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Exhibit 10.1
CHANGE OF CONTROL AGREEMENT
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CHANGE OF CONTROL AGREEMENT, dated as of September 7, 2000, by and between
SmarterKids.com. (the "Company") and __________ (the "Executive"). This
Agreement supercedes any other agreement between the parties.
WHEREAS, the Company believes it to be to its advantage to employ the
Executive to render services to the Company as hereinafter provided;
WHEREAS, the Company desires continuity of management; and
WHEREAS, the Executive is willing to continue to render services to the
Company subject to the conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Executive agree
as follows:
1. TERMINATION FOLLOWING A CHANGE OF CONTROL.
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(a) If, at any time after a Change in Control (as such term is defined in
Section 3(b)), but prior to the date three (3) years from the date of a Change
in Control, the Company terminates the Executive's employment, the Company
shall:
(i) continue to pay to the Executive, in accordance with the Company's
normal payroll practices and policies in effect from time to time
(including any required withholding), the Executive's base salary
(at the monthly base salary rate in effect for such Executive
immediately prior to the termination of his employment) until the
earlier of (i) six (6) months following the termination of the
Executive's employment, or (ii) the date the Executive is employed by
a subsequent employer or is engaged as a consultant (note: in the
event of consulting income of less than base salary, the Company will
compensate the difference) (the "Severance Payments"); provided,
however, that the Company shall not be obligated to make any Severance
Payments pursuant to this Section 1(a) during any period in which the
Executive is in violation of the terms of his/her Employee
Noncompetition, Nondisclosure and Developments Agreement with the
Company;
(ii) the date of the Executive's termination shall be the date of the
"qualifying event" under the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA"). If the Executive elects to
continue medical insurance coverage after termination in accordance
with the provisions of COBRA, the Company shall pay the Executive's
monthly premium payments until the earlier of (i) the date which is
six (6) months following the termination of the Executive's
employment; (ii) the date the Executive obtains other employment, or
(iii) the date the Executive's COBRA continuation coverage would
terminate in accordance with the provisions
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of COBRA. Thereafter, if the payment of monthly premiums by the
Company has ceased due to a reason in (i) or (ii) above, the
Executive will be responsible for any and all payments for the
remaining period of elected continued health insurance coverage under
COBRA.
(iii) In addition to any other vesting provisions that the Executive may be
entitled to in accordance with other agreements with the Company,
accelerate the vesting of all of the Executive's incentive and non-
qualified stock options by six (6) months from the date of the
termination;
(b) For purposes of Section 1, "Good Reason" shall mean the occurrence of
one or more of the following events following a Change of Control: (i) the
assignment to the Executive of any duties substantially inconsistent with his
position, authority, duties or responsibilities immediately prior to the Change
of Control or any other action by the Company which results in a substantial
limitation in such position, authority, duties or responsibilities; (ii) a
substantial reduction in the aggregate of the Executive's base or incentive
compensation of the termination of the Executive's rights or any employee
benefits immediately prior to the Change of Control, except to the extent any
such benefit is replaced with a substantially similar benefit, or a reduction in
scope of value thereof; or (iii) a relocation of the Executive's place of
business which results in the one-way commuting distance for the Executive
increasing by more than 50 miles from the location thereof immediately prior to
the Change of Control (provided, however, that travel consistent with past
practices for business purposes shall not be considered "commuting" for purposes
of this clause (iii)); or (iv) a failure by the Company to obtain the agreement
referenced in Section 3(f).
2. TERM. If a Change of Control has not occurred within three (3) years
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from the date hereof, this Agreement shall terminate and be of no further force
and effect.
3. GENERAL.
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(a) Notwithstanding anything else to the contrary herein: (i) the
Company's obligation to provide any of the amounts and benefits set forth in
this Agreement shall be subject to, and conditioned upon, the Executive's
execution of a full release of claims satisfactory to the Company releasing the
Company and its affiliates, subsidiaries, divisions, directors, employees and
agents from any claims arising from or related to the Executive's employment or
severance from employment with the Company, including any claims arising from
this Agreement (the "Release"); (ii) the Company shall not be obligated to
provide any of the amounts and benefits set forth in this Agreement until any
applicable period within which the Executive may revoke the Release has expired;
and (iii) any amounts and benefits set forth in this Agreement shall be reduced
by any and all other severance or other amounts or benefits paid or payable to
the Executive as a result of the termination of his employment.
