LeapFrog 2003 Annual Report Download - page 148

promulgated pursuant to the Securities Act (“Regulation S-K”)), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of Regulation S-K and is not engaged in a
business relationship as to which disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a “non-employee director” for purposes of Rule 16b-3.
(v) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.
(w) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.
(x) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the Plan.
(y) “Option Agreement” means a written agreement between the Company and an Optionholder evidencing
the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and
conditions of the Plan.
(z) “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable,
such other person who holds an outstanding Option.
(aa) “Outside Director” means a Director who either (i) is not a current employee of the Company or an
“affiliated corporation” (within the meaning of Treasury Regulations promulgated under Section 162(m) of the
Code), is not a former employee of the Company or an “affiliated corporation” receiving compensation for prior
services (other than benefits under a tax-qualified pension plan), was not an officer of the Company or an
“affiliated corporation” at any time and is not currently receiving direct or indirect remuneration from the
Company or an “affiliated corporation” for services in any capacity other than as a Director or (ii) is otherwise
considered an “outside director” for purposes of Section 162(m) of the Code.
(bb) “Own,” “Owned,” “Owner,” “Ownership” Aperson or Entity shall be deemed to “Own,” to have
“Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly
or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting
power, which includes the power to vote or to direct the voting, with respect to such securities.
(cc) “Parent” means any parent corporation of the Company, whether now or hereafter existing, as such
term is defined in Section 424(e) of the Code.
(dd) “Participant” means a person to whom a Stock Award is granted pursuant to the Plan or, if applicable,
such other person who holds an outstanding Stock Award.
(ee) “Performance Criteria” means the one or more criteria that the Committee shall select for purposes of
establishing the Performance Goal(s) for a Performance Period. The Performance Criteria that will be used to
establish such Performance Goal(s) may be based on any one of, or combination of, the following: (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 shareholder 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) revenue; (xx) revenue growth; (xxi)
expenses; (xxii) improvement in or attainment of expense levels; (xxiii) improvement in or attainment of
working capital levels; (xxiv) economic value added; (xxv) market share; (xxvi) cash flow; (xxvii) cash flow per
share; (xxviii) economic value added (or an equivalent metric); (xxix) share price performance; (xxx) debt
reduction; and (xxxi) other measures of performance selected by the Committee. Partial achievement of the
specified criteria may result in the payment or vesting corresponding to the degree of achievement as specified in
the Award Agreement. The Committee shall, within the time period required by Section 162(m) of the Code
(generally, the first 90 days of the Performance Period), define in an objective fashion the manner of calculating
the Performance Criteria it selects to use for such Performance Period.
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