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EXHIBIT 10.2
LEARNINGSTAR CORP.
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2000 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose. This 2000 Non-Employee Director Stock Option Plan (the
"Plan") is intended to promote the interests of LearningStar Corp. (the
"Company") by providing an inducement to obtain and retain the services of
qualified persons who are not employees or officers of the Company to serve as
members of its Board of Directors (the "Board").
2. Available Shares. The total number of shares of Common Stock, par
value $.01 per share, of the Company (the "Common Stock") for which Options (as
defined below) may be granted under the Plan shall not exceed [__________]
shares, subject to adjustment in accordance with paragraph 10 of the Plan.
Shares subject to the Plan are authorized but unissued shares or shares that
were previously issued and subsequently reacquired by the Company. If any
Options granted under the Plan are surrendered or lapse without exercise, in
whole or in part, the shares reserved therefor shall continue to be available
under the Plan.
3. Administration. The Plan shall be administered by the Board or by
a committee appointed by the Board (the "Committee"). In the event the Board
fails to appoint or refrains from appointing a Committee, the Board shall have
all power and authority to administer the Plan. In such event, the word
"Committee" wherever used herein shall be deemed to mean the Board. The
Committee shall, subject to the provisions of the Plan, have the power to
construe the Plan, to determine all questions hereunder, and to adopt and amend
such rules and regulations for the administration of the Plan as it may deem
desirable. No member of the Board or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
Option granted under it.
4. Automatic Grant of Options. The Plan shall first become effective
on the date that the Plan is approved by the Board (the "Effective Date").
Subject to the availability of shares under the Plan, (a) each person who first
becomes a member of the Board after the Effective Date and who is not an
employee or officer of the Company (each a "Non-Employee Director" and,
collectively, "Non-Employee Directors") shall be automatically granted on the
date such person is first elected to the Board, without further action by the
Board, an option to purchase [45,000] shares of the Common Stock, provided, that
the grant described in this clause (a) shall not be made to any person who
served as a non-employee director of Smarterkids.com, Inc. prior to the
Effective Date, and (b) each Non-Employee Director (whether or not such person
was elected initially before or after the Effective Date) upon reelection to the
Board of Directors during the term of the Plan, shall be automatically granted
on each such date an option to purchase an additional [2,000] shares of Common
Stock (each an, "Option" and, collectively, the "Options"). The Options to be
granted under this paragraph 4 shall be the only Options granted at any time to
any Non-Employee Director (each an "Optionee" and, collectively, the
"Optionees") under the Plan. The number of shares covered by Options granted
under this paragraph 4 shall be subject to adjustment pursuant to paragraph 10
of the Plan. Notwithstanding anything to the contrary set forth herein, if the
Plan is not approved by a majority of the Company's stockholders present, or
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represented, and voting on such matter at the first meeting of stockholders of
the Company following the Effective Date, then the Plan and the Options granted
pursuant to this Section 4 shall terminate and become void, and no further
Options shall be granted under the Plan.
5. Option Price. The purchase price of the shares of stock covered
by an Option granted pursuant to the Plan shall be 100% of the fair market value
of such shares (the "Exercise Price") on the day the Option is granted (the
"Grant Date"), subject to adjustments pursuant to paragraph 10 of the Plan. For
purposes of the Plan, if, at the time an option is granted under the Plan, the
Company's Common Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the Grant Date and shall mean (i) the
average (on that date) of the high and low prices of the Common Stock on the
principal national securities exchange on which the Common Stock is traded, if
the Common Stock is then traded on a national securities exchange; or (ii) the
last reported sale price (on that date) of the Common Stock on the Nasdaq
National Market, if the Common Stock is not then traded on a national securities
exchange; or (iii) the closing bid price (or average of bid prices) last quoted
(on that date) by an established quotation service for over- the-counter
securities, if the Common Stock is not traded on the Nasdaq National Market.
However, if the Common Stock is not publicly traded at the time an option is
granted under the Plan, "fair market value" shall be deemed to be the fair value
of the Common Stock as determined by the Committee after taking into
consideration all factors which it deems appropriate, including, without
limitation, recent sale and offer prices of the Common Stock in private
transactions negotiated at arm's length.
6. Period of Option. Unless sooner terminated in accordance with the
provisions of paragraph 8 of the Plan, an Option granted hereunder shall expire
on the date which is ten (10) years after the date of grant of the Option.
7. Vesting of Shares and Non-Transferability of Options.
(a) Vesting of Shares. Subject to paragraphs 8 and 10 of the
Plan, Options held by each Optionee shall vest and become exercisable in
accordance with the following schedule, provided that the Optionee has
continuously served as a member of the Board through the following vesting
dates:
Percentage Date of Vesting
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33 1/3% One year from the date of grant
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66 2/3% Two years from the date of grant
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100% Three years from the date of grant
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The number of shares as to which Options may be exercised shall be
cumulative, so that once the Option becomes exercisable as to any shares it
shall continue to be exercisable as to such shares, until expiration or
termination of the Option as provided in the Plan.
