12 shall provide EMPLOYEE with both Side A and Side B
directors’ and officers’ insurance, and shall indemnify EMPLOYEE and his legal
representatives to the fullest extent permitted by the laws of the State of
Delaware and the By-Laws of K12 as in effect on the date hereof, against all
damages, costs, expenses and other liabilities reasonably incurred or sustained
by EMPLOYEE or his legal representatives in connection with any suit, action or
proceeding to which EMPLOYEE or his legal representatives may be made a party by
reason of EMPLOYEE being or having been a director or officer of K12 or any
Affiliate, or having served in any other capacity or taken any

 

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other action purportedly on behalf of or at the request of K12 or any Affiliate.
During and after the term of this Agreement and without the need for further
approval by the Board of Directors of K12 or any Affiliate, K12 will promptly
advance or pay any and all amounts for costs or expenses (including but not
limited to legal fees and expenses reasonably incurred by counsel of EMPLOYEE’s
choice retained by EMPLOYEE) for which EMPLOYEE may claim K12 is obligated to
indemnify him.

 

EMPLOYEE undertakes to repay such amounts if it is ultimately determined that he
is not entitled to be indemnified by K12 as provided in this Section 2.4.

 

ARTICLE III.
COMPENSATION

 

3.1                               Base Salary.

 

(a)                                 Subject to Sections 2.3(b) and
3.1(b) hereof, for the services EMPLOYEE shall render pursuant to this
Agreement, K12 shall pay EMPLOYEE during the Term an annual base salary (“Base
Salary”) of at least Four Hundred Thousand Dollars ($400,000). Such rate of Base
Salary will be effective as of February 15, 2016. Subject to Sections 2.3(b) and
3.1(b) hereof, such Base Salary shall not be reduced but, at the discretion of
the Board, may be increased from time to time. Base Salary shall be payable in
accordance with K12’s then-prevailing executive payroll practices. The term
“Base Salary” as used herein shall include any adjustment made thereto in
accordance with the terms of this Agreement.

 

3.2                               Annual Performance Bonus.

 

During the Term, EMPLOYEE will be eligible to receive a bonus (the “Performance
Bonus”), based on objective criteria the Board shall establish after
consultation with EMPLOYEE at the beginning of each fiscal year of the Company
(each a “Fiscal Year”), but no later than 90 days after the start of such Fiscal
Year. As soon as practicable following the close of each Fiscal Year for which a
Performance Bonus is to be paid hereunder, the Board shall authorize, certify
and declare the amount of such Performance Bonus based upon K12’s and EMPLOYEE’s
performance, as measured against the objective criteria the Board established
for EMPLOYEE for such Fiscal Year. The target for such Performance Bonus shall
not be less than 150% of the Base Salary and not more than 300% of the Base
Salary then payable to EMPLOYEE for the Fiscal Year covered by such Performance
Bonus. For the Fiscal Year ending June 30, 2016, EMPLOYEE’s Performance Bonus
will be calculated reflecting a blended base salary rate, taking into account
his services at Chief Executive Officer (at a base salary of $735,000) during
such Fiscal Year prior to the Effective Date and his services as Executive
Chairman (at a Base Salary of $300,000) during such Fiscal Year after the
Effective Date, based on the relative periods of time during which he served in
each position. Except as expressly set forth in this Section 3.2 or Article 4,
EMPLOYEE’s right to receive a Performance Bonus for any Fiscal Year shall be
subject to his continued rendering of services to K12 either as an employee or
member of the Board through the last day of the applicable Fiscal Year, provided
that in the event the EMPLOYEE ceases to be an employee of K12 during any
applicable Fiscal Year, but remains as a member of the Board through the last
day of the applicable Fiscal Year, EMPLOYEE’s Performance Bonus for such Fiscal
Year shall be pro-rated to reflect the number

 

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of days during which he served as an employee for such Fiscal Year. Each
Performance Bonus found to be due and payable hereunder shall be calculated,
authorized and paid within such time so as to allow such bonus to qualify as a
“short-term deferral” within the meaning of Treasury Regulation
Section 1.409A-1(b)(4).

 

3.3                               Participation in Benefit Plans. During the
Term, subject to any generally-applicable eligibility requirements but also to
the specific terms of this Agreement, EMPLOYEE shall be eligible throughout the
term of this Agreement to participate in any pension, thrift, profit-sharing,
group term life or long- or short-term disability insurance, medical or dental,
or other employee benefit plan, program or policy that K12 sponsors and
maintains at any time during the term of this Agreement (other than plans
providing severance benefits, which are covered exclusively by this Agreement,
except to the extent any such plan may, following the Effective Date, expressly
provide for EMPLOYEE’s participation therein) for the benefit of its employees,
under the same terms and conditions as the Corporation’s other executive
employees.  EMPLOYEE shall be generally entitled to paid vacation, paid and
unpaid sick leave, and holidays under the same terms and conditions as applied
to other K12 executive employees; however, EMPLOYEE shall be entitled to five
(5) weeks of paid vacation, with the ability to carry over and use a maximum of
two (2) weeks of such vacation during the immediately following ninety (90) day
period.

 

3.4                               Expenses. During the Term, K12 shall reimburse
EMPLOYEE for all reasonable, ordinary and necessary business expenses actually
incurred by EMPLOYEE in connection with the performance of his duties hereunder,
including ordinary and necessary expenses incurred by EMPLOYEE in connection
with travel on K12 business. All expenses shall be approved by K12 in accordance
with and subject to the terms and conditions of K12’s then-prevailing expense
policy. EMPLOYEE shall provide to K12 any and all statements, bills, or receipts
evidencing the expenses for which EMPLOYEE seeks reimbursement, and such related
information or materials as K12 may from time to time reasonably require.
EMPLOYEE shall account to K12 for any expenses that are eligible for
reimbursement under this Section 3.4 in accordance with K12 policy.  EMPLOYEE
shall be entitled to reimbursement of his reasonable attorneys’ fees incurred in
connection with the negotiation of this agreement in an amount not to exceed
$20,000.  Such reimbursement shall be made promptly upon submission of
appropriate documentation of such expenses, but not later than December 31,
2016.

 

3.5                               Employment and Supplies. During the Term, K12
shall provide EMPLOYEE with administrative support relating to the performance
of EMPLOYEE’s duties of the same type and at least the same extent as is
provided to other executive employees. K12 shall acquire and/or provide to
EMPLOYEE for his business use: a multimedia portable computer and subscriptions
to various trade publications and various trade books. Such items shall remain
the exclusive property of K12, are to be used solely for K12’s benefit, and
shall be returned promptly to K12 upon request at the termination of EMPLOYEE’s
employment for whatever reason.

 

3.6                               Withholding. Anything in this Agreement to the
contrary notwithstanding, all payments required to be made by K12 hereunder to
EMPLOYEE or EMPLOYEE’s estate or designated beneficiaries in connection with
EMPLOYEE’s employment hereunder shall be

 

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subject to all applicable tax and other withholding, as K12 may reasonably
determine pursuant to applicable laws and regulations.

