LeapFrog 2006 Annual Report Download - page 167

Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume of trading in the Class A
Common Stock) on the last market trading day prior to the day of determination, as reported in The Wall
Street Journal or such other source as the Board deems reliable.
(ii) In the absence of such markets for the Class A Common Stock, the Fair Market Value shall be
determined by the Board based upon an independent appraisal in compliance with Section 409A of the Code
or, in the case of an Incentive Stock Option, in compliance with Section 422 of the Code.
(t) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code and the regulations promulgated thereunder.
(u) “Non-Employee Director” means a Director who either (i) is not a current Employee or Officer of the
Company or its parent or a subsidiary, does not receive compensation (directly or indirectly) from the Company
or its parent or a subsidiary for services rendered as a consultant or in any capacity other than as a Director
(except for an amount as to which disclosure would not be required under Item 404(a) of Regulation S-K
promulgated pursuant to the Securities Act (“Regulation S-K”)), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of Regulation S-K and is not engaged in a
business relationship as to which disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a “non-employee director” for purposes of Rule 16b-3.
(v) “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.
(w) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.
(x) “Option” means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the Plan.
(y) “Option Agreement” means a written agreement between the Company and an Optionholder evidencing
the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and
conditions of the Plan.
(z) “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable,
such other person who holds an outstanding Option.
(aa) “Outside Director” means a Director who either (i) is not a current employee of the Company or an
“affiliated corporation” (within the meaning of Treasury Regulations promulgated under Section 162(m) of the
Code), is not a former employee of the Company or an “affiliated corporation” receiving compensation for prior
services (other than benefits under a tax-qualified pension plan), was not an officer of the Company or an
“affiliated corporation” at any time and is not currently receiving direct or indirect remuneration from the
Company or an “affiliated corporation” for services in any capacity other than as a Director or (ii) is otherwise
considered an “outside director” for purposes of Section 162(m) of the Code.
(bb) “Own,” “Owned,” “Owner,” “Ownership” A person or Entity shall be deemed to “Own,” to have
“Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if such person or Entity, directly
or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has or shares voting
power, which includes the power to vote or to direct the voting, with respect to such securities.
(cc) “Parent” means any parent corporation of the Company, whether now or hereafter existing, as such
term is defined in Section 424(e) of the Code.
(dd) “Participant” means a person to whom a Stock Award is granted pursuant to the Plan or, if applicable,
such other person who holds an outstanding Stock Award.
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