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(b) Non-transferability. Any Option granted pursuant to the
Plan shall not be assignable or transferable other than by will or the laws
of descent and distribution or pursuant to a domestic relations order and,
subject to paragraph 8(b), shall only be exercisable during the Optionee's
lifetime.
8. Termination of Option Rights.
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(a) In the event an Optionee ceases to be a member of the Board
for any reason other than death or permanent disability, any unexercised
portion of Options granted to such Optionee shall, to the extent not then
vested, immediately terminate and become void; any portion of an Option
which is then vested but has not been exercised at the time the Optionee so
ceases to be a member of the Board may be exercised by the Optionee within
90 days after the date the Optionee ceased to be a member of the Board; and
all Options shall terminate after such 90 days have expired.
(b) In the event that an Optionee ceases to be a member of the
Board by reason of his or her death or permanent disability, any Option
granted to such Optionee shall be immediately and automatically accelerated
and become fully vested and exercisable by the Optionee (or by the
Optionee's personal representative, heir or legatee, in the event of death)
until the scheduled expiration date of the Option.
(c) No portion of an Option may be exercised if the Optionee is
removed from the Board of Directors for any one of the following reasons:
(i) disloyalty, gross negligence, dishonesty or breach of fiduciary duty to
the Company; or (ii) the commission of an act of embezzlement, fraud or
deliberate disregard of the rules or policies of the Company which results
in loss, damage or injury to the Company, whether directly or indirectly;
or (iii) the unauthorized disclosure of any trade secret or confidential
information of the Company; or (iv) the commission of an act which
constitutes unfair competition with the Company, or which induces any
customer of the Company to break a contract with the Company; or (v) any
activity on behalf of any organization or entity which is a competitor of
the Company, unless such conduct is approved by a majority of the members
of the Board of Directors.
9. Exercise of Option. Subject to the terms and conditions of the
Plan and the option agreements, an Option granted hereunder shall, to the extent
then exercisable, be exercisable in whole or in part by giving written notice
addressed to the Company at [_____________________________], or the last address
indicated by the Company, stating the number of shares with respect to which the
Option is being exercised, accompanied by payment in full for such shares.
Payment may be (a) in United States dollars in cash or by check, (b) in whole or
in part in shares of the Common Stock of the Company already owned by the person
or persons exercising the Option or shares subject to the Option being exercised
(subject to such restrictions and guidelines as the Board may adopt from time to
time), valued at fair market value determined in accordance with the provisions
of paragraph 5 or (c) consistent with applicable law, through the delivery of an
assignment to the Company of a sufficient amount of the proceeds from the sale
of the Common Stock acquired upon exercise of the Option and an authorization to
the broker or selling agent to pay that amount to the Company, which sale shall
be at the Optionee's direction at
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the time of exercise. There shall be no such exercise at any one time as to
fewer than the lesser of one hundred (100) shares or the total number of shares
that the Optionee may exercise under his or her respective Option. The Company's
transfer agent shall, on behalf of the Company, prepare a certificate or
certificates representing such shares acquired pursuant to exercise of the
Option, shall register the Optionee as the owner of such shares on the books of
the Company and shall cause the fully executed certificate(s) representing such
shares to be delivered to the Optionee as soon as practicable after payment of
the Exercise Price in full. The holder of an Option shall not have any rights of
a stockholder with respect to the shares covered by the Option, except to the
extent that certificates for such shares are delivered to him or her upon the
due exercise of the Option.
10. Adjustments Upon Changes in Capitalization and Other Events.
Upon the occurrence of any of the following events, an Optionee's rights with
respect to Options granted to him or her hereunder shall be adjusted as
hereinafter provided:
(a) Stock Dividends and Stock Splits. If the shares of Common
Stock shall be subdivided or combined into a greater or smaller number of
shares or if the Company shall issue any shares of Common Stock as a stock
dividend on its outstanding Common Stock, the number of shares of Common
Stock deliverable upon the exercise of Options shall be appropriately
increased or decreased proportionately, and appropriate adjustments shall
be made in the purchase price per share to reflect such subdivision,
combination or stock dividend.
(b) Recapitalization Adjustments. In the event of a
reorganization, recapitalization, merger, consolidation, or any other
change in the corporate structure or shares of the Company, to the extent
permitted by Rule 16b-3 under the Securities Exchange Act of 1934, the
Committee shall make adjustments in the number and kind of shares
authorized by the Plan and in the number and kind of shares covered by the
Plan, and in the Exercise Price of outstanding Options under the Plan
necessary to maintain the proportionate interest of the Optionee and
preserve, without exceeding, the value of such Option. Notwithstanding the
foregoing, no such adjustment shall be made which would, within the meaning
of any applicable provisions of the Internal Revenue Code of 1986, as
amended, constitute a modification, extension or renewal of any Option or a
grant of additional benefits to the holder of any Option.