 

3.7                               Equity Compensation Grants. Subject to any
generally applicable terms and conditions set forth in the Corporation’s
shareholder-approved Equity Incentive Award Plan, as currently amended and in
effect (the “EIA Plan”), EMPLOYEE shall be granted, and K12 shall make equity
compensation awards to EMPLOYEE under the following terms and conditions:

 

(a)                                 Stock Price RSA Opportunity. For a period of
two years following the Effective Date, in addition to any regular annual or
other periodic equity incentive awards to be granted to EMPLOYEE (and in
addition to all previously granted awards), the EMPLOYEE shall have an
opportunity to earn awards of restricted stock to be granted under the EIA Plan
based on K12’s Average Stock Price (as defined below) achieving the levels as
set forth in this Section 3.7(a), provided in each case that EMPLOYEE is
employed by K12 as of the date such Average Stock Price is achieved:

 

(i)                                     For purposes of this Section 2(c)(i)(C),
“Average Stock Price” means the average closing price of K12’s common stock
determined over any period of 30 consecutive days;

 

(ii)                                  As of the first date upon which the
Average Stock Price equals or exceeds $13.00, the EMPLOYEE shall receive a
restricted stock award of a number of shares having a Fair Market Value at the
time of grant of $500,000 (38,462 shares);

 

(iii)                               As of the first date upon which the Average
Stock Price equals or exceeds $16.00, the EMPLOYEE shall receive a restricted
stock award of a number of shares having a Fair Market Value at the time of
grant of $1,500,000 (93,750 shares); and

 

(iv)                              As of the first date upon which the Average
Stock Price equals or exceeds $19.00, the EMPLOYEE shall receive a restricted
stock award of a number of shares having a Fair Market Value at the time of
grant of $2,500,000 (131,579 shares).

 

EMPLOYEE shall also earn an award described in clauses (ii), (iii) or (iv) if
EMPLOYEE’s employment is terminated by K12 without Cause, or by EMPLOYEE for
Good Reason, and the applicable Average Stock Price threshold is achieved within
30 days after the date of such termination. For the avoidance of doubt, the
award opportunities in clauses (ii), (iii) and (iv) above are cumulative such
that the EMPLOYEE shall have a total opportunity to earn up to $4,500,000
(263,791 shares) in restricted stock value (as of the applicable grant dates)
pursuant to this Section 3.7(a).  The Average Stock Price thresholds stated
above will be automatically adjusted to account for any stock dividend, stock
split or other similar non-reciprocal transaction. With respect to any award of
restricted stock granted under this Section 3.7(a) (each and any such award a
“Stock Price RSA Grant”), 50% of the shares subject to such grant shall be
immediately vested on the date the applicable Stock Price threshold is achieved
and the remaining 50% of the total number of restricted shares in such Stock
Price RSA Grant shall vest ratably in semi-annual intervals until the two year
anniversary of the Effective Date, such that all restricted shares that are
earned under this Section 2(c)(i)(C) and granted as part of a Stock Price RSA
Grant shall be 100% vested as of the two year anniversary of the Effective
Date.  For the avoidance of doubt, if an applicable Stock Price threshold is not
achieved prior to the two year anniversary of the Effective Date, no Stock Price
RSA Grant will be made in respect of such Stock Price threshold.  In the event
of a Change in Control prior to the two year anniversary of the Effective Date,
if a Stock Price RSA Grant for a particular Stock Price threshold has not yet
been made, the shares of restricted stock for such Stock Price threshold will be
considered earned and will be granted immediately prior to the occurrence of the
Change in Control if the stock price paid or implied in such transaction equals
or exceeds the

 

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corresponding dollar threshold.  Any such shares that are granted immediately
prior to a Change in Control will be 100% vested upon grant.  No further Stock
Price RSA Grant will be made under this Section 2(c)(i)(C) following the date of
such Change in Control.

 

(b)                                 Ongoing Equity Incentive Awards.   During
the Term, EMPLOYEE shall also be eligible to participate in and will receive
additional awards under K12’s equity incentive award plans and programs as in
effect from time to time at a level and on terms commensurate with his position
as Executive Chairman of K12 (“Ongoing Equity Awards”).  Ongoing Equity Awards
are currently granted on an annual basis at or near the beginning of each fiscal
year of K12, in each case as determined by the Board or the Compensation
Committee of the Board, and are expected to be granted in the form of
performance-based restricted stock, restricted stock units or similar awards, in
each case as determined by the Board or the Compensation Committee of the Board
in their discretion from time to time.  Prior to the Effective Date, the
EMPLOYEE received a regular annual award for Fiscal Year 2016 (the “FY2016
Award”).  This Agreement is not intended to impact the FY2016 Award or any other
previously granted equity compensation awards, including the awards that were
granted pursuant to the terms of the Initial Agreement or the Prior Agreement
(such awards, together with the FY2016 Award are referred to herein as the
“Prior Equity Awards”).  Commencing with Fiscal Year 2017, EMPLOYEE’s initial
annual target award level is $2,000,000.  For the avoidance of doubt, all equity
compensation awards are subject to approval by the Board on an annual basis or
otherwise at the time of grant.

 

(c)                                  S-8 Registration; 409A.  K12 covenants and
acknowledges, as applicable, that: (i) to the extent permitted by law and for so
long as K12 is subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended, all shares of K12 common stock issued to EMPLOYEE in
respect of awards granted hereunder shall be registered under the Securities Act
of 1933, as amended, on an effective Form S-8 registration statement; and
(ii) it intends that all compensation paid or payable to EMPLOYEE shall comply
with, or be exempt from, the provisions of Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”) and related rulings and regulations
(“Section 409A”), it being understood that nothing in this Agreement is intended
to provide EMPLOYEE with any gross-up or indemnification in respect of any taxes
or penalties imposed as a result of Section 409A.

 

(d)                                 Special Vesting Provisions For Equity
Compensation Awards. Notwithstanding the preceding provisions of this
Section 3.7 to the contrary, in the event EMPLOYEE separates from employment
with K12 either due to a termination of EMPLOYEE’s employment by K12 Without
Cause (which does not include termination of EMPLOYEE by reason of K12 giving
Notice of Non-Renewal pursuant to Section 2.1) or EMPLOYEE’s resignation of his
employment for Good Reason as specifically described in Section 4.5, the
following special vesting provisions shall apply to the EMPLOYEE’s equity
compensation awards: (i) if such separation does not occur within two years
following the occurrence of a “Change in Control” (as defined in the EIA Plan)
all of the then-non-vested awards and grants that would have vested at any time
during the two year period following the separation shall immediately and
automatically vest, provided that, unless a provision more favorable to EMPLOYEE
is included in an applicable award agreement, any such awards that are subject
to performance-based vesting conditions shall only be payable subject to the
attainment of the performance measures for the applicable performance period as
provided under the terms of the applicable award agreement; and (ii) if such
separation occurs within two years following the occurrence of a “Change in
Control” (as defined in the EIA Plan), all of the non-vested awards and grants
that are then outstanding shall immediately and automatically vest, provided
that (A) any such awards that are subject to performance-based vesting
conditions shall

 

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remain subject to the attainment of the applicable performance metrics to the
same extent as such performance metrics continue to apply following the Change
in Control for K12’s other executive officers, and (B) the Stock Price RSA
Grants which have not theretofore been earned shall be granted and become vested
only if the Change in Control conditions specified in Section 3.7(a) are
satisfied.

