LeapFrog 2005 Annual Report Download - page 159

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.
If 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. A stock 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.
Restricted Stock Awards. Restricted stock awards are granted pursuant to restricted stock agreements.
The purchase price of a restricted stock award cannot be less than 50% of the fair market value of the Class A
common stock on the date of grant or at the time the purchase is made.
Shares awarded under a restricted stock award may be subject to repurchase by us in accordance with a
vesting schedule to be determined by the board of directors. If a restricted stock award recipient’s relationship
with us, or any affiliate of ours, terminates, we may repurchase or reacquire any of the shares subject to such
award that are unvested as of the date of such termination. Class A common stock acquired pursuant to a
restricted stock award may be paid for in cash or, if provided in the restricted stock agreement at the discretion of
the board of directors, pursuant to a deferred payment arrangement or in other legal consideration approved by
the board of directors. Rights to acquire shares under a restricted stock award may be transferable only to the
extent provided in a restricted stock award agreement.
Restricted Stock Unit Awards. Restricted stock unit awards are granted pursuant to restricted stock unit
award agreements. The purchase price, if any, for restricted stock unit awards may be paid in any form of legal
consideration acceptable to the board of directors.
Restricted stock unit awards vest at the rate specified in the restricted stock unit award agreement as
determined by the board of directors. However, at the time of grant, the board of directors may impose additional
restrictions or conditions that delay the delivery of stock or cash subject to the restricted stock unit award to a
time after vesting. A restricted stock unit award may be settled by the delivery of shares of LeapFrog’s Class A
common stock, cash, any combination of the two or in any other form of consideration, as determined by the
board of directors. Dividend equivalent rights may be credited with respect to shares covered by a restricted stock
unit award as determined by the board of directors and contained in the restricted stock unit award agreement.
However, LeapFrog does not anticipate paying cash dividends on its Class A common stock for the foreseeable
future. If a restricted stock unit award recipient’s relationship with us, or any affiliate of ours, terminates,
restricted stock units that have not vested will be forfeited on the date of such termination, except as otherwise
may be provided in the restricted stock unit award agreement.
Stock Appreciation Rights. Stock appreciation rights are granted pursuant to stock appreciation rights
agreements. The maximum term of stock appreciation rights granted under the Equity Plan is 10 years.
Each stock appreciation right is denominated in shares of Class A common stock equivalents. The strike
price of stock appreciation rights may not be less than 100% of the fair market value of the Class A common
stock equivalents subject to the stock appreciation rights on the date of grant. Upon exercise of a stock
appreciation right, LeapFrog will pay the recipient an amount equal to the excess of (i) the aggregate fair market
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