Document:

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                                                                   Exhibit 10.17

                              EMPLOYMENT AGREEMENT

                  EMPLOYMENT AGREEMENT, dated as of July 2, 2000, by and between
LEXENT INC., a Delaware corporation (the "Company"), and NANCY HUSON (the
"Employee").

                              W I T N E S S E T H:

                  WHEREAS the Company desires to induce the Employee to enter
into employment with the Company for the period provided in this Agreement, and
the Employee is willing to accept such employment with the Company on a
full-time basis, all in accordance with the terms and conditions set forth
below;

                  NOW, THEREFORE, for and in consideration of the premises
hereof and the mutual covenants contained herein, the parties hereto hereby
covenant and agree as follows:

                  1. Employment.

                  (a) The Company hereby agrees to employ the Employee, and the
         Employee hereby agrees to accept such employment with the Company,
         commencing on July 10, 2000 (the "Commencement Date") and continuing
         for the period set forth in Section 2 hereof, all upon the terms and
         conditions hereinafter set forth.

                  (b) The Employee affirms and represents that as of the
         commencement of her employment by the Company on the Commencement Date,
         she will be under no obligation to any former employer or other party
         which is in any way inconsistent with, or which imposes any restriction
         upon, the Employee's acceptance of employment hereunder with the
         Company, the employment of the Employee by the Company, or the
         Employee's undertakings under this Agreement.

                  2. Term of Employment. Unless earlier terminated as provided
in this Agreement, the term of the Employee's employment under this Agreement
shall be for a period beginning on the Commencement Date and ending on July 10,
2004. The period from the Commencement Date until June 10, 2004, or, in the
event that the Employee's employment hereunder is earlier terminated as provided
herein, such shorter period, is hereinafter called the "Employment Term."

                  3. Duties. The Employee shall be employed as Executive Vice
President - Corporate Development of the Company, shall faithfully perform and
discharge such duties as inhere in the position of Executive Vice President of
the Company as may be specified in the Bylaws of the Company with respect to
such position, and shall also perform and discharge such
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other duties and responsibilities consistent with such position as the Board of
Directors of the Company (the "Board of Directors") shall from time to time
determine. The Employee shall report to the Chief Executive Officer of the
Company. The Employee shall perform her duties principally at offices of the
Company in New York City, New York, with such travel to such other locations
from time to time as the Chief Executive Officer may reasonably prescribe.
Except as may otherwise be approved in advance by the Board of Directors, and
except during vacation periods and reasonable periods of absence due to
sickness, personal injury or other disability, the Employee shall devote her
full business time throughout the Employment Term to the services required of
her hereunder. The Employee shall render her business services exclusively to
the Company and its subsidiaries during the Employment Term and shall use her
best efforts, judgment and energy to improve and advance the business and
interests of the Company and its subsidiaries in a manner consistent with the
duties of her position.

                  4. Compensation.

                  (a) Salary. As compensation for the performance by the
         Employee of the services to be performed by the Employee hereunder
         during the Employment Term, the Company shall pay the Employee a base
         salary at the annual rate of Two Hundred and Forty Thousand Dollars
         ($240,000) (said amount, together with any increases thereto, being
         hereinafter referred to as "Salary"). The Employee's salary shall
         increase from time to time as determined by the Board of Directors in
         its sole discretion; provided, that such Salary shall increase at least
         five percent (5%) each year of the Employment Term. Any Salary payable
         hereunder shall be paid in regular intervals in accordance with the
         Company's payroll practices from time to time in effect.

                  (b) Bonus. Provided that the Employee is employed by the
         Company on the last day of the fiscal year (or on June 30, 2004 for the
         calendar year 2004), the Employee shall be eligible to receive bonus
         compensation from the Company in respect of each fiscal year (or
         portion thereof) occurring during the Employment Term in an amount
         targeted at 40% of her Salary (pro rated only for the calendar year
         2004) if the Company achieves the target performance objectives
         established by the Compensation Committee of the Board of Directors
         (the "Compensation Committee") with respect to such fiscal year. In
         accordance with the foregoing conditions, the Employee shall also be
         eligible to receive additional bonus compensation from the Company in
         respect of each fiscal year (or portion thereof) occurring during the
         Employment Term in an amount targeted at 60% of her Salary (prorated
         only for calendar year 2004) for exceptional performance as may be
         determined by the Compensation Committee in its sole discretion.

                  (c) Initial Payment. In connection with the execution and
         delivery by the Employee of this Agreement, the Company shall pay the
         Employee a one-time bonus in the amount of $50,000 (the "Initial
         Payment") on or before July 31, 2000.

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                  5. Other Benefits; Options.

                  (a) General. During the Employment Term, the Employee shall:

                           (i) be eligible to participate in employee fringe
         benefits and pension and/or profit sharing plans that may be provided
         by the Company for its senior executive employees in accordance with
         the provisions of such plans, as the same may be in effect from time to
         time;

                           (ii) be eligible to participate in any medical and
         health plans or other employee welfare benefit plans that may be
         provided by the Company for its senior executive employees in
         accordance with the provisions of any such plans, as the same may be in
         effect from time to time;

                           (iii) be entitled to the number of paid vacation days
         in each calendar year determined by the Company from time to time for
         its senior executive officers, provided that such number of paid
         vacation days in each calendar year shall not be less than twenty (20)
         work days (four calendar weeks); the Employee shall also be entitled to
         all paid holidays given by the Company to its senior executive
         officers;

                           (iv) be entitled to sick leave, sick pay and
         disability benefits in accordance with any Company policy that may be
         applicable to senior executive employees from time to time; and

                           (v) be entitled to reimbursement for all reasonable
         and necessary out-of-pocket business expenses incurred by the Employee
         in the performance of her duties hereunder in accordance with the
         Company's normal policies from time to time in effect.

                  (b) Grant of Initial Options. In connection with the execution
         and delivery of this Agreement by the Employee, the Company is granting
         to the Employee options ("Initial Options") to purchase 750,000 shares
         (as adjusted equitably for stock dividends, stock splits, combinations,
         etc.) of Company Common Stock, $.001 par value ("Common Stock"), at a
         purchase price $6.00 (as adjusted equitably for stock dividends, stock
         splits, combinations, etc.), of which options to purchase 25% of such
         shares of Common Stock shall vest on the Commencement Date and options
         to purchase the remaining shares of Common Stock will vest in
         thirty-six equal increments over the thirty-six month period beginning
         on the first anniversary of the Commencement Date. Further, the Initial
         Options will contain provisions providing that (i) if the Employee's
         employment hereunder is terminated Without Cause or for Good Reason
         (each, as defined in Section 7 hereof) during the Employment Term, all
         of the previously unexercisable portion of the Initial Options shall
         become immediately vested; and (ii) if there is a Change of Control (as
         defined in (e) below) of the Company during the Employment Term, all of
         the previously unexercisable portion of the Initial Options shall
         become immediately vested.