(b) In the event the Executive's employment with the Company is terminated
by the Company for any reason other than without Cause, or the Executive
terminates his employment with the Company for any reason other than Good
Reason, the Executive shall not be entitled to any severance benefits or other
considerations described herein.
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(c) For purposes of this Agreement, "Change of Control" shall mean the
closing of: (i) a merger, consolidation, liquidation or reorganization of the
Company into or with another Company or other legal person, after which merger,
consolidation, liquidation or reorganization the capital stock of the Company
outstanding prior to consummation of the transaction is not converted into or
exchanged for or does not represent more than 50% of the aggregate voting power
of the surviving or resulting entity; or (ii) the direct or indirect acquisition
by any person (as the term "person" is used in Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended) of more than 50% of the voting
capital stock of the Company, in a single or series of related transactions.
(d) For purposes of this Agreement, "Cause" shall mean: (i) the commission
of the Executive of a felony, either in connection with the performance of his
obligations to the Company or which adversely affects the Executive's ability to
perform such obligations; (ii) gross negligence, dishonesty or breach of
fiduciary duty; or (iii) the commission by the Executive of an act of fraud or
embezzlement which results in loss, damage or injury to the Company, whether
directly or indirectly.
(e) Notwithstanding anything to the contrary in this Agreement, if the
Company determines in its sole discretion after consultation with its tax and
accounting advisors that the Executive is a Disqualified Individual (as defined
in Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"))
and that any portion of any payment or distribution by the Company to or for the
benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise (a "Payment")
would be an Excess Parachute Payment (as defined in Section 280G of the Code)
but for the application of this sentence, then the amount of all such Payments
otherwise payable to the Executive pursuant to this Agreement shall be reduced
to the minimum extent necessary (but in no event to less than zero) so that no
portion of any Payment, as so reduced, constitutes an Excess Parachute Payment.
For purposes of this reduction, no portion of any Payment shall be taken into
account to the extent that such Payment, in the opinion of the Company, after
consultation with its tax and accounting advisors, does not constitute a
"parachute payment" within the meaning of Section 280G(b)(2) of the Code.
(f) Except as otherwise provided herein, this Agreement shall be binding
upon and inure to the benefit of the Company and any successor (whether direct
or indirect, by purchase, merger, consolidation, reorganization or otherwise) of
the Company; provided, however, that the Company shall obtain the written
agreement of any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) of the Company to be bound by the
provisions of this Agreement as if such successor were the Company and for
purposes of this Agreement, any such successor of the Company shall be deemed to
be the "Company" for all purposes.
(g) Nothing in this Agreement shall create any obligation on the part of
the Company or any other person to continue the employment of the Executive or
to employ the Executive for
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any specific or definite term or length of employment. If the Executive elects
to receive the severance and benefits set forth in this Agreement by executing
the Release, the Executive shall not be entitled to any other salary
continuation, severance or other termination benefits in the event of his
cessation of employment with the Company.
(h) Nothing herein shall affect the Executive's obligations under any key
employee, non-competition, confidentiality, option or similar agreement between
the Company and the Executive currently in effect or which may be entered into
in the future.
4. REPRESENTATIONS AND GOVERNING LAW
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(a) This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
(b) This Agreement represents the complete and sole understanding between
the parties, supersedes any and all other agreements and understandings, whether
oral or written. This Agreement may not be modified, amended or rescinded except
upon the written consent of the Company and the Executive. The invalidity or
unenforceability of any provision of this Agreement shall not affect the other
provisions of this Agreement and this Agreement shall be construed and reformed
to the fullest extent possible.
(c) The Executive may not assign any of his rights or obligations under
this Agreement; the rights and obligations of the Company under this Agreement
shall inure to the benefit of, and shall be binding upon, the successors and
assigns of the Company. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument.
(d) The Executive represents that he has read the foregoing Agreement,
fully understands the terms and conditions of such Agreement, and is voluntarily
executing the same. In entering into this Agreement, the Executive does not
rely on any representation, promise or inducement made by the company, with the
consideration described herein.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
The Company:
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SMARTERKIDS.COM
By:
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Name:
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Title:
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The Executive:
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