LeapFrog 2009 Annual Report Download - page 170

termination, and that his Options were exercised on the same date, based on exercise price of the Options of
$3.91, the closing price of our Class A common stock as reported by the NYSE for December 31, 2009, the
potential realizable value of the additional vested options would have been $1,078,104. We would also have been
required to pay to Mr. Katz the Katz Severance Benefits, as applicable. For purposes of the foregoing discussion,
a change-in-control transaction will be deemed to have occurred if any person or entity acquires at least a
majority of the combined voting power of our outstanding securities, or upon our merger or consolidation,
adoption by our stockholders of a plan of dissolution or liquidation or the sale or transfer of substantially all of
our assets.
Non-Solicitation, Non-Competition, Non-Interference, Release
To receive any of the benefits described above under his employment agreement, Mr. Katz would have been
required to execute a release agreement. Under his employment agreement and his 2010 transition agreement,
Mr. Katz is subject to a non-solicitation provision for two years after termination of his employment in February
2010, as well as a non-interference provision and a confidentiality provision.
William K. Campbell, William B. Chiasson and Michael J. Dodd
Messrs. Campbell and Dodd are each eligible to receive severance and termination payments under the
Severance Plan. Mr. Chiasson was eligible to receive the same benefits in fiscal 2009, though such benefits have
been adjusted by a March 2010 employment agreement with Mr. Chiasson as described in more detail below.
Under the terms of the Severance Plan, Messrs. Campbell and Dodd are, and Mr. Chiasson was, eligible to
receive the benefits described in the Severance Plan if the executive officer were terminated without “cause” or
the executive officer were to resign for “good reason.”
Under the Severance Plan, “cause” exists if the employee:
• is convicted of a felony or a crime involving moral turpitude or dishonesty,
• commits fraud against the company,
• commits a material breach of any material provision of a written agreement with the company
(including, without limitation, the Proprietary Information and Inventions Agreement) or of a written
policy of the company, provided that the employee was given reasonable notice and opportunity to
cure,
• shows conduct demonstrating unfitness to serve, provided that the employee was given reasonable
notice and opportunity to cure, or
• breaches duties to the company including persistent unsatisfactory performance of job duties.
Under the Severance Plan, “good reason” exists if:
• there is any material diminution in the employee’s authority, duties or responsibilities,
• there is a reduction in base salary of greater than 10% of base salary prior to the reduction, unless
others in equivalent roles are accordingly reduced,
• the employee’s business location moved more than 50 miles beyond current location, or
• we materially breach the agreement under which the employee is employed.
For Mr. Dodd, the definition of good reason also includes a change in control of LeapFrog in which
Mr. Dodd does not hold the senior-most position in his functional area in the surviving top-most parent company
(excluding any company that is an investment fund or other non-operating company), whether public or private,
and does not report directly to the chief executive officer of such top-most parent company. However, as a
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