Exhibit 10.1

 

FRANKLIN ELECTRONIC PUBLISHERS, INC.

 

CORPORATE POLICY

 

EXECUTIVE SEVERANCE PROTECTION

 

A. Definitions:

 

“Change of Control” means (i) the accumulation by a party (other than Bermuda
Trust Co. Ltd. as trustee for James Simons) of twenty percent (20%) or more of
the shares of the common stock of the Company; (ii) a merger or consolidation of
the Company in which the Company does not survive as an independent public
company; (iii) a sale of all or substantially all of the assets of the Company;
or (iv) a liquidation or dissolution of the Company.

 

“Constructive Termination” means (i) the material diminution of a Participant’s
position, authority, duties or responsibilities; (ii) the relocation of the
Company’s principal place of business to a location more than twenty-five (25)
miles from Burlington, New Jersey or, in connection with a Change of Control,
the requirement by its successor that a Participant be employed at a place of
business that is more than twenty-five (25) miles from Burlington, New Jersey;
or (iii) a reduction in a Participant’s salary.

 

“Cause” means material non-performance of a Participant’s duties or material
injury or harm to the Company or its successor caused by a Participant.

 

B. Severance Package:

 

1. Trigger: Any termination by the Company or its successor of a Participant’s
employment (except discharge for “Cause” or death), including “Constructive
Termination”.

 

2. Benefits: A Participant shall receive

 

a. Severance pay in the form of salary continuation at the then-current salary
rate for a period of months determined by the product of (i) one and one-half
months and (ii) the number of years of a Participant’s employment with the
Company and its successor and any partial year (on a prorated basis) of
employment with the Company and its successor, to a maximum of thirty months of
salary continuation (payable according to the regular payroll schedule);

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b. Acceleration of vesting of all of Participant’s stock options; and

 

c. Continuation of then-current medical, dental and life insurance coverage for
the salary continuation period or, if earlier, the date that the Participant
obtains comparable insurance coverage in connection with new employment.

 

C. Change of Control Protection:

 

1. On a Change of Control involving the acquisition of the Company by another
public company, all of Participant’s stock options shall be converted into stock
options of the other public company on substantially equivalent economic terms
and shall continue to vest at the same rate; or

 

2. On any other Change of Control, acceleration of vesting of all of
Participant’s stock options effective immediately prior to the Change of
Control.

 

D. Participation:

 

Each executive officer (as determined by the Company’s Board of Directors under
the Securities Exchange Act of 1934 and its regulations) once having served as
such for one year, except those executive officers having written contracts of
employment.

 

E. Binding Effect:

 

This Plan may be relied upon as an inducement to a Participant’s continuing his
or her employment with the Company and, as such, may not be modified by the
Company, or any successor, to the detriment of any Participant. This Policy
shall bind the Company and any successor. The Company shall take steps to cause
any successor to expressly assume the obligations of the Company hereunder;
however, this Policy shall remain in effect following any merger or acquisition
of the Company and a Participant’s rights hereunder shall not be adversely
affected by any merger of, acquisition of, or other Change of Control in the
Company, notwithstanding the failure of the successor to expressly assume such
obligations.