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         All terms and conditions, including those referred to herein, shall be
         provided in a Stock Option Agreement of even date herewith between the
         Company and the Employee.

                  (c) Put Option for Certain Initial Options. Subject to Section
         8(c) hereof, for the period (the "Put Option Period") beginning on the
         date (the "Lock-Up Termination Date") which is 180 days after the date
         the Company consummates an initial public offering of its Common Stock
         and ending on the one-year anniversary of the Lock-Up Termination Date,
         Employee shall have the right and option (the "Put Option"), but not
         the obligation, to sell to the Company any unexercised and vested
         Initial Options representing up to 187,500 shares (as adjusted
         equitably for stock dividends, stock splits, combinations, etc., the
         "Put Option Shares") of Common Stock in accordance with the following
         terms and conditions:

                           (i) In the event that Employee exercises the Put
                  Option, the Company shall pay to Employee as purchase price
                  for the Put Option Shares an amount (the "Purchase Price") per
                  share equal to the difference between $8.50 (as adjusted
                  equitably for stock dividends, stock splits, combinations,
                  etc.) and the exercise price of the Initial Options underlying
                  any Put Option Shares provided for in paragraph (b) of Section
                  5 hereof.

                           (ii) Employee may exercise the Put Option by giving
                  the Company a written notice of election to sell the Put
                  Option Shares (the "Put Option Notice") at any time during the
                  Put Option Period, which Put Option Notice shall specify the
                  number of Put Option Shares to be sold and the Purchase Price
                  for such Put Option Shares.

                           (iii) The closing for the purchase by the Company of
                  such Put Option Shares will take place at the principal office
                  of the Company as soon as practicable for both Employee and
                  the Company after delivery of the Put Option Notice. At such
                  closing, the Employee will deliver the stock option agreement
                  representing the options underlying the Put Option Shares to
                  be sold to the Company and such other documentation as
                  reasonably requested by the Company or their counsel, against
                  payment in cash of the Purchase Price thereof. Any Initial
                  Options underlying Put Option Shares sold to the Company
                  pursuant to the provisions of this Section 5(c) will
                  thereafter be terminated and no longer exercisable by
                  Employee.

                  (d) Grant of Subsequent Options. In connection with her
         continued employment by the Company, on the first anniversary of the
         Commencement Date, and on each of the subsequent anniversaries thereof
         during the Employment Term, the Company agrees to grant the Employee
         options ("Subsequent Options") to purchase at least 45,000 shares (as
         adjusted equitably for stock dividends, stock splits, combinations,
         etc.) of Common Stock at a purchase price equal to the Fair Market
         Value (as defined in (f) below) of the Common Stock on the date of
         grant, which options shall vest in twenty-five

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         percent increments over a four-year period with the first twenty-five
         percent to vest on the first anniversary of the date of grant. Each
         grant of these Subsequent Options shall be pursuant to specific terms
         set forth in a stock option agreement between the Company and the
         Employee.

                  (e) Change of Control. "Change of Control" means any capital
         reorganization, consolidation, merger or sale of assets as a result of
         which or in connection with which a person, corporation or other entity
         other than Kevin and Hugh O'Kane acquires (x) ownership of more than
         50% of the equity securities of the Company or (y) all or substantially
         all of the assets and properties of the Company as an entirety.

                  (f) Fair Market Value. "Fair Market Value" means as of any
         date, the value of Common Stock determined as follows:

                           (i) If the Common Stock is listed on any established
         stock exchange or a national market system, including without
         limitation the National Market System of the National Association of
         Securities Dealers, Inc. Automated Quotation ("NASDAQ") System, the
         Fair Market Value of a share of Common Stock shall be the closing sales
         price for such stock (or the closing bid, if no sales were reported) as
         quoted on such system or exchange (or the exchange with the greatest
         volume of trading in Common Stock) on the last market trading day prior
         to the day of grant of the particular Subsequent Options and as
         reported in the Wall Street Journal or such other source as the
         Compensation Committee deems reliable;

                           (ii) If the Common Stock is quoted on the NASDAQ
         System (but not on the National Market System thereof) or is regularly
         quoted by a recognized securities dealer but selling prices are not
         reported, the Fair Market Value of a share of Common Stock shall be the
         average between the high bid and low asked prices for the Common Stock
         on the last market trading day prior to the day of grant of the
         particular Subsequent Options and as reported in the Wall Street
         Journal or such other source as the Compensation Committee deems
         reliable; or

                           (iii) In the absence of an established market for the
         Common Stock, the Fair Market Value shall be determined in good faith
         by the Compensation Committee.

                  6. Confidential Information. The Employee hereby covenants,
agrees and acknowledges as follows:

                  (a) The Employee has and will have access to and will
         participate in the development of or be acquainted with confidential or
         proprietary information and trade secrets related to the business of
         the Company and any present or future subsidiaries or affiliates of the
         Company (collectively with the Company, the "Companies"), including but
         not limited to (i) customer lists; related records and compilations of
         information; the identity, lists or descriptions of any new customers,
         referral sources or organizations;

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         financial statements; cost reports or other financial information;
         contract proposals or bidding information; business plans; training and
         operations methods and manuals; personnel records; software programs;
         reports and correspondence; and management systems, policies or
         procedures, including related forms and manuals; (ii) information
         pertaining to future developments such as future marketing or
         acquisition plans or ideas, and potential new business locations and
         (iii) all other tangible and intangible property, which are used in the
         business and operations of the Companies but not made public. The
         information and trade secrets relating to the business of the Companies
         described hereinabove in this paragraph (a) are hereinafter referred to
         collectively as the "Confidential Information", provided that the term
         Confidential Information shall not include any information (A) that is
         or becomes generally publicly available (other than as a result of
         violation of this Agreement by the Employee), (B) that the Employee
         receives on a nonconfidential basis from a source (other than the
         Companies or their representatives) that is not known by her to be
         bound by an obligation of secrecy or confidentiality to any of the
         Companies or (C) that was in the possession of the Employee prior to
         disclosure by the Companies.

                  (b) The Employee shall not disclose, use or make known for her
         or another's benefit any Confidential Information or use such
         Confidential Information in any way except as is in the best interests
         of the Companies in the performance of the Employee's duties under this
         Agreement. The Employee may disclose Confidential Information when
         required by a third party and applicable law or judicial process, but
         only after providing immediate notice to the Company of any third
         party's request for such information, which notice shall include the
         Employee's intent to disclose any Confidential Information with respect
         to such request.

                  (c) The Employee acknowledges and agrees that a remedy at law
         for any breach or threatened breach of the provisions of this Section 6
         would be inadequate and, therefore, agrees that the Companies shall be
         entitled to seek injunctive relief in addition to any other available
         rights and remedies in case of any such breach or threatened breach by
         the Employee; provided, however, that nothing contained herein shall be
         construed as prohibiting the Companies from pursuing any other rights
         and remedies available for any such breach or threatened breach.