 

ARTICLE IV.
TERMINATION

 

4.1                               General.  EMPLOYEE’s employment by K12 shall
terminate in accordance with the provisions of this Article 4 upon EMPLOYEE’s
death or Disability, upon EMPLOYEE’s discharge by K12 with or without Cause,
upon EMPLOYEE’s resignation with or without Good Reason, or upon the expiration
of the term of this Agreement without extension or renewal. Upon termination of
EMPLOYEE’s rendering of services to K12 either as an employee or member of the
Board for any reason, EMPLOYEE will promptly deliver to K12 all correspondence,
drawings, manuals, letters, notes, notebooks, reports, programs, plans,
proposals, financial documents, or any other documents or property containing
Confidential Information.

 

4.2                               Death. If EMPLOYEE’s employment terminates
because of his death, the date of termination shall be the date of death.

 

(a)                                 If EMPLOYEE’s employment terminates because
of his death, K12 shall continue to pay EMPLOYEE’s then-current Base Salary
through the end of the third consecutive calendar month following EMPLOYEE’s
death, and a pro-rated Performance Bonus based on the Performance Bonus most
recently paid or becoming payable to EMPLOYEE. Such payments shall be made to
EMPLOYEE’s legal representatives, estate, beneficiaries or heirs, in accordance
with K12’s then-prevailing executive payroll practices, subject to any and all
then-applicable state and federal laws. In addition, K12 shall continue to pay
and provide for any health, medical, dental, or vision benefits then being
provided to the plan-eligible dependents of EMPLOYEE for a period of one year,
provided that in lieu of such benefit continuation, K12 in its discretion may
pay EMPLOYEE’s legal representatives, estate, beneficiaries or heirs an amount
equal to the out-of-pocket cost EMPLOYEE’s covered dependents otherwise would
incur to obtain continuation coverage for such one year period pursuant to
COBRA, which amount shall be paid in a single lump sum to EMPLOYEE’s legal
representatives, estate, beneficiaries or heirs within ninety (90) calendar days
following the date EMPLOYEE’s employment by K12 terminates.

 

(b)                                 If EMPLOYEE’s employment terminates because
of his death, all of EMPLOYEE’s non-vested equity compensation awards that would
have vested at any time during the one year period following the date of
EMPLOYEE’s death shall immediately and automatically vest, provided that, unless
a provision more favorable to EMPLOYEE is included in an applicable award
agreement, any such awards that are subject to performance-based vesting
conditions shall only be payable subject to the attainment of the performance
measures for the applicable performance period as provided under the terms of
the applicable award agreement. EMPLOYEE’s legal representative, estate,
beneficiaries and heirs shall thereupon be entitled to exercise any of
EMPLOYEE’s then-vested options within the one (1) year period immediately
following such

 

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EMPLOYEE’s date of death, based on their respective interests in such options
and restricted shares.

 

4.3                               Disability. For purposes of this Agreement,
EMPLOYEE shall be deemed to have experienced a “Disability” at such time as
EMPLOYEE experiences a disability within the meaning of Section 409A.

 

(a)                                 Upon EMPLOYEE’s Disability, the payment of
benefits under K12’s short-term and long-term disability insurance plans, if
any, shall offset and reduce K12’s obligation to pay Base Salary and a
Performance Bonus under Section 3.1 and 3.2, where EMPLOYEE can be shown to have
received such payments.

 

(b)                                 Subject to any applicable legal
requirements, in the event EMPLOYEE shall remain under a Disability for a period
exceeding one hundred twenty (120) consecutive days in any twelve (12) month
period, K12 shall have the right to terminate EMPLOYEE’s employment hereunder.
K12 shall effect such termination by giving EMPLOYEE a notice specifying the
effective date of such termination, which date shall not be earlier than the
last day of the calendar month following the giving of notice.

 

(c)                                  If K12 terminates EMPLOYEE’s employment
because of Disability, K12 shall continue to pay EMPLOYEE’s then-current Base
Salary through the end of the third consecutive calendar month following
EMPLOYEE’s Disability, and a pro-rated Performance Bonus based on the
Performance Bonus most recently paid or becoming payable to EMPLOYEE. Such
payments shall be made to EMPLOYEE, or in the event of employee’s subsequent
death, EMPLOYEE’s legal representatives, estate, beneficiaries or heirs, in
accordance with K12’s then-prevailing executive payroll practices, subject to
any and all then-applicable state and federal laws. In addition, K12 shall
continue to pay and provide for any health, medical, dental or vision benefits
then being provided to EMPLOYEE and the plan-eligible dependents of EMPLOYEE for
a period of one year, provided that in lieu of such benefit continuation, K12 in
its discretion may pay EMPLOYEE an amount equal to the out-of-pocket cost
EMPLOYEE’s covered dependents otherwise would incur to obtain continuation
coverage for such one year period pursuant to COBRA, which amount shall be paid
in a single lump sum to EMPLOYEE within ninety (90) calendar days following the
date EMPLOYEE’s employment by K12 terminates.

 

(d)                                 If K12 terminates EMPLOYEE’s employment
because of Disability, all of EMPLOYEE’s non-vested equity compensation awards
that would have vested at any time during the one year period following the date
of such termination shall immediately and automatically vest, provided that,
unless a provision more favorable to EMPLOYEE is included in an applicable award
agreement, any such awards that are subject to performance-based vesting
conditions shall only be payable subject to the attainment of the performance
measures for the applicable performance period as provided under the terms of
the applicable award agreement. EMPLOYEE (or in the event of EMPLOYEE’s death,
his legal representative, estate, beneficiaries or heirs, based on their
respective interests) shall thereupon be entitled to exercise any of EMPLOYEE’s
then-vested options within the one (1)-year period immediately following such
EMPLOYEE’s date of termination.

 

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4.4                               Discharge for Cause or Voluntary Resignation.

 

(a)                                 For purposes of this Agreement, Cause shall
mean a good faith finding by the Board of Directors of: (i) EMPLOYEE’s willful
or gross misconduct, willful or gross negligence in the performance of his
duties for K12, intentional or habitual neglect of his duties for K12, or
material breach or violation by Employee of this Agreement or any other material
agreement between EMPLOYEE and K12 or any material policy of K12 (such as the
K12 Code of Business Conduct and Ethics or any successor policy), provided that
K12 shall have given EMPLOYEE notice specifying the conduct it believes to fall
within this sentence and EMPLOYEE shall have failed to remedy such conduct
within ten (10) days thereafter; or (ii) EMPLOYEE’s theft or misappropriation of
funds of K12 or conviction of a felony. K12 shall effectuate a discharge for
Cause by giving EMPLOYEE a notice specifying the effective date of such
termination.

