Exhibit 2.3
SEVERANCE AGREEMENT
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THIS SEVERANCE AGREEMENT (the "Agreement") is made and entered into as of
April 30, 2001 by and between LearningStar Corp., a Delaware corporation
("LearningStar"), and Xxxxx Xxxxx ("Xxxxx"). Capitalized terms used in this
Agreement and not otherwise defined shall have the meanings ascribed to them in
that certain Contribution Agreement and Plan of Reorganization and Merger, dated
as of November 14, 2000, as amended, by and among Earlychildhood LLC
("Earlychildhood"), XxxxxxxXxxx.xxx, Inc. ("SmarterKids"), LearningStar and S-E
Educational Merger Corp., a wholly-owned subsidiary of LearningStar (the "Merger
Agreement").
WHEREAS, concurrently with the execution of this Agreement, in connection
with the transactions contemplated by the Merger Agreement, SmarterKids and
Earlychildhood consummated the combination of their respective companies and
each became a wholly owned subsidiary of LearningStar.
WHEREAS, effective as of the date hereof, LearningStar wishes to provide
Xxxxx with a severance arrangement on the terms and conditions set forth herein,
and Xxxxx wishes to accept such severance arrangement on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the parties agree as
follows:
1. Resignation. Effective as of the date hereof, Xxxxx hereby agrees to
resign from any and all positions as an officer, director, employee or
consultant of SmarterKids, and LearningStar hereby agrees to accept Xxxxx'x
resignation from any and all such positions.
2. Termination of Agreements and Employment Relationship. Effective as of
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the date hereof, any and all rights and obligations of the employment
relationship between SmarterKids and Xxxxx (the "Employment Relationship"),
shall be terminated, cancelled and of no further force and effect.
3. Severance.
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(a) On the date hereof LearningStar shall pay Xxxxx $400,000. The
parties hereto acknowledge and agree that Xxxxx shall not be entitled to any
further payments pursuant to this Agreement in connection with the termination
of the Employment Relationship.
(b) From the date hereof through October 31, 2002, LearningStar shall
continue to provide Xxxxx his current employee benefits, including but not
limited to health, dental, short-term disability, life insurance and long-term
disability coverage.
(c) All options to purchase common stock of LearningStar
("LearningStar Options") held by Xxxxx immediately after the Effective Time
shall be vested and immediately exercisable. Xxxxx shall have until three and
one-half years following the Effective Time to exercise such LearningStar
Options.
(d) In the event that Xxxxx exercises his option under Section 15 to
revoke this Agreement, Xxxxx agrees to refund any and all severance payments
received pursuant to Section 3, and acknowledges that LearningStar shall have no
further obligations to make severance payments to Xxxxx.
4. Release.
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a. Except for those obligations created by or arising out of this
Agreement, Xxxxx hereby forever releases, discharges and covenants not to xxx
LearningStar, SmarterKids, Earlychildhood or, as applicable, their respective
divisions, subsidiaries, parent(s), affiliated corporations, partnerships or
limited liability companies, past and present, and each of them, as well as
their directors, officers, shareholders, members, representatives, assignees,
successors, agents and employees, past and present, and each of them
(individually and collectively, "Releasees") from and with respect to any and
all claims, wages, agreements, obligations, demands and causes of action, known
or unknown, suspected or unsuspected, arising out of or in any way connected
with (i) the Merger Agreement or (ii) the Employment Relationship with, or
Xxxxx'x separation or resignation from, SmarterKids, including, without limiting
the generality of the foregoing, any claim for severance pay, bonus, incentive
compensation, incentive stock options (other than the 1,071,000 incentive stock
options (or shares received or receivable upon exercise thereof) of SmarterKids
held by Xxxxx prior to the date hereof; the validity of Xxxxx'x ownership rights
thereto, and to the shares of LearningStar obtainable upon exercise thereof,
being hereby acknowledged by both parties), performance units, or similar
benefit, change in control benefit, sick leave, pension, retirement, vacation
pay, life insurance, health or medical insurance or any other fringe benefit,
workers' compensation or disability, equity or non-equity rights, or any other
occurrences, acts or omissions whatsoever, known or unknown, suspected or
unsuspected, resulting from any act or omission by or on the part of the
Releasees, committed or omitted prior to the date of this Agreement, including,
without limiting the generality of the foregoing, any claim for breach of
contract, impairment of economic opportunity, intentional infliction of
emotional distress or other tort, any claim under Title VII of the Civil Rights
Act of 1964, the Age Discrimination in Employment Act, the Americans with
Disabilities Act, the Family and Medical Leave Act, the California Fair
Employment and Housing Act, the California Family Rights Act, or any other
federal, state or local law, regulation or ordinance. Nothing contained herein
shall be construed to preclude Xxxxx from pursuing disability-related insurance
claims or benefits.
