LeapFrog 2011 Annual Report Download - page 167

Under the terms of Mr. Barbour’s employment agreement, the term ‘‘cause’’ means:
• commission of a willful act of fraud, embezzlement or misappropriation against or involving
the Company;
• conviction, or entry of a guilty or no contest plea, for any felony involving moral turpitude
or dishonesty;
• commission of an act or failure to commit an act, involving the Company that would amount to
willful misconduct, wanton misconduct, gross negligence or a material breach of Mr. Barbour’s
employment agreement and which results or is reasonably likely to result in significant harm to the
Company; or
• willful failure to perform the responsibilities and duties set forth in the employment agreement for
a period of ten business days following receipt of written notice from the Company regarding
such failure.
Under the terms of Mr. Barbour’s employment agreement, ‘‘good reason’’ means:
• a material diminution in his authority, duties or responsibilities;
• the requirement that Mr. Barbour report to an officer or other employee of the Company rather than
the board of directors;
• a material reduction in Mr. Barbour’s base salary;
• a change in the geographic location of his workplace by more than 50 miles or an increase in his
commute in excess of thirty miles
• the expiration of Mr. Barbour’s term as a member of the board of directors without his
re-election; or
• a material breach by the Company of his employment agreement.
Under his employment agreement, upon the occurrence of a change in control of the Company, we would
be required to accelerate the vesting of any outstanding equity awards then held by Mr. Barbour such that all
of his equity awards would vest as of the date of the change in control. Assuming that a change in control of
the Company occurred on December 31, 2011 and that all of Mr. Barbour’s outstanding stock options were
exercised on the same date, based on exercise price of $5.59 per share, the closing market price of our
Class A common stock as reported by the NYSE for December 30, 2011, the potential realizable value of the
additional options and restricted stock unit awards which would have vested because of a change in control
would have been $1,858,500. In addition, if during the two-year period following a change in control of the
Company, Mr. Barbour’s employment were terminated without cause or by Mr. Barbour for ‘‘good reason,’’
we would be required to pay to Mr. Barbour: (i) 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 (other than Larry Ellison, Michael Milken, Lowell Milken or any combination of the foregoing)
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. The base salary component of the severance be $1,150,000, the bonus payment
component would have been $1,150,000 and, together with the above value of his stock awards, the total
severance amount would be $4,158,500.
To receive any of the payments and benefits described above, Mr. Barbour would be required to execute
a release of claims against the Company.
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