LeapFrog 2010 Annual Report Download - page 172

(5) Calculated by multiplying the sales price as reported by the broker at the time of exercise on the date the
stock option was exercised, or $5.27 per share on November 8, 2010, by the number of shares exercised less
the option exercise price, calculated by multiplying the option exercise price of $2.75 per share by the
number of shares exercised.
Potential Payments Upon Termination or Change in Control
Our Executive Management Severance and Change-in-Control Plan, or the Severance Plan, was approved
by the compensation committee in 2007. Under the Severance Plan, our named executive officers may receive
payments and benefits in the event of their termination of employment under specified circumstances, including
in connection with a change in control of the Company. Mr. Katz did not participate in the Severance Plan, but
was instead eligible to receive benefits under the terms of the severance and change-in-control provisions in his
employment agreement until his resignation in March 2010. Mr. Chiasson was eligible to receive benefits under
the Severance Plan until the execution of his employment agreement in March 2010, after which he was only
eligible to receive benefits under the terms of the severance and change-in-control provisions in his employment
agreement.
The specific terms and conditions of these agreements and the estimated payments and benefits for all of our
named executive officers are described below and are based on the assumption that a triggering event occurred
on December 31, 2010 and assume a price per share of our Class A common stock of $5.55, which was the price
of our Class A common stock reported by the NYSE at the close of market on December 31, 2010. With respect
to the estimated or potential value of options that are accelerated and/or have extended exercise periods in
connection with a named executive officer’s termination of employment or a change in control of the Company,
the actual value of the options realized, if any, will depend upon the extent to which the market value of our
Class A common stock exceeds the exercise price on the date the option is exercised. Due to the number of
factors that affect the nature and amounts of compensation and benefits provided upon the events discussed
below, the amounts paid or distributed upon the actual occurrence of a triggering event may be different from the
amounts set forth below.
Jeffrey G. Katz
Until March 2010, the Katz Employment Agreement provided Mr. Katz with certain benefits if his
employment was terminated by us for reasons other than cause or by Mr. Katz for good reason or due to his death or
permanent disability. Upon such a termination, Mr. Katz (or his estate), would have been entitled to receive (a) on
our customary bonus payment date, a prorated portion of his target bonus for the year in which his termination
occurred, and (b) vesting for 12 additional months of any stock options held by Mr. Katz (the “Katz Options”). In
addition, all vested Katz Options would have remained exercisable for two years following the termination date. In
addition, if Mr. Katz’s employment had been terminated other than by us for cause or by Mr. Katz for good reason
or due to his death or permanent disability, we agreed to hire Mr. Katz as a consultant for a period of two years
following his termination. During this two-year consulting period, we would have been required to pay Mr. Katz an
annual consulting fee equal to the sum of (a) his base salary at the time of his termination, (b) the higher of his
target bonus at the time of his termination and the average annual bonus amount paid to Mr. Katz for the two fiscal
years preceding his termination and (c) one-third of all self-employment taxes paid by Mr. Katz on the consulting
fees. The consulting fees would have been paid to Mr. Katz in equal semi-monthly installments. We also agreed to
pay all health insurance continuation payments to maintain Mr. Katz’s group health insurance coverage, for himself
and his covered dependents, while he was providing consulting services to the Company.
The Katz Employment Agreement also provided for the acceleration of the vesting of any equity awards
then held by Mr. Katz in the event of a change of control of the Company, such that all of his equity awards
would have vested as of the date of the change in control. In addition, if during the two-year period following a
change in control of the Company, Mr. Katz’s employment were terminated for any reason other than cause or by
Mr. Katz for good reason or due to his death or permanent disability, we would have been required to accelerate
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