LeapFrog 2003 Annual Report Download - page 134

months following such termination (or such longer or shorter period as specified in the option agreement) or
(ii) the expiration of the term of such option as set forth in the option agreement. In the event an optionee’s
relationship with us, or any affiliate of ours, terminates as a result of the optionee’s death or the optionee dies
within a specified period after termination of service, the optionee (or such optionee’s estate, heirs or
beneficiaries) may exercise his or her option (to the extent that such option was vested at the time of death), but
only within the period ending on the earlier of (i) 6 months following the optionee’s death (or such longer or
shorter period as specified in the option agreement) or (ii) the expiration of the term of the option as set forth in
the option agreement. If an option is not exercised within the time specified in the option agreement, such option
terminates.
Class A common stock issued pursuant to stock options granted under the Equity Plan may be paid for in
cash or, if provided in the stock option agreement at the discretion of the board of directors, in shares of Class A
common stock previously owned by the optionee, pursuant to a deferred payment arrangement, pursuant to a
“cashless” exercise program, or in other legal consideration approved by the board of directors.
Generally, an optionee may not transfer a stock option other than by will or the laws of descent and
distribution unless the optionee holds a nonstatutory stock option and the terms of the stock option agreement
provide otherwise. However, an optionee may designate a beneficiary who may exercise the option following the
optionee’s death.
Tax Limitations on Incentive Stock Option Grants. Incentive stock options may be granted only to our
employees. The aggregate fair market value, determined at the time of grant, of shares of our Class A common
stock with respect to incentive stock options that are exercisable for the first time by an optionee during any
calendar year under all of our stock plans may not exceed $100,000. No incentive stock option may be granted to
any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of the total
combined voting power of LeapFrog or any affiliate unless the following conditions are satisfied:
•The option exercise price is at least 110% of the fair market value of the stock subject to the option on
the date of grant; and
•The term of the incentive stock option award does not exceed five years from the date of grant.
Stock Bonus Awards. Stock bonus awards are granted pursuant to stock bonus agreements.
Shares awarded under a stock bonus award may be subject to repurchase by us in accordance with a vesting
schedule to be determined by the board of directors. The grant or vesting of Stock Awards may also be subject to
Performance Goals to be determined by the Committee, based on a service condition or on one or more of the
following Performance Criteria: (i) earnings per share; (ii) earnings before interest, taxes and depreciation;
(iii) earnings before interest, taxes, depreciation and amortization (EBITDA); (iv) net earnings; (v) total
stockholder return; (vi) return on equity; (vii) return on assets; (viii) return on investment; (ix) return on capital
employed; (x) operating margin (xi) gross margin; (xii) operating income; (xiii) net income; (xiv) net operating
income; (xv) net operating income after tax; (xvi) pre- and after-tax income; (xvii) pre-tax profit; (xviii)
operating cash flow; (xix) net sales; (xx) net sales growth; (xxi) expenses; (xxii) improvement in or attainment of
expense levels; (xxiii) improvement in or attainment of working capital levels; (xxiv) market share; (xxv) cash
flow; (xxvi) cash flow per share; (xxvii) economic value added (or an equivalent metric); (xxiii) share price
performance; (xxix) debt reduction; and (xxx) other measures of performance selected by the Committee.
In the event a stock bonus award recipient’s relationship with us, or any affiliate of ours, terminates, we may
reacquire any of the shares subject to such award that are unvested as of the date of such termination.
Astock bonus award may be awarded in consideration for past services rendered to us or any affiliate of ours.
Rights to acquire shares under a stock bonus award may be transferable only to the extent provided in a
stock bonus agreement.
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