b. This Agreement is intended to be effective as a bar to every
claim, demand and cause of action stated above. Accordingly Xxxxx hereby
expressly waives any rights and benefits conferred by any law, rule or
regulation of any other state, federal, or foreign authority or jurisdiction to
the effect that a release does not extend to claims which the releasor does not
know or suspect to exist in his favor at the time of executing the release,
which if known by him or her must have materially affected his or her settlement
with the Releasee.
5. Assistance With Claims. Xxxxx agrees that during and after his employment
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by SmarterKids, he will assist LearningStar in the defense of any claims or
potential claims that may be made or threatened to be made against it or
SmarterKids in any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (a "Proceeding") and will assist LearningStar
in the prosecution of any claims that may be made by LearningStar in any
Proceeding, to the extent that such claims may relate to Xxxxx'x service as a
director or officer of SmarterKids. Xxxxx agrees, unless precluded by law, to
promptly inform LearningStar if Xxxxx is asked to participate (or otherwise
become involved) in any Proceeding involving such claims or potential claims.
Xxxxx also agrees, unless precluded by law, to promptly inform LearningStar if
Xxxxx is asked to assist in any investigation (whether governmental or private)
of LearningStar or SmarterKids (or their respective actions), regardless of
whether a lawsuit has then been filed against LearningStar or SmarterKids with
respect to such investigation.
6. Term. This Agreement shall continue through the date of the last payment
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or benefit provided for hereunder, provided that Sections 7, 8 and 10 shall
survive such expiration in accordance with their terms.
7. Indemnification. During and after the term of this Agreement,
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LearningStar agrees that if Xxxxx is made a party, or compelled to testify or
otherwise participate in any Proceeding, by reason of the fact that he was a
director or officer of SmarterKids (or any of its Subsidiaries), Xxxxx shall be
indemnified by LearningStar to the fullest extent permitted under Section 145 of
the Delaware General Corporation Law or (but not to any lesser extent) as
authorized by LearningStar's certificate of incorporation or bylaws or
resolutions of the LearningStar Board of Directors against all costs, expenses,
liabilities, damages and losses reasonably incurred or suffered by Xxxxx in
connection therewith, and such indemnification shall continue as to Xxxxx for
the period of any applicable statute of limitations or, if longer, for the
period in which any such Proceeding which commenced within the period of any
such statute of limitations is pending. LearningStar shall advance to Xxxxx all
reasonable costs and expenses incurred by him in connection with a Proceeding
within ten (10) days after receipt by LearningStar of a written request for such
advance. Such request shall include an itemized list of the costs and expenses
and an undertaking by Xxxxx to repay the amount of such advance if it shall
ultimately be determined, in a final judgment for which the time to appeal has
expired, that, pursuant to applicable law, he is not entitled to be indemnified
against such costs and expenses.
