iRobot 2008 Annual Report Download - page 40

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The following table shows the number of shares of our common stock underlying outstanding Eligible
Options (assuming a Trailing Average Price of $13.00) in each exercise price range as of March 20, 2009.
Exercise Price Range of Eligible Options
Maximum
Number of Shares
Underlying
Eligible Options
Weighted
Average Exercise
Price
Weighted
Average
Remaining Life
(in Years)
$13.00 to $16.00 ........................ 436,094 $14.43 6.26
$16.01 to $18.00 ........................ 350,180 $16.78 5.41
$18.01 to $20.00 ........................ 212,803 $18.68 5.23
$20.01 to $22.00 ........................ 155,607 $20.94 5.42
Above $22.00 .......................... 243,908 $25.58 4.39
Election to Participate. Participation in the Option Exchange Program will be voluntary. Eligible
Participants will be permitted to exchange all or none of their Eligible Options for New Options on a
grant-by-grant basis.
Exercise Price of New Options. All New Options will be granted with an exercise price equal to the
closing price of our common stock as reported by NASDAQ on the Grant Date.
Vesting of New Options. The New Options will not be exercisable on the date they are granted, even if
the corresponding exchanged Eligible Options had previously become exercisable. In general, subject to the
Eligible Participant’s continuing service, the New Options will become exercisable as follows:
• If and to the extent the corresponding exchanged Eligible Option was exercisable as of the Grant Date,
a like portion of the New Option will become exercisable on the first anniversary of the Grant
Date; and
• If and to the extent the corresponding exchanged Eligible Option was not exercisable as of the Grant
Date, a like portion (or all) of the New Option will become exercisable one year from the date(s) as of
which the Eligible Option would have become exercisable in accordance with its terms.
Term of the New Options. The New Options will have the same expiration date as the original
exchanged Eligible Options.
Other Terms and Conditions of the New Options. The other terms and conditions of the New Options
will be set forth in an option agreement to be entered into as of the Grant Date. Any additional terms and
conditions will be comparable to the other terms and conditions of the Eligible Options. All New Options will
be non-qualified stock options for federal income tax purposes, regardless of the tax status of the Eligible
Options exchanged in the Option Exchange Program. The shares of our common stock for which the New
Options may be exercised are currently registered on a registration statement filed with the SEC.
Cancellation of Net Shares. The Eligible Options exchanged for New Options will be cancelled. The net
shares, which are the shares underlying the Eligible Options in excess of the shares underlying the New
Options, will not be returned to the pool of shares available under the 2005 Plan. Therefore, the number of
shares in the pool of shares of our common stock available for issuance under the 2005 Plan will remain
unchanged as a result of the Option Exchange Program.
Accounting Treatment. We have adopted the provisions of Financial Accounting Standards Board
Statement of Financial Accounting Standards No. 123 (Revised), or FAS 123(R), regarding accounting for
share-based payments. Under FAS 123(R), we will recognize the unamortized compensation cost of the
surrendered options as well as any incremental compensation cost of the stock options granted in the Option
Exchange Program. The incremental compensation cost will be measured as the excess, if any, of the fair
value of each New Option granted to employees for the exchanged Eligible Options, measured as of the date
the New Options are granted, over the fair value of the Eligible Options exchanged for the New Options,
measured immediately prior to the cancellation. This incremental compensation cost will be recognized ratably
over the vesting period of the New Options. In the event that any of the New Options are forfeited prior to
their vesting due to termination of service, the incremental compensation cost for the forfeited New Options
38