LeapFrog 2015 Annual Report Download - page 175

Under the terms of the offer letters of Messrs. Ahearn and Arthur, the term ‘‘good reason’’ means:
• a material diminution in authority, duties or responsibilities;
• a reduction in base salary or target bonus greater than 10%;
• a change in the geographic location of his workplace by more than 50 miles; or
• a material breach by the Company of the terms under which he is employed.
Under the offer letters, 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 Messrs. Arthur and Ahearn
such that all of their equity awards would vest as of the date of the change in control.
To receive any of these payments and benefits, Messrs. Arthur and Ahearn would be required to execute
a release of claims against LeapFrog.
Mr. Adams
Mr. Adams is eligible to receive severance payments and benefits under the Severance Plan. Under the
terms of the Severance Plan, Mr. Adams is eligible to receive the payments and benefits described in the
Severance Plan if his employment is terminated without cause or he resigns for good reason.
Under the Severance Plan, ‘‘cause’’ exists if he:
• 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 within
12 months following a Change in Control;
• there is a reduction in base salary of greater than 10% of base salary prior to the reduction;
• the executive’s business location moved more than 50 miles beyond current location; or
• the Company materially breaches the agreement under which the executive is employed.
Under the Severance Plan, to resign for ‘‘good reason,’’ he must resign within 60 days after the
occurrence, without his consent, of one of the events listed in the ‘‘good reason’’ definition, after having given
the Company 30 days’ written notice (during which time the Company would have the opportunity to cure the
event that he asserts is good reason). If the Company cures the event, then he would not be eligible for a
good reason resignation.
If a covered termination of employment (which includes a resignation for ‘‘good reason’’) is triggered
and does not occur in relation to a change in control of LeapFrog, the Severance Plan provides for the
following payments and benefits:
Base Severance
(Months of Base Salary) Health Insurance Payments Form of Payment
12 12 months of COBRA coverage Semi-monthly Installments
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