LeapFrog 2010 Annual Report Download - page 174

that all of his equity awards would be vested as of the date of the change in control. Assuming that a change in
control of the Company occurred on December 31, 2010 and that the all of Mr. Chiasson’s outstanding stock
options were exercised on the same date, based on exercise price of $5.55 per share, the closing market price of
our Class A common stock as reported by the NYSE for December 31, 2010, the potential realizable value of the
additional options which would have vested because of a change in control would have been $459,074. In
addition, if during the two-year period following a change in control of the Company, Mr. Chiasson’s
employment were terminated without cause or by Mr. Chiasson for “good reason,” all of his equity awards would
remain exercisable for a period of two years after the termination date. We would also have been required to pay
to Mr. Chiasson: (a) 24 months of base salary and (ii) a payment equal to two times his target bonus opportunity
for the calendar year in which the termination occurred. 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.
To receive any of the payments and benefits described above, Mr. Chiasson would have been required to
execute a release of claims against the Company.
Messrs. Campbell, Chai, Dodd and Etnyre
Messrs. Campbell, Dodd and Etnyre are each eligible to receive severance payments and benefits under the
Severance Plan. Mr. Chai was eligible to receive severance payments and benefits under the Severance Plan
during 2010.
Under the terms of the Severance Plan, Messrs. Campbell, Dodd and Etnyre (and, during 2010, Mr. Chai)
are eligible to receive the payments and benefits described in the Severance Plan if they are terminated without
cause or were to resign for good reason.
Under the Severance Plan, “cause” exists if the executive:
• 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 Company’s Proprietary Information and Inventions Agreement) or
of a written policy of the Company, provided that the executive was given reasonable notice and
opportunity to cure;
• shows conduct demonstrating unfitness to serve, provided that the executive 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 executive’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 executive’s business location moved more than 50 miles beyond current location; or
• we materially breach the agreement under which the executive is employed.
For Mr. Dodd and, during 2010, Mr. Chai, the definition of “good reason” also includes a change in control
of the Company in which such executive 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
68