 

(b)                                 For purposes of this Agreement, voluntary
resignation means the EMPLOYEE’s resignation of his employment hereunder without
Good Reason (as defined in Section 4.5(b) hereof). EMPLOYEE shall effect a
termination by voluntary resignation by giving K12 a notice specifying the
effective date of such termination, which date shall not be earlier than thirty
(30) days after the giving of notice.

 

(c)                                  In the event EMPLOYEE is discharged by K12
for Cause or EMPLOYEE terminates his K12 employment by voluntary resignation:

 

(i)                                     K12 shall pay or provide to EMPLOYEE, in
accordance with K12’s then-prevailing executive payroll practices, all Base
Salary, vested benefits and other payments to which EMPLOYEE and his
plan-eligible dependents (if any) are entitled hereunder through the effective
date of termination.

 

(ii)                                  EMPLOYEE’s non-vested equity compensation
awards shall be immediately forfeited. EMPLOYEE shall be entitled to exercise
any of his vested options within the one hundred eighty (180) consecutive day
period immediately following the termination of EMPLOYEE’s employment or the
EMPLOYEE’s removal from the Board, whichever is later, provided, however, that
if K12 provides EMPLOYEE with a notice of termination for Cause, EMPLOYEE shall
be permitted to exercise any vested options for a period not to exceed ninety
(90) days after the effective date of a termination for Cause. In all cases, the
foregoing shall be subject to earlier termination of the options upon the
regular expiration date of the options or upon the occurrence of a Change in
Control or other corporate event or extraordinary transaction as provided in the
EIA Plan or its successor.

 

(iii)                               Except as set forth in this Section 4.4, K12
shall have no further obligation to EMPLOYEE (or EMPLOYEE’s legal
representative, estate, beneficiaries or heirs) for any compensation, benefits
or other payments hereunder, provided that nothing herein shall be deemed to
affect EMPLOYEE’s entitlement, if any, to any vested pension or similar benefits
to which he may be or may become entitled.

 

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4.5                               Discharge Without Cause or Resignation for
Good Reason.

 

(a)                                 For the purposes of this Agreement,
discharge without Cause is any termination by K12 of EMPLOYEE’s employment
hereunder without Cause, as defined in Section 4.4(a) hereof and does not
include the termination of EMPLOYEE by reason of K12 giving Notice of
Non-Renewal pursuant to Section 2.1. K12 shall effectuate a discharge without
Cause by giving EMPLOYEE a notice specifying the effective date of such
discharge, which date shall not be earlier than thirty (30) days after the
giving of notice.

 

For the purposes of this Agreement, Good Reason shall mean: (i) a material
diminution of EMPLOYEE’s authority, duties or responsibilities; or (ii) a
material change in the geographic location at which EMPLOYEE must perform his
personal services for K12 (at present, the Greater Washington, D.C. area); or
(iii) a material breach of this Agreement by K12, so long as in each case
EMPLOYEE shall have given K12 notice of the conduct he believes constituted the
material diminution, change or breach within ninety (90) days of its occurrence
and K12 shall have failed to remedy such diminution, change or breach within
thirty (30) days thereafter. EMPLOYEE shall effect an employment termination by
resignation for Good Reason by giving K12 a notice specifying the effective date
of such employment termination.  EMPLOYEE agrees that neither his no longer
serving as K12’s Chief Executive Officer as of the Effective Date nor any of the
changes to his compensation or other terms and conditions of employment as
provided for under this Agreement shall constitute Good Reason hereunder.

 

(b)                                 In the event EMPLOYEE is discharged by K12
Without Cause or EMPLOYEE terminates his K12 employment by resigning for Good
Reason, and subject to EMPLOYEE’s execution within 30 days following the
EMPLOYEE’s termination of employment, and non-revocation of a general release of
all claims against K12 and its affiliates in the form attached hereto as
Exhibit A (as such form may be revised to reflect changes in applicable law), no
later than 8 days following the EMPLOYEE’s termination of employment (a
“Release”):

 

(i)                                     K12 shall pay EMPLOYEE an amount equal
to three (3) times EMPLOYEE’s then-current Base Salary, determined as of his
date of discharge or termination. Such amount shall be paid in a single sum, net
of any applicable withholding, within ninety (90) calendar days following the
date EMPLOYEE’s employment by K12 terminates, or if earlier, on the
March 15th next following the close of the taxable year in which EMPLOYEE’s
employment by K12 terminates. In addition, EMPLOYEE shall remain eligible to
receive a Performance Bonus for the Fiscal Year in which such termination
occurs, subject to the attainment of the performance criteria previously
established for such Fiscal Year by the Compensation Committee, which amount
shall be pro-rated to reflect the partial year of service and shall be paid at
the earlier of the time the amount and entitlement to the performance bonus can
be determined or the performance bonuses are paid to other K12 executives and in
accordance with the payment timing provisions of Section 3.2. K12 also shall
continue to provide the health, medical, dental and vision benefits then being
provided or made available to EMPLOYEE and his plan-eligible dependents for a
period of one (1) year following the date EMPLOYEE’s employment by K12
terminates, provided that in lieu of such benefit continuation, K12 in its
discretion may pay EMPLOYEE an amount equal to the out-of-pocket cost EMPLOYEE
and his covered dependents otherwise would incur to obtain continuation coverage
for such one year period pursuant to COBRA, which amount shall be paid in a
single lump sum to EMPLOYEE within ninety (90) calendar

 

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days following the date EMPLOYEE’s employment by K12 terminates. In addition,
vesting shall occur as set forth in Section 3.7(i) hereof. In no event shall
amounts payable in one taxable year affect amounts payable in any other taxable
year.

 

(ii)                                  To the extent the amount payable to
EMPLOYEE pursuant to this Section 4.5(b) (other than in connection with and as a
result of a Change in Control) exceeds the maximum amount permitted under Income
Tax Regulations Section 1.409A-1(b)(9)(iii) (pertaining to certain separation
pay plans), determined as of the first of the year in which EMPLOYEE separates
from service, such excess amount shall be paid as a separate single sum, but
shall be treated as subject to the requirements of Section 409A and shall be
subjected to the payment protocols set forth in Section 4.7 hereof.

 

(c)                                  In the event EMPLOYEE is discharged by K12
without Cause or EMPLOYEE terminates his K12 employment by resigning for Good
Reason, and in addition to the special vesting provided pursuant to
Section 3.7(i) hereof, EMPLOYEE shall be entitled to exercise any of his vested
options through the earlier of three hundred sixty five (365)-consecutive day
period immediately following such discharge or termination or the original
expiration date of such options and subject to earlier termination in the event
of a Change in Control or other corporate event or extraordinary transaction as
provided in the EIA Plan or its successor.

