LeapFrog 2005 Annual Report Download - page 152

options, restricted stock awards, restricted stock unit awards, stock appreciation rights or performance stock
awards. If the board does not make such a determination on or before December 31 of a calendar year, all Initial
and Annual Grants to be granted in the subsequent calendar year shall be in the form of options.
Options. Initial and Annual Grants that are made in the form of options vest in monthly installments over
a three-year period from the date of grant.
An option granted to a non-employee director may provide for an early exercise feature pursuant to which
the option may be exercised prior to full vesting, resulting in unvested shares of Class A common stock being
subject to repurchase by us in the event of the non-employee director’s cessation of service prior to the vesting of
the shares.
The exercise price of the options granted under the Director Plan will be equal to the fair market value of the
Class A common stock on the date of grant. Class A common stock issued pursuant to options granted under the
Director Plan may be paid for in cash, in shares of Class A common stock previously owned by the optionee,
pursuant to a “cashless” exercise program, by a “net exercise” arrangement, or in any other form of legal
consideration that may be acceptable to the board.
No option granted under the Director Plan may be exercised after the expiration of 10 years from the date it
was granted. Options granted under the Director Plan are not transferable other than by will or by the laws of
descent and distribution and are exercisable during the life of the optionee only by the optionee, unless otherwise
provided by the board of directors. However, an optionee may designate a beneficiary who may exercise the
option following the optionee’s death. An optionee whose service relationship with LeapFrog or a subsidiary
(whether as a non-employee director of LeapFrog or subsequently as an employee, director or consultant of either
LeapFrog or a subsidiary) ceases for any reason may exercise vested options for the term provided in the option
agreement (three months generally, six months if the service relationship ends on account of disability or death).
Other Stock Awards. If an Initial or Annual Grant is in the form of a stock award other than an option,
the number of shares of Class A common stock subject to such Initial or Annual Grant shall be determined by the
board in its sole discretion. The terms of such other stock awards shall be determined by the board at the time of
grant in accordance with the following provisions.
Restricted Stock Awards. Restricted stock awards may be granted under the Director Plan pursuant to
restricted stock award agreements.
A restricted stock award may be awarded in consideration for past or future services rendered or to be
rendered to LeapFrog or an affiliate or in any other form of legal consideration acceptable to the board. Shares of
Class A common stock acquired under a restricted stock award may be subject to forfeiture to LeapFrog in
accordance with a vesting schedule as determined by the board. Upon termination of a non-employee director’s
service, LeapFrog may reacquire any forfeited shares of stock that have not vested as of such termination under
the terms of the applicable restricted stock award agreement. Rights to acquire shares under a restricted stock
award may be transferred only upon such terms and conditions as determined by the board.
Restricted Stock Unit Awards. Restricted stock unit awards may be granted under the Director Plan
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. A restricted stock unit award may be settled by the delivery of shares of Class A
common stock, in cash, or by any combination of these means as determined by the board. Restricted stock unit
awards vest at the rate specified in the restricted stock unit award agreement as determined by the board.
However, at the time of grant, the board may impose additional restrictions or conditions that delay the delivery
of stock or cash subject to the restricted stock unit award after vesting. Dividend equivalent rights may be
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