                  (d) The Employee agrees that upon termination of her
         employment with the Company for any reason, the Employee shall
         forthwith return to the Company all Confidential Information in
         whatever form maintained (including, without limitation, computer discs
         and other electronic media).

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                  (e) The obligations of the Employee under this Section 6
         shall, except as otherwise provided herein, survive the termination of
         the Employment Term and the expiration or termination of this
         Agreement.

                  (f) Without limiting the generality of Section 12 hereof, the
         Employee hereby expressly agrees that the foregoing provisions of this
         Section 6 shall be binding upon the Employee's heirs, successors and
         legal representatives.

                  7. Termination of Employment.

                  (a) The Employee's employment hereunder shall be terminated
         upon the occurrence of any of the following:

                           (i) death of the Employee;

                           (ii) the Employee's inability to perform her duties
         on account of disability or incapacity for a period of one hundred
         eighty (180) or more days, whether or not consecutive, within any
         period of twelve (12) consecutive months;

                           (iii) the Company giving written notice, at any time,
         to the Employee that the Employee's employment is being terminated for
         "Cause" (as defined in (b) below);

                           (iv) the Company giving written notice, at any time,
         to the Employee that the Employee's employment is being terminated or
         is not being renewed, other than pursuant to clause (i), (ii) or (iii)
         above ("Without Cause"); or

                           (v) the Employee terminates her employment hereunder
         for "Good Reason" (as defined in (c) below); or

                           (vi) the Employee terminates her employment hereunder
         for any reason whatsoever (whether by reason of retirement, resignation
         or otherwise) other than in accordance with (v) above.

                  (b) Cause. The following actions, failures and events by or
         affecting the Employee shall constitute "Cause" for termination within
         the meaning of clause (iii) of Section 7 (a) above:

                           (i) a conviction of, or plea of nolo contendere to, a
         felony;

                           (ii) willful misconduct that is materially injurious
         to the Company;

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                           (iii) failure to undertake communicated directives on
         material business matters despite written instruction to do so by the
         Board of Directors or the Chairman of the Company; or

                           (iv) any willful material breach of this Agreement
         which has resulted in material injury to the Company.

                  (c) Good Reason. The Employee may terminate her employment
         with the Company for "Good Reason" if, without the Employee's written
         consent, there is:

                           (i) a material adverse change in the Employee's title
         or Salary;

                           (ii) the assignment of duties to the Employee
         materially and adversely inconsistent with the Employee's position;

                           (iii) any requirement by the Company that Employee's
         primary office location be other than in New York City or the state of
         New Jersey; or

                           (iv) a Change of Control of the Company.

         In the event that Employee determines that a Good Reason exists for
         termination, Employee must notify the Company of such determination in
         writing, within 30 days following Employee's actual knowledge of the
         event giving rise to such Good Reason. Following receipt of such
         notice, if, in the next 30 days, the Company remedies the event giving
         rise to such Good Reason, Employee may not terminate her employment
         with the Company for Good Reason as a result of such event.

                  8. Payments Upon Termination.

                  (a) Termination Without Cause or for Good Reason. In addition
         to the acceleration of the Initial Options provided for in Section
         5(b)(i) hereof and subject to paragraph (c) below, in the event that
         the Employee's employment is terminated by the Company Without Cause or
         by the Employee for Good Reason during the Employment Term then the
         Company shall pay to the Employee, as severance pay or liquidated
         damages or both, monthly payments at the rate per annum of her Salary
         at the time of such termination and any bonus that Employee would have
         been entitled to under Section 4(b) but for Employee's termination by
         the Company (pro rated for the portion of the fiscal year occurring
         prior to the cessation of the Employee's employment) for a period of
         twelve (12) months after such termination.

                  (b) Payments Limited. Notwithstanding anything to the contrary
         expressed or implied herein, except as required by applicable law and
         except as set forth in Section 8(a) above, neither the Company nor any
         of its affiliates shall be obligated to make any payments to the
         Employee or on her behalf of whatever kind or nature by reason of the

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         Employee's cessation of employment (including, without limitation, by
         reason of termination of the Employee's employment by the Company for
         Cause, Without Cause or otherwise or by the Employee for Good Reason or
         otherwise), other than (i) such amounts, if any, of her Salary and
         bonus as shall have accrued and remained unpaid as of the date of said
         cessation, (ii) such other amounts, if any, which may be then otherwise
         payable to the Employee pursuant to the terms of the Company's benefits
         plans or pursuant to clause (v) of Section 5(a) above and (iii) subject
         to paragraph (c) below, such amounts, if any, pursuant to the
         Employee's exercise of the Put Option.

                  (c) Treatment of Put Option upon Termination. Unless the
         Employee shall have previously delivered to the Company the Put Option
         Notice in accordance with Section 5(c)(ii) hereof, the Employee's right
         to exercise the Put Option will be terminated on the date the
         Employee's employment is terminated for any reason; provided, that, in
         the event that Employee's employment is terminated by the Company
         Without Cause or by the Employee for Good Reason during the Put Option
         Period, Employee shall have the right to exercise the Put Option for 30
         days after such termination in accordance with Section 5(c) above.

                  (d) Interest. No interest shall accrue on or be paid with
         respect to any portion of any payments under this Section 8.

                  9.  Non-Assignability.

                  (a) Neither this Agreement nor any right or interest hereunder
         shall be assignable by the Employee or her beneficiaries or legal
         representatives without the Company's prior written consent; provided,
         however, that nothing in this Section 9(a) shall preclude the Employee
         from designating a beneficiary to receive any benefit payable hereunder
         upon her death or incapacity. This Agreement may not be assigned by the
         Company except with the Employee's prior written consent, provided,
         however, that the Company may assign this Agreement to an affiliate of
         the Company with the financial resources to fulfill the Company's
         obligations hereunder.

                  (b) Except as required by law, no right to receive payments
         under this Agreement shall be subject to anticipation, commutation,
         alienation, sale, assignment, encumbrance, charge, pledge, or
         hypothecation or to exclusion, attachment, levy or similar process or
         to assignment by operation of law, and any attempt, voluntary or
         involuntary, to effect any such action shall be null, void and of no
         effect.

