LeapFrog 2010 Annual Report Download - page 173

the vesting of any equity awards then held by Mr. Katz with the result that all of his equity awards would have
been vested as of the date of his termination and all of his vested stock options would remain exercisable for two
years after the termination date. We would also have been required to pay to Mr. Katz the severance payments
and benefits described above, as applicable.
After the execution of the Katz Transition Agreement in connection with his resignation in March 2010,
Mr. Katz was no longer eligible to receive payments upon a termination of employment or a change in control of
the Company. His transition was treated, for purposes of the severance provisions in the Katz Employment
Agreement, as a resignation without good reason and, accordingly, no severance payments or benefits were
triggered by the transition. He was not eligible for any payments or benefits upon a termination of employment
or change in control of the Company as of December 31, 2010. For a description of the other terms of the Katz
Transition Agreement, see “Employment Arrangements,” above.
William B. Chiasson
Mr. Chiasson was our CEO in March 2010 until his resignation in March 2011. In March 2010, we entered
into an employment agreement with Mr. Chiasson that provided he would be entitled to certain payments and
benefits if his employment was terminated by us without cause or by Mr. Chiasson for good reason. Upon such a
termination of employment, Mr. Chiasson, would have been entitled to receive (a) 12 months of base salary and
(ii) a payment equal to his target bonus opportunity for the calendar year in which the termination occurred. In
addition, all vested stock options held by Mr. Chiasson (the “Chiasson Options”) would have remained
exercisable for one year following the termination date. Assuming, for purposes of illustration, a termination date
of December 31, 2010 and exercise of the Chiasson Options on the same date, the base salary component of the
severance would have been $450,000, the bonus payment component would have been $337,500 and, based on
exercise price of the Chiasson Options 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 all vested options as of that
date would have been $600,886, for a total severance amount of $1,388,386.
Under the terms of Mr. Chiasson’s employment agreement, the term “cause” meant:
• commission of an 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. Chiasson’s employment
agreement and which would 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 days following receipt of written notice from the Company regarding such failure.
Under the terms of Mr. Chiasson’s employment agreement, “good reason” meant:
• a material diminution in his authority, duties or responsibilities (the requirement that Mr. Chiasson
assume any position other than the senior-most position in his functional area in the surviving top-most
parent company, reporting directly to the chief executive officer, upon a change-in-control transaction
shall be deemed a substantial reduction for purposes of triggering termination payments);
• a greater than 10% reduction in his base salary, unless the base salaries of other senior executive
employees are also reduced by the same percentage; or
• a change in the geographic location of his workplace by more than 50 miles.
Under his employment agreement, upon the occurrence of a change in control of the Company, we would
have been required to accelerate the vesting of any outstanding equity awards then held by Mr. Chiasson such
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