E XHIBIT 10.40
L EAP F ROG E NTERPRISES , I NC .
2002 E QUITY I NCENTIVE P LAN
P ERFORMANCE S HARE A WARD A GREEMENT
Pursuant to the Target Award Grant
Notice ( “Grant Notice” ) and this
Performance Share Award Agreement (
“Agreement” ) (collectively, the
“Award” ), LeapFrog Enterprises, Inc.
(the “Company ”) has awarded you,
pursuant to its Performance Share Award Program (the
“Program” ) under its 2002 Equity
Incentive Plan (the “Plan” ), the number
of shares of the Company’s Class A Common Stock as
indicated in the Grant Notice, provided that (i) the
Performance Goals specified in Exhibit A to the Program are met
during the Performance Period beginning on
,
and ending on
,
and (ii) you remain continuously employed by the Company
during the entire Performance Period. Defined terms not explicitly
defined in this Agreement but defined in the Plan shall have the
same definitions as in the Plan or Program document.
The details of your Award are as
follows.
1. E NTITLEMENT TO S HARES .
Subject to the limitations contained herein, you shall be entitled
to receive a percentage of the shares of Class A Common Stock
specified in your Grant Notice if (i) a specified target level
of certain Performance Goals is met during the applicable
Performance Period and (ii) you remain continuously employed
by the Company during the entire Performance Period. If the level
of Performance Goals that is met during the Performance Period is
less than or exceeds the specified target level, you will be
awarded a pro-rata percentage of shares specified in your Grant
Notice; provided, however, that (i) if a specified
threshold level of Performance Goals is not met during the
Performance Period, you will not receive any shares, and
(ii) the maximum number of shares that you may receive will be
200% of the shares specified in your Grant Notice. The applicable
threshold, target, and maximum award levels for the applicable
Performance Period are set forth in Exhibit A to the
Program.
2. D IVIDENDS . Prior to your receipt of any shares subject to
your Award, you shall not receive any payment or other adjustment
in the number of shares subject to your Award for dividends or
other distributions that may be made in respect of the shares of
Class A Common Stock to which your Award relates.
3. D ISTRIBUTION OF S HARES .
Provided that you become entitled to the shares of Class A
Common Stock subject to your Award in accordance with
Section 1 of this Agreement, the Company will distribute such
shares to you within thirty (30) days following the completion
of an independent audit and certification by the Committee, as
described in Section 4(a) of the Program; provided,
however , that in the event that the Company determines that
you are subject to its Policy Against Trading on the Basis of
Inside Information and any shares of Class A Common Stock in
respect of your Award are scheduled to be delivered on a day (the
“ Original Distribution Date ”) that does
not occur during a “window period” applicable to you,
as determined by the Company in accordance with such policy, then
such shares shall not be delivered on such Original Distribution
Date and shall instead be delivered as soon as practicable within
the next “window period” applicable to you pursuant to
such policy; and provided further , that if you elect to
defer issuance of the shares of Class A Common Stock as
provided in Section 4 of this Agreement, the shares of
Class A Common Stock shall be issued as set forth in your
Deferral Election Form.
4. D EFERRAL E LECTION . You
may elect to defer issuance of the shares of Class A Common
Stock that would otherwise be issued by virtue of the vesting of
your Award as set forth in the
1.