                  10.  Restrictive Covenants.

                  (a) Competition. During the Employment Term and, in the event
         the Employee's employment is terminated, during the period (the
         "Applicable Continuation Period") following such termination and
         continuing until (i) the last payment is made to the Employee pursuant
         to Section 8(a) hereof or (ii) in the case of a termination of the

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         Employee's employment pursuant to Section 7(a)(iii) or (v) hereof, the
         first anniversary of the date of such termination, the Employee will
         not directly or indirectly (as a director, officer, executive employee,
         manager, consultant, independent contractor, advisor or otherwise)
         engage in competition with, or own any interest in, perform any
         services for, participate in or be connected with any business or
         organization which engages in competition with any of the Companies
         within the meaning of Section 10(d), provided, however, that the
         provisions of this Section 10(a) shall not be deemed to prohibit the
         Employee's ownership of not more than two percent (2%) of the total
         shares of all classes of stock outstanding of any publicly held
         company, or ownership, whether through direct or indirect stock
         holdings or otherwise, of not more than one percent (1%) of any other
         business.

                  (b) Non-Solicitation. During the Employment Term and during
         the Applicable Continuation Period, the Employee will not directly or
         indirectly induce or attempt to induce any employee of any of the
         Companies to leave the employ of the Company or such subsidiary or
         affiliate, or in any way interfere with the relationship between any of
         the Companies and any employee thereof.

                  (c) Non-Interference. During the Employment Term and during
         the Applicable Continuation Period, the Employee will not directly or
         indirectly hire, engage, send any work to, place orders with, or in any
         manner be associated with any supplier, contractor, subcontractor or
         other business relation of any of the Companies if such action by her
         would have an adverse effect on the business, assets or financial
         condition of any of the Companies, or materially interfere with the
         relationship between any such person or entity and any of the
         Companies.

                  (d) Certain Definitions.

                           (i) For purposes of this Section 10, a person or
         entity (including, without limitation, the Employee) shall be deemed to
         be a competitor of one or more of the Companies, or a person or entity
         (including, without limitation, the Employee) shall be deemed to be
         engaging in competition with one or more of the Companies, if such
         person or entity conducts, or, to the knowledge of the Employee, plans
         to conduct, the Specified Business (as hereinafter defined) as a
         significant portion of its business in any of the markets served by the
         Companies or, in the case of a person or entity pursuing a business
         strategy of providing telecommunications infrastructure services,
         anywhere in the continental United States.

                           (ii) For purposes of this Agreement, "Specified
         Business" means (A) providing outsourced telecommunications
         infrastructure services to local or long distance telecommunications
         providers or engaging in any business conducted by the Company at the
         time of termination of the Employee's employment with the Company or
         (B) conducting, operating, carrying out or engaging in the business of
         managing any entity described in clause (A).

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                  (e) Certain Representations of the Employee. In connection
         with the foregoing provisions of this Section 10, the Employee
         represents that her experience, capabilities and circumstances are such
         that such provisions will not prevent her from earning a livelihood.
         The Employee further agrees that the limitations set forth in this
         Section 10 (including, without limitation, time and territorial
         limitations) are reasonable and properly required for the adequate
         protection of the current and future businesses of the Companies. It is
         understood and agreed that the covenants made by the Employee in this
         Section 10 (and in Section 6 hereof) shall survive the expiration or
         termination of this Agreement.

                  (f) Injunctive Relief. The Employee acknowledges and agrees
         that a remedy at law for any breach or threatened breach of the
         provisions of Section 10 hereof would be inadequate and, therefore,
         agrees that the Company and any of its subsidiaries or affiliates shall
         be entitled to seek injunctive relief in addition to any other
         available rights and remedies in cases of any such breach or threatened
         breach; provided, however, that nothing contained herein shall be
         construed as prohibiting the Company or any of its affiliates from
         pursuing any other rights and remedies available for any such breach or
         threatened breach.

                  11. Representations and Warranties. The Employee represents
and warrants that she is not subject to or a party to any agreement, contract,
covenants, order or other restriction which in any way prohibits, restricts or
impairs the Employee's ability to enter into this Agreement and carry out her
duties and obligations hereunder. Each party hereto represents and warrants to
the other that (i) each has the full legal right and power and all authority and
approvals required to enter into, execute and deliver this Agreement and to
perform fully all of her or its obligations hereunder; and (ii) this Agreement
has been duly executed and delivered and constitutes a valid and binding
obligation of each party, enforceable in accordance with its terms.

                  12. Binding Effect. Without limiting or diminishing the effect
of Section 9 hereof, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, successors, legal
representatives and assigns.

                  13. Notices. All notices which are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and (i) delivered personally,
(ii) mailed by certified or registered mail, return receipt requested and
postage prepaid, (iii) sent via a nationally recognized overnight courier or
(iv) sent via facsimile confirmed in writing to the recipient, if to the Company
at the Company's principal place of business, and if to the Employee, at her
home address most recently filed with the Company, or to such other address or
addresses as either party shall have designated in writing to the other party
hereto, provided, however, that any notice sent by certified or registered mail
shall be deemed delivered on the date of delivery as evidenced by the return
receipt.

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                  14. Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.

                  15. Severability. The Employee agrees that in the event that
any court of competent jurisdiction shall finally hold that any provision of
Section 6 or 10 hereof is void or constitutes an unreasonable restriction
against the Employee, the provisions of such Section 6 or 10 shall not be
rendered void but shall apply with respect to such extent as such court may
judicially determine constitutes a reasonable restriction under the
circumstances. If any part of this Agreement other than Section 6 or 10 is held
by a court of competent jurisdiction to be invalid, illegible or incapable of
being enforced in whole or in part by reason of any rule of law or public
policy, such part shall be deemed to be severed from the remainder of this
Agreement for the purpose only of the particular legal proceedings in question
and all other covenants and provisions of this Agreement shall in every other
respect continue in full force and effect and no covenant or provision shall be
deemed dependent upon any other covenant or provision.

                  16. Waiver. Failure to insist upon strict compliance with any
of the terms, covenants or conditions hereof shall not be deemed a waiver of
such term, covenant or condition, nor shall any waiver or relinquishment of any
right or power hereunder at any one or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.

                  17. Entire Agreement; Modifications. This Agreement
constitutes the entire and final expression of the agreement of the parties with
respect to the subject matter hereof and supersedes all prior agreements, oral
and written, between the parties hereto with respect to the subject matter
hereof. This Agreement may be modified or amended only by an instrument in
writing signed by both parties hereto.

                  18. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

                                    * * * * *

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                  IN WITNESS WHEREOF, the Company and the Employee have duly
executed and delivered this Agreement as of the day and year first above
written.
LEXENT INC.

