LeapFrog 2015 Annual Report Download - page 133

delegate to a committee of one or more directors the ability to grant awards and take certain other actions
with respect to participants who are not executive officers, and may delegate certain administrative functions
under the 2011 EIP to an officer or officers. The compensation committee has delegated authority to a
management stock award committee (‘‘MSAC’’) consisting of the Chief Executive Officer and the Chief
Financial Officer to grant awards to non-executive employees within limits and a budget pre-approved by the
compensation committee. The compensation committee may interpret the 2011 EIP and awards granted under
it and establish, amend and revoke any rules relating to the 2011 EIP.
Duration, Suspension, Termination, and Amendment
The board of directors may suspend or terminate the 2011 EIP at any time. Unless sooner terminated by
our board of directors, the 2011 EIP shall automatically terminate on March 16, 2021, which is the day before
the tenth anniversary of the date the 2011 EIP was adopted by the board of directors. No awards may be
granted under the 2011 EIP while the 2011 EIP is suspended or after it is terminated.
The board of directors may amend the 2011 EIP at any time. However, no amendment or termination of
the plan will adversely affect any rights under awards already granted to a participant unless agreed to by the
affected participant. In addition, we will obtain stockholder approval of any amendment to the 2011 EIP, if
required by applicable law or listing requirement that would:
• Materially increase the number of shares of Class A Common Stock available for issuance under the
2011 EIP;
• Materially expand the class of individuals eligible to receive awards under the 2011 EIP;
• Materially increase the benefits accruing to participants under the 2011 EIP or materially reduces the
price at which shares of Class A Common Stock may be issued or purchased under the 2011 EIP;
• Materially extend the term of the 2011 EIP; or
• Expand the types of awards available for issuance under the 2011 EIP.
Adjustments; Corporate Transactions
In the event of a capitalization adjustment, the compensation committee shall appropriately and
proportionately adjust the number and kind of shares available for grant under the 2011 EIP, and subject to the
various limitations set forth in the 2011 EIP, the number and kind of shares subject to outstanding awards
under the 2011 EIP, and the exercise or settlement price of outstanding stock options and of other awards.
In the event of a corporate transaction, the board of directors may arrange for the assumption of the
outstanding awards, the acceleration of vesting of outstanding awards, the assignment of rights with respect to
the awards, the cancellation of the awards or a payment to award holders, as determined by the board of
directors. For purposes of the 2011 EIP, a corporate transaction will be deemed to occur in the event of (i) the
consummation of a sale of all or substantially all of our consolidated assets, (ii) the consummation of a sale of
at least 90% of our outstanding securities, (iii) the consummation of a merger or consolidation in which we
are not the surviving corporation, or (iv) the consummation of a merger or consolidation in which we are the
surviving corporation but shares of our outstanding common stock are converted into other property by the
virtue of the transaction, as determined by the board of directors.
Tax Withholding
The board of directors may require a participant to satisfy any federal, state, local, or foreign tax
withholding obligation relating to a stock award by (a) causing the participant to tender a cash payment;
(b) withholding shares of common stock from the shares of common stock issued or otherwise issuable to the
participant in connection with the award; (c) withholding cash from an award settled in cash or from other
amounts payable to the participant; or (d) by other method set forth in the award agreement. We generally are
required to withhold whenever an employee recognizes ordinary income under the 2011 EIP.
U.S. Federal Tax Consequences
The following is a summary of the principal U.S. federal income taxation consequences to participants
and LeapFrog with respect to participation in the 2011 EIP. The information is based upon current federal
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