 

4.6                               Expiration of Contract Term.  In the event
that K12 elects not to renew the Term of this Agreement by giving Notice of
Non-Renewal pursuant to Section 2.1 and EMPLOYEE’s employment by K12 therefore
terminates at the expiration of the Term of this Agreement, the severance
payments under Section 4.5 and the special vesting provisions under
Section 3.7(d) shall not apply, provided that if in such event EMPLOYEE is asked
to leave the Board, all options granted to EMPLOYEE shall immediately vest (to
the extent not already vested), and EMPLOYEE shall be entitled to exercise any
of his vested options within the three hundred sixty five (365)-consecutive day
period immediately following the date of such employment termination.  In
addition thereto, any restricted shares or other equity awards scheduled to vest
at the close of the final calendar quarter coincident with or immediately
preceding the expiration of the Term shall thereupon vest, provided EMPLOYEE has
satisfied the performance criteria selected by the Board or the Compensation
Committee (as applicable).  If K12 elects not to renew the Term of this
Agreement by giving Notice of Non-Renewal pursuant to Section 2.1 and EMPLOYEE
remains on the Board, all vesting shall continue in accordance with the terms of
the applicable award agreements for so long as the EMPLOYEE remains on the
Board.

 

4.7                               Compliance with Section 409A of the Code. The
provisions of this Section 4.7 (other than subsections (c), (d) and (e) hereof)
shall apply solely to any payment, otherwise determined to be due and payable
under this Agreement, which constitutes “deferred compensation” subject to
Section 409A.

 

(a)                                 General Suspension of Payments. If, at the
time EMPLOYEE incurs a separation from service (within the meaning of subsection
(d) hereof), K12 qualifies as a “public company” (within the meaning of
Section 409A) and EMPLOYEE is then a “specified employee,” as such term is
defined within the meaning of Section 409A, any payments or benefits payable or
provided as a result of such separation that would otherwise be paid or provided
prior to the first

 

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day of the seventh month following such separation (other than due to death or
Disability within the meaning of Section 4.3 hereof) shall instead be paid or
provided on the earlier of (i) one hundred eighty one (181) days following such
separation; or (ii) the date of EMPLOYEE’s death; or (iii) that date certain
which otherwise complies with Section 409A. In the event that EMPLOYEE is
entitled to receive payments during the 181-day suspension period described in
this Section 4.7(a), EMPLOYEE shall receive the accumulated benefits that would
have been paid or provided under this Agreement within the suspension period on
the earliest day that would be permitted under Section 409A.

 

(b)                                 Reimbursement Payments. The following
rules shall be followed when paying any amount under this Agreement that is
capable of being treated as a “reimbursement” or a “separation payment” within
the meaning of Income Tax Regulations Section 1.409A-1(b)(9)(v) : (i) the amount
of expenses eligible for reimbursement in one calendar year shall not limit the
available reimbursements for any other calendar year (other than an arrangement
providing for the reimbursement of medical expenses qualifying as such for
purposes of Section 105(b) of the Code); (ii) EMPLOYEE shall file a claim for
all reimbursement payments not later than thirty (30) days following the end of
the calendar year during which such expenses were incurred, (iii) K12 shall make
such reimbursement payments within thirty (30) days following the date EMPLOYEE
delivers written notice of such expenses to K12; and (iv) EMPLOYEE’s right to
such reimbursement payments shall not be subject to liquidation or exchange for
any other payment or benefit.

 

(c)                                  Separation from Service. For purposes of
this Agreement, any reference to a “termination” of EMPLOYEE’s K12 employment
shall be interpreted consistent with the meaning of the term “separation from
service” in Section 409A(a)(2)(A)(i) of the Code, Income Tax Regulations
Section 1.409A-1(h), and related regulations and rulings.

 

(d)                                 Installment Payments. For purposes of
Section 409A of the Code and related regulations and rulings, and any state law
of similar import (including without limitation Treasury Regulations
Section 1.409A-2(b)(2)(iii)), any installment payments scheduled to be made
under this Agreement will be treated as the right to receive a series of
separate payments, causing each such installment payment to at all times be
considered a separate and distinct payment.

 

(e)                                  General. Notwithstanding anything to the
contrary in this Agreement, the Parties intend that the payments becoming due
and payable under this Agreement shall satisfy, to the greatest extent possible,
one (1) or more of the exemptions set forth in Section 409A of the Code and
Income Tax Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(5), and
1.409A-(b)(9). This Agreement will be construed to the greatest extent possible
as consistent with those provisions. Without limiting the generality of the
foregoing, to the extent any series of payments to be made hereunder is found to
be subject to Section 409A, the Parties shall not take any action to change the
timing of such payments.

 

4.8                               Parachute Payments.

 

(a)                                 It is the objective of this Agreement to
maximize EMPLOYEE’s Net After-Tax Benefit (as defined herein) if payments or
benefits provided under this Agreement are subject to

 

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excise tax under Section 4999 of the Code.  Notwithstanding any other provisions
of this Agreement, in the event that any payment or benefit by K12 or otherwise
to or for the benefit of EMPLOYEE, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (all such
payments and benefits, including the payments under Sections 4(b) and
4(c) hereof, being hereinafter referred to as the “Total Payments”), would be
subject (in whole or in part) to the excise tax imposed by Section 4999 of the
Code (the “Excise Tax”), then the Total Payments shall be reduced to the extent
necessary so that no portion of the Total Payments shall be subject to the
Excise Tax, but only if (i) the net amount of such Total Payments, as so reduced
(and after subtracting the net amount of federal, state and local income and
employment taxes on such reduced Total Payments and after taking into account
the phase out of itemized deductions and personal exemptions attributable to
such reduced Total Payments), is greater than or equal to (ii) the net amount of
such Total Payments without such reduction (but after subtracting the net amount
of federal, state and local income and employment taxes on such Total Payments
and the amount of Excise Tax to which EMPLOYEE would be subject in respect of
such unreduced Total Payments and after taking into account the phase out of
itemized deductions and personal exemptions attributable to such unreduced Total
Payments).

 

(b)                                 The Total Payments shall be reduced by K12
in the following order:  (i) reduction of any cash severance payments otherwise
payable to EMPLOYEE that are exempt from Section 409A, (ii) reduction of any
other cash payments or benefits otherwise payable to EMPLOYEE that are exempt
from Section 409A, but excluding any payments attributable to the acceleration
of vesting or payments with respect to any equity award with respect to the
K12’s common stock that is exempt from Section 409A, (iii) reduction of any
other payments or benefits otherwise payable to EMPLOYEE on a pro-rata basis or
such other manner that complies with Section 409A, but excluding any payments
attributable to the acceleration of vesting and payments with respect to any
equity award with respect to K12’s common stock that are exempt from
Section 409A, and (iv) reduction of any payments attributable to the
acceleration of vesting or payments with respect to any other equity award with
respect to K12’s common stock that are exempt from Section 409A.