                                            By:
                                                --------------------------------
                                                  Name:
                                                  Title:

                                            -----------------------------------
                                                  Nancy Huson

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                                                                   Exhibit 10.23

June 20, 2000

Mr. Benno C. Schmidt, Jr.
121 E. 91st Street
New York, NY  10128

Dear Benno:

         This letter agreement ("Agreement") sets forth the terms of your
employment with Edison Schools Inc. ("Edison" or the "Company"). This Agreement
supersedes and replaces the employment agreement dated March 1, 1997, as amended
by an amendment dated as of December 15, 1997, between you and The Edison
Project L.P. and any agreement appearing as an exhibit or attachment thereto or
referred to therein (the "1997 Employment Agreement"). Notwithstanding the
foregoing, your obligations with respect to the following shall survive and
shall not be modified: (i) the promissory note issued to Whittle Communications
L.P. (which was assigned to Edison) dated June 5, 1992 in the original principal
amount of $1,600,000, as amended by those certain Letter Agreements dated March
15, 1995, May 1, 1996, March 1, 1997 and December 15, 1997 and the Allonge to
Promissory Note dated as of October 5, 1999, and any accrued and unpaid interest
thereon through the date hereof (the "Existing Loan"); (ii) the promissory note
issued to Edison dated January 23, 1996 in the original principal amount of
$200,000, amended by those certain Letter Agreements dated March 1, 1997 and
December 15, 1997 and the Allonge to Promissory Note dated as of October 5,
1999, and any accrued and unpaid interest thereon through the date hereof (the
"Transition Loan" and, together with the Existing Loan, the "Loans"); (iii) the
release provided by the terms of your employment agreement with The Edison
Project L.P. dated March 15, 1995; (iv) the assignment to Edison of benefits
under the $5,000,000 First Colony Life Insurance policy 1893365 (the "Insurance
Policy") as collateral for the Loans; (v) the Nonstatutory Stock Option
Agreement between you and the Company dated as of June 30, 1999 which amended
and restated the option originally granted on March 15, 1995 and subsequently
amended on March 1, 1997 and December 15, 1997; and (vi) the Nonstatutory Stock
Option Agreement dated as of June 30, 1999 which amended and restated the Trance
1 Option granted on December 15, 1997.

         Position/Responsibilities. You will be employed as Edison's Chairman,
working out of the Company's headquarters in New York City. Your
responsibilities are set forth on Exhibit A attached hereto.
<PAGE>   2
         Term. The term of your employment will commence as of the date hereof
and end on June 30, 2003, unless terminated earlier by you or by the Company as
provided below.

                                       2
<PAGE>   3
         Base Salary. You will be paid at an annual base salary rate of $298,080
from the date hereof. Throughout the term of this Agreement, your base salary
will be increased or decreased at the same time and in the same amount as the
annual base salary of the Company's Chief Executive Officer ("CEO").

         Bonus. In addition to your base salary, you may be eligible for
incentive bonuses at the sole discretion of the Company's Board of Directors
("Board"). Whenever the Company grants a cash incentive bonus to the Company's
CEO, the Company will initiate a discussion with you, the CEO and the
Compensation Committee of the Board as to whether a similar bonus will be
granted to you.

         Stock Options. Simultaneous with the execution of this agreement, the
parties hereto shall execute the Stock Option Agreement dated as of June 20,
2000 and attached hereto as Exhibit B and the Stock Option Agreement dated as of
June 20, 2000 and attached hereto as Exhibit C.

         Benefits. You will be entitled to the standard Company benefits for
executives at your level as in effect from time to time. The Company will
further maintain for your benefit supplemental long-term disability insurance
and supplemental term life insurance under the Insurance Policy provided that
you execute, and cause any beneficiary named under the Insurance Policy to
execute, all documentation required or requested by Edison in connection with
the assignment of the Insurance Policy as collateral for the Loans, including,
without limitation, the assignment (for your execution) attached hereto as
Exhibit E and the consent to assignment (for execution by each beneficiary)
attached hereto as Exhibit F. You agree not to change the beneficiaries named
under the Insurance Policy without the prior written consent of Edison. You will
receive six weeks of vacation annually in addition to the official Company
holidays.

         Expense Reimbursements. You will be reimbursed for all reasonable
business expenses you incur in fulfilling your responsibilities hereunder upon
submission of adequate documentation for such expenses and subject to the
Company's policies.

         Termination/Severance Pay. Either you or Edison may terminate your
employment at any time without cause by giving written notice to that effect.
The termination of employment shall be effective on the date specified in such
notice (the "Effective Termination Date").

         (i) If Edison terminates your employment without cause or if you
terminate your employment for "good reason," Edison will pay you as severance
pay for a period beginning on the Effective Termination Date and ending twelve
months from such date (the "Severance Period") your then current base salary
plus the bonus amount you earned for the prior fiscal year (together, the
"Enhanced Base"). The Enhanced Base will be paid on Edison's normal payroll
cycle during the Severance Period whether or not

                                       3
<PAGE>   4
you obtain other employment. For purposes of this Agreement, "good reason" shall
mean (a) the assignment to you of duties and responsibilities which results in
your having materially less significant duties and responsibilities or
exercising materially less significant power and authority than you had, or
duties and responsibilities or power and authority not in all material respects
comparable to that of the level and nature which you had immediately prior to
any such assignment; (b) your removal, or the failure to re-appoint you to your
then current position with Edison; and (c) Edison's failure to perform in a
timely manner its material obligations under this Agreement, other than, in the
case of each of (a), (b) and (c), (A) with your express written consent or (B)
in connection with any termination of your employment by Edison as the result of
your disability or "for cause."

         (ii) If you terminate your employment without "good reason" as defined
above, Edison will pay you as severance pay your base salary as of the date of
termination for the Severance Period, provided that if you become employed
elsewhere during the Severance Period the amounts otherwise payable to you under
this sentence shall be reduced by the total amount of any compensation you earn
from such employment during the Severance Period regardless of when such
compensation is to be paid. You agree to report to the Company in writing the
amounts of any such compensation as soon as practicable after it is earned by
you. For purposes of the severance pay offset provisions of this paragraph, the
terms "employed" and "employment" shall mean the providing of any services for
compensation whether as a full-time or part-time employee or as a consultant.
Payments made to you as reimbursement for documented expenses will not
constitute compensation for purposes of this paragraph.

         (iii) Edison shall have the right to terminate your employment for
cause by giving you written notice to that effect. The termination of employment
shall be effective on the date specified in such notice. However, "for cause" is
restricted to (1) commission of a willful act of dishonesty in the course of
your duties with Edison which significantly injures Edison; (2) conviction of a
crime of moral turpitude or of a felony; or (3) chronic alcoholism or drug
abuse. If you are terminated for cause, Edison will pay your unpaid base salary
through the effective date of termination.

         (iv) In the event of a termination of your employment for any reason
except your death, in addition to any other severance pay to which you may be
entitled, the Company will pay you a lump sum of $3.2 million (the "Lump-sum
Severance Payment") within 30 days after the Effective Termination Date. Edison
will withhold from the Lump-sum Severance Payment all Federal, state and city
employment and income taxes related thereto that Edison is required to withhold.
You agree that Edison may offset against the Lump-Sum Severance Payment, as
reduced by any applicable tax withholdings, the total amount outstanding on the
Loans including the accrued and unpaid interest through the date of such offset.

