LeapFrog 2005 Annual Report Download - page 192

Unless otherwise specifically provided in the Option, the purchase price of Class A Common Stock acquired
pursuant to an Option that is paid by delivery to the Company of other Class A Common Stock acquired, directly
or indirectly from the Company, shall be paid only by shares of the Class A Common Stock of the Company that
have been held for more than six (6) months (or such longer or shorter period of time required to avoid a charge
to earnings for financial accounting purposes). At any time that the Company is incorporated in Delaware,
payment of the Class A Common Stock’s “par value,” as defined in the Delaware General Corporation Law, shall
not be made by deferred payment.
In the case of any deferred payment arrangement, interest shall be compounded at least annually and shall
be charged at the minimum rate of interest necessary to avoid (1) the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest under the deferred payment
arrangement and (2) the treatment of the Option as a variable award for financial accounting purposes.
(e) Transferability of an Incentive Stock Option. An Incentive Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering
written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of
the death of the Optionholder, shall thereafter be entitled to exercise the Option.
(f) Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock Option shall be transferable
to the extent provided in the Option Agreement. If the Nonstatutory Stock Option does not provide for
transferability, then the Nonstatutory Stock Option shall not be transferable except by will or by the laws of
descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the
Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the
Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.
(g) Vesting Generally. The total number of shares of Class A Common Stock subject to an Option may,
but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal. The
Option may be subject to such other terms and conditions on the time or times when it may be exercised (which
may be based on performance or other criteria) as the Board may deem appropriate. The vesting provisions of
individual Options may vary. The provisions of this Section 6(g) are subject to any Option provisions governing
the minimum number of shares of Class A Common Stock as to which an Option may be exercised.
(h) Termination of Continuous Service. In the event that an Optionholder’s Continuous Service
terminates (other than upon the Optionholder’s death or Disability), the Optionholder may exercise his or her
Option (to the extent that the Optionholder was entitled to exercise such Option as of the date of termination) but
only within such period of time ending on the earlier of (i) the date three (3) months following the termination of
the Optionholder’s Continuous Service (or such longer or shorter period specified in the Option Agreement or
(ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination, the
Optionholder does not exercise his or her Option within the time specified in the Option Agreement, the Option
shall terminate.
(i) Extension of Termination Date. An Optionholder’s Option Agreement may also provide that if the
exercise of the Option following the termination of the Optionholder’s Continuous Service (other than upon the
Optionholder’s death or Disability) would be prohibited at any time solely because the issuance of shares of
Class A Common Stock would violate the registration requirements under the Securities Act, then the Option
shall terminate on the earlier of (i) the expiration of the term of the Option set forth in Section 6(a) or (ii) the
expiration of a period of three (3) months after the termination of the Optionholder’s Continuous Service during
which the exercise of the Option would not be in violation of such registration requirements.
(j) Disability of Optionholder. In the event that an Optionholder’s Continuous Service terminates as a
result of the Optionholder’s Disability, the Optionholder may exercise his or her Option (to the extent that the
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