8. Confidentiality. For a period of five (5) years from the Effective Date,
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Xxxxx agrees not to use or disclose LearningStar's, SmarterKids' or
Earlychildhood's trade secrets and confidential business information, and
expressly acknowledges that this obligation survives the termination of his
employment. Trade secrets and confidential business information include, without
limitation, items such as business, marketing and sales plans and strategies;
analyses of competition and competitors; pricing information (including profit
margins, discounts, and pricing strategies); customer information (including the
identity, addresses and phone numbers of existing or prospective customers,
customer contacts, customer lists, profit margins for particular customers,
customer data such as load profiles, customer contracts and terms such as
pricing and expiration dates, and information about the particular desires and
needs of customers); supply information (including equipment specifications and
capabilities, production problems and progress, and terms such as payment,
pricing and expiration dates), supply contracts, and the identity, addresses and
phone numbers of key suppliers; specialized software and related applications
and data; and employment information (including the identity and performance of
key employees and salary history) (hereafter collectively "Proprietary
Information"). Xxxxx agrees to return to LearningStar all of its and
SmarterKids' property in Xxxxx'x possession and all documents, including
documents stored on computer readable media, which contain or reflect
Proprietary Information of any type.
9. Non-Disparagement. Xxxxx agrees to refrain from making any statements
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about LearningStar, SmarterKids, Earlychildhood or any of their respective
officers, directors or members that would disparage, or reflect unfavorably upon
the image or reputation of LearningStar, SmarterKids, Earlychildhood or any such
officer, director or member. LearningStar and its subsidiaries agree to refrain
from making any statements about Xxxxx that would disparage, or reflect
unfavorably upon the image or reputation of Xxxxx.
10. Arbitration. Any claim arising out of or relating to this Agreement will
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be subject to arbitration in Boston, Massachusetts, in accordance with the
Federal Arbitration Act and the rules of the American Arbitration Association
relating to commercial disputes. The prevailing party in any such arbitration
shall be entitled to recover from the other party its reasonable expenses
incurred in connection with such arbitration, including the reasonable fees and
expenses of counsel.
11. Severability. If any provision of this Agreement is determined to be
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invalid or unenforceable, it shall be adjusted rather than voided, to achieve
the intent of the parties to the extent possible, and the remainder of the
Agreement shall be enforced to the maximum extent possible.
12. Entire Agreement. This Agreement constitutes the entire agreement
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between Xxxxx and LearningStar with respect to the terms and conditions of any
severance arrangement, and, as of the Effective Time, supersedes all prior or
concurrent arrangements, discussions, agreements or understandings with respect
to the Xxxxx'x services.
13. Governing Law. This Agreement shall be governed by the laws of the
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Commonwealth of Massachusetts without regard to principles of conflicts of law.
14. Amendment. No amendment shall be valid unless in writing and signed by
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each of LearningStar and Xxxxx.
15. Counsel; Review. The parties have had the opportunity to review this
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Agreement themselves and, if they have so chosen, with their respective legal
counsel, and enter into this Agreement voluntarily. Xxxxx acknowledges that he
may consider this Agreement for a period of twenty-one (21) days prior to
signing it. Xxxxx also understands that he may revoke this Agreement within
seven (7) days following his execution of the Agreement by giving written notice
to LearningStar.
16. Notice. Any notice, or other written communication to be given pursuant
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to this Agreement for whatever reason shall be deemed duly given and received
(a) if delivered personally, from the date of delivery, or (b) by certified
mail, postage pre-paid, return receipt requested, three (3) days after the date
of mailing, addressed to the above parties as follows:
If to LearningStar:
LearningStar Corp.
0 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Board of Directors
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
and
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, Xx., Esq.
If to Xxxxx:
00 Xxxxxxxx Xxxx
Xxxxxxx, XX 00000
and
with a copy to:
Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, Xx., Esq.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
date and year first above written.
LEARNINGSTAR CORP.
By: /s/ Xxxxxx Xxxxxxx
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Name Xxxxxx Xxxxxxx
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Title:
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/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