                                       4
<PAGE>   5
         (v) In consideration of the severance pay provided for in (i), (ii) and
(iv) above, you agree to deliver to Edison on or promptly following the
effective date of the termination of your employment a Separation and Release in
the form customarily being used by Edison at such time.

         Death. If you die during your employment hereunder, this Agreement
shall terminate upon the date of your death. Edison's obligations under this
Agreement (other than obligations then due and owing hereunder) will terminate
upon Edison's payment to the personal representative of your estate (i) your
unpaid base salary through the date of your death and (ii) any expenses properly
reimbursable under this Agreement and not yet reimbursed.

         Stock Redemption. In the event of the termination of your employment
for any reason except your death, Edison agrees that upon receipt of your
written request within six months after the Effective Termination Date, it will
promptly purchase from you the minimum amount of Edison stock (the "Redeemed
Stock") necessary to provide you with enough cash to pay all Federal, state and
city income taxes (the "Required Taxes") on the Lump-Sum Severance Payment and
the Redeemed Stock. The Required Taxes shall be deemed to be the sum of (A) the
product of the Lump-Sum Severance Payment multiplied by the total of your
expected marginal tax rates for federal, state and city income taxes for the
year in which such payment is made, taking into account the deductibility of
state and city taxes for federal purposes, plus (B) the product of the capital
gain on the sale of the Redeemed Stock multiplied by the total of the applicable
federal, state and city capital gains tax rates for the year in which the stock
is sold, taking into account the deductibility of state and city taxes for
federal purposes. The date on which the Redeemed Stock will be purchased (the
"Redemption Date") will be determined by the Edison Board, but shall not be
later than the date federal income taxes are required to be paid on the Lump-Sum
Severance Payment. If Edison's stock is publicly traded, the price per share
paid by Edison for the Redeemed Stock shall be the average of the bid and asked
share prices for the 30-day period preceding the Redemption Date. If Edison's
stock is not publicly traded, the price per share paid for the Redeemed Stock
shall be the price paid in the most recent transaction, provided however that if
a third-party transaction occurs within three months after the Effective
Termination Date at a higher price, the purchase price shall be adjusted upward
to reflect such difference. Edison may offset against the proceeds of the
Redeemed Stock the total amount outstanding under the Loans, including the
accrued and unpaid interest through the date of such offset.

         Exclusivity. In return for the compensation payments set forth in this
agreement, you agree to devote 100% of your professional time and energies to
Edison and not engage in any other business activities without prior approval of
the Board.

         Confidentiality. It is understood that in order to perform your duties
at Edison, it will be necessary for Edison to divulge to you its proprietary
information, including,

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<PAGE>   6
but not limited to, information and data relating to or concerned with Edison's
business, finances, development projects and other affairs. You agree that you
will not divulge such proprietary information to anyone outside Edison at any
time whether or not you are in the employ of Edison, except as may otherwise be
required in connection with the business and affairs of Edison. You agree to use
your best efforts to prevent such disclosure by others. You also agree that any
developments, discoveries, or inventions made by you alone or with others during
the term of your employment with Edison and applicable to the type of businesses
or development projects engaged in by Edison during such period shall be the
sole and exclusive property of Edison and you agree to execute all documents
requested by Edison to protect Edison's rights thereto.

         Non-competition and Non-solicitation. You further agree that during
your employment with Edison and for one year after the termination of such
employment for any reason, you will not at any time engage in or participate as
an executive officer, employee, director, agent, consultant, representative,
stockholder, or partner, or have any financial interest, in any business which
"competes" with Edison or any subsidiary of Edison or successor to the business
of Edison. For the purposes hereof, a "competing" business shall mean any
business which directly competes with any of the businesses of Edison as such
business shall exist during your employment with Edison (for example, the
business of managing public and/or private schools for profit), but a
"competing" business shall not include the traditional non-profit education
business so long as such activities do not violate the confidentiality
provisions of this agreement. Ownership by you of publicly traded stock of any
corporation conducting any such business shall not be deemed a violation of the
preceding two sentences provided you do not own more than three percent (3%) of
the stock of any such corporation. You further agree that for a period of one
year after the termination of your employment with Edison for any reason, you
will not, directly or indirectly, solicit the employment or other services of
any executive employee of Edison. For the purposes of the foregoing, any
executive employee who within twelve months of terminating his employment with
Edison becomes employed by any entity of which you are an officer or director or
owner of more than an aggregate of 3% of the outstanding stock or equity
interest therein shall be deemed, prima facie, to have been so solicited.

         Entire Agreement. Except as expressly provided in the first paragraph
of this Agreement and together with the attached exhibits, this letter agreement
constitutes the entire understanding of the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, written or
oral, among the parties with respect to such subject matter. This agreement is
governed by the substantive laws of the State of New York.

         Duplicate originals of this agreement are being provided to you. Please
sign below to evidence your agreement to the foregoing, and return one original
to me for our records.

                                       6
<PAGE>   7
Sincerely,
EDISON SCHOOLS INC.

By: /s/ H. Christopher Whittle
   ____________________________________
     H. Christopher Whittle
     President and CEO

ACCEPTED AND AGREED:

/s/ Benno C. Schmidt, Jr.
__________________________
Benno C. Schmidt, Jr.

June 20, 2000
_________________________
Date

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<PAGE>   8
                                    EXHIBIT A

                        RESPONSIBILITIES OF THE CHAIRMAN

All of the following responsibilities are subject to the direction, authority
and approval of Edison's Board of Directors.

         -   Preside over Edison's Board meetings

         -   Direct the Company's legislative and political efforts

         -   Participate in the Company's strategic planning initiatives

         -   Support the Company's marketing efforts

         -   Assist in capital formation

         -   Engage in philanthropic activities as directed by the Board

         -   Direct the Company's headquarters development efforts

                                       8
<PAGE>   9
                                    EXHIBIT B

                               EDISON SCHOOLS INC.

                            NONSTATUTORY STOCK OPTION
                     GRANTED UNDER 1999 STOCK INCENTIVE PLAN

1.       Grant of Option.

         This agreement evidences the grant by Edison Schools Inc., a Delaware
corporation (the "Company"), on June 20, 2000 (the "Grant Date") to BENNO C.
SCHMIDT, JR., an employee of the Company (the "Participant"), of an option (the
"Option") to purchase, in whole or in part, on the terms provided herein and in
the Company's 1999 Stock Incentive Plan (the "Plan"), a total of 225,000 shares
(the "Shares") of Class A Common Stock, $.01 par value per share, of the Company
("Common Stock") at $20.75 per Share. The Option is granted in consideration of
the performance of those services the Participant is already performing or may
be expected to perform as an employee of the Company. Unless earlier terminated
as provided herein, this Option shall expire on the date 10 years from the Grant
Date (the "Final Exercise Date").