(c) Issuances of Securities. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and
no adjustment by reason thereof shall be made with respect to, the number
or Exercise Price of shares subject to Options. No adjustments shall be
made for dividends paid in cash or in property except as set forth in
subsection (a) above.
(d) Adjustments. The Board shall determine the specific
adjustments to be made under this paragraph 10 and its determination shall
be conclusive.
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11. Restrictions on Issuance of Shares. Notwithstanding the
provisions of paragraphs 4 and 9 of the Plan, the Company shall have no
obligation to deliver any certificate or certificates upon exercise of an Option
until one of the following conditions shall be satisfied:
(i) The shares subject to the Option are effectively registered
under applicable Federal and state securities laws as now in force or
hereafter amended; or
(ii) Counsel for the Company shall have given an opinion that the
issuance of such shares is exempt from registration under Federal and state
securities laws as now in force or hereafter amended; and that the Company
has complied with all applicable laws and regulations with respect thereto,
including without limitation all regulations required by any stock exchange
upon which the Company's outstanding Common Stock is then listed.
12. Legend on Certificates. The certificates representing shares
issued pursuant to the exercise of an Option granted hereunder shall include
such appropriate legends, and such written instructions to the Company's
transfer agent, as may be deemed necessary or advisable by counsel to the
Company in order to comply with the requirements of the Securities Act of 1933,
as amended (the "Securities Act") or any state securities laws.
13. Representation of Optionee. If requested by the Company, the
Optionee shall deliver to the Company written representations and warranties
upon exercise of the Option that are necessary to show compliance with Federal
and state securities laws, including representations and warranties to the
effect that a purchase of shares under the Option is made for investment and not
with a view to their distribution (as that term is used in the Securities Act).
14. Option Agreement. Each Option granted under the provisions of
the Plan shall be evidenced by an option agreement, which agreement shall be
duly executed and delivered on behalf of the Company and by the Optionee to whom
such Option is granted. The option agreement shall contain such terms,
provisions and conditions not inconsistent with the Plan as may be determined by
the officer executing such option agreement.
15. Termination and Amendment of Plan. Options may no longer be
granted under the Plan after the tenth (10th) anniversary of the date that the
Plan is approved by the Board, and the Plan shall terminate when all Options
granted or to be granted hereunder are no longer outstanding.
The Board may at any time wholly or partially amend, alter, suspend or
terminate the Plan. However, without approval of the Company's stockholders
given within twelve (12) months before or after the action by the Board, no
action of the Company's Board of Directors may, except as provided in paragraph
10, increase the limits imposed in paragraph 2 on the maximum number of shares
which may be issued under the Plan or extend the term of the Plan under
paragraph 15.
The Board shall obtain stockholder approval of any Plan amendment to
the extent necessary and desirable to comply with applicable tax laws.
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No amendment, alteration, suspension or termination of the Plan shall
impair the rights of any Optionee, unless mutually agreed otherwise between the
Optionee and the Company, which agreement must be in writing and signed by the
Optionee and the Company. Termination of the Plan shall not affect the
Committee's ability to exercise the powers granted to it hereunder with respect
to Options granted or awarded under the Plan prior to the date of such
termination.
16. Withholding of Income Taxes. Upon the exercise of an Option, the
Committee at its sole discretion may either require payment in cash or a
deduction from other compensation payable to each Optionee of any sums required
by federal, state or local tax law to be withheld with respect to the issuance,
vesting, exercise or payment of any Option. The Committee may also in its sole
discretion and in satisfaction of the foregoing requirement allow such Optionee
to elect to have the Company withhold shares of Common Stock otherwise issuable
under such Option (or allow the return of shares of Common Stock) having a fair
market value equal to the sums required to be withheld. Notwithstanding any
other provision of the Plan, the number of shares of Common Stock which may be
withheld upon the exercise or vesting of any right under the Plan, or which may
be repurchased from the Optionee within six months after such shares were
acquired by the Optionee from the Company, in order to satisfy the Optionee's
federal and state income and payroll tax liabilities with respect to the
exercise or vesting of the right shall be limited to the number of shares which
have a fair market value equal to the aggregate amount of such liabilities based
on the minimum statutory withholding rates for federal and state tax income and
payroll tax purposes that are applicable to such supplemental taxable income.
17. Compliance with Regulations. It is the Company's intent that the
Plan comply in all respects with Rule 16b-3 under the Securities Exchange Act of
1934 (or any successor or amended provision thereof) and any applicable
Securities and Exchange Commission interpretations thereof. If any provision of
the Plan is deemed not to be in compliance with Rule 16b-3, the provision shall
be null and void.
18. Governing Law. The validity and construction of the Plan and the
instruments evidencing Options shall be governed by the laws of the state of
Delaware, without giving effect to its principles of conflicts of law thereof.
19. Approval of Stockholders of the Company. The Plan shall be
submitted for the approval of the Company's stockholders within twelve months
after the date of the Board of Director's initial approval of the Plan.
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