LeapFrog 2005 Annual Report Download - page 178

(ii) Strike Price. Each Stock Appreciation Right will be denominated in shares of Class A Common
Stock equivalents. The strike price of each Stock Appreciation Right shall not be less than one hundred
percent (100%) of the Fair Market Value of the Class A Common Stock equivalents subject to the Stock
Appreciation Right on the date of grant.
(iii) Calculation of Appreciation. The appreciation distribution payable on the exercise of a Stock
Appreciation Right will be not greater than an amount equal to the excess of (A) the aggregate Fair Market
Value (on the date of the exercise of the Stock Appreciation Right) of a number of shares of Class A
Common Stock equal to the number of shares of Class A Common Stock equivalents in which the
Participant is vested under such Stock Appreciation Right, and with respect to which the Participant is
exercising the Stock Appreciation Right on such date, over (B) the strike price that will be determined by
the Board at the time of grant of the Stock Appreciation Right.
(iv) Vesting. At the time of the grant of a Stock Appreciation Right, the Board may impose such
restrictions or conditions to the vesting of such Stock Appreciation Right as it, in its sole discretion, deems
appropriate.
(v) Exercise. To exercise any outstanding Stock Appreciation Right, the Participant must provide
written notice of exercise to the Company in compliance with the provisions of the Stock Appreciation
Right Agreement evidencing such Stock Appreciation Right.
(vi) Payment. The appreciation distribution in respect of a Stock Appreciation Right may be paid in
Class A Common Stock, in cash, in any combination of the two or in any other form of consideration, as
determined by the Board and contained in the Stock Appreciation Right Agreement evidencing such Stock
Appreciation Right.
(vii) Termination of Continuous Service. In the event that a Participant’s Continuous Service
terminates, the Participant may exercise his or her Stock Appreciation Right (to the extent that the
Participant was entitled to exercise such Stock Appreciation Right as of the date of termination) but only
within such period of time ending on the earlier of (A) the date three (3) months following the termination
of the Participant’s Continuous Service (or such longer or shorter period specified in the Stock Appreciation
Right Agreement), or (B) the expiration of the term of the Stock Appreciation Right as set forth in the Stock
Appreciation Right Agreement. If, after termination, the Participant does not exercise his or her Stock
Appreciation Right within the time specified herein or in the Stock Appreciation Right Agreement (as
applicable), the Stock Appreciation Right shall terminate.
(viii) Compliance with Section 409A of the Code. Notwithstanding anything to the contrary set
forth herein, any Stock Appreciation Rights granted under the Plan that are not exempt from the
requirements of Section 409A of the Code shall contain such provisions so that such Stock Appreciation
Rights will comply with the requirements of Section 409A of the Code. Such restrictions, if any, shall be
determined by the Board and contained in the Stock Appreciation Right Agreement evidencing such Stock
Appreciation Right. For example, such restrictions may include, without limitation, a requirement that a
Stock Appreciation Right that is to be paid wholly or partly in cash must be exercised and paid in
accordance with a fixed pre-determined schedule.
(d) Performance Stock Awards. A Performance Stock Award is a Stock Award that may be granted,
may vest, or may be exercised based upon the attainment during one or more periods of time of certain
performance goals. Such performance goals may be determined by the Board in its sole discretion or may be
based on the Performance Goals selected by the Committee under the Company’s 2002 Equity Incentive Plan (as
such terms are defined in the Company’s 2002 Equity Incentive Plan). A Performance Stock Award may, but
need not, require the completion of a specified period of Continuous Service. The length of any performance
period, the performance goals to be achieved during such performance period, and the measure of whether and to
what degree such performance goals have been attained shall be conclusively determined by the Board in its sole
discretion. In addition, to the extent permitted by applicable law and the applicable Award Agreement, the Board
may determine that cash may be used in payment of Performance Stock Awards.
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