         It is intended that the Option evidenced by this notice shall not be an
incentive stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended, and any regulations promulgated thereunder (the "Code").
Except as otherwise indicated by the context, the term "Participant," as used in
this Option, shall be deemed to include any person who acquires the right to
exercise this Option validly under its terms.

2.       Vesting Schedule.

         (a) This Option will become exercisable ("vest") with respect to 75,000
Shares in equal amounts over a 60-month period, with the first monthly vesting
to occur on the last day of June, 2000 and the last monthly vesting to occur on
the last day of May, 2005, provided

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<PAGE>   10
Participant is continuously employed over this period. If Participant ceases to
be an employee of the Company, vesting will cease at such time.

         (b) This Option will vest with respect to 150,000 Shares on May 20,
2010, provided that (i) vesting with respect to 25,000 Shares for each of the
three Fiscal Years (as defined below) of the Company beginning with the 2001
Fiscal Year and ending with the 2003 Fiscal Year shall be accelerated based upon
assessment by the Company's compensation committee, as approved by the Company's
Board of Directors (the "Board"), of the Company's performance for the
respective Fiscal Year; and (ii) vesting with respect to 25,000 Shares for each
of the three Fiscal Years of the Company beginning with the 2001 Fiscal Year and
ending with the 2003 Fiscal Year shall be accelerated based upon assessment by
the Company's compensation committee, as approved by the Board, of Participant's
individual performance for the respective Fiscal Year. "Fiscal Year" means with
respect to the Company, the twelve-month period running from July 1 of one
calendar year through June 30 of the succeeding calendar year

         (c) The right of exercise shall be cumulative so that to the extent the
Option is not exercised in any period to the maximum extent permissible it shall
continue to be exercisable, in whole or in part, with respect to all Shares for
which it is vested until the earlier of the Final Exercise Date or the
termination of this Option under Section 3 hereof or the Plan.

3.       Exercise of Option.

         (a) Form of Exercise. Each election to exercise this Option shall be in
writing, signed by the Participant, and received by the Company at its principal
office, accompanied by this agreement and payment in full in the manner provided
in the Plan. The Participant may purchase

                                       2
<PAGE>   11
less than the number of Shares covered hereby, provided that no partial exercise
of this Option may be for any fractional share or for fewer than ten whole
Shares.

         (b) Continuous Relationship with the Company Required. Except as
otherwise provided in this Section 3, this Option may not be exercised unless
the Participant, at the time he or she exercises this Option, is, and has been
at all times since the Grant Date, an employee of the Company (an "Eligible
Participant").

         (c) Termination of Relationship with the Company. If the Participant
ceases to be an Eligible Participant for any reason, then, except as provided in
paragraphs (d) and (e) below, the right to exercise this Option shall terminate
two years after such cessation (but in no event after the Final Exercise Date),
provided that this Option shall be exercisable only to the extent that the
Participant was entitled to exercise this Option on the date of such cessation.
Notwithstanding the foregoing, if the Participant, prior to the Final Exercise
Date, violates the non-competition or confidentiality provisions of any
employment contract, confidentiality and nondisclosure agreement or other
agreement between the Participant and the Company, the right to exercise this
Option shall terminate immediately upon written notice to the Participant from
the Company describing such violation.

         (d) Exercise Period Upon Death or Disability. If the Participant dies
or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior
to the Final Exercise Date while he or she is an Eligible Participant and the
Company has not terminated such relationship for "cause" as specified in
paragraph (e) below, this Option shall be exercisable, within the period of one
year following the date of death or disability of the Participant, by the
Participant, provided that this Option shall be exercisable only to the extent
that this Option was exercisable

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<PAGE>   12
by the Participant on the date of his or her death or disability, and further
provided that this Option shall not be exercisable after the Final Exercise
Date.

         (e) Discharge for Cause. If the Participant, prior to the Final
Exercise Date, is discharged by the Company for "cause" (as defined below), the
right to exercise this Option shall terminate immediately upon the effective
date of such discharge. "Cause" shall mean willful misconduct by the Participant
or willful failure by the Participant to perform his or her responsibilities to
the Company (including, without limitation, breach by the Participant of any
provision of any employment, consulting, advisory, nondisclosure,
non-competition or other similar agreement between the Participant and the
Company), as determined by the Company, which determination shall be conclusive.
The Participant shall be considered to have been discharged for Cause if the
Company determines, within 30 days after the Participant's resignation, that
discharge for cause was warranted.

4.       Withholding.

         No Shares will be issued pursuant to the exercise of this Option unless
and until the Participant pays to the Company, or makes provision satisfactory
to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this Option.

5.       Nontransferability of Option.

         This Option may not be sold, assigned, transferred, pledged or
otherwise encumbered by the Participant, either voluntarily or by operation of
law, except by will or the laws of descent and distribution, and, during the
lifetime of the Participant, this Option shall be exercisable only by the
Participant.

                                       4
<PAGE>   13
6.       Confidentiality.

         To the extent Participant acquires non-public information with respect
to the Company, including without limitation, technical, financial, competitive,
marketing, sales, and business information, documents and tangible items
(collectively, the "Information"), Participant shall keep such Information
strictly confidential and not at any time hereafter disclose or divulge such
Information to any person, firm or corporation or otherwise use such Information
for any such purpose (other than for the purposes of the Company) without the
prior written consent of the Company.

7.       Provisions of the Plan.

         This Option is subject to the provisions of the Plan, a copy of which
is furnished to the Participant with this Option.

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<PAGE>   14
         IN WITNESS WHEREOF, the Company has caused this Option to be executed
under its corporate seal by its duly authorized officer. This Option shall take
effect as a sealed instrument.

                                   EDISON SCHOOLS INC.

                                   By:____________________________

                                       H. Christopher Whittle

                                       President and Chief Executive Officer

Dated:____________________

                                       6
<PAGE>   15
PARTICIPANT'S ACCEPTANCE

         The undersigned hereby accepts the foregoing Option and agrees to the
terms and conditions thereof. The undersigned hereby acknowledges receipt of a
copy of the Company's 1999 Stock Incentive Plan.

                                  PARTICIPANT:

                                  _______________________________

                                  Name: Benno C. Schmidt, Jr.

                                  Address: ______________________

                                           ______________________

         If the Participant resides in a community property state, it is
desirable to have the Participant's spouse also accept the Option by signature
here. The following are community property states: Arizona, California, Idaho,
Louisiana, Nevada, New Mexico, Texas, and Washington. Although Wisconsin is not
formally a community property state, it has laws governing the division of
marital property similar to community property states and it may be desirable to
have a Wisconsin Participant's spouse also accept the Option. In addition, if
the Company is granting an Option to a California Participant, it must comply
with California blue sky rules which, if applicable, require modification to
this Option.

                                       7
<PAGE>   16
                                    EXHIBIT C

                               EDISON SCHOOLS INC.