 

(c)                                  All determinations regarding the
application of this Section 4.8 shall be made by an accounting firm with
experience in performing calculations regarding the applicability of
Section 280G of the Code and the Excise Tax selected by K12 and acceptable to
EMPLOYEE (“Independent Advisors”), a copy of which report and all worksheets and
background materials relating thereto shall be provided to EMPLOYEE.  For
purposes of determining whether and the extent to which the Total Payments will
be subject to the Excise Tax, (i) no portion of the Total Payments the receipt
or enjoyment of which EMPLOYEE shall have waived at such time and in such manner
as not to constitute a “payment” within the meaning of Section 280G(b) of the
Code shall be taken into account; (ii) no portion of the Total Payments shall be
taken into account which, in the opinion of the Independent Advisors, does not
constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the
Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in
calculating the Excise Tax, no portion of such Total Payments shall be taken
into account which, in the opinion of Independent Advisors, constitutes
reasonable compensation for services actually rendered, within the meaning of
Section 280G(b)(4)(B) of the Code, in excess of the “base amount” (as defined in
Section 280G(b)(3) of the Code) allocable to such reasonable compensation; and
(iii) the value of any non-cash benefit

 

14

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or any deferred payment or benefit included in the Total Payments shall be
determined by the Independent Advisors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code.  The costs of obtaining such
determination and all related fees and expenses (including related fees and
expenses incurred in any later audit) shall be borne solely by K12.

 

ARTICLE V.
RESTRICTIVE COVENANTS

 

5.1                               Confidentiality. Except as authorized or
directed by K12, EMPLOYEE shall not, at any time during which EMPLOYEE is
receiving any compensation from K12, and for a period of three (3) years
thereafter, directly or indirectly publish or disclose any Confidential
Information of K12 or of any of its Affiliates, or Confidential Information of
others that has come into the possession of K12 or of any of its Affiliates, or
into the EMPLOYEE’s possession in the course of his employment with K12 or of
his services and duties hereunder, to any other person or entity, and EMPLOYEE
shall not use any such Confidential Information for EMPLOYEE’s own personal use
or advantage or make it available to others for use. All confidential
information, whether oral or written, regarding the business or affairs of K12
or any of its Affiliates, including, without limitation, information as to their
products, services, systems, designs, inventions, software, finances (including
prices, costs and revenues), marketing plans, programs, methods of operation,
prospective and existing contracts, customers and other business arrangements or
business plans, procedures, and strategies, shall all be deemed Confidential
Information, except to the extent the same shall have been lawfully and without
breach of the EMPLOYEE’S confidentiality obligation made available to the
general public, or that EMPLOYEE can prove, by documentary evidence, was
previously known to EMPLOYEE prior to the term of EMPLOYEE’s employment or other
service with K12. Upon expiration or termination of this Agreement for any
reason, EMPLOYEE shall promptly return to K12 all Confidential Information,
including all copies thereof in EMPLOYEE’s possession, whether prepared by him
or others.

 

5.2                               Unfair Competition. During his employment
pursuant to this Agreement and for a period of 12 months thereafter (the
“Post-Termination Non-Compete Period), EMPLOYEE shall not, within the United
States, directly or indirectly, and whether or not for compensation, as a
stockholder owning beneficially or of record more than five percent (5%) of the
outstanding shares of any class of stock of an issuer, or as an officer,
director, employee, consultant, partner, joint venturer, proprietor, or
otherwise, engage in or become interested in any Conflicting Organization in
connection with research, development, consulting, manufacturing, purchasing,
accounting, engineering, marketing, merchandising or selling of any Conflicting
Product or Service, directly or indirectly, in competition with K12 or any of
its Affiliates (or any of their successors) as conducted from time to time
during such period, provided, however, that if within two years following the
occurrence of a “Change in Control” (as defined in the EIA Plan), the EMPLOYEE
separates from employment with K12 either due to a termination of EMPLOYEE’s
employment by K12 Without Cause or EMPLOYEE’s resignation of his employment for
Good Reason as specifically described in Section 4.5, and, in either case, the
K12  or the applicable successor or acquiring entity elects to continue to
require EMPLOYEE’s continued compliance with this Section 5.2, K12 (or the
successor or acquiring entity, as applicable) shall pay EMPLOYEE an amount equal
to one (1) times EMPLOYEE’s then-current Base Salary, determined as of his date
of discharge or termination. Such amount shall be paid in a single sum,

 

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net of any applicable withholding, within ninety (90) calendar days following
the date EMPLOYEE’s employment terminates, or if earlier, on the March 15th next
following the close of the taxable year in which EMPLOYEE’s employment
terminates.

 

5.3                               Non-Solicitation.

 

(a)                                 EMPLOYEE shall not, at any time during his
employment pursuant to this Agreement and for a period of 12 months thereafter
(the “Restriction Period”), directly or indirectly, recruit or otherwise solicit
or induce any customer, subscriber, vendor, business affiliate, or supplier of
K12 or its Affiliates to (i) terminate its arrangement with K12 or its
Affiliates, or (ii) otherwise change its relationship with K12 or its
Affiliates.

 

(b)                                 EMPLOYEE shall not, at any time during the
Restriction Period, directly or indirectly, either on his own account or for any
other person or entity, solicit any employee of K12 or its Affiliates to
terminate his or her employment with K12 or its Affiliates.

 

5.4                               Injunctive Relief; Survival. EMPLOYEE
acknowledges that a breach of the covenants contained in this Article 5 and in
Article 6 will cause irreparable damage to K12 and its goodwill, the exact
amount of which will be difficult or impossible to ascertain, and that the
remedies at law for any such breach will be inadequate. Accordingly, EMPLOYEE
agrees that in the event of a breach of any of the covenants contained in this
Article 5 or in Article 6, in addition to any other remedy which may be
available at law or in equity, K12 will be entitled to specific performance and
injunctive relief. The provisions of this Article 5 and Article 6 shall survive
any termination or expiration of the term of this Agreement.

 

ARTICLE VI.
INVENTIONS, WORKS OF AUTHORSHIP,
PATENTS AND COPYRIGHTS

 

6.1                               EMPLOYEE shall assign and transfer to K12, and
does hereby assign and transfer to K12 all right title and interest in and to
all K12 IP (as defined below). All K12 IP is and shall be the sole property of
K12. EMPLOYEE shall disclose all K12 IP promptly in writing to K12. Upon request
of K12, EMPLOYEE shall promptly execute a written assignment of title to K12 for
all K12 IP, and EMPLOYEE will preserve all such K12 IP as Confidential
Information. As used herein “K12 IP” shall mean all inventions and intellectual
property rights (including, but not limited to, designs, discoveries,
inventions, improvements, ideas, devices, techniques, processes, writings, trade
secrets, trademarks, patents, copyrights and all plans, memoranda and other
tangible information relating to such intellectual property, whether or not
subject to protection under applicable laws) that EMPLOYEE solely or jointly
with others conceives, makes, acquires, suggests or participates in at any time
during EMPLOYEE’S employment with K12 and that relate to the actual business,
products, processes, work, operations, research and development or other
activities of K12.

