LeapFrog 2005 Annual Report Download - page 174

(c) Form of Initial and Annual Grants. On or before December 31 of any calendar year, the Board shall
determine if all Initial and Annual Grants to be granted in the subsequent calendar year shall be in the form of
Options described in Section 7, Restricted Stock Awards described in Section 8(a), Restricted Stock Unit Awards
described in Section 8(b), Stock Appreciation Rights described in Section 8(c), or Performance Stock Awards
described in Section 8(d). 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 described in Section 7.
(i) Options.
(A) Initial Grant. If the Initial Grant is in the form of an Option, the Initial Grant shall be a
Nonstatutory Stock Option to purchase Thirty Thousand (30,000) shares of Class A Common Stock on
the terms and conditions set forth herein.
(B) Annual Grant. Subject to Section 6(b), if the Annual Grant is in the form of an Option, the
Annual Grant shall be a Nonstatutory Stock Option to purchase Fifteen Thousand (15,000) shares of
Class A Common Stock on the terms and conditions set forth herein; provided, however, that if a
Non-Employee Director holds the position of Chairman of the Board on the Annual Grant Date, such
Non-Employee Director shall instead be granted an Annual Grant to purchase Twenty-Five Thousand
(25,000) shares of Class A Common Stock on the terms and conditions set forth herein.
(ii) Other Types of Stock Awards. If the Initial or Annual Grant is in the form of a Restricted Stock
Award, Restricted Stock Unit Award, Stock Appreciation Right or Performance Stock Award, 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.
7. O PTION P ROVISIONS .
Each Option shall be in such form and shall contain such terms and conditions as required by the Plan. Each
Option shall contain such additional terms and conditions, not inconsistent with the Plan, as the Board shall deem
appropriate. Each Option shall include (through incorporation of provisions hereof by reference in the Option or
otherwise) the substance of each of the following provisions:
(a) Term. No Option shall be exercisable after the expiration of ten (10) years from the date it was
granted.
(b) Exercise Price. The exercise price of each Option shall be one hundred percent (100%) of the Fair
Market Value of the stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing,
an Option may be granted with an exercise price lower than that set forth in the preceding sentence if such
Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the
provisions of Section 424(a) of the Code.
(c) Consideration. The purchase price of Class A Common Stock acquired pursuant to an Option shall be
paid, to the extent permitted by applicable statutes and regulations and as determined by the Board in its sole
discretion, by any combination of the methods of payment set forth below. The Board shall have the authority to
grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use
certain methods) and to grant Options that require the consent of the Company to utilize a particular method of
payment. The methods of payment permitted by this Section 7(c) are:
(i) by cash, check, bank draft or money order payable to the Company;
(ii) pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board
that, prior to the issuance of the stock subject to the Option, results in either the receipt of cash (or check) by
the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company
from the sales proceeds;
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