                            NONSTATUTORY STOCK OPTION
                     GRANTED UNDER 1999 STOCK INCENTIVE PLAN

1.       Grant of Option.

         This agreement evidences the grant by Edison Schools Inc., a Delaware
corporation (the "Company"), as of June 20, 2000 (the "Grant Date") to BENNO C.
SCHMIDT, JR., an employee of the Company (the "Participant"), of an option (the
"Option") to purchase, in whole or in part, on the terms provided herein and in
the Company's 1999 Stock Incentive Plan (the "Plan"), a total of 66,500 shares
(the "Shares") of Class A Common Stock, $.01 par value per share, of the Company
("Common Stock") at $20.75 per Share. The Option is granted in consideration of
the performance of those services the Participant is already performing or may
be expected to perform as an employee of the Company. Unless earlier terminated
as provided herein, this Option shall expire on the date 10 years from the Grant
Date (the "Final Exercise Date").

         It is intended that the Option evidenced by this notice shall not be an
incentive stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended, and any regulations promulgated thereunder (the "Code").
Except as otherwise indicated by the context, the term "Participant," as used in
this Option, shall be deemed to include any person who acquires the right to
exercise this Option validly under its terms.

2.       Vesting Schedule.

         (a) This Option will become exercisable ("vest") in equal amounts over
a 60-month period, with the first monthly vesting to occur on the last day of
June, 2000 and the last monthly vesting to occur on the last day of May, 2005,
provided Participant is continuously employed

                                       1
<PAGE>   17
over this period. If Participant ceases to be an employee of the Company,
vesting will cease at such time.

         (b) The right of exercise shall be cumulative so that to the extent the
Option is not exercised in any period to the maximum extent permissible it shall
continue to be exercisable, in whole or in part, with respect to all Shares for
which it is vested until the earlier of the Final Exercise Date or the
termination of this Option under Section 3 hereof or the Plan.

3.       Exercise of Option.

         (a) Form of Exercise. Each election to exercise this Option shall be in
writing, signed by the Participant, and received by the Company at its principal
office, accompanied by this agreement and payment in full in the manner provided
in the Plan. The Participant may purchase less than the number of Shares covered
hereby, provided that no partial exercise of this Option may be for any
fractional share or for fewer than ten whole Shares.

         (b) Continuous Relationship with the Company Required. Except as
otherwise provided in this Section 3, this Option may not be exercised unless
the Participant, at the time he or she exercises this Option, is, and has been
at all times since the Grant Date, an employee of the Company (an "Eligible
Participant").

         (c) Termination of Relationship with the Company. If the Participant
ceases to be an Eligible Participant for any reason, then, except as provided in
paragraphs (d) and (e) below, the right to exercise this Option shall terminate
two years after such cessation (but in no event after the Final Exercise Date),
provided that this Option shall be exercisable only to the extent that the
Participant was entitled to exercise this Option on the date of such cessation.
Notwithstanding the foregoing, if the Participant, prior to the Final Exercise
Date, violates the non-competition or confidentiality provisions of any
employment contract, confidentiality and nondisclosure

                                       2
<PAGE>   18
agreement or other agreement between the Participant and the Company, the right
to exercise this Option shall terminate immediately upon written notice to the
Participant from the Company describing such violation.

         (d) Exercise Period Upon Death or Disability. If the Participant dies
or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior
to the Final Exercise Date while he or she is an Eligible Participant and the
Company has not terminated such relationship for "cause" as specified in
paragraph (e) below, this Option shall be exercisable, within the period of one
year following the date of death or disability of the Participant, by the
Participant, provided that this Option shall be exercisable only to the extent
that this Option was exercisable by the Participant on the date of his or her
death or disability, and further provided that this Option shall not be
exercisable after the Final Exercise Date.

         (e) Discharge for Cause. If the Participant, prior to the Final
Exercise Date, is discharged by the Company for "cause" (as defined below), the
right to exercise this Option shall terminate immediately upon the effective
date of such discharge. "Cause" shall mean willful misconduct by the Participant
or willful failure by the Participant to perform his or her responsibilities to
the Company (including, without limitation, breach by the Participant of any
provision of any employment, consulting, advisory, nondisclosure,
non-competition or other similar agreement between the Participant and the
Company), as determined by the Company, which determination shall be conclusive.
The Participant shall be considered to have been discharged for Cause if the
Company determines, within 30 days after the Participant's resignation, that
discharge for cause was warranted.

4.       Withholding.

         No Shares will be issued pursuant to the exercise of this Option unless
and until the

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<PAGE>   19
Participant pays to the Company, or makes provision satisfactory to the Company
for payment of, any federal, state or local withholding taxes required by law to
be withheld in respect of this Option.

5.       Nontransferability of Option.

         This Option may not be sold, assigned, transferred, pledged or
otherwise encumbered by the Participant, either voluntarily or by operation of
law, except by will or the laws of descent and distribution, and, during the
lifetime of the Participant, this Option shall be exercisable only by the
Participant.

6.       Confidentiality.

         To the extent Participant acquires non-public information with respect
to the Company, including without limitation, technical, financial, competitive,
marketing, sales, and business information, documents and tangible items
(collectively, the "Information"), Participant shall keep such Information
strictly confidential and not at any time hereafter disclose or divulge such
Information to any person, firm or corporation or otherwise use such Information
for any such purpose (other than for the purposes of the Company) without the
prior written consent of the Company.

7.       Provisions of the Plan.

         This Option is subject to the provisions of the Plan, a copy of which
is furnished to the Participant with this Option.

                                       4
<PAGE>   20
         IN WITNESS WHEREOF, the Company has caused this Option to be executed
under its corporate seal by its duly authorized officer. This Option shall take
effect as a sealed instrument.

                                   EDISON SCHOOLS INC.

                                   By:____________________________

                                       H. Christopher Whittle

                                       President and Chief Executive Officer

Dated:____________________

                                       5
<PAGE>   21
PARTICIPANT'S ACCEPTANCE

         The undersigned hereby accepts the foregoing Option and agrees to the
terms and conditions thereof. The undersigned hereby acknowledges receipt of a
copy of the Company's 1999 Stock Incentive Plan.

                                  PARTICIPANT:

                                  _________________________________

                                  Name: Benno C. Schmidt, Jr.

                                  Address: ________________________

                                           ________________________

         If the Participant resides in a community property state, it is
desirable to have the Participant's spouse also accept the Option by signature
here. The following are community property states: Arizona, California, Idaho,
Louisiana, Nevada, New Mexico, Texas, and Washington. Although Wisconsin is not
formally a community property state, it has laws governing the division of
marital property similar to community property states and it may be desirable to
have a Wisconsin Participant's spouse also accept the Option. In addition, if
the Company is granting an Option to a California Participant, it must comply
with California blue sky rules which, if applicable, require modification to
this Option.

                                       6

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