 

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ARTICLE VII.
MISCELLANEOUS

 

7.1                               Assignment. The rights and obligations of K12
under this Agreement shall be binding upon its successors and assigns and,
subject to EMPLOYEE’s rights under Section 4.5 hereof, may be assigned by K12 to
the successors in interest of K12. The rights and obligations of EMPLOYEE under
this Agreement shall be binding upon EMPLOYEE’s heirs, legatees, personal
representatives, executors or administrators. This Agreement may not be assigned
by EMPLOYEE, but any amount owed EMPLOYEE upon EMPLOYEE’s death shall inure to
the benefit of EMPLOYEE’s heirs legatees, personal representatives, executors,
or administrators.

 

7.2                               Notice. For purposes of this Agreement,
notices and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when hand delivered, sent by
overnight courier, or mailed by first-class, registered, or certified mail,
return receipt requested, postage prepaid, or transmitted by telegram,
facsimile, or telex addressed as follows:

 

If to EMPLOYEE: (Copy to K12 Executive Office)

 

Nathaniel A. Davis

2300 Corporate Park Drive

Herndon, Virginia 20171

 

If to K12:

 

K12 Inc.

Attn: General Counsel

2300 Corporate Park Drive

Herndon, Virginia 20171

 

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

 

7.3                               Entire Agreement. From and after the Effective
Date, this Agreement constitutes the entire agreement between the Parties
hereto, and expressly supersedes all prior oral or written agreements,
commitments or understandings with respect to the matters provided for herein,
including the Prior Agreement.

 

7.4                               Headings. Article and Section headings
contained in this Agreement are inserted for convenience of reference only,
shall not be deemed to be a part of this Agreement for any purpose, and shall
not in any way define or affect the meaning, construction or scope of any of the
provisions hereof.

 

7.5                               Severability. In the event any provision of
this Agreement, or any portion thereof, is determined by any arbitrator or court
of competent jurisdiction to be unenforceable as written, such provision or
portion thereof shall be interpreted so as to be enforceable. In the event

 

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any provision of this Agreement or any portion thereof is determined by any
arbitrator or court of competent jurisdiction to be void, the remaining portions
of this Agreement shall nevertheless be binding upon K12 and EMPLOYEE with the
same effect as though the void provision or portion thereof had been severed and
deleted.

 

7.6                               Arbitration. Without prejudice to K12’s right
to seek an injunction pursuant to Section 5.4 hereof from a court of competent
jurisdiction, any dispute between the Parties hereto arising out of this
Agreement, or otherwise arising out of or relating to EMPLOYEE’s employment by
K12, or the termination thereof, shall be submitted to non-binding mediation
before a mediator to be agreed upon by the Parties or, failing agreement, to be
appointed by the American Arbitration Association (“AAA”). The expenses of the
mediation shall be borne by the company. In the event that mediation is
unsuccessful, such dispute shall be resolved by binding arbitration, before a
single arbitrator, under the rules of the AAA. Each party shall bear its own
costs. However, the arbitrator shall have the authority to apportion the costs
of arbitration and to render an award including reasonable attorney’s fees, as
and to the extent he deems appropriate under the circumstances, provided he
makes a finding that the party awarded costs is entitled to such an award due to
the bad faith of the other party.

 

7.7                               Governing Law. Except as otherwise provided in
Section 2.4 hereof, this Agreement, the rights and obligations of the Parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed in accordance with the substantive laws of the Commonwealth of
Virginia (excluding the choice of law rules thereof).

 

7.8                               Amendment; Modification; Waiver. No amendment,
modification or waiver of the terms of this Agreement shall be valid unless made
in writing and duly executed by EMPLOYEE and K12. No delay or failure at any
time on the part of EMPLOYEE or K12 in exercising any right, power or privilege
under this Agreement, or in enforcing any provision of this Agreement, shall
impair any such right, power, or privilege, or be construed as a waiver of any
default or as any acquiescence therein, or shall affect the right of EMPLOYEE or
K12 thereafter to enforce each and every provision of this Agreement in
accordance with its terms.

 

7.9                               Additional Obligations. Both during and after
the term of employment, EMPLOYEE shall, upon reasonable notice, furnish K12 with
such information as may be in EMPLOYEE’s possession or control, and cooperate
with K12, as may reasonably be requested by K12 (and, after the term of
employment, with due consideration for EMPLOYEE’s obligations with respect to
any new employment or business activity) in connection with any litigation or
other adversarial proceedings in which K12 or any Affiliate is or may become a
party. K12 shall reimburse EMPLOYEE for all reasonable expenses incurred by
EMPLOYEE in fulfilling EMPLOYEE’s obligations under this Section 7.9.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as
of the Effective Date.

 

 

K12 INC.

 

 

 

 

 

By:

/s/ Adam Cohn

 

 

Adam Cohn

 

 

Chairman, Compensation Committee

 

 

 

 

 

/s/ Nathaniel A. Davis

 

Nathaniel A. Davis

 

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EXHIBIT A

 

Separation Agreement and Release

 

This Separation Agreement and Release (“Agreement”) is made by and between
Nathaniel A. Davis (“Executive”) and K12 Inc. (the “Company”) (collectively,
referred to as the “Parties” or individually referred to as a “Party”).
Capitalized terms used but not defined in this Agreement shall have the meanings
set forth in the Employment Agreement (as defined below).

 

WHEREAS, the Parties have previously entered into that certain Second Amended
and Restated Employment Agreement, dated as of              , 2016 (the
“Employment Agreement”); and

 

WHEREAS, in connection with Executive’s termination of employment with the
Company effective    , 20 , the Parties wish to resolve any and all disputes,
claims, complaints, grievances, charges, actions, petitions, and demands that
Executive may have against the Company and any of the Releasees as defined
below, including, but not limited to, any and all claims arising out of or in
any way related to Executive’s employment with or separation from the Company or
its subsidiaries or affiliates but, for the avoidance of doubt, nothing herein
will be deemed to release any rights or remedies in connection with Executive’s
rights as a shareholder of the Company or Executive’s right to indemnification
by the Company or any of its affiliates pursuant to contract or applicable law,
Executive’s rights to Side A and Side B directors’ and officers’ insurance
coverage as set forth in the Employment Agreement, and any rights Executive or
his dependents have or may have under the Employee Retirement Income Security
Act of 1974 (“ERISA”) with respect to any Company-sponsored employee benefit
plans in which he or they then have an interest (collectively, the “Retained
Claims”).

 

NOW, THEREFORE, in consideration of the severance payments described in
Section 4.5 of the Employment Agreement, which, pursuant to the Employment
Agreement, are conditioned on Executive’s execution and non-revocation of this
Agreement, and in consideration of the mutual promises made herein, the Company
and Executive hereby agree as follows:

 

1.                                      Severance Payments; Salary and Benefits.
The Company agrees to provide Executive with the severance payments and benefits
described in Section 4.5 of the Employment Agreement, payable at the times set
forth in, and subject to the terms and conditions of, the Employment Agreement.
In addition, to the extent not already paid, and subject to the terms and
conditions of the Employment Agreement, the Company shall pay or pay to
Executive all amounts of base salary through the date of termination.

 

2.                                      Release of Claims. Executive agrees
that, other than with respect to the Retained Claims, the foregoing
consideration represents settlement in full of all outstanding obligations owed
to Executive by the Company and all of its direct or indirect subsidiaries and
Affiliates (as defined in the Employment Agreement), and any of their current
and former officers, directors, managers, employees, agents, attorneys,
administrators, benefit plans, plan administrators, insurers, trustees,
divisions, and subsidiaries and predecessor and successor corporations and
assigns (collectively, the “Releasees”). Executive, on his own behalf and on
behalf of any of

 

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Executive’s affiliated companies or entities and any of their respective heirs,
family members, executors, agents, and assigns, other than with respect to the
Retained Claims, hereby and forever releases the Releasees from, and agrees not
to sue concerning, or in any manner to institute, prosecute, or pursue, any
claim, complaint, charge, duty, obligation, or cause of action relating to any
matters of any kind, whether presently known or unknown, suspected or
unsuspected, that Executive may possess against any of the Releasees arising
from any omissions, acts, facts, or damages that have occurred up until and
including the Effective Date of this Agreement (as defined in Section 7 below),
including, without limitation:

 

(a)                                 any and all claims relating to or arising
from Executive’s employment or service relationship with the Company or any of
its direct or indirect subsidiaries or affiliates and the termination of that
relationship;

 

(b)                                 any and all claims for wrongful discharge of
employment; termination in violation of public policy; discrimination;
harassment; retaliation; breach of contract, both express and implied; breach of
covenant of good faith and fair dealing, both express and implied; promissory
estoppel; negligent or intentional infliction of emotional distress; fraud;
negligent or intentional misrepresentation; negligent or intentional
interference with contract or prospective economic advantage; unfair business
practices; defamation; libel; slander; negligence; personal injury; assault;
battery; invasion of privacy; false imprisonment; conversion; and disability
benefits;

 

(c)                                  any and all claims for violation of any
federal, state, or municipal statute, including, but not limited to, Title VII
of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the
Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the
Equal Pay Act; the Fair Credit Reporting Act; the Age Discrimination in
Employment Act of 1967; the Older Workers Benefit Protection Act; the ERISA
(except for any Retained Claims) ; the Worker Adjustment and Retraining
Notification Act; the Family and Medical Leave Act; and the SarbanesOxley Act of
2002;

 

(d)                                 any and all claims for violation of the
federal or any state constitution;

 

(e)                                  any and all claims arising out of any other
laws and regulations relating to employment or employment discrimination;

 

(f)                                   any claim for any loss, cost, damage, or
expense arising out of any dispute over the non-withholding or other tax
treatment of any of the proceeds received by Executive as a result of the
Employment Agreement or this Agreement; and

 

(g)                                  any and all claims for attorneys’ fees and
costs.

 

Executive agrees that the release set forth in this section shall be and remain
in effect in all respects as a complete general release as to the matters
released. This release does not release claims that cannot be released as a
matter of law, including, but not limited to, Executive’s right to file a charge
with or participate in a charge by the Equal Employment Opportunity Commission,
or any other local, state, or federal administrative body or government agency
that is authorized to enforce or administer laws related to employment, against
the Company

 

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(with the understanding that Executive’s release of claims herein bars Executive
from recovering such monetary relief from the Company or any Releasee), claims
for unemployment compensation or any state disability insurance benefits
pursuant to the terms of applicable state law, claims to continued participation
in certain of the Company’s group benefit plans pursuant to the terms and
conditions of COBRA, claims to any benefit entitlements vested as the date of
separation of Executive’s employment (including but not limited to any claims
Executive may have under the Equity Incentive Award Plan or any option or award
agreements to which Executive is then a party), pursuant to written terms of any
employee benefit plan of the Company or its affiliates and Executive’s right
under applicable law and any Retained Claims. This release further does not
release claims for breach of Article 4 of the Employment Agreement.

 

3.                                      Acknowledgment of Waiver of Claims under
ADEA. Executive understands and acknowledges that Executive is waiving and
releasing any rights Executive may have under the Age Discrimination in
Employment Act of 1967 (“ADEA”), and that this waiver and release is knowing and
voluntary. Executive understands and agrees that this waiver and release does
not apply to any rights or claims that may arise under the ADEA after the
Effective Date of this Agreement. Executive understands and acknowledges that
the consideration given for this waiver and release is in addition to anything
of value to which Executive was already entitled. Executive further understands
and acknowledges that Executive has been advised by this writing that:
(a) Executive should consult with an attorney prior to executing this Agreement;
(b) Executive has 21 days within which to consider this Agreement; (c) Executive
has 7 days following Executive’s execution of this Agreement to revoke this
Agreement pursuant to written notice to the General Counsel of the Company;
(d) this Agreement shall not be effective until after the revocation period has
expired; and (e) nothing in this Agreement prevents or precludes Executive from
challenging or seeking a determination in good faith of the validity of this
waiver under the ADEA, nor does it impose any condition precedent, penalties, or
costs for doing so, unless specifically authorized by federal law. In the event
Executive signs this Agreement and returns it to the Company in less than the 21
day period identified above, Executive hereby acknowledges that Executive has
freely and voluntarily chosen to waive the time period allotted for considering
this Agreement.

 

4.                                      Severability. In the event that any
provision or any portion of any provision hereof or any surviving agreement made
a part hereof becomes or is declared by a court of competent jurisdiction or
arbitrator to be illegal, unenforceable, or void, this Agreement shall continue
in full force and effect without said provision or portion of provision.

 

5.                                      No Oral Modification. This Agreement may
only be amended in a writing signed by Executive and a duly authorized officer
of the Company.

 

6.                                      Governing Law; Dispute Resolution. This
Agreement shall be subject to the provisions of Sections 7.6 and 7.7 of the
Employment Agreement.

 

7.                                      Effective Date. If Executive has
attained or is over the age of 40 as of the date of Executive’s termination of
employment, then each Party has seven days after that Party signs this Agreement
to revoke it and this Agreement will become effective on the eighth day after
Executive signed this Agreement, so long as it has been signed by the Parties
and has not been

 

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revoked by either Party before that date (the “Effective Date”). If Executive
has not attained the age of 40 as of the date of Executive’s termination of
employment, then the “Effective Date” shall be the date on which Executive signs
this Agreement.

 

8.                                      Voluntary Execution of Agreement.
Executive understands and agrees that Executive executed this Agreement
voluntarily, without any duress or undue influence on the part or behalf of the
Company or any third party, with the full intent of releasing all of Executive’s
claims against the Company and any of the other Releasees. Executive
acknowledges that: (a) Executive has read this Agreement; (b) Executive has not
relied upon any representations or statements made by the Company that are not
specifically set forth in this Agreement; (c) Executive has been represented in
the preparation, negotiation, and execution of this Agreement by legal counsel
of his own choice or has elected not to retain legal counsel; (d) Executive
understands the terms and consequences of this Agreement and of the releases it
contains; and (e) Executive is fully aware of the legal and binding effect of
this Agreement.

 

IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective
dates set forth below.

 

 

 

 

EXECUTIVE

Dated:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPANY

 

 

 

 

 

 

